Rank Group Plc · LSE:RNK
Rank — The Rank Group — H1 2015/16 Earnings Presentation
39 slides from Rank's earnings presentation, February 2016
Slide 1: Interim results for the six months ended 31 December 2015
The Rank Group Plc Interim results for the six months ended 31 December 2015
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Slide 3: Agenda
Agenda Introduction Henry Birch, Chief Executive Financial performance H1 2015/16 Clive Jennings, Finance Director Operational performance H1 2015/16 Henry Birch, Chief Executive Strategic outlook Henry Birch, Chief Executive Q&A 3
Slide 4: H1 summary
H1 summary LFL growth in all brands and channels Digital revenues up 14% Mecca retail in LFL revenue growth Continued delivery of strategic objectives Imminent launch of new digital platform Even with the introduction of RGD, 4% EPS growth and 13% growth in dividend 4
Slide 5: Clive Jennings, Finance Director
CLIVE JENNINGS Finance Director
Slide 6: Financial headlines
Financial headlines H1 2015/16 H1 2014/15 % Gross revenue (1) £374.2m £361.7m 3% Reported operating profit (2) £40.4m £40.8m (1)% Operating profit before RGD (2) £46.1m £41.7m 11% EBITDA (2) £62.7m £62.1m 1% Cash generated from continuing operations £63.7m £68.5m (7)% Net debt (3) £(52.0)m £(94.9)m
Slide 7: Revenue & operating profit
Revenue & operating profit Revenue (4) Operating profit (5) £m H1 2015/16 H1 2014/15 H1 2015/16 H1 2014/15 Grosvenor Casinos 219.0 205.6 33.3 31.0 Mecca 143.0 143.3 19.9 22.9 Enracha 12.2 12.8 1.4 0.9 Central costs (14.2) (14.0) Total continuing 374.2 361.7 40.4 40.8 • Solid Grosvenor Casinos venues
Slide 8: Operating profit bridge
Operating profit bridge (4.8) +2.7 (0.2) £m +1.9 Other Improvement central Cost of Improvement in digital costs RGD in venues 40.8 36.0 40.4 H1 2014/15 Restated H1 2014/15 H1 2015/16 operating profit operating profit operating profit • Overall profit growth of 11% excluding the impact of RGD • Good
Slide 9: Statutory profit and loss
Statutory profit and loss £m H1 2015/16 H1 2014/15 Profit from continuing operations 40.4 40.8 Net interest payable (3.7) (5.9) Profit before taxation and exceptional items 36.7 34.9 Exceptional items 6.0 1.4 Profit before taxation 42.7 36.3 Taxation (4.8) (8.0) Discontinued operations 3.7 16.0 Prof
Slide 10: Cash flow and net debt
Cash flow and net debt £m H1 2015/16 H1 2014/15 Cash inflow from continuing operations 67.0 72.8 Net cash payments in respect of provisions and exceptional items (3.3) (4.3) Cash generated from continuing operations 63.7 68.5 Capital expenditure (26.1) (15.8) Fixed asset disposals 7.0 1.5 Net intere
Slide 11: Capital investment
Capital investment £m H1 2015/16 H1 2014/15 Grosvenor Casinos 12.8 9.6 Mecca 3.9 4.7 Enracha 2.4 0.2 Central 7.0 1.3 Total 26.1 15.8 • FY 2015/16 guidance increased to circa £56m-£60m • Extension and refurbishment of Luton casino to accommodate additional product under the recently awarded 2005 Act
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Slide 13: Operational review: Mecca Venues
Operational review: Mecca Venues Revenue(7) Operating profit(8) Retail business in LFL growth £m H1 H1 H1 H1 2015/16 2014/15 2015/16 2014/15 Early days but very promising signs: Venues 109.8 111.8 14.3 14.5 – year-on-year admissions growth in Q2 KPIs – continued strength in spend Visits (000s) 5
Slide 14: Operational review: Mecca Venues
Operational review: Mecca Venues Admissions trends very positive LFL H1 variance of (1)% vs. prior year LFL Q2 variance of 1% vs. prior year Improved marketing: – retail CRM rationalised and improved – fewer, bigger, better promotions 2% H1 14 H2 14 H1 15 H2 15 Q1 16 0% Q2 16 -2% -4% -6% -8%
Slide 15: Operational review: Mecca Venues
