REG - Rank Group PLC - Final Results
15/08/2024 07:00
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RNS Number : 5754A Rank Group PLC 15 August 2024
News release
LEI: 213800TXKD6XZWOFTE12
15 August 2024
The Rank Group Plc ('Rank' or the 'Group')
Preliminary results for the 12 months ended 30 June 2024
Delivering against the strategic plan with growth across all businesses
Rank (LSE: RNK) is pleased to announce its preliminary results for the 12
months ended 30 June 2024.
Overview
· Like-for-like ('LFL') Net Gaming Revenue ('NGR') grew 9% year on year with all
businesses in growth.
· LFL underlying operating profit for the year was £46.5m, slightly ahead of
analysts' consensus and more than double the prior year's £20.1m, reflecting
the significant operating leverage in the business.
· LFL underlying operating profit continues to rebuild with £24.8m in H2, up
14% compared with £21.7m in H1.
· Strong trading in Q4, with LFL NGR increasing 14% year on year, providing good
momentum into 2024/25.
· Net cash pre IFRS 16 at year end was £20.9m, reflecting stronger cash flows
as trading improves.
· Group's strong balance sheet position is supported by debt facilities of
£120m comprising £30m Term Loan to October 2026 and £90m Revolving Credit
Facility ('RCF') to January 2027. The total undrawn RCF at 30 June 2024 was
£78.5m.
· The Group has continued to invest in its c.7,600 employees with employment
costs increasing by 11% in the year, driven by the combined effect of wage
inflation and the reinstatement of colleague bonuses. Employment costs are the
key headwind for the Group in 2024/25 and are expected to increase by a
further 7%.
· Total capital expenditure in the year was £46.7m, with key investments
delivered across the Group's venues and proprietary technology. We expect
total capital expenditure for 2024/25 to be c. £60m.
· Good progress continues to be made within the Group's ESG programme with the
net zero plan well underway, key technology developments delivered in the year
to further enhance protections for our customers, record colleague engagement
scores recorded in the period and a continued strong focus on the role we play
within the local communities in which we operate.
· The Board is recommending a final dividend of 0.85p per share. The
resumption of dividend payments to shareholders reflects the Board's
confidence in the improving trading and financial position of the Group.
Financial highlights
2023/24 2022/23 Change
Financial KPIs Group underlying LFL net gaming revenue (NGR)(1) £734.4m £671.4m 9%
Venues underlying LFL NGR(1) £508.4m £468.8m 8%
Digital underlying LFL NGR(1) £226.0m £202.6m 12%
Underlying LFL operating profit(1,2) £46.5m £20.1m 131%
Net free cash flow £26.6m £(17.9)m(3) -
Net cash/(debt) pre IFRS 16 £20.9m £(5.9)m -
Underlying earnings per share(2) 5.9p 1.1p -
2023/24 2022/23 Change
Statutory performance Statutory NGR £734.7m £681.9m 8%
Group operating profit / (loss) £29.4m £(110.4)m(3) -
Profit / (loss) before taxation £15.5m £(123.3)m(3) -
Profit / (loss) after taxation £12.0m £(96.1)m(3) -
Net (debt) £(132.5)m £(174.9)m(3) (24)%
Basic earnings / (loss) per share 2.7p (20.5)p(3) -
Dividend per share 0.85p - -
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.
3. Restated, refer to CFO review for further details.
· Statutory operating profit of £29.4m includes a net impairment charge of
£7.6m and a charge of £6.6m relating to the amortisation of acquired
intangible assets of Stride Gaming and Yo Bingo.
Operational highlights
· Grosvenor venues LFL NGR grew 9% year on year, with London growing 10% and the
rest of the UK growing 8%. Customer visits grew 9% and spend per visit
decreased 1%. Active customers grew 2%.
· Mecca venues LFL NGR grew 8% on the prior year with customer visits growing 2%
and the spend per visit increasing 6%. 44% of the 187,000 new customers in the
year were under 35 years old, reflecting the continued broad appeal of Mecca.
· Enracha venues LFL NGR grew 7% on customer visits growing 6% and spend per
visit increasing 1%.
· Digital LFL NGR grew 12% year on year, towards the top end of the annual
growth opportunity outlined at the November Capital Markets Day, with
particularly strong growth in the Grosvenor and Mecca cross-channel brands and
in the Yo brand in Spain. Margin expansion now expected to be greater than 600
bps in the medium term.
· A number of key technology developments were successfully delivered in the
year including a single content management system now serving all UK facing
brands, the launch of the first in-house developed app for the Grosvenor brand
and the successful build of the central engagement platform (a single customer
database serving all UK facing businesses). The next phase of the development
programme is focused on the seamless cross-channel customer experience.
· The Spanish facing digital brands were transferred to Ceuta in December 2023
delivering a 10% saving in gaming tax from the start of the second half.
· The sale of the Group's shareholding in the Indian rummy brand, Passion
Gaming, was successfully completed in June 2024. In the current year Passion
Gaming represented less than 2% of Digital's total NGR, on a proforma basis.
· Discussions regarding the sale of the UK Digital non-proprietary
('multi-brand') business are well advanced and the Group expects the disposal
to complete in the next few months.
· The Group has a strong three-year programme of growth initiatives in place for
each of our businesses focused on: cash maximisation in land-based bingo;
recovery and growth in our Grosvenor venues business; scaling the digital
business both in the UK and internationally and maximising the opportunities
of the anticipated land-based legislative reforms for the UK's casino and
bingo sectors.
Current trading and outlook
We have made a good start to the new financial year. We exited 2023/24 with
good momentum which has continued into 2024/25, with Group NGR up 10% for the
first 6 weeks against a strong comparative.
Dividend
The continuing recovery in profitability combined with the Group's balance
sheet strength gives the Board the confidence to propose a resumption of
ordinary dividend payments. The Board is recommending a final dividend of
0.85p as a full year dividend.
The Group is also intending to declare an 2024/25 interim dividend alongside
its half year results in January 2025.
John O'Reilly, Chief Executive of The Rank Group Plc said:
"This has been a year of strong financial, operational and strategic progress
for Rank. We are continuing to rebuild profitability following the impact of
lockdowns and the material inflationary pressures experienced in recent years.
Trading continues to improve due to ongoing investment in our people, our
products and the facilities within our venues businesses, and the continued
development of the proprietary technology which is driving the growth of our
digital business.
With some important developments within our proprietary technology now in
place, we are increasingly delivering a seamless and tailored cross-channel
experience for our customers, leveraging our key area of competitive
advantage.
We are well-positioned to take advantage of the much needed land-based reforms
which will help to further modernise our casino and bingo propositions to
better meet the expectations of today's customers and we look forward to the
Government confirming the timetable for the required secondary legislation.
We have started the new financial year as we finished the previous one, with
good momentum across all businesses. With inflation receding, disposable
incomes improving, investment continuing to be made in the customer
proposition and a strong pipeline of growth initiatives underway, we are
confident in the future prospects of the Group.
It would not be possible to deliver this improved performance without our
excellent colleagues who continue to excite, entertain and protect their
customers, support their local communities and contribute fully to the
progress we are continuing to make."
Definition of terms:
· Net gaming revenue ('NGR') is revenue less customer incentives;
· Underlying measures exclude the impact of amortisation of acquired
intangibles; profit or loss on disposal of businesses; acquisition and
disposal costs including changes to deferred or contingent consideration;
impairment charges; reversal of impairment charges; restructuring costs as
part of an announced programme; retranslation and remeasurement of foreign
currency contingent consideration; discontinued operations, significant
material proceeds from tax appeals and the tax impact of these, should they
occur in the period. Collectively these items are referred to as separately
disclosed items ('SDIs');
· EBIT is operating profit before SDIs;
· Underlying earnings per share is calculated by adjusting profit attributable
to equity shareholders to exclude SDIs;
· '2023/24' refers to the 12-month period to 30 June 2024 and '2022/23' refers
to the 12-month period to 30 June 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;
and
· Venues includes Grosvenor venues, Mecca venues and Enracha venues.
Enquiries
The Rank Group Plc
Sarah Powell, director of investor relations and communications (investor Tel: 01628 504 303
enquiries)
David Williams, director of public affairs (media enquiries) Tel: 01628 504 295
FTI Consulting LLP
Ed Bridges Tel: 020 3727 1067
Alex Beagley Tel: 020 3727 1045
Photographs available from www.rank.com (http://www.rank.com/)
Analyst meeting and webcast details:
Thursday 15 August 2024
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_PR24 . 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.
Business review
The year to 30 June 2024 saw continued improvement in trading conditions and
in the financial performance of the Group. All businesses have delivered good
levels of NGR growth and strong increases in profitability.
At a Group level, underlying like-for-like ('LFL') Net Gaming Revenue ('NGR')
of £734.4m grew by 9% against the prior year. Grosvenor venues grew NGR by
9%, Mecca grew by 8% and Enracha grew by 7%. The digital business saw NGR
growth of 12%, with the UK growing by 11% and Spain growing by 16%.
With NGR increasing across the Group, underlying LFL operating profit more
than doubled from £20.1m in 2022/23 to £46.5m in 2023/24.
NGR / £m 2023/24 2022/23 Change
Grosvenor venues 331.3 305.0 9%
Mecca venues 138.6 127.9 8%
Enracha venues 38.5 35.9 7%
Digital 226.0 202.6 12%
Underlying LFL(1) Group 734.4 671.4 9%
Impact of venues openings, closures and FX(2) 0.3 10.5 -
Underlying Group 734.7 681.9 8%
Operating profit / £m 2023/24 2023/24 Change
Grosvenor venues 23.7 16.7 42%
Mecca venues 3.9 (5.6) -
Enracha venues 9.6 9.0 7%
Digital 23.4 13.1 79%
Central costs (14.1) (13.1) (8)%
Underlying(3) LFL(1) Group 46.5 20.1(4) 131%
Impact of venues openings, closures, and FX(2) (0.2) (1.6) -
Total Group 46.3 18.5 150%
1. Results are presented on a like-for-like ('LFL') basis
which removes the impact of club closures and foreign exchange movements.
2. A full analysis of these adjustments can be found in the
Alternative Performance Measures ('APM') section.
3. Before the impact of separately disclosed items.
4. Restated, refer to CFO review for further details.
Digital cross-channel customer revenues continue to grow faster than overall
Group revenues, up 16% in the year. The key enabler is the Group's proprietary
technology platform, which has seen several critical enhancements successfully
delivered this year. These include a single content management system across
all of our UK digital brands and a much improved app for the Grosvenor brand
which has been developed in-house for the first time. We successfully
transferred the UK's digital platform to the cloud to enhance security,
scalability and cost efficiency and completed the single customer engagement
platform serving each of our UK businesses. There are many technology
developments in the roadmap over the coming years to deliver a full
cross-channel seamless experience for our customers and to maximise this area
of significant competitive advantage. The next steps include the delivery of a
single cross-channel membership for Mecca customers in 2024/25 and the
development of several cross-channel products and services for both the
Grosvenor and Mecca brands.
At a Group level, the focus remains on driving cost efficiencies and ensuring
we operate within an appropriately tight control framework. Good progress is
being made in enhancing controls and adding automation within both the finance
and people and culture support functions. To ensure data is protected and
development opportunities are prioritised appropriately, the Group has
implemented a governance framework for Artificial Intelligence ('AI').
We retain a single programme management framework across the Group to
evaluate, prioritise, resource and continuously monitor the key strategic
initiatives, which ensure we continue to meet the needs of our customers,
while driving growth in revenues and delivering cost efficiencies.
Grosvenor venues
Key performance indicators:
2023/24 2022/23 Change
£m £m
LFL(1) NGR 331.3 305.0 9%
London 108.1 98.0 10%
Rest of the UK 223.2 207.0 8%
Total NGR 331.3 306.3 8%
LFL(1) underlying(2) operating profit 23.7 16.7 42%
Total profit / (loss) 16.5 (35.4) -
1. Results are presented on a like for like ('LFL') basis
which removes the impact of club closures.
2. Before the impact of separately disclosed items.
The Grosvenor management team was strengthened early in the year with the
appointment of Mark Harper as Managing Director and Samantha Collins as
National Operations Director. We continued to invest in people in the year,
ensuring we have the right people in the right roles to deliver quality
customer experience and operational execution. Customer Net Promoter Scores
('NPS') climbed steadily throughout the year to reach 68 (30 June 2023: 64),
whilst colleague engagement scores have reached a new high of 79% (30 June
2023: 70%).
Grosvenor venues LFL underlying NGR was £331.3m, a growth of 9% over the
prior year. This is an acceleration on the 3% growth delivered in 2022/23 as
the business continues to recover from the impact of lockdowns, the slow
return of international customers, particularly to London's casinos, and the
tightening of affordability restrictions in recent years.
Average weekly NGR, which was £7.5m in the eight months prior to lockdown in
2019/20, grew from £5.9m in 2022/23 to £6.3m, highlighting the further
opportunity to grow revenues, even before the much needed and anticipated
legislative reforms. Active LFL customers in the year grew 2%, reflecting
the continued improvements being made in managing customer affordability risk
through improvements in systems, processes and in the skills of our
colleagues.
