TIDMRNK
RNS Number : 8386H
Rank Group PLC
23 August 2016
23 August 2016
The Rank Group Plc ("Rank" or the "Group")
Full year results for the 12 months to 30 June 2016
Continued like-for-like revenue growth across all brands and
channels
Financial highlights in the 12 months ended 30 June 2016
2015/16 2014/15 Change
---------------------- --------------------------- ----------- ----------- -------
Financial KPIs Group revenue GBP753.0m GBP738.3m 2%
---------------------- --------------------------- ----------- ----------- -------
Group EBITDA before
exceptional items GBP128.2m GBP126.3m 2%
-------------------------------------------------- ----------- ----------- -------
Group EBITDA before
exceptional items and
Remote Gaming Duty GBP139.8m GBP132.9m 5%
-------------------------------------------------- ----------- ----------- -------
Group operating profit
before exceptional items GBP82.4m GBP84.0m (2)%
-------------------------------------------------- ----------- ----------- -------
Group operating profit
before exceptional items
and Remote Gaming Duty GBP94.0m GBP90.6m 4%
-------------------------------------------------- ----------- ----------- -------
Adjusted profit before
tax GBP77.4m GBP74.1m 4%
-------------------------------------------------- ----------- ----------- -------
Adjusted earnings per
share 15.4p 14.6p 5%
-------------------------------------------------- ----------- ----------- -------
Statutory performance Statutory revenue GBP708.5m GBP700.7m 1%
---------------------- --------------------------- ----------- ----------- -------
Profit before taxation
after exceptional items GBP85.5m GBP74.5m 15%
-------------------------------------------------- ----------- ----------- -------
Net debt GBP(41.2)m GBP(52.9)m 22%
-------------------------------------------------- ----------- ----------- -------
Final dividend 4.70p 4.00p 18%
-------------------------------------------------- ----------- ----------- -------
Dividend per share 6.50p 5.60p 16%
-------------------------------------------------- ----------- ----------- -------
Key highlights
-- Continued like-for-like growth across all brands and
channels, with Group like-for-like revenue up 3%
-- Group EBITDA and Group operating profit before exceptional
items up in the year, 5% and 4% respectively, excluding the impact
of Remote Gaming Duty
-- Continued strong digital revenue growth, up 11%
-- Mecca's retail bingo growth continues, with revenue up 2% on a like-for-like basis
-- Debt levels further reduced with leverage down to 0.3x
-- UK digital brands migrated onto new digital platform in Q3
2015/16, on time and within budget
-- Strong dividend growth with dividend per share of 6.50p, up 16% year-on-year
-- Adjusted EPS up 5%
Henry Birch, Chief Executive of The Rank Group Plc said:
"I am pleased to report a solid set of results with Group
revenue up 2%, again recording like-for-like growth across all
brands and channels in the year."
"This year we have focussed on delivering significant projects
to ensure we have the right platform in place for future growth.
This included the migration of our digital business onto a new
platform, the rollout of an improved retail casino management
system and investments into new generation machines in both our
casino and bingo venues."
"At the same time we have delivered a substantial increase in
the dividend to our shareholders."
"Rank remains in a strong financial position, possesses
market-leading brands and has a clear strategy for long-term
growth. The board continues to look to the future with
confidence."
Definition of terms:
-- Group revenue is before adjustment for customer incentives;
-- Group EBITDA is Group operating profit before exceptional
items, depreciation and amortisation;
-- Adjusted profit before tax is profit from continuing
operations before taxation adjusted to exclude exceptional items,
the unwinding of discount in disposal provisions and other
financial gains or losses;
-- Adjusted earnings per share is calculated by adjusting profit
attributable to equity shareholders to exclude discontinued
operations, exceptional items, other financial gains or losses,
unwinding of the discount in disposal provisions and the related
tax effects;
-- "2015/16" refers to the audited 12-month period to 30 June
2016 and "2014/15" refers to the audited 12-month period to 30 June
2015; and
-- Like-for-like excludes the effect of club openings, closures,
relocations, and discontinued operations.
-- The Group results make reference to 'adjusted' results
alongside our statutory results, which we believe will be more
useful to readers as we manage our business using these adjusted
measures. The directors believe that exceptional items and other
adjustments impair visibility of the underlying performance of the
Group's business and accordingly, these are excluded from our
non-GAAP measurement of Revenue, Profit Before Tax, EBITDA,
Operating Profit and Adjusted EPS. Adjusted measures are the same
as those used in internal reports.
Enquiries
The Rank Group Plc
Sarah Powell, investor Tel: 01628 504303
relations
FTI Consulting
Ed Bridges Tel: 020 3727 1067
Alex Beagley Tel: 020 3727 1045
Photographs available from www.rank.com
Analyst meeting and webcast details:
Tuesday 23 August 2016
There will be an analyst meeting at 9.30am, admittance to which
is by invitation only. There will also be a simultaneous webcast of
the meeting.
For the live webcast, please register at www.rank.com. A replay
of the webcast and a copy of the slide presentation will be made
available on the website later. The webcast will be available for a
period of six months.
Forward-looking statements
This announcement includes "forward-looking statements". These
statements contain the words "anticipate", "believe", "intend",
"estimate", "expect" and words of similar meaning. All statements,
other than statements of historical facts included in this
announcement, including, without limitation, those regarding the
Group's financial position, business strategy, plans and objectives
of management for future operations (including development plans
and objectives relating to the Group's products and services) are
forward-looking statements that are based on current expectations.
Such forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause the
actual results, performance, achievements or financial position of
the Group to be materially different from future results,
performance, achievements or financial position expressed or
implied by such forward-looking statements. Such forward-looking
statements are based on numerous assumptions regarding the Group's
operating performance, present and future business strategies, and
the environment in which the Group will operate in the future.
These forward-looking statements speak only as at the date of this
announcement. Subject to the Listing Rules of the Financial Conduct
Authority, the Group expressly disclaims any obligation or
undertaking, to disseminate any updates or revisions to any
forward-looking statements, contained herein to reflect any change
in the Group's expectations, with regard thereto or any change in
events, conditions or circumstances on which any such statement is
based. Past performance cannot be relied upon as a guide to future
performance
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation.
Chief executive's review
Total revenue was up 2% in the year, and following the closure
of underperforming venues in the current and prior years,
like-for-like revenue increased by 3%. Digital continued to grow
strongly with total digital revenues (online and mobile) up 11% in
the year. Total venues grew by 1% in the year, on a like-for-like
basis revenues grew by 2%.
Group EBITDA rose by 2% in the year and was up 5% excluding the
impact of Remote Gaming Duty ('RGD'). Group operating profit fell
by 2% due to higher digital operating costs, principally RGD, and a
weak Q4 in Grosvenor's venues.
GBPm Revenue(1) Operating
profit(2)
------------------- ------------------ ------------------
2015/16 2014/15 2015/16 2014/15
------------------- -------- -------- -------- --------
Grosvenor Casinos 438.6 423.4 66.2 66.5
Venues 408.1 401.1 60.9 63.4
Digital 30.5 22.3 5.3 3.1
------------------- -------- -------- -------- --------
Mecca 287.7 289.6 41.5 43.0
Venues 221.5 224.4 32.9 28.9
Digital 66.2 65.2 8.6 14.1
------------------- -------- -------- -------- --------
Enracha 26.7 25.3 3.6 2.6
Venues 26.7 25.3 3.8 3.1
Digital - - (0.2) (0.5)
------------------- -------- -------- -------- --------
Central costs (28.9) (28.1)
------------------- -------- -------- -------- --------
Total 753.0 738.3 82.4 84.0
------------------- -------- -------- -------- --------
1 before adjustments for customer incentives.
2 before exceptional items.
In 2015/16, the Group focussed on putting in place building
blocks to transform its businesses. A key part of this has been
providing the Group with a genuine platform for growth. In Q3, the
Group migrated its UK digital business to a new digital platform
provided by Bede Gaming which was completed on time and within
budget. The Group's digital casino brand benefited substantially
from the migration with a new poker product and sports betting
added quickly and smoothly. As indicated at the Q3 Interim
Management Statement, our recent migration of Mecca digital to the
new platform has led to a 5% digital revenue decline during the
period. Whilst revenues for the full year have remained solid,
profitability was affected by a full year of RGD.
Grosvenor Casinos continued to deliver solid growth, with total
revenues up 4% in the year with continued strong growth from its
digital channel. Operating profit was marginally down in the year
as the growth in digital was offset by a disappointing Q4 in the
venues channel which has subsequently normalised.
Mecca's like-for-like revenue rose by 2% in the year driven by a
2% increase in both venues and digital. Total revenue was down 1%
in the period. Operating profit fell by 3% due to the impact of RGD
and higher operating costs in the digital channel offsetting a
solid venues performance. Actions across product, people and
marketing are underway to address the disappointing digital
performance.
Positive momentum continues in the Group's Spanish operations
with both revenue and operating profit growing strongly in the
year.
Central costs increased by 3% in the year driven by higher
employment costs.
On a cash basis, Rank invested GBP52.7m of capital across the
Group during the year with a GBP10.0m investment into new
generation casino gaming machines.
Adjusted net interest payable for the 12 months was lower than
the comparable period due to lower debt levels and lower financing
costs following the refinancing of Rank's bank facilities in
September 2015.
Adjusted earnings per share increased by 5% to 15.4p.
Details of exceptional items relating to continuing operations
can be found in note 3. In the year there was an exceptional profit
of GBP9.7m which principally related to the disposal of two
freehold properties.
Dividend
The board targets a progressive and sustainable dividend. This
dividend policy reflects the strong cash flow characteristics and
long-term earnings potential of the Group, whilst allowing it to
retain sufficient capital to fund on-going operating requirements,
investment and balance sheet management. The board is pleased to
recommend a final dividend of 4.70 pence per share to be paid on 20
October 2016 to shareholders on the register at 9 September 2016.
This will take the full year dividend to 6.50 pence per share, a
16% increase on last year. The Group's dividend cover has as a
result reduced to 2.4 times from 2.6 times in the prior year.
Current trading and outlook
Trading in the short seven-week period to 14 August 2016 has
been positive and is in line with management's expectations.
Rank is predominantly a UK facing business with limited exposure
to non-sterling costs and earnings. The UK's decision to leave the
European Union is expected to have little or no direct impact on
Rank's performance. Any likely impact would however be driven by
any macro-economic impact of lower UK growth rates or loss of
consumer confidence and spending power.
Rank remains in a strong financial position, possesses
market-leading brands and has a clear strategy for long-term
growth.
Our strategy
Rank's aim is to be the UK's leading multi-channel gaming
operator. We are focused on building brands with the ability to
deliver them via the channels our customers prefer whether that is
through our 154 venues, online or mobile.
