TIDMRNK
RNS Number : 5681J
Rank Group PLC
17 August 2023
News release
LEI: 213800TXKD6XZWOFTE12
17 August 2023
The Rank Group Plc ('Rank' or the 'Group')
Preliminary results for the 12 months ended 30 June 2023
Performance in line with upgraded guidance
Rank (LSE: RNK) is pleased to announce its preliminary results
for the 12 months ended 30 June 2023.
Overview
-- Like-for-like ('LFL') underlying operating profit for
the full year was GBP20.3m, in line with the upgraded
guidance provided in April 2023, but down on the prior
year of GBP42.5m.
-- H2 profit performance was stronger than H1, with LFL underlying
operating profit of GBP16.1m, compared with just GBP4.2m
in H1.
-- LFL underlying venues NGR grew 6% on the prior year, with
good momentum continuing into Q1 2023/24.
-- Underlying digital NGR grew 10% year on year with LFL
underlying operating profit growing 7% to GBP18.8m.
-- Despite revenue growth, underlying venues operating profit
of GBP40.9m was down 27%, or GBP14.8m, on the prior year,
reflecting significant cost increases, notably employment
up GBP15.9m and energy up GBP5.4m.
-- 70% of the Group's energy costs for 2023/24 are fixed
and we anticipate total energy costs for 2023/24 to be
circa GBP20m, down from GBP28.6m in 2022/23.
-- Group increased investment in colleague pay during the
year, raising average pay by 10% focused on lower salaried
colleagues. 2023/24 employment costs are expected to be
circa 7% higher than 2022/23.
-- Refinancing concluded with GBP100m of committed revolving
credit facilities to November 2024, reducing to GBP75m
through to February 2025.
-- Our balance sheet strength enables continued investment
in both the digital and venues businesses which positions
the Group well for future growth, including from the UK
Government's review of gambling legislation which will
deliver important reforms for land-based bingo and casino
venues.
-- Good progress being made in the Group's ESG strategy with
a net zero plan now in place and further improvements
seen in the protection of our customers, the engagement
of our colleagues and the role we play within local communities.
Financial highlights
2022/23 2021/22 Change
Financial Group underlying LFL
KPIs net gaming revenue (NGR)(1) GBP679.7m GBP633.2m 7%
------------------------------ ---------- ------------ -------
Digital underlying LFL
NGR(1) GBP202.9m GBP183.8m 10%
------------------------------------------ ---------- ------------ -------
Venues underlying LFL
NGR(1) GBP476.8m GBP449.4m 6%
------------------------------------------ ---------- ------------ -------
Underlying LFL operating
profit(1,2) GBP20.3m GBP42.5m (52)%
------------------------------------------ ---------- ------------ -------
Net (debt) / cash pre GBP(3.9)m GBP16.9m(3) -
IFRS 16
------------------------------ ---------- ------------ -------
Underlying earnings per
share(2) 1.2p 4.0p (70)%
------------------------------------------ ---------- ------------ -------
2022/23 2021/22 Change
Statutory
performance Reported NGR GBP681.9m GBP644.0m 6%
------------------------- ------------ --------------- -------
Group operating (loss) GBP(109.8)m GBP80.8m(3) -
/ profit
------------------------- ------------ --------------- -------
(Loss) / profit before GBP(122.7)m GBP73.0m(3) -
taxation
------------------------- ------------ --------------- -------
(Loss) / profit after GBP(95.3)m GBP64.9m(3) -
taxation
------------------------- ------------ --------------- -------
Net free cash flow GBP(20.3)m GBP59.5m(3) -
------------------------- ------------ --------------- -------
Net (debt) GBP(172.9)m GBP(164.8)m(3) -
------------------------- ------------ --------------- -------
Basic (loss) / earnings
per share (20.4)p 13.9p(3) -
---------------------------------------- ------------ --------------- -------
Dividend per share - - -
---------------------------------------- ------------ --------------- -------
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.
-- LFL underlying operating profit of GBP20.3m declined 52%
from GBP42.5m in 2021/22 predominantly due to underlying
cost inflation.
-- Statutory Group operating loss of GBP109.8m includes GBP118.9m
of impairment charges, due to lower than expected performance
in the year, and GBP7.7m of closure costs relating to
16 venues which were closed in the year.
-- Net debt pre IFRS 16 at 30 June 2023 was GBP3.9m.
Operational highlights
-- Grosvenor venues LFL NGR grew 4% in the year. An NGR decline
of 5% in H1 was followed by a growth of 15% in H2, as
the business continued to improve the quality of its safer
gambling measures and invest in its people, products and
facilities.
-- Grosvenor venues customer visits grew 7% on the prior
year with customers continuing to return to casinos following
the lockdowns of 2020 and 2021.
-- Mecca venues LFL NGR grew 7%, with customer visit volumes
up 4%, continuing the slow recovery from the impact of
the pandemic, particularly on the older cohort of bingo
customers who have been slowest to return.
-- Mecca estate now more profitable and sustainable following
the closure of 15 Mecca clubs in the year, taking the
Mecca estate to 56 venues.
-- Enracha venues delivered very strong LFL NGR growth of
19%, on customer visit volumes up 16% against the prior
year.
-- Digital NGR grew 10% in the year following the successful
completion of the migration of the Rank brands onto the
proprietary technology platform and the subsequent transfer
of development resource to the delivery of enhancements
to customer journeys, services and products.
-- Successful completion of Gambling Commission assessments
in Mecca and Grosvenor, and a Gibraltar Commissioner assessment
in the UK digital business. In respect of the Grosvenor
assessment, the Gambling Commission has provided an early
indication that it has seen a satisfactory outcome and
we are awaiting the formal written notification.
-- A strong transformation plan for each of the Group's businesses
provides a three-year programme of headline growth initiatives
centred on maximising the opportunities afforded by the
UK Government's planned legislative reforms for land-based
gambling and growing our Digital business both within
the UK and internationally.
-- Jon Martin appointed Chief Operating Officer in the year,
taking responsibility for the development and delivery
of the Group's cross-channel customer experience; Andrew
Peat appointed UK Digital Managing Director, joining H1
2023/24.
-- Following the year end, Mark Harper has joined the Group
as Grosvenor Managing Director from 14 August 2023 and
Keith Laslop has been appointed Non-Executive Director
with effect from 1 September 2023.
Current trading and outlook
The new financial year has started strongly across all of the
businesses with overall underlying Group LFL NGR ahead by 16%
compared with the prior year.
Grosvenor venues NGR has grown 17% in the first six weeks with
visits up 13%. Grosvenor venues trading performance outside London
is strong with NGR up 25% and visits up 15%, but the performance in
London is softer with NGR up only 5% on the same period last
year.
Mecca venues had a very strong start to the year, benefitting
from the wet weather in July and early August with NGR up 17%.
Enracha venues NGR is ahead of the prior year by 12%.
Digital NGR is up 13% in the opening six weeks, continuing to
benefit from new product and service enhancements and greater
levels of personalisation for our customers.
Despite the generally challenging trading conditions, with
inflation still running high and the increase in interest rates
impacting consumer discretionary expenditure, we expect to see good
levels of revenue increase year-on-year and to grow our
profitability in 2023/24.
Dividend
Taking account of the continued challenging trading environment
and the strong pipeline of investment opportunities to drive
revenue and profit growth, the Board has not proposed a full year
dividend but expects to recommence dividend payments as soon as
circumstances permit.
John O'Reilly, Chief Executive of The Rank Group Plc said:
"The return of customers to our Grosvenor and Mecca venues
continues to pick up and our second half numbers give cause for
optimism after a very challenging couple of years. During that
time, our UK venues have faced a surge in energy costs, high wage
inflation, a tightening in the regulatory environment, the slow
return of overseas visitors to London's casinos and the more
general pressures on the consumer's discretionary expenditure.
However, energy costs have stabilised, inflation appears to now be
easing, customers continue to slowly return to both our Grosvenor
and our Mecca venues and we now expect to deliver good levels of
revenue and profit growth.
Our Digital business is performing strongly, and we have a
strong pipeline of customer facing developments in both our UK and
Spanish brands to drive revenue and profit growth. We are very
focused on delivering a market leading cross-channel experience for
our Grosvenor and Mecca customers with several key developments
landing during this new financial year.
The UK Government's white paper on gambling reform sets out a
number of important public policies which will enable the
land-based bingo and casino sectors to modernise the customer
proposition to better meet the needs of today's consumers. The
delivery of the secondary legislation to enable these reforms
cannot come soon enough and we are well advanced with plans to
maximise these opportunities.
I am hugely grateful to my colleagues across the Group who
continue to excite, entertain and protect their customers, provide
support to their local communities and contribute fully to the
progress we are making in the transformation of Rank."
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;
-- '2022/23' refers to the 12-month period to 30 June 2023,
'2021/22' refers to the 12-month period to 30 June 2022
and 'CY 2019' refers to the 12-month period to 31 December
2019;
-- Like-for-like ('LFL') measures have been disclosed in
this report to show the impact of club openings, closures,
acquired businesses, foreign exchange movements and discontinued
operations;
-- Prior year LFL measures are amended to show an appropriate
comparative for the impact of club openings, disposals,
closures and acquired businesses;
-- The Group results make reference to 'underlying' results
alongside our statutory results, which we believe will
be more useful to readers as we manage our business using
these adjusted measures. The directors believe that SDIs
impair visibility of the underlying performance of the
Group's business because these items are often material,
non-recurring and do not relate to the underlying trading
performance. Accordingly, these are excluded from our
non-GAAP measurement of revenue, EBITDA, operating profit,
profit before tax and underlying EPS. Underlying measures
are the same as those used for internal reports. 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 Tel: 01628 504
and communications (investor enquiries) 303
David Williams, director of public affairs Tel: 01628 504
(media enquiries) 295
FTI Consulting LLP
Ed Bridges Tel: 020 3727 1067
Alex Beagley Tel: 020 3727 1045
Photographs available from www.rank.com
Analyst meeting and webcast details:
Thursday 17 August 2023
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. 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
During H1 2022/23, the Group undertook a review of the Group's
central costs and concluded it is appropriate that a proportion of
these costs should be allocated to each of its operating business
units. Consequently, we have presented operating profit pre and
post the central cost reallocation and, to aid comparisons, 2021/22
operating profit for each business unit has been restated
accordingly.
The year to 30 June 2023 saw the continued recovery of our
venues businesses following the very heavy impact of pandemic
lockdowns and the subsequent sharp rise in inflation, interest
rates and energy costs. In the UK, both Grosvenor and Mecca venues
saw accelerated revenue recovery in the second half of the year
with profit conversion improving as energy costs began to fall. In
Spain, Enracha continued its strong recovery and saw its annual
revenues back above pre-pandemic levels. Our digital business
maintained double digit revenue growth and is making an increasing
contribution to the Group's overall profitability.
At a Group level, underlying like-for-like ('LFL') NGR of
GBP679.7m was up 7% against the prior year. All businesses within
the Group were in LFL revenue growth in the year with Grosvenor
venues at +4%, Mecca venues at +7%, Enracha venues at +19% and
Digital at +10%. With continued recovery in the venues businesses,
revenue in the second half of the year grew 13% on the prior year
compared with the 2% year on year growth posted in the first
half.
The trading update issued in December 2022 reflected lower than
expected performance in the first half of the year and rebased
future performance expectations. This was the main driver of the
GBP118.9m of impairment charges for the current year and relates to
a number of our Grosvenor, Mecca and Enracha venues.
Despite the improving revenue position, underlying LFL operating
profit of GBP20.3m was down 52% against the prior year (GBP42.5m),
reflecting the significant increases in energy and employment costs
and the absence of Government furlough payments and other pandemic
related support which continued to support the Group in
2021/22.
Energy costs are expected to be circa GBP20m for 2023/24, down
from GBP28.6m in 2022/23.
NGR / GBPm 2022/23 2021/22 Change
Grosvenor venues 306.3 293.9 4%
-------- -------- -------
Mecca venues 134.1 124.8 7%
-------- -------- -------
Enracha venues 36.4 30.7 19%
-------- -------- -------
Digital 202.9 183.8 10%
-------- -------- -------
Underlying LFL(1) Group 679.7 633.2 7%
-------- -------- -------
Impact of venues openings, closures
and FX(2) 2.2 10.8 -
-------- -------- -------
Underlying Group 681.9 644.0 6%
-------- -------- -------
Operating profit / GBPm 2022/23 2021/22 Change
-------- -------- -------
Grosvenor venues 27.7 45.4 (39)%
-------- -------- -------
Mecca venues 4.0 2.0 100%
-------- -------- -------
Enracha venues 9.2 8.3 11%
-------- -------- -------
Digital 18.8 17.5 7%
-------- -------- -------
Central costs (39.4) (30.7) 28%
-------- -------- -------
Underlying LFL(1) Group 20.3 42.5 (52)%
-------- -------- -------
Operating profit / GBPm 2022/23 2021/22 Change
-------- -------- -------
Presentation post reallocation of
central costs:
-------- -------- -------
Grosvenor venues 16.3 36.5 (55)%
-------- -------- -------
Mecca venues (5.8) (4.9) (18)%
-------- -------- -------
Enracha venues 9.1 8.2 11%
-------- -------- -------
Digital 13.8 13.4 3%
-------- -------- -------
Central costs (13.1) (10.7) 22%
-------- -------- -------
Underlying LFL(2) Group 20.3 42.5 (52)%
-------- -------- -------
Impact of venues openings, closures,
and FX(2) (1.2) (4.0) -
-------- -------- -------
Total Group 19.1 38.5 (50)%
-------- -------- -------
1. Results are presented on a like-for-like ('LFL') basis which
removes the impact of club openings, club closures , foreign
exchange movements and discontinued operations.
2. A full analysis of these adjustments can be found in the
Alternative Performance Measures ('APM') section.
Grosvenor venues
Key financial performance indicators:
2022/23 2021/22
GBPm GBPm Change
LFL(1) NGR 306.3 293.9 4%
London 99.3 98.9 0%
Rest of the UK 207.0 195.0 6%
-------- -------- -------
Total NGR 306.3 296.6 3%
-------- -------- -------
Underlying(2) LFL(1) operating profit pre-central cost reallocation 27.7 45.4 (39)%
-------- -------- -------
Underlying(2) LFL(1) operating profit post-central cost reallocation 16.3 36.5 (55)%
-------- -------- -------
Total (loss) / profit (35.4) 51.7 -
-------- -------- -------
1. Results are presented on a like for like ('LFL') basis which
removes the impact of club openings, club closures, foreign
exchange movements and discontinued operations.
2. Before the impact of separately disclosed items.
Grosvenor venues' underlying LFL NGR was up 4% compared to the
prior year. Recovery from the combined impact of lockdowns during
the pandemic and tightened affordability restrictions has been
slower than expected. NGR declined 5% in the first half against the
prior year but grew 15% against H2 2021/22.
Average weekly NGR grew from GBP5.8m in Q1 to GBP6.0m in Q2 and
Q3 before falling back to GBP5.8m in our traditionally softer Q4.
The respective year on year movements were (5)%, (5)%, +15% and
+16%.
Grosvenor's London casino estate continues to perform below the
levels seen prior to the pandemic. The rise of working from home
following the pandemic has impacted visitor volumes in London but
the most material effect remains the slow return of customers from
the Middle East and from East and South-East Asia. With fewer
international customers arriving in London, competition amongst
London's casinos is more intense than ever. Revenue in the London
estate was flat on the prior year.
The Grosvenor Russell Square casino was permanently closed in
the year reducing the overall Grosvenor estate to 51 casinos,
representing 43% of the UK market's 118 casinos.
