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Share Name Share Symbol Market Type Share ISIN Share Description
Rank Grp. LSE:RNK London Ordinary Share GB00B1L5QH97 ORD 13 8/9P
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Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Travel & Leisure 691.0 46.7 9.2 17.0 609.46

Rank Group PLC Half-year Report

31/01/2019 7:01am

UK Regulatory (RNS & others)


Rank Group (LSE:RNK)
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3 Months : From Jan 2019 to Apr 2019

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Rank Group PLC

31 January 2019

LEI: 213800TXKD6XZWOFTE12

31 January 2019

The Rank Group Plc ("Rank" or the "Group")

Interim results for the six months ended 31 December 2018

Full year outlook in line

Financial highlights

 
                                                       H1 2018/19    H1 2017/18     Change 
                                                                   ------------ 
  Financial 
   KPIs            Group like-for-like revenue          GBP366.0m     GBP375.0m     (2.4)% 
                 ----------------------------------  ------------  ------------  --------- 
   Digital like-for-like revenue                         GBP63.9m      GBP60.8m       5.1% 
 --------------------------------------------------  ------------  ------------  --------- 
   Digital revenue                                       GBP70.4m      GBP60.8m      15.8% 
 --------------------------------------------------  ------------  ------------  --------- 
   Venues like-for-like revenue                         GBP302.1m     GBP314.2m     (3.9)% 
 --------------------------------------------------  ------------  ------------  --------- 
   Group EBITDA before exceptional 
    items                                                GBP52.3m      GBP63.3m    (17.4)% 
 --------------------------------------------------  ------------  ------------  --------- 
   Group operating profit before 
    exceptional items                                    GBP30.3m      GBP41.7m    (27.3)% 
 --------------------------------------------------  ------------  ------------  --------- 
   Adjusted profit before tax                            GBP29.1m      GBP40.2m    (27.6)% 
 --------------------------------------------------  ------------  ------------  --------- 
   Adjusted earnings per share                               6.1p          8.0p    (23.8)% 
 --------------------------------------------------  ------------  ------------  --------- 
  Statutory 
   performance     Statutory revenue                    GBP348.2m     GBP354.2m     (1.7)% 
                 ----------------------------------  ------------  ------------  --------- 
   Group operating profit                                GBP25.8m      GBP34.2m    (24.6)% 
 --------------------------------------------------  ------------  ------------  --------- 
   Profit before taxation                                GBP22.8m      GBP32.8m    (30.5)% 
 --------------------------------------------------  ------------  ------------  --------- 
   Cash generated from operations                        GBP56.0m      GBP61.9m     (9.5)% 
 --------------------------------------------------  ------------  ------------  --------- 
                   Net cash                               GBP7.7m       GBP4.0m          - 
                 ----------------------------------  ------------  ------------  --------- 
   Basic earnings per share 
    after exceptional items                                  4.8p          6.4p    (25.0)% 
 --------------------------------------------------  ------------  ------------  --------- 
   Dividend per share                                       2.15p         2.15p         0% 
 --------------------------------------------------  ------------  ------------  --------- 
 

Operational highlights

-- Digital revenue improved in the period with Mecca and Grosvenor continuing to grow customer volumes

   --      YoBingo! performing ahead of acquisition plan 

-- Grosvenor venues impacted by reduced contribution from major players, a weather impacted Q1 and

challenging   consumer back drop 

-- Key casino investments at the Barracuda and new gaming machines and electronic roulette across the estate

-- Grosvenor's single account and wallet offer, Grosvenor One, successfully trialled in the period; rollout

scheduled by   the end of FY 2018/19 
   --      Transformation programme launched and gaining momentum 

Outlook

   --      Trading in the short four week period to 27 January in line with management's expectations 
   --      Full year performance expected to be in line with current consensus 

-- Total Group cost savings of GBP10m identified for H2 2018/19, with a full year net benefit of GBP19m

expected in FY   2019/20 

John O'Reilly, Chief Executive of The Rank Group Plc said:

"The first half of our financial year has been a tough trading period, I am however encouraged by the Group's improved performance in Q2. The three year transformation programme that we outlined at our Full Year results in August 2018 is now well underway with nearly 300 initiatives identified and tasked. The programme will gain further momentum in H2 2018/19 and the management team is positive about what can be achieved. While there is lots to be done to deliver the revenue improvements and cost efficiencies identified, I am confident in the outlook for Rank and excited about the opportunities that exist."

Ends

Definition of terms:

-- Any reference to revenue or like-for-like group revenue is before adjustment for customer incentives;

   --       EBITDA is operating profit before exceptional items, depreciation and amortisation; 

-- Adjusted profit before tax is profit from continuing operations before taxation adjusted to exclude exceptional items and other financial gains or losses resulting from foreign exchange gains and losses on loans and borrowings. See Financial Review for reconciliation;

-- Adjusted earnings per share is calculated by adjusting profit attributable to equity shareholders to exclude exceptional items, other financial gains or losses, unwinding of the discount rate in the disposal provisions and the related tax effects as detailed in note 7;

-- "H1 2018/19" refers to the unaudited six-month period to 31 December 2018 and "H1 2017/18" refers to the unaudited six-month period to 31 December 2017;

-- Like-for-like measures have been disclosed in this report to show the impact of club openings, closures, and relocations;

-- Prior period like-for-like measures are amended to show an appropriate comparative for the impact of club openings, closures, relocations, acquired businesses and discontinued operations;

-- The Group results make reference to "'adjusted" 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 exceptional items and other adjustments impair visibility of the underlying performance of the Group's business and accordingly, these are excluded from our non-GAAP measurement of revenue, profit before tax, EBITDA, operating profit and EPS. Adjusted measures are the same as those used for internal reports;

   --       Venues includes Grosvenor Venues, Mecca Venues and International Venues; and 

-- The Group reports segmental information on the basis by which the chief operating decision maker utilises internal reporting within the business. In the current year, the internal reporting of the operating segments has been modified following changes in management responsibilities. As from 1 July 2018, UK Digital, Enracha Digital and YoBingo! were combined into a single operating segment which is now known as Digital. Enracha Venues and Belgium were also combined into a single operating segment which is now known as International Venues. All prior period comparables have been restated to reflect these changes.

Enquiries

 
  The Rank Group Plc 
  Sarah Powell, director of investor    Tel: 01628 504 303 
   relations and communications 
 
  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 31 January 2019

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.

Chief executive's review

The key management focus in H1 2018/19 has been the development of the Group's transformation programme. The planning phase concluded in November 2018 with the programme formally launched within the business in December 2018. This is a three year change programme for the Group focussed around revenue growth, cost savings/efficiencies and ensuring the key enablers including organisational capability, core technology and key processes and systems are in place. A number of key initiatives are now well underway and the programme will gain further momentum in H2 2018/19.

After a difficult Q1 2018/19, the Group's performance improved during Q2 2018/19, with like-for-like Group revenues(1,3) down 2.4% for H1 2018/19, compared to the 4.7% decline in Q1 2018/19. The Group's digital business grew by 15.8% in the period driven by Mecca and YoBingo!. However, the period continued to be challenging for the Group's UK retail businesses with like-for-like revenue(1,3) down 4.2%.

Total Grosvenor venues revenue(1) was down 5.1% in the period, with like-for-like revenue(1,3) down 4.7%. Performance was principally driven by a lower contribution from its major players, both handle and win margin, the challenging consumer backdrop and a weather impacted Q1. Total and like-for-like operating profit(4) fell by 33.8% and 35.0% respectively in the period, due to lower revenues. As part of the transformation programme changes were introduced to simplify casino management structures and reduce labour hours. These changes are expected to result in approximately GBP7.5m of labour savings in H2 2018/19. Further detail on the transformation programme is outlined later in this review.

Mecca's like-for-like revenue(1,3) was down 3.3% in the period driven by a 11.8% decline in like-for-like customer visits. Total revenue(1) fell by 3.9%. Total operating profit(4) fell by 10.2%; excluding the impact of closed sites and the three Luda venues, like-for-like operating profit(3,4) fell by 7.6%. Changes to the customer offer continued to be developed in the period with the successful trial of a new price and prize board policy aimed at giving customers additional value at the lower attended midweek sessions and guaranteeing bigger prize boards across the weekend.

Like-for-like digital revenue(1,3) grew by 5.1%, driven by an improved performance from Mecca. Total digital revenue(1) was up 15.8% in the period following the contribution from YoBingo!. YoBingo! performed strongly in the period with revenues up 41.0% and continued to grow its share of the Spanish digital bingo market(2) , up 4.9ppts to 42.1%. The contribution from YoBingo! helped grow total digital operating profit(4) by 5.8%. Like-for-like operating profit(3,4) fell by 1.9% following the increase in UK Remote Gaming Duty ('RGD') on customer bonuses, which resulted in GBP0.9m of incremental RGD in the period.

Like-for-like international venues revenue(1,3) was broadly flat in the period.

