TIDMRNK
RNS Number : 3750N
Rank Group PLC
29 January 2016
29 January 2016
The Rank Group Plc ("Rank" or the "Group")
Half-year results for the six months ended 31 December 2015
A good set of results with like-for-like revenue growth across
all brands and channels
Financial highlights in the six months ended 31 December
2015
H1 2015/16 H1 2014/15 Change
(unaudited) (unaudited)
------------------------------------------------------------- -------------- -------------- --------
Financial
KPIs Group revenue GBP374.2m GBP361.7m 3%
--------------- -------------------------------------------- -------------- -------------- --------
Like-for-like Group revenue GBP370.1m GBP351.7m 5%
------------------------------------------------------------ -------------- -------------- --------
Adjusted profit before tax GBP37.4m GBP35.8m 4%
------------------------------------------------------------ -------------- -------------- --------
Group operating profit before exceptional
items and Remote Gaming Duty GBP46.1m GBP41.7m 11%
------------------------------------------------------------ -------------- -------------- --------
Adjusted earnings per share 7.4p 7.1p 4%
------------------------------------------------------------ -------------- -------------- --------
Net debt GBP52.0m GBP94.9m
-------------------------------------------- -------------- -------------- --------
Group EBITDA GBP62.7m GBP62.1m 1%
------------------------------------------------------------ -------------- -------------- --------
Statutory
performance Statutory revenue GBP352.7m GBP343.3m 3%
--------------- -------------------------------------------- -------------- -------------- --------
Profit before taxation after exceptional
items GBP42.7m GBP36.3m 18%
------------------------------------------------------------ -------------- -------------- --------
Cash generated from continuing
operations GBP63.7m GBP68.5m (7)%
------------------------------------------------------------ -------------- -------------- --------
Earnings per share before exceptional
items 8.1p 6.9p 17%
------------------------------------------------------------ -------------- -------------- --------
Dividend per share 1.80p 1.60p 13%
------------------------------------------------------------ -------------- -------------- --------
Key highlights
-- Group revenue up 5% on a like-for-like basis
-- Group operating profit before exceptional items up 11%
excluding the impact of Remote Gaming Duty ("RGD")
-- Continued strong digital revenue growth, up 14%
-- Grosvenor Casinos revenue up 7%
-- Mecca's retail bingo business in growth with revenue up 2% on a like-for-like basis
-- New digital platform migration on track; go-live by the end of this quarter as planned
-- Two new format bingo clubs planned to be opened summer 2016
-- Contracts agreed with new suppliers for both digital poker and sports book offer
-- Luton casino refurbished to accommodate the newly-awarded 2005 Act casino licence
-- Strong dividend growth with interim dividend of 1.80p, up 13%
reflecting underlying performance
-- Adjusted EPS up 4%
Henry Birch, chief executive of The Rank Group Plc said:
"I am very pleased to announce a good set of results with
like-for-like revenue growth across all brands and channels. Even
with the impact of RGD we have delivered growth in both adjusted
EPS, up 4%, and dividend, up 13%."
"2016 will see us deliver significant new platforms, new
functionality and new products - including a new digital platform,
a new retail casino management system, new poker and sports betting
products and a new retail bingo format - all of which will drive
improvements across our company. It is extremely encouraging that
ahead of these changes, we are continuing to grow all parts of our
business. In particular, it is very pleasing to have grown Mecca's
retail bingo business, on a like-for-like basis, both at the top
and bottom line, giving us renewed confidence in its future."
Ends.
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;
-- "H1 2015/16" refers to the unaudited six month period to 31
December 2015 and "H1 2014/15" refers to the unaudited six month
period to 31 December 2014; and
-- Like-for-like excludes the effect of club openings, closures,
relocations, discontinued operations and changes in foreign
exchange rates
Enquiries
The Rank Group Plc
Sarah Powell, investor relations Tel: 01628 504303
FTI Consulting LLP
Ed Bridges Tel: 020 3727 1067
Alex Beagley Tel: 020 3727 1045
Photographs available from www.rank.com
Analyst meeting and webcast details:
Friday 29 January 2016
There will be an analyst meeting at 9.30am, admittance to which
is by invitation only. The presentation will also be accessible via
a live webcast, details of which can be found 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.
Chief executive's review
During the six months to 31 December 2015, Rank has grown
like-for-like revenue, up 5%. Group operating profit before
exceptional items was down 1% in the period following the
introduction of Remote Gaming Duty ("RGD") on 1 December 2014.
Excluding the impact of RGD, group operating profit was up 11%.
Venues revenue grew by 2% and digital by 14%. Statutory revenue
for the Group grew by 3%.
GBPm Revenue* Operating profit**
-------------------- -------------------------- ---------------------------
H1 2015/16 H1 2014/15 H1 2015/16 H1 2014/15
-------------------- ------------ ------------ ------------- ------------
Grosvenor Casinos 219.0 205.6 33.3 31.0
-------------------- ------------ ------------ ------------- ------------
Venues 205.1 195.7 30.9 29.1
-------------------- ------------ ------------ ------------- ------------
Digital 13.9 9.9 2.4 1.9
-------------------- ------------ ------------ ------------- ------------
Mecca 143.0 143.3 19.9 22.9
-------------------- ------------ ------------ ------------- ------------
Venues 109.8 111.8 14.3 14.5
-------------------- ------------ ------------ ------------- ------------
(MORE TO FOLLOW) Dow Jones Newswires
January 29, 2016 02:00 ET (07:00 GMT)
Digital 33.2 31.5 5.6 8.4
-------------------- ------------ ------------ ------------- ------------
Enracha 12.2 12.8 1.4 0.9
-------------------- ------------ ------------ ------------- ------------
Venues 12.2 12.8 1.5 1.2
-------------------- ------------ ------------ ------------- ------------
Digital - - (0.1) (0.3)
-------------------- ------------ ------------ ------------- ------------
Central costs (14.2) (14.0)
-------------------- ------------ ------------ ------------- ------------
Total 374.2 361.7 40.4 40.8
-------------------- ------------ ------------ ------------- ------------
* before adjustment for customer incentives; ** before
exceptional items
Grosvenor Casinos' revenue increased 7% in the period to
GBP219.0m driven by a solid venues performance and continued strong
growth from its digital channel. Total operating profit rose by 7%
to GBP33.3m.
Mecca's like-for-like revenue grew 3% in the period with digital
growth of 5% and like-for-like venues growth of 2%. Total operating
profit fell by 13% to GBP19.9m following the introduction of RGD
which resulted in an incremental cost of GBP3.3m in the period.
Enracha's euro revenue increased by 4% following further
investments into the retail estate and improvements in the Spanish
economy. Sterling operating profit rose by GBP0.5m to GBP1.4m.
Central costs increased by 1% to GBP14.2m, mainly as a result of
increases in Long Term Incentive Plan costs.
During the period Rank invested GBP26.1m of capital across the
Group with more than 40% deployed in our Grosvenor Casinos venues
and 23% across our digital channels.
