Rank Group Plc · LSE:RNK
Rank — The Rank Group — H1 2018/19 Earnings Presentation
40 slides from Rank's earnings presentation, February 2019
Slide 1: Interim Results for the Six Months Ended 31 December 2018
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2018
Slide 2: Agenda
Agenda Introduction John O’Reilly, Chief Executive Financial and Operational Performance Bill Floydd, Chief Financial Officer Strategic Update and Outlook John O’Reilly, Chief Executive Q&A 2 INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2018
Slide 3: Introduction – John O'Reilly
Introduction JOHN O’REILLY chief executive
Slide 4: Rank post Transformation Programme
Rank post Transformation Programme TODAY 2020/21 A balanced retail and Customer offer A retail focussed business digital business Gaming business appealing Product market Transactional gaming operator to a broader leisure market Greater proportion of revenues Geographic market UK focused from non-UK
Slide 5: Financial and Operational Performance – Bill Floydd
FINANCIAL AND OPERATIONAL PEFORMANCE BILL FLOYDD chief FINANCIAL OFFICER
Slide 6: Financial headlines
Financial headlines H1 H1 £m 2018/19 2017/18 % LFL revenue(1) £366.0m £375.0m (2.4)% LFL operating profit(2) £30.1m £42.3m (28.8)% Exceptional cost £5.1m £6.2m (17.7)% Net cash (3) £7.7m £4.0m - Adjusted EPS(2) 6.1p 8.0p (23.8)% Dividend per share 2.15p 2.15p 0% • Tough start to the year, LFL revenu
Slide 7: Revenue & operating profit
Revenue & operating profit LFL REVENUE(4) LFL OPERATING PROFIT(5 ) H1 H1 H1 H1 £m 2018/19 2017/18 2018/19 2017/18 Grosvenor Venues 181.3 190.2 19.3 29.7 Mecca Venues 98.3 101.7 12.1 13.1 Digital(6) 63.9 60.8 10.2 10.4 International Venues 22.5 22.3 4.1 4.1 Central costs - - (15.6) (15.0) Total 366.0
Slide 8: Operational review: Grosvenor Venues
Operational review: Grosvenor Venues (7) LFL REVENUE • Continues to be challenging H1 H1 £m 2018/19 2017/18 − Weather impacted Q1 London 68.6 70.4 − Difficult consumer backdrop Provinces 112.7 119.8 − Lower contribution from major players Total 181.3 190.2 • Strong growth in London customer visits L
Slide 9: Operational review: Mecca Venues
Operational review: Mecca Venues LFL OPERATING (9) (10) LFL REVENUE PROFIT • LFL revenue down as visits decline H1 H1 H1 H1 £m 2018/19 2017/18 2018/19 2017/18 − Three venues closed in the period Venues 98.3 101.7 12.1 13.1 • Spend per visit up 9.6% driven by improved offer KPIs • Changes to price an
Slide 10: Operational review: Digital
Operational review: Digital (11) (12) REVENUE OPERATING PROFIT • LFL revenue growth of 5.1% H1 H1 H1 H1 £m 2018/19 2017/18 2018/19 2017/18 − Mecca up 7.5% Mecca 38.8 36.1 − Grosvenor impacted by a fall in ARPU Grosvenor Casinos 24.6 24.5 − YoBingo! growing strongly Enracha 0.5 0.2 • Revenue up 15.8%
Slide 11: Operational review: International
Operational review: International LFL OPERATING (15) (16) LFL REVENUE PROFIT • Performance flat in the period H1 H1 H1 H1 £m 2018/19 2017/18 2018/19 2017/18 • Renewal of Blankenberge’s licence approved, Enracha venues 17.5 17.6 3.5 3.6 refurbishment scheduled for 2020 Belgium casino venue 5.0 4.7 0.
Slide 12: Statutory profit and loss
Statutory profit and loss H1 H1 £m 2018/19 2017/18 Profit from operations 30.3 41.7 Net interest payable (1.4) (1.4) Profit before taxation and exceptional items 28.9 40.3 Exceptional items (6.1) (7.5) Profit before taxation 22.8 32.8 Exceptional taxation 1.0 1.3 Taxation (5.1) (9.0) Profit for the
Slide 13: Cashflow and net debt
Cashflow and net debt H1 H1 £m 2018/19 2017/18 • Net cash position strengthened Cash inflow from operations 60.3 67.3 • Term loan facilities increased to Net cash payments in respect of £50.0m and extended to early provisions and exceptional items (4.3) (5.4) 2020 Cash generated from operations 56.0
Slide 14: Strategic Update and Outlook – John O'Reilly
STRATEGIC UPDATE AND outlook JOHN O’REILLY chief EXECUTIVE
Slide 15: Our plan of action - update
Our plan of action - update 1 2 3 4 Increase Grow Drive Improve our focus on the our our customer digital cost organisational business efficiencies capability 15 INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2018
Slide 16: Our plan of action - update: increase focus on the customer
Our plan of action - update • Project Experience driving service 1 improvements • Forensic approach to capital Increase investment our focus on the − Barracuda refurbishment Barracuda casino London customer − Victoria improvements • Grosvenor One roll out commencing • Foundations laid for data drive
Slide 17: Our plan of action - update: grow digital business
Our plan of action - update • Starting to gather momentum Q1 Q2 H1 2 GROSVENOR 2018/19 2018/19 2018/19 • Grosvenor: GGR (11.4)% 12.8% 0.4% − Impacted by enhanced due NGR (6.5)% 17.5% 5.8% Grow diligence Average monthly our active customers 14.9% − Q2 performance better digital than Q1 business − Fre
Slide 18: Our plan of action - update: drive cost efficiencies
Our plan of action - update TRANSFORMATION COST EFFICIENCY SAVINGS • Grosvenor Casinos H1 H2 FY 3 − Simplified management structure £m Casino operating model 2018/19 - 2018/19 7.5 2019/20 18.0 Support functions - 2.0 6.5 Drive − Improved team member Procurement - 0.5 2.5 scheduling Less: wage cost i
Slide 19: Our plan of action - update: organisational capability
Our plan of action - update • New exec team members 4 − Bill Floydd, CFO − Jim Marsh, CTO Improve − Jonathan Greensted, CIO our • High quality transformation team organisational • Other key appointments made across business capability 19 INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2018
Slide 20: Transformation Programme – rigorous process
Transformation Programme – rigorous process • Centered on revenue growth, cost reduction and key enablers • Rigorous process to move initiatives from ideas to implementation idea owner value action activities money generated identified estimated planned executed banked 12 280 1,700 WORKSTREAMS INITI
Slide 21: Transformation Plan – enhancing revenue growth
Transformation Plan – enhancing revenue growth KEY DELIVERABLES 2019 2020 2021 APR19 Renewed focus on loyalty and rewards Optimised acquisition through Marketing SEPT 19 Redesigned user journeys performance marketing effectiveness JUN 20 FEB 19 Daily retention game Materially grow our JUN 19 Buy in
Slide 22: Transformation Plan – driving cost efficiencies
Transformation Plan – driving cost efficiencies KEY DELIVERABLES 2019 2020 2021 Review of UK retail DEC 18 Grosvenor management structure changes operating model MAR 19 Grosvenor team optimisation Fit for purpose DEC 21 support functions Optimising support functions Procurement efficiencies JUN 21 R
Slide 23: Transformation Plan – key enablers
Transformation Plan – key enablers KEY DELIVERABLES 2019 2020 2021 Critical JUN 19 Grosvenor One systems JUN 19 Bonus /wallet functionality DEC 19 Content Management System (Grosvenor) Data MAR 19 Data strategy DEC 21 analytics DEC 19 Data community Data quality and BI DEC 20 Data architecture Reinv
Slide 24: Outlook
Outlook • Current trading in line with management’s expectations • Group’s financial performance for FY 2018/19 is expected to be in line with the current consensus expectations − circa £10.0m of total cost savings scheduled for H2 − full year benefit of £19.0m for FY2019/20 • Transformation program
Slide 25: Appendices
ank Group man, APPENDICES
Slide 26: Strategy execution
Strategy execution 1 Creating a compelling multi-channel offer 2 Building digital capability and scale 3 Developing our venues 4 Investing in our brands and marketing 5 Using technology to drive efficiency and improve the customer experience 26 INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 20
Slide 27: Strategy execution: Creating a compelling multi-channel offer
Strategy execution 1 Creating a compelling multi-channel offer H1 2018/19 activity: • Grosvenor One successfully trialled in two clubs (Stockport and Didsbury); and • Initial investigations have been undertaken with regards to an omni-channel service for Mecca customers H2 2018/19 priorities: • Comp
Slide 28: Strategy execution: Building digital capability and scale
Strategy execution 2 Building digital capability and scale H1 2018/19 activity: • Improvements were made in the period regarding the integration of the customer relationship management (‘CRM’) platform and the Bede operating platform, these improvements have reduced customer journey friction issues;
Slide 29: Strategy execution: Building digital capability and scale (H2)
Strategy execution 2 Building digital capability and scale H2 2018/19 priorities: • Grosvenor will be launched on the new content management system over the coming months with a phased and targeted rollout to new and existing customers; • Further improvements are to be made to the bonus and wallet f
Slide 30: Strategy execution: Developing our venues
Strategy execution 3 Developing our venues H1 2018/19 activity: • Refresh completed at Grosvenor’s Victoria casino in London to improve electronic product offer; • Refurbishment at Grosvenor’s Barracuda casino in London successfully completed; • Continued development of Mecca’s wider entertainment o
Slide 31: Strategy execution: Developing our venues (H2)
Strategy execution 3 Developing our venues H2 2018/19 priorities: • Creation of an dedicated VIP gaming area at the Victoria casino in London; • Following lessons learnt in H1 around Mecca’s wider entertainment offer, further events scheduled for H2; • Launch of a new, entertainment and social engag
Slide 32: Strategy execution: Investing in our brands and marketing
Strategy execution 4 Investing in our brands and marketing H1 2018/19 activity: • Customer segmentation work commenced in the period to drive new concept proposition for Grosvenor’s venues which will determine future venue investments and local marketing campaigns; • ‘Project Experience’, the venues
Slide 33: Strategy execution: Brands and marketing (H2)
Strategy execution 4 Investing in our brands and marketing H2 2018/19 priorities: • Increase marketing investment in digital across both Mecca and Grosvenor digital; • Use of customer segmentation to help drive key marketing investments and define customer contact and investment strategies for Grosv
Slide 34: Strategy execution: Using technology to drive efficiency
Strategy execution 5 Using technology to drive efficiency and improve the customer experience H1 2018/19 activity: • Refurbishment of 3,500 Mecca Max units completed; • Investment into new casino gaming machines including new product in the Victoria and the Park Tower casinos in London; and • Contac
Slide 35: Revenue & operating profit - LFL
Revenue & operating profit - LFL LFL REVENUE(1) LFL OPERATING PROFIT(2) H1 H1 H1 H1 £m 2018/19 2017/18 2018/19 2017/18 Grosvenor Venues 181.3 190.2 19.3 29.7 Mecca Venues 98.3 101.7 12.1 13.1 Digital 63.9 60.8 10.2 10.4 - Mecca 38.8 36.1 - - - Grosvenor Casinos 24.6 24.5 - - - Enracha 0.5 0.2 - - In
Slide 36: Group datasheet
Group datasheet H1 FY H1 FY H1 FY 2018/19 2017/18 2017/18 2016/17 2016/17 2015/16 Revenue (£m) 374.4 741.1 379.6 755.1 378.6 753.0 - YOY growth (1.4)% (1.9)% 0.3% 0.3% 1.2% 2.0% Operating profit (£m) 30.3 77.0 41.7 83.5 36.6 82.4 - YOY growth (27.3)% (7.8)% 13.9% 1.3% (9.4)% (1.9)% Operating margin
Slide 37: Grosvenor Venues datasheet
Grosvenor Venues datasheet H1 FY H1 FY H1 FY 2018/19 2017/18 2017/18 2016/17 2016/17 2015/16 Casino licences: London 9 9 9 9 9 9 Provinces 54 54 54 54 54 56 Total 63 63 63 63 63 65 Non-trading licences 10 10 12 12 12 12 Revenue (£m) 181.4 362.5 191.2 382.2 193.6 394.0 Operating profit (£m) 19.4 47.2
Slide 38: Mecca Venues datasheet
Mecca Venues datasheet H1 FY H1 FY H1 FY 2018/19 2017/18 2017/18 2016/17 2016/17 2015/16 Venues 82 85 85 85 85 87 Revenue (£m) 100.0 208.1 104.1 213.6 108.0 221.5 Operating profit (£m) 11.4 28.6 12.7 29.9 13.3 32.9 Operating margin (%) 11.4 13.7 12.2 14.0 12.3 14.9 EBITDA (£m) 16.4 40.2 18.6 41.8 19
Slide 39: Digital datasheet
Digital datasheet H1 FY H1 FY H1 FY 2018/19 2017/18 2017/18 2016/17 2016/17 2015/16 Revenue (£m) 70.4 124.7 60.8 111.5 52.4 96.7 - Mecca 38.8 75.0 36.1 67.6 33.1 66.2 - Grosvenor 24.6 47.5 24.5 43.9 19.3 30.5 - Enracha 0.5 0.6 0.2 - - - - YoBingo 6.5 1.6 - - - - Operating profit (£m) 11.0 20.0 10.4
Slide 40: International venues datasheet
International venues datasheet H1 FY H1 FY H1 FY 2018/19 2017/18 2017/18 2016/17 2016/17 2015/16 Revenue (£m) 22.6 45.8 23.5 47.8 24.6 40.8 Operating profit (£m) 4.1 8.8 4.4 8.3 4.2 5.8 Operating margin (%) 18.1 19.2 18.7 17.4 17.1 14.2 EBITDA (£m) 5.5 11.5 5.8 11.1 5.7 8.5 Visits (000s) 1,065 2,148