TIDMRNK
RNS Number : 6088O
Rank Group PLC
31 January 2019
LEI: 213800TXKD6XZWOFTE12
31 January 2019
The Rank Group Plc ("Rank" or the "Group")
Interim results for the six months ended 31 December 2018
Full year outlook in line
Financial highlights
H1 2018/19 H1 2017/18 Change
------------
Financial
KPIs Group like-for-like revenue GBP366.0m GBP375.0m (2.4)%
---------------------------------- ------------ ------------ ---------
Digital like-for-like revenue GBP63.9m GBP60.8m 5.1%
-------------------------------------------------- ------------ ------------ ---------
Digital revenue GBP70.4m GBP60.8m 15.8%
-------------------------------------------------- ------------ ------------ ---------
Venues like-for-like revenue GBP302.1m GBP314.2m (3.9)%
-------------------------------------------------- ------------ ------------ ---------
Group EBITDA before exceptional
items GBP52.3m GBP63.3m (17.4)%
-------------------------------------------------- ------------ ------------ ---------
Group operating profit before
exceptional items GBP30.3m GBP41.7m (27.3)%
-------------------------------------------------- ------------ ------------ ---------
Adjusted profit before tax GBP29.1m GBP40.2m (27.6)%
-------------------------------------------------- ------------ ------------ ---------
Adjusted earnings per share 6.1p 8.0p (23.8)%
-------------------------------------------------- ------------ ------------ ---------
Statutory
performance Statutory revenue GBP348.2m GBP354.2m (1.7)%
---------------------------------- ------------ ------------ ---------
Group operating profit GBP25.8m GBP34.2m (24.6)%
-------------------------------------------------- ------------ ------------ ---------
Profit before taxation GBP22.8m GBP32.8m (30.5)%
-------------------------------------------------- ------------ ------------ ---------
Cash generated from operations GBP56.0m GBP61.9m (9.5)%
-------------------------------------------------- ------------ ------------ ---------
Net cash GBP7.7m GBP4.0m -
---------------------------------- ------------ ------------ ---------
Basic earnings per share
after exceptional items 4.8p 6.4p (25.0)%
-------------------------------------------------- ------------ ------------ ---------
Dividend per share 2.15p 2.15p 0%
-------------------------------------------------- ------------ ------------ ---------
Operational highlights
-- Digital revenue improved in the period with Mecca and
Grosvenor continuing to grow customer volumes
-- YoBingo! performing ahead of acquisition plan
-- Grosvenor venues impacted by reduced contribution from major
players, a weather impacted Q1 and
challenging consumer back drop
-- Key casino investments at the Barracuda and new gaming
machines and electronic roulette across the estate
-- Grosvenor's single account and wallet offer, Grosvenor One,
successfully trialled in the period; rollout
scheduled by the end of FY 2018/19
-- Transformation programme launched and gaining momentum
Outlook
-- Trading in the short four week period to 27 January in line with management's expectations
-- Full year performance expected to be in line with current consensus
-- Total Group cost savings of GBP10m identified for H2 2018/19,
with a full year net benefit of GBP19m
expected in FY 2019/20
John O'Reilly, Chief Executive of The Rank Group Plc said:
"The first half of our financial year has been a tough trading
period, I am however encouraged by the Group's improved performance
in Q2. The three year transformation programme that we outlined at
our Full Year results in August 2018 is now well underway with
nearly 300 initiatives identified and tasked. The programme will
gain further momentum in H2 2018/19 and the management team is
positive about what can be achieved. While there is lots to be done
to deliver the revenue improvements and cost efficiencies
identified, I am confident in the outlook for Rank and excited
about the opportunities that exist."
Ends
Definition of terms:
-- Any reference to revenue or like-for-like group revenue is
before adjustment for customer incentives;
-- EBITDA is operating profit before exceptional items, depreciation and amortisation;
-- Adjusted profit before tax is profit from continuing
operations before taxation adjusted to exclude exceptional items
and other financial gains or losses resulting from foreign exchange
gains and losses on loans and borrowings. See Financial Review for
reconciliation;
-- Adjusted earnings per share is calculated by adjusting profit
attributable to equity shareholders to exclude exceptional items,
other financial gains or losses, unwinding of the discount rate in
the disposal provisions and the related tax effects as detailed in
note 7;
-- "H1 2018/19" refers to the unaudited six-month period to 31
December 2018 and "H1 2017/18" refers to the unaudited six-month
period to 31 December 2017;
-- Like-for-like measures have been disclosed in this report to
show the impact of club openings, closures, and relocations;
-- Prior period like-for-like measures are amended to show an
appropriate comparative for the impact of club openings, closures,
relocations, acquired businesses 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 EPS. Adjusted measures are the same as those
used for internal reports;
-- Venues includes Grosvenor Venues, Mecca Venues and International Venues; and
-- The Group reports segmental information on the basis by which
the chief operating decision maker utilises internal reporting
within the business. In the current year, the internal reporting of
the operating segments has been modified following changes in
management responsibilities. As from 1 July 2018, UK Digital,
Enracha Digital and YoBingo! were combined into a single operating
segment which is now known as Digital. Enracha Venues and Belgium
were also combined into a single operating segment which is now
known as International Venues. All prior period comparables have
been restated to reflect these changes.
Enquiries
The Rank Group Plc
Sarah Powell, director of investor Tel: 01628 504 303
relations and communications
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:
Thursday 31 January 2019
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.
Chief executive's review
The key management focus in H1 2018/19 has been the development
of the Group's transformation programme. The planning phase
concluded in November 2018 with the programme formally launched
within the business in December 2018. This is a three year change
programme for the Group focussed around revenue growth, cost
savings/efficiencies and ensuring the key enablers including
organisational capability, core technology and key processes and
systems are in place. A number of key initiatives are now well
underway and the programme will gain further momentum in H2
2018/19.
After a difficult Q1 2018/19, the Group's performance improved
during Q2 2018/19, with like-for-like Group revenues(1,3) down 2.4%
for H1 2018/19, compared to the 4.7% decline in Q1 2018/19. The
Group's digital business grew by 15.8% in the period driven by
Mecca and YoBingo!. However, the period continued to be challenging
for the Group's UK retail businesses with like-for-like
revenue(1,3) down 4.2%.
Total Grosvenor venues revenue(1) was down 5.1% in the period,
with like-for-like revenue(1,3) down 4.7%. Performance was
principally driven by a lower contribution from its major players,
both handle and win margin, the challenging consumer backdrop and a
weather impacted Q1. Total and like-for-like operating profit(4)
fell by 33.8% and 35.0% respectively in the period, due to lower
revenues. As part of the transformation programme changes were
introduced to simplify casino management structures and reduce
labour hours. These changes are expected to result in approximately
GBP7.5m of labour savings in H2 2018/19. Further detail on the
transformation programme is outlined later in this review.
Mecca's like-for-like revenue(1,3) was down 3.3% in the period
driven by a 11.8% decline in like-for-like customer visits. Total
revenue(1) fell by 3.9%. Total operating profit(4) fell by 10.2%;
excluding the impact of closed sites and the three Luda venues,
like-for-like operating profit(3,4) fell by 7.6%. Changes to the
customer offer continued to be developed in the period with the
successful trial of a new price and prize board policy aimed at
giving customers additional value at the lower attended midweek
sessions and guaranteeing bigger prize boards across the
weekend.
Like-for-like digital revenue(1,3) grew by 5.1%, driven by an
improved performance from Mecca. Total digital revenue(1) was up
15.8% in the period following the contribution from YoBingo!.
YoBingo! performed strongly in the period with revenues up 41.0%
and continued to grow its share of the Spanish digital bingo
market(2) , up 4.9ppts to 42.1%. The contribution from YoBingo!
helped grow total digital operating profit(4) by 5.8%.
Like-for-like operating profit(3,4) fell by 1.9% following the
increase in UK Remote Gaming Duty ('RGD') on customer bonuses,
which resulted in GBP0.9m of incremental RGD in the period.
Like-for-like international venues revenue(1,3) was broadly flat
in the period.
