6-K 1 form6-k.txt FORM 6-K ________________________________________________________________________________ U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 dated June 1, 2005 WORLD GAMING PLC ---------------------------------------- (Exact Name as Specified in its Charter) N/A ---------------------------------- (Translation of Registrant's Name) Jasmine Court Friars Hill Road St. Johns, Antigua --------------------------------------------------- (Address of principal executive offices) (Zip code) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F X Form 40-F ----- ----- Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes No X ----- ----- If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable. ________________________________________________________________________________ EXPLANATORY NOTE: Attached hereto as an exhibit to this Form 6-K are the Registrant's unaudited consolidated financial statements at and for the three-month period ended March 31, 2005, and related Management's Discussion and Analysis of Financial Condition and Results of Operations. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused the Report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: June 1, 2005 WORLD GAMING PLC By: /s/ David James Naismith ------------------------ Name: David James Naismith ------------------------ Title: CFO ------------------------ - 2 - EXHIBIT INDEX ------------- Exhibit Description of Exhibit ------- ---------------------- 1 Unaudited consolidated financial statements at and for the three-month period ended March 31, 2005, and related Management's Discussion and Analysis of Financial Condition and Results of Operations - 3 - EXHIBIT 1 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 harbor for forward-looking statements. To comply with the terms of the safe harbor, 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 risks 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. 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. 1 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION (Dollars in thousands of US dollars, except per share data) OVERVIEW World Gaming Plc ("World Gaming" or the "Company") is a holding company incorporated under the laws of England and Wales that, through its subsidiaries and joint venture arrangements, is a developer, licensor and supplier of online gaming products, including casino, sportsbook and pari-mutuel betting. Interactive Systems Inc., a wholly-owned subsidiary of the Company incorporated and operating out of Antigua, licenses gaming software to third parties for an initial licensing fee and monthly royalties. In addition, Interactive Systems Inc. provides hosting and other systems administrative services to its licensees. WG Interactive Inc., a wholly-owned subsidiary of the Company, incorporated and operating out of British Columbia, Canada, provides further administrative services on behalf of Interactive Systems Inc. such as development support. The following tables set out selected consolidated information from the statements of operations for the three months ended March 31, 2005 and March 31, 2004 and the balance sheets as at March 31, 2005 and at December 31, 2004: SELECTED STATEMENT OF OPERATIONS INFORMATION (UNAUDITED) For the three months ended March 31, 2005 March 31, 2004 -------------- -------------- Net Sales .................................. $ 2,635 $ 5,364 Gross Profit ............................... 1,874 4,865 Expenses including interest and depreciation 1,039 2,863 Net Income/(Loss) .......................... 836 1,989 SELECTED BALANCE SHEET INFORMATION March 31, 2005 December 31, (unaudited) 2004 -------------- ------------ Working Capital ............................ $ 15,998 $ 14,866 Total Assets ............................... 20,751 23,379 Total loans and capital lease obligations .. - - Accumulated Deficit ........................ (5,518) (6,354) Total Shareholders' Equity ................. 16,947 16,028 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION (Dollars in thousands of US dollars, except per share data) Total revenues for the quarter ended March 31, 2005 decreased by 50.9% or $2,729 to $2,635 compared to $5,364 for the same period last year. The decrease in total revenues is wholly attributable to the Sportingbet Transaction effective October 1, 2004 where in return for certain consideration and other arrangements, the Company no longer charges royalties to Sportingbet for use of the Gaming Software (see "Sportingbet Transaction" below). Revenue from continuing and new licensees increased by 54.1% or $702 for the quarter ended March 31, 2005 when compared to $1,298 for the same period last year. Key financial aspects of the Sportingbet Transaction described below, for comparative purposes are as follows: o The Company no longer charges royalties to Sportingbet, which represented 68% of total revenue for the quarter ended March 31, 2004; o 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 in the quarter ended March 31, 2005; o All development costs previously incurred by the Company are paid by Sportingbet which equalled approximately $1,200 of costs for the quarter ended March 31, 2004; o The Company received certain cash and other consideration under the Sportingbet Transaction. Net income from operations for the quarter ended March 31, 2005 decreased by 58.0% to $836 or $0.03 per participating ordinary share compared to net income of $1,989 or $0.04 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 October 1, 2004 described below. Royalty revenue from software licensing decreased 59.5% or $2,941 to $2,000 for the quarter ended March 31, 2005 compared to $4,941 for the same period last year. Excluding royalties from Sportingbet, revenue from continuing and new licensees grew 54.1% to 2,000 for the quarter ended March 31, 2005 when compared to the same period last year. Pursuant to the Sportingbet Transaction described below, the Company received hosting revenues from Sportingbet and Sportingbet funded all development costs thus reducing operating costs by 63.7% in the quarter ended March 31, 2005 as described below. Pursuant to terms of the Sportingbet Transaction, the Company received hosting revenue from Sportingbet of $635 in the quarter ended March 31, 2005 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 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. 3 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION (Dollars in thousands of US dollars, except per share data) For the three months ended March 31, 2005, gross wagering volumes increased 42.9% to $2.0 billion when compared to $1.4 billion in the prior year. Growth in wagering volume from continuing licensees, excluding Sportingbet, was 70.3%. 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 ended March 31, 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 March 31, 2005 was 71.1% compared to 90.7% for the same period last year. The decrease resulted from 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 $400 would be re-allocated from operating expenses to direct cost of sales and therefore included in hosting costs for the quarter ended March 31, 2004. Operating expenses including interest and depreciation decreased 64.1% to $1,039 during the quarter ended March 31, 2005 compared to $2,890 for the same period last year. The decrease occurred primarily due to the following: o Development costs being funded by Sportingbet as result of the Transaction described below, effective October 1, 2004 which represented approximately $1,200 of operating costs in the quarter ended March 31, 2004. o Re-allocation of all hosting costs to direct cost of sales which attributed to approximately $400 of operating costs in the quarter ended March 31, 2005. o Depreciation charges during the quarter ended March 31, 2005 declined $208 or 52.4% when compared to the same period last year. LIQUIDITY AND CAPITAL RESOURCES At March 31, 2005, the Company had $12,377 in cash and cash equivalents up from $7,944 at December 31, 2004. The increase in the quarter was primarily due to net income earned in the quarter and the receipt of the second installment of consideration of $3,000 from Sportingbet. 4 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION (Dollars in thousands of US dollars, except per share data) Working capital at March 31, 2005 improved to $15,998 from $14,866 at December 31, 2004. Consistent with the Company's accounting policies, reserves and deposits held by credit card processors on behalf of our licensees were written off the Company's balance sheet in the quarter. At December 31, 2004 the Company held as a receivable from transaction processors $2,234. These amounts relate to reserves and other deposits that were receivable on behalf of the Company's licensees up to the date of closure of its transaction processing division in February 2004. These funds are held on behalf of licensees and accordingly the associated payable to the licensees in the same amount has also been written off. Accounts receivable decreased by $1,953 from $4,438 at December 31, 2004 to $2,485 at March 31, 2005. The accounts receivable balance primarily consists of amounts due to the Company in respect of deposits processed on behalf of licensees during March 2005. The Company collects all funds processed by our licensees in the previous month within 30 days of month-end of the preceding month. The Company then collects its royalty from these funds before distributing to respective licensees. In addition, balances due from one of our largest licensees were brought current in the quarter ended March 31, 2005. Royalties due from operating licensees who do not utilize the Company's outsourced processing function are usually collected towards the end of the following month. Prior to closure of the transaction processing division in February 2004, such amounts would have been disclosed as amounts due from processors. Prepaid expenses and deposits increased by $35 to $379 at March 31, 2005 compared to $344 at December 31, 2004. The increase is due to prepaid software maintenance in the quarter ended March 31, 2005. Consideration receivable of $4,000 represents cash payments due from Sportingbet in respect of the transaction which took effect October 1, 2004. A further staged payment of $3,000 was received on March 1, 2005 and the balance of $4,000 is receivable no later than November 1, 2005. Deferred costs during the quarter ended March 31, 2005 totalled $202. These costs are attributable to the Company's listing on the Alternative Investment Market ("AIM") of the London Stock Exchange on May 17, 2005. Consistent with the listing date, these costs will therefore be allocated to share premium reserve in the second calendar quarter of 2005. Accounts payable and accrued liabilities balances decreased by $3,649 to $3,445 in the quarter ended March 31, 2005 compared to $7,094 at December 31, 2004. The reduction relates to the write off of balanced attributable to reserves and deposits described above of $2,234 and lower amounts receivable in respect of March 2005 processing net of the Company's royalties. In addition, amounts managed for jackpot balances of $781 at March 31, 2005 are included in the balance together with general accounts payable. Jackpot balances are amounts held on behalf of our licensees for our gaming products utilized on their websites. 