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

CryptoLogic Limited

November 10, 2011 04:43 ET

CryptoLogic Reports Profit and Growth in Cash in Q3 2011

DUBLIN, IRELAND--(Marketwire - Nov. 10, 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 third quarter ended September 30, 2011.

Q3 2011 Highlights:

  • Total revenue increased to $7.2 million (Q2 2011: $7.0 million)
  • Total expenses reduced to $5.9 million (Q2 2011: $6.5 million)
  • Income before tax increased to $1.3 million (Q2 2011: $0.5 million)
  • Cash increased to $15.2 million (Q2 2011: $12.0 million)

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

Operating and Financial Review

Total revenue after amortization of royalties and games in Q3 2011 increased to $7.2 million (Q2 2011: $7.0 million). Q3 2011 included $0.9 million as a result of a reanalysis of jackpot provisions; Q2 2011 included $0.8 million as a result of a reduction in liabilities previously provided against revenue following the resolution of a dispute with a significant supplier of games.

Hosted Casino

Revenue from Hosted Casino increased to $6.5 million in Q3 2011, including $0.9 million related to the above jackpot provisions (Q2 2011: $5.7 million, including $0.3 million related to the above dispute resolution), reflecting a higher contribution from a key licensee.

Branded Games

Revenue from this segment decreased to $1.4 million in Q3 2011 (Q2 2011: $2.1 million, including $0.5 million related to the above dispute resolution). Three new branded games went live in the quarter taking the total number of games rolled out by licensees and generating revenues to date to 188 from 185 at the end of the second quarter.

Poker and Other

Poker and Other revenue amounted to $0.3 million in Q3 2011 (Q2 2011: $0.2 million).

Expenses

Operating expenses decreased to $4.1 million in Q3 2011 (Q2 2011: $4.5 million).

General and administrative expenses decreased to $1.5 million in Q3 2011 (Q2 2011: $1.6 million).

Income before tax for the quarter amounted to $1.3 million, including $0.9 million related to the above jackpot provisions, compared with $0.5 million in the second quarter, including $0.8 million related to the above dispute resolution.

Balance Sheet and Cash Flow

Cash and cash equivalents as at September 30, 2011 amounted to $15.2 million (June 30, 2011: $12.0 million). The increase in cash during Q3 2011 of $3.2 million is primarily due to net cash flows from operating activities. The Company continues to be debt-free.

Update on Commercial Agreements

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. In October 2011, the brand licensor answered the complaint, denying any cure and filed 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
September 30, December 31, January 1,
2011 2010 2010
ASSETS
Deferred tax assets$763 $864 $1,549
Property, plant and equipment 1,977 2,585 2,826
Intangible assets 1,735 2,210 8,906
Total non-current assets 4,475 5,659 13,281
Cash and cash equivalents 15,216 10,584 23,447
Security deposits 641 515 250
User funds held on deposit 3,007 6,069 7,929
Trade and other receivables 3,622 5,046 7,972
Current tax assets 753 730 681
Prepayments 7,083 8,942 9,426
Total current assets 30,322 31,886 49,705
Total assets$34,797 $37,545 $62,986
EQUITY
Share capital$34,229 $34,129 $33,916
Share options 5,584 5,564 5,646
Deficit (22,252) (22,878) (2,766)
Total equity attributable to shareholders of the Company 17,561 16,815 36,796
Non-controlling interest 1,166 1,226 2,948
Total equity 18,727 18,041 39,744
LIABILITIES
Deferred tax liabilities 47 16
Total non-current liabilities 47 16
Trade payables and accrued liabilities 8,278 13,060 13,156
Income taxes payable 4,738 359 2,157
User funds held on deposit 3,007 6,069 7,929
Total current liabilities 16,023 19,488 23,242
Total liabilities 16,070 19,504 23,242
Total equity and liabilities$34,797 $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 September 30, For the nine months ended September 30,
2011 2010 2011 2010
Total revenue$7,219 $6,095 $20,213 $20,475
Expenses:
Operating 4,090 7,265 13,305 25,278
General and administrative 1,451 1,655 4,476 6,470
Reorganization 209 1,908
Impairment of intangible assets 5,624
Depreciation 226 303 679 947
Amortization of intangible assets 136 175 483 1,010
5,903 9,607 18,943 41,237
Results from operating activities 1,316 (3,512) 1,270 (20,762)
Finance income 13 14 78 442
Finance costs (20) (106) (30) (49)
Net finance income/(costs) (7) (92) 48 393
Income/(loss) before income taxes 1,309 (3,604) 1,318 (20,369)
Income tax expense 259 115 652 380
Income/(loss) for the period 1,050 (3,719) 666 (20,749)
Other comprehensive income
Other comprehensive income for the period net of income tax
Total comprehensive income/(loss) for the period$1,050 $(3,719)$666 $(20,749)
Total comprehensive income/(loss) attributable to:
Shareholders of the Company 988 (3,439) 626 (19,297)
Non-controlling interests 62 (280) 40 (1,452)
Total comprehensive income/(loss) for the period 1,050 (3,719) 666 (20,749)
Earnings/(loss) per Common Share
Basic earnings/(loss) per share$0.08 $(0.27)$0.05 $(1.50)
Diluted earnings/(loss) per share$0.08 $(0.27)$0.05 $(1.50)
CRYPTOLOGIC LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands of U.S. dollars)
(Unaudited)
Attributable to Shareholders of the Company
Share
capital
Contri-
buted
surplus
Share
options