GBPm Group Revenue(1) LFL Group Revenue(1,3)
H1 2018/19 H1 2017/18 Change H1 2018/19 H1 2017/18 Change
------------ ------------ -------- ------------ ------------ --------
Grosvenor venues 181.4 191.2 (5.1)% 181.3 190.2 (4.7)%
------------ ------------ -------- ------------ ------------ --------
Mecca venues 100.0 104.1 (3.9)% 98.3 101.7 (3.3)%
------------ ------------ -------- ------------ ------------ --------
Digital 70.4 60.8 15.8% 63.9 60.8 5.1%
------------ ------------ -------- ------------ ------------ --------
International venues 22.6 23.5 (3.8)% 22.5 22.3 0.9%
------------ ------------ -------- ------------ ------------ --------
Total 374.4 379.6 (1.4)% 366.0 375.0 (2.4)%
------------ ------------ -------- ------------ ------------ --------
GBPm Operating Profit(4) LFL Operating Profit(3,4)
H1 2018/19 H1 2017/18 Change H1 2018/19 H1 2017/18 Change
------------ ------------ --------- ------------ ------------ ---------
Grosvenor venues 19.4 29.3 (33.8)% 19.3 29.7 (35.0)%
------------ ------------ --------- ------------ ------------ ---------
Mecca venues 11.4 12.7 (10.2)% 12.1 13.1 (7.6)%
------------ ------------ --------- ------------ ------------ ---------
Digital 11.0 10.4 5.8% 10.2 10.4 (1.9)%
------------ ------------ --------- ------------ ------------ ---------
International venues 4.1 4.3 (4.7)% 4.1 4.1 0%
------------ ------------ --------- ------------ ------------ ---------
Central costs (15.6) (15.0) 4.0% (15.6) (15.0) 4.0%
------------ ------------ --------- ------------ ------------ ---------
Total 30.3 41.7 (27.3)% 30.1 42.3 (28.8)%
------------ ------------ --------- ------------ ------------ ---------
1 Before adjustments for customer incentives.
2 As per Spanish market data at September 2018.
3 Excludes the impact of any venue closures, opening,
relocations or acquired businesses.
4 Before exceptional items.
Exceptional items, before tax and financing charges, were
GBP4.5m in the period. GBP3.8m of the costs relate to redundancies
made across the Group.
H2 exceptional costs relating to the transformation programme
are expected to be broadly in line with those in H1 as further cost
efficiencies are made.
Acquisition of YoBingo!
In May 2018, we completed the acquisition of QSB Gaming Limited,
the owner of YoBingo!, a leading Spanish digital bingo business for
an initial consideration of EUR23.1m and, subject to future
performance, up to a maximum consideration of EUR52.0m. The
acquisition of YoBingo! provides Rank with a secure and strong
digital bingo presence in Spain, a high growth and regulated
digital gaming market.
YoBingo!'s performance continues to be in line with management's
expectations and further consideration is due to be paid in H2
2018/19. Total consideration is expected to be close to or at the
cap of EUR52.0m and is expected to be funded from existing cash and
debt facilities.
Transformation Programme
The framework for driving change within Rank is the
transformation programme. The framework provides a clear view on
the performance of the business against the programme. The
programme contains 12 distinct workstreams, each owned by one of
the senior executive team and supported by the transformation team,
with nearly 300 separate initiatives, each with clear
milestones.
Each initiative has been validated in terms of its financial
contribution and timetabled with clear responsibilities and
accountabilities for its delivery. The programme follows a strict
cadence with weekly management progress reviews, to ensure each
initiative is on track and that corrective actions are taken where
required. The programme runs deep through the organisation such
that it creates a clearly understood plan of action, the delivery
of which everyone can follow.
The 12 workstreams are centred around revenue growth, cost
reduction and key enablers.
Revenue growth workstreams
1. Improve our marketing effectiveness;
2. Materially grow our digital business;
3. Identify and progress our international strategic opportunities;
4. Development of the Grosvenor venues proposition; and
5. Stabilisation of Mecca venues.
Cost reduction workstreams
6. Review of our UK retail operating model;
7. Review and identify opportunities for both our freeholds and leaseholds;
8. Drive and secure procurement efficiencies; and
9. Create 'fit for purpose' support functions.
Key enabler workstreams
10. Prioritisation of our critical systems to ensure key
projects are delivered on time and to budget;
11. Improve our data analytics; and
12. Reinvigorate Rank's culture and capability.
Total costs savings for H2 2018/19 are expected to be GBP10.0m;
with GBP7.5m coming from employee changes in our casinos, GBP2.0m
from changes to our support office functions and GBP0.5m from
procurement efficiencies. There will be a flow through of these
costs savings into the next financial year and we expect the total
net savings to be circa GBP19.0m for 2019/20.
Further detail on what has been delivered in the period and the
plans for H2 2018/19 can be found in the Our Strategy section.
Management team changes
Chief Information Officer
Jonathan Greensted joined the Group on 13 August 2018 as chief
information officer. Jonathan is a highly experienced IT and
programme director and brings with him over 20 years' experience
across a variety of sectors. Jonathan joined us from Travelodge
where he was their chief technology officer.
Chief Transformation Officer
Jim Marsh joined the Group on 1 October 2018 as chief
transformation officer. Jim has led and delivered transformations
in a variety of sectors. He joined us from McKinsey & Company
where he was a partner in its transformation team.
Chief Financial Officer
Bill Floydd joined the Group on 12 November 2018 as chief
financial officer. Bill has successfully led business turnaround
and finance transformation projects in other listed organisations.
Bill joins us from Experian plc where he was CFO for its UK and
Ireland region.
Board changes
Richard Kilmorey
The Rt. Hon. The Earl of Kilmorey, PC did not seek re-election
at the 2018 annual general meeting and therefore stepped down
during the period having completed over six years on the Board.
Tang Hong Cheong
Post period, on the 15 January 2019, Hong Cheong , a director of
Rank's major shareholder, was appointed to the Board. Hong Cheong
has been working with the management of Rank since 2010 and has a
broad understanding of the operation, finance and business aspects
of Rank. The appointment of Hong Cheong will further enhance the
communication between Rank and its major shareholder.
Regulation and taxation
The anticipated increase in UK Remote Gaming Duty from 15% to
21% was announced in the Chancellor's 2018 Budget and comes into
effect from April 2019. Based on revenues for FY 2017/18 it is
expected to result in additional RGD of GBP6.6m per annum.
Brexit
The decision made by the United Kingdom to leave the European
Union, or 'Brexit' as it has become known, means that like other
businesses operating in the UK, Rank must prepare for the changes
that this decision might bring.
Rank has considered how Brexit might impact the Group and the
overall conclusion is that it is reasonably well positioned based
on the nature of the sector and geographies in which it operates.
However, we remain cautious in light of the unknown economic impact
of Brexit on consumer expenditure.
Current trading and outlook
Trading in the short four-week period to 27 January 2019 has
been in line with management's expectations.
The Group does not expect any material improvement to the
challenging consumer environment over the short to medium term,
however driven by the transformation programme, the Group's
financial performance for FY 2018/19 is expected to be in line with
the current consensus expectations with circa GBP10.0m of total
cost savings scheduled for H2.
Dividend
The board is pleased to declare an interim dividend of 2.15
pence per share to be paid on 14 March 2019 to shareholders on the
register at 15 February 2019.
Operating Review
Grosvenor Venues
As from 1 July 2018, Grosvenor Venues excludes the contribution
from its Belgium casino which is now reported under International
Venues.
H1 2018/19 continued to be challenging for Grosvenor's casinos,
with like-for-like revenue(1,2) down 4.7%.
Key financial performance indicators
H1 2018/19 H1 2017/18 Change
Revenue(1,2) (GBPm) 181.3 190.2 (4.7)%
London(4) 68.6 70.4 (2.6)%
Provinces(4) 112.7 119.8 (5.9)%
------------ ------------ ---------
EBITDA(3) (GBPm) 29.3 39.9 (26.6)%
------------ ------------ ---------
Operating profit(1,3)
(GBPm) 19.3 29.7 (35.0)%
------------ ------------ ---------
Total revenue(2) (5.1)%
------------
Total operating
profit(3) (33.8)%
------------
1 Excludes venues openings, closures and relocations.
2 Before adjustments for customer incentives.
3 Before exceptional items.
4 H1 2018/19 and H1 2017/18 adjusted for the reallocation of
beamed roulette revenue from Provinces to London following tax
treatment agreement with HMRC.
Following a weather impacted start to the period, like-for-like
Grosvenor revenue(1,2) performance was driven by a lower
contribution from its major players, impacting both handle and win
margin. The continuing difficult consumer backdrop also impacted
performance, principally affecting the provincial venues.
As a result of lower revenues, like-for-like operating
profit(1,3) fell by 35.0% in the period. As highlighted above, one
of the cost efficiency workstreams in the Group's transformation
programme is focused on ensuring the casino operating model is more
effective and efficient. We have simplified the casino management
structure and reduced contracted hours to better meet customer
demand. As a result, total casino labour savings for H2 are
estimated to be GBP7.5m.
