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Probability plc ('the Company')

Final Results

Probability plc, the AIM quoted mobile phone gambling specialist, announces its audited results for the year ended 31 March 2009

Financial highlights

Net gaming revenue up 58% to £5m (2008 - £3.2m) 

Close to break-even for full year. (£61,000 pre-tax loss compared to 2008 loss of £1,045,000) *

Cash resources of £2.2m at 31 March 2009 (2008 - £2.5m).

New product development significantly increased during the year by over £500,000.

Operational highlights

Groundbreaking brand licencing deals concluded with Paramount Digital Entertainment ('Grease', 'The Italian Job'), Hasbro ('Connect Four', 'Battleship', 'Trivial Pursuit'), FremantleMedia ('The X-Factor', 'Play Your Cards Right')  

Successful development of new gaming platforms for mobile five-reel, multi-line and feature slots, and for person-to-person gaming, including Poker, now supported on over 6,000 types of mobile phone.

Business-to-business distribution deal with mFuse, a provider of mobile sports betting software to some of Europe's leading bookmakers, giving access to their entire customer base for white-label services.

Over 243,000 new customers registered to the Company's LadyLuck's mobile gaming brand.

Pre-installation deal with the Three mobile network for hard coded links on two million new phones to the Company's mobile services. 

* excluding share option charges of £92,000 (2008 - £70,000)

Chairman's Statement 

This has been another year of excellent progress for Probability despite the pressures from the wider economy. I am pleased to be able to be able to report that Probability has increased revenues, and narrowed losses, significantly. Through our trading growth and our continued investment in our platform and product, we are consolidating our technological and commercial head start in the emergent field of mobile gaming. The final result of near break-even for the year is fully in line with management expectations.

The basis of our strength as a Company is our absolute focus on one area of gaming technology and services, and the people who use it, in a regulated environment. This depth of knowledge and expertise helps us not only as a direct to consumer operator in attracting and retaining customers, but also makes us an increasingly attractive partner for on-line and off-line companies wishing to benefit from our mobile expertise and range of content through a business-to-business offering.

We have maintained a disciplined approach to cost and cash management, ending the year with a similar amount of cash as we began it. Surpluses from the growth this year have been reinvested into our capacity to develop new and exciting products, as well as the brand licenses we have pursued which have proven powerful tools for recruiting and retaining customers. As well as new games, we have also invested in our back-office systems for managing customer relationships and in preparing for the many opportunities now being lined up for our business-to-business services. 

We remain committed to, and confident of, our direct-to-consumer strategy. This side of our business provided most of our income, offering mobile only gaming services distributed primarily to customers already surfing the mobile internet or downloading other types of games from their network operators. 

Having established a foothold in the business-to-business market over the past year, gaining experience by working with Rank Group plc and News International for example, we also believe that there is considerable opportunity now to scale up this side of our business, without losing focus on our direct to consumer offering. More and more entities around the world are expressing a real interest in exploring mobile as a delivery channel for their services and we have invested in developing those aspects of our platform and service which partners such as these require. The deals which we have recently concluded with, for example, mFuse and Dragonfish (888) are part of a medium term strategy to build up our capabilities in this area and are very encouraging as a sign of things to come.

I wish to extend my personal gratitude to everyone in the team at Probability for their continued loyalty and hard work, and look forward to working closely with them all as we drive this business forward to the enormous success which we all believe lies ahead of us. 

Graham Parr

Chairman

27 July 2009

Business Review

The 58% increase in revenues this year bringing us close to break even, is an excellent result. This, along with the continued development of our service and offering, positions Probability well for future growth as both a direct-to-consumer and business-to-business specialist in all types of regulated mobile cash gaming. 

A big contributor to that growth this year has been on widening our portfolio of mobile games, particularly with branded content offering mass consumer appeal. 'Grease' slots - themed on the classic movie - has been a huge and instant success, whilst 'Ramesses Riches', a five-reel slot developed through our alliance with NextGen Gaming of Australia, has attracted many players who have played the same game on various on-line casino sites. Below the surface, we have also upgraded our CRM capability to create what we call 'live CRM', a real-time promotional management system which can respond to changes in player behaviour in minutes with targeted offers and personalised bonuses. This is all achieved within a strong framework of risk management and social responsibility.

