Paddy Power reports another sound year

Online and land gambling group Paddy Power Betfair plc has published its prelims for the year ended December 31st 2017, highlighting:

* Revenue up 13 percent y-o-y to GBP 1,745 million, driven by 16 percent growth in sports revenue;

* Underlying EBITDA up 18 percent to GBP 473 million, higher than previous guidance range (GBP 450 million to GBP 465 million) due to favourable Q4 sports

results;

* Final dividend of 135p per share, resulting in total dividends for the year up 21 percent to 200p per share;

* Continued strong cash generation, with underlying free cash flow up 57 percent to GBP 395 million;

* European platform integration successfully completed in January 2018 and resources now focused on developing customer facing products;

* Additional c.GBP 20 million investment in marketing and customer proposition planned in 2018 to boost the Paddy Power brand in the UK and the Betfair brand in international markets;

* Leading customer propositions and continued strong performance in Australia, Retail and the US have positioned company strongly ahead of regulatory changes;

* Targeting leverage of between 1x and 2x net debt to EBITDA in the medium term to improve efficiency of the Group’s capital structure;

Peter Jackson, Chief Executive, commented Wednesday:

“The business saw continued good growth in 2017, with operating profits increasing by 19 percent. Our Australian and Retail operations performed particularly well, growing profits by over 40 percent.

“Following the successful completion of our European technology integration, Paddy Power customers are now enjoying the fastest sports book app in the market. Our considerable development resources will now be focused on bringing more new products to customers, some of which will be delivered ahead of the World Cup.

“We saw the benefits of investing in our customer propositions in 2017, with Sportsbet launching a number of product features that give extra value to customers and Betfair moving to a clear market leadership position in its football pricing. Now the Paddy Power brand is operating with an improved product, we will increase marketing spend to align with its mass market positioning and step up the retention-focused investment that we started in 2017. At the same time, we also plan to increase our investment in international markets.

“Our scale, leading customer propositions and strong balance sheet mean we are well positioned ahead of the regulatory and fiscal changes expected in the UK, Australia and the USA. Our strengths in operating efficiently and responsibly will enable us to build a business that can sustainably generate shareholder returns over the long term.”

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