The Rank Group Plc (RNKA.F) Earnings Call Transcript & Summary

Good morning, everyone. I'm John O'Reilly, and I'd like to welcome you to Rank Group's results presentation for the year ended the 30th of June 2020. Thank you for joining us this morning. I'm sorry we can't do this in person, but hopefully or at least it would be nice to think that by the time of our interim results in the new year, we'll be back to some degree of normality. Now -- but what about admin, there are a couple of ways listening to the presentation this morning. You're either doing that via the conference call details outlined in the RNS or via the webcast link found on our website, rank.com. If you wish to ask any questions after the presentation, please make sure you've dialed in with the conference call details. I'd recommend you mute your webcast if you've also dialed into the webcast to via the Internet or on your line. So the easy way of doing this actually is the conference call and to pick up the slides on the rank.com website. Our results for the year have been well flagged to you in a number of trading updates over recent months. So I'm going to begin with an update on the progress the group is making as we emerge from lockdown and reopen our venues. Bill Floydd, our group CFO, will then take you through the year-end numbers and provide more detail on liquidity and cash flows. I'll then provide an update on the next phase of the transformation of the group, which we are colloquially calling transformation 2.0. We'll then take any questions you may have, and then you can get back to your day. Well, it's certainly been a year or 2 halves, following the groundwork we put into the transformation program in the prior financial year, we entered this year with strong momentum, and this continued right throughout the first half and up until lockdown hit in March. Our like-for-like net gaming revenue across the group was up 11%, with like-for-like underlying profit, operating profit that is, up 61% at GBP 71.6 million for the 8 months to the end of February. As a result of the pandemic, we're forced to close our venues in March, and they remain closed other than in Spain, which we opened during June through to the end of the financial year and, of course, beyond. The strength of our business is a result of the cost efficiencies we've delivered through the transformation program; the progress we've been making across our digital businesses, both in the U.K. and in Spain; and a strong balance sheet that helped us to navigate through a second half in which our venues businesses, which accounted for 76% of group revenues coming into lockdown, have been closed. We're certainly grateful to government for the support of the Coronavirus Job Retention Scheme, which has helped us to protect as many jobs as possible across the group and to be able to prepare for reopening. And we're now emerging from lockdown. It's been an extended lockdown for Grosvenor casinos, where we're only given clearance to open on the 15th of August in England and a little later than that in the month in Scotland and Wales. Early performance levels are encouraging. Our London casinos are suffering from the absence of visitors to the city, but elsewhere, we've received a good reaction from customers to the COVID measures we have in place across the estate. We focused heavily on cash during lockdown. Net debt pre-IFRS 16 at year-end was GBP 63.2 million compared to GBP 59 million at the half year. With the casinos remaining closed long after most other hospitality venues, we've agreed to a covenant waiver with the banks for the December test date and are confident that we'll return to our normal covenants at year-end. Our cash flow in July and August has been in line with our expectations. I'm certainly pleased with the way my colleagues across the group have responded to COVID-19 crisis in terms of helping secure our liquidity position, supporting our local communities and supporting our customers during lockdown and, of course, preparing for reopening. We closed down our Enracha venues in Spain in early March, with Mecca and Grosvenor, and a casino in Belgium closing later in the month, the 20th of March in the U.K. We entered lockdown with GBP 160 million of cash and bank facilities, GBP 30 million of the GBP 85 million RCF ends at the end of this month. Managing our liquidity was our immediate priority. Without mitigating actions with our venues closed, Rank entered lockdown with a GBP 25 million monthly net cash burn. This was offset to around GBP 10 million a month through the huge support from government by the Coronavirus Job Retention Scheme, with similar schemes in Spain and Belgium, enabling us to protect jobs whilst placing around 7,600 colleagues into furlough. Plus our immediate mitigating actions, including with landlords to reduce or defer rents wherever possible, with our partner suppliers freeze payments and deliveries and with HMRC to delay tax payments. We canceled the annual pay around. And of course, we had to postpone or cancel the full year dividend to shareholders. As we now emerge from lockdown, we'll continue to focus very tightly on the management of cash within the business, as Bill will update you on. In our local communities, the efforts of our colleagues across the group during lockdown has been outstanding. Lots of our teams volunteered to stay out of furlough and man our kitchens up and down the U.K. to cook and often deliver meals to the vulnerable within their communities as well as for emergency service and NHS workers. Colleagues have been raising money for the Carers Trust, which has been much in need of support over recent times, and we've provided our car parks free to NHS workers and other essential workers during the height of the pandemic. For our regular customers, our colleagues provided frequent telephone contact to check on their well-being, as indeed they have with their colleagues who were placed in furlough to check that they are okay. Within Mecca, we've been providing local online free bingo for our venue customers as well as chat facilities so they can engage with their friends and with the local Mecca team. We've been running charity poker tool tournaments, charity bingo events and other online activities to provide as much -- some much-needed entertainment during lockdown. It's been a great effort and also has helped us to prepare for reopening. Now we've been ready to reopen our venues since June, and they're now very different venues, too. We're blessed with a lot of space in Mecca, in Grosvenor and Enracha, and can successfully accommodate lots of people within social distance facilities. In Grosvenor, we've introduced ID scanning on entry. We're trialing this before the pandemic struck as part of our safer gambling transformation work stream to provide improved data on customers entering our venues. We've now introduced it right across the Grosvenor estate to also support track and trace, if required. In Mecca, entry is by membership, so we have the data points. We have protective screening and reception between our gaming machines and at our gaming tables to create secure spaces for our customers, with socially distanced seating arrangements in Mecca and in Enracha, and we've reduced capacities across the estate. Floor plans have been revised. One way system is introduced with signs to help our customers. All of our colleagues are involved in what is a rigorous cleaning regime, including chip cleaning across our casinos. In Mecca, we've changed the daily schedule to hourly sessions spreading demand across the day. And in Grosvenor, we've revised the gaming offering to support social distancing. Safety guidelines have been agreed with the government scientific advisers, and we were grateful to the Deputy Chief Medical Officer for personally visiting 1 of our Grosvenor venues in Central London in early July to view and provide his support for the COVID-safe measures that we put in place. We've run extensive training for our colleagues and are very grateful for their dedication and hard work. It's a tougher environment working with a facemask and often a visor, but our colleagues have stepped up to the task and are providing a great service to their customers. Our Enracha venues opened during June, but we've experienced subsequent closures in Barcelona. All of them are now back open in Spain, but with capacity and opening hour constraints. Mecca opened on the fourth of July in England, the third of August in Wales and the 24th of August in Scotland. 72 of our 77 Mecca venues are now open, the other 5 venues can all open but they're marginal businesses with September 2021 lease ends, and we're reviewing their viability whilst we're in discussions with the respective landlords. We'd hope to open as many of these as possible over the next few weeks. The opening of Grosvenor was delayed to the 15th of August in England, the 24th of August in Scotland and the 28th of the month in Wales. Some venues have been delayed by local lockdowns. But on Tuesday, we were committed to reopen our remaining casinos in Greater Manchester, with the exception of Bolton. And now we have just 2 casinos, Leicester and Bolton, that remain closed due to local lockdowns, and we've yet to reopen our casino in Sunderland, but we expect to do so in the coming weeks. Now the early demand trends in Mecca have been encouraging and ahead of our expectations. Cumulative like-for-like revenues to the sixth of September are at around 70% of prior year levels, with the trend continuing to slowly improve each week. The confidence of our older customers to leave their homes is impacting visit numbers, which are down 40% overall, but are down 60% amongst customers aged 70-plus. Spend per visit is up 15%, with the main stage bingo spend per visit up nearly 30%. This reflects the changes we've made to the Mecca proposition on reopening. With more emphasis on the core bingo game, slowing it down, adding more entertainment and putting relatively less emphasis on the cash line interval game, giving more overall value to our customers and more chances to win. The very early demand trends in Grosvenor are also encouraging and in line with our expectations. But please do bear in mind here that we're just talking 3 weeks of 35 venues in England, there's 2 weeks for our venues in Scotland and it's less than that for our venues in Wales. And of course, those that have been caught up in local lockdowns. Outside of London, we're seeing good trends with like-for-like revenues to the sixth of September, running at 75% of 2019 levels and also gradually improving. In London, our 8 venues are as expected, experiencing very much tougher trading conditions, with like-for-like revenues running at just over 40% of prior year levels. The absence of visitors, particularly overseas tourists, offices still being largely empty, concerns about safety of public transport and the extension of the congestion charges to evenings and weekends are having a material impact on the hospitality sector in London, and that very much includes casinos. Across the Grosvenor estate as a whole, like-for-like revenue to the sixth of September are running at 60% of prior year levels. And as I say, gradually improving as customers know we're back open and experience the safe yet entertaining experience we've created. Gaming machines and electronic roulette performance is stronger within table gaming, and that just reflects the social distancing measures that we have in place, which inevitably restrict supply. In our Digital businesses, it's been full steam ahead, of course, albeit with ever-tightening safer gambling restrictions to protect customers, but also inevitably adding some friction for all of our customers. On a like-for-like basis, with good growth in the U.K. and in Spain, Digital revenues grew 23% on the prior year, up 31% in the second half of the year with the closure of casino and bingo venues and the absence of sports betting opportunities. Mecca net gaming revenue 23% in the year with Grosvenor growing 24%. In Grosvenor, we experienced very strong growth rates from our omnichannel service, Grosvenor One. 30% of our Grosvenor venues win came from omnichannel customers in the year. And online, this was 44% of our net gaming revenue, with omnichannel customers growing 43% in the year in volume terms. Net gaming revenues from the Stride brands, and that's proprietary and nonproprietary combined, declined 9% on a pro forma basis in the year, following work to harmonize safer gambling controllers across our digital business. On a pro forma basis, this reduces the overall growth of the digital business to 11% in the year. In Spain, Yo delivered like-for-like net gaming revenue growth of 18%. This was on the back of growth of 38% in the second half. Outside of driving growth and enhancing our safer gambling standards, our priority action has been the development of the Stride proprietary platform in preparation for the migration of Rank brands and to spearhead international growth opportunities going forward, and that program of work is going well. Bill, over to you.

John, thanks very much. Good morning, everyone. And moving to the financial headlines, we had a strong start to the year. By the end of February, 8 months into our financial year, like-for-like revenue was 11% ahead of the previous year, with strong performances in Digital, Grosvenor Casinos and International venues. Like-for-like underlying profit was 61% ahead of the prior year. Thereafter, the closure of our venues businesses from mid-March, meant that we ended the year with a like-for-like revenue decline of 15% and underlying operating profit down by 45%. And an underlying loss of close to GBP 30 million in the last 4 months of the year. Despite this, the group comfortably achieved its banking covenants at the end of year test date. We have, however, agreed with all of the banks, a temporary liquidity covenant of GBP 50 million in place of our regular covenants, given the lack of visibility on EBITDA to December 2020, and I'll provide more detail on this later. Our immediate focus is to return the business to its former health and to balance the opportunities for future growth with providing a return to shareholders through restoration of the dividend as soon as we are sufficiently confident in the cash flows of the business. In the interest of time, I will not take you through the detail of the venue's performance as the commentary for those businesses is self-evident. Our usual slides are in the appendix. In Digital, we are delighted with the performance in Mecca, up 23% in the year, driven by customer journey improvements and better marketing execution, increasing customer numbers. Q4 benefited from increased consumer demand during lockdown, and we've seen a return to more normal levels as lockdown restrictions have eased. The performance in Grosvenor was also very pleasing, with customer numbers up by 35% driven by the strength in ever-improving multichannel proposition, customer journey improvements from the launch of our new content management system and the launch of a daily retention game. Q4 saw a strong uplift in demand, but since the end of lockdown, performance has been curtailed by both the return of live sports providing consumers with a broader range of products on which to gamble, and our own venues being closed has limited the appeal to multichannel players. Yo performed very strongly in the second half and, as a result, grew by 18% in the year. The new management team is intently focused on broadening our marketing reach through channel diversification, improved CRM and product innovation. YoCasino continues to perform well and in line with our launch plan. In Stride, following the gradual return in performance through Q2 and Q3, Q4 was impacted by the introduction of improved safer gambling controls as we rolled out enhanced measures and use across the rest of the digital portfolio to the proprietary platform and the Aspers joint venture. As a result, revenue for the year was down by 9% on a pro forma 12-month basis. The impact of these changes will annualize out in Q3 of the current financial year, but will ensure that the business is able to progress on a firmer footing than would otherwise have been the case. The nonproprietary brands have continued to perform well and remain in growth, whilst the Indian rummy business has continued to grow strongly, with revenue for the year reaching GBP 5.4 million. Integration is on track with cost synergies now projected at GBP 15 million in year 3 compared to our initial estimate of GBP 13 million. Moving to the income statement. Operating profit was GBP 51.1 million. As we noted in our July RNS, this was in the lower half of our guidance range. As we expensed GBP 2.5 million on reopening costs, predominantly perspex screens and deep cleaning to ensure that we provide the cleanest and safest possible venues. The impact of IFRS 16 ended up being an increase to operating profit of GBP 7.8 million, almost exactly offset by an increase to the net financing charge of GBP 7.9 million. The underlying finance charge was GBP 5.5 million, an increase year-on-year of GBP 2.7 million, reflecting the drawdown of the Stride acquisition term loan. The effective tax rate was 21.7%. This is higher than the 19% guidance due to a timing difference on a tax credit in Malta, which will be recognized next year. Going forward, I would expect the tax rate to be more closely in line with the headline 18%. On separately disclosed items, I'll just draw your attention to a few of the key ones. The GBP 25 million credit for VAT on slot machines paid between 2002 and 2005 following the successful outcome of our claim, the cash on this was received in April. Going the other way, the biggest charges were impairments and therefore a noncash item. Impairments totaled GBP 37.9 million impacting 5 casinos, 41 Mecca Bingo clubs and 5 interactive venues. These charges reflect the impact of the pandemic and assume that we return to pre-COVID levels over 3 years. The performance of the business going into lockdown would likely have resulted in no impairments. There's also a GBP 10.2 million property-related provision, where the liability will fall due to Rank if the tenant defaults. The annual cash impact for this charge is about GBP 300,000. The total charge