RNK Rank Group Plc

News release                      

LEI: 213800TXKD6XZWOFTE12

1 February 2024

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

Interim results for the six months ended 31 December 2023

Revenue and profit growth across all businesses

Rank (LSE: RNK) is pleased to announce its interim results for the six months ended 31 December 2023.

Overview

Financial highlights

1.        On a like-for-like ('LFL') basis which removes the impact of club openings, closures, foreign exchange movements and discontinued operations.

2.        Excludes separately disclosed items.

3.        Restated, refer to CFO review for further details.

Operational highlights

Current trading and outlook

The venues and digital businesses experienced a busy trading period through the Christmas and New Year holiday season with trading normalising throughout the rest of January.

Whilst it remains a challenging economic environment, we are positive about the future and expect LFL operating profit for the year ending 30 June 2024 to be in line with our expectations.

Dividend

The Board has not proposed an interim dividend but expects to recommence dividend payments as soon as circumstances permit.

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

"After what has been a very challenging few years for Rank due to a wide range of external macro factors, we are starting to build revenues and, with our strong operational leverage, we are improving our profitability, with the Group delivering revenue and operating profit growth across all businesses.

We are well positioned to optimise the opportunities afforded by the UK Government's planned land-based regulatory reforms which will hopefully be implemented through the passing of secondary legislation in the summer of 2024. These reforms cannot come soon enough in enabling us to modernise our proposition to better meet our customers' expectations.

We are making good progress with the strong pipeline of development initiatives in both our UK and Spanish digital brands to accelerate revenue and profit growth. Whilst we expect UK digital growth to be offset in the short term by the impact of new maximum online slot stakes and the impact of the statutory levy in the UK, we are confident in the opportunities of delivering a market leading cross channel experience for our Grosvenor and Mecca customers.  We are also excited to grow our digital business in selected new markets, commencing later this calendar year with the launch of the YoBingo brand in Portugal.

I would like to express my considerable thanks to my colleagues across the Group who continue to excite, entertain and protect our customers, provide support to their local communities and contribute significantly to the progress we are making in the transformation of the Group. "

Definition of terms:

Photographs available from www.rank.com

Analyst meeting and webcast details:

Thursday 1 February 2024

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 or on https://brrmedia.news/RNKIR2324. A replay of the webcast and a copy of the slide presentation will be made available on the website later. The webcast will be available for a period of six months.

Forward-looking statements

This announcement includes 'forward-looking statements'. These statements contain the words 'anticipate', 'believe', 'intend, 'estimate', 'expect' and words of similar meaning. All statements, other than statements of historical facts included in this announcement, including, without limitation, those regarding the Group's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Group's products and services) are forward-looking statements that are based on current expectations. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance, achievements or financial position of the Group to be materially different from future results, performance, achievements or financial position expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Group's operating performance, present and future business strategies, and the environment in which the Group will operate in the future. These forward-looking statements speak only as at the date of this announcement. Subject to the Listing Rules of the Financial Conduct Authority, the Group expressly disclaims any obligation or undertaking, to disseminate any updates or revisions to any forward-looking statements, contained herein to reflect any change in the Group's expectations, with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Past performance cannot be relied upon as a guide to future performance.

Business review

The six months to 31 December 2023 saw good revenue and profit growth across all of the Group's business units. In the UK, both Grosvenor and Mecca venues saw accelerated revenue growth with profit conversion benefitting from the high operating leverage and the year-on-year decline in energy prices, albeit attenuated by rising employment costs. In Spain, Enracha venues continues to trade very strongly with revenues above pre-pandemic levels. In Digital, the continued growth in revenue is driving much stronger profitability and, despite the impact of the upcoming regulatory changes, we anticipate further margin improvements in the medium term.

At Group level, underlying LFL NGR of £362.6m was up 9% against the prior year. All businesses were in LFL revenue growth year-on-year with Grosvenor venues +10%, Mecca venues +9%, Enracha venues +10% and Digital +8%.