Rest of the UK performance has been recovering more quickly. NGR
was up 6% against the prior year on visits up 7%.
The largely fixed or semi-fixed cost base of the Grosvenor
business delivers significant operating leverage as revenues grow.
With revenues slow to recover to pre-pandemic levels, inflationary
pressure on employment and other costs resulted in LFL underlying
operating profit post-central cost recharges of GBP16.3m in the
year (down from GBP36.5m in 2021/22). The key cost pressures on the
business have been seen in salaries and wages +GBP12.2m, energy
+GBP3.8m, and property maintenance +GBP2.3m.
The Grosvenor team has continued to focus on driving operating
cost efficiencies in the year including the further rollout of a
table operating system to ensure table gaming is operating as
efficiently as possible, LED lighting and other energy saving
initiatives, reductions in trading hours in selected venues and a
rationalisation of the food and beverage offering to reduce wastage
and improve operating margins.
The increase in salary and wage costs in the Grosvenor business
reflects the labour market pressures since reopening following
lockdown in May 2021. The absence of European croupiers coming to
the UK as a result of Brexit has added to the broader job market
pressures within the hospitality sector. The investment the
business has made in colleague salaries and wages has significantly
eased these employment pressures and supported the ongoing
improvement in colleague engagement and eNPS scores across the
Grosvenor estate. The Grosvenor management team has also been
further strengthened with the addition of two further Regional
Operations Managers in the year and the build out of a new high
value customer team to better support the needs of higher staking
customers particularly within the very competitive London
market.
The Group has continued to invest in the Grosvenor business both
to improve the quality of the customer proposition and to prepare
the estate for the impact of the UK Government's review of gambling
legislation for land-based casinos which, following the publication
of the white paper in April 2023, is now expected to be implemented
during 2024/25.
GBP7.1m has been invested in property refurbishments during
2022/23. Merchant City, Glasgow, is a high footfall venue in a very
good location which has historically performed strongly but had
needed updating. The venue has had a complete overhaul with the
introduction of new brand standards which help to underline the
entertainment and excitement of the Grosvenor customer proposition.
Grosvenor Merchant City now has a bar, sports viewing area,
restaurant and gaming machines on the ground floor with a modern
and vibrant gaming and poker floor below. It has been an important
development in broadening the appeal of casinos and the brand
identity and brand guidelines have been gradually rolling out
across the wider Grosvenor estate.
In the London estate, Grosvenor Gloucester Road has undergone a
full refurbishment to better meet the needs of its Kensington
customer base. The development includes a wholly refurbished gaming
floor and a new restaurant and bar area. Grosvenor Bayswater
(formerly the Golden Horseshoe) also now enjoys the benefit of a
new restaurant and bar area which is proving very popular with its
customers. All development projects continue to be designed for the
implementation of up to 80 gaming machines once the policy
decisions in the Government's review of gambling legislation are
enacted.
GBP6.0m has been invested in new electronic gaming terminals,
gaming machines, tables and wheels during the year. New gaming
machines are being trialled for future implementation. Total
capital investment in the Grosvenor estate in the year was
GBP19.5m.
A new electronic roulette game has also been rolled out across
the Grosvenor estate. Called Going for Gold, the game is the first
to offer UK casino customers a side bet progressive with jackpots
that run to hundreds of thousands of pounds. Another new initiative
has been the roll out of a new local marketing tool and framework
that enables casinos to identify, review and contact cohorts of
contactable customers using SMS messaging; email capability will
very soon be added to the functionality.
The Grosvenor business completed a Gambling Commission
compliance assessment during 2022/23. There were several changes to
policies and to practices to better protect our customers that were
identified during the assessment process. Having implemented a new
risk model in the prior year, this has now been rolled out on an
app for colleagues to use to assess customer risk, determine the
nature of the required customer interaction and to record and
evaluate the outcomes. This provides a tighter framework for
managing customer risk to ensure customers are playing within their
means. It also enables earlier and, consequently, more positive
interaction with our customers.
During the year, Grosvenor recognised an impairment charge of
GBP53.3m relating to 23 venues due to lower than expected trading
performance, and an impairment reversal of GBP6.6m relating to
another seven venues.
Mecca venues
Key financial performance indicators:
2022/23 2021/22
GBPm GBPm Change
LFL(1) NGR 134.1 124.8 7%
-------- -------- -------
Total NGR 136.3 134.0 2%
-------- -------- -------
Underlying(2) LFL(1) operating profit
pre-central cost reallocation 4.0 2.0 100%
-------- -------- -------
Underlying(2) LFL(1) operating (loss)
post-central cost reallocation (5.8) (4.9) (18)%
-------- -------- -------
Total (loss) / profit (74.1) 26.7 -
-------- -------- -------
1. Results are presented on a like for like ('LFL') basis which
removes the impact of club openings, club closures, foreign
exchange movements and discontinued operations.
2. Before the impact of separately disclosed items.
2022/23 has been something of a turnaround year for Mecca venues
following the severe downturn the land-based bingo sector suffered
as a result of the pandemic lockdowns. The bingo industry emerged
from the pandemic with a smaller customer base and with the
consequent lower revenues resulting in weaker prize boards.
Stronger bingo venues in terms of prize fund liquidity have been
able to sustain strong businesses and have attracted custom from
weaker venues. Across the sector, post-pandemic, there has been too
many bingo venues.
Mecca venues emerged from lockdown with an estate of generally
strong bingo venues. Nevertheless, the downturn in customer numbers
and revenues necessarily led to some closures. Bingo venues are
social amenities which play a very important role within their
local communities and therefore the decision to close a venue is
not taken lightly. However, having given the lower liquidity Mecca
venues every opportunity to recover and to return to profitability,
15 venues were permanently closed during 2022/23. This has reduced
the Mecca estate to 56 venues. These 56 stronger venues have
improved their appeal to customers with LFL NGR for the Mecca
estate growing 7% against the prior year.
With a strengthened leadership team in place, Mecca venues ended
the year with strong momentum. In the first half of the financial
year NGR grew 4% on the prior year on customer visit volumes also
growing by 4%. H2 2022/23 LFL NGR grew 11% on visitor volumes up
4%, with strong H2 performances from bingo and machine gaming. The
business continues to see the return of customers following the
pandemic despite reopening two years prior. However, the business
continues to attract high volumes of new customers with circa 4% of
customers every week being new to Mecca. Over 50% of new customers
to Mecca are aged under 35.
Mecca's customer net promoter score ('NPS') further improved,
rising from +61 last year to +78 in 2022/23. The increasing
momentum in the business also reflects in our colleague eNPS scores
which further increased from +4 in 2021/22 to +25 in 2022/23.
Main stage bingo NGR grew 24% on the prior year, driven by the
success of strong prize boards and the addition of a new bingo
variant. Interval bingo NGR grew 9% and food and beverage sales
grew 6%. Gaming machine NGR grew by just 2% in the year, but with
stronger momentum in the second half of the year which saw NGR grow
by 7%. Much work is ongoing across the Mecca estate to improve the
quality of the machine offering and we are hopeful that the
announced change in the Government's white paper to the makeup of
machines in bingo venues, which currently restricts Category B3
machines to just 20% of the gaming machine offering, will enable
Mecca to better meet the needs of today's consumers.
With LFL NGR growing GBP9.3m in the year, Mecca's LFL underlying
operating loss post-central cost was GBP5.8m, down from GBP4.9m in
2021/22. The key cost increases in the year were energy +GBP1.3m
and property maintenance +GBP1.5m, offset by reductions in duty and
employment costs.
The performance of Mecca Luton, which reopened in March 2022,
continued to improve during the year, delivering many learnings in
terms of its attractiveness to a broader customer base.
Consequently, investments have been made in the year at nine Mecca
venues, primarily focusing on updating their external appearance
and improving the quality of the gaming machine offering. Playsafe,
a system which supports the provision of real time information for
our colleagues on individual customer machine play has been
successfully rolled out across the estate. Total capital investment
in the Mecca estate in 2022/23 was GBP12.5m.
During the year Mecca recognised an impairment charge of
GBP61.5m relating to 70 venues, including some which were closed in
the year, due to the lower than previously expected
performance.
Enracha venues
Key financial performance indicators:
2022/23 2021/22
GBPm GBPm Change
LFL(1) NGR 36.4 30.7 19%
-------- -------- -------
Total NGR 36.4 30.1 21%
-------- -------- -------
Underlying(2) LFL(1) operating profit
pre-central cost reallocation 9.2 8.3 11%
-------- -------- -------
Underlying(2) LFL(1) operating profit
post-central cost reallocation 9.1 8.2 11%
-------- -------- -------
Total profit 4.9 15.0 (67)%
-------- -------- -------
1. Results are presented on a like for like ('LFL') basis which
removes the impact of club closures, foreign exchange movements and
discontinued operations.
2. Before the impact of separately disclosed items.
The Enracha estate of nine bingo, machine gaming and sports
betting venues in Spain performed strongly with underlying LFL NGR
growing 19% over the prior year. LFL NGR of GBP36.4m was the result
of continued strong growth in gaming machine NGR (AWPs, electronic
roulette and B3/B4 bingo machines) which were up 25%, with main
stage bingo NGR up 10% on the prior year. This improving NGR
position for bingo reflects the strength of bingo liquidity and
prize boards across the Enracha venues estate.
Customer visits grew 16% in the year.
Enracha delivered a LFL underlying operating profit post
allocation of central costs of GBP9.1m, up 11% on the GBP8.2m
operating profit in 2021/22. The key areas of cost increase were
seen in employment costs which were up GBP3.0m and energy costs
which were up GBP0.4m on the prior year. The reallocation of
central costs only marginally impacted LFL underlying profit at
GBP9.1m.
Capital investment in the year of GBP1.2m was focused on
completing the rollout of TiTo (the ticket in ticket out customer
payment and withdrawal mechanism for gaming machines), a trial of a
loyalty programme in selected venues, the rollout of a new food and
beverage electronic point of sale ('EPOS') system, machine jackpot
display screens and the continued upgrade of the gaming machine
estate.
During the year Enracha venues recognised an impairment charge
of GBP4.1m relating to two venues whose performance was lower than
anticipated.
Digital
Key financial performance indicators:
2022/23 2021/22
GBPm GBPm Change
LFL(1) NGR 202.9 183.8 10%
Mecca 72.6 66.9 9%
Grosvenor 57.0 49.8 14%
Enracha/Yo 24.1 21.5 12%
Other including Stride legacy brands 49.2 45.6 8%
-------- -------- -------
Total NGR 202.9 183.3 10%
Mecca 72.6 66.9 9%
Grosvenor 57.0 49.8 14%
Enracha/Yo 24.1 21.0 15%
Other including Stride legacy brands(3) 49.2 45.6 8%
-------- -------- -------
Underlying(2) LFL(1) operating profit
pre-central cost reallocation 18.8 17.5 7%
-------- -------- -------
Underlying(2) LFL(1) operating profit
post-central cost reallocation 13.8 13.4 3%
-------- -------- -------
Total profit/(loss) 4.7 (1.2) -
-------- -------- -------
1. Results are presented on a like-for-like ('LFL') basis which
removes the impact of foreign exchange.
2. Before the impact of separately disclosed items.
3. Includes contribution from Passion Gaming.
The digital business has performed strongly in the year with LFL
NGR growth of 10% to GBP202.9m and underlying LFL operating profit
pre allocation of central costs growing 7% to GBP18.8m. After the
reallocation of GBP5.0m of costs previously assigned as central
costs, but now appropriately charged to the digital business, the
full year underlying operating profit was GBP13.8m.
LFL NGR, excluding Enracha/Yo, was up 10% on the prior year at
GBP178.8m. Now fully operating on the RIDE proprietary platform,
the Mecca and Grosvenor brands continued to improve their
performance with Mecca growing NGR 9% and Grosvenor growing 14%
year on year. Our other UK facing brands saw NGR grow 8% in the
year.
With the successful conclusion of the project to ready the RIDE
platform for the migration of the Mecca and Grosvenor online sites,
the digital team is now focused on further improving the products,
services and user journeys for our customers. Much greater
personalisation has been added to the Mecca and Grosvenor sites
during the year so that the customer increasingly receives an
offering which more suitably meets their preferences. New live
gaming tables have been added both from Grosvenor venues and from a
new live dealer studio opened during the year. Safer gambling
player journeys continue to be improved to reduce friction for
customers and a new markers of harm model has been successfully
introduced to further help identify at risk play in real time.
The development effort in the software engineering hub in Cape
Town is centred on the next phase of delivering a seamless
cross-channel experience to customers including a unified customer
membership system, a single content management system operating
across all the digital brands and further modernising the RIDE
platform to speed up the development time and to increase both
capacity and reliability. Artificial Intelligence ('AI') is being
added to customer journeys and in particular to customer support to
improve our responsiveness to customers. The development of a
single cross-channel central engagement platform has also now been
successfully completed and is being rolled out across key data
driven processes such as real time predictive models, cross channel
single customer view and real time business performance reporting.
The business continues to build out its operations hub in Mauritius
which provides a high-quality capability across a number of key
back office, marketing and customer management functions.
In Spain, the Yo and Enracha brands grew LFL NGR by 12% in the
year. YoSports was successfully launched prior to the FIFA World
Cup and the site has received a good response from customers. The
ability to accelerate growth in the Spanish market is constrained
by the marketing restrictions introduced by the Government in 2021.
However, the launch of YoSports has supported customer acquisition
and revenue growth in the year and further initiatives, including
platform and site enhancements and product developments are in the
pipeline to further support the YoBingo, YoCasino and Enracha
brands.
The application to the Portuguese regulator for a licence to
launch YoBingo is ongoing, the timescale largely the result of no
other bingo brand having yet been licensed in Portugal.
Passion Gaming, the online Indian rummy business in which Rank
holds a 51% share, grew LFL NGR by 33% in the year following the
easing of regulatory restrictions in certain states.
Group liquidity
The Group ended the year with total cash and available
facilities of GBP101.4m.
In May 2023, the Group made its scheduled term loan repayment of
GBP34.5m in line with the agreed loan amortisation profile reducing
its term loan to GBP44.4m.
In August 2023, the Group secured a financing package which
totalled GBP100m of revolving credit facilities. GBP25m is
committed until November 2024 and the remaining GBP75m is committed
until February 2025. The Group has subsequently repaid the
remaining term loan of GBP44.4m.
The Group will look to replace the GBP100m of RCF with a
longer-term financing package in 2023/24 when it anticipates
securing better financing terms, driven by additional consecutive
months of improved trading.
The Group expects to meet all future financial covenants under
its current lending facilities.
Sustainability update
We are continuing to mature our approach to ESG and have
strengthened governance of sustainability initiatives and
performance through the formation of new working groups, comprising
of individuals across the business and supported by external
consultants.
In recognition of the importance of ESG on our long-term
business success, we have also introduced eight key performance
indicators (KPIs) across our four focus areas - Customers,
Colleagues, Environment and Communities.
Customers Environment
* Customer Net Promoter Score ('NPS') * Energy intensity ratio*
* % of [UK] digital customers who use safer gambling
tools
* Customer feedback score relating to Rank's approach
to safer gambling*
* Employee NPS relating to Rank's approach to safer
gambling*
Colleagues Community
* Employee NPS* * Total charitable funds raised
* % of females in senior management
-------------------------------------
For detail of Rank's performance please refer to the Strategic
update section.
*Four of these KPIs are linked to executive compensation and
further embed the importance of ESG into our core objectives and
culture.
Customers
Safer gambling remains a primary commitment in both our business
and sustainability strategy. Our goal is to deliver an entertaining
experience and, therefore, we want all our customers to play within
their means. Safer gambling is a constant consideration in every
customer engagement.