 
   GBPm                             Group Revenue(1)                   LFL Group Revenue(1,3) 
                           H1 2018/19    H1 2017/18    Change    H1 2018/19    H1 2017/18    Change 
                         ------------  ------------  --------  ------------  ------------  -------- 
  Grosvenor venues              181.4         191.2    (5.1)%         181.3         190.2    (4.7)% 
                         ------------  ------------  --------  ------------  ------------  -------- 
  Mecca venues                  100.0         104.1    (3.9)%          98.3         101.7    (3.3)% 
                         ------------  ------------  --------  ------------  ------------  -------- 
  Digital                        70.4          60.8     15.8%          63.9          60.8      5.1% 
                         ------------  ------------  --------  ------------  ------------  -------- 
  International venues           22.6          23.5    (3.8)%          22.5          22.3      0.9% 
                         ------------  ------------  --------  ------------  ------------  -------- 
  Total                         374.4         379.6    (1.4)%         366.0         375.0    (2.4)% 
                         ------------  ------------  --------  ------------  ------------  -------- 
 
 
  GBPm                             Operating Profit(4)                 LFL Operating Profit(3,4) 
                           H1 2018/19    H1 2017/18     Change    H1 2018/19    H1 2017/18     Change 
                         ------------  ------------  ---------  ------------  ------------  --------- 
  Grosvenor venues               19.4          29.3    (33.8)%          19.3          29.7    (35.0)% 
                         ------------  ------------  ---------  ------------  ------------  --------- 
  Mecca venues                   11.4          12.7    (10.2)%          12.1          13.1     (7.6)% 
                         ------------  ------------  ---------  ------------  ------------  --------- 
  Digital                        11.0          10.4       5.8%          10.2          10.4     (1.9)% 
                         ------------  ------------  ---------  ------------  ------------  --------- 
  International venues            4.1           4.3     (4.7)%           4.1           4.1         0% 
                         ------------  ------------  ---------  ------------  ------------  --------- 
  Central costs                (15.6)        (15.0)       4.0%        (15.6)        (15.0)       4.0% 
                         ------------  ------------  ---------  ------------  ------------  --------- 
  Total                          30.3          41.7    (27.3)%          30.1          42.3    (28.8)% 
                         ------------  ------------  ---------  ------------  ------------  --------- 
 

1 Before adjustments for customer incentives.

2 As per Spanish market data at September 2018.

3 Excludes the impact of any venue closures, opening, relocations or acquired businesses.

4 Before exceptional items.

Exceptional items, before tax and financing charges, were GBP4.5m in the period. GBP3.8m of the costs relate to redundancies made across the Group.

H2 exceptional costs relating to the transformation programme are expected to be broadly in line with those in H1 as further cost efficiencies are made.

Acquisition of YoBingo!

In May 2018, we completed the acquisition of QSB Gaming Limited, the owner of YoBingo!, a leading Spanish digital bingo business for an initial consideration of EUR23.1m and, subject to future performance, up to a maximum consideration of EUR52.0m. The acquisition of YoBingo! provides Rank with a secure and strong digital bingo presence in Spain, a high growth and regulated digital gaming market.

YoBingo!'s performance continues to be in line with management's expectations and further consideration is due to be paid in H2 2018/19. Total consideration is expected to be close to or at the cap of EUR52.0m and is expected to be funded from existing cash and debt facilities.

Transformation Programme

The framework for driving change within Rank is the transformation programme. The framework provides a clear view on the performance of the business against the programme. The programme contains 12 distinct workstreams, each owned by one of the senior executive team and supported by the transformation team, with nearly 300 separate initiatives, each with clear milestones.

Each initiative has been validated in terms of its financial contribution and timetabled with clear responsibilities and accountabilities for its delivery. The programme follows a strict cadence with weekly management progress reviews, to ensure each initiative is on track and that corrective actions are taken where required. The programme runs deep through the organisation such that it creates a clearly understood plan of action, the delivery of which everyone can follow.

The 12 workstreams are centred around revenue growth, cost reduction and key enablers.

Revenue growth workstreams

   1.     Improve our marketing effectiveness; 
   2.     Materially grow our digital business; 
   3.     Identify and progress our international strategic opportunities; 
   4.     Development of the Grosvenor venues proposition; and 
   5.     Stabilisation of Mecca venues. 

Cost reduction workstreams

   6.     Review of our UK retail operating model; 
   7.     Review and identify opportunities for both our freeholds and leaseholds; 
   8.     Drive and secure procurement efficiencies; and 
   9.     Create 'fit for purpose' support functions. 

Key enabler workstreams

10. Prioritisation of our critical systems to ensure key projects are delivered on time and to budget;

11. Improve our data analytics; and

12. Reinvigorate Rank's culture and capability.

Total costs savings for H2 2018/19 are expected to be GBP10.0m; with GBP7.5m coming from employee changes in our casinos, GBP2.0m from changes to our support office functions and GBP0.5m from procurement efficiencies. There will be a flow through of these costs savings into the next financial year and we expect the total net savings to be circa GBP19.0m for 2019/20.

Further detail on what has been delivered in the period and the plans for H2 2018/19 can be found in the Our Strategy section.

Management team changes

Chief Information Officer

Jonathan Greensted joined the Group on 13 August 2018 as chief information officer. Jonathan is a highly experienced IT and programme director and brings with him over 20 years' experience across a variety of sectors. Jonathan joined us from Travelodge where he was their chief technology officer.

Chief Transformation Officer

Jim Marsh joined the Group on 1 October 2018 as chief transformation officer. Jim has led and delivered transformations in a variety of sectors. He joined us from McKinsey & Company where he was a partner in its transformation team.

Chief Financial Officer

Bill Floydd joined the Group on 12 November 2018 as chief financial officer. Bill has successfully led business turnaround and finance transformation projects in other listed organisations. Bill joins us from Experian plc where he was CFO for its UK and Ireland region.

Board changes

Richard Kilmorey

The Rt. Hon. The Earl of Kilmorey, PC did not seek re-election at the 2018 annual general meeting and therefore stepped down during the period having completed over six years on the Board.

Tang Hong Cheong

Post period, on the 15 January 2019, Hong Cheong , a director of Rank's major shareholder, was appointed to the Board. Hong Cheong has been working with the management of Rank since 2010 and has a broad understanding of the operation, finance and business aspects of Rank. The appointment of Hong Cheong will further enhance the communication between Rank and its major shareholder.

Regulation and taxation

The anticipated increase in UK Remote Gaming Duty from 15% to 21% was announced in the Chancellor's 2018 Budget and comes into effect from April 2019. Based on revenues for FY 2017/18 it is expected to result in additional RGD of GBP6.6m per annum.

Brexit

The decision made by the United Kingdom to leave the European Union, or 'Brexit' as it has become known, means that like other businesses operating in the UK, Rank must prepare for the changes that this decision might bring.

Rank has considered how Brexit might impact the Group and the overall conclusion is that it is reasonably well positioned based on the nature of the sector and geographies in which it operates. However, we remain cautious in light of the unknown economic impact of Brexit on consumer expenditure.

Current trading and outlook

Trading in the short four-week period to 27 January 2019 has been in line with management's expectations.

The Group does not expect any material improvement to the challenging consumer environment over the short to medium term, however driven by the transformation programme, the Group's financial performance for FY 2018/19 is expected to be in line with the current consensus expectations with circa GBP10.0m of total cost savings scheduled for H2.

Dividend

The board is pleased to declare an interim dividend of 2.15 pence per share to be paid on 14 March 2019 to shareholders on the register at 15 February 2019.

Operating Review

Grosvenor Venues

As from 1 July 2018, Grosvenor Venues excludes the contribution from its Belgium casino which is now reported under International Venues.

H1 2018/19 continued to be challenging for Grosvenor's casinos, with like-for-like revenue(1,2) down 4.7%.

Key financial performance indicators

 
                            H1 2018/19    H1 2017/18     Change 
  Revenue(1,2) (GBPm)            181.3         190.2     (4.7)% 
   London(4)                      68.6          70.4     (2.6)% 
   Provinces(4)                  112.7         119.8     (5.9)% 
                          ------------  ------------  --------- 
  EBITDA(3) (GBPm)                29.3          39.9    (26.6)% 
                          ------------  ------------  --------- 
  Operating profit(1,3) 
   (GBPm)                         19.3          29.7    (35.0)% 
                          ------------  ------------  --------- 
  Total revenue(2)              (5.1)% 
                          ------------ 
  Total operating 
   profit(3)                   (33.8)% 
                          ------------ 
 

1 Excludes venues openings, closures and relocations.

2 Before adjustments for customer incentives.

3 Before exceptional items.

4 H1 2018/19 and H1 2017/18 adjusted for the reallocation of beamed roulette revenue from Provinces to London following tax treatment agreement with HMRC.

Following a weather impacted start to the period, like-for-like Grosvenor revenue(1,2) performance was driven by a lower contribution from its major players, impacting both handle and win margin. The continuing difficult consumer backdrop also impacted performance, principally affecting the provincial venues.

As a result of lower revenues, like-for-like operating profit(1,3) fell by 35.0% in the period. As highlighted above, one of the cost efficiency workstreams in the Group's transformation programme is focused on ensuring the casino operating model is more effective and efficient. We have simplified the casino management structure and reduced contracted hours to better meet customer demand. As a result, total casino labour savings for H2 are estimated to be GBP7.5m.

Two key investments were made in the period to better serve specific customer bases. The first related to the refurbishment at the Barracuda casino in London which was completed at the end of the period. The Barracuda now provides an offer more suitable for its higher spending customers and customer feedback post completion has been excellent. The second related to one of Grosvenor's largest casinos, the Victoria casino in London. It underwent several changes in the period, which included the appointment of a new manager and improvements to the gaming floor layout with new electronic roulette and gaming machines. A new VIP playing area is due to be completed in H2 2018/19.

Key non-financial performance indicators

 
                      H1 2018/19    H1 2017/18      Change 
  Customer visits 
   (000s)(5,6)             3,451         3,552      (2.8)% 
   London                    753           679       10.9% 
   Provinces               2,698         2,873      (6.1)% 
                    ------------  ------------  ---------- 
  Spend per visit          52.54         53.55      (1.9)% 
   (GBP)(5,6) 
   London                  91.10        103.68     (12.1)% 
   Provinces               41.77         41.70        0.2% 
                    ------------  ------------  ---------- 
 

5 Excludes venues openings, closures and relocations.

6 Unaudited

Like-for-like London customer visits(5,6) were strong in the period, up 10.9%. Like-for-like provinces customer visits(5,6) were down 6.1% reflecting the ongoing difficult economic climate and consumer uncertainty. Like-for-like spend per visit(5,6) decreased in the period driven by lower spend levels in London.

Venues revenue analysis

 
  GBPm                     H1 2018/19    H1 2017/18    Change 
  Casino games                  114.1         122.7    (7.0)% 
                         ------------  ------------  -------- 
  Gaming machines                46.1          45.4      1.5% 
                         ------------  ------------  -------- 
  Card room games                 7.4           7.7    (3.9)% 
                         ------------  ------------  -------- 
  Food and drink/other           13.7          14.4    (4.9)% 
                         ------------  ------------  -------- 
  Total(7)                      181.3         190.2    (4.7)% 
                         ------------  ------------  -------- 
 

7 Excludes venues openings, closures and relocations.

During the period, a greater focus was made on using data to drive machine investments. These investments have performed well and contributed to a 1.5% gaming machine revenue increase in the period.

