REG - Rank Group PLC - Half-year Report <Origin Href="QuoteRef">RNK.L</Origin> - Part 2
01/02/2018 07:06
- Part 2: For the preceding part double click ID:nRSA5584Da
income:
Exchange adjustments including tax - - - 1.0 - 1.0
Total comprehensive income for the period - - - 1.0 28.1 29.1
Transactions with owners:
Dividends paid to equity holders (note 6) - - - - (18.4) (18.4)
Refund of unclaimed dividends (note 6) - - - - 0.2 0.2
Debit in respect of employee share schemes including tax - - - - (1.3) (1.3)
At 31 December 2016 54.2 98.4 33.4 14.5 161.7 362.2
Group Balance Sheet
at 31 December 2017 and 30 June 2017
31 December 30 June
2017 2017
(unaudited)
Note £m £m
Assets
Non-current assets
Intangible assets 413.1 411.5
Property, plant and equipment 175.3 187.9
Deferred tax assets 0.7 0.1
Other receivables 7.0 6.5
596.1 606.0
Current assets
Inventories 2.9 2.8
Other receivables 33.1 25.3
Income tax receivable - 0.3
Cash and short-term deposits 98.4 79.0
134.4 107.4
Total assets 730.5 713.4
Liabilities
Current liabilities
Trade and other payables (142.4) (128.9)
Income tax payable (14.3) (12.7)
Financial liabilities - loans and borrowings (68.4) (34.6)
Provisions 8 (7.4) (10.0)
(232.5) (186.2)
Net current liabilities (98.1) (78.8)
Non-current liabilities
Trade and other payables (30.3) (31.8)
Financial liabilities - loans and borrowings (26.3) (57.0)
Deferred tax liabilities (19.6) (19.9)
Provisions 8 (23.6) (23.7)
Retirement benefit obligations (4.3) (4.2)
(104.1) (136.6)
Total liabilities (336.6) (322.8)
Net assets 393.9 390.6
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 16.1 15.8
Retained earnings 191.8 188.8
Total shareholders' equity 393.9 390.6
Group Cash Flow Statement
for the six months to 31 December 2017
Six months to Six months to
31 December 2017 31 December 2016
(unaudited) (unaudited)
Note £m £m
Cash flows from operating activities
Cash generated from continuing operations 10 61.9 51.8
Interest received 0.2 0.1
Interest paid (1.4) (1.5)
Tax paid (6.4) (5.8)
Net cash from operating activities 54.3 44.6
Cash flows from investing activities
Purchase of intangible assets (6.5) (3.8)
Purchase of property, plant and equipment (10.9) (13.2)
Net cash used in investing activities (17.4) (17.0)
Cash flows from financing activities
Dividends paid to equity holders (20.7) (18.4)
Refund of unclaimed dividends - 0.2
Finance lease principal payments (0.7) (0.7)
Net cash used in financing activities (21.4) (18.9)
Net increase in cash, cash equivalents and bank overdrafts 15.5 8.7
Effect of exchange rate changes (0.2) (0.2)
Cash and cash equivalents at start of period 76.5 57.9
Cash and cash equivalents at end of period* 91.8 66.4
*Cash and cash equivalents at the end of the period includes overdraft of £6.6m (year ended 31 December 2016: £5.1m)
1General 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 31 January 2018.
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 2017 were
approved by the board of directors on 16 August 2017 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 2017 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 2017, 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.
Accounting policies
There have been no new or amended standards or interpretations that became
effective in the period which have had a material impact upon the values or
disclosures in the interim financial information.
Given the fair value of financial instruments is approximate to the carrying
amounts no separate note has been included.
Except as described below, the accounting policies applied are consistent with
those of the financial statements for the 12 month period ended 30 June 2017,
as described in those financial statements.
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total annual earnings.
The Group has not early adopted any standard, interpretation or amendment that
was issued but is not yet effective.
