Rank Group PLC · LSE:RNK
Rank — The Rank Group — FY2013 Earnings Presentation
35 slides from Rank's earnings presentation, 2013
Slide 1: The Rank Group Presents: Preliminary Results to 30 June 2013
Slide 2: Introduction
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
Clive Jennings finance director
Slide 4: 12 months to 30 June 2013
12 months to 12 months to 30 June 2013 30 June 2012 Gross revenue(2) £625.0m £584.3m Operating profit(3) £69.9m £69.7m Adjusted earnings per share(3) 12.4p 12.4p EBITDA(3) £108.8m £107.0m Operating cash inflow £81.5m £62.5m Net (debt) / cash(4) £(103.8)m £41.8m Total dividend per share 4.10p 3.60p (
Slide 5: Revenue and operating profit by business
(5) (6) Revenue Operating profit £m 2012/13 2011/12 2012/13 2011/12 Grosvenor Casinos 300.3 261.5 47.4 39.9 Mecca 296.2 293.6 44.1 49.9 Enracha 28.5 29.2 0.7 0.1 Central costs (22.3) (20.2) Total continuing 625.0 584.3 69.9 69.7 (5) before adjustment for free bets, promotions and customer bonuses 5
Slide 6: Operating profit bridge FY 2011/12 to FY 2012/13
£m +40.7 -10.1 -17.0 employment -9.0 taxes & -1.6 -2.8 duties marketing revenue & free bets depreciation other(7) 69.7 & amortisation 69.9 FY 2011/12 FY 2012/13 operating profit operating profit 6 (7) other includes direct and property costs
Slide 7: Operating profit variances by business
Grosvenor Central £m Casinos Mecca Enracha costs Total Revenue 38.8 2.6 (0.7) - 40.7 Employment costs (9.0) 0.2 0.3 (1.6) (10.1) Taxes and duties (12.5) (4.4) (0.1) - (17.0) Marketing & free bets (5.4) (3.5) 0.2 (0.3) (9.0) D&A (2.8) 1.3 - (0.1) (1.6) Other(8) (1.6) (2.0) 0.9 (0.1) (2.8) Operating p
Slide 8: Grosvenor Casinos
(9) (10) Revenue Operating profit £m 2012/13 2011/12 2012/13 2011/12 London 105.8 94.9 26.6 20.7 Provinces 154.4 145.6 20.0 22.8 Belgium 14.8 15.3 - (0.7) Acquired casinos 15.5 - 2.9 - Venues total 290.5 255.8 49.5 42.8 Digital 9.8 5.7 (2.1) (2.9) Total brand 300.3 261.5 47.4 39.9 KPIs(11) Venues Di
Slide 9: Mecca
(12) (13) Revenue Operating profit £m 2012/13 2011/12 2012/13 2011/12 Venues 234.9 237.8 23.0 28.3 Digital 61.3 55.8 21.1 21.6 Total brand 296.2 293.6 44.1 49.9 KPIs Venues Digital Visits (000s) 13,559 14,407 5,003 4,336 Spend per visit (£) 17.32 16.51 12.25 12.87 • Digital: solid growth in customer
Slide 10: Enracha
2012/13 2011/12 Revenue (£m) 28.5 29.2 Revenue (euros m) 34.5 34.5 Operating profit (£m)(14) 0.7 0.1 KPIs Visits (000s) 1,980 2,049 Spend per visit (£) 14.39 14.25 • Tough economic conditions • Reduction in costs 10 (14) before exceptional items
Slide 11: Costs
£m 2012/13 2011/12 Change Employment 198.3 188.2 5% Direct costs 53.9 49.7 8% Property costs 50.6 49.3 3% Other 39.5 42.2 (6)% Sub total 342.3 329.4 4% Marketing - online 12.0 9.3 29% - offline 21.0 18.1 16% Taxes & duties 112.1 95.1 18% Depreciation 38.9 37.3 4% Total 526.3 489.2 8% • Grosvenor Cas
Slide 12: Profit before and after exceptional items and tax
£m 2012/13 2011/12 Profit from continuing operations 69.9 69.7 Net interest payable (5.3) (4.9) Profit before tax and exceptional items 64.6 64.8 Exceptional items (21.9) (19.8) Profit before tax 42.7 45.0 Taxation (13.8) (13.6) Discontinued operations (1.9) (3.3) Profit for the period 27.0 28.1 • E
Slide 13: Cash flow
£m 2012/13 2011/12 Cash inflow from continuing operations 117.7 111.1 Capital expenditure (38.2) (48.8) Fixed asset disposals 2.0 0.2 Operating cash inflow 81.5 62.5 Discontinued operations (9.1) (3.4) Acquisition and disposal of businesses (175.9) (0.1) Net cash payments; provisions and exceptional
Slide 14: Capital expenditure by business
£m 2012/13 2011/12 Grosvenor Casinos 21.0 26.9 Mecca 9.6 12.5 Enracha 1.4 3.6 Central 6.2 5.8 Total continuing 38.2 48.8 14
Slide 15: Balance sheet and liquidity
• Undrawn revolving credit facilities of £80.0m • Strong operating cash flow of over £100m annually • Conservative leverage of less than 1 times • No refinancing required in the next 2 years • VAT claims 15
Slide 16: Current trading and outlook
• Group revenue continuing to grow year on year • Like-for-like revenue adversely impacted by unusually hot weather • Remain confident for the rest of the year 16
Slide 17: Ian Burke, chief executive
THE RANK GROUP PRESENTS Ian Burke chief executive
Slide 18: Strategic priorities
• Develop strong gaming based entertainment brands – Customer insight driving product and service improvement – Capital investment to extend reach and broaden appeal of our brands – Deliver brand experiences in venues, online & via mobile devices • Engage in constructive political engagement 18
Slide 19: Product and service improvement
