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

Good morning all. Thank you to everybody joining online, and a warm welcome to everyone that's here with us today. It is, of course, my first set of results as Chief Executive, and I'm grateful to our Board, our major shareholder, for their support and for this opportunity. Rank is a great business, and I'm delighted to share with you the story of another year of strong performance to set out in a bit more detail how I see the opportunities for the group, and why I think we're really well positioned for future success. I'm also delighted to be joined for the first time by Cliff Baty, our Interim CFO. I'm going to start with the key highlights for the year before handing over to Cliff for the financial review. So once again, there was strong revenue and underlying profit growth in the year. It was great to see all businesses contributing to the improvement, and that's despite some headwinds. During the year, we took decisive action to mitigate the impact of higher RGD on our U.K. digital-facing business. And the performance in digital was therefore encouraging at plus 12% in Q4, particularly given the material reductions in above-the-line marketing. We started the new financial year in a similar fashion, so that's pleasing too. From August of 2025, we started to increase the number of gaming machines in Grosvenor. And as planned, we increased machine numbers by 65% before Christmas with any modest in-year capital expenditure. The momentum is building with the initial step-up in performance continuing to improve through the year and strengthening further in the early weeks of the new financial year. The trajectory is positive and provides a strong platform on which to build, but requires further optimization before we need to make any further capital investment. So the focus is on maximizing the productivity of our machines, and there are lots of actions underway in that regard that I'll come on to later. Over the last 6 months, we've been through an estate segmentation exercise in each of our venues businesses. And off the back of that, we have taken some necessary but difficult decisions, and that included the closure of 9 Mecca sites in the year. On the other hand, in Grosvenor, we're trialing a smaller format casino proposition that could provide an attractive investment opportunity. It's about ensuring we have high-quality, high-returns venue estates for the future. We've also continued to evolve the strategy over the last few months. And as a result, we're clear about how we create value. We're also clear on where we can win in casino-led and bingo-led gaming and importantly, about why we can win. More from me on that later. And for now, let me pass over to Cliff, who will take you through the financial performance. Cliff?

