Holding(s) in Company
Livermore Investmens Press Release 2006 / EMPIRE ONLINE LIMITED MAIDEN PRELIMINARY RESULTS FOR YEAR ENDED 31 DECEMBER 2005
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04 April 2006

Empire Online Limited
EMPIRE ONLINE LIMITED MAIDEN PRELIMINARY RESULTS FOR YEAR ENDED 31 DECEMBER 2005


 

Empire Online Limited (the  “Company” or “Empire Online”),  a leading multi-channel online  gaming and marketing services company,  today announces its maiden preliminary results for the year ended 31 December  2005.  

 
OPERATING HIGHLIGHTS:
 
·       Successful acquisitions of Club Dice casino and bingo platforms and Noble Poker, the largest poker operator   on the iPoker network 
 
·       Final dividend of US6.8cents (3.9pence) per Ordinary Share 
 
·      Successful listing on AIM market raising $222m in gross proceeds 
                   
                   
·      Assignment of Empire Online's PartyGaming related 'skin' operations to PartyGaming for $250 million cash 
                 
 
 
FINANCIAL HIGHLIGHTS: 
 
                 

·                       Reported                  net gaming revenues up 102% to $97.4m (2004: $48.3m.) Reported                  profit after amortisation and non recurring                    charges                  before taxation up 57% to $41.2m (2004: $26.2m)

                 
·      Pro forma* net gaming revenues up 61% to $105.2m (2004: $65.2m) 
                 
·      Pro forma* gross profit up 33% to $51.9m (2004: $38.9m) 
                 
·      Pro forma* profit before amortisation and non recurring charges up 33% to $50.1m (2004: $37.7m) 
                 
·      Active Real Money Players at the end of 2005 rose by 59% to 165,310 (2004: 104,177)
 
                 

Commenting                  on the results, Noam Lanir, CEO of Empire Online Limited,                  said: “2005 was an extremely busy year for Empire with our                  successful listing on the AIM market of the London Stock                  Exchange and our evolution from a marketing services provider                  to a successful online gaming platform. We are extremely                  pleased with the performance of the Company during the period,                  and are very encouraged with the growth in both our poker and                  casino offerings globally and in particular in geographical                  territories outside of the USA.
                 
                  The Company added around 450 new real money sign ups per day                  in the first 4 weeks of March in the new financial year.                   The Board reiterates its confidence in achieving an                  EBITDA of $37m for the year to 31 December 2006.”

                 

*The                  pro-forma financial information has been prepared so as to                  provide comparable information for the transitional year of                  2005 during which certain assets were acquired by the Group                  from Tradal Ltd, a related company incorporated in St. Vincent                  and the Grenadines. Further details are disclosed within this                  statement. 

                 

There                  will be a financial_reports to analysts at 9.00am today at Citigate                  Dewe Rogerson, 3 London Wall Buildings, London EC2M 5SY. For                  further investor information please go to http://investors.ep.com/company_information.htm

                 
                   
Enquiries: 
                 
                 
                   
Empire Online Limited                                                                     +44(0) 20 7638 9571
                 
                 
                   
Noam Lanir, Chief Executive Officer                      
                 
                 
                   
Andrew Burns, Chief Financial Officer
                 
                 
                   
Andrew Burnett, Head of Mergers & Acquisitions  
                 
                 
                   
Citigate Dewe Rogerson                                                                   +44(0) 20 7638 9571
                 
                 
                   
Sarah Gestetner
                 
                 
                   
Ged Brumby
                 
                 

Chairman’s                  Statement 

                 

I                  would like to welcome all shareholders and investors to Empire                  Online’s maiden preliminary results.

                 

This                  has been a big year of change for all at Empire Online and I                  would like to express my gratitude to Noam Lanir and the rest                  of the directors and staff for all of their efforts during                  this period. Noam has a great understanding of this sector and                  I believe that with his ongoing enthusiasm and experience the                  Company is extremely well placed to meet the challenges ahead. 

                 

Following                  the settlement from PartyGaming, Empire Online is in a very                  strong position financially. The $250m received is currently                  on deposit and is available to finance the acquisition of                  complementary businesses that can be acquired at a sensible                  price. The sector is widely expected to go through a period of                  consolidation and the Company in uniquely placed to emerge as                  one of the key players in the industry.

                 

Opportunities                  for organic growth also remain strong and are being achieved                  with admirable geographic diversity. At the same time we have                  significant downside protection to the Company in the unlikely                  event of any disruption to our US business through any                  regulatory activities. 

                 

Diluted                  earnings per share after amortisation and non recurring charges                  were US16.0cents per share for the year. The Board is                  pleased to recommend a final dividend of $20m which is US                  6.8cents (3.9pence) per share. Subject to approval at the                  Company’s AGM, the Company anticipates that the final                  dividend will be paid in early June. 

