Corporate By William Hill PLC

2015 Annual Report and Accounts

The 2015 Annual Report and Accounts, incorporating the audited financial statements, have been published today and are available as a PDF document on the Group's corporate website at  Notifications will be sent to shareholders who have opted for electronic communication.

Copies of the Annual Report will be posted to shareholders on 15 March 2016, together with the Notice of 2016 Annual General Meeting and proxy forms.  In accordance with Listing Rule 9.6.1, a copy of the 2015 Annual Report is being uploaded today to the National Storage Mechanism and will shortly be available for viewing.

A condensed set of the Company's financial statements and information on important events that have occurred during the financial year and their impact on the financial statements, were included in the preliminary results announcement released earlier today. That information, together with the information set out below, which is extracted from the 2015 Annual Report, is provided in accordance with the Disclosure and Transparency Rule 6.3.5 which is required to be communicated to the media in full unedited text through a Regulatory Information Service. This information should be read in conjunction with the Company's preliminary results announcement. This announcement is not a substitute for reading the full 2015 Annual Report.  Page or note references in the text below refer to page numbers and note numbers in the 2015 Annual Report.

Managing Our Risks

Assessing risk and putting steps in place to respond appropriately is essential both to protect our Group and to make correct business decisions affecting our future. We continue to balance risk with the opportunities the Group identifies, and an acceptance of a certain level of risk is essential to allow the Group to advance towards its strategic aims. The management of these risks is an inherent part of our strategy and the ongoing assurance provided to the Board delivers valuable insight into the progress against these aims.

Prioritising risks

We have set out the key risks facing the Group as approved by the Board. We also provide a view on the likelihood of these risks crystallising in the coming year and the potential impacts, along with an indicator of the change in risk compared to the prior year assessment. The narrative outlines how the Group is placed to deal with risks as they impact the business.

Our approach

The Board is responsible for the process to determine and execute appropriate responses to potentially significant risks in pursuit of the Group's strategic objectives. These actions are taken in the context of a defined risk appetite which has clear standards and definitions and which is reviewed annually by the Board. During the year the Board re-affirmed the existing risk appetite as being appropriate. The Board confirms that its assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity, and which are set out in this 'Managing our Risks' section, was robust.

The Board, with the support of the Audit and Risk Management Committee, routinely monitors risks that could materially and adversely affect William Hill's operational results, strategic and financial goals and receives regular assurance through its Committees as to how these risks are being managed and mitigated throughout the year.

We continue to assess how best to conduct risk management throughout the Group and confirm that we have formally assessed risk in each strategic business unit with local management, and formed a consolidated view of risk with senior executives, prior to review and approval by the Board.

Risk maps for each business unit have been prepared by local management and a consolidated view is presented to the Board, highlighting both perceived material changes in risk during the year and also any common themes for further review. As with prior years this assessment is an engrained and ongoing process which helps define assurance plans and advisory support throughout the year. Further evolution of our risk management practices is planned for 2016, including closer alignment of our controls self-assessment process to the risk analysis with a particular focus on financial, regulatory and programme delivery risks at a business unit level. This process will enhance yet further the ongoing assurance provided to the Board throughout the year.

Progress on risk management is monitored at the executive level and reported upon to the Board's Audit and Risk Management Committee. An annual assessment is also conducted and reported to the Audit and Risk Management Committee as to the effectiveness of the risk management processes for the year.

The following is a summary of the Board's assessment and response to the principal risks facing William Hill. An explanation of how the Group manages its various financial risks is provided in notes to the financial statements.

Area of Risk: Regulatory Compliance and Change

Likelihood:  High
Impact: High
Change: Stable

What's the issue?        
We have combined risks relating to changing regulatory environments and our ongoing compliance requirements. Failure to meet standards required by regulatory bodies may result in significant business interruption, fines or reputational damage.

Holding licences in key markets, such as with the Nevada Gaming Commission, is an essential part of our growth strategy and therefore the risk of breaching local licensing regulations is clear and must be managed and monitored. This drives a need to continually update processes and controls to ensure compliance and to review the ongoing changes to our business across the Group to assess the impact on our licensing position.