Mecca Venues

Mecca's like-for-like revenue(1,2) was down 3.3% in the period driven by a fall in customer visits.

Key financial performance indicators

 
                                H1 2018/19    H1 2017/18     Change 
  Revenue(1,2) (GBPm)                 98.3         101.7     (3.3)% 
                              ------------  ------------  --------- 
  EBITDA(3) (GBPm)                    16.4          18.6    (11.8)% 
                              ------------  ------------  --------- 
  Operating profit(1,3) 
   (GBPm)                             12.1          13.1     (7.6)% 
                              ------------  ------------  --------- 
  Total revenue(2)                  (3.9)% 
                              ------------ 
  Total operating profit(3)        (10.2)% 
                              ------------ 
 

1 Excludes venues closures and Luda.

2 Before adjustments for customer incentives.

3 Before exceptional items.

Changes to the customer offer continued to be developed in the period with the successful trial of a new price and prize board policy aimed at giving customers additional value at the lower attended midweek sessions and guaranteeing bigger prize boards across the weekend.

Mecca's wider entertainment offer continued to gain scale and pace in the period with events such as premium acts (e.g. 5ive), Bonkers Bingo, DJ Nights and Rewind Festivals (multi-act nights). These events continue to drive the brand's awareness amongst new Mecca customers whilst contributing to revenue and operating profit.

Mecca's operating costs continue to be well managed with an ongoing focus on cost efficiencies.

Three clubs were closed in the period (Ashford, Ellesmere Port and Catford). Like-for-like operating profit(1,3) fell by 7.6% in the period due to lower revenues.

Key non-financial performance indicators

 
                      H1 2018/19    H1 2017/18     Change 
  Customer visits 
   (000s)(4,5)             4,300         4,877    (11.8)% 
                    ------------  ------------  --------- 
  Spend per visit 
   (GBP)(4,5)              22.86         20.85       9.6% 
                    ------------  ------------  --------- 
 

4 Unaudited

5 Excludes venue closures and Luda.

Like-for-like customer visits(4,5) fell by 11.8% in the period, however like-for-like spend per visit(4,5) increased by 9.6% following beneficial changes to the National Game mechanic and the consequential increase in interval game dwell times.

Venues revenue analysis

 
  GBPm                     H1 2018/19    H1 2017/18    Change 
  Main stage bingo               17.4          17.9    (2.8)% 
                         ------------  ------------  -------- 
  Interval games                 35.8          37.7    (5.0)% 
                         ------------  ------------  -------- 
  Amusement machines             32.9          33.1    (0.6)% 
                         ------------  ------------  -------- 
  Food and drink/other           12.2          13.0    (6.2)% 
                         ------------  ------------  -------- 
  Total(6)                       98.3         101.7    (3.3)% 
                         ------------  ------------  -------- 
 

6 Excludes venue closures and Luda

Luda - venues

Luda's performance remained unchanged in the period. Management will review the potential opportunities for Luda as a high street gaming business when the impact of the upcoming reduction to GBP2 maximum stake for B2 gaming machines in high street betting shops has been assessed.

Digital

As from 1 July 2018, UK Digital, Enracha Digital and YoBingo! were combined into a single operating segment which is now known as Digital.

Rank's digital business continued to grow, with like-for-like revenue(1,2) up 5.1%.

Key financial performance indicators

 
                            H1 2018/19    H1 2017/18    Change 
  Revenue(1,2) (GBPm)             63.9          60.8      5.1% 
   Mecca                          38.8          36.1      7.5% 
   Grosvenor                      24.6          24.5      0.4% 
   Enracha                         0.5           0.2      150% 
                          ------------  ------------  -------- 
  EBITDA(3) (GBPm)                14.8          12.6     17.5% 
                          ------------  ------------  -------- 
  Operating profit(1,3) 
   (GBPm)                         10.2          10.4    (1.9)% 
                          ------------  ------------  -------- 
  Total revenue(2)               15.8% 
                          ------------ 
  Total operating 
   profit(3)                      5.8% 
                          ------------ 
 

1 Excludes contribution from YoBingo!

2 Before adjustments for customer incentives.

3 Before exceptional items.

Mecca digital grew revenue(2) 7.5% in the period driven by another successful 'Meccarena' marketing campaign and ongoing customer offer improvements which included the launch of a new fixed odds bingo game, BOB ('Best Odds Bingo'). BOB gives online bingo customers more chances to win with every customer having an equal chance of winning.

Enhanced due diligence continued to impact Grosvenor digital's performance, with revenues(2) broadly flat in the period. Improvements to Grosvenor's digital offer remained a key focus in the period with performance improving over the half, Q2 up 12.6% compared to (11.1)% at Q1.

Operating profit(3) fell in the period due to the change in taxation of free bets in the UK (from October 2017), costing an additional GBP0.9m of RGD in the period (total cost of GBP1.7m in the period).

YoBingo! performed strongly in the period with revenues up 41.0% and continued to grow its share of the Spanish digital bingo market, up 4.9ppts to 42.1%. The contribution from YoBingo! helped grow total digital operating profit(3) by 5.8%.

Improvements to marketing and offer drove growth in both customer numbers, up 14.8%, and first time depositors ('FTDs'), up 10.0%.

Key non-financial performance indicators (UK only)

 
                               H1 2018/19    H1 2017/18    Change 
        Customers(4) (000s)           294           256     14.8% 
                  Grosvenor            92            85      8.2% 
                      Mecca           202           171     18.1% 
                             ------------  ------------  -------- 
   First Time Depositors(4) 
                     (FTDs)           110           100     10.0% 
                  Grosvenor            50            41     22.0% 
                      Mecca            60            59      1.7% 
                             ------------  ------------  -------- 
 

4 Unaudited

The Group continued to invest into Grosvenor One in the period, the single account and wallet casino product. Grosvenor One was successfully trialled in two casinos in the period (Stockport and Didsbury). The estate rollout is due to be completed by the end of the current financial year alongside a comprehensive marketing programme.

International Venues

From 1 July 2018, Enracha's venues and Grosvenor's Belgium casino are reported under International Venues.

Like-for-like euro revenue(1,2) from the Group's International venues grew by 0.8% in the period.

Key financial performance indicators

 
                                H1 2018/19    H1 2017/18     Change 
         Revenue(1,2) (EURm)          25.2          25.0       0.8% 
                     Enracha          19.6          19.7     (0.5)% 
         Grosvenor - Belgium           5.6           5.3       5.7% 
                              ------------  ------------  --------- 
         Revenue(1,2) (GBPm)          22.5          22.3       0.9% 
                     Enracha          17.5          17.6     (0.6)% 
         Grosvenor - Belgium           5.0           4.7       6.4% 
                              ------------  ------------  --------- 
  EBITDA(3) (GBPm)                     5.5           5.7     (3.5)% 
                              ------------  ------------  --------- 
       Operating profit(1,3)           4.6           4.6         0% 
                      (EURm) 
                     Enracha           3.9           4.0     (2.5)% 
         Grosvenor - Belgium           0.7           0.6      16.7% 
                              ------------  ------------  --------- 
       Operating profit(1,3)           4.1           4.1         0% 
                      (GBPm) 
                     Enracha           3.5           3.6     (2.8)% 
         Grosvenor - Belgium           0.6           0.5      20.0% 
                              ------------  ------------  --------- 
  Total revenue(2)                  (3.8)% 
                              ------------ 
  Total operating profit(3)         (4.7)% 
                              ------------ 
 

1 Excludes venue closures

2 Before adjustments for customer incentives.

3 Before exceptional items.

Spanish regulatory and local authority actions in the period negatively impacted the performance of Enracha's venues resulting in a 0.5% fall in like-for-like euro revenue(2) . The Belgium casino in Blankenberge grew like-for-like euro revenue(2) by 5.7% in the period following improvements to the gaming machine offer.

Blankenberge's application to renew its casino licence with effect from January 2021 was approved by the local authority in August 2018 and a refurbishment and remodelling of the casino is scheduled for 2020.

Key non-financial performance indicators

 
                           H1 2018/19    H1 2017/18    Change 
  Customer visits(4,5) 
   (000s)                       1,065         1,047      1.7% 
                         ------------  ------------  -------- 
  Spend per visit(4,5) 
   (EUR)                        23.66         23.88    (0.9)% 
                         ------------  ------------  -------- 
  Spend per visit(4,5) 
   (GBP)                        21.13         21.30    (0.8)% 
                         ------------  ------------  -------- 
 

4 Excludes closed venues

5 Unaudited

Our strategy

Rank's aim is to be the UK's leading multi-channel gaming operator. We are focused on building brands with the ability to deliver them via the channels our customers prefer, whether that is through our venues, online or mobile.

   1.     Creating a compelling multi-channel offer 

In the markets we operate, Rank is one of the few gaming companies in a position to provide customers a genuine multi-channel gaming offer. We have a number of key assets, including a portfolio of 146 venues, our membership-based models, our loyalty and reward programmes and the high levels of engagement that our team members enjoy with customers.

H1 2018/19 activity:

   --      Grosvenor One successfully trialled in two clubs (Stockport and Didsbury); and 

-- Initial investigations have been undertaken with regards to an omni-channel service for Mecca customers.

H2 2018/19 priorities:

-- Complete the rollout of Grosvenor One across the casinos estate alongside a comprehensive marketing

programme;       and 

-- Development of Mecca Max terminals to enable customers to create an online account in venue.

   2.     Building digital capability and scale 

Rank has built strong positions in venue-based gaming which we seek to replicate across our digital channels (online and mobile). In H1 2018/19, our digital operations generated 19% of Group revenue whereas digital channels now represent around 47% of Great Britain's gambling market (excluding National Lottery), presenting a significant growth opportunity. We continue to enhance our capability in this area such that we can leverage our active retail customer base and meet their changing needs.

H1 2018/19 activity:

-- Improvements were made in the period regarding the integration of the customer relationship management ('CRM') platform and the Bede operating platform; these improvements have reduced customer journey friction issues;

-- Six new digital games were launched providing more bespoke and exclusive games for our customers; and

-- Through the use of new digital agencies and data models we have improved returns on our marketing investments.

