Paddy Power CEO sets out stall with bumper shareholder return

By Padraic Halpin DUBLIN (Reuters) - Paddy Power will return 392 million euros (285 million pounds) to shareholders after the Irish gambling company could not find any compelling acquisitions to spend its cash on following a year of record profit growth. The move to hand shareholders back 8 euros a share, on top of a 13 percent increase in full-year dividends, pushed shares 8 percent higher and comes after Chief Executive Andy McCue took over in January following Patrick Kennedy's ten years in charge. The cash return is equivalent to more than 10 percent of the market value of the bookmaker and moves it from a net cash position to one of net debt of around one times earnings before interest, taxes, depreciation and amortisation (EBITDA). "All we're saying is that right now, nothing looks better than our organic strategy. That may change," Chief Financial Officer Cormac McCarthy told Reuters in a telephone interview. "Giving back money to shareholders and taking on very modest debt doesn't mean we've no flexibility. We could gear up to three times, we're only gearing up to between zero and one times and that debt will pay down very quickly if we want it to." One of the best performing stocks in Europe over the last five months, Paddy Power shares were 8.65 percent higher at an all-time high of 72.9 euros by 0850 GMT. McCue, the former head of Paddy Power's UK and Irish retail operations, said a business reorganisation would include a moderation in headcount growth, with economies of scale set to fund increased in-house product development. Some secondary products including Paddy Power In-Play, a betting product it sought to roll out on Facebook, have been discontinued. Paddy Power will also review its Italian business, which is seeing slower than expected growth. Asked if the company was committed to Italy which it entered in 2012, McCarthy said it would take "a good hard look". Paddy Power, which has more than doubled annual profit since 2009 through overseas expansion and a stronger online performance than rivals, said its operating profit rose 19 percent to 163.8 million euros last year. That was ahead of the 162.3 million forecast by analysts and, like British rival William Hill , represented record profit growth, helped by last year's soccer World Cup -- the industry's largest event. McCue said 2015 had started well, with sportsbook stakes up 18 percent online and 8 percent year-on-year in shops. "McCue has outlined his strategy, and at first look we like what he is saying," said Goodbody Stockbrokers' Gavin Kelleher. (Editing by Louise Heavens and Mark Potter)