REG - Rank Group PLC - Half-year Report
30/01/2025 07:00
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RNS Number : 1925V Rank Group PLC 30 January 2025
News release
LEI: 213800TXKD6XZWOFTE12
30 January 2025
The Rank Group Plc ('Rank' or the 'Group')
Interim results for the six months ended 31 December 2024
Continued strong momentum with revenue and profit growth across all businesses
and strong returns on investment
Rank (LSE: RNK) is pleased to announce its interim results for the six months
ended 31 December 2024 ('H1').
Financial highlights
H1 2024/25 H1 2023/24 Change
Financial Group underlying LFL net gaming revenue (NGR)(1) £401.8m £356.0m 13%
KPIs
Venues underlying LFL NGR(1) £281.6m £250.9m 12%
Digital underlying LFL NGR(1) £120.2m £105.1m 14%
Underlying LFL operating profit(1,2) £32.9m £21.2m 55%
Net cash pre IFRS 16 £24.2m £17.6m 38%
Underlying earnings per share(2) 4.8p 2.9p 66%
H1 2024/25 H1 2023/24 Change
Statutory Reported NGR £401.8m £362.6m 11%
Total Group operating profit £40.2m £16.2m 148%
Profit before taxation £34.7m £10.4m 234%
Profit after taxation £28.9m £8.8m 228%
Net free cash flow £4.3m £23.5m (82)%
Net debt £(111.8)m £(144.7)m 23%
Basic earnings per share 6.2p 1.9p 226%
Dividend per share 0.65p - -
1. On a like-for-like ('LFL') basis which removes the impact of club
openings, closures, foreign exchange movements and discontinued operations.
2. Excludes separately disclosed items.
Continued improvement in financial performance
· Like-for-like ('LFL') Net Gaming Revenue ('NGR') of £401.8m, up 13%
year-on-year with all businesses reporting growth.
· Underlying LFL operating profit increased 55% to £32.9m (H1 2023/24:
£21.2m).
· Group underlying LFL operating margin of 8.2%, up from 6.0% in the prior year.
· Statutory Group operating profit of £40.2m compared to £16.2m in H1 2023/24.
· Net free cash flow of £4.3m in the period (£23.5m in H1 2023/24), with net
cash pre IFRS 16 of £24.2m.
· The Board has proposed an Interim dividend of 0.65 pence per share.
Further progress against the strategic plan supported by targeted investments
· Focused investment has driven revenue growth in all businesses, with
particularly strong growth seen in Grosvenor (+15)% and Digital (+14)%.
· Grosvenor delivered £7.3m average NGR per week in H1, ahead of our
expectations. We now expect Grosvenor to deliver c. £8.0m average NGR per
week in the medium term, excluding the impact of land-based reforms, supported
by continued improvements in our customer risk management systems, product
offering and further enhancements in the quality of the customer experience.
· A rationalised Mecca venues estate grew NGR by 6% on a LFL basis in H1,
supported by selected investments in gaming machine areas and external signage
schemes.
· In Digital, the launch of our in-house developed Grosvenor and Mecca apps is
driving strong revenue growth. Our expectation remains that the Digital
business will grow LFL NGR by 8-12% CAGR and improve LFL operating margin by
at least 600bps in the medium term, despite the negative financial impact of
online reforms in the Gambling Act review.
· Successful disposal of the UK digital non-proprietary ('multi-brand') business
in December for a total consideration of £7.5m, with £3.0m received up front
and the £4.5m deferred consideration payable over 3 years.
· Preparations continue at pace to take full advantage of the legislative
reforms for the UK's land-based casinos which are expected to be implemented
in the summer of this year.
· Safer gambling improvements delivered through better use of technology,
improved risk management processes and the further development of colleague
skillsets.
· £100m of the current £120m bank facility extended for a further 12 months,
ensuring the Group retains an appropriate financing structure.
· Overall employee engagement score increased by 0.2 points to 8.1, a reflection
of the continued investment in our colleagues.
Current trading and outlook
All our businesses experienced strong trading through the Christmas and New
Year holiday period and revenue has been in line with our expectations
throughout January. Some trading variance is anticipated in Q3, followed by
increased cost pressures in Q4 with Gambling Act measures, including the
statutory levy and maximum online slot stakes, as well as the increase in
employer national insurance contributions and the National Living Wage,
impacting from April.
Trading performance is encouraging, and the Board is confident about the
Group's ability to deliver on its strategic goals. Underlying LFL operating
profit for the year ending 30 June 2025 is now expected to be slightly ahead
of current expectations. We expect the benefits of the land-based legislative
reforms to be seen in our next financial year.
John O'Reilly, Chief Executive of The Rank Group Plc said:
"We are pleased to deliver another good set of results as we continue to take
advantage of the growth opportunities available to us and maintain a strong
momentum across all of our businesses.
Customers are responding positively to the investment we are making and to the
experiences we are delivering both online and in our venues.
The second half will see inflationary employment cost headwinds and the
negative financial impact of some of the measures in the Gambling Act, but we
are confident that our ability to both grow revenues and secure further cost
efficiencies will help us to sustain our positive profit trajectory.
We are readying ourselves to take full advantage of the benefits of the
land-based legislative reforms which we expect to see implemented from summer
2025. A programme of venue and product improvements is well advanced as we
prepare to better meet the needs of our customers when the time comes.
The benefit of our digital proprietary platforms is increasingly evident in
our performance, as we continue to focus on product innovation and investment
in our technology. Our vision to optimise a seamless and tailored cross
channel offering for our customers continues to be our priority with some key
initiatives landing in H2.
Thanks to my colleagues across the Rank Group whose commitment to delivering
experiences that excite and entertain our customers has delivered this strong
set of results."
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');
· Underlying earnings per share is calculated by adjusting profit attributable
to equity shareholders to exclude SDIs;
· 'H1 2024/25' refers to the six-month period to 31 December 2024 and 'H1
2023/24' refers to the six-month period to 31 December 2023;
· 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 acquired businesses, foreign
exchange movements and discontinued operations;
· 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. Please refer to APMs for further details;
· Venues includes Grosvenor venues, Mecca venues and Enracha venues.
Enquiries
The Rank Group Plc
David Williams, director of corporate affairs and investor relations (inc.
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/)
Analyst meeting and webcast details:
Thursday 30 January 2025
There will be an analyst meeting at 9.30am, admittance to which is by
invitation only. There will also be a simultaneous webcast of the meeting.
For the live webcast, please register at www.rank.com or on
https://brrmedia.news/RNK_HY_25 (https://brrmedia.news/RNK_HY_25)
A replay of the webcast and a copy of the slide presentation 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.
Group performance review
Financial Summary H1 H1 Change
2024/25 2023/24
£m £m %
Total Net Gaming Revenue 401.8 362.6 11%
LFL Net Gaming Revenue 401.8 356.0 13%
Grosvenor Venues 192.8 167.5 15%
Mecca Venues 68.6 64.5 6%
Enracha Venues 20.2 18.9 7%
Digital 120.2 105.1 14%
Underlying operating profit 32.9 21.6 52%
Underlying LFL operating profit 32.9 21.2 55%
Grosvenor Venues 20.6 14.0 47%
Mecca Venues 0.3 - -
Enracha Venues 5.4 4.8 13%
Digital 14.2 9.9 43%
Corporate costs (7.6) (7.5) (1%)
Separately disclosed items 6.9 (5.9) -
Underlying net financing charge (5.1) (5.3) 4%
Statutory profit before taxation 34.7 10.4 234%
Taxation (5.8) (1.6) -
Statutory profit after taxation 28.9 8.8 228%
Underlying earnings per share 4.8p 2.9p 66%
Interim dividend per share 0.65p - -
Net debt (111.8) (144.7) 23%
Net cash pre IFRS16 24.2 17.6 38%
Net free cash flow 4.3 23.5 (82)%
Capital expenditure 27.3 19.3 41%
A strong H1 trading period saw Group LFL revenues grow 13%, with continued
momentum in all businesses and good progress against the strategic priorities
of sustained growth in our Grosvenor venues, accelerating growth and driving
scale in digital, and maximising cash in our bingo businesses. At a statutory
level, reported NGR was up 11%.
Our venues businesses have been impacted in recent years by elevated levels of
inflation, with Grosvenor and Mecca having to absorb cost rises in energy,
supply chain and, most notably, employment costs. Unlike many other
hospitality businesses, gambling companies cannot readily pass these cost
increases on to the consumer. Whilst many of the cost pressures have now
eased, employment costs have risen sharply in recent years.
LFL employment costs rose from £118.9m in H1 2023/24 to £133.6m, and we
expect total FY 2024/25 employment costs to be up c. 10% as a result of the
announced changes to employer national insurance contributions and the
National Living Wage from April 2025.
Despite these cost pressures, the strong growth in NGR saw underlying LFL
operating profit increasing 55% to £32.9m (H1 2023/24: £21.2m).
Separately disclosed items in the period totalled a £6.9m credit, (H1
2023/24: £5.9m cost) including the profit on the sale of the UK digital
non-proprietary business and credits associated with the historic closure of
venues, offset by costs associated with the amortisation of intangible assets
and property related provisions.
Statutory total Group operating profit for the period was £40.2m (£16.2m in
H1 2023/24).
Underlying net financing charge
The £5.1m underlying net financing charge for the six months ended 31
December 2024 was lower than the prior period's charge of £5.3m due to lower
loan amortisation costs and lower drawings in the period. The underlying net
financing charge includes £3.0m of lease interest calculated under IFRS 16.
Underlying net finance charges for 2024/25 are now expected to be
£10.0m-£10.5m. The finance charge associated with the full year lease
interest calculated under IFRS 16 is expected to be c. £6m.
Taxation
The Group's underlying effective corporation tax rate in H1 2024/25 was 19.8%
(H1 2023/24: 17.2%) based on a tax charge of £5.5m on underlying profit
before taxation.
The underlying effective corporation tax rate for 2024/25 is expected to be
19.0-21.0%.
On a statutory basis, the Group had an effective tax rate of 16.7% in H1
2024/25 (H1 2023/24: 15.4%) based on a tax charge of £5.8m on total profit of
£34.7m. This is lower than the effective tax rate on underlying profit due to
some of the separately disclosed items not attracting a tax charge.
In the six months ended 31 December 2024, the Group had an effective cash tax
rate of 0.9% on total profit before taxation (H1 2023/24: (43.3)%). The cash
tax rate differs from the standard rate of UK tax due to refunds of UK tax
paid in prior years from loss carry back claims.
The Group is expected to have a cash tax rate of approximately 0-2% for the
year ended 30 June 2025. The cash tax rate is driven by the H1 refunds of UK
tax paid in prior years from loss carry back claims and an expected refund in
H2 of Maltese tax paid in prior years from dividend refund claims.
Earnings per share ('EPS')
Basic EPS increased to 6.2p from 1.9p in the prior period. Underlying EPS
increased to 4.8p from 2.9p in the prior period driven by the improvement in
underlying LFL operating profit and lower net financing charges. For further
details refer to note 7.
Cash flow and net debt
As at 31 December 2024, net debt was £111.8m. Debt comprised £30.0m of term
loan, £14.0m of drawn revolving credit facilities and £136.0m in finance
leases, offset by cash at bank of £68.2m.
On 9 January 2025, the Group extended £100.0m of its £120.0m revolving
credit facility for a further 12 months, ensuring appropriate financing is in
place for the next 3 years. We have significant headroom against all of the
financial covenants associated with our financing.
H1 H1 2023/24(1)
2024/25 £m
£m
Operating profit from continuing operations 32.9 21.6
Depreciation and amortisation 25.4 23.9
Working capital and others (3.9) 16.3
Cash inflow from operations 54.4 61.8
Capital expenditure (27.3) (19.3)
Net interest and tax (2.2) 2.9
Lease payments (18.9) (18.8)
Cashflows in relation to SDIs (1.7) (3.1)
Net free cash flow 4.3 23.5
Business disposal 3.0 -
Dividend paid (4.0) -
Total cash inflow 3.3 23.5
Opening net cash / (debt) pre IFRS 16 20.9 (5.9)
Closing net cash pre IFRS 16 24.2 17.6
IFRS 16 lease liabilities (136.0) (162.3)
Closing net debt post IFRS 16 (111.8) (144.7)
1. Restated
Capital Allocation Policy and Dividend
It is the Board's primary intention to ensure the Group maintains a strong
balance sheet position and has appropriate financing in place to manage
operational requirements.
The Group will continue to invest capital in a disciplined manner to further
improve the customer proposition and to maximise the opportunity presented by
the forthcoming land-based reforms. This includes addressing the historical
backlog of infrastructure investment that is required to ensure our venues can
operate effectively.
Growth capital expenditure is subject to strict hurdle rates, typically with a
payback of 3 years or less. We will prioritise investment in venues based on
competitive potential in local markets, clearest growth opportunities and
investments that allow us to quickly assess the impacts of the land-based
reforms.
We will make returns to shareholders by way of an ordinary dividend, operating
a progressive dividend policy, with a payout ratio that is expected to grow to
over 35%.
After consideration of inorganic growth opportunities that align with the
Group's strategic plan, any surplus capital will be returned to shareholders
through supplementary returns at the Board's discretion.
As at 31 December 2024, the Group had a closing net cash balance (excluding
leases) of £24.2m. On 9 January 2025, the Group extended £100m of the
current £120m bank facility for a further 12 months, ensuring we retain an
appropriate financing structure for the medium term.
In line with the above dividend policy, the Board has announced an Interim
dividend of 0.65 pence per share. The dividend will be paid on 13 March 2025
to shareholders on the register as at 14 February 2025.
Business Review
Grosvenor venues
Key financial performance indicators:
H1 2024/25 H1 Change
£m 2023/24
£m
LFL(1) NGR 192.8 167.5 15%
London 62.7 56.8 10%
Rest of the UK 130.1 110.7 18%
Total NGR 192.8 167.5 15%
Underlying(2) LFL(1) operating profit 20.6 14.0 47%
Total operating profit 19.8 13.7 45%
1. Results are presented on a like for like ('LFL') basis which
removes the impact of club openings, club closures, foreign exchange movements
and discontinued operations.
2. Before the impact of separately disclosed items.
Delivering sustained growth is the strategic priority of the Grosvenor venues
business. We have emerged from our prolonged recovery phase, are activating
key growth levers and are identifying efficiencies in our operations to
continue to drive revenue and profitable growth.
Our average NGR for H1 2024/2025 grew 15% to £7.3m per week, with continued
investment in product and in selected properties, further improvements in
safer gambling measures and a strengthened management team driving further
customer experience enhancements.
The revenue growth, which was ahead of our expectations, resulted from a 7%
growth in visitor numbers and an 8% growth in spend per visit. London venues
grew NGR 10% with the rest of the UK growing 18%.
We are investing in product and venues improvements, while continuing to
prepare our venues and teams for the benefits of the land-based legislative
reforms, expected to be implemented from summer 2025.
At a product level, we have improved our table gaming offer with continued
investment in roulette wheels and gaming tables and the further roll out of
our table management system which optimises table opening plans, game mix and
staking levels. Table gaming revenues grew 23%, benefitting from a stronger
than average table gaming margin in the period. Our strong focus on poker
across the estate continued in H1 and included Goliath, an 11-day event at the
Grosvenor Casino in Coventry, the largest ever poker tournament held outside
North America, with entries totalling nearly 12,000 players competing for a
prize pool of £1.9m.
We are nearing the completion of our electronic roulette terminal upgrade. In
H1, we upgraded 341 terminals, taking the total number of new machines to 600
since 2022, and added 322 electronic baccarat licences to the existing
electronic terminals in 33 venues, further enhancing the offer as we look to
give Grosvenor customers the best electronic gaming experience in the market.
Electronic gaming revenues grew 16% on prior year.
Gaming machine revenues grew 6%, with growth constrained by the supply of
machines not meeting customer demand during key playing periods of the week.
We have increased the number of gaming machine manufacturers to five,
providing a broader choice of machines for customers to enjoy. The breadth of
machine suppliers in our estate will be particularly important once the
land-based reforms are implemented.
Our trial of sports betting at Grosvenor Luton gives encouragement ahead of
the legislative reforms.
Planning for development works in our venues has accelerated in readiness for
the land-based legislative reforms. The criteria for determining where we are
targeting investment centres around venues where we identify the most
competitive potential, the clearest growth opportunities, and where we will be
able to quickly assess the impacts of the land-based reforms when implemented.
Our approach is to invest at levels which are supported by our confidence in
the results of the land-based reforms.
The refurbishment of Grosvenor Leicester completed in H1 at a total cost of
£4.0m and the early signs are that the return on investment is strong. Work
began in H1 on the refurbishment work at our flagship casino, The Vic (on
London's Edgware Road), and is due to complete towards the end of H2, ahead of
the important summer trading period, at a total capital cost of c. £15m. We
expect payback on our growth investment to be around 3 years.
The ongoing refinement of our approach to safer gambling and management of
customer risk revolves around better use of technology, improved processes for
identifying and addressing potentially harmful play, developing the skillsets
of our colleagues to achieve high quality customer interactions, and
supporting colleagues in improving the experience for those customers who are
required to undergo financial checks.
During H1, we have further rolled out our cultural transformation programme
("From Like To Love") for the leadership teams of all our casinos, with some
470 managers now having been through the programme. Our employee opinion
survey in November 2024 returned strong results, with an engagement score of
8.2, up from 7.9 at the 2023/24 year end.
The increase in the National Living Wage, changes to employer national
insurance contributions (the rate and the threshold) and the new statutory
levy for research, prevention and treatment (RPT) of problem gambling rate of
0.5% of gross gambling yield ("GGY") will combine to create significant cost
headwinds from the final quarter of this financial year. We are targeting
further operational efficiencies and initiatives to enhance productivity with
a view to offsetting some of the impact of these headwinds.