Product and service improvement • Quantitative and qualitative research – Improved gaming offer – Food, drink and entertainment – Recruitment, induction, training and development 19
Slide 20: Capital investment, £21.0m
Capital investment, £21.0m • Conversions and refurbishments – Gunwharf Quays, Portsmouth (Dec 2012; £2.4m) – Reading G (March 2013; £6.8m) • Table and slot machines – Chipping and shuffle (£2.5m) – Slots (£1.6m) 20
Slide 21: Multi channel development
Multi channel development • Product upgrades • Marketing spend – First TV advertising campaign • Cross channel co-operation – Brand leadership team 21
Slide 22: Product and service improvements
Product and service improvements • Gaming product – Mecca Max, new terminals • Food, drink and entertainment – Improved menu, House Party • Improved employee performance – Service improvements (iCare; skill bytes) 22
Slide 23: Capital investment
Capital investment • Venues – Hartlepool (November 2012, £0.7m) – Knotty Ash (February 2013, £0.7m) – Programme not achieving targeted investment returns – Further work underway to broaden the appeal of Mecca’s retail proposition 23
Slide 24: Multi channel distribution
Multi channel distribution • Continued success – Product upgrades – Marketing – Growth in mobile – Venues/digital co-operation 24
Slide 25: Achieve benefits: acquired casinos
Achieve benefits • Infrastructure transitioned – Site visits – Staff engagement – Support services transferred to Rank • Operational improvements - £2.0m p.a. – Staff motivation & engagement – 24 hours – Playpoints loyalty scheme – Amend table staking – Purchasing benefits – Sales managers 25
Slide 26: Achieve benefits: capex led improvements
Achieve benefits • Capex led improvements – G conversions and refurbishments to deliver 20% cash on cash return within 2 years – £10.7m approved for improved product – £9.4m for G Casino conversions & refurbishments 2013/14 G conversions Leicester, Liverpool, £3.1m Glasgow Merchant City, Bournemouth
Slide 27: Priorities
• Grosvenor Casinos and Mecca – Strong, trusted brands • Casinos venues and meccabingo.com – Continue to be our stronger performing areas • Priorities 1. Action further improvements for retail channel 2. Continue digital growth 3. Achieve planned benefit from acquired casinos 27
Slide 28: Appendices
THE RANK GROUP PRESENTS Appendices
Slide 29: Change of year end to 30 June
• Rank’s year end changed to 30 June • Each operating businesses’ results recast to 30 June accounting reference date – FY 2012/13 12 months to 30 June 2013 – H1 2012/13 6 months to 31 December 2012 – FY 2011/12 12 months to 30 June 2012 – H1 2011/12 6 months to 31 December 2011 – FY 2010/11 12 mont
Slide 30: Grosvenor Casinos KPIs
FY 2012/13 H1 2012/13 FY 2011/12 H1 2011/12 FY 2010/11 H1 2010/11 (2) Casino licences London 8 4 4 4 5 5 Provinces 51 33 33 33 32 31 Belgium 2 2 2 2 2 2 Total 61 39 39 39 39 38 Non-trading licences 17 10 10 10 10 11 Revenue (£m) 290.5 140.1 255.8 125.8 245.4 122.0 EBIT (£m) 49.5 27.2 42.8 20.4 38.6
Slide 31: Current and forecast casino estate
Current estate Forecast estate (at 31 August 2013) (2015) Grosvenor Casinos – Traditional 34 25 Grosvenor Casinos – G format 21 31 Licences located alongside existing casinos 4 13 Non-trading licences 17 7(2) Total licences(3) 76 76 Total casino venues 55 56 (2) Wolverhampton(2), Middlesbrough, Lond
Slide 32: Mecca KPIs
FY 2012/13 H1 2012/13 FY 2011/12 H1 2011/12 FY 2010/11 H1 2010/11 Clubs 97 97 97 98 100 103 Revenue (£m) 234.9 115.7 237.8 117.4 237.5 115.8 EBIT (£m) 23.0 11.1 28.3 14.8 29.9 13.7 Operating margin 9.8% 9.6% 11.9% 12.6% 12.6% 11.8% Customers MAT (000s) 958 958 965 943 924 911 Visits (000s) 13,559 6,
Slide 33: Enracha KPIs
FY 2012/13 H1 2012/13 FY 2011/12 H1 2011/12 FY 2010/11 H1 2010/11 Clubs 11 11 11 11 11 11 Revenue (£m) 28.5 13.8 29.2 14.9 33.5 18.6 EBIT (£m) 1.6 0.8 1.4 0.5 4.0 3.8 Operating margin 5.6% 5.8% 4.8% 3.4% 11.9% 20.4% Customers MAT(000s) 276 291 305 308 319 331 Visits (000s) 1,980 998 2,049 1,064 2,20
Slide 34: Casino operators by venues and licences
Casino Total Operator Venues Licences Grosvenor Casinos 55 76(5) Genting 40(4) 57(4) London Clubs 10 11 A&S Leisure 6 6 Gala 4 7 Aspers/Aspinall’s 4 8(4) Club 36 3 3 Clockfair 2 2 Guoco 1 1 Others 12 27(4) Total 137 198 Source: company research (4) includes 2005 Act casino licences (5) includes 5 no
Slide 35: Bingo operators by clubs
(5) Operator Clubs Gala Bingo 138 Mecca Bingo 97 Top Ten Bingo 17 Carlton Clubs 13 Others 129 Total 394 Source: company research (5) excludes the conversion of adult gaming centres to bingo clubs 35