Rank Group Plc · LSE:RNK
Rank — The Rank Group — Merger or Acquisition (December 2006)
16 slides from Rank's merger presentation, Dec 7, 2006
Slide 1: Creation of a focused gaming business
Creation of a focused gaming business Hard Rock disposal 7th December 2006
Slide 2: Ian Burke, Chief executive
Ian Burke Chief executive, The Rank Group Plc
Slide 3: Agenda
Agenda • Transaction overview • Strategic rationale • Financial impact and use of proceeds • Ongoing Rank Group
Slide 4: Transaction overview
Transaction overview • Agreement to sell Hard Rock to Seminole Hard Rock Entertainment Inc for $965m (£490m) in cash • £460m net proceeds, after transaction costs and tax • £350m to be returned to shareholders via special dividend • Shareholder approval at EGM required • Rank’s transformation into f
Slide 5: Expected timetable & process
Expected timetable & process • Sale of Hard Rock announced 07/12/06 • Circular posted to shareholders 15/12/06 • EGM 08/01/07 • Sale completes 05/03/07 • Special dividend paid to shareholders April 2007 • Share consolidation effective* April 2007 * Share consolidation ratio to be published within cl
Slide 6: Overview of Hard Rock
Overview of Hard Rock • £250.1m revenue* • £48.1m EBITDA* • £34.8m operating profit* • Active in restaurants, hotels and casinos markets • Merchandise retail core to business model • >130 Hard Rock branded outlets world-wide * Rank Group 2005 accounts NB - transaction does not include Hard Rock Casi
Slide 7: Rationale for disposal
Rationale for disposal • Thorough review undertaken • Sale of Hard Rock right action for maximising value – Limited synergies with Rank Gaming – Future growth requires significant capital investment – Competitive auction process captured future value • Exciting opportunities exist in Gaming – Desire
Slide 8: Use of proceeds and capital structure
Use of proceeds and capital structure • $965m (£490m) gross proceeds from transaction • £460m net proceeds • £350m to be returned to shareholders via payment of special dividend (65 pence per share) • £110m to be used to reduce borrowings • Balance sheet policies remain unchanged over medium term •
Slide 9: Strategic Transformation essentially complete
Strategic Transformation essentially complete Rank Group 1998 - 2006 Operating profit 1998 Pro forma operating profit H1 2006 Escape Gaming Gaming Entertainment Hard Rock Holidays Deluxe
Slide 10: Strategic Transformation essentially complete
Strategic Transformation essentially complete Strategic priority Progress Examine strategic options $965m Hard Rock sale agreed for Hard Rock DMS exit in Europe (including UK) Exit Deluxe Media and Complete exit by June 2007 other non-core interests $32.5m US Holidays sale agreed Establish appropria
Slide 11: Rank Group - a focused gaming business
Rank Group - a focused gaming business • Integrated gaming model with established brands and track record of responsible operation – Bingo - Mecca Bingo & Top Rank Espana – Casinos - Grosvenor – Interactive - Blue Square • Significant distribution footprint – 113 Mecca Bingo clubs across UK – 11 Top
Slide 12: Rank Group - a focused gaming business
Rank Group - a focused gaming business • £529.8m revenue* • £133.0m EBITDA* • £105.7m operating profit * Pro forma Rank Group 2005 accounts, excludes Hard Rock, US Holidays, Deluxe Media Services and Group overhead
Slide 13: The UK Gaming market
The UK Gaming market • A growing market – UK betting and gaming expenditure expected to grow by 30% by 2010* • A changing market – Full implementation of 2005 Gambling Act to spur product evolution – Clear potential for further regulatory evolution • Attractive fundamentals – Healthy cash flows and
Slide 14: Current trading & directorate
Current trading & directorate • 48 week trading statement issued today – good progress in underlying business – near term challenge from smoking ban • Appointment of chairman – Peter Johnson appointed as Rank Group chairman from 1 March 2007
Slide 15: Summary
Summary • Rank is a leading UK gaming group with strong market positions • Long term dynamics of gaming market remain attractive • Well positioned to capitalise on opportunities as gaming market develops
Slide 16: Rank Group
;S KZ Rank Group
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