Operational review: Mecca Venues Growth in spend per visit continues to be driven by improved product and service Benefits seen from the roll-out of 5,600 new and replacement Mecca Max units in the previous year Server-based slots from Scientific Games/Playtech slots offer – 1,000 new and 1,315
Slide 16: Operational review: Mecca Digital
Operational review: Mecca Digital Revenue(9) Operating profit Digital growth continues £m H1 H1 H1 H1 2015/16 2014/15 2015/16 2014/15 Digital revenue up 5% Digital 33.2 31.5 5.6 8.4 Depositing customers up 8% KPIs New platform will be key to driving growth: Visits (000s) 2,645 2,569 – compet
Slide 17: Operational review: Grosvenor Casinos Venues
Operational review: Grosvenor Casinos Venues Revenue(10) Operating profit Good venues performance £m H1 H1 H1 H1 2015/16 2014/15 2015/16 2014/15 5% revenue growth London 75.2 71.2 16.0 16.3 Operating profit up 6% Provinces 123.4 117.7 14.4 12.6 Belgium 6.5 6.8 0.5 0.2 Growth across all gaming
Slide 18: Operational review: Grosvenor Casinos Venues
Operational review: Grosvenor Casinos Venues Product and venue development driving growth Growth across all gaming products and F&B Strong slots growth – 11% - prompting further investment in server based product Introduction of an estate-wide blackjack progressive jackpot (‘Ace King Suited’)
Slide 19: Operational review: Grosvenor Casinos Venues
Operational review: Grosvenor Casinos Venues Product and venue development driving growth Significant extension and refurbishment of Luton casino, utilising a new 2005 Act Licence and 40 additional slots Second licences put alongside four existing casinos, improving product depth Four ‘sparkle
Slide 20: Operational review: Grosvenor Casinos Digital
Operational review: Grosvenor Casinos Digital Revenue(11) Operating profit Continued strong digital performance £m H1 H1 H1 H1 2015/16 2014/15 2015/16 2014/15 40% revenue growth Digital 13.9 9.9 2.4 1.9 26% growth in operating profit even with KPIs Remote Gaming Duty Visits (000s) 406 270 Mobi
Slide 21: Enracha
Enracha Strong trends with growth in admissions and £m 2014/15 2013/14 revenue: Revenue (£m) 12.2 12.8 – euro revenues up 4% Revenue (euros m) 16.9 16.3 – visits up 8% Operating profit(12) (£m) 1.4 0.9 – EBITDA up 29% KPIs Venues Sportsbetting partnership with Sportium in Visits (000s) 978 903 C
Slide 22: 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 23: 1. Creating a compelling multi-channel offer
1. Creating a compelling multi-channel offer My Mecca app Deal signed with Playtech- Digital platform migration (due owned Intelligent Gaming (IGS) before end of March 2016) to roll out their NEON retail Roll out of NEON casino management platform throughout our Grosvenor Progress towards si
Slide 24: 2. Building digital capability
2. Building digital capability Progress towards new digital Delivery of new digital platform platform launch (due by end of March 2016) Deal agreed with Microgaming New poker product in place for new digital poker product New sports betting product in Deal signed with Kambi for the place
Slide 25: 3. Developing our venues
3. Developing our venues Brand, format and site determined for the Delivery of new digital platform first new bingo club (opening of at least one new format bingo venue) £4.3m invested in a refurbishment and extension of Grosvenor Luton, utilisation of a Further refurbishments of four new 20
Slide 26: 4. Investing in brands and marketing
4. Investing in brands and marketing Appointment of new Grosvenor Grosvenor TV advertising marketing director, Jo Blundell Increase digital marketing (former agency head and activity post digital platform marketing director of launch McDonalds) Launch new retail bingo brand Creation of a n
