REG - Rank Group PLC - Interim results for 6 months to 31 December 2016 <Origin Href="QuoteRef">RNK.L</Origin> - Part 2
26/01/2017 08:45
- Part 2: For the preceding part double click ID:nRSZ1458Va
adjustments including tax - - - 1.3 - 1.3
Actuarial loss on retirement benefits net of tax - - - - (0.1) (0.1)
Total comprehensive income for the period - - - 1.3 41.5 42.8
Transactions with owners:
Dividends paid to equity holders (note 6) - - - - (15.6) (15.6)
Credit in respect of employee share schemes including tax - - - - 1.3 1.3
At 31 December 2015 54.2 98.4 33.4 10.3 126.6 322.9
Group Balance Sheet
at 31 December 2016 and 30 June 2016
31 December 30 June
2016 2016
(unaudited)
Note £m £m
Assets
Non-current assets
Intangible assets 404.0 404.3
Property, plant and equipment 188.5 202.0
Deferred tax assets 1.2 1.3
Other receivables 6.6 6.5
600.3 614.1
Current assets
Inventories 3.1 2.9
Other receivables 28.4 36.2
Income tax receivable 0.4 0.4
Cash and short-term deposits 71.5 61.0
103.4 100.5
Total assets 703.7 714.6
Liabilities
Current liabilities
Trade and other payables (129.2) (139.3)
Income tax payable (13.6) (11.0)
Financial liabilities - loans and borrowings (16.3) (14.4)
Provisions 8 (11.1) (9.2)
(170.2) (173.9)
Net current liabilities (66.8) (73.4)
Non-current liabilities
Trade and other payables (33.2) (34.7)
Financial liabilities - loans and borrowings (88.2) (87.8)
Deferred tax liabilities (19.6) (21.0)
Provisions 8 (26.6) (40.9)
Retirement benefit obligations (3.7) (3.7)
(171.3) (188.1)
Total liabilities (341.5) (362.0)
Net assets 362.2 352.6
Capital and reserves attributable to the Company's equity shareholders
Share capital 54.2 54.2
Share premium 98.4 98.4
Capital redemption reserve 33.4 33.4
Exchange translation reserve 14.5 13.5
Retained earnings 161.7 153.1
Total shareholders' equity 362.2 352.6
Group Cash Flow Statement
for the six months to 31 December 2016
Six months to Six months to
31 December 2016 31 December 2015
(unaudited) (unaudited)
Note £m £m
Cash flows from operating activities
Cash generated from continuing operations 10 51.8 63.7
Interest received 0.1 0.1
Interest paid (1.5) (2.5)
Tax paid (5.8) (22.6)
Discontinued operations - (0.2)
Net cash from operating activities 44.6 38.5
Cash flows from investing activities
Purchase of intangible assets (3.8) (6.5)
Purchase of property, plant and equipment (13.2) (19.6)
Proceeds from sale of property, plant and equipment - 7.0
Purchase of convertible loan note - (1.0)
Net cash used in investing activities (17.0) (20.1)
Cash flows from financing activities
Dividends paid to equity holders (18.4) (15.6)
Refund of unclaimed dividends 0.2 -
Drawdown of revolving credit facilities - 7.0
Repayment of term loans - (120.0)
Drawdown of term loans - 90.0
Loan arrangement fees - (1.5)
Finance lease principal payments (0.7) (1.5)
Net cash used in financing activities (18.9) (41.6)
Net increase (decrease) in cash, cash equivalents and bank overdrafts 8.7 (23.2)
Effect of exchange rate changes (0.2) 0.1
Cash and cash equivalents at start of period 57.9 87.5
Cash and cash equivalents at end of period* 66.4 64.4
*Cash and cash equivalents at the end of the period includes overdraft of £5.1m (year ended 31 December 2015: £5.9m)
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 25 January 2017.
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 2016 were
approved by the board of directors on 22 August 2016 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 2016 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 2016, 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 segment above and have reviewed the Group's
projected compliance with its banking covenants. Based on the Group's cash
flow forecasts and operating budgets, and assuming that trading does not
deteriorate considerably from current levels, the directors believe that the
Group will generate sufficient cash to meet its requirements for at least 12
months from the date of approval of the interim financial information and
comply with all of its banking covenants. Accordingly the adoption of the
going concern basis remains appropriate.
Accounting policies
There have been no new or amended standards or interpretations that became
effective in the period which have had a material impact upon the values or
disclosures in the interim financial information.
Except as described below, the accounting policies applied are consistent with
those of the financial statements for the 12 month period ended 30 June 2016,
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.
