REG - Rank Group PLC - Half-year Report
27/01/2022 07:00
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RNS Number : 7753Z Rank Group PLC 27 January 2022
LEI: 213800TXKD6XZWOFTE12
27 January 2022
The Rank Group Plc ('Rank' or the 'Group')
Interim results for the six months ended 31 December 2021
Rank (LSE: RNK) is pleased to announce its interim results for the six months
ended 31 December 2021.
Overview
· The Group returned to profitability in H1 with improving venues performance in
Grosvenor, Mecca and Enracha through Q1 and into Q2
· The UK Government's Plan B measures, the return of social distancing measures
in Scotland and Wales, the reintroduction of capacity and opening hour
restrictions in Spain, together with the resultant increase in consumer
caution in regards to indoor hospitality settings negatively impacted trading
in November and December
· The digital business grew revenues 7% in the half and in January 2022 has
completed the successful migration of meccabingo.com to the RIDE proprietary
trading platform
· Cash and bank facilities ended December at £224.8m, strengthened by the
return to cash generative trading and receipt of the £83.1m VAT repayment,
enabling an acceleration in the Group's Transformation 2.0 programme
Financial highlights
H1 2021/22 H1 2020/21 Change
Financial KPIs Group underlying net gaming revenue (NGR)(1) £333.5m £175.9m 90%
Digital underlying NGR(1) £92.1m £85.9m 7%
Venues underlying NGR(1) £241.4m £90.0m 168%
Underlying operating profit / (loss)(1,2) £24.1m £(41.2)m -
Net cash / (debt) pre IFRS 16 £55.1m £(45.2)m -
Cash and available facilities £224.8m £128.3m 75%
Underlying earnings / (loss) per share(2) 3.0p (9.5)p -
Statutory performance Reported NGR £333.7m £177.6m 88%
Group operating profit / (loss) £103.0m £(52.9)m -
Profit / (loss) after taxation £84.6m £(48.6)m -
Cash generated from / (used in) operations £139.6m £(17.5)m -
Net (debt) £(141.2)m £(268.3)m (47)%
Basic earnings / (loss) per share 18.1p (11.9)p -
Dividend per share 0p 0p -
1. On a like-for-like ('LFL') basis which removes the impact of club openings,
closures, acquired businesses, foreign exchange movements and discontinued
operations.
2. Excludes separately disclosed items.
Financial highlights
· Underlying LFL operating profit for H1 of £24.1m, following a loss of £41.2m
in the same period last year, reflects the venues businesses being open
throughout the half, but also the continued impact of COVID-19 on leisure and
hospitality venues. Compared with the pre-pandemic H1 2019/20, operating
profit was down 59%
· Statutory Group operating profit of £103.0m, up 295%, following the receipt
of the £83.1m VAT repayment
· Venues LFL NGR grew 168% on the COVID-19 impacted prior year but was down 20%
on H1 2019/20. Revenues grew in Q1 but softened in Q2 as pandemic restrictions
were reintroduced on rising case numbers and as consumer caution further
increased with the onset of the Omicron variant
· Digital NGR grew 7% in H1 with the reopening of venues supporting the growth
in revenues from omni-channel customers
· The balance sheet further strengthened through £57.9m cash generated from
trading and £83.1m in VAT receipts. The existing debt covenant waivers
continue until the March 2022 testing date; without further disruption to the
business in the form of curfews or enforced closures, we will return to our
standard debt covenants in June 2022
Operational highlights
· Trading in Grosvenor grew steadily in H1 2021/22 until the rise of COVID-19
case numbers and restrictions were reintroduced. London performance was
initially weaker than the rest of the estate but improved rapidly once most
travel restrictions were removed in October; our London casinos saw a sharp
increase in handle until the onset of the Omicron variant in early December
· Following growth in Q1, visitor volumes and revenues declined in Mecca from
late October as COVID-19 case numbers grew across the UK
· 7% growth in active customers in UK digital supported by a 37% increase in
marketing investment in H1 and growth in omni-channel play with Grosvenor and
Mecca venues open
· Good progress in the development of the RIDE proprietary technology platform
with meccabingo.com successfully migrated in early January and
grosvenorcasino.com expected to migrate in the summer
· The improved cash position of the Group has enabled the acceleration of the
Group's Transformation 2.0 programme focusing on revenue growth in each of the
businesses. A strong pipeline of investments is in train for H2 2021/22
Due to the restrictions imposed by our current bank debt covenant waivers, the
Board has not proposed an interim dividend but expects to restart dividend
payments as soon as circumstances permit.
John O'Reilly, Chief Executive of The Rank Group Plc said:
"Our venues performed well following the reopening in May 2020, with revenues
rising until the second half of Q2 when growing COVID-19 case numbers, the
emergence of the Omicron variant and the resultant return of restrictions on
consumers softened demand. Grosvenor has demonstrated high customer demand in
the absence of COVID-19 restrictions, particularly when the travel
restrictions for tourists coming into the UK were largely removed in October,
resulting in much improved table handle in our London venues. Mecca has been
harder hit, as caution amongst our older customer cohort has impacted visit
numbers, particularly with the rising Omicron case numbers in the run up to
Christmas.
"Our digital business performed strongly in the half and is now much better
positioned to continue to deliver on our digital ambitions. The successful
migration of meccabingo.com earlier this month is the latest significant
milestone in the shift to our in-house technology platform. We expect to
complete the migration of Grosvenor in the summer which will free up
considerable development capability to enable much greater agility and speed
in the delivery of products, services and enhanced digital customer
experiences, as well as delivering valuable cost synergies. At this interim
period, I am pleased with the return of stronger customer numbers and revenue
growth across our digital brands.
"Whilst the trading environment continues to be challenging and cost headwinds
are applying additional pressure on the hospitality sector, we have proven
that with no restrictions, our trading rebounds quickly. Rank is well
positioned to regain the robust revenue and profit growth momentum we had
created before the pandemic struck. We have strengthened the balance sheet
and, with the return to profitability and cash generation, we have been able
to accelerate our transformation programme to drive faster revenue growth as
restrictions are lifted. There remains some uncertainty as to how COVID-19
will impact our businesses over the coming months, but we are accelerating our
transformation investments and are competitively very well placed to benefit
as consumers emerge from the pandemic.
"We are looking forward to the publication of the UK Government's gambling
review white paper, expected in the coming months. Land-based casinos and
bingo clubs are in need of long overdue modernisation and the legislative
review will hopefully enable us to deliver a broader and more compelling
proposition to our customers.
"I am hugely grateful to colleagues right across the Group for their
commitment to their customers and to their local communities during the
pandemic restrictions and for the progress being made in the ongoing
transformation of Rank."
Current trading and outlook
The current COVID-19 restrictions have resulted in soft trading across our
venues businesses in the first three weeks of January. The digital business is
trading in line with expectations and meccabingo.com has already returned to
pre-migration revenue levels.
We are well positioned to regain the strong growth momentum we had previously
built up as we now come out of the pandemic. With most UK COVID-19
restrictions now removed, we expect trading to recover quickly across the
Grosvenor estate, particularly when inbound tourism picks up. For the Mecca
venues business we expect a slower build as consumer confidence gradually
recovers.
With the expectation of no further material restrictions and with trading
therefore improving across our venues businesses in the second half of the
year, management expects underlying EBIT for the year ending 30 June 2022 to
be within a range of £55m to £65m.
Definition of terms:
· Net gaming revenue ('NGR') is revenue less customer incentives;
· Underlying measures exclude the impact of amortisation of acquired
intangibles; profit or loss on disposal of businesses; acquisition and
disposal costs including changes to deferred or contingent consideration;
impairment charges; reversal of impairment charges; restructuring costs as
part of an announced programme; retranslation and remeasurement of foreign
currency contingent consideration; discontinued operations, significant
material proceeds from tax appeals and the tax impact of these, should they
occur in the period. Collectively these items are referred to as separately
disclosed items ('SDIs');
· EBIT is operating profit before SDIs;
· Underlying earnings per share is calculated by adjusting profit attributable
to equity shareholders to exclude SDIs;
· 'H1 2021/22' refers to the six-month period to 31 December 2021 and 'H1
2020/21' refers to the six month period to 31 December 2020;
· Like-for-like ('LFL') measures have been disclosed in this report to show the
impact of club openings, closures, acquired businesses, foreign exchange
movements and discontinued operations;
· Prior year LFL measures are amended to show an appropriate comparative for the
impact of club openings, disposals, closures and acquired businesses;
· The Group results make reference to 'underlying' 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 SDIs impair visibility of the underlying performance of the Group's
business because these items are often material, non-recurring and do not
relate to the underlying trading performance. Accordingly, these are
excluded from our non-GAAP measurement of revenue, EBITDA, operating profit,
profit before tax and underlying EPS. Underlying measures are the same as
those used for internal reports; and
· Venues includes Grosvenor venues, Mecca venues and Enracha venues.
Enquiries
The Rank Group Plc
Sarah Powell, director of investor relations and communications (investor Tel: 01628 504 303
enquiries)
David Williams, director of public affairs (media enquiries) Tel: 01628 504 295
FTI Consulting LLP
Ed Bridges Tel: 020 3727 1067
Alex Beagley Tel: 020 3727 1045
Photographs available from www.rank.com (http://www.rank.com/)
Webinar
There will be a virtual meeting for sell-side analysts and investors at 9:30am
GMT today, the details of which can be obtained from FTI Consulting LLP by
emailing them at rank.sc@fticonsulting.com (mailto:rank.sc@fticonsulting.com)
.
A replay of the webcast 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.