1. Creating a compelling multi-channel offer
In the markets where we operate, Rank is one of the few gaming
companies in a position to provide customers with a genuine
multi-channel gaming offer. We have a number of key assets,
including a portfolio of 154 venues, our membership-based model
with approximately three million members, our loyalty and reward
programmes and the high levels of engagement that our team members
enjoy with customers.
Activity in 2015/16
-- Single account and wallet development: During the year,
progress has been made towards the development of a single account
and wallet. The aim is for each brand to offer its customers one
account and wallet which works across all channels
-- New Mecca services app launched: 'My Mecca' was launched in
H1 2015/16. The app provides customers with functionality including
a club finder tool and details of current promotions at each
venue
-- Development of a new cross-channel (online and retail) bingo
brand: During the year a new bingo brand and proposition were
developed. Several locations for new bingo venues have been
identified and are currently subject to planning permission. The
digital service will launch in H2 2016/17. The new brand will offer
a different proposition from traditional retail bingo and is likely
to appeal to a different demographic
-- Mecca digital membership trial: A digital membership scheme
was successfully trialled in Mecca Croydon enabling customers to
enter the venue with their membership details provided by an app on
their mobile device. Key benefits include an improved customer
experience, lower costs via the removal of replacement membership
cards, the ability to market to customers in a more cost effective
way, via mobile, as well as developing a multi-channel offer
-- New poker offer launched: In Q3 2015/16, Grosvenor Casinos
launched a new digital poker offer powered by Microgaming
Priorities for 2016/17
-- Launch of new bingo brand across both online and retail
channels: The new online brand is scheduled to be launched in H2
2016/17 alongside its retail channel (subject to planning)
-- Launch of single account and wallet: Grosvenor Casinos aims
to launch its first single account and wallet offer in 2016/17 with
Mecca to follow shortly after
2. Building digital capability
Rank has built strong positions in venue-based gaming which we
seek to replicate across our digital channels (online and mobile).
In 2015/16, our digital operations generated 13% of Group revenue
whereas digital channels now represent around 39% of Great
Britain's gambling market (excluding National Lottery). This
presents a significant growth opportunity. We are in the process of
enhancing our capability in this area such that we can meet the
changing needs of our customers and capture a greater share of the
digital market.
Activity in 2015/16
-- Migration to new digital gaming platform: During Q3 2015/16,
both Mecca and Grosvenor Casinos migrated their digital brands onto
the Group's new digital platform provided by Bede Gaming
-- Soft launch of Grosvenor Casinos' new digital sports book: In
June 2016, an introductory product for sports book was soft
launched in time for the UEFA Euro 2016 football championships
-- New content on meccabingo.com and grosvenorcasinos.com: A key
benefit of moving to the Bede Gaming digital platform is the
ability to take content from multiple providers and therefore have
access to a wider range of content. During the year the Group
signed contracts with both Net Entertainment and NYX, as well as a
number of other game developers, which will result in over 100 new
gaming titles for our digital brands
-- Launch of enracha.es: Enracha.es was soft-launched on the new
Bede Gaming platform in June 2016
Priorities for 2016/17
-- Full launch of Grosvenor Casinos' digital sports book: During
H1 2016/17, bonus functionality will go live along with an enhanced
site
-- Continued improvements to digital poker offer: The customer
journey will be improved, specifically focusing on alleviating
customer friction points (registration, depositing and withdrawing)
in addition to launching mobile and instant play products
-- Improvement to Grosvenor Casinos' digital Live Casino offer:
In July 2016, Grosvenor Casinos' successful live casino product was
refreshed following the move of its supplier's studio from Riga,
Latvia to a larger facility in Malta
-- Launch of new digital Mecca VIP site: A new VIP microsite
will be launched alongside a new VIP programme and increased VIP
management capabilities
-- Enracha.es: The full enracha.es is scheduled to go live in H1
2016/17 offering customers digital bingo, blackjack, roulette and
slots
3. Developing our venues
Our casino and bingo venues remain a material part of Rank's
business, providing entertainment for millions of customers each
year and generating the majority of the Group's revenue and
profits. By continuing to invest in our venues (in terms of
product, environment and service) and by creating new ones, we are
constantly evolving and enhancing the experiences that we offer to
customers, and in doing so growing our revenue.
Activity in 2015/16
-- Relaunch of Luton casino under a 2005 Act licence: In
September 2015, Grosvenor Casinos relaunched its Luton casino
following a GBP4.3m expansion and refurbishment. The investment
included extension and refurbishment works to accommodate the 2005
Act casino licence, allowing up to 60 additional slot machines
-- Addition of second casino licences alongside three existing
casinos: Additional licences were located alongside existing
casinos in Coventry, Blackpool and Portsmouth
-- Refurbishment of Grosvenor Casinos' Park Tower casino in
London: GBP1.2m was spent in the year on the refurbishment and
modernisation of The Park Tower casino in London. The last
investment at The Park Tower was in 2011 and the refurbishment was
critical in protecting its market position
-- Grosvenor 'sparkles': A total of 15 casinos received low-cost
improvements in the period at a total capital cost of GBP4.4m under
the 'sparkles' programme
-- Partial open door and full open door trials in Grosvenor
Casinos: During the year some of our UK casinos removed their
requirement to register all customers. This is referred to as
either Partial Open Door (POD), involving the partial removal of
entry requirements, or Full Open Door (FOD), involving full removal
of requirements. Neither policy changes our commitment to
responsible gambling or customer security. POD was rolled out
across the entire casino estate in the year with FOD trialled
across our casino venues in Glasgow. FOD contributed to an 8%
increase in admissions and higher non-gaming spend in the Glasgow
venues
-- Mecca refurbishments: During the year seven Mecca venues were
refurbished at a total cost of GBP2.3m
Priorities for 2016/17
-- Mecca refurbishments: A further eight venues are scheduled
for refurbishment in 2016/17 at a total cost of GBP2.1m
-- Addition of second licences alongside existing casinos:
Following the recent planned closure of two casinos (Glasgow
Princes and Leeds Arena), four non-trading casino licences are to
be located alongside existing casinos in Glasgow and Leeds
-- Refurbishments of Grosvenor Casinos' venues in Leeds and
Nottingham: A total investment of GBP6.2m is planned for the
refurbishment of two Grosvenor Casinos venues in Leeds and
Nottingham. Both casinos were part of the estate acquired from Gala
Coral in 2013 and are the last casinos to receive investment post
acquisition. Both refurbishments are scheduled to be completed by
the end of H1 2016/17
-- Opening of new concept bingo venues: A number of locations
have been identified and are currently under planning review. It is
envisaged that the first new club will open in the course of
2016/17
-- Further roll out of FOD in Grosvenor Casinos: Subject to
licence conditions, FOD will be rolled out across the remainder of
the Grosvenor Casinos estate by the end of September 2016
4. Investing in our brands and marketing
The development of a group of well-defined, relevant and
resonant brands is critical for the success of our ambition. Rank
possesses a number of well-known brands with strong levels of
affinity amongst customers. Continuing to invest and develop these
brands, alongside new ones, is an important part of increasing and
sustaining revenues.
Activity in 2015/16
-- Development of the Group's data science and customer
relationship management ('CRM') teams: During the year, the Group
has significantly enhanced its data science and CRM capabilities.
This has included building new teams and putting in place a new
data platform and tools. It is expected that these tools will
improve customer insight, customer yields and marketing efficiency
as well as customer experience
-- Appointment of new marketing director for Grosvenor Casinos:
During the year a new marketing director, Jo Blundell, was
appointed for Grosvenor Casinos. Jo was previously UK marketing
director of McDonalds and managing director of the advertising
agency TBWA
Priorities for 2016/17
-- Launch of new customer contact centre in Sheffield: Rank is
in the process of moving its contact centre in central London to
Sheffield. The current call centre has an expensive cost base and
is partially outsourced. The new centre's strategy aims to move it
from its current cost centre model to one that directly generates
profit through a more proactive relationship with our customers.
The new contact centre is due to open in September 2016
-- Investment into VIP teams across all brands: Investment will
continue through VIP team expansion for both UK brands. Investment
will continue to be made into customer verification teams which
enable the Group to operate responsibly and in line with customer
due diligence and anti-money laundering requirements
-- Launch of new digital gaming brands: The Group will continue
to look at ways to grow its customer base and revenues through the
use of new digital gaming brands, allowing 'cross-sell' from its
existing databases
-- Improve marketing through the use of customer analytics and
segmentation: Through its new data science team and through
segmentation tools, the Group aims to better predict the
interactions of customers across all channels
5. Using technology to drive efficiency and improve customer experience
The customer is at the heart of our focus on increasing the use
of technology in our business and driving efficiency. Improved
customer experience and operating margins can help create a
competitive advantage. We have identified a number of opportunities
to harness technological developments to offer our customers more
engaging experiences and to achieve sustainable growth in operating
margins.
Activity in 2015/16
-- Roll-out of a new casino management system, Neon: At the end
of the financial year, a new casino management system, Neon, was
rolled out across the entire retail estate. Neon provides the
casinos with an improved system to manage customer interactions,
the cash desk and loyalty programmes
-- Launch of progressive jackpot across Grosvenor Casinos: In
January 2016, the 'Ace King Suited' progressive jackpot was
launched across the entire estate resulting in increased blackjack
handle
-- Get Set Roulette launched in a further seven casinos: The
roll-out of Get Set Roulette continued in the period. Get Set
Roulette offers an enhanced customer experience for electronic
roulette with a more consistent rate of play and greater choice of
wheels
-- Labour planning software to reduce employment costs in
Grosvenor Casinos: Labour planning software that had been
introduced outside London in the prior year was further rolled out
across the London casinos in the year. The software focuses on
optimising working hours and is estimated to provide savings of
GBP0.8m in a full year
-- New slots and electronic roulette machines in Grosvenor
Casinos: A GBP10.0m investment in new server-based slots and
electronic roulette machines was completed providing customers with
a better quality offer and improved features. This investment
contributed to a 9% growth in gaming machine revenues in the
year
-- Investment in new cash line systems to accommodate the new
GBP1 coin: At a total cost of GBP1.1m the existing Mecca cashline
system is being upgraded in preparation for the introduction of the
new GBP1 coin. The investment programme commenced in 2015/16 and
will be completed in 2016/17
-- Introduction of server-based games and Ticket In Ticket Out
(TiTo) functionality into Mecca's slot machines: Following the
rollout across 79 clubs in June 2015, Mecca has seen an improved
slots performance, up 3% in the year on a like-for-like basis. The
TiTo functionality also allows for lower cost promotional activity
and improved player tracking
Priorities for 2016/17
-- Full integration of new casino loyalty system with Neon:
Neon's roll-out was successfully completed in July 2016. Neon's
functionality for table management and single wallet is scheduled
to go live in 2016/17. A new loyalty scheme will be fully
integrated into Neon in 2016/17, initially focusing on slots.