Changes in presentation - analysis by segment
The combination of the operating segments has been modified following changes
in management responsibilities. As from 1 December 2016 Grosvenor Casinos
Digital and Mecca Digital have been combined into a single operating segment
which is now known as UK digital.
Enracha Venues and Enracha Digital have also been combined into a single
operating segment which is now known as Enracha.
As a result the group will now report five segments being Grosvenor Venues,
Mecca Venues, UK Digital, Enracha and Central Costs. 2015 comparative
information has been restated.
2 Segment information - continuing operations
Six months to 31 December 2016 (unaudited)
Grosvenor Venues Mecca Venues UK Digital Enracha Central costs Total
£m £m £m £m £m £m
Continuing operations
Group revenue reported in internal information 202.0 108.0 52.4 16.2 - 378.6
Customer incentives (6.9) (5.9) (10.5) - - (23.3)
Segment revenue 195.1 102.1 41.9 16.2 - 355.3
Operating profit (loss) before exceptional items 26.1 13.3 7.3 2.9 (13.0) 36.6
Exceptional operating (loss) profit (4.2) 10.5 (1.4) (0.2) (2.9) 1.8
Segment result 21.9 23.8 5.9 2.7 (15.9) 38.4
Finance costs (2.2)
Finance income 0.1
Other financial losses (0.9)
Profit before taxation 35.4
Taxation (7.3)
Profit for the period from continuing operations 28.1
Six months to 31 December 2015 (unaudited)*
Grosvenor Venues Mecca Venues UK Digital Enracha Central costs Total
£m £m £m £m £m £m
Continuing operations
Group revenue reported in internal information 205.1 109.8 47.1 12.2 - 374.2
Customer incentives (7.8) (5.3) (8.4) - - (21.5)
Segment revenue 197.3 104.5 38.7 12.2 - 352.7
Operating profit (loss) before exceptional items 30.9 14.3 8.0 1.4 (14.2) 40.4
Exceptional operating profit - 6.0 - - - 6.0
Segment result 30.9 20.3 8.0 1.4 (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
* 2015 figures have been restated based on the following changes to operating
segments effective from 1 December 2016:
- Grosvenor Casinos Digital and Mecca Digital have been reported as a single
operating segment now known as UK Digital
- Enracha Venues and Enracha Digital have been reported as a single operating
segment now known as Enracha
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 2016 (unaudited)
Grosvenor Venues Mecca Venues UK Digital Enracha Central costs Total
£m £m £m £m £m £m
Employment and related costs 71.1 27.7 4.9 7.3 9.5 120.5
Taxes and duties 42.4 17.3 4.5 0.8 0.9 65.9
Direct costs 7.0 10.4 12.6 1.4 - 31.4
Property costs 15.1 13.4 0.4 0.7 0.6 30.2
Marketing 7.3 5.1 6.5 0.4 - 19.3
Depreciation and amortisation 12.7 5.9 2.8 0.8 0.9 23.1
Other 13.4 9.0 2.9 1.9 1.1 28.3
Total costs before exceptional items 169.0 88.8 34.6 13.3 13.0 318.7
Cost of sales 193.0
Operating costs 125.7
Total costs before exceptional items 318.7
Six months to 31 December 2015 (unaudited)*
Grosvenor Venues Mecca Venues UK Digital Enracha Central costs Total
£m £m £m £m £m £m
Employment and related costs 69.7 26.4 4.1 5.8 8.7 114.7
Taxes and duties 43.3 18.0 5.7 0.7 0.8 68.5
Direct costs 5.9 10.4 11.0 1.1 - 28.4
Property costs 14.5 13.2 0.3 0.8 0.5 29.3
Marketing 8.9 5.7 6.4 0.4 - 21.4
Depreciation and amortisation 12.1 6.5 2.1 0.8 0.8 22.3
Other 12.0 10.0 1.1 1.2 3.4 27.7
Total costs before exceptional items 166.4 90.2 30.7 10.8 14.2 312.3
Cost of sales 188.1
Operating costs 124.2
Total costs before exceptional items 312.3
* 2015 figures have been restated based on the following changes to operating
segments effective from 1 December 2016:
- Grosvenor Casinos Digital and Mecca Digital have been reported as a single
operating segment now known as UK Digital
- Enracha Venues and Enracha Digital have been reported as a single operating
segment now known as Enracha
3 Exceptional items
Six months to Six months to
31 December 2016 31 December 2015
(unaudited) (unaudited)
£m £m
Exceptional items relating to continuing operations
Closure of venues (0.3) 6.0
Impairment charges (4.7) -
Impairment reversals 0.6 -
Group restructuring including relocation costs (3.8) -
Release from provisions for property leases 10.7 -
Aborted acquisition costs (0.7) -
Exceptional operating income 1.8 6.0
Taxation (see note 5) (1.0) 0.3
Exceptional items relating to continuing operations 0.8 6.3
Exceptional items relating to discontinued operations
Finance costs (see note 4) - (0.2)
Taxation (see note 5) - 3.9
Exceptional items relating to discontinued operations - 3.7
Total exceptional items 0.8 10.0
Continuing operations
Closure of venues
The Group has recognised £0.1m for additional costs associated with the
closure of two Grosvenor clubs and £0.2m for a gaming duty claim in relation
to a previously disposed Enracha club.
