1. hobbies and interests
2. games
3. gambling

THE HOME OF BETTING
William Hill corporate presentation
April 2015
1
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
2014: a record year
World Cup
372.2
330.6
276.8
Retail
Online
Australia
3%
335.0
6%
275.7
Other
3%
8%
UK
Non-UK
15%
18%
85%
82%
2013
2014
30%
32%
61%
2010
2011
2012
2013
2014
£372.2m
Record operating
profit1, up 11%
3
1.
2.
2013
57%
2014
40%
of net revenue from
digital businesses2
Operating profit/loss is defined as pre-exceptional profit/loss before interest and tax, and the amortisation
of specific identified intangible assets recognised on acquisitions
Online and William Hill Australia
18%
of net revenue from
international markets
Best ever operating profit result in 2014
Unaudited
2014
•
Successful diversification continues
Group net revenue
+8%
•
Record-breaking World Cup performance with Online
wagering for the tournament +211% on 2010
•
Weaker sports results year-on-year in Retail and
Online
•
Continued strong growth in Online Sportsbook
turnover and improved gaming growth
•
Retail supported by gaming machine growth and
effective cost control
•
Improving Australia KPIs
•
Continued strong performance in US
-
Online net revenue
+18%
-
Retail net revenue
+0%
-
Australia net revenue2
+11%
-
William Hill US
+31%
-
Telephone
-28%
Group operating profit1
40%
18%
of net revenue
from digital
businesses3
(2013: 36%)
•
of net revenue
from international
markets
(2013: 15%)
1.
4
+11%
2.
3.
Full-year dividend +5%, ahead of EPS growth
Operating profit/loss is defined as pre-exceptional profit/loss before interest and tax, before the
amortisation of specifically identified intangible assets recognised on acquisitions
Pro forma local currency comparisons
Digital businesses are Online and William Hill Australia
William Hill at a glance
•
•
•
One of the world’s leading multi-channel betting and gaming company
16,000 employees in nine countries
Continued diversification
• Betting and gaming
• Land-based and digital
• UK and international
Revenue by geography
Revenue by business segment
Revenue by product type
2%
2%
1%
8%
7%
8%
46%
54%
32%
58%
82%
UK
5
Australia
US
Other
Retail
Telephone
William Hill US
Online
William Hill Australia
Betting
Gaming
Our strategic priorities
MULTI-CHANNEL
INNOVATION,
TECHNOLOGY AND DATA
•
•
•
•
•
Emerging trend in multi-channel usage in the UK
William Hill best placed as no.1 in Retail and no.1 in Online
Already successful in gaming launches
Drive towards one customer proposition
Higher yields, higher retention, lower CPA
UK betting population by channel and age1
100%
21%
80%
Retail: 59%
60%
26%
23%
5%
30%
22%
7%
Desktop:
10%
8%
Mobile:
4%
7%
20%
50%
44%
18-24
25-34
1.
55%
66%
80%
0%
Retail
6
13%
7%
15%
29%
40%
INTERNATIONAL
19%
Kantar Retail Gambling Tracker Q4 2013. 7.4 million people used Retail, Online or Mobile in
the past 12 months out of a UK population aged 18+ of 47.8 million people
35-44
Multi-channel
45-54
Online
55+
Our strategic priorities
MULTI-CHANNEL
INNOVATION,
TECHNOLOGY AND DATA
•
•
•
•
Blend of internal and external excellence and innovation
Strong in-house track record: Trading platform and Vegas
Project Trafalgar
Improved data management, more personalisation
Investing in internal technology capabilities1
Increasing proportion of
internal
development spend
INTERNATIONAL
53%
50%
140
70%
120
60%
50%
100
41%
40%
80
30%
60
20%
10%
40
40%
0%
20
37%
‐10%
0
‐20%
H1/12
2010
7
1.