Two key investments were made in the period to better serve
specific customer bases. The first related to the refurbishment at
the Barracuda casino in London which was completed at the end of
the period. The Barracuda now provides an offer more suitable for
its higher spending customers and customer feedback post completion
has been excellent. The second related to one of Grosvenor's
largest casinos, the Victoria casino in London. It underwent
several changes in the period, which included the appointment of a
new manager and improvements to the gaming floor layout with new
electronic roulette and gaming machines. A new VIP playing area is
due to be completed in H2 2018/19.
Key non-financial performance indicators
H1 2018/19 H1 2017/18 Change
Customer visits
(000s)(5,6) 3,451 3,552 (2.8)%
London 753 679 10.9%
Provinces 2,698 2,873 (6.1)%
------------ ------------ ----------
Spend per visit 52.54 53.55 (1.9)%
(GBP)(5,6)
London 91.10 103.68 (12.1)%
Provinces 41.77 41.70 0.2%
------------ ------------ ----------
5 Excludes venues openings, closures and relocations.
6 Unaudited
Like-for-like London customer visits(5,6) were strong in the
period, up 10.9%. Like-for-like provinces customer visits(5,6) were
down 6.1% reflecting the ongoing difficult economic climate and
consumer uncertainty. Like-for-like spend per visit(5,6) decreased
in the period driven by lower spend levels in London.
Venues revenue analysis
GBPm H1 2018/19 H1 2017/18 Change
Casino games 114.1 122.7 (7.0)%
------------ ------------ --------
Gaming machines 46.1 45.4 1.5%
------------ ------------ --------
Card room games 7.4 7.7 (3.9)%
------------ ------------ --------
Food and drink/other 13.7 14.4 (4.9)%
------------ ------------ --------
Total(7) 181.3 190.2 (4.7)%
------------ ------------ --------
7 Excludes venues openings, closures and relocations.
During the period, a greater focus was made on using data to
drive machine investments. These investments have performed well
and contributed to a 1.5% gaming machine revenue increase in the
period.
Mecca Venues
Mecca's like-for-like revenue(1,2) was down 3.3% in the period
driven by a fall in customer visits.
Key financial performance indicators
H1 2018/19 H1 2017/18 Change
Revenue(1,2) (GBPm) 98.3 101.7 (3.3)%
------------ ------------ ---------
EBITDA(3) (GBPm) 16.4 18.6 (11.8)%
------------ ------------ ---------
Operating profit(1,3)
(GBPm) 12.1 13.1 (7.6)%
------------ ------------ ---------
Total revenue(2) (3.9)%
------------
Total operating profit(3) (10.2)%
------------
1 Excludes venues closures and Luda.
2 Before adjustments for customer incentives.
3 Before exceptional items.
Changes to the customer offer continued to be developed in the
period with the successful trial of a new price and prize board
policy aimed at giving customers additional value at the lower
attended midweek sessions and guaranteeing bigger prize boards
across the weekend.
Mecca's wider entertainment offer continued to gain scale and
pace in the period with events such as premium acts (e.g. 5ive),
Bonkers Bingo, DJ Nights and Rewind Festivals (multi-act nights).
These events continue to drive the brand's awareness amongst new
Mecca customers whilst contributing to revenue and operating
profit.
Mecca's operating costs continue to be well managed with an
ongoing focus on cost efficiencies.
Three clubs were closed in the period (Ashford, Ellesmere Port
and Catford). Like-for-like operating profit(1,3) fell by 7.6% in
the period due to lower revenues.
Key non-financial performance indicators
H1 2018/19 H1 2017/18 Change
Customer visits
(000s)(4,5) 4,300 4,877 (11.8)%
------------ ------------ ---------
Spend per visit
(GBP)(4,5) 22.86 20.85 9.6%
------------ ------------ ---------
4 Unaudited
5 Excludes venue closures and Luda.
Like-for-like customer visits(4,5) fell by 11.8% in the period,
however like-for-like spend per visit(4,5) increased by 9.6%
following beneficial changes to the National Game mechanic and the
consequential increase in interval game dwell times.
Venues revenue analysis
GBPm H1 2018/19 H1 2017/18 Change
Main stage bingo 17.4 17.9 (2.8)%
------------ ------------ --------
Interval games 35.8 37.7 (5.0)%
------------ ------------ --------
Amusement machines 32.9 33.1 (0.6)%
------------ ------------ --------
Food and drink/other 12.2 13.0 (6.2)%
------------ ------------ --------
Total(6) 98.3 101.7 (3.3)%
------------ ------------ --------
6 Excludes venue closures and Luda
Luda - venues
Luda's performance remained unchanged in the period. Management
will review the potential opportunities for Luda as a high street
gaming business when the impact of the upcoming reduction to GBP2
maximum stake for B2 gaming machines in high street betting shops
has been assessed.
Digital
As from 1 July 2018, UK Digital, Enracha Digital and YoBingo!
were combined into a single operating segment which is now known as
Digital.
Rank's digital business continued to grow, with like-for-like
revenue(1,2) up 5.1%.
Key financial performance indicators
H1 2018/19 H1 2017/18 Change
Revenue(1,2) (GBPm) 63.9 60.8 5.1%
Mecca 38.8 36.1 7.5%
Grosvenor 24.6 24.5 0.4%
Enracha 0.5 0.2 150%
------------ ------------ --------
EBITDA(3) (GBPm) 14.8 12.6 17.5%
------------ ------------ --------
Operating profit(1,3)
(GBPm) 10.2 10.4 (1.9)%
------------ ------------ --------
Total revenue(2) 15.8%
------------
Total operating
profit(3) 5.8%
------------
1 Excludes contribution from YoBingo!
2 Before adjustments for customer incentives.
3 Before exceptional items.
Mecca digital grew revenue(2) 7.5% in the period driven by
another successful 'Meccarena' marketing campaign and ongoing
customer offer improvements which included the launch of a new
fixed odds bingo game, BOB ('Best Odds Bingo'). BOB gives online
bingo customers more chances to win with every customer having an
equal chance of winning.
Enhanced due diligence continued to impact Grosvenor digital's
performance, with revenues(2) broadly flat in the period.
Improvements to Grosvenor's digital offer remained a key focus in
the period with performance improving over the half, Q2 up 12.6%
compared to (11.1)% at Q1.
Operating profit(3) fell in the period due to the change in
taxation of free bets in the UK (from October 2017), costing an
additional GBP0.9m of RGD in the period (total cost of GBP1.7m in
the period).
YoBingo! performed strongly in the period with revenues up 41.0%
and continued to grow its share of the Spanish digital bingo
market, up 4.9ppts to 42.1%. The contribution from YoBingo! helped
grow total digital operating profit(3) by 5.8%.
Improvements to marketing and offer drove growth in both
customer numbers, up 14.8%, and first time depositors ('FTDs'), up
10.0%.
Key non-financial performance indicators (UK only)
H1 2018/19 H1 2017/18 Change
Customers(4) (000s) 294 256 14.8%
Grosvenor 92 85 8.2%
Mecca 202 171 18.1%
------------ ------------ --------
First Time Depositors(4)
(FTDs) 110 100 10.0%
Grosvenor 50 41 22.0%
Mecca 60 59 1.7%
------------ ------------ --------
4 Unaudited
The Group continued to invest into Grosvenor One in the period,
the single account and wallet casino product. Grosvenor One was
successfully trialled in two casinos in the period (Stockport and
Didsbury). The estate rollout is due to be completed by the end of
the current financial year alongside a comprehensive marketing
programme.
International Venues
From 1 July 2018, Enracha's venues and Grosvenor's Belgium
casino are reported under International Venues.
Like-for-like euro revenue(1,2) from the Group's International
venues grew by 0.8% in the period.
