Annual Report • Sep 13, 2022
Annual Report
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The Rank Group PLC 213800TXKD6XZWOFTE12 2021-07-01 2022-06-30 213800TXKD6XZWOFTE12 2020-07-01 2021-06-30 213800TXKD6XZWOFTE12 2022-06-30 213800TXKD6XZWOFTE12 2021-06-30 213800TXKD6XZWOFTE12 2020-06-30 213800TXKD6XZWOFTE12 2020-07-01 2021-06-30 rnk:UnderlyingMember 213800TXKD6XZWOFTE12 2020-07-01 2021-06-30 rnk:SeparatelyDisclosedItemsMember 213800TXKD6XZWOFTE12 2020-07-01 2021-06-30 ifrs-full:IssuedCapitalMember 213800TXKD6XZWOFTE12 2020-07-01 2021-06-30 ifrs-full:SharePremiumMember 213800TXKD6XZWOFTE12 2020-07-01 2021-06-30 ifrs-full:CapitalRedemptionReserveMember 213800TXKD6XZWOFTE12 2020-07-01 2021-06-30 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800TXKD6XZWOFTE12 2020-07-01 2021-06-30 ifrs-full:RetainedEarningsMember 213800TXKD6XZWOFTE12 2020-07-01 2021-06-30 ifrs-full:EquityAttributableToOwnersOfParentMember 213800TXKD6XZWOFTE12 2020-07-01 2021-06-30 ifrs-full:NoncontrollingInterestsMember 213800TXKD6XZWOFTE12 2021-07-01 2022-06-30 rnk:UnderlyingMember 213800TXKD6XZWOFTE12 2021-07-01 2022-06-30 rnk:SeparatelyDisclosedItemsMember 213800TXKD6XZWOFTE12 2021-07-01 2022-06-30 ifrs-full:IssuedCapitalMember 213800TXKD6XZWOFTE12 2021-07-01 2022-06-30 ifrs-full:SharePremiumMember 213800TXKD6XZWOFTE12 2021-07-01 2022-06-30 ifrs-full:CapitalRedemptionReserveMember 213800TXKD6XZWOFTE12 2021-07-01 2022-06-30 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800TXKD6XZWOFTE12 2021-07-01 2022-06-30 ifrs-full:RetainedEarningsMember 213800TXKD6XZWOFTE12 2021-07-01 2022-06-30 ifrs-full:EquityAttributableToOwnersOfParentMember 213800TXKD6XZWOFTE12 2021-07-01 2022-06-30 ifrs-full:NoncontrollingInterestsMember 213800TXKD6XZWOFTE12 2020-06-30 ifrs-full:IssuedCapitalMember 213800TXKD6XZWOFTE12 2020-06-30 ifrs-full:SharePremiumMember 213800TXKD6XZWOFTE12 2020-06-30 ifrs-full:CapitalRedemptionReserveMember 213800TXKD6XZWOFTE12 2020-06-30 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800TXKD6XZWOFTE12 2020-06-30 ifrs-full:RetainedEarningsMember 213800TXKD6XZWOFTE12 2020-06-30 ifrs-full:EquityAttributableToOwnersOfParentMember 213800TXKD6XZWOFTE12 2020-06-30 ifrs-full:NoncontrollingInterestsMember 213800TXKD6XZWOFTE12 2021-06-30 ifrs-full:IssuedCapitalMember 213800TXKD6XZWOFTE12 2021-06-30 ifrs-full:SharePremiumMember 213800TXKD6XZWOFTE12 2021-06-30 ifrs-full:CapitalRedemptionReserveMember 213800TXKD6XZWOFTE12 2021-06-30 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800TXKD6XZWOFTE12 2021-06-30 ifrs-full:RetainedEarningsMember 213800TXKD6XZWOFTE12 2021-06-30 ifrs-full:EquityAttributableToOwnersOfParentMember 213800TXKD6XZWOFTE12 2021-06-30 ifrs-full:NoncontrollingInterestsMember 213800TXKD6XZWOFTE12 2022-06-30 ifrs-full:IssuedCapitalMember 213800TXKD6XZWOFTE12 2022-06-30 ifrs-full:SharePremiumMember 213800TXKD6XZWOFTE12 2022-06-30 ifrs-full:CapitalRedemptionReserveMember 213800TXKD6XZWOFTE12 2022-06-30 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800TXKD6XZWOFTE12 2022-06-30 ifrs-full:RetainedEarningsMember 213800TXKD6XZWOFTE12 2022-06-30 ifrs-full:EquityAttributableToOwnersOfParentMember 213800TXKD6XZWOFTE12 2022-06-30 ifrs-full:NoncontrollingInterestsMember iso4217:GBP iso4217:GBP xbrli:shares Annu al Rep or t 202 2 T o exc i t e a n d t o e n t e r ta in model, a ne w r isk mo del acr os s G ro s venor ca si nos a nd t he roll i ng out of a ne w mac hi ne ma nag ement sy st em in Me cc a. – W h i ls t t he del ay to t he pub lic at ion of t he UK G over n ment’s gambl i ng r ev iew W h ite Pap er is d i sapp oi nt in g, we cont i nue to bu i ld s uppor t for a prog r a m me of mode st r efor m s for t he la nd-ba s ed c a sino a nd bi ng o se c tor s. Financial – Underly i ng oper at i n g pro t 1 of £ 4 0.4 m compa r es w ith a lo ss of £ 82.4m i n 2020/21 wh ich w a s more hea v i l y impac t ed b y t he pa ndem ic w it h venues close d at v a r ious p oint s t hr oughout t h e y e a r. – Gr oup opera t i ng pro t of £82 .1m ree c ts t he net re ceipt of £ 77 .1m f r om a V AT rep ay ment, impa i r ment cha r ge of £25. 8m net of impa ir ment r ev er sa l , up f rom a G r oup oper at i ng los s of £92.9m in t he prior yea r . – Gr oup re t u r ned t o net ca sh p osit ion pre -I F R S 16 of £1 9 . 1m, suppor ted b y £100. 7 m cash i n o w fr om oper at ions a nd £ 83.1m of V AT r eceipt s. – Ba n k w a iver r e st r ict ions l i f t ed a nd re t u r ned t o st a nd a r d debt co vena nts f rom 1 Ju l y 2022. 1. On a l i ke -f or -l i ke ( ‘L F L ’ ) b a si s wh ic h re mov es t he i mpa c t of club o pen i n gs , cl osu r e s, ac qu i r e d bus i nes se s, f or eig n e xc ha nge mo vem ent s a nd di scont i nued oper at ion s. 2. Y ea r - on-y ea r compa ri so ns f or ou r ve nues a r e d is tor te d by s ig n i ca nt per io d s of c los u re , cu r few s a nd r eg io na l res t r ict ion s i n t he 2 020 /21 na ncia l yea r. T he l a st c omp a r able 1 2-mo nt h per iod t h at w a s u na f fec te d b y t he C OV I D -19 pa nd em ic wa s t he 12 mont hs to 31 D ec emb er 2019 ( ‘CY 2 019’ ) wh ic h t he G r oup u se s a s a comp a r i so n to p er f or m a nce l ev el s. 2022 business highlights – Underly i ng oper at i n g pro t 1 for t he f u l l yea r w a s £4 0.4m, i n l ine w it h gu id a nce of £4 0m pr o v ided i n June 2022 . – Se cond ha lf per for ma nce w a s ad ver sel y impac t ed b y di f cu lt t r ad i ng cond it ions in G r os venor venues, pa r t icu l a rl y i n London, w h ich led to a r es et of oper at ing pro t g u ida nce for t he f ul l yea r . – Underly i ng v enues Net Ga mi ng Re venue (‘NG R’ ) 1 up 209% yea r- on-yea r i n t he yea r b ut dow n 19% on C Y 2019 2 re ec t i n g t he conti nued impac t of, a nd g rad ua l r e cov er y fr om , t he pa ndem ic. – Underly i ng d i g ita l NGR 1 g r e w 4% yea r - on-yea r suppor te d b y a 1 78% g ro w th i n ac t ive cr os s- ch a n nel cu s to mer s. – Si x -fold incr ea s e in u nderl y i ng d i g ita l oper at i ng pr ot 1 yea r- on-yea r to £18. 7 m as f ur t her sy nerg ies r ea l i se d f r om t he te ch nolog y i nteg r a t ion fol lo w i ng t he St r ide acq ui sit ion i n Oc tober 2 019 . – Mecc a d ig it a l bu sine ss succe ssf ul l y mi g ra ted t o t he R IDE pla t for m i n Ja nua r y 2022 wit h the na l bra nd, Gr os venor, mig r at i ng ac r os s by end of Q1 2022 / 2 3. – Underly i ng venues oper at i ng pr ot 1 included ener g y cos t s of £2 3.2m , up sig n i ca ntl y on t he CY 2019 2 cos t of £13.0m. E nerg y cos t s for 2022 /2 3 wou ld be appr ox i m atel y £4 6m ba se d on cu r r ent ma rket pr ice s. – Mecc a bei ng r es hap ed to r e t u r n to pro t abi l it y wit h seven venues close d in Q1 2022 /2 3. – T he st r ong c a sh p osit ion ha s en abled t he acceler at ion of t he Gr oup’ s Tra nsfor mat ion 2.0 prog ra m me, wh ich is foc u sed on i mpr ov ing t he c us tomer of fer a nd g r ow i ng c u stomer number s , ha s del iver e d w it h g oo d re t u r n s f r om t he £6. 2m G r os venor in ves t ment int o new pr oduc t a nd £ 5.3m ca si no refurb i shm e n ts. – Pr og r e ssion of t he Gr oup’ s ES G prog r a m me cont i nues w it h sig n i c a nt development s int roduce d t h r oughout t he yea r t o f u r ther en h a nce c us tomer sa fe t y includ i ng a new on l i ne ma rkers of h a r m More infor m ation T o nd out t he late st about ou r busi ness go to w w w .ra nk .com Ove r v ie w IC I nt ro duc t ion 01 About u s Strategic Report 12 Ch a i r’ s le t ter 1 4 Ou r bus ines s 16 C h ief E xec ut i ve’ s re v ie w 26 CFO’ s r e v ie w 28 O u r ex t er na l env i ron ment 32 How we cr e ate long-ter m v a lue 40 Our st rateg y 52 O u r ke y per form a nce i nd icat ors 54 Our appr oac h to E SG 72 Our bu sine ss model 7 4 R isk m a n ag ement 82 C ompli a nce st a tements 84 Alt er na t iv e Per for m a nce Mea su r es Gov ernance R eport 88 Cha i r’s int ro duc t ion to gov er na nce 91 2018 Co de C omplia nce Sta tement 92 How we a r e go ver ne d 94 Ou r B oa r d 98 How go ver n a nce suppor ts del i ver y – A yea r i n r e v iew 100 Nom i nat ions Com m it te e Rep or t 107 Audit C om m it t ee Rep or t 11 4 ES G & Sa fer G a mbl i ng C omm it tee Rep or t 118 Fi na nc e Com m it t ee Rep or t 120 Remu nera t ion Com m it te e Rep or t 12 3 Remu nerat ion Pol ic y 131 An nua l Repor t on Remu nera t ion 143 D i re c t or s’ Repor t 1 47 Di r ec tor s’ Resp onsibi l it ies Financial Statements 150 Independent aud itor ’ s r epor t 160 G roup i ncome st atement 16 1 G roup st a tement of comprehensi ve i ncome 162 Ba l a nce she et s 164 St atement s of ch a ng es i n eq uit y 166 S ta tements of ca sh o w 16 7 Notes to t he na ncia l st at ements 212 Fi ve -yea r r e v ie w Other Infor mation 213 Sh a r eholder i n for mat ion Conte nts O ver t he cou r se of mor e t h a n t h r ee - quar ters o f a c ent u r y , t he Group ha s enter t a ined m a ny m i l l ions of c us tomers in Br ita i n a nd a rou nd t he world. T he Gr oup’ s s tor y is one of iconic bra nds a nd t a lente d p e ople. T o del i ver exc it i ng a nd enter ta in i ng ex per ien c es i n sa fe, sust a i n able a nd re wa rd i ng env ir on ments. W e w i l l achie ve t hi s t hr ough re ec t ing t he cha ngi n g need s a nd e x pe c ta t ions of ou r cu stomer s, com mu n it ies a nd col lea g ues. T o e xcite a nd to enter t a i n. Who w e are Our purpose Ove r vi e w T o d ay , w e st i l l l ov e b r ing i ng ex c i t emen t t o m i l l i on s a r o u nd t h e wo rl d, w it h o u r ga mi ng - ba s e d en t er t a i n ment br a nd s. A n d w e be l i ev e t hat by d oing i t res po nsi b ly , a n d p lay i ng o u r p a r t in t h e co m m u n it y , w e ca n ma k e sure o u r v e n u e s a n d o n l in e si tes a re l l ed w i t h f un a n d lau gh te r . A s we e m e r ge d f ro m t h e p a n de m i c w e focus ed o n re f reshi ng o u r b usin ess to h e l p us d e l iv e r our p ur po se , to e x ci te a n d to e nt e r t a in . R ank has b e en enter taining Britain since 19 3 7 . The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial st atements Over v ie w 01 About us “ I t is imp or tan t t o e n s u r e o u r E S G obj e ctiv es re l a te to an d inte g ra te wit h our co mp an y gro w t h obje ctiv es . ” John O’Rei lly Chi ef E xec uti ve R efreshing our st rategy a n d ap p roa ch t o E SG Lea rn mo re a bo ut our a pp roa ch t o ESG on p ag es 54- 71 The Rank Group Plc Annual Report 2022 02 Above: John O’Reilly , Chief E xecutiv e The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial st atements Over v ie w 03 “ T he G ro up look s t o chal lenge and motiv ate all co lle agu es to de liv er in a manne r that is under pin ned b y our com mitm e n t to sa fer gamblin g . ” K a tie M cAlist er N on-Exec utive Dire ctor an d Chair of th e ESG & Safer G ambl ing Com mit tee R einforcing our app roach to sa fe r ga m b l ing is i n o u r D NA Lea rn mo re a bo ut our commit me nt to safer gamblin g on p ag es 56-57 The Rank Group Plc Annual Report 2022 04 Above: Grosv enor Casino Shefeld The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial st atements Over v ie w 05 “ W e are chan ging our casinos, m aking t h em m o r e r e l eva n t a n d appealing to a br o ader audie nce t hrough up grading our produ ct and F &B of fe r . ” Debbie Husband Managing Director , Grosvenor V enues W e are in v esting i n o u r venue s Lea rn mo re a bo ut our inv estme nts in our Business Performance r eview on p ag es 17- 22 The Rank Group Plc Annual Report 2022 06 Above: Grosv enor Glasgow Me rc ha nt C it y The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial st atements Over v ie w 07 “ W e a r e e x c i t ed b y t he roa dm ap ah e a d , a s w e lo o k t o b r i ng the v enue s and digital e xp e r ie nc es clo ser toge t her . ” Jon Martin Man aging Director , UK Digital Dev elopin g our di gital a n d cros s -c ha n n e l o f fe r Lea rn mo re a bo ut our s tra te gy on pages 40- 51 The Rank Group Plc Annual Report 2022 08 Above: meccabingo.com The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial st atements Over v ie w 09 The Rank Group Plc Annual Report 2022 10 Strategic R ep ort In t his se ction: W e d escr i be why w e ar e c onde nt t hat t he i mp rovem en ts we a re co nti n u ing to ma ke to the custo me r p r o positi on a nd t he investme nts i n o ur v en ue s, a longsi de t h e g radua l l y r e du ci ng imp ac t o f t h e pand emi c, po sitio ns us w el l for t he yea r a h ead. W e a lso loo k a t h ow we hav e st reng t he ned our ba la nce shee t a n d o ur und erst a nding o f w hat o ur custo m ers wa nt f rom t he bus i n ess. 12 Cha i r’ s l et ter 1 4 O ur b usin ess 1 6 C hie f Executive ’ s rev iew 26 CFO ’ s r ev iew 28 Ou r e x te r na l envi ronme nt 3 2 H ow we c reate lo ng -te r m va lu e 40 Our str ate g y 5 2 Our key per fo r ma n ce i ndi cato r s 54 Our ap proa ch t o ESG 72 Our b usine ss m ode l 7 4 R isk ma nagem en t 82 Com plia n ce state m en t s 84 A lternat ive Pe r fo r ma nce M ea sures Above: Support Ofce, Maidenhead The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 11 Chair ’ s letter T he G ro up has ended the y ear w ith a s tr ong bal ance she et , positiv e tra ding mome ntum and a l e ade rship te am committed to deliv ering sustainable v alue for all its stak e hol de rs . Alex Thurs by Chai r Business updates + 14 . 2 p Ea r ni ng s per sha re. + 98 % Underly i ng G roup LF L Net Ga m i ng Re venue (‘NGR’ ) up on pr ior y ea r. + 4 % Underly i ng NGR for our U K di g it a l busi ness d r iven by t he per for ma nce of our G ro s venor and St r ide le gac y br a nd s. The Rank Group Plc Annual Report 2022 12 Performa nce Underly i ng G roup LF L NGR wa s up 98% on the pr ior yea r, wit h ou r venues back open a nd our venues’ c ol lea g ues doing wha t t hey do bes t , enter t a i n i ng a nd excit ing ou r cus tomer s. Ou r venues ar e st il l in po st COV I D - 19 re co ver y , w it h underly ing G roup LF L NGR dow n 10% compar e d to our pre -pa ndem ic per for ma nc e 1 . W e a r e con dent t h at t he Gr oup’ s t a r ge ted c apit a l pro g ra mme ca n d r iv e gr ow t h in c us tomer v isit s a nd, a longs ide deliver ing oper at ion a l ef c iencies, a n impr ov ed per form a nce. Ou r UK d ig it a l bu sine ss a l so re co ver ed i n t he yea r, wit h u nderly ing G r oup LFL NG R up 4 %, d r iven b y t he per for m a nce of Gr os venor a nd t he St r ide legac y br a nd s wh ich opera te on t he propr iet a r y R IDE plat f or m. T he Boa r d se es ou r dig ita l busi ness a s a key pr ov ider of f ut u r e g ro w th for t he Gr oup. Ea r ni ng s per sha re (‘E PS ’) wa s 14.2p, up fr om a loss per ea r n i ng s of 1 6. 5p in t he pr ior yea r, due to our venues bei ng back open a nd cont r ibut i ng po sit ivel y to t he Gr oup. EPS befor e sepa ratel y d is close d items wa s 4. 3p. Dividend A s we st a r ted t he new na nc ia l ye a r on 1 July 2022 , we saw t he remo va l of t he ba n k- i mpo se d re st r ict ion on n o t pay ing our sh a r eholders a d iv idend wh ich wa s a cond it ion of our ban k n a nci a l co vena nt wa i ver put in place du r i ng t he pa ndem ic. A s t he Gr oup ’s p er for ma nce cont i nues to impr ov e, we wi l l r ea ss es s t he Gr oup ’s appro ach to pa y i ng d iv idends to our sha reholders. W e ex p ec t to pr ov ide f ur ther cla rit y a r ound t he re su mpt ion of pay i ng d iv idend s at t he ti me of the ha l f ye a r re su lt s a n nouncement in Ja nua r y . Board change s Du r i ng t he yea r , we conti nued to s t r eng t hen our Bo a r d w it h t he appoi nt ment of t wo new members. On 1 May 2022 , we welcomed R icha r d Ha r r is to the G roup as C h ief Fin a nci a l Of cer (‘CFO’ ) a nd to the Boa rd fol low i ng t he depa r tu r e of Bil l F loy dd on 31 D ec ember 2021. Rich a r d br i ngs ex ten siv e na nc ia l a nd oper at iona l ex per ien c e wh ich w il l be inva luable a s Ra nk move s t hr ough t he nex t pha s e of its t ra nsfor m at ion pla n. I wou ld li ke to t a ke t he oppor t un it y on b eha lf of t he Boa r d to t ha nk Bi l l for his exc el lent contr ibution to t he Gr oup as it nav igate d its wa y t h r ough t he pa ndem ic and to Simon Hay who took on the r ole of I nter im CFO for t he four month s pr ior to Rich a r d join i ng. Dear Shareholders It has b een a yea r of re cov er y for the Gr oup, par t icu l a rl y for our venues busi ness es. Clea rly t he pace o f re co ver y in t he UK ha s be en below ex pe c t at ions, but t he Boa r d a nd I a re con dent t hat r obust pla n s a re i n place to d r i ve t he re qu ir e d g ro w th a nd i mpro vements. It has a l so b een a n imp or t a nt yea r for our U K di g ita l busines s. T he Mecca br a nd wa s succes sf u l l y mig r at ed onto t he RI DE propr iet a r y pla t for m i n Janua r y 2022 a nd t he Gr os venor bra nd is due to mig r ate in Q1 2022/ 23. Fol low i ng Gr o sv enor’ s mi g ra t ion, a l l Gr oup dig it a l busines se s w i l l be oper at i ng on ow ned te ch nolog y plat f or ms pr ov idi ng g re ater a g il it y a nd soph ist icat ion in re spond i ng to cu st omer need s wh i ls t deliv er i ng impr ov ed ma r g i n s. Gr ea t prog r es s ha s be en made in t he yea r i n est abl i sh in g a Gr oup-w ide ES G a nd sa fer ga mbl i ng st r at eg y . A set of per for ma nce mea su re s ha ve been a g re e d wh ich w i l l evol ve a longs ide our va r ious in it i at i ves. T he Gr oup rema in s ded icat ed to a sa fer ga mbl in g env i ron ment for our c ust omers. T he Gr oup rec og n ise s t he in at ionar y pre ssu r es fac i ng UK con su mers but is con dent t h at t he prog r a m me of pla n ned impr ov ements a long side the r educi ng impac t of t he pa ndem ic wi l l pos it ion it well for f ut u r e gr o w t h. T he Gr oup has ended t he yea r wit h a st r ong ba l a nce shee t , posit i ve t ra d i ng momentu m a nd a ref r eshe d leader sh ip tea m com m it ted to deli ver i ng su st a i na ble va lue for al l its st a keholder s. Regulation Unfor tu n atel y , t he UK G over nment’s W h ite Pap er for gambl i ng re for m is yet to be publis hed. Ha v i ng or ig i n a l l y ex pe c ted its publ icat ion befor e t he end of 2021, mult iple mi n is ter i a l ch a nge s a nd more re cent l y t he appoi nt ment of a ne w Pr i me Mi n ster ha ve r esu lt ed in f u r t her delay s to its public at ion. T he Ra n k te a m cont i nues to work ha rd out l i ni ng mode st pr opos a l s to moder n is e t he UK la nd-ba s ed ca si no a nd bing o sec t or s and it’s st i l l ex p ec te d t ha t t he Gr oup w il l b enet f r om t he re v iew when it concludes. Lea rn mo re a bo ut our response to the G ove rnm ent ’s Gambling R eview: w w w. r a n k . c o m/en/ responsibility On 23 Ju ne 2022, we were del ighted to a n nounce t h at Luci nda Ch a rle s-Jones joined t he Boa rd a s a Non -E xec ut i ve Di r ec tor. Lu c ind a’ s back g rou nd in remu nerat ion a nd people mat ter s a nd ex per ien c e of operat i ng i n re g u lat ed consu mer -fac in g busi ness es w i l l be a re a l as se t to t he Boa r d. W e a l so sa id fa r e wel l to t w o long-ser v in g Non-Exe c ut iv e Dir e c tor s dur ing t he yea r. On 31 J a nuar y 2022, Sus a n Hooper stepp ed dow n af ter ser v in g over si x yea rs on the Ra nk Boa rd. Susa n al so succes sf u l l y cha ir ed t he ES G & Sa fer Ga mblin g com m it te e for four a nd a ha l f yea r s a nd wa s pivota l i n ensu r i ng ESG wa s considere d in it s w ider form w it hout l o si ng our clea r com m it ment to sa fer ga mbl in g . K at ie McA li ster wa s app ointe d Ch a i r of the ES G & Sa fer Ga mblin g Com m it te e fol low i ng Susa n’ s depa r tu r e. On 19 J a nuar y 2022, fol low ing h is accep ta nce to jo in t he Boa rd of Nueva Cod ere, C h r is Bel l s teppe d dow n f r om t he Boa rd a f t er ser v in g si x a nd ha l f yea rs a s Sen ior Independent Di r ec t or . Fol low i ng Ch r i s’ s depa r t u r e, Ka ren W h it wor t h was appoi nte d Sen ior Independent Di r ec tor. Ch r i s’ s cont r ibution to t he Ra n k Bo a r d ha s been i nv a luable a nd we wi sh bot h Susa n a nd Ch r i s well for t he f ut u re. Thank y ou T he Group ha s emerged f r om the pa ndemic w it h a rene wed fo cu s a nd energ y . T here l ie ma n y oppor t un it ies a head for t he Gr oup a nd its f ut u r e succes s w i l l not be possible w it hout t he unw aver ing pa ss ion and re si l ience of t he Ra n k tea m . On beha lf of t he Boa r d I would l i ke to sa y t ha n k to a l l 7 ,60 0 col lea g ues for the pa r t you play i n del iver i ng t he R a n k st r ate g y . A le x T hu r sby Cha ir 1 7 Aug ust 2022 1. Y e a r - on-y ea r compa ri so ns f or ou r ve nues a r e d is to r t ed b y si g n i c a nt p er iods o f clo su r e, cu r few s a nd r eg io na l res t r ict ion s i n t he 2 020 /21 na ncia l yea r. T he l a st c omp a r able 1 2-mo nt h per iod t h at w a s u na f fec te d b y t he C OV I D -19 pa nd em ic wa s t he 12 mont hs to 31 D ec emb er 2019 ( ‘CY 2 019’ ) wh ic h pr o v ide s a help f u l comp a r i so n to p er f or m a nce l ev el s. The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 13 Ou r bu sin ess A un iq ue bl end of e xpe riences, b rande d v e nues an d digital c ha nne ls in th e UK and Sp ain . 64 M ecca branded v enues Mecc a is Ra n k ’ s commu n it y-ga m in g bra nd for t he Br it is h ma rke t. A nat ional por tfol io of 64 venues offer ing bin go, slot mach i ne ga mes, g r eat v a lue food a nd dr in k , a nd liv e enter t a i n ment. Mecca digital channels T he dig it a l cha n nels of fer a ra n ge of popu la r game s li ke bin go, a wide ra nge of slot game s a nd table ga mes. 64 52 G ros venor branded venues T he UK ’ s la r g est mu lt i-c ha nnel ca si no oper ator w it h 52 venues. The bra nd of fers a ra ng e of casi no t able ga mes, includ i ng rou let te, black jack, bacc a r at a nd poker as wel l a s elec t r on ic roule t te a nd slot ma ch i ne ga me s. Grosv en or digital channels T he bra nd ’ s complementa r y d ig it a l cha nnels of fer ma ny popul a r ga me s, includ i ng it s success f u l li ve ca si no, in add it ion t o a spor t s bet t i ng of fer . 52 9 Enrac ha branded venues En r ach a is Ra nk ’ s com mu n it y-ga mi n g busi ness for t he Spa n ish ma rket. Ni ne venues offer ing a ra n ge of popul a r com mun it y ga mes l ike bi ngo a nd poker as wel l a s elec t r on ic casi no a nd slot ga mes, g r ea t va lue food a nd d r i n k , a nd li ve enter t a in ment. Enracha digital channels En r ach a a l so ha s a sma l l complementa r y d ig it a l of fer . 9 Our branded v enues and digital channels The Rank Group Plc Annual Report 2022 14 T he Gr oup operat es t he ma rke t-lead in g d ig it a l bin go bra nd, Y oBi ngo, to t he Spa n ish ma rket a long side its newer d ig it a l ca si no offer, Y oC a si no. In add it ion t o its es ta bli shed br a nds , t he Gr oup al so oper at es mult iple d ig it a l bra nd s usi ng a combin at ion of propr iet a r y a nd non-propr ieta r y l icen sed s of t wa r e pro v id i ng on l ine bin go, ca si no and slot ga m i ng. Our m ark ets Our d igital only brands In v enue s and online – e x tending the custome r e xperience Ou r a i m is to prov ide a s ea m le ss, cont i nuous and per son a l i sed c us tomer ex per ien c e acr os s a ny dev ice or v enue t hey w i sh to v isit . Spl it of LFL N GR – U K Spl it of LFL N GR – S pai n V enues £430.6m Dig it a l £162.3m V enues £30.1m Dig it a l £21.0m The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 15 Chief Ex ecutiv e’ s re view Our stron g b al ance she et en abl es continue d in v estme nt in our T ransf ormation 2 . 0 programme which po si tio ns th e Gro up w el l bo th fo r gr o w th and for t he anticipate d regulator y refor m to lan d- b ase d gaming . John O’Rei lly Chie f Exe cut ive Business updates +£ 4 0. 4 m Underly i ng L F L opera t i ng pro t of £40.4m compa r es w it h a los s of £82.4m i n t he pr ior yea r. + 2 75 % Gr os venor’s underl y i ng L F L Net Ga m i ng Rev enue (‘NG R’) wa s up 275 % compa r e d to t he prior yea r . + 15 % Inc re a se in sp end per v isit at Mecc a venues on the core ma in st a ge bin go ga me. +£ 1 8 .7 m Dig it a l u nderl y i ng LF L oper at ing pro t of £18. 7m u p f r om £3.1m in t he pr ior yea r. The Rank Group Plc Annual Report 2022 16 Strate gic upda te Du r i ng t he yea r , we took some ti me as a Boa r d a nd exe cut i ve tea m to rev i sit t he Gr oup’ s pu r po se, a mbit ion a nd st rateg ic aim s. Purpos e Ou r over a r ch i ng pu r p os e of deliver ing excit ing a nd enter ta i n i ng ex per ien c es rem a i ns u ncha nged . Howev er , t he Bo a r d re cog n i se d t hat ou r pur pose st a tement must re ec t ou r com mit ment t o ensu r i ng t ha t we meet t he need s of al l of our st a keholder s in a sus t a i nable wa y . Refreshe d purpos e stateme nt: T o del iv er excit i ng a nd enter ta i n i ng ex per ien c es i n sa fe, sus t a i nable a nd re wa rd i ng env i r on ments. W e w i l l ach ie ve t h is t h r ough re ec t ing t he cha ngi n g need s a nd ex pe c t at ions of our c ust omers, com mun it ies a nd col lea g ues. T o exc ite a nd to enter t a in. Ambition Ou r st ate d Gr oup a mbit ion made refer ence to bec omi n g a £1 bn r evenue inter nat iona l ga m i ng busi nes s by 2023. T he impac t of t he COVI D - 19 pa ndem ic on ou r venues busi ness es ha s ma de t h is a mbit ion un ach ie vable w it h i n t he ti mes ca le. Follow ing t he publica t ion of the W h ite Paper on UK ga mblin g refor m we w i l l ha ve a bet ter under st a nd i ng of our f ut u r e g ro w th t r a jec tor y a nd w il l r es t ate ou r med ium to long-ter m a mbit ion. Current tradi ng and o utlo ok O ver a l l , Gr oup underly ing NGR is r un n in g 3% a head of the pr ior yea r in t he r s t se ven week s of 2022/ 2 3. U nder ly ing Dig it a l NGR h as g r ow n 12% in t he seven week s, w it h venu e s dow n 1 %. Gr o sv enor venues NGR is dow n 4 % ye a r - on-yea r but w it h av era ge we ek l y NGR in t he se ven week s 11 % a head of Q4, w it h t he g r adua l re t u r n of over se as c us tomer s to our London ca si nos more t h a n of fs et ti ng t he sof ter t r ad i ng cond it ion s outside of London. Mecc a is se ein g v isit s up 8% a nd NGR up 2%. Trad in g cond it ions a r e li kel y to rem a i n cha lleng i ng i n t he month s a head w it h hi gh in at ion h it ti ng con su mer d isc r et iona r y ex p end it u r e a nd in at iona r y cos t pres su r es, pa r t icu la rly t he f u r t her r is e in energ y pr ices in r ec ent week s, cont i nui ng to impac t oper at ing ma rg i ns. Howe ver, t he s ucces sf u l mi g ra t ion to propr iet a r y te ch nolog y wit h i n t he d ig it a l busi ness a nd t he in ves t ment into t he venues est ate, w i l l r esu lt i n us bei ng able to compete s t r ongly i n t he comi ng ye a r. Moreo ver, the st r ong ba l a nce shee t enables cont i nued inv est ment i n ou r Tra nsfor mat ion 2.0 prog ra mme wh ich posit ions the Gr oup wel l bot h for g ro w th a nd for the a nt icipat ed r eg u la tor y refor m to la nd-ba se d ga m i ng fol low i ng t he outcome of the UK G o ver n ment’s r e v iew of ga mbli ng r eg u la t ion. NGR 2021 /22 £m 2020/21 £m Cha nge C Y 2019 1 £m Cha nge Gr os venor venues 296.6 79.2 275% 364.1 (19)% Mecc a venues 134.0 53.8 149% 175.7 (24)% En r ach a venues 30.1 15.9 89% 31.6 (5)% Dig it a l 183.3 176.4 4% 144.0 27% Unde rl y in g L F L 2 644.0 325.3 98% 715.4 (10)% Impac t of venues closu re s an d FX 3 – 4.3 1 8.6 Unde rl y in g 644.0 326.8 95% 734.0 (12)% Op eratin g prot 2021 /22 £m 2020/21 £m Cha nge C Y 2019 £m Cha nge Gr os venor venues 45.1 (40.7) (211)% 75.4 (40)% Mecc a venues (0.8) (17.5) (96)% 33.0 (102)% En r ach a venues 8.1 0.6 1,233% 7.5 8% Dig it a l 2 18.7 3.1 499% 22.9 (1 8)% Cent r a l co st s (30.7) (27.9) 9% (34.6) (11)% Unde rl y in g L F L 2 40.4 (82.4) (149)% 104.2 (61)% Impac t of venues closu re s an d FX 3 (0.6) (2.1) 0.5 Unde rl y in g 39.8 (84.5) (147)% 104.7 (62)% 1. Y e a r - on-y ea r compa ri so ns f or ou r ve nues a r e d i s tor ted b y s ig n i c a n t per iod s of clo su r e, c u r f ew s a nd r eg ion a l r e st ric t ions i n t he 2 020/ 21 na nc ia l y ea r . T he la s t comp a r able 1 2- mont h p er io d t h at w a s un a f f ec t e d by t he COV I D -1 9 p a nd em ic wa s t he 12 mont hs to 31 D ec emb er 2019 ( ‘C Y 2019’ ) w h ich t he Gr oup u s es a s a c ompa ri so n to p er f or m a nce l ev el s. 2. Res u lt s a r e pr e se nte d on a l i ke -f or -l i ke ( ‘L F L ’ ) b a si s wh ic h re mov es t he imp ac t of c lub clo su r e s, fo re ig n exc h a ng e mov emen t s a nd d i sc ont i nue d op er at io ns. 3. A f ul l a na l y si s of t he se a dju s t ment s c a n b e fou nd i n t he A lte r n at i ve P er fo r m a nce Me a su r e s (‘APM ’ ) se c t ion . Y e a r - on-yea r compa ri son s for our venues a r e di stor ted b y sig n i ca nt perio ds of closu r e, cu r fe w s a nd reg iona l r es t r ic t ions in t he 2020/21 n a nci a l yea r . T he la st compa r able 12-month per iod th at wa s un a f fe c te d by t he COVI D -1 9 pa ndem ic wa s t he 12 month s to 31 D ec ember 2019 (‘C Y 201 9 ’) wh ich t he Gr oup uses a s a compa r i son to per for ma nce level s. At a Gr oup level, u nderly ing L F L NGR of £64 4.0m was up 98% aga i ns t t he prior yea r. The la r ge st g r ow t h wa s in G ro s venor venues which wer e subjec t to t he most se ver e res t r ic t ions i n 2020/21. In compa r i son to CY 2019 , u nderly ing LF L NGR wa s dow n 1 0%, r eec t ing t he oper at i ng r est ric t ions wh ich wer e in plac e acr os s t he venues busines se s in t he r st ha l f a nd slower t h a n ex p ec te d re co ver y in our G ro s venor venues in the se cond ha l f. Underly i ng LF L oper at i ng pro t of £ 4 0.4m compa r es w it h a loss o f £82.4m in t he prior yea r a nd a pr o t of £104. 2m in C Y 201 9. Despit e t he conti nued st r ong foc u s on d r iv ing ef ciencies ac ro ss eac h of the busi ness es, i n at iona r y co st pr es sur e s in t he Gr o sv enor and Mecc a UK venues busi ness es nega t ivel y impac t ed oper at i ng ma r g i ns. T he mater i a l incr e a se ha s been in energ y which more th a n doubled t o £22.4m in U K venues. Bas ed on cu r r ent ma rk et pr ices, energ y cos t s for FY 23 wou ld be appro x i mat ely £ 46m. P r ice s for the r st qua r ter of t he ye a r a re x ed a nd know n but t here rem a i n s exp osu r e to m a rk et volat i l it y be yond Septemb er . A n u mber of init iat ive s, includ i ng energ y ef c ienc y prog r a m mes, a r e under wa y to mit ig ate some of the impac t of hi gher energ y pr ice s. Business pe rformance The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 17 Ch i ef E xe cu t ive ’s rev i ew Continu ed Gr os venor’s underl y i ng L F L NGR wa s up 275 % compa red to t he pr ior yea r, w here Gr os venor’s venues were eit her close d or oper at i ng u nder cu r fe w . Compa r e d w it h ca lend a r yea r 201 9, underl y i ng L F L NGR wa s dow n 19% ree c t i ng t he cont inued impac t f r om t he pa ndem ic, the slow r et u r n of over sea s c us tomers to ou r London ca si nos a nd t he pres su re on UK con su mer d isc r et iona r y ex p end it u r e. A l l of Gr os venor’s 52 venues were oper at iona l t h r oughout t he per iod , howe ver much of t he y ea r wa s i mpac te d by COV ID - 19 . In t he r st ha lf of t he yea r, despite so ci a l d is t a nci ng a nd t he re qu ir e d wea r ing of face ma sk s , v isitor number s a nd re venues gr adu a l l y impr ove d. Howe ver, t he emer gence of t he Om icr on va r ia nt and t he G ov er n ment’ s con se quent Pla n B mea sur e s saw NGR de cl i ne sig n i ca ntl y at t he end of Q2 a nd into Q3. W h i ls t a l l imp ose d COV ID -1 9 re st ric t ions were r emove d in la te Ja nua r y , v i sitor volumes , pa r t icul a rl y acr o ss t he London est a te of ni ne venues which accou nt for over 38% of rev enues in a norm a l t r ad i ng yea r, rema i ned ver y wea k u nt i l lat e June when some impro vement wa s seen. A v era ge we ek l y NGR of £6.1m in Q1 inc re a se d to £6.3m in Q2 as t r a vel re st r ict ions ea se d a nd re venues inc re a se d in ou r London ca si nos. In Q3 aver a ge week ly NGR fell to £ 5.3m w it h t he impa c t of Omic ron a nd ver y wea k t r ad i ng cond it ions in L ondon. In Q 4 aver ag e week ly NGR fell to jus t £5.1m, w it h t he volume of over se a s play ers i nto London onl y st a r t i ng to pick u p to wa r d s t he end of the yea r . Compa r ed w it h ca lenda r ye a r 2019 , London NGR wa s dow n 27% for t he f u l l yea r, w ith t he re st of the UK dow n 13%. T he st r onge st per for mi ng venues wer e t hose i n UK ‘sta yc at ion’ lo cat ions such as Br ighton , Black p ool a nd Bou r nemout h a nd venues such as Br is tol, W a lsa ll , Shef eld, London Vic tor ia (‘ T he Vic’) a nd Not t i ng ha m wh ich hav e t ra ded st r ongl y , some on the back of development inve st ment . T he Gr os venor busi ness cont i nued to d r ive st r ong co st ef c iencies t h r oughout t he yea r but w it h NG R fa l l i ng 19% compar ed w it h C Y 2019 a nd en er g y cost s i ncr ea si ng sig n i ca ntl y , t he opera t i ng ma r g i n decl i ned f r om 20. 7% to 15.2% del iver ing a n underl y i ng L F L opera t i ng pro t of £45.1m ( oper at i n g loss of £40.7 m in t he pr ior yea r) . 2021 /22 £m 2020/21 £m Cha nge C Y 2019 1 Cha nge LFL 2 NGR 296.6 79.2 275% 364.1 (19)% London 101.6 26.5 283% 138.7 (27)% Res t of the UK 195.0 52.7 270% 225.4 (13)% T ot a l NGR 296.6 79.2 275% Underly i ng L F L 2 oper at ing p r o t / ( l o s s) 45.1 (40.7) (211)% 75.4 (40)% Unde rl y i n g 3 oper at ing p r o t / ( l o s s) 45.1 (40.7) (211)% T ot a l prot /(los s ) 60.6 (27.4) (321)% 1. Y e a r - on-y ea r compa ri so ns f or ou r ve nues a r e d i s tor ted b y s ig n i c a n t per iod s of clo su r e, c u r f ew s a nd r eg ion a l r e st ric t ions i n t he 2 020/ 21 na nc ia l y ea r . T he la s t comp a r able 1 2- mont h p er io d t h at w a s un a f f ec t e d by t he COV I D -1 9 p a nd em ic wa s t he 12 mont hs to 31 D ec emb er 2019 ( ‘C Y 2019’ ) w h ich t he Gr oup u s es a s a c ompa ri so n to p er f or m a nce l ev el s. Ple a se r e fer t o t he A l ter nat ive Pe r for ma nc e Mea s ur e s se c t ion t o nd ou t how C Y 2 019 ha s b ee n ca lcu l ate d . 2. Res u lt s a r e pr e se nte d on a l i ke -f or -l i ke ( ‘L F L ’ ) b a si s wh ic h re mov es t he imp ac t of c lub op en i ng s, c los u r es, acq u i re d bu si ne ss e s, for e ig n ex ch a n ge mo ve ment s a nd d isc ont i nue d ope r at ion s. 3. Bef or e t he i mpa c t of se pa r a tel y d i sc lo se d it em s. Gros venor v enues K ey nancial performance indicat ors Du r i ng t he yea r , Gr os venor re cog nis ed a n impa ir ment cha rge of £26.9m and a n impa ir ment re ver sa l of £13. 3m rela t i ng to a number of venu e s. Despit e a dis appoi nt i ng ye a r f rom a t ra d i ng per sp ec t i ve, a number of key in it i at i ves ha ve be en succes sf u l l y del iver ed to acc elerat e t he tr a n sfor m at ion of the Gr o sv enor busines s as it r eco ver s f rom long per io ds of lockdo w n a nd ot her re st r ict ions t h r ough t he pa ndem ic. £6. 2m ha s be en inve st ed i n new elec t r onic rou let te ter m in a l s, ga m i ng ma ch i nes, table s and whe els du r i ng t he yea r. The hea lt hy table ma r g i n of 1 7 .8% wa s t he re su lt of conti nued in ves t ment in t he late st rou let te wheels , tig hter table ma n ag ement cont r ols a nd en ha nce d sc ience being appl ied to table open i ng pla n s. £5. 3m has b een i nves te d in prop er t y development dur ing 2021 /2 2. Ref u rbish ment s were complete d at Br is tol, Black pool, W a lsa ll a nd Hudders eld to moder n is e t he venues, add enha nced cu stomer fac i l it ies includ i ng ba r s a nd re st au r a nt s, impr ove non-ga m i ng lou nge fac il it ies and spor ts v ie w i ng a r ea s, in add it ion to ma k ing impr o vements to ga m i ng oor s. A n adu lt ga mi ng cent r e licence h as b een adde d to add it iona l spac e at t he gr ou nd oor of the St Gi les ca si no in T ot ten ha m Cour t Road in re ad i ness for t he a nt icipate d ch a nge s in ca si no re g u lat ions ema n at i ng f r om t he UK G ov er n ment’ s cu r r ent re v ie w of ga mbli ng leg is lat ion. A n add it iona l casi no l icence has b een adde d to Gr os venor Not t i n gha m pr ov idi ng a n add it iona l 20 gam i ng mac h i nes. Follow ing ex tensiv e cus tomer re sea rch , a new concept venue has be en dev eloped at t he ex is t i ng Merc ha nt Cit y site in G la sg ow . T he ca si no which opened shor t ly a f ter t he yea r end is more open a nd welcomi ng, pro v id i ng more int uit iv e jour ne ys for new cu stomer s. T he venue pr e sent s a new Gr os venor bra nd l o go a nd v isu a l posit ionin g to help u nderl i ne t he enter t a in ment and exc itement of the cu stomer prop osit ion. T he venue has a ba r , sp or t s v ie w i ng a r ea s, re st au r a nt a nd ga m i ng mac hi ne a r ea s on t he gr ound oor w it h a moder n a nd v ibra nt gam i ng oor below. T he ne w Gl a sgo w Merch a nt Cit y Cas ino is a not her imp or t a nt step for t he Gr os venor bra nd i n broa deni n g t he appe a l of ca sino s to a la rg er audience of consu mers. A new cus tomer sa fet y model wa s t r ia lled a nd success f u l ly r ol led out acr os s t he Gr os venor es t ate in Nov ember 2021. T he model prov ides tea ms w it h dat a point s on a da i ly ba sis wh ich pi npoi nt cus tomer s re qu i r i ng f u r t her rev ie w to ensu r e t hey a r e play ing sa fely a nd wit hi n t heir mea ns. T he hospita lit y sec tor ha s ex p er ienced consider able labou r ma r ket pre ss ur es since r eop en in g . W it h i n t he ca sino se c tor, t he pa r tic ul a r pr ess ur e poi nt ha s been a r ound l icens ed ga m i ng p ers on nel of whom a la rg e per cent ag e were pr ev iously nat ion a l s fr om ma i n l a nd Eur ope. Wit h th i s pro v i sion of g a m i ng col lea g ues ha v i ng d r ied up due to Bre x it , t he Gr os venor busi ness r ol led out clea r er ca reer pat hw a ys u nder a new empl o ye e va lue prop osit ion a nd est abl is hed ga m i ng academ ies ac r oss t he U K to suppor t t he t ra in i ng of newly r ec r u ite d col lea g ues a nd t hose look ing to t ra nsfer f r om food a nd be ver ag e a nd ot her posit ions i nto licen se d ga m i ng r oles. O ver 4 40 col lea g ues qua l i ed a s Gr os venor ga m i ng col lea g ues dur ing t he na ncia l yea r . The Rank Group Plc Annual Report 2022 18 “ It ’ s so gr eat to talk to and me et our customers in our v enue s again. ” De bbie Johns ton G eneral Manager , Grosv enor Glasgow Merc hant Cit y Above: Grosv enor Glasgow Merchan t City The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 19 Ch i ef E xe cu t ive ’s rev i ew Continu ed T he impac t of t he pandem ic ha s been se ver e on the bin go sec t or gi ven t he imp or t a nce of a n older cohor t of cust omers to v isitor numb er s. Mecca’ s LF L NGR inc re a se d 1 49% on the pr ior yea r but wa s dow n 24% on C Y 2019 on v isit volumes dow n 32%. Mecc a w it ness ed a slow r eco ver y f rom t he pa ndem ic wit h t he bigg es t shor t f a l l to pre -pa ndem ic v isitor number s b ein g a mongs t older cus tomer seg ments. Compa r e d wit h CY 2019 , v isitor volu mes were do w n 32% in H1 a t 2, 54 8k . H2 per for ma nce wa s a f fe c ted b y Om icr on ca se numb er s acr os s t he UK wh ich f ur t her impac t ed t he w i l l in g ness of older consu mer s to at t end indoor hospit a l it y . Never t heless, v i sitor volu mes impr ove d to 2,68 7k i n H2 , dow n 33% on C Y 2019 . Mecc a ha s compete d ha r d for cu stomer’s leisu re t i me by c ut t i ng pr ice s acr os s a ra nge of bingo se ssions a nd g ua r a nt eei ng st r ong pr i zeb oa r d s. Never t heless, spend per v isit on t he core m a i ns ta ge bi ngo ga me inc re a se d 15 % on 2019 a s c us tomers ut i l ise d t he incr e as ed va lue t o buy more t icket s in t he ga me. Acr o ss t he boa r d spend per v is it gr e w 13% on 2019 wit h ga m i ng mac h ine spend g r ow i n g by 33% a nd food a nd be ver ag e by 27%. Spend per v isit on inter v a l ga mes de cl i ned 13% as ex pend it u r e t ra nsfer r e d into t he ma in st a ge bing o ga me. 2021 /22 £m 2020/21 £m Cha nge C Y 2019 1 Cha nge LFL 2 NGR 134.0 53.8 149% 175.7 (24)% T ot a l NGR 134.0 55.5 141% Underly i ng L F L 2 oper at ing p r o t / ( l o s s) (0.8) (17.5) (95)% 33.0 (102)% Unde rl y i n g 3 oper at ing p r o t / ( l o s s) (0.8) (1 8.9) (96)% T ot a l prot /(los s ) 33.6 (22.7) (248)% 1. Y e a r - on-y ea r compa ri so ns f or ou r ve nues a r e d i s tor ted b y s ig n i c a n t per iod s of clo su r e, c u r f ew s a nd r eg ion a l r e st ric t ions i n t he 2 020/ 21 na nc ia l y ea r . T he la s t comp a r able 1 2- mont h p er io d t h at w a s un a f f ec t e d by t he COV I D -1 9 p a nd em ic wa s t he 12 mont hs to 31 D ec emb er 2019 ( ‘C Y 2019’ ) w h ich t he Gr oup u s es a s a c ompa ri so n to p er f or m a nce l ev el s. 2. Res u lt s a r e pr e se nte d on a l i ke -f or -l i ke ( ‘L F L ’ ) b a si s wh ic h re mov es t he imp ac t of c lub op en i ng s, c los u r es, acq u i re d bu si ne ss e s, for e ig n ex ch a n ge mo ve ment s a nd d isc ont i nue d ope r at ion s. 3. Bef or e t he i mpa c t of se pa r a tel y d i sc lo se d it em s. Mecca ven ues K ey nancial performance indicat ors T he underl y i ng L F L operat ing loss of £0.8m, r ee c t i ng bot h the fa l l i n NGR a nd t he £8.1m inc r ea se i n energ y cost s in t he yea r, compar e s w it h a £1 7 . 5m operat i ng loss i n t he prior yea r a nd a £3 3.0m underl y i ng L F L oper at i ng pro t i n CY 2019 . Se ven loss ma k in g venues at lease end ha ve close d in Q1 2022/ 23. Du r i ng t he yea r , Mecc a re cog n is ed a n impa ir ment cha rge of £20. 9 m rel at i n g to a number of venu e s. Mecc a Luton reop ened in Ma rch 2022 fol low i ng a f ul l rede sig n and ref urbis hment . T h is new Mecc a concept venue prov ides for a wide ra n ge of enter t a i n ment ex per ien c es w it h bingo at t he core. It is ea rl y da ys for Me cc a Luton a f ter a pr olonged closu r e, but the c ust omer reac t ion to t he venue and t he exp er ience is ver y posit i ve a nd we exp ec t c us tomer volumes a nd re venues to cont i nue t o bui ld. Bin go venues cont inue to prov ide an imp or t a nt so ci a l a men it y and , wit h the emergence f r om t he pa ndem ic, a st r eng t hened Mecca te a m ha s a clea r foc us on accelera t i ng t he rat e of yea r- on- yea r g r ow t h, r et u r n i ng t hei r venues to pro t abi l it y in 2022/ 2 3. T he En r ach a venues busines s in Spa i n re co ver ed st r ongl y i n 2021/ 22 despite ha v i ng COV ID -1 9 re st ric t ions on open i ng hour s a nd on capac it y l e vel s unt i l wel l i nto H2 . Underly i ng LF L NGR of £ 30. 1 m wa s up 89% aga ins t t he prior yea r and dow n jus t 5 % a ga i n st pr e-pa ndemic CY 2019 . Impac t ed b y t he pandem ic, oper at i ng re st r ict ions a nd lower ed con su mer con dence about i ndoor hospit a l it y , t he volume of v isit s to En r ach a wa s dow n 33% ag a i ns t CY 2019 . Howe ver, t his wa s la rgel y of fs et by a 29% gr o w t h in t he spend per v isit . T h is g r ow t h in c ust omer exp end it u re ha s la r g ely be en d r iven b y 6 % g r ow t h in ga m i ng mac h ine NGR despit e v isitor number s bei ng dow n by a th i r d. T he inv es t ment made to t he mach i ne offer ing acr os s t he En r ach a est at e pr ior to the pa ndem ic has del iv ere d st r ong r et u r n s a nd t h is ha s be en f ur t her enh a nce d by t he gr adu a l rol lout of a new mach i ne ma n ag ement sy stem wh ich is pr ov idi ng en ha nce d met r ics a nd i nsight s i nto cu stomer pla y . 2021 /22 £m 2020/21 £m Cha nge C Y 2019 1 Cha nge LFL 2 NGR 30.1 15.9 89% 31.6 (5)% T ot a l NGR 30.1 17.5 72% Underly i ng L F L 2 oper at ing p r o t / ( l o s s) 8.1 0.6 1,250% 7.5 8% Unde rl y i n g 3 oper at ing p r o t / ( l o s s) 7.5 (0.2) (3,850)% T ot a l prot /(los s ) 15.1 (0.8) (1,988)% 1. Y e a r - on-y ea r compa ri so ns f or ou r ve nues a r e d i s tor ted b y s ig n i c a n t per iod s of clo su r e, c u r f ew s a nd r eg ion a l r e st ric t ions i n t he 2 020/ 21 na nc ia l y ea r . T he la s t comp a r able 1 2- mont h p er io d t h at w a s un a f f ec t e d by t he COV I D -1 9 p a nd em ic wa s t he 12 mont hs to 31 D ec emb er 2019 ( ‘C Y 2019’ ) w h ich p ro v id es a helpf u l c omp a r i son t o pe r fo r ma nce le vel s. 2 Re su l t s a r e pr es ent ed o n a l ik e -for -l i k e (‘ LF L ’ ) ba si s w hic h r emo ve s t he i mp ac t of c lub op en i ng s, c los u re s, acq u i re d bu si ne ss e s, for e ig n ex ch a n ge mo ve ment s a nd d isc ont i nue d ope r at ion s. 3. Bef or e t he i mpa c t of se pa r a tel y d i sc lo se d it em s. Enracha venues K ey nancial performance indicat ors T he ni ne En r ach a venues deliv ere d a n underl y i ng L F L oper at i ng pro t of £8.1m , a n inc re a se of 8% o n C Y 2019 . Du r i ng t he yea r , En r ach a re cog n i se d a n impa ir ment re ver sa l of £ 8. 8m re ga r d i ng a number of its venues. The Rank Group Plc Annual Report 2022 20 “ Our b ingo v enu es con tinue to pro vide an imp or tant social a m e n i t y. ” An dy Crum p Managing Direct or, Me cca V enues Above: Mecca Lut o n The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 21 Ch i ef E xe cu t ive ’s rev i ew Continu ed T he dig it a l busines s per for med st r ongly in t he yea r, d eli ver i ng u nderly ing LF L NGR g ro w th of 4 % a nd i ncr ea si ng u nderly ing LF L oper at i ng pr o t of £18. 7m up f r om £ 3. 1 m in t he pr ior yea r. Wit h i n t he UK-faci ng bra nds, Mecc a NGR decl i ned 3% y ea r - on-yea r w h i ls t Gro s venor g re w 7% and t he St r ide legac y bra nds g re w 11 %. T he St r ide leg ac y br a nds on t he RI DE propr iet a r y te ch nolog y pl at for m g re w 31 %, wh i l st t hos e opera t i ng on t h i rd-p a r t y plat form s fel l 1 4% as ot her oper ator s caught up wit h the a f for d abi lit y pro ces se s a nd res t r ic t ions i nt r oduce d acr os s Ra nk ’s d igit a l bu sine sse s in 2020. Y o a nd E n rac ha g r ew NG R by 4 % des pite ma rk et i ng i nve st ment bei ng dow n 5 1 % ag a i ns t t he prior yea r fol low ing t he ad ver ti sin g a nd ot her res t r ic t ions int r o duced b y t he Span i sh G over nment in Ma y 2021. Unique act ive player s were dow n 19% a s t he volu me of rs t t ime depo sitor s ha l ve d, but t he re venue per cus tomer gr e w 27% as r etent ion ra tes i mpro ve d and t he va lue of new cus tomer s incr ea s ed . Mecc a wa s success f u l ly m ig r ate d to t he R IDE propr ieta r y tec h nolog y pla t for m in Ja nua r y 2022. T he Gr os venor on l ine busi ness w i l l be m ig r ate d in S eptember 2022, complet i ng t he succes sf u l inte g ra t ion of the St r ide acqu isit ion a nd fr e ei ng up sign i c a nt dev elopment capa bil it y for new produc t s, impr ov ed us er jour ne y s a nd enh a nced om n i-c ha nnel cu stomer ex per iences wit hi n t he tec h nolog y r oad m ap. 2021 /22 £m 2020/21 £m Cha nge LFL 1 NGR 183.3 176.4 4% Mec c a 66.9 68.7 (3)% Grosv en or 49.8 46.5 7% E n r a c h a / Yo 21.0 20.1 4% Ot her includi ng St r ide le gac y br a nd s 45.6 41.1 11% T ot a l NGR 183.3 177.4 3% Mec c a 66.9 68.7 (3)% Grosv en or 49.8 46.5 7% E n r a c h a / Yo 21.0 21.1 0% Ot her includi ng St r ide le gac y br a nd s 45.6 41.1 11% Underly i ng L F L 1 operat ing pr ot /(los s ) 18.7 3.1 503% Unde rl y i n g 2 operat ing pr ot /(los s ) 18.7 3.2 484% T ot a l prot /(los s ) 4.2 (11.3) (137)% 1. Res u lt s a r e pr e se nte d on a l i ke -f or -l i ke ( ‘L F L ’ ) b a si s wh ic h re mov es t he imp ac t of c lub clo su r e s a nd fo re ig n exc ha n ge. 2. Be for e t he i mp ac t of s epa rat el y d i sc los e d ite ms. Digital K ey nancial performance indicat ors Du r i ng t he yea r , f u r t her improv ements were m ade to t he UK d ig it a l oper at i ng model w it h a st r eng then i ng of t he sof t wa r e eng i neer i n g hu b i n Cap e T ow n, add it iona l gr ow t h in t he Mau r it ius oper at ions tea ms a nd sev era l key appoi nt ments ac r oss te ch nolog y , ma rk et i ng a nd com merc ia l fu nc t ions. Cos t sy nerg ies f r om t he Str ide acquis it ion tot a l le d £1 0. 2m in 2021 / 22 w it h a f ur t her £4. 