5 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION (Dollars in thousands of US dollars, except per share data) Net cash provided by operating activities for the quarter ended March 31, 2005 was $1,459 compared to $4,066 for the same period last year. The decrease is primarily due to lower net income in the quarter ended March 31, 2005 and the removal of receipts from credit card processors in respect of our licensees due to the closure of this division in February 2004. Net cash provided by investing activities for the quarter ended March 31, 2005 was $2,905 compared to $318 used for investing activities for the same period last year. This increase is primarily represented by second instalment of consideration received on March 1, 2005 of $3,000 in respect of the Sportingbet Transaction described below. A further $4,000 is due on November 1, 2005. Net cash provided by financing activities for the quarter ended March 31, 2005 was $82 compared to $1,121 used for financing activities for the same period last year. Cash provided by financing activities was primarily from the issuance of ordinary shares in respect of share options exercised in the period. "SPORTINGBET TRANSACTION" (Currency in US dollars) Joint Venture Arrangements, effective October 1, 2004, were entered into on October 12, 2004 between the Company and Sportingbet. The principle terms of the arrangements are as follows: o The ownership of the intellectual property in the Company's gaming software including it's gaming product suite ("Gaming Software") was transferred into a new exempt limited partnership, Bullen Road LP, based in the Cayman Islands, which was established under the equal joint ownership of SSII Limited and Sportingbet; o In consideration of this transfer, Sportingbet agreed to pay a total of $10 million in cash to the Company ($3 million was paid on each of October 12, 2004 and March 1, 2005 and the balance of $4 million is payable on or before November 1, 2005). In addition, the economic value of Sportingbet's then 29.6% shareholding in the Company was eliminated by the cancellation of all rights of any value attached to the ordinary shares of the Company then held by Sportingbet, and a convertible loan note representing indebtedness of $900,000 owing from the Company to Sportingbet was cancelled; o Each of the Company and Sportingbet has the right to appoint two directors to the four person board of Bullen Road LP which controls the development objectives of Alea Software Ltd, a wholly owned subsidiary of Sportingbet and the developer of the Gaming Software under the Joint Venture Arrangements; o During the period of the Joint Venture Arrangements, Sportingbet is responsible for all of Alea's costs associated with the development and maintenance of the Gaming Software (with a minimum spend of $4.5 million per year in the first 3 years and a minimum of $2.5 million in the fourth year); o The Company retains the right to determine 30% of the development time on the Gaming Software through a development plan devised by the Joint Venture Board consisting of two members of the Company and two members from Sportingbet; 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION (Dollars in thousands of US dollars, except per share data) o The Company has a worldwide royalty free licence allowing it to continue to use and sublicence the Gaming Software. In the event that World Gaming becomes an operator it would pay a 5% royalty only on those revenues to Sportingbet; o Sportingbet has a worldwide royalty free licence to use the Gaming Software. Royalty payments of 5% are due from Sportingbet in the event that they licence the Gaming Software to any new licencees; o Sportingbet pays its proportion of the hosting costs on the Company's systems and information technology (IT) services at cost plus 10%; o The Joint Venture Arrangements may be terminated by the Company on three months notice. Except in the event of breach by World Gaming, Sportingbet may not terminate the Joint Venture Arrangements for three years. Thereafter, Sportingbet may terminate on 12 months notice to the Company; and o On termination of the Joint Venture Arrangements, (a) Sportingbet must pay $3 million to the Company (which would be retrospectively reduced by the amount of consideration received by the Company if it sells its rights to the Gaming Software within 2 years); and (b) each of the Company and Sportingbet will be granted a perpetual, non-exclusive royalty free licence to use, sub-licence and assign all of the then intellectual property rights underlying the improved Gaming Software, and neither party will have the rights to any further improvements or developments made by the other party. The additional $3 million payable to the Company upon termination of the Agreements by Sportingbet has not been included in the Company's financial statements. REGULATORY DEVELOPMENTS The licensees of the Company's software products, and the Company itself, are subject to applicable laws in various jurisdictions. As companies and consumers involved in Internet gaming are located around the globe, including the end-users of our licensees, there is uncertainty regarding exactly which governments have jurisdiction or authority to regulate or legislate with respect to various aspects of the industry. The uncertainty surrounding the regulation of Internet gaming could have a material adverse effect on the Company's business, revenues, operating results, and financial condition. There is a risk that criminal and civil proceedings could be initiated in various jurisdictions against the Company's licensees, or, less likely, even the Company, and such proceedings could involve substantial litigation expense, penalties, fines, diversion of the attention of key executives, injunctions or other prohibitions being invoked against the licensee or the Company. Such proceedings could have a material adverse effect on the Company's business, revenues, operating results and financial condition. In addition, as electronic commerce develops further, it may generally be the subject of government regulation including taxation which could impact the Company's financial position. Also, current laws that pre-date or are incompatible with Internet electronic commerce may be enforced in a manner that restricts the electronic commerce market. Any such developments could have a material adverse effect on the Company's business, revenues, operating results and financial condition. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION (Dollars in thousands of US dollars, except per share data) 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. If Internet gambling prohibition legislation is introduced and becomes law, it would have an immediate detrimental effect on the industry and would pose a serious threat to the Company's continued operations. In March 2004, the World Trade Organization held in favour of Antigua and Barbuda and against the United States of America with regard to unlawful trade restrictions relating to Internet gaming. In April 2005, the U.S. appeal to this ruling was heard, but it is too early to determine what, if any, influence this may have on United States led legislation. 8 WORLD GAMING PLC AND SUBSIDIARIES Consolidated Balance Sheets (In Thousands of U.S. Dollars) ASSETS ------ March 31, December 31, 2005 2004 ----------- ------------ (Unaudited) CURRENT ASSETS Cash and cash equivalents ........................ $ 12,377 $ 7,944 Reserves and deposits with credit card processors - 2,234 Accounts receivable, net ......................... 649 587 Accounts receivable from related party ........... 1,836 3,851 Consideration receivable ......................... 4,000 7,000 Deferred AIM costs ............................... 202 - Prepaid expenses ................................. 379 344 -------- -------- Total Current Assets ........................... 19,443 21,960 Capital Assets, net .............................. 1,308 1,419 -------- -------- TOTAL ASSETS ................................... $ 20,751 $ 23,379 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 9 WORLD GAMING PLC AND SUBSIDIARIES Consolidated Balance Sheets (Continued) (In Thousands of U.S. Dollars) LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ March 31, December 31, 2005 2004 ----------- ------------ (Unaudited) CURRENT LIABILITIES Accounts payable and accrued liabilities ...... $ 3,445 $ 7,080 Current portion of capital lease obligation ... - 14 -------- -------- Total Current Liabilities ................... 3,445 7,094 LONG-TERM LIABILITIES Deferred bonus provision ...................... 359 257 Convertible Note payable to related party ..... - - -------- -------- TOTAL LIABILITIES ................................ 3,804 7,351 -------- -------- STOCKHOLDERS' EQUITY Capital stock ................................. 23,750 23,654 Accumulated deficit ........................... (5,518) (6,354) Accumulated other comprehensive loss .......... (1,285) (1,272) -------- -------- Total Stockholders' Equity .................. 16,947 16,028 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .. $ 20,751 $ 23,379 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 10 WORLD GAMING PLC AND SUBSIDIARIES Consolidated Statements of Operations and Other Comprehensive Income/(Loss) (In Thousands of U.S. Dollars, except share amounts) (Unaudited) For the 3 Months Ended March 31, ----------------------------- 2005 2004 ------------ ------------ REVENUE Royalties and fees ......................... $ 2,000 $ 5,288 Other ...................................... 635 76 ------------ ------------ Total Revenue ............................ 2,635 5,364 Cost of sales .............................. 761 499 ------------ ------------ Gross Profit ............................. 1,874 4,865 ------------ ------------ OPERATING EXPENSES Development, selling, general, and administrative ......................... 896 2,466 Depreciation and amortization .............. 189 397 Interest and bank charges .................. (46) 27 ------------ ------------ Total Operating Expenses ................. 1,039 2,890 ------------ ------------ Net Income From Operations .................... 836 1,975 ------------ ------------ OTHER INCOME Other income ............................. - 14 ------------ ------------ Total Other Income ....................... - 14 NET INCOME .................................... 836 1,989 ------------ ------------ OTHER COMPREHENSIVE INCOME Foreign currency translation ............. (13) 188 ------------ ------------ Total other comprehensive income ......... (13) 188 ------------ ------------ Net Comprehensive Income ...................... $ 823 $ 2,177 ============ ============ PROFIT PER SHARE - Basic ...................... $ 0.02 $ 0.04 ============ ============ - Excluding non-voting ................... $ 0.03 $ 0.04 ============ ============ - Fully Diluted .............. $ 0.02 $ 0.03 ============ ============ - Excluding non-voting ................... $ 0.02 $ 0.03 ============ ============ WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - Basic ................... 46,248,072 45,781,407 ============ ============ - Excluding non-voting ................... 32,741,868 45,781,407 ============ ============ - Fully Diluted ........... 52,402,610 58,827,169 ============ ============ - Excluding non-voting ................... 38,896,406 58,827,169 ============ ============ The accompanying notes are an integral part of these consolidated financial statements. 11 WORLD GAMING PLC AND SUBSIDIARIES Consolidated Statements of Cash Flows (In Thousands of U.S. Dollars) (Unaudited)