for acquisition-related intangibles is GBP 9.6 million and in line with our previous guidance. In the year ahead, this charge will increase to around GBP 11.5 million to reflect the full year impact of the Stride acquisition. Finally, we concluded the national minimum wage matter for GBP 2.9 million, well within our initial provision. The cash settlement of this matter was also paid during the year. On cash flow, cash from operations before IFRS 16 was GBP 101.4 million, boosted by GBP 25 million from the VAT settlement. Cash on CapEx was GBP 50.7 million, with close to GBP 7 million of CapEx creditors unwinding in the year. In the year ahead, we're currently targeting CapEx of GBP 30 million as we are clearly cautious on how the business will recover. If circumstances allow, then we will move faster on our investment priorities and we continue to focus on fast payback initiatives, but we're also mindful of rebalancing the balance sheet and being able to return to paying a dividend at the earliest opportunity. Dividend payments in the year totaled GBP 32.4 million, with the interim dividend being paid in March immediately prior to lockdown. We received GBP 5.6 million from the disposal of our investment in Bede, and the final retention on the Yo acquisition was paid in April at GBP 2.3 million. Net debt pre-IFRS 16 was GBP 63.2 million, with cash and available facilities at year-end of GBP 140 million. Looking to the short-term future, I've set out here for you the average weekly revenue performance of the venues businesses over the last 2 weeks, being the period where we've had 40 or more Grosvenor casinos open. We then have a high-level view of the revenue required from each of the venues businesses for the group to achieve a cash breakeven point. This includes central costs, CapEx, interest and tax. Whilst the International and Mecca businesses now have over 10 weeks of trading under our belts, it's still very early days in Grosvenor, and that business generates around 50% of Rank's revenue. Growth in our revenue in London remains weak and is at about 40% of last year. Outside the capital, like-for-like revenue is reaching 75% of prior year. As you can see, we are already close to the breakeven, and all the venues businesses are making good progress to returning to positive cash flow. On the CJRS, we have claimed GBP 29 million in relation to the last financial year, with GBP 17 million being received by the end of June and the balance being received in July and August. In total, I expect us to claim a further GBP 11 million by the time the scheme ends in October. We estimate a further GBP 6 million will be available through the bonus element of the scheme in early 2021. In April, we were able, with the support of treasury, to defer GBP 37.5 million of duty payments, GBP 7.7 million was paid in June and we have now paid a further GBP 10.8 million for a total of GBP 18.5 million. The balance of GBP 19 million is scheduled to be settled in installments by the end of December. All other duty is being paid on time. We've also received strong support from most of our landlords by allowing us to defer rent. At year-end, we had GBP 13.2 million of rent that will be paid over 1 to 18 months and substantially caught up in the current financial year. The net impact of the above is a cash outflow of around GBP 14 million in the first half and broadly cash neutral in the second half. Here, I've given you a reminder of the group's banking facilities. Whilst current facilities totaled GBP 213.1 million, GBP 30 million of RCF expires later this month. The first amortization payment of the Stride loan falls due in May 2021, further reducing our facilities by GBP 19.7 million. Facilities at that point would be GBP 163.4 million, which is sufficient for our needs based on our current projections. On covenants, as I noted earlier, we have agreed a temporary liquidity covenant of GBP 50 million with our banks that will be tested quarterly during the financial year. Our liquidity at the end of August was in line with our modeling, it's around GBP 125 million. And as GBP 30 million of this will expire in September, it puts us at around GBP 95 million on a like-for-like basis. We've also agreed not to make shareholder distributions and not to make acquisitions or disposals without agreement from the banks. We have also negotiated the ability to exit the waiver period early if we believe that we will be able to meet the regular covenants but net debt-to-EBITDA is under 3x and the interest cover is over 3x. The key enablers for achieving an early exit are that the venues remain open and to get Grosvenor trading at or above 80% of pre-COVID levels in the coming weeks and for Mecca to be consistently achieving over 70% of pre-COVID levels. Before I hand you back to John, I'll just remind you of the key points. Strong performance ahead of lockdown as transformation initiatives began to deliver, decisive action taken to bring the business through lockdown, revised covenants in place for December, encouraging signs that the group will soon return to positive cash flow as long as the venues remain open and we will provide further guidance at the AGM when we have more experience of Grosvenor post reopening. John?

