Holding(s) in Company
Livermore Investmens Press Release 2008 / Final Results
Print Current Text  Close

02 May 2008

Final Results


Livermore Investments Group Limited (the "Group" or "Livermore") today 
announces its preliminary results for the year ended 31 December 2007.
• Successfully completed restructuring and established operations as an
  investment company
• Net Asset Value per share USD 0.97 (0.49 pence) after payout of 3.3 cents per 
  share during the year;  total payout of 6.1 cents per share in 2007, which
  includes a cash dividend of 3.3 cents per share and share buy-back for 
  USD 7.2m
• Net Asset Value growth of USD 19.1m before payment of dividend and share 
  buy back
• Major investments during the year include:
    - Atlas Estates, Eastern Europe: diversified real estate company
    - Wyler Park, Switzerland: sale and leaseback of commercial buildings,
      land, and residential development due for completion in July 2008
    - DTH Television Grup SA, BOOM, Romania: Direct-to-Home satellite
      television service
    - SRS Charminar, India: top real estate owner and developer
• Gross income from investment activities USD 25.8m
• Earnings before interest, tax, depreciation, amortization and non
  recurring items of USD 22.7m
• Net income after tax of USD 20.7m 
• Final dividend of 3.5 cents per share
Commenting on the results, Noam Lanir, CEO of Livermore Investments Group
Limited, said:
"We are pleased to report the results of our first year as an investment
company. During 2007 the Group was successful in deploying a significant part of
its capital in a few outstanding opportunities mainly in Europe and Asia. These
investments are consistent with our strategy to establish a diversified
portfolio with income generating and growth opportunities. Each of our
investments is expected to generate above average returns over the mid to long
For further investor information please go to www.livermore-inv.com.
Livermore Investments Group Limited                         + 41 43 3443200
Doron Yassur, Chief Financial Officer
Numis Securities                                            +44 (0) 20 7260 1000
Jag Mundi
Hudson Sandler                                              +44 (0) 20 7796 4133
Jessica Rouleau/ Fran Read
• Successfully completed restructuring and established operations as an 
  investment company
• Net Asset Value per share USD 0.97 (49 pence) after payout of  3.3 cents per 
  share during the year
• Net Asset Value growth of USD 19.1m before payment of dividend and treasury 
  share buy back
• Gross income from investment activities USD 25.8m
• Earnings before Interest, Tax, Depreciation, Amortization and non recurring 
  items - USD 22.7m
• Net Income after tax of - USD 20.7m
• Dividend distributed during the year (for 2006) - USD 9.7m
• 2007 total payout of 6.1 cents per share which include a cash dividend of 
  USD 10.0m and treasury shares purchased for USD 7.2m.

Chairman's and Chief Executive's Review
We are pleased to report the results of Livermore's  first year as an investment
company.  At the beginning of the year, we concluded the disposal of the Group's
old activities,  its change of name and change of purpose.  This transaction was
completed on 19 January 2007 (see note 13).  Following  these initial  actions,
the Group 's primary  focus was on  building  up a robust  portfolio  management
infrastructure and recruiting an investment management team.
During 2007 the Group was  successful  in  deploying a  significant  part of its
capital in a few outstanding deep value opportunities mainly in Europe and Asia.
These  investments  are  consistent  with  Livermore's  strategy to  establish a
diversified portfolio with income generating and growth  opportunities.  Each of
the investments  presents a strong value proposition and is expected to generate
above average returns over the mid-term period.
Management  aims for the overall  investment  portfolio  to generate  annualized
growth of over 15% over time with a relatively conservative risk profile.
Financial Review
The NAV of the Group at 31 December 2007 was  approximately USD 276.4m following
dividend  payment of USD 9.7m, and a share buy back of USD 7.2m. This represents
an increase of USD 19.1m over the NAV at 31  December  2006,  Net profit was USD
20.7m, which represents a return on equity (ROE) of 7.3%.
Operational  expenses (excluding  amortisation and non-recurring items) were USD
3.2m, representing 1.2% of the NAV.
The increase in the NAV is primarily attributed to the following:
-    Gains from associated companies - USD 8.8m.
-    Gains from investments in private equity and hedge funds - USD 4.7m.
-    Gains from real estate  investments  (rental income,  changes in fair value
     and exchange rate gain) - USD 5.0m.
-    Net gains due to trading  activities (not including hedge funds and private
     equity  investments),  and exchange rate  differences on investments in the
     portfolio at year end - USD 2.9m
the Company  distributed  dividends  totalling USD 9.7m during the year, for the
results of 2006.
The Board is pleased to recommend a final cash dividend  payment for 2007 of USD
10.0m or 3.5 cents ( 1.8 pence) per share.  Going forward,  the Board intends to
distribute  discretionary  dividends based on the net performance of the Group's
investment  portfolio.  In addition,  over the last  financial  year the Company
purchased  8,750,000  shares to be held in treasury,  for total  proceeds of USD
7.2m. In 2008, the Company purchased an additional  1,808,262 shares.  The total
number of shares held in treasury at 30 April 2008 was 10,558,262.
Annual General Meeting
The Group's Annual General Meeting will be held on 25 June 2008.
Richard B Rosenberg                                     Noam Lanir
Chairman                                                Chief Executive Officer
30 April 2008
Review of activities
Principal activities 
Following  the  agreement  of the  disposal  of  the  Group's  online  marketing
operations on 29 December  2006,  the change of name and change of purpose,  the
Group commenced activity as an investment company in January 2007.
The  principal  activities of the Group for the year ended 31 December 2007 were
financial and strategic  oriented  investments in real estate,  private  equity,
hedge funds and capital markets.
Introduction and Overview
In 2007, we began our journey as an  investment  company.  Having  completed one
year,  we are  pleased  to  report  that  2007 was a  successful  first  year of
operations for Livermore, despite challenging market conditions. Over the course
of the year,  Livermore  built up a solid  management  team,  set up an advisory
office in Zurich, Switzerland,  and deployed most of its capital in a robust and
well diversified  portfolio.  The portfolio has a mixture of yielding and growth
assets  with a  geographical  focus on Europe and India.  The NAV at 31 December
2007 was USD 0.97 ( 49 pence) per share.
The gross income for 2007 was USD 25.8m which includes  investment income of USD
13.0m and income from the purchase of an  associate of USD 8.8m.  The net profit
for 2007  amounted to USD 20.7m,  which  represents a ROE of 7.3%.  The Group is
pleased to announce a final  dividend  for 2007 of USD 10.0m which  equates to a
3.6% return on capital to investors.
Considering  the  high  liquidity   position  of  Livermore  together  with  the
robustness and  diversification of its investment  portfolio,  the Board believe
the Group is well positioned to withstand the current volatile market conditions
and continue to generate superior value for its shareholders. The Board continue
to review a high volume of potential  deal flow and are well  positioned to take
advantage of adverse market conditions.

Global Investment Environment
The global economy grew strongly in the first half of 2007 with growth running
above 5%, although turbulence in financial markets clouded prospects in the
second half of 2007 and for 2008. China's economy gained further momentum
through 2007, growing by 11.5%, while India and Russia continued their strong
growth. These three countries alone accounted for half of global growth over the
past year. Among the advanced economies, growth in the euro zone and Japan
slowed in the second quarter of 2007 after two quarters of strong gains. In the
United States, growth averaged 2.25% in the first half of 2007 as the housing
downturn continued to create considerable drag(1).
Inflation seemed to be contained in the advanced economies, but rose in many
emerging markets and developing countries, reflecting higher energy and food
prices. In the United States, core inflation gradually eased to below 2%. In the
euro zone, inflation generally remained below 2% in 2007, but energy and food
price increases contributed to an increase in September. Some emerging markets
and developing countries saw more inflation pressures, reflecting strong growth
and the greater weight of rising food prices in their consumer price indices.
The acceleration in food prices reflected pressure from the rising use of corn
and other food items for bio-fuel production and poor weather conditions in some
countries. Strong demand kept oil and other commodity prices high(1).
Financial market conditions became more volatile in the third quarter of 2007.
Credit conditions tightened as concerns about the fallout from strains in the
U.S. subprime mortgage market increased and led to a spike in yields on
securities collateralized with subprime mortgage loans as well as other
higher-risk securities. Uncertainty about the distribution of losses and rising
concerns about counterparty risk saw liquidity dry up in segments of the
financial markets. Equity markets retreated, led by falling valuations of
financial institutions and long-term government bond yields declined as
investors looked for safe havens. Emerging markets were also affected, although
the impact was less pronounced than in previous episodes of global financial
market turbulence(1).
Prior to the recent market turbulence, central banks around the world were
generally tightening monetary policy to head off nascent inflation pressures. In
August however, faced by mounting market disruptions, major central banks
injected liquidity into money markets to stabilize short-term interest rates.
The Federal Reserve cut the federal funds rate by 50 basis points in September
and another 25 basis points in December with expectations of further reductions
in coming months. Expectations of monetary policy tightening by the Bank of
England, Bank of Japan, and the European Central Bank have been rolled back
since the onset of the financial market turmoil. Major emerging markets on the
other hand faced the principal challenge of addressing increasing inflation
The major currencies largely continued trends observed since early 2006. The
U.S. dollar continued to weaken. The Euro and the Swiss Franc appreciated but
continued to trade in a range broadly consistent with recent fundamentals. The
Indian Rupee appreciated sharply against the U.S. dollar on account of large
inflows of foreign capital(1).
US: Following a weak start to 2007, the U.S. economy rebounded strongly in the
second quarter, growing by 3.8% on an annualised basis. Net exports and business
investment provided a significant boost to growth, although private consumption
growth slowed markedly in the face of rising gasoline prices, and residential
investment continued to exert a significant drag on growth. In the latter half,
however, the U.S. economy and financial markets were affected by the credit
crisis and falling home prices together with rising foreclosures. The S&P 500
index rose 10% to an all time high at the beginning of October, before falling
6% by December 2007. Credit spreads widened significantly despite aggressive
rate cuts by the Federal Reserve. The US Dollar depreciated significantly
against the Euro, ending the year at 1.46 versus 1.33 at the beginning of the
EURO ZONE: The financial market turbulence came at a time when Western Europe
had been enjoying its best economic performance for a decade. A long spell of
robust global growth, healthy corporate balance sheets, accommodative financing
conditions, and past reforms laid the foundation for a strong upswing. The euro
area economy expanded at approximately 3% per annum from mid 2006, although
growth eased in the second quarter of 2007. Growth has been driven by a
broad-based acceleration in investment spending, especially in Germany, in
response to high regional and global demand for machinery and equipment, a
pickup in construction, and robust exports. Private consumption softened in the
first half of 2007, but consumer confidence remained fairly robust until June,
when it began to weaken. In the United Kingdom, the expansion continued at a
strong and steady pace, with growth of 3% (year on year) in the second quarter
of 2007, led by consumption. In Norway, Sweden, and Switzerland, growth was also
sustained above potential long term rates in the second quarter.
SWITZERLAND: Switzerland experienced strong growth in 2007, achieving GDP growth
of 2.9% year on year. The economy benefited from a lower exchange rate with
respect to the euro. Unemployment in 2007 was low and an increasing number of
foreign nationals were employed in Switzerland. The financial turbulence of the
US markets affected the Swiss equity markets, with the SMI index closing 4.8%
below where it opened at the beginning of the year. Increased oil and commodity
prices contributed to a surge in inflation, which climbed to 2% year on year in
December - the highest level since October 1995.
INDIA: GDP growth in India was stronger than expected over the past year, but is
expected to moderate to 8.5% in 2007-08, from a high of 9.5% last fiscal year.
Headline inflation (WPI), at around 3 %, was below the Reserve Bank of India's
(RBI) near-term projections, although CPI inflation was higher. The rupee
appreciated significantly against the dollar, but export growth remained strong.
