William Hill — H1 2019 Earnings Presentation
34 slides from William Hill's earnings presentation, Aug 9, 2019
Slide 1: Half-year results 2019
9 August 2019 12018 om ended 2 July 2019)
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: H1 2019 highlights
H1 2019 highlights * — Diversifying Online with international markets contributing 33% of revenue in H1 * UK: trends improving through the period with net revenue +7% in Q2 * — International: positive momentum with Mr Green, on track for c£4m annualised cost synergies in 2019 * Building a scale busi
Slide 4: Ruth Prior, CFO
. ss The USA celebrate winning the 2019-FIFA Ruth Prior, CFO Women’s World Cup
Slide 5: Group income statement — in line with expectations
Group income statement — in line with expectations Addition of Mr Green and US Net revenue! 797.2 14.5 817 802.9 +1% —» | sowth offset by Retail since £2 stake limit Cost of sales (195.3) (1.9) (197.2) (196.6) +0% Gross profit 601.9 12.6 614.5 606.3 +1% Reduced profitability with Net operating expen
Slide 6: Online KPIs — period of transition
Online KPIs — period of transition UK International H12019 H12018 %||H12019 H12018 % Net revenue (£'m) 253.1 -3% 123.5 1% Unique actives (‘OO0) 1,916.1 -11% 881.2 +9% New accounts (’000) 540.9 -9% 238.5 +1% Average revenue per user (£) 132 +8% 140 -9% Average cost per acquisition (£) 119 -3% 161 -8%
Slide 7: Online — revenue growth with addition of Mr Green
Online — revenue growth with addition of Mr Green H1 2019 impact of enhanced customer due diligence “30 measures: revenue £16m, adjusted operating profit £11m. Sportsbook amounts wagered 2,286.0 2,352.7 3% YoY impact now at an end - Sportsbook gross win margin 8.0% 8.3% -0.3 ppts Sportsbook net reve
Slide 8: Retail — performance since April as expected
Retail — performance since 1 April as expected 2018 £m Sportsbook amounts wagered! 1,119.3 1,071.7 +4% Average no. of LBOs 2,306 2339 M Average no. of machines 9,004 9,244 -3% - Sportsbook gross win margin 18.4% 18.4% -0.0 ppts Gross win / machine / week? £795 £1,028 23% Sportsbook net revenue 205.4
Slide 9: US update - leading market share across US
US update - leading market share across US Operator Service Provider Lottery Pow | ote | ™ retail Se 1 ; Handle ($m) 766.6 149.2 77. 62.4 13.5 1,292.2 Gross win margin 65% 57% 84% | 78% | 13% 63% 121% 5.0% 6,9% Market share! 32% 10% 21% ' 80% | 32% 8% 100% 100% 27% Direct revenue? v v v H v t ' ' H
Slide 10: William Hill US (local currency) — strong wagering growth
William Hill US (local currency) — strong wagering growth across business US US US US Existing? Expansion Expansion Expansion Total US Total US Retail Online Total? 2019 2019 2019 2019 2019 2018 % - $m $m $m $m $m $m change Continued strong growth in mobile > Amounts wagered 666.5 +51% wagering, now
Slide 11: Cash flow
Cash flow Cash generation Depreciation impacted by IFRS 16 Additional interest costs from dual- running bonds Net cash impact of the £170m acquisition of Mr Green, prior year includes the sale of Australia and NYX Cash capex 2019 £m 2018 £m Online 34.4 22.9 Retail 13 64 US 77 49 IT / other 6.9 8.9 T
Slide 12: Balance sheet and revised guidance update
Wi. Balance sheet and revised guidance update Net debt to EBITDA for covenant purposes! in line with expectations at 2.0x — leverage will increase with US investment and lower Retail EBITDA Retail: £50-70m steady-state profit range — mid-range in 2019, increasing in 2020 Online: maintain market shar
Slide 13: Retail update
Slide 14: Impact of £2 stake limit
Oa. \\\' Impact of £2 stake limit * Gaming revenues down 45% following implementation * Customer migration from B2 to B3 in line with expectations * Positive substitution into sports betting — 7% LFL increase in staking — SSBT machine weekly average increasing by 17%
Slide 15: Decisive action to mitigate
Decisive action to mitigate * Proposed closure of c700 shops announced * Doit once, do it right — Addresses management and support costs — Certainty for our employees — Resume our focus on the future — Optimal EBIT outcome for the business * Majority of shop closures will be in Q4 * Ongoing manageme
Slide 16: A resilient business
A resilient business ¢ Allthe right shops in all the right places — Increased SSBT density — Resumed innovation activity — Disciplined management of controllable costs — Profit per shop continues to be industry leading * Profit remains in line with guidance * Resilient retail division making a posit
Slide 17: Philip Bowcock, CEO
England win the Cricket World Cup on the last Philip Bowcock, CEO ball vs. New Zealand — ihe _
Slide 18: Digital strategy
