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Livermore Investmens Press Release 2006 / Q2 2006 Trading Update
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18 July 2006

Empire Online Limited
Q2 2006 Trading Update

Empire Online Limited (the "Company" or "EOL"), a leading online gaming network and provider of marketing services to the online gaming industry, today provides the following trading update for the second quarter of 2006.


The second quarter is traditionally the slowest quarter of the year for the online gaming industry. The rate of new player signups has always been lowest in the second quarter, rebuilding and growing throughout the second half of the year. This year the normal seasonality has been more pronounced.

Empire now recruits the majority of its new players from outside of the USA. EOL’s sign-up’s have therefore been more exposed to the short term change in online gaming trading patterns caused by the World Cup. This has had an additional dampening effect on new player sign ups and player activity in poker and casino gaming, resulting in June being the slowest month in Q2.

Trading highlights for Q2  :

Geographic diversification with over 60% of new real money players driven from outside of the USA (Q1 2006 over 50% of new real money players driven from outside of the USA).
Net cash position of over $260m available for investment.
Number of new real money players across all gaming platforms has risen by 29,928 for Q2 2006 (Q1 2006: 44,217; Q2 2005: 42,772). Excluding Empire poker the comparatives are Q1 2006: 36,242; Q2 2005: 9,838. Non-US players accounted for over 60% of all new real money signups in Q2 2006.
Total Company net gaming revenue for Q2 2006 was $18.3m (Q1 2006: $21.1m; Q2 2005: $25.3m). Net gaming revenues across all gaming platforms excluding Empire Poker for Q1 2006 were $17.6m and for Q2 2005 $5.1m.
Total Company Casino revenue of $16m (Q1 2006: $15.3m; Q2 2005: $5.1m).
Total Company Poker revenue of $2.2m (Q1 2006: $5.8m; Q2 2005: $20.2m).
Estimated earnings before interest taxation depreciation and amortisation (EBITDA) and non-recurring exceptional items of approximately $7.2m (Q1 2006:  $8.5m; Q2 2005: $12.4m)
Cost per acquisition (CPA) of new real money players of $329 (Q1 2006 : $222). As the majority of Empire Online players are recruited through revenue share deals with affiliates, the company includes the ongoing costs for players recruited in previous periods within its CPA definition. The calculation of CPA does not flex with short term changes in new real money sign-ups and therefore does not affect earnings directly. Restating the CPA to exclude revenue share players would give a cost in Q2 of $116 (Q1 2006 :$109).

Key Performance Indicators (KPI’s) excluding Empire poker

 Q2 ‘06Q1 ‘06ChangeQ2 ’05Change
   % %
(1) Number of New Real     
Money Players acquired     
(2) Number of                Active       
Players (a)      
Total79,984                85,351                (6%)                23,813236%
(3) Average Active     
Players per Day      
Poker3,785                4,102(8%)                0100%
Casino3,566                3,868                (8%)1,324               
Total7,351                7,970                (8%)                1,324455%
 (4) Poker                Active      
Player days     
Player days0.34m0.37m(8%)0100%

(a) Number of Active Players is defined as those who have played for real money in the preceding 90 days.


Empire Online is financially strong with considerable cash resources of over $260m. The Company is well placed to exploit value-enhancing opportunities as they arise. Although, the Company has progressed several opportunities, completion of transactions has been hindered by unreasonably high valuations expected by vendors and the uncertainty surrounding the US regulatory environment. In addition to its acquisition strategy the Company is also seeking to diversify its existing business operations. The Company has recruited additional resource to allow senior management sufficient time to adequately explore all possibilities in this area.

As part of this ongoing process, the Company has altered the incentives structure provided to one of its main affiliate partners. This change is not expected to affect earnings for 2006 but may have impact on earnings for 2007.

Commenting on today’s trading update, Noam Lanir, CEO, said “I am pleased to report further progress, against the normal Q2 headwind, in re-building the Company. The Company’s geographic diversification and financial strength are key features which will ensure future success. I expect this progress to continue through the second half of 2006.”

For further information:

Empire Online Limited+357 (2) 5 847 700
Noam Lanir, Chief Executive Officer 
Andrew Burns, Chief Financial Officer 
Andrew Burnett, Head of Mergers and Acquisitions