REG - Rank Group PLC - Half Yearly Report <Origin Href="QuoteRef">RNK.L</Origin> - Part 2
29/01/2016 07:11
- Part 2: For the preceding part double click ID:nRSc3750Na
(unaudited) (unaudited)
£m £m
Cash flows from operating activities
Cash generated from continuing operations 63.7 68.5
Interest received 0.1 0.3
Interest paid (2.5) (4.2)
Tax (paid) received (22.6) 5.2
Discontinued operations (0.2) -
Net cash from operating activities 38.5 69.8
Cash flows from investing activities
Disposal of subsidiary - (0.1)
Purchase of intangible assets (6.5) (3.5)
Purchase of property, plant and equipment (19.6) (12.3)
Proceeds from sale of property, plant and equipment 7.0 1.5
Purchase of convertible loan note (1.0) -
Net cash used in investing activities (20.1) (14.4)
Cash flows from financing activities
Dividends paid to equity holders (15.6) (12.3)
Drawdown (repayment) of revolving credit facilities 7.0 (20.0)
Repayment of term loans (120.0) -
Drawdown of term loans 90.0 -
Loan arrangement fees (1.5) -
Finance lease principal payments (1.5) (1.6)
Net cash used in financing activities (41.6) (33.9)
Net (decrease) increase in cash, cash equivalents and bank overdrafts (23.2) 21.5
Effect of exchange rate changes 0.1 (0.1)
Cash and cash equivalents at start of period 87.5 46.3
Cash and cash equivalents at end of period 64.4 67.7
1 General information, basis of preparation and accounting policies
The Company is a public limited company which is listed on the London stock
exchange and incorporated and domiciled in England and Wales under
registration number 03140769. The address of its registered office is
Statesman House, Stafferton Way, Maidenhead SL6 1AY.
This condensed consolidated interim financial information was approved for
issue on 28 January 2016.
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 2015 were
approved by the board of directors on 19 August 2015 and delivered to the
Registrar of Companies. The report of the auditors on those accounts was
unqualified, did not contain an emphasis of matter paragraph and did not
contain a statement made under Section 498 of the Companies Act 2006.
This condensed consolidated interim financial information has been reviewed
but not audited.
Basis of preparation
This condensed consolidated interim financial information for the six months
ended 31 December 2015 has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and with IAS34 'Interim
financial reporting' as adopted by the European Union. The condensed
consolidated interim financial information should be read in conjunction with
the financial statements for the 12 month period ended 30 June 2015, which
have been prepared in accordance with IFRSs as adopted by the European Union.
Going concern
In adopting the going concern basis for preparing the financial information
the directors have considered the issues impacting the Group during the period
as detailed in the business review above and have reviewed the Group's
projected compliance with its banking covenants. Based on the Group's cash
flow forecasts and operating budgets, the directors believe that the Group
will generate sufficient cash to meet its borrowing requirements for at least
12 months from the approval of this report and comply with its banking
covenants.
Accounting policies
There have been no new or amended standards or interpretations that became
effective in the period which have had a material impact upon the values or
disclosures in the interim financial information.
Except as described below, the accounting policies applied are consistent with
those of the financial statements for the 12 month period ended 30 June 2015,
as described in those financial statements.
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total annual earnings.
The Group has not early adopted any standard, interpretation or amendment that
was issued but is not yet effective.
2 Segment information - continuing operations
Six months to 31 December 2015 (unaudited)
Grosvenor Casinos Mecca Enracha Central
Venues Digital Venues Digital Venues Digital costs Total
£m £m £m £m £m £m £m £m
Continuing operations
Group revenue reported in internal information 205.1 13.9 109.8 33.2 12.2 - - 374.2
Customer incentives (7.8) (2.2) (5.3) (6.2) - - - (21.5)
Segment revenue 197.3 11.7 104.5 27.0 12.2 - - 352.7
Operating profit (loss) before exceptional items 30.9 2.4 14.3 5.6 1.5 (0.1) (14.2) 40.4
Exceptional operating profit - - 6.0 - - - - 6.0
Segment result 30.9 2.4 20.3 5.6 1.5 (0.1) (14.2) 46.4