Grosvenor's London casino estate grew revenues by 10% with customer visits up
11%. The higher footfall casinos, lower stakes venues which attract tourists
and London commuters performed strongly in the year. The higher-end venues,
which have historically attracted high net worth international customers
continued to perform softly relative to the pre-Brexit position.
The rest of the UK also saw performance continue to improve with NGR up 8% on
customer visits up 9%.
With 4,200 colleagues across Grosvenor's 51 venues, employment was the major
area of cost increase in the year. Employment costs increased by £17.6m with
pay rises heavily focussed towards the lower paid colleagues.
Despite wage pressures, the improved revenue combined with the significant
operating leverage within the Grosvenor business delivered a 42% growth in
underlying LFL operating profit of £23.7m.
At a statutory level, operating profit improved from a loss of £35.4m in
2022/23 to a profit of £16.5m in 2023/24, including a net impairment charge
of £5.9m, principally driven by the underperformance against expectations of
one venue.
Grosvenor continues to see strong and consistent growth in all gaming
products. Electronic roulette revenues grew 11% in the year, gaming machine
revenues grew 9% and table gaming saw revenues grow 9%.
£6.4m was invested in new products during the year. Principally, this was in
the form of replacing electronic roulette terminals, roulette wheels, gaming
tables and supporting equipment. The business typically leases gaming machines
or has contracts on a revenue share basis. In the year, Grosvenor introduced
gaming machines from Aristocrat and Blueprint, as well as upgrading Novomatic
and IGT machines across the estate. There is considerable opportunity,
following the anticipated land-based legislative reforms, to broaden the range
of gaming machine content across the Grosvenor estate to increase the
excitement and entertainment for our customers.
In addition to product renewal, £7.6m was invested in the property facilities
in the year. This included external signage and decoration works at the
Northampton, Manchester (Bury New Road), Reading and Great Yarmouth casinos,
plus smaller investments in a number of other Grosvenor venues. At the year
end, Grosvenor Leicester was nearing completion of a full refurbishment,
including the development of an extensive sports viewing facility, which will
be converted to a sports betting arena once permitted.
Investment in heating, air conditioning, health and safety and other general
infrastructure amounted to £5.0m in the year reflecting the continued
catching up following a period of underinvestment during the Covid pandemic.
Grosvenor successfully completed the Gamcare Safer Gambling Standard
assessment, being awarded the gold level accreditation.
Mecca venues
Key performance indicators:
2023/24 2022/23 Change
£m £m
LFL(1) NGR 138.6 127.9 8%
Total NGR 138.9 136.3 2%
Underlying(2) LFL(1) operating profit / (loss) 3.9 (5.6) -
Total (loss) (1.7) (74.1) -
1. Results are presented on a like for like ('LFL') basis which
removes the impact of club closures.
2. Before the impact of separately disclosed items.
The Mecca business has undergone a considerable rationalisation of the estate
following the impact of the pandemic on both customer numbers and visit
frequency. In 2018/19, Mecca had 82 venues; we have ended 2023/24 with 52
venues. Four venues were closed in the year and, with one further closure
anticipated in 2024/25, that will complete the rationalisation process other
than in the context of specific property lease events which may arise over the
coming years. The result of this rationalisation has been the creation of a
stronger and more competitive estate with higher liquidity, namely higher
visits and therefore more attractive prize boards.
Mecca grew LFL NGR by 8% in the year. LFL visits grew 2% and the average
customer spend per visit grew 6%. LFL active customers grew by 1%.
Mecca continues to attract very large volumes of new customers with over
187,000 new memberships in the year. 44% of these new customers to Mecca are
under 35 years of age, demonstrating the continued strong appeal of bingo when
provided in a contemporary environment, with good value prices and attractive
prize boards.
NGR from main stage bingo, the primary game played within Mecca's venues, grew
11% on the prior year with LFL revenues 11% ahead of pre-pandemic 2019 levels.
Main stage bingo is the principal driver of customer visitation, and this
growth underpins the longevity of the land-based bingo business.
Gaming machine revenues grew 9% and are 1% ahead of LFL revenues in
pre-pandemic 2019 levels. The machine estate continued to be modernised during
the year with a broader range of both suppliers and game content. Gaming
machines account for 40% of Mecca's revenue and remain a significant growth
opportunity, subject to the expected delivery of the land-based legislative
reforms, which will enable up to 50% of machines to be category B3 machines,
by far the most popular machines with bingo customers.
The interval bingo game grew LFL revenue 7% in the year, with food and
beverage sales growing 6%.
With a more vibrant Mecca estate, the experience for our customers also
improved, reflected in the customer NPS of +78. Significantly, Mecca's
employee engagement level continues to grow, from 75% in 2022/23 to 83% in
2023/24.
Underlying LFL operating profit in the year was £3.9m, a strong recovery from
the loss of £5.6m in the prior year. The key cost increase was employment
costs which grew by 12% due to the continued investment in our colleagues,
particularly those on lower hourly pay rates.
Statutory operating loss for the year was £1.7m following a net impairment
charge of £5.3m. Whilst there are a large number of impairments and
impairment reversals, driven by the sensitivity of changes to financial
forecasts at a venue level, the net impairment charge is primarily driven by a
small number of venues that have underperformed our expectations.
Capital investment in the year was £14.1m. £1.2m of this was regarding
improvements to the branding and external appearance of six venues. At the
year end, 15 out of the 52 Mecca venues have received investment in external
signage and décor since 2022. £3.5m was invested in improving the gaming
machine areas within 17 Mecca venues; 20 Mecca venues now have redesigned and
refurbished gaming machine areas since the investment programme commenced.
Both the investment in external signage and interior gaming machine areas are
delivering strong returns and will continue into 2024/25. An additional £3.5m
was spent in the year on refreshing new product across the remaining estate
and a new reporting and monitoring system, Playsafe, which provides colleagues
with greater visibility of customer's machine play was rolled out across the
year.
Capital investment in infrastructure amounted to £4.0m and this was primarily
centred on air conditioning systems, boilers, electrical works and other
renewals.
Overall, 2023/24 was a positive year for the Mecca business, returning to
profitability with a rationalised and revitalised estate, a strong management
team, improving revenue growth and good momentum entering 2024/25.
Enracha venues
Key performance indicators:
2023/24 2022/23 Change
£m £m
LFL(1) NGR 38.5 35.9 7%
Total NGR 38.5 36.4 6%
Underlying(2) LFL(1) operating profit 9.6 9.0 7%
Total profit 13.1 4.9 -
1. Results are presented on a like for like ('LFL') basis which
removes the impact of foreign exchange movements.
2. Before the impact of separately disclosed items.
The Enracha estate of nine bingo, sports betting and gaming machine venues in
Spain, continues to perform very strongly. Underlying LFL NGR of £38.5m was
7% ahead of the prior year, with all venues delivering growth. Customer visits
grew 6% in the year, as the business continues to attract high attendances for
its attractive bingo prize boards. Customer NPS reached a record score of 56
in the year, demonstrating the attractiveness of the customer offering and the
high levels of service provided by our Enracha team.
Bingo revenues continue to grow, up 7% on the prior year, and gaming machine
revenues increased by 7%.
Underlying LFL operating profit hit a record £9.6m in the year, an increase
of 7% on the prior year.
Statutory operating profit for the year was £13.1m following an impairment
reversal of £3.6m relating to one venue.
A total £0.9m of capital was invested in a full refurbishment of Enracha
Seville, which extends the gaming machine area and improves the overall
customer facilities. The overall capital investment in the year was £2.3m and
this included the completion of the refurbishment of Enracha Reus, the further
roll out of the customer loyalty programme, a new CRM system, new gaming
machine jackpot display screens and a new food and beverage EPOS system.
The Enracha business is in a strong position as it enters 2024/25.
Digital
Key financial performance indicators:
2023/24 2022/23 Change
£m £m
LFL(1) NGR 226.0 202.6 12%
Mecca 86.9 72.5 20%
Grosvenor 69.0 57.1 21%
Other proprietary brands 23.2 23.4 (1)%
Non-proprietary brands 15.5 19.6 (21)%
Yo/Enracha 27.6 23.8 16%
Passion Gaming 3.8 6.2 (39)%
Total NGR 226.0 202.9 11%
Underlying(2) LFL(1) operating profit 23.4 13.1(3) 79%
Total profit 16.2 4.1 -
1. Results are presented on a like for like ('LFL') basis which
removes the impact of foreign exchange movements.
2. Before the impact of separately disclosed items.
3. Restated, refer to CFO review for further details.
Scaling Rank's digital business is a key strategic pillar for the Group and
2023/24 saw considerable progress being made. Underlying LFL NGR increased 12%
on the prior year, in line with the 8% to 12% annual growth opportunity
outlined in the November 2023 Capital Markets Event.
In the UK facing business, revenues grew 11% with very strong growth of 20%
and 21% respectively in the Mecca and Grosvenor cross-channel brands. The
other UK facing brands operating on the Group's proprietary technology
platform were down 1%.
Driving the growth in customers and revenues in the UK has been the delivery
of some key technology developments. In the second half of the year a new
single content management system to service all the proprietary technology
brands was successfully rolled out. In addition to providing operational
efficiencies and speed to market of new front end developments, this also
delivers faster webpage loads for customers.
A new in-house developed Grosvenor app was launched in Q4 and is already
seeing strong take-up from customers and is driving higher deposits per
player. The expectation is that a new in-house developed app for Mecca
customers will launch in 2024/25.
Improved personalisation continues following the successful build of the
central engagement platform. This centralised data platform is also serving to
improve our customer risk management systems with a number of enhancements to
Rank's proprietary 'Hawkeye' customer monitoring system introduced in the
year.
The proprietary technology platform modernisation programme continues at pace
with a number of key architectural changes and system enhancements completed
during the year. The full modernisation programme is expected to complete
during 2024/25.
In the multi-brand business (non-proprietary brands), which consists of over
80 brands operating on third party platforms and licences, NGR declined 21% in
the year. The decision was made mid-way through the year to exit the
multi-brand business, for which the process is well advanced, and the Group
expects to complete the sale in the coming months.
Yo and Enracha Spanish digital brands delivered NGR growth of 16% over the
prior year. In December 2023, the business was successfully relocated to
Ceuta, halving the rate of gaming tax from 20% to 10% from the start of the
second half.
In April 2024, 'Live Bingo', a streamed bingo service, was successfully
introduced with a strong take up from the Yo Bingo community of customers.
The launch of the Yo brand in Portugal is now expected in 2024/25. This will
be the first bingo brand to launch in the country and therefore the licensing
process has been frustratingly complex and extended.
Passion Gaming, the online Indian rummy in which Rank held a 51% stake, was
sold in June 2024 to its founders following significant changes to the tax
regime for online games of skill, which saw NGR decline 39% year on year. For
further detail refer to note 16.
Underlying operating profit in the digital business grew 79% in the year to
£23.4m highlighting the strong operating leverage within the digital business
as revenues grow.
Statutory operating profit for the year was £16.2m following £6.6m of
amortisation of acquired intangible assets.
Capital investment in the year totalled £10.3m, principally centred on the
ongoing developments within the proprietary technology platform.
With a strong pipeline of technology developments being released during
2024/25 another strong performance for the Group's digital business is
anticipated, in line with the revenue opportunity presented at the recent
Capital Markets Day.
Group liquidity
The Group ended the year with net cash pre IFRS 16 of £20.9m.
Working capital at the end of the year was an inflow of £27.0m, due to the
Group's improved financial performance, which has resulted in a higher duty
payable and the reinstatement of employee bonuses which are paid post year
end.
In January 2024, the Group successfully secured a new £120m club facility,
comprising a £30m Term Loan and a £90m Revolving Credit Facility ('RCF').
The Term Loan expires in October 2026 and the RCF in January 2027. Both the
Term Loan and RCF have market typical tenor extension options which are at the
lender's discretion.
The new facility retains the two financial covenants which were applicable to
its previous facilities, net debt to EBITDA not to exceed 3x and EBITDA to net
interest payable of no less than 3x. There is an additional covenant
referred to as a Fixed Charge Cover ratio, where (net interest payable plus
operating leases) to (EBITDA plus net operating leases) can be no less than
1.5x. The Group expects to retain significant headroom against these
covenants.
Sustainability update
Our sustainability strategy is now well-established; it focuses on the four
key areas of Customers, Colleagues, Environment and Communities.
Customers
Our commitment to our customers is unwavering. We continue to prioritise the
safety of our customers, ensuring that they enjoy a frictionless experience,
while going beyond compliance to minimise the risk of harmful play. By
harnessing increasingly advanced data modelling, we have been able to identify
potentially vulnerable customers earlier and with greater precision.
Furthermore, we are focused on utilising new technologies to enhance our
proposition, to improve our customer service response times and to make the
customer experience increasingly personalised and relevant. These measures are
part of our ongoing efforts to safeguard our customers, whilst delivering an
exciting and entertaining experience.
Colleagues
Our colleagues are at the heart of what we do. This year, we have focused on
weaving our employee value proposition, 'Work. Win. Grow.', into every facet
of our operations. We believe that investing in our people is crucial to our
continued success. To ensure our venue colleagues are engaged and aware of
developments within our business, we launched the connect platform. Our
colleagues can now access company information more easily online or through an
app; this is already fostering a stronger connection between our colleagues
and the business. We are proud to have an employee engagement score of 79%, up
7ppts on the prior year.
Environment
Our journey towards a sustainable future continues to gain momentum. We have
made significant progress on our Net Zero Pathway, including the completion of
baselining energy use data in our 40 highest-consuming UK venues.
Additionally, we have completed Scope 1, 2, and 3 emissions baselining for all
our Spanish venues. This year, we commenced our Scope 3 assessment in the UK
and began engaging with suppliers to gain a complete picture of our emissions
profile across the value chain.
The success of our decarbonisation efforts relies in part on the actions of
our colleagues. We therefore launched a cultural programme as part of the Net
Zero Pathway and have been raising awareness for more energy conscious
behaviours such as our energy efficient lighting initiative. Energy
consumption monitoring has been valuable in demonstrating the immediate effect
of behavioural change on energy use, and introducing monthly league tables has
been a great success in encouraging our venues' teams to think about energy
consumption. As a result of these efforts, emissions have fallen by 11%,
underscoring the effectiveness of our early initiatives.
Communities
Rank continues to occupy a central role in the communities in which we
operate. It has been inspiring to see our colleagues participate in various
fundraising initiatives, demonstrating our collective commitment to making a
positive impact. This year, we celebrated ten years of our partnership with
Carers Trust, raising £3.8m for this deserving charity in that time. Our
charitable activities extend beyond fundraising, with our venues being used by
Carers Trust to host local events and colleagues volunteering their time for
various carers support initiatives. Our ongoing community engagement
reflects our dedication to supporting and enriching the lives of those around
us.
ESG KPIs 2023/24 2022/23 Change
Customers:
Customer Net Promoter Score ('NPS') 52 43 21%
% of UK digital customers who use safer gambling tools 31% 30% 1ppts
Customer feedback score relating to Rank's approach to safer gambling 84% 78% +6ppts
Employee NPS relating to Rank's approach to safer gambling 69 53 30%
Colleagues:
Employee NPS 39 14 179%
% of females in senior management 34% 35% (1)ppt
Environment:
Carbon emissions 22,112 tCO2e 24,853 tCO2e (11)%
Community:
Total charitable funds raised £323k £283k 14%
High standards of business conduct underpin everything we do at Rank.
Compliance remains a central focus, and we ensure that we act in accordance
with all relevant regulations in each of our operating locations. Anticipating
the impact of new regulations on sustainability reporting, we have proactively
begun to align our disclosures to meet these requirements. This year, we
conducted a double materiality assessment process to better position ourselves
for future reporting obligations, reaffirming our commitment to transparency
and accountability.
As we look back on the achievements of 2023/24, we are proud of our progress
and remain steadfast in our commitment to sustainable and responsible business
practices.
Regulatory update
Publication of the Government's White Paper into gambling reforms was made in
April 2023 and the start of 2023/24 saw a number of Gambling Commission and
DCMS-led consultations launched with the intention of exploring how best to
apply the public policies contained in the White Paper. For Rank, the most
material consultation of the year related to the, much needed, land-based
reforms for casino and bingo. In May 2024, the Government published its
response to the consultation, outlining how the various reforms would be
delivered and the proposed secondary legislation to bring them into being. We
welcomed the details of the Government's consultation response, noting that it
signified another important step closer to the legislation which will enable
Rank's Grosvenor and Mecca venues to better meet the needs of our customers.
The July general election inevitably delayed the proposed secondary
legislation but, with a new Labour Government now in place and a new DCMS
ministerial team appointed, we expect the passage of legislation to recommence
in the coming months.
CFO's review
Within this section all prior year comparatives are to the 12 months ended 30
June 2023.
Reported net gaming revenue ('NGR')
For the 12 months ended 30 June 2024, total NGR increased by 8% to £734.7m
with improved NGR performance across all of the Group's business units.
Operating profit
The Group delivered an operating profit of £29.4m for the year, compared to
an operating loss of £110.4m(1) in the prior year. The improvement in
operating profit was due to improved NGR performance across the Group and
significantly reduced net impairment charges in the current period of £7.6m,
compared to £118.9m in the prior period.
Separately disclosed items ('SDIs')
SDIs are infrequent in nature and/or do not relate to Rank's underlying
business performance.
Total SDIs for the 12 months ended 30 June 2024 were £16.9m.
The material SDIs in the year were as follows:
· Net impairment charges of £7.6m relating to lower than anticipated
performances and a reduction of forecasted earnings regarding certain venues
partially offset by the reversal of previously impaired assets; and
· Amortisation of acquired intangible assets of £6.6m relating to the
acquisition of Stride Gaming and Yo Bingo.
Further details regarding the SDIs can be found in note 3.
Prior period restatement
These consolidated financial statements include a prior year restatement in
relation to prior year costs identified in the Digital business which
erroneously had not been recognised in the prior year consolidated income
statements. The error was considered to be material due to its nature and
impact to key performance indicators. Accordingly, a third balance sheet has
been presented in accordance with IAS 1 'Presentation of Financial
Statements'.
During the year, the Group identified an accumulated total of £4.4m of prior
year adjustments within the Digital business comprising £3.2m of trading
related costs which erroneously had not been recognised in the prior year
financial statements and £1.2m of excess releases to income which erroneously
had been recognised in the prior year financial statements. Of the total value
of £4.4m, £0.5m relates to financial year 2022/23 and the remaining £3.9m
relates to pre 2022/23.
The above restatement reduces both basic and diluted EPS by 0.1 pence for the
year ended 30 June 2023.
The impact of the adjustment on the June 2023 balance sheet is a reduction to
total asset of £2.0m, an increase on trade and other payables of £2.2m, a
reduction to closing reserves as at 30 June 2023 of £4.4m and a reduction to
opening reserves as at 1 July 2022 of £3.9m.
Due to the working capital movements stated above, the opening cash balance
has reduced by £2.0m and cash flows from operating activities increased by
£2.4m in the cash flow statement for the year ended 30 June 2023.
In addition to above, the consolidated statement of cash flow includes a prior
year restatement in relation to leases. During the year, the Group identified
that the lease principal payments incorrectly included £4.6m of
property-related VAT and £1.1m 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 £5.7m in both net cash generated from operating activities and
net cash used in financing activities in the 2023 statement of cash flows.
For further details refer to note 1.
Net financing charge
The £12.8m net financing charge was slightly higher than the prior period's
charge of £12.3m principally due to higher bank fees following the
refinancing of the Group's facilities in January 2024. The net financing
charge includes £5.9m of lease interest calculated under IFRS 16.
Cash flow and net debt
As at 30 June 2024, net debt was £132.5m. Debt comprised £30.0m of term
loan, £11.5m of drawn revolving credit facilities and £153.4m in finance
leases, offset by cash at bank of £62.4m.
The Group finished the year with net cash for covenant purposes of £5.1m.
2023/24 2022/23(1)
£m £m
Operating profit from continuing operations 46.3 18.5
Depreciation and amortisation 47.7 60.1
Working capital and other 25.1 0.4
Cash inflow from operations 119.1 79.0
Capital expenditure (46.7) (44.1)
Net finance cost and tax (5.7) (7.8)
Lease payments (39.0) (37.9)
Cashflows in relation to SDIs (0.1) (7.1)
Net free cash flow 27.6 (17.9)
Business disposal/acquisition and other (0.8) (0.5)
Total cash in/(out) flow 26.8 (18.4)
Opening net (debt)/cash pre IFRS 16 (5.9) 12.5
Closing net cash (debt) pre IFRS 16 20.9 (5.9)
IFRS 16 lease liabilities (153.4) (169.0)
Closing net (debt) post IFRS 16 (132.5) (174.9)
1. Restated.
Taxation
The Group's underlying effective corporation tax rate in 2023/24 was 18.8%
(2022/23: 8.1%) based on a tax charge of £6.3m on underlying profit before
taxation.
The underlying effective corporation tax rate for 2024/25 is expected to be
17-19%, being below the UK statutory tax rate. The tax rate is driven by
some overseas profits being taxed at lower rates than the UK.
On a statutory basis, the Group had an effective tax rate of 22.6% in 2023/24
(2022/23: 22.1%) based on a tax charge of £3.5m on total profit of £15.5m.
This is higher than the effective tax rate on underlying profit due to a
significant level of separately disclosed items which relate to overseas
operations and attract a tax credit at lower rates than the UK.
Further details of the tax charge are provided in note 5
Dividend
The continuing recovery in profitability combined with the Group's balance
sheet strength gives the Board the confidence to propose a resumption of
ordinary dividend payments. The Board is recommending a final dividend of
0.85p as a full year dividend. Subject to approval by shareholders the final
dividend will be paid on 25 October 2024 to shareholders on the register on 20
September 2024. The ex-dividend date will be 19 September 2024.
Earnings per share ('EPS')
Basic EPS increased to 2.7p from a loss of 20.5p(1) in the prior period.
Underlying EPS increased to 5.9p, up from 1.1p(1) in the prior period. For
further details refer to note 7.
Cash tax rate
In the 12 months ended 30 June 2024, the Group had an effective cash tax rate
of (7.2)% on underlying profit before taxation (2022/23: 51.6%).
On a statutory basis, the Group had an effective cash tax rate of (15.5)% in
2023/24 (2022/23: (2.6)%) based on a tax refund of £2.4m on total profit of
£15.5m.
The cash tax rate differs from the standard rate of UK tax due to refunds of
UK tax overpaid in prior years.
The Group is expected to have an underlying cash tax rate of approximately
1-3% for the year ended 30 June 2025. The cash tax rate is driven by
utilisation of brought forward tax losses and expected refunds of UK and
Maltese tax paid in prior years from loss carry back and dividend refund
claims.
Going concern
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 August 2025. 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 reflect a reduced
trading performance and inflationary impacts on the cost base. In these
events, the Group will generate sufficient cash to meet it liabilities as they
fall due and meet covenant requirements for the period to 31 August 2025.
Alternative performance measures
When assessing, discussing and measuring the Group's financial performance,
management refer to measures used for internal performance management. These
measures are not defined or specified under UK adopted International Financial
Reporting Standards (IFRS) and as such are considered to be Alternative
Performance Measures ('APMs').
By their nature, APMs are not uniformly applied by all preparers including
other operators in the gambling industry. Accordingly, APMs used by the Group
may not be comparable to other companies within the Group's industry.
Purpose
APMs are used by management to aid comparison and assess historical
performance against internal performance benchmarks and across reporting
periods. These measures provide an ongoing and consistent basis to assess
performance by excluding items that are materially non-recurring,
uncontrollable or exceptional. These measures can be classified in terms of
their key financial characteristics.
Profit measures allow management and users of the financial statements to
assess and benchmark underlying business performance during the year. They are
primarily used by operational management to measure operating profit
contribution and are also used by the Board to assess performance against
business plan.
The following table explains the key APMs applied by the Group and referred to
in these statements:
APM Purpose Closest equivalent IFRS measure Adjustments to reconcile to primary financial statements Reconciliation reference
Underlying like-for-like ('LFL') net gaming revenue ('NGR') Revenue measure NGR · Excludes contribution from any venue openings, closures, disposals, acquired 1a, 1b
businesses and discontinued operations
· Foreign exchange movements
Underlying LFL operating profit /(loss) Profit measure Operating profit / (loss) · Separately disclosed items 3a, 3b
· Excludes contribution from any venue openings, closures, disposals, acquired
businesses and discontinued operations
· Foreign exchange movements
· Central cost reallocation
Underlying (loss) / earnings per share Profit measure Earnings / (loss) per share · Separately disclosed items 6
Net free cash flow Cash measure Net cash generated from operating activities · Lease principal repayments Refer to cash flow in CFO review
· Cash flow in relation to separately disclosed items
· Cash capital expenditure
· Net interest and tax payments
1a, 1b
Underlying LFL operating profit /(loss)
Profit measure
Operating profit / (loss)
· Separately disclosed items
· Excludes contribution from any venue openings, closures, disposals, acquired
businesses and discontinued operations
· Foreign exchange movements
· Central cost reallocation
3a, 3b
Underlying (loss) / earnings per share
Profit measure
Earnings / (loss) per share
· Separately disclosed items
6
Net 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
Refer to cash flow in CFO review
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 year (2023/24), the Group closed four Mecca venues. 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.
