Rank Group Plc · LSE:RNK
Rank — The Rank Group — H1 2009 Earnings Presentation
46 slides from Rank's earnings presentation, Jul 31, 2009
Slide 1: Half-year results 2009
Half-year results 2009 31 July 2009
Slide 2: Peter Johnson, Chairman
Peter Johnson, Chairman
Slide 3: Agenda
Agenda • Half-year results – Paddy Gallagher • Operational review and strategic priorities – Ian Burke
Slide 4: Paddy Gallagher, finance director
Paddy Gallagher, finance director
Slide 5: Financial headlines
Financial headlines • Revenue: £266.0m (2008: £257.0m) • Operating profit: £30.2m (2008: £28.9m) • Adjusted profit before tax: £24.7m (2008: £17.6m) • Adjusted EPS: 4.5p (2008: 3.0p) • Operating cash flow: £28.6m (2008: £34.1m) • Net debt: £208.1m (£226.5m at 31 December 2008)
Slide 6: Adjusted profit
Adjusted profit* 2009 2008 £m H1 H1 Revenue 266.0 257.0 Operating profit 30.2 28.9 Interest (5.5) (11.3) Profit before tax 24.7 17.6 Effective tax rate 28.9% 34.3% Adjusted earnings* per share 4.5p 3.0p • Positive cash tax in H1 2009 *Profits and earnings before discontinued operations, exceptional
Slide 7: Changes to disclosure
Changes to disclosure • Segmental reporting (IFRS 8) – reallocation of shared services • VAT refund/non-payment – benefit of VAT refund recognised in FY08 but not in H108 income statement – business review adjusted to show comparable results • Tax changes in HM Government’s Budget 2009 – like-for-li
Slide 8: Revenue & operating profit
Revenue & operating profit Revenue Operating profit 2009 2008 2009 2008 £m H1 H1 H1 H1 Mecca Bingo* 116.3 116.9 19.0 22.7 Top Rank Espana 18.1 17.7 2.7 4.1 Grosvenor Casinos 106.7 102.2 14.7 12.5 Rank Interactive 24.9 27.0 3.0 3.5 Central costs (9.2) (11.0) Group* 266.0 263.8 30.2 31.8 * Revenue and
Slide 9: Operating costs
Operating costs 2009 2008 £m H1 H1 change Employment 87.1 82.6 5.4% Taxes & duties 38.7 32.8 18.0% Direct costs 25.2 23.9 5.4% Property costs 22.6 23.8 (5.0)% Marketing 22.7 23.2 (2.2)% Depreciation 12.5 13.1 (4.6)% Other 27.0 28.7 (5.9)% Total 235.8 228.1 3.4% • Like-for-like costs held in line wit
Slide 10: Mecca Bingo
Mecca Bingo 2009 2008 £m H1 H1 Revenue* 116.3 116.9 Operating profit* 19.0 22.7 KPIs Visits (000s) 7,491 7,893 Spend per visit (£) 15.53 14.82 • Strong growth from gaming machines • £1.1m additional taxation in period as result of HM Government Budget 2009 * Revenue and operating profit for Mecca Bi
Slide 11: Top Rank Espana
Top Rank Espana 2009 2008 £m H1 H1 Revenue 18.1 17.7 Operating profit 2.7 4.1 KPIs Visits (000s) 1,130 1,203 Spend per visit (£) 16.02 14.71 • 10.6% revenue decline in euros • Continued gains in market share
Slide 12: Grosvenor Casinos
Grosvenor Casinos Revenue Operating profit 2009 2008 2009 2008 £m H1 H1 H1 H1 London 41.2 44.1 5.3 5.7 Provincial 57.3 50.4 8.9 5.8 Belgium 8.2 7.7 0.5 1.0 106.7 102.2 14.7 12.5 KPIs Visits (000s) 2,270 2,098 Spend per visit (£) 47.00 48.72 • Growth in customer visits - London and provinces • Strong
Slide 13: Rank Interactive
Rank Interactive Revenue 2009 2008 £m H1 H1 Bingo/games 16.4 14.7 Casino 2.4 2.6 Poker 1.7 2.0 Sportsbook 4.4 7.7 24.9 27.0 Operating profit 3.0 3.5 • Strong growth from meccabingo.com • Blue Square sportsbook improving after poor Q1
Slide 14: Statutory profit & loss
Statutory profit & loss 2009 2008 £m H1 H1 Adjusted profit before tax 24.7 17.6 Net return on defined benefit pension asset - 3.6 Amortisation of equity component of convertible bond (0.3) (1.8) Other* 1.2 (0.8) Profit before tax and exceptional items 25.6 18.6 Exceptional items 1.4 (95.2) Profit (l
Slide 15: Cash flow
Cash flow 2009 2008 £m H1 H1 Continuing operations Cash inflow from operations 41.3 39.8 Capital expenditure (14.3) (11.3) Fixed assets disposals 1.6 5.6 Operating cash inflow 28.6 34.1 Acquisitions and disposals (0.3) 25.2 (Payments) receipt - exceptional costs and provisions (12.5) 2.0 15.8 61.3 I
Slide 16: Strengthened balance sheet
Strengthened balance sheet • Sustained reduction in net debt Group net debt (£m) 316.9 • Positive developments on VAT claims 273.4 – favourable High Court ruling 226.5 208.1 – £6.8m interest receipt in H2 • Significant headroom against £400m+ debt facilities – £150m term loan (2012) – £250m revolver
Slide 17: Capital investment to support growth
Capital investment to support growth 2009F 2009 2008 £m FY H1 H1 Mecca Bingo 12.0 - 14.0 8.1 4.4 Top Rank Espana 1.0 - 2.0 0.5 0.8 Grosvenor Casinos 16.0 - 18.0 3.9 3.3 Rank Interactive 4.0 - 5.0 1.6 2.5 Central 1.0 0.2 0.3 Total 35.0 - 40.0 14.3 11.3 • Grosvenor Casinos - G Casino expansion • Mecca
Slide 18: Ian Burke, chief executive
Ian Burke, chief executive
Slide 19: Strategic priorities
Strategic priorities Becoming the UK’s leading gaming-based leisure business . . . • Deepen customer insight to drive product and service improvement • Selective investment to strengthen position in UK and assess longer term growth opportunities overseas • Active engagement to shape the wider enviro
Slide 20: Review of H1
Review of H1 • Positive first-half performance • Competitive outperformance across land-based businesses • Continued investment in businesses • Management team strengthened • Negative changes in HM Government’s Budget 2009
Slide 21: Deepen customer insight - How
Deepen customer insight - How • Deeper understanding of what customers want • Enhanced management information systems • Measurement of willingness of customers to recommend our brands
Slide 22: Deeper understanding of what customers want
Deeper understanding of what customers want • Customer insight teams – established in Grosvenor Casinos, Mecca Bingo & Rank Interactive • Loyalty schemes and player tracking – Play Points in five casinos – Lucky Swipes in three bingo clubs – enhanced VIP programme in Rank Interactive – step by step
Slide 23: Enhanced management information systems
Enhanced management information systems Playsafe • Accurate live data on 3,900 gaming machines • System extended to 66 Mecca Bingo clubs • Benefits include: – inventory management – machine siting – cash security • Roll-out to rest of portfolio
Slide 24: Measurement of willingness to recommend
Measurement of willingness to recommend Net Promoter Scores* (%) 40 39 35 34 Q1 2009 Q2 2009 Q1 2009 Q2 2009 Mecca Bingo Grosvenor Casinos *Net promoter score is derived by subtracting the number of negative customer scores (detractors) from positive customer scores (promoters). Neutral scores (pass
Slide 25: Deepen customer insight - Why
Deepen customer insight - Why • Product and service improvement • Consistent delivery of value for money propositions
Slide 26: Product and service improvement
Product and service improvement • Electronic gaming – additional B3 machines – new stakes / prizes for Cat C • Food and beverage – table service • Exploit online the strengths of land based brands – Meccabingo.com re-launched in H1 – GCasino.com to be launched in H2
Slide 27: Selective investment
Selective investment Grosvenor / G Casino • Limited market supply growth expected in medium term • G Casino now a proven formula • More efficient capital investment model due to capex re-engineering • Opportunity to transform G Casino into national casino brand • Developing alternative formats for s
Slide 28: Selective investment: G Casino
Selective investment G Casino • >40% higher customer visits • Key changes from traditional casino . . . – highly visible exteriors – wide range of gaming and non-gaming activities – relaxed and informal service culture . . . to create broader appeal – more customers, lower average frequency – greate
Slide 29: Selective investment: G Casino rollout
Selective investment G Casino • Ten G Casinos by FY 2009 Aberdeen • >20 G Casinos by FY 2012 – non-operating licences Dundee (Q4 2009) – relocations – re-branding – selective acquisitions Bolton Blackpool Sheffield (Q4 2009) Manchester Coventry Luton (Q3 2009) London Thanet
Slide 30: Selective investment: Mecca Bingo new concept club
Selective investment Mecca Bingo new concept club • Mecca Beeston opened 14th May 2009 – £4.9m investment • Key changes from traditional bingo club . . . – highly visible exteriors – focus on entertainment – noisy zones & quiet zones – broader range of games – high quality, good value F&B with table
Slide 31: Selective investment: Mecca Bingo new concept
Selective investment Mecca Bingo new concept • Two existing Mecca clubs to be re-modelled – by H1 2010 • Assessment of opportunities across rest of portfolio – monitor performance of new concept clubs and identify areas for improvement – review of new concept capital investment requirements
Slide 32: Selective investment
Selective investment • Rank Interactive – greater emphasis on bingo and casino – resources focused on marketing rather than technology • Top Rank Espana – short-term focus on capital and cost control – medium-term assessment of development opportunities
Slide 33: Shape wider environment
Shape wider environment • Operational progress undermined by taxation policy adversely impacting bingo • Responsibility to our shareholders to address issues of gaming taxation and regulation • Programme of engagement a key component of our strategy
Slide 34: Shape wider environment
Shape wider environment • More supportive approach to bingo clubs from DCMS – Cat B3 machine increase – Cat C machine stakes and prizes – supportive of bingo clubs position on taxation • Liberal Democrat and SNP support for bingo duty at 15%, sympathetic response from Conservative front bench • Cont
Slide 35: Outlook
Outlook • Clear strategy to grow our businesses • Economic outlook remains uncertain • Increase in taxation weighted towards H2 • Improving customer propositions, stronger management and strong financial position
Slide 36: Appendix
Appendix Appendix
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Slide 39: Mecca Bingo data sheet
Mecca Bingo data sheet H1 2009 FY 2008 H1 2008 Clubs 103 102 102 Revenue (£m) 116.3 227.6 116.9 EBIT (£m) 19.0 37.9 22.7 Operating margin 16.3% 16.7% 19.4% Active membership MAT (000s) 912 898 984 Customer visits (000s) 7,491 15,358 7,893 Spend per visit (£) 15.53 14.82 14.82 Electronic gaming B3 ma
Slide 40: Top Rank Espana data sheet
Top Rank Espana data sheet H1 2009 FY 2008 H1 2008 Clubs 11 11 11 Revenue (£m) 18.1 35.8 17.7 EBIT (£m) 2.7 6.9 4.1 Operating margin 15% 19% 23% Active membership MAT (000s) 316 323 330 Customer visits (000s) 1,130 2,410 1,203 Spend per visit (£) 16.02 14.85 14.71
Slide 41: Grosvenor Casinos data sheet
Grosvenor Casinos data sheet H1 2009 FY 2008 H1 2008 Casinos London 5 5 5 Provinces 28* 27 27 Belgium 2 2 2 Total 35* 34 34 Unused licences 13* 13 13 Revenue (£m) 106.7 206.2 102.2 EBIT (£m) 14.7 25.9 12.5 Operating margin 13.8% 12.6% 12.2% Active membership MAT (000s) 842 775 806 Customer visits (0
Slide 42: Rank Interactive data sheet
Rank Interactive data sheet H1 2009 FY 2008 H1 2008 Bingo/games 16.4 29.7 14.7 Casino 2.4 5.5 2.6 Poker 1.7 3.8 2.0 Sportsbook 4.4 13.6 7.7 Revenue (£m) 24.9 52.6 27.0 EBIT (£m) 3.0 7.6 3.5 Operating margin 12% 14% 13%
Slide 43: Changes to portfolio
Changes to portfolio H1 • Grosvenor Casinos – acquisition of casino at Ricoh Arena, Coventry – re-branding of Bolton casino as G Casino • Mecca Bingo – opening of Mecca, Beeston, Nottingham H2 • Grosvenor Casinos – opening of G Casino, Dundee (new licence) – opening of G Casino, Sheffield (relocatio
Slide 44: Casinos market supply (July 2009)
Casinos market supply (July 2009) Operator Operating Non-operating Total clubs licences licences Genting Stanley 45 10* 55 Grosvenor Casinos 34 12 46 Gala 27 4 31 Caesar’s/London Clubs 11 1 12 A&S Leisure 6 0 6 Isle of Capri/Blue Chip 2 1 3 Aspers/Aspinall’s 4 0 4 Clockfair 2 0 2 Guoco 1 4 5 Indepen
Slide 45: Bingo clubs market supply (July 2009)
Bingo clubs market supply (July 2009) Operator clubs Gala Bingo 153* Mecca Bingo 103 Top Ten Bingo 36 Carlton Clubs 14 Riva Bingo 11 Buckingham Bingo 11 Others 256* Total 584* * does not include 6 additional club closures (5 Gala Bingo; 1 independent) announced but not yet effective
Slide 46: Forthcoming events
Forthcoming events October 2009 (date to be confirmed) Interim management statement investor relations contacts Dan Waugh Alex Viney director of investor relations assistant 01628 504053 01628 504072 dan_waugh@rank.com alex_viney@rank.com