Thanks, Richard, and good morning, everyone. A pleasure to be here presenting the full year results. I'm going to talk briefly through the financial highlights, operating profit growth and then cash flow, CapEx and capital allocation. This slide illustrates some of the financial highlights from a strong year for the business. Like-for-like net gaming revenue was up 6% at GBP 834 million with growth across all our businesses. Good cost control and that resulted in an operating profit of GBP 78.6 million, up 21%, and that includes 1 quarter's impact of remote gaming duty in our U.K.-facing digital business. That strong result flows through to improvements in underlying EPS and return on capital employed. Given this performance, the group has proposed a final year dividend of 2.5p per share, giving a total full year dividend of 3.5p per share, a 35% increase over prior year. Just walking through the key items on the profit bridge, starting from last year's GBP 64.8 million. Revenue growth, which is revenue less direct costs was GBP 24.5 million. As mentioned, we started paying 40% RGD from the 1st of April, which was a GBP 10.1 million impact. However, the U.K. digital business took mitigating actions, which resulted in GBP 8.1 million of savings from reduced above-the-line marketing, staff and supplier costs. Depreciation increased GBP 4.6 million as a result of prior year's CapEx investment. Minimum wage rises and the knock-on impact across our U.K. estate meant underlying salary and wage costs increased. However, we were able to mitigate this through staff costs and other savings, giving an overall cost increase of GBP 2.8 million. And finally, we launched online bingo in Portugal in March, which led to a net P&L cost of GBP 1.3 million due to the initial start-up cost and the marketing investment. Overall, this gives an operating profit of GBP 78.6 million with an increase in operating margin from 8.1% to 9.4%. We did incur some exceptional costs during the year, and we've previously separately disclosed the Spanish fraud and the regulatory settlement items. Other significant costs represent the management actions we've taken to strengthen the business. As Richard mentioned, this includes the closure of 8 Mecca clubs in early June and 1 in the first half of the year. These clubs are either loss-making or not commercially viable, so we took the difficult decision to close. I'm pleased we've seen a positive transfer from customers from some of these clubs to other Mecca venues nearby where that has been geographically possible. These closures are part of the venue segmentation work we performed, as Richard again referenced, which will help drive future investment decisions across the estate. The restructuring costs relate to the staff reduction actions taken in response to the start of the RGD. And whilst these decisions are always difficult, we will continue to look for efficiencies across the business so we can tightly manage the underlying cost base. Turning to cash flow. Net free cash flow was GBP 25.5 million, and this reflects CapEx of GBP 50.2 million, which was at the lower end of our FY '26 estimates, together with lease payments of GBP 48.3 million. Those lease payments have increased over prior year due mainly to the increased machine estate rollout. Interest and tax costs were GBP 8.6 million, offset by a working capital inflow of GBP 4.6 million. The table in the top right shows the year-end cash position with the cash inflows of GBP 25.5 million together with dividend payments of GBP 13.8 million, which left the group with a net cash balance of GBP 56.8 million at the year-end. Adjusting for the IFRS 16 leases of GBP 204 million, this gives an accounting net debt figure of GBP 147.2 million. It's worth noting we also refinanced our debt facilities in June with a new 4-year GBP 120 million RCF facility on improved commercial terms. This puts our balance sheet in a healthy position going forward. As previously mentioned, FY '26 CapEx was GBP 50.2 million, down from GBP 58.5 million in FY '25. Looking at the split across the businesses, Grosvenor included general maintenance and upkeep spend as well as refurbishments at Brighton and Bolton, introduction of sports betting areas at Reading and Leicester, together with the works required for the additional machine rollout across the estate. In Mecca, spend included our new 1825 social lounge at Stockton, a significant investment in the modernization of bingo, which is opening very shortly and was actually highlighted in the opening video. Other spend includes upgrades to our gaming machine areas in Thanet, Romford, Acocks Green, Gateshead and Swansea as well as external signage at 11 venues. Digital CapEx was GBP 10.8 million and comprises mostly of the capitalized internal headcount of our IT development teams. The reduction in spend from FY '25 reflects a lowering from the more elevated CapEx levels of recent years when we were addressing significant maintenance backlog as well as investing in the venues estate, especially The Vic renovation. Going forward, we will take a disciplined approach to CapEx, spending what was required to maintain a high-quality estate and only investing in high-returning development projects. This approach also feels prudent given the recent change to RGD and the current discussions around the industry. We would estimate FY '27 CapEx will be around GBP 40 million, with the bulk of the reduction being in the Grosvenor business. These reduced spend levels will significantly improve the group's underlying cash generation. While mentioning FY '27, I will just point out that in the appendix, we do have slides which give forecasts for our interest and taxation forecasts for next year. The bottom of this slide illustrates the strong growth we've seen in return on capital employed over recent years from 4% 3 years ago to over 18% now. Whilst the full year of RGD will have an impact on FY '27, we'd expect to continue to see strong returns in the future. And given the improvements in underlying cash flow, as mentioned, I thought it would be worth quickly reiterating the group's capital allocation policy. Maintain balance sheet strength, disciplined capital investment, pay a progressive dividend that grows to over 35% payout ratio, worth noting our FY '26 dividend of 3.5p per share represents a 33% ratio. We will consider inorganic growth opportunities, but only where they help us achieve our strategic aims and meet strict financial criteria. Otherwise, we will return surplus cash to shareholders. Thank you very much. I'll hand back to Richard.