2 Segment information
Six months to 31 December 2017 (unaudited)
GrosvenorVenues MeccaVenues UKDigital Enracha Centralcosts Total
£m £m £m £m £m £m
Group revenue reported in internal information 197.2 104.1 60.6 17.7 - 379.6
Customer incentives (6.9) (5.0) (13.5) - - (25.4)
Segment revenue 190.3 99.1 47.1 17.7 - 354.2
Operating profit (loss) before exceptional items 30.1 12.7 11.4 2.6 (15.1) 41.7
Exceptional operating (loss) profit (6.6) (0.5) 0.2 - (0.6) (7.5)
Segment result 23.5 12.2 11.6 2.6 (15.7) 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
Six months to 31 December 2016 (unaudited)
GrosvenorVenues MeccaVenues UKDigital Enracha Centralcosts Total
£m £m £m £m £m £m
Group revenue reported in internal information 202.0 108.0 52.4 16.2 - 378.6
Customer incentives (6.9) (5.9) (10.5) - - (23.3)
Segment revenue 195.1 102.1 41.9 16.2 - 355.3
Operating profit (loss) before exceptional items 26.1 13.3 7.3 2.9 (13.0) 36.6
Exceptional operating (loss) profit (4.2) 10.5 (1.4) (0.2) (2.9) 1.8
Segment result 21.9 23.8 5.9 2.7 (15.9) 38.4
Finance costs (2.2)
Finance income 0.1
Other financial losses (0.9)
Profit before taxation 35.4
Taxation (7.3)
Profit for the period 28.1
To increase transparency, the Group continues to include additional disclosure
analysing total costs by type and segment. A reconciliation of total costs,
before exceptional items, by type and segment is as follows:
Six months to 31 December 2017 (unaudited)
GrosvenorVenues MeccaVenues UKDigital Enracha Centralcosts Total
£m £m £m £m £m £m
Employment and related costs 68.4 26.8 5.2 7.4 9.1 116.9
Taxes and duties 40.4 16.9 6.2 1.0 0.8 65.3
Direct costs 9.3 10.4 14.9 2.5 - 37.1
Property costs 16.0 14.2 0.2 0.6 0.8 31.8
Marketing 6.6 4.3 3.8 0.7 - 15.4
Depreciation and amortisation 11.3 5.9 2.1 0.8 1.5 21.6
Other 8.2 7.9 3.3 2.1 2.9 24.4
Total costs before exceptional items 160.2 86.4 35.7 15.1 15.1 312.5
Cost of sales 191.1
Operating costs 121.4
Total costs before exceptional items 312.5
Six months to 31 December 2016 (unaudited)*
GrosvenorVenues MeccaVenues UKDigital Enracha Centralcosts Total
£m £m £m £m £m £m
Employment and related costs 71.8 28.0 4.9 7.5 9.5 121.7
Taxes and duties 43.3 17.5 4.6 0.9 0.9 67.2
Direct costs 8.5 10.6 13.0 1.4 - 33.5
Property costs 15.3 13.6 0.4 0.7 0.6 30.6
Marketing 7.2 5.2 6.5 0.4 - 19.3
Depreciation and amortisation 12.7 5.9 2.8 0.8 0.9 23.1
Other 10.2 8.0 2.4 1.6 1.1 23.3
Total costs before exceptional items 169.0 88.8 34.6 13.3 13.0 318.7
Cost of sales 193.0
Operating costs 125.7
Total costs before exceptional items 318.7
* The 2016 comparative has been amended to ensure consistency of cost
classification in both years
3 Exceptional items
Six months to31 December 2017 Six months to31 December 2016
(unaudited) (unaudited)
£m £m
Exceptional items
Closure of venues - (0.3)
Impairment charges (4.9) (4.7)
Impairment reversals - 0.6
Group restructuring including relocation costs (1.6) (3.8)
Net (loss) profit from property leases (1.0) 10.7
Aborted acquisition costs - (0.7)
Exceptional operating (costs) income (7.5) 1.8
Taxation (see note 5) 1.3 (1.0)
Total exceptional items (6.2) 0.8
Impairment charges
The Group has recognised an impairment charge of £4.9m for two venues within
Grosvenor. Performance at these venues has not been in line with expectations
and management do not expect the results to improve in the short term.
