Interim Results - Part 2

RANK GROUP PLC 5 August 1999 PART 2 THE RANK GROUP PLC INTERIM RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 1999 GROUP PROFIT AND LOSS ACCOUNT (unaudited) 6 months to 30.6.99 6 months to 30.6.98 Before Except- Total Before Except- Total Except- ional £m Except- ional (as re- ional Items ional Items stated) Items £m Items (as re- £m (as re- stated) stated) £m £m £m TURNOVER Continuing 916 - 916 901 - 901 operations ----- ----- ----- ----- ----- ----- OPERATING PROFIT Continuing 100 - 100 99 - 99 operations ----- ----- ----- ----- ----- ----- NON- - 3 3 - 10 10 OPERATING ITEMS (Note 4) SHARE OF OPERATING PROFIT (LOSS) IN ASSOCIATES AND JOINT VENTURES: Universal 17 (45) (28) 13 (9) 4 Studios Escape Other 3 - 3 1 - 1 ----- ----- ----- ----- ----- ----- PROFIT 120 (42) 78 113 1 114 (LOSS) BEFORE INTEREST Net interest: - Managed (32) (8) (40) (28) - (28) businesses - Asso- (8) - (8) (4) - (4) ciates and joint ventures ----- ----- ----- ----- ----- ----- PROFIT 80 (50) 30 81 1 82 (LOSS) BEFORE TAX Tax (Note (16) 2 (14) (16) - (16) 5) ----- ----- ----- ----- ----- ----- PROFIT 64 (48) 16 65 1 66 (LOSS) AFTER TAX Minority - - - (2) - (2) interests Preference (10) - (10) (10) - (10) dividends ----- ----- ----- ----- ----- ----- EARNINGS 54 (48) 6 53 1 54 (LOSS) ===== ===== ===== ===== ===== ===== Earnings 7.0p (6.2)p 0.8p 7.0p 0.1p 7.1p (loss) per Ordinary share (Note 6) Net 4.0p 5.75p Dividend per Ordinary share GROUP PROFIT AND LOSS ACCOUNT (unaudited) 6 months 6 months Year to to to 31.12.98 30.6.99 30.6.98 (as (as restated) restated) £m £m £m TURNOVER Continuing operations 916 901 2,057 ===== ===== ===== OPERATING PROFIT Continuing operations 100 99 180 Exceptional items within - - (98) operating profit NON-OPERATING ITEMS (Note 4) 3 10 (208) SHARE OF OPERATING PROFIT (LOSS) IN ASSOCIATES AND JOINT VENTURES: Universal Studios Escape 17 13 27 Other 3 1 4 Exceptional write-off of pre- (45) (9) (24) opening costs ----- ----- ----- PROFIT (LOSS) BEFORE INTEREST 78 114 (21) Net interest: - Managed businesses (32) (28) (50) - Associates and joint (8) (4) (8) ventures - Exceptional charge on (8) - - repayment of fixed rate debt ----- ----- ----- PROFIT (LOSS) BEFORE TAX 30 82 (79) Profit before tax and 80 81 251 exceptional items Tax (Note 5) (14) (16) (55) ----- ----- ----- PROFIT (LOSS) AFTER TAX 16 66 (134) Minority interests - (2) (3) Preference dividends (10) (10) (21) ----- ----- ----- EARNINGS (LOSS) 6 54 (158) ===== ===== ===== Earnings before exceptional 54 53 172 items ===== ===== ===== Earnings (loss) per Ordinary 0.8p 7.1p (20.6)p share (Note 6) - before exceptional items 7.0p 7.0p 22.5p Net Dividend per Ordinary 4.0p 5.75p 18.50p share Diluted earnings (loss) per 1.9p 7.8p (16.6)p Ordinary share - before exceptional items 7.7p 7.7p 23.3p GROUP BALANCE SHEET (unaudited) As at As at As at 30.6.99 30.6.98 31.12.98 (as (as restated) restated) £m £m £m FIXED ASSETS Intangible assets 3 2 3 Tangible assets 2,018 1,914 1,872 Investments 387 301 350 ----- ----- ----- 2,408 2,217 2,225 ----- ----- ----- CURRENT ASSETS Stocks 83 115 69 Debtors (including amounts 547 755 648 falling due after one year) Cash, deposits and 102 122 95 investments ----- ----- ----- 732 992 812 CREDITORS (amounts falling due within one year) Loan capital and borrowings (226) (304) (88) Other (515) (530) (554) ----- ----- ----- (741) (834) (642) NET CURRENT ASSETS (9) 158 170 ----- ----- ----- TOTAL ASSETS LESS CURRENT 2,399 2,375 2,395 LIABILITIES CREDITORS (amounts falling due after more than one year) Loan capital and borrowings (1,133) (737) (1,064) Other creditors and (58) (96) (92) provisions ----- ----- ----- 1,208 1,542 1,239 ===== ===== ===== CAPITAL AND RESERVES Called up share capital 123 123 123 Share premium account 8 7 8 Other reserves 1,065 1,385 1,096 ----- ----- ----- SHAREHOLDERS' FUNDS 1,196 1,515 1,227 Equity interests 977 1,298 1,009 Non-equity interests 219 217 218 MINORITY INTERESTS (including 12 27 12 non-equity