Interim Results

Paddy Power plc
02 September 2003


                                Paddy Power Plc

             Interim results for the six months ended 30 June 2003


Paddy Power plc, trading as Paddy Power Bookmaker, Ireland's leading off-course
bookmaker, today announced interim results for the 6 months to 30 June 2003.

                                                                 
                           H1 2003         H2 2002         Change 
                              Euro            Euro              % 

Turnover                    453.4m          319.1m             42 
Operating profit              6.8m            9.1m           (25) 
Profit Before Tax             7.2m            9.3m           (22) 
Profit After Tax              6.2m            7.7m           (20) 
EPS                          13.1c           16.3c           (20) 
Cash Balance                 35.1m           29.4m             19 
Interim Dividend              4.3c            3.4c             26 



Commenting on the results John O'Reilly, Chief Executive said:

'The first 6 months of 2003 has seen solid progress in the development of Paddy
Power with significant expansion across all three operating divisions. We are
pleased with the progress of our UK retail operations where we now hold 18
licences and the continued development of the on-line business which we now
expect to be profitable for the year.  Overall the Group is well poised for
continued growth across all channels and geographic markets.  We remain
committed to our core brand attributes of being the fair, friendly and fun
bookmaker offering punters a unique betting experience.  Product innovation and
customer focus will continue to be a key strategic priority going forward. '


Commenting on the results Ross Ivers, Finance Director said:

'We are pleased with the strong turnover growth of 42% that we have seen in the
first 6 months of the year. While operating profit suffered during the period
due to the previously announced adverse racing results, the underlying growth in
the business positions Paddy Power well for the remainder of 2003 and beyond.
With strong cash reserves, constant cost control and a dynamic entrepreneurial
management team, we continue to expand the business prudently and will continue
to seek out new opportunities to drive shareholder return.'


2 September 2003



Issued on behalf of Paddy Power plc by Drury Communications

For reference:

John O'Reilly                         Ross Ivers
Chief Executive                       Finance Director
Paddy Power plc                       Paddy Power plc
Tel: + 353 1 4045936                  Tel: + 353 1 4045912
Mobile: + 353 87 254 1688             Mobile: + 353 87 668 8772

Mark Cahalane/Oonagh Daly             Trevor Phillips
Drury Communications Ltd              Holborn
Tel: + 353 1 260 5000                 Tel: + 44 207 929 5599
Mobile: + 353 87 230 2737             Mobile: + 44 7889 153628





             Interim results for the six months ended 30 June 2003

                              Chairman's Statement


I am pleased, in issuing my first report as Chairman of Paddy Power plc, to
report on another period of excellent progress in the development of your
Company. Turnover for the 6 months to 30 June 2003 grew by 42% to a record
€453m (2002:€319m) through a combination of strong organic growth throughout the
business and expansion of the retail estate in Ireland and the United Kingdom.
As identified in our trading statement in April, operating profit at €6.8m was
down by 25% on the same period last year due to a number of adverse horse racing
results, primarily at Cheltenham and the Grand National.  However, these were
exceptional results and, while adversely impacting operating profit in the six
months to 30 June, will not impact the future profitability of the Company.

The success of Paddy Power has been driven by our focus on our customers and by
consistently delivering on our brand attributes of being Fair, Friendly and Fun.
We remain as focused on these attributes as ever and are committed to
expanding our operations via all channels in Ireland and the UK.

Expansion of the Group has continued unabated with continued growth in our Irish
betting shop estate through new openings, relocations and refurbishments.  The
development of our UK estate is building momentum with good progress in site
finding, licence applications and openings.  Our on-line business continues to
grow customer numbers and we remain confident that it will become a strong
profit contributor to the Group over time.  Our telephone business has seen
solid growth in Ireland.  In the UK this division is still in the early stages
of development but is showing good growth, while gross margins continue to
improve as the division begins to develop critical mass.  These points are
addressed in more detail in the Operations and Financial Reviews that follow.

During the period, the management team has put significant effort into the
development of a 5-year strategic plan.  This plan will enable the Board and
management to clearly identify the strategies for growth over the next 5 years
and to put in place the resources required to deliver that growth.