Group restructuring including relocation costs
In 2016/17 the Group carried out a detailed review of its entire UK
organisational structure designed to improve customer service and simplify
operations. This resulted in changes to management and team structures at both
club and central levels, the decision to centralise support functions into a
new office in Maidenhead and the merging of separately run brand teams in UK
digital. Current period costs include residual costs from the restructuring
implemented in 2016/17 as well as costs from restructuring the UK corporate
office and the implementation of a single UK retail leadership team to cover
both Mecca and Grosvenor Casinos. The total cost of this restructuring project
was £10.4m, £1.6m of which has been recognised in the current period. The
project is now substantially complete and significant costs are not expected
to be incurred in H2.
Net (loss) profit from property leases
Despite advanced negotiations to sub-let an onerous property within Grosvenor,
the potential tenant decided to not complete the agreement and as a result a
£1.0m onerous lease provision has been recognised for the empty property.
4 Financing
Six months to Six months to
31 December 2017 31 December 2016
(unaudited) (unaudited)
£m £m
Finance costs:
Interest on debt and borrowings (1.1) (1.3)
Amortisation of issue costs on borrowings (0.2) (0.2)
Interest payable on finance leases (0.3) (0.3)
Unwinding of the discount in property lease provisions (0.1) (0.4)
Total finance costs (1.7) (2.2)
Finance income:
Interest income on short term bank deposits 0.2 0.1
Finance income 0.2 0.1
Other financial gains (losses) - including foreign exchange 0.1 (0.9)
Total net financing costs (1.4) (3.0)
Six months to Six months to
31 December 2017 31 December 2016
(unaudited) (unaudited)
£m £m
Total net financing costs (1.4) (3.0)
Adjust for:
Other financial (gains) losses - including foreign exchange (0.1) 0.9
Interest payable included in adjusted profit (1.5) (2.1)
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 to31 December 2017(unaudited) Six months to31 December 2016(unaudited)
£m £m
Current income tax
Current income tax - UK (6.6) (5.7)
Current income tax - overseas (2.0) (1.2)
Current income tax charge (8.6) (6.9)
Current income tax on exceptional items 0.5 (1.6)
Amounts over provided in previous years (0.4) -
Total current income tax charge (8.5) (8.5)
Deferred tax
Deferred tax - UK (0.6) (0.4)
Deferred tax - overseas - (0.1)
Restatement of deferred tax from 18% to 17% - 1.1
Deferred tax on exceptional items 0.8 0.6
Amounts over provided in previous years 0.6 -
Total deferred tax credit 0.8 1.2
Tax charge in the income statement (7.7) (7.3)
The tax effect of items within other comprehensive income was as follows:
Six months to31 December 2017 Six months to31 December 2016
(unaudited) (unaudited)
£m £m
Current tax credit on exchange movements offset in reserves - 0.2
Total tax credit on items within other comprehensive income - 0.2
The credit in respect of employee share schemes included within the Statement
of Changes in Equity includes a deferred tax credit of £0.1m (six months to 31
December 2016: £nil).
Factors affecting future taxation
On 8 July 2015, the Chancellor of the Exchequer announced the reduction in the
main rate of UK corporation tax to 19.0% for the year starting 1 April 2017
and a further 1.0% reduction to 18.0% from 1 April 2020. These changes were
substantively enacted in October 2015.
On 16 March 2016, the Chancellor of the Exchequer announced a further 1.0%
reduction to the previously announced 18.0% main rate of UK corporation tax to
17.0% from 1 April 2020. This change was substantively enacted in September
2016.
The rate reductions will reduce the amount of cash tax payments to be made by
the Group.