5m exp ec te d to be del iver ed fol low ing complet ion of the Gr os venor mi g ra t ion. T he busi ness cont i nues to develop a nd rol l out add it iona l sa fet y m e ch a n is ms to help prot ec t c ust omers b y ensu r i ng t he y a re pla y i ng w it h i n t hei r mea ns. A f ford abil it y jour ne y s cont inue to be impr ove d to re duce un nec ess a r y fr ict ion for c u stomer s. A new ma rker s of ha r m m o del ha s been int r o duced wh ich en ha nces rea l ti me identi cat ion of pot ent ia l ly at-risk pl ay , t r ig ger i ng a n appr opr ia te inter ac t ion w it h t he cus tomer . Wit h i n t he inter nat iona l dig it a l busi nes s, En r ach a on li ne wa s succes sf u l l y mig r at ed onto t he Y o propr ie ta r y te ch nolog y plat f or m a nd in Q4 we lau nche d En r ach a Spor t s. A new Y o Spor t s ser v ice is in development for launch i n H1. Pa ssion Ga m i ng, t he onl i ne Ind ia n r u m my busi ness i n wh ich Ra nk holds a 5 1 % sh a r e, saw NG R gr ow 18% in t he yea r a s lega l re st r ict ions i n T a m i l Nadu and Ker a l a were ea s ed . The Rank Group Plc Annual Report 2022 22 “ Last y ear was transfor mational fo r the U K digi tal business. ” Jon Martin Managin g Director , UK Digital The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 23 Strategic pillars T he Boa r d r ev iewed R a n k ’s si x str at eg ic pil l a r s a nd concluded t ha t t he key foc us a r ea s of dr i v i ng ou r dig it a l busines s a nd ev olv i ng ou r venues is st il l ver y much the pr ior it y . Ou r foc us on developi ng our cr os s- ch a n nel offer ing ha s now prog r e ss ed int o how we ca n bet ter prov ide a sea m les s cr os s- ch a n nel ser v ice to our cu stomer s wh ich bet ter meet s t heir nee d s. It was a l so concluded t h at ou r four t h pil l a r, wh ich high l i ghted t he need to i n nova te, is now ro ote d in a l l our ch a n nel in it i at i ves a nd t herefor e should not be a sepa r ate d is t i nct pi l la r . W e wa nt ed to ensu r e we hav e a fu l l y embedde d sus t a i nable st r ate g y and t ha t wha t may b e cla ss ed a s ES G a im s wer e not dea lt w it h sepa r atel y . A s a re su lt , our na l t w o st r ateg ic pil la r s now f ul l y embed ou r sus ta ina bil it y foc us a r ea s of cus tomer s, col lea g ues, com mun it ies a nd t he env i r on ment . Ref r eshe d st r ateg ic pil l a r s: 1. Pr ov ide a sea mles s a nd ta i lor ed ex per ien c e for cus tomers ac r oss venues a nd o n l i ne 2. Dr iv e di g ita l gr ow t h pow ere d by ou r propr iet a r y te ch nolog y and l ive pla y crede ntia ls 3. Conti nuousl y evol ve our venues est a te w it h enga g i ng pr oposit ions th at appe a l to bot h ex ist i ng a nd new c ust omers 4. Be pa ssion ate about t he development a nd wel lbein g of our col leag ues and t he cont r ibut ion we ma ke to our co mmu niti es 5. Bu i ld sust a i n able relat ionships w it h our cu stomer s by pr ov idi ng t hem w it h sa fe env i r on ments in wh ich to pla y For deta i l s of our st r ate g ic in it iat ives in t he yea r pl e a se refer to O ur St rateg y sec t ion on pa ge 40. Sustainability In Ja nua r y 2022, we is sued our r s t-e ver Resp onsible Busi ness Rep or t wh ich out l i ned our E SG com m it ments. W e ha ve cont i nued to bui ld on the goo d found at ions se t out in t he Janua r y r epor t a nd a re plea se d to rep or t for t he r st t i me on our ach ievement s w it h i n our cor porat e st r ate g y . W e ha ve identi ed key per for ma nce ind ic ator s ag a i ns t each a r ea of focu s to enable us to repor t more broa d l y on our soc ia l a nd env i r on menta l impac t s a long side our na ncia l r epor t in g c a le nd a r. A comprehensi ve 2022 Respon sible Busi nes s Repor t wi l l be publi shed i n Sept ember a nd w il l be ava i la ble to view a nd dow n load f r om our cor p or ate website, www . ra nk . c o m . Regulatory update W e cont i nue to awa it t he publicat ion of the G over nment’s W hit e Paper for ga mbli ng refor m. Or ig i na ll y schedu le d to be publis hed befor e t he end o f c a lenda r yea r 2021, mi n is ter ia l cha ng es in l ate 2021 cont r ibute d to a ser ies of delay s t h r oughout the r s t ha l f of 2022, wh ich cu l m i na ted i n June w it h a not her ke y mi n i ster ia l cha nge in t he Depa r t ment for Dig it a l , Cu lt u r e, Med ia a nd Spor t (‘DCM S’ ) a nd t he Go ver n ment-wide susp ens ion of a ny new leg isl at ion or pol ic y , pr ior to the appoi nt ment of a ne w Pr ime Mi n is ter . Ou r under s t a nd i ng is t ha t t he pub lic at ion of a Wh ite Pap er is li kel y to be fol lowed b y a ser ies of Ga mbl in g Com m iss ion consu lt a t ions rel at i ng to sp ec i c pol ic y re com mendat ions. The t i meli ne for the se consu lt a t ions is uncon r med but li kely to beg i n soon a f ter t he Wh it e Paper is publis hed. O ver t he cour s e of the pa st ye a r, we h ave worke d ha r d to a r t icul ate ou r modest pol ic y prop osa ls w it h ke y pa rl i a menta r y st a keholder s, pr i ncipa l l y in ter ms of la nd-ba s ed re for ms for ca si nos a nd bin go clubs, but a lso for sen sible dig it a l pol ic y decis ions . Ch i ef E xe cu t ive ’s rev i ew Continu ed “ Our ov era rch ing pur pose of del iv er i ng exc it i ng a nd enter t a i n i n g ex p er iences re mains . ” John O’Reilly Chie f Exe cut ive Bel ow: John O’Reilly , Kat ie McAlist er and Alex Thursby The Rank Group Plc Annual Report 2022 24 In ter m s of our ca si nos, we prop os ed a slid i ng sc a le ( ba se d on size of venue ) for incr ea s ed number s of slot mach i nes acr os s UK c as inos wh ich wou ld enable a l l venues to bet t er cater to c ust omer dema nd wh i ls t pres er v i ng t he cha r ac ter of a UK ca si no. W e r ema in hopef u l of dereg u la t ion in ter ms of slot m ach i ne number s a nd bel iev e t hat t he sl id in g sca le mo del is t he most ef fec t ive solut ion to ensur e consi st ent and e ven-ha nde d refor m i n li ne w it h t he G ov er n ment’ s or ig i n a l objec t i ves. W e ha ve a l so prop os ed t he ava il abil it y of Ra ndom N u mber G ener ator ba se d pro duct on ter m in a l s in ou r clubs, along w it h the pro v i sion of sp or ts bet t in g wh ich would help t o ensur e UK ca si nos st a r t t o catch up w it h wh at is w idely av a i l able th r oughout t he world. A solut ion to the issue of pro v id i ng cr e d it for High Net W or th ind i v idua l s is imp or t a nt, pa r tic ul a rl y in our L ondon cas inos , a nd we have a r g ued t ha t a ny solut ion in t h is spac e must apply equ a l l y to a l l venues which compe te for over s ea s cu stomer s. Ou r propo sa ls for l a nd-ba se d bingo refor ms ha ve been si m i la rly modes t. T he ex i st i ng ‘80:20’ r u le, wh ich re qu i re s 80% of our mac hi ne m i x in clubs to be inc re a si ngly obsolete Ca t C or C at D mac hi nes i n order to pro v ide t he 20% bal a nce of more popu la r B3 mach i nes, is a r ch a ic. W e hav e prop ose d t he r u le be remove d a nd t hat t he abil it y to offer side -bet s on t he ma i n st ag e ga me of bingo be p er m it t ed . W e cont i nue to work w it h DC MS a nd to se ek fu r t her enga gement f rom t he UK G a mbl in g Com m is sion in order to ensu r e t ha t t hese modes t refor m s a r e f ul ly under st oo d and ca n be i mplemented. Ou r UK d ig it a l bu sine ss w i l l l ik ely be impac t ed b y cha n ges to t he d ig it a l elements of the W h ite Pap er re com mendat ions. W e have a r g ue d ag a i ns t t he impos it ion of a s ta t utor y lev y a nd aga ins t t he bla n ket ba nn i ng of fr e e bet s, bo t h of which wou ld cu r ta i l ou r compet iti ve abil it ies. W e hope t ha t a ny cha nges to a f for d abi l it y th r eshold s a nd onl i ne slot li m it s w i l l pro v ide a li ne in t he sa nd wh ich sen sibly a l low s cu stomer s a nd oper ator s to adjus t to cha nges a nd del iver a sa fer ga mbl in g consi stent ex p er ience w it hout f u r t her reg u lat or y cre ep. Management change s Du r i ng t he yea r we made a n u mber of ke y appoi nt ments to t he exec ut i ve tea m. On 1 May 2022 , R icha r d Ha r r is joined t he Gr oup as Ch ief Fi na nc ia l O f c er (‘CFO’ ). Richa rd joined us f r om London est a te agent s Fox ton s Plc where he had been C FO for t h re e yea r s. P r ior to join i ng Fox tons , R icha r d wa s Gr oup Fi na nc ia l Cont r ol ler for La i rd plc. On 2 May 2022 , En r ic Monton Mon ter o joined us a s Ma n ag i ng D ir e c tor of Ra n k Inter nat iona l, our Spa n ish venues a nd d ig it a l busi nes s. En r ic ha s over 20 yea rs of exp er ience in t he Spa n ish l a nd-ba se d a nd di g ita l bet t ing a nd ga m i ng se c tor, most r ecent ly as Ma n a g in g Di re c tor of Cir s a’ s La t i n A mer ica busi nes s. Debbie H usba nd w a s appoi nted Ma nag i ng Di r ec tor of t he Gr os venor venues busines s on 3 May 2022. Debbie was pre v ious ly Nat iona l Op era t ions Di r ec tor for Gr os venor ha v i ng joined t he Gr oup f r om T r av elodg e in S eptember 2017 . A nd y Cr u mp joined t he Gr oup as Mec ca Ma n ag i ng Di r e c tor on 3 May 2022. A nd y joined us f r om Ma rk s a nd Spencer wher e he was Head of Hospita lit y Oper at ions w it h P&L r esp onsibi l it y for over 40 0 ca fes , ba ker ie s and del i cou nter s. Pr ior to Ma rks a nd Spencer , A ndy spent 14 ye a r s in sen ior oper at iona l r oles w it h P u nch T a ver n s. Em m a Morn i ng, who joined t he t ra nsfor m at ion prog r a m me of c e in 2019 ha v i ng pre v ious ly worke d w it h K PMG in t he UK a nd Aus t ra li a in va r ious consu lt i ng roles , wa s promote d to the exe c ut ive te a m dur ing t he yea r a s Tra nsfor mat ion a nd Str ateg y D ir ec tor . On 12 Se ptember 2022 , Ha zel B oyle w i l l join t he Gr oup as Ch ief People Of cer . Ha z el joins us f r om Fut u r e plc, where she wa s most r ecent ly t heir Ch ief People Of cer . Ha z el br i ngs a wea lt h of corp or ate ex per ien c e a nd ex ten sive k no wled ge of ma n ag i n g cha n ge a nd t ra nsfor m at ion acr os s la r ge g r oups, w it h a st r ong fo cu s on ta lent ma n a gement and de velopment. T he new members of t he exec ut iv e tea m br i ng renewe d energ y t o the tr a n sfor m at ion of the Gr oup. John O’Reil l y Ch ief E xec ut i ve Of cer 1 7 Aug ust 2022 Above: Richard Harris For more information on Richard Ha rris’ appointment, see page 103 The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 25 CF O’ s re vie w F or the 1 2 mo n ths end ed 30 J une 2 022 NGR in cr ease d b y 9 5 % t o £ 6 44. 0m du e to th e imp act of CO VI D - 19 enforc e d v e nue closu res and op e ratin g restrictions in th e pr io r y ear . Rich ar d Ha rris Chief Finan cial Of cer Business updates +£ 82 .1 m Inc re a se in oper at ing pr ot w it h our venues back open, f r om an oper at ing loss of £92.9m in t he prior yea r. + 14 . 2 p Inc re a se in ba sic EP S f r om (1 6.5 )p in t he pr ior yea r. The Rank Group Plc Annual Report 2022 26 Wit h i n t h is se c t ion a l l pr ior yea r compa r at i ves a r e to t he yea r ended 30 June 2021. Reported ne t gaming re venue (‘ N G R ’) For the 12 mont hs ended 30 June 2022 NGR inc re a se d by 95% to £6 4 4.0m due to t he impac t of COVI D - 19 enfor ce d venue closu r es a nd oper at i ng r es t r ic t ions in t he pr ior yea r. Operating pr ot Wit h ou r venues back open, oper at i ng pro t g r ew to £ 82.1m, f r om a n opera t i ng loss of £92.9m in t he prior yea r. Separately disclosed items ( ‘ SDIs’ ) SDIs ar e item s t hat a r e in f req uent in nat ur e and /o r do not rel ate to R a n k ’ s underl y i ng bu sine ss per form a nce. T ot a l SD I s for the yea r ended 30 June 2022 were £ 46. 2m . T he key SDIs in t he yea r were as fol low s: – Net V AT re ceipt of £77 .1m (net of c os ts) plus t he ass oc iat ed i ntere st of £5.6m concer n i ng a long-st a nd i ng V AT cla im re ga r d i ng ga m i ng m ach i nes dur ing t he per iod A pr i l 200 6 a nd Janua r y 2013; – Impa ir ment cha rge of £47 .8m rel at i ng to a number of Gro sv enor and Mecc a ve nues ; – A n impa ir ment re ver s a l of £22.0m re ga r d i ng a number of Gr os venor a nd En r ach a venues follow ing a n i mpro ved cu r r ent re su lt a nd fore ca s ted out lo ok; – £10 .4m r elea se of a proper t y pr ov i sion cr ea ted du r i ng t he COV ID -1 9 pa ndem ic re cog n i se d to cover t he Gr oup bec om in g li able to ma ke potent i a l pay ments under a prop er t y a r r a ng ement if ten a nt s defau lte d; – A mor ti sat ion cos t s of £1 1.7 m r ela t i ng to t he acqu ir e d int a n g ible asse t s of Str ide a nd Y o br a nds; – Closu r e cos t s of £4. 7m rega rd i ng t he closu r e of a number of Me cc a venu e s; and – Pr o t on di spo sa l of £ 8.8m r elat ing to add it iona l proce ed s f r om t he di spo sa l of the Bel g ium ca si no. Fu r ther det a i l s reg a r d i ng t he SDIs ca n be found i n note 4 o f t he n a nci a l st atement s. Net nancing charge T he £13. 4 m underl y i n g net n a nci ng cha rge for t he yea r ended 30 June 2022 wa s in l i ne wit h the pr ior yea r’s c ha rge. T he underl y i ng net na ncin g cha r g e includes £ 6. 7m of lease i nter est c a lc ul ate d under IF R S 16. T axation T he Gr oup’ s under ly ing ef fe c t ive cor p orat ion t a x rate i n 2021 /22 wa s 2 3.5% (2020/ 21: 15.6 %) ba s ed on a ta x cha r ge of £6. 2m ( e xclud in g impac t of rate c ha n ges on deferr e d ta x) on underly ing pro t befor e ta xa t ion. T h is is h igher th a n t he Gr oup’ s a nt ic ipated ef fe c t iv e ta x rate of 1 7 -1 9% for t he yea r ma in ly a s a res ul t of lower t ha n forec a ste d pro t s in ov er sea s jur isd ict ions ta xed at lower rate s t ha n t he UK . T he underl y i ng ef fe c t ive cor porat ion t a x rat e for 2022/ 23 is ex p ec te d to be 16- 18%, bei ng below t he UK s ta t utor y ta x rate. T he ta x rate is d r iven by some over se a s pro t s bei ng t a xe d at lower rat es t h a n t he UK a nd Ma lte se t a x c re d it s a sso ci ate d w it h d iv idend pay ments to be re ceiv ed i n 2022 / 2 3. On a st at utor y ba sis, t he Gr oup had a n ef fec t ive ta x rate of 22.7% ( 2020/21: 9 . 7% ) ba se d on a t a x cha r ge of £16. 9 m a nd tot a l pro t of £7 4. 3m. T h is is h igher t ha n the ef fec t ed t a x r ate on underl y i ng pr o t bec aus e of cer t a i n sepa ratel y d isc lose d items wh ich do not resu lt i n a ta x cre d it. Fu r ther det a i l s of the t a x ch a r ge a r e pro v ided i n note 6 of t he na ncia l st atement s. Earnings per share ( ‘EPS’ ) Ba sic EP S gr e w to 1 4. 2p f r om (1 6. 5)p in t he pr ior yea r. Underl y i ng EP S g r ew to 4.3p f rom (2 0. 1)p in t he prior yea r. Fo r f u r t her det a i l s refer to note 1 0 of t he na nc ia l st atement s. Cash tax rate In t he yea r en d ed 30 June 2022, t he Gr oup had a n ef fe c t ive c a sh ta x rate of 13.3% on tot a l pro t before t a x a t ion (2020/21: ( 1. 3)% ). T he ca sh ta x rat e is lower t ha n t he ef fec t ive ta x rate due to the ut i l is at ion of loss es a r i sin g in 2020/ 21 to off set pr o ts in 2021 / 22 re su lt i ng i n a reduc t ion in ca sh ta x due. T he Gr oup is exp ec t ed to ha ve a ca sh ta x rate of appr ox i ma tely 1-3% i n t he yea r ended 30 June 2023. T h is is lower t h a n t he ef fec t i ve ta x rate b ec ause of ut i l isa t ion of brought for w a r d ta x losse s a nd Ma lte se ta x cr ed it s ex p ec te d to be re ceiv ed i n 2022 / 2 3. Richard Har ris Ch ief Fi na nc ia l O f c er 1 7 Aug ust 2022 Cash ow an d net deb t A s at 30 June 2022, net debt was £162.6m. Debt compris ed £ 78.8m in ter m l oa n s and £181. 7m in na nce lea se s, of fs et by c a sh at ba n k of £97 . 9 m. I n t he per iod , t he Group rep a id £29 .6m of t he ter m loa n in l ine w it h t he loa n’ s a g re e d amor t isa t ion schedu le. T he Gr oup n i shed t he pr ior yea r w it h net debt for covena nt pur po se s of £65.5m. Follow ing t he re ceipt of t he V AT repa y ment in De cember 2021 a nd t he Group’ s venues back open genera t i ng ca sh we n is hed t he yea r w it h n e t ca sh for coven a nt pu r p ose s of £6. 7m. 2021 /22 £m 2020/21 £m Op era t i ng pro t f r om conti nu in g opera t ions 39.8 (84.5) Op era t i ng pro t f r om di scont i nued oper at ions – 1.5 Depr ec iat ion a nd amor t isat ion 67.4 71.2 W ork ing capit a l (6.2) (9.2) O t he r (0.3) (0.2) Ca sh in o w /( out ow) fr om operat ion s 100.7 (21.2) Capit a l ex p end it u re (40.6) (22.2) Net inter e st a nd ta x (16.2) (16.3) Le a se pr i ncipa l pa y ment s (53.7) (31.8) Ca sh o w s in rel at ion to SDIs 70.6 (5.9) Net fre e ca sh ow 60.8 (85.6) Sha r e capit a l issued – 68.1 Busi nes s acqu isit ion a nd ot her (0.7) (0.5) Business d isposa l 8.8 25.2 T o t a l ca sh in o w 68.9 7.2 Op eni n g net cas h /( debt) pre I F R S 1 6 (49.8) (57.0) Closi ng net ca s h /( debt) pre I FR S 1 6 19.1 (49.8) IF R S 16 l e a se l iabi l it ies (18 1.7) (206.9) Closi ng net ( debt) post I FR S 16 (162.6) (256.7) The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 27 Our e x ter nal en vironmen t T hrough und erstanding the mar k et s in wh ic h w e ope rate , and our customers’ need s an d e xpec tat ion s, w e can continually driv e impr o v ement s to our cust om er e xp erience in a wa y that del iv er s v alu e to all our stak e hol de rs . Worki ng a cros s disciplines and ge og rap hi es to imp rove the customer e xperience Above: Sarah Powell and Katie M cAlist er The Rank Group Plc Annual Report 2022 28 Meeting the changing needs of our cus tomers Customer ins i ghts Ou r pur pos e is in pa r t dr i ven by mee t i ng t he cha n g i ng need s a nd ex pe c t at ions of our cus tomer s. T h r ough cus tomer in sight s we ca n under s ta nd h o w a nd what we nee d to do to deliv er excit i ng a nd enter ta i n i ng ex per ien c es. Mecca v enues Mecc a is our h igh ly-t r uste d a nd com mun it y-focu sed l a nd-ba se d bra nd k now n for t he f r iend l ine ss of our col lea g ues a nd oppor t un it ies to w i n big . – Bin go ha s rele va nce and appe a l to appro x i mat ely 30% of t he popul at ion but need s to evol ve to meet t hei r cha ngi n g need s. – O ver a l l , t he bingo ma rket cont i nues to consolidate. – T here is a desi r e for new exp er iences t ha t a re eng ag i ng, sa fe a nd va lue for mone y . – T here is a desi r e for more acces sible, moder n a nd li vel y bing o venues complemented by a n enjoy able food a nd bev era ge of fer. – Pos t t he COVID -1 9 pa ndem ic t he re t u r ned you ng er play ers a r e pla y i ng more of ten but t he older player s a r e pla y i ng less. – A v era ge Mec ca c ust omer age is 4 4 yea r s; howe ver, the most f r equent cu stomer s a r e fema les be t ween 60 a nd 70 y ea r s old. Customer analy sis Male Existing Paper Bingo >35 years Higher frequency Venues only customer Female 73% 15% 39% 39% 88% 24% 27% 85% 61% 61% 12% 76% New Electronic Bingo (Max Bingo) <35 years Recreational Cross-channel customer Grosv enor v enues – Appr ox i ma tel y 8% o f t he U K popu lat ion v isit c a sino s at leas t once a year, though a n add it iona l 12% would consider v isit ing a ca si no if t he offer wa s d i f fer ent to what t he y per ceiv e a cas ino to be. – T here is a desi r e for fu n, enjo yable, f r iend ly a nd welcom i ng ex per ien c es in a sa fe a nd se cu r e env i r on ment. – T here is a need for more moder n a nd in nov at i ve ex per ien ces w it hout lo sin g t he t h r i l l a nd excitement of play ing in a ca si no. – A v era ge G r os venor cus tomer age is 39 yea r s; however, the cu stomer s t ha t v isit t he most a nd ha ve h igher levels of spend ar e over 56 ye a r s old. – Ma le to fema le spl it for Gro s venor’ s cu stomer s is 4:1 . Customer analy sis Male Existing Core and higher spending >35 years Venues only customer Female 27% 65% 89% 66% 5% 73% 35% 11% 34% 95% New Occasional and casual <35 years Cross-channel customer Enracha v enues En r ach a is our Spa n i sh la nd-ba s ed venues bra nd pro v id i ng a pre domi n a nt l y bing o -bas ed ga mi ng ex p er ience. – Du r i ng 2019 , befor e t he COVI D - 19 pa ndem ic, 2.4m people v isit ed a bing o venue in Spai n. T h i s number dec re a se d to 1.4m dur i ng 2020. V enues bingo i n Spa i n ha s relev a nce a nd appe a l to appro x i mat ely 6% of t he Spa n ish adult populat ion. – Follow ing r ec ent reg u l ator y re st r ict ions where t he siz e of ava ila ble pri ze s ha s been r ed uced , cus tomer s now va lue more t he gr e at cu stomer ser v ice a nd sea mles s cus tomer jour ne y s. – T here is a need for st at e- of-t he-a r t elec t r on ic ga mi n g ar e a s which a r e com for t able a nd moder n, complemented by add it iona l ga mes such as c us tom ise d jack pot s a nd loya lt y c a r d f u nct ion a l it y . – En r ach a’ s bigges t cu stomer g r oup is the 26 to 35 yea r s cat egor y , repr es ent i ng over 23% of tota l customer s, but genera t i ng onl y 12% of tota l vi sit s. W her ea s cu stomer s over 65 yea rs repr es ent 1 4% of t he customer ba se, but generat e 29% of ou r v i sits. – T he most loya l and f r equent En r ac ha cu stomer s a r e fema les ov er 65 yea r s, who generate 19% of our tota l vis its , w it h a n av era ge of 1.5 v isit s per mont h. – Ma le to fema le spl it for En ra cha’ s cu stomer s is 1:1. UK Dig ital bingo – 2% of t he UK popul at ion pla y onl i ne bing o each mont h; t he g ro w t h oppor tu n it y th at ex ist s w it h i n t h is seg ment rem a i ns sig n i c a nt . – Cus tomer s a re look ing for t heir ex per ien c e to be sa fe a nd sec u r e, where it is eas y to r ec eive w i n n in gs, wher e t hey h ave f u n a nd more cha nces to w in . – T he ex per ience need s to be i nt u it ive a nd ea s y for cus tomers to us e. T hi s includes ha v i ng a rel iable app wh ich pro v ides g re at , simple user ex per iences. – T here is a g r ow i ng dema nd fr om cu stomer s for v a r iet y , whet her th at be t he promot ions t h at ca ter for a wider ra nge of budget s, or t he ga mes a nd feat u r es av a i lable. Cus tomer s a re wa nti ng more inter ac t i ve a nd f re e -to -pla y mecha nics t ha t a l low t heir money to go f u r ther. – Cus tomer s ex pe c t sa fer ga mbl i ng to be embedde d acr os s t heir ex p er ience w it h t he prov ision of safer ga mblin g tools av a i lable upfr ont in t hei r cu stomer jou r ne y s . – T he aver ag e onl i ne bing o pla yer age is 39 yea r s, sl ight l y older tha n th at for Mecc a at 38 yea r s. UK Dig ital casin o – 4 % of t he UK popu la t ion play on l i ne ca si no each mont h, w it h oppor t u n it ies for gr ow t h spe ci ca ll y a rou nd slot s a nd poker . – T here is a desi r e for gr eat look ing site s wh ich of fer t he best i n new ga mes a long w it h st rong promot ions. – Pr o v id i ng excit ing a nd enter ta i n i ng ex per ien c es a nd bei ng a bra nd t h at li st ens to cu st omer feedback a nd mee ts t heir nee d s is impor ta nt to pl a yer s, as is t he need to re wa rd loy a lt y a nd offer oppor tu n it ies to w i n big . – Cus tomer s hav e a preferenc e for sites t ha t prov ide tools to help them cont rol t heir sp end and wher e t here is s w i f t a nd sea mles s pay ment of w i n n i ng s. – T he aver ag e onl i ne ca si no play er age is 37 yea r s, you nger t h a n t h at for Gr os venor at 41 yea r s. What t his m ea ns for Ran k Ra nk is foc us ed on t he cont inuous development of new ga mes a nd form at s to f u r t her excite a nd enter t a i n its c us tomer s. Refer to page s 4 4 to 47 for f u r ther det a i l s of how we ar e our bu ild i ng d ig it a l capa bil it y a nd sca le a nd evolv i ng ou r venues propo sit ion. Cross -channel – Wit h it s 12 5 venues, Ra n k is un iquel y place d to pro v ide a cro ss- c ha n nel ex per ien c e for bot h bin go a nd ca si no cus tomer s. – Cr os s- cha nnel cu stomer s tend to have hi gher level of engagement a nd loya lt y t ha n single cha nnel cus tomer s. – Wit h on l y 12% of our UK venues cu stomer s pla y i ng w it h us bot h in venue and onl i ne t here is sig n i c a nt oppor tu n it y for the Gr oup to gr ow it s cr os s- ch a n nel cus tomer bas e. The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 29 Our external en vironment Continu ed Impro ving the custo mer ex p erience i n 2022 “ Re sp on sible ga m ing si t s at t he h ea r t o f o ur c u s tomer of fer . ” “ Onl y 4 % of t h e po pulat i o n v is i t a c asin o – we n eed t o make our ve n u es t h e go-to pla ce f or eve r yo ne wh o w a n t s to be e n ter t a in ed. ” “ B i n g o h a s rel e va n ce a n d ap pea l to c.3 0% o f the pop ulat i on bu t n eed s to e vo lve to mee t t h eir cha ngi ng n eed s . ” “ T h ere is a n eed fo r m ore m ode r n and i n n ovat ive ex p er iences w it hout l osing t h e t hr il l and ex cit em en t o f p la y i ng in a ca sin o . ” Above: Grosv enor Glasgow Merchan t City The Rank Group Plc Annual Report 2022 30 Operating in highl y regulated geograp hies Great Britain Ra nk oper ate s venues under its Mecc a a nd Gr os venor Ca si nos bra nds acr os s Gr ea t Br it a i n. T he venues bingo a nd ca si no ma rke t s a re wel l est abl is hed a nd a re h igh l y reg ula ted . Unl i ke Mecc a, t her e a r e a li m ited numb er of ca sino l icences i n Gr eat Br it a in wh ich a r e a l loca te d to cer t a i n per m it ted a r ea s. Ca si no Bing o Ra nk oper ate d licence s 71 63 Ra nk dor ma nt licences 7 n/a T ot a l licences 78 63 Ra nk oper ate d venues 52 1 63 1. E xc lude s ca s in o l icenc e op er at ed f r om M ec ca O l d b u r y. Ra nk oper ate s its U K cus tomer -fac in g d ig it a l busi nes s t h rough G ibra lta r, A lder ne y a nd UK on l ine ga mi ng l icences. Spain Ra nk oper ate s venues under its E nr ac ha bra nd ac ro ss Spa i n t h r ough Spa n ish ga m i ng l icences. Li ke G re at Br it a i n, t he Spa n is h venues ma rk et is a reg ula ted a nd ma t u re m a rke t. Ra nk ’s Y o a nd E n rac ha d ig it a l br a nd s a r e opera ted t h r ough Spa n is h onl i ne ga m i ng l icences. India T h r ough a joint ventu r e, Ra nk oper ate s Pa ssion Ga m i ng, an on l i ne r um m y busi ness i n Ind i a. What t his m ea ns for Ran k Ou r bin go a nd ca si no venues in Engl a nd, Sco t la nd and W a les acc ount ed for more t ha n 7 4 % of Gr oup re venue pre- C OVI D -1 9. In add it ion, the ma jor it y of R a n k ’ s dig it a l cu stomer s a r e bas ed i n Br it a i n. Pr e -pa ndem ic, our cor e ma r ket ha s pro v ided a rel at i vel y st able env ir on ment for ga m in g a nd bet ti ng b y compa r i son w it h ma ny ot her jur is d ict ions ar ou nd t he world . W orking closely with regulators W e work clos ely w it h our reg u l ator s to uphold a nd d r i ve for wa r d t he sta nda r d s ex pe c te d of our indus t r y in a n ev er- ev olv i ng r eg u l ator y la nd sc ape a nd enf orcement-led reg ula tor appro ach. We a r e comm it ted to oper at i ng i n complia nce w it h a l l r elev a nt leg isl at ion, re g u la t ions a nd licen si ng re qu i rement s. T he UK G ov er n ment launc hed its pla nned re v ie w of gambl i ng leg isl at ion in Dec ember 2020. The r ev iew focu ses heav il y on onl ine r eg u la t ion but al so re cog n i ses t he nee d to ensu re t h at t he re g u lat ion of la nd-base d ga mbl in g is appropr iate for tod ay ’ s cons umer a nd equ it able, rel at iv e to onl i ne reg u l at ions. It is cr it ica l for t he fut u r e of the indu st r y t ha t t he right ba l a nce, e v idence a nd prop or t ional it y is appl ied dur ing t h is re v ie w . In it s Ca l l for Ev iden c e, to whic h we re sponded , t he G over nment hi gh l ighted t h at problem ga mbl in g ha s been s t able in t he UK for ma ny yea rs. Howe ver, a s a n indu st r y we must ens ur e t ha t we conti nue to do al l we ca n to pr ote c t v u l nerable cu st omers wh i ls t a l so ensu r i ng we pro v ide t he best ex p er ience to t he vas t ma jor it y of c us tomer s who never ex per ien c e a ny ha r m. The G o ver n ment’s W h ite Pap er on gambl i ng ref or m is a nt icipate d in t he nex t few mont h s. In t he la s t 12 month s, t he UK Ga mbli ng Com m is sion (‘Comm i ssion’) has publ ished its con su lt at ion re spon se s on th r ee a r ea s: Remote Cus tomer Inter ac t ion, Reg u l ator y Pa nel Refor m, a nd Licen si ng, Complia nce a nd En for cement Polic y . In pa r t icu l a r, under it s conclusion to the c ust omer inter ac t ion cons ul ta t ion, t he Com m iss ion moved to i mplement min i mum pla yer prot ec t ion st a nd a r d s t hat w i l l be consider ed b y t he Go ver n ment a s pa r t of the ongoi ng r ev iew refer enced abo ve. It al so det er m i ned t ha t new re qu i rement s to ensu r e t hat on l i ne ga mbli ng bus ines se s do more to identi f y and t a ke a more ta ilore d appr oach to c ust omer inter ac t ions to f ur t her prot ec t c ust omers at r is k of ha r m pu bl i shed a s gu id a nce in Ju ne 2022 must be i mplemented in Sept ember 2022. Du r i ng t he yea r , we were a l so r equ i r ed to implement new remote tec h n ica l st a nd a r d s re qu ir ement s t hat c a me into forc e in Oc tober 2021 in r elat ion t o di spla y of tr a n sac t ions, auto-pla y f u nct ional it y , t i me requ i r ements a nd re a l it y check s a nd res pon sible produc t desig n. In Spa i n, t he G ov er n ment pas se d a Roya l Dec r ee t h at i mpos ed re st ric t ions on onl i ne ga m i ng r elat ed to ad ver ti si ng a nd re spon sible ga mbli ng, the ke y pro v is ions of which ca me into force on 1 May 2021. T h is fol lowe d on fr om in it i a l mea su re s int r o duced ea rlier in 2020 to r est ric t onl i ne ga m i ng ad ver t isi ng in l ight of t he COVI D -1 9 pa ndem ic. I n add it ion, we exp ec t a fu r t her Roya l Decr e e on sa fer ga mbli n g to be publis hed in t he nex t few mont hs. In Ju ly 2021 a new Act wa s pa ss ed on mea sur e s to pre vent a nd ght ta x fr aud, wh ich li m it s ca sh pa y ment s in Spa n is h ve nues . What t his m ea ns for Ran k Rega rd i ng it s UK la nd-ba s ed oper at ions , Ra nk is se ek i ng ha r monis at ion of the 1968 Ac t a nd the 20 05 Ac t rel at i ng to ca s inos , spe ci c a l l y t he abil it y to prov ide a mor e appropr iate level of ga m i ng mac h ine s acr os s its 51 casi nos l icens ed by t he 1968 Ac t. For our UK bin go venues busi ness, Ra nk is se ek i ng remo va l of t he re st r ict ion sur rou nd i ng t he number of Categor y B 3 mac hi nes per mit ted in ea ch bin go venue a long w it h cer ta in ot her cons t ra int s wh ich should r esu lt i n prod uct i nno vat ion a nd t herefor e a bet ter exp er ience for our Mecc a cus tomer s. For our UK-facin g di g ita l busines s, t he pol it ica l de b ate cont i nues a rou nd pla yer prot ec t ion chec k s a nd we rema i n eng ag ed a nd in for me d on developments t h r ough our ow n effor ts a nd v ia t he indu st r y t rade assoc iat ion. Ra nk cons iders it s reg ula tor s as a ke y st a keholder w it h whom enga gement cont i nues to be impor ta nt (plea se se e pag e 38 for mo r e i n for ma t ion about how we engag e wit h t hem ). W e w i l l conti nue to enga ge a nd ev olve ou r approac h to play er prot ec t ion a nd consu mer fa i r nes s. The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 31 Section 1 72 stat ement How w e crea te long- ter m v alue S172 fac t or Relevant disclosure T he l ik ely con se quences of a n y dec ision in t he long term Compa n y pur pos e (see in side cov er a nd pa ges 17 a nd 98) Ou r bus ines s model (pa ge s 72 to 73) Ou r st rate g y (page s 40 t o 51 ) En ga gement w it h r eg u l ator s a nd leg i sla tor s (pa ge 38 ) T he inter e st s of t he C ompa ny’s emp lo ye es Col lea g ues (pa ge s 59 to 6 1) Inclu sion a nd d iver sit y (pa ge 6 1) Employ ee eng ag ement (pag e 36) Non- na nc ia l r epor t in g (pag e 83) T he need t o fos ter t he Compa ny’ s rel at ions h ips w it h suppl ier s, cu st omers a nd ot her s Cus tomer enga gement (pa ge 35 ) Supplier enga gement (pa ge 39) En ga gement w it h r eg u l ator s a nd leg i sla tor s (pa ge 38 ) Resp onsible pa y ment prac t ices (pag e 39) A nt i-br iber y a nd cor r upt ion (page 59) Moder n sl av er y (pag e 39) T he impac t of t he Compa ny’s operat ions on t he com mun it y a nd t he env i r on ment Com mun it y enga gement (pa ge 37 ) Es t abli sh i ng t he E SG & S a fer G a mbl i ng Com m it tee (pa ge 5 6) TC F D d isc losu r es (pa ge 70) Ra nk C a r es (pa ge 71) T he desi r abil it y of t he Compa ny ma i nt a i n i ng a r eput at ion for h igh st a nda r d s of b usi ne ss conduc t Bra nds (pa ges 14 a nd 15) Cu lt u r e a nd va lues (page s 60 a nd 73) En ga gement w it h r eg u l ator s a nd leg i sla tor s (pa ge 38 ) W h i s t leb low in g (p a ge 59) Inter na l n a ncia l contr ol s (pag e 1 0 8) T he need t o ac t fa i rl y b et ween member s of t he Compa n y Sha r eholder enga gement (pa ge 39) A n nua l G enera l Mee t in g (pa ge 89) R ight s at tache d to sh a r es (pa ge 145) V ot i ng r ights (pa ge 145) In ac cor da nce wit h Sec t ion 1 72(1 ) Compa n ies Ac t 2 00 6, t he C ompa ny ’ s Di r ec tor s mus t ac t i n a wa y t h at t he y consider, in goo d fa ith , wou ld be mos t l i kely to pr omote t he succes s of t he Compa n y for t he benet of its member s as a whole, and in doi ng s o ha ve r ega rd (amongs t ot her mat ter s ) to t he ra nge of f ac tor s se t out in sec t ion 1 72(1 )( a) to (f ) of t he Compa n ies Ac t , includ i ng t he i nter es t s of st a keholder s. Ma ny of t he Boa r d ’ s pr incipa l de ci sions were t a ken in d i r ec t r es pons e to t he G r oup’ s cont i nued re co ver y f rom t he pandem ic a nd re v ie w of its s t r ate g y , a s wel l a s t he i mpac t of incr ea si ng i n at iona r y pr es su re s in t he lat ter ha l f of t he yea r . I n t a k ing such dec isions it c a r ef u l l y con sidere d st a keholder s, a nd t he infor mat ion it re ceiv ed t hr ough enga gement , a nd how each s uch dec ision wou ld i mpac t on t he succes s of t he Gr oup, w it h due r ega rd to t he ot her ma t ter s s et out i n se c t ion 1 7 2(1 ) ( a) to (f ) of t he Compan ies A c t 20 06. T h is w as p a r tic u la r ly r ele va nt i n r ela t ion to it s d isc u ssions a nd decis ion-ma k i ng on (i) it s r ev ised p ur pose a nd the r ef r esh of t he Gr oup’ s s t r ateg ic pi l la rs w it h a v iew to ensu r ing su st a i n able gr o w t h, (i i) de velopment of the G roup’ s E SG f ra mework a nd st rate g y , a nd (i i i) c apit a l inv es t ments , each a s de sc r ibe d on pag es 98 t o 99. T he Boa rd per for med it s dut ies b y , a mongs t ot her t h i ng s, d i sc us sin g t he fol low i ng m at t er s: – a f u l l re v iew of t he Gr oup’ s s t r ateg y , pur pose a nd va lues, pa r t icu l a rl y i n l ight of t he impac t of t he pandem ic on t he busi ness a nd its cont i nued r eco ver y . Pleas e se e pa ges 4 0 to 51 for more in f or m at ion. – cont i nued development of Ra nk ’s ESG st r ate g y follow i ng nd i ng s f r om the mat er ia l it y a ss es sment conducte d du r i ng 2020/21. Plea se s ee p ag es 5 4 to 71 for more i n for mat ion. – capit a l e x pend it u r e a nd i nve st ment oppor tu n it ies. Plea s e se e pag es 3 4 a nd 99 for mor e i n for mat ion. – upda tes t o t he Gr oup’ s c or por at e r isk re g ist er a nd pr i ncipa l r isk s. Plea se se e pag es 7 4 to 81 for more i n for m at ion. – t he impac t of i ncr e a sin g energ y pr ices a nd in at ionar y pr ess ur e s. Pleas e see pa ge 17 for more i n for mat ion. – re g u lat or y cha n ge i mpac t i ng t he G r oup, implemented du r i ng t he yea r a nd a nt icipate d i n t he for thcom i ng y ea r. Pleas e se e pa ges 16 to 25 for mor e in f or m at ion. E x a mples of how pr i ncipa l de c isions i n 2021 /22 t ook i nto accou nt s ta keholder inter e st s c a n be fou nd on pa ges 3 3 a nd 34. Ot her exa mples of Boa r d enga gement c a n be fou nd w it h i n t he ‘ St a keholder enga gement’ s ec t ion on pa ge s 35 to 39 . The Rank Group Plc Annual Report 2022 32 Principal decision Refreshed purpose and strategy Conte x t Dur ing t he ye a r, the B oa r d r ev isited a nd di sc us sed w it h ma n a gement t he Gr oup’ s pu r pose, a mbit ion and st r at eg ic ai m s to deter m i ne whet her t hese cont i nued to be t for pur pose a s t he Compa n y re cover s f r om t he pa ndem ic and embed s sus t a i nabi l it y . Decisio n-mak i ng process T he Boa r d re v iewed R a n k ’s s t r ateg ic pil l a r s. It d isc us se d Ra nk ’s p osit ion w ith i n t he ga mbl in g indu st r y a nd t he w ider leisur e indu st r y a nd consider ed ma rket t r ends a nd compet itor an a l ysi s. It al so r ee c te d on economic condit ions and t he out look as R a n k re co ver s f rom t he i mpac t of the pa ndem ic. The Bo a r d wa nte d to ensu re t h at R a n k ha s a f ul l y embed ded sus t a i nabi l it y st r ateg y a nd a ls o consider ed t he i mpac t of the UK G o ver n ment’s G a mbl i ng Ac t 200 5 re v ie w . T he Boa r d d is cu ss ed r ev ised ve -ye a r pla n s pre sente d by eac h ar e a of the busi ness. It deter mi ned t ha t t he key foc us a r ea s of d r iv ing our d ig it a l busines s a nd evolv ing ou r venues is st i l l ver y m uch t he pr iorit y . It concluded th at t he busi ness’ focu s on developin g our cr os s- ch a n nel of fer i ng ha s now develop ed i nto how we ca n bet ter prov ide a s ea m le ss cr os s cha nnel ser v ice to our cu stomer s wh ich bet ter meet s t heir nee d s. Ke y st a keholder consider at ions Cu st omer s – player pr ote c t ion, cu stomer ex per ience and rele va nce of of fer i ng Ou r p eopl e – oppor t u n it ies for pro g re ssion, i nclusion & div er sit y , oppor t un it ie s to sha r e idea s a nd ma ke a d if ference a nd wel lbei ng Com mun it ies – posit ive commu n it y impac t a nd employ ment Reg ul ator s a nd leg isl ator s – opennes s a nd tr a n spa renc y , sa fer ga mblin g, p ol ic y a nd ga mbli ng reg u lator y cha nge Sha reholder s & I nve sto rs – st ra teg y , per for ma nc e and out look , cor p ora te gov er na nce and E SG Supplier s – robus t busi ness , long-term pa r t ner sh ips a nd a coll abor at i ve appro ach Ke y ES G consider at ions En su r i ng t h at t he st r ateg ic pi l l a r s f u l ly embe d our sus t a i nabi l it y focu s a re a s of cust omers, col lea g ues, com mun it ies a nd t he env i r on ment. Ac t ions a nd outcomes T he Boa rd appr ov ed : – A ref r es hed pur pose s ta tement – to deliver exc it i ng a nd enter t a in i ng ex per ien c es i n a sa fe, sus ta ina ble and re wa rd i ng env i r on ment. – Ref r eshe d st r ateg ic pil l a r s: 1. Pr o v ide a sea m les s a nd ta i lor ed ex p er ience for cust omers ac ro ss venues a nd onl i ne 2. Dr ive di g ita l gr ow t h pow ere d by ou r propr iet a r y te ch nolog y a nd l ive pla y cr e dent ia l s 3. C ont inuousl y ev olve ou r venues est ate w it h eng ag i ng pr opo sit ions t h at appea l to bot h ex is t i ng a nd new c us tomers 4. B e pa ssiona te about t he development a nd wellbei n g of our collea g ues a nd t he cont r ibut ion we ma k e to ou r com mun it ies 5. Bu i ld sus t a i nable rel at ions h ips wit h our cus tomer s by pr ov id i ng t hem w it h sa fe envi r on ments in wh ich to pla y Impac t of t hese ac t ions on t he long-ter m success of t he Comp a n y A st r ong pur pos e and cle a r st r ate g ic pil la rs t ha t re sona te w it h a l l st a k eholders cr e ate s a combined v ision, po sit ion in g t he Compa ny to cr ea te long-ter m va lue a nd sust a i n able gr ow t h. Above: Jonathan P lumb, Kar en Whitworth and Richar d Harris Above: John O’Reilly , Jon M artin and Alex Thursby The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 33 Above: Grosv enor Glasgow Merchan t City Above: Grosv enor Glasgow Merchan t City How we c rea te l ong -te rm value Continu ed Principal decision Grosv enor , Glasgow M erchant City redev elopment Conte x t The Boa rd com menced t he 2021 /22 n a nci a l yea r focus ed on in it i at i ves to d r i ve gr o w t h includi n g by wa y of venue r e dev elopment. Gla s gow Merc ha nt Cit y wa s ident i ed a s one such ven ue. Dec is ion-mak ing pr oc ess F ol lo w i ng ex t ensi ve cu stomer re se a r ch a nd in sight s work t hat h ad com menced in 2019/2020, a nd as pa r t of the Tra nsfor mat ion pla ns , t he Ch ief T r a ns for ma t ion Of c er a nd V enues Ma n a g in g Di r ec tor pr esent ed to t he Boa r d r ede velopment pla ns for Gl a sgo w Merch a nt Cit y . T he Boa r d ch a l lenge d ma n a gement to ensu re t h at it had cons idere d t he vie ws of a l l ke y st a keholder s in de velopin g t he pla ns. T h is i ncluded loc a l aut hor it y and l icensi ng con sidera t ions, rel at ions h ips w it h supplier s, col lea g ue v iew s a nd the over a l l ant icipat ed r et u r n on inv es t ment. It di sc uss ed t he pot ent ia l i mpac t of la nd-ba se d refor m s under t he UK G o ver n ment’s G a mbl i ng Ac t 200 5 re v ie w on the prop er t y . It al so d is cu ss ed t he role of t h is re de velopment in Gr os venor’ s o vera ll st r ate g y , not i ng t ha t t he propos it ion would be a new concept ca si no a nd t he need t herefor e to ev a luat e a nd ree c t on lea r n i ngs i n order to i nf or m f u r t her G r os venor venues inve st ments. Under the Boa r d ’s deleg ate d aut hor it y the Fi na nce Comm it tee re v ie wed a nd appr ove d t he na l capit a l ex p end it u r e for the Merc ha nt Cit y re dev elopment. Ke y st a keholder consider at ions Cu st omer s – player pr ote c t ion, cu stomer ex per ience, releva nce of of fer ing a nd hea lt h & s a fe t y Ou r p eopl e – oppor t u n it ies for pro g re ssion, oppor t un it ies to sha re idea s a nd ma k e a di f fer ence, hea lt h & s a fet y a nd wel lbei ng Com mun it ies – posit ive commu n it y impac t a nd loca l employ ment Reg ul ator s a nd leg isl ator s – complia nce w it h law s a nd reg u l at ions, sa fer gambl i ng, polic y a nd ga mbl in g reg ula tor y cha n ge Sha reholder s & I nve sto rs – st ra teg y , per for ma nc e and out look , cor p ora te gov er na nce and E SG Supplier s – robus t busi ness , long-term pa r t ner sh ips a nd a coll abor at i ve appro ach Ke y ES G consider at ions Cus tomer – engag ement in for med de velopment plan s, sa fer gambl i ng, cust omer ser v ice, produc t qua l it y a nd hea lt h & sa fe t y Col lea g ue – engag ement, t ra in i ng, ongoing oppor t un it ies for de velopment En v i ron ment – energ y-ef c ient approac h, such a s to light i ng a nd a i r cond it ioni ng Com mun it y – impac t on loca l env i r on ment, r ede velopment is al ig ned wit h and bui ld s on loca l a r ea in ves t ment Ac t ions a nd outcomes T he Boa r d ch a l lenge d t he busi ness to con sider how the re de velopment al ig n s a nd w il l cont i nue to a l ig n w it h t he st r at eg ic pil la rs. Ma n ag ement to repor t back on init ia l cus tomer feedb ack , venue per for ma nce follow i ng r eop en in g a nd how th i s re dev elopment wi l l in for m ot her s im i l a r inv es t ments. Impac t of t hese ac t ions on the long-ter m succes s of the Compa n y T he Boa r d r eco g n ise s t he need to cont inuousl y ev olve t he venues est ate w it h engag i ng prop osit ions t h at app ea l to bot h ex ist ing a nd new cu st omers i n order to cr eat e long-term v a lue a nd sust a inable g ro w t h. The Rank Group Plc Annual Report 2022 34 Stak eholder engagement W e believ e that to secure ou r long-ter m success, we must tak e account of what is impor tant to our ke y stakeholders. Th is is best achie ved through pr oactive and effectiv e engagement, which helps us to iden tif y and focus on the issue s t hat matter most a nd factor stak eholders’ views in to our decision-making . Activ e stak eholder engagement is a k ey part of how w e manage risk s and unlock oppor tunities. W h i le t he ma jor it y of engag ement w it h s ta keholders t a ke s plac e w it h i n t he bus ines s d iv isions a nd is le d by d iv isiona l ma na gement , t he Boa rd eng ag es d i r ec t l y w it h cer t a in st a k eholders. T he Di r ec tor s a r e a lso kep t re g u la rly appr a is ed of a ll s ta keholders’ v iew s t h r ough d iv isiona l r ep or t s to t he Boa r d, s o t h at Di r ec t or s a r e able to ha ve r ega r d t o such v iew s i n t hei r dec ision-ma k ing, as i l lu st r ate d b y r eference t o va r ious st a keholder s’ intere st s i n our S ec t ion 1 7 2(1 ) s t atement on pa ge 32 a nd t he ca s e st ud ies on pag es 33 a nd 34. W e a l so en ga ge d w it h ou r ke y s ta keholders i n conduct i ng t he mater i a l it y as se ssment t h at sh ape d a nd i n for med our E SG s t r ate g y (pleas e se e pag e 55 for more i n for m at ion) . Underst a ndi ng a nd ba la nci ng t he resp ec t i ve nee d s a nd ex pe c t at ions of ou r st a k eholders o ver t he pa s t yea r has b een as i mpor ta nt as e ver a nd we r em a i n com m it te d to doi ng s o. Customers En su r i ng ou r c ust omers a re at t he hea r t of our de c ision-ma k ing is cr ucia l to ou r s t r ateg y . Underst a ndi ng t hei r ch a ng i ng ne ed s, prefer ence s a nd beh av iours helps u s to ens ur e t hat our of feri ng rem a i ns s a fe, fa ir, cur rent a nd app ea l i ng. K ey are as o f cons ide rat io n – Pla yer pr ote c t ion – Cus tomer ex p er ience – Relev a nce of of fer i ng – Hea lt h, sa fet y a nd wel lb ein g How we e nga ge W e hos t, s er ve a nd enga ge w ith ou r c us tomer s eac h a nd ev er y da y by mea ns of d ig it a l i nter f ace s a nd conver s at ions i n ou r venues a nd remot ely . T h i s includes d iscu ssi ng t heir over a ll ex p er ience, sa fer g a mbli ng, a f for d abi l it y and wel f a r e. W e a lso r eg u l a rl y enga ge w it h our c us tomers t hr ough qu a nt it at i ve a nd qu a l it at i ve re sea rch t o se ek t heir v iews, opi n ions a nd i nsi ghts i nto how w e ca n i mpr ove ou r pr oduc t s, ser v ice s a nd us er jour neys. 2021 /20 22 highlights – Sought c us tomer v iew s on ou r appro ach to pr ot ec t i ve mea su r es as p a ndem ic res t r ict ions wer e l i f t ed. – Ut i l ise d c us tomer in sight s a nd con sidere d cu st omer feedba ck as p a r t of Mecca a nd G r os venor br a nd dev elopment and dec ision-ma k ing i n con nec t ion w it h t he re dev elopment of venues includ i ng Mec ca Luton , Gr o sv enor Gl as gow Mer ch a nt Cit y , G r os venor Bla ck po ol a nd G ro s venor Br is tol. – Conduct ed i nter cep t inter v ie ws, a ccompa n ied v isit s a nd fou r mi xed ag e cu st omer gr oups m ade up of bot h i n f r eq uent a nd re g u la r bi ng o cu st omers a f ter t he r eop eni n g of Mecc a Luton in M ay 202 2. – Ut i l ise d a n ‘al wa y s on ’ c u stomer su r vey f oc usi ng on c us tomer ex per ien c e i n Mecc a venues, wh ich c a n be c ompleted i n-per son or v ia a n a pp. – Conduct ed a n onl i ne sur ve y a mong a n at iona ll y r epre sent at i ve audience ba s ed on a ge, gender a nd s oc ia l c la s s to u nders t a nd t he siz e of t he c as ino a nd bi ng o cr os s- ch a n nel ma r ket s a nd cu stomer v ie ws. A lso ut il is ed c us tomer foc us g r oups m ade up of repr esent at ive sa mples of on l i ne a nd venue cus tomer s who ev a lua ted a s et of pr opos a l s desi g ned to en h a nce a nd encour a ge c ro ss- c ha n nel pla y . – Conduct ed pl ay er re se a r ch a nd s ought fee dback on pr oduc t s a nd user jou r ne y s, ut i l isi ng t he output i n pr oduc t dev elopment a nd to in for m ou r approac h to user jour ney re nement. Th is led to, a mong st ot her th i ng s, sa fer ga mbli ng to ol de velopment work , ga me t i le opt i m is at ion a nd r eg is t r at ion i mpro vement s. Above: Mecca Lut o n Above: Grosv enor Glasgow Merchan t City The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 35 Our people Ou r pe ople a r e t he hea r t a nd sou l of t he busi ness a nd cent ra l to it s succes s. W e dep end on t heir p a ssion a nd com m it ment to implement our s t r ateg y a nd ens ur e ou r c ust omers a re ser ve d in t he best p oss ible way . K ey are as o f cons ide rat io n – Opp or t un itie s for pr og res sion – Inclu sion a nd d iver sit y – Fai r pa y a nd r ew a r d – Opp or t un it ies to sh a r e idea s a nd m a ke a d i f fer ence – Hea lt h, sa fet y a nd wel lb ein g How we e nga ge W e se ek a n op en d ia log ue c u lt u r e a nd host for um s t h r oughout t he yea r to enable t he exch a ng e of opin ion bet ween c ol lea g ues a nd t he sha r in g of v iew s w it h s en ior ma n ag ement a nd t he Boa rd. Ot her engag ement met hod s inc lude, but a re not l i m ite d to, month l y G r oup and bu si ness u n it T ow n H a l l s, f r eq uent new slet t er s a nd cor p ora te com mu nic at ions to s ha r e ne ws a nd development s, employe e opin ion su r vey s, r eg u l a r per for ma nce a nd dev elopment rev iews a nd venue v i sit s by B oa r d member s a nd sen ior ma n ag ement. W e a l so cont i nue to o f fer a c on dent i a l wh is t leblow i ng hot l i ne to a l l col le ag ue s. 2021 /20 22 highlights – Reg u la r commu n icat ion G roup -w ide by w a y of our G e t C on ne c te d pr og r a m me. – So cia l med ia for u m s for Gr o sv enor a nd Mecc a col lea g ues to ex pr es s v iew s a nd sh a r e new s. – Month l y T ow n Ha l l meet ing s w it h Q & A s es sions a va i l able to col lea g ues i n a l l ju r i sd ic t ions to a t tend . – Held work shops to a ss es s f u r t her way s to de velop a nd en ha nce our s a fer ga mblin g cu lt ur e a nd r ol l in g out f u r t her ta i lore d train ing in res ponse . – Employ ee Vo ice me et i ng s at tended b y elec te d repr e sent at i ves f rom t he busines s, sen ior hum a n r es our ce s ma nag ement and t he Ch ief E xe c ut ive. – T a l k ing S TA R S a nd L ea d i ng STA R S foru m s held a nd at t ended by t he desig nat ed Non-E xe cut ive Di r ec tor. – Conduct ed a f ul l E mploye e Opi n ion Sur ve y in S ept ember 2021 a nd a ‘pul se su r ve y’ i n Ma y 2022 a nd i mplemented ac t ion pla n s fol low i ng a r e v iew of r esu l ts. – STA R S v a lues a wa r d s cont i nued to r ec og n ise i nd i v idua l s a nd / or tea ms for demonst rat i ng R a nk ’s va lues in t heir work , nomi na ted b y t hei r pe er s. – Embe dde d our s i x ED & I col lea g ue net work gr oups: W el lb ein g; W omen; R ac ia l E qu a l it y a nd Div er sit y ; LG BT +; Fam i l ies; a nd genera l ED& I (i ncor p ora t i ng r el ig ious celebra t ions ). – Int r o duced a r a ng e of ac t iv ities a nd in it ia t ive s to ma ke sur e t ha t our w ork plac e is a n en joya ble and s uppor t ive place t o work , such a s ma ss a ges, y oga c la ss es, pr o v id i ng br ea k fas t s a nd lunches a nd ar ra ng i ng o t her so cia l event s, a nd i nv iti ng a ps ychot herapis t to t a l k on menta l hea lt h. – W el lbei n g @R a n k pr og ra m me. – Op en d ia log ue w it h t ra de un ions. – T he Boa rd con sidere d work force eng ag ement updat es f r om desig n ate d Non-E xec ut i ve Di r ec t or (who is a ls o ch a i r of t he Remunera t ion Com m it t ee) , pr ov idi ng i nsi ghts f r om ou r col lea g ues bot h posit i ve a nd nega t iv e f rom t he reg u l a r ca dence of employee for ums t hr oughout t he yea r . – Boa rd Di r ec tor s conduc ted site v i sit s to enga ge r st ha nd w it h col le ag ue s. How we c rea te l ong -te rm value Continu ed Above: Support Ofce, Maidenhead Above: Mecca Lut o n The Rank Group Plc Annual Report 2022 36 Communities Com mun it y l in k s a re a s i mpor ta nt to R a n k a nd its pe ople as t hey a r e to ou r cu stomer s. O ur bu si ness es a r e mor e l ikel y to s uccee d when t hey a re pa r t of hea lt hy a nd suppor ti ve com mun it ies and we a r e com m it t ed to m a k ing a p osit i ve cont r ibut ion to them. K ey are as o f cons ide rat io n – Ch a r it able i n it iat ives – Posit i ve com mun it y i mpac t – Emplo y ment – Rep ut a t io n How we e nga ge Ou r venues a r e com mun it y hubs in w hich p eople sp end leisu re t i me a nd enga ge a nd i nter ac t w it h other c us tomer s a nd w it h ou r col lea g ues. T he st reng th of ou r bus ine ss is i n pa r t due to t he long-ter m t r u st a nd r el at ionsh ips w h ich ex i st b et ween ou r col lea g ues a nd c us tomers , who ver y of ten w il l ha ve k now n eac h ot her for ma n y yea rs. A ke y lea rn i ng h a s a l so b een how i nteg r a l t he role of ou r venues a nd kee pin g com mun it ies en ga ged h a s been p a r tic u la r ly du r ing, a nd as a r es ul t of, t he pa ndem ic. W e eng ag e w it h t he loca l com mu n it y th r ough v olunte er i ng, cha rit y work a nd prov idi ng employ ment a nd work e x per ience oppor t u n it ie s. W e a r e pa r t icu l a rl y pr oud of our eight-yea r pa r t ner sh ip w it h Ca r er s Tr ust . 2021 /20 22 highlights – Cont i nued to suppor t our com mu n it ies a s t he pa ndem ic ea se d a nd cont i nued to ma ke suppor t c a l l s to Mec ca c us tomer s inclu d ing t hose sel f- isolati ng . – Suppor te d t he ‘Ev er yone Deser ve s a Ch r ist m as’ ca mpaig n by d is t r ibut ion of ha mp er s to loc a l v ul nerable a nd i sola ted p eople. – Ra ised £ 28 4,48 4. 51 du r i n g t he 2021/ 22 na ncia l yea r for Ca r er s Tr ust , wh ich w ork s to i mpro ve suppor t, s er vice s a nd re cog n it ion for a n yone l iv i ng w ith t he cha l leng es of c a r i ng for a fa m i l y member or f r iend who is i l l, f r a i l , d isa bled or ha s menta l he a lt h or a dd ict ion problems. T h is i ncluded a n inv itat ion to ca r er s to t a ke a br ea k and enjo y a Mecc a Bi ng o club ga me or Gr os v enor venues ’ a f ter no on tea . – Pr omote d loc a l v aca nc ies acc ord i ng t o po stco de r eg ions a nd t heir lo ca l job centr es a nd c ol leges t o ensu r e job seeker s c a n nd loca l em plo y ment a nd one w h ich ha s pro ved to be succes sf u l r ec r u it ment met ho d. – Cons idere d com mun it y cont r ibut ion a nd i mpac t when conside r i ng est ate st rateg y . Above: Mecca Dagenham Ever y on e D es er ves a Ch ri s tm as Above: Grosv enor The Vict oria Cit y Poke r Ni g ht ch a ri t y eve nt The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 37 Regulators and legislators Reg u la tor s a nd leg is lat ors pl a y a ke y role i n sh apin g t he ga mbl i ng la nd sc ap e a nd a n ongoi ng op en d ia logue is e ssent ia l to en sur e we be t ter u nder st a nd the ex p ec t at ions under pi n n i ng r eg u la t ion a nd t ha t r eg u la t ion is fou nded i n a n u nder st a nd i ng of t he cu stomer. Regu l ator s a l so mon itor t he h igh s t a nda rd s by w h ich we oper ate. K ey are as o f cons ide rat io n – Op en ness a nd t r a n spa renc y – Compl ia nce w ith l aw s a nd r eg u l at ions – Cons umer f a i r nes s a nd pla yer pr ote c t ion – Polic y and t he d i r ec t ion of fut u r e ga mbl i ng r eg u la t ion How we e nga ge Es t abli sh i ng a nd de velopi ng r elat ionships w it h elec te d pa rl i a menta ri a n s, gover nment of c ia l s, indu st r y pe er s a nd key st a keholder s (such as c a mpa ig n g r oups a nd me d ia) r ema i n s a ke y foc us, p a r tic ul a r ly i n t he U K t h is y ea r w it h t he w ide-r a n g in g re v ie w of ga mbl i ng leg isl at ion t h at i s under wa y . W e conduc t such enga gement our s elv es a nd a l so t hr ough i ndus t r y bo d ies, such as t he Bet ti ng a nd Ga m i ng Cou nci l ( ‘BG C ’ ), t he Ca si no Gr oup (wit hi n t he BG C) a nd t he Bingo A ssoc ia t ion. W e s t r iv e to est abl i sh st rong work ing r el at ionsh ips w it h t he a i m t h at our cont r ibut ions a re va lued in ter ms of deli ver i ng c us tomer -or iented laws and regulatio ns. Fr om a compl ia nce p er spe c t ive, w e pa r t icipate i n r eg u la r meet i ng s a nd com mu n icat ions w it h t he UK G a mbl i ng Com m is sion (‘Com m iss ion ’ ), as wel l a s ot her r eg u l ator y bo d ies a nd aut hor it ies b y whom we a r e l icen se d. 2021 /20 22 highlights – Under t a ken a pr og r a m me of enga gement w it h MPs a nd med i a dur ing t he yea r a head of t he ant icipa ted U K G o ver n ment’s W h ite Pap er for ga mblin g refor m. – Sc hedu led a pr og r a m me of MP v isits t o loca l cons t it uenc y Gr os veno r C a si no s. – At tended a nd host ed a t t he Lab ou r pa r t y a nd Conser va t ive pa r t y c onfer ence s. – E xec ut i ve app ea r a nce s i n f ront of a nu mber of A l l-Pa r t y Pa rl ia menta r y Gr oups, a dd r es sin g re pre sent at i ves i n Pa rl ia ment in rel at ion to t he UK G over nment’s rev iew of t he Ga mblin g Ac t 20 05. – Ch a i r at tended t he Com m is sion ’s cha i r s rou ndt ables d ur ing t h e y e a r. – Ch ief E xec ut i ve at t ended a meet i ng held at the BG C of ces w it h t he Comm is sion ’s CEO dur ing t he yea r . – Reg u la r contac t w it h of c ia ls in DC M S, inc ludi ng t he cu r r ent a nd for mer Ga mblin g M in i ster, as we s ought to a r t icu la te t he ca se for leg i sl at iv e cha nge t h at suppor ts R a n k ’ s st r at eg y . – Members of B G C, Bi ng o A ss oc iat ion and J Dig it a l – lo bb y i st s. – Submit t ed A nnua l A ssur a nce S t atement to t he C omm i ssion. – W orke d on a t r a n spa r ent a nd col l abor at i ve ba sis w it h t he Com m is sion a nd our ot her reg u la tor s. – Resp onded to t he Comm is sion ’s consu lt at ion in r el at ion to Licen si ng, Compli a nce a nd E n for cement Polic y . Above: Grosv enor Glasgow Merchan t City Above: Grosv enor Glasgow Merchan t City How we c rea te l ong -te rm value Continu ed The Rank Group Plc Annual Report 2022 38 Shareholders a nd inv estors W e adop t a n open a nd t ra n spa r ent appr oac h w it h ou r sha reholders a nd an a l ys t s to com mun ic ate ou r per form a nce a nd use t heir fee dback to i n for m ou r s t r ateg y a nd de cis ion-ma k i ng. K ey are as o f cons ide rat io n – St r ateg y , per form a nce a nd out look – Le ader sh ip cap abi lit y – E xec ut i ve r emuner at ion – Cor pora te g ov er n a nce – En v i ron ment a l , soc ia l and g over na nce ( E SG ) p er for ma nce How we e nga ge W e adop t a pro ac t ive a ppro ach to i nv est or rel at ions , conduct ing a comprehen sive pr og r a m me of re g u la r contac t a nd c onsu lt at ion t h r oughout t he yea r. Our i nv es tor r elat ions prog r a m me i ncludes re g u la r up dat es, me et i ng s, r oad show s a nd ou r A n nua l Gener a l Meet i ng. T he ot her ke y wa y i n wh ich we com mun ic ate w it h a l l sha reholders i s v ia ou r cor porat e website, w w w .r a n k .com. 2021 /20 22 highlights – 38 meet ing s held w it h sh a r eholders du r ing t he ye a r, in add it ion to qua r terl y mee t i ng s held wit h t he major it y sh a r eholder . – Ch ief E xec ut i ve, Ch ief Fi na nc ia l O f c er a nd Dir e c tor of Inv es tor Rela t ions to ok pa r t in a sc hedu led pr og r a m me of ma jor sha reholder engag ement to dis cu ss i nter i m a nd na l ye a r prel i m i na r y r esu l ts a nd an a l ys t s fol low i ng a nnou ncement of n a l pr el im i na r y r esu lt s. – Ch a i r a nd Sen ior I ndependent Di r ec t or enga ge d w it h sha reholders i n re spon se to spe ci c mee t i ng re ques t s, wh ich i ncluded d is cu ssions on E S G. – Cons ul t at ion w it h m ajor sh a r eholders on t he Recov er y Incent i ve S cheme wh ich wa s subs equent l y appr ove d by s ha r eholder s at t he 2021 AGM. – Recei ve d vote s f r om 93.1 9% of sha reholder s for t he 2021 AGM. Suppliers W e h ave r el at ions hips w it h ci r ca 1, 20 0 suppl ier s, ra ngi ng f rom sma l l busine sse s to l a r ge mul t i nat ional c ompa n ies. We ai m to oper ate to t he highes t profe ssiona l sta nda r d s, t r eat ing ou r supplier s a s ke y busi nes s pa r t ners a nd operat ing i n a fa ir a nd re a sonable m a n ner , encou r ag i n g supply ch a i n t r a n spa r enc y a nd promot i n g fa i r work ing c ondit ions. K ey are as o f cons ide rat io n – Robust ness of our bu si ness – Long-ter m pa r t nersh ips – Fai r enga gement a nd pa y ment term s – Col l ab ora t i ve app ro ach How we e nga ge W e h ave a de d icat ed pr o cu r ement f unc t ion wh ich en ga ges w ith our suppl ier s w it h t he ai m of opt i m isi ng t he way t h at we w ork w it h t hem. W e bui ld r ela t ionsh ips r eg iona ll y a nd loc a l l y to b et t er under s ta nd the m a rke t s f r om where we s ou rc e pro duc ts a nd ser v ices. T he se r ela t ionsh ips a nd g ood c om mun icat ion were pa r tic u la r ly i mpor ta nt dur i ng t he pandem ic, bo t h for t he per iod for wh ich our v enues were c lose d, but a lso i n r ela t ion to t he col lab ora t ion re qu i re d to i mplement closur e s a nd r eopen i ng s. 2021 /20 22 highlights – W orke d w it h our supplier s to en su r e a pra g ma t ic appro ach to r eco ver y f r om t he pa ndem ic. – Implemented ne w sof t wa r e s olut ion to impr ove m a n ag ement of cont ra ct l i fe c ycles. – Implemented a r ef r es hed suppl ier rela t ionsh ip ma nag ement f ra mework to suppor t impr ov ed w ay s of work ing wh i l st d r iv i ng va lue cr e at ion for bot h Ra n k a nd it s pa r t ner s. – W orke d w it h suppliers t o ensu r e smoot h tr a n sit ion du r i ng plat f or m m ig r at ions u nder ta ken du r ing t he ye a r. – Pr o v ided t ra i n in g to suppl iers a nd contr ac tor s a s appr opr ia te when v isit ing ou r venues. – T he Gr oup’ s Mo der n Sl aver y St at ement, wh ich i s submit ted to t he Boa rd for appr ov a l e ach ye a r, ca n be fou nd on w w w.ra n k.com. Above: Grosv enor The Vict oria Cit y Poke r Ni g ht ch a ri t y eve nt Above: Grosv enor Casinos The G rou p’s Mo d ern Slavery St atement can b e fo und o n ww w.rank.com The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 39 Our st rategy O u r st ra te g y i s t o e v o l v e o u r p ositi on as an ent e r tainmen t bra n d Lea rn mo re a bo ut our business model on p ag es 72- 73 The Rank Group Plc Annual Report 2022 40 Th is y ear we are reporting under our ve refreshed strate gic pillars. Our strate gy remains focused on driving our digital business and evolving our v enues , alongside a seam l ess cr oss- channel ex p erience . W e took the opportunity to ensur e our sustainabilit y objectives were fully embedded in the Group’ s strategy and now hav e t wo pillars dedic ated to our sustainability focus areas of customer , colleag ues, communities and the en vironment . Our ve strategic pillars: 1. Pro vide a seamless e xperience 2 . D riv e di gital growt h 3. Ev olve o ur venues 4. Be passiona te about our co lleagu es 5. Buil d sustainable re lationships Above: Mecca Lut o n The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 41 Our strategy Continu ed Strategic pilla r 1 Pr ovide a seamle ss and tailored e xperience f or cust omers across v enues and online Above: Grosv enor The Rialt o The Rank Group Plc Annual Report 2022 42 In t he ma rket s i n wh ich we op era te, R a n k is one of t he fe w ga m i ng c ompa n ies i n a posit ion to prov ide cust omers w ith a g enui ne one-bra nd ga m in g ex per ien c e ac ro ss b ot h venues a nd on l i ne. Ou r ke y a ss et s a r e ou r 12 5 venues, our member sh ip -ba se d models , our c us tomer rel at ion sh ips a nd t he h igh le vels of eng a gement t ha t our t ea m member s enjo y w it h ou r c us tomer s. What we s aid What we d id – Lau nch Mec ca’ s big money For t u ne ga me once joi nt liqu id it y f u nct ional it y is r ol led out ac r os s t he Mecc a venues es ta te. – Del iver e d r st to ma r ket pr oduc t, Mec ca For t une, prov idi ng l ive bi ngo ac ro ss our Me cca e st at e a nd on l ine. – Uni f y reg i st r at ion acro ss venues a nd on l ine for Mec ca c us tomer s. – Del iver e d pha ses 1 a nd 2 of M e cc a’ s u n i e d reg i st r at ion ac r os s venues and onl i ne mea n i ng c us tomers c a n sig n up sea m less ly i r r es pe c t ive of c ha n nel v i a t hei r mobile phones or v ia QR code s i n our Me cca v enues. – De velop mic ro site s for ke y Mecc a venues. – Lau nched Mec ca venues spe ci c pa ge s onto meccabi ngo.com where cu st omers ca n d iscov er more ab out t heir v enue before v isit i ng. – En h a nce f u nc t iona lit y of t he My Mecc a app to del iver g reat er per son a l i sat ion. – Cons idere d a s pa r t of Mecca’ s over a ll app s t r ateg y wh ich w as f ur t her develope d dur ing t he yea r . – Fu r ther de velopment to impr ov e cr os s- ch a n nel cu stomer jou r ne ys i n Gr os venor, par t icu l a rl y a s we m ig r ate to t he new pr opr iet a r y pla t for m , R IDE . – Lau nched t hev ic.com where c us tomer s ca n d isco ver much more about t he venu e befor e t he y v is it. A lso l aunc hed r i a lto ca si no.com. – De veloped a qu icker sig n-up jour ney , jus t ve cl ick s, for bot h n e w a nd ex i st i ng cu s to mer s. – Cr os s- cha nnel ad vo cat es on site i n a l l venues helpin g cu stomer s to r eg i ster a nd ex per ien c e our d igit a l of feri ng s. – De veloped a nd pi loted a n i ndus t r y- r st elec t r on ic rou let t e prog r es siv e jackp ot ga me acr os s v e ca si nos pro v id i ng our c ust omers t he abi lit y to w i n a n est i m ate d jackp ot of over £1 m f r om a £1 st a ke. O pt ion to l i n k to d ig it a l u nder i nve st i gat ion. – Enha nce o u r spo r tsboo k propos it io n in s elec te d Gr o sv enor venues. – Complete d en ha nce d sp or t s v ie w i ng a r e a s in ele ven of ou r ca si nos en abli n g cu stomer s to h ave b et ter v isibi l it y of odd s a nd of fer s f r om ou r Gr os venor sp or t sbo ok a nd bet d ir ec t l y us in g QR code s. – Ded icated new sp or t s zones i n our ca si nos i n Hudderseld , Shef eld, Bl ack p ool, Luton a nd G la sg ow Mer cha nt Cit y . – De velop bra nd app s to suppor t ca sh les s t r a n sac t ion s in v enues. – Cont i nued to de velop app st r at eg y for each br a nd a nd t h i s r ema i n s a pr ior it y foc us a r ea for 2022 / 23. – Mult i- ch a n nel T V adver t isi ng ca mpa ign s for bot h Mecca a nd Gr o sv enor . – T h is w i l l b e a n a r e a of foc us for 2022 / 23 fol low ing t he inves t ment i nto d ig it a l cu st omer jou r ne y s po s t-plat f or m m ig r a t ion. – Fu r ther de velopment of En r ach a’ s cr os s- ch a n nel of fer . – W ork h a s foc us ed on i mpro v i ng t he dig it a l of fer i n t he cur rent yea r and t he focus w i l l move to i mpr ov ing t he c r oss -c ha nnel ex p er ience in 2 022/ 2 3. Percen tage of v enues customers that p lay w ith us onl ine 13% Gr os venor + 4ppt s 9% Me cc a - 5p pt s 0% Enrac ha +0p pts Percenta ge of dig ital NG R from cross -chan nel customers 75% Gr os venor + 4 4pp ts 2 3% Mec c a + 4pp t s 0% Enrac ha +0p pts Area s of focus for 202 2/ 23 : – Fu r ther de velop t he app s t r ateg y for each br a nd en su r i ng c us tomer need s a r e met for bot h onl i ne a nd in-venue ex per ien c es, r emov ing t he n e e d for cu stomer s to mov e acr o ss mul t iple mono c ha n nel ap ps. – Lau nch l iv e st r e a m i ng f r om a f u r ther four G r os venor ca si nos t o our on l i ne audiences a nd deliv er impr ov ements to t he d ig it a l l i ve r oule t te e x per ien c e. – Int r o duce a r t ic ia l intel l igence to bet ter d r iv e per son a l i sat ion for ou r Gr os venor sp or t s a nd gam i ng cu stomer s show ing of fer s, b et s a nd homepage s ta ilore d to t heir beh av iou r. – Cont i nue to deli ver compel l i ng Me cc a of fer s foc us ed on d r iv in g new cu stomer acq ui sit ion a nd r etent ion. – Lau nch u n i ed Mec ca member sh ip acr os s on l i ne a nd in venues t h at w i l l br i ng r ea l ti me com mun ica t ion, per son a l is ed c ontent, c r os s sel l a nd improve d onboard i ng. – Int r o duce a new Mec ca lo ya l t y ca r d embedde d i nto ou r apps a nd si ngle members h ip jour ne y a l ig ned t o our single app s t rateg y . KPIs The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 43 Strategic pilla r 2 Driv e digital growt h pow ered by our pr oprie tar y technology and li ve play credentia ls Our strategy Continu ed Above: grosv enorcasinos.com The Rank Group Plc Annual Report 2022 44 W e h ave bu i lt s t r ong po sit ions i n venues-ba se d ga mi ng wh ich we a re se ek i ng to r epl ica te ac ro ss ou r d ig it a l c ha nnels. I n 2021 / 22, our d ig it a l operat ions generat ed 2 8% of Gr oup re venue. Acr os s t he UK a s a w hole, dig it a l cha n nels r epr es ente d a r ound 49% of t he ga mbl in g ma rk et ( e xcludi n g t he Nationa l Lot ter y) pre -pa ndem ic, pre sent i ng a sig n i ca nt gr ow t h oppor t un it y . What we s aid What we d id – Mig r at e mecc abin go.com (Q3 202 1 /2 2) a nd g r os venorc a si nos.com (Q4 2021 / 22) ont o t he pr opr ieta r y pla t for m. – Mecc abin go.com wa s succes sf u l l y lau nched ont o t he R IDE pla t for m i n Ja nua r y 2022 , on t ime a nd on budg et . g r os venorc a si nos.com is due to be m ig r at ed i n Q1 2022 /2 3. – W e m ig r ate d ou r en rac ha .es site to t he Y o pr opr iet a r y pla t for m, pr o v id i ng g r eat er development ex ibi l it y and sc a l abil it y . – Cont i nue the de velopment of new feat u r es t o en ha nce ou r d ig it a l ex per ien c e. – En h a nce d per s ona l i sat ion deliver ed for g r o sv enorc a sino s.com and me ccabi ng o.com cu stomer s t a i lor i ng ex p er ience to t hei r pr eference s. – Impr ov ements del iv ere d for mecc abi ngo.com to i mpro ve c us tomer enga gement t h r ough t he us e of pop -ups a nd ba n ner s. – Add it ion a l l ive c a si no table s on r ia l to.com and t hev ic.com so onl i ne pla yer s c a n pla y in v enues acr os s d if ferent Eu rop ea n c it ies. – Relau nched ou r sp or t sbo ok for enr ac ha .es i n t he yea r follow ing it s m ig r at ion onto t he Y o pl at f or m. – Opt im is e ma r ket i ng ef fec t ivene ss a nd sca le inve st ment to d r ive h igher level s of cus tomer acq ui sit ion. – Lau nched Br ita i n’ s G ot T a lent campa ign on ra d io and i n pri nt to d r iv e Mecca br a nd awa renes s a long side a da i l y r etent ion ga me. – 5 % i nc re a se i n ma rket i ng i nve st ment i n U K ga m i ng br a nd s. – Ref r esh app s t r ate g ies w it h a s ha r per foc us on c ro ss -c ha n nel a nd supp or t ing venues ex per ien c es. – A foc us ed appr oac h to ou r app st rate g ies is a ke y pr ior it y for 2022 /2 3. – Lau nch new B2B i nter na t iona l pa r tner sh ips w here R a n k c a n pr ov ide its d igit a l of fer t o es ta bli shed inter nat iona l ga m in g venues businesses . – V a r ious B2B pa r t ner sh ip oppor t u n it ies wer e in ves t iga te d in t he yea r, h o we ver none were c onsider ed s uit able at t his c u r r ent t i me. Digital NGR Cust omer numbers Area s of focus for 202 2/ 23 : – Mi g r ate g ros v enorc a si no s.com onto our R I DE plat for m. – En h a nce G r os venor’s Dai ly Re tent ion Ga me offer i ng ou r c us tomers g r e ater va r iet y a nd r a n ge of pr i ze s. – Lau nch t he str e a m i ng on l i ne of liv e im mer siv e ev ents i n ou r Mecc a venues to help dr ive cr o ss ch a n nel acq ui sit ion. – Del iver t he sig n i c a nt dev elopment ro ad ma p wh ich fol low s t he m ig ra t ion of Gr os venor onto t he R I DE plat f or m. – Lau nch a new Spa n ish sp or t s be t t i ng site Y o Spor t. – Lau nch ne w apps for Y o Ca si no a nd Y o Spor t in Spa i n. – Rol l-out a c r oss -c ha nnel st r at eg y for E n r ach a . – Lau nch Y oBin go in Por tug a l to repl icat e t he success f u l Y oBi ng o model. – Upgr ade t he propr iet a r y Y o tec h nolog y pla t for m . UK £162.3m; + 4% Inter nat iona l £21.0m; + 4% UK d i g ita l 7 4 6k; 0% Inter nat iona l dig it a l 4 7 k ; -39% KPIs The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 45 Our strategy Continu ed Strategic pilla r 3 Continuously ev olve our venues estate with engaging proposi tions that appeal to both e xisting and new cu stomers Above: Grosvenor Brist o l The Rank Group Plc Annual Report 2022 46 Ou r c as ino a nd bi ng o venues pro v ide enter ta i n ment for m il l ion s of cu stomer s eac h yea r and g enerat e t he ma jor it y of t he Gr oup’ s re venue and pr ot s. B y cont i nuously e volv ing our venues (i n ter m s of produc t, env ir onment a nd ser v ice ) a nd b y cr eat i n g new concept s, we a re con st a nt l y en h a nci ng t he exp er iences t h at we of fer ou r c us tomer s, whet her the y be e x is t i ng or new. What we s aid What we d id – Ref u rbish ment of f u r t her ca si nos fol low i ng t he succe ss of pr e v ious pre- COV ID - 19 invest ments. – New br a nd pr oof of concept v enue launche d in G l a sgo w Merc ha nt C it y offer ing a d ra mat ic new look , new r e st au ra nt and ba rs a nd sp or t s v iew i ng z one. – Complete d ref u rbi sh ments in Hudders eld, Br i stol , Black p ool , and W a l sa ll i mpro v i ng ca si no ga m i ng a rea l ay out s a nd pro v id i ng b et ter qua l it y re st au r a nt s a nd ba r s. – Adde d a n add it iona l A du lt Ga m i ng Cent re licence to ou r St Gi les ca si no in London a nd ex pa nde d ou r slot s of fer i ng i n Not t ingh a m. – New e -ga mi ng ter mi na ls lau nche d acr os s L ondon a nd in ke y r eg iona l ca si nos to i mpro ve c ust omer choice a nd qua l it y of ex per ience. – Lau nch t he n e w E mploye e V a lue Pr op osit ion (‘E V P ’ ) for Gro s venor col lea g ue s. – Lau nched t o a l l G r os venor employe es of fer i ng a de velopment pat h wa y to f u r t her t heir c a r e er w it h G r os venor . – Int r o duce a new fo od a nd b ev era ge prop osit ion ac ro ss t he Gro s venor est a te t a i lore d to ea ch loc a l m a rke t. – Pi lot s of new men u concep t s tr ia l led at T he Vic, Merch a nt Cit y and Blac k po ol ca sino s. En h a nce d menus launched a long w it h the ref urbis h ments at our Hudders eld, Br is tol a nd W a l sa ll ca si nos. – De velop a new dema nd ros ter i ng t ool for Gr os venor co ver i ng a ll a rea s of t he c a s i no. – T o ol in pi lot at our Not t i ngh a m a nd Bir mi ngh a m Hi l l St r e et ca si nos. Per for ma nce ha s be en i n l ine w it h ex pe c ta t ions a nd t he tool w il l be rol le d out acr os s t he rem a i n in g ca si no es t ate i n Q1 2022 /2 3. – De velopment of a new concept Mec ca venue in Luton. – Ou r new concept venue at Luton opened in Ma r ch 2022 w it h a new ‘alw a ys on’ bi ng o sche dule a nd ref r eshe d foo d a nd be ver ag e menu. – E x pa n sion of Mecca’ s new a nd impr ov ed fo od a nd b ev era ge of fer to add it ion a l venues. – New menus del iver e d for bot h food a nd b ev era ge ac r os s 14 M e cc a venues. – Fu r ther de velopment under wa y a nd w i l l be f ur t her t r ia lled i n a nother 16 venues in e a rl y 2022 /2 3. – Fu r ther de velop i mpro vements for Mecc a’ s c ore m a i ns t ag e bin go ga me. – Inv es t ment in b et ter va lue for our bi ng o cu st omers w ith t he int r oduc t ion of lower pr ices a nd big ger g u a ra nteed pr ize s. – A new p or t folio of side bet g a mes wa s i nt r o duced a long side t he ma ins t a ge bi ngo g a me. – Upgr ade d 700 ga mi ng m ach i nes, br i ng i n g impr ov ed v a r iet y to ou r cu st omers. – Implement new mac h ine m a na gement sy s tem ac ro ss t he En rac ha e st at e. – Successf ul del iver y ha s pro v ided u s wit h gr eat er v isibi l it y of t he per for ma nce of t he mach i nes ac r os s our E n r ach a venues. – Op en our r st s ta nd-alone En r ac ha St ad ium venue. – Cu r r ent l y on hold as we i nve st igate f u r t her t he av a i lable l icensi ng op t ions. Area s of focus for 202 2/ 23 : – Lau nch of new r e wa rd s a nd i ncent ive s prog r a m me for ou r G ro s venor venues. – Cont i nue t he d ev elopment a nd ref urbis hment of t he G r os venor es ta te w it h 1 2 venues l is ted for r ef u rbi sh ment in F Y 2 3. – Lau nch of a new ele c t r on ic rou let te jack pot g a me, G oi ng for G old, ac r os s our G r os venor es t ate. Cust omer numbers 1 , 0 01 k Gr os venor venues +27 6% 635k Mecc a venues + 104% 2 01 k En r ach a venues + 86% Strategic inv estment £1 1 . 8 m Gr os venor venues F Y 21 £0.3m £3 .7 m Mecc a venues F Y21 £ 0m £0 . 4 m En r ach a venues F Y 21 £0m Net pro moter sc ore 57 % Gr os venor venues + 4ppt s 61% Mecc a venues -3ppt s% 4 5% En r ach a venues* +9pp t s * C omp a r ed t o F Y 20, no t mea s ur e d i n F Y 21. KPIs – Foc us on i mpro v i ng t he slot s per for ma nce of ou r Mecc a venues t h r ough a be t ter pr o duct m i x a nd pre sent at ion i n venue. – Inv es t iga te oppor t un it ie s to sh a r e space i n ou r Mecc a venues t h r ough complementa r y pa r t ners h ips a nd col lab ora t ions w it h t hi r d pa r t ies. – Cont i nue the E n r ach a venues inv es t ment prog r a m me i n ou r A nd a lucí a a nd Sabadel l venues. – Cons ider pros pe c t ive opp or t un it ies to cont inue gr o w i ng in t he Spa n is h ma rk et t h r ough t a r g ete d acqu i sit ions. – Deploy pl ay er t r ack i ng a nd new jack pot s i n eac h E n rac ha venue to i mpro ve c ust omer ex per ience. – Fu l l deploy ment of our En r ach a venues loya lt y c a r d i nto a l l p er m it ted venues. The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 47 Our strategy Continu ed Strategic pilla r 4 Be passionat e about the de v elopment and well - being of our collea gues and the contr ibution we mak e to our communities Above: Mecca Lut o n The Rank Group Plc Annual Report 2022 48 W e cont i nue to bu ild a h igh-per for m in g cu lt ur e t h r ough t he eng agement a nd de velopment of col leag ues who wa nt to put e xcit i ng a nd enter ta i n i ng c us tomers a t t he hea r t of what t hey do. W e st ri ve for a c ul t u re of o w ner sh ip a nd t r a ns pa r enc y t h at empo wer s ou r tea m s to ac h ieve g oa l s t he y d id not t h in k p os sible and t o be t he ver y be st t hat t he y ca n be. W e a r e a l so a cut ely a wa r e of t he r ole our venues, of ces a nd col lea g ues pla y in t he com mun it ies in which we oper ate a nd tog et her a s a collec t ive orga nis at ion we st r i ve to add va lue wherever p os sible. What we s aid What we d id – Implement ‘Ra is in g Ou r Ga me’ , our new Employ ee V a lue P r opo sit ion (E V P) acr os s t he G ro s venor venues busi ness , to enga ge ou r col lea g ues i n del iv er i ng a d if ferent ia ted c u stomer ex p er ience. – Gr os venor l aunc hed a r ef r eshed c a r e er pat h wa y to 3, 50 0 venues col lea g ues a l lo w i ng t hem acce ss to b esp oke suppor t t h rough t ra i n i ng a nd de velopment act iv it ies. ‘Ra i si ng our G a me’ was e volve d dur ing t he yea r into a Group -w ide prog r a m me, ren a med ‘Work. Wi n. Gr o w . ’ . – Implement bes t i n cla s s ser v ice t ra in i ng to suppor t t he new Mec ca bra nd pr opo sit ion under pin n i ng our ‘Mec ca of t he Fut u re’ st r ate g y . – A new su ite of t r a i n i ng i n it iat ives wa s i mplemented i n t he ye a r co ver i ng a w ide ra nge of topics, f r om cu stomer s er vice pr inciples to t r a i n i ng on en sur ing a de eper k nowle dg e of each pr o duct on of fer. – Implement the ‘ Talent’ work s t r ea m of T r a n sfor m at ion 2.0, ensu r i ng w e re cr uit , de velop a nd re t a i n emerg i ng a nd top t a lent. – W e h ave i mplemented t a lent pr og r a m mes at t hr ee le vel s w it h ap propr i ate le vel s of development a nd suppor t for each. T here a r e 70 colle ag ues a cr os s R a n k i n t a lent prog r a m me s w it h supp or t for t hem ra ng i ng f r om i nd iv idu a l coac h i ng to g r oup development pr og ra mmes to p os t-g rad uate le vel pr og r a m mes at pr e st ig ious un i ver sit ies or i ns t it ut ions spec ia lisi n g in lea der sh ip development. – Cont i nue to develop a h igh- per for ma nce c u lt u r e, includ i ng under s ta ndi ng t he prog r ess b ei ng made t hr ough ou r Emplo yee Opi n ion Sur vey . – W e cont i nue to dev elop t he cu lt u r e at R a n k a nd have s een a n i mpr ovement of 3ppt s in ou r eng ag ement scor e dur ing t he yea r . O u r work on E qua lit y , Div ers it y and Inclu sion (‘ED& I’ ) is a n ex a mple of the pro g re ss we a r e ma k ing w it h a ques t ion on ED& I bei ng a mong t he highes t scor i ng i n t he enga gement sur ve y . W e cont inue to reg ula rly re cog nis e col leag ues aga i ns t Ra nk ’ s S TA R S va lues. – Cont i nue to deli ver t he G roup’ s inclu sion a nd d iver sit y st r at eg y , includ i ng t he a n nua l ca lenda r of event s a nd build i n g on t he for u ms t ha t a r e a l r ead y i n pla ce, such a s Fa m i l ie s @R a n k . – Ou r ke y ED& I ach ie vement in t he yea r wa s t he succes sf u l lau nch of si x ED& I col lea g ue net w ork g r oups. T he g roups pr o v ide our c ol lea g ues w it h t he oppor t u n it y to pr ov ide i ns ight f u l fee dbac k on where i mpr ovement s ca n be made. E ach g r oup is spon sor ed b y a n E x ec ut iv e Com m it t ee member a nd supp or t ed b y a lead i ng e x ter na l ED &I pa r t ner . – En su r e col lea g ue fac il it ies a re consider ed i n a ll venue in ves t ments. – W e now en su re t hat a l l b ack of house c ol leag ue ar ea s a r e con sider ed a s pa r t of a l l venue ref u rbish ment s. In t he yea r, speci c impro vements wer e made i n our Br i stol , W a l sa ll a nd Gla sg ow Mer cha nt Cit y cas ino s. – Rev iew work i ng en v i r onment s a nd fac i l it ies for ou r suppor t of ce col lea g ues. – W e h ave pl ace d g r eater emph a sis on col l abor at ion a nd com mu n icat ion acr o ss ou r of ce s to accom mod ate t he cha nges i n col leag ue w ork i ng pat ter ns p ost- COV ID -1 9. Area s of focus for 202 2/ 23 : – Lau nch r ef r eshed t h r e e-y ea r E D& I st r ate g y acr oss t he Gr oup focu se d on ensu r i ng t he Group is r e cog n is ed as a n employer of choice by at t rac t ing, developi ng a nd r et a in in g a t r u l y d iver s e pool of t a lent . – E x pa nd t he re ach of t he Group’ s ED& I col lea g ue net w ork g r oups a nd lau nch t he Gr oup’ s r s t neur od i ver se col lea g ue net w or k g ro up. – Lau nch a nd embe d t he ne wly de velop ed Gr oup-w ide E V P W or k. W in . Gr ow . – Cont i nue the de velopment of t he Gr oup’ s Net Z er o Pla n a nd look to set i nter medi ate t a r g et s to lower t he Gr oup’ s c a rb on em iss ions a nd us e of ot her nat ur a l r esou r ce s. KPIs Females i n seni or pos itions U K co lle agu es from ethni c mino rit y backgrounds Contribution t o good causes £0 . 3 m +0% EO S engagement score 68% +3ppts Gre enho use ga s emissi ons inte nsit y 39. 2 tCO 2 e per £m NGR - 4 0% Fema le 27%; +0 ppt Ma le 73%; +0ppt Et h n ic mi nor it y 32% ; + 1ppt W hite Br it ish 68%; - 1ppt The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 49 Our strategy Continu ed Strategic pilla r 5 Build sustainabl e relationships with our cust omers by pr oviding them with safe envir on ments in which to pl ay Above: Mecca Lut o n The Rank Group Plc Annual Report 2022 50 Mi l l ions of c us tomer s re g u la r ly en joy t he f u n a nd e xcitement of ga mblin g, but we rec og n is e t ha t a sma ll p erc ent age of c us tomer s ca n b e at r i sk of pr oblem gambl i ng a nd a sm a l ler numb er of people c a n su f fer h a r m t hr ough exc ess ive ga mblin g. W e r ec og n is e t he imp or t a nce of cont i nuous in nova t ion to re ne our appr oac h to ma k i n g ga mbli ng a s sa fe a s pos sible thus en sur ing we cr e ate a nd ma i nt a i n sus t a i nable r ela t ionsh ips w it h a l l our c u stomer s. What we s aid What we d id – Rol lout a more pla yer cent ric r i sk - ba se d a f for d abil it y a ss es sment model in G r os venor venues. – W e ha ve dev eloped a holi st ic r isk ma t r i x to be t t er identi f y potent ia l ‘ at-ri sk ’ pla y a nd to a ss ess a c u stomer’s level of a f for dabi l it y . T he mat r i x was t ri a l led i n m id-2021, t hen rol le d out in No vember to a ll G r os venor venues. – Del iver a r e a l t i me monitor ing to ol look i ng at c us tomer ac t iv it y a nd cha nges i n c us tomer pla y in our casin os. – T h is i s st i l l u nder de velopment and w i l l b e del iver e d in H1 2022 / 23. – Cont i nue our sa fer ga mbli ng c u lt u r a l as se ssment work w ith c ol leag ues. – Complete d cu lt u r a l a sse ssment a nd nd i ngs i ncor p ora ted i nto t h r ee ke y act ions, a s fol low s: – Vis ion: t he a r tic ul at ion of wh at we s ta nd for and w hy is s a fer ga mblin g is i mpor ta nt to us. – Mess ag i ng: c onsi stent a nd reg u la r commu n icat ion f r om t he leader s hip te a m to r ein for ce t he vi sion. – De velopment of kno wled ge a nd sk il l s: deli ver r ole appropr iate t r a i n i ng suppor ted by G a mC a r e. T h is is on goi ng a nd i s due to complete b y De cember 2022 . – Rol lout f ur t her re f re shed s a fer ga mbl i n g mes sa g i n g a nd com mu n icat ions ac r os s R a n k businesses . – For our U K d ig it a l c us tomer s, we i nt r oduce d a new welcome jou r ney w it h clea r mess ag i ng a rou nd what s a fer g a mbli ng me as ur e s we ha ve i n plac e a nd wh at sa fer ga mbl in g mech a n i sms a r e a va ila ble to our c us tomer s. – In ou r venues, we pr ov ide and m a ke a va i l able to t a ke a wa y , clea r a nd consis tent sa fer ga mbl in g i nf or ma t ion for our c us tomers. – Int r o duce re a l t i me v ie w of cu stomer pla y acr o ss a l l br a nd s a nd c ha n nel s to help dete ct e a rl ier p otent ia l at-risk cu stomer s i n venues a nd on l ine. – W e h ave c ommence d a pr ojec t t o del iver a c ro ss -c ha n nel si ngle c us tomer v iew, ex pe c te d to be del i ver ed i n 2022 /2 3. – Implement a more r obust c us tomer int er ac t ion e v a lua t ion f r a me wor k to help in for m a nd e vol ve ou r appr oach to pla yer pr ote c t ion. – T o be del iv ere d fol low i ng f u r ther r e nement as pa r t of our sa fer ga mbl in g a lgor ith m for d ig it a l c us tomers. – Fu r ther de velop ou r holis t ic a nd r isk-base d model for ea rly i nter vent ion for potent i a l l y at-r isk pla y . – Cu r r ent l y i n development a nd due for implementa t ion in H1 2022 /2 3. Area s of focus for 202 2/ 23 : – Cont i nue to re ne a nd impr ove t he holi st ic pla yer pr ote c t ion model in ou r G ro s venor venues. – Impr ov e t he tool s av a i l able to Gr os venor venues col lea g ues t o ma ke de ci sion-ma k i ng more ef cient a nd ef fec t ive. – Rev iew a nd impr ov e our d igit a l cu stomer onboa rd i ng jou r ne ys to remov e un ne ces sa r y f r ict ion cau sed by ‘ k now you r cu st omer’ a nd player pro tec t ion proc ess es. – Complet ion of role ap pr opr ia te en ha nce d sa fer ga mbli ng t ra i n in g suppor ted b y Ga mCa re t o over 1,100 col lea g ues. T he t r a i n i ng is a i me d at de veloping t he necess a r y sk i l l s re qu i re d to h ave mor e mea n i ng f ul sa fer ga mbl in g i nterac t ions w it h our c us tomer s. – Cont i nue to develop ou r ma r ker s of ha r m mo del a s pa r t of a cont inuous impr ov ement and e v a luat ion o f pl a yer pro tec t ion ri sk model s. – W ork to wa rd s ach iev ing G a mC a r e sa fer g a mbli ng a ccr e d it at ion acr o ss our U K oper at ions. The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 51 Our k e y p er formance indicators Financial KPIs Underlying 1 net gami ng rev enue ( ‘NG R’ ) Underly i ng NG R is a n i nd ica tor of t he Gr oup’ s t op-l i ne g r ow t h. It is r evenue r et a i ned f r om t he a mou nt s st a ke d a f ter pa y i ng out cu stomer w i n n i ng s a nd deduc t i ng c us tomer inc ent ive s. Underly i ng NG R inc r ea se d b y 95% in t he yea r d ue to t he impac t of venue closur e s a nd ot her r es t r ic t ions du r i ng t he pandem ic in t he prior yea r . 2022 £644.0m £329.6m £629.7m 2021 2020 Underlying 1 operating prot/ ( loss ) Underly i ng oper at i n g pro t pro v ides a pict u r e of the underl y i n g per for ma nce a nd i s a ke y ind ica tor of t he Gr oup’ s succes s i n del iver i ng t op-l i ne g r ow t h wh i le cont r ol l in g cos t s. Underly i ng oper at i ng pr ot i ncr ea s ed to a n oper at i ng pr ot of £39.8m due to t he i mpac t of venue closu re s a nd ot her r es t r ic t ions du r i n g t he pa ndem ic in t he prior yea r . 2022 £39.8m £(84.5)m £49.1m 2021 2020 Net debt Net debt is c a lc u lat ed a s tot a l bor r ow i ng s les s ca sh a nd shor t- ter m dep osit s. Net debt de c re a se d in t he yea r due to £100. 7m of ca sh g enerat ed f r om oper at ion s dur ing t he yea r a nd t he £ 8 3. 1 m V AT r epa y ment re cei ved i n De cember 2 021 off se t t ing t he oper at iona l c a sh u se d in t he busines s. 2022 £162.6m £256.7m £297.5m 2021 2020 Underlying 1 EB ITDA Underly i ng E BI T DA i s ea r n i ng s befor e inter e st , ta x, depr ec iat ion, a mor t i sa t ion a nd sepa r at ely d i sc lose d items. It i s ca lcul ate d b y ta k in g underl y i ng oper at i ng pr o t before s epa r atel y d isc lose d items a nd addi ng b ack depr ec ia t ion a nd a mor t i sa t ion. Underly i ng EBI T DA for the yea r i ncr ea s ed to £107 . 2m due to t he ret u r n to pro t fol low i ng t he tempor a r y closu r e of the Gr oup’ s venues dur ing t he CO V ID - 19 pa ndem ic in t he prior yea r . 2022 £107.2m £(14.2)m £123.8m 2021 2020 K PI: Fi n a nc ia l K PIs Strateg ic pilla r Page Di gital NG R 2 45 St ra teg ic i nve st ment 3 47 K PI: St a k ehold er K PI s Str ategic pilla r Page Perc enta ge of venues c us tomer s t hat pl ay w it h us o nl i ne 1 43 Percent ag e of dig it a l NGR from cr os s-c ha n nel cu st omer s 1 43 Cu stomer nu mber s (dig it a l) 2 45 Cu stomer nu mber s (venues ) 3 47 Net promoter sc ore 3 47 EOS s cor e 4 49 Fema les i n sen ior posit ions 4 49 UK col lea g ues f r om et h nic mi nor it y backg r ound s 4 49 Cont r ibut ion s to go od cau ses 4 49 Gre en hous e ga s em is sion s i ntensi t y 4 49 Our ve stra te gic pil la rs: 1 Pr ov ide a s ea m le ss ex per ience 2 Dr i ve d ig it a l g r o w t h 3 Evol ve ou r venues 4 B e pas sionat e about our col lea g ues 5 Bu i ld sus ta ina ble relat ionships The Rank Group Plc Annual Report 2022 52 Stak eholder KPIs Earnings per share ( ‘EPS’ ) EP S is a key i nd icator of t he Gr oup’ s g ro w t h af ter a l low i ng for a l l cos t s includ i ng sepa r at ely d is clos ed item s. EP S incr e a sed to 14.2p re ec t i n g t he operat i ng pr o t generat ed i n t he yea r . 2022 14.2p (16.5)p 2.5p 2021 2020 Underlying 1,2 EPS Underly i ng E PS is a ke y ind ica tor of the Gr oup’ s g r ow t h befor e a l low i n g for sepa r at ely d i sc lose d items. Underly i ng E PS i ncr ea s ed to 4.3p due to the oper at i ng pr o t genera ted i n t he ye a r. 2022 4.3p (20.3)p 6.7p 2021 2020 Dividend per share Div idend per sha r e is t he sum of dec la red d i v idends i ssue d by t he Compa n y for ever y or d i na r y s ha r e out st a ndi ng. In l ight of t he COV I D - 19 pa ndem ic a nd t he mat er ia l impac t on our bu si ness, t he Group d id not pa y a n i nter i m d iv idend and t he Boa rd w i l l not be propo sin g a n a l yea r div idend for 2021 / 22. 2022 0p 0p 2.80p 2021 2020 1. Under ly ing m ea su r e s ex clud e t he i mpa c t of a mor t is at io n of ac qu i r ed in ta ng ible s; pr o t or lo s s on d is po s a l of bu si ne ss es ; ac qu is it ion a nd di sp os a l co st s i nc lud i ng c ha nge s to de fer re d or con t i ng ent c ons ider a t ion ; im pa i r me nt ch a r ge s; r e ver s a l o f imp a i r me nt ch a r g es; r e st ruc t ur i n g co st s a s p a r t o f a n a n nou nce d pr o g ra mme; r e t r a n sl at ion an d re mea s u re ment of f or eig n c u r r en c y cont ing ent c on side ra t ion ; d is c ont i nue d ope ra t ion s, s ig n i ca nt mat er i a l pr oc ee d s f r om t a x appe a l s a nd t he ta x imp ac t of t he s e, sho ul d t he y o cc u r in t he per io d . Col l ec t i ve ly t hese i tem s a r e r ef er r e d to a s s epa rat el y d is cl os ed ite ms ( ‘ SDIs’ ). 2. Be for e d i sc ont i nue d ope r at ion s. The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 53 Our app roach t o ESG Environment 1 Ener g y use 2 Ca rbon em i ssion s 3 W a st e ma n a gement 4 W ater u se People and Communities 5 Com mun it y in ves t ment 6 Div er sit y and i nclus ion 7 Hea lt h and s a fet y 8 Employ ee eng ag ement 9 T a lent m a na gement 10 Employe e wel lbei ng bene ts 11 Employ ee t r a i n i ng a nd de velopment 12 Pr o duct s a fet y a nd qu a l it y 13 Et hica l ma rket ing 14 Cus tomer wel fa re 15 Cus tomer pr iv ac y a nd dat a se cu r it y 16 Pr ote c t i ng you ng a nd vu l ner able cu s to mer s 17 Sa fer g a mbli n g Gov ernance 18 E xec ut i ve r emuner at ion 19 Pr o cu r ement prac t ices 20 Suppl ie r r el a t io n s 21 Cor pora te g ov er n a nce 22 Ec onom ic per for ma nce 23 Le ader sh ip cap abi lit y 24 Business ethics 25 Reg u l at or y compl ia nce T he fol low i ng r epor t pre sent s a su m ma r y of Ra nk ’s ESG & sa fer ga mbli ng com m it ments a nd approac h. At R a nk we a r e ded ic ate d to ens ur ing we op era te sus ta ina bly a nd we h av e a l ig ned ou r pro ces se s a nd pol icies t o int er na t iona l bes t pr ac t ice a s pa r t of t he st r ate g y t o bui ld a n e ven mor e re si l ient a nd resp onsible business. Ou r more de t a i led su st a i n abil it y d is closu r e is i ncluded i n our m a iden f u l l ye a r Sust a i n abil it y Rep or t (see w w w .r a n k .com) , wh ich i ncludes inde xes a lig ned t o t he Sust a i n abil it y Acc ount i n g St a nda rd s Boa rd (S A SB) a nd t he G loba l Repor t i ng In it i at i ve (GR I ). W e h av e inc luded in b ot h t he A n nua l a nd Sust a i nabi l it y Repor ts, our f ul l d is closu r e i n l i ne w it h t he re com mendat ions of t he T a sk Forc e on Climat e-re lated Financi a l Di scl osures (‘TCF D’) . Materialit y assessment T o en su r e t ha t wha t is mos t mat er ia l to t he busi ness i s bei ng a dd r ess ed i n ou r E SG st r ate g y , a key r s t step wa s conduc t i ng a mater i a l it y as ses sment t hat eng ag ed w it h ou r st a keholder s. Conduct ed du r i ng t he 2020/21 n a ncia l yea r, t his a ss es sment est abl ishe d wh ich is sues a r e mos t imp or t a nt for R a n k , f r om a n i nter na l a nd ex ter na l per spe c t ive. T he re su lt s ha ve sh ape d a nd w i l l c ont inue to i n for m ou r E SG st rate g y . For Ran k ’s 2022 Sustainability Report , pl ea se go t o ww w.rank.com Rele v a nce t o bu si ne ss a nd com mer c ia l g oa ls (i nt er n a l ) Imp or ta nce to s t a ke holde r s (ex ter na l) 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 The Rank Group Plc Annual Report 2022 54 Group strategic pillars ESG foc us are as a nd ob jec tives Customer ex p erience K ey material issues Colleague ex p erience En vironme ntal management ESG stra tegy Du r i ng t he development of our sus t a i nabi l it y st r ate g y , it ha s b een imp or t a nt t o ensu r e t h at ou r objec t i ves r el ate to a nd integ r ate w it h ou r compa n y g r ow t h objec t i ves. O u r a i m a nd obli gat ion to sha reholders i s to be c a r ef u l c us tod ia ns of t hei r i nve st ment a nd t h is r e v iew of m ater ia l iss ues w it h i n ou r oper at ions h a s i mpro ved our appr e ci at ion of mat er ia l r isk s, a id i ng ou r ma nagement a nd mit igat ion of potent i a l i ssues to pr e ser ve va lue in our or ga nis at ion. W e h ave e st abl is hed fou r ke y foc us a rea s w hich fe e d into t he over a r ch i ng G r oup st r ate g ic pil l a r s a nd a r e t her efor e int eg r ate d w it h ou r cor porat e st r at eg y: Customer E x per ience; Colle ag ue E x per ience; E nv ir onment a l M a na gement ; a nd Com mun it y En ga gement. E ach fo c us a r ea h a s u nderly ing obje c t ive s a nd ke y mater ia l issues. We h ave a l so s ta r te d to de ne a ra ng e of as so ci ate d E SG -relat ed ke y p er for m a nce i nd icat ors on w h ich to meas ure our pro g ress . – Pr o v ide a se a m les s a nd t a i lore d ex per ience for cus tomers ac r os s venues a nd on l ine – Dr i ve d ig it a l g r o w t h power e d by ou r pr opr iet a r y te ch nolog y and l i ve pla y c re dent ia ls – Cont i nuously e vol ve ou r venues est a te w it h en ga g i ng pr oposit ions t hat a ppea l to bot h e x i st i ng a nd new cus tomer s – Be pa s sionate ab out t he de velopment and wel lb ein g of our c ol leag ues and t he contr ibut ion we ma ke to ou r com mun it ies – Bu ild su st a inable r elat ionships w it h our c us tomer s b y pro v id i ng t hem w it h sa fe env ir onment s i n wh ich to pl ay – Pr o v ide a sa fe, sec ur e env i r on ment and p er son a l ex per ien c e – Cr eat e a nd ma i nt a i n go od gambling behavio u rs – Pr ot ec t v ul nera ble cu s to mer s – Educa te ou r pe ople to enable a nd encou ra ge posit ive ga m i ng b eha v iou r s – Cr eat e a fa i r, sa fe a nd insp iring w orking env i r on ment – En su r e t ha t our op era t ions min im ise a ny nega t ive impac t s we m a y ha ve – Reduce ou r ca rbon emi ssion s where ver po ss ible – Pr o v ide a n e ssent i a l s oc ia l out let for c us tomers a nd genera te la s t i ng com mu nit y spi r it – Dr i ve com mun it y ac t ion a nd dev elop genui ne soc ia l leg ac y Commun it y engagement – Sa fer g a mbli n g – Pr otect i ng young and v u l nerable c us tomers – Cus tomer pr iv ac y & dat a s ec u r it y – Cus tomer wel fa re – Et hica l ma rket ing – Pr o duct s a fet y & qu a l it y – Le ader sh ip cap abi lit y – T a lent m a na gement – Employ ee t r a i n i ng & dev elopment – Employ ee eng ag ement – En v i r on ment a l ma n ag ement – Com mun it y enga gement – Reg u l at or y compl ia nce – Ec onom ic per for ma nce – Business ethics Dat a po int What t his m ea ns 68% (202 1: 65% ) Employ ee opi n ion sur ve y enga gement sc ore T o del i ver a n e xcit i ng a nd enter t a i n in g ex p er ience, we re qu i r e a work for ce of eng ag ed a nd motiv ate d employe es. 39. 2 t CO 2 e per £ m N GR (2021 : 65. 8 t C O 2 e per £ m NGR Ener g y use (i nten sit y rat io ) W e ha ve enga ge d w it h our ut i l it y supplier s, eet m a na ger s a nd ca rbon consu lt a nts to u nder st a nd w here we c a n m a ke CO 2 sa v i ng s acr os s ou r oper at ions. £0 . 3 m (2 02 1: £0 . 3m) Ch a r it able com mun it y cont r ibut ions T h r ough our v enues, we con nec t w it h a w ide ra n ge of com mun it ies a nd h av e t he abil it y to p osit i vel y impac t soc io- e conom ic sta nda r d s, t h r ough jobs, t a x pay ment s a nd ch a r it able donat ions. The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 55 Our a pp roa ch to E SG Continu ed ESG go v ernance T o en su r e ef fec t ive gov er n a nce of ES G -r ela ted m at ters a nd in it ia t ive s, du r i ng t he yea r we implemented a n upd ate d gov er na nce st r uc t u r e. W h i le t he Boa rd cont i nues to h ave o ver a l l re spon sibil it y for t he G roup’ s E SG st rate g y , re spon sibil it ies ar e deleg ate d to t he E SG & Sa fer G a mbl i ng Com m it tee a s se t out in t he Comm it tee’ s T er ms of Refer ence (for more in for ma t ion, ple a se s ee t he ES G & Sa fer Ga mbl in g Com m it t ee Rep or t on pag e 11 4). Th i s includes o ver se ei ng t he prog r e ss m ade b y t he busi nes s under e ach of our fou r E SG fo cu s a r ea s e st abl ishe d t h is ye a r : Cu stomer E x p er ience, Col lea g ue E x per ience, E nv ir onment a l M a na gement , a nd Com mun it y E nga gement. T he Cha i r of t he Com m it t ee ke eps t he Boa r d appra ised of t he Group’ s ES G per for ma nce a nd a ny a ri si ng is sues. T he G r oup ’s Ris k Com m it t ee a lso ke eps t he Boa r d a nd Aud it Com m it t ee i n for med of ne w or emerg i ng ES G r is k s a s t hey r el ate to t he Gr oup. At ma nag ement level, ou r c r oss - d isc ipli n a r y E SG Ste er i ng C om m it te e is re sp ons ible for r epor t i ng on E S G -rel ate d dat a p oint s a nd in it iat ives u nder eac h of t he four fo c us a r ea s. It s member s i nclude repr es ent at iv es f r om eac h a r ea of t he busi ness t oge t her w it h subje c t ma t ter ex per ts f rom acr o ss t he G r oup. The ste er i ng com m it tee is r e spon sible for pro v id i ng upd ate s to t he E SG & S a fer Ga mblin g Com m it t ee. T he s teer ing com m it te e ens ur e s t ha t it is i n for med of ES G iss ues t h r ough mul t iple cha n nel s inc lud i ng w ebi na rs, publ ica t ions , a nd ongoi n g ad v ic e f r om E SG cor p or at e ad v is or s. A s our a ppro ach to E S G ma n ag ement cont inues to m at u r e, ou r gov er na nce of ESG m at ters w il l be come f u r t her embedded i nto t he busines s. Customers Ou r pu r p ose i s to pr ov ide an enter ta in i ng a nd exc it i ng ex p er ience for our c us tomer s, a nd we a r e cont i nua l l y eng ag i ng a nd li st en in g to fee dback i n or der to del i ver pro duct s a nd ser v ices to be st su it t hem. Concu r r ent l y , work ing i n t he ga mbli ng indu st r y we f ul l y appre c iate t he ass oc iat ed re spon sibil it y to c us tomer s’ welfa re a nd minimisin g the r isk of gamb ling- rela ted ha r m. T hat i s why ou r com m it ment to prot ec t i ng ou r c us tomer s a nd pr omot in g sa fer g a m i ng is i nt r i n sic to ev er y t hi ng we do. Th r ough a dv oc at i ng a n u nder s ta ndi ng of re spon sible play , pr ov idi ng a r a ng e of robus t sa fer ga mbli ng t ool s, ut i l isi ng tec h nolog y to ident i f y ‘ a t r is k ’ c us tomers , a nd cu lt ivat i ng a c u lt u r e of aw a r eness , we a r e well pla ced to f u l l th i s comm it ment . Safer Gambling A s ev er y cus tomer is d i f fer ent , t her e is no one-si ze - ts -a l l appr oach to ident i f yi n g ‘ a t-ris k ’ pla y . W e emplo y a w ide ra nge of sa fer g a mbli ng me a sur e s to ident i f y an y iss ues at t he ea rlies t po ssible oppor t un it y . A ss ess ment and i mpr ovement of t hes e mea sur e s is ong oin g as w e re spond to development s in t ec h nolog y a nd c us tomer under s ta ndi ng, as w el l a s new leg is lat ion a nd re g u lat ion. However, the mos t ef fec t ive mea n s of pre vent i ng h a r m a nd ensu r i ng a p osit ive ex per ien ce is t hr ough empower ing ou r c us tomers. B y pr o v id i ng acce ss to s a fer ga mblin g tool s a nd educa t i ng c ust omers ab out r esp onsible pla y , we a r e eq uippi ng ou r cu stomer s w it h t he under s t a nd i ng to u se ou r pro duc ts a nd ser v ices s a fely . “ W e a r e equi pp ing ou r c us t omer s w it h t he u nde r s t a nd i n g to us e our p r odu c ts a nd ser v ice s s a fel y . ” Lea rn mo re a bo ut our a pp roa ch t o ESG gove rna nc e in ou r ESG & Sa fer G am bl in g Commit tee Report on p ag e 114 Adele Farrel l Director o f Compliance & Responsible Gambling Audit Committee Risk Commit tee ESG Steering Com mitte e Carbon R eduction W o rking Group ESG & SG Com mit tee – Climat e change policy – Climate ch ang e risk Ex ternal ESG specialist Board of Directors The Rank Group Plc Annual Report 2022 56 Safer gambling messaging Com mensu r ate w ith ou r com m it ment to keepi ng ou r c us tomers s a fe, s a fer ga mblin g mess ag i ng i s incor pora ted i nto ou r oper at ions a nd c om mun ic at ion s. O u r ded ica ted r e spon sible ga mbli ng w ebsite, Keep It F u n ( ht t ps:/ / keepit f u n. ra nk .com / ), pro v ides a hub for adv ice and i n for m at ion on sa fer ga mbli ng to ols, a nd t he Keep It Fu n mess a g in g appe a r s on a l l ou r com mun icat ions as s t a nda rd. We ar e ke en t ha t t h is mes sa g i ng is ubiqu itous s o t ha t cu stomer s c a n ea si l y acce ss supp or t should it b e re qu i re d. Wit h i n ou r venues, sa fer ga mbli ng mess ag i ng i s cont i nua l l y v is ible. W e h av e re sou r ces on t he ca si no oors a nd i n bing o ha ll s, d is pla y re spon sible ga mbl in g sig na ge, a nd promote sa fer g a mbl in g on our me d ia sc r een s. W e a lso h ave r e sou rc es in t he back of c es of our venues to ensu re t ha t our employ ee s rem a i n cog n i sa nt of ou r com m it ment to sa fer g a mbl in g a nd a r e able to qu ick l y acce ss s a fer ga mblin g mat er ia ls. Safer gambling tools utilised by Ran k W e a r e cont i nua ll y a sse ssi ng a nd impr ov ing t he sa fer ga mbl in g mea su re s we ha ve i n plac e w it h t he o b jec t ive of minimisin g the r isk of gamb ling- rela ted ha r m. T he prop or t ion of i nd iv idua ls t h at d ispl ay pr oblem ga mbl in g beh av iours is ver y sma ll , a nd we s t r iv e to ident i f y t hese i nd iv idua ls a nd focu s our ef for t s on pro v id i ng t hem w it h the supp or t t hey re qu i re, w h il s t at t he sa me ti me seek t o pro v ide a se a m les s user jou r ne y for ou r cu stomer s. T he appr oac h t h at we t a ke ine v it abl y va r ies by ch a n nel a nd a l so by ju r i sd ic t ion. W e ut il is e da ta mo dels t o bet ter identi f y ‘at -r i sk ’ pl ay er s, ha ve 24 / 7 li ve mon itor i ng for ou r on l ine br a nd s, a nd a r e pro g re ssi ng ou r abi l it y to ha ve a re a l-t i me si ngle cu stomer v ie w . Safer gambling tools available to cu stomers In a dd it ion to t he to ols t h at we deplo y to identi f y t hos e cu stomer s who m ay r e qu ir e suppor t and w it h whom to inter ac t when appropr iate, we a l so pr o v ide tool s to help our c us tomer s rem a i n i n cont r ol of t heir pla y a nd r educe t he r i sk of ha rm . A l l t he in for mat ion, ad v ice, a nd si g npos t i ng for suppor t is ava il able to cu stomer s on our de d icat ed s a fer ga mbl i ng websit e, Keep It F u n. Cus tomer s t hems elve s ca n apply ma ch i ne loss a nd t ime li m it s at slot s a nd elect r on ic rou let te mac hi nes i n ou r G ro s venor venues, B3 g a m i ng mac h i nes i n t he Mecc a es t ate, a nd depo sit a ler ts on Mecc a Ma x elec t r on ic touch sc re en t ablet s. W hen a c us tomer t r ig ger s a n a ler t or re aches a s el f-set mac hi ne sp end, a n i nter ac t ion is t r igger ed a nd a noti c at ion is sent to a ded icate d mobile ha nd se t ca r r ied b y t he rele va nt venue ’s ma na ger. For cus tomer s t ha t a r e concer ne d t h at t he y ha ve a pr oblem wit h ga mbli ng a nd feel t ha t t he tools av a i la ble ar e not suf cient to pr otec t t hem, t hey c a n c hoos e to sel f-e xclude. Ou r Gr o sv enor Ca si nos, Mecc a Bi ngo c lubs a nd onl i ne site s a l l of fer t he opt ion to sel f- exclude, wh ich i s a n enf orce d br ea k f rom ga mbl i ng. T o suppor t a cu stomer t h at h as s el f-exc luded, t heir st at u s w i l l be up da ted aut omat ic a l l y on our C R M s y st em wh ich w i l l suppr ess a l l ma rket i ng c ommu n icat ions t o t h at cu stomer a nd t he proce ss of r e -join i ng following a self - exclusi on is also ar duo us by desig n. Employ ee training T o en su r e t hese t ool s a r e us ed to b es t ef fec t , it is i mper at ive our employ ee s a r e equ ippe d w it h t he sk il l s a nd under s ta ndi ng t o suppor t c u stomer s a nd inter vene when nec ess a r y . Ever y employe e must complete m a nd ator y sa fer g a mbl in g t ra in i ng, wit h prog r es s bei ng mon itor ed t h r ough our on l i ne plat for m. I n t he pa st yea r we ha ve i nves te d sig n i ca ntl y in add it iona l sa fer ga mblin g t r a i ni n g for our col lea g ues. I n pa r t nersh ip w it h Ga mC a r e, t he lead i ng c ha r it y i n ou r se c tor for suppor t wit h problem ga mbli ng, we a r e del iver i ng f ur t her t ra i n i ng to emplo yee s to bu ild upon t heir ex i st i n g k nowle dg e a nd sk i l l s as t o how to i nter ac t w it h c u stomer s a nd re cog n i se c ha n ges i n pa t ter ns of pla y . Pre venting underage play and protecting vulnerable cus tomers At R a n k , we pa y pa r t icu l a r at tent ion to pr otec t ing ou r you nger a nd more v u l nerable c us tomers f rom bei ng h a r me d or ex ploited b y ga mbl i ng i n accor d a nce w it h t he Ga mbli ng C om m iss ion for Gr eat Br it a i n’ s ( ‘Com mi ssion’) Licence Cond it ions a nd Codes of P r ac t ice. Reco g n isi ng t hat cu st omers u nder -25 a r e more v ul nerable t h a n t ho se i n h igher age br ac ket s, we f ac tor i n t he ag e of our cu stomer s a s pa r t of our a f ford abi l it y model, a nd appl y autom at ic depo sit l im it s for a l l c us tomers u nder -25. W e employ a r a ng e of mea su re s to pr ev ent under a ge pla y on l i ne a nd in ou r venues. For exa mple, our pol ic y of re g is t ra t ion at a l l G ro s venor venues li m it s t he r i sk of under -1 8 s enter i ng t he premi se s, a nd we use t hi r d-pa r t y c r ed it r efer ence d at aba se s to chec k a nd va lida te c us tomer re g ist rat ion det a i l s onl i ne. W e do not m a rke t our pro duct s a nd faci l it ies i n such a wa y a s to appe a l to c h i ld ren or y oun g pe ople. A s a mea n s of pro v id i ng r ea son able as su r a nce t h at we h ave ef fec t ive p ol icies a nd pro ce du re s to pr ev ent under a ge ga mbl in g, Ra n k ’s casi nos a nd bingo v enues pa r tic ipate i n col lec t ive tes t pu rc ha si ng prog r a m me s org a n is ed b y t he r esp ec t ive t rade asso ciat ions. Custom er p rivacy an d dat a se curit y At R a n k we t a k e re spon sibil it y for prot ec t i ng ou r c us tomer s’ priv ac y a nd keepi ng t heir da ta s ec u r e when t he y pla y w it h u s. W e h ave a m at u r e appr oac h to dat a s ec u r it y; our pr ior it y is to pr ev ent bre ach or los s of dat a a nd to ensu re d at a is us ed i n a fa ir a nd t r a n spa r ent m a n ner . T h is i s ma n ag ed v ia appropr iate to oli ng a nd pro ce sse s, w it h broad a lig n ment to ISO 2 7001 a nd en ha nced r equ i r ements of ot her r eg u la tor s inc ludi ng t he Comm is sion, t he In for m at ion Com m is sioner’ s Of ce a nd PC I-DS S r eg u la t ions. We em plo y a w ide ra nge of prot ec t ion mea su r es, a nd to ensu r e t he ef fe c t iv eness of ou r s ys tem s we ha ve r eg u l a r aud its a nd ass es sments. A l l employ ees a re r eq ui r ed t o abide by pol icies a nd pr oc edu r es t hat r elat e to t he ke y da ta pr ot ec t ion pr i nciples a nd in for mat ion sec u r it y pr otoc ols a nd mus t complete ma ndator y t r a i n in g in r e spe c t of dat a a nd i n for m at ion se c ur it y . Lea rn mo re a bo ut our a pp roa ch t o Saf er Gambling in our 20 22 Sustainability Report at ww w.rank.com The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 57 Our a pp roa ch to E SG Continu ed C us t omer s er v ice In or der to c ont i nua l l y d r iv e impr o vement s i n ou r c us tomer ex per ience, we nee d to u nder st a nd w hat it is ou r c us tomers a re look ing for w hen t hey v isit us i n venue or onl i ne. T h r ough a va r iet y of ch a n nels, we eng a ge w it h our c us tomer s to e st abl i sh t hei r pref erenc es, g at her feed back , a nd re solv e a ny i ssue s t h at ma y a r ise. Above: Mecca Lut o n The Rank Group Plc Annual Report 2022 58 Product safety and quality For Ra n k , ou r foc u s on pro duct s a fet y a nd qua l it y mea n s ens ur ing f a i r nes s of pla y . Cus tomer s a r e not goi ng to pl ay on mac hi nes i f t hey a r e not fa i r. F a i l i ng to ensu r e pr oduc t sa fe t y a nd qua l it y ca n a ls o ha ve r eg u la tor y cons equence s. Ra nk is re qu i re d to s our ce it s ga mbli ng eq uipment a nd sof t wa re for it s UK-base d ca s inos , bin go venues a nd on li ne site s f r om compa n ies licen se d b y t he Com m is sion. W e en su r e t ha t our ph ysic a l a nd d ig it a l ga mes a r e compli a nt w it h reg u l ator y re qu i r ements includ i ng, but not li m ite d to, spe ed of pl ay , ra ndom n u mber g enerat ion, produc t per for ma nce, a nd r et ur n-to -pla yer r ate. Ethical mark eting W hen ad ver ti si ng ou r pro duc ts , our s ole intent ion is to reac h ou r int ended aud ience, to enable t hos e who a r e per mit ted to ga mble w it h u s to k now a bout ou r pro duc ts a nd of fer s a nd dec ide i f t hey w ish to pl ay w it h u s. W e con sider t he appr opr iat e level of ma rk et i ng to del i ver to ou r ex ist i ng cu stomer s a nd t he mea ns by w h ich it is del iver e d, t a k ing a t a ilore d appr oac h rat her th a n pr oduc in g a h igh volu me of com mun icat ions. W e a l so fol low s t r ic t pro ces se s to pr ev ent ma rk et i ng com mun icat ions fr om b ein g re cei ved by v ul ner able gr oups or per s ons w ho hav e sel f-e xcluded. We ar e con st a nt ly ev a lua t i ng t he content of our me ssa g i ng, ensu r i ng t ha t it a l ig n s w it h ou r v a lues a s a busi nes s a nd our a ppro ach to s a fer ga mblin g . Health and safety W h i le phys ica l hea lt h a nd sa fe t y r isk i s not t he most m ater i a l is sue i n our w ider indu st r y , we t r ea t t he hea lt h a nd sa fe t y of our c us tomer s a nd col lea g ues a s h igh pr ior it y and a re com m it t ed to a ch iev ing t he h ighest le vel of st a nda r ds a nd ongoing impr ov ement acr os s t he Gr oup. T he G enera l Ma na ger s of eac h of our venues a r e re spon sible for ensu r i ng t h at t heir r e spe c t ive v enue ’s operat ions me et t he re qu isit e st a nd a r d s a nd a che ck a nd ba l a nce is pr o v ided i n t he U K b y t he ded ica ted he a lt h a nd sa fet y tea m conduct i ng r e g u la r hea lt h a nd sa fet y as se ssment s for eac h venue. Resu lt s a r e ci r cu l ate d to t he venues leader s h ip tea m , complet ion of res u lt i ng ac t ion s is monitor e d and a n y sign i ca nt is sues a r e esc a l ate d a nd fol lowe d up by m a n ag ement tea m s, w it h t he as sis t a nce of spe c ia l i st ex ter na l con su lt a nt s wher e nee ded . Colleagues In or der to del i ver a n exc it i ng a nd enter t a in i ng ex p er ience, we r equ i r e a work for ce of eng ag ed , mot iv ate d a nd sk i l led employ ee s. A s such we a r e com m it te d to pr ov idi ng t r a i n i ng a nd suppor t to our col lea g ues, a nd th at t he y a r e g iven t he oppor t u n it y to develop a nd prog r e ss t h r ough t he Group wh i l st t hems elve s ex per iencing a s a fe a nd f u n work i ng en v i r onment . Leadership capability Ou r B oa r d a nd E xe c ut ive C om m it t ee members a re r equ i r ed t o lead f r om t he f r ont to d r i ve t he busi nes s for wa r d s a nd del iver on t he long-ter m st r at eg y . We mak e sur e t ha t a l l ou r leader s h ave t he appropr ia te k nowle dg e a nd sk i l l s to del iver a g a i ns t Ra nk ’s object ives a nd we employ s ucces sion pla n n i ng to en su r e t he cont i nuit y of capa bil it y i n ke y roles. We offer e xec ut iv e coac hi ng a nd leader sh ip cour s es, a nd succes sion pla n s a r e ma i nt a i ned for t he Boa rd, E xec ut ive C om m it te e a nd ot her sen ior leader sh ip pos it ions. Emplo yee training and dev elopment Mandator y training A l l employe e s mus t complet e compl i a nce t ra in i ng to m a ke su r e t h at e ver y ind i v idua l in t he Group is a wa re of t he ex pe c t at ion s for profe ssiona l beha v iour a nd we ma i nt a i n t he h ighes t st a nd a r d s in busi ness e t h ics. T his i ncludes G DPR, a nt i-money lau nder i ng, a nt i-brib er y , a nd hea lt h and s a fet y t r a i n in g, as wel l a s ot her t ra in i ng spe ci c for t he d if ferent a re a s of t he busi nes s, wh ich is pr o v ided t hr ough our e -lea r ni ng pl at for m or i n-per s on. Col lea g ues a r e a l so m ade a wa r e, on a n ongoi ng ba si s, of Spea k ing Up, t he Gr oup’ s wh i st leblow in g pr og ra mme. T o es t abl ish st r ong a wa reness ac r os s t he Gr oup, ever y ind i v idua l a t R a n k must a lso complete ma nd ator y sa fer ga mbli ng t ra i n in g, wit h prog r e ss b ein g monitor e d t h r ough ou r on l i ne pla t for m. In r el at ion to busi nes s et hics, we endeav our t o conduct ou r bus ine ss w it h inte g r it y a nd adopt v a lues a nd s ta nda r d s desig ne d to help gu ide ou r col lea g ues i n t heir c onduct a nd bu si ness r ela t ionsh ips. In a dd it ion to t r a i n in g, Ra n k h as i n pl ace pol icies, pr oc edu r es, m a n ag ement sy s tems a nd inter n a l cont r ol s to pr ev ent br iber y a nd cor r uption o ccu r ri ng. T hi s includes a r e qu ir ement t h at a l l c ol leag ues a nd ot her i nd iv idua ls work ing for us ad her e to our g i f ts a nd hospita l it y pol ic y , wh ich r equ i r es t hem to c onsider t he appropr iatenes s of t he gi v i ng a nd re ceiv ing of g i f ts a nd hospit a lit y a nd is rei n for ce d by r atc het i ng appr o va l le vel s. Recru itment and de velopment opportunities In or der to a t t r ac t a nd r et a in t he mos t ta lented ind i v idua ls we a r e foc u sin g on st r ea ml i n i ng ou r re cr uit ment pr oc ess a nd ma k ing s ur e we a re h ir ing t he most qua l i ed i nd iv idua ls f rom a d iver s e pool of ca ndida tes a s q uick ly a s pos sible. W e a r e cu r r ent l y de velopin g our ne w employe e va lue pr oposit ion, W ork . Wi n. G r ow ., wh ich foc us es on c re at i ng e xcit ing oppor tu n it ies for ou r employe es, a nd at t rac t i ng t a lente d, ener ge t ic people to joi n our globa l te a m. W e of fer a hos t of t r a i n in g oppor tu n it ies includ i ng a n e -lea rn i ng pl at for m th at holds over 70 0 cou r ses , a nd plac e hi gh potent i a l i nd iv idua ls on succe ssion pla ns. The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 59 Our a pp roa ch to E SG Continu ed E mplo y e e eng a g ement a nd we l lb e i n g Ou r i ndus t r y is a t ru l y exc it i ng one i n wh ich to oper at e. T h is r es onat es ac ro ss t he Gr oup, w it h col le ag ues va lu i ng t he int ere st ing n at u r e of our bu si nes s a nd t he sk i l le d r oles we pr ov ide. O ur b usi nes s st r at eg y is a l so wel l c om mun ica te d to ens u r e t hat e ve r yone u nder s t a nds a nd is work ing t owa rd s t he sa me goa l s. Ra nk ’ s cu lt ur e is de ned by it s established values – ser v ice , tea mwor k , a mbit ion, re sp onsibi l it y a nd solut ions (STA R S) – a nd its pu r p ose. F rom t he poi nt of re cr uit ment , a l l c ol lea g ues a r e made a wa r e of ou r va lues a nd t hese a re inc or p or ate d i nt o ma ny dev elopment in it iat i ves to en su r e t he y a r e at t he hear t of a succe ssf ul c a r eer a t Ra nk . T o ens ur e our wor k for ce r ema in s con nec te d a nd mot iv ate d, we op era te a numb er of in it iat i ves to f ac i l it ate eng a gement w it h col lea g ues, t o a l low f ee dback a nd t he a r tic u la t ion of a ny is sues, a nd for busi ness com mu n ica t ion s f r om t he E xec ut ive. W e h ave a lso put i ncr e a sed f oc us upon menta l hea lt h a nd wellbei ng t hi s yea r , pro v id i ng a nu mber of re sou r ce s a nd event s for c ol lea g ues to ac ce ss a nd a t tend , to ens ur e t hat ev er yone is get ti ng t he supp or t t he y ne ed . Above: Mecca Lut o n The Rank Group Plc Annual Report 2022 60 Male:female split of to tal Group Gender pay gap % of colleagues by coun t ry % of UK e mp loyees ar e White B riti sh % of co lle ag ues by a ge b and % of em ployees w ho ar e par t-tim e Ma le Fema le Boa r d 5 3 Sen ior ma n a gement 51 19 W ho le G r o up 3,952 3,618 W h ite Br iti sh 6 8% Ot her 32% <30 30% 30 -5 0 4 6% >50 2 4% Pa r t-ti me 39% Fu l l-t i me 61% Equality , diversity and inclusion Cr eat ing a work ing en v i r onment t h at embod ies e qua lit y , d iver sit y a nd i nclusion (‘E D& I’ ) is i ncr ed ibly impor ta nt at Ra n k . W e h ave fou r s ta te d a i ms a ga i n st w hich we ha ve del iv ere d a number of i n it ia t ive s in t he past y ea r. 1. Crea te a n i nclusive env i ron ment which f acilitates our colleagues to develop, be cre at ive a nd del iver except ion a l s er v ic e – W e h ave a v a r iet y of fa mi ly s uppor t pol icies a nd t his y ea r l au nched ou r Menopause Pol ic y wh ich i ncludes t he of fer of n a nci a l suppor t for t reat ment. – W e a r e cont i nua ll y a sse ssi ng ho w we ca n i mpr ove ou r appr oac h to en su re a ll our c olle ag ue s feel suppor ted a nd hear d in t heir role s a nd we w i l l be lo ok i ng to publis h a new t h r e e-y ea r E D& I s t ra teg y befor e t he end of H1 2022/ 23. 2. E nsu re t here is a d iver se work forc e acro ss a ll g rade s – W e h ave s ev era l in it ia t ive s i n place to suppor t under -repr es ente d g roups, in pa r t ic ul a r women i n sen ior po sit ions, a nd to suppor t t hem in de velopi ng t heir c a r e er s. – Ou r a n a l ysi s of da t a a nd fee dback is es sent i a l to t r ack pr og r e ss, ident i f y a r ea s for i mpro vement a nd mea su re t he impac t of i n it ia t ive s we h ave del i ver ed . 3. M a ke i nclusion a nd d iver sit y i nteg ra l to how we do busi nes s – T o en su r e t ha t a l l col le ag ues h av e a voice, we f u r ther embe dde d our si x ED &I c ol leag ue n e t work gr oups: W el lbei ng ; W omen; R ac ia l E qu a l it y a nd Div er sit y; LGBT +; Fam i l ies; a nd genera l ED& I (i ncor p ora t i ng r el ig ious c e le b r a t i o n s). – A long side t h is, we c r ea ted a c a lend a r of t wel ve E D& I e vent s (t wo for ea ch g roup) th at a l ig ne d w it h n at iona l or inter nat iona l event s a nd w i l l b e ref r e shed on a n a nnua l b as is. 4. D emonst r ate leader sh ip on inc lusio n a nd d i ver sit y , i nt er na ll y a nd exter n a l ly , po sit ion in g Ra n k as a n ‘ employer of choice ’ – W e suppor t our c olle ag ues wit h tr a i n i ng a nd dev elopment and oper at e a High Per f or m i ng Sp ons or sh ip P r og ra m me (‘H PSP ’ ) t ha t suppor ts t he de velopment of fema le col lea g ues. – W e a r e look ing to onbo a r d a n ex ter na l plat f or m t h at w i l l en able high per for mi ng col le ag ues , inc ludi ng t hose on t he HP SP , to acc ess w orld- cl as s coac hi ng a nd mentori ng s er v ices. UK 87% Spa i n 7% Mau r it ius 4% Sout h A f r ica 1% Gib ra lt a r 1% Ma lt a <1% Isr ael <1% Mea n 30.3% Med ia n 30.0% A t a glance The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 61 Our a pp roa ch to E SG Continu ed O u r a ppr oac h A s a Gr oup, we re cog n i se t he impor t a nce of re duci ng ou r env i r on menta l impac t a nd ensu r i n g t ha t we a r e oper at i ng a s sus ta ina bly a s po ssible. A s pa r t of our ES G st rateg y , we a r e c ur rent l y map pin g out our env ir on menta l comm it ment s, as se ssi ng w here c a rb on re duct ion mea sur e s ca n be implemented a nd how our venues ca n oper at e more ef c ientl y . W e a r e s t a r ti ng t o incor porat e E SG consider at ions i nto ou r due d i l igence pro ces se s, b y re ques t i ng env ir on menta l pol icies f r om suppl iers a nd includi ng in ou r Re ques ts for P r opo sa l a re qu i rement to supp or t t he Group’ s env i r on menta l a gend a . Above: Support Ofce, Maidenhead The Rank Group Plc Annual Report 2022 62 Climate change and net zero planning In l i ne w it h t he ambit ions s et out i n t he Pa r i s A g re ement a nd com m it ments s et out at t he r ecent C OP26 U N C l im ate C on fer ence, Ra nk is c onsider i ng it s r oa d map t owa rd s a ca r bon net z er o f ut u r e. In t a ndem w ith ou r ener g y usa ge a nd po wer cap acit y r ev iew , we w i l l b e developi ng ou r ca rbon re duc t ion st r ate g ies w it h ou r oper at ion a l pa r t ner s a nd w i l l upda te st a keholders on our pr og r es s. T h is w i l l b e for m a l is ed t hr ough a net z ero f ra mework a nd t a r ge t s a nd cr iter ia t h at inv olve s ach ie v i ng ac t u a l em is sions re duct ion and neut r a l is at ion of a ny r e sidua l ca rbon f r om ou r op er at ions. T ask Forc e on Climate-related Financial Disclosures ( ‘ TC FD’ ) Com mensu r ate w ith t he req ui r ement under L is t i ng R ule ( L R 9.8.6) rega rd i ng d isc losu r es to t he T a sk For ce on C l im ate - rel ate d Fi na ncia l D is closu r es, R a nk ha s develop ed it s r epor t in g f r a mew ork to t a ke into a ccou nt t he TC F D r ecom menda t ions. W e w i l l a lig n ou r per for ma nce a nd st ra teg y rep or ti ng to t he four pi l la r s of t he TCF D: gov er na nce, st r ateg y , r isk m a n ag ement, a nd met r ics a nd ta r ge t s. Gov ernance Board oversight T o en able over sight a nd gover n a nce of cl im ate -r ela ted i ssues , it is i mpor ta nt t ha t such con siderat ions ar e m ade, a nd d isc u ssions h ad, b y R a n k ’ s leader sh ip. A s such, bo t h t he B oa r d a nd t he E SG & S a fer Ga mblin g Com m it t ee a re i nf or med of cl i mat e-r ela te d iss ues. T he Aud it Com m it t ee ha s a l so b een m ade a wa r e of t he cl i m ate cha nge accou nt i ng c onsider at ion in t he prep a r at ion of t h is ye a r’s An nua l Repor t a nd Accou nt s. W h i le t he G roup r ec og n ise s cl i mat e ch a nge a s a r ele va nt r isk a nd /or oppor tu n it y for t he busi ness , t ha t r isk i s pre sent l y con sidere d low to t he busines s over t he short , med iu m a nd long ter m. T he ES G & Sa fer Ga mbl in g Com m it tee ha s re spon sibil it y for t he ov er sight of cl i mat e cha nge pol ic y , st rate g y and op erat iona l over sight , a nd ident i f y in g cl i ma te -rel ate d r isk s a nd contr ibuti ng t hose to t he Aud it Com m it t ee for r e v iew. The Aud it Com m it t ee holds r esp onsibi l it y for ass es si ng t he inte g r it y of t he ES G & Sa fer Ga mbl in g Comm it tee’ s cl i mate-relate d r isk process a nd ensu r i n g t ha t it is i n l ine w ith r isk ma n ag ement pro ces s, a s wel l a s cl i m ate cha nge disclosure. En vi ronment Energy usage T he most sig n i ca nt ar ea of cont r ibut ion to t he G roup’ s ca r bon fo ot pr i nt is ou r venues’ en er g y usa ge. We ar e work ing w it h ou r energ y con su lt a nt s to det er m i ne where r e duct ion o pp or tu n it ies l ie a nd once t he as se ssment is c omplete we w i l l set a ta rge t to ree c t t hes e ndi n gs. Power ca pa cit y review Ou r ener g y c onsu lt a nts, Con su lt u s, a r e conduct ing a po wer c apac it y re v iew of our pr oper t ies. Of t he 4 1 s upplies appr o ved for capa cit y re duc t ions, 2 3 ha ve be en pro ces se d, 8 a re i n a queue to be pro cessed , and 10 require re-analysis fol low i ng con r mat ion of ex is t i ng det a i l s. Once t he pr oje c t ha s concluded , C onsu lt u s w i l l is sue a for ma l rev iew to det a i l succes sf u l pr ice r ed uct ion b y venue. W aste and w ater management Ra nk is w ork i ng w ith it s suppl ier s a nd pro v ider s to a ss es s our u se of r es our ce s a nd ev a lua te wher e impr ov ements c a n be m a de. W e a r e eng ag ed i n ea rly s ta ge conver s at ions w it h our wa ter pr ov ider , SES , as wel l a s a water ef c ienc y busi ness, w it h t he o b jec t i ve of r educi ng w ater consu mpt ion and su r f ace wa ter i mpac t on our bu sine ss. W e h ave a sk ed ou r wa s te pr ov ider, Bif f a, to r ev isit our Waste & R ec ycli ng G u ide a nd updat e it to ree c t our cu r r ent wa s te consu mpt ion and subse quent l y out l i ne appropr iate mea su r es for wa s te r ed uct ion. Bif fa w i l l be c r eat ing on site c ol lat era l to in st ruc t employe es on w a ste s eg r ega t ion a nd t hereb y re duce wa ste to la nd ll , a nd we a r e con sider in g f u r ther mea su r es to ra i se a wa reness for r e c yc l in g a nd be st prac t ice i n w as te m a na gement . T ravel and eet management T he Gr oup is looki n g at spec i c a r ea s where it c a n r e duce its en v i r onment a l impac t f rom t r avel a nd is work i ng w ith consu lt a nts to con sider a ra nge of ca r bon re duct ion init iat ive s. A s a r esu lt of t he pa ndem ic, remot e work i ng h a s ch a ng ed our c ommut i ng pr ac t ice s. W e w i l l b e re v ie w i ng ou r t r av el pol ic y i n order t o ensu r e it is t for pur p ose, a nd we a r e a ls o re v ie w i ng opt ions to elec t r if y our ee t. Fu r ther, the G r oup ’s Ri sk Com m it t ee pl ay s a ke y role i n t he ma nag ement of ri sk s to t he busi nes s. Fu r ther de ta il on com m it tee ac t iv it y c a n be fou nd w it hi n t he G over na nce Rep or t s ec t ion o f t hi s rep or t. T he Boa rd is k ept appr a is ed of pr og r es s on a l l cl i m ate -rel ate d ma t t ers v ia t he Ch a i r of ES G & Sa fer Ga mbl in g Com m it t ee, a nd the Com m it t ee i s in for med by t he C a rb on Re d uc t ion Work in g G r oup. T he Gr oup’ s a s se ssment of cl i mat e -rel ate d r isk s a nd oppor t u n it ies c ont inues to de velop, a nd t he Bo a r d ’ s con sidera t ion of such iss ues in F Y 2022 ree c ts bo t h t h is a nd the cu r r ent u nder st a nd i ng of c l im ate c ha n ge as b ei ng of low r i sk to R a n k at pr es ent. At t he d i r ec t ion o f t he Boa r d, t he ESG & Sa fer G a mbl i ng a nd Aud it C omm it tee s were b ot h t a ske d w it h developi ng a be t ter appreciat ion fo r cl i mate-relate d ri sk and its p otent i a l i mpac t s upon t he busi nes s. T he ES G & Sa fer Ga mbl in g Com m it tee re ceiv ed a pr es ent at ion f r om a n E SG spe ci a l is t a nd r ecei ves g uida nc e f r om ad v i sor s on a n ongoi n g ba si s. T he Boa rd a l so c onsider ed c l im ate -r elat ed iss ues when re v iew in g a nd sh apin g t he ESG st r ateg y . T hi s st rateg y was developed by t he ESG & S a fer G a mbli ng C om m it t ee, in for med by sen ior leader s h ip acr os s t he busi ness , a nd endors ed b y t he Boa r d. Mater ia l i n a n nua l budg et i ng i s t he re g u la r i nv est ment into our r e a l es t ate, a nd cu r r ent con sidera t ions i nclude in su la t ion, l ight i ng, a nd heat i ng, vent i lat ion a nd a i r c ond it ion i ng ( H V AC ) cont r ol . Cl i ma te -rel ate d is sues w i l l cont i nue to be a consider at ion for t he B oa r d i n re v ie w i ng a nd g u idi ng p er for ma nce objec t ives, monitor ing a nd p er for m a nce. A s t he a ss ess ment of cli m ate -rel at ed is sues mat ur es a nd integrate s more deep l y into t he st r at eg ic a nd r isk a s ses sment pro ce ss es of t he busi ness , t he busi nes s ma y i nteg r ate g re ater c onsider at ion of cl i mat e mat ter s into o t her dec ision-ma k ing pr oc es ses. The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 63 Management o versight Cl i ma te ch a ng e ha s t he p otent ia l to impac t t he Gr oup in a m y r iad of wa ys. T herefore, con sider at ion s f r om mu lt iple seg ment s of t he busi ness mus t fee d i nto R a n k ’s as se ssment of cl i ma te -rel ate d r is k s a nd oppor tu n it ies. For t he Group’ s na nces, cl i mat e-r ela te d r isk h a s t he pot ent ia l t o impac t n a nci a l per form a nce a nd cos t ba se; r ega rd i ng i nve stor r el at ions, it i s mat er ia l i n t he ma na gement of Ra nk ’ s capit a l m a rke ts pr o le a nd awa r eness of emerg i ng c apit a l ma rket r i sk s a nd re qu i rement s; for our P r o cu r ement T e a m, a ke y consider at ion is S cop e 3 emi ssion s ma n ag ement in or der to mee t net z ero a mbit ions; a nd t he ma nag ement of our prop er t y por t fol io t h rou gh impr ov ing ef c iencies and dec a rb on isa t ion is m ater ia l in r e duci ng Sc ope 1 a nd 2 em i ssions. Cl i ma te ch a ng e is pr es ent ly c onsider ed a n emerg i ng r isk for t he Gr oup. T o r ema in abreas t of climate -related mat ters, ma n ag ement a re i n for me d b y enga g i ng w it h a ll of t he G r oup ’s corp ora te ad v i sor s ( ES G , br ok i ng, lega l a nd acc ount i ng ) t h r ough webin a r s, publ icat ions , 1- 2-1 t r a i n i ng s es sion s a nd on goi ng d isc us sion s. In a dd it ion to ad v i sor enga gement , ma n ag ement monitor cl i m ate -r elat ed iss ues a nd t hei r mat er ia lit y on a n ongoi ng ba sis. R i sk Com m it tee mee t i ngs (wh ich a ls o consider n a nci a l r isk s) ar e held month l y; t he r isk a nd audit f u nct ions work ver y closel y tog et her ; a nd t he r i sk r eg is ter s a r e re v ie wed mont h l y b y ma nagement a nd on a cons t a nt ba sis b y ea ch bus ines s u n it. Ma n ag ement in for m s t he Bo a r d of cl i mat e-r ela te d r isk s a nd oppor t u n it ies v ia t w o ke y ch a n nels. Ma nag ement per son nel sub m it cli mate -related in for mat ion via boa r d a nd comm it tee pap er s; t h is ye a r, paper s wer e i ssued t o t he Aud it Com m it tee det a i l i ng t he T CF D r ec ommend at ions , cl i mat e ch a nge a ccou nt i ng con siderat ions. Ma n ag ement a ls o at t end Boa rd a nd B oa r d Com m it t ee mee t i ng s by i nv itat ion. Strategy T he Gr oup de nes t he shor t , med ium, a nd long-ter m t i me hori z ons a s t he fol low ing: – Shor t – pr es ent to 2030 – Med ium – 2 030 to 20 4 0 – Long – 2 04 0 T he na nc ia l i mpac t of di f fer ing level s of ri sk a r e de ned a s follo ws: – Lo w – ma n a ged a s p a r t of ex is t i ng processes – Med ium – a dd it iona l mit ig at ion or inve st m ent required – High – sig n i c a nt inv es t ment re qu i re d a nd con sidere d ma ter i a l r isk t o t he busi nes s Ra nk t a ke s i nto cons iderat ion t he u sef u l li fe of t he or ga nis at ion’ s a ss et s or in f r a st r uct u r e a nd t he fact t hat cl i ma te - rel ate d is sues of t en ma n i fe st t hem sel ves over t he m e d iu m a nd longer ter ms. Du r i ng t he yea r, Ra n k ’ s a ccou nt i ng te a m conducte d a n a s ses sment of cl i mat e-r el ate d mat ter s t ha t ma y i mpac t t he Gr oup’ s na ncia l st at ements. A sum m a r y of each is i ncluded belo w: Intangible assets, property , plant and equipment, leased assets Cl i ma te -rel ate d r is k s ma y ha ve a subst a nt i ve na ncia l or st r ate g ic impac t of t he Gr oup’ s bu si ness, a f fec t i ng t he usef u l li ves a nd residua l va lues of i nta ngible a nd ta ngible a ss et s. It cou ld be de ter m i ned a f t er a sse ssment t h at u sef u l l iv es m ay need t o be r educe d a nd depr ec iat ion and a mort is ation accel erated. Impairment of asset s Impa ir ment i ndic ator s shou ld inc lude sig n i ca nt cha ng es in t he te ch nolog ica l, ma rk et , ec onomic or lega l env ir on ment t ha t ha ve a n ad ver s e of t he Gr oup. Inc re a se d aw a r eness of t he con se quences of env i r onment a l c ha n ge is t ri gger ing re g u lat or y act ion, w h ich is a f fec t i ng st a keholder s’ per spe c t ive s. Pro visi ons A s t he Gr oup t a ke s ac t ion to add r es s t he cons equence s of cl i mat e cha nge, t hes e ac t ions ma y r es ul t in t he reco g n it ion of new l iabi l it ies or, where t he c r iter i a for re cog n it ion a r e not met , new cont ingent li abi l it ies ma y h ave t o be d i sclo sed . Fair value measurement T he Gr oup should b e ensu r ing t h at r elev a nt fa i r va lue measu r ements appr opr ia tel y consider t he r elev a nt cl i m ate -r elat ed r i sk fac tor s. C l im ate c ha nge ca n have a ta ngible ef fe c t on a sse t s a nd l iabi l it ies now or in t he fut u r e (e .g. ri si ng wa ter level s, ch a ng i ng w eat her pat ter n s, inc re a se d pol lut ion level s etc.) . Summary ndings T he Gr oup cons t a nt l y mon itor s lat es t gover nment legislat ion on cl im ate-related mat ter s. A s at ye a r end, t here is no leg isl at ion in plac e t hat w i l l n a nci a l l y impac t t he Group. T he Gr oup w i l l ad just t he ke y a ssu mpt ions u se d i n va lue i n use ca lc u la t ions a nd s ensit i v it y to ch a ng es i n as su mpt ions s hould a ch a ng e be r eq ui r e d. Climate-related risk s and opportunities T he spec i c cl i ma te -rel ate d issue s t hat cou ld have a mat er ia l n a nci a l impac t on Ra nk ha ve be en identi e d for each t i me hori z on a nd i ncluded i n t he R isk Table on pag e 65. Cl i m ate -rel ate d phy sica l ri sk s, consider ed w it h refer ence to t heir pot ent ia l impac t on t he na nc ia l p er for m a nce of t he Gr oup a s a whole, a re b ei ng i nteg r ate d into ou r bu sine ss s t ra teg y t h r ough t he mit igat ion act iv it y ow i ng f rom t he r is k ma n ag ement pro ces se s monitor e d by t he R isk C om m it te e. Some r is k s a nd oppor t un it ie s a r e consider ed b y ge og r aphy . F loo d r i sk , for ex a mple, is of g r eater r isk i n t he UK , a nd we a l so con sider la w dependent on U K or EU ju r is d ict ion. In ter m s of oppor tu n it y , t he acce ss to r ene wa l ener g y is g re ater in Spa in t h a n i n t he U K. Cl i ma te ch a ng e doe s a l so pr esent s ome oppor tu n it ies. O r ga n i sat ion s t ha t sh i f t t heir ener g y usa ge to wa rd low em is sion energ y sou rc es cou ld po tent ia ll y sa ve on a n nua l ener g y c os t s. Fu r ther mor e, in nov at ion a nd de velopment of new low emi ssion pr oduc t s a nd ser v ice s ma y impr ov e a busi nes s compet iti ve po sit ion a nd capit a lis e on sh i f t i n g consu mer a nd pro ducer prefer ence s. At ye a r end, c l im ate -r ela ted r isk is not a nt icipate d to ha ve a mater i a l n a ncia l impac t on t he busines s a nd t he r i sk over a ll is con sidere d low . Such is sues do mea n an adju st ment i n t he Gr oup’ s st r ate g y to accom mod ate g r e ater r ec og n it ion of cl i mat e r isk , a nd how th i s is a ss es se d, re sou r ced a nd commu nic ate d to st a keholder s. T he B oa r d, E xecut ive a nd work i ng g r oups w i l l c ont inue to mon itor a ll cl i mate-relate d issues. Our a pp roa ch to E SG Continu ed The Rank Group Plc Annual Report 2022 64 Risk T ra n sit ion: Tra n sit ioni n g to a lower - ca rbon economy m a y enta il ex tensiv e pol ic y , lega l , te ch nolog y , a nd m a rke t cha nges to a dd r es s mit igat ion a nd ad apt at ion requ i rement s r ela ted t o cl i mat e ch a nge. Ty p e R is k de sc r ip t ion Pot ent ia l outc omes Mi tiga ting acti viti es Ti mef r a me Pol ic y a n d Leg islat ion T ha t Ra nk i s not able to r e sp ond to increas ingly st r in gent rep or ting obl ig a t ion s to t he f r equenc y or qu alit y req uired. Le ga l a nd /or reputa t iona l i ssues , wh ich i n t u r n d r iv e compli a nce co st s a nd p otent i a l l y impac t cos t of capit a l . Fi na nc ia l i mpac t : low Moni tor p otent ia l legislat i ve and reg u lator y ch a nges. Cons ider in g abi lit y to ach ie ve net z ero by 20 35 t a r ge t. W ork ing to de ne net zer o st rate g y and s et inter im t a r ge t s. Shor t to me d iu m Pol ic y a n d Leg islat ion T hat nat ion states ma y i nt ro d uc e ca rbon em i ssion le v ie s , pl ac i n g a n add it ional fe e upon energ y con su mpt ion cos t s. T h is m ay i ncr e a se R a n k ’s operat i ng c os ts. Fi na nc ia l i mpac t : low to me d ium Assess prope r t y port folio to deter mi ne in ves t ment prog r a m me s t ha t ma k e bui ld i ng mor e energ y ef c ient, less c a rb on in ten si ve. Se ek to sou r ce g r een energ y . Shor t Pol ic y a n d Leg islat ion T h at new cli mate -related laws o r re g u l at ion s for whi ch Ra nk i s n ot p repared. Ra nk m ay b e subjec t to a n incr e as e i n accou nt i ng pro v i sions, not i nit ia l l y budget ed for. Th i s ma y impac t pr o ta bil it y . Ra nk m ay b e subjec t to i nc re a se d compli a nce co st s. Fi na nc ia l i mpac t : low De ne deca rbon i sa t ion st rateg y to remai n a head of regu lat ion. Shor t to me d iu m Te c h n o l o g y Te c h n o l o g y ad v a nc es introd ucin g m ore env i r on ment a ll y f r iend l y equ ipment to replace exist ing IT infrastr u c ture. W h i ls t R a n k doe s not r ely on c a rb on inten se as se t s for va lue gener at ion it never t heless u ses I T equ ipment to fu l l a va r iet y of f u nct ions: 1. Ga mi ngmach i nesonplay i ngo or s. Much of th i s equ ipment is sou r ced f rom t he US. W h i ls t t he US com m it ted to a 20 50 net z er o ta rge t, a ny v a r i a nces i n t i me com m it ment s a nd energ y ef c ienc y re qu ir ement s of elect r ica l ly po wer ed equ ipment, be t ween t he US ma rket a nd t he ma rk et s we oper at e in m a y lead to u nex p ec te d cos t i mpl ica t ions . 