2019 final results 52 weeks ended 31 December 2019 26 February 2020 - PowerPoint PPT Presentation

1 2019 final results 52 weeks ended 31 December 2019 26 February 2020

2 statements contained in this presentation and/or the information incorporated by reference into this presentation. per share of William Hill as altered by the presentation will necessarily match or exceed the historical or published earnings per share of William document is intended as a profit forecast or profit estimate and no statement in this document should be interpreted to mean that the earnings undertaking publicly to release the result of any revisions to any forward-looking statements in this presentation. No statement in this Disclosure and Transparency Rules (and/or any regulatory requirements) or applicable law, William Hill explicitly disclaims any obligation or Subject to the requirements of the FCA, the London Stock Exchange, the Market Abuse Regulation (596/2014), the Listing Rules and the our risks” in the Company’s 2019 Annual Report. factors identified in this document, in addition to the risk factors that may affect William Hill’s operations which are described under “Managing placed on any forward-looking statements. Before making any investment decision in relation to William Hill you should specifically consider the results and developments to differ materially from those expressed or implied by the forward-looking statements. Undue reliance should not be risks, uncertainties and assumptions relating to William Hill’s operations and growth strategy, and a number of factors that could cause actual knowledge and information available to the Directors on the date of this presentation, and are subject to risks relating to future events, other Any forward-looking statements made by or on behalf of the William Hill Group speak only as of the date they are made and are based upon the liquidity, and the development of the industry in which it operates may differ materially from the impression created by the forward-looking Disclaimer predict. Forward-looking statements are not guarantees of future performance. The Group's actual results of operations, financial condition, they relate to events and depend on circumstances that may or may not occur in the future and may be beyond William Hill's ability to control or industry changes on the business of William Hill, the Group. By their nature, forward-looking statements involve risks and uncertainties because management strategies, the expansion and growth of the Group’s business operations; and (iii) the effects of government regulation and earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and expectations of the Directors, William Hill or the Group concerning, amongst other things: (i) future capital expenditures, expenses, revenues, information incorporated by reference into this presentation and may include statements regarding the intentions, beliefs or current case, their negative or other variations or comparable terminology. They appear in a number of places throughout this presentation and the "believes", "estimates", "anticipates", "expects", "intends", "plans", "goal", "target", "aim", "may", "will", "would", "could" or "should" or, in each looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms This presentation has been prepared by William Hill PLC (“William Hill”). It includes statements that are, or may be deemed to be, "forward- Cautionary note regarding forward-looking statements William Hill PLC Hill.

3 Introduction Ulrik Bengtsson Financial review Ruth Prior Operational review and strategy Ulrik Bengtsson Q&A Ulrik Bengtsson and Ruth Prior Contents 1 2 3 4

4 We are building William Hill to be a digitally led, internationally diverse betting and gaming business of scale

5 Retail Where pro forma results are stated, this assumes Mr Green was consolidated into the group at the end of January 2018, in order to provide a more 1. measures headwinds Group US meaningful comparator period. A well-executed year of transition Online 1 • Operating profit of £147m, ahead of expectations against challenging regulatory • 24% of revenue now generated outside the UK, up from 15% • Signed up to Safer Gambling Commitments and implemented customer protection • UK maintained market share and returned to growth • International net revenue -3%, driven by regulatory headwinds and legacy product • Mr Green performed in line with expectations, strong underlying activity • £2 stake limit introduced 1 April, 713 shop closures in the third quarter • Delivered operating profit of £83.2m ahead of expectations • US net revenue increased 38%; live in 9 states • 24% nationwide market share • Exclusive partnership with CBS Sports established in early 2020

