Professional Documents
Culture Documents
M05EFA
1
ABSTRACT
As an investment analysts team for World Wealth Management, the team investigates
the fiscal term for most recent three years of two gamble companies, Paddy
Power Betfair Plc and William Hill Plc namely business performance from 2013 to 2015
upon a request from Dave Jones who is a long-time client. The team
applies appropriate financial ratios and tools to the annual figures of both companies
and decide tendency in their business and assess their present and past performance.
Also, the team analyse the gambling industry to obtain further understanding of the
sector where the two companies take part. The outcomes from research and analysis
that the team has conducted will be used to summarise to present to Dave Jones, who
was interested in the expansion of his portfolio, which company will be the better choice
of his investment?
2
Table of Contents
1.0 Introduction.............................................................................................................5
2.0 Financial Analysis and Interpretation......................................................................6
2.1 Profitability..............................................................................................................6
2.1.1 Return on Capital Employed............................................................................6
2.1.2 Net Profit Margin..............................................................................................7
2.1.3 Gross Profit Margin..........................................................................................9
2.2 Efficiency...............................................................................................................10
2.2.1 Fixed assets turnover.....................................................................................10
2.2.2 Sale per employee.........................................................................................11
2.3 Liquidity.................................................................................................................12
2.4 Gearing.................................................................................................................14
2.4.1 Capital Gearing..............................................................................................14
2.4.2 Interest cover.................................................................................................15
2.5 Investment............................................................................................................17
2.5.1 Earnings per Share........................................................................................17
2.5.2 Dividend per Share........................................................................................19
2.5.3 Dividend Payout.............................................................................................20
3.0 Vertical and horizontal analysis............................................................................21
3.1 Industry Analysis...................................................................................................21
3.1.1 Future of Gambling industry in the UK..........................................................22
3.1.2 Customers......................................................................................................22
3.2 Paddy Power Betfair plc.......................................................................................23
3.2.1 Growth............................................................................................................23
3.2.2 Shareholders..................................................................................................24
3.2.3 Performance...................................................................................................24
3.2.4 Products.........................................................................................................25
3.2.5 Consumers.....................................................................................................25
3.2.6 Customer Support..........................................................................................26
3.3 William Hill Plc......................................................................................................26
3.3.1 Growth............................................................................................................26
3.3.2 Shareholders..................................................................................................27
3.3.3 Performance...................................................................................................28
3.3.4 Products.........................................................................................................28
3.3.5 Consumers.....................................................................................................29
3.3.6 Customer Support..........................................................................................29
3.3.7 Strategies.......................................................................................................29
3.3.8 Future.............................................................................................................30
3.3.9 Competitors....................................................................................................30
3
3.3.10 Average........................................................................................................31
4.0 Summary of Analysis & Research........................................................................32
5.0 Recommendation for Investment.........................................................................33
Reference...................................................................................................................... 34
Appendices................................................................................................................... 36
Vertical and Horizontal calculation.................................................................................36
Table of Figures
4
1.0 Introduction
The team acquired annual reports of both the companies, Paddy Power Betfair Plc and
William Hill Plc, and analysed the released financial statements of 2013, 2014 and 2015
two, several ratios i.e. the profitability, investment, liquidity, efficiency, gearing ratios and
tools like vertical and horizontal analysis is computed according to the financial reports.
5
2.0 Financial Analysis and Interpretation
2.1 Profitability
Profitability is one of the critical indexes to check the performance of the company. First
of all, the team has examined the profits of both the companies to know if they are
adequate.
Return on Capital Employed (ROCE) is the index to measure returns i.e. profitability
6
The ROCE of William Hill has slightly decreased from 14.53% in 2013 to 13.32% in
2015, Paddy Power has substantially increased their ROCE of approximately 20% from
41.89% in 2013 to 61.99% in 2015. This is because their Operating profit has
marketing. Through the period, ROCE of Paddy Power is higher than the market
average from FAME. On the other hand, ROCE of William Hill is extremely low
Net Profit Margin is one of the indicators that are the most important to see the financial
health of the company. The higher Net Profit Margin shows the higher competitiveness
of the company in the market. The indicator shows how much profit of each pound the
7
Figure 2: Net Profit Margin
Both companies have reduced their Net Profit Margin from 2013 to 2015 and what can
be considered as factors are growing cost of sales and expenses. As for William Hill, the
cost of sales increased about 20% in 2015 compared with one in 2014. This is because
MGD rate increased from 20% to 25% on 1st March 2015. Shrinking of Net Profit
As for Paddy Power, their revenue increased by approximately 24% in 2015 compared
with one in 2014. However, their expenses rise 17 % in 2015 from 2014 and especially
mostly related to technology invested in product development and the opening of new
shops.
8
2.1.3 Gross Profit Margin
Gross Profit Margin expresses the percentage of profit by measuring how much
revenue a company has earned. It is affected by many items such as changes in sales
Gross Profit
Gross Profit Margin = x 100
Revenue
Gross profit margin of Paddy Power and William Hill shows similar trend i.e. it has
gradually declined during the period. The ratios are higher than the market average all
the time. The reason why the ratio of Paddy Power decreased is improving their direct
betting costs which include betting taxes, software supplier costs, and other direct
betting costs. For the case of William Hill, the major reasons of decrease are reducing
9
revenue and increase in the cost of sales, mainly Point of Consumption Tax affected.
2.2 Efficiency
Efficiency ratio is used to show if the company uses its assets and liabilities usefully.
____________________________
10
This ratio measures how efficiently the company is going to manage its own investment.
The higher ratio means, the more efficient the company is; this means the company
has an efficient way to use its assets to make sure the company has enough assets to
generate sales. While comparing the data, it easy to find the Paddy Power has a higher
Numbers of employees
Sales per employee is a ratio which shows how much sales is made by every
employee. A high ratio explains how effective the employees are. Paddy power has a
11
higher ratio than William Hill. The sales per employee is a good measure of personal
productivity. From 2013-2014 William Hill has an increase of this ratio, while Paddy
power is decreasing but still has a higher ratio than the William Hill.
2.3 Liquidity
12
Short-term solvency is mainly used to determine the company's ability to pay short-term
debts, which is usually occurred due to the need of production and business and the period
is shorter than a year. On the basis of the current ratio, inventory items whose liquidity are
weaker, have to be excepted from the assets used for evaluating debt repayment ability in
the liquid ratio. In other words, it can help to determine whether there are adequate liquid
According to the above figure, we can see, the overall short-term solvency capacity of
William Hill has been below the level of Paddy Power for three years in a horizontal
view. Besides, at the vertical sense, Paddy Power's index has risen in 2014 at about
1.4, but the improvement has not been maintained, and it fell sharply to 0.8 in 2015.
William Hill's solvency has continued to decline in the past three years, from the level of
more than 0.8 in 2013, fall to only about 0.5 in 2015, from which we can see the
situation is worsening.
13
2.4 Gearing
Gearing ratio tells us about how solid a company is to tackle or to repay its debt.
Gearing ratio tells how solid the company is considering to long-term debt because the
14
Figure 8: Capital Gearing
Gearing ratio should be above 10% and below 50% for it to be interpreted as
generously. William Hill in 2013, as many as 47% of the funding covered by long-term
debt which is not positive for the company. Paddy Power did not have any long-term
15
debt in 2013-2014, but in 2015 they made long-term loans which are 74% of the total
long-term financing. If we also look at the balance sheet of FAME Shareholders funds,
we will discover that it has been dramatically reduced from 2014 to 2015.
For long-term borrowing of a company, it is usually accompanied by the need to pay the
interest at a regular time every year. Ability to repay the interest in time is also one of
Interest Paid
This indicator helps companies to identify the relationship between borrowing costs and
revenue that is to clarify whether the business achieves greater returns on the basis of
the borrowing capital. The computational results are shown in the following table:
16
2015 2014 2013
According to the chart above, the two companies showed a big difference at this
indicator, William Hill saw a slight decline in this interest coverage ratio for nearly three
years. However, Paddy Power has demonstrated a shocking coverage situation, which
although there was a significant decrease than the previous two years in 2015.
2.5 Investment
17
Paddy Power William Hill
Earnings per share (EPS) is the segment of an organisation's benefit that is distributed
deciding a stock's esteem, and it involves the "E" some portion of the P/E (value
18
Year
Figure 12: Earnings per Share
Clearly, the Paddy Power's EPS expanded generously in 2013, and after that again in
2014 and in 2015, while the William Hill's EPS has decreased both in 2014 and 2015.
Similarly as with EPS, the Profit Per Share ought to be investigated after some time to
decide whether there is a development slant. Profit per share is the total of proclaimed
profits issued by the organisation for each standard share exceptional. It is the
19
aggregate profits paid out by the business, including interval profits, profit by the
Dividends
DPS = X 100
No of Shares
Year
In spite of the fact that the desires would be for profits to increment more noteworthy
than that of expansion, a long haul financial specialist may see open doors for the more
prominent long haul estimation of the shares, ought to the organization have the
capacity to utilize held income to adventure development openings that may bring about
20
2.5.3 Dividend Payout
This ratio measures the percentage of profits made that are paid to the shareholders in
dividends.
EPS
Dividend Payout
The greater the payout percentage, the less the company has for reinvestment. It is
noted that both the companies had made a profit for three years in a row, and has paid
a dividend to the shareholders. This seems like they are attracting the shareholders to
21
Gross profit for William Hill and Paddy Power are reduced from the year 2013-2015
which is negative for the companies. This is because of the cost of sales has increased
William Hill has a reduction in operating profit from the year 2013-2015, primarily due to
exceptional items. Paddy Power has a higher operating profit in 2014-2015 than William
William Hill pays 10 to 15 times more interest than Paddy Power and has, therefore, a
much-reduced profit before tax from 2013 to 2015. Paddy Power pays interest only in
Paddy Power, however, has reduced its payout for dividends over the years and are
Retained profit for both companies have been reduced over the years 2013-2015 which
Overall Paddy Power comes best out of it with a retained profit of 6.6% over the past
The UK was the host to the first international summit on online gambling and also the
first nation to introduce legislation for controlling online gambling (Matthew 2006).
The online gambling industry has maintained constant growth in all years. The British
government has a major role in the British online gambling industry. They put the
legislation that affects online gaming and affecting the industry's development in the
country. British government is very controlling; they are much focused to get the agreed
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measures to prevent children to be able to take advantage of online gambling sites,
(Matthew 2006)
The British government has considered cutting the tax rate for online gambling in the
UK (U.S. Newswire 2013). This is because of the major UK online gambling companies
have moved out of the UK in the recent years to be able to save tax costs. It looks like
the British government has realised that there is much profit in the online gambling
industry. It will attract all the major UK online gambling companies back to Britain, but
the government is still very strict in terms of regulation and regulatory requirements.
3.1.2 Customers
The online betting industry has a broad category of segments. There is some statutory
requirement that consumer should be over 18 years to be able to gamble. They have
consumers who are generally interested in making daily life more exciting by gambling.
23
Paddy Power Betfair was formed in 2016 after the Paddy Power Plc and Betfair Group
Plc decided to merge to become one of the leading players in the sports betting and
gaming operators.
Founders of Paddy Power were Stewart Kenny, David Power and John Corcoran in
1988 and November 2011 where Paddy Power the most valuable gaming company in
Today driver Paddy Power with four sports betting and gaming brands:
Paddy Power
Betfair
Sportsbet
TVG
3.2.1 Growth
In September 2015, both Paddy Power plc and Betfair Group plc stated that they
agreed to terms of the merger of both companies and it completed on 2nd February
2016. Both companies recorded considerable growth in revenues and profits. The
revenues of Paddy Power increased by 24% in 2015, and the operating profit increased
10%. Meanwhile, Betfair improved their revenues by 17% and grew 9% of operating
profit.
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3.2.2 Shareholders
The investment management company BlackRock Inc. has the largest percentage of
shares. They were not on the list of the main shareholders in 2013 and 2014, but the
Capital Group Companies, Inc. was the largest stockholder in those years. The
percentage of the Capital Group Companies shares increased from 3.85% to 8.21% in
2015.
3.2.3 Performance
Taking after an extremely positive first half execution, Paddy Power controlled a detailed
solid basic development for the three months till mid of November. The online games
wagering stakes rise 23%, while online add up to net income grew 7%. Under it's retail
arm, sports stakes grew 12%. As of fifteenth November, Paddy Power control had a net
25
obligation of euro 96 million, which is comparable to its 2014 profit before intrigue,
The Dublin-based firm has updated its working benefit estimates to 180 million euros,
which is an ascent of 16.2 million euros, though in 2013 Paddy Power control recorded
3.2.4 Products
There are several products which are in business right now such as,
Sports betting,
Online poker,
Online casino,
Online bingo,
3.2.5 Consumers
The web-based wagering industry has a general class of portions. There is some
statutory necessity that purchaser ought to be more than 18 years to have the capacity
to bet. They have buyers who are for the most part intrigued by making day by day life
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3.2.6 Customer Support
Paddy power tries to understand their customers better, so it provides their customers
with the information and tools. In this way, they can manage their money and time much
better. The company gives the detail at the ability to use the accessibility and how long
they are limited on the machine because every machine can reflect time out. There is
a feature which has found the limit that can help the customer to control their gambling.
The name William Hill originates from the founder of the company for about 83 years
In 2002 the Company was listed on the London Stock Exchange and also in
2013 was horse race betting was the major in sports betting in the UK. William Hill led
horse race gambling regarding income and search impression volume (Entertainment
Close Up 2013)
William Hill is the leading player in bookmaker online gaming and betting providers to
UK Customers. They have also made some major investments overseas. They are the
third largest provider of online sports betting in Australia and one of the largest in legal
3.3.1 Growth
Due to a successful shift to mobile, the revenue of mobile Sportsbook increased by 24%
and 36% increase for mobile gaming in 2015 by leading strong online growth. The net
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revenue of the group declined by 1% which was reflected by the lack of the main
international football games in that period; results drop in the retail trade for sports and
extensive work to centralise business in Australia to adapt fast growing the recreational
customer base. The growth of the Online net revenue becomes slow under the
3.3.2 Shareholders
The share of 13.03% hold by Parvus Asset Management (UK) LLP is outstandingly high
reduce their share while Oppenheimer Funds, Inc. and Schroders plc are remaining the
same share.
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3.3.3 Performance
Bookmaker William Hill share cost dropped by more than 13% after it cautioned of 25-
million-pound fall in online benefits in 2016. William Hill's online business took a hit in
the period to twentieth of the walk as an advanced execution was affected by controls
and lower than anticipated gross win edges. Share costs dropping more than 50%
indicates a loss and 13.5 % which increased as soon after exchanging started.
Second, Net win edges in the online business were 1.9 % focuses beneath the desires
3.3.4 Products
Online Betting
Sports betting
Vegas
Macau
Casino
Scratch Card
Poker
Bingo
Virtual
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3.3.5 Consumers
The electronic betting industry has a general class of bits. There is some statutory need
that buyer should be over 18 years to have the ability to wager. They have purchasers
who are generally charmed by making a step by step life all the all the more
empowering by wagering.
William Hill has refreshed the information as regulation change, and it included several
areas in markets position. William Hill helps the customer to get an innovative point. It is
not only one-way management. It has Omni-channel, betting and gaming fixed to attract
measures an expectable profit for the customer to consider. Gaming is a volatile profit to
let the customers use the products. William Hill has an international market, and it owes
to its technology.
3.3.7 Strategies
Each business will have a strategy for its own development. The strategy of William Hill
in the following years is mainly to increase its diversification through its digital and
international revenues. From Paddy Power's specific behaviour, we can see the
implementation of its strategy, such as the merger with another leading company in this
industry in 2016, and this merging strategy also makes the year to become the best
year ever for Paddy Power. By merging companies, it can capture the market quickly,
30
share channels with each other, and the combination of two leading companies helps to
reduce vicious competition, which improving the value of both the companies.
3.3.8 Future
The company's future development is always matched with its strategy. For William Hill,
it will begin to enter overseas markets, like building a challenger brand in Australia.
Besides, William Hill will start to strengthen the company's competitiveness, and
enhance the business from the internal organisation, such as the management and
more profitable projects. On the one hand, consolidate existing customers, which
means addressing multi-channel and core retail customer demand. One the other
hands, using the combined resources to occupy a larger market, and to lock more
3.3.9 Competitors
competitors entering the market, will affect the development of the company, so the
companies. In general, these two companies are both in a dominant position compared
with their competitors in the contest. For William Hill, as per the abundant cash inflows
31
from its operations, this company can further increase its research and development on
the technology platform, which also makes the company different from its competitors
effectively. Most of the company's competitors are still using a third-party platform for
sales and operation of its products, but William Hill has its own technology through
research and development platform, which not only absorb more customers but also let
it stand out from the competitors. In terms of Paddy Power, its advantages in retailing
are prominent, only 565 shops can have an equal turnover of 1163 competitors, which
mainly because of its distribution- Paddy Powers retail shops are always located in the
place where crowds are gathered, and people can easily find a Paddy Power shop
3.3.10 Average
The industry data is calculated based on 14 companies including William Hill and Paddy
Power in this industry, whose main business are all gambling and betting activities. In
terms of solvency, the ratio of both companies is much higher than the industry average,
William Hill ranked No. 6, No. 5 and No. 3 respectively from 2013 to 2015, the industry
average is about 30, but William Hill has reached 50 to 60 levels. We can see that
William Hills long-term solvency is quite strong, which also reflect their good use of
financial leverage. However, indicators of Paddy Power ranked No.2, No.2 and No.10 in
the past three years, and the solvency showed an obvious downward trend in 2015, at
only 12.41, which was lower than the industry average of 33.29. Thus, Paddy Power
should be wary of the risk of expiry liabilities. William Hill has reduced from 0.82 in 2013
to 0.76 in 2014, while only 0.52 at the last year. Similarly, Paddy Power`s Liquidity Ratio
32
in the previous three years were 1.17, 1.34 and 0.82, which reflect the environment
change has affected the whole industry that the company showed a decline in their
liquidity abilities.
Paddy Power's Income has gone up by 24% to 1,094m in the year 2015, with twofold
digit development overall on the web and retail divisions. Working benefit has gone up
10% to 180m, or half before 66m in new duties and item charges. Weakened EPS up
12% to 332.8 Cents for each share; Entire year's profit up by 18% to 180 cents for every
share and extra 8 per share money return amid 2015.UK retail income has gone up by
Obligation. This Domain now has 341 shops with a net 20 units opened in 2015. This
Irish Retail income has increased by 14% (up 11% like-for-like). The working benefit of
20m which is 44%. In the home market now it has 259 shops with 14 units opened in
2015.
Exchanging in William Hill stays in accordance with past entire year working benefit
direction of 260-280m subject to standardized gross win edges inside the online net
income decrease of 11%, gaming was 4% let moreover, Sportsbook was down 17%,
affected by time-outs and self-avoidances; we are checking this intently in any case, at
33
5.0 Recommendation for Investment
Based on the analysis above, it can be found that there are significant differences
between the two companies Paddy Power Betfair Plc and William Hill Plc in terms of
as products and customers. It can be concluded that compared with William Hill, Paddy
Power has a higher return on capital employed and net profit margin, even though the
two companies present similar trend in the aspect of gross profits margin. Furthermore,
through analysing statistics about the two companies ability in capital gearing, earning
of investment and products as well as service portfolio, it is not difficult to come to the
conclusion that generally speaking, Paddy Power has more competitive advantages in
bringing more rewards for clients. Based on these findings, it is suggested that
investment should be made on Paddy Power Betfair Plc. According to the vertical and
Horizontal analysis, we can also see that Paddy Power has more retained profit as
Prashant Jha
Waqas Mahmood
Bin Chen
Zhaozhao Wang
Kiyomi Kamata
34
Reference
Anon(2015) 'The Rise of Paddy Power'. Sunday Business Post [online] Aug 30, 2015:
n/a. available form
<http://search.proquest.com/docview/1708057625/fulltext/2E89AA18AC8D4F01PQ/1?
accountid=10286> [19 march 2017]
Anon(2013) 'UK Government Plans to Offer Huge Tax Concessions to Online Gambling
Companies'. U.S. Newswire Mar 7 [online], 2013: n/a. available from
<http://search.proquest.com/docview/1314891226?rfr_id=info%3Axri%2Fsid%3Aprimo>
[19 march 2017]
Anon(2010) 'UK Government: New British Licence Requirements for Overseas Online
Gambling Firms'. M2 Presswire [online] Jan 7, 2010: n/a. available from
<http://search.proquest.com/docview/446122418/abstract/827B83E9DBB0464EPQ/1?
accountid=10286#> [19 march 2017]
Bradley Gerrard (2017) Paddy Power Betfair claims merger success despite profit hit
[online] available from www.telegraph.co.uk [7 March 2017]
35
John Harrington (2017) William Hill beats the handicap with full-year profits [online]
available from <www.proactiveinvestors.co.uk> [24 February 2017]
Paddy power PLC (2013) Paddy Power annual report 2013 [online] available
from<www.paddypowerplc.com/sites/default/files/attachments/2013_annual_report.pdf>
[15 March 2017]
Paul Jarvis (2017) William Hill CEO Search Nears End as Online Revival Begins
[online] available from<www.bloomberg.com> [24 February 2017]
William Hill PLC (2013) The home of betting William hill plc annual report and accounts
[online] available fromhttp://files.williamhillplc.com/media/1202/ar_2013.pdf [3 March
2017]
William Hill (2017) Regulatory news [online] available from
<https://www.williamhillplc.com/investors/regulatory-news/24389699-trading-
statement/> [25 march 2017]
Appendices
36
Paddy Power Betfair plc (2015) ' 000
37
Capital Employed (CE) = FA + CA - CL
=
= 15.56%
= Revenue
38
= 803,687
= 74.75%
(Check ratios)
ROCE = Net Profit Margin x ASSET T/O
= 15.56 x 3.98
= 61.93%
LIQUIDITY:
Current Ratio
Current Assets
Current Ratio =
Current Liabilities
170,922
=
208,313
= 0.82
Liquid Ratio
= 170,922 - 0
= 0.82
39
Current Liabilities = 208,313
EFFICIENCY:
Fixed assets turnover
Revenue
Fixed assets turnover =
Non-current assets (NBV)
803,687
=
37,391
= 21.49
Sale
Sale per employee =
Numbers of employees
803,687
=
5,069
= 158.55
GEARING (Borrowing):
= 141,915
40
(50,503 + 141,915)
74
No. of Shares
No. of Shares
EPS
= 147,293,000 x 100
3.3
= 48,123,143 shares
41
No of Shares
= 76,323,000 x 100
51,104,700
Dividend Payout
EPS
= 56,072 x 100
108,211
= 51.82 %
42
Paddy Power Betfair plc (2014) ' 000
43
= 41.23%
127,420
Net Profit Margin =
685,802
= 18.58%
Gross Profit
Gross Profit Margin =
Revenue
555,317
Gross Profit Margin =
685,802
= 80.97%
(Check ratios)
ROCE = Net Profit Margin x ASSET T/O
= 18.58 x 2.22
= 41.25%
44
LIQUIDITY:
Current Ratio
Current Assets
Current Ratio =
Current Liabilities
246,891
=
183,791
= 1.34
Liquid Ratio
Liquid Ratio = Current Assets Stock
= 246,891 - 0
= 1.34
EFFICIENCY:
45
Fixed assets turnover Revenue
685,802
=
63,101
= 10.87
Sale
Sale per employee =
Numbers of employees
685,802
=
4,856
= 141.23 GBP
GEARING (Borrowing):
Capital Gearing
0
=
(301,021+ 0)
46
SHAREHOLDERS RATIOS Earnings per Share (EPS)
EPS = 3 Euros
No. of Shares
No. of Shares
EPS
= 144,909,000 x 100
= 45,115,140 shares
No of Shares
= 68991000 x 100
50977085
47
DPS = 135 Cents
Dividend Payout
EPS
= 53666 x 100
112720
= 47.6 %
48
Capital Employed (CE) =
=
49
(Check ratios)
ROCE = Net Profit Margin x ASSET T/O
= 18.44 x 2.27
= 41.86%
LIQUIDITY:
Current Ratio
Current Ratio =
Current Assets
Current Liabilities
=
215,317
183,398
=
1.17
Liquid Ratio
= 215317 - 0
50
= 1.17
Current Liabilities =
183,398
EFFICIENCY:
624,058
=
31,919
= 19.55
624,058
=
4,156
= 150.16
GEARING (Borrowing):
51
Capital Gearing
Long Term Borrow
Gearing (Borrowing) Ratio =
Capital Employed + Long ter
0
=
(260,446 + 0)
No. of Shares
No. of Shares
EPS
123,184,00
= 0 x 100
2.6
= 47,990,704 share
52
s
No of Shares
= 61,907,000 x 100
50,850,848
Dividend Payout
EPS
= 51,844 x 100
103,159
= 50.26 %
53
William Hill Plc (2015) ' 000
54
Net Profit Margin
Net Profit Margin Operating Profit (PBIT)
x 100
= Revenue
224,300
Net Profit Margin
x 100
= 1,590,900
= 14.10%
Margin = Revenue
Margin = 1,590,900
= 76.25%
(Check ratios)
ROCE = Net Profit Margin x ASSET T/O
= 14.10 x 0.96
= 13.54%
LIQUIDITY:
Current Ratio
55
Current Assets
Current Ratio =
Current Liabilities
170,922
=
208,313
= 0.82
Liquid Ratio
Liquid Ratio = Current Assets Stock
= 170,922 - 0
= 0.82
EFFICIENCY:
Fixed assets turnover
Revenue
Fixed assets turnover =
Non-current assets (NBV)
1,590,900
=
320,300
= 4.97
1,590,900
=
15,747
= 101.03
56
GEARING (Borrowing):
369,500
=
(1,215,800 + 369,500)
23
EPS = 21.6 p
No. of Shares
57
No. of Shares
EPS
= 18,990,0000 x 100
21.6
= 880,900,000 shares
No of Shares
= 108,400 x 100
880,900
DPS = 12.3 p
Dividend Payout
58
EPS
= 81500 x 100
189900
= 42.92 %
59
= 1,983,300
281,800
Net Profit Margin =
1,609,300
= 17.51%
60
1,305,100
Gross Profit Margin =
1,609,300
= 81.10%
(Check ratios)
ROCE = Net Profit Margin x ASSET T/O
= 17.51 x 0.81
= 14.18%
LIQUIDITY:
Current Ratio
Current Assets
Current Ratio =
Current Liabilities
282,200
=
369,800
= 0.76
Liquid Ratio
Liquid Ratio = Current Assets Stock
= 282,200 - 100
= 0.76
61
EFFICIENCY:
1,609,300
=
87,600
= 18.37
Sale
Sale per employee =
Numbers of employees
1,609,300
=
16,078
= 100.09
62
GEARING (Borrowing):
716,100
=
(1,160,300 + 716,100)
38
SHAREHOLDERS RATIOS
EPS = 23.6 p
No. of Shares
No. of Shares
EPS
= 206,300,000 x 100
63
23.6
= 873,200,000 shares
No of Shares
= 104000 x 100
874,152
DPS = 11.9 p
Dividend Payout
EPS
= 102,300 x 100
206,300
= 49.59 %
64
William Hill Plc (2013)
65
Net Profit Margin
Operating Profit (PBIT)
Net Profit Margin =
Revenue
303,000
Net Profit Margin =
1,486,500
= 20.38%
= Revenue
= 1,486,500
= 81.69%
(Check ratios)
ROCE = Net Profit Margin x ASSET T/O
= 20.38 x 0.71
= 14.47%
LIQUIDITY:
66
Current Ratio
Current Ratio =
Current Assets
Current Liabilities
=
272,700
328,600
=
0.83
Liquid Ratio
EFFICIENCY:
Liquid Ratio = Current Assets Stock Fixed assets turnover
Fixed assets turnover = Revenue
= 272,700 - 200 Non-current assets (NBV)
= 0.83 = 1,486,500
55,900
Current Liabilities = 328,600
= 26.59
1,486,500
=
17,089
= 86.99
GEARING (Borrowing):
67
Capital Gearing Ratio
Long Term Borrowing
Gearing (Borrowing) Ratio =
Capital Employed + Long term borro
895,900
=
(1,023,300+895,900)
47
EPS = 28.1 p
No. of Shares
No. of Shares
EPS
= 21,120,0000 x 100
28.1
= 898,300,000 shares
68
Dividends per Share DPS
No of Shares
= 87,100 x 100
898,809
DPS = 10 p
Dividend Payout
EPS
= 124,100 x 100
69
211,200
= 58.75 %
[Companies]
70
71