What are we doing to address the issue?
We remain wholly confident that investment in our compliance and assurance functions allows us to identify, understand and address changing regulatory requirements in an efficient and effective manner.

We actively engage with the UK Government and regulatory bodies to discuss the measures by which we fulfil our obligations under the licensing objectives in the UK.

In the UK, in addition to our ongoing support and continued adherence to the voluntary ABB Code, William Hill remains a committed member of the Senet Group, which aims to promote responsible gambling standards and to hold its members to account.

In addition to our core commitment to support the British Gambling Commission's core licensing objectives, the Group remains committed to upholding the standards required in all of our licensed territories as they continue to evolve. We maintain dialogue with regulators and other key stakeholders in our licensed territories internationally, continually monitor the changing legal landscape and adapt our strategy on a country-by-country basis to changes in regulation. A high proportion of Online's revenues are derived from licensed territories, which mitigates risks associated with operating on a non-locally licensed basis.

We have well-resourced in-house compliance functions and have compliance officers in all of our strategic business units who are a core part of the local management teams, ensuring compliance has a voice at the top table in each location. Compliance processes and controls across the Group are well established and the compliance functions operate independently of operational management both to support management's compliance obligations and to provide ongoing assurance over the adherence to local requirements. A bi-monthly Group Compliance Committee provides all compliance officers with direct access to the Group CEO and ensures compliance issues are shared across the Group to allow for the identification of trends and common issues.

The Group Risk and Audit function also considers regulatory compliance as a core part of audit delivery, reporting directly to the Audit and Risk Management Committee, as an independent third line of defence.

Area of Risk: Execution of IT Strategy

Likelihood:  Medium
Impact: High
Change: Increasing

What's the issue?
The demand for stability and availability of our core platforms has never been higher, both as a global business sharing elements of our trading platforms across differing time zones, and increasingly around the clock with significant peaks in activity driven by key sporting events.

Technology is also key to being able to differentiate within our markets, hence our technology must enable a high speed to market and deliver a great user experience, whilst still meeting stability and availability demands.

Failure to execute the IT strategy could cause other key risks to crystallise, as well as having a direct impact on customers.

What are we doing to address the issue?
Our strategy over the last 18 months has seen investment in core technology platforms, reducing reliance on third parties as we take direct ownership of our own platforms and systems, including the launch of our Trafalgar platform in the Online business and the introduction of our Riga interface which allows us to utilise content from multiple suppliers within our core Vegas platform.

Ongoing investment will continue to focus on reducing this risk further.

Where key dependencies exist we have robust contracts in place and are working with suppliers to ensure those agreements meet our changing business needs.

Investment in IT remains a core pillar of our strategy, and the recent appointment of a new Chief Information Officer (CIO) reflects our commitment to continue strengthening our IT capabilities. Where appropriate good practice in technology is shared across the Group.

Area of Risk: Cyber-Crime and Security

Likelihood:  Medium
Impact: High
Change: Increasing

What's the issue?
Technology-focused businesses continue to see increased threats of unauthorised access to data or systems, misappropriation of funds or significant down-time from cyber-crime or malicious activities. Increasingly sophisticated protection techniques and growing investment in technology and people are

required to prevent or mitigate significant financial, operational and reputational damage associated with such breaches. The 24/7 nature of the sports betting and online gaming industries, and the increasing digital footprint of our global operations, mean that this risk is a material and increasing threat facing the Group.

What are we doing to address the issue?
Our technology security arrangements have proven sufficient to prevent material damage to our business up to this point in time. We have not suffered any material loss of functionality, data security breaches or financial loss as a result of the exploitation of security vulnerabilities in the period. However, the continually evolving and growing threat ensures that we are not complacent and we continue to review and enhance our security offering internally and through the use of specialist third parties.