Key financial performance indicators
H1 2018/19 H1 2017/18 Change
Revenue(1,2) (EURm) 25.2 25.0 0.8%
Enracha 19.6 19.7 (0.5)%
Grosvenor - Belgium 5.6 5.3 5.7%
------------ ------------ ---------
Revenue(1,2) (GBPm) 22.5 22.3 0.9%
Enracha 17.5 17.6 (0.6)%
Grosvenor - Belgium 5.0 4.7 6.4%
------------ ------------ ---------
EBITDA(3) (GBPm) 5.5 5.7 (3.5)%
------------ ------------ ---------
Operating profit(1,3) 4.6 4.6 0%
(EURm)
Enracha 3.9 4.0 (2.5)%
Grosvenor - Belgium 0.7 0.6 16.7%
------------ ------------ ---------
Operating profit(1,3) 4.1 4.1 0%
(GBPm)
Enracha 3.5 3.6 (2.8)%
Grosvenor - Belgium 0.6 0.5 20.0%
------------ ------------ ---------
Total revenue(2) (3.8)%
------------
Total operating profit(3) (4.7)%
------------
1 Excludes venue closures
2 Before adjustments for customer incentives.
3 Before exceptional items.
Spanish regulatory and local authority actions in the period
negatively impacted the performance of Enracha's venues resulting
in a 0.5% fall in like-for-like euro revenue(2) . The Belgium
casino in Blankenberge grew like-for-like euro revenue(2) by 5.7%
in the period following improvements to the gaming machine
offer.
Blankenberge's application to renew its casino licence with
effect from January 2021 was approved by the local authority in
August 2018 and a refurbishment and remodelling of the casino is
scheduled for 2020.
Key non-financial performance indicators
H1 2018/19 H1 2017/18 Change
Customer visits(4,5)
(000s) 1,065 1,047 1.7%
------------ ------------ --------
Spend per visit(4,5)
(EUR) 23.66 23.88 (0.9)%
------------ ------------ --------
Spend per visit(4,5)
(GBP) 21.13 21.30 (0.8)%
------------ ------------ --------
4 Excludes closed venues
5 Unaudited
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 venues, online or mobile.
1. Creating a compelling multi-channel offer
In the markets we operate, Rank is one of the few gaming
companies in a position to provide customers a genuine
multi-channel gaming offer. We have a number of key assets,
including a portfolio of 146 venues, our membership-based models,
our loyalty and reward programmes and the high levels of engagement
that our team members enjoy with customers.
H1 2018/19 activity:
-- Grosvenor One successfully trialled in two clubs (Stockport and Didsbury); and
-- Initial investigations have been undertaken with regards to
an omni-channel service for Mecca customers.
H2 2018/19 priorities:
-- Complete the rollout of Grosvenor One across the casinos
estate alongside a comprehensive marketing
programme; and
-- Development of Mecca Max terminals to enable customers to
create an online account in venue.
2. Building digital capability and scale
Rank has built strong positions in venue-based gaming which we
seek to replicate across our digital channels (online and mobile).
In H1 2018/19, our digital operations generated 19% of Group
revenue whereas digital channels now represent around 47% of Great
Britain's gambling market (excluding National Lottery), presenting
a significant growth opportunity. We continue to enhance our
capability in this area such that we can leverage our active retail
customer base and meet their changing needs.
H1 2018/19 activity:
-- Improvements were made in the period regarding the
integration of the customer relationship management ('CRM')
platform and the Bede operating platform; these improvements have
reduced customer journey friction issues;
-- Six new digital games were launched providing more bespoke
and exclusive games for our customers; and
-- Through the use of new digital agencies and data models we
have improved returns on our marketing investments.
H2 2018/19 priorities:
-- Grosvenor will be launched on the new content management
system over the coming months with a phased and targeted rollout to
new and existing customers;
-- Further improvements are to be made to the bonus and wallet
functionality for new and existing customers;
-- Additional games are to be launched;
-- Customer registration and conversion journeys to be
redesigned and improved across online and mobile for
both Mecca and Grosvenor; and
-- There will be a continued focus on increased marketing
investments to ensure returns are further improved.
3. Developing our venues
Our casino and bingo venues remain a central 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 concepts, we
are constantly evolving and enhancing the experiences that we offer
to customers.
H1 2018/19 activity:
-- Refresh completed at Grosvenor's Victoria casino in London to
improve the electronic product offer;
-- Refurbishment at Grosvenor's Barracuda casino in London successfully completed;
-- Continued development of Mecca's wider entertainment offer
with events such as premium acts (e.g. 5ive),
Bonkers Bingo, DJ Nights and Rewind Festivals (multi-act nights); and
-- Ongoing negotiations with venue landlords to re-gear and
extend leases whilst reducing property costs.
H2 2018/19 priorities:
-- Creation of a dedicated VIP gaming area at the Victoria casino in London;
-- Following lessons learnt in H1 around Mecca's wider
entertainment offer, further events scheduled for H2;
-- Launch of a new, entertainment and social engagement-led
concept called 'Players' that presents the
bingo experience in a more contemporary format;
-- Secure location of new concept casino and agree plans for a
second new concept venue to be developed; and
-- Refurbishment planned for Grosvenor's Sheffield casino to
include tournament electronic gaming.
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.
H1 2018/19 activity:
-- Customer segmentation work commenced in the period to help
drive new concept proposition for Grosvenor's
venues which will determine future venue investments and local marketing campaigns;
-- 'Project Experience', the venues customer experience project
was rolled out in the period improving
customer journeys in both our bingo and casino venues;
-- The integrated marketing campaign, Meccarena, led to strong
customer acquisition activity for Mecca digital;
-- New VIP strategy rolled-out following the recent appointments
to the Grosvenor VIP casino team; and
-- New local marketing platform rolled out providing clubs with
better support and consistency over local
promotional activity.
H2 2018/19 priorities:
-- Increase marketing investment in digital across both Mecca and Grosvenor digital;
-- Use of customer segmentation to help drive key marketing
investments and define customer contact and
investment strategies for Grosvenor One's loyalty programme;
-- Implement an integrated CRM and loyalty strategy including
the launch of interactive reward pods in
Grosvenor's casinos;
-- Launch new Grosvenor rewards programme;
-- Continue development of the local marketing platform to
ensure consistency and breadth of content
available for both Mecca and Grosvenor venues; and
-- A renewed focus on converting Mecca's venues customers to digital.
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.
H1 2018/19 activity:
-- Refurbishment of 3,500 Mecca Max units completed;
-- Investment into new casino gaming machines including new
product in the Victoria and the Park Tower
casinos in London; and
-- Contactless chip and pin payment introduced at the casino's cash desk.
H2 2018/19 priorities:
-- Introduction of Ticket In Ticket Out ('TiTo') for table gaming; and
-- Self-service TiTo cash terminals to be installed across
casinos to allow customers to buy in and cash out
their TiTo tickets.
Financial Review
H1 2018/19 H1 2017/18 Change
(GBPm) (GBPm)
Revenue 374.4 379.6 (1.4)%
------------ ------------ ---------
Less: customer incentives (26.2) (25.4) 3.1%
------------ ------------ ---------
Statutory revenue 348.2 354.2 (1.7)%
------------ ------------ ---------
Operating profit(1) 30.3 41.7 (27.3)%
------------ ------------ ---------
Less: net finance charges(1) (1.4) (1.4) 0%
------------ ------------ ---------
Add: other financial losses(1) 0.2 (0.1)
------------ ------------ ---------
Adjusted profit before taxation(2) 29.1 40.2 (27.6)%
------------ ------------ ---------
Group operating profit before interest
and tax 25.8 34.2 (24.6)%
------------ ------------ ---------
Net financing charge (3.0) (1.4) 114.3%
------------ ------------ ---------
Taxation (4.1) (7.7) (46.8)%
------------ ------------ ---------
Profit after taxation 18.7 25.1 (25.5)%
------------ ------------ ---------
Earnings per share 4.8p 6.4p (25.0)%
------------ ------------ ---------
Adjusted earnings per share(3) 6.1p 8.0p (23.8)%
------------ ------------ ---------
1 Before exceptionals, as per note 2.
2 Adjusted profit before taxation is calculated by adjusting
profit from continuing operations before taxation to exclude
exceptional items, the unwinding of the discount on disposal
provisions and other financial gains and losses.
3 Adjusted EPS is calculated using adjusted profit which
excludes 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.
For the period ended 31 December 2018, statutory revenue
decreased by 1.7% to GBP348.2m.
Operating profit(1) was down by 27.3% principally due to lower
revenues, with adjusted profit before taxation down 27.6%.
The net financing charge before exceptional items is flat in the
period.
Exceptional items
In order to give a full understanding of the Group's performance
and to 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 H1
2018/19 the Group commenced its transformation programme which
resulted in GBP4.5m of exceptional costs in the period. GBP3.8m of
the costs relate to redundancies made across the Group.
Total exceptional items resulted in a GBP1.9m cash outflow in
the period.
Earnings per share
Basic EPS was down 25.0% to 4.8 pence. Adjusted EPS(3) was down
23.8% to 6.1 pence. For further details refer to note 7.