Finance costs (3.1)
Finance income 0.1
Other financial losses (0.7)
Profit before taxation 42.7
Taxation (4.8)
Profit for the period from continuing operations 37.9
Six months to 31 December 2014 (unaudited)
Grosvenor Casinos Mecca Enracha Central
Venues Digital Venues Digital Venues Digital costs Total
£m £m £m £m £m £m £m £m
Continuing operations
Group revenue reported in internal information 195.7 9.9 111.8 31.5 12.8 - - 361.7
Customer incentives (3.8) (2.1) (6.8) (5.7) - - - (18.4)
Segment revenue 191.9 7.8 105.0 25.8 12.8 - - 343.3
Operating profit (loss) before exceptional items 29.1 1.9 14.5 8.4 1.2 (0.3) (14.0) 40.8
Exceptional operating profit (loss) - - 1.9 - (0.5) - - 1.4
Segment result 29.1 1.9 16.4 8.4 0.7 (0.3) (14.0) 42.2
Finance costs (5.4)
Finance income 0.3
Other financial losses (0.8)
Profit before taxation 36.3
Taxation (8.0)
Profit for the period from continuing operations 28.3
2 Segment information - continuing operations (continued)
To increase transparency, the Group continues to include additional disclosure
analysing total costs by type and segment. A reconciliation of total costs,
before exceptional items, by type and segment is as follows:
Six months to 31 December 2015 (unaudited)
Grosvenor Casinos Mecca Enracha Central
Venues Digital Venues Digital Venues Digital costs Total
£m £m £m £m £m £m £m £m
Employment and related costs 69.7 1.5 26.4 2.6 5.8 - 8.7 114.7
Taxes and duties 43.3 1.7 18.0 4.0 0.7 - 0.8 68.5
Direct costs 5.9 3.4 10.4 7.6 1.1 - - 28.4
Property costs 14.5 0.1 13.2 0.2 0.8 - 0.5 29.3
Marketing 8.9 1.2 5.7 5.2 0.4 - - 21.4
Depreciation and amortisation 12.1 1.0 6.5 1.1 0.8 - 0.8 22.3
Other 12.0 0.4 10.0 0.7 1.1 0.1 3.4 27.7
Total costs before exceptional items 166.4 9.3 90.2 21.4 10.7 0.1 14.2 312.3
Cost of sales 188.1
Operating costs 124.2
Total costs before exceptional items 312.3
Six months to 31 December 2014 (unaudited)
Grosvenor Casinos Mecca Enracha Central
Venues Digital Venues Digital Venues Digital costs Total
£m £m £m £m £m £m £m £m
Employment and related costs 68.8 1.5 26.9 3.1 6.4 0.1 8.7 115.5
Taxes and duties 41.4 0.2 17.7 0.7 0.9 - 1.1 62.0
Direct costs 6.9 2.3 11.4 7.3 1.0 0.2 - 29.1
Property costs 15.0 0.1 13.7 0.2 0.8 - 0.5 30.3
Marketing 7.3 0.9 5.3 4.9 0.4 - - 18.8
Depreciation and amortisation 12.1 0.7 6.3 0.7 0.8 - 0.7 21.3
Other 11.3 0.2 9.2 0.5 1.3 - 3.0 25.5
Total costs before exceptional items 162.8 5.9 90.5 17.4 11.6 0.3 14.0 302.5
Cost of sales 182.8
Operating costs 119.7
Total costs before exceptional items 302.5
3 Exceptional items
Six months to Six months to
31 December 2015 31 December 2014
(unaudited) (unaudited)
£m £m
Exceptional items relating to continuing operations
Closure of venues 6.0 2.4
Charge to provision for property leases - (1.0)
Exceptional operating income 6.0 1.4
Taxation (see note 5) 0.3 -
Exceptional items relating to continuing operations 6.3 1.4
Exceptional items relating to discontinued operations
Finance costs (see note 4) (0.2) -
Taxation (see note 5) 3.9 16.0
Exceptional items relating to discontinued operations 3.7 16.0
Total exceptional items 10.0 17.4
Continuing operations
Closure of venues
The Group has recognised a credit of £6.0m in respect of the sale of its
freehold interest on the closure of a Mecca venue. This freehold was held for
sale at 30 June 2015. The credit includes a charge to provision for
restructuring costs of £0.2m which relate to costs associated with the closure
of this venue.
4 Financing
Six months to Six months to
31 December 2015 31 December 2014
(unaudited) (unaudited)
£m £m
Continuing operations
Finance costs:
Interest on debt and borrowings (1.8) (3.3)
Amortisation of issue costs on borrowings (0.4) (0.7)
Interest on direct taxation - (0.3)
Interest payable on finance leases (0.4) (0.4)
Unwinding of the discount in onerous lease provisions (0.5) (0.6)
Unwinding of the discount in disposal provisions - (0.1)
Total finance costs (3.1) (5.4)
Finance income:
Interest income on short term bank deposits 0.1 0.1
Interest income on direct taxation - 0.2
Finance income 0.1 0.3
Other financial losses - including foreign exchange (0.7) (0.8)
Total net financing cost for continuing operations (3.7) (5.9)
Discontinued operations
Exceptional finance costs (0.2) -
Total net financing cost for discontinued operations (0.2) -
Total net financing costs (3.9) (5.9)
Exceptional finance costs recognised in discontinued operations relate to the cost of a letter of credit held in respect of taxation balances on disposed entities.
