Rank Group Plc · LSE:RNK
Rank — The Rank Group — H1 2012 Earnings Presentation
35 slides from Rank's earnings presentation, February 2012
Slide 1: Interim results to 31 December 2011
Interim results to 31 December 2011 www.rank.com
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
Clive Jennings, finance director www.rank.com
Slide 4: Financial headlines
Financial headlines Six months to 31 December 2011 •Gross revenue*: £295.9m (H2 2010: £286.7m) •EBITDA**: £53.1m (H2 2010 : £49.2m) •Operating profit**: £34.6m (H2 2010 : £33.4m) •Adjusted profit before tax**: £32.5m (H2 2010 : £30.1m) •Adjusted earnings per share**: 6.1p (H2 2010 : 5.6p) •Second in
Slide 5: Revenue & operating profit
Revenue & operating profit Revenue* Operating profit** Revenue* Operating profit** H2 H2 H2 H2 2011 2010 2011 2010 £m 2011 2010 2011 2010 Grosvenor Casinos 125.8 122.0 20.4 18.4 249.2 238.6 40.6 36.0 Mecca Bingo 117.4 115.8 14.8 13.7 239.1 234.5 31.0 29.7 Rank Interactive 37.8 30.3 6.4 5.6 71.8 57.7
Slide 6: Grosvenor Casinos
Grosvenor Casinos Revenue* Operating profit** Revenue* Operating profit** H2 H2 H2 H2 2011 2010 2011 2010 £m 2011 2010 2011 2010 London 46.5 49.3 10.2 9.3 93.2 94.7 19.0 17.6 Provinces 71.5 64.4 11.4 8.9 139.9 127.7 22.3 17.6 Belgium 7.8 8.3 (1.2) 0.2 16.1 16.2 (0.7) 0.8 125.8 122.0 20.4 18.4 249.2
Slide 7: Mecca Bingo
Mecca Bingo 2011 2010 2011 2010 £m H2 H2 Revenue* 117.4 115.8 239.1 234.5 Operating profit** 14.8 13.7 31.0 29.7 KPIs Visits (000s) 7,163 7,167 14,652 14,688 Spend per visit (£) 16.39 16.16 16.32 15.96 • Growth in customers driving revenue (like for like up 3.5%) and operating profit • 1.4% growth i
Slide 8: Rank Interactive
Rank Interactive 2011 2010 2011 2010 £m H2 H2 Bingo & games 28.9 22.2 54.8 42.0 Casino 3.2 2.7 6.2 5.7 Poker 0.6 0.8 1.3 1.8 Sportsbook 5.1 4.6 9.5 8.2 Revenue 37.8 30.3 71.8 57.7 Operating profit 6.4 5.6 9.1 7.9 • meccabingo.com benefiting from referrals from land-based venues • grosvenorcasino.com
Slide 9: Top Rank España
Top Rank España 2011 2010 2011 2010 £m H2 H2 Revenue 14.9 18.6 29.8 37.0 Operating profit* 0.5 3.8 0.7 6.8 KPIs Visits (000s) 1,064 1,197 2,074 2,339 Spend per visit (£) 14.00 15.54 14.37 15.82 • Effect of full smoking ban and challenging economic situation • Cost control measures along with value p
Slide 10: Operating costs
Operating costs £m H2 2011 H2 2010 Change 2011 2010 Change Employment 93.5 95.9 (2.5)% 189.2 188.7 0.3% Taxes & duties 47.3 44.0 7.5% 93.8 90.0 4.2% Direct costs 27.2 25.5 6.7% 54.8 51.2 7.0% Property costs 25.1 24.3 3.3% 49.6 47.1 5.3% Marketing* 28.1 25.3 11.1% 56.9 51.9 9.6% Depreciation** 18.5 1
Slide 11: Statutory profit & loss
Statutory profit & loss 2011 2010 2011 2010 £m H2 H2 Adjusted profit before tax 32.5 30.1 58.8 55.2 Other (0.7) 0.1 (0.6) (0.7) Profit before tax and exceptional items 31.8 30.2 58.2 54.5 Exceptional items (12.9) (24.1) 136.0 19.0 Profit before tax 18.9 6.1 194.2 73.5 Taxation (4.6) (5.8) (44.1) (24
Slide 12: Cash flow
Cash flow 2011 2010 £m Continuing operations Cash inflow from operations 97.0 93.1 Capital expenditure (49.9) (50.2) Fixed assets disposals 0.8 0.1 Operating cash inflow 47.9 43.0 Acquisitions and disposals (0.1) 0.8 Receipts - exceptional items and provisions 66.4 26.4 114.2 70.2 Dividends (10.4) (
Slide 13: Strengthened balance sheet