Reconciliation 1a
2023/24 Grosvenor venues Mecca venues Enracha venues Digital Total
£m
Underlying LFL NGR 331.3 138.6 38.5 226.0 734.4
Open, closed and disposed venues - 0.3 - - 0.3
Foreign exchange ('FX') - - - - -
Underlying NGR - continuing operations 331.3 138.9 38.5 226.0 734.7
Reconciliation 1b
2022/23 Grosvenor venues Mecca venues Enracha venues Digital Total
£m
Underlying LFL NGR 305.0 127.9 35.9 202.6 671.4
Open, closed and disposed venues 1.3 8.4 - - 9.7
Foreign exchange ('FX') - - 0.5 0.3 0.8
Underlying NGR - continuing operations 306.3 136.3 36.4 202.9 681.9
Reconciliation 2
Calculation of comparative underlying LFL NGR
2022/23
Reported underlying LFL NGR 681.9
Reversal of 2022/23 closed venues -
2023/24 closed venues (9.7)
2023/24 FX (0.8)
Restated underlying LFL NGR 671.4
Reconciliation 3a
2023/24 Grosvenor venues Mecca venues Enracha venues Digital Central costs Total
£m
Underlying LFL operating profit 23.7 3.9 9.6 23.4 (14.1) 46.5
Opened, closed and disposed venues - (0.2) - - - (0.2)
Underlying operating profit - continuing operations 23.7 3.7 9.6 23.4 (14.1) 46.3
Separately disclosed items (7.2) (5.4) 3.5 (7.2) (0.6) (16.9)
Operating profit / (loss) - continuing operations 16.5 (1.7) 13.1 16.2 (14.7) 29.4
Reconciliation 3b
2022/23 Grosvenor venues Mecca venues Enracha venues Digital(1) Central costs Total
£m
Underlying LFL operating profit 16.7 (5.6) 9.0 13.1 (13.1) 20.1
Opened, closed and disposed venues (0.4) (1.4) - - (1.8)
FX - - 0.1 0.1 - 0.2
Underlying operating profit - continuing operations 16.3 (7.0) 9.1 13.2 (13.1) 18.5
Separately disclosed items (51.7) (67.1) (4.2) (9.1) 3.2 (128.9)
Operating profit / (loss) - continuing operations (35.4) (74.1) 4.9 4.1 (9.9) (110.4)
1. Restated, refer to CFO review for further details
Reconciliation 4
Calculation of comparative underlying LFL operating profit
£m 2022/23
Reported underlying LFL operating profit 20.3
Reversal of 2022/23 closed venues (1.2)
2023/24 closed venues 1.8
2023/24 FX (0.2)
Restatement of Digital costs (0.6)
Underlying LFL operating profit 20.1
1. Restated, refer to CFO review for further details
Reconciliation 5
£m 2023/24 2022/23(1)
Underlying current tax (charge) (6.3) (0.5)
Tax on separately disclosed items 2.8 27.7
Tax (charge)/credit (3.5) 27.2
1. Restated, refer to CFO review for further details.
Reconciliation 6
P 2023/24 2022/23(1)
Underlying EPS 5.9 1.1
Separately disclosed items (3.2) (21.6)
Reported EPS 2.7 (20.5)
1. Restated, refer to CFO review for further details.
Principal risks and uncertainties
The Board has conducted an assessment of the Company's principal and emerging
risks. The risks outlined in this section are the principal risks that we have
identified as material to the Group. They represent a 'point-in-time'
assessment, as the environment in which the Group operates is constantly
changing and new risks may always arise.
Risks are considered in terms of likelihood and impact and are based on
residual risk rating of: high, medium and low, i.e. after taking into account
controls already in place and operating effectively. Mapping risks in this way
helps not only to prioritise the risks and required actions but also to direct
the required resource to maintain the effectiveness of controls already in
place and mitigate further where required.
The risks outlined in this section are not set out in any order of priority,
and do not include all risks associated with the Group's activities.
Additional risks not presently known to management, or currently deemed less
material, may also have an adverse effect on the business. Risks such as these
are not raised as principal risks but are nevertheless periodically monitored
for their impact on the Group.
The Risk Committee takes responsibility for managing the risk framework,
reviews risk and risk mitigation on a monthly basis an acts as an escalation
point for risk within the business. The chief finance officer takes
responsibility for reporting on risk to the Audit Committee and the Board.
Summary Residual Risk
Residual Risk Rating Change
1 Uncertain trading environment High -
2 Compliance with gambling law and regulations High Moved from increasing to stable
3 Safe and sustainable gambling Medium -
4 People Medium -
5 Strategic programmes Medium -
6 Data protection and management Medium -
7 Cyber resilience Medium Moved to increasing from stable
8 Business continuity and Disaster Recovery Medium -
9 Dependency on third parties and supply chain Medium -
10 Taxation Low -
11 Liquidity and funding Low Residual risk rating moved to low and moved from stable to reducing
12 Health and safety Low Residual risk rating moved to low and moved from stable to reducing
Emerging risks
The Group's risk profile will continue to evolve as a result of future events
and uncertainties. Our risk management processes include consideration of
emerging risks; horizon scanning is performed with a view to enabling
management to take timely steps to intervene as appropriate.
The methodology used to identify emerging risks includes reviews with both
internal and external subject matter experts, reviews of consultation papers
and publications from within and outside the industry and the use of key risk
indicators. Throughout the year some new risks have emerged and developed
which have been monitored by management with appropriate actions taken.
The Board and management team continue to monitor the political and
macroeconomic backdrop faced by the Group. In particular, the forming of the
new Government by the Labour party could result in policy or taxation that
impact on the profitability of the Group.
Changes to regulation in the gambling industry continue to be closely
monitored in all our jurisdictions as further changes are anticipated. The
formation of the new Government has created uncertainty over the timing of the
legislation to implement the Gambling Act review, including land-based
reforms.
The Group primarily operates from properties on short leases in the UK venues
businesses. Management seek to renew leases for longer period in strategically
important locations and ensure continuity of tenure in profitable venues.
However, it is not always possible to guarantee security of tenure where
landlords seek to occupy a property themselves or take it back on
redevelopment grounds.
New technologies such as Artificial Intelligence (AI) are being explored by
the Group and are expected to provide opportunities to deliver improved
customer service and efficiency. However, there are also risks associated with
new AI technology, particularly in the protection of and use of proprietary
data - the Group is exploring how best to capitalise on these technologies
whilst not exposing itself to unnecessary risk.
Climate risks are currently not regarded as a principal risk for the Group,
but there are additional disclosure requirements that need to be reported on,
such as the EU Corporate Sustainability Reporting Directive ('CSRD').
Principal risk 1: Uncertain trading environment
Principal risk
Consumers' discretionary expenditure continues to be impacted by uncertain
political and macroeconomic conditions. Such pressures influence customer
behaviour and can reduce spend on entertainment and leisure activities such as
those offered by the Group, as well as their propensity to visit our venues.
This could impact our financial performance and ability to deliver on our
strategic plans.
Whilst overall inflationary pressures have eased, wage inflation remains
significant and continues to impact the operating margins of our venues
businesses. Related risks caused by the current macroeconomic conditions and
the change of the UK Government may lead to changes in consumer activity,
reduced energy availability and the increased cost of products and services,
all of which could impact our future performance.
Residual risk rating and change in risk impact
Considered high residual risk and stable.
With the current trading environment, inflationary pressures (particularly in
labour costs), energy prices remaining above historic norms, higher interest
rates and labour shortages impacting the leisure sector in particular, the
risk here is considered high.
Risk mitigation strategy
We are actively monitoring the situation and continue to put contingency
measures in place to manage these risks, including:
· strategic plans have been prepared with current consumer pressures in mind. We
have adapted our approach to ensure future plans are sufficiently robust to
deal with the uncertain trading conditions.
· monitoring economic developments and undertake scenario analysis where
appropriate. In particular, the Group focuses on impacts in the short and
medium term that may result from changes in customer behaviour.
· ongoing review of operational plans to ensure that they are robust and well
managed.
· undertaking regular insight and tracking work in relation to our brands and
continue to assess the relevance of our products to our customers.
· considering ways to manage the Group's exposure in respect of external
conditions beyond its control, including forward buying of energy and
reviewing the extent of interest rate risk exposure.
· ensuring that our procurement team conducts tender processes and leverages our
scale to effectively control costs and ensure pricing is competitive.
· ensuring there are workstreams in place to effectively manage labour cost
pressures.
Governance and oversight of risk
Board.
Principal risk 2: Compliance with gambling laws and regulations
Principal risk
Regulatory and legislative regimes for betting and gaming in key markets are
constantly under review and can change (including as to their interpretation
by regulators) at short notice. These changes could benefit or have an adverse
effect on the business and additional costs might be incurred in order to
comply. Failing to comply leads to an increased risk of investigation(s),
regulatory action and sanctions by way of licence conditions, financial
penalties and/or loss of an operating licence.
Residual risk rating and change in risk impact
Considered high residual risk and stable.
There is ongoing and increased regulatory focus on compliance by regulators in
the jurisdictions in which the Group operates. The risk of potential
non-compliance increases with the pace of change in regulation. In particular,
regulatory change in the UK is often delivered through Gambling Commission
guidance, which is often open to interpretation.
Risk mitigation strategy
The Group ensures that:
· it seeks ongoing and regular engagement with government, key civil servants
involved in determining gambling policy and with regulators.
· it monitors legislative and regulatory developments and announcements in
relation to prospective change.
· it has defined policies and procedures in place, which are periodically
reviewed and updated as appropriate to take account of regulatory changes and
guidance.
· it has a dedicated compliance team led by an experienced Director of
Compliance & Safer Gambling, which monitors implementation of, and
compliance with such policies and procedures and provides regular reports to
the venues' senior management, as well as to the Compliance and Group Risk
Committees. The Director of Compliance & Safer Gambling also provides
bi-annual reports to the Audit Committee.
· its Compliance Committee meets on a monthly basis, with agenda items including
data trends, monitoring programme outputs, proposed changes to compliance
models, tools and processes and trade association updates.
· all colleagues undertake annual mandatory compliance training (including
anti-bribery, corruption and money laundering), with additional training being
undertaken as required/requested or as may be appropriate to a specific role.
· it actively promotes a compliant environment and culture in which customers
can play safely.
· it engages with regulators as appropriate and examines the learnings from, and
measures adopted by, other operators and sectors of the gambling industry.
Governance and oversight of risk
ESG and Safer Gambling Committee.
Principal risk 3: Safe and sustainable gambling
Principal risk
Safe gambling underpins our strategy with one of our five strategic pillars
being that we will build sustainable relationships with our customers by
providing them with safe environments in which to play. This minimises the
potential for our customers to suffer harm from their gambling and will assist
the Group in ensuring that it grows the business in a sustainable way. We are
committed to delivering the highest possible levels of player safety and
protection.
Failure to provide a safe gambling environment for our customers could have
regulatory implications, affect trust in our brands and impact our ability to
build a sustainable business for the long term.
Residual risk rating and change in risk impact
Considered medium residual risk and stable.
Our most material ESG issue is to ensure the highest possible levels of player
safety and protection.
Risk mitigation strategy
The Group ensures that:
· it actively promotes a safer gambling culture.
· it interacts and engages with its customers on a regular basis.
· it makes available a range of tools on all brands across all channels to
support customers in managing their spend and play.
· it invests continuously in the development of its people, processes and
technology, including with the assistance of expert third parties, to
introduce new and ongoing improvements to enable it to identify and
effectively interact with at-risk customers.
· it continues to invest in data analytics to better identify potentially
at-risk play by consumers and in the resultant processes which deliver the
appropriate interactions with those customers and the ongoing evaluation of
the effectiveness of those interactions.
· all colleagues undertake annual mandatory safer gambling training, with
additional training (including provided externally, for example by GamCare) as
required/requested or as may be appropriate to a specific role.
· it invests significantly in improvements for tackling the problem through
donations to research, treatment and education initiatives, as well as through
driving collaboration across the industry with other operators, charities and
regulatory bodies.
· it has dedicated and experienced first and second line safer gambling teams.
Governance and oversight of risk
ESG and Safer Gambling Committee.
Principal risk 4: People
Principal risk
Pivotal to the success of the organisation isa failure to attract or retain
key individuals may impact the Group's ability to deliver on its strategic
priorities.
A prerequisite to achieving all the strategic priorities is ensuring the Group
has the right people with the right skills, deployed within the right area of
the business.
Residual risk rating and change in risk impact
Considered medium residual risk and stable.
The availability of colleagues and competition for talent continues to be a
focus area, particularly for our UK venues business.
Risk mitigation strategy
The Group ensures that it:
· regularly engages with colleagues and reviews its reward propositions in order
to retain existing talent and attract the best candidates to roles.
· conducts benchmarking exercises in relation to its compensation packages.
· provides training and induction programmes to new joiners, tailored as
appropriate for those who are new to the sector.
· monitors attrition and recruitment rates.
· is focused on developing diversity across the Group.
· continues to develop its succession plans.
· offers opportunities for colleagues to develop their skills and progress in
their careers.
· continues to consider the development of its culture, including how this is
viewed by colleagues in employee opinion surveys and the actions that can be
taken in light of the output.
· regularly engage with trade union bodies and maintain an open dialogue on
matters impacting our colleagues
Governance and oversight of risk
Board, Nominations and Remuneration Committees.