Six months to Six months to
31 December 2015 31 December 2014
(unaudited) (unaudited)
£m £m
Total net financing cost for continuing operations (3.7) (5.9)
Adjust for:
Unwinding of the discount in disposal provisions - 0.1
Other financial losses - including foreign exchange 0.7 0.8
Interest payable included in adjusted profit (3.0) (5.0)
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 to 31 December 2015 (unaudited)
Continuing operations Discontinued operations Total
£m £m £m
Current income tax
Current income tax - UK (7.1) - (7.1)
Current income tax - overseas (0.6) - (0.6)
Current income tax charge (7.7) - (7.7)
Amounts over provided in previous years on exceptional items 0.3 3.9 4.2
Total current income tax (charge) credit (7.4) 3.9 (3.5)
Deferred tax
Deferred tax - UK (0.4) - (0.4)
Deferred tax - overseas (0.1) - (0.1)
Restatement of deferred tax from 20% to 18% 3.1 - 3.1
Total deferred tax credit 2.6 - 2.6
Tax (charge) credit in the income statement (4.8) 3.9 (0.9)
Six months to 31 December 2014 (unaudited)
Continuing operations Discontinued operations Total
£m £m £m
Current income tax
Current income tax - UK (7.0) - (7.0)
Current income tax - overseas (0.3) - (0.3)
Current income tax charge (7.3) - (7.3)
Current income tax on exceptional items (0.4) - (0.4)
Amounts over provided in previous years 0.5 - 0.5
Amounts over provided in previous years on exceptional items 0.4 16.0 16.4
Total current income tax (charge) credit (6.8) 16.0 9.2
Deferred tax
Deferred tax - UK (0.6) - (0.6)
Deferred tax - overseas (0.1) - (0.1)
Amounts under provided in respect of previous years (0.5) - (0.5)
Total deferred tax charge (1.2) - (1.2)
Tax (charge) credit in the income statement (8.0) 16.0 8.0
5 Taxation (continued)
The tax effect of items within other comprehensive income was as follows:
Six months to Six months to
31 December 2015 31 December 2014
(unaudited) (unaudited)
£m £m
Current tax credit (charge) on exchange movements offset in reserves 0.1 (0.1)
Deferred tax credit on actuarial loss on retirement benefits - 0.1
Total tax credit on items within other comprehensive income 0.1 -
The credit in respect of employee share schemes included within the Statement
of Changes in Equity includes a deferred tax credit of £0.2m (six months to 31
December 2014: £nil).
Tax on discontinued operations
The £3.9m exceptional tax credit in discontinued operations relates to a
refund of amounts previously paid which the Group expects to receive following
the conclusion of a tax exposure relating to a discontinued operation in an
overseas jurisdiction. As at 30 June 2015 this item was disclosed as a
contingent asset.
Factors affecting future taxation
On 8 July 2015, the Chancellor of the Exchequer announced the reduction in the
main rate of UK corporation tax to 19.0% for the year starting 1 April 2017
and a further 1.0% reduction to 18.0% from 1 April 2020. These changes were
substantively enacted in October 2015. The rate reductions will reduce the
amount of cash tax payments to be made by the Group.
On 20 June 2014, the Spanish Government announced the reduction in the
corporation tax rate in Spain from 30% to 28% for financial years beginning in
2015 and to 25% for financial years beginning in 2016 and onwards. These
changes were substantively enacted in November 2014.
A reconciliation of tax on continuing operations to tax included in adjusted
profit is described below:
Six months to Six months to
31 December 2015 31 December 2014
(unaudited) (unaudited)
£m £m
Tax charge for continuing operations (4.8) (8.0)
Adjust for:
Tax on exceptional items (0.3) -
Tax on adjusted items and impact of reduction in tax rate (3.2) (0.2)
Tax charge included in adjusted profit (8.3) (8.2)
6 Dividends
Six months to Six months to
31 December 2015 31 December 2014
(unaudited) (unaudited)
£m £m
Dividends paid to equity holders
Final dividend for 2014/15 paid on 21 October 2015 - 4.00p per share 15.6 -
Final dividend for 2013/14 paid on 22 October 2014 - 3.15p per share - 12.3
Total 15.6 12.3
The Board has declared an interim dividend of 1.80p per ordinary share. The
dividend will be paid on 22 March 2016 to shareholders on the register at 12
February 2016. The financial information does not reflect this dividend.
7 Adjusted earnings per share
Adjusted earnings is calculated by adjusting profit attributable to equity
shareholders to exclude the impact of reductions in tax rate, discontinued
operations, exceptional items, other financial gains or losses, unwinding of
the discount in disposal provisions and the related tax effects. Adjusted
earnings is one of the business performance measures used internally by
management to manage the operations of the business. Management believes that
the adjusted earnings measure assists in providing a view of the underlying
performance of the business.