The external current account deficit is expected to widen to about 2% of GDP in
2007-08 against the backdrop of the strengthened rupee and slowing global
growth. The deficit is comfortably financed by private inflows. Reserves exceed
$260 billion (over 10 times short-term external debt), and external debt remains
low (about 17% of GDP, as of end 2006-07). India's financial markets largely
recovered from corrections during the summer's credit-market turbulence, with
the Indian stock indices reaching near record highs. Large inflows of foreign
capital and excess liquidity remain a concern for the RBI and measures such as
credit tightening and changes to regulate inflows into the capital markets were
Livermore's Investment strategy in light of the global economy trends
Livermore's investment strategy is to establish a diversified portfolio of value
investments with a relatively low risk profile and a geographic focus on Europe
and Asia. Investments are also focused on sectors which Management believe will
provide superior growth over the mid to long term. In Emerging Markets the Group
invests alongside local partners with relevant expertise and proven track
record. Up to 10% of the portfolio is allocated to trading opportunities. During
2007, this part of the portfolio was primarily invested in a few stocks in the
energy sector and in specific growth opportunities in Asia.
The Board viewed 2007 in two distinct parts. During first half of the year there
continued to be significant appetite for risk . This changed in the second half
of the year, during which the credit market turmoil, together with the liquidity
crunch and a sharp correction in the US housing market, caused severe market
dislocations, which further deteriorated during the first quarter of 2008. In
contrast emerging markets, such as India, continued to grow, demonstrating the
strength of their respective domestic markets.
The Board continued to implement its strategy of building a diversified
portfolio which will generate stable above market returns for investors over the
mid to long term. Through a top down investment approach and partnerships with
top tier management and investment partners, Livermore has invested in a
combination of high growth and deep value opportunities over the course of the
year. This process was further accelerated in the second half of 2007 as the
risk-return profile of certain long term opportunities in private equity and
real estate was far superior to that of short term opportunities in the equity
markets. The Board believe that its flexible, though conservative investment
approach, and the investment and currency allocation it has established will
shield the Group's shareholders from the current volatility in financial markets
and generate sustainable returns for investors.
Review of Significant Investments
Atlas Estates ("Atlas") - Central and Eastern Europe
In December 2007, Livermore acquired a 21% stake in Atlas, a diversified real
estate company prominent in East Europe, and became its largest shareholder.
Since floating on the UK Alternative Investment Market in 2006, Atlas has
invested in top quality residential and commercial properties primarily located
in Poland, Romania, and Hungary. These properties include the Warsaw Hilton and
Platinum Towers in Poland.
Rationale for investment:
Value Investment: As at 31 December 2007 Atlas' NAV was EUR 4.98 per share. The
adjusted NAV, after taking into account the revaluation of land assets held
under operating lease, was EUR 6.36 per share. Livermore's average purchase
price of Atlas shares represents a 14.7% discount to NAV and a 33% discount to
the adjusted NAV. Atlas enjoys both solid earnings from its high quality
yielding assets and upside potential in its development projects, which were
acquired at attractive valuations.
Access to Eastern Europe: The Board believe that Eastern European real estate
will continue to benefit from the ongoing regeneration of the region as more
countries (including Romania and Bulgaria) become members of the European Union
and the region experiences increased foreign investment in infrastructure and
business and residential accommodation. The region is already experiencing high
GDP growth rates and rising per capita income, further boosting the real estate
Upside potential: Given that Atlas is trading at a significant discount to its
NAV and due to short term catalysts, such as its recent dual listing on the
Warsaw exchange, Atlas has the potential to close part of this discount. The
Board believe that over time, as value is realised, Atlas' share price should
converge with its NAV. Following Livermore's acquisition, Atlas has entered into
an agreement to sell the Millennium Plaza in Warsaw at a profit of approximately
EUR 15m.
The Board believe that through closing the NAV gap, maximizing the potential of
the existing assets in Atlas' portfolio as well as certain enhancements relating
to the structure of the Investment Manager, this investment will generate
significant value for Livermore with very little downside risk.
Wyler Park - Switzerland
In July 2007 the Group finalized its first real estate investment through the
purchase and leaseback of Wyler Park from SBB, the Swiss national railway
company. The purchase followed a bid process of over 6 months in which over 20
parties participated. The property was purchased for CHF 93m through a newly
established Swiss special purchase vehicle. Non recourse finance of some CHF 80m
was provided by Merrill Lynch. As part of this commercial investment, the
Company is developing a residential project including 39 residential apartments
to be completed in July 2008. The total cost of the residential development
project is approximately CHF 15m. The project includes additional development
rights, which the Company expects to utilize in the future. This high profile
investment has positioned the Company well in the Swiss market and has generated
significant deal flow opportunities in the property sector. Some of these
projects are currently under various stages of review and negotiation.
During 2007 the Wyler Park property contributed some USD 4.1m to the Group's
annual profit before tax, derived from operating income, revaluation gains, and
exchange rate differences due to the appreciation of the CHF.
Construction of the residential part of the project is progressing in line with
expectations and there is strong demand for the apartments. Construction is
expected to be complete in the summer of 2008. Following completion of the
residential part, we foresee further appreciation in the property valuation.
DTH Television Grup SA, BOOM - Romania
Livermore invested in Boom in October 2007 and acquired a 15% minority stake for
approximately EUR 9.5m. Boom is a Direct-To-Home multi channel satellite
television service in Romania which started operations during the third quarter
of 2006. The company plans to leverage on the growth of the Romanian economy,
increased spending by its expanding middle class and the low penetration of
digital television service in the country. Romanians watch television for 306
minutes per day on average, making Romania one of the highest television
consumer nations in Europe and therefore an attractive destination for
television related services.
Boom's competitive advantage lies in providing exclusive content and hi-tech
services including High Definition, Dolby Surround, and ITV to its subscribers.
Boom plans to reach 600,000 subscribers by 2012 and capture some 20% of the
digital TV market in Romania. With a market potential of 7.6m homes and
regulatory encouragement to switch from analogue to digital reception, Boom is
well placed to capitalize on this tremendous window of opportunity. As at 31
December 2007, Boom had 107,000 subscribers (versus some 70,000 subscribers at
the time of Livermore's acquisition), which was ahead of its target for the
year. This represents a monthly growth rate in new subscribers of 10%. Boom
expects to breakeven in 2009 and make significant profits in the years ahead. In
March 2008 Boom won the bid for the exclusive rights for the Romanian Football
Champions League in the 2009-12 seasons.
Livermore invested in Boom at an attractive valuation, following thorough due
diligence, after closely following the development of the subscriber base and
being satisfied with the Company's key performance indicators. Although Boom's
shareholders have been approached by a few international media entities that
expressed an interest in acquiring Boom, Livermore as well as the founding
shareholders expect to realise this investment in 2009-2010.
Montana Tech Components ("Montana") - Europe
Montana, based in Austria, is a leading components manufacturer in the fields of
Aerospace Components, Metal Tech and Varta Micro Power. Montana is the market
leader in these defined niches and Livermore believes it has solid growth
potential. Montana pursues a sustainable growth strategy by focusing on growth
sectors featuring advanced components, smart technologies and by outsourcing
labour-intensive processes to Eastern Europe and Asia as well as by making
add-on acquisitions. The Aerospace components business has a 50% market share in
an industry with very high barriers to entry.  Montana's Metal Technology
business is also well positioned with over 50% market share in an otherwise
highly fragmented market.  This business produces tools for identification and
marking of Steel products. In their Micro battery business, Montana is the
leader in rechargeable hearing aid batteries, with strong growth potential
coming from their Lithium Polymer batteries division. Livermore invested EUR 5m
in Montana, following which, Montana completed a further round of funding at a
higher valuation. Livermore expects to exit via an IPO during 2008-2009. Montana
reported net income of EUR 29.2m for 2007, which represents year-on-year growth
of 15.2%.
CALS refinery - India
In December 2007, Livermore entered into a Total Swap Agreement (TSA) with
respect to a Global Depositary Receipt (GDR) issued by an Indian refinery
company - CALS Refinery. CALS is promoted by Spice group to setup refineries in
India. Spice is a USD 2 billion group with interests in Oil & Gas, Aviation,
Hotels, and Heavy engineering in India and Africa. The company aspires to become
a world-class oil and gas company specializing in the integrated energy
business. CALS plans to relocate a refinery from Germany to India and the GDR
was issued to part-finance the relocation and setup of this refinery in India.
CALS expects the refinery to have a capacity of 4.8 Million Metric Tons Per
Annum with expected gross refinery margins of 12%. The TSA has a capital
protection structure and enhances the attractiveness of the GDR, which was a
limited issue to an exclusive set of investors at attractive valuations.
Other Private Equity Investments
The other private equity investments held by the Group, are mainly in the
emerging economies of India and China.
India Blue Mountains: A leading hotel and hospitality development fund that
develops and acquires hotels in India. The fund has acquired land and is in the
process of developing hotels in Mumbai, Chennai, Pune, Gurgaon, and Goa. Since
our investment, the NAV per share has increased by 27.05% for the year ended 31
December 2007. The fund recently acquired a highly rated hotel in Mumbai which
has yet to be re-valued. The fund plans to exit via an IPO in 2008 - 2009.
Promethean India: India-focused private equity fund, which is AIM quoted
(Ticker: PTHI IN). It operates a hybrid investment strategy, enabling it to
invest in private and quoted equities. Some of its portfolio investments include
a leading tiles manufacturer in India, an established automotive components
manufacturer, a hospitality company with luxury hotels located in prime
locations in top Indian cities, and an m-commerce player.
SRS Partners, JM Financial: Real estate-focused exclusive private equity fund
partnered with JM Financial that has established a successful portfolio of real
estate in India. A significant portion of the investments are in residential
real estate in the highest growth cities in India.
Panda Capital: China-based Private Equity Fund focused on early-stage industrial
operations in China and Taiwan, which represent strong growth opportunities. The
fund is invested in manufacturing, media, healthcare, and emerging technology
Alternative Investment Managers
During 2007, Livermore constructed a globally diversified portfolio of exclusive
managers. All managers have a proven track record and are led by outstanding
individuals or teams whom Livermore management personally know. This combination
of managers and investment strategies focused on absolute returns generated
superior returns during the year in comparison to market peers. The investment
strategies include long/short equities, merger arbitrage, credit opportunities
and multi-strategies.
The overall performance of this portfolio in 2007 was growth of approximately
20% (annualised). The Group reviews talented managers on an on going basis with
the aim to source suitable managers that can enhance the performance of the
portfolio and reduce its volatility.
Livermore's portfolio construction and allocation strategy is based on hedge
fund strategy and sector diversification, internal correlations, macro-economic
conditions, market cycles, and fund strategy risk considerations. In its
selection process Livermore places special focus on qualitative traits of the
investment manager. Livermore has access to top hedge fund managers, some of
whom are not available to the public, as well as outstanding emerging hedge fund
managers. The Group closely monitors the managers and continually adjusts the
portfolio. Livermore's management believe that its approach and access to
talented managers will generate higher risk adjusted returns.
In addition, during 2007 the Group invested in a diversified portfolio of
exclusive managers in the credit arena, mainly through investments in equity
tranches of Collateralized Loan Obligations. These investments were made with a
view to taking advantage of the tight financing terms for these deals and the
strong fundamentals of leveraged loans as an asset class, namely high recovery
rates and strong cash flows. The total credit portfolio as at year end amounted
to USD 29.1m.
Post balance sheet events and investments
The following post balance sheet events and investments were recorded:
SRS Charminar
In January 2008, Livermore invested in a leading Indian Real Estate company, in
association with SRS Private and other investors. The target company is a top
real estate player in South India, with a land bank of over USD 1.3bn spread
across the city of Hyderabad and the state of Andhra Pradesh.
The investment in the target company was conducted via a fund structure (SRS
Charminar) set up by SRS Private Invest. The fund will in turn invest in the
target company in the form of compulsorily convertible debentures. The proceeds
will be used by the target company for development of residential and commercial
real estate on the land bank owned by them.
