Interactive Gaming Holdings Plc
AIM : IGH

March 24, 2006 02:09 ET

Interactive Gaming Holdings plc: Preliminary Results

LONDON, UNITED KINGDOM--(CCNMatthews - March 24, 2006) - Interactive Gaming Holdings plc ("IGH" or "the Group") (AIM:IGH), the online sports betting and gaming Company, today announces its preliminary results for the year ended 30 November 2005.

Highlights

- Turnover Pounds Sterling 8,090,000 (18 months 2004: Pounds Sterling nil)

- Loss before and after tax Pounds Sterling 864,000 (18 months 2004 Pounds Sterling 388,000), including head office start up costs of Pounds Sterling 470,000

- Group Cash at bank Pounds Sterling 1,145,000 (2004: Pounds Sterling 176.000)

- Acquisition of Heathorns and Premier Bet

- Software licence agreement for Orbis' OpenBet gaming platform

- Pro forma turnover (assuming full year of ownership) Pounds Sterling 23.4 million

These preliminary results cover the 12 month period to 30 November 2005 whereas the previous results were for an 18 month period from June 2003 to November 2004 in which the Group had no trading activities.

Commenting on the results, Thomas Taule, Chairman and Chief Executive of Interactive Gaming Holdings, said: "IGH has achieved a year of significant development and growth. The Group's focus has been on the integration of our two major acquisitions over the year. I am pleased to report that we have made considerable progress. We are confident that we can continue to further develop our brands and business lines. To support these developments, we have now finalized and implemented the technology platform that will allow for a single solution platform capable of supporting all of the current and future gambling products."



For further information:
Interactive Gaming Holdings Plc
Thomas Taule, Chairman and Chief Executive Tel: +44 (0) 207 745 6273
tom@igh.com www.igh.com

Media enquiries:
Abchurch
Chris Lane / Chris Munden Tel: +44 (0) 20 7398 7700
chris.lane@abchurch-group.com www.abchurch-group.com
chris.munden@abchurch-group.com


Chairman' statement

The year to 30 November 2005 was an exceptionally busy period for IGH. We made two strategically significant acquisitions in Heathorns and Premier Bet, signed an important software licensing agreement with Orbis Technology, a leading provider of online betting software, raised additional capital to fund our expansion and significantly enhanced the Group's infrastructure. IGH is operating in a market that is seeing significant growth and the Group is now well placed to take advantage of the opportunities available to us.

Heathorns / Orbis

Heathorns is the world's oldest established bookmaker, focused on horse racing, football, cricket, rugby, golf and NFL betting. IGH acquired Heathorns in March 2005 for Pounds Sterling 0.5 million in cash, as well as the issue of two million new IGH shares at nine pence per share. There was also a deferred amount of Pounds Sterling 75,000 payable over two years.

To enhance our Heathorns' offering, IGH entered into a software licensing & development agreement with Orbis Technology in April 2005. Under the agreement Orbis has supplied its OpenBet gambling platform to Heathorns to drive a new seamless and secure gambling offering from Heathorns, and to provide the technology for Heathorns' new call centre operation. Heathorns' customers will benefit from a complete gambling solution, enabling bets across multiple channels and products from one single account. Importantly, all administrative tasks will be carried out by a single fully integrated back-office.

The strategy has been to combine Orbis' market leading technology with the Group's significant online gaming marketing experience and Heathorns' established sports betting brand and client base to build a substantial sportsbook, casino, fixed odds games and poker business. I am delighted to say that we have made significant progress.

Premier Bet / Orbis

Premier Bet is a fixed odds bookmaker based in London that operates an internet and telephone betting operation, specialising in football. IGH acquired Premier Bet in August 2005 for a total consideration of Pounds Sterling 1.2 million in shares, loan notes and options.

As expected, Premier Bet has experienced a slight reduction in turnover and profitability over the period as we have been migrating Premier Bet's customers to the new Orbis OpenBet platform. We have also added additional risk management procedures and relocated the back office. Our aim is to broaden the revenue base, reduce volatility and improve margins and we are confident that the longer-term benefits will add significant value to IGH.

Our strategy with Premier Bet has been to leverage its brand name to expand into betting markets other than football, to adopt a more risk averse trading strategy, and to fundamentally alter the marketing focus towards more recreational, lower stake, higher margin customers. There are also considerable cross-selling opportunities between Premier Bet and Heathorns customers that we will be exploiting.

