Rank Group Plc · LSE:RNK
Rank — The Rank Group — H1 2014/15 Earnings Presentation
36 slides from Rank's earnings presentation, February 2015
Slide 1: Experiencing Entertainment – Interim Results 2014
EXPERIENCING ENTERTAINMENT THE RANK GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2014
Slide 2: Clive Jennings, Finance Director
Clive Jennings finance director 2
Slide 3: Financial Headlines
FINANCIAL HEADLINES H1 2014/15 H1 2013/14 Gross revenue(1) £361.7m £352.4m Operating profit(2) £40.8m £32.7m EBITDA(2) £62.1m £54.2m Operating cash inflow £72.8m £49.7m Net debt(3) £(94.9)m £(135.1)m Adjusted earnings per share(2) 7.1p 5.3p Total dividend per share 1.60p 1.35p • Strong result for fi
Slide 4: Revenue & Operating Profit
REVENUE & OPERATING PROFIT (4) (5) Revenue Operating profit £m H1 2014/15 H1 2013/14 H1 2014/15 H1 2013/14 Grosvenor Casinos 205.6 194.2 31.0 28.2 Mecca 143.3 143.5 22.9 13.9 Enracha 12.8 14.7 0.9 0.3 Central costs (14.0) (9.7) Total continuing 361.7 352.4 40.8 32.7 • Casinos comprise 57% of profit
Slide 5: Operating Profit Bridge
OPERATING PROFIT BRIDGE 5.7 £m 4.3 (2.0) 3.6 (2.3) Improvement (1.2) in venues Higher central Improvement employment Other central Irrecoverable in digital costs costs Estimated VAT benefit of 40.8 32.7 bingo duty cut H1 2013/14 H1 2014/15 operating profit operating profit 5
Slide 6: Grosvenor Casinos
GROSVENOR CASINOS (6) (7) Revenue Operating profit £m H1 2014/15 H1 2013/14 H1 2014/15 H1 2013/14 London 71.2 65.5 16.3 13.9 Provinces 117.7 115.4 12.6 15.2 Belgium 6.8 7.5 0.2 - Venues total 195.7 188.4 29.1 29.1 Digital 9.9 5.8 1.9 (0.9) Total brand 205.6 194.2 31.0 28.2 KPIs Venues Digital Visits
Slide 7: Mecca
MECCA (8) (9) Revenue Operating profit £m H1 2014/15 H1 2013/14 H1 2014/15 H1 2013/14 Venues 111.8 113.7 14.5 7.1 Digital 31.5 29.8 8.4 6.8 Total brand 143.3 143.5 22.9 13.9 KPIs Venues Digital Visits (000s) 5,993 6,209 2,569 2,323 Spend per visit (£) 18.66 18.31 12.26 12.83 • Reduction in rate of d
Slide 8: Improving Bingo Venue Trends
IMPROVING BINGO VENUE TRENDS Comparable Venue Visits Comparable Venue Revenue 0.0% 0.0% Jan-Jun Jul-Dec Jan-Jun Jul-Dec -1.0% H2 H1 -0.5% H2 2013/14 2014/15 -1.0% 2013/14 H1 -2.0% 2014/15 -1.5% -3.0% -2.0% -2.5% -4.0% -3.0% -5.0% -3.5% • Cautious optimism about the recent slow-down in the rate of ad
Slide 9: Enracha
ENRACHA H1 2014/15 H1 2013/14 Revenue (£m) 12.8 14.7 Revenue (euros m) 16.3 17.3 Operating profit (£m) (10) 0.9 0.3 KPIs Visits (000s) 903 989 Spend per visit (euros) 18.05 17.49 • Improvements in trading offset by FX impact • Comparable customer visits and local currency spend per visit back in gro
Slide 10: Statutory Profit & Loss
STATUTORY PROFIT & LOSS £m H1 2014/15 H1 2013/14 Profit from continuing operations 40.8 32.7 Net interest payable (5.9) (4.4) Profit before tax and exceptional items 34.9 28.3 Exceptional items 1.4 (34.5) Profit before tax / (loss) 36.3 (6.2) Taxation (8.0) 4.7 Discontinued operations 16.0 2.8 Profi
Slide 11: Exceptional Items & Discontinued Ops
EXCEPTIONAL ITEMS & DISCONTINUED OPS £m H1 2014/15 H1 2013/14 Onerous property leases (1.0) - Net impact of club closures 2.4 - Integration costs - (1.2) Indirect taxation - (26.1) Net finance costs - (7.2) Total exceptionals pre tax 1.4 (34.5) Taxation - 8.8 Discontinued operations 16.0 2.8 Total e
Slide 12: Cash Flow and Net Debt
CASH FLOW AND NET DEBT £m H1 2014/15 H1 2013/14 Cash inflow from operations 72.8 49.7 Capital expenditure (15.8) (29.7) Fixed asset disposals 1.5 0.2 Operating cash inflow 58.5 20.2 Discontinued operations - (0.4) Acquisition and disposal of businesses (0.1) 0.9 Net cash payments; provisions and exc
Slide 13: Capital Investment