Business review
The COVID-19 pandemic has continued to impact the Group's performance during
the first half of 2021/22. Nevertheless, both the Grosvenor and Enracha venues
businesses have performed strongly, providing evidence that the end of the
pandemic will see a strong recovery in revenue and profitability.
The Mecca venues business has been more severely impacted by the autumn's rise
in COVID-19 case numbers, but venues-based bingo remains an attractive social
activity and we are focussed on investing in value for bingo customers as
consumers return to indoor hospitality.
The UK facing digital business returned to growth in the first half, strongly
supported by omni-channel customer revenues, and, in early January 2022, we
have successfully migrated the meccabingo.com business onto the proprietary
technology platform acquired in the Stride acquisition. This is a very
significant milestone for our UK digital business, Rank Interactive.
Similarly, in our Spanish facing digital business, we have migrated the
enracha.es site onto the Yo Bingo platform and are now well advanced in terms
of launching Yo Sports in Spain and introducing the Yo brand to the Portuguese
market.
Our balance sheet, which inevitably came under considerable pressure during
the lengthy periods of lockdown over the past two years, is back into a strong
position with the return to profitable cash generative trading and the receipt
of £83.1m following the successful conclusion of a longstanding VAT refund
claim. The Group has numerous opportunities for organic growth investments and
the strengthened balance sheet has enabled the acceleration of our
Transformation 2.0 programme, with some key investments now again being made
in products, properties and systems to improve the quality of our customer
proposition. We have a strong capital investment programme in train during the
second half of the year.
We continue to fully engage with the UK Government as it considers the first
major review of gambling legislation since the 2005 Gambling Act. The majority
of the UK's casinos are regulated under legislation which dates back over 50
years and the current review is the opportunity for much needed modernisation
of both land-based casino and bingo regulations in the UK. The Government has
announced that it expects to publish a white paper outlining its proposals in
the coming months.
Business performance
Year-on-year comparisons are distorted by significant periods of closure,
curfews and regional restrictions in H1 2020/21 and the absence of
restrictions in H1 2019/20. At a Group level, LFL NGR was up 90% in H1 against
the prior year at £333.5m. The largest growth was in Grosvenor venues which
were subject to the most severe restrictions in H1 2020/21. In comparison to
H1 2019/20, LFL NGR was down 17%. This principally reflects the continued
restrictions across the venues businesses so far this year.
Underlying LFL operating profit of £24.1m compares with a loss of £41.2m in
H1 last year and a profit of £59.8m in H1 2019/20.
£m NGR
H1 2021/22 H1 2020/21 Change H1 2019/20(1) Change
Digital 92.1 85.9 7% 99.7(2) (8)%
Grosvenor venues 161.6 43.1 275% 198.1 (18)%
Mecca venues 65.7 38.4 71% 86.3 (24)%
Enracha venues 14.1 8.5 66% 18.0 (22)%
Underlying LFL(3) 333.5 175.9 90% 402.1(2) (18)%
Impact of venues closures and FX(4) 0.2 1.7 6.4
Underlying 333.7 177.6 88% 408.5(2) (19)%
Operating profit
H1 2021/22 H1 2020/21 Change H1 2019/20 Change
Digital 3.7 1.3 185% 12.9(2) (71)%
Grosvenor venues 34.9 (20.9) 267% 48.1 (27)%
Mecca venues (1.3) (4.8) 73% 13.8 (109)%
Enracha venues 2.7 (0.6) 550% 4.2 (36)%
Central costs (15.9) (16.2) 2% (19.2) 17%
Underlying LFL(3) 24.1 (41.2) 158% 59.8(2) (60)%
Impact of venues closures and FX(4) (0.4) (0.6) -
Underlying 23.7 (41.8) 157% 59.8(2) (60)%
1. H1 2019/20 trading represents performance before the impact of
COVID-19.
2. Digital performance for H1 2019/20 includes pre acquisition
performance of Stride.
3. On a like-for-like ('LFL') basis which removes the impact of club
closures, foreign exchange movements and discontinued operations.
4. A full analysis of these adjustments can be found in the
Alternative Performance Measures ('APM') section.
Grosvenor venues
Key financial performance indicators
£m H1 2021/22 H1 2020/21 Change H1 2019/20(5) Change
LFL NGR 161.6 43.1 275% 198.1 (18)%
London 54.0 14.5 272% 80.3 (33)%
Rest of UK 107.6 28.6 276% 117.8 (9)%
Underlying LFL operating profit / (loss)(6) 34.9 (20.9) 267% 48.1 (27)%
Total NGR 161.6 43.1 275% 198.1 (18)%
Total underlying operating (loss) / profit(6) 34.7 (21.2) 264% 48.1 (28)%
Total operating profit / (loss) 72.8 (22.0) 431% 48.1 51%
5. H1 2019/20 trading represents performance before the impact of
COVID-19.
6. Before the impact of separately disclosed items.
The strength of the Grosvenor venues business is reflected in both the rapid
return of revenues when our venues were open without material restrictions and
the return of strong profitability, reflecting the improvements in operating
leverage delivered by the early phase transformation initiatives. A 27%
decline in LFL underlying operating profit versus pre-pandemic H1 2019/20 of
£48.1m is a positive performance when taking into account the continued
impact of COVID-19 restrictions in the half and £2.5m of additional energy
costs.
All of Grosvenor's 52 venues were operational throughout H1 2021/22 but with
social distancing measures for much of the time and face masks and table
service compulsory under the Government's Plan B measures introduced in
December. Moreover, inbound travel restrictions severely impacted the
performance of Grosvenor's London venues until they eased in October. The
Omicron variant significantly impacted trade across the estate in the run up
to, and during, the Christmas and New Year holiday period.
Grosvenor's LFL NGR was up 275% compared to the same period in the prior year,
where Grosvenor's venues were either closed or operating under curfew for 81%
of the total available days, but was down 18% compared with its pre-COVID-19
performance in H1 2019/20.
NGR performance across the London venues was relatively weak in the first
quarter, down 33% against 2019/20, with inbound travel restrictions and the
slow return of office workers heavily impacting the capital's night-time
economy. With the removal of most travel restrictions in October, Grosvenor's
London venues quickly rebounded with NGR performance just 13% behind 2019 in
November, before slowing again in December as Omicron hit the capital
particularly hard.
Across the rest of the UK, Grosvenor made a steady recovery in Q1 and into
October but softened in November as case numbers grew and consumer caution
increased.
Nevertheless, with pandemic restrictions being eased across the UK in the
early part of H2, the evidence from H1 suggests a strong recovery for the
Grosvenor business.
Transformation initiatives in H1 have focussed strongly on product and system
improvements across the Grosvenor estate. Two new electronic roulette games
were launched in the half; Reel King Roulette, and Lucky Lady's Charm which
was successfully trialled for roll out in H2. Further investment has been made
in updating the estate of electronic roulette terminals with 156 new machines
deployed. The first phase of the rollout of a new table management system
which supports teams in scheduling table opening and minimum bets has been
successfully completed with a further investment planned for H2. Additional
investment in new roulette wheels in the half, alongside table management
improvements delivered a strong increase in the table margin during the
period. Investment has also continued in updating the gaming machine estate
with additional rollout of IGT Curve terminals alongside a further rollout of
flexi-link jackpots. Further investments in the second half of the year
include the rollout of Reel King Roulette on live tables and the trial of a
table roulette progressive jackpot, a first for the UK market. Also in the
pipeline is a further investment in replacement roulette wheels and electronic
roulette terminals.
Following the successful rollout of ID scanning technology across the
Grosvenor estate prior to reopening in May 2021, the team have been focussed
on improvements to the risk management model to identify and interact
appropriately with customers who show possible signs of at-risk play. The
model was rolled out across the Grosvenor business in July 2021 with further
work ongoing to hone its effectiveness and to better support our venue teams
in protecting their customers. ID scanning on entry has also led to new
omni-channel journeys being introduced for customers new to Grosvenor,
introduced in the first half, and for existing single channel customers which
will roll out in the second half of the year.
The Grosvenor business is piloting a new demand-led rostering system which,
alongside the new table management system, should further optimise the
operating model to be better meet customer demand. Grosvenor has launched a
new programme of Gaming Academies through which, in H1, just over 250
colleagues have enjoyed an extensive six-week training programme before
graduating as qualified dealers. The programme continues through H2 and has
now been extended to attract external as well as internal applicants.
The Huddersfield casino was refurbished with a significantly improved customer
journey and facilities and has performed strongly since completion. An
additional licence acquired in Nottingham saw a small refurbishment deliver an
additional 20 gaming machines; an investment which is also performing
strongly. The investment plan steps up considerably from the start of the
second half with refurbishment works commencing in three casinos in January, a
further two in February and a further two in April. A further four casinos
have plans being prepared for works to commence before the end of the second
half.
Mecca venues
£m H1 2021/22 H1 2020/21 Change H1 2019/20(7) Change
LFL NGR 65.7 38.4 71% 86.3 (24)%
Underlying LFL operating (loss) / profit(8) (1.3) (4.8) 73% 13.8 (109)%
Total NGR 65.9 39.0 69% 91.9 (28)%
Total underlying operating (loss) / profit(8) (1.5) (5.3) 72% 13.7 (111)%
Total operating profit / (loss) 43.6 (6.1) 815% 15.5 181%
7. H1 2019/20 trading represents performance before the impact of
COVID-19.