Underlying LFL operating profit of £20.6m in H1, up 47% on the prior year
(£14.0m in H1 2023/24), highlights the strong operating leverage of the
Grosvenor business.
At a statutory level, operating profit improved to £19.8m, up from £13.7m in
the prior year period.
As a result of the strong trading performance in the first half, we are now
rebasing our expectations that, through organic growth and excluding the
benefits of the land based legislative reforms, we can grow Grosvenor's
revenues to c. £8.0m per week in the medium term.
With a clear roadmap for performance improvements, venue optimisation and
product enhancements, we are confident that Grosvenor customers can look
forward to an even more exciting and entertaining experience in our casinos in
H2 and beyond.
We will be hosting a Capital Markets Event in the summer of 2025, focusing on
the Grosvenor venues business, to showcase the progress made to date and the
medium-term opportunities.
Mecca venues
Key financial performance indicators:
H1 2024/25 H1 Change
£m 2023/24
£m
LFL(1) NGR 68.6 64.5 6%
Total NGR 68.6 67.2 2%
Underlying(2) LFL(1) operating profit 0.3 - -
Total operating profit (loss) 3.5 (1.0) -
1. Results are presented on a like for like ('LFL') basis which
removes the impact of club openings, club closures, foreign exchange movements
and discontinued operations.
2. Before the impact of separately disclosed items.
Maximising cash is the strategic aim of our Mecca venues business. In H1, we
largely completed the rightsizing of the estate, with one further venue
closure resulting in an estate of 51 clubs. This rationalisation has resulted
in more competitive venues with higher liquidity and stronger prize boards
and, as a result, a more vibrant business.
Mecca LFL NGR grew 6% versus prior year, driven by 5% growth in spend per
visit and a 1% growth in visits.
We continue to invest in the mainstage bingo game which is the primary driver
for customers visiting a venue. Locally, we are ensuring strong competitive
prize boards at value for money prices. Consequently, mainstage bingo GGR was
up 5%, with NGR flat following the deduction of added prize money. However,
with stronger visit numbers as a result of attractive bingo prizes, Mecca saw
an 8% increase in bingo interval game revenue and a 9% growth in gaming
machine revenue.
In product terms, we deployed 1,500 new Mecca Max units as bingo customers
continue to gradually migrate to tablet-based play. 235 new Novomatic
machines, including the first VIP Galaxy units, were launched in 44 clubs, as
part of a wider focus on upgrading our machine offering. An agreement with
Light & Wonder to renew 1,495 machines has been concluded and the rollout
has now commenced.
Investment in our machine areas is also continuing and delivering fast
returns.
A growing confidence across the Mecca business is evident with a record
colleague engagement score of 8.5 in our most recent employee opinion survey.
In H1, employment costs were up £3.0m and these costs will also represent the
most significant H2 headwind.
Underlying LFL operating profit of £0.3m in H1 (£nil in H1 2023/24) shows a
positive trajectory. Ensuring Mecca continues to improve its contribution to
Group profitability and cash generation remains our priority, alongside
helping to drive scale in our digital business by leveraging the cross-channel
opportunities.
Enracha venues
Key financial performance indicators:
H1 2024/25 H1 Change
£m 2023/24
£m
LFL(1) NGR 20.2 18.9 7%
Total NGR 20.2 19.5 4%
Underlying(2) LFL(1) operating profit 5.4 4.8 13%
Total operating profit 5.4 5.0 8%
1. Results are presented on a like for like ('LFL') basis which
removes the impact of club closures, foreign exchange movements and
discontinued operations.
2. Before the impact of separately disclosed items.
Like Mecca, cash maximisation is the strategic priority for the Enracha estate
of nine well-invested flagship bingo, machine gaming and sports betting venues
in Spain. Enracha continued to build on the strong revenue growth seen in
recent years, with LFL NGR up 7% on the prior year to £20.2m, driven by
customer visits up 7%.
Underlying LFL operating profit grew 13% to £5.4m.
Following the completion of the refurbishment of our Seville venue in H1 which
saw 20% NGR growth and 7% growth in visits in the subsequent period, we plan
to refurbish our Sabadell venue in H2, increasing the availability of both
gaming machines and electronic roulette.
Digital
Key financial performance indicators:
H1 2024/25 H1 Change
£m 2023/24
£m
LFL(1) NGR 120.2 105.1 14%
Mecca 48.1 39.8 21%
Grosvenor 41.0 33.5 22%
Other proprietary brands 11.6 10.9 6%
Non proprietary brands 6.0 8.0 (25)%
Enracha/Yo 13.5 12.9 5%
Total NGR 120.2 108.4 11%
Underlying(2) LFL(1) operating profit 14.2 9.9 43%
Total operating profit 19.2 6.3 205%
1. Results are presented on a like for like ('LFL') basis which
removes the impact of club closures, foreign exchange movements and
discontinued operations.
2. Before the impact of separately disclosed items.
Accelerating growth and driving scale remains our strategic priority for the
digital business, and the strong H1 performance demonstrates the returns we
are seeing on the investments we have made in our proprietary platforms, in
particular the pipeline of product and customer experience improvements.
In H1, LFL NGR grew 14% to £120.2m with average revenue per customer up 16%.
In the UK, digital NGR grew 16% to £106.7m, building on the momentum with
which we exited last year, with very strong growth in our two cross-channel
brands, Grosvenor (+22%) and Mecca (+21%).
Our other UK facing digital brands, including Stride legacy brands, grew 6%.
Strong revenue growth in the half was driven by initiatives including the
launch of our new proprietary app in Mecca, featuring an enhanced bingo
offering with new slots content and bonus tools. The Grosvenor app offers new
live tables from our Grosvenor venues and a number of product enhancements
which are driving app penetration amongst our customer base. We have invested
in our reward and loyalty programmes for both Grosvenor and Mecca as we work
towards our ambition of delivering a seamless and tailored cross-channel
experience for our customers.
We disposed of the non-proprietary business in December 2024 for a total
consideration of £7.5m. Prior to its disposal the non-proprietary business
had seen a 25% decline in LFL revenues year on year.
Safer gambling remains at the heart of our approach to customer sustainability
and in H1 we completed our work to bring together Safer Gambling and Customer
Due Diligence into a single operational team using our proprietary Hawkeye
system to monitor customer behaviour. We were delighted that Rank Interactive
was awarded EGR's 'Safer Gambling Operator of the Year' in H1 which, in part,
recognises how we have used our central engagement platform to build out real
time data capabilities to support improvements to risk management and more
effective interactions with our customers.
H2 will see the delivery of cross-channel single membership for Mecca
customers, enabling us to provide a more personalised experience with tailored
customer rewards. We will also roll out automatic bank transfer functionality
for digital customers, enabling funds to be returned immediately into a
customer's bank account rather than via a payment card.
In Spain, digital revenues grew 5%. The consistent strong growth in the Yo
digital business in Spain stalled in Q2 as we are reaching the capacity for
concurrent players in a single bingo game. This restricts our ability to
deliver regular big prize rooms, which are a key driver of visits to
YoBingo. We have been developing a new bingo platform for the Yo business
which, when launched, will provide much needed additional capacity. The
development is code complete and we are currently undertaking performance
testing with an intention of launching the platform later this year. Plans are
also in place to launch new mobile apps in Spain for YoCasino, YoSports and
YoBingo during H2.
The application to the Portuguese regulator, SRIJ, for a licence for YoBingo
remains in progress. It continues to take longer than we had anticipated, but
we believe the final stage of the regulator's software testing process is
currently underway and we hope to now complete the final phase of the
homologation programme in the coming few months.
Underlying LFL operating profit for the digital business in H1 was £14.2m, a
growth of 43%.
In the UK, the new statutory levy for research, prevention and treatment (RPT)
of problem gambling will apply from April 2025. For our UK digital business,
the rate will be set at 1.1% of GGY, with an impact on digital profitability
in Q4 of £0.7m and an annualised impact of £2.8m.
We are working alongside our industry peers, the credit reference agencies and
the Gambling Commission on the trial of frictionless financial risk
assessments in line with the policy proposal in the Gambling Act Review white
paper.
Our previous guidance of 8-12% NGR CAGR and 600bps of margin improvement
relative to 2022/23 accounts for the impact of the Gambling Act Review,
notably the anticipated impact of the maximum slot staking limits which will
be implemented in H2. Given the current momentum within the UK digital
business and the strong pipeline of initiatives, we would anticipate operating
towards the upper end of this range in the medium term.
Sustainability update
Rank is committed to its sustainability strategy of being a resilient and
responsible business. The Group drives its sustainability strategy through
four focus areas: Customers, Colleagues, Environment and Communities.
Customers
In Grosvenor venues, we continued to focus on enabling our colleagues to
better track play and ensure customers are not experiencing harm. Launching
a comprehensive data dashboard for our colleagues in H1 was an important step
forward. Our customer-facing colleagues now have a consolidated, accurate and
timely view of the customer's play. We also appointed local dedicated Player
Protection managers who understand the local customer base and can provide
accessible and appropriate support to our in-venue teams.
