Introduction Ian Burke, chairman Financial performance 2013/14 Clive Jennings, finance director Operational performance 2013/14 Henry Birch, chief

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2 Ian Burke chairman

3 Introduction Ian Burke, chairman Financial performance 2013/14 Clive Jennings, finance director Operational performance 2013/14 Henry Birch, chief executive Strategic outlook Henry Birch, chief executive Q&A 3

4 Clive Jennings finance director 4

5 2013/ /13 Gross revenue (1) Operating profit (2) Adjusted earnings per share (2) EBITDA (2) Operating cash inflow Net debt (3) Total dividend per share 707.7m 72.4m 12.4p 116.0m 63.2m (137.0)m 4.50p 625.0m 69.9m 12.4p 108.8m 81.5m (104.1)m 4.10p Solid result for the year following challenging H1 performance Strong H2 profit performance - up 21% vs H1 Final dividend 3.15p up 11% (1) before adjustment for free bets, promotions and customer bonuses (2) before exceptional items (3) position at the end of the 12 month period 5

6 Revenue (4) Operating profit (5) m 2013/ / / /13 Grosvenor Casinos Mecca Enracha Central costs (22.2) (22.3) Total continuing Group now dominated by casino brand - 55% of revenue - 60% of profits (pre central costs) (4) before adjustment for free bets, promotions and customer bonuses (5) before exceptional items 6

7 m Park Tower win margin Acquired casinos -3.2 July 2013 hot weather -6.7 Mecca admissions fall +1.5 Profit growth 72.4 FY 2012/13 operating profit Normalised FY 2012/13 FY 2013/14 operating profit 2012/13 Park Tower performance was the highest win margin and handle level in last five years Profit up 10% on normalised 2012/13 7

8 Revenue (6) Operating profit (7) m 2013/ / / /13 London Provinces Belgium Acquired casinos Venues total Digital Total brand (0.9) (2.1) 47.4 KPIs (8) Visits (000s) Spend per visit ( ) 8, Venues (8) 6,052 (8) Digital Continued benefit from acquired casinos offset by weak performances in London and the Provinces Strong digital growth (6) before adjustment for free bets, promotions and customer bonuses (7) before exceptional items (8) excludes acquired casinos 8

9 m Venues Digital Total brand Revenue (9) Operating profit (10) 2013/ / / / KPIs Venues Digital Visits (000s) 12,607 13,559 4,822 5,003 Spend per visit ( ) Venues: Cost and efficiency actions in H1 drove significant H2 profit improvement up 97% versus H1 Venues: 3 new clubs planned as part of bingo duty cut commitment with limited number of club closures planned in coming year Digital: Extremely competitive market and increased shared service cost allocation impacted profits (9) before adjustment for free bets, promotions and customer bonuses (10) before exceptional items 9

10 Revenue ( m) Revenue (euros m) Operating profit ( m) (11) 2013/ / KPIs Visits (000s) Spend per visit ( ) 1, , Continuing difficult economic conditions led to impairments at three clubs One loss-making club closed (11) before exceptional items 10

11 m 2013/ /13 Profit from continuing operations Net interest payable Profit before tax and exceptional items Exceptional items Profit before tax Taxation Discontinued operations Profit for the period 72.4 (9.0) 63.4 (49.0) (5.3) 64.6 (21.9) 42.7 (13.8) (1.9) 27.0 Effective tax rate: 22.2% Cash tax rate on adjusted profit: 16.7% 2014/15 effective tax rate expected to be 22-24% Discontinued comprises tax refunds on disposed businesses 11

12 m 2013/ /13 Impairments & property leases Acquisition & integration costs Indirect taxation Restructuring costs Finance costs Total exceptionals pre tax Taxation Discontinued operations Total exceptionals post tax (18.0) (1.7) (26.1) (0.7) (2.5) (49.0) (32.6) (2.2) (8.5) (7.0) - (4.2) (21.9) (15.5) Indirect tax comprises output VAT repaid to HMRC Impairments mainly relates to three Enracha clubs and Grosvenor New Brighton 12

13 m Cash inflow from continuing operations Capital expenditure Fixed asset disposals Operating cash inflow Discontinued operations Acquisition and disposal of businesses Net cash payments; provisions and exceptional items Net interest and tax Settlement of legacy tax issues Net dividends paid New finance leases Other (12) Cash outflow Opening net (debt) / cash Closing net debt 2013/ / (44.3) (0.6) 1.1 (6.7) (15.5) (56.6) (16.4) (2.3) 0.9 (32.9) (104.1) (137.0) (38.2) (9.1) (176.2) (14.0) (12.8) - (14.6) (0.8) 0.1 (145.9) 41.8 (104.1) (12) includes fx translation 13