~~2004~~For ~~2003~~the ~~2002~~3 ~~Notes~~Months ~~$'000~~Ended ~~$'000~~March ~~$'000 TURNOVER 1 16~~31,~~288~~ ~~17,698 16,777 Cost of sales 1,871 2,150 1,704~~ ---------------------- 2005 2004 ------- ------- ~~Gross~~CASH ~~profit~~FLOWS ~~14,417~~FROM ~~15,548~~OPERATING 15ACTIVITIES Net Income .................................................. $ 867 $ 1,~~073~~989 ~~Other~~Adjustment ~~operating~~to ~~expenses~~reconcile (net) ~~9,337~~loss ~~13,218~~to ~~20,336~~net ~~------~~cash provided by operating activities: Depreciation and amortization ............................. 189 397 Loss on disposal of fixed assets .......................... -~~-----~~ -~~-----~~ ~~OPERATING~~Changes ~~PROFIT~~in ~~BEFORE~~operating ~~INTEREST~~assets ~~AND~~and ~~SIMILAR~~liabilities: ~~INCOME~~(Increase) 5decrease in reserves with credit card processors 2,~~080~~234 2,~~330~~076 (5Increase) decrease in accounts receivable ................ 1,~~263~~953 (1,455) ~~Investment~~(Increase) ~~income~~decrease 2in ~~111~~prepaid ~~147~~expenses 92and ~~Interest~~deposits ~~payable~~...... 3(35) 103 (8Increase) decrease in deferred costs ..................... (~~203~~202) - Increase (~~147~~decrease) ~~Exceptional~~in ~~item~~accounts -payable ~~Gain~~and onaccrued ~~Lease~~liabilities ~~settlements~~.............................................. 5(3,649) --1,269 ~~834~~Increase --(decrease) -in ~~Gain~~accrual onfor ~~Disposal~~legal 5claims ~~12,187~~........... -- --(15) ~~------~~Increase ~~------~~(decrease) in funds held on deposit .............. -~~-----~~ ~~PROFIT~~(2,160) ONIncrease ~~ORDINARY~~(decrease) ~~ACTIVITIES~~in ~~AFTER~~e-cash ~~EXCEPTIONAL~~balances ~~ITEMS~~due ~~AND~~to ~~BEFORE~~related ~~TAXATION~~party 4- 171,~~370~~862 ~~3,108~~Increase (~~5,318~~decrease) ~~Taxation~~in 7provisions ......................... 102 - Exchange movements ........................................ - -- ------- ------- Net Cash Provided by Operating Activities ............... 1,459 4,066 ------- ------- ~~PROFIT/(LOSS)~~CASH ~~FOR~~FLOWS ~~THE~~FROM ~~FINANCIAL~~INVESTING ~~YEAR~~ACTIVITIES 17Purchase ~~17,370~~of ~~3,108~~property ~~(5,318)~~and ~~======~~equipment ~~======~~.......................... ~~======~~(95) ~~BASIC PROFIT/~~(~~LOSS~~318) ~~PER~~Consideration ~~SHARE~~received 8- ~~0.38~~Sportingbet 0.~~07 (0~~.~~16)~~...................... ~~BASIC~~3,000 ~~PROFIT~~- ~~PER~~------- ~~SHARE Excluding Non~~-~~Voting~~------ 8Net ~~0.53~~Cash ~~0.07~~Provided --by ~~DILUTED PROFIT/~~(~~LOSS~~Used For)~~PER~~ ~~SHARE~~Investing 8Activities 0.~~34 0~~.05.. 2,905 (~~0.05~~318) ~~DILUTED~~------- ~~PROFIT~~------- ~~PER~~CASH ~~SHARE~~FLOWS ~~Excluding~~FROM ~~Non-Voting~~FINANCING 8ACTIVITIES ~~0.46~~Issuance ~~0.05~~of --common ~~The~~shares ~~operating~~...................................... ~~profit~~96 ~~for~~- ~~the~~Repayment ~~year~~of ~~arises~~loans ~~from~~payable ~~the~~..................................... ~~company's~~- ~~continuing~~(914) ~~operations.~~Principal ~~STATEMENT~~payments OFon ~~TOTAL~~capital ~~RECOGNISED~~lease ~~GAINS~~obligations ~~AND~~................ ~~LOSSES~~(14) ~~2004~~(207) ~~2003~~------- ~~2002~~------- ~~Notes~~Net ~~$'000~~Cash ~~$'000~~Provided ~~$'000~~by ~~Profit/~~(~~Loss)~~Used for) ~~the~~Financing ~~financial~~Activities ~~period~~...... ~~17,370~~82 ~~3,108~~ (51,~~318~~121) ~~Currency~~------- ~~translation~~------- ~~difference~~Effects onof ~~foreign~~exchange ~~currency~~rate ~~net~~on ~~investment~~cash ~~168~~.......................... ~~(385)~~$ (8513) ~~------~~$ 188 ------- ------- ~~Total~~The ~~recognised~~accompanying ~~gains~~notes ~~relating~~are toan ~~the~~integral ~~year~~part ~~17,538~~of ~~2,723~~these ~~(5,403)~~consolidated ~~======~~financial ~~======~~statements. ~~======~~12

