Rank Group Plc · LSE:RNK
Rank — The Rank Group — FY2016 Earnings Presentation
44 slides from Rank's earnings presentation, August 2016
Slide 1: Preliminary results for the year ended 30 June 2016
The Rank Group Plc Preliminary results for the year ended 30 June 2016
Slide 2: Henry Birch, Chief Executive
(n®, ank Group HENRY BIRCH Chief Executive
Slide 3: Agenda
Agenda Introduction Henry Birch, Chief Executive Financial performance Clive Jennings, Finance Director Operational performance and Strategic Outlook Henry Birch, Chief Executive Q&A
Slide 4: Summary
Summary Like-for-like revenue growth across all brands and channels Digital revenues up 11% Mecca retail in LFL revenue growth EBITDA up 2% Launch of new digital platform in Q3 Weaker Q4 across retail businesses Investment in building blocks for future growth EPS growth of 5% and 16%
Slide 5: Finance Director
Finance Director
Slide 6: Financial headlines
Financial headlines 2015/16 2014/15 % Gross revenue(1) £753.0m £738.3m 2% Reported operating profit(2) £82.4m £84.0m (2)% Operating profit before RGD(2) £94.0m £90.6m 4% EBITDA(2) £128.2m £126.3m 2% Net debt(3) £(41.2)m £(52.0)m 22% Adjusted earnings per share(2) 15.4p 14.6p 5% Final dividend per sh
Slide 7: Revenue & operating profit
Revenue & operating profit Revenue(4) Operating profit (5) £m 2015/16 2014/15 2015/16 2014/15 Grosvenor Casinos 438.6 423.4 66.2 66.5 Mecca 287.7 289.6 41.5 43.0 Enracha 26.7 25.3 3.6 2.6 Central costs (28.9) (28.1) Total continuing 753.0 738.3 82.4 84.0 • Grosvenor Casinos continued to deliver soli
Slide 8: Operating profit bridge
Operating profit bridge +5.4 (8.3) +11.4 £m Improvement (1.4) in digital (3.5) Increase in (4.8) customer National incentives and Living (0.4) 84.0 rebates Wage Increase in Increase in depreciation central costs 82.4 Cost of Improvement RGD 79.2 in venues 2014/15 Pre RGD 2015/16 operating H1 2014/15
Slide 9: Statutory profit and loss
Statutory profit and loss £m 2015/16 2014/15 Profit from continuing operations 82.4 84.0 Net interest payable (6.2) (10.3) Profit before taxation and exceptional 76.2 73.7 items Exceptional items 9.3 0.8 Profit before taxation 85.5 74.5 Taxation (14.4) (15.5) Discontinued operations 3.6 15.8 Profit
Slide 10: Exceptional items
Exceptional items £m 2015/16 2014/15 Impairments & property leases 1.9 0.4 Disposal of freehold property 10.0 - Closure of venues (2.6) 1.7 Net finance costs - (1.3) Total exceptionals pre tax 9.3 0.8 Taxation 0.4 1.3 Discontinued operations 3.6 15.8 Total exceptionals post tax 13.3 17.9 • Two ex bi
Slide 11: Cash flow and net debt
Cash flow and net debt £m 2015/16 2014/15 Cash inflow from continuing operations 116.4 154.5 Net cash payments in respect of provisions and exceptional items (6.2) (7.9) Cash generated from continuing operations 110.2 146.6 Capital expenditure (52.7) (31.9) Fixed asset disposals (inc subsidiaries) 1
Slide 12: Capital investment
Capital investment £m 2015/16 2014/15 Grosvenor Casinos 25.1 15.9 Mecca 10.6 9.5 Enracha 3.4 0.9 Central 13.6 5.6 Total 52.7 31.9 • Significant £10m investment in casino gaming (slots and electronic roulette) • Extension and refurbishment of Luton casino to accommodate additional product under the 2
Slide 13: Financial strength
Financial strength Low net debt of £41.2m with conservative leverage of c.0.3 times Strong operating cash flow with EBITDA of £128.2m Continued deleverage expected despite a planned increase in capital expenditure Undrawn £90m revolving credit facilities Plans in place to mitigate signific
Slide 14: Dividend
Dividend 6.5 5.6 6.5p 4.5 5.6p 4.1 3.6 4.5p 4.1p 3.6p 2011/12 2012/13 2013/14 2014/15 2015/16 • 16% increase in dividend in last 12 months • 16% compound growth rate over the last five years
Slide 15: Chief Executive
(n®, ank Group HENRY BIRCH Chief Executive
Slide 16: Operational review: Mecca Venues
Operational review: Mecca Venues Revenue (7) Operating profit (8) 2% like-for-like revenue growth £m 2015/16 2014/15 2015/16 2014/15 Venues 221.5 224.4 32.9 28.9 Operating profit up 14% Annual active customers of 987k: KPIs 3% comparable increase vs last year Visits (000s) 11,550 12,035 Spend
Slide 17: Operational review: Mecca Venues
Operational review: Mecca Venues Comparable Venue Income 5% Five quarters of consecutive comparable 4% revenue growth for retail bingo. Something not 3% achieved since 2007 smoking ban 2% Admissions trend overall very positive but 1% Q2 15 Q3 15 marred by weak Q4 0% Q1 15 Q4 15 Q1 16 Q2 16 Q3 16
Slide 18: Operational review: Mecca Venues
Operational review: Mecca Venues Like-for-like machine revenues up 3%: server based slots from Scientific Games/Playtech with TiTo functionality Investment in Mecca Max units in prior year driving penetration: 34% of customers using Maxes up from 31% year before Benefits continue from menu enh
Slide 19: Operational review: Mecca Digital
Operational review: Mecca Digital Revenue (9) Operating profit Digital growth continues in a competitive market £m 2015/16 2014/15 2015/16 2014/15 Digital 66.2 65.2 8.6 14.1 Digital revenue up 2% First-time depositing customers up 21% KPIs Visits (000s) 5,385 5,213 Disappointing H2: Spend pe
Slide 20: Operational review: Mecca Digital
