Rank Group Plc · LSE:RNK

Rank — The Rank Group — FY2015 Earnings Presentation

42 slides from Rank's earnings presentation, August 2015

  1. Slide 1: Starting to Deliver: Preliminary results for the year ended 30 June 2015

    STARTING TO DELIVER The Rank Group Plc Preliminary results for the year ended 30 June 2015

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  3. Slide 3: Agenda

    Agenda Introduction Henry Birch, Chief Executive Financial performance 2014/15 Clive Jennings, Finance Director Operational performance 2014/15 Henry Birch, Chief Executive Strategic outlook Henry Birch, Chief Executive Q&A 3

  4. Slide 4: Clive Jennings, Finance Director

    CLIVE JENNINGS Finance Director

  5. Slide 5: Financial headlines

    Financial headlines 2014/15 2013/14 % Gross revenue (1) £738.3m £707.7m 4% Operating profit (2) £84.0m £72.4m 16% Adjusted earnings per share (2) 14.6p 12.4p 18% EBITDA (2) £126.3m £116.0m 9% Cash inflow from operations £154.5m £107.2m 44% Net debt (3) £(52.9)m £(137.0)m 61% Final dividend per share

  6. Slide 6: Revenue & operating profit

    Revenue & operating profit Revenue (4) Operating profit (5) £m 2014/15 2013/14 2014/15 2013/14 Grosvenor Casinos 423.4 391.2 66.5 56.8 Mecca 289.6 288.2 43.0 37.0 Enracha 25.3 28.3 2.6 0.8 Central costs (28.1) (22.2) Total continuing 738.3 707.7 84.0 72.4 • Good profit growth seen in every brand • S

  7. Slide 7: Operating profit bridge

    Operating profit bridge +8.7 -3.0 -2.9 Higher +10.4 central Other £m employment central Improvement costs costs 84.0 in digital +11.3 -4.9 -1.4 Bingo price -6.6 Improvement Irrecoverable reductions in venues 72.4 VAT Cost of Reduction in RGD bingo duty FY 2013/14 FY 2014/15 operating profit operatin

  8. Slide 8: Statutory profit and loss

    Statutory profit and loss £m 2014/15 2013/14 Profit from continuing operations 84.0 72.4 Net interest payable (10.3) (9.0) Profit before tax and exceptional items 73.7 63.4 Exceptional items 0.8 (49.0) Profit before tax 74.5 14.4 Taxation (15.5) 3.0 Discontinued operations 15.8 2.8 Profit for the pe

  9. Slide 9: Exceptional items

    Exceptional items £m 2014/15 2013/14 Impairments & property leases 0.4 (18.0) Acquisition & integration costs - (1.7) Indirect taxation - (26.1) Closure of venues 1.7 (0.7) Net finance costs (1.3) (2.5) Total exceptionals pre tax 0.8 (49.0) Taxation 1.3 13.6 Discontinued operations 15.8 2.8 Total ex

  10. Slide 10: Cash flow and net debt

    Cash flow and net debt £m 2014/15 2013/14 Cash inflow from continuing operations 154.5 107.2 Capital expenditure (31.9) (44.3) Fixed asset disposals 1.5 0.3 Operating cash inflow 124.1 63.2 Discontinued operations - (0.6) Acquisition and disposal of businesses (0.1) 1.1 Net cash payments; provisions

  11. Slide 11: Capital investment

    Capital investment £m 2014/15 2013/14 Grosvenor Casinos 15.9 35.5 Mecca 9.5 5.9 Enracha 0.9 1.3 Central 5.6 1.6 Total 31.9 44.3 • Southend casino completed and now trading • Luton 2005 Act conversion in progress – completes later this month • Mecca retail received significant investment in new produ

  12. Slide 12: Financial strength

    Financial strength  Strong operating cash flow with EBITDA of £126.3m  New bank facilities being put in place comprising £90m 3.5 year term loans and £90m 5 year revolving credit facilities  Conservative leverage of c.0.4 times  Living wage impact  VAT reclaims now largely limited to compound i

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  14. Slide 14: Operational review: Grosvenor Casinos

    Operational review: Grosvenor Casinos Revenue(7) Operating profit(8) Strong retail performance driven by: £m 2014/15 2013/14 2014/15 2013/14  Growth across all gaming products and London 148.3 131.5 34.0 27.9 F&B Provinces 239.6 231.7 28.6 29.4  Effective VIP management Belgium 13.2 14.5 0.8 0.4 

  15. Slide 15: Operational review: Grosvenor Venues

    Operational review: Grosvenor Venues Effective VIP management driving revenue growth:  Introduction of Gold Cards (25k customers) and Black Cards (5k customers) – enhanced levels of service and benefits – enhanced loyalty points and rewards  New VIP management team in place in London and major con

