The Rank Group plc Capital Markets Day 24 May 2017
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Agenda • Welcome ₋ Henry Birch • Mecca retail ₋ Alan Morgan • Grosvenor retail ₋ Martin Pugh • Digital ₋ Bede Gaming, Michael Brady & Dan Smyth ₋ Rank, Adam Joseph & Darren Moffett • Close 2
Alan Morgan • Hospitality & Leisure background • Pubs, Hotels, Restaurants, Retail, David Lloyd Leisure • Part of the Exec team that demerged Spirit Pub Company from Punch Taverns, listed it, created and rolled out 3 new brands and then sold it to Greene King • Joined Rank in September 2016 • Views on Retail Bingo market based on eyes from a different perspective – Big upside to be had but must be experiential and social based reasons to visit to attract different customer base • We can do what most other leisure operators do but they can’t do what we do – USP... 4
UK Bingo Market • The UK bingo industry consists of 358 bingo venues Operator Venues Gala Bingo 131 • 20% of total machines can be B3/B4 machines Mecca 85 Majestic 16 • Bingo licences are permitted in any part of the UK Carlton Clubs 13 Club 3000 12 • Mecca is the second largest operator (by venue) of bingo Castle 11 clubs Beacon 8 Others 82 Total 358 5
Mecca Retail – The context • Overall customer numbers in growth over the last 18 months • Admissions from traditional core customers are in decline (although ahead of the market) • Cash flow from core customers is robust - take per head growing well, cost control is strong, low capex cost • Limited innovation across the industry in the past, but we are positive about driving new types of customers • Early evidence from our trials on both existing product changes and new innovation is exciting 6
Mecca Retail – The Plan • Stage 1 - Implement robust cost control and disciplines to improve profitability now and ensure increased revenue converts heavily to the bottom line ongoing • Stage 2 - Take the quick revenue opportunities through improved service & better upselling ongoing • Stage 3 - Get more from the customers we’ve got through product change & innovation to improve spend per visit & frequency ongoing • Stage 4 - Attracting a new audience with the assets we have today through different events & targeted marketing early success • Stage 5 - Drive really exciting and long term growth with new concepts (conversion and new sites) close to launch - Multi purpose proposition for some of our clubs - Luda 7
Cost control results so far 2013/14 2014/15 2015/16 Q1 16/17 Q2 16/17 Q3 16/17 Salaries & wages £m 44.6 43.9 45.0 12.0 11.6 11.1 % revenue 20.6% 20.3% 20.4% 22.1% 21.9% 20.3% Operating hours 3,805 3,697 3,690 917 896 850 Weekly Av’000 73 71 71 71 69 65 Promotional costs £m 19.6 21.9 19.5 4.8 5.7 3.4 % revenue 9.0% 10.1% 8.9% 8.8% 10.8% 6.3% • Operating hours reduction driven through club benchmarking & £ revenue per labour hour focus • Promotional spend has much stricter control groups to measure effectiveness and focus on better balance between profitable and non profitable admissions (this does have an impact on admissions number) 8
Product innovation for SPV growth SPV 2013/14 2014/15 2015/16 Q1 16/17 Q2 16/17 Q3 16/17 Bingo £2.80 £2.61 £2.76 £3.10 £3.20 £3.37 % Var (6.9)% 6.0% 12.1% 15.8% 22.1% Interval games £7.54 £7.74 £7.77 £7.75 £8.00 £8.00 %Var 2.6% 0.4% (0.2)% 3.0% 2.9% Slots £5.78 £6.06 £6.31 £6.47 £6.68 £6.57 % Var 4.7% 4.2% 2.5% 5.8% 4.0% F&B £1.91 £2.07 £2.19 £2.18 £2.29 £2.37 %Var 8.4% 5.5% (0.2)% 4.6% 8.5% Total £18.36 £18.90 £19.58 £20.07 £20.88 £21.12 % Var 3.0% 3.6% 2.5% 6.6% 7.9% • New bingo calendar & new games to drive incremental play. Improved National Game and benefit from increased Max units • New style games with more interaction for customers that drive rate of play • Additional titles, VIP programme improved and increased events / tournaments (opening hours being reviewed) • Menu re-engineered to drive penetration into premium dishes, service at table & impulse purchase 9
Product innovation for admissions growth • Theme nights rather than discounting to drive frequency of existing customers • New events & games created to attract different audiences Examples: ₋ Students nights (Mayhem Bingo / Batty Bingo) ₋ Young professionals (Bonkers Bingo) ₋ Alternative night out (Big Bingo Bash) 10
