The Rank Group Plc Annual Report and Financial Statements 2013 the Rank Group Plc Annual Report and Financial Statements 2013
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The Rank Group Plc The Rank Group Plc Annual Report and Financial Statements 2013 Annual Report and Financial Statements 2013 the rank group experience contents Directors’ report Performance highlights 2 Group overview 4 Chairman and chief executive’s review 8 Business model 12 Strategic update 13 Operating review Grosvenor Casinos 20 Mecca 26 Enracha 30 Operating responsibly 33 Financial review 40 Tax fact file 43 Governance Board of directors 48 Management team 50 Corporate governance 51 Remuneration report 66 Financial statements Independent auditor’s report 76 Group income statement 77 Group statement of comprehensive income 78 Balance sheets 79 Statements of changes in equity 80 Statements of cash flow 81 Notes to the financial statements 82 Unaudited appendix to the financial statements Unaudited financial statements 134 Five year review 142 Other information Shareholder information 143 Glossary 144 The rank group presents The Group has been entertaining Britain since 1937, from its origins in motion pictures to today’s gaming based entertainment brands. The Group has remained true to its founding mission to make life better by bringing people together for fun and entertainment. In this the Group applies a moral code, focused on values of fairness and a belief in ‘the right thing to do’. Over the course of more than three-quarters of a century, the Group has thrilled many millions of customers in Britain and around the world. The Group’s story is one of iconic brands and talented people with a mission to entertain. For more information please visit www.rank.com Directors’DIRECTORs’ reportRePORT PERFORMANCE HIGHLIGHTS: 12-MONTH PERIOD 1 JULy 2012 – 30 JUNE 2013 performance highlights Delivering solid performance The charts illustrate the Group’s Revenue1 (£m) Statutory performance for the 12-month revenue (£m) periods to 30 June over the last four years. The results are unaudited with 625.0* 596.2* 558.9* the exception of the 12 months to 584.3* 556.9 580.7 533.9 30 June 2013. Only the results to 555.1 30 June 2012 and 2013 have been restated to exclude the disposed Blue Square Bet business. Statutory reporting periods The Group changed its accounting 10 11 12 13 10 11 12 13 reference date to 30 June in the prior £625.0m £596.2m period. The comparable statutory reporting period is therefore the 18 months to 30 June 2012. To aid comparability between periods the following commentary refers to the unaudited 12 month results Adjusted earnings Dividend to 30 June 2012. per share5 (p) per share (p) 12.4* 12.4* 4.10* 10.2 3.60* 9.0 2.66 2.09 10 11 12 13 10 11 12 13 12.4p 4.10p * Excludes Blue Square Bet. ** 2012/13 excludes customers from the acquired casinos and Blue Square Bet. The Rank Group Plc: Annual Report and Financial Statements 2013 2 Operating EBITDA3 (£m) Adjusted profit profit2 (£m) before tax4 (£m) 69.9* 69.7* 108.8* 107.0* 65.7* 65.1* 62.9 97.0 56.4 56.4 84.3 48.9 10 11 12 13 10 11 12 13 10 11 12 13 £69.9m £108.8m £65.1m Net (debt)/cash Customers (000s) Customer (£m) visits (000s) 6 41.8 27,895 27,090* 37.2 26,933** 2,676** 2,641* 2,563 2,546 22,464 (133.4) (103.8) 10 11 12 13 10 11 12 13 10 11 12 13 £(103.8)m 2,676 26,933 1 Before adjustment for free bets, promotions and customer bonuses. 2 Before exceptional items. 3 Group EBITDA is Group operating profit before exceptional items, depreciation and amortisation. 4 Adjusted profit before taxation is calculated by adjusting profit from continuing operations before taxation to exclude exceptional items, the unwinding of discount in disposal provisions and other financial gains or losses. 5 Adjusted earnings per share is calculated by adjusting profit attributable to equity shareholders to exclude discontinued operations, exclude discounted operations, exceptional items, other financial gains or losses, unwinding of the discount in disposal provisions and the related tax effects. 6 Excludes digital channels. The Rank Group Plc: Annual Report and Financial Statements 2013 3 Directors’DIRECTORs’ reportRePORT GROUP OVERVIEW our Businesses At the heart of entertainment grosvenor casinos Grosvenor Casinos serves more than 1 million customers a year through a national portfolio of branded venues as well as via its online and mobile casinos. The brand offers a range of popular casino table games, including roulette, blackjack, baccarat and poker as well as electronic casino and slots games. Contribution to Group revenue* £300.3M Number of licensed casinos 57 Operating profit** £47.4 m Customers (000s)*** 1,306 Key achievements • Completed the acquisition of 19 casino venues and 3 non-trading licences from the Gala Coral group • Growth in customers and customer visits • A new G casino opened in Reading * Before adjustment for free bets, promotions and customer bonuses. ** Before exceptional items. *** Excludes customers from the acquired casinos. The Rank Group Plc: Annual Report and Financial Statements 2013 4 mecca enracha Mecca is Rank’s community-gaming brand for the Enracha is Rank’s community-gaming business for the British market. With over 1 million customers a year Spanish market. 