Interactive Gaming Holdings Plc
AIM : IGH

August 15, 2006 02:04 ET

Interactive Gaming Holdings Plc: Interim Results, Trading Update and Change of Adviser

LONDON, UNITED KINGDOM--(CCNMatthews - Aug. 15, 2006) - Interactive Gaming Holdings Plc ("IGH" or "the Group") (AIM:IGH), the online sports betting and gaming operator, announces its unaudited results for the six month period to 31 May 2006 and a positive trading update on Q3.

Highlights:

- turnover increased to Pounds Sterling 8.85 million (H1 2005: Pounds Sterling 1.66 million) with an EBITDA loss of Pounds Sterling 0.77 million

- John Heaton, former Chief Executive of the Tote, appointed as Chief Executive Officer

- new Orbis back end software platform implementation complete

- redesigned websites launched for PremierBet and Heathorns

- PremierBet Casino launched

- over Pounds Sterling 5 million of bets taken over the World Cup with new registrations increasing threefold, returning an 8% gross profit margin

- strong current trading, Group expected to be profitable at the EBITDA level in Q3 2006

- Arbuthnot Securities appointed nominated adviser and broker to the Company with immediate effect

Commenting on the results, John Heaton, Chief Executive Officer, said: "The first half of our financial year was a period of significant change at IGH with the creation of an infrastructure to enable us to drive future growth, the implementation of the new Orbis software platform and the development and launch of our Casino. The costs of these investments were in line with expectations and place the Group in an extremely strong position going forward , with the benefits already being felt. We have two strong brands in PremierBet and Heathorns and we are ideally placed to drive profitable growth."



For further information:

Interactive Gaming Holdings Plc

John Heaton, Chief Executive Tel: +44 (0) 20 7745 6273
john.heaton@igh.com www.igh.com
Tom Taule, Executive Chairman
tom@igh.com

Arbuthnot Securities
Nick Marsh, Corporate Finance Tel: +44 (0) 20 7012 2000
www.arbuthnotsecurities.co.uk

Media enquiries:

Abchurch
Chris Lane / Franziska Bohnke Tel: +44 (0) 20 7398 7700
chris.lane@abchurch-group.com www.abchurch -group.com


About IGH

Interactive Gaming Holdings plc is an online sports betting and casino operator listed on the AIM market of the London Stock Exchange.

IGH provides its customers with a complete gaming experience offering seamless integration between traditional sports betting and its casino products.

The Group's strategy is to enhance organic growth by focusing on selective value -enhancing acquisitions within the online sports betting and gaming sectors. In addition to IGH's existing customer base, the Group is actively pursuing, under revenue share agreements, white-label opportunities with significant brand names.

To date, IGH has made two acquisitions, namely Heathorns, the world's oldest established bookmakers in March 2005, and PremierBet, a fixed odds bookmaker based in London, in August 2005.

The Group, in accordance with US legislation, does not have any operations in the US nor accept bets from US citizens on any product.

Further information on Interactive Gaming Holdings can be found at www.igh.com.

Chairman's Statement

The first half of our financial year, as anticipated, has been very much focused on the continued development and expansion of the Group's infrastructure and product offerings which we are now able to fully capitalise upon.

The returns on this investment are already being witnessed in the second half of the financial year with improved profitability, increased customer registrations and an excellent World Cup season.

As well as the significant operational and technical achievements in this period, we also appointed John Heaton as the new Chief Executive Officer. John brings a wealth of experience to IGH from his time as Chief Executive of the Tote from 1996 to 2004 and will be extremely valuable to the Group as we continue to grow the business.

During the remainder of the financial year we will be increasing our marketing activities in relation to our current product offering, while continuing to focus on making value -enhancing acquisitions in the sports betting and gaming arenas.

The policy of IGH has always been not to accept bets from the US A and particularly given the recent developments in the US A, we will ensure that our business continues with this approach.

