Interim Results
Rank Group PLC
7 September 2001
The Rank Group Plc
Interim Results for the 6 months ended 30 June 2001
- Profit before tax** almost doubled at £82.8m
- Earnings per share** almost four times higher at 9.2p
- Operating profit** on continuing operations up 11% to £96.0m
- Gaming profit up 15% with businesses well positioned to take advantage
of the recommendations of the Gambling Review
- Hard Rock continues its return to growth with profit up 10%
- Deluxe profit** in line with last year
- Interim dividend up by 5% to 4.2p
** before exceptional items
Commenting on the results, Mike Smith, Chief Executive, said:
'The Group continues to improve its operational and financial performance. All
our businesses have performed well and the considerable restructuring
completed last year means that our post interest and post tax earnings are
significantly improved. We have declared a 5% increase in the interim
dividend.
We have put in place several initiatives in support of future growth and we
continue to invest, partly in anticipation of a favourable impact from the
implementation of the recommendations of the UK Gambling Review Body. Our
strong financial position and increased confidence in the future encourage us
to seek further opportunities for expansion within our more focused
activities.'
Enquiries:
The Rank Group Tel: 020 7706 1111
Mike Smith, Chief Executive
Ian Dyson, Finance Director
Kate Ellis-Jones, Investor Relations
Press Enquiries:
The Maitland Consultancy Tel: 020 7379 5151
Angus Maitland
Laura Frost
RG/04/01
Conference call details:
Friday 7 September 2001 - the meeting starts at 9.30am - call in at 9.20am
quoting The Rank Group
UK dial in number - 020 8240 8240
International dial in number - +44 (0) 20 8240 8240
Instant replay number - available at anytime from the end of the meeting on 7
September for 7 days
UK dial in number - 020 8288 4459 - Access code 618 992
International dial in number - +44 (0) 20 8288 4459 - Access code 618 992
The slide presentation will be on the rank.com website
CHIEF EXECUTIVE'S REVIEW
The benefits of the actions taken in 2000 are shown in the substantial
improvement in the Group's results. This is the first time for some two years
that we have not been preoccupied with the disposal of businesses or major
operational restructuring initiatives. A smaller capital base, much reduced
borrowings, and the elimination of loss making activities, all linked to a
constant drive to improve performance, have given the Group significantly
improved earnings in this six month period.
Putting the benefits of the restructuring to one side, there are further
improvements in operating profits as attention to margin and cost has again
brought rewards. Mecca Bingo was outstanding in the six months; Grosvenor
Casinos was good except within our more exclusive clubs in London; Hard Rock
again improved profits; Deluxe film was strong and video resilient following
all the actions taken last year.
Cash flow was neutral during this six month period and will be positive for
the full year after absorbing an increased level of capital expenditure in our
continuing businesses. Development activity includes the expansion and
relocation of businesses within Gaming; new cafes and further reconfigurations
within Hard Rock; the completion of the new Deluxe film laboratory in Rome and
the start of the replacement film laboratory in Toronto. This expenditure will
help drive the Group forward next year.
Whilst there is evidence of a slow down in economic activity, we have not been
unduly affected to date, with only the Hard Rock markets particularly
dependent upon tourism showing limited signs of downturn. Nevertheless we have
already taken action to reduce costs and strengthen our marketing across all
of the businesses to safeguard against the possibility of less buoyant
conditions. Recent trading has been good and this, together with the steps we
have taken, reinforces our belief that our expectations for 2001 results
should be met.
Taking a longer term view, the adoption of the recommendations of the UK
Gambling Review Body will be very positive for the Group. Timing is uncertain
as there is a consultation process and a need for primary legislation before
all the recommendations can be implemented. However, there is a general
acceptance that the betting and gaming industries will be boosted by the more
liberal regulatory environment. Our strong brands, leading market positions
and customer base, combined with well invested facilities, will enable us to
capitalise on the new opportunities.
Our strong financial position and increased confidence in the future encourage
us to seek further opportunities for expansion within our more focused
activities. To date we have made small scale business purchases, these being
the Park Tower Casino in London last year and two bingo clubs very recently.
