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02 April 2007
Livermore Investments Group Limited
LIVERMORE INVESTMENTS GROUP LIMITED PRELIMINARY RESULTS FOR YEAR ENDED 31 DECEMBER 2006
RNS Number:1677ULivermore Investments Group Limited02 April 2007 LIVERMORE INVESTMENTS GROUP LIMITED PRELIMINARY RESULTS FOR YEAR ENDED 31 DECEMBER 2006Livermore Investments Group Limited (the "Company" or "Livermore") todayannounces its preliminary results for the year ended 31 December 2006.HIGHLIGHTS:• Change of purpose to Investment Company approved by shareholders on 18 January 2007.• Sale of remaining operating activities to PartyGaming plc for $48m.• Final dividend of US3.4cents per Ordinary Share.• Profit after tax $62.7m (2005 : $41.2m).• Earnings before Interest, Tax, Depreciation, Amortisation and non recurring items from discontinued operations $27.1m (2005 : $45.7m).Commenting on the results, Noam Lanir, CEO of Livermore Investments GroupLimited, said: "2006 was another eventful year for Livermore which culminatedin the exit from our operating activities and the transition to an investment company. I look forward to developing a company specialising in exploiting nicheopportunities to deliver superior returns to all shareholders."For further investor information please go to www.livermore-inv.com.Enquiries:Livermore Investments Group Limited + 357 25 847 700Noam Lanir, Chief Executive OfficerAndrew Burns, Chief Financial OfficerHudson Sandler +44 (0) 20 7638 9571Jessica RouleauChairman's and Chief Executive's ReviewIntroductionThe year to 31 December 2006 has been another period of great change forLivermore Investments Group Limited*. Following the settlement with PartyGamingPlc in February 2006 and the exit from its remaining operating business inJanuary 2007, shareholders unanimously approved the transition to an investmentcompany at the Extraordinary General Meeting (EGM) held on 17 January 2007.Livermore's investment policies were set out in the circular sent toshareholders on 29 December 2006. In summary, Livermore will invest in publicand private equities, real estate and credit products through separatedivisions, which will engage specialist teams that will focus on each investmentcategory. Livermore's investment strategy will have a global remit with a focuson value added opportunities in emerging markets. Through this structureLivermore will aim to achieve superior returns for its shareholders.Sale of operating business to PartyGaming PlcOn 17 January 2007, shareholders approved the sale by the Company of itsremaining operating business to PartyGaming Plc. The gross consideration was$48.0m, which included $10m payable to an employee trust. Following theintroduction of the Unlawful Internet Gambling Enforcement Act by the USgovernment in October 2006 and the Company's immediate withdrawal from the USmarket, the operating activity of the Company had become sub-critical and a saleto a larger operator who could realise synergy benefits from the remainingoperation represented the best value to shareholders.This transaction was completed on 19 January 2007. See note 5.Financial ReviewAs a consequence of the sale to PartyGaming Plc, the Company's operatingactivities have been included within discontinued items within the ConsolidatedIncome Statement. Profit before interest, taxation, amortisation andnon-recurring items for discontinued operations for year ended 31 December 2006was $26.1m (2005 : $45.0m). The principal reasons for this reduction were; thedisposal of the Empire Poker assets following the settlement agreement reachedwith Partygaming Plc in February 2006 and the withdrawal from the US market inOctober 2006.Profit from disposal of discontinued operations is detailed in note 5. Insummary, an exceptional gain of $235.9m was made on the sale of Empire Poker toPartyGaming Plc and an exceptional loss of $199.2m was incurred on the disposalof the remaining operating activities to PartyGaming Plc. This loss was afterdeducting a write-down of intangible goodwill and other assets to theirrealisable value. Other non-recurring and amortisation