Premier Bet is anticipating an exciting summer with the World Cup in Germany and will also be looking to expand into other European countries.

Financial Review

The accounts include the results of Heathorns International Ltd and Premier Bet Ltd from their respective acquisition dates. On this basis, the reported Group turnover for the year to 30 November 2005 was Pounds Sterling 8.1 million (2004: nil). The turnover for the Group would have been Pounds Sterling 23.4 million if both companies had been subsidiaries of the Group for the whole year.

The gross profit margin for the period of 3% reflects a gross win margin of 5% in Heathorns International and 1% in Premier Bet, both of which are forecast to improve in future months.

The loss before and after taxation for the year to 30 November 2005 was Pounds Sterling 864,000 (2004: Pounds Sterling 388,000), which includes Pounds Sterling 470,000 for head office costs and Pounds Sterling 82,000 for goodwill amortisation.

Group cash at bank as at 30 November 2005 was Pounds Sterling 1.14 million (2004: Pounds Sterling 176,000), which reflects Pounds Sterling 2.3 million net proceeds from fundraising during the year, less Pounds Sterling 616,000 cash cost of acquisitions and an operational cash outflow of Pounds Sterling 1.18 million. Shareholders funds increased to Pounds Sterling 2.43 million (2004: Pounds Sterling 305,000) equivalent to 3.5p per share.

Fund raising / share issues

In March 2005, IGH raised approximately Pounds Sterling 1.52 million from a placement of 17.8 million new shares at nine pence per share. These funds were partly used for the Heathorns acquisition, as well as providing additional working capital for the Group's ongoing development. As part of the acquisition, an additional two million IGH shares were issued to the owners of Heathorns.

In August 2005, IGH issued 5,555,555 new ordinary shares to the owners of Premier Bet as partial consideration for this acquisition, as well as a three per cent Pounds Sterling 500,000 convertible unsecured loan note (due 2008). The previous owners of Premier Bet also have an option to subscribe for up to 5,398,770 new IGH shares at 18 pence per share, exercisable at any time within five years.

On 15 November 2005, IGH raised Pounds Sterling 684,000 net via a placing of 17,975,000 new ordinary shares at 4 pence per share. The new monies raised are being used for development costs and additional working capital.

The company is actively engaged in discussions to secure additional financing to accelerate the growth of the business.

Board changes

Graham Doyle joined the Board as a Non-Executive Director in October 2005. Graham was the Managing Director of Premier Bet and has been working as a consultant to IGH since the acquisition of Premier Bet in August 2005. His previous experience has mainly been in business development and strategic planning at leading companies such as Time Warner Inc., Victor Chandler International and the IFX Group (formerly Zetters).

Michael Wellesley-Wesley stepped down in December 2005 from his position as a Non-Executive Director. Being mainly based in the United States, he felt that he was not able to devote sufficient time to IGH. I would like to thank Michael for his support since the flotation of IGH on AIM in March 2004.

The Board intend to appoint a further non-executive director in the near future.

Infrastructure

Over the past year, we have made considerable efforts to improve our infrastructure. Accordingly, the new back-end systems has been implemented based on the Orbis Technology platform, giving the Group vastly improved infrastructure with regards to being able to offer a single solution platform to optimise systems efficiencies across all betting channels.

Internal procedures and management reporting standards have also been further enhanced.

Post year end events

On 3rd February 2006 the company announced it has signed an additional software licence with Orbis Technology Ltd for the Casino back office. This is to be integrated with the Heathorns and Premier Bet websites and will further enhance the opportunities for cross marketing between casino and sports betting opportunities.

Strategy and Outlook

Our strategy at IGH is to build a fully integrated internet, telephone betting and gaming offering that maximises the significant opportunities to cross-sell, drive revenues and improve margins. We have made considerable progress in the last year with the acquisition of the well-regarded Heathorns and Premier Bet businesses, and the successful launch of the new Orbis technology platform. These steps already position the Group well for the future and we anticipate profitability being achieved at both Heathorns and Premier Bet very shortly. The FIFA World Cup in 2006 will further provide an opportunity for new customer registration and revenue growth in the current year.

As the foundations are now in place we will look to build scale to our businesses, not only online but also on the ground. Heathorns has already started re-establishing itself on the rails at race courses.

We will continue to look for opportunities to enhance shareholder value through strategic acquisitions and organic growth, adding to IGH's portfolio and leveraging the brands. I am confident that 2006 will prove to be another year of significant expansion for IGH and firmly believe that our proposition offers real value for shareholders.