Paddy Power is progressing a number of initiatives to supplement its horse
racing business with additional sports betting products, including the provision
of separate sports betting areas in our larger retail stores.  This is as a
result of growing customer demand, the high cost of providing the horse racing
product and the limited appeal of horse racing to new customers.

In addition to generating absolute profit growth, expansion in the UK will help
diversify betting risk due to the different product mix and betting patterns in
the UK.  It will also provide income from AWP (slot) machines and fixed odds
betting terminals (FOBT's) which have a lower risk profile than traditional
betting and which are not available in the Irish market.

The call by Horse Racing Ireland for a 50% increase in betting tax in order to
fund extra prize money for wealthy owners is misguided.  The only people who pay
betting tax are shop customers.  People with a credit card can bet tax free
outside of Ireland via the internet or telephone.  A tax increase will only
further divert money outside of Ireland and reduce employment.

We believe that layers on betting exchanges in Ireland and the UK should be
taxed on an equal basis as the bookmakers.  We note that there is as yet no tax
on betting exchanges in Ireland.

Progress on deregulation in the betting and gaming industry in the UK has
continued in 2003 and we welcome the potential abolition of the anti-competitive
Demand Test.  Notwithstanding the objections of the 'Big Three' its removal is
good for competition and therefore the customer.  Paddy Power does not believe
deregulation will lead to a proliferation of betting shops but will in fact
raise standards and lower the number of outlets, as the market will no longer
support poor quality or inefficient outlets.

Investment in people throughout the entire organisation is key to the further
expansion of Paddy Power.  The recruitment, development and succession planning
of both executive and non-executive personnel are increasing focal points for
the Company.  As part of this process we were delighted to welcome Mr Nigel
Northridge to the Board in July as a non-executive Director. His experience will
be a great asset to the business as well as bringing additional independence to
the Board.  The Company also continues to invest in executive management with a
number of senior appointments being made in both Ireland and the UK to support
expansion in both of these markets.  In addition, the approval of the 2003 Long
Term Incentive Plan by shareholders at the 2003 Annual General Meeting increases
our ability to attract, motivate and retain key staff.

Corporate governance is a continuing priority for the Board and we are closely
monitoring the development of guidelines and legislation in Ireland, the UK and
Europe.  The Board is committed to having appropriate corporate governance
processes in place.  It is developing formal internal policies that address,
amongst others, areas such as Board tenure, Directors' assessments and
remuneration, committee responsibilities as well as the reporting mechanisms to
shareholders to accompany these policies.  The Board will make further
announcements on this in due course.

The Board has decided to pay an interim dividend of 4.3c per share on 22
September 2003 to shareholders on the register at the close of business on 12
September 2003.  This represents an increase of 26% and reflects the confidence
the Board has in the Company, its cash position and its desire to have a
progressive dividend policy.

I remain very confident of the prospects for Paddy Power and look forward to
working with my Board colleagues and the executive management team at Paddy
Power as we continue to develop your Company.



Operations Review

Betting Shops

The Group operates 139 (2002: 129) betting shops throughout Ireland and the
United Kingdom as at 30 June 2003.  During the six months to 30 June, five
(2002: three) new outlets were opened in Ireland bringing the total number in
Ireland to 134.  In addition, five (2002: one) shops were relocated while one
(2002: three) was refurbished. The Group also operates four racecourse shops as
well as a stadium shop at Lansdowne Road, home of the Irish Rugby Football Union
and home venue for the Football Association of Ireland.

Consistent with our stated strategy we plan to roll out a test bed of
approximately 12 shops in the UK by the end of 2003.  We are pleased with
progress to date and we continue to further develop the product offering with
each new shop opened.

In the UK, the Group operated five (2002: two) betting shops as at 30 June 2003.
In addition, it has a further six licences that are yet to open giving it a
total of eleven licences at 30 June 2003.  Two FOBT's and two AWP's have been
installed in each premise.

