Rank Group Plc · LSE:RNK
Rank — The Rank Group — H1 2019/20 Earnings Presentation
45 slides from Rank's earnings presentation, February 2020
Slide 1: Interim results for the six months ended 31 December 2019
Interim results for the six months ended 31 December 2019
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 The Rank Group Plc Interim results for the six months ended 31 December 2019
Slide 3: Introduction
Introduction John O’Reilly, Chief Executive 3 The Rank Group Plc Interim results for the six months ended 31 December 2019
Slide 4: Rank Transformation Programme
Rank Transformation Programme Day 1 Today 2020/21 A retail focused Stride acquisition A balanced venues and Customer offer business completed digital business Transactional Gaming business appealing Product market gaming operator Pier Nine opened to a broader leisure market Passion Gaming Greater pr
Slide 5: Financial and operational performance
Financial and operational performance Bill Floydd, Chief Financial Officer 5 The Rank Group Plc Interim results for the six months ended 31 December 2019
Slide 6: Financial headlines
Financial headlines LFL underlying NGR, YOY growth H1 H1 2019/20 2018/19 % 12% LFL underlying NGR £377.5m £342.4m 10% 10% LFL underlying operating profit (1) £55.1m £32.5m 70% 8% Underlying EPS (1) 11.0p 6.4p 72% 6% Dividend per share 2.80p 2.15p 30% 4% Underlying net (debt)/cash (2) £(59.0)m £7.7m
Slide 7: LFL underlying NGR & operating profit
LFL underlying NGR & operating profit LFL NGR LFL Operating Profit (3) H1 H1 H1 H1 £m 2019/20 2018/19 % 2019/20 2018/19 % Digital 65.2 57.3 14% 10.5 12.6 (17)% Grosvenor venues 198.1 172.0 15% 45.9 19.4 137% Mecca venues 89.6 90.5 (1)% 12.3 12.0 3% International venues 24.6 22.6 9% 5.3 4.1 29% Centr
Slide 8: Operational review: Digital
Operational review: Digital LFL NGR LFL Operating Profit (5) H1 H1 H1 H1 • LFL NGR up 14% £m 2019/20 2018/19 2019/20 2018/19 − Mecca up 13% Mecca 34.2 30.2 − Grosvenor up 21% Grosvenor 24.3 20.1 Enracha 0.3 0.5 − Yo down 2% Yo 6.4 6.5 • Operating profit down 17%; impacted by LFL Total 65.2 57.3 10.5
Slide 9: Operational review: Stride
Operational review: Stride LFL NGR LFL Operating Profit (6) H1 H1 • Improved trajectory on revenue £m 2019/20 2019/20 Performance since acquisition 18.1 1.4 • Investment in marketing to drive revenue (6) before separately disclosed items and IFRS 16 turnaround • Integration underway, cost synergy ex
Slide 10: Operational review: Grosvenor venues
Operational review: Grosvenor venues LFL NGR LFL Operating Profit (7) H1 H1 H1 H1 • LFL revenue up 15% YOY £m 2019/20 2018/19 2019/20 2018/19 London 80.2 65.3 • All product areas in growth Rest of UK 117.9 106.7 • Capital investments delivering good returns Total 198.1 172.0 45.9 19.4 (7) before sep
Slide 11: Grosvenor venues NGR bridge
Grosvenor venues NGR bridge £6.1m £198.1m £4.4m £(1.3)m Other £1.5m Free £10.1m bets Electronic Slots Roulette investment uninvested £3.9m venues £172.0m £1.4m Electronic Roulette Table Table invested handle margin venues H1 H1 18/19 19/20 11 The Rank Group Plc Interim results for the six months end
Slide 12: Operational review: Mecca venues
Operational review: Mecca venues LFL NGR LFL Operating Profit (8) H1 H1 H1 H1 • LFL revenue down 1% YOY £m 2019/20 2018/19 2019/20 2018/19 − Visits down 5% Venues 89.6 90.5 12.3 12.0 − Spend per visit up 4% (8) before separately disclosed items and IFRS 16 − Growth in machine NGR LFL underlying NGR,
Slide 13: Operational review: International venues
Operational review: International venues LFL NGR LFL Operating Profit (9) H1 H1 H1 H1 • Q2 momentum driven by machine £m 2019/20 2018/19 2019/20 2018/19 upgrades in four Enracha venues Enracha 18.9 17.5 Blankenberge casino 5.7 5.1 • Consistent improvement in Belgium Total 24.6 22.6 5.3 4.1 • New Enr
Slide 14: Statutory income statement
Statutory income statement H1 H1 £m 2019/20 2018/19 • Effective tax rate: 18.7% Operating profit(10) 59.8 31.9 • Impact of IFRS 16: operating profit Net financing charge (6.9) (1.4) increases by £3.8m and finance costs by Profit before taxation and separately £4.0m, overall impact of £(0.2)m disclos
Slide 15: Separately disclosed items
Separately disclosed items H1 H1 £m 2019/20 2018/19 Profit on disposal of venues 1.8 - Amortisation of acquired intangibles - Yo (six months) (1.6) (1.6) - Stride (three months) (2.1) - Acquisition related costs (1.8) - Business transformation costs - (4.5) Operating loss (3.7) (6.1) Finance costs -
Slide 16: Cashflow and net debt
Cashflow and net debt H1 H1 £m 2019/20 2018/19 • £128.1m term loan facility drawn for Stride acquisition Cash inflow from operations pre IFRS 16 89.0 60.3 Net cash payments in respect of provisions and • H1 working capital inflow of £9.3m separately disclosed items (1.9) (4.3) expected to reverse in
Slide 17: Guidance
Guidance H1 FY £m 2019/20 2019/20 Underlying operating profit incl. IFRS 16 £59m £113m - £123m Underlying EPS 11.0p 21p - 23p • Second half seasonally weaker in Grosvenor venues • Annualisation of Grosvenor venues operating model changes • Six months of Stride • Impact of credit card ban unlikely to
Slide 18: Strategic Update and Outlook
Strategic Update and Outlook John O’Reilly, Chief Executive 18 The Rank Group Plc Interim results for the six months ended 31 December 2019
Slide 19: H1 Revenue Growth by Business
H1 Revenue Growth by Business Group Digital NGR Grosvenor venues Mecca venues International venues NGR excl Stride NGR NGR NGR 15% 14% 10% 9% 10% H1 H1 H1 H1 H1 18/19 18/19 18/19 19/20 18/19 H1 H1 H1 H1 -2% H1 -3% 19/20 18/19 19/20 19/20 -1% 19/20 -4% -6% 19 The Rank Group Plc Interim results for th
Slide 20: 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 20 The Rank Group Plc Interim results for the six months ended 31 December 2019
Slide 21: 1. Increase our focus on the customer
1. Increase our focus on the customer Rialto Grosvenor venues • Broaden appeal • Investment into people, product, technology and facilities • London: The Victoria, Rialto, Golden Horseshoe & Park Tower • Rest of UK: Sheffield, Edinburgh, Reading & Brighton Grosvenor One • First step to omni-channel
Slide 22: 1. Increase our focus on the customer
1. Increase our focus on the customer Enracha • Enracha Stadium concept under development Mecca • Extend breadth of entertainment offer Data science Enracha • Investment into capability with regards to safer gambling 22 The Rank Group Plc Interim results for the six months ended 31 December 2019 Mec
Slide 23: 2. Growing our digital business
2. Growing our digital business Grosvenor • Grosvenor One driving 21% NGR growth Mecca • User experience improvements • Strong promotional programme • 13% growth in NGR Yo • YoCasino now live Stride • Good recovery in Q2 • Transforms our digital capability 23 The Rank Group Plc Interim results for t
Slide 24: 3. Driving cost efficiencies
3. Driving cost efficiencies • Casino operating model delivering in line with previous guidance (FY 2019/20 estimate £19m) • Annualised savings of £8m expected in Grosvenor venues player incentives • Support office to be largely decentralised by 2020/21 • Estates management and procurement to drive
Slide 25: 4. Improve organisational capability
4. Improve organisational capability • Continue to strengthen the management team • Building digital capability from within • Focus on diversity and inclusion 25 The Rank Group Plc Interim results for the six months ended 31 December 2019
Slide 26: Transformation plan – enhancing revenue growth
Transformation plan – enhancing revenue growth Key deliverables 2020 2021 2022 Marketing JUN 20 Optimised acquisition through performance marketing effectiveness DEC 20 Automated customer lifecycle management Materially grow our FEB 20 Setting up Stride Transformation 1.0 workstream digital business
Slide 27: Transformation plan – driving cost efficiencies
Transformation plan – driving cost efficiencies Key deliverables 2020 2021 2022 Review of UK venue MAY 20 Task management software rollout in wider estate operating model Fit for purpose support AUG 20 Optimising support functions (phase 2) functions JAN 21 Optimisation of ways of working Procuremen
Slide 28: Transformation plan – key enablers
Transformation plan – key enablers Key deliverables 2020 2021 2022 Critical DEC 20 Content Management System (Mecca) systems JAN 21 Network refresh Data MAR 20 Single Customer View (phase 1) analytics DEC 20 Data architecture DEC 21 Data quality and BI Data Safer gambling analytics MAY 20 Implement
Slide 29: Stride integration plan
Stride integration plan Key deliverables 2020 2021 2022 Technology JAN 20 Begin scale-up of migration team migration JAN 20 Continue gap analysis and agree on key systems OCT 20 First brand migrated OCT 21 Complete migration to proprietary platform JAN 20 New leadership defining future operating mod
Slide 30: Outlook
Outlook • Transformation programme continues to gain momentum • Stride integration is underway • Full year underlying operating profit guidance of £113m - £123m • H2 has commenced in line with expectations 30 The Rank Group Plc Interim results for the six months ended 31 December 2019
Slide 31: Appendices
Appendices
Slide 32: Group datasheet
Group datasheet H1 FY H1 FY H1 FY 2019/20 2018/19 2018/19 2017/18 2017/18 2016/17 Net gaming revenue (£m) 397.4 695.1 348.2 691.0 354.2 707.2 - YOY growth 14% 1% (2)% (2)% 0% 0% Operating profit (£m) 56.0(11,12) 75.7(11) 31.9(11) 77.4(11) 41.7 83.5 - YOY growth 76% (2)% (24)% (7)% 14% 1% Operating m
Slide 33: Digital datasheet
Digital datasheet H1 FY H1 FY H1 FY 2019/20 2018/19 2018/19 2017/18 2017/18 2016/17 NGR (£m) 83.2 118.5 57.3 96.7 47.3 88.5 Operating profit (£m) 11.8(13,14) 23.9(13) 12.6(13) 20.3(13) 10.4 22.2 Operating margin (%) 14.2 20.2 22.0 21.0 22.0 25.1 EBITDA (£m) 16.2(14) 29.5 14.8 25.0 12.6 27.3 (13) IFR
Slide 34: Grosvenor Venues datasheet
Grosvenor Venues datasheet H1 FY H1 FY H1 FY 2019/20 2018/19 2018/19 2017/18 2017/18 2016/17 Casino licences: London 9 9 9 9 9 9 Rest of UK 56 55 54 54 54 54 Total 65 64 63 63 63 63 Non-trading licences 8 9 10 10 12 12 Net gaming revenue (£m) 198.1 338.2 172.1 349.4 184.3 367.3 Operating profit (£m)
Slide 35: Mecca Venues datasheet
Mecca Venues datasheet H1 FY H1 FY H1 FY 2019/20 2018/19 2018/19 2017/18 2017/18 2016/17 Venues 77 82 82 85 85 85 Revenue (£m) 91.9 193.5 96.2 199.0 99.1 203.6 Operating profit (£m) 12.0(16) 28.6 11.4 28.6 12.7 29.9 Operating margin (%) 13.1 14.8 11.9 14.4 12.8 14.7 EBITDA (£m) 17.2(16) 39.1 16.4 40
Slide 36: International venues datasheet
International venues datasheet H1 FY H1 FY H1 FY 2019/20 2018/19 2018/19 2017/18 2017/18 2016/17 Revenue (£m) 24.2 44.9 22.6 45.9 23.5 47.8 Operating profit (£m) 5.2(18) 9.3 4.1 8.8 4.3 8.4 Operating margin (%) 21.5 20.7 18.1 19.2 18.3 17.6 EBITDA (£m) 6.6(18) 12.0 5.5 11.5 5.8 11.1 (18) Pre IFRS 16
Slide 37: Balance sheet
Balance sheet At 31 At 30 At 31 At 31 At 30 At 31 December June December December June December 2019 2019 2018 2019 2019 2018 Assets Liabilities Non-current assets Current liabilities Intangible assets 532.7 447.8 457.2 Trade and other payable (147.4) (145.2) (165.0) Property, plant and equipment 15
Slide 38: Balance sheet IFRS 16 reconciliation
Balance sheet IFRS 16 reconciliation At 30 June IFRS 16 At 1 July £m 2019 impacts 2019 Non-current assets 617.0 186.9 803.9 Current assets 92.3 (8.7) 83.6 Total assets 709.3 178.2 887.5 Current liabilities (222.0) (18.6) (240.6) Non-current liabilities (89.3) (167.1) (256.4) Total liabilities (311.3
Slide 39: LFL revenue reconciliation H1 2019/20
LFL revenue reconciliation H1 2019/20 Grosvenor Mecca International Digital venues venues venues Total LFL revenue (NGR) 65.2 198.1 89.6 24.6 377.5 Add: Grosvenor closures - - Add: Mecca closures 2.3 2.3 Add: Stride 18.1 18.1 Less: Foreign exchange (0.1) (0.4) (0.5) Total revenue (NGR) 83.2 198.1 91
Slide 40: Cash generated from continuing operations IFRS 16 reconciliation
Cash generated from continuing operations IFRS 16 reconciliation H1 H1 IFRS 16 2019/20 2019/20 impacts revised Operating Profit 52.3 3.8 56.1 Separately disclosed items 3.7 - 3.7 Operating profit before separately disclosed items 56.0 3.8 59.8 Depreciation and amortisation 22.7 15.2 37.9 Increase in
Slide 41: Operating profit reconciliation
Operating profit reconciliation H1 H1 £m 2019/20 2018/19 LFL underlying operating profit pre IFRS 16 55.1 32.5 Acquired businesses – Stride 1.4 - Closed venues (0.4) (0.6) Foreign exchange (0.1) - Underlying operating profit pre IFRS 16 56.0 31.9 IFRS 16 3.8 - Underlying operating profit 59.8 31.9 S
Slide 42: EBITDA reconciliation
EBITDA reconciliation H1 H1 £m 2019/20 2018/19 LFL EBITDA 77.7 52.9 Depreciation, amortisation before (22.6) (20.4) separately disclosed items LFL operating profit 55.1 32.5 Separately £m Underlying disclosed items Total LFL EBITDA 77.7 (1.6) 76.1 Acquired businesses – Stride 1.6 (2.1) (0.5) Closed
Slide 43: Tax charge reconciliation
Tax charge reconciliation H1 H1 £m 2019/20 2018/19 Underlying current tax charge 10.4 5.9 Deferred Tax (0.5) (0.2) Tax on separately disclosed items (0.4) (1.6) Reported tax charge 9.5 4.1 43 The Rank Group Plc Interim results for the six months ended 31 December 2019
Slide 44: Net debt reconciliation
Net debt reconciliation H1 H1 £m 2019/20 2018/19 Underlying net (debt) / cash (59.0) 7.7 IFRS 16 adjustment (241.5) - Reported net (debt) / cash (300.5) 7.7 44 The Rank Group Plc Interim results for the six months ended 31 December 2019
Slide 45: EPS reconciliation
EPS reconciliation H1 H1 2019/20 2018/19 Underlying EPS 11.0p 6.4p Separately disclosed items (0.8)p (1.6)p Reported EPS 10.2p 4.8p 45 The Rank Group Plc Interim results for the six months ended 31 December 2019