8. Before the impact of separately disclosed items.
The effect of the pandemic on the consumer's willingness to attend indoor
hospitality has had a more severe impact on Mecca given the importance of an
older cohort of customers in Mecca's visit numbers. Older customers were
slower to return following the reopening of Mecca's venues in May and were
quicker to stop visiting when case numbers across the UK began to rise again
in Q2. Consequently, Mecca NGR was down 22% in Q1 and down 26% in Q2 against
the pre-COVID 19 impacted 2019/20; a reduction of 24% for the half. An
underlying operating loss of £1.5m in the half, reflecting both the fall in
revenue and a £3.3m increase in energy costs, compares with a £13.7m profit
in H1 2019/20 and a £5.3m loss in H1 2021/22.
Compared to the same period in the prior year when Mecca's venues were closed
for 41% of the total available days, LFL revenues were up 71%.
Spend per visit was up 12% compared to the same period in H1 2019/20, with
visits down 32%. The renewal of 20% of the B3 and C gaming machine estate
contributed to machine revenues falling just 9% versus H1 2019/20.
The focus for the Mecca business, as pandemic fears ease and restrictions on
consumers are removed, is to re-grow visitor volumes. Bingo remains an
attractive proposition for UK consumers with over 30% of adult women saying
they would consider playing bingo in a local bingo club. The transformation
workstream is centred on investing in value for Mecca's customers as the
country emerges from pandemic restrictions. This programme will give
exceptional value to customers on the mainstage bingo game in the shape of
lower prices and more and improved prize guarantees.
Aligned to additional value is a programme of trial investments in Mecca's
facilities which will roll out in the second half of the financial year. In
March, a new trial venue will open in Luton. Mecca Luton has been designed to
attract and drive frequency of an under-represented cohort of younger, more
digital savvy players whilst not alienating our more traditional customer
base. The venue design is more contemporary and relevant, using big screen
technology, a mix of quiet zones and more social environments, an always-on
bingo schedule, a very different food and beverage offering and a strong focus
on entertainment, with facilities which will accommodate large events and
higher energy evenings. Elsewhere across the Mecca estate the business will be
trialling a programme of smaller investments to make the external appearance
of our venues more contemporary. The aim is to successfully redefine the bingo
proposition and to help inform future direction for investment across the
Mecca estate.
Bingo venues continue to provide an important social amenity and, with the
emergence from the pandemic, the Mecca team has a clear focus on returning
their venues to growth and profitability. Customer NPS scores across the
estate continue to improve and community activity such as the recent 'Everyone
Deserves a Christmas' campaign, which saw the Mecca team deliver over 4,000
hampers to families in need, reinforce the effort to revitalise venue-based
bingo across the UK.
Good progress has been made in the half in developing the omni-channel
experience for Mecca customers. A joint liquidity game with Mecca's online
customers, Mecca Fortune, has proved a successful addition to the evening
venue schedule and will be further developed in the second half. Progress in
the rollout of Mecca's programme of entertainment events linked to bingo has
slowed with the growth in COVID-19 case numbers and restrictions on indoor
hospitality venues but is primed to accelerate once pandemic fears ease.
Enracha venues
£m H1 2021/22 H1 2020/21 Change H1 2019/20(9) Change
LFL NGR 14.1 8.5 66% 18.0 (22)%
Underlying LFL operating profit / (loss)(10) 2.7 (0.6) 550% 4.2 (36)%
Total NGR 14.1 9.0 57% 18.6 (24)%
Total underlying operating profit / (loss)(10) 2.7 (0.6) 550% 4.2 (36)%
Total operating profit / (loss) 1.5 (0.6) 350% 4.2 (64)%
9. H1 2019/20 trading represents performance before the impact of
COVID-19.
10. Before the impact of separately disclosed items.
Enracha venues in Catalonia, Madrid and Andalusia, remained open throughout
the first half, however opening hours and capacity restrictions in force
during Q1 were lifted at the start Q2 but reinstated in Catalonia in
December. The need for COVID-19 passports to gain entry into venues selling
food and beverage also impacted our venues in Catalonia and Andalusia from
early December.
Visitor numbers were down 32% compared with H1 2019/20 with LFL NGR down 22%.
The sharp increase in spend per visit, up 16%, reflects the electronic games
investments made within the transformation programme which has seen machine
revenues being maintained at H1 2019/20 levels despite the sharp drop in
visitor numbers due to the pandemic.
Enracha's LFL NGR was up 66% compared to the same period in the prior year
where Enracha's venues were subject to enforced closures and, when open,
occupancy and opening hour restrictions.
Operating profit of £2.7m was much improved on last year's first half loss of
£0.6m but was 36% down on the £4.2m operating profit achieved in H1 2019/20.
The key transformation initiative in the half has been the gradual rollout of
a new gaming machine management system which will provide enhanced performance
metrics on customer play. Our venue in Gorbea, a suburb of Madrid, has
permanently closed following damage to the property caused by last winter's
Storm Filomena. As many colleagues as possible have been redeployed across the
Enracha estate but a provision of £1.2m has been made for redundancy costs
associated with the closure. The recently opened second Enracha venue in
Girona is performing ahead of expectations.
Digital
Key financial performance indicators
£m H1 2021/22 H1 2020/21 Change
LFL NGR 92.1 85.9 7%
Mecca 34.9 33.8 3%
Grosvenor 25.8 21.9 18%
Enracha 0.4 0.5 (20)%
Yo 10.0 9.2 9%
Stride 21.0 20.5 2%
Underlying LFL operating profit(4) 3.7 1.3 185%
Total NGR 92.1 86.5 6%
Mecca 34.9 33.8 3%
Grosvenor 25.8 21.9 18%
Enracha 0.4 0.6 (33)%
Yo 10.0 9.7 3%
Stride 21.0 20.5 2%
Total underlying operating profit(4) 3.7 1.5 147%
Total operating (loss) (3.5) (5.8) 40%
4 Before the impact of separately disclosed items.
LFL Digital NGR grew by 7% in the half with a particularly strong 18% growth
in the Grosvenor online business which benefitted from the reopening of venues
and the return of much stronger revenues from omni-channel customers. Around
70% of consumers who visit casino venues in the UK also play online and the
ability to provide customers with a single account and the ability to move
seamlessly across channels to make bookings, accept and redeem promotions and
to play casino games is a key competitive strength for Grosvenor and a focus
area for the transformation of our digital business. The development of
Grosvenor's omni-channel capability progressed further in the half with the
successful launch of TheVic.com, a standalone site for customers of the
Victoria Casino on London's Edgeware Road.
Mecca digital grew revenues by 3%, its growth impacted by the preparation for
the migration of the business onto the RIDE proprietary platform which was
successfully completed at the start of the second half (January 2022). This is
a major milestone for the development of Rank's digital business, remaining
key to driving digital revenue growth in the UK and internationally, and
follows two years of extensive development to the technology platform acquired
through the acquisition of Stride Gaming plc. Rank's UK digital business, Rank
Interactive, now has its own technology platform with which to drive a strong
programme of product, service and customer journey improvements and
innovations. This will start immediately for the Mecca online brand whilst
development continues in preparation for the migration of the Grosvenor online
business in the summer.
We remain on track to deliver our projected annual cost synergies of £15m
following the migrations, with £10.1m forecasted to be achieved in FY 2021/22
and the remaining £4.9m to be delivered following completion of the Grosvenor
migration.
The Stride brands operating on the RIDE platform performed much more strongly
in the first half with NGR growing 34% but this was largely offset by a
decline of 16% in NGR from the non-proprietary brands operating on third party
platforms which reflected a catching up in affordability restrictions being
introduced by other operators.
Significant improvements to our systems and data analytics have been made to
provide ever increasing levels of customer protection. Amongst the key first
half initiatives have been enhanced affordability journeys for customers to
improve response rates following requests for evidence supporting expenditure
levels, further enhancements to our 24-hour customer monitoring system,
Hawkeye, to identify higher risk play following new customer registration and
detailed analysis work for the next phase of development across all of our
risk models. The migration to the RIDE platform further improves our risk
management capability and the service levels we can provide to our customers
in this respect.
Further significant improvements have been made to the Rank Interactive
operating model in the half with a further build out of technical development
capability in Cape Town, additional growth of our Mauritius operations and
several key appointments across technology and commercial functions. The
business is well set to grow as the migration to the RIDE platform completes.
Yo performed well in the half, with particularly strong growth from the
YoCasino offering which was launched in December 2019. Our more established
YoBingo brand saw NGR growth slow as it continued to feel the effects of the
regulatory changes bought in May 2021 preventing any level of incentivisation
to prospective or recently acquired customers. During the half, enracha.es was
successfully migrated onto the proprietary Yo technology platform. In the
second half of the year we expect to launch sports betting on both the Enracha
and Yo brands and launch the YoBingo brand in Portugal where we are in the
final stages of the platform's regulatory approval process.
Passion Gaming, the online Indian rummy business in which Rank holds a 51%
share, returned to growth during Q2 and continues to trade cash positively as
we review the changing and currently improving regulatory landscape in India.
Group liquidity
The Group ended H1 2021/22 in a strong liquidity position with its venues open
generating cash, bolstered by the recent £83.1m VAT refund from HM Revenue
and Customs ('HMRC').
Total cash and available facilities at 31 December 2021 was £224.8m, up
£126.8m from 30 June 2021.
During the half the Group settled all of the £12.2m of deferred rent from 30
June 2021 and entered 2022 with no additional rent deferrals.
In May 2022, the Group will make its scheduled term loan repayment of £29.6m
in line with the agreed loan amortisation profile, reducing its term loan to
£78.8m.
The Group's bank debt financial covenant waivers, which were put in place in
H1 2020/21, expire in H2 2021/22, with the end of March 2022 being the last
testing date where the Group is required to have at least £50m of total cash
and available facilities (the 'liquidity test', a condition of the waivers).