                 

Together                  with the interim dividend of $10m or US3.4cents (1.9pence) per                  share, this takes the dividends paid to shareholders since the                  IPO to $30m or US10.2cents (5.8pence) per share. The Board                  reiterates its intention to continue with a 50% dividend                  payout ratio going forward. 

                 

The                  opportunities that lie ahead are excellent and the Board                  remains extremely confident about the future business and                  profitability of Empire Online. 

                 

 

                 

Lord                  Steinberg
                  Chairman          

                 

Chief                  Executive’s Review 

                 

2005                  has been a year of considerable change for the Company. We end                  the year in a strong and secure position with the last six                  months in particular seeing a remarkable transformation in the                  Company. At the time of our IPO in June we were principally a                  provider of marketing services to two of the largest online                  gaming companies in their respective fields: CasinoOnNet and                  PartyPoker.  Now,                  we have an established and fast growing Licensed Gaming                  business which operates its own platforms (Club Dice and Noble                  Poker) and have $250m cash at our disposal to pursue                  acquisitions which will enable us to play a leading part in                  industry consolidation. 

                 

Operating                  Review

                 

The                  twelve months to 31st December 2005 has seen                  further continued growth across all aspects and areas of the                  Company, albeit in a manner different to that anticipated at                  the time of the Company’s IPO in June 2005. The number of                  registered customers across the Group has risen over the                  course of the twelve months ending 31st December                  2005, by 185,456 (2004: 121,257). 

                 

Growth                  in our casino business has led to a total number of active                  players at the end of the year of 42,304 (2004: 32,711). Total                  pro-forma revenues for the division were $31.4m (2004: $21.8m)                  for the year which generated a pro-forma gross profit of                  $16.6m (2004: $14.7m) for the year on a pro-forma gross profit                  margin of 51% (2004: 67%). 

                 

In                  addition, growth in our poker business has led to a total                  number of active players at the end of the year of 123,006                  (2004:71,466). Total pro-forma revenues for the division were                  $73.8m (2004: $43.3m) for the year which generated a pro-forma                  gross profit of $35.3m (2004: $24.3m) for the year on a                  pro-forma gross profit margin of 48% (2004: 56%). 

                 

We                  have seen growth across Key Performance Indicators (KPI’s)                  at our Club Dice casino suite and our Noble Poker brand. Both                  of these platforms were acquired in August 2005, with the aim                  of reducing our reliance on our two technology providers at                  the time and to establish our move into licensed gaming, where                  we own and operate our own gaming license. 

                 

This                  growth has been achieved along with a relentless focus on cost                  containment. The average cost of acquiring a new real money                  player across the group during 2005 was $230 (2004: $220). The                  Board believes that the stability of this metric, along with                  the Company’s ability to sustain a high level of player                  acquisition emphasises the deliverability of future                  incremental profits.

                 

 

                 

Club                  Dice Casino

                 

Empire                  Online completed the acquisition of the Club Dice Casino suite                  in August. The cost of the acquisition was $46.6m. 

                 

Club                  Dice has seen substantial growth in revenues and new sign ups                  since inception. At the end of 2005, the Club Dice platforms                  in aggregate had 26,790 active players. The net revenue per                  day averaged $79,946 during the fourth quarter (Q4) of 2005,                  compared to an average daily income of $65,334, an increase of                  22.4% on the third quarter (Q3) of 2005. 

                 
                 
                 

Noble                  Poker

                 

Empire                  Online completed the acquisition of the player database, brand                  and intellectual property of Noble Poker in August 2005. Noble                  Poker is the largest poker operator on the Playtech iPoker                  network, one of the fastest growing poker networks on the                  internet. The cost of the acquisition was $3.6 million. 

                 

The                  Company has implemented strategies to help drive the rate of                  growth in new daily signups. This has been successfully                  executed with Noble Poker achieving an average of 138 new real                  money signups per day during the fourth quarter of 2005                  against 118 new real money player signups during the third                  quarter of 2005. The number of active players was 29,585 at                  the end of the fourth quarter of 2005, against 21,809 at the                  end of the third quarter.

                 

 

                 

Industry                  Consolidation / Mergers and Acquisitions

                 

For                  many years, the industry has talked of consolidation. Now, we                  are starting to see that talk become reality. Empire Online                  has always seen its role at the centre of this consolidation,                  believing that our core expertise in marketing is better                  leveraged across a larger platform. The Company has always                  expressed its intention to pursue industry-consolidating deals                  as and when they become available. The large number of online                  gaming sites and the increasingly higher barriers to                  profitable scale mean that consolidation will be seen by many                  operators as an attractive exit going forward. 