Operational review: Mecca Digital New management led by Leon Thomas, former MD of Tombola, Caesars Interactive. New head of marketing Expanded VIP team Proprietary content starting to drive volumes and differentiation: – Emoji Bingo and Burst – Slots eg Victoria’s Sponge HTML5 version just l
Slide 21: Digital Platform
Digital Platform Launch of new Bede platform on time and in-budget on both Mecca and Grosvenor in Q3 New platform provides: – modern open architecture, allowing rapid release of new content and functionality – cloud-based infrastructure – cost effective and scalable – significantly improved bonu
Slide 22: Operational review: Grosvenor Casinos Venues
Operational review: Grosvenor Casinos Venues Revenue (10) Operating profit (11) Solid venues performance £m 2015/16 2014/15 2015/16 2014/15 London 150.3 148.3 31.7 34.0 2% revenue growth Provinces 243.7 239.6 27.2 28.6 Operating profit down 4% Belgium 14.1 13.2 2.0 0.8 – Player rebates and loyal
Slide 23: Operational review: Grosvenor Casinos Venues
Operational review: Grosvenor Casinos Venues Product development £10m investment in next generation of electronic gaming starting to drive slots revenues: up 9%. Introduction of an estate-wide blackjack progressive jackpot (‘Ace King Suited’) Introduction of improved electronic roulette (‘Get
Slide 24: Operational review: Grosvenor Casinos Venues
Operational review: Grosvenor Casinos Venues Venue development Successful roll out of new Neon casino management system from IGS Significant extension and refurbishment of Luton casino, utilising a new 2005 Act licence and 40 additional slots Second licences put alongside existing casinos, inc
Slide 25: Operational review: Grosvenor Casinos Digital
Operational review: Grosvenor Casinos Digital Revenue (12) Operating profit Continued strong digital performance £m 2015/16 2014/15 2015/16 2014/15 Digital 30.5 22.3 5.3 3.1 37% revenue growth 71% growth in operating profit even with KPIs Remote Gaming Duty Visits (000s) 839 667 Spend per visit
Slide 26: Enracha
Enracha Strong trends with growth in admissions and £m 2015/16 2014/15 revenue continuing: Revenue (£m) 26.7 25.3 – Euro revenues up 7% Revenue (euros m) 35.6 33.4 – Visits up 10% Operating profit(13) (£m) 3.6 2.6 – Operating profit up 38% KPIs Venues Ownership of five freeholds following Visits
Slide 27: Strategy update
Strategy update Aim: To be the UK’s leading multi-channel gaming operator Clear strategy for delivering sustainable profitable growth across all our brands through 5 initiatives: 1. Creating a compelling multi-channel offer 2. Building digital capability 3. Developing our venues 4. Investing in bran
Slide 28: 1. Creating a compelling multi-channel offer
1. Creating a compelling multi-channel offer My Mecca app Activity on 2015/16 Priorities for 2016/17 ‘My Mecca’ services app Launch of new bingo brand launched across both digital and retail channels Development of new cross- channel bingo brand Launch of single account and wallet in Grosven
Slide 29: 2. Building digital capability
2. Building digital capability Activity on 2015/16 Priorities for 2016/17 New digital platform in place Full launch of sports book Soft launch of new digital Improvements to new poker sports book offer Launch of new poker product New slots content from multiple providers New proprietar
Slide 30: 3. Developing our venues
3. Developing our venues Activity on 2015/16 Priorities for 2016/17 £4.3m invested in a refurbishment and Opening of new concept extension of Grosvenor Luton, bingo venues utilisation of a new 2005 Act licence Refurbishment of our Leeds Refurbishment of The Park Tower and Nottingham casinos
Slide 31: 4. Investing in brands and marketing
4. Investing in brands and marketing Activity on 2015/16 Priorities for 2016/17 Appointment of new Launch of new customer contact Grosvenor marketing director, centre in Sheffield Jo Blundell (former MD of Launch of data platform, giving TBWA and marketing director single customer view and rea
Slide 32: 5. Using technology to drive efficiency and improve customer experience
5. Using technology to drive efficiency and improve customer experience Activity on 2015/16 Priorities for 2016/17 Rollout of new casino management system, Neon Full integration of new casino loyalty system with Neon Launch of ‘Ace King Suited’ progressive jackpot across Grosvenor Additional
Slide 33: Key areas of focus for the year ahead
Key areas of focus for the year ahead Growth across all brands and channels Mecca digital to show double-digit revenue growth Successful launch of new retail bingo concept Launch of new digital brands Launch of a single account and wallet across digital and retail Improved data analysis
Slide 34: Summary
Summary Solid operating performance across all brands and channels Clear delivery of building blocks for growth Launch of new digital platform Strong balance sheet with net debt of £41m 18% growth in final dividend, ahead of EPS growth, showing continued confidence in our future Clear st
Slide 35: Appendices
(n®, ank Group » APPENDICES
Slide 36: Group datasheet
Group datasheet FY 2015/16 H1 2015/16 FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 Revenue (£m) 753.0 374.2 738.3 361.7 707.7 352.4 - YOY growth 2% 3% 4% 3% 13% 16% Operating profit (£m) 82.4 40.4 84.0 40.8 72.4 32.7 - YOY growth (2)% (1)% 16% 25% 4% (14)% Operating margin 10.9% 10.8% 11.4% 11.3% 10.
