RNS Number:7443R
CryptoLogic Inc.
06 November 2003



NEWS FOR IMMEDIATE RELEASE

Symbol: TSX: CRY; NASDAQ: CRYP; LSE: CRP


ALL DOLLAR AMOUNTS IN US$


               CRYPTOLOGIC DELIVERS STRONG PERFORMANCE IN Q3 2003

                      Revenue rose 37%, net profit up 75%;

Strong quarterly growth evidence of focused international and product expansion
                                    strategy


November 6, 2003 (London, UK) - CryptoLogic Inc., a leading software developer
to the Internet gaming and e-commerce industries, announced today its financial
results for the third quarter and nine months ended September 30, 2003.  The
strong results highlight the continuing growth and strength of the company's
business.

"CryptoLogic continues to outperform in 2003, driven by our focused strategy of
international diversification and product expansion," said Lewis Rose,
CryptoLogic's President and CEO. "Third quarter revenue rose more than 35% to
$10.9 million and net income increased by 75% to $2.3 million, even in
seasonally the softest period of the year. CryptoLogic also achieved two
important milestones:  the listing of our shares on the London Stock Exchange
and the declaration of our first ever quarterly dividend - signs of our
financial strength."

CryptoLogic's third quarter achievements included:

*  Earnings growth to $0.18 per diluted share, ahead of analysts' consensus of 
   $0.15 and the 2002 third quarter of $0.11;

*  Commenced trading on the London Stock Exchange's Main Market, in line with 
   the company's global strategy and commitment to the highest regulatory
   standards and transparency in the industry;

*  Declared a quarterly dividend of $0.03 per share - the first in CryptoLogic's 
   history;

*  Renewed and expanded an exclusive agreement until 2008 with a major existing 
   UK licensee, Littlewoods Gaming, for both online casino and poker solutions 
   developed by CryptoLogic;

*  Continued global diversification, with licensees' revenue from international 
   markets at approximately 55% year-to-date, up from about 40% in fiscal 2002; 
   and

*  New poker and bingo products continued to contribute over 10% of total 
   revenue, providing promising upside opportunities in these large, emerging 
   game segments.


Strong Q3 Growth (All financial figures are expressed in U.S. dollars)

For the third quarter ended September 30, 2003, CryptoLogic recorded a 37%
increase in revenue to $10.9 million, compared with $8.0 million in last year's
third quarter.  EBITDA for the quarter rose 81% to $2.9 million, compared with
$1.6 million in 2002.  This translated into an EBITDA margin of 26% as a
percentage of revenue, up from 20% last year. Net income rose 75% to $2.3
million or $0.18 per diluted share, compared with $1.3 million or $0.11 per
diluted share last year.

The strong gains in the third quarter were attributed to existing customers'
stabilizing and growing businesses fuelled by higher player deposits and wagers,
enhanced payment options, and increasing contribution from new licensees.  As
well, growth continued from international players, and incremental revenue from
new poker and bingo products.  Improved EBITDA margins for the third quarter
reflected CryptoLogic's scalable expense structure, while the company continued
to invest in key areas of its business to drive sustainable, long-term growth.

Revenue for the nine months ended September 30, 2003 rose 20% to $30.7 million,
compared with $25.6 million in the same 2002 period.  EBITDA for the first nine
months in 2003 increased 29% to $8.0 million, compared with $6.2 million before
the non-recurring special charge last year.  This translated into improved
EBITDA margin of 26%, up from 24% in 2002. Net income improved 21% to $6.7
million or $0.54 per diluted share, versus $5.5 million ($0.43 per diluted
share) before the special charge in 2002.  After the special charge, the company
had a net loss of $4.3 million or $0.35 per diluted share in 2002.


Balance Sheet Strength

CryptoLogic continued its track record of consistent operating profits and
healthy cash flow.  At September 30, 2003, CryptoLogic had no debt, and a cash
position of $59.4 million (Q2 2003: $51.6 million) or $4.76 per diluted share
(Q2 2003: $4.19) (comprising cash and cash equivalents, short term investments,
and including restricted cash of $5.6 million). This cash amount excluded $7.8
million in user deposits, which are funds held on behalf of licensees' players.
User funds on deposit have been separated on the balance sheet starting this
quarter to provide improved disclosure of the company's available working
capital.

The company's working capital was $41.9 million or $3.36 per diluted share.
Operating cash flow for the third quarter of 2003 was $9.9 million, up from $2.2
million in 2002, due to increased cash generated from earnings, lower restricted
cash requirements, and other changes in working capital.


