Gala Coral swings to interim loss amid rising costs and poor football results

Mixed horse racing and football results, along with rising costs, saw bookmaker Gala Coral swing to a loss in the first half of the year.

In the six months to the end of April, the London-listed group, which is in the process of being taken over by sector peer Ladbrokes in a £2.2bn (€2.8bn, $3.2bn) deal, swung to a £49.8m loss compared to the £103.4m profit it posted in the corresponding period in 2015.

A sharp increase in operating expenses, which surged 67% year-on-year to £318.8m, was the main factor behind the company swinging to an interim loss. The rise in expenses was largely due to "annual salary increases, inflationary increases on some content contracts and a one-off investment in staff training to implement new customer protection and anti-money laundering measures."

Softer horse racing stakes and a string of disappointing results in the Premier League and Italy's Serie A also contributed to the losses, although Coral added football results improved compared to the "adverse football margins" recorded over the Christmas period.

Along with other bookmakers, Coral endured a torrid time at the Cheltenham Festival in March, its worst gross win margin since 2003, as a number of winners romped home, costing bookies millions in the process.

However, Coral said the loss was "largely offset" by a strong performance at the Grand National, which saw Rule The World win at 33-1.

Revenue, meanwhile, increased 13% year-on-year to £606m, driven higher by a sharp increase in sports net revenue, which surged 108% to £32.7m as sports stakes grew 39% to £171.0m. Gaming net revenue, meanwhile, rose 38% compared with last year to £53.4m, driven by cross-sell from sports into gaming and high levels of multi-channel play.