Rank Group Plc · LSE:RNK
Rank — The Rank Group — 18 months to 30 June Earnings Presentation
43 slides from Rank's earnings presentation, August 2012
Slide 1: Preliminary Results to 30 June 2012
75 Years of Thrills and Entertainment The Rank Group Plc Preliminary Results to 30 June 2012
Slide 2: Agenda
Agenda Introduction Ian Burke, chairman and chief executive Review of financial results Clive Jennings, finance director Strategy and operational update Ian Burke 2
Slide 3: Clive Jennings, finance director
75 Years of Thrills and Entertainment Clive Jennings finance director
Slide 4: Changes to accounting reference date
Changes to accounting reference date Rank’s year end changed to 30 June Financial results presentation focussed on pro-forma to 30 June year end •‘2011/12’ 12 months to 30 June 2012 •‘2010/11’ 12 months to 30 June 2011 •pro-forma key statements for June year end Statutory results •18 months to 30 Ju
Slide 5: Financial headlines
Financial headlines 12 months to 30 June 2012 • Growth in revenue and operating profit translates to 13.7% rise in EPS • Final dividend per share of 2.50p • Strong financial position • Gross revenue*: £600.5m (2010/11: £580.7m) • EBITDA**: £104.4m (2010/11: £97.0m) • Operating profit**: £65.5m (2010
Slide 6: Delivering earnings and dividend growth
Delivering earnings and dividend growth GR – 14% EPS* CA (09/10 – 11/12) R – 31% DPS CAG 11.6p (09/10 – 11/12) 10.2p 9.0p 8.8p 2.66p 3.60p 2.09p 2008/09 2009/10 2010/11 2011/12 • Financial strength and strong operating performance - dividend cover drops * Adjusted EPS 6
Slide 7: Revenue & operating profit
Revenue & operating profit Revenue* Operating profit** £m 2011/12 2010/11 2011/12 2010/11 Grosvenor Casinos 255.8 245.4 42.8 38.6 Mecca Bingo 237.8 237.5 28.3 29.9 Rank Interactive 77.7 64.3 10.5 8.3 Top Rank España 29.2 33.5 1.4 4.0 Central costs (17.5) (17.9) Group 600.5 580.7 65.5 62.9 * before a
Slide 8: Grosvenor Casinos
Grosvenor Casinos Revenue* Operating profit** £m 2011/12 2010/11 2011/12 2010/11 London 94.9 95.9 20.7 18.3 Provinces 145.6 132.9 22.8 20.0 Belgium 15.3 16.6 (0.7) 0.3 255.8 245.4 42.8 38.6 KPIs Visits (000s) 6,095 5,742 Spend per visit (£) 41.97 42.74 • Like-for-like revenue for 12 months up 3.9% *
Slide 9: Mecca Bingo
Mecca Bingo £m 2011/12 2010/11 Revenue* 237.8 237.5 Operating profit** 28.3 29.9 KPIs Visits (000s) 14,407 14,656 Spend per visit (£) 16.51 16.20 • Growth in customers and spend per visit driving revenue like for like up 2.0% • 1.9% growth in spend per visit from improved food and drink offer and in
Slide 10: Rank Interactive
Rank Interactive £m 2011/12 2010/11 Bingo & games 59.7 48.1 Casino 8.5 5.7 Poker 1.1 1.5 Sports betting 8.4 9.0 Revenue 77.7 64.3 Operating profit 10.5 8.3 • meccabingo.com and grosvenorcasino.com benefiting from increased online:offline crossover • Blue Square’s mobile applications now account for
Slide 11: Top Rank España
Top Rank España 2011/12 2010/11 £m H2 H1 H2 H1 Revenue (£m) 14.3 14.9 14.9 18.6 Revenue (€m) 17.1 17.4 16.6 22.3 Operating profit* 0.9 0.5 0.2 3.8 smoking ban KPIs introduced Visits (000s) 2,049 2,207 Spend per visit (£) 14.25 15.18 • Effect of full smoking ban and challenging economic situation • C
Slide 12: Operating costs - including free bets
Operating costs - including free bets £m 2011/12 2010/11 Change Employment 192.6 191.6 0.5% Taxes & duties 95.7 90.5 5.7% Direct costs 54.5 53.1 2.6% Property costs 49.6 48.8 1.6% Marketing* - online 26.0 20.6 26.2% - offline 35.2 33.5 5.1% Depreciation** 38.9 34.1 14.1% Other 42.5 45.6 (6.8)% Total
Slide 13: Statutory profit & loss
Statutory profit & loss £m 2011/12 2010/11 Profit from continuing operations 65.5 62.9 Net interest payable (4.9) (6.3) Profit before tax and exceptional items 60.6 56.6 Exceptional items (19.8) 124.8 Profit before tax 40.8 181.4 Taxation (12.5) (45.3) Discontinued operations (0.2) 6.1 Profit for th
Slide 14: Cash flow and net cash/(debt)
Cash flow and net cash/(debt) £m 2011/12 2010/11 Continuing operations Cash inflow from operations 108.5 97.5 Capital expenditure (49.6) (45.0) Fixed asset disposals 0.2 0.7 Operating cash inflow 59.1 53.2 Net acquisitions and disposals (0.1) 0.8 Net cash receipts/(payments); provisions and exceptio
