26 September 2006

Empire Online Limited
INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2006

EmpireOnline Limited (the “Company” or “Empire Online”), a provider of marketingservices to the online gaming industry, today announces its interim results forthe six months ended 30 June 2006.

OPERATINGAND FINANCIAL HIGHLIGHTS:

·        Earnings beforeinterest taxation depreciation and amortisation (EBITDA) and non-recurringexceptional items of $15.7m (H1 2005: $24.9m*). 

·        Net cash position ofover $260m. 

·        Net profit beforetaxation, non-recurring items and amortisation of $20.0m (H1 2005: $25.5m*)including net finance income of $4.7m (H1 2005: $0.9m*).

·        Net gaming revenue forH1 2006 was $38.2m (H1 2005: $49.7m*). Net gaming revenue across all gamingplatforms excluding Empire Poker for H1 2006 was $34.7m (H1 2005:$10.7m*). 

·        Casino net gamingrevenue for H1 2006 was $30.2m (H1 2005: $10.7m*). 

·        Poker net gamingrevenue for H1 2006 was $8.0m (H1 2005: $39.0m*). 

·        Geographicdiversification with 55% of new real money players driven from outside of theUSA (H1 2005 39%). 

·        Reported profit afteramortisation and non-recurring charges before taxation of $253.1m (H1 2005$21.2m).

*     Pro forma figure which is defined as the aggregation of theCompany for six months to 30 June 2005 and the results of Tradal Limited to 31May 2005. 

Therewill be a presentation to analysts at 9.00am today at Hudson Sandler, 29 ClothFair, London, EC1A 7NN. For further investor information please go to http://investors.ep.com/

Enquiries:

EmpireOnline Limited                                                          +35725 847 700

NoamLanir, Chief Executive Officer                  

Andrew Burns, Chief Financial Officer

HudsonSandler                                                                     +44(0) 20 7796 4133

JessicaRouleau

[Theinformation contained herein is not for publication or distribution to personsin the United States of America. The securities referred to herein have notbeen and will not be registered under the US Securities Act 1933, as amended,and may not be offered or sold without registration thereunder or pursuant to an available exemption therefrom.]

Chief Executive’s Statement

FINANCIAL REVIEW

Netgaming revenues for the first six months of 2006 were $38.2m (2005: $49.7m*).The increase in casino revenues arising from the Playtech licencees acquired inthe second half of 2005 offset the reduction in Poker revenues due to thetermination of Empire Poker following the settlement agreement with Partygamingplc in February 2006. Total casino revenues for the first six months of 2006rose to $30.2m (2005: $10.7m*). By contrast, poker revenues for the first sixmonths of 2006 fell to $8.0m (2005: $39.0m*).

Grossprofit for the first six months of 2006 was $17.6m, 46.1% of revenue (2005:$21.1m, 50.3% of revenue). Gross profit margin has reduced due to the change inproduct mix towards casino activities.

Administrationexpenses have risen to $2.3m, 6.0% of revenues, for the first six months of2006 (2005: $1.0m, 2.5% of revenues). This increase is due to additionalexpenditure due to listing and lag in re-organisation following the disposal ofEmpire Poker. Administration costs, as a percentage of revenues, is lowcompared with the sector in general.

Netfinance income has increased substantially to $4.7m for the first six months of2006 (2005: $0.7m). This reflects the financial resources available to thegroup following the Empire Poker settlement. In the second half of the currentfinancial year the Company expects to obtain a yield in excess of LIBOR on itscash resources.

Theprofit from non-recurring items and amortisation of intangible assets excludinggoodwill and employee share options was $233m for the period (2005: nil). Thenet profit from the settlement of Empire Poker was $237m after deductingrelated costs, which consisted of professional fees and termination costs foraffiliates and agents of $13m. Amortisation of intangible assets of $2m wascharged during the period mainly relating to Player Data and Domain names associatedwith the Club Dice and Noble Poker acquisitions. Employee share optionamortisation was $1.5m for the period.

DIVIDEND

TheBoard declares an interim dividend of $5m, which equates to 1.7 US cents pershare. The dividend will be paid on 30 November 2006 to those shareholders onthe register at 27 October 2006.

