Business
Rank : Annual Report and Accounts 2024
Rank : Annual Report and Accounts
About this update from Rank Group Plc
connected brand experience Annual Report 2024 The Rank Group Plc Annual Report 2024 Group performance highlights 2024 Group Overview Strategic Report Governance Contents Financial Statements 2 NEXT BACK PREVIOUS CONTENTS Group underlying NGR* £734.4m Group underlying operating profit* £46.5m Net cash pre IFRS 16 £20.9m Net (debt) £ ( 132.5 ) m Underlying EPS 5.9p Customer NPS 52 Reported NGR £734.7m Group operating profit £29.4m Net free cashflow £26.6m Dividend per share 0.85p Basic earnings per share 2.7p Employee NPS 39 Introduction Investment case Group Overview Welcome from Chair and Chief Executive Business model Our brands Global teams and delivery Our culture Market review Strategic Report Chief Executive's Statement Strategy Key performance indicators 2023/24 Interview Chief Operating Officer Operating review - Grosvenor Casinos Operating review - Mecca venues Operating review - Enracha venues Operating review - Digital Section 172 statement Stakeholder engagement Sustainability Double materiality assessment Customers Colleagues Environment Communities Chief Financial Officer's review Alternative Performance Measures 57 Improving our risk management approach 63 Going concern, viability and non-financial and sustainability information statement Governance Chair's introduction to governance Governance at a glance How we are governed Our Board Our Executive Committee Our culture and workforce engagement Nominations Committee Report Audit Committee Report 85 ESG & Safer Gambling Committee Report Finance and Disclosure Committee Report Remuneration Committee Report Remuneration at a glance Remuneration Policy Annual Report on Remuneration Directors' Report Directors' Responsibilities Financial Statements Independent auditor's report Group income statement Group statement of comprehensive (loss) income Balance sheets Statements of changes in equity Statements of cash flow Notes to the financial statements Five-year review Shareholder information Gambling Act Review Page 11 Cross-channel strategy Page 19 Safer gambling Page 40 Net zero pathway Page 43 Workforce engagement Page 75 On a like-for-like ('LFL') basis which removes the impact of club openings, closures, foreign exchange movements and discontinued operations. The Rank Group Plc Annual Report 2024 Group Overview Strategic Report Governance Financial Statements 3 Introduction BACK Seamless customer delivery NEXT CONTENTS PREVIOUS Who we are Over the course of more than three-quarters of a century, Rank has entertained many millions of customers in Britain and around the world. The Group's story is one of iconic brands and talented people. Our Purpose To deliver exciting and entertaining experiences in safe, sustainable and rewarding environments. We will achieve this through reflecting the changing needs and expectations of our customers, communities and colleagues. To excite and to entertain. Mecca Luton The Rank Group Plc Annual Report 2024 Group Overview Strategic Report Governance Financial Statements 4 Investment case BACK Positioned to deliver continued growth in revenue and profitability NEXT CONTENTS PREVIOUS To excite and to entertain our customers 1 2 Cash maximisation Grosvenor recovery in bingo and growth 3 4 Digital Gambling growth Act Review 5 6 7 Technology Safer People & data gambling & culture Grosvenor, Luton 1 Cash maximisation in bingo Our bingo operations in both the UK and Spain are expected to make a positive contribution to the Group's profit and cash flow going forwards. Through the rationalisation of our Mecca bingo estate, specifically the closing of loss-making venues and investing in our strong and highly competitive venues, Mecca has returned to profitability. Whilst the rationalisation of the estate has now largely completed, we believe Mecca can return to double-digit operating profit in the medium term. In Spain, our Enracha venues are well invested, flagship venues. We have scope to further improve this already very competitive and profitable Spanish business. 2 Grosvenor recovery and growth Prior to the COVID-19 pandemic, Grosvenor was delivering average weekly NGR of £7.5m. With a combination of the impact of the pandemic on our customer base and a tightening of regulation, average weekly NGR fell to £5.9m in 2022/23. Through improving our approach to risk management and enhanced customer service and experience, Grosvenor is focused on driving average weekly NGR to at least £7m and beyond in the medium term. Securing the much needed land-based reforms in the UK Government's Gambling Act Review will provide Grosvenor's customers with a more relevant offer and deliver further significant growth opportunities. 3 Digital growth The Group's digital brands have significant opportunity to grow, holding relatively small market share positions compared to its venues' brands. Following the acquisition of the proprietary technology, the digital business has been working through a comprehensive programme of platform and product enhancements, all focused on delivering an engaging, personalised and increasingly cross-channel customer experience. Great progress has been made in 2023/24, and we believe there is opportunity to deliver 8 to 12% compounded annual revenue growth and margin improvement of over 600 basis points over the medium term. 4 Gambling Act Review The UK Government's review of gambling legislation and regulation will provide the much needed and vitally important reforms for land-based casinos and bingo. The proposed changes to land-based casinos and bingo present the Group with a once in a lifetime opportunity to modernise and broaden the venues experience. For further detail regarding the White Paper's proposals refer to page 11. 