Slide 27: 5. Using technology to drive efficiency and improve customer experience
5. Using technology to drive efficiency and improve customer experience Completion of Mecca Max roll out Roll out of new server-based – 5,600 units purchased giving a total of slots in Grosvenor 11,300 Mecca Max units across the estate Further roll out of ‘Get Set Launch of ‘Ace King Suited’
Slide 28: Key areas of focus for the year ahead
Key areas of focus for the year ahead As stated at preliminary results in Aug‘15 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
Slide 29: Summary
Summary Continued good operating performance across all brands and channels Clear roadmap of deliverables in 2016 which will drive revenue and value Imminent launch of new digital platform Strong balance sheet 13% growth in interim dividend, ahead of EPS growth, showing continued confidenc
Slide 30: Appendices
APPENDICES
Slide 31: Group datasheet
Group datasheet H1 2015/16 FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 FY 2012/13 Revenue (£m) 374.2 738.3 361.7 707.7 352.4 625.0 - YOY growth 3% 4% 3% 13% 16% 7% Operating profit (£m) 40.4 84.0 40.8 72.4 32.7 69.9 - YOY growth (1)% 16% 25% 4% (14)% 0% Operating margin 10.8% 11.4% 11.3% 10.2% 9.3%
Slide 32: Grosvenor Casinos Venues datasheet
Grosvenor Casinos Venues datasheet H1 2015/16 FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 FY 2012/13 Casino licences: London 9 9 9 9 9 8 Provinces 58 56 56 54 54 51 Belgium 2 2 2 2 2 2 Total 69 67 67 65 65 61 Non-trading licences 10 12 12 13 13 17 Revenue (£m) 205.1 401.1 195.7 377.7 188.4 290.5 Ope
Slide 33: Grosvenor Casinos Venues - London datasheet
Grosvenor Casinos Venues - London datasheet H1 2015/16 FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 FY 2012/13 Revenue (£m) 75.2 148.3 71.2 131.5 65.5 105.8 Operating profit (£m) 16.0 34.0 16.3 27.9 13.9 26.6 Operating margin 21% 23% 23% 21% 21% 25% Visits (000s) 772 1,468 757 1,452 729 1,053 Spend p
Slide 34: Grosvenor Casinos Digital datasheet
Grosvenor Casinos Digital datasheet H1 2015/16 FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 FY 2012/13 Revenue (£m) 13.9 22.3 9.9 13.5 5.8 9.8 Operating profit / (loss) (£m) 2.4 3.1 1.9 (0.9) (0.9) (2.1) Operating margin 17.3% 13.9% 19.2% - - - EBITDA (£m) 3.4 4.6 2.6 1.1 0.1 (0.6) Customers MAT (000
Slide 35: Mecca Venues datasheet
Mecca Venues datasheet H1 2015/16 FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 FY 2012/13 Venues 87 90 93 96 97 97 Revenue (£m) 109.8 224.4 111.8 229.3 113.7 234.9 Operating profit (£m) 14.3 28.9 14.5 21.1 7.1 23.0 Operating margin 13.0% 12.9% 13.0% 9.2% 6.2% 9.8% EBITDA (£m) 20.8 41.6 20.8 34.9 14.3
Slide 36: Mecca Digital datasheet
Mecca Digital datasheet H1 2015/16 FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 FY 2012/13 Revenue (£m) 33.2 65.2 31.5 58.9 29.8 61.3 Operating profit (£m) 5.6 14.1 8.4 15.9 6.8 21.1 Operating margin 16.9% 21.6% 26.7% 27.0% 22.8% 34.4% EBITDA (£m) 6.7 15.6 9.1 18.3 7.9 22.6 Customers MAT (000s) 267 2
Slide 37: Enracha datasheet
Enracha datasheet H1 2015/16 FY 2014/15 H1 2014/15 FY 2013/14 H1 2013/14 FY 2012/13 Venues 9 9 9 10 11 11 Revenue (£m) 12.2 25.3 12.8 28.3 14.7 28.5 Operating profit (£m) 1.4 2.6 0.9 0.8 0.3 0.7 Operating margin 11.5% 10.3% 7.0% 2.8% 2.0% 2.5% EBITDA (£m) 2.2 4.1 1.7 2.9 1.3 3.1 Customers MAT (000s)
Slide 38: UK casinos market supply
UK casinos market supply Casino Total Venues Licences Operator Grosvenor Casinos 56 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 9 (3) Club 36 3 3 Clockfair 2 2 Guoco 1 1 Others 12 26 Total 143 198 Source: National Casin
Slide 39: UK bingo clubs market supply
UK bingo clubs market supply (4) Clubs 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 39