DUBLIN, IRELAND -- (Marketwire) -- 05/10/12 -- CryptoLogic Limited (TSX: CRY)(TSX: CXY)(NASDAQ: CRYP), a developer of branded online betting games and Internet casino software, announces its financial results for the first quarter ending March 31, 2012.
Q1 2012 summary:
-- Total revenue of $5.3 million (Q1 2011: $6.0 million)
-- Total expenses of $7.5 million (Q1 2011: $6.5 million)
-- Net loss of $2.2 million (Q1 2011: $0.6 million loss)
-- Net cash of $16.7 million (Q4 2011: $16.6 million)
-- Signed three licensing deals for CryptoLogic games with operators
Betdaq, Loto Quebec and NeoGames
-- Recommended $35.8 million takeover by Amaya Gaming Group Inc (Amaya)
Overview
In February 2012 CryptoLogic recommended a $35.8 million cash offer from Amaya, which has received acceptances representing approximately 88.15% of the issued share capital of CryptoLogic as at 2 May 2012. The Offer has gone unconditional and has been further extended until 3.00 p.m. UK time (10.00 a.m. Toronto time) on 16 May 2012, unless otherwise extended.
Operating and Financial Review
Total revenue in Q1 2012 decreased 11.5% to $5.3 million (Q1 2011: $6.0 million). The decrease in revenue in Q1 2012 partly reflects increased amortization of royalties paid to a major third party brand licensor and also higher amortization charges for new games. Gross revenue before amortization costs totalled $6.6 million (Q1 2011: $7.1 million).
Hosted casino
Revenue from hosted casino amounted to $5.0 million for the three months ended March 31, 2012 compared with the same period in the prior year (Q1 2011: $5.2 million). In January 2012, the Company announced that it had acquired the Maltese online gambling licenses for InterCasino from OIGE, the Company's largest and longest-standing licensee.
Branded Games
Branded Games revenue decreased 4.8% to $1.4 million for the three months ended March 31, 2012 when compared with the same period in the prior year (Q1 2011: $1.5 million), primarily due to a lower contribution from a major licencee partially offset by an increase in the number of revenue producing games through an increased number of licensees and games per licensee. During the quarter, the Company's revenue producing games increased from 212 to 229 games.
Poker and Other
Poker and other revenue amounted to $0.2 million for the three months ended March 31, 2012 when compared with the same period in the prior year (Q1 2011: $0.4 million).
Amortization of Royalties
Amortization of royalties increased 24.3% to $1.1 million for the three months ended March 31, 2012 when compared with the same period in the prior year (Q1 2011: $0.9 million). Amortization of royalties represented (19.9%) of total revenue in Q1 2012 (Q1 2011: (14.2%)). The increase in amortization of royalties is primarily due to an increase in the royalties earned by a major brand licensor.
Balance Sheet and Cash Flow
Cash and cash equivalents as at March 31, 2012 amounted to $16.7 million (December 31, 2011: $16.6 million). The Company continues to be debt free.
Board Changes
On April 3, 2012, CryptoLogic announced that David Baazov, President, Chief Executive Officer, Secretary, Treasurer and Director of Amaya, assumed the role of Chief Executive Officer of CryptoLogic and Daniel Sebag, Chief Financial Officer and Director of Amaya, assumed the role of Chief Financial Officer of CryptoLogic. David Gavagan stepped down as Chairman and Interim Chief Executive Officer of CryptoLogic and Huw Spiers stepped down as Group Head of Operations and Chief Financial Officer of CryptoLogic.
It was also announced on April 3, 2012, that Simon Creedy Smith and James Wallace had offered their resignations to the board of directors. These were accepted with immediate effect. The remaining two non-executive Directors, Thomas Byrne and David Gavagan, remain as members of the board of directors. Two additional Directors, David Baazov, as an executive director, and Divyesh Gadhia, as a non-executive director, have been named as new Directors of CryptoLogic.
London Stock Exchange de-listing
In connection with the offer, Amaya has announced that, if permitted by applicable law, it intends to procure the making of applications by the Company for the cancelation of the listing of the CryptoLogic Shares from the London Stock Exchange, the Toronto Stock Exchange and Nasdaq, and the filing of the Form 15F with the SEC to request that its reporting obligations under the US Exchange Act are terminated. On April 2, 2012, the Company announced that it intended to apply for the cancelation of the listing of the CryptoLogic Shares from the London Stock Exchange, and on May 3, 2012, the Financial Services Authority announced that the listing of the CryptoLogic Shares on the London Stock Exchange had been canceled.
Litigation
In February 2011, a brand licensor delivered to the Company a notice purporting to terminate the brand license agreement between the two companies, claiming that the Company had breached such agreement. In May 2011, the brand licensor reaffirmed its position that the brand license agreement is terminated. The Company believes there is no breach that warrants termination of the agreement. 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 seeking monetary damages for the alleged breach of the agreement and a declaration that the agreement has been terminated. This litigation is ongoing.
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 ordinary shares trade on the Toronto Stock Exchange (CRY, CXY) and the NASDAQ Global Select Market (CRYP).