interests) ----- ----- ----- 1,208 1,542 1,239 ===== ===== ===== NET BORROWINGS 1,257 919 1,057 ===== ===== ===== GROUP CASH FLOW (unaudited) 6 months 6 months Year to to to 31.12.98 30.6.99 30.6.98 £m £m £m NET CASH INFLOW FROM 91 153 360 OPERATING ACTIVITIES (Note 7) DISTRIBUTIONS FROM JOINT 10 4 24 VENTURES AND ASSOCIATED UNDERTAKINGS RETURNS ON INVESTMENT AND SERVICING OF FINANCE Interest (net) (46) (40) (82) Dividends paid to preference (9) (10) (20) shareholders and minorities (55) (50) (102) TAX PAID (NET) (7) (19) (55) CAPITAL EXPENDITURE Purchase of tangible fixed (253) (225) (440) assets Purchase of investments - - (4) Investments in associates and (62) (65) (127) joint ventures Sale of fixed assets and 23 166 178 assets held for disposal (292) (124) (393) ACQUISITIONS AND DISPOSALS Purchase of subsidiaries (1) (47) (46) Sale of businesses and 226 224 237 investments 225 177 191 ORDINARY DIVIDENDS PAID (131) (50) (50) ----- ----- ----- CASH (OUTFLOW) INFLOW BEFORE USE OF LIQUID (159) 91 (25) RESOURCES AND FINANCING ===== ===== ===== MOVEMENTS IN NET DEBT Cash (outflow) inflow before (159) 91 (25) use of liquid resources and financing Increase in finance leases (1) (6) (9) Net debt of acquired - - (1) subsidiaries Foreign exchange differences (40) 5 3 Repurchase of minority - - (25) preference shares Contributions from minority - - 9 interests Issue of Ordinary share - 3 3 capital ----- ----- ----- (Increase) decrease in net (200) 93 (45) debt Net debt at beginning of (1,057) (1,012) (1,012) period ----- ----- ----- Net debt at end of period (1,257) (919) (1,057) ====== ====== ====== GROUP RECOGNISED GAINS AND LOSSES 6 months 6 months Year to to to 31.12.98 30.6.99 30.6.98 £m £m £m Profit (loss) for the 16 64 (137) financial period Currency translation (7) (1) 4 differences on foreign currency net investments ----- ----- ----- TOTAL RECOGNISED GAINS AND 9 63 (133) LOSSES FOR THE PERIOD ----- ----- ----- Prior year adjustments - Implementation of FRS12 (31) - Write off of Universal (35) Studios Escape pre-opening costs - Write off of other pre- (23) opening costs ----- (89) ----- TOTAL RECOGNISED GAINS AND (80) LOSSES SINCE PREVIOUS ANNUAL REPORT ===== MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS 6 months 6 months Year to to to 31.12.98 30.6.99 30.6.98 £m £m £m Profit (loss) for the 16 64 (137) financial period Dividends payable (40) (54) (161) Other recognised gains and (7) (1) 4 losses (net) Issue of Ordinary share - 49 59 capital Goodwill realised on closure - - 5 or disposal ----- ----- ----- NET MOVEMENT IN SHAREHOLDERS' (31) 58 (230) FUNDS ----- ----- ----- OPENING SHAREHOLDERS' FUNDS 1,316 1,518 1,518 AS PREVIOUSLY STATED Prior year adjustments - Implementation of FRS12 (31) (27) (27) - Write off of Universal (35) (11) (11) Studios Escape pre-opening costs - Write off of other pre- (23) (23) (23) opening costs ----- ----- ----- OPENING SHAREHOLDERS' FUNDS 1,227 1,457 1,457 AS RESTATED ----- ----- ----- ----- ----- ----- Closing shareholders' funds 1,196 1,515 1,227 ===== ===== ===== NOTES TO THE INTERIM STATEMENTS (unaudited) 1. Segmental analysis of continuing operations by division 6 months 6 months Year to to to 31.12.98 30.6.99 30.6.98 (as (as restated) restated) TURNOVER £m £m £m DELUXE 287 262 651 ----- ----- ----- HARD ROCK 119 116 239 ----- ----- ----- HOLIDAYS - UK Holidays 156 164 437 - US Holidays 22 26 55 ----- ----- ----- 178 190 492 ----- ----- ----- LEISURE - Gaming 200 199 402 - Entertainment 132 134 273 ----- ----- ----- 332 333 675 ----- ----- ----- OTHER - - - CONTINUING OPERATIONS 916 901 2,057 ===== ===== ===== OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS DELUXE 27 26 85 ----- ----- ----- HARD ROCK 17 22 47 ----- ----- ----- HOLIDAYS - UK Holidays 3 5 56 - US Holidays 4 2 1 ----- ----- ----- 7 7 57 ----- ----- ----- LEISURE - Gaming 30 24 52 - Entertainment 17 19 36 ----- ----- ----- 47 43 88 ----- ----- ----- OTHER 2 1 1 ----- ----- ----- CONTINUING OPERATIONS 100 99 278 ===== ===== ===== INVESTMENT EXPENDITURE 6 months 6 months Year to to to 31.12.98 30.6.99 30.6.98 £m £m £m DELUXE 33 22 56 ----- ----- ----- HARD ROCK 16 23 50 ----- ----- ----- HOLIDAYS - UK Holidays 149 137 196 - US Holidays - 1 2 ----- ----- ----- 149 138 198 ----- ----- ----- LEISURE - Gaming 25 48 90 - Entertainment 32 47 100 ----- ----- ----- 57 95 190 ----- ----- ----- OTHER - - 2 ----- ----- ----- CONTINUING OPERATIONS - 278 496 - Investment in associates 62 65 131 and joint ventures ----- ----- ----- 317 343 627 ===== ===== ===== Investment expenditure consists of: - Purchase of tangible fixed 253 225 440 assets - Investment in associates 62 65 131 and joint ventures - Purchase of subsidiaries 1 47 47 and minorities ----- ----- ----- - Satisfied by cash 316 337 618 - New finance leases 1 6 9 ----- ----- ----- 317 343 627 ===== ===== ===== 2. Segmental Analysis of continuing operations by geographical area of origin 6 months 6 months Year to to to 31.12.98 30.6.99 30.6.98 (as (as restated) restated) £m £m £m TURNOVER - United Kingdom 526 527 1,174 - North America 338 320 749 - Rest of the World 52 54 134 ----- ----- ----- 916 901 2,057 ===== ===== ===== OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS - United Kingdom 53 52 151 - North America 39 38 103 - Rest of the World 8 9 24 ----- ----- ----- 100 99 278 ===== ===== ===== 3. The profit and loss account for the half year ended 30 June 1999 includes contributions from Rank subsidiaries for the period ended 26 June 1999 (27 June 1998). 4. Non-operating items comprise: 6 months 6 months Year to to to 31.12.98 30.6.99 30.6.98 £m £m £m NON-OPERATING ITEMS: Profit (loss) on disposal of - 8 (55) properties Profit (loss) on disposal of 3 - (153) continuing operations Net profit on disposal of - 2 - discontinued operations ----- ----- ----- NON-OPERATING ITEMS BEFORE 3 10 (208) TAX Tax on non-operating items - - - ----- ----- ----- Non-operating items after tax 3 10 (208) ===== ===== ===== 5. The tax charge may be analysed as follows: 6 months 6 months Year to to to 31.12.98 30.6.99 30.6.98 £m £m £m Rank subsidiaries 15 15 52 Associates and investments 1 1 3 ----- ----- ----- 16 16 55 ===== ===== ===== Exceptional tax credit (2) - - ===== ===== ===== The tax charge for the Rank subsidiaries for the six months ended 30 June 1999 has been calculated by reference to the forecast tax rate for the year ending 31 December 1999. 6. The weighted average number of shares used in the calculation of earnings per share is 773.2m (1998 first half: 759.5m, full year: 765.0m). 7. The reconciliation of operating profit to cash flow from operating activities is: 6 months 6 months Year to to to 31.12.98 30.6.99 30.6.98 as as restated restated £m £m £m Operating profit 100 99 180 Exceptional operating costs - - 98 and provisions Cash payments in respect of - (3) (5) exceptional costs Depreciation 69 65 136 (Profit) on sales of fixed (3) - - assets (Increase) in working capital (73) (10) (42) Other items (2) 2 (7) ----- ----- ----- NET CASH INFLOW FROM 91 153 360 OPERATING ACTIVITIES ===== ===== ===== 8. The US$ exchange rates for the relevant accounting periods are: 6 months 6 months Year to to to 31.12.98 30.6.99 30.6.98 US$ £m £m £m Average 1.61 1.66 1.66 Period-end 1.58 1.66 1.66 9. 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 1998 except as stated in 10 below. The figures for the year ended 31 December 1998 have been extracted from the statutory accounts which have been filed with the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under section 237 of the Companies Act 1985. 