LONDON, June 1 /PRNewswire-FirstCall/ - World Gaming plc (LSE: WGP,
OTC BB: WGMGY), a UK-based Internet-gaming software and e-business services
group of companies ("the Company"), is pleased to report financial and
operating results for the quarter ended March 31, 2005.

    Highlights

        -  Like-for-like growth in royalty revenue from continuing licensees
           of 54% in the quarter ended March 31, 2005 when compared to the
           same period last year;
        -  Wagering volume on the Company's servers at $2.0 billion for the
           quarter ended March 31, 2005, up from $1.4 billion for the same
           period last year;
        -  First quarter results have met or exceeded management's
           expectations on key indicators;
        -  The Company signed two new licensees in the first quarter of 2005;
        -  Successful placing and admission to AIM on May 17, 2005;
        -  Further Poker launches to licensees scheduled for the second
           quarter of 2005.

    Fiscal results

    Like-for-like revenue from continuing licensees (excluding Sportingbet)
grew 54.1% during the quarter ended March 31, 2005 when compared to the
quarter ended March 31, 2004. Total revenues for the quarter ended 31 March
2005 decreased by 50.9% or $2,729,000 to $2,635,000 compared to $5,364,000 for
the same period last year. The decrease in total revenue is wholly
attributable to the transaction with Sportingbet which was effective as of
October 1, 2004 where in return for certain consideration and other
arrangements, the Company no longer charges royalties to Sportingbet for use
of the Software ("Sportingbet Transaction").
    Key financial aspects of the Sportingbet Transaction for comparative
purposes are as follows:

        -  The Company no longer charges royalties to Sportingbet,
           representing 68% of total revenue for the quarter ended
           March 31, 2004;
        -  The Company charges Sportingbet hosting fees on a cost plus
           10% basis for its share of usage of the Company's hosting
           facilities which generated revenues of $635,000 in the quarter
           ended March 31, 2005;
        -  All development costs previously incurred by the Company are paid
           by Sportingbet which equalled approximately $1.2m of costs for the
           quarter ended March 31, 2004;
        -  The Company received certain cash and other consideration under
           the Sportingbet Transaction as previously disclosed.

    Net income from operations for the quarter ended March 31, 2005 was
$836,000 or $0.03 per participating ordinary share compared to net income from
operations of $1,989,000 or $0.04 per participating ordinary share last year.
Participating ordinary shares for the quarter ended March 31, 2005 exclude the
13.5m shares effectively cancelled as a result of the transaction with
Sportingbet described above.
    Gross wagering volumes on the Company's servers increased 42.9% during
the quarter ended March 31, 2005 to $2.0 billion when compared to $1.4 billion
for the same period last year. Growth in wagering volume from continuing
licensees (excluding Sportingbet) was 70.3% in the quarter.
    Effective October 1, 2004 Sportingbet now pays the Company for its usage
of the Company's hosting facility. The payment is on a cost plus 10% basis and
amounted to revenue of $635,000 in the quarter ended March 31, 2005 compared
to $nil for the same period last year.
    In February 2004, the Company closed its transaction processing and
customer service divisions migrating licensees that utilized these services to
a third party supplier. For comparative purposes, $423,000 of transaction
processing fee revenue was included in total revenues for the quarter ended
March 31, 2004 compared to $nil in the quarter ended March 31, 2005. Direct
costs associated with this division exceeded fee revenue in every quarter up
to the date of its closure.
    The gross margin for the quarter ended March 31, 2005 was 71.1% compared
to 90.7% for the same period last year. The decrease is primarily the result
of a change in accounting policy as of January 1, 2005 to treat all hosting
costs as direct costs of sales. In the quarter ended March 31, 2004, such
direct costs only consisted of certain hosting costs and direct costs
associated with transaction processing. On a like-for-like basis,
approximately an additional $400,000 would have been re-allocated from
operating costs and included in hosting costs for the quarter ended
March 31, 2004.
    Operating expenses including interest and depreciation decreased 64.1% to
$1,039,000 during the quarter ended March 31, 2005 compared to $2,890,000 for
the same period last year.
    The decrease occurred primarily due to the following:

        -  Development costs being funded by Sportingbet as result of the
           Transaction described below, effective October 1, 2004. On a
           like-for-like basis this represented approximately $1.2m of
           operating costs in the quarter ended March 31, 2004;
        -  Re-allocation of all hosting costs to direct cost of sales. On a
           like-for-like basis, this attributed to approximately $400,000 of
           operating costs in the quarter ended March 31, 2005; and
        -  Depreciation charges during the quarter ended March 31, 2005
           declined $208,000 or 52.4% when compared to the same period last
           year.

    In summary, for the quarter ended March 31, 2005 compared to the same
quarter last year, net profit decreased by 58.0%, primarily due to a 59.5%
decrease in royalty revenues as a result of the Sportingbet Transaction.
However, with associated reductions in operating expenses and recovery of
direct costs, operating profit margin for the Company on the basis of royalty
revenue has increased 4.5% to 41.8% compared to 40% in the quarter ended
March 31, 2004. Management believes that this demonstrates the highly scalable
nature of the business.


