Guoco : Overseas Regulatory Announcement - The Rank Group Plc - Preliminary results for the 12 months ended 30 June 2019

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

OVERSEAS REGULATORY ANNOUNCEMENT

(This overseas regulatory announcement is issued pursuant to Rule 13.10(B) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.)

Please refer to the attached announcement on the next page.

As at the date of this announcement, the board of directors of Guoco Group Limited comprises Mr. Kwek Leng Hai as Executive Chairman; Mr. Tang Hong Cheong as President & CEO; Mr. Kwek Leng San as Non-executive Director and Mr. Volker Stoeckel, Mr. Roderic N. A. Sage and Mr. David Michael Norman as Independent Non-executive Directors.

Final Results - RNS - London Stock Exchange

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Regulatory Story

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Rank Group PLC - RNK Final Results

Released 07:00 22-Aug-2019

RNS Number : 8507J

Rank Group PLC

22 August 2019

LEI: 213800TXKD6XZWOFTE12

22 August 2019

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

Preliminary results for the 12 months ended 30 June 2019

Expectations delivered, transformation programme starting to drive growth Financial highlights

		2018/19	2017/18	Change
Financial KPIs	Group like­for­like revenue	£729.5m	£731.3m	0%
	Venues like­for­like revenue	£597.8m	£608.2m	(2)%
	Digital like­for­like net gaming revenue	£105.5m	£95.3m	11%
	(NGR)
	Operating profit before exceptional items	£72.5m	£77.0m	(6)%
	Adjusted earnings per share	14.8p	15.0p	(1)%
Statutory	Statutory revenue	£695.1m	£691.0m	1%
performance	Group operating profit	£39.0m	£50.1m	(22)%
	Profit after taxation from continuing	£27.6m	£35.9m	(23)%
	operations
	Cash generated from operations	£113.1m	£102.4m	10%
	Net cash/(debt)	£1.8m	£(9.3)m
	Basic earnings per share	7.4p	9.2p	(20)%
	Dividend per share	7.65p	7.45p	3%

Operational highlights

• All businesses delivering LFL revenue growth in H2
• H2 operating profit of £42.2m, up 20%, following a tough first half in which operating profit was £30.3m
• The transformation programme launched in December 2018 is driving improved Group performance and new ways of working

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Final Results - RNS - London Stock Exchange

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• £10.7m of savings delivered in the year with an additional £9.3m from these initiatives flowing into 2019/20
• New operating model launched for Grosvenor Casinos, resulted in £8.2m of savings in 2018/19 and a further £11.3m in 2019/20 (pre­wage increases)
• Mecca offer enhanced by initiatives including new games, side bets and extending session lengths resulted in revenue growth in H2
• Strong growth in Digital NGR of 23% including contribution from YoBingo acquired in May 2018. Excluding YoBingo, Digital NGR grew by 11%
• £28.6m of exceptional costs, includes an £8.0m provision for technical non­ compliance with National Minimum Wage Regulations
• Agreed terms to sell five Mecca bingo clubs to a UK bingo operator
• On 31 May 2019, announced agreement on the terms of an offer to acquire Stride Gaming plc to create one of the UK's leading online gaming businesses
• Full year dividend up by 3%

Outlook

• Encouraging start to 2019/20
• Expect the acquisition of Stride to complete early in Q2 2019/20
• Optimistic about 2019/20 outturn

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

"We are pleased with the Group's second half performance and the full year results, especially given the challenges we faced in the first half of the year. The transformation programme is pivotal to our growth strategy both in the UK and internationally. We are excited by the important initiatives that are being implemented across each of our businesses. We have made a good start to the transformation of Rank and there remains a lot of improvement to be delivered. I would like to thank my colleagues across the Group for their enthusiasm and commitment in delivering much needed improvements in the ways in which we are meeting the needs of our customers.