Thank you, Cliff. You did a much better job of that than your predecessor used to. In all seriousness, moving across to my new role as Group CEO has been an appropriate time to review the lessons learned over the last few years, including what's worked well and what needs to improve. The great thing from my perspective is we believe there are lots of things that we're doing right. And that's coming through in customer response, the colleague engagement scores and, of course, in the financial performance. It's therefore about fine-tuning how we execute our growth plan from a position of strength. I describe it as a positive evolution of strategy and how we create value. The Group's purpose to excite and to entertain our customers remains unchanged. And I'll talk in a moment about how that purpose is implemented across all of our businesses. We believe we have a clear right to win in casino-led and bingo-led gaming. We've got deep expertise in our casino and bingo businesses. We do it better than the competition. There are areas of core competence, and we will create strategic value by doubling down in those areas. There are clear growth drivers in casino venues, in digital and in our bingo venues. And we're well placed to capitalize on the existing and growing customer preference for gaming machines and in a broader sense, electronic play. Finally, the Group adds value in a number of ways through the development of talent and strategic capabilities in data and analytics, supporting the plans to provide more personalized experiences where the potential is vast, and increasingly in the application of technology to help serve customer needs. I'll talk you through some of the key parts of that plan today. So starting with purpose. We apply the Group's purpose to excite and to entertain through a common customer experience vision for all of our businesses. Importantly, the aim is to offer more localized, more segmented and more personalized experiences. But in order to do that, we need every customer to be known, valued, safe and most importantly, entertained. That's regardless of whether the customer plays in venue or online, in casino or bingo in the U.K., Spain or Portugal. So the vision for the customer experience is consistent, and we implement that well in some places today, but we've got a great opportunity to do it much better across the Group in the future. Moving into casino and bingo-led gaming. To reiterate, we believe we have a genuine competitive strength, expertise and significant further potential in these areas. In Grosvenor Casinos, we're the market leader in land-based with around 40% market share, a position that's grown in recent times. The venue segmentation work gives us a clear framework for a commercial strategy and for investment across the estate, including the trial of a new small format high-productivity electronic-led casino. Revenues in Grosvenor are resilient, improving and there are clear growth drivers. There are high barriers to entry through the licensing model. And our casino heritage, that genuine casino authenticity is a key point of differentiation online. People come to us for the live casino offering, which is particularly important with RGD at that higher rate. Moving to bingo. Put simply, bingo is in the DNA of The Rank Group. We love bingo. I love bingo. We're proud of it, and we're passionate about it. It's great value community-based entertainment. We've got a strong Enracha estate of 9 well-located venues in Spain, and have remodeled the shape of the Mecca estate to focus on the higher quality, higher return venues that generate strong liquidity, which is critical to the bingo game. Liquidity is genuinely king. It drives the prize boards that customers play for and the price they pay. And the same applies online. It's exceptionally hard to replicate the liquidity game in the unlicensed market. And we're well positioned online, particularly given the changing nature of the industry with a highly loyal customer base. So we're clear where we can win, but also why we can win, which is on the bottom half of the slide. We've got well-loved brands in attractive markets, a compelling customer proposition that is delivered by highly skilled and highly engaged colleagues. We've got clear growth drivers, well understood by everyone across the Group and a significant opportunity to grow through investment in the cross-channel proposition. We're reviewing the implementation of that strategy through 2 parallel components. On the one hand, we're focused on delivering the GBP 100 million plus operating profit ambition that you're all familiar with, and that's the deliver part of the chart. But we're also thinking about how we build the business for longer-term value creation, and that's the deploy part of the strategy. One doesn't lead to another. They run in parallel, and we need them both to fully realize our ambitions. In deliver, it's about maximizing the value of existing assets. We've got a laser focus on performance, using data and insights to drive growth and utilizing technology to improve customer propositions. That will result in revenue growth, but also higher margins, higher returns and improved cash generation. In deploy, it's about selectively deploying capital to build scale in the areas we know we can win and where we're confident of securing strong returns. I've already said that that's casino-led and bingo-led gaming. The smaller format electronic-led casinos are a good example of where we'll invest as our investments in social gaming lounges in both Mecca and Enracha. We'll also look to grow our international revenue streams to provide greater diversification. Both in Enracha and Yo, 2 bingo-led businesses in Spain have operating margins above 25%. So 2 really productive businesses, but they account for less than 10% of Group revenues. We want international to be a bigger proportion of the Group in future, and Portugal is where we're focusing our attention to start with. It was great to launch our bingo product there towards the end of the