REG - Rank Group PLC - Final Results <Origin Href="QuoteRef">RNK.L</Origin> - Part 2
17/08/2017 07:06
- Part 2: For the preceding part double click ID:nRSQ2150Oa
Gaming limits are utilised across all areas of gaming operations to continually manage risk exposure. New systems of table management are being implemented in the casino estate to deliver up to the minute information to aid management to help promptly detect any operational issues which may affect the customer experience or the win margin. The VIP population is closely managed to ensure that strong long-term relationships are developed through dedicated customer handling and specialised incentive schemes. The VIP segment is also monitored by senior management and resources are in place to attract and retain suitable high value players within appropriate limits to mitigate business risk.
a longer period. The important VIP sector of the business in both retail and digital contains a small volume of customers who can themselves create volatility in the
overall margin given the value of their gaming play. Issues with misfeasance or the accurate management of the games can also affect win margins.
Loss of licences or imposition of serious licence conditions Rank's gaming licenses are fundamental to its operation. In the British venues business there is a Stable The loss of licences could have an adverse effect on our business and profitability and prevent us from providing gambling services. All staff undergo relevant training for their roles to ensure that a good understanding of the objectives of compliance and the obligations of their role is maintained. Rank also has a dedicated compliance function that is independent of the operational teams and exists to provide guidance and support to the operational teams delivering compliant operations as well as oversight of all relevant matters relating to ensuring full compliance. In addition, there is a separate and independent internal audit function to provide assessments of the compliance of all operating areas on a regular basis.
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.
Single Account and Wallet Project The project to deliver an integrated wallet and account experience for customers across the digital and retail casinos is a key Stable A failure to deliver key strategic projects impacts on customer loyalty and growth. Rank has a structured and disciplined project delivery methodology to ensure that critical projects are robustly managed to achieve their deliverables. Key projects are also subject to detailed management oversight from a project board as well as having sponsorship from a senior-level stakeholder. A comprehensive project risk approach is also undertaken within the project, managed by experienced project managers.
strategic enabler for the company.
Business Continuity and Disaster Recovery The ongoing operation of the business is dependent on the availability of IT systems, staff and physical club venues. Ensuring Stable Without effective business continuity and disaster recovery plans the business could experience delays in restoring revenue-generating activities or important operational processes such as financial reporting, causing both financial and reputational damage. Business continuity plans are in place for key operations and are reviewed on a regular basis to ensure that they remain in a state of preparedness. Plans for the recovery of critical IT services are likewise in place and reviewed on an ongoing basis.
that serious disruptive events such as fire, flood, pandemic or security incident can be managed to restore operations swiftly and smoothly is of critical importance.
Information Risk
Data Management, Information Technology and Cyber Risk In the course of its commercial business, and to comply with relevant regulatory and legal requirements, Rank Stable A breach of data security could result in significant reputational damage as well as impacting our customer's trust of the Company, affecting their ongoing relationships and consequently the Company's financial performance. Additionally, potential consequences of a breach may include compensation payments to those affected, or significant fines. Any failure of technology systems may leave the company unable to render service to customers impacting on revenue and profitability. Rank has invested considerable resources in its information technology and cyber security capabilities and continues to do so, with a team of specialist security resources guiding a comprehensive data and security strategy. A continual process of risk assessment, identification and remediation is in place alongside robust change management protocols to minimise the risk of interruptions caused by IT changes.
collects and stores a considerable amount of data regarding its customers, staff and suppliers. The robust protection of this data is critical to ensuring that Rank acts
responsibly in protecting these stakeholders from risk as well as complying with relevant data protection regulation, including the forthcoming EU General Data Protection
Regulations due to come into force in May 2018. In order to deliver commercial improvements and new customer experiences there is an ongoing programme of IT changes,
additions and improvements. This continues the Group's significant dependence on strong IT systems and processes, as well as a reliance on a large number of suppliers of
IT services and software. The resilient and secure operation of these IT systems is a key requirement, particularly for the operation of the digital business, and any
vulnerability to malfunctions, service interruptions of cyber-attacks would pose a risk to the Group's ability to serve its customers.