We continue to invest in technology to ensure that we remain at
the leading edge when it comes to player protection. Through the
development of our bespoke Central Engagement Platform ('CEP'), we
are bringing all customer data into one singular platform,
improving customer visibility and enabling us to better monitor
their play across all our brands, digital and land based. Through
adding automation to the alert system for detecting potential
problem gambling it has already enhanced the ability of our
Grosvenor venues to observe incidences of harmful play in real time
and to make interventions where required.
The experience and dedication of our colleagues remains an
invaluable tool in safeguarding customers' mental and financial
wellbeing. The relationships our venue teams have established with
their customers delivers an irreplaceable human understanding of
play at the individual level. To complement the abilities of our
staff in identifying 'at-risk' play, we have invested significantly
in employee training. Over 1,200 of our colleagues across
Grosvenor, Mecca and UK Digital businesses received in-depth
training to detect and deal with harmful gambling and have reported
improved understanding of potential risks and more confidence in
taking action when they identify concerning playing behaviour.
Colleagues
To enhance our approach to colleague engagement, we introduced
the position of Chief People Officer this year and we have been
pleased to see the immediate impact this new role and focus has
had. There is now a stronger focus on culture across the
organisation, and we are making great strides in elevating the
employee experience. Our People and Culture function have been
restructured to improve the flow of information from all our
locations up to Group level, ensure we are well placed to support
our people and culture plans on a local level, and provide
oversight of all aspects of the employee development lifecycle.
This has helped to assess what works well and determine where we
can improve. Whilst we have invested greatly in employee
professional development, we know there is more to be done to make
sure that everyone is being brought along on the Group's journey.
Our conception of a compelling new Employee Value Proposition
('EVP') is central in addressing this. The EVP will improve
outcomes for employees in every country of operation through the
restructuring of our rewards and benefits policy and creates a
greater cohesion through improved integration of our company
values. The results are already being realised in the evident
quality of people we are bringing into the business, including at
executive level.
Environment
Our consideration for our environmental impact has accelerated
in recent years. This analysis reflects not only our commitment to
being a responsible corporate citizen, but also in recognition of
the material financial savings made possible by improving energy
efficiency.
The Group is now fully committed to being net zero by 2035 for
all Scope 1, 2 and selected Scope 3 emissions and fully net zero
across all scopes by 2050.
Our newly formed Net Zero Working Group oversees decarbonisation
initiatives across Rank. This year, the first step has been to
conduct an extensive energy audit of our venues in both the UK and
Spain. By establishing a utilisation baseline, we now have a clear
and comprehensive understanding of where energy savings and carbon
reductions can be made. The application of monitoring technology in
the UK captures energy use right down to the machine level, and the
data collected will additionally support preventative maintenance
programmes, further improving both the carbon and cost efficiency
of our operations.
Informed by our energy assessment, we have established
Group-wide interim Net Zero targets and are developing a strategy
to support the achievement of these objectives. In Spain, we have
already installed LED lighting, and we have introduced a number of
simple solutions in our Mecca venues this year to reduce energy
consumption.
Fundamental to the success of our net zero strategy, will be the
buy-in and strategy implementation from our colleagues. We are
therefore developing an internal programme to raise awareness and
instil behavioural change throughout our support offices and
venues.
Communities
We greatly value the connections we have with the communities
where we operate. Whenever I visit a venue, I am always struck by
how much our employees truly care about their customers. Bingo is
an important weekly social occasion for many; as a result, our
Mecca colleagues strike up strong relationships with their
customers and will even reach out to check-in on elderly patrons
when they do not attend in line with their usual routine.
Embedded in these communities as we are, we can provide support
that meets local need. Taking a largely decentralised approach to
our philanthropic endeavours, we allow our clubs autonomy on the
initiatives they champion. This year's activities have included
everything from hosting community meetings and events in our
venues, to donating to Easter and Christmas hampers as part of
campaigns to support underprivileged groups.
At Group level we are proud to have been partnered with Carers
Trust for almost a decade. This year alone, we provided support to
480 carers, with colleagues raising GBP0.3m through hosting charity
poker nights, completing marathons and bike rides, and much
more.
Further detail regarding our sustainability strategy and the
progress made in the year will be outlined in our 2023
sustainability report which will be published in September
2023.
Regulatory update
The UK Government's white paper, published on 27 April, set out
public policy for reforms to land-based and online gambling
regulation and legislation. The reforms to land-based casinos and
bingo are critical to ensuring that we can meet the needs of
today's consumers.
The Government plans to enable casinos to offer up to 80 gaming
machines on a 5:1 machine to live gaming table ratio, subject to
the size of the venue and the available non-gaming space. Casinos
will also be able to offer sports betting facilities and enable
electronic payments, rather than just cash, on gaming machines.
These modest but essential reforms, which will be delivered through
secondary legislation, will enable the UK's casinos to better meet
the expectations of customers.
The white paper also supports enabling credit to be offered to
High Net Worth international customers visiting the UK. The
extension of table games such as blackjack on electronic terminals
to enable customers to play at lower staking levels has been left
as an open issue requiring further review. Both of these reforms
would require primary legislation, something which is unlikely to
happen in the foreseeable future.
In bingo, the Government has supported reform to the current
restriction that requires no more than 20% of the gaming machines
to be category B3 (GBP2 maximum stake and GBP500 maximum prize),
with the balance required to be category C and D machines which are
increasingly unpopular with customers. Category B3 machines account
for over 70% of machine revenues in Mecca. Rather than removing the
rule, the Government has proposed establishing a new 50% rule,
requiring half of the available machines to be category C or D.
This reform, whilst not going quite as far as we would wish, will
enable us to go some way in modernising the machine offering for
Mecca's customers. The bingo reforms also include allowing
customers to make electronic, rather than simply cash,
payments.
The Government has outlined that it expects these critical
land-based reforms to be implemented through secondary legislation
(positive statutory instruments) by the summer of 2024.
In the digital sector, the Government is consulting on a maximum
staking limit for online slot games which would subsequently be
delivered through secondary legislation. The other reforms to
online gaming, including changes to game design, an opt in
requirement for cross-sell and financial risk assessments (to
provide a frictionless check on a customer's means), will be
delivered by changes to regulations (Licence Conditions and Codes
of Practice ('LCCP')) following consultations now being conducted
by the Gambling Commission. The Commission anticipates that the
full programme of reforms to LCCP will take three years to deliver.
We would not expect a customer centric approach to these regulatory
reforms to have a material impact to our UK facing digital business
which is already positioned to ensure we provide very high levels
of protection to our customers.
Board changes
Having completed over six years on the Board, Steven Esom,
Non-Executive Director and Chair of the Remuneration Committee,
stepped down from the Board on 31 December 2022.
Lucinda Charles-Jones succeeded Steven Esom as Chair of the
Remuneration Committee and was appointed as the designated
Non-Executive Director for workforce engagement from 1 January
2023.
On 16 August, Keith Laslop was appointed to the Board as a
Non-Executive Director and a member of the Audit Committee, with
effect from 1 September 2023. Keith was previously Chief Financial
Officer of Gamesys Group Plc between 2013 and October 2021.
Management changes
From 1 June 2023, Jon Martin took on a newly created role of
Chief Operating Officer for the Group. Jon was previously managing
director for our UK digital business, a role he has held since
2020.
Jon will continue to have accountability for the strategy and
performance of the UK digital business, as well as taking overall
responsibility for the development and delivery of Rank's
cross-channel customer offer for the Mecca and Grosvenor
brands.
Andrew Peat will join the Group from William Hill later in 2023
as Managing Director of the Group's UK digital business.
In August 2023, Mark Harper joined as Grosvenor's new Managing
Director. Mark joins us from Pears Partnership Capital, part of the
William Pears Group, where he was the Operating Partner, managing
the leisure and hospitality investment portfolio, a role he has
been in since 2021. Mark has broad experience in the leisure
industry and the 24/7 economy, with ten years at Allied Domecq
Leisure across many of their divisions and more recently in
leadership roles at several leading holiday park Groups.
Our strategy and KPIs
Our strategy is focused on generating long term sustainable
shareholder value. We have made considerable progress which ensures
significant opportunity in the next phase of the plan.
Strategic pillar 1
Provide a seamless and tailored experience for customers across
venues and online.
In the markets in which we operate, Rank is one of the few
gaming companies in a position to provide customers with a genuine
one-brand gaming experience across both venues and online. Our key
assets are our 116 venues, our membership-based models, our
customer relationships and the high levels of engagement that our
team members enjoy with our customers.
What we said What we did
Further develop the app strategy We have created our app strategy
for each brand ensuring customer focused on delivering a deeper
needs are met for both online brand experience. We have initiated
and in-venue experiences, removing a programme of work to consolidate
the need for customers to move and improve our mobile apps
across multiple mono-channel over the next 12-18 months.
apps.
---------------------------------------
Launch live streaming from a We have launched our live streaming
further four Grosvenor casinos product 'Live and Direct' into
to our online audiences and our Glasgow, Sheffield and Nottingham
deliver improvements to the casinos. We have also launched
digital live roulette experience. variants of the games taking
our live streaming from venue
portfolio from one to ten games.
---------------------------------------
Introduce artificial intelligence We have introduced our personalisation
to better drive personalisation engine which allows us to identify
for our Grosvenor casino and customer traits and preferences
sports customers showing offers, and create and test insight-based
bets and homepages tailored campaigns across marketing channels
to their behaviour. to optimise the customer experience.
---------------------------------------
Continue to deliver compelling Three key offers were launched
Mecca offers focused on driving in the year - 'Mecca Perks',
new customer acquisition and a stamp card for venues visits
retention. with digital rewards; 'Mecca
Bestie', where customers win
additional prizes if their 'bestie'
bingo partner wins and the popular
'Everyone's a winner' campaign.
We continue to build out our
cross-channel rewards programme
for our Mecca customer base.
---------------------------------------
Launch unified Mecca membership We have launched our Mecca single
across online and in venues sign-up journey which automatically
that will bring real time communication, creates a venues membership
personalised content, cross for new and existing meccabingo.com
sell and improved onboarding. customers, enabling channel
agnostic communication, content
and tailored experiences.
---------------------------------------
Introduce a new Mecca loyalty Mecca Perks, a brand led loyalty
card embedded into our apps scheme with digital and in venue
and single membership journey rewards, was launched in the
aligned to our single app strategy. year. Further development of
our single membership and apps
will unlock enhanced Mecca loyalty
and reward functionality.
---------------------------------------
KPIs
Percentage of venues customers that play with us online
-- Grosvenor venues 5% (0ppts)
-- Mecca venues 9% (0ppts)
-- Enracha venues 0% (0ppts)
Percentage of digital NGR from cross-channel customers
-- Grosvenor venues 32% (-2ppts)
-- Mecca venues 20% (-3ppts)
-- Enracha venues 1% (+1ppts)
Focus for 2023/24:
-- Introduce via our proprietary technology platform single
unified membership for Mecca online and venue customers
-- Delivery of single apps for each brand ensuring customer
needs are met for both online and in-venue experiences
-- Delivering further venues content online, allowing customers
to virtually tour our venues and bringing the venues
atmosphere online through dynamic content
-- Further development of our personalisation capabilities,
delivering the right content, at the right time to the
customer
-- Continue to deliver our cross channel live casino offering
through shared jackpots, game variants and customer
experiences
-- Deliver gamification and personalisation of rewards
through retention and product recommendations relevant
to the customer and reward players for engaging at a
brand level
-- Relaunch our improved joint liquidity bingo game 'Fortune',
enabling seamless play in venue or online with community
jackpots
Strategic pillar 2
Drive digital growth powered by our proprietary technology and
live play credentials.
We have built strong positions in venues-based gaming which we
are seeking to replicate across our digital channels. In 2022/23,
our digital operations generated 30% of Group revenue. Across the
UK as a whole, digital channels represented around 65% of the
gambling market (excluding the National Lottery) pre-pandemic,
presenting a significant growth opportunity.
What we said What we did
Migrate grosvenorcasinos.com We migrated Grosvenorcasinos.com
onto our RIDE platform. to our RIDE proprietary platform
in September 2022, completing our
group wide migrations and enabling
us to deliver a host of innovative
customer-oriented improvements.
-----------------------------------------------
Enhance Grosvenor's Daily We have launched a full suite of
Retention Game offering our Daily Retention Games across all
customers greater variety Rank brands, offering a variety
and range of prizes. of mechanics and prizes including
bespoke variants such as Beat the
Timer, Everyone's a Winner, Winfall,
Scratch and Win and Loose Woman.
-----------------------------------------------
Launch the streaming online We enhanced our Mecca TV proposition
of live immersive events with celebrity presenters hosting
in our Mecca venues to help main event bingo games on Friday
drive cross channel acquisition. nights and streaming in venue events
such as Bonkers and Players Bingo.
-----------------------------------------------
Deliver the significant development The Grosvenor migration to our RIDE
roadmap which follows the proprietary platform unlocked cost
migration of Grosvenor onto synergies relating to technology
the RIDE platform. services, cloud hosting, marketing
and player protection tools.
With the migrations completed, our
in-house resource was able to switch
focus on delivering customer journey
improvements such as greater personalisation,
improved customer journeys, launch
of improved games and game variants
(Live and Direct, 'Loose Women'
Bingo), and delivering improvements
to our safer gambling monitoring.
-----------------------------------------------
Launch a new Spanish sports YoSport was successfully launched
betting site YoSport. in September 2022 to provide sports
betting to the Spanish market.
-----------------------------------------------
Launch new apps for YoCasino Both android apps were launched
and YoSport in Spain. in Q4 2022/23 and further work is
underway to enable promotion in
Google Play.
-----------------------------------------------
Roll-out a cross-channel A soft launch to selected customers
strategy for Enracha. will be launched towards the end
of 2023/24.
-----------------------------------------------
Launch YoBingo in Portugal Good progress is being made in the
to replicate the successful homologation of our YoBingo.pt site
YoBingo model. by SRIJ, Portugal's regulator, and
we hope to be now launching this
new service in the coming months
-----------------------------------------------
Upgrade the proprietary Yo The first phase of this development,
technology platform. a new bingo module, will be launched
in Q2 2023/24.
-----------------------------------------------
KPIs
Digital NGR
-- UK GBP172.7m (+10%)
-- International GBP30.2m (+16%)
Digital customer numbers
-- UK 1,153k (+14%)
-- International 48k (+2%)
Focus for 2023/24:
-- Continue to build out our core RIDE platform scalability
and enhance its resilience to support our growth ambitions
-- Enhance our sportsbook capabilities through onsite content
and bonusing improvements so we become the sportsbook
of choice for Grosvenor customers
-- Scale marketing investment through key channels to drive
brand awareness and customer consideration
-- Further investment into our Safer Gambling tools and measures
-- Enhance our monitoring and player protection capabilities
whilst delivering excellent customer experience
-- Launch a daily live online bingo experience at YoBingo.es
Strategic pillar 3
Continuously evolve our venues estate with engaging propositions
that appeal to both existing and new customers.
Our casino and bingo venues provide entertainment for millions
of customers each year and generate the majority of the Group's
revenue and profits. By continuously evolving our venues (in terms
of product, environment and service) and by creating new concepts,
we are constantly enhancing the experiences that we offer our
customers, whether they be existing or new.
What we said What we did
Launch of new rewards and During the year we altered our marketing
incentives programme for approach, by focusing on fewer larger
our Grosvenor venues. national campaigns, marketing activities
to more local and personalised promotions
and rewards, ensuring they are more
relevant for each casino's customer
base.
