THE HOME OF BETTING William Hill PLC corporate presentation April 2016 William Hill, the official betting partner of the Australian Open, is the first bookmaker to sponsor a Grand Slam tennis tournament. 1 The image shows Andy Murray in the final against the tournament’s ultimate winner, Novak Djokovic.
Disclaimer This presentation has been prepared by William Hill PLC (“William Hill”). This presentation includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "plans", "goal", "target", "aim", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this presentation and the information incorporated by reference into this presentation, and include statements regarding the intentions, beliefs or current expectations of the directors, William Hill or the Group concerning, amongst other things, the results of operations, financial condition, liquidity, prospects, growth, strategies and dividend policy of William Hill and the industry in which it operates. By their nature, forward-looking statements involve risks and uncertainties because 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 predict. Forward-looking statements are not guarantees of future performance and hence may prove to be erroneous. The Group's actual results of operations, financial condition, liquidity, dividend policy and the development of the industry in which it operates may differ materially from the impression created by the forward-looking statements contained in this presentation and/or the information incorporated by reference into this presentation. In addition, even if the results of operations, financial condition, liquidity and dividend policy of the Group and the development of the industry in which it operates are consistent with the forward-looking statements contained in this presentation and/or the information incorporated by reference into this presentation, those results or developments may not be indicative of results or developments in subsequent periods. Other than in accordance with its legal or regulatory obligations (including under the Listing Rules, the Disclosure and Transparency Rules and the Prospectus Rules), William Hill does not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise. 2
2015 overview • Good progress on strategic priorities – Proprietary SSBT in-shop, preparing for EURO 2016 roll-out – Online Trafalgar mobile front-end is live, platform for rapid innovation – Australian business exited 2015 with encouraging growth after brand launch • Operating profit of £291.4m, +2% excluding c£87m of additional UK gambling duties • Strong cash generation: operating cash flow £300.9m, net debt for covenant purposes down to £488.2m • Dividend payout ratio increased to c50% of adjusted EPS, full-year dividend +2.5% • Up to £200m capital return via share buyback to shareholders 3 Numbers are presented on a pre-exceptional basis. Definitions are provided in the glossary at the back of the presentation.
William Hill at a glance • One of the world’s leading multi-channel betting and gaming companies • Scale operation with highly cash generative Retail business funding growth investment • c16,000 employees in nine countries • A balanced business: 53% betting and 47% gaming • Successful multi-channel model: 59% land-based and 41% digital • UK-focused with increasing international reach: 85% UK and 15% international Revenue by business segment Revenue by product type Revenue by geography 2% 1% 2% 6% 4% 3% 6% 47% 53% 35% 56% 85% Retail Online Betting Gaming UK Australia Telephone William Hill Australia US Italy and Spain William Hill US Other 4 Note: Pie charts show 2015 full-year position
Our strategic priorities • Expansion of total betting population – 6.49 million in 2010 1 8.12 million in Q1 2015 2 – OMNI-CHANNEL • Structural trends in multi-channel usage – 24% increase in number of Retail’s regular customers using online since Q3 2014 – 70% of spend is by Retail customers with online operators – Omni-channel customers spend, on average, 1.8 times what a single channel customer spends INTERNATIONAL William Hill Retail’s regular customers Q3 14 23% 77% Q3 15 28% 72% TECHNOLOGY 13% William Hill Retail + William Hill Online Sources: 1. TGI 2009 (April 2009 – March 2010), TGI 2010 (January 2010 – December 2010) 5 2. Kantar Market Sizing tracker Q1’14– Q1’ 15 , (16.7% of UK adult population 18+ of 47,800,000)
Our strategic priorities Top ten gambling markets by gross win (2013, £bn) 1 • Leverage existing capabilities in other markets OMNI-CHANNEL • Focus on five regulated markets • Flexible enough to exploit opportunities • Consider complementary gambling skill sets INTERNATIONAL TECHNOLOGY 215 32 142 226 180 449 106 116 212 153 Gross win per capita (£) 6 1. H2GC Global Gambling Data (February 2014); population data (Wikipedia)
Our strategic priorities • Blend of in-house / bespoke platforms and third-party expertise • Strong product differentiation through Trading and gaming OMNI-CHANNEL platforms • Rapid innovation by controlling front-end (Trafalgar) • Ten-year agreement with OpenBet focused on new back-end platform within three years, £80m investment in NYX / OpenBet INTERNATIONAL William Hill is the only operator to have developed a proprietary SSBT. This gives us a leading product range and increased flexibility without paying a revenue share TECHNOLOGY Through Project Trafalgar, we have taken control of our ‘front-end’ customer interfaces (desktop, mobile web, iOS and Android apps). This enables daily releases and rapid innovation. 7
UK Retail • Largest business segment, representing 56% of revenue Market leader with 2,371 LBOs 1 , equivalent to 26% market share 2 • • 48% betting (OTC) and 52% gaming (machine) • £889.5m net revenue and £171.4m operating profit in 2015 • Resilient, cash-generative business Delivering revenue growth against challenging economic backdrop Leader in UK retail bookmaking Evolving product mix (gross win) 907.0 911.4 889.5 46% 52% Other, 12% William 837.9 4% Hill, 3% 5% 10% 4% 26% Betfred, 8% 12% 783.1 789.7 16% 11% 25% 20% Ladbrokes, Coral, 2010 2015 25% 21% Horse racing Football Greyhounds Virtual 2010 2011 2012 2013 2014 2015 Other Gaming 1. Licensed betting offices 8 2. Gambling Commission Industry Statistics April 2010-March 2015
Online • c1,300 employees across seven countries, 35% of Group revenue Market leader with 15% market share by revenue in the UK 1 • • 48% betting (Sportsbook) and 52% gaming (casino, bingo, poker) • £550.7m net revenue and £126.5m operating profit in 2015 • Well-positioned under UK Point of Consumption Tax change UK betting market share UK gaming market share Net revenue growth 12% 15% 527.4 550.7 3% 22% 446.3 9% 35% 7% 406.7 321.3 8% 8% 251.5 18% 7% 11% 4% 6% 4% 4% 18% 4% 2% 4% William Hill Gala Coral 2010 2011 2012 2013 2014 2015 Bet365 Betfair SkyBet 888 William Hill Paddy Power Paddy Power Rank SkyBet Ladbrokes Ladbrokes Betfair Bwin.Party 32Red Gala Coral Non-reporting operators Bet365 Non-reporting operators 1. Gambling Compliance Industry Statistics, April 2010-March 2015. Note this market share data 9 was published in October 2015, prior to the merger of Paddy Power Betfair in 2016
Italy and Spain • Mobile already generating 47% of net revenue • Strengthening brand awareness: No. 2 in both Italy and Spain • Strong market share gains • Italy profitable at end 2015, Spain to follow thereafter Spain online sports market share by turnover 3 Italy online sports market share by turnover 2 Others 9% Other Paddy Power 6% 7% Sportium Bwin Group 8% 5% Snai 5% Bet365 47% Bet365 William Hill 46% Sisal 5% 19% Lottomatica 6% Eurobet 8% Bwin 20% William Hill 9% 1. Agimeg and AAMS, July 2015 2. DGOJ, company estimates 10
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