2011
Company data
2012
2013
2014
H2/12
H1/13
H2/13
H1/14
Total casino
Vegas yoy growth
Playtech casino yoy growth
Our strategic priorities
Top ten gambling markets by gross win (2013, £bn)1
•
•
•
•
•
MULTI-CHANNEL
Leverage existing capabilities in other markets
Focus on five regulated markets
Flexible enough to exploit opportunities
Consider complementary gambling skill sets
Evolving technology can support B2B potential
INNOVATION,
TECHNOLOGY AND DATA
INTERNATIONAL
215
8
1.
32
142
226
H2GC Global Gambling Data (February 2014); population data (Wikipedia)
180
449
106
Gross win per capita (£)
116
212
153
UK Retail
•
Largest business segment, representing 57% of revenue
•
Market leader with 2,360 LBOs1, equivalent to 26% market share2
•
49% betting (OTC) and 51% gaming (machine)
•
£911.5m net revenue and £193m operating profit in 2014
•
Resilient, cash-generative business
Delivering growth against
challenging economic backdrop
Leader in UK retail bookmaking3
Evolving product mix (revenue)
907
46%
Other,
14%
837.9
783.1
789.7
Betfred,
16%
757.5
William
Hill,
26%
4%
3%
10%
12%
25%
Coral,
20%
2009
9
1.
2.
2010
2011
2012
2013
Licensed betting offices
Gambling Commission Industry Statistics April 2012-March 2013
Ladbrokes,
25%
2010
Horse racing
Greyhounds
Other
51%
6%
4%
8%
11%
20%
2014
Football
Virtual
Gaming
Online
•
c1,250 employees across seven countries, 3% of Group revenue
•
Market leader with 15% market share by revenue in the UK1
•
48% betting (Sportsbook) and 52% gaming (casino, bingo, poker)
•
£527m net revenue and £178m operating profit in 2014
•
Well-positioned under UK Point of Consumption Tax change
Leader in UK online market2
Strong profit growth
446.3
406.7
321.3
50%
15%
20%
4%
Growing ahead of the market3
14%
22%
5%
251.5
203.5
16%
5%
9%
5%
8%
2009
10
1.
2.
2010
2011
2012
2013
William Hill
Betfair
Sky Bet
Ladbrokes
PokerStars
Others
Bet365
Paddy Power
Gamesys
Gala Coral
888
Gambling Data , European Regulated Online Markets Data Report, September 2014
2009 to 2013 CAGR, UK data from H2GC
12%
4%
-4%
8%
7%
15%
12%
13%
11%
Sportsbook
Casino
Poker
WH Online
Bingo
UK
Total
Italy and Spain
•
Mobile already generating 47% of net revenue
•
Strengthening brand awareness: No. 1 in Italy, No. 2 in Spain1
•
Strong market share gains
•
On track for break-even in 2015
Italy online sports market share by turnover2
Others, 14%
Bet365
28%
Snai
7%
Lottomatica
10%
Sisal
8%
Bwin
8%
Eurobet
9%
William Hill
9%
11
Other
7%
Sportium
8%
William Hill
19%
Paddy Power
7%
1.
2.
3.
Spain online sports market share by turnover3
European Brand Study, July 2014
Agimeg and AAMS
DGOJ, company estimates
Bwin
20%
Bet365
46%
William Hill Australia
•
Attractive growth market with high per capita spend on gambling
•
Online betting projected to grow at 14% CAGR over next few years
•
Structural growth drivers in core areas of expertise – fixed odds, sports betting, mobile
•
Established through acquisition of Sportingbet, Centrebet, tomwaterhouse.com
•
Rebranding as William Hill
•
A$223m net revenue and A$45m operating profit in 2014 (pro forma)
•
Potential for long-term regulatory expansion in online in-play and gaming
Online is growing as a
proportion of overall betting1
100%
9%
80%
18%
14%
60%
59%
34%
34%
10%
13%
14%
43%
25%
21%
19%
6%
21%
6%
26%
27%
2011
2013
External
strategy
People
0%
2006/07
TAB
12
Clear strategy for a competitive market
Trading
40%
20%
The market is consolidating
1.