H2 2018/19 priorities:

-- Grosvenor will be launched on the new content management system over the coming months with a phased and targeted rollout to new and existing customers;

-- Further improvements are to be made to the bonus and wallet functionality for new and existing customers;

   --      Additional games are to be launched; 

-- Customer registration and conversion journeys to be redesigned and improved across online and mobile for

both           Mecca and Grosvenor; and 

-- There will be a continued focus on increased marketing investments to ensure returns are further improved.

   3.     Developing our venues 

Our casino and bingo venues remain a central part of Rank's business, providing entertainment for millions of customers each year and generating the majority of the Group's revenue and profits. By continuing to invest in our venues (in terms of product, environment and service) and by creating new concepts, we are constantly evolving and enhancing the experiences that we offer to customers.

H1 2018/19 activity:

-- Refresh completed at Grosvenor's Victoria casino in London to improve the electronic product offer;

   --      Refurbishment at Grosvenor's Barracuda casino in London successfully completed; 

-- Continued development of Mecca's wider entertainment offer with events such as premium acts (e.g. 5ive),

Bonkers   Bingo, DJ Nights and Rewind Festivals (multi-act nights); and 

-- Ongoing negotiations with venue landlords to re-gear and extend leases whilst reducing property costs.

H2 2018/19 priorities:

   --      Creation of a dedicated VIP gaming area at the Victoria casino in London; 

-- Following lessons learnt in H1 around Mecca's wider entertainment offer, further events scheduled for H2;

-- Launch of a new, entertainment and social engagement-led concept called 'Players' that presents the

bingo experience   in a more contemporary format; 

-- Secure location of new concept casino and agree plans for a second new concept venue to be developed; and

-- Refurbishment planned for Grosvenor's Sheffield casino to include tournament electronic gaming.

   4.     Investing in our brands and marketing 

The development of a group of well-defined, relevant and resonant brands is critical for the success of our ambition. Rank possesses a number of well-known brands with strong levels of affinity amongst customers. Continuing to invest and develop these brands, alongside new ones, is an important part of increasing and sustaining revenues.

H1 2018/19 activity:

-- Customer segmentation work commenced in the period to help drive new concept proposition for Grosvenor's

venues   which will determine future venue investments and local marketing campaigns; 

-- 'Project Experience', the venues customer experience project was rolled out in the period improving

customer journeys   in both our bingo and casino venues; 

-- The integrated marketing campaign, Meccarena, led to strong customer acquisition activity for Mecca digital;

-- New VIP strategy rolled-out following the recent appointments to the Grosvenor VIP casino team; and

-- New local marketing platform rolled out providing clubs with better support and consistency over local

promotional         activity. 

H2 2018/19 priorities:

   --      Increase marketing investment in digital across both Mecca and Grosvenor digital; 

-- Use of customer segmentation to help drive key marketing investments and define customer contact and

investment       strategies for Grosvenor One's loyalty programme; 

-- Implement an integrated CRM and loyalty strategy including the launch of interactive reward pods in

Grosvenor's         casinos; 
   --      Launch new Grosvenor rewards programme; 

-- Continue development of the local marketing platform to ensure consistency and breadth of content

available for both   Mecca and Grosvenor venues; and 
   --      A renewed focus on converting Mecca's venues customers to digital. 
   5.     Using technology to drive efficiency and improve customer experience 

The customer is at the heart of our focus on increasing the use of technology in our business and driving efficiency. Improved customer experience and operating margins can help create a competitive advantage. We have identified a number of opportunities to harness technological developments to offer our customers more engaging experiences and to achieve sustainable growth in operating margins.

H1 2018/19 activity:

   --      Refurbishment of 3,500 Mecca Max units completed; 

-- Investment into new casino gaming machines including new product in the Victoria and the Park Tower

casinos in   London; and 
   --      Contactless chip and pin payment introduced at the casino's cash desk. 

H2 2018/19 priorities:

   --      Introduction of Ticket In Ticket Out ('TiTo') for table gaming; and 

-- Self-service TiTo cash terminals to be installed across casinos to allow customers to buy in and cash out

their TiTo             tickets. 

Financial Review

 
                                             H1 2018/19    H1 2017/18     Change 
                                                 (GBPm)        (GBPm) 
  Revenue                                         374.4         379.6     (1.4)% 
                                           ------------  ------------  --------- 
  Less: customer incentives                      (26.2)        (25.4)       3.1% 
                                           ------------  ------------  --------- 
  Statutory revenue                               348.2         354.2     (1.7)% 
                                           ------------  ------------  --------- 
 
  Operating profit(1)                              30.3          41.7    (27.3)% 
                                           ------------  ------------  --------- 
  Less: net finance charges(1)                    (1.4)         (1.4)         0% 
                                           ------------  ------------  --------- 
  Add: other financial losses(1)                    0.2         (0.1) 
                                           ------------  ------------  --------- 
  Adjusted profit before taxation(2)               29.1          40.2    (27.6)% 
                                           ------------  ------------  --------- 
 
  Group operating profit before interest 
   and tax                                         25.8          34.2    (24.6)% 
                                           ------------  ------------  --------- 
  Net financing charge                            (3.0)         (1.4)     114.3% 
                                           ------------  ------------  --------- 
  Taxation                                        (4.1)         (7.7)    (46.8)% 
                                           ------------  ------------  --------- 
  Profit after taxation                            18.7          25.1    (25.5)% 
                                           ------------  ------------  --------- 
 
  Earnings per share                               4.8p          6.4p    (25.0)% 
                                           ------------  ------------  --------- 
  Adjusted earnings per share(3)                   6.1p          8.0p    (23.8)% 
                                           ------------  ------------  --------- 
 

1 Before exceptionals, as per note 2.

2 Adjusted profit before taxation is calculated by adjusting profit from continuing operations before taxation to exclude exceptional items, the unwinding of the discount on disposal provisions and other financial gains and losses.

3 Adjusted EPS is calculated using adjusted profit which excludes exceptional items, other financial gains or losses, unwinding of the discount in disposal provisions and the related tax effects. Adjusted earnings is one of the business performance measures used internally by management to manage the operations of the business. Management believes that the adjusted earnings measure assists in providing a view of the underlying performance of the business.

For the period ended 31 December 2018, statutory revenue decreased by 1.7% to GBP348.2m.

Operating profit(1) was down by 27.3% principally due to lower revenues, with adjusted profit before taxation down 27.6%.

The net financing charge before exceptional items is flat in the period.

Exceptional items

In order to give a full understanding of the Group's performance and to aid comparability between periods, the Group reports certain items as exceptional to normal trading.

Details of exceptional items can be found in note 3. In H1 2018/19 the Group commenced its transformation programme which resulted in GBP4.5m of exceptional costs in the period. GBP3.8m of the costs relate to redundancies made across the Group.

Total exceptional items resulted in a GBP1.9m cash outflow in the period.

Earnings per share

Basic EPS was down 25.0% to 4.8 pence. Adjusted EPS(3) was down 23.8% to 6.1 pence. For further details refer to note 7.

Taxation

The Group's effective corporation tax rate in H1 2018/19 was 17.5% (H1 2017/18: 22.3%) based on a tax charge of GBP5.1m on adjusted profit before taxation. This is lower than the Group's anticipated effective tax rate of 20%-22% for the year as a result of the recognition of a deferred tax credit of GBP0.5m in relation to profits arising in Malta which are subject to a shareholder refund when distributed and a number of prior year adjustments relating to UK and overseas entities as a result of releasing tax provisions that are no longer considered likely to be required. Further details on the taxation charge are provided in note 5. On a statutory unadjusted basis, the Group had an effective tax rate of 18.0% (H1 2017/18: 23.5%), based on a tax charge of GBP4.1m and total profit before taxation for the period of GBP22.8m.

Cash tax rate

In the period ended 31 December 2018, the Group had an effective cash tax rate of 15.1% on adjusted profit (H1 2017/18: 15.9%). The cash tax rate is lower than the effective tax rate mainly as a result of the use of losses within the Group and the timing of tax instalment payments.

Cash flow and net cash

As at 31 December 2018, net cash was GBP7.7m, an improvement of GBP3.7m from the comparable period end. Debt comprised GBP51.0m in bank loans, GBP5.5m in finance leases and GBP5.8m in overdrafts, offset by cash at bank and in hand of GBP70.0m. In August 2018, the term loan facilities were reduced to GBP20.0m, from GBP50.0m, in line with the agreed amortisation profile. GBP59.0m of revolving credit facilities ('RCF') were undrawn at the period-end (H1 2017/18: GBP90.0m undrawn).

In January 2019, Rank refinanced its GBP20.0m term loan facilities to ensure sufficient debt facilities were in place to cover the deferred consideration payment regarding the acquisition of YoBingo! and transformation programme initiative costs. Following the refinancing, the term loan banking facilities now total GBP50.0m and comprise three bi-lateral facilities. Two of the three facilities expire in January 2020 with the third in March 2020.

The bank facilities require the maintenance of a minimum ratio of earnings before interest, tax, depreciation and amortisation (EBITDA) to net interest payable and a maximum ratio of net debt to EBITDA, tested biannually. The Group has complied with its banking covenants.

 
  GBPm                                           H1 2018/19    H1 2017/18 
  Cash inflow from operations                          60.3          67.3 
                                               ------------  ------------ 
  Net cash payments in respect of provisions 
   and exceptional items                              (4.3)         (5.4) 
                                               ------------  ------------ 
  Cash generated from operations                       56.0          61.9 
                                               ------------  ------------ 
  Capital expenditure                                (14.1)        (17.4) 
                                               ------------  ------------ 
  Net interest and tax payments                       (5.1)         (7.6) 
                                               ------------  ------------ 
  Dividends paid                                     (20.7)        (20.7) 
                                               ------------  ------------ 
  Other (including exchange translation)                0.9           0.2 
                                               ------------  ------------ 
  Cash inflow                                          17.0          16.4 
                                               ------------  ------------ 
  Opening net debt                                    (9.3)        (12.4) 
                                               ------------  ------------ 
  Closing net cash                                      7.7           4.0 
                                               ------------  ------------ 
 

Total capital expenditure of GBP14.1m was spent in the period. Key capital projects included the completion of the Barracuda refurbishment in London and the purchase of new gaming machines currently under trial in our London casinos.