The exit is expected to be via an IPO within 36 months of the date of
investment. Investors are guaranteed a minimum of 12.5% discount on the IPO
price. The deal structure includes a put option for investors, which can be
exercised if the IPO does not take place within 3 years. The put option is
secured by land valued at USD 1.3bn and guarantees a minimum return of
approximately 30% IRR if exercised.
Blue Ridge China
The Group committed to invest in Blue Ridge China, a Limited Partnership whose
main business will be running a fund of Portfolio Investments in companies
principally engaged in business in China. The Partnership shall generally have
significant influence on the management, operations and strategic direction of
investee companies. The intention of the fund is to raise USD 1.4bn, of which
the committed capital of the limited Partnership is some USD 150m.
Change of Name
The Company changed its name to Livermore Investments Group Limited following
the EGM held on 28 February 2007.
Discontinued operations
The Group disposal of the remainder of its operating activities to PartyGaming
Plc for a net consideration of $38m, was completed on 19 January 2007 and was
included in the 2006 financial accounts. Details and full disclosure of this can
be found in Note 13 to the financial statements.
In Q3 2007, an ex-employee of Empire Online Limited (the Company's previous
name), filed a law suit against the Company, one of its directors, and one of
its former subsidiaries, in the Labour Court of Tel Aviv. According to the
lawsuit, the plaintiff claims compensation relating to the event of the sale of
all commercial activities of Empire Online Limited until the end of 2006, and
for terms relating to the termination of his employment with Empire Online
Limited. The Company has taken a conservative approach and made a provision of
USD 750k for all settlement costs and the potential related legal expenses of
this case.

Report of the Directors
The Board's objectives
The Board's primary objectives are to supervise and control the management
activities, business development, and the establishment of a strong franchise in
the Group's business lines. Measures aimed at increasing shareholders value over
the medium to long-term, such as an increase in NAV and dividends paid are used
to monitor performance.
The Board of Directors
Richard Barry Rosenberg (age 52), Non-Executive Director, Chairman of the Board
Richard joined the Group in December 2004. He became Non-Executive Chairman on
31 October 2006, following the resignation of Lord Leonard Steinberg. He
qualified as a chartered accountant in 1980 and in 1988 co-founded the
accountancy practice Sedley Richard Laurence Voulters. He has considerable
experience in giving professional advice to clients in the leisure and
entertainment sector. Richard is a director of a large number of companies
operating in a variety of business segments.
Noam Lanir (age 41), Founder and Chief Executive Officer
Noam founded the Group in July 1998, to develop a specialist online marketing
operation. Noam has led the growth and development of the group's operations
over the last nine years which culminated in its IPO in June 2005 on AIM. He is
also a major benefactor of a number of charitable organisations. Prior to 1998,
Noam was involved in a variety of businesses mainly within the leisure and
entertainment sector.
Ron Baron (age 40), Executive Director and Chief Investment Officer
Ron was appointed as Executive Director and Chief Investment Officer on 10
August 2007. Ron has wide investment and M&A experience. From 2001 to 2006 Ron
served as a member of the management at Bank Leumi, Switzerland and was
responsible for portfolio management activity. Prior to this he spent five years
as a commercial lawyer at Kantor, Elhanani, Tal & Co. Law Offices in Tel Aviv,
Israel, advising banks and large corporations on corporate transactions,
including buy-outs and privatisations. He holds an MBA from INSEAD Fontainebleau
and a LLB (LAW) and BA in Economics from Tel Aviv University.
The Directors shall retire from office at the third Annual General Meeting after
that at which they were last elected, and if they so wish, offer themselves up
for re-election to the Board. Subject to the Companies Act and the Articles, the
Directors to retire by rotation at the Annual General Meeting in every year
shall be in addition to any Director who wishes to retire and not to offer
himself for reappointment and any Director to retire under the Company's
Articles. The interests of the Directors and their related companies in the
shares and options over shares in the Company are as shown on page 2. Details of
the Directors' remuneration and service contracts also appear on page 2.
The Directors submit their annual report and audited financial statements of the
Group for the year ended 31 December 2007.
Directors responsibilities in relation to the accounts
The Directors are responsible for preparing the Annual Report and the financial
statements in accordance with applicable law and International Financial
Reporting Standards as adopted by the European Union.
The Directors are required to prepare financial statements for each financial
year which give a true and fair view of the state of affairs of the Group and of
the profit or loss of the Group for that period. In preparing these financial
statements, the Directors are required to:
• Select suitable accounting policies and then apply them consistently;
• Make judgments and estimates that are reasonable and prudent;
• State whether applicable accounting standards have been followed,
  subject to any material departures disclosed and explained in the financial
• Prepare the financial statements on the going concern basis unless it
  is inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
Group and enable them to ensure that the financial statements comply with the
applicable law. They are also responsible for safeguarding the assets of the
Group and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate
and financial information included on the Group's website. Legislation in the
British Virgin Islands governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Disclosure of information to the auditor
In so far as the Directors are aware:
• there is no relevant audit information of which the Company's auditor is
  unaware; and
• the directors have taken all steps that they ought to have taken to make
  themselves aware of any relevant audit information and to establish that the
  auditor is aware of that information.
Substantial Shareholdings
As at 25 March 2008 the following interests in 3 per cent or more of the
Company's existing ordinary share capital had been reported:
                                Number of Ordinary    % of issued ordinary share
                                            Shares                       capital
Groverton Management Ltd               146,540,923                         50.05
Sidmore Holdings Ltd                    24,578,931                          8.40
Artemis Investment Management           14,328,327                          4.89
Israel Discount Bank                    13,277,568                          4.54
Ron Baron                               13,055,510                          4.46
New Star Asset Management               11,349,144                          3.88
Livermore Investments Ltd               10,558,262                          3.61
Bank Hapoalim Luxemburg                 10,033,309                          3.43
Deutsche Bank                            9,725,776                          3.32
Save as disclosed in this report and in the remuneration report, the Company is
not aware of any person who is interested directly or indirectly in 3 per cent
or more of the issued share capital of the Company or could, directly or
indirectly, jointly or severally, exercise control over the Company.
Details of transactions with Directors are disclosed in note 30 to the financial
Corporate Governance
The Company recognises the importance of the principles of good corporate
governance and the Board is pleased to report its commitment to such high
standards throughout the year. As an AIM quoted Company Livermore is not
required to follow the provisions of the 2006 FRC Combined Code (the "Code").
The Board Constitution and Procedures
The Company is controlled through the Board of Directors, which currently
comprises 1 Non-Executive Director and 2 Executive Directors. The Chief
Executive's responsibilities focus on coordinating the Company's business and
implementing Group strategy.
A formal schedule of matters is reserved for consideration by the Board, which
meets approximately six times each year. The Board is responsible for
implementation of the investing strategy described in the circular to
shareholders dated 29 December 2006 and adopted pursuant to shareholder approval
at the Company's EGM on 17 January 2007. It reviews the strategic direction of
the Group, its codes of conduct, its annual budgets, its progress towards
achievement of these budgets and any capital expenditure programmes. In
addition, the Directors have access to the advice and services of the Company
Secretary and all Directors are able to take independent professional advice in
the furtherance of their duties if necessary. The Directors receive training and
advice on their responsibilities as necessary. All Directors, in accordance with
the Code, submit themselves for re-election at least once every three years.
Board Committees
Due to the fact that there is currently only one Non Executive Director on the
board of Directors, the Company does not employ the powers of its Audit,
Remuneration and Nomination Committees. The Company is evaluating the
recruitment of an additional Non-Executive Director, and once such appointment
is made, it will employ the full powers of its Board committees. In addition,
the board is evaluating the establishment of an advisory panel to assist in the
development and implementation of investment strategy and policy.
a)      Remuneration Committee
Until 31 October 2006 the Remuneration Committee comprised of two Non-Executive
Directors and was chaired by Richard Rosenberg.
The Remuneration Committee considers the terms of employment and overall
remuneration of the Executive Directors and key members of executive management
regarding share options, salaries, incentive payments and performance related
pay. The remuneration of Non-Executive Directors is determined by the Board.
b)      Audit Committee
Until 31 October 2006 the Audit Committee comprised two Non-Executive Directors
and was chaired by the then senior independent Non Executive Director. The
duties of the Committee include monitoring the auditor's performance and
reviewing accounting policies and financial reporting procedures. The Committee
prepares a summary of its work, which is included each year in the Company's
Annual Report.
c)      Communication with Investors
The Directors are available to meet with shareholders throughout the year. In
particular the Executive Directors prepare a general presentation for analysts
and institutional shareholders following the interim and preliminary results
announcements of the company. The Chairman, Richard Rosenberg, was available for
meetings with shareholders throughout the year. The Board endeavours to answer
all queries raised by shareholders promptly.
Shareholders are encouraged to participate in the Annual General Meeting at
which the Chairman will present the key highlights of the Group's performance.
The Board will be available at the Annual General Meeting to answer questions
from shareholders.
Internal Control
The Board is responsible for ensuring that the Company has in place a system of
internal control and for reviewing its effectiveness. In this context, control
is defined as the policies and processes established to ensure that business
objectives are achieved cost effectively, assets and shareholder value
safeguarded and that laws and regulations are complied with. Controls can
provide reasonable but not absolute assurance that risks are identified and
adequately managed to achieve business objectives and to minimise material
errors, frauds and losses or breaches of laws and regulations.
The Group operates a sound system of internal control, which is designed to
ensure that the risk of misstatement or loss is kept to a minimum.
Given the Group's size and the nature of its business, the Board does not
consider that it is necessary to have an internal audit function. An internal
audit function will be established as and when the Group is of an appropriate
The Board will undertake a review of its internal control on an on going basis.
Independence of Auditor
The Board undertakes a formal assessment of the auditor's independence each
year, which includes:
   •a review of non-audit related services provided to the Company and
    related fees;
   •discussion with the auditor of a written report detailing all
    relationships with the Company and any other parties which could affect
    independence or the perception of independence;
   •a review of the auditor's own procedures for ensuring independence of the
    audit firm and partners and staff involved in the audit, including the
    rotation of the audit partner;
   •obtaining written confirmation from the auditors that they are
   •a review of fees paid to the auditor in respect of audit and non-audit

Remuneration Report
The Directors' emoluments, benefits and shareholdings during the year ended 31
December 2007 were as follows:
Directors' Emoluments
Each of the Directors has a service contract with the Company.
Director                         Notes      Date of   Salary/Fees    Benefits    Total Emoluments      Total Emoluments
                                          agreement          $000        $000          2007, $000            2006, $000
Richard Barry Rosenberg                    10/06/05           151           -                 151                    94
Noam Lanir                           a     10/06/05           400           -                 400                 1,000
Ron Baron                                  01/09/07            94           -                  94                     -
Andrew Rae Burns                     b     01/09/05           131           -                 131                   337
The dates are presented in day / month / year format.
a) Service contract terminable on either party to the agreement giving to the
   other 12 months' notice;
b) Andrew Rae Burns resigned on 31 August 2007.
Directors' Interests
Interests of Directors in ordinary shares
                                    Notes             As at 31.12.2007                 As at 31.12.2006
                                                 Number of   Percentage of       Number of     Percentage of
                                                  Ordinary        ordinary        Ordinary   ordinary issued
                                                    Shares    issued share          Shares     share capital
Noam Lanir                               a     138,840,923         48.883%      95,616,837           32.659%
Ron Baron                                b      13,055,510          4.597%               -                 -
Richard Barry Rosenberg                             15,000          0.005%          15,000            0.005%
Andrew Rae Burns                                         -               -          20,000            0.007%
a) Noam Lanir is interested in his ordinary shares by virtue of the fact that he
owns directly or indirectly all of the issued share capital of Groverton
Management Limited.
b) On 16 April 2007, a loan of USD 5m was provided to Ron Baron to purchase
Livermore shares. The loan bears an annual interest rate of 6 month USD Libor +
25bp, and is payable 3 years from grant.