The Group will revert to its financial covenants of net debt to EBITDA of less
than 3x and EBITDA to interest charge of no less than 3x from 30 June 2022.
The Group expects to meet its final liquidity test in March 2022 and all
future financial covenants.
The strengthened balance sheet has enabled the acceleration of investments
identified in the next phase of Rank's transformation programme and we expect
£50m of capital to be invested in the full year.
Dividend
Due to restrictions under our current bank debt financial covenant waivers the
Board has not proposed an interim dividend. The Board is committed to
restarting dividends when circumstances permit and this will be kept under
regular review.
Sustainability
We have a clear ambition at Rank to become a £1 billion revenue international
gaming company by 2023, through transforming our business and consistently
exceeding our customer and shareholder expectations.
Those expectations include the sustainable evolution of our operations,
considering our impact on society and the environment. Only a model that
builds Environmental, Social and Governance ('ESG') matters into its strategy
can be truly sustainable.
Our ESG objectives are clear, to reduce the negative impact and to increase
the positive impacts of our operations.
Our commitments focus on the following four areas:
1. Customer experience:
· provide a fun, exciting and safe experience;
· encourage and enable good gambling behaviours; and
· seek to protect vulnerable customers from harm.
2. Colleague experience:
· educate our colleagues to enable and encourage positive gaming behaviours;
· create a fair, safe and fulfilling working environment that supports
professional development; and
· maintain positive relationships with business partners.
3. Environmental management:
· invest in efficient and responsible operations to reduce our impact on the
environment; and
· engage with the supply chain to deliver sustainable and responsible outcomes.
4. Community engagement:
· provide a social outlet for customers and generate lasting community spirit;
and
· drive community action and develop positive social legacy.
Today we formally launch the Group's first Responsible Business Report. The
report provides an overview of the initial work we have undertaken to
establish the appropriate approach to the development of our ESG strategy. The
next stage of our work will be to promote the core initiatives and define the
key performance indicators which will enable us to report more broadly on our
social and environmental impacts alongside our financial reporting calendar.
A copy of the report can be found on the Group's corporate website here
https://www.rank.com/en/investors/results--reports---presentations.category1.html
Regulatory update
We look forward to the publication of the Government's white paper which will
shape the next stage of the review of gambling legislation in the UK. We
continue to work closely with our industry peers, and our trade bodies, in
pursuing evidence-based reforms to the current existing legislation and
regulation. A further period of consultation is likely to follow the
publication of the white paper before legislative change can be implemented.
For our land-based casino and bingo business, we have presented a
modernisation programme which, were the Government to deliver legislative
change in line with our proposals, would help to revitalise the customer
experience in our clubs, and better address the customer's expectations and
demands.
Any changes which require primary legislation are, we believe, unlikely to be
delivered within the next 24 months. However, the majority of our
modernisation proposals can be delivered by statutory instrument (secondary
legislation) and could, therefore, be delivered quickly. Our expectation is
for a tightening of regulations governing online play in the UK alongside
modest, but important, regulatory changes for land-based venues and their
customers.
Board changes
Group Chief Financial Officer
On 1 May 2022, Richard Harris will join the Group as Chief Financial Officer
('CFO') and the Rank Board following the departure of Bill Floydd in December
2021. Richard will join us from Foxtons Group plc where he has held the role
of CFO since June 2019. Simon Hay, Director of Group Finance, was appointed
interim CFO with effect from 1 January 2022 and will continue in that role
until Richard joins the Group.
Susan Hooper
Susan Hooper, Non-executive Director and Chair of Rank's ESG & Safer
Gambling Committee, will step down from the Rank Board on 31 January 2022
having completed over six years.
Katie McAlister has been appointed Chair of the ESG & Safer Gambling
Committee with effect from 1 February 2022.
Senior Independent Director
Chris Bell, Non-Executive Director and Senior Independent Director, resigned
on 19 January 2022 having served over six years on the Rank Board.
Karen Whitworth has been appointed Senior Independent Director with effect
from 19 January 2022.
Financial review
Reported net gaming revenue ('NGR')
For the six months to 31 December 2021 NGR increased by 88% to £333.7m due to
our venues not being subject to any enforced COVID-19 closures as experienced
in the comparable period.
Operating profit
In line with NGR, operating profit benefited from our venues being open in the
period. The increase in NGR and the SDI operating profit of £79.3m led to
an operating profit of £103.0m.
Separately disclosed items ('SDIs')
SDIs are items that are infrequent in nature and/or do not relate to Rank's
underlying business performance.
Total SDIs for the six months to 31 December 2021 were £70.7m, post
discontinued operations and tax.
The key SDIs in the period were as follows:
· Integration costs of £1.3m regarding the costs incurred to ready the RIDE
proprietary platform, acquired in the Stride acquisition, to migrate the
legacy Rank brands over the coming year;
· Amortisation costs of £5.9m relating to the acquired intangible assets of
Stride and Yo;
· Closure costs of £1.2m regarding the closure of an Enracha venue in Spain;
· A VAT receipt of £77.1m (net of costs) and the associated interest of £5.6m
regarding a long-standing VAT claim regarding gaming machines during the
period April 2006 and January 2013;
· A reversal of previously impaired assets of £10.8m relating to six Grosvenor
venues; and
· £3.1m of additional profit on the disposal of the Group's Blankenberge casino
in Belgium in the prior year.
Net financing charge
The £6.5m underlying net financing charge for the period was in line with the
prior year.
Taxation
On a statutory basis, the Group had an effective tax rate of 20.2% (H1 2020/21
16.5%) based on a tax charge of £20.6m and total profits of £102.1m. This is
higher than the UK statutory tax rate of 19% because of amortisation costs
that are not deductible for tax purposes.
The Group's effective underlying corporation tax rate in H1 2021/22 was 19.2%
(2020/21: 17.0%) based on a tax charge of £3.3m on underlying profit before
taxation. This is higher than the Group's anticipated effective tax rate of
17% to 19% for the period as a result of the mix of UK profits compared to
overseas profits being higher than previously forecast.
Further details on the tax charge are provided in note 5.
Earnings per share ('EPS')
Basic EPS grew by 252% to 18.1 pence. Underlying EPS was up 132% to 3.0
pence.
Cash flow and net debt
As at 31 December 2021, net debt was £141.2m. Debt comprised £108.4m in
term loans and £196.3m in finance leases, offset by cash at bank of £163.5m.
H1 2021/22 H1 2020/21
£m £m
Cash inflow / (outflow) from operations 57.9 (12.4)
Cash receipts in respect of VAT claim recognised as SDI 83.1 -
Cash payments in respect of SDIs (1.4) (5.1)
Cash generated from / (used in) operations 139.6 (17.5)
Capital expenditure (13.4) (11.2)
Net interest and tax (10.2) (7.7)
Net proceeds from equity placing - 68.1
Disposal of subsidiary 3.1 -
Lease payments (13.9) (19.6)
Others (including exchange translation) (0.3) (0.3)
Cash inflow / (outflow) 104.9 11.8
Opening net (debt) pre IFRS 16 (49.8) (57.0)
Closing net cash / (debt) pre IFRS 16 55.1 (45.2)
IFRS 16 lease liabilities (196.3) (223.1)
Closing net debt post IFRS 16 (141.2) (268.3)
Net cash for covenant purposes at 31 December 2021 was £37.6m.
Cash tax rate
In the period ended 31 December 2021, the Group had an effective cash tax rate
of 5.8% on total profit before taxation (H1 2020/21: (3.8)%). The cash tax
rate is lower than the effective tax rate due to the utilisation of losses
arising in 2020/21 to offset profits in 2021/22 resulting in a reduction in
cash tax due.
Alternative Performance Measures
When assessing, discussing and measuring the Group's financial performance,
management refer to measures used for internal performance management. These
measures are not defined or specified under UK adopted International Financial
Reporting Standards (IFRS) and as such are considered to be Alternative
Performance Measures ('APMs').
By their nature, APMs are not uniformly applied by all preparers including
other operators in the gambling industry. Accordingly, APMs used by the Group
may not be comparable to other companies within the Group's industry.
Purpose
APMs are used by management to aid comparison and assess historical
performance against internal performance benchmarks and across reporting
periods. These measures provide an ongoing and consistent basis to assess
performance by excluding items that are materially non-recurring,
uncontrollable or exceptional. These measures can be classified in terms of
their key financial characteristics.
Profit measures allow management and users of the financial statements to
assess and benchmark underlying business performance during the year. They are
primarily used by operational management to measure operating profit
contribution and are also used by the Board to assess performance against
business plan.
