Bookmaker William Hill (LON:WMH) was in uncharacteristically generous mood on Friday, upping its dividend pay-out ratio and confirming a share buy-back programme.
The company's dividend for 2015 was upped to 12.5p from 12.2p the year before despite a 17% fall in adjusted earnings per share (EPS) to 24.7p, signalling a change in its pay-out policy; the board now intends to recommend a dividend roughly half of EPS from now on.
The company also unveiled a £200mln repurchase programme to be completed over the next 12 months, as net debt at the end of 2015 had reduced to £488.2mln from £602.8mln a year earlier.
Revenue in 2015 ebbed a little to £1.59bn from £1.61bn the year before, reflecting the absence of a major football tournament during the year.
Profit before tax fell 8% to £189.9mln from £206.3mln in 2014, which the group put down to substantial additional gambling taxes on its UK online and retail businesses. Excluding some £87mln of additional UK gambling duties, operating profit rose 2% year-on-year, whereas including them it fell 22% to £291.4mln.
James Henderson, chief executive of William Hill, said the company had made substantial operating progress against its three strategic priorities of an omni-channel offering, upgrading its technology and broadening its territorial footprint.
"In technology terms, Online now has a platform that allows us to deliver rapid and frequent innovations to customers, further differentiating our offering. We are also now preparing to roll out our proprietary self-service betting terminal in Retail. This is an important part of our omni-channel strategy and enables us to bring the best of Online to our shops,” Henderson said.
"Internationally, I'm particularly pleased that William Hill Australia is now benefiting from our reshaping and investment in the business. We now have one of the highest rated betting apps in Australia and during the William Hill-sponsored Australian Open we acquired an impressive c1,000 customers a day and saw a 680% increase in tennis in-play turnover,” he added.
Stockbroker Liberum Capital said the numbers were broadly in-line with its expectations with the main talking points being the increase in the pay-out ratio and the announcement of the share buy-back.
That view was echoed by Karl Burns at Panmure Gordon, who indicated he would probably not make any significant changes to his current year forecasts unchanged, though he did push up his target price from 339p to 375p.
Burns noted the buy-back is equivalent to 5.6% of the company's share capital, suggesting the bookie is unlikely to participate in any mergers & acquisitions activity in the near term.
Both Liberum and Panmure Gordon rate the shares no better than a 'hold' with Liberum favouring Playtech (LON:PTEC) in the sector and Panmure plumping for GVC Holdings (LON:GVC).
Peel Hunt also has a 'hold' rating on the shares and said the more generous dividend policy highlighted the cash generative nature of the business.
Shares in William Hill were down 2.3% at 392.3p in mid-morning trading.