Press Release

Gala Coral, Europe’s pre-eminent integrated betting and gaming group, has today announced record results for the year ended 29th September 2007 and published its Annual Report.   Gala Coral is the first major private equity backed businesses in the UK to be compliant with the recently issued Walker Committee recommendations, providing transparent and timely information about the Group’s performance.

Group Turnover and Profit Before Interest and Tax

Neil Goulden, Chief Executive of the Gala Coral Group said,

“I am delighted to report record profits for the Gala Coral Group resulting in a 10.6% increase in PBIT (profit before interest and tax).  The results demonstrate that following the 2005 merger between The Gala Group and Coral Eurobet, creating a fully diversified betting and gaming group with a multi-channel offer, the Group is best placed to take advantage of the wide range of growth opportunities in the UK and internationally. 

“We have responded quickly to the Walker Committee Recommendations for greater transparency and disclosure.  Gala Coral and its private equity investors, Candover, Cinven and Permira, are very pleased to be leading the way in terms of reporting and disclosure.

“In a challenging year Gala Coral has remained focussed on its core values and has continued to lead in the field of responsible gambling. Our commitment to funding, education, research and treatment into problem gambling remains undiminished.

“I am especially pleased that after only two months of trading our new international division has seen above expectation yields from our new betting shops in Italy.  We have 219 shops open and the remaining will be opened by Easter 2008.

“I am also pleased with the continued growth of the Coral business.  Since we acquired Coral in 2005 we have added an extra 300 betting offices and the estate has further benefited from the changes to opening hours and new content on our machines introduced from 1st September.

“However other recent regulatory and legislative changes have had a significant impact upon the operating environment for the business.  This is especially the case for the bingo industry which has been uniquely affected by the smoking ban.  In addition, the concurrent removal of ‘Section 21 machines’, which were very popular with our customers, has further impacted growth.  On top of this, and despite bingo being one of the softest forms of gambling, it remains the most heavily taxed in the gambling industry as the industry pays both VAT and Gross Profits Tax.  We continue to make our case to Government for the abolition of VAT on Bingo products.

“Looking ahead, we hope that there will be a more balanced and consistent approach to regulation and taxation which will allow for greater stability in the market place.  Like many businesses we enter 2008 cautious about the wider market conditions, but confident that Gala Coral can continue to outperform its peer group and grow both in the UK and internationally.”

A copy of Gala Coral’s Annual Report can be viewed at www.galacoral.com.

Key operational highlights within the divisions include:

• EBITDA at Coral grew 21% to £194.3 million, driven by 60 new shop acquisitions, 28 new openings and underlying growth within existing shops.  Coral now trades from over 1550 shops and has an integrated remote gaming offer via coral.co.uk and Coral Telebet.
• Gala Casinos EBITDA rose by 10.7% to £33.2 million, despite the unexpected duty increase imposed by the government in April 2007, which cost £2.5 million in the year, and growing competition, both of which will impact full year profits in 2007/8.  The division awaits further information from the Government on the granting of the new casino licences.
• EBITDA in Gala Bingo was down 10.7% to £136.7 million due to the smoking ban in Scotland (March 2006), Wales (April 2007) and England (July 2007) and the removal of ‘Section 21 machines’.  Gala Bingo still enjoys a 43% market share and our Bingo clubs are visited by over 1.6 million people each year. Since the 1st September 2007 the division has launched a new Jackpot game, called High Five, in its clubs and in the last three months has paid out over £2.5m in prize money.  Despite tough trading conditions, the Gala Bingo brand has shown overall growth within the last year.
• Management’s decision to diversify the bingo product into wider platforms, such as online and TV has been vindicated.  Galabingo.com is now the largest online bingo site in the UK and continues to grow. Gala Bingo created the first ever bingo millionaire in July of this year, through an integrated competition involving TV, Online and clubs called Kerchingo.
• Galabingo.com was launched in February 2006 and is now the UK’s market leader in online Bingo. The profits for the Gala Bingo Brand are up within the Group when galabingo.com and TV is added to the retail business.
• The E-commerce division grew its underlying EBITDA (after excluding a £10m one off receipt in 2005/6) by 2.0% to £44.9 million.  Regulatory action by various jurisdictions around the world limited growth in the division but the launch of Gala Bingo has been a major success and we now have over 570,000 active players making over 13 million visits per annum to our site, which bodes well for strong growth in future years.
• The Group has made its first steps towards developing a significant presence internationally.  We now have over 219 betting offices open in Italy and will be up to 360 by Easter 2008.  We have also acquired our first bingo club in Italy which will also enable us to offer online Bingo in Italy.  In addition we are also on track to open our first Bingo Club in China.  Our aim is to grow our International Division to represent 10% of group operating profits.
• Gala Coral continues to be an industry leader in terms of its staff engagement, responsible gambling programmes and community based CSR activity.  The Group was the first gambling company to achieve full GamCare accreditation across all four UK gaming and betting channels (betting, bingo, casinos and online) and continues to make significant contributions to the communities in which it operates.  The Group is also working with the Carbon Trust to reduce its carbon footprint.

For more information please contact:
Craig Leviton, Gala Coral, 07958 437 952
Jon Rhodes, Brunswick, 07974 982334

Notes to editors:
The Gala Coral Group is Europe's leading integrated gaming company and Britain’s largest private company, with over 1750 retail trading outlets in the UK and an E-Commerce division, which offers customers casino, poker, bingo and sports betting on line. The Group employs over 19,000 people in the UK and has 3.25 million active players.

Gala Bingo is the industry leader with approximately 32 million admissions from 170 clubs, every year and a typical weekly payout of £28 million in prize money.

Gala Casinos is one of the UK's largest casino operators with 30 casinos across the UK and Gibraltar and over 1.3 million members.

Coral is currently the fastest growing bookmaker in Britain, with over 1550 retail outlets.  Since acquiring Coral in October 2005, Gala Coral Group has increased the size of its betting shop estate by over 20%.

The Gala Coral E-Commerce Division is responsible for the development, management and operation of all the e-commerce activities of Gala Coral.  This includes the websites of the Group’s UK brands, Gala Bingo, Gala Casinos and Coral, along with Eurobet, the Group’s international brand. 

Other services operated by the division include Gala TV, the world’s first interactive bingo television channel, Sportpress.com, the international sports results service and the Great British Poker Tour.  Gala Coral E-Commerce operates one of the world’s most advanced online and interactive betting and gaming platforms.  The division offers everything from sportsbetting and casino products to bingo and multi-player poker. 

Over 1 billion total transactions are processed each year across our Internet, mobile and iTV (interactive) services, equivalent to over 30 bets a second 24 hours a day, 7 days a week.  With customers in over 100 countries, our products are offered in 16 different languages.

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