The following table explains the key APMs applied by the Group and referred to
in these statements:
APM Purpose Closest equivalent IFRS measure Adjustments to reconcile to primary financial statements
Underlying like-for-like ('LFL') net gaming revenue ('NGR') Revenue measure NGR · Separately disclosed items
· Excludes contribution from any venue openings, closures, disposals, acquired
businesses and discontinued operations
· Foreign exchange movements
Underlying LFL operating (loss) / profit Profit measure Operating profit / (loss) · Separately disclosed items
· Excludes contribution from any venue openings, closures, disposals, acquired
businesses and discontinued operations
· Foreign exchange movements
Underlying LFL (loss) / profit before taxation Profit measure Profit / (loss) before tax · Separately disclosed items
· Excludes contribution from any venue openings, closures, disposals, acquired
businesses and discontinued operations
· Foreign exchange movements
Underlying LFL (loss) / profit after taxation Profit measure Profit / (loss) after tax · Separately disclosed items
· Excludes contribution from any venue openings, closures, disposals, acquired
businesses and discontinued operations
· Foreign exchange movements
Tax impact of all
Underlying (loss) / earnings per share Profit measure Earnings / (loss) per share · Separately disclosed items
Underlying LFL operating (loss) / profit
Profit measure
Operating profit / (loss)
· Separately disclosed items
· Excludes contribution from any venue openings, closures, disposals, acquired
businesses and discontinued operations
· Foreign exchange movements
Underlying LFL (loss) / profit before taxation
Profit measure
Profit / (loss) before tax
· Separately disclosed items
· Excludes contribution from any venue openings, closures, disposals, acquired
businesses and discontinued operations
· Foreign exchange movements
Underlying LFL (loss) / profit after taxation
Profit measure
Profit / (loss) after tax
· Separately disclosed items
· Excludes contribution from any venue openings, closures, disposals, acquired
businesses and discontinued operations
· Foreign exchange movements
Tax impact of all
Underlying (loss) / earnings per share
Profit measure
Earnings / (loss) per share
· Separately disclosed items
Rationale for adjustments - Profit and debt measure
1. Separately disclosed items ('SDIs')
SDIs are items that bear no relation to the Group's underlying ongoing
performance. The adjustment helps users of the accounts better assess the
underlying performance of the Group, helps align to the APMs used to run the
business and still maintains clarity to the statutory reported numbers. The
following provides the rationale for treating these items as SDIs.
Further details of the SDIs can be found in the Financial Review and note 3 of
the Financial Statements.
2. Contribution from any venue openings, closures, disposals, acquired businesses
and discontinued operations
In the prior period (H1 2020/21), the Group closed one Mecca venue. For the
purpose of calculating like-for-like ('LFL') measures its contribution has
been excluded from the prior period numbers and current period numbers, to
ensure comparatives are made to measures on the same basis.
3. Foreign exchange movements
During the year the exchange rates may fluctuate, therefore by using an
exchange rate fixed throughout the year the impact on overseas business
performance can be calculated and eliminated.
The tables below reconcile the underlying performance measures to the reported
measures of the continuing operations of the Group.
£m H1 2021/22 H1 2020/21
Underlying LFL net gaming revenue (NGR) 333.5 175.9
Closed/disposed venues 0.2 0.6
Foreign exchange ('FX') - 1.1
Underlying NGR - continuing operations 333.7 177.6
Calculation of comparative underlying LFL NGR
H1 2020/21
Reported underlying LFL NGR 156.9
Reversal of Stride (acquired business) 20.5
Reversal of 2020/21 closed venues 0.2
2021/22 closed venues (0.6)
2021/22 FX (1.1)
Restated underlying LFL NGR 175.9
£m H1 2021/22 H1 2020/21
LFL underlying operating profit / (loss) 24.1 (41.2)
Opened, closed and disposed venues (0.4) (0.8)
Foreign exchange - 0.2
Underlying operating profit / (loss) - continuing operations 23.7 (41.8)
Separately disclosed items 79.3 (11.1)
Operating profit / (loss) - continuing operations 103.0 (52.9)
Calculation of comparative underlying LFL operating profit
£m H1 2020/21
Reported underlying LFL reported operating loss pre IFRS 16 (33.2)
Reversal of Stride (acquired business) (8.2)
Opened and closed venues (0.4)
2021/22 closed venues 0.8
2021/22 FX (0.2)
Underlying LFL operating profit (41.2)
£m H1 2021/22 H1 2020/21
Underlying current tax (charge) / credit (3.3) 8.3
Tax on separately disclosed items (17.3) 1.5
Tax (charge) / credit (20.6) 9.8
Pence H1 2021/22 H1 2020/21
Underlying EPS 3.0 (9.5)
Separately disclosed items 15.1 (2.4)
Reported EPS 18.1 (11.9)
Principal risk and uncertainties
Understanding, accepting and managing risk are fundamental to Rank's strategy
and success. We have a Group wide enterprise risk management framework and
approach in place, which is integrated into our organisational management
structure and responsibilities. The aim of this is to provide oversight and
governance of the key risks we face, as well as monitoring upcoming and
emerging risks and performing horizon scanning over the medium to long term.
The Group's enterprise risk strategy focuses on the minimisation of the 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 2021 and include:
• COVID-19 pandemic;
• Changing customer needs (venues);
• Gambling laws and regulations;
• Health and safety;
• Taxation;
• Integration, transformation and technology projects and programmes;
• Business continuity planning and disaster recovery (operational resilience);
• Data protection and management;
• Cyber resilience;
• Dependency on third parties and supply chain; and
• People.
The principal emerging risks faced by the Group include the following:
• The most significant near-term risk is the forthcoming proposed changes to the
gambling regulation. Mitigation has taken the form of ongoing monitoring and
risk assessments, ongoing membership and contribution to trade associations,
and continuing to build on and maintain relationships with our stakeholders;
• Ongoing potential impact post Brexit following the reopening of our venues
where the key challenges to the business are the availability of staff and the
impact on our food and beverage supply chain; and
• Lastly, we are monitoring medium-term emerging environmental and social risks
and related reporting requirements, including those in relation to climate
change.
Greater detail on these risks and uncertainties are set out in pages 62 to 68
of the Group's 2021 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 unaudited condensed consolidated financial statements have been prepared
in accordance with IAS 34, "Interim Financial Reporting", as issued by the
International Accounting Standards Board and as contained in UK adopted
international accounting standards; and
· The interim management report includes a fair review of the information
required by Disclosure Guidance and Transparency Rules sourcebook 4.2.7 and
Disclosure Guidance and Transparency Rules sourcebook 4.2.8.
The directors of The Rank Group Plc are:
Chew Seong Aun
Steven Esom
Susan Hooper
Katie McAlister
John O'Reilly
Alex Thursby
Karen Whitworth
Signed on behalf of the board on 26 January 2022
John
O'Reilly
Alex Thursby
Chief
Executive
Chair
INDEPENDENT REVIEW REPORT TO THE RANK GROUP PLC
Conclusion
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 2021 which comprises the Consolidated Income Statement, Consolidated
Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated
Statement of Changes in Equity, Consolidated Cash Flow Statement and the
related explanatory notes 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.
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 2021 is not prepared, in
all material respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with 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. 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.
As disclosed in note 1, the annual financial statements of the Group will be
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Responsibilities of 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
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion is based on procedures that are
less extensive than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
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.
Ernst & Young LLP
Glasgow
26 January 2022
Consolidated Income Statement
for the six months ended 31 December 2021
Six months ended 31 December 2021 Six months ended 31 December 2020
(unaudited)
(unaudited)
Separately Separately
disclosed items disclosed items
Underlying (note 3) Total Underlying (note 3) Total
Note £m £m £m £m £m £m
Continuing operations
Revenue 2 333.7 - 333.7 177.6 - 177.6
Cost of sales 2 (198.4) - (198.4) (135.0) - (135.0)
Gross profit 135.3 - 135.3 42.6 - 42.6
Other operating costs 2 (114.6) (8.6) (123.2) (113.2) (11.1) (124.3)
Other operating income 2 3.0 87.9 90.9 28.8 - 28.8
Operating profit (loss) 23.7 79.3 103.0 (41.8) (11.1) (52.9)
Financing:
- finance costs 4 (6.6) - (6.6) (6.5) - (6.5)
- finance income 4 - - - 0.1 - 0.1
- other financial gains (losses) 4 0.1 5.6 5.7 (0.1) - (0.1)
Total net financing (charge) income (6.5) 5.6 (0.9) (6.5) - (6.5)
Profit (loss) before taxation 17.2 84.9 102.1 (48.3) (11.1) (59.4)
Taxation 5 (3.3) (17.3) (20.6) 8.3 1.5 9.8
Profit (loss) for the period from continuing operations 13.9 67.6 81.5 (40.0) (9.6) (49.6)
Discontinued operations
Profit after tax for the period from discontinued operations 6 - 3.1 3.1 1.0 - 1.0
Profit (loss) for the period 13.9 70.7 84.6 (39.0) (9.6) (48.6)
Attributable to:
Equity holders of the parent 13.9 70.7 84.6 (38.9) (9.6) (48.5)
Non-controlling interests - - - (0.1) - (0.1)
13.9 70.7 84.6 (39.0) (9.6) (48.6)
Earnings (loss) per share attributable to equity shareholders
- basic 8 3.0p 15.1p 18.1p (9.5)p (2.4)p (11.9)p
- diluted 8 3.0p 15.1p 18.1p (9.5)p (2.4)p (11.9)p
Earnings (loss) per share - continuing operations
- basic 8 3.0p 14.4p 17.4p (9.8)p (2.4)p (12.2)p
- diluted 8 3.0p 14.4p 17.4p (9.8)p (2.4)p (12.2)p
Earnings per share - discontinued operations
- basic 8 - 0.7p 0.7p 0.3p - 0.3p
- diluted 8 - 0.7p 0.7p 0.3p - 0.3p
Consolidated Statement of Comprehensive Income
for the six months ended 31 December 2021
Six months ended Six months ended
31 December
31 December