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New concepts 13
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Bingo • High footfall location in a city centre or the High Street • Compact footprint, typically 2.5k - 5k sqft • Slots lounge with the latest technology and games • Time and price flexibility – a “pay as you go” bingo model rather than traditional time bound sessions • Coffee shop style F&B with pizzas and other hot food • Appealing to a new audience • Modern, open, inviting environment 15
Product Bingo • Primary purpose of venue • Full programme of games throughout trading day with a combination of – Bingo Variant (fixed odds) games. Multiple titles available on Max and paper ticket printed on demand. Games played on video wall every 6 minutes, or on demand on EBT every 2 minutes – Key Cashlinks with Mecca estate and wider industry played on Max only • Primarily delivered via new Captec 8” tablets with bingo and slots content Slots • 100% digital offer from 4 main suppliers • 26 cabinets in Walsall (15 Cat B3; 11 Cat C) • 2 x freeplay cabinets to encourage customers to trial • Single TiTo journey via VideoBet platform • 5 x retro arcade cabinets to drive additional footfall and interest in venue 16
Product F&B • Seen as vital component to break down barriers, drive footfall, dwell time and TPH. Key differentiator vs High Street gaming offer • Food offer by day part; – Breakfast – pastries, porridge, granola, bacon rolls – Lunch – sandwiches, panini’s, pasta bowls – Evening – pizza’s, chicken wings & strips, hot dogs, nacho’s – Cakes, tray bakes, muffins, impulse purchases available all day • Drinks offer – Limited alcohol range – beer, wine, cider, mainline spirits. – Lavazza coffee delivered by bean to cup machine – Soft drinks range 17
Luda - Walsall 18
• Initial capex of £800k per unit which is expected to reduce through learnings to £500k • Return on investment in 3-4 years • Rollout pace dependent on success and property 19
Mecca next generation What is it: • A multi-use leisure venue that at its core combines, a flexible venue for bingo and events, competitive F&B with a broad gaming experience and the latest technology, all day, every day Who is it for: • Gender neutral • 25-45 years core audience, 45+ & sub 25 secondary audience • Adult only in the gaming areas but with the ability for bar area to allow families during the day • Demographic: C1/C2/D • Groups and individuals dependent on needs Food Bar & Sports Bar Games & Arcade Room Slots Room Events & Bingo Room 20
Summary • Making good progress against the plan in all areas • Patting our heads and rubbing our tummies... (Attract new and keep old) • Cost control now very strong • Product innovation is delivering • Venue innovation happening • Exciting times ahead 21
Q&A 22
Grosvenor Casinos Martin Pugh
Martin Pugh • Leisure and lottery background • Previously managing director for Virgin Active and Camelot • Joined Rank in January 2015 • Previously managing director of Mecca until September 2016 24
UK Casino Market • The UK retail casino industry consists of 146 operating Operator Operating Total licences with 27 in London and 119 in the Provinces Licences Licences • In total, there are 182 1968 Act licences and 16 2005 Act Grosvenor Casinos 65 77 Genting 40 56 licences Caesars Entertainment Ltd 9 11 • Six casinos are operating under the 2005 Act (Grosvenor A&S Leisure 5 6 Double Diamond 5 7 operates a small category casino in Luton) and it’s expected Aspers/Aspinalls 5 9 that a further 2-4 will open, leaving six licences dormant Club 365 2 3 Clockfair 2 2 • 2005 Act licences are entitled to a larger number of slot Guoco 1 1 machines, whereas the 1968 Act casinos slot machine Others 12 26 entitlement is capped at 20 Total 146 198 • Each licence is within a permitted area and can not be transferred • Grosvenor Casinos is the largest operator (by venue) of casinos 25
