Business little beter at online gambling software company

Investors in the veteran online gambling software developer Cryptologic will have been heartened by a small improvement in performance reported in the embattled company’s Q2-2011 results, which were released this week.
Highlights of the quarter to June 30 2011 included:
* Total revenue increased over the previous quarter by a million dollars to $7.0 million (Q1 2011: $6.0 million)
* Total expenses held at $6.5 million (Q1 2011: $6.5 million)
* Income before tax of $0.5 million, and improvement over the previous quarter (Q1 2011: $0.4 million loss)
* Millionaires Club jackpot win of $4.2 million paid in June 2011
* Cash on hand of $12.0 million down from the first quarter (Q1 2011: $14.5 million)
Management said that the board of directors is encouraged by the performance in the quarter and continues to focus on driving revenues further while managing costs tightly to enhance shareholder value.
Revenue in the quarter benefited from a reduction of $800 000 in liabilities previously provided against revenue through the resolution of a dispute with a games supplier.
Revenue from online casino licensees increased to $5.7 million in Q2 2011 (Q1 2011: $5.2 million), reflecting a higher contribution from a key licensee and $300 000 related to the above games supply dispute resolution.
Branded Games revenue rose to $2.1 million in Q2 2011 (Q1 2011: $1.5 million). 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.
Online poker and other revenue declined from the previous quarter, dropping to $200 000 in Q2 2011 (Q1 2011: $400 000).
Operating expenses decreased to $4.5 million in Q2 2011 (Q1 2011: $4.7 million).
General and Administrative expenses rose to $1.6 million in Q2 2011 (Q1 2011: $1.4 million).
Income before tax for the quarter amounted to $500 000 compared with a loss before tax of $400 000 in the first quarter.
Cash and cash equivalents as at June 30, 2011 amounted to $12.0 million (March 31, 2011: $14.5 million). The decrease in cash during Q2 2011 of $2.5 million was primarily due to a $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 $1.8 million. Cryptologic continues to be debt-free, however.
In June this year the company signed games supply agreement “with the significant supplier of games, “which enables the two parties to continue with their commercial relationship”?
However, Cryptologic remains in dispute with an unnamed brand licensor, and has filed suit 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.
Management is continuing its strategic review of the company. and has additionally appointed Deloitte Corporate Finance as financial advisor.

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