REG - Rank Group PLC - Final Results <Origin Href="QuoteRef">RNK.L</Origin> - Part 2
23/08/2016 10:34
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Stable
free bets subject to remote gaming duty.
Operational risk
Volatility of Gaming WinWin percentages for gambling activities can vary over a short period of time, although they will Gaming win margin directly impacts profitability. Across the business gaming limits are actively utilised to manage the risk exposure of the business at all times. VIP customers are actively managed through dedicated customer relationship teams who work to administer both relationships and reward programmes to manage and encourage loyalty. Specialist resources are in place to provide ongoing proactive and reactive detection of operational issues or suspicious behaviour that may interfere with accurate game results. Stable
stabilise over a longer period. The business is also vulnerable to the potential impact of a small number of customers who can
create volatility from the level of their gaming win. Also of significance to the business is a small highly valuable segment of
VIP customers. Win percentages may also be affected by misfeasance or any other problems with the accurate running of the game.
Loss of licencesRank's gaming licences are fundamental to its operation. In the British venues part of the business there is a The loss of licences could have an adverse effect on our business and profitability and prevent us from providing gambling services. Rank has a dedicated compliance function that is independent of operations and a separate internal audit function that is independent of both operations and the compliance function. Rank maintains a strong and open relationship with the UK Gambling Commission and the other relevant regulatory bodies in all jurisdictions in which it operates. Stable
requirement to hold an operator's licence from the UK Gambling Commission (the body responsible for regulating commercial
gambling in Great Britain) in respect of each of the licensed activities undertaken. Additionally, it is necessary to hold
premises licences from the relevant local authority in which each venue is situated, one for gambling activities and one for the
sale of alcohol. Our UK customer facing transactional websites also require an operator's licence from the UK Gambling
Commission as well as a licence from the Alderney Gambling Control Commission, the body responsible for the regulation of
eGambling in the States of Alderney where our remote gambling operations are based. Our operations in Spain and Belgium are also
subject to licensing requirements in the jurisdictions and local areas in which they operate.
Business continuity and disaster recoveryDue to the venues based nature of much of the business, the Group's significant If business continuity and disaster recovery plans failed to operate successfully the business would experience delays in recovering critical revenue generating activities or operational processes, such as financial reporting, causing both financial and reputational damage. Due to the ongoing and significant amounts of corporate and systems change the Group business continuity plan is the subject of ongoing regular review to ensure that it gives coverage to critical departments and premises. IT continuity and disaster recovery plans are in place and likewise regularly updated, including for key suppliers of technology services and support. Stable
reliance on technology, and the criticality of staff in serving customers and running the business, serious disruptive events
such as building fire, pandemic or serious technology failure may cause an interruption to the ability to operate elements of
the business if business continuity and disaster recovery plans failed to operate successfully.
Information Risk
Information technology and cyber riskThe Group is highly dependent on complex technology and advanced information systems with If our prevention measures for technology attacks should fail our customers' trust may be lost and our reputation may consequently be harmed and customers deterred from using our services which may in turn have a material adverse effect on our financial performance. Failures in service provision could also render the Group unable to serve customers during such service interruptions, again having an adverse effect on revenue and profit. A breach of data security could also have additional potential consequences depending on the nature of the breach, such as compensatory payments to customers or fines. Rank has continued to make significant investments in its technology capability, security and resilience in order to deliver a robust operating environment, both working on its owned environment and in close collaboration with key partners. It is recognised that the business environment demands that investments of such time and resources are ongoing so appropriate structures are in place with specialised teams, such as an information security team, playing a pivotal role in technology strategy. Relevant company policies and procedures are in place to guide all activities with data, such as access control and encryption. These are supervised by the Director of Information Security and his team, and regular proactive security reviews are undertaken. Stable
many interfaces and a significant number of separate suppliers. For commercial, regulatory and legal reasons Rank holds a
considerable amount of information about its customers on these systems. We have a duty to ensure that this data is treated with
sensitivity, confidentiality and security in order not to expose our customers to risk. The pace of business change and
development means that IT changes such as new software coding, systems enhancements and new software application integrations
are undertaken continually and consequently these systems are inherently vulnerable to experiencing malfunctions, failures, or
cyber-attacks such as viruses or hacker intrusion. Comprehensive technology resilience and systems protection and detection
measures are in place but it is difficult to detect all threats and vulnerabilities in order to prevent all service
interruptions and problems.
