Amaya Gaming reports $1.92 million full year loss

The Montreal-based Amaya Gaming Group, which is currently making a bid to take over veteran online gambling software provider Cryptologic has posted its Q4 and Full Year results, showing commendable increases in revenues, but a significant Cdn $ 1.92 million loss over the Full Year.

Quarter 4 2011 revenues soared to Cdn $ 9.49 million (Q4-2010: 2.096 million) whilst net earnings were remarkably improved at Cdn $ 2.88 million compared with 2010 quarter four’s loss of -Cdn $ 591,401.

However, over the full year 2011 the gaming firm posted a loss of Cdn $ 1.92 million against 2010’s Cdn $ 82,995.

Highlights of the year’s activities were identified by management as:

• an agreement to provide virtual horse racing systems to Société des Casinos du Québec;

• an exclusive 20-year contract with the National Lottery of Moldova to provide a full range of gaming solutions including lottery systems, video lottery terminals, sports betting, and digital gaming;

• an exclusive 10-year contract with the Government of the Republic of Armenia to implement a national lottery program and to provide its central reporting and integrity software solutions;

• the selection by Loto-Québec subsidiary Société du Jeu Virtuel du Québec (SJVQ) to provide content for its gaming website, Espace-jeux.

• the successful deployment of several recurring-revenue gaming initiatives, including: Kwachu 6/48, a Short Message Service (“SMS”)-based lottery in the Republic of Kenya; Betkenya.com, the official online gaming website of the Republic of Kenya; Yoola Obukadde, or “Win Millions,” an SMS game in Uganda; and 1,200 additional Mosino hospitality entertainment systems deployed during the year.

• On July 14, 2011, Amaya completed the acquisition of Chartwell Technology Inc. for consideration totalling Cdn $ 22.7 million. The Chartwell business was a significant contributor to revenue growth in the third and fourth quarters.

• Amaya secured a licence to operate online gaming in the Dominican Republic, offering a full range of online games.

• New gaming licenses were obtained in Uganda and Kenya, along with licenses in Malta, Alderney, Curacao, Gibraltar, Isle of Man and United Kingdom.

• The company has agreed in principle on the terms of an all-cash offer to acquire Cryptologic Limited. The offer remains open for acceptance until March 28, 2012.

“Amaya capped a breakthrough year with an outstanding fourth quarter,” said David Baazov, president and chief executive officer of Amaya Gaming Group.

“We tripled revenues in 2011 as contract wins turned into active deployments. This was the first year in which we gained real traction in the government solutions vertical. And in the hospitality vertical, we deployed a significant number of Mosino units which will strengthen the recurring revenue stream.

“Looking ahead, we see additional opportunities in the public sector, as more governments – including several in North America – are considering the expansion of regulated gaming activities in their jurisdictions. Even on the strength of the existing contracts we have already deployed or are in the process of implementing, we are very well positioned for continued rapid growth in 2012.”

Financial Results

Amaya generated total revenue of Cdn $ 18.38 million in fiscal 2011, an increase of Cdn $ 12.33 million or 204 percent compared to Cdn $ 6.05 million of revenues in 2010. The revenue growth was primarily attributable to the Corporation’s sales of its proprietary Mosino hospitality entertainment system, the inclusion of Chartwell’s software licensing revenue in the second half of 2011, and SMS sales in the Republic of Kenya.

Amaya’s revenue in the fourth quarter of 2011 was Cdn $ 9.49 million. This represented year-over-year growth of 353 percent from revenue of Cdn $ 2.10 million in the fourth quarter of 2010.

Gross profit was Cdn $ 17.02 million in fiscal 2011, representing 93 percent of revenues, compared to Cdn $ 4.73 million or 78 percent of revenues in 2010. The increase in gross profit percentage was due primarily to a reduction in hardware costs of the Mosino system, and the inclusion of Chartwell’s high-margin software licensing revenue.

However, marketing and administration expenses were significantly higher in 2011, eroding earnings.