Strengthened balance sheet Financial position (£m) 2007-2011, Net cash/(Net debt) 25.0 37.2 FY 07 H1 08 FY 08 H1 09 FY 09 H1 10 FY 10 H1 11 H2 11 (133.4) (123.4) (186.8) (208.1) (226.5) (273.4) (316.9) • New £80m bank facilities allow substantial investment in proven capital programmes • UK casinos
Slide 14: Strengthened balance sheet
Strengthened balance sheet Cash inflow (£m) 2007-2011 25.0 FY 07 H2 11 316.9 Capex £172.7m Dividend Legacy £18.5m incl. VAT refunds £225.7m Operating cashflows £307.4m • Cash inflow from operations (excluding VAT receipts) over the last four years has funded; capital investment programme, dividends
Slide 15: Capital investment to support growth
Capital investment to support growth 2011 2010 18 months to £m 30 June 2012F Grosvenor Casinos 23.5 19.4 42 Mecca Bingo 13.4 21.2 21 Rank Interactive 6.5 6.2 11 Top Rank España 5.0 1.9 5 Other 1.5 1.5 2 Total 49.9 50.2 81 • 74% of 2011 capital expenditure to extend reach and broaden appeal of brands
Slide 16: Financial strength
Financial strength • New revolving credit facility of £80m agreed • Target return 15%; aggregate return on expansionary capex 18.9% • Target dividend cover of 3.0x • Certainty on bingo VAT receipts, and imminent decision on amusement machines • Additional VAT claims pending; at least equivalent to p
Slide 17: Ian Burke
Rank Group Since 1937 lan Burke www.rank.com
Slide 18: Group Strategy
Group Strategy Our goal is to increase shareholder wealth by driving sustainable growth in earnings per share •Develop trusted gaming based entertainment brands •Operate responsibly in regulated markets •Engage positively with government 18
Slide 19: Our brands
Our brands Rank’s long term competitive advantage arises from the development of a portfolio of trusted brands Brand Position Core market Social, community gaming- Female-led based entertainment Age: 25 to 55 years Social and competitive Male-led gaming-based Age: 25 to 55 years entertainment Sports
Slide 20: Our brands strategy
Our brands strategy • Who are our customers and what are their needs? – insight and segmentation • How do we deliver the product, service and experience customers demand? • Where do we deliver these experiences? – venues, online and mobile 20
Slide 21: Our brands – Grosvenor Casinos
Our brands – Grosvenor Casinos 34 venues in major cities in the UK Our focus 1.Product and service improvements 2.Extending reach; capital investment 3.Extending reach; distribution 21
Slide 22: Grosvenor Casinos – extending reach, capital investment
Grosvenor Casinos – extending reach, capital investment Portfolio development 2011 •3 G Casino Conversions •1 new G Casino Portfolio development plan to 2015 •£70m investment to grow portfolio to 45 casinos – Grosvenor Casino brand growing awareness through new markets •30 G Casinos by 2015 – Larger
Slide 23: Grosvenor – extending reach, distribution
Grosvenor– extending reach, distribution Online •Upgraded website – Updated branding, new games, detailed information on venues •10 percentage point increase to customer satisfaction Mobile •Website optimisation •Interface tailored for individual mobile devices •Widest selection of games content in
Slide 24: Our brands – Mecca
Our brands – Mecca Mecca is one of Britain’s most familiar gaming brands •Multi-channel distribution through 98 venues, online and mobile applications Our focus 1.Product and service improvement; cross channel community gaming, food and drink, entertainment 2.Extending reach; developing inclusive ga
