REG - Rank Group PLC - Final Results <Origin Href="QuoteRef">RNK.L</Origin> - Part 3
23/08/2016 10:34
- Part 3: For the preceding part double click ID:nRSW8386Hb
Effect of exchange rate changes 0.8 (0.7)
Cash and cash equivalents at start of year 87.5 46.3
Cash and cash equivalents at end of year 57.9 87.5
1. General information, basis of preparation and accounting policies
General information
The Company is a public limited company which is listed on the London Stock
Exchange and is incorporated and domiciled in England and Wales under
registration number 03140769. The address of its registered office is
Statesman House, Stafferton Way, Maidenhead, SL6 1AY.
This condensed consolidated financial information was approved for issue on 22
August 2016.
This condensed consolidated financial information does not constitute
statutory accounts within the meaning of Section 434 of the Companies Act
2006. The statutory accounts for the year ended 30 June 2016 were approved by
the board of directors on 22 August 2016, but have not yet been delivered to
the Registrar of Companies. The report of the auditors on those accounts was
unqualified, did not contain an emphasis of matter paragraph and did not
contain a statement made under Section 498 of the Companies Act 2006. The
statutory accounts for the year ended 30 June 2015 have been delivered to the
Registrar of Companies.
Basis of preparation
The financial information attached has been extracted from the audited
financial statements for the year ended 30 June 2016. The financial
information has been prepared in accordance with IFRS as adopted by the
European Union.
Going concern
In adopting the going concern basis for preparing the financial information
the directors have considered the issues impacting the Group during the period
as detailed in the business review above and have reviewed the Group's
projected compliance with its banking covenants. Based on the Group's cash
flow forecasts and operating budgets, the directors believe that the Group
will generate sufficient cash to meet its liabilities as they fall due for at
least 12 months from the date of approval of the financial statements and
comply with its banking covenants. Accordingly the adoption of the going
concern basis remains appropriate.
Accounting policies
Except as described below, the accounting policies applied are consistent with
those of the annual financial statements for the year ended 30 June 2015, as
described in those financial statements.
The following amendment to an existing standard is mandatory for the first
time for the financial period beginning 1 July 2015:
· IAS 19 (amended) Employee Benefits
The Group has not been materially impacted by the adoption of this amendment.
The Group has not early adopted any other standard, amendment or
interpretation that was issued but is not yet effective.
2. Segment information - continuing operations
Year ended 30 June 2016
Grosvenor Casinos Mecca Enracha Central
Venues Digital Venues Digital Venues Digital costs Total
£m £m £m £m £m £m £m £m
Continuing operations
Revenue before adjustment for customer incentives 408.1 30.5 221.5 66.2 26.7 - - 753.0
Customer incentives (15.9) (4.9) (10.6) (13.1) - - - (44.5)
Statutory revenue 392.2 25.6 210.9 53.1 26.7 - - 708.5
Operating profit (loss) before exceptional items 60.9 5.3 32.9 8.6 3.8 (0.2) (28.9) 82.4
Exceptional (loss) profit (1.1) - 9.2 - 1.1 - 0.1 9.3
Segment result 59.8 5.3 42.1 8.6 4.9 (0.2) (28.8) 91.7
Finance costs (5.3)
Finance income 0.2
Other financial losses (1.1)
Profit before taxation 85.5
Taxation (14.4)
Profit for the year from continuing operations 71.1
Year ended 30 June 2015
Grosvenor Casinos Mecca Enracha Central
Venues Digital Venues Digital Venues Digital costs Total
£m £m £m £m £m £m £m £m
Continuing operations
Revenue before adjustment for customer incentives 401.1 22.3 224.4 65.2 25.3 - - 738.3
Customer incentives (6.7) (5.1) (13.7) (12.1) - - - (37.6)
Statutory revenue 394.4 17.2 210.7 53.1 25.3 - - 700.7
Operating profit (loss) before exceptional items 63.4 3.1 28.9 14.1 3.1 (0.5) (28.1) 84.0
Exceptional profit - - 1.0 - 1.1 - - 2.1
Segment result 63.4 3.1 29.9 14.1 4.2 (0.5) (28.1) 86.1
Finance costs (11.7)
Finance income 0.4
Other financial losses (0.3)
Profit before taxation 74.5
Taxation (15.5)
Profit for the year from continuing operations 59.0
To increase transparency, the Group has decided to include additional
disclosure analysing total costs by type and segment. A reconciliation of
total costs on continuing operations, before exceptional items, by type and
segment is as follows:
Year ended 30 June 2016
Grosvenor Casinos Mecca Enracha Central
Venues Digital Venues Digital Venues Digital costs Total
£m £m £m £m £m £m £m £m
Employment and related costs 139.6 3.8 53.7 6.0 11.5 0.1 18.9 233.6
Taxes and duties 86.0 3.8 35.7 7.8 1.5 - 1.6 136.4
Direct costs 14.5 7.5 21.0 15.1 2.6 - - 60.7
Property costs 29.4 0.2 25.6 0.4 1.7 - 1.1 58.4
Marketing 15.6 2.3 9.9 10.5 1.0 - - 39.3
Depreciation and amortisation 25.0 2.1 12.6 2.8 1.5 - 1.8 45.8
Other 21.2 0.6 19.5 1.9 3.1 0.1 5.5 51.9
Total costs before exceptional items 331.3 20.3 178.0 44.5 22.9 0.2 28.9 626.1
Cost of sales 391.7
Operating costs 234.4
Total costs before exceptional items 626.1
Year ended 30 June 2015
Grosvenor Casinos Mecca Enracha Central
Venues Digital Venues Digital Venues Digital costs Total
£m £m £m £m £m £m £m £m
Employment and related costs 138.9 3.2 54.8 6.7 12.3 0.2 17.0 233.1
Taxes and duties 84.6 1.8 35.3 5.0 1.7 - 1.9 130.3
Direct costs 16.9 4.8 22.6 14.4 2.1 0.2 - 61.0
Property costs 30.0 0.2 27.0 0.3 1.6 - 1.0 60.1
Marketing 14.6 2.2 10.5 9.7 0.9 - - 37.9
Depreciation and amortisation 23.7 1.5 12.7 1.5 1.5 - 1.4 42.3
Other 22.3 0.4 18.9 1.4 2.1 0.1 6.8 52.0
Total costs before exceptional items 331.0 14.1 181.8 39.0 22.2 0.5 28.1 616.7
Cost of sales 376.6
Operating costs 240.1
Total costs before exceptional items 616.7
3. Exceptional items
Year ended Year ended
30 June 30 June
2016 2015
£m £m
Exceptional items relating to continuing operations
Impairment charges (0.9) (1.2)
Impairment reversals 1.4 3.1
Net release (charge) from/to provisions for property leases 1.4 (1.5)
Closure of venues (2.6) 1.7
Exceptional operating cost (0.7) 2.1
Disposal of freehold buildings 10.0 -
Exceptional operating income 10.0 -
Finance costs (see note 4) - (1.3)
Taxation (see note 5) 0.4 1.3
Exceptional items relating to continuing operations 9.7 2.1
Exceptional items relating to discontinued operations
Disposal of subsidiary (0.3) -
Finance costs (see note 4) (0.3) (0.4)
Taxation (see note 5) 4.2 16.2
Exceptional items relating to discontinued operations 3.6 15.8
Total exceptional items 13.3 17.9
Continuing operations - year ended 30 June 2016
Impairment charges
The Group recognised an impairment charge of £0.9m for a venue within
Grosvenor Casinos. Performance at the venue has not been in line with
expectations.
Impairment reversal
The Group reversed a previous impairment charge of £1.4m in Enracha. This
reflects increased performance at a venue attributed to improvements in the
commercial environment.
Net release from provisions for property leases
The Group recognised a net release of £1.4m in relation to provisions for
onerous property leases in the year. This includes a £0.7m and £1.0m gain,
from successful onerous lease surrenders in Mecca and Grosvenor Casinos
respectively, net of a charge from a reduction in the discount rate applied to
existing provisions.
Further movements in the property leases provision are explained under closure
of venue costs below.
Closure of venues
During the year the Group closed, or committed to close, seven venues of which
four were within Mecca and three within Grosvenor Casinos. The charge in the
period of £2.6m reflects additional costs of closure due to redundancy,
dilapidation and onerous property lease costs, at three clubs within Grosvenor
Casinos (£0.8m), one club in Mecca (£1.5m) and one previously closed club
within Enracha (£0.3m).
Disposal of freehold buildings
During the year Mecca sold two freehold buildings for a net profit, after
associated disposal costs, of £10.0m.
Discontinued operations
Disposal of subsidiary
The Group disposed of Rank Insurance Limited for a net cost of £0.3m. The
business provided insurance services to previously discontinued activities and
represents an end of life legacy insurance company. Approximate annual
operating costs from the business were £0.1m.
Taxation and finance cost
£3.9m of income has been recognised in respect of discontinued operations in
overseas jurisdictions. This comprises £4.4m of exceptional tax credit due to
settlement of amounts previously paid across to an overseas tax authority,
£0.3m of finance cost for an associated letter of credit and an additional
£0.2m charge for a separate tax exposure in another jurisdiction.
The exceptional tax credit of £4.4m less £0.3m of associated finance cost in
relation to the letter of credit has been disclosed separately on the cash
flow as cash from discontinued operations.
4. Financing
Year ended Year ended
30 June 30 June
2016 2015
£m £m
Continuing operations:
Finance costs:
Interest on debt and borrowings (3.2) (5.7)
Amortisation of issue costs on borrowings (0.4) (2.5)
Interest payable on finance leases (0.7) (0.9)
Unwinding of discount in property lease provisions (0.9) (1.2)
Unwinding of discount in disposal provisions (0.1) (0.1)
Total finance costs (5.3) (10.4)
Finance income:
Interest income on short-term bank deposits 0.1 0.2
Interest income on loans 0.1 -
Interest income on direct taxation - 0.2
Total finance income 0.2 0.4
Other financial losses (1.1) (0.3)
Total net financing charge for continuing operations before exceptional items (6.2) (10.3)
Exceptional finance costs - (1.3)
Total net financing charge for continuing operations (6.2) (11.6)
Discontinued operations:
Exceptional finance costs (0.3) (0.4)
Total net financing charge for discontinued operations (0.3) (0.4)
Total net financing charge (6.5) (12.0)
Exceptional finance costs recognised in discontinued operations in the year of
£0.3m relate to the cost of a letter of credit held in respect of taxation
balances on disposed entities.
Other financial losses include foreign exchange losses on loans and
borrowings.
A reconciliation of total net financing charge for continuing operations
before exceptional items to adjusted net interest included in adjusted profit
is disclosed below:
Year ended Year ended
30 June 30 June
2016 2015
£m £m
Total net financing charge for continuing operations before exceptional items (6.2) (10.3)
Adjust for :
Unwinding of discount in disposal provisions 0.1 0.1
Other financial losses 1.1 0.3
Adjusted net interest payable (5.0) (9.9)
5. Taxation
Year ended 30 June 2016
Continuing operations Discontinued operations Total
£m £m £m
Current income tax
Current income tax - UK (13.6) - (13.6)
Current income tax - overseas (2.2) - (2.2)
Current income tax on exceptional items 0.1 - 0.1
Amounts under provided in previous period (0.2) - (0.2)
Amounts over provided in previous period on exceptional items 0.3 4.2 4.5
Total current income tax (charge) credit (15.6) 4.2 (11.4)
Deferred tax
Deferred tax - UK (1.1) - (1.1)
Deferred tax - overseas (0.6) - (0.6)
Restatement of deferred tax due to rate change 2.3 - 2.3
Amounts over provided in previous period 0.6 - 0.6
Total deferred tax credit 1.2 - 1.2
Tax (charge) credit in the income statement (14.4) 4.2 (10.2)
Year ended 30 June 2015
Continuing operations Discontinued operations Total
£m £m £m
Current income tax
Current income tax - UK (10.0) - (10.0)
Current income tax - overseas (2.7) - (2.7)
Current income tax on exceptional items 1.1 0.1 1.2
Amounts over provided in previous period 0.7 - 0.7
Amounts over provided in previous period on exceptional items 0.4 16.1 16.5
Total current income tax (charge) credit (10.5) 16.2 5.7
Deferred tax
Deferred tax - UK (3.7) - (3.7)
Deferred tax - overseas (0.1) - (0.1)
Restatement of deferred tax due to rate change 0.2 - 0.2
Deferred tax on exceptional items (0.2) - (0.2)
Amounts under provided in previous period (1.2) - (1.2)
Total deferred tax charge (5.0) - (5.0)
