WORLD GAMING plc ANNOUNCES FULL YEAR TRADING STATEMENT
LONDON , UK , February 16, 2005 - World Gaming plc. (OTC BB: WGMGY), a UK-based Internet-gaming software and e-business services group of companies (the Group), is pleased to announce a trading statement in respect of its year ended December 31, 2004.
The Company expects earnings before interest, depreciation and extraordinary gains of between $6.0m and $6.5m (2003: $4.5m) equating to basic earnings per ordinary share of between 18 and 20 cents per ordinary share for the year ended December 31, 2004.
During the fourth quarter of 2004, the Company completed a transaction with its then major licensee, Sportingbet plc, the full details of which were disclosed to Shareholders and voted upon at the Company's 2004 Annual General Meeting. Under the terms of the transaction the Company received certain consideration for enabling Sportingbet to acquire an interest in the Company's software for a period agreed under the terms of the transaction. In the fourth quarter of 2004 and for the full year to December 31, 2004, this transaction has resulted in an extraordinary one time gain expected to be in the region of $12.0m – 12.3m after charging associated costs. Therefore, the Company expects net profit after interest, depreciation and extraordinary items relating to the Sportingbet transaction of between $17.0m and $18.0m for the year ended December 31, 2004.
As discussed in the Company's SEC filing in respect of the 3rd quarter of 2004, effective October 1st, 2004 as a result of the transaction with Sportingbet, the Company no longer receives royalty fees from Sportingbet. However, it also no longer has the costs associated with the entire development group and is receiving hosting revenues equal to Sportingbet's usage percentage of the Company's hosting facilities with a 10% mark-up (estimated to be $2.5 million in the twelve months following the date of the transaction).
Fourth quarter royalty revenues from continuing licensees on a like-for-like basis (excluding Sportingbet) have grown approximately 28% when compared to the same period last year. Like-for-like operating costs after taking into account the hosting cost recovery have reduced approximately 66% despite one-off professional and other costs incurred in the quarter.
Basic earnings per share for the purpose of this announcement has been calculated with reference to approximately 32.4m shares. It should be noted that as a result of the transaction described above, shares previously held by Sportingbet plc of approximately 13.5m have no voting or economic rights all of which in aggregate can be acquired by the company for $1 at which time it has positive retained earnings to do so and have therefore been excluded.
The Company is pleased to report that the first quarter of 2005 has to date met with management's expectations and growth trends experienced in the fourth quarter of 2004 are continuing in 2005. In addition, the Company continues to make progress with the strategies outlined at its 2004 Annual General Meeting. In this regard, the Company expects to update shareholders over the coming weeks with progress in respect of its listing on the Alternative Investment Market (AIM) of the London Stock Exchange.