Interests of Directors in share options
                                No of options at 31    Date of      Exercise  Exercise     Vesting period of options
                                     December  2007       grant    price,  £  Price, $
Noam Lanir                               10,000,000    19/07/06       0.7775   1.41786             19/07/06-19/07/09
Richard Barry Rosenberg                     150,000    19/07/06       0.7775   1.41786             19/07/06-19/07/09
                                             75,000    07/12/05         0.71      1.22             07/12/05-07/12/08
The options are exercisable up to 10 years after the date of grant. No options
were exercised during the year 2007.
Share Option Scheme
The Company's remuneration committee (the "Committee") is responsible for
administering the Share Option Scheme. Options to acquire Shares in the Company
may be granted under the Share Option Scheme to any employee or director of the
Company or member of the Group.
The option exercise price per Ordinary Share is determined by the Committee but
will be no less than market value of the Ordinary Shares on the dealing day
immediately preceding the date of grant. The options are not subject to any
performance criteria.
An option is normally exercisable in three equal tranches, on the first, second
and third anniversary of the grant.
The Share Option Scheme will terminate ten years after it is adopted by the
Company, or earlier in certain circumstances.
Remuneration Policy
The Group's policy has been designed to ensure that the Group has the ability to
attract, retain and motivate executive directors and key management personnel to
ensure the success of the organization.
The following key principles guide its policy:
   •policy for the remuneration of executive directors will be determined and
    regularly reviewed independently of executive management and will set the
    tone for the remuneration of other senior executives
   •the remuneration structure will support and reflect the Group's stated
    purpose to maximize long-term shareholder value
   •the remuneration structure will reflect a just system of rewards for the
   •the overall quantum of all potential remuneration components will be
    determined by the exercise of informed judgement of the independent
    remuneration committee, taking into account the success of the Company and
    the competitive global market
   •a significant personal shareholding will be developed in order to align
    executive and shareholder interests
   •the assessment of performance will be quantitative and qualitative and
    will include exercise of informed judgement by the remuneration committee
    within a framework that takes account of sector characteristics and is
    approved by shareholders
   •the committee will be proactive in obtaining an understanding of
    shareholder preferences
   •remuneration policy and practices will be as transparent as possible,
    both for participants and shareholders
   •the wider scene, including pay and employment conditions elsewhere in the
    Group, will be taken into account, especially when determining annual salary
Review of the business and risks
The Company is now an investment company, a more detailed review of the business
is given in the Chairman's and Chief Executive's review.
The Board considers that the risks the Shareholders face can be divided into
external and internal risks.
External risks to shareholders and their returns are those that can severely
influence the investment environment within which the Group operates, and
include economic recession, declining corporate profitability, rising inflation
and interest rates and excessive stock-market speculation.
Current portfolio risks include interest rate increases, a global economic
effect on Emerging markets (mainly India), a global credit shortage caused by
the US credit market crisis, and instability in the Private Equity and Hedge
Fund sectors. The mitigation of these risks is achieved by investment
diversification, both by sector and by location.
Internal risks to shareholders and their returns are:
Portfolio (investment and location selection and concentration), balance sheet
(gearing) and/or investment mismanagement. In particular the Board has
identified the exposure to Atlas Estates Ltd. as a notably large single
investment risk.
In respect of the risks associated with investments, the board is evaluating the
establishment of an external investment advisory board. In addition, a periodic
internal review is performed to ensure transparency of Group activities and
investments. All service providers to the Group are regularly reviewed. The
mitigation of the risks related to investments is effected by investment
restrictions and guidelines and through reviews at Board Meetings.
As the portfolio is invested mostly in non USD currencies (mainly EURO, CHF and
INR), it is exposed to movements in these currencies.
On the asset side, the Group's exposure to interest rate risk is limited to the
interest bearing deposits and portfolio of bonds in which the Group invests
surplus funds. On the liability side, the Group's exposure to rising interest
rates is minimal as it has limited borrowings correlated to variable interest
Management monitors liquidity to ensure that sufficient liquid resources are
available to the Group. The Group's credit risk is primarily attributable to
receivables from its CDO / CLO and bond portfolio. Generally the Group's maximum
credit exposure is the carrying amount of trade and other receivables shown on
the face of the Balance Sheet.
Share Capital
There was no change in the authorised share capital during the year to 31
December 2007. The authorised share capital is 1,000,000,000 ordinary shares
with no par value.
Related party transactions
Details of any transactions of the Group with related parties during the year to
31 December 2007 are disclosed in Note 30 to the Financial Statements.
Report of the independent auditor to the members of Livermore Investments Group
We have audited the consolidated financial statements of Livermore Investments
Group Limited for the year ended 31 December 2007 which comprise the
Consolidated Income Statement, the Consolidated Balance Sheet, the Consolidated
Statement of Changes in Equity, the Consolidated Statement of Cash Flows and
notes 1 to 34. The consolidated financial statements have been prepared under
the accounting policies set out therein.
This report is made solely to the Company's members, as a body. Our audit work
has been undertaken so that we might state to the Company's members those
matters we are required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
The directors' responsibilities for preparing the Annual Report and the
consolidated financial statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union are set out in the
statement of Directors' Responsibilities.
Our responsibility is to audit the consolidated financial statements in
accordance with relevant legal and regulatory requirements and International
Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the consolidated financial statements
give a true and fair view. In addition we report to you if, in our opinion, we
have not received all the information and explanations we require for our audit,
or if information specified by IFRS regarding directors' remuneration and other
transactions is not disclosed.
We read other information contained in the Annual Report, and consider whether
it is consistent with the audited consolidated financial statements. This other
information comprises only the Highlights, the Chairman's and Chief Executive's
Review, the Review of Activities, the Report of the Directors, the Corporate
Governance statement, the Remuneration Report and the Review of the Business and
Risks. We consider the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the consolidated
financial statements. Our responsibilities do not extend to any other
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the consolidated financial statements. It also includes an
assessment of the significant estimates and judgments made by the directors in
the preparation of the consolidated financial statements, and of whether the
accounting policies are appropriate to the Company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the consolidated financial
statements are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the consolidated financial
In our opinion the consolidated financial statements give a true and fair view,
in accordance with IFRSs as adopted by the European Union, of the state of the
group's affairs as at 31 December 2007 and of its profit for the year then
Date: 30 April 2008
Livermore Investment Group Limited
Consolidated Income Statement for the year ended 31 December 2007
                                              Note           Discontinued
                                                      2007           2006   2006
                                                      $000           $000   $000
Revenue from discontinued operations                     -         59,850      -
Investment income
Interest / dividend income                     4    16,573              - 12,085
Property revenue                               5     1,822              -      -
Gains / losses on investments                  6   (1,433)              -    108
Gain on acquisition of associate               7     8,827              -      -
Cost of sales                                            -       (30,256)      -
                                                    ------         ------ ------
Gross profit                                        25,789         29,594 12,193
Amortisation and non recurring items           8     (134)       (11,054)      -
Administrative expenses                        9   (3,172)        (3,483)  (995)
                                                    ------         ------ ------
Operating profit                                    22,483         15,057 11,198
Finance expenditure                            10  (1,398)   -            (170)
                                                    ------         ------ ------
Profit before taxation                              21,085         15,057 11,028
Taxation                                       11    (368)            (7)      -
Profit after taxation from discontinued                  -         15,050      -
Profit from disposal of discontinued           13        -         36,642      -
Profit from discontinued operations                      -         51,692 51,692
                                                    ------                ------
Profit for period                                   20,717                62,720
                                                    ======                ======
Earnings per share
Basic earnings per share ($)                   14     0.07           0.18   0.21
                                                    ======         ====== ======
Diluted earnings per share ($)                 14     0.07           0.17   0.21
                                                    ======                ======
Proposed final dividend per share ($)               $0.035                $0.034
                                                    ======                ======
Proposed final dividend ($000)                      10,000                10,000
                                                    ======                ======
Dividends paid during the year per share ($)        $0.033                $0.085
                                                    ======                ======
Dividends paid during the year ($000)          16    9,657                24,887
                                                    ======                ======
The notes on pages 2 to 2 form part of these financial statements.
Livermore Investments Group Limited
Consolidated Balance Sheet as at 31 December 2007
                                                        Note      2007      2006
                                                                  $000      $000
Non-current assets
Property, plant and equipment                            17        405        49
Intangible assets                                        18         45        73
Available- for-sale financial assets                     19    217,763   124,491
Financial assets designated at fair value through        20        729
profit or loss
Investment in property                                   21     97,632         -
Investment in associate                                  22     69,639         -
                                                             --------- ---------
                                                               386,213   124,613
                                                             --------- ---------
Current assets
Trade and other receivables                              23      1,850    50,795
Cash and cash equivalents                                24      9,917   137,715
                                                             --------- ---------
                                                                11,767   188,510
                                                             --------- ---------
Total assets                                                   397,980   313,123
                                                             ========= =========
Share capital                                            25          -         -
Share premium                                                  202,635   209,807
Other reserves                                                     767     2,676
Retained earnings                                               73,041    61,763
                                                             --------- ---------
Total equity                                                   276,443   274,246
                                                             --------- ---------
Non current liabilities
Bank loan                                                26     69,411         -
Deferred tax                                                       258         -
                                                             --------- ---------
                                                                69,669         -
                                                             --------- ---------
Current liabilities
Bank overdrafts                                          27     15,825     4,960
Trade and other payables                                 28     35,934    33,910
Current tax payable                                      29        109         7
                                                             --------- ---------
                                                                51,868    38,877
                                                             --------- ---------
Total liabilities                                              121,537    38,877
                                                             ---------    ------
Total equity and liabilities                                   397,980   313,123
                                                             ========= =========
Net asset valuation per share
Basic net asset valuation per share ($)                           0.97      0.94
                                                             ========= =========
Diluted net asset valuation per share ($)                         0.97      0.94
                                                             ========= =========
These Financial Statements were approved by the Board of Directors on 30 April
The notes on pages 2 to 2 form part of these financial statements.
Livermore Investments Group Limited
Consolidated Statement of Changes in Equity for the year ended 31 December 2007
                                                  Share    Share    Share Investments   Retained
                                                capital  premium   option revaluation   earnings    Total
                                      Note                        reserve     reserve
                                                   $000     $000     $000        $000       $000     $000
 Balance at 1 January 2006                             - 209,807      277           -     22,297  232,381
 Changes in equity for the year
  ended 31 December 2006
 Available-for-sale investments
 Valuation  gains/(losses)  taken to                   -       -        -         990          -      990
 Transferred  to  profit  or loss on                   -       -        -       (108)          -    (108)
                                                  ------  ------   ------      ------     ------   ------
 Net income  recognised  directly in                   -       -        -         882          -      882
 Profit for the year                                   -       -        -           -     62,720   62,720
                                                  ------  ------   ------      ------     ------   ------
 Total recognised income and                           -       -        -         882     62,720   63,602
  expense for the year
 Dividends paid                        16              -       -        -           -   (24,887) (24,887)
 Share option charge                                   -       -    3,150           -          -    3,150
 Share options forfeited                               -       -  (1,633)           -      1,633        -
                                                  ------  ------   ------      ------     ------   ------
 Balance at 31 December 2006                           - 209,807    1,794         882     61,763  274,246
 Changes in equity for the year
  ended 31 December 2007
 Available-for-sale investments
 Valuation gains/(losses) taken to                     -       -        -     (7,679)          -  (7,679)
 Transferred to profit or loss on                      -       -        -       3,331          -    3,331
                                                  ------  ------   ------      ------     ------   ------
 Net income recognised directly in                     -       -        -     (4,348)          -  (4,348)
 Profit for the year                                   -       -        -           -     20,717   20,717
                                                  ------  ------   ------      ------     ------   ------
 Total recognised income and                           -       -        -     (4,348)     20,717   16,369
  expense for the year
 Dividends paid                        16              -       -        -           -    (9,657)  (9,657)
 Purchases of own shares                               - (7,172)        -           -          -  (7,172)
 Share option charge                                   -       -    2,657           -          -    2,657
 Share options forfeited                               -       -     (218)          -        218        -
                                                  ------  ------   ------      ------     ------   ------
 Balance at 31 December 2007                           - 202,635    4,233     (3,466)     73,041  276,443
                                                  ------  ------   ------      ------     ------   ------

The notes on pages 2 to 2 form part of these financial statements.