Quarterly Dividend

In September, CryptoLogic's Board of Directors adopted a quarterly dividend
policy.  The Board approved the first dividend of $0.03 per share, payable on
November 24, 2003 to shareholders of record as at November 17, 2003.
CryptoLogic is one of the few software companies with a regular dividend policy.


Global Expansion

CryptoLogic's strategy of global expansion continued to be reflected in
licensees' international revenue at approximately 55% of total revenue
year-to-date, up from about 40% in 2002.  The company continues to benefit from
the favourable contribution and growth of existing and new customers focused on
overseas markets.

In September of 2003, CryptoLogic, through its licensing subsidiary, WagerLogic,
secured a long-term, expanded agreement with a current customer, Littlewoods
Gaming, a major household name in the UK.  Littlewoods committed to a five-year
exclusive contract, conditional upon performance targets after the second year,
to continue to use WagerLogic's online casino offering, and added WagerLogic's
proven online poker solution, both until 2008.  Littlewoods presents exciting
potential for CryptoLogic in two significant growth areas - the burgeoning UK
market and the large poker opportunity.


London Stock Exchange Listing

The United Kingdom is emerging as the global center for regulated interactive
gaming.  CryptoLogic's new listing on London's Main Board further highlights its
considerable UK presence, particularly its local operations and prominent UK
customers, comprising William Hill plc, Littlewoods Gaming, The Ritz Club London
Online, and ukbetting plc.  The listing enhances the company's visibility and
profile in this high-growth region, and gives CryptoLogic access to a broader
shareholder base in a gaming-friendly jurisdiction.


Strategic Product Diversification

In an increasingly competitive and sophisticated global market, new game and
service introductions create marketing opportunities for licensees, enhance
player loyalty, and drive incremental revenue.  One year since launch, poker and
bingo contributes more than 10% of CryptoLogic's revenue.  Licensees are
experiencing growth in their online businesses driven by these large, emerging
game segments that attract a strong community of loyal players.


Outlook

CryptoLogic continues to deliver on its strategic plan and achieve solid top-
and bottom-line performance.  The company's strong results in 2003 illustrate
the importance of investments in key areas of CryptoLogic's business.
CryptoLogic remains alert to further opportunities to increase shareholder
value.

Management forecasts that fourth quarter revenue will range from $11.0-$11.5
million, with net income of $2.3-$2.5 million or $0.18-$0.20 per diluted share.


2003 Third Quarter Analyst Call

A conference call is scheduled for 8:30 a.m. (EST) (1:30 p.m. GMT) on Thursday,
November 6, 2003.  Interested parties should call either 416-695-9753,
1-888-789-0150 (North America) or international toll free number at (Country
Code) 800-4222-8835.  Instant replay will be available until Thursday, November
13, 2003 by calling 416-695-5275 or 1-866-518-1010.


About CryptoLogic (www.cryptologic.com)

Focused on integrity and innovation, CryptoLogic Inc. is a leading software
development company serving the global Internet gaming market. The company's
proprietary technologies enable secure, high-speed financial transactions over
the Internet. CryptoLogic continues to develop state-of-the-art Internet
software applications for both the electronic commerce and Internet gaming
industries. WagerLogic Ltd., a wholly-owned subsidiary of CryptoLogic, is
responsible for the licensing of its gaming software and services to customers
worldwide.  For more information on WagerLogic, visit www.wagerlogic.com.

CryptoLogic's common shares trade on the Toronto Stock Exchange (symbol: CRY),
on the Nasdaq National Market (symbol: CRYP), and on the London Stock Exchange
(symbol: CRP).



For more information, please contact:
CryptoLogic, (416) 545-1455                            Argyle Rowland,  (416) 968-7311 (North American media)
Nancy Chan-Palmateer, Director of Communications             Daniel Tisch, ext. 223/ dtisch@argylerowland.com
Jim Ryan, Chief Financial Officer                          Melissa Chang, ext. 239/ melissa@argylerowland.com

                                                              Financial Dynamics, + 44 20 7831 3113(UK media)
                                                                          Juliet Clarke, juliet.clarke@fd.com
                                                                        Edward Bridges, edward.bridges@fd.com


CRYPTOLOGIC FORWARD LOOKING STATEMENT DISCLAIMER:

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.  Investors are cautioned that all forward-looking
statements involve risks and uncertainties including, without limitation, risks
associated with the Company's financial condition and prospects, 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, risks associated with competition and other risks
detailed in the Company's filings with securities regulatory authorities. These
risks may cause results to differ materially from those projected in the
forward-looking statements.


