Rank Group (LSE:RNK) — FY Results

0:00 Good afternoon, ladies and gentlemen. Welcome to the RANK GROUP PLC Full Year Results Investor Presentation. Throughout this recorded meeting, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time just using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions at any time and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. We'd now like to play you a short video, after which you'll be hearing from CEO, John Riley and Chief Financial Officer, Richard Harris. So a little video there that shows something of how our colleagues across all the business that make up the

1:30 RANK GROUP deliver fun, excitement, and entertainment to our customers. And there's lots of numbers here for you this afternoon, but ultimately, giving fun to our customers is what this one business is all about. I'm John O'Reilly. I'm the CEO of RANK of the RANK GROUP. Delighted to welcome you to our results presentation. This is for the year ended 06/30/2025. Rich Harris, RANK GROUP CFO, is with me, and he'll take you through the detailed numbers in a moment. By way of a brief overview, it's been another really good year. Very solid progression for the group. We've delivered growth across all of our businesses. We now have that inflection point of the casino legislative reforms, reforms which I think represent the most significant change to The UK casino sector since the 1968 Gaming Act.

2:21 Here are just the sort of headlines for the year to June 2025. Like for like net gaming revenue was up 11% over the prior year at 795,300,000. Underlying like for like operating profit was 63,700,000. That was up 38% on 2024 and slightly ahead of our expectations at this point in our progression. The group's underlying like for like operating margin was 8%, up from 6.5% last year. We're making very good progress in terms of return on capital employed, up 4.2 percentage points to 14.5%. GROUP PLC has delivered an average weekly net gaming revenue of 7,300,000, and that was up 14% on the prior year and above the £7,000,000 per week that we've been targeted we've been targeting, and we got there faster than we expected than we expected.

3:21 Mecca had another very solid year of improved performance with revenues up 5%. And in Racha, our Spanish bingo business continued its strong performance with revenues growing 9% in the year. Digital revenue grew 10% with very strong growth from our two cross channel brands, GROUP PLC, which was up 22%, and MEKA, which is up 11%. The land based casino reforms are now on the statute book, and we expect to be rolling out around 850 machines this year. And we've already commenced that process, and we'll say a little bit about that as we go on. And with the strong momentum across the group, the board has set a final dividend of 1.95p per share, taking the full year dividend to 2.6 p.

4:07 So it's been another good year for the group. Performance continues to improve, and it reflects the strategy we have in place, the priorities we've set and the highest high quality of execution on our key initiatives, which is building profitability, building cash flow and increasing returns for our shareholders. And Richard will take you through the detailed numbers. Thank you, John, and good afternoon, everyone. I'll take you through the group results, provide a bit more detail on the business unit performance and then spend a bit of time focusing on CapEx, return on investment and cash flow.

4:41 So starting with the key drivers of that profit improvement in the year: Revenue growth of 11% contributes almost £50,000,000 of additional profit, and that's after deducting all direct costs. That's partially offset by higher employment costs of 26,000,000, which have grown by 11% on the prior year due to the higher national minimum wage, one quarter's impact of higher employer national insurance contributions, some selected investments in headcount and additional costs associated with colleague incentives. Looking forward to twenty five-twenty six, employment costs are expected to increase by six to 7%, and that's largely driven by the same factors. Depreciation costs were higher in the year due to the capital investments we're making in the business.

5:30 Overall operating profit is up 38% to 63,700,000. Net free cash flow in the period was 27,700,000. Within that, capital expenditure was 58,500,000, within the guided range of 55,000,000 to 60,000,000, but up on the prior year as we've started the investment to capitalize on the casino reforms, and we've been refurbishing the Victoria Casino. There was a net working capital inflow of £10,900,000 Around half of the improvement is temporary in nature and we expect it to reverse in the first half of twenty twenty five-twenty six. However, is a good underlying improvement as well. In the table on the right hand side you can see how the free cash flow has converted through into closing net cash of 45,400,000 There's a £3,800,000 consideration received on the disposal of our non proprietary or multi brand business, and there's a further 3,700,000 due on that sale over the next three years.

6:37 We restarted the final dividend last year, and including the interim dividend from this year, dividends paid were £7,000,000 Including lease liabilities, net debt was 130,800,000 and lease liabilities have increased by £23,000,000 in the period. The lease liabilities as a multiple of lease payments are now sitting at 4.4 times as we extended the leases on a number of key strategic properties in Grosvenor that were coming to the end of their lease term. There are a handful more leases in negotiation and as a reminder, we expect the medium term position to be in the range of 4.5 to five times annual lease payments.

7:23 We've now entered a higher capital investment phase with spend in the year of fifty eight point five million. We've made significant progress with the maintenance and infrastructure backlog over the last two years. And whilst there is still some work to be done in the year ahead, the venue's estates are now in much better shape. In Grosvenor, we completed the refurbishment of the Leicester Casino at the start of the year, invested in the refurb at the Vic, upgraded electronic terminals and table equipment, and prepared a number of venues to capitalize on the opportunity from the casino reforms. In Mecca, a large proportion of the spend was relating to maintenance and infrastructure. We also made selected investments to improving gaming machine areas, improve external signage, and made further investments to modernize the proposition.

8:12 The growth investments are all delivering strong return on investment, and I'll bring that to life shortly. Total spend on the proprietary digital platforms was £9,300,000 with the vast majority of the spend being capitalized headcount.

8:29 This year, we reported the group's return on capital employed for the first time. We've entered a higher capital investment phase and this is the mechanism by which we hold ourselves to account and demonstrate the returns we are delivering. It's something we already monitor internally at both the project level, but also at the group level as part of our capital allocation framework. As you can see from the slide, ROCE has improved relatively materially over the last couple of years to 14.5%. We've got clear hurdle rates in place. I'll prioritize those investments that present the clearest growth opportunities, where the competitive potential in local markets is highest, and that allow us to quickly assess the impact of the land based casino reforms.

9:17 Moving into the business unit detail for last year. GROUP PLC grew NGR by 14%, that was ahead of our expectations. Table Gaming revenues grew by 16%, as a result of the investments we have made in product and table management. Electronic gaming grew 21%, and I'll give a bit more detail on that in a moment. Gaming machine revenues were up 8%, ahead of visit growth, but with supply limited and unable to fully meet customer demand. Geographically, the rest of The UK grew strongly at 17%. The total growth for London was 9%, but excluding the Vic, the other venues in London grew 21%.

10:04 Employment costs were the main headwind, growing 14,100,000 in the year. And taking all of that into account, like for like operating profit was up 35% to 32,000,000. When combined with the excellent colleague engagement scores at 8.4 out of 10, improving customer NPS and the casino reforms, there is much to be optimistic about in GROUP PLC. I thought I'd take a little bit of time to illustrate the return on investment we've seen so far with some examples. So an electronic roulette, which accounts for around 15% of GROUP PLC revenues. In comparison to traditional table based roulette, it offers the customer independence from other players, so a private game that's uninterrupted, a stake size of the customer's choosing with minimum stakes much lower than those on tables, the opportunity to win progressive prizes, including going for gold, and all of that available twenty four seven in all of our casinos.

11:12 Over the last twelve months, we've removed poorer quality, older terminals, some of which have been in our venues for over ten years. We replaced these old machines with new, high quality terminals that are already proven within our estate. The in year investment was 7,800,000 in 545 machines. There was no change in the total of number of terminals at thirteen fifty. The customer benefits include high quality, consistent customer experience, improved user interface, which is much more intuitive and with better imagery and content and the introduction of new games, including baccarat. It all sounds relatively simple, but the investment is delivering great financial returns.

12:02 Stakes are up 39% on the new terminals compared to those that they replaced. NGR is up 42 from the period that they were launched. And the return on investment has been 45%, which indicates a payback period of just over two years. This was a significant contribution to the total ER growth of 21%. Having grown the digital business by 12 in twenty three-twenty four, we grew by a further 10% in twenty four-twenty five, in the middle of our medium term range of eight to 12%. That's despite the introduction of maximum slot staking limits online from the beginning of April. Both of the cross channel brands have grown by double digit percentage, with growth in the performance being particularly strong.

12:54 We launched new apps early last year, and the penetration of app revenues has increased from 13% of total to 30%. The Spanish digital business had a tougher period with revenue flat, and John will talk more on that later. In addition to the max slot staking limits, the new statutory levy also took effect from 04/01/2025. We now pay 1.1% of GGY, up from 0.1% previously. The combined impact of these Gambling App Review measures were $1,900,000 in Q4 and have an annualized impact of around $8,000,000 Like for like operating profit in the period grew by 41% to £33,300,000 At the Capital Markets event in December 2023, we set out a target to deliver 500 basis points of margin improvement in the medium term, which we then subsequently increased to 600 basis points on a like for like basis.

14:02 You can see that we've grown margins from 6.5% to 14.1 in that time. Of the increase, 1.3% relates to the disposals of both the non proprietary business and Passion Gaming, the Indian rummy business. The rebased starting point of 7,800,000 has then subsequently increased to 14.1%, and that's driven by the operating leverage that comes from a double digit growth rate over the last two years, plus the operating model improvements that we've made in our business. Looking forward, we see a twelve month period where margins will level off, impacted by the statutory levy and dilutive impact of the maximum slot staking limits.

14:48 In addition, there will be a non like for like impact from the launch of Yo Bingo in Portugal, which we expect to go live in December. From '26 to '27 onwards, see further room for improvement in margins, benefiting from the planned revenue growth. Moving to land based bingo. Recent recent years have seen a significant rationalization of the Mecca Estate, a process that has largely concluded with two venue closures over the course of the past year, bringing our estate size to 50 clubs. We now have a more competitive business with clubs that offer stronger price boards due to higher liquidity. Revenue growth was 5%, all driven by an increase in the spend per head.

15:37 Mainstage Bing Group's revenues were down 1% off the back of the additional investments we've made in additional prize money, which we think is key for the health of the business in the medium term. Gaming machine revenues grew by 9% and now account for 41% of revenues in Mecca. As with GROUP PLC, the largest cost in Mecca is employment costs, which were up £2,700,000 in the year due to the impact of the National Living Wage and the higher employer National Insurance contributions. Like for like operating profit was down marginally to 3,400,000, impacted by those higher employment costs. In Spain, there was further revenue and profit growth from our estate of nine well invested flagship Enracha venues.

16:29 Revenue was up 9%, an acceleration on the growth seen in h one. Within this, visits grew 3% and spread per head was up 6%. In the first half, we completed the refurbishment of our Seville venue. We saw 4% growth in visits and 14% growth in revenue since launch. Our broader investment in product, service and environment has seen game and machine revenues in Enracha grow by 9%. In total, underlying like for like operating profit grew 15% to 10,800,000, Another record year of profitability in Enracha. Over the past three years, we've made selected low cost investments to improve the gaming machine areas in bingo clubs. We've called that investment project jackpot.

17:24 Gaming machine areas present a significant opportunity in Mecca, but have been historically under invested in due to the primary focus on main stage bingo. 25 venues are seeing total investment of £5,300,000 around £200,000 worth of investment per venue, with 15 of those investments taking place in year. We've refurbished the machine areas, improved layouts, enhanced the lighting, and introduced better audio quality. Venues that have received the investment are delivering 14% higher staking, and NGR is up 13%. It's delivering a return on investment of 65%, so paying back in around one and a half years. Given the success of these investments and the need to further modernize the proposition, we've also invested in the gaming machines themselves.

18:18 850 Equinox tablets from Light and Wonder were rolled out replacing the much older Clarity machines. And a further 664 new machines were introduced from a number of suppliers across the estate. Forward on CapEx, as I mentioned, are now in a phase of elevated investment. We expect the base level of capital expenditure through the plan to be in the range of 25,000,000 to £30,000,000 That covers investment in maintenance, infrastructure and development of digital platforms. In FY '26 and FY '27, total CapEx is approximately 60,000,000 per annum, with 35,000,000 of growth CapEx in venues, which includes the investment to take advantage of the casino reforms, alongside further refurbishment work within GROUP PLC.

19:13 A normalized capital expenditure of £50,000,000 is expected thereafter, with half of the spend on growth and refurbishment activity to continue to drive long term profit improvement. All growth activity is expected to have a strong return on investment, with payback of less than three years, equivalent to a return on capital employed of 35 percent. We first presented this slide at the Digital Capital Markets event in November 2023, and it shows the cash generation we expect to deliver over the medium term through the various stages of the plan. In the first stage, we were expecting to be broadly cash flow neutral. In fact, we've done much better than that due to disciplined capital investment, improved working capital and improved profitability.