    Selected statement of operations information (unaudited, in thousands)

                                                         For the three months
                                                            ended March 31,
                                                            2005      2004
                                                         --------------------

              Net Sales                                   $  2,635  $  5,364
              Gross Profit                                   1,874     4,865
              Operating Expenses                             1,039     2,890
              Net Income                                       836     1,989


    Operational update

    During the quarter ended March 31, 2005, management spent significant
time establishing the Company's listing on the Alternative Investment Market
("AIM") of the London Stock Exchange. The Company was admitted to trading
during the second quarter on May 17, 2005 raising pnds stlg 2,499,000 from the
private placement of 4,760,000 ordinary shares.
    The Board sees this as a critical step in the Company's future strategic
direction in addition to offering existing shareholders greater value through
a more stable trading platform. It is expected that the Company's listing on
AIM will assist in meeting its strategic direction, in particular, completion
of corporate transactions that will enhance shareholder value.
    In the first quarter of 2005 the Company signed two new licensees. These
licensees have significant experience in the on-line gaming industry and it is
expected that they will begin to contribute material revenues in the final
quarter of 2005.
    The Company continues to roll out its third-party supplied multi-player
poker solution to its licensees. One of the Company's largest licensees has
commenced going live in the second quarter of 2005.
    Through the second quarter of 2005 the Company will continue to complete
planned hardware and software upgrades for the busy winter sports season
commencing in the third quarter. Software upgrades will be completed through
Alea Software Ltd.

    Outlook

    The Company enters the new financial year well placed to build upon its
successes in 2004. The development of the worldwide industry of online gaming
continues to replicate similar growth experienced since its inception. Strong
organic growth continues to be exploited by operators and their suppliers.
    The Board remains confident that the Company has the business model to
share in this growth through both its licensing model and acquisitive strategy
during the forthcoming year.
    Seasonality of the business means that the second quarter is generally
the slowest trading quarter for the Company. It appears likely that while the
growth from licensee revenue in first quarter of 2005 will continue, the
percentage increase in such revenues for the second quarter of 2005 compared
to the same period last year may be less pronounced. The Board is confident
that it can utilise this time to perform necessary software and infrastructure
upgrades for its licensees in preparation for the busy winter sports season
commencing in the third quarter.

    Daniel Moran, World Gaming's CEO commented:

    "The Company enters the new financial year well placed to build upon its
successes in 2004. The development of the worldwide industry of online gaming
continues to grow at the same rates since inception. Strong organic growth
continues to be exploited by many operators and their suppliers."
    "The Board remains confident that the Company has the business model to
share in this growth through both its licensing model and acquisitive strategy
during the forthcoming year. We look to the future with confidence."

    SEC filing

    The company has today filed a Form 6-K in respect of the quarter ended
March 31, 2005 with the U.S. Securities and Exchange Commission. Full details
of this filing are available for viewing at http://www.sec.gov.

    Corporate background

    World Gaming plc is a UK-based I-gaming software and e-business services
Group. The Group is an international developer, licensor, and provider of
online gaming products, including casino, sportsbook, and pari-mutuel betting.
For more information about World Gaming plc, visit the Group's Web site at
http://www.worldgamingplc.co.uk.
    Interactive Systems Inc., a subsidiary of the Group incorporated and
operating out of Antigua, licenses its gaming software to third parties for an
initial licensing fee and monthly royalties. Alea Software Inc., in
participation with World Gaming plc develops gaming software and web pages.

    Contact: Investor Relations
    World Gaming plc
    investor.relations@worldgaming.com


    Special note regarding forward-looking statements

    We make certain forward-looking statements in this document within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. The Private Securities
Litigation Reform Act of 1995 provides a safe harbour for forward-looking
statements. To comply with the terms of the safe harbour, we note that a
variety of factors could cause our actual results and experience to differ
substantially from the anticipated results or other expectations expressed in
our forward-looking statements. When words and expressions such as:
"believes," "expects," "anticipates," "estimates," "plans," "intends,"
"objectives," "goals," "aims," "projects," "forecasts," "possible," "seeks,"
"may," "could," "should," "might," "likely," "enable" or similar words or
expressions are used in this document, as well as statements containing
phrases such as "in our view," "there can be no assurance," "although no
assurance can be given" or "there is no way to anticipate with certainty,"
forward-looking statements are being made. These forward-looking statements
speak as of the date of this document.
    The forward-looking statements are not guarantees of future performance
and involve risk and uncertainties. These risks and uncertainties may affect
the operation, performance, development and results of our business and could
cause future outcomes to differ materially from those set forth in our
forward-looking statements. These statements are based on our current beliefs
as to the outcome and timing of future events, and actual results may differ
materially from those projected or implied in the forward-looking statements.
Further, some forward-looking statements are based upon assumptions of future
events which may not prove to be accurate. The forward-looking statements
involve risks and uncertainties including, without limitation, the risks and
uncertainties referred to in our filings with the Securities and Exchange
Commission, including our most recent Form 20-F.
    We undertake no obligation to publicly update or revise any
forward-looking statements as a result of future developments, events and
conditions outside of our control. New risk factors emerge from time to time
and it is not possible for us to predict all such risk factors, nor can we
assess the impact of all such risk factors on our business or the extent to
which any factor, or combination of factors, may cause actual results to
differ significantly from those forecast in any forward-looking statements.
Given these risks and uncertainties, investors should not overly rely or
attach undue weight to our forward-looking statements as an indication of our
actual future results.

Link to this page: