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Acquisition of Gala Casinos Presentation to Analysts and Investors 21 June 2012

Acquisition of Gala Casinos Presentation to Analysts and Investors 21 June 2012. www.rank.com. Agenda. Overview Ian Burke, chairman and chief executive Transaction Structure & Financial Impact Clive Jennings, finance director Summary / Q&A Ian Burke. Overview. www.rank.com.

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Acquisition of Gala Casinos Presentation to Analysts and Investors 21 June 2012

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

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

  3. Overview www.rank.com

  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 • Based on EBITDA of £23.5m for the 12 months ended 24 September 2011

  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

  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

  7. Combined casinos estate in Great Britain Gala Casinos Aberdeen Birmingham Bournemouth Bradford Bristol Cardiff Edinburgh Glasgow (3) Hull Leeds Leicester Liverpool London (4) Northampton Nottingham Stockport Stockton Sunderland 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 Gala Casinos Grosvenor Casinos (3) (4) (4) (4) (2)

  8. Estate development potential 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 (2)

  9. Transaction Structure & Financial Impact

  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 2012

  11. Reconciliation of target financials Bridge from “Carve-out” EBITDA to “Acquired” EBITDA (£m) 2.2 23.5 3.9 2.1 15.4 Former Gala cost allocations Depreciation 6.0 Amortisation 2.0 EBIT(1) 7.4 "Carve-out" Allocation of Gala Allocation of Gala Additional "Acquired" (2) 2011A EBITDA Group brand Group overheads immediate savings 2011A EBITDA marketing costs from casino overheads and closed casinos not acquired (1) EBIT stated pre exceptional charge of £12.5m (2) Year to 24 September 2011

  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

  13. Total UK casinos 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 68 58 45 39 35 30 17 17 2011 2015PF 2011PF 2015 No. of G format casinos

  14. (£m) (000s) 126 123 122 130 3,500 117 113 107 104 3,000 78 3,059 2,952 2,790 52 2,500 2,624 2,555 26 2,270 0 2,000 H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 H2 2011 Proven Track Record Revenue (£m) and Customer Visits (000s) EBITDA (£m) and Operating Margin (%) (£m) 26.9 27.1 28.0 22% 23.8 22.2 21.9% 21.5% 20.5 21.0 18.7 20% 14.0 19.5% 19.0% 18% 7.0 18.1% 17.5% 0.0 16% H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 H2 2011

  15. Key performance indicators – Provinces Grosvenor ‘G’ Casino Proposed Gala ‘G’ Casino Variance 3,623 118.3 35.2 29.8% Customer visits/week Revenue (£k)/week EBITDA (£k)/week EBITDA margin (%) 3,203 106.2 27.2 25.6% 13.1% 11.4% 29.4% 4.2%

  16. Combined Financial Profile Rank (12m to 31 Dec 2011) Pro Forma post Acquisition(1) (1) Revenue: £590m 2011PF Revenue: £713m EBITDA: £101m 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]

  17. Title PageThe Rank Group Plc Concluding Remarks & Summary

  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

  19. Q&A

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