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World Gaming PLC (WGP)

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Monday 01 August, 2005

World Gaming PLC

Interim Results

World Gaming PLC
01 August 2005


                                WORLD GAMING PLC
                       ('World Gaming' or 'the Company')


The Board of World Gaming, an internet Gaming Software provider offering a
comprehensive suite of products and services for internet gaming Operators, is
pleased to announce the Company's second quarter results for the three and six
months ended the 30 June 2005.


   •Like-for-like growth in royalty revenue of 55.5% in the quarter ended 30
    June 2005 when compared to the same period last year;

   •Wagering volume on the Company's servers at $3.6 billion for the six months 
    ended 30 June 2005, up from $2.6 billion for the same period last year;

   •Strong balance sheet and cash flows in the period with net working capital
    up 34.0% to $19.9m;

   •Two new licensees signed in the second quarter of 2005;

   •Successful debut on Alternative Investment Market ('AIM') of the London 
    Stock Exchange;

   •Poker launched to a major licensee during the second quarter.

World Gaming plc CEO, Daniel Moran said: 'The second quarter is seasonally the
industry's least  busy period in the year and the Company has utilised this time
well to pursue new licensing opportunities and implement  robust software and
hardware upgrades. We are delighted with the results of these efforts which have
resulted in new  licensees and greater system speed and capacity. We look to the
third quarter with confidence and a resolve to continue  to deliver on our



WORLD GAMING PLC                                  Tel: +1 888 883 0833
Daniel Moran, Chief Executive

BISHOPSGATE COMMUNICATIONS LIMITED                Tel:  020 7430 1600
Maxine Barnes
Dominic Barretto

DANIEL STEWART & COMPANY PLC                      Tel: 020 7374 6789
Ruari McGirr

The Ordinary Shares have not been and will not be registered under the U.S.
Securities Act of 1933 (the 'Securities Act') and may not be offered or sold in
the United States or to a U.S. person (as such term is defined in Regulations S
under the Securities Act) absent registration or an applicable exemption from
registration under the Securities Act.



The quarter and six months ended 30 June 2005 has continued to demonstrate
significant growth in licensee revenue. During the quarter the Company has
worked to integrate its new licensees in preparation for the seasonally busy
autumn and winter sports calendar together with carrying out planned
infrastructure upgrades. Similar to the first quarter of this year, results
continue to meet or exceed management's expectations on key indicators.

Royalty revenues continue to show strong growth with a 55.5% rise in
like-for-like royalty revenues for the quarter and a 54.7% rise year to date.

The Company enters the third quarter of 2005 well placed to continue its strong
revenue growth both organically and through the addition of its new licensees.

Financial Results

Three and six months ending 30 June 2005

Revenue from continuing and new licensees increased by 55.5% or $546,000 to
$1.530m for the quarter ended 30 June 2005 when compared to $984,000 for the
same period last year. For the six months ended 30 June 2005 revenue from these
licensees increased 54.7% or $1.248m to $3.530m when compared to $2.282m for the
same period last year. Total revenues for the quarter ended 30 June 2005
decreased by 47.8% or $1.983m to $2.165m compared to $4.148m for the same period
last year. For the six months ended 30 June 2005 total revenues decreased
$4.712m or 49.5% to $4.800m compared to $9.512m for the same period last year.
The decrease in total revenues is wholly attributable to the Sportingbet
Transaction effective 1 October, 2004 (referred to previously), where in return
for certain consideration and other arrangements, the Company no longer charges
royalties to Sportingbet for use of the Software.

Key financial aspects of the Sportingbet Transaction having a material effect
for comparative purposes are described below:

   •The Company no longer charges royalties to Sportingbet, which represented
    76% and 72% of total revenue for the quarter and six months ended 30 June
    2004 respectively;
   •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 for the quarter ended 30 June 2005 and $1.270m in the
    six months ended 30 June 2005. These hosting fees were not charged to
    Sportingbet during the corresponding periods in 2004;
   •All software development costs previously incurred by the Company are
    paid by Sportingbet which on average equalled approximately $1.200m per
    quarter in 2004;
   •The Company received certain cash and other consideration under the
    Sportingbet Transaction described below.