WORLD GAMING PLC AND SUBSIDIARIES Consolidated Statements of Cash Flows (Continued) (In Thousands of U.S. Dollars) (Unaudited)

~~Group~~For ~~2004~~the ~~2003~~3 ~~2002~~Months ~~Notes~~Ended ~~$'000~~March ~~$'000 $'000 FIXED ASSETS Tangible assets 9 1~~31,~~419~~ ~~1,854 2,931~~ ------ ------ ------ ~~1,419 1,854 2,391~~ ------ 2005 2004 ------- ------- ~~CURRENT~~INCREASE/(DECREASE) ~~ASSETS~~IN ~~Debtors~~CASH 12.................................... ~~14,016~~$ 84,~~080~~433 4$ 2,~~524~~815 ~~Cash~~CASH atAND ~~bank~~CASH ~~and~~EQUIVALENTS inAT ~~hand~~BEGINNING OF PERIOD ............... 7,944 2,~~896~~657 ~~922~~ ------ -~~-----~~ ------- ~~21,960~~CASH ~~10,976~~AND ~~5,446~~CASH ~~CREDITORS:~~EQUIVALENTS ~~Amounts~~END ~~falling~~OF ~~due~~PERIOD ~~within~~........................ ~~one year 13 (7~~$12,~~094)~~377 ~~(11,102)~~$ (95,~~827)~~472 ~~------~~======= ~~------~~======= ~~------~~SUPPLEMENTAL ~~NET~~SCHEDULE ~~CURRENT~~OF ~~ASSETS/(LIABILITIES)~~CASH ~~14,609~~FLOW ~~(126)~~INFORMATION ~~(4,381)~~ ------ ------ ------ ~~TOTAL ASSETS LESS CURRENT LIABILITIES 16,028 1,728 (1,450) CREDITORS (including convertible debt): Amounts falling due after more than one year 14~~ -- ~~(900) (895) PROVISIONS FOR LIABILITIES AND CHARGES 15 (257)~~ -- ~~(1,200)~~ ------ ------ ------ ~~NET ASSETS/(LIABILITIES) 16,028 828 (3,545) ====== ====== ====== CAPITAL AND RESERVES Called up share capital 16 134 133 97 Share Premium Account 17 1,675 1,614~~ ------ ~~Deferred~~CASH ~~Compensation~~PAID ~~Reserve~~DURING 17THE ~~567~~PERIOD ~~567~~FOR ~~567~~Interest ~~Merger Reserve 17 23,528 23,528 23,528 Profit~~ and ~~loss~~Bank ~~account~~charges 17..................................... ~~(9,876)~~$ (~~25,014~~46) ($ 27~~,737)~~ ~~------~~The ~~------~~accompanying ~~------~~notes ~~SHAREHOLDERS'~~are ~~FUNDS~~an ~~(including~~integral ~~non-equity~~part ~~interests)~~of ~~16,028~~these ~~828~~consolidated ~~(3,545)~~financial ~~======~~statements. ~~====== ======~~13

