Q3 Trading Update

RNS Number : 9570F
Leisure & Gaming plc
16 October 2008

16 October 2008

Leisure & Gaming plc

Unaudited results for the third quarter ended 30 September 2008

Leisure & Gaming plc ("L&G" or "the Group"), the online betting and gaming group, announces its unaudited results for the quarter ended
30 September 2008.

In the traditionally quiet third quarter, the Group achieved a gross profit of EUR0.9m (2007: EUR0.5m) and an operating break even
position which was EUR0.7m better than the comparable period last year. These results were in line with management expectations.

Financial Highlights
* Amounts wagered were EUR13.3m (2007: EUR19.0m)
* Net win was EUR3.2m (2007: EUR4.6m)
These figures were in line with management expectations following the proactive rationalisation of our betting estate made in the third
quarter of 2007.

* Net win margin held at 24.1% (2007: 24.2%)
* Gross profit up 80% to EUR0.9m (2007: EUR0.5m)
* Gross profit percentage up to 6.8% (2007: 2.6%)
* Overheads were down 25% to EUR0.9m (2007: EUR1.2m)
* Operating break even (2007: Loss EUR0.7m)

Key Business Performance Indicators
* Italian partner network increased by 9.5% from 474 to 519 outlets
* Number of partners now higher than previous year and expected to grow steadily.
* Poker for fun launched into Italian network
* Slots trial commenced
* Fabrizio Motterlini appointed as CEO in Italy
* Number of active partners in Cyprus up by 40% from 15 to 21, ahead of plan
* Greece online business attracted over 250 active customers
* Total number of active customers in Betshopitalia at 30 September was 28,974 (2007: 26,293), an increase of 10%
* Continued overhead reductions and cost control

Richard Creed, CEO of Leisure & Gaming plc said:

"The Group has now recorded four quarters of profitable recovery, indicating that our business has turned the corner following its
extensive restructuring in September 2007.

In particular, the EUR0.7m improvement in operating profit for the quarter as compared to last year demonstrates the benefit of the
restructuring of the partner network which continues to deliver higher returns.

Partner and customer numbers continue to grow which coupled with our strengthened platform and continued geographic diversification
places the Group in a good position to take advantage of what is traditionally our busiest time of year."

For further information, please contact:
Richard Creed, Leisure & Gaming plc, Tel: 020 8545 2190
Billy Clegg/Caroline Stewart, Financial Dynamics, Tel: 020 7831 3113
William Vandyk, Blue Oar Securities, Tel: 020 7448 4400
FINANCIAL RESULTS

Third quarter ended 30 September 2008
In total, the amounts wagered on all our products for the three months to 30 September 2008 were EUR13.3m (2007: EUR19.0m), earning net
win of EUR3.2m (2007: EUR4.6m) generating a net win margin of 24.1% (2007: 24.2%).

Amounts wagered on sports betting were EUR12.1m (2007: EUR17.6m) generating a net win of EUR2.4m (2007: EUR3.9m) at a net win percentage
of 19.8% (2007: 22.1%).

Amounts wagered on horses was EUR0.6m (2007: EUR1.0m) generating a net win of EUR0.2m (2007: EUR0.3m) at a net win percentage of 33.3%
(2007: 30.0%).

Amounts played on casino products were EUR5.7m in plays (2007: EUR5.6m) generating net win of EUR0.4m (2007: EUR0.3m). (Please note that
amounts wagered above only include the net win in casino products).

Amounts played on lotto and skill games were EUR0.6m (2007: EUR0.8m) generating net win of EUR0.2m (2007: EUR0.1m). (This is treated
similarly in financial terms to casino products).
Other income was earned through advertising income on goalslive.com EUR0.2m (2007: EUR0m).

The cost of sales amounted to EUR2.5m (2007: EUR4.1m) which included commissions payable to our partner network, betting duties, IT
software provider commissions, bonuses given to customers and the cost of processing payments to and from customers.

Gross profit earned was EUR0.9m (2007: EUR0.5m)

Administrative costs were EUR0.9m (2007: EUR1.2m)

Operating profit for the three months was break even (2007: Loss EUR0.7m)

REVIEW OF OPERATIONS

Italy
The Group has a stable network of partners across central and southern Italy and we have started a modest growth plan with 45 partners
recruited between July and September taking our compliment to 519 partners. We aim to continue increasing the number of partners by 15 per
month.

We now have 36 "corner" licenses open with the remaining 23 ready awaiting approval of the necessary paperwork by AAMS, the regulators.

The Group has introduced "Betshop easy" - a terminal that allows customers to access their account and place bets on production of an
identity card. It has proved popular in trials and we aim to introduce terminals throughout our network.

The Group has started trials of slot machines which will be introduced to partners on a revenue sharing basis. Partners will be
encouraged to use Betshop slot machines as part of a package of services and products available to them.

The Group introduced "play for fun" poker to customers, has prepared tutorials and is organising play for fun tournaments. The objective
is to build a large play for fun network that will transfer into play for real.

Skill games and bingo will be introduced before the end of the year on a trial basis.

These initiatvies are designed to offer partners a wide range of products for customers and encourage an increase in customer numbers.

We are delighted to welcome Fabrizio Motterlini as CEO of Betshopitalia SRL. Fabrizio is an experienced gaming operator who was
President of SISAL spa, one of the largest gaming operators in Italy from 1985 to 1999. His contacts and experience will be valuable as we
expand.

Cyprus
The Group has increased the number of outlets in Cyprus to 21 and intends to continue expanding.

Greece
The online marketing has resulted in an active customer base of over 250 and our partner has agreed to spend EUR1m in marketing between
now and 31 December.

Romania
The Group has been unable to find a suitable local partner but we are maintaining our license and a watching brief while we are
focussing our efforts and resources on the Italian, Cypriot and Greek markets.

Regulatory developments
The Italian market is now viewed as one of the best regulated outside the UK and in line with Spain. This has allowed for the
development of a solid betting infrastructure and culture.

The Group continues to monitor other markets and has identified two further markets which appear suitable for the partner model adopted
in Italy.

OUTLOOK
The fourth quarter is the busiest of the year with a full programme of soccer throughout Europe. It is encouraging to note that we have
expanded and strengthened our network and customer base for the start of our busiest season. Also, additional products and revenue-earning
avenues are beginning to make a contribution to profits.

We look forward to announcing our Q4 results on Tuesday, 3 February 2009.

This information is provided by RNS
The company news service from the London Stock Exchange

END

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