The Group's adjusted net financing charge of GBP3.0m was down in
the 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 4% to 7.4p.
Exceptional items in the period were a credit of GBP10.0m, with
GBP6.3m relating to continuing operations and the balance relating
to discontinued operations. Further details can be found in note
3.
Dividend
The board is pleased to declare an interim dividend of 1.80
pence per share, an increase of 13% over the prior period. The
dividend will be paid on 22 March 2016 to shareholders on the
register at 12 February 2016.
Taxation
From 1 December 2014, Remote Gaming Duty at 15% was applied to
all online gambling revenue generated by customers in the UK. The
incremental cost to the Group in H1 2015/16 was GBP4.8m.
Board changes
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 concluded he must
relinquish some of his responsibilities. A search for a new
non-executive director is underway and an announcement will be made
when an individual has been appointed.
Current trading and outlook
Trading in the short four week period to 24 January 2016 has
been positive and in line with our internal expectations.
Rank remains in a strong financial position, possesses
market-leading brands and has a clear strategy for long-term
growth.
Strategy update
Rank's aim is to be the UK's leading multi-channel gaming
operator. In order to achieve this, we are focused on building
engaging brands with the ability to deliver them via the channels
that customers prefer - whether venues, online or mobile. We will
focus in particular on building engagement with customers across
multiple channels, where research tells us we are likely to
generate more durable and valuable customer relationships.
At the end of the 2014/15 financial year we outlined the Group's
five strategic objectives. Below we provide an update on progress
made during H1 2015/16 and plans for H2.
Creating a compelling
multi-channel * Migration of the Group's digital brands from Openbet
offer to its new digital platform provided by Bede Gaming,
is on track and will go live, as planned, by the end
of March 2016
* New Mecca services app, 'My Mecca', was launched in
H1. The app provides customers with a club finder
tool and details of current promotions at each venue
* Concept development and requirement specification has
commenced on the Group's single wallet proposition.
Engagement with key retail suppliers has commenced
* Grosvenor Casinos' loyalty scheme, Play Points, was
rolled out into one further venue in H1 with a
further three planned for H2
* "Neon" management system of Playtech-owned
Intelligent Gaming ("IGS") selected as the new retail
management system for Grosvenor Casinos. Neon
roll-out due to be completed by the end of July 2016
----------------------- -------------------------------------------------------------
Building digital
capability * Microgaming appointed as the new provider of
Grosvenor's digital poker product. New offer to be
launched in H2
* Kambi appointed as the provider of Grosvenor's new
digital sports book offer. Launch date planned for
summer 2016
----------------------- -------------------------------------------------------------
Developing our
venues * Grosvenor Casinos' relaunched its Luton casino in
September 2015 following a GBP4.3m investment. The
investment covered extension and refurbishment works
to accommodate the newly-awarded 2005 Act casino
licence, allowing 40 additional slot machines
* Second casino licences were added alongside four
existing casinos, allowing greater depth of product
* A GBP1.3m refurbishment of the London Park Tower
casino commenced in H1 with completion scheduled for
Q4
* Four Grosvenor casinos received a "sparkles"
refurbishment in H1 with a further seven are
scheduled for H2
* Grosvenor Casinos launched a "partial open door"
policy to address entry queues at busy times
* In H2, subject to planning permission, a second
licence will be added alongside our already
successful Gunwharf Quays casino in Portsmouth
* In H2, a GBP4.0m refurbishment of the Leeds Westgate
casino will commence
* The first new format bingo venue due to be opened in
the Midlands in summer 2016
* Three Mecca venues received "light" refurbishments in
the period at a capital cost of GBP0.4m with a
further four planned for H2
----------------------- -------------------------------------------------------------
Investing in
our brands and * A new marketing director for Grosvenor Casinos was
marketing appointed in the period with responsibility for both
the venues and digital channels
* Total marketing spend, including customer incentives,
was up 15% in the period
* A new central CRM & analytics team was created in the
period and investments into a new customer management
system will be made in H2
----------------------- -------------------------------------------------------------
Using technology
to drive efficiency * Launch of "Ace King Suited" progressive jackpot
and improve customer across Grosvenor Casinos venues
experience
* "Get Set Roulette" launched in four casinos, offering
an enhanced customer experience on electronic
roulette
* Continued use of labour-planning software to reduce
employment costs in Grosvenor Casinos venues
* Investment in bingo cashline systems to deal with the
introduction of the new GBP1 coin
----------------------- -------------------------------------------------------------
Business review
Grosvenor Casinos
(MORE TO FOLLOW) Dow Jones Newswires
January 29, 2016 02:00 ET (07:00 GMT)
Grosvenor Casinos has produced a good performance during the six
months to 31 December 2015 with strong digital growth and solid
venues growth.
H1 2015/16 H1 2014/15 Change
------------------------- ------------ ------------ --------
Total revenue* (GBPm) 219.0 205.6 7%
------------------------- ------------ ------------
* Venues 205.1 195.7 5%
------------------------- ------------ ------------
* Digital 13.9 9.9 40%
------------------------- ------------ ------------
Total EBITDA (GBPm) 46.4 43.8 6%
------------------------- ------------ ------------ --------
* Venues 43.0 41.2 4%
------------------------- ------------ ------------ --------
* Digital 3.4 2.6 31%
------------------------- ------------ ------------ --------
Total operating profit
(GBPm) 33.3 31.0 7%
------------------------- ------------ ------------
* Venues 30.9 29.1 6%
------------------------- ------------ ------------
* Digital 2.4 1.9 26%
------------------------- ------------ ------------ --------
Like-for-like revenue 7%
------------------------- ------------
* Venues 5%
------------------------- ------------
* Digital 40%
------------------------- ------------
* before adjustment for customer incentives
Venues revenue was up 5% in the period driven by growth across
all key areas even with a weaker period in our London venues in the
second half of November and early December, in common with other
leisure operators. Operating profit of GBP30.9m was 6% higher in
the period. Recent trading in our London venues has returned to
expected levels.
The digital channel continued to grow strongly in the period,
with revenue up 40%, driven by an increase in customers. Digital
operating profit was up 26% even with an incremental GBP1.5m RGD
tax cost being incurred in the period.
Key performance indicators
H1 2015/16 H1 2014/15 Change
------------------------------- --------------- ------------ --------
Total customers (000s)* not available 1,766 -
------------------------------- --------------- ------------ --------
not available 1,743 -
* Venues
------------------------------- --------------- ------------ --------
* Digital 126 54 133%
------------------------------- --------------- ------------ --------
Cross channel customer cross
over** 2.7% 1.7% 1.0ppt
------------------------------- --------------- ------------ --------
Total customer visits (000s) 4,600 4,417 4%
------------------------------- --------------- ------------ --------
* Venues 4,194 4,147 1%
------------------------------- --------------- ------------ --------
* Digital 406 270 50%
------------------------------- --------------- ------------ --------
Total spend per visit (GBP) 47.61 46.55 2%
------------------------------- --------------- ------------ --------
* Venues 48.90 47.19 4%
------------------------------- --------------- ------------ --------
* Digital 34.24 36.67 (7)%
------------------------------- --------------- ------------ --------
* customers shown on a moving annual total ('MAT') basis and
cross-over customers included only once; **percentage of registered
venues customers who are also digital customers
During H1, some of our UK casinos removed their requirement to
register all customers, therefore total venue customer numbers
cannot be accurately tracked. This means that total venue customers
and total brand customers will no longer be provided. However, the
cross channel customer cross over percentage based on registered
customer numbers has been provided.