  16. Slide 16: Operational review: Grosvenor Venues

    Operational review: Grosvenor Venues Continuing active estate management ensuring sustained growth:  Opening of Grosvenor Southend in September 2014  Opening of Oldbury casino adjacent to Mecca Oldbury in December 2014  New 2005 Act licence and extension of existing Grosvenor Luton  Refurbishmen

  17. Slide 17: Operational review: Mecca

    Operational review: Mecca Revenue(9) Operating profit(10) Retail: £m 2014/15 2013/14 2014/15 2013/14  Stable retail revenues on a like-for-like club basis Venues 224.4 229.3 28.9 21.1  Fall in visits offset by increase in spend per visit Digital 65.2 58.9 14.1 15.9  Improved retail performance as

  18. Slide 18: Operational review: Mecca Venues

    Operational review: Mecca Venues Growth in spend per visit driven by improved product and service:  Increased electronic bingo: Mecca Max units – 5,600 new and replacement Max units introduced in the year – reduced unit size makes for better customer experience and lower unit cost – higher spend pe

  19. Slide 19: Operational review: Mecca Venues

    Operational review: Mecca Venues Continuing cost control and efficiency driving margin:  2% saving in direct payroll expenses despite £550k pay increase  Closure of six clubs throughout the year: reduced revenues but improved profitability  Improved purchasing processes (especially in F&B), incre

  20. Slide 20: Operational review: Mecca Venues

    Operational review: Mecca Venues Like-for-like venues visits Rate of decline in admissions slowing: H1 14 H2 14 H1 15 H2 15 0%  2014/15 admissions variance of (2.6%) vs. (6.6%) prior year with several clubs in admissions growth  Improved marketing: -5% – TV advertising promoting club experience –

  21. Slide 21: Enracha

    Enracha £m 2014/15 2013/14  Like-for-like euro revenues up 9% Revenue (£m) 25.3 28.3  Encouraging quarterly trends with growth in admissions Revenue (euros m) 33.4 34.0 and revenue Operating profit (£m) 2.6 0.8  Significant growth in operating profit due to tax KPIs Venues de-regulation, cost con

  22. Slide 22: Operational review: Digital

    Operational review: Digital  Combined revenues up 21% and operating profit up 14% despite RGD  Strong growth in mobile: 65% of all digital customers played on mobile vs 49% in 2013/14 – Grosvenor mobile revenue up 155% yoy – Grosvenor mobile actives up 132% yoy – Mecca mobile stakes up 69% yoy – M

  23. Slide 23: Operational review: Digital

    Operational review: Digital Operational and product innovation driving growth ahead of platform migration:  New Mecca website: single adaptive and responsive front end across desktop, mobile and tablet launched on Mecca in May 2015  Significant mobile product development: – Mecca native IOS iPad a

  24. Slide 24: Cross channel

    Cross channel Retail base providing strong underpin and growth to digital:  Percentage of digital customers who are also club customers: Mecca: 33% Grosvenor: 35%  Percentage of new digital customers last year who were club customers: Mecca: 16% Grosvenor: 44%  Percentage of retail customers who

  25. Slide 25: 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

  26. Slide 26: 1. Creating a compelling multi-channel offer

    1. Creating a compelling multi-channel offer Activity in 2014/15 Priorities in 2015/16  Grosvenor “My Casino” services app  Digital platform migration  Tri-channel launch of content  Mecca Services app  Progress towards a new digital platform  Progress towards single account and single wallet

  27. Slide 27: 2. Building digital capability

    2. Building digital capability Activity in 2014/15 Priorities in 2015/16  Bede appointment  Delivery of new digital platform  New Mecca website: launch of a single  Digital poker product development responsive and adaptive Mecca front end for desk  Sports betting product top, tablet and mobile

  28. Slide 28: Building digital capability: New platform

    Building digital capability: New platform Good progress on core platform migration to Bede Gaming:  Estimated launch in Q3 2015/16  Likely to be single “big bang” approach for both UK brands, with Enracha to follow Key benefits and functionality include:  Flexible, open architecture allowing quic

  29. Slide 29: 3. Developing our venues

    3. Developing our venues Activity in 2014/15 Priorities in 2015/16  New casino opened in Southend  Opening of new format bingo venue  Refurbishments of Gloucester Road (London) and  Expansion of key casino sites Bournemouth casinos  Eighteen Grosvenor ‘sparkles’  Opening of Oldbury casino, adj

  30. Slide 30: 4. Investing in brands and marketing

    4. Investing in brands and marketing Activity in 2014/15 Priorities in 2015/16  A single cross-brand digital marketing team  Continue to increase marketing spend incrementally whilst ensuring ROI  New advertising agency appointed across both brands  Review and improve our customer relationship 