Net income from operations for the quarter ended 30 June 2005 decreased by 80.5%
to $328,000 or $0.01 per participating ordinary share compared to net income of
$1.684m or $0.03 per participating ordinary share for the same period last year.
For the six months ended 30 June 2005, net income from operations decreased by
68.3% to $1.163m or $0.04 per participating ordinary share compared to net
income of $3.672m or $0.08 per participating ordinary share for the same period
last year. Participating ordinary shares include those shares that have voting
and economic rights and exclude those shares held by Sportingbet in accordance
with the transaction effective 1 October 2004.

In the quarter ended 30 June 2005 the Company received hosting revenue from
Sportingbet of $635,000 compared to $nil in the same quarter last year. The
hosting revenue is charged on a percentage of usage basis plus a 10% mark-up for
Sportingbet's usage of the Company's hosting facilities.

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 six months ended 30 June 2004
compared to $nil in the quarter and six months ended 30 June 2005. Direct costs
associated with this division exceeded fee revenue in every quarter up to the
date of its closure.

For the three months ended 30 June 2005, total gross wagering volumes handled by
the Company's hosting facility increased 33.3% to $1.6 billion when compared to
$1.2 billion in the three months ended 30 June 2004. For the six months ended 30
June 2005 gross wagering volume increased to $3.6 billion up 38.5% from $2.6
billion for the same period last year. Growth in wagering volume from continuing
licensees, excluding Sportingbet, was 69.3% for the quarter and stands at 69.8%
for the six months ended 30 June 2005. Management believes that the growth in
wagering volume is attributable to a continued expansion of the market for
internet gaming. In addition, this growth is partially attributable to increased
reliability of the Company's product suite as a result of infrastructure and
support services upgrades. Overall net win experienced by licensees during the
quarter and six months ended 30 June 2005 was consistent with the same period
last year. (Net win for the Company's licensees is the difference between the
amount wagered (bet placed) by a customer and the amount paid back to (won by)
that customer).

The gross margin for the quarter ended 30 June 2005 was 68.7% compared to 95.6%
for the same period last year. For the six months ended 30 June 2005 gross
margin was 70.0% compared to 92.9% for the same period last year. The decrease
resulted from a change in accounting policy as of 1 January 2005 to treat all
hosting costs as direct costs of sales. During the three months and six months
ended 30 June 2004, such direct costs only consisted of certain hosting costs
and direct costs associated with transaction processing. Applying this change in
accounting policy to the three months and six months ended 30 June 2004,
approximately $380,000 and $780,000 respectively would be re-allocated from
operating expenses to direct cost of sales.

Operating expenses including depreciation decreased 45.7% to $1.240m during the
quarter ended 30 June 2005 compared to $2.283m 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 which represented approximately $700,000 of operating costs in
    the quarter ended 30 June 2004.
   •Re-allocation of all hosting costs to direct cost of sales which would
    have otherwise attributed to approximately $380,000 of operating costs in
    the quarter ended 30 June 2005.
   •Depreciation charges during the quarter ended 30 June 2005 declined
    $174,000 or 49.1% when compared to the same period last year.

Operating expenses including depreciation in the six months to 30 June 2005
decreased 55.0% to $2.326m compared to $5.173m for the same period last year.

Review of Operations

On 17 May, 2005 the Company was admitted to trading on the Alternative
Investment Market ('AIM') of the London Stock  Exchange raising £2,499,000 from
a placing of 4,760,000 ordinary shares. 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 July 2005, the Company announced the signing of two new licensees. Under
commercial terms with one of these  licensees, the Company will license its
rights to the domain name. It is expected that the 
portal will launch in the third quarter of 2005 utilising the full suite of
products offered by the Company. The  Company believes that has the
potential to develop as a key brand within the industry.

The Company launched a multi-player poker solution to one of its largest 
licensees in the quarter.

Planned hardware and software upgrades continued through the second quarter in
preparation for the busy autumn and  winter sports season commencing in the
third quarter. Testing to date on these upgrades has indicated increases in 
processing speeds experienced by licensees' customers and greater volume and
storage capacity.