2021
2020
(unaudited) (unaudited)
£m £m
Comprehensive income:
Profit (loss) for the period 84.6 (48.6)
Other comprehensive income:
Items that may be reclassified to profit or loss:
Exchange adjustments net of tax (1.5) (1.1)
Items that will not be reclassified to profit or loss:
Actuarial gain on retirement benefits net of tax - 0.1
Total comprehensive income (loss) for the period 83.1 (49.6)
Attributable to:
Equity holders of the parent 83.1 (49.5)
Non-controlling interests - (0.1)
Consolidated Balance Sheet
at 31 December 2021 and 30 June 2021
As at As at
31 December 30 June
2021
2021
(unaudited) (audited)
Note £m £m
Assets
Non-current assets
Intangible assets 503.6 504.6
Property, plant and equipment 112.2 117.4
Right-of-use assets 134.4 128.6
Deferred tax assets 4.7 3.6
Other receivables 6.5 5.1
761.4 759.3
Current assets
Inventories 2.5 2.0
Other receivables 19.3 16.3
Government grants 9 - 0.8
Income tax receivable 1.1 10.1
Cash and short-term deposits 163.5 69.6
186.4 98.8
Total assets 947.8 858.1
Liabilities
Current liabilities
Trade and other payables (144.8) (126.3)
Lease liabilities (40.0) (42.2)
Income tax payable (1.7) (3.1)
Financial liabilities - loans and borrowings (31.0) (39.4)
Provisions 10 (5.8) (5.4)
(223.3) (216.4)
Net current liabilities (36.9) (117.6)
Non-current liabilities
Lease liabilities (156.3) (164.7)
Financial liabilities - loans and borrowings (77.7) (77.7)
Deferred tax liabilities (26.2) (18.3)
Provisions 10 (16.0) (16.0)
Retirement benefit obligations (3.7) (3.8)
(279.9) (280.5)
Total liabilities (503.2) (496.9)
Net assets 444.6 361.2
Capital and reserves attributable to the Company's equity shareholders
Share capital 11 65.0 65.0
Share premium 11 155.7 155.7
Capital redemption reserve 33.4 33.4
Exchange translation reserve 13.1 14.6
Retained earnings 177.5 92.6
Total equity before non-controlling interests 444.7 361.3
Non-controlling interests (0.1) (0.1)
Total shareholders' equity 444.6 361.2
Consolidated Statement of Changes in Equity
for the six months ended 31 December 2021
For the six months ended 31 December 2021 (unaudited)
Share capital Share premium Capital redemption reserve Exchange translation reserve Retained earnings Reserves attributable to the Company's equity shareholders Non- controlling interest Total equity
£m £m £m £m £m £m £m £m
At 1 July 2021 65.0 155.7 33.4 14.6 92.6 361.3 (0.1) 361.2
Comprehensive income:
Profit for the period - - - - 84.6 84.6 - 84.6
Other comprehensive income:
Exchange adjustments net of tax - - - (1.5) - (1.5) - (1.5)
Total comprehensive profit (loss) for the period - - - (1.5) 84.6 83.1 - 83.1
Transactions with owners:
Credit in respect of employee share schemes including tax - - - - 0.3 0.3 - 0.3
At 31 December 2021 65.0 155.7 33.4 13.1 177.5 444.7 (0.1) 444.6
For the six months ended 31 December 2020 (unaudited)
Share capital Share premium Capital redemption reserve Exchange translation reserve Retained earnings Reserves attributable to the Company's equity shareholders Non- controlling interest Total equity
£m £m £m £m £m £m £m £m
At 1 July 2020 54.2 98.4 33.4 18.8 161.3 366.1 (0.2) 365.9
Comprehensive income:
Loss for the period - - - - (48.5) (48.5) (0.1) (48.6)
Other comprehensive income:
Exchange adjustments net of tax - - - (1.1) - (1.1) - (1.1)
Actuarial gain on retirement benefits net of tax - - - - 0.1 0.1 - 0.1
Total comprehensive loss for the period - - - (1.1) (48.4) (49.5) (0.1) (49.6)
Transactions with owners:
Issue of share capital (note 11) 10.8 57.3 - - - 68.1 - 68.1
Credit in respect of employee share schemes including tax - - - - 1.2 1.2 - 1.2
At 31 December 2020 65.0 155.7 33.4 17.7 114.1 385.9 (0.3) 385.6
Consolidated Cash Flow Statement
for the six months ended 31 December 2021
Six months ended Six months ended
31 December
31 December
2020
2021
(unaudited) (unaudited)
Note £m £m
Cash flows from operating activities
Cash generated from (used in) operations 13 139.6 (17.5)
Interest received 0.1 0.1
Interest paid (4.4) (6.0)
Tax paid (5.9) (1.8)
Net cash generated from (used in) operating activities 129.4 (25.2)
Cash flows from investing activities
Additional proceeds on disposal of business 6 3.1 -
Purchase of intangible assets (5.5) (8.6)
Purchase of property, plant and equipment (7.9) (2.6)
Net cash used in investing activities (10.3) (11.2)
Cash flows from financing activities
Share capital issued 11 - 68.1
Repayment of revolving credit facilities (11.0) -
Lease principal repayments (13.9) (19.6)
Net cash (used in) generated from financing activities (24.9) 48.5
Net increase in cash, cash equivalents and bank overdrafts 94.2 12.1
Effect of exchange rate changes (0.3) (0.3)
Cash and cash equivalents at start of period 69.6 71.1
Cash and cash equivalents at end of period 163.5 82.9
1 General information, basis of preparation and accounting policies
General information
The Rank Group Plc ('the Company') and its subsidiaries (together 'the Group')
operate gaming services in Great Britain (including the Channel Islands),
Spain and India.
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 interim financial information was approved for
issue on 26 January 2022.
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 2021 were
approved by the Board of Directors on 18 August 2021 and delivered to the
Registrar of Companies. The report of the auditors on those accounts was
unqualified, did not draw attention to any matters by way of emphasis, 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 2021 has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and with UK-adopted
International Accounting Standards (IAS) 34 'Interim financial reporting'. The
condensed consolidated interim financial information should be read in
conjunction with the financial statements for the 12-month period ended 30
June 2021, which have been prepared in accordance with UK-adopted
International Financial Reporting Standards (IFRS).
Going concern
In adopting the going concern basis for preparing the interim financial
statements, the Directors have considered the circumstances impacting the
Group during the year including the trading performance for the venues in
accordance with Government guidance, the latest forecast for 2021/22 and the
long-range forecast approved by the Board. The Directors also considered the
Group's projected compliance with its banking covenants and access to funding
options for the 12 months ending 31 January 2023.
The Directors recognise that there continues to be a high level of forecasting
uncertainty at this time caused by the ongoing impact of the COVID-19 pandemic
on consumer sentiment, Government policy and the overall impact on consumer
demand. Notwithstanding this, the Directors have taken confidence in the
performance of the Group since venues reopened, and also note the continued
success of the vaccine roll out in line with the UK Government's targets.
The Group closely monitors and carefully manages its liquidity risks by
regularly producing a cash flow forecast which indicates that it will continue
to have significant liquidity throughout the going concern period to 31
January 2023. The base case cash flow forecast also contains certain
discretionary costs within management control that could be reduced in the
event of a revenue downturn. These include reductions to overheads, reduction
to marketing costs, reductions to the venues' operating costs and reductions
to capital expenditure.
The committed financing position in the base case cash flow forecast within
the going concern assessment period is that the Group continues to have access
to the following committed facilities:
• Term loan of £108.4m which reduces to £78.8m in May 2022 due to a scheduled
loan repayment
• Revolving credit facilities ('RCF') of £80.0m
The Group's overall liquidity has improved following the receipt of the
£83.1m VAT duty refund from HMRC on 2 December 2021. At the date of approval
of the interim financial statements, the term loan was £108.4m and the
£80.0m RCF was undrawn.
In undertaking their assessment, the Directors also reviewed compliance with
the renegotiated banking covenants that temporarily replace the normal tests
with a minimum liquidity test of £50.0m, with the next quarterly test in
March 2022 ('Revised Covenants'), and the normal banking covenants which are
applicable from 30 June 2022, when the covenant testing reverts back to being
on a six-monthly basis. The Group expects to meet the Revised Covenants in
March 2022 and its normal banking covenants at 30 June 2022 and 31 December
2022.
1 General information, basis of preparation and accounting policies
(continued)
Group management have run downside scenarios and sensitivities for different
scenarios including an increase in the impact of COVID-19 on the business
resulting in (i) the closure of UK venues and receiving Government support via
Coronavirus Job Retention Scheme (CJRS) (or equivalent) during the closure
period and (ii) the implementation of curfew hours on UK venues which results
in reduced capacity, in each case for a period of five (5) months.
Notwithstanding the current position from Government to keep business open,
should a closure be implemented, management has modelled on five (5) months
being in line with the period of closure during 2021. This is considered a
severe downside case. Whilst the closures and curfew do not have direct impact
over the digital business as a whole, the downside scenarios further
incorporated a potential impact on omni-channel performance.
Having modelled the downside scenarios, the Group would continue to meet its
Revised Covenants in both cases. Furthermore, in both downside scenarios, the
Group would also meet its normal banking covenants at the 30 June 2022 and 31
December 2022 test dates when they again apply.
Accordingly, the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for a period at least
through to 31 January 2023. For these reasons, the Directors continue to adopt
the going concern basis of accounting in preparing the condensed consolidated
interim financial statements.
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 interim financial information are consistent with those followed
in the Group's financial statements for the year ended 30 June 2021.
There are no new or amended standards or interpretations that became effective
in the period from 1 July 2021 which have had a material impact upon the
values or disclosures in the condensed consolidated interim financial
information.
The Group has not early adopted any standard, interpretation or amendment that
has been issued but is not yet effective.