Group underlying LFL operating profit of £21.7m compared with just £2.7m¹ in the first half of 2022/23 and £17.5m¹ in the second half, reflecting the continued improvement in revenues and the significantly reduced energy costs offsetting the impact of higher employment costs. The Group's LFL energy costs in H1 were £8.6m compared with £14.0m in the first half of 2022/23. LFL employment costs rose from £106.6m in H1 2022/23 to £114.9m in the first half of 2023/24. Total energy costs are expected to be c.£18.5m for the full year (£28.6m in 2022/23) with total employment costs expected to be up 7%.

With trading performance in line with expectations, no impairment charges or reversals were recognised in the half, compared with £95.4m of net impairment charges and reversals in the prior period.

1.        Restated, refer to CFO review for further details.

2.        Results are presented on a like-for-like ('LFL') basis which removes the impact of club openings, club closures, foreign exchange movements and discontinued operations.

3.        A full analysis of these adjustments can be found in the Alternative Performance Measures ('APM') section.

4.        Before the impact of separately disclosed items.

Grosvenor venues

Key financial performance indicators:

1.        Results are presented on a like for like ('LFL') basis which removes the impact of club openings, club closures, foreign exchange movements and discontinued operations.

2.        Before the impact of separately disclosed items.

Grosvenor venues' LFL NGR grew 10% versus the first half of 2022/23 to £167.5m. Compared with the second half of 2022/23 the growth was also 10%. Trading continues to slowly improve in line with the continued enhancements to customer risk management practices and investment in our colleagues, our products and our facilities.  Visit volumes grew 8% on the same period last year, with spend per visit up 2%. The slow growth in spend per visit reflects the decline in high-net-worth tourists visiting the UK. This is partly driven by the absence of tax-free shopping post-Brexit and the lack of credit facilities available in other jurisdictions.

Average NGR per week in the period was £6.4m which compares with £5.8m in 2022/23. Our expectation is that revenues can at least reach £7.0m per week, excluding the impact of the Gambling Act Review, through continued improvements in customer risk management supported by technology and the skills of our venue management teams and with further improvements to products and facilities.

At a product level, Grosvenor continues to see good growth in electronic gaming with electronic roulette NGR growing 13% and gaming machine revenues growing 16% in the period. Table gaming revenues grew 7%. The growth in electronic gaming serves to further highlight the critical importance of being able to better meet the needs of today's customers through stronger supply and more choice of content through the proposed UK legislative changes.

The largely fixed and semi-fixed cost base of the Grosvenor business delivers high operating leverage as revenues grow. Underlying LFL operating profit nearly trebled from £4.7m in the first half of last year to £14.0m this year. Energy costs declined £2.4m, whilst employment costs were up £5.4m. At a statutory level, operating profit improved from a loss of £42.4m in the first half of 2022/23 to a profit of £13.7m this half. There were no impairment charges in the period, compared to net impairment charges of £43.1m in the same period last year, reflecting the continued improvements in the trading performance of the Grosvenor business.

The Group has continued to invest in the Grosvenor business to further improve the quality of the customer proposition and to prepare the estate for the implementation of the UK Government's policy proposals for casinos which it expects to implement this year. The material legislative changes are an increase in the number of gaming machines to up to 80 per casino (current restriction is just 20 machines per casino licence), and the introduction of sports betting and electronic payments for gaming within casinos. A detailed implementation plan has been developed with preparatory investments planned for the enablement works across the estate commencing in the second half of this financial year.

£2.5m has been invested in property refurbishments and improvements in the period with major works completed at Grosvenor Northampton. £1.9m has been invested in product upgrades, notably new electronic gaming terminals, gaming machines, gaming tables and roulette wheels.

