Slide 1: Preliminary Results 2004
,S Rank Group Preliminary Results 2004
Slide 2: Mike Smith, Chief Executive
Mike Smith Chief Executive
Slide 3: Ian Dyson, Finance Director
lan Dyson Finance Director Rank Group
Slide 4: 2004 financial headlines
2004 financial headlines • EPS* up 4% to 20.0p (2003** - 19.2p) • Operating profit* down to £204.9m (2003** - £218.0m) • Exceptional charge of £233.4m, £19.0m cash cost • Free cash flow of £36.3m (2003** - £17.1m) • Net debt reduced to £606.7m (2003 - £700.5m) • Final dividend up 5% to 9.8p making 1
Slide 5: Exceptional items
Exceptional items £m H1 H2 Total Deluxe Media H1 restructuring (27.1) - (27.1) Loss on disposal (4.1) - (4.1) Deluxe Media - Provision for loss on disposal - (104.7) (104.7) - Goodwill previously written-off - (76.7) (76.7) Hard Rock impairments - (31.0) (31.0) (31.2) (212.4) (243.6) Tax credit on e
Slide 6: Mecca Bingo
Mecca Bingo £m 2004 2003* Change Turnover UK before GPT 265.3 236.9 GPT effect (24.7) (3.8) UK adjusted 240.6 233.1 +3% Spain 27.3 24.6 +11% 267.9 257.7 +4% Operating profit UK 70.5 70.7 -0% Spain 7.7 6.8 +13% 78.2 77.5 +1% Mecca UK Admissions (000s) 20,933 21,066 -1% Spend per head (£) 11.49 11.06
Slide 7: Mecca Bingo UK - H1 vs H2
Mecca Bingo UK - H1 vs H2 6% 5% 4.7% 4.1% 4% 3.6% 3.8% 3.2% 3% 1.8% 2% 1% 0.6% 0% H1 H2 Full year -1% -0.6% Admissions -2% -1.8% Handle Turnover* *Adjusted for Gross Profits Tax
Slide 8: Grosvenor Casinos
Grosvenor Casinos £m 2004 2003* Change Turnover London - upper 23.4 19.0 +23% London - other 56.7 54.2 +5% Provincial 97.3 91.5 +6% Hard Rock 11.0 9.0 +22% Belgium 12.4 9.6 +29% 200.8 183.3 +10% Operating profit London - upper 3.8 3.4 +12% London - other 11.3 9.9 +14% Provinces 24.7 25.5 -3% Hard Ro
Slide 9: London - other H1 vs H2
London - other H1 vs H2 10% 10% 9% 9% Admissions 8% Handle 6% Turnover 5% 4% 4% 2% 2% H1 0% 0% H2 Full year -2% -1% -4% -6% -5%
Slide 10: Provinces H1 vs H2
Provinces* H1 vs H2 25% Admissions 20% 20% Handle Turnover 15% 10% 8% 9% 7% 5% 5% H1 0% 0% 0% H2 Full year -5% -6% -10% -8% *Excluding Stoke-on Trent and Bolton that opened in 2004
Slide 11: Blue Square
Blue Square £m Pro forma* 2004 2003 Change Stakes Internet 159.9 178.5 -10% Telebet 63.7 77.3 -18% Games 216.0 134.1 +61% 439.6 389.9 +13% Gross Win Internet 11.7 11.1 +5% Telebet 4.8 3.9 +23% Games 9.1 8.1 +12% 25.6 23.1 +11% * Figures assuming Rank Group owned Blue Square for the full year
Slide 12: Hard Rock Operating profit
Hard Rock Operating profit* £m 2004 2003 % growth Owned cafes 25.7 24.4 +5% Franchise and other income Cafes 5.4 5.8 -7% Hotels and gaming 9.9 5.2 +90% Territory deals 0.7 1.8 -61% Overheads (13.9) (14.1) +1% Operating profit 27.8 23.1 +20% * before exceptional items
Slide 13: Hard Rock Owned cafe - operating profit
Hard Rock Owned cafe - operating profit* £m 27 26 2.5 25.7 25 24.4 24 2.1 23 22 21 (3.3) 20 2003 Currency New units# LFL growth 2004 * before exceptional items # including impact of openings in 2003 and 2004 and pre-opening costs
Slide 14: Deluxe Film
Deluxe Film £m 2004 2003 % change Turnover Film Processing and Distribution 315.6 387.3 -19% Creative Services 51.0 32.6 +56% 366.6 419.9 -13% Operating profit* Film Processing and Distribution 49.9 69.8 -29% Creative Services 10.5 7.5 +40% 60.4 77.3 -22% * before goodwill amortisation, 2003 restate
Slide 15: Deluxe Film Cum monthly YoY volume - N America
Deluxe Film Cum monthly YoY volume - N America m ft 2004 versus 2003 150 100 50 0 (50) (100) (150) (200) (250) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Slide 16: Deluxe Media
Deluxe Media Turnover Operating profit* £m 2004 2003 2004 2003 Video duplication 60.7 111.2 (0.5) (9.1) DVD/CD replication 199.0 150.6 9.2 13.0 Distribution services 125.4 106.8 2.2 11.5 385.1 368.6 10.9 15.4 * before exceptional items and goodwill amortisation, 2003 restated for FRS17
Slide 17: Group cash flow
