TIDMWMH
RNS Number : 2340E
William Hill PLC
26 February 2020
William Hill PLC
2019 Annual Report and Accounts
26 February 2020
The Company will today publish on its website
www.williamhillplc.com the Annual Report and Accounts for the
period ended 31 December 2019 (the 2019 Annual Report).
For those shareholders who have elected to receive paper
communications, copies of the 2019 Annual Report will be posted to
shareholders on 11 March 2020, together with the Notice of 2020
Annual General Meeting and proxy forms.
Shareholders who have not elected to receive paper
communications will be notified of the availability of the 2019
Annual Report on the Company's website.
In accordance with Listing Rule 9.6.1 of the UK Financial
Conduct Authority (FCA), a copy of the 2019 Annual Report will be
submitted to the UK Listing Authority and will be available for
public inspection at the National Storage Mechanism (NSM)
www.morningstar.co.uk/uk/NSM.
The information included in the final results announcement
released on 26 February 2020, together with the information in the
Appendices to this announcement which is extracted from the 2019
Annual Report, constitute the materials required by the FCA's
Disclosure Guidance and Transparency Rule 6.3.5R. This announcement
is not a substitute for reading the 2019 Annual Report in full.
Page and note references in the Appendices below refer to page and
note references in the 2019 Annual Report.
Balbir Kelly-Bisla
Company Secretary
26 February 2020
OAM: Annual financial and audit reports
William Hill LEI: 213800MDW41W5UZQIX82
Cautionary statement regarding forward-looking statements
William Hill PLC (William Hill) cautions investors that any
forward-looking statements or projections made by William Hill
including those made in this announcement, are subject to risks and
uncertainties that may cause actual results to differ materially
from those projected. Such factors include, but are not limited to
those set out in Appendix A of this announcement.
APPIX A
Managing our Risks
A STRONG RISK MANAGEMENT APPROACH
We continue to take a pragmatic and commercial approach to
managing risk which is carefully balanced with commercial
realities, allowing us to acknowledge an increased appetite for
risk where significant opportunity exists. First and foremost, we
put our regulatory requirements and the protection of our customers
as key priorities when setting our risk appetite. We have invested
in our governance and control environments to ensure this approach
to regulation and player safety is understood and executed
consistently.
No system of control or governance can practically seek to
guarantee all risk is mitigated. It is the aim of the Group risk
management process to highlight risks, ensure management are aware
of the ongoing position, support their decision making so that they
can take appropriate steps within a wider framework of risk
management, and to deliver in line with the Board's risk
appetite.
Our approach
The Board is responsible for oversight and approval of
appropriate responses to potentially significant risks in pursuit
of the Group's strategic objectives. During the year, the Board
re-affirmed the existing risk appetite as being appropriate. The
Board confirms the assessment of the principal risks facing the
Group, including those that would threaten its business model,
future performance, solvency or liquidity was robust.
Each business unit has fully considered their own risk profile,
which has been appraised, challenged and approved by the Executive,
with a consolidated view presented to the Board.
The Group Executive are charged with managing risk, and
undertake these duties through regular review of the business unit
risk registers, by monitoring key risk indicators, and formally
considering risk as part of the investment appraisal process, Group
and regional capital expenditure and project appraisals, review of
key changes and a thorough discussion with the Board as part of
Group strategy days.
We set out on the following pages the principal risks facing the
business, as approved by the Board, as well as commentary providing
examples of how we mitigate these risks. As explained, this list is
not exhaustive, but represents the Board and management's
assessment of those risks which require our considered response at
this time.
Brexit
We previously set out our position on Brexit within the 2018
Annual Report and Accounts, which has required careful monitoring
and action by management. The key challenges to the business are
access to licensed markets, availability of staff and impacts on
data handling. Our acquisition of the Mr Green business, and the
associated licences in Malta held by our international business
mitigates the licence issue. We have appropriate business
continuity arrangements in place for short term border disruptions
affecting the movement of our people, and are not otherwise over
exposed to the impact of Brexit in this area. Finally appropriate
data sharing arrangements are in place to allow us to continue to
fulfil our data handling obligations.
Given these mitigations, Brexit is not assessed as a Strategic
level risk, but is being handled in individual business unit risk
registers.
EMERGING RISKS
Our risk management processes include consideration of emerging
risks, which are reviewed by Executive Management. We engage in
such horizon scanning to allow management to take timely steps to
intervene as appropriate. Methods to identify emerging risks
include reviews with both internal and external subject matter
experts, use of key risk indicators from management information and
reports, and consultation papers and publications from within and
outside the industry.
