On Friday Gala Coral announced record results for the year ended 29 September 2007 and published its Annual Report. The company is the first major private equity backed business in the UK to comply with recently issued Walker Committee recommendations for providing transparent and timely information about performance. Neil Goulden, Chief Executive of the Gala Coral Group, commented:

“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.” Despite the bingo industry being badly affected by the smoking ban, the Gala Coral Group saw pre-tax profits rise 10.6% to just under £310 million, up from just over £280 million in 2006.

Since the 2005 merger of Gala Group with Coral Eurobet, the new company has added an extra 300 betting shops and is now taking advantage of the longer opening hours allowed since 1 September. Gala Coral’s bingo division recorded a £16.4 million fall in growth from 2006 figures, Coral betting grew £33 million and Gala Casinos were steady with a £3.2 million rise.

Neil Goulden said that the year had been challenging but that the company continued to focus on its core values and to lead the field in responsible gambling. During the year 219 betting shops were opened in Italy, with a further 141 due to open by Easter 2008, and have been performing above expectations. In the UK the company continues to seek a more balanced and consistent approach to regulation.

“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.”

The Management’s decision to diversify the bingo product into wider platforms, such as online and TV seems to have 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. The E-Commerce division saw negative growth of £9.2 million for the year but underlying EBITDA grew by 2% and the launch of Gala Bingo was a major success.

Summing up, Neil Goulden stated, ““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.” (E-12.17.07)

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