We undertake regular external security scans and have controls in place to mitigate the effects of denial of service attacks against our systems. We work with a number of specialist IT partners to ensure that our security arrangements and systems are well structured, sufficient for our current needs and up-to-date with the latest IT security developments and to learn from any incidents experienced across the Group.

Area of Risk: Competitive Landscape

Likelihood:  High
Impact: Medium
Change: Increasing

What's the issue?
The last year has seen a number of high profile changes to the competitive landscape, in particular the completion of mergers within the UK bookmaking industry, as well as other intended mergers yet to complete. Longer term these changes are likely to alter the dynamics of the industry and will no doubt result in increased competition to attract and retain customers, which may impact margins and put pressure on market share.

What are we doing to address the issue?
Whilst the wider market remains distracted by the mechanics of internal changes, William Hill remains focused on the development of its leading market position and well placed to take advantage of new opportunities as they arise.

We remain committed to the presence of William Hill as a leading brand in our core markets and to the increasing internationalisation of our brand and business, and we understand how the changing competitive landscape will affect our business in these markets. We have consistently demonstrated our ability to differentiate our brand in crowded markets and to support this in the last year alone we have: launched Project Trafalgar in our Online business; continued to drive forward our Omni-channel strategy in our UK business, drawing on the complementary and unique strengths of our Retail and Online offering to enhance our customer experience; actively sought to compete in the market through the launch of mobile apps in Australia and the US, including the in-play service; consolidated our multi-brand offerings into one William Hill brand in Australia; invested in an online lottery business to provide access to new product streams; and successfully launched the WH Labs accelerator programme, demonstrating our commitment to innovation.

These developments are illustrations of our ability to deliver effectively to the market and to differentiate our Group in crowded local markets under one Group brand.

Area of Risk: Talent

Likelihood:  Medium
Impact: Medium
Change: Stable

What's the issue?
To address the range of challenges a business as complex as ours faces it is essential we maintain and develop a focused leadership team and have access to a number of highly skilled specialists across the Group.

What are we doing to address the issue?
During the period there have been a series of managed transitions in the core management team, allowing our CEO to establish a team aligned to the strategic aims of the business and with the core skills required to deliver the vision. Continuing investment in recruiting and integrating key senior hires to supplement the existing core management team underpins our commitment to the growth strategy.

Overall the Group provides competitive salary and benefits packages, including short-term bonuses and long-term share-based incentives, and regularly reviews these for competitiveness. Employees are encouraged to become owners of the business through annual Save-As-You-Earn programmes. The Board has visibility of key leadership remuneration arrangements through the Remuneration Committee.

The Group continues to utilise robust appraisal and goal-setting processes and performs annual talent reviews with the senior management team. The Group regularly reviews the levels of employee engagement through an annual employee survey and implements specific action plans to address areas of improvement.

Area of Risk: Fiscal Change

Likelihood:  Medium
Impact: Medium
Change: Decreasing

What's the issue?
The Group remains exposed to the impact of taxation changes in all key markets, which cannot be directly passed on to our customers, and therefore impacts the bottom line. Both the Point of Consumption Tax and Machine Games Duty changes impacted in 2015, but are built into budgets and forecasts, and at the prior year-end the timing of the general election drove uncertainty as to the UK tax position. Therefore, the risk of further tax changes affecting profitability is reduced compared to the last risk assessment.

What are we doing to address the issue?
There remains a requirement to ensure that cost savings and efficiencies throughout the Group help mitigate increasing costs outside the Group's control. The Group actively engages in relevant government consultations. Our continued international expansion makes the risk of taxation change more likely, if not certain, to some extent across our footprint. However, it actively reduces the reliance on any individual country and will lessen the impact of changes imposed by any one government.

Area of Risk: Business Continuity Management and Disaster Recovery

Likelihood:  High
Impact: Low
Change: Stable

What's the issue?
Over recent years the Group has had to address a number of potentially significant business interruptions, often with external causes and the potential to cause major interruption to our operations. Failure to adequately respond to business interruptions may result in unnecessary loss of business or adversely impact customers' experience. In all cases we have realised the benefit of our ongoing investment in preparations for business interruption and the resulting impact from an operational and technology perspective has been successfully managed.

