Rank Group Plc · LSE:RNK
Rank — The Rank Group — H1 2022/23 Earnings Presentation
29 slides from Rank's earnings presentation, February 2023
Slide 1: The Rank Group Plc Interim results
The Rank Group Plc Interim results for the six months ended 31 December 2022
Slide 2: Introduction
Introduction John O’Reilly Chief Executive
Slide 3: Introduction
Introduction • H1 trading was challenging in the UK venues businesses; continued Underlying LFL operating profit strong growth in the digital business £4.2m • Underlying LFL profitability was £4.2m (H1 2021/22 £24.9m) • Venues business profitability impacted by higher energy costs and LFL digital NG
Slide 4: Grosvenor venues
Grosvenor venues Momentum starting to rebuild • H1 LFL NGR £153.4m, down 5% on H1 2021/22 but up 15% on H2 2021/22 Weekly average NGR • Q1 revenue up 14% on Q4 2021/22. Growth slowed in Q2 to +4% on Q1 £6.3m • Customer visits up 5% in H1 but spend per visit down 9% £6.1m £6.0m • Improvements have be
Slide 5: Mecca venues
Mecca venues Slowly rebuilding to profitability • H1 LFL NGR £65.5m, up 4% on H1 2012/22 with customer visits also up 4% NGR variance by month v 2019/20 • Customer visits down 28% on pre-pandemic H1 2019/20 with NGR down 20% but continuing to slowly improve 2022 2023 • Attracting strong volume of ne
Slide 6: Enracha venues
Enracha venues Well-invested business with strong gaming machine offer delivering very strong growth NGR variance by quarter v CY 2019 • Strong recovery from the impact of the pandemic with H1 LFL NGR £17.7m, up 25% on H1 FY22 and 11% ahead of pre-pandemic H1 19/20 12% • Customer visits up 16% on la
Slide 7: Digital
Digital Continued progress across technology, revenue growth and operating profit growth H1 H1 NGR / £m 2022/23 2021/22 Change • H1 LFL NGR £100.8m, up 9% on H1 2021/22 Mecca 36.1 34.9 3% • Operating leverage within the digital business resulted in underlying Grosvenor 27.8 25.8 8% profit of £7.4m O
Slide 8: Financial and operational performance
Financial and operational performance Richard Harris Chief Financial Officer
Slide 9: Recovery has been slower than expected
Recovery has been slower than expected LFL Net Gaming Revenue LFL Underlying Operating Profit Underlying EPS £337.4m £4.2m (0.8)p H1 2021/22: £330.5m H1 2021/22: £24.9m* H1 2021/22: 2.8p* Net Free Cash Flow Net Cash (pre-IFRS 16) £(5.7)m £10.9m 30 June 2022: £58.6m* 30 June 2022: £16.9m* * Restated
Slide 10: LFL underlying operating profit impacted by significant cost pressures
LFL underlying operating profit impacted by significant cost pressures £m • 2% revenue growth delivers £1.3m profit • Significant cost pressures: Revenue – Wage inflation growth – Energy costs up across all three venues businesses – Covid support – furlough income Staff costs and rates relief last y
Slide 11: Centrally managed costs
Centrally managed costs Now allocated to the business they support LFL underlying LFL underlying • Historically, some cost centres managed profit / (loss) profit / (loss) centrally but provide support services to the before cost Central cost post cost business units Business Unit allocation allocati
Slide 12: Income statement
Income statement Impairments are the largest driver of loss after tax H1 H1.. • Closed clubs & FX in H1 2022/23 relates to £m 2022/23 2021/22* the closure of seven Mecca clubs and LFL underlying operating profit 4.2 24.9 one Grosvenor casino FX, closed clubs and re-opening (1.0) (1.8) • Financing ch
Slide 13: Separately disclosed items
Separately disclosed items H1 H1 £m 2022/23 2021/22 Continuing operations • Impairment charges of £95.4m split £52.3m in Impairment charges (95.4) - Mecca and £43.1m in Grosvenor Impairment reversal - 10.8 • Closure costs of £7.3m relate to one Grosvenor Closure of venues (7.3) (1.2) casino (which c
Slide 14: Free cash flow to operating profit bridge
Free cash flow to operating profit bridge Cash flow £m H1 H1.. 2022/23 2021/22* Depreciation and amortisation Opening net cash (debt) (pre-IFRS 16) 16.9 (50.7) Net free cash flow (5.7) 101.2 Business disposal - 3.1 Payment of contingent consideration (0.3) - Tax and Closing net cash (pre-IFRS 16) 10
Slide 15: Liquidity
Liquidity We remain in a strong financial position H1 FY.. Debt maturity profile £m 2022/23 2021/22* £m 180 Cash and cash equivalents 89.7 95.7 RCF (undrawn) 80.0 80.0 150 Customer funds (21.3) (17.8) 120 Total cash and available facilities 148.4 157.9 90 • Cash and available facilities of £148.4m 6
