Paddy Power Betfair’s (PPB) latest results are getting a lukewarm reaction despite revealing integration work for the combination running ahead of schedule.

Shares nudge 2.6% lower to £96.87 as investors instead focus on a swing to first half operating loss of £47.5 million. The plunge into the red reflecting £195 million worth of costs associated with the tie-up between Paddy Power and Betfair earlier in 2016.

The enlarged business is expecting £65 million of cost synergies next year, which would be 12 months earlier earlier than originally planned.

The bookmaker has posted an increase of revenue by nearly a fifth to £759 million with double digit growth in all divisions in the six months to 30 June.

It says online revenue has increased by 20% to £440 million as a result of additional net gaming revenue of £38 million from Euro 2016.

Revenue in the Australia and retail divisions is up 17% and 12% respectively, which was driven by an increase in stakes on sports competitions.

ETX Capital's Neil Wilson is positive about the merger, highlighting an 18% rise in combined revenue in the first half.

Davy Research says Paddy Power Betfair has performed well with evidence of positive operational leverage. The company beat its forecasts for growth and revenue, driven by an improvement in European gross win margins and the European Championship.


Issue Date: 24 Aug 2016