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 fourth quarter
and full year ended December 31, 2011.
Full Year Highlights:
-- Total revenue rose to $27.3 million (2010: $26.0 million), the first
increase since 2006
-- Profit of $6.5 million, including tax credit of $2.7 million and profit
on sale of investment of $1.3 million, (2010: $21.6 million loss), the
first annual profit since 2007
-- Earnings per share amounted to $0.47 (2010: $1.56 loss per share)
-- Total expenses reduced by 48% to $24.8 million (2010: $47.3 million)
-- Cash increased by 57% to $16.6 million (2010: $10.6 million)
-- Signed licensing deals for CryptoLogic games with several operators,
including SkillOnNet, bwin and Loto Quebec
-- 212 branded games now live and producing revenue (2010: 170)
-- Instant Click, the Company's rapid-deployment games suite, delivered
first revenues after its launch by new licensees
Q4 2011 Highlights:
-- Profit increased to $5.8 million, including tax credit of $3.4 million
and profit on sale of investment of $1.3 million, (Q3 2011: $1.1 million
profit)
-- Total revenue was $7.0 million (Q3 2011: $7.2 million)
-- Total expenses $5.9 million (Q3 2011: $5.9 million)
David Gavagan, Chairman and Interim Chief Executive Officer,
said: "While trading conditions remained challenging throughout the
year, our strategy and restructuring and the commitment of our
people over the past 18 months have returned the business to profit
for the first time since 2007 and delivered the first annual
increase in revenues and cash for five years."
Overview
There was a significant turnaround for the Company in 2011
resulting from a continued focus on increasing revenues and
maintaining tight control over costs following the significant
restructuring programme initiated in August 2010.
The goals set out to stabilise the Company and return to revenue
growth and profitability were achieved last year. The breathing
space afforded by the restructuring allowed the Company to arrest
the decline in revenues, resulting in the Company reporting:
-- its first annual increase in revenues since 2006
-- its first annual profit and earnings per share since 2007
-- its first cash generation from operations since 2006
In February 2011, the Company appointed Deloitte Corporate
Finance to act as its independent financial adviser to assist it
with a strategic review encompassing a range of options available
to the Company, from continuing as an independent entity through to
the sale of part or all of its business, as well as to provide
advice with respect to any potential transaction. During 2011, in
connection with the strategic review, a number of parties contacted
or were contacted by Deloitte Corporate Finance. In February 2012,
a recommended cash offer from Amaya Gaming Group Inc. for the
entire issued and to be issued share capital of CryptoLogic was
announced at a price of $2.535 per share, a premium of
approximately 110% to the closing price of $1.21 per share on
NASDAQ on March 24, 2011, the day prior to the announcement of the
strategic review.
Operating and Financial Review
Total revenue increased 5% to $27.3 million for the year ended
December 31, 2011 (2010: $26.0 million). Total revenue in Q4 2011
was $7.0 million (Q3 2011: $7.2 million).
Profit was $6.5 million or $0.47 per share for the year ended
December 31, 2011 (2010: $21.6 million loss or $1.56 loss per
share). In Q4 2011, profit increased to $5.8 million (Q3 2011: $1.1
million).
Total expenses decreased 48% to $24.8 million for the year ended
December 31, 2011 (2010: $47.3 million). Total expenses in Q4 2011
were $5.9 million (Q3 2011: $5.9 million).
Hosted Casino
Revenue from Hosted Casino increased 7% to $23.4 million in 2011
(2010: $22.0 million), and includes an increase in jackpot revenue
of $1.4 million, including a revision of our estimate to discharge
future jackpot payouts of $0.9 million, and a reduction of $0.3
million in liabilities previously provided against Hosted Casino
revenue through the resolution of a dispute with a significant
supplier of games. In Q4 2011, revenue from this segment was $6.0
million (Q3 2011: $6.5 million).
Branded Games
Branded Games revenue increased 25% to $6.9 million in 2011
(2010: $5.5 million), accounting for approximately 25% of total
revenues (2010: 21%). In Q4 2011, revenue from this segment
increased to $1.9 million (Q3 2011: $1.4 million).
The increase in Branded Games revenue is primarily due to the
increased number of revenue producing games through an increased
number of licensees and games per licensee. During the year, the
Company's revenue producing games increased from 170 to 212 games.
There was also a reduction of $0.5 million in liabilities
previously provided against Branded Games revenue through the
resolution of a dispute with a significant supplier of games,
partially offset by a lower contribution from a major licensee.
In June a $4.2 million jackpot win was paid on Millionaires'
Club, the Company's popular online slot game, to a player on
SkyVegas.com, a leading CryptoLogic licensee.
Poker and Other
Poker and Other revenue amounted $1.2 million in 2011 (2010:
$2.8 million).