WORLD GAMING PLC AND SUBSIDIARIES Notes to the Unaudited Consolidated Financial Statements March 31, 2005 and December 31, 2004 NOTE 1 - ACCOUNTING POLICIES The consolidated financial statements at March 31, 2005 are unaudited for the purposes of this 6-K filing, but include all adjustments (consisting only of normal recurring adjustments) which in the opinion of management, are necessary to state fairly the financial information set forth therein in accordance with accounting principles generally accepted in the United States of America. The financial amounts presented in the notes are in thousands of U.S. dollars unless the currency has been otherwise indicated. NOTE 2 - UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial reporting. Accordingly, certain information and footnote disclosures normally included in financial statements prepared under accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such regulations. These consolidated financial statements for the quarter ended March 31, 2005 should be read in conjunction with the Company's annual report on Form 20-F for the fiscal year ended December 31, 2004. NOTE 3 - INCOME TAXES No income taxes arise as no taxation charges are levied in the main operating territory and elsewhere as there are losses brought forward from previous periods. NOTE 4 - STOCK OPTIONS On March 12, 1998, the Board of Directors approved a Stock Option Plan ("the Plan"), which authorized the issuance of 3,000,000 options to employees of the Company and its subsidiaries at an exercise price of $0.74. The options expire on January 1, 2008. On December 31, 1998, the Board of Directors authorized the issuance of up to 4,000,000 additional options at an exercise price to be determined based on the trading price of the Company's shares on the grant date. 14 WORLD GAMING PLC AND SUBSIDIARIES Notes to the Unaudited Consolidated Financial Statements March 31, 2005 and December 31, 2004 NOTE 4 - STOCK OPTIONS (continued) On December 23, 1999, the Board of Directors authorized the issuance of up to 5,000,000 additional options at an exercise price to be determined based on the trading price of the Company's shares on the grant date. On August 5, 2003 the Board of Directors authorized the issuance of up to 1,500,000 additional options to employees at an exercise price of $0.15, being the closing market price on the date of grant, of which 1,475,000 were issued. All subsequent option issues have been issued in accordance with the Stock Option Plan at the discretion of the Stock Option Committee, provided that: 1.) the aggregate option grants shall not exceed the maximum allowable under the Plan, 2.) the exercise price is not less than the market value of the Company's trading shares on the date of the grant, and 3.) the option period does not exceed expiry of the Plan date. Options for continuing directors, employees and consultants expire the sooner of ten years after the date granted or the expiry date of the Plan. A summary of the Company's stock option activity and related information follows: Three months ended Year ended March 31, 2005 December 31, 2004 --------------------- ----------------------- Beginning of period .... 10,934,888 $ 0.63 10,818,724 $ 0.78 Granted ................ 2,575,000 0.61 2,550,000 0.37 Exercised .............. (450,000) 0.21 (300,000) (0.20) Forfeited and adjusted . (2,415,350) 1.05 (2,133,836) (1.12) ---------- ------ ---------- ------- End of period .......... 10,644,538 $ 1.02 10,934,888 $ 0.63 ---------- ------ ---------- ------- In March 2005, a former director of the Company relinquished all rights to purchase 2,200,000 ordinary shares in the Company that had fully vested. At March 31, 2005 options outstanding were as follows:

