Paddy Power payout to be a one-off

Paddy Power is unlikely to follow up its latest cash bonanza for shareholders, with another bumper pay-out in the foreseeable future.

The betting and gaming giant’s planned €392m cash return to shareholders was approved at its agm yesterday. When the company’s normal annual dividend is included, investors are sharing a windfall of €442m on the back of last year’s performance.

Davy Stockbrokers last month suggested that Paddy Power’s cash returns to shareholders could reach €800m over the next couple of years — via ordinary and special dividends — as it rows back from acquisition spend and grows more organically.

However, speaking after yesterday’s agm, chief executive Andy McCue said another like-minded special dividend is unlikely in the short-term. However, he added the company will maintain a progressive dividend policy.

The company also yesterday updated on trading for the first four months of the year, during which it saw group net revenue grow by 35%, year-on-year, although sports results have not been as good as expected and it had a slightly disappointing Cheltenham Festival, by its own standards.

In Ireland, new legislation allowing longer shop opening times helped boost retail revenue by 10%, while UK revenue was up by 15%. Online group revenue was up by 43%, year-on-year.

The real success story of the period, however, was Australia, where Power’s online business grew revenue by 43%. The review into its underperforming Italian operations has concluded the business has long-term potential, although “substantial operational improvements” will be carried out.

Mr McCue said the Italy business needs to be “right-sized”, with new products needed and brand awareness improved, adding the aim is to replicate the success of Australia in Italy.

Paddy Power is in the midst of adding six more shops to its Irish retail network — via an acquisition from Hackett’s Bookmakers — but is unlikely to take control of any sites up for grabs from Ladbrokes’ downsizing in Ireland, as the two firms’ footprints overlap in many areas.

Mr McCue said the company will be more selective in its retail growth in Ireland, where it is already well-established, than in the UK, where it can grow by up to 30 stores per year for the foreseeable future.

Meanwhile, the company also yesterday announced Smurfit Kappa head, Gary McGann, as its new chairman, with him set to succeed Nigel Northridge, who has served in the post for six years, from the beginning of next month.