Rank Group PLC · LSE:RNK
Rank — The Rank Group — H1 2003 Earnings Presentation
39 slides from Rank's earnings presentation, Sep 5, 2003
Slide 1: The Rank Group Plc Interim Results 2003
The Rank G roup Plc Interim Results 2003 5 Septem ber2003
Slide 2: Alun Cathcart, Chairman
A lun Cathcart Chairm an
Slide 3: Mike Smith, Chief Executive
M ike Sm ith ChiefExecutive
Slide 4: Group results
G roup results • EPS dow n 4% • G am ing -Furtherim provem ent,up 14% • Hard Rock -decline 10% (hotels) • Deluxe Film -unchanged (acquisitions) • Deluxe M edia -DVD replacing VHS • Exceptionalcharges • Interim dividend -up 5% to 4.6p
Slide 5: Group progress
G roup progress • G am ing -positioning for deregulation – Blue Square – im proved facilities • H ard Rock -brand extensions – Casinos – SolM eliá • D eluxe – Film -G eographic reach – M edia -DVD expansion (Disctronics)
Slide 6: Ian Dyson, Finance Director
lan Dyson Fnance D xector Rank Group
Slide 7: Profit before exceptional items
Profit before exceptionalitem s £m 2003 2002 Turnover 879.9 689.6 O perating profit* 91.6 95.4 A ssociates 0.1 1.7 Interest (14.3) (12.0) Profit before tax* 77.4 85.1 Effective tax rate 30.3% 34.1% Earnings per share 7.3p 7.6p * Stated aftergoodw illam ortisation of£2.8m (2002 -£0.3m )
Slide 8: H1 2003 vs H1 2002 Group operating profit
H 1 2003 vs H 1 2002 G roup operating profit £m 105 5.8 100 4.2 (0.4) 95.4 95 (3.5) (6.4) 91.6 90 (3.5) 85 80 2002 A cq’ns Currency G am ing H ard D eluxe Central 2003 H1 Rock & O ther H 1
Slide 9: Mecca Bingo
M ecca Bingo £m 2003 2002 Turnover UK 119.2 118.5 Spain 11.7 7.8 130.9 126.3 O perating profit UK 36.7 35.3 Spain 3.1 1.8 39.8 37.1 U K Statistics A dm issions (000s) 10,901 11,937 Spend per head £10.93 £9.93
Slide 10: Grosvenor Casinos UK
G rosvenor Casinos U K £m 2003 2002 % grow th Turnover London -upper 8.1 9.2 -12.0 London -other 26.2 25.9 +1.2 Provincial 45.6 40.4 +12.9 Hard Rock 4.4 - - 84.3 75.5 +11.7 O perating profit London -upper 1.8 2.3 -21.7 London -other 4.6 4.8 -4.2 Provinces 13.7 11.4 +20.2 Hard Rock (0.8) - - Division
Slide 11: Blue Square H1 2003
Blue Square H 1 2003 £m Pro form a* Pro form a* % grow th 2003 2002 Stakes Internet 93.1 66.9 +39 Telebet 41.8 14.7 +184 G am es 62.0 9.5 +553 196.9 91.1 +116 G ross W in Internet 6.4 5.8 +10 Telebet 2.5 1.2 +113 G am es 3.8 0.9 +339 12.7 7.9 +60 * Figures assum ing Rank G roup ow ned the business f
Slide 12: Hard Rock Operating profit
H ard Rock O perating profit £m 2003 2002 O w ned cafes 12.5 15.8 Franchise and other incom e Cafes 2.8 3.3 Hotels 4.5 1.4 Territory sales 1.0 1.1 A dvertising and prom otion (0.4) (0.5) O verheads (7.1) (6.3) O perating profit 13.3 14.8
Slide 13: Hard Rock Like for like sales
H ard Rock Like forlike sales Change 10% Food and Beverage 5% 0% Total -5% -10% M erchandise -15% -20% Jan Feb M ar A pr M ay Jun Jul A ug 2003 vs 2002
Slide 14: Deluxe
D eluxe £m 2003 2002 Turnover Film services 180.1 179.3 M edia services 144.2 127.2 324.3 306.5 O perating profit* Film services 29.7 29.5 M edia services (3.3) 1.9 26.4 31.4 A ssociate Investm ents 0.1 0.8 26.5 32.2 * Before exceptionalitem s
Slide 15: Deluxe Film Turnover analysis
D eluxe Film Turnoveranalysis £m 185 9.0 180.1 179.3 180 175 17.8 170 165 160 (16.7) 155 150 (9.3) 2002 U niversal Currency A cquisitions Revenue 2003 G row th
Slide 16: Deluxe Film Operating profit analysis
D eluxe Film O perating profitanalysis £m 35 4.3 29.7 30 29.5 5.1 25 20 (6.7) (2.5) 15 10 5 0 2002 U niversal Currency A cquisitions Profit 2003 im provem ent
Slide 17: Deluxe Film Contract status
D eluxe Film Contractstatus Feet(billion) 2 41% Universal Due to expire Contractextended 30% 1 21% 8% 22% 0 2003 2004 2005 2006 2007 + Contractexpiry year * Percentages representproportion of 2002 contracted footage of4.3 billion feet
Slide 18: Deluxe Media Services
D eluxe M edia Services Turnover O perating Profit* £m 2003 2002 2003 2002 Video duplication 55.1 80.2 (3.2) 3.5 D VD replication 33.9 8.8 (5.2) (1.2) D istribution services 44.7 36.2 2.5 - D igitalservices 10.5 2.0 2.6 (0.4) 144.2 127.2 (3.3) 1.9 * Before exceptionalitem s
Slide 19: 2003 H1 exceptional charges
2003 H 1 exceptionalcharges £m 2003 Blue Square Reorganisation/integration 6.0 D eluxe M edia Services* Plant closure and reorganisation 12.2 Legalprovisions 9.4 N on-operating exceptionalitem Release of disposalprovisions (4.0) 23.6 * Before m inority interest
Slide 20: Group cash flow