5 Technology and data Technology and data are key to the improvements we are making across all of our businesses. There are four key technology projects: Single content management system Providing the ability to manage all of the website content for our UK facing brands on a single system. This enables more appealing and relevant real-time promotional content and a smoother customer experience. App development Currently, too small a portion of our digital revenue is driven by our apps. Through improved functionality and personalisation we expect to increase our digital app revenues as we better meet the needs of our customers. Group-wide central engagement platform Improving the real-time data capabilities across our digital and venues businesses is critical to meeting our customer needs. The platform is helping us deliver a much- improved personalised customer offer in a timely manner. Modernisation of our RIDE platform We need to keep investing in our proprietary platform to enable the Group to deliver, at speed, product and service enhancements to our customers. 6 Safer gambling Safer gambling is at the heart of building a sustainable business for the long term and is pivotal to our success. We believe that providing excellent customer service, safe environments, and protecting personal data are important factors that attract customers to our brands and support sustainable long-term earnings growth. 7 People and culture Delivering a high-quality service to our customers depends on our ability to provide a positive working environment for our colleagues. Recruiting and retaining high quality talent, providing personal development opportunities and consistently driving colleague engagement are all critical parts of the relationship we have with our teams. Our investment case is centred on the Group delivering against its strategic objectives. Further information regarding the Group's strategic progress can be found on Strategic Pillar pages 15 - 17. The Rank Group Plc Annual Report 2024 Group Overview In this section: Welcome from Chair and Chief Executive Business model Our brands Global teams and delivery Our culture Market review Group Overview Strategic Report Governance Financial Statements 5 NEXT BACK PREVIOUS CONTENTS The Rank Group Plc Annual Report 2024 Group Overview Strategic Report Governance Financial Statements 6 WELCOME Enhancing our customer proposition NEXT BACK PREVIOUS CONTENTS Dear Stakeholder, We are pleased to share with you The Rank Group Plc's Annual Report for the year ending 30 June 2024; a year which saw us achieve good progress across our businesses, developing and delivering a range of plans focused on prioritising the customer experience to support future growth. Our Strategic Report captures our operational, financial and sustainability performance across our land-based venues, digital businesses, operational hubs and central functions. The Group has delivered a 9% increase in like-for-like net gaming revenue ('NGR') and, alongside strong cost control, resulted in operating profit more than doubling in the year. Whilst we operate a number of market- leading brands, customers expect a unified playing experience whether in one of our venues or using our mobile apps; our continuous focus on delivering a seamless customer journey cross-channel remains our priority. This year, our teams have been focused on enhancing the customer journey so we can personalise their experiences across our varied brands, making them more connected and rewarding. Customers will only continue to interact with our brands if we offer them the best experience, whether that be in venue or online. This report outlines many of the delivered projects aimed at keeping the experience exciting and entertaining for the 12.8m customers who visited us this year. Our Governance Report includes an update on our Non-Executive team's oversight of management strategy, including compliance with regulatory requirements, adherence to the UK Corporate Governance Code, effective risk management and representation of shareholder interests. Key developments have addressed the Group's approach to culture, workforce and wider stakeholder engagement, as well as the Board's monitoring of the effectiveness of internal controls. The Governance Report also includes an update of the Group's Remuneration Policy. Transparency in our reporting is a core obligation and our disclosure strategy continues to evolve in line with regulatory changes and stakeholder expectations. We hope this review provides a clear and understandable account of our latest Alex Thursby John O'Reilly performance and, as ever, we welcome any feedback on our reporting. Chair Chief Executive The Rank Group Plc Annual Report 2024 Group Overview Strategic Report Governance Financial Statements 7 BUSINESS MODEL A customer-centric,brand-led engagement approach Delivering a more effective customer proposition and resilient business NEXT BACK PREVIOUS CONTENTS Opportunities The Group is exposed to a number of advantageous dynamics that combine to present a range of organic growth drivers Operating model By bringing the Group brand operations through central technology platforms, Rank can better manage its interactions with customers, and provide a more intuitive and connected product experience