Since 30 June, two further shops have been opened in Ireland bringing the total
in Ireland to 136 at the date of this report.  In addition there have been two
relocations and one extension completed.  In the UK, one new shop has been
opened while seven additional licences have been granted between 30 June and the
date of this report.  This brings the total licences held in the UK to 18 of
which six are open at the date of this report.  A further 14 licence
applications are at various stages of processing and we are hopeful that the
licence hearing dates for the majority will be scheduled before the year-end.
On top of this, the Group is actively pursuing additional premises.

The Group has now installed two FOBT's in each betting shop in the UK.  All new
units will have FOBT's installed as part of their standard fit, in addition to
the existing AWP machines.


Non-retail

During the period, the Group commenced the merger of the telephone and on-line
operations under a single management structure and on a single technology
platform. This will enable Paddy Power to offer a single account to our
customers which can be used to fund bets through any of the non-retail channels.
Completion of this project is expected towards the end of this year.


Telephone

The Group operates a free telephone betting service in both Ireland and the UK.
The Irish business, which has been operating since 1996, has continued to see
strong turnover growth driven by new and existing customers.  The UK business,
which is in the early stages of development, continues to see good growth and
now represents 38.7% of turnover for this division.  Total registered customers
have increased to 55,948 from 45,990 at 31 December 2002, with 31,429 in Ireland
and 24,519 in the UK.  Total active customers (those that have bet in the last
three months) have increased to 22,037 from 14,574 at 31 December 2002, with
11,503 (Dec 2002: 8,600) in Ireland and 10,534 (Dec 2002: 5,974) in the UK.


On-line

The on-line division has continued to make strong progress in the first half of
2003 with turnover exceeding a weekly run rate of €3m.  Total registered
customers have increased to 152,641 from 121,327 at 31 December 2002, with
59,933 in Ireland and 92,708 in the UK.  Total active customers (those that have
bet in the last three months) have increased to 42,730 from 29,660 at 31
December 2002, with 16,497 (December 2002: 10,501) in Ireland and 26,233
(December 2002: 19,159) in the UK.



Financial Review

Turnover

Turnover for the six months ended 30 June 2003 increased from €319.1m to
€453.4m, an increase of 42% with solid growth across all channels.  This growth
has been driven by continued penetration of the Irish market together with our
expansion into the UK.  The UK market accounted for 23% of turnover in the
period.

Turnover in the betting shops was €272.1m (2002: €218.6m), an increase of 24.5%.
Like-for-like turnover increased by 18.7% to €259m from €218.6m.  Average slip
value for the period was €16.55 (2002: €14.55), an increase of 13.7% while slip
volumes increased by 9.5%.

Telephone betting turnover increased by €28.7m across both the UK and Ireland.
Turnover in Ireland was €53.8m (2002: €42.8m), an increase of 25.8% while
turnover in the UK increased by 107%, from €16.3m to €34.0m.  Average bet size
was €65.92 (2002: €66.70). Active customers (those who have bet in the last
three months) were 11,503 (2002: 11,549) and 10,534 (2002: 7,536) in Ireland and
the UK respectively at 30 June.

On-line turnover has continued to see significant growth with total turnover
increasing by 125.8% to €93.4m (2002: €41.4m).  Average bet size was €27.16
(2002: €22.9), an increase of 18.6%. Customer numbers continue to grow with
active customers (those who have bet in the last three months) increasing by
8,742 to 42,730 from 33,998 at 30 June 2002.    Active Euro customers are 16,497
(2002: 13,935) and active Sterling are 26,233 (2002: 20,053).

Other than the World Cup in June 2002 which accounted for approximately €9m of
turnover there were no material events that impact year-on-year turnover
comparisons.


Gross Margin

Gross Margin, measured as bets placed (excluding betting duty) less winnings
returned to customers, increased by 7.8% to €41.9m from €38.8m for the same
period in 2002.

The following gross margin percentages were achieved:

                                                              
Gross Margins         H1 2003        H2 2002        H1 2002

Betting Shops           11.3%          12.4%          13.9%
Dial-a-Bet               6.3%           7.6%           8.3%
On-line                  6.0%           7.7%           8.9%
     

Gross Margin percentages were adversely impacted in the early part of the year
by a poor sequence of horse racing results primarily at the Cheltenham festival
and the Grand National.  While all three channels were impacted, the greatest
impact was on the telephone business.  The impact of these results was that
gross margins were below normal trading levels across all channels for the
period.

