Slide 1: Interim Results 2004
Interim Results 2004 3 September 2004
Slide 2: Alun Cathcart, Chairman
Alun Cathcart Chairman
Slide 3: Mike Smith, Chief Executive
Mike Smith Chief Executive
Slide 4: Ian Dyson, Finance Director
lan Dyson Finance Director Rank Group
Slide 5: Profit before exceptional items
Profit before exceptional items £m 2004 2003 Turnover 931.4 879.9 Operating profit* 80.2 94.4 Associates 0.2 0.1 Interest (16.5) (14.3) Profit before tax* 63.9 80.2 Effective tax rate 28.1% 30.3% Earnings per share* 7.8p 7.7p * Stated before goodwill amortisation of £3.7m (2003 - £2.8m)
Slide 6: Gaming
Gaming £m 2004 2003 % growth Turnover Mecca 146.9 130.9 +12.2 Grosvenor 94.4 88.5 +6.7 Blue Square 198.2 179.2 +10.6 439.5 398.6 +10.3 Operating profit Mecca 38.8 39.8 -2.5 Grosvenor 14.7 15.3 -3.9 Blue Square 1.3 0.9 +44.4 54.8 56.0 -2.1
Slide 7: Mecca Bingo
Mecca Bingo £m 2004 2003 % growth Turnover UK 133.9 119.2 +12.3 Spain 13.0 11.7 +11.1 146.9 130.9 +12.2 Operating profit UK 35.4 36.7 -3.5 Spain 3.4 3.1 +9.7 38.8 39.8 -2.5 UK Statistics Admissions (000s) 10,710 10,901 -1.8 Spend per head £11.32 £10.93 +3.6
Slide 8: Grosvenor Casinos UK
Grosvenor Casinos UK £m 2004 2003 % growth Turnover London - upper 11.6 8.1 +43.2 London - other 25.9 26.2 -1.1 Provincial 45.8 45.6 +0.1 Hard Rock 5.1 4.4 +15.9 88.4 84.3 +4.9 Operating profit London - upper 1.9 1.8 +5.6 London - other 4.4 4.6 -4.3 Provinces 11.5 13.7 -16.1 Hard Rock (0.5) (0.8) +3
Slide 9: Blue Square H1 2004
Blue Square H1 2004 £m Pro forma Pro forma* % growth 2004 2003 Stakes Internet 73.8 93.1 -20.7 Telebet 30.0 41.8 -28.2 Games 94.4 62.0 +52.3 198.2 196.9 +0.7 Gross Win Internet 6.5 6.4 +1.6 Telebet 2.4 2.5 -4.0 Games 4.3 3.8 +13.2 13.2 12.7 +3.9 * Figures assuming Rank Group owned the business for t
Slide 10: Hard Rock
Hard Rock Operating profit £m 2004 2003 Owned cafes 11.3 12.5 Franchise and other income Cafes 2.2 2.8 Hotels 3.1 4.5 Gaming Franchise 1.4 - Territory sales 0.3 1.0 Advertising and promotion (0.8) (0.4) Overheads (5.9) (7.1) Operating profit 11.6 13.3
Slide 11: Deluxe
Deluxe £m 2004 2003** Turnover Film services 185.4 190.6 Media services 173.7 133.7 359.1 324.3 Operating profit* Film services 27.6 32.3 Media services (10.7) (5.9) 16.9 26.4 Associate Investments 0.2 0.1 17.1 26.5 * Before exceptional items ** As restated for the transfer of digital services busin
Slide 12: Deluxe Film: Turnover analysis
Deluxe Film Turnover analysis £m 190.6 190 17.5 185.4 180 (13.0) 170 (9.7) 160 150 140 2003* Expired Currency Revenue 2004 contracts Growth *As restated
Slide 13: Deluxe Film: Operating profit analysis
Deluxe Film Operating profit analysis £m 32.3 15.0 2.5 27.6 (4.7) 10.0 (2.5) 5.0 0.0 2003* Expired Currency Profit 2004 contracts Improvement *As restated
Slide 14: Deluxe Film: Contract status
Deluxe Film Contract status Feet (billion) 74% 3 Expired 2 Due to expire Contract extended 1 18% 8% 0 2003 2004 2005 2006 2007 2008+ Contract expiry year * Percentages represent proportion of 2003 contracted footage of 4.1 billion feet
Slide 15: Deluxe Media Services
Deluxe Media Services Turnover Operating Profit* £m 2004 2003** 2004 2003** Video duplication 30.5 55.1 (5.1) (3.2) DVD/CD replication 83.6 33.9 (6.2) (5.2) Distribution services 59.6 44.7 0.6 2.5 173.7 133.7 (10.7) (5.9) * Before exceptional items ** As restated for the transfer of digital services
Slide 16: 2004 H1 exceptional charges
2004 H1 exceptional charges £m 2004 Deluxe Media Services VHS plant closure 4.0 Impact of lost DVD contract 23.1 Non-operating exceptional item Loss on disposal of continuing operations 4.1 31.2 * Before tax and minority interest
Slide 17: Group cash flow
Group cash flow £m 2004 2003 Operating activities 90.4 132.7 Deluxe contract advances 17.9 (54.2) Capital expenditure (55.3) (48.2) Fixed asset disposals 0.6 1.3 Operating cash flow 53.6 31.6 Interest, tax and dividends (56.2) (85.8) Free cash flow (2.6) (54.2) Acquisitions & investments* (14.9) (87
Slide 18: Capital expenditure
Capital expenditure £m H1 H1 FY 2004 estimate 2004 2003 Gaming 29.6 24.1 65 - 75 Hard Rock 5.8 6.2 12 - 15 Deluxe 19.0 17.3 35 - 40 Other 0.9 0.6 1-2 55.3 48.2 113 - 132 Note: Since 30 June 2004 the Group has made acquisitions totalling £35m
Slide 19: Mike Smith, Chief Executive
Mike Smith Chief Executive
Slide 20: The Group in context
