Paddy Power releases post-close trading update

Ahead of its preliminary results on 7 March, on Monday Paddy Power Betfair plc published a post close trading update for the three month period ended 31 December 2016 (Q4 2016) and the year ended 31 December 2016 (FY2016).

The announcement reveals that group revenue in FY2016 was up 18 percent year on year (+11 percent in constant currency) to GBP 1,551 million, with management expecting full-year group underlying EBITDA to be around the mid-point of the previously guided range of GBP 390 million to GBP 405 million, despite worse than expected gross win margins in November and December.

Since its Q3-2016 trading update, the gambling group has continued to see good sportsbook staking growth, but results favoured the punters, the statement notes. This started with the unexpected US election outcome, which cost the Paddy Power Betfair almost GBP 5 million, and concluded with group European sportsbooks losing money on football bets in the month of December.

Management estimates that the impact on group revenue from the customer friendly results, before any benefit from the re-cycling of winnings, was approximately GBP 40 million in the quarter. The impact on profitability of these results was partially offset by lower than expected marketing and staff costs.

The group’s online gambling operations saw a 3 percent year-on-year decline in revenue due to adverse sports betting results, despite 15 percent y-o-y growth in sportsbook stakes. The benefits of the group’s geographical diversification strategy were highlighted by a strong performance from Sportsbet in Australia, where Q4 stakes growth of 25 percent and revenue growth of 18 percent (both in local currency) helped to partially offset the poor gross win margins in the European business.

Financials Q4-2016

Sports betting stakes GBP 2666 million (Q4-2015 GBP 2091 million);
Net revenue percentage 8.1 percent (Q4-2015 9.4 percent);
Sports betting revenue GBP 299 million (Q4-2015 GBP 268 million);
Gaming GBP 89 million (Q4-2015 GBP 84 million);
Total revenue GBP 388 million (Q4-2015 GBP 351 million).

Financials FY 2016

Sports betting stakes GBP 9890 million (FY2015 GBP 7999 million);
Net revenue percentage 8.7 percent (FY2015 8.8 percent);
Sports revenue GBP 1198 million (FY2015 GBP 1009 million);
Gaming revenue GBP 353 million (FY2015 GBP 309 million);
Total revenue GBP 1551 million (FY2015 GBP 1318 million).

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