In Mecca venues, we continued to develop the skills of our colleagues across
our venues with 23 venues participating in the latest wave of bespoke safer
gambling training. Improvements to our safer gambling technologies remain a
priority and work continues to deliver efficiencies through automation and by
improving the quality of the data available to our Mecca colleagues.
In the UK digital business, we have continued to prepare teams for the impact
of the introduction of regulatory changes resulting from the Gambling Act
Review. In H1, we introduced the new financial vulnerability checks and have
also implemented the mandated in-game changes aimed at reducing harmful play.
We have successfully completed the technology development required to restrict
maximum staking for online slots to £5 (£2 for under 25 year olds) and await
confirmation of the implementation date, expected to be April 2025.
Colleagues
A key highlight in H1 was measuring the impact of our people strategy through
the latest employee opinion survey. Our overall engagement score increased
by 0.2 points to 8.1.
We have clear plans to further develop our colleague engagement through
improving our training and development programme, by refining the right
behaviours around Equality, Diversity & Inclusion ("ED&I"), by
engaging and rewarding the right colleague behaviours, and through
prioritising the wellbeing of our colleagues.
Environment
We continue to deliver net zero reductions in line with our net zero plan.
In H1, we achieved 32% of our 2024/25 reduction target, with our gas and
electricity emissions reducing by c. 17%. We anticipate that all electricity
for our UK and Spanish operations will be from zero emission sources in the
second half, a significant step to removing emissions from our operations.
We have focused on ensuring that we have a full view of our scope three
emissions. As this works nears its conclusion, a detailed scope three
reduction plan will be devised in H2, with reduction strategies in place by
the end of 2024/25.
Communities
Our ambition is to make a positive impact within the community both nationally
and locally, either through our UK charitable partnership with Carers Trust or
through local initiatives that directly impact a venue's local community. In
H1, we raised over £177k for Carers Trust and are now approaching our £4m
total fundraising target.
Regulatory update
The UK Government's review of gambling legislation and regulation commenced in
December 2020 and appeared likely to be implemented for land-based casinos in
the autumn of 2024, but these reforms were inevitably put on hold by the
calling of an early general election.
The new Government has confirmed that a statutory levy for research,
prevention and treatment ('RPT') of gambling-related harm will take effect
from 6 April 2025, with payment rates set at 0.2% of GGY for UK land-based
bingo, 0.5% for UK land-based casinos and 1.1% for UK digital. We expect the
gross impact for the Group to be c. 4.5m on an annualised basis.
The Government is yet to confirm a commencement date for the slot staking
limits (set at £5, with customers under 25 set at £2), but we expect these
to be in place from the start of Q4 FY2024/25 with an anticipated impact on
digital revenue of c. £8m on an annualised basis.
We are confident that the Government recognises that changes to legislation
are vital to modernise the proposition and support the jobs and tax revenues
that businesses like ours provide.
Baroness Twycross, the Gambling Minister, has expressed her support for the
specific legislative reforms for casinos outlined in the previous government's
white paper, commenting in a speech made in December 2024: "I am very aware of
the relatively modest changes being asked for by the casino sector. I support
the measures outlined in the white paper and I will provide an update as soon
as possible on their progress."
The Minister also outlined her support for the land-based bingo sector: "I
also want to work closely with other parts of the land-based sector, such as
bingo clubs … to understand what we can do to support them. They are a vital
and vibrant part of many communities and I want to see them thrive, not just
survive."
We expect the secondary legislation permitting the casino reforms to be
completed during H2 2024/25, in time for the rollout of improvements to begin
this summer. These reforms will enable us to more than double the number of
gaming machines across the Grosvenor estate and will permit sports betting in
casinos which will help to further broaden the customer base and provide
additional reasons to visit.
We anticipate that other proposed changes, including reforms to electronic
payments in venues and the current 80/20 rule restricting Category B3 machines
to just 20% of the total number of machines in bingo clubs and replacing it
with a 2:1 ratio of Category B3 machines to Category C or D machines, will
follow later in the calendar year or early 2026.
The ability to offer side bets on the main stage game of bingo, one of the
policies presented in the white paper, would help venues to thrive, delivering
additional fun and excitement to the game and providing more customers with
more opportunities to enjoy a win.
We believe that the modernising reforms will help us to better meet the
expectations of today's consumers in our venues and, although it is difficult
to quantify the likely upside of the land-based reforms, we expect the Group
to be a significant net beneficiary of the Government's Gambling Act Review.
Board update
On 2 December 2024, we announced the appointment of Mr. Christian Nothhaft as
a non-independent non-executive director. The appointment coincided with the
retirement from the Board of Mr. Chew Seong Aun. The Board wishes to reiterate
its gratitude for the valuable contribution to the Group made during Mr.
Chew's tenure of office.
Going concern statement
Based on the Group's cash flow forecasts and business plan, the Directors
believe that the Group will generate sufficient cash to meet its liabilities
and meet covenant requirements as they fall due for the period up to 31
January 2026. In making such statement, the Directors highlight forecasting
accuracy in relation to the level of trading performance achieved as the key
sensitivity in the approved base case.
The Directors have considered two downside scenarios which reflects a reduced
trading performance, inflationary impacts on the cost base and various
management controllable mitigations.
In each of the downside scenarios the Group will generate sufficient cash to
meet its liabilities as they fall due and meet its covenant requirements to
the period 31 January 2026 with a downside scenario requiring the
implementation and execution of mitigating cost actions within the control of
management.
Principal risks and uncertainties
Key business risks are reviewed by the executive directors, other senior
executives and the Board on a regular basis and, where appropriate, actions
are taken to mitigate the key risks that are identified. We have a Group wide
enterprise risk management framework and approach in place, integrated into
our organisational management structure and responsibilities, with the Board
having overall responsibility for risk management in the Group.
The principal risks and uncertainties that could impact the Group are detailed
in the Group's Annual Report and Accounts 2024 and the Board of Directors
confirm that they remain relevant for the remainder of the financial year.
Alternative performance measures
When assessing, discussing and measuring the Group's financial performance,
management refer to measures used for monitoring internal performance. 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 profit /(loss) post-corporate cost reallocation Profit measure Operating profit / (loss) · Separately disclosed items
· Excludes contribution from any venue openings, closures, disposals, acquired
businesses and discontinued operations
· Foreign exchange movements
· Corporate cost reallocation
Underlying earnings / (loss) per share Profit measure Earnings / (loss) per share · Separately disclosed items
Free cash flow Cash measure Net cash generated from operating activities · Lease principal repayments
· Cash flow in relation to separately disclosed items
· Cash capital expenditure
· Net interest and tax payments
Underlying LFL operating profit /(loss) post-corporate cost reallocation
Profit measure
Operating profit / (loss)
· Separately disclosed items
· Excludes contribution from any venue openings, closures, disposals, acquired
businesses and discontinued operations
· Foreign exchange movements
· Corporate cost reallocation
Underlying earnings / (loss) per share
Profit measure
Earnings / (loss) per share
· Separately disclosed items
Free cash flow
Cash measure
Net cash generated from operating activities
· Lease principal repayments
· Cash flow in relation to separately disclosed items
· Cash capital expenditure
· Net interest and tax payments
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
operating performance. The adjustment helps users of the accounts better
assess the underlying performance of the Group, helps align to the measures
used to run the business and still maintains clarity to the statutory reported
numbers.
Further details of the SDIs can be found in the Financial Review and note 3.
2. Contribution from any venue openings, closures, disposals, acquired businesses
and discontinued operations
In the current period (H1 2024/25), 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 2024/25 H1 2023/24
Underlying LFL net gaming revenue (NGR) 401.8 356.0
Open, closed and disposed venues - 5.6
Foreign exchange ('FX') - 1.0
Underlying NGR - continuing operations 401.8 362.6
Calculation of comparative underlying LFL NGR
H1 2023/24
Reported underlying LFL NGR 362.6
H1 2024/25 closed venues (5.6)
H1 2024/25 FX (1.0)
Restated underlying LFL NGR 356.0
£m H1 2024/25 H1 2023/24
Underlying LFL operating profit 32.9 21.2
Opened, closed and disposed venues - 0.1
Foreign exchange ('FX') - 0.3
Underlying operating profit - continuing operations 32.9 21.6
Separately disclosed items 7.3 (5.4)
Operating profit - continuing operations 40.2 16.2
Calculation of comparative underlying LFL operating profit
£m H1 2023/24
Reported underlying LFL operating profit 21.7
Reversal of H1 2023/24 closed venues (0.1)
H1 2024/25 closed venues (0.1)
H1 2024/25 FX (0.3)
Underlying LFL operating profit 21.2
£m H1 2024/25 H1 2023/24
Underlying current tax charge (2.1) (1.5)
Tax on separately disclosed items (0.3) 1.2
Deferred tax (3.4) (1.3)
Total tax charge (5.8) (1.6)
P H1 2024/25 H1 2023/24
Underlying EPS 4.8 2.9
Separately disclosed items 1.4 (1.0)
Reported EPS 6.2 1.9
Directors' Responsibility Statement
Each of the directors named below confirm that to the best of his or her
knowledge:
· The condensed consolidated financial statements, prepared under UK-adopted IAS
34 'Interim Financial Reporting', give a true and fair view of the assets,
liabilities, financial position and profit of the Company and the undertakings
included in the consolidation taken as a whole; and
· The management report includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together with a
description of the risk and uncertainties that they face.
