William Hill — FY2019 Earnings Presentation
37 slides from William Hill's earnings presentation, Feb 26, 2020
Slide 1: 2019 final results
19 final resul leeks ended 31 December 26 February 2020 5
Slide 2: Disclaimer
Disclaimer William Hill PLC Cautionary note regarding forward-looking statements This presentation has been prepared by William Hill PLC (“William Hill”). It includes statements that are, or may be deemed to be, “forward- looking statements". These forward-looking statements can be identified by the
Slide 3: Contents
Contents Introduction Ulrik Bengtsson Financial review 2 Ruth Prior Operational review and strategy Ulrik Bengtsson Q&A 4 Ulrik Bengtsson and Ruth Prior
Slide 4: PENG NSE LST Ly
ta PENG NSE LST Ly
Slide 5: A well-executed year of transition
A well-executed year of transition Group |u| * Operating profit of £147m, ahead of expectations against challenging regulatory headwinds * 24% of revenue now generated outside the UK, up from 15% * Signed up to Safer Gambling Commitments and implemented customer protection measures Online! DO * UK m
Slide 6: Financial review
Financial review m ; Ruth Prior, CFO
Slide 7: Group income statement: ahead of expectations
Group income statement: ahead of expectations ‘ 52 weeks ended S2weeks 52 weeks ended S3weeks $ Addition of Mr Green and US growth, 31 Dec 2019 ended 31 Dec 2019 ended ___y| offset by Retail decline since £2 Exc. US 31 Dec 2019 Inc.US 1Jan2019 Inc. £ % change stake limit on gaming. On a 52 week Expa
Slide 8: Online: transition year well delivered, regulatory headwinds partially mitigated
Online: transition year well delivered, regulatory headwinds partially mitigated 2019! 2018 % £m £m change Sportsbook amounts wagered 4,528.4 4,702.8 -4% 7 , . 9 9) Sportsbook gross win margin 8.0% 8.0% +0.0 ppts Increase driven by the consolidation of Mr Sportsbook net revenue 307.6 318.7 -3% Green
Slide 9: Online KPIs: UK yield and international acquisition focus
Online KPIs: UK yield and international acquisition focus UK International 2019 2018 % 2019 2018 % Net revenue (£'m) 481.0 498.4 3% 257.3 264.6 -3% Unique actives (‘'O00) 2,145.0 2,507.7 14% 1,023.2 1,006.4 +2% New accounts (‘000) 925.3 998.5 -7% 746.0 750.4 -1% Average revenue per user (£) 224.2 19
Slide 10: Retail: strong performance in a year of unprecedented change
Retail: strong performance in a year of unprecedented change oy 2019 2018 ‘0 em em change LFL’ Sportsbook amounts wagered! 2,161.6 2,195.9 -2% +6% ——> - Sportsbook gross win margin 18.5% 18.2% +0.3 ppts +0.3 ppts Sportsbook net revenue 400.0 398.9 +0% +8% Gaming net revenue 317.0 496.3 -36% -30% Net
Slide 11: Retail KPIs: encouraging adoption into sportsbook
Retail KPls: encouraging adoption into sportsbook Like-for-like 2019 2018 YoY LBOs 2019 2018 Number of LBOs 1,568 1,568 - — > |Asatyearend 1,568 2,319 Average 2,087 2,333 SSBT MWA! Growth - - +15% SSBT Density 2.4 18 +0.6 OTC/SSBT split! 79% 1 21% 84% / 16% -/+5 ppts Gaming machines MWA2 £779 £1,089
Slide 12: US update: leading market share across the US
US update: leading market share across the US Handle (US$m) % on Mobile Gross win margin Market share! Direct revenue* Service provider revenue* wn Operator Service Provider Lottery NJ wv? Total cake retail a 1,640 69% 6.6% 32% v 100% 6.2% 9% v 0% 9.1% 23% v 100% 6.6% 83% v 0% 8.3% 18% v 0% 10.8% 2%
Slide 13: US (local currency): break even with disciplined investment
US (local currency): break even with disciplined investment US US US US H Existing? Expansion Expansion Expansion otalUS TotalUS : xisting Retail Online Total? i 2019 2019 2019 2019 2019 2018 } % Amounts wagered up +39% YoY, us$m us$m us$m us$m us$m Us$Sm } change when including service provider + w
Slide 14: Group cash flow: net cash outflow due to Mr Green acquisition
Group cash flow: net cash outflow due to Mr Green acquisition 2019 2018 £m £m Cash generation Adjusted operating profit 147.0 233.6 [_™ | Depreciation impacted by IFRS 16 Depreciation and amortisation 124.0 73.6 — Non-cash share remuneration charge 45 5.5 EBITDA 275.5 312.7 Net cash impact of the £1
Slide 15: Guidance
Guidance Online: continued growth assuming a steady regulatory landscape * UK-maintain UK market share in a low single digit growth market + International— markets to grow on average at high single digit * RGD increase (15% to 21%) impacted the online business from 1% April 2019, Q1 2020 will be imp
Slide 16: Operating Review
Operating Review Ulrik Bengts on, CEO Af ft, oe Mm t 3 | a vi _y — ‘ f & j y 4 "» y VA 3 ; ti ¢ —_ =e . i rie “* a oad = . A eas " ae
Slide 17: Foundations in place: a strong position to deliver our ambitions
Foundations in place: a strong position to deliver our ambitions * Regulation and Safer Gambling: always regulatory challenges, the industry is mobilising and collaborating to protect our customers * Online UK: maintained market share, strengthened the brand and enhanced product offering * Online In
Slide 18: Safer Gambling: delivering major industry level change
Safer Gambling: delivering major industry level change Our voluntary ‘whistle-to-whistle’ ban on pre-watershed TV advertising reduced the exposure of under 18s to gambling adverts by 97% re www.pa rliament.uk Weare engaged with the House of Lords Select . Committee and will continue dialogue to high
