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:

END

Probability plc has three subsidiaries, all of which are 100% owned by Probability plc:

Probability Games Corporation Limited is a UK registered and domiciled company which develops and licences technology.

Probability Games (Alderney) Limited operates the gambling services from Alderney and Geurnsey, and holds an eGambling licence from the Alderney Gambling Control Commission. This company is registered and domiciled in Alderney.

There are no other subsidiaries or areas of operation.

Probability plc does not own interests in any other companies.

Probability plc Registered Office

MH Secretaries,  Staple Court,  11 Staple Inn Buildings,  London WC1V 7QH

The issued capital of Probability plc consists of 21,611,091 ordinary shares of 1 pence each (“Ordinary Shares”), all with voting rights.

The total number of current voting rights in the Company is 21,611,091.

The shares are exclusively traded on the London Stock Exchange Alternative Investment Market.

The are no restrictions on the transfer of shares in issue.

Key shareholdings (>3%)

AIM Admission Document

Memorandum And Articles Of Association

2007 Audited Accounts

2008 Audited Accounts

2009 Audited Accounts

Collins Stewart initial research note (Sept 2008)

Collins Stewart, the Company’s broker, provides investors with independent research into the Company. Their current forecast was published February 2010.

Probability has significant cash reserves of approx. £1.9m (Dec 09) relative to its market capitalisation of around £7m – £9m.

The Company believes that it’s current valuation may be influenced by the fact that, following a profit in H1 2009, the company decided to embark upon an aggressive investment programme designed to enhance its capabilities and defer profitability accordingly into the next financial year. That was an exciting, but uncertain, prospect.

The decision to increase investment and defer profitability was driven by rapid changes in the mobile and e-gaming environment, which in the Company’s view had created new opportunities that the business was uniquely positioned to capitalise upon. This investment was to be funded mainly from cash generated by the operating business, and partly from reserves. The decision meant that forecast profits and revenues for 2009 would not be met.

In January 2010 the Company announced that this investment programme was nearing completion. Some of the benefits to the Company include faster game development, quicker internationalisation and localisation of the service, and rapid deployment in new mobile formats such as iPhone and Android. This was accompanied by further investment in people and in servers.

The business is also developing in new ways not anticipated in 2008, as demand for a ‘white label’ or business-to-business offering from established e-gaming operators has increased. During 2009 the Company laid the foundations for addressing this market by entering into strategic agreements with enablers and integrators such as Orbis, mFuse Ltd. and Mobenga. Once integration into these platforms is completed, Probability will be able to being offering its games to a wide range of e-gaming and sportsbook operators around the world. Potential revenues from this new business have not been included in any published forecasts.

Whilst Probability will doubtless have to demonstrate  the value of the business-to-business model, it has already shown that it can make money in the direct-to-consumer business and has a dominant position in the UK market for mobile casino. Profits have been delayed by the 2009 Investment Programme, but once complete, growth should return to that business and the opportunities for expansion will be even greater than before.

Broker & NOMAD

Bruce Garrow, Collins Stewart (Europe) Ltd, 88 Wood Street, London, EC2V 7QR, Tel: 020 7523 8359 BGarrow@collinsstewart.com

Investor Relations

Buchanan Public Relations

Charles Ryland / Suzanne Brocks

(020) 7466 5000

charlesr@buchanan.uk.com / suzanneb@buchanan.uk.com

Auditor

BDO LLP, 55 Baker Street, London W1.

Legal Advisors

Steven Raize

Davies Arnold Cooper LLP, 6-8 Bouverie Street, London EC4Y 8DD

DDI: 020 7293 4030

Chief Executive Officer

Charles Cohen is the CEO of Probability plc and was the co-founder of the business along with his friend, John Scaife, in 2003. Mr. Cohen’s background is as an entrepreneur in new media, having founded several internet businesses in his career including beenz.com, the worldwide online currency which was valued at $300m in 2000. ceo@probability.co.uk

Finance Director

Bill Henbrey FCA is a non-Executive Director of Probability plc and supervises the financial functions of the business on behalf of the Board, although does not work full time in the business. He also chairs the Remuneration and Audit Committee. Mr. Henbrey was a partner in BDO Stoy Hayward and head of the UK Betting & Gaming and Leisure & Hospitality Units until his retirement from the firm in June 2006.