The current UK casino gaming machine market has two main suppliers, and we are seeking to extend the choice of machines and games available to UK consumers by broadening the supplier base. In recent months, Grosvenor has contracted with Aristocrat, the world's leading casino machine supplier, to introduce its machines and game packs to UK casino customers. The early results look very encouraging. Discussions are taking place with additional international gaming machine suppliers.

Mecca venues

Key financial performance indicators:

1.        Results are presented on a like for like ('LFL') basis which removes the impact of club openings, club closures, foreign exchange movements and discontinued operations.

2.        Before the impact of separately disclosed items.

The first half of 2023/24 has seen a continuation of the turnaround in performance of the Mecca business which got fully underway in 2022/23. The impact of the pandemic lockdowns resulted in a material step down in active customer numbers and visits across the UK land-based bingo sector. The industry emerged from the pandemic with excess supply and large numbers of loss-making venues. Bingo venues are important social amenities which play a key community role and the decision to permanently close is not taken lightly. Disappointingly, Mecca has been forced to closed 20 loss making venues since reopening to our customers in May 2021, with one further venue closing in the first half of 2023/24, reducing the estate to 55 venues. Two further closures are planned for the second half of the year.

The result of closures has been to migrate customers and bingo liquidity to stronger, more vibrant Mecca venues offering bigger prize boards at good value prices. Investment in this smaller estate includes improved gaming machine areas (eight Mecca venues completed in the period) and more modern and striking external presentation of the Mecca brand and offering (four Mecca venues completed in the period) has helped to further revitalise the business. £5.9m has been invested in developments and improvements in the first half of the year.

Mecca venues' LFL NGR grew 9% in the first half to £67.2m. LFL visit volumes grew 2% with active customers up 2% and spend per visit up 7% on the prior year.

LFL main stage bingo NGR grew 20% on the prior year, with LFL revenues now back in growth (+10%) compared with pre-pandemic 2019. Interval games grew 5% year on year with gaming machine revenues growing 9% on a like for like basis. Compared with 2019, LFL gaming machine revenues are flat, highlighting the vital importance of the UK Government's planned reform of the current 80/20 rule which requires at least 80% of gaming machines to be Category C machines with a maximum prize of £100 and no more than 20% Category B3 machines which have a maximum prize of £500. Category B3 machines, which are typically more modern digital cabinets with stronger game packs and are popular with our customers, capture over 70% of machine play. A further consultation has been published by Government reviewing the relative merits of a two to one Category B3 to Category C machine ratio and a three to one ratio. Either would be beneficial changes, enabling bingo venues to better meet the needs of today's consumers.

With LFL NGR growing £5.3m in the first half, Mecca moved into an underlying LFL operating profit of £0.1m compared with a loss of £4.8m in the prior period. In terms of key costs within the business, LFL energy costs declined by £2.4m, with LFL employment costs increasing by £0.9m. With the positive momentum within the business, we expect Mecca to be profitable at the year end.

Enracha venues

Key financial performance indicators:

1.        Results are presented on a like for like ('LFL') basis which removes the impact of club closures, foreign exchange movements and discontinued operations.

2.        Before the impact of separately disclosed items.

The Enracha estate of nine bingo, machine gaming and sports betting venues in Spain continued to perform strongly in the period with LFL NGR up 10% on the prior year to £19.5m. Visit volumes and active customers both increased 9%, with spend per visit up 1%.

Whilst customer visits remain behind pre-pandemic levels, LFL revenues in the period were up 21% on the same period in 2019.

Underlying LFL operating profit grew 28% to £5.0m.

Capital investment of £0.8m centred on the continued rollout of the Enracha customer loyalty card, a new CRM system to support customers within the loyalty programme and enhanced machine jackpot displays. A small refurbishment was concluded in Enracha Reus with two larger refurbishments planned for venues in Sabadell and Seville in the second half of the year.