2. On l i ne ga m ing pl at for m I T in f r as t r uct u re a nd gener a l b usi ne ss /operat ing I T infrastructure ma y su f fer a r educ t ion in u sef ul li fe d r iven by m a jor adv a nce s in I T energ y ef c ienc y , dr iv i ng inc re a se in depr ec ia t ion a nd a mor t is at ion cost s . Reg u la r inve st ment. Shor t t o me d iu m The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 65 Ty p e R is k de sc r ip t ion Pot ent ia l outc omes Mi tiga ting acti viti es Ti mef r a me Ma rket Cli mate induced changes to cu s to mer prefer ence s for lei su r e. Ch a ng es i n cons umer pr efer ences m ay encou r ag e more pla yer s to pl a y on li ne at home, ra t her t h a n inc u r pos sible t ra nspor tat ion emis sions a nd cont i nued uti l is at ion of inef c ient spaces. Fi na nc ia l i mpac t : low Fo r ma l ise a nd communicate clea r dec a r bon i sa t ion st rateg y . Lon g Ma rket Suppl y c h a i n cos t in at ion. Inc re a se d cos t s rel ate d to t he use of new env i r on menta l l y f r iendly m ater ia ls or pr o ces se s cou ld re su lt i n cont r ac t s pre v ious ly e x pe c t i ng to be pro t able bec omi ng los s ma k ing. Fi na nc ia l i mpac t : low Com menci ng S cope 3 as se ssment to b et ter un ders ta nd Rank ’ s ex po su re t o hi gh emit t in g se c t ions of its v a lue cha in. In t i me, w i l l s eek in creased inf ormati on rega r d ing cl im ate r isk e x pos ur e f r om ke y supplier s. Me d iu m Rep ut a t io na l F ailure to meet i nter n a l or ex ter na l st a k eholder cli mate -related expec t ations, imp acting rel at ion s. Perc eive d h igher r isk i nve st ment, inc re a sin g cos t of capita l wit h inves tor s, na ncia l i ns t it ut ion s, and insurers . Reduce d re venues due to c ha l len ges i n at t rac t ing new t a lent a nd i ncr ea s ed ope x f r om employe e t u r no v e r. Fi na nc ia l i mpac t : low to me d ium De ne a nd commun ica te our net z er o a mbit ions. Shor t Risk Physic a l: Phy sica l ri sk s r esu lt i n g f r om cl i mat e cha nge ca n be ev ent d r iven (acute) or lo n ger -ter m s h if ts (chr on ic ) i n c l im ate pa t t er ns. R is k de sc r ip t ion Pote nt ia l outcome s Mi tig ating ac tiviti es Ti mef r a me E x t r eme wea t her ev ents l i ke d rou ght, oo d i ng a nd stor m s. Da ma ge t o our pr oper t ies a nd veh icles w h ich w i l l i ncu r i ncr ea se d ca pex a nd ins ur a nce c os ts. Impac t s of supply c ha in d isr upt ion fr om i ncr ea s ed se ver it y of ex t r eme we at her e vent s ma y i mpac t opex a nd capex , a s wel l a s i mpac t r e venue if cu stomer dem a nds for on l i ne enter ta i n ment ca n not b e me t . Fi na nc ia l i mpac t : low to me d ium Bus i ness cont i nu it y a nd cr isis ma nag ement pla ns i n pla ce. Shor t to long Ch a ng es i n av era ge c l im ate cond it ions i nclud in g r isi ng s ea level s, coa st a l ood i ng a nd inc re a se d aver a ge temp era t u re s. Inc re a se d oper at i ng co st s d r iven by t he as t he inc re a se d use of c l im ate c ont r ol sy s tems ac r os s our pr op er t ies. Inc re a se d ma i nten a nce a nd i n su ra nce cost s. Fi na nc ia l i mpac t : low to me d ium Inv es t ment into pr op er t y por t fol io. Shor t to long Our a pp roa ch to E SG Continu ed The Rank Group Plc Annual Report 2022 66 Scenario analysi s T o e va luate t he r esi l ienc y of t he G roup’ s appr oach t o cl i ma te -rel ate d r isk s and opp or t u n it ies , we ha ve conduc te d a n a n a l ysi s for t wo d if ferent po ssible scen a r ios: t he ris e i n globa l temper at u r e is l i m ite d to les s t ha n 2 deg re es, or t he glo ba l tempera t u r e r is es b y more t ha n 2 degr e es. T he r i sk s a nd opp or t u n it ies t o t he Gr oup u nder each s cen a r io a r e pr es ented a ga i n st s hor t , med ium , a nd long-ter m t i me hor i zon s. < 2-degree scenario Ou r less t h a n 2°c scena rio a ssu mes t h at we act r esp onsibl y , impro ve t he ef c ienc y of our por t folio work i ng w it h ou r la nd lor d s, a nd re duce ou r GHG em is sions. T h is m a y inc lude the i nt r oduc t ion of ca rbon pr ici ng b y na t iona l g over nments. We consider t r a ns it ion r isk s t o pos e t he g r eat er t h r eat t o our bu si ness a nd st ra teg y under t h i s scen a r io , w it h onl y a l i m ited a nd ma na ge able impac t on ou r oper at ions f r om phy sica l ri sk s. T h at sa id, we consider t his t hr eat t o be l i m ite d in t he shor t ter m a nd t herefore ou r s t ra teg y re si l ient under t his s cena r io. W e c onsider ed t he IE A ’s N e t Z er o Scen a r io in developi ng t h i s scen a r io . Shor t ter m ( t o 2030) Med ium t er m (20 30 to 20 4 0) Long t er m ( b e yond 20 40) R isk s Higher t r a n sit ion r is k s a sso ci ate d w it h mov ing t o a low-c a rb on economy – Compl ia nce r isk if we f a i l to mee t regulat or y req uirem ents , in clu ding em i s sion s r e p or t i n g obl i g at ions . – Reput at iona l ri sk w it h inve stor s, cu stomer s a nd employe es, i f we d o not adequately addr ess cl im ate cha nge. – Inc re a se d cos t of cl i ma te -rel ate d lev ies/ inc re a se d pr ici ng of g r een hous e ga s (GHG) em is sions. R isk s Cont i nued t r a n sit ion r isk s – Cont i nu i ng c ompl ia nce r isk if we fa i l to me et r eg u la tor y re qu i rement s, in clu ding e missi ons repo r ting obl ig a t ion s . – Inc re a si ng r eput at iona l ri sk w it h inv es tor s, c ust omers a nd empl o ye es, if we d o not adeq uatel y add r e ss cli mate cha nge. – Inc re a se d cos t of cl i ma te -rel ate d lev ies/ inc re a se d pr ici ng of G HG emis sions. – Ch a ng i ng c us tomer beh av iour . R isk s Le ss sig n i c a nt inc re a se i n physica l ri sk s – Cont i nued isol ate d ex tr eme wea t her event s c ausi ng m a n ag eable d i re c t busi ness d i sr upt ion s to of ce loca t ions, a nd impa c ts t o supplier s i n our modera te supply c ha in. – Higher su m mer temper at u r es a nd rapid cha nges i n temper at ur e a nd hum id it y caus in g ch a l lenge s for venue cool i ng, a nd inc r ea se s in ener g y cos ts a cr os s our venues a nd of ce s. Oppor tu nit ie s – De ne ne t zer o st r ateg y to meet inc r ea si ng st a k eholder expe c t at ion s. – Potent ia l to dev elop a zer o- em is sions on l i ne pro duc t, or fa ci l it y t ha t a l low s c ust omers t o of fs et. – A s dema nd for more energ y ef cient in f r a st r uct u r e a nd equ ipment incr ea se s in t he ma r ket , so dema nd w i l l inc r ea se wh ich is l ik ely to r educe co st s. T h i s w i l l enable i nve st ment t h at w i l l u lt ima tely r e duce energ y cos t s. > 2 °c scenario T h is s cena rio a ss ume s global c l i mat e pol ic y is le ss ef fe c t iv e a nd un abat ed G HG emi ssions c aus e cl i ma te ch a ng e abo ve t h at env isa ged by t he Par is Ag r e ement. Under t h is sc ena r io, infor med by t he I E A ’ s SDS sc ena rio, we wou ld ex p ec t phy sica l ri sk s to b ecome much more appa rent i n t he longer ter m a nd out weigh t r a n sit iona l r isk s. Under t h is sc ena rio ou r busi nes s a nd st rateg y r ema i n s r esi l ient in t he shor t ter m. F ur t her work to de ne t he resi l ience of our st r ateg y be yond t h is t i me hori zon is s t i l l re qu ir e d. Shor t ter m ( t o 2030) Med ium t er m (20 30 to 20 4 0) Long t er m ( b e yond 20 40) R isk s Sli ght inc re a se i n t r a n sit ion a nd phy sica l r isk s i n t he short t er m – Isol ate d a nd ma nag eable busi nes s d isr uptions c aus ed b y ex tr eme we at her event s, such a s ood ing or dr ought . – In su ra nce cost s r ise i n step w it h inc re a se i n phy sica l d a m a ge to prop er tie s. – Ad-hoc suppl y cha in i nter r uptions. R isk s Inc re a si ng phy sica l r isk s due to a fa i lu r e to ade quat ely t ra n sit ion to a low-c a rb on ec onomy – Inc re a se i n energ y co st s a s t r ad it iona l energ y sou rc es b ecome more cons t r a i ned , wh i ls t u nder inv es t ment into c lea ner ener g y fa i ls to br idge energ y dema nd g ap. – F lood i n g at cer ta i n h igh-r i sk venues due to inc re a se d sea le vel. R isk s Inc re a se d phy sica l r i sk s due to a fa ilu re to ade quat ely t ra n sit ion to a low-c a rb on ec onomy – Inc re a se i n energ y co st s. – F lood i n g at cer ta i n h igh-r i sk venues due to inc re a se d sea le vel. Oppor tu nit ie s – De ne ne t zer o st r ateg y to meet inc r ea si ng st a k eholder expe c t at ion s. – Potent ia l to dev elop a zer o- em is sions on l i ne pro duc t, or fa ci l it y t ha t a l low s c ust omers t o of fs et. – A s dema nd for more energ y ef cient in f r a st r uct u r e a nd equ ipment incr ea se s in t he ma r ket , so dema nd w i l l inc r ea se wh ich is l ik ely to r educe co st s. T h i s w i l l enable i nve st ment t h at w i l l u lt ima tely r e duce energ y cos t s. The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 67 Risk M anagement T o det er m i ne the r elat ive sign i ca nc e of cl i mat e-r ela te d r isk s i n r ela t ion to ot her r isk s , in 2021 we c onducte d a ma ter ia lit y as se ssment. T hi s pro ce ss, eng ag i ng a ra nge of st a keholder s bot h inter n a l a nd ex ter na l to t he orga n i sat ion, pl ace d cl i mat e r isk a s a lo w-ri sk ma t ter, rela t ive to ot her E SG i ssues. We al so mon itor t he re g u lat or y space i n order t o be i n for med of a ny de velopments t h at cou ld i mpac t t he ef fec t of c l im ate -r elat ed i ssues. C u r r ent ly , t here a re ex ist i ng a nd emergi ng r e g u lat or y re qu i rement s r elat ed to c l i mat e cha nge t ha t a r e cons idere d a r isk b y R a n k . A s t he Gr oup’ s appre c iat ion for t he complex it ies of cl i m ate r isk ha s de veloped , (th at t he r i sk s ma y m a n i fes t in a v a r iet y of t ra nsit iona l a nd physica l ri sk s ) s o it ha s ev olve d it s repr e sent at ion of cl i mat e r isk w it h i n it s r is k re g ist er . A s such, cl i mat e r isk i s inc luded a s a n emerg i n g r isk on t he Compa n y’ s r isk re g ist er . T he potent ia l size a nd scope of identi ed cl i ma te -rel ate d r isk s i s deter mi ned i n t he sa me ma n ner as a ny r isk on t he ris k re g ist er . T he Gr oup’ s r isk ma n a gement pro ce ss inv olve s a n a n a l y sis wh ich wei ghts ‘I mpac t ’ ag a i ns t ‘Li kel i hood ’ . T he n a nci a l impa c t of ri sk is de ned t hus: L ow – ma n ag ed a s pa r t of ex is t i ng pr oc ess es; Med ium – add it iona l mit ig at ion or in ves t ment re qu i re d; a nd H igh – sign i c a nt inv es t ment re qu i re d a nd con sidere d mat er ia l r isk to t he bu sine ss. Dec is ions to m it iga te, t r a n sfer, accept, or cont r ol cl i mat e-r ela ted r isk s a r e ma de in t he sa me ma n ner a s a ny r isk on t he r isk re g ist er , a s c l im ate r isk is i ncluded a s a st a nd-a lone r i sk on our r isk re g is ter a nd is t her efor e inte g ra ted i nto t he overa ll r i sk ma n ag ement fr a me work . De n i ng cl i m ate as a n emerg i ng r i sk a l so mea n s t h at t he Audit C om m it t ee h as g enera l over sight of t h is i ssue. Add it ional ly , t h r ough g u ida nce f rom t he ESG & S a fer G a mbl in g Com m it t ee, t he Aud it C om mit tee a re encour a ged t o cons ider cl im ate -r ela ted mat ter s when consider i n g t he fol low i ng P r i nc ipa l R i sk s: 1. T a xa t ion ( s hould a c a rb on pr ice be introduc ed) 2. Bu si ness cont i nu it y pla n n in g a nd d isa s ter r ec over y (should a ny ph ys ica l cli mate -related r isk s impact t he busi ness or it s supply cha i n – a sh oo d in g etc. ) 3. People (desir e to work for a n emplo yer t ha t is com m it ted to net z er o etc.) O ver t he com i ng mont h s t he Gr oup w i l l st a r t to cons ider t he spre ad of phy sica l a nd t ra nsit iona l ri sk s on our r eg ister. As prev iously ack nowledged, cl im ate-related r isk s a re va rie d a nd per meate ma n y ot her ex i st i ng r isk s over s een b y t he B oa r d. Du r i ng t he yea r, we condu c t ed de sk t op as se ssment to re v ie w t he percei ve d ood r isk s of ou r U K pr oper ties , wh ich compr is es 92% of our p or t folio. Using U K G over nment a nd S cot ti sh E nv i r on menta l Pr ot ec t ion A genc y on l i ne tool s, we identi ed t he fol low i ng: Sur fac e ri sk R iv er ri sk Co a st a l ri sk High 12.20% 0.80% 1.60% Me d iu m 17.10% 3.25% Res er voi r 5.70% Metrics & T argets T he met r ics c u r r ent l y us ed b y R a n k to asses s cli mate -related r isks a nd oppor tu n it ies i n l i ne w it h it s s t r ateg y a nd r isk m a n ag ement proc es s a r e Sc ope 1 a nd 2 emi ssion s a nd a r e publi shed a s pa r t of t he Gr oup’ s obl iga t ions to r ep or t i n l i ne w it h St rea ml i ned E nerg y & Ca rbon Rep or t ing (SE CR). SECR re po rt Obj ectives o f this rep or t T h is r epor t ha s be en pr epa r e d to suppor t Ra nk ’s complia nce w it h t he Compa n ies Ac t 20 06 ( St r ate g ic Repor t a nd Dir e c tor s’ Repor t) Reg ul at ion s 2013 a nd t he compa n ies ( D ir e c tor s’ Repor t) a nd L i m ite d Li abi l it y Par t ner sh ips ( E nerg y a nd Ca rbon Rep or t) Re g u l at ion s 2019 . T hese pie ces of leg i sla t ion re qu ir e quot ed compa n ies to r ep or t ener g y consu mpt ion a nd g re en house g a s em iss ions a r i si ng f rom ac t iv it ies for wh ich t hose compa n ies a r e re spon sible. The r ep or t a lso pr ov ides Ra nk w it h an a nnua l r e v ie w of t he Gr oup’ s energ y consu mpt ion. Scope Boundaries A n oper at iona l cont r ol appr oach h a s be en use d to de ne t he Gr een hous e Ga s (GHG) emi ssion s bou nda r y . For Ra n k ’ s ma nd ator y sc ope, t h i s cap t u re s emi ssion s as so ci ate d w it h t he operat ion of Ra nk ’s sites a nd compa ny- ow ned t ra nspor t. T he ‘ f u l l s cope’ a l so i ncludes t he volunt a r y d i sclo su re of em is sions re su lt i ng f r om elec t ric it y tr a n sm is sion a nd d is t r ibut ion loss es, pr ivate v eh icles ( u se d for compa n y busi nes s ), a ir t rav el a nd wa st e d isp osa l. A l l em i ssions, m a nd ator y a nd volunt a r y , r efer to U K a nd Spa i n oper at ions on l y . T h is i n for m at ion wa s col le c ted a nd rep or ted i n li ne w it h t he met hodolog y set out in t he UK G over nment’s Env i r on menta l Rep or t i n g G u idel i ne s 2 019 . Em i ssions h av e be en ca lcul ate d usi ng t he 2021 conver sion fac tor s pr ov ided by D ef r a. T here a re no mat er ia l omis sions f r om t he ma nd ator y S cope 1 a nd 2 em i ssions. T he rep or ti ng p er iod i s Jul y 2021 to June 2022 , as p er Ra n k ’ s n a nc ia l acc ount s. Supporting mater ial A n em iss ions dat a le ha s be en compiled accor d i ng to a spec i c at ion ag r ee d w it h Ra nk . T he dat a le w i l l be re ta ined b y Con su lt us I nter n at iona l G r oup (Cons u lt u s ) a nd is a va i l able for audit upon r e quest . T he suppor ti ng d at a , a s supplie d by R a n k a nd rele va nt th i r d pa r t ies is held b y Cons ul t us a nd ca n be made a va ilable on r eq uest . Emissions intensity For pur p os es of ba sel i n i ng a nd ong oi ng compa r i son, it i s r equ i r ed to e x pre ss t he GHG em iss ions usi ng a c a rb on int ensit y met r ic. T he i ntensit y met r ic chosen is £m NGR . R a n k ’s N GR i n 2021 / 22 wa s £ 64 4.0m, g iv i ng a n inten sit y of 39 . 2 t CO 2 e per £ m NGR , 4 0% lower t h a n l as t ye a r . Our a pp roa ch to E SG Continu ed The Rank Group Plc Annual Report 2022 68 Quanti cati on and Repor tin g Metho dol ogy T he Gr oup ha s t a ken g uida nce f rom t he U K G ov er n ment En v i r onment a l Rep or ti ng G u ideli nes ( Ma rc h 2019) , t he G HG Repor ti ng Pr ot ocol – C or p orat e St a nd a r d, a nd fr om t he U K G ov er n ment GHG Conver s ion F a c tor s for Compa n y Repor t in g doc u ment for ca lc u la t i ng ca rbon em is sions. E nerg y usa ge i n for m at ion ( ga s a nd elect r icit y) ha s b een obt a i ned d ir ec t l y f r om ou r energ y supplier s a nd ha l f-hour ly ( H H ) d at a , where ap plic able, for t he HH suppl ies. For supplies where t her e wa s not compl e te 12-mont h energ y usa ge da t a ava i l able, at pr o le es t i ma t ion tech n iques wer e use d to complete t he a n nua l c onsu mpt ion. Tra n sp or t m i lea ge a nd /o r f uel usag e da ta w a s pr ov ide d for compa ny a nd employee -o w ne d veh icles. tCO 2 e emi ssion s were c a lc u la ted u si ng t he appr opr ia te em is sion fac tor s f r om t he U K G ov er n ment GHG conver sion i n for m at ion a nd re t a i ned w it hi n t he or ga n is at ion’ s Dat a F i le for refer ence wher e r equ i r ed w it h t he except ion of S p a i n wh ich is f r om t he I E A . Overal l Gro up Posi tio n kWh Emission so u rce Ene r g y t y p e 2021 /22 kW h 2020/21 kW h % of 2021 /22 tota l Cha nge +/ - Gas 63,554,204 54,304,890 52% 17% E le c t r ic i t y 61,279,863 47,548,865 46% 29% Company t r avel 3,993,358 2,529,333 2% 58% To t a l 128,827,425 104,383,088 100% 23% UK G rou p Posit ion k Wh Em i s sion s ou r ce Ene r g y t y p e 2021 /22 kW h 2020/21 kW h % of 2021 /22 tota l Cha nge +/ - Gas 63,110,578 53,356,974 54% 18 % E le c t r ic i t y 57,120,020 43,524,462 44% 31% Company t r avel 3,993,358 2,529,333 3% 58% To t a l 124,223,956 99,410,769 100% 25% * Compa ny t r av el 20 21 / 22 i nc lude s a l l S cop e 1 a nd S c ope 3 d a t a. Spa in G roup Po sit ion k Wh Em i s sion s ou r ce Ene r g y t y p e 2021 /22 kW h 2020/21 kW h % of 2021 /22 tota l Cha nge +/ - Gas 443,626 293,036 9% 51% E le c t r ic i t y 4,159,843 2,845,759 9l% 46% To t a l 4,603,469 3,138,795 100% 47% * Belg ium’ s e m is sion d a ta i nc lude d i n o ver a l l g r o up po sit ion for 202 0/ 21. GHG Emissions Summary 2021 /22 2020/21 Ene r g y t y p e tC0 2 e % tC0 2 e % Ga s ( Scop e 1) 11,641 43.4% 9,946 41.3% Compa ny t r a n sp or t (Sc ope 1) 551 2.1% 622 2.6% Emplo ye e t r a nsp or t ( S cop e 3) 206 0.8% – 0.0% F- G as es ( Sc ope 1) 145 0.5% 50 0.2% Ele c t r icit y (S cop e 2) 12,897 48.1% 11,066 46.0% Tra nsm i ssion & loss es (S cop e 3) 1,089 4.1% – 0.0% A i r t r av el (S cope 3) 198 0.7% 15 0.1% W a st e (S cope 3) 112 0.4% 2,368 9.8% To t a l 26,840 100% 24,067 100% Ene r g y t y p e 2021 /22 2020/21 Sc ope 1 (m a nd ator y) 12,337 10,618 Sc ope 2 (m a nd ator y) 12,897 11,066 Ma ndator y tot a l 25,235 21,684 Sc ope 3 (compu ls or y) 1,605 2,383 To t a l 26,840 24,067 The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 69 W h i ls t we embra ce t he r ec ommend at ions, w e re cog n i se t h at ou r d is closu r es a re not yet f ul l y cons ist ent w it h s ome of t he TCF D re com mendat ions a nd in such c a se s we ha ve e xpl a i ned w hy a nd pr ov ided a desc r ipt ion of t he pr ior it y ac t ions to b e ta ken to clos e t he gaps. A l l in for mat ion consider e d mat er ia l t o our T C FD d isclos ur es a re pr es ented w ith i n t h i s TC F D se c t ion. Compliance table TCFD Pilla r Recomme nded Disclosures Co mpl ia nce st a t us a nd f ut u r e ac t i v it y G o ver na nce a. D es cr ib e t he Bo a r d ’ s o ver sight of cl i mat e-r ela te d r isk s a nd oppor t u n it ies. St at u s: gr e en Intent ion: the B oa r d a nd r elev a nt com m it tees to s t r eng t hen t he consider at ion of cl i ma te -rel ate d is sues when r ev iew i ng a nd g u idi ng b usi ness pl a n s, ma jor capit a l exp end it u r e a nd M& A ac t i v it y . b. Desc r ibe m a n ag ement’ s r ole in asses sing a nd managing c l imat e-re lated r isk s a nd oppor t u n it ies. St at u s: gr e en Intent ion: the G roup is t o cl a r i f y t he ma nd ate of t he Ca rbon Reduc t ion W ork ing G r oup a nd to kee p impr ov ing me cha nis ms for in for mi ng ma nag er s of cl i mat e-r ela ted m at ters. Str ateg y a. Desc r ibe t he cli ma te -rel ate d r is k s a nd opp or tu n it ies t he or ga ni sa t ion ha s identi ed ov er t he shor t, med iu m a nd long ter m. St at u s: gr e en Intent ion: conti nue to mat u r e sc ena r io an a l ysi s a nd r esi l ience tes t i ng of r is k s over t he shor t, me d ium a nd long ter m. b. Desc r ibe t he impac t of cl i ma te -rel ate d r isk s a nd oppor t u n it ies on t he orga n isat ion ’ s businesses, st rateg y , a nd na nc ia l pla nn i ng. St at u s: a mber Intent ion: seek to pr ior it i se t he f ac tor i ng of cl i m ate -rel ate d r isk s a nd oppor t un it ie s into i nves t ment st r ate g ies a nd n a nc ia l p lanning . c. Desc r ibe t he resi l ience of t he orga n isat ion ’ s st rateg y , ta k i ng into consider at ion d i f fer ent cl i ma te -rel ate d scen a r ios, i nclud i ng a 2 °c or lower sc en a r io. St at u s: a mber Intent ion: conti nue to mat u r e sc ena r io an a l ysi s a nd r esi l ience tes t i ng of r is k s over t he shor t, me d ium a nd long ter m. R isk m a n ag ement a . D esc r ib e t he org a n is at ion’ s pr oc ess es for identi f y i ng a nd a s ses si ng cl i m ate - rel ate d r i sk s. St at u s: a mber Intent ion: build g r e ater c apac it y w it h i n t he Gr oup to ident i f y a nd a sse ss c l im ate r el ate d r isk s. b. Desc r ibe t he orga n i sat ion ’s proce ss es for mana gi ng cl imate -related r isk s. St at u s: a mber Intent ion: whi ls t eac h of t he t r a n sit iona l a nd physica l ri sk s l is te d in t he re por t ar e deemed low to med iu m na nc ia l r i sk to t he busi ness i n t he short t er m, f ur t her res ea rch i s re qu i re d to deter mi ne the n a nci a l mat er ia lit y of thes e ri sk s over t he med ium a nd longer ter m. c. Desc r ibe how pr o ces se s for identi f y i ng, asses sing , and ma naging climate- related r isk s a re i ntegrate d into the org a n is at ion’ s ov era ll r isk ma n ag ement. St at u s: a mber Intent ion: fu r t her res ou rc e a nd cons iderat ion to b e g iven t o t he ma n ag ement of cl im ate -r elat ed r isk s. Met r ics a nd ta r ge t s a. Disclose the m et r ics used by the orga n isat ion to a sse ss cli mate -related r isk s a nd oppor t u n it ies i n l i ne w it h it s st r ate g y and r isk ma n ag ement pro ces s. St at u s: a mber Intent ion: whi ls t t he G r oup a l re ad y r epor ts S cope 1 a nd 2 emi ssion s, cer ta i n S cope 3 em i ssions a re ca pt u r ed a nd the busi ness m a y cons ider t he adopt ion of a n i nter n a l ca rbon pr ice to mea su re i mpac t a nd the p otent ia l payb ack on busi nes s pla n s a nd rele va nt capit a l i nve st ment pr og r a m mes. b. Disc lose S cop e 1, Sc ope 2 a nd , if appropr iate S cope 3 g r een house ga s (GHG) em is sions a nd t he r ela ted r isk s. St at u s: gr e en Intent ion: whi ls t t he G r oup a l re ad y r epor ts S cope 1 a nd 2 emi ssion s, cer ta i n S cope 3 em i ssions a re ca pt u r ed a nd it is t he intent ion of t he busi ness i n t he comi ng ye a r s to set a r m net zer o t a r ge t, i n l i ne w it h t he requ i r ement of t he Science B a sed T a rget s In itiat ive. c. Desc r ibe t he ta r get s u se d by t he orga n isat ion to m a nage cl i mate-relate d r isk s a nd oppor t u n it ies a nd per for ma nce a ga i n st t a r ge t s. Stat us: red Intent ion: to an nou nce dec a rb on is at ion ta rge t s dur ing t he next na ncia l yea r . Gr e en – Dis clos ur e met ; A mber – P r og r a m me of work u nder wa y to meet d isclos ur e; Re d – P ro g ra mme of work ye t to st a r t to mee t disclosure. Our a pp roa ch to E SG Continu ed The Rank Group Plc Annual Report 2022 70 Commun it y A cent ral r ole i n th e com muni t y W e h ave a lwa ys o cc upied a cent r a l r ole in t he com mun it ies i n wh ich w e oper ate, a nd our Me cca v enues in pa r t icu l a r a r e a so c ia l hub for l o ca l people. Pla y i ng bi ng o is a ke y for m of so cia l inter ac t ion for ma n y is olat ed a nd older people a nd ou r clubs w i l l cont i nue to prov ide th i s leisu re s er v ice for genera t ions to come. T he st rong t ies we hav e w it h loca l commun it ies in uence our appr oac h i n t h is a rea : ou r col lea g ues go be yond t he exp ec te d to suppor t t heir cu stomer s, we c ha mpion ch a r it able in it i at i ves on a venue-b y-venue basis a nd ad ver ti se employ ment oppor t u n it ies loca ll y , a nd we cho se ou r Gr oup -w ide cha rit y pa r t ner , C a r er s Tr ust , on t he ba sis of it s net work of ca r er s cent r e s acr os s t he U K t h at suppor t people doi ng v it a l u npa id work . Developing our community strategy A s a re su lt of t he pa ndem ic, t he under s ta ndi ng of t he i nteg r a l r ole we pl ay in c ommu n it ies c a me int o sha rp er foc u s. W e m ade it a pr ior it y to kee p suppor ti ng our c us tomer s ev en when our v enues were forc ed to s hut dur i ng lo ckdo w n s. A s t he pa ndem ic re st r ict ions ea s ed , we wer e st il l keen to m a i nt a i n t h is c om mun it y foc us. In t he lo nger ter m, we wa nt t o ma i nt a i n t h is moment um a nd we re cog n is e t h at ou r cu stomer s a nd com mu n it ies w i l l cont i nue to nee d suppor t. W h i le much of our ac t iv it y ha s b een d ri ven loc a l l y a nd we w i l l cont i nue to opera te i n it iat ives on a venue-by-venue basi s, we a r e wor k i ng tow a r ds f or ma lis in g a cent r a l s t r ateg y on com mun it y enga gement a nd suppor t. O ur new Mecc a Ma nag i ng D i re c tor w i l l pl ay a sig n i ca nt role in developi ng t h is st rate g y . Our Group-wide charity partne rship: Ca re rs T rust Since 2014 Ra n k h a s be en pa r t nere d w it h Ca r er s Tr ust , a c ha r it y wh ich w ork s to impr ov e ser v ices, s uppor t , a nd r ec og n it ion for unpa id ca rer s. D u r i ng ou r pa r t ners h ip so fa r , t he G roup ha s r a i se d £ 3,1 93,7 6 3. 79 for t he cha r it y and suppor ted 1 3,135 ca r er s. I n or der to t a ke o w ner sh ip of a spec i c pro jec t to suppor t the Ca r er s Trus t , we es t abli shed R a nk Ca res G r a nt s. En abled b y t he f u nd r a isi ng e f for ts of our col lea g ues ac ro ss t he Group, we g ive g ra nts to c a r er s in t hr ee a rea s: – Carers Essentials Fund – ca r er s ca n apply for g r a nt s to wa r d s t he co st of v it a l equ ipment such as w a sh i ng mac h i nes, cooker s, f ridg e f r eez er s or be ds. – Ca r ers T a ke Time O ut Fu nd – g iv ing ca r er s t i me out f r om ca ri ng t o rel a x, do somet h i ng for t hemselve s a nd r ec ha r g e t heir b at t er ies. – Ca r ers Sk i l ls F u nd – enabl i ng c a r er s to lea r n new sk i l ls t o help t hem w it h ca r ing or to r e t u r n to work . For a ca r er to r ec eive a g r a nt , t he y must submit a n a pplic at ion w it h one of ou r 120 net w ork pa r t ners a rou nd t he UK . T hese appl icat ions a re t hen r ev iewed b y a G ra nts Pa nel. We inv ite col le ag ues f rom a r ou nd t he busi nes s to sit on t hes e pa nel s so t h at t hey c a n ap pre ci ate t he impac t of our f u nd ra isin g a nd t he i mpor ta nce of suppor ti ng c a r er s. “ T h is t i m e ou t a l lows m e to have s ome t h i n g mor e posit ive to enj o y i n li fe w h i ch in t ur n a l lows m e to be m o r e posi t iv e i n my ca r ing ro le a t ho me. ” Jackie Unpaid carer Bel ow: Cit y Poker N ig ht Ran k Ca res c ha ri t y fu n dra i se r The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 71 Ou r bu sin ess mo d el What w e do W e h ave b een enter t a i n in g Br it a i n si nce 1937 , f rom ou r or ig i n s in mot ion pict ur es to t od ay ’ s g a m i ng-bas ed enter ta in ment bra nd s. Ou r pu r p ose i s to work t oget her to cr eat e excit ing env ir on ments t ha t ree c t t he cha ngi ng nee d s a nd exp ec t at ions of ou r cu stomer s a nd ou r col lea g ues, del i ver i ng s t i mul at i ng a nd enter t a in i ng ex p er iences e ver y t i me. T o E xc ite a nd T o E nter ta i n. T h is i s how we do it. W e a r e t he only G r oup t hat of fers c us tomers b ot h v enue and d ig it a l bing o a nd c as ino ex p er iences. V enues – La rge st venues c as ino oper at or in G r eat B r it a i n (52 venues ). – Se cond-la r g es t venues bing o oper ator i n G r eat Br ita i n (64 venues ). – Gr ow ing v enues bing o pre sence i n Spa i n (9 venues ). – Ou r venues busi nes se s oper ate i n ma t u re a nd well- es t abl ishe d gam bl ing mark et s. – Mecc a a nd E n rac ha a re bin go -led br a nd s wh ich of fer co mmu nit y -b ased gaming . – Gr os venor is a c a si no-le d bra nd pri ncipa l l y fo cu se d on ta ble a nd mac h ine ga mi ng. – Ou r venues busi nes se s oper ate t hr ough a ma in ly le a sehold est ate. – Ou r venues a r e member sh ip-ba s ed a nd f r e e to joi n. – A foo d a nd be ver ag e of fer is a va ilable ac r oss a ll ou r venues. – Rev enue is generat ed i n ou r venues when a cu stomer be t s ag a i ns t t he house (g a mes of cha nce) . Underly ing pro t is genera ted once t he cost of c ust omer incent i ves, s a les a nd ot her oper at i ng c os ts a re ded ucte d. Digital – A d iver s e por tfol io of ov er 1 40 d ig it a l bra nd s cov er i ng c a sino, bing o, slot s a nd spor ts b et ti ng. – Ou r Mecc a a nd G r os venor on l ine of fer s c omplement our est abl i shed venues br a nd s. – A l l d ig it a l cus tomer s pla y w it h ou r on l i ne bra nd s t h r ough a bra nd w a l let . – Rev enue is generat ed on l i ne when a cu stomer be t s ag a i ns t t he house ( ga me s of cha nce) . Underly i ng pr ot is gener ate d once t he cos t of cu stomer i ncent iv es, s a les a nd ot her operat ing co st s ar e d educted. Stak eholder value cr e ated Our customers 2 ,4 00k W e c re ate v a lue for our 2 ,40 0k c us tomers b y pr ov idi ng t hem w it h ma rk et-lead i ng ga mi ng ex p er iences t hr ough ou r venues, on li ne, or acr os s bot h cha n nel s. Our people 7, 6 0 0 7 ,60 0 pa ssion ate a nd com m it ted employe es. Our suppliers 1, 200 O ver 1, 20 0 suppl iers, w ho t h r ough mea n i ng f ul enga gement a nd col lab ora t ion a r e ke y in helpi ng us del i ver ou r st r ate g ic a im s. Our communities £ 300 , 000 £ 300,0 00 c ha rit able dona t ions m ade to C a r er s Trus t . Gov ernments £17 1 . 5 m £1 71. 5m generat ed for t a x author it ies and lo ca l gover n ment s. Our shareho l ders T h r ough our d iscipl i ned appr oac h to st rateg ic del iv er y a nd unw av er i ng com m it ment to s a fe a nd fa ir er ga mbl i ng, we a re foc us ed on c re at i ng su st a inable va lue for our sha r eholder s. The Rank Group Plc Annual Report 2022 72 5 4 3 2 1 Supported b y robu st gov ernance and nancial management – St r ong leader s h ip dur i ng t he pandem ic mea nt t he right de ci sions wer e ma de at t he r ight t i me. – Ra nk ’s Boa r d a nd E xe c ut ive s pr ov ide a br oad m i x of sk il l s, k no wled ge a nd ex p er ience to mee t t he Gr oup’ s ne ed s, en su r i ng it del iver s on it s s t r ateg y . – A st r ong, d isc ipli ned a ppro ach to l iqu id it y t h rou gh ca r ef ul ca s h ma n ag ement pro v ided t he necess a r y suppor t to t he ba l a nce s heet t hr ough t he COV ID -1 9 p a ndem ic res ul t i ng i n a st r ong p osit ion for fut u r e in ves t ment. What w e nee d to create v alue 1 Cust omer insights / engagement T h r ough cu st omer in sight s d ra w n f r om c us tomer re se a r ch a nd da ta s cience we c a n b et ter under st a nd what ou r cu r rent a nd pot ent ia l c us tomer s wa nt , en su r i ng we pr ov ide relev a nt, excit ing a nd enter t a i n in g ex per iences. 2 Strong br and positioning Ra nk h as a p or tfol io of bra nds, wh ich i nclude its t hr e e wel l-e st abl is hed c ro ss- c ha n nel br a nd s, Gr o sv enor Ca si nos, Mecc a a nd E n rac ha , a long side our 140 d ig it a l-on ly , propr ieta r y a nd non- pr opr ieta r y br a nd s. 3 Play er protection Ou r t h r e e li nes of defence mo del, i nvol v i ng ou r f r ont-li ne col lea g ues, ou r compl ia nce te a m a nd ou r i nter n a l aud it tea m , se ek s to ens ur e t hat we a r e t a k ing t he appr opr i ate ac t ions to pr ote c t ou r cu stomer s. 4 Innov at ion and technology – Ou r goa l is to of fer se a m les s a nd i ns t a nt jour neys a cr os s our d ig it a l and v enue bra nds w h ich re qu i re s i n nova t ion a nd in ves t ment in t ec h nolog y . – Inv es t ment is d r i ven b y our s t r ate g ic prior it ies and w here re t u r n s a r e pro ven. 5 Inspir ing people – Ou r pe ople a r e our ke y a s set . T he y a r e t he fa ce of our venues’ bra nds. T hr ough st rong te a mwork , r eg ula r t ra in i ng a nd a de d icate d suppor t net w ork our t ea m members a re ex p er t s a t del iver i ng a c u stomer -foc us ed ex per ien c e. – Ou r v e STA R S va lu e s a r e at t he core of ever y th i ng we do. In del i ver i ng t hese va lues, w e ca n a ch iev e our pu r p os e a nd exce ed ou r s t r ateg ic goa ls. – A comprehen sive employ ee eng ag ement prog r a m me a longs ide our e qua l it y , i nclusion a nd d iver sit y st rate g y ensu r es we h av e a n i nclusiv e a nd sus t a i nable c u lt u r e. Evo lv i ng our posit i on a s a n ent er t a i n men t br a nd The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 73 Ris k m anagement How we m ana ge ris k Underst a ndi ng, accept ing a nd m a na g i ng r isk a re f u nda menta l to R a n k ’ s st r at eg y a nd succes s. W e h av e a Gr oup enter pr ise - w ide r isk m a n ag ement fr a me work a nd appro ach , wh ich is i nteg r at ed i nto ou r org a n is at iona l ma na gement st r uct u r e a nd re spon sibi lit ies. T he a im of t his i s to pro v ide ov er sight a nd go ver n a nce of t he ke y r isk s w e face, a s wel l as monit or i ng upcom i ng a nd emer g in g r isk s a nd per for mi ng hor i zon s ca nn i ng ov er t he med ium t o long ter m. Ke y or mater ia l ri sk s a r e identi e d a nd monitor e d t h r ough r is k re g ist er s at a Gr oup level a nd wit hi n busi nes s un it s, ensu r i ng b ot h a t op- do w n a nd bo t tom-up appro ach to r isk ma n a gement. O ver t he pa s t yea r we hav e cont i nued to en ha nce our Gr oup enter pr ise r i sk ma n ag ement f ra mework a nd i mpro ve ou r abil it y to ident i f y , m it ig ate, mon itor a nd re v ie w ke y r is k s. For each pr i nc ipa l r is k identi ed , t he Ri sk Com m it t ee a ss ess ed t he l ik eli ho od a nd con se quence, a nd con r med a ‘ r i sk ow ner’ who is a member of t he E xec ut i ve Com m it tee. T he r i sk ow ner is re spon sible for den i ng a nd implement in g m it iga t ions wh ich a r e re v ie wed for a ppropr i atenes s a nd monitored reg ul a rly . Risk appetite De ni ng r isk app et it e is key i n t he proc ess of embedd i ng t he ri sk ma nagement sy s tem i nto our or g a n is at iona l cu lt u re. Ou r r i sk appe t ite appr oac h is t o mi n i m is e our e x pos ur e to r eput at ional , compl ia nce a nd exces sive n a nc ia l r i sk , whi l st accep t i ng a nd encou ra g i ng mor e r isk i n pur s uit of ou r pu r p ose a nd ambit ion. A s pa r t of the e st abl is hment of r i sk appe t ite, t he Boa rd w i l l con sider a nd monit or t he level of acc ept able r is k it is w i l l i ng to t a k e in e ach of t he pr i nc ipa l r isk a rea s. W e r ec og n is e t ha t our a ppet ite for r isk v a r ies a ccor d i ng to t he act iv it y under ta ken, a nd t h at ou r accep ta nce of r isk i s subjec t a l wa y s to ens ur ing t ha t potent i a l bene ts a nd r i sk s a re f u l l y under s too d befor e de velopments a r e aut hor is ed , a nd t h at sen sible meas ur e s to m it iga te r i sk a r e es ta bli shed . Impro ving our ab ilit y to iden tif y , mitigat e, mon ito r and re vie w k e y risk s Identify Monitor Revi ew Mitigate Role: T he B oa r d h a s ov er a l l r es pon sib i l it y for t he r i sk m a na g ement f ra mewor k a nd fo r es t abl i sh i ng r isk app e t ite , a s wel l a s en su r ing t hat t he app ro ac h is emb e dde d i nto t he oper at io ns of t he busi ne ss. Specic activities: App ro ve s r i sk m a n ag ement f ra me wor k a nd pr o ce ss es . Se t s r isk a ppe t it e. Re v ie ws t he G r oup’ s r i sk pr o le. Role: Gr oup i nte r n a l aud it help s to ma n a ge r i sk ident i c at ion b y conduc t ing ind ep enden t aud it s of t he r isk s to t he busi ne ss a nd pro g re s s in mi tiga ting acti on pl ans. Specic activities: De velo ps a r i sk-ba se d i nte r n a l aud it p ro g r a m me. Aud i t s t he r i sk pr oc es se s ac r os s t he or g a n i sat ion. Re cei ve s a nd pr o v ide s a ss u ra nce on t he ma n a geme nt of ri sk . Rep or ts on t he ef cienc y and ef f ec t i ve nes s of inte r na l c ont r ols. Role: T he Aud it C om m it tee i s re sp on sible fo r as s es si ng t he ong oi ng ef fec t i vene ss of t he r isk ma n a geme nt f r a me wor k a nd pr oc es se s, a n d for u nder ta k in g a n i ndep ende nt r ev iew of t he m it i gat ion pla n s for ma te rial ris ks. Specic activities: O ver s e es r i sk m a n a gemen t f ra mewor k , con t r ols a nd pr oc es se s. Re v iews a c t ion pl a n s to ma n a ge si g n i c a nt r i sk s. Re v ie ws G r oup r i sk r e g is ter. Role: T he G ro up R is k Com m i t t ee i s re sp on sible fo r imp lement i n g t he r i sk m a na g ement f ra mewor k a nd pr o ce ss e s, as s es si ng a nd ma n ag i n g r i sk a nd a ss is t i ng t he Boa rd a nd Aud it C om m it tee i n t he ir ov er sig ht of r i sk a nd m it igat ion. Specic activities: Re v ie ws G r oup r i sk r e g is ter. Ca r rie s out “ de ep d i ve” r i sk re g is te r re v ie w s of spe ci c bus ine s s a re a s. Ident i es a nd ma n a ge s r i sk s a s t he y a r ise. Pr o v id es for um t o ens u r e ade qu at e a nd t i mel y pr og r e ss of risk-mitig at ion act ions. Con sider s rep or t s f r om compl i a nc e f u nc t ion s. Group internal au dit Audit Committee Risk Committee Board Our ris k management frame work T op - do w n ide nt i ca t ion Bo t t om-up ide nt i ca t ion The Rank Group Plc Annual Report 2022 74 Impact Likelihood 1 2 3 5 4 6 12 7 8 9 10 11 Principal r isks and uncertainties heatmap Summary Residual Risk Y ea rly chang e 1 Uncer t a i n t r ad i ng env ir on ment N/A 2 Compl ia nce w ith g a mbl in g la ws a nd reg u la t ions 3 Sa fer ga mblin g N/A 4 Pe ople 5 Hea l t h a nd s a fet y 6 Ta x a t i o n 7 C h a ng e pr og r a mmes: I nt eg r at ion, t r a n sfor m at ion a nd techno logy projects 8 Bu si ness cont i nu it y pla n n in g a nd d is a ster r e cov er y ( oper at iona l re si l ience ) 9 Data pr ot ec t ion a nd ma nag ement 10 C yb er re si l ience 11 Dep endenc y on t h i r d pa r t ies a nd supply c ha i n 12 Pa nde m ic Principal r isks and uncertainties T he Boa rd ha s c onducte d a r obust as se ssment of t he Compa ny’ s pr i ncipa l a nd emerg i ng r isk s. T he r isk s outl i ned i n t h is s ec t ion a r e t he pr i ncipa l ri sk s t h at we ha ve identi ed a s mater ia l to t he Gr oup. T hey r epr esent a ‘point-in-t i me’ as se ssment , as t he env ir on ment in w h ich t he Gr oup oper ate s is con st a nt ly ch a ng i ng a nd new r i sk s ma y a l wa y s a r i se. R isk s a re con sidere d i n ter m s of l ikel i hoo d a nd impa c t a nd a r e ba se d on re sidua l r isk rat ing of: h igh , med ium a nd low , i.e. af ter ta k i ng i nto acc ount cont r ol s a lr ea d y i n place a nd operat i n g ef fec t ively . Mappi ng r isk s i n t his w ay helps not on l y to pr ior it i se t he r isk s a nd req ui r ed a c t ions but a l so t o direct the required reso urce t o maintain t he ef fec t iveness of cont r ol s a l r ea dy i n place a nd mit ig ate f u r t her where r e qu ir e d. T he r isk s out li ned i n t h i s se c t ion a re not set out i n a n y order of pr iorit y , a nd do not include a l l r isk s a sso ci ate d w it h the Gr oup’ s ac t iv it ies. Add it ion a l r i sk s not pre sent l y k no w n to ma n ag ement, or c ur rent l y deeme d less mat er ia l , ma y a l so h a ve a n ad ver s e ef fec t on t he busi ness. R isk s such a s t hes e a r e not ra i se d a s pr i ncipa l r isk s but a r e never t heless p er iod ica ll y monit ore d for t heir i mpac t on t he G r oup. Emerging risks Ou r r i sk ma nagement pr oc ess es i nclude consider at ion of emerg i ng ( inc ludi ng oppor t u n it y) r isk s; hori z on sc a nn i ng i s per for med w it h a v iew to enabl i ng ma n ag ement to ta ke t imel y st eps to inter vene a s appr opr ia te. Ou r met ho dolog y u se d to ident i f y emerg i ng r isk s i ncludes r e v iew s w it h bot h i nter n a l a nd ex t er na l subjec t ma t ter e x per ts, re v ie ws of con su lt at ion pap er s a nd publicat ions fr om w it hi n a nd out side t he indu st r y a nd t he use of key r isk ind ic ator s. T h r oughout t he yea r s ome new r is k s ha ve emerge d a nd de velope d wh ich ha ve b een monitor e d by m a n ag ement and ac t ion ta ken when t hey s t a r ted to c r ys t a l l is e. T he most sig n i ca nt n e a r -ter m em er g i ng r isk i s t he for thcom i ng pr opo se d ch a nge s to U K ga mbl in g r eg u la t ion w it h t he G over nment’s propos ed W hite Pa per on legislat ive a nd reg ul ator y r eform exp ec ted to be publ ishe d in t he comi ng mont hs. Mit i gat ion ha s t a ken t he for m of ongoi ng monitor ing a nd r i sk a ss es sments, on goi ng members h ip and c ont r ibut ion to t r ade a ss oc ia t ions , a nd c ont i nui n g to bu i ld on a nd ma i nt a i n r elat ionships w it h our st a keholder s. W e a lso c ont inue to de velop our pl a ns a nd consider our s t r ate g y , to t he ex tent poss ible base d on av a i l able in for mat ion, so a s to en su r e we a r e wel l-place d to r eac t t o t he impac t s a nd oppor tu n it ies pr es ente d by such reg u lator y ch a nge. T he Gr oup’ s a s se ssment of cl i mat e -rel ate d r isk s a nd oppor t u n it ies c ont inues to develop (plea s e se e pag es 62 to 70 for more i n for ma t ion) . Howe ver, whi l st cl i mat e r isk i s a n emer g in g r is k for t he Gr oup, it is not of its el f cu r r ent l y r ega rde d as a pr incipa l r isk a nd t he r i sk it sel f is cu r r ent l y con sidere d low . We never t heless cont i nue to keep t h i s under r e v iew. The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 75 Principal risk: 1 Uncertain trading en vironmen t Y e a rl y ch a n ge – N/ A Principal r isk Reco ver y f rom t he pa ndem ic is slowed b y in a t iona r y pre ssures impa ct ing cons ume rs’ discreti onar y expe nditure . Such pres su re s in uence cus tomer beha v iour a nd ca n reduce spend on enter ta i n ment a nd leisu r e ac t iv itie s such a s t hose of fere d b y t he Gr oup, a nd prop ensit y to v isit our venues. T h is cou ld i mpac t ou r per form a nce a nd s t r ate g ic deci sions. Moreo ver, the sh a r p r ise i n energ y cos t is i mpac t i ng t he oper at i ng m a r g i ns of ou r venues busi nes ses a nd th i s w i l l be f u r t her impac te d if pr ices cont inue to i ncr ea s e. Relat ed r i sk s caus ed b y c u r r ent mac r oe conomic a nd ge opol it ic a l uncer ta int y a re ener g y ava il abil it y a nd t he i ncr ea s ed c ost of pro duct s a nd s er v ices, a l l of w h ich cou ld impac t ou r f ut ur e per for ma nce a nd s t r ateg ic de cis ions. Residual r isk rating and change in risk impact New ( e vol ved f r om ‘Cha n g i ng Cus tomer Need s (venues )’) a nd cons idere d hi gh re sidua l r isk. Wit h t he c ur rent t ra d in g env i r onment , in a t iona r y pre ssu r es, energ y pr ices at r e cor d h ighs, i ncr e a ses i n i nter es t ra tes a nd lab our s hor t ag es p os t-COV I D - 19 impac t ing t he leisu r e se c tor in pa r t ic ul a r, the r i sk here i s con sidere d h igh. Risk mitigat ion strate gy W e a r e ac t i vel y monitor ing t he situa t ion a nd cont i nue to put cont i ngenc y me a sur e s in pl ace to m a n ag e t hes e r isk s , in clu ding: – monitor ing e conomic de velopments a nd u nder ta ke s cen a r io a na lys is wher e appr opr iat e. In pa r t ic ul a r, the G r oup focu se s on impac t s i n t he shor t and me d ium ter m th at m ay r e su lt f rom c ha nges i n c ust omer beha v iou r . – re v ie w i ng oper at ional pl a n s to en sur e t hat t he y a r e r obust a nd wel l ma nag ed . – under ta ki n g re g u la r i n sight a nd t r ack ing wor k in r el at ion to our br a nd s, a nd c ont inue to a ss ess t he relev a nce of ou r pro duct s t o our c us tomer s. – consider i ng w a ys to m a n ag e t he G roup’ s ex po su re i n r es pe c t of ex ter na l cond it ions b e yond it s cont r ol, i nclud in g for wa r d buy i ng of ener g y a nd re v ie w i ng t he ex tent of inter es t r ate risk exposur e. – ensu r i ng t hat ou r pro c ur ement tea m conduct s tender pro ces se s a nd lev era ge s our s ca le to ef fec t i vely c ont r ol cos ts a nd ensu r e pr ici ng i s compe t it iv e. Link to strateg y Pi l l a r s 2 a nd 3 Principal risk: 2 Compliance with gambling laws and regul ations Y earl y c han ge Principal r isk Reg u la tor y a nd leg isl at i ve r eg i mes for be t t i n g a nd ga m i ng in ke y m a rke t s a r e con st a nt l y u nder re v iew a nd ca n c ha nge (i ncludi ng a s t o t heir i nter pret at ion by reg ula tor s ) a t shor t not ice. Thes e cha nges cou ld benet or ha ve a n adv er se ef fe c t on t he busi ness a nd add it iona l c ost s m ight b e inc u r r ed i n order t o comply . Fai l i ng to c omply lead s to a n incr ea s ed r isk of inv est igat ion( s) and r eg u l ator y ac t ion a nd sa nct ions b y wa y of licence cond it ions, n a nci a l pen a lt ies a nd / or loss of an oper at i ng l icence. Residual r isk rating and change in risk impact Cons idere d h igh re sidua l r isk a nd i ncr ea si ng. T here i s ongoi ng i ncr e as ed r eg ula tor y foc us on compl ia nc e by r eg u l ator s i n t he ju r is d ic t ions i n wh ich t he G roup oper at es. T he r isk of p otent i a l non-compl ia nce incr ea s es w it h t he pace of cha nge in r eg ula t ion, pa r t icu l a rl y when l im it ed t i me is pro v ided t o ensu r e compl ia nce. Re g u lat or y cha n ge i n t he UK i s of ten del i ver ed t hr ough ad hoc G a mbl i ng Com m i ssion g uid a nce wh ich i s of t en open to i nter pr e ta t ion; t h is f ur t her inc re a se s t he r isk of a neg at iv e outcome f r om a re g u lat or y compl ia nce a ss es sment . Risk mitigat ion strate gy T he Gr oup ensu r es t hat: – it seek s on goi ng a nd r eg u l a r enga gement w it h gover nment, ke y civ il s er va nt s in volv ed i n deter mi n i ng ga mblin g pol ic y a nd w it h r eg ula tor s. – it monitor s leg i sla t ive a nd reg u l ator y dev elopments a nd a n nouncement s i n rel at ion to pr osp ec t ive cha nge. – it ha s de ned pol icies a nd pr oce du re s in plac e, wh ich a re per iod ica l ly r e v iew ed a nd upd at ed a s appr opr ia te to t a k e accou nt of re g u lat or y cha n ges a nd gu ida nce. – it ha s a ded icated c omplia nce tea m le d by a n exp er ienced Di r ec tor of C omplia nce & Sa fer G a mbl in g, which mon itor s implementa t ion of a nd compli a nce w it h such pol icies a nd pro ce dur e s a nd pr ov ide s re g u la r r ep or t s t o t he venues’ senior ma n ag ement, a s wel l a s to t he Complia nce and G r oup R isk Com m it t ee s. T he Di r ec tor of C ompli a nce & Sa fer Ga mbl in g a ls o pr ov ide s bi-an nua l repor t s to t he Aud it Com m it tee. – its C ompli a nce C omm it tee mee t s on a mont h ly ba si s, w it h agend a item s i ncludi ng d at a t r end s, mon itor i ng pr og r a m me out put s, pr opos ed c ha n ges t o compli a nce model s, to ols a nd pro ces se s a nd t r ade a ss oc iat ion u p d ate s. – a l l col lea g ues u nder ta k e a n nua l m a nda tor y compli a nce t ra in i ng (i nclud i ng a nt i-br iber y a nd cor rupt ion and money lau nder i ng), w it h add itiona l tr a i n i ng b ein g under ta ken as re qu i re d /re quest ed or as may be appropr i ate to a sp ec i c role. – it ac t ivel y pr omotes a c omplia nt env ir on ment a nd c ul t u re in w h ich cu stomer s c a n pla y sa fely . – it enga ge s w it h r eg u l ator s a s appr opr ia te a nd ex a mi nes t he lea r n i ng s f r om, a nd mea su r es a dopte d by , ot her operat ors a nd se c tor s of t he ga mbl i ng i ndust r y . Link to strateg y Pi l l a r s 1, 2 , 3, a nd 5 Risk manage ment Continu ed The Rank Group Plc Annual Report 2022 76 Principal risk: 3 Safer gambling Y e a rl y ch a n ge – N/ A Principal r isk Sa fer g a mbli n g under pins ou r s t ra teg y w it h one of ou r v e st r ateg ic pil la r s bei ng t ha t we wi l l bu i ld sust a i n able rel at ions h ips w it h ou r c us tomers b y pr ov idi ng t hem w ith s a fe env i r on ments i n wh ich to pl ay . M i n im i si ng t he pot ent ia l for our c us tomer s to su f fer h a r m f r om t hei r ga mblin g w i l l a ssi st t he Gr oup in en su r i ng t hat it g r ow s t he busi nes s i n a sus ta ina ble way . We ar e com m it t ed to del i ver i ng t he highest pos sible level s of pla yer sa fet y a nd prote c t ion. Fai lu re t o pro v ide a sa fe ga mbli ng en v i r onment for ou r cu stomer s cou ld ha ve r eg u l ator y i mplica t ions, a ffe c t t r u st in ou r br a nd s a nd impa c t our abi l it y to bu ild a s ust a inable bus i ne ss. Residual r isk rating and change in risk impact New a s a st a nd-alone pr i ncipa l r isk a nd con sidere d med ium residua l risk . Ou r mos t mat er ia l ESG i ssue is t o ensu r e t he h ighes t pos sible level s of pla yer sa fet y and pr ote c t ion. Risk mitigat ion strate gy T he Gr oup ensu r es t hat: – it ac t ivel y pr omotes a s a fer ga mblin g cu lt ur e. – it i ntera c ts a nd engag es w it h its c us tomer s on a reg ula r basi s. – it ma ke s av a i l able a ra n ge of tool s on a l l br a nd s ac ro ss a ll cha nnels t o suppor t cus tomer s in m a n ag i ng t heir spend a n d p l a y. – it inv es t s cont i nuously i n t he de velopment of its pe ople, pro ces se s a nd te ch nolog y , i ncludi ng w it h t he a ssi st a nce of ex per t t h ir d pa r t ies, t o int roduce ne w a nd ongoi ng impr ov ements to en able it to ident if y a nd ef fe c t iv ely i nter ac t w it h at-r isk c u stomer s. – it cont i nues to in ves t in d at a a na ly t ics to b et ter identi f y potent i a l l y at-r isk pla y b y con su mers a nd in t he r esu lt a nt pro ces se s wh ich del iv er t he appr opr iat e inter ac t ion s w it h t hose c us tomer s a nd t he ong oin g ev a lua t ion of t he ef fec t iveness of t ho se i nter ac t ions. – a l l col lea g ues u nder ta k e a n nua l m a nda tor y sa fer g a mbli ng t ra in i ng, wit h add it iona l t ra i n i ng (i nclud i ng pr ov ide d ex ter na l l y , for ex a mple by G a mC a r e ) a s r e qu ir e d /re quest ed or as ma y be appr opr iate to a spe ci c role. – it inve st s sig n i c a nt l y in i mpro vements for t ack li ng t he problem t h r ough dona t ions to r es ea r c h, t r ea t ment a nd educa t ion in it i at iv es, a s wel l a s t hr ough d r i v i ng col lab ora t ion acr os s t he i ndus t r y w it h ot her operator s, cha rit ies a nd reg ula tor y bod ies. – it ha s a ded icate d a nd exp er ienced r s t a nd sec ond li ne sa fer g a mbli ng t ea m s. Link to strateg y Pi l l a r s 1 a nd 5 Principal risk: 4 People Y earl y c han ge Principal r isk People a r e pivot a l to t he succes s of t he org a n is at ion a nd a fa i lu re t o at t rac t or r et a i n ke y i nd iv idu a ls m a y impa c t t he Gr oup’ s abi l it y to del iver on it s s t r ateg ic pr ior it ies. A prer e qu isite t o ach iev ing a ll of t he s t r ateg ic pr ior it ies i s ensu r i ng t he Group ha s t he right p eople w it h t he right sk il l s, deploye d w it h i n t he r i ght a re a of t he busi nes s. Residual r isk rating and change in risk impact Cons idere d med ium r e sidua l r i sk a nd i ncr ea si ng. Cons idere d inc re a si ng a s t he a va i l abil it y of col lea g ues a nd compet ition for t a lent cont i nues to be a fo c us a r ea , pa r t icu l a rl y for our U K venues busi nes s po st b ot h t he pandem ic a nd t he impac t of Br e x it on t he br oader hospit a lit y sec t or . Risk mitigat ion strate gy T he Gr oup ensu r es t hat it: – re g u la r ly en ga ges w ith c ol lea g ues a nd r ev iews it s r ew a r d prop osit ions i n or der to r et a in ex ist i ng t a lent a nd at t ra c t t he bes t ca ndid ates t o r oles. – conduct s b ench ma r k i ng ex erc is es i n r elat ion to its compe ns at ion p ack a ge s. – pro v ides t ra i n in g a nd i nduct ion pr og r a m mes to ne w joiner s ta ilore d a s appr opr ia te for t hos e who a r e new to t he sec tor. – monitor s at t r it ion a nd r ec r u it ment r ate s. – is foc u sed i s on de veloping d i ver sit y acr o ss t he G r oup. – cont i nues to dev elop its succe ssion pla ns. – of fer s oppor tu n it ies for c ol leag ues to develop t hei r sk i l l s a nd pro g re ss i n t hei r ca re ers. – cont i nues to consider t he de velopment of its c u lt u r e, includ i ng how t his i s v iew ed b y col lea g ues i n employe e opin ion su r vey s a nd t he ac t ion s t ha t ca n b e t a ken i n l ight of t he out put. Link to strateg y Pi l l a r s 1, 2 , 3, 4 a nd 5 The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 77 Principal risk: 5 Health and safety Y earl y c han ge Principal r isk Fai lu re t o meet t he requ i r ements of t he v a r ious domes t ic a nd inter nat iona l r ule s a nd re g u la t ions r elat ing to t he heal t h a nd sa fe t y of our employe es a nd c us tomer s cou ld ex po se t he G r oup ( a nd ind iv idua l Dir e c tor s a nd employe es) to mater i a l c iv i l , cr i m i na l and / or r eg u la tor y act ion w it h t he a sso ci ate d na ncia l a nd rep uta t iona l c ons equences. Residual r isk rating and change in risk impact Cons idere d med ium r e sidua l r i sk a nd s ta ble. No sign i c a nt ch a ng es in domes t ic and i nter n at iona l st a nd a r d s/r eg ula t ions a r e a nt icipated i n t he shor t ter m. Risk mitigat ion strate gy T he Gr oup ensu r es t hat: – it ha s de ned pol icies a nd pr oce du re s in plac e, wh ich a r e per iod ica l ly r e v iew ed a nd upd at ed a s appr opr i ate. – it ha s a ded icated hea lt h a nd sa fet y t ea m le d b y a n ex per ien c ed Hea d of Hea lt h and S a fet y , wh ich mon itor s implementa t ion of and c ompli a nce w it h such pol icies a nd pro ce dur e s a nd pr ov ide s re g u la r r ep or t s to t he venues ’ sen ior ma n ag ement, a s wel l a s to t he H ea lt h & Sa fet y a nd Gr oup R isk C om m it te es. T he Head of Hea lt h & S a fet y a l so pro v ides bi-a n nua l r ep or t s to t he Audit Com m it tee. – a l l col lea g ues u nder ta k e a n nua l m a nda tor y t ra in i ng, wit h add it iona l tr a i n i ng b ein g under ta ken as r e qu ir e d / re ques ted or as ma y be appr opr iate to a spe ci c role. Link to strateg y Pi l l a r s 3 a nd 5 Principal risk: 6 T axation Y earl y c han ge Principal r isk Ch a ng es in sc a l r eg i mes in domes t ic and i nter n at iona l ma rk et s ca n happen a t shor t not ice. T he se ch a ng es cou ld bene t or have a n ad ver se ef fe c t w it h add it iona l cost s potent i a l l y i ncu r r e d in or der to c omply . Residual r isk rating and change in risk impact Cons idere d low r esidua l ri sk a nd st