whilst ensuring player safety Competitive Revenue Value advantages streams created Competitive advantages come from We have a The Group creates a number of the company's approach to risk, broad range of outcomes for its varied stakeholders customer engagement culture and complementary through the delivery of its strategy resource management to maximise revenue streams revenue Regulatory changes, delivered through the Gambling Act Review, providing more appealing experiences in land-based casinos and bingo in the UK Estate refurbishment and modernisation to attract customers and optimise our venues Technology and data provides us with realtime player insights to improve customer interactions and optimise marketing initiatives Resource efficiency and effectiveness, including Net Zero Plan realising long-term cost savings Pipeline of exciting product development initiatives across engagement channels to broaden our customer base Geographic expansion into existing and new territories United Kingdom Venues Digital Technology Platform Brands Seamless Customer Experience Brands Technology Platform Venues Digital International Market-leading brands and high customer recognition Talented teams focused on local markets Appropriate safer gambling strategies to create sustainable customer relationships Proprietary technology platform ownership Progressive employee value proposition with strategically aligned compensation to attract and retain colleagues UK land-based casino games UK and Spanish land-based bingo games UK and Spanish land-based slots and electronic games Food and beverage in our UK and Spanish venues Wider entertainment experiences in our UK and Spanish venues UK and Spanish digital portfolio covering casino, bingo, slots and sports Investors Underlying LFL Underlying Dividend operating profit EPS 0.85p £46.5m 5.9p Customers Customer NPS 52 Colleagues Employee NPS 39 Regulators Breaches/fines Good working Zero relationship Communities Charitable funds raised £323k Suppliers Supplier relationships 134 Environment Absolute carbon emissions 22,112 tCO 2 e The Rank Group Plc Annual Report 2024 Group Overview Strategic Report Governance Financial Statements 8 OUR BRANDS Leveraging our brands to excite and to entertain NEXT BACK PREVIOUS CONTENTS Grosvenor Casinos Mecca Enracha Digital The UK's largest multi-channel casino operator with 51 venues. The brand offers a range of casino table games, including roulette, blackjack, baccarat and poker as well as electronic roulette and gaming machines alongside bars, restaurants and broader entertainment experiences. Mecca is Rank's community-gaming brand for the British market. A national portfolio of 52 venues offering bingo, gaming machines, great value food and drink and live entertainment. Enracha is Rank's community-gaming business for the Spanish market. Nine venues offering a range of popular community games like bingo as well as electronic casino and slot games, sports betting, great value food and drink and live entertainment. Our digital portfolio includes our established market leading brands, Mecca and Grosvenor for the UK market and Yo for the Spanish market. The Group also operates over 80 UK digital-only brands via our proprietary technology platform and third-party platforms. Grosvenor, Leicester Mecca, Hull Enracha, Reus Like-for-like net gaming revenue UK Venues £469.9m (71%) Digital £194.6m (29%) International Venues £38.5m (55%) Digital £31.4m (45%) The Rank Group Plc Annual Report 2024 Our global teams and delivery Group Overview Strategic Report Governance Financial Statements 9 Our culture BACK NEXT PREVIOUS CONTENTS To support the seamless delivery of our brands across our land-based and digital channels, the Group operates its technology development, delivery and operations teams in a number of strategic global locations. UK Corporate Venues leadership and support teams Venues product and customer support Venues and technology support Digital customer support Spain Corporate Venues leadership and support teams Venues product and customer support Venues and technology support Gibraltar Digital leadership and delivery Digital product support Rank's culture encourages colleagues to take ownership of their roles and promotes collaborative working to create supportive work environments. Upholding our core values of Service, Teamwork, Ambition, Responsibility and Solutions ('STARS'), our colleagues are empowered to play an active role in driving Rank's culture, influencing organisational behaviours, decision-making processes and interpersonal dynamics, everything which impacts the Group's performance, strategic ambitions, sustainable growth and profitability. Our values Service Total colleagues 7,600 Venues colleagues 6,400 Digital colleagues 500 Technology colleagues 300 Corporate colleagues 400 Ceuta Digital leadership and delivery Digital product and customer support Malta Digital product and customer support Mauritius Technology and customer support Group operational support South Africa Technology development We start with the customer. We do everything in our power to deliver special service every time. Teamwork We pull together across brands, channels and locations to perform at our very best. Ambition We challenge the way we do things and explore new ways to excite and entertain our customers, and outshine the competition. Responsibility We understand our responsibility to all of our communities. We act with the highest integrity and honesty in everything we do. Solutions We act positively to get to the heart of problems quickly and find ways to solve them. The Rank Group Plc Annual Report 2024 Group Overview Strategic Report Governance Financial Statements MARKET REVIEW Evolving customer and industry dynamics The drivers impacting the Group underpin the potential for an improving cash generation profile 10 NEXT BACK PREVIOUS CONTENTS Macro trends Venues Grosvenor, Blackpool Digital The industry landscape in the UK and Spain Regulatory pressures, changing consumer habits and the economic impact of inflation have all had an impact on the industry, with the potential for further market consolidation. We believe Rank remains well positioned to manage the risks arising from these changes and will seek to benefit from the opportunities they present. Regulation Regulation is central to our industry landscape, with the changing interpretation of regulations by the UK Gambling Commission putting pressure on operators in the market. Our wealth of industry experience means we have strong processes and proprietary technology solutions in place to support our business. We have a good working relationship with regulators and welcome the much-neededland-based reforms. Customer behaviours Customer behaviours are constantly changing but venues continue to play a huge role in differentiating our offer in the market. Since the pandemic, we have seen a lasting impact on some of our customers, particularly in older customer segments in our Mecca venues, but we still enjoy strong customer loyalty. We are using customer insights to understand how we can deliver exciting and distinctive experiences that are engaging, safe and represent value for money. We continue to develop new games and formats, build our digital capability and scale, and evolve the customer offer at our venues. Economic pressures Economic pressures are a key factor for the industry with higher costs of operation (employment costs, utilities, supplies). We are able to manage our input costs due to our large scale, and to allocate resources across the estate to better meet customer demand. Land-based casinos In the UK there are currently 117 operating casinos. In total, 149 licences are in use, as some casino venues operate through more than one licence. There are an additional 28 licences held across UK operators which are not currently in use. The UK casino market has strict regulatory requirements which limit the number and movement of casino licences in the UK, thereby creating high barriers to entry. The UK casino market has been constrained by the number of gaming machines permitted per licence, with the maximum number limited to 20. Globally, there is growing customer demand for gaming machines and the UK Gambling Act Review provides a once-in-a-generation opportunity to extend the appeal of casinos and to modernise our electronic offering, enabling the UK land-based casino sector to better meet the needs and expectations of customers. For further details regarding the Gambling Act Review see page 11. UK land-based bingo The UK bingo market is heavily consolidated with the top three operators holding 63% of the 248 operating bingo venues. The bingo market has been in decline for a number of years so there is a need to evolve and create more accessible, modern and lively venues with strong bingo prize boards, a compelling gaming machine offer, good value food and drink and live entertainment. The mix of gaming machines is currently constrained by outdated legislation which will be improved subject to the Government implementing the Gambling Act Review. Spanish land-based bingo The Spanish bingo market is very fragmented with 323 bingo venues. Bingo has declined in Spain in recent years against a backdrop of growth in slot arcades and sports betting. With this decline in bingo, the stronger venues with more attractive prize boards attract bigger audiences, which in turn delivers higher prizes. The stronger bingo venues have also broadened their product range by including electronic roulette, bingo and other slot games, sports betting, good value food and drink and live entertainment. The UK's digital gambling market is fast moving, competitive and subject to strict regulation, but remains structurally attractive with clear headroom for growth over the coming years. UK digital bingo Customers are looking for a safe, secure and intuitive gaming experience, with more chances to win and easy pay-outs when they do. Customers want personalisation and more variety, from promotions that cater for a wider range of budgets, to the games and features available. The experience needs to be increasingly meeting the needs and expectations of the customer in real-time. UK digital casinos Customers want exciting and entertaining experiences, as well as great-looking sites that offer the latest games and strong promotions. They prefer sites that provide tools to help them control their spend and reward loyalty. They are looking for opportunities to have fun, at times the opportunity to win big, with rapid payment of winnings. International digital Similar to the UK market, the Spanish digital market is very competitive and subject to strict regulation. The online bingo market is the smallest sector, with only a few well known brands of which Yo Bingo is the largest. The online casino and sports betting markets continue to grow quickly with a wide range of competing brands providing opportunities for newer entrants to compete effectively and to grow market share. Attention : This is an excerpt of the original content. To continue reading it, access the original document here .