Q3 KPIs and Trading Update

26 January 2010

Probability plc (“Probability” or “the Company”)

Q3 KPIs and Trading Update

Probability plc, the AIM listed mobile gambling specialist, announces Key Performance Indicators for Q3 2009, covering the period from 1 October 2009 to 31 December 2009, and provides further information on its investment programme and expectations for the business in the near term.

Q3 2009 Key Performance Indicators

• Net Gaming Revenue £1,136,525, slightly lower than previous quarter due to higher withdrawals running up to Christmas. (Q2 2009: £1,237,114)
  
• 47,089 new players registered. (Q2 2009: 48,969)
• Net cash and cash equivalents of £1.91m at 31 December 2009 (Q2 2009: £1.96m)

Trading highlights include:

• New X Factor branded slots game attracted over £2.5m in wagers during the screening period of the live shows.
  
• Record winnings paid out to players in November, repeating the “Christmas Came Early” phenomenon seen in previous years, and reducing net revenues accordingly.
• Record bets taken in December. The busiest day was 24 December, with over 2.6 mobile plays per second on average, closely followed by 31 December with 2.4 plays per second.

Commenting on the KPIs for Q3 2009, Charles Cohen, Chief Executive of Probability, said:

“As we expected, net gaming revenues were slightly lower than the previous quarter as players cashed in their winnings in November to finance their Christmas expenditure.

We were buoyed by the success of the X Factor slots game toward the end of the Quarter, which saw significant traction through December as the live televised finals progressed.

December trading all round was very encouraging, with record bets taken and net gaming revenues 30% higher than November, which followed a strong month in October.

We were very pleased that the new server capacity in which we have invested was online in time for this busy period and ensured that our systems performed well, giving players a great experience and handling a record number of mobile bets .”

Update on Investment Programme

The investment programme, which was accelerated during 2009 and discussed with investors at the time of the interim results, has now been largely completed and is already starting to have a beneficial effect on revenues and margins.

The objective of this plan, as previously disclosed, is to enable Probability to expand with greater speed and in more ways than would otherwise have been possible.

Our plans were accelerated following changes in the market environment which have opened considerable new opportunities for us. In particular, the uptake of the iPhone and the Google Android platforms have shifted consumer expectations of mobile services generally, and significantly improved the prospects for mobile gambling.

Our newly created higher margin business-to-business division is also experiencing strong demand from e-gaming businesses and online sportsbooks for a “white label” offering from Probability to allow them to address these opportunities themselves.

The investment plan, when complete, will enable the Company to:

• Increase our capacity for creating and releasing new mobile gambling games by approximately 60% across all mass-market consumer devices, including the latest smartphones from Apple and those using the Google Android platform;
• Significantly upgrade our data-centre and add an additional system contingency (“failover”) site, creating substantial capacity for the anticipated growth in traffic from both our consumer and business-to-business activities;
• Support multiple languages across the service and integrate with global payment systems including the Entropay system which is widely used by on-line gambling providers in EMEA and South/Central America; and
• Integrate more rapidly into a broader range of third party e-gaming platforms to support our business-to-business plans including Orbis, mFuse and Mobenga

Total headcount has increased nearly 25% during the period under review, which brings us close to completing our team. We have also recruited at the senior level and restructured our operations to allow both the consumer and business-to-business sides of Probability to grow.

Despite this increased spend, the Company still has significant cash reserves and no debt, as the cost for this expansion has been largely funded from cash generated by our consumer facing business, with some additional spending from reserves.

There is no requirement to seek further funding, based upon our current plans and progress, as we expect to be cash generative again as soon as our infrastructure expansion programme has been completed and is delivering benefits to the business.

Outlook

The business continues to perform in line with management’s expectations despite the wider economic environment and the parallel efforts of implementing our investment programme, which is now largely complete.

As we have previously advised, the decision to invest in future growth opportunities, a strategy adopted following the achievement of H1 2009 profitability, means that we do not expect to make a profit in the current financial year.

As the investment programme is now largely complete, the first of the new products and services which we can now deliver will start to generate additional revenues early in the next financial year.

Our core consumer business is already benefitting from the increased flow of new games and an improved infrastructure for customer management and promotions.

This is reflected in the stronger trading in October and December, as well as very pleasing results in the first three weeks of January. With the exception of seasonal related withdrawals in November, per-customer yields have improved over the past six months, whilst customer acquisition costs have remained steady.

In our business to business division, the Company is in active licensing discussions with a number of major third party operators, intent on providing their customers with a credible mobile gaming solution.

Alongside a strong pipeline now developing in our higher margin business-to-business division, as well as opportunities from new initiatives following the investment programme, we anticipate that Probability may become cash generative again as early as the Spring and we look forward with confidence to profitable future growth from the excellent prospects in our marketplace.

For further information, please contact:

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