A reconciliation of tax on continuing operations to tax included in adjusted
profit is described below:
Six months to31 December 2017 Six months to31 December 2016
(unaudited) (unaudited)
£m £m
Tax charge (7.7) (7.3)
Adjust for:
Tax on exceptional items (1.3) 1.0
Tax on adjusted items and impact of reduction in tax rate - (1.3)
Tax charge included in adjusted profit (9.0) (7.6)
6 Dividends
Six months to31 December 2017 Six months to31 December 2016
(unaudited) (unaudited)
£m £m
Dividends paid to equity holders
Final dividend for 2016/17 paid on 31 October 2017 - 5.30p per share 20.7 -
Final dividend for 2015/16 paid on 20 October 2016 - 4.70p per share - 18.4
Refund on unclaimed dividend (0.2)
Total 20.7 18.2
The Board has declared an interim dividend of 2.15p per ordinary share. The
dividend will be paid on 15 March 2018 to shareholders on the register at 16
February 2018. The financial information does not reflect this dividend.
7 Adjusted earnings per share
Adjusted earnings is calculated by adjusting profit attributable to equity
shareholders to exclude the impact of reductions in tax rate, 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 to31 December 2017 Six months to31 December 2016
(unaudited) (unaudited)
£m £m
Profit attributable to equity shareholders 25.1 28.1
Adjust for:
Exceptional items after tax 6.2 (0.8)
Other financial (gains) losses (0.1) 0.9
Taxation on adjusted items and impact of reduction in tax rate - (1.3)
Adjusted net earnings attributable to equity shareholders 31.2 26.9
Weighted average number of ordinary shares in issue 390.7m 390.7m
Adjusted earnings per share (p) - basic 8.0p 6.9p
Adjusted earnings per share (p) - diluted 8.0p 6.9p
8 Provisions
Property lease Disposal Restructuring Indirect tax
provisions provisions provisions provisions Total
£m £m £m £m £m
At 1 July 2017 24.6 4.2 3.7 1.2 33.7
Unwinding of discount 0.1 - - - 0.1
Charge to the income statement - exceptional 1.0 - 1.1 - 2.1
Release to the income statement - exceptional - - (0.2) - (0.2)
Utilised in period (1.2) - (3.5) - (4.7)
At 31 December 2017 (unaudited) 24.5 4.2 1.1 1.2 31.0
Current 4.7 0.4 1.1 1.2 7.4
Non-current 19.8 3.8 - - 23.6
At 31 December 2017 (unaudited) 24.5 4.2 1.1 1.2 31.0
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:
At31 December 2017 At31 December 2016
(unaudited) (unaudited)
£m £m
Total loans and borrowings (94.7) (104.5)
Less: accrued interest 0.4 0.4
Less: unamortised facility fees (0.1) (0.4)
(94.4) (104.5)
Add: cash and short term deposits 98.4 71.5
Net cash (debt) 4.0 (33.0)
10 Cash generated from continuing operations
Six months to31 December 2017 Six months to31 December 2016
(unaudited) (unaudited)
£m £m
Operating profit 34.2 38.4
Exceptional items 7.5 (1.8)
Operating profit before exceptional items 41.7 36.6
Depreciation and amortisation 21.6 23.1
Increase in inventories (0.1) (0.2)
(Increase) decrease in other receivables (8.3) 7.8
Increase (decrease) in trade and other payables 13.5 (8.4)
Share-based payments expense (credit) 0.2 (1.5)
Settlement of share based payments (1.7) -
Loss on disposal of property, plant and equipment 0.1 0.2
Impairment of intangible assets 0.2 -
Impairment of property, plant and equipment 0.1 0.3
67.3 57.9
Cash payment in respect of provisions (See note 8) (4.7) (4.5)
Cash payments in respect of exceptional items (0.7) (1.6)
Cash generated from operations 61.9 51.8
11 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,
8 of these have not expired or been surrendered. These 8 leases have durations
of between 15 months and 95 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.
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 2017,
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
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