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Probability Says Profit Unlikely Before FY 2011

2nd November 2009 9:09 am GMT

Mobile gambling specialist Probability plc said this morning that it expects to defer profitability until at least the next financial year as it continues to invest in its technology and business development capabilities and explore wider opportunities as a gaming operator and a mobile gaming platform provider.

The company reported net gaming revenues of £2.48 million for the six month period ended September 31st 2009, a 5% decline on the corresponding period last year, with £46 million of mobile cash wagers handled at its LadyLucks mobile casino which added 116,619 new registered players during the period.

Administrative expenses rose 12% to £2.3 million in Q3, which Probability attributed to increased investment in its technology and business development capabilities as the company looks to drive both its business-to-business and direct-to-consumer divisions forward.

As a result the company incurred a loss after tax of £275,000 or a loss of 1.27 pence per share, compared to a profit of £103,000 last year.

"The first half of this year went pretty much according to plan, with progress on all fronts. Net gaming revenues were 4.7% better than the six months to March 2009 and we have been able to increase investment in our technology and business development capabilities," said Charles Cohen, CEO of Probability.

"This investment will enable us to take advantage of the wider opportunities we see as a gaming operator and as a mobile gaming platform provider for on-line operators. Whilst we continue to grow our core business and explore these opportunities, we will be investing further and as a consequence we now expect to defer profitability at least until the next financial year.

In the interests of creating long term value for shareholders, Cohen said that the company would not curtail investment at this stage in the company's development for the sake of short term profits.

"The key investments are in technology and people to allow us to grow faster and in more product areas," he said. "We are internationalising our platform to allow for multi-lingual and multi-currency services, and have also created a dedicated team for smartphone applications including iPhone, Blackberry and Android devices. A project is also well under way to more than double the operating capacity of our systems in anticipation of significant growth in the next few years."

Probability also this morning announced the appointment of former GTECH G2 executive Matthew Sunderland, who joins the company as Managing Director of Consumer Brands, responsible for all the direct-to-consumer business following years of hands on experience creating and building online gaming services for St. Minver and G2.

The company also said that Glenn Elliott, currently Chief Operating Officer, will lead the new business-to-business division, which recently secured a new contract win with Mirror Group Newspapers. Other partners currently include Dragonfish and Orbis.

As at September 30th the company held cash and cash equivalents of £1.97 million compared to £2.50 million last year.

Shares in Probability plc (Co. Profile) (AIM:PBTY) are currently trading at 54.00 pence per share in London this morning.

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