10.Two changes of accounting policy are reflected in this statement. As announced with the 1998 results, the Group has now adopted Financial Reporting Standard 12 ('Provisions, contingent liabilities and contingent assets'). This has led to restatements of prior periods' results in respect of two aspects of the standard: - the change to the date on which a commitment is recognised for accounting purposes, and - the requirement for a provision to be made for onerous contracts such as vacant leasehold properties The impact on shareholders' funds at 31 December 1998 was mainly in respect of vacant leasehold properties. The future costs of such properties have been discounted at a pre-tax rate of 5%. The second change in policy relates to the treatment of pre- opening expenses. The Group's previous policy was to amortise such expenses over periods of three to five years. A new US accounting standard comes into effect this year which requires the immediate write-off of such expenses which will directly impact Universal Studios Escape's (USE) results. In order to maintain comparability between USE figures available in the United States and those in the Group's results, the Board has decided to align Rank's own accounting policy with the US requirements. In view of the materiality of the USE figures, the necessary restatements have been made in these results. The effect of the new policy on Rank businesses' pre-opening expenses, which are significantly less material, is still being finalised and appropriate adjustments will be recorded in the full year accounts. It is anticipated that this will have no impact on operating profit in 1999 but an adverse impact of £3m for 1998. Because of their materiality, the write offs as incurred of USE's pre-opening expenses have been shown as exceptional items charged in arriving at the Group's share of operating profit from joint ventures and associates. The total write off is £80m - £45m in 1999, £24m in 1998 and £11m in 1997 and earlier. 11. YEAR 2000 The Year 2000 issue affects installed computer systems, software applications and other business systems that have date sensitive programs that may not properly reflect or recognise the Year 2000. This could result in miscalculation or system failures. In 1997, Rank surveyed those areas where its systems and applications might be affected by the Year 2000 problem. As a result of the significant capital investment made, starting in 1996, on improving and replacing systems to support the way Rank now operates within its divisions, few problem areas were identified. As the new systems replace fully depreciated older systems or represent a considerable enhancement to them, expenditure on them has been capitalised in fixed assets in the normal way. Revenue expenditure on addressing Year 2000 problems outside major system replacements has not been, and is not expected to be, material. Progress continues to be made in overcoming the remaining Year 2000 issues. The final part of the conversion of the majority of Deluxe's financial and business systems to the SAP platform will complete in this quarter. The main outstanding issue in Holidays is the reservation systems where full compliance is on track to be achieved, as planned, by 30 September. Divisional systems in Leisure are new and Year 2000 compliant while the final amendments to site level systems will again be completed by 30 September. The status of Year 2000 projects is regularly reviewed by senior management and the Audit Committee. There is a risk to the Group, as with all companies, that its suppliers and customers may experience Year 2000 failures. Contingency plans are being drawn up to address these eventualities and will be finalised by the end of the third quarter of 1999. INDEPENDENT REVIEW REPORT TO THE RANK GROUP PLC INTRODUCTION We have been instructed by the Group to review the financial information set out on pages 9 to 18 and we have read the other information contained in the interim report for 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 Listing Rules of the London Stock Exchange 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. 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 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 1999. PricewaterhouseCoopers Chartered Accountants London 4 August 1999

Companies

Rank Group (RNK)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today