Digital

Key financial performance indicators:

1.        Digital NGR was not impacted by any LFL adjustments in the period.

2.        Before the impact of separately disclosed items.

3.        Restated, refer to CFO review for further details.

Good progress has continued in the development of the Group's digital business. LFL NGR grew 8% to £108.4m. The digital business delivered LFL operating profit of £10.1m, up 87% on the first half of 2022/23.

In the UK, digital NGR grew 8% to £92.8m with strong growth in Grosvenor (+21%) and Mecca (+11%) supported by the continued healthy growth levels seen in cross-channel customer revenues. Other UK facing brands, including the legacy Stride brands, saw revenues decline 12% with marketing investment levels reset to ensure effective returns.

As outlined in the November 2023 Capital Markets Day Event, the next phase of growth in the UK digital business is centred around four technology developments:

In Spain, the Yo and Enracha brands grew LFL NGR by 15% to £13.3m in the period. In December 2023, the Spanish business was successfully relocated to Ceuta.

The development of live bingo, a streamed video bingo service, has been soft launched to customers and we expect to go live with this market leading development in Q3.

The application to the Portuguese regulator, SRIJ, for a licence for YoBingo is nearing the final phase of the homologation programme and we expect to have launched this service by the end of this calendar year.

Recent changes in the local fiscal regulations in India have substantially increased the tax burden on the Group's Indian rummy business, Passion Gaming.  Following a strategic review, the Group has decided to divest its controlling stake in Passion Gaming to its founder and non-controlling equity stakeholder for an expected consideration of £0.2m.  The divestment is expected to be completed in the second half of the current financial year and the business has been treated as an asset held for sale at the balance sheet date.  Resulting in a £0.5m write down in assets to the fair value less cost of sale, as reflected in separately disclosed items.

Group liquidity

The Group ended the half with net cash pre IFRS 16 of £17.6m.

In January 2024, the Group successfully secured a new £120m club facility, comprising a £30m Term Loan and a £90m Revolving Credit Facility ('RCF').  The tenor for the Term Loan element is two years and nine months and the RCF is three years.  Both the Term Loan and RCF have market typical tenor extension options which are at the lender's discretion.

The new facility retains the two financial covenants which were applicable to its previous facilities, net debt to EBITDA not to exceed 3x and EBITDA to net interest payable of no less than 3x.  In addition, there is an additional covenant referred to as a Fixed Charge Cover ratio, where (net interest payable plus operating leases) to (EBITDA plus net operating leases) can be no less than 1.5x. The Group expects to retain significant headroom against these covenants.

Sustainability update

Rank remains committed to its sustainability strategy of building a more resilient and responsible business.  In the first half, the Group has made good progress across all four focus areas of Customers, Colleagues, Environment and Communities.

Customers

The key activity in the first half of the year in further enhancing the protections we provide to our customers has been the completion of the build of the central engagement platform, a new platform which brings all our data together and provides stronger real time capabilities in responding to customer behaviour.

In Grosvenor venues the access to real time data via the central engagement platform is enabling regular enhancements to the risk app, a real time tool which provides prompts to colleagues for interactions with customers based upon their play patterns.

In Mecca venues the priority activity has been the development of the Playsafe system to remove manual tracking of customer dwell times on gaming machines and provide real time customer play data and alerts to our colleagues. We expect this to be fully operational in the second half of the year.

Within the UK digital business we are building out further real time use cases using the central engagement platform to identify potentially at risk behaviour to enable us to intervene in a more targeted way, providing support where required and avoiding unnecessary friction for customers playing happily within their means.

In the Spanish digital business priority has been implementing phase one measures within the Government's Safer Gambling Decree and preparing for the phase two measures which will be introduced in Q3.

During the calendar year 2023 our UK facing casino, bingo and digital businesses successfully completed Gambling Commission compliance assessments.

Colleagues

During the period, the Group continued the global roll out of its employee value proposition, Work.Win.Grow.  This helps foster a culture that meets the expectations of our colleagues whilst improving the attraction, recruitment and retention of talented colleagues.

Significant preparation work has been undertaken readying the business for the launch of a new colleague communication and engagement app.  Due to launch in the second half of the year, all our colleagues will for the first time have easy access to timely and relevant information and be able to engage with colleagues across the Group.

Environment

Good progress has been made in the period, with approximately 65% of the Group's targeted emission reductions for the current financial year already secured.  Alongside ongoing energy efficiency initiatives, a programme of net zero audits has commenced in the UK. These will initially focus on the Group's top 20 energy consuming venues and will provide targeted and bespoke energy consumption reduction plans for each venue.

It is essential we encourage the right behaviours across all colleagues if the Group is meet its net zero ambitions.  The Group completed the roll out of an energy consumption dashboard to 20 of its UK venues, providing rich real time energy usage information.  We are now able to engage, challenge and share best practice regarding energy reduction strategies.

During the half, the Group also commenced a thorough review of its Spanish venues to create a local tailored net zero plan that aligns with the Group's overall objective of meeting its intermediate ambition of being net zero across scope 1,2 and some scope 3 emissions by 2035, and all scopes by 2050.

Communities

During the period, the Group continued to develop its community strategy of actively contributing to its local communities.  Rank has a long history of volunteering and fundraising and launched a new volunteering policy which provides all colleagues with one day a year to volunteer for local worthy causes. 

The Group continued to support our UK based charity partner, Carers Trust, raising over £144k in the period.  Conscious of Rank's global footprint, the Group is focused on developing its community network across all its locations to ensure all colleagues have opportunities to better support their local communities.

Regulatory update

The UK Government published a white paper in April 2023 announcing a series of policy changes for gambling legislation and regulation. The legislative changes will be implemented by secondary legislation, following consultations conducted by the Department of Culture, Media and Sport ('DCMS'). The regulatory changes will be implemented by the UK Gambling Commission, again following public consultations. Those legislative changes requiring primary legislation are unlikely to be pursued by Government in the immediate term.

DCMS has carried out consultations on the key land-based gambling reforms outlined in the white paper which can be implemented by secondary legislation, with the expectation that this legislative process will be completed in summer 2024.

Subject to the outcome of the consultation process, we would expect the secondary legislation to:

DCMS has also conducted consultations on a reduction in the maximum stakes permitted for online slot games with various options ranging from £2 to £15 and the possibility of a lower maximum stake for consumers under 25 years of age. The DCMS Select Committee recently concluded that the maximum should be set at £5 (£2 for under 25s) and, if this were the outcome, we would expect an impact to digital profitability of circa £4m.

The consultation on a new statutory levy for research, prevention and treatment of problem gambling proposed payment rates by gambling sector. When implemented, we would expect our payments to increase by £4m per year by 2027.

The UK land-based gambling industry's customer proposition is very largely determined by statute and gambling reviews offer a generational opportunity to modernise the offer to better compete with the digital market and with other hospitality and leisure options for consumers. It is clearly more difficult to quantify the financial impact of the land-based reforms which will enable casinos and bingo venues to better meet the expectations of today's consumers. However, we expect the anticipated reforms, both statutory and regulatory, will deliver a significant net upside for the Group from the Government's Gambling Review.

CFO's review

Within this section all prior year comparatives are to the six months ended 31 December 2022.

Reported net gaming revenue ('NGR')

For the six months ended 31 December 2023, total NGR increased by 7% to £362.6m with improved NGR performance across all of the Group's business units.

Operating profit

The Group delivered an operating profit of £16.2m for the period, compared to an operating loss of £103.0m¹ in the prior period.  The improvement in operating profit was due to improved NGR performance across the Group and no impairment charges in the current period, compared to net impairment charges of £95.4m in the prior period.

Energy costs are significant for the Group and to provide the Group with some certainty it operates a Group hedging policy.  This allows the Group to fix a portion of its future energy costs up to two years in advance, near term energy costs can be fixed up to 100%.  85% of the Group's energy costs have been fixed for H2 2023/24 and we expect energy costs to be approximately £18.5m.  At current market prices, energy costs are expected to be broadly flat in 2024/25.

