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Ladbrokes Coral left satisfied as pictures row fails to dent profits

Ladbrokes Coral chief executive Jim Mullen
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Ladbrokes Coral's ongoing commercial dispute with Arena Racing Company over betting shop pictures has had a "favourable" impact on the company's profits, chief executive Jim Mullen said on Tuesday.

The stand-off over new betting shop channel The Racing Partnership (TRP) means that action from six British courses is not available in the group's shops, but Mullen conceded their customers wanted to see racing and said he hoped for a resolution in the coming months.

Mullen was speaking as Ladbrokes Coral unveiled their first results since completing their merger in November.

The costs of the merger meant the company made a reported operating loss of £202.4 million in 2016. However on a pro forma basis, which assumes the merger had taken place by the start of 2016, operating profit was up 22 per cent to £264.3m, with revenues up 11 per cent to £2.35 billion.

Ladbrokes and Coral betting shops - along with Betfred - have not signed a deal with TRP, which represents 15 Arc courses and seven independents.

Six Arc tracks - Southwell, Wolverhampton, Lingfield, Doncaster, Windsor and Worcester - moved from SIS to TRP on January 1. Fakenham, Hexham and Towcester join them in May, with the remainder moving to TRP from New Year's Day 2018.

It is estimated the dispute could cost Arc around £16m in media rights over the course of this year if it is not resolved, but the racecourse group has stood firm and issued legal proceedings against Ladbrokes Coral for using off-tube commentaries on the races involved which have since been discontinued.

However, while Ladbrokes Coral revealed over-the-counter stakes this year had been five to six per cent behind 2015, that continued a trend from the last quarter of 2016 and the bookmaker said the loss of betting income was more than made up for in savings on media rights.

Mullen told the Racing Post: "This is only a commercial issue. What we do have to say is from a profit perspective we're not seeing any impact. In fact, it has been favourable.

"However, I like racing, at Ladbrokes Coral we support racing, and customers like to see racing in the shops.

"We want to get it fixed and I'm sure sensible minds over the coming months will get to a resolution on this."

Mullen said he wanted to work with racing "because both our interests are aligned", not least in advance of the government's Triennial Review of gaming machines which the betting shop sector has claimed could cost the sport £290m by 2020 if stakes are subject to a severe cut.

Former culture secretary John Whittingdale warned the sector last week to expect bad news from government, which Mullen said had surprised him.

"The reason why is that the construct of the Triennial is a call for evidence," he added.

"We presented the evidence and the evidence does not state there is a connection between stakes and prizes and problem gambling."

Mullen said his responsibility was to his shareholders, colleagues and customers, adding: "We need to put the data forward and say what the impact of a review which is not based on the evidence presented would be."

In contrast to 2016, results at this year's Cheltenham Festival favoured bookmakers.

But Mullen added: "It was the opposite last year and these things come in phases. We have the Grand National coming up, which is always a sleepless few nights waiting for that to happen, and we've had real peaks and troughs in football."

Looking at the company's results overall, Mullen said: "We are showing positive growth in every division. It's a positive set of results."

Analysts appeared to be of the same view, with Gavin Kelleher of Goodbody saying in a note: "While the triennial review remains a key driver of the investment case we think management deserves credit for performing strongly on the issues that are within its control."

The company's shares, however, ended the day down 2.3p at 133p.

This is only a commercial issue. What we do have to say is from a profit perspective we are not seeing any impact. In fact it has been favourable
E.W. Terms
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