Paddy Power showcases stellar growth in management statement

Paddy Power chairman Nigel Northridge told the company’s investors at this morning’s agm that in 2012 the land and online gambling group achieved record turnover of Euro 5.7 billion and operating profit of Euro 136 million.

“Net revenue increased by 25 percent in constant currency and earnings per share grew by 17 percent,” the chairman revealed, announcing a final dividend that makes for a total 2012 dividend of 120 cents per share, an increase of 20 percent.

“Last year’s results also reflected a significant level of investment for the future with over Euro 20 million in start-up losses across four new online ventures, in particular our launch into the Italian online market in May 2012,” Northridge said.

“Paddy Power’s strong growth has continued into 2013, in line with our expectations,” the chairman said. “Group net revenue is up 20 percent in the year to date, driven by 29 percent growth in online revenue and 8 percent growth in retail revenue.

“Sports results have been favourable overall, with the Group’s sportsbook gross win percentage above our normal expectations and above the equivalent period last year, notwithstanding a record number of Irish trained winners at Cheltenham. In fact, football results were so good that we could afford to pay out on Man United as Premier League winners in early February!”

The chairman singled out online operations for special praise, noting that Paddy Power’s net revenue in the sector has grown by 30 percent in Online (ex-Australia) and 28 percent in Australia.

“This was driven by continued strong growth in online active customers of 33 percent, comprising a 32 percent increase in Online (ex-Australia) and 39 percent growth in Australia,” Northridge said. “The strengths of both businesses are being complemented by leading positions in mobile betting, with that component of revenue up 112 percent to an industry-leading 42 percent of total online revenue.

“Online (ex-Australia) has also benefited from the inclusion of Italian activity in the period which added 3 percent to its net revenue growth. We continue to invest in our Italian online operation: our online sportsbook market share increased to 6 percent in the first quarter of 2013, whilst we also significantly expanded our gaming product range in the last two months with the roll out of online games and a download live casino and our mobile casino going live this week.”

Northridge said that the group’s UK Retail activities performed well in a competitive high street environment and a weak economy, with revenues to 2 percent, driven mainly by sportsbook betting, which offset a decline in machine betting.

“Before the cost of free bets, like-for-like gross win per machine per week was down 3 percent to GBP 1,201, the chairman revealed.

“Irish Retail also performed well with like-for-like stakes up 3 percent, albeit revenue declined due to a return to normal sporting results. New shop openings have been strong, with 17 in the UK and 6 in Ireland.”

Paddy Power retains significant financial flexibility with net cash at 12 May of Euro 268 million, or Euro 208 million excluding customer balances.