26th February 2016
Bookmakers William Hill’s profits may have been hit by increased taxes but the share buyback plan is good news for shareholders.
In its full year results, reported this morning, William Hill said revenue for the year had slipped 1% and operating profit was down 22% – both shy of market expectations.
However, the news isn’t all bad for shareholders, said Ian Forrest, investment research analyst at The Share Centre, as William Hill is planning a £200 million share buyback that will increase its dividend payout.
‘The group said it had been hit by increased taxes on its UK online and retail units,’ said Forrest.
‘However, and most importantly, shareholders should be pleased with William Hill’s review of its priorities. It intends to remain focused on strengthening its balance sheet and generating good cash flow, which should allow it to pursue a £200 million share buyback programme in 2016. Furthermore, investors should appreciate that the company also announced that it will be increasing its dividend pay-out ratio from 40% to 50%.’
Forrest added that William Hill ‘continues to deliver a strong return on capital employed and as a result, we continue to recommend William Hill as a ‘buy’ for medium risk investors with a balanced portfolio’.
The company will also benefit from online and international growth.
‘Growth in its mobile and online operations and selective international expansion should provide regional, regulatory and economic diversification, while expanding its services to appeal to a wider demographic,’ said Forrest.