The directors of The Rank Group Plc are:
Lucinda Charles-Jones
Richard Harris
Keith Laslop
Katie McAlister
Christian Nothhaft
John O'Reilly
Alex Thursby
Karen Whitworth
Signed on behalf of the board on 29 January 2025
John
O'Reilly
Richard Harris
Chief
Executive
Chief Financial Office
Condensed Consolidated Income Statement
for the six months ended 31 December 2024
Six months ended 31 December 2024 (unaudited) Six months ended 31 December 2023 (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 2 401.8 - 401.8 362.6 - 362.6
Cost of sales 2 (229.1) - (229.1) (208.3) - (208.3)
Gross profit 172.7 - 172.7 154.3 - 154.3
Other operating costs 2,3 (139.8) (2.1) (141.9) (132.7) (5.4) (138.1)
Other operating income 3 - 9.4 9.4 - - -
Operating profit (loss) 2 32.9 7.3 40.2 21.6 (5.4) 16.2
Financing:
- finance costs (5.4) - (5.4) (5.9) - (5.9)
- finance income 0.6 - 0.6 0.4 - 0.4
- other financial (losses) gains (0.3) (0.4) (0.7) 0.2 (0.5) (0.3)
Total net financing charge 4 (5.1) (0.4) (5.5) (5.3) (0.5) (5.8)
Profit (loss) before taxation 27.8 6.9 34.7 16.3 (5.9) 10.4
Taxation 5 (5.5) (0.3) (5.8) (2.8) 1.2 (1.6)
Profit (loss) for the period 22.3 6.6 28.9 13.5 (4.7) 8.8
Attributable to:
Equity holders of the parent 22.3 6.6 28.9 13.5 (4.5) 9.0
Non-controlling interests - - - - (0.2) (0.2)
22.3 6.6 28.9 13.5 (4.7) 8.8
Earnings (loss) per share attributable to equity shareholders
- basic 7 4.8p 1.4p 6.2p 2.9p (1.0)p 1.9p
- diluted 7 4.8p 1.4p 6.2p 2.9p (1.0)p 1.9p
Earnings (loss) per share - continuing operations
- basic 7 4.8p 1.4p 6.2p 2.9p (1.0)p 1.9p
- diluted 7 4.8p 1.4p 6.2p 2.9p (1.0)p 1.9p
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 31 December 2024
Six months ended Six months ended
31 December
31 December
2024
2023
(unaudited) (unaudited)
£m £m
Comprehensive income:
Profit for the period 28.9 8.8
Other comprehensive income:
Items that may be reclassified to profit or loss:
Exchange adjustments net of tax (0.6) 0.3
Total comprehensive income for the period 28.3 9.1
Attributable to:
Equity holders of the parent 28.3 9.3
Non-controlling interests - (0.2)
Condensed Consolidated Balance Sheet
at 31 December 2024 and 30 June 2024
As at As at
31 December
30 June
2024
2024
(audited and restated)
(unaudited)
Note £m £m
Assets
Non-current assets
Intangible assets 442.6 446.4
Property, plant and equipment 123.9 112.5
Right-of-use assets 57.9 64.1
Deferred tax assets 4.5 8.3
Other receivables 7.1 5.2
636.0 636.5
Current assets
Inventories 2.2 2.0
Other receivables 21.1 19.1
Income tax receivable 5.2 8.5
Cash and short-term deposits 72.6 66.1
Assets classified as held for sale - 0.3
101.1 96.0
Total assets 737.1 732.5
Liabilities
Current liabilities
Trade and other payables (145.9) (149.0)
Lease liabilities (32.4) (32.6)
Income tax payable (2.7) (4.2)
Financial liabilities - loans and borrowings (4.6) (3.3)
Provisions 9 (1.1) (3.6)
(186.7) (192.7)
Net current liabilities (85.6) (96.7)
Non-current liabilities
Lease liabilities (103.6) (120.8)
Financial liabilities - loans and borrowings (42.7) (40.6)
Deferred tax liabilities (2.8) (2.8)
Provisions 9 (33.7) (33.2)
Retirement benefit obligations (3.3) (3.4)
(186.1) (200.8)
Total liabilities (372.8) (393.5)
Net assets 364.3 339.0
Capital and reserves attributable to the Company's equity shareholders
Share capital 65.0 65.0
Share premium 155.7 155.7
Capital redemption reserve 33.4 33.4
Exchange translation reserve 13.3 13.9
Retained earnings 96.9 71.0
Total equity before non-controlling interests 364.3 339.0
Total shareholders' equity 364.3 339.0
Condensed Consolidated Statement of Changes in Equity
for the six months ended 31 December 2024
For the six months ended 31 December 2024 (unaudited)
Reserves
attributable to
Capital Exchange the Company's Non-
Share Share redemption translation Retained equity controlling Total
capital premium reserve reserve earnings shareholders interests equity
£m £m £m £m £m £m £m £m
At 1 July 2024 65.0 155.7 33.4 13.9 71.0 339.0 - 339.0
Comprehensive income:
Profit for the period - - - - 28.9 28.9 - 28.9
Other comprehensive income:
Exchange adjustments net of tax - - - (0.6) - (0.6) - (0.6)
Total comprehensive (loss) profit for the period - - - (0.6) 28.9 28.3 - 28.3
Transactions with owners:
Credit in respect of employee share schemes including tax - - - - 1.0 1.0 - 1.0
Dividends paid to equity holders - - - - (4.0) (4.0) - (4.0)
At 31 December 2024 65.0 155.7 33.4 13.3 96.9 364.3 - 364.3
For the six months ended 31 December 2023 (unaudited)
Reserves
attributable to
Capital Exchange the Company's Non-
Share Share redemption translation Retained equity controlling Total
capital premium reserve reserve earnings shareholders interests equity
£m £m £m £m £m £m £m £m
At 1 July 2023 (as previously reported) 65.0 155.7 33.4 14.0 61.6 329.7 0.3 330.0
Impact of prior period error - - - - (4.4) (4.4) - (4.4)
At 1 July 2023 (as restated) 65.0 155.7 33.4 14.0 57.2 325.3 0.3 325.6
Comprehensive income:
Profit (loss) for the period - - - - 9.0 9.0 (0.2) 8.8
Other comprehensive income:
Exchange adjustments net of tax - - - 0.3 - 0.3 - 0.3
Total comprehensive profit (loss) for the period - - - 0.3 9.0 9.3 (0.2) 9.1
Transactions with owners:
Credit in respect of employee share schemes including tax - - - - 0.6 0.6 - 0.6
At 31 December 2023 65.0 155.7 33.4 14.3 66.8 335.2 0.1 335.3
Condensed Consolidated Cash Flow Statement
for the six months ended 31 December 2024
Six months ended Six months ended
31 December 2024
31 December 2023
(unaudited) (unaudited and restated)
Note £m £m
Cash flows from operating activities
Cash generated from operations 11 52.7 58.9
Interest received 0.5 0.5
Interest paid (2.4) (2.1)
Tax paid (0.3) 4.5
Net cash from operating activities 50.5 61.8
Cash flows from investing activities
Purchase of intangible assets (4.8) (7.9)
Purchase of property, plant and equipment (22.5) (11.4)
Proceeds on sale of business 3.0 -
Net cash used in investing activities (24.3) (19.3)
Cash flows from financing activities
Dividends paid to equity holders 6 (4.0) -
Repayment of revolving credit facilities (60.5) (52.0)
Drawdown of revolving credit facilities 63.0 88.0
Lease principal and interest payments (18.9) (18.8)
Repayment of term loans - (44.4)
Net cash used in financing activities (20.4) (27.2)
Net increase in cash, cash equivalents and bank overdrafts 5.8 15.3
Effect of exchange rate changes - (0.2)
Cash and cash equivalents at start of period(1) 62.4 56.5
Cash and cash equivalents at end of period(1) 68.2 71.6
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) and
Spain.
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 29 January 2025.
This condensed consolidated interim 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 2024 were
approved by the Board of Directors on 14 August 2024 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 2024 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 2024, which have been prepared in accordance with UK-adopted
International Accounting Standards.
Going concern
Assessment
In adopting the going concern basis for preparing the financial information,
the Directors have considered the circumstances impacting the Group during the
year as detailed in the operating review, including the latest forecast for
2024/25 ('the Base case') and long range forecast approved by the Board, and
recent trading performance, and have reviewed the Group's projected compliance
with its banking covenants and access to funding options for the 12 months
ending 31 January 2026 for the going concern period.
