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Probability plc
(Probability and the Company)
Audited Results for the year to 31 March 2010
Probability plc, (AIM: PBTY) the mobile phone gambling specialist, announces its audited results for the year ended 31 March 2010.
Key points
FY 2010 was a year of strategic investment designed to position the Company for its next stage of growth.
Trading was in line with market expectations:
* Net gaming revenue 4.7m (2009 – 5m) on reduced marketing and increased technology spend.
* Overall loss for year 755k (2009 – 153k), impacted by strategic investment in technology.
* Cash resources of 1.6m at 31 March 2010 sufficient for current plans (2009 – 2.2m).
Shortly before the end of the year the Company processed its 500,000,000th mobile gambling transaction.
A strategic investment in the Companys industry-leading mobile gambling platform was undertaken during the year, resulting in new products, new revenue opportunities and improved margins from existing customers. The Company does not capitalise investment in its technology and therefore the full cost is reflected in the Results.
The Company is already benefiting from the investment, including:
* Gross win per cash player increased by 18% compared to the previous year.
* Conversion rate of new players to cash players increased by 28% compared to the previous year.
* iPhone gambling games launched in June 2010 have exceeded management expectations post launch.
* Spanish language brand, RingRingJuegos, is gaining traction after launch in June 2010.
* New Business-to-Business offering launched, with PaddyPower as first customer win.
During the year the Company also renewed key distribution deals in the UK for its LadyLucks Mobile Casino with the Orange and Three mobile networks.
Commenting on the results, Probability CEO Charles Cohen said, We are delighted to have been able to complete a major strategic investment in our platform from existing resources whilst keeping revenues close to last years. This investment gives us the power to develop our business faster and in more areas than would have been possible before.
Probability is now ideally placed to take advantage of the boom in smartphones and mobile internet use as the key player in the mobile gambling games segment worldwide. The short term effect of this years investment in our technology will be more than justified by the additional growth potential which it has delivered some of which we are already beginning to see.
For further information, please contact:
| Probability | 0207 290 0640 |
| Charles Cohen, CEO | ceo@probability.co.uk |
| Buchanan Communications | 0207 466 5000 |
| Charles Ryland/Ben Romney/Suzanne Brocks | |
| Daniel Stewart & Company (NOMAD) | 0207 776 6550 |
| Paul Shackleton/James Felix |
Chairmans Statement
This has been a year of significant investment for Probability, and we are delighted to have completed our programme of product and platform development on time and from existing resources.
The early signs from the new products and services are wholly good and we remain confident that the investment decisions we have made are right for the Companys long term growth potential.
New devices such as the Apple iPhone and the huge number of smartphones now being sold have created a truly mass market for the type of mobile gambling which Probability excels at.
The team at Probability has done an excellent job this year keeping the wheels turning whilst re-building the whole system to allow us to take advantage of all of these new opportunities.
The fact that during this year we processed our five hundred millionth transaction shows that mobile is not just the next big thing for e-gaming: it is in my view certain to be the big growth area in gambling over the next few years.
With countries such as Italy and France now looking to allow more providers in, we are optimistic of being able to build on our reputation from the UK market to achieve even greater reach.
With our unique place in the market, proven technology, and the variety of ways in which we can make money from consumer and business-to-business, no company could be better positioned than this one to take advantage of the mobile gambling opportunity.
Graham Parr
Chairman
CEOs Review
The marketplace in which Probability operate has changed fundamentally and for the better in the past two years.
These changes were predicted but the speed at which they have been happening is phenomenal and shows no sign of slowing.
Mobile internet traffic is expected to quadruple between 2010 and 2013. Already, 38% of internet time is spent on a mobile device (source: Cisco).
This creates the conditions in which Probability can achieve significant growth and a mass market of potential customers for us to address wherever regulations permit.
Being able to realise the opportunity this presents us with has been the basis for our business strategy this year, starting with the decision to rein in marketing spend whilst we rebuilt our platform from the ground up.
We have added the capacity, the reach to new devices and the ability to support a broad business-to-business offering that were required for future growth.
The early signs are the new products and services are going to enable us to deliver that growth.
We now have a diverse suite of cash games for the iPhone which is already performing ahead of management expectations. The popularity of slots seems to have carried across from featurephones to the touch screen, and with early customer feedback so positive we are already working on expanding that range of games and offering it to our business-to-business clients.