Livermore Investments Group Limited
Consolidated Statement of Cash Flows for the year ended 31 December 2007
                                                     Note        2007       2006
                                                                 $000       $000
Cash flows from operating activities
Profit before tax                                              21,085     62,727
Adjustments for
Depreciation and amortisation                        17/18         93      3,298
Goodwill fair value adjustment                                      -        797
Interest expense                                      10        1,398        170
Equity settled share options                           8        2,657      3,150
Profit on disposal of business                                      -   (36,642)
Loss on sale of property, plant and equipment                      13          -
                                                           ---------- ----------
                                                               25,246     33,500
                                                           ---------- ----------
Changes in working capital
Decrease in trade and other receivables                        48,945      8,612
Increase / (Decrease) in trade and other payables               2,024   (11,830)
Tax paid                                                          (8)        (7)
                                                           ---------- ----------
                                                               50,961    (3,225)
                                                           ---------- ----------
Net cash generated from operating activities                   76,207     30,275
                                                           ---------- ----------
Cash flows from investing activities
Purchase of property, plant and equipment             17        (418)      (113)
Purchase of intangible assets                         18         (16)      (916)
Acquisition of investments                                   (98,349)  (123,609)
Acquisition of investment property                           (97,632)          -
Acquisition of associate                                     (69,639)          -
Disposal of business assets                                         -    235.878
                                                           ---------- ----------
Net cash (used in)/from investing activities                (266,054)    111,240
                                                           ---------- ----------
Cash flows from financing activities
Dividends paid                                                (9,657)   (24,887)
Purchase of own shares                                        (7,172)          -
Proceeds from bank loan                                        69,411          -
Interest paid                                                 (1,398)      (170)
                                                           ---------- ----------
Net cash from/(used in) financing activities                   51,184   (25,057)
                                                           ---------- ----------
Net (decrease)/increase in cash and cash                    (138,663)    116,458
Cash and cash equivalents at the beginning of the             132,755     16,297
                                                           ---------- ----------
Cash and cash equivalents at the end of the year              (5,908)    132,755
                                                           ---------- ----------
The notes on pages 2 to 2 form part of these financial statements.
Notes on the Financial Statements
1.       General Information
1.1.   Incorporation, principal activity and status of the Company
The Company was incorporated as an international business company and registered
in the British Virgin Islands (BVI) on 2 January 2002 under IBC Number 475668
with the name Clevedon Services Limited. The liability of the members of the
Company is limited.
1.2.   The Company changed its name to Empire Online Limited on 5 May 2005 and
then changed to Livermore Investments Group Limited on 28 February 2007.
1.3.   The principal activity of the Group changed to investment services on 1
January 2007. Before that the principal activity of the Group was the provision
of marketing services to the online gaming industry and, since 1 January 2006,
the operation of online gaming.
1.4.   The principal legislation under which the Company operates is the BVI
Business Companies Act (2004.).
1.5.   The registered office and head office of the Company is located at
Trident Chambers, PO Box 146, Road Town, Tortola, British Virgin Islands.
2.       Accounting Policies
2.1.   The significant accounting policies applied in the preparation of the
financial information are as follows:
a)       Basis of preparation
The audited financial statements of Livermore Investments Group Limited have
been prepared in accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union and on a going concern basis. The
financial statements have been prepared on the historical cost except for the
• Derivative financial instruments are measured at fair value.
• Financial instruments at fair value through profit or loss are measured
  at fair value.
• Available- for- sale financial assets are measured at fair value.
• Investment property is measured at fair value.
• Share- based payments are fair valued at the date of grant.
The financial information is presented in US dollars because that is the
currency in which the Group primarily operates.
The directors have reviewed the accounting policies used by the Group and
consider them to be the most appropriate.
A new standard, IFRS 7 - Financial Instruments: Disclosure was introduced for
accounting periods beginning on or after 1 January 2007.
IFRS 7 introduces new disclosures to improve the information about financial
instruments. It requires the disclosure of qualitative and quantitative
information about exposure to risks arising from financial instruments,
including specified minimum disclosures about credit risk, liquidity risk and
market risk, including sensitivity to market risk. It replaces the disclosure
requirements in IAS 32 "Financial Instruments: Disclosure and Presentation".
b)       New standards and interpretations not yet adopted
The following standards, issued by the IASB, have not been adopted by the Group
and the Group is currently assessing the impact these standards will have on the
presentation of the consolidated results in future periods:
IFRS 8 - Operating segments (effective for accounting periods beginning on or
after 1 January 2009)
IFRS 8 contains requirements for the disclosure of information about an entity's
operating segments and also about the entity's products and services, the
geographical areas in which it operates, and its major customers. The standard
is concerned only with disclosure and replaces IAS 14 "Segment reporting".
IAS 1 - Presentation of financial statements (revised 2007)
This standard is applicable for accounting periods beginning on or after 1
January 2009. The main changes triggered by this standard result in a separate
presentation of changes in equity that arise from transactions with owners in
their capacity as owners from other changes in equity. The amended version of
this standard also changes the terminology and presentation of the primary
financial statements.
Other standards which will become effective in future periods, but which are not
expected to impact on the Group are:
• Revised IAS 23 - Borrowing Cost
• IFRIC 11 - IFRS 2 - Group and Treasury Shares Transactions
• IFRIC 12 - Service Concession Agreements
• IFRIC 13 - Customer Loyalty Programmes
• IFRIC 14 - IAS 19 - The Limit on a Defined Asset, Minimum funding
Requirements and Other Interactions
• IFRS 3 - Business Combinations (revised 2008)
• IAS 27 Consolidated and Separate Financial Statements (revised 2008)
• Amendment to IFRS 2 Share-Based Payment Vesting Conditions and Cancellations
c)       Basis of Consolidation
The consolidated results incorporate the results of Livermore Investments Group
Limited and all of its subsidiaries undertakings as at 31 December 2007 using
the acquisition method of accounting as required. Profits or losses on intra
group transactions are eliminated on consolidation. The results for the
subsidiary undertakings acquired during the year have been included from the
date of acquisition. On acquisition of a subsidiary all of the subsidiary's
assets and liabilities which exist at the date of acquisition are recorded at
fair value. The excess of the fair value of the consideration given over the
fair value of the identifiable net assets acquired, is capitalised net of any
provision for any impairment.
d)       Investment in associates
The Group's interest in associates, being those entities over which it holds
significant influence and which are neither subsidiaries nor joint ventures, are
accounted for using the equity method.
Under the equity method, the investment in an associate is carried in the
balance sheet at cost plus post acquisition changes in the Group's share of the
net assets of the associate and less any impairment in the value of individual
investments. The Group income statement reflects the share of the associate's
results after tax. The Group statement of recognized income and expenses
reflects the Group's share of any income and expenses recognized by the
associate outside profit or loss.
Any goodwill arising on the acquisition of an associate, representing the excess
of the cost of investment compared to the Group's share of the net fair value of
the associate's identifiable assets, liabilities and contingent liabilities, is
included in the carrying amount of the associate and is not amortized. To the
extent that the net fair value of the associate's identifiable assets,
liabilities and contingent liabilities is greater then the cost of the
investment, a gain is recognized and added to the Group's share of the associate
profit and loss in the period in which the investment is acquired.
Financial statements of associates are prepared for the same period as the
Group's. Adjustments are made to bring the associate's accounting policies into
line with those of the Group.
e)       Revenue recognition
Revenue from discontinued operations is recognised in the accounting period in
which the transaction occurs.
Revenue from discontinued operations comprises commissions earned from clients,
net of rebates and chargebacks deducted at source. Commissions are calculated
based on a percentage of the net amount earned by the Group's clients on their
internet websites from players introduced to the websites by the Group. Where
the Company acted as operator, casino net revenue represented commission charged
or tournament entry fees where the player had concluded their participation in
the tournament.
f)        Investment Income
Investment income comprises interest income on funds invested, dividend income,
and investment property income. Interest and investment property income is
recognised as it accrues. Dividend income is recognised on the date that the
Group's right to receive payment is established, which in the case of quoted
securities is the ex-dividend date.
g)       Foreign currency
Monetary assets and liabilities denominated in non-US dollar currencies are
translated into US dollar equivalents using year-end spot foreign exchange
rates. Non-monetary assets and liabilities are translated using exchange rates
prevailing at the dates of the transactions. Exchange rate differences on
foreign currency transactions are included in net finance income.
The results and financial position of all Group entities that have a functional
currency different from US dollars are translated into the presentation currency
as follows:
(i)    assets and liabilities for each balance sheet item
presented are translated at the closing rate at the date of that balance sheet; and
(ii)   income and expenses for each income statement item are
translated at an average exchange rate (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the dates
of the transactions). Exchange differences arising are recognised through the
Income Statement; and
(iii)  exchange differences on the net investment in subsidiary
entities with a different functional currency to the group are recognised
through equity.
h)       Taxation
Provision is made for corporation tax on the taxable profits for the year at the
appropriate rate in force.
Deferred tax is accounted for using the balance sheet liability method in
respect of temporary differences arising from differences between the carrying
amount of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit. In principle,
deferred tax liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Deferred tax liabilities are provided in full with no
i)         Goodwill
Goodwill, being the excess of the fair value of cost of an acquisition over the
fair value attributed to the net assets at acquisition, is capitalised.
Goodwill is not being amortised through the income statement; however, it is
subject to annual impairment reviews. Impairment of the goodwill is evaluated by
comparing the present value of the future expected cash flows, (the
"value-in-use") to the carrying value of the underlying net assets and goodwill.
If the net assets and goodwill were to exceed the value-in-use, an impairment
would be deemed to have occurred and the resulting write down in the goodwill
would be charged to the income statement immediately.
j)         Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated
depreciation. Carrying amounts are reviewed at each balance sheet date for
Depreciation is calculated using the straight-line method, at annual rates
estimated to write off the cost of the assets less their estimated residual
values over their expected useful lives. The annual depreciation rates used are
as follows:
Computer hardware      - 33.3%
Fixtures and Fittings  - 10%
Office renovation      - 2.5%
k)       Intangible assets
Intangible assets comprise website design costs and computer software and are
stated at historic cost less accumulated amortisation. Carrying amounts are
reviewed at each balance sheet date for indications of impairment.
Amortisation is calculated using the straight-line method, at annual rates
estimated to write off the cost of the assets over their expected useful lives.
The annual amortisation rates are as follows:
Computer software      - 33.3%
l)         Investment property
Certain of the Group's properties are classified as investment property, being
held for long term investment and to earn rental income.
Investment properties are measured initially at cost, and thereafter are stated
at fair value, which reflects market conditions at the balance sheet date. Gains
or losses arising from changes in the fair values of investment properties are
included in the income statement in the year in which they arise.
m)      Development property
Investment property under development is stated at cost incurred to date, and is
not depreciated. On completion of development, this asset is transferred to
investment property.
n)       Equity
Equity issued by the Company is recorded as the proceeds are received, net of
direct issue costs.
Equity purchased by the Company is recorded as the consideration paid, including
directly associated assets and is deducted from total equity as treasury shares
until they are sold or cancelled. Where such shares are subsequently sold or
reissued, any consideration received is included in total equity.
The share premium account includes any premiums received on the initial issuing
of the share capital. Any transaction costs associated with the issuing of
shares are deducted from the premium paid.
Equity-settled share-based employee remuneration is credited to the share option
reserve until related stock options are exercised. On exercise or lapse amounts
recognised in the share option reserve are taken to retained earnings.
Unrealised gains and losses on available for sale financial assets are taken to
the investment revaluation reserve. When these gains/losses are realised, they
are taken to the income statement.
o)       Leases
All leases are classified as operating leases and rentals are charged to income
on a straight-line basis over the term of the lease.
p)       Financial instruments
The carrying amounts of cash and cash equivalents, related party creditors,
trade receivables, other accounts receivable, trade payables, customer deposits
and other accounts payable approximate to their fair value.