The Luton casino was relaunched in September 2015 following a
GBP4.3m extension and refurbishment programme to accommodate the
newly-awarded 2005 Act licence which allowed the addition of a
further 40 gaming machines. Trading post the relaunch has been in
line with management's expectations.
Our Southend casino, which opened in September 2014, continues
to improve its performance.
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 following analysis has been provided.
Customer visits Spend per visit Revenue Operating profit
(000s) (GBP) (GBPm) (GBPm)
------------ ------------------------ ------------------------ ------------------------ --------------------------
H1 H1 H1 H1 H1 H1 H1 2015/16 H1 2014/15
2015/16 2014/15 2015/16 2014/15 2015/16 2014/15
------------ ----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
London 772 757 97.41 94.06 75.2 71.2 16.0 16.3
------------ ----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
Provinces 3,293 3,251 37.47 36.20 123.4 117.7 14.4 12.6
------------ ----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
Belgium 129 139 50.39 48.92 6.5 6.8 0.5 0.2
------------ ----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
Total 4,194 4,147 48.90 47.19 205.1 195.7 30.9 29.1
------------ ----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
An increase in customer visits and handle contributed to a 6%
increase in London revenues. Provincial revenue increased by 5%
driven by a strong performance from gaming machines. London
operating profit has been adversely impacted by increases in
irrecoverable VAT and higher promotional costs.
Venues revenue analysis - UK only
GBPm H1 2015/16 H1 2014/15 Change
--------------------- ------------ ------------ --------
Casino games 131.9 127.3 4%
--------------------- ------------ ------------ --------
Gaming machines 43.1 38.8 11%
--------------------- ------------ ------------ --------
Card room games 7.6 7.8 (3)%
--------------------- ------------ ------------ --------
Food & drink/other 16.0 15.0 7%
--------------------- ------------ ------------ --------
Total 198.6 188.9 5%
--------------------- ------------ ------------ --------
Gaming machine revenue continues to perform strongly, up 11% in
the period, following ongoing investments in the machine
estate.
Mecca
Life-for-like brand revenue increased by 3% with like-for-like
venues revenue increasing 2% and digital revenue increasing 5%.
Total statutory revenue was marginally down in the period.
H1 2015/16 H1 2014/15 Change
--------------------------- ------------ ------------ --------
Total revenue* (GBPm) 143.0 143.3 0%
--------------------------- ------------ ------------
* Venues 109.8 111.8 (2)%
--------------------------- ------------ ------------
* Digital 33.2 31.5 5%
--------------------------- ------------ ------------
Total EBITDA** (GBPm) 27.5 29.9 (8)%
--------------------------- ------------ ------------ --------
* Venues 20.8 20.8 0%
--------------------------- ------------ ------------ --------
* Digital 6.7 9.1 (26)%
--------------------------- ------------ ------------ --------
Total operating profit**
(GBPm) 19.9 22.9 (13)%
--------------------------- ------------ ------------
* Venues 14.3 14.5 (1)%
--------------------------- ------------ ------------ --------
* Digital 5.6 8.4 (33)%
--------------------------- ------------ ------------ --------
Like-for-like revenue 3%
--------------------------- ------------
* Venues 2%
--------------------------- ------------
* Digital 5%
--------------------------- ------------
* before adjustments for customer incentives; ** before
exceptional items
Venues revenue of GBP109.8m was down 2% in the period following
the closure of nine clubs in the last 18 months.
(MORE TO FOLLOW) Dow Jones Newswires
January 29, 2016 02:00 ET (07:00 GMT)
The Group remains committed to opening three new venues
following the reduction in bingo duty. The first new format bingo
venue is due to open in summer 2016 under a new brand name.
During the period, 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 5% to GBP33.2m driven by increases
in customer numbers. Operating profit fell by 33% to GBP5.6m,
following the introduction of RGD on 1 December 2014 which resulted
in an incremental tax cost of GBP3.3m in the period.
Key performance indicators
H1 2015/16 H1 2014/15 Change
-------------------------- ------------ ------------ --------
Total customers (000s)* 1,152 1,105 4%
-------------------------- ------------ ------------ --------
* Venues 973 938 4%
-------------------------- ------------ ------------ --------
* Digital 267 243 10%
-------------------------- ------------ ------------ --------
Cross channel customer
cross over** 9.0% 8.1% 0.9ppt
-------------------------- ------------ ------------ --------
Total customer visits
(000s) 8,401 8,562 2%
-------------------------- ------------ ------------ --------
* Venues 5,756 5,993 (4)%
-------------------------- ------------ ------------ --------
* Digital 2,645 2,569 3%
-------------------------- ------------ ------------ --------
Total spend per visit
(GBP) 17.02 16.74 2%
-------------------------- ------------ ------------ --------
* Venues 19.08 18.66 2%
-------------------------- ------------ ------------ --------
* Digital 12.55 12.26 2%
-------------------------- ------------ ------------ --------
* customers shown on a moving annual total ('MAT') basis and
cross-over customers included only once; **percentage of venues
customers who are also digital customers
On a like-for-like basis customer visits were down 1%. On an
absolute basis, they were down 4%. The recent investments in new
Mecca Max units and customer service improvements led to a 2%
increase in spend per visit.
Venues revenue analysis
GBPm H1 2015/16 H1 2014/15 Change LFL change
--------------------- ------------ ------------ -------- ------------
Main stage bingo 16.0 15.5 3% 6%
--------------------- ------------ ------------ -------- ------------
Interval games 44.5 46.7 (5)% (2)%
--------------------- ------------ ------------ -------- ------------
Amusement machines 36.0 36.8 (2)% 2%
--------------------- ------------ ------------ -------- ------------
Food & drink/other 13.3 12.8 4% 7%
--------------------- ------------ ------------ -------- ------------
Total 109.8 111.8 (2)% 2%
--------------------- ------------ ------------ -------- ------------
Interval bingo's like-for-like revenue fell by 2% in the period
due to the increase in new customers, who tend to have a lower
preference for interval game play.