As a consequence of the above adverse results and the lower margin being
achieved on the UK telephone business, due to its early stages of development,
gross margins are below the bottom end of their normal full year ranges for the
6 months to 30 June. As there has been no fundamental change in trading, these
adverse results will not impact future periods.


Operating Profit

Operating profit fell by €2.3m from €9.1m to €6.8m in comparison to the same
period in 2002.  An analysis of operating profit is given below:


Operating Profit/(loss)     H1 2003         H1 2002   Increase/(Decrease)
                              €'000           €'000                 €'000
Betting Shops                 7,772          10,750               (2,978)
Dial-a-Bet                    (597)              16                 (613)
On-Line                       (373)         (1,693)                 1,320
Total                         6,802           9,073               (2,271)


Notwithstanding the 42% increase in turnover, operating profits fell across all
three divisions.  This was primarily due to the lower Gross Margin achieved in
comparison to the prior year for the reasons noted above.  Operating costs have
increased by 18% as a consequence of the increased numbers of betting shops in
operation and in fit out, together with higher transaction volumes within the
non-retail channels and general inflation.


Taxes

The corporation tax charge for the six months to 30 June 2003 was €1.1m (2002:
€1.6m) an effective rate of 14.5% (2002: 17%).  This is a decrease of 2.5
percentage points and is due to the lowering of the Irish statutory corporation
tax rate to 12.5%. Paddy Power's effective rate is 2% above the statutory rate
due to a number of non-deductible expenses and its high level of passive income
which is taxed above the statutory rate.


Cash Flow

Net cash flow from operating activities for the six months ended 30 June 2003
decreased by 15.7% to €13.5m from €16.0m.  The reduction was primarily a
consequence of the lower operating profit.  The cash was applied acquiring fixed
assets of €10.2m comprising freehold premises, the fit-out of new and relocated
stores as well as computer equipment.  In addition, dividends of €3.2m and taxes
of €2.4m were paid during the period.  Cash received from the exercise of share
options amounted to €0.7m.  Cash balances at 30 June 2003 were €35.1m compared
to €36.3m at 31 December 2002.  This includes cash balances held on behalf of
customers of €5.4m.


Dividends

The Board has decided to pay an interim dividend of 4.3c per share on 22
September 2003 to shareholders on the register at the close of business on 12
September 2003.

The increase in dividend in a period where EPS fell reflects the Board's
confidence in the future performance of the Company, the short-term nature of
the fall in EPS and the Group's strong cash position.


Company Brokers

The Company is pleased to announce the appointment of Investec, replacing ING,
as joint brokers to the company operating alongside Goodbody Stockbrokers.


Outlook

The outlook for all business channels remains in line with expectations.

Turnover growth from 30 June to 26 August has remained strong across all
channels while gross margins have been in line with seasonal trends.

Further expansion of the Irish betting shop estate is expected in the second
half through new shops, relocations, extensions and refurbishments.  In line
with our stated strategy, licence applications will continue in the UK through
2003 and beyond with up to 14 new licence hearings expected before the year-end.
Licences granted from these hearings, together with those unopened licences
already held, will be rolled out over 2003 and 2004 as our knowledge of the UK
retail market and our operational capacity increases.

The on-line business continues to expand in both Ireland and the UK and has now
traded profitably for several months.  We expect it to trade profitably for the
second half of 2003 and for the year as a whole.  The Group is actively engaged
in evaluating both additional geographic markets and products that can be
delivered through the on-line channel.

The telephone business continues to show excellent turnover growth in both
Ireland and the UK.  As this service reaches the mass market in the UK we expect
that its gross margins will be within normal trading ranges and that the
division will be profitable in 2004.