Expenses
Operating expense decreased 42% to $17.6 million in 2011 (2010:
$30.1 million). In Q4 2011, operating expenses were $4.3 million
(Q3 2011: $4.1 million).
General and administrative expenses decreased 24% to $5.7
million in 2011 (2010: $7.6 million). In Q4 2011, general and
administrative expenses were $1.3 million (Q3 2011: $1.5
million).
The reduction in annual operating and general administrative
expenses is primarily due to the Company's reorganization
plans.
Profit
Profit for the year was $6.5 million compared with a $21.6
million loss in 2010. The movement from loss to profit was as a
result of increased revenue and profit on derecognition of
available-for-sale assets and decreased operating, general and
administrative, depreciation and amortization, impairment of
intangible assets, reorganization and income tax expenses. Included
within this movement is a profit on sale of an investment of $1.3
million, a revision of our estimate to discharge future jackpot
payouts of $0.9 million, a reduction of $0.8 million in liabilities
previously provided against revenue through the resolution of a
dispute with a significant supplier of games and a refund of $3.4
million of tax previously paid for potential tax liabilities.
Balance Sheet and Cash Flow
Cash and cash equivalents as at December 31, 2011 increased to
$16.6 million (September 30, 2011: $15.2 million) (December 31,
2010: $10.6 million). The increase in cash during 2011 of $6.0
million is primarily due to net cash flows from operating
activities and cash received from sale of investment.
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.
Subsequent Event
In January 2012, the Company announced that it had acquired, for
nominal consideration, the Maltese online gambling licenses for
InterCasino from OIGE, the Company's largest and longest-standing
Hosted Casino licensee, resulting in the Company becoming an online
casino owner and the majority of the Hosted Casino business
becoming a B2C business.
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-US 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
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands of US dollars)
December 31, December 31, January 1,
2011 2010 2010
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ASSETS
Deferred tax assets $ 961 $ 864 $ 1,549
Property, plant and equipment 1,759 2,585 2,826
Intangible assets 1,759 2,210 8,906
----------------------------------------------------------------------------
Total non-current assets 4,479 5,659 13,281
----------------------------------------------------------------------------
Cash and cash equivalents 16,570 10,584 23,447
Security deposits 619 515 250
User funds held on deposit 2,655 6,069 7,929
Trade and other receivables 4,788 5,046 7,972
Current tax assets 364 730 681
Prepayments 6,327 8,942 9,426
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Total current assets 31,323 31,886 49,705
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Total assets $ 35,802 $ 37,545 $ 62,986
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EQUITY
Share capital $ 34,246 $ 34,129 $ 33,916
Share-based payment reserve 5,606 5,564 5,646
Retained earnings (16,821) (22,878) (2,766)
----------------------------------------------------------------------------
Total equity attributable to
shareholders of CryptoLogic 23,031 16,815 36,796
Non-controlling interest 1,507 1,226 2,948
----------------------------------------------------------------------------
Total equity 24,538 18,041 39,744
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LIABILITIES
Deferred tax liabilities 3 16 -
----------------------------------------------------------------------------
Total non-current liabilities 3 16 -
----------------------------------------------------------------------------
Trade payables and accrued
liabilities 4,642 7,707 10,136
Provisions 3,098 5,353 3,020
Income taxes payable 866 359 2,157
User funds held on deposit 2,655 6,069 7,929
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Total current liabilities 11,261 19,488 23,242
----------------------------------------------------------------------------
Total liabilities 11,264 19,504 23,242
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Total equity and liabilities $ 35,802 $ 37,545 $ 62,986
----------------------------------------------------------------------------
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CRYPTOLOGIC LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(In thousands of US dollars, except per share data)
For the three months For the year
ended December 31, ended December 31,
2011 2010 2011 2010
----------------------------------------------------------------------------
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Total revenue $ 7,040 $ 5,513 $ 27,253 $ 25,988
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Expenses
Operating 4,264 4,851 17,570 30,130
General and administrative 1,264 1,091 5,739 7,561
Depreciation 332 415 897 1,042
Amortization of intangible
assets - - 597 1,330
Impairment of intangible
assets - (295) - 5,329
Reorganization - 27 - 1,935
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5,860 6,089 24,803 47,327
----------------------------------------------------------------------------
Results from operating
activities 1,180 (576) 2,450 (21,339)
----------------------------------------------------------------------------
Finance income 159 7 194 255
Finance costs (157) (211) (145) (65)
