Addressing the company’s annual general meeting today (Thursday) Paddy Power chairman Nigel Northbridge gave a trading update for the period 1 January to 11 May 2015 versus the equivalent period last year, commenting that the group has enjoyed a good start to the year.
Although sports results have been unfavourable across the sector, this has been offset for Paddy Power by strong top-line growth, particularly in Australia, he revealed.
Other highlights included:
* The group’s Italian business has been reviewed and substantial operational improvements identified. This market has potential over the medium to long term and further investment will yield more returns. With the execution of its plan, Paddy Power expects to achieve some year-on-year reduction in Italian losses this year and again next year, before substantially eliminating losses and moving to profitability thereafter. Italian net revenue increased by 23 percent in the period.
* In Online, sports betting stakes grew by 24 percent and total net revenue by 36 percent.
* By contrast, in Retail, sports betting stakes grew by 14 percent and total net revenue by 21 percent. While sports results have improved relative to the comparative period, they were below normal expectations, most particularly in the Telephone channel.
* Total Group sports betting stakes increased by 21 percent, with net revenue up 28 percent for sports betting and 26 percent overall.
* Weakness in the Euro relative to the comparative period continues to help offset the impact of new taxes and regulations, with Group net revenue up 35 percent on a non-constant currency basis.
* Product releases in the period for Paddy Power.com included partial cash-out and mobile usability enhancements, while in Australia the company launched cash-out, fingerprint log-in and live Victorian racing streaming.
* The company plans to launch a new marketing campaign later this year, and has increased brand investment in Australia to target the current state of flux amongst competing brands.
* The online Australian business reported wagers up 39 percent and net revenue up by 43 percent, driving continued market share gains.
* Sports betting net revenue in the UK and Irish business grew 43 percent, helped by the largest year-on-year gross win percentage rebound amongst group divisions. Notwithstanding this level of increased winnings from customers, sportsbook stakes were up 13 percent, and continued strong performance from mobile and proprietary games drove eGaming net revenue growth of 17 percent.
* As at 11 May, the Group had no debt and net cash of Euro 347 million, or Euro 265 million excluding customer balances. The Group will distribute approximately Euro 442 million to shareholders by 5 June by way of a Euro 1.02 regular final dividend per share and a Euro 8 per share B share scheme. The Group has arranged a related Euro 300 million committed five year revolving credit facility with a syndicate of banks.
Northridge took the opportunity to announce that he is to stand down as chairman and as a non-executive director of Paddy Power at the end of H1-2015. He will be replaced with Gary McGann, who joined the Board last year as a non-executive director.