Slide 37: Grosvenor Casinos Venues datasheet
Grosvenor Casinos Venues datasheet FY 2015/16 H1 2015/16 FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 Casino licences: London 9 9 9 9 9 9 Provinces 56 58 56 56 54 54 Belgium 2 2 2 2 2 2 Total 67 69 67 67 65 65 Non-trading licences 12 10 12 12 13 13 Revenue (£m) 408.1 205.1 401.1 195.7 377.7 188.4 Ope
Slide 38: Grosvenor Casinos Venues - London datasheet
Grosvenor Casinos Venues - London datasheet FY 2015/16 H1 2015/16 FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 Revenue (£m) 150.3 75.2 148.3 71.2 131.5 65.5 Operating profit (£m) 31.7 16.0 34.0 16.3 27.9 13.9 Operating margin 21.1% 21.3% 22.9% 22.9% 21.2% 21.2% Visits (000s) 1,482 772 1,468 757 1,452
Slide 39: Grosvenor Casinos Digital datasheet
Grosvenor Casinos Digital datasheet FY 2015/16 H1 2015/16 FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 Revenue (£m) 30.5 13.9 22.3 9.9 13.5 5.8 Operating profit / (loss) (£m) 5.3 2.4 3.1 1.9 (0.9) (0.9) Operating margin 17.4% 17.3% 13.9% 19.2% - - EBITDA (£m) 7.4 3.4 4.6 2.6 1.1 0.1 Customers MAT (00
Slide 40: Mecca Venues datasheet
Mecca Venues datasheet FY 2015/16 H1 2015/16 FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 Venues 87 87 90 93 96 97 Revenue (£m) 221.5 109.8 224.4 111.8 229.3 113.7 Operating profit (£m) 32.9 14.3 28.9 14.5 21.1 7.1 Operating margin 14.9% 13.0% 12.9% 13.0% 9.2% 6.2% EBITDA (£m) 45.5 20.8 41.6 20.8 34.
Slide 41: Mecca Digital datasheet
Mecca Digital datasheet FY 2015/16 H1 2015/16 FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 Revenue (£m) 66.2 33.2 65.2 31.5 58.9 29.8 Operating profit (£m) 8.6 5.6 14.1 8.4 15.9 6.8 Operating margin 13.0% 16.9% 21.6% 26.7% 27.0% 22.8% EBITDA (£m) 11.4 6.7 15.6 9.1 18.3 7.9 Customers MAT (000s) 303 26
Slide 42: Enracha datasheet
Enracha datasheet FY 2015/16 H1 2015/16 FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 Venues 9 9 9 9 10 11 Revenue (£m) 26.7 12.2 25.3 12.8 28.3 14.7 Operating profit (£m) 3.6 1.4 2.6 0.9 0.8 0.3 Operating margin 13.5% 11.5% 10.3% 7.0% 2.8% 2.0% EBITDA (£m) 5.1 2.2 4.1 1.7 2.9 1.3 Customers MAT (000s)
Slide 43: UK casinos market supply
UK casinos market supply Casino Total Venues Licences Operator Grosvenor Casinos 56 77(3) Genting 41 56 Caesers Entertainment UK 9 11 A&S Leisure 6 6 Double Diamond 6 7 Aspers/Aspinall’s 7 9(3) Club 36 3 3 Clockfair 2 2 Guoco 1 1 Others 12 26 Total 143 198 Source: National Casino Industry Forum (3)
Slide 44: UK bingo clubs market supply
UK bingo clubs market supply Clubs(4) Operator Gala Bingo 130 Mecca 87 Top Ten Bingo 15 Carlton Clubs 13 Castle 11 Club 3000 12 Beacon 9 Others 86 Total 363 Source: Bingo Association (4) excludes the conversion of adult gaming centres to bingo clubs