William Hill : Annual Report and Accounts 2020

CONTENTS

Strategic Report

• 1 Our Purpose

• 2 Chairman's Statement

• 4 Group at a Glance

• 6 CEO's Review

• 12 Market Overview

• 14 Our Business Model

• 16 Stakeholder Engagement

• 18 Key Performance Indicators

• 20 Strategy in Action

• 26 Sustainability Report

• 40 Non-Financial Information Statement

• 41 Financial Review

• 48 Viability Statement

• 50 Managing our Risks

Directors' Report

• 54 Governing our Strategy

• 55 Board of Directors

• 58 Chairman's Governance Statement

• 61 Corporate Governance Report

• 74 Audit and Risk Management Committee Report

• 79 Corporate Responsibility Committee Report

• 82 Nomination Committee Report

• 85 Directors' Remuneration Report

• 100 Other Statutory Information

• 103 Directors' Statement of Responsibilities

Financial Statements

• 104 Independent Auditor's Report

• 118 Group Financial Statements

• 160 Parent Company Financial Statements

• 169 Five-Year Summary

• 170 Statement of Group Accounting Policies

Other Information

• 182 Abbreviations and Glossary

• 184 Shareholder Information

Some imagery has been taken before the implementation of measures such as social distancing and recommendation to wear a mask.

Pages 1 to 53 form the Strategic Report of William Hill PLC for the 52-week period ended 29 December 2020.

The Strategic Report has been approved by the Board of William Hill PLC and signed on behalf of the Board by the Chief Executive Officer and the Chief Financial Officer.

2020 PERFORMANCE HIGHLIGHTS

Net revenue1 (£bn)

£1.3bn

202020192018

1.3

1.6

Basic earnings/(loss) per share (p)

6.2p

1.6

Basic, adjusted earnings per share4 (p)

2.3p

Profit/(loss) before interest and tax2 (£m)

£80.3m

Adjusted operating profit3 (£m)

£57.3m

• 202057.3

2019

2018

Net debt/EBITDA (x)

0.8x

• 1. Net revenue is an industry term equivalent to revenue as defined in the notes to the financial statements.

  233.6

• 2. We achieved a statutory profit of £80.3m due to a net total of £23.0m exceptional credit in relation to VAT income received in the period, partially offset by a Retail impairment charge and costs relating to the transaction with Caesars Entertainment, Inc.

• 3. Adjusted operating profit is defined as profit before interest and tax, excluding exceptional items and other defined adjustments. Further detail on exceptional items and adjusted measures is provided in note 3 to the financial statements.

4.

Adjusted EPS is calculated using adjusted profit after tax and is used in evaluating performance for dividend policy purposes. Further detail on adjusted measures is provided in note 3 to the financial statements. The calculation of EPS measures is shown in note 11 to the financial statements.

R1.

This performance metric is linked to Directors' remuneration (see page 85 onwards).

OUR PURPOSE IS TO SAFELY CONNECT OUR CUSTOMERS WITH THEIR FRIENDS AND SPORTS THROUGH A MARKET-LEADING BETTING AND GAMING EXPERIENCE

William Hill PLC Annual Report and Accounts 2020

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CHAIRMAN'S STATEMENT

I WOULD LIKE TO THANK THE WILLIAM HILL TEAM FOR THEIR DEDICATION AND RESILIENCE."

2020 has been a year to remember, bringing further consolidation within the industry alongside the resurgence of regulatory changes in many countries. In any typical year these would be material developments, but in 2020 this happened against the backdrop of the Covid-19 pandemic and the rapid changes it brought with it.

I would like to thank the entire William Hill team for their dedication and resilience throughout this year. From our shop colleagues to our IT developers and our customer service teams, William Hill delivered a world-class product, safely and responsibly. We looked after our customers, suppliers, and all stakeholders by upholding the values and culture which have made us successful over many years. We were able to improve our customer experience, strengthen the balance sheet and secure an offer valuing our equity at c.£2.9bn and so delivering a clear outcome for our shareholders.

Significant progress

Our year started well, with strong growth in Online and the US. However, this early momentum was disrupted by the onset of the Covid-19 pandemic in March and the necessary closure of our Retail estate. While live sporting events were cancelled around the world, we used the time wisely to upgrade systems, launch new products and enhance player safety. We took decisive action to preserve liquidity and strengthen the balance sheet, cancelling the final dividend and raising £218.6m through a successful equity placing in May. In conjunction with the VAT refund of £208.3m, the Group had sufficient liquidity to withstand the uncertain trading conditions, while maintaining investment in the business.

As the year unfolded, the revitalised leadership team delivered on the Group's strategic growth ambitions through international diversification and greater digital capability. The International Online business performed well while the UK Online business returned to growth. Although we elected not to re-open a small portion of our Retail estate, we protected jobs, topped up wages to full pay and repaid the furlough scheme monies.

In the US, we materially expanded our geographic and media footprint, leveraging the existing partnership with Caesars Entertainment, Inc. (Caesars) and commencing new partnerships with CBS Sports and ESPN. The reinvigoration of our product and technology suite gained traction across the Group, particularly evident in the UK and US.

The recommended cash offer

The rapid growth now evident in the US sports betting and iCasino market is creating an intensely competitive environment, requiring significant investment to maximise growth opportunities. This material execution risk is coinciding with the increased possibility of further regulatory intervention in the UK and Europe.

The compelling progress we made in the past 18 months and our reinforced financial flexibility place us in a stronger competitive position. However, we also recognised that significant marketing spend, and multi-year investment, is required to realise our growth ambitions, along with the need to broaden the scope of our relationship with Caesars.

Following an unsolicited approach from Apollo Management International LLP in August, the Board conducted a private auction, culminating in the cash offer from Caesars of 272p per share, which we unanimously recommended. During the process, the interests of all stakeholders were considered and we concluded that the offer took account of the potential for further regulatory

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William Hill PLC Annual Report and Accounts 2020

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