We remain active in the pursuit of more significant acquisitions within
Gaming.
We are pleased to be able to announce a 5% increase in the interim dividend to
4.2p per share.
Profit Before Tax
Turnover Profit before
exceptional items
2001 2000 2001 2000
£m £m £m £m
Gaming 209.4 226.9 45.6 39.5
Hard Rock 130.6 127.6 24.0 21.9
Deluxe 282.0 303.3 22.7 23.5
US Holidays 23.4 24.9 6.7 8.2
Central costs and other - - (3.0) (6.3)
------------ ------------ ------------
Continuing operations 645.4 682.7 96.0 86.8
Discontinued operations - 223.4 - 9.5
------------ ------------ ------------
645.4 906.1 96.0 96.3
======== ========
Net income (loss) from associates 1.7 (13.6)
and joint ventures
Managed businesses' interest (14.9) (40.6)
--------- ---------
Profit before tax and exceptional 82.8 42.1
items
Exceptional items 6.5 (184.6)
--------- ---------
Profit (loss) before tax 89.3 (142.5)
======== ========
Earnings per share before 9.2p 2.5p
exceptional items
Dividend per share 4.2p 4.0p
Summary of Results
Group profit before tax and exceptional items of £82.8m was almost double last
year, with earnings per share almost four times higher at 9.2p. This
improvement in results reflects the substantial restructuring of the Group in
2000, allied to further strong operating profit growth from continuing
operations and a further reduction in the effective tax rate.
Turnover on continuing operations was down 5.5%. A number of issues distort
the comparability of turnover with last year, in particular the loss of the
Fox US video contract in Deluxe, exceptional business at the Clermont casino
in the first half of 2000 and a week less trading in Hard Rock this year.
Adjusting for these items and reflecting the impact of changes in exchange
rates leaves turnover 1.1% lower than last year.
Operating profit from continuing operations was up 11%, with Gaming and Hard
Rock again performing strongly. Continued growth in film together with the
major restructuring undertaken in US video last year led to a satisfactory
result overall for Deluxe.
Net income from associates and joint ventures, now principally the
contribution from the British Land joint venture, was £1.7m, a significant
improvement on the prior year figure which included a £14.6m loss in respect
of the Group's interest in Universal Studios Escape, sold in July 2000.
Managed businesses interest was £25.7m lower than last year largely reflecting
the substantial reduction in net debt to £334.6m at 30 June compared to £
1,048.7m at 30 June 2000. The effective tax rate has been further reduced to
19.5% (2000 full year - 21.5%).
The Group recorded net exceptional profit before tax of £6.5m, due largely to
a profit on the sale and leaseback of assets within Deluxe. An analysis of
exceptional items is given on page 10.
The interim dividend has been increased by 5% to 4.2p (2000 - 4.0p).
Gaming
Turnover Operating Profit
2001 2000 2001 2000
£m £m £m £m
Mecca Bingo 118.8 117.9 35.0 28.2
Grosvenor Casinos 68.2 84.5 9.7 10.8
Rank Leisure
Machine Services 22.4 24.5 0.9 0.5
------------- ------------- ------------- -------------
209.4 226.9 45.6 39.5
======= ======= ======= =======
Gaming operating profit was up 15%, with another very strong performance by
Mecca Bingo more than compensating for some weakness at the high end London
casinos within Grosvenor.
Mecca's strategy of focusing on higher yield players has continued to reap
rewards with operating profit up almost 25%. Spend per head was up more than
12% to £9.30 in the period and has now increased by 30% since 1998. This
growth more than offset the decline in admissions to leave turnover up 1%.
There is however a recognition of the need to attract more high yielding
players and consequently plans are in place for increased promotional activity
over the coming months. Effective management of the product mix and tight
control of costs led to a further improvement in the profit margin to 29%
(2000 - 24%).
In June, Mecca acquired two clubs in Rotherham and Wakefield which are both
trading ahead of expectations. Further opportunities for acquisitions are
under review.
Grosvenor Casinos' results were mixed with an excellent result in the
provinces undermined by a more difficult trading period in London, leaving
operating profit down 10%.
