LONDON, UK, Aug. 5 /PRNewswire-FirstCall/ - World Gaming plc
(OTC BB: WGMGY), a UK-based Internet-gaming software and e-business services
group of companies (the "Company"), is pleased to report financial results for
the three and six months ended June 30, 2004.
Highlights
- Net profit for the quarter of $1,684,000 vs. loss of $236,000 for the
same period last year.
- System-wide wagering volume up 85% from the same quarter last year.
- Revenues in the quarter up 39% from the same period last year.
- Operating expenses in the quarter down 22% from the same period last
year.
- Multi-player poker released to major licensee in May 2004 with further
roll-out in third quarter.
- Settlement of outstanding office lease liability.
Fiscal results
Total revenues for the quarter ended June 30, 2004 were $4,148,000
compared to $2,986,000 for the same period last year. For the six months ended
June 30, 2004 total revenues were $9,512,000 compared to $7,523,000 for the
same period last year. This 39% increase in revenues in the quarter was driven
primarily by increased licensee wagering volumes of 85% and higher net win
achieved by our licensees when compared to the same period last year.
Net profit for the quarter ended June 30, 2004 was $1,684,000 or $0.04
earnings per share compared to a net loss of $236,000 or a loss of $0.01 per
share for the corresponding period last year.
In February 2004, the Company closed the transaction processing division
together with Customer Support. Affected licensees were successfully
transferred to an industry leading solution. There are no revenues or direct
costs from these divisions in the quarter to June 30, 2004.
The gross margin for the quarter was 92.9% as compared to 88.0% for the
same period last year. The increase represents a more profitable revenue mix
due to the closure of the transaction processing division in February 2004.
Operating expenses decreased 22% to $2,283,000 during the first quarter
of 2004 compared to $2,911,000 for the same period last year. The primary
contributors to this reduction were:
- Elimination of advertising and promotion expenses that were utilized
in launching the worldgaming.com gaming site during the second quarter
of 2003;
- A 32% reduction in other corporate overheads or a reduction of
$113,000, when compared to the same period last year.
The Company has stabilized the cost base over the past twelve months
while maintaining its commitment to continue investing in enhanced
infrastructure and product offerings for its existing licensees.
In July 2004, the Company settled an outstanding lease liability in
respect of an office lease contracted in October of 2001. The outstanding
liability in respect of this lease was in excess of CAD $600,000. The
settlement in the amount of CAD $175,000 inclusive of fees was paid in
July 2004.
Selected statement of operations information (unaudited, in thousands)
For the three months ended
June 30,
2004 2003
----------------------------
Net Sales $ 4,148 $ 2,986
Gross Profit 3,967 2,654
Operating Expenses (incl.
interest and depreciation) 2,283 2,890
Net Profit/(Loss) 1,684 (236)
Operational update
During the second quarter, the Company launched its multi-player poker
product supplied by a third party and integrated onto the World Gaming
platform. The product has been launched to its major licensee with roll-out to
other licensees expected in the third quarter of 2004.
The enhanced horse-racing product launched in April of 2004, continues to
yield growth in volumes. The Company continues to monitor this product for
further opportunities. Further development of this product is continuing that
will provide licensees with greater options to maximise their net-win.
Towards the end of the second quarter of 2004 the Company began investing
in a major upgrade to its hosting facilities in Antigua. The upgrade will
involve moving to an Oracle 10g database platform in addition to replacement
and expansion of disk storage sub-systems. This platform together with other
new hardware infrastructure will produce a more robust operating system with
greater scalability.
The Company previously disclosed that during the first quarter of 2004,
the Company agreed in principle with Sportingbet Plc to a two-year extension
of its existing software license agreement. During the year ending December
31, 2003 Sportingbet represented approximately 80% of the Company's royalty
revenues. In addition, the licensee is a substantial shareholder of the
Company owning approximately 29.6 percent of the Company's outstanding equity
capital with the ability to acquire an additional 14 percent interest upon
conversion of certain convertible debt of the Company. As previously
disclosed, the licensee has indicated that it wishes to explore alternative
structures to its existing relationship with the Company. The Company has been
working with Sportingbet to resolve this issue and, although no assurances can
be given, the Company believes that it will be in a position to update
shareholders in respect of the restructured relationship with Sportingbet on
Monday August 9, 2004.
SEC filing
The company has today filed its Form 6-k in respect of the three and six
months ended June 30, 2004 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.
Starnet Systems International 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. Inphinity
Interactive Inc., a wholly owned subsidiary of the Group 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
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