The ever-changing regulatory landscape is a risk to the
business, and throughout the year some risks have emerged which
have been monitored by management, and action was taken when these
started to crystallise. Emerging risks (including opportunity
risks) continue to develop, for example, live debates in the UK
market regarding caps on online gaming stakes, media speculation
across European markets on advertising restrictions, moves to
further responsible gambling regulation, and possible increases to
taxation rates. We continue to monitor these emerging areas and
others to assess where action is required.
International opportunities continue to arise, which represent
risk in decision-making on strategic opportunities, or our position
in key markets changing as others make strategic moves. There is
clear risk in the regulatory complexity and the ability to operate
effectively in new markets as they develop. We have experience in
opening new markets, enhanced by the Mr Green acquisition, which
helps our mitigation as these opportunities develop.
Risk category Strategic Management and mitigation examples Net risk
area movement
Regulatory, political
and legal risk
--------- --------------------------------------------- ----------
Risks arise from breaches 1 We seek to work with our peers Increasing
and/or changes to and key groups within the industry
regulation, regulatory and through direct engagement with
policy and interpretation, key stakeholders, to provide input
and applicable laws. to the approach to regulation,
Our continuing international both internationally and particularly
expansion, and the at this time in relation to the
opening up of newly UK Online market. As we increasingly
licenced markets, diversify our revenues across multiple
brings further complexity regulated markets we become less
to our multi-jurisdictional sensitive to changes in any one
regulatory position, individual market. Our depth of
and the additional experience in the US market through
requirements internally an established, compliant business
to ensure we are fulfilling in Nevada provides a sound platform
our obligations. from which to extend our US compliance
processes and teams to meet regulation
in new and emerging US states.
Our industry exists 2 Throughout the year, we have strengthened
in varying political our Compliance functions significantly,
regimes, with the investing in growth areas, aligning
sentiment towards our regulatory teams to the new
gambling varying depending business structures internationally,
on the regime. The and addressing historic issues
attitude towards gambling highlighted within the 2018 regulatory
in these landscapes, settlement. We revised the structure
and the relationship of our compliance teams, providing
with political agendas, local accountability aligned with
tends to be driving central oversight and assurance.
political decisions Group management receive appropriate
based on the maturity comfort that compliance obligations
of those markets. are being addressed consistently
and proportionately across the
Group.
Further, given our 3 In the year we completed a major
presence in multiple project, which clarified the organisational
jurisdictions and accountabilities for key areas
as a large, listed, of compliance along a three lines
and regulated employer of defence model. This provided
of scale we have clear additional oversight and control
legal obligations of key regulatory matters whilst
to manage and monitor also ensuring that management were
our regulatory requirements. directly accountable for embedding
compliance activities throughout
the Group.
4 Given the increasing complexity
driven through the number of regulated
markets, and our continuing growth
ambitions, the gross risk is assessed
as increasing which results in
an increase to the overall net
risk as some of these factors are
not directly controllable. Where
we are able to influence or control
risks internally in order to mitigate
them we have taken appropriate
action.
--------- --------------------------------------------- ----------
Strategic risk
--------- --------------------------------------------- ----------
Our core strategy 1 The US remains our most significant Stable
is based on a set near-term opportunity. As we continue
of key assumptions, to hold leading positions in existing
and in some cases states, and work to launch in newly
those assumptions accessible states, the complexity
contain informed views of our US business increases. States
around how the risk have varying models depending on
landscape will develop local regulations and each business
and also where this must be suitably tailored to each
will present opportunity. states' requirements.
Within our industry 2 The PLC Board actively reviews
this strategic risk our US growth strategy, and adequate
includes the disruption governance and oversight is in
of the competitive place to monitor progress. Our
landscape as others new relationship with Eldorado,
engage in new business and further the Eldorado relationship
combinations, new with Caesars, increases our footprint
products and new routes and provides access to an increased
into additional markets. number of properties, licences
and customers. We continue to assess
opportunities in the US, such as
the recent deal relating to Cantor.
Budgets are available for resourcing
support functions and rapidly maturing
the support environment for new
state launches from our core base
in Nevada, and locally as required.
We have already seen 3 The industry continues to see innovation
some of the assumptions and disruption. We recognise the
underpinning our strategic need to constantly evolve our offering
risks begin to crystallise. to remain credible in the market.
For example, 'early The ongoing integration of Mr Green,
mover' states have and the access to products, markets,
opened up following licences and skills this provides
the repeal of PASPA, is a key step in ensuring that
and we have seen further we continue to be an operator of
mergers and changes choice for our customers. By aligning
across the industry our new capabilities in Mr Green
during the year. Neither with our existing areas of strength,
of these matters represent such as the development capabilities
a conclusion to the of the Grand Parade business in
movement of the risk Krakow, we are able to continually
landscape as further refresh our product. Further alignment
changes are probable of technology and product under
in both instances. one leadership role helps drive
continual innovation, and ensure
our development efforts are fully
focused on enhancing our interactions
with our customers.