-- Additional Mecca Max roll-out: Following the successful
introduction of 5,600 additional Mecca Max units at the start of
2015/16, a further 5,250 units are to be rolled out across the
Mecca estate of which 2,500 will be incremental
-- Launch of new food and beverage ordering facility on Mecca
services app and Mecca Max units: A third party food ordering app
was trialled in Southend and Croydon with favourable impacts on
queuing times and customer reactions. A project is now in place to
include food and beverage ordering functionality to the Mecca
services app that was launched in 2015/16
-- Additional new slots and electronic roulette machines in
Grosvenor Casinos: Following the successful performance of recent
investments an additional GBP5.0m will be spent in 2016/17 on new
slots and electronic roulette machines
-- New loyalty scheme for digital bingo: Following the
successful integration of Grosvenor Casinos' loyalty scheme into
Neon, a similar but bingo tailored loyalty system will be reviewed
and considered for Mecca digital
-- Further roll-out of Get Set Roulette: 15 more casinos will
receive Get Set Roulette in H1 2016/17
-- New customer analytics platform for all channels: A new
analytics platform will be launched in 2016/17 where live data will
be available on all digital devices, enabling much improved
in-venue analysis for club managers
National Living Wage
The introduction of the National Living Wage resulted in GBP1.4m
of additional operating costs for the year, excluding any
mitigating actions. The Group implemented the National Living Wage
to all Grosvenor Casinos' employees from January 2016, with Mecca
employees from 1 April 2016. Mecca and Grosvenor Casinos mitigating
actions have been implemented and will continue to be worked
through into 2016/17 in preparation for the next increase which
comes into effect from April 2017.
Taxation
From 1 December 2014, Remote Gaming Duty at 15% was applied to
all online gambling revenues generated by customers in the UK. The
incremental cost to the Group in 2015/16 was GBP4.8m.
Board and management changes
On 1 September 2015, Susan Hooper was appointed to the Rank
board as a non-executive director. Susan serves on the remuneration
and nominations committees.
On 30 November 2015, Tim Scoble, non-executive director, stood
down from the Rank board. Tim's other commitments had grown
substantially in the months preceding and hence he concluded that
he must relinquish some of his responsibilities. Tim made an
invaluable contribution during his time on the board.
On 1 March 2016, Steven Esom was appointed to the Rank board as
a non-executive director. Steven was also appointed chair of Rank's
remuneration committee and serves on its audit and nominations
committees.
At the end of 2015/16, Mark Jones left the Group after serving
seven years, initially as managing director of Mecca and latterly
as managing director of Grosvenor Casinos. A search is underway to
select a new managing director for Grosvenor Casinos.
Responsible Gambling
During the year, the Group formed a board-level responsible
gambling committee chaired by Lord Kilmorey. This committee will
operate alongside the newly-created executive level compliance and
responsible gambling committee chaired by the Group's chief
executive.
Grosvenor Casinos performance review
Grosvenor Casinos continues to deliver solid growth, with total
revenues up 4% in the year with continued strong growth from its
digital channel.
2015/16 2014/15 Change
----------------------------- -------- -------- -------
Total revenue(1) (GBPm) 438.6 423.4 4%
----------------------------- -------- -------- -------
Venues 408.1 401.1 2%
----------------------------- -------- -------- -------
Digital 30.5 22.3 37%
----------------------------- -------- -------- -------
Total EBITDA(2) (GBPm) 93.3 91.7 2%
----------------------------- -------- -------- -------
Venues 85.9 87.1 (1)%
----------------------------- -------- -------- -------
Digital 7.4 4.6 61%
----------------------------- -------- -------- -------
Total operating profit(2,3)
(GBPm) 66.2 66.5 0%
----------------------------- -------- -------- -------
Venues 60.9 63.4 (4)%
----------------------------- -------- -------- -------
Digital 5.3 3.1 71%
----------------------------- -------- -------- -------
Like-for-like revenue 4%
----------------------------- --------
Venues 3%
----------------------------- --------
Digital 37%
----------------------------- --------
1 Before adjustment for customer incentives.
2 Before exceptional items.
3 As per note 2 in the Group Financial Information.
Venues revenue grew by 2% in the year, with good growth up to
the end of Q3 offset by disappointing gaming win margins and visits
in Q4 which were seen across the industry. Operating profit fell by
4%, due to higher operating costs including player rebates and
loyalty scheme costs.
In September 2015, the extension and refurbishment works at
Grosvenor's Luton casino were completed at a total capital cost of
GBP4.3m. Since completion trading has seen an uplift, in line with
management expectations. In August 2015, at the expiry of its
lease, the licence from Grosvenor's Osborne Road casino in
Portsmouth was moved to operate alongside its larger and more
profitable Gunwharf Quays casino, also in Portsmouth.
In July 2016, Grosvenor's Princes casino in Glasgow (an
under-performing former Gala casino) was closed and the Group plans
to relocate the spare licences alongside the brand's two remaining
casinos in Glasgow during 2016/17.
The brand's digital channel continues to grow strongly with
revenues up 37% in the year following a successful migration onto
the new digital platform in Q3. Even with an incremental GBP1.5m of
RGD in the year, operating profit grew strongly, up 71%. Following
the move to the Bede Gaming platform key improvements were made to
the customer registration process which along with more effective
marketing contributed to a 77% increase in first- time
depositors.
Key performance indicators
2015/16 2014/15 Change
------------------------ -------- -------- -------
Total customers(4)
(000s) 1,611 1,817 (11)%
------------------------ -------- -------- -------
Venues(5,6) 1,557 1,743 (11)%
------------------------ -------- -------- -------
Digital(5) 101 114 (11)%
------------------------ -------- -------- -------
Cross-channel customer
cross-over(7) 3.0% 2.3% 0.7ppt
------------------------ -------- -------- -------
Total customer visits
(000s) 8,998 8,900 1%
------------------------ -------- -------- -------
Venues 8,159 8,233 (1)%
------------------------ -------- -------- -------
Digital 839 667 26%
------------------------ -------- -------- -------
Total spend per visit
(GBP) 48.74 47.57 2%
------------------------ -------- -------- -------
Venues 50.02 48.72 3%
------------------------ -------- -------- -------
Digital 36.35 33.43 9%
------------------------ -------- -------- -------
Total net promoter
score 56% 40% 16ppt
------------------------ -------- -------- -------
Venues 57% 40% 17ppt
------------------------ -------- -------- -------
Digital 21% 18% 3ppt
------------------------ -------- -------- -------
4 Cross-over customers included only once.
5 Customers shown on a moving annual total ('MAT') basis.
6 Following the introduction of 'partial' and 'full' open door
where some of our casinos removed their requirement to register all
customers, the participating casinos are unable to accurately track
customer numbers, therefore total brand and venue customers only
include registered customers.
7 Percentage of registered venues customers who are also digital
customers.
Like-for-like venues customers were flat in the year, ahead of
the wider UK casino market. Spend per visit increased by 3% in the
year, driven by the recent investment into new games and
product.
Digital customers were down 11% in the year due to the impact of
TV advertising in the prior year that generated multiple lower
value customers and has not been repeated. Mobile customers grew
strongly in the year, up 42%. Spend per visit increased by 9% in
the year driven by improved marketing and the improved offer on the
Bede Gaming platform.
Venues regional analysis
The casino estate is split into three key areas - London,
Provinces and Belgium. To better illustrate the differences across
the estate, the below analysis has been provided.
Customer Spend per Revenue Operating
visits (000s) visit (GBPm) profit (GBPm)
(GBP)
----------- ------------------ ------------------ ------------------ ------------------
2015/16 2014/15 2015/16 2014/15 2015/16 2014/15 2015/16 2014/15
----------- -------- -------- -------- -------- -------- -------- -------- --------
London 1,482 1,468 101.42 101.02 150.3 148.3 31.7 34.0
----------- -------- -------- -------- -------- -------- -------- -------- --------
Provinces 6,433 6,506 37.88 36.83 243.7 239.6 27.2 28.6
----------- -------- -------- -------- -------- -------- -------- -------- --------
Belgium 244 259 57.79 50.97 14.1 13.2 2.0 0.8
----------- -------- -------- -------- -------- -------- -------- -------- --------
Total 8,159 8,233 50.02 48.72 408.1 401.1 60.9 63.4
----------- -------- -------- -------- -------- -------- -------- -------- --------
London visits increased by only 1% impacted by a subdued Q4.
Although the provinces witnessed a 1% fall in visits, provincial
revenue increased by 2% in the year.
Venues revenue analysis - Great Britain only
GBPm 2015/16 2014/15 Change
-------------------- -------- -------- -------
Casino games 261.6 263.5 (1)%
-------------------- -------- -------- -------
Gaming machines 86.5 79.4 9%
-------------------- -------- -------- -------
Card room games 15.3 15.7 (3)%
-------------------- -------- -------- -------
Food & drink/other 30.6 29.3 4%
-------------------- -------- -------- -------
Total 394.0 387.9 2%
-------------------- -------- -------- -------
Recent investments into gaming machines have driven a strong
increase in gaming machine revenue in the year, up 9%.
Mecca performance review
Mecca's like-for-like revenue rose by 2% in the year driven by a
2% increase in both venues and digital. Total revenue was down 1%
in the period.
2015/16 2014/15 Change
----------------------- -------- -------- -------
Total revenue(1)
(GBPm) 287.7 289.6 (1)%
----------------------- -------- -------- -------
Venues 221.5 224.4 (1)%
----------------------- -------- -------- -------
Digital 66.2 65.2 2%
----------------------- -------- -------- -------
Total EBITDA(2)
(GBPm) 56.9 57.2 (1)%
----------------------- -------- -------- -------
Venues 45.5 41.6 9%
----------------------- -------- -------- -------
Digital 11.4 15.6 (27)%
----------------------- -------- -------- -------
Total operating
profit(2,3) (GBPm) 41.5 43.0 (3)%
----------------------- -------- -------- -------
Venues 32.9 28.9 14%
----------------------- -------- -------- -------
Digital 8.6 14.1 (39)%
----------------------- -------- -------- -------
Like-for-like revenue 2%
----------------------- --------
Venues 2%
----------------------- --------
Digital 2%
----------------------- --------
1 Before adjustment for customer incentives.
2 Before exceptional items.
3 As per note 2 in the Group Financial Information.
Like-for-like revenue was up 2% in the year driven by a higher
spend per visit. Operating profit increased by 14% in the year
driven by lower operating costs.
During the year Mecca closed three venues, one of which involved
the disposal of a freehold property in Hornchurch which resulted in
an exceptional profit of GBP6.0m.
Digital revenues increased by 2% in the year, with H2 2015/16
being adversely impacted by platform migration issues following the
move to the new Bede Gaming platform in Q3 along with the
introduction of social responsibility tools. Operating profit fell
in the year, down 39%, with the comparable period only impacted by
seven months of RGD. The incremental tax cost in the year was
GBP3.3m.