~~2004~~Options ~~2003~~Outstanding ~~2002~~Options ~~Notes~~Exercisable ~~$'000~~------------------------------------ ~~$'000~~----------------------------------- ~~$'000~~Weighted ~~Net~~Weighted ~~Cash~~Average ~~inflow/(outflow)~~Weighted ~~from~~Average ~~operating~~Weighted ~~activities~~Remaining ~~18a~~Average ~~6,374~~Remaining ~~2,667~~Average ~~(1,203)~~Range ~~Returns~~of onNumber ~~investments and servicing~~ of ~~finance~~Contractual ~~18b~~Exercise ~~103~~Number ~~778~~of ~~(55)~~Contractual ~~Capital~~Exercise ~~expenditure~~Exercise ~~and~~Prices ~~financial~~Options ~~investment~~Life ~~18b~~ (~~1,065~~Years) 28Price Options Life (~~1,165~~Years) ~~Sportingbet~~Price ~~Agreement 2,032~~ -- ------------- ---------- ------------ -------- ~~CASH INFLOW/(OUTFLOW) BEFORE FINANCING 7,444 3,473 (2,423) Financing 18b (2,181) (1,261) 1,845~~ --------- ------------ -------- ~~NET~~$0.01 ~~INCREASE/(DECREASE)~~- IN$0.50 ~~CASH 5~~7,~~263 2~~290,~~212~~000 ~~(578)~~5.7 ~~======~~$ ~~======~~0.25 ~~======~~4,690,000 ~~RECONCILIATION~~5.4 OF$ ~~NET~~0.24 ~~CASHFLOW~~$0.51 TO- ~~MOVEMENT~~$1.00 IN2,236,667 ~~NET~~5.6 ~~FUNDS~~$ ~~2004~~0.69 ~~2003~~376,667 ~~2002~~2.9 $~~'000~~ ~~$'000~~0.69 $~~'000~~1.01 ~~Increase/(decrease)~~- in$3.00 ~~cash~~788,454 ~~for~~3.0 ~~the~~$ ~~year~~1.91 5763,~~263~~454 2~~,212~~.9 ~~(578)~~$ ~~Cash~~1.92 ~~outflow/(inflow)~~$3.01 ~~from~~- ~~decrease~~$8.50 ~~/(increase)~~329,417 in5.2 ~~debt~~$ ~~2,243~~3.27 1329,~~861~~417 (5.2~~,676)~~ $ 3.27 --------------- ---------- ------------ ~~Decrease/(increase)~~-------- in--------- ~~net~~------------ ~~debt~~-------- ~~resulting~~$0.01 ~~from~~- ~~cash~~$8.50 ~~flows 7~~10,~~506~~644,538 5.4~~,073~~ ~~(3,254)~~$ ~~New~~0.56 ~~Finance leases -- (1~~6,~~002)~~159,538 ~~(875)~~4.6 ~~Currency~~$ ~~translation~~0.64 ~~differences (189) (267) (85) Non~~-~~cash movements 900~~ -- -- ---------- ---------- ------------ ~~8,217 2,804 (4,214) Net (debt)/funds at 1 January (287) (3,091) 1,123~~ -------- --------- ------------ ~~NET FUNDS/(DEBT) AT 31 DECEMBER 7,930 (287) (3,091) ====== ====== ======~~--------

15 WORLD GAMING PLC AND SUBSIDIARIES Notes to the Unaudited Consolidated Financial Statements March 31, 2005 and December 31, 2004 NOTE 5 - COMMITMENTS AND CONTINGENCIES At March 31, 2005, the Company had employment contracts with its three principal officers. The salary and bonus compensation resulting from these contracts are as follows: Potential Bonus Name and Term of Base (as a percentage Principal Position the Contract Salary of Base Salary) ------------------- -------------- ------- ---------------- A. Daniel Moran, ongoing GBP 159 Up to 50% Director & CEO David Naismith, ongoing GBP 129 Up to 50% Director & CFO Jonathan Moss ongoing GBP100 Up to 50% Director of Sale and Marketing On April 11, 2003 the Company entered into an employment agreement with Mr. Daniel Moran as a Director on the Board of Directors and Chief Executive Officer. The agreement provides for an annual salary of GBP 159, an annual housing allowance of $72, in addition to other normal executive employment benefits. On August 1, 2003 the Company entered into an employment agreement with Mr. David Naismith as a Director on the Board of Directors and Chief Financial Officer. The agreement provides for an annual salary of GBP 129, an annual housing allowance of $48, in addition to other normal executive employment benefits. On January 1, 2005 the Company entered into an employment agreement with Mr. Jonathan Moss as Director of Sales and Marketing. The agreement provides for an annual salary of GBP 100 in addition to other normal executive employment benefits. On March 1 2005, Mr. Moss was appointed a Director on the Board of Directors. No change in Mr. Moss's remuneration occurred as a result of this appointment. 16

Year ended Year ended Year ended 31 December 31 December 31 December 2004 2003 2002 $'000 $'000 $'000 Other interest receivable 111 147 92 ----- ----- ----- 111 147 92 ===== ===== ===== 3. INTEREST PAYABLE Year ended Year ended Year ended 31 December 31 December 31 December 2004 2003 2002 $'000 $'000 $'000 Finance leases 8 203 147 ----- ----- ----- 8 203 147 ===== ===== ===== 4. PROFIT/(LOSS) ON ORDINARY ACTIVITIES Year ended Year ended Year ended 31 December 31 December 31 December 2004 2003 2002 $'000 $'000 $'000 Profit/(loss) on ordinary activities before taxation is stated after charging: Depreciation and amounts written off tangible fixed assets: Charge for the year owned assets 951 1,322 2,540 leased assets 469 611 628 Loss on disposals 201 -- 74 Exchange losses 25 19 17 Operating lease rentals: Other operating leases 295 362 435 Auditors' remuneration Group 125 97 105 Parent 30 30 5 Research and Development expenditure 2,745 3,511 3,169

Year ended Year ended Year ended 31 December 31 December 31 December 2004 2003 2002 The average monthly number of persons (including Directors) employed by the company during the year was: Development - North America 34 40 48 Operations - Caribbean 20 51 61 Corporate - U.K. -- 1 6 ----- ----- ----- 54 92 115 ===== ===== ===== Staff costs for above persons: Wages and salaries 4,289 6,021 4,889 Social security costs 139 105 182 ----- ----- ----- 4,428 6,126 5,071 ===== ===== ===== DIRECTORS' REMUNERATION Year ended Year ended Year ended 31 December 31 December 31 December 2004 2003 2002 $'000 $'000 $'000 Emoluments 579 515 275 Benefits in kind 142 119 33 Compensation payment 37 200 -- Bonuses 487 180 -- ----- ----- ----- Total emoluments 1,245 1,014 308 ===== ===== =====

Highest Paid Director Year ended Year ended Year ended 31 December 31 December 31 December 2004 2003 2002 Emoluments 469 284 208 ===== ===== =====

Year ended Year ended Year ended 31 December 31 December 31 December 2004 2003 2002 $'000 $'000 $'000 Profit/(Loss) on ordinary activities before tax 17,370 3,108 (5,318) ------ ----- ------ Profit/(Loss) on ordinary activities multiplied by standard rate of 30% (2003: 30%, 2002: 30%) 5,211 932 (1,595) Expenses not deductible for tax purposes -- -- 1 Tax losses (brought forward) / carried forward (5,211) (932) 1,594 ------ ----- ------ Current tax charge for period -- -- -- ====== ===== ======