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
Henry Birch
Ian Burke
Steven Esom
Susan Hooper
Clive Jennings
Lord Kilmorey
Owen O'Donnell
Alex Thursby
Signed on behalf of the board on 16 August 2017
Henry Birch Clive Jennings
Chief Executive Finance Director
Group Financial Information
Group Income Statement
For the year ended 30 June 2017
Year ended 30 June 2017 Year ended 30 June 2016
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 755.1 - 755.1 753.0 - 753.0
Customer incentives (47.9) - (47.9) (44.5) - (44.5)
Revenue 707.2 - 707.2 708.5 - 708.5
Cost of sales (391.4) - (391.4) (391.7) - (391.7)
Gross profit 315.8 - 315.8 316.8 - 316.8
Other operating costs (232.3) 1.0 (231.3) (234.4) (0.7) (235.1)
Other operating income - - - - 10.0 10.0
Group operating profit 83.5 1.0 84.5 82.4 9.3 91.7
Financing:
- finance costs (4.4) - (4.4) (5.3) - (5.3)
- finance income 0.2 - 0.2 0.2 - 0.2
- other financial losses (0.6) - (0.6) (1.1) - (1.1)
Total net financing charge (4.8) - (4.8) (6.2) - (6.2)
Profit before taxation 78.7 1.0 79.7 76.2 9.3 85.5
Taxation (15.6) (1.2) (16.8) (14.8) 0.4 (14.4)
Profit (loss) for the year from continuing operations 63.1 (0.2) 62.9 61.4 9.7 71.1
Discontinued operations - - - - 3.6 3.6
Profit (loss) for the year 63.1 (0.2) 62.9 61.4 13.3 74.7
Attributable to:
Equity holders of the parent 63.1 (0.2) 62.9 61.4 13.3 74.7
Earnings (loss) per share attributable to equity shareholders
- basic 16.2p (0.1)p 16.1p 15.7p 3.4p 19.1p
- diluted 16.1p (0.1)p 16.0p 15.7p 3.4p 19.1p
Earnings (loss) per share - continuing operations
- basic 16.2p (0.1)p 16.1p 15.7p 2.5p 18.2p
- diluted 16.1p (0.1)p 16.0p 15.7p 2.5p 18.2p
Earnings per share - discontinued operations
- basic - - - - 0.9p 0.9p
- diluted - - - - 0.9p 0.9p
Group Statement of Comprehensive Income
For the year ended 30 June 2017
Year ended Year ended
30 June 30 June
2017 2016
£m £m
Comprehensive income:
Profit for the year 62.9 74.7
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Exchange adjustments net of tax 2.3 4.5
Items that will not be reclassified to profit or loss:
Actuarial loss on retirement benefits net of tax (0.6) (0.1)
Total comprehensive income for the year 64.6 79.1
Attributable to:
Equity holders of the parent 64.6 79.1
Group Statement of Changes in Equity
For the year ended 30 June 2017
Capital Exchange Retained
Share Share redemption translation earnings
capital premium reserve reserve (losses) Total
£m £m £m £m £m £m
At 1 July 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
Comprehensive income:
Profit for the year - - - - 62.9 62.9
Other comprehensive income:
Exchange adjustments net of tax - - - 2.3 - 2.3
Actuarial loss on retirement benefits net of tax - - - - (0.6) (0.6)
Total comprehensive income for the year - - - 2.3 62.3 64.6
Transactions with owners:
Dividends paid to equity holders (see note 6) - - - - (26.2) (26.2)
Refund of unclaimed dividends (see note 6) - - - - 0.2 0.2
Debit in respect of employee share schemes including tax - - - - (0.6) (0.6)
At 30 June 2017 54.2 98.4 33.4 15.8 188.8 390.6
Group Balance Sheet
At 30 June 2017
As at As at
30 June 30 June
2017 2016
£m £m
Assets
Non-current assets
Intangible assets 411.5 404.3
Property, plant and equipment 187.9 202.0
Deferred tax assets 0.1 1.3
Other receivables 6.5 6.5
606.0 614.1
Current assets
Inventories 2.8 2.9
Other receivables 25.3 36.2
Income tax receivable 0.3 0.4
Cash and short-term deposits 79.0 61.0
107.4 100.5
Total assets 713.4 714.6
Liabilities
Current liabilities
Trade and other payables (128.9) (139.3)
Income tax payable (12.7) (11.0)
Financial liabilities - loans and borrowings (34.6) (14.4)
Provisions (10.0) (9.2)
(186.2) (173.9)
Net current liabilities (78.8) (73.4)
Non-current liabilities
Trade and other payables (31.8) (34.7)
Financial liabilities - loans and borrowings (57.0) (87.8)
Deferred tax liabilities (19.9) (21.0)
Provisions (23.7) (40.9)
Retirement benefit obligations (4.2) (3.7)
(136.6) (188.1)
Total liabilities (322.8) (362.0)
Net assets 390.6 352.6
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 15.8 13.5
Retained earnings 188.8 153.1