TRADING OUTLOOK

Aswas reported within the Q2 KPI announcement, the normal slow down in tradingactivity seen in Q2 has been more pronounced this year when compared toprevious years. Current daily sign up rates of new real money players areapproximately 250 players per day. Whilst the Board expects the outcome for thecurrent year to be broadly in line with market expectations, if there is noimprovement in this rate of sign ups, earnings growth for 2007 will bechallenging.   

STRATEGIC UPDATE

Theregulatory uncertainty that the on line gaming industry has always faced hasincreased as a consequence of recent events. In light of this, the Board willreview carefully all uses for the Company’s surplus capital in order tomaximize shareholder value.

TheCompany will update shareholders in due course.

*     Pro forma figure which is defined asthe aggregation of the Company for six months to 30 June 2005 and the resultsof Tradal Limited to 31 May 2005.

Independent Review Report

to Empire Online Limited

Introduction

We have been instructed by the company to review thefinancial information for the six months ended 30 June 2006 which comprises theconsolidated income statement, the consolidated balance sheet, the consolidatedstatement of changes in equity, the consolidated cash flow statement andthe related notes 1 to 12.  We have read the other information contained in the interimreport, which comprises only of the operating and financial highlights and theChief Executive's statement, and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information.  Our responsibilities do not extend to anyother information.

This report is made solely to the company in accordance withguidance contained in APB Bulletin 1999/4 "Review of Interim FinancialInformation".  Our review work hasbeen undertaken so that we might state to the company those matters we arerequired to state to it in a review report and for no other purpose.  To the fullest extent permitted by law, wedo not accept or assume responsibility to anyone other than the company for ourreview work, for this report, or for the conclusion we have formed.

Directors' responsibilities

The interim report, including the financial informationcontained therein, is the responsibility of, and has been approved by thedirectors.  The directors areresponsible for preparing the interim report and for ensuring that theaccounting policies and presentation applied to the interim figures should beconsistent with those applied in preparing the preceding annual accounts exceptwhere any changes, and the reasons for them, are disclosed.

This Interim report has been prepared in accordance withInternational Accounting Standard 34 “Interim Financial Reporting”.

Review work performed

We conducted our review in accordance with guidance containedin Bulletin 1999/4 "Review of Interim Financial Information" issuedby the Auditing Practices Board for use in the United Kingdom.  A review consists principally of makingenquiries of management and applying analytical procedures to the financialinformation and underlying financial data and, based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed.  A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions.  It issubstantially less in scope than an audit performed in accordance withInternational Standards on Auditing (UK and Ireland) and therefore provides alower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financialinformation.

Review conclusion

On the basis of our review we are not aware of any materialmodifications that should be made to the financial information as presented forthe six months ended 30 June 2006.

GRANT THORNTON UK LLP
Chartered Accountants
Slough
26 September 2006

Notes:See Note 1

1            The maintenance and integrity of theEmpire Online website is the responsibility of the directors: the interimreview does not involve consideration of these matters and, accordingly, thecompany's reporting accountants accept no responsibility for any changes thatmay have occurred to the interim report since it was initially presented on thewebsite.

2            Legislation in the United Kingdomgoverning the preparation and dissemination of the interim report differs fromlegislation in other jurisdictions.

* Shares in issueat 1 January 2005, had a par value of US $0.01 each. On 15 June 2005 each sharewas converted and reclassified to 2,066.222427 ordinary shares of no par value.

Empire Online Limited

Notes to the financialinformation

Six months ended 30 June2006

1. AccountingPolicies

TheInterim financial statements of Empire Online Limited have been prepared on thebasis of the accounting policies stated in the Annual Report 2005, available onwww.ep.com. The financial information has beenprepared in accordance with IAS 34 “Interim Financial Reporting”.

Basisof consolidation

Theconsolidated financial statements include the accounts of the Company and itssubsidiaries. The subsidiaries are companies controlled by Empire OnlineLimited. Control exists where the Company has the power to govern the financialand operating policies of an investee entity so as toobtain benefits from its activities. Subsidiaries are consolidated from thedate the parent gained control until such time as control ceases.

Thefinancial statements of the subsidiaries are included in the consolidatedfinancial statements using the acquisition method of accounting. On the date ofthe acquisition the assets and liabilities of a subsidiary are measured attheir fair values and any excess of the cost of acquisition over the fairvalues of the identifiable net assets acquired is recognisedas goodwill. Intercompany transactions and balancesare eliminated on consolidation.