Slide 15: Capital investment to support growth
Capital investment to support growth £m 2012/13F 2011/12 Grosvenor Casinos 25-26 26.8 Mecca Bingo 14-15 12.7 Rank Interactive 10-11 7.9 Top Rank España 1-2 1.4 Other 2-3 1.5 Total 52-57 50.3 • Grosvenor expansionary capex year 2 cash-on-cash return; 23.7% – Grosvenor Casinos expansion on track • Suc
Slide 16: Move to brand based reporting
Move to brand based reporting Revenue by brand* £m 2011/12 2010/11 Grosvenor Casinos 261.8 249.0 Mecca 294.0 282.6 Top Rank España /enracha 29.2 33.5 Blue Square 15.5 15.6 Group 600.5 580.7 * before adjustment for free bets, promotions and customer bonuses 16
Slide 17: Financial strength
Financial strength • New revolving credit facility of £80m agreed • Rank’s capital investment programme delivering against targets • Certainty on bingo VAT receipts • Additional VAT claims of an estimated £275m 17
Slide 18: Current trading
Current trading • Like-for-like growth in six week trading period • UK brands performing well in tough economic conditions 18
Slide 19: Ian Burke
75 Years of Thrills and Entertainment Ian Burke
Slide 20: Group Strategy
Group Strategy To achieve sustainable growth in earnings per share by stimulating and meeting growing demand for gaming based entertainment Develop trusted brands available in venues, online and on mobile . . . . . . identify distinct customer segments . . . understand our customers needs Engage in
Slide 21: Our brands
Our brands Rank’s long term competitive advantage arises from the development of a portfolio of trusted brands Brand Needs Segment Social and competitive Male-led gaming-based Age: 25 to 55 years entertainment Social, community Female-led gaming-based Age: 25 to 55 years entertainment Sports-led bet
Slide 22: Brand strategies
Brand strategies • Systematic use of customer data and feedback – customer focus – insight into action • Capital investment to extend reach and broaden appeal – Grosvenor; G casino and Gala Casinos – Mecca; Full House • Multi-channel distribution – reorganisation around brands 22
Slide 23: Multi-channel distribution - reorganisation
Multi-channel distribution - reorganisation Grosvenor Casinos, Phil Urban •venues contribute over half of operating profit •opportunities in digital channel Mecca, Mark V Jones •strong online revenue growth •high brand recognition The Rank Group Blue Square, Mark A Jones •mobile opportunity •Strateg
Slide 24: Our brands – Grosvenor Casinos
Our brands – Grosvenor Casinos Insight; low brand awareness as a result of historic advertising prohibition Leading gaming brand Awareness 44% 93% %’age of respondents who recognise brand when prompted Consideration 10% 19% %’age of respondents who would use brand products 7% 14% Action %’age of res
Slide 25: Our brands – Grosvenor Casinos
Our brands – Grosvenor Casinos Grosvenor is Britain’s leading casino operator Our focus 1.Product and service improvement • gaming, food, drink and entertainment 2.Extending reach • developing inclusive gaming venues, online and mobile • multi channel distribution 25
Slide 26: Grosvenor Casinos - capital investment
extending reach, Grosvenor Casinos - capital investment Portfolio development 2011/12 •Three new G casinos •Two G casino conversions Portfolio development plan 2012/13 •Two new G casinos •One conversion to G casino format •Medium term targets – larger venues in high profile locations suitable for la
Slide 27: Grosvenor Casinos – distribution
extending reach, Grosvenor Casinos – distribution Online, including mobile •Product upgrades •Increased marketing •Closer co-operation between venues and digital channels 27
Slide 28: Our brands - Mecca
Our brands - Mecca Insight; Mecca enjoys high awareness but low conversion to trial Leading gaming brand Awareness 87% 93% Consideration 17% 19% 13% 14% Action 28
Slide 29: Our brands - Mecca
Our brands - Mecca Mecca is one of Britain’s most familiar gaming brands • Multi-channel distribution through 97 venues, online and via mobile applications Our focus 1. Product and service improvement • cross channel community gaming, food, drink and entertainment 2. Extending reach • developing inc