charges were $11.1m(2005: $4.6m). These charges relate to intellectual property and share optionamortisation and non-recurring payments made in respect of liabilities nottransferred to PartyGaming Plc. See note 2.The Company received investment income of $12.2m (2005: $1.2m) on its financialassets and cash resources held during the year. This excludes unrealised capitalgains of $0.9m (2005: nil) which are not recognised through the ConsolidatedIncome Statement until realised.Earnings per share, including discontinued operations, for 2006 were $0.21(2005: $0.16).Profit before tax for the year to 31 December 2006 was $62.7m (2005: $41.2m)At 31 December 2006 the Company held financial assets and cash of $257.2m. Thisexcludes the consideration due on the sale of the operating assets toPartyGaming plc.DividendThe Board is pleased to recommend a final dividend with respect to 2006 of $10mor US 3.4 cents (1.8pence) per share. This dividend will be paid on 29 June 2007to shareholders on the register at 6 June 2007. Together with the interimdividend of $5m or US1.7cents (0.9pence) per share, this takes the totaldividend for 2006 to US5.1cents per share (2.7pence per share).RicharD Rosenberg Noam LanirChairman Chief Executive30 March 2007* Livermore Investments Group Limited was formerly known as Empire OnlineLimited. Shareholders approved a special resolution to change the Company's nameat the EGM held on 28 February 2007.Livermore Investment Group LimitedConsolidated Income Statementfor the year ended 31 December 2006 Note Discontinued Discontinued Operations Operations 2006 2006 2005 2005 $000 $000 $000 $000Net gaming revenue 59,850 - 97,389 -Investment revenue 4 - 2,301Cost of sales (30,256) - (49,644) - ------ ------ ------ ------Gross profit 29,594 2,301 47,745Amortisation and non 2 (11,054) - (4,581) -recurring itemsAdministrative expenses (3,483) (995) (2,705) (466) ------ ------ ------ ------Operating profit / (loss) 3 15,057 1,306 40,459 (466)Finance expenditure - (170) - (55)Finance income - 9,892 1,246 - ------ ------ ------ ------Profit before taxation 15,057 11,028 41,705 (521)Taxation (7) - (10) - ------ ------ ------ ------Profit for the year after taxation from continuing operations 11,028 (521)Profit after taxation from discontinued operations 15,050 - 41,695 -Profit from disposal of discontinued operations 5 36,642 - - - ------ ------Profit for discontinued operation 51,692 51,692 41,695 41,695 ------ ------Profit for period 62,720 41,174 ====== ======Earnings per shareBasic earnings per share ($) 6 0.18 0.21 0.16 0.16 ====== ====== ====== ======Diluted earnings per share ($) 6 0.17 0.21 0.16 0.16 ====== ====== ====== ======DividendsProposed final dividend per share ($) $0.034 $0.068 ====== ======Proposed final dividend ($000) 10,000 20,000 ====== ======Dividends paid during the year per share ($) $0.085 $0.034 ====== ======Dividends paid during the year ($000) 24,887 49,043 ====== ======Livermore Investments Group LimitedConsolidated Balance Sheetas at 31 December 2006 Note 2006 2005 $000 $000AssetsNon-current assetsProperty, plant and equipment 49 119Intangible assets 73 224,628Financial assets 7 124,491 - ------ ------ 124,613 224,747 ------ ------Current assetsTrade and other receivables 50,795 11,431Cash and cash equivalents 8 137,715 16,297 ------ ------ 188,510 27,728 ------ ------Total assets 313,123 252,475 ====== ======EquityShare capital - -Reserves 212,483 210,084Retained earnings 61,763 22,297 ------ ------Total equity 274,246 232,381 ------ ------LiabilitiesCurrent liabilitiesBank overdrafts 9 4,960 -Trade and other payables 33,910 20,088Current tax payable 7 6 ------ ------Total liabilities 38,877 20,094 ------ ------Total equity and liabilities 313,123 252,475 ====== ======These Financial Statements were approved by the Board of Directors on 30 March2007.Livermore Investments Group LimitedConsolidated Statement of Changes in Equityfor the year ended 31 December 2006 Investments Note Share Share Share revaluation Retained capital premium option reserve reserve earnings Total $000 $000 $000 $000 $000 $000Balance at 1 