Rank Group Plc · LSE:RNK
Rank — The Rank Group — FY2020 Earnings Presentation
45 slides from Rank's earnings presentation, September 2020
Slide 1: Preliminary results for the 12 months ended 30 June 2020
ae Rank Group The Rank Group Pic Preliminary results for the 12 months ended 30 June 2020
Slide 2: Introduction
Introduction John O’Reilly, Chief Executive 2 The Rank Group Plc Preliminary results for the 12 months ended 30 June 2020
Slide 3: 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 3 The Rank Group Plc Preliminary results for the 12 months ended 30 June 2020
Slide 4: Strong performance prior to lockdown, encouraging start following reopening
Strong performance prior to lockdown, encouraging start following reopening • Following the groundwork put into the transformation programme, Rank made a great start to 2019/20 • Eight months to the end of Feb 2019 − LFL NGR up 11% − LFL underlying operating profit up 61% at £71.6m • Strength of the
Slide 5: Securing the business through lockdown
Securing the business through lockdown • Mecca and Grosvenor temporarily closed on 20 March 2020 • Entered lockdown with £160m of cash and Revolving Credit Facilities of which £30m expires end September 2020 • Liquidity the immediate priority − monthly net cash burn rate of £25m offset to circa £10m
Slide 6: Supporting our local communities during lockdown
Supporting our local communities during lockdown 6 The Rank Group Plc Preliminary results for the 12 months ended 30 June 2020
Slide 7: Reopening our venues under social distancing
Reopening our venues under social distancing Mecca, Grosvenor and Enracha venues have been ready to open since June 2020 • ID scan on entry in Grosvenor casinos • Protective screens at reception, gaming machines, gaming tables • Reduced capacity to enable social distancing • Floor plan revisions, fl
Slide 8: Reopening our venues under social distancing continued
Reopening our venues under social distancing continued • Extensive training for colleagues on new social distancing and other safety measures • Enracha venues opened regionally at different times during June − experienced subsequent closures in two Barcelona city centre venues − all now open but wit
Slide 9: Early demand trends
Early demand trends Mecca Grosvenor • Encouraging trend since reopening with LFL revenues • Encouraging early demand trends with LFL revenues to to 6 September at 70% of prior year levels 6 September at 60% of 2019 levels − spend per visit +15% • Outside London, LFL revenues are 75% of 2019 levels •
Slide 10: Strong digital growth in digital revenues in H2
Strong digital growth in digital revenues in H2 NGR growth • Strong digital growth in UK and Spain 35% − FY LFL NGR + 23% 30% − H2 LFL NGR +31% 25% 20% • UK digital LFL NGR grew 23% 15% − Mecca LFL NGR +23% 10% − Grosvenor LFL NGR +24% 5% 0% • Grosvenor One omni-channel H1 H2 FY − 30% of Grosvenor v
Slide 11: Financial and operational performance
Financial and operational performance Bill Floydd, Chief Financial Officer 11 The Rank Group Plc Preliminary results for the 12 months ended 30 June 2020
Slide 12: Financial headlines
Financial headlines Full year Full year 8 months to FY FY reported LFL Feb 2020 2019/20 2018/19 % % NGR £532.1m £638.1m £695.1m (8)% (15)% Underlying operating profit (1) £76.6m £51.1m £75.7m (32)% (45)% Underlying EPS (1) - 7.0p 15.3p (54)% - Dividend per share - 2.80p 7.65p (63)% - Underlying net
Slide 13: Operational review: Digital
Operational review: Digital LFL NGR LFL Operating Profit (4) £m 2019/20 2018/19 2019/20 2018/19 • LFL NGR up 23% Mecca 76.5 62.2 − Mecca up 23% Grosvenor 52.4 42.4 − Grosvenor up 24% Enracha 1.0 0.9 − Enracha up 11% Yo 15.4 13.0 − Yo up 18% LFL Total 145.3 118.5 26.9 23.9 • LFL operating profit up 1
Slide 14: Operational review: Stride
Operational review: Stride NGR Operating Profit (5) £m 2019/20 2019/20 • Q4 decline driven by safer gambling controls in Performance since acquisition 51.0 1.7 proprietary brands (5) before separately disclosed items and IFRS 16 • Impact of changes will annualise in Q3 FY FY • Strong performance in
Slide 15: Income statement
Income statement £m 2019/20 2018/19 • Impact of IFRS 16: operating profit increases by £7.8m and finance costs Operating profit(6) 51.1 75.7 by £7.9m, overall impact of £(0.1)m Net financing charge (13.4) (2.8) • Effective underlying tax rate: 21.7% Profit before taxation and separately disclosed it
Slide 16: Separately Disclosed Items
Separately Disclosed Items FY FY £m 2019/20 2018/19 Impairment charges (37.9) (11.1) Profit on disposal of venues 1.8 - Profit on disposal of investment 2.1 - Acquisition related costs (1.4) (2.2) Integration costs (2.6) - Pay provision 4.9 (8.0) VAT claim 25.3 - Amortisation of acquired intangibles
Slide 17: Cashflow
Cashflow £m 2019/20 2018/19 Cash inflow from operations pre IFRS 16 101.4 129.0 Net cash receipts (payments) in respect of provisions and separately disclosed items 25.4 (15.9) Cash generated from operations pre IFRS 16 126.8 113.1 Capital expenditure (50.7) (34.0) Acquisition of Stride (85.5) - Acq
Slide 18: Outlook modelling
Outlook modelling Average weekly Weekly cash revenue breakeven £m last 2 weeks point Grosvenor 4.2 4.4 Mecca 2.5 2.4 Enracha 0.4 0.5 • Cash breakeven point covers central costs, capex, interest and taxation 18 The Rank Group Plc Preliminary results for the 12 months ended 30 June 2020
Slide 19: Other cash considerations
Other cash considerations At 30 June 2020 Forward position Coronavirus Job Retention Scheme £29.0m claimed Future claims of c.£11m received by December 2020 (CJRS) £17.1m received c.£6m from bonus element of scheme in March 2021 Gaming duty £37.5m initially deferred £18.5m paid by end of August £7.7
Slide 20: Debt financing
Debt financing At 30 June September May £m 2020 2020 2021 Stride term loan 128.1 128.1 108.4 RCFs 85.0 55.0 55.0 Total 213.1 183.1 163.4 • Stride term loan amortises by £29.6m in May 2022, £34.5m in May 2023 and is fully repaid in May 2024 • Remaining RCFs expire in 2024 20 The Rank Group Plc Prelim
Slide 21: Financial covenants
Financial covenants Normal test Net debt: EBITDA less than 3.0x Tested December 2020 and June 2021 Interest cover over 3.0x Temporary test Minimum liquidity test of £50.0m Tested quarterly from September 2020 to (cash and available facilities) March 2021 • Restrictions on shareholder distributions,
Slide 22: Key points
Key points • Strong performance ahead of lockdown as transformation initiatives began to deliver • Decisive action taken to bring the business through lockdown • Revised banking covenant in place for December 2020 • Encouraging signs that Group will soon return to positive cashflow as long as venues
Slide 23: Strategic Update and Outlook
Strategic Update and Outlook John O’Reilly, Chief Executive 23 The Rank Group Plc Preliminary results for the 12 months ended 30 June 2020
Slide 24: Transformation 2.0
Transformation 2.0 • Emerging from lockdown the ideal time to re-boot the transformation programme • Transformation reset with a three year aspiration • Navigates current cash constraints to ensure we deploy cash most effectively and ensures the flexibility to pivot quickly • All existing transforma
Slide 25: Transformation 2.0 – Grosvenor & Mecca venues
Transformation 2.0 – Grosvenor & Mecca venues Delivered Delivery in train Future delivery Investment in ER & gaming machine Continued improvement in ER and gaming Implement automation and technology for Grosvenor terminals and broader suite of games machines offer key business processes venues Large