The Group does not issue derivative financial instruments for trading purposes.
The Group holds derivative financial instruments for trading purposes.
Trade and other receivables
Trade and other receivables are recognised and carried at the original
transaction value. An estimate for doubtful debts is made when collection of the
full amount is no longer probable. Bad debts are written off when identified.
Where the time value of money is significant receivables are carried at
amortized cost.
Cash and cash equivalents
Cash comprises cash in hand and balances with banks. Cash equivalents are short
term, highly liquid investments that are readily convertible to known amounts of
cash. They include unrestricted short-term bank deposits originally purchased
with maturities of twelve months or less.
Trade and other payables
Trade and other payables are recognised and carried at the original transaction
Financial assets at fair value through profit or loss
From 1 January 2008 all new financial assets acquired will be designated at fair
value through profit or loss upon initial recognition, because management
consider this to more fairly reflect the way these assets are managed by the
Group. The Group's business is investing in financial assets with a view to
profiting from their total return in the form of income and capital growth. This
portfolio of financial assets is managed and its performance evaluated on a fair
value basis, in accordance with a documented investment strategy, and
information about the portfolio is provided internally on that basis to the
Group's Board of directors and other key management personnel.
Financial Assets at fair value through profit and loss include financial assets
that are either classified as held for trading or are designated by the Group to
be carried at fair value through profit and loss upon initial recognition. By
definition, all derivative financial instruments that do not qualify for hedge
accounting fall into this category. All assets within this category are measured
at their fair value, with changes in value recognised in the income statement
when incurred. Upon initial recognition attributable transactions costs are
recognised in profit or loss when incurred.
Available-for-sale assets
During the year ended 31 December 2007, all financial assets (other than
derivatives) were classified as available for sale on initial recognition.
Available for sale financial assets are recognised when the Company becomes a
party to the contractual provisions of the instrument. Available for sale
financial assets are recognised at fair value plus transaction costs.
Available-for-sale financial assets include non-derivative financial assets that
are either designated as such or do not qualify for inclusion in any of the
other categories of financial assets. All financial assets within this category
are measured, with changes in value recognised in equity, through the statement
of changes in equity. Gains and losses arising from investments classified as
available-for-sale are recognised in the income statement when they are sold or
when the investment is impaired.
In the case of impairment of available-for-sale assets, any loss previously
recognised in equity is transferred to the income statement. Impairment losses
recognised in the income statement on equity instruments are not reversed
through the income statement. Impairment losses recognised previously on debt
securities are reversed through the income statement when the increase can be
related objectively to an event occurring after the impairment loss was
recognised in the income statement.
An assessment for impairment is undertaken at least at each balance sheet date.
A financial asset is derecognised only where the contractual rights to the cash
flows from the asset expire or the financial asset is transferred and that
transfer qualifies for derecognition. A financial asset is transferred if the
contractual rights to receive the cash flows of the asset have been transferred
or the Group retains the contractual rights to receive the cash flows of the
asset but assumes a contractual obligation to pay the cash flows to one or more
recipients. A financial asset that is transferred qualifies for derecognition if
the Group transfers substantially all the risks and rewards of ownership of the
asset, or if the Group neither retains nor transfers substantially all the risks
and rewards of ownership but does transfer control of that asset.
Valuation of financial assets
• Cash and deposits are evaluated per holdings in banks.
• Public equities, Credit Notes and Bonds are valued per their bid market
  prices on quoted exchanges, or as quoted by market maker.
• Hedge Funds and Private Equity funds are valued per reports provided by
  the funds on a periodic basis.
• Private Equities and Unlisted Investments are valued using market
  valuation techniques as determined by the directors.
• Investment property is valued at fair value based on valuations
  provided by a certified external appraiser. Development projects are valued at
  cost until completion.
• Derivative instruments are valued at close-out cost as provided by
  counter parties of the derivative agreement.
q)       Share Options
IFRS 2 "Share-based Payment" requires the recognition of equity settled share
based payments at fair value at the date of grant.
The Group issues equity-settled share based payments to certain employees and
other advisors. The fair value of share-based payments to employees at grant
date is measured using the Binomial pricing model. The fair value of share-based
payments to other advisors, are measured directly at the fair value of the
services provided.
The fair value determined at the grant date is expensed on a straight-line basis
over the vesting period, based on the Group's estimate of the shares that will
eventually vest and adjusted for the effect of non market-based vesting
conditions. The corresponding credit is taken to the share option reserve.
r)        Legal and other disputes
Provision is made where a reliable estimate can be made of the likely outcome of
legal and other disputes against the Group. In addition, provision is made for
legal and other expenses arising from claims received or other disputes. No
provision is made for other possible claims or where an obligation exists but it
is not possible to make a reliable estimate. Costs associated with claims made
by the Group are charged to the Income Statement as they are incurred.
s)       Critical accounting judgements and key sources of estimation
Impairment of financial assets
The group assesses at each balance sheet date whether financial assets are
impaired. If an impairment has occurred, this loss is taken to the income
Assets carried at cost
If there is objective evidence that an impairment loss on unquoted equity
instrument that is not carried at fair value because its fair value cannot be
reliably measured, or on a derivative asset that is linked to and must be
settled by delivery of such a unquoted equity instrument, has been incurred, the
amount of the loss is measured as the differences between the asset's carrying
amount and the present value of estimated future cash flows discounted at the
current market rate of return of similar financial assets.
Provision for legal and other disputes
Determining whether provisions for legal and other disputes is required requires
the Group to assess the likelihood of an economic outflow occurring as a result
of past events. Where an economic outflow is considered probable, a provision
has been made for the estimated outflow. Where an outflow is considered
possible, but not probable it has only been disclosed.
Where the information required by IAS 37 "Provisions, Contingent Liabilities and
Contingent Assets" is expected to prejudice the outcome of legal and other
disputes, it has not been disclosed on these grounds.
Further details of contingent liabilities and provisions are provided in notes
31 and 33.
t)        Discontinued operations
A discontinued operation is a cash-generating unit, or group of cash-generating
units, that either has been disposed of, or is classified as held for sale, and:
• Represents a separate major line of business or geographical area of 
• Is part of a single co-ordinated plan to dispose of a separate major
  line of business or geographical area of operations or
• Is a subsidiary exclusively with the view to resale
The disclosures for discontinued operations in the prior year relate to all
operations that have been discontinued by the balance sheet date for the latest
period presented.
3.       Segment Information
Management consider investment activity to be a single class of business.
Business segments
The Groups' performance as it is analysed by its business segments is given
Revenue by segments                                   2007                  2006
                                                      $000                  $000
Discontinued operations                                  -                59,850
Investments                                         25,789                12,193
                                                    ------                ------
                                                    25,789                72,043
                                                    ------                ------
Cost of sales                                            -              (30,256)
Amortization and non recurring items                 (134)              (11,054)
Administration expenses                            (3,172)               (4,478)
Finance expenditure                                (1,398)                 (170)
                                                    ------                ------
Profit before taxation                              21,085                26,085
                                                    ======                ======
4.       Interest / dividend income
                                                      2007                  2006
                                                      $000                  $000
Interest from available for sale investments         9,187                 2,193
Interest on Bank deposits and current accounts       4,332                 9,660
Exchange income                                      2,498                   232
Dividend income                                        556                     -
                                                    ------                ------
                                                    16,573                12,085
                                                    ======                ======
5.       Investment property revenue
                                                      2007                  2006
                                                      $000                  $000
Rental income                                        1,822                     -
                                                    ------                ------
                                                     1,822                     -
                                                    ======                ======
6.       Gain / losses on investments
                                                      2007                  2006
                                                      $000                  $000
Gain on sale of available for sale investments       3,331                   108
Property revaluation                                 1,244                     -
Loss on derivative instruments                       (414)                     -
Loss on impairment                                 (5,594)                     -
                                                    ------                ------
                                                   (1,433)                   108
                                                    ======                ======
7.       Gains on acquisition of associate
                                                      2007                  2006
                                                      $000                  $000
Atlas Estates Ltd.                                   8,827                     -
                                                    ------                ------
                                                     8,827                     -
                                                    ======                ======
The investment in associate forms part of the Group's investment portfolio and
therefore has been included within investment income.
8.       Amortisation and non recurring items
Amortisation and non-recurring items refer to:
                                                            2007            2006
                                                            $000            $000
Amortisation of intangible assets                             63           2,315
Amortisation of share options                              2,657           3,150
Non recurring expenses                                        32           1,144
Compensation to third parties                                  -           4,445
Income related to discontinued operations                (2,618)               -
                                                          ------          ------
                                                             134          11,054
                                                          ======          ======
9.       Administrative expenses
                                                            2007            2006
                                                            $000            $000
Operational expenses                                         316             357
Directors fees and expenses                                  985           1,737
Consultants fees and expenses                                503             357
Other salaries and expenses                                  258             299
Office cost                                                  407             532
Plc costs                                                    425             396
Custody fees                                                 143               -
Administration services                                      135             800
                                                          ------          ------
                                                           3,172           4,478
                                                          ======          ======
At 31 December 2007 the Group employed 8 staff (31 December 2006: 28).
10.    Finance expenditure
                                                            2007            2006
                                                            $000            $000
Bank interest and fees                                       550             170
Financing investment property                                848               -
                                                          ------          ------
                                                           1,398             170
                                                          ======          ======
11.    Taxation
                                                            2007            2006
                                                            $000            $000
Tax charge                                                   368               7
                                                          ------          ------
                                                             368               7
                                                          ======          ======
The tax charge for the year can be reconciled to the accounting
profit as follows:
Profit before tax                                         21,085          62,727
                                                          ------          ------
Tax effect of domestic corporation tax                         -               -
Tax effect of share of subsidiaries                          110               7
Deferred tax                                                 258               -
                                                          ------          ------
Tax for the year                                             368               7
                                                          ======          ======
The Company is an international business company based in the British Virgin
Islands (BVI) and, under its laws is not subject to corporation tax. Corporation
tax is calculated with reference to the profit of the Company's subsidiaries.
Since the Group trades in a number of jurisdictions, there is a risk that
certain tax authorities consider that it should be subject to tax in those
countries. The directors have considered these risks and concluded that no
further tax provision is required.
12.    Discontinued operations
On 14 February 2006 certain trade assets were disposed of for $250m. The assets
included in the disposal were certain domain names and the brand names "Empire
Poker" and "Ace Club". These brands and domain names were used by the Group to
direct online poker and casino players to PartyGaming's websites, creating net
gaming revenue for the Group.
On 29 December 2006, the Company agreed to dispose of its remaining operations
to PartyGaming Plc.
This agreement was validated by the EGM held on 19 January 2007.
                                                              2007          2006
                                                              $000          $000
Cash flows from discontinued operations
Net cash from operating activities                               -       (2,010)
Net cash from investing activities                               -       234,849
Net cash from financing activities                               -      (24,887)
                                                            ------        ------
Net cash from discontinued operations                            -       207,952
                                                            ======       =======
13.    Disposal of business assets
                               Total     Total Empire Poker Disposal of business
                                2007      2006         2006                 2006
                                $000      $000         $000                 $000
Disposal proceeds received         -   287,972      250,000               37,972
Legal and professional             -     (944)            -                (944)
Compensations to third             -  (26,827)     (14,122)             (12,705)
Warranties provision               -   (2,000)                           (2,000)
Assets written off                 - (221,559)                         (221,559)
                              ------    ------       ------               ------
Profit from disposal to            -    36,642      235,878            (199,236)
PartyGaming Plc
                              ======    ======      =======               ======
On 14 February 2006 the Group sold certain business assets to PartyGaming Plc
pursuant to a settlement agreement for a total consideration of $250m. Business
assets included in the disposal were certain domain names and brand names. The
consideration represented $250m, which was all in the form of cash.