                                CRYPTOLOGIC INC.
                          CONSOLIDATED BALANCE SHEETS
                         (In thousands of U.S. dollars)

                                                                                         As at              As at
                                                                                 September 30,       December 31,
                                                                                          2003               2002
                                                                                   (unaudited)          (audited)
ASSETS

Current assets:
     Cash and cash equivalents                                                         $40,788            $13,660
     Restricted cash                                                                     5,550             15,740
     Short term investments                                                             13,090             10,857
     Reserves with processors                                                              176                774
     Accounts receivable                                                                   198                887
     Prepaid expenses                                                                    1,219                916
     Income taxes recoverable                                                               --                583
                                                                                        61,021             43,417

User funds on deposit                                                                    7,816              3,829

Investments                                                                                 --                680
Capital assets                                                                           4,010              2,713
Intangible assets                                                                          147                226
Goodwill                                                                                 1,665              1,665
                                                                                       $74,659            $52,530

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable and accrued liabilities                                          $18,293             $7,605
     Income taxes payable                                                                  820                 --
                                                                                        19,113              7,605

User funds held on deposit                                                               7,816              3,829

                                                                                        26,929             11,434

Shareholders' equity:
     Capital stock                                                                      10,990             10,720
     Retained earnings                                                                  36,740             30,376
                                                                                        47,730             41,096
                                                                                       $74,659            $52,530



                                CRYPTOLOGIC INC.
                  CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                         (In thousands of U.S. dollars)
                                  (Unaudited)


                                                      For the three months              For the nine months
                                                       ended September 30,              ended September 30,
                                                     2003               2002            2003             2002

Retained earnings, beginning of period            $34,790            $27,318         $30,376          $52,369
Net income/(loss)                                   2,284              1,302           6,698          (4,320)
Excess of purchase price of
  treasury shares over stated value                    --              (308)              --         (19,737)
Registration costs                                  (334)                 --           (334)               --
Retained earnings, end of period                  $36,740            $28,312         $36,740          $28,312



                                CRYPTOLOGIC INC.
                       CONSOLIDATED STATEMENTS OF INCOME
          (In thousands of U.S. dollars, except per share information)
                                  (Unaudited)


                                                            For the three months         For the nine months
                                                             ended September 30,         ended September 30,
                                                              2003           2002         2003          2002

Revenue                                                    $10,944         $8,004      $30,671       $25,558
Expenses
     Software development and support                        6,617          4,879       18,543        14,581
     General and administrative                              1,374          1,434        3,865         4,401
     Finance                                                    74            105          259           358
     Amortization                                              442            303        1,059           718
                                                             8,507          6,721       23,726        20,058

Income from operations                                       2,437          1,283        6,945         5,500
Interest income                                                196            164          531           490

Income before undernoted                                     2,633          1,447        7,476         5,990

Special charge                                                  --             --           --      (10,506)

Income/(loss) before taxes                                   2,633          1,447        7,476       (4,516)
Income taxes                                                   349            145          778         (196)

Net income/(loss)                                           $2,284         $1,302       $6,698      $(4,320)

Earnings/(loss) per share
     Basic
          Before tax effected special charge                 $0.19          $0.11        $0.55         $0.45
          Net income/(loss)                                  $0.19          $0.11        $0.55       $(0.35)
     Diluted
          Before tax affected special charge                 $0.18          $0.11        $0.54         $0.43
          Net income/(loss)                                  $0.18          $0.11        $0.54       $(0.35)

Weighted average number of shares ('000s)
          Basic                                             12,256         12,317       12,233        12,274
          Diluted                                           12,696         12,338       12,491        13,019




                                CRYPTOLOGIC INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (In thousands of U.S. dollars)
                                  (Unaudited)

                                                                    For the three months      For the nine months
                                                                     ended September 30,      ended September 30,
                                                                      2003          2002        2003        2002
Cash provided by (used in):

Operating activities:
          Net income/(loss)                                         $2,284        $1,302      $6,698    $(4,320)
          Adjustments to reconcile income to
            cash provided by (used in) operating activities:
                     Amortization                                      442           303       1,059         718
                     Write-down of investments                          --            --          --       6,903
                     Gain on sale of investment                         --            --        (31)          --
          Changes in operating assets and liabilities:
                     Restricted cash                                 1,500       (1,200)      10,190       1,060
                     Reserves with processors                         (17)           678         598       (698)
                     Accounts receivable                             1,117           971         689        (52)
                     Prepaid expenses                                (261)           230       (303)       (208)
                     Income taxes                                      924          (45)       1,403       (277)
                     Accounts payable and accrued liabilities        3,952             5      10,688       2,912
                                                                     9,941         2,244      30,991       6,038

Financing activities:
          Issue of capital stock                                        53            --         270       2,402
          Registration costs                                         (334)            --       (334)          --
          Repurchase of common shares                                   --         (330)          --    (20,126)
                                                                     (281)         (330)        (64)    (17,724)