Computer Leasehold Software Hardware & Improvements Motor & Domain Equipment & Fixtures Vehicles Names Total $'000 $'000 $'000 $'000 $'000 COST At 1 January 2002 7,111 907 114 2,431 10,563 Additions 1,549 52 -- 501 2,102 Disposals -- (118) (68) (186) Exchange differences (15) 13 -- 8 6 ------ ---- --- ------ ------ 1 January 2003 8,645 854 114 2,872 Additions 127 9 66 874 1,076 Disposals (102) -- -- -- (102) Exchange differences (8) -- -- (41) (49) ------ ---- --- ------ ------ 1 January 2004 8,662 863 180 3,705 13,410 Additions 692 49 -- 324 1,065 Disposals (6,102) (967) (106) (2,364) (9,539) Exchange differences 259 164 1 305 729 ------ ---- --- ------ ------ 31 December 2004 3,511 109 75 1,970 5,665 ====== ==== === ====== ====== DEPRECIATION 1 January 2002 4,429 387 61 1,553 6,430 Charged in the year 2,175 218 25 750 3,168 Disposals -- (44) -- -- (44) Exchange differences 9 (13) -- 4 -- ------ ---- --- ------ ------ 1 January 2003 6,613 548 86 2,307 9,554 Charged in the year 1,371 147 25 390 1,933 Exchange differences 58 -- -- 11 69 ------ ---- --- ------ ------ 1 January 2004 8,042 695 111 2,708 11,556 Charged in the year 772 164 31 453 1,420 Disposals (6,105) (920) (75) (2,088) (9,188) Exchange differences (233) (129) -- 96 458 ------ ---- --- ------ ------ 31 December 2004 2,942 68 67 1,169 4,246 ------ ---- --- ------ ------ Net book value 31 December 2004 569 41 8 801 1,419 ====== ==== === ====== ====== 31 December 2003 620 168 69 997 1,854 ====== ==== === ====== ====== 31 December 2002 2,032 306 28 565 2,931 ====== ==== === ====== ======

Subsidiary Principal Activity Type of Shares Percentage Country of Held Owned Incorporation WG International Ltd Holding Company Ordinary 100% England & Wales LVA Holdings (formerly Holding Ordinary 100% U.S.A. Starnet Communications Company Internatio nal Inc) (1) Interactive Services Inc. Licensing of Ordinary 100% Antigua Internet Gaming Systems WG Interactive Inc. Systems Ordinary 100% Canada Administration World Gaming Europe Ltd(1) Dormant Ordinary 100% England & Wales SSII Ltd (formerly Starnet Licensing of Ordinary 100% Antigua Systems International Inc)(2) Internet Gaming Systems EFS Caribbean Inc(2) Dormant Ordinary 100% Antigua EFS St Kitts Inc(2) Dormant Ordinary 100% Antigua Inphinity Interactive Inc(2) Dormant Ordinary 100% Canada World Gaming Service Inc(2) Dormant Ordinary 100% Antigua ESCE Inc (formerly Starnet Dormant Ordinary 100% Canada Communications Canada Inc)(2)

2004 2003 2002 ------------------------------- ------------------------------- ------------------------------- Weighted Weighted Weighted Weighted Weighted Weighted Aggregate average a period Aggregate average a period Aggregate average a period carrying interest rate fixed carrying interest rate fixed carrying interest rate fixed amount rate for amount rate for amount rate for Currency $'000 % Years $'000 % Years $'000 % Years FIXED RATE LIABILITIES US$ 14 12 1 385 12.7 1 128 11.8 1 Canadian$ -- -- -- 261 6.0 1 1,563 6.0 1 --------- --------- --------- 14 646 1,691 ========= ========= ========= FIXED RATE ASSETS US $ 7,133 2.2% -- -- -- 1 44 5.1 -- ========= ========= ========= 2004 2003 2002 ----------------------- ----------------------- ------------------------ Weighted Weighted Weighted Aggregate Average Aggregate Average Aggregate Average Carrying Maturity Carrying Maturity Carrying Maturity Amount years Amount years Amount years Currency $'000 $'000 $'000 INTEREST FREE LIABILITIES US $ -- -- 1,669 1 1,299 1 Canadian $ -- -- 595 1 -- -- --------- --------- --------- -- 2,264 2,264 ========= ========= ========= INTEREST FREE ASSETS US$ 717 -- 2,879 -- 1,483 -- Canadian $ 20 -- 3 -- -- -- East Caribbean $ 74 -- 14 -- 16 -- --------- --------- --------- 811 2,896 1,499 ========= ========= ========= 2004 2003 2002 ----------------------- ----------------------- ------------------------ Aggregate Benchmark Aggregate Benchmark Aggregate Benchmark Carrying Interest Carrying Interest Carrying Interest Amount rate Amount rate Amount rate Currency $'000 $'000 $'000 FLOATING RATE LIABILITIES US$ -- -- 232 LIBOR+2% 812 LIBOR+2% East Caribbean $ -- -- 3 -- -- -- --------- --------- --------- -- 235 812 ========= ========= =========

2004 Options Outstanding Options Exercisable Weighted Weighted Average Average Weighted remaining Weighted remaining Average Range of Exercise Number of contractual Average Number of contractual exercise prices options life (years) exercise price Options life (years) price $0.14 - $0.50 8,545,000 5.3 $0.24 6,340,000 4.9 $0.25 $0.51 - $1.00 611,667 3.3 $0.74 456,667 2.2 $0.77 $1.01 - $3.00 1,169,054 3.0 $1.86 1,169,054 3.0 $1.86 $3.01 - $8.50 609,167 3.8 $3.60 609,167 3.8 $3.60 ---------- --------- 10,934,888 7.2 $0.66 8,547,888 4.13 $0.74 ========== ========= 2003 Options Outstanding Options Exercisable Weighted Weighted Average Average Weighted remaining Weighted remaining Average Range of Exercise Number of contractual Average Number of contractual exercise prices options life (years) exercise price Options life (years) price $0.31 - $1.00 3,302,122 7.3 $0.24 3,561,237 5.9 $0.31 $1.01 - $1.50 517,470 4.8 $1.37 475,968 4.7 $1.37 $1.51 - $2.50 1,029,370 3.0 $2.23 996,036 2.9 $2.22 $2.51 - $6.00 951,262 5.8 $3.45 917,928 5.7 $3.42 $6.01 - $11.00 18,500 5.0 $8.01 18,500 5.0 $8.01 ---------- --------- 10,818,724 6.664 $0.78 5,969,669 5.27 $1.22 ========== ========= 2002 Options Outstanding Options Exercisable Weighted Weighted Average Average Weighted remaining Weighted remaining Average Range of Exercise Number of contractual Average Number of contractual exercise prices options life (years) exercise price Options life (years) price $0.31 - $1.00 3,281,372 1.4 $0.43 1,784,537 1.20 $0.44 $1.01 - $1.50 985,637 2.7 $1.32 722,553 3.04 $1.35 $1.51 - $2.50 1,188,386 2.2 $2.22 927,819 2.59 $2.22 $2.51 - $6.00 1,447,649 3.4 $3.30 1,271,041 3.69 $3.25 $6.01 - $11.00 39,175 7.77 $6.40 120,498 7.55 $6.53 ---------- --------- 11,027,383 7.2 $0.66 3,384,383 6.28 $1.04 ========== =========