CAPITAL INVESTMENT £m H1 2014/15 H1 2013/14 Grosvenor Casinos 9.6 24.9 Mecca 4.7 3.7 Enracha 0.2 0.5 Central 1.3 0.6 Total 15.8 29.7 Finance leases – Mecca - 2.3 Total capital expenditure 15.8 32.0 • 2014/15 guidance circa £40 - 45m • Mecca capex programme restarted post duty cut (venues refurbs and
Slide 14: Financial Strength
FINANCIAL STRENGTH • Undrawn revolving credit facilities of £80.0m expiring January 2017 • £140.0m term loans expiring May 2016 • Strong operating cash flow with last 12 months EBITDA of £123.9m • Conservative leverage of c.0.8 times • Legacy tax issues now largely resolved • Potential VAT reclaims
Slide 15: Henry Birch, Chief Executive
Henry Birch chief executive 15
Slide 16: H1 Summary
H1 SUMMARY • Strong profit performance • Improved performance across all brands and channels • Encouraging growth in digital • Agreement for a new digital platform in place • New management team in place • Delivery against strategic objectives 16
Slide 17: Operational Review: Mecca Venues
OPERATIONAL REVIEW: Mecca Venues • Improved performance around visits and revenue: • Continued focus on improving efficiency with a 6% − focus on value to our customers saving in direct payroll expenses in H1 − reducing the cost of bingo • Maintaining active retail customer base (938k vs 940k) − con
Slide 18: Mecca: H2 and Investment Post Bingo Duty Cut
MECCA: H2 and Investment Post Bingo Duty Cut • Prices cut on 89% of main stage bingo sessions • 7 clubs to be refurbished in current year with another 5 to 7 planned for next year • £2.4m investment into our Mecca Max handheld bingo units to improve the customer experience: 1,000 additional units pu
Slide 19: Operational Review: Grosvenor Venues
OPERATIONAL REVIEW: Grosvenor Venues • 4% revenue growth despite weaker provincial win margin and some one-off costs • Launch of “Black Card” and “Gold Card” – service level for VIPs • Opening of Grosvenor Southend in September 2014, opening of Oldbury casino, adjacent to Mecca, and refurbishment of
Slide 20: Grosvenor Venues: H2 Activity
GROSVENOR VENUES: H2 Activity • Extension of Grosvenor Luton – new licence, improved product and customer experience • Refurbishment of the Gloucester • Launch of Grosvenor “services app”, pulling together club and digital services and info • New TV campaign promoting digital and club experience • N
Slide 21: Operational Review: Digital
OPERATIONAL REVIEW: Digital • 16% digital revenue growth yoy − 71% growth in Grosvenor − 6% growth in Mecca • 75% growth in operating profit • Successful multi-channel promotion − Mecca at 8.1% digital cross-over from retail (up from 7.1%) − Grosvenor: 72% increase in multi-channel customers • Organ
Slide 22: New Digital Platform
NEW DIGITAL PLATFORM Decision to move our core platform to Bede Gaming: • Flexible, open architecture allowing quick and easy integrations - central to joining up retail • Control of product and functionality roadmap • Improved bonusing, CRM and business intelligence • Allows us to work with best of
Slide 23: Digital Platform Roll Out
DIGITAL PLATFORM ROLL OUT • Sequential roll-out of brands: Grosvenor, Mecca, Enracha • First brand live within 2015 • Staged roll-out of development: Stage 1 - all brands live on new platform with all existing integrations complete Stage 2 - Rank-specified enhanced functionality roadmap delivered (c
Slide 24: Digital H2 Activity
DIGITAL H2 ACTIVITY • Primary focus on new platform • Incremental operational improvements - digital enablers: e.g. allowing multiple payment methods on mobile & tablet • Formation of a shared digital marketing team across brands and a single digital agency • New games content (from IGT, Playtech/VF