Slide 26: Transformation 2.0 – Enracha venues & Omni-channel
Transformation 2.0 – Enracha venues & Omni-channel Delivered Delivery in train Future delivery Tenth venue opened in Spain (Enracha New concept trial – Enracha Stadium Further investment in Enracha Stadium Enracha Catedral in Girona) Torremolinos in venues concept venues Optimising gaming machine an
Slide 27: Transformation 2.0 – Digital
Transformation 2.0 – Digital Delivered Delivery in train Future delivery Stride post-acquisition leadership Bella brand migration to the proprietary Mecca brand migration to the proprietary Digital alignment platform platform Customer registrations optimised via new Grosvenor brand migration to the
Slide 28: Transformation 2.0 – Central
Transformation 2.0 – Central Delivered Delivery in train Future delivery Affordability model introduced for all Facility for customers to set loss and time Position and relaunch Rank’s Safer Safer customers limits at machines in Grosvenor Gambling brand Gambling Safer Gambling and Enhanced Due Devel
Slide 29: Current trading and outlook
Current trading and outlook • Encouraging signs that Group will soon return to positive cashflow as long as venues remain open • Expect to rebuild revenues with an increase in footfall once social distancing and other supply constraints reduce and customer confidence returns • Further guidance at AG
Slide 30: Appendices
Appendices
Slide 31: Group datasheet
Group datasheet FY H1 FY H1 FY H1 2019/20 2019/20 2018/19 2018/19 2017/18 2017/18 Net gaming revenue (£m) 638.1 397.4 695.1 348.2 691.0 354.2 - YOY growth (8%) 14% 1% (2)% (2)% 0% Operating profit (£m) 51.1 (11) 56.0 (11) 75.7(11) 31.9(11) 77.4(11) 41.7 - YOY growth (32%) 76% (2)% (24)% (7)% 14% Ope
Slide 32: Income statement IFRS 16 impact
Income statement IFRS 16 impact Pre IFRS16 Post IFRS16 £m 2019/20 IFRS16 impact 2019/20 Operating profit 43.3 7.8 51.1 Net financing charge (5.5) (7.9) (13.4) Profit before taxation and separately disclosed items 37.8 (0.1) 37.7 Separately disclosed items (22.3) - (22.3) Profit before taxation 15.5
Slide 33: Digital datasheet
Digital datasheet FY H1 FY H1 FY H1 2019/20 2019/20 2018/19 2018/19 2017/18 2017/18 NGR (£m) 196.2 83.2 118.5 57.3 96.7 47.3 Operating profit (£m) 28.6 (13, 14) 11.8 (13,14) 23.9 (13) 12.6 (13) 20.3(13) 10.4 Operating margin (%) 14.6 14.2 20.2 22.0 21.0 22.0 EBITDA (£m) 39.1 (14) 16.2 (14) 29.5 14.8
Slide 34: Grosvenor Venues datasheet
Grosvenor Venues datasheet FY H1 FY H1 FY H1 2019/20 2019/20 2018/19 2018/19 2017/18 2017/18 Casino licences: London 9 9 9 9 9 9 Rest of UK 56 56 55 54 54 54 Total 65 65 64 63 63 63 Non-trading licences 8 8 9 10 10 12 Net gaming revenue (£m) 275.9 198.1 338.2 172.1 349.4 184.3 Operating profit (£m)
Slide 35: Mecca Venues datasheet
Mecca Venues datasheet FY H1 FY H1 FY H1 2019/20 2019/20 2018/19 2018/19 2017/18 2017/18 Venues 77 77 82 82 85 85 Revenue (£m) 130.7 91.9 193.5 96.2 199.0 99.1 Operating profit (£m) 2.7(16) 12.0(16) 28.6 11.4 28.6 12.7 Operating margin (%) 13.1 13.1 14.8 11.9 14.4 12.8 EBITDA (£m) 2.1(16) 17.2(16) 3
Slide 36: International venues datasheet
International venues datasheet FY H1 FY H1 FY H1 2019/20 2019/20 2018/19 2018/19 2017/18 2017/18 Revenue (£m) 35.3 24.2 44.9 22.6 45.9 23.5 Operating profit (£m) 5.2 (18) 5.2 (18) 9.3 4.1 8.8 4.3 Operating margin (%) 14.7 21.5 20.7 18.1 19.2 18.3 EBITDA (£m) 7.4 (18) 6.6 (18) 12.0 5.5 11.5 5.8 (18)
Slide 37: Balance sheet
Balance sheet At 30 At 31 At 30 At 30 At 31 At 30 June December June June December June 2020 2019 2019 2020 2019 2019 Assets Liabilities Non-current assets Current liabilities Intangible assets 521.0 532.7 447.8 Trade and other payable (142.6) (147.4) (145.2) Property, plant and equipment 144.6 153.