Basisof preparation

Theseresults have been prepared on the basis of the accounting policies expected tobe adopted in the Company’s full year financial statements, which are expectedto be prepared in accordance with International Financial Reporting Standards(“IFRS”) as adopted by the European Union.

Goodwillis initially measured at cost, being the excess of the consideration paid overthe net fair value of the assets acquired. Following initial recognition,goodwill is measured at cost less any accumulated impairment losses. Goodwillis not amortized. Goodwill is reviewed annually or more frequently if events orchanges in circumstances indicate that the carrying value may be impaired.

Thefinancial information for the period ending 30 June 2005 is extracted from theGroup’s financial statements for the year ended 31 December 2005.

2. Unusual items

Duringthe period the company has disposed of certain assets as a result of a legaldispute with PartyGaming Plc. This disposal may be considered as unusual due toits size and form.

Theimpact of this is disclosed in notes 4 and 5.

3.Change of Estimates

Duringthe year ended 31 December 2005, a provisional amount was used in respect ofgoodwill $44,074,000 relating to the acquisition of Club Dice. This was reducedby $798,000 during the period upon finalization of the total amount due to theselling party.

4.Effect of changes in the composition of the entity

InFebruary 2006 certain trade assets were disposed to PartyGaming for $250m.

Theassets included in the disposal are certain domain names and the brand names“Empire Poker” and “Ace Club”.  Thesebrands and domain names were used by Empire Online to direct online poker andcasino players to Partygaming’s websites, creating net gaming revenue for theGroup.

In the year ended 31 December 2005, the grossprofit before administrative expenses attributable to the assets being sold wasapproximately $38.5 million.  In thequarter ended 31 December 2005 the assets contributed gross profit before administrativeexpenses of $5.0 million.  The balancesheet value of the net assets pursuant to the disposal was less than $0.1million as at 31 December 2005.

In the quarter ended 31 March 2006 the assetscontributed gross profit before administrative expenses of $2.5 million.

5. Segment Information in respect of assets disposedduring period

6.Dividend

TheBoard declares an interim dividend of $5m, which equates to 1.7 US cents pershare. The dividend will be paid on 30 November 2006 to those shareholders onthe register at 27 October 2006.

7. Segment Information for the period

      Businesssegments

      The Group’s performance is analysed by itstwo business segments below:

8. Earnings per share

Basic earnings per share have beencalculated by dividing the net profit attributable to ordinary shareholders(profit for the period) by the weighted average number of shares in issueduring the period.

Thereare potentially dilutive shares in existence at the period end. Dilutedearnings per share have been calculated by dividing the net profit attributableto ordinary shareholders (profit for the period) by the weighted average numberof shares in issue during the period.

9. Amortization andnon-recurring items

These items are of anon-recurring nature and they include the net profit from the disposal toPartyGaming, the amortisation of the share options scheme and the amortisationof the PlayerData and Domains acquired during 2005.

              Unaudited

10.Related parties transactions

Tradal Limited is a related party by virtue of commonownership with Empire Online Limited.

11. Property, plant andequipment

During the six months ended30 June 2006, the group has acquired property, plant and equipment with a costof $83,000. Depreciation of $35,000 has been charged during the period.

12. Preparation of InterimStatements

The financial informationdoes not constitute statutory accounts within the meaning of the BVIInternational Business Companies Act 1984 (as amended). Financial Statementsfor Empire Online Limited for the year ended 31 December 2005, prepared inaccordance with International Financial Reporting Standards as adopted by theEuropean Union, on which the auditors gave an unqualified audit report areavailable from the company’s website, www.ep.com.

ProForma Financial Information

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

TradalLtd will continue to play an important role for the Group as some of the keymembers of staff are employed by this company. This company charges a servicefee for the services provided by its staff members.

To provide comparable financial information with that included withinthe AIM admission document, the aggregation of the income statements for bothEmpire Online Limited and Tradal Limited is shown below.

This aggregation has been prepared from the auditedfinancial statements for the year ended 31 December 2005 and the unaudited results for the interim period ended on 30 June 2006.