11 venues serve more than 276,000 and a national portfolio of venues, as well as one of customers a year through venues in Catalonia, Madrid, Great Britain’s most popular community gaming Andalucía and Galicia, offering a range of popular websites and app. The digital channel offers a range community games like bingo and poker as well as of popular games like bingo and poker as well as a wide electronic casino and slot games, great value food range of slot games, and the venues also offer great and drink, and live entertainment. value food and drink, and live entertainment. Contribution to Group revenue* Contribution to Group revenue* £296.2m £28.5m Number of licensed bingo venues Number of licensed bingo venues 97 11 Operating profit** Operating profit** £44.1m £0.7m Customers (000s) Customers (000s) 1,134 276 Key achievements Key achievements • Sustained revenue growth in meccabingo.com • Continued roll-out of the Enracha brand across • 16% growth in digital customers the Spanish venues • 161% growth in mobile revenue • Increased customer satisfaction The Rank Group Plc: Annual Report and Financial Statements 2013 5 Directors’DIRECTORs’ reportRePORT GROUP OVERVIEW where we operate Leading in our markets great britain Great Britain is the largest of Rank’s markets, representing approximately 92% of Group revenue. Grosvenor Casinos and Mecca are headquartered in Maidenhead. Rank has become the largest land-based casino operator in Great Britain with 55 venues and 12 non-trading licences after completing the acquisition of 19 casinos and 3 non- trading licences from Gala Coral in May 2013. BELGIUM Belgium is a small but stable and strongly established gambling market. Rank operates 2 casino venues: in Middlekerke and Blankenberge. SPain Today, Enracha is the fourth largest bingo operator in Spain with 11 community gaming-based entertainment venues in Catalonia, Madrid, Andalucía and Galicia. Enracha is headquartered in Barcelona. Sources: 1 Office for National Statistics, 2011 census. 2 Indexmundi.com. 3 Indexmundi.com. 4 Gambling Commission, Gambling Data. 5 Direccion General de Ordenacion del Juego. 6 Gambling Compliance & lotto.be. The Rank Group Plc: Annual Report and Financial Statements 2013 6 Group revenue Size of gambling market4 by territory great britain 55 92% £12bn casino venues Adult population1 Gambling spend 97 per adult bingo venues 50.6m £237 Group revenue Size of gambling market6 by territory BELGUIM 3% €1bn 2 Casino Adult population3 Gambling spend venues per adult 8.8m €114 Group revenue Size of gambling market5 by territory SPAIN 11 5% €9bn BINGO venues Adult population2 Gambling spend per adult 39.8 m €226 The Rank Group Plc: Annual Report and Financial Statements 2013 7 Directors’ report Chairman and Chief Executive´s Review Delivering on our strategy The Group’s performance is driven by its established approach of understanding our customer needs, developing well-known and much loved brands, taking responsibility for our actions and playing our part in building vibrant communities. As always our employees are vital to how we achieve this. I would like to take the opportunity on behalf of the Board to thank them all for their efforts. It has been a busy 12 months for Rank culminating in the successful completion in May of the acquisition of 19 casinos and 3 non-trading licences from Gala Coral Group Limited (“Gala Coral”) and the disposal of the loss making Blue Square Bet business. Despite a tough economic environment and the competitive market in which we operate the Group has delivered a Ian Burke solid set of results. The Board has recommended a final Chairman & chief executive dividend of 2.85 pence per share making total dividends 14 August 2013 for the 12 months to 30 June 2013 of 4.10 pence per share, an increase of 14% on the previous 12-month period. Having moved to a brand-based structure at the beginning of the year, the Group has witnessed strong growth from digital media (online and mobile) and our fastest growing channel of distribution was mobile media, which increased revenue by 168% to £13.2m. 30% of our digital customers are now playing with our brands on mobile devices, up 23% from the prior period. This remains a strong area of focus for our team going forward. Our businesses have I am very proud of the positive contribution the Group delivered a solid makes to life in Britain in a number of areas.