Slide 38: Balance sheet IFRS 16 impact
Balance sheet IFRS 16 impact Pre IFRS16 IFRS16 Post IFRS16 £m 2019/20 impact 2019/20 Non-current assets 665.7 152.9 818.6 Current assets 112.1 (3.6) 108.5 Total assets 777.8 149.3 927.1 Current liabilities (195.6) (25.1) (220.7) Non-current liabilities (205.4) (135.1) (340.5) Total liabilities (401.
Slide 39: LFL revenue reconciliation 2019/20
LFL revenue reconciliation 2019/20 Grosvenor Mecca International Digital venues venues venues Total LFL revenue (NGR) 145.3 275.9 128.4 35.5 585.1 Add: Grosvenor closures - - - - - Add: Mecca closures - - 2.3 - 2.3 Add: Stride 51.0 - - - 51.0 Less: Foreign exchange (0.1) - - (0.2) (0.3) Total revenu
Slide 40: Cash generated from continuing operations IFRS 16 reconciliation
Cash generated from continuing operations IFRS 16 reconciliation Pre IFRS16 IFRS 16 Post IFRS16 2019/20 impacts 2019/20 Operating Profit 15.7 7.8 23.5 Separately disclosed items 27.6 - 27.6 Operating profit before separately disclosed items 43.3 7.8 51.1 Depreciation and amortisation 46.0 29.5 75.5
Slide 41: Operating profit reconciliation
Operating profit reconciliation £m 2019/20 2018/19 LFL underlying operating profit pre IFRS 16 42.3 76.9 Acquired businesses – Stride 1.7 - Closed and opened venues (0.6) (1.2) Foreign exchange (0.1) - Underlying operating profit pre IFRS 16 43.3 75.7 IFRS 16 7.8 - Underlying operating profit 51.1 7
Slide 42: EBITDA reconciliation
EBITDA reconciliation £m 2019/20 2018/19 LFL EBITDA 88.3 118.9 Depreciation, amortisation before (46.0) (42.0) separately disclosed items LFL operating profit 42.3 76.9 £m Underlying LFL EBITDA 88.3 Acquired businesses – Stride 1.7 Closed and opened venues (0.6) Foreign exchange (0.1) EBITDA pre IFR
Slide 43: Tax charge reconciliation
Tax charge reconciliation £m 2019/20 2018/19 Underlying current tax charge (6.9) (12.4) Deferred Tax (3.7) (0.7) Tax on separately disclosed items 4.6 6.1 Reported tax charge (6.0) (7.0) 43 The Rank Group Plc Preliminary results for the 12 months ended 30 June 2020
Slide 44: Net debt reconciliation
Net debt reconciliation £m 2019/20 2018/19 Underlying net (debt) / cash (63.2) 1.8 IFRS 16 adjustment (234.3) - Reported net (debt) / cash (297.5) 1.8 44 The Rank Group Plc Preliminary results for the 12 months ended 30 June 2020
Slide 45: EPS reconciliation
EPS reconciliation 2019/20 2018/19 Underlying EPS 7.0p 15.3p Separately disclosed items (4.5)p (7.9)p Reported EPS 2.5p 7.4p 45 The Rank Group Plc Preliminary results for the 12 months ended 30 June 2020