Paddy Power chief plays down prospect of more payouts after next month’s €442m dividend

Paddy Power chief executive, Andy McCue, has played down suggestions that it could follow next month's €442 million cash distribution to shareholders with further large payouts in the next few years.

The listed bookie said on Thursday that revenue growth helped offset tougher margins from betting on key sports such as racing and football over the first four months of 2015.

After getting approval at its annual general meeting (agm) on Thursday, Paddy Power will distribute €442 million to shareholders next month by way of a €1.02 regular final dividend and a B-share scheme.

Analysts recently suggested that the group redistribute up to €800 million in total to shareholders over the next two years. Mr McCue said that the company would “maintain a progressive policy” but would also keep its options open.

“We’ve always had a progressive dividend policy,” he said after the agm in Dublin. “I wouldn’t anticipate in the short term, necessarily, another big payout by way of a B-share scheme, because there’s quite a lot involved in working through those, they need to be sizeable to go through that process.”

He added that alongside its dividend policy, Paddy Power wanted the flexibility to take advantage of opportunies “as and when they arise”.

The bookie is borrowing to help fund the payout to shareholders and confirmed that it has arranged €300 million credit with a syndicate of banks. Mr McCue said that it expects that its debt-to-earnings ratio will be one-to-one in the future. The group had €265 million in cash on May 11th.

Asked if Power would be interested in buying any of the 60 or so betting shops that rival Ladbrokes expects to close in the Republic as part of a restructuring, Mr McCue said that the group would continue to be "highly selective" about opening new outlets either in this jurisdiction or the UK.

Over the first four months it opened 8 new shops in the UK and bought two in the Republic.

Paddy Power announced earlier on Thursday that outgoing Smurfit Kappa chief executive, Gary McGann will succeed Nigel Northridge as chairman when he steps down as chairman at the end of June.

Group net revenues grew 26 per cent in the four months ended April 30th, offsetting a run of good racing and football results for the company’s punters, which tightened margins considerably.

Mr McCue said that its margin from this year's Cheltenham national hunt racing festival was 3 per cent, compared to a more usual 8 per cent. He explained that this was down to 13 Irish winners at the meeting plus the success of high-profile Irish trainer, Willie Mullins.

“Given our Irish bias in our business it was a relatively weak Cheltenham festival from our point of view,” Mr McCue said. However, he added that results have improved since then.

Paddy Power has completed a review of its Italian operation, which has been losing money. It hopes to cut these losses this year through a programme of cost cuts, boosting brand awareness and improving its betting and electronic gaming products.