Full-year results for Irish bookmaker Paddy Power (PAP) demonstrated the importance of a strong online presence in regulated markets - operating profit rose 14 per cent to €136m (£117m), driven largely by the online sportsbook in Ireland, the UK and Australia. However, the mobile betting boom has now moved into a phase where enticing new punters to place bets has led to what management described as "significant marketing inflation".
Expansion into new markets explains the €15.8m increase in online gaming's operating costs as Paddy Power established an Italian operation. The expansion meant losses of €20.5m here and pushed online profits from outside Australia down 2 per cent to €72.7m. By other measures, though, the year was a success for online, with the the number of active punters having risen 44 per cent to 1.6m. Australian gaming growth was particularly impressive - the Aussie division's profits jumped 35 per cent to €30.8m. In the retail business, Paddy's 430 shops in the UK and Ireland grew operating profits by a combined €8.3m to €29.7m.
Chief financial officer Cormac McCarthy said Paddy Power generated enough cash from its operating activities to finance its increased marketing spend - costs rose 33 per cent last year - and that it would use money back offers as a form of proxy advertising.
Broker Investec forecasts pre-tax profits for 2013 of €166m, giving EPS of 287¢ (from 248¢ in 2012).
PADDY POWER (PAP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 6,640¢ | MARKET VALUE: | €3.26bn | |
| TOUCH: | 6,631-6,639¢ | 12-MONTH HIGH: | 6,658¢ | LOW: 4,434¢ |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 565¢* | NET CASH: | €209m | |
| Year to 31 Dec | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2008 | 284 | 81.7 | 146 | 54.0 |
| 2009 | 296 | 67.2 | 122 | 58.4 |
| 2010 | 426 | 111 | 193 | 75.0 |
| 2011 | 499 | 143 | 255 | 100 |
| 2012 | 654 | 139 | 251 | 120 |
| % change | +31 | -3 | -2 | +20 |
Ex-div: 13 Mar Payment: 24 May *Includes intangible asset of €159m, or 324¢ a share £1=€1.16 | ||||