  31. Slide 31: 5. Using technology to drive efficiency and improve customer experience

    5. Using technology to drive efficiency and improve customer experience Activity in 2014/15 Priorities in 2015/16  Server-based slots roll out in Mecca  iBeacon trial – 1,000 new and 1,315 upgraded server-based  Improved electronic roulette machines from Scientific Games/Videobet  Cashless syste

  32. Slide 32: New management team

    New management team Paul Richardson Martin Pugh Colin Cole-Johnson Mark Jones Group Director of Strategy and MD Mecca Director of Digital and Cross Channel MD Grosvenor Casinos (Mecca, Premium Corporate Development (Camelot, Virgin Active, Safeway) (William Hill, Ladbrokes) Bars and Restaurants, (Ga

  33. Slide 33: Key areas of focus for the year ahead

    Key areas of focus for the year ahead  Continued growth across all brands and channels  Successful launch of new digital platform  Successful launch of new retail bingo concept  Acceleration in Grosvenor Casinos venues admissions growth  Like-for-like revenue growth in Mecca venues  Progress t

  34. Slide 34: 2014/15 Summary

    2014/15 Summary  Strong operating performance  Strong digital growth ahead of schedule  New management team in place  Ongoing delivery against strategic objectives with clear roadmap  Strong balance sheet with significantly improved cash flow from operations  27% growth in final dividend, ahea

  35. Slide 35: Appendices

    APPENDICES 35

  36. Slide 36: Grosvenor Casinos Venues datasheet

    Grosvenor Casinos Venues datasheet FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 FY 2012/13 H1 2012/13 Casino licences: London 9 9 9 9 8 4 Provinces 56 56 54 54 51 33 Belgium 2 2 2 2 2 2 Total 67 67 65 65 61 39 Non-trading licences 12 12 13 13 17 10 Revenue (£m) 401.1 195.7 377.7 188.4 290.5 140.1 Ope

  37. Slide 37: Grosvenor Casinos Digital datasheet

    Grosvenor Casinos Digital datasheet FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 FY 2012/13 H1 2012/13 Revenue (£m) 22.3 9.9 13.5 5.8 9.8 4.4 Operating profit / (loss) (£m) 3.1 1.9 (0.9) (0.9) (2.1) (1.8) Operating margin 13.9% 19.2% - - - - Customers MAT (000s) 114 54 50 42 35 33 Visits (000s) 667 2

  38. Slide 38: Mecca Venues datasheet

    Mecca Venues datasheet FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 FY 2012/13 H1 2012/13 Venues 90 93 96 97 97 97 Revenue (£m) 224.4 111.8 229.3 113.7 234.9 115.7 Operating profit (£m) 28.9 14.5 21.1 7.1 23.0 11.1 Operating margin 12.9% 13.0% 9.2% 6.2% 9.8% 9.6% Customers MAT (000s) 961 938 937 940

  39. Slide 39: Mecca Digital datasheet

    Mecca Digital datasheet FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 FY 2012/13 H1 2012/13 Revenue (£m) 65.2 31.5 58.9 29.8 61.3 30.4 Operating profit (£m) 14.1 8.4 15.9 6.8 21.1 11.4 Operating margin 21.6% 26.7% 27.0% 22.8% 34.4% 37.5% Customers MAT (000s) 267 243 229 234 242 227 Visits (000s) 5,213

  40. Slide 40: Enracha datasheet

    Enracha datasheet FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 FY 2012/13 H1 2012/13 Venues 9 9 10 11 11 11 Revenue (£m) 25.3 12.8 28.3 14.7 28.5 13.8 Operating profit (£m) 2.6 0.9 0.8 0.3 0.7 0.4 Operating margin 10.3% 7.0% 2.8% 2.0% 2.5% 2.9% Customers MAT (000s) 269 250 260 278 276 291 Visits (000

  41. Slide 41: UK casinos market supply

    UK casinos market supply Casino Total Venues Licences Operator Grosvenor Casinos 58 77 (3) Genting 41 56 Caesers Entertainment UK (fka London Clubs) 9 11 A&S Leisure 6 6 Double Diamond 6 7 Aspers/Aspinall’s 7 (3) 9 (3) Club 36 3 3 Clockfair 2 2 Guoco 1 2 Others 11 25 Total 144 198 Source: National C

  42. Slide 42: UK bingo clubs market supply

    UK bingo clubs market supply (4) Clubs Operator Gala Bingo 130 Mecca 90 Top Ten Bingo 15 Carlton Clubs 13 Castle 11 Club 3000 11 Beacon 9 Others 91 Total 370 Source: Bingo Association (4) excludes the conversion of adult gaming centres to bingo clubs 42

The Rank Group — FY2015 Earnings Presentation on 6ix