On 19 January 2007, the Group completed the sale to PartyGaming plc of its
remaining operating business. This agreement was signed on 28 December 2006 and
was subject to certain conditions including approval of the Company's
shareholders at an EGM on 17 January 2007. Between signing and completion the
Company continued to operate the business, however during this period
restrictions were placed on the operation of the business by PartyGaming plc.
Business assets included in the disposal were certain domain names, players'
data and brand names. Assets written off, principally, comprises of acquired
intangible goodwill relating to the acquisition of business of Tradal Limited in
May 2005 and the acquisition of Club Dice casinos in September 2005.
The Group received a consideration for the disposal of the business of
83,325,934 PartyGaming shares representing a gross value of $47.9m. As part of
the agreement 17,374,637 PartyGaming shares were transferred to agents as
compensation resulting in net disposal proceeds to the Group of $37.9m. The
transaction was conditional on a further payment to a marketing service provider
of $10m.
14.    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 dilutive shares in existence as at the year ended 31 December 2007
and the year ended 31 December 2006.
                                                2007          2006          2006
Net profit attributable to ordinary           20,717        51,692        62,720
shareholders ($000)
                                       =============   ===========   ===========
Weighted average number of ordinary      286,944,439   292,777,772   292,777,772
shares in issue
                                       =============   ===========   ===========
Basic earnings per share ($)                    0.07          0.18          0.21
                                       =============   ===========   ===========
Weighted average number of ordinary      286,944,439   299,723,327   299,723,327
shares including the effect of
potentially diluted shares
                                       =============   ===========   ===========
Diluted earnings per share ($)                  0.07          0.17          0.21
                                       =============   ===========   ===========
Number of Shares
Weighted average number of ordinary      286,944,439   292,777,772   292,777,772
shares in issue
Effect of dilutive potential ordinary
Share options                                      -     6,945,555     6,945,555
                                       ------------- ------------- -------------
Weighted average number of ordinary      286,944,439   299,723,327   299,723,327
shares including the effect of
potentially dilutive shares
                                       =============   ===========   ===========
15.    Net asset value per share
Net asset value per share has been calculated by dividing the net assets
attributable to ordinary shareholders by the weighted average number of shares
in issue during the relevant financial periods.
Diluted net asset value per share is calculated after taking into consideration
the potentially dilutive shares in existence as at the year ended 31 December
2007 and the year ended 31 December 2006.
                                                              2007          2006
Net assets attributable to ordinary shareholders           276,643       274,246
                                                     ============= =============
Weighted average number of ordinary shares in issue    284,027,772   292,777,772
                                                     ============= =============
Basic net asset value per share ($)                           0.97          0.94
                                                     ============= =============
Weighted average number of ordinary shares including   284,027,772   292,777,772
the effect of potentially diluted shares
                                                     ============= =============
Diluted NAV per share ($)                                     0.97          0.94
                                                     ============= =============

Number of Shares
Weighted average number of ordinary shares in issue    284,027,772   292,777,772
Effect of dilutive potential ordinary shares:
Share options                                                    -             -
                                                     ------------- -------------
Weighted average number of ordinary shares including   284,027,772   299,777,772
the effect of potentially dilutive shares
                                                     ============= =============
16.    Dividends
                                                              2007          2006
                                                              $000          $000

Dividends paid                                               9,657        24,887
                                                            ======        ======

The final dividend for 2006 was paid on 8 June 2007. Dividends for 2007 will be
paid on 31.7.2008.
17.    Property, plant and equipment
                          Office Computer Hardware Fixtures and Fittings    Total
                                              $000                  $000     $000
As at 1 January 2006           -               131                     -      131
Additions                      -               104                     9      113
Disposal                       -             (156)                     -    (156)
                          ------            ------                ------   ------
As at 1 January 2007           -                79                     9       88
Additions                    281                66                    71      418
Disposal                       -              (20)                     -     (20)
                          ------            ------                ------   ------
As at 31 December            281               125                    80      486
                          ------            ------                ------   ------
As at 1 January 2006           -              (12)                     -     (12)
Charge for the year            -              (78)                   (1)     (79)
Disposal                       -                52                     -       52
                          ------            ------                ------   ------
As at 1 January 2007           -              (38)                   (1)     (39)
Charge for the year          (7)              (34)                   (8)     (49)
Disposal                       -                 7                     -        7
                          ------            ------                ------   ------
As at 31 December            (7)              (65)                   (9)     (81)
                          ------            ------                ------   ------
Net book value
As at 31 December            274                60                    71      405
                          ======            ======                ======   ======
As at 31 December              -                41                     8       49
                          ======            ======                ======   ======
18.    Intangible assets
              Goodwill Website Design Costs Domains Player data Computer Software     Total
                  $000                 $000    $000        $000              $000      $000
As at 1        221,192                1,371     575       4,486                63   227,687
January 2006
Additions            -                  848       -           -                68       916
Adjustment       (797)                    -       -           -                 -     (797)
in fair
Disposal     (220,395)              (2,219)   (575)     (4,486)                 - (227,675)
                ------               ------  ------      ------            ------  --------
As at 1              -                    -       -           -               131       131
January 2007
Additions            -                    -       -           -                16        16
                ------               ------  ------      ------            ------  --------
As at 31             -                    -       -           -               147       147
                ------               ------  ------      ------            ------  --------
As at 1              -                (744)   (130)     (2,171)              (14)   (3,059)
January 2006
Charge for           -                (860)       -     (2,315)              (44)   (3,219)
the year
Disposal             -                1,604     130       4,486                 -     6,220
                ------               ------  ------      ------            ------  --------
As at 1              -                    -       -           -              (58)      (58)
January 2007
Charge for           -                    -       -           -              (44)      (44)
the year
                ------               ------  ------      ------            ------  --------
As at 31             -                    -       -           -             (102)     (102)
                ------               ------  ------      ------            ------  --------
Net book
As at 31             -                    -       -           -                45        45
                ======               ======  ======      ======            ====== =========
As at 31             -                    -       -           -                73        73
                ======               ======  ======      ======            ====== =========
19.    Available-for-sale financial assets
                                                              2007          2006
                                                              $000          $000
Fixed income investments                                    96,000       100,975
Public Equities investments                                 40,940        23,516
Private equities                                            25,246             -
Hedge funds                                                 25,120             -
Financial and minority holdings                             24,628             -
Other investments                                            5,829             -
                                                            ------        ------
                                                           217,763       124,491
                                                            ======       =======
Financial assets relate to investments in bonds and equity classified as
available for sale. Financial assets are held in the balance sheet at the year
end at fair value. Fair value is measured by reference to the market value of
the assets at the balance sheet date as they are openly traded on a public
20.    Financial assets designated at fair value through profit or loss
                                                     2007                  2006
                                                     $000                  $000
Derivatives                                           729                     -
                                                   ------                ------
                                                      729                     -
                                                   ======                ======
21.    Investment and development property
                                  Investment     Development      2007      2006
                                    property        Property      $000      $000
Valuation as at 1 January 2007             -               -         -         -
Additions                             85,040          11,348    96,388         -
Change in fair value                   1,244               -     1,244         -
                                      ------          ------    ------    ------
Valuation as at 31 December 2007      86,284          11,348    97,632         -
                                      ======          ======    ======    ======
An investment property, Wylerpark, in Switzerland was purchased on 1 July 2007.
The investment property was valued by Wuest & Partners as at 31 December 2007 on
the basis of open market value in accordance with the appraisal and valuation
guidelines of the Royal Institute of Certified Surveyors, and the European Group
of Valuers' Associations.
22.    Investments
                                                                  2007      2006
                                                                  $000      $000
Investment in associates                                        69,639         -
                                                                ------    ------
Investments accounted for using the equity method               69,639         -
                                                                ======    ======
(a) Investment in associates - The group has 21.28% interest in Atlas Estates
Limited, an AIM - quoted real estate investment and Development Company.
The following table illustrates summarised financial information of the group's
investment in Atlas Estates Ltd:
                                                                 2007       2006
                                                                 $000       $000
Share of the associates Balance Sheet
Non-current assets                                            112,606          -
Current assets                                                 52,546          -
                                                               ------     ------
Share of gross assets                                         165,152          -
                                                               ------     ------
Current liabilities                                          (25,274)          -
Non-current liabilities                                      (70,239)          -
                                                               ------     ------
Share of gross liabilities                                   (95,513)          -
                                                               ------     ------
Share of net assets                                            69,639          -
                                                               ======     ======
Atlas Estates Limited became an associate investment on 31 December 2007,
following the Group's acquisition of 9.1% of Atlas's issued share capital.
Therefore the Group has not recognised any share of Atlas's results in its
income statement for the year ended 31 December 2007.
The excess of net fair value of the associate's identifiable assets and
liabilities over the cost of investment of $8,827,000 has been recognised in the
income statement.
(b) Details of group undertakings
Details of the investments in which the group holds 20% or more of the nominal
value of any class of share capital are as follows:
Name of Subsidiary   Place           Holding  Proportion of       Principal
                     of incorporation         voting rights and   activity
                                              shares held
Livermore Capital    British Virgin  Ordinary 100%                Fund
Limited              Islands         shares                       management
Livermore Fund I     British Virgin  Ordinary 100%*               Hedge Fund,
Limited              Islands         shares                       Dormant
Livermore Capital AG Switzerland     Ordinary 100%                Administration
                                     shares                       services
Livermore            Switzerland     Ordinary 100%*               Real Estate
Investments AG                       shares                       management
Livermore Real       Switzerland     Ordinary 100%                Real Estate
Estate I AG                          shares                       management,
Livermore Enaxor     Luxemburg       Ordinary 100%                Real Estate
S.a.r.l                              shares                       Owner
LivermoreInvestments Cyprus          Ordinary 100%                Administration
Cyprus Limited                       shares                       services
Livermore            United Kingdom  Ordinary 100%                Dormant
Investments Limited                  shares                       company
Empire Payments Ltd  St. Kitts       Ordinary 100%                Dormant
                                     shares                       company
Sandhirst Ltd        Cyprus          Ordinary 100%                Dormant
                                     shares                       company
Atlas Estates Ltd    Guernsey        Ordinary 21.28%              Real Estates 
                                     shares                       Investments
* Held by a Subsidiary undertaking.
All cash transactions between the 100% subsidiaries and the Group during the
year were eliminated on consolidation.
23.    Trade and other receivables
                                                              2007         2006
                                                              $000         $000
Trade receivables                                              286        1,548
Other debtors and prepayments                                1,564       49,247
                                                            ------       ------
                                                             1,850       50,795
                                                             =====       ======
The carrying value of trade and other receivables approximates to their fair
Included in other debtors and prepayments at 31 December 2006 is $47,967,000 due
from PartyGaming Plc on sale of the business as described in note 13.
24.    Cash and cash equivalents
Cash and cash equivalents included in the cash flow statement comprise the
following at the balance sheet date:
                                                                  2007      2006
                                                                  $000      $000
Short term deposits                                                500   136,522
Cash at bank                                                     9,417     1,193
                                                                ------    ------
                                                                 9,917   137,715
Bank overdrafts used for cash management purposes             (15,825)   (4,960)
                                                                ------    ------
Cash and cash equivalents in the statement of cash flows       (5,908)   132,755
                                                                ======    ======
25.    Shareholders equity
Share capital comprises the following:
                                              $0 shares    Share premium arising
                                                 Number                     $000
As at 1 January 2006 and 31 December 2006   292,777,772                  209,807
Re-purchased and held in treasury           (8,750,000)                  (7,172)
                                             ----------                ---------
As at 31 December 2007                      284,027,772                  202,635
8,750,000 shares (2006: Nil) were held in treasury at the year end.
The Company has authorised share capital of 1,000,000,000 ordinary shares with
no par value, and no restrictions.
