CryptoLogic Limited
TSX : CRY
TSX : CXY
NASDAQ : CRYP
LSE : CRP

CryptoLogic Limited

August 11, 2011 02:00 ET

CryptoLogic Announces Revenue Growth and Reports Profit in Q2 2011

DUBLIN, IRELAND--(Marketwire - Aug. 11, 2011) - CryptoLogic Limited (TSX:CRY)(TSX:CXY)(NASDAQ:CRYP)(LSE:CRP), a developer of branded online betting games and Internet casino software, announces its financial results for the second quarter ended June 30, 2011.

Q2 2011 Highlights:

  • Total revenue increased to $7.0 million (Q1 2011: $6.0 million)
  • Total expenses held at $6.5 million (Q1 2011: $6.5 million)
  • Income before tax of $0.5 million (Q1 2011: $0.4 million loss)
  • Millionaires Club jackpot win of $4.2 million paid in June 2011
  • Cash of $12.0 million (Q1 2011: $14.5 million)

The Board is encouraged by the performance in the quarter and continues to focus on driving revenues further while managing costs tightly to enhance shareholder value.

Operating and Financial Review

Total revenue after amortization of royalties and games in Q2 2011 increased to $7.0 million (Q1 2011: $6.0 million). Revenue in the quarter benefited from a reduction of $0.8 million in liabilities previously provided against revenue through the resolution of a dispute with a significant supplier of games.

Hosted Casino

Revenue from Hosted Casino increased to $5.7 million in Q2 2011 (Q1 2011: $5.2 million), reflecting a higher contribution from a key licensee and $0.3 million related to the above resolution.

Branded Games

Revenue from this segment rose to $2.1 million in Q2 2011 (Q1 2011: $1.5 million), including $0.5 million related to the above resolution. Six new branded games went live in the quarter taking the total number of games rolled out by licensees and generating revenues to date to 185 from 179 at the end of the first quarter.

Poker and Other

Poker and Other revenue amounted to $0.2 million in Q2 2011 (Q1 2011: $0.4 million).

Expenses

Operating expenses decreased to $4.5 million in Q2 2011 (Q1 2011: $4.7 million).

General and Administrative expenses rose to $1.6 million in Q2 2011 (Q1 2011: $1.4 million).

Income before tax for the quarter amounted to $0.5 million compared with a loss before tax of $0.4 million in the first quarter.

Balance Sheet and Cash Flow

Cash and cash equivalents as at June 30, 2011 amounted to $12.0 million (March 31, 2011: $14.5 million). The decrease in cash during Q2 2011 of $2.5 million is primarily due to a $3.0 million decrease in jackpot provisions, following a significant jackpot win during the quarter, and a decrease in other trade payables and accrued liabilities of $1.8 million, partially offset by cash generated from operations before changes in non-cash operating items of $0.7 million and decreased prepayments of $1.0 million. The Company continues to be debt-free.

Update on Commercial Agreements

Further to the announcement on May 12, 2011, the Company signed a binding agreement in June 2011 with the significant supplier of games, which enables the two parties to continue with their commercial relationship.

Further to the announcement on May 12, 2011, the Company remains in dispute with a brand licensor. In June 2011, the Company filed suit against the brand licensor seeking judgment that any breach was cured and the agreement remains in force. The brand licensor has yet to respond to this suit or file a countersuit.

Strategic Review

On March 25, 2011, the Company announced that it had appointed Deloitte Corporate Finance as financial advisor to assist it with a strategic review of the Company. The strategic review is ongoing and further announcements will be made as and when appropriate.

About CryptoLogic® (www.cryptologic.com)

Focused on integrity and innovation, CryptoLogic Limited is a leading developer and supplier of Internet gaming software. With more than 300 games, CryptoLogic has one of the most comprehensive casino suites on the Internet, with award-winning games featuring some of the world's most famous action and entertainment characters. The Company's licensees include many top Internet gaming brands. CryptoLogic's leadership in regulatory compliance makes it one of the few companies with gaming software certified to strict standards similar to land-based gaming. The CryptoLogic Group licenses gaming software and services to blue-chip customers that offer their games to non-U.S. based players around the world.