Enracha
H1 2015/16 H1 2014/15 Change
------------------------ ------------ ------------ --------
Revenue (EURm) 16.9 16.3 4%
------------------------ ------------ ------------
Revenue (GBPm) 12.2 12.8 (5)%
------------------------ ------------ ------------
EBITDA* (GBPm) 2.2 1.7 29%
------------------------ ------------ ------------ --------
Operating profit*
(GBPm) 1.4 0.9 56%
------------------------ ------------ ------------ --------
Like-for-like revenue 5%
------------------------ ------------
* before exceptional items
Refurbishments of three venues in 2014/15 along with the
positive momentum in the Spanish economy contributed to a 4%
increase in euro revenue in the period. Operating profit continues
to benefit from tight cost controls.
Key performance indicators
H1 2015/16 H1 2014/15 Change
------------------------- ------------ ------------ --------
Customers (000s)* 260 250 4%
------------------------- ------------ ------------ --------
Customer visits (000s) 978 903 8%
------------------------- ------------ ------------ --------
Spend per visit (EUR) 17.28 18.05 (4)%
------------------------- ------------ ------------ --------
Spend per visit (GBP) 12.47 14.17 (12)%
------------------------- ------------ ------------ --------
* Customers shown on a moving annual total ('MAT') basis
The lease on our Continental venue in Barcelona was due to
expire in August 2018. During H1, the Continental freehold was
purchased at a cost of EUR3.2m to ensure continuity of this highly
successful venue.
Venues revenue analysis
EURm H1 2015/16 H1 2014/15 Change
--------------------- ------------ ------------ --------
Bingo 9.8 9.4 4%
--------------------- ------------ ------------ --------
Amusement machines 5.8 5.6 4%
--------------------- ------------ ------------ --------
Food & drink/other 1.3 1.3 0%
--------------------- ------------ ------------ --------
Total 16.9 16.3 4%
--------------------- ------------ ------------ --------
Financial review
Group revenue for the six-month period from continuing
operations rose by 3% to GBP374.2m while Group operating profit
before exceptionals of GBP40.4m was down 1% compared to the prior
period, principally due to the impact of RGD.
Adjusted net interest payable for the six 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 (further details can be found on page 13).
The Group's adjusted profit before tax was GBP37.4m, up 4%.
Adjusted earnings per share was up 4% period-on-period at
7.4p.
Taxation
The Group's effective corporation tax rate on continuing
operations was 22.2% (H1 2014/15: 22.9%) based on a tax charge of
GBP8.3m on adjusted profit before taxation. This is within the
Group's anticipated effective corporation tax rate range for
2015/16 of 21% to 23%.
The Group had a H1 effective cash tax rate of 15.2% on adjusted
profit after excluding a GBP4.5m repayment received in respect of
UK corporation tax overpaid in the prior year. The Group is
expected to have a cash tax rate of 17% to 19% in 2015/16,
excluding any tax payable on the resolution of a number of legacy
issues. This is lower than the Group's effective corporation tax
rate due to the utilisation of tax losses and the timing of
corporation tax instalment payments.
A restatement of deferred tax balances, to reflect the reduction
in corporation tax rates in the future from 20% to 18%, resulted in
a GBP3.1m deferred tax credit in the period.
As previously disclosed, the Group participated in a disclosed
tax avoidance scheme which has been included in the list of
Disclosure of Tax Avoidance Schemes ("DOTAS"). This scheme is being
challenged by HMRC and the case will be heard at a Tax Tribunal
later on this calendar year, with another tax payer as lead case.
Under tax rules introduced last year, HMRC can request payment of
the amounts under dispute in advance of the Tax Tribunal.
Consequently HMRC made a formal payment request for GBP21.4m which
was subsequently settled by Rank in the period.
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.
During the period the Group recognised the following exceptional
items:
-- A credit relating to the sale of a freehold interest of a Mecca venue;
-- A refund due from the Canadian Revenue Authority following
the successful settlement of a transfer pricing dispute relating to
a disposed business; and
-- An exceptional tax credit relating to the reduction of a tax provision.
Full details of the Group's exceptional items are provided in
note 3.
Cash flow
H1 2015/16 H1 2014/15
GBPm GBPm
Continuing operations
Cash inflow from operations 67.0 72.8
Net cash payments in respect of provisions
and exceptional items (3.3) (4.3)
------------------------------------------------- ------------ ------------
Cash generated from continuing operations 63.7 68.5
Capital expenditure (26.1) (15.8)
Fixed asset disposals 7.0 1.5
Net interest and tax (payments) / receipts (5.1) 1.3
Payment of disputed tax (21.4) -
Dividends paid (15.6) (12.3)
Convertible loan payment (1.0) -
(MORE TO FOLLOW) Dow Jones Newswires
January 29, 2016 02:00 ET (07:00 GMT)
Other (including foreign exchange translation) (0.6) (1.1)
------------------------------------------------- ------------ ------------
Cash inflow 0.9 42.1
Opening net debt (52.9) (137.0)
------------------------------------------------- ------------ ------------
Closing net debt (52.0) (94.9)
------------------------------------------------- ------------ ------------
Financial structure and liquidity
At the end of December 2015, net debt was GBP52.0m compared with
net debt of GBP94.9m at the end of December 2014. Net debt
comprised GBP97.0m in bank loans, GBP9.2m in fixed rate Yankee
bonds, GBP10.2m in finance leases and GBP5.9m in overdrafts offset
by cash at bank and in hand of GBP70.3m.
The Group completed the refinancing of its bank facilities in
the period. The new bank facilities comprise a 3.5 year amortising
GBP90.0m term loan facility and a 5 year GBP90.0m revolving credit
facility. These 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 has a strong balance sheet with a conservative
leverage of 0.4 times net debt to EBITDA.
Capital expenditure
H1 2015/16 H1 2014/15
GBPm GBPm
---------------------------- ------------ ------------
Grosvenor Casinos 12.8 9.6
Mecca 3.9 4.7
Enracha 2.4 0.2
Central 7.0 1.3
---------------------------- ------------ ------------
Total capital expenditure 26.1 15.8
---------------------------- ------------ ------------
During the six-month period, Rank invested GBP12.6m into its
Grosvenor Casino venues, with the majority being expended on the
recently refurbished and extended Luton casino (GBP3.3m in H1) and
GBP1.0m spent on locating a second licence adjacent to existing
casinos in Coventry, Blackpool, Glasgow and Sheffield. Grosvenor
Casinos also invested GBP4.3m on new gaming machines following the
decision to move a majority of the machine estate from being leased
to owned. The balance was principally spent on upgrades to the IT
systems and general venues expenditure.
Mecca invested GBP2.9m into its venues. GBP1.4m was spent on
venue refurbishments and improvements to gaming product. The
balance was spent on upgrades to the IT systems and general venues
expenditure.
On developing our digital capability we invested a total of
GBP1.0m in Mecca, GBP0.2m in Grosvenor Casinos and centrally
GBP4.1m on the new digital platform.
During H2 2015/16, we plan to spend between GBP30m and GBP34m.
Of this, approximately GBP14.3m will be invested in Grosvenor
Casinos venues, which includes an additional GBP6.4m on purchasing
gaming machines following the decision to replace a number of our
slots and electronic roulette machines with the latest product.
