Merger Costs See Paddy Power Betfair Slump to a Loss
Gambling giant Paddy Power Betfair announced a £47.5 million loss in the first-half of 2016 causing shares in the company to fall 2.6 percent to £96.90 per share.
The company made a profit of £106.5 million a year earlier, but the cost of the merger between Paddy Power and Betfair weighed in at £195.1 million, of which £29 million was associated with advisory fees.
Although Paddy Power Betfair recorded a loss, the rest of its financial figures were positive, and the company is in excellent health.
Its sportsbook stakes increased 21 percent, total net revenue increase by 18 percent to £759 million, gross profit soared by 19 percent to £584 million, and underlying operating profit stood at £147.6 million, an increase of 39 percent.
Operating costs also increased with a 31 percent rise in sales and marketing costs. However, the company forecast it would save £65 million from cost-saving synergies by next year, up from the £50 million it estimated from 2018.
Commenting in a statement to the London Stock Exchange, Breon Corcoran, the Chief Executive of Paddy Power Betfair, said: “Paddy Power Betfair has sustained good momentum through a period of considerable change. The restructuring is now largely complete, and the merger synergies are being delivered ahead of schedule.
“We are creating a world-class operation by exploiting the unique assets and capabilities of each legacy business, particularly in the key functions of technology, marketing and trading.”
“While our industry remains highly competitive and is exposed to the prevailing economic and regulatory environments, our strong market positions, increased scale and enhanced capabilities position us well for sustainable, profitable growth.”
Corcoran also revealed Paddy Power Betfair has been looking at buying some of the betting shops currently being made available by Gala Coral and Ladbrokes. Coral and Ladbrokes are themselves consolodating in a £2.3 billion merger, but competition regulators have demanded between350 and 400 shops owned by the two companies be sold to see the deal completed.
However, Corcoran stated acquiring such betting shops is not high up in the company’s priorities due to the continued integration of Paddy Power and Betfair, but “if the right assets came up at the right price, then we’d be very well positioned to do that.”
Lead image courtesy of androidslots.co.uk