Separately disclosed items ('SDIs')

SDIs are infrequent in nature and/or do not relate to Rank's underlying business performance.

Total SDIs for the six months ended 31 December 2023 were £5.4m.

The key SDIs in the year were as follows:

Further details regarding the SDIs can be found in note 3.

Prior period restatement

These consolidated interim financial statements include a prior year restatement in relation to prior year costs identified in the Digital business which erroneously had not been recognised in the prior year consolidated interim income statements.

Unrecorded costs in Digital business

During the period, the Group identified an accumulated total of £4.4m of prior year adjustments comprising £3.2m of trading related costs which erroneously had not been recognised in the prior year financial statements, and £1.2m of excess releases to income which erroneously had been recognised in the prior year financial statements. Of the total value of £4.4m, £0.5m relates to 2022/23 which will be corrected as a prior period adjustment in the 2023/24 financial statements. With £1.7m relating to H1 2022/23 and £(1.2)m to H2 2022/23.  The remaining £4.4m relates to pre 2022/23.

The adjustments to cash relate to the trading related costs being erroneously recognised as cash in transit.

Net financing charge

The £5.3m underlying net financing charge for the six months ended 31 December 2023 was slightly lower than the prior period's charge of £6.0m principally due to lower finance lease interest charges and slightly higher finance income in the current period. The underlying net financing charge includes £2.8m of lease interest calculated under IFRS 16.

Having concluded a refinancing of the business in January 2024, net finance charges for 2023/24 are expected to be circa £14m, including the accelerated write-off of historical fees. Based on current interest rates, net finance charges for 2024/25 are expected to be £12.5 - 13.0m.

Cash flow and net debt

As at 31 December 2023, net debt was £144.7m. Debt comprised £54.0m of drawn revolving credit facilities and £162.3m in finance leases, offset by cash at bank of £71.6m.

During the period, the Group repaid its outstanding term loan of £44.4m as part of the first phase of refinancing that was completed in August 2023.

The Group finished the year with net cash for covenant purposes of £2.1m.

1.        Restated.

Taxation

The Group's underlying effective corporation tax rate in H1 2023/24 was 17.2% (H1 2022/23: (16.7)%) based on a tax charge of £2.8m on underlying profit before taxation.

The underlying effective corporation tax rate for 2023/24 is expected to be 17-19%.

On a statutory basis, the Group had an effective tax rate of 15.4% in H1 2023/24 (H1 2022/23: 5.7%) based on a tax charge of £1.6m on total profit of £10.4m.  This is lower than effective tax rate on underlying profit due to the significant level of separately disclosed items which attract a tax credit.

Further details of the tax charge are provided in note 5.

Earnings per share ('EPS')

Basic EPS increased to 1.9p from a loss of 22.0p¹ in the prior period. Underlying EPS increased to 2.9p from a loss of 1.2p¹ in the prior period. For further details refer to note 7.

Cash tax rate

In the six months ended 31 December 2023, the Group had an effective cash tax rate of (43.3)% on total profit before taxation (H1 2022/23: (2.3)%).  The cash tax rate differs from the standard rate of UK tax due to refunds of UK tax overpaid in prior years.

The Group is expected to have a cash tax rate of approximately (20)% for the year ended 30 June 2024.  Similar to the position for H1, the cash tax rate is driven by the refunds of UK tax overpaid in prior years.

Going concern statement

Based on the Group's cash flow forecasts and business plan, the Directors believe that the Group will generate sufficient cash to meet its liabilities and meet covenant requirements as they fall due for the period up to 31 January 2025.   In making such statement, the Directors highlight forecasting accuracy in relation to the level of trading performance achieved as the key sensitivity in the approved base case.

The Directors have considered two downside scenarios which reflects a reduced trading performance, inflationary impacts on the cost base and various management controllable mitigations.