January2005 1 604 - - 30,166 30,771Net profit for theyear - - - - 41,174 41,174Issue of new sharecapital (1) 222,601 - - - 222,600IPO expenses - (13,398) - - - (13,398)Share optionreserve - - 277 - - 277Dividends paid - - - - (49,043) (49,043) ------ ------ ------ ------ ------ ------Balance at 31 December2005 - 209,807 277 - 22,297 232,381Net profit for theyear - - - - 62,720 62,720Share optionreserve - - 3,150 - - 3,150Share optionsforfeited - - (1,633) - 1,633 -Revaluation reserve - - - 882 - 882Dividends paid - - - - (24,887) (24,887) ------ ------ ------ ------ ------ ------Balance at 31 December2006 - 209,807 1,794 882 61,763 274,246 ====== ====== ====== ====== ====== ======Livermore Investments Group LimitedConsolidated Statement of Cash Flowsfor the year ended 31 December 2006 Note 2006 2005 $000 $000Cash flows from operating activitiesProfit after tax 62,720 41,174Adjustments forDepreciation and amortisation 3,298 2,898Goodwill fair value adjustment 797 -Investment revenue 4 (2,301) -Finance income (9,660) (1,159)Interest expense 170 55Equity settled share options 3,150 277Profit on disposal 5 (36,642) - ------ ------ 21,532 43,245 ------ ------Changes in working capitalDecrease in trade and other receivables 8,612 6,900(Decrease)/ increase in trade and other payables (11,830) 16,910 ------ ------ (3,218) 23,810 ------ ------Net cash generated from operating activities 18,314 67,055 ------ ------Cash flows from investing activitiesPurchase of property, plant and equipment (113) (131)Purchase of intangible assets (916) (5,528)Acquisition of business - (221,192)Acquisition of investments (123,609) -Disposal of business assets 5 235,878 -Interest revenue received 4 2,301 -Finance income received 9,660 1,159 ------ ------Net cash used in investing activities 123,201 (225,692) ------ ------Cash flows from financing activitiesDividends paid (24,887) (49,043)Proceeds from issue of shares - 209,202Interest paid (170) (55) ------ ------Net cash from/(used in) financing activities (25,057) 160,104 ------ ------Net increase in cash and cash equivalents 116,458 1,467Cash and cash equivalents at the beginning of the year 16,297 14,830 ------ ------Cash and cash equivalents at the end of the year 132,755 16,297 ------ ------Notes to the Financial Statements1. Basis of preparationThe audited financial statements of Livermore Investments Group Limited havebeen prepared in accordance with International Financial Reporting Standards("IFRS") as adopted by the European Union. The significant accounting policiesapplied in the Financial Statements of the Group in the prior years have beenapplied consistently in these Financial Statements. The financial information ispresented in US dollars because that is the currency in which the Groupprimarily operates.2. Amortisation and non recurring itemsAmortisation and non-recurring items refer to: 2006 2005 $000 $000Amortisation of intangible assets 2,315 2,266Amortisation of share options 3,150 277IPO related expenses - 587Non recurring expenses 1,144 1,451Compensation to third parties 4,445 - ------ ------ 11,054 4,581 ------ ------3. Operating Profit on continuing operations 2006 2005 $000 $000Operating profit is stated after charging:Administration services 800 936Depreciation - 12Amortisation - 2,886Operating leases - 18Auditors' remuneration 195 90 ====== ======Auditor's remuneration is analysed as:Audit fees 195 90 ====== ======4. Investment revenue 2006 2005 $000 $000Interest revenueAvailable for sale investments 2,193 -Gain on sale of shares 108 - ------ ------ 2,301 - ====== ======5. Disposal of business assets Disposal of Empire Poker business Total 2006 2006 2006 2005 $000 $000 $000 $000Disposal proceeds received 250,000 37,972 287,972 -Legal and professionalexpenses - (944) (944) -Compensations to third parties (14,122) (12,705) (26,827) -Warranties provision - (2,000) (2,000)Assets written off - (221,559) (221,559) - ------ ------ ------ ------Profit from disposal toPartyGaming Plc 235,878 (199,236) 36,642 - ====== ====== ====== ======On 14 February 2006 the Group sold certain business assets to PartyGaming