Bookmaker Paddy Power was a winner in 2004 with pre-tax profits up 58 per cent to €32.1 million, writes Siobhán Creaton

The first half of 2004 was extremely profitable for the bookmakers when the winnings it took from punters were greater than expected. The pendulum swung back in the punters' favour in the second half, it said, when its earnings were flat.

The chief executive, Mr John O'Reilly, said its earnings were ahead of its own targets although poor sporting results in the fourth quarter, particularly December, kept the figures slightly below analysts' year-end forecasts. Paddy Power shares closed 5 cent lower at €12.85. Investors will receive a final dividend of 12.52 cent, up 46 per cent on 2003.

Mr O'Reilly said the company was entering 2005 in excellent health but cautioned that investors should not expect a similar surge in profits over the next 12 months. It expects that its online betting business will boost earnings and offset sporting results shocks.

Sales at its retail betting shops rose by 25 per cent to €689 million in 2004. Its telephone betting business reported a 33 per cent increase in business to €237 million, while its online betting activities rose by 30 per cent to €240 million.

The gross win, which is the amounts staked less the amount returned to customers as winnings, was up 31 per cent to €88.7 million in the Paddy Power retail shops last year. The return to punters who used its telephone betting services rose by 49 per cent to €19.7 million while the gross win at its online business was 90 per cent higher at €26 million.

Mr O'Reilly said that while all strands of the business had performed well, he was particularly pleased that its online business had come of age. It is the fast-moving part of the Paddy Power group, offering new products such as a casino range.

Last year the average bet at its shops was €18.21, compared to €16.98 in the previous year. The average bet placed by telephone was €83.45, up from €67.64, while the online average was broadly unchanged at €27.09. In 2004 the group processed 37.8 million betting slips at its shops, 2.8 million telephone bets and 8.4 million online bets.

It is expecting to see further revenue growth in the online business this year together with new revenues from online poker and better fixed-odds terminals at its expanding UK operations.

Paddy Power has over 30 outlets in the UK and is focused on growing its share of this market. It expects to open eight new outlets in the UK this year. This business will be profitable in 2005 but the start-up costs will mean it will report a loss. Paddy Power says it will be profitable in 2006.