Consolidated Profit and Loss Account
Six months ended 30 June 2003 - unaudited

                                                                              
                                      Six months    Six months            Year
                                        ended 30      ended 30        ended 31
                                       June 2003     June 2002   December 2002
                                           €'000         €'000           €'000
                             Notes   (unaudited)   (unaudited)       (audited)

  Turnover                2(a) (b)       453,403       319,142         673,788
  Cost of winning bets                 (411,485)     (280,272)       (596,779)
  paid                                                                        
                                     _________________________________________

  Gross profit                2(c)        41,918        38,870          77,009
  Operating expenses                    (35,116)      (29,797)        (59,926)
                                     _________________________________________

  Operating profit            2(d)         6,802         9,073          17,083
  Interest receivable                        487           266             895
  and similar income                                                          
  Interest payable and                      (55)          (75)           (156)
  similar charges                                                             
                                     _________________________________________

  Profit on ordinary                                                          
  activities                                                                  
  before taxation                          7,234         9,264          17,822
  Tax on profit on                       (1,049)       (1,575)         (3,029)
  ordinary activities                                                         
                                     _________________________________________

  Profit on ordinary                                                          
  activities                                                                  
  after taxation                           6,185         7,689          14,793
  Dividends                              (2,053)       (1,603)         (4,809)
                                     _________________________________________

  Retained profit for                      4,132         6,086           9,984
  the period                                                                  
  Retained profit                         31,205        21,221          21,221
  brought forward                                                             
                                     _________________________________________

  Retained profit                         35,337        27,307          31,205
  carried forward                                                             
  ____________________________________________________________________________
  Earnings per Share                                                          
  - Basic                                  13.1c         16.3c          31.38c
  - Diluted                                12.4c         15.1c           29.0c
  Dividend per share                        4.3c          3.4c           10.2c
  ____________________________________________________________________________
 


Consolidated Balance Sheet
30 June 2003 - unaudited
                                                                              
                                        Six months    Six months          Year
                                             ended         ended         ended
                                           30 June       30 June   31 December
                                              2003          2002          2002
                                       (unaudited)   (unaudited)     (audited)
  Fixed assets                                                                
  Intangible assets                            964         1,085         1,025
  Tangible assets                           32,092        22,516        24,994
                                     _________________________________________
                                            33,056        23,601        26,019
                                     _________________________________________

  Current assets                                                              
  Debtors                                    2,421         1,425         1,570
  Cash at bank and in hand                  35,122        29,436        36,373
                                     _________________________________________
                                            37,543        30,861        37,943
                                    
  Creditors (amounts falling                                                  
  due within one year)                    (24,400)      (16,326)      (22,159)
                                     _________________________________________

  Net current assets                        13,143        14,535        15,784
                                     _________________________________________

  Total assets less current                 46,199        38,136        41,803
  liabilities                                                                 
  Creditors (amounts due after one           (282)         (580)         (480)
  year)                                                                       
  Provision for liabilities and              (942)       (1,308)       (1,177)
  charges                                                                     
                                     _________________________________________

  Net assets                                44,975        36,248        40,146
                                     =========================================

  Capital and reserves                                                        
  Called up share capital                    4,775         4,714         4,714
  Share premium                              3,941         3,305         3,305
  Capital redemption reserve fund              662           662           662
  Capital conversion reserve fund              260           260           260
  Profit and loss account                   35,337        27,307        31,205
                                     _________________________________________

  Shareholders' funds - all equity          44,975        36,248        40,146
  ____________________________________________________________________________




Consolidated Cash Flow Statement
Six months ended 30 June 2003 - unaudited
                                                                              
                                          Six months    Six months        Year
                                               ended         ended       ended            
                                             30 June       30 June 31 December            
                                                2003          2002        2002            
                                               €'000         €'000       €'000            
                                 Notes   (unaudited)   (unaudited)   (audited)

  Net cash inflow from                                                        
  operating activities           3 (a)        13,517        16,035      30,435

  Returns on investments                                                      
  and servicing of finance                                                    
  Interest received                              553           266         717
  Interest element of                                                         
  finance lease payments                        (35)          (75)       (149)
                                     _________________________________________
                                                 518           191         568

  Taxation                                                                    
  Corporation tax paid                       (2,420)         (700)     (1,466)