In London, the Clermont experienced challenging trading conditions in direct
contrast to the exceptional trading last year. There has been some improvement
in recent weeks with margins returning to more normal levels. The Park Tower
also had a slow first half, but again has improved recently.
The provincial casinos performed well with handle per head up 6% and operating
profit up 18% to £6.0m. The casinos in Birmingham, Blackpool and Great
Yarmouth were relocated during the period, with Brighton to follow next year.
A total of eight casinos will have been relocated or substantially extended in
the past two years and we have also added two new casinos to the estate. In
addition, the new Hard Rock casino in Manchester will open in the first half
of 2002 and a site has been acquired for a London Hard Rock casino, subject to
the grant of a new license.
The enhanced estate is now well positioned to take advantage of the
recommendations made in the UK Gambling Review. We welcome the recommendations
which include the abolition of permitted areas; the ending of a membership
requirement; larger pay-outs in Bingo; additional gaming machines; and the
possibility of offering a wider range of products.
Rank Leisure Machine Services increased operating profit to £0.9m (2000 - £
0.5m).
Significant progress has been made in the development of a range of internet
gaming products which will be launched later this year.
Hard Rock
Turnover* Operating Profit*
2001 2000 2001 2000
£m £m £m £m
Owned cafes 122.0 123.3 22.5 26.7
Cafe franchise and other 6.9 4.2 7.4 4.7
income
Hotel franchise and other 1.7 0.1 1.2 0.1
income
Advertising and promotion - - - (3.0)
Overheads - - (5.3) (6.6)
Restructuring charge - - (1.8) -
---------- ---------- ---------- ----------
130.6 127.6 24.0 21.9
======= ======= ======= =======
* Results for 2001 are for 26 weeks (2000 - 27 weeks)
Hard Rock increased operating profit by 10% despite an extra trading week in
2000 and a restructuring charge of £1.8m. Favourable exchange rate movements
increased turnover by £9.8m and profit by £1.5m compared to last year.
Like for like revenues within owned cafes were 3.5% down on 2000 (on a
comparable 26 week trading period). The improved trend experienced in the
first weeks of the year was adversely affected by disruption to key cafes
caused by the reconfiguration projects and the slowdown in the US economy,
particularly in those cities where there is a greater reliance on tourism.
Europe continued to perform strongly with like for like revenues up 3.8%.
A total of £9.4m was spent in the first half of the year on 13 cafe
reconfigurations, with a particular emphasis on the merchandise offering. Work
has now been completed on many of the larger cafes including New York, London,
Las Vegas, Paris and Washington D.C. Results have been encouraging within
these cafes since their relaunch and have helped to improve the overall like
for like sales trend which is down 1.9% in the third quarter to date. The
programme of updating the cafe portfolio will continue with further
reconfigurations, the rebuild of Toronto and the relocation of Phoenix. Plans
are also in place for additional owned cafes, principally in Europe, including
Munich and Birmingham, which are due to open later this year. In the US,
Pittsburgh, Austin and Minneapolis are due to open next year.
We have continued our programme to increase traffic at our cafes by switching
from spending on general brand reinforcement to focusing on promotional
activities to increase local customer attendance. Accordingly, corporate
advertising has reduced but there is higher promotional expenditure at the
individual cafe level.
The global attraction of the Hard Rock brand was reinforced in the first half
of the year with a significant increase in franchise and other income to £
8.6m. This includes franchise territory sales amounting to £3.3m. New
franchised cafes opened in Belfast, Queenstown (New Zealand), Cairo and at
Universal Studios Osaka. Bogota and Osaka City will open later this year and a
further six cafes are planned for 2002. We continue to believe that there are
further opportunities to expand the reach of the brand both within the core
cafe business and within hotels and casinos. The Hard Rock hotel in Orlando
opened in January and has exceeded our expectations, contributing £1.1m of
profit in the first half. Further hotel deals, including a resort hotel in
Pattaya, Thailand to open in November and the Chicago deal announced last
year, are in the pipeline. Within casino gaming, following the agreement with
the Seminole Indian Nation, a number of other opportunities are being pursued
in the US.