Digital strategy BUILD THE WORLD'S MOST TRUSTED DIGITAL GAMBLING BRAND STRATEGIC GOALS Market leading mobile Sportsbook Clear William Hill brand position and strong value perception Advanced Customer Lifetime Management capabilities and focus on incremental gains International expansion Creating a p
Slide 19: Online UK — transition year with strong progress in key customer metrics
Millia. Online UK — transition year with strong progress in key customer metrics ¢ Improvements to Sportsbook and gaming, and customer experience touch points — Live Casino enhancements — e.g. in-game quick deposit — Improved navigation in gaming app — Live scores — Enhanced registration framework s
Slide 20: Online UK — strong progress in key customer metrics
Online UK — strong progress in key customer metrics +33% Y-O-Y All-time-high customer satisfaction & & @ GS GP @ @ H & F O_O OP O_O @ FEM FPF PM MA SMS HK Sw SF Ww VF +3 ppts Y-O-Y in our usability score Ease of use +42% in our NPS from Jan’ 19 Net Promoter Score (3 months rolling average) Reduction
Slide 21: Delivering a clear William Hill brand proposition
Delivering a clear William Hill brand proposition
Slide 22: Addressing the issues driving public concern, increasing collaboration
Addressing the issues driving public concern, increasing collaboration across the industry Voluntary ‘whistle-to-whistle’ ban around live sports pre-watershed came into effect 1 August Commitment by five major operators to safer gambling measures and increased treatment funding Ongoing collaboration
Slide 23: Online International — diversifying our business
Online International — diversifying our business * Integration Revenue mix — Progressing well — Cost synergies: on track to deliver c£4m annualised this year, 5 c£6m Year 3 target 33% — Malta hub established for all non-UK operations p 67% * Markets — Good growth in Mr Green‘s major markets except S
Slide 24: To be the US market leader
TO BE THE US MARKET LEADER STRATEGIC GOALS Existing partnerships give us retail and ‘first skin’ mobile access to 17 states If Eldorado/Caesars deal completes in H1 2020: . 34 casino properties . Five additional states Market access deals with land- based partners essential in majority of states New
Slide 25: Retail Mobile US Expansion
• • 212 • • 945 241 666 492 • 371 247 529 150 59 370 394 452 487 498 • 305 338 238 2012 2013 2014 2015 2016 2017 2018 H1 2019 • Retail Mobile US Expansion
Slide 26: Currently live
Currently live Delaware Mississippi MT Nevada1,2 New Jersey1 Pennsylvania1 ME Rhode Island1 West Virginia1 OR New Mexico NH MI NY MA New York (retail) IA Arkansas RI PA CT Expected in 2019-2020 IL IN OH NV NJ CO DE Illinois1 MO WV Indiana1 CA KY MD Iowa1,2 DC Tennessee1 TN NC Washington D.C. AZ AR L
Slide 27: Strongest market access, potential population
Strongest market access, potential population of 175 million people Illinois Indiana lowa Tennessee Washington D.C. Louisiana Missouri Florida Ohio Connecticut Massachusetts Michigan Colorado Montana Oregon New Hampshire Maryland Maine Arizona 4 {Population © £2. Chew orn & “eve. 1 1.0 | 3.0 h 3.0 '
Slide 28: Growth opportunities
Growth opportunities * Eldorado takeover of Caesars expected to complete in H1 2020 ¢ William Hill benefits through increased market + access via exclusive deal with Eldorado: (oy ELDORADO £2 s ELDORADO > — Secured access to states increases from 15 to 20, including New York, Arizona, California, N.
Slide 29: Operational excellence: proprietary tech platform
Operational excellence: proprietary tech platform ¢ Proprietary platform built from best-in-class systems from across the Group — William Hill Sportsbook platform — Player Account Management (NeoGames, 30.9% owned by William Hill) — Betting engine (Grand Parade) — William Hill Global Trading Platfor
Slide 30: Brand and marketing: partnership opportunities
Brand and marketing: partnership opportunities * Exploring options for national media a + . E€ ELDORADO t partnership AeESORTS. $2 SaLESARS * Key drivers in our choice of partner: Customer rewards — strong digital database Programme — exclusive media integration — closely aligned interests Customer
Slide 31: On track with execution of strategy
On track with execution of strategy * Investing to capitalise on expansion of US sports betting market * Driving Online growth in the UK and internationally * Decisive action taken to ensure long-term profitability of Retail * Proactive and collaborative approach to sustainability agenda * Full-year
Slide 32: Philip Bowcock, CEO
Philip'Bo > K p id CF | D
Slide 33: Appendices
/ Bilt ML Appendices
Slide 34: Glossary
Glossary Adjusted results Amortisation Amounts wagered ARPU Adjusted earnings per share (EPS) Basic EPS Cost per acquisition (CPA) EBITDA FVAs Gross win Gross win margin / net revenue margin Adjusted operating profit OTC Net debt for covenant purposes Net revenue New accounts PBIT Sportsbook SSBT Un