We fully intend to continue a high intensity of innovation as we pursue future growth in both the direct and business to business markets. Gaming and lottery consumers generally have an unquenchable thirst for new content. Whereas a few years ago it was enough for a gaming service to offer a handful of own-brand slots, alongside the standard casino fare, many on-line gaming operators now offer a choice exceeding 1,000 games and release schedules more punishing than a Hollywood studio. This is a trend which suits Probability very well. Supplying this demand is at the heart of our growth and investment strategy - both in direct-to-consumer marketing and business-to-business.

The software platform which Probability has built, and continues to invest in, has two great strengths in this fast changing and unpredictable environment. First, it allows for very rapid development of a wide range of game formats with the highest quality standards and full regulatory compliance. Secondly, our whole service is now readily connected to other operating platforms, such as Orbis (a back-office system widely used by bookmakers) and the mFuse NOVO system. This means that any gaming operator which uses these platforms can add mobile content from Probability quickly and without major technical investment up-front.

There remains significant growth potential in both our direct to consumer and business to business markets. The coming year will see us expand direct to consumer marketing to new territories where the regulatory environment allows and the Company is actively investigating the potential for additional operating licences in the EU and more widely. The deals which we have concluded now with mFuse and Dragonfish/888 are key milestones in the development of this business-to-business strategy and we hope to be able to expand this offering even faster in the coming year.

None of this would, of course, be possible without the hard work and creativity of everyone working in and with Probability - as well as the continued support and involvement of our investors and shareholders. I hope we continue to retain that support for, as impressive as the performance to date may be, this is only just the beginning.

Charles Cohen

Chief Executive

27 July 2009

 

Consolidated income statement for the year ended 31 March 2009

	Note	2009 £'000	2008 £'000
Continuing operations
Net gaming revenue		4,987	3,157
Operating expenses		(994)	(782)
Administrative expenses		(4,246)	(3,542)
Other administrative expenses		(4,154)	(3,472)
Share option charges		(92)	(70)
Operating loss		(253)	(1,167)
Finance income		100	52
Loss before tax		(153)	(1,115)
Tax expense	5	-	(195)
Loss after tax attributable to equity holders of the parent		(153)	(1,310)
Loss per share ( pence) Basic and diluted	4	(0.71)	(7.06)

                

Probability Plc

Consolidated statement of recognised income and expense for the year ended 31 March 2009

		2009 £'000	2008 £'000
Loss for the period		(153)	(1,310)
Total recognised income and expense for the year		(153)	(1,310)

Consolidated balance sheet at 31 March 2009

	Note	2009 £'000	2009 £'000	2008 £'000	2008 £'000
Assets Non-current assets
Property, plant and equipment		109		118
Total non-current assets			109		118
Current assets
Trade and other receivables		782		537
Cash and cash equivalents		2,244		2,501
Total current assets			3,026		3,038
Total assets			3,135		3,156
Current liabilities
Trade and other payables		608		568
Provisions		238		238
Total current liabilities			846		806
Total liabilities			846		806
TOTAL NET ASSETS			2,289		2,350

Consolidated balance Sheet at 31 March 2009

Capital and reserves attributable to equity holders of the Company
Share capital	6	216		216
Share premium		5,240		5,240
Reverse acquisition reserve		1,380		1,380
Retained earnings		(4,547)		(4,486)
			2,289		2,350
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT			2,289		2,350

Consolidated cash flow statement for the year ended 31 March 2009

		2009 £'000	2009 £'000	2008 £'000	2008 £'000
Cash flows from operating activities
Loss before tax		(153)		(1,115)
Adjustments for:
Depreciation		50		43
Share option charge		92		70
Finance income		(100)		(52)
			(111)		(1,054)
Cash flows from operating activities before changes in working capital
(Increase) in trade and other receivables		(245)		(237)
Increase in trade and other payables		40		168
Increase in provisions		-		238
			(205)		169
Cash flow from operating activities			(316)		(885)
Cash flow from investing activities
Capital expenditure		(41)		(44)
Finance income		100		52
			59		8
Cash flow from financing activities
Issue of ordinary shares (net of share issue costs)		-		1,707
			-		1,707
(Decrease)/Increase in cash and cash equivalents			(257)		830
Cash and cash equivalents at the beginning of the year			2,501		1,671
Cash and cash equivalents at the end of the year			2,244		2,501

Probability Plc

Notes to the preliminary announcement for the year ended 31 March 2009

1 Statutory information 

Probability Plc is a Public Limited Company incorporated in the United Kingdom under the Companies Act 1985 (Registration No. 5830059). The Company's registered address is Staple Court, 11 Staple Inn Buildings, London, WC1V 7QH. The Company's ordinary shares are traded on the Alternative Investment Market (AIM).