Key performance indicators
2015/16 2014/15 Change LFL change
------------------------ -------- -------- ------- -----------
Total customers(4)
(000s) 1,187 1,141 4% 7%
------------------------ -------- -------- ------- -----------
Venues(5) 987 961 3% 5%
------------------------ -------- -------- ------- -----------
Digital(5) 303 267 13% 13%
------------------------ -------- -------- ------- -----------
Cross-channel customer
cross-over(6) 10.4% 9.1% 1.3ppt
------------------------ -------- -------- ------- -----------
Total customer
visits (000s) 16,935 17,248 (2)% 0%
------------------------ -------- -------- ------- -----------
Venues 11,550 12,035 (4)% (1)%
------------------------ -------- -------- ------- -----------
Digital 5,385 5,213 3% 3%
------------------------ -------- -------- ------- -----------
Total spend per
visit (GBP) 16.99 16.79 1%
------------------------ -------- -------- -------
Venues 19.18 18.65 3%
------------------------ -------- -------- -------
Digital 12.29 12.51 (2)%
------------------------ -------- -------- -------
Total net promoter
score 62% 57% 5ppt
------------------------ -------- -------- -------
Venues 69% 62% 7ppt
------------------------ -------- -------- -------
Digital 25% 30% (5)ppt
------------------------ -------- -------- -------
4 Cross-over customers included only once.
5 Customers shown on a moving annual total ('MAT') basis.
6 Percentage of venues customers who are also digital
customers.
Growth in venues customer numbers continued in the year, up 3%.
Like-for-like visits fell by 1% following growth in Q2 and Q3.
Investment into product and improvements to the food and beverage
offer led to a 3% increase in spend per visit.
A TV campaign that ran throughout the year contributed to a 13%
increase in digital customer numbers. In 2016/17, the focus will
move to improving customer retention levels and widening the VIP
customer base. A new TV campaign is currently under development and
is due to be aired in H1 2016/17.
Venues revenue analysis
GBPm 2015/16 2014/15 Change LFL change
-------------------- -------- -------- ------- -----------
Main stage
bingo 31.9 31.4 2% 5%
-------------------- -------- -------- ------- -----------
Interval games 89.5 92.9 (4)% (1)%
-------------------- -------- -------- ------- -----------
Amusement
machines 73.0 73.5 (1)% 3%
-------------------- -------- -------- ------- -----------
Food & drink/other 27.1 26.6 2% 5%
-------------------- -------- -------- ------- -----------
Total 221.5 224.4 (1)% 2%
-------------------- -------- -------- ------- -----------
The recent roll out of server-based machine games and investment
into new Mecca Max units contributed to like-for-like revenue
growth for amusement machines and main stage bingo
respectively.
Enracha performance review
Positive momentum continues in the Group's Spanish operations
with both revenue and operating profit growing strongly in the
year.
2015/16 2014/15 Change
---------------- -------- -------- -------
Total revenue
(EURm) 35.6 33.4 7%
---------------- -------- -------- -------
Revenue (GBPm) 26.7 25.3 6%
---------------- -------- -------- -------
EBITDA(1)
(GBPm) 5.1 4.1 24%
---------------- -------- -------- -------
Operating
profit(1)
(EURm) 4.7 3.4 38%
---------------- -------- -------- -------
Operating
profit(1,2)
(GBPm) 3.6 2.6 38%
---------------- -------- -------- -------
1 Before exceptional items.
2 As per note 2 in the Group Financial Information.
The combination of a stronger Spanish economy and investments
into product led to a 7% increase in euro revenues in the year.
Euro operating profit was up 38% driven by revenue growth.
Key performance indicators
2015/16 2014/15 Change
----------------- -------- -------- -------
Customers(3)
(000s) 274 269 2%
----------------- -------- -------- -------
Customer visits
(000s) 2,020 1,844 10%
----------------- -------- -------- -------
Spend per
visit (EUR) 17.62 18.11 (3)%
----------------- -------- -------- -------
Spend per
visit (GBP) 13.22 13.72 (4)%
----------------- -------- -------- -------
Net promoter
score 90% 91% (1)ppt
----------------- -------- -------- -------
3 Customers shown on a moving annual total ('MAT') basis.
During the year Enracha acquired the freehold of its Continental
venue in Barcelona at capital cost of GBP2.4m.
Venues revenue analysis
EURm 2015/16 2014/15 Change
-------------------- -------- -------- -------
Bingo 20.3 19.1 6%
-------------------- -------- -------- -------
Amusement
machines 12.7 11.7 9%
-------------------- -------- -------- -------
Food & drink/other 2.6 2.6 0%
-------------------- -------- -------- -------
Total 35.6 33.4 7%
-------------------- -------- -------- -------
Financial review
Group statutory revenue rose by 1% in the year. Profit for the
year from continuing operations increased by 21% to GBP71.1m as a
result of lower interest charges and profit from the sale of two
freeholds.
Group revenue for the 12-month period from continuing operations
rose by 2% to GBP753.0m. The Group incurred Remote Gaming Duty for
the full 12 months in 2015/16, compared to only seven in the prior
year, at an additional cost of GBP4.8m.
Net finance charges fell nearly 40% to GBP6.2m due to lower debt
levels and lower financing costs following the refinancing of
Rank's bank facilities in September 2015 (further details can be
found at note 4).
Adjusted earnings per share was up 5% at 15.4p.
Basic earnings per share from continuing operations was up 20%
at 18.2p.
Taxation
The Group's effective corporation tax rate on continuing
operations was 22.5% (2014/15: 22.9%) based on a tax charge of
GBP17.4m on adjusted profit before taxation. The Group's effective
corporation tax rate for 2016/17 is expected to fall within the
range of 20% to 22% as a result of the reduction of UK corporation
tax rates.
On a statutory unadjusted basis, the Group had an effective tax
rate of 12.1% (2014/15: (0.9)%), based on a tax charge of GBP10.2m
and total profit for the year of GBP84.9m.
The Group had a cash tax rate of 18.3% on adjusted profit,
excluding tax paid in relation to legacy issues (2014/15: 15.6%).
This adjusted cash tax rate was in line with management's
expectations. The Group is expected to have a cash tax rate of 17%
to 19% in 2016/17. This is lower than the Group's effective
corporation tax rate due to the utilisation of capital allowances
and losses in the Group.
The Group had an unusually high total cash tax rate of 31.4%
(2014/15: 3.0%) following the payment detailed below.
As highlighted in previous reports, the Group previously
participated in a disclosed tax planning scheme. The scheme will be
litigated through the courts with another tax payer as the lead
case and could be heard in December 2016 at the earliest. During
the year the Group received a request for payment of the principal
amount in dispute (GBP21.4m) which was paid in the year.
During the year, the Group successfully concluded a long
standing issue in relation to a disposed business in an overseas
territory and received a repayment of GBP4.4m of tax previously
overpaid.
Cash flow
12 months 12 months
to 30 June to 30
2016 June 2015
GBPm GBPm
----------------------------------- ------------ -----------
Continuing operations
----------------------------------- ------------ -----------
Cash inflow from operations 116.4 154.5
----------------------------------- ------------ -----------
Net cash payments in respect
of provisions and exceptional
items (6.2) (7.9)
----------------------------------- ------------ -----------
Cash generated from continuing
operations 110.2 146.6
----------------------------------- ------------ -----------
Capital expenditure (52.7) (31.9)
----------------------------------- ------------ -----------
Fixed asset disposals 12.3 1.5
----------------------------------- ------------ -----------
Disposal of subsidiaries (0.2) -
----------------------------------- ------------ -----------
Net interest and tax payments (12.0) (9.7)
----------------------------------- ------------ -----------
Payment of disputed tax (21.4) -
----------------------------------- ------------ -----------
Dividends paid (22.7) (18.6)
----------------------------------- ------------ -----------
Convertible loan payment (1.1) (2.4)
----------------------------------- ------------ -----------
Other (including foreign exchange
translation) (0.7) (1.4)
----------------------------------- ------------ -----------
Cash inflow 11.7 84.1
----------------------------------- ------------ -----------
Opening net debt (52.9) (137.0)
----------------------------------- ------------ -----------
Closing net debt (41.2) (52.9)
----------------------------------- ------------ -----------
Exceptional items
In order to give a full understanding of the Group's financial
performance and aid comparability between periods, the Group
reports certain items as exceptional to normal trading.
Details of exceptional items can be found in note 3. In the year
there was an exceptional profit of GBP9.7m which principally
relates to the disposal of two freehold properties and a GBP3.6m
exceptional profit from discontinued operations following the tax
refund detailed above.
Financial structure and liquidity
At 30 June 2016, net debt was GBP41.2m compared to net debt of
GBP52.9m at 30 June 2015. The net debt comprised GBP80.0m in bank
term loans, GBP10.1m in fixed rate Yankee bonds, GBP9.0m in finance
leases and GBP3.1m in overdrafts, offset by cash at bank and in
hand of GBP61.0m.
At the start of the financial year the Group's banking
facilities comprised two GBP60.0m bi-lateral term loans and four
GBP20.0m undrawn bi-lateral revolving credit facilities totalling
GBP200.0m. In September 2015, the Group refinanced its bank
facilities with GBP90.0m of revolving credit facilities which
expire in September 2020 and GBP90.0m of term loan facilities which
expire in March 2019. The GBP90.0m of term loan facilities
comprises three bilateral agreements and in line with the agreed
amortisation profile was reduced to GBP80.0m in January 2016. The
GBP90.0m of revolving credit facilities comprises three bi-lateral
agreements.
The new bank facilities require the maintenance of a minimum
ratio of earnings before interest, tax, depreciation and
amortisation (EBITDA) to net interest payable and a maximum ratio
of net debt to EBITDA, tested biannually. The Group has complied
with its banking covenants.
The Group's balance sheet continued to strengthen in the year
with leverage falling from 0.4 times to 0.3 times at 30 June
2016.
Capital expenditure
12 months to 12 months to
Cash: 30 June 2016 30 June 2015
GBPm GBPm
--------------------------- -------------- --------------
Continuing operations
--------------------------- -------------- --------------
Grosvenor Casinos 25.1 15.9
--------------------------- -------------- --------------
Mecca 10.6 9.5
--------------------------- -------------- --------------
Enracha 3.4 0.9
--------------------------- -------------- --------------
Central 13.6 5.6
--------------------------- -------------- --------------
Total capital expenditure
(venues and digital) 52.7 31.9
--------------------------- -------------- --------------
During the year, Rank invested GBP24.8m into its Grosvenor
Casinos venues. A significant amount of the full year spend was on
expansions, refurbishments and gaming machines.
Two major venue projects were completed in the year. In
September 2015, the extension and refurbishment of Grosvenor
Casinos' Luton venue was completed in the year at a cost of GBP3.3m
and in H2 the brand completed the GBP1.2m refurbishment of The Park
Tower casino in London. During the year a decision was made to move
a majority of the gaming machine estate from leased to owned; this
was completed in the year at a total capital cost of GBP10.0m. A
total of GBP3.2m was invested into the retail casinos' IT
infrastructure, this included a GBP1.1m roll-out of the new casino
management system (Neon) and a GBP0.5m investment into Get Set
Roulette. The balance was principally spent on smaller scale venue
improvements, known as 'sparkles', IT investments and other digital
improvement.