                 

I                  believe that the cash reserves available to the Company, along                  with the ability to use its equity give the Company                  considerable flexibility in pursuing merger and acquisition                  activity over the remainder of the year. Our focus is to                  extend the range of the products that we can offer our                  customers, including a sportsbook. We will assess areas of                  geographical acquisition in-line with regulatory and                  legislation trends.

                 

 

                 

Industry                  Regulation

                 

Since                  the beginning of the year there has been renewed activity in                  the US Congress to bring forward bills that seek to either ban                  the use of financial instruments for online gaming or extend                  existing federal laws to prohibit US citizens from online                  gaming completely. Having established this Company in 1998, I                  am used to US regulatory threats as an ever present                  ‘soundtrack’ to the industry. 

                 

I                  cannot offer investors any certainty that prohibitive                  legislation will not pass Congress, but as CEO of Empire                  Online, it is my duty to take all actions necessary to                  position this Company so that it maximises its exposure to the                  upside from this industry and minimises the risks.                   Our Mergers and Acquisitions function will seek to                  exploit, from a position of strength, any opportunities that                  may arise from adverse legislation being passed.

                 

 

                 

Financial                  Review 

                 

Pro-forma                  net gaming revenue for the year ended 31 December 2005 was                  $105.2m (12 months to December 2004: $65.2m), earning a                  pro-forma gross margin of $51.9m (2004: $39.0m) at 49.3% of                  turnover (2004: 59.8%). The reduction in pro-forma gross                  margin has arisen from additional marketing costs incurred in                  order to stabilise the EmpirePoker platform following the                  separation form PartyPoker on 8th October 2005.                  Additionally, significant offline campaigns were undertaken                  throughout 2005, which initially yield a lower gross margin                  than the Company’s main online marketing activities. 

                 

Pro-forma                  profit before tax was $50.1m (2004: $37.7m), before amortization                  and non recurring costs of $4.5m (2004: nil.)

                 

Pro-forma                  diluted earnings per share before amortisation                  and non-recurring costs                  were 19cents (2004: $350). Pro-forma diluted earnings                  per share after amortisation                  and non-recurring costs                  were 17cents (2004: $350). 

                 

During                  the year ended 31 December 2005, the Company generated                  pro-forma cash from operating activities of $77.2m (2004:                  $37.4m). As at 31 December 2005 the Company had $16.3m (2004:                  $21.8m) of cash and liquid resources on its balance sheet.

                 
 
                 

Trading                  Outlook

                 

During                  the first 4 weeks of March in the new financial year the rate                  of new real money player growth was around 450 per day. The                  Company continues to believe that growth opportunities for all                  its platforms remain strong. In particular, the Company is                  pleased to note that more than 50% of new daily signups                  originate from outside of the USA. The cost of acquiring new                  customers continues to fall on a quarter by quarter basis.

                 

On                  the current rate of growth, the Company reiterates its                  confidence in achieving an EBITDA of $37 million for the                  current year.

                 

 

                 

Noam                  Lanir

                 

Chief                  Executive

                 

Consolidated                  Income Statement

                 

for                  the year ended 31 December 2005

                 

 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
                         

 

                       
                         

 

                         

Note

                       
                         

Pre-                          amortisation and non recurring items

                         

 2005

                       
                         

Amortisation                          and non recurring items

                         

2005

                       
                         

 

                         

 

                         

 

                         

2005

                       
                         

 

                         

 

                         

 

                         

2004

                       
                         

 

                         

 

                       
                         

 

                       
                         

$000

                       
                         

$000

                       
                         

$000

                       
                         

$000

                       
                         

Net                          gaming revenue

                       
                         

 

                       
                         

97,389

                       
                         

-

                       
                         

97,389

                       
                         

48,319

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Cost                          of sales

                       
                         

 

                       
                         

(49,644)

                       
                         

-

                       
                         

(49,644)

                       
                         

(20,716)

                       
                         

 

                       
                         

 

                       
                         

                                   ––––––

                       
                         

                                   ––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

Gross                          profit

                       
                         

 

                       
                         

47,745

                       
                         

-

                       
                         

47,745

                       
                         

27,603

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Administrative                          expenses

                       
                         

2

                       
                         

(3,171)

                       
                         

(4,581)

                       
                         

(7,752)

                       
                         

(1,643)

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

Operating                          profit

                       
                         

3

                       
                         

44,574

                       
                         

(4,581)

                       
                         

39,993

                       
                         

25,960

                       
                         

Finance                          expenditure

                       
                         

 

                       
                         

(55)

                       
                         

-

                       
                         

(55)

                       
                         

(43)

                       
                         

Finance                          income

                       
                         

 

                       
                         