The Directors have reviewed and challenged management's assumptions for the
Group's Base case view for the going concern period. Key considerations are
the assumptions on the levels of customer visits and their average spend in
the venues-based businesses, and the number of first time and returning
depositors in the digital businesses, and the average level of spend per visit
for each. The Base case view 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 within the going concern
assessment period is that the Group have access to the following newly
extended committed facilities, which were executed in January 2025:
· Revolving credit facilities ("RCF") of £90.0m, repayable as
£15.0m in January 2027 and £75.0m in January 2028.
· Term loan of £30m with repayment of £5m in October 2026 and
£25m in October 2027
In undertaking their assessment, the Directors also reviewed compliance with
the banking covenants ("Covenants") which are tested bi-annually at June and
December. The Group expects to meet the Covenants throughout the going concern
period and at the test dates, being June 2025 and December 2025, and have
sufficient cash available to meet its liabilities as they fall due.
Sensitivity Analysis
The Base case view reflects the Directors' best estimate of the outcome for
the going concern period. A number of plausible but severe downside risks,
including consideration of possible mitigating actions, have been modelled
with particular focus on the potential impact to cash flows, cash headroom and
covenant compliance throughout the going concern period.
The two downside scenarios modelled are:
(i) revenues in Grosvenor fall by 10% and Rank
Interactive by 10% versus the Base case view, with management taking a number
of mitigating actions including reduction in capital expenditure, reduction in
staff costs and the removal of the Group planning contingency.
(ii) a reverse stress test, revenues in Grosvenor fall by
23.5% and revenues in Rank Interactive fall by 15% in the next half year and
28% and 21.6% respectively thereafter, with management taking actions as for
scenario (i) but with further mitigating actions on employment costs and
marketing costs.
Going concern (continued)
Having modelled the scenarios, the indication is that the Group would continue
to meet its covenant requirements in all scenarios and have available cash to
meet liabilities within the going concern period.
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 2026.
For these reasons, the Directors continue to adopt the going concern basis for
the preparation of these consolidated and Company financial statements, and in
preparing the consolidated and Company financial statements, they do not
include any adjustments that would be required to be made if they were
prepared on a basis other than going concern.
Going concern statement
Based on the Group's cash flow forecasts and business plan, the Directors
believe that the Group will generate sufficient cash to meet its liabilities
as they fall due for the period up to 31 January 2026. In making such
statement, the Directors highlight forecasting accuracy in relation to the
level of trading performance achieved, as the key sensitivity in the approved
Base case.
The Directors have considered two downside scenarios which reflects a reduced
trading performance, inflationary impacts on the cost base and various
management-controlled cost mitigations.
In each of the downside scenarios, the Group will generate sufficient cash to
meet its liabilities as they fall due and will meet its covenant requirements
for the period to 31 January 2026 with scenarios i) and ii) requiring the
implementation and execution of mitigating cost actions within the control of
management.
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 2024 except for
the change set out below.
There is one new amended standard or interpretations that became effective in
the period from 1 January 2024 which have had a material impact upon the
values or disclosures in the condensed consolidated interim financial
information. This relates to the classification of loans as current or
non-current (IAS 1) as a result of the amendments issued in IAS 1 which has
led to a prior year adjustment for the period ended 30 June 2024. See below
for further details.
The Group has not early adopted any standard, interpretation or amendment that
has been issued but is not yet effective.
Separately disclosed items (SDI)
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;
• Costs or income associated to the closure of venues;
• Acquisition and disposal costs including changes to deferred or contingent
consideration;
• Impairment charges;
• Reversal of previously recognised impairment charges;
• Property related provisions;
• Restructuring costs as part of an announced programme;
• Retranslation and remeasurement of foreign currency contingent consideration;
• Discontinued operations;
• Significant, material proceeds from tax appeals;
• General dilapidations provision interest unwinding;
• General dilapidation asset depreciation;
• 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 this 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, including inflationary cost pressures impacting the cost of
living and customer sentiment and behaviour. 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 2024 including the additional significant estimates for
the interim period ending 31 December 2024.
Dilapidations provision
Provisions for dilapidations are recognised where the Group has the obligation
to make-good its leased properties. These provisions are measured based on
historically settled dilapidations which form the basis of the estimated
future cash outflows. Any difference between amounts expected to be settled
and the actual cash outflow will be accounted for in the period when such
determination is made.
The Group's provisions are estimates of the actual costs and timing of future
cash flows, which are dependent on future events, property exits and market
conditions. Thus, there is inherently an element of estimation uncertainty
within the provisions recognised by the Group. Any difference between
expectations and the actual future liability will be accounted for in the
period when such determination is made.
The provisions are most sensitive to estimates of the future cash outflows
which are based on historically settled dilapidations. This means that an
increase in cash outflows of 1% would have resulted to a £0.3m increase in
the dilapidations provision. Likewise, a decrease in cash outflows of 1% would
have resulted to a £0.3m decrease in the dilapidations provision.
Prior period restatement
These consolidated interim financial statements include a prior period
restatement in relation to the presentation and classification of the RCF
facility in accordance with IAS 1 amendments. This saw the RCF facility
reclassified from current liabilities to non-current. The adjustment reduces
current liabilities by £11.5m and increases non-current liabilities by
£11.5m as at 30 June 2024.
In addition to the above, the consolidated statement of cash flow includes a
prior year restatement in relation to leases. During the period, the Group
identified that the lease principal payments incorrectly included £2.5m of
property-related VAT and £1.6m of property service charges. Cash flows from
lease-related VAT and property service charges should have been disclosed
within cash flows from operating activities. This restatement results in a
reduction of £4.1m in both net cash generated from operating activities and
net cash used in financing activities in the cash flow statement for six
months ended 31 December 2023. As discussed in the 2024 Annual Report, the
restatement was identified following a review of the 2023 Annual Report by the
Financial Reporting Council.
The prior period comparatives have been restated for the above items in
accordance with IAS 8: 'Accounting Policies, Changes in Accounting Policies
and Errors' and have impacted the primary financial statements as follows:
Balance Sheet
At 30 June 2024
As previously reported Adjustment Audited and restated
£m £m £m
Current liabilities
Financial liabilities - loans and borrowings (14.8) 11.5 (3.3)
Non-current liabilities (29.1) (11.5) (40.6)
Financial liabilities - loans and borrowings
Total liabilities (393.5) - (393.5)
Net assets 339.0 - 339.0
Equity
Total shareholders' equity 339.0 - 339.0
Cash Flow Statement
for the six months ended 31 December 2023
As previously reported Adjustment Unaudited and restated
£m £m £m
Cash generated from operations 63.0 (4.1) 58.9
Net cash generated from operating activities 65.9 (4.1) 61.8
Net cash used in investing activities (19.3) - (19.3)
Net cash used from financing activities (31.3) 4.1 (27.2)
Net increase in cash and bank overdrafts 15.3 - 15.3
Cash and cash equivalents at start of period 56.5 - 56.5
Effect of exchange rate changes (0.2) - (0.2)
Cash and cash equivalents at end of period 71.6 - 71.6
2 Segment information
Six months ended 31 December 2024 (unaudited)
Grosvenor Mecca International Corporate
Digital Venues Venues Venues Costs Total
£m £m £m £m £m £m
Segment revenue 120.2 192.8 68.6 20.2 - 401.8
Operating profit (loss) 14.2 20.6 0.3 5.4 (7.6) 32.9
Separately disclosed items 5.0 (0.8) 3.2 - (0.1) 7.3
Segment result 19.2 19.8 3.5 5.4 (7.7) 40.2
Finance costs (5.4)
Finance income 0.6
Other financial losses (0.7)
Profit before taxation 34.7
Taxation (5.8)
Profit for the period from continuing operations 28.9
Six months ended 31 December 2023 (unaudited)
Grosvenor Mecca International Corporate
Digital Venues Venues Venues Costs Total
£m £m £m £m £m £m
Segment revenue 108.4 167.5 67.2 19.5 - 362.6
Operating profit (loss) 10.1 14.0 - 5.0 (7.5) 21.6
Separately disclosed items (3.8) (0.3) (1.0) - (0.3) (5.4)
Segment result 6.3 13.7 (1.0) 5.0 (7.8) 16.2
Finance costs (5.9)
Finance income 0.4
Other financial losses (0.3)
Profit before taxation 10.4
Taxation (1.6)
Profit for the period from continuing operations 8.8
2 Segment information (continued)
Six months ended 31 December 2024 (unaudited)
Grosvenor Mecca International Corporate
Digital Venues Venues Venues costs Total
£m £m £m £m £m £m
Employment and related costs 17.6 78.7 24.7 9.0 3.6 133.6
Taxes and duties 26.5 40.8 12.8 1.0 1.1 82.2
Direct costs 31.4 16.0 11.4 2.5 - 61.3
Property costs 0.1 5.3 1.9 0.3 0.2 7.8
Marketing 20.0 4.2 3.1 1.1 - 28.4
Depreciation and amortisation 6.5 13.5 3.9 0.8 0.7 25.4
Other 3.9 13.7 10.5 0.1 2.0 30.2
Total costs before separately disclosed items 106.0 172.2 68.3 14.8 7.6 368.9
Cost of sales 229.1
Operating costs 139.8
Total costs before separately disclosed items 368.9
Six months ended 31 December 2023 (unaudited)
Grosvenor Mecca International Corporate
Digital Venues Venues Venues costs Total
£m £m £m £m £m £m
Employment and related costs 16.5 67.9 22.7 9.4 3.4 119.9
Taxes and duties 24.4 35.1 12.3 1.0 1.8 74.6
Direct costs 26.4 15.2 10.6 1.7 - 53.9
Property costs 0.3 5.2 2.3 0.3 0.1 8.2
Marketing 19.3 4.1 2.3 1.4 - 27.1
Depreciation and amortisation 7.1 11.9 2.7 0.7 1.5 23.9
Other 4.3 14.1 14.3 - 0.7 33.4
Total costs before separately disclosed items 98.3 153.5 67.2 14.5 7.5 341.0
Cost of sales 208.3
Operating costs 132.7
Total costs before separately disclosed items 341.0
3 Separately disclosed items
Six months ended Six months ended
31 December 2024
31 December 2023
(unaudited) (unaudited)
£m £m
Separately disclosed items
Amortisation of acquired intangible assets (1.9) (3.2)
Closure of venues 2.3 (0.1)
Property related provisions (0.2) (1.6)
Gain on disposal of subsidiary (note 8) 6.6 -
VAT refund from HMRC (in relation to a disposed business) 0.5 -
Impairment of assets held for sale - (0.5)
Impact on operating profit 7.3 (5.4)
Interest (0.4) (0.5)
Taxation (note 5) (0.3) 1.2
Total separately disclosed items 6.6 (4.7)
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 £1.9m
(2023: 3.2m) relating to the acquired intangible assets of Stride and YoBingo.