Directors' Responsibility Statement
Each of the directors named below confirm that to the best of his or her
knowledge:
• The financial statements, prepared in accordance with the financial
statements under International Financial Reporting Standard (IFRs) as adopted
by the European Union, give a true and fair view of the assets, liabilities,
financial position and profit of the Company and the undertakings included in
the consolidation taken as a whole; and
• The strategic report includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings including in the consolidation taken as a whole, together with a
description of the risk and uncertainties that they face.
The directors of The Rank Group Plc are:
Chris Bell
Henry Birch
Ian Burke
Steven Esom
Susan Hooper
Clive Jennings
Lord Kilmorey
Owen O'Donnell
Signed on behalf of the board on 22 August 2016
Henry Birch Clive Jennings
Chief Executive Finance Director
Group Financial Information
Group Income Statement
For the year ended 30 June 2016
Year ended 30 June 2016 Year ended 30 June 2015
Before Exceptional Before Exceptional
exceptional items exceptional items
items (note 3) Total items (note 3) Total
£m £m £m £m £m £m
Continuing operations
Revenue before adjustment for customer incentives 753.0 - 753.0 738.3 - 738.3
Customer incentives (44.5) - (44.5) (37.6) - (37.6)
Revenue 708.5 - 708.5 700.7 - 700.7
Cost of sales (391.7) - (391.7) (376.6) - (376.6)
Gross profit 316.8 - 316.8 324.1 - 324.1
Other operating costs (234.4) (0.7) (235.1) (240.1) 2.1 (238.0)
Other operating Income - 10.0 10.0 - - -
Group operating profit 82.4 9.3 91.7 84.0 2.1 86.1
Financing:
- finance costs (5.3) - (5.3) (10.4) (1.3) (11.7)
- finance income 0.2 - 0.2 0.4 - 0.4
- other financial losses (1.1) - (1.1) (0.3) - (0.3)
Total net financing charge (6.2) - (6.2) (10.3) (1.3) (11.6)
Profit before taxation 76.2 9.3 85.5 73.7 0.8 74.5
Taxation (14.8) 0.4 (14.4) (16.8) 1.3 (15.5)
Profit for the year from continuing operations 61.4 9.7 71.1 56.9 2.1 59.0
Discontinued operations - profit - 3.6 3.6 - 15.8 15.8
Profit for the year 61.4 13.3 74.7 56.9 17.9 74.8
Attributable to:
Equity holders of the parent 61.4 13.3 74.7 56.9 17.9 74.8
Earnings per share attributable to equity shareholders
- basic 15.7p 3.4p 19.1p 14.6p 4.5p 19.1p
- diluted 15.7p 3.4p 19.1p 14.6p 4.5p 19.1p
Earnings per share - continuing operations
- basic 15.7p 2.5p 18.2p 14.6p 0.5p 15.1p
- diluted 15.7p 2.5p 18.2p 14.6p 0.5p 15.1p
Earnings per share - discontinued operations
- basic - 0.9p 0.9p - 4.0p 4.0p
- diluted - 0.9p 0.9p - 4.0p 4.0p
Group Statement of Comprehensive Income
For the year ended 30 June 2016
Year ended Year ended
30 June 30 June
2016 2015
£m £m
Comprehensive income:
Profit for the year 74.7 74.8
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Exchange adjustments net of tax 4.5 (4.7)
Items that will not be reclassified to profit or loss:
Actuarial loss on retirement benefits net of tax (0.1) (0.4)
Total comprehensive income for the year 79.1 69.7
Attributable to:
Equity holders of the parent 79.1 69.7
Group Statement of Changes in Equity
For the year ended 30 June 2016
Capital Exchange Retained
Share Share redemption translation earnings
capital premium reserve reserve (losses) Total
£m £m £m £m £m £m
At 1 July 2014 54.2 98.4 33.4 13.7 42.6 242.3
Comprehensive income:
Profit for the year - - - - 74.8 74.8