Mecca invested GBP9.1m into its venues in the year. GBP2.2m was
spent on the refurbishment of seven venues in addition to a GBP1.2m
investment into 450 replacement Mecca Max units, battery
replacements and development. In preparation for the introduction
of the new GBP1 coin in March 2017 GBP0.5m was spent on the
replacement of cashline coin mechanisms in 39 venues. In-line with
the rest of the Group, Mecca invested into its IT infrastructure at
a capital cost of GBP1.8m. The balance was spent on general venue
improvements.
During the year, Enracha acquired the freehold of its
Continental venue in Barcelona at a cost of GBP2.4m; in purchasing
the freehold Enracha has protected the venues' future.
2015/16 was a significant year for investing in our digital
businesses for future growth. The key central project in the year
was the migration to the new digital gaming platform at a cost of
GBP6.4m.This was in addition to the GBP1.1m ongoing development of
the Group's single account and wallet and a GBP1.1m investment
improving the Group's customer data analytic systems.
During 2016/17, we plan to invest between GBP60m to GBP70m; an
increase on 2015/16 reflecting additional investment in new gaming
machines in Grosvenor Casinos and major refurbishments of two
casinos in Leeds and Nottingham.
Total capital committed at 30 June 2016 was GBP1.8m.
Going concern
In adopting the going concern basis for preparing the financial
information the directors have considered the issues impacting the
Group during the period as detailed in the performance review above
and have reviewed the Group's projected compliance with its banking
covenants. Based on the Group's cash flow forecasts and operating
budgets, the directors believe that the Group will generate
sufficient cash to meet its liabilities as they fall due for at
least 12 months from the date of approval of this report and comply
with its banking covenants.
Principal risks and uncertainties
Regulatory, Finance and Tax Risks
--------------------------------------------------------------------------------------------
Impact Mitigation Direction
of travel
-------------------------- ------------------------ ------------------------- -----------
Regulation
Adverse regulatory Regulatory Rank actively Stable
changes in legislation changes participates
continue to could increase in trade bodies'
represent a the cost representations
significant of doing to Government,
risk. Changes business. opposition parties
in political and regulatory
and social attitudes bodies, and works
to gambling to enable stakeholders
in our key markets to understand
and negative our business
publicity surrounding and its positive
the gambling contribution
industry could to the economy
influence regulators' and community.
perception of We continue to
gambling and promote the 'Keep
could lead to it Fun' brand
increased gambling and website to
regulation. customers and
regulators to
de-mystify the
perception of
casinos, promote
a safe environment
to play and illustrate
the Group's position
in leading the
industry in this
field.
-------------------------- ------------------------ ------------------------- -----------
Taxation
Adverse changes Any increases Rank continues Stable
in fiscal regulation in the levels to be a leading
continue to of taxation participant in
be a significant or duties its relevant
risk, including to which trade organisations
the forthcoming we are subject, and takes an
change which or the implementation active part in
makes free bets of any new all relevant
subject to remote taxes or consultations
gaming duty. levies to by Government.
which we
will be
subject,
could have
a material
adverse
effect on
our business,
financial
condition
and results
of operations.
-------------------------- ------------------------ ------------------------- -----------
Operational risk
--------------------------------------------------------------------------------------------
Volatility of
Gaming Win Gaming win Across the business Stable
Win percentages margin directly gaming limits
for gambling impacts are actively
activities can profitability. utilised to manage
vary over a the risk exposure
short period of the business
of time, although at all times.
they will stabilise
over a longer VIP customers
period. The are actively
business is managed through
also vulnerable dedicated customer
to the potential relationship
impact of a teams who work
small number to administer
of customers both relationships
who can create and reward programmes
volatility from to manage and
the level of encourage loyalty.
their gaming
win. Also of Specialist resources
significance are in place
to the business to provide ongoing
is a small highly proactive and
valuable segment reactive detection
of VIP customers. of operational
Win percentages issues or suspicious
may also be behaviour that
affected by may interfere
misfeasance with accurate
or any other game results.
problems with
the accurate
running of the
game.
-------------------------- ------------------------ ------------------------- -----------
Loss of licences
Rank's gaming The loss Rank has a dedicated Stable
licences are of licences compliance function
fundamental could have that is independent
to its operation. an adverse of operations
In the British effect on and a separate
venues part our business internal audit
of the business and profitability function that
there is a requirement and prevent is independent
to hold an operator's us from of both operations
licence from providing and the compliance
the UK Gambling gambling function. Rank
Commission (the services. maintains a strong
body responsible and open relationship
for regulating with the UK Gambling
commercial gambling Commission and
in Great Britain) the other relevant
in respect of regulatory bodies
each of the in all jurisdictions
licensed activities in which it operates.
undertaken.
Additionally,
it is necessary
to hold premises
licences from
the relevant
local authority
in which each
venue is situated,
one for gambling
activities and
one for the
sale of alcohol.
Our UK customer
facing transactional
websites also
require an operator's
licence from
the UK Gambling
Commission as
well as a licence
from the Alderney
Gambling Control
Commission,
the body responsible
for the regulation
of eGambling
in the States
of Alderney
where our remote
gambling operations
are based. Our
operations in
Spain and Belgium
are also subject
to licensing
requirements
in the jurisdictions
and local areas
in which they
operate.
-------------------------- ------------------------ ------------------------- -----------
Business continuity
and disaster
recovery If business Due to the ongoing Stable
Due to the venues continuity and significant
based nature and disaster amounts of corporate
of much of the recovery and systems change
business, the plans failed the Group business
Group's significant to operate continuity plan
reliance on successfully is the subject
technology, the business of ongoing regular
and the criticality would experience review to ensure
of staff in delays in that it gives
serving customers recovering coverage to critical
and running critical departments and
the business, revenue premises.
serious disruptive generating
events such activities IT continuity
as building or operational and disaster
fire, pandemic processes, recovery plans
or serious technology such as are in place
failure may financial and likewise
cause an interruption reporting, regularly updated,
to the ability causing including for
to operate elements both financial key suppliers
of the business and reputational of technology
if business damage. services and
continuity and support.
disaster recovery
plans failed
to operate successfully.
-------------------------- ------------------------ ------------------------- -----------
Information Risk
--------------------------------------------------------------------------------------------
Information
technology and
cyber risk If our prevention Rank has continued Stable
The Group is measures to make significant
highly dependent for technology investments in
on complex technology attacks its technology
and advanced should fail capability, security
information our customers' and resilience
systems with trust may in order to deliver
many interfaces be lost a robust operating
and a significant and our environment,
number of separate reputation both working
suppliers. may consequently on its owned
be harmed environment and
For commercial, and customers in close collaboration
regulatory and deterred with key partners.
legal reasons from using It is recognised
Rank holds a our services that the business
considerable which may environment demands
amount of information in turn that investments
about its customers have a material of such time
on these systems. adverse and resources
We have a duty effect on are ongoing so
to ensure that our financial appropriate structures
this data is performance. are in place
treated with with specialised
sensitivity, Failures teams, such as
confidentiality in service an information
and security provision security team,
in order not could also playing a pivotal
to expose our render the role in technology
customers to Group unable strategy.
risk. to serve
customers Relevant company
The pace of during such policies and
business change service procedures are
and development interruptions, in place to guide
means that IT again having all activities
changes such an adverse with data, such
as new software effect on as access control
coding, systems revenue and encryption.
enhancements and profit. These are supervised
and new software by the Director
application A breach of Information
integrations of data Security and
are undertaken security his team, and
continually could also regular proactive
and consequently have additional security reviews
these systems potential are undertaken.
are inherently consequences
vulnerable to depending
experiencing on the nature
malfunctions, of the breach,
failures, or such as
cyber-attacks compensatory
such as viruses payments
or hacker intrusion. to customers
or fines.
Comprehensive
technology resilience
and systems
protection and
detection measures
are in place
but it is difficult
to detect all
threats and
vulnerabilities
in order to
prevent all
service interruptions
and problems.
-------------------------- ------------------------ ------------------------- -----------
Directors' Responsibility Statement
Each of the directors named below confirm that to the best of
his or her knowledge:
-- The financial statements, prepared in accordance with the
financial statements under International Financial Reporting
Standard (IFRs) as adopted by the European Union, give a true and
fair view of the assets, liabilities, financial position and profit
of the Company and the undertakings included in the consolidation
taken as a whole; and
-- The strategic report includes a fair review of the
development and performance of the business and the position of the
Company and the undertakings including in the consolidation taken
as a whole, together with a description of the risk and
uncertainties that they face.