20:06 The combined impact has delivered net free cash flow of over £55,000,000 in that two year time period. We've got further two years where CapEx will be at elevated levels, but combined with the continued improvements in profitability, off the back of those investments, we expect to deliver another two years of modest cash generation. Thereafter, when CapEx has normalized and we're seeing the material benefits will come from the casino reforms, plus the ongoing growth in digital, we expect cash generation to improve even further. With that, I'll hand you back to John. Thanks, Richard. To the strategic update and outlook. These are the four key areas of focus which we believe deliver our pathway to operating profit of a 100,000,000 plus.

21:00 And their sustained growth in the GROUP PLC business, accelerating our digital growth, maximizing cash in our land based bingo businesses, and, of course, the key reforms for the land based casino and bingo sectors in the UK government's review of gambling legislation and regulation. And that's all underpinned by our investment in our technology, very strong group wide focus on safer gambling, and a focus on our people and a culture of ensuring we always deliver great service,

21:30 excitement, and entertainment for our customers, which is the business that we're in. Starting with sustained growth in Grosvenor, we have a clear line of sight to £8,000,000 average net gaming revenue per week. And that's before the revenue benefit of more gaming machines and sports betting this year and all, at some point, electronic payments also promising the UK government's gambling act review. The key initiatives which are driving the growth include the investment we've been making in the quality of gaming product, new tables, new roulette wheels, our table gaming management system, electronic gaming terminals, and so on. We continue to invest in poker. Just a few weeks ago, we concluded the 2025 edition of Goliath, which is the biggest poker tournament outside of Vegas, and with another record entry this year and a price pool of over £2,000,000.

22:21 We're continuing to invest in the quality of our facilities. The Victoria Casino, otherwise known as the Vic on Edgerow Road in London, has seen a 15,000,000 refurbishment. We commenced works last October completing the refurbishment just a few weeks ago, inevitably delivering quite a lot of disruption to our customers during much of the last year. Revenues fell only a £120,000 per week during the works, which is a huge credit to the team at the Vic. Customer reaction to the refurbished venue has been terrific, and we expect the Vic to make a considerable contribution towards that step up to £8,000,000 per week and beyond. Our approach to investment during the latter half of FY '24 and during '25 has been to ready some of our most important casinos and competitively significant casinos for the land based reforms.

23:14 GROUP PLC, which was under refurbishment as we entered 2425 and completed during half one, provides a good case study.

23:23 Now our casino in in Leicester is in a strong competitive location in the city, but it hadn't had an investment for well over ten years. We've now fully modernized the venue and in doing so, prepared it for the casino reforms, which now enable its host 80 gaming machines. The refurbishment also created a sports book, effectively an area for customers to watch a ball game, place bets, enjoy high quality service, and do so twenty four hours of the day. Visits have grown 10% since the refurbishment, and NGR, net gaming revenue, has grown 19%. The investment was £4,000,000. We expect to pay back within thirty months based upon that the current performance, and that's before the impact of 80 machines rather than 20 machines and the benefit of sports betting.

24:14 We've also readied seven further GROUP PLC casinos in '24, '25 for the maximum allowable number of gaming machines given the floor space. With more investments to be made over the next two years as we learn more about the impacts of the reforms. We're hospitality business and the relationship between our colleagues and our customers is central to GROUPner's success. GROUP PLC's cultural program called From Like to Love continues to gain gain traction, and this is benefiting our customer net promoter scores and our employee engagement levels with a record engagement score for GROUP PLC in our most recent employee opinion survey. This is a fabulous business. We're the leading operator with 50 of the 111 casinos currently trading in The UK. We've got the benefit of what is now only an emerging seamless cross channel experience.

25:05 We have a strong management team and a culture focused on the service, excitement, entertainment, and very importantly, the protections that we deliver to our customers. The state was underinvested, but we're gradually dealing with that. And now we have the long awaited land based reforms of gaming machines, more gaming machines, and sports betting. And this is what we expect to happen as a result of the reforms. In twenty twenty four, twenty five, the GROUP PLC had 50 casinos with an average of 1,367 gaming machines across those 50 vent venues, generating revenue of 102,000,000. The casino reforms enable higher machine allocations for casinos licensed under the 68 Gaming Act, and that's 49 of our 50 casinos.