Impairment charges
The Group has recognised an impairment charge of £4.1m for a venue within
Grosvenor Venues and £0.6m for a venue within Enracha. Performance at these
venues has not been in line with expectations.
Impairment reversal
The Group has recognised an impairment reversal of £0.6m for a venue within
Enracha. Performance at this venues has exceeded expectations due to
improvements in the local economic environment.
Group restructuring including relocation costs
In H1 2016/17 the Group carried out a detailed review of its entire UK
organisational structure designed to improve customer service and simplify
operations. This has resulted in changes to management and team structures at
both club and central levels, the decision to centralise support functions
into a new office in Maidenhead and the merging of the separately run brand
teams supporting digital into one operational team. The cost of this
restructure is estimated to be £8.0 million with £3.8 million recognised in H1
and the balance expected to be incurred in H2.
H1 costs include £1.2m of redundancy cost, £2.3m of relocation cost and £0.3m
of legal and professional fees.
Costs by segment were £0.1m Grosvenor Venues, £0.2m Mecca Venues, £1.3m UK
Digital and £2.2m Central.
Release from provision for property leases
The Group recognised a net release of £10.7m in relation to provisions for
onerous leases in the period due to the successful surrender of a site within
Mecca for a payment of £2.0m.
Aborted acquisition costs
Central cost includes £0.7m of aborted acquisition costs.
4 Financing
Six months to Six months to
31 December 2016 31 December 2015
(unaudited) (unaudited)
£m £m
Continuing operations
Finance costs:
Interest on debt and borrowings (1.3) (1.8)
Amortisation of issue costs on borrowings (0.2) (0.4)
Interest payable on finance leases (0.3) (0.4)
Unwinding of the discount in property lease provisions (0.4) (0.5)
Total finance costs (2.2) (3.1)
Finance income:
Interest income on short term bank deposits 0.1 0.1
Finance income 0.1 0.1
Other financial losses - including foreign exchange (0.9) (0.7)
Total net financing cost for continuing operations (3.0) (3.7)
Discontinued operations
Exceptional finance costs - (0.2)
Total net financing cost for discontinued operations - (0.2)
Total net financing costs (3.0) (3.9)
Six months to Six months to
31 December 2016 31 December 2015
(unaudited) (unaudited)
£m £m
Total net financing cost for continuing operations (3.0) (3.7)
Adjust for:
Other financial losses - including foreign exchange 0.9 0.7
Interest payable included in adjusted profit (2.1) (3.0)
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 2016 (unaudited)
Continuing operations Discontinued operations Total
£m £m £m
Current income tax
Current income tax - UK (5.7) - (5.7)
Current income tax - overseas (1.2) - (1.2)
Current income tax charge (6.9) - (6.9)
Current income tax on exceptional items (1.6) - (1.6)
Total current income tax charge (8.5) - (8.5)
Deferred tax
Deferred tax - UK (0.4) - (0.4)
Deferred tax - overseas (0.1) - (0.1)
Restatement of deferred tax from 18% to 17% 1.1 - 1.1
Deferred tax on exceptional items 0.6 - 0.6
Total deferred tax credit 1.2 - 1.2
Tax charge in the income statement (7.3) - (7.3)
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)
5 Taxation (continued)
The tax effect of items within other comprehensive income was as follows:
Six months to Six months to
31 December 2016 31 December 2015
(unaudited) (unaudited)
£m £m
Current tax credit on exchange movements offset in reserves 0.2 0.1
Total tax credit on items within other comprehensive income 0.2 0.1
The credit in respect of employee share schemes included within the Statement
of Changes in Equity includes a deferred tax credit of £nil (six months to 31
December 2015: £0.2m).
Factors affecting future taxation
On 16 March 2016, the Chancellor of the Exchequer announced a further 1.0%
reduction to the previously announced 18.0% main rate of UK corporation tax to
17.0% from 1 April 2020. This change was substantively enacted in September
2016.
On 8 July 2015, the Chancellor of the Exchequer announced the reduction in the
main rate of UK corporation tax to 19.0% for the year starting 1 April 2017
and a further 1.0% reduction to 18.0% from 1 April 2020. These changes were
substantively enacted in October 2015.