Adjusted net earnings attributable to equity shareholders is derived as
follows:
Six months to Six months to
31 December 2015 31 December 2014
(unaudited) (unaudited)
£m £m
Profit attributable to equity shareholders 41.6 44.3
Adjust for:
Discontinued operations (net of taxation) (3.7) (16.0)
Exceptional items after tax on continuing operations (6.3) (1.4)
Other financial losses 0.7 0.8
Unwinding of the discount in disposal provisions - 0.1
Taxation on adjusted items and impact of reduction in tax rate (3.2) (0.2)
Adjusted net earnings attributable to equity shareholders 29.1 27.6
Weighted average number of ordinary shares in issue 390.7m 390.7m
Adjusted earnings per share (p) - basic 7.4p 7.1p
Adjusted earnings per share (p) - diluted 7.4p 7.1p
8 Provisions
Property lease Disposal Restructuring Indirect tax
provisions provisions provisions provisions Total
£m £m £m £m £m
At 1 July 2015 47.6 4.3 0.5 1.2 53.6
Exchange adjustments - 0.1 - - 0.1
Unwinding of discount 0.5 - - - 0.5
Charge to the income statement - exceptional - - 0.2 - 0.2
Utilised in period (2.6) - (0.7) - (3.3)
At 31 December 2015 (unaudited) 45.5 4.4 - 1.2 51.1
Current 5.7 1.0 - 1.2 7.9
Non-current 39.8 3.4 - - 43.2
At 31 December 2015 (unaudited) 45.5 4.4 - 1.2 51.1
9 Borrowings to net debt reconciliation
Under IFRS, accrued interest and unamortised facility fees are classified as
loans and borrowings. A reconciliation of loans and borrowings disclosed in
the balance sheet to the Group's net debt position is provided below:
At At
31 December 2015 31 December 2014
(unaudited) (unaudited)
£m £m
Total loans and borrowings (122.2) (167.9)
Less: accrued interest 0.6 0.9
Less: unamortised facility fees (0.7) (1.0)
(122.3) (168.0)
Add: cash and short term deposits 70.3 73.1
Net debt (52.0) (94.9)
10 Cash generated from continuing operations
Six months to Six months to
31 December 2015 31 December 2014
(unaudited) (unaudited)
£m £m
Continuing operations
Operating profit 46.4 42.2
Exceptional items (6.0) (1.4)
Operating profit before exceptional items 40.4 40.8
Depreciation and amortisation 22.3 21.3
Increase in inventories (0.2) (0.2)
Decrease in other receivables 7.3 7.7
(Decrease) increase in trade and other payables (4.3) 3.2
Share-based payments 1.1 -
Impairment of property, plant and equipment 0.4 -
67.0 72.8
Cash utilisation of provisions (3.3) (4.2)
Cash payments in respect of exceptional items - (0.1)
Cash generated from continuing operations 63.7 68.5
11 Contingent liabilities
Property leases
Concurrent to the £211m sale and leaseback in 2006, the Group transferred the
rights and obligations but not the legal titles of 44 property leases to a
third party. The Group remains potentially liable in the event of default by
the third party. Should default occur then the Group would have recourse to
two guarantors. It is understood that, of the original 44 leases transferred,
11 of these have not expired or been surrendered. These 11 leases have
durations of between 11 months and 97.5 years and a current annual rental
obligation (net of sub-let income) of approximately £1.1m.
During a prior year, the Group became aware of certain information in respect
of a deterioration in the financial position of the third party and one of the
guarantors. However, the Group has not to date been notified of any default,
or intention to default, in respect of the transferred leases.
Stamp duty
The Group has received a determination from HMRC in respect of the amount of
stamp duty payable on certain transactions undertaken by Gala Casino 1 Limited
(now Grosvenor Casinos (GC) Limited) before its acquisition by the Group on 12
May 2013. The maximum potential additional stamp duty that could be due if
HMRC are successful is £7.2m plus interest. Under the terms of the Sale and
Purchase Agreement any liability arising falls upon Gala Coral and the Group
has an indemnification from Gala Coral.
12 Related party and ultimate parent undertaking
Guoco Group Limited (Guoco), a company incorporated in Bermuda and listed on
the Hong Kong stock exchange, has a controlling interest in The Rank Group
Plc. The ultimate parent undertaking of Guoco is Hong Leong Company
(Malaysia) Berhad (Hong Leong) which is incorporated in Malaysia. At 31
December 2015, entities controlled by Hong Leong owned 56.1% of the Company's
shares, including 52.0% through Guoco and its wholly owned subsidiary Rank
Assets Limited, the Company's immediate parent undertaking.
This information is provided by RNS
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