able. T a x cha nges i n t he i m med ia te f ut u r e a r e not a nt icipat ed to be m ater i a l i n t hei r i mpac t on t he Gr oup. Risk mitigat ion strate gy T he Gr oup’ s t a x st r ate g y is appro ve d a n nua l l y b y t he Bo a r d. Resp onsibi l it y for its ex ec ut ion is delega ted t o t he Ch ief Fi na nc ia l O f c er who repor ts t he Gr oup’ s ta x posit ion to t he Bo a r d on a re g u la r basi s. T he Gr oup ensu r es t hat it: – ha s a n appropr iately qu a l i e d a nd res ou rc ed t a x te a m to ma nage it s t a x a f fa ir s. – cont i nues to monitor t a x legi sl at ion a nd a n nouncement s in r el at ion to pr osp ec t i ve ch a ng e a nd, w here appr opr i ate, pa r tic ipate i n con su lt at ions o ver pr opos ed leg i sla t ion, eit her d ir e c t l y or t h r ough i ndust r y b od ies. – enga ge s w it h r eg u l ator s a s appr opr ia te. – per for ms a na lysi s of the na ncia l i mpac t on the Gr oup a r is in g f r om prop ose d ch a ng es to t a xa t ion rat es. – seek s e x ter na l ad v ice a nd suppor t a s ma y be r e qu ir e d. – dev elops or g a n i sa t iona l cont i ng enc y pl a n s a s a ppr opr i ate. Link to strateg y Pi l l a r s 2 a nd 3 Risk manage ment Continu ed The Rank Group Plc Annual Report 2022 78 Principal risk: 7 Change pr o grammes : Integratio n , transf ormation and techn olo gy project s Y earl y c han ge Principal r isk Ke y Gr oup pr ojec t s a nd pr og r a m mes c ould f a i l to del iv er , re su lt i ng i n m is se d ma r ket opp or t u n it ies , a nd / or t a ke long er to del iver, resu lt ing i n m is se d s y ner g ies a nd sa v i ng s. Residual r isk rating and change in risk impact Cons idere d med ium r e sidua l r i sk a nd s ta ble. Fai lu re t o del iver ke y s t r ateg ic pr ojec t s a nd prog r a m mes impac t s on c us tomer loy a lt y a nd t he st rateg ic g r ow t h of t he busi nes s a nd t her efore r em a i ns a med ium re sidua l r i sk , but is a l so r eg a r ded a s s t able. Risk mitigat ion strate gy T he Gr oup ensu r es t hat ch a ng e pro g ra mmes: – use a s t r uc t u r ed a nd dis cipl i ned del iver y met hodolog y to ensu r e t h at t he y a r e r obus t ly m a n ag ed to a ch iev e t heir outc ome. – a r e subjec te d to de ta iled m a n ag ement over sight a s wel l as h av ing sp ons or sh ip f rom a s en ior-lev el st a keholder. – fol low a comprehen sive r isk ma n a gement appr oach a nd ar e ma n ag ed b y ex p er ienced pr oje c t a nd pr og r a m me ma n a ger s. Link to strateg y Pi l l a r s 1, 2 a nd 3 Principal risk: 8 Business continuit y planning and disas ter recov ery ( operational re silience ) Y earl y c han ge Principal r isk Pla n n i ng a nd pr epa rat ion of t he org a n is at ion, t o ensu r e it cou ld over come ser ious incident s or d isa s ter s a nd r es ume norm a l op era t ions w it hi n a r ea son ably shor t per iod , is c r it ic a l to ensu r e t h at t her e is m i n i ma l impac t to it s oper at ions, cu stomer s a nd r eput at ion. T y pica l di sa s ter s m ight inc lude: nat u r a l d is a ster s s uch as r es a nd oo ds, pa ndemics, acc idents i mpac t i ng ke y people, in sol venc y of ke y suppl iers, e vent s t h at r es ul t in a los s or lac k of ava il abil it y of da t a or I T s ys tem s, negat i ve med i a ca mpaig ns a nd ma r ket upheav a l s. Residual r isk rating and change in risk impact Cons idere d med ium r e sidua l r i sk a nd s ta ble. T he geo g ra phica l nat u r e of t he oper at i ng en v i r onment a nd ke y r isk e x pos ur e s a r e k now n and u nder st oo d. Risk mitigat ion strate gy T he Gr oup seek s to develop, embed a nd re ne its approac h to inc ident a nd cr i sis m a na gement on a n ong oin g pr oac t iv e ba sis. Gr oup busi nes s cont i nuit y pla n s a r e r eg u la rly r e v iewe d for ke y sites a nd busines s a r ea s a nd th is w ork i ncludes re v iew in g t he re si l ience of a nd d isa s ter r ec over y for I T s y st ems. Link to strateg y Pi l l a r s 1, 2 , 3 a nd 5 The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 79 Principal risk: 9 Data prot e ction and managemen t Y earl y c han ge Principal r isk T he in abi l it y to adequ atel y pr ote c t sen sit ive c u stomer d at a a nd ot her ke y d at a a nd i n for ma t ion as se ts t hat cou ld be le a ke d, ex po se d, h acke d or t r a ns mit ted w ould r es ul t in c us tomer det r i ment , for ma l inve st igat ions a nd / or p os sible lit i gat ion lead i ng to pro se cut ion, nes a nd / or d a ma ge to ou r bra nd s. Residual r isk rating and change in risk impact Cons idere d med ium r e sidua l r i sk a nd s ta ble. T he Gr oup cont i nues to dev elop a nd en ha nce it s c ont rol env i r on ment in r elat ion to cus tomer dat a c ont rol s a nd reg u lator y r equ ir emen t s. Risk mitigat ion strate gy T he Gr oup ha s i n plac e da ta pr ot ec t ion pol icie s in or der to prot ec t t he priv ac y r ights of i nd iv idua ls i n accor d a nce w it h GDPR a nd ot her r elev a nt loc a l d at a pr otec t ion and pr iv ac y leg isl at ion ( a s a pplic able ). The se a r e mon itore d b y a n ex per ien c ed Dat a P ro tec t ion O f cer (‘DPO’ ) to ensu re t h at t he busi ness i s aw a r e of, a nd ad heres to, lega l req ui r ement s a nd indu st r y be st pr ac t ice. T he DPO pr o v ides r eg u l a r r epor ts t o t he Gr oup R isk C om m it t ee on r elev a nt d at a a nd t r ends , monitor ing pr og r a m me out put s, ongoi ng pr oje c t s a nd a n y potent i a l r eg u l ator y ma t ter s. T he D P O a l so pr o v ides bi-a n nua l rep or ts to t he Aud it C omm it tee. A l l col le ag ue s under ta ke a nnua l ma nd ator y t r a i n in g, wit h add it iona l tr a i n i ng b ein g under ta ken as r e qu ir e d / re ques ted or as ma y be appr opr iate to a spe ci c role. T e ch nolog y a nd I T sec u r it y cont r ols a re i n plac e to r est ric t acce ss to s ensit ive da ta a nd ensur e i nd iv idua ls on l y ha ve acce ss to t he dat a t he y need t o do t hei r job. The Gr oup a l so ca r rie s out per iod ic penetr at ion test i ng of se c ur it y c ont rol s a r ou nd d at a . Link to strateg y Pi l l a r s 1, 2 a nd 3 Principal risk: 10 Cyber resilience Y earl y c han ge Principal r isk C yb er-a t t ack s c a n d isr upt and cau se consider able na nc ia l a nd rep uta t iona l d a m a ge to t he G r oup. If a c yb er -at t ac k wer e to occ u r, the G roup cou ld lose a s se ts , rep uta t ion a nd busi nes s, a nd potent i a l l y face r eg u la tor y ne s a nd /or lit iga t ion – as well as t he cost s of r emed ia t ion. Op era t ions a r e h igh l y dependent on te ch nolog y and ad v a nced in for mat ion s ys tems (such a s t he us e of cloud comput in g) a nd t here i s a r is k t ha t such te ch nolog y or s y s tems c ould f a i l, or outa ge s occ u r. Residual r isk rating and change in risk impact Cons idere d med ium r e sidua l r i sk a nd s ta ble. Due to t he pr og r a m me of work i n plac e a nd ongoi ng monitor ing a nd r esp ons e to new a nd emerg in g at tack ve c tor s, t h is i s consider ed a s t able r isk for t he Group. Risk mitigat ion strate gy T he G roup: – ha s a Se c u r it y Oper at ions Cent r e (SO C ) a nd Vul ner abi l it y Ma n ag ement ser v ice tool s(s ) to pr o v ide i ncr ea se d v i sibil it y of sec u r it y ev ents a nd enable v ul ner abi l it ies to b e monitored /quickly add re ssed. – ha s i n place s ec u r it y pol icies a nd proce du r es a nd conduc t s t ra in i ng for col lea g ues to en su r e ongoi ng a wa r enes s. – employs a de d icat ed , spe ci a l is t G roup se c ur it y t ea m. – ca r rie s out per iod ic att ac k a nd penet rat ion te st i ng, w it h ac t ions a r isin g fol lowed -up, tr acke d a nd r emed i ate d by t he sec u r it y tea m. – fol lows a r ol l i ng pr og r a m me of work to cont i nue to en ha nce c yb er se cu r it y a nd r esi l ience w it hi n t he I T es t ate. Link to strateg y Pi l l a r s 1, 2 a nd 3 Risk manage ment Continu ed The Rank Group Plc Annual Report 2022 80 Principal risk: 11 Dependency on third parties and supply c hain Y earl y c han ge Principal r isk T he Gr oup is dep endent on a number of t h i r d-pa r t y s upplier s for t he oper at ion of its bu si ness. T he wit hdr aw a l or r emova l f rom t he ma rket of one or more of t hese t h i rd -pa r t y suppl iers , fa i lu re of t hese supplier s to compl y w it h c ont ra c t ua l obliga t ions, or r eput at ion a l is sues a r isin g in c onne c t ion w it h t hese s upplier s cou ld ad ver sel y a f fe c t oper at ions, espe ci a l l y where t hese supplier s a r e n iche. Residual r isk rating and change in risk impact Cons idere d med ium r e sidua l r i sk a nd s ta ble. T he t h i rd -pa r t y op era t i ng env i r on ment a nd ke y r isk e x po su re s ha ve r ema i ned t he sa me but t he potent ia l r isk t o supply ch a i n due to t he cu r r ent m acr o econom ic env i r onment cont i nues to be mon itor ed . Risk mitigat ion strate gy T he Gr oup ha s a cent r a l proc u r ement tea m t h at o ver se es t he pro ces s for acq ui sit ion of supplier s ac ro ss t he Group, ut i l isi ng a supplier r i sk ma n a gement f ra mework . Ou r p olic ies a nd pro ce dur e s re qu i r e due di l ig ence to be c a r rie d out on supplier s. W e r eq ui r e t h at suppl ier cont ra c ts i nclude, a mong st ot her t h i ngs , appr opr iate c lau se s on compli a nce w it h applicable la ws a nd r eg ula t ions, t he pr e vent ion of moder n sl av er y a nd a nt i-br iber y . We seek to work w ith s upplier s who a r e ac t iv ely manag ing climate risks. Busi nes s ow ner s a r e r esp ons ible for commun ic at ion w it h k ey supplier s a nd a r e u lt i m atel y accou nt able for such rel at ion sh ips a nd ensu r i n g t ha t cont r ac t ua l req ui r ements a re met . Link to strateg y Pi l l a r s 1, 2 , 3, 4 a nd 5 Principal risk: 12 Pandemi c Y earl y c han ge Principal r isk A l l r es t r ic t ions h av e be en l if ted si nce Au g us t 2021 in t he UK. Howe ver, as a re su lt of t he se ver e i mpac t t h at COV ID -1 9 h ad on t he busi ness , t he ra te of it s re co ver y sinc e t he venues re opened a nd res t r ic t ions wer e l i f ted (i nclud in g t he ra te of re t u r n of cu st omers, p a r tic ul a r ly f r om ov er sea s) , a nd t he re sidua l r isk t ha t re st ric t ions c ould b e rei nt r o duced , or cu stomer s ma y elec t t o re duce t hei r so ci a l cont ac t s i f ca s es were t o inc r ea se, we c ont i nue to ta ke a c aut ious appr oac h to t he r educ t ion of r isk a t t h is t i me. Residual r isk rating and change in risk impact Cons idere d low r esidua l ri sk but dec r ea si ng. T he r isk of r e -int r o duct ion of rest r ict ions at s hor t not ice h as t o be ba la nced w it h t he re a ssu r a nce s pro v ided b y t he su c ces s of vacc i nat ion prog ra mmes a nd no socia l di st a nc in g mea su re s ha v i ng be en i n plac e in t he UK for over t welv e month s. Fu r t her to t h is , t he r isk i s r ega r de d a s low a nd cont i nu in g to dec r ea se. Risk mitigat ion strate gy T he Gr oup cont i nues to monit or t he r isk i n ea ch ju r is d ict ion in wh ich it ha s venues or o f ces. T he hea lt h and sa fe t y of ou r col lea g ues a nd c us tomers r em a i ns of pa ra mou nt impor t a nce a nd r isk a s se ssment s cont i nue to be a n es sent i a l pa r t of ensu r i ng a sa fe t y r s t appro ach. W e a l so c ont i nue to re v iew ou r c r isi s ma n a gement a nd busi ness c ont i nuit y pla n s on a less ons lea rnt ba si s a nd to ensu r e t h at t he y r ema in up-to - d ate. Link to strateg y Pi l l a r s 1, 2 , 3, 4 a nd 5 The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 81 Compliance statements Assessment In a dopt i ng t he goi ng c oncer n ba si s a nd v iabi l it y st at ement for prepa r ing t he na ncia l i nf or ma t ion, t he Dir e c tor s hav e co nsi dere d the circumstance s im pacting t he Gr oup du r i ng t he ye a r a s det a i le d in t he oper at i ng r e v iew on pa ge s 16 to 25, includ i ng t he budg et for 2022 / 23 (‘t he base ca s e’), the v e-ye a r busi nes s pla n for t he Group, a nd re cent t r ad i n g per for ma nce, a nd h ave r e v ie wed t he Gr oup’ s pr oje c te d compli a nce w it h its ba n k i ng c oven a nt s a nd acc es s to f u nd i ng opt ions for t he 1 2 mont hs end i ng 31 Augu st 202 3 for t he goi ng c oncer n per iod a nd for the t h r e e yea rs end i ng Aug us t 2025 for t he vi abil it y a ss ess ment. T he Di r ec tor s r e cog n is e t h at t her e is uncer ta int y at t h is t i me c ause d b y t he slower t h a n a nticipat ed r et ur n of c us tomers to U K la nd-ba s ed leisu r e enter ta in ment venues, t he impa c t of cu r r ent ge opol it ica l in uences on consu mer sent iment a nd d isp osable i ncomes, inc re a se in i n at ion rat es a nd t he overa ll i mpac t on con su mer dema nd . T he Di r ec t ors not e t ha t t h is h a s had a n impac t on t he acc u rac y of budget i ng a nd fore ca s t i ng in t he 2021 /2 2 na nc ia l yea r, a nd w it h t r ad i ng b ei ng wea ker t ha n a nt icipate d upon t he r eop en in g of venues, t h is h a s be en consider ed b y m a na gement when set t in g t he ba se c a se for t he 2022 / 23 na ncia l yea r . T he Di r ec tor s h av e re v ie wed a nd cha lleng ed m a na gement ’ s a ss umpt ions on t he Gr oup’ s b as e ca s e. Ke y cons iderat ion s a r e t he a ssu mpt ions on t he levels of cu stomer v i sit s i n t he venues busi ness es, t he number of r s t t ime a nd re t u r n i ng depos itor s in t he dig it a l busines se s, a nd t he aver a ge le vel of spend p er v isit for each . T he ke y ba se c a se a s sump t ions on cos ts a re a s fol low s: – Pay rol l co st s a r e ad jus ted for i ncr e a ses in t he Nationa l M i n i mum Wage a nd a pay r ise is a wa rded i n A pr i l 2023; – Rent due dur i ng t he 2022/ 23 n a nc ia l yea r i s pa id on t i me; – A l l t a x a nd dut y is pa id on t ime; – Capit a l e x pend it u r e is i n l i ne w it h st rateg ic plans; a nd – St a nda rd pa y ment ter ms a r e a ssu med for supplier pa y ment s. A l low a nce i s made for one - of f cos t s as so ci ate d w it h i mplementat ion o f t he Gr oup ’ s st rateg ic plan. T he ba se c a se cont a i n s cer ta i n d is cr e t iona r y cos t s w it h i n ma nag ement cont rol t hat cou ld be r educe d i n t he ev ent of a re venue dow nt u r n. T hese i nclude re duc t ions to over head s, r educ t ion to ma rket i ng co st s, re duct ions to t he venues’ operat i ng c os ts a nd re duc t ions to c apit a l ex p end it u r e. T he comm it ted n a nci ng po sit ion in t he ba se c a se w it hi n t he goi ng concer n as se ssment per iod is t ha t t he G roup cont i nues to ha ve acce ss t o t he fol low i ng com m it te d fac i l it ies: – T er m loan of £ 78.8m w hich r e duces to £4 4.4m i n Ma y 202 3 due to a sche du led loa n r epa y ment; a nd – Rev olv i ng c re d it fac i l it ies (‘RC F ’ ) of £8 0.0m, r educi n g to £ 55.0m in Ju l y 2023. At t he d ate of appr o va l of t he consol idat ed a nd Compa ny n a nci a l st at ements, t he ter m loa n w a s £78. 8m a nd t he £ 80.0m RCF w as u nd r aw n. In u nder ta k ing t heir as se ssment , t he Di r ec tor s a lso r ev iewed c ompli a nce w it h t he ba n k i ng co vena nts (‘Cov ena nt s’) wh ich a r e tes te d bi-a n nua l l y at June a nd Dec ember. The Gr oup ex p ec t s to mee t t he Cov ena nt s a t Dec ember 2022 a nd Ju ne 2023 a nd h a s av a i lable c a sh to mee t li abi l it ies a s t he y fa ll due. Sensitivity anal ysis T he bas e ca se pla n reec t s t he Di r ec tor s’ bes t es t i ma te of t he f ut u r e pr osp ec t s of t he busi ness. A nu mber of plau sible but sev ere do w n s ide r isk s, i nc lud in g c on sid er at ion of pos sible mit ig at i ng ac t ions, hav e be en model led w it h pa r tic ul a r fo cu s on t he potent i a l i mpac t to ca sh ow s, ca sh head r o om a nd cov en a nt compl i a nc e t h r oughout t he goin g concer n p er iod . T he potent ia l impa c t on t he Gr oup of a combin at ion of scen a r ios o ver a nd ab ove t hose i ncluded i n t he ba s e ca s e pla n h a s a ls o be en te ste d. T he t wo dow nside scen a r ios mo del led a r e: (i) c us tomer/depositor number s a nd /or aver a ge sp end per v i sit a r e below b a se ca se e x pe c t at ions, of f se t by d ir ec t co st mit igat ions, a nd (i i) a s for scen a r io (i ), but ta k i n g t he re venue decl i ne ac ro ss t he Group f u r t her to re ec t more r ecent per for ma nce i n t he la st qu a r ter of the 2021 /22 n a nci a l yea r , a long w it h a 5 % i n at ion a r y impac t on t he va r iable cost ba s e, in a dd it ion to t he 8% a l r ead y i ncluded i n t he ba se c a se, t o re ec t add it iona l impac t on underl y i ng cos t s due to g eop ol it ica l i n uences a nd pre ssu r es on con su mer s d isp osable incomes , of fs et b y re duc t ion in cont r ol l able op er at i n g co st . Hav ing mod el led t he dow nside scen a r ios , t he ind ica t ion is t h at t he G r oup would cont i nue to meet it s Co vena nts i n bot h ca se s a nd ha ve a va ilable c a sh to mee t lia bili tie s. Accor d i ngl y , t he Di r ec tor s h av e a re a sonable ex p ec t at ion th at t he G roup ha s ade qua te r esou r ce s to cont i nue in oper at iona l e x i stence for a p er iod a t lea st t h r ough 31 Aug ust 2 023. For t hese r e a sons , t he Di r ec tor s c ont inue to adopt t he going concer n ba si s for t he pre pa r at ion of t hes e cons olid ate d a nd Compa ny n a nci a l st atement s a nd i n pr epa r i ng t he cons olid ate d a nd Compa ny n a nci a l st atement s t he y do not i nclude a ny adju st ment s t h at wou ld be r e qu ir e d to be ma de i f t hey w ere pr epa red on a b as is ot her t h a n goi ng concer n. Going concer n statement Ba se d on the Gr oup’ s ca sh ow fore c a st s a nd busi nes s pla n , t he Di r ec t ors b el ieve t ha t the Gr oup w il l genera te suf cient ca sh to meet it s l i abil it ies as t he y fa ll due for t he per iod up to 31 Aug us t 202 3. In m a k i ng such st at ement, t he Di r e c tor s h igh l ight fore ca s t i ng acc u r ac y i n r elat ion to the le vel of t ra d in g per form a nce ac h ieve d a s t he ke y sen sit iv it y i n t he appr ov ed ba s e ca se. T he Di r ec tor s h av e consider ed t wo dow n side scena r ios which ree c t a r e duced t ra d i ng per for ma nce a nd in a t iona r y impac t s on t he cost ba se. I n t hes e e vents , t he Gr oup wi l l gener ate su f c ient ca sh to meet it s l iabi l it ies a s t hey fa ll due a nd meet co ven a nt r equ i r ements for t he perio d to 31 Aug ust 2 023. Going concer n and viability statemen t The Rank Group Plc Annual Report 2022 82 Viabil ity state ment In ac cor da nce wit h pro v ision 31 of t he 2018 UK C or por ate G over n a nce C ode, t he Di re c tor s con r m th at t hey h ave consider ed t he cur rent po sit ion of t he Gr oup a nd a sse ss ed it s pr osp ec t s a nd longer -ter m v iabil it y over t he th r e e-ye a r per iod t o Aug u st 2025. A lt hough longer per iod s a r e use d when ma k i ng sig n i c a nt st r ate g ic deci sions, t hr ee y ea r s h a s be en use d a s it is con sidere d t he longe st p er iod of t ime o ver wh ich su it able cer ta i nt y for ke y as su mpt ions i n t he c u r r ent cl i ma te ca n b e ma de. T h is is s uppor t ed b y t he Gr oup’ s bu si ness pl a n. Hav ing u nder ta k en t heir a s se ssment a nd consider ed t he overa ll c i rc u ms t a nce s of t he Gr oup, the Di re c tor s con r m th at t he y ha ve a r ea son able ex pe c t at ion t ha t t he Gr oup w i l l be able to c ont inue in op era t ion a nd meet it s l ia bil it ie s as t hey fa ll due ov er t he t h r ee -ye a r per iod to Aug us t 2025. In m a k i n g t h is s t atement, t he Dir ec t or s ha ve per forme d a r obust a s ses sment of t he pr i ncipa l r i sk s fa ci ng t he Group wh ich includes a n a ss es sment of b ot h n a nc ia l a nd non-n a nci a l r isk s tha t ma y t hr e aten t he busi nes s model, f ut ur e per form a nce, liqu id it y a nd solv enc y of t he Gr oup. T he ke y a ssu mpt ions m ade a r e t hat: – T he Gr oup per form s i n l ine w it h t he ba se c as e budge t for F Y 23 u se d for t he goi ng concer n a s se ssment, a nd the st r ate g ic pla n appr ov ed b y t he B oa r d. – T he Gr oup cont i nues to ha ve acc ess to it s ex i st i ng R CF , fol low ing t he expi r y of £25.0m RC F i n t he goi ng concer n per iod , w it h t he rema inder ha v i ng mat ur it y da tes i n 2024, a nd th at t he Gr oup is able to a r ra ng e new RC F at a level r e qu ir e d a s ex i st i ng f aci l it ie s mature . – T he Gr oup re pay s £ 78.8m of debt na ncing on t i me in t he pla n per iod . T he Di r ec tor s h av e a l so con sidere d t he potent i a l outc ome fr om t he G o ver n ment ’ s re v ie w of t he Ga mblin g Ac t 20 05, wh ich ba se d on t he in for mat ion av a i lable a nd t heir u nder st a ndi ng at t he date of t h i s st atement , is a nt icipated to h av e a posit ive impac t on t he Group. Ou r appr oac h to r i sk ma n a gement a nd det a i l s of t he pr i ncipa l r i sk s fac i ng R a n k , toge t her w it h t he impac t of eac h r isk , t he d ir e c t ion of t ra vel a nd t he act ions ta ken to mit igate such r isk s a r e set out on pag es 7 4 to 81. T he r is k s consider e d include (w it hout l i m ita t ion) : u ncer ta in t ra d i ng env i r on ment, c ha n ges t o regulati on (inc lu d ing gamb l ing laws a nd re g u lat ions ), people, sa fer g a mbl in g, hea lt h and s a fet y , ta x a nd te ch nolog y r isk s (i ncludi ng d at a a nd cy ber se c ur it y). T he Gr oup’ s bu si ness pl a n is r e v ie wed a t lea st a n nua ll y . It consider s c ur rent t r ad i ng t r ends, t he impac t of capit a l pr o jec t s, ex i st i ng debt f ac il it ies and c omplia nce w it h co ven a nt s a nd ex p ec te d ch a ng es to t he r eg u la tor y a nd compet iti ve env i r on ment, a s wel l a s ex p ec t at ions for consu mer d is pos able income. I n ca r r y ing out t he as se ssment t he D ir e c tor s ha ve re v ie wed a nd cha l leng ed ke y a s su mpt ions w it h i n t he G roup’ s busi nes s pla n . Det a ils of t he as su mpt ions i ncluded i n t he as se ssment a nd t he s ensit i v it y a na ly sis appl ied to t he ba s e ca se pl a n a r e s et out abo ve on pag e 82. Non- nancial in formation statemen t W e a i m to c omply w it h the Non-Fi na ncia l Rep or t ing D i re c t iv e re qu i rement s f r om se c t ions 41 4 CA a nd 4 14C B of t he UK C ompa n ies Ac t 200 6. T he t able below s et s out wher e rele va nt in for m at ion is loc ate d i n t h is A nnua l Repor t . Re port ing requirem ent Som e of ou r r ele va nt pol ic ies W her e t o nd mor e i n t he A nnu a l Re po r t Pages Env i r on menta l mat ter s – En v i r on ment 62 to 70 Empl oye es – He a lt h a nd sa fet y pol ic y – W h i s t leblo w i n g p ol ic y – Co de of c onduc t – Co l le a g ue s – Div er sit y & Inclusion – Eq ua l oppor t un i t ies – Cu s tome r s – St a keholder enga gement 59 to 6 1 a nd 36 Hu m a n R igh t s – Moder n s la ver y st atement – Hu ma n r i g ht s 39 So ci a l Mat t er s – Hea lt h and s a fet y pol ic y – Co de of c onduc t – W h i s t leblo w i n g p ol ic y – Cu s tome r s – Co l le a g ue s – Co mmuni tie s 35 to 37 , 55 to 61 and 71 A nt i-cor r upt ion a nd a nt i-brib er y – A nt i-cor r upt ion a nd br iber y , g if ts a nd hospita l it y pol ic y – Co de of c onduc t – W h i s t leblo w i n g p ol ic y – A nt i-money lau nder i ng p ol ic y – Co l le a g ue s – Audit C om m it t ee 36, 59 to 6 1 a nd 10 8 t o 10 9 Bus i nes s mod el – Ou r bu si ne ss mod el 72 to 73 P r i ncipa l ri sk s a nd unc er t a i nt ies – Des cr iption of r isk pr o ces se s, r isk m a n ag ement, r i sk go ve r n a nc e 7 4 to 81 Non- n a nci a l key per for ma nce ind i cat or s – Ou r ke y per for ma nce i nd ica tor s – Our st r ateg y – Our E SG st rateg y – Ou r ex ter na l env ir on ment 40 to 51, 52 to 53 a nd 54 to 71 The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 83 Alternativ e Per formance M easures W hen a ss essi n g, dis cu ssi ng a nd measu r i ng t he Gr oup’ s n a ncia l per for m a nce, ma n ag ement refer to me as ur e s use d for inter na l p er for m a nce m a na gement . T hese mea sur e s a re not de ne d or speci ed under U K-adopted I nter n at iona l Fin a nci a l Repor t in g Sta nda r d s (‘IF R S ’) a nd a s such a r e consider ed t o be A lter na t iv e Per for m a nce Mea su r es (‘ A PMs’). B y t heir n at u r e, A PM s a r e not u ni for ml y appl ied b y a l l pr epa r er s i ncludi n g ot her oper ator s i n t he ga mbl i ng i ndus t r y . Accor d i ngl y , A PMs u se d by t he Gr oup may not be compa r able to ot her compan ies w it h i n t he G roup’ s i ndust r y . Purpo se A PMs a re us ed b y ma nag ement to a id compa r i son a nd a ss es s h ist or ica l per for ma nce a ga i n st i nter n a l p er for m a nce bench m a rk s a nd ac r os s rep or ti ng p er iod s. T hese me as ur e s pro v ide a n ong oin g a nd consi st ent bas is to a s ses s per form a nce b y exclud i ng item s t h at a r e ma ter ia ll y non- re c u r r ing, u ncont r ol l able or e xcep t ion a l. T hese mea su r es ca n be cla ssi ed i n ter ms of thei r ke y na nc ia l ch a r ac ter ist ics. Pr o t mea su re s a l low ma nagement a nd user s of t he n a nc ia l st a tements to a ss ess a nd bench m a rk u nderl y i ng bu sine ss per for ma nce du r i ng t he yea r . T hey a r e pr i ma r il y use d b y oper at iona l ma na gement to meas ur e oper at i ng pr o t cont r ibut ion a nd a r e a l so us ed b y t he B oa r d to a s se ss per for ma nce a ga i n st bu sine ss pla n. T he fol low i ng t able ex pla in s t he ke y A PMs a ppl ied by t he Gr oup and r efer r e d to i n t hes e st a te ment s: A PM Pur pose Clo se s t eq u iv a len t IFRS m easure Ad ju st me nt s to r e con ci le t o pr i m a r y na ncia l st at ement s Unde rl y i n g l i ke -for -l i ke (‘L F L ’ ) net ga m i ng r e venue (‘NG R’ ) Re v enue m easure NGR – Sepa r at ely d i sclo se d items – E xclude s cont r ibut ion f r om a ny venue open i ng s, closu r es , disposa ls, acquired businesses a nd d i sc ont i nued op er at ion s – Foreig n exc ha nge movement s Unde rl y i n g oper at ing p r o t / ( l o s s) Pr ot m easure Op era t i ng p r o t / ( l o s s) – Sepa ratel y d is clos ed it ems – E xclude s cont r ibut ion f r om a ny venue open i ng s, closu r es , disposa ls, acquired businesses a nd d i sc ont i nued op er at ion s – Foreig n exc ha nge movement s Unde rl y i n g pr o t / lo ss befor e t a x at ion Pr ot m easure P r o t /( l o s s) befor e t a x – Sepa ratel y d is clos ed it ems Unde rl y i n g p r o t / ( l o s s) a f t er t a x a t ion Pr ot m easure P r o t /( l o s s) a f t er t a x – Sepa ratel y d is clos ed it ems Unde rl y i n g ear n ings / ( loss ) per sh a r e Pr ot m easure Ea r n ings / ( loss) per sha re – Sepa ratel y d is clos ed it ems Fr ee ca s h ow C ash m easure Net c a sh genera ted f r om oper at ing a ctivi ti es – Le a se pr i ncipa l repa y ment s – Ca sh ow i n rel at ion to SDIs – Ca sh c apit a l ex p end it u r e – Net i ntere st a nd ta x pay ment s T he ta bles below r e conci le t he u nderly ing p er for m a nce mea su r es t o t he re por ted mea sur e s of t he cont i nui ng oper at ions of the G r oup. 2021 /22 £m 2020/21 £m Underlyi ng LF L net ga m i ng r evenue (NGR) 644.0 325.3 Closed / d isposed ven ues – 2.5 Foreig n exc ha n ge (‘F X ’) – 1.8 Underlyi ng NGR – cont i nui ng oper at ions 644.0 329.6 Calculation of comparativ e underlying LFL NGR 2020/21 Repor t ed u nderly i ng L FL NGR 288.2 Rev er sa l of St ride (acqui r ed b usi ness) 41.1 Rev er sa l of 2020/ 21 clos ed v enues 0.3 2021 /22 c lose d venues (2.5) 2021 /22 F X (1.8) Rest at ed u nderly i ng L F L NGR 325.3 2021 /22 £m 2020/21 £m LF L underly i ng operat ing pro t /(loss) 40.4 (82.4) Op ened, c lose d a nd d i spos ed v enues (0.6) (2.1) Underlyi ng operat ing pro t /(loss) – c on t inuin g o pera t io ns 39.8 (84.5) Sepa ratel y d is clos ed it ems 42.3 (8.4) Oper at i ng pro t /(loss) – c ont i nui ng operat ion s 82.1 (92.9) The Rank Group Plc Annual Report 2022 84 Rationale f or adjustments – Prot and de bt mea sure 1. Separat ely disclosed it ems ( ‘ SDIs’ ) SDIs a re it ems t hat be a r no rel at ion to t he Gr oup’ s u nderl y i ng ong oi ng per form a nce. T he adju st ment helps us er s of t he accou nt s bet ter a sse ss t he underly ing p er for m a nce of t he Gr oup, helps a l ig n to t he A PM s us ed to r u n t he bu sine ss a nd s t i l l ma int a i ns cla rit y to t he stat utor y repor ted nu mber s. T he fol low i ng pr ov ides t he rat iona le for t r eat i ng t hese item s a s SDIs. Fu r ther de ta il s of t he SDIs ca n b e fou nd in t he Fina ncia l Re v ie w a nd note 4 of t he Fi na nc ia l S t atement s. 2 . Contrib ution f rom any venue openings , closures, disposals, acquired businesses and discont inued operations In t he prior per io d (2020/ 21) , t he G roup close d ve Mecc a venues. F or t he pu r po se of ca lcu l at i ng l ik e-for -l i ke (‘LF L ’) mea su r es its c ont r ibut ion ha s b een exc luded f r om t he pr ior per iod nu mber s a nd c u r r ent per iod nu mber s, to en su r e compa r at i ves a r e made t o mea su re s on t he sa me ba si s. 3. F oreign exchange movements Du r i ng t he yea r t he exc ha n ge r ate s ma y uct uate, t herefor e by us in g a n excha nge rat e xe d t h r oughout the yea r the impac t on over se a s busi nes s per form a nce c a n be ca lcu lated a nd elim in ated. Calc ula tio n of comp ara tive und erl yin g LFL oper ati ng pro t 2020/21 £m Repor te d u nderly in g LF L rep or te d operat i ng lo ss pr e IF R S 16 (67.0) Rev er sa l of St ride (acqui r ed b usi ness) (16.4) Op ened a nd clo sed v enues (1.1) 2021 /22 c lose d venues 2.0 2021 /22 F X 0.1 Underlyi ng LF L operat i ng pro t (82.4) 2021 /22 £m 2020/21 £m Un d er l y i ng c u r r e n t t a x (ch a r g e)/c r e d i t (9.6) 8.0 T a x on sepa r atel y d i sclos ed it ems (1 0.5) 0.3 Defer r e d ta x 3.2 2.1 Ta x (c h a r g e) /c r e d i t (16.9) 10.4 2021 /22 Pence 2020/21 Pence Unde rl y in g E P S 4.3p (20.1)p Sepa ratel y d is clos ed it ems 9.9p 3.6p Repor t ed E P S 14.2p (16.5)p Calc ula tio n of Ca len da r Y ea r 2019 ( CY 2019 ) com pa rat ive Ad d: 12 mon t h s to 30 Ju ne 20 19 Le s s: si x mon t hs t o 31 De cemb er 2018 Ad d: si x mon t hs t o 31 De cemb er 20 19 LF L adj us t ment s 1 Ca l end a r Yea r 20 19 NGR : Gr os venor venues 338.2 (172.1) 198.1 (0.1) 364.1 Mecc a venues 193.5 (96.2) 91.9 (13.5) 175.7 En r ach a a venues 44.9 (22.6) 24.2 (14.9) 31.6 Dig it a l 11 8.5 (57.3) 83.2 (0.4) 144.0 Gr oup 695.1 (348.2) 397.4 (28.9) 715.4 Op era t i ng pro t : Gr os venor venues 44.9 (19.4) 48.1 1.8 75.4 Mecc a venues 28.6 (11.4) 13.7 2.1 33.0 En r ach a venues 2 9.3 (4.1) 5.3 (3.0) 7.5 Dig it a l 20.7 (11.0) 11.9 1.3 22.9 Le ss C ent r a l co st s (31.0) 15.6 (19.2) – (34.6) Gr oup 72.5 (30.3) 59.8 2.2 104.2 1. Li k e -for -l i k e re mov es t he imp ac t of c lub op en i ng s, c los u r es, a cq u ir e d bu si ne ss es , for ei g n ex ch a n ge movement s a nd di scont i nued oper at ion s. 2. En r ac h a venue s Bl a n k enb er ge c a si no d i sp os a l on 1 A pr i l 2 021. The Rank Group Plc Annual Report 2022 Strategic report Governanc e r ep ort Financial st atements Overview 85 The Rank Group Plc Annual Report 2022 86 G o v ernance Repor t In t his se ction: W e prov id e a n ove r v i ew of o ur corporate gove r na n ce st r uct u re, po l i cies and pr ac t ic e s . W e a lso l ook a t t h e key act iv i t ies und er t a ken d u r i ng t h e yea r b y our Boa rd a n d its Co m m it tees in ensur ing ef fec t ive lea der sh ip, o ver sight a nd ap pli cat io n o f best p r act i ce pr inci pl es at R a nk . 88 Cha ir’ s intr odu c t i o n to gove r na n ce 9 1 20 18 Cod e Com plia nc e Statem en t 92 How w e a r e gove r n ed 94 O ur Boa r d 98 H ow gove r na n ce su ppo r ts delive r y – A year i n re v iew 1 0 0 Nom i n at ion s C om m it te e R ep or t 1 07 Au d i t Comm it tee Re por t 1 1 4 ESG & Sa fer Gamb l ing Commit tee Rep or t 1 18 Fina nce Co mm it tee Re por t 120 R em une rat io n Commit tee Rep or t 123 Rem u n erat i on P oli c y 13 1 A n nu a l Re por t on R em une rat io n 1 43 Dir ec to r s ’ Re por t 1 4 7 Direc tors ’ Respo nsi bilit i es Lea rn mo re a bo ut our go vernance structure at w w w. r a n k . c o m/en/ about -us / corporate- gover nance Above: Jonathan P lumb, Kar en Whitworth and Richar d Harris The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 87 Chair ’ s introduction to go v ernance T he B oard has a cl ear com mit m e nt to ro bu st cor p orate go v ernance. W e bel ie v e that g ood go v e rnance l e ads to stro nger v alue creati on and redu ces risk for sharehol de rs an d inde e d all our stak eho ld ers . Alex Thurs by Chai r Dear shareholders I a m plea se d to pr esent t his y ea r ’ s Di r ec tor s’ a nd Cor p ora te G o ver n a nce Repor t. T he B oa r d ha s a c lea r com m it ment to r obust cor pora te go ver n a nce a nd we bel iev e t ha t goo d go ver n a nce lea ds t o st r ong er va lue c re at ion a nd r educe s r isk for sha r eholder s a nd i ndee d a l l ou r st a keholder s. T he B oa r d ha s m a i nta ined its fo c us on h igh st a nda r d s t h r oughout t he yea r , ensu r ing t h at ou r go ver n a nce f ra mework mee ts t he needs of t he busi ness a nd is appropr iately a lig ne d w it h b es t prac t ice. ESG and safer g ambling I a m pa r t ic u la rl y plea se d t h at t h is n a ncia l yea r w e cemented ou r com m it ment to E SG , ref r e sh i ng ou r Gr oup pu r po se a nd s t r ateg ic pil l a r s to en su r e t ha t sus t a i nabi l it y is clea r ly ident i e d as bei ng at t he cor e of wha t we do and publis h in g our r st f u l l sus ta ina bil it y r epor t. T he Bo a r d is un a n i mous i n its v iew t ha t t h is w il l en able us to c re ate a n even mor e succes sf u l busi ness. We ar e com for table t h at t he wor k under ta ken to dat e pro v ides u s w it h a c lea r f ra mework w it hi n wh ich we c a n foc u s on t he iss ues t h at ma t ter mos t to u s a nd our st a keholder s. A s a f u r t her demonst r at ion of ES G sit t ing at t he hear t of our s t r ateg y , we ha ve i ncor p orat ed E SG me t r ics i nto E xec ut i ve Di r e c tor remu nera t ion a nd dur ing t he for t hcom in g yea r wi l l c ont inue to ex pa nd on our appro ach to en su r e ongoi ng a l ig n ment b et ween sh a r eholder a nd ma n a gement inter e st s i n t h is r eg a r d. The Rank Group Plc Annual Report 2022 88 Wit h s a fer ga mbli ng bei ng ou r pr i m a r y ES G foc us a rea , we c ont inue to plac e add it iona l emphasi s on our r e spon se to t he r i sk of ga mbl in g-rela ted h a r m a nd promot i ng a s a fer ga mbli ng c ul t u re. It rem a i ns of t he ut mo st i mpor ta nce t o us t h at wh i l st pr ov idi ng a n e xcit ing a nd enter t a in i ng ex p er ience to ou r cu stomer s, t hey m a i nt a i n t r u st i n ou r bra nds a nd fe el sa fe. O ngoi ng r eg u l ator y de velopments, a nd in p a r tic u la r t he rev iew of ga mbl in g leg isl at ion i n t he UK , w il l mea n th at t he pace of del iv er y onl y cont i nues to acceler ate, a nd t he Boa r d is com m it ted to ensu r ing t h at R a n k i s pro ac t ive a nd in nov at i ve i n it s appr oach. Dev el oping our relationsh ips with st akeholders St a keholder enga gement enable s us to be t ter u nder s ta nd what m at t er s most to t hos e per son s w it h an i nter es t i n our busi ness , consider a ll r elev a nt fac t or s a nd selec t t he best cou r se of ac t ion for l on g- ter m busi nes s success. I r ema i n con dent in t he Boa r d ’ s abi l it y to ef fe c t ivel y eng ag e w it h ou r ke y st a keholders a nd ut i l is e t h at enga gement i n its de c ision-ma k i ng. Some of t he hig hl i ghts of how t he Boa r d enga ge d dur ing t he yea r a r e: – Col lea g ues: v i sit s to ou r venues a nd of ce s to enga ge w it h col lea g ues r st-ha nd i n t heir plac e of work – Reg u l at or s: cor res ponde d a nd pa r tic ipate d in me et i ng s w it h r e g u lat ors spe ci c a l l y foc us ed to wa r d s Boa rd Directors – Sha r eholder s: held more t ha n 40 meet i ng s du r i ng t he cour se of t he ye a r w it h ou r sh a r eholders More i n for ma t ion about ou r st a k eholder enga gement is s et out on pa ges 35 t o 39 of t h is r epor t. Culture W e se ek to appl y cor p ora te go ver n a nce g uidel i nes in a wa y t ha t is beneci a l to our busi ness , consi st ent w it h ou r c ul t u re a nd t r ue to ou r sh a r ed v a lues. I n la s t yea r ’ s rep or t, we rea f r me d our com m it ment to R a n k ’s establ i shed v a lues – ser v ice, tea m work , a mbit ion, r esp onsibi l it y a nd solut ions – wh ich we k now cont i nue to re sona te st rongl y w it h c ol lea g ues. Ou r Boa rd a nd t he lea der s in ou r bus ine ss a r e accou nt able for role model l i ng ou r va lues, a nd we t a ke c a r e to en su re t hat we r ec r u it a nd appr a is e ind i v idua l s a ga i n st t hem in order t o prot ec t a nd enha nce our c ul t u re. T he Boa rd r eg u l a rl y monit ors t he cu lt u re of t he busi ness i n a nu mber of wa ys. Du r i ng t he yea r, th is i ncluded : – Inter ac t ion w it h Ex ec ut iv es, member s of t he leader sh ip tea m, a nd ot her col lea g ues in B oa r d mee t i ng s a nd on v i sits t o of ce s a nd venues – Reg u la r rep or t s f r om t he E xe c ut ive Com m it t ee, pa r t icu l a rl y t he C h ief E xec ut i ve a nd t he Hum a n Re sou r ces Directo r , o n culture- relat ed ma t ters , includ i ng fe edbac k f r om employee opin ion su r vey r es ul ts a nd act ions a r is in g f r om such fee dback – Upda te r epor ts fol low ing v a r ious employee for um s held dur i ng t he yea r f rom t he H u m a n Re sou rc es D ir e c tor a nd des ig nated Non -E xecutive Di rector , Ste ven E som, i n r esp ec t of wor k for ce enga gement Board change s T here h av e be en a number of ch a n ges to t he Boa r d du r i ng t he 2021/ 22 n a nci a l yea r. W e wer e del ighted t o appoi nt R ich a r d Ha r r is as Ch ief Fi na ncia l Of cer, fol low ing t he depa r t ur e of Bi l l F lo ydd at t he end of 2021. R icha r d joi ned us i n Ma y 2022 f rom Fox tons w here he ha d helped n av igate t he busi ness t h r ough t he n a ncia l impac t of t he pa ndem ic, led a br oad r a n ge of M& A ac t iv ities, a nd del iver e d sig n i ca nt cost impr ov ement acr os s t he busi nes s. In add it ion, Luci nd a Ch a rle s-Jones joined t he Boa rd a s a n i ndependent Non-E xe cut ive Directo r in Jun e 20 22. Lu cinda brings a wea l t h of pe ople a nd remu nerat ion ex per t is e to t he Bo a r d, t oget her wit h wider cor p orat e re spon sibi l it y exp er ience a nd w i l l undoubte d l y add v a lue as w e se ek to embed f ur ther E SG w ith i n ou r cor p or ate st r ate g y . Fu r t her det a i l of t he pr oce ss for t hese a ppoi nt ments i s se t out on pag es 102 t o 10 3. Du r i ng t he yea r i n add it ion to Bi l l F lo ydd ’s depa r t ur e, Sus a n Hoop er a nd Ch r is Bel l stepp ed do w n f r om t he B oa r d . I wou ld li ke to t a ke t h i s add it ion a l oppor t un it y to t h a n k t hem for t heir r e spe c t ive c onsider able cont r ibut ions t o Ra nk , i n eac h ca s e for over si x yea r s a s i ndependent Non- Executive Directors. Board effectiveness and composition T he Boa rd con sider s ev a luat ion to be a n ess ent ia l check a nd ba la nce on whet her its composit ion, focu s a nd appr oac h is i n l ine w it h t he Compan y’s overa l l g oa l s. D ur ing t he yea r , we eng ag ed L i nts to ck L i m ited to u nder t a k e a n ex ter na l r e v ie w a nd I a m pleas ed t o rep or t th at t he output of t h is work wa s t hat t he Bo a r d a nd it s Com m it tees a r e opera t i ng ef c ient ly a nd pro duc t ivel y . More det a ils of t he eva lu at ion pro ce ss c a n be fou nd on pag e 104. Ou r br oad r a ng e of Boa rd t a lent co ver s a va r iet y of sk il l s a nd our d i ver se g r oup of Non-E xe c ut i ve D ir e c tor s cont i nue to br i ng much ex per ien c e a nd ch a l leng e to t he Bo a r d, en h a nce d by t hi s yea r ’ s appoi nt ments (as s et out abo ve) . My fo cu s w i l l cont i nue to be on ma i nt a i n i ng s t r ong Boa rd leader s hip to d r ive f u r ther impr ov ements wher e po ssible a nd developi ng succe ssion pla ns to en sur e t hat we a r e wel l-plac ed to c ont inue del iver ing into t he fut u r e. The year a he ad T he Boa rd r ema i n s con sc ious of t he ongoi ng nee d for go od go ver n a nce a nd I a m r ea ss ur e d t ha t our f ra mew ork is st r ong a nd effe c t ive. T he past y ea r h a s been c ha lleng i ng i n pa r t icu l a r for ou r UK v enues busi ness es a s we r ec over f rom t he impac t of t he CO V ID - 19 pa ndem ic. T he re si l ience show n b y col lea g ues i s ad m i rable a nd I wou ld l i ke to t a k e t h is oppor tu n it y to pa y t r ibute, on b eha l f of t he Boa rd, t o a l l ou r col lea g ues i n t he busi ness f or t heir c ont inued d r ive a nd com m it ment a nd to my fel low D i r ec tor s for t he v a lue d cont r ibut ion. A s we look a hea d to t he com i ng ye a r, the publicat ion of the UK G over n ment’s Wh ite Paper for g a mbli ng r efor m wi l l b e a ke y mi les tone for R a n k a nd for t he w ider indu st r y . W e h av e be en enga g i ng open l y a nd pro ac t ivel y w it h a l l a spe c t s of t he pro ces s a nd a r e hopef ul t h at it w i l l c r eate t he h ighest p os sible reg u l ator y st a nd a r d s in a pr opor t ionate m a n ner, present i ng oppor tu n it ies for su st a i n able gr o w th a longs ide add it iona l s a feg ua rd ing m easures . W e go i nto t he yea r a hea d w it h r enew ed con dence i n our st r at eg ic pla ns a nd i n t he k now ledg e t ha t t he Compa ny is led b y a hi gh ly comp etent a nd pr ofes siona l t ea m . I look for wa r d to t he suppor t of our sha reholders a s t he busines s cont i nues its r e cov er y jour ne y a nd t a ke s ad va ntag e of t he oppor tu n it ies t hat l ie a head . I look for wa r d to enga g i ng w it h you f u r t her at t h is ye a r’s An nua l Gener a l Mee t i ng on T hur s da y 13 O c tober 2022. A le x T hu r sby Cha ir The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 89 Board i n actio n – at a glanc e T h r oughout t he yea r, t he Boa r d m a i nta ined its fo c us on r ec over y a nd f ut ur e g ro w t h. It a ls o r ema i ned k een to r et a in it s foc us on adopt i ng a t ru l y c us tomer- cent r ic approac h to it s dec ision-ma k ing, wh il s t dev eloping its su st a i na bil it y agend a . T hi s is re ec te d in t he Boa r d ’ s ac t iv it ies for t he ye a r, which foc us ed i n pa r t icu l a r on st r at eg ic pla n s a nd inv es t ments a lig ne d to g r ow t h i nit iat ive s. It is i ncu mbent on t he Bo a r d to ensu r e t h at t he pu r p os e a nd st r ate g ic di r e ct ion of the Compa n y rem a i n appr opr ia te. A ke y outcome f rom t hi s yea r ’ s B oa r d s t r ateg y da y wa s t he appr ov a l of a r ef r eshe d pur pose a nd st r ateg ic pi l la rs. Se e pag e 98 for more i n for m at ion. Lea rn mo re a bo ut our B oa rd in a ct io n on p ag es 98-99 Capital in v est ment Wit h a n emphasi s on it s pur pos e – to exc ite a nd to enter t a i n – t he Boa rd foc us ed on i n it iat ives to d ri ve impr ov ements i n t he ke y a r ea s of venue re de velopment and te ch nolog y . I n doi ng so, it ensu r ed t hat t he v ie ws of ke y st a keholder s wer e con sidere d a s pa r t of pla n n i ng pr oc ess es, a s wel l a s t he impact of ant icipated regu lator y cha nge. Se e pag e 99 for mor e in for mat ion. Strategy day ESG T he Boa rd ch a l leng ed t he busi ness t o dev elop a n ES G st rateg y that would place sus ta ina bil it y at t he hea r t of dec ision-ma k ing a nd embe d ES G w it h i n R a n k ’ s cu lt u r e. Se e pag e 99 for mor e in f or m at ion. Above l ef t : Grosv enor Glasgow Merchan t City Above b ot to m: Support Ofce, Maidenhead Above to p: Kati e McA l is ter, Karen W h it w or th and Alex Thursby Above m id dl e: Kati e McA l is ter a nd A l ex Th u rs by The Rank Group Plc Annual Report 2022 90 T he Boa rd r ema i n s com m it t ed to ma i nt a i n i ng t he h ighes t st a nd a r d s of cor p orat e go ver n a nce ac ro ss t he Group, re cog n i sin g t he i mpor ta nce of a s t r ong gov er na nce fr a me work to u nder pi n ou r st r ate g ic objec t iv es. I a m plea s ed to r ep or t t ha t, for t he yea r under r e v ie w , we h ave consi st ent ly a pplie d t he pr i nciples of goo d gov er na nce conta i ned i n t he 2018 UK Cor p ora te G o ver n a nce C ode (t he ‘2018 Cod e’) a nd a r e i n f u l l compl ia nce w it h its pro v i sions, sa ve i n r esp ec t of P r ov ision 38. W h i ls t pen sion cont r ibut ion r ate s for newl y appoi nte d E xe cut ive Di r ec tor s w il l be a l ig ne d w it h t he wider work force on appoi nt ment ( a s h a s be en t he ca s e in re spe c t of R icha rd Ha rr is’ appoint ment), t he pen sion cont r ibut ion ra te for Joh n O’Reil l y w i l l b e a l ig ned w it h t he ra te av a i lable to t he major it y of t he w ider work for ce (cur rent l y 3% ) f r om 1 Ja nua r y 2023. F ur t her in for mat ion is a va i l able on pag e 132. How w e comp ly w it h t he U K Co r p or at e G ov er n a nc e Co de 2 018 More i n for mat ion on pa ges 1 Boa r d leader sh ip a nd compa ny pu r pos e A Ef fe c t ive a nd entr epr eneur ia l Bo a r d t ha t pr omotes long-ter m sus t a i nable succe ss 95 to 96 B P u r p ose, s t r ateg y , va lues and c u lt u r e 36 , 40 to 6 4, 7 2, 73, 89, 92 a nd 115 C G over na nce f r a me work a nd B oa r d r es our ce s 92, 98 to 9 9, and 111 D Sta keholder enga gement 35 to 39 E W or k for c e pol ic ies a nd pra c t ice s 59 to 6 1 2 Div ision of re spon sibil it ies F Board ro le s 93 G Ind epe ndence 94 H E x ter n a l com m it ment s a nd con ict s of inter e st s 93 and 95 to 9 6 I Boa rd ef c ienc y a nd key ac t i v it ies 98 t o 99 a nd 104 to 105 3 Composit ion, succession a nd eva lu at ion J A ppoi nt ments t o t he Bo a r d 95 to 96 K Bo a r d sk i l l s, ex p er ience a nd k now ledg e 94 to 9 6 a nd 104 L A n nua l Bo a r d e va lua t ion 10 4 t o 10 5 4 Audit, r i sk a nd i nter na l c ont rol M Financi a l re port ing 109 t o 111 E x ter na l aud itor s a nd i nter n a l aud it 109 t o 111 N Fai r, bal a nce d a nd under s t a nda ble – 2022 A n nua l Rep or t r e v ie w 10 9 O Inter n a l n a nci a l cont r ols 10 8 t o 10 9 R isk m a n ag ement 74 5 Remunerat ion P Li n k ing r emuner at ion w it h pu r pose a nd st ra teg y (plea se se e com ment s abo ve i n re ga r d to p ension cont r ibut ion ra te s ) 132 to 139 Q Remunerat ion polic y 12 3 to 130 R Perfor m a nce outc omes 133 to 13 4 T he 2018 Code c a n b e fou nd on t he Fi na nc ia l Re por ti ng C ou nci l ’ s webs ite w w w.fr c.org. u k . 