The directors of The Rank Group Plc are:
Chris Bell
Henry Birch
Ian Burke
Steven Esom
Susan Hooper
Clive Jennings
Lord Kilmorey
Owen O'Donnell
Signed on behalf of the board on 22 August 2016
Henry Birch Clive Jennings
Chief Executive Finance Director
Group Financial Information
Group Income Statement
For the year ended 30 June 2016
Year ended 30 June Year ended 30 June
2016 2015
------------------------------------ ------------------------------------
Before Exceptional Before Exceptional
exceptional items exceptional items
(note (note
items 3) Total items 3) Total
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------- ------------ ------------ -------- ------------ ------------ --------
Continuing operations
Revenue before
adjustment for
customer incentives 753.0 - 753.0 738.3 - 738.3
Customer incentives (44.5) - (44.5) (37.6) - (37.6)
----------------------- ------------ ------------ -------- ------------ ------------ --------
Revenue 708.5 - 708.5 700.7 - 700.7
Cost of sales (391.7) - (391.7) (376.6) - (376.6)
----------------------- ------------ ------------ -------- ------------ ------------ --------
Gross profit 316.8 - 316.8 324.1 - 324.1
Other operating
costs (234.4) (0.7) (235.1) (240.1) 2.1 (238.0)
Other operating
Income - 10.0 10.0 - - -
----------------------- ------------ ------------ -------- ------------ ------------ --------
Group operating
profit 82.4 9.3 91.7 84.0 2.1 86.1
Financing:
- finance costs (5.3) - (5.3) (10.4) (1.3) (11.7)
- finance income 0.2 - 0.2 0.4 - 0.4
- other financial
losses (1.1) - (1.1) (0.3) - (0.3)
----------------------- ------------ ------------ -------- ------------ ------------ --------
Total net financing
charge (6.2) - (6.2) (10.3) (1.3) (11.6)
----------------------- ------------ ------------ -------- ------------ ------------ --------
Profit before
taxation 76.2 9.3 85.5 73.7 0.8 74.5
Taxation (14.8) 0.4 (14.4) (16.8) 1.3 (15.5)
----------------------- ------------ ------------ -------- ------------ ------------ --------
Profit for the
year from continuing
operations 61.4 9.7 71.1 56.9 2.1 59.0
Discontinued
operations -
profit - 3.6 3.6 - 15.8 15.8
Profit for the
year 61.4 13.3 74.7 56.9 17.9 74.8
----------------------- ------------ ------------ -------- ------------ ------------ --------
Attributable
to:
Equity holders
of the parent 61.4 13.3 74.7 56.9 17.9 74.8
----------------------- ------------ ------------ -------- ------------ ------------ --------
Earnings per share attributable to equity shareholders
- basic 15.7p 3.4p 19.1p 14.6p 4.5p 19.1p
- diluted 15.7p 3.4p 19.1p 14.6p 4.5p 19.1p
Earnings per share - continuing operations
- basic 15.7p 2.5p 18.2p 14.6p 0.5p 15.1p
- diluted 15.7p 2.5p 18.2p 14.6p 0.5p 15.1p
Earnings per share - discontinued operations
- basic - 0.9p 0.9p - 4.0p 4.0p
- diluted - 0.9p 0.9p - 4.0p 4.0p
----------------------- ------------ ------------ -------- ------------ ------------ --------
Group Statement of Comprehensive Income
For the year ended 30 June 2016
Year
Year ended ended
30 June 30 June
2016 2015
GBPm GBPm
--------------------------------------------- ----------- --------
Comprehensive income:
Profit for the year 74.7 74.8
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss:
Exchange adjustments net of tax 4.5 (4.7)
Items that will not be reclassified
to profit or loss:
Actuarial loss on retirement benefits
net of tax (0.1) (0.4)
Total comprehensive income for the
year 79.1 69.7
--------------------------------------------- ----------- --------
Attributable to:
Equity holders of the parent 79.1 69.7
--------------------------------------------- ----------- --------
Group Statement of Changes in Equity
For the year ended 30 June 2016
Capital Exchange Retained
Share Share redemption translation earnings
capital premium reserve reserve (losses) Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ -------- -------- ----------- ------------ --------- -------
At 1 July 2014 54.2 98.4 33.4 13.7 42.6 242.3
Comprehensive income:
Profit for the year - - - - 74.8 74.8
Other comprehensive
income:
Exchange adjustments
net of tax - - - (4.7) - (4.7)
Actuarial loss on retirement
benefits net of tax - - - - (0.4) (0.4)
------------------------------ -------- -------- ----------- ------------ --------- -------
Total comprehensive
(expense) income for
the year - - - (4.7) 74.4 69.7
Transactions with owners:
Dividends paid to equity
holders (see note 6) - - - - (18.6) (18.6)
Credit in respect of
employee share schemes
including tax - - - - 1.0 1.0
At 30 June 2015 54.2 98.4 33.4 9.0 99.4 294.4
------------------------------ -------- -------- ----------- ------------ --------- -------
Comprehensive income:
Profit for the year - - - - 74.7 74.7
Other comprehensive
income:
Exchange adjustments
net of tax - - - 4.5 - 4.5
Actuarial loss on retirement
benefits net of tax - - - - (0.1) (0.1)
------------------------------ -------- -------- ----------- ------------ --------- -------
Total comprehensive
income for the year - - - 4.5 74.6 79.1
Transactions with owners:
Dividends paid to equity
holders (see note 6) - - - - (22.7) (22.7)
Credit in respect of
employee share schemes
including tax - - - - 1.8 1.8
At 30 June 2016 54.2 98.4 33.4 13.5 153.1 352.6
------------------------------ -------- -------- ----------- ------------ --------- -------
Group Balance Sheet
At 30 June 2016
As at As at
30 June 30 June
2016 2015
GBPm GBPm
--------------------------------------- -------- --------
Assets
Non-current assets
Intangible assets 404.3 395.7
Property, plant and equipment 202.0 203.4
Deferred tax assets 1.3 2.2
Other receivables 6.5 5.3
--------------------------------------- -------- --------
614.1 606.6
Current assets
Inventories 2.9 2.8
Other receivables 36.2 29.3
Income tax receivable 0.4 1.7
Cash and short-term deposits 61.0 89.6
--------------------------------------- -------- --------
100.5 123.4
Assets held for sale - 0.6
Total assets 714.6 730.6
--------------------------------------- -------- --------
Liabilities
Current liabilities
Trade and other payables (139.3) (147.0)
Income tax payable (11.0) (28.0)
Financial liabilities - loans
and borrowings (14.4) (125.5)
Provisions (9.2) (8.9)
--------------------------------------- -------- --------
(173.9) (309.4)
Net current liabilities (73.4) (186.0)
--------------------------------------- -------- --------
Non-current liabilities
Trade and other payables (34.7) (37.6)
Financial liabilities - loans
and borrowings (87.8) (17.6)
Deferred tax liabilities (21.0) (23.1)
Provisions (40.9) (44.7)
Retirement benefit obligations (3.7) (3.8)
--------------------------------------- -------- --------
(188.1) (126.8)
Total liabilities (362.0) (436.2)
--------------------------------------- -------- --------
Net assets 352.6 294.4
--------------------------------------- -------- --------
Capital and reserves attributable
to the Company's equity shareholders
Share capital 54.2 54.2
Share premium 98.4 98.4
Capital redemption reserve 33.4 33.4
Exchange translation reserve 13.5 9.0
Retained earnings 153.1 99.4
--------------------------------------- -------- --------
Total shareholders' equity 352.6 294.4
--------------------------------------- -------- --------
Group Statement of Cash Flow
For the year ended 30 June 2016
Year
Year ended ended
30 June 30 June
2016 2015
GBPm GBPm
--------------------------------------- ----------- --------
Cash flows from operating activities
Cash generated from operations
(see note 10) 110.2 146.6
Interest received 0.1 0.3
Interest paid (5.0) (7.8)
Tax paid (31.1) (2.2)
Discontinued operations 4.1 -
Net cash from operating activities 78.3 136.9
--------------------------------------- ----------- --------
Cash flows from investing activities
Disposal of subsidiaries (net
of cash disposed) (0.2) (0.1)
Purchase of intangible assets (14.5) (10.5)
Purchase of property, plant and
equipment (38.2) (21.4)
Proceeds from sale of property,
plant and equipment 12.3 1.5
Purchase of convertible loan note (1.1) (2.4)
Net cash used in investing activities (41.7) (32.9)
--------------------------------------- ----------- --------
Cash flows from financing activities
Dividends paid to equity holders (22.7) (18.6)
Repayment of term loans (130.0) (20.0)
Drawdown of term loans 90.0 -
Repayment of revolving credit
facilities - (20.0)
Repurchase of bonds - (0.4)
Finance lease principal payments (2.8) (3.1)
Loan arrangement fees (1.5) -
--------------------------------------- ----------- --------
Net cash used in financing activities (67.0) (62.1)
--------------------------------------- ----------- --------
Net (decrease) increase in cash,
cash equivalents and bank overdrafts (30.4) 41.9
Effect of exchange rate changes 0.8 (0.7)
Cash and cash equivalents at start
of year 87.5 46.3
--------------------------------------- ----------- --------
Cash and cash equivalents at end
of year 57.9 87.5
--------------------------------------- ----------- --------
1. General information, basis of preparation and accounting policies
General information
The Company is a public limited company which is listed on the
London Stock Exchange and is incorporated and domiciled in England
and Wales under registration number 03140769. The address of its
registered office is Statesman House, Stafferton Way, Maidenhead,
SL6 1AY.
This condensed consolidated financial information was approved
for issue on 22 August 2016.
This condensed consolidated financial information does not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006. The statutory accounts for the year ended
30 June 2016 were approved by the board of directors on 22 August
2016, but have not yet been delivered to the Registrar of
Companies. The report of the auditors on those accounts was
unqualified, did not contain an emphasis of matter paragraph and
did not contain a statement made under Section 498 of the Companies
Act 2006. The statutory accounts for the year ended 30 June 2015
have been delivered to the Registrar of Companies.
Basis of preparation
The financial information attached has been extracted from the
audited financial statements for the year ended 30 June 2016. The
financial information has been prepared in accordance with IFRS as
adopted by the European Union.
Going concern
In adopting the going concern basis for preparing the financial
information the directors have considered the issues impacting the
Group during the period as detailed in the business review above
and have reviewed the Group's projected compliance with its banking
covenants. Based on the Group's cash flow forecasts and operating
budgets, the directors believe that the Group will generate
sufficient cash to meet its liabilities as they fall due for at
least 12 months from the date of approval of the financial
statements and comply with its banking covenants. Accordingly the
adoption of the going concern basis remains appropriate.
Accounting policies
Except as described below, the accounting policies applied are
consistent with those of the annual financial statements for the
year ended 30 June 2015, as described in those financial
statements.
The following amendment to an existing standard is mandatory for
the first time for the financial period beginning 1 July 2015:
-- IAS 19 (amended) Employee Benefits
The Group has not been materially impacted by the adoption of
this amendment.
The Group has not early adopted any other standard, amendment or
interpretation that was issued but is not yet effective.