14 m Grosvenor Casinos - existing venues - acquired venues Mecca Enracha Central Total continuing 2013/ / /15 guidance 40m-45m 14

15 Undrawn revolving credit facilities of 60.0m Strong operating cash flow with EBITDA of 116.0m Conservative leverage of c.1.2 times Potential VAT claims Supreme Court hearing April

16 Only covers short six week period All brands are showing year on year growth (13) Strong growth in online casino continuing (13) in local currency 16

17 Henry Birch chief executive

18 Operational performance 2013/14 18

19 Disappointing H1 Slow to react to demand for value for money in Mecca Increasingly competitive London market Mecca digital losing some ground Challenging economic backdrop in Spain Successful integration of Gala casinos Strong Grosvenor digital performance (38% revenue growth) Luton 05 licence award Rank-led lobbying resulted in bingo duty cut to 10% Continuing strength of mobile channel in Mecca: - Mobile customers >40% of digital base - Mobile acquisition >60% of new digital customers H2 YOY profit growth in Mecca retail including strong control on labour ( 4.1m saving) 19

20 Strategic outlook 20

21 160+ gaming entertainment venues up and down the UK and internationally Market leading positions in retail casino (35%) and retail bingo (34%) A leading digital bingo business with 24% market share c.3 million customers in the last 12 months Recognised brands with significant equity and heritage 11,000 passionate employees who engage with and understand our customers 21

22 1. Creating a compelling multi-channel offer 2. Building digital capability 3. Developing our venues 4. Investing in our brands and marketing 5. Using technology to improve efficiency and customer experience 22

23 Why is it important? A key differentiator for Rank that leverages our assets Increasing consumer demand for multi-channel propositions across all sectors (eg retail, banking) Multi-channel customers are higher value than mono-channel customers Improved customer retention An exportable model: the UK s liberal regulatory regime makes it the first in the world where true multi-channel gaming can be implemented Rank s venues are best-placed to create a multi-channel offer Rank Membership-based Activity tracked through loyalty scheme Long dwell time (2hrs+) Significant interaction with staff Entertainment experience Bookmakers/AGC s Anonymous Little-to-no tracking Limited dwell time Limited interaction with staff A cup of tea if you re lucky! 23

24 British Gambling Prevalence Survey (2010) reveals low levels of multi-channel play BUT the last 4 years has seen significant digital growth, esp. mobile Of Rank s total 3.0m customers, approx. 3% are multi-channel Mecca at c.7% cross-over; Grosvenor at c.2% Many of our club customers are playing online with our competitors Industry: 2010 Rank:

25 Seamless content Continue games across different devices/ channels Networked jackpots Across channels Use your own device Mobile and tablet use to gamble in club Loyalty Loyalty points earned and redeemable across all channels Mobile services app Mobile app to drive retail usage and convenience Offers/bonuses Bonuses and offers to encourage multi-channel activity Single account Automatic registration and membership across all channels Joined-up content Networked slots, live casino, live bingo Multi- Channel Offer Single wallet Ability to access funds and receive bonuses across all channels And more 25

26 Why is it important? Central to our multi-channel strategy Growth area for Rank: - Rank under-represented: digital represents 10% of total revenues vs 30% for the wider market - Mecca with strong digital market share (24%) in a relatively fragmented market - Grosvenor growing fast (38% YOY) with significant potential: 2% digital market share vs 35% retail market share Point of Consumption tax both a challenge and an opportunity: - margin reduction - market share freed up from smaller operators 26

27 Legacy platform: Slow, costly integrations Limited bonusing, CRM and BI Poor supplier management Multi-channel difficult Large collection of data, but not used effectively: Manual reports No real time data No single view of customer Limited insight New platform: Open architecture: easy integrations Modern back-end: bonusing, CRM, BI Partnership model Improved security Data warehouse with new tools and applications: Real time data and automation driving improved marketing, offers, CRM and insight Duplicated teams across brands Lack of digital leadership Capability gaps High churn of people New UK digital head Shared team across brands Hiring new people Improved office relationships Underspend relative to competitors Marketing cut in past year Ineffective spend Fixing the funnel Hiring experts and using the right external resources Gradually increasing spend 27

28 Why is it important? Venues remain the prime revenue generator of Rank (90%) and the gaming industry generally (65%) Leisure is governed by fairly short term trends meaning that venue evolution is necessary Successful venue development will drive revenue, strengthen brands and is a means to create new brands and businesses 28