1,246

                       
                         

-

                       
                         

1,246

                       
                         

309

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

Profit                          before taxation

                       
                         

 

                       
                         

45,765

                       
                         

(4,581)

                       
                         

41,184

                       
                         

26,226

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Taxation

                       
                         

 

                       
                         

(10)

                       
                         

-

                       
                         

(10)

                       
                         

-

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

Profit                          after taxation for the period

                       
                         

 

                       
                         

45,755

                       
                         

(4,581)

                       
                         

41,174

                       
                         

26,226

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Earnings                          per share

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Basic                          earnings per share ($)

                       
                         

4

                       
                         

$0.18

                       
                         

 

                       
                         

$0.16

                       
                         

$                          243.85

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Diluted                          earnings per share ($)

                       
                         

4

                       
                         

$0.17

                       
                         

 

                       
                         

$0.16

                       
                         

$                          243.85

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Dividends

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Proposed                          final dividend per share ($)

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

$0.07

                       
                         

-

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Proposed                          final dividend ($000)

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

20,000

                       
                         

-

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Dividends                          paid during the period per share ($)

                       
                         

 

                       
                         

 

                       
                         

$0.10

                       
                         

-

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Dividends                          paid during the period ($000)

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

49,043

                       
                         

-

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                 

 The                  notes on pages 10 to 11 form part of these financial                  statements. 

                 

 

                 

Consolidated                  Balance Sheet

                 

as                  at 31 December 2005

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Note

                       
                         

 

                         

2005

                       
                         

 

                         

2004

                       
                         

 

                         

 

                       
                         

 

                       
                         

$000

                       
                         

$000

                       
                         

Assets

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Non-current                          assets

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Property,                          plant and equipment

                       
                         

 

                       
                         

119

                       
                         

-

                       
                         

Intangible                          assets

                       
                         

 

                       
                         

224,628

                       
                         

794

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

 

                       
                         

 

                       
                         

224,747

                       
                         

794

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Current                          assets

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Trade                          and other receivables

                       
                         

 

                       
                         

11,431

                       
                         

18,331

                       
                         

Cash                          and cash equivalents

                       
                         

5

                       
                         

16,297

                       
                         

14,830

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

 

                       
                         

 

                       
                         

27,728

                       
                         

33,161

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Total                          assets

                       
                         

 

                       
                         

252,475

                       
                         

33,955

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Equity

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Share                          capital

                       
                         

 

                       
                         

-

                       
                         

1

                       
                         

Share                          premium

                       
                         

 

                       
                         

209,807

                       
                         

604

                       
                         

Share                          option reserve

                       
                         

 

                       
                         

277

                       
                         

-

                       
                         

Retained                          earnings

                       
                         

 

                       
                         

22,297

                       
                         

30,166

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Total                          equity

                       
                         

 

                       
                         

232,381

                       
                         

30,771

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Liabilities

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Current                          liabilities

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Trade                          and other payables

                       
                         

 

                       
                         

20,088

                       
                         

3,184

                       
                         

Current                          tax payable

                       
                         

 

                       
                         

6

                       
                         

-

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Total                          liabilities

                       
                         

 

                       
                         

20,094

                       
                         

3,184

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Total                          equity and liabilities

                       
                         

 

                       
                         

252,475

                       
                         

33,955

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                 

These                  Financial Statements were approved by the Board of Directors                  on the 3rd of April 2006. 

                 

The                  notes on pages 10 to 11 form part of these financial                  statements. 

                 

Consolidated                  Statement of Changes in Equity

                 

for                  the year ended 31 December 2005

                 

 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                         

 

                       
                         

 

                       
                         

Share

                         

capital

                       
                         

Share

                         

premium

                       
                         

Share

                         

Option                          reserve

                       
                         

Accumulated

                         

profits

                       
                         

 

                         

Total

                       
                         

 

                         

 

                       
                         

 

                       
                         

$000

                       
                         

$000

                       
                         

$000

                       
                         

$000

                       
                         

$000

                       
                         

 

                         

Balance                          at 1 January 2004

                       
                         

 

                       
                         

 

                         

1

                       
                         

 

                         

-

                       
                         

 

                         

-

                       
                         

 

                         

3,940

                       
                         

 

                         

3,941

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Share                          capital issued

                       
                         

 

                       
                         

-

                       
                         

604

                       
                         

-

                       
                         

-

                       
                         

604

                       
                         

Net                          profit for the year

                       
                         

 

                       
                         

-

                       
                         

-

                       
                         

-

                       
                         

26,226

                       
                         

26,226

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

Balance                          at 31 December 2004

                       
                         

 

                       
                         

1

                       
                         

604

                       
                         

 

                       
                         

30,166

                       
                         