Approximately GBP8.6m will be invested into Mecca's venues with a
focus on new gaming product and our new format retail bingo club.
GBP4.7m will be spent on enhancing our digital capability and
GBP1.9m on group wide IT investments. The balance of the capex
spend will be on general expenditure.
GBP3.6m of capital was committed at 31 December 2015.
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 borrowing requirements for at least 12
months from the approval of this report and comply with its banking
covenants.
Principal risk and uncertainties
The Group's risk management strategy focuses on the minimisation
of risks for the Group. Key risks are reviewed by the executive
committee and board on a regular basis and, where appropriate,
actions are taken to mitigate the key risks that are identified.
The principal risks and uncertainties faced by the Group remain
those set out in the Group's annual report and financial statements
for the year ended 30 June 2015 and include:
-- Regulatory, finance and tax risks;
-- Operational risks (new online gaming platform, volatility of
gaming win, loss of licences, business continuity and disaster
recovery and wage rise inflation); and
-- Information technology risks.
Greater detail on these risks and uncertainties are set out in
pages 20 to 23 of the Group's 2015 annual report and financial
statements.
Directors' Responsibility Statement
The interim management report complies with the Disclosure Rules
and Transparency Rule ('DTR') of the United Kingdom's Financial
Conduct Authority in respect of the requirement to produce a
half-yearly financial report. The interim report is the
responsibility of, and has been approved by, the directors. We
confirm that to the best of our knowledge:
-- The condensed set of financial statements has been prepared in accordance with IAS 34;
-- The interim management report includes a fair review of the
important events during the first six months and description of the
principal risk and uncertainties for the remaining six months of
the year, as required by DTR 4.2.7R; and
-- The interim management report and note 12 to the Group
financial information includes a fair review of disclosure of
related party transactions and changes therein, as required by DTR
4.2.8R.
The directors of The Rank Group Plc are:
Ian Burke
Henry Birch
Chris Bell
Susan Hooper
Clive Jennings
The Rt. Hon. the Earl of Kilmorey, PC
Owen O'Donnell
For and on behalf of the board on 28 January 2016.
Henry Birch Clive Jennings
Chief Executive Finance Director
Independent Review Report to The Rank Group Plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 December 2015 which comprises the Group Income
Statement, Group Statement of Comprehensive Income, Group Statement
of Changes in Equity, Group Balance Sheet, Group Cash Flow
Statement and the related explanatory notes. We have read the other
information contained in the half yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
December 2015 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
28 January 2016
Group Income Statement
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for the six months to 31 December 2015
Six months to 31 December Six months to 31 December
2015 2014
(unaudited) (unaudited)
--------------------------------------- ---------------------------------------
Before Exceptional Before Exceptional
exceptional items exceptional items
(note
items 3) Total items (note 3) Total
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- ------------- ------------- --------- ------------- ------------- ---------
Continuing operations
---------------------------- ------------- ------------- --------- ------------- ------------- ---------
Revenue before adjustment
for customer incentives 374.2 - 374.2 361.7 - 361.7
Customer incentives (21.5) - (21.5) (18.4) - (18.4)
---------------------------- ------------- ------------- --------- ------------- ------------- ---------
Revenue 352.7 - 352.7 343.3 - 343.3
Cost of sales (188.1) - (188.1) (182.8) - (182.8)
---------------------------- ------------- ------------- --------- ------------- ------------- ---------
Gross profit 164.6 - 164.6 160.5 - 160.5
Other operating
(costs) income (124.2) 6.0 (118.2) (119.7) 1.4 (118.3)
---------------------------- ------------- ------------- --------- ------------- ------------- ---------
Group operating
profit 40.4 6.0 46.4 40.8 1.4 42.2
Financing:
- finance costs (3.1) - (3.1) (5.4) - (5.4)
- finance income 0.1 - 0.1 0.3 - 0.3
- other financial
losses (0.7) - (0.7) (0.8) - (0.8)
---------------------------- ------------- ------------- --------- ------------- ------------- ---------
Total net financing
charge (3.7) - (3.7) (5.9) - (5.9)
---------------------------- ------------- ------------- --------- ------------- ------------- ---------
Profit before taxation 36.7 6.0 42.7 34.9 1.4 36.3
Taxation (5.1) 0.3 (4.8) (8.0) - (8.0)
---------------------------- ------------- ------------- --------- ------------- ------------- ---------
Profit for the period
from continuing
operations 31.6 6.3 37.9 26.9 1.4 28.3
Discontinued operations - 3.7 3.7 - 16.0 16.0
Profit for the period 31.6 10.0 41.6 26.9 17.4 44.3
---------------------------- ------------- ------------- --------- ------------- ------------- ---------
Attributable to:
Equity holders of
the parent 31.6 10.0 41.6 26.9 17.4 44.3
---------------------------- ------------- ------------- --------- ------------- ------------- ---------
Earnings per share attributable
to equity shareholders
- basic 8.1 2.5 10.6 6.9 4.4 11.3
- diluted 8.1 2.5 10.6 6.9 4.4 11.3
Earnings per share - continuing
operations
- basic 8.1 1.6 9.7 6.9 0.3 7.2
- diluted 8.1 1.6 9.7 6.9 0.3 7.2
Earnings per share - discontinued
operations
- basic - 0.9 0.9 - 4.1 4.1
- diluted - 0.9 0.9 - 4.1 4.1
---------------------------- ------------- ------------- --------- ------------- ------------- ---------
Group Statement of Comprehensive Income
for the six months to 31 December 2015
Six months
Six months to to
31 December 31 December
2015 2014
(unaudited) (unaudited)
GBPm GBPm
--------------------------------------- ------------- --------------
Comprehensive income:
Profit for the period 41.6 44.3
Other comprehensive income:
Items that may be reclassified
to profit or loss:
Exchange adjustments net of
tax 1.3 (1.1)
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 period 42.8 42.8
--------------------------------------- ------------- --------------
Attributable to:
Equity holders of the parent 42.8 42.8
--------------------------------------- ------------- --------------
Group Statement of Changes in Equity
for the six months to 31 December 2015
For the six months to 31 December 2015 (unaudited)
-----------------------------------------------------------------------
Capital Exchange
Share Share redemption translation Retained
capital premium reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------- --------- --------- ------------ ------------- ---------- --------
At 1 July 2015 54.2 98.4 33.4 9.0 99.4 294.4
Comprehensive income:
Profit for the period - - - - 41.6 41.6
