CHARTWELL TECHNOLOGY INC.
TSX : CWH

CHARTWELL TECHNOLOGY INC.

January 29, 2008 15:51 ET

Chartwell Announces Financial Results for the Three and Twelve Months Ended October 31, 2007

CALGARY, ALBERTA--(Marketwire - Jan. 29, 2008) - Chartwell Technology Inc. ("Chartwell" or the "Company") (TSX:CWH), a leading provider of gaming software systems and entertainment content to the online and remote gaming industry, announces audited financial results for the year ended October 31, 2007.

The 2007 fiscal year was a very successful year for the Company despite continued uncertainty in the regulation of the industry and a lack of interest from North American capital markets in the online gaming industry. The highlights for the year are as follows:

- Record total revenue at $21.2 million, up from $18.6 million in fiscal year 2006.

- Record cash flow from operations of $5.1 million, up from $0.4 million in fiscal year 2006.

- EBITDA of $3.1 million, more than 12 times the EBITDA of $0.3 million in fiscal year 2006.

Three months ended October 31, 2007

Revenue for this year's fourth quarter was $4.9 million compared to $4.7 million for the same period a year earlier. Revenue growth in the quarter is mainly due to new customers gained late in fiscal year 2006.

Net loss for the quarter was $1.1 million compared to a net loss of $0.2 million, with basic and fully diluted loss per share of $0.07 compared to a loss per share of $0.01 in the comparable quarter of 2006, respectively. The decline in net income for the fourth quarter of fiscal 2007 was largely the result of certain non-cash charges and foreign exchange losses including:

- An impairment charge for the cost of deferred mobile software development

- An impairment charge for the remaining software intangible assets acquired in the Micropower acquisition

- A foreign exchange loss as the Canadian dollar strengthened towards the end of the Company's fiscal year

Software development and support expenses, net of deferred software development costs, were $2.2 million in both fourth quarters of 2007 and 2006. Total software development and support expenses before deferred software development were substantially lower in the fourth quarter of 2007 than in 2006.

Sales and marketing expenses decreased to $0.7 million from $0.8 million as decreased marketing expenses offset an increase in salary expense related to an expansion in client management staffing in the fourth quarter of 2007 as compared to the same period the year prior.

General and administrative expenses decreased to $1.1 million from $1.5 million as there was a reduction in bad debt expense as well as a reduction in the amount of professional fees in the fourth quarter of 2007 as compared to the same period the year prior.

Year ended October 31, 2007

Total revenue for the year ended October 31, 2007 increased 14% to $21.2 million compared to fiscal 2006 revenue. The increase in revenue is largely due to significant new customers that went live late in fiscal 2006.

Net loss for fiscal 2007 was $0.1 million ($0.00 per basic and diluted share) compared to a net income of $0.9 million in the previous year. The Company reported a net loss in 2007 largely as the result of $1.4 million in intangible asset impairment charges and foreign exchange losses, although the earning power of the Company improved significantly over the year as reflected in the strong cash flow from operations and EBITDA in the year as compared to fiscal 2006.

Software development and support expenses increased to $9.5 million from $8.1 million for the same period in fiscal 2006. The increase is due mainly to a reduced deferral of software development costs. In 2007, the Company deferred software development and support expense by $0.5 million as compared to deferring $2.6 million in fiscal 2006.

Sales and marketing expenses increased to $3.0 million in fiscal 2007 from $2.3 million in fiscal 2006. The increase in sales and marketing is a result of the Company expanding its client management capabilities to improve overall service to our clients.

General and administrative expenses declined to $4.2 million from $4.5 million as the Company experienced reductions in bad debt and professional services expenses as compared to the prior year.

Chartwell incurred a foreign currency loss in fiscal 2007 of $0.7 million compared to $0.2 million in 2006. A majority of the loss occurred late in the year as the Canadian dollar strengthened against the Euro and British Pound.

Balance sheet strength

The Company continued to maintain a strong balance sheet through both maintaining positive cash flow and working capital. At October 31, 2007 Chartwell had $15.1 million of cash and short term investments and positive working capital of $20.0 million with no debt.

About Chartwell

Chartwell specializes in the development of leading-edge gaming applications and entertainment content for the Internet and other remote access devices. Chartwell's Java and Flash based software products and games are designed for deployment in gaming, entertainment, advertising and promotional applications. Chartwell does not participate in the online gaming business of its clients. Chartwell's team of highly trained professionals is committed to delivering the highest quality software and maintaining its leading edge through continuous development and unparalleled customer support.

Chartwell invites you to preview our company and gaming applications at www.chartwelltechnology.com

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements contained herein may constitute forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. We believe that the expectations reflected in the forward-looking statements are reasonable based upon management's current views but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. These statements speak only as of the date hereof. We do not intend, and do not assume any obligation, to update conclusions, forecasts or projections that may be contained in these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. No assurance can be given that actual results, performance or achievement expressed in, or implied by these forward-looking statements will occur, or if they do, that any benefits may be derived from them. Past results and information provided by third party sources considered to be accurate have been applied in drawing a conclusion or making a forecast or projection set out in the forward-looking information.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of factors that may include, but are not limited to: a failure to complete the business combination referred to herein, the impact of government regulation and laws affecting international operations, the impact of price competition, loss of business or credit risks associated with current and prospective major customers, general industry and market conditions and growth rates, currency rate fluctuations, the impact of consolidations in the online gaming industry and other risks detailed from time to time in Chartwell's Annual Information Form and Management's Discussion and Analysis, both of which may be found at www.sedar.com


The TSX does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Chartwell Technology Inc.
    Alan Richter
    Chief Financial Officer
    (403) 261-6619 or Toll Free: (877) 261-6619
    or
    Chartwell Technology Inc.
    David Bajwa
    Investor Relations
    (604) 669-4180 or Toll Free: (877) 669-4180
    Email: info@chartwelltechnology.com
    Website: www.chartwelltechnology.com