Slide 25: Strategic Update and Progress
STRATEGIC UPDATE AND PROGRESS 1. Creating a Compelling Multi-Channel Offer − Deal signed with Global Draw/Videobet to supply 1,000 new server based terminals for Mecca and upgrade 1,367 existing units 2. Building Digital Capability − Agreement in place with Bede Gaming to supply core digital platfor
Slide 26: Strategic Update and Progress
STRATEGIC UPDATE AND PROGRESS 3. Venue Development cont: − Refurbishment of Grosvenor Bournemouth − Opening of an electronic casino adjoining to Mecca Oldbury, using an unutilised Grosvenor casino licence − Increased maintenance and refurbishment budget (42% yoy increase) in Mecca venues 4. Investin
Slide 27: New Management Team
NEW MANAGEMENT TEAM Martin Pugh Colin Cole-Johnson Mark Jones MD Mecca Director of Digital and Cross Channel MD Grosvenor Casinos (Camelot, Virgin Active, Safeway) (William Hill, Ladbrokes) (Mecca, Premium Bars and Restaurants, Yates, Pizza Hut) Keith Woodcock Frances Bingham Henry Birch Clive Jenni
Slide 28: Outlook – Deliverables and Current Trading
OUTLOOK – Deliverables and Current Trading • Ongoing delivery of improvements in line with strategic priorities • Focus of calendar 2015 - delivery of new digital platform • Current trading: only covers short four week period • All brands are showing year on year growth • Strong growth in digital ca
Slide 29: Appendices
Appendices 29
Slide 30: Analysis for Data Sheets
ANALYSIS FOR DATA SHEETS • Each operating businesses’ results recast to 30 June accounting reference date - H1 2014/15: 6 months to 31 December 2014 - FY 2013/14: 12 months to 30 June 2014 - H1 2013/14: 6 months to 31 December 2013 - FY 2012/13: 12 months to 30 June 2013 - H1 2012/13: 6 months to 31
Slide 31: Grosvenor Casinos Venues Data Sheet
GROSVENOR CASINOS VENUES DATA SHEET H1 2014/15 FY 2013/14 H1 2013/14 FY 2012/13 H1 2012/13 FY 2011/12 Casino licences London 9 9 9 8 4 4 Provinces 56 54 54 51 33 33 Belgium 2 2 2 2 2 2 Total 67 65 65 61 39 39 Non-trading licences 12 13 13 17 10 10 Revenue (£m) 195.7 377.7 188.4 290.5 140.1 255.8 EBI
Slide 32: Mecca Venues Datasheet
MECCA VENUES DATASHEET HY 2014/15 FY 2013/14 H1 2013/14 FY 2012/13 H1 2012/13 FY 2011/12 Venues 93 96 97 97 97 97 Revenue (£m) 111.8 229.3 113.7 234.9 115.7 237.8 EBIT (£m) 14.5 21.1 7.1 23.0 11.1 28.3 Operating margin 13.0% 9.2% 6.2% 9.8% 9.6% 11.9% Customers MAT (000s) 938 937 940 958 958 965 Visi
Slide 33: Enracha Datasheet
ENRACHA DATASHEET H1 2014/15 FY 2013/14 H1 2013/14 FY 2012/13 H1 2012/13 FY 2011/12 Venues 9 10 11 11 11 11 Revenue (£m) 12.8 28.3 14.7 28.5 13.8 29.2 EBIT (£m) 0.9 0.8 0.3 0.7 0.4 1.4 Operating margin 7.0% 2.8% 2.0% 2.5% 2.9% 4.8% Customers MAT (000s) 250 260 278 276 291 305 Visits (000s) 903 1,945
Slide 34: UK Casinos Market Supply
UK CASINOS MARKET SUPPLY Operator Casino Venues Total Licences Grosvenor Casinos 58 77 Genting 40 56 London Clubs 9 11 A&S Leisure 6 6 Double Diamond 6 7 Aspers/Aspinall’s 7 9 Club 36 3 3 Clockfair 2 2 Guoco 1 1 Others 11 26 Total 143 198 Source: company research 34
Slide 35: UK Bingo Clubs Market Supply
UK BINGO CLUBS MARKET SUPPLY Operator Clubs (3) Gala Bingo 133 Mecca Bingo 93 Top Ten Bingo 15 Carlton Clubs 13 Castle 11 Club 3000 11 Beacon 9 Others 90 Total 375 Source: Bingo Association (3) excludes the conversion of adult gaming centres to bingo clubs 35
Slide 36: Dividend Growth
DIVIDEND GROWTH 5.00p 4.00 4.00p 3.50 3.00p 3.00 2.00p 2.50 1.00p 2.00 0.00p 1.50 2010/11 2011/12 2012/13 2013/14 2014/15 2010/11 2011/12 2012/13 2013/14 2014/15 Interim dividend Total full year dividend Dividend cover • Strong growth in dividend • Dividends growing faster than earnings 36