25:53 And that became law on the first of July this year, where they're coming into full state of the July 22. Those reforms apply to England and Wales, but not to Scotland. And the legislation we need to be implemented by the Scottish Parliament is not currently on the horizon, so something for us to work towards there. The legislation required casinos to submit variation applications to the relevant local authority. And the first day we could do that was the July 22, and we submitted 38 applications on that day. We have five casinos in Scotland. We've got three casinos in England, are too small to receive additional gaming machines and four casinos where we can't introduce any more machines without capital investment, and that's work which we will prioritize down the track.

26:40 Hence, 38 applications being made. We're through that process in very large part, and we're now rolling out just over 850 gaming machines through this financial year. And the majority of that, we expect to be to be completed in the first half of this year, I. Before Christmas. Subject to development, which includes structural works in our casinos to change physical layouts, to create more space for gaming machines, we expect to roll out a further 650 machines over the next thirty months, making an additional 1,500 machines in total increase in the current estate by a 110%. We've said that we expect the machine estate to increase by a 130% over time, and that's still the case, but it requires the legislation to be passed in Scotland plus additional development in the shape of extensions and relocations.

27:32 And not everyone bets on or not everyone bets on sport plays in a casino, but just about every casino player also bets on sport. And here, we've acquired 356 sports betting terminals and expect to complete the installation across the 38 casinos in line with the gaming machine installations. We've been experimenting with our 2,005 act casino in Luton. Think of it as a very nice bedding shop with great service and a and food and beverage. Space is clearly a constraint to do that everywhere, but we intend offering sports betting wherever we possibly can as we expect this to be to give existing customers more reasons to visit and to broaden the appeal of casinos to a wider audience of customers. Our digital business is on a journey towards delivering an increasingly rich and seamless cross channel experience for our customers.

28:24 The scale of RANK's digital business has been gradually increasing since the acquisition of the Yo Bingo business in Spain, and that was in 2018, and the acquisition of Stride Gaming in The UK in 2019. We set an expectation of growing revenue by 8% to 12 compound average growth over the medium term, and we've got a strong pipeline of developments to deliver this going forwards. We're modernizing the core platform to ensure we can develop, test, and deploy new functionality, features, and products at speed. In this respect, we have an important road map of developments ahead of us this year, including a new bonus engine, a new wallet, and a new operator interface, has gone live in the last few weeks. And that that helps the teams running our online services in real time.

29:11 In the next couple of months, we'll merge Mecca's venue based apps with our core Mecca Bingo app to deliver one single app across both venues and digital. In q three, we will launch membership single membership for Mecca customers so that as a customer of the Mecca brand, you're recognized regardless of channel. We're extending the footprint across channel games within both Mecca and GROUP PLC, including a game called Mega Money, a Friday night joint liquidity game called in venue and streamed online, and live at GROUP PLC table gaming opportunities from our bricks and mortar casinos. And whilst our UK digital business grew 12% in the year to June, in Spain, our digital business was flat following several years of strong growth.

29:57 Our challenge in Spain has been the core bingo platform, which has lacked the capacity to grow concurrent customer numbers during peak trading hours. In the coming weeks, we'll be launching a new Yo Bingo platform, which will provide much greater scale, bigger pools, and bigger prizes. And that's a critical development to get the Yo business back to the double digit growth rates we've seen over recent years. And we're confident that by the end of half one, the Yo business will be back in growth. We've now successfully completed the homologation process in Portugal with the regulator giving our platform the all clear for launch. We'll soft launch in the coming weeks as we gear up for a full customer launch later this half. And then we'll become the first online bingo operator in Portugal. RANK Digital is now a material business with a strong management team, good technology, and it's now making a significant contribution to RANK GROUP's overall profitability and cash flows with considerable further upside to be delivered as we build out a seamless and tailored cross channel experience for our customers.

31:01 To cash maximization in bingo, and that's been our approach, and that's our approach over the short to medium term. That said, we are making some investments too where we're seeing rapid returns. And this year, we'll make some further investments to machine areas and external decor and to signage, and we have a couple investment trials of outdoor terraces and cashless interval games underway. We've been scaling electronic bingo, and we'll be pushing this even further this year with an ambitious goal to take the share of bingo revenue played on tablets well beyond last year's 76% figure. We're awaiting the reforms in the Gambling Act review that were proposed for bingo, including the much needed change to its eighty twenty machine rule, which provides just about the opposite mix of category b three machines to that which is preferred by our customers.