Retained
earnings
Total Non-
controlling
interest

Total
equity
Balance, 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 (19,297) (19,297) (1,452) (20,749)
Transactions with owners recorded directly in equity
Shares exchanged 195 195 (195)
Share-based payment transactions (89) (89) (89)
Balance, September 30, 2010$34,043$68$5,557 $(22,063)$17,605 $1,301 $18,906
Balance, 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 626 626 40 666
Transactions with owners recorded directly in equity
Shares exchanged 100 100 (100)
Share-based payment transactions 20 20 20
Balance, September 30, 2011$34,161$68$5,584 $ (22,252)$17,561 $1,166 $18,727
CRYPTOLOGIC LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)
For the three months ended September 30, For the nine months ended September 30,
2011 2010 2011 2010
Cash flows from/(used in):
Operating activities:
Income/(loss) for the period$1,050 $(3,719)$666 $(20,749)
Adjustments for:
Depreciation 226 303 679 947
Amortization of intangible assets 136 175 483 1,010
Impairment of intangible assets 5,624
Deferred tax 68 (54) 132 220
Share based payment transactions (43) (320) 20 (89)
1,437 (3,615) 1,980 (13,037)
Change in operating assets and liabilities:
Change in trade and other receivables 1,133 (496) 1,424 2,645
Change in prepayments 393 345 1,859 250
Change in trade payables and accrued liabilities (59) (1,112) (4,782) 533
Cash from/(used in) operating activities 2,904 (4,878) 481 (9,609)
Change in income taxes receivable/payable 309 (69) 4,356 (1,176)
Net cash from/(used in) operating activities 3,213 (4,947) 4,837 (10,785)
Investing activities:
Acquisition of property, plant and equipment(13) (166) (74) (622)
Disposal of property, plant and equipment 21 3 21
Acquisition of intangible assets (8)
Decrease/(increase) in security deposits 16 (272) (126) (272)
Net cash from/(used in) investing activities 3 (417) (205) (873)
Financing activities:
Cash flows from financing activities
Net cash from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents3,216 (5,364) 4,632 (11,658)
Cash and cash equivalents, beginning of period 12,000 17,153 10,584 23,447
Cash and cash equivalents, end of period$15,216 $11,789 $15,216 $11,789

Contact Information

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

    CryptoLogic
    Huw Spiers
    CFO
    +353 1 234 0400
    www.cryptologic.com

    Luther Pendragon
    Neil Thapar, Alexis Gore
    +44 207 618 9100