Paddy Power hopes that being Ireland's biggest bookie and its expanding online gaming operations will enable it to increase profits despite the recession.
Gross win, or the amount Paddy Power retains from customers after paying out winnings, climbed 7 per cent on a constant currency basis to almost €284m (£255m) in 2008. Paddy Power generates half its income in pounds. So, including the currency effect, the gross win climbed just 2 per cent. The company increased its profit before tax an impressive 14 per cent on a constant currency basis to €79m.
Internet betting operating profits increased 34 per cent to €43m and now represent 57 per cent of the total, compared to 44 per cent in 2007. This offset the declining Irish retail profits, which fell over 18 per cent to €28.3m.
Investec slightly reduced its 2009 EPS forecast to 106¢ (137¢ in 2008), but expects a bounce to 113¢ the following year. The company is being hit mainly by the economic slowdown in Ireland, combined with a doubling in the betting tax from 1 per cent to 2 per cent on 1 May. In the long-term, this could be to Paddy Power's advantage as rival operators close stores.
| PADDY POWER (PAP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,140¢ | MARKET VALUE: | €542m | |
| TOUCH: | 1,140¢-1,141¢ | 12-MONTH HIGH: | 2,505¢ | LOW: 940¢ |
| DIVIDEND YIELD: | 5% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 268¢ | NET CASH: | €76.7m | |
| Year to 31 Dec | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2004 | 134 | 31.3 | 54.1 | 20.6 |
| 2005 | 161 | 31.3 | 54.1 | 24.2 |
| 2006 | 219 | 49.7 | 81.9 | 32.2 |
| 2007 | 279 | 75.8 | 127 | 51.0 |
| 2008 | 284 | 81.7 | 146 | 54.0 |
| % change | +2 | +8 | +14 | +6 |
Ex-div: 11 Mar Payment: 22 May *Includes intangible assets €46.6m, or 98¢ a share £1 = €1.12 | ||||
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