Other comprehensive
income:
Exchange adjustments
including tax - - - 1.3 - 1.3
Actuarial loss on retirement
benefits net of tax - - - - (0.1) (0.1)
------------------------------- --------- --------- ------------ ------------- ---------- --------
Total comprehensive
income for the period - - - 1.3 41.5 42.8
Transactions with owners:
Dividends paid to equity
holders (see note 6) - - - - (15.6) (15.6)
Credit in respect of
employee share schemes
including tax - - - - 1.3 1.3
At 31 December 2015 54.2 98.4 33.4 10.3 126.6 322.9
------------------------------- --------- --------- ------------ ------------- ---------- --------
For the six months to 31 December 2014 (unaudited)
-----------------------------------------------------------------------
Capital Exchange
Share Share redemption translation Retained
capital premium reserve reserve earnings 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 period - - - - 44.3 44.3
Other comprehensive
income:
Exchange adjustments
including tax - - - (1.1) - (1.1)
Actuarial loss on retirement
benefits net of tax - - - - (0.4) (0.4)
------------------------------- --------- --------- ------------ ------------- ---------- --------
Total comprehensive
(expense) income for
the period - - - (1.1) 43.9 42.8
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January 29, 2016 02:00 ET (07:00 GMT)
Transactions with owners:
Dividends paid to equity
holders (see note 6) - - - - (12.3) (12.3)
At 31 December 2014 54.2 98.4 33.4 12.6 74.2 272.8
------------------------------- --------- --------- ------------ ------------- ---------- --------
Group Balance Sheet
at 31 December 2015 and 30 June 2015
31 December 30 June
2015 2015
(unaudited)
GBPm GBPm
---------------------------------------- ------------- ---------
Assets
Non-current assets
Intangible assets 398.6 395.7
Property, plant and equipment 204.5 203.4
Deferred tax assets 2.1 2.2
Other receivables 6.2 5.3
---------------------------------------- ------------- ---------
611.4 606.6
Current assets
Inventories 3.0 2.8
Other receivables 23.0 29.3
Income tax receivable 3.8 1.7
Cash and short-term deposits 70.3 89.6
---------------------------------------- ------------- ---------
100.1 123.4
Assets held for sale - 0.6
Total assets 711.5 730.6
---------------------------------------- ------------- ---------
Liabilities
Current liabilities
Trade and other payables (144.2) (147.0)
Income tax payable (10.9) (28.0)
Financial liabilities - loans
and borrowings (17.9) (125.5)
Provisions (7.9) (8.9)
---------------------------------------- ------------- ---------
(180.9) (309.4)
Net current liabilities (80.8) (186.0)
---------------------------------------- ------------- ---------
Non-current liabilities
Trade and other payables (36.3) (37.6)
Financial liabilities - loans
and borrowings (104.3) (17.6)
Deferred tax liabilities (20.1) (23.1)
Provisions (43.2) (44.7)
Retirement benefit obligations (3.8) (3.8)
---------------------------------------- ------------- ---------
(207.7) (126.8)
Total liabilities (388.6) (436.2)
---------------------------------------- ------------- ---------
Net assets 322.9 294.4
---------------------------------------- ------------- ---------
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 10.3 9.0
Retained earnings 126.6 99.4
---------------------------------------- ------------- ---------
Total shareholders' equity 322.9 294.4
---------------------------------------- ------------- ---------
Group Cash Flow Statement
for the six months to 31 December 2015
Six months Six months
to to
31 December 31 December
2015 2014
(unaudited) (unaudited)
GBPm GBPm
---------------------------------------------------- -------------- --------------
Cash flows from operating activities
Cash generated from continuing operations 63.7 68.5
Interest received 0.1 0.3
Interest paid (2.5) (4.2)
Tax (paid) received (22.6) 5.2
Discontinued operations (0.2) -
Net cash from operating activities 38.5 69.8
---------------------------------------------------- -------------- --------------
Cash flows from investing activities
Disposal of subsidiary - (0.1)
Purchase of intangible assets (6.5) (3.5)
Purchase of property, plant and equipment (19.6) (12.3)
Proceeds from sale of property, plant and
equipment 7.0 1.5
Purchase of convertible loan note (1.0) -
Net cash used in investing activities (20.1) (14.4)
---------------------------------------------------- -------------- --------------
Cash flows from financing activities
Dividends paid to equity holders (15.6) (12.3)
Drawdown (repayment) of revolving credit
facilities 7.0 (20.0)
Repayment of term loans (120.0) -
Drawdown of term loans 90.0 -
Loan arrangement fees (1.5) -
Finance lease principal payments (1.5) (1.6)
Net cash used in financing activities (41.6) (33.9)
---------------------------------------------------- -------------- --------------
Net (decrease) increase in cash, cash equivalents
and bank overdrafts (23.2) 21.5
Effect of exchange rate changes 0.1 (0.1)
Cash and cash equivalents at start of period 87.5 46.3
Cash and cash equivalents at end of period 64.4 67.7
---------------------------------------------------- -------------- --------------
1 General information, basis of preparation and accounting policies
The Company is a public limited company which is listed on the
London stock exchange and 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 interim financial information was
approved for issue on 28 January 2016.
This condensed consolidated financial information does not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006. Statutory accounts for the 12 month period
ended 30 June 2015 were approved by the board of directors on 19
August 2015 and 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.
This condensed consolidated interim financial information has
been reviewed but not audited.
Basis of preparation
This condensed consolidated interim financial information for
the six months ended 31 December 2015 has been prepared in
accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and with IAS34 'Interim financial
reporting' as adopted by the European Union. The condensed
consolidated interim financial information should be read in
conjunction with the financial statements for the 12 month period
ended 30 June 2015, which have been prepared in accordance with
IFRSs 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 borrowing requirements for at least 12
months from the approval of this report and comply with its banking
covenants.
Accounting policies
There have been no new or amended standards or interpretations
that became effective in the period which have had a material
impact upon the values or disclosures in the interim financial
information.
Except as described below, the accounting policies applied are
consistent with those of the financial statements for the 12 month
period ended 30 June 2015, as described in those financial
statements.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual
earnings.
The Group has not early adopted any standard, interpretation or
amendment that was issued but is not yet effective.
