The gaming goliath that is Paddy Power Betfair (PPB) flexed its muscles with double-digit revenue growth in each of its four divisions during the first half. On a pro-forma basis, which assumes the merger had happened at the start of 2015, total net sales rose nearly a fifth to £759m thanks to a 21 per cent rise in sportsbook stakes to £4.81bn. The costs of the merger, listed as a £195m separate item, pushed the group to an operating loss. But the underlying figure, which excludes this, rose nearly 40 per cent to £148m. A 2.3 percentage point rise in underlying cash profit margins helped here.
A strong Euro 2016 generated total sales of £38m for the group but the Cheltenham Festival, which all bookies will want to forget this year after a flurry of punter-friendly results, meant overall sportsbook net revenue percentage for the half was approximately 50 basis points lower than would otherwise have been expected.
Total operating costs rose by 14 per cent thanks to factors such as increased marketing spend and new taxes such as Irish point of consumption tax. But management said £65m of cost synergies should be seen in 2017, a year earlier than planned.
Analysts at Davy expect pre-tax profits of £307m for the year to December 2016, leading to EPS of 307p. compared with £223m and 418p in 2015.
PADDY POWER BETFAIR (PPB) | ||||
---|---|---|---|---|
ORD PRICE: | 9,975p | MARKET VALUE: | £8.36bn | |
TOUCH: | 9,970-9,980p | 12-MONTH HIGH: | 10,850p | LOW: 5,366p |
DIVIDEND YIELD: | na | PE RATIO: | 98 | |
NET ASSET VALUE: | 5,073p* | NET CASH: | £2m |
Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)** |
---|---|---|---|---|
2015 | 387 | 60.3 | 109 | na |
2016 | 709 | -45.9 | -68 | 40.0 |
% change | +83 | -176 | -162 | - |
Ex-div: 8 Sep Payment: 30 Sep *Includes intangible assets of £4.52bn, or 5,393p a share **Pro forma figures, excludes special 12p interim paid on the merger in February 2016 £1=€1.17 |