2. Segment information - continuing operations
Year ended 30 June 2016
------------------------------------------------------------------
Grosvenor
Casinos Mecca Enracha Central
Venues Digital Venues Digital Venues Digital costs Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------- ------ ------- ------ ------- ------ ------- ------- ------
Continuing
operations
Revenue before
adjustment
for customer
incentives 408.1 30.5 221.5 66.2 26.7 - - 753.0
Customer incentives (15.9) (4.9) (10.6) (13.1) - - - (44.5)
------ ------- ------ ------- ------
Statutory revenue 392.2 25.6 210.9 53.1 26.7 - - 708.5
-------------------- ------ ------- ------ ------- ------ ------- ------- ------
Operating profit
(loss) before
exceptional
items 60.9 5.3 32.9 8.6 3.8 (0.2) (28.9) 82.4
Exceptional
(loss) profit (1.1) - 9.2 - 1.1 - 0.1 9.3
Segment result 59.8 5.3 42.1 8.6 4.9 (0.2) (28.8) 91.7
-------------------- ------ ------- ------ ------- ------ ------- ------- ------
Finance costs (5.3)
Finance income 0.2
Other financial
losses (1.1)
-------------------- ------ ------- ------ ------- ------ ------- ------- ------
Profit before
taxation 85.5
Taxation (14.4)
Profit for
the year from
continuing
operations 71.1
-------------------- ------ ------- ------ ------- ------ ------- ------- ------
Year ended 30 June 2015
------------------------------------------------------------------
Grosvenor
Casinos Mecca Enracha Central
Venues Digital Venues Digital Venues Digital costs Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------- ------ ------- ------ ------- ------ ------- ------- ------
Continuing
operations
Revenue before
adjustment
for customer
incentives 401.1 22.3 224.4 65.2 25.3 - - 738.3
Customer incentives (6.7) (5.1) (13.7) (12.1) - - - (37.6)
------ ------- ------ ------- ------ ------- -------
Statutory revenue 394.4 17.2 210.7 53.1 25.3 - - 700.7
-------------------- ------ ------- ------ ------- ------ ------- ------- ------
Operating profit
(loss) before
exceptional
items 63.4 3.1 28.9 14.1 3.1 (0.5) (28.1) 84.0
Exceptional
profit - - 1.0 - 1.1 - - 2.1
------ ------- ------ ------- ------ ------- ------- ------
Segment result 63.4 3.1 29.9 14.1 4.2 (0.5) (28.1) 86.1
-------------------- ------ ------- ------ ------- ------ ------- ------- ------
Finance costs (11.7)
Finance income 0.4
Other financial
losses (0.3)
-------------------- ------ ------- ------ ------- ------ ------- ------- ------
Profit before
taxation 74.5
Taxation (15.5)
Profit for
the year from
continuing
operations 59.0
-------------------- ------ ------- ------ ------- ------ ------- ------- ------
To increase transparency, the Group has decided to include
additional disclosure analysing total costs by type and segment. A
reconciliation of total costs on continuing operations, before
exceptional items, by type and segment is as follows:
Year ended 30 June 2016
-------------------------------------------------------------------------
Grosvenor
Casinos Mecca Enracha Central
Venues Digital Venues Digital Venues Digital costs Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- ------- -------- ------- -------- ------- -------- -------- ------
Employment
and related
costs 139.6 3.8 53.7 6.0 11.5 0.1 18.9 233.6
Taxes and duties 86.0 3.8 35.7 7.8 1.5 - 1.6 136.4
Direct costs 14.5 7.5 21.0 15.1 2.6 - - 60.7
Property costs 29.4 0.2 25.6 0.4 1.7 - 1.1 58.4
Marketing 15.6 2.3 9.9 10.5 1.0 - - 39.3
Depreciation
and amortisation 25.0 2.1 12.6 2.8 1.5 - 1.8 45.8
Other 21.2 0.6 19.5 1.9 3.1 0.1 5.5 51.9
--------------------- ------- -------- ------- -------- ------- -------- -------- ------
Total costs
before exceptional
items 331.3 20.3 178.0 44.5 22.9 0.2 28.9 626.1
--------------------- ------- -------- ------- -------- ------- -------- -------- ------
Cost of sales 391.7
Operating costs 234.4
--------------------- ------- -------- ------- -------- ------- -------- -------- ------
Total costs
before exceptional
items 626.1
--------------------- ------- -------- ------- -------- ------- -------- -------- ------
Year ended 30 June 2015
-------------------------------------------------------------------------
Grosvenor
Casinos Mecca Enracha Central
Venues Digital Venues Digital Venues Digital costs Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- ------- -------- ------- -------- ------- -------- -------- ------
Employment
and related
costs 138.9 3.2 54.8 6.7 12.3 0.2 17.0 233.1
Taxes and duties 84.6 1.8 35.3 5.0 1.7 - 1.9 130.3
Direct costs 16.9 4.8 22.6 14.4 2.1 0.2 - 61.0
Property costs 30.0 0.2 27.0 0.3 1.6 - 1.0 60.1
Marketing 14.6 2.2 10.5 9.7 0.9 - - 37.9
Depreciation
and amortisation 23.7 1.5 12.7 1.5 1.5 - 1.4 42.3
Other 22.3 0.4 18.9 1.4 2.1 0.1 6.8 52.0
--------------------- ------- -------- ------- -------- ------- -------- -------- ------
Total costs
before exceptional
items 331.0 14.1 181.8 39.0 22.2 0.5 28.1 616.7
--------------------- ------- -------- ------- -------- ------- -------- -------- ------
Cost of sales 376.6
Operating costs 240.1
--------------------- ------- -------- ------- -------- ------- -------- -------- ------
Total costs
before exceptional
items 616.7
--------------------- ------- -------- ------- -------- ------- -------- -------- ------
3. Exceptional items
Year
Year ended ended
30 June 30 June
2016 2015
GBPm GBPm
--------------------------------- ----------- --------
Exceptional items relating to
continuing operations
Impairment charges (0.9) (1.2)
Impairment reversals 1.4 3.1
Net release (charge) from/to
provisions for property leases 1.4 (1.5)
Closure of venues (2.6) 1.7
Exceptional operating cost (0.7) 2.1
Disposal of freehold buildings 10.0 -
--------------------------------- ----------- --------
Exceptional operating income 10.0 -
Finance costs (see note 4) - (1.3)
Taxation (see note 5) 0.4 1.3
Exceptional items relating to
continuing operations 9.7 2.1
--------------------------------- ----------- --------
Exceptional items relating to
discontinued operations
Disposal of subsidiary (0.3) -
Finance costs (see note 4) (0.3) (0.4)
Taxation (see note 5) 4.2 16.2
--------------------------------- ----------- --------
Exceptional items relating to
discontinued operations 3.6 15.8
--------------------------------- ----------- --------
Total exceptional items 13.3 17.9
--------------------------------- ----------- --------
Continuing operations - year ended 30 June 2016
Impairment charges
The Group recognised an impairment charge of GBP0.9m for a venue
within Grosvenor Casinos. Performance at the venue has not been in
line with expectations.
Impairment reversal
The Group reversed a previous impairment charge of GBP1.4m in
Enracha. This reflects increased performance at a venue attributed
to improvements in the commercial environment.
Net release from provisions for property leases
The Group recognised a net release of GBP1.4m in relation to
provisions for onerous property leases in the year. This includes a
GBP0.7m and GBP1.0m gain, from successful onerous lease surrenders
in Mecca and Grosvenor Casinos respectively, net of a charge from a
reduction in the discount rate applied to existing provisions.
Further movements in the property leases provision are explained
under closure of venue costs below.
Closure of venues
During the year the Group closed, or committed to close, seven
venues of which four were within Mecca and three within Grosvenor
Casinos. The charge in the period of GBP2.6m reflects additional
costs of closure due to redundancy, dilapidation and onerous
property lease costs, at three clubs within Grosvenor Casinos
(GBP0.8m), one club in Mecca (GBP1.5m) and one previously closed
club within Enracha (GBP0.3m).
Disposal of freehold buildings
During the year Mecca sold two freehold buildings for a net
profit, after associated disposal costs, of GBP10.0m.
Discontinued operations
Disposal of subsidiary
The Group disposed of Rank Insurance Limited for a net cost of
GBP0.3m. The business provided insurance services to previously
discontinued activities and represents an end of life legacy
insurance company. Approximate annual operating costs from the
business were GBP0.1m.
Taxation and finance cost
GBP3.9m of income has been recognised in respect of discontinued
operations in overseas jurisdictions. This comprises GBP4.4m of
exceptional tax credit due to settlement of amounts previously paid
across to an overseas tax authority, GBP0.3m of finance cost for an
associated letter of credit and an additional GBP0.2m charge for a
separate tax exposure in another jurisdiction.
The exceptional tax credit of GBP4.4m less GBP0.3m of associated
finance cost in relation to the letter of credit has been disclosed
separately on the cash flow as cash from discontinued
operations.
4. Financing
Year
Year ended ended
30 June 30 June
2016 2015
GBPm GBPm
------------------------------------------- ----------- --------
Continuing operations:
Finance costs:
Interest on debt and borrowings (3.2) (5.7)
Amortisation of issue costs on
borrowings (0.4) (2.5)
Interest payable on finance leases (0.7) (0.9)
Unwinding of discount in property
lease provisions (0.9) (1.2)
Unwinding of discount in disposal
provisions (0.1) (0.1)
------------------------------------------- ----------- --------
Total finance costs (5.3) (10.4)
Finance income:
Interest income on short-term
bank deposits 0.1 0.2
Interest income on loans 0.1 -
Interest income on direct taxation - 0.2
------------------------------------------- ----------- --------
Total finance income 0.2 0.4
Other financial losses (1.1) (0.3)
Total net financing charge for
continuing operations before exceptional
items (6.2) (10.3)
Exceptional finance costs - (1.3)
Total net financing charge for
continuing operations (6.2) (11.6)
------------------------------------------- ----------- --------
Discontinued operations:
Exceptional finance costs (0.3) (0.4)
Total net financing charge for
discontinued operations (0.3) (0.4)
------------------------------------------- ----------- --------
Total net financing charge (6.5) (12.0)
------------------------------------------- ----------- --------
Exceptional finance costs recognised in discontinued operations
in the year of GBP0.3m relate to the cost of a letter of credit
held in respect of taxation balances on disposed entities.
Other financial losses include foreign exchange losses on loans
and borrowings.
