Probability plc : Q4 FY2012 Trading Update

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

Trading Update for Quarter 4 of year ended 31 March 2012

Record revenues and strong momentum in all activities.

Smartphone players now 76% of total, up from 30% in one year.

Probability plc (AIM: PBTY), the mobile gambling specialist, is pleased to update investors on trading in the final three months of the financial year ended 31 March 2012 and to provide guidance on management expectations for the Company's near term performance.

Key Performance Indicators for the three months ended 31 March 2012 (unaudited)

• Net gaming revenue ("NGR") in the quarter of £2.1 million, 30% higher than the same quarter last year (Q4 FY11: £1.6m).
• 76% of all players during the quarter were using a smartphone or tablet, compared to 30% in the same quarter last year.
• Business to business ("B2B") revenues in the quarter were 246% higher than the same quarter last year.

Full year KPI summary (unaudited)

• NGR for the year ended 31 March 2012 of £7.3 million was 35% higher than the previous year (FY11: £5.4 million) and in line with management expectations.
• Total customer deposits in the 2012 financial year were 58% higher than in the previous year. Deposits per player increased by 41% for the year.

Operational Highlights

• Business to consumer ("B2C") activity continues to benefit from increased investment in television advertising. Total marketing spend in the fourth quarter was 109% higher than in the same quarter last year. The return period on investment in television advertising is stable at five  to six months after a campaign has aired, with a positive net return thereafter.
• The first phase of the Company's planned integration into the newly enhanced Facebook platform for mobile has been completed. Customers can now use their Facebook accounts to initiate a registration and are even able to post their wins to Facebook from within their games. Initial customer response has been positive.
• During the fourth quarter, the Company's games were made available to William Hill customers through their mobile site. Other major contracts with significant gaming companies, including Ladbrokes, have been signed and are in the process of being integrated or are awaiting launch. Existing services with Paddy Power plc and Rank Group plc continue to perform strongly.
• The Company has completed the set up of its software for Caliente in Mexico, one of the largest gambling operators in Latin America, which will launch subject to regulatory approval.
• The Company continues to progress its application for a licence to supply our technology to gambling operators in the State of Nevada.

2012 full year provisional update

During the last quarter of the 2012 financial year, the Company made significant additional investments in television advertising (including the commissioning of a new television advert) following on from successful campaigns earlier in the year which generated strong net positive returns.

As previously indicated, the cost impact of this activity will be expensed as it is incurred even though the expected revenue from new customers will not be generated until after the financial year end. After expensing these investments made late in the fourth quarter, the Company expects to report a small loss for the 2012 financial year.

Commenting on the KPI report, Charles Cohen, Chief Executive Officer said:

"We broke previous records for player deposits, turnover and B2B revenues this quarter.

"A big contributor to this came encrusted in gems, with lashings of fake tan and some buff bodies in 'The Only Way Is Slots' which we launched during the quarter. "TOWIS" has been a massive hit with our customers and was by far our most popular game in March.

"That momentum has continued. April is ahead in revenues and deposits from March, with B2B revenues stronger still. We are confident that Probability's growth will continue into the new financial year and beyond.

B2C - TV advertising proven, growing

"TV advertising has helped us take the business to a new level this year and will drive our growth in B2C into the new financial year.

"As we have previously stated, investment in advertising on television generates strong returns but requires up front investment which impacts profits and cash flow in the short term, whilst generating revenues thereafter. The payback period is stable at around five to six months for a campaign and the returns which we are seeing after this point are very healthy.

"During the year we have iteratively increased the size and scope of TV campaigns to ensure we are continuing to generate more income than expense from these customers.

"We are very happy with the results so far and confident that we can continue with this strategy as we build our capability to make strong, sustainable profits.

Smartphones: Android beats iPhone

"We have reached a tipping point with smartphone usage amongst our customers. Over three quarters of players are now using a smartphone, compared to just over a quarter one year ago.

"Of these smartphone customers just over half are now using Android devices.

"This is a very important segment of the market which is ignored by many commentators and even competitors. It's also hard to service, with increasing fragmentation of device capabilities and versions. Of the top fifty Android devices used by customers in the fourth quarter, a third of these didn't even feature in the top fifty of the third quarter.

"Supporting the widest range of devices has always been a core competency of Probability and will remain so in the new era of smartphones."

Business to Business, International growth

"Our B2B revenues are rising alongside the increased uptake which our clients are enjoying of their mobile sportsbooks.

"Our live B2B customers now include Rank Group plc (Mecca, BlueSquare), Paddy Power and William Hill whose mobile customers can play our games using their existing gaming accounts with these companies, from within the same mobile sites.

"We are also in the process of setting up a service with Ladbrokes to provide their mobile customers with our full range of mobile games, as well as two other major European focussed operators.

"Alongside our core business we continue to make progress in exploring overseas opportunities. These include the licensing of our software platform to Caliente in Mexico, who are in the final stages of compliance testing for their regulations.

"We are also progressing our ambition to seek a licence to offer our technology in Nevada, although this is a complex process with at this stage no clear timetable."

Outlook

"2012 is going to be a big year for us, and for mobile gambling in general. There is a landgrab under way for the mobile gambler - most of whom we believe will be new players who are not currently gambling on the web. Our regulated B2C and white label business is ideally positioned to exploit this opportunity.

"At the same time, web based operators are discovering the benefits and the complexities of this new mobile market. Our expertise in this space, as well as priviledged regulatory position and technical capabilities, support a B2B proposition which has already demonstrated strong traction and has excellent prospects.

"Internationally, as more markets open to regulated activity, including individual States in the US, we see chances for both B2B licensing, and B2C/white label.

"These are exciting times to be in this market."

ENDS

For further information visit www.probability.co.

Charles Cohen (CEO)       Probability plc         Tel: [phone]; twitter: @probabilityplc

Paul Shackleton (NOMAD)/James Felix    Daniel Stewart & Co.    Tel: [phone]

David Bick/Mark Longson   Square1 Consulting      Tel: [phone]