  Capital expenditure                                                         
  and financial investments                                                   

  Acquisition of tangible                   (10,205)       (2,660)     (8,083)
  fixed assets                                                                
  Sale proceeds on                                
  disposal of fixed assets                        22             -          31                            
                                     _________________________________________

                                            (10,183)       (2,660)     (8,052)

  Equity dividends paid                      (3,206)       (1,602)     (3,206)
                                     _________________________________________

  Net cash (outflow)/inflow                                                   
  before financing                           (1,774)        11,264      18,279

  Financing                                                                   
  Capital element of                           (174)         (135)       (213)
  finance lease payments                                                      
  Issue of new shares                                                         
  including                                                                   
  share premium less costs                       697             -            
  of issue                                                                    
                                     _________________________________________

  Net cash (outflow)/inflow      3 (b)       (1,251)        11,129      18,066
  ____________________________________________________________________________



1.  Basis of Preparation

    The financial statements have been prepared in accordance with generally 
    accepted accounting principles under the historical cost convention and 
    comply with financial reporting standards of the Accounting Standards Boards
    as promulgated by the Institute of Chartered Accountants in Ireland.

2.  Segmental Information

    The turnover, operating profit and net assets of the Group relate to
    the provision of betting services in the Republic of Ireland and the United 
    Kingdom. With the exception of five shops, the betting shop estate is based 
    in the Republic of Ireland. The remaining five betting shops, the On-line 
    division and the telephone division are operated out of the UK.

(a) Turnover by Delivery Channel

                                                                    
                        Six months    Six months          Year
                             ended         ended         ended
                           30 June       30 June   31 December
                              2003          2002          2002
                             €'000         €'000         €'000
                       (unaudited)   (unaudited)     (audited)

    Betting offices        272,120       218,578       448,096
    Telephone               87,875        59,192       122,892
    On-line                 93,408        41,372       102,800
                       _______________________________________
                           453,403       319,142       673,788
    __________________________________________________________



(b) Turnover by Region

                                                                
    Ireland and Other      348,917       275,171       570,564
    Great Britain          104,486        43,971       103,224
                       _______________________________________
                           453,403       319,142       673,788
    __________________________________________________________


(c) Gross Profit by Delivery Channel
                                                                 
    Betting Offices         30,810        30,279        58,859
    Telephone                5,500         4,929         9,743
    On-line                  5,608         3,662         8,407
                       _______________________________________
                            41,918        38,870        77,009
    __________________________________________________________


(d) Operating Profit/(Loss) by Delivery Channel
                                                                  
    Betting Offices         7,772         10,750        19,167
    Telephone               (597)             16           312
    On-line                 (373)        (1,693)       (2,396)
                       _______________________________________
                            6,802          9,073        17,083
                       _______________________________________



3.  Notes to the Cash Flow Statement

(a) Reconciliation of Operating Profit to Net Cash Inflow from Operating
    Activities
                                                                              
                                        Six months    Six months          Year
                                             ended         ended         ended
                                           30 June       30 June   31 December
                                              2003          2002          2002
                                             €'000         €'000         €'000
                                       (unaudited)   (unaudited)     (audited)

  Operating profit                           6,802         9,073        17,083
  Depreciation                               3,035         2,894         5,805
  Amortisation of goodwill                      61            61           121
  Increase in debtors                        (915)         (315)         (282)
  Increase in creditors                      4,484         4,322         7,706
  Loss on disposal of fixed assets              50             -             2
                                       _______________________________________
  Net cash inflow from operating            13,517        16,035        30,435
  activities                                                                  
  ____________________________________________________________________________


(b) Analysis of changes in Cash during the period

                                                                             
                                        Six months    Six months          Year
                                             ended         ended         ended
                                           30 June       30 June   31 December
                                              2003          2002          2002
                                             €'000         €'000         €'000
                                       (unaudited)   (unaudited)     (audited)

  Balance at beginning of period            36,373        18,307        18,307
  Net cash (outflow)/inflow                (1,251)        11,129        18,066
                                       _______________________________________
  Balance at end of period                  35,122        29,436        36,373
  ____________________________________________________________________________




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