The acquisition of Stride, which we expect to complete in 2019/20, will help step change our digital business, deliver strong synergies, bring proprietary technology in house and create one of the UK's leading online gaming businesses."

Ends

Definition of terms:

• Any reference to revenue or like­for­like group revenue is before adjustment for customer incentives;
• Net gaming revenue ('NGR') is revenue less customer incentives;
• Revenue is also referred to as gross gaming revenue ('GGR');
• EBITDA is operating profit before exceptional items, depreciation and amortisation;
• Adjusted profit before tax is profit from continuing operations before taxation adjusted to exclude exceptional items and other financial gains or losses resulting from foreign exchange gains and losses on loans and borrowings. See Financial Review for reconciliation;
• Adjusted earnings per share is calculated by adjusting profit attributable to equity shareholders to exclude exceptional items, other financial gains or losses, unwinding of the discount rate in the disposal provisions and the related tax effects as detailed in note 7;
• "2018/19" refers to the audited 12­month period to 30 June 2019 and "2017/18" refers to the audited 12­month period to 30 June 2018;
• Like­for­like ('LFL') measures have been disclosed in this report to show the impact of club openings, closures, relocations and acquired businesses;
• Prior year LFL measures are amended to show an appropriate comparative for the impact of club openings, closures, relocations, acquired businesses, discontinued operations and foreign exchange movements;
• The Group results make reference to "'adjusted" results alongside our statutory results, which we believe will be more useful to readers as we manage our business using these adjusted measures. The directors believe that exceptional items and other adjustments impair visibility of the underlying performance of the Group's business and accordingly, these are excluded from our non­GAAP measurement of revenue, EBITDA, operating profit, profit before tax and adjusted EPS. Adjusted measures are the same as those used for internal reports;
• Venues includes Grosvenor Venues, Mecca Venues and International Venues; and
• The Group reports segmental information on the basis by which the chief operating decision maker utilises internal reporting within the business. In the current year, the internal reporting of the operating segments has been modified following changes in management responsibilities. From 1 July 2018, UK Digital, Enracha Digital and YoBingo! were combined into a single operating segment which is now known as Digital. Enracha Venues and our

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Final Results - RNS - London Stock Exchange

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Belgium casino were also combined into a single operating segment which is now known as International Venues. All prior period comparables have been restated to reflect these changes.

Enquiries
The Rank Group Plc
Sarah Powell, director of investor relations and communications	Tel: [phone]
FTI Consulting LLP
Ed Bridges	Tel: [phone]
Alex Beagley	Tel: [phone]
Photographs available from www.rank.com

Analyst meeting and webcast details:

Thursday 22 August 2019

There will be an analyst meeting at 10.30 am, admittance to which is by invitation only. There will also be a simultaneous webcast of the meeting.

For the live webcast, please register at www.rank.com. A replay of the webcast and a copy of the slide presentation will be made available on the website later. The webcast will be available for a period of six months.

Forward­looking statements

This announcement includes "forward­looking 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 forward­looking statements that are based on current expectations. Such forward­looking 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 forward­looking statements. Such forward­looking 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 forward­looking 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 forward­looking statements, contained herein to reflect any change in the Group's expectations, with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Past performance cannot be relied upon as a guide to future performance.

Chief executive review

We are pleased with our full year results, with revenue growth being delivered in each of the Group's businesses in H2 following a weak start to the year. The Group's transformation programme, launched in December 2018, is now starting to drive performance improvements in both our UK and international venues businesses. Rank's digital business grew strongly with like­for­like H2 net gaming revenue (NGR) up 14% compared to the H1 growth of 7%.

As at 30 June 2019, there were a total of 13 workstreams and 388 initiatives within the transformation programme which is now embedded in the business and driving new improved ways of working. Initiatives in the transformation programme delivered £10.7m of cost savings in H2 and it is expected that a further £9.3m of cost savings will be delivered in 2019/20. Whilst we have further cost saving initiatives in the programme, the transformation of Rank inevitably centres on initiatives which drive revenue growth.