UK Casino Market • The casino market attracts over 20m visits a year with 14m in the Provincial casinos and 6m in London Annual Visits from UK Casino Estate Total Annual Visits Average Weekly Visits • Gaming handle totals £7.4bn and the sector generates 22,000 3,000 gaming revenues (excluding spends on slots) of £1.0bn 1 2 Average Weekly Visits 20,000 2,500 with an average spend per head of £48 Total Annual Visits 18,000 2,000 • London is segmented into the ‘Upper segment’ which 16,000 1,500 14,000 contains six casinos aimed at the high end of the 1,000 12,000 market with the other 21 casinos attracting a broader 10,000 500 customer base 8,000 0 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 • London accounts for c65% of the total gaming revenues with London Upper, accounting for 36% of the total London revenues Notes: 1. Deregulation: abolished 24hr rule, advertising now permissible, machines • Historical growth has come from new openings and de- increased to 20 from 10 and added note acceptors, S21 machines added in addition to B1 machines regulation through abolition of membership rules, 2. Smoking ban and removal of S21 machines advertising and slot machine entitlement 26
Introduction to Grosvenor • Grosvenor operates 67 licences out of 56 venues – 45 in Provinces, 9 in London and 2 in Belgium • 19 casinos were acquired from Gala in May 2013 • Market share of over 37% based on number of visits • Average casino size of 21k sqft • 726 tables and 1,280 slot machines • Average revenue of £7.3m per club and £1.2m profit per club • 1.6m active customers as at 30 June 2016 Market Share of Visits 38.0% 37.0% 36.0% 35.0% 16 Q1 16 Q2 16 Q3 16 Q4 Calender quarters 27
The Grosvenor Customer • 27% Female/73% Male Current Income Mix • Average age of member is 40 • Average frequency of visit 5.2 per year; up 11% YOY Card Room Games Food & Drink 8% • 65% of income comes from casino games with machine 4% revenues at 23% • Trend is for growth in machine revenues with a 5ppt increase in Gaming the share of total income over the last 5 years. This has been Machines 23% driven by improvements in service, experience and product • Spend per visit is £40 in Provinces and £98 in London Casino Games • Stronger bias towards casino games in London with 78% of 65% revenues vs. 57% in the Provinces • Roulette remains the most popular game with 77% of play followed by Blackjack. This has been consistent over the last 5 years 28
2016/17 In Context A year of significant change: • Enhanced Due Diligence – continuing challenge, but progress being made • People and cost base restructuring – Project One and Refocus: • Project One: Standardisation of employment contract T&Cs • Project Refocus: £6m of savings through management delayering and other operational cost savings • Technology investment – Neon and Single Account and Wallet • Neon Cash desk system implemented July 2016 • Machines, Table and loyalty system being rolled out from June 2017 • Benefits include: • Provides a basis for omni-channel gaming solution • Increased Anti Money Laundering and Responsible Gambling compliance through increased knowledge of customers • Improved loyalty functionality • Improved monitoring and optimisation of machine and table performance 29
Our Approach • Major focus on step-changing London performance (45% profits in 9 casinos) • Introduce a new, more leisure-based offering in major provincial centres • Refurbishments at Leeds and Nottingham are the first of this type with a roadmap of future schemes • Maintain transactional approach and tight cost control in other provincial casinos • Continued product and service development driving new customers and spend per visit • Drive multi-channel play 30
Provincial Venue Development Leeds: • Scheme to modernise and create a leading gaming experience at a cost of £2.7m • Offers 20 tables with 40 slots and 38 electronic gaming positions • Trading in line with expectations and competes with the 2005 Act licence casino that opened in January 31
Provincial Venue Development Nottingham: • Transformational refurbishment at a cost of £3.0m with a zonal approach that integrates leisure and gaming • Supports full open door offering customers a seamless experience across all areas • Nottingham has started well with significant increases across all KPIs 32