Separately disclosed items
The Group incurs costs and earns income that is non-recurring in nature or
that, in the Directors' judgement, need to be disclosed separately by virtue
of their size and incidence in order for users of the condensed consolidated
interim financial information to obtain a proper understanding of the
financial information and the underlying performance of the business. These
items include (but are not limited to):
• Amortisation of acquired intangible assets;
• Profit or loss on disposal of businesses;
• Acquisition and disposal costs including changes to deferred or contingent
consideration;
• Impairment charges;
• Reversal of impairment charges;
• Restructuring costs as part of an announced programme;
• Retranslation and remeasurement of foreign currency contingent consideration;
• Discontinued operations;
• Significant, material proceeds from tax appeals;
• The tax impact of all the above.
Determining whether an item is part of specific adjusting items requires
judgement to determine the nature and the intention of the transaction.
Estimates and judgements
In preparing these condensed consolidated financial information, management
has made judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expense. Actual results may differ from these estimates. The significant
judgements made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were the same as those that applied
to the consolidated financial statements for the year ended 30 June 2021.
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total annual earnings.
1 General information, basis of preparation and accounting policies
(continued)
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.
The Group reports five segments: Digital, Grosvenor Venues, Mecca Venues,
International Venues and Central Costs.
2 Segment information
Six months ended 31 December 2021 (unaudited)
Digital Grosvenor Venues Mecca Venues Enracha Central Costs Total
Venues
£m £m £m £m £m £m
Segment revenue 92.1 161.6 65.9 14.1 - 333.7
Other operating income - 2.3 0.7 - - 3.0
Operating profit (loss) 3.7 34.7 (1.5) 2.7 (15.9) 23.7
Separately disclosed items (7.2) 38.1 45.1 (1.2) 4.5 79.3
Segment result (3.5) 72.8 43.6 1.5 (11.4) 103.0
Finance costs (6.6)
Other financial gains 5.7
Profit before taxation 102.1
Taxation (20.6)
Profit for the period from continuing operations 81.5
Six months ended 31 December 2020 (unaudited)
Digital Grosvenor Venues Mecca Venues Enracha Venues Central Costs Total
£m £m £m £m £m £m
Segment revenue 86.5 43.1 39.0 9.0 - 177.6
Other operating income - 21.6 6.7 0.3 0.2 28.8
Operating profit (loss) 1.5 (21.2) (5.3) (0.6) (16.2) (41.8)
Separately disclosed items (7.3) (0.8) (0.8) - (2.2) (11.1)
Segment result (5.8) (22.0) (6.1) (0.6) (18.4) (52.9)
Finance costs (6.5)
Finance income 0.1
Other financial losses (0.1)
Loss before taxation (59.4)
Taxation 9.8
Loss for the period from continuing operations (49.6)
Under IFRS 8 - Operating Segments, segments are reported in a manner
consistent with internal reporting provided to the Chief Operating Decision
Maker.
Following the sale of its Blankenberge Casino in Belgium, Management has now
refined the previously reported "International Venues" segment to "Enracha
Venues" which solely operates in Spain.
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 separately disclosed items, by type and segment is as follows:
Six months ended 31 December 2021 (unaudited)
Digital Grosvenor Venues Mecca Venues International Venues Central Costs Total
£m £m £m £m £m £m
Employment and related costs 11.1 51.7 22.2 7.3 9.9 102.2
Taxes and duties 20.2 33.7 12.9 0.8 1.2 68.8
Direct costs 25.6 12.7 9.9 1.1 - 49.3
Property costs 0.1 4.4 1.8 0.4 0.8 7.5
Marketing 19.9 2.1 3.1 0.8 - 25.9
Depreciation and amortisation 7.0 16.0 7.9 0.7 2.8 34.4
Other 4.5 8.6 10.3 0.3 1.2 24.9
Total costs before separately disclosed items 88.4 129.2 68.1 11.4 15.9 313.0
Cost of sales 198.4
Operating costs 114.6
Total costs before separately disclosed items 313.0
Six months ended 31 December 2020 (unaudited)
Digital Grosvenor Venues Mecca Venues International Venues Central Costs Total
£m £m £m £m £m £m
Employment and related costs 11.2 45.2 21.5 6.2 11.0 95.1
Taxes and duties 20.6 11.4 8.5 0.8 0.6 41.9
Direct costs 24.0 4.5 5.4 1.4 - 35.3
Property costs 0.4 1.7 (0.5) 0.4 0.8 2.8
Marketing 17.2 1.0 1.8 0.2 - 20.2
Depreciation and amortisation 6.8 16.6 8.2 0.9 2.9 35.4
Other 4.8 5.5 6.1 - 1.1 17.5
Total costs before separately disclosed items 85.0 85.9 51.0 9.9 16.4 248.2
Cost of sales 135.0
Operating costs 113.2
Total costs before separately disclosed items 248.2
3 Separately disclosed items
Six months ended Six months ended
31 December 2021
31 December 2020
(unaudited) (unaudited)
£m £m
Separately disclosed items
Integration costs (1.3) (1.4)
Business transformation costs (0.2) (3.8)
Amortisation of acquired intangible assets (5.9) (5.9)
Closure of venues (1.2) -
Impairment reversal 10.8 -
VAT refund 77.1 -
Impact on operating profit 79.3 (11.1)
Other financial gains 5.6 -
Taxation (see note 5) (17.3) 1.5
Separately disclosed items relating to continuing operations 67.6 (9.6)
Profit on disposal of business 3.1 -
Separately disclosed items relating to discontinued operations 3.1 -
Total separately disclosed items 70.7 (9.6)
Integration Costs
Costs directly associated with the integration of business acquisitions are
charged to the consolidated income statement. Such items are material,
infrequent in nature and are not considered to be part of the underlying
business performance.
In the current period, £1.3m of costs have been excluded from the underlying
operating results of the Group. These costs have been incurred to ready the
ride proprietary platform, acquired in the Stride acquisition, to migrate the
legacy Rank brands over the coming year.
In the prior period, costs of £1.4m were excluded from the underlying
operating results of the Group.
Business transformation costs
This is a multi-year change programme for the Group focused around revenue
growth, cost savings, efficiencies and ensuring the key enablers are in
place. The transformation programme started in January 2019 and was expected
to last three years, however in light of COVID-19, the timeframe has been
extended to 2023. The multi-year change programme is a material, infrequent
programme and is not considered to be part of the underlying business
performance.
In the current period, £0.2m of costs are excluded from the underlying
performance of the Group. In the prior period, costs of £3.8m were excluded
from the underlying operations of the Group.
Amortisation of acquired intangible assets
Acquired intangible assets are amortised over the life of the assets with the
charge being included in the Group's reported amortisation expense. Given
these charges are material and non-cash in nature, the Group's underlying
results have been adjusted to exclude the amortisation expense of £5.9m (six
months ended 31 December 2020: £5.9m) relating to the acquired intangible
assets of Stride and YoBingo.
Closure of venues
During the period the Group made the decision to close one of its
international venues. £1.2m of costs relating to this venue, including
redundancy and employee settlement costs, legal costs and reallocation of
assets directly attributed to these venues, have been expensed in the
period. This is a material, one-off cost and as such has been excluded from
underlying results.
Impairment reversal
During the period, the Group recognised a reversal of previously impaired
assets of £10.8m relating to six of its Grosvenor venues. This follows the
business transformation completed in 2020 and the reopening of venues since
May 2021, which has contributed to an improved current result and forecast
outlook for the Grosvenor venues identified.
This is a material, non-recurring item and as such, has been excluded from
underlying results.
3 Separately disclosed items (continued)
VAT refund
On 30 June 2021, the Group was informed that the First-tier Tribunal ('FTT')
had allowed the appeal of the Group on its claim to be refunded VAT paid on
the takings from gaming machines during the period April 2006 to January 2013.
A refund was received in relation to this claim on 2 December 2021, comprising
£77.5m principal and interest of £5.6m, with costs directly incurred
amounting to £0.4m.
This is a material, one-off amount and as such has been excluded from
underlying results.
Profit on disposal of business
Charges or credits associated with the disposal of part or all of a business
may arise. Such disposals may result in one time impacts that in order to
allow comparability means the Group removes the profit or loss from the
underlying operating results.
The Belgium casino sale was reported in the Annual Report and Accounts at 30
June 2021 at a profit of £23.8m. At 31 December 2021, an additional profit of
£3.1m has been recognised, relating to proceeds received from the sale of the
Belgium casino following a positive outcome in a salary moderation case in
Belgium, the benefit of which was retained by Rank in the sale.
4 Financing
Six months ended Six months ended
31 December 2021
31 December 2020
(unaudited) (unaudited)
£m £m
Finance costs:
Interest on debt and borrowings (2.2) (1.9)
Amortisation of issue costs on borrowings (1.0) (0.9)
Interest payable on leases (3.4) (3.7)
Total finance costs (6.6) (6.5)
Finance income:
Interest income on short-term bank deposits - 0.1
Finance income - 0.1
Other financial gains (losses) 0.1 (0.1)
Total net financing charge before separately disclosed items (6.5) (6.5)
Separately disclosed items - interest on VAT refund 5.6 -
Total net financing charge (0.9) (6.5)
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 31 December 2021 (unaudited) Six months ended 31 December 2020 (unaudited)
Continuing operations Continuing operations Discontinued operations
Discontinued operations Total Total
£m £m £m £m £m £m
Current income tax
Current income tax - UK (1.9) - (1.9) 2.7 - 2.7
Current income tax - overseas (0.7) - (0.7) (0.6) (0.3) (0.9)
Current income tax (charge) credit (2.6) - (2.6) 2.1 (0.3) 1.8
Current income tax on separately disclosed items (6.2) - (6.2) - - -
Amounts over provided in previous periods (4.7) - (4.7) 0.2 - 0.2
Total current income tax (charge) credit (13.5) - (13.5) 2.3 (0.3) 2.0
Deferred tax
Deferred tax - UK (0.8) - (0.8) 5.5 - 5.5
Deferred tax - overseas (0.5) - (0.5) 0.5 - 0.5
Restatement of deferred tax due to rate change 0.6 - 0.6 - - -
Deferred tax on separately disclosed items (11.1) - (11.1) 1.5 - 1.5
Amounts over provided in previous year 4.7 - 4.7 - - -
Total deferred tax (charge) credit (7.1) - (7.1) 7.5 - 7.5
Tax (charge) credit in the income statement (20.6) - (20.6) 9.8 (0.3) 9.5
Further details regarding the Group's discontinued operations can be found in
note 6.
