Rank Group Plc · LSE:RNK
Rank — The Rank Group — H1 2012/13 Earnings Presentation
35 slides from Rank's earnings presentation, February 2013
Slide 1: Half Year Financial Results to 31 December 2012
YEAR FINANCIAL RESULT: TO 31 DECEMBER 2012 HALF
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: Six months to December 2012
Six months to 31 December 2012 • Gross revenue : £312.0m (H1 2011/12: £295.9m) (1) • Operating profit : £33.4m (H1 2011/12: £34.6m) (2) • Adjusted earnings per share : 5.9p (H1 2011/12: 6.1p) (3) • EBITDA : £53.7m (H1 2011/12: £53.1m) (2) • Operating cash flow: £40.9m (H1 2011/12: £24.4m) • Net cash
Slide 5: Revenue and operating profit by brand
(1) (2) Revenue Operating profit H1 H1 H1 H1 £m 2012/13 2011/12 2012/13 2011/12 Grosvenor Casinos 144.5 128.1 25.4 18.9 Mecca 146.1 144.8 22.5 26.6 Enracha 13.8 14.9 0.4 (0.3) Blue Square Bet 7.6 8.1 (4.8) (1.7) Central costs - - (10.1) (8.9) Group 312.0 295.9 33.4 34.6 Group excl. additional Blue S
Slide 6: Operating profit bridge H1 2011/12 to H1 2012/13
£m +16.1 -4.6 -5.3 employment -6.8 34.6 taxes & -1.8 +1.2 33.4 duties revenue marketing (1) & free bets depreciation Other & amortisation H1 2011/12 H1 2012/13 operating profit operating profit (1) other includes direct and property costs 6
Slide 7: Operating profit variances by brand
Grosvenor Blue Square Central £m Casinos Mecca Enracha Bet costs Total Revenue 16.4 1.3 (1.1) (0.5) - 16.1 Employment costs (2.1) (1.3) 0.6 (0.3) (1.5) (4.6) Taxes and duties (5.9) 0.4 - 0.1 0.1 (5.3) Marketing & free bets (2.8) (1.4) 0.3 (2.6) (0.3) (6.8) D&A (1.8) 0.1 0.1 (0.1) (0.1) (1.8) Other(1
Slide 8: Grosvenor Casinos
(1) (2) Revenue Operating profit H1 H1 H1 H1 £m 2012/13 2011/12 2012/13 2011/12 London 57.2 46.5 16.5 10.2 Provinces 75.4 71.5 10.8 11.4 Belgium 7.5 7.8 (0.1) (1.2) Venues total 140.1 125.8 27.2 20.4 Digital 4.4 2.3 (1.8) (1.5) Total brand 144.5 128.1 25.4 18.9 KPIs Venues Digital Visits (000s) 3,05
Slide 9: Mecca
(1) (2) Revenue Operating profit H1 H1 H1 H1 £m 2012/13 2011/12 2012/13 2011/12 Venues 115.7 117.4 11.1 14.8 Digital 30.4 27.4 11.4 11.8 Total brand 146.1 144.8 22.5 26.6 KPIs Venues Digital Visits (000s) 6,864 7,163 2,436 2,027 Spend per visit (£) 16.86 16.39 12.48 13.52 • Digital: Strong growth in
Slide 10: Enracha
H1 H1 2012/13 2011/12 Revenue (£m) 13.8 14.9 Revenue (euros m) 17.3 17.2 Operating profit (£m)(1) 0.4 (0.3) KPIs Visits (000s) 998 1,064 Spend per visit (£) 13.83 14.00 • Tough economic conditions • Growth in euro revenue (1) before exceptional items 10
Slide 11: Blue Square Bet
H1 H1 £m 2012/13 2011/12 Games 4.0 3.4 Sports betting 3.6 4.7 Revenue 7.6 8.1 Operating loss (4.8) (1.7) KPIs Visits (000s) 852 858 Spend per visit (£) 8.92 9.44 • £2.0m of additional marketing spend • Lower than average win margin in sports betting 11
Slide 12: Group costs
H1 H1 £m 2012/13 2011/12 Change Employment 98.1 93.5 5% Direct costs 28.0 27.2 3% Property costs 25.6 25.1 2% Other 19.1 21.6 (12)% Sub total 170.8 167.4 2% Marketing - online 10.4 6.5 60% - offline 9.2 8.4 10% Taxes & duties 52.6 47.3 11% D&A 20.3 18.5 10% Total 263.3 248.1 6% • Grosvenor Casinos:
Slide 13: Profit before and after tax
H1 H1 £m 2012/13 2011/12 Adjusted profit from continuing operations 31.3 32.5 Other 0.2 (0.7) Profit before tax and exceptional items 31.5 31.8 Exceptional items (16.2) (12.9) Profit before tax 15.3 18.9 Taxation (6.3) (4.6) Discontinued operations 9.1 - Profit for the period 18.1 14.3 • Effective t
Slide 14: Cash flow
H1 H1 £m 2012/13 2011/12 Continuing operations Cash inflow from operations 56.8 52.2 Capital expenditure (17.9) (28.0) Fixed asset disposals 2.0 0.2 Operating cash inflow 40.9 24.4 Net cash payments; provisions and exceptional items (5.3) (11.3) Net interest and tax (4.7) (23.7) Dividends (9.8) (3.9
Slide 15: Capital expenditure
H1 H1 FY £m 2012/13 2011/12 2012/13 Grosvenor Casinos 10.9 14.9 27-29 Mecca 4.1 6.3 12-13 Enracha 0.5 3.2 1-2 Blue Square Bet 0.8 - 1 Central costs 2.4 3.8 6-7 Total 18.7 28.2 47-52 • Includes new finance leases of £0.8m (H1 2011/12: £0.2m) 15
Slide 16: Financial position
• Strong financial position, net cash £62.6m • Undrawn revolving credit facilities of £80.0m • Strong cash flow of over £100m annually • VAT claims 16