London Opportunity • 27 operating casinos within three licenced boroughs (Westminster, Camden and Kensington & Chelsea) • Newham hosts London's only 2005 Act casino at Stratford • Grosvenor operates 9 casinos with 2 in Camden, 2 in K&C and 5 in Westminster. Also hold a spare licence in K&C • Grosvenor London generates approximately 40% of revenues and 45% of EBITDA • Our ambition to drive collective strength of Grosvenor’s London casinos through: ₋ Market positioning ₋ People ₋ Marketing ₋ VIP ₋ Refurbishments and relocations ₋ Service ₋ F&B 33
London Opportunity • Modernisation programme underway at Piccadilly and Golden Horseshoe venues • Combined capital cost of £3.2m • Piccadilly focused on exceptional gaming experience, capitalising on its close proximity to Chinatown • Scheme at the Golden Horseshoe sees a modernisation of the casino offering a relaxed experience to the multi-ethnic area whilst creating a dedicated VIP offer 34
Summary • 2016/17 a year of change, but business now well-positioned for top and bottom line growth • Improving underlying trends throughout the year • Leaner cost base and technology enhancements set strong platform for next phase • Provincial refurbishments outperforming targets and attracting new, younger customers • Significant opportunity to grow our London business • Multi-channel likely to have a positive impact on core retail business • Clear path to growth in 2018/19 and beyond 35
Q&A 36
AN INTRODUCTION TO BEDE Michael Dan Brady Smyth CEO Managing Director
WHO WE ARE UK BASED LICENSED EXPERIENCED ONE TEAM 1ST CHOICE Private Ltd Co. AGCC & UKGC 15+ Years Over 180 Strong 25 Brands Founders & Team Licenses & Platform Rich Pedigree Three Offices Rank Partner in Spain
BEDE’S VISION
THE FUTURE OF BEDE
BEDE SOFTWARE
PRODUCTS A COMPLETE ONLINE GAME SOLUTION PLATFORM GAMING VERTICALS WHITE LABEL SITE Everything you’ll need to run Game content and unified bonusing Turnkey and managed service your business from a single integration solution
PLATFORM AS THE ENABLER OF DIFFERENTIATION AND INNOVATION
PLATFORM AS THE ENABLER OF DIFFERENTIATION AND INNOVATION Highly Scalable Transactional Wallet Industry leading flexible wallet and player account accessible from any device
PLATFORM AS THE ENABLER OF DIFFERENTIATION AND INNOVATION Open Platform Extensive APIs allowing Operators full access to integrated any third party or create their own IP Highly Scalable Transactional Wallet Industry leading flexible wallet and player account accessible from any device
OPEN PLATFORM ● Extensive APIs ● SDK - multiple access points ● Enabling operator ● Best of breed services ● Supplier agnostic
EXAMPLE: SINGLE ACCOUNT ● Bede Omni-Wallet understands Retail ○ Single wallet for all channels ○ Trace source of funds ○ Playable at 10,000s gaming terminals ● Loyalty integration ○ Single A/C - Earn across retail and digital ○ Redeem for cash/bonus/shop ● Bede Bonus ○ Cross channel promotions are possible by awarding digital bonus via API
PLATFORM AS THE ENABLER OF DIFFERENTIATION AND INNOVATION Bede Products Industry leading out of the box tools unifying gaming experience across all providers Open Platform Extensive APIs allowing Operators full access to integrated any third party or create their own IP Highly Scalable Transactional Wallet Industry leading flexible wallet and player account accessible from any device
FIRST CLASS TOOLS TAILOR AND TARGET YOUR OFFER TO MEET CUSTOMER NEEDS PLAYER CAMPAIGN BONUS MANAGEMENT CAMPAIGN MGR BONUS TOOL PLAYER — — MANAGEMENT Target & execute tailored Complete bonus tool — comms based on real Free spins 360 view of player time customer events Sports free bets activity Permission based Omni Ready
REPORTING & BUSINESS INTELLIGENCE BUSINESS LIVE DATA DATA APIs INTELLIGENCE ● Real time ● BI / Visualisation tool ● Low latency data - ● Snapshots on business ● Access to Data cubes automated marketing ● 25+ simple widgets ● Segmentation ● Hi latency data - Finance reporting
DEEP INTEGRATIONS - ENHANCED OFFERING ● Cross-sell bonusing ● Granular, real time data ● Free Spins integration to ● Targeted front-end ● Targeting via Camp. Mgr Bede Bonus Tool ● Unique bonuses OTHERS :
EXAMPLE: RANK - CHELTENHAM HIGHLIGHTS THE ADDITIONAL VALUE THE BEDE PLATFORM CAN OFFER ● Integrated Kambi’s bonus tool which can be used Bede Campaign Mgr ● Rank have automatically triggered: ○ Sports bonuses & messaging ○ Segmented offering - e.g. if X then offer Y, if Z then offer A. ○ Chain bonuses - i.e. one bonus triggers another.