CryptoLogic's common shares trade on the Toronto Stock Exchange (CRY, CXY), the NASDAQ Global Select Market (CRYP) and the Main Market of the London Stock Exchange (CRP).

CRYPTOLOGIC FORWARD LOOKING STATEMENT DISCLAIMER:

This press release contains forward-looking statements within the meaning of applicable securities laws. Statements in this press release, which are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "believe", "expect", "anticipate", "estimate", "intend", "may", "will", "would" and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are based on certain factors and assumptions including expected growth, results of operations, performance, business prospects and opportunities, foreign exchange rates and effective income tax rates. While the Company considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual results, performance or achievements of the Company to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Risks related to forward-looking statements include, without limitation, risks associated with the Company's financial condition, prospects and opportunities, legal risks associated with Internet gaming and risks of governmental legislation and regulation, risks associated with market acceptance and technological changes, risks associated with dependence on licensees and key licensees, risks relating to international operations and risks associated with competition. Additional risks and uncertainties can be found in the Company's Form 20-F for the fiscal year ended December 31, 2010 under the heading "Item 3 – Key Information – Risk Factors" and in the Company's other filings with the US Securities and Exchange Commission and Canadian provincial securities commissions. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Forward-looking statements are given only as at the date of this release and the Company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law.

CRYPTOLOGIC LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands of U.S. dollars)
(Unaudited)
As at As at As at
June 30, December 31, January 1,
2011 2010 2010
ASSETS
Deferred tax assets $ 802 $ 864 $ 1,549
Property, plant and equipment 2,190 2,585 2,826
Intangible assets 1,871 2,210 8,906
Total non-current assets 4,863 5,659 13,281
Cash and cash equivalents 12,000 10,584 23,447
Security deposits 657 515 250
User funds held on deposit 3,430 6,069 7,929
Trade and other receivables 4,755 5,046 7,972
Current tax assets 737 730 681
Prepayments 7,476 8,942 9,426
Total current assets 29,055 31,886 49,705
Total assets $ 33,918 $ 37,545 $ 62,986
EQUITY
Share capital $ 34,169 $ 34,129 $ 33,916
Share options 5,627 5,564 5,646
Deficit (23,240 ) (22,878 ) (2,766 )
Total equity attributable to shareholders of the Company 16,556 16,815 36,796
Non-controlling interest 1,164 1,226 2,948
Total equity 17,720 18,041 39,744
LIABILITIES
Deferred tax liabilities 18 16
Total non-current liabilities 18 16
Trade payables and accrued liabilities 8,337 13,060 13,156
Income taxes payable 4,413 359 2,157
User funds held on deposit 3,430 6,069 7,929
Total current liabilities 16,180 19,488 23,242
Total liabilities 16,198 19,504 23,242
Total equity and liabilities $ 33,918 $ 37,545 $ 62,986
CRYPTOLOGIC LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(In thousands of U.S. dollars, except per share data)
(Unaudited)
For the three months ended June 30, For the six months ended June 30,
2011 2010 2011 2010
Total revenue $ 6,978 $ 6,739 $ 12,994 $ 14,380
Expenses:
Operating 4,528 9,435 9,216 18,013
General and administrative 1,628 2,637 3,024 4,815
Reorganization 1,670 1,699
Impairment of intangible assets 5,624 5,624
Depreciation 225 421 453 644
Amortization of intangible assets 166 318 347 835
6,547 20,105 13,040 31,630