The tax effect of items within other comprehensive income is as follows:
Six months ended Six months ended
31 December 2021
31 December 2020
(unaudited) (unaudited)
£m £m
Current tax charge on exchange movements offset in reserves (0.1) (0.1)
Total tax charge on items within other comprehensive income (0.1) (0.1)
The credit in respect of employee share schemes included within the Statement
of Changes in Equity includes a deferred tax credit of £0.4m (six months
ended 31 December 2020: £0.1m charge).
Factors affecting future taxation
UK corporation tax is calculated at 19% (six months ended 31 December 2020:
19%) of the estimated assessable profit for the period. Taxation for
overseas operations is calculated at the local prevailing rates.
On 3 March 2021, the Chancellor of the exchequer announced the increase in the
main rate of UK corporation tax from 19% to 25% for the year starting 1 April
2023. This change was substantively enacted on 24 May 2021.
On 20 July 2021, the Government of Gibraltar announced the increase in the
corporation tax rate in Gibraltar from 10% to 12.5% effective from 1 August
2021.
The rate increases will increase the amount of cash tax payments to be made by
the Group.
6 Discontinued operations
On 29 October 2020, the Group publicly announced the decision by the Board
that it had entered into a contract of sale in respect of its Blankenberge
casino in Belgium, a wholly owned subsidiary. At 31 December 2020 Blankenberge
casino was therefore classified as a disposal group held for sale, and was no
longer presented within International Venues in the segmental note 2.
In April 2021, the Group completed the sale of its standalone non-core Belgium
casino in Blankenberge to Kindred Group plc for £25.2m of cash sale proceeds.
Full details of the transaction was disclosed in the Group's 2021 Annual
Report and Accounts.
The results of Blankenberge casino for the prior period are presented below:
Six months ended
31 December 2020
(unaudited)
£m
Revenue 4.0
Cost of sales (0.7)
Gross Profit 3.3
Other operating costs (2.0)
Operating profit 1.3
Profit before taxation 1.3
Taxation (0.3)
Profit for the period from discontinued operations 1.0
6 Discontinued operations (continued)
The major classes of assets and liabilities of the balance sheet of the
Blankenberge casino classified as held for sale as at 31 December 2020 are
shown below in accordance with IFRS requirements.
As at
31 December
2020
(unaudited)
£m
Assets
Property, plant and equipment 0.6
Other receivables 1.8
Income tax receivable 0.3
Assets held for sale 2.7
Liabilities
Trade and other payables (2.1)
Liabilities directly associated with assets held for sale (2.1)
Net assets directly associated with disposal group 0.6
The net cash flows incurred by Blankenberge casino for the prior period are
presented below:
Six months ended
31 December 2020
(unaudited)
£m
Operating 0.5
Net cash inflow 0.5
For the six months ended 31 December 2021, an additional profit of £3.1m
relating to additional proceeds from the sale of the Belgium casino following
a positive outcome in a salary moderation case in Belgium has been recognised
as a Separately disclosed item, which is consistent with the disclosure of the
original transaction. Funds were received on 6 August 2021.
7 Dividends
No interim dividend in respect of the period ended 31 December 2021 (31
December 2020: £nil) will be recommended.
8 Underlying earnings per share
Underlying earnings is calculated by adjusting profit attributable to equity
shareholders to exclude separately disclosed items and the related tax
effects. Underlying earnings is one of the business performance measures
used internally by management to manage the operations of the business.
Management believes that the underlying earnings measure assists in providing
a view of the underlying performance of the business.
Underlying net earnings attributable to equity shareholders is derived as
follows:
Six months ended Six months ended
31 December 2021
31 December 2020
(unaudited) (unaudited)
Profit (loss) attributable to equity shareholders 84.6m (48.5)m
Adjusted for:
Separately disclosed items (after tax) (70.7)m 9.6m
Underlying earnings (loss) attributable to equity shareholders 13.9m (38.9)m
Continuing operations 13.9m (39.9)m
Discontinued operations - 1.0m
Weighted average number of ordinary shares in issue 468.4m 406.7m
Underlying earnings (loss) per share - basic 3.0p (9.5)p
Continuing operations 3.0p (9.8)p
Discontinued operations - 0.3p
Underlying earnings (loss) per share - diluted 3.0p (9.5)p
Continuing operations 3.0p (9.8)p
Discontinued operations - 0.3p
9 Government grants
As at As at
31 December
30 June
2021 2021
(unaudited) (audited)
£m £m
At the start of the period 0.8 11.9
Receivable in the period 3.0 64.4
Cash received (3.8) (75.5)
At the end of the period - 0.8
Government grants have been received under the Coronavirus Job Retention
Scheme in the UK and similar schemes in other countries in which the Group
operates.
10 Provisions
Property lease Disposal Restructuring Indirect tax
Pay Warranty
provisions provisions provisions provisions provisions provisions Total
£m £m £m £m £m £m £m
At 1 July 2021 (audited) 15.2 3.9 0.1 1.2 0.2 0.8 21.4
Charge to income statement (separately disclosed items) - - 1.2 - - - 1.2
Utilised in period (0.8) - - - - - (0.8)
At 31 December 2021 (unaudited) 14.4 3.9 1.3 1.2 0.2 0.8 21.8
Current 2.6 0.2 1.3 1.2 0.2 0.3 5.8
Non-current 11.8 3.7 - - - 0.5 16.0
At 31 December 2021 (unaudited) 14.4 3.9 1.3 1.2 0.2 0.8 21.8
11 Issued capital and reserves
At At
31 December
31 December
2021 2020
(unaudited) (unaudited)
£m £m
Authorised ordinary shares of 13 8/9p each
Number 1,296.0m 180.0 180.0
Issued and fully paid
At 1 July 2020 54.2
Issued on 24 November 2020 10.8
At 31 December 2020 65.0
At 31 December 2021 65.0
Share premium
At 1 July 2020 98.4
Issued on 24 November 2020 57.3
At 31 December 2020 155.7
At 31 December 2021 155.7
On 24 November 2020, the Group issued 77,746,020 ordinary shares as part of a
share placing and parallel retail offer, corresponding to 19.9% of total
shares issued. Each share has the same right to receive dividends and
represents one vote at shareholders' meetings.
Share premium proceeds in addition to the nominal value of the share issued
during the period have been included in share premium, less the costs
associated with the issue of new equity.
Total shares in issue at 31 December 2021 are 468,429,541 (2020: 468,429,541)
12 Borrowings to net debt reconciliation
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
2021 2020
(unaudited) (unaudited)
£m £m
Total loans and borrowings (108.7) (124.5)
Adjusted for:
Accrued interest 2.3 0.4
Unamortised facility fees (2.0) (4.0)
(108.4) (128.1)
Cash and short-term deposits from operations 163.5 82.9
Net cash (debt) excluding IFRS 16 lease liabilities 55.1 (45.2)
IFRS 16 lease liabilities (196.3) (223.1)
Net debt (141.2) (268.3)
13 Cash generated from operations
Six months ended Six months ended
31 December 2021
31 December 2020
(unaudited) (unaudited)
£m £m
Operating profit(loss) from continuing operations 103.0 (52.9)
Operating profit from discontinued operations - 1.3
Separately disclosed items from continuing operations (79.3) 11.1
Operating profit (loss) before separately disclosed items 23.7 (40.5)
Depreciation and amortisation 34.4 35.5
(Increase) in inventories (0.4) (0.1)
(Increase) decrease in other receivables (22.9) 6.8
Increase (decrease) in trade and other payables 22.4 (15.3)
Share-based payments 0.3 1.2
Loss on disposal of property, plant and equipment 0.3 -
57.8 (12.4)
Cash utilisation of provisions 0.1 -
Cash receipts in respect of VAT refund 83.1 -
Cash payments in respect of separately disclosed items (1.4) (5.1)
Cash generated from (used in) operations 139.6 (17.5)
14 Contingent liabilities
Property arrangements
The Group has certain property arrangements under which rental payments revert
to the Group in the event of default by the third party. At 31 December 2021,
it is not considered probable that the third party will default. As such, no
provision has been recognised in relation to these arrangements. If the
party were to default on these arrangements, the obligation for the Group
would be £1.5m on a discounted basis.
Legal and regulatory landscape
Given the nature of the legal and regulatory landscape of the industry, from
time to time the Group receives notices and communications from regulatory
authorities and other parties in respect of its activities and is subject to
regular compliance assessments of its licensed activities.
The Group recognises that there is uncertainty over any fines or charges that
may be levied by regulators as a result of past events and depending on the
status of such reviews, it is not always possible to reliably estimate the
likelihood, timing and value of potential cash outflows.
15 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 GuoLine Capital Assets
Limited ('GuoLine') which is incorporated in Jersey. At 31 December 2021,
entities controlled by GuoLine owned 56.1% of the Company's shares, including
52.0% through Guoco's wholly-owned subsidiary, Rank Assets Limited, the
Company's immediate parent undertaking.
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