Livermore Regulatory News (LIV)

18 Jul 2006 07:01

Empire Online Limited18 July 2006 Empire Online Limited ("EOL") Q2 2006 Trading Update Empire Online Limited (the "Company" or "EOL"), a leading online gaming networkand provider of marketing services to the online gaming industry, today providesthe following trading update for the second quarter of 2006. Seasonality The second quarter is traditionally the slowest quarter of the year for theonline gaming industry. The rate of new player signups has always been lowest inthe second quarter, rebuilding and growing throughout the second half of theyear. This year the normal seasonality has been more pronounced. Empire now recruits the majority of its new players from outside of the USA.EOL's sign-up's have therefore been more exposed to the short term change inonline gaming trading patterns caused by the World Cup. This has had anadditional dampening effect on new player sign ups and player activity in pokerand casino gaming, resulting in June being the slowest month in Q2. Trading highlights for Q2 : • Geographic diversification with over 60% of new real money players driven from outside of the USA (Q1 2006 over 50% of new real money players driven from outside of the USA). • Net cash position of over $260m available for investment. • Number of new real money players across all gaming platforms has risen by 29,928 for Q2 2006 (Q1 2006: 44,217; Q2 2005: 42,772). Excluding Empire poker the comparatives are Q1 2006: 36,242; Q2 2005: 9,838. Non-US players accounted for over 60% of all new real money signups in Q2 2006. • Total Company net gaming revenue for Q2 2006 was $18.3m (Q1 2006: $21.1m; Q2 2005: $25.3m). Net gaming revenues across all gaming platforms excluding Empire Poker for Q1 2006 were $17.6m and for Q2 2005 $5.1m. • Total Company Casino revenue of $16m (Q1 2006: $15.3m; Q2 2005: $5.1m). • Total Company Poker revenue of $2.2m (Q1 2006: $5.8m; Q2 2005: $20.2m). • Estimated earnings before interest taxation depreciation and amortisation (EBITDA) and non-recurring exceptional items of approximately $7.2m (Q1 2006: $8.5m; Q2 2005: $12.4m) • Cost per acquisition (CPA) of new real money players of $329 (Q1 2006 : $222). As the majority of Empire Online players are recruited through revenue share deals with affiliates, the company includes the ongoing costs for players recruited in previous periods within its CPA definition. The calculation of CPA does not flex with short term changes in new real money sign-ups and therefore does not affect earnings directly. Restating the CPA to exclude revenue share players would give a cost in Q2 of $116 (Q1 2006 : $109). Key Performance Indicators (KPI's) excluding Empire poker Q2 '06 Q1 '06 Change Q2 '05 Change % %(1) Number of New Real Money Players acquired Poker 10,681 13,313 (22%) 0 100%Casino 19,297 22,929 (16%) 9,838 96%Total 29,928 36,242 (18%) 9,838 204% (2) Number of ActivePlayers (a) Poker 28,949 33,550 (14%) 0 100%Casino 51,035 51,801 (1%) 23,613 114%Total 79,984 85,351 (6%) 23,813 236% (3) Average ActivePlayers per Day Poker 3,785 4,102 (8%) 0 100%Casino 3,566 3,868 (8%) 1,324 169%Total 7,351 7,970 (8%) 1,324 455% (4) Poker Active Player daysPoker 0.34m 0.37m (6%) 0 100% (a) Number of Active Players is defined as those who have played for real moneyin the preceding 90 days. Outlook Empire Online is financially strong with considerable cash resources of over$260m. The Company is well placed to exploit value-enhancing opportunities asthey arise. Although, the Company has progressed several opportunities,completion of transactions has been hindered by unreasonably high valuationsexpected by vendors and the uncertainty surrounding the US regulatoryenvironment. In addition to its acquisition strategy the Company is also seekingto diversify its existing business operations. The Company has recruitedadditional resource to allow senior management sufficient time to adequatelyexplore all possibilities in this area. As part of this ongoing process, the Company has altered the incentivesstructure provided to one of its main affiliate partners. This change is notexpected to affect earnings for 2006 but may have impact on earnings for 2007. Commenting on today's trading update, Noam Lanir, CEO, said "I am pleased toreport further progress, against the normal Q2 headwind, in re-building theCompany. The Company's geographic diversification and financial strength are keyfeatures which will ensure future success. I expect this progress to continuethrough the second half of 2006." For further information: Empire Online Limited +357 25 847 700Noam Lanir, Chief Executive OfficerAndrew Burns, Chief Financial OfficerAndrew Burnett, Head of Mergers and Acquisitions END This information is provided by RNS The company news service from the London Stock Exchange