31:51 And we're also pushing for a broadening of our what constitutes bingo to enable side bets to be offered on the main stage game, providing customers with more chances to win. Now those changes have been delayed as the government reviews the licensing regime for traditional bingo venues. We're hopeful we'll see this reform at some point during this financial year. Bingo very much needs help if it's to be sustained at today's levels. Mecca's well positioned for these reforms with 50 venues with increasingly strong price boards, giving great value to our customers, registering very high customer net promoter scores, and delivered by a highly engaged Mecca team of colleagues. And in Spain, we'll continue to improve in what is a terrific in Ratchet business with two further venue in investments this year, one already very near completion at Sabadell in Catalonia.

32:43 So we believe the path we're on, the progress we've already made, and the runway of opportunity we have before is create a compelling investment case for the RANK GROUP. We have market leading positions in attractive markets. We have the biggest brands in the land based bingo and casino markets. The benefit of strong cross channel customer economics and in GROUP PLC, a casino business with a licensing requirement, which creates a high barrier to entry. We've got an attractive customer proposition as a result of the renewal investment we've been making across our venues businesses and the complete renewal of our digital business on acquired and now increasingly modernized proprietary technology. And we've got a very strong road map of investment opportunity, particularly this year with the legislative reforms for casinos in The UK. We've got a highly engaged and skilled workforce, a group wide record engagement score this year of 8.3 out of 10, not surprisingly delivering market leading customer net promoter scores with considerable investment going into further enhancing the culture within our business.

33:45 With very clear growth drivers, a clear pathway to 8,000,000 net gaming revenue per week in GROUP before the benefit of land based reforms, an expected eight to 12% compound average growth rate in digital, and an anticipated continued growth in a now well set Mecca and a very well polished in Racha estate in Spain, plus a 62% increase in game machine numbers in GROUP this year with that extending to a 110% increase by the end of twenty twenty seven. And with targeted investment to maximize shareholder value, a capital allocation policy with clear hurdles for capital investment, and a progressive dividend policy. And all that delivers strong financial outcomes, Double digit revenue growth with growth in all businesses and a strong profit conversion on track to deliver a 100,000,000 plus operating profit in the medium term.

34:41 Cash generation being ahead of our expectations and will continue to improve as operating profit grows and capital investment normalizes. We have strong payback on investments, and we're growing the return on capital employed, a strong balance sheet with a net cash position, and with significant further opportunities for the group. In our view, there is a lot more to come. Very briefly, when we published the results a few weeks ago, we talked about the good momentum within the group, and that's continued into 2526 with NGR growing at 9% in the opening six weeks. And we're obviously well placed to meet expectations for 2526. That concludes the formal bit of the presentation, and we are now very willing to and welcome to take any questions that viewers may have. That's great. Thank you very much indeed, John, Richard, for updating investors.

35:39 Ladies and gentlemen, please do continue to submit your questions. But just while I review those submitted already, I'd just like to remind you that the recording of this presentation along with a copy of the slides and the published Q and A will be available via your Investor Me company dashboard. John Rich, I'm just going bring up your cameras for those attending online. Firstly, thank you to everybody for your engagement this afternoon. We've got a number of questions to give to you guys. So look, I think you might have touched on this in the presentation, but perhaps if I start with this one. When do you expect to secure final approval to launch in Portugal? And what revenue opportunity do you see there in year one? So we we there's a process called homologation whereby the regulator in Portugal reviews our offering to the customer. And there's a lot of load of tests and all that stuff that we have to we have been going through and have been going through for several years.

36:30 I think when we started the process some years ago, there were 17 licenses in Portugal, there are now 18. And we'll be the nineteenth license in Portugal. So we are there or thereabouts. We'll be the first bingo. I mentioned there, we'll be the first bingo operator in Portugal. And bingo's quite a strong business in Portugal, not online. There's a good strong bricks and mortar. We don't know. It's a first for the market. We'll be the first online bingo operator with YoBingo, and it's super exciting. We'll see what it delivers in the fullness of time. That's great. Thank you very much indeed. Let's turn to the next question. This was actually presubmitted ahead of the event. The new casino reforms allow more machines and sports betting. How quickly do you expect these changes to feed through into earnings?