30,771

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Net                          profit for the period

                       
                         

 

                       
                         

-

                       
                         

-

                       
                         

-

                       
                         

41,174

                       
                         

41,174

                       
                         

Issue                          of new share capital

                       
                         

 

                       
                         

(1)

                       
                         

222,601

                       
                         

-

                       
                         

-

                       
                         

222,600

                       
                         

IPO                          expenses

                       
                         

 

                       
                         

-

                       
                         

(13,398)

                       
                         

-

                       
                         

-

                       
                         

(13,398)

                       
                         

Share                          option reserve

                       
                         

 

                       
                         

-

                       
                         

-

                       
                         

277

                       
                         

-

                       
                         

277

                       
                         

Dividends                          paid

                       
                         

 

                       
                         

-

                       
                         

-

                       
                         

-

                       
                         

(49,043)

                       
                         

(49,043)

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

Balance                          at 31 December 2005

                       
                         

 

                       
                         

-

                       
                         

209,807

                       
                         

277

                       
                         

22,297

                       
                         

232,381

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                 

The                  notes on pages 10 to 11 form part of these financial                  statements.

                 

 

                 

Consolidated                  Statement of Cash Flows 

                 

for                  the year ended 31 December 2005

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
                         

 

                       
                         

 

                       
                         

 

                         

 

                         

                            Note

                       
                         

 

                         

 

                         

2005

                       
                         

 

                         

 

                         

2004

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

$000

                       
                         

$000

                       
                         

Cash                          flows from operating activities

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

                            Profit before tax

                       
                         

 

                       
                         

 

                       
                         

41,184

                       
                         

26,226

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Adjustments                          for

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

                            Depreciation and amortisation

                       
                         

 

                       
                         

 

                       
                         

2,898

                       
                         

173

                       
                         

                            Interest                          income

                       
                         

 

                       
                         

 

                       
                         

(1,159)

                       
                         

(309)

                       
                         

                            Interest                          expense

                       
                         

 

                       
                         

 

                       
                         

55

                       
                         

-

                       
                         

                            Equity settled share options

                       
                         

 

                       
                         

 

                       
                         

277

                       
                         

-

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

43,255

                       
                         

26,090

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Changes                          in working capital

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

                            Decrease in trade and other receivables

                       
                         

 

                       
                         

 

                       
                         

6,900

                       
                         

881

                       
                         

                            Increase/                          (decrease) in trade and other payables

                       
                         

 

                       
                         

 

                       
                         

16,904

                       
                         

(2,109)

                       
                         

                            Taxation                          paid

                       
                         

 

                       
                         

 

                       
                         

(4)

                       
                         

-

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

23,800

                       
                         

(1,228)

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Net                          cash generated from operating activities

                       
                         

 

                       
                         

 

                       
                         

67,055

                       
                         

24,862

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Cash                          flows from investing activities

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

                            Purchase of property, plant and equipment

                       
                         

 

                       
                         

 

                       
                         

(131)

                       
                         

-

                       
                         

                            Purchase of                          intangible assets

                       
                         

 

                       
                         

 

                       
                         

(5,528)

                       
                         

(967)

                       
                         

                            Acquisition                          of business

                       
                         

 

                       
                         

 

                       
                         

(221,192)

                       
                         

-

                       
                         

                            Interest                          income received

                       
                         

 

                       
                         

 

                       
                         

1,159

                       
                         

309

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Net                          cash used in investing activities

                       
                         

 

                       
                         

 

                       
                         

(225,692)

                       
                         

(658)

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Cash                          flows from financing activities

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

                            Advance of loans to shareholders

                       
                         

 

                       
                         

 

                       
                         

-

                       
                         

(11,139)

                       
                         

                            Dividends                          paid

                       
                         

 

                       
                         

 

                       
                         

(49,043)

                       
                         

-

                       
                         

                            Proceeds                          from issue of shares

                       
                         

 

                       
                         

 

                       
                         

209,203

                       
                         

-

                       
                         

                            Share                          capital cancellation

                       
                         

 

                       
                         

 

                       
                         

(1)

                       
                         

-

                       
                         

                            Interest                          paid

                       
                         

 

                       
                         

 

                       
                         

(55)

                       
                         

-

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Net                          cash from/(used in) financing activities

                       
                         

 

                       
                         

 

                       
                         

160,104

                       
                         

(11,139)

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Net                          increase in cash and cash equivalents

                       
                         

 

                       
                         

 

                       
                         

1,467

                       
                         

13,065

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Cash                          and cash equivalents at the beginning of the year

                       
                         

 

                       
                         

5

                       
                         

14,830

                       
                         

1,765

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Cash                          and cash equivalents at the end of the year

                       
                         

 

                       
                         

5

                       
                         

16,297

                       
                         

14,830

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                 

 The                  notes on pages 10 to 11 form part of these financial                  statements.