Overheads were again lower following the concerted efforts made to improve the
efficiency of the business in 1999 and 2000. A further restructuring of the
corporate office in Orlando was announced in late June 2001 at a cost of £
1.8m.
Deluxe
Turnover Operating Profit*
2001 2000 2001 2000
£m £m £m £m
Film processing 154.3 135.6 23.4 22.7
Video duplication & 124.8 166.3 1.5 2.9
distribution
DVD replication 2.9 1.4 (2.2) (2.1)
----------- ----------- ----------- -----------
282.0 303.3 22.7 23.5
======= ======= ======= =======
*before exceptional items
Film processing had a good first half with footage up 7% and turnover up 14%.
Operating profit was, however, only 3% ahead of last year due to a much higher
proportion of lower margin, front end work as a result of accelerated filming
schedules in anticipation of a threatened Hollywood actors and writers strike.
The threatened strike action will not now occur following settlement of the
potential dispute. Margins were also adversely affected by a higher level of
subcontracting in Europe following the delay of the Rome laboratory, which
opened in June. The new Toronto laboratory is scheduled to commence processing
later this year. Current film release print schedules are strong.
The video duplication business proved resilient in the period. Turnover was
down by 25% reflecting the loss of the Fox contract in August 2000 and lower
volumes in Europe, which benefited from a substantial one-off publishing
project last year. The successful restructuring undertaken in the US mitigated
the impact of the loss of Fox on operating profit; indeed profits in the US
were higher than in 2000. A similar, albeit smaller, restructuring exercise is
in progress in Europe which to date has cost £6.9m, recorded as an exceptional
item within operating profit.
The DVD replication plant in California continued to disappoint, recording a
loss of £2.2m. The DVD market remains extremely difficult with substantial
excess capacity driving down unit prices and hampering Deluxe's attempts to
gain volume.
US Holidays
US Holidays generated operating profit of £6.7m (2000 - £8.2m) and cash flow
of £11.8m (2000 - £12.5m).
Central costs and other income
2001 2000
£m £m
Central costs (5.4) (6.3)
Other income 2.4 -
------------- -------------
(3.0) (6.3)
======= =======
Associates and joint ventures
Associates and joint ventures comprises the net profit after interest in
respect of the British Land joint venture (£1.4m) and ETS, a distributor of
film release prints and trailers (£0.3m). The prior year includes losses from
Universal Studios Escape of £14.6m.
Interest
Managed businesses' interest was £14.9m, a reduction of £25.7m from the prior
year. This reflects the significant reduction in net debt following the
restructuring of the Group in 2000. The average interest rate was 7.5% (2000 -
7.4%), with the increase reflecting the lower rate of interest received on
cash deposits and the high proportion of fixed rate debt which reduced the
impact of reductions in floating rates in the period. Average interest rates
are expected to improve in the second half of the year following the execution
of a series of interest rate swaps and refinancing of £65m of fixed rate debt
within the last few months.
The interest charge includes a net credit of £0.6m in respect of a profit on
early redemption of £18m of the Group's fixed rate debt, less associated costs
and write-offs.
Taxation
The effective tax rate on Rank managed businesses is 19.5%, a reduction of two
percentage points compared to 2000. The effective rate continues to benefit
from prior year capital allowance disclaimers and US tax losses.
Dividend
An interim dividend of 4.2p per Ordinary share will be paid on 12 October 2001
to those shareholders on the register on 21 September 2001.
Exchange rates
The net translation effect of changes in average exchange rates between 2000
and 2001 was to increase turnover by £29.3m and profit before tax and
exceptional items by £3.1m. The increase in profit before tax comprises an
increase in operating profit of £3.7m (Deluxe £1.5m, Hard Rock £1.5m, US
Holidays £0.6m, Gaming £0.1m) offset by higher interest payable of £0.6m. The
average rates are given in note 7.
Exceptional items
£m
Exceptional items within operating profit
Restructuring charge at Deluxe Video Europe (6.9)
Non-operating exceptional items
Disposal of plant and equipment within Deluxe Video US 14.4
Other disposals (1.0)
------------
6.5
=======
Following the successful restructuring within the US video business in 2000, a
similar, albeit smaller scale, exercise is in progress in Europe. This
involves the closure of a duplication plant in France and restructuring in the
UK and Germany. The costs incurred to 30 June 2001 of £6.9m have been included
as an exceptional item.