We also have now got a platform which can handle significantly greater volumes of transactions alongside faster analytical tools and customer management systems.
In addition, our platform is now a very capable polyglot. We can translate the whole service into any other language in a matter of days, rather than the months which it would have taken previously. Our Spanish language service is gaining traction already even from limited trial marketing.
Clearly the price of this, in the short term, has been shown in increased costs as we do not capitalise investment in our platform. We are pleased, however, that the outcome for the year was very much as we had expected and communicated to shareholders with our progress throughout FY2010.
Shareholders can be confident that the future of this business has been secured by the investment which we made this year.
Charles Cohen
Chief Executive
Consolidated Statement of Comprehensive Income for the year ended 31 March 2010
| Note | 2010
‘000 |
2009
‘000 |
||
| Continuing operations | ||||
| Net gaming revenue | 4,723 | 4,987 | ||
| Operating expenses | (882) | (994) | ||
| Administrative expenses | (4,615) | (4,246) | ||
| Other administrative expenses | (4,591) | (4,154) | ||
| Share option charges | (24) | (92) | ||
| _______ | _______ | |||
| Operating loss | (774) | (253) | ||
| Finance income | 19 | 100 | ||
| _______ | _______ | |||
| Loss before tax | (755) | (153) | ||
| Tax expense | 5 | - | - | |
| _______ | _______ | |||
| Loss after tax attributable to equity holders of the parent |
(755)
_______ |
(153)
_______ |
||
| Loss per share (pence) Basic and diluted |
4 | (3.49)
_______ |
(0.71) _______ |
|
Probability Plc
Consolidated Statement of Changes in Equity for the year ended 31 March 2010
| Share capital
|
Share premium | Reverse acquisition
reserve |
Retained
earnings |
Total | |
|
000 |
‘000 |
‘000 |
‘000 |
‘000 |
|
| Balance at 1 April 2008 | 216 | 5,240 | 1,380 | (4,486) | 2,350 |
| Loss for the period | - | - | - | (153) | (153) |
| Total comprehensive income for period | - | - | - | (153) | (153) |
| Share based payments credit to equity | - | - | - | 92 | 92 |
| Balance at 31 March 2009 | 216 | 5,240 | 1,380 | (4,547) | 2,289 |
| Balance at 1 April 2009 | 216 | 5,240 | 1,380 | (4,547) | 2,289 |
| Loss for the period | - | - | - | (755) | (755) |
| Total comprehensive income for period | - | - | - | (755) | (755) |
| Share based payments credit to equity | - | - | - | 24 | 24 |
| Balance at 31 March 2010 | 216 | 5,240 | 1,380 | (5,278) | 1,558 |
Consolidated Statement of Financial Position at 31 March 2010
| Note | 2010 | 2010 | 2009 | 2009 | |||
| ‘000 | ‘000 | ‘000 | ‘000 | ||||
| Assets | |||||||
| Non-current assets | |||||||
| Property, plant and equipment | 87 | 109 | |||||
| Total non-current assets | 87 | 109 | |||||
| Current assets | |||||||
| Trade and other receivables | 718 | 782 | |||||
| Cash and cash equivalents | 1,644 | 2,244 | |||||
| Total current assets | 2,362 | 3,026 | |||||
| Total assets | 2,449 | 3,135 | |||||
| Current liabilities | |||||||
| Trade and other payables | 653 | 608 | |||||
| Provisions | 238 | 238 | |||||
| Total current liabilities | 891 | 846 | |||||
| Total liabilities | 891 | 846 | |||||
| TOTAL NET ASSETS | 1,558 | 2,289 | |||||
| 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 | (5,278) | (4,547) | |||||
| 1,558 | 2,289 | ||||||
| TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT | 1,558 | 2,289 | |||||
Consolidated Cash Flow Statement for the year ended 31 March 2010
| 2010 | 2010 | 2009 | 2009 | ||||||
| ‘000 | ‘000 | ‘000 | ‘000 | ||||||
| Cash flows from operating activities | |||||||||
| Loss before tax | (755) | (153) | |||||||
| Adjustments for: | |||||||||
| Depreciation | 57 | 50 | |||||||
| Share option charge | 24 | 92 | |||||||
| Finance income | (19) | (100) | |||||||
| (693) | (111) | ||||||||
| Cash flows from operating activities before changes in working capital | |||||||||
| Decrease/(increase) in trade and other receivables | 64 | (245) | |||||||
| Increase in trade and other payables | 45 | 40 | |||||||
| 109 | (205) | ||||||||
| Cash flow from operating activities | (584) | (316) | |||||||
| Cash flow from investing activities | |||||||||
| Capital expenditure | (35) | (41) | |||||||
| Finance income | 19 | 100 | |||||||
| (16) | 59 | ||||||||
| Decrease in cash | |||||||||
| and cash equivalents | (600) | (257) | |||||||
| Cash and cash equivalents at the | 2,244 | 2,501 | |||||||
| beginning of the year | |||||||||
| Cash and cash equivalents at the | 1,644 | 2,244 | |||||||
| end of the year | |||||||||
Probability Plc
Notes to the preliminary announcement for the year ended 31 March 2010
1 Statutory information
Probability Plc is a Public Limited Company incorporated in the United Kingdom under the Companies Act 2006 (Registration No. 5830059). The Companys registered address is Staple Court, 11 Staple Inn Buildings, London, WC1V 7QH. The Companys ordinary shares are traded on the Alternative Investment Market (AIM).
