19th May 2016 15:09
LONDON (Alliance News) - Moody's Investors Services has changed its outlook on its Ba1 corporate family rating and Ba1-PD probability of a default rating for William Hill PLC to stable from positive.
Moody's said it had changed its outlook as a reflection of William Hill's weakened online operating performance since the second half of 2015, and the turnaround risk associated with its Australian online business, which will result in a further 10% to 15% reduction in its group operating profit for its current year.
"While Moody's expects that William Hill's credit metrics (particularly leverage and interest coverage) and liquidity will remain strong for the rating category, free cash flow generation will turn negative in FY2016 owing to the GBP200 million share buy-back programme," Moody's said.
The stable rating outlook means Moody's expects William Hill to maintain a strong credit metric and liquidity for its rating category over the next year to year and a half. It also expects the company will generate positive free cash flow from its financial year 2017 onwards, and there will be no further material regulatory changes.
A Ba1 rating from Moody's means not prime. It means the debt is non-investment grade.
"Our decision to stabilise the outlook reflects weakened trading in William Hill's online division, the slow turnaround of its underperforming Australian business, which will result in further operating profit declines in fiscal 2016.The outlook change also factors in the impact the company's share buy-back programme turning free cash flow negative despite strong credit metrics and liquidity," said Moody's Vice President and Senior Analyst Donatella Maso in a statement.
Shares in William Hill were up 0.1% at 306.30 pence Thursday afternoon.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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