Thomas J Taule

Executive Chairman

14 August 2006

Chief Executives Report

Operational review

Operationally, IGH has had a successful half year with the completion of a number of key projects, including:

- implementation of the new Orbis OpenBet software system

- redesigned websites for PremierBet and Heathorns

- PremierBet Casino launch

- introduction of mobile gaming

The completion of the integration of the Orbis software system is a significant success story for the Group. The OpenBet system is seen as 'state of the art' for the betting and gaming industry and will be a strategic differentiator for the Group. The system enables IGH to run its Sportsbook, Casino and Games from one backend system which facilitates a single end -user account and login across all products. It allows seamless integration with the Group's mobile betting service and enables quick integration and installation of any number of Sportsbook or Casino websites.

A key element of the OpenBet software platform is the ability to create quickly any number of Sportsbook and Casino websites linked to a single backend software system. In the case of an acquisition, this functionality significantly speeds up the time taken to integrate an acquisition into the Group , making the business exceptionally scaleable.

We are also able to exploit our leading software platform by offering "white label" agreements to third parties that do not have this technology. Under these agreements, the third party will use our technology to run their betting and gaming websites in return for a licensing fee. As well as the income gained from this arrangement, we will have access to additional customer data which increases our marketing potential.

The implementation of the OpenBet system across both PremierBet and Heathorns, has created operational synergies and increased cross marketing opportunities.

IGH is now in a position where the Group has the operational infrastructure that provides sufficient resources to enable us to grow the business, with particular emphasis on increasing our marketing efforts. In order to maximise revenues from affiliates and to lead targeted and generic marketing campaigns, IGH has appointed a specialised Media Buying and Marketing Team. We are in the process of increasing our marketing activity for the recently launched PremierBet Casino and are extremely pleased with the growth prospects for all our products. The OpenBet system has marketing specific modules that will help IGH maximise incomes from affiliates and increase current customer spend through cross marketing of other gaming products. The OpenBet "one -wallet" solution makes it significantly easier for existing customers to bet across different gaming products and channels, which in turn will help increase average customer spend.

Group Strategy

The Group's focus has been to make value enhancing acquisitions in the online betting and gaming arenas to compliment current operations, however the Group will also consider offline acquisitions where the Board believes they have the potential to increase shareholder value.

IGH holds gaming licences in the UK and Malta (both EU jurisdictions) where gaming is a legal activity. It has always been the policy of IGH not to take wagers from the USA.

Current trading and prospects

Our investment in operational infrastructure is substantially complete and we are already seeing the positive effects of this. Key performance points since the end of the interim period include:

- excellent World Cup taking in excess of Pounds Sterling 5 million in bets, returning a gross profit margin of over 8%

- new registrations increased threefold over the World Cup season

- expected to be profitable at the EBITDA level in Q3

The functionality of the OpenBet system allows rapid building and integration of new Sportsbook and Casino websites which provides IGH with a competitive advantage when entering discussions with third parties interested in running a white label site. This avenue for growth is of particular interest to the Group as it represents an opportunity to access markets in other high margin territories that IGH is currently not operating in. These opportunities can be exploited quickly and at relatively low cost.

The creation of white label deals increases the Groups customer database and subsequently increases marketing opportunities.

Our immediate intention is to increase marketing spend and activity to drive organic growth while continuing to source acquisition targets and joint venture relationships that will maximise profitability and shareholder value.

Change of Adviser

We are delighted to announce the appointment of Arbuthnot Securities as our nominated adviser and broker effective immediately. We have chosen to work with Arbuthnot in recognition of their expertise in the gaming market.

John Heaton

Chief Executive

14 August 2006




INTERIM UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31ST MAY 2006

CONSOLIDATED PROFIT AND LOSS ACCOUNT

6 months 6 months 12 months
to 31 May to 31 May to 30 Nov
06 05 05
unaudited unaudited audited
Pounds Pounds Pounds
Sterling Sterling Sterling
000 000 000

Turnover 8,854 1,661 8,090

Operating loss (932) (321) (864)

Loss on activities before
and after taxation (928) (321) (864)

Loss per share (basic
and diluted) (1.84) p (1.02) p (2.17) p

All amounts relate to continuing activities.
All recognised gains and losses are included in the profit and
loss account.