Taxation
The Group's effective corporation tax rate in H1 2018/19 was
17.5% (H1 2017/18: 22.3%) based on a tax charge of GBP5.1m on
adjusted profit before taxation. This is lower than the Group's
anticipated effective tax rate of 20%-22% for the year as a result
of the recognition of a deferred tax credit of GBP0.5m in relation
to profits arising in Malta which are subject to a shareholder
refund when distributed and a number of prior year adjustments
relating to UK and overseas entities as a result of releasing tax
provisions that are no longer considered likely to be required.
Further details on the taxation charge are provided in note 5. On a
statutory unadjusted basis, the Group had an effective tax rate of
18.0% (H1 2017/18: 23.5%), based on a tax charge of GBP4.1m and
total profit before taxation for the period of GBP22.8m.
Cash tax rate
In the period ended 31 December 2018, the Group had an effective
cash tax rate of 15.1% on adjusted profit (H1 2017/18: 15.9%). The
cash tax rate is lower than the effective tax rate mainly as a
result of the use of losses within the Group and the timing of tax
instalment payments.
Cash flow and net cash
As at 31 December 2018, net cash was GBP7.7m, an improvement of
GBP3.7m from the comparable period end. Debt comprised GBP51.0m in
bank loans, GBP5.5m in finance leases and GBP5.8m in overdrafts,
offset by cash at bank and in hand of GBP70.0m. In August 2018, the
term loan facilities were reduced to GBP20.0m, from GBP50.0m, in
line with the agreed amortisation profile. GBP59.0m of revolving
credit facilities ('RCF') were undrawn at the period-end (H1
2017/18: GBP90.0m undrawn).
In January 2019, Rank refinanced its GBP20.0m term loan
facilities to ensure sufficient debt facilities were in place to
cover the deferred consideration payment regarding the acquisition
of YoBingo! and transformation programme initiative costs.
Following the refinancing, the term loan banking facilities now
total GBP50.0m and comprise three bi-lateral facilities. Two of the
three facilities expire in January 2020 with the third in March
2020.
The 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.
GBPm H1 2018/19 H1 2017/18
Cash inflow from operations 60.3 67.3
------------ ------------
Net cash payments in respect of provisions
and exceptional items (4.3) (5.4)
------------ ------------
Cash generated from operations 56.0 61.9
------------ ------------
Capital expenditure (14.1) (17.4)
------------ ------------
Net interest and tax payments (5.1) (7.6)
------------ ------------
Dividends paid (20.7) (20.7)
------------ ------------
Other (including exchange translation) 0.9 0.2
------------ ------------
Cash inflow 17.0 16.4
------------ ------------
Opening net debt (9.3) (12.4)
------------ ------------
Closing net cash 7.7 4.0
------------ ------------
Total capital expenditure of GBP14.1m was spent in the period.
Key capital projects included the completion of the Barracuda
refurbishment in London and the purchase of new gaming machines
currently under trial in our London casinos.
Investment continued in the period into the Grosvenor One
product and a new content management system for the Group's UK
digital brands.
For the full 2018/19 financial year the Group is planning to
invest circa GBP40.0m.
Acquisition of YoBingo!
On 21(st) May 2018, Rank Digital Holdings Limited (a wholly
owned group company) acquired the entire share capital of QSB
Gaming Limited, the owner of YoBingo!, the second largest online
bingo operator in Spain for an estimated total consideration of
EUR52.0m. The results of that business have been incorporated into
the Digital segment.
Further contingent consideration will be paid based on the
EBITDA generated by YoBingo! in the calendar year 2018 and has been
estimated based on recent business performance and expectations for
future growth. Payment is expected in H2 2018/19 and the Group
currently intends to fund this through its current cash and debt
facilities.
Acquisition accounting will be finalised in the Group's 2018/19
report.
Taxation changes
In May 2018, it was announced that the rate of UK Remote Gaming
Duty will be increased to offset reduced tax revenues from the
proposed changes to the maximum stakes of B2 gaming machines. This
change comes into effect from April 2019 and is estimated to result
in an increase in Rank's tax liability by GBP1.7m for FY
2018/19.
IFRS 16 - Lease
IFRS16 'Leases' will replace IAS17 in its entirety and will be
effective for the Group from its 2019/20 accounting year. It will
result in most leases being recognised in the Statement of
Financial Position, with additional fixed assets and liabilities
being recognised. The Group continues to assess the full impact of
IFRS16 and it is not yet possible to reasonably quantify its
financial effects. The effect will be impacted by interest rates in
future years, along with changes to the terms of the Group's
existing leases. The directors believe that the new standard will
have a material impact upon the Group's reported performance with
increases in EBITDA being largely offset by increases in both
depreciation and interest charges, and increases in operating
profit largely offset by increases in interest charges. There is no
current expectation that the group's cashflows will be materially
impacted.
IFRS 9 and IFRS 15
IFRS 9 and IFRS 15 is effective for the Group's current
accounting year, 2018/19. There is no material impact on the
results or net assets from these standards. Please refer to the
accounting policies for further detail.
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 financial review 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 all of its
banking covenants.
Principal risks and uncertainties
The Group's enterprise risk management strategy focuses on the
minimisation of risks for the Group. Key risks are periodically
reviewed by the risk committee, executive and the board, where
appropriate, actions are taken to mitigate these.
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 2018 and include:
-- Regulatory, finance, tax and operating environment risks;
-- Business operational risks, such as volatility of gaming win,
strategic programmes, third party and supply chain and business
continuity; and
-- Information technology risks, such as cyber-security,
disaster recovery and data management.
Greater detail on these risks and uncertainties are set out in
pages 42 to 46 of the Group's 2018 annual report and financial
statements.
Directors' Responsibility Statement
Each of the directors named below confirm that to the best of
his or her knowledge:
-- The financial statements, prepared 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 management 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
Ian Burke
Steven Esom
Tang Hong Cheong
Susan Hooper
Alan Morgan
John O'Reilly
Alex Thursby
Signed on behalf of the board on 30 January 2019
John O'Reilly
Chief Executive
INDEPENT 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 2018 which comprises Consolidated
Income Statement, Consolidated Statement of Comprehensive Income,
Consolidated Statement of Changes in Equity, Consolidated Balance
Sheet, Consolidated Cash Flow Statement and the related explanatory
notes 1 to 12 that have been reviewed. 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 Guidance 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 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 2018 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London, United Kingdom
30 January 2019
Consolidated Income Statement
for the six months ended 31 December 2018
Six months ended 31 December Six months ended 31
2018 December 2017
(unaudited) (unaudited)
------ --------------------------------------- -------------------------------------------
Before Exceptional Before Exceptional
Exceptional items Exceptional items
(note (note
Items 3) Total Items 3) Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------ ------------- ------------- --------- ----------------- ------------- ---------
Continuing
operations
------------------ ------ ------------- ------------- --------- ----------------- ------------- ---------
Revenue before
adjustment
for customer
incentives 374.4 - 374.4 379.6 - 379.6
Customer
incentives (26.2) - (26.2) (25.4) - (25.4)
------------------ ------ ------------- ------------- --------- ----------------- ------------- ---------
Revenue 2 348.2 - 348.2 354.2 - 354.2
Cost of sales (192.3) - (192.3) (191.1) - (191.1)
------------------ ------ ------------- ------------- --------- ----------------- ------------- ---------
Gross profit 155.9 - 155.9 163.1 - 163.1
Other operating
costs (125.6) (4.5) (130.1) (121.4) (7.5) (128.9)
------------------ ------ ------------- ------------- --------- ----------------- ------------- ---------
Operating profit
(loss) 2 30.3 (4.5) 25.8 41.7 (7.5) 34.2
Financing:
- finance costs (1.2) (1.4) (2.6) (1.7) - (1.7)
- finance income - - - 0.2 - 0.2
- other
financial
(losses) gains (0.2) (0.2) (0.4) 0.1 - 0.1
------------------ ------ ------------- ------------- --------- ----------------- ------------- ---------
Total net
financing
charge 4 (1.4) (1.6) (3.0) (1.4) - (1.4)
------------------ ------ ------------- ------------- --------- ----------------- ------------- ---------
Profit (loss)
before
taxation 28.9 (6.1) 22.8 40.3 (7.5) 32.8
Taxation 5 (5.1) 1.0 (4.1) (9.0) 1.3 (7.7)
------------------ ------ ------------- ------------- --------- ----------------- ------------- ---------
Profit (loss)
for
the period 23.8 (5.1) 18.7 31.3 (6.2) 25.1