--------------------------------------------
Continue the development Three major refurbishments were
and refurbishment of the completed in the year at our Merchant
Grosvenor estate with 12 City casino in Glasgow and at the
venues listed for refurbishment Gloucester and Bayswater casinos
in 2022/23. in London, in addition to two smaller
refurbishments at our Southampton
and Brighton casinos. We also upgraded
the 'back of house' team member
areas in five of our Grosvenor casinos,
with further to be completed to
be 2023/24 and upgraded air conditioning
across 15 of our casinos, including
delivering significant improvements
in energy efficiency.
--------------------------------------------
Launch of a new electronic Going for Gold was successfully
roulette jackpot game, Going rolled out across 900 terminals
for Gold, across our Grosvenor in the Grosvenor estate and is proving
estate. to be very popular with customers.
--------------------------------------------
Focus on improving the slots Through the introduction of new
performance of our Mecca machine suppliers, we have been
venues through a better product able to broaden the range of slot
mix and presentation in venue. machines available to our Mecca
customers. We have optimised the
gaming machine area layouts in a
number of venues and commenced a
programme of refurbishments of these
areas in a number of our Mecca venues.
--------------------------------------------
Investigate opportunities To date, we have been unable to
to share space in our Mecca secure a suitable party which complements
venues through complementary and enhances the experience for
partnerships and collaborations our Mecca customers. Further opportunities
with third parties. are under review.
--------------------------------------------
Continue the Enracha venues We are currently at the planning
investment programme in our approval stage to refurbish our
Andalucía and Sabadell venues in Seville and Sabadell.
venues. We hope to complete both projects
in 2023/24.
--------------------------------------------
Consider prospective opportunities We have reviewed a number of prospective
to continue growing in the acquisition targets in the year
Spanish market through targeted but valuations are high and the
acquisitions. Group's priority has been to ensure
we retain a strong balance sheet
position during this period of high
costs of debt financing.
--------------------------------------------
Deploy player tracking and Player tracking is live in seven
new jackpots in each Enracha venues. New jackpot displays are
venue to improve customer live in four venues.
experience.
--------------------------------------------
Full deployment of our Enracha Live across the estate with the
venues loyalty card into last permitted venue in the Enracha
all permitted venues. venues estate deploying the loyalty
card system in September 2023.
--------------------------------------------
KPIs
Venues customer numbers
-- Grosvenor venues 1,044k (-1%)
-- Mecca venues 637k (0%)
-- Enracha venues 270k (+34%)
Venues strategic investment
-- Grosvenor venues GBP13.1m (+11%)
-- Mecca venues GBP3.7m (0%)
-- Enracha venues GBP0.6m (+50%)
Venues Net Promoter Score
-- Grosvenor venues +57 (+0)
-- Mecca venues +78 (+17)
-- Enracha venues +36 (-9)
Focus for 2023/24:
-- Continue to build on our strong Mecca slots performance
by refurbishing an additional 20 slots areas in our key
venues
-- Continuing with our external redevelopment programme,
with six Mecca venues to be upgraded in 2023/24
-- 1,700 new Mecca Max units to be rolled out in 2023/24
across Mecca
-- Improving the visibility of our venues online with more
informative and up to date venues related information
-- Refurbish the external of 12 of our Grosvenor venues in
order to improve kerb appeal and help drive consideration
from non-casino customers
-- Complete major refurbishments at our Leicester and Portsmouth
casino and begin the refurbishment of our flagship casino,
The Victoria on London's Edgware Road
-- Complete the detailed planning for the implementation
of the land-based bingo and casino reforms contained within
the UK Government's white paper
-- Complete refurbishments in Enracha's Seville and Sabadell
venues
Strategic pillar 4
Be passionate about the development and well-being of our
colleagues and the contribution we make to our communities.
We continue to build a high-performing culture through the
engagement and development of colleagues who want to put exciting
and entertaining customers at the heart of what they do. We strive
for a culture of ownership and transparency that empowers our teams
to achieve goals they did not think possible and to be the very
best that they can be. We are also acutely aware of the role our
venues, support offices and colleagues play in the communities in
which we operate and together as a collective organisation we
strive to add value wherever possible.
What we said What we did
Launch refreshed three-year During the year, a simplified
ED&I strategy across the Group ED&I strategy was agreed.
focused on ensuring the Group
is recognised as an employer The Group also appointed a new
of choice by attracting, developing Head of Learning, Engagement
and retaining a truly diverse and Inclusion. One of their
pool of talent. key areas of focus is the development
and implementation of the Group's
ED&I strategy. Further progress
is expected in 2023/24.
----------------------------------------
Expand the reach of the Group's Numerous network group events
ED&I colleague network groups were held during the year, maintaining
and launch the Group's first the Group's focus on ED&I.
neurodiverse colleague network
group. Further development of new network
Group's is planned for 2023/24.
----------------------------------------
Launch and embed the newly developed During the year, key projects
Group-wide EVP Work. Win. Grow. such as a full review of the
Group's people policies, an
overhaul and relaunch of the
Group's careers website and
the implementation of a new
payroll system were delivered
under the Work.Win.Grow. programme.
----------------------------------------
Continue the development of The Group has set an intermediate
the Group's net zero plan and target of net zero for its global
look to set intermediate targets Scope 1, 2 and selected Scope
to lower the Group's carbon 3 emissions by 2035 supported
emissions and use of other natural by a robust action plan.
resources.
Rank aims to be net zero globally
across all scopes by 2050.
----------------------------------------
KPIs
-- Employee Net Promoter Score +14 (+12)
-- % of females in senior positions 35% (+8ppts)
-- Emission intensity ratio 36.6 tCO2e per GBPm NGR (-12%)
-- Total charitable funds raised GBP0.3m (0%)
Focus for 2023/24:
-- Improve the delivery and content of colleague development
courses and training across the Group
-- Implementation of an improved colleague communication
and engagement strategy
-- Ensure Group policies are modern and global to better
reflect the current and future business needs
-- Delivery of the further energy efficiency programmes in
line with the Group's net zero plan
-- Roll out of a Group wide engagement programme centred
on the Group's environmental ambitions
Strategic pillar 5
Build sustainable relationships with our customers by providing
them with safe environments in which to play.
Millions of customers regularly enjoy the fun and excitement of
gambling, but we recognise that a small percentage of customers can
be at risk of problem gambling and a smaller number of people can
suffer harm through excessive gambling. We recognise the importance
of continuous innovation to refine our approach to making gambling
as safe as possible thus ensuring we create and maintain
sustainable relationships with all our customers.
What we said What we did
Continue to refine and improve Significant investment was made
the holistic player protection in the year in improving our
model in our Grosvenor venues. player protection model, with
over 10,000 training modules
delivered to Grosvenor colleagues
-------------------------------------
Improve the tools available A new risk app was launched
to Grosvenor venues colleagues that allows our colleagues easier
to make decision-making more access to information for faster
efficient and effective. decision-making and customer
interaction.
-------------------------------------
Review and improve our digital Significant further improvements
customer onboarding journeys have been delivered to improve
to remove unnecessary friction customer 'safer gambling' journeys
caused by 'know your customer' and improve customer response
and player protection processes. rates to requests for affordability
information.
-------------------------------------
Completion of role appropriate We have made further progress
enhanced safer gambling training in the year, with 743 additional
supported by GamCare to over team members completing the
1,100 colleagues. The training enhanced safer gambling training.
is aimed at developing the necessary
skills required to have more
meaningful safer gambling interactions
with our customers.
-------------------------------------
Continue to develop our markers During the year, we developed
of harm model as part of a continuous automated marketing and bonusing
improvement and evaluation of suppression technology delivered
player protection risk models. through our proprietary Hawkeye
monitoring platform.
This new functionality allows
us to suspend bonus offers and
promotional marketing where
a customer is showing indication
of potential harmful behaviour.
-------------------------------------
Work towards achieving GamCare During the year Rank was awarded
safer gambling accreditation Gamcare Level 2 accreditation
across our UK operations. for Mecca venues and the UK
digital business. The review
of Grosvenor venues is ongoing.
-------------------------------------
KPIs
-- Safer gambling eNPS score 53% (+2ppts)
-- Customer feedback score on safer gambling
* Grosvenor venues 82%
* Mecca venues 83%
* UK digital 73%
Scores were not recorded prior to 2022/23. Enracha venues and
our Spanish digital business will start to seek customer feedback
in 2023/24.
-- % UK digital customers using safer gambling tools 43%
(+7ppts)
Focus for 2023/24:
-- Deliver changes outlined in the Gambling Act review for
the UK digital business, specifically around financial
risk assessments, slots staking, game design and marketing
preferences
-- Enrol in the GamProtect scheme, introducing controls across
UK gambling operators to protect customers who have identified
as being harmed by excessive gambling
-- Continue to progress Gamcare accreditation for our Grosvenor
venues
CFO's review
Within this section all prior year comparatives are to the year
ended 30 June 2022.
Reported net gaming revenue ('NGR')
For the 12 months ended 30 June 2023 NGR increased by 6% to
GBP681.9m following an improved NGR performance across a majority
of the Group's business units.
Operating profit
The Group delivered an operating loss of GBP109.8m for the year,
compared to an operating profit of GBP80.8m, principally due to
higher impairment charges of GBP118.9m, higher operating costs and
a VAT refund in the prior year.
Energy costs are a significant cost for the Group and to provide
the Group with some certainty it has adopted an agreed hedging
policy. This allows the Group to fix a portion of its future energy
costs up to two years in advance, near term energy costs can be
fixed up to 100%. Regarding 2023/24, 70% of the Group energy costs
have been fixed and at current market prices we expect 2023/24
energy costs to be approximately GBP20m.
Separately disclosed items ('SDIs')
SDIs are items that are infrequent in nature and/or do not
relate to Rank's underlying business performance.
Total SDIs for the year ended 30 June 2023 were GBP101.5m.
The key SDIs in the year were as follows:
-- A rebasing of expected future performance at the end of
H1 2022/23 has resulted in an impairment charge of GBP118.9m
relating to 23 Grosvenor venues, 70 Mecca venues and two
Enracha venues, as well as an impairment of GBP182.6m
in the parent company accounts;
-- A GBP6.6m reversal of previously impaired assets following
a better than anticipated performance and improved outlook
regarding seven Grosvenor venues;
-- Closure costs of GBP7.7m relating to the closure of a
number of Grosvenor, Mecca and Enracha venues; and
-- Amortisation of acquired intangible assets of GBP8.6m
relating to the acquisition of Stride Gaming, YoBingo
and the remaining shares in Rialto (previously Aspers
Online).
Further details regarding the SDIs can be found in note 4 of the
financial statements.
Prior period restatement
During the year, the Group identified an accumulated total of
GBP2.2m of prior year payment processing costs within the Digital
business which erroneously had not been recognised in the prior
year financial statements. Of the total value, GBP1.3m relates to
2021/22, with GBP0.6m relating to H1 2021/22 and GBP0.7m to H2
2021/22. The remaining GBP0.9m relates to pre 2021/22.
Net financing charge
The GBP12.3m underlying net financing charge for the year ended
30 June 2023 was slightly lower than the prior year's charge of
GBP13.4m principally due to lower bank fee amortisation costs in
the current year. The underlying net financing charge includes
GBP6.5m of lease interest calculated under IFRS 16.
Cash flow and net debt
As at 30 June 2023, net debt was GBP172.9m. Debt comprised
GBP44.4m in term loans, GBP18.0m of drawn revolving credit
facilities and GBP169.0m in finance leases, offset by cash at bank
of GBP58.5m. In the period, the Group repaid GBP34.5m of the term
loan in line with the loan's agreed amortisation schedule.
In August 2023, the Group made an early repayment of the
remaining balance of the term loan, funded by the new GBP100m
RCF.
The Group finished the year with net debt for covenant purposes
of GBP19.1m.
2022/23 2021/22(1)
GBPm GBPm
Operating profit from continuing operations 19.1 38.5
-------- -----------
Depreciation and amortisation 60.1 67.4
-------- -----------
Working capital 3.0 (6.2)
-------- -----------
Other 2.5 (0.3)
-------- -----------
Cash inflow from operations 84.7 99.4
-------- -----------
Capital expenditure (44.1) (40.6)
-------- -----------
Net interest and tax (7.8) (16.2)
-------- -----------
Lease payments (43.6) (53.7)
-------- -----------
Cashflows in relation to SDIs (9.5) 70.6
-------- -----------
Net free cash flow (20.3) 59.5
-------- -----------
Business acquisition and other (0.5) (0.7)
-------- -----------
Business disposal - 8.8
-------- -----------
Total cash (out)/in flow (20.8) 67.6
-------- -----------
Opening net cash/(debt) pre IFRS 16 16.9 (50.7)
-------- -----------
Closing net (debt)/cash pre IFRS 16 (3.9) 16.9
-------- -----------
IFRS 16 lease liabilities (169.0) (181.7)
-------- -----------
Closing net (debt) post IFRS 16 (172.9) (164.8)
-------- -----------
1. Restated
Taxation
The Group's underlying effective corporation tax rate in 2022/23
was 8.8% (2021/22: 23.5%) based on a tax charge of GBP0.6m
(excluding impact of rate changes on deferred tax) on underlying
profit before taxation. This is different to the Group's
anticipated effective tax rate of 16-18% for the year. This is
mainly as a result of lower than forecasted profits in UK
operations.
The underlying effective corporation tax rate for 2023/24 is
expected to be 20-22%, 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
22.1% (2021/22: 22.7%) based on a tax credit of GBP27.1m and total
loss of GBP122.7m. This is higher than the effected tax rate on
underlying profit because of the significant level of separately
disclosed items which attract a tax credit.
Further details of the tax charge are provided in note 6 of the
financial statements.
Earnings per share ('EPS')
Basic EPS declined to a loss of 20.4p from a profit of 13.9p in
the prior year. Underlying EPS declined to 1.2p from 4.0p in the
prior year. For further details refer to note 9 of the financial
statements.
Cash tax rate
In the year ended 30 June 2023, the Group had an effective cash
tax rate of (2.6)% on total profit before taxation (2021/22:
(13.3)%). The cash tax rate is lower than the effective tax rate
due to losses generated by the UK operations during the period
resulting in no cash tax payable in the UK.
The Group is expected to have a cash tax rate of approximately
(14)-(16)% in the year ended 30 June 2024. This is lower than the
effective tax rate due to the utilisation of brought forward tax
losses and refunds of UK corporation tax expected from prior year
overpayments and loss carry back claims.
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:
Closest
equivalent Adjustments to reconcile to
APM Purpose IFRS measure primary financial statements
Underlying Revenue NGR -- Separately disclosed items
like-for-like measure -- Excludes contribution from
('LFL') net any venue openings, closures,
gaming disposals, acquired businesses
revenue ('NGR') and d iscontinued operations
-- Foreign exchange movements
--------- ------------------ -------------------------------------------------------------------
Underlying LFL Profit Operating profit -- Separately disclosed items
operating profit measure / (loss) -- Excludes contribution from
/(loss) any venue openings, closures,
post-central disposals, acquired businesses
cost reallocation and d iscontinued operations
-- Foreign exchange movements
-- Central cost reallocation
--------- ------------------ -------------------------------------------------------------------
Underlying LFL Profit Operating profit
operating profit measure / (loss) * Separately disclosed items
/(loss)
pre-central
cost reallocation * Excludes contribution from any venue openings,
closures, disposals, acquired businesses and
discontinued operations
* Foreign exchange movements
--------- ------------------ -------------------------------------------------------------------
Underlying profit Profit Profit / (loss) -- Separately disclosed items
/ (loss) before measure before tax
taxation
--------- ------------------ -------------------------------------------------------------------
Underlying (loss) Profit Profit / (loss) -- Separately disclosed items
/ profit after measure after tax
taxation
--------- ------------------ -------------------------------------------------------------------
Underlying (loss) Profit Earnings / (loss) -- Separately disclosed items
/ earnings per measure per share
share
--------- ------------------ -------------------------------------------------------------------
Free cash flow Cash Net cash
measure generated * Lease principal repayments
from operating
activities
* Cash flow in relation to SDIs
* Cash capital expenditure
* Net interest and tax payments
--
--------- ------------------ -------------------------------------------------------------------
Rationale for adjustments - Profit and debt measure
1. Separately disclosed items ('SDIs')
SDIs are items that bear no relation to the Group's underlying
ongoing operating performance. The adjustment helps users of the
accounts better assess the underlying performance of the Group,
helps align to the measures used to run the business and still
maintains clarity to the statutory reported numbers.