Total shareholders' equity 390.6 352.6
Group Statement of Cash Flow
For the year ended 30 June 2017
Year ended Year ended
30 June 30 June
2017 2016
£m £m
Cash flows from operating activities
Cash generated from operations (see note 10) 116.3 110.2
Interest received 0.2 0.1
Interest paid (3.2) (5.0)
Tax paid (14.7) (31.1)
Discontinued operations - 4.1
Net cash from operating activities 98.6 78.3
Cash flows from investing activities
Disposal of subsidiaries (net of cash disposed) - (0.2)
Purchase of intangible assets (13.1) (14.5)
Purchase of property, plant and equipment (29.6) (38.2)
Proceeds from sale of property, plant and equipment - 12.3
Purchase of convertible loan note - (1.1)
Net cash used in investing activities (42.7) (41.7)
Cash flows from financing activities
Dividends paid to equity holders (26.2) (22.7)
Refund of unclaimed dividends 0.2 -
Repayment of term loans (10.0) (130.0)
Drawdown of term loans - 90.0
Finance lease principal payments (1.3) (2.8)
Loan arrangement fees - (1.5)
Net cash used in financing activities (37.3) (67.0)
Net increase (decrease) in cash, cash equivalents and bank overdrafts 18.6 (30.4)
Effect of exchange rate changes - 0.8
Cash and cash equivalents at start of year 57.9 87.5
Cash and cash equivalents at end of year 76.5 57.9
1. General information, basis of preparation and accounting policies
General information
The Company is a public limited company which is listed on the London Stock
Exchange and is incorporated and domiciled in England and Wales under
registration number 03140769. The address of its registered office is TOR,
Saint-Cloud Way, Maidenhead, SL6 8BN.
This condensed consolidated financial information was approved for issue on 16
August 2017.
This condensed consolidated financial information does not constitute
statutory accounts within the meaning of Section 434 of the Companies Act
2006. The statutory accounts for the year ended 30 June 2017 were approved by
the board of directors on 16 August 2017, but have not yet been delivered to
the Registrar of Companies. The report of the auditors on those accounts was
unqualified, did not contain an emphasis of matter paragraph and did not
contain a statement made under Section 498 of the Companies Act 2006. The
statutory accounts for the year ended 30 June 2016 have been delivered to the
Registrar of Companies.
Basis of preparation
The financial information attached has been extracted from the audited
financial statements for the year ended 30 June 2017. The financial
information has been prepared in accordance with IFRS as adopted by the
European Union.
Going concern
In adopting the going concern basis for preparing the financial information
the directors have considered the issues impacting the Group during the period
as detailed in the business review above and have reviewed the Group's
projected compliance with its banking covenants. Based on the Group's cash
flow forecasts and operating budgets, the directors believe that the Group
will generate sufficient cash to meet its liabilities as they fall due for at
least 12 months from the date of approval of the financial statements and
comply with its banking covenants. Accordingly the adoption of the going
concern basis remains appropriate.
Accounting policies
(a) Standards, amendments to and interpretations of existing standards adopted
by the Group
The Group has not been materially impacted by the adoption of any standards.
The Group has not early adopted any other standard, amendment or
interpretation that was issued but is not yet effective.
(b) Standards, amendments to and interpretations of existing standards that
are not yet effective
IFRS 16 'Leases' represents a significant change, notably for lessees, in how
leases are accounted for and reported. The standard will be effective for the
Group for the period beginning 1 July 2019, subject to EU endorsement, and
will replace IAS 17 'Leases'. IFRS 16 will require all lessees to recognise a
right of use asset and lease liability for all leases, except for leases with
a lease term of 12 months or less or the underlying asset is of low value.