The Group in context • The Group structure has been stable since 2000 • Total shareholder return +85% • Each of the divisions has changed fundamentally . . . • The Group is increasingly focussed on Gaming and Hard Rock . . . • Now is an opportune time to consider the separation of the two Deluxe bus
Slide 21: Gaming: Mecca Bingo 2003 vs 2000
Gaming Mecca Bingo - 2003 vs 2000 • 3 less clubs but profits 36% higher* • Operating margin up from 25% to 31% • Market share up from 28% to 29% • Spanish operations have almost doubled in scale *Full year 2003 vs 2000
Slide 22: Gaming: Bingo 2004 and beyond
Gaming Bingo - 2004 and beyond • 121 properties • 38 over 30k sq ft • 2.8m sq ft in total • Excellent geographic coverage • New areas of opportunity: – UK deregulation – new technology The relocated Mecca in Easterhouse, Glasgow – organisation – international
Slide 23: Gaming: Casinos 2003 vs 2000
Gaming Casinos - 2003 vs 2000 • Operating profits up by 49% • Operating margin up from 14% to 18% • 4 more casinos - now 36 • Market share steady at 21% • 10 relocations completed • 5 new licences in progress Park Tower Casino - 2000
Slide 24: Gaming: Casinos 2004 and beyond
Gaming Casinos - 2004 and beyond • Gaming deregulation – more slots – 24 hour rule – advertising – non-permitted areas • More definitive on timing • New formats • Taxation and duty Park Tower Casino - 2004
Slide 25: Gaming: Betting 2003 vs 2000
Gaming Betting* - 2003 vs 2000 • Operating profit of £0.9m vs loss of £7m • Stakes of £390m vs £31m • 59k active customers vs 21k • Full suite of games and betting products • Single customer account *Blue Square was acquired in January 2003
Slide 26: Gaming: Betting 2004 and beyond
Gaming Betting - 2004 and beyond • Product development – new games – FTSE – poker room – Blue Square casino • Blue Square shop • Introduction into casinos
Slide 27: Hard Rock - 2003 vs 2000
Hard Rock - 2003 vs 2000 • Profits down at the cafes by 50% – post 9/11impact – merchandise sales • Development of low-cost model • 65 vs 55 owned cafes • Hotels and Casinos – 4 hotels – 3 casinos The Hard Rock Cafe, London
Slide 28: Hard Rock - 2004 and beyond
Hard Rock - 2004 and beyond Franchise and brand extensions • More cafes – mostly franchised – 6 to be added in ‘04 • Hotels – Orlando, Chicago – New York, San Diego • Hotel/casinos – Hollywood, Tampa – Biloxi The franchised cafe in Melbourne, Australia • Casinos
Slide 29: Deluxe Film - 2003 vs 2000
Deluxe Film - 2003 vs 2000 • Profits up by 49%* • Footage up by 30%* • New labs in Toronto, Rome, Spain and Australia • Added Services – ETS – Capital FX – Digital Asset Management *Full year 2003 vs 2000
Slide 30: Deluxe Film - 2004 and beyond
Deluxe Film - 2004 and beyond • Build on market leadership • New geographic markets • Expansion of digital services – EFILM - market leader – CE&A - market leader • Further opportunities The screening room at EFILM, Hollywood in digital
Slide 31: Deluxe Media - 2003 vs 2000
Deluxe Media - 2003 vs 2000 • Total transformation from VHS to DVD • Consolidated facilities • Geographic expansion • 162m DVD produced vs 3.3m* • Distribution is key - 523m vs 420m units* *Full year 2003 vs 2000
Slide 32: Deluxe Media - 2004 and beyond
Deluxe Media - 2004 and beyond • Focus on manufacturing and distribution • First class facilities in N America and Europe • Gaining new contract business is key Sortation in Deluxe Media’s Pleasant Prairie facility
Slide 33: Review of Group Structure
Review of Group Structure • Each of the businesses 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 34: Group outlook
Group 12 month outlook • Gaming – UK: improved trading and prospects for deregulation – Europe: Belgium and Spain • Hard Rock – further recovery? – focus on franchising and brand extensions • Deluxe – Film - further development of added services – Media - focus on manufacturing and distribution
Slide 35: Supplementary Slides
Supplementary Slides
Slide 36: Hard Rock: Like for like sales
Hard Rock Like for like sales Change 10% Food and Beverage 5% 0% Total -5% Merchandise -10% Jan Feb Mar Apr May Jun Jul Aug 2004 vs 2003
Slide 37: Contract advances
Contract advances 2004 H1 summary 2004 2003 £m Film Media Total Total New advances (6.2) (12.5) (18.7) (98.7) Amortisation 28.1 8.5 36.6 44.5 Net cashflow 21.9 (4.0) 17.9 (54.2) Net receivable 184.4 25.3 209.7 283.4 Creditors 100.1 17.6 117.7 22.7
Slide 38: Group capital structure
Group capital structure 30 Jun 31 Dec 30 Jun £m 2004 2003 2003 Net debt (668.1) (700.5) (529.6) Deluxe net contract advances receivable 209.7 229.1 283.4 Preference shares - - (227.5)