6 Ruth Prior, CFO Financial review

7 0.0 8.0 Dividend per share (p) -48% 20.6 10.7 -96% (83.6) (3.1) -96% (712.3) (27.0) Loss for the period 1 3.8 Profit from discontinued ops -33% -96% (716.1) (27.0) Loss from continuing ops +83% 5.8 10.6 Tax -95% (721.9) (37.6) (31.5) (6.1) Loss before tax 12.0 This slide provides an overview of results with both adjusted and statutory measures. Following slides on divisional performance reflect adjusted results, since that is how 52 weeks ended 2019 £m release of prior year provisions Tax credit has doubled through 134.1 Exceptional items and adjustments 18.2 Amortisation of acquired intangibles 4.4 Other exceptional items 3.5 Transformation programme 8.2 Corporate transaction / integration 99.8 Triennial mitigation restructuring Dividend 8p per share as guided performance is internally managed and reported. IFRS 16 impact and new £350m bond addition of Mr Green headwinds in Online, offset by the stake limit on gaming and regulatory Reduced profitability with Retail £2 basis, net revenue is flat YoY stake limit on gaming. On a 52 week offset by Retail decline since £2 Addition of Mr Green and US growth, Group income statement: ahead of expectations (Loss)/earnings per share and adjusted EPS figures are both calculated based on continuing operations only. 2. These results are the 100% consolidated results of the Group. 1. +49% (34.0) (50.5) 1 Jan 2019 Inc. (389.7) (377.9) (5.3) (372.6) Cost of sales -2% 1,621.3 1,581.7 42.8 1,538.9 Net revenue % change £m US Expansion ended Gross profit 31 Dec 2019 31 Dec 2019 Exc. US Expansion £m 52 weeks ended US Expansion 53 weeks £m 52 weeks ended 31 Dec 2019 Inc. US Expansion £m -3% 1,166.3 (0.3) -37% (50.2) Net finance costs + >100% (687.9) 12.9 (31.2) 44.1 Profit/(loss) before interest and tax -85% (921.5) (134.1) (5.1) (129.0) Exceptional items and adjustments 233.6 37.5 (63.6) 1,203.8 1,231.6 -2% Net operating expenses (993.2) (1,056.8) 147.0 (998.0) +6% Adjusted operating profit/(loss) 173.1 (26.1) relating to the sale of Australia Loss per share (p) 2 Adjusted earnings per share (p) 2

8 Exceptional items and adjustments Green results post acquisition. On a pro Increase driven by the consolidation of Mr +2% 53.6 54.8 Capital additions ->100% 3.2 (18.7) -9% Increase YoY due to the consolidation of Mr 130.2 118.8 Adjusted operating profit +7% (99.6) (106.6) - Other costs incl. recharges +17% (39.0) (45.6) forma basis gaming was down -1% Green. Mr Green synergy of c£4m delivered +53% (11) Online: transition year well delivered, regulatory headwinds partially Mr Green results are included on a statutory basis (from the end of January 2019 post acquisition). 1. (24) Impact on 2019 adjusted operating profit 8 MRG accounting adjustment 4 MRG Synergies International regulatory headwinds Impact of Mr Green consolidation, alongside (12) Enhanced Customer Due Diligence measures (13) Remote Gaming Duty (RGD): 15% to 21% 2019 £m being classified as an adjusted item Green software depreciation on acquisition £8m benefit through the treatment of Mr April 2019 c£13m impact of RGD rate increases since 1st - Depreciation and amortisation (18.6) 2019 1 8.0% +36% 315.7 430.7 Gaming net revenue -3% 318.7 307.6 Sportsbook net revenue +0.0 ppts 8.0% 738.3 - Sportsbook gross win margin -4% 4,702.8 4,528.4 Sportsbook amounts wagered change % £m 2018 £m Net revenue 634.4 (28.4) +19% - Customer transaction fees +19% (147.7) (176.2) - Marketing +33% (45.2) (60.3) - Employee costs (350.1) +16% (417.1) Operating costs +12% 480.3 535.9 Gross profit +31% (154.1) (202.4) Cost of sales mitigated

9 -4% 746.0 750.4 -1% Average revenue per user (£) 224.2 198.8 +13% 251.5 263.0 Marketing % of net revenue 998.5 22.0% 23.4% -1.4ppts 27.3% 28.0% -0.7ppts UK International Please note that these KPIs are presented on a pro forma basis, with Mr Green included from the date of acquisition in both years in order -7% 925.3 Online KPIs: UK yield and international acquisition focus -3% 2019 2018 % 2019 2018 % Net revenue (£’m) 481.0 498.4 257.3 New accounts (’000) 264.6 -3% Unique actives (’000) 2,145.0 2,507.7 -14% 1,023.2 1,006.4 +2% to enable a more meaningful comparison