Thanks, Bill. All right. Emerging from lockdown is the ideal point to reboot the transformation program, that's the program we embarked on in autumn 2018, and which so far has delivered improved performance and improved our organizational capability across the group. The transformation reboot, as I'm calling it, has a 3-year aspiration. It's been designed to navigate the current cash constraints but ensure we deploy cash most effectively, and that we have the flexibility to pivot quickly as we see improvement in our liquidity. All of our existing transformational initiatives are being evaluated to stop, past to business as usual or continue within the new Transformation 2.0 program. The emphasis is inevitably on revenue growth and cost efficiencies. In the rebooted program, we have 7 work streams across the group. On the next few charts, we have just a flavor of those emerging work streams and initiatives. I'll also provide an update here of some of the initiatives which we have already delivered and some of those which are in train. In the Grosvenor work stream, we're investing in further electronic roulette and gaming machine upgrades, and new gaming concepts prior to lockdown. We completed the investment in our Pier Nine new casino concept in Brighton with promising results, and we've seen a good customer response there since we reopened, with some further enhances to make following feedback from our customers, and we hope to complete that later in the year. We've also been experimenting with some smaller-scale investments with some very good returns and now planning for further projects when our cash headroom enables us to recommence that program. Further changes the Grosvenor operating model reflect the lower customer volumes under social distancing. In train, we have the ongoing improvement of the capability of our general managers and building the bench strength of our casino management teams, which has been critical to our improvement in performance. We've also been using this period of downtime to build our understanding of our customers with implications for the positioning of our investments across the estate. For future delivery, we have further automation of processes, investments in data and a new employee value proposition, as we build out further growth opportunities in the Grosvenor net venues business. In Mecca, as I mentioned earlier, we've made some significant changes to the customer proposition with a stronger focus on the value delivered to our customers through the main stage bingo game, which is the primary reason why our customers visit Mecca. We've completed a number of gaming machine enhancements, including Ticket in Ticket Out, and have improved the quality of our gaming machine positioning in a number of our clubs. In train, we have 6 pilot venues underway to test various elements of the potential customer proposition for Mecca, with a focus on the food and beverage offer, an extension of entertainment as part of the core bingo offer and additional local community leisure events. Elements which work will be rolled into the core estate. We're working on the delivery of Mecca Live, which will offer pulled jackpots across channel. And have an online booking and ordering app in development for Mecca Club customers. Looking forwards, in addition to the proposition of changes, we're working on a brand refresh to reflect the changes to the proposition and we're prioritizing omnichannel opportunities such as joint liquidity and single sign-up for membership. In Enracha, we've opened our 10th venue in Girona very recently, and we've finished Phase 1 of the optimization of our gaming machine and sports betting operation, the Enracha Stadium concept, with excellent results from the early investments. We have a new stand-alone Enracha Stadium trial concept, which is a stand-alone gaming machine, automated roulette, automated bingo and sports betting venue, and that's planned for Torremolinos. And we're working on improvements to our loyalty program to increase customer contactability in Spain. Future initiatives include further investments in the Enracha Stadium concept in our venues to further increase their appeal to a wider audience, and to grow our gaming machine and sports betting revenues and the development of our Enracha omnichannel offering. Now I've mentioned the importance of Grosvenor One, our omnichannel service, the success of both the venues and digital business in the period prior to lockdown. And there's still much to do. I consider us just being on the nursery slopes in this respect and the next big step is single sign up, regardless of channel, something which, frankly, should have been there at the outset. We're just about to launch a new sports book, which has a materially better offering for Grosvenor customers, and we have further work in optimizing cross-channel CRM. A little down the track, we'll be launching our first dedicated casino website on our proprietary technology platform. We have plans to test an in-venue sportsbook proposition to further promote our improved online sports betting service, and we're looking forward to streaming venue content to enhance our Mecca Live concept. The overriding priority within the Digital business is the integration of Stride, which centers on the delivery of enhancements to the proprietary platform and the subsequent migration of Mecca and Grosvenor. We're making good progress, as I've said, and we expect to migrate our first small brand Bella this autumn, which provides us with a good dress rehearsal for the brands which will follow. We've made further improvements to customer KYC processes to smooth the sign-up journey, and instant payments are now the norm for our customers with additional improvements having been made to our cashier. We have a new brand in development on our in-house platform, which is meccagames.com, and we're increasing the level of personalization of customer offers across all brands. We're also bringing the development of our front-end content management system in-house to drive speed and cost efficiencies. In the Yo 'business in Spain, we've invested in a new strengthened management team, and we've launched YoCasino with good early results, as you've seen from the second half growth levels. We're soon to release a new much needed mobile front end designed for YoBingo, and we have a new data and analytics platform being introduced to improve customer insights. Much work is underway to improve our CRM capabilities, and we're building out a new Yo offering for the Portuguese market, which will likely launch in the second half of this financial year. Much work continued on our safer gambling work stream throughout lockdown. And consequently, we've opened our venues with a new affordability model in place for all Grosvenor customers. We further reduced safer gambling and enhanced due diligence triggers for customer interaction, and we've rolled out our focal research triggers for player interaction based upon their gaming machine electronic roulette behavior. Much work is in train, including the ability for our customers to set loss and time limits on gaming machines in their casinos, the development of a safer gambling dashboard, which is currently in trial, and the rollout of the next phase of "don't leave it to chance" colleague training material. We have worked commencing on our safer gambling brand positioning and its communication, particularly in venues where it needs to have greater visibility. And we've got further work going on the personalized and bespoke approach to customer interaction and work to enhance our safer gambling culture throughout the business. Finally, on the group operating model, we've made cost savings in central support, we've reduced reliance on and the cost of contractors and we've added some additional grips into the procurement process. In train, we're developing a dedicated omnichannel team to drive this key transformation work stream. We're expanding our low-cost offshore technology hub in Cape Town, and similarly, expanding our offshore customer and back-office support hub in Mauritius. We're continuing to invest in data and data science, and the next key project is the evolution of our single-customer view. We're planning to in-source more technology and marketing to take full advantage of the Stride capability, and are accelerating the integration to release cost synergies earlier. And that gives you a flavor to just some of the work that's going on within the transformation reboot. And there's a lot still to be done within the business to put meat on the business case bones, determine prioritization and resourcing, the milestones and the time lines. And we'll update you further on our progress at the half year. Finally, in terms of our current trading and outlook, Mecca achieved cash breakeven in August. And as long as our venues remain open, we're confident from early trading that Grosvenor will be cash-generative in September. Our digital business is performing broadly in line with expectations, with cost reduction measures being applied across the business. And assuming no material disruptions, we expect the group to be at cash breakeven or above in September before the impact of repaying deferred rent and duty. We expect to rebuild our revenues through the year with an increasing footfall expected once social distancing and other supply constraints reduce and, of course, consumer confidence returns. The pace at which revenues return will determine our ability to restore the dividend and invest in the transformation of Rank. We'll provide further guidance at the AGM when we have more experience of Grosvenor's trading post reopening. And as I say, beyond the immediate constraints, we're looking ahead to drive revenue and profit growth through transformation 2.0. At which point, we will stop and take any questions.