2018 Code Compliance Statement The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 91 The Rank G rou p Plc B oar d T he Boa rd is u lt ima tely r e spon sible for t he di r ec t ion, ma na gement a nd p er for m a nce of t he C ompa ny . It meet s for m a l l y on a re g u la r basi s, w it h a dd it iona l ad-hoc meet i ng s sc hedu led i n l i ne w it h bu si ness nee d s. T he Di r ec tor s v iew t heir me et i ng s a s a n i mpor ta nt me cha nis m t h r ough wh ich t he y d is ch a r ge t heir dut ies, pa r tic u la r ly u nder s.1 72 of t he Compa nies Ac t 2 00 6 (see pa ge s 32 to 34 for more i n for m at ion) . Board leadership , Compan y purpose and go vernanc e structure Executive Committe e T he E xec ut i ve C omm it tee m a na ge s t he d ay-to - da y oper at ions of the G r oup’ s bus ines s w it hi n level s of aut hor it y delegat ed by t he Boa rd. It compr is es t he Ch ief E xec ut i ve, Ch ief Fi na nc ia l O f c er , G r oup Genera l Coun sel & Compa ny S ec re t a r y , t he Ma n ag i ng D i re c tor s for ea ch of G ro s venor V enues, Mecc a V enues, I ntera c t ive a nd Inter n at iona l, Gr oup Huma n Resou rc es Di r ec tor, Chief In for mat ion Of cer, C h ief T r a n sfor m at ion Of cer , G roup Tra nsfor mat ion St r ateg y Di re c tor, Ch ief In nov at ion Of cer a nd the Di r ec t or of Inves tor Relat ions & Com mun ica t ions. T h r ee sen ior ma n ag ement comm it t ee s, t he Ri sk Com m it t ee, t he Hea lt h and Sa fe t y Comm it tee a nd t he Complia nce Comm it tee, suppor t and r epor t to t he Aud it Com m it tee i n ord er to ensu r e t h at t he appr opr i ate i nter n a l c ont rol s for r is k ma n a gement a r e implemented a nd monitor ed . In add it ion, the ES G Steer ing Com m it tee, compr isi ng sen ior ma n ag ement fr om a r ound t he Gr oup rep or t s to t he ES G & Sa fer Ga mbl i ng Com m it t ee. For more in for mat ion about t he Compan y’ s appro ach to r isk ma n a gement, plea s e se e pag es 7 4 to 8 3. Board Commit tees Nominations Committe e Au d it Committe e Rem uneration Committe e ESG & Saf er Gamblin g Committe e Finance Committe e T he Nom i na t ion s Com m it t ee r ec om mends appoi nt ments t o t he Boa rd. It o ver se es succe ss ion pla n ni ng for Di r ec tor s a nd t he process f or su ccessio n pla n n i ng for t he s enior ma n ag ement tea m . It ensu r es t hat t her e is a n appropr iate m i x of sk i l l s a nd ex per ience on the Bo a r d. T he Nom i na t ion s Com m it tee pr omote s d iver sit y on t he Bo a r d a nd acr o ss t he G r oup. Rea d mo re on p ag es 100 to 106. T he Aud it Com m it t ee over s ee s t he Gr oup’ s na ncia l r epor ti ng a nd monitor s t he ind epe ndence of inter na l a nd e x ter n a l audit . It is r esp onsible for i nter na l c ont r ol s a nd monitor s r isk ma n ag ement includ i ng t he identi c at ion of emerg i ng r i sk s. T he Audit C om m it t ee i s re sp on sible for t he rel at ions h ip w it h t he ex ter na l aud itor. Rea d mo re on p ag es 107 to 113. T he Remuner at ion Com m it t ee i s re sp on sible for esta bli shing a Remunera t ion Pol ic y a nd set t in g t he remu nerat ion for the Ch a i r of t he Boa rd , E xec ut i ve Di r e c tor s a nd sen ior ma n ag ement. It over s ee s remu nerat ion po l ic ie s a nd p r ac t ic e s acr os s t he G roup. T he Remuner at ion Com m it t ee i s re sp on sible for t he a l ig n ment of re wa rd, incent i ves a nd cu lt u r e a nd appr ove s bonus pla n s a nd long-ter m incent i ve pla ns for t he E xec ut i ve Di r e c tor s a nd sen ior ma n ag ement. Rea d mo re on p ag es 120 to 142 . T he ESG & Sa fer Ga mblin g Com m it t ee is r e sp on sible f or as sis t i ng t he C ompa ny in t he formu lat ion and monitor ing of it s env i r on menta l , so ci a l a nd gov er n a nce st rateg y . Reect ive o f Rank ’ s p rodu cts a nd ser v ices, t he ES G & Sa fer Ga mbl i ng Com m it t ee a lso ha s a pa r tic u la r f oc us on t he Compa n y’ s s a fer ga mbling st rateg y a nd pol ic y for t he pre vent ion of ga mbl i ng- rel ate d ha rm i n e ach of t he jur i sd ic t ions a nd ch a n nels i n wh ich it oper ates. Rea d mo re on p ag es 114 to 117 . T he Fi na nce Comm it tee is aut hor i se d by t he Boa rd to appr o ve ca pita l ex pend it u r e a nd m a ke na nce decision s for t he Gr oup up to aut hor is ed l i m it s in accor d a nce w it h the Gr oup’ s deleg at ion of aut hor it y . T he F in a nce Com m it t ee a lso ac t s a s the Boar d’ s d isclosure com m it te e for t he pur pose s of t he Ma r ket Abuse Regu lat ion. Rea d mo re on p ag es 118 to 119. How w e are go v ern ed The Rank Group Plc Annual Report 2022 92 Board purpose T he Boa rd is r e spon sible for the long-ter m succes s of t he Compa n y a nd it s r ole is to pro v ide leader s hip w it hi n a st r uct u r e t h at pro v ides for ef fec t ive c ont rol s a nd en ables r isk t o be a ss es se d a nd ma n a ged . I n under ta ki n g t h is r ole, a nd w it h t he clea r under s ta ndi ng t hat t he B oa r d r et a i ns ul t i mat e re spon sibil it y for t he exer c ise of its p ower s a nd author it ies , t here i s a for ma l fr a me work of Com m it tees of t he Boa rd to suppor t it in d i sc ha r g i ng it s dut ies, a s se t out on pag e 92. E ach Com m it t ee oper at es u nder ter m s of refer ence appr o ved b y t he B oa r d , wh ich a r e re v ie wed a nnua l ly a nd ca n be found on t he Compa n y’ s web site, w w w . ra nk .com. Division of responsibilities Chai r an d Chie f Exe cu tive Ra nk h as e st abl is hed a cle a r d iv ision bet ween t he resp ec t i ve r esp onsibi l it ies of t he Non-Exe c ut ive C h a i r a nd t he Ch ief E xe cut ive. The C hair – Is r esp onsible for t he leader sh ip a nd ef fec t iveness of t he B oa r d , inc ludi ng set t in g its a gend a , over s eei ng c or por ate gov er na nce mat ters a nd u nder ta k ing t he ev a lua t ion of t he Boa r d , it s Com m it t ee s a nd Di r ec t ors. – En su r es t h at t he B oa r d a s a whole pla ys a f ul l a nd con st r uct i ve pa r t in t he dev elopment and det er m i nat ion of Ra nk ’ s st rateg y . – O ver se es ef fec t ive en ga gement w it h t he Compa n y’ s v a r ious s t a keholder s. – En su r es a c u lt u r e of open ness a nd debate a r ou nd t he Bo a r d t able. – Set s a nd ma nage s t he Boa r d ’s a gend a in c onsu lt at ion wit h E xecut ive Di r ec tor s a nd t he Gener a l Cou ns el & Compa ny Se cr et a r y . En su r es t hat Di r e c tor s rec eive acc ur at e, t i mely a nd cle a r i n for ma t ion a nd t ha t t he y a r e f u l l y in for med of rele va nt mat ter s , so a s to pr omote ef fec t ive a nd cons t r uct ive d ebate a nd suppor t sound de ci sion-ma k i ng. – En su r es t h at ade qua te t i me is a va i l able for d isc us sion of t he pr i ncipa l r i sk s, imp or t a nt m at ters a nd key de cis ions a f fe c t i ng t he Compa ny . The Chi ef E xec utive – Is ac cou ntable to t he Boa r d for a l l a sp ec t s of t he per for ma nce a nd m a na gement of t he Gr oup, includ i ng de veloping busi ness s t r ate g ies for Bo a r d appr ov a l a nd ach iev ing t imely a nd ef fec t ive implementa t ion wh ile m a na g i ng r isk. – Is r esp onsible for t he da y-to -d a y oper at ions of t he bu sine ss. – En su r es ef fe c t iv e com mun icat ion w it h a ll s ta keholders. – Ma n ag es t he E xe c ut ive C om m it t ee a nd is r esp onsible for lead i ng a nd mot iva t i ng a la rge w ork for ce of p eople. – Pr omote s t he st rateg y , va lues, ambit ion a nd pu r po se of R a n k a nd c onduct s t he Compa n y’ s a ff a i r s to t he h ighes t st a nd a r d s of inte g r it y , pr obit y and cor p or at e go ver na nce. – T a k es r esp onsibi l it y for Gr oup hea lt h a nd sa fe t y pol icies. – Is re spon sible for the ES G st r ateg y a nd embedd i n g a sa fer g a mbli ng c u lt u r e acr os s t he G roup. Non-Execut ive Directors a nd Senior Independen t Director T he Non-E x ec ut i ve D i r ec t or s supp or t t he Ch a i r a nd pr ov ide o b jec t i ve a nd cons t r uc t i ve ch a l leng e to ma nagement . T hey a re r eq ui r ed b y t hei r r ole to, a mongs t ot her t h i ng s, over s ee t he deliver y of t he st r ate g y wit hi n t he r i sk appe t ite s et b y t he Boa rd , sc r ut i n is e t he per form a nce of ma n ag ement in mee t i ng a g re ed g oa l s a nd objec t i ves, mon itor t he repor ti ng of per for ma nce a nd en sur e c omplia nce w it h r eg u l ator y r equ i r ements. T he Non-Exe c ut iv e Di r ec tor s pa r t icipat e in meet i ng s held by t he Cha i r w it hout the E xec ut i ve Di r e c tor s pre sent . T he Sen ior Independent Di r ec tor pr ov ides a sou nd in g boa rd for t he C ha i r a nd s er ves as a n inter me d ia r y for t he C h ief E xec ut i ve a nd ot her Di r ec t or s when nece ssa r y . She leads t he pro ces s of eva luat in g t he Ch a i r’ s p er for ma nce a nd is a v a i lable i f sha reholders h av e a ny concer ns t h at t he y ha ve be en u nable to r es olve t hr ough t he nor m a l ch a n ne l s. Comp any Secretar y T he Compa ny S ec re t a r y ma ke s sur e t h at appropr iate a nd t i mely i n for m at ion is pro v ided t o t he Bo a r d a nd it s Com m it t ee s a nd is r esp onsible for ad v i sin g a nd suppor ti ng t he Cha i r a nd t he B oa r d on a l l go ver n a nce m at t er s. A l l D i re c tor s ha ve acce ss to t he Compa ny S ec re t a r y a nd may ta ke indep endent profes siona l a dv ice at t he Compa n y’ s e x pen se i n f u r t hera nce of t heir dut ies. Con icts of int eres t T he Gr oup bel iev es it h as ef fec t iv e pro ce dur e s in pl ace to mon itor a nd de a l w it h a ny p otent ia l con ict s of intere st a nd ensu r e t h at a n y rel ate d-pa r t y tr a n sac t ions inv olv ing D ir e c tor s, or t hei r con nec te d pa r tie s, a r e conduct ed on a n a r m ’s leng t h b a sis. Directo rs are req uired t o discl ose a ny con ic t s of inter est i m med ia tel y as a nd when t hey a r ise t hr oughout t he yea r . I n add it ion, a for m a l pr o ces s is u nder ta ken each yea r w hen al l Di re c tor s con r m to t he Boa rd det a i l s of a ny o t her d i re c tor sh ips t h at t hey hold. T hese a r e a ss ess ed b y t he Nomi na t ions C omm it tee, a nd t hen the Boa rd. No D i re c tor is c ounte d a s pa r t of t he quor u m in r e spe c t of t he aut hor is at ion of his or her ow n con ic t. Board re-election In ac cor da nce wit h t he Compa ny ’ s a r t icles of as so cia t ion a nd t he 2018 Co de, a l l cont i nu i ng D i re c t or s w i l l s t a nd f or re - elec t ion a nd R ich a r d Ha rr is a nd Luci nda Ch a r les-Jones, a s new Di r e c tor s a ppoi nt ed dur ing t he yea r , w il l s t a nd for elec t ion at t he 2022 A n nua l Gener a l Mee t i ng. Insurance cover T he Compa n y ha s a r ra ng ed i n sur a nc e cov er and i ndem ni es Di r ec t ors i n re spe c t of lega l ac t ion a ga i n st t hem to t he ex tent per m it ted b y la w . Neit her t he i n sur a nc e nor t he indem n it y applies i n sit uat ions where a D i re c tor h as a c ted f r audu lent ly or d is honest ly . The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 93 Our B oard Skil ls of t he N on- Exe cut ive Dire cto rs Ka r en W hit wor t h Steven Esom Che w S eo ng A un A le x T hu r sb y K at ie Mc A li st er Lucin da Charles- Jones 1. Cus tomer Cent r ic/ hos pita lit y 2. Env ir onment , Sust a i nabi l it y and Go ver n a nce 3. Fin a nci a l ( ac cou nt in g a nd /or n a nce) 4. Ga mi ng 5. Market ing 6. Pe ople 7 . Rea l es t ate & proper t y 8. R isk & Compli a nce 9 . Str ateg y 10 . T e ch nolog y /dig it a l Board tenure 0 -3 yea rs 5 3- 6 y ea r s 2 6 -9 yea r s 1 Committee membe rship Aud it Committee Fi n a nce Committee Nomi na t ions Committee Remu ner a t ion Committee ES G & Sa f er G a mbl i n g Committee A lex T hu r sb y Joh n O’Rei l l y Ri ch ard Harri s Ste ven Es om K a t ie Mc A l i s te r Che w Seon g Aun Lu ci nda Charles- Jon es K a r en W h it wor t h Key Com m it t ee member Com m it t ee C ha ir Board independence Indep endent Appoint ed Chai r A lex T hu r sb y 1 Ye s August 2017 E xec ut i ve Joh n O’Rei l l y No May 201 8 Ri ch ard Harri s No May 2022 Non-E xec u t ive Ste ven Es om Ye s March 2016 K a t ie Mc A l i s te r Ye s April 2021 Che w Seon g Aun No D ecember 2020 Lu ci nda Charles- Jon es Ye s Jun e 2022 K a r en W h it wor t h Ye s Nov ember 2019 1. A le x T hu r sb y wa s or igi n a l l y ap poi nt e d to t he B o a r d on 1 Au g us t 20 17 a nd b ec a me No n-E x ec ut ive C ha ir w it h ef fe c t f r om 17 Oc tob er 2 019. Ma le 5 Fema le 3 Board gender The Rank Group Plc Annual Report 2022 94 Ale x Th ursb y Cha ir Appoi ntme nt Augus t 201 7¹ Independent on appointment Ethnicity /Nationality W h i t e /A u s t r a l i a n Age 62 K ey strengt hs – Br oa d n a nci a l a nd i nte r n at ion a l ex p er ienc e, h av ing w ork ed a cr o ss mul t iple m a rk et s a nd p r oduc t g ro ups i n t he b a n k i n g se c tor for m a ny y ea rs. – E xt en si ve le ader s h ip ex p er ie nce, w it h a s t r on g u nder s t a nd i ng o f go ver na nce a nd inv es to r re la t ion s. Previous experience: A le x wa s a non- e xe c ut iv e d i r ec t or at Ba r c la y s B a n k Plc f r om 20 18 to 2019. He wa s ch ief ex ec ut ive of cer at Nat ion a l B a n k of Dh abi f r om 2 013 to 2016 a nd a non- e xe c ut iv e d i r ec t or at A MM B Hold i ng s B erh ad , a B ur s a Ma l a y sia l i st e d comp a ny a nd pa r t of t he A M Ba n k G ro up, f r om 20 0 8 to 201 2 . A le x held v a r iou s se n ior ro les a t Aus t r a l i a a nd Ne w Z e a l a nd Ba n k ing G r oup (A NZ ) for ve ye a r s, inc lud i ng C E O of t he I nte r na t ion a l Ins titu tio nal Bankin g di vis io n. Pr ior to th i s, he wa s w it h Sta n da rd Ch a r ter ed B a n k fo r 21 ye a r s, w her e hi s r ole s inc lude d hea d of t he whole sa le ba n k i ng c l ient re la t ion sh ip i n Nor the a s t A si a. Key exter na l co mmi tm en ts A le x is c ha ir of t he B oa rd of G ov er nor s a t Gig gle s w ick S cho ol. Committee membership Fi n a nce C om m it tee (C ha i r) Nomi na t ions Com m it tee (Cha i r) ES G & Sa fer G a mbl i n g Com m it tee 1. A le x wa s or ig in a l l y ap po in te d to t he B oa r d on 1 A ug u st 2 017 a nd be ca me t he Non-E xec ut i ve C h a i r w it h e f fe c t f r om 17 Oc t ober 2 019. John O’Reil ly Ch i e f Ex ec u tiv e Appoi ntme nt Ma y 2018 Non-Independent Ethnicity /Nationality W h ite/ B r it ish Age 62 K ey strengt hs – Sig n i ca nt and e x te ns ive ex p er ienc e of t he b et ti n g a nd ga mi ng indus t r y . – P r o ve n bus i nes s lea der s hip w it h a br ead t h of s t r a teg ic , com me rc i a l a nd ope ra t ion a l ex p er ienc e. St r on g sha r eholder unders ta nd i ng. Previous experience: Joh n wa s a non -e xe c ut i ve d i r ec t or at W i l l ia m H i l l Plc f r om 2 017 to 2018 , non- exe c ut i ve d i r e c tor a n d ch a i r at Gr a nd P a r ad e 2015 t o 2016 a nd a non- exe c ut i ve d i r e c tor a n d ch a i r of t he r emu ner at io n com m it tee a t T ele c it y Gr oup Plc f r om 2 00 7 to 2 016. He wa s a s en ior ex ec ut ive at G a l a Cor a l G r oup f r om 2 011 to 201 5 a nd pr ior to t hi s, a t La dbr oke s, w her e he held se v er a l se n ior po sit ions, inc luding managing directo r o f re mote b et t in g a nd g a m i ng, a nd su bsequen t ly , execu t ive director f r om 20 0 6 to 2010. Key exter na l co mmi tm en ts Joh n is a non -e xe c ut i ve d i r ec t or a nd ch a i r of t he aud it an d r is k com m it tee at Weat he rb ys L i m it e d a nd a t r ust ee of t he Ne w Br id g e Fou nda t ion , t he p riso n er be frie ndi ng chari ty . Committee membership Fi n a nce C om m it tee ES G & Sa fer G a mbl i n g Com m it tee Richard Ha r ris Chief Fi na ncial Of cer Appoi ntme nt Ma y 202 2 Non-Independent Ethnicity /Nationality W h ite/ B r it ish Age 39 K ey strengt hs – Ha s held C FO a nd s en ior na nce ro les i n a nu mbe r of con su mer - fac i ng or g a n i sa t ion s, de ve lopi ng a st r on g u nder s t a nd i n g of cor por ate na nce, com mer c ia l n a nc e, in ve st or re la t ion s a nd na ncia l repor tin g. – E xt en si ve op er at ion a l e x pe r ienc e, pa r t icu la rly i n acqui sitions, di sposa l s and busi ness impr ovement. Previous experience: R ich a r d ’s pre v iou s r oles i nc lude Ch ief F i na nc i a l Of cer at Fox tons Gr oup plc f rom 20 19 to 2022 , G r oup Fi n a nci a l C ont r ol l er at L a i r d Plc f r om 2016 to 2019, a nd ov er 11 ye a r s at Ma r k s a nd Spenc er plc wher e he held a numb er of sen ior n a nc ia l roles. He is a CI M A qu a l i e d ma na gemen t accou nt a nt . Key exter na l co mmi tm en ts None. Committee membership Fi n a nce C om m it tee K a r en W hit wor t h Sen i or Indep endent Direct or Appoi ntme nt Nov embe r 2019 Independent Ethnicity /Nationality W h ite/ B r it ish Age 53 K ey strengt hs – Sig n i ca nt st r at eg ic, n a nc ia l a nd lea der s h ip ex p er ienc e ga ine d t h r ough a nu mb er of s en ior com mer c ia l, ope ra t ion a l a nd go ver na nce r ole s. – E xt en si ve k no wle d ge of c on su mer - fac i ng, mu lt i- sit e r et a i l , a nd mul t i- ch a n nel b usi ne ss e s. Previous experience: K a r en w as p r ev iousl y a non- exe c ut i ve d i r e c tor a nd c h a i r of t he aud it co m m it t ee a t Pe t s at Home Plc . She wa s a supe r v isor y bo a r d member a nd memb er of t he a ud it com m i t t ee at G S1 UK L i m ite d f r om 2015 to 2 018. K a r en sp ent o ver 10 ye a r s a t J Sa i n sbu r ys plc, l at t er ly a s d i re c t or of non-fo od g r o ce r y and ne w bus ine s s. P r ior t o joi n in g J Sa i n sbu r ys, she w a s na nc e d ir e c to r at on l i ne ent er ta i n ment bus ine s s BG S Hold i ng s L i m ite d a nd held a nu mber o f sen ior g loba l r ole s at I nte rc ont i nen ta l Hotel s G r oup plc. Her ea rly c a r e er wa s s pe nt at Co ope r s & Lybra n d (now P w C ), wher e she qu a l i ed a s a cha r te re d accou nt a nt . Key exter na l co mmi tm en ts K a r en i s a non- exe c ut i ve d i r e c tor a t Trit a x Big B ox R E I T plc a nd T es co Plc . Committee membership Aud it C om m it tee (Ch a i r) Nomi na t ions Com m it tee Remu ner at io n Com m i t te e ES G & Sa fer G a mbl i n g Com m it tee Executive Directors Non-Executiv e Directors Chair The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 95 Non-Executiv e Directors continued Lucind a C ha rles- Jones Non-E xe c u t i ve D i r e c tor Appoi ntme nt June 2 022 Independent Ethnicity /Nationality W h ite/ B r it ish Age 56 K ey strengt hs – E xt en si ve r emu ner at io n a nd pe ople ex p er ie nce, bo t h U K and inte r nationally . – E xp er ienc e i n st rat eg ic de velop ment of en v i r on ment a l a nd so c ia l a s pe c t s of c or p or ate resp onsibil it y . Previous experience: Luci nd a h a s mor e t ha n 25 ye a r s’ exe c ut i ve -le ve l ex p er ienc e i n hum a n re so ur c es r ole s. She wa s ch ief p eop le & cor p or at e re sp ons ibi l it y of ce r of A X A UK a nd I re la nd, pa r t of the A X A SA Gr o up, fr om 201 5 to 2022 a nd g r oup H R d i re c t or for T o we r gat e Pa r tne r sh ip C o Ltd f rom 2011 t o 2014. P r ior to t hi s, Luc i nda w a s g ro up globa l H R d i r e c tor fo r Ha y s Plc a nd ha s a lso p re v iousl y held hu ma n re so ur c es r ole s at R AC PLC, con su mer d i v is ion a nd Vi vend i SA. Key exter na l co mmi tm en ts Luci nd a i s a non- exe c ut i ve d i r e c tor on t he b oa r d of Tr u st ee s for B us ine s s in t he Com mu n it y wher e she a l s o ch a i r s t he r emu ner at ion com m it t ee . Committee membership Nomi na t ions Com m it tee Remu ner at io n Com m i t te e ES G & Sa fer G a mbl i n g Com m it tee Che w Seong Aun Non-E xe c u t i ve D i r e c tor Appoi ntme nt De cemb er 2 020 Non-Independent Ethnicity /Nationality Asia n / Ma lay sian Age 57 K ey strengt hs – A b re ad t h of s t r at eg ic a nd oper a t ion a l k no wle d ge h av ing work ed a cr o ss a nu mb er of comp a n ies i n t he Ho ng L e ong Gr o up. – E x t en siv e ex p er ienc e in n a nc e an d b anking . Previous experience: Se ong A un h a s ove r 30 yea r s’ ex p er ienc e in n a nc e a nd ba n k i n g a nd ha s b e en w it h t he Hong L e ong Gr oup f or mor e t h a n 15 y ea r s . He wa s t he ch ief n a nc ia l of cer of Hon g Le on g Fi n a nc ia l G r oup B er ha d, a n as s oc ia te d comp a n y of Guo co G r oup Li m it e d l is te d i n Ma l a y sia f rom 20 0 6 to 202 0. In h is ea rl ier ca r e er, Seo ng Au n held v a r iou s se n ior ba n k ing po sit ion s i n t he M idd le Ea st a nd As ia for o ver 10 ye a r s. He i s a n IC E AW qua li ed C ha r ter e d Acc ou nt a nt ( FC A) a nd me mber of t he As ia n In s t it ut e of C ha r ter e d B a n ker s in Mala ysia. Key exter na l co mmi tm en ts Se ong A un i s a n exe c ut iv e d i re c to r a nd t he g r oup ch ief n a nc ia l of cer of Guo co G r oup L i m ite d ( ‘Guo co’ ), l is te d i n Hong K ong. He is a l s o a non- exe c ut i ve d i r e c tor of G uo coL a nd Li m it e d, (a ke y subs id ia r y of G uoc o l is te d in Si ng ap or e) and a non- exe c ut i ve d i r ec t or of La m S oo n ( Hong K ong ) L im i te d ( l is te d i n Hon g Kon g), a l l of wh ic h a r e memb er s of t he Hong L e on g Gr oup. Committee membership None. Ste ven E s om Non-E xe c u t i ve D i r e c tor Appoi ntme nt Ma r c h 2 0 16 Independent Ethnicity /Nationality W h ite/ B r it ish Age 61 K ey strengt hs – A w ea lt h of co m mer ci a l e x per ience at co ns ume r -foc u se d , mu lt i- sit e, reta il businesses. – L on g-s t a nd i n g plc a nd s t r at eg ic ex p er ienc e a nd s ha r eho lder ex per ience. Previous experience: Ste v en wa s ch a i r of t he GB B ox i ng boa rd f r om 2 013 to 2 021, c ha ir of t he Br it ish Re t a i l C ons or tiu m f r om 2 011 to 202 0, t he s en ior i ndep end ent d ir e c to r at C ra ns w ick Plc f r o m 20 09 to 2018 a nd a non-e xe c ut i ve d i r ec t or a nd ch a i r a t Ca r phone War ehou se f r om 20 05 t o 20 0 9. Pr ior t o t h at , hi s r et a il c a r ee r inc lude d 11 ye a r s at Wait ros e b et wee n 1995 a n d 20 07 , t he la s t v e of wh ich wer e a s ma n a g i ng d i r e c tor a nd a p er iod of t i me a s exe c ut i ve d i r e c tor of f oo d at Ma r k s & Spenc er plc. Hi s ea r l ier ca r e er w a s sp ent at L a dbr oke s a nd Sa i n sbu r y’s where he held va r ious com mer c ia l role s. Key exter na l co mmi tm en ts Ste v en is a non-e xe c ut i ve ch a i r at Ad v a nt a ge Tra ve l Pa r t ner sh ip, c ha ir at Se de x a nd ch a i r of t he Br it i sh Wrestl ing A ssociat ion. Committee membership Remu ner at io n Com m i t te e (Ch a i r) Nomi na t ions Com m it tee Audit C omm it t ee K at ie McA li s ter Non-E xe c u t i ve D i r e c tor Appoi ntme nt Apr il 2021 Independent Ethnicity /Nationality W h ite/ B r it ish Age 46 K ey strengt hs – E xt en si ve d ig i t a l a nd m a r ket ing ex p er ienc e, bo t h UK a n d internationally . – R es pon sib le for s ev er a l d ig ita l t r a ns for mat ion a nd busi ne ss ch a ng e pr og r a m me s a nd a s t r on g int er e st i n en v i r on ment a l , so c ia l a nd go ver na nce ( E S G ) in it iat i ve s. Previous experience: K at ie joi ne d T UI i n 1998 i n t he com mer c ia l ar ea of T U I U K a nd Ir el a nd w it h r oles i n t r a d i ng, pr oduc t , a nd d es t i n at ion s er v ice s. She is c ur rent ly ch ief m a rk et i n g of c er for T U I Nor the r n Reg ion ( U K , Ir el a nd a nd Nor d ic). Key exter na l co mmi tm en ts K at ie is c h ief ma r ke t i ng of ce r for T U I Nor t her n Reg ion ( U K , I re la nd a nd Nor d ic) and sit s on t he T U I Nor t her n Reg ion B oa r d . She is re sp on sible fo r cor e m a rk et i n g d is cipl i ne s i nclud i n g br a nd ad ver t is in g, d ig it a l C R M a nd e- c om mer ce for T U I U K a nd Ir el a nd , Fi r s t Choic e, Ma rel l a Cr ui se s, a s we l l as s a le s c ha n ne ls. Committee membership E SG & Sa fer Ga mbl i n g Com m it tee (C h a i r) Remu ner at io n Com m i t te e Audit C omm it t ee Our B oa rd Continu ed The Rank Group Plc Annual Report 2022 96 Board and Committee meeting attendance T he Di r ec tor s’ at t enda nce a t for m a l l y sche du led B oa r d a nd Com m it tee mee t i ng s dur ing t he yea r is r ec orde d i n t he t able below . It shows t he number of for ma ll y sche du led B oa r d a nd C omm it tee mee t i ng s at tended by e ach D i re c tor a ga i n st t he n u mber of such meet i ng s t h at t he r elev a nt D ir e c tor wa s el ig ible to at tend as a member. Director Boa rd Aud it Committee Fi n a nce Committee 1 Nomi na t ions Committee Remu ner a t ion Committee ES G & S a fer Ga mbli n g Committee Ch r is Bel l 2 4/4 2/2 2/2 2/2 2/2 Lu ci nda Charles- Jon es 3 0/0 0/0 0/0 0/0 Che w Seon g Aun 8/8 Ste ven Es om 8/8 4/4 4/4 4/4 Bil l F loydd 4 4/4 2/2 Ri ch ard Harri s 5 1/1 2/2 Susa n Hoop er 6 5/5 3/3 3/3 3/3 K a t ie Mc A l i s te r 7 8/8 2/2 4/4 4/4 4/4 Joh n O’Rei l l y 8/8 8/8 4/4 A lex T hu r sb y 8/8 8/8 4/4 4/4 K a r en W h it wor t h 8 8/8 4/4 0/0 4/4 4/4 1. Si mon Ha y w a s app oi nt ed t o t he F i na nc e C om m it t e e wh i l st he w a s i nte r i m CF O b et wee n 1 Ja nua r y 2 022 u nt i l 3 0 Apr il 2 022 . 2. Ch r i s B el l r e sig ne d f r om t he Boa r d o n 18 Ja nu a r y 2022 . 3. Luci nd a C ha rles -Jones w a s ap poi n te d to t he B o a r d on 22 Ju ne 2 022 a nd to t he Nom i n at ions, A ud it a nd E S G & S a fer G a m bl i ng C om m it tee s. 4. Bi l l F lo y dd r es ig ne d f r om t he B o a r d on 31 De ce mbe r 2021 . 5. R ic ha rd Ha rr is wa s a ppo in te d to t h e Bo a r d on 1 M ay 2 022 a nd appo i nte d to t he Fi na nc e C om m it t e e. 6. Sus a n Hoo pe r re si g ned f rom t h e Bo a r d on 31 Ja nu a r y 2022 . 7 . K a t ie Mc A l i s ter w a s app oi nt ed a s E S G & Sa fer G a mbl i ng C om m it tee C h a i r on 1 Feb r ua r y 20 22 . She w a s app oi nt ed t o t he Aud it Com m it tee o n 18 Ja nu a r y 2022 . Fol lo w i ng a r e v ie w of C om m it tee c omp osi t ion , K at ie s t epp ed d ow n fr om t he Nom in at ions C om m it tee on 21 J une 2 022 . 8. K a r en W hit wor t h wa s ap po in te d to t he N om i na t ion s C om m it t e e on 21 Ju ne 202 2. Company Se cretary Lu i s a Wr ig ht G r oup G enera l C ou n s el & Co mpany Secret a r y Appoi ntme nt Ma y 2018 Experience Lu is a joi ned R a nk i n 2018 a s i ts G r oup G e ner a l Cou n se l & Compa n y Se c r et a r y . P r ior to joi n i ng Ra nk , she he ld t he p os it ion of g r oup g ener a l cou n sel a nd c ompa n y se c re t a r y at Spor tec h PLC for si x y ea rs, h a v i ng p re v iousl y sp ent te n ye a r s at Ols w a ng L L P , wher e s he sp ec ia li se d i n ad v i si n g cl ient s i n t he g a mbl i n g, spor t a nd med ia se c tor s. Good go v ernance enables better per for mance “ Ou r best -p ract i ce appr oac h t o c or p or ate gove r na n ce ena bl es a nd suppor t s del i ver y o f our o bject ives and pl a y s a n i mpor t a nt rol e in relatio nshi ps w it h our k e y st a keholder s. ” Luisa W right Gr oup G enera l Coun sel & Compa ny Se c re t a r y The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 97 How go v ernance suppor ts de liv er y A year in re v iew Strategy day Good gov ernance i ncludes de veloping a strategy , selecting and s uppor ting leadership t o deliv er that strategy , and assuranc e as t o its deli v er y , all t o the highest standards of sa fet y and t ransparen cy . In e a rl y Ma r c h 2022, t he Boa r d met for it s a n nua l s t r ateg y r ev iew . T h is yea r , t he meet i ng foc u sed on ve -yea r pla ns for each of Gr os venor, Mecca , Dig it a l and I nter n at iona l. T he Boa rd wa s a ls o ch a l leng ed to c onsider whet her the G r oup ’s st rat eg ic pil l a r s rem a i ned t for p ur pose in l ight of t hose pla ns a nd its comm it ment to embed s us ta inabi l it y w it h i n it s cor porat e st r at eg y . It concluded t ha t t he ke y foc us a rea s of d r iv in g t he d ig it a l bu si ness a nd ev olv i ng v enues a re s t i l l ver y much t he pr ior it y , a s is de velopi ng our c r oss -c ha nnel of fer i ng s o a s to pr ov ide a s ea m les s cr o ss cha nnel ser v ice to ou r c us tomers t hat be t t er meet s t heir need s. T he Boa rd con sidere d ma rket t r ends a nd compet itor a na l ysi s. It d isc us se d R a n k ’s posit ion w it h i n t he ga mblin g indu st r y a nd t he w ider leisur e indu st r y a nd re ec te d on economic cond it ions a nd t he out look a s R a n k r ec over s f r om t he impac t of t he pa ndem ic. It obser ved t hat t he st rong ba la nce shee t wou ld enable cont i nued inv es t ment in t he T r a ns for ma t ion 2.0 prog r a m me po sit ion in g t he Gr oup wel l for r eco ver y a nd t he i mpac t of t he a nt icipa ted ga mbling reg u lator y reform. Pr e sent at ions w ere g i ven b y sen ior ma n a gement f rom e ach a rea of t he busi ness t o enable a dee per d iv e int o cu stomer i nsi ghts, re sea rch nd i ng s a nd how t hese ha ve in uenced t he ongoing development of g ro w t h in it i at i ves t hat fed i nto e ach a r e a’ s pl a ns. T he Boa r d al so re ec t ed on the impor ta nc e of ongoi ng in ves t ment into t ec h nolog y , d at a a nd t he appr oac h to mul t i-c ha n nel del iv er y as k ey d ri ver s i n ach iev ing s ust a inable g r ow t h. T he Boa r d noted ag r e ed ac t ion pla ns a r i si ng f r om t he da y a nd requ i r ed t hat upd ate s on each a rea w ould b e pro v ide d at it s meet ing s t here a f ter . Follow ing t he st ra teg y da y d is cu ssion s, in A pr i l t he B oa r d appr ov ed t he re v is ed pu r p os e and st rate g ic pil la rs, ha v i ng sa t is ed it sel f t ha t, w h il st t he overa rch i ng pu r pose of del iv er i ng enter ta in in g a nd exc it i ng ex p er iences r ema ins u nch a ng ed , R a n k ’s pur po se a nd the st r ate g ic pi l l a r s should a ls o clea rl y ree c t our comm it ment to ensu r ing t h at we me et t he nee d s of a l l st a keholders i n a sus ta ina ble way (see p ag es 33, 4 0 to 51 and 55 ). Time o n Bo ard a cti viti es Busi nes s Re v iew s 17 % Fi n a nc i a l 22% T r a n sfor m at ion & St rat eg y 36% Go ver n a nce & In ves tor Relat ions 20% Reg u lat or y & R isk 5% Above: Bo a rd St rate g y D ay, Ma rc h 202 2 The Rank Group Plc Annual Report 2022 98 Capital Inv estment ESG Fu r ther to a ppro va l of the Tra n sfor m at ion 2.0 pla n , t he Bo a r d com menced t he 2021 /22 n a nci a l yea r focus ed on in it i at i ves to d r i ve g r ow t h in t he key a r ea s of venue r ede velopment a nd tec h nolog y . It wa s ke en to en su re t hat such i n it ia t ive s con sidere d cu stomer i nsi ghts a nd other s t a keholder inter e st s at t he projec t pla n n i ng ph as e, du r i ng t he de velopment pha se a nd i n conduc t i ng re v ie ws a nd eva lu at ions fol low ing del i ver y . O ver t he cour s e of t he yea r , t he Bo a r d clos ely mon itor ed pr og r es s t h r ough r eg u l a r upda tes f r om s enior m a na gement a nd c ha l leng ed m a n ag ement to re ec t on t he deci sions bei ng made f r om a st r ateg ic per sp ec t i ve, pa r t icu la rly fol low ing it s r ef r esh of t he st ra teg ic pil l a r s i n Apr il 2022 a nd i n a nt ic ipat ion of t he G over nment’s re v ie w of t he Ga mblin g Ac t 20 05. V enue rede velopment In l i ne wit h st ra teg y di sc us sions, t he Boa r d r ee c ted on cu stomer in sight s work pr es ented b y m a na gement t h at i n for med pr op osa ls for t he re de velopment of venu e s. It ch a l lenge d ma nag ement to ensu r e t h at st a k eholders wer e pr oper ly con sider ed b efore, du r i n g a nd a f ter pla n n i ng such de velopment work a nd t h at it wa s c lea r where e ach such de velopment sat u nder t he s t r ateg y . It a lso ack no wled ged t hat R a n k ’ s p eople a r e a ke y a ss et i n en sur ing venue ref u rbis h ments a r e a succe ss. T echnol ogy T h r oughout t he yea r, t he Boa r d r eg u l a rl y d is c uss ed t he mig r at ion pro jec t , to move a ll d ig it a l operat ions to t he R IDE pr opr iet a r y plat f or m. It r ec eive d upda tes, a nd cha l leng ed m a n ag ement, on pro jec t t i mel ines , cos t s a nd s y ner g ies a nd wa s pr o v ided w ith pre sent at ions on t he produc t a nd pla t for m de velopment roa d map a nd oppor tu n it ies for g r o w t h once t he mig r at ion is completed. T he Boa rd wa s plea s ed to not e t he succes sf u l m ig r at ion of Mecc a to t he R I DE plat for m in Ja nua r y 2022, a nd was k een to en su r e t ha t appr opr iat e lea r n i ng s wer e con sidere d i n prep a r i ng for t he Gr os v enor mig r at ion t h at w i l l t a k e plac e befor e t he end of Q1 2022 / 2 3. Du r i ng t he yea r, the Boa rd a l so c onsider ed a nd approv ed ke y tec h nolog y cont rac t s rel ate d to d r iv i ng for wa r d te ch nolog ica l impr ov ements ac r oss t he Group. Du r i ng t he yea r, the Boa rd appr ov ed ne w ter m s of refer ence for t he rena med ESG & Sa fer Ga mbli ng Com m it tee a nd welcomed t he appoi nt ment of K at ie McA li st er as it s C ha ir. The Boa rd ch a l leng ed t he Com m it t ee to d evelop a s t r ateg y t h at wou ld enable sus ta ina bil it y to be a t t he hea r t of a l l dec ision-ma k ing a nd embed ES G w it h i n Ra nk ’s c u lt u r e. T he Comm it tee appr ove d t he ES G st r ate g y in Ja nua r y 2022 a nd t he Boa r d ensu r e d t ha t t he out put f rom t he Comm it tee’ s d is cu ssions f or med pa r t of it s ow n r e v iew of t he Gr oup’ s s t r ateg ic pi l la rs a nd pu r pose. It wa s ke en to en su re t ha t what ma y be cl a ss ed a s ES G ai m s were not dea l t wit h sepa r at ely a nd th at t he cor porat e st r at eg y f ul ly embed s R a n k ’ s sus ta ina bil it y foc us a rea s of c us tomer s, col lea g ues, com mu n it ies a nd t he env i r on ment. T he Boa rd appr ov ed publ icat ion of t he G roup’ s Resp onsible Busi nes s Repor t in Ja nua r y 2022 w h ich set out t he in it ia l work under ta ken to est abli sh t he Gr oup’ s E SG f r a mew ork. D u r i ng t he yea r, it a ls o ta sk ed m a na gement to c ommence de velopment of Ra nk ’s ne t zer o pla n a nd delegate d to its E SG & Sa fer G a mbl in g a nd Aud it Com m it t ee s t he appr oach t o be t a ken t o t he new T ask F orce on Climate- rela ted F inancial D iscl osures re qu i rement s. T he ESG & Sa fer Ga mbli ng Com m it tee a l so foc us ed on de velopin g t he K PIs a nd metr ics th at wou ld u nder pi n t he new ES G st r ateg y . T he Boa r d f u r t her t a sk ed t he Remunera t ion Com m it t ee w it h re v ie w i ng E xec ut iv e pay fr om a n ESG per spe c t i ve (to complem ent t he ex i st i ng s a fer ga mbli ng mea su r e ), re su lt i ng in a ne w appr oach t o t he bonus sc heme for t he for t hc omi ng y ea r ( a s e xpl a i ned on pa ge 1 21) . T he Boa r d ha s appr ove d t he publicat ion of t he Gr oup’ s r s t f ul l sus ta ina bil it y r epor t a longside t h i s A n nua l R epor t. Above: Kati e McA l is ter, Karen W h it w or th an d Ri ch ar d Ha rr i s Above: Kati e McA l is ter a nd A l ex Th u rs by The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 99 Nomina tions Committee Repor t “The Co mmit te e co ntinu es to de monst rate its imp o r tant ro le in succession p lanning , incl usion & div e rsit y a nd p roposin g n ew directors fo r appoin tment t o the Board in or der to maintain t he right bal ance of knowledg e, skills and a tt ributes. ” Alex Thurs by Chair o f the Nominations Comm it tee Committee membership and attendance Appoi nte d to Com m it te e At tend a nce Cu r r ent members A lex T hu r sb y (Ch a ir) 1 August 2017 4/4 Lu ci nda Charles- Jon es² Jun e 2022 0/0 Ste ven E som March 2016 4/4 K a r en W h it wor t h³ Ju ne 2022 0/0 Ot her mem b ers du r i ng t he yea r Ch r i s Bel l⁴ July 2015 2/2 Susa n Hoop er ⁵ Septem ber 2015 3/3 K at ie McA li ster ⁶ April 2021 4/4 1. A le x T hu r sb y to ok ov er a s C ha ir i n Oc t obe r 2019. 2. Luci nd a C h a rle s-Jo nes w a s app oi nt ed t o t he C om m it tee i n Ju ne 2 022 . 3. K ar en W hit wor t h wa s ap po in te d to t h e Com m i t te e i n Ju ne 20 22 fo l low ing a r e v ie w of C om m it tee compo sit ion. 4. C h r is B el l s t epp ed d ow n fr om t he Com m it tee i n Ja nu a r y 202 2 fol lo w i ng h i s r es ig n at io n f r om t he B oa rd . 5. S us a n Ho ope r st epp e d do w n f r om t he C om m it te e in Ja nua r y 2022 f ol lo w i ng her r e si g na t ion f r om t he Boa rd . 6. K a t ie Mc A li st er s tep pe d do w n f r om t he Com m it tee i n Ju ne 2 022 f ol lo w i ng a r e v ie w of C om m it t e e compo sit ion. Other attendees Gr oup G enera l Coun sel & C ompa ny S ec r et a r y . One add it ional me et i ng w a s convene d dur ing t he yea r to con sider t he appoi nt ment of Rich a r d Ha r r is as Ch ief Fi na ncia l Of cer a nd to t he Boa r d. T he Com m it t ee a l so met sepa r at ely du r i n g t he yea r to di sc us s mat ter s w it hout t he pr es ence of ma n ag ement. Role and responsibilities T he Com m it t ee i s re spon sible for lead i ng t he pro ce ss for app oint ment s, en su r i ng pla n s a r e i n place for or derl y succe ssion to bot h t he Boa r d a nd s en ior ma n ag ement posit ions, a nd over se ei ng t he dev elopment of a diver s e pipel ine for succes sion. Its k ey r e spon sibil it ie s a r e to: – Le ad a r ig orou s a nd t r a n spa r ent pr oce du r e for B oa rd a ppoi nt ments. – Reg u la rly r e v iew a nd ref r esh t he Boa rd ’ s c omposit ion, ta k ing i nto accou nt t he leng t h of ser vice of t he Boa rd a s a whole, in or der for it to rem a i n ef fe c t ive a nd able to operat e in t he best i nter es t s of sha reholders. – En su r e pla n s a r e i n place f or orderl y succes sion to pos it ions on t he B oa r d a nd over s ee succ ess ion pla n n in g for sen ior ma n ag ement. – O ver se e t he de velopment of a di ver se pipel i ne for succ es sion. – W ork a nd l i a is e w it h ot her Boa r d Com m it t ee s as a ppropr iate, i ncludi ng w it h t he Remunerat ion Com m it tee w it h r esp ec t t o a ny r emu nerat ion pack a ge to b e of fer ed to ne w appoi nte es to t he Boa r d. T he for ma l ter ms of r efer ence of t he Com m it t ee a r e a va ilable at w w w .r a n k .com or by w rit ten re ques t to t he G r oup G enera l Coun sel & C ompa ny S ec r et a r y , who ac t s as s ec r et a r y to t he Comm it tee. K ey ac tivi tie s duri ng t he year – Rec om mende d t he app oi nt ment to t he Bo a r d of R icha rd Ha rr is a nd Luci nda C ha rles-Jones. – Cont i nued to monit or d iver sit y in it i at i ves u nder t he I nclusion a nd Diversit y Strateg y . – Re v iew ed suc ce s sio n pl a ns. The Rank Group Plc Annual Report 2022 100 Dear shareholders I a m plea se d to pr esent t he Nomin at ion s Com m it t ee Rep or t cover i ng t he work of the Com m it t ee du r i ng t he 2021 /22 n a nci a l yea r. It has a ga in be en a bus y y ea r, wit h a number of ch a ng es to t he Boa r d, it s Com m it t ee s a nd to t he E xe c ut ive Com m it t ee. W e ha ve cont i nued to foc u s on t he imp or t a nt ar ea s of succe ssion pla nn i ng, our i nclusion a nd d i ver sit y st r ate g y and ev a luat ing t he Boa r d ’ s comp osit ion, sk il l s a nd ex per ience. Director appointments I wa s del ighte d to welcome t wo new d ir e c tor s to t he B oa r d t h i s yea r . Appointment of Chief Financial Ofcer R icha rd Ha r r is wa s app oi nted a s C h ief Fi na nc ia l O f c er , a nd to t he Boa rd, w it h ef fec t f rom 1 Ma y 2022. T he sea r ch pr oc es s lead i ng to h i s appoi nt ment wa s conduc te d by t he Chief E xe c ut iv e a nd Gr oup Hum a n Resou r ce s Di r ec tor, ass ist ed b y ex ter na l agenc y , O dger s B er nd ts on. T he pr oc ess t ha t led to R ich a r d ’s appoint ment is se t out in mor e det a i l on pa ge 103 a nd det a i l s of hi s ex p er ience ca n b e fou nd on pag e 95. Non-Executive D irector appointment Luci nd a Ch a r les -Jones wa s app oi nte d as a n independent Non-E xe cut ive Di r ec tor of t he Boa rd on 22 June 2022 . T he se a r ch pro ces s t h at led t o her appoi nt ment wa s conducte d b y t he C ha i r, assi ste d b y t he Gr oup Huma n Resou r ces D i re c tor a nd ex ter na l a genc y , Spencer S t ua r t. T he pro ces s t h at led t o Lucind a’ s appoi nt ment is se t out in mor e det a i l on pa ge 102 a nd det a i l s of Lucind a’ s e x per ience c a n b e found on pa ge 9 6. Luci nda b ec a me a member of t he Remunera t ion, Nom in at ions a nd E SG & Sa fer Ga mbl in g Com m it tees on her app oi nt ment. Neit her of t he sea rch a gencie s use d i n con nec t ion w it h t hese appoi nt ment s ha s a ny ot her connec t ion w it h t he Compa ny or a ny of it s Di r ec t ors. A l l ne w Boa rd member s r ecei ve a n ind uct ion follo w i ng t hei r app oi nt ment , wh ich is led b y t he Group G ener a l Cou n sel & Compa n y Se cr et a r y a nd compri ses b ot h a genera l and p er sona li se d prog ra m me. T he genera l induct ion includes t heir dut ies a nd r esp onsibi l it ies a s a d i r ec t or of a li st ed compa ny , w h il st t he pers ona lis ed induc t ion is de v is ed a nd ta i lore d to e ach new d i r ec tor ’ s bac kg r ou nd, e x per ience a nd r ole. Executive Committee appointments T here w ere ne w appoi nt ment s a l so to t he E xec ut i ve Com m it tee t h i s yea r . Follo w i ng sea rch pr oc es ses c onducte d b y t he Ch ief E xec ut i ve a nd G r oup Huma n Re sou r ces Di r ec tor, wit h ex ter n a l a genc y a s sis t a nce as a ppropr iate, t he Com m it tee note d t he fol low ing app oint ments: – Ma n ag i ng D i re c tor, Gro s venor – Debbie Husband , who joine d R a n k i n 201 7 a s Nat iona l Op er at ion s D ir e c tor f or Gr os venor, was pr omote d to Ma n a g in g Di r ec tor, Gr os venor in M ay 2 022. P r ior to join i ng R a n k , Debbie wa s UK O p erat ions Di r e c t or at Tra velo d ge. – Ma n a g in g Di r ec tor, Mecca – A ndy Cr ump joined t he Compa ny i n Ma y 2022 a s Ma n ag i ng D i re c tor, Mecca . Hi s pre v ious role wa s Hea d of Hospit a l it y Op era t ions at Ma r k s a nd Spencer PLC. – Ma n ag i ng D i re c tor, Inter n at iona l – En r ic M onton joi ned R a n k i n Ma y 2022 as M a na g i ng D i re c tor, Inter na t iona l . He joined t he C ompa ny f r om Ci r s a where he ser ved a s L at i n A mer ic a Ma n ag i ng Di r ec tor of Spor t ium , Ci r sa’ s d ig it a l a nd sportbook bra nch. – Gr oup Tra nsform at ion a nd St rateg y Di r ec tor – E m ma Mor n i ng, who joined t he Compa n y in O c tober 2019 as t r a n sfor mat ion le ad , wa s pr omo te d to Group T ra n sformat ion and St rateg y Di r ec tor i n Ja nua r y 2022 . Du r i ng t he yea r, the Com m it tee a l so re com mended t he app oi nt ment of Simon Ha y , t he cu r rent di r e c tor of Group na nce, as i nter i m Ch ief Fi na ncia l Of cer for the per iod f rom 1 Ja nua r y 2022 to 30 A pr i l 2022 ( com menci ng on Bi l l F lo ydd ’s depar t u re f rom t he busines s a nd end i ng upon R ich a r d H a r r is’ appoi nt ment). Board compositio n In l i ne w it h t he req ui r ements of t he 2018 UK C or p orat e G ov er na nce Code, we s pent consider able t i me t h is ye a r look i ng a t Boa rd compo sit ion, r e v iew ing t he leng t h of tenur e of Boa rd member s a nd look ing at wa y s in w h ich Boa rd member sh ip m ight be r ef r eshe d. W hi ls t t he Com m it tee consider s t h at t he Boa r d ha s t he nec es sa r y mi x of sk il l s, k nowledg e a nd ex p er ience to f u l l it s role ef fec t ively , we identi ed t h at t here w a s a succes sion pla n n i ng nee d i n rel at ion to r emuner at ion a nd pe ople mat ter s. T h is led t o a pro ce ss r esu lt ing i n t he appoi nt ment of Lucind a C ha r les-Jones as a ne w i ndependent Non-E xec ut i ve Di r ec tor (as r eference d ab ove) . W e a r e sat i se d t ha t t he Boa r d is wel l ba l a nced , pr ov idi ng a n appr opr i ate blend of exec ut i ve a nd non-e xec ut i ve sk i l l s a nd a col lec t i ve compe tence to mee t t he G roup’ s cu r r ent nee d s a nd del iver it s s t r ateg y . Never t heless, w e cont i nue to eva luate t he sk i l l set s of B oa r d member s on a n ong oin g ba sis a nd bu i ld t h is e v a luat ion into our Bo a r d succ es sion pl a n s. T he compos it ion a nd cha ir -sh ip of t he Boa rd ’ s C om m it te es w ere a lso r e v iew ed dur ing t he yea r . Fol low ing C h r is B el l a nd Susa n Ho oper st eppi ng dow n fr om t he Boa rd i n Ja nua r y 2022, K a ren W hit wor t h wa s appoi nte d a s Sen ior I ndependent Di r ec tor a nd Kat ie Mc A l i ster a s C ha ir of t he ES G & Sa fer Ga mbl in g Com m it t ee, w it h K a t ie a ls o appoi nte d to t he Aud it Com m it t ee. T he member sh ip of t he Boa rd ’ s C om m it te es w a s re v isited a ga in fol low i ng t he app oint ment of Lu c ind a Ch a rles -Jon e s i n June 2022 , w it h Luci nd a appoi nt ed t o t he R emuner at ion, Nom i nat ions a nd E SG & Sa fer Ga mbl in g Com m it tees, K a r en bei ng app oint ed to t he Nomin at ion s Com m it t ee a nd K a t ie steppi ng do w n f r om t he Nomi n at ions C om mit tee. T he c u r r ent members h ip of each Com m it tee is s et out on pag e 94. T he compos it ion of t he E xec ut iv e Com m it t ee w as a lso c onsider ed du r i ng t he yea r. I c a n con r m th at t he Com m it te e is sat i se d t ha t t he Boa r d , its Com m it tees a nd t he E xe cut ive Com m it t ee a re appr opr ia tely compo se d. Du r i ng t he yea r, the Com m it tee con sidere d t he ot her sign i ca nt com m it ment s of our Non-Exe c ut iv e Dir e c tor s a nd wa s sat i se d t ha t each Di r ec t or ha s suf cient ti me to d isc ha rge t heir re spon sibil it ies effe c t i vely . The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 101 Establishing role requirements T he Nom i na t ion s Com m it te e con sider e d t he tenur e of t he B oa r d Di r ec t or s dur ing t he yea r wit h a pa r t icul a r fo cu s on t he indep endent Non-Exe c ut iv e Di r ec tor s. Follow ing a de t a i led r e v iew of sk il l s a nd ex per ien c e, coupled w it h Ch r is B el l a nd Susa n Ho oper’s depar t u re s, a se a r ch for a new Non-E xec ut i ve Di r e ct or com menced . T he Nomi nat ions Comm it tee ident i ed a desi r e to app oint a new Non-E xe c ut ive Di r ec tor w ith r emu nerat ion a nd p eople ex per ien c e, a nd cor p or ate go ver n a nce ex per ien c e at a F TSE l is te d compa ny ga i ned i n a con su mer-fa ci ng bu si ness. It deter m i ned it a ppropr i ate t o do so dur ing t h is n a nc ia l ye a r . Identifying candidates T he Nom i na t ion s Com m it te e wa s pa r tic u la r ly m i nd f u l of t he nee d to mee t t he sk i l l r eq ui r ements a nd independence cr it er ia . It a l so w a nte d to cont i nue to promote d i ver sit y on t he Boa rd. It deter m i ned on t his o cc a sion to enga ge a n ex ter na l he ad hunt er to a ssi st w it h t he sea rch a nd follow i ng a r e v ie w of t h re e exe cut i ve sea rch r ms, Spencer St ua r t wa s enga ge d ba se d on t hei r pre v ious ex per ien c e i n del iver i ng s im i l a r r oles, t heir k nowled ge a nd acc es s to d iver s e ca nd id ate s in t he ma rket place a nd t hei r compet iti ve pr ici ng. Follow ing a det a i led br ie ng on t he key re qu i rement s, Spencer S t ua r t pre sente d a li st of 35 c a nd id ates s elec te d f r om a d iver s e pool . T he Ch a i r a nd t he G r oup H uman Res ources Directo r , in consu lt a t ion w it h Spencer S t ua r t, as se ss ed c a nd ida tes a ga i n st t he brief a nd shor t lis te d si x c a nd ida tes to pr o ce ed to t he Fi r st S t ag e A ss ess ment. Nominations Committee Report Continu ed Appointmen t of Lucinda Charle s-Jone s as Non-Executiv e D irector First Stage A ssessme nt T h is F ir s t St a ge A ss es sment compr is ed a n i nter v ie w w it h t he Ch a i r a nd t he E SG & S a fer G a mbl in g Com m it tee Ch a i r. T wo ca ndid ates pr og r e sse d to t he Second St a ge A s ses sment. Second Stage Assessment T he Se cond St a ge A ss es sment compr is ed i nter v iew s w it h t he ot her i ndependent Non-E xec ut i ve Di r ec t ors. One ca ndida te pr og r es sed t o t he Fi na l Sta ge A sses sment. Final Stage Assessment T he Fi na l Sta ge A s se ssment compr is ed i nter v ie ws w ith t he Chief E x ec ut iv e a nd t he non-independent Non-E xec ut i ve Di r ec t or . Final Decision T he Ch a i r gat hered a nd ass ess ed t he feedbac k f r om t he as se ssment pr oce ss a nd re com mended to t he Nomin at ion s Com m it t ee Luci nd a Ch a rles -Jones as t he pr efer r ed ca nd id ate. T he Nom i nat ions Comm it tee c oncu r r ed w ith t hi s v iew, rega r d i ng Luci nd a as p os se ssi ng t he de si re d ex p er ience a nd w ider sk i l l s to add v a lue to t he B oa r d . T he Nomi na t ions C omm it tee a g r ee d t h at t he C ha i r shou ld ma ke a rec om mendat ion to t he Boa rd t h at Luci nda C h a rles -Jon e s be app oi nted . T he Bo a r d subse quent ly a ppro ve d her appoi nt ment a nd Luci nda w as a ppoi nted t o t he Bo a r d, a nd to Ra n k ’ s R emunera t ion, Nomi na t ions a nd E S G & Sa fer G a mbl i ng Com m it tees on 22 Ju ne 2022. Process A r ea a nd met w it h: O ver v ie w of m at ter s co ve re d : G over na nce a nd i nve st or rel at ions – met w it h C ha ir, Group G ener a l Cou n sel & Compa n y Se cr et a r y a nd Dir e ct or of In ve st or Rel at ion s & C or p ora te Com mun ica t ions. A lso met w it h fello w Boa rd member s, br oker s a nd cor p ora te PR ad v isors. Appr oach t o cor p ora te go ver n a nce at Ra nk , B oa r d a nd Com m it tee s t r uc t u r e, in ve st or re la t ions a nd cor p or ate com mu n icat ions. Busi nes s a nd st rateg y – met w it h Cha ir, Ch ief E xe cut ive a nd eac h member of t he E xec ut i ve Com m it tee. Ma n ag ement st r uc t u r e a nd oper at ion s acr os s t he G roup, inc ludi ng m a rke t i ng, inn ovati on and omni -chann el , IT , gov er na nce and employ ee i nter