Group cash flow £m 2004 2003* Operating activities 242.4 309.2 Deluxe contract advances 17.8 (17.3) Capital expenditure (115.6) (111.4) Fixed asset disposals 7.3 9.4 Operating cash flow 151.9 189.9 Interest, tax and dividends (115.6) (172.8) Free cash flow 36.3 17.1 Acquisitions** (74.7) (123.6) Dis
Slide 18: IFRS Accounting: Overview
IFRS Accounting: Overview • First reporting period H1 2005 : due September 2005 • Opening balance sheet for IFRS transition: 1 January 2004 • Modest impact for the Rank Group’s pre-tax profit • Update planned for Q2 2005
Slide 19: Impact of IFRS Adoption: P&L Account
Impact of IFRS Adoption : P&L Account • Goodwill amortisation no longer required • Property leases many operating leases under UK GAAP are now finance leases in IFRS • Employee benefits share options, SAYE, pensions & pensions • Convertible Bond amortisation of equity component of convertible bond
Slide 20: Mike Smith, Chief Executive
Mike Smith Chief Executive
Slide 21: Review of Group Structure
Review of Group Structure From September 2004 • Each of the businesses is well positioned • Now is the right time to separate Deluxe Film and Deluxe Media from the Group • Full engagement with key stakeholders – major studio customers – employees • Update in Q1 2005
Slide 22: Separation of Deluxe businesses
Separation of Deluxe businesses Progress to date • Legal/structuring issues understood – Media • sale process underway • number of interested parties – Film • complex process • work continuing • Separation of both businesses remains a priority
Slide 23: Deluxe Media Summary
Deluxe Media Summary • Weak result in 2004 • 232m DVD produced in 2004 (2003 - 162m) • Distribution - 649m units shipped in 2004 (2003 - 523m units) • Loss of major contract in 2004 will undermine future performance • Sale process underway
Slide 24: Deluxe Film Contract status
Deluxe Film Contract status Feet (billion) 2 54% Extended during 2004 Due to expire 1 23% 15% 8% 0 2004 2005 2006 2007 2008 2009 2010+ Contract expiry year
Slide 25: Deluxe Film Processing and Distribution
Deluxe Film Film Processing and Distribution • Strong market position - share and contracts • Unexpectedly poor result in North America in 2004 • Growth characteristics remain • New geographic markets present growth opportunities • Threat of digital exhibition remains distant . . . • . . . but techn
Slide 26: Deluxe Film Creative Services
Deluxe Film Creative Services • Business segments: – EFILM - post-production – Deluxe Digital Studios (DDS) - DVD mastering – Deluxe Media Asset Management • Strong market positions • Good results in ‘04 with full year contributions in ‘05 • Integral to any digital distribution platform
Slide 27: Deluxe Film Creative Services - EFILM
Deluxe Film Creative Services - EFILM
Slide 28: Deluxe Film Creative Services - EFILM
Deluxe Film Creative Services - EFILM Total number of major features 70 using digital intermediates 60 EFILM 64 50 40 30 37 29 20 23 10 14 8 0 2002 2003 2004 Source: Deluxe estimates
Slide 29: Deluxe Film Creative Services - EFILM
Deluxe Film Creative Services - EFILM • World leading digital film laboratory • Rapid penetration of digital intermediate technology – enhances conventional film process – provides additional powers of control and creativity • Any future format or input can be enhanced digitally • Technology link to
Slide 30: Deluxe Film Creative Services - DDS
Deluxe Film Creative Services - DDS
Slide 31: Deluxe Film Creative Services - DDS
Deluxe Film Creative Services - DDS • The world’s largest CE&A company – enhanced by recent acquisitions (DVCC, Softitler) • New facilities in Los Angeles • Authoring, subtitling . . . • Compression is key for all distribution formats . . . • . . . including digital platforms
Slide 32: Hard Rock Transcending the 'cafe' brand
Hard Rock Transcending the ‘cafe’ brand • Cafes still central . . . EBIT 2004 (before central costs) – LFL sales up Territory – new cafes performing well Hotels and Owned gaming – growth in franchise cafes • Increasing value in hotels and casinos Franchised cafes The new franchised café in Kuwait
