Winner alright! Paddy Power records double digit growth in earnings in 2017
Revenue at booking making giant Paddy Power Betfair increased by 13pc year-on-year to £1.7bn (€1.9bn), driven by a 16pc growth in the company’s sports revenue.
Revenue growth included a £39m benefit from the translation of non-UK revenues due to the weakness of sterling in the first half of the year relative to 2016. On a constant currency basis, revenue growth was 10pc.
In the company’s annual results released this morning, earnings before interest, tax, depreciation and amortisation (EBITDA) expenses had increased by 18pc in 2017 to £473m – higher than the company’s previous guidance range – due to what it described as “favourable” sports results in the final three months of 2017.
Operating profit at the company was up 19pc year-on-year to £392m.
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In its online business the company saw its underlying operating profit increase by 5pc to £268m.
Meanwhile the company, which on Monday announced that its chief financial officer, Alex Gersh, was to step down, saw it free cash flow increase by 57pc year-on-year to £395m.
“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,” Peter Jackson, who took over as chief executive in January, said.
“Our strengths in operating efficiently and responsibly will enable us to build a business that can sustainably generate shareholder returns over the long term."
In announcing the results Paddy Power said that is European platform integration had been successfully completed in January 2018, and resources were now focused on developing customer facing products.
UK & Ireland
Revenues from UK shops increased by 11pc and while Irish shops saw revenues increase 8pc in the euro, with the company reporting total revenue of £1bn from the two markets.
Paddy Power, which operates 626 betting shops across the UK and Ireland, said that it had allocated around an additional £20m investment in marketing and customer proposition planned in 2018 to boost its brand in the UK, and the Betfair brand in international markets.
During the year the company opened 11 new shops in the UK and three in Ireland.
In respect of the Gambling Control Bill that the Irish Government is working towards introducing, the company said that it “remains supportive of the bill and its aim to introduce into Irish legislation, regulation in line with international best practice.”
In Australia, where the country is likely to see the widespread introduction of point of consumption taxes in 2018, EBITDA increased by 42pc year-on-year to £139m.
Going forwards the company said that the business will now be managed by three regional CEOs, reporting directly to the group CEO, which it said would simplify decision making and “facilitate an increased focus on each brand's identity and customer proposition.”
The company said it would pay a final dividend of 135p per share, resulting in total dividends for the year up 21pc to 200p per share.