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0 DRAFT Acquisition of Gala Casinos Presentation to Analysts and Investors 21 June 2012 www.rank.com 1.

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Presentation on theme: "0 DRAFT Acquisition of Gala Casinos Presentation to Analysts and Investors 21 June 2012 www.rank.com 1."— Presentation transcript:

1 0 DRAFT Acquisition of Gala Casinos Presentation to Analysts and Investors 21 June

2 Agenda Overview Ian Burke, chairman and chief executive Transaction Structure & Financial Impact Clive Jennings, finance director Summary / Q&A Ian Burke 2

3 2 DRAFT Overview 3

4 Transaction overview Acquisition of Gala Casinos for £205m cash consideration –8.7x 2011A ‘Acquired‘ EBITDA (1) of £23.5m –Opportunity to unlock cost and revenue synergies of more than £1m pa Gala Casinos is the third largest casino operator in Great Britain –23 land-based operating casinos in Great Britain –Three non-operating licences Gala is retaining –Venues and associated licences in Gibraltar and Dundee –Non-operating licence for the City of Westminster (London) –Gala branded online casino activities –Central management functions (1)Based on EBITDA of £23.5m for the 12 months ended 24 September

5 Acquisition in line with group strategy Drive sustainable growth in earnings per share Develop trusted gaming based entertainment brands –Grosvenor branded venues in 39 major towns and cities in Great Britain 8% increase in addressable market 95% of core customers in catchment 800,000 active customers on Gala database Operate responsibly in regulated markets 5

6 Strong strategic rationale Creates No.1 casino operator in Great Britain with 58 casinos and 13 non-operating licences –Strongly positioned to capture long-term growth opportunities presented by casino gaming in the UK Step-up in Rank’s programme of estate expansion in Grosvenor Casinos –Opportunity to convert nine Gala casinos to the ‘G Casino’ format –Few overlaps with Rank estate –Increases reach of Grosvenor brand into 11 more towns and cities –Over half of the casinos to be acquired located in towns and cities in which Rank does not currently operate Expected to be earnings enhancing for Rank in the first full financial year of ownership 6

7 Gala Casinos Aberdeen Birmingham Bournemouth Bradford Bristol Cardiff Edinburgh Glasgow (3) Hull Leeds Leicester Liverpool London (4) Northampton Nottingham Stockport Stockton Sunderland Combined casinos estate in Great Britain Gala Casinos Grosvenor Casinos (4) (3) (4) (2) Grosvenor Aberdeen Birmingham Blackpool Bolton Brighton Bristol Cardiff Coventry Dundee Huddersfield Leeds London (4) Luton Manchester (4) New Brighton Newcastle Plymouth Portsmouth (2) Reading Scarborough Sheffield Southampton Stockton Stoke Swansea Thanet Walsall Yarmouth 7

8 Estate development potential (2) Gala Casinos Coventry Northampton Wolverhampton Grosvenor Birmingham (2) Edinburgh Hove Liverpool London Manchester Reading Southend & Westcliff Swansea Gala Casinos non-operating licences Grosvenor Casinos non-operating licences 8

9 8 DRAFT Transaction Structure & Financial Impact 9

10 Transaction details and timetable All cash consideration of £205m –Subject to certain adjustments, including for working capital at completion –£22.5m of total consideration held in escrow for the purpose of satisfying certain potential claims against the seller Funded new three-year bank facilities totalling £175m together with existing bank facilities Conditionality –Rank shareholder approval at a General Meeting on 26 July 2012 –UK merger control clearance Completion targeted for September

11 Reconciliation of target financials (1) EBIT stated pre exceptional charge of £12.5m (2) Year to 24 September 2011 Depreciation Amortisation EBIT (1) Bridge from “Carve-out” EBITDA to “Acquired” EBITDA (£m) (2) Former Gala cost allocations "Carve-out" 2011A EBITDA Allocation of Gala Group brand marketing costs Allocation of Gala Group overheads Additional immediate savings from casino overheads and closed casinos not acquired "Acquired" 2011A EBITDA 11

12 Financial highlights Synergies provide opportunity to unlock £1 million of annual savings –Rank’s centralised purchasing function –IT infrastructure shared across wider estate –Sales force applied across broader estate Further benefits anticipated to be realised from opportunity to deploy Rank’s operational excellence across an enlarged portfolio –‘G Casino’ format roll-out across nine casinos acquired –Rebranding of estate to Grosvenor Casinos Incremental Capex post acquisition of £25-30m over two years –Capex would be in addition to Rank’s existing investment plan 12

13 Investment programme 68 British casinos by 2015 including 39 under the ‘G casino’ format –Total initial estimate of incremental £25-30m investment programme Nine acquired casinos to be converted to ‘G casino’ format by 2014 ‘G Casino’ roll-out has historically generated over 20% year-two cash-on-cash returns Acquired provincial casinos to be rebranded to Grosvenor Casinos by the end of 2012 –Named London casinos to have consistent look and feel by end 2012 Total UK casinos No. of G format casinos PF PF 39 13

14 Proven Track Record Revenue (£m) and Customer Visits (000s) EBITDA (£m) and Operating Margin (%) % 18.1% 19.0% 19.5% 21.9% 21.5% 16% 18% 20% 22% H1 2009H2 2009H1 2010H2 2010H1 2011H (£m) ,270 2,555 2,624 2,790 2,952 3,059 2,000 2,500 3,000 3, H1 2009H2 2009H1 2010H2 2010H1 2011H (£m) (000s) 14

15 Key performance indicators – Provinces Grosvenor ‘G’ Casino 3, % 3, % 13.1% 11.4% 29.4% 4.2% Customer visits/week Revenue (£k)/week EBITDA (£k)/week EBITDA margin (%) Variance Proposed Gala ‘G’ Casino 15

16 Combined Financial Profile Revenue: £590m EBITDA: £101m 2011PF Revenue: £713m 2011PF EBITDA: £124m (1) Based on Gala Casinos results for the 12 months to 24 September 2011 and pro forma adjustments shown on slide [10] (1) Rank (12m to 31 Dec 2011)Pro Forma post Acquisition (1) 16

17 DRAFT Title Page The Rank Group Plc Concluding Remarks & Summary 17

18 Summary Creates No.1 casino operator in Great Britain with 58 casinos and 13 non-operating licences Applying Rank’s financial strength Extends reach of Grosvenor brand Expected to be earnings enhancing for Rank in the first full financial year of ownership 18

19 DRAFT Q&A 19


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