Further details of the SDIs can be found in the Financial Review
and note 4.
2. Contribution from any venue openings, closures, disposals,
acquired businesses and discontinued operations
In the current period (2022/23), the Group closed one Grosvenor
venue and 15 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.
GBPm 2022/23 2021/22
Underlying LFL net gaming revenue
(NGR) 679.7 633.2
-------- --------
Open, closed and disposed venues 2.2 12.0
-------- --------
Foreign exchange ('FX') - (1.2)
-------- --------
Underlying NGR - continuing operations 681.9 644.0
-------- --------
Calculation of comparative underlying LFL NGR
2021/22
Reported underlying LFL NGR 644.0
--------
2022/23 closed venues (12.0)
--------
2022/23 FX 1.2
--------
Restated underlying LFL NGR 633.2
--------
GBPm 2022/23 2021/22
LFL underlying operating profit 20.3 42.5
-------- --------
Opened, closed and disposed venues (1.2) (3.8)
-------- --------
FX - (0.2)
-------- --------
Underlying operating profit - continuing
operations 19.1 38.5
-------- --------
Separately disclosed items (128.9) 42.3
-------- --------
Operating (loss) / profit - continuing
operations (109.8) 80.8
-------- --------
Calculation of comparative underlying LFL operating profit
GBPm 2021/22
Reported underlying LFL operating profit 40.4
--------
2021/22 restatement relating to digital cash (1.3)
--------
2021/22 opened and closed venues (0.6)
--------
2022/23 closed venues 3.8
--------
2022/23 FX 0.2
--------
Underlying LFL operating profit 42.5
--------
GBPm 2022/23 2021/22
Underlying current tax (charge) (0.6) (9.6)
-------- --------
Tax on separately disclosed items 27.7 (10.5)
-------- --------
Deferred tax - 3.2
-------- --------
Tax credit / (charge) 27.1 (16.9)
-------- --------
Pence 2022/23 2021/22
Underlying EPS 1.2 4.0
-------- --------
Separately disclosed items (21.6) 9.9
-------- --------
Reported EPS (20.4) 13.9
-------- --------
Comparison of 2022/23 LFL performance to CY2019
Whilst year-on-year comparisons are now free from the material
impacts of the pandemic experienced in calendar years 2020 and
2021, the Group continues to review performance against the 12
months to 31 December 2019 (CY 2019), the last comparable period
which was unaffected by COVID-19 and the more recent inflationary
pressures.
NGR / GBPm 2022/23 CY 2019(1) Change
Grosvenor venues 306.3 359.7 (15)%
London 99.3 134.3 (26)%
Rest of UK 207.0 225.4 (8)%
-------- ----------- -------
Mecca venues 134.1 164.5 (18)%
-------- ----------- -------
Enracha venues 36.4 32.4 12%
-------- ----------- -------
Digital 202.9 144.3 41%
-------- ----------- -------
Underlying LFL Group 679.7 700.9 (3)%
-------- ----------- -------
Impact of venues openings,
closures and FX 2.2 33.1 -
-------- ----------- -------
Underlying Group 681.9 734.0 (7)%
-------- ----------- -------
Operating profit / GBPm 2022/23 CY 2019 Change
-------- ----------- -------
Grosvenor venues 27.7 74.3 (63)%
-------- ----------- -------
Mecca venues 4.0 30.9 (87)%
-------- ----------- -------
Enracha venues 9.2 7.7 19%
-------- ----------- -------
Digital 18.8 23.0 (18)%
-------- ----------- -------
Central costs (39.4) (34.6) 14%
-------- ----------- -------
Underlying LFL Group 20.3 101.3 (80)%
-------- ----------- -------
Impact of venues openings,
closures and FX (1.2) 3.5 -
-------- ----------- -------
Underlying Group 19.1 104.8 (82)%
-------- ----------- -------
1. Stride was acquired in October 2019 and has been included on a pro forma basis.
Reallocation of central costs
During the year, the Group undertook a review of the Group's
central costs and has concluded that a proportion of them, which
are directly attributable to the relevant business units, should be
allocated to those business units, better reflecting the underlying
profitability of each segment. This resulted in changes in the
underlying profit (loss) of each segment in the prior year which
has been re-presented in the table below.
Year ended 30 June 2023
------------------------------------------------------------------
Grosvenor Mecca Enracha Central
Digital venues venues venues Costs Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------- -------- -------- -------- --------------
Segment revenue 202.9 306.3 136.3 36.4 - 681.9
----------------------------- -------- ---------- -------- -------- -------- --------------
Other operating income - - - - - -
Operating profit (loss) 18.8 27.7 2.8 9.2 (39.4) 19.1
Separately disclosed
items (9.1) (51.7) (67.1) (4.2) 3.2 (128.9)
----------------------------- -------- ---------- -------- -------- -------- --------------
Segment result 9.7 (24.0) (64.3) 5.0 (36.2) (109.8)
Central costs allocation (5.0) (11.4) (9.8) (0.1) 26.3 -
Segment result (post
central cost allocation) 4.7 (35.4) (74.1) 4.9 (9.9) (109.8)
----------------------------- -------- ---------- -------- -------- -------- --------------
Finance costs (12.6)
Finance income 0.8
Other financial losses (1.1)
----------------------------- -------- ---------- -------- -------- -------- --------------
(Loss) before taxation (122.7)
Taxation 27.1
----------------------------- -------- ---------- -------- -------- -------- --------------
(Loss) for the period
from continuing operations (95.6)
----------------------------- -------- ---------- -------- -------- -------- --------------
Year ended 30 June 2022 (re-presented)
------------------------------------------------------------------
Grosvenor Mecca Enracha Central
Digital venues venues venues Costs Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------- -------- -------- -------- --------------
Segment revenue 183.3 296.6 134.0 30.1 - 644.0
----------------------------- -------- ---------- -------- -------- -------- --------------
Other operating income - 2.6 1.0 - - 3.6
Operating profit (loss) 17.4 45.1 (0.8) 7.5 (30.7) 38.5
Separately disclosed
items (14.5) 15.5 34.4 7.6 (0.7) 42.3
----------------------------- -------- ---------- -------- -------- -------- --------------
Segment result 2.9 60.6 33.6 15.1 (31.4) 80.8
Central cost allocation (4.1) (8.9) (6.9) (0.1) 20.0 -
----------------------------- -------- ---------- -------- -------- -------- --------------
Segment result (post
central cost allocation) (1.2) 51.7 26.7 15.0 (11.4) 80.8
----------------------------- -------- ---------- -------- -------- -------- --------------
Finance costs (13.1)
Finance income 0.1
Other financial gains 5.2
----------------------------- -------- ---------- -------- -------- -------- --------------
Profit before taxation 73.0
Taxation (16.9)
----------------------------- -------- ---------- -------- -------- -------- --------------
Profit for the period
from continuing operations 56.1
----------------------------- -------- ---------- -------- -------- -------- --------------
Analysis of total costs by type and segment and how the central
costs have been re-allocated:
Year ended 30 June 2023
Grosvenor Mecca Enracha Central
Digital venues venues venues Costs Total
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- -------- ---------- -------- -------- -------- ------
Employment and related
costs 28.1 122.2 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
Property costs 0.8 11.6 6.5 0.6 0.5 20.0
Marketing 33.3 6.2 5.7 2.4 0.2 47.8
Depreciation and amortisation 14.3 28.8 10.9 1.5 2.5 58.0
Other 7.8 29.0 26.4 0.1 1.0 64.3
--------------------------------- -------- ---------- -------- -------- -------- ------
Total costs before SDI
(post-central cost allocation) 189.1 290.0 143.3 27.3 13.1 662.8
--------------------------------- -------- ---------- -------- -------- -------- ------
Cost of sales 409.0
Operating costs 253.8
--------------------------------- -------- ---------- -------- -------- -------- ------
Total costs before SDI
(post-central cost allocation) 662.8
--------------------------------- -------- ---------- -------- -------- -------- ------
Year ended 30 June 2023
Grosvenor Mecca Enracha Central
Digital Venues Venues Venues Costs Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- -------- ---------- -------- -------- -------- ------
Employment and related
costs 3.4 5.9 4.8 0.1 (14.2) -
Taxes and duties 0.4 0.9 0.9 - (2.2) -
Direct costs - - - - - -
Property costs - - - - - -
Marketing - - - - - -
Depreciation and amortisation 0.1 1.0 0.9 - (2.0) -
Other 1.1 3.6 3.2 - (7.9) -
-------------------------------- -------- ---------- -------- -------- -------- ------
Central cost allocation 5.0 11.4 9.8 0.1 (26.3) -
-------------------------------- -------- ---------- -------- -------- -------- ------
Cost of sales -
Operating costs -
-------------------------------- -------- ---------- -------- -------- -------- ------
Central cost allocation -
-------------------------------- -------- ---------- -------- -------- -------- ------
Year ended 30 June 2023
Grosvenor Mecca Enracha Central
Digital Venues Venues Venues Costs Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- -------- ---------- -------- -------- -------- ------
Employment and related
costs 24.7 116.1 41.3 17.6 21.9 221.6
Taxes and duties 47.3 63.3 26.2 2.0 3.4 142.2
Direct costs 57.1 28.2 20.6 3.0 - 108.9
Property costs 0.8 11.6 6.5 0.6 0.5 20.0
Marketing 33.3 6.2 5.7 2.4 0.2 47.8
Depreciation and amortisation 14.2 27.8 10.0 1.5 4.5 58.0
Other 6.7 25.4 23.2 0.1 8.9 64.3
-------------------------------- -------- ---------- -------- -------- -------- ------
Total costs before SDI
(pre-central cost allocation) 184.1 278.6 133.5 27.2 39.4 662.8
-------------------------------- -------- ---------- -------- -------- -------- ------
Cost of sales 409.0
Operating costs 253.8
-------------------------------- -------- ---------- -------- -------- -------- ------
Total costs before SDI
(pre-central cost allocation) 662.8
-------------------------------- -------- ---------- -------- -------- -------- ------
Year ended 30 June 2022 (re-presented)
----------------------------------------------------------
Grosvenor Mecca Enracha Central
Digital Venues Venues Venues Costs Total
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- -------- ---------- -------- -------- -------- ------
Employment and related
costs 27.8 109.0 47.3 14.7 6.9 205.7
Taxes and duties 40.7 61.0 25.6 1.6 0.2 129.1
Direct costs 49.4 23.6 19.9 2.4 - 95.3
Property costs 0.5 9.5 4.5 0.6 0.9 16.0
Marketing 33.2 5.9 5.8 1.7 0.1 46.7
Depreciation and amortisation 13.4 33.3 16.0 1.3 3.4 67.4
Other 5.0 20.7 23.6 0.4 (0.8) 48.9
--------------------------------- -------- ---------- -------- -------- -------- ------
Total costs before SDI
(post-central cost allocation) 170.0 263.0 142.7 22.7 10.7 609.1
--------------------------------- -------- ---------- -------- -------- -------- ------
Cost of sales 386.5
Operating costs 222.6
--------------------------------- -------- ---------- -------- -------- -------- ------
Total costs before SDI
(post-central cost allocation) 609.1
--------------------------------- -------- ---------- -------- -------- -------- ------
Year ended 30 June 2022 (re-presented)
----------------------------------------------------------
Grosvenor Mecca Enracha Central
Digital Venues Venues Venues Costs Total
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- -------- ---------- -------- -------- -------- ------
Employment and related
costs 3.5 5.1 4.3 0.1 (13.0) -
Taxes and duties 0.2 0.5 0.5 - (1.2) -
Direct costs - - - - - -
Property costs - 0.8 - - (0.8) -
Marketing - - - - - -
Depreciation and amortisation 0.2 0.9 0.9 - (2.0) -
Other 0.2 1.6 1.2 - (3.0) -
--------------------------------- -------- ---------- -------- -------- -------- ------
Central cost allocation 4.1 8.9 6.9 0.1 (20.0) -
--------------------------------- -------- ---------- -------- -------- -------- ------
Cost of sales -
Operating costs -
--------------------------------- -------- ---------- -------- -------- -------- ------
Central cost allocation -
--------------------------------- -------- ---------- -------- -------- -------- ------
Six months ended 31 December 2022 (unaudited
and re-presented)
----------------------------------------------------------
Grosvenor Mecca Enracha Central
Digital Venues Venues Venues Costs Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- -------- ---------- -------- -------- -------- ------
Employment and related
costs 24.3 103.9 43.0 14.6 19.9 205.7
Taxes and duties 40.5 60.5 25.1 1.6 1.4 129.1
Direct costs 49.4 23.6 19.9 2.4 - 95.3
Property costs 0.5 8.7 4.5 0.6 1.7 16.0
Marketing 33.2 5.9 5.8 1.7 0.1 46.7
Depreciation and amortisation 13.2 32.4 15.1 1.3 5.4 67.4
Other 4.8 19.1 22.4 0.4 2.2 48.9
-------------------------------- -------- ---------- -------- -------- -------- ------
Total costs before SDI
(pre-central cost allocation) 165.9 254.1 135.8 22.6 30.7 609.1
-------------------------------- -------- ---------- -------- -------- -------- ------
Cost of sales 386.5
Operating costs 222.6
-------------------------------- -------- ---------- -------- -------- -------- ------
Total costs before SDI
(pre-central cost allocation) 609.1
-------------------------------- -------- ---------- -------- -------- -------- ------
Principal risks and uncertainties
The Board has conducted a robust 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.
Emerging risks
Our risk management processes include consideration of emerging
(including opportunity) risks; horizon scanning is performed with a
view to enabling management to take timely steps to intervene as
appropriate.
Our 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 and action taken when they started to
crystallise.
The current economic pressures, high rates of inflation and
pressures on disposable incomes are a cause for concern for many
consumers. The executive directors continue to be vigilant of the
changing economic backdrop and the impact on the Group.
Additionally, changes in the regulation of the gaming market are
monitored closely and the Group continues to evolve climate-related
risks and opportunities. However, climate risks are currently not
regarded as a principal risk and the risk itself is currently
considered low.
Principal risk 1: Uncertain trading environment
Yearly change: No Change
Consumers' discretionary expenditure continues to be impacted
by inflationary pressures, volatile energy markets and higher
interest rates. 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 our strategic plans.
Moreover, various cost pressures are impacting the operating
margins of our venues businesses and this will be further impacted
if wage and other inflation remains high. Related risks caused
by current macroeconomic and geopolitical uncertainty are 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,
energy prices remaining above historic norms, increases in 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.
Principal risk 2: Compliance with gambling laws and regulations
Yearly change: No change
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) and
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 increasing.
There is ongoing 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, particularly when limited time is provided
to ensure compliance. Regulatory change in the UK is often delivered
through ad hoc Gambling Commission guidance which is often open
to interpretation; this further increases the risk of a negative
outcome from a regulatory compliance assessment.