Investing activities:
          Additions to capital assets                                (344)          (43)     (2,269)       (740)
          Purchase of intangible assets                                (8)            --         (8)          --
          Short term investments                                  (13,090)            --     (2,233)          --
          Investments                                                   --            --          --     (5,933)
          Sale of investment                                            --            --         711       1,056
                                                                  (13,442)          (43)     (3,799)     (5,617)
Increase (decrease) in cash and cash equivalents                   (3,782)         1,871      27,128    (17,303)
Cash and cash equivalents, beginning of period                      44,570        20,385      13,660      39,559
Cash and cash equivalents, end of period                           $40,788       $22,256     $40,788     $22,256




                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            As at September 30, 2003

      (All figures are in U.S. dollars, except where otherwise indicated)
                                  (Unaudited)

These consolidated interim financial statements of CryptoLogic Inc. (the "
Company") have been prepared in accordance with Canadian generally accepted
accounting principles using the same accounting policies as were used for the
consolidated financial statements for the year ended December 31, 2002.  This
consolidated interim financial statements should be read in conjunction with the
audited consolidated financial statements for the year ended December 31, 2002,
as set out in the 2002 Annual Report.

1.                 Stock Option Plan

In accordance with the Canadian recommendations adopted in 2002, the Company
will continue its existing policy that no compensation cost is recorded on the
grant of stock options to employees.  Consideration paid by employees on the
exercise of stock options is recorded as share capital.  However, under the
Canadian standard, the Company is required to provide additional pro forma
disclosures for options granted to employees as if the fair value based
accounting method had been used to account for employee stock options.

The fair value of the options granted were made using the Black-Scholes option
pricing model using the following weighted assumptions:
                                                                      2003                   2002
Dividend yield                                                          1%                     0%
Risk-free rate                                                       2.75%                   2.0%
Expected volatility                                                  75.0%                 100.0%
Expected life of options in years                                      5.0                    5.0

Had compensation expense been determined based on the fair value of the employee
stock option awards at the grant dates in accordance with the new
recommendations, the Company's net income and earnings per share would have been
changed to the following pro-form amounts:

                                           Three months ending                         Nine months ending
                                              September 30,                               September 30,
                                                 2003                 2002                    2003                2002
                                       As                    As                    As                     As
                                 reported   Pro forma  Reported  Pro forma   reported    Pro forma  reported Pro forma
                                   ('000)      ('000)    ('000)     ('000)     ('000)       ('000)    ('000)    ('000)

Net income/(loss)                  $2,284      $2,039    $1,302     $1,164     $6,698       $6,041  $(4,320)  $(4,533)

Earnings/(loss) per share
     Basic                          $0.19       $0.17     $0.11      $0.09      $0.55        $0.49   $(0.35)   $(0.37)
     Diluted                        $0.18       $0.16     $0.11      $0.09      $0.54        $0.48   $(0.35)   $(0.37)



2.                 Capital Stock

Authorized:
Unlimited common shares


Issued:
                                      Common Shares                Series F Warrants             Total
                                      Issued    Stated Value         Issued    Stated Value     Stated Value

Balance, December 31, 2001            13,137          $8,448             30            $272           $8,720
Repurchase of shares                 (1,240)           (389)             --              --            (389)
Exercise of stock options                349           2,402             --              --            2,402
Balance, September 30, 2002           12,246         $10,461             30            $272          $10,733

Balance, December 31, 2002            12,206         $10,448             30            $272          $10,720
Share issue                               24             104             --              --              104
Exercise of stock options                 31             166             --              --              166
Balance, September 30, 2003           12,261         $10,718             30            $272          $10,990



3.                 Special Charge - 2002

During the second quarter of FY 2002, the Company took a one-time special charge
of $10.5 million ($9.9 million on an after tax basis).  This charge was
comprised of a write-down of investments that were deemed permanently impaired,
including the 100% write-down of the Company's investment in SCG Enterprises
Limited, a wholly owned subsidiary of Sports.com, as well as costs associated
with consolidation of the Company's players' support operations, executive
management reorganization, and estimated settlement and legal costs.


4.                 Comparative Figures

Certain of the prior years' figures have been reclassified for consistency with
the current presentation.  Cash related to user funds on deposit have been
segregated and reclassified as to User Funds on Deposit as a non-current asset.
The corresponding liability has been renamed User Funds Held on Deposit and
reclassified as a non-current liability. In addition, Canadian Goods and
Services Tax (GST) and European Value Added Tax (VAT) Recoverable have been
reclassified from Prepaid Expenses to Accounts Receivable.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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