The performance of Grosvenor's casinos across the year is very much a tale of two halves. H1 was disappointing with both like­for­like revenue and operating profit down 5% and 35% respectively. However, in H2 both revenue and cost initiatives started to drive performance with H2 revenue up 1% and operating profit up strongly at 40%. The introduction of a new casino operating model, with simplified management structures and reduced labour hours, was launched in December 2018 and led to H2 savings of £8.2m. A further £11.3m of savings is expected to flow through into 2019/20.

Mecca's like­for­like revenue was down 2% in the year driven by a 9% fall in customer visits. Like­for­like operating profit was broadly flat in the year as operating costs continued to be tightly controlled. Several initiatives within the transformation programme were successfully delivered in the second half of the year and will continue to be developed into 2019/20, focusing on improving the gaming machine offer and delivering additional value to our bingo customers.

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Final Results - RNS - London Stock Exchange

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Due to the ongoing underperformance of Luda, the decision was made in the year to close all three venues which ceased trading on 24 July 2019.

International venues grew like­for­like revenue by 1%. Improvements to the management, product and delivery of the gaming machine offer contributed to an 8% increase in operating profit.

Like­for­like digital NGR, excluding the contribution for YoBingo, increased by 11% in the year, driven by various improvements to both the Mecca and Grosvenor offers and in the more effective delivery of customer bonusing. Total digital revenue grew by 17% in the year due to the contribution from YoBingo. Digital like­for­like operating profit was down 3% in the year as improvements to revenue were offset by £0.8m of incremental Remote Gaming Duty ('RGD') on player bonuses and £1.9m of additional RGD following its increase to 21% (from 15%) from 1 April 2019.

£m	Group revenue		LFL1 Group revenue
	2018/19	2017/18	Change	2018/19	2017/18	Change
Grosvenor venues	353.2	362.4	(3)%	353.0	360.4	(2)%
Mecca venues	202.1	208.1	(3)%	199.9	203.2	(2)%
International venues	44.9	45.9	(2)%	44.9	44.6	1%
Digital	146.3	124.7	17%	131.7	123.1	7%
Total	746.5	741.1	1%	729.5	731.3	0%
Digital NGR	118.5	96.7	23%	105.5	95.3	11%
	Operating profit		LFL operating profit
	2018/19	2017/18	Change	2018/19	2017/18	Change
Grosvenor venues	44.9	47.2	(5)%	44.7	47.8	(7)%
Mecca venues	28.6	28.6	0%	30.0	30.1	0%
International venues	9.3	8.8	6%	9.3	8.6	8%
Digital	20.7	19.9	4%	19.1	19.6	(3)%
Central costs	(31.0)	(27.5)	13%	(31.0)	(27.5)	13%
Total	72.5	77.0	(6)%	72.1	78.6	(8)%

1 Excludes the contribution from YoBingo, Luda, clubs closed partway through a year and the impact of foreign exchange.

Safer Gambling

Rank is committed to promoting gambling as a recreational activity and, as importantly, to managing or preventing its use by those people who may be vulnerable, at risk of experiencing harm or who have developed a problem. The last 12 months have seen significant changes in the way our industry is asked to think about this commitment. Not least, we are encouraged to no longer frame our work in terms of responsible gambling, which risks placing too much emphasis on individual responsibility. Rather, we must actively pursue improvements in the promotion and delivery of safer gambling, specifically:

• Continuously assessing the risks relating to our products and environments, so that we may design controls to make gambling safer in the first instance; and
• Promoting safer participation in gambling by all those people who choose to play with us.

During the year, with this in mind, we revisited our safer gambling policy and developed a new strategy, under the auspices of the re­named safer gambling committee. We also determined that safer gambling should be one of our six strategic pillars and included it as a specific workstream within the transformation programme to set the course, and build upon the momentum within the business, for significant ongoing improvement across the Group.

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