On 6 June 2001, Deluxe Video US completed a sale and leaseback of the plant
and equipment at the video duplication facility in Arkansas. The proceeds were
£28.1m and resulted in a profit on disposal of £14.4m. The plant and equipment
has been leased for a five year term.
Cash flow
2001 2000
£m £m
Cash inflow from operating activities 104.1 181.3
Capital expenditure (51.7) (82.3)
Fixed asset disposals 32.7 10.3
------------- -------------
Operating cash flow 85.1 109.3
Distributions from associates and joint ventures 2.4 1.2
Acquisitions - (25.3)
Investments (4.8) (6.7)
Disposals 3.6 340.0
------------- -------------
86.3 418.5
Interest, tax and dividend payments (85.0) (122.6)
------------- -------------
1.3 295.9
Payments to minorities (1.0) -
Purchase of Ordinary share capital - (119.8)
------------- -------------
0.3 176.1
======== ========
The Group generated net cash of £0.3m in the period (2000 - £176.1m). In the
absence of significant disposal proceeds, this represents a robust performance
given the lower level of profitability in the first half relative to the
second and the fact that the 2000 final dividend of £47.3m was paid in April
2001.
Fixed asset disposals include £28.1m proceeds from the disposal of plant and
equipment at Deluxe's video duplication facility in Arkansas. Investments
include further payments in respect of the Group's interest in the Universal
Hotels.
Capital expenditure by division was:
2001 2000
£m £m
Gaming 22.2 19.3
Hard Rock 11.7 5.4
Deluxe 17.1 10.1
Other 0.7 0.3
------------- -------------
Total on continuing businesses 51.7 35.1
Discontinued businesses - 47.2
------------- -------------
Total capital expenditure 51.7 82.3
======== ========
Net debt
Net debt at 30 June 2001 was £334.6m compared with £1,048.7m last year and £
319.9m at 31 December 2000. An exchange loss of £19.4m arose during the period
reflecting the Group's relatively high proportion of US dollar debt.
Net debt as a percentage of shareholders funds was 56% (30 June 2000 - 111%,
31 December 2000 - 58%).
GROUP PROFIT AND LOSS ACCOUNT (unaudited)
6 months to 30.6.01
Before
Exceptional Exceptional
Items Items Total
£m £m £m
Turnover
Continuing operations 645.4 - 645.4
Discontinued operations - - -
---------- --------- ---------
645.4 - 645.4
Operating profit
Continuing operations 96.0 (6.9) 89.1
Discontinued operations - - -
---------- --------- ---------
96.0 (6.9) 89.1
Non-operating items (Note 3) - 13.4 13.4
Share of operating profit (loss) in associates
and joint ventures:
Universal Studios Escape - - -
Other 3.4 - 3.4
---------- --------- ---------
Profit (loss) before interest 99.4 6.5 105.9
Net interest: (14.9) - (14.9)
Managed businesses
Universal Studios Escape - - -
Other (1.7) - (1.7)
---------- --------- ---------
Profit (loss) before tax 82.8 6.5 89.3
Tax (Note 4) (16.3) - (16.3)
---------- --------- ---------
Profit (loss) after tax 66.5 6.5 73.0
Minority interests (1.3) - (1.3)
Preference dividends (10.5) - (10.5)
---------- --------- ---------
Earnings (loss) 54.7 6.5 61.2
======== ======== ========
Basic and diluted earnings (loss) per Ordinary 9.2p 1.1p 10.3p
share
(Note 5)
Net dividend per Ordinary share 4.2p
6 months to 30.6.00
Before Except-
Exceptional ional
Items Items Total
£m £m £m
Turnover
Continuing operations 682.7 - 682.7
Discontinued operations 223.4 - 223.4
---------- --------- ---------
906.1 - 906.1
Operating profit
Continuing operations 86.8 (41.9) 44.9
Discontinued operations 9.5 (0.4) 9.1
---------- --------- ---------
96.3 (42.3) 54.0
Non-operating items (Note 3) - (129.1) (129.1)
Universal Studios Escape 5.2 (13.2) (8.0)
Other 2.8 - 2.8
---------- --------- ---------
Profit (loss) before interest 104.3 (184.6) (80.3)
Net interest:
(40.6) - (40.6)
Managed businesses