What are we doing address the issue?
The Group now has access to Business Continuity sites in our core UK locations, multiple sites or bespoke Business Continuity facilities in key overseas locations or the ability to rely on tested and proven flexible ways of working in other locations. Further back-up IT systems have been put in place for a number of business critical systems, generally in different geographic locations from the main system. However, this is not intended to be a full duplication of the operational systems as this would not be cost effective, so some day-to-day activities could be curtailed in the short term should an incident occur.

We will also continue to test and rehearse our people, technology and building services infrastructure to ensure that business continuity capability and readiness is embedded in the culture of the business.

31. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its associates are disclosed below. Transactions between the Company and its subsidiaries and associates are disclosed in the Company's separate financial statements.

Trading Transactions


During the period the Group made purchases of £49.9m (52 weeks ended 30 December 2014:  £48.3m) from Satellite Information Services Limited, a subsidiary of the Group's associated undertaking, SIS. At 29 December 2015, the amount receivable from Satellite Information Services Limited by the Group was £nil (30 December 2014: £nil).

The Group made no purchases from its associated undertaking, NeoGames. At 29 December 2015, no amounts were due to or from NeoGames.

All transactions with associates were made at market price.

The Group has made available a US$15m loan facility to NeoGames, of which $nil is drawn down.

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'.


  52 weeks
      29 December 2015
52 weeks
      30 December 2014

Short-term employee benefits (including salaries)



Post-employment benefits (employer's contribution)



Share-based payments (IFRS 2 charges)






The disclosures above include c£84,000 received by directors in respect of dividends on the Company's ordinary shares (period to 30 December 2014: c£86,000).

The values presented above include share-based payments measured in accordance with IFRS 2.  This is a different basis from that used for the presentation in the Directors' Remuneration Report (DRR). In addition, the above includes bonuses on a paid basis, whereas the DRR includes them on an accrued basis. Other than the inclusion of dividends, the timing of bonus inclusion and the basis of measurement of share-based payments, all values above are presented on a consistent basis with those disclosed in the DRR.

Pension schemes

The pension schemes of the Group are related parties. Arrangements between the Group and its pension schemes are disclosed in note 30.

Statement of Directors' Responsibilities

This statement is repeated here solely for the purposes of complying the Disclosure and Transparency Rule 6.3.5.  This statement relates to and is extracted from the 2015 Annual Report.  It is not connected to the extracted information presented in this announcement or the preliminary results announcement released on 26 February 2016.

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 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). 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 is 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, 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.

Responsibility Statement

We confirm that to the best of our knowledge:

  • the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
  • the Strategic Report, which includes the management report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

In addition, each of the directors considers that the Annual Report and financial statements, 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.

This responsibility statement is approved by the board of directors and is signed on its behalf by:

J Henderson
Chief Executive Officer 

P Bowcock
Chief Financial Officer

26 February 2016


Luke Thomas
Company Secretary, William Hill plc
Tel: 020 8918 3935

About William Hill PLC

William Hill, The Home of Betting, is one of the world's leading betting and gaming companies, employing around 16,000 people. Founded in 1934, it is the UK's largest bookmaker with around 2,370 licensed betting offices that provide betting opportunities on a wide range of sporting and non-sporting events, gaming on machines and numbers-based products including lotteries. The Group's Online business ( is one of the world's leading online betting and gaming businesses, providing customers with the opportunity to access William Hill's products online, through their smartphone or tablet, by telephone and by text services. William Hill US was established in June 2012 and provides land-based and mobile sports betting services in Nevada, and is the exclusive risk manager for the State of Delaware's sports lottery. William Hill Australia is one of the largest online betting businesses in Australia after the Group acquired Sportingbet and in 2013. It offers sports betting products online, by telephone and via mobile devices. William Hill PLC is listed on the London Stock Exchange. The Group generates revenues of c£1.6bn a year.


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