Thomas J Taule

Chairman and Chief Executive

24 March 2006



Interactive Gaming Holdings plc

Consolidated profit and loss account for the year ended 30 November 2005

16 June
2003 to 30
November
Year ended 30 November 2005 2004
Continuing Acquisitions Total
operations
Note Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling

Turnover 144,629 7,945,603 8,090,232 -
Cost of Sales (162,670) (7,677,027) (7,839,697) -
---------------------------------------------
Gross Profit
/ (Loss) (18,041) 268,576 250,535 -

Administrative
expenses:
---------------------------------------------
Operating
expenses (575,686) (456,711) (1,032,397) (387,759)
Amortisation
of Goodwill - (82,453) (82,453) -
---------------------------------------------
Administrative
expenses (575,686) (539,164) (1,114,850) (387,759)
---------------------------------------------
Operating Loss (593,727) (270,588) (864,315) (387,759)
-----------------------
Interest Receivable 4,163 -
Interest Payable
and Similar
Charges (3,750) -
---------------------
Loss on ordinary
activities
before and
after taxation (863,902) (387,759)
---------------------
Loss per share
- basic and
diluted 1 (2.17p) (2.88p)



Interactive Gaming Holdings plc

Consolidated statement of total recognised gains and
losses for the year ended 30 November 2005

Year ended 16 June
30 November 2003 to
2005 30 November
2004

Pounds Pounds
Sterling Sterling
Note


Consolidated statement of total
recognised gains and losses
Loss for the financial year / period (863,902) (387,759)
Exchange translation differences (6,028) -
---------------------
Total recognised gains and losses
for the year / period (869,930) (387,759)
---------------------



Interactive Gaming Holdings plc

Consolidated balance sheet at 30 November 2005

Note 2005 2005 2004 2004
Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling
Fixed assets
Intangible Assets 1,931,686 -
Tangible assets 971,752 539,826
--------- ---------
2,903,438 539,826

Current assets
Debtors 695,151 919
Cash at bank and in hand 1,145,248 175,799
---------- --------
1,840,399 176,718

Creditors: amounts falling
due within one year
Convertible Debt 500,000 -
Other 1,520,331 147,802
---------- --------
2,020,331 147,802
---------- --------

Net current (liabilities)
/ assets (179,932) 28,916
--------- ---------

Total assets less
current liabilities 2,723,506 568,742
Creditors: amounts falling
due within more than
one year 291,886 264,131
--------- ---------

Total assets less current
liabilities 2,431,620 304,611
--------- ---------

Capital and reserves

Called up share capital 3 694,438 231,410
Share premium account 4 2,361,289 460,960
Merger Reserve 4 604,444 -
Other Reserve 4 29,138 -
Profit and loss account 4 (1,257,689) (387,759)
--------- ---------

Shareholders' funds
- equity 2,431,620 304,611
--------- ---------



Interactive Gaming Holdings plc

Consolidated cash flow statement for the year ended 30 November 2005

Year ended 30 16 June 2003 to
November 2005 30 November 2004
Pounds Pounds Pounds Pounds
Note Sterling Sterling Sterling Sterling
Net cash outflow
from operating
activities 5 (1,177,780) (163,758)

Return on
investments
and servicing
of finance
Interest
Received 4,163 -
Interest Paid (3,750) -
----------- ---------
413 - -

Capital
expenditure
and Financial
Investment
Payments to
acquire
tangible assets (464,312) (2,813)
----------- ---------
(464,312) (2,813)
Acquisitions
and Disposals
Payments to
acquire
subsidiary
undertakings (615,642) -
Cash acquired 938,970 -
----------- ---------
323,328 -
----------- ----------

Cash outflow
before financing
activities (1,318,351) (166,571)

Financing
Issue of ordinary
share capital 2,418,000 622,050
Share issue costs (130,200) (279,680)
----------- ---------
2,287,800 342,370
----------- ----------

Increase in
cash in the
year / period 969,449 175,799
----------- ----------


Interactive Gaming Holdings plc

Notes to the accounts

1. Basis of preparation

The financial statements have been prepared on the going concern basis which assumes that the company will continue in operational existence for the foreseeable future.