4 Our strength in the US market,
and the partnerships we have entered
into allows us to respond in line
with market evolution. Our increasing
strengths and offerings ensure
that we are well placed to excel
in continually evolving markets
elsewhere. For these reasons we
assess this risk as stable.
--------- --------------------------------------------- ----------
Market/financial risk
--------- --------------------------------------------- ----------
Our growth plans, 1 We proactively engage with lenders Stable
expansion into new and rating agencies, loan facilities
territories and continuous are kept under review, and we actively
improvement programmes monitor cash flow forecasts across
across the organisation the Group. We have adequate governance
mean we need to maintain in place to understand the implications
clear focus on liquidity of our liquidity and funding position
and funding. As with and appropriately prioritise how
all businesses, there we invest our resources to manage
is a need to balance our existing operations whilst
ambition with strong taking advantage of growth opportunities.
fiscal management
to ensure funds are
available and funding
requirements are met.
2 Investment opportunities are assessed
on a Group basis, and significant
investments are actively managed
through clear delegated authority
limits across the Group. This ensures
that significant programmes of
work, or individual projects are
approved at a Group level, ensuring
management are able to assess investments
across business units and ensure
funds are being invested in the
most appropriate way.
3 Overall our assessment is that
this risk remains significant,
but stable.
--------- --------------------------------------------- ----------
Operational risk
--------- --------------------------------------------- ----------
As with all businesses, 1 Historically William Hill has operated Stable
we face risks that a wide range of legacy systems,
our operational processes, which presents challenges to ensure
procedures and controls our platforms are stable and available
do not work efficiently at key times. Significant investment
and effectively if has been made in this area including
they are not correctly a project
implemented and managed.
A business of our 2 to move land-based data centres
size, complexity and into the cloud. Reliance on older
geographical footprint legacy platforms is reducing.
must ensure appropriate
systems and controls
are in place to manage
operations locally,
and provide Group
management with sufficient
information to align
operations across
the Group.
3 Technology has been brought together
with product under one function,
reporting to a single member of
the Executive Management team.
This will align priorities and
should lead to better prioritisation
and allocation of resource. Significant
investments have been made in addressing
legacy issues in recent years and
the record of unplanned issues
has declined significantly.
We continue to invest in our cyber
security response for both prevention
of issues and reaction to threats.
We work closely with leading-edge
partners
to access external solutions to
protect against significant application
and network denial-of-service attacks.
We also invest heavily in our own
internal protections and monitoring.
Attracting, developing and retaining
key talent is a continual risk,
particularly in competitive areas
such as technology development,
and in expanding markets such as
the US. Failure to secure the right
talent in the right location could
undermine our opportunity to deliver
strategic goals.
Our HR functions play active roles
in the benchmarking, retention
and development of talent pools.
The risk is particularly acute
in specific high-demand skill areas
and we continue to benchmark packages
and roles actively to ensure we
are well placed in such markets.
Succession planning is embedded
for key roles and actively updated
and reviewed by senior management.
Due to the proactive stance we
take in managing our operational
risks, and the continual monitoring
undertaken by management to ensure
corrective actions are undertaken
and completed, our overall assessment
is that the level of risk is stable
relative to prior years.
--------- --------------------------------------------- ----------
Tax changes
--------- --------------------------------------------- ----------
Our continued expansion 1 We have dedicated tax experts within Increasing
internationally brings the business supported by legal
added complexity to experts. Regular meetings are held
our tax positions, with government representatives
which requires careful in the UK and Gibraltar and in
management to ensure international markets to maintain
that we are fulfilling our compliant position and to engage
our requirements. actively in horizon monitoring.
Changing regulations
could affect our bottom
line.
3 Tax changes have been raised by
regulators in some international
markets, and our continued expansion
across the US and into emerging
markets increases the complexity
of our tax requirements.