Slide 30: Mecca – capital investment
extending reach, Mecca – capital investment Full House Destination •Wood Green exceeding expectations; four more sites scheduled to prove the concept Average Average spend Average EBITDA Venues visits/week per visit (£) per week (£’k) Full House 7 3,953 18.40 15.6 Destination Traditional Mecca 90 2,
Slide 31: Mecca – multi-channel distribution
extending reach, Mecca – multi-channel distribution Good growth in year •Cross channel marketing •Product upgrades •Strength of the brand •TV advertising Further growth opportunities •Enhancements to website to improve customer experience •Product range •Mobile applications 31
Slide 32: Our brands - Blue Square
Our brands - Blue Square Insight; young brand with no high street presence; low brand awareness Leading gaming brand Awareness 44% 93% Consideration 5% 19% 3% 14% Action 32
Slide 33: Engaging with Government
Engaging with Government Fairness, Responsibility and Sustainability •Current regime rife with anachronistic distinctions that stifle growth Select Committee •Culture, Media and Sport select committee report on Gambling Act 2005 – reduction in bingo tax rate to 15% – portability of casino licences –
Slide 34: Summary
Summary • Strong brands with dedicated management • Momentum for regulatory reform • Financial strength 34
Slide 35: Appendices
75 Years of Thrills and Entertainment Appendices
Slide 36: Our brands - insight into action
Our brands - insight into action Rank’s brands face different challenges to achieve their potential Leading gaming brand Awareness 93% 44% 87% 44% %’age of respondents who recognise brand when prompted Consideration 19% 10% 17% 5% %’age of respondents who would use brand products Action 14% 7% 13% 3
Slide 37: Analysis for datasheets
Analysis for datasheets Rank’s year end changed to 30 June Each operating businesses’ results recast to 30 June accounting reference date •H1 2011/12 6 months to 31 December 2011 •FY 2011/12 12 months to 30 June 2012 •H1 2010/11 6 months to 31 December 2010 •FY 2010/11 12 months to 30 June 2011 •H1
Slide 38: Grosvenor Casinos data sheet
Grosvenor Casinos data sheet FY 2011/12 H1 2011/12 FY 2011/10 H1 2011/10 FY 2010/09 H1 2010/09 Casino licences London 4 4 5 5 5 5 Provinces 33 33 32 31 30 30 Belgium 2 2 2 2 2 2 Total 39 39 39 38 37 37 Unused licences 10 10 10 11 12 12 Revenue (£m) 255.8 125.8 245.4 122.0 229.9 113.3 EBIT (£m) 42.8
Slide 39: Mecca Bingo data sheet
Mecca Bingo data sheet FY 2011/12 H1 2011/12 FY 2011/10 H1 2011/10 FY 2010/09 H1 2010/09 Clubs 97 98 100 103 103 103 Revenue (£m) 237.8 117.4 237.5 115.8 235.4 116.7 EBIT (£m) 28.3 14.8 29.9 13.7 29.3 13.3 Operating margin 11.9% 12.6% 12.6% 11.8% 12.4% 11.4% Customers MAT (000s) 965 943 924 911 895
Slide 40: Rank Interactive data sheet
Rank Interactive data sheet FY 2011/12 H1 2011/12 FY 2011/10 H1 2011/10 FY 2010/09 H1 2010/09 Bingo & games 59.7 28.9 48.1 22.2 37.7 17.9 Sports betting 8.4 5.1 9.0 4.6 7.7 4.1 Casino 8.5 3.2 5.7 2.7 5.7 2.7 Poker 1.1 0.6 1.5 0.8 2.2 1.2 Revenue (£m) 77.7 37.8 64.3 30.3 53.3 25.9 EBIT (£m) 10.5 6.4
Slide 41: Top Rank España data sheet
Top Rank España data sheet FY 2011/12 H1 2011/12 FY 2011/10 H1 2011/10 FY 2010/09 H1 2010/09 Clubs 11 11 11 11 11 11 Revenue (£m) 29.2 14.9 33.5 18.6 36.5 18.1 EBIT (£m) 1.4 0.5 4.0 3.8 5.9 2.9 Operating margin 4.8% 3.4% 11.9% 20.4% 16.2% 16.0% Customers MAT(000s) 305 308 319 331 341 314 Visits (000
Slide 42: Casinos market supply
Casinos market supply Casino Total Operator Venues* Licences* Genting 39 57 Grosvenor Casinos 35 47 Gala 25 31 London Clubs 10 11 A&S Leisure 6 6 Aspers/Aspinall’s 5 8 Club 36 3 3 Clockfair 2 2 Guoco 1 6 Others 12 22 Total 138 193 Source: company research * includes 2005 Act casino licences 42
Slide 43: Bingo clubs market supply
Bingo clubs market supply Operator Clubs* Gala Bingo 143 Mecca Bingo 97 Top Ten Bingo 22 Carlton Clubs 14 Others 192 Total 468 Source: company research * excludes the conversion of adult gaming centres to bingo clubs 43
The Rank Group — 18 months to 30 June Earnings Presentation on 6ix