Slide 25: Mecca – extending reach, capital investment
Mecca – extending reach, capital investment Full House Destination •Converted clubs see increases to customer satisfaction, customer visits and a fall in the average age of customers •Review of conversion costs means that the latest Full House conversion, to be reopened in March 2012, will cost less
Slide 26: Mecca – extending reach, distribution
Mecca – extending reach, distribution Online •Enhancements to website improve customer experience •Increasing customer satisfaction •New slots content, consistent with venues •X-Factor agreement provides exclusive content Mobile •Real money applications compatible with iphone and android •Cashline b
Slide 27: Regulation and Taxation
Regulation and Taxation The regulation and taxation of the gaming industry remains in flux, the results will have a profound effect on how Rank operates Regulation •UK government launches review of Gambling Act 2005 •Reinstatement of triennial review for UK amusement machines •Regulation of online g
Slide 28: Summary
Summary • Strong balance sheet • Trusted brands • Opportunities to develop multi-channel distribution 28
Slide 29: Appendices
Rank Group Since 1937 Appendices www.rank.com
Slide 30: Grosvenor Casinos data sheet
Grosvenor Casinos data sheet H2 2011 H1 2011 H2 2010 H1 2010 H2 2009 H1 2009 Casino licenses London 4 5 5 5 5 5 Provinces 33 32 31 30 30 28 Belgium 2 2 2 2 2 2 Total 39 39 38 37 37 35 Unused licences 10 10 11 12 12 13 Revenue (£m) 125.8 123.4 122.0 116.6 113.3 106.7 EBIT (£m) 20.4 20.2 18.4 17.6 16.
Slide 31: Mecca Bingo data sheet
Mecca Bingo data sheet H2 2011 H1 2011 H2 2010 H1 2010 H2 2009 H1 2009 Clubs 98 100 103 103 103 103 Revenue (£m) 117.4 121.7 115.8 118.7 116.7 116.3 EBIT (£m) 14.8 16.2 13.7 16.0 13.3 19.0 Operating margin 12.6% 13.3% 11.8% 13.5% 11.4% 16.3% Customers MAT (000s) 943 924 911 895 881 912 Customer visi
Slide 32: Rank Interactive data sheet
Rank Interactive data sheet H2 2011 H1 2011 H2 2010 H1 2010 H2 2009 H1 2009 Bingo/games 28.9 25.9 22.2 19.8 17.9 16.4 Casino 3.2 3.0 2.7 3.0 2.7 2.4 Poker 0.6 0.7 0.8 1.0 1.2 1.7 Sportsbook 5.1 4.4 4.6 3.6 4.1 4.4 Revenue (£m) 37.8 34.0 30.3 27.4 25.9 24.9 EBIT (£m) 6.4 2.7 5.6 2.3 4.5 3.0 Operating
Slide 33: Top Rank España data sheet
Top Rank España data sheet H2 2011 H1 2011 H2 2010 H1 2010 H2 2009 H1 2009 Clubs 11 11 11 11 11 11 Revenue (£m) 14.9 14.9 18.6 18.4 18.1 18.1 EBIT (£m) 0.5 0.2 3.8 3.0 2.9 2.7 Operating margin 3.4% 1.4% 20.4% 16.3% 16.0% 14.9% Customers MAT(000s) 308 319 331 341 314 316 Customer visits (000s) 1,064
Slide 34: Casinos market supply (December 2011)
Casinos market supply (December 2011) Operating Non-operating Total Operator licenses licences Licences Genting Stanley 46 9 55 Grosvenor Casinos 37 10 47 Gala 27 4 31 Caesar’s / London Clubs 10 0 10 A&S Leisure 6 0 6 Aspers / Aspinall’s* 5 1 6 Club 36 3 0 3 Clockfair 2 0 2 Guoco 1 5 6 Independents
Slide 35: Bingo clubs market supply (December 2011)
Bingo clubs market supply (December 2011) Operator Clubs* Gala Bingo 146 Mecca Bingo 98 Top Ten Bingo 22 Carlton Clubs 14 Others 195 Total 475 * Company Research; excludes the conversion of adult gaming centres to bingo clubs 35