Other comprehensive income:
Exchange adjustments net of tax - - - (4.7) - (4.7)
Actuarial loss on retirement benefits net of tax - - - - (0.4) (0.4)
Total comprehensive (expense) income for the year - - - (4.7) 74.4 69.7
Transactions with owners:
Dividends paid to equity holders (see note 6) - - - - (18.6) (18.6)
Credit in respect of employee share schemes including tax - - - - 1.0 1.0
At 30 June 2015 54.2 98.4 33.4 9.0 99.4 294.4
Comprehensive income:
Profit for the year - - - - 74.7 74.7
Other comprehensive income:
Exchange adjustments net of tax - - - 4.5 - 4.5
Actuarial loss on retirement benefits net of tax - - - - (0.1) (0.1)
Total comprehensive income for the year - - - 4.5 74.6 79.1
Transactions with owners:
Dividends paid to equity holders (see note 6) - - - - (22.7) (22.7)
Credit in respect of employee share schemes including tax - - - - 1.8 1.8
At 30 June 2016 54.2 98.4 33.4 13.5 153.1 352.6
Group Balance Sheet
At 30 June 2016
As at As at
30 June 30 June
2016 2015
£m £m
Assets
Non-current assets
Intangible assets 404.3 395.7
Property, plant and equipment 202.0 203.4
Deferred tax assets 1.3 2.2
Other receivables 6.5 5.3
614.1 606.6
Current assets
Inventories 2.9 2.8
Other receivables 36.2 29.3
Income tax receivable 0.4 1.7
Cash and short-term deposits 61.0 89.6
100.5 123.4
Assets held for sale - 0.6
Total assets 714.6 730.6
Liabilities
Current liabilities
Trade and other payables (139.3) (147.0)
Income tax payable (11.0) (28.0)
Financial liabilities - loans and borrowings (14.4) (125.5)
Provisions (9.2) (8.9)
(173.9) (309.4)
Net current liabilities (73.4) (186.0)
Non-current liabilities
Trade and other payables (34.7) (37.6)
Financial liabilities - loans and borrowings (87.8) (17.6)
Deferred tax liabilities (21.0) (23.1)
Provisions (40.9) (44.7)
Retirement benefit obligations (3.7) (3.8)
(188.1) (126.8)
Total liabilities (362.0) (436.2)
Net assets 352.6 294.4
Capital and reserves attributable to the Company's equity shareholders
Share capital 54.2 54.2
Share premium 98.4 98.4
Capital redemption reserve 33.4 33.4
Exchange translation reserve 13.5 9.0
Retained earnings 153.1 99.4
Total shareholders' equity 352.6 294.4
Group Statement of Cash Flow
For the year ended 30 June 2016
Year ended Year ended
30 June 30 June
2016 2015
£m £m
Cash flows from operating activities
Cash generated from operations (see note 10) 110.2 146.6
Interest received 0.1 0.3
Interest paid (5.0) (7.8)
Tax paid (31.1) (2.2)
Discontinued operations 4.1 -
Net cash from operating activities 78.3 136.9
Cash flows from investing activities
Disposal of subsidiaries (net of cash disposed) (0.2) (0.1)
Purchase of intangible assets (14.5) (10.5)
Purchase of property, plant and equipment (38.2) (21.4)
Proceeds from sale of property, plant and equipment 12.3 1.5
Purchase of convertible loan note (1.1) (2.4)
Net cash used in investing activities (41.7) (32.9)
Cash flows from financing activities
Dividends paid to equity holders (22.7) (18.6)
Repayment of term loans (130.0) (20.0)
Drawdown of term loans 90.0 -
Repayment of revolving credit facilities - (20.0)
Repurchase of bonds - (0.4)
Finance lease principal payments (2.8) (3.1)
Loan arrangement fees (1.5) -
Net cash used in financing activities (67.0) (62.1)
Net (decrease) increase in cash, cash equivalents and bank overdrafts (30.4) 41.9
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