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2 Segment information - continuing operations
Six months to 31 December 2015 (unaudited)
----------------------------------------------------------------------------------
Grosvenor
Casinos Mecca Enracha Central
Venues Digital Venues Digital Venues Digital costs Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------- --------- -------- --------- --------- --------
Continuing operations
Group revenue reported
in internal information 205.1 13.9 109.8 33.2 12.2 - - 374.2
Customer incentives (7.8) (2.2) (5.3) (6.2) - - - (21.5)
----------------------------- -------- --------- -------- --------- -------- --------- ---------
Segment revenue 197.3 11.7 104.5 27.0 12.2 - - 352.7
----------------------------- -------- --------- -------- --------- -------- --------- --------- --------
Operating profit
(loss) before exceptional
items 30.9 2.4 14.3 5.6 1.5 (0.1) (14.2) 40.4
Exceptional operating
profit - - 6.0 - - - - 6.0
-------- --------- -------- --------- -------- --------- --------- --------
Segment result 30.9 2.4 20.3 5.6 1.5 (0.1) (14.2) 46.4
----------------------------- -------- --------- -------- --------- -------- --------- --------- --------
Finance costs (3.1)
Finance income 0.1
Other financial
losses (0.7)
----------------------------- -------- --------- -------- --------- -------- --------- --------- --------
Profit before taxation 42.7
Taxation (4.8)
Profit for the
period from continuing
operations 37.9
----------------------------- -------- --------- -------- --------- -------- --------- --------- --------
Six months to 31 December 2014 (unaudited)
----------------------------------------------------------------------------------
Grosvenor
Casinos Mecca Enracha Central
Venues Digital Venues Digital Venues Digital costs Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------- -------- --------- --------- --------
Continuing operations
Group revenue reported
in internal information 195.7 9.9 111.8 31.5 12.8 - - 361.7
Customer incentives (3.8) (2.1) (6.8) (5.7) - - - (18.4)
-----------------------------
Segment revenue 191.9 7.8 105.0 25.8 12.8 - - 343.3
----------------------------- -------- --------- -------- --------- -------- --------- --------- --------
Operating profit
(loss) before exceptional
items 29.1 1.9 14.5 8.4 1.2 (0.3) (14.0) 40.8
Exceptional operating
profit (loss) - - 1.9 - (0.5) - - 1.4
Segment result 29.1 1.9 16.4 8.4 0.7 (0.3) (14.0) 42.2
----------------------------- -------- --------- -------- --------- -------- --------- --------- --------
Finance costs (5.4)
Finance income 0.3
Other financial
losses (0.8)
----------------------------- -------- --------- -------- --------- -------- --------- --------- --------
Profit before taxation 36.3
Taxation (8.0)
Profit for the
period from continuing
operations 28.3
----------------------------- -------- --------- -------- --------- -------- --------- --------- --------
2 Segment information - continuing operations (continued)
To increase transparency, the Group continues to include
additional disclosure analysing total costs by type and segment. A
reconciliation of total costs, before exceptional items, by type
and segment is as follows:
Six months to 31 December 2015 (unaudited)
---------------------------------------------------------------------------------
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 69.7 1.5 26.4 2.6 5.8 - 8.7 114.7
Taxes and duties 43.3 1.7 18.0 4.0 0.7 - 0.8 68.5
Direct costs 5.9 3.4 10.4 7.6 1.1 - - 28.4
Property costs 14.5 0.1 13.2 0.2 0.8 - 0.5 29.3
Marketing 8.9 1.2 5.7 5.2 0.4 - - 21.4
Depreciation and
amortisation 12.1 1.0 6.5 1.1 0.8 - 0.8 22.3
Other 12.0 0.4 10.0 0.7 1.1 0.1 3.4 27.7
Total costs before
exceptional items 166.4 9.3 90.2 21.4 10.7 0.1 14.2 312.3
--------------------- -------- --------- -------- --------- -------- --------- --------- -------
Cost of sales 188.1
Operating costs 124.2
Total costs before
exceptional items 312.3
--------------------- -------- --------- -------- --------- -------- --------- --------- -------
Six months to 31 December 2014 (unaudited)
---------------------------------------------------------------------------------
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 68.8 1.5 26.9 3.1 6.4 0.1 8.7 115.5
Taxes and duties 41.4 0.2 17.7 0.7 0.9 - 1.1 62.0
Direct costs 6.9 2.3 11.4 7.3 1.0 0.2 - 29.1
Property costs 15.0 0.1 13.7 0.2 0.8 - 0.5 30.3
Marketing 7.3 0.9 5.3 4.9 0.4 - - 18.8
Depreciation and
amortisation 12.1 0.7 6.3 0.7 0.8 - 0.7 21.3
Other 11.3 0.2 9.2 0.5 1.3 - 3.0 25.5
-------
Total costs before
exceptional items 162.8 5.9 90.5 17.4 11.6 0.3 14.0 302.5
--------------------- -------- --------- -------- --------- -------- --------- --------- -------
Cost of sales 182.8
Operating costs 119.7
Total costs before
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exceptional items 302.5
--------------------- -------- --------- -------- --------- -------- --------- --------- -------
3 Exceptional items
Six months
Six months to to
31 December 31 December
2015 2014
(unaudited) (unaudited)
GBPm GBPm
--------------------------------------------- --------------- --------------
Exceptional items relating to continuing
operations
Closure of venues 6.0 2.4
Charge to provision for property leases - (1.0)
--------------------------------------------- --------------- --------------
Exceptional operating income 6.0 1.4
Taxation (see note 5) 0.3 -
Exceptional items relating to continuing
operations 6.3 1.4
--------------------------------------------- --------------- --------------
Exceptional items relating to discontinued
operations
Finance costs (see note 4) (0.2) -
Taxation (see note 5) 3.9 16.0
--------------------------------------------- --------------- --------------
Exceptional items relating to discontinued
operations 3.7 16.0
--------------------------------------------- --------------- --------------
Total exceptional items 10.0 17.4
--------------------------------------------- --------------- --------------
Continuing operations
Closure of venues
The Group has recognised a credit of GBP6.0m in respect of the
sale of its freehold interest on the closure of a Mecca venue. This
freehold was held for sale at 30 June 2015. The credit includes a
charge to provision for restructuring costs of GBP0.2m which relate
to costs associated with the closure of this venue.
4 Financing
Six months
Six months to to
31 December 31 December
2015 2014
(unaudited) (unaudited)
GBPm GBPm
-------------------------------------------- --------------- --------------
Continuing operations
Finance costs:
Interest on debt and borrowings (1.8) (3.3)
Amortisation of issue costs on borrowings (0.4) (0.7)
Interest on direct taxation - (0.3)
Interest payable on finance leases (0.4) (0.4)
Unwinding of the discount in onerous
lease provisions (0.5) (0.6)
Unwinding of the discount in disposal
provisions - (0.1)
-------------------------------------------- --------------- --------------
Total finance costs (3.1) (5.4)
Finance income:
Interest income on short term bank
deposits 0.1 0.1
Interest income on direct taxation - 0.2
-------------------------------------------- --------------- --------------
Finance income 0.1 0.3
Other financial losses - including
foreign exchange (0.7) (0.8)
Total net financing cost for continuing
operations (3.7) (5.9)
Discontinued operations
Exceptional finance costs (0.2) -
Total net financing cost for discontinued
operations (0.2) -
-------------------------------------------- --------------- --------------
Total net financing costs (3.9) (5.9)
-------------------------------------------- --------------- --------------
Exceptional finance costs recognised in discontinued operations
relate to the cost of a letter of credit held in respect of taxation
balances on disposed entities.
Six months
Six months to to
31 December 31 December
2015 2014
(unaudited) (unaudited)
GBPm GBPm
-------------------------------------------- --------------- --------------
Total net financing cost for continuing
operations (3.7) (5.9)
Adjust for:
Unwinding of the discount in disposal
provisions - 0.1
Other financial losses - including
foreign exchange 0.7 0.8
Interest payable included in adjusted
profit (3.0) (5.0)
-------------------------------------------- --------------- --------------
5 Taxation
Income tax is recognised based on management's best estimate of
the weighted average annual income tax rate expected for the full
financial period.
