Rank Group Plc · LSE:RNK
Rank — The Rank Group — H1 FY2023/24 Earnings Presentation
33 slides from Rank's earnings presentation, February 2024
Slide 1: The Rank Group Plc Interim results for the six months ended 31 December 2023
The Rank Group Plc Interim results for the six months ended 31 December 2023
Slide 2: Introduction
Introduction John O’Reilly Chief Executive
Slide 3: Overview
Overview Improved trading with profits in line with our expectations Underlying LFL operating profit • A much improved first half performance with LFL revenues up 9%, delivering underlying LFL operating profit of £21.7m (H1 FY23 £2.7m) £21.7m • All venues businesses delivering good levels of revenue
Slide 4: Grosvenor venues: gaining momentum
Grosvenor venues Gaining momentum • LFL NGR of £167.5m was up 10% against the prior year at an average of Weekly average NGR £6.4m per week (£5.8m per week in FY23) £6.4m • Within the London estate, NGR grew 8%; outside of London NGR grew 11% £6.0m £5.9m • Customer visit volumes up 8%: London +11%,
Slide 5: Mecca venues: returned to profitability
Mecca venues Returned to profitability • Continuation of the turnaround in performance following the step down Operating venues in active customer numbers from pandemic lockdowns • 21 Mecca closures since 2021, have migrated customers and liquidity to 72 71 64 56 55 more vibrant venues with bigger p
Slide 6: Enracha venues: strong revenue and profit growth
Enracha venues Strong revenue and profit growth • LFL NGR grew 10% to £19.5m, up 21% on 2019 • Customer visits grew 9%, with spend per visit up 1% • Continued rollout of the Enracha customer loyalty card, the implementation of a new CRM system and machine jackpot displays supporting customer and rev
Slide 7: Digital: making good progress
Digital Making good progress • Digital LFL NGR of £108.4m, up 8% yoy H1 H1 • Grosvenor grew 21% and Mecca grew 11%, supported by strong NGR / £m 2023/24 2022/23 Change cross-channel customer growth Mecca 39.8 36.0 11% • Other UK facing brands declined 12%, with marketing investment Grosvenor 33.5 27
Slide 8: Financial performance
Financial performance Richard Harris Chief Financial Officer
Slide 9: Improved revenue and profit momentum
Improved revenue and profit momentum LFL Net Gaming Revenue Underlying LFL Operating Profit Underlying EPS £362.6m £21.7m 2.9p H1 2022/23: £332.6m H1 2022/23: £2.7m* H1 2022/23: (1.2)p* Net Free Cash Flow Net Cash (pre IFRS 16) £23.5m £17.6m H1 2022/23: £(5.7)m H1 2022/23: £6.5m* 9 The Rank Group Pl
Slide 10: Rank Investment Case
Rank Investment Case Cash maximisation Grosvenor recovery in bingo and growth Digital growth Gambling Act Review Technology Safer People and data gambling and culture 10 The Rank Group Plc Interim results for the six months ended 31 December 2023
Slide 11: Delivery in H1
Delivery in H1 • Rationalisation of the estate and LFL growth of 9% has returned Cash maximisation Mecca to profitability. Further improvement to come in bingo • Enracha continues to perform well, LFL growth of 10% • LFL revenue growth of 10% and operating leverage combines to Grosvenor recovery del
Slide 12: LFL operating profit improvement driven by revenue growth
LFL operating profit improvement driven by revenue growth £m • 9% LFL revenue growth delivers £19.5m profit • Lower energy costs driven Depreciation predominantly by market price Employment improvements. In addition, costs consumption reductions through Energy costs Other energy efficiency investmen
Slide 13: Income statement
Income statement H1 H1 £m 2023/24 2022/23* LFL underlying operating profit 21.7 2.7 • Closed clubs & FX in H1 2023/24 relates to FX, closed clubs and re-opening (0.1) (1.5) the closure of one Mecca club Underlying operating profit 21.6 1.2 Net financing charge (5.3) (6.0) • Financing charge comprise
Slide 14: Improving cash generation profile
Improving cash generation profile Now – Next 18 months 18 months – 3 years 3 - 5 years Investing for growth Balancing investment Growing and returns shareholder returns Operating Operating Operating profit Capex profit Capex profit Capex Cash flow neutral Modest cash generation Strong cash generatio
Slide 15: Free cash flow bridge
Free cash flow bridge H1 H1 Cash flow £m 2023/24 2022/23 Lease payments Opening net (debt) cash (pre IFRS 16) (5.9)* 12.5* Net free cash flow 23.5 (5.7)* Payment of contingent consideration Movement of business combination - (0.3)* in working capital Closing net cash (pre IFRS 16) 17.6 6.5* and othe
Slide 16: Liquidity
Liquidity New banking facility completed Committed facilities £m • New 4-bank club facility of £120m, comprising 2 incumbent lenders and 2 new lenders 120 120 120 • £90m RCF with 3 year tenor 90 • £30m Term Loan with 2 year and 9 month tenor with bullet repayment 90 90 90 • Both have +1+1 extension
Slide 17: Financial Guidance
Financial Guidance FY24 FY25 • Energy costs expected to be £18.5m, down from expected • Energy costs expected to be broadly flat in FY25 £20m at the start of the year and £28.6m last year • Taking a proactive approach to managing our exposure • 85% hedged in H2 to energy price fluctuations with 45%
Slide 18: Strategic Update and Outlook
Strategic Update and Outlook John O’Reilly Chief Executive
Slide 19: The UK Government's gambling review
The UK Government’s gambling review Anticipating the key land-based reforms being implemented this summer • The Government expects the secondary legislation for the key land-based reforms to be on the statute books by the summer. These changes will: – Double the number of gaming machines in the Gros
Slide 20: Transformation 2.0 – H2 initiatives
Transformation 2.0 – H2 initiatives Grosvenor Full refurbishment of Grosvenor Enablement works for the roll out of Further modernisation of electronic Leicester and a further four external venues additional gaming machines gaming products investments Mecca Five gaming machine area Three external ref
Slide 21: ESG highlights
ESG highlights Customers • Calendar year 2023, all UK businesses successfully completed Gambling Commission compliance assessments • Development of new bespoke Central Engagement Platform completed – provides colleagues with single customer data platform • Development of Playsafe system in Mecca ven
Slide 22: Current trading and outlook
Current trading and outlook • The venues and digital businesses experienced a busy trading period through the Christmas and New Year holiday season with trading normalising throughout the rest of January • Cost of living pressures likely to continue to bite on consumers but we have plenty of opportu
Slide 23: Appendices
Appendices
Slide 24: Transformation 2.0 – H1 Achievements
Transformation 2.0 – H1 Achievements Grosvenor Four external refurbishments completed Launch of Aristocrat gaming machines Appointment of new Managing Director, venues Operations Director and People Director Mecca Eight gaming machine areas Four external refurbishments completed Rollout of 1,700 new
Slide 25: Group datasheet
Group datasheet H1 H1 H1 2023/24 2022/23* 2022/23* 2021/22* 2021/22* 2020/21* Net gaming revenue (£m) 362.6 681.5 338.9 643.5 333.7 329.6 - YOY growth 7% 6% 2% 95% 88% (48%) Operating profit (£m) 21.6 18.5 1.2 36.0 23.1 (86.1) - YOY growth 1,700% (50)% (95)% 143% 155% (27)% Operating margin (%) 6.0
Slide 26: Digital datasheet
Digital datasheet H1 H1 H1 2023/24 2022/23* 2022/23* 2021/22* 2021/22* 2020/21* NGR (£m) 108.4 202.5 100.8 182.8 92.1 177.4 Operating profit pre central costs allocation (£m) N/A 18.2 8.0 14.9 3.7 1.6 Operating margin pre central costs allocation (%) N/A 9.0 7.9 8.2 4.0 0.9 Operating profit post cen
Slide 27: Grosvenor datasheet
Grosvenor datasheet H1 H1 H1 2023/24 2022/23 2022/23 2021/22* 2021/22 2020/21 Casino licences: London 9 9 9 9 9 9 Rest of UK 62 62 62 62 63 62 Total 71 71 71 71 72 71 Non-trading licences 7 7 7 7 7 7 Net gaming revenue (£m) 167.5 306.3 153.4 296.6 161.6 79.2 Operating profit pre central costs alloca
Slide 28: Mecca datasheet
Mecca datasheet H1 H1 H1 2023/24 2022/23 2022/23 2021/22* 2021/22 2020/21 Venues 55 56 64 71 72 72 Revenue (£m) 67.2 136.3 67.0 134.0 65.9 55.5 Operating (loss) profit pre central costs allocation (£m) N/A 2.8 (1.2) (0.8) (1.5) (18.9) Operating margin pre central costs allocation (%) N/A 2.1 (1.8) (
Slide 29: Enracha venues datasheet
Enracha venues datasheet H1 H1 H1 2023/24 2022/23 2022/23 2021/22* 2021/22 2020/21 Revenue (£m) 19.5 36.4 17.7 30.1 14.1 17.5 Operating profit pre central costs allocation (£m) N/A 9.2 4.0 7.5 2.7 (0.2) Operating margin pre central costs allocation (%) N/A 25.3 22.6 24.9 19.1 (1.1) Operating profit
Slide 30: Separately disclosed items
Separately disclosed items H1 H1 2023/24 2022/23 Continuing operations • No Impairment or impairment reversal in current period Impairment charges - (95.4) Closure of venues (0.1) (7.3) • Amortisation £3.2m relates to the historic acquisitions of Stride and Bingosoft Amortisation of acquired intangi
Slide 31: Balance sheet
Balance sheet At 31 Dec At 30 June At 31 Dec At 30 June 2023 2023* 2023 2023* Assets Liabilities Non-current assets Current liabilities Intangible assets 454.5 456.8 Trade and other payable (142.2) (128.3) Property, plant and equipment 99.6 97.5 Liabilities classified as held for sale (1.1) - Right-
Slide 32: Operating profit reconciliation
Operating profit reconciliation H1 H1 £m 2023/24 2022/23* LFL underlying operating profit 21.7 2.7 FX, closed and re-opened venues (0.1) (1.5) Underlying operating profit 21.6 1.2 Separately disclosed items (5.4) (104.2) Operating profit (loss) 16.2 (103.0) *Restated 32 The Rank Group Plc Interim re
Slide 33: Tax charge reconciliation
Tax charge reconciliation H1 H1 £m 2023/24 2022/23* Underlying current tax charge (1.5) (1.3) Deferred tax credit (1.3) 0.5 Tax on separately disclosed items 1.2 7.0 Reported tax (charge) credit (1.6) 6.2 *Restated 33 The Rank Group Plc Interim results for the six months ended 31 December 2023