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Ladbrokes Coral chief: relationship with racing best I've seen

Jim Mullen: 'There isn't really a major blocker that is stopping us going in the same direction'
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Relationships between the betting industry and British racing are the "best I've seen", according to Ladbrokes Coral chief executive Jim Mullen.

Mullen was speaking as the company unveiled their financial results on Thursday for the first half of the year.

Group operating profit rose seven per cent to £158.3 million compared to the same period last year.

That was driven by their digital performance, with net revenue rising 17 per cent to £374.5m, but retail net revenue of £697.2m was £41.3m or six per cent behind last year, with over-the-counter stakes down ten per cent.

A media rights stand-off between the company and new betting shop channel The Racing Partnership (TRP) meant Ladbrokes Coral were unable to show racing from a number of tracks in their betting shops for much of this year.

'Period of goodwill'

However, a deal was completed in July that Mullen said boded well for the future, although he told analysts racing's profitability had fallen while the direct costs of showing the sport in betting shops had risen by 70 per cent since 2008.

He said of the relationship with racing: "I think in my time as chief executive, and the last seven or eight years as a senior executive in the sector, this is the best I've seen it.

"There isn't really a major blocker that is stopping us going in the same direction. I think the key thing now is using this period of goodwill to build some momentum for both bookmakers and racing.

"There are a couple of conversations going on so we're in a fairly decent place and we're encouraged by it."

The deal with TRP is on a revenue share basis, and Mullen added: "We are now sharing in the product because it's revenue based, so if there's an upside we both see the upside and if there's a downturn we both see the downturn and it basically means we're both encouraged to make it work."

Full Ladbrokes Coral results

Ladbrokes Coral completed their £2.3 billion merger last year and the company said synergies from that were now expected to be £150m per annum by 2019, more than double the original estimate.

Mullen said: "We delivered on the operational and financial targets while going through the integration of a merger.

"There was a concern about whether we could do both and we're encouraged to say that we have."

Ladbrokes Coral also announced they were doubling their interim dividend to 2p.

Mullen added: "What's interesting for me is not the absolute number but that it actually demonstrates the confidence that we can pay it and continue to deliver on the business. I think that's a real confidence boost for observers and shareholders."

Ladbrokes Coral, along with other betting shop operators, are awaiting the results of the government's review of gaming machines, which is expected this autumn and could result in a cut in maximum stakes from £100 to as little as £2, a move the industry has warned would lead to widespread shop closures.

Mullen said: "The message is that I think everyone – not just the bookmakers but our shop colleagues, Treasury and racing – just need certainty.

Unsuccessful takeover bid

"We need to get through this and move on so we can actually plan our business, pay our taxes and let our colleagues know they've still got jobs."

It was reported recently that Ladbrokes Coral were the subject of a second unsuccessful takeover bid from online gambling operator GVC Holdings.

Chairman John Kelly told analysts he would not comment on the reports, but added: "However, it would be remiss not to say that as a board we have a duty to consider proposals that come in where we feel there may be merit for the business and its shareholders."

Analysts at Goodbody said Ladbrokes Coral's digital performance had been "impressive" and that trends in over-the-counter business in betting shops "may be improving".

They added: "As we have outlined previously, management is doing a very good job with the factors within its control. However, the investment case remains heavily reliant on the outcome of the triennial review."

The company's share price ended the day up 0.9p at 118.5p.

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I think the key thing now is using this period of goodwill to build some momentum for both bookmakers and racing
E.W. Terms