Investment continued in the period into the Grosvenor One product and a new content management system for the Group's UK digital brands.

For the full 2018/19 financial year the Group is planning to invest circa GBP40.0m.

Acquisition of YoBingo!

On 21(st) May 2018, Rank Digital Holdings Limited (a wholly owned group company) acquired the entire share capital of QSB Gaming Limited, the owner of YoBingo!, the second largest online bingo operator in Spain for an estimated total consideration of EUR52.0m. The results of that business have been incorporated into the Digital segment.

Further contingent consideration will be paid based on the EBITDA generated by YoBingo! in the calendar year 2018 and has been estimated based on recent business performance and expectations for future growth. Payment is expected in H2 2018/19 and the Group currently intends to fund this through its current cash and debt facilities.

Acquisition accounting will be finalised in the Group's 2018/19 report.

Taxation changes

In May 2018, it was announced that the rate of UK Remote Gaming Duty will be increased to offset reduced tax revenues from the proposed changes to the maximum stakes of B2 gaming machines. This change comes into effect from April 2019 and is estimated to result in an increase in Rank's tax liability by GBP1.7m for FY 2018/19.

IFRS 16 - Lease

IFRS16 'Leases' will replace IAS17 in its entirety and will be effective for the Group from its 2019/20 accounting year. It will result in most leases being recognised in the Statement of Financial Position, with additional fixed assets and liabilities being recognised. The Group continues to assess the full impact of IFRS16 and it is not yet possible to reasonably quantify its financial effects. The effect will be impacted by interest rates in future years, along with changes to the terms of the Group's existing leases. The directors believe that the new standard will have a material impact upon the Group's reported performance with increases in EBITDA being largely offset by increases in both depreciation and interest charges, and increases in operating profit largely offset by increases in interest charges. There is no current expectation that the group's cashflows will be materially impacted.

IFRS 9 and IFRS 15

IFRS 9 and IFRS 15 is effective for the Group's current accounting year, 2018/19. There is no material impact on the results or net assets from these standards. Please refer to the accounting policies for further detail.

Going concern

In adopting the going concern basis for preparing the financial information the directors have considered the issues impacting the Group during the period as detailed in the financial review and have reviewed the Group's projected compliance with its banking covenants. Based on the Group's cash flow forecasts and operating budgets the directors believe that the Group will generate sufficient cash to meet its borrowing requirements for at least 12 months from the approval of this report and comply with all of its banking covenants.

Principal risks and uncertainties

The Group's enterprise risk management strategy focuses on the minimisation of risks for the Group. Key risks are periodically reviewed by the risk committee, executive and the board, where appropriate, actions are taken to mitigate these.

The principal risks and uncertainties faced by the Group remain those set out in the Group's annual report and financial statements for the year ended 30 June 2018 and include:

   --       Regulatory, finance, tax and operating environment risks; 

-- Business operational risks, such as volatility of gaming win, strategic programmes, third party and supply chain and business continuity; and

-- Information technology risks, such as cyber-security, disaster recovery and data management.

Greater detail on these risks and uncertainties are set out in pages 42 to 46 of the Group's 2018 annual report and financial statements.

Directors' Responsibility Statement

Each of the directors named below confirm that to the best of his or her knowledge:

-- The financial statements, prepared under International Financial Reporting Standard (IFRS) as adopted by the European Union, 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 including 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:

Chris Bell

Ian Burke

Steven Esom

Tang Hong Cheong

Susan Hooper

Alan Morgan

John O'Reilly

Alex Thursby

Signed on behalf of the board on 30 January 2019

John O'Reilly

Chief Executive

INDEPENT REVIEW REPORT TO THE RANK GROUP PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2018 which comprises Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity, Consolidated Balance Sheet, Consolidated Cash Flow Statement and the related explanatory notes 1 to 12 that have been reviewed. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2018 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Ernst & Young LLP

London, United Kingdom

30 January 2019

Consolidated Income Statement

for the six months ended 31 December 2018

 
                                  Six months ended 31 December                   Six months ended 31 
                                               2018                                  December 2017 
                                            (unaudited)                               (unaudited) 
                    ------  ---------------------------------------  ------------------------------------------- 
                                   Before    Exceptional                        Before    Exceptional 
                              Exceptional          items                   Exceptional          items 
                                                   (note                                        (note 
                                    Items             3)      Total              Items             3)      Total 
                      Note           GBPm           GBPm       GBPm               GBPm           GBPm       GBPm 
------------------  ------  -------------  -------------  ---------  -----------------  -------------  --------- 
  Continuing 
  operations 
------------------  ------  -------------  -------------  ---------  -----------------  -------------  --------- 
  Revenue before 
   adjustment 
   for customer 
   incentives                       374.4              -      374.4              379.6              -      379.6 
  Customer 
   incentives                      (26.2)              -     (26.2)             (25.4)              -     (25.4) 
------------------  ------  -------------  -------------  ---------  -----------------  -------------  --------- 
  Revenue                2          348.2              -      348.2              354.2              -      354.2 
  Cost of sales                   (192.3)              -    (192.3)            (191.1)              -    (191.1) 
------------------  ------  -------------  -------------  ---------  -----------------  -------------  --------- 
  Gross profit                      155.9              -      155.9              163.1              -      163.1 
  Other operating 
   costs                          (125.6)          (4.5)    (130.1)            (121.4)          (7.5)    (128.9) 
------------------  ------  -------------  -------------  ---------  -----------------  -------------  --------- 
  Operating profit 
   (loss)                2           30.3          (4.5)       25.8               41.7          (7.5)       34.2 
  Financing: 
  - finance costs                   (1.2)          (1.4)      (2.6)              (1.7)              -      (1.7) 
  - finance income                      -              -          -                0.2              -        0.2 
  - other 
   financial 
   (losses) gains                   (0.2)          (0.2)      (0.4)                0.1              -        0.1 
------------------  ------  -------------  -------------  ---------  -----------------  -------------  --------- 
  Total net 
   financing 
   charge                4          (1.4)          (1.6)      (3.0)              (1.4)              -      (1.4) 
------------------  ------  -------------  -------------  ---------  -----------------  -------------  --------- 
  Profit (loss) 
   before 
   taxation                          28.9          (6.1)       22.8               40.3          (7.5)       32.8 
  Taxation               5          (5.1)            1.0      (4.1)              (9.0)            1.3      (7.7) 
------------------  ------  -------------  -------------  ---------  -----------------  -------------  --------- 
  Profit (loss) 
   for 
   the period                        23.8          (5.1)       18.7               31.3          (6.2)       25.1 
------------------  ------  -------------  -------------  ---------  -----------------  -------------  --------- 
 
  Attributable to: 
  Equity holders 
   of 
   the parent                        23.8          (5.1)       18.7               31.3          (6.2)       25.1 
------------------  ------  -------------  -------------  ---------  -----------------  -------------  --------- 
 
  Earnings (loss) per share attributable 
   to equity shareholders 
  - basic                             6.1          (1.3)        4.8                8.0          (1.6)        6.4 
  - diluted                           6.1          (1.3)        4.8                8.0          (1.6)        6.4 
------------------  ------  -------------  -------------  ---------  -----------------  -------------  --------- 
 
 

Consolidated Statement of Comprehensive Income

for the six months ended 31 December 2018

 
                                     Six months ended    Six months ended 
                                          31 December         31 December 
                                                 2018                2017 
                                          (unaudited)         (unaudited) 
                                                 GBPm                GBPm 
---------------------------------  ------------------  ------------------ 
  Comprehensive income: 
  Profit for the period                          18.7                25.1 
  Other comprehensive income: 
  Items that may be reclassified 
   to profit or loss: 
  Exchange adjustments net of 
   tax                                            1.2                 0.3 
--------------------------------- 
  Total comprehensive income for 
   the period                                    19.9                25.4 
---------------------------------  ------------------  ------------------ 
 
  Attributable to: 
  Equity holders of the parent                   19.9                25.4 
---------------------------------  ------------------  ------------------ 
 

Consolidated Statement of Changes in Equity

for the six months ended 31 December 2018

 
                                           For the six months ended 31 December 2018 (unaudited) 
                                 ----------------------------------------------------------------------- 
                                                            Capital       Exchange 
                                     Share      Share    redemption    translation    Retained 
                                   capital    premium       reserve        reserve    earnings     Total 
                                      GBPm       GBPm          GBPm           GBPm        GBPm      GBPm 
-------------------------------  ---------  ---------  ------------  -------------  ----------  -------- 
  At 1 July 2018                      54.2       98.4          33.4           16.6       193.9     396.5 
  Comprehensive income: 
  Profit for the period                  -          -             -              -        18.7      18.7 
  Other comprehensive income: 
  Exchange adjustments 
   net of tax                            -          -             -            1.2           -       1.2 
-------------------------------  ---------  ---------  ------------  -------------  ----------  -------- 
  Total comprehensive income 
   for the period                        -          -             -            1.2        18.7      19.9 
 
  Transactions with owners: 
  Dividends paid to equity 
   holders (note 6)                      -          -             -              -      (20.7)    (20.7) 
  At 31 December 2018                 54.2       98.4          33.4           17.8       191.9     395.7 
-------------------------------  ---------  ---------  ------------  -------------  ----------  -------- 
 
 
                                            For the six months ended 31 December 2017 (unaudited) 
                                 ----------------------------------------------------------------------- 
                                                            Capital       Exchange 
                                     Share      Share    redemption    translation    Retained 
                                   capital    premium       reserve        reserve    earnings     Total 
                                      GBPm       GBPm          GBPm           GBPm        GBPm      GBPm 
-------------------------------  ---------  ---------  ------------  -------------  ----------  -------- 
  At 1 July 2017                      54.2       98.4          33.4           15.8       188.8     390.6 
  Comprehensive income: 
  Profit for the period                  -          -             -              -        25.1      25.1 
  Other comprehensive income: 
  Exchange adjustments 
   net of tax                            -          -             -            0.3           -       0.3 
-------------------------------  ---------  ---------  ------------  -------------  ----------  -------- 
  Total comprehensive income 
   for the period                        -          -             -            0.3        25.1      25.4 
 