On course
2012/13
Telephone
Internet
Tabcorp
Tatts
Sportsbet
William Hill
NSW and Victoria thoroughbred turnover, Australian Racing Board Fact Book
Other
User
experience
Brand
William Hill US
•
Land-based sports books and mobile offering in Nevada, with B2B opportunities
•
Exclusive risk manager for Delaware state lottery
•
Full gaming licence, well-positioned to exploit growth opportunities
•
Strong performance since integration
•
$49m net revenue and $16m operating profit in 2014
Nevada sports handle1 growth
Nevada sports book market share
16%
55%
84%
45%
No. of books
Other
13
1.
Handle is defined as the total amounts wagered. Data from UNLV Center for Gaming Research March 2013
GGR
William Hill
Strong free cash flow and solid balance sheet
Strong cash generation (£m)
Diversified sources of debt funding (£m)
2020
189.4
131.9
99.4
107.2
17.4
35.1
17.5
2009
Dividends
38.5
82.8
1.
74.6
65.0
53.9
71.1
87.1
104.0
52.3
60.9
2010
2011
2012
2013
2014
Non controlling interests
Around 2.5x dividend cover
14
540
375
2018
540
375
2017
540
375
2016
540
375
300
2015
540
375
300
2014
540
375
300
95.2
27.0
34.6
Capex1
2019
21.6
31.0
116.8
375
Capital expenditure net of disposals
Deleverage
0
500
Revolving credit facility
1000
4.25% bond
7.125% bond
Net debt/EBITDA 1.4x vs covenant of 3.5x
Regulatory update
•
£50 journey to be implemented 6 April 2015
•
Point of Consumption Tax implemented
December 2014
•
Consultations on the Horserace Betting Levy,
contributions from offshore operators and
possible replacement with a betting right
•
4th EU Money Laundering Directive
•
Responses awaited on planning and
advertising
15
Online UK performance in H2 2014
Net revenue
New accounts
Unique actives
Revenue per active
Cost per acquisition
+29%
+7%
+17%
+10%
+4%
Responsible Gambling Trust report
•
Report published on 1 Dec 2014 on conclusion of two-year research programme
–
–
•
Key conclusions
–
–
–
–
•
Distinguishing between harmful and non-harmful gaming machine play
Measures to limit harmful play without impacting on those who do not exhibit harmful behaviours
It is possible to distinguish between harmful and non-harmful gaming machine play
Data are based on an unrepresentative group so policy-markers are cautioned about implementing
interventions on the basis of these data
Holistic approach to problem identifying harm is required, understanding behaviour and patterns of play
Further work required to identify harms that can result in more targeted campaigns
Other takeaways
–
–
–
No ‘silver bullet’ on harm minimisation measures
Problem gambling is found at all staking levels and problem gamblers use multiple products
RGT recommends ‘it would be inadvisable to rush to policies on the basis of these foundational studies’
£5.13
16
average stake
per bet
3%
Note: all numbers refer to the average of B2 + B3 activity
of sessions involve
£100 max. stake
£7
average loss
per session
Compelling investment proposition
Market leading UK multi-channel betting and gaming business
Capitalising on fast-growing digital opportunity
Further diversification through international expansion
Strong free cash flow and balance sheet
17
Record-breaking World Cup wagering
H1 2014
£m
FY 2014
£m
FY 2010
£m
Change
%
Retail
33.5
44.3
48.6
-9%
Online
122.3
158.6
51.0
+211%
3.7
5.3
15.8
-66%
13.0
18.6
-
-
172.5
226.8
115.4
+97%
Retail
8.0
12.9
18.1
-29%
Online
17.7
24.7
10.2
+142%
Telephone
0.4
0.6
3.9
-85%
Other1
1.7
2.3
-
-
27.8
40.5
32.2
+26%
Retail
24.0%
29.2%
37.2%
-8.0 ppts
Online
14.5%
15.6%
20.0%
-4.4 ppts
9.5%
11.3%
24.5%
-13.2 ppts
Other1
13.1%
12.4%
-
-
Total gross win margin
16.1%
17.8%
27.9%
-10.1 ppts
Telephone
Other1
Total amounts wagered
Total gross win
Telephone
18
1.
‘Other’ includes William Hill Australia and William Hill US