year. Just to reiterate, deliver and deploy are in parallel rather than sequential, and we need both to fully realize our ambitions. So getting into the drivers of growth in each of the businesses. We talked about the playbook for success in Grosvenor in the Capital Markets Day in October 2025. The key components of that are shown here. We've got a high-quality segmented estate. And in each of those segments, we have a clear commercial plan, a clear investment plan and a model of the returns that we expect. We've improved the quality of our club environment significantly over the last few years. There's still some work to do, but the estate is increasingly better shape. And we'll continue to invest in that estate going forward, a targeted approach that utilizes that venue segmentation. But it also recognizes we've delivered higher returns where we've focused on more targeted schemes that have the most direct impact on the customer. In hospitality businesses, people are key. And in Grosvenor, we've got over 4,000 highly skilled colleagues. The From Like to Love cultural change program that we introduced a few years ago has had a material impact. We've got some of the best engagement scores in the hospitality sector, which given the 24/7 nature of our operation is a fantastic result. We offer unrivaled products and service, first-class table gaming, the best and most innovative electronic gaming in the U.K., a much improved slots proposition with breadth of choice for the customer. We can now offer sports betting and already have sports betting terminals in 24 casinos. We're learning plenty there as sports broadens the proposition of our venues. We've got a tailored F&B offer, and we're the market leader in poker in the U.K. On which note, we held our annual Goliath Poker event in Coventry Casino a couple of weeks ago. Cliff and I both went along for some of it. That was to watch rather than play, unfortunately. And it was a fantastic success with 15,000 customers competing for a prize pool of GBP 2.2 million. It's the biggest poker event of its kind outside of Vegas, and we're very proud of it. Most importantly, customers love it, too. Finally, we continue to make progress with the cross-channel proposition, which is a point of difference in the market and can be a catalyst for further growth through retention and deeper customer relationships. There's a big opportunity in that regard. Moving into Grosvenor performance for the year, where we made continued progress again. Revenues were up 5% with gaming machines, the fastest-growing product vertical. Table gaming performance was flat, a tale of 2 halves. Revenue was up 2% in the first half, but down in H2 due to the Middle East conflict and the consequential reduced travel from that region. As I mentioned earlier, we plan to trial a smaller format casino this year using some of our dormant licenses. Gaming machines were an important driver of growth in FY '26. And as you can see from the chart, slots performance improved as the year progressed. And that improvement has continued into the new financial year. We've grown machine numbers by 850 or around 65%. And after the initial step-up in revenues, we're very focused on optimizing the performance of the machine estate before making further capital investments. Our experience from adding machines into venues in the past tells us it takes around 2 to 3 years to get to maturity. We've learned that customers like the increased breadth of choice in the machine estate. But there are probably 4 or 5 machine suppliers that we'll work most closely with in the next few years in order to maximize performance. Service definitely matters for our slots customers, knowing their drink of choice is their favorite game and helping them with offers and so on are an important part of the slots experience. We're investing in training a mystery customer program with a specific focus on slots areas. We're also investing in a new loyalty and rewards program direct to the machines in the first half of the new year. It's clear that data and insights has to drive decision-making and performance improvement. We're going to increase machine allocations to venues when the utilization rates demand it and where the capital returns are strong. Growth will come from a combination of increasing the customer base and increasing share of wallet from existing customers that may also play elsewhere. We offer a really attractive slots proposition in our venues now, and we expect to move from GBP 2 million slots revenue per week from prior to land-based reforms to over GBP 3 million per week in the next 2 to 3 years. On to building scale in digital. I think it's fair to say the U.K. digital landscape is experiencing a seismic shift with the increase in RGD to 40%. With that in mind, ensuring you have a clear framework for acquiring, entertaining and retaining customers is key. And for us, that's join, play, stay. Join is about acquiring customers as efficiently as possible. If we do that well, marketing expenses as a percentage of revenue will decline as our acquisition programs become more effective. Play is about giving customers the best possible proposition, the most fun in order to deepen engagement. And to that end, we protected free bets, incentives and continue to focus on improving customer journeys, improving the customer proposition in all of our digital channels. If we do this well, customer player day should materially increase. And stay is obviously about retention, building loyalty and improving customer lifetime value. That's the commercial model that we've implemented that gives us the best possible chance of success in a higher tax world. So in that context, digital performance is pleasing. Revenues grew by 12% in the final quarter, the first quarter with higher RGD and by 8% for the full year. We took decisive action to mitigate the impact of higher taxes, reducing above-the-line marketing significantly more than most operators because we have the advantage of well-known brands. We did dial up performance marketing