es t s. St r ateg ic pi l la rs a nd C ompa ny pu r pose. In r es pe c t of R icha r d H a r r is, a more det a i led i nt r od uct ion to t he bu si ness a nd per form a nce for Mec ca , G ro s venor , Dig it a l a nd Inter n at iona l. Ga mblin g la ws a nd reg u la t ions – met w it h G r oup G enera l C ou nsel & C ompa n y Se cr et a r y , D ir e c tor of Compl ia nce & Res pon sible G a mbli ng, a nd D i r e c tor of P ubl ic A f f a i r s. T he compli a nce f r a me work at R a n k , ga m i ng i ndus t r y re g u lat ion, the G r oup’ s rel at ions h ips w it h G over n ments a nd reg u lators a nd eme r g ing r egu lator y r isk s a nd oppor t u n it ies. Fi na nc e a nd r isk – me t w it h D i re c tor of Gr oup Fi na nce, Dir e c tor of T a x, D i re c tor of A na ly tic s, Di r ec tor of R isk & Inter na l Audit , Aud it C omm it tee C ha ir a nd t he ex ter na l aud itor. Lucind a C ha r les-Jones a ls o met w it h R icha rd Ha r r is a s t he new ly app oi nted C F O. A n u nder st a nd i ng of t he Group’ s na ncia l po sit ion and t he ke y r isk s a nd cha lleng es for t he G r oup, par t icu l a rl y in l ight of t he i mpac t of COV ID - 19 on t he busi nes s a nd it s re co ver y . Remunera t ion – met w it h t he Cha i r, Remunera t ion Com m it t ee C ha ir, Dir ec tor of Rew a r d, Hu ma n Re sou r ces D i r ec tor a nd ke y exe cut ives. A n u nder st a nd i ng of t he remunera t ion pol ic y a nd r emuner at ion mat ter s at R a n k . Succes sion pl a n n i ng a nd i nclu sion a nd d iver sit y – met w it h t he Cha ir and Human Reso urces Directo r . Appr oach t o succes sion pla n n i ng a nd t he st r at eg ic appro ach to i nclus ion a nd d iver sit y . ES G – met w it h the E SG & S a fer Ga mblin g Com m it t ee C ha ir. A n o ver v iew of t he G r oup ’s st rat eg y for ES G a nd sa fer ga mbli ng a nd where Ra nk is on it s E SG jou r ne y . Site v is its – me t w it h G ener a l M a na ger s a nd ot her venues col lea g ues. A ser ies of sit e v isit s to s ee t he busines s in ac t ion, which i ncluded d i r ec t ex per ien c e of our c us tomer jour neys a nd ga m i n g pro duc t s. Induction proc ess Lucind a Jones- C ha rles a nd R ich a r d Ha r r is pa r t icipate d in a n inten sive a nd ta ilor e d i nduc t ion pr og r a m me up on t heir r e spe c t ive a ppoi nt ments , wh ich included t he follow ing: The Rank Group Plc Annual Report 2022 102 A r ea a nd met w it h: O ver v ie w of m at ter s co ve re d : G over na nce a nd i nve st or rel at ions – met w it h C ha ir, Group G ener a l Cou n sel & Compa n y Se cr et a r y a nd Dir e ct or of In ve st or Rel at ion s & C or p ora te Com mun ica t ions. A lso met w it h fello w Boa rd member s, br oker s a nd cor p ora te PR ad v isors. Appr oach t o cor p ora te go ver n a nce at Ra nk , B oa r d a nd Com m it tee s t r uc t u r e, in ve st or re la t ions a nd cor p or ate com mu n icat ions. Busi nes s a nd st rateg y – met w it h Cha ir, Ch ief E xe cut ive a nd eac h member of t he E xec ut i ve Com m it tee. Ma n ag ement st r uc t u r e a nd oper at ion s acr os s t he G roup, inc ludi ng m a rke t i ng, inn ovati on and omni -chann el , IT , gov er na nce and employ ee i nter es t s. St r ateg ic pi l la rs a nd C ompa ny pu r pose. In r es pe c t of R icha r d H a r r is, a more det a i led i nt r od uct ion to t he bu si ness a nd per form a nce for Mec ca , G ro s venor , Dig it a l a nd Inter n at iona l. Ga mblin g la ws a nd reg u la t ions – met w it h G r oup G enera l C ou nsel & C ompa n y Se cr et a r y , D ir e c tor of Compl ia nce & Res pon sible G a mbli ng, a nd D i r e c tor of P ubl ic A f f a i r s. T he compli a nce f r a me work at R a n k , ga m i ng i ndus t r y re g u lat ion, the G r oup’ s rel at ions h ips w it h G over n ments a nd reg u lators a nd eme r g ing r egu lator y r isk s a nd oppor t u n it ies. Fi na nc e a nd r isk – me t w it h D i re c tor of Gr oup Fi na nce, Dir e c tor of T a x, D i re c tor of A na ly tic s, Di r ec tor of R isk & Inter na l Audit , Aud it C omm it tee C ha ir a nd t he ex ter na l aud itor. Lucind a C ha r les-Jones a ls o met w it h R icha rd Ha r r is a s t he new ly app oi nted C F O. A n u nder st a nd i ng of t he Group’ s na ncia l po sit ion and t he ke y r isk s a nd cha lleng es for t he G r oup, par t icu l a rl y in l ight of t he i mpac t of COV ID - 19 on t he busi nes s a nd it s re co ver y . Remunera t ion – met w it h t he Cha i r, Remunera t ion Com m it t ee C ha ir, Dir ec tor of Rew a r d, Hu ma n Re sou r ces D i r ec tor a nd ke y exe cut ives. A n u nder st a nd i ng of t he remunera t ion pol ic y a nd r emuner at ion mat ter s at R a n k . Succes sion pl a n n i ng a nd i nclu sion a nd d iver sit y – met w it h t he Cha ir and Human Reso urces Directo r . Appr oach t o succes sion pla n n i ng a nd t he st r at eg ic appro ach to i nclus ion a nd d iver sit y . ES G – met w it h the E SG & S a fer Ga mblin g Com m it t ee C ha ir. A n o ver v iew of t he G r oup ’s st rat eg y for ES G a nd sa fer ga mbli ng a nd where Ra nk is on it s E SG jou r ne y . Site v is its – me t w it h G ener a l M a na ger s a nd ot her venues col lea g ues. A ser ies of sit e v isit s to s ee t he busines s in ac t ion, which i ncluded d i r ec t ex per ien c e of our c us tomer jour neys a nd ga m i n g pro duc t s. Establishing role requirements T he Nom i na t ion s Com m it te e com menced a r ec r u it ment pr oc ess for a new Ch ief Fi na nc ia l O f c er follo w i ng Bi l l F loydd ’ s not ice of resig n at ion i n Aug us t 2021. T he Gr oup Huma n Resou rc es Di r ec tor a nd Chief E xe c ut iv e prep a r ed t he role spec i c at ion for t he sea r ch , wh ich foc us ed on s t r ong st rate g ic, oper at iona l a nd tech n ica l exp er ience, a long w it h excel lent rel at ions hip sk il l s. T he spec i c at ion wa s appro ve d by t he Com m it t ee. Appoin tment of Richar d Harr is as Chief Financial Ofcer First Stage A ssessme nt T h is F ir s t St a ge A ss es sment compr is ed a n i nter v ie w w it h t he Ch ief E xe c ut ive a nd the G roup Hum a n Re sou r ces D i re c tor. T wo ca ndid ates pr og r e sse d to t he Second St a ge A s ses sment. Second Stage Assessment T he Se cond St a ge A ss es sment compr is ed i nter v iew s w it h t he Ch a i r a nd t he S en ior Independent Non-E xe cut ive Di r ec tor. One ca ndida te pr og r es sed t o t he Fi na l Sta ge A sses sment. Final Stage Assessment T he Fi na l Sta ge A s se ssment compr is ed i nter v ie ws w ith a ll ot her mem b er s of t he Boa rd. Final Decision T he Ch ief E xe c ut ive g at her ed a nd ass ess ed t he feedbac k f r om t he as se ssment pr oc ess a nd d is cu sse d h is r e com mendat ion tha t R icha rd Ha rr is be app ointe d w it h the C ha ir who wa s i n suppor t. T he r ecom menda t ion wa s pr esent ed to t he Nomin at ions Com m it t ee, wh ich ag r e ed a nd con r med th at t he Ch a i r should ma k e t he re com mendat ion to the B oa r d. T he Remunerat ion C omm it tee appr o ved t he propos ed remu nerat ion packa ge a nd the B oa r d subse quent l y appr ove d R ich a r d ’ s app oi nt ment. He was app ointe d as R a n k ’ s C h ief Fin a nci a l Of cer a nd to the Boa rd on 1 May 2022. Process Identifying candidates T he Nom i na t ion s Com m it te e appr o ve d t he enga gement of a n ex ter na l head hu nter to a ssi st w ith t he sea r ch , a nd fol low i ng a r e v iew of t hr ee e xec ut i ve sea rch r ms, Odg er s Ber nd st on was enga ge d ba se d on t heir pr e v ious ex per ien c e i n del iver i ng s im i l a r r oles, t heir k nowled ge of t he i ndust r y , t heir acce ss to d i ver se c a nd ida tes a nd thei r compet iti ve pr ici ng. Follow ing a de t a i led d i sc uss ion wit h Od ger s Ber ndst on, a ca ndid ate br ief wa s develop ed . T heir s ea rch of c a nd idat es consider ed t hose who wer e a l r ead y on publicl y l ist ed b oa r d s a s CF Os or wher e t here m ight b e a nat ur a l s tep up into a CFO r ole. A d iver s e po ol of 88 c a nd idat es wa s in it i a l l y identi ed f r om bot h i nside a nd outs ide t he indus t r y . 50 of t he identi ed ca ndid ates wer e inc luded on a n in it ia l shor t li st , wh ich fol low ing consu lt a t ion bet ween t he Chief E xec ut i ve a nd G r oup Huma n Re sou r ces Di r ec tor w ith O dg er s Ber ndston w a s re duced t o 20 to pr oc ee d to t he Fi r s t St ag e A ss ess ment. Induction proc ess Lucind a Jones- C ha rles a nd R ich a r d Ha r r is pa r t icipate d in a n inten sive a nd ta ilor e d i nduc t ion pr og r a m me up on t heir r e spe c t ive a ppoi nt ments , wh ich included t he follow ing: The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 103 T he re su lt s a nd r ec ommend at ions f r om t he eva lua t ion in r es pe c t of t he Boa rd a nd each C om m it t ee wer e c ir c u lat ed to a ll D i re c tor s, pr es ented t o t he Bo a r d a nd d is cu ss ed at t he r elev a nt Com m it tee mee t i ngs. T he ar ea s of fo cu s for t he Bo a r d a r e se t out on t he fol low i ng pa ge a nd the a r ea s of fo cu s for eac h Com m it tee a r e se t out in t he resp ec t i ve Com m it t ee r epor ts , includ i ng on pa ge 106 i n r esp ec t of t h i s Com m it tee. Du r i ng t he yea r, I h eld one -to -one mee t i ng s w it h a ll Non-E xe cut ive Di r ec tor s t o d isc u ss t hei r per form a nce, d r a w i ng on t he r esu lt s of t he e va luat ion exer ci se a nd to identi f y whet her t hey cont i nue to cont r ibute ef fe c t iv ely to t he Boa r d a nd demons t r ate com m it ment to t hei r role. I a l so met w ith a nd eva luated t he per for ma nce of t he Ch ief E xec ut i ve ut i l isi n g fee dback f r om t he ex erc is e. T he Sen ior Indep endent Di r ec tor combined r e spon ses t o t he exer c ise w ith fe e dback f r om sep a r ate d i sc us sions she held w it h t he Non -E xecut ive Di r ec tor s, E xec ut ive D i re c tor s a nd t he Group G enera l Cou nsel & Compa n y Se cr et a r y on m y per f or ma nce, before d i sc us si ng t he r esu lt s w ith me. Board ef fectiveness revie w It is i ncu mbent on t he Com m it tee to en su re t hat a for m a l a nd r igorou s re v ie w of t he ef fec t iveness of t he B oa r d , its C om m it t ee s a nd eac h Di r ec tor i s conduct ed e ach ye a r. T he pro ce ss for t h i s yea r’ s r ev iew is se t out opposit e, toge t her w it h pr og r e ss a ga i n st la st y ea r ’ s B oa r d ac t ions a nd outcomes f rom t hi s yea r ’ s e va luat ion. Proce ss for 2 021/ 2 2 review T he ev a lua t ion t h is ye a r wa s c onducte d by L i nt st ock L i m ite d. L i nt sto ck is a n indep endent adv isor y r m th at spe ci a l is es in B oa r d ev a lua t ions, a nd pro v ides no ot her ser v ices to t he Group. The followi ng pro cess wa s followe d for the 2021 / 2 2 evaluatio n: Stag e 1 Dec is ion ta ken f or exer ci se to b e fac i l ita ted b y L i nt sto ck L i m ited , fol low i ng pr es enta t ions b y pot ent ia l pr o v ider s Stag e 2 Eva luat ion pro ces s a nd ques t ion na i r es a g r ee d be t ween L int s toc k a nd ke y pro jec t sp ons ors Stag e 3 Eva luat ion quest ionna i r es c ompleted b y Bo a r d member s Stag e 4 Eva luat ion nd i n gs pre sente d Stag e 5 Impr ov ements a nd a r ea s of focu s identi e d a nd ag r ee d for t he Boa r d a nd eac h Com m it t ee for t he fort hcomi ng ye a r Nominations Committee Report Continu ed Succession planning Succession pla ns a r e ma int a i ned for t he Boa rd, E xec ut ive C om m it te e a nd ot her sen ior leader sh ip pos it ions a nd wer e re v ie wed b y t he Comm it tee du r i ng t he yea r. Su c ces sion pla n n i ng for t he Chief Fi na nc ia l O f c er t ur ned into a re cr uit ment pro ces s fol low i n g Bil l Floy dd ’ s not ice of re sig na t ion in Au g us t 2021 a nd re su lte d in t he appoint ment of R ich a r d Ha r ri s a s mentioned e a rl ier i n t h is r ep or t . Du r ing t he yea r , t he Com m it tee a l so c onducte d a det a i led r e v iew of t he succession pla n for t he Ch ief E xe cut ive. T he Com m it t ee welcome d t he nota ble ex a mples of succe ssion pla n n i ng a nd d iver sit y i n ac t ion in t he promot ion of Debbie H u sba nd a nd E m ma Mor n i ng to t he E xe cut ive Com m it tee a s set out on pag e 101 of th is Rep or t. A n o ver v iew of t he development of fer ed to D ebbie leadi ng t o her promot ion, f r om her ow n p er spe c t iv e, ca n b e fou nd in ou r 2022 Sus t a i nabi l it y Repor t. O t her i nter n a l sen ior ma nag ement promot ions w ere t o t he r oles of Ch ief Op era t i ng Of cer for Gro sv enor (please see ou r 2022 Su st a i na bil it y Repor t) and Directo r o f Leg a l. T raining W e r eg u l a rl y con sider t ra in i ng re qu i rement s for t he B oa r d w it h a vie w to en ha ncing k nowled ge a nd sk il l set s a nd to ensu r e appr opr ia te acc ount i s ta ken of changing circumstanc es. Directors a re inv ited to ident i f y to t he G roup G ener a l Cou ns el & Compa n y Se cr e ta r y a ny add it iona l in for m at ion, sk il l s a nd k now ledg e en ha ncement s t h at t he y r equ i r e. Du r i ng t he yea r, Dir ec tor s r e ceive d month l y r epor ts of c u r r ent a nd for ec a st t ra d i ng r esu lt s a nd t r e a su r y posit ion s. T hey a l so r ec eive d reg ula r brie n gs on t he pol it ica l and r eg u l ator y ga mbl i ng env i r on ment. Di r ec t ors r e ceiv ed cor porat e gov er na nce updat es f r om t he G roup G enera l Coun sel & C ompa ny S ec r et a r y on mat ters s uch a s t he Fi na ncia l Rep or t ing Cou nc i l (‘F R C ’) re por t on cor pora te gov er na nce in t he U K , t he F RC a r ea s of super v isor y fo cu s for 2022 /2 3, In ves tor A ss oc i at ion e x pe c t at ions for 202 3, ne w clima te-re lated repo r ting req uirem ents , a nd f r om t he Gr oup’ s aud itor on m at ters such a s t he BEI S con su lt at ion on re stor ing t r u st i n aud it a nd cor p ora te go ver n a nce a nd new I SA con sidera t ions. Di r e c tor s a l so under took ma ndator y Compa n y t r a i n in g on mat ters i nclud i ng t he G a mbl in g Com m is sion for Gr eat B r it a i n’ s L icensi ng Objec t i ves, E qu a l it y a nd Di ver sit y in t he W ork pl ace, t he Br iber y Act a nd GDPR. The Rank Group Plc Annual Report 2022 104 Bo ard pr ogr ess a ga inst 2 020/ 21 act ion s Du r i ng t he yea r, the Boa rd con sidere d it s del iver y a ga i n st t he ar ea s of pa r t icu l a r foc us t h at had be en identi ed u nder t he 2020/21 eva luat ion exerc is e. Ov era ll , it consider ed t hat it ha d made g oo d pr og re ss a s fol low s: Ag ree d a c t ion a r e a s Pr og r e ss m ad e i n 2021 /22 1. Strateg y M a na gement wa s as ked to pr esent a re v i se d ve -ye a r st r at eg y to t he Bo a r d for appr ov a l, w h ich it is note d happ ened pr ior to t he 2020/21 ye a r end. Up da tes a s to pr og r es s wer e pr ov ide d t h r oughout t he yea r, cu l m in at i ng i n a f ul l r ev iew a nd ref res h of t he Compa n y’ s s t r ateg ic pi l la rs fol low ing it s Ma rch 2022 st rateg y day . 2. W or k for c e enga gement T he Boa rd d is c uss ed d at a f r om t he a n nua l Employe e Opi n ion Sur ve y a nd t he ‘P u ls e’ sur ve y conduct ed du r i ng t he yea r, toge t her w it h r ep or t s f r om t he Non-E xe cut ive Di r ec t or re spon sible for work for ce eng ag ement. T her e ha s b een a cont i nued foc us on ov er se ein g ac t ions a nd c ha l lengi ng ma n ag ement to ev a lua te t hei r impa c t. T he Boa rd a nd C omm it tee mee t i ng s in No vember 2021 to ok place i n Br ighton, enabl i ng t i me to be s pent at P ier Ni ne a nd a ser ies of s chedu led Non-E xe c ut ive D i r ec tor venue v is its t ook place i n Ju ly 2 022. T h i s wa s i n add it ion to ot her ad hoc venue v isit s b y D ir e c tor s t h r oughout t he yea r . 3. Ma nag i ng t a len t T he Boa rd con sidere d t h at it shou ld conduct a mor e det a i led re v ie w du r i ng t he ye a r of t he ov era ll appr oac h to t a lent ma n ag ement. T h i s wa s u nder t a k en in p a r t, but ha s b een sche dule d for a deep er r ev iew dur ing t he for t hcom i ng yea r fol low i ng r ec ent Boa rd a nd s enior m a na gement ch a ng es. 4. ES G The Boa rd appr ove d a new ESG s t r ateg y , t he Compa ny’s rs t Resp onsible Busi nes s Repor t in Ja nua r y 2 022 set t in g out a n over v iew of t he in it ia l w ork t a ken to de velop such s t r ateg y a nd t he r st f u l l Sust a i n abil it y Repor t published a long side t h is A n nua l Re po r t. Outco mes from 2 021 / 22 review – B oard O ver a l l , t he Di r ec tor s b el ieve d t h at t he B oa r d wa s f unc t ioni ng wel l. T he a re a s for pa r tic u la r fo c us for t he for t hcom in g yea r were a g re ed a s fol lo ws: 1. S t rat eg y – wh i l st ac k now ledg i ng t hat t he m a i n im me d iat e foc us h a s to be on busi ness r e co ver y , fol lo w i ng t he r ev iew a nd r ef re sh of t he s t r ateg ic pi l la rs t he Boa rd con sidere d t h at t her e nee ds t o be a cont i nued foc u s on developi ng t he longer -ter m s t r ateg y , pa r t icu la rly i n r espe c t of Mecc a venues. 2. De veloping t he E SG S t rat eg y – t here w as cle a r re cog n it ion of t he sig n i ca nt prog r e ss mad e in t h is a r ea du r i ng t he 2021 /2 2 na nc ia l ye a r, but it wa s a l so noted t h at t he nex t na ncia l yea r wi l l be imp or t a nt i n embedd i ng t he st rate g y w it h i n t he bus ines s. 3. M a na g ingt a lent,genera l lya ndmores pec i ca llyf r omad ivers it ya nd inc lusio n a nd r emu nerat ion per sp e ct ive – t he Bo a r d re cog n i se d t ha t t h is w a s a ca r r y for wa r d f rom t he pre v ious n a nc ia l yea r , but felt t hat it wa s in a st r ong er posit ion to under t a ke t hi s r ev iew dur ing 2022 / 23 fol lo w i ng r ec ent Boa rd a nd sen ior ma n ag ement cha n ges. “ W e a re sat ised t hat t he Bo a rd pr o v id e s a n app r opr i a t e blend o f execu t i ve and non- e x e c u t i ve sk il ls to m eet t h e Grou p ’ s n eeds. ” Al ex Thursby Chair o f the Nominations Comm it tee For more information on our Board skills, experience and tenure, p lease see pages 94 -96. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 105 Board and senior management diversity W e r ec og n is e t ha t to be a s ucces sf u l Compa n y a nd ach ie ve our s t r ate g ic goa l s, Ra nk mus t be bo t h i nclusi ve a nd d iv ers e. Such rec og n it ion must be re ec te d t h r oughout t he org a n is at ion, i nclud in g on t he Boa rd , a nd I a m plea se d to r epor t t ha t women now compr is e more t h a n a t hi rd of our D i re c tor s a nd t he B oa r d mee t s t he re com mendat ions of t he Pa rker Rep or t . T he Com m it t ee ne ver t heless note d t he new re qu i rement s f r om t he Fi na ncia l C onduct Aut hor it y t ha t t he Boa rd shou ld be look ing to ach ie ve 4 0% gender d iver sit y a nd t h at at lea st one sen ior bo a r d po sit ion should be held by a fem a le. T he Bo a r d meet s t he lat ter re qu i r ement, fol low i ng t he appoi nt ment of K a r en W h it wor t h as S en ior Indep endent Di r ec tor i n Ja nua r y 2022 . A s at 30 Ju ne 2022, 37 . 50% of t he Bo a r d wa s fema le (37 .50% at t he date of t h i s rep or t) , 30. 7 7% of t he E xe cut ive Com m it t ee (30.77% as at t he date of t h is r ep or t) a nd 30% of ma n ag ement-l e vel d i r ec t r ep or t s to t he E xe cut ive Com m it tee (30% a s at t he dat e of t h is r ep or t). Fur t her det a i l s of t he gender bre a kdo w n of D ir e c tor s, sen ior ma n ag ement a nd t he Gr oup ca n be found on pag e 6 1 of t h i s rep or t. T he Com m it t ee is com m it ted to cont i nui n g to r ev iew its composit ion fr om a d iver sit y per sp ec t ive, includ i ng work ing t owa rd s meet ing t he 40% g ender ta rge t a nd inc r ea si ng BA ME repr es ent at ion i n sen ior roles. In or der to en su r e t ha t we ha ve o ver sight of prog r e ss ma de i n t h is a r e a acr o ss t he Compa n y , t he Comm it tee con sider s per for ma nce a ga i n st t he C ompa ny ’ s inclu sion a nd d iver sit y st r at eg y , w hich empha sis es t he des ir e to ac h ieve a d ivers e work for ce ac r os s a l l g r ade s. T he st r at eg y is ba se d on fou r ke y a i ms n a mely , (i ) cr ea te a n i nclusiv e env i r on ment which f ac il it a tes our c olle ag ue s to de velop, be cr ea t ive a nd del iver exc ept iona l ser v ice, (ii ) ensu r e t here i s a d iver s e work force ac r oss a ll g rad es, (i i i) m a ke i nclusion a nd d iv er sit y inte g ra l to how we do busi nes s, a nd (iv) demonst rate lea der sh ip on inclu sion a nd d iver sit y , i nter na ll y a nd ex ter na ll y , posit ionin g R a n k a s a n ‘empl o yer ’ of choice. T he Com m it te e con sidere d a nd welcomed t he pr og r es s made d ur ing t he yea r a ga in st eac h of t he fou r a i ms a s s et out on pag e 6 1 a nd i n more de t a i l in ou r 2022 Sust a inabi l it y Repor t. Du r i ng t he yea r, the Com m it tee a l so consider ed t he resu lt s of t he E mploye e Opi n ion Sur ve y (f ul l in Sep tember 2021 a nd P u ls e in M ay 2 022) so fa r a s q uest ion s rel ate d to i nclusion a nd d iv er sit y a nd wa s pleas ed t o se e t ha t t he Gr oup -w ide Nominations Committee Report Continu ed enga gement scor e i ncr ea s ed b et ween Sept ember a nd Apr il a nd t he inclusion a nd d iver sit y-rela ted a c t iv it ies dur i ng t he yea r were w el l-re ceiv ed. T he Comm it tee a l so re ceiv ed r e cr uit ment da ta t o re v iew a nd cha lleng e a s it deemed a ppropr iate to ensu r e a l ig n ment w it h our pol ic y to re cr uit t he b es t ca nd id ate h av ing r eg a r d to t he sk i l l s a nd ex p er ience r equ i r ed , but w it h a m i nd to d iv er sit y , i nclud in g gender a nd et h n icit y . Nominations Committee evaluation A s ment ioned abov e, it is i ncu mbent on t he Boa rd to en su re t hat a for m a l a nd r igor ous r e v ie w of t he ef fec t iveness of t he Com m it t ee i s conduct ed ea ch ye a r. Pr og r e ss a ga i n st l a st ye a r’s act ions, as w el l a s t he outcomes f r om t h i s yea r ’ s ev a luat ion, ar e s et out belo w . Progr ess a gai nst 2 020/ 21 review 1. Agreed a ction are as T o en su r e t ha t succes sion pla n s for t he ke y roles of C h ief E xec ut i ve a nd C h ief Fi na nc ia l Of cer conti nue to de velop, along side plan s for t he Ch a i r a nd ot her Non-E xe cut ive Di r ec tor s w ith long er tenur es. Progress made during 20 21 / 22 Du r i ng t he yea r t her e wa s a det a iled re v ie w of t he succes sion pla n for t he Chief E xec ut i ve. Fu r t her more, a r e v iew of B oa r d sk i l l set s w ith s ucces sion pla n n i ng i n m ind led to t he app oint ment of Lu c ind a C ha r les- Jones as a n independent Non-E xe cut ive Di r ec tor. The succe ssion pla n for the Ch ief Fi na nc ia l O f c er wa s repla ced w it h a re cr uit ment pr oc ess , re su lt i ng i n t he appoi nt ment of R icha rd Ha r ri s. 2 . Agreed a ction are as T o en su r e t ha t t her e is ongoi ng c ha lleng e as t o pro g re ss /achie vement s ag a i ns t t he inclu sion a nd d iver sit y st r at eg y , w ith a pa r tic u la r f oc us on t he E xe c ut iv e Com m it t ee (and to b e cons idere d a long side s ucces sion pl a n n i n g for t he E xec ut i ve Com m it tee) and t he i mpac t of t he pa ndem ic on colle ag ues. Progress made during 20 21 / 22 T he Com m it t ee a s ses se d pr og r ess of inclu sion a nd d iver sit y in it iat ive s t h r oughout t he yea r. The p osit i ve i ncr ea se in fem a le r epre sent at ion o n t he Exe c ut ive Com m it t ee w as w elcomed, a lt hough it wa s noted t hat a pipel i ne for succession is re qu i re d to en su re t hat t he de sir e d level s a r e ma i nt a i ned a nd t hat f u r t her work is re qu i re d w it h rega rd to e t h n ic d iver sit y . 3. Agreed a ction are as T o fo c us on t he ef fe c t iv eness, a nd how t he Com m it t ee c a n f u r t her ev a luat e/ demonst r at e t he ef fe c t ivene ss, of t he Boa rd a nd it s Com m it tees , it bei ng note d t ha t a n ex ter na l e v a luat ion wi l l i n a ny event b e conduct ed du r i ng t he 2021/ 22 na ncia l yea r . Progress made during 20 21 / 22 T he Di r ec tor s c onsider ed t hat t he ex t er n a l ev a luat ion proce ss conduc te d by L i nt st ock Li m ite d as sis te d it in re ec t i ng on its ef fec t iveness du r i ng t he yea r. Over a l l t he per f or ma nce of the C omm it tee w as high ly rated . Out com es fro m 2021/ 22 r eview T h is ye a r’s Comm it tee e va lu at ion exer ci se concluded t h at t he C omm it tee c ont inues to oper ate ef fe c t iv ely . Ha v i ng c onsider ed t he nd i ngs , t he Comm it tee ag r e ed t h at it s foc us for t he for t hcom in g yea r should be: 1. T o e v a luat e t he succes s of pre v ious succes sion pla n s a nd foc us , in pa r t icu l a r, on succe ss ion pla n ni ng f or t he Ch a i r a nd t he E xe c ut ive C om m it t ee. 2. T o cont i nue to ensu r e t here i s ongoi ng cha lleng e a s to pr og r ess /ach ievement s ag a i ns t t he inc lusion a nd d iver sit y st r ate g y , w it h a pa r t icul a r fo cu s on et h n ic d iver sit y a nd t he pipel i ne for maintaining progres s in re latio n t o gender d iver sit y . 3. T o c onduct a mor e in- dept h ex ter na l ev a luat ion of the Boa rd a nd it s Co mm ittee s, in volving Directo r inter v ie ws, once r e cent ch a ng es in B oa r d comp osit ion ha ve s et tle d. I look for wa r d to meet ing sh a r eholders a t t he for t hcomi ng AGM, w hen I w i l l be h app y to a n sw er a ny que st ions on t his r ep or t . A le x T hu r sby Ch a i r of t he Nomi n at ions C om m it te e The Rank Group Plc Annual Report 2022 106 A udi t Comm ittee R eport “The Co mmit te e co ntinu es to perfor m a k ey r ole with in the Group ’ s go v ernance f ramew ork, supporting the Bo ard in m onitoring and revie wing the sy stems f or risk ma na gement, inter n al con t rol and nan cial reporting. ” Ka r e n W h i t w o r t h Chair of th e Audit Commit te e Committee membership and attendance Appoi nte d to Com m it te e At tend a nce Cu r r ent members K a r en W h it wor t h ( C ha ir) N ovem ber 2019 4/4 Ste ven E som March 2016 4/4 K a t ie Mc A l i s te r January 2022 2/2 Ot her mem b ers du r i ng t he yea r Ch r i s B el l¹ Jun e 2015 2/2 1. Ch r i s B el l s te ppe d do w n f r om t he Com m it tee i n Ja nua r y 2022 f ol low ing h i s r es ig n at io n f r om t he B oa rd . Other attendees Ch ief E xe cut ive Ch ief Fi na nc ia l O f c er Bo ard Chai r Gr oup G enera l Coun sel & C ompa ny S ec r et a r y Di r ec tor of I nter n a l Aud it E x ter na l Aud itor T he Com m it t ee met s epa r at ely du r i ng t he yea r to d i sc uss m at ters w it hout ma n ag ement pre sent. T he ex ter n a l aud itor a nd t he Dir ec t or of Inter na l Aud it wer e pr ov ide d t he oppor tu n it y at eac h meet ing to d i sc us s mat ter s w it hout t he pr es ence of ma n a gement. Role and responsibilities T he role of t he C omm it tee i s pr i ma r il y to suppor t t he Bo a r d in f u l ll i ng it s cor p orat e go ver n a nce obli gat ion s so fa r as t hey r elat e to t he ef fe c t iv eness of t he Gr oup’ s r isk ma n a gement sy s tems , inter na l cont r ol pro ces se s a nd n a nci a l rep or ti ng. Its ke y r esp onsibi l it ies i nclude: – Rev iew i ng t he integ r it y of na ncia l st atement s a nd a n y a n nouncement s rel at i ng to n a nci a l per form a nce. – Rev iew i ng a nd ch a l leng i ng k e y accou nt i ng judgement s a nd n a r r at i ve disclosures. – Moni tor i n g i nter n a l cont r ol a nd r isk m a n ag ement proc es ses. – Per for m i ng a r obus t a sse ssment of t he Compa n y’ s pr incipa l a nd emerg i ng r i sk s. – Monitor ing a nd r e v iew ing t he ef fec t iveness of t he i nter n a l aud it f u nct ion, ensur ing t hat it is able to exer ci se i ndependent judgement . – Cons ider in g t he appoi nt ment of t he ex t er na l auditor, thei r r epor ts, per for ma nce, ef fe c t iv eness a nd ind epe ndence. – Ag r e ei ng t he ex ter na l aud it or’ s ter ms of enga gement a nd t he appr opr ia teness of t he audit fe e. T he for ma l ter ms of r efer ence of t he Com m it t ee a r e a va ilable at w w w .r a n k .com or by w rit ten re ques t to t he G r oup G enera l Coun sel & C ompa ny S ec r et a r y , who ac t s as s ec r et a r y to t he Comm it tee. K ey ac tivi tie s duri ng t he year – Re-a s se sse d ong oing a nd emerg in g r isk s a s t he Compa ny cont i nues it s re co ver y f rom t he impac t of t he COVI D -1 9 pa ndem ic. – Cons idere d appr oach t o impa ir ment re v ie w a nd r esu lt i ng i mpa ir ment a nd re ver s a l s of impa i r ment. – Discussed t he p r oposed disclosures a nd a ssu r a nce pr og r a m me to enable t he Gr oup to r epor t aga ins t t he T a sk Fo r ce on Cli mate-relate d Finan cial Dis clos ures re quirem en t s. – Cons idere d t he BEI S con su lt at ion on ‘Rest or i ng Tru st i n Aud it a nd Cor p ora te G o ver n a nce’ a nd its potent i a l i mpac t on t he G r oup. – Conduct ed a de epd ive into c yber a nd in for mat ion se cu r it y . The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 107 Dear shareholders I a m plea se d to pr esent t he Audit Com m it t ee Repor t for t he 2021/ 22 na ncia l yea r. Du r i ng t he ye a r, the Com m it tee ha s cont i nued to ca rr y out a ke y r ole w it h i n t he Gr oup’ s g over na nce f r a me work , suppor ti n g t he Boa rd i n monit or i ng a nd r ev iew i ng t he sy s tems f or r isk m a na gement , i nter na l cont r ol and n a nci a l r epor ti ng. K ey activities T he COV ID -1 9 pa ndem ic cau se d subst a nt i a l d i sr upt ion to t he Compan y a nd t he cu r rent mac r oe conomic cl i m ate pre sent s add it ional r isk a nd u ncer t a int y . Fu r ther to t hi s, t he Com m it tee ca r r ied out a robus t r ea ss es sment of t he Gr oup’ s pr i ncipa l r i sk s, wh ich c a n b e found on pag es 7 4 to 81. W e r e ceive d r eg u l a r upda tes on t he work of the R i sk Com m it tee a nd debate d t he ex t ent to wh ich t her e wer e new r i sk s a nd / or i ncr ea s ed r i sk w it hi n t he busi nes s a nd how such r i sk s wer e mit igate d. T he C om mit tee a lso cont i nued its w ork on t he es sent ia l over sight of inter na l cont r ol (more det a il of wh ich is se t out below) a nd t he Compa ny’ s r isk m a n ag ement sy st ems. T he re co ver y of t he busi ness a nd as so ci ate d r isk s al so c ont r ibute d to our wor k on goin g concer n a nd vi abil it y . W e re v iewed n a ncia l models (i ncludi ng dow n side scen a r io s ) to c onsider head r o om over t he cou r se of the n a nci a l yea r 2021 /22 a nd bey ond, t a k ing t i me to under s ta nd and c ha l lenge, where nece ssa r y , sig n i c a nt judgement s a nd as su mpt ions i n t he model l i ng, t he r ever s e st r es s te st model s a nd co vena nt and liqu id it y head r oom. Mor e det a i l on t his work , toge t her w it h our goi ng concer n and v iabi l it y st atement s, is on p ag es 82 to 8 3. W e a l so r e v ie wed ou r appr oac h to impa ir ment s a nd d is cu ss ed m a na gement ’ s as se ssment for i nd icator s of i mpa i r ment of as se ts , re ver s a l of i mpa i r ment a nd associated disclosures. Mo r e detai l ca n be fou nd on pag e 11 0. Audit Committee Report Continu ed Du r i ng t he yea r, the Com m it tee d is cu ss ed and app r oved the proposed disclosures a nd a ssu r a nce pr og r a m me to enable t he Gr oup to r epor t aga ins t t he Task Force on Climat e-re lated Financi a l Di scl osures re qu i rement s for the r s t t ime, a s desc r ibe d on pa ge s 63 to 70. W e a l so c onsider ed t he BEIS con su lt at ion on ‘Rest or i ng Tru st i n Aud it a nd C or por ate G over na nce’ , r ec eiv ing upd ate s at ea ch meet i ng on t he audit a nd go ver n a nce refor m agend a. We approve d a nd r e v iewe d t he outcome of a compa r i son exer c is e ag a i ns t cu r r ent cont r ol s, u nder t a k en w it h suppor t fr om a n e x ter n a l a dv isor a nd t he out put of t ha t exer ci se w il l be u se d to develop a compr ehensi ve r oad m ap a nd implementa t ion pla n to b e over s een b y t he Com m it t ee. T he C omm it tee w i l l c ont inue to r ev iew prepa rat ions f or a nt icipate d refor m dur i ng t he yea r a hea d. Intern al cont rols T he Boa rd ha s o ver a l l r esp onsibi l it y for t he r isk m a n ag ement fr a me work , a s ex pla i ne d f u r t her on page 7 4. It delegat es re spon sibil it y for r ev iew i ng t he ef fec t iveness of t he G r oup’ s s y stem s of inter na l cont r ol to t he Comm it tee. T h is cov ers a ll m ater ia l cont r ols i nclud i ng na ncia l , operat iona l a nd complia nc e cont r ols a nd r isk ma n ag ement sy s tems. Du r i ng t he yea r, we recei ved de t a i led rep or ts f r om eac h of t he t h r ee l i nes of defence so a s to en able us to ma int a i n over sight a nd dis cu ss t he ri sk s a nd cha lleng es to t he Group. In pa r t ic ul a r, t he Com m it t ee r e v iew ed t he fol low ing: – Enter p r is e r isk m a n agement : W e con sidere d t he m a n ner in w h ich t he r isk m a n ag ement fr a me work h a s ev olve d a nd t he ov era ll app et it e to r i sk. W e r e v iewe d t he r i sk ma nag ement met hodolog y and con rme d t hat it cont i nues to be appr opr ia te. W e a lso consider ed t he Group r i sk r eg is ter i n re spe c t of bot h cu r r ent a nd emerg i ng r isk s a nd cha l leng ed t he Exe cut ive Di r ec tor s on such r isk s a nd t he ma n ag ement of t he sa me. T he Gr oup’ s pr i ncipa l a nd emer g i ng r i sk s a r e se t out on pag es 7 4 to 81. – Leg a l a nd re g ul ator y : Re ec t i ve of the re g u lat or y env i ron ment i n wh ich R a n k oper ates , a nd w it h a n added empha si s on re cov er y f rom t he impac t of t he pa ndem ic on t he Compa ny , we cont i nued to ex a m i ne t he ef fe c t ivene ss of t he Compa n y’ s f r a me work of compl ia nce cont r ol s. T hi s i ncluded inter na l aud it r ev iews, r ep or t s on a nt i-money lau nder i ng f r om t he Nomi na te d Of c er, upd at es on mater i a l reg u lator y mat ters, ta k i ng account of cor r esp ondence f r om a nd g u ida nce iss ued by r eg ul ator s (i nclud in g fol low i ng compli a nce a ss es sments) , a nd r e v iew s of prog r e ss ma de on a r ea s r eq ui r i ng impr ov ement. T he Com m it tee a l so d isc u sse d t he st a t us of m ater i a l l it ig at ion a nd re g u lat or y mat ters a ffe c t i ng t he Compa n y , inc ludi ng a ny na ncia l impac t and/ or dis clo sure req uirem ents . – Hea lt ha nds a fet y: W e consider ed dur ing t he yea r ongoi ng hea lt h a nd sa fe t y proje c ts f or t he venues est a te. W e a ls o r ecei ve d rep or ts f r om t he G roup’ s Head of Hea lt h a nd Sa fe t y on relev a nt dat a a nd tr end s, monitor ing pr og r a m me out put s a nd a ny p otent i a l r eg u l ator y mat ter s, inc ludi ng r ep or t s m ade u nder t he Repor t in g of In jur ies, Dis ea se s a nd Da nger ou s Occ u r r ences Re g u lat ions 2 01 3 ( R I D D O R ). – In for mat ionsecu r it y ,da t apr ivacy a nd d is a ster r e cover y : We considere d dur ing t he yea r pro g re ss m ade i n re spe c t of in for mat ion se cu r it y a nd d at a pr iv ac y cont r ol s. T h is i ncluded a r e v iew of the spe ci c key r i sk ind ica tor s for t hese a rea s a nd u p d ate s on t r ends rel at i ng t o da ta c ompli a nce f u r t her to t he G roup’ s monitor ing pr og r a m me. T he Com m it t ee a lso r ec eive d deep - d iv e pre sent at ions on t he Group’ s appr oach to i nf or ma t ion sec u r it y a nd d is a ster re co ver y re spe c t iv ely f r om t he D ir e c tor of I T Se cu r it y a nd t he C h ief In for m at ion Of cer . T he pre sent at ion s prov ided, in each c a se, a n over v iew of t he Compa ny’ s cr it ica l s ys tem s, a r ea s of ke y r i sk ( a nd mit iga t ion, a s appr opr iat e ) a nd development r oad m aps. T he C om mit tee a ls o r ecei ve d rep or ts f r om t he Dat a Pr ot ec t ion Of cer on relev a nt dat a a nd t r ends, mon itor i ng pr og r a m me out put s, ongoi ng pr ojec t s a nd an y potent ia l reg u lator y mat ters. The Rank Group Plc Annual Report 2022 108 – Codeofc onducta ndwh ist leblowi ng: W e re con r med t he ongoin g appropr iatenes s of t he Gr oup-w ide wh is t leblow i ng pol ic y a nd proce du r e, wh ich is oper at ed b y a n e x ter na l t h i rd-p a r t y pr ov ider , Sa feca l l. T he ser v ice pro v ides a mu lt i l i ng ua l commu n icat ion cha nnel, a nd enables employee s a nd ot her sta keholders to repor t i n con dence a nd, i f t he y w i sh, a nonymous ly , to Sa fe ca ll , wh ich t hen subm it s rep or ts to the a l located appropriate ind iv idual w it h i n t he bus ines s for i nves t ig at ion a s nece ssa r y . Rep or t s r e ceive d du r i ng t he yea r wer e kept st ric t l y con dent i a l a nd t he concer ns ident i e d were r efer r ed to appr opr iat e ma n a ger s w it hi n t he Gr oup for in ves t iga t ion a nd re solut ion. W e r ec eive d a n a n a l y sis of a l l r ep or t s submit ted du r i ng t he yea r . T he Compa n y’ s c ode of conduc t, w h ich wa s ref r e shed du r i ng t he yea r, is ava i l able on w w w.ra n k .com . Internal audit T he Gr oup’ s i nter na l aud it f u nc t ion for ms t he pr i ma r y s our ce of i nter n a l a s su ra nce to t he Com m it tee v i a t he del iver y of t he inter na l aud it pla n, wh ich is s t r uc t u r ed to a l ig n w it h t he Gr oup’ s s t ra teg ic pr ior it ies a nd ke y r isk s and i s dev eloped b y i nter n a l audit w ith i nput f r om m a na gement a nd t he Com m it t ee. It s r ole is to pr ov ide indep endent, obje c t ive a s su ra nce a nd consu lt ing s er v ices desi g ned to add a nd prot ec t v a lue by i mpr ov i n g t he Gr oup’ s oper at ions. I nter n a l aud it a ssi st s t he Gr oup in ac compl ish i ng it s obje c t ive s by br ing i ng a s y stem at ic, d i sc ipli ned appro ach to e v a luat e a nd i mpro ve t he ef fec t iveness of r i sk ma nag ement, cont r ol a nd gov er n a nce pr oce ss es. Eac h yea r , t he Com m it tee r ev iews a nd appro ve s t he int er na l audit pla n. T he pla n is kept u nder r e v iew, dependi ng on oper at iona l or o t her busi nes s re qu i rement s, w it h a n y ch a ng es bei n g d isc u sse d a nd ag r e ed w it h t he Com m it te e. T he Di r ec t or of Inter na l Aud it submit s r ep or t s on completed aud it s to e ach C om mit tee meet i ng. T he ndi ng s ar e di sc us se d by the Com m it t ee, to get her wit h a ny impl icat ions a r is in g fr om such nd i ng s on the broa der cont r ol en v i r on ment . Re com mend at ions a r is in g f r om inter na l aud it r ev iews a r e com mun icat ed to t he relev a nt busi nes s a r ea for i mplementat ion of appr opr iat e cor r ec t ive mea su re s a nd t he Com m it tee monitor s s enior m a na gement ’ s re spon sivene ss to t he same. T he work u nder t a k en by i nter na l aud it dur ing t he yea r inc luded: c yber -ac t ive directo r y rev iew , m a rke t ing com plian ce a nd da ta q ua l it y r ev iew , c y ber -per imeter sec u r it y r ev iew a nd a re v ie w of hi gh va lue cu stomer cont r ol s. V enues audit s re com menced i n Aug ust 2021. In a dd it ion to t he abo ve, t he i nter n a l aud it te a m a l so as sis te d w it h a d hoc r eg u la tor y mat ters a nd cont r ols i mpr ovement work t hat a r os e dur ing t he yea r . Du r i ng t he yea r t he Com m it tee r ev iewed t he sk i l l s a nd dept h of the i nter n a l aud it tea m a nd approv ed t he rec r u it ment of add it iona l res our ce s, i nclud in g a spe ci a l is t int er na l IT aud itor. T he pla n ne d ex ter na l qu a l it y as se ssment of t he inter na l aud it f u nc t ion wa s on hold due to t he venues closu r es at t he sta r t of 2021. It is a nt icipate d t h at it w i l l pr o cee d in t he nex t n a nci a l yea r. Fair , balanced and understandable One of t he ke y compl ia nce r e qu ir ement s in r el at ion to a g r oup’ s a n nua l repor t a nd accou nt s is t h at , t a ken a s a whole, t he y a r e fa i r, ba l a nc ed a nd u nder st a nd able. For more information on ou r ap pro a ch to risk management se e pa ge s 7 4-81. T he coor d i na t ion a nd re v iew of Gr oup-w ide cont r ibut ions t o Ra nk ’ s A nnua l Repor t and Acc ount s fol low s a w el l- es t abl is hed pro ces s, wh ich i s per forme d in p a r a l lel w it h t he form a l pr oce ss u nder ta k en by t he ex ter na l aud itor. A sum ma r y of t he pr oc ess is a s fol low s: – T he A n nua l R epor t a nd Accou nt s a r e d ra f te d by a ppropr i ate s en ior ma n ag ement w it h o vera ll c oor d i nat ion by a t ea m c ompri si ng t he G r oup Gener a l Cou ns el & Compa n y Se cr e ta r y , t he Ch ief Fi na nc ia l O f c er , t he Di r ec t or of Inv est or Rela t ions a nd t he D ir e c tor of Gr oup Fi na nce t o ensu r e con sis tenc y; – Comprehen sive r e v ie ws of t he d r a f ts of t he A n nua l Rep or t and Ac cou nts a r e under ta ken by m a na gement , t he E xec ut i ve Com m it tee a nd t he Boa r d Ch a i r a nd r esp ec t i ve C ha i r of eac h Co mmittee ; – A nea r- na l dr a f t is rev iewed by t he Co mmittee ; – A na l d r a f t is rev iewed b y t he Boa r d; a nd – For ma l a ppro va l of the A nnua l Re por t a nd Accou nt s is g i ven b y a com m it te e of t he Boa rd (usua l l y t he Fi na nce Co mmittee ) . T a k ing t his a ppro ach en abled t he Com m it t ee to r e com mend to t he Bo a r d, a nd t hen the Bo a r d its el f, to con r m t h at t he Compa n y’ s 2 022 A n nua l R epor t ta k en as a w hole is fa i r, bal a nce d a nd und er s t a nd able a nd pro v ide s t he in f or m at ion ne ce ss a r y for s ha reholder s to a sse ss t he Compa ny’s posit ion a nd per for ma nce, bus ines s model a nd s t r ateg y . K ey jud gem ent s and na nci al reporting matters T he Com m it t ee a s ses se s a nd ch a l lenge s whet her du r i ng t he yea r su it able accou nt i ng pol ic ies ha ve be en adopt ed a nd whet her m a na gement h as m ade appropr iate es t i ma tes a nd ju d gement s. Ke y accou nt i ng judg ements con sidere d , conclusions r eac hed a nd t heir n a nci a l impac t s du r i ng t he yea r u nder re v ie w a r e set out i n t he t able on pa ge 110 . Add it ion a l l y , w e d is cu sse d w it h t he ex ter na l aud itor t he sign i c a nt is sues add r es se d by t he Comm it tee du r i ng t he yea r a nd the a r e as of p a r tic ul a r fo c us, as de sc r ibe d i n t he i ndependent aud itor’ s rep or t on pages 1 50 to 159 . The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 109 Audit Committee Report Continu ed Ke y jud ge ment s a nd na nc ia l rep or ti n g ma t t er s 20 21 / 22 A ud it C om m it tee r e v ie w a nd c onc lus ion s Going concer n and viabili t y statemen t T he Di r ec tor s mus t deter mi ne t h at t he busi nes s is a g oing concer n for t he p er iod up to 31 Aug us t 2023 f r om t he date of si gn ing t he acc ounts . Furthe r mo re, the Directo r s are re quired to ma k e a st at ement in t he A nnua l Re por t as to t he longer-ter m v iabi l it y of t he Gr oup. Th i s ha s b een a n a l y sed i n de t a i l, i nclud in g t he dow n side scen a r ios modelle d in t he vi abi l it y sta tement. T he Com m it t ee c onducte d a n a n nua l ass es sment pur su a nt to wh ich t he Di r ec t or s were a ble to conclude t hat it i s appr opr iat e to prepa re t he na nc ia l s ta tements on a goin g concer n ba sis, as s et out i n more de t a i l on pa ges 82 a nd 83. W e r ev iewed na ncia l model s (includ i ng dow nside scena rios) , t a k i ng t i me to under st a nd and cha lleng e, where nece ss a r y , sig n i c a nt judgements a nd ass umpt ions in t he model l i ng, t he r ever s e st res s tes t model s a nd cov ena nt a nd liqu idit y head r o om. Fu r t her more, t he Com m it t ee e va luated m a n ag ement’ s wor k in c onduct i ng a robus t a sse ssment of the G roup’ s longer-t er m v iabi l it y , a f r med t he re a sona bleness of t he a ssu mpt ion s, consider e d whet her a v iabi l it y per iod of th r ee n a nc ia l yea rs r ema i ned mos t appropr iate, and con r med th at it w a s as pa r t of a r ec om mendat ion to t he Bo a r d. F u r t her deta i l c a n b e found on pa ge s 82 a nd 83. T reat ment of separately disclosed i tems ( ‘SDIs’ ) T he Gr oup sepa ratel y d is clos es cer t a i n cos t s a nd i ncome t hat impa ir t he v i sibil it y of t he under ly ing p er for m a nce a nd t rends bet ween p er iod s. T he se pa r atel y d is clos ed item s a r e m ater i a l a nd in f r e quent in n at u r e a nd / or do not r ela te to u nderl y i ng bu sine ss per for ma nce. Judgement is r eq ui r ed i n de ter m i n i ng whet her a n item should be cl a ssi e d as a n SDI or included w it h i n t he und erl y ing re sults . T he Com m it t ee r e v iew ed t he pr es ent at ion t r eat ment of SDIs a nd ag r e ed t hat t he item s l ist ed i n note 4 a r e appr opr i ate. T he Com m it t ee note d t h at f r om a qua lit y of ea r ni ng s per sp ec t i ve, bot h a ccr e t ive a nd di lut iv e impac t s h ad be en r ec orde d i n bot h t he cu r r ent a nd pr ior ye a r s. Impairment re view For good w i l l a nd inde nite -l i fe as se ts , t he Group per form s a n a n nua l i mpa i r ment r ev iew . In a dd it ion, t he Group r ev iews a ss et s t ha t a r e subjec t to a mor t is at ion or depre c iat ion for e vent s or cha nges i n c ir c u ms ta nces t h at i nd icate t hat t he ca r r y in g a mount of a n a sse t or ca sh- genera t i ng u n it ma y not be r ec over able. If a n as se t ha s pr ev iously b een i mpa i r ed t he Group con siders w het her t here h a s be en a ch a ng e in c i rc u ms t a nce s or event t hat ma y ind ica te t he i mpa i r ment is no longer r e qu ir e d. T he G r oup consider s ea ch venue to be a c a sh-gener at i ng u n it a nd t he r e v iew cov ers a ppro x i mat ely 130 i nd iv idua l ca s h-genera t i ng u n its (‘CGU ’), w it h goo d w i l l a nd inde nite l i fe as set s con sidere d at a g roup of CG U level . T he Com m it t ee r e v iew ed m a na gement ’ s i mpa i r ment re v iew pro ces s i ncludi n g, where appl icable, t he potent ia l ind ic ator s of impa i r ment a nd /or rev er sa l , ca sh ow pr oje c t ions, cont i nued pos t-C OVI D - 19 r evenue r eco ver y , g ro w th r at es a nd d i scou nt r ate s use d to der i ve a va lue in use ( ‘ V I U’ ), mult iples use d i n V I U, the sens it iv it y to a s su mpt ions ma de, a nd us ed V IU for a l l CG Us consi st ent w it h t he pr ior ye a r. T he Com m it t ee r e v iew ed a nd a g r ee d t he va lue of impa ir ment cha rge s a nd r ev er sa l s r ec og n ise d i n 2021 /2 2 a nd r ev iewed t he d isc losu r es i nclud in g t he sen sit iv it y d i sclo su re s of ch a nge s i n ke y as su mpt ions. F u r t her deta ils a re d is clos ed i n note 14 on pag es 18 8 to 191. Compliance with laws and regul ations T he Gr oup oper ate s in a n evol v i ng r eg u l ator y env i r on ment w it h i ncr ea si n gly complex l aw s a nd r eg u l at ions, p a r tic ul a r ly ga mbling-related reg ul at ions. T he Gr oup ha s r ec eive d i ncome fr om go ver n ment s du r i ng t he yea r, pa r t icul a rl y t he C oron av ir u s Job Retent ion Sc heme (‘CJR S’ ), t he r u les for wh ich a re of t en complex a nd w it h w h ich t he Gr oup is r equ i r ed t o comply . T he Com m it t ee r e v iew ed m a na gement ’ s appr oac h to comply ing w it h l aw s a nd r eg u l at ions i nclud i ng a ss ess in g t he pot ent ia l na ncia l i mpac t, acc ount i ng a nd d is closu r e for a ny potent ia l non-c ompl ia nc e. T he Com m it t ee r e v iew ed a nd a g r ee d t he acc ount i ng for t he CJR S in 2021 / 22 a nd recei ve d upda tes on t he qua nt u m a nd t i m in g of cla ims on a n ongoin g ba sis t hr oughout t he yea r . T axation T he Gr oup holds pr ov isions for cer ta i n t a x mat ters, i n add ition to t he nor ma l pr o v i sions for cor por at ion t a x. In a s ses si ng t he appr opr i atenes s of ind i r ec t t a x pro v is ions, t he Gr oup must e st i m ate t he l i kel y outcome of uncer ta in t a x posit ions where judg ement is subjec t t o inter pret a t ion a nd rem a i ns t o be ag r e ed w it h t he rele va nt aut horit y . At bo t h t he h a l f a nd t he f u l l y ea r, the C omm it tee con sider ed t he Gr oup’ s ap proa ch to t a x pro v ision i ng, in or der to sa t isf y it sel f how ma n ag ement ca me to it s b est e st ima te of t he l ik ely outc ome. T he Com m it t ee r e ceive