(ShareCast News) - Paddy Power posted a 31% rise in interim pre-tax profit as revenue grew strongly across the company's online and retail divisions, as it announced an agreement in principle to the key terms of a possible merger with Betfair.Pre-tax profit for the six months ended 30 June came in at €80.5m from €61.6m in the first half of last year, while net revenue rose 25% to €527.8m.Operating profit was up 33% to €80m and the company lifted its interim dividend by 20% to 60 cents per share.Paddy Power said the strong performance was broad-based, although Australia was the standout with reported operating profit there up 78%.In the online division, revenue grew 34% to €345 million, with sportsbook up 42%and gaming up 14%, while operating profit for online rose 45% to €70m.Paddy Power said it expects full-year 2015 operating profit to be ahead of 2014 and the consensus market forecast.Chief executive Andy McCue said: "We have made substantial progress implementing the strategy we set out in March, with further payback to come from new mobile product releases, refreshed marketing campaigns and efficiency gains. We now expect full year 2015 reported operating profit to be a mid to high single digit percentage above 2014 and the consensus market forecast."Also on Wednesday, Paddy Power and Betfair said they have agreed in principle to the key terms of a possible merger that would create a combined group with revenues of over £1.1bn.