IGH to Commence Online Gambling Operations following Heathorns Acquisition

Interactive Gaming Holdings plc on Tuesday announced the acquisition of Mathew Simmonds International Limited and its wholly owned subsidiary, Heathorns International Limited--a move that marks a shift in IGH's business focus from marketing to operations.

IGH plans to launch an extensive online betting operation under the Heathorns brand. The site will target the U.K. and European markets.

IGH put up £500,000 in cash, 2 million ordinary shares (valued at £180,000 at the placing price) and £75,000 deferred payable over two years for all of the assets of Mathew Simmonds International Limited.

To fund the acquisition and further develop Heathorns, IGH raised approximately £1.52 million (net of expenses for the Company) by placing 17.8 million ordinary shares at a placing price of 9p per share.

Established in 1890, Heathorns is the world's oldest bookmaker. It focuses heavily on racing, football, cricket, rugby, golf and other sports popular among its predominantly U.K. client base and specializes in dealing with individuals who have high net worth with extended lines of credit. The company has a call center based and licensed in Malta, supplemented by a basic online service.

Thomas Taule, CEO of IGH, said Heathorns' position as a very extensive phone-based betting operation made it an excellent candidate for acquisition.

"It was an optimal partner for us," Taule said. "We had been looking for six months, and were finally able to find someone that didn't offer redundancies to what we already had in place. It is a good platform and a strong brand that we feel confident in taking online."

IGH owns a handful of portal sites that it uses to help market and promote other online gaming operations for its clients.

Taule said that becoming an operator shouldn't affect IGH's work as a marketing company.

"The bottom line is if you are an operator and are having success with a campaign or being listed on a site then you don't really care what else is being offered on that site or who owns the site," Taule explained. "A lot of our clients see an 8 percent conversion rate with us, and that is extremely high."

IGH hopes to bring back a substantial portion of the 3,000-plus users in the Heathorns database who were debit card users but have since stopped using Heathorns.

"If we can get them to reactivate with us, it could represent an enormous influx of users into the system right away," Taule said.

One of Taule's hopes is that an expanded Web site incorporating sports betting, casino games and poker will attract Heathorn's low-volume customers.

Heathorns will retain key members of its senior management team, including Andrew Collins, who has over 20 years bookmaking experience and is responsible for the Malta sports book risk management operation. Helen Simmonds, part of the family that has run the business for the last 70 years, will be join the IGH board as a non-executive director and will assist IGH with strategic marketing of the Heathorns brand on a consultancy basis.

In fiscal 2004 year, Heathorns had turnover of £7.02 million, gross "net win" of £438,000 (6.2 percent of turnover) and it broke even at a net profit level. The consolidated net liabilities of Heathorns at completion is expected to be approximately £41,000.

IGH hopes to name a software partner for the new site within two weeks.