The directors have prepared projected cash flow information for the next 2 years which indicates that the group will be able to grow significantly the business following the implementation of new systems. On this basis the directors consider that the group will generate sufficient funds to enable it to operate for the foreseeable future. However, any such forecasts are uncertain. In the event that the group were unable to generate the cash inflows set out in the projections, the directors would seek alternative sources of funding.

The financial statements do not include any adjustments that would result if the group were unable to meet its forecast growth targets or raise additional funds.

2. Loss per share

The calculation of loss per share for the year ended 30 November 2005 is based on the loss after taxation of Pounds Sterling 863,902. The calculation of basic loss per share and diluted loss per share is based on a weighted average number of shares in issue during the year. The number of shares used in these calculations and the reconciliation of denominators used for basic and diluted earnings per share calculations is set out below:



Number
Basic shares at 30 November 2005 69,443,777
Effect of exercise of options 37,750,000
Diluted shares at 30 November 2005 107,193,777

The diluted loss per share is the same as the basic loss per share.


3. Acquisitions

The Group acquired the entire share capital of Matthew Simmonds International Ltd (since renamed Heathorns (Malta) Ltd), on 14 March 2005, and the entire Share Capital of Premier Bet Ltd on 31 August 2005.

The net liabilities at date of acquisition were as follows:



Book Value Fair Value Fair Value Premier Bet
Heathorns Adjustment Heathorns Book and
Heathorns Fair Value
Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling
Tangible Fixed Assets 26,974 - 26,974 -
Debtors 143,970 (29,386) 114,584 191,114
Cash at Bank and
in Hand 1,418 - 1,418 937,552
Creditors: amounts
falling due within
one year (257,335) - (257,335) (1,128,666)
----------------------------------------------
Net Liabilities
Acquired (84,973) (29,386) (114,359) -
---------------------
Goodwill on
Acquisition 805,429 1,208,710
------------------------
Total Purchase
Consideration 691,070 1,208,710
------------------------


The fair value adjustment relates to the write down of a debtor
balance in Heathorns to its expected recoverable amount.

Heathorns Premier Bet Total
Pounds Pounds Pounds
Sterling Sterling Sterling

Total Purchase Consideration
was as follows:
Cash, including costs 436,070 179,572 615,642
Deferred Consideration 75,000 - 75,000
Share Capital Issued 180,000 500,000 680,000
Loan Note Issued - 500,000 500,000
Share Options issued - 29,138 29,138
----------------------------------
691,070 1,208,710 1,899,780
----------------------------------

The net outflow of cash arising from acquisitions was as follows:

Cash consideration, as above (436,070) (179,572) (615,642)
Cash acquired 937,552 1,418 938,970
----------------------------------
Net Cash inflow / (outflow)
in respect of acquisition 501,482 (178,154) 323,328
----------------------------------

The results of Heathorns (Malta) Ltd & its 100% subsidiary Heathorns
International Ltd prior to acquisition were as follows:

1 February Year ended
2005 to 31 January
14 March 2005 2005
Pounds Pounds
Sterling Sterling
Turnover 975,266 7,016,612
------------------------
Operating profit/ (loss) 4,281 (77,877)
Net interest - (2,776)
------------------------
Profit / (loss) on ordinary activities
before taxation 4,281 (80,653)
Taxation on profit / (loss) from
ordinary activities - -
------------------------
Profit / (loss) for the period 4,281 (80,653)
------------------------

There were no recognised gains or losses other than the profit /
(loss) for the period.

The results of Premier Bet Ltd prior to its acquisition were as
follows:

1 January to
31st August 2005
Pounds Sterling
Turnover 11,575,120
------------------
Operating loss 1,248,279
Net interest 7,058
------------------
Loss on ordinary activities before taxation 1,241,221
Taxation on profit from ordinary activities -
------------------
Loss for the period 1,241,221
------------------

There were no recognised gains or losses other than the loss for
the period.

4. Share capital

2005 2004
Number Number
Authorised
Ordinary shares of 1p each 400,000,000 400,000,000
---------------------------------
Pounds Sterling Pounds Sterling
4,000,000 4,000,000
---------------------------------
Allotted, called up and fully paid
Ordinary shares of 1p each 69,443,777 23,141,000
---------------------------------
Pounds Sterling Pounds Sterling
694,438 231,410
---------------------------------


Movements in issued share capital:

On 15 March 2005 17,800,000 ordinary shares of 1p were placed by Insinger de Beaufort at 9p per share.