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, 2011 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 US dollars)
(Unaudited)
March 31, December 31,
2012 2011
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ASSETS
Deferred tax assets $ 921 $ 961
Property, plant and equipment 1,589 1,759
Intangible assets 1,685 1,759
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Total non-current assets 4,195 4,479
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Cash and cash equivalents 16,717 16,570
Security deposits 639 619
User funds held on deposit 2,523 2,655
Trade and other receivables 3,701 4,788
Current tax assets 293 364
Prepayments 5,911 6,327
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Total current assets 29,784 31,323
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Total assets $ 33,979 $ 35,802
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EQUITY
Share capital $ 35,011 $ 34,246
Share-based payment reserve 5,702 5,606
Retained earnings (18,945) (16,821)
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Total equity attributable to shareholders
of CryptoLogic 21,768 23,031
Non-controlling interest 668 1,507
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Total equity 22,436 24,538
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LIABILITIES
Deferred tax liabilities 6 3
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Total non-current liabilities 6 3
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Trade payables and accrued liabilities 4,857 4,642
Provisions 2,779 3,098
Income taxes payable 1,378 866
User funds held on deposit 2,523 2,655
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Total current liabilities 11,537 11,261
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Total liabilities 11,543 11,264
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Total equity and liabilities $ 33,979 $ 35,802
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CRYPTOLOGIC LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(In thousands of US dollars, except per share data)
(Unaudited)
For the three months
ended March 31,
2012 2011
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Total revenue $ 5,323 $ 6,016
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Expenses
Operating 4,991 4,688
General and administrative 2,237 1,396
Depreciation 189 228
Amortization of intangible assets 118 181
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7,535 6,493
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Results from operating activities (2,212) (477)
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Finance income 131 39
Finance costs (10) (10)
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Net finance income/(costs) 121 29
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Profit/(loss) before income taxes (2,091) (448)
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Income tax expense/(credit) 118 180
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Profit/(loss) and total comprehensive income/(loss)
for the period $ (2,209) $ (628)
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Profit/(loss) and total comprehensive income/(loss)
attributable to:
Shareholders of CryptoLogic (2,124) (587)
Non-controlling interests (85) (41)
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Profit/(loss) and total comprehensive income/(loss)
for the period $ (2,209) $ (628)
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Earnings/(loss) per share
Basic earnings/(loss) per share $ (0.16) $ (0.05)
Diluted earnings/(loss) per share $ (0.16) $ (0.05)
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CRYPTOLOGIC LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands of US dollars)
(Unaudited)
Attributable to shareholders of CryptoLogic
Share-
based Non-
Share payment Retained controlling Total
capital reserve earnings Total interest equity
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Balance,
January 1,
2011 $ 34,129 $ 5,564 $ (22,878) $ 16,815 $ 1,226 $ 18,041
Total
comprehensive
income/(loss)
for the period
Profit or
loss - - (587) (587) (41) (628)
Transactions
with owners
recorded
directly in
equity
Shares
exchanged 6 - - 6 (6) -
Share-based
payments - 32 - 32 - 32
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Balance, March
31, 2011 $ 34,135 $ 5,596 $ (23,465) $ 16,266 $ 1,179 $ 17,445
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Balance,
December 31,
2011 $ 34,246 $ 5,606 $ (16,821) $ 23,031 $ 1,507 $ 24,538
Total
comprehensive
income/(loss)
for the period
Profit or
loss - - (2,124) (2,124) (85) (2,209)
Transactions
with owners
recorded
directly in
equity
Shares
exchanged 754 - - 754 (754) -
Share-based
payments - 96 - 96 - 96
Issue of
ordinary
shares in
relation to
exercised
employee
share
options 11 - - 11 - 11
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Balance, March
31, 2012 $ 35,011 $ 5,702 $ (18,945) $ 21,768 $ 668 $ 22,436
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CRYPTOLOGIC LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US dollars)
(Unaudited)
For the three months
ended March 31,
2012 2011
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Cash flows from/(used in):
Operating activities:
Profit/(loss) for the period $ (2,209) $ (628)
Adjustments for:
Depreciation 189 228
Amortization of intangible assets 118 181
Deferred tax 43 41
Interest received (13) (8)
Unrealized foreign exchange difference on cash
and cash equivalents (207) (298)
Share-based payments 96 32
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(1,983) (452)
Change in operating assets and liabilities:
Change in trade and other receivables 1,087 52
Change in prepayments 416 454
Change in trade payables and accrued
liabilities 215 (947)
Change in provisions (319) 1,007
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Cash from/(used in) operating activities (584) 114
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Change in income taxes receivable/(payable) 583 3,867
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Net cash from/(used in) operating activities (1) 3,981
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Investing activities:
Acquisition of property, plant and equipment (19) (54)
Acquisition of intangible assets (44) (9)
Interest received 13 8
Decrease/(increase) in security deposits (20) (296)
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Net cash from/(used in) investing activities (70) (351)
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Financing activities:
Issuance of shares in relation with
exercised employee share options 11 -
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Net cash from/(used in) financing activities 11 -
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Net increase/(decrease) in cash and cash
equivalents (60) 3,630
Cash and cash equivalents, beginning of period 16,570 10,584
Unrealized foreign exchange difference on cash and
cash equivalents 207 298
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Cash and cash equivalents, end of period $ 16,717 $ 14,512
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Contacts:
CryptoLogic Limited
David Baazov
CEO
+1 514 744 3122
CryptoLogic Limited
Daniel Sebag
CFO
+1 514 744 3122
www.cryptologic.com
Luther Pendragon
Neil Thapar
+44 207 618 9100
Luther Pendragon
Alexis Gore
+44 207 618 9100
