Rank Group Plc · LSE:RNK
Rank — The Rank Group — FY2024 Earnings Presentation
34 slides from Rank's earnings presentation, September 2024
Slide 1: The Rank Group Plc Preliminary results for the 12 months ended 30 June 2024
The Rank Group Plc Preliminary results for the 12 months ended 30 June 2024
Slide 2: Introduction
Introduction John O’Reilly Chief Executive
Slide 3: Overview: Delivering against the strategic plan
Overview Delivering against the strategic plan with growth across all businesses Group LFL NGR / £m • Continued revenue and profitability growth in H2 delivering full year underlying LFL operating profit of £46.5m 371.8 362.6 338.8 • 9% growth in LFL Group Net Gaming Revenue (‘NGR’), with the venues
Slide 4: Grosvenor venues
Grosvenor venues Continuing to gain momentum – land based legislative reforms to come • LFL NGR of £331.3m, an increase of 9% on the prior year • Within the London estate NGR grew 10%; rest of UK NGR grew 8% • Customer visit volumes grew 9%; London up 11% and the rest of the UK up 9% • LFL operating
Slide 5: Mecca venues
Mecca venues Returned to profitability - growing confidence • Estate rationalisation completing with one further planned closure taking the estate to 51 venues • The stronger estate delivered NGR growth of 8% in the year to £138.6m with visits growth of 2% and spend per visit growing 6% • LFL mainst
Slide 6: Enracha venues
Enracha venues Continued strong revenue and profit growth • LFL NGR grew 7% to £38.5m with customer visits growing 6% • Bingo revenues grew 7% and gaming machine revenues grew 7% • LFL operating profit increased 7% to £9.6m • £2.3m capital investment on two refurbishments, the rollout of a customer
Slide 7: Digital
Digital Scaling Rank’s digital business and delivering margin improvement LFL NGR / £m 2023/24 2022/23 Change • LFL NGR grew 12% to £226.0m Mecca 86.9 72.5 20% • Grosvenor grew 21% and Mecca grew 20% with strong cross-channel customer growth Grosvenor 69.0 57.1 21% Other proprietary brands 23.2 23.4
Slide 8: Financial and operational performance
Financial and operational performance Richard Harris Chief Financial Officer
Slide 9: Strong revenue and profit performance
Strong revenue and profit performance LFL Net Gaming Revenue Underlying LFL Operating Profit Underlying EPS £734.4m £46.5m 5.9p 2022/23: £671.4m 2022/23: £20.1m* 2022/23: 1.1p* Net Free Cash Flow Net Cash (pre IFRS 16) Dividend per share £27.6m £20.9m 0.85p 2022/23: £(17.9)m 2022/23: £(5.9)m * 2022/
Slide 10: Rank investment case
Rank investment case To excite and to entertain our customers 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 Preliminary results for the 12 months ended 30 June 2024
Slide 11: Strong delivery against the investment case
Strong delivery against the investment case MEDIUM TERM • Rationalisation of the estate combined with 8% LFL NGR • Double digit operating Cash growth returned Mecca to profitability in H1 with further profit in Mecca maximisation progress made in H2 • Continued progress in in bingo • Enracha continu
Slide 12: LFL operating profit improvement driven by revenue growth
LFL operating profit improvement driven by revenue growth £m 10.0 • 9% LFL revenue growth drives improved profit position 9.7 Depreciation • Lower energy costs driven Energy predominantly by combination of 40.5 (28.8) costs lower market prices and reduced Employment (5.0) consumption costs Other cos
Slide 13: Free cash flow bridge
Free cash flow bridge £m Lease 2023/24 2022/23* payments Opening net (debt) cash pre IFRS 16 (5.9) 12.5 47.7 Net free cash flow 27.6 (17.9) Payment of contingent consideration - (0.5) Business Disposal (0.8) - Closing net cash (debt) pre IFRS 16 20.9 (5.9) (39.0) Capex Lease liabilities (153.4) (169
Slide 14: 2023/24 capex
2023/24 capex • Infrastructure spend required to address historic backlog Maintenance 30% • Grosvenor investment in product, venue modernisation and GAR enabling works • Low-cost investment schemes in Mecca and Enracha to improve customer propositions • Investment in key technology programmes suppor
Slide 15: 2024/25 capex
2024/25 capex • Similar spend next year on venue maintenance and infrastructure in absolute terms – will Maintenance <30% reduce over time • Refurbishment of our flagship casino at The Vic, which also includes a significant level of infrastructure spend • Further roll-out of low-cost investment sche
Slide 16: Financial Guidance
Financial Guidance 2024/25 Medium Term • Wage inflation remains the major headwind in the year • On track to deliver Digital opportunity of 8-12% CAGR ahead – employment costs expected to be up 7% • Digital margin expansion now >600bps • Taking a proactive approach to managing our exposure • Cash ge
Slide 17: Improving cash generation profile
Improving cash generation profile Next 12 months 12 months to 2.5 years Beyond 2.5 years Investing Balancing investment Growing for growth and returns shareholder returns Operating Operating Operating profit Capex profit Capex profit Capex Cash flow neutral Modest cash generation Strong cash generat