Closure of venues
During the period, the Group has surrendered six leases in Mecca for closed
sites, resulting in a lease liability write-off of £2.7m. There were no
corresponding lease assets outstanding at the time of the write-off, due to
historical impairments.
The group also recognised £0.4m of closure costs, related to a number of
Mecca venues and additional incidental closure costs that could not be
provided for at the year-end. Upon initial recognition of closure provisions,
management uses its best estimates of the expected relevant costs to be
incurred, as well as expected closure dates. These estimates are reviewed
periodically to ensure they remain reasonable. In the prior period, the Group
closure cost was £0.1m.
These are material, unrelated to the underlying trading activities of the
Group and is considered non-recurring. Accordingly, they have been classified
as an SDI.
Property related provisions
The Group recognised a dilapidation liability (and corresponding dilapidation
asset) of £28.7m during the period ended 31 December 2022. As a result, the
Group have recognised dilapidation asset depreciation of £0.9m (2023: £0.7m)
and interest on dilapidation liability of £0.4m (2023: £0.5m) both
recognised as separately disclosed items. Concurrently, the Group released
£0.6m from specific dilapidation provision and £0.2m general dilapidation
provision for a number of Mecca venues.
Property related provisions do not relate to the operations of the Group,
rather a direct result of potential club or property closure and are
therefore, excluded from underlying results.
This is a material, one-off provision and as such has been excluded from
underlying results consistent with the original recognition of the provision.
Gain on disposal of subsidiary
During the period, the Group disposed its non-proprietary business to a
third-party and generated a profit of £6.6m. This includes a total sales
consideration of £6.9m, comprising £3.0m in cash consideration and the
present value of an agreed £4.5m deferred consideration, valued at £3.9m.
This is partially offset by £0.3m for assets held for sale. See note 8.
VAT refund from HMRC (in relation to a disposed business)
During the period, the Group received a refund of £0.5m related to historical
VAT overpayments related to a disposed business of the Group.
The refund relates to a historical matter outside the Group's ongoing
operations and therefore it has been classified as an SDI.
3 Separately disclosed items (continued)
Impairment of assets held for sale
An impairment loss of £0.5m arose on the reclassification of the Passion
Gaming disposal group to "held for sale" as of 31 December 2023, where the
fair value less cost to sell was lower than the carrying amount. This loss,
which includes expected transaction and completion costs, has been classified
as a separately disclosed item SDI due to its connection to the ongoing
disposal of the business, representing a non-recurring event outside the
Group's regular operational activities. This was then disposed of in June 2024
and thus does not appear on the Balance Sheet as at 30 June 2024.
4 Financing
Six months ended Six months ended
31 December 2024
31 December 2023
(unaudited) (unaudited)
£m £m
Finance costs:
Interest on debt and borrowings (2.1) (2.2)
Amortisation of issue costs on borrowings (0.3) (0.9)
Interest payable on leases (3.0) (2.8)
Total finance costs (5.4) (5.9)
Finance income:
Interest income on short-term bank deposits 0.6 0.4
Finance income 0.6 0.4
Other financial (losses) gains (0.3) 0.2
Total net financing charge before separately disclosed items (5.1) (5.3)
Separately disclosed items - interest (0.4) (0.5)
Total net financing charge (5.5) (5.8)
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 Six months ended 31 December
2024 2023
(unaudited) (unaudited)
£m £m
Current income tax
Current income tax - overseas (2.1) (1.5)
Total current income tax charge (2.1) (1.5)
Deferred tax
Deferred tax - UK (2.3) (1.1)
Deferred tax - overseas (1.1) (0.6)
Deferred tax on separately disclosed items (0.3) 1.2
Amounts over provided in previous year - 0.4
Total deferred tax charge (3.7) (0.1)
Tax charge in the income statement (5.8) (1.6)
The tax effect of items within other comprehensive income was as follows:
Six months ended Six months ended
31 December
31 December
2024 2023
(unaudited) (unaudited)
£m £m
Current tax credit on exchange movements offset in reserves - 0.1
Deferred tax charge on exchange movements offset in reserves (0.3) -
Total tax (charge) credit on items within other comprehensive income (0.3) 0.1
The credit in respect of employee share schemes included within the Statement
of Changes in Equity includes a deferred tax credit of £0.1m (six months to
31 December 2023: £nil).
Factors affecting future taxation
The ultimate holding company and its subsidiaries (the "UHC Group") of which
the Group is a part of, is within the scope of the Organisation for Economic
Co-operation and Development ("OECD") Pillar Two model rules whereby top-up
tax on profits are required in any jurisdictions in which it operates when the
blended effective tax rate in each of those jurisdictions is lower than the
minimum effective tax rate of 15%.
The Pillar Two model rules will be effective in the jurisdiction of the UHC
Group's parent company from the financial year beginning on or after 1 January
2025. Some tax jurisdictions where the Group operates, including the United
Kingdom, have implemented the Pillar Two model rules earlier starting from the
financial year beginning on or after 1 January 2024, making it effective for
the Group from 1 July 2024.
5 Taxation (continued)
The UHC Group has assessed the potential exposure to the Pillar Two income
taxes for all of its subsidiaries that operate in the same jurisdictions as
the Group, and the Group has also carried out its own independent
assessment. The potential impact has been assessed based on the 30 June 2023
tax filings, country by country reporting and financial statements for the
constituent entities in the Group. In this assessment the majority of
jurisdictions satisfied the transitional safe harbour rules and based on the
level of pre-tax profit and level of tax expense in the other jurisdictions it
is not considered that there would be a material top-up tax liability at this
stage.
The Amendments to IAS 12 "Income Taxes - International Tax Reform - Pillar Two
Model Rules" introduce a temporary mandatory exception to the accounting for
deferred taxes arising from the jurisdictional implementation of the Pillar
Two Model Rules as well as disclosure requirements on the exposure to Pillar
Two income taxes upon adoption.
Accordingly, the Group has applied the temporary mandatory exception in
Amendments to IAS 12 "International Tax Reform - Pillar Two Model Rules"
retrospectively and is not accounting for deferred taxes arising from any
top-up tax due to the Pillar Two model rules in the consolidated financial
statements.
Deferred tax
At 31 December 2024, there is a net deferred tax asset of £3.8m in respect of
the UK. Deferred tax assets are recognised on tax losses to the extent that it
is probable that future taxable profits will be available against which they
can be used.
Deferred tax assets are reviewed at each reporting date taking into account
the recoverability of the deferred tax assets, future profitability and any
restrictions on use. In considering their recoverability, the Group takes
into account all relevant and available evidence to assess future
profitability over a reasonably foreseeable time period. In assessing the
probability of recovery, the Directors have reviewed the Group's Strategic
Plan that has been used for both the Going Concern and the fixed asset
impairment testing. This plan anticipates the existence of future taxable
profits as the Group continues its recovery from the impact on trading from
Covid-19. This recovery is expected primarily in the Grosvenor business with
recent and ongoing investment in refurbishing venues and product enhancement
driving additional revenues. Based on the Group's Strategic Plan, the
deferred tax recognised on tax losses is expected to be recovered by 2029 even
if the impact of future taxable profit from the reversal of taxable temporary
differences is ignored.