Results from operating activities 431 (13,366 ) (46 ) (17,250 )
Finance income 36 114 76 517
Finance costs (11 ) (17 ) (21 ) (32 )
Net finance income 25 97 55 485
Income/(loss) before income taxes 456 (13,269 ) 9 (16,765 )
Income tax expense 213 142 393 265
Income/(loss) for the period 243 (13,411 ) (384 ) (17,030 )
Other comprehensive income
Other comprehensive income for the period net of income tax
Total comprehensive income/(loss) for the period $ 243 $ (13,411 ) $ (384 ) $ $(17,030 )
Total comprehensive income/(loss) attributable to:
Shareholders of the Company 225 (12,480 ) (362 ) (15,858 )
Non-controlling interests 18 (931 ) (22 ) (1,172 )
Total comprehensive income/(loss) for the period 243 (13,411 ) (384 ) (17,030 )
Earnings/(loss) per Common Share
Basic earnings/(loss) per share $ 0.02 $ (0.97 ) $ (0.03 ) $ (1.23 )
Diluted earnings/(loss) per share $ 0.02 $ (0.97 ) $ (0.03 ) $ (1.23 )
CRYPTOLOGIC LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands of U.S. dollar)
(Unaudited)
Attributable to Shareholders of the Company
Share capital Contributed surplus Share options Retained earnings Total Non-controlling interest Total equity
Balance at January 1, 2010 $ 33,848 $ 68 $ 5,646 $ (2,766 ) $ 36,796 $ 2,948 $ 39,744
Total comprehensive income for the period
Profit or loss (15,858 ) (15,858 ) (1,172 ) (17,030 )
Transactions with owners recorded directly in equity
Shares exchanged 192 192 (192 )
Share-based payment transactions 231 231 231
Balance at June 30, 2010 $ 34,040 $ 68 $ 5,877 $ (18,624 ) $ 21,361 $ 1,584 $ 22,945
Balance at December 31, 2010 $ 34,061 $ 68 $ 5,564 $ (22,878 ) $ 16,815 $ 1,226 $ 18,041
Total comprehensive income for the period
Profit or loss (362 ) (362 ) (22 ) (384 )
Transactions with owners recorded directly in equity
Shares exchanged 40 40 (40 )
Share-based payment transactions 63 63 63
Balance at June 30, 2011 $ 34,101 $ 68 $ 5,627 $ (23,240 ) $ 16,556 $ 1,164 $ 17,720
CRYPTOLOGIC LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollar)
(Unaudited)
For the three months For the six months
ended June 30, ended June 30,
2011 2010 2011 2010
Cash flows from/(used in):
Operating activities:
Income/(loss) for the period $ 243 $ (13,411 ) $ (384 ) $ (17,030 )
Adjustments for:
Depreciation 225 421 453 644
Amortization of intangible assets 166 318 347 835
Impairment of intangible assets 5,624 5,624
Deferred tax 24 44 64 274
Share based payment transactions 31 (72 ) 63 231
689 (7,076 ) 543 (9,422 )
Change in operating assets and liabilities:
Change in trade and other receivables 239 1,954 291 3,141
Change in prepayments 1,012 273 1,466 (95 )
Change in trade payables and accrued liabilities (4,783 ) 2,766 (4,723 ) 1,645
Cash from/(used in) operating activities (2,843 ) (2,083 ) (2,423 ) (4,731 )
Change in income taxes receivable/payable 181 239 4,047 (1,107 )
Net cash from/(used in) operating activities (2,662 ) (1,844 ) 1,624 (5,838 )
Investing activities:
Acquisition of property, plant and equipment (7 ) (413 ) (61 ) (456 )
Disposal of property, plant and equipment 3 3
Acquisition of intangible assets (8 )
Decrease/(increase) in security deposits 154 (142 )
Net cash from (used in) investing activities 150 (413 ) (208 ) (456 )
Financing activities:
Cash flows from financing activities
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents (2,512 ) (2,257 ) 1,416 (6,294 )
Cash and cash equivalents, beginning of period 14,512 19,410 10,584 23,447
Cash and cash equivalents, end of period $ 12,000 $ 17,153 $ 12,000 $ 17,153

Contact Information

  • CryptoLogic
    David Gavagan
    Chairman and Interim CEO
    +353 1 234 0400

    CryptoLogic
    Huw Spiers
    CFO
    +353 1 234 0400

    Corfin Public Relations
    Neil Thapar
    +44 207 596 2860

    Corfin Public Relations
    Alexis Gore
    +44 207 596 2860