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 and 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.
Principal risk 3: Safe and sustainable gambling
Yearly change: No change
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.
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 a dedicated and experienced first and second
line safer gambling teams.
Principal risk 4: People
Yearly change: No change
Pivotal to the success of the organisation and a 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 post
both the pandemic and the impact of Brexit on the broader hospitality
sector.
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 is 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.
Principal risk 5: Strategic Programmes
Yearly change: No change
Key projects and programme could fail to deliver, resulting
in missed market opportunities for the Group, and/or take longer
to deliver, resulting in missed synergies and 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.
Principal risk 6: Health and safety
Yearly change: No change
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
medium residual risk and stable.
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 &
Safety and Group Risk Committees. The Head of Health
& Safety also provides bi-annual reports to the Audit
Committee.
* it has a capable facilities management services
provider that can support and advice on all health
and safety compliance matters.
* all colleagues undertake annual mandatory training,
with additional training being undertaken as
required/requested or as may be appropriate to a
specific role.
Principal risk 7: Data protection and management
Yearly change: No change
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.
Principal risk 8: Cyber resilience
Yearly change: No change
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.
Due to the programme of work in place and ongoing monitoring
and response to new and emerging attack vectors, this is considered
an increasing risk for the Group.
Risk mitigation strategy
The Group:
* has a Security Operations Centre (SOC) and
Vulnerability Management service tools(s) to provide
increased visibility of security events and enable
vulnerabilities to be monitored/quickly addressed.
* has in place security policies and procedures and
conducts training for colleagues to ensure ongoing
awareness.
* employs a dedicated, specialist Group security team.
* 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.
Principal risk 9: Business continuity and Disaster Recovery
Yearly change: No change
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.
Principal risk 10: Dependency on third parties and supply chain
Yearly change: No change
The Group is dependent on a number of these 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
have remained the same but the potential risk to supply chain
due to the current macroeconomic environment continues to be
monitored.
Risk mitigation strategy
The Group has a central procurement team that oversees the process
for acquisition of suppliers across the Group, utilising a supplier
risk management framework. Our policies and procedures require
due diligence to be carried out on 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.
Principal risk 11: Taxation
Yearly change: No change
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 in their impact on 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.
Principal risk 12: Liquidity and funding
Yearly change: No change
Availability of, and access to, appropriate sources and levels
of funding is critical to the continued operation of the business
and implementation of the Group's strategy.
The Group is reliant on maintaining affordable committed debt
facilities with banking partners, all of which have specific
obligations and covenants that need to be met. A loss of debt
facilities and/or clearing facilities could result in the Group
being unable to meet its obligations as they become due.
Our ability to repay debt and fund working capital, capital
expenditure and other expenditure is dependent on our operating
performance, ability to generate cash and to refinance existing
debt when necessary.
Residual risk rating and change in risk impact
Considered high residual risk and increasing.
The available pool of capital willing to lend into the gambling
sector has reduced over time. In addition, business performance
post pandemic has weakened the credit profile of the Group.
Changes in interest rates have impacted the overall cost of
debt.
Risk mitigation strategy
The Group ensures that it:
* reviews and refines its strategic financial plan
regularly, including sensitivity analysis to assess
the impact of the changing economic environment. Cash
flows are stress tested to ensure we retain
sufficient liquidity and can operate within covenant
limits.
* continues to review the capital structure to ensure
appropriate financing is in place to support
investment in the business.
* has sufficient cash and available facilities in place
to navigate through any short term deterioration in
performance.
* has strong discipline over capital allocation
decisions and scrutiny of discretionary expenditure.
* focuses on working capital management to improve cash
flow and reduce reliance on bank facilities.
* Maintains ongoing frequent and open dialogue with
banking partners.
* Has an appropriately resourced Treasury team that are
involved in advance of any major business decisions
that could impact banking partner's willingness to
provide debt or clearing facilities.
* ensure no trading entity is solely reliant on one
bank for clearing services.
Directors' Responsibility Statement
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
Katie McAlister
John O'Reilly
Alex Thursby
Karen Whitworth
Signed on behalf of the board on 16 August 2023
John O'Reilly Richard Harris
Chief Executive Chief Financial Officer
Group Income Statement
For the year ended 30 June 2023
Year ended 30 June 2022
Year ended 30 June 2023 (restated)
---------------------------------- --------------------------------------
Separately Separately
disclosed disclosed
items items
(note (note
Underlying 3) Total Underlying 3) Total
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- ----------- ----------- -------- ----------- ------------- ----------
Continuing operations
Revenue 681.9 - 681.9 644.0 - 644.0
Cost of sales (409.0) (112.3) (521.3) (386.5) (25.8) (412.3)
---------------------------- ----------- ----------- -------- ----------- ------------- ----------
Gross profit (loss) 272.9 (112.3) 160.6 257.5 (25.8) 231.7
Other operating income - 3.7 3.7 3.6 88.3 91.9
Other operating costs (253.8) (20.3) (274.1) (222.6) (20.2) (242.8)
---------------------------- ----------- ----------- -------- ----------- ------------- ----------
Group operating (loss)
profit 19.1 (128.9) (109.8) 38.5 42.3 80.8
Financing:
- finance costs (12.6) - (12.6) (13.1) - (13.1)
- finance income 0.8 - 0.8 0.1 - 0.1
- other financial (losses)
gains (0.5) (0.6) (1.1) (0.4) 5.6 5.2
---------------------------- ----------- ----------- -------- ----------- ------------- ----------
Total net financing
(charge) income (12.3) (0.6) (12.9) (13.4) 5.6 (7.8)
---------------------------- ----------- ----------- -------- ----------- ------------- ----------
(Loss) profit before
taxation 6.8 (129.5) (122.7) 25.1 47.9 73.0
Taxation (0.6) 27.7 27.1 (6.4) (10.5) (16.9)
---------------------------- ----------- ----------- -------- ----------- ------------- ----------
(Loss) profit for
the year from continuing
operations 6.2 (101.8) (95.6) 18.7 37.4 56.1
Discontinued operations
- profit - 0.3 0.3 - 8.8 8.8
(Loss) profit for
the year 6.2 (101.5) (95.3) 18.7 46.2 64.9
---------------------------- ----------- ----------- -------- ----------- ------------- ----------
Attributable to:
Equity holders of the
parent 5.8 (101.5) (95.7) 18.7 46.2 64.9
Non-controlling interest 0.4 - 0.4 - - -
---------------------------- ----------- ----------- -------- ----------- ------------- ----------
6.2 (101.5) (95.3) 18.7 46.2 64.9
---------------------------- ----------- ----------- -------- ----------- ------------- ----------
(Loss) earnings per share attributable to equity shareholders
- basic 1.2p (21.6)p (20.4)p 4.0p 9.9p 13.9p
- diluted 1.2p (21.6)p (20.4)p 4.0p 9.9p 13.9p
(Loss) earnings per share - continuing operations
- basic 1.2p (21.7)p (20.5)p 4.0p 8.0p 12.0p
- diluted 1.2p (21.7)p (20.5)p 4.0p 8.0p 12.0p
Earnings per share - discontinued operations
- basic - 0.1p 0.1p - 1.9p 1.9p
- diluted - 0.1p 0.1p - 1.9p 1.9p
Group Statement of Comprehensive (Loss) Income
For the year ended 30 June 2023
Year ended Year ended
30 June 30 June
2023 2022
(restated)
GBPm GBPm
-------------------------------------------------- ----------- -----------
Comprehensive (loss) income:
(Loss) profit for the year (95.3) 64.9
Other comprehensive income:
Items that may be reclassified subsequently to
profit or loss:
Exchange adjustments net of tax (0.6) -
Items that may not be reclassified subsequently
to profit or loss:
Actuarial gain on retirement benefits net of tax - 0.1
Total comprehensive (loss)/income for the year (95.9) 65.0
-------------------------------------------------- ----------- -----------
Attributable to:
Equity holders of the parent (96.3) 65.0
Non-controlling interest 0.4 -
-------------------------------------------------- ----------- -----------
(95.9) 65.0
-------------------------------------------------- ----------- -----------
Group Balance Sheet
At 30 June 2023
As at As at
30 June 30 June
2023 2022
(restated)
GBPm GBPm
------------------------------------------------ -------- -----------
Assets
Non-current assets
Intangible assets 456.8 493.6
Property, plant and equipment 97.5 113.1
Right-of-use assets 64.1 101.6
Deferred tax assets 7.6 1.4
Other receivables 6.2 6.7
------------------------------------------------ -------- -----------
632.2 716.4
Current assets
Inventories 2.2 2.3
Other receivables 29.1 34.2
Government grants - -
Income tax receivable 14.9 8.1
Cash and short-term deposits 60.0 95.7
------------------------------------------------ -------- -----------
106.2 140.3
Total assets 738.4 856.7
------------------------------------------------ -------- -----------
Liabilities
Current liabilities
Trade and other payables (126.1) (131.1)
Lease liabilities (42.2) (40.4)
Income tax payable (5.7) (4.2)
Financial liabilities - loans and borrowings (63.7) (33.9)
Provisions (7.3) (6.9)
------------------------------------------------ -------- -----------
(245.0) (216.5)
Net current liabilities (138.8) (76.2)
------------------------------------------------ -------- -----------
Non-current liabilities
Lease liabilities (126.8) (141.3)
Financial liabilities - loans and borrowings - (44.1)
Deferred tax liabilities (1.5) (20.5)
Provisions (31.7) (5.6)
Retirement benefit obligations (3.4) (3.6)
------------------------------------------------ -------- -----------
(163.4) (215.1)
Total liabilities (408.4) (431.6)
------------------------------------------------ -------- -----------
Net assets 330.0 425.1
------------------------------------------------ -------- -----------
Capital and reserves attributable to the Group
equity shareholders
Share capital 65.0 65.0
Share premium 155.7 155.7
Capital redemption reserve 33.4 33.4
Exchange translation reserve 14.0 14.6
Retained earnings 61.6 156.5
------------------------------------------------ -------- -----------
Total equity before non-controlling interest 329.7 425.2
Non-controlling interest 0.3 (0.1)
------------------------------------------------ -------- -----------
Total shareholders' equity 330.0 425.1
------------------------------------------------ -------- -----------
Group Statement of Changes in Equity
For the year ended 30 June 2023
Reserves
attributable
to the
Capital Exchange Group's Non-
Share Share redemption translation Retained equity controlling Total
capital premium reserve reserve earnings shareholders interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- --------- --------- ------------ ------------ ---------- ------------- ------------- --------
At 1 July 2021
(as previously
reported) 65.0 155.7 33.4 14.6 92.6 361.3 (0.1) 361.2
Impact of prior
period error
(note 2) - - - - (0.9) (0.9) - (0.9)
---------------- --------- --------- ------------ ------------ ---------- ------------- ------------- --------
At 1 July 2021
(restated) 65.0 155.7 33.4 14.6 91.7 360.4 (0.1) 360.3
Comprehensive
income:
Profit for the
year - - - - 64.9 64.9 - 64.9
Other
comprehensive
income:
Exchange
adjustments
net of tax - - - - - - - -
Actuarial gain
on
retirement
benefits
net of tax - - - - 0.1 0.1 - 0.1
---------------- --------- --------- ------------ ------------ ---------- ------------- ------------- --------
Total
comprehensive
income for the
year - - - - 65.0 65.0 - 65.0
Transactions
with
owners:
Debit in
respect
of employee
share
schemes
including
tax - - - - (0.2) (0.2) - (0.2)
---------------- --------- --------- ------------ ------------ ---------- ------------- ------------- --------
At 30 June 2022
(restated) 65.0 155.7 33.4 14.6 156.5 425.2 (0.1) 425.1
---------------- --------- --------- ------------ ------------ ---------- ------------- ------------- --------
Comprehensive
income:
Loss for the
year - - - - (95.7) (95.7) 0.4 (95.3)
Other
comprehensive
(loss) income:
Exchange
adjustments
net of tax - - - (0.6) - (0.6) - (0.6)
Actuarial gain
on
retirement
benefits
net of tax - - - - - - - -
---------------- --------- --------- ------------ ------------ ---------- ------------- ------------- --------
Total
comprehensive
(loss) income
for
the year - - - (0.6) (95.7) (96.3) 0.4 (95.9)
Transactions
with
owners:
Credit in
respect
of employee
share
schemes
including
tax - - - - 0.8 0.8 - 0.8
---------------- --------- --------- ------------ ------------ ---------- ------------- ------------- --------
At 30 June 2023 65.0 155.7 33.4 14.0 61.6 329.7 0.3 330.0
---------------- --------- --------- ------------ ------------ ---------- ------------- ------------- --------
Group Statement of Cash Flow
For the year ended 30 June 2023
Year ended Year ended
30 June 30 June
2023 2022
(restated)
GBPm GBPm
------------------------------------------------- ----------- -----------
Cash flows from operating activities
Cash generated from operations (see note
13) 75.3 170.0
Interest received 0.3 5.8
Interest paid (4.9) (12.1)
Tax paid (3.2) (9.9)
Net cash generated from operating activities 67.5 153.8
------------------------------------------------- ----------- -----------
Cash flows from investing activities
Purchase of intangible assets (13.1) (14.5)
Purchase of property, plant and equipment (31.0) (26.1)
Proceeds from sale of business - 8.8
Payment of contingent consideration of business
combination (0.4) (0.6)
Net cash used in investing activities (44.5) (32.4)
------------------------------------------------- ----------- -----------
Cash flows from financing activities
Repayment of term loans (34.5) (29.6)
Drawdown of revolving credit facilities 22.0 -
Repayment of revolving credit facilities (4.0) (11.0)
Lease principal payments (43.6) (53.7)
Net cash used in financing activities (60.1) (94.3)
------------------------------------------------- ----------- -----------
Net (decrease) increase in cash and short
term deposits (37.1) 27.1
Effect of exchange rate changes (0.1) (0.1)
Cash and short-term deposits at start of
year 95.7 68.7
------------------------------------------------- ----------- -----------
Cash and short-term deposits at end of
year 58.5 95.7
------------------------------------------------- ----------- -----------
(1) is net of bank overdraft of GBP1.5m
contained in current f inancial 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 2023 were authorised for issue in accordance
with a resolution of the Directors on 16 August 2023.
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.
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 for preparing the financial
information, the Directors have considered the circumstances
impacting the Group during the year, including the budget for
2023/2024 ('the base case'), the long-range forecast approved by
the Board, and recent trading performance. The Directors have
reviewed the Group's projected compliance with its banking
covenants and access to funding options for the 12 months ending 31
August 2024 for the going concern period, and for the six months
beyond the end of the going concern period for cliff edge events
affecting the going concern period such as the availability of
revolving credit facilities or repayments of any term loans.
The Directors recognise that there is continued uncertainty at
this time caused by the slower than anticipated return of customers
to UK land-based leisure entertainment venues, the impact of
macroeconomic factors on consumer sentiment and disposable incomes,
continued inflationary pressures and higher interest rates and
their overall impact on consumer demand and discretionary spending.
The Directors note that this has had an impact on the accuracy of
budgeting and forecasting for the current financial year, and this
has been considered by management when preparing their sensitivity
review for the going concern period.
The Directors have reviewed and challenged management's
assumptions on the Group's base case for the going concern period.
Key considerations are the assumptions on the levels of customer
visits and their average spend in the venues-based businesses, and
the number of first time and returning depositors in the digital
businesses, and the average level of spend per visit for each.