------------------ ------ ------------- ------------- --------- ----------------- ------------- ---------
Attributable to:
Equity holders
of
the parent 23.8 (5.1) 18.7 31.3 (6.2) 25.1
------------------ ------ ------------- ------------- --------- ----------------- ------------- ---------
Earnings (loss) per share attributable
to equity shareholders
- basic 6.1 (1.3) 4.8 8.0 (1.6) 6.4
- diluted 6.1 (1.3) 4.8 8.0 (1.6) 6.4
------------------ ------ ------------- ------------- --------- ----------------- ------------- ---------
Consolidated Statement of Comprehensive Income
for the six months ended 31 December 2018
Six months ended Six months ended
31 December 31 December
2018 2017
(unaudited) (unaudited)
GBPm GBPm
--------------------------------- ------------------ ------------------
Comprehensive income:
Profit for the period 18.7 25.1
Other comprehensive income:
Items that may be reclassified
to profit or loss:
Exchange adjustments net of
tax 1.2 0.3
---------------------------------
Total comprehensive income for
the period 19.9 25.4
--------------------------------- ------------------ ------------------
Attributable to:
Equity holders of the parent 19.9 25.4
--------------------------------- ------------------ ------------------
Consolidated Statement of Changes in Equity
for the six months ended 31 December 2018
For the six months ended 31 December 2018 (unaudited)
-----------------------------------------------------------------------
Capital Exchange
Share Share redemption translation Retained
capital premium reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------- --------- --------- ------------ ------------- ---------- --------
At 1 July 2018 54.2 98.4 33.4 16.6 193.9 396.5
Comprehensive income:
Profit for the period - - - - 18.7 18.7
Other comprehensive income:
Exchange adjustments
net of tax - - - 1.2 - 1.2
------------------------------- --------- --------- ------------ ------------- ---------- --------
Total comprehensive income
for the period - - - 1.2 18.7 19.9
Transactions with owners:
Dividends paid to equity
holders (note 6) - - - - (20.7) (20.7)
At 31 December 2018 54.2 98.4 33.4 17.8 191.9 395.7
------------------------------- --------- --------- ------------ ------------- ---------- --------
For the six months ended 31 December 2017 (unaudited)
-----------------------------------------------------------------------
Capital Exchange
Share Share redemption translation Retained
capital premium reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------- --------- --------- ------------ ------------- ---------- --------
At 1 July 2017 54.2 98.4 33.4 15.8 188.8 390.6
Comprehensive income:
Profit for the period - - - - 25.1 25.1
Other comprehensive income:
Exchange adjustments
net of tax - - - 0.3 - 0.3
------------------------------- --------- --------- ------------ ------------- ---------- --------
Total comprehensive income
for the period - - - 0.3 25.1 25.4
Transactions with owners:
Dividends paid to equity
holders (note 6) - - - - (20.7) (20.7)
Debit in respect of employee
share schemes including
tax - - - - (1.4) (1.4)
At 31 December 2017 54.2 98.4 33.4 16.1 191.8 393.9
------------------------------- --------- --------- ------------ ------------- ---------- --------
Consolidated Balance Sheet
at 31 December 2018 and 30 June 2018
As at As at
31 December 30 June
2018 2018
(unaudited) (audited)
Note GBPm GBPm
---------------------------------------------- -------- ------------------- -----------
Assets
Non-current assets
Intangible assets 457.2 459.1
Property, plant and equipment 160.8 171.5
Other investment 3.5 3.5
Deferred tax assets 0.4 0.4
Other receivables 4.1 3.7
---------------------------------------------- -------- ------------------- -----------
626.0 638.2
Current assets
Inventories 2.7 2.5
Other receivables 34.2 29.2
Cash and short-term deposits 70.0 50.4
---------------------------------------------- -------- ------------------- -----------
106.9 82.1
Total assets 732.9 720.3
---------------------------------------------- -------- ------------------- -----------
Liabilities
Current liabilities
Trade and other payables (165.0) (153.1)
Income tax payable (10.9) (10.3)
Financial liabilities - loans
and borrowings (58.1) (54.2)
Provisions 8 (10.1) (8.0)
---------------------------------------------- -------- ------------------- -----------
(244.1) (225.6)
Net current liabilities (137.2) (143.5)
---------------------------------------------- -------- ------------------- -----------
Non-current liabilities
Trade and other payables (29.2) (30.6)
Financial liabilities - loans
and borrowings (4.2) (5.5)
Deferred tax liabilities (23.8) (24.4)
Provisions 8 (31.9) (33.6)
Retirement benefit obligations (4.0) (4.1)
---------------------------------------------- -------- ------------------- -----------
(93.1) (98.2)
Total liabilities (337.2) (323.8)
---------------------------------------------- -------- ------------------- -----------
Net assets 395.7 396.5
---------------------------------------------- -------- ------------------- -----------
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 17.8 16.6
Retained earnings 191.9 193.9
---------------------------------------------- -------- ------------------- -----------
Total shareholders' equity 395.7 396.5
---------------------------------------------- -------- ------------------- -----------
Consolidated Cash Flow Statement
for the six months ended 31 December 2018
Six months Six months
ended ended
31 December 31 December
2018 2017
(unaudited) (unaudited)
Note GBPm GBPm
----------------------------------------------- ------ -------------- --------------
Cash flows from operating activities
Cash generated from continuing operations 10 56.0 61.9
Interest received - 0.2
Interest paid (0.7) (1.4)
Tax paid (4.4) (6.4)
Net cash from operating activities 50.9 54.3
----------------------------------------------- ------ -------------- --------------
Cash flows from investing activities
Purchase of intangible assets (3.4) (6.5)
Purchase of property, plant and equipment (10.7) (10.9)
Net cash used in investing activities (14.1) (17.4)
----------------------------------------------- ------ -------------- --------------
Cash flows from financing activities
Dividends paid to equity holders (20.7) (20.7)
Drawdown of revolving credit facilities 31.0 -
Repayment of term loans (30.0) -
Finance lease principal payments (0.7) (0.7)
Net cash used in financing activities (20.4) (21.4)
----------------------------------------------- ------ -------------- --------------
Net increase in cash, cash equivalents and
bank overdrafts 16.4 15.5
Effect of exchange rate changes 0.1 (0.2)
Cash and cash equivalents at start of period 47.7 76.5
----------------------------------------------- ------ -------------- --------------
Cash and cash equivalents at end of period* 64.2 91.8
----------------------------------------------- ------ -------------- --------------
*Cash and cash equivalents at the end of the period includes an overdraft
of GBP5.8m (period ended 31 December 2017: GBP6.6m)
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 TOR, Saint-Cloud Way, Maidenhead, SL6 8BN.
This condensed consolidated interim financial information was
approved for issue on 30 January 2019.
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 2018 were approved by the board of directors on 15
August 2018 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 2018 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 2018, 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, and assuming that trading does not deteriorate
considerably from current levels, the directors believe that the
Group will generate sufficient cash to meet its requirements for at
least 12 months from the date of approval of the interim financial
information and comply with all of its banking covenants.
Accordingly, the adoption of the going concern basis remains
appropriate.
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Board of Directors, as the chief
operating decision-makers, to enable them to make strategic and
operational decisions.
In the current period the internal reporting of operating
segments has been modified following changes in management
responsibilities. As from 1 July 2018;
- UK Digital, Enracha Digital and YoBingo were combined into a
single operating segment which is now known
as Digital,
- Grosvenor Venues now excludes our Belgium casino, and
- Enracha Venues and our Belgium casino were combined into a
single operating segment known as International
Venues.
The Group now reports five segments: Grosvenor Venues, Mecca
Venues, Digital, International Venues and Central Costs. The prior
period comparative information has been restated to assist with
comparability.
Accounting policies
Standards, amendments to and interpretations of existing
standards adopted by the Group
The accounting policies and methods of computation adopted in
the condensed consolidated half-yearly financial information are
consistent with those followed in Group's full financial statements
for the year ended 30 June 2018, except for the adoption of new
standards effective as of 1 January 2018. The Group applies, for
the first time, IFRS 15 - Revenue from Contracts with Customers and
IFRS 9 - Financial Instruments.
IFRS 15 - Revenue from Contracts with Customers
IFRS 15 supersedes IAS 11 Construction Contracts, IAS 18 Revenue
and related Interpretations and it applies to all revenue arising
from contracts with customers, unless those contracts are in the
scope of other standards. The new standard establishes a five-step
model to account for revenue arising from contracts with customers.