                 

Notes                  to the Financial Statements  

                 

                          

                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
                       

1.

                       

Basis                  of preparation 

                       

                 

The                  audited financial statements of Empire Online have been                  prepared in accordance with International Financial Reporting                  Standards (“IFRS”) as adopted by the European Union.                    The significant accounting policies applied in the                  Financial Statements of the Group in the prior years have been                  applied consistently in these Financial Statements.                   The Group adopted for the first time IFRS 2 Share Based                  Payments and IFRS 3 Business Combinations in 2005.                   The adoption of the above had no impact on prior years.

                 

The                  financial information is presented in US dollars because that                  is the currency in which the Group primarily operates.

                     
                       

                       

2.

                       

Amortisation                  and non recurring items

 Amortisation                  and non recurring items refer to:
                 

2.   

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
                         

                       
                         

 

                         

2005

                       
                         

 

                         

2004

                       
                         

 

                       
                         

$000

                       
                         

$000

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Amortisation                          of intangible assets

                       
                         

2,266

                       
                         

-

                       
                         

Amortisation                          of share options

                       
                         

277

                       
                         

-

                       
                         

IPO                          related expenses

                       
                         

587

                       
                         

-

                       
                         

Non                          recurring expenses

                       
                         

1,451

                       
                         

-

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

 

                       
                         

4,581

                       
                         

-

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                 

 

                 

 

                                                                                                                       
                       

3.

                       

Operating                        Profit

                 

3.                        

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                         

 

                       
                         

 

                         

2005

                       
                         

 

                         

2004

                       
                         

 

                       
                         

$000

                       
                         

$000

                       
                         

Operating                          profit is stated after charging:

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Administration                          services

                       
                         

936

                       
                         

1,460

                       
                         

Depreciation

                       
                         

12

                       
                         

260

                       
                         

Amortisation

                       
                         

2,886

                       
                         

173

                       
                         

Operating                          leases

                       
                         

18

                       
                         

-

                       
                         

Auditors’                          remuneration

                       
                         

90

                       
                         

37

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Auditor’s                          remuneration is analysed as: 

                       
                         

 

                       
                         

 

                       
                         

Audit                          fees

                       
                         

90

                       
                         

37

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

                         

                         

                         

                 

 

                                                                                                                                                                                                           
                       

4.

                       

Earnings                  per share

                 

Basic                  earnings per share has been calculated by dividing the net                  profit attributable to ordinary shareholders (profit for the                  year) by the weighted average number of shares in issue during                  the relevant financial periods. 

                 

 

                       

Diluted                  earnings per share is calculated after taking into                  consideration the potentially diluted shares in existence as                  at the year ended 31 December 2005. For the year ended 31                  December 2004 there were no potentially diluted shares.

                     
                 


                 
 
                 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                         

 

                       
                         

Pre-                          amortisation and non recurring items

                         

 2005

                       
                         

Post                          amortisation and non recurring items

                         

2005

                       
                         

 

                         

 

                         

 

                         

2004

                       
                         

Net                          profit attributable to ordinary shareholders ($000)

                       
                         

45,755

                       
                         

41,174

                       
                         

26,226

                       
                         

 

                       
                         

–––––––––

                       
                         

–––––––––

                       
                         

–––––––––

                       
                         

Weighted                          average number of ordinary shares in issue

                       
                         

260,689,492

                       
                         

260,689,492

                       
                         

107,550

                       
                         

 

                       
                         

–––––––––

                       
                         

–––––––––

                       
                         

–––––––––

                       
                         

Basic                          earnings per share ($)

                       
                         

0.18

                       
                         

0.16

                       
                         

243.85

                       
                         

 

                       
                         

–––––––––

                       
                         

–––––––––

                       
                         

–––––––––

                       
                         

Weighted                          average number of ordinary shares including the effect                          of potentially diluted shares

                       
                         

261,862,570

                       
                         

261,862,570

                       
                         

107,550

                       
                         

 

                       
                         

–––––––––

                       
                         

–––––––––

                       
                         

–––––––––

                       
                         

Diluted                          earnings per share ($)

                       
                         

0.17

                       
                         

0.16

                       
                         

243.85

                       
                         

 

                       
                         

–––––––––

                       
                         

–––––––––

                       
                         

–––––––––

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Number                          of Shares

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Weighted                          average number of ordinary shares in issue

                       
                         

260,689,492

                       
                         

260,689,492

                       
                         

107,550

                       
                         

                           Effect of                          dilutive potential ordinary shares:

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

                            Share options

                       
                         

1,173,078

                       
                         

1,173,078

                       
                         

-

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

Weighted                          average number of ordinary shares including the effect                          of potentially diluted shares

                       
                         

261,862,570

                       
                         

261,862,570

                       
                         

107,550

                       
                         

 

                       
                         

–––––––––

                       
                         

–––––––––

                       
                         

–––––––––

                       
                 

 

                 

 

                                                                                                                                                                                                           
                       

5.