Tax (charge) credit in the income statement (15.5) 16.2 0.7
Tax on exceptional items - continuing operations
The taxation impacts of continuing exceptional items are disclosed below:
Year ended 30 June 2016 Year ended 30 June 2015
Current income tax Deferred tax Total Current income tax Deferred tax Total
£m £m £m £m £m £m
Impairment charges - 0.2 0.2 - 0.1 0.1
Impairment reversals - (0.4) (0.4) - (0.6) (0.6)
Net (release) charge from/to provisions for property leases (0.4) - (0.4) 0.3 - 0.3
Closure of venues 0.5 0.2 0.7 0.5 0.3 0.8
Exceptional finance costs - - - 0.3 - 0.3
Amounts over provided in respect of previous years 0.3 - 0.3 0.4 - 0.4
Tax credit (charge) on exceptional items - continuing operations 0.4 - 0.4 1.5 (0.2) 1.3
Tax on exceptional items - discontinued operations
The taxation impacts of discontinued exceptional items are disclosed below:
Year ended 30 June 2016 Year ended 30 June 2015
Current income tax Deferred tax Total Current income tax Deferred tax Total
£m £m £m £m £m £m
Net credit relating to overseas tax audits 4.2 - 4.2 16.1 - 16.1
Exceptional finance costs - - - 0.1 - 0.1
Tax credit on exceptional items - discontinued operations 4.2 - 4.2 16.2 - 16.2
The £4.2m exceptional tax credit in discontinued operations relating to
overseas tax audits consists of a refund of tax paid of £4.4m following the
successful resolution of a transfer pricing dispute, offset by a £0.2m charge
in relation to a separate audit.
Tax effect of items within other comprehensive income
Year ended Year ended
30 June 30 June
2016 2015
£m £m
Current income tax credit (charge) on exchange movements offset in reserves 0.6 (0.4)
Deferred tax credit on actuarial movement on retirement benefits - 0.1
Total tax credit (charge) on items within other comprehensive income 0.6 (0.3)
The credit in respect of employee share schemes included within the Statement
of Changes in Equity includes a deferred tax credit of £0.1m.
Factors affecting future taxation
UK corporation tax is calculated at 20.00% of the estimated assessable profit
for the period. Taxation for overseas operations is calculated at the local
prevailing rates.
On 8 July 2015, the Chancellor of the Exchequer announced the reduction in the
main rate of UK corporation tax to 19.0% for the year starting 1 April 2017
and a further 1.0% reduction to 18.0% from 1 April 2020. These changes were
substantively enacted in October 2015. The rate reductions will reduce the
amount of cash tax payments to be made by the Group.
On 20 June 2014, the Spanish Government announced the reduction in the
corporation tax rate in Spain from 30% to 28% for financial years beginning in
2015 and to 25% for financial years beginning in 2016 and onwards. These
changes were substantively enacted in November 2014.
6. Dividends
Year ended Year ended
30 June 30 June
2016 2015
£m £m
Dividends paid to equity holders
Final dividend for 2013/14 paid on 22 October 2014 - 3.15p per share - 12.3
Interim dividend for 2014/15 paid on 20 March 2015 - 1.60p per share - 6.3
Final dividend for 2014/15 paid on 21 October 2015 - 4.00p per share 15.6 -
Interim dividend for 2015/16 paid on 22 March 2016 - 1.80p per share 7.1 -
22.7 18.6
A final dividend in respect of the year ended 30 June 2016 of 4.70p per share,
amounting to a total dividend of £18.4m, is to be recommended at the annual
general meeting on 14 October 2016. These financial statements do not reflect
this dividend payable.
7. Adjusted earnings per share
Adjusted earnings is calculated by adjusting profit attributable to equity
shareholders to exclude discontinued operations, exceptional items, other
financial gains or losses, unwinding of the discount in disposal provisions
and the related tax effects. Adjusted earnings is one of the business
performance measures used internally by management to manage the operations of
the business. Management believes that the adjusted earnings measure assists
in providing a view of the underlying performance of the business.