EXAMPLE: EVOLUTION DATA FEED TAKING ADDITIONAL LIVE DATA FEED TO ADD NEW BONUSING & TARGETING ● Integrated Evolution’s Data Feed API. ● Used to create Roulette Triggers - e.g. ○ Winning outcome ○ Hot / Lucky numbers ○ Favourite dealer ● Automated, real time outcomes: ○ Bespoke bonuses ○ Behavioural segments ○ Highly targeted communications
EXAMPLE: IGT FREE SPINS INTEGRATING 3RD PARTY SERVICES & EXTENDING, TO SINGLE BACK OFFICE ● Aim to make BedeBOSS the single back office for an operator. ● Integrated IGT free spins. ● Now doing Net Ent, MGS and SG. ● Also extending our Games Integration API to enable us to offer free spins on all third party content - a market first!
BEST OF BREED GAMING SOLUTION Differentiation Create a user experience without ENABLING platform limitation DIFFERENTIATION Bede Products AND INNOVATION Industry leading out of the box tools unifying gaming experience across all providers FOR RANK Open Platform Extensive APIs allowing Operators full access to integrated any third party or create their own IP Highly Scalable Transactional Wallet Industry leading flexible wallet and player account accessible from any device
Thank you
Digital Adam Joseph & Darren Moffett
Depth of Digital Expertise Who Are We? Activity delivered Gibraltar – P&L Leadership, Product Management, Operations, Digital Marketing Maidenhead – Multi-Channel, SAW, Analytics, Optimisation, (Personalisation), Data Science, CRM, Payments Sheffield – Inbound & Outbound Contact, VIP, Fraud Operations Adam Joseph Shared Services – HR, Finance, Legal & Compliance Rory Howard Jonathan Pettemerides Ed Wilson Debbie Cooper Darren Moffett 59
Digital Review Activity delivered Priorities Platform migration – February 2016 Microgaming Poker migration – February 2016 Kambi Sports – June 2016 NetEnt, NYX, Realistic, Eyecon – completing the suite New Live Dealer Studio – July 2016 Mecca Bonus Wallet Change – August 2016 Marketing technology overhaul New Customer Solutions Hub New Structure 60
Sheffield – Customer Solutions Hub Activity delivered August 2016 – Victoria closed – Sheffield opened Now 24/7 Chat & Social in addition to Phone & Email Recently expanded for VIP & Fraud Salesforce CX technology Outbound driven approx. £6m deposits Customer Satisfaction & First Contact Resolution measures ahead of benchmarks and positive trend 61
Transforming Marketing Technology Activity delivered Cloud hosted platform Rebuilt Digital Data Ecosystem Propensity modelling & micro-clustering driving customer interactions Migrating to Adobe Campaign to deliver automation & enable scale Optimisation efforts driven approx. £2.5m additional deposits this year Transactional, Behavioural & CRM, CX & Optimisation, Modeled Data Direct Sales Personalisation & Media 62
Multi-Channel The Opportunity Key activities completed Approx. 2.8m venue members Playtech IGS installed to Grosvenor venues Grosvenor, min. 50% active online Bede wallet changes Customer demand Rank Enterprise Services (Middleware) Value of a multi-channel engaged customer Fraud Engine Development – Safecharge & Feedzai Sport an important driver of venue visits Grosvenor venues teams affiliate pilot The Opportunity Mecca Grosvenor 63
Single Account & Wallet Digital The Opportunity Key activities completed Solution Overview Complexity simplified by modern tech of selected 3rd parties and RES Rank Enterprise Services (RES) • Authentication; Single Customer View; Customer Service; CRM; Fraud; Payments; Analytics RES links the core operating platforms Core problems solved – multi-channel registration; fund & play; withdraw; fraud prevention; responsible gambling; Venues Touchpoints marketing & promotion 64