Regulatory Developments

The Company and the industry as a whole are under threat from certain factions
within the U.S. Congress that seek to ban certain Internet gambling. Whilst
legislation has been introduced in both houses of Congress in recent years, no
Internet gambling bills have been introduced in the current session of Congress,
and thus there are no bills pending. There is no way of knowing if and when such
a bill might be introduced, and the Company continues to monitor this situation
since the passage of this legislation could have a substantial impact on the
business of the Company's licensees and ultimately the Company.

In March 2004, the World Trade Organization held in favor of Antigua and Barbuda
and against the United States of  America with regard to unlawful trade
restrictions relating to Internet gaming.  The United States appealed the
finding  and in April 2005, the WTO Appellate Body held that The United States
had made a commitment under the General Agreement  on Trade in Services (GATS)
to permit free trade in gambling services, but can restrict such trade to
protect public  morals and public order, if it does so in a non-discriminatory
manner.  However, the United Interstate Horse Racing Act  (IHRA) is
discriminatory because it permits domestic suppliers to accept wagers on horse
races but does not permit  foreign suppliers to do so.  The United States must
remove the discrimination so foreign suppliers can provide the same  services as
domestic suppliers.  This can be done either by permitting foreign suppliers to
provide services or barring  domestic suppliers from providing services.  In
either case, World Gaming could benefit.  If the IHRA is amended to  permit
foreign suppliers to legally accept wagers on horse racing over the Internet, it
can positively impact World  Gaming by allowing it to offer such services to its
licensees.  If the United States decides to ban all interstate  remote betting
on horse races, it could eliminate the existing domestic providers.


The Company continues to build on its existing revenue streams through the
addition of new licensees in addition to  maintaining strong relationships with
its existing licensees. The Company remains committed to building and
maintaining  its licensing and hosting infrastructure so that it can continue to
exploit the continued growth trends within the  on-line gaming industry as a
whole. This includes integrating new products and investing in robust

In addition, the Board remains committed to its intention to complete
strategically sound and earnings enhancing acquisitions. The Board is confident
that it has the skill base and resources to deliver on this strategy.

From an earnings perspective, the seasonally fluctuating nature of the business
is expected to be less pronounced as  new products such as poker and other non-
event reliant products continued to be added to the Company's product suite. 
The Board is confident that the Company is well placed to continue strong
earnings growth throughout 2005 and beyond.

Daniel Moran
Chief Executive

The information contained herein is not for publication or distribution to
persons in the United States of America.   The securities referred to herein
have not been and will not be registered under the US Securities Act 1933, as 
amended, and may not be offered or sold without registration thereunder or
pursuant to an available exemption therefrom.

                                 World Gaming plc
                 Unaudited Consolidated Profit and Loss Account
                  Three months ended the 30 June 2005 and 2004

                                               3          3         6         6
                                          months     months    months    months
                                         30 June    30 June   30 June   30 June
                                            2005       2004      2005      2004
                                           $'000      $'000     $'000     $'000

TURNOVER                                   2,165      4,148     4,800     9,512

Cost of sales                               (678)      (181)   (1,439)     (680)
                                          --------  --------   -------   -------

GROSS PROFIT                               1,487      3,967     3,361     8,832

Other operating expenses (net)            (1,240)    (2,283)   (2,326)   (5,173)
                                          --------  --------   -------   -------

INTEREST AND SIMILAR INCOME                  247      1,684     1,035     3,659

Interest income (net)                         81          -       128        13
                                          --------  --------   -------   -------

PROFIT/(LOSS) BEFORE TAXATION                328      1,684     1,163     3,672

Taxation                                       -          -         -         -
                                          --------  --------   -------   -------

PERIOD                                       328      1,684     1,163     3,672
                                          ========  ========   =======   =======

BASIC EARNINGS PER SHARE                    0.01       0.04      0.02      0.08
Excluding Non-Voting                        0.01       0.04      0.03      0.08
DILUTED EARNINGS PER SHARE                  0.01       0.03      0.02      0.06
Excluding Non-Voting                        0.01       0.03      0.03      0.06