G roup cash flow £m 2003 2002 O perating activities 132.7 122.3 D eluxe contract advances (54.2) (146.8) Capitalexpenditure (48.2) (51.4) Fixed asset disposals 1.3 18.3 O perating cash flow 31.6 (57.6) Interest,tax and dividends (85.8) (90.7) Free cash flow (54.2) (148.3) A cquisitions & investm ent
Slide 21: Capital expenditure
Capitalexpenditure £m H1 H1 FY 2003 estim ate 2003 2002 G am ing 24.1 19.9 60 -70 H ard Rock 6.2 15.6 10 -15 D eluxe 17.3 15.3 35 -45 O ther 0.6 0.6 1 -2 48.2 51.4 106 -132
Slide 22: Acquisitions and investments
A cquisitions and investm ents H1 H 2 2003 £m 2003 Com m itted G am ing* 65.9 3 H ard Rock 1.9 1 D eluxe 19.5 25 O ther 2.4 - 89.7 29 *Includes £65m Blue Square debt
Slide 23: Group capital structure
G roup capitalstructure 30 Jun 31 D ec 30 Jun £m 2003 2002 2002 N et debt (529.6) (399.1) (416.8) D eluxe net contract advances receivable 283.4 236.4 253.8 Preference shares (227.5) (226.6) (225.5)
Slide 24: Mike Smith, Chief Executive
M ike Sm ith ChiefExecutive
Slide 25: Deluxe Growth and development
D eluxe G row th and developm ent • D eluxe Film Services – grow th dynam ics continue – geographic reach – added services – contracts • D eluxe M edia Services – added services – VHS decline vsDVD grow th – strategic acquisitions in DVD – good geographic coverage
Slide 26: DVD Growth and development
D VD G row th and developm ent • A cquisitions – Pioneer:initialexperience – Ritek:US capacity and offload capability – Disctronics:European capacity and CD contract • Capacity and distribution – North Am erica – Europe • A dded services – C&A
Slide 27: Hard Rock Growth and development
H ard Rock G row th and developm ent • H ard Rock Cafes – brand strength – low ercostcafes • H ard Rock brand extensions – Indian gam ing (Sem inoles, Choctaw s, Foxw oods) – O thergam ing (Biloxi) – SolM eliá JV (Chicago plus others)
Slide 28: Hard Rock Hotel/casino Fort Lauderdale
H ard Rock H otel/casino FortLauderdale
Slide 29: Hard Rock Hotel/casino Tampa
H ard Rock H otel/casino Tam pa
Slide 30: Hard Rock Growth and development
H ard Rock G row th and developm ent • H ard Rock Cafes – brand strength – low ercostcafes • H ard Rock brand extensions – Indian gam ing (Sem inoles, Choctaw s,Foxw oods) – O thergam ing (Biloxi) – SolM eliá JV (Chicago plus others)
Slide 31: Gaming Growth and development
G am ing G row th and developm ent • G am ing – Positive environm ent – Deregulation initiatives – Duty change – Preparing forBudd – Hard Rock brand – Full‘suite’ofproducts
Slide 32: Gaming Deregulation Impact to-date
G am ing D eregulation Im pactto-date • Lim ited deregulation already – lateropening – alcoholon the gam ing floor – new gam es – entertainm ent • New ,largerfacilities (7 relocations,4 new licences) • Double digitgrow th overlastfouryears
Slide 33: Grosvenor UK Current position
G rosvenor U K Currentposition 30 Jun 2003 Num berofcasinos 34 ‘New Builds’# 11 M ajorrefurbishm ents w ithin last12 m onths 4 Tables 392 Electronic Roulette 495 Slots 266 # Includes new licences (W alsall,Salford,tw o Hard Rock casinos)and relocated casinos (Birm ingham ,Blackpool,Brighton,G reat.Y
Slide 34: Park Tower Casino
FI =/ a ae | = |= i ian y ey
Slide 35: Mecca UK Current position
M ecca U K Currentposition 30 Jun 2003 Bingo clubs 122 Clubs in non perm itted areas 67 Possible conversions to m ulti-gam ing c.30 Num berofjackpotm achines 324
Slide 36: Gaming Deregulation What we do know
G am ing D eregulation W hatw e do know • Process underw ay – Pre-Legislative Scrutiny Com m ittee appointed – draftbillin O ctober2003 • G am bling Com m ission – arm s-length from governm ent • Licensing -operating,personaland prem ises • O therBudd recom m endations to be included: – elim ination
Slide 37: Gaming Deregulation What we don't know
G am ing D eregulation W hatw e don’tknow • Tim ing • Casino regulations – slots pertable/unlim ited – progressive slots – role oflocalauthorities and regionalplanning – speed ofopening up non-perm itted areas • Duty rates? • Allsubjectto debate and allto play for
Slide 38: Gaming Deregulation Rank's perspective
G am ing D eregulation Rank’s perspective • Very likely to happen • Threatfrom new entrants stillunclear • Irrespective oftim ing – plenty stillto go for(slotnum bers,progressives etc.) – stillgood grow th prospects from existing operations • Rank G roup w ellplaced to take im m ediate advantage
Slide 39: Group 12 month outlook
G roup 12 m onth outlook • G am ing – UK:furtherprogress and im pactofinvestm ents – Europe:gains in Belgium and Spain • H ard Rock -degree of recovery – Sem inoles,SolM eliá JV,others? • D eluxe – Film -continued positive trend – M edia -grow th in DVD and related services • O ther – cash generatio