Adjusted net earnings attributable to equity shareholders is derived as
follows:
Year ended Year ended
30 June 30 June
2016 2015
£m £m
Profit attributable to equity shareholders 74.7 74.8
Adjust for:
Discontinued operations (net of taxation) (3.6) (15.8)
Exceptional items after tax on continuing operations (9.7) (2.1)
Other financial losses 1.1 0.3
Unwinding of discount in disposal provisions 0.1 0.1
Taxation on adjusted items and impact of reduction in tax rate (2.6) (0.2)
Adjusted net earnings attributable to equity shareholders (£m) 60.0 57.1
Adjusted earnings per share (p) - basic 15.4p 14.6p
Adjusted earnings per share (p) - diluted 15.4p 14.6p
8. Provisions
Property
lease Disposal Restructuring Indirect tax
provisions provisions provisions provision Total
£m £m £m £m £m
At 1 July 2015 47.6 4.3 0.5 1.2 53.6
Exchange adjustments - 0.3 - - 0.3
Unwinding of discount 0.9 0.1 - - 1.0
Charge to the income statement - exceptional 4.5 0.3 - - 4.8
Release to the income statement - exceptional (3.0) (0.3) (0.1) - (3.4)
Utilised in year (5.5) (0.3) (0.4) - (6.2)
At 30 June 2016 44.5 4.4 - 1.2 50.1
Current 7.2 0.8 - 1.2 9.2
Non-current 37.3 3.6 - - 40.9
Total 44.5 4.4 - 1.2 50.1
Further details of the exceptional charge and release to the income statement
are provided in note 3.
9. Borrowings to net debt reconciliation
Under IFRS, accrued interest and unamortised facility fees are classified as
loans and borrowings. A reconciliation of loans and borrowings disclosed in
the balance sheet to the Group's net debt position is provided below:
As at30 June2016 As at30 June2015
£m £m
Total loans and borrowings (102.2) (143.1)
Less: accrued interest 0.5 0.7
Less: unamortised facility fees (0.5) (0.1)
(102.2) (142.5)
Add: cash and short-term deposits 61.0 89.6
Net debt (41.2) (52.9)
10. Cash generated from operations
Year ended Year ended
30 June 30 June
2016 2015
£m £m
Continuing operations
Operating profit 91.7 86.1
Exceptional items (9.3) (2.1)
Operating profit before exceptional items 82.4 84.0
Depreciation and amortisation 45.8 42.3
Share based payments 1.9 1.1
Loss on disposal of property, plant and equipment 0.5 0.3
Loss on disposal of intangible assets - 0.5
Impairment of property, plant and equipment 0.5 0.5
(Increase) decrease in inventories (0.1) 0.3
(Increase) decrease in other receivables (5.9) 1.8
(Decrease) increase in trade and other payables (8.7) 23.7
116.4 154.5
Cash utilisation of provisions (6.2) (7.7)
Cash payments in respect of exceptional items - (0.2)
Cash generated from continuing operations 110.2 146.6
11. Contingent assets
Discontinued taxation
In the prior year the Group advised that it could receive a tax refund of
between £2.5m and £4.0m in respect of amounts previously paid in relation to a
discontinued operation. A refund of £4.4m was received in the period and has
been disclosed as an exceptional item in note 3.
12. Contingent liabilities
Property leases
Concurrent to the £211m sale and leaseback in 2006, the Group transferred the
rights and obligations but not the legal titles of 44 property leases to a
third party. The Group remains potentially liable in the event of default by
the third party. Should default occur then the Group would have recourse to
two guarantors. It is understood that, of the original 44 leases transferred,
9 of these have not expired or been surrendered. These 9 leases have
durations of between 5 months and 97 years and a current annual rental
obligation (net of sub-let income) of approximately £0.8m.
During 2014, the Group became aware of certain information in respect of a
change in the financial position of the third party and one of the guarantors.
However, the Group has not to date been notified of any default, or intention
to default, in respect of the transferred leases.
Stamp duty
The Group has received from HMRC a determination in respect of the amount of
stamp duty payable on certain transactions undertaken by Gala Casino 1 Limited
(now Grosvenor Casinos (GC) Limited) before its acquisition by the Group on 12
May 2013. The Group estimates the maximum possible additional stamp duty that
could be due if HMRC are successful to be £7.2m plus interest. Under the
terms of the Sale and Purchase Agreement the vast majority of any liability
arising falls upon Gala Coral and the Group has further indemnification in the
event of default by Gala Coral.
13. Related party transactions and ultimate parent undertaking
Guoco Group Limited (Guoco), a company incorporated in Bermuda, and listed on
the Hong Kong stock exchange has a controlling interest in The Rank Group Plc.
The ultimate parent undertaking of Guoco is Hong Leong Company (Malaysia)
Berhad (Hong Leong) which is incorporated in Malaysia. At 30 June 2016,
entities controlled by Hong Leong owned 56.2% of the Company's shares,
including 56.1% through Guoco and its wholly-owned subsidiary, Rank Assets
Limited, the Company's immediate parent undertaking.
This information is provided by RNS
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