37:15 So I probably touched on some of that in the presentation. But so we we think there are opportunities this year to introduce 850 machines and sports betting into 38 casinos across the 50 in the estate. And there are there are opportunities beyond that. But this year, eight eight hundred and fifty, and that's on that's a 62% increase on the number of machines with which we ended 2025, financial year '25. And then then thereafter, we need further capital investments. So we estimate the amount of capital investment we need in the next eighteen months beyond this year. So that's f y twenty seven and the first half of twenty eight, will deliver further 650 machines from an investment of around 25,000,000.

38:02 And that takes our estate up to a 110% of the machine numbers with with which we ended last year. Machine revenue, you you've seen the numbers in the year end deck, which is that those 1,367 machines delivered revenue of a 102. So it's an increase of a 110%. We think we can get higher. We think we get a 130%. The one number we're not presenting because we don't know ourselves yet is the diminishing returns of adding adding in more machines. But clearly, there is we clearly recognize that, supply has not met demand. And that's the basis on which the government have been, supportive of the reform because they recognize too that the demand for gaming machines in casinos does not meet the demand. And if I just give you one small of maybe a couple of numbers.

38:48 In Vegas on the strip, gaming machines account for 68, 69% of casino revenues. Come a bit close to home in France. Gaming machines account for 74% of casino revenues, casino gaming revenues. And if I look at GROUP PLC's numbers for the year just gone, it's about 28%. So you can see the constraint on gaming machines in our business and the upside opportunity. Thanks, John. You've talked a lot about both the, I guess, the physical state as well as digital. The next question kind of asks how do you balance investment between digital with maintaining and upgrading venue estates? Yes. So I mentioned in the presentation that we our our base level of capital expenditure each each year is 25 to 30,000,000.

39:37 So if we did nothing else other than invest in maintenance and infrastructure within our venues And as well as do all the investments that we need to do in our digital platform, we'll spend around 25 to £30,000,000 per annum. So of that, the digital component is about £10,000,000, and it breaks down into three areas really. So the first one is regulatory and compliance, so changes to the platform that we need to do in order to continue to comply with gambling regulations. Second phase is investment in the infrastructure behind the platform. So that's making sure that the platform is fit for the future. It's historically been one large code database, and we're breaking that down into microservices over a period of time. So that investment has been ongoing for a period of time and will continue for the next twelve to eighteen months or so. And then the third leg is the kind of growth CapEx, which is investment in the proposition to really drive revenue growth. And that's ultimately what's fueling that eight to 12% revenue growth that we expect to deliver per annum. So the digital investment is a big priority for us. It's kind of alongside the maintenance of the existing venues estate.

40:48 That's where we prioritize. And then on top of that, we've got the growth investment that goes back into our venues estate as well. For the next two years, we expect to spend $60,000,000 per annum in total. Thanks, Richard. Obviously, the performance has been been noted here. One of the questions goes on to say, do you expect the current momentum to continue into the next financial year? Yep. So you saw from the deck, we grew by 11% last year, and we've grown by 9% in the first six weeks of this financial year. So the momentum has largely continued. And when you consider that we've got the land based reforms still to come, it's a reasonable expectation to become on or around that performance over the course of the next twelve months. Thank you very much indeed.

41:33 Maybe sticking with you. What returns are you targeting on CapEx? And how are you measuring the payback on refurbishments? Yes. So I mentioned touched on this a little bit in the deck as well. So our hurdle rate for all growth investments is for a return on capital employed of at least 35%, and that gives a payback within three years. So we've got a long, long, long list of potential investments that we could be making in this business in order to drive long term profitability. But we are prioritizing between and choosing between investments that are paying back in less than three years. So anything that doesn't pay back in three years at the moment is not making the cut. In terms of how we measure the performance of the refurbishment, so it varies depending on the type of investment that we're making, but largely, it is against a control group. So investments at venues that haven't been invested in, and how does that performance compare to the invested venue. So I've been relatively tried and tested, relatively common methodology.

42:33 And, yeah, I gave some examples in the presentation deck. We are we are seeing very strong returns on the investments that we're making. Thanks, Richard. Maybe turning to you, John, for this one, if I may. How do you see acquisitions growing revenue when looking to capital allocation? So we we've got, as Richard's kind of indicated, we've got a really strong road map of opportunity ahead of us from an organic perspective. So so, you know, look, would would we rule out acquisitions? No. We wouldn't. But right now, we've got we've got plenty of opportunity. Richard's talked to investments in with a sort of three year payback hurdle, which is very, very strong returns. We talked about eighteen months returns on investment in Mecca.