Slide 17: Current trading
• Like-for-like growth in two week period before snow • Snow impact on last two weeks • Remain confident for rest of the year 17
Slide 18: Ian Burke, chief executive
1 RANK GROUP PRESENTS Ian Burke chief executive
Slide 19: 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 19
Slide 20: Product and service improvement
Product and service improvement • Quantitative and qualitative research – improved gaming offer – food, drink and entertainment – recruitment, induction, training and development 20
Slide 21: Capital investment, Grosvenor Casinos
Capital investment, £10.9m • First half 2012/13 – Gunwharf Quays, Portsmouth (Dec 2012; £2.2m) • Second half 2012/13 – Reading (March 2013; £7.5m) – extension of Bury New Road (June 2013; £1.8m) • Extended entertainment offer; show bar 21
Slide 22: Multi channel development
Multi channel development • Product upgrades • Marketing spend – first TV advertising campaign • Cross channel co-operation – brand leadership team 22
Slide 23: Product and service improvements
Product and service improvements • Gaming product – Mecca Max, new terminals • Food, drink and entertainment – cooked to order, improved menu • Improved employee performance – service improvements (iCare; skill bytes) 23
Slide 24: Capital investment, Mecca
Capital investment • Wood Green performance – achieving 20% cash return • Hartlepool – November 2012 (£0.7m) • Knotty Ash – February 2013 (£0.7m) 24
Slide 25: Multi channel distribution
Multi channel distribution • Continued success – product upgrades – marketing – growth in mobile – venues/digital co-operation 25
Slide 26: Summary and opportunities
• Grosvenor Casinos and Mecca – strong, trusted brands • Casino venues and digital bingo – continue to be our stronger performing areas • Opportunities – improve bingo venues and digital casinos • Gala Casinos • Blue Square Bet review 26
Slide 27: Appendices
Pr RANK GROUP PRESENTS Appendices
Slide 28: 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 – 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 months to 30 June 2011 – H1 2010/11 6 month
Slide 29: Grosvenor Casinos KPIs
H1 2012/13 FY 2011/12 H1 2011/12 FY 2010/11 H1 2010/11 FY 2009/10 Casino licences London 4 4 4 5 5 5 Provinces 33 33 33 32 31 30 Belgium 2 2 2 2 2 2 Total 39 39 39 39 38 37 Unused licences 10 10 10 10 11 12 Revenue (£m) 140.1 255.8 125.8 245.4 122.0 229.9 EBIT (£m) 27.2 42.8 20.4 38.6 18.4 33.8 Oper
Slide 30: Mecca KPIs
H1 2012/13 FY 2011/12 H1 2011/12 FY 2010/11 H1 2010/11 FY 2009/10 Clubs 97 97 98 100 103 103 Revenue (£m) 115.7 237.8 117.4 237.5 115.8 235.4 EBIT (£m) 11.1 28.3 14.8 29.9 13.7 29.3 Operating margin 9.6% 11.9% 12.6% 12.6% 11.8% 12.4% Customers MAT (000s) 958 965 943 924 911 895 Visits (000s) 6,864 1
Slide 31: Enracha KPIs
H1 2012/13 FY 2011/12 H1 2011/12 FY 2010/11 H1 2010/11 FY 2009/10 Clubs 11 11 11 11 11 11 Revenue (£m) 13.8 29.2 14.9 33.5 18.6 36.5 EBIT (£m) 0.8 1.4 0.5 4.0 3.8 5.9 Operating margin 5.8% 4.8% 3.4% 11.9% 20.4% 16.2% Customers MAT(000s) 291 305 308 319 331 341 Visits (000s) 998 2,049 1,064 2,207 1,1
Slide 32: Blue Square Bet KPIs
H1 H1 £m 2012/13 2011/12 Games 4.0 3.4 Sports betting 3.6 4.7 Revenue (£m) 7.6 8.1 EBIT (£m) (4.8) (1.7) Customers MAT (000s) 120 96 Visits (000s) 852 858 Spend per visit (£) 8.92 9.44 32
Slide 33: Rank's brands face different challenges to achieve their potential
Rank’s brands face different challenges to achieve their potential Leading gaming brand Awareness 93% 49% 87% 42% %’age of respondents who recognise brand when prompted Consideration 17% 13% 25% 5% %’age of respondents who would use brand products Action 21% 11% 18% 3% %’age of respondents who have
Slide 34: Casino operators by venues and licences
Casino Total (1) (1) Operator Venues Licences Genting 39 57 Grosvenor Casinos 35 47 Gala 25 31 London Clubs 10 11 A&S Leisure 6 6 Aspers/Aspinall’s 5 8 Club 36 3 3 Clockfair 2 2 Guoco 1 6 Others 12 22 Total 138 193 Source: company research (1) includes 2005 Act casino licences 34
Slide 35: Bingo operators by clubs
(1) Operator Clubs Gala Bingo 138 Mecca Bingo 97 Top Ten Bingo 22 Carlton Clubs 14 Others 192 Total 463 Source: company research (1) excludes the conversion of adult gaming centres to bingo clubs 35