Principal risk 5: Strategic programmes
Principal risk
Key projects and programmes (including technological change programmes) could
fail to deliver, and/or take longer to deliver resulting in missed market
opportunities for the Group resulting in missed synergies or savings.
Residual risk rating and change in risk impact
Considered medium residual risk and stable.
Failure to deliver key strategic projects and programmes impacts on customer
loyalty and the strategic growth of the business and therefore remains a
medium residual risk but is also regarded as stable.
Risk mitigation strategy
The Group ensures that programmes:
· use a structured and disciplined delivery methodology to ensure that they are
robustly managed to achieve their outcome.
· are subjected to detailed management oversight as well as having sponsorship
from a senior-level stakeholder.
· follow a comprehensive risk management approach and are managed by experienced
project and programme managers.
Governance and oversight of risk
Board.
Principal risk 6: Data protection and management
Principal risk
The inability to adequately protect sensitive customer data and other key data
and information assets that could be leaked, exposed, hacked or transmitted
would result in customer detriment, formal investigations and/or possible
litigation leading to prosecution, fines and/or damage to our brands.
Residual risk rating and change in risk impact
Considered medium residual risk and stable.
The Group continues to develop and enhance its control environment in relation
to customer data controls and regulatory requirements.
Risk mitigation strategy
The Group has in place data protection policies in order to protect the
privacy rights of individuals in accordance with GDPR and other relevant local
data protection and privacy legislation (as applicable). These are monitored
by an experienced Data Protection Officer ('DPO') to ensure that the business
is aware of, and adheres to, legal requirements and industry best practice.
The DPO provides regular reports to the Group Risk Committee on relevant data
and trends, monitoring programme outputs, ongoing projects and any potential
regulatory matters. The DPO also provides bi-annual reports to the Audit
Committee.
All colleagues undertake annual mandatory training, with additional training
being undertaken as required/requested or as may be appropriate to a specific
role.
Technology and IT security controls are in place to restrict access to
sensitive data and ensure individuals only have access to the data they need
to do their job. The Group also carries out periodic penetration testing of
security controls around data.
Governance and oversight of risk
Audit Committee.
Principal risk 7: Cyber resilience
Principal risk
Cyber-attacks can disrupt and cause considerable financial and reputational
damage to the Group. If a cyber-attack were to occur, the Group could lose
assets, reputation and business, and potentially face regulatory fines and/or
litigation - as well as the costs of remediation.
Operations are highly dependent on technology and advanced information systems
(such as the use of cloud computing) and there is a risk that such technology
or systems could fail, or outages occur.
Residual risk rating and change in risk impact
Considered medium residual risk and increasing.
There is an ongoing programme of work in place, including monitoring and
responding to new and emerging attack vectors. However, the nature of the
external environment means this is considered an increasing risk for the
Group.
Risk mitigation strategy
The Group:
· has in place security policies and procedures and conducts training for
colleagues to ensure ongoing education and awareness.
· employs a dedicated specialist Group security team.
· has a Security Operations Centre ('SOC') and Vulnerability Management service
tools(s) to provide monitoring and visibility of security events and enable
vulnerabilities to be monitored and quickly addressed.
· carries out periodic attack and penetration testing, with actions arising
followed-up, tracked and remediated by the security team.
· follows a rolling programme of work to continue to enhance cybersecurity and
resilience within the IT estate.
Governance and oversight of risk
Audit Committee.
Principal risk 8: Business continuity and disaster recovery
Principal risk
Planning and preparation of the organisation, to ensure it could overcome
serious incidents or disasters and resume normal operations within a
reasonably short period, is critical to ensure that there is minimal impact to
its operations, customers and reputation.
Typical disasters might include: natural disasters such as fires and floods,
pandemics, accidents impacting key people, insolvency of key suppliers, events
that result in a loss or lack of availability of data or IT systems, negative
media campaigns and market upheavals.
Residual risk rating and change in risk impact
Considered medium residual risk and stable.
The geographical nature of the operating environment and key risk exposures
are known and understood.
Risk mitigation strategy
The Group seeks to develop, embed and refine its approach to incident and
crisis management on an ongoing proactive basis. Group business continuity
plans are regularly reviewed for key sites and business areas and this work
includes reviewing the resilience of and disaster recovery for IT systems.
Governance and oversight of risk
Audit Committee.
Principal risk 9: Dependency on third parties and supply chain
Principal risk
The Group is dependent on a number of third parties and suppliers for the
operation of its business. The withdrawal or removal from the market of one or
more of these third-party suppliers, failure of these suppliers to comply with
contractual obligations, or reputational issues arising in connection with
these suppliers could adversely affect operations, especially where these
suppliers are niche.
Residual risk rating and change in risk impact
Considered medium residual risk and stable.
The third-party operating environment and key risk exposures continue to be
monitored.
Risk mitigation strategy
The Group has a central procurement team that oversees the process for
selecting suppliers across the Group, utilising a supplier risk management
framework. Our policies and procedures require due diligence to be carried out
on material suppliers.
We require that supplier contracts include, amongst other things, appropriate
clauses on compliance with applicable laws and regulations, the prevention of
modern slavery and anti-bribery. We seek to work with suppliers who are
actively managing climate risks.
Business owners are responsible for communication with key suppliers and are
ultimately accountable for such relationships and ensuring that contractual
requirements are met.
Governance and oversight of risk
Board and Audit Committee.
Principal risk 10: Taxation
Principal risk
Changes in fiscal regimes in domestic and international markets can happen at
short notice. These changes could benefit or have an adverse impact with
additional costs potentially incurred in order to comply.
Residual risk rating and change in risk impact
Considered low residual risk and stable.
Tax changes in the immediate future are not anticipated to be material.
However, with the election of the new UK Government, there may be changes in
taxation policy or tax rates that could impact the future profitability of the
Group.
Risk mitigation strategy
The Group's tax strategy is approved annually by the Board. Responsibility for
its execution is delegated to the Chief Financial Officer who reports the
Group's tax position to the Board on a regular basis.
The Group ensures that it:
· has an appropriately qualified and resourced tax team to manage its tax
affairs.
· continues to monitor tax legislation and announcements in relation to
prospective change and, where appropriate, participate in consultations over
proposed legislation, either directly or through industry bodies.
· engages with regulators as appropriate.
· performs analysis of the financial impact on the Group arising from proposed
changes to taxation rates.
· seeks external advice and support as may be required.
· develops organisational contingency plans as appropriate.
Governance and oversight of risk
Board and Audit Committee.
Principal risk 11: Liquidity and funding
Principal risk
The Group is reliant on committed debt facilities with four lenders, all of
which have specific obligations and covenants that need to be met, and
multiple banks for clearing (transaction processing).
A loss of debt facilities and/or clearing facilities could result in the Group
being unable to meet its obligations as they become due.
Residual risk rating and change in risk impact
Considered low residual risk and reducing.
The above is being maintained through open dialogue with the banks.
Risk mitigation strategy
The Group ensures that it:
· continues to review the Group's capital structure to ensure we have financing
in place to support investment in the business.
· has sufficient cash reserves to navigate through any short-term reduction in
available debt facilities.
· ongoing monitoring of financial position with banks and open dialogue around
the provisions (accurate forecasting processes and early engagement with
lenders around covenant requirements).
· Treasury team involved in advance of any major business decisions that could
impact banks providing clearing facilities.
· ensure no trading entity is solely reliant on one bank for clearing services.
Governance and oversight of risk
Board and Finance Committee.
Principal risk 12: Health and safety
Principal risk
Failure to meet the requirements of the various domestic and international
rules and regulations relating to the safety of our employees and customers
could expose the Group (and individual Directors and employees) to material
civil, criminal and/or regulatory action with the associated financial and
reputational consequences.
Residual risk rating and change in risk impact
Considered low residual risk and reducing.
No significant changes in domestic and international standards/regulations are
anticipated in the short term.
Risk mitigation strategy
The Group ensures that:
· it has defined policies and procedures in place, which are periodically
reviewed and updated as appropriate.
· it has a dedicated health and safety team led by an experienced Head of Health
and Safety, which monitors implementation of and compliance with such policies
and procedures and provides regular reports to the venues' senior management,
as well as to the Health and Safety and Group Risk Committees. The Head of
Health and Safety also provides bi-annual reports to the Audit Committee.
· all colleagues undertake annual mandatory training, with additional training
being undertaken as required/requested or as may be appropriate to a specific
role.
Governance and oversight of risk
Audit Committee.
Directors' Responsibility Statement
The Statement of Directors' Responsibilities is made in respect of the full
Annual Report and the Financial Statements not the extracts from the financial
statements required to be set out in the announcement.
Each of the directors named below confirm that to the best of his or her
knowledge:
· The financial statements, prepared under UK-adopted International Financial
Reporting Standard (IFRS), 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:
Chew Seong Aun
Lucinda Charles-Jones
Richard Harris
Keith Laslop
Katie McAlister
John O'Reilly
Alex Thursby
Karen Whitworth
Signed on behalf of the board on 14 August 2024
John O'Reilly Richard Harris
Chief Executive Chief Financial Officer
Group income statement
for the year ended 30 June 2024
Year ended 30 June 2024 Year ended 30 June 2023 (restated)
Separately disclosed Separately disclosed
items items
Underlying (note 3) Total Underlying (note 3) Total
£m £m £m £m £m £m
Continuing operations
Revenue 734.7 - 734.7 681.9 - 681.9
Cost of sales (418.2) (7.6) (425.8) (409.0) (112.3) (521.3)
Gross profit (loss) 316.5 (7.6) 308.9 272.9 (112.3) 160.6
Other operating income - - - - 3.7 3.7
Other operating costs (270.2) (9.3) (279.5) (254.4) (20.3) (274.7)
Group operating profit (loss) 46.3 (16.9) 29.4 18.5 (128.9) (110.4)
Financing:
- finance costs (13.4) - (13.4) (12.6) - (12.6)
- finance income 0.7 - 0.7 0.8 - 0.8
- other financial losses (0.1) (1.1) (1.2) (0.5) (0.6) (1.1)
Total net financing charge (12.8) (1.1) (13.9) (12.3) (0.6) (12.9)
Profit (loss) before taxation 33.5 (18.0) 15.5 6.2 (129.5) (123.3)
Taxation (6.3) 2.8 (3.5) (0.5) 27.7 27.2
Profit (loss) for the year from continuing operations 27.2 (15.2) 12.0 5.7 (101.8) (96.1)
Discontinued operations - profit - 0.2 0.2 - 0.3 0.3
Profit (loss) for the year 27.2 (15.0) 12.2 5.7 (101.5) (95.8)
Attributable to:
Equity holders of the parent 27.5 (15.0) 12.5 5.3 (101.5) (96.2)
(0.3) - (0.3) 0.4 - 0.4
Non-controlling interest
27.2 (15.0) 12.2 5.7 (101.5) (95.8)
Earnings (loss) per share attributable to equity shareholders
- basic 5.9p (3.2)p 2.7p 1.1p (21.6)p (20.5)p
- diluted 5.9p (3.2)p 2.7p 1.1p (21.6)p (20.5)p
Earnings (loss) per share - continuing operations
- basic 5.9p (3.3)p 2.6p 1.1p (21.7)p (20.6)p
- diluted 5.9p (3.3)p 2.6p 1.1p (21.7)p (20.6)p
Earnings per share - discontinued operations
- basic - 0.1p 0.1p - 0.1p 0.1p
- diluted - 0.1p 0.1p - 0.1p 0.1p
Group statement of comprehensive income (loss)
for the year ended 30 June 2024
Year ended Year ended
30 June 30 June
2024 2023
(restated)
£m £m
Comprehensive income (loss):
Profit (loss) for the year 12.2 (95.8)
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Exchange adjustments net of tax (0.2) (0.6)
Total comprehensive income (loss) for the year 12.0 (96.4)
Attributable to:
Equity holders of the parent 12.3 (96.8)
Non-controlling interest (0.3) 0.4
12.0 (96.4)
Group balance sheet
at 30 June 2024
As at As at As at
30 June 30 June 30 June
2024 2023 2022
(restated) (restated)
£m £m £m
Assets
Non-current assets
Intangible assets 446.4 456.8 493.6
Property, plant and equipment 112.5 97.5 113.1
Right-of-use assets 64.1 64.1 101.6
Deferred tax assets 8.3 8.1 1.8
Other receivables 5.2 5.4 6.3
636.5 631.9 716.4
Current assets
Inventories 2.0 2.2 2.3
Other receivables 19.1 29.1 34.2
Assets classified as held for sale 0.3 - -
Income tax receivable 8.5 15.0 8.2
Cash and short-term deposits 66.1 58.0 91.4
96.0 104.3 136.1
Total assets 732.5 736.2 852.5
Liabilities
Current liabilities
Trade and other payables (149.0) (128.3) (130.8)
Lease liabilities (32.6) (42.2) (40.4)
Income tax payable (4.2) (5.7) (4.2)
Financial liabilities - loans and borrowings (14.8) (63.7) (33.9)
Provisions (3.6) (7.3) (6.9)
(204.2) (247.2) (216.2)