2 Accounting policies

Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs), as adopted for use in the European Union, issued by the International Accounting Standards Board (IASB).

    

The preliminary financial information has been prepared using accounting policies set out in the Group's statutory accounts for the years ended 31 March 2009 and 2008. 

The financial information set out above does not constitute the Group's statutory accounts for the years ended 31 March 2009 or 2008. The statutory accounts for 2009 will be delivered to the Registrar of Companies in due course.

Net gaming revenue

Revenue is recognised to the extent that its probable economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is recognised in the accounting periods in which the transactions occur.

Revenue is recognised when a bet is placed by the player.

Revenue comprises net gaming revenue derived from mobile phone gambling operations. 

    

Net gaming revenue is defined as the difference between the amount of bets placed by the players less amounts won by players. It is stated after deduction of certain bonuses granted to players.

        

Commission that is derived from the Group's 'white label' operations (third party entities that use the Group's platform) and Poker is included within net gaming revenue.

3. Segmental analysis

    

The total net gaming revenue of the Group for the year has been wholly derived by the Group's Alderney subsidiary from its customers. The Group, therefore, has only one business and only one geographical segment.

4 Loss per share

	2009	2008
Loss attributable to ordinary shareholders ( £'000)	153	1,310
Weighted average number of shares (in thousands)	21,597	18,546
Basic and diluted loss per share (in pence)	0.71	7.06
There are no potentially dilutive shares in issue at either year end
The number of share options in issue at balance sheet date was 1,850,045 (2008- 1,904,000)

5 Tax expense

	2009	2008
	£'000	£'000
Current tax expense	-	-
	-	-
Deferred tax expense
Previously recognised deferred tax assets written off in the year	-	195
	-	195
Total tax charge	-	195

The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the UK applied to losses for the year are as follows:

	2009 £'000	2008 £'000
Loss on ordinary activities before tax	(153)	(1,310)
Expected tax charge based on the standard rate of  corporation tax in the UK of 28% ( 2008-30%)	(43)	(393)
Expenses not deductible for tax purposes	30	30
Previously recognised deferred tax asset written off in the year	-	195
Tax Losses carried forward to future periods	4	354
Capital allowances in excess of depreciation	9	9
Total tax expense	-	195

A deferred tax asset of approximately £1,544,000 (2008 £ 1,540,000 ) has not been recognised on losses available for carry forward as the recoverability of any asset is dependant upon sufficient profits being achieved in future years to utilise this asset. The timings of such profits are uncertain.

6. Share capital

	Authorised
	2009	2009	2008	2008
	Number	£'000	Number	£'000
Ordinary shares of 1p each
At end of the year	100,000,000	100,000	100,000,000	100,000
	Issued and fully paid
	2009	2009	2008	2008
	Number	£'000	Number	£'000
Ordinary shares of 1p each
At end of the year	21,611,091	216	21,592,955	216

 

During the year 18,136 shares where exercised through the share option scheme for total consideration of £181 

7 The financial information set out above for the years ended 31 March 2009 and 2008 does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for 31 March 2008 have been delivered to the Registrar of Companies and those for 31 March 2009 will be delivered following the Company's annual general meeting. The Company's auditors have reported on the full accounts for both years and given an unqualified audit report for each year which did not include references to any matters to which the auditors drew attention by way of emphasis nor contain statements under the Companies Act 1985 s327(2) or (3).

8. The annual report and accounts will be available for shareholders and members of the public at the Company's Registered Office, Staple Court, 11 Staple Inn Buildings, London, WC1V 7QH or on the Investor Relation Section of the Company's website at www.probabilityplc.com

27 July 2009

ENDFR IFFLLDRISFIA