modestly, and that supported performance and is delivering strong returns. We renegotiated supplier contracts and also reduced headcount in the U.K. digital business. There were the necessary actions to ensure we had a viable business going forward. But as I mentioned, we have continued to invest in the customer proposition, and that's also key to having a vibrant digital business in the U.K. going forward. Moving to performance in Spain, where we grew by 7% in the year, much improved where we finished the last previous financial year and the start of FY '26 when the business is in slight decline. YoBingo performance was pleasing and YoSports growth was particularly strong. We've taken some of the community aspects we have in bingo and are applying them to the sports site, which gives us a point of differentiation against the much bigger operators. Broadly maintaining margins in digital, given the tax impact in Q4 was pleasing, but digital profitability will inevitably reset in the year ahead. Moving to bingo. The plan remains to maximize medium-term cash generation in our bingo venues. And this slide illustrates the model. We've got strong brands in both Mecca and Enracha. A vibrant bingo game is key. That's how you attract customers. It's their primary reason for visiting. And those customers, generally speaking, are very loyal. The community aspect is also important. There's a deep loyalty to our brands and a strong association to colleagues and to other customers. From a financial perspective, gaming machines and electronic tablets are the productive assets to help drive overall profitability and good quality data, which continues to improve through the loyalty card in Enracha and through the Mecca app is important to driving growth. In the year, both Mecca and Enracha delivered solid performance. NGR growth in both was driven by a combination of strong bingo proposition. And that's the primary reason to visit. That's why people come, plus strong gaming machine growth on top. We've made targeted investments in each business, particularly in the gaming machine areas, but also in social bingo lounges the first of those, Bingo Boom, opened in Seville in April and the investment in the 1825 lounge in Mecca Stockton that you saw in the video completed only last week. Off the back of the venue segmentation work, we did close 9 Mecca venues, and that leaves us with a higher-quality Mecca estate that we're happy to invest in. The Enracha estate remains well invested and in very strong shape. Colleague engagement and customer NPS is also strong across both businesses. I've mentioned already that slots and electronic gaming are the economic growth engine for all of our venues businesses. Slots accounts for around 44% of group revenues. Electronic terminals account for around 16% of Grosvenor venues revenues. And tablet-based play and Mecca now accounts for around 80% of bingo revenues. The important point is that customers like playing electronically, even if they're in physical venues. It's part of the broader trend that you see across hospitality businesses with customers increasingly interacting with physical locations through digital devices. It's convenient, it's interactive and it's what customers demand. We continue to improve the proposition in these areas in order to capitalize on the growth opportunity and the shift in how customers are behaving in hospitality venues like ours. Slots and electronic gaming are also our most productive assets. They utilize space efficiently and generate strong returns. As part of our increased focus, we're deepening relationships with suppliers to ensure we continue to develop the proposition and lead the way on innovation in our sectors. In that context, it would be remiss of me not to mention Machine Gaming Duty. It's currently charged at 20% of revenue generated on gaming machines in both casinos and bingo halls. And as you heard, gaming machines are an important component of our venue profitability. Any increase in MGD puts pressure on the viability of venues. You can see on the slide the impact of wage inflation and higher taxation on the number of Mecca venues and Mecca colleagues over time. Unfortunately, any increase in MGD leads to fewer venues, lower employment and reduced tax receipts within 12 months. We've started to make these arguments publicly, and we made them last year as well. We'll continue to showcase our clubs that support jobs, provide customers with enjoyable experiences that means they come back week in, week out and generate significant tax and duty receipts. We're very proud of what we offer in towns and cities across the country. These are genuine community assets. Moving now to current trading. I'm pleased to say that the strong momentum has continued into the first 6 weeks of the new financial year. Revenues were up 8% with gaming machines and Grosvenor having grown 15% and digital revenues have grown by 10%. But as you've heard, digital profitability was notably reset in '26, '27, and that's despite the mitigating actions we've already taken. But we are well placed to deliver market expectations for the new financial year. Finally, I also expect that momentum to translate into further strategic progress. The strategy is focused on those areas where we can win, casino-led and bingo-led gaming. And underlying performance momentum is good across the Group. There are clear growth drivers in each of our businesses and plenty of runway ahead of us. We've got a strong balance sheet, as Cliff mentioned, and that allows us to continue to invest in order to capitalize on these growth opportunities. We're on track to deliver at least GBP 100 million of operating profit in the medium term. And across the Group, there is a clear focus on creating long-term sustainable shareholder value. All right. Thank you for listening. There's now an opportunity for questions. We will start with questions from the room before moving online. Got a keen audience member here. And before you ask your question, please state your name and where you work.