CONSOLIDATED BALANCE SHEET

6 months 6 months 12 months
to 31 May to 31 May to 30 Nov
06 05 05
unaudited unaudited audited
Pounds Pounds Pounds
Sterling Sterling Sterling
Notes 000 000 000

FIXED ASSETS

Tangible assets 1,264 543 971
Goodwill 1,838 822 1,932
------------------------------------
3,102 1,365 2,903
------------------------------------

CURRENT ASSETS

Debtors 644 185 695
Cash at bank and in hand 904 932 1,146
------------------------------------
1,548 1,117 1,841
------------------------------------

CREDITORS: AMOUNTS FALLING
DUE WITHIN ONE YEAR

Bank overdraft 38 100 -
Convertible debt 1 500 - 500
Other creditors 1,726 385 1,520
------------------------------------
2,264 485 2,020
------------------------------------


NET CURRENT (LIABILITIES) /
ASSETS (716) 632 (179)

TOTAL ASSETS LESS CURRENT
LIABILITIES 2,386 1,997 2,724

CREDITORS: AMOUNTS FALLING
DUE AFTER MORE THAN ONE YEAR 267 312 292
------------------------------------

------------------------------------
NET ASSETS 2,119 1,685 2,432
------------------------------------
------------------------------------

CAPITAL AND RESERVES

Called up share capital 799 429 694
Share premium account 2,872 1,965 2,361
Merger reserve 604 - 605
Other reserve 29 - 29
Profit and loss account (2,186) (709) (1,257)
------------------------------------

SHAREHOLDERS FUNDS - EQUITY 2,119 1,685 2,432
------------------------------------
------------------------------------


CONSOLIDATED CASHFLOW STATEMENT

6 months 6 months 12 months
to 31 May to 31 May to 30 Nov
06 05 05
unaudited unaudited audited
Pounds Pounds Pounds
Sterling Sterling Sterling
000 000 000

Net cash outflow from
operating activities (532) (343) (1,178)

Capital expenditure and
financial investment (363) - (464)

Acquisition of businesses - (521) 323

Net cash outflow before
financing (896) (864) (1,319)

Financing, net of expenses 615 1,521 2,288
------------------------------------

(Decrease) / Increase in cash (280) 657 969
------------------------------------
------------------------------------


RECONCILIATION OF OPERATING
LOSS TO NET CASH OUTFLOW
FROM OPERATING ACTIVITIES

Operating loss (932) (321) (864)

Changes in working capital
and non cash items 400 (22) (314)
------------------------------------

Net cash outflow from
operating activities (532) (343) (1,178)
------------------------------------
------------------------------------

RECONCILIATION OF NET CASH
FLOW MOVEMENT TO MOVEMENT
IN NET CASH (DEBT)

(Decrease) / Increase in cash
in the period (280) 657 969

Loan note issue - - (500)

Exchange variance 24 (10) (28)
------------------------------------

(256) 647 441

Opening net debt 353 (88) (88)
------------------------------------

Closing net cash 97 559 353
------------------------------------
------------------------------------


Note 1 -- Publication of non-statutory accounts

The financial information set out in this interim statement, does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The financial information for the full preceding period is based on the statutory accounts for the period ended 30th November 2005. Those accounts, on which the auditors issued an unqualified opinion, have been delivered to the registrar of Companies.



Note 2 -- Loss per share

The loss per share is calculated based on:

Pounds Sterling ' 000
Loss for the period (928)

' 000
Weighted average number of shares in issue 50,559


Note 3 -- Accounting policies

The interim financial information has been prepared on the basis of the accounting policies set out in the Group's statutory accounts for the period ended 30th November 2005.

Note 4 -- Convertible debt

The convertible loan stock is convertible at the option of the holder at any point up to 24th August 2008, at a conversion rate of Pounds Sterling 0.15 per one pence ordinary share. The right to conversion shall be deemed to have been exercised if the Company's share price has been at or above 15 pence for 60 consecutive business days.

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