Good News For William Hill Shareholders

Published: Friday, March 04, 2005 Online-Casinos.com

WILLIAM HILL GIVING IT BACK TO THE INVESTORS

Good news for Will Hill shareholders.

Reuters reported this week that William Hill shareholders are in line for a GBP 453 million payout through a return of capital, following a 22 percent rise in annual earnings.

Earnings per share for 2004 rose to 36.2 pence, the British gambling group reported. Pretax profit rose 21 percent to GBP 205.3 million, towards the bottom end of market forecasts which ranged from GBP 204 million to GBP 213.9 million. The total dividend rose 32 percent to 16.5 pence.

"Returns of capital are flavour of the month in the leisure sector and the news should be well received. However, the return of cash also demonstrates that the stock has few growth opportunities to invest in," brokerage Seymour Pierce said in a research note.

The chairman at William Hill said the Board had decided to return the GBP 453 million to shareholders as it did not feel it could use the money on suitable acquisition opportunities in the casino sector. The British government is planning to deregulate the gaming industry to make it easier for new parties, including U.S. companies, to enter the sector.

"The Gambling Bill now appears less likely to offer opportunities for expansion of the UK casino industry, and synergies between casino and betting operators, than were originally anticipated," said chairman Charles Scott.

"Consequently, the board is not inclined to commit significant capital to potential acquisitions outside of its core bookmaking and gaming businesses at the current time," he added.

Existing shareholders will get an extra 115 pence per share, either in the form of a dividend or in cash. The gambling group said that its balance sheet had been further strengthened by securing new bank facilities of GBP 1.2 billion.

Chief Executive David Harding said that despite the cash return, the company could still buy more betting shop chains.

"Our first priority would be to buy more betting shops. I think we could buy another 600," he told reporters.

William Hill shares have outperformed the benchmark FTSE 100 index by about 10 percent over the last year.