In each of the downside scenarios the Group will generate sufficient cash to meet its liabilities as they fall due and meet its covenant requirements to the period 31 January 2025 with scenario ii) requiring the implementation and execution of mitigating cost actions within the control of management.

Alternative performance measures

When assessing, discussing and measuring the Group's financial performance, management refer to measures used for internal performance management. These measures are not defined or specified under UK adopted International Financial Reporting Standards (IFRS) and as such are considered to be Alternative Performance Measures ('APMs').

By their nature, APMs are not uniformly applied by all preparers including other operators in the gambling industry. Accordingly, APMs used by the Group may not be comparable to other companies within the Group's industry.

Purpose

APMs are used by management to aid comparison and assess historical performance against internal performance benchmarks and across reporting periods. These measures provide an ongoing and consistent basis to assess performance by excluding items that are materially non-recurring, uncontrollable or exceptional. These measures can be classified in terms of their key financial characteristics.

Profit measures allow management and users of the financial statements to assess and benchmark underlying business performance during the year. They are primarily used by operational management to measure operating profit contribution and are also used by the Board to assess performance against business plan.

The following table explains the key APMs applied by the Group and referred to in these statements:

Rationale for adjustments - Profit and debt measure

SDIs are items that bear no relation to the Group's underlying ongoing operating performance.  The adjustment helps users of the accounts better assess the underlying performance of the Group, helps align to the measures used to run the business and still maintains clarity to the statutory reported numbers. 

Further details of the SDIs can be found in the Financial Review and note 3. 

In the current period (H1 2023/24), the Group closed one Mecca venue.  For the purpose of calculating like-for-like ('LFL') measures its contribution has been excluded from the prior period numbers and current period numbers, to ensure comparatives are made to measures on the same basis.

During the year the exchange rates may fluctuate, therefore by using an exchange rate fixed throughout the year the impact on overseas business performance can be calculated and eliminated.

The tables below reconcile the underlying performance measures to the reported measures of the continuing operations of the Group.

Calculation of comparative underlying LFL NGR

Calculation of comparative underlying LFL operating profit

1 Restated.

1         Restated, refer to CFO review for further details.

1.        Restated, refer to CFO review for further details.

Principal risks and uncertainties

Key business risks are reviewed by the executive directors, other senior executives and the Board on a regular basis and, where appropriate, actions are taken to mitigate the key risks that are identified. We have a Group wide enterprise risk management framework and approach in place, integrated into our organisational management structure and responsibilities, with the Board having overall responsibility for risk management in the Group.

The principal risks and uncertainties that could impact the Group are detailed in the Group's Annual Report and Accounts 2023 and the Board of Directors confirm that they remain relevant for the remainder of the financial year. The principal risks are as follows:

Emerging and evolving risks

Although rates of inflation and energy costs have now stabilised and shown early signs of easing, the current economic pressures are still a cause for concern for many consumers. The directors continue to be vigilant of the changing economic backdrop and the impact on the Group. This is further supported by horizon scanning work performed by executive management in conjunction with the Board, with regular debate on new and emerging risks taking place.

Additionally, the Group continues to evolve its analysis of climate-related risks and opportunities. However, climate risks are currently not regarded as a principal risk and the risk itself is currently considered low.

Directors' Responsibility Statement

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

The directors of The Rank Group Plc are:

Chew Seong Aun

Lucinda Charles-Jones

Richard Harris

Keith Laslop

Katie McAlister

John O'Reilly

Alex Thursby

Karen Whitworth

Signed on behalf of the board on 31 January 2024

Condensed Consolidated Income Statement

(unaudited)

for the six months ended 31 December 2023

Condensed Consolidated Statement of Comprehensive Income

(unaudited)

for the six months ended 31 December 2023

Condensed Consolidated Balance Sheet

(unaudited)

at 31 December 2023 and 30 June 2023