On 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.
The rate reductions will reduce the amount of cash tax payments to be made by
the Group.
A reconciliation of tax on continuing operations to tax included in adjusted
profit is described below:
Six months to Six months to
31 December 2016 31 December 2015
(unaudited) (unaudited)
£m £m
Tax charge for continuing operations (7.3) (4.8)
Adjust for:
Tax on exceptional items 1.0 (0.3)
Tax on adjusted items and impact of reduction in tax rate (1.3) (3.2)
Tax charge included in adjusted profit (7.6) (8.3)
6 Dividends
Six months to Six months to
31 December 2016 31 December 2015
(unaudited) (unaudited)
£m £m
Dividends paid to equity holders
Final dividend for 2015/16 paid on 20 October 2016 - 4.70p per share 18.4 -
Final dividend for 2014/15 paid on 21 October 2015 - 4.00p per share - 15.6
Refund of unclaimed dividends (0.2) -
Total 18.2 15.6
The Board has declared an interim dividend of 2.00p per ordinary share. The
dividend will be paid on 21 March 2017 to shareholders on the register at 10
February 2017. 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 2016 31 December 2015
(unaudited) (unaudited)
£m £m
Profit attributable to equity shareholders 28.1 41.6
Adjust for:
Discontinued operations (net of taxation) - (3.7)
Exceptional items after tax on continuing operations (0.8) (6.3)
Other financial losses 0.9 0.7
Taxation on adjusted items and impact of reduction in tax rate (1.3) (3.2)
Adjusted net earnings attributable to equity shareholders 26.9 29.1
Weighted average number of ordinary shares in issue 390.7m 390.7m
Adjusted earnings per share (p) - basic 6.9p 7.4p
Adjusted earnings per share (p) - diluted 6.9p 7.4p
8 Provisions
Property lease Disposal Restructuring Indirect tax
provisions provisions provisions provisions Total
£m £m £m £m £m
At 1 July 2016 44.5 4.4 - 1.2 50.1
Exchange adjustments - 0.2 - - 0.2
Unwinding of discount 0.4 - - - 0.4
Charge to the income statement - exceptional - - 2.0 0.2 2.2
Release to the income statement - exceptional (10.7) - - - (10.7)
Utilised in period (4.4) (0.1) - - (4.5)
At 31 December 2016 (unaudited) 29.8 4.5 2.0 1.4 37.7
Current 6.9 0.8 2.0 1.4 11.1
Non-current 22.9 3.7 - - 26.6
At 31 December 2016 (unaudited) 29.8 4.5 2.0 1.4 37.7
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 2016 31 December 2015
(unaudited) (unaudited)
£m £m
Total loans and borrowings (104.5) (122.2)
Less: accrued interest 0.4 0.6
Less: unamortised facility fees (0.4) (0.7)
(104.5) (122.3)
Add: cash and short term deposits 71.5 70.3
Net debt (33.0) (52.0)
10 Cash generated from continuing operations
Six months to Six months to
31 December 2016 31 December 2015
(unaudited) (unaudited)
£m £m
Continuing operations
Operating profit 38.4 46.4
Exceptional items (1.8) (6.0)
Operating profit before exceptional items 36.6 40.4
Depreciation and amortisation 23.1 22.3
Increase in inventories (0.2) (0.2)
Decrease in other receivables 7.8 7.3
Decrease in trade and other payables (8.4) (4.3)
Share-based payments (1.5) 1.1
Loss on disposal of property, plant and equipment 0.2 -
Impairment of property, plant and equipment 0.3 0.4
57.9 67.0
Cash utilisation of provisions (See note 8) (4.5) (3.3)
Cash payments in respect of exceptional items (1.6) -
Cash generated from continuing operations 51.8 63.7
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,
9 of these have not expired or been surrendered. These 9 leases have
durations of between 3 months and 96 years and a current annual rental
obligation (net of sub-let income) of approximately £0.8m.
During 2014, the Group became aware of certain information in respect of a
change in the financial position of the third party and one of the guarantors.
However, the Group has not to date been notified of any default, or intention
to default, in respect of the transferred leases.
12 Related party and ultimate parent undertaking
Guoco Group Limited (Guoco), a company incorporated in Bermuda, and listed on
the Hong Kong stock exchange has a controlling interest in The Rank Group Plc.
The ultimate parent undertaking of Guoco is Hong Leong Company (Malaysia)
Berhad (Hong Leong) which is incorporated in Malaysia. At 31 December 2016,
entities controlled by Hong Leong owned 56.2% of the Company's shares,
including 52.0% through Guoco and its wholly-owned subsidiary, Rank Assets
Limited, the Company's immediate parent undertaking.
This information is provided by RNS
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