--------- --------------------------------------------- ----------
Key Strategic area Net risk movement
1 Driving digital growth in the Stable
UK and Internationally
2 Remodelling Retail Increasing
3 Growing a business of scale in Decreasing
the US
4 Nobody Harmed
-------------------------------- ------------------
APPIX B
Related party transactions
Associates
During the period, the Group made purchases of GBP74.5m (53
weeks ended 1 January 2019: GBP73.3m) from Sports Information
Services Limited, a subsidiary of the Group's associated
undertaking, Sports Information Services (Holdings) Limited. At 31
December 2019, the amount receivable from and payable to Sports
Information Services Limited by the Group was GBPnil (1 January
2019: GBPnil). The Group made purchases of GBP4.5m from its
associated undertaking, NeoGames. At 31 December 2019, GBPnil was
payable to NeoGames in respect of purchases (1 January 2019:
GBPnil). The Group made available a $15m loan facility to NeoGames
in 2018. At 31 December 2019, $12.5m of the drawn down amount along
with $0.4m associated interest was receivable from NeoGames (1
January 2019: $6m drawn down with $0.2m interest). This loan is
considered to be low credit risk as Neogames have a low risk of
default and a strong capacity to meet its contractual cash flow
obligations in the near term.
During the period, the Group made purchases of GBP13k from Green
Jade Games Ltd. At 31 December 2019, the amount payable by the
Group was GBP5k.
All transactions with associates were made on market terms.
Remuneration of key management personnel
The remuneration of the directors, who are the key management
personnel of the Group, is set out below in aggregate for each of
the categories specified in IAS 24 'Related Party Disclosures'.
APPIX C
Directors' statement of responsibilities
The directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law, the directors
are required to prepare the Group financial statements in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union and Article 4 of the IAS
Regulation. They have elected to prepare the parent company
financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards
and applicable law), including FRS 101 'Reduced Disclosure
Framework'. Under company law, the directors must not approve the
accounts unless they are satisfied that they give a true and fair
view of the state of affairs of the company and of the profit or
loss of the company for that period.
In preparing the parent company financial statements, the
directors are required to:
- Select suitable accounting policies and then apply them consistently;
- Make judgements and accounting estimates that are reasonable and prudent;
- State whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
- Prepare the financial statements on the going concern basis,
unless it is inappropriate to presume that the Company will
continue in business.
In preparing the Group financial statements, International
Accounting Standard 1 requires that directors:
- Properly select and apply accounting policies;
- Present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
- Provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
- Make an assessment of the Company's ability to continue as a going concern.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy, at any time,
the financial position of the Company, and enable them to ensure
that the financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
We confirm that to the best of our knowledge:
- The 2019 Annual Report and Accounts, taken as a whole, is
fair, balanced and understandable, and provides the information
necessary for shareholders to assess the Company's position and
performance, business model and strategy;
- The Group Financial Statements, which have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union and Article 4 of the IAS Regulation
(in the case of the consolidated financial statements) and United
Kingdom Generally Accepted Accounting Practice, including Financial
Reporting Standard 101 'Reduced Disclosure Framework' (FRS 101) (in
the case of the parent company financial statements), give a true
and fair view of the assets, liabilities, financial position and
loss of the Group and the undertakings included in the
consolidation taken as a whole; and
- The Strategic Report and risk sections of the 2019 Annual
Report, which represent the management report, include a fair
review of the development and performance of the business and the
position of the Group, together with a description of the principal
risks and uncertainties that it faces.
Name Function
Roger Devlin Independent Non-Executive Chairman
Ulrik Bengtsson Chief Executive Officer
Ruth Prior Chief Financial Officer
Mark Brooker Senior Independent Non-Executive
Director
Jane Hanson Independent Non-Executive Director
Robin Terrell Independent Non-Executive Director
Lynne Weedall Independent Non-Executive Director
Gordon Wilson Independent Non-Executive Director
About William Hill
===================
William Hill PLC is one of the world's leading betting and
gaming companies, employing c12,000 people. Its origins are in the
UK where it was founded in 1934, and where it is listed on the
London Stock Exchange. The majority of its GBP1.6bn annual revenues
are still derived from the UK, where it has a national presence of
licensed betting offices and one of the leading online betting and
gaming services. William Hill's European Online business is
headquartered in Gibraltar and Malta, and is licensed online in 10
countries following the acquisition of Mr Green & Co AB in
January 2019. In 2012, it established William Hill US with a focus
on retail and mobile operations in Nevada and became the largest
sports betting business in the US. Following the ruling in May 2018
by the Supreme Court that the federal ban on state sponsored sports
betting was unconstitutional, William Hill US has expanded and
continues to expand as new states regulate sports betting. It is
now operating in nine states: Delaware, Indiana, Iowa, Mississippi,
Nevada, New Mexico, New Jersey, Rhode Island and West Virginia in
addition to Washington DC. Eldorado Resorts, Inc. currently owns
shares representing 20% of the share capital of William Hill US
Holdco, Inc., the holding company of William Hill US.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
ACSKZGZZFVGGGZM
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