CryptoLogic announces revenue growth and reports profit

Total expenses for the period held at us$ 6.5 million and income before tax of us$ 0.5 million, compared to the first quarter, with us$ 0.4 million loss. Besides, it had a Millionaires Club jackpot win of us$ 4.2 million paid in June 2011, and cash of us$ 12
 million (compared to us$ 14.5 million in the first quarter).

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.

Total revenue after amortization of royalties and games in the second quarter increased to us$ 7 million (while the previous period was us$ 6 million). Revenue in the quarter benefited from a reduction of us$ 0.8 million in liabilities previously provided against revenue through the resolution of a dispute with a significant supplier of games.

Revenue from Hosted Casino increased to us$ 5.7 million in the second quarter 2011, reflecting a higher contribution from a key licensee and us$ 0.3 million related to the above resolution.

Revenue from Branded Games rose to us$ 2.1 million, including us$ 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 revenue amounted to us$ 0.2 million in second quarter 2011. Besides, operating expenses decreased to us$ 4.5 million and General and Administrative expenses rose to us$ 1.6 million in the first quarter. Income before tax for the quarter amounted to us$ 0.5 million compared with a loss before tax of $0.4 million in the first quarter.

Cash and cash equivalents as at June 30, amounted to us$ 12 million. The decrease in cash during the period, of us$ 2.5 million is primarily due to a us$ 3 million decrease in jackpot provisions, following a significant jackpot win during the quarter, and a decrease in other trade payables and accrued liabilities of us$ 1.8 million, partially offset by cash generated from operations before changes in non-cash operating items of us$ 0.7 million and decreased prepayments of us$ 1 million. The company continues to be debt-free.

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, the firm remains in dispute with a brand licensor. Last June, it 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.

On March 25, 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.