Universal Studios Escape (19.8) - (19.8)
Other (1.8) - (1.8)
---------- --------- ---------
Profit (loss) before tax 42.1 (184.6) (142.5)
Tax (Note 4) (12.6) 3.0 (9.6)
---------- --------- ---------
Profit (loss) after tax 29.5 (181.6) (152.1)
Minority interests (1.5) - (1.5)
Preference dividends (10.5) - (10.5)
---------- --------- ---------
Earnings (loss) 17.5 (181.6) (164.1)
======== ======== ========
Basic and diluted earnings (loss) per Ordinary 2.5p (25.6)p (23.1)p
share (Note 5)
Net dividend per Ordinary share 4.0p
GROUP PROFIT AND LOSS ACCOUNT (unaudited)
6 months 6 months Year to
to 30.6.01 to 30.6.00 31.12.00
£m £m £m
Turnover
Continuing operations 645.4 682.7 1,404.1
Discontinued operations - 223.4 389.3
------------ ------------ ------------
645.4 906.1 1,793.4
Operating profit before exceptional items
Continuing operations 96.0 86.8 203.1
Discontinued operations - 9.5 59.7
------------ ------------ ------------
96.0 96.3 262.8
Exceptional items within operating profit (6.9) (42.3) (43.5)
Non-operating items (Note 3) 13.4 (129.1) (449.5)
Share of operating profit (loss) in
associates and joint ventures:
Universal Studios Escape - 5.2 11.4
Other 3.4 2.8 6.3
Exceptional items - (13.2) (13.8)
------------ ------------ ------------
Profit (loss) before interest 105.9 (80.3) (226.3)
Net interest:
Managed businesses (14.9) (40.6) (67.4)
Associates and joint ventures (1.7) (21.6) (27.1)
Exceptional charge on repayment of fixed - - (20.3)
rate debt
------------ ------------ ------------
Profit (loss) before tax 89.3 (142.5) (341.1)
------------------------------------- ---------------- ------------ ------------
Profit before tax and exceptional items 82.8 42.1 186.0
------------------------------------- ---------------- ------------ ------------
Tax (Note 4) (16.3) (9.6) 23.7
------------ ------------ ------------
Profit (loss) after tax 73.0 (152.1) (317.4)
Minority interests (1.3) (1.5) (3.0)
Preference dividends (10.5) (10.5) (21.0)
------------ ------------ ------------
Earnings (loss) 61.2 (164.1) (341.4)
======== ======== ========
Earnings before exceptional items 54.7 17.5 120.0
======== ======== ========
Basic and diluted earnings (loss) per 10.3p (23.1)p (49.1)p
Ordinary share (Note 5)
- before exceptional items 9.2p 2.5p 17.3p
Net dividend per Ordinary share 4.2p 4.0p 12.0p
GROUP BALANCE SHEET (unaudited)
As at As at As at
30.6.01 30.6.00 31.12.00
£m £m £m
Fixed assets
Intangible assets 7.8 10.4 7.6
Tangible assets 769.5 1,755.2 775.8
Investments 62.8 49.4 56.3
------------ ------------ -------------
840.1 1,815.0 839.7
------------ ------------ -------------
Current assets
Stocks 80.2 102.0 65.2
Debtors (including amounts falling due 465.4 542.9 486.1
after one year)
Investments 6.1 164.9 11.7
Cash and deposits 152.8 103.1 156.0
------------ ------------ -------------
704.5 912.9 719.0
Creditors (amounts falling due within
one year)
Loan capital and borrowings (43.2) (14.8) (42.6)
Other (326.9) (518.9) (341.3)
------------ ------------ -------------
(370.1) (533.7) (383.9)
Net current assets 334.4 379.2 335.1
------------ ------------ -------------
Total assets less current liabilities 1,174.5 2,194.2 1,174.8
Creditors (amounts falling due after
more than one year)
Loan capital and borrowings (450.3) (1,137.0) (445.0)
Other creditors and provisions (110.1) (95.4) (157.6)
------------ ------------ -------------
614.1 961.8 572.2
======== ======== ========
Capital and reserves
Called up share capital 104.7 115.1 104.6
Share premium account 8.5 8.5 8.5
Other reserves 483.9 822.2 443.2
------------ ------------ -------------
Shareholders' funds 597.1 945.8 556.3
------------------------------------- ---------------- ------------ ------------
Equity interests 373.8 725.8 334.1
Non-equity interests 223.3 220.0 222.2