Under IFRS 15, revenue is recognised at an amount that reflects the
consideration to which an entity expects to be entitled in exchange
for transferring goods or services to a customer. The standard
requires entities to exercise judgement, taking into consideration
all of the relevant facts and circumstances, when applying each
step of the model to
1 General information, basis of preparation and accounting
policies (continued)
contracts with their customers. The Group adopted IFRS 15 using
the full retrospective method of adoption with no material impact
on the financial statements of the Group.
(a) Gaming Win
The Group's income earned from gaming win does not fall within
the scope of IFRS 15. Income from these online activities is
disclosed as revenue although these are accounted for and meet the
definition of a gain under IFRS 9.
(b) Food Beverage and other
The Group's income earned from food and beverage and other good
sales is recognised when the goods or services are transferred to
the customer and is within the scope of IFRS 15.
IFRS 9 - Financial Instruments
IFRS 9 replaces IAS 39 Financial Instruments: Recognition and
Measurement for annual periods beginning on or after 1 January
2018, bringing together all three aspects of the accounting for
financial instruments: classification and measurement; impairment;
and hedge accounting. The Group has applied IFRS 9 retrospectively
with no material impact on the financial statements of the
Group.
(a) Classification and measurement
The Group's income earned from gaming win falls within the scope
of IFRS 9, the change has not resulted in a material impact on
accounting or presentation of this income. There were no changes in
classification and measurement of other financial assets and
liabilities.
(b) Impairment
The adoption of IFRS 9 has changed the Group's accounting for
impairment losses for financial assets by replacing IAS 39's
incurred loss approach with a forward looking expected credit loss
(ECL). IFRS 9 application did not result in material changes to the
Group's financial statements.
Trade receivables
Trade receivables are initially recognised at fair value and
subsequently measured at amortised cost. The Group has applied the
standard's simplified approach and has calculated the ECLs based on
lifetime of expected credit losses. This change did not result in
material changes to the Group's financial statements. Bad debts are
written off when there is objective evidence that the full amount
may not be collected.
Investments
Under IFRS 9 investments are measured at fair value through
other comprehensive income (FVOCI). The impact of this change is
not material for the current period.
Financial liabilities
The accounting for the Group's financial liabilities remains
largely the same as it was under IAS 39.
There are no other 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.
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.
2 Segment information
Six months ended 31 December 2018 (unaudited)
----------------------------------------------------------------------------------------
Grosvenor Mecca International Central
Venues Venues Digital Venues Costs Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ------------------- --------------- --------- --------
Revenue
before
adjustment
for
customer
incentives 181.4 100.0 70.4 22.6 - 374.4
Customer
incentives (9.3) (3.8) (13.1) - - (26.2)
--------------- -------------- ------------- ------------------- --------------- ---------
Segment
revenue 172.1 96.2 57.3 22.6 - 348.2
--------------- -------------- ------------- ------------------- --------------- --------- --------
Operating
profit
(loss)
before
exceptional
items 19.4 11.4 11.0 4.1 (15.6) 30.3
Exceptional
operating
loss (2.0) (0.1) (0.1) - (2.3) (4.5)
-------------- ------------- ------------------- --------------- --------- --------
Segment
result 17.4 11.3 10.9 4.1 (17.9) 25.8
--------------- -------------- ------------- ------------------- --------------- --------- --------
Finance costs (2.6)
Other
financial
losses (0.4)
--------------- -------------- ------------- ------------------- --------------- --------- --------
Profit before
taxation 22.8
Taxation (4.1)
Profit for
the
period 18.7
--------------- -------------- ------------- ------------------- --------------- --------- --------
Six months ended 31 December 2017 (unaudited)*
----------------------------------------------------------------------------------------
Grosvenor Mecca International Central
Venues Venues Digital Venues Costs Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ------------------- --------------- --------- --------
Revenue
before
adjustment
for
customer
incentives 191.2 104.1 60.8 23.5 - 379.6
Customer
incentives (6.9) (5.0) (13.5) - - (25.4)
--------------- -------------- ------------- ------------------- --------------- ---------
Segment
revenue 184.3 99.1 47.3 23.5 - 354.2
--------------- -------------- ------------- ------------------- --------------- --------- --------
Operating
profit
(loss)
before
exceptional
items 29.3 12.7 10.4 4.3 (15.0) 41.7
Exceptional
operating
(loss)
profit (6.6) (0.5) 0.2 - (0.6) (7.5)
-------------- ------------- ------------------- --------------- --------- --------
Segment
result 22.7 12.2 10.6 4.3 (15.6) 34.2
--------------- -------------- ------------- ------------------- --------------- --------- --------
Finance costs (1.7)
Finance
income 0.2
Other
financial
gains 0.1
--------------- -------------- ------------- ------------------- --------------- --------- --------
Profit before
taxation 32.8
Taxation (7.7)
Profit for
the
period 25.1
--------------- -------------- ------------- ------------------- --------------- --------- --------
* 2017 figures have been restated based on the following changes
to operating segments effective from 1 July 2018;
- UK Digital, Enracha Digital and YoBingo were combined into a
single operating segment which is now known as Digital,
- Grosvenor Venues now excludes our Belgium casino, and
- Enracha Venues and our Belgium casino were combined into a
single operating segment known as International Venues.
2 Segment information (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 ended 31 December 2018 (unaudited)
-------------------------------------------------------------------------------------------------------
Grosvenor Mecca International Central
Venues Venues Digital Venues Costs Total
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ------------ --------- ------------- --------------- --------- -------
Employment and related
costs 64.9 25.4 7.5 9.5 10.1 117.4
Taxes and duties 36.8 16.5 10.6 2.0 0.8 66.7
Direct costs 11.0 10.8 16.0 2.0 - 39.8
Property costs 14.8 13.8 0.3 1.1 0.8 30.8
Marketing 6.6 4.5 5.7 1.1 - 17.9
Depreciation and
amortisation 9.9 5.0 3.8 1.4 1.9 22.0
Other 8.7 8.8 2.4 1.4 2.0 23.3
Total costs before
exceptional items 152.7 84.8 46.3 18.5 15.6 317.9
--------------------------- ------------ --------- ------------- --------------- --------- -------
Cost of sales 192.3
Operating costs 125.6
Total costs before
exceptional items 317.9
--------------------------- ------------ --------- ------------- --------------- --------- -------
Six months ended 31 December 2017 (unaudited)*
-------------------------------------------------------------------------------------------------------
Grosvenor Mecca International Central
Venues Venues Digital Venues Costs Total
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ------------ --------- ------------- --------------- --------- -------
Employment and related
costs 66.5 26.8 5.4 9.7 9.2 117.6
Taxes and duties 39.1 16.9 6.4 2.1 0.8 65.3
Direct costs 9.1 10.4 15.5 2.1 - 37.1
Property costs 15.6 14.2 0.2 1.0 0.8 31.8
Marketing 6.5 4.3 3.8 0.8 - 15.4
Depreciation and
amortisation 10.6 5.9 2.2 1.4 1.5 21.6
Other 7.6 7.9 3.4 2.1 2.7 23.7
Total costs before
exceptional items 155.0 86.4 36.9 19.2 15.0 312.5
--------------------------- ------------ --------- ------------- --------------- --------- -------
Cost of sales 191.1
Operating costs 121.4
Total costs before
exceptional items 312.5
--------------------------- ------------ --------- ------------- --------------- --------- -------
* 2017 figures have been restated based on the following changes
to operating segments effective from 1 July 2018;
- UK Digital, Enracha Digital and YoBingo were combined into a
single operating segment which is now known as Digital,
- Grosvenor Venues now excludes our Belgium casino, and
- Enracha Venues and our Belgium casino were combined into a
single operating segment known as International Venues.
3 Exceptional items
Six months
Six months ended ended
31 December 31 December
2018 2017
(unaudited) (unaudited)
GBPm GBPm
------------------------------------------- ------------------ --------------
Exceptional items
Impairment charges - (4.9)
Group restructuring including relocation
costs - (1.6)
Net loss from property leases - (1.0)
Business transformation costs (4.5) -
------------------------------------------- ------------------ --------------
Exceptional operating costs (4.5) (7.5)
Finance costs (1.4) -
Other financial losses (0.2) -
Taxation 1.0 1.3
Total exceptional items (5.1) (6.2)
------------------------------------------- ------------------ --------------
Business transformation costs
Transformation costs of GBP4.5m in the period include one-off
costs associated with restructuring the business. Costs incurred in
the period primarily consist of severance costs. These costs are
considered exceptional as this is a material initiative which is
one-off in nature.