Slide 33: Hard Rock Owned and franchised cafes
Hard Rock Owned and franchised cafes 140 Owned cafes Franchised cafes 120 100 53 48 48 80 45 47 60 40 61 65 69 54 54 20 0 2000 2001 2002 2003 2004
Slide 34: Hard Rock Hotels
Hard Rock Hotels • Far East • Orlando • Sol Meliá JV – Chicago – New York – Madrid – San Diego • Seminole hotels The Reina Victoria Hotel in Madrid will open – Tampa as the Hard Rock Hotel Madrid in late 2005 – Hollywood (FL)
Slide 35: Hard Rock Branded gaming
Hard Rock Branded gaming • 4 casinos now operational • UK – London - at capacity – Manchester • Florida – Tampa } expansion – Hollywood (Fl) planned Seminole Ft. Lauderdale opened in May 2004 • New developments – Biloxi - on track for Q4 2005
Slide 36: Hard Rock - brand extensions
Hard Rock - brand extensions US$1bn of third party investment Seminole hotel/casino - Tampa Hotel/casino - Biloxi, Mississippi Hard Rock Hotel - Chicago New York Paramount Hotel
Slide 37: Gaming: competitive advantage
Gaming: competitive advantage • 120 Mecca Bingo clubs • 36 Grosvenor casinos • 2.8m sq ft • 22 of which are new or – 7 over 40k sq ft refurbished – 33 over 30k sq ft • 0.5m sq ft – 30 over 20k sq ft • 398 gaming tables • 4.6m registered members • 626 electronic roulette (1.1m active) • 1.3m register
Slide 38: Gaming Mecca Bingo - mature, cash generative
Gaming Mecca Bingo - mature, cash generative • Relocations – 4 completed in 2004 • New licences – Paisley (‘06) – Crewe (‘06) – Thanet (‘06) • Product development – electronic bingo – cashline The relocated Mecca in Glasgow Easterhouse – section 21 machines • 11 clubs in Spain
Slide 39: Gaming Grosvenor Casinos - growth
Gaming Grosvenor Casinos - growth • Investment in new licences – Bolton – Stoke-on-Trent – Dundee (‘06) – Swansea (‘06) • Relocations – Cardiff – Bury New Road (‘05) • Belgium The new Grosvenor casino in Bolton
Slide 40: Gaming Blue Square - good prospects
Gaming Blue Square - good prospects • Product development – Blue Square casino – Poker room – other new products • On-line market growing rapidly • Blue Square shop Plans for the new Blue Square Shop, London
Slide 41: UK Gambling Bill Timing
UK Gambling Bill Timing • House of Lords – 2nd reading on 22 February – Committee stage w/c 7 March – Report stage and 3rd reading w/c 4 April – Passing • House of Commons – Consideration of amendments • Royal Assent
Slide 42: UK Gambling Bill BCA Advertising
UK Gambling Bill BCA Advertising
Slide 43: UK Gambling Bill What we have asked for
UK Gambling Bill What we have asked for LEVEL PLAYING FIELD ALL CASINOS SHOULD BE TREATED THE SAME Same regulations + Same taxation SAME PRODUCTS
Slide 44: UK Gambling Bill Three possible scenarios
UK Gambling Bill Three possible scenarios 1. Does not go through at all 2. Goes through as is - no amendment 3. Goes through - with amendments
Slide 45: UK Gambling Bill Rank's Gaming strategy
UK Gambling Bill Rank’s Gaming strategy • We will have to wait and see . . . • We are well placed – strong market positions – well invested estate – large customer base • Strong balance sheet and cash flow
Slide 46: Rank Group Summary
Rank Group Summary • Deluxe Media to be sold • Plans to separate Deluxe Film continuing • Hard Rock - further developments • Irrespective of outcome of Gambling Bill, Gaming is well placed • Progressive dividend policy
Slide 47: Supplementary Slides
Supplementary Slides
Slide 48: Capital expenditure
Capital expenditure* £m 2004 2003 2005 2004 Estimate Depreciation Gaming # 58.9 44.8 50- 60 27.9 Hard Rock 13.3 12.4 10 - 15 15.7 Deluxe 37.4 33.7 20 - 30 27.2 US Holidays 2.8 1.0 0-5 0.7 112.4 91.9 80 - 110 71.5 * Assuming a full year for all businesses # Excluding RLMS
Slide 49: Group capital structure
Group capital structure 31 Dec 31 Dec £m 2004 2003 Net debt (606.7) (700.5) Deluxe contract advances net receivable 180.7 229.2 (426.0) (471.3) Average rate on net debt 5.5% 5.4% Fixed charge cover # 5.1x 4.4x # restated for FRS 17