29 New clubs: Commitment to Government to build 3 new bingo clubs Opportunity to trial new formats and brands BUT focus on ROI and learning from past experience Estate management: Exit from loss-making clubs Limited capex focused on maintenance Casino licence utilisation Use dormant casino licences in existing bingo clubs to broaden product offer Oldbury trial development for 2014/15 29

30 2014/15 activity Southend opening in September 2014 Nottingham and Bournemouth Pipeline: Licence bids/usage Relocations Extensions refurbishment Focus on joined-up London approach: Fastest growing local market, constituting 60%+ of total UK market Grosvenor: nine casinos throughout the capital Sales initiative 30

31 In Mecca and Grosvenor, Rank has well-established, recognised brands: Mecca at 80% brand awareness amongst general public Grosvenor at 22% brand awareness amongst general public BUT: - Need for better brand definition - Need for improved resonance/relevancy as well as brand recognition - Need for better functional capability Strong, defined brands will: - improve marketing efficiency - increase retention of customers - increase customer values New digital brands to target different customer segments and for cross-sell from existing brands Halo effect across channels 31

32 Why is it important? A means of increasing our margins through cost reduction, allowing reinvestment into product and service Providing an improved customer experience which should drive increased revenues and customer retention Helps create a multi-channel offer Challenges Some infrastructure needs to be put in place first Some product/suppliers not yet there Successes Existing: Mecca Max units, TiTO, server-based gaming Future: Bring your own Device, mobile devices as membership cards and wallets 32

33 1. Infrastructure and applications to support our vision and ambition 2. Capex to support scheduled venue development BUT: We see this as achievable within current anticipated levels of spend Capex likely to stay within our depreciation charge (excluding new venues / relocations) Accelerated venue development may require additional capex but this will be well-flagged and would not be outside of established target returns 33

34 Robust core businesses: Grosvenor : leading market share, defensible position (limited licences and high barriers to entry); nascent digital business Mecca : strong cash flow with limited capital investment, leading digital business with growth potential Enracha : small but stable business with digital and multi-channel growth potential Clear strategy for growth and value creation: Creation of market-leading, defensible positions in multi-channel casino and bingo A scaled digital business Strong brands with growth potential Revenue growth and operating margin increase 34

35 Appendices

36 Rank s year end changed to 30 June Each operating businesses results recast to 30 June accounting reference date - FY 2013/14 12 months to 30 June H1 2013/14 6 months to 31 December FY 2012/13 12 months to 30 June H1 2012/13 6 months to 31 December FY 2011/12 12 months to 30 June H1 2011/12 6 months to 31 December

37 GROSVENOR CASINOS VENUES DATA SHEET FY 2013/14 H1 2013/14 FY 2012/13 H1 2012/13 FY 2011/12 H1 2011/12 Casino licences London Provinces Belgium Total Non-trading licences Revenue ( m) EBIT ( m) Operating margin Customers MAT (000s) (1) Visits (000s) Spend per visit ( ) % 1,770 8, % 1,713 4, % 1,288 6, % 1,282 3, % 1,193 6, % 1,194 3, Electronic gaming (UK only) B1 machines B2 machines B3/C/D machines Electronic casino terminals 1, ,732 1, , , , , ,015 (1) Active customers on a Moving Annual Total basis, excluding Belgium 37

38 FY 2013/14 H1 2013/14 FY 2012/13 H1 2012/13 FY 2011/12 H1 2011/12 Venues Revenue ( m) EBIT ( m) Operating margin Customers MAT (000s) Visits (000s) Spend per visit ( ) % , % 940 6, % , % 958 6, % , % 943 7, Electronic gaming B3/B4 machines (2) C/D machines Electronic bingo terminals 1,762 3,407 8,481 1,841 3,423 8,170 1,908 3,577 8,075 1,224 4,213 8,100 1,164 4,285 8,055 1,114 4,451 7,545 (2) includes B3 machines located in adult gaming centres, operated by Rank and located adjacent to Mecca Bingo clubs 38

39 FY 2013/14 H1 2013/14 FY 2012/13 H1 2012/13 FY 2011/12 H1 2011/12 Venues Revenue ( m) EBIT ( m) Operating margin % % % % % % Customers MAT (000s) Visits (000s) 1, , ,049 1,064 Spend per visit ( )

40 Operator Grosvenor Casinos Genting London Clubs A&S Leisure Double Diamond Aspers/Aspinall s Club 36 Clockfair Guoco Others Total Casino Venues 56 (3) Total Licences 77 (3) (3) (3) Source: company research (3) includes 2005 Act casino licences 40

41 Operator Gala Bingo Mecca Bingo Top Ten Bingo Carlton Clubs Castle Club 3000 Beacon Others Total Clubs (4) Source: Bingo Association (4) excludes the conversion of adult gaming centres to bingo clubs 41