6 Dividends
Six months ended 6 months ended
31 December
31December
2024 2023
(unaudited) (unaudited)
£m £m
Dividends paid to equity holders
Final dividend for 2023/24 paid on 25 October 2024 - 0.85p per share 4.0 -
Total 4.0 -
The Board has declared an Interim dividend of 0.65p per share. The dividend
will be paid on 13 March 2025 to shareholders on the register as at 14
February 2025. The financial information does not reflect this dividend.
7 Underlying earnings per share
Six months ended Six months ended
31 December 2024
31 December 2023
(unaudited) (unaudited)
£m £m
Profit attributable to equity shareholders 28.9 9.0
Adjusted for:
Separately disclosed items (after tax) (6.6) 4.5
Underlying earnings attributable to equity shareholders 22.3 13.5
Continuing operations 22.3 13.5
Weighted average number of ordinary shares in issue 468.4m 468.4m
Underlying earnings per share (p) - basic 4.8p 2.9p
Continuing operations 4.8p 2.9p
Underlying earnings per share (p) - diluted 4.8p 2.9p
Continuing operations 4.8p 2.9p
8 Profit on disposal of the non-proprietary ('multi-brand') business
The Group completed the sale of the Digital non-proprietary business to
Broadway Gaming UK Limited on 18 December 2024.
The major classes of assets and liabilities disposed relating to the
non-proprietary business was as follows:
Six months ended
31 December
2024
(unaudited)
£m
Intangible fixed assets (0.3)
Total assets (0.3)
Trade and other payables -
Total liabilities -
Net assets disposed (0.3)
Consideration received 6.9
Disposal costs and completion adjustments -
Separately disclosed items - profit on disposal 6.6
Total gross consideration due of £7.5m comprised £3.0m in cash on completion
and £4.5m of deferred consideration discounted to £3.9m. The deferred
consideration will be settled on a Revenue Share basis phased over the course
of 39 months, subject to a minimum of £0.1m per month over 45 months, as per
the terms agreed. A discount rate of 10.05% was used to calculate the present
value. The total profit on disposal in separately disclosed items is £6.6m
(see note 3).
9 Provisions
Property lease Disposal Pay
provisions provisions provisions Total
£m £m £m £m
At 1 July 2024 (audited) 36.5 0.2 0.1 36.8
Created 0.1 - 0.4 0.5
Charge to the income statement - SDI 0.4 - - 0.4
Release to the income statement - SDI (0.8) - - (0.8)
Utilised in period (2.1) - - (2.1)
At 31 December 2024 (unaudited) 34.1 0.2 0.5 34.8
Current 0.9 0.2 - 1.1
Non-current 33.2 - 0.5 33.7
At 31 December 2024 (unaudited) 34.1 0.2 0.5 34.8
Provisions have been determined based on management's best estimate of the
future cash flows, taking into account the risks associated with each
obligation.
Property related provisions
Where the Group no longer operates from a leased property, onerous property
contract provisions are recognised for the least net cost over the expected
economic benefits. Unless a separate exit agreement with a landlord has
already been agreed, the Group's policy is that this onerous contract
provision includes all unavoidable costs of meeting the obligations of the
contract. The amounts provided are based on the Group's best estimates of the
likely committed outflows and site closure dates. These provisions do not
include lease liabilities, however, do include unavoidable costs related to
the lease such as service charges, insurance and other directly related costs.
As at 31 December 2024, property related provision includes £32.3m (2024:
£34.0m) provision for dilapidations and £1.8m (2024: £2.5m) onerous
contracts provision.
Provisions for dilapidations are recognised where the Group has the obligation
to make-good its leased properties. These provisions are recognised based on
historically settled dilapidations which form the basis of the estimated
future cash outflows. Any difference between amounts expected to be settled
and the actual cash outflow will be accounted for in the period when such
determination is made within the income statement.
Where the Group is able to exit lease contracts before the expiry date or
agree sublets, this results in the release of any associated property
provisions. Such events are subject to the agreement of the landlord,
therefore the Group makes no assumptions on the ability to either exit or
sublet a property until a position is contractually agreed.
Disposal provisions
In prior years, a provision has been made for legacy industrial disease and
personal injury claims, and other directly attributable costs arising as a
consequence of the sale or closure of previously owned businesses.
During the prior period, the Group re-considered this provision by reviewing
the historic claims and any final settlements made. The nature and timing of
any personal injury claims is uncertain and therefore, in most cases, the
payment could not be determined as probable. It was therefore determined
necessary to release the majority of the provision and recognise the possible
settlement of legacy industrial disease and personal injury claims as a
contingent liability (see note 12).
Pay provisions
During the period, the Group recognised an additional provision of £0.4m
relating to a compliance audit.
The opening balance provision of £0.1m, relates to the historical remaining
settlements associated with NMW regulations.
10 Borrowings to net debt reconciliation
As at As at
31 December
31 December
2024
2023
(unaudited) (unaudited)
£m £m
Total loans and borrowings (47.3) (54.4)
Adjusted for:
Accrued interest 0.3 0.4
Unamortised facility fees (1.4) -
(48.4) (54.0)
Cash and short-term deposits from operations 72.6(1) 69.7
Cash and short-term deposits from assets held for sale - 1.9
Net cash excluding IFRS16 lease liabilities 24.2 17.6
IFRS 16 Lease liabilities (136.0) (162.3)
Net debt (111.8) (144.7)
(1) Excludes overdraft of £4.4m
11 Cash generated from operations
Six months ended Six months ended
31 December 2024
31 December 2023
(unaudited and restated)
(unaudited)
£m £m
Profit for the year 28.9 8.8
Adjustment for
Depreciation and amortisation 25.4 23.9
Amortisation of arrangement fees 0.3 0.9
Share-based payments 1.0 0.5
Underlying net financing charge 4.8 5.3
Income tax charge 5.5 2.8
Gain on lease surrender (0.6) -
Separately disclosed items (6.6) 4.8
58.7 47.0
Increase in inventories (0.2) (0.2)
(Increase) decrease in other receivables (3.1) 8.2
(Decrease) increase in trade and other payables (1.0) 7.0
54.4 62.0
Cash utilisation of provisions (2.0) (2.3)
Receipt (payments) in respect of separately disclosed items 0.3 (0.8)
Cash generated from operations 52.7 58.9
12 Contingent liabilities
Property arrangements
The Group had certain property arrangements under which rental payments revert
to the Group in the event of a default by the third party. It is not
considered probable that the third party will default. As such no provision
has been recognised. At 31 December 2024, the maximum obligation for the Group
is £0.4m 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.
There are currently no additional regulatory reviews that would suggest that
Rank has a financial exposure.
Disposal claims
As a consequence of historic sale or closure of previously owned businesses,
the Group may be liable for any legacy industrial disease and personal injury
claims alongside any other directly attributable costs. The nature and timing
of these claims is uncertain and depending on the result of the claim's
assessment review, it is not always possible to reliably estimate the
likelihood, timing and value of potential cash outflow.
Contingent consideration
On 21 April 2022, the Group completed the purchase of the remaining 50%
shareholding of Rank Interactive Limited (formerly known as Aspers Online
Limited) for a total consideration £1.3m. Of this consideration, £0.5m was
paid in cash on completion in lieu of the outstanding loan balance the Company
owed to the seller and £0.8m in contingent consideration.
The contingent consideration will be equivalent to a percentage of the net
gaming revenue generated from the acquired customer database, until Aspers
Group launches a competing online operation or until a £2m brand fee is
reached. A present value of £0.8m was recognised on 30 June 2022.
The Group has settled £0.6m of the contingent consideration up to date,
leaving a balance of £0.2m. This balance is deemed sufficient to cover
payments until the end of financial year 2026.
13 Related party transactions and ultimate parent undertaking
Guoco Group Limited (Guoco), a company incorporated in Bermuda, and listed on
the Hong Kong stock exchange has a controlling interest in The Rank Group
Plc. The ultimate parent undertaking of Guoco is GuoLine Capital Assets
Limited ('GuoLine') which is incorporated in Jersey. At 31 December 2024,
entities controlled by GuoLine owned 60.3% (30 June 2024: 60.3%) of the
Company's shares, including 56.2% (30 June 2024: 56.2%) through Guoco's
wholly-owned subsidiary, Rank Assets Limited, the Company's immediate parent
undertaking.
14 Post balance sheet events
On 9 January 2025, the Group extended £100.0m of its £120.0m committed
facilities for a further 12 months. This results to amends the Group's
current Revolving Credit Facility ('RCF') totalling to £90.0m, of which
£15.0m is being repayable in January 2027 and the remaining £75.0m now in
January 2028. Additionally, the Group holds a £30.0m term loan in which
£5.0m is repayable in October 2026 and the remaining £25.0m now in October
2027.
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