Probability plc ("Probability" or "the Company")

Trading Update for the quarter ended 31 December 2013

Improvements in core business, strong growth in Italy.

Probability plc, the mobile gambling services and technology specialist, is pleased to provide unaudited key performance indicators for the third quarter of the financial year (1 October 2013 to 31 December 2013 inclusive).

Financial and Operating Highlights (unaudited):

  • Core B2C business continues to improve, delivering 5.1% quarter-on-quarter growth in total net gaming revenue to £2.0m (Q3 FY13: £2.3m).
  • Gaming margins in B2C stable at 4.8% against previous quarter win margin of 4.9%.
  • Improved yields from B2C and White Label players. Quarterly average revenues per player were 6% higher compared to the preceding quarter, as gaming margins stabilised and promotional campaigns performed well.
  • Wagering volume per active player in the core B2C business was 3% higher than the previous quarter and 16% higher than the equivalent period a year ago, boosted by innovations such as the unique Daily Bonus Bonanza feature for LadyLuck's customers in the UK.
  • Player acquisition costs reduced by a further 37% per new customer in the period compared to the preceding quarter through continued efficiencies in targeting and higher conversion rates.
  • Renewal of our contract with William Hill online as a B2B partner and launch of "Project Xmas" bespoke slot for PaddyPower.
  • Revenues from Italy grew 36% compared to the previous quarter.
  • Net cash and equivalents at the end of the quarter of c£1.4m, following marketing investments of £0.5m during the quarter (Q2 FY14: cash at period end: £1.7m).

Commenting on the trading update, Probability CEO Charles Cohen said, "This was the second quarter of growth in a row, as we continue to focus upon delivering a business built upon solid foundations of cost efficient marketing and higher per-player revenues. All the underlying metrics, such as conversion rates, deposits per active player, and wagering levels point to  this being a sustainable trend that we can build upon.

"Revenues from UK smartphone players in December in our higher margin B2C and White Label businesses were better than at any time in the last twelve months, and on significantly lower marketing and promotional cost than previously. This more than offset the continuing decline in revenues from legacy featurephone customers, which is now down to a third of its value a year ago. The upward trend is continuing into January as we continue to drive efficiency in marketing spend and improve revenues from our database.

"We had a strong quarter in Italy with NGR growing 36% on the previous quarter. The business was boosted by new product launches with partners including GTech (Lottomatica) and our sports betting product for SNAI prior to the two-week winter break for Italian football at the end of December.

"Marketing investment in the quarter was £0.5m which typically takes up to six months to produce a positive net return.

"Looking forward to the final quarter of this financial year, we have seen good momentum coming in to January in Italy, the football season has also re-commenced after the Christmas break, increasing betting activity again.

"We have a number of exciting product launches in the pipeline for the next few months both for the UK and Italy where we are also preparing to launch our first White Label offering.

"As we mentioned in our last update, the company is in advanced discussions with a major US Casino operator to provide a solution for the regulated market there. These conversations are proceeding well and we will continue to update investors on this new opportunity when appropriate to do so."

ENDS

For further information, please contact:

Probability plc

Charles Cohen, Chief Executive Officer

Qurban Hussain, Chief Financial Officer

+44(0) 20 7092 8801

Numis Securities Limited

Richard Thomas, Nominated Adviser

Alex Ham, Corporate Broking

+44(0) 20 7260 1000

Square 1 Consulting

David Bick, Public Relations

+44(0) 20 7929 5599

Notes on KPI definitions:

"B2C" - revenues derived from players recruited to services operated under a brand owned by the Company, either through direct marketing by the Company or by affiliates on behalf of the Company. B2C services utilise one of the Company's remote gambling licences and the Company takes all regulatory responsibility.

"B2B" - revenues derived from players using games hosted on the Company's software platform who are recruited to the platform by a Partner. Unless this Partner is themselves a regulated gambling operator, the Company retains all regulatory responsibility for the players and the player relationship is managed by Probability including banking, support and promotions.

"Platform Revenue" - gross cash staked less gross cash won net of progressive jackpot contributions by consumers playing the Company's mobile gambling products on its platform, regardless of the source of that customer.

"Net Gaming Revenue" - Platform Revenues less promotional costs to existing customers, less revenue shares paid to certain B2B partners.

"Active Player" - a valid account holder who places at least one cash wager in the period.

"ARPU" - Platform Revenues per Active player.

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