The Group expects the standard to apply to the majority of its operating lease
commitments and will have a material impact on the Group's reported results
and balance sheet. The recognition of right of use assets and lease
liabilities will result in an increase in total assets and total liabilities
reported. Within the income statement, the current rent expense will be
replaced with a depreciation and interest expense. The standard will also
impact a number of statutory reporting measures such as operating profit and
cash generated from operations, as well as alternative performance measures
used by the Group.
The full impact of IFRS 16 on the Group is currently being assessed, including
the practical application of the principles of the standard to the Group's
leases, and it is therefore not yet possible to provide a reasonable estimate
of its effect.
IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with
Customers' will be effective for our next financial reporting period. The
Group does not anticipate a material impact on the results or net assets from
these standards or any other standards that are in issue but not yet
effective.
Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The chief operating
decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the management
team that makes strategic and operational decisions.
In the current year, the reporting of operating segments has been modified
following changes in management responsibilities and reporting to the chief
operating decision maker. As from 1 December 2016 Grosvenor Casinos Digital
and Mecca Digital were combined into a single operating segment which is now
known as UK Digital. Enracha Venues and Enracha Digital were also combined
into a single operating segment which is now known as Enracha.
The Group now report five segments Grosvenor Venues, Mecca Venues, UK Digital,
Enracha and Central Costs. The prior year comparative information has been
restated.
2. Segment information - continuing operations
Year ended 30 June 2017
Grosvenor Venues Mecca Venues UK Digital Enracha Central Costs Total
£m £m £m £m £m £m
Continuing operations
Revenue before adjustment for customer incentives 397.2 213.6 111.5 32.8 - 755.1
Customer incentives (14.9) (10.0) (23.0) - - (47.9)
Statutory revenue 382.3 203.6 88.5 32.8 - 707.2
Operating profit (loss) before exceptional items 52.1 29.9 22.7 6.2 (27.4) 83.5
Exceptional (loss) profit (5.2) 11.2 (2.0) 0.6 (3.6) 1.0
Segment result 46.9 41.1 20.7 6.8 (31.0) 84.5
Finance costs (4.4)
Finance income 0.2
Other financial losses (0.6)
Profit before taxation 79.7
Taxation (16.8)
Profit for the year from continuing operations 62.9
Year ended 30 June 2016
Grosvenor Venues Mecca Venues UK Digital Enracha Central Costs Total
£m £m £m £m £m £m
Continuing operations
Revenue before adjustment for customer incentives 408.1 221.5 96.7 26.7 - 753.0
Customer incentives (15.9) (10.6) (18.0) - - (44.5)
Statutory revenue 392.2 210.9 78.7 26.7 - 708.5
Operating profit (loss) before exceptional items 60.9 32.9 13.9 3.6 (28.9) 82.4
Exceptional (loss) profit (1.1) 9.2 - 1.1 0.1 9.3
Segment result 59.8 42.1 13.9 4.7 (28.8) 91.7
Finance costs (5.3)
Finance income 0.2
Other financial losses (1.1)
Profit before taxation 85.5
Taxation (14.4)
Profit for the year from continuing operations 71.1
2016 figures have been restated based on the following changes to operating
segments effective from 1 December 2016. Grosvenor Casinos Digital and Mecca
Digital have been reported as a single operating segment now known as UK
Digital. Enracha Venues and Enracha Digital have been reported as a single
operating segment now known as Enracha.
To increase transparency, the Group has decided 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:
Year ended 30 June 2017
Grosvenor Venues Mecca Venues UKDigital Enracha Central Costs Total
£m £m £m £m £m £m
Employment and related costs 140.2 53.7 9.2 13.8 21.1 238.0
Taxes and duties 82.7 33.5 10.5 1.8 1.8 130.3
Direct costs 14.4 20.4 26.9 3.3 - 65.0
Property costs 30.1 27.3 0.7 1.4 1.3 60.8
Marketing 13.7 8.4 9.1 1.0 0.2 32.4
Depreciation and amortisation 24.5 11.9 5.1 1.5 2.3 45.3
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