Ivor Jones from Peel Hunt. Richard, could you talk about how the route to GBP 100 million might have changed over the course of the last year if it has changed? Obviously, you've talked about a reduction in CapEx relative to what we might have been expecting.

I think in the last 12 months, it's probably changed in 2 ways. The first was obviously, when you've got a resetting of digital profitability off the back of higher RGD, that inevitably means that the digital component of our GBP 100 million is lower. I think it's fair to say that, there was probably an expectation we'd be able to go well beyond that GBP 100 million. So still feel confident we can get there. I think from a Grosvenor perspective, we've got capacity for another 650 machines. We've put 850 in already, another 650 to go. I would think of that as the kind of full capacity for the business. We're going to invest in -- so the extra 650 machines requires about GBP 25 million to GBP 27 million worth of CapEx. So we only want to push the button on that additional CapEx when we're confident we've got the best returns that we possibly can at the existing machine estate. And then when we're going to add them into the estate, we're going to get the returns on that investment. So will we add more machines in the year ahead? Absolutely. But do I think it's about maximizing the performance from the existing machine estate first? Yes. Final bit, Mecca is probably going to be off the back of the abolition of Bingo Duty, Mecca plays a slightly larger part in that GBP 100 million as well.

Just to be clear, are you saying that the GBP 100 million requires the next cohort of -- the full next cohort of machines?

So I don't think a material number of additional machines is required for us to hit GBP 100 million operating profit.

Beyond the ones you've already installed?

Not materially.

No. Okay. You talked about the small casino format. What is it? What does it cost?

So a small format casino is a result of the venue segmentation work that we've done over the course of the last 6 months or so. We've done that in each of our businesses. In Grosvenor, I think it's kind of clear when you segment the venues, we've got some very strong flagship venues where we're going to have 80 gaming machines, a full proposition across table gaming, electronic roulette, slot machines, poker, great F&B, all of that. But there is a component of our existing estate, which just lends itself to a smaller footprint, higher productivity offer. So less prominent table gaming, prominent slots, prominent electronic roulette and then a complementary F&B offer potentially with some sports terminals as well. And we're trialing that in one of our existing venues at the moment. And we think we can take that model and apply that to potentially use some of our additional dormant licenses in new locations around the country. We're going to learn the lessons from the venue that we've got in place already, and then we'll look to trial in a few more locations over the course of the next year or so. Cost-wise, I estimate around GBP 1 million per site. It's a relatively modest investment, smaller footprint than what you might be used to in terms of some of our larger casinos, utilizes electronic gaming predominantly, lower staff intensities, operating margins, I would hope we can get them up to around 20%.

GBP 1 million sounds more like a pub than a casino. Is that because you think about landlord contribution or a lot of the physical assets will be leased when you're talking about the GBP 1 million?

Yes. So it's definitely a smaller format. So we're not talking about anything that's kind of more than perhaps 6,000 or 8,000 square feet. And again, the machine proposition, typically, we have those on either leases or revenue share. We're not -- this is not gold plated stuff. I think GBP 1 million is reasonable. It might be a bit higher, it might be a bit lower, but on average, it feels reasonable.