The operating profit for the quarter arises from the company's continuing

STATEMENT OF TOTAL RECOGNISED GAINS AND    $'000    $'000   $'000   $'000

Profit for the financial period              328    1,684   1,163   3,672

Currency translation difference on 
foreign currency net investment               10      (57)     (3)    130
                                          -------- -------- ------- -------

Total recognised gains relating to the       338    1,627   1,160   3,802
year                                      ======== ======== ======= =======

                                World Gaming plc
                          Consolidated Balance Sheets
                    As at 30 June 2005 and 31 December 2004

                                                       30 June     31 December
                                                          2005            2004
                                                         $'000           $'000
Tangible assets                                          1,174           1,419
                                                       ---------       ---------
                                                         1,174           1,419

Debtors                                                  6,941          14,016
Cash at bank and in hand                                16,527           7,944
                                                       ---------       ---------
                                                        23,468          21,960

Amounts falling due within one year                     (3,537)         (7,094)
                                                       ---------       ---------

NET CURRENT ASSETS                                      19,931          14,866
                                                       ---------       ---------

TOTAL ASSETS LESS CURRENT LIABILITIES                   21,105          16,285

Amounts falling due after more than one year:
Provisions for liabilities and charges                    (428)           (257)
                                                       ---------       ---------

NET ASSETS                                              20,677          16,028
                                                       =========       =========

Called up share capital                                    151             134
Share premium account                                    5,147           1,675
Deferred compensation reserve                              567             567
Merger reserve                                          23,528          23,528
Profit and loss account                                 (8,716)         (9,876)
                                                       ---------       ---------

SHAREHOLDERS' FUNDS                                     20,677          16,028
                                                       =========       =========


1.  All amounts are in thousands of U.S. Dollars.

2.  Earnings per share excluding shares with no voting or
    economic rights refers to the 13,506,204 shares held by Sportingbet PLC and 
    its affiliates that have been set aside as a result of the Transaction with
    Sportingbet PLC and may be repurchased by the Company for an aggregate $1 
    when the Company has retained earnings to do so. This transaction had no 
    impact on the earnings per share calculation for the same period in 2004.

3.  The calculation of basic earnings per share in the quarter is based on the 
    profit after tax at 30 June 2005 of $328,000 (2004: $1,684,000) and on the 
    weighted average number of ordinary shares in issue.

4.  There have been no material changes to the accounting policies of the Group
    as set out in 31 December 2004 consolidated financial statements.

                                World Gaming plc
                   Unaudited Consolidated Cash Flow statement
                   Three months to the 30 June 2005 and 2004

                                                       6 months       6 months
                                                          ended          ended
                                                        30 June        30 June
                                                           2005           2004
                                                          $'000          $'000

Net cash inflow from operating activities                 1,259          3,664

Returns on investment and servicing of
finance                                                     128             13

Capital expenditure                                        (125)        (1,148)

Consideration received - Sportingbet                      3,000              -
                                                        ---------      ---------

CASH INFLOW/(OUTFLOW) BEFORE FINANCING                    4,262          2,529

Financing                                                   (14)        (1,409)

Issue of shares                                           4,325              -
                                                        ---------      ---------

INCREASE IN CASH IN THE PERIOD                            8,573          1,120
                                                        =========      =========


Increase in cash in the period                            8,573          1,120

Cash (inflow)/outflow from
(increase)/decrease in debt                                  14          1,250

Currency translation differences                             10            130
                                                        ---------      ---------
FLOWS IN PERIOD                                           8,597          2,500
                                                        ---------      ---------

Non-cash movements                                            -              -
                                                        ---------      ---------
Movement in net funds in period                           8,597          2,500
                                                        ---------      ---------
                                                        ---------      ---------
Net funds/(debt) at start of period                       7,930           (287)
                                                        ---------      ---------

NET FUNDS AT END OF PERIOD                               16,527          2,213
                                                        =========      =========

                      This information is provided by RNS
            The company news service from the London Stock Exchange