  Transactions with owners: 
  Dividends paid to equity 
   holders (note 6)                      -          -             -              -      (20.7)    (20.7) 
  Debit in respect of employee 
   share schemes including 
   tax                                   -          -             -              -       (1.4)     (1.4) 
  At 31 December 2017                 54.2       98.4          33.4           16.1       191.8     393.9 
-------------------------------  ---------  ---------  ------------  -------------  ----------  -------- 
 

Consolidated Balance Sheet

at 31 December 2018 and 30 June 2018

 
                                                                        As at        As at 
                                                                  31 December      30 June 
                                                                         2018         2018 
                                                                  (unaudited)    (audited) 
                                                    Note                 GBPm         GBPm 
----------------------------------------------  --------  -------------------  ----------- 
  Assets 
  Non-current assets 
  Intangible assets                                                     457.2        459.1 
  Property, plant and equipment                                         160.8        171.5 
  Other investment                                                        3.5          3.5 
  Deferred tax assets                                                     0.4          0.4 
  Other receivables                                                       4.1          3.7 
----------------------------------------------  --------  -------------------  ----------- 
                                                                        626.0        638.2 
  Current assets 
  Inventories                                                             2.7          2.5 
  Other receivables                                                      34.2         29.2 
  Cash and short-term deposits                                           70.0         50.4 
----------------------------------------------  --------  -------------------  ----------- 
                                                                        106.9         82.1 
 
  Total assets                                                          732.9        720.3 
----------------------------------------------  --------  -------------------  ----------- 
 
  Liabilities 
  Current liabilities 
  Trade and other payables                                            (165.0)      (153.1) 
  Income tax payable                                                   (10.9)       (10.3) 
  Financial liabilities - loans 
   and borrowings                                                      (58.1)       (54.2) 
  Provisions                                           8               (10.1)        (8.0) 
----------------------------------------------  --------  -------------------  ----------- 
                                                                      (244.1)      (225.6) 
 
  Net current liabilities                                             (137.2)      (143.5) 
----------------------------------------------  --------  -------------------  ----------- 
 
  Non-current liabilities 
  Trade and other payables                                             (29.2)       (30.6) 
  Financial liabilities - loans 
   and borrowings                                                       (4.2)        (5.5) 
  Deferred tax liabilities                                             (23.8)       (24.4) 
  Provisions                                           8               (31.9)       (33.6) 
  Retirement benefit obligations                                        (4.0)        (4.1) 
----------------------------------------------  --------  -------------------  ----------- 
                                                                       (93.1)       (98.2) 
 
  Total liabilities                                                   (337.2)      (323.8) 
----------------------------------------------  --------  -------------------  ----------- 
 
  Net assets                                                            395.7        396.5 
----------------------------------------------  --------  -------------------  ----------- 
 
  Capital and reserves attributable to the Company's equity shareholders 
  Share capital                                                          54.2         54.2 
  Share premium                                                          98.4         98.4 
  Capital redemption reserve                                             33.4         33.4 
  Exchange translation reserve                                           17.8         16.6 
  Retained earnings                                                     191.9        193.9 
----------------------------------------------  --------  -------------------  ----------- 
  Total shareholders' equity                                            395.7        396.5 
----------------------------------------------  --------  -------------------  ----------- 
 

Consolidated Cash Flow Statement

for the six months ended 31 December 2018

 
                                                             Six months      Six months 
                                                                  ended           ended 
                                                            31 December     31 December 
                                                                   2018            2017 
                                                            (unaudited)     (unaudited) 
                                                   Note            GBPm            GBPm 
-----------------------------------------------  ------  --------------  -------------- 
  Cash flows from operating activities 
  Cash generated from continuing operations          10            56.0            61.9 
  Interest received                                                   -             0.2 
  Interest paid                                                   (0.7)           (1.4) 
  Tax paid                                                        (4.4)           (6.4) 
  Net cash from operating activities                               50.9            54.3 
-----------------------------------------------  ------  --------------  -------------- 
 
  Cash flows from investing activities 
  Purchase of intangible assets                                   (3.4)           (6.5) 
  Purchase of property, plant and equipment                      (10.7)          (10.9) 
  Net cash used in investing activities                          (14.1)          (17.4) 
-----------------------------------------------  ------  --------------  -------------- 
 
  Cash flows from financing activities 
  Dividends paid to equity holders                               (20.7)          (20.7) 
  Drawdown of revolving credit facilities                          31.0               - 
  Repayment of term loans                                        (30.0)               - 
  Finance lease principal payments                                (0.7)           (0.7) 
  Net cash used in financing activities                          (20.4)          (21.4) 
-----------------------------------------------  ------  --------------  -------------- 
 
  Net increase in cash, cash equivalents and 
   bank overdrafts                                                 16.4            15.5 
  Effect of exchange rate changes                                   0.1           (0.2) 
  Cash and cash equivalents at start of period                     47.7            76.5 
-----------------------------------------------  ------  --------------  -------------- 
  Cash and cash equivalents at end of period*                      64.2            91.8 
-----------------------------------------------  ------  --------------  -------------- 
 
              *Cash and cash equivalents at the end of the period includes an overdraft 
                                    of GBP5.8m (period ended 31 December 2017: GBP6.6m) 
 

1 General information, basis of preparation and accounting policies

The Company is a public limited company which is listed on the London Stock Exchange and incorporated and domiciled in England and Wales under registration number 03140769. The address of its registered office is TOR, Saint-Cloud Way, Maidenhead, SL6 8BN.

This condensed consolidated interim financial information was approved for issue on 30 January 2019.

This condensed consolidated financial information does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the 12 month period ended 30 June 2018 were approved by the board of directors on 15 August 2018 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain a statement made under Section 498 of the Companies Act 2006.

This condensed consolidated interim financial information has been reviewed but not audited.

Basis of preparation

This condensed consolidated interim financial information for the six months ended 31 December 2018 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS34 'Interim financial reporting' as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the financial statements for the 12 month period ended 30 June 2018, which have been prepared in accordance with IFRSs as adopted by the European Union.

Going concern

In adopting the going concern basis for preparing the financial information the directors have considered the issues impacting the Group during the period as detailed in the business review above and have reviewed the Group's projected compliance with its banking covenants. Based on the Group's cash flow forecasts and operating budgets, and assuming that trading does not deteriorate considerably from current levels, the directors believe that the Group will generate sufficient cash to meet its requirements for at least 12 months from the date of approval of the interim financial information and comply with all of its banking covenants. Accordingly, the adoption of the going concern basis remains appropriate.

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, to enable them to make strategic and operational decisions.

In the current period the internal reporting of operating segments has been modified following changes in management responsibilities. As from 1 July 2018;

- UK Digital, Enracha Digital and YoBingo were combined into a single operating segment which is now known

as   Digital, 
   -     Grosvenor Venues now excludes our Belgium casino, and 

- Enracha Venues and our Belgium casino were combined into a single operating segment known as International

Venues.

The Group now reports five segments: Grosvenor Venues, Mecca Venues, Digital, International Venues and Central Costs. The prior period comparative information has been restated to assist with comparability.

Accounting policies

Standards, amendments to and interpretations of existing standards adopted by the Group

The accounting policies and methods of computation adopted in the condensed consolidated half-yearly financial information are consistent with those followed in Group's full financial statements for the year ended 30 June 2018, except for the adoption of new standards effective as of 1 January 2018. The Group applies, for the first time, IFRS 15 - Revenue from Contracts with Customers and IFRS 9 - Financial Instruments.

IFRS 15 - Revenue from Contracts with Customers

IFRS 15 supersedes IAS 11 Construction Contracts, IAS 18 Revenue and related Interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other standards. The new standard establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The standard requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances, when applying each step of the model to

1 General information, basis of preparation and accounting policies (continued)

contracts with their customers. The Group adopted IFRS 15 using the full retrospective method of adoption with no material impact on the financial statements of the Group.

(a) Gaming Win

The Group's income earned from gaming win does not fall within the scope of IFRS 15. Income from these online activities is disclosed as revenue although these are accounted for and meet the definition of a gain under IFRS 9.

(b) Food Beverage and other

The Group's income earned from food and beverage and other good sales is recognised when the goods or services are transferred to the customer and is within the scope of IFRS 15.

IFRS 9 - Financial Instruments

IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement for annual periods beginning on or after 1 January 2018, bringing together all three aspects of the accounting for financial instruments: classification and measurement; impairment; and hedge accounting. The Group has applied IFRS 9 retrospectively with no material impact on the financial statements of the Group.

(a) Classification and measurement

The Group's income earned from gaming win falls within the scope of IFRS 9, the change has not resulted in a material impact on accounting or presentation of this income. There were no changes in classification and measurement of other financial assets and liabilities.

(b) Impairment

The adoption of IFRS 9 has changed the Group's accounting for impairment losses for financial assets by replacing IAS 39's incurred loss approach with a forward looking expected credit loss (ECL). IFRS 9 application did not result in material changes to the Group's financial statements.

Trade receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost. The Group has applied the standard's simplified approach and has calculated the ECLs based on lifetime of expected credit losses. This change did not result in material changes to the Group's financial statements. Bad debts are written off when there is objective evidence that the full amount may not be collected.

Investments

Under IFRS 9 investments are measured at fair value through other comprehensive income (FVOCI). The impact of this change is not material for the current period.

Financial liabilities

The accounting for the Group's financial liabilities remains largely the same as it was under IAS 39.

There are no other new or amended standards or interpretations that became effective in the period which have had a material impact upon the values or disclosures in the interim financial information.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

The Group has not early adopted any standard, interpretation or amendment that was issued but is not yet effective.