And last one for the moment. We talked about the impact of increased RGD of GBP 46 million, but the impact in the first quarter was GBP 10 million. Is that because -- why was that something to do with seasonality I haven't thought about?

Cliff, do you want to take that?

Yes, I can take that. Well, we only pay RGD actually on the sort of gaming side. So -- and proportionately pay on GGR. So we are sort of working NGR items. So if you do the math based on where we're going to be, you have to sort of take out the sportsbook gross up with the level of free bets. And as Richard mentioned, we haven't really cut down on the free bets because we have down slightly, but we're still obviously engaging with customers. So you get to 46 on that basis.

But then why 10 in a quarter?

That same basis basically because you've taken based on GGR effect this year. Sorry, the increase from 10 in the quarter to 35% is because we've actually got some revenue growth planned into that number.

It's Roberta Ciaccia from Investec. First question for me, we're now 4.5 months into the RGD increase, doubling basically. Did you see already any changes in the competitive environment, anybody getting out of the market, something that could give us hope that for the more established operators, the impact is going to be somehow mitigated in terms of revenue in the future? That would be my first question, if I can then add.

Yes. So I think where taxes go up around the world, it's kind of relatively consistent what the kind of consequences are in different markets. So taxes go up, there tends to be quite significant reductions in above-the-line marketing. As I mentioned earlier, we've reduced our marketing above-the-line very significantly, but we've probably done it less than other operators. So some of the sportsbook operators, partly because sports betting doesn't drop until next year, partly because of the World Cup, maintained levels of investment, I would say. And also, there's some mid-tier operators out there that have remained particularly strong in terms of their levels of investment. I think over time, that's likely to still decline. But so far, we haven't really seen that on a material basis. We've seen some smaller operators leave the market. But I think we knew about them before the end of March really. I wouldn't say we've seen any further operators exit the market, nor would I expect to really over the course of the first 3 or 4 months. But inevitably, over time, I think there is going to be consolidation in that market. Do I think we've benefited from players leaving the market so far in our 12%? Not really.

And second question, you've talked about Clifford potential inorganic investment opportunities, of course, subject to the capital allocation in general. And then you also mentioned you expect over time to have more contribution from outside of the U.K. Do you have -- can you give us any idea of what you're looking for and what kind of hurdle rates and what geographies in case? Or is it too early?

It's too early. I mean, I think with the health of the balance sheet that we have, what's happened with RGD and the positioning of the business, I think the logic of increased diversification outside the U.K. has obviously merit. So we are keeping our eyes open. We are based in Spain, a very, very successful profitable business in Spain, launching in Portugal. So we're looking obviously to develop in those areas. But we wouldn't want to be specific or even sort of constrain us necessarily in there. But just to reiterate that if we do, do anything, it will have to hit some quite high financial hurdles and it will have to be part of our strategic basis and plan as we discussed.

Just to add to that, I think preference for organic because there's obviously more execution risk with inorganic. I think any good businesses keeps its eye on opportunities that are in the market. We're a market leader in casino in the U.K. We've got strong positions in bingo. It's logical that as part of the strategy, we just kind of keep your eye on what's going on in the market and see if there's any opportunities that fit that strategic agenda.

Greg Johnson, Shore Capital. Just a couple of questions following on. In terms of digital, the sort of double-digit growth you're achieving revenue growth in the U.K. post the RGD increase probably surprised many with the strength there. Anything we should be sort of thinking about in terms of that slowing down in terms of kind of, I suppose, offshore operators taking share? Because it just feels a particularly strong performance. And with that in mind, obviously, there was a strong profit performance in digital in the year. What was Q4 like year-on-year, just thinking about the first point of post RGD increase? Secondly, on CapEx, do you think the GBP 40 million is now the sort of run rate for the business pre any sort of further deployment that you've talked about in terms of deliver and deploy? And finally, with the closures at Mecca, are we now there with sort of 40-odd sites as the optimal level?