A reconciliation of total net financing charge for continuing
operations before exceptional items to adjusted net interest
included in adjusted profit is disclosed below:
Year
Year ended ended
30 June 30 June
2016 2015
GBPm GBPm
------------------------------------------- ----------- --------
Total net financing charge for
continuing operations before exceptional
items (6.2) (10.3)
Adjust for :
Unwinding of discount in disposal
provisions 0.1 0.1
Other financial losses 1.1 0.3
Adjusted net interest payable (5.0) (9.9)
------------------------------------------- ----------- --------
5. Taxation
Year ended 30 June
2016
------------------------------------
Continuing Discontinued
operations operations Total
GBPm GBPm GBPm
----------------------------------- ------------ ------------- -------
Current income tax
Current income tax - UK (13.6) - (13.6)
Current income tax - overseas (2.2) - (2.2)
Current income tax on exceptional
items 0.1 - 0.1
Amounts under provided
in previous period (0.2) - (0.2)
Amounts over provided in
previous period on exceptional
items 0.3 4.2 4.5
Total current income tax
(charge) credit (15.6) 4.2 (11.4)
----------------------------------- ------------ ------------- -------
Deferred tax
Deferred tax - UK (1.1) - (1.1)
Deferred tax - overseas (0.6) - (0.6)
Restatement of deferred
tax due to rate change 2.3 - 2.3
Amounts over provided in
previous period 0.6 - 0.6
Total deferred tax credit 1.2 - 1.2
----------------------------------- ------------ ------------- -------
Tax (charge) credit in
the income statement (14.4) 4.2 (10.2)
----------------------------------- ------------ ------------- -------
Year ended 30 June
2015
------------------------------------
Continuing Discontinued
operations operations Total
GBPm GBPm GBPm
----------------------------------- ------------ ------------- -------
Current income tax
Current income tax - UK (10.0) - (10.0)
Current income tax - overseas (2.7) - (2.7)
Current income tax on exceptional
items 1.1 0.1 1.2
Amounts over provided in
previous period 0.7 - 0.7
Amounts over provided in
previous period on exceptional
items 0.4 16.1 16.5
Total current income tax
(charge) credit (10.5) 16.2 5.7
----------------------------------- ------------ ------------- -------
Deferred tax
Deferred tax - UK (3.7) - (3.7)
Deferred tax - overseas (0.1) - (0.1)
Restatement of deferred
tax due to rate change 0.2 - 0.2
Deferred tax on exceptional
items (0.2) - (0.2)
Amounts under provided in
previous period (1.2) - (1.2)
Total deferred tax charge (5.0) - (5.0)
----------------------------------- ------------ ------------- -------
Tax (charge) credit in the
income statement (15.5) 16.2 0.7
----------------------------------- ------------ ------------- -------
Tax on exceptional items - continuing operations
The taxation impacts of continuing exceptional items are
disclosed below:
Year ended 30 Year ended 30
June 2016 June 2015
--------------------------- ---------------------------
Current Current
income Deferred income Deferred
tax tax Total tax tax Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- -------- --------- ------ -------- --------- ------
Impairment charges - 0.2 0.2 - 0.1 0.1
Impairment reversals - (0.4) (0.4) - (0.6) (0.6)
Net (release) charge
from/to provisions
for property leases (0.4) - (0.4) 0.3 - 0.3
Closure of venues 0.5 0.2 0.7 0.5 0.3 0.8
Exceptional finance
costs - - - 0.3 - 0.3
Amounts over provided
in respect of previous
years 0.3 - 0.3 0.4 - 0.4
------------------------- -------- --------- ------ -------- --------- ------
Tax credit (charge)
on exceptional
items - continuing
operations 0.4 - 0.4 1.5 (0.2) 1.3
------------------------- -------- --------- ------ -------- --------- ------
Tax on exceptional items - discontinued operations
The taxation impacts of discontinued exceptional items are
disclosed below:
Year ended 30 Year ended 30
June 2016 June 2015
--------------------------- ---------------------------
Current Current
income Deferred income Deferred
tax tax Total tax tax Total
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- -------- --------- ------ -------- --------- ------
Net credit relating
to overseas tax
audits 4.2 - 4.2 16.1 - 16.1
Exceptional finance
costs - - - 0.1 - 0.1
--------------------------- -------- --------- ------ -------- --------- ------
Tax credit on exceptional
items - discontinued
operations 4.2 - 4.2 16.2 - 16.2
--------------------------- -------- --------- ------ -------- --------- ------
The GBP4.2m exceptional tax credit in discontinued operations
relating to overseas tax audits consists of a refund of tax paid of
GBP4.4m following the successful resolution of a transfer pricing
dispute, offset by a GBP0.2m charge in relation to a separate
audit.
Tax effect of items within other comprehensive income
Year Year
ended ended
30 June 30 June
2016 2015
GBPm GBPm
------------------------------------ -------- --------
Current income tax credit (charge)
on exchange movements offset in
reserves 0.6 (0.4)
Deferred tax credit on actuarial
movement on retirement benefits - 0.1
Total tax credit (charge) on items
within other comprehensive income 0.6 (0.3)
------------------------------------ -------- --------
The credit in respect of employee share schemes included within
the Statement of Changes in Equity includes a deferred tax credit
of GBP0.1m.
Factors affecting future taxation
UK corporation tax is calculated at 20.00% of the estimated
assessable profit for the period. Taxation for overseas operations
is calculated at the local prevailing rates.
On 8 July 2015, the Chancellor of the Exchequer announced the
reduction in the main rate of UK corporation tax to 19.0% for the
year starting 1 April 2017 and a further 1.0% reduction to 18.0%
from 1 April 2020. These changes were substantively enacted in
October 2015. The rate reductions will reduce the amount of cash
tax payments to be made by the Group.
On 20 June 2014, the Spanish Government announced the reduction
in the corporation tax rate in Spain from 30% to 28% for financial
years beginning in 2015 and to 25% for financial years beginning in
2016 and onwards. These changes were substantively enacted in
November 2014.
6. Dividends
Year Year
ended ended
30 June 30 June
2016 2015
GBPm GBPm
------------------------------------- -------- --------
Dividends paid to equity holders
Final dividend for 2013/14 paid
on 22 October 2014 - 3.15p per
share - 12.3
Interim dividend for 2014/15 paid
on 20 March 2015 - 1.60p per share - 6.3
Final dividend for 2014/15 paid
on 21 October 2015 - 4.00p per
share 15.6 -
Interim dividend for 2015/16 paid
on 22 March 2016 - 1.80p per share 7.1 -
------------------------------------- -------- --------
22.7 18.6
------------------------------------- -------- --------
A final dividend in respect of the year ended 30 June 2016 of
4.70p per share, amounting to a total dividend of GBP18.4m, is to
be recommended at the annual general meeting on 14 October 2016.
These financial statements do not reflect this dividend
payable.
7. Adjusted earnings per share
Adjusted earnings is calculated by adjusting profit attributable
to equity shareholders to exclude discontinued operations,
exceptional items, other financial gains or losses, unwinding of
the discount in disposal provisions and the related tax effects.
Adjusted earnings is one of the business performance measures used
internally by management to manage the operations of the business.
Management believes that the adjusted earnings measure assists in
providing a view of the underlying performance of the business.
Adjusted net earnings attributable to equity shareholders is
derived as follows:
Year Year
ended ended
30 June 30 June
2016 2015
GBPm GBPm
------------------------------------ -------- --------
Profit attributable to equity
shareholders 74.7 74.8
Adjust for:
Discontinued operations (net of
taxation) (3.6) (15.8)
Exceptional items after tax on
continuing operations (9.7) (2.1)
Other financial losses 1.1 0.3
Unwinding of discount in disposal
provisions 0.1 0.1
Taxation on adjusted items and
impact of reduction in tax rate (2.6) (0.2)
------------------------------------ -------- --------
Adjusted net earnings attributable
to equity shareholders (GBPm) 60.0 57.1
Adjusted earnings per share (p)
- basic 15.4p 14.6p
Adjusted earnings per share (p)
- diluted 15.4p 14.6p
------------------------------------ -------- --------
8. Provisions
Property
Indirect
lease Disposal Restructuring tax
provisions provisions provisions provision Total
GBPm GBPm GBPm GBPm GBPm
-------------------------- ----------- ----------- -------------- ---------- ------
At 1 July 2015 47.6 4.3 0.5 1.2 53.6
Exchange adjustments - 0.3 - - 0.3
Unwinding of discount 0.9 0.1 - - 1.0
Charge to the income
statement - exceptional 4.5 0.3 - - 4.8
Release to the income
statement - exceptional (3.0) (0.3) (0.1) - (3.4)
Utilised in year (5.5) (0.3) (0.4) - (6.2)
-------------------------- ----------- ----------- -------------- ---------- ------
At 30 June 2016 44.5 4.4 - 1.2 50.1
-------------------------- ----------- ----------- -------------- ---------- ------
Current 7.2 0.8 - 1.2 9.2
Non-current 37.3 3.6 - - 40.9
-------------------------- ----------- ----------- -------------- ---------- ------
Total 44.5 4.4 - 1.2 50.1
-------------------------- ----------- ----------- -------------- ---------- ------
Further details of the exceptional charge and release to the
income statement are provided in note 3.
9. Borrowings to net debt reconciliation
Under IFRS, accrued interest and unamortised facility fees are
classified as loans and borrowings. A reconciliation of loans and
borrowings disclosed in the balance sheet to the Group's net debt
position is provided below:
As at As at
30 June 30 June
2016 2015
GBPm GBPm
----------------------------------- --------- ---------
Total loans and borrowings (102.2) (143.1)
Less: accrued interest 0.5 0.7
Less: unamortised facility fees (0.5) (0.1)
----------------------------------- --------- ---------
(102.2) (142.5)
Add: cash and short-term deposits 61.0 89.6
----------------------------------- --------- ---------
Net debt (41.2) (52.9)
----------------------------------- --------- ---------
10. Cash generated from operations
Year ended Year ended
30 June 30 June
2016 2015
GBPm GBPm
------------------------------------------ ----------- -----------
Continuing operations
Operating profit 91.7 86.1
Exceptional items (9.3) (2.1)
------------------------------------------ ----------- -----------
Operating profit before exceptional
items 82.4 84.0
Depreciation and amortisation 45.8 42.3
Share based payments 1.9 1.1
Loss on disposal of property,
plant and equipment 0.5 0.3
Loss on disposal of intangible
assets - 0.5
Impairment of property, plant
and equipment 0.5 0.5
(Increase) decrease in inventories (0.1) 0.3
(Increase) decrease in other receivables (5.9) 1.8
(Decrease) increase in trade and
other payables (8.7) 23.7
------------------------------------------ ----------- -----------
116.4 154.5
Cash utilisation of provisions (6.2) (7.7)
Cash payments in respect of exceptional
items - (0.2)
------------------------------------------ ----------- -----------
Cash generated from continuing
operations 110.2 146.6
------------------------------------------ ----------- -----------
11. Contingent assets
Discontinued taxation
In the prior year the Group advised that it could receive a tax
refund of between GBP2.5m and GBP4.0m in respect of amounts
previously paid in relation to a discontinued operation. A refund
of GBP4.4m was received in the period and has been disclosed as an
exceptional item in note 3.
12. Contingent liabilities
Property leases
Concurrent to the GBP211m sale and leaseback in 2006, the Group
transferred the rights and obligations but not the legal titles of
44 property leases to a third party. The Group remains potentially
liable in the event of default by the third party. Should default
occur then the Group would have recourse to two guarantors. It is
understood that, of the original 44 leases transferred, 9 of these
have not expired or been surrendered. These 9 leases have durations
of between 5 months and 97 years and a current annual rental
obligation (net of sub-let income) of approximately GBP0.8m.
During 2014, the Group became aware of certain information in
respect of a change in the financial position of the third party
and one of the guarantors. However, the Group has not to date been
notified of any default, or intention to default, in respect of the
transferred leases.
Stamp duty
The Group has received from HMRC a determination in respect of
the amount of stamp duty payable on certain transactions undertaken
by Gala Casino 1 Limited (now Grosvenor Casinos (GC) Limited)
before its acquisition by the Group on 12 May 2013. The Group
estimates the maximum possible additional stamp duty that could be
due if HMRC are successful to be GBP7.2m plus interest. Under the
terms of the Sale and Purchase Agreement the vast majority of any
liability arising falls upon Gala Coral and the Group has further
indemnification in the event of default by Gala Coral.
13. Related party transactions and ultimate parent undertaking
Guoco Group Limited (Guoco), a company incorporated in Bermuda,
and listed on the Hong Kong stock exchange has a controlling
interest in The Rank Group Plc. The ultimate parent undertaking of
Guoco is Hong Leong Company (Malaysia) Berhad (Hong Leong) which is
incorporated in Malaysia. At 30 June 2016, entities controlled by
Hong Leong owned 56.2% of the Company's shares, including 56.1%
through Guoco and its wholly-owned subsidiary, Rank Assets Limited,
the Company's immediate parent undertaking.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GMGZRGZVGVZZ
(END) Dow Jones Newswires
August 23, 2016 02:00 ET (06:00 GMT)
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