2 Segment information

 
                                       Six months ended 31 December 2018 (unaudited) 
                 ---------------------------------------------------------------------------------------- 
 
                      Grosvenor          Mecca                         International    Central 
                         Venues         Venues              Digital           Venues      Costs     Total 
                           GBPm           GBPm                 GBPm             GBPm       GBPm      GBPm 
                 --------------                 -------------------  ---------------  ---------  -------- 
 
  Revenue 
   before 
   adjustment 
   for 
   customer 
   incentives             181.4          100.0                 70.4             22.6          -     374.4 
  Customer 
   incentives             (9.3)          (3.8)               (13.1)                -          -    (26.2) 
---------------  --------------  -------------  -------------------  ---------------  --------- 
  Segment 
   revenue                172.1           96.2                 57.3             22.6          -     348.2 
---------------  --------------  -------------  -------------------  ---------------  ---------  -------- 
 
  Operating 
   profit 
   (loss) 
   before 
   exceptional 
   items                   19.4           11.4                 11.0              4.1     (15.6)      30.3 
  Exceptional 
   operating 
   loss                   (2.0)          (0.1)                (0.1)                -      (2.3)     (4.5) 
                 --------------  -------------  -------------------  ---------------  ---------  -------- 
  Segment 
   result                  17.4           11.3                 10.9              4.1     (17.9)      25.8 
---------------  --------------  -------------  -------------------  ---------------  ---------  -------- 
 
  Finance costs                                                                                     (2.6) 
  Other 
   financial 
   losses                                                                                           (0.4) 
---------------  --------------  -------------  -------------------  ---------------  ---------  -------- 
  Profit before 
   taxation                                                                                          22.8 
  Taxation                                                                                          (4.1) 
  Profit for 
   the 
   period                                                                                            18.7 
---------------  --------------  -------------  -------------------  ---------------  ---------  -------- 
 
                                       Six months ended 31 December 2017 (unaudited)* 
                 ---------------------------------------------------------------------------------------- 
                      Grosvenor          Mecca                         International    Central 
                         Venues         Venues              Digital           Venues      Costs     Total 
                           GBPm           GBPm                 GBPm             GBPm       GBPm      GBPm 
                 --------------                 -------------------  ---------------  ---------  -------- 
 
  Revenue 
   before 
   adjustment 
   for 
   customer 
   incentives             191.2          104.1                 60.8             23.5          -     379.6 
  Customer 
   incentives             (6.9)          (5.0)               (13.5)                -          -    (25.4) 
---------------  --------------  -------------  -------------------  ---------------  --------- 
  Segment 
   revenue                184.3           99.1                 47.3             23.5          -     354.2 
---------------  --------------  -------------  -------------------  ---------------  ---------  -------- 
 
  Operating 
   profit 
   (loss) 
   before 
   exceptional 
   items                   29.3           12.7                 10.4              4.3     (15.0)      41.7 
  Exceptional 
   operating 
   (loss) 
   profit                 (6.6)          (0.5)                  0.2                -      (0.6)     (7.5) 
                 --------------  -------------  -------------------  ---------------  ---------  -------- 
  Segment 
   result                  22.7           12.2                 10.6              4.3     (15.6)      34.2 
---------------  --------------  -------------  -------------------  ---------------  ---------  -------- 
 
  Finance costs                                                                                     (1.7) 
  Finance 
   income                                                                                             0.2 
  Other 
   financial 
   gains                                                                                              0.1 
---------------  --------------  -------------  -------------------  ---------------  ---------  -------- 
  Profit before 
   taxation                                                                                          32.8 
  Taxation                                                                                          (7.7) 
  Profit for 
   the 
   period                                                                                            25.1 
---------------  --------------  -------------  -------------------  ---------------  ---------  -------- 
 
 

* 2017 figures have been restated based on the following changes to operating segments effective from 1 July 2018;

- UK Digital, Enracha Digital and YoBingo were combined into a single operating segment which is now known as Digital,

   -     Grosvenor Venues now excludes our Belgium casino, and 

- Enracha Venues and our Belgium casino were combined into a single operating segment known as International Venues.

2 Segment information (continued)

To increase transparency, the Group continues to include additional disclosure analysing total costs by type and segment. A reconciliation of total costs, before exceptional items, by type and segment is as follows:

 
                               Six months ended 31 December 2018 (unaudited) 
 ------------------------------------------------------------------------------------------------------- 
                                Grosvenor      Mecca                   International    Central 
                                   Venues     Venues        Digital           Venues      Costs    Total 
                                     GBPm       GBPm           GBPm             GBPm       GBPm     GBPm 
---------------------------  ------------  ---------  -------------  ---------------  ---------  ------- 
  Employment and related 
  costs                              64.9       25.4            7.5              9.5       10.1    117.4 
  Taxes and duties                   36.8       16.5           10.6              2.0        0.8     66.7 
  Direct costs                       11.0       10.8           16.0              2.0          -     39.8 
  Property costs                     14.8       13.8            0.3              1.1        0.8     30.8 
  Marketing                           6.6        4.5            5.7              1.1          -     17.9 
  Depreciation and 
   amortisation                       9.9        5.0            3.8              1.4        1.9     22.0 
  Other                               8.7        8.8            2.4              1.4        2.0     23.3 
  Total costs before 
   exceptional items                152.7       84.8           46.3             18.5       15.6    317.9 
---------------------------  ------------  ---------  -------------  ---------------  ---------  ------- 
  Cost of sales                                                                                    192.3 
  Operating costs                                                                                  125.6 
  Total costs before 
   exceptional items                                                                               317.9 
---------------------------  ------------  ---------  -------------  ---------------  ---------  ------- 
 
                              Six months ended 31 December 2017 (unaudited)* 
 ------------------------------------------------------------------------------------------------------- 
                                Grosvenor      Mecca                   International    Central 
                                   Venues     Venues        Digital           Venues      Costs    Total 
                                     GBPm       GBPm           GBPm             GBPm       GBPm     GBPm 
---------------------------  ------------  ---------  -------------  ---------------  ---------  ------- 
  Employment and related 
  costs                              66.5       26.8            5.4              9.7        9.2    117.6 
  Taxes and duties                   39.1       16.9            6.4              2.1        0.8     65.3 
  Direct costs                        9.1       10.4           15.5              2.1          -     37.1 
  Property costs                     15.6       14.2            0.2              1.0        0.8     31.8 
  Marketing                           6.5        4.3            3.8              0.8          -     15.4 
  Depreciation and 
   amortisation                      10.6        5.9            2.2              1.4        1.5     21.6 
  Other                               7.6        7.9            3.4              2.1        2.7     23.7 
  Total costs before 
   exceptional items                155.0       86.4           36.9             19.2       15.0    312.5 
---------------------------  ------------  ---------  -------------  ---------------  ---------  ------- 
  Cost of sales                                                                                    191.1 
  Operating costs                                                                                  121.4 
  Total costs before 
   exceptional items                                                                               312.5 
---------------------------  ------------  ---------  -------------  ---------------  ---------  ------- 
 
 

* 2017 figures have been restated based on the following changes to operating segments effective from 1 July 2018;

- UK Digital, Enracha Digital and YoBingo were combined into a single operating segment which is now known as Digital,

   -     Grosvenor Venues now excludes our Belgium casino, and 

- Enracha Venues and our Belgium casino were combined into a single operating segment known as International Venues.

3 Exceptional items

 
                                                                     Six months 
                                               Six months ended           ended 
                                                    31 December     31 December 
                                                           2018            2017 
                                                    (unaudited)     (unaudited) 
                                                           GBPm            GBPm 
-------------------------------------------  ------------------  -------------- 
  Exceptional items 
  Impairment charges                                          -           (4.9) 
  Group restructuring including relocation 
   costs                                                      -           (1.6) 
  Net loss from property leases                               -           (1.0) 
  Business transformation costs                           (4.5)               - 
-------------------------------------------  ------------------  -------------- 
  Exceptional operating costs                             (4.5)           (7.5) 
 
  Finance costs                                           (1.4)               - 
  Other financial losses                                  (0.2)               - 
  Taxation                                                  1.0             1.3 
  Total exceptional items                                 (5.1)           (6.2) 
-------------------------------------------  ------------------  -------------- 
 

Business transformation costs

Transformation costs of GBP4.5m in the period include one-off costs associated with restructuring the business. Costs incurred in the period primarily consist of severance costs. These costs are considered exceptional as this is a material initiative which is one-off in nature.

Finance costs and other financial losses

Exceptional finance cost is non-cash interest from unwinding a discount applied to contingent consideration payable. Other financial losses include foreign exchange losses on the same consideration. Contingent consideration is payable due to the acquisition of QSB Gaming Limited ('YoBingo') and the majority is expected to be paid in H2 2018/19.

4 Financing

 
                                                                                           Six months 
                                                Six months ended                                ended 
                                                     31 December                          31 December 
                                                            2018                                 2017 
                                                     (unaudited)                          (unaudited) 
                                                            GBPm                                 GBPm 
--------------------------------------------  ------------------  ----------------------------------- 
  Finance costs: 
  Interest on debt and borrowings                          (0.7)                                (1.1) 
  Amortisation of issue costs on borrowings                (0.1)                                (0.2) 
  Interest payable on finance leases                       (0.2)                                (0.3) 
  Unwinding of the discount in property 
   lease provisions                                        (0.2)                                (0.1) 
--------------------------------------------  ------------------  ----------------------------------- 
  Total finance costs                                      (1.2)                                (1.7) 
 
  Finance income: 
  Interest income on short-term bank 
   deposits                                                    -                                  0.2 
--------------------------------------------  ------------------  ----------------------------------- 
  Finance income                                               -                                  0.2 
 
  Other financial (losses) gains                           (0.2)                                  0.1 
 
  Total net financing charge before 
   exceptional items                                       (1.4)                                (1.4) 
--------------------------------------------  ------------------  ----------------------------------- 
  Exceptional finance costs                                (1.4)                                    - 
  Exceptional other financial losses                       (0.2)                                    - 
  Total net financing charge                               (3.0)                                (1.4) 
--------------------------------------------  ------------------  ----------------------------------- 
 

4 Financing (continued)

A reconciliation of total net financing charge before exceptional items to adjusted net interest included in adjusted profit is disclosed below:

 
                                                                          Six months 
                                                    Six months ended           ended 
                                                         31 December     31 December 
                                                                2018            2017 
                                                         (unaudited)     (unaudited) 
                                                                GBPm            GBPm 
------------------------------------------------  ------------------  -------------- 
  Total net financing charge before exceptional 
   items                                                       (1.4)           (1.4) 
  Adjust for: 
  Other financial losses (gains)                                 0.2           (0.1) 
------------------------------------------------  ------------------  -------------- 
  Adjusted net interest payable                                (1.2)           (1.5) 
------------------------------------------------  ------------------  -------------- 
 

5 Taxation

Income tax is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial period.