Net current liabilities (108.2) (142.9) (80.1)
Non-current liabilities
Lease liabilities (120.8) (126.8) (141.3)
Financial liabilities - loans and borrowings (29.1) - (44.1)
Deferred tax liabilities (2.8) (1.5) (20.5)
Provisions (33.2) (31.7) (5.6)
Retirement benefit obligations (3.4) (3.4) (3.6)
(189.3) (163.4) (215.1)
Total liabilities (393.5) (410.6) (431.3)
Net assets 339.0 325.6 421.2
Capital and reserves attributable to the Group equity shareholders
Share capital 65.0 65.0 65.0
Share premium 155.7 155.7 155.7
Capital redemption reserve 33.4 33.4 33.4
Exchange translation reserve 13.9 14.0 14.6
Retained earnings 71.0 57.2 152.6
Total equity before non-controlling interest 339.0 325.3 421.3
Non-controlling interest - 0.3 (0.1)
Total shareholders' equity 339.0 325.6 421.2
Group statement of changes in equity
for the year ended 30 June 2024
Share capital Share premium Capital redemption reserve Exchange translation reserve Retained earnings (losses) Reserves attributable to the Group's equity shareholders Non- controlling interest Total equity
£m £m £m £m £m £m £m £m
At 1 July 2022 (as previously reported) 65.0 155.7 33.4 14.6 156.5 425.2 (0.1) 425.1
Impact of prior period error - - - - (3.9) (3.9) - (3.9)
(note 1)
At 1 July 2022 (restated) 65.0 155.7 33.4 14.6 152.6 421.3 (0.1) 421.2
Comprehensive income:
(Loss) profit for the year - - - - (96.2) (96.2) 0.4 (95.8)
Other comprehensive income:
Exchange adjustments net of tax - - - (0.6) - (0.6) - (0.6)
Total comprehensive (loss) income for the year - - - (0.6) (96.2) (96.8) 0.4 (96.4)
Transactions with owners:
Credit in respect of employee share schemes including tax - - - - 0.8 0.8 - 0.8
At 30 June 2023 (restated) 65.0 155.7 33.4 14.0 57.2 325.3 0.3 325.6
Comprehensive income:
Profit (loss) for the year - - - - 12.5 12.5 (0.3) 12.2
Other comprehensive income:
Exchange adjustments net of tax - - - (0.1) (0.1) (0.2) - (0.2)
Total comprehensive income for the year - - - (0.1) 12.4 12.3 (0.3) 12.0
Transactions with owners:
Credit in respect of employee share schemes including tax - - - - 1.2 1.2 - 1.2
Other - - - - 0.2 0.2 - 0.2
At 30 June 2024 65.0 155.7 33.4 13.9 71.0 339.0 - 339.0
Group statement of cash flow
for the year ended 30 June 2024
Year ended Year ended
30 June 30 June
2024 2023
(restated)
£m £m
Cash flows from operating activities
Cash generated from operations (see note 13) 118.9 72.0
Interest received 0.6 0.3
Interest paid (4.4) (4.9)
Arrangement fees paid (4.3) -
Tax received (paid) 2.4 (3.2)
Net cash generated from operating activities 113.2 64.2
Cash flows from investing activities
Purchase of intangible assets (16.1) (13.1)
Purchase of property, plant and equipment (30.6) (31.0)
Proceeds from sale of business (0.8) -
Purchase of subsidiaries (net of cash acquired) - (0.4)
Net cash used in investing activities (47.5) (44.5)
Cash flows from financing activities
Repayment of term loans (44.4) (34.5)
Drawdown of term loans 30.0 -
Drawdown of revolving credit facilities 175.4 22.0
Repayment of revolving credit facilities (181.9) (4.0)
Lease principal payments (39.0) (37.9)
Net cash used in financing activities (59.9) (54.4)
Net increase (decrease) in cash and short-term deposits 5.8 (34.7)
Effect of exchange rate changes 0.1 (0.1)
Cash and short-term deposits at start of year(1) 56.5 91.3
Cash and short-term deposits at end of year(1) 62.4 56.5
(1) is net of bank overdraft of £3.7m (2023: £1.5m) contained in current
financial liabilities - loans and borrowings
1. General information, basis of preparation and accounting policies
General information
The consolidated financial statements of The Rank Group Plc ("the Company")
and its subsidiaries (together "the Group") for the year ended 30 June 2024
were authorised for issue in accordance with a resolution of the Directors on
14 August 2024.
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.
The Group operates gaming services in Great Britain (including the Channel
Islands), Spain and India.
Summary of significant accounting policies
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies have
been consistently applied to all periods presented, except where noted below.
Basis of preparation
The consolidated financial statements have been prepared under the historical
cost convention.
The financial information does not constitute the Group's statutory accounts
for the years ended 30 June 2024 or 2023 but is derived from those accounts.
Statutory accounts for 2023 have been delivered to the Registrar of
Companies, and those for 2024 will be delivered in due course. The auditor has
reported on those accounts; their reports were (i) unqualified, (ii) did not
include reference to any matters to which the auditor drew attention by way
of emphasis without qualifying their report and (iii) did not contain
statements under Section 498(2) or (3) of the Companies Act 2006.
Whilst the financial information included in this announcement has been
computed using the recognition and measurement requirements of UK adopted
International Accounting Standards (IAS), this announcement does not
itself contain sufficient information to comply with IAS. The Company expects
to send its Annual Report 2024 to shareholders on 14 September 2024.
Statement of compliance
The consolidated financial statements have been prepared in accordance with
UK-adopted International Accounting Standards. UK-adopted International
Accounting Standards includes standards issued by the International Accounting
Standards Board ('IASB') that are endorsed for use in the UK.
Going concern
In adopting the going concern basis and viability statement for preparing the
financial information, the Directors have considered the circumstances
impacting the Group during the year, including the budget 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 period from the date
of this report to 31 August 2025 for the going concern period, and for the
period to 31 August 2027 for the viability assessment. 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 key
base assumptions on costs are as follows:
· Payroll costs are adjusted for increases in the National Minimum
Wage and pay rise awarded in April 2025
· Rent due during the 24/25 financial year is paid on time
· All tax and duty are paid on time
· Capital expenditure is in line with strategic plans
· Standard payment terms are assumed for supplier payments.
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, reductions 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 continues to have access to the following
committed facilities:
· Revolving credit facilities ("RCF") of £90.0m, repayable in
January 2027.
· Term loan of £30.0m with bullet repayment in October 2026 - this
is after the going concern period.
· Both have +1+1 extension options.
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 have the 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 7% 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 initial year, with management
taking actions as for scenario (i) but with further mitigating actions on
employment costs and marketing costs.
Having modelled the downside 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.
The Directors acknowledge that there is ongoing uncertainty regarding the
outcome of the Gambling Act Review (GAR) and its subsequent timing. The
Directors acknowledge that this may have a more positive impact on the
budgeting and forecasting performance than anticipated if earlier
implementation occurs. For the going concern period, management have not
included any benefit from the GAR.
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 August 2025.
For these reasons, the Directors continue to adopt the going concern basis for
the preparation of these consolidated financial statements, and in preparing
the consolidated 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 August 2025. 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 meet its covenant requirements for
the period to 31 August 2025 with scenarios i) and ii) requiring the
implementation and execution of mitigating cost actions within the control of
management.
Changes in accounting policy and disclosures
(a) Standards, amendments to and interpretations of existing standards adopted
by the Group
In preparing the consolidated financial statements for the current period, the
Group has adopted the following new IFRSs amendments to IFRSs and IFRS
Interpretations Committee (IFRIC) interpretations. All standards do not have
a significant impact on the results or net assets of the Group. Changes are
detailed below:
· Insurance Contracts (IFRS 17)
· Disclosure of accounting policies (amendments to IAS 1 and IFRS
Practice Statement 2 effective for period beginning 1 July 2023)
· Definition of accounting estimates (amendments to IAS 8 effective
for period beginning 1 July 2023)
· Deferred tax related to assets and liabilities arising from a
single transaction (amendment to IAS 12 effective for period beginning 1 July
2023) Interest rate benchmark reform - Phase 2 (amendment to IAS 39)
· International Tax Reform- Pillar Two Model Rules (amendments to
IAS 12)
· Classification of Liabilities as Current or Non-current and
Non-current liabilities with Covenants (amendment to IAS 1)
· Lease liability in a Sale and Leaseback (amendment to IFRS 16)
· Disclosure: Supplier Finance Arrangements (Amendments to IAS 7
and IFRS 7)
· Lack of exchangeability (amendment to IAS 21)
· Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture (amendments to IFRS 10 and IAS 28).
(b) Standards, amendments to and interpretations of existing standards that
are not yet effective
At the date of authorisation of the consolidated financial statements, the
following Standards, amendments and Interpretations, which have not been
applied in these consolidated financial statements, were in issue but not yet
effective:
· International Tax Reform - Pillar 2 Model Rules - (Amendments to
IAS 12)
· Classification of Liabilities as Current or Non-Current and
Non-current Liabilities with Covenants (amendment to IAS 1)
· Lease liability in a sale and leaseback (Amendments to IFRS 16)
· Disclosures: Supplier Finance Arrangements - Amendments to IAS 7
and IFRS 7
· Lack of exchangeability - amendments to IAS 21
· Classification and measurement of Financial Instruments -
Amendments to IFRS 9 and IFRS 7
· Presentation and Disclosure in Financial Statements
· Subsidiary without Public Accountability: Disclosures
· Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture - Amendments to IFRS 10 and IAS 28
The Group does not currently believe that the adoption of these new standards
or amendments would have a material effect on the results or financial
position of the Group.
Separately disclosed items (SDI)
The Group separately discloses certain costs and income that impair the
visibility of the underlying performance and trends between periods. The
SDIs are material and infrequent in nature and/or do not relate to underlying
business performance. Judgement is required in determining whether an item
should be classified as an SDI or included within the underlying results.
SDIs 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
· General dilapidations provision interest unwinding
· General dilapidation asset depreciation
· Discontinued operations
· Significant, material proceeds from tax appeals; and
· Tax impact of all the above.
Climate change
The Group continues to consider the impact of climate change in the
consolidated financial statements and considers that the most significant
impact would be in relation to the cost of energy to the Group for which best
estimates have been factored into future forecasts, the carrying value of
assets in the accounts, albeit this is not considered to have a material
impact at the current time and the useful economic life of assets.
The Group constantly monitors the latest government legislation in relation to
climate related matters. At the current time, no legislation has been passed
that will impact the Group. The Group will adjust key assumptions in value in
use calculations and sensitise these calculations should a change been
required.
Dilapidation costs
The provision represents the estimated cost of dilapidation at the end of the
lease term of certain properties. The provision is reviewed periodically and
reflects judgement in the interpretation of lease terms and negotiation
positions with landlords including the likelihood that the current leasehold
properties may be subject to redevelopment at the end of lease term
Estimates and judgements
In preparing the 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.
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 financial statements include a prior year restatement in
relation to prior year costs identified in the Digital business which
erroneously had not been recognised in the prior year consolidated income
statements. The error was considered to be material due to its nature and
impact to key performance indicators.
Accordingly, a third balance sheet has been presented in accordance with IAS 1
'Presentation of Financial Statements.'
During the period, the Group identified an accumulated total of £4.4m of
prior year adjustments within the Digital business comprising £3.2m of
trading related costs which erroneously had not been recognised in the prior
year financial statements and £1.2m of excess releases to income which
erroneously had been recognised in the prior year financial statements. Of the
total value of £4.4m, £0.5m relates to financial year 2022/23 and the
remaining £3.9m relates to pre 2022/23.
The impact of the adjustment on the June 2023 balance sheet is a reduction to
total asset of £2.2m, an increase on trade and other payables of £2.2m, a
reduction to closing reserves as at 30 June 2023 of £4.4m and a reduction to
opening reserves as at 1 July 2022 of £3.9m.
The above restatement reduces both basic and diluted EPS by 0.1 pence for the
year ended 30 June 2023.
In addition to above, the consolidated statement of cash flow includes a prior
year restatement in relation to leases. During the year, the Group identified
that the lease principal payments incorrectly included £4.6m of
property-related VAT and £1.1m 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 £5.7m in both net cash generated from operating activities and
net cash used in financing activities in the 2023 statement of cash flows. The
restatement was identified following a review of the 2023 Annual Report by the
Financial Reporting Council ('FRC'). The FRC's review does not benefit from
detailed knowledge of our business, or an understanding of the underlying
transactions entered into and therefore provides no assurance that the Annual
Report is correct in all material aspects.