2 Accounting policies
Basis of preparation
The 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 Groups statutory accounts for the years ended 31 March 2010 and 2009.
During the year the Group has adopted IAS 1 (revised) Presentation of Financial Statements. The effect of adopting the standard is presentational and has no impact on the reported profit or net assets in any year.
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 Groups white label operations (third party entities that use the Groups 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 Groups Alderney subsidiary from its customers who are located mainly in the UK. The information utilised by the Groups chief operating decision makers is, therefore, not segregated.
| 4 | Loss per share | 2010 | 2009 | |
| Loss attributable to ordinary shareholders ( 000) | 755 | 153 | ||
| Weighted average number of shares (in thousands) | 21,613 | 21,597 | ||
| Basic and diluted loss per share (in pence) | 3.49 | 0.71 |
The number of share options in issue at balance sheet date was 2,298,820
(2009 – 1,850,045). None of the options outstanding at the year end have a
potentially dilutive effect on the loss per share calculation.
| 5 | Tax expense | 2010 000 |
2009 000 |
|
| Current tax expense | - | - | ||
| - | - | |||
| Deferred tax expense | ||||
| Previously recognised deferred tax assets written off in the year | - | - | ||
| - | - | |||
| Total tax charge | - | - | ||
| 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: | ||||
| 2010 000 |
2009 000 |
|||
| Loss on ordinary activities before tax | (755) | (153) | ||
| Expected tax charge based on the standard rate of corporation tax in the UK of 28% ( 2009-28%) | (211) | (43) | ||
| Expenses not deductible for tax purposes | 30 | 30 | ||
| Tax Losses carried forward to future periods | 174 | 4 | ||
| Capital allowances in excess of depreciation | 7 | 9 | ||
| Total tax expense | - | - | ||
A deferred tax asset of approximately 1,728,000 (2009 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 | ||||
| 2010 | 2010 | 2009 | 2009 | |
| 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 | ||||
| 2010 | 2010 | 2009 | 2009 | |
| Number | ‘000 | Number | ‘000 | |
| Ordinary shares of 1p each | ||||
| _______ | _______ | _______ | _______ | |
| At end of the year | 21,627,640 | 216 | 21,611,091 | 216 |
| _______ | _______ | _______ | _______ | |
During the year 16,549 options were exercised through the share option scheme for total consideration of 166
- The financial information set out above does not constitute the companys statutory accounts for 2009 and 2010. Statutory accounts for the years ended 31 March 2009 and 31 March 2010 have been reported on by the Independent Auditors. The Independent Auditors Report on the Financial Statements for 2009 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 237(2) or 237(3) of the Companies Act 1985. The Independent Auditors Report on the Financial Statements for 2010 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
8 The annual report and accounts will be available for shareholders and members of the public at the Companys Registered Office, Staple Court, 11 Staple Inn Buildings, London, WC1V 7QH or on the Investor Relations Section of the Companys website at www.probability.co.uk
9 The annual report and accounts, together with the notice for annual general meeting (AGM) will be provided to shareholders by 17th August 2010. The AGM will be held at 10am on 8th September 2010 at the offices of Buchanan Communications, 45 Moorfields, London EC2Y 9AE.
27 July 2010