43:20 So we're seeing super strong returns. We've got a very long road map of opportunity within their existing estate without considering acquisitions. There are clearly some interesting things that we might want to add in time. But in the short term, we've got a very strong organic road map, and acquisitions are unlikely to be our prioritization. Great. Can you expand on the digital offering and brand recognition more aggressively as it seems to be a very competitive space? I guess, or not you accelerate. Can't not do anything other than agree with that question. Yeah. I think we can. Look. The way I think about this is that the we're the strongest casino brand in Grosvenor. We're the strongest bingo brand in Mecca, and we've got three or 4% of the digital market in The UK.

44:11 So, yeah, we've been super we've we've got a very significant opportunity in the digital business. We are growing it quickly, and we'd like to grow it faster. And a lot of our investment, a lot of our focus in recent years has been doing exactly that. We're we're investing quite heavily above the line. We're investing quite large amounts of money to recruit customers. But our our sweet spot is our bricks and mortar venues and the extent to which they drive customers into our digital channels. And that's key critical. You know, we we have got that advantage of 50 casinos in The UK and 50 bingo halls in The UK and the most well known bricks and mortar casino and bingo brands.

44:57 And and that's really the and our corporate, if you like, competitive advantage, our real sweet spot is in driving that that seamless cross channel experience. And I I think there, we're sort of on the nursery slopes. We have got, clearly, some significant developments being landed this year. But beyond this year, I think it's gonna take us two to three years to really deliver that seamless experience in a way which I think really starts to maximize the opportunity we've got in the digital space. Thanks, John. And I guess the last question that we got as we stand, beyond the reforms, John, what do you see as the largest opportunities and risks perhaps to shape the future of business? So we've got two two or three years now of growth delivered in for the casino business delivered by the reforms is the way I think about it. Beyond that point, we we will have 27 dormant licenses, which gives us dormant casino licenses.

45:55 And a casino license, just to remind everyone, a casino license is determined by an act of parliament. So there can't be any more any more casino licenses without it being a statute. So that that's the that's, if you like, the the constraint in the market. I don't think more casino licenses are likely in the near term, at least. And we we we have got 50 venues today. We've got another 27 dormant licenses, which we could use in the future, which gives us a significant opportunity. In the in the mega biz business, cross channel single membership is the real driver, I think, of not only the digital business, but also the bricks and mortar business, the the physical estate. And in the physical estate, I I should kind of add, you know, Mecca.

46:42 We think about Mecca. We present the results at a channel level. Actually, you know, this is one single brand, and the most important brand for us in the online space today in terms of revenue generation is Mecca. 42% of our revenues are driven by the Mecca business online. So that's super important to us. In terms of large opportunity beyond that, I would stick with, you know, this is a business which, the cost base is largely fixed and semi fixed. And as therefore, as revenue grows, the operating leverage is such that we start to generate a lot of cash. Now that that's good for shareholders in terms of reforms. It's also good, I think, because we can we think we've got a lot of road runway here, a lot of opportunity to expand the RANK GROUP beyond the position it's in today. Clearly, we need to continue demonstrating along that pathway that we're delivering very, very strong returns for our shareholders, and that's the that's the road we're on.

47:42 That's great, John. Thank you very much indeed. And that does cover all the questions from investors. So thank you once again to you all for your engagement this afternoon. John Richard, know investor feedback is particularly important to you both, and I'll shortly redirect those on the call to give you their thoughts and expectations. But perhaps before doing so, could just come back to you maybe, John, for a couple of closing comments. This this is a I've been in this business. I've been in the gambling industry for most of my life, and not all of it. But I think I knew the difference between 72 and 130 when I was about 3.5. So it's definitely in my blood. And in 2019, 2020, the RANK GROUP share price hit £3.28. We were rocking and rolling. And, I actually said then, of course, a few weeks later, we were closed. And it's been since then, it's been something of a battle. I now feel that we're back actually on a stronger trajectory than I thought we were on in 2020.

48:32 This business is moving in the right direction pretty quickly now. We've delivered the land based reforms still a and there is a, as I say, a big road map of opportunity ahead of us. So I think it's a big a good time to be involved with the group. That's great. John, Richard, thank you once again for updating investors. If I could please ask investors not to close this session as we're now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. This may take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of RANK GROUP PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.