 
 
                                                    Six months ended    Six months ended 
                                                                             31 December 
                                                    31 December 2018                2017 
                                                         (unaudited)         (unaudited) 
                                                                GBPm                GBPm 
--------------------------------------------  ----------------------  ------------------ 
  Current income tax 
  Current income tax - UK                                      (3.9)               (6.6) 
  Current income tax - overseas                                (2.8)               (2.0) 
--------------------------------------------  ----------------------  ------------------ 
  Current income tax charge                                    (6.7)               (8.6) 
  Current income tax on exceptional 
   items                                                         1.0                 0.5 
  Amounts over (under) provided in previous 
   period                                                        0.8               (0.4) 
  Total current income tax charge                              (4.9)               (8.5) 
--------------------------------------------  ----------------------  ------------------ 
  Deferred tax 
  Deferred tax - UK                                                -               (0.6) 
  Deferred tax - overseas                                        0.8                   - 
  Deferred tax on exceptional items                                -                 0.8 
  Amounts over provided in previous 
   period                                                          -                 0.6 
  Total deferred tax credit                                      0.8                 0.8 
--------------------------------------------  ----------------------  ------------------ 
 
  Tax charge in the income statement                           (4.1)               (7.7) 
--------------------------------------------  ----------------------  ------------------ 
 
 
 

The debit in respect of employee share schemes included within the Statement of Changes in Equity includes a deferred tax credit of GBPnil (six months ended 31 December 2017: GBP0.1m).

Factors affecting future taxation

UK corporation tax is calculated at 19.00% (six months ended 31 December 2017: 19.00%) of the estimated assessable profit for the period. Taxation for overseas operations is calculated at the local prevailing rates.

On 8 July 2015, the Chancellor of the Exchequer announced the reduction in the main rate of UK corporation tax to 19.00% for the year starting 1 April 2017 and a further 1.00% reduction to 18.00% from 1 April 2020. These changes were substantively enacted in October 2015.

On 16 March 2016, the Chancellor of the Exchequer announced a further 1.00% reduction to the previously announced 18.00% main rate of UK corporation tax to 17.00% from 1 April 2020. This change was substantively enacted in September 2016.

On 26 July 2017, the Belgian Government announced the reduction in the corporation tax rate in Belgium from 33.99% to 29.58% for financial years beginning in 2018 and to 25.00% for financial years beginning in 2020 and onwards. These changes were substantively enacted in December 2017.

The rate reductions will reduce the amount of cash tax payments to be made by the Group.

5 Taxation (continued)

A reconciliation of tax on continuing operations to tax included in adjusted profit is described below:

 
                                                                   Six months 
                                             Six months ended           ended 
                                                  31 December     31 December 
                                                         2018            2017 
                                                  (unaudited)     (unaudited) 
                                                         GBPm            GBPm 
-----------------------------------------  ------------------  -------------- 
  Tax charge                                            (4.1)           (7.7) 
  Adjust for: 
  Tax on exceptional items                              (1.0)           (1.3) 
----------------------------------------- 
  Tax charge included in adjusted profit                (5.1)           (9.0) 
-----------------------------------------  ------------------  -------------- 
 

6 Dividends

 
                                              Six months      Six months 
                                                   ended           ended 
                                             31 December     31 December 
                                                    2018            2017 
                                             (unaudited)     (unaudited) 
                                                    GBPm            GBPm 
----------------------------------------  --------------  -------------- 
  Dividends paid to equity holders 
  Final dividend for 2017/18 paid on 30 
   October 2018 - 5.30p per share                   20.7               - 
  Final dividend for 2016/17 paid on 31 
   October 2017 - 5.30p per share                      -            20.7 
  Total                                             20.7            20.7 
----------------------------------------  --------------  -------------- 
 

The Board has declared an interim dividend of 2.15p per ordinary share. The dividend will be paid on 14 March 2019 to shareholders on the register at 15 February 2019. The financial information does not reflect this dividend.

7 Adjusted earnings per share

Adjusted earnings is calculated by adjusting profit attributable to equity shareholders to exclude exceptional items, other financial gains or losses, unwinding of the discount in disposal provisions and the related tax effects. Adjusted earnings is one of the business performance measures used internally by management to manage the operations of the business. Management believes that the adjusted earnings measure assists in providing a view of the underlying performance of the business.

Adjusted net earnings attributable to equity shareholders is derived as follows:

 
                                                                      Six months ended 
                                                  Six months ended         31 December 
                                                  31 December 2018                2017 
                                                       (unaudited)         (unaudited) 
                                                              GBPm                GBPm 
---------------------------------------------  -------------------  ------------------ 
  Profit attributable to equity shareholders                  18.7                25.1 
  Adjust for: 
  Exceptional items after tax                                  5.1                 6.2 
  Other financial losses (gains)                               0.2               (0.1) 
---------------------------------------------  -------------------  ------------------ 
  Adjusted net earnings attributable to 
   equity shareholders                                        24.0                31.2 
  Weighted average number of ordinary 
   shares in issue                                          390.7m              390.7m 
  Adjusted earnings per share (p) - basic                     6.1p                8.0p 
  Adjusted earnings per share (p) - diluted                   6.1p                8.0p 
---------------------------------------------  -------------------  ------------------ 
 

8 Provisions

 
                                                                                 Indirect 
                              Property lease      Disposal    Restructuring           tax 
                                  provisions    provisions       provisions    provisions    Total 
                                        GBPm          GBPm             GBPm          GBPm     GBPm 
-----------------------------------  -------  ------------  ---------------  ------------  ------- 
  At 1 July 2018                        36.0           4.0              0.4           1.2     41.6 
  Unwinding of discount                  0.2             -                -             -      0.2 
  Exceptional charge to the 
   income statement                        -             -              2.6             -      2.6 
  Cash utilised in period              (2.1)             -            (0.3)             -    (2.4) 
  At 31 December 2018 (unaudited)       34.1           4.0              2.7           1.2     42.0 
-----------------------------------  -------  ------------  ---------------  ------------  ------- 
  Current                                6.0           0.2              2.7           1.2     10.1 
  Non-current                           28.1           3.8                -             -     31.9 
  At 31 December 2018 (unaudited)       34.1           4.0              2.7           1.2     42.0 
-----------------------------------  -------  ------------  ---------------  ------------  ------- 
 
 

9 Borrowings to net debt reconciliation

Under IFRS, accrued interest and unamortised facility fees are classified as loans and borrowings. A reconciliation of loans and borrowings disclosed in the balance sheet to the Group's net debt position is provided below:

 
                                                                  At 
                                                  At     31 December 
                                    31 December 2018            2017 
                                         (unaudited)     (unaudited) 
                                                GBPm            GBPm 
-------------------------------  -------------------  -------------- 
  Total loans and borrowings                  (62.3)          (94.7) 
  Adjust for: 
  Accrued interest                               0.1             0.4 
  Unamortised facility fees                    (0.1)           (0.1) 
-------------------------------  -------------------  -------------- 
                                              (62.3)          (94.4) 
  Cash and short-term deposits                  70.0            98.4 
  Net cash                                       7.7             4.0 
-------------------------------  -------------------  -------------- 
 

10 Cash generated from continuing operations

 
                                                                        Six months 
                                                  Six months ended           ended 
                                                       31 December     31 December 
                                                              2018            2017 
                                                       (unaudited)     (unaudited) 
                                                              GBPm            GBPm 
----------------------------------------------  ------------------  -------------- 
 
  Operating profit                                            25.8            34.2 
  Exceptional items                                            4.5             7.5 
----------------------------------------------  ------------------  -------------- 
  Operating profit before exceptional 
   items                                                      30.3            41.7 
  Depreciation and amortisation                               22.0            21.6 
  Increase in inventories                                    (0.2)           (0.1) 
  Increase in other receivables                              (5.3)           (8.3) 
  Increase in trade and other payables                        13.3            13.5 
  Share-based payments                                         0.4             0.2 
  Settlement of share-based payments                         (0.4)           (1.7) 
  Loss on disposal of property, plant 
   and equipment                                                 -             0.1 
  Impairment of intangible assets                                -             0.2 
  Impairment of property, plant and equipment                  0.2             0.1 
----------------------------------------------  ------------------  -------------- 
                                                              60.3            67.3 
  Cash utilisation of provisions (See 
   note 8)                                                   (2.4)           (4.7) 
  Cash payments in respect of exceptional 
   items                                                     (1.9)           (0.7) 
  Cash generated from operations                              56.0            61.9 
----------------------------------------------  ------------------  -------------- 
 

11 Contingent liabilities

Property leases

Concurrent to the GBP211m sale and leaseback in 2006, the Group transferred the rights and obligations but not the legal titles of 44 property leases to a third party. The Group remains potentially liable in the event of default by the third party. Should default occur then the Group would have recourse to two guarantors. It is understood that, of the original 44 leases transferred, eight of these have not expired or been surrendered. These eight leases have durations of between two months and 94 years and a current annual rental obligation (net of sub-let income) of approximately GBP0.8m.

During 2014, the Group became aware of certain information in respect of a change in the financial position of the third party and one of the guarantors. However, the Group has not to date been notified of any default, or intention to default, in respect of the transferred leases.

12 Related party and ultimate parent undertaking

Guoco Group Limited (Guoco), a company incorporated in Bermuda, and listed on the Hong Kong stock exchange has a controlling interest in The Rank Group Plc. The ultimate parent undertaking of Guoco is Hong Leong Company (Malaysia) Berhad (Hong Leong) which is incorporated in Malaysia. At 31 December 2018, entities controlled by Hong Leong owned 56.2% of the Company's shares, including 52.0% through Guoco and its wholly-owned subsidiary, Rank Assets Limited, the Company's immediate parent undertaking.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

IR BMMJTMBBJTML

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January 31, 2019 02:01 ET (07:01 GMT)

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