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:
Income Statement
for the year ended 30 June 2023
As previously reported Adjustment As restated
£m £m £m
Revenue 681.9 - 681.9
Cost of sales (521.3) - (521.3)
Gross profit 160.6 - 160.6
Other operating income 3.7 3.7
Other operating costs (274.1) (0.6) (274.7)
Operating loss (109.8) (0.6) (110.4)
Financing:
- finance costs (12.6) - (12.6)
- finance income 0.8 - 0.8
- other financial gains (1.1) - (1.1)
Total net financing charge (12.9) - (12.9)
Loss before taxation (122.7) (0.6) (123.3)
Taxation 27.1 0.1 27.2
Loss for the period from continuing operations (95.6) (0.5) (96.1)
Profit after tax from discontinued operations 0.3 - 0.3
Loss for the year (95.3) (0.5) (95.8)
As previously reported Adjustment As restated
£m £m £m
Loss per share attributable to equity shareholders
- basic (20.4)p (0.1)p (20.5)p
- diluted (20.4)p (0.1)p (20.5)p
Underlying loss per share attributable to equity shareholders
- basic (20.4)p (0.1)p (20.5)p
- diluted (20.4)p (0.1)p (20.5)p
Balance Sheet
As previously reported Adjustment As restated
£m £m £m
Assets 7.6 8.1
Deferred tax asset 0.5
Other receivables 6.2 (0.8) 5.4
Income tax receivable 14.9 0.1 15.0
Cash and short-term deposits 60.0 (2.0) 58.0
Total assets 738.4 (2.2) 736.2
Liabilities
Trade and other payable (126.1) (2.2) (128.3)
Total liabilities (408.4) (2.2) (410.6)
Net assets 330.0 (4.4) 325.6
Equity
Retained earnings 61.6 (4.4) 57.2
Total equity before non-controlling interests 329.7 (4.4) 325.3
Non-controlling interests 0.3 - 0.3
Total shareholders' equity 330.0 (4.4) 325.6
At 30 June 2023
Balance Sheet
At 1 July 2022
As previously reported Adjustment As restated
£m £m £m
Assets
Deferred tax asset 1.4 0.4 1.8
Other receivables 6.7 (0.4) 6.3
Income tax receivable 8.1 0.1 8.2
Cash and short-term deposits 95.7 (4.3) 91.4
Total assets 856.7 (4.2) 852.5
Liabilities
Trade and other payables (131.1) 0.3 (130.8)
Total Liabilities (431.6) 0.3 (431.3)
Net Assets 425.1 (3.9) 421.2
Equity
Retained earnings 156.5 (3.9) 152.6
Total equity before non-controlling interests 425.2 (3.9) 421.3
Non-controlling interests (0.1) - (0.1)
Total shareholders' equity 425.1 (3.9) 421.2
Cash Flow Statement
for the year ended 30 June 2023
As previously reported Adjustment As restated
£m £m £m
Cash flows from operating activities
Cash generated from operations 75.3 (3.3) 72.0
Net cash generated from operating activities 67.5 (3.3) 64.2
Net cash used in investing activities (44.5) - (44.5)
Net cash used from financing activities (60.1) 5.7 (54.4)
Net decrease in cash and short-term deposits (37.1) 2.4 (34.7)
Cash and short-term deposit at the start of the period 95.7 (4.4) 91.3
Effect of exchange rate changes (0.1) - (0.1)
Cash and short-term deposits at end of year 58.5 (2.0) 56.5
2. Segment information
Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the Board of Directors, as the chief operating
decision-makers (CODM), to enable them to make strategic and operational
decisions.
The Group reports five segments: Digital, Grosvenor Venues, Mecca Venues,
Enracha Venues and Central Costs.
Year ended 30 June 2024
Digital Grosvenor Mecca Enracha Central Total
Venues Venues Venues Costs
£m £m £m £m £m £m
Continuing operations
Revenue 226.0 331.3 138.9 38.5 - 734.7
Operating profit (loss) 23.4 23.7 3.7 9.6 (14.1) 46.3
Separately disclosed items (7.2) (7.2) (5.4) 3.5 (0.6) (16.9)
Segment result 16.2 16.5 (1.7) 13.1 (14.7) 29.4
Finance costs (13.4)
Finance income 0.7
Other financial losses (1.2)
Profit before taxation 15.5
Taxation (3.5)
Profit for the year from continuing operations 12.0
Year ended 30 June 2023 (restated and re-presented)
Digital Grosvenor Mecca Enracha Central Total
Venues Venues Venues Costs
£m £m £m £m £m £m
Continuing operations
Revenue 202.9 306.3 136.3 36.4 - 681.9
Operating profit (loss) 13.2 16.3 (7.0) 9.1 (13.1) 18.5
Separately disclosed items (9.1) (51.7) (67.1) (4.2) 3.2 (128.9)
Segment result 4.1 (35.4) (74.1) 4.9 (9.9) (110.4)
Finance costs (12.6)
Finance income 0.8
Other financial losses (1.1)
Loss before taxation (123.3)
Taxation 27.2
Loss for the year from continuing operations (96.1)
Under IFRS8 - Operating Segments, segments are reported in a manner consistent
with internal reporting provided to CODM.
To increase transparency, the Group has decided to include additional
disclosure analysing total costs by type and segment. A reconciliation of
total costs, before separately disclosed items, by type and segment is as
follows:
Year ended 30 June 2024
Digital Grosvenor Mecca Enracha Central Total
Venues Venues Venues Costs
£m £m £m £m £m £m
Employment and related costs 28.9 139.6 51.8 17.7 8.6 246.6
Taxes and duties 51.2 70.0 26.1 1.8 2.1 151.2
Direct costs 55.3 29.2 21.9 3.4 - 109.8
Depreciation and amortisation 14.6 25.9 4.3 1.5 1.4 47.7
Marketing 39.2 8.0 5.1 2.8 - 55.1
Property costs 1.0 9.5 5.1 0.5 0.4 16.5
Other 12.4 25.4 20.9 1.2 1.6 61.5
Total costs before separately disclosed items 202.6 307.6 135.2 28.9 14.1 688.4
Cost of sales 418.2
Operating costs 270.2
Total costs before separately disclosed items 688.4
Year ended 30 June 2023 (restated)
Digital Grosvenor Mecca Enracha Central Total
Venues Venues Venues Costs
£m £m £m £m £m £m
Employment and related costs 28.1 122.0 46.1 17.7 7.7 221.6
Taxes and duties 47.7 64.2 27.1 2.0 1.2 142.2
Direct costs 57.1 28.2 20.6 3.0 - 108.9
Depreciation and amortisation 14.3 28.8 10.9 1.5 2.5 58.0
Marketing 33.3 6.2 5.7 2.4 0.2 47.8
Property costs 0.8 11.6 6.5 0.6 0.5 20.0
Other 8.4 29.0 26.4 0.1 1.0 64.9
Total costs before separately disclosed items 189.7 290.0 143.3 27.3 13.1 663.4
Cost of sales 409.0
Operating costs 254.4
Total costs before separately disclosed items 663.4
3. Separately disclosed items (SDIs)
Year ended Year ended
30 June 30 June
2024 2023
£m £m
Continuing operations
Impairment charges (28.8) (118.9)
Impairment reversals 21.2 6.6
Closure of venues (0.2) (7.7)
Amortisation of acquired intangible assets (6.6) (8.6)
Property-related provision (1.9) (1.9)
Loss on disposal of subsidiary (0.6) -
Integration costs - (0.1)
Business transformation costs - (2.0)
Disposal provision release - 3.7
Separately disclosed items ((1)) (16.9) (128.9)
Interest (1.1) (0.6)
Taxation (see note 5) 2.8 27.7
Separately disclosed items relating to continuing operations ((1)) (15.2) (101.8)
Separately disclosed items relating to discontinued operations ((1))
Profit on disposal of business 0.2 0.3
Total separately disclosed items (15.0) (101.5)
((1)) It is Group policy to reverse separately disclosed items in the same
line as they were originally recognised.
Impairment charges and reversal
During the year, the Group recognised impairment charges of £28.8m (2023:
£118.9m) relating to Grosvenor and Mecca clubs for a number of reasons,
including lower than anticipated performances, further reduction in forecast
earnings and a decision to close a number of clubs and venues (see note 8 for
further details).
The Group also recognised a reversal of previously impaired assets of £21.2m
(2023: £6.6m Grosvenor venues) relating to Grosvenor, Mecca and Enracha
venues. The reversals were driven by better than anticipated performance and
improved outlook in the identified Grosvenor, Mecca and Enracha venues.
These items are material, non-recurring and as such, have been excluded from
underlying results.
Closure of venues
During the year, the Group impact of closed clubs was £0.2m (2023: £3.1m
relating to a number of Mecca venues. £3.0m relating to a Grosvenor venue and
£0.1m relating to an Enracha venue). These relate to onerous contract costs,
dilapidations and strip out costs on leased sites and other directly related
costs that have been identified for closure. Upon initial recognition of
closure provisions, management uses its best estimates of the relevant costs
to be incurred, as well as the expected closure dates.
These are material, one off cost and as such have been excluded from
underlying results.
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 £6.6m
(2023: £8.6m) relating to the acquired intangible assets of Stride, Yo Bingo
and Rialto.
Property related provision
The Group recognised a dilapidation liability (and corresponding dilapidation
asset) of £28.7m during the period ending 31 December 2022. As a result,
the Group have recognised dilapidation asset depreciation of £1.7m (2023:
£1.9m) and interest on dilapidation liability of £1.1m (2023: £0.6m) both
recognised as separately disclosed items.
Property related provisions do not relate to the operations of the Group,
rather a direct result of potential club or property closures and are
therefore, excluded from underlying results.
In prior years and as a result of the COVID-19 lockdown, the Group determined
it was probable that they will be required to make payments under a property
arrangement for which the liability will revert to the Group if the tenant
defaults. A provision of £10.4m was recognised, being the present value of
the amount expected to be paid over the remaining term of the lease.
During the prior year, the Group have re-considered this provision in light of
the current circumstances and situation for both the Group, the guarantors and
the property tenants. It was determined that payment is no longer probable
and therefore, the provision was released in full.
This is a material, one-off provision and as such has been excluded from
underlying results consistent with the original recognition of the provision.
Integration costs
During the year, no cost (2023: £0.1m) has been excluded from underlying
operating results of the Group. These costs have been incurred to ready the
RIDE proprietary platform, acquired in the Stride acquisition, to migrate the
legacy Rank brands. Meccabingo.com successfully migrated in January 2022 and
grosvenorcasino.com in September 2022.
Costs directly associated with the integration of business acquisitions are
charged to the Group income statement. Such items are material, infrequent
in nature and are not considered to be part of the underlying business
performance.
Business transformation costs
This was a multi-year change programme for the Group focused around revenue
growth, cost savings, efficiencies and ensuring the key enablers are in place.
The transformation programme started in January 2019 was expected to complete
by 31 December 2021 but due to COVID-19 this period was extended.
The multi-year change programme is a material, infrequent programme and is not
considered to be part of the underlying business performance. During the
year no cost (2023: £2.0m) was incurred and excluded from the underlying
results of the Group. Going forward, the costs associated with this
programme would form part of the underlying results of the Group.
Disposal provision release
In prior years, a provision had 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 year, the Group have re-considered this provision by reviewing the
historic and recent claims including the final settlement made. The Group also
assessed the likelihood of payment for existing and potential future claims
and concluded, on most cases, that the payment could not be determined as
probable. It was therefore determined necessary to release the provision of
£3.7m for the year.
Loss on disposal of subsidiaries
During the year the Group disposed of its subsidiary of Passion Gaming and
incurred a loss of £0.5m. In addition, the multi-brand business is in the
process of divestment and £0.1m related to legal fees incurred to date.
Taxation
The tax impact on all of the above items are also considered not to be part of
the underlying operations of the Group.
Profit on disposal of business
Charges or credits associated with the disposal of part or all of a business
may arise. Such disposals may result in one time impacts that in order to
allow comparability means the Group removes the profit or loss from underlying
operating results.
The Group also made the decision to release £0.2m of the warranty provision
associated with the Belgium casino sale due to passage of time.
4. Financing
Year ended Year ended
30 June 30 June
2024 2023
£m £m
Continuing operations
Finance costs:
Interest on debt and borrowings (4.0) (4.8)
Amortisation of issue costs on borrowings (3.5) (1.3)
Interest payable on leases (5.9) (6.5)
Total finance costs (13.4) (12.6)
Finance income:
Interest income on net investments in leases 0.3 0.1
Interest on short-term bank deposits 0.4 0.7
Total finance income 0.7 0.8
Other financial losses(1) (0.1) (0.5)
Total net financing charge before separately disclosed items (12.8) (12.3)
Separately disclosed items - interest (1.1) (0.6)
Total net financing charge (13.9) (12.9)
(1.)Other financial losses include foreign exchange losses on loans and
borrowings.