------------------------------------- ---------------- ------------ ------------
Minority interests (including non-equity 17.0 16.0 15.9
interests)
------------ ------------ -------------
614.1 961.8 572.2
======== ======== ========
GROUP CASH FLOW (unaudited)
6 months 6 months Year to
to 30.6.01 to 30.6.00 31.12.00
£m £m £m
Net cash inflow from operating activities 104.1 181.3 358.0
(Note 6)
Distributions from joint ventures and 2.4 1.2 2.6
associated undertakings
Returns on investment and servicing of
finance
----------- ----------- -----------
Interest (net) (31.8) (54.0) (88.2)
Dividends paid to Preference shareholders (9.4) (9.4) (19.1)
and minorities
----------- ----------- -----------
(41.2) (63.4) (107.3)
Tax received (paid) (net) 3.5 (3.3) 12.8
Capital expenditure
----------- ----------- -----------
Purchase of tangible fixed assets (51.7) (82.3) (144.6)
Purchase of investments (3.1) (1.5) (6.2)
Sale of fixed assets and assets held for 32.7 10.3 20.1
disposal
----------- ----------- -----------
(22.1) (73.5) (130.7)
Acquisitions and disposals
----------- ----------- -----------
Purchase of subsidiaries - (25.3) (25.7)
Sale of businesses and investments 3.6 344.4 1,219.3
Net cash disposed - (4.4) (6.4)
Investments in associates and joint (1.7) (5.2) (13.4)
ventures
----------- ----------- -----------
1.9 309.5 1,173.8
Ordinary dividends paid (47.3) (55.9) (83.7)
----------- ----------- -----------
Cash inflow before use of liquid 1.3 295.9 1,225.5
resources and financing
Movements in net debt
Cash inflow before use of liquid 1.3 295.9 1,225.5
resources and financing
======== ======== ========
Payments to minorities (1.0) - (1.3)
Purchase of Ordinary share capital - (119.8) (304.3)
Increase in finance leases - (8.2) (2.0)
Gain on bond purchase 4.4 - -
Foreign exchange differences (19.4) (54.7) (75.9)
----------- ----------- -----------
(Increase) decrease in net debt (14.7) 113.2 842.0
Net debt at beginning of period (319.9) (1,161.9) (1,161.9)
----------- ----------- -----------
Net debt at end of period (334.6) (1,048.7) (319.9)
======== ======== ========
GROUP RECOGNISED GAINS AND LOSSES
6 months 6 months Year to
to 30.6.01 to 30.6.00 31.12.00
£m £m £m
Profit (loss) for the financial period 71.7 (153.6) (320.4)
Currency translation differences on foreign 3.4 0.1 (5.1)
currency net investments
Tax on exchange adjustments offset in reserves - - (17.9)
--------- --------- ---------
Total recognised gains and losses for the period 75.1 (153.5) (343.4)
======== ======== ========
MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS
6 months 6 months Year to
to 30.6.01 to 30.6.00 31.12.00
£m £m £m
Profit (loss) for the financial period 71.7 (153.6) (320.4)
Dividends payable (34.3) (37.2) (87.9)
Other recognised gains and losses 3.4 0.1 (23.0)
(net)
Purchase of Ordinary share capital - (119.8) (304.3)
Goodwill realised on disposal - 72.5 108.1
------------- ------------- -------------
Net movement in shareholders' funds 40.8 (238.0) (627.5)
------------- ------------- -------------
------------- ------------- -------------
Opening shareholders' funds 556.3 1,183.8 1,183.8
------------- ------------- -------------
Closing shareholders' funds 597.1 945.8 556.3
======== ======== ========
NOTES TO THE INTERIM STATEMENTS (unaudited)
1. Accounting policies
The interim financial statements have been prepared on the basis of the
accounting policies set out in the Company's statutory accounts for the
financial period ended 31 December 2000. In accordance with the requirements
of FRS 18 'Accounting Policies', management have reviewed the accounting
policies currently adopted by the Group and consider them to be the most
appropriate against the objectives of relevance, reliability, comparability
and understandability.