KPI performance Grosvenor Quarterly Active Spilt • Sustained GGR growth 80,000 80,000 ₋ Driven by 46% YoY increase in actives 70,000 70,000 • Strong Sportsbook launch 60,000 60,000 ₋ Over 27k customers have placed a real 50,000 50,000 money bet 40,000 40,000 Activity delivered Grosvenor GGR 30,000 30,000 £12,000,000 £11,000,000 20,000 20,000 £10,000,000 £9,000,000 10,000 10,000 £8,000,000 £7,000,000 0 0 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 £6,000,000 £5,000,000 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Live Casino Casino Poker Sportsbook Unique Actives 65
KPI performance Mecca Product split (actives) • ARPU growth driven by platform capabilities ₋ Site opt-in 41% ₋ Additional bonus types Slots & Games Bingo 59% • Strong Slots & Games performance ₋ 16% YoY growth in GGR ₋ 30% YoY growth in ARPU Mecca ARPU Product split (GGR) £150 £140 34% £130 Slots & Games £120 Bingo £110 66% £100 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 66
Slots integrations • Bhotesh Maheshwari, Head of Casino – 10 years industry experience (Inspired and Betfair) ₋ Much improved quality and quantity in game delivery NetEnt NYX ₋ Mecca customer marketing on Slots has been overhauled, this has driven significant ARPU growth ₋ Exclusive titles launched on both Mecca and Grosvenor, as well as a bespoke and exclusive game launched impressively 67
Bingo • James Boord, Head of Bingo – 6 years industry experience (Gala and Sky) ₋ Investment in core product with new and innovative games exclusive to Mecca Linka-balls Cashline Fortunes Emoji Reactors ₋ Successful cross sell game launches via popular Bingo themes Emoji and Burst 68
Investment in Live Casino • Richard Walker, Head of Live Casino – 20 years industry experience, land based (Grosvenor, LCI and Gala) and supplier side (Evolution) ₋ New studio in Malta ₋ New native app on iOS and Android 69
Launching Sportsbook • Steve Munns, Head of Sport – 15 years industry experience (888 and Stan James) ₋ Rapid integration – 10 weeks from start of project to launch pre Euro 2016 ₋ Engaged with 27k customers and proving a key product for acquisition and retention ₋ Win margin solid at 6.5% since launch 70
Scaling Poker • Tom Hudson, Operations Manager – 7 years industry experience (Betfred) • Alex Martin, Commercial Manager – 8 years industry experience (PKR and Bluff) ₋ Now live with a full product offering – Mobile, Instant Play and Mac ₋ Convergence plans for key retail tournaments ₋ Investment in marketing and promotional plans 71
Operational excellence • Anthony Conroy, Head of Operations – 10 years industry experience (Coral and Boyles) ₋ New bonusing platform: ₋ Instant rewards – Deposit bonuses, cashbacks, sportsbook, unique vouchers ₋ Specific bonusing – individual game > all games ₋ Campaign Management: ₋ Tight integration between bonus platform and site ₋ Campaign team delivering detailed, targeted promotions Winterland Tales: Advent style campaign ₋ Internal notification node 6,063 Opt-ins (30% of base) Multi-product, Multi-channel 72
Digital Strategy 1) Leveraging our venues & customer base 2) Launching new 5) People excellence Our Digital brands Strategy is based on 5 initiatives 4) Competitive & 3) Marketing & differentiated Operational content & products excellence 73
Digital Strategy Leveraging our venues & customer base Launching new brands Venue teams as affiliates First new brand Live broadcast from venue Luda Exclusive multi-channel slots Single Account & Wallet Novomatic – Reel King Potty & River Queen 74
Digital Strategy Marketing & Operational excellence Competitive, differentiated product Profitably expand our marketing activities Live broadcast from venue Realise benefits from recent investments New Slots, including bespoke & exclusive Bonus & wallet developments Mecca & Live Casino Apps New Episerver CMS Leverage our live UK Poker Events Adobe Campaign People • New structure & hires in place • Maidenhead move, Victoria closure • STARS values embedded 75
Q&A 76
Thank you 77
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