[Operator Instructions] This first question is from Gavin Kelleher of Goodbody.

On the performance in Grosvenor venues to date, appreciate it's a very short-term period, which is kind of 2 or 3 weeks of data. But just given your experience to date, any anecdotal evidence on how the customers are getting more used to the proposition over the weeks that you've seen and any sort of signs that there's kind of gradual improvements during that period as people get used to us? And then secondly, my next question is on Digital. I mean the statements kind of focus in a Grosvenor digital just around more recently kind of omnichannel, but being a bit weaker there because the [ tools ] is being closed. Can you just give us a sense of when we should see that improve over the next couple of quarters, please?

Okay. Let me start with venues question first, Gavin. Let me start with the venues question first. I mean I think customer reaction is -- what is interesting is that customers are clearly looking to play in what they see as the safest venues. That is definitely the case. And actually, our learnings from across the world before we got to reopen, and most of the world reopened their casinos before we did in the U.K. And so we got to see the evidence across the world. And what was clear was the safer the venue, the more the customer valued the kind of the service that was being provided by the operator. So we have gone a bit to town. These are -- as I described it to somebody last week, they're more laboratory the nightclub right now. They are very kind of secure, safe and secure venues with a very different kind of customer journey from that which you will have experienced in the past. But that's what customers wanted. I think in terms of gaming machine revenues, I expect to see those rebuild gradually. We have seen a gradual improvement over the limited time that we've been open. And it is difficult because it is only 3 weeks. So we are very early days and we only opened 4, in Greater Manchester, venues on Tuesday this week. So this is very, very kind of early stuff. But so far, good reaction and gradual improvement. I think we're not supply-constrained on machines because only one person can play a machine at a time side, so I would expect to see those revenues recover fairly quickly. I think table gaming is more challenging because it is more supply constrained. In the past, we could accommodate 12 or more customers playing at roulette table. And from a customer perspective, I could stand behind the table, watch what was going on, kind of get myself familiar. And then throw some money in, get some chips and start playing. I can't do that anymore as a customer. So I need to have maybe a bit more confident before I sit down at the table because I'm walking up to a table, sitting down at a pre-determined seat to play the game, and that is a little bit more challenging for the customer. So you've got -- it kind of is self-selecting to the more regular, more experienced table gaming player are those that are playing. And that's not a big surprise because supply is constrained. And look, we're just going to wait and see how that develops over the weeks and months to come. But so far, customer reaction clearly is very good. They like the fact that these are very safe and secure venues, which was reflected in the view from the deputy chief medical officer when he came to one of our casinos in London in July. They're safe and secure. From Digital, yes, we experienced, I guess like the rest of the industry, with no sports betting and venues closed. Clearly, during the period of lockdown of our Digital business, Grosvenor and Mecca both performed strongly. Grosvenor in Q4 got a little bit softer. And I think that reflected the fact that the venues have been open for such a long time. And then 5 months on, the best part of half of our revenue in Grosvenor digital comes from omnichannel customers. And with venues closed, clearly the value, the benefit of omnichannel dissipates over time. I think what's also true is that the -- we've continued to put in place a number of safer gambling measures trying to trigger these lower triggers, tight affordability modeling, and that has had some impact. So we're seeing good numbers of active customers, but the revenue per player is lower. And I think now, I think what's going to happen going forwards is Grosvenor venues thankfully back open, omnichannel back underway. And in the coming weeks, as I mentioned there, we're very soon launching single-sign up, which we should have had at the outset of Grosvenor One, we didn't, but it will be there very soon now. And that means that irrespective of which channel you sign up on, you automatically become both a venues player, both a venues customer and an online customer. So no need to sign up twice. I think that's going to be a big step change for Grosvenor Digital.

We have another question, this one comes from Ivor Jones at Peel Hunt.

Can I ask a couple of things, maybe one at a time for simplicity. John, you talked about the change in the product of Mecca, could you talk about that in the context of the change in the age mix in market? Do you think the changes that you made the product that attractive to older people [ placed ] and connected?