Chief Technology Officer

Adam Neilson was one of the first employees of Probability and developed the first mobile slot machine offered by the Company. He now leads a development team of around 20 specialists in mobile, gaming, and high volume transactional systems.

Managing Director, Consumer Brands

Matthew Sunderland joined Probability in November 2009 to take charge of LadyLuck’s – Britain’s favourite mobile casino – with a brief to continue the rapid expansion of Probability’s direct-to-consumer business globally. Previously, Matt had been Group Marketing Director, Gaming, at St. Minver – part of G2, the online gaming division of GTech.

Managing Director, Business-To-Business

Glenn Elliott joined Probability in 2007, having held senior positions at Arena Mobile and Orange. Initially taking the role of Chief Operating Officer, Glenn helped the transition to a larger business and is now responsible for developing the Company’s business-to-business strategy.

Key competitors against whom we benchmark ourselves in our business-to-business offering are currently:

• Spin3 (www.spin3.com)Spin3 is a division of Microgaming, one of the world’s largest providers of e-gaming services. They have a good range of games and strong management. The service is also tightly integrated into the Microgaming portfolio.
• Playtech Mobile (www.playtech.com)Playtech is the largest supplier by market capitalisation of e-gaming technology. They have recently launched a small suite of mobile games available to existing clients. Playtech does not compete in the direct-to-consumer space with Probability, but their customers do.

Our competitive position in this market is strong because, for example:

• We are independent of any particular e-gaming platform, so we can work with any e-gaming operator, regardless of who provides other parts of their system. We are even able to work with Microgaming and Playtech customers.
• As mobile specialists, we have a much broader offering and a firm committment to maintaining compatibility with new devices.

In the direct-to-consumer business, there are a number of competitors particularly in the UK marketplace with a variety of offerings. These include:

• mFortune (www.mfortune.co.uk)
• JackpotJoy Mobile (www.jackpotjoy.co.uk)
• Casino Tropez (www.casinotropez.com)

Our competitive position in this market is strengthened by:

• Our early brand leadership, with LadyLuck’s now boasting more than 800,000 registered players.
• The breadth of our offering – we have twice as many games at least as any other competitor, and our service is compatible with significantly more mobile devices.
• Our relationships with mobile network operators gives us privileged access to consumers and lower costs of acquisition thanks to our scale.
• Our focus on mobile means we are not distracted by other channels and can ensure the best possible service for our customers.

What’s to stop bigger, richer, companies jumping in to this space and putting Probability out of business?

This is the question we are asked most by potential investors and our answer is simple.

Almost anyone can develop a mobile game and put it on the market. As games go, gambling games are pretty simple, without complex graphics and interfaces to worry about. So the barriers to entry into the mobile gambling market are low.

The barriers to scale, however, are very high indeed. The biggest challenges include:

• The high cost of maintaining compatibility with new phones.
• Meeting high and changing regulatory standards on a mobile platform.
• Back-office systems must be developed and configured for the real-time mobile world, not the e-mail environment.
• Acquiring and exploiting attractive, branded content which will appeal to consumers.
• Acquiring and converting customers profitably.

These are some of the reasons why some companies have already tried and failed to develop a fresh mobile gambling offering. Even large companies have withdrawn having realised the difficulties of making it work for them. Some startups have also gone out of business.

Probability entered this market early and has a genuine head start on some of these very expensive, time consuming and technically challenging requirements. In particular:

• Ours is the only m-gaming system to offer the full range of services for instant gaming, from slots and Bingo to casino and poker, from a single point of service.
• We have developed systems that automatically adapt our software to 70% of the new phones coming onto the market, without any need for human intervention.
• Ours is the only mobile gambling platform to have PCI compliance for secure financial transaction management, as well as the gold-standard of gambling regulatory compliance from the Alderney Gambling Control Commission.
• We have three years of work and the experience of thousands of mobile CRM campaigns built in to expert systems for segementing, targeting and profiling customers.
• We have extensive relationships with mobile advertising networks and mobile network operators, which provides us with some exclusive access to customers.
• Our licences for brands from companies such as Paramount, Hasbro and NextGen Gaming allow us to offer some of the most attractive brands to consumers.