----------------------------------------------------------------------------
Net finance income/(costs) 2 (204) 49 190
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Profit on derecognition of
available-for-sale assets 1,250 185 1,250 185
----------------------------------------------------------------------------
Profit/(loss) before income
taxes 2,432 (595) 3,749 (20,964)
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Income tax expense/(credit) (3,358) 277 (2,706) 657
----------------------------------------------------------------------------
Profit/(loss) and total
comprehensive income/(loss)
for the period $ 5,790 $ (872) $ 6,455 $(21,621)
----------------------------------------------------------------------------
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Profit/(loss) and total comprehensive income/(loss) attributable to:
Shareholders of CryptoLogic 5,431 (815) 6,057 (20,112)
Non-controlling interests 359 (57) 398 (1,509)
----------------------------------------------------------------------------
Profit/(loss) and total
comprehensive income/(loss)
for the period $ 5,790 $ (872) $ 6,455 $(21,621)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings/(loss) per share
Basic earnings/(loss) per
share $ 0.42 $ (0.06) $ 0.47 $ (1.56)
Diluted earnings/(loss) per
share $ 0.42 $ (0.06) $ 0.47 $ (1.56)
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CRYPTOLOGIC LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands of US dollars)
Years ended December 31, 2011 and 2010
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, 2010 $ 33,916 $5,646 $ (2,766) $ 36,796 $ 2,948 $ 39,744
Total
comprehensive
income/(loss)
for the period
Profit or loss - - (20,112) (20,112) (1,509) (21,621)
Transactions with
owners recorded
directly in
equity
Shares
exchanged 213 - - 213 (213) -
Share-based
payments - (82) - (82) - (82)
----------------------------------------------------------------------------
Balance,
December 31,
2010 $ 34,129 $5,564 $ (22,878) $ 16,815 $ 1,226 $ 18,041
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total
comprehensive
income/(loss)
for the period
Profit or loss - - 6,057 6,057 398 6,455
Transactions with
owners recorded
directly in
equity
Shares
exchanged 117 - - 117 (117) -
Share-based
payments - 42 - 42 - 42
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Balance,
December 31,
2011 $ 34,246 $5,606 $ (16,821) $ 23,031 $ 1,507 $ 24,538
----------------------------------------------------------------------------
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CRYPTOLOGIC LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US dollars)
Years ended December 31, 2011 and 2010
For the three months For the year
ended December 31, ended December 31,
2011 2010 2011 2010
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Cash flows from/(used in):
Operating activities:
Profit/(loss) for the period $ 5,789 $ (872) $ 6,455 $ (21,621)
Adjustments for:
Depreciation 220 96 897 1,042
Amortization of intangible
assets 113 319 597 1,330
Impairment of intangible
assets - (295) - 5,329
Deferred tax (242) 464 (110) 684
Cash received from
derecognition of available-
for-sale assets (1,250) (185) (1,250) (185)
Interest received (159) (7) (194) (80)
Unrealized foreign exchange
difference on cash and cash
equivalents 158 53 291 (26)
Share-based payments 22 7 42 (82)
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4,651 (420) 6,728 (13,609)
Change in operating assets and
liabilities:
Change in trade and other
receivables (1,166) 281 258 2,926
Change in prepayments 756 234 2,615 484
Change in trade payables and
accrued liabilities (427) (1,999) (3,065) (2,429)
Change in provisions (111) 1,370 (2,255) 2,333
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Cash from/(used in) operating
activities 3,703 (534) 4,281 (10,295)
----------------------------------------------------------------------------
Change in income taxes
receivable/payable (3,483) (374) 873 (1,550)
----------------------------------------------------------------------------
Net cash from/(used in) operating
activities 220 (908) 5,154 (11,845)
----------------------------------------------------------------------------
Investing activities:
Acquisition of property,
plant and equipment - (219) (74) (822)
Disposal of property, plant
and equipment - - 3 21
Acquisition of intangible
assets (139) (224) (146) (243)
Cash received from
derecognition of available-
for-sale assets 1,250 185 1,250 185
Interest received 159 7 194 80
Decrease/(increase) in
security deposits 22 7 (104) (265)
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Net cash from/(used in) investing
activities 1,292 (244) 1,123 (1,044)
----------------------------------------------------------------------------
Net increase/(decrease) in cash
and cash equivalents 1,512 (1,152) 6,277 (12,889)
Cash and cash equivalents,
beginning of period 15,216 11,789 10,584 23,447
Unrealized foreign exchange
difference on cash and cash
equivalents (158) (53) (291) 26
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Cash and cash equivalents, end of
period $ 16,570 $ 10,584 $ 16,570 $ 10,584
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Contacts: CryptoLogic Limited David Gavagan Chairman and Interim
CEO +353 1 234 0400 CryptoLogic Limited Huw Spiers CFO +353 1 234
0400 www.cryptologic.com Luther Pendragon Neil Thapar +44 207 618
9100 Luther Pendragon Alexis Gore +44 207 618 9100
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