CHARTWELL TECHNOLOGY INC.
TSX : CWH

CHARTWELL TECHNOLOGY INC.

January 28, 2011 17:57 ET

Chartwell Announces Financial Results for the Three and Twelve Months Ended October 31, 2010

CALGARY, ALBERTA--(Marketwire - Jan. 28, 2011) - Chartwell Technology Inc. (TSX:CWH) ("Chartwell" or the "Company"), a leading provider of games, gaming systems and platform for the regulated online casino gaming industry, announces audited financial results for the year ended October 31, 2010.

Highlights

The Chartwell Games Platform (CGP) was completed in the prior year and aggregates some of the online gaming industry's most exciting content in a highly flexible delivery platform, leading to what the Company believes has greatly improved its ability to distribute its proprietary and third-party games content to a wider audience.

This year Chartwell released 20 new table and slot games, combining proven performing games such as The Book of Ra™ and Columbus™ from Novomatic, as well as Texas Hold'em Bonus™ and Caribbean Stud Poker™. 

From Chartwell's own game development studios came the branded Paramount slots The Italian Job™ and Sleepy Hollow™, Multiplayer Blackjack and Baccarat and several new slots including Sinful Spins™ and Bars and Bells™, the latter game featuring the groundbreaking Streak Breaker™ feature.

Late in the fiscal year, Chartwell became the exclusive European distributor of HoGaming's Live Dealer product. The Live Dealer product provides a suite of traditional casino games with a unique Live Dealer video feed.

Chartwell broadened its Casino game suite, and delivered some of the industries most exciting and innovative content, combined with major software enhancements to allow for faster and more seamless delivery in a more cost efficient manner. This will provide a strong base for greater market penetration as evidenced by both the renewal of long-term licensees and the signing of significant new licensees. In the year Chartwell renewed the license agreements with Victor Chandler, Stan James, Mybet and Doxxbet. In terms of new licensees, Chartwell added Globet and Centrebet during the year and, most recently, Rank Interactive. New licensees and additional content for existing licensees, combined with cost savings afforded by the investments made in systems and architecture in the year gives the Company a strong start to 2011.

Three months ended October 31, 2010

Following the closure of PokerNexus late in fiscal 2009, Poker community licensing and services operations have been reported as discontinued operations.

Revenue for this year's fourth quarter from continued operations was $2.4 million compared to $3.5 million for the same period a year earlier. The decline in revenue results from a number of factors, primarily the non-renewal of a significant licensee late in the fourth quarter of 2010, but also the continued strength of the Canadian dollar as it compared to the Company's billing currencies of the EUR and GBP. 

Software development and support expenses before the benefit of government grants were reduced to $2.2 million in the fourth quarter of 2010 from $2.5 million from the fourth quarter of 2009 on reduced salaries, consulting and hosting fees. 

Sales and marketing expenses increased to $515,000 from $399,000 primarily as the result of an expanded sales team, while general and administrative expenses decreased modestly to $652,000 from $782,000 on reduced insurance and overhead costs. 

Net loss from continuing operations for the fourth quarter was $1.1 million as compared to a net income of $196,000 from comparable operations in the prior year, with a loss per share of $0.07 as compared to earnings per share of $0.01 in the comparable quarter of 2009. Reduced revenue and a smaller benefit from government grants were partially offset by reduced total expenses.

Year ended October 31, 2010

Total revenue for the year ended October 31, 2010 decreased 23% to $12.1 million compared to $15.6 in fiscal 2009. The largest factor in the decline in revenue is the decline in the value of the EUR and GBP against the Canadian Dollar as revenue is translated and reported in Canadian dollars. This factor accounted for approximately one half of the revenue decline. Also affecting revenue was the termination of a significant licensee late in the fiscal year and the reduction in revenue experienced by another significant licensee that introduced additional casino products and was also affected by the introduction of regulations in that licensee's core market. 

Software development and support expenses increased modestly to $9.0 million from $8.8 million for the same period in fiscal 2009. The increase is due to modestly higher salaries and reduced government grants recorded. Significant software development projects which were completed during the year will benefit the Company in 2011.

Sales and marketing expenses were comparable between years at $2.0 million in both fiscal 2010 and 2009. General and administrative expenses decreased to $3.2 million from $3.4 million due to lower professional fees.

The net loss from continuing operations prior to the impairment of goodwill that was recorded in the third quarter of 2010 and before income taxes was $4.0 million as compared to a loss from continued operations of $868,000 in the prior year. Total net loss (including a large write-down of goodwill largely associated with the discontinued poker operations) was $7.1 million or $0.39 per share in 2010, as compared to a net loss of $2.7 million or $0.14 per share in 2009.

Mr. Alan Richter, CFO of Chartwell comments on the fiscal 2010 results, "The breadth and depth of the products that we have released throughout the year, combined with the numerous new clients we've recently signed give us confidence that we have a strong base with which to build on, and return our results to profitable growth. Our investment in systems and products during the past year has us positioned to add revenue and decrease our operating costs in 2011."

Continued balance sheet strength

The Company continued to maintain a strong balance sheet. At October 31, 2010 Chartwell had $16.9 million of cash and short term investments and positive working capital of $18.2 million with virtually no debt.

About Chartwell

Chartwell specializes in the development of leading-edge games, gaming systems, and platform for the regulated online casino gaming industry. Chartwell is certified or licensed to offer a range of services in all of the leading regulated online gaming markets. Chartwell is not a gaming operator; our clients own their brands and databases entirely and exclusively. Chartwell's team of highly trained professionals is committed to delivering the highest quality software and maintaining its market 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 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. 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.

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: actual implementation or delays in the implementation of our products by our customers, delays in development, the impact of government regulation, licensing 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