The Company has a share option scheme. The outstanding share options to acquire
ordinary shares as at 31 December 2007 were as follows:
              Outstanding     Date Exercise Exercise Earliest Expiry of exercise
            Share options  Granted    price    price exercise               date
                                          £        $     date
As at 1        12,989,840
Issued on 5     1,500,000 05/04/06     1.50     2.62 05/04/07            5/04/16
April 2006
Issued on      10,950,000 19/07/06     0.78     1.42 19/07/07            5/04/16
19 July
Share        (12,494,285)
As at 1        12,945,555
Share         (1,400,000)
As at 31       11,545,555
The fair value of options granted to employees were determined using the
Binomial valuation model. The model takes into account a volatility rate of
between 41-45% calculated using the historical volatility of a peer group of
similar gaming companies and a risk free interest rate of 4.0-4.4% and it has
been assumed the options have a expected life of two years post date of vesting.
The expense for the period has been included in amortisation and non-recurring
expenses (see note 8).
26.    Bank Loans
                                                           2007             2006
                                                           $000             $000

Long term bank loan                                      69,411                -
                                                         ------           ------
                                                         69,411                -
                                                         ======           ======
The long term bank loan is related to Wyler park property investment purchase
and is secured on this property. Interest is payable at 4.15% and the loan
balance is repayable on 12 July 2014.
27.    Bank Overdrafts
                                                              2007          2006
                                                              $000          $000

Short term bank overdrafts                                  15,825         4,960
                                                            ------        ------
                                                            15.825         4,960
                                                            ======        ======
28.    Trade and other payables
Amounts falling due within one year
                                                                2007        2006
                                                                $000        $000
Trade payables                                                 1,607       3,405
Other payables and accrued expenses                           34,327      30,505
                                                              ------      ------
                                                              35,934      33,910
                                                              ======      ======
The Directors consider that the carrying value of trade and other payables
approximates to their fair value.
Included in other payables and accrued expenses is $28,794,000 relating to
amounts due on the purchase of associate. Included in other payables and accrued
expenses at 31 December 2006 is $10,004,000 relating to amounts due to agents as
part of the PartyGaming Plc transaction in December 2006.
29.    Current tax payable
                                                                 2007      2006
                                                                 $000      $000
Corporation tax payable                                           109         7
                                                               ======     ======
30.    Related party transactions
                                                                 2007      2006
                                                                 $000      $000

Amounts owed by key management                                  5,500         -
                                                               ======     ======
Interest receivable on key management balances                    190         -
                                                               ======     ======
Amounts owed to Directors                                          94       391
                                                               ======     ======
Administration services provided by Tradal Limited                193       660
                                                               ======     ======
Paid in respect of services *                                     688     1,562
                                                               ======     ======
* These payments were made in respect of members of key management either
directly to them or to companies to which they are related.
Tradal Ltd is a related party by virtue of common ownership with Livermore
Investments Group Limited.
Loans of $5,500,000 were made to key management during the period for the
acquisition of shares in the Company. Interest is payable on these loans at US
LIBOR plus 0.25% and the loans are secured on the shares acquired. The loans are
repayable on the earlier of the employee leaving the Company or November 2010.
31.    Contingent liabilities
The agreement with PartyGaming Plc relating to the disposal of the remaining
online gaming operations which was completed in January 2007, could potentially
give rise to a liability arising from warranties and indemnities included within
the sale and purchase agreement.
No further information is provided as the directors consider it could prejudice
the outcome of any claim.
32.    Other commitments and contingencies
                                                                     2007   2006
                                                                     $000   $000
Future minimum lease commitments under property operating leases:
Less than one year                                                      -     27
Committed real estate development expenditure                       6,266      -
                                                                   ------ ------
Total commitments falling due within one year                       6,266     27
                                                                   ====== ======
33.    Litigation
A trademark dispute with La Societe des Bains de Mer et du Circle des Etrangers
a Monaco was settled in January 2007 when the Group agreed to an out of court
settlement of USD 3.4m.
During the year the Group was made aware of a possible litigation in relation to
a former employee relating to the termination of his contract following the sale
of the operating business to PartyGaming in December 2006. This litigation
procedure is taking place and the Group has made a provision of USD 750k for the
Directors' best estimate of the potential liability and expenses arising.
Other than the above no member of the Group is or has been involved in any legal
or arbitration proceedings which may have, or have had during the 12 months
preceding the date of this document, a significant effect on the Group's
financial position nor are the Directors aware of such proceedings pending or
threatened against any member of the Group.
The Group has provided for litigation claims in line with its accounting policy
as set out in note 1.
34.    Financial risk management objectives and policies
The Group's financial instruments comprise available for sale investments,
derivatives, cash balances and receivables and payables that arise directly from
its operations.
Risk Objectives and Policies
The objective of the Group is to achieve growth of shareholder value, yet in
line with reasonable risk, taking into consideration that the protection of
long-term shareholder value is paramount. The policy of the Board is to provide
a framework within which the Investment Manager can operate and deliver the
objectives of the Group.
Risks Associated with Financial Instruments
Foreign currency risk
Foreign currency risks arise in two distinct areas which affect the valuation of
the investment portfolio, 1) where an investment is denominated and paid for in
a currency other than US Dollars; and 2) where an investment has substantial
exposure to non US Dollars underlying assets or cash flows. Although the Company
reports in USD, most of the Company's assets are in non USD currencies and the
Company in general does not hedge its currency exposure. The investment manager
discretionally partially hedges against foreign currency movements affecting the
value of the investment portfolio based on his view on the relative strength of
certain currencies. The Investment Managers monitor the effect of foreign
currency fluctuations through the pricing of the investments by the various
markets. The level of investments denominated in foreign currencies held by the
Group at 31 December 2007 is the following:
                    2007        2007      2007             2006        2006      2006
                      $m          $m        $m               $m          $m        $m
        Financial assets Liabilities Net value Financial assets Liabilities Net value
US                 156.8        23.3     133.5            306.3        38.9     267.4
British             45.3           -      45.3              0.2           -       0.2
Euro                66.3        28.9      37.4              2.5           -       2.5
Swiss              105.5        69.4      36.1              4.1           -       4.1
Indian              16.8           -      16.8                -           -         -
Others               7.3           -       7.3                -           -         -
Some of the USD denominated investments are backed by underlying assets which
are invested in non USD assets.
Interest rate risk
The Group is exposed to market price risk on its interest-bearing instruments
which are affected by changes in market interest rates and expectations. The
Group has borrowings of USD 69.4m (2006: 0) which have been fixed through the
use of an interest rate swap.
The Group has banking credit lines which are available on short notice for the
Investment Managers to use in their investment activities, the costs of which
are based on variable rates plus a margin. When an investment is made utilising
the facility, consideration is given to the financing costs which would impact
the returns. The level of banking facilities used is monitored by both the Board
and the Investment Manager on a regular basis. If fully drawn, the credit lines
could form up to 40% of the current value of the investment portfolio. The level
of banking facilities utilised at 31 December 2007 was USD 15.8m (2006: USD
Interest rate changes will also impact equity prices. The level and direction of
change in equity prices is subject to prevailing local and world economics as
well as market sentiment all of which are very difficult to predict with any
certainty. At 31 December 2007 and 2006 the Group had no financial liabilities
that bore an interest rate risk, other than the previously disclosed bank
The Group has floating rate financial assets consisting of bank balances that
bear interest at rates based on the banks floating interest rate. During the
period the average rate of interest earned on cash balances was 5.39%. The
Group's interest bearing assets and liabilities are as follows:
                                                                     2007   2006
                                                                       $m     $m
Financial assets
Subject to Interest rate changes                                     29.1   10.9
Not Subject to interest rate changes                                 29.2   54.0
Total                                                                58.3   64.9
Financial liabilities subject to interest rate changes               15.8    5.0
Financial liabilities not subject to interest rate changes           69.4      -
Total                                                                85.2    5.0
Changes in market interest rates will affect the valuation of fixed rate
interest bearing instruments. A 1% change in market interest rates would result
in an estimated $1.5m change in the value of fixed rate financial assets.
Market price risk
By the nature of its activities, most of the Group's investments are exposed to
market price fluctuations. The Board monitors the portfolio valuation on a
regular basis and consideration is given to hedging or adjusting the portfolio
against large market movements.
Other than Atlas Estates, which represents some 20% of its portfolio, the Group
had no single major investments that in absolute terms and as a proportion of
the portfolio that could result in a significant reduction in the NAV and share
price. The portfolio as a whole does not correlate exactly to any Stock Exchange
As the Group is now an investment company, many of the market risks are new.
Management of risks is primarily achieved by having a diversified portfolio to
spread the market risk. A 10% change in the value of the Group's portfolio of
financial instruments would result in a 12% change in equity.
The Investment Manager may use derivative instruments in order to mitigate
market risk or to take a directional investment. At the year end there were some
USD 0.7m of interest rate derivatives. These provide a limited degree of
protection against a rise in interest rates and would not materially impact the
portfolio returns if a large market movement did occur.
Credit Risk
The group invests in a wide range of securities with various credit risk
profiles including investment grade securities, sub investment grade and equity
positions. The investment in debt instruments is usually in investment grade
securities, however, the Group may invest also in sub investment grade or
unrated debt instruments. The investment manager mitigates the credit risk via
diversification across issuers. However, the Group is exposed to a migration of
credit rating, widening of credit spreads and default of any specific issuer.
The Group has a relatively high exposure to the Global and US credit market in
its portfolio of CDOs/CLOs which totals some USD 29.1m.
The Group only transacts with regulated institutions on normal market terms
which are trade date plus one to three days. The levels of amounts outstanding
from brokers are regularly reviewed by the Investment Manager. The duration of
credit risk associated with the investment transactions is the period between
the date the transaction took place, the trade date and the date the stock and
cash are transferred, the settlement date. The level of risk during the period
is the difference between the value of the original transaction and its
replacement with a new transaction. The amounts due to brokers at 31 December
2007 are USD 50k. The Group is exposed to credit risk in respect of its interest
bearing investments of $58.3m.
At 31.12.2007, the credit rating distribution of the Group's bond portfolio was
as follows:
Rating                         Amount, $000                    Percentage
AAA                                   8,021                          13.8%
AA                                   13,779                          23.6%
A                                     2,087                           3.6%
A-                                    6,451                          11.0%
BBB+                                 13,126                          22.5%
Bbe                                   2,022                           3.5%
Not Rated                            12,796                          22.0%
Total                                58,282                         100.0%
In the prior year the portfolio of interest bearing financial assets was
primarily short term and held with highly rated institutions.
Liquidity Risk
The only significant financial liability of the Group is the bank loan of $69
million used for purchase of a real estate property, which has a maturity of 7
years and is fully financed by the rental income from that same property.
A large proportion of the Group's portfolio is invested in mid term private
equity investments with low or no liquidity. The investments of the Company in
publicly traded securities are subject to availability of buyers at any given
time and may be very low or non existent subject to market conditions.
The Investment Managers take into consideration the liquidity of each investment
when purchasing and selling in order to maximise the returns to Shareholders by
placing suitable transaction levels into the market. Special consideration is
given to investments that represent more than 5% of the investee.
Capital Management
The Group considers its capital to be its issued share capital and reserves. The
Board regularly monitors its share discount policy and the level of discounts
and whilst it has the option to re-purchase shares, it considers that the best
means of attaining a good rating for the shares is to concentrate on good
shareholder returns.
However, the Board believes that the ability of the Company to re-purchase its
own Ordinary shares in the market may potentially enable it to benefit all
equity shareholders of the Company. The re-purchase of Ordinary shares at a
discount to the underlying net asset value would enhance the net asset value per
share of the remaining equity shares.
Under this policy, in 2007, the Company bought 8,750,000 of its Ordinary shares.
Financial assets by category:
                                                                    2007    2006
                                                                    $000    $000
Non current assets
Available-for-sale financial assets                              217,763 124,491
Financial assets designated at fair value through Profit and Loss    729       -
Current assets
loans and other receivables:
Trade and receivables                                              1,850  50,795
Cash and cash equivalents                                          9,917 137,715
Financial liabilities by category:
                                                                    2007    2006
                                                                    $000    $000
Current liabilities
Bank overdrafts                                                   15,825   4,960
Trade payables
Trade and other payables                                          35,394  33,910
Current tax payable                                                  109       7
Non current liabilities
Bank loan