Slide 18: Strategic Update and Outlook
Strategic Update and Outlook John O’Reilly Chief Executive
Slide 19: Delivering against the strategic plan
Delivering against the strategic plan • Delivering against the investment case that returns Rank to £100m + operating profit • Delivering against our five strategic pillars: 1. Providing a seamless and tailored experience for customers across venues and online 2. Drive digital growth powered by our
Slide 20: Transformation initiatives
Transformation initiatives H1 2024/25 Grosvenor Modernisation of electronic table Launch of sports betting proposition in gaming with replacement of 248 External refurbishment of three venues venues Grosvenor Casino Luton terminals Mecca Trial of new display screens for Gaming machine area refurbish
Slide 21: Environmental highlights
Environmental highlights Good progress on meeting our Net Zero plan • Data capture technology (‘PRISM’) in place for the 40 highest energy using venues and the energy usage now monitored of over 12,000 assets in real time • £8.7m invested in energy saving initiatives in the year • Good energy reduct
Slide 22: Current trading and outlook
Current trading and outlook • Good momentum exiting 2023/24 has continued into 2024/25 with NGR growing 10% in the opening 6 weeks • Continued employment cost pressures, but we have the opportunity to drive revenue growth in each of our businesses • Strong cash position enables continued investment
Slide 23: Appendices
Appendices
Slide 24: Transformation 2.0: H2 2023/24 achievements
Transformation 2.0 H2 2023/24 achievements Grosvenor Modernisation of electronic gaming Full refurbishment of Grosvenor Launch of culture change programme products with 84 new slots in London Leicester and a further two external venues ‘Like to Love’ for all managers and rollout of 120 Aristocrat ma
Slide 25: Income statement
Income statement 2023/24 2022/23* LFL underlying operating profit 46.5 20.1 • Closed clubs & FX relates to the closure of four Mecca clubs in the year FX, closed clubs and re-opening (0.2) (1.6) Underlying operating profit 46.3 18.5 • Total financing charge below expectations due to lower drawn Net
Slide 26: Balance sheet
Balance sheet At 30 June At 30 June At 30 June At 30 June 2024 2023* 2024 2023* Assets Liabilities Non-current assets Current liabilities Intangible assets 446.4 456.8 Trade and other payable (149.0) (128.3) Property, plant and equipment 112.5 97.5 Lease liabilities (32.6) (42.2) Right-of-use assets
Slide 27: Liquidity
Liquidity Current banking facility Committed facilities £m • £90m RCF with expiry date January 2027 120 120 120 • £30m Term Loan with bullet repayment October 2026 • Both have +1+1 extension options at lenders’ discretion 90 • Existing covenants remain with the addition of a Fixed Charge 90 90 90 Co
Slide 28: Group datasheet
Group datasheet H1 2022/23 H1 2021/22 H1... 2020/21(1) H1... 2023/24 2023/24 restated 2022/23 restated 2021/22(1) restated 2020/21(1) Net gaming revenue (£m) 734.7 362.6 681.9 338.9 643.5 333.7 329.6 177.6 - YOY growth 8% 7% 6% 2% 95% 88% (48)% (55)% Operating profit (£m) 46.3 21.6 18.5 1.2 36.0 23.
Slide 29: Digital datasheet
Digital datasheet H1 H1 H1 H1 2023/24 2023/24 2022/23* 2022/23* 2021/22* 2021/22* 2020/21* 2020/21* NGR (£m) 226.0 108.4 202.9 100.8 182.8 92.1 177.4 86.5 Operating profit pre central costs allocation (£m) n/a n/a 18.2 8.0 14.9 3.7 1.6 1.5 Operating margin pre central costs allocation (%) n/a n/a 9.
Slide 30: Grosvenor datasheet
Grosvenor datasheet H1 H1 H1 H1 2023/24 2023/24 2022/23 2022/23 2021/22 2021/22 2020/21 2020/21 Casino licences: London 9 9 9 9 9 9 9 9 Rest of UK 62 62 62 62 62 63 62 62 Total 71 71 71 71 71 72 71 71 Non-trading licences 7 7 7 7 7 7 7 8 Net gaming revenue (£m) 331.3 167.5 306.3 153.4 296.6 161.6 79
Slide 31: Mecca datasheet
Mecca datasheet H1 H1 H1 H1 2023/24 2023/24 2022/23 2022/23 2021/22 2021/22 2020/21 2020/21 Venues 52 55 56 64 71 72 72 76 Revenue (£m) 138.9 67.2 136.3 67.0 134.0 65.9 55.5 39.0 Operating profit (loss) pre central costs allocation (£m) n/a n/a 2.8 (1.2) (0.8) (1.5) (18.9) (5.3) Operating margin pre
Slide 32: Enracha venues datasheet
Enracha venues datasheet H1 H1 H1 2023/24 2023/24 2022/23 2022/23 2021/22 2021/22 2020/21 Revenue (£m) 38.5 19.5 36.4 17.7 30.1 14.1 17.5 Operating profit (loss) pre central costs allocation (£m) n/a n/a 9.2 4.0 7.5 2.7 (0.2) Operating margin pre central costs allocation (%) n/a n/a 25.3 22.6 24.9 1
Slide 33: Operating profit reconciliation
Operating profit reconciliation £m 2023/24 2022/23 LFL underlying operating profit 46.5 20.1 FX, closed and re-opened venues (0.2) (1.6) Underlying operating profit 46.3 18.5 Separately disclosed items (16.9) (128.9) Operating (loss) profit 29.4 (110.4) 33 The Rank Group Plc Preliminary results for
Slide 34: Tax charge reconciliation
Tax charge reconciliation £m 2023/24 2022/23 Underlying current tax charge (2.4) (0.5) Deferred tax credit (3.9) - Tax on SDI 2.8 27.7 Reported tax (charge) credit (3.5) 27.2 34 The Rank Group Plc Preliminary results for the 12 months ended 30 June 2024