Bookmaker Paddy Power doubled profits in 2002 on the back of a solid performance by its betting offices and a sharp fall in losses at the online operation.

Operating profits were down at the telephone-betting division due to the start-up costs incurred by the British division.

Pre-tax profit for the group over the 12 months rose 96 per cent to €17.8 million, with earnings per share growing by the same amount to 31.38 cents. Turnover was 46 per cent ahead of 2001 at €673.8 million. Operating expenses were 25 per cent higher at almost €60 million.

Analysts welcomed the figures, which were marginally ahead of most recent forecasts, and several intend to revise upwards projections for the company's future performance.

Fears that the introduction of the euro would hit the size of stakes proved unfounded with punters betting an average of 12 per cent more per bet to €15.29 at bookies during the year. The phone operation saw a 6 per cent rise in stake size, while stake size fell in the online sector, which moved into the mass market and saw a dramatic increase in business volume.

Margins remained within the company's usual parameters, apart from the internet division, which outperformed. It yielded a gross margin of 8.2 per cent and the company has raised its guidance on this area by one percentage point to between 7.5 and 8.5 per cent. Betting office margins were 13.14 per cent, with phone operations returning 7.9 per cent.

The phone and online operations recorded the sharpest rise in sales, and chief executive Mr John O'Reilly said the company saw online operations moving into profit by the end of the current year.

"We always said the online service would break even in 2003 and we remain confident this will happen," he said.

Mr O'Reilly said the current year had started well for the company. "There is an ongoing fear of war in Iraq and we remain a little cautious," he said.

Looking ahead, the company continues to see growth in its Irish betting-office chain, which is the core profit generator for the business. It also sees the British betting-office operation becoming a significant part of the business over time. It will open 10 new betting offices in Ireland in addition to relocating, extending or refurbishing all existing branches.

It has recently opened its first betting office in Britain and hopes to have 12 clustered around London by year-end.

Executives dismissed recent rumours of a share placing, which had hit its share price. The company has doubled the final dividend to 6.8 per cent.