Paddy Power founders cash in €22m of shares

Two Paddy Power plc founding directors, Mr Stewart Kenny and Mr John Corcoran, cashed in more than €22 million of shares yesterday as part of a €34 million placing of the stock with institutional investors in Ireland and the UK.

The bookmaker chain yesterday announced pre-tax profits for the six months to end June 2003 slipped 22 per cent to €7.2 million from €9.2 million last year. Earnings per share (eps) fell by 20 per cent from 16.3 cent in the first half of 2002 to 13.1 cent this year. Turnover grew by 42 per cent from €319.1 million in 2002 to €453.4 million this year.

In April Paddy Power warned that profits would be hit by the record 10 favourites which won at Cheltenham in March and the Irish-trained Monty's Pass Grand National victory. Finance director Mr Ross Ivers said the bookmaker saw this as a one-off. The firm underscored this view with a generous interim dividend of 4.3 cent, up 26 per cent on last year.

After the results announcement, Goodbody Stockbrokers said it had sold 2.5 million shares on behalf of Paddy Power board's largest shareholder, Mr Corcoran, and 1.2 million for former chief executive and chairman, Mr Kenny. Both men are non-executive directors.

The shares were sold at €6.06, earning Mr Corcoran €15.15 million and Mr Kenny €7.27 million. Private venture capitalist Hg Capital, another pre-flotation shareholder, sold 1.2 million shares, earning it €9 million. Hg's managing director, Mr Ian Armitage, is also a non-executive director, and personally holds 38,189 shares in the firm.

The transactions formed the bulk of the sale of 5.6 million shares worth €33.9 million to Irish and British institutions. A charitable trust, of which Mr Kenny and Power chairman, Mr Fintan Drury, are trustees, also sold 50,000 shares for €303,000.

The €6.06 sale price was a discount of just over 3 per cent on Paddy Power's closing price of €6.25. The stock was 20 cents down on Monday's €6.45 close.

Mr Kenny transferred 400,000 shares, valued at €2.24 million at yesterday's closing price, to his family. These transactions left him with 259,832 shares, or 0.54 per cent of the issued capital. He still has the option to buy 720,000 shares in the firm at €1.16 up to May 1st, 2006. Mr Corcoran holds 2.6 million shares or 5.4 per cent, while Hg Capital holds 1.6 million shares, just over 3 per cent of the firm.

Including yesterday's placing, Mr Corcoran has sold €18.65 million of shares since Paddy Power floated in December 2000, while Mr Kenny has sold €13.97 million. He also handed over €3.25 million in stock to charity last year.

Yesterday's results showed the firm's 139 licensed betting shops made an operating profit of €7.7 million. But this was offset by operating losses of €597,000 and €373,000 in its phone and online betting operations respectively.