Mullen hails TRP deal as Ladbrokes Coral issue trading update

"Sensible and sustainable" was how Ladbrokes Coral chief executive Jim Mullen described last week's deal with betting shop channel The Racing Partnership (TRP) as the bookmaker issued a trading update on Thursday.

The media rights agreement ended a commercial stand-off with TRP that had dragged on since the start of the year and had meant a blackout of some race meetings in the company's shops.

A weak performance from the company's retail sector was one of the features of the update, but it was offset by a better performance from digital betting while synergies from the merger of the two brands have increased to £150 million from £100m.

Mullen said: "I am comfortable and happy with a strong overall performance.

"I think you have to look at this one in the round, and overall we're in a good place with some of the planned and considered approaches we took."

The end of the football season had been "tough" according to Mullen, who said the amount of winning favourites had gone in punters' favour.

'We must be doing something right'

He added: "It went the customers' way but we are seeing our sportsbook stakes in digital are up 23 per cent versus last year so we're seeing the stakes going back in. We must be doing something right on product proposition."

Digital net revenue for the first half of the year was 17 per cent ahead of 2016 while sports betting revenue in that division was up 25 per cent.

However, in the company's retail estate net revenue was six per cent behind last year with over-the-counter net revenue 11 per cent down and gaming machine net revenue one per cent lower.

Over-the-counter stakes were seven per cent down which the company said had been impacted by changes to gross win margin in Ladbrokes shops and not having TRP.

Mullen said they were seeing nothing in retail "that is a surprise to us" and that the company had taken a "planned and considered approach" to the estate.

"It's hugely cash generative and profit can be yielded from this retail estate if you make the right decisions," he added.

"Previously Ladbrokes' horse margin was below market. We have restored that.

"That restoration approach obviously has an effect on stakes and therefore revenue so that is one reason why the revenue has been impacted. However, that has a positive impact on profitability, so that was planned and considered."

'Right thing for our customers'

Mullen conceded not having TRP for most of 2017 had hit stakes and revenue but that it had been positive for profits.

He added: "In media rights we think – and I've said this before – if sensible minds can get together we can resolve all of the differences between bookmakers and racing. I think this is an example of that.

"I think it's an equitable deal and the right thing for our customers, which is most important. We are a bookmaker and we wanted the pictures back in the shops.

"It's on a revenue share basis, which is far more sensible and sustainable for the sector and for racing, so we're delighted with that."

The firm's update appeared to go down well in the City.

Analyst Gavin Kelleher of Goodbody said in a note: "Overall this update should be well received.

"While the performance in UK retail is weak, this is being offset by strong growth in digital and the increased cost synergy delivery."

The bookmaker's share price reflected that reception with the firm's stock closing at 126.70p, up 7.7p or 6.47 per cent, on Thursday.