Paddy Power to double UK outlets

LISTED BOOKMAKER Paddy Power plans to double its British operations with an expansion to Glasgow and Manchester from London following a year of near 60 per cent profit growth.

The company yesterday said that operating profits grew 59 per cent to €72.1 million in 2007 from €45.5 million the previous year. Earnings per share grew at a similar rate to 127.4 cent from 78.6 cent over the same period.

Announcing the results yesterday, chief executive Patrick Kennedy said the group was planning "to expand our UK operations beyond the M25 and out of London".

He said the group is planning to open shops in Glasgow and Manchester and intends doubling the number of outlets in its British estate to 120, from 58, over three years.

Last year, its UK betting shops delivered a trading profit of €300,000, compared with a €6 million loss in 2006. However, €1.2 million in costs from the closure of some shops meant the business made a €900,000 loss.

Overall, the total amount staked by its customers last year grew 13 per cent to just over €2 billion. Of this, the bookmaker won €279 million, a 28 per cent increase on the €218.7 million won from punters in 2006.

The difference between the amount staked by the bookmaker's customers and that paid out to them on winning bets is known as the gross win.

The company's overall gross win margin in 2007 was close to 14 per cent, meaning that for every €1 staked by customers, they got just over 76 cent back.

A key driver of growth in 2007 was sporting results that went against punters, particularly in the first half of the year.

Yesterday, Mr Kennedy said that profit growth in the first six months was 100 per cent. This dropped back to 21 per cent in the second half.

Mr Kennedy said the run of good results - from the bookmaker's point of view - was one of the best for 20 years and was from that point of view exceptional.

Examples included a string of fancied horses beaten at Cheltenham and a drawn result at the final whistle in the English FA Cup final between Manchester United and Chelsea.

Although the latter won the game in extra time, most football results bets are on the basis of 90 minutes, meaning that punters backing one team or the other lost.

Operating profits from its betting shops in Ireland and Britain more than doubled to €33.7 million last year from €16 million in 2006.

Over the same period, its online division delivered 36 per cent growth to €32 million from €23.4 million.

The telephone business delivered 7 per cent growth in operating profit to €6.4 million.

The group had cash balances of €87.9 million at the year's end. It intends paying shareholders a full-year dividend of 51 cent.

Paddy Power: results

Turnover: €2bn (+13 per cent)

Gross win: €279m

(+28 per cent)

Operating profit: €72.1m (+59 per cent)

Basic earnings per share: 127.4c (+62 per cent)

Full year dividend: 51c (+58 per cent)

SUMMARY

A run of results at last year's Cheltenham racing festival helped ensure a record-breaking first half.  Despite golfer Pádraig Harrington's British Open win and Irish racehorse Dylan Thomas' victories at Ascot the bookmaker ended the year with operating profits up 59 per cent at €72.1 million.