Bookmakers Paddy Power posted an underlying pre-tax profit of just over €121 million for last year, up 16 per cent on 2010.

The group, which is now Ireland’s largest financial firm by market capitalisation, saw revenue for 2011 rise by 17 per cent to €499 million from €427 million.

Some 79 per cent of its operating profits came from online activities, the company said.

Despite the turbulent economic conditions, the bookmaker posted a record turnover of €4.6 billion last year, up 19 per cent on the previous year.

The group said full-year adjusted earnings per share (EPS) rose 26 per cent year-on-year to €212.3 cents, ahead of the 15 to 20 range it guided in November and the €202 euro cents analysts had predicted.

Paddy Power, whose betting shops in Ireland account for less than 10 per cent of profit after a rapid expansion online and entry into new markets such as Australia, France and Canada, said it expected to expand into the Italian online market later this year.

The company said it hoped to set up in Italy under its own brand before June's European soccer championships.

"Italy is overall the largest (market) in Europe when you combine online and retail and it's actually relatively small at this point in terms of an online market," Paddy Power finance director Jack Massey said.

"We feel there's good potential to flow into the online market from retail. We feel that the regulator has been allowing regulated companies to add more product to their online offering and that can be a driver of growth."

Paddy Power said trading in the first two months of the year had been satisfactory.