Share Deferred Profit Premium Compensation Merger and Loss Account Reserve Reserve Account $'000 $'000 $'000 $'000 At 31 December 2001 -- 395 23,528 (22,334) Increase in deferred compensation -- 172 -- -- Retained loss for the year -- -- -- (5,318) Currency translation difference on net investments -- -- -- (85) ------- ------- ------- ------- At 31 December 2002 -- 567 23,528 (27,737) Retained Profit for the year -- -- -- 3,108 Premium on issue of shares 1,614 -- -- -- Currency translation difference on net investments -- -- -- (385) ------- ------- ------- ------- At 31 December 2003 1,614 567 23,528 (25,014) Retained profit for the year -- -- -- 17,370 Premium on issue of shares 61 -- -- -- Payment for cancellation of economic and voting rights attached to certain shares (see note 5) -- -- -- (2,400) Currency translation difference on net investments -- -- -- 168 ------- ------- ------- ------- At 31 December 2004 1,675 567 23,528 (9,876) ======= ======= ======= =======

Year ended Year ended Year ended 31 December 31 December 31 December 2004 2003 2002 $'000 $'000 $'000 Operating profit/(loss) 5,080 2,330 (5,263) Increase in provision for liabilities and charged 275 -- -- Deferred Compensation -- -- 172 Depreciation 1,420 1,933 3,168 Loss on sale of fixed assets 206 -- 74 (Increase)/Decrease in debtors 1,064 (3,556) 2,149 Increase/(Decrease) in creditors (1,739) 1,960 (1,503) Exchange movements 86 -- -- ------ ------ ------ NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 6,374 2,667 (1,203) ====== ====== ======

Year ended Year ended Year ended 31 December 31 December 31 December 2004 2003 2002 $'000 $'000 $'000 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest received 111 147 92 Interest paid (8) (203) (147) Exceptional item -- 834 -- ------ ------ ------ NET CASH INFLOW/(OUTFLOW) FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 103 778 (55) ====== ====== ====== CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Purchase of tangible fixed assets (1,065) (74) (1,165) Sale of tangible fixed assets 102 -- ------ ------ ------ NET CASH INFLOW/(OUTFLOW) FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (1,065) 28 (1,165) ====== ====== ====== FINANCING Issue of shares 62 600 -- Capital element of finance leases (647) (1,997) (367) Instalment consideration received (net) -- -- Debt due within one year: - (decrease)/increase in short-term borrowings (1,596) (109) 1,557 Debt due beyond one year: - new secured loan repayable 2005 -- 245 655 ------ ------ ------ NET CASH (OUTFLOW)/INFLOW FROM FINANCING (2,181) (1,261) 1,845 ====== ====== ====== SPORTINGBET TRANSACTION Staged payments received 3,000 -- -- Proceeds from sale of fixed assets 75 -- -- Legal and professional costs of agreement (1,043) -- -- ------ ------ ------ NET INFLOW OF FUNDS FROM TRANSACTION 2,032 -- -- ====== ====== ======

At Other At 1 January non-cash Exchange 31 December 2002 Cash flows changes Movement 2002 $'000 $'000 $'000 $'000 $'000 Overdrafts -- (210) -- -- (210) Cash in hand, at bank 2,206 (1,199) -- 85 922 ------ ------ ---- --- ------ 2,206 (1,409) -- (85) 712 Debt due within 1 year -- (1,557) -- -- (1,557) Debt due after more than 1 year -- (655) -- -- (655) Finance leases due in less than 1 year (1,058) 362 (655) -- (1,351) Finance leases due after more than 1 year (25) 5 (220) -- (240) ------ ------ ---- --- ------ Total 1,123 (3,254) (875) (85) (3,091) ====== ====== ==== === ======

At Other At 1 January non-cash Exchange 31 December 2003 Cash flows changes Movement 2003 $'000 $'000 $'000 $'000 $'000 Overdrafts (210) (29) -- -- (239) Cash in hand, at bank 922 2,241 -- (267) 2,896 ------ ------ ------ ---- ------ 712 2,212 -- (267) 2,657 Debt due within 1 year (1,557) 109 -- -- (1,448) Debt due after more than 1 year (655) (245) -- -- (900) Finance leases due in less than 1 year (1,351) 1,757 (1,002) -- (596) Finance leases due after more than 1 year (240) 240 -- -- -- ------ ------ ------ ---- ------ Total (3,091) 4,073 (1,002) (267) (287) ====== ====== ====== ==== ====== At Other At 1 January non-cash Exchange 31 December 2004 Cash flows changes Movement 2004 $'000 $'000 $'000 $'000 $'000 Overdrafts (239) 239 -- -- -- Cash in hand, at bank 2,896 5,024 -- 24 7,944 ------ ------ ---- ---- ------ 2,657 5,263 -- 24 7,944 Debt due within 1 year (1,448) 1,596 (148) -- Debt due after more than 1 year (900) -- 900 -- -- Finance leases due in less than 1 year (596) 647 -- (65) (14) Finance leases due after more than 1 year -- -- -- -- -- ------ ------ ---- ---- ------ Total (287) 7,506 900 189 7,930 ====== ====== ==== ==== ======

Issued Issued Authorised (fully paid) (fully paid) Number Number (pound) Company shares of (pound)0.002 (pound)1,000,000 divided 46,331,407 92,662.81 into 500,000,000 ordinary shares comprised of Ordinary shares 32,825,203 37,585,203 Sportingbet Shares 13,506,204 13,506,204

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