Finance costs and other financial losses
Exceptional finance cost is non-cash interest from unwinding a
discount applied to contingent consideration payable. Other
financial losses include foreign exchange losses on the same
consideration. Contingent consideration is payable due to the
acquisition of QSB Gaming Limited ('YoBingo') and the majority is
expected to be paid in H2 2018/19.
4 Financing
Six months
Six months ended ended
31 December 31 December
2018 2017
(unaudited) (unaudited)
GBPm GBPm
-------------------------------------------- ------------------ -----------------------------------
Finance costs:
Interest on debt and borrowings (0.7) (1.1)
Amortisation of issue costs on borrowings (0.1) (0.2)
Interest payable on finance leases (0.2) (0.3)
Unwinding of the discount in property
lease provisions (0.2) (0.1)
-------------------------------------------- ------------------ -----------------------------------
Total finance costs (1.2) (1.7)
Finance income:
Interest income on short-term bank
deposits - 0.2
-------------------------------------------- ------------------ -----------------------------------
Finance income - 0.2
Other financial (losses) gains (0.2) 0.1
Total net financing charge before
exceptional items (1.4) (1.4)
-------------------------------------------- ------------------ -----------------------------------
Exceptional finance costs (1.4) -
Exceptional other financial losses (0.2) -
Total net financing charge (3.0) (1.4)
-------------------------------------------- ------------------ -----------------------------------
4 Financing (continued)
A reconciliation of total net financing charge before
exceptional items to adjusted net interest included in adjusted
profit is disclosed below:
Six months
Six months ended ended
31 December 31 December
2018 2017
(unaudited) (unaudited)
GBPm GBPm
------------------------------------------------ ------------------ --------------
Total net financing charge before exceptional
items (1.4) (1.4)
Adjust for:
Other financial losses (gains) 0.2 (0.1)
------------------------------------------------ ------------------ --------------
Adjusted net interest payable (1.2) (1.5)
------------------------------------------------ ------------------ --------------
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 ended Six months ended
31 December
31 December 2018 2017
(unaudited) (unaudited)
GBPm GBPm
-------------------------------------------- ---------------------- ------------------
Current income tax
Current income tax - UK (3.9) (6.6)
Current income tax - overseas (2.8) (2.0)
-------------------------------------------- ---------------------- ------------------
Current income tax charge (6.7) (8.6)
Current income tax on exceptional
items 1.0 0.5
Amounts over (under) provided in previous
period 0.8 (0.4)
Total current income tax charge (4.9) (8.5)
-------------------------------------------- ---------------------- ------------------
Deferred tax
Deferred tax - UK - (0.6)
Deferred tax - overseas 0.8 -
Deferred tax on exceptional items - 0.8
Amounts over provided in previous
period - 0.6
Total deferred tax credit 0.8 0.8
-------------------------------------------- ---------------------- ------------------
Tax charge in the income statement (4.1) (7.7)
-------------------------------------------- ---------------------- ------------------
The debit in respect of employee share schemes included within
the Statement of Changes in Equity includes a deferred tax credit
of GBPnil (six months ended 31 December 2017: GBP0.1m).
Factors affecting future taxation
UK corporation tax is calculated at 19.00% (six months ended 31
December 2017: 19.00%) 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 19.00% for the
year starting 1 April 2017 and a further 1.00% reduction to 18.00%
from 1 April 2020. These changes were substantively enacted in
October 2015.
On 16 March 2016, the Chancellor of the Exchequer announced a
further 1.00% reduction to the previously announced 18.00% main
rate of UK corporation tax to 17.00% from 1 April 2020. This change
was substantively enacted in September 2016.
On 26 July 2017, the Belgian Government announced the reduction
in the corporation tax rate in Belgium from 33.99% to 29.58% for
financial years beginning in 2018 and to 25.00% for financial years
beginning in 2020 and onwards. These changes were substantively
enacted in December 2017.
The rate reductions will reduce the amount of cash tax payments
to be made by the Group.
5 Taxation (continued)
A reconciliation of tax on continuing operations to tax included
in adjusted profit is described below:
Six months
Six months ended ended
31 December 31 December
2018 2017
(unaudited) (unaudited)
GBPm GBPm
----------------------------------------- ------------------ --------------
Tax charge (4.1) (7.7)
Adjust for:
Tax on exceptional items (1.0) (1.3)
-----------------------------------------
Tax charge included in adjusted profit (5.1) (9.0)
----------------------------------------- ------------------ --------------
6 Dividends
Six months Six months
ended ended
31 December 31 December
2018 2017
(unaudited) (unaudited)
GBPm GBPm
---------------------------------------- -------------- --------------
Dividends paid to equity holders
Final dividend for 2017/18 paid on 30
October 2018 - 5.30p per share 20.7 -
Final dividend for 2016/17 paid on 31
October 2017 - 5.30p per share - 20.7
Total 20.7 20.7
---------------------------------------- -------------- --------------
The Board has declared an interim dividend of 2.15p per ordinary
share. The dividend will be paid on 14 March 2019 to shareholders
on the register at 15 February 2019. 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 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 ended
Six months ended 31 December
31 December 2018 2017
(unaudited) (unaudited)
GBPm GBPm
--------------------------------------------- ------------------- ------------------
Profit attributable to equity shareholders 18.7 25.1
Adjust for:
Exceptional items after tax 5.1 6.2
Other financial losses (gains) 0.2 (0.1)
--------------------------------------------- ------------------- ------------------
Adjusted net earnings attributable to
equity shareholders 24.0 31.2
Weighted average number of ordinary
shares in issue 390.7m 390.7m
Adjusted earnings per share (p) - basic 6.1p 8.0p
Adjusted earnings per share (p) - diluted 6.1p 8.0p
--------------------------------------------- ------------------- ------------------
8 Provisions
Indirect
Property lease Disposal Restructuring tax
provisions provisions provisions provisions Total
GBPm GBPm GBPm GBPm GBPm
----------------------------------- ------- ------------ --------------- ------------ -------
At 1 July 2018 36.0 4.0 0.4 1.2 41.6
Unwinding of discount 0.2 - - - 0.2
Exceptional charge to the
income statement - - 2.6 - 2.6
Cash utilised in period (2.1) - (0.3) - (2.4)
At 31 December 2018 (unaudited) 34.1 4.0 2.7 1.2 42.0
----------------------------------- ------- ------------ --------------- ------------ -------
Current 6.0 0.2 2.7 1.2 10.1
Non-current 28.1 3.8 - - 31.9
At 31 December 2018 (unaudited) 34.1 4.0 2.7 1.2 42.0
----------------------------------- ------- ------------ --------------- ------------ -------
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 2018 2017
(unaudited) (unaudited)
GBPm GBPm
------------------------------- ------------------- --------------
Total loans and borrowings (62.3) (94.7)
Adjust for:
Accrued interest 0.1 0.4
Unamortised facility fees (0.1) (0.1)
------------------------------- ------------------- --------------
(62.3) (94.4)
Cash and short-term deposits 70.0 98.4
Net cash 7.7 4.0
------------------------------- ------------------- --------------
10 Cash generated from continuing operations
Six months
Six months ended ended
31 December 31 December
2018 2017
(unaudited) (unaudited)
GBPm GBPm
---------------------------------------------- ------------------ --------------
Operating profit 25.8 34.2
Exceptional items 4.5 7.5
---------------------------------------------- ------------------ --------------
Operating profit before exceptional
items 30.3 41.7
Depreciation and amortisation 22.0 21.6
Increase in inventories (0.2) (0.1)
Increase in other receivables (5.3) (8.3)
Increase in trade and other payables 13.3 13.5
Share-based payments 0.4 0.2
Settlement of share-based payments (0.4) (1.7)
Loss on disposal of property, plant
and equipment - 0.1
Impairment of intangible assets - 0.2
Impairment of property, plant and equipment 0.2 0.1
---------------------------------------------- ------------------ --------------
60.3 67.3
Cash utilisation of provisions (See
note 8) (2.4) (4.7)
Cash payments in respect of exceptional
items (1.9) (0.7)
Cash generated from operations 56.0 61.9
---------------------------------------------- ------------------ --------------
11 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, eight of
these have not expired or been surrendered. These eight leases have
durations of between two months and 94 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.
12 Related party 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 31 December 2018, entities controlled
by Hong Leong owned 56.2% of the Company's shares, including 52.0%
through Guoco and its wholly-owned subsidiary, Rank Assets Limited,
the Company's immediate parent undertaking.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BMMJTMBBJTML
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