                       

Cash                  and cash equivalents

Cash                  and cash equivalents included in the cash flow statement                  comprise the following at the balance sheet date:
                 

 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
                         

 

                       
                         

 

                         

2005

                       
                         

 

                         

2004

                       
                         

 

                       
                         

$000

                       
                         

$000

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Short                          term deposits

                       
                         

14,607

                       
                         

12,495

                       
                         

Cash                          at bank

                       
                         

1,690

                       
                         

2,335

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

 

                       
                         

16,297

                       
                         

14,830

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                 

 

                 

 Unaudited                  Pro-Forma Financial Information

                 

 General Information     

                 

                           The pro-forma financial information has been prepared                  so as to provide comparable information for the transitional                  year 
                    of 2005 during which certain assets were acquired                  by the Group from Tradal Ltd, a related company incorporated                  in 
                    St. Vincent and the Grenadines.
 

                 

                   Tradal                  Ltd will continue to play an important role for the Group as                  some of the key members of staff are employed by
                     this  Company.                  This Company charges a service fee for the services provided                  by its staff members.

                 

 

                 

                             Balance Sheet

                 

The                  aggregated balance sheet as at 31 December 2005 is actually                  the same as the Group Balance Sheet as Tradal Ltd’s                  operations that related to the Group have, by the end of the                  year, been integrated into the group via the acquisition of                  Tradal Ltd’s assets.

                 

 

                 

                             Basis of aggregation

                 

The                  pro-forma results of the Group are an aggregation based on                  Empire Online Group results for the year ended 31 December                  2005 incorporating the trading results of the acquired                  business from Tradal Ltd for the first five months of 2005.                  These results were aggregated so as to provide comparable                  information.

                 

 

                 

Unaudited                  pro-forma Income Statement

                 

for                  the year ended 31 December 2005

                 

­­­­­­­

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
                         

 

                       
                         

 

                       
                         

Pre-                          amortisation and non recurring items

                         

 2005

                       
                         

Amortisation                          and non recurring items

                         

2005

                       
                         

 

                         

 

                         

 

                         

2005

                       
                         

 

                         

 

                         

 

                         

2004

                       
                         

 

                         

 

                       
                         

 

                       
                         

$000

                       
                         

$000

                       
                         

$000

                       
                         

$000

                       
                         

Net                          gaming revenue

                       
                         

 

                       
                         

105,181

                       
                         

-

                       
                         

105,181

                       
                         

65,186

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Cost                          of sales

                       
                         

 

                       
                         

(53,244)

                       
                         

-

                       
                         

(53,244)

                       
                         

(26,192)

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

                                   ––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

Gross                          profit

                       
                         

 

                       
                         

51,937

                       
                         

-

                       
                         

51,937

                       
                         

38,994

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Administrative                          expenses

                       
                         

 

                       
                         

(3,249)

                       
                         

(4,581)

                       
                         

(7,830)

                       
                         

(1,827)

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

Operating                          profit

                       
                         

 

                       
                         

48,688

                       
                         

(4,581)

                       
                         

44,107

                       
                         

37,167

                       
                         

Net                          finance income

                       
                         

 

                       
                         

1,392

                       
                         

-

                       
                         

1,392

                       
                         

531

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

Profit                          before taxation

                       
                         

 

                       
                         

50,080

                       
                         

(4,581)

                       
                         

45,499

                       
                         

37,698

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Taxation

                       
                         

 

                       
                         

(22)

                       
                         

-

                       
                         

(22)

                       
                         

(16)

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

Profit                          after taxation for the period

                       
                         

 

                       
                         

50,058

                       
                         

(4,581)

                       
                         

45,477

                       
                         

37,682

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

––––––

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Earnings                          per share

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Basic                          earnings per share ($)

                       
                         

 

                       
                         

$0.19

                       
                         

 

                       
                         

$0.17

                       
                         

$350

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Diluted                          earnings per share ($)

                       
                         

 

                       
                         

$0.19

                       
                         

 

                       
                         

$0.17

                       
                         

$350

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Dividends

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Proposed                          dividend per share ($)

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

$0.07

                       
                         

-

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Proposed                          dividend ($000)

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

20,000

                       
                         

-

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Dividends                          paid during the period per share ($)

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

$0.10

                       
                         

-

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Dividends                          paid during the period ($000)

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

49,043

                       
                         