Slide 19: "It's who you play with"
“it's who you play with” When the fun stops, stop. Becanbieanaren @ #1 brand for total awareness 19
Slide 20: Product: increased customer focus and real improvements
Product: increased customer focus and real improvements Increased customer focus and new ways of New betslip working translating into real improvements * New betslip and bet management functionality * Improvements in speed, navigation and search * Sportsbook front end (Spain & Italy) * Single wallet
Slide 21: Online International: ready for growth
Online International: ready for growth Malta hub Online Revenue mix * Consolidated all non-UK operations in the Malta hub * Multi-country capabilities: local experts and tailored products . woe fe) * Integration was completed successfully, retaining the 35% entrepreneurial culture International * La
Slide 22: Retail: focused on the future
Retail: focused on the future A major project, executed as planned, enabling us to look to the future * Created certainty for our team * Customer behaviour continues to adjust to the ‘new normal’ ¢ Trialling new product and customer offering initiatives * Retained our high street presence, maintaini
Slide 23: William Hill US: growing a business of scale and value
William Hill US: growing a business of scale and value Seven consecutive years of strong growth Wagering growth (US$m) 2,942 * Added more than US$1bn of wagers of which 60% were mobile * 24% national market share . . ay: . 1,873 * 35% wagering CAGR' since William Hill US was established 130 1,008 61
Slide 24: William Hill US: the building blocks for continued growth now in place
William Hill US : the building blocks for continued growth now in place Product and Technology Market Access Team/ operational excellence Launched proprietary purpose-built technology platform Retail and gaming components to be added in 2020 Unmatched market access in 24 states including New York, C
Slide 25: William Hill US: CBS Sports deal enables efficient customer acquisition
William Hill US: CBS Sports deal enables efficient customer acquisition Largest sports property in the US More than sports fantasy platforms and databases in the world brand and odds v v 25
Slide 26: Strategy
Slide 27: Our strategic priorities: Customer - Team - Execution
Our strategic priorities: Customer - Team - Execution Competitive A Collaborative Customer Offering and Agile Team BUILDA DIGITALLY LED, INTERNATIONALLY DIVERSE GAMBLING Creating TE oF Revenue Scale Growth Operational Efficiency 27
Slide 28: Competitive customer offering
Competitive customer offering We have started to build out our product capabilities in 2019 Our track record is improving: Competitive ¢ US platform Yip * Sportsbook front end (Italy) /@l * Single wallet (Spain) BUILDA * Smart Data Platform DIGITALLY LED, INTERNATIONALLY DIVERSE GAMBLING . COMPANY O
Slide 29: Collaborative and agile team
Collaborative and agile team Building our capabilities: ¢ Investing in talent and culture * Agile ways of working * Established a New Jersey digital hub ACollaborative and Agile Team * Continue growing the US team > New Executive appointments: DICTTALEY LED, * New Chief Product & Technology Officer
Slide 30: Revenue growth
Revenue growth BUILDA DIGITALLY LED, INTERNATIONALLY DIVERSE GAMBLING COMPANY OF SCALE Revenue Growth A clear set of strategies in place for each division: Maintain UK Online market share through increased share of wallet Accelerate International Online growth through more targeted investments in se
Slide 31: Operational efficiency
Operational efficiency Evolving our operating model to drive operational efficiency and improve our cost base: * Culture of continuous improvement * Increased automation * Improved marketing efficiency BUILDA Enabled by: DIGITALLY LED, INTERNATIONALLY . DIVERSE GAMBLING AWS rollout COMPANY OF SEAL *
Slide 32: Creating scale
Creating scale Creating Scale BUILDA DIGITALLY LED, INTERNATIONALLY DIVERSE GAMBLING COMPANY OF SCALE Generate economies of scale across the Group Utilising core platform components globally: * Global trading platform * Smart Data Platform Build global centre of excellences for key supporting functi
Slide 33: Focus on Customer, Team and Execution
Focus on Customer, Team and Execution Weare ina stronger position * Wehave a renewed operational focus on Customer, Team and Execution « Almost a quarter of revenue is now generated outside of the UK * Weare capitalising on our unique position in the US sports betting market with valuable partnershi
Slide 34: Q&A
Q&A Ulrik Bengtsson, CEO Ruth Prior, CFO
Slide 35: Appendices
/ Bilt ML Appendices
Slide 36: US state regulation map
WA ND MT MN ME WI OR SD VT ID MI NH WY NY MA NE IA CT PA RI IL IN OH NV UT NJ CO KS MO WV DE KY VA MD CA DC OK TN NC AZ AR Live states NM Expected 2020 SC MS GA Expected 2021 onwards LA AL Currently not expected TX to regulate FL
Slide 37: Glossary
Glossary Adjusted earnings per share (EPS) Adjusted operating profit Adjusted results Amortisation Amounts wagered ARPU Basic EPS Cost per acquisition (CPA) EBITDA FVAs Gross gambling yield Gross win Gross win margin / net revenue margin Net debt for covenant purposes Net revenue New accounts OTC PA