Six months to 31 December
2015 (unaudited)
--------------------------------------
Continuing Discontinued
operations operations Total
GBPm GBPm GBPm
--------------------------------------- ------------- -------------- -------
Current income tax
Current income tax - UK (7.1) - (7.1)
Current income tax - overseas (0.6) - (0.6)
--------------------------------------- ------------- -------------- -------
Current income tax charge (7.7) - (7.7)
Amounts over provided in previous
years on exceptional items 0.3 3.9 4.2
Total current income tax (charge)
credit (7.4) 3.9 (3.5)
--------------------------------------- ------------- -------------- -------
Deferred tax
Deferred tax - UK (0.4) - (0.4)
Deferred tax - overseas (0.1) - (0.1)
Restatement of deferred tax from 20%
to 18% 3.1 - 3.1
Total deferred tax credit 2.6 - 2.6
--------------------------------------- ------------- -------------- -------
Tax (charge) credit in the income
statement (4.8) 3.9 (0.9)
--------------------------------------- ------------- -------------- -------
Six months to 31 December
2014 (unaudited)
--------------------------------------
Continuing Discontinued
operations operations Total
GBPm GBPm GBPm
--------------------------------------- ------------- -------------- -------
Current income tax
Current income tax - UK (7.0) - (7.0)
Current income tax - overseas (0.3) - (0.3)
--------------------------------------- ------------- -------------- -------
Current income tax charge (7.3) - (7.3)
Current income tax on exceptional
items (0.4) - (0.4)
Amounts over provided in previous
years 0.5 - 0.5
Amounts over provided in previous
years on exceptional items 0.4 16.0 16.4
Total current income tax (charge)
credit (6.8) 16.0 9.2
--------------------------------------- ------------- -------------- -------
Deferred tax
Deferred tax - UK (0.6) - (0.6)
Deferred tax - overseas (0.1) - (0.1)
Amounts under provided in respect
of previous years (0.5) - (0.5)
Total deferred tax charge (1.2) - (1.2)
--------------------------------------- ------------- -------------- -------
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January 29, 2016 02:00 ET (07:00 GMT)
Tax (charge) credit in the income
statement (8.0) 16.0 8.0
--------------------------------------- ------------- -------------- -------
5 Taxation (continued)
The tax effect of items within other comprehensive income was as
follows:
Six months
Six months to to
31 December 31 December
2015 2014
(unaudited) (unaudited)
GBPm GBPm
------------------------------------------ --------------- --------------
Current tax credit (charge) on exchange
movements offset in reserves 0.1 (0.1)
Deferred tax credit on actuarial loss
on retirement benefits - 0.1
Total tax credit on items within other
comprehensive income 0.1 -
------------------------------------------ --------------- --------------
The credit in respect of employee share schemes included within
the Statement of Changes in Equity includes a deferred tax credit
of GBP0.2m (six months to 31 December 2014: GBPnil).
Tax on discontinued operations
The GBP3.9m exceptional tax credit in discontinued operations
relates to a refund of amounts previously paid which the Group
expects to receive following the conclusion of a tax exposure
relating to a discontinued operation in an overseas jurisdiction.
As at 30 June 2015 this item was disclosed as a contingent
asset.
Factors affecting future taxation
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.
A reconciliation of tax on continuing operations to tax included
in adjusted profit is described below:
Six months
Six months to to
31 December 31 December
2015 2014
(unaudited) (unaudited)
GBPm GBPm
----------------------------------------- --------------- --------------
Tax charge for continuing operations (4.8) (8.0)
Adjust for:
Tax on exceptional items (0.3) -
Tax on adjusted items and impact of
reduction in tax rate (3.2) (0.2)
-----------------------------------------
Tax charge included in adjusted profit (8.3) (8.2)
----------------------------------------- --------------- --------------
6 Dividends
Six months Six months
to to
31 December 31 December
2015 2014
(unaudited) (unaudited)
GBPm GBPm
---------------------------------------- -------------- --------------
Dividends paid to equity holders
Final dividend for 2014/15 paid on 21
October 2015 - 4.00p per share 15.6 -
Final dividend for 2013/14 paid on 22
October 2014 - 3.15p per share - 12.3
Total 15.6 12.3
---------------------------------------- -------------- --------------
The Board has declared an interim dividend of 1.80p per ordinary
share. The dividend will be paid on 22 March 2016 to shareholders
on the register at 12 February 2016. The financial information does
not reflect this dividend.
7 Adjusted earnings per share
Adjusted earnings is calculated by adjusting profit attributable
to equity shareholders to exclude the impact of reductions in tax
rate, 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:
Six months to
Six months to 31 December
31 December 2015 2014
(unaudited) (unaudited)
GBPm GBPm
--------------------------------------------- ------------------- ---------------
Profit attributable to equity shareholders 41.6 44.3
Adjust for:
Discontinued operations (net of taxation) (3.7) (16.0)
Exceptional items after tax on continuing
operations (6.3) (1.4)
Other financial losses 0.7 0.8
Unwinding of the discount in disposal
provisions - 0.1
Taxation on adjusted items and impact
of reduction in tax rate (3.2) (0.2)
--------------------------------------------- ------------------- ---------------
Adjusted net earnings attributable to
equity shareholders 29.1 27.6
Weighted average number of ordinary
shares in issue 390.7m 390.7m
Adjusted earnings per share (p) - basic 7.4p 7.1p
Adjusted earnings per share (p) - diluted 7.4p 7.1p
--------------------------------------------- ------------------- ---------------
8 Provisions
Property Indirect
lease Disposal Restructuring tax
provisions provisions provisions provisions Total
GBPm GBPm GBPm GBPm GBPm
--------------------------- ------------ ------------ --------------- ------------ -------
At 1 July 2015 47.6 4.3 0.5 1.2 53.6
Exchange adjustments - 0.1 - - 0.1
Unwinding of discount 0.5 - - - 0.5
Charge to the income
statement - exceptional - - 0.2 - 0.2
Utilised in period (2.6) - (0.7) - (3.3)
At 31 December 2015
(unaudited) 45.5 4.4 - 1.2 51.1
--------------------------- ------------ ------------ --------------- ------------ -------
Current 5.7 1.0 - 1.2 7.9
Non-current 39.8 3.4 - - 43.2
At 31 December 2015
(unaudited) 45.5 4.4 - 1.2 51.1
--------------------------- ------------ ------------ --------------- ------------ -------
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:
At
At 31 December
31 December 2015 2014
(unaudited) (unaudited)
GBPm GBPm
------------------------------------ ------------------- --------------
Total loans and borrowings (122.2) (167.9)
Less: accrued interest 0.6 0.9
Less: unamortised facility fees (0.7) (1.0)
------------------------------------ ------------------- --------------
(122.3) (168.0)
Add: cash and short term deposits 70.3 73.1
Net debt (52.0) (94.9)
------------------------------------ ------------------- --------------
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