The base case view contains certain discretionary costs within
management control that could be reduced in the event of a revenue
downturn. These include reductions to overheads, 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 totalling GBP100m are available
to the Group through to November 2024;
-- In November 2024, the facilities available to the Group
reduces to GBP75m, maturing in February 2025. Based on
ongoing conversations with lenders and the improving trading
performance of the Group, management has a reasonable
expectation that there will be a successful refinancing
of the facilities beyond February 2025.
At the date of approval of the financial statements, GBP50m of
the GBP100m RCF had been drawn down in order to repay the term
loan.
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 as at
December 2023 and June 2024 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 three downside scenarios modelled are:
(i) revenues in the Grosvenor business fall by 23% and
the Group experiences additional inflationary costs compared
to the base case view, with management taking only mitigating
actions that have no effect on the Group's trading performance;
(ii) revenues in Grosvenor fall by 20% and Rank Interactive
by 7% versus the base case view, with management taking
a number of mitigating actions including reduction in
capital expenditure, reduction in marketing and other
overheads and the removal of the Group planning contingency;
(iii) a reverse stress test, revenues in Grosvenor fall
by 36% in the initial year, with management taking actions
as for scenario (ii) but with further mitigating actions
on employment costs and extending creditor days.
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 in all three
scenarios.
Accordingly, the Directors have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for a period at least through 31 August 2024.
For these reasons, the Directors continue to adopt the going
concern basis for the preparation of these consolidated and Company
financial statements, and in preparing the consolidated and Company
financial statements, they do not include any adjustments that
would be required to be made if they were prepared on a basis other
than going concern.
Going concern statement
Based on the Group's cash flow forecasts and business plan, the
Directors believe that the Group will generate sufficient cash to
meet its liabilities as they fall due for the period up to 31
August 2024. 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 three downside scenarios which
reflects a reduced trading performance, inflationary impacts on the
cost base and various management-controlled cost mitigations.
In each of the three 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 2024 with
scenarios ii) and iii) requiring the implementation and execution
of mitigating cost actions within the control of management.
Accounting policies
(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:
-- Property, plant equipment: proceeds before intended use
(amendment to IAS 16)
-- Onerous contracts: cost of fulfilling a contract (amendment
to IAS 37)
-- Interest rate benchmark reform - Phase 2 (amendment to
IAS 39)
-- Annual improvements to IFRS Standards 2018 - 2020 (amendment
to IFRS 1, IFRS 9, IFRS 16 and IAS 41)
-- Reference to the conceptual framework (amendment to IFRS
3)
(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:
-- Disclosure of accounting policies (amendments to IAS 1
and IFRS Practice Statement 2)
-- Onerous contracts: cost of fulfilling a contract (amendments
to IAS 8)
-- Deferred tax related to assets and liabilities arising
from a single transaction (amendment to IAS 12)
-- Liability in a sale and leaseback (amendment to IFRS 16)
-- Classification of liabilities as current and non-current
(amendment to IAS 1)
-- Insurance contracts (amendment to IFRS 17)
-- Non-current liabilities with Covenants (amendment to IAS
1)
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 dilapidations asset deprecaition;
-- Discontinued operations;
-- Significant, material proceeds from tax appeals;
-- The tax impact of all the above.
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 GBP0.3m increase in the dilapidations
provision. Likewise, a decrease in cash outflows of 1% would have
resulted to a GBP0.3m 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.
During the year, the Group identified an accumulated total of
GBP2.2m prior year payment processing costs within the Digital
business which erroneously had not been recognised in the prior
year financial statements. Of the total value, GBP1.3m relates to
FY2021/22, with the remaining GBP0.9m relating to pre
FY2021/22.
The adjustments made to the year comparatives increase other
operating costs by GBP1.3m, reduce cash and short term deposits by
GBP1.3m, reduce prior year opening reserves by GBP0.9m and closing
reserves is adjusted by GBP1.3m.
The impact of the adjustment on the June 2022 balance sheet is a
reduction to cash and short-term deposits of GBP2.2m, a reduction
to closing reserves of GBP2.2m and a reduction to opening reserves
of GBP0.9m.
The prior period comparatives have been restated for the above
items in accordance with IAS8: '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 2022
As previously As
reported Adjustment restated
GBPm GBPm GBPm
-------------- ----------
Revenue 644.0 - 644.0
Cost of sales (412.3) - (412.3)
--------------------------------------- -------------- ----------- ----------
Gross profit 231.7 - 231.7
Other operating income 91.9 91.9
Other operating costs (241.5) (1.3) (242.8)
--------------------------------------- -------------- ----------- ----------
Operating profit 82.1 (1.3) 80.8
Financing:
* finance costs (13.1) - (13.1)
* finance income 0.1 - 0.1
* other financial gains 5.2 - 5.2
--------------------------------------- -------------- ----------- ----------
Total net financing charge (7.8) - (7.8)
--------------------------------------- -------------- ----------- ----------
Profit before taxation 74.3 (1.3) 73.0
Taxation (16.9) - (16.9)
--------------------------------------- -------------- ----------- ----------
Profit for the period from continuing
operations 57.4 (1.3) 56.1
Profit after tax from discontinued
operations 8.8 - 8.8
--------------------------------------- -------------- ----------- ----------
Profit for the period 66.2 (1.3) 64.9
--------------------------------------- -------------- ----------- ----------
As previously As
reported Adjustment restated
GBPm GBPm GBPm
------------------------- --------------------- ----------- ----------
Total earnings per share attributable to
equity shareholders
* basic 14.2p (0.3)p 13.9p
* diluted 14.2p (0.3)p 13.9p
Total earnings per share attributable to equity shareholders
- continuing operations
* basic 12.3p (0.3)p 12.0p
* diluted 12.3p (0.3)p 12.0p
Underlying earnings per share attributable to equity shareholders
- discontinued operations
* basic 1.9p - 1.9p
* diluted 1.9p - 1.9p
Balance Sheet
At 30 June 2022
As previously As
reported Adjustment restated
GBPm GBPm GBPm
------------------------------------- -------------- ----------- ----------
Assets
Cash and short-term deposits 97.9 (2.2) 95.7
------------------------------------- -------------- ----------- ----------
Total assets 858.9 (2.2) 856.7
------------------------------------- -------------- ----------- ----------
Total liabilities (431.6) - (431.6)
------------------------------------- -------------- ----------- ----------
Net assets 427.3 (2.2) 425.1
------------------------------------- -------------- ----------- ----------
Equity
Retained earnings 158.7 (2.2) 156.5
------------------------------------- ----------- ----------
Total equity before non-controlling
interests 427.4 (2.2) 425.2
Non-controlling interests (0.1) - (0.1)
------------------------------------- -------------- ----------- ----------
Total shareholders' equity 427.3 (2.2) 425.1
------------------------------------- -------------- ----------- ----------
Cash flow statement
for the year ended 30 June 2022
As previously As
reported Adjustment restated
GBPm GBPm GBPm
--------------------------------------- -------------- ----------- ----------
Cash flows from operating activities
Cash generated from operations 171.3 (1.3) 170.0
--------------------------------------- -------------- ----------- ----------
Net cash generated from operating
activities 155.1 (1.3) 153.8
--------------------------------------- -------------- ----------- ----------
Net cash used in investing activities (32.4) - (32.4)
Net cash used from financing
activities (94.3) - (94.3)
--------------------------------------- -------------- ----------- ----------
Net increase in cash and short-term
deposits 28.4 (1.3) 27.1
--------------------------------------- -------------- ----------- ----------
Cash and short-term deposit at
the start of the period 69.6 (0.9) 68.7
--------------------------------------- -------------- ----------- ----------
Cash and short-term deposits
at end of period 97.9 (2.2) 95.7
--------------------------------------- -------------- ----------- ----------
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 2023
------------------------------------------------------------
Grosvenor Mecca Enracha Central
Digital Venues Venues Venues Costs Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------- -------- -------- -------- --------
Continuing operations
Revenue 202.9 306.3 136.3 36.4 - 681.9
Other operating
income - - - - - -
Underlying operating
profit (loss) 13.8 16.3 (7.0) 9.1 (13.1) 19.1
Separately disclosed
items (9.1) (51.7) (67.1) (4.2) 3.2 (128.9)
-------- ---------- -------- -------- -------- --------
Segment result 4.7 (35.4) (74.1) 4.9 (9.9) (109.8)
----------------------- -------- ---------- -------- -------- -------- --------
Finance costs (12.6)
Finance income 0.8
Other financial
losses (1.1)
----------------------- -------- ---------- -------- -------- -------- --------
Loss before taxation (122.7)
Taxation 27.1
----------------------- -------- ---------- -------- -------- -------- --------
Loss for the year
from continuing
operations (95.6)
----------------------- -------- ---------- -------- -------- -------- --------
Year ended 30 June 2022 (restated and re-presented)
--------------------------------------------------------------
Grosvenor Mecca Enracha Central
Digital Venues Venues Venues Costs Total
GBPm GBPm GBPm GBPm GBPm GBPm
--------- --------- -------- -------- -------
Continuing operations
Revenue 183.3 296.6 134.0 30.1 - 644.0
Other operating
income - 2.6 1.0 - - 3.6
Underlying operating
profit* 13.3 36.2 (7.7) 7.4 (10.7) 38.5
Separately disclosed
items (14.5) 15.5 34.4 7.6 (0.7) 42.3
--------- ----------- --------- -------- -------- -------
Segment result (1.2) 51.7 26.7 15.0 (11.4) 80.8
------------------------ --------- ----------- --------- -------- -------- -------
Finance costs (13.1)
Finance income 0.1
Other financial
gains 5.2
------------------------ --------- ----------- --------- -------- -------- -------
Profit before taxation 73.0
Taxation (16.9)
------------------------ --------- ----------- --------- -------- -------- -------
Profit for the
year from continuing
operations 56.1
------------------------ --------- ----------- --------- -------- -------- -------
*During the year, the Group undertook a review of the Group's
central costs and has concluded that a proportion of them, which
are directly attributable to the relevant business units, should be
allocated to those business units, better reflecting the underlying
profitability of each segment. This resulted in changes in the
underlying profit (loss) of each business segment in the prior year
which has been re-presented in the table above.
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 2023
----------------------------------------------------------
Grosvenor Mecca Enracha Central
Digital Venues Venues Venues Costs Total
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------- -------- ---------- -------- -------- -------- ------
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 7.8 29.0 26.4 0.1 1.0 64.3
----------------------- -------- ---------- -------- -------- -------- ------
Total costs before
separately disclosed
items 189.1 290.0 143.3 27.3 13.1 662.8
----------------------- -------- ---------- -------- -------- -------- ------
Cost of sales 409.0
Operating costs 253.8
----------------------- -------- ---------- -------- -------- -------- ------
Total costs before
separately disclosed
items 662.8
----------------------- -------- ---------- -------- -------- -------- ------
Year ended 30 June 2022 (restated and re-presented)
--------------------------------------------------------------
Grosvenor Mecca Enracha Central
Digital Venues Venues Venues Costs Total
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------- --------- ----------- --------- --------- -------- ------
Employment and
related costs 27.8 109.0 47.3 14.7 6.9 205.7
Taxes and duties 40.7 61.0 25.6 1.6 0.2 129.1
Direct costs 49.4 23.6 19.9 2.4 - 95.3
Depreciation and
amortisation 13.4 33.3 16.0 1.3 3.4 67.4
Marketing 33.2 5.9 5.8 1.7 0.1 46.7
Property costs 0.5 9.5 4.5 0.6 0.9 16.0
Other 5.0 20.7 23.6 0.4 (0.8) 48.9
----------------------- --------- ----------- --------- --------- -------- ------
Total costs before
separately disclosed
items 170.0 263.0 142.7 22.7 10.7 609.1
----------------------- --------- ----------- --------- --------- -------- ------
Cost of sales 386.5
Operating costs 222.6
----------------------- --------- ----------- --------- --------- -------- ------
Total costs before
separately disclosed
items 609.1
----------------------- --------- ----------- --------- --------- -------- ------
3. Separately disclosed items
Year ended Year ended
30 June 30 June
2023 2022
GBPm GBPm
---------------------------------------------- ----------- -----------
Continuing operations
Impairment charges (118.9) (47.8)
Impairment reversals 6.6 22.0
Closure of venues (7.7) (4.7)
Amortisation of acquired intangible assets (8.6) (11.7)
Integration costs (0.1) (2.8)
Business transformation costs (2.0) (0.9)
VAT claim - net of costs - 77.1
Property-related provision (1.9) 10.4
Disposal provision release 3.7
Gain on remeasurement of previously existing
interest in joint venture - 0.8
Acquisition and disposal related costs - (0.1)
Separately disclosed items (1) (128.9) 42.3
Interest (0.6) 5.6
Taxation (see note 5) 27.7 (10.5)
Separately disclosed items relating to
continuing operations(1) (101.8) 37.4
Separately disclosed items relating to
discontinued operations(1)
Profit on disposal of business 0.3 8.8
Total separately disclosed items (101.5) 46.2
---------------------------------------------- ----------- -----------
(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
GBP118.9m (2022: GBP47.8m) relating to Grosvenor and Enracha venues
and Mecca clubs. Following the last assessment made on 31 December
2022 where impairment charges of GBP95.4m were recognised, the
Group recognised a further GBP23.5m impairment charge for the
period 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 GBP6.6m (2022: GBP22.0m Grosvenor and Enracha venues)
relating to Grosvenor venues. The reversals were driven by better
than anticipated performance and improved outlook in the identified
Grosvenor venues.
These items are material, non-recurring and as such, have been
excluded from underlying results.
Closure of venues
During the year, the Group made the decision to close a number
of Grosvenor (GBP3.0m), Mecca venues (GBP3.1m) and an Enracha venue
(GBP0.1m) at a total cost of GBP6.2m (2022: GBP4.7m relating to a
number of Mecca venues). 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.
The items also includes specific dilapidation costs for recently
closed clubs. This includes a specific dilapidation cost for
recently closed clubs estimated at GBP1.5m.
These are material, one -off costs 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 GBP8.6m (2022: GBP11.7m)
relating to the acquired intangible assets of Stride, YoBingo and
Rialto.
Integration costs
During the year, GBP0.1m of costs (2022: GBP2.8m) have been
excluded from the underlying operating results of the Group. These
costs have been incurred to ready the RIDE proprietary platform,
acquired in the Stride acquisition, to migrate the legacy Rank
brands. Meccabingo.com successfully migrated in January 2022 and
grosvenorcasinos.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 was started
in January 2019 and expected to complete by 31 December 2021 but
due to COVID-19 this period was extended. The multi-year change
programme was a material, infrequent programme and was not
considered to be part of the underlying business performance.
During the year GBP2.0m of costs were 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.
VAT claim
On 30 June 2021, the Group was informed that the First-tier
Tribunal ('FTT') had allowed the appeal of the Group on its claim
to be refunded VAT paid on the takings from gaming machines during
the period April 2006 to January 2013. Whilst this was a positive
decision for the Group, HMRC had a number of avenues of appeal
before this matter reached a definitive conclusion, beginning with
an initial 56-day period from the date of decision in which to
lodge an appeal and agree the exact guarantee of the claim with the
Group. Due to this, the transaction was disclosed as contingent
assets in the Group's Annual Report for the year ending 30 June
2021.
On 2 December 2021, the refund was received in relation to this
claim comprising GBP77.5m principal and interest of GBP5.6m, with
costs directly incurred amounting to GBP0.4m. This confirms the
closure of the claim and the Group assessed no further appeal
opportunities to any parties.
This is a material, one-off amount and as such has been excluded
from underlying results.
Property related provisions
The Group recognised a dilapidation liability (and corresponding
dilapidation asset) of GBP28.7m during the period ending 31
December 2022. As a result, the Group have recognised dilapidation
asset depreciation of GBP1.9m (2022: GBPnil) and interest on
dilapidation liability of GBP0.6m (2022: GBPnil) 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
closure 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 GBP10.4m
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 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.