5. Taxation
Year ended Year ended
30 June 30 June
2024 2023
(restated)
£m £m
Current income tax
Current income tax - UK 0.1 1.3
Current income tax - overseas (2.3) (1.9)
Current income tax on separately disclosed items - 2.6
Amounts (under) over provided in previous period (0.2) 0.1
Total current income tax (charge) credit (2.4) 2.1
Deferred tax
Deferred tax - UK (1.6) (5.8)
Deferred tax - overseas (1.2) 0.1
Impact of rate changes on deferred tax - 5.7
Deferred tax on separately disclosed items 2.8 25.1
Amounts under provided in previous period (1.1) -
Total deferred tax (charge) credit (1.1) 25.1
Tax (charge) credit in the income statement (3.5) 27.2
Tax on SDIs
The taxation impacts of separately disclosed items are disclosed below:
Year ended 30 June 2024 Year ended 30 June 2023
Current income tax Deferred tax Total Current income tax Deferred tax Total
£m £m £m £m £m £m
Net impairment charges - 1.2 1.2 2.0 23.2 25.2
Property-related provisions - 0.8 0.8 0.2 0.7 0.9
Amortisation of acquired intangible assets - 0.8 0.8 - 1.3 1.3
Closure of venues - - - 0.2 1.3 1.5
Integration costs - - - 0.1 (1.8) (1.7)
Business transformation costs - - - 0.1 0.4 0.5
Tax credit on SDIs - 2.8 2.8 2.6 25.1 27.7
Factors affecting future taxation
UK corporation tax is calculated at 25.00% (year ended 30 June 2023: 20.50%)
of the estimated assessable profit for the period. Taxation for overseas
operations is calculated at the local prevailing rates.
On 1 July 2024, the Government of Gibraltar announced the increase in the main
rate of corporation tax from 12.50% to 15.00% effective from 1 July 2024.
This rate change will increase the amount of cash tax payments to be made by
the Group.
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, will implement 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.
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.
6. Dividends paid to equity holders
A final dividend in respect of the year ended 30 June 2024 of 0.85p per share,
amounting to a total dividend of £4.0m, is to be recommended at the Annual
General Meeting on 17 October 2024 (year ended 30 June 2023: £nil). These
financial statements do not reflect this dividend payable.
7. Underlying earnings per share
Underlying earnings is calculated by adjusting profit attributable to equity
shareholders to exclude discontinued operations, separately disclosed items
and the related tax effects. Underlying earnings is one of the business
performance measures used internally by management to manage the operations of
the business. Management believes that the underlying earnings measure
assists in providing a view of the underlying performance of the business.
Underlying net earnings attributable to equity shareholders is derived as
follows:
Year ended Year ended
30 June 30 June
2024 2023
(restated)
£m £m
Profit (loss) attributable to equity shareholders 12.5 (96.2)
Adjust for:
SDIs after tax 15.0 101.5
Underlying net earnings attributable to equity shareholders 27.5 5.3
Continuing operations 27.5 5.3
Weighted average number of ordinary shares in issue 468.4m 468.4m
Underlying earnings per share (p) - basic
Continuing operations 5.9p 1.1p
Underlying earnings per share (p) - diluted
Continuing operations 5.9p 1.1p
8. Impairment reviews
The Group considers each venue to be a separate Cash-Generating Unit ('CGU').
The Group's digital operations consist of the UK digital business and the
International digital business. UK digital and International digital are each
assessed as separate CGUs. The individual Grosvenor venues are aggregated for
the purposes of allocating the Grosvenor goodwill.
As at 30 June 2024, goodwill and indefinite life intangible assets considered
significant in comparison to the Group's total carrying amount of such assets
have been allocated to groups of CGUs as follows:
Goodwill Intangible assets
2023/24 2022/23 2023/24 2022/23
£m £m £m £m
Grosvenor - group of CGUs(1) 80.9 80.9 179.0 179.5
UK digital CGUs 108.5 108.5 - -
International digital CGUs 30.9 30.9 - -
Enracha CGUs(2) - - 11.2 11.6
Total 220.3 220.3 190.2 191.1
(1. Each Grosvenor venue is a separate CGU. Each venue holds at least one
licence, but can hold multiple licences, which represents an indefinite life
intangible asset. The individual Grosvenor venues are aggregated for the
purposes of allocating the Grosvenor goodwill.)
(2. Each Enracha venue is a separate CGU. As no individual venue CGU is
significant in comparison to the total carrying amounts of intangible assets
and other assets, the venue CGUs have been presented on aggregated basis.)
The carrying amounts of the Group's non-financial assets, other than
inventories and deferred tax assets, are reviewed at each reporting date to
determine whether there is any indication of impairment as required by IAS 36.
If any such indication exists, then the assets or CGUs recoverable amount is
estimated. For goodwill and intangible assets that have
indefinite lives, the recoverable amount of the related CGU or group of CGUs
is estimated each year at the same time. The recoverable amount is determined
based on the higher of the fair value less costs of disposal and value in use.
The nature of the test requires that the Directors exercise judgement and
estimation.
The impairment test was conducted in June 2024, and management is satisfied
that the assumptions used were appropriate and that goodwill asset is not
impaired, no reasonable possible changes in assumptions will result in an
impairment and therefore no sensitivity analysis has been disclosed.
Testing is carried out by allocating the carrying value of these assets to
CGUs, as set out above, and determining the recoverable amounts of those CGUs.
The individual CGUs were first tested for impairment and then the group of
CGUs to which goodwill is allocated were tested. Where the recoverable amount
exceeds the carrying value of the CGUs, the assets within the CGUs are
considered not to be impaired. If there are legacy impairments for such
assets, except goodwill, these are considered for reversal.
The recoverable amounts of all CGUs or group of CGUs have been calculated with
reference to their value in use. Value in use calculations are based upon
estimates of future cash flows derived from the Group's strategic plan for the
following three years. The strategic plan is updated in the final quarter of
the financial year and has been approved by the Board of Directors. Future
cash flows will also include an estimate of long-term growth rates which are
estimated by business unit.
Pre-tax discount rates are applied to each CGU or group of CGUs cash flows and
reflect both the time value of money and the risks that apply to the cash
flows of that CGU or group of CGUs. These estimates have been calculated by
external experts and are based on typical debt and equity costs for listed
gaming and betting companies with similar risk profiles. The rates adopted are
disclosed in the table below.
Pre-tax discount rate Long-term growth rate
2023/24 2022/23 2023/24 2022/23
Grosvenor venues 12.80% 12.17% 2% 2%
Mecca clubs 12.80% 12.17% 2% 0%
UK digital 13.41% 12.57% 2% 2%
International digital 14.29% 12.63% 2% 2%
Enracha venues 13.07% 13.83% 2% 2%
The following impairment charges and impairment reversals have been recognised
during the year and disclosed within Separately disclosed items in the Group
income statement:
Property, plant and Right-of-use Intangible
equipment assets assets Total
£m £m £m £m
Impairment charges
Grosvenor venues(1) (3.0) (4.7) (11.1) (18.8)
Mecca venues (2) (4.4) (5.6) - (10.0)
(7.4) (10.3) (11.1) (28.8)
Impairment reversals
Grosvenor venues(1) 3.5 2.9 6.5 12.9
Mecca venue(2) 1.2 3.5 - 4.7
Enracha venues(3) 0.2 0.7 2.7 3.6
4.9 7.1 9.2 21.2
At the end of the year (2.5) (3.2) (1.9) (7.6)
(1. Impairment charge and reversal are recorded at the different individual
Grosvenor venue CGUs. The total value in use of the CGUs where an impairment
charge or impairment reversal was recognised totalled to £588.4m.)
(2. Impairment charge and reversal are recorded at the different individual
Mecca venue CGUs. The total value in use of the CGUs where an impairment
charge or impairment reversal was recognised totalled to £25.5m.)
(3. Impairment charge and reversal are recorded at the different individual
Enracha venue CGUs. The total value in use of the CGUs where an impairment
charge or impairment reversal was recognised totalled to £85.2m.)
9. Assets classified as held for sale
At 30 June 2024, the Group is well advanced in discussions to sell the
multi-brand business to a third party. The multi-brand business enables
customers of those brands to play real money online gambling games on
third-party platforms. The sale is expected to complete in the first quarter
of the next financial year. The multi-brands business is included in the
Digital segment.
The divestment is driven by the Group's longer term strategic ambition to
focus on its core brands, including Grosvenor and Mecca, which are hosted on
the Group's proprietary online platform.
The non-current assets at 30 June 2024 of the Multi-brands business have been
reclassified as a disposal group held for sale. The reclass of non-current
assets held for sale which relate to the Multi-brands business consists of the
following:
As at
30 June
2024
£m
Intangible assets 0.3
Assets classified as held for sale 0.3
As at the date of reclassification of the multi-brands disposal group to
assets held for sale, we have expensed £0.1m for the expected legal
transaction costs, to separately disclosed items.
10. Provisions
Property related Disposal Indirect tax Pay Warranty
provisions provisions provision provision provision Total
£m £m £m £m £m £m
At 1 July 2023 37.3 0.2 1.2 0.1 0.2 39.0
Created 2.8 - - - - 2.8
Charge to the income statement - separately disclosed items 1.1 - - - - 1.1
Release to the income statement - separately disclosed items (2.6) - - - (0.2) (2.8)
Utilised in the year (2.1) - (1.2) - - (3.3)
At 30 June 2024 36.5 0.2 - 0.1 - 36.8
Current 3.3 0.2 - 0.1 - 3.6
Non-current 33.2 - - - - 33.2
Total 36.5 0.2 - 0.1 - 36.8
Provisions have been made based on management's best estimate of the future
cash flows, taking into account the risks associated with each obligation.
11. Share capital and reserves
As at 30 June 2024 As at 30 June 2023
Number Nominal Number Nominal
value Value
m £m m £m
Authorised ordinary shares of 13 8/9p each 1,296.0 180.0 1,296.0 180.0
Issued and fully paid
At start of the year 468.4 65.0 468.4 65.0
At end of the year 468.4 65.0 468.4 65.0
Share premium
At start of the year 468.4 155.7 468.4 155.7
At end of the year 468.4 155.7 468.4 155.7
Total shares in issue at 30 June 2024 are 468,429,541 (2023: 468,429,541).
12. 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:
As at As at
30 June 30 June
2024 2023
(restated)
£m £m
Total loans and borrowings (43.9) (63.7)
Adjusted for:
Accrued interest 0.3 0.4
Unamortised facility fees (1.6) (0.6)
(45.2) (63.9)
Cash and short-term deposits 66.1 58.0
Net debt excluding IFRS 16 lease liabilities 20.9 (5.9)
IFRS 16 lease liabilities (153.4) (169.0)
Net debt (132.5) (174.9)
£4.3m was paid as arrangement fees during the year.
13. Notes to cash flow
Year ended Year ended
30 June 30 June
2024 2023
(restated)
£m £m
Profit (loss) for the year 12.2 (95.8)
Adjustments for:
Depreciation and amortisation 47.7 60.1
Amortisation of arrangement fees 3.5 1.3
Loss on disposal of property, plant and equipment - 0.2
Net financing charge 9.4 12.3
Income tax expense 6.3 0.6
Share-based payments 1.2 1.1
Separately disclosed items 15.0 101.5
95.3 81.3
Decrease in inventories 0.2 0.2
Decrease in other receivables 21.1 11.9
Increase (decrease) in trade and other payables 5.7 (11.9)
122.3 81.5
Cash utilisation of provisions (3.3) (2.4)
Cash receipts in respect of separately disclosed items (0.1) (7.1)
Cash generated from operations 118.9 72.0
14. Contingent liabilities
Property arrangements
The Group has certain property arrangements under which rental payments revert
to the Group in the event of default by the third party. At 30 June 2024, it
is not considered probable that the third party will default. As such, no
provision has been recognised in relation to these arrangements. If the third
party were to default on these arrangements, the obligation for the Group
would be £0.8m 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.
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. A present value
of £0.8m was recognised at 30 June 2022.
The Group settled £0.4m of the contingent consideration leaving a balance of
£0.4m on 30 June 2023.
At 30 June 2024, the Group settled a further £0.1m of the contingent
consideration leaving a balance of £0.3m.
Contingent Assets
There are no contingent assets requiring disclosures at 30 June 2024.
15. Related party transactions and ultimate parent undertaking
Guoco Group Limited ('Guoco'), a company incorporated in Bermuda and listed on
The Stock Exchange of Hong Kong Limited, 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 30 June 2024,
entities controlled by GuoLine owned 60.3% (30 June 2023: 57.4%) of the
Company's shares, including 56.2% (30 June 2023: 53.3%) through Guoco's
wholly-owned subsidiary, Rank Assets Limited, the Company's immediate parent
undertaking.
16. Loss on disposal of subsidiary undertaking
The Group completed the sale of Passion Gaming to its founders on 26 June
2024.
The major classes of assets and liabilities disposed relating to Passion
Gaming for the period ending 26 June 2024 was as follows:
£m
Intangible fixed assets 0.1
Property, plant and equipment 0.1
Other receivables 0.1
Cash 1.0
Total assets 1.3
Trade and other payables (0.7)
Total liabilities (0.7)
Net assets disposed 0.6
Consideration received (0.2)
Loss on disposal - SDI 0.4
The consideration received on the date of disposal of Passion Gaming was
£0.2m and, net of cash and cash equivalents disposed, there was a net outflow
of £(0.8)m.
SDIs - loss from continuing operations are set out below:
£m
Loss on disposal 0.4
Exchange losses transferred to income statement on disposal 0.1
Total SDIs 0.5
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