-

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

                         

                         

                         

                         

                         

                         

                 

Unaudited                  pro-forma Cash Flow Statement

                 

for                  the year ended 31 December 2005 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                         

 

                         

2005

                       
                         

 

                         

 

                         

2004

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

$000

                       
                         

$000

                       
                         

Cash                          flows from operating activities

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

                            Profit before income tax

                       
                         

 

                       
                         

 

                       
                         

45,499

                       
                         

37,698

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Adjustments                          for

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

                            Depreciation and amortisation

                       
                         

 

                       
                         

 

                       
                         

2,928

                       
                         

317

                       
                         

Equity                          settled share options

                       
                         

 

                       
                         

 

                       
                         

277

                       
                         

-

                       
                         

                            Interest                          income

                       
                         

 

                       
                         

 

                       
                         

(1,395)

                       
                         

(625)

                       
                         

                            Interest                          expense

                       
                         

 

                       
                         

 

                       
                         

90

                       
                         

-

                       
                         

                            Non cash                          item: aggregation adjustments

                       
                         

 

                       
                         

 

                       
                         

-

                       
                         

(3,384)

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

47,399

                       
                         

34,006

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Changes                          in working capital

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

                            Decrease in trade and other receivables

                       
                         

 

                       
                         

 

                       
                         

14,039

                       
                         

855

                       
                         

                            Increase in                          trade and other payables

                       
                         

 

                       
                         

 

                       
                         

15,793

                       
                         

2,386

                       
                         

                            Taxation                          (paid)/received

                       
                         

 

                       
                         

 

                       
                         

(4)

                       
                         

1

                       
                         

                            Decrease in                          trading investments

                       
                         

 

                       
                         

 

                       
                         

-

                       
                         

104

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

29,828

                       
                         

3,346

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Net                          cash generated from operating activities

                       
                         

 

                       
                         

 

                       
                         

77,227

                       
                         

37,352

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Cash                          flows from investing activities

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

                            Purchase of property, plant and equipment

                       
                         

 

                       
                         

 

                       
                         

(131)

                       
                         

(152)

                       
                         

                            Purchase of                          intangible assets

                       
                         

 

                       
                         

 

                       
                         

(5,558)

                       
                         

-

                       
                         

                            Acquisition                          of business

                       
                         

 

                       
                         

 

                       
                         

(221,192)

                       
                         

(1,037)

                       
                         

                            Elimination                          of Tradal Ltd assets and liabilities

                       
                         

 

                       
                         

 

                       
                         

216

                       
                         

-

                       
                         

                            Interest                          income received

                       
                         

 

                       
                         

 

                       
                         

1,395

                       
                         

627

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Net                          cash used in investing activities

                       
                         

 

                       
                         

 

                       
                         

(225,270)

                       
                         

(562)

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Cash                          flows from financing activities

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

                            Advance of loans to shareholders

                       
                         

 

                       
                         

 

                       
                         

-

                       
                         

(16,413)

                       
                         

                            Dividends                          paid

                       
                         

 

                       
                         

 

                       
                         

(49,043)

                       
                         

(5,004)

                       
                         

                            Proceeds                          from issue of shares

                       
                         

 

                       
                         

 

                       
                         

209,203

                       
                         

-

                       
                         

                            Decrease in                          Capital Account

                       
                         

 

                       
                         

 

                       
                         

(18,010)

                       
                         

-

                       
                         

                            Decrease in                          Treasury Shares

                       
                         

 

                       
                         

 

                       
                         

445

                       
                         

-

                       
                         

                            Interest                          paid

                       
                         

 

                       
                         

 

                       
                         

(90)

                       
                         

-

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Net                          cash used in financing activities

                       
                         

 

                       
                         

 

                       
                         

142,505

                       
                         

(21,417)

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Net                          (decrease)/ increase in cash and cash equivalents

                       
                         

 

                       
                         

 

                       
                         

(5,538)

                       
                         

15,373

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

Cash                          and cash equivalents at the beginning of the year

                       
                         

 

                       
                         

 

                       
                         

21,835

                       
                         

6,462

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                         

Cash                          and cash equivalents at the end of the year

                       
                         

 

                       
                         

 

                       
                         

16,297

                       
                         

21,835

                       
                         

 

                       
                         

 

                       
                         

 

                       
                         

––––––

                       
                         

––––––

                       
                 

The                  financial information of the Group set out above does not                  constitute statutory accounts.                   The results for the year ended 31 December 2005 are                  based on the audited annual report and consolidated financial                  statements of Empire Online Limited which have been reported                  on by the auditors.  The                  report of the auditors was unqualified. 

                 

Copies                  of the 2005 annual report and accounts will be sent to                  shareholders in due course.