2. Segmental analysis of continuing operations by geographical area of origin
6 months 6 months Year to
to 30.6.01 to 30.6.00 31.12.00
£m £m £m
Turnover
United Kingdom 249.2 263.5 531.3
North America 333.2 354.5 743.6
Rest of the World 63.0 64.7 129.2
------------- ------------- ------------
645.4 682.7 1,404.1
======== ======== ========
Operating profit before exceptional
items
United Kingdom 42.5 33.0 77.7
North America 42.9 43.6 103.9
Rest of the World 10.6 10.2 21.5
------------- ------------- ------------
96.0 86.8 203.1
======== ======== ========
3. Non-operating items
Non-operating items comprise:
6 months 6 months Year to
to 30.6.01 to 30.6.00 31.12.00
£m £m £m
Non-operating items:
Profit on disposal of fixed assets 14.4 - -
Loss (including provision for loss) on disposal of - - (0.6)
continuing operations
Loss (including provision for loss) on disposal of (1.0) (129.1) (448.9)
discontinued operations
Non-operating items before tax 13.4 (129.1) (449.5)
-------- -------- --------
Tax credit on non-operating items - - 65.7
-------- -------- --------
Non-operating items after tax 13.4 (129.1) (383.8)
======== ======== ========
4. Tax charge
The tax charge may be analysed as follows:
6 months 6 months Year to
to 30.6.01 to 30.6.00 31.12.00
£m £m £m
Rank subsidiaries 15.8 12.3 42.0
Associates and joint ventures 0.5 0.3 -
------------- ------------- -------------
16.3 12.6 42.0
======== ======== ========
Exceptional tax credit - (3.0) (65.7)
======== ======== ========
5. Weighted average number of shares
The weighted average number of shares used in the calculation of basic
earnings per share is 591.5m (2000 first half: 709.8m, full year: 695.6m).
6. Reconciliation of operating profit to cash flow
6 months 6 months Year to
to 30.6.01 to 30.6.00 31.12.00
£m £m £m
Operating profit 89.1 54.0 219.3
Exceptional operating costs and 6.9 42.3 43.5
provisions
Cash payments in respect of exceptional (14.6) (9.2) (19.6)
costs
Depreciation 44.2 70.0 134.0
(Increase) decrease in working capital (17.0) 32.0 6.4
Other items (4.5) (7.8) (25.6)
------------ ------------ ------------
Net cash inflow from operating 104.1 181.3 358.0
activities
======== ======== ========
7. Exchange rates
The US$/£ exchange rates for the relevant accounting periods are:
6 months 6 months Year to
to 30.6.01 to 30.6.00 31.12.00
US$/£
Average 1.42 1.57 1.50
Period-end 1.41 1.51 1.49
Independent review report to The Rank Group Plc
Introduction
We have been instructed by the Company to review the financial information set
out on pages 13 to 19. We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the interim report in accordance with the
Listing Rules of the Financial Services Authority which require that the
accounting policies and presentation applied to the interim figures should be
consistent with those applied in preparing the preceding annual accounts
except where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999
/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of Group management and
applying analytical procedures to the financial information and underlying
financial data and, based thereon, assessing whether the accounting policies
and presentation have been consistently applied unless otherwise disclosed. A
review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than
an audit performed in accordance with United Kingdom Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2001.
PricewaterhouseCoopers
Chartered Accountants
London
7 September 2001
-ends-
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