On 14 April 2005 2,000,000 ordinary shares of 1p were issued as part consideration for the acquisition of Matthew Simmonds International Ltd (since renamed Heathorns (Malta) Ltd.), at a premium of 8p.

On 31 August 2005 5,555,555 ordinary shares of 1p were issued as part consideration for the acquisition of Premier Bet Ltd, at a premium of 8p per share.

On 31 August 2005 222,222 ordinary shares of 1p were issued at a premium of 8p per share.

On 8 September 2005 1,250,000 ordinary shares of 1p were issued at a premium of 3p per share.

On 9 September 2005 300,000 and 1,200,000 ordinary shares of 1p each were issued on the exercise of share options at 1p and 2p respectively.

On 15 November 2005 17,975,000 ordinary shares of 1p each were placed by Insinger de Beaufort at 4p per share.

Share Option Scheme

At 30 November 2005 the following share options were outstanding in respect of the ordinary shares and were capable of exercise up until the relevant date of lapse:



Date of grant Number of shares Date of lapse Exercise price
Pounds Sterling
24/10/03 100,000 24/10/08 0.05
28/01/04 150,000 28/01/09 0.05
04/08/04 2,500,000 04/08/09 0.05
04/08/04 2,500,000 04/08/09 0.10
04/08/04 2,500,000 04/08/09 0.15
04/08/04 2,500,000 04/08/09 0.20
29/04/05 25,000 29/04/10 0.07
31/08/05 5,398,770 31/08/10 0.18
09/09/05 35,000,000 09/09/10 0.06

Total outstanding 50,673,770


During the year 300,000 share options were exercised at 1p per share and 1,200,000 share options were exercised at 2p per share. No options were granted at an exercise price below the market value of the shares at the date of the grant.

5. Reserves



Group Merger Other Share Profit Total
Reserve Reserve Premium and Loss
Pounds Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling Sterling
At 1 December
2004 - - 460,960 (387,759) 73,201
Shares issued
during the
year, net of
share issue
costs 604,444 - 1,900,329 - 2,504,773
Loss for the Year - - - (863,902) (863,902)
Exchange
Adjustment - - - (6,028) (6,028)
Arising on issue
of Share Options - 29,138 - - 29,138
--------------------------------------------------
At 30 November
2005 604,444 29,138 2,361,289 (1,257,689) 1,737,182
--------------------------------------------------

6. Reconciliation of operating loss to net cash outflow from
operating activities

Year ended 16 June
30 November 2004 to
2005 30 November
2004
Pounds Pounds
Sterling Sterling
Operating loss (864,315) (387,759)
Amortisation 82,453 -
Depreciation 81,087 77,118
Increase in debtors (388,534) (919)
(Decrease)/Increase in creditors (88,471) 147,802
-----------------------
Net cash outflow from operating activities (1,177,780) (163,758)
-----------------------

7. Analysis of net funds

At Cash Exchange At
1 December flow differences 30 November
2004 2005
Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling
Cash in hand and
at bank 175,799 969,449 - 1,145,248
Debt due within
one year - (500,000) - (500,000)
Debt due after
one year (264,131) - (27,755) (291,886)
----------------------------------------------
Total net funds/(debt) (88,332) 469,449 (27,755) 353,362
----------------------------------------------

8. Reconciliation of net cash flow to movement in net funds

Year ended 16 June
30 November 2004 to
2005 30 November
2004
Pounds Pounds
Sterling Sterling
Unaudited Audited
Increase in cash in year 969,449 175,799
Issue of loan note (500,000) (264,131)
Exchange differences (27,755) -
-----------------------
Movement in net funds in the year 441,694 (88,332)
Net debt at 1 December 2004 (88,332) -
-----------------------
Net Funds/(Debt) at 30 November 2005 353,362 (88,332)
-----------------------


9. Report and accounts

The financial information set out in this document, which summarises the results of the group, does not amount to statutory accounts for the periods ended 30 November 2005 or 2004, within the meaning of s.240 of the Companies Act 1985. The group's auditors have audited the 2004 statutory accounts and have issued an unqualified report thereon within the meaning of Section 235 and have not made any statement under Section 237 (2) or (3) of the Companies Act 1985.

The statutory accounts for 2005 will be finalised on the basis of the financial information presented by the directors in this announcement and will be posted to shareholders shortly and delivered to the Registrar of Companies following the Annual General Meeting. The audited accounts will be available on the group's website at www.igh.com.

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