Slide 16: Financial Guidance
Financial Guidance • Total 2022/23 capital expenditure of approximately £40m • Term loan repayment of £34.5m in May 2023 • Energy costs expected to be £31m in 2022/23: – 100% hedged in Q3 and 75% hedged in Q4 • Energy costs expected to be c. £26m in 2023/24 at current market prices: – Taking a proac
Slide 17: Strategic Update and Outlook
Strategic Update and Outlook John O’Reilly Chief Executive
Slide 18: Transformation 2.0 – H2 initiatives
Transformation 2.0 – H2 initiatives Grosvenor Upgrade of external appeal of ten of our Launch of Going for Gold, a multi-site, Lapsed customer reactivation most prominent venues across the multi terminal, progressive electronic venues programme estate roulette game Rollout of new bingo products incl
Slide 19: ESG highlights
ESG highlights Customers • Improvements made to management of customer risk across Grosvenor venues – Over 850 Grosvenor colleagues completed face-to-face training programmes to develop customer interaction skills – Development and trial of a safer gambling app to support colleagues in delivering an
Slide 20: The UK Government's gambling review
The UK Government’s gambling review Key regulatory changes sought by the land-based casino and Current status bingo sectors • Continued engagement with • Harmonisation of 1968 Act casinos with those of the 2005 Act enabling up Government on the need for to 80 gaming machines, from the current restri
Slide 21: Current trading and outlook
Current trading and outlook • Strong Christmas and New Year trading providing good momentum in H2 • Cost of living pressures likely to continue to bite on our UK venues’ customers over the coming months • Strong digital growth expected in H2 • Strong balance sheet enables continued investment in our
Slide 22: Appendices
Appendices 22 The Rank Group Plc Interim results for the six months ended 31 December 2022
Slide 23: Transformation 2.0 – H1 Achievements
Transformation 2.0 – H1 Achievements Grosvenor Refurbishments complete at Brighton, Lucky Lady’s Charm, jackpot electronic Launch of Roulette Gold, a live table, Glasgow Merchant City and London roulette game, rolled out across the progressive jackpot game on trial at The venues Bayswater estate Vic
Slide 24: Group datasheet
Group datasheet H1 FY H1. FY. H1. FY. 2022/23 2021/22 2021/22* 2020/21* 2020/21* 2019/20* Net gaming revenue (£m) 338.9 644.0 333.7 329.6 177.6 629.7 - YOY growth 2% 95% 88% (48)% (55)% (9)% Underlying operating profit (£m) 3.2 39.8 23.1 (84.5) (41.8) 49.1 - YOY growth 86% 147% 155% (272)% (171)% (3
Slide 25: Digital datasheet
Digital datasheet H1 FY H1. FY H1 FY 2022/23 2021/22 2021/22* 2020/21 2020/21 2019/20 NGR (£m) 100.8 183.3 92.1 177.4 86.5 196.2 Operating profit pre central costs allocation (£m) 10.0 18.7 3.7 3.2 1.5 28.7 Operating margin pre central costs allocation (%) 9.9 10.2 4.0 1.8 1.7 14.7 Operating profit
Slide 26: Grosvenor datasheet
Grosvenor datasheet H1 FY H1 FY H1 FY 2022/23 2021/22 2021/22 2020/21 2020/21 2019/20 Casino licences: London 9 9 9 9 9 9 Rest of UK 62 62 63 62 62 62 Total 71 71 72 71 71 71 Non-trading licences 7 7 7 7 8 8 Net gaming revenue (£m) 153.4 296.6 161.6 79.2 43.1 275.9 Operating profit pre central costs
Slide 27: Mecca datasheet
Mecca datasheet H1 FY H1 FY H1 FY 2022/23 2021/22 2021/22 2020/21 2020/21 2019/20 Venues 64 71 72 72 76 77 Revenue (£m) 67.0 134.0 65.9 55.5 39 130.7 Operating (loss) profit pre central costs allocation (£m) (1.2) (0.8) (1.5) (18.9) (5.3) 6.0 Operating margin pre central costs allocation (%) (1.8) (
Slide 28: Enracha venues datasheet
Enracha venues datasheet H1 FY H1 FY H1 FY 2022/23 2021/22 2021/22 2020/21 2020/21 2019/20 Revenue (£m) 17.7 30.1 14.1 17.5 9.0 26.9 Operating profit pre central costs allocation (£m) 4.0 7.4 2.7 (0.2) (0.6) 3.3 Operating margin pre central costs allocation (%) 22.6 0.2 19.1 (1.1) (6.7) 12.3 Operati
Slide 29: Balance sheet
Balance sheet At At At 30 June At 30 June 31 December 2022 31 December 2022 2022 as restated 2022 as restated Assets Liabilities Non-current assets Current liabilities Intangible assets 468.6 493.6 Trade and other payable (148.7) (131.1) Property, plant and equipment 96.4 113.1 Lease liabilities (44