The Irish bookmaker announced its interim results for the six months ended 30 June 2006, which saw a 27% increase in turnover up to EUR 878m with growth across all channels and a 30% rise in gross win up to EUR 105m boosted by an 83% increase in win from online gaming and FOBTs. The operating profit was up 11% to EUR 19.6m and the profit before tax was up 12% to EUR 20.5m.
The profit growth is particularly strong in the context of the firm\’s decision to introduce tax-free’ betting into the Irish betting shops six months early.
The non retail division, which includes online betting and telephone betting, increased its operating profit by 16.2% to EUR 12.9m, of which EUR 9.7m from the online channel.
During the first half of 2006, the online channel achieved significant growth in total active customers, which were up by 80% to over 133,000, including 96,000 sports betting customers, 15,000 gaming customers and over 22,000 multi-product customers.
The amounts staked online on the sportsbook increased by 52.7% to EUR 235.0m. Bet volumes grew 56.6% to 8.5m while the average bet value decreased 2.5% to EUR 27. The average gross win percentage during the six months fell to 7.6% compared to 8.4% in the same period in 2005 and a guided range of 8.0% to 9.0%. Nonetheless as a consequence of the very high turnover growth the overall gross win was up 37.5% to EUR 17.8m.
The German language online sportsbook launched in April has been progressing in line with expectation, while the sportsbook product range has been expanded to meet continental European preferences with the inclusion of ice-hockey, basketball and additional soccer coverage.
The online channel also generates gaming revenues from casino products, gaming products and poker. Revenue from these sources, representing the operator’s rake, increased by 75.8% to EUR 12.9m. Growth was achieved across all three product categories, but it was particularly marked in poker, due to the sponsorship of the 2006 Irish Open poker tournament.
Product expansion in the gaming area also continued with the launch of ‘reverse auctions’ in January and online bingo in July.
The amounts staked within the telephone channel grew by 21.5% to EUR 155m. The average stake per bet increased by 11.6% to EUR 99, while bets grew 8.8% to 1.57m. The average gross win percentage during the six months was 8.0% compared to 8.6% in 2005 and a guided range of 8.0% to 9.0%. Gross win grew from EUR 11.0m to EUR 12.4m reflecting the strong turnover growth.
In the retail division, which operates 205 betting shops across Ireland and the UK, the amounts staked grew by 18.0% to EUR 475m. The average stake per slip increased 9.6% to EUR 20, while the number of slips grew 7.6% to 23.3m. Gross win, including income from fixed odds betting terminals in the UK estate, increased by 24.6% to EUR 61.8m. The gross win percentage in the retail sportsbook was 12.5% compared to 12.0% in 2005. The guided range remains 11% to 13%.
“Our business has grown substantially in the first six months of the year. Turnover, gross win and profits have grown in each of our three divisions and, in addition, we have launched three more new businesses. We look forward to the rest of the year and beyond with confidence,” commented CEO Patrick Kennedy.
“The business continues to grow strongly in the second half of the year, although as is often the case in the months of July and August gross win percentages have been somewhat weaker than in the first half. Subject to the volatility that could arise from sporting results, the Group remains on track to deliver its targeted operating profit for the year, in line with consensus markets forecasts, which would represent around 40% growth on last year,” added Chairman Fintan Drury.
Chief Executive Patrick Kennedy said that Paddy Power was also interested in acquiring a casino license in Ireland should the reform proposed by Justice Minister Michael McDowell go forward.
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