Disposal provision release
In prior years, provision has been made for legacy industrial
disease and personal injury claims, and other directly attributable
costs arising as a consequence of the sale or closure of previously
owned businesses.
During the 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 GBP3.7m
for the year.
Gain on remeasurement of previously existing interest in joint
venture
During the prior year, a gain of GBP0.8m was recognised on the
remeasurement of the previously existing interest in a joint
venture following the completion of the purchase of Rank
Interactive Limited (previously Aspers Online Limited), see note
16.
The gain is infrequent in nature and does not represent
underlying performance and has been excluded from underlying
results.
Acquisition and disposal related costs
Acquisition and disposal related costs include non-recurring
costs to professional firms that have resulted from acquisition or
potential disposal of a subsidiary. This has been presented as a
separately disclosed item due to its one-off nature.
Profit on disposal of business
Charges or credits associated with the disposal of part or all
of a business may arise. Such disposals may result in one time
impacts that in order to allow comparability means the Group
removes the profit or loss from the underlying operating
results.
The Group also made the decision to release GBP0.3m of the
warranty provision associated with the Belgium casino sale due to
the passage of time.
Taxation
The tax impact of all of the above items are also considered not
to be part of the underlying operations of the Group.
4. Financing
Year ended Year ended
30 June 30 June
2023 2022
GBPm GBPm
---------------------------------------------- ----------- -----------
Continuing operations
Finance costs:
Interest on debt and borrowings (4.8) (4.5)
Amortisation of issue costs on borrowings (1.3) (1.9)
Interest payable on leases (6.5) (6.7)
---------------------------------------------- ----------- -----------
Total finance costs (12.6) (13.1)
Finance income:
Interest income on net investments in leases 0.1 0.1
Interest on short-term bank deposits 0.7 -
---------------------------------------------- ----------- -----------
Total finance income 0.8 0.1
Other financial losses (0.5) (0.4)
Total net financing charge before separately
disclosed items (12.3) (13.4)
Separately disclosed items - interest (0.6) 5.6
Total net financing charge (12.9) (7.8)
---------------------------------------------- ----------- -----------
5. Taxation
Year
ended Year ended
30 June 30 June
2023 2022
GBPm GBPm
--------------------------------------------- --------- -----------
Current income tax
Current income tax - UK 1.3 (0.7)
Current income tax - overseas (2.0) (3.5)
Current income tax on separately disclosed
items 2.6 (3.3)
Amounts over (under) provided in previous
period 0.1 (5.4)
Total current income tax credit (charge) 2.0 (12.9)
--------------------------------------------- --------- -----------
Deferred tax
Deferred tax - UK (5.8) 0.2
Deferred tax - overseas 0.1 (1.4)
Impact of rate changes on deferred tax 5.7 (0.2)
Deferred tax on separately disclosed items 25.1 (7.2)
Amounts over provided in previous period - 4.6
Total deferred tax credit (charge) 25.1 (4.0)
--------------------------------------------- --------- -----------
Tax credit (charge) in the income statement 27.1 (16.9)
--------------------------------------------- --------- -----------
Tax on separately disclosed items
The taxation impacts of separately disclosed items are disclosed
below:
Year ended 30 June Year ended 30 June
2023 2022
--------------------------- ----------------------------
Current Current
income Deferred income Deferred
tax tax Total tax tax Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- -------- --------- ------ -------- --------- -------
VAT claim - net of costs - - - (4.6) (11.1) (15.7)
Net impairment charges 2.0 23.2 25.2 1.3 3.3 4.6
Property related provisions 0.2 0.7 0.9 (0.6) (1.4) (2.0)
Amortisation of acquired intangible
assets - 1.3 1.3 - 1.1 1.1
Closure of venues 0.2 1.3 1.5 0.5 0.4 0.9
Integration costs 0.1 (1.8) (1.7) 0.1 0.3 0.4
Business transformation costs 0.1 0.4 0.5 - 0.2 0.2
------------------------------------- -------- --------- ------ -------- --------- -------
Tax credit (charge) on separately
disclosed items 2.6 25.1 27.7 (3.3) (7.2) (10.5)
------------------------------------- -------- --------- ------ -------- --------- -------
Factors affecting future taxation
The Group operates in a number of territories and so the Group's
profits are subject to tax in various jurisdictions. The Group
monitors income tax developments in these territories which could
affect the Group's tax liabilities.
On 20 June 2023 the UK Finance Bill was substantively enacted in
the UK, including legislation to implement the OECD Pillar Two
income taxes for periods beginning on or after 1 January 2024. The
Group has applied the exception in the Amendments to IAS 12 issued
in May 2023 and has neither recognised nor disclosed information
about deferred tax assets or liabilities relating to Pillar Two
income taxes.
UK corporation tax is calculated at 20.50% (year ended 30 June
2022: 19.00%) of the estimated assessable profit for the period.
Taxation for overseas operations is calculated at the local
prevailing rates.
On 3 March 2021, the Chancellor of the Exchequer announced the
increase in the main rate of UK corporation tax from 19.00% to
25.00% for the year starting 1 April 2023. This change was
substantively enacted on 24 May 2021.
This rate increase will increase the amount of cash tax payments
to be made by the Group.
6. Dividends paid to equity holders
No dividend in respect of the year ended 30 June 2023 will be
recommended at the Annual General Meeting on 19 October 2023 (year
ended 30 June 2022: nil).
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
2023 2022
(restated)
GBPm GBPm
--------------------------------------------------- ----------- -----------
(Loss) profit attributable to equity shareholders (95.7) 64.9
Adjust for:
Separately disclosed items after tax 101.5 (46.2)
Underlying net earnings attributable to equity
shareholders 5.8 18.7
Continuing operations 5.8 18.7
Discontinued operations - -
Weighted average number of ordinary shares
in issue 468.4m 468.4m
Underlying earnings per share (p) - basic 1.2p 4.0p
Continuing operations 1.2p 4.0p
Discontinued operations - -
Underlying earnings per share (p) - diluted 1.2p 4.0p
Continuing operations 1.2p 4.0p
Discontinued operations - -
--------------------------------------------------- ----------- -----------
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.
During the year, Mecca clubs and Grosvenor and Enracha venues
had indicators of impairment, primarily caused by lower than
anticipated performance post the pandemic, and low level of
forecast earnings, or a decision to close venues. This further
resulted to a decision to close a Grosvenor venue and a number of
Mecca clubs which resulted in an impairment of GBP7.1m.
The Group also recognised a reversal of previously impaired
assets of GBP6.6m relating to Grosvenor venues (FY22: GBP22m
relating to Grosvenor and Enracha venues). The reversals were
driven by better than anticipated performance and improved outlook
in the identified Grosvenor and Enracha venues.
The impairment test was conducted in June 2023, and management
is satisfied that the assumptions used were appropriate.
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 five year period
ending 30 June 2027. Future cash flows will also include an
estimate of long-term growth rates which are estimated by business
unit.
Pre-tax discount rates were re-assessed at 30 June 2023 and 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 Long-term
rate growth rate
------------------- ------------------
2022/23 2021/22 2022/23 2021/22
----------------------- --------- -------- -------- --------
Grosvenor venues 12.17% 11.3% 2% 2%
Mecca venues 12.17% 11.3% 0% 0%
UK digital 12.57% 13.0% 2% 2%
International digital 12.63% 14.7% 2% 2%
Enracha 13.83% 12.5% 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
GBPm GBPm GBPm GBPm
------------------------ ----------- ------------- ----------- --------
Impairment charges
Grosvenor venues(1) (18.9) (7.5) (26.9) (53.3)
Mecca venues (2) (31.8) (29.7) - (61.5)
Enracha venues(3) (0.9) (2.4) (0.8) (4.1)
------------------------ ----------- ------------- ----------- --------
(51.6) (39.6) (27.7) (118.9)
Impairment reversals
Grosvenor venues(1) 4.3 2.3 - 6.6
4.3 2.3 - 6.6
( 112
At the end of the year (47.3) (37.3) (27.7) .3)
------------------------ ----------- ------------- ----------- --------
(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 GBP108.7m.
(2) Impairment charge and reversal are recorded at the different
Mecca venue CGUs. The total value in use of the CGUs where an
impairment charge or impairment reversal was recognised totalled to
GBP13.4m.
(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 GBP60.1m.
9. Government grants
As at As at
30 June 30 June
2023 2022
GBPm GBPm
-------------------------- --------- --------
At the start of the year - 0.8
-------------------------- --------- --------
Receivable in the year - 3.6
Cash received - (4.4)
At the end of the year - -
-------------------------- --------- --------
10. Provisions
Property Indirect
related Disposal tax Pay Warranty
provisions provisions provision provision provision Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ----------- ----------- ---------- ---------- ---------- ------
At 1 July 2022 6.8 3.9 1.2 0.1 0.5 12.5
Created 28.7 - - - - 28.7
Charge to the income
statement - separately
disclosed items 7.4 - - - - 7.4
Release to the income
statement - separately
disclosed items (3.2) (3.7) - - (0.3) (7.2)
Utilised in the
year (2.4) - - - - (2.4)
------------------------- ----------- ----------- ---------- ---------- ---------- ------
At 30 June 2023 37.3 0.2 1.2 0.1 0.2 39.0
------------------------- ----------- ----------- ---------- ---------- ---------- ------
Current 5.6 0.2 1.2 0.1 0.2 7.3
Non-current 31.7 - - - - 31.7
------------------------- ----------- ----------- ---------- ---------- ---------- ------
Total 37.3 0.2 1.2 0.1 0.2 39.0
------------------------- ----------- ----------- ---------- ---------- ---------- ------
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
As at 30 June 2023 2022
--------------------- ------------------
Nominal Nominal
Number value Number Value
m GBPm m GBPm
---------------------------- ---------- --------- -------- --------
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
Shares issued in year - - - -
---------------------------- ---------- --------- -------- --------
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
Shares issued in year - - - -
---------------------------- ---------- --------- -------- --------
At end of the year 468.4 155.7 468.4 155.7
---------------------------- ---------- --------- -------- --------
Total shares in issue at 30 June 2023 are 468,429,541 (2022:
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
2023 2022
GBPm GBPm
---------------------------------------------- --------- ---------
Total loans and borrowings (62.2) (78.0)
Adjusted for:
Accrued interest 0.4 0.5
Unamortised facility fees (0.6) (1.3)
---------------------------------------------- --------- ---------
(62.4) (78.8)
Cash and short-term deposits 58.5 95.7
---------------------------------------------- --------- ---------
Net debt excluding IFRS 16 lease liabilities (3.9) 16.9
---------------------------------------------- --------- ---------
Lease liabilities (169.0) (181.7)
---------------------------------------------- --------- ---------
Net debt (172.9) (164.8)
---------------------------------------------- --------- ---------
13. Notes to cash flow
Year ended Year ended
30 June 30 June
2023 2022
GBPm GBPm
(restated)
--------------------------------------------------- ----------- -----------
(Loss) profit for the year (95.3) 64.9
Adjustments for:
Depreciation and amortisation 60.1 67.4
Amortisation of arrangement fees 1.3 -
Loss on disposal of assets 0.2 -
Net financing charge 12.3 13.4
Income tax expense 0.6 6.4
Share-based payments 1.1 (0.3)
Separately disclosed items 101.5 (46.2)
--------------------------------------------------- ----------- -----------
81.8 105.6
--------------------------------------------------- ----------- -----------
Decrease (increase) in inventories 0.2 (0.3)
Decrease (increase) in other receivables 11.2 (18.4)
(Decrease) increase in trade and other payables (8.4) 12.5
--------------------------------------------------- ----------- -----------
84.8 99.4
Cash utilisation of provisions (2.4) (1.8)
Cash (payments) receipts in respect of separately
disclosed items (7.1) 72.4
--------------------------------------------------- ----------- -----------
Cash generated from operations 75.3 170.0
--------------------------------------------------- ----------- -----------
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 2023, 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 GBP0.8m 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 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 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 outflows.
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 of
GBP1.3m. Of this consideration, GBP0.5m was paid in cash on
completion in lieu of the outstanding loan balance the Group owed
to the seller and GBP0.8m in contingent consideration included in
Trade and other payables of the Group balance sheet. The contingent
consideration will be equivalent to a percentage of the net gaming
revenue generated from the acquired customer database. A present
value of GBP0.8m has been provisionally recognised for the
contingent consideration and is dependent upon the date a competing
online gaming operation is established.
At 30 June 2023, the Group settled GBP0.4m of the contingent
consideration leaving a balance of GBP0.4m.
15. Related party transactions and ultimate parent undertaking
Guoco Group Limited ('Guoco'), a company incorporated in
Bermuda, and listed on the Hong Kong Stock Exchange has a
controlling interest in The Rank Group Plc. The ultimate parent
undertaking of Guoco is GuoLine Capital Assets Limited ('GuoLine')
which is incorporated in Jersey. At 30 June 2023, entities
controlled by GuoLine owned 57.4% (30 June 2022: 56.1%) of the
Company's shares, including 53.3% (30 June 2022: 52.0%) through
Guoco's wholly-owned subsidiary, Rank Assets Limited, the Company's
immediate parent undertaking. Hong Leong Company (Malaysia) Berhad
('Hong Leong') was the ultimate parent company of Guoco until 16
April 2021 whereupon, following an internal restructure, GuoLine
became the ultimate parent company of Guoco.
16. Acquisition of subsidiary undertakings
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 of
GBP1.3m. Of this consideration, GBP0.5m was paid in cash on
completion in lieu of the outstanding loan balance the Group owed
to the seller and GBP0.8m 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 GBP0.8m has been provisionally recognised for the
contingent consideration and is dependent upon the date a competing
online gaming operation is established.
At the date of acquisition, the fair value of assets acquired
and liabilities assumed, goodwill and consideration, including the
fair value of the Group's pre-acquisition 50% shareholding at the
acquisition date, are outlined below. The fair value of operational
cash and trade and other payables totalling GBP0.5m corresponds to
their book value.
GBPm
-------------------------- ------
Customer relationships 1.4
Cash 0.1
Trade and other payables (0.6)
Deferred tax liability (0.4)
--------------------------- ------
Net assets acquired 0.5
Goodwill 2.1
--------------------------- ------
Total consideration 2.6
--------------------------- ------
The goodwill consists of future revenue opportunities
attributable to new customers, the new brands and development of
technology and amounts that are required for general operational
purposes. No amount of the goodwill recognised is expected to be
deductible for tax purposes.
At the date of acquisition, the Group recognised a gain of
GBP0.8m on remeasurement of its pre-acquisition 50% shareholding
and acquisition related costs of GBP0.02m both of which were
recognised as separately disclosed items in the Group income
statement.
In the year ended 30 June 2022, Rank Interactive Limited
contributed statutory revenue of GBP0.8m and profit before tax of
GBPnil. If the acquisition had occurred at the beginning of the
year, the continuing statutory revenues of the entity in the 12
months to 30 June 2022 would have been GBP6.1m and loss before tax
would have been GBP0.2m.
At 30 June 2023, the Group settled GBP0.4m of the contingent
consideration leaving a balance of GBP0.4m.
17. Post balance sheet events
In August 2023, the Group secured a financing package which
totalled GBP100m of revolving credit facilities. GBP25m is
committed until November 2024 and the remaining GBP75m is committed
until February 2025. The Group subsequently repaid the remaining
term loan of GBP44.4m.
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END
FR ZZGMRZVLGFZZ
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August 17, 2023 02:00 ET (06:00 GMT)
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