Plcpursuant to a settlement agreement for a total consideration of $250m. Businessassets included in the disposal were certain domain names and brand names. Theconsideration represented $250m, which was all in the form of cash.On 19 January 2007, the Company completed the sale to PartyGaming plc of itsremaining operating business. This agreement was signed on 28 December 2006 andwas subject to certain conditions including approval of the Company'sshareholders at an EGM on 17 January 2007.Between signing and completion the Company continued to operate the business,however during this period restrictions were placed on the operation of thebusiness by PartyGaming plc. Business assets included in the disposal werecertain domain names, players data and brand names. Assets written off,principally, comprises of acquired intangible goodwill relating to theacquisition of business of Tradal Limited in May 2005 and the acquisition ofClub Dice casinos in September 2005.The Group received a consideration for the disposal of the business of83,325,934 PartyGaming shares representing a gross value of $47.9m. 17,374,637PartyGaming shares were transferred to agents as compensation resulting in netdisposal proceeds to the Group of $37.9m. The transaction was conditional on afurther payment to marketing service provider of $10m.6. Earnings per shareBasic earnings per share has been calculated by dividing the net profitattributable to ordinary shareholders (profit for the year) by the weightedaverage number of shares in issue during the relevant financial periods.Diluted earnings per share is calculated after taking into consideration thepotentially diluted shares in existence as at the year ended 31 December 2006and the year ended 31 December 2005. Discontinued Operations 2006 2006 2005Net profit attributable to ordinary shareholders ($000) 51,692 62,720 41,174 =========== =========== ===========Weighted average number of ordinary shares in issue 292,777,772 292,777,772 260,689,492 =========== =========== ===========Basic earnings per share ($) 0.18 0.22 0.16 =========== =========== ===========Weighted average number of ordinary shares including the effect ofpotentially diluted shares 299,723,327 299,723,327 261,862,570 =========== =========== ===========Diluted earnings per share ($) 0.17 0.21 0.16 =========== =========== ===========Number of SharesWeighted average number of ordinary shares in issue 292,777,772 292,777,772 260,689,492Effect of dilutive potential ordinaryshares:Share options 6,945,555 6,945,555 1,173,078 ------ ------ ------Weighted average number of ordinary shares including the effect ofpotentially diluted shares 299,723,327 299,723,327 261,862,570 =========== =========== =========== 7. Financial assets 2006 2005 $000 $000Fixed return investments 100,976 -EEquity investments 23,515 - ------ ------ 124,491 - ====== ======Financial assets relate to investments in bonds and equity classified asavailable for sale. Financial assets are held in the balance sheet at the yearend at fair value. Fair value is measured by reference to the market value ofthe assets at the balance sheet date as they are openly traded on a publicmarket.8. Cash and cash equivalentsCash and cash equivalents included in the cash flow statement comprise thefollowing at the balance sheet date: 2006 2005 $000 $000Short term deposits 136,522 14,607Cash at bank 1,193 1,690 ------ ------ 137,715 16,297 ====== ======9. Bank Overdrafts 2006 2005 $000 $000Short term bank overdrafts 4,960 - ------ ------ 4,960 - ====== ======The financial information of the Group set out above does not constitutestatutory accounts. The results for the year ended 31 December 2006 are based onthe audited annual report and consolidated financial statements of LivermoreInvestments Group Limited which have been reported on by the auditors. Thereport of the auditors was unqualified.Copies of the 2006 annual report and accounts will be sent to shareholders indue course.Copies of this announcement are available from the Company's website,www.livermore-inv.com.
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