So yes, as you know, we would always like the age base to more reflect the population. And yes, I think the Mecca age profile is younger than most people think. But nonetheless, our visit numbers are typically, pre COVID, have been older than the average demographic population at large. Clearly, we're seeing a younger customer base. That is because, in large part, older customers are clearly more concerned about going out. That's the reality of it. What we're finding is that when our older customers come and experience and evening or afternoon at Mecca, they're then very willing to come back. A customer said to me a couple of weeks ago in Chesterfield that she had come out the house, and she was very, very keen to come back and play at Mecca and she persuaded her daughter -- who didn't want to go to bingo, she persuaded a daughter to take her that afternoon. Her daughter took her that afternoon, dropped her back at home and then she caught the bus and came back in the evening. So I think there is something about customers when they experience what is a very, very socially distanced environment. We are blessed, as I said, with space. I joke that our customers have been social distancing in Mecca for years. So we've got -- we are blessed with space. In terms of the propositional changes, what we are keen to do is to give more value to the customer, in essence. People come to bingo to play the main stage game rather than the interval game, and I think we've been a bit guilty of putting too much emphasis on the interval game at the expense of the main stage game. So we're slowing it down. We're putting much more emphasis on main stage bingo. I think we are saying there are 20,000-plus more chances to win. There are a lot more chances for consumers to win. We're adding more entertainment into delivery of main stage bingo. We're putting in things. We're putting -- adding in quizzes and other forms of entertainment that center around the main stage bingo, and putting a lot of emphasis on food and beverage. Because I think that our players and our research tells us that our players want to experience a good food and beverage offer alongside bingo. And we're seeing significant improvements in stake per head as a consequence of the changes that we've made. It's early days, and we've still got a lot of learning to do. I think the 6 test venues...

Were putting off older customers?

I don't think we are putting off older customers. I think our challenge with older customers right now is the -- inevitably the fear campaign, which got us all locked down in the first place, I think it's going to take a little longer for our older customers to feel happier about going out. And that's certainly what we're seeing. I don't think the proposition changes are having any impact. In fact, if anything, slowing the game down is what they've probably been asking us to do for many years.

Great. That's helpful. Could I ask about, I guess, seasonality in Grosvenor and just trying to understand London. Would -- I know it's only a couple of weeks, but would Grosvenor have been fairly dependent on tourists in August relative to September, October? So I hope that the year-over-year will change in September, October. As dependence on tourism fades away, [ you're not relevant ]?

No, I think that is a fair point, actually. So yes, I mean, we are -- the like-for-like period, yes, so you're absolutely right. It's the toughest period of the year, Ivor. Because if you go back to last August particularly, London was -- you've heard me say last summer was an amazing summer. We had a very strong summer in London for tourists.

Ivor, I'll just comment on that and say September last year was good as well. But it's certainly from October, the tourism element in London did drop off. So -- and we noticed that at the top level. So September is a tough set of comparatives, as you'll recall from our numbers Q1 last year, but it will get a little bit easier after that.

I think also London more generally, and this is early days, but with kids going back to school that has helped a little bit. I think we are seeing more people. There's more people in town. People are starting to go back to offices. But certainly, the point I made, if we could -- the congestion charge evenings and weekends isn't helping, that would be a great bonus it that were dropped.

And kind of following up on the Grosvenor point. I think it seems very possible that you're talking about trading cash positive at these levels of revenue. Obviously, I'm modeling month by month, but I think it implies that you really cut costs -- the cost base in the venues business relative to where it was before. Is that right? And is that a structural change? So is there now more operating leverage in the business if I expect revenue to come back? Because you haven't told us anything about like-for-like costs in these few weeks, but it feels like they must be down quite sharply.

Yes. So let me start and then Bill can add the numbers. What we've not done is made any kind of -- any -- we haven't made any changes to our cost base during lockdown. I mean for good reason, we haven't made any changes. But we very carefully modeled what we thought demand levels would be like. And we've mentioned that we're broadly there in Grosvenor, we're ahead slightly in Mecca. So -- and we inevitably modeled what our cost base would need to be at those revenue levels to ensure that supply met demand at those revenue levels. And -- but there was clearly a period of natural attrition, which has arisen in the business in both businesses, particularly in Grosvenor actually, at the point when we're saying to colleagues, we're reopening. And that has -- that natural attrition which arose has handled a lot of the cost reduction that we determined we needed to make in the business. And we needed to make in a way which would still adequately meet not only the customer demand levels that we thought we'd be seeing in the model, where we're thereabouts in Grosvenor and a bit ahead in Mecca, but also the additional pressures that we've got in the business now about managing social distancing, managing the cleaning regime and so on within those businesses. So we're in a pretty good place. I think there will be small amounts of restructuring here in there, but tiny, actually, over the coming weeks. Bill, do you want to add?

Yes. No, Ivor, I would temper your excitement around more operating leverage. It's already operating -- it's got great operating leverage as it is. We do need to manage the balance of supply and demand here. And as John said, we've managed to take advantage of headcount where attrition has occurred. We've cut right back on all the rest of the discretionary costs, particularly around marketing. Which as we see more opportunity to bring this back, we want to make sure that we get -- the more revenue we get, the better obviously. But in the short term, we've taken the costs where we can. And yes, but -- and we've done a sensible job of that. But I think going forward, if we see the demand levels returning, then we'll have to put some cost back in to run the casino in a way that would be a good experience for our customers.

Great. And lastly, could you just clarify what you said about single sign-up. It sounded like if I signed up to Grosvenor One online and then signed up in the casino, I'd have 2 different and unrelated accounts. But I don't think you can have said that, so I must have misunderstood.

Okay. So what we've been doing is that if you were a Grosvenor -- if you're Grosvenor venues' customer, you're already a member of Grosvenor. But what happens to this point, if you want to be a Grosvenor One customer, you've got to resign, you got to sign up again. So we had a process whereby we've been signing our Grosvenor venues customers up to make them Grosvenor online customers, which is kind of crazy. What you want is if you're a customer, your customer. So once you signed up as a customer, you're then a customer across any channel which you choose to play with Grosvenor. And that's the single sign-up, which we're about to deliver.

We currently have no further questions listed. [Operator Instructions]. We have a follow-up question from Gavin Kelleher of Goodbody.

Just one final one from me. Talking about the competitive landscape in venues in Mecca and in casinos in general in the U.K. There's been some headlines over other operators [indiscernible], et cetera, et cetera. Could you just give us a bit of a flavor on the competitive landscape across the U.K. in both bingo and casino, just what you've seen so far since the opening occurred in both?

Well, Gavin, we are very much more focused on what we're doing than our competitors. We of course, are keeping a hand over what our competitors are doing, too, but and we've been much more focused on what we're doing. I think that this is -- the length of closure has been tough on everybody. And right across both Bingo and casino businesses, it's been tough. And everybody has been in sort of survival mode. And I'd like to think we're at the sort of the stronger end of that spectrum coming out of this. That's what we intend to be. We certainly entered this with that in mind and that's where we've intended to be. So I think there will be some opportunities, some venues have been a bit slow to open. Some venues haven't opened. So there's a handful of casinos that haven't opened across the estate. And that doesn't sound a lot when he's only 127 casinos in the U.K. that a handful casinos not opening is helpful. So we've seen some benefit from that. And in bingo, much the same. Opening hours are different across all of our competitors now, that's not unhelpful. And yes, if that continues, then we'll certainly be keen to benefit from it. So yes, that's how I'd describe it really.

We have another follow-up question from Ivor Jones of Peel Hunt.

Well, if I'm not going to anybody else's way, there were a couple of [indiscernible]. On the detail, John, you mentioned that you were looking at probably a sportsbook into Grosvenor venues. But I think you've only got one where that will be permitted. So is that, right? Can you just talk about what the opportunity is there? And then the other bigger picture. In relation to Pier Nine, we talked about it before but now you've got some early signs of success. What does further success look like, [ can you ] Pier Nine by other casinos? And does that imply potentially moving to other sites to make them big enough to deliver on that? Or is it a one-off?

Okay. So the Sportsbook, you're absolutely right. The -- 60 of their casinos can't offer sports betting and -- crazy that may be. And the 2005 Act, only the 8 large casino licenses, of which there's what, 3 or 4 in the U.K., only the large casinos can offer sports betting, the small ones, which includes our Luton venue. That's a 2005 Act can't offer sports betting, which is kind of crazy, I think. But nonetheless, sport is a driver for casino players. All of our -- I mean, one thing I always say to everybody is that not all sports betting customers play in a casino, but all casino players play on sport. I mean that is just a fact. So there is a strong synergy between sports and casino players, sports and casino. What we -- and we see that online inevitably. What we are doing first and foremost is improving the quality of our sports book. I'd liken our sportsbook to the British library, it's got all the books are in there, it's just a bit difficult to find. And our new sportsbook will offer much better navigation to the consumer. And we are very, very soon will be launching that. That gives an opportunity, I think, then to make that book's offering more accessible to customers in our venues. And we can't offer -- under the Act, we can't offer dedicated facilities for sports betting, gambling in venue. So we clearly can't do that. But we can provide -- a lot of customers come to our venues to watch sport, and what we can do is provide the right kind of stimuli to customers to play with grosvenorsports.com whilst they're in our venues. Currently, we get big crowds around football matches, very big cranes around boxing events. But we can't monetize it and we're keen to monetize it by encouraging players in the direction of grosvenosports.com. The second point, Pier Nine, yes, I mean, I think there's a lot to learn from Pier Nine. There's a lot of good things about it, and there's a lot of things that aren't as good as I would have hoped. And we have got some further work to do in Pier Nine. But the customer response has been really good. It was good before we closed, and it's been very good since we reopened. It's in our top 3 or 4 performing venues in the U.K. So it's performing well. And -- but clearly, a lot more to do there. And there are lots of things from that experiment, and that's what it is, which have implication for our other casino investments when our liquidity enables us to press on with that program. I think Pier Nine per se is a one-off. I don't expect other Pier Nines. But certainly, elements of the Pier Nines experience, you'll see in other venues going forward because it's certainly been well appreciated by customers.

In other venues that you already have or after moving licenses to new venues?

Well, today, I would say, in the immediate term, in other venues that we have. I think one of the benefits of it actually is that with the mind to what might happen as a result of the gambling review. I take a fair bit of hope, actually, that the findings of the House of Lords Select Committee will have an impact on the gambling review, which will be kicking off in the coming weeks. The harmonization of the 2005 and the' '68 Act ideally could have happened many, many years ago, but I think there's a very good opportunity for that to happen now under the gambling review. And that would give us opportunity to invest in our estate. And certainly, learnings from Pier Nine would be reflective in that program going forwards. But that's all for the future. Lots would pass under the bridge before we get to that point.

We currently have no further questions registered.

Well, let me draw stumps at that point. Many thanks, everybody, for joining us this morning and look forward to talk to many in the interim, but if not at our interims in the new year. Many thanks.