Rank Group Plc · LSE:RNK
Rank — The Rank Group — FY2021 Earnings Presentation
39 slides from Rank's earnings presentation, September 2021
Slide 1: Preliminary results for the 12 months ended 30 June 2021
The Rank Group Plc Preliminary results for the 12 months ended 30 June 2021
Slide 2: Introduction
Introduction John O’Reilly Chief Executive
Slide 3: A horrid 12 months . . . but recovery is now underway
A horrid 12 months . . . but recovery is now underway Underlying operating loss • 2020/21 underlying operating loss of £84.5m on revenue at just 45% of £84.5m CY 2019 (pre-COVID performance) • UK venues open for just 38% of available days and, when open, impacted by UK venues open curfew, capacity a
Slide 4: The impact of the pandemic and Government enforced restrictions
The impact of the pandemic and Government enforced restrictions LFL revenue Days trading GROSVENOR MECCA ENRACHA GROSVENOR down 71% 22% of CY 2019 0% 0% 0% MECCA down 57% Normal conditions 31% of CY 2019 down 35% 21% 29% 42% ENRACHA 49% of CY 2019 Reduced occupancy and social distancing measures 13%
Slide 5: Encouraging venues trading since reopening on 17 May 2021
Encouraging venues trading since reopening on 17 May 2021 Grosvenor Grosvenor NGR • London revenue 40% behind 2019 levels 81% of 2019 levels (1) − absence or international tourism − fewer office workers and late night travel challenges Visits down 37% • Scotland revenue 43% behind 2019 levels as a r
Slide 6: Encouraging venues trading since reopening on 17 May 2021 continued
Encouraging venues trading since reopening on 17 May 2021 continued Mecca Mecca NGR • Improving performance since the removal of capacity and social distancing restrictions with revenue down 20% since 19 July 79% of 2019 levels (2) • Weakest recovery being experienced amongst older customer cohorts.
Slide 7: Digital performance impacted by venue closures and affordability restrictions in the UK
Digital performance impacted by venue closures and affordability restrictions in the UK Digital • Closure of venues for the majority of the year heavily impacted the flow through of omni-channel customers to our UK digital brands Proforma NGR − Grosvenor omni-channel customer digital revenues fell b
Slide 8: Digital performance impacted by venue closures and affordability restrictions continued
Digital performance impacted by venue closures and affordability restrictions in the UK continued • The development of further improvements to affordability customer journeys has delayed the migration of Mecca to the proprietary technology platform. Good progress is being made and migration is expec
Slide 9: Strong commitment of the Rank team
Strong commitment of the Rank team • The Rank team has shown outstanding commitment, drive and energy − supported our local communities − taken tough measures to help the Group’s liquidity − prepared our businesses for their successful reopening • 91% of colleagues have been on furlough but have bee
Slide 10: Financial and operational performance
Financial and operational performance Bill Floydd Chief Financial Officer
Slide 11: Financial headlines
Financial headlines Full year Full year reported LFL 2020/21 2019/20 (1) % % NGR £329.6m £629.7m (48)% (50)% Underlying operating (loss) / profit (3) £(84.5)m £49.1m (272)% (238)% Underlying EPS (3,4) (20.3)p 6.7p (403)% - Dividend per share - 2.80p - - Underlying net debt (5) £49.8m £57.0m 13% - (3
Slide 12: Operational review: Digital
Operational review: Digital LFL NGR LFL Operating Profit (6) • A challenging year for the £m 2020/21 2019/20 2020/21 2019/20 UK digital business Grosvenor 46.5 52.4 − revenue from omni-channel Mecca 68.7 76.5 players down £21m Enracha 1.1 1.0 − ARPUs down 18% Yo 20.0 15.4 • Yo growth at 30% LFL Tota
Slide 13: Income statement
Income statement £m 2020/21 2019/20 (7) • Financing charge comprises £7.7m of interest on IFRS16 leases and £6.7m of other finance costs, Underlying operating (loss) / profit (84.5) 49.1 similar charge expected in the year ahead Net financing charge (14.4) (13.4) Underlying (loss) / profit before ta
Slide 14: Separately disclosed items
Separately disclosed items 2020/21 2019/20 Transformation and integration costs (7.9) (2.6) Amortisation of acquired intangibles (11.8) (9.6) Closure of venues (2.1) - Tax related refunds 13.6 25.3 Property related provisions (0.2) (10.2) Impairment charges - (37.9) Profit on disposal - 3.9 Acquisit
Slide 15: Cashflow
Cashflow £m 2020/21 2019/20 Net cash (used in) / generated from operations (15.3) 171.9 Interest and tax (16.3) (29.6) Cash generated from operations (31.6) 142.3 • Capex guidance for FY22 of Capital expenditure (22.2) (50.7) £40m-£50m depending on M&A activity 25.2 (82.2) confidence in our recovery
Slide 16: Trading since reopening
Trading since reopening 17 May – 27 Jun 28 Jun – 15 Aug weekly average weekly average Weekly cash NGR (£m) (6 weeks) (7 weeks) breakeven point Grosvenor 5.5 5.9 Mecca 2.6 2.6 Enracha 0.5 0.5 Total 8.6 9.0 7.3 • Grosvenor London and Scotland held back by lack of tourism and curfew respectively • Rest
Slide 17: Other cash considerations
Other cash considerations 30 June 2021 Forward position Coronavirus Job Retention Scheme £59.4m claimed Minimal future claims anticipated (‘CJRS’) in 2020/21 Duty Continue to pay on time Rent £12.2m deferred To be settled in line with agreed payment plans, currently extending to March 2022 VAT claim
Slide 18: Summary
Summary • A very challenging year • Venues have now been open for 13 weeks, comfortably trading above cash break even and revenue trajectory is improving • Confident Group will continue to meet its liquidity covenants and will return to regular banking covenants by 2021/22 year end 18 The Rank Group
Slide 19: Strategic Update and Outlook
Strategic Update and Outlook John O’Reilly Chief Executive
Slide 20: Transformation 2.0
Transformation 2.0 • Transformation 2.0 is the reset during lockdown of the Group’s transformation with three year change aspiration 7 WORKSTREAMS • The plans have been central to the reopening of the business and in determining, prioritising and resourcing our future growth initiatives 1 Grosvenor
Slide 21: Transformation 2.0 – Grosvenor & Mecca venues
Transformation 2.0 – Grosvenor & Mecca venues Delivered Delivery in train Future delivery Investment at The Vic, including an Further investments across the Grosvenor external gaming terrace Programme of four casino refurbishments Grosvenor estate venues Launch of Reel King Roulette and further Crea
Slide 22: Transformation 2.0 – Enracha venues & Omni-channel
Transformation 2.0 – Enracha venues & Omni-channel Delivered Delivery in train Future delivery Development of an Enracha app carrying Opening first standalone Enracha Enracha membership card and access to loyalty Further investment in machine estate Stadium venues programme venues Cost optimisation
Slide 23: Transformation 2.0 – Digital
Transformation 2.0 – Digital Delivered Delivery in train Future delivery Strengthened the management team with Migration of Mecca to the proprietary The migration of Grosvenor and the Digital several key appointments platform completion of development in-housing Post-integration development prioriti
Slide 24: Transformation 2.0 – Central
Transformation 2.0 – Central Delivered Delivery in train Future delivery A real-time view of our customer’s play, Facility for customers to set loss and time Trial of more player centric, risk-based Safer limits at machine in Grosvenor assessment model on affordability to detect potential harms at a
Slide 25: The UK Government's Gambling Review
The UK Government’s Gambling Review The key regulatory changes sought by the casino and bingo sectors • Harmonisation of 1968 Act casinos with those of the 2005 Act enabling up to 80 gaming machines, from the current restriction of 20, and the ability to offer sports betting • The ability to provide
Slide 26: Outlook
Outlook • We have reopened successfully and with the improvement in the confidence of consumers to visit indoor hospitality venues and the gradual return of international tourism we expect to gradually return to pre-pandemic trading levels across our venues businesses • The Transformation 2.0 progra
Slide 27: Appendices
Appendices
Slide 28: Group datasheet
Group datasheet H1 H1 H1 2020/21(8) 2020/21(8) 2019/20(8) 2019/20(8) 2018/19(8) 2018/19(8) Net gaming revenue (£m) 329.6 177.6 629.7 391.8 685.5 343.2 - YOY growth (48%) (55%) (9%) 13% 1% (1)% Operating profit (£m) (84.5) 41.8 49.1 58.7 74.3 31.3 - YOY growth (272%) (171%) (35%) 84% (2)% (23)% Opera
Slide 29: Digital datasheet
Digital datasheet H1 2020/21 H1 2020/21 2019/20 H1 2019/20 2018/19 2018/19 NGR (£m) 177.4 86.5 196.2 83.2 118.5 57.3 Operating profit (£m) 3.2 1.5 28.7 11.9 23.9 12.6 Operating margin (%) 1.8 1.7 14.7 14.3 20.2 22.0 29 The Rank Group Plc Preliminary results for the 12 months ended 30 June 2021
Slide 30: Grosvenor datasheet
Grosvenor datasheet H1 H1 H1 2020/21 2020/21 2019/20 2019/20 2018/19 2018/19 Casino licences: London 9 9 9 9 9 9 Rest of UK 62 62 62 62 61 60 Total 71 71 71 71 70 69 Non-trading licences 7 8 8 8 9 10 Net gaming revenue (£m) 79.2 43.1 275.9 198.1 338.2 172.1 Operating profit (£m) (40.7) (21.2) 40.2 4
Slide 31: Mecca datasheet
Mecca datasheet H1 H1 H1 2020/21 2020/21 2019/20 2019/20 2018/19 2018/19 Venues 72 76 77 77 82 82 Revenue (£m) 55.5 39.0 130.7 91.9 193.5 96.2 Operating profit (£m) (18.9) (5.3) 6.0 13.7 28.6 11.4 Operating margin (%) (34.1) (13.6) 4.6 14.9 14.8 11.9 Visits (000s) 1,923 1,347 5,780 3,902 8,725 4,349
Slide 32: Enracha venues datasheet
Enracha venues datasheet H1 H1 H1 2020/21 2020/21 2019/20 2019/20 2018/19 2018/19 Revenue (£m) 17.5 9.0 26.9 18.6 35.3 17.6 Operating profit (£m) (0.2) (0.6) 3.3 4.2 7.8 3.5 Operating margin (%) (1.1) (6.7) 12.3 22.6 22.1 19.9 32 The Rank Group Plc Preliminary results for the 12 months ended 30 June
Slide 33: Balance sheet
Balance sheet At 30 June At 30 June At 30 June At 30 June 2021 2020 2021 2020 Assets Liabilities Non-current assets Current liabilities Intangible assets 504.6 521.0 Trade and other payable (126.3) (142.6) Property, plant and equipment 117.4 144.6 Lease liabilities (42.2) (50.9) Right-of-use assets
Slide 34: LFL revenue reconciliation 2020/21
LFL revenue reconciliation 2020/21 Grosvenor Mecca Enracha Digital venues venues venues Total LFL revenue (NGR) 136.3 79.2 55.2 17.5 288.2 Add: Mecca closures - - 0.3 - 0.3 Add: Stride 41.1 - - - 41.1 Total revenue (NGR) 177.4 79.2 55.5 17.5 329.6 34 The Rank Group Plc Preliminary results for the 12
Slide 35: Operating profit reconciliation
Operating profit reconciliation £m 2020/21 2019/20 (10) LFL underlying operating (loss) / profit (67.0) 48.4 Acquired businesses – Stride (16.4) 1.7 Closed and opened venues (1.1) (0.8) Foreign exchange - (0.2) Underlying operating (loss) / profit (84.5) 49.1 Separately disclosed items (8.4) (27.6)
Slide 36: Tax charge reconciliation
Tax charge reconciliation £m 2020/21 2019/20 Underlying current tax credit / (charge) 8.0 (6.1) Deferred Tax 2.1 (3.7) Tax on separately disclosed items 0.3 4.6 Reported tax credit / (charge) 10.4 (5.2) 36 The Rank Group Plc Preliminary results for the 12 months ended 30 June 2021
Slide 37: Net debt
Net debt £m 2020/21 £m 2020/21 Net debt (256.7) Cash and cash equivalents 69.6 IFRS 16 206.9 Undrawn facilities 44.0 Net debt pre IFRS 16 (49.8) Customer funds (15.6) Cash and available facilities 98.0 £m 2020/21 Cash and cash equivalents 69.6 Term loan (108.4) Drawdown of revolving credit facilitie
Slide 38: Debt facilities
Debt facilities At 30 Jun July May £m 2021 2021 2022 Stride term loan 108.4 108.4 78.8 RCFs 55.0 80.0 80.0 Total 163.4 188.4 158.8 • Stride term loan amortises by £29.6m in May 2022, £34.5m in May 2023 and is fully repaid in May 2024 • RCF of £25.0m will expire in July 2023, £40.0m will expire in Ma
Slide 39: Financial covenants
Financial covenants Normal test Net debt: EBITDA less than 3.0x Resume from June 2022 Interest cover over 3.0x Temporary test Minimum liquidity test of £50.0m Tested quarterly from September 2020 (cash and available facilities) to March 2022 • Restrictions on shareholder distributions, acquisitions