Paddy Power Betfair on Monday reported revenues were up by 89 percent during its first year as a merged company, despite costs associated with the merger that ultimately dragged down its bottom line.
While revenues soared to £1.5 billion ($1.83 billion) in 2016, these figures were tempered by one-off merger-related payments of £116 million ($141 million), which weighed heavily on its operating profits.
These were down to £15 million ($18 million) from £125 million ($152 million) a year earlier.
Since Paddy Power and Betfair only finalized their £7 billion ($8.5 billion) merger in February 2016, of course, comparative figures for 2015 have been calculated as though they were merged entities in that year.
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Paddy Power and Betfair created one of the biggest, if not the biggest, online gambling powerhouses in the world when they agreed terms to join forces in September 2015.
And Breon Corcoran, chief executive of the enlarged company, said Monday that the implementation of the merger, and the integration of the two companies, was ahead of schedule.
“2016 was a transformational year for Paddy Power Betfair with much of the integration of the businesses completed sooner and more efficiently than expected,” said
“We have created a business with considerable scale that is stronger and better able to compete than either of the individual legacy companies. The group is well positioned to deliver sustainable, profitable growth.”
With growth almost doubling in its first year, Paddy Power Betfair is unlikely to lose much sleep over those profit-crunching one-off payments, especially when it expects to benefit this year from an estimated £65 million ($79 million) in cost-saving synergies generated by the merger.
Some of those savings come, inevitably, in the form of job cuts. Six hundred and fifty of the combined company’s 7,200 workers lost their jobs last summer, but Corcoran says the company is hiring again.
“People were very focused from the start in maintaining momentum and continuity and getting on with it,” he told the Financial Times. “It hasn’t been just about job cuts. Although there were redundancies last summer, we’ve been hiring consistently since then and we are on or about flat headcount from 13 months ago [when the merger completed].”
The marriage of the British company, Betfair, to Ireland’s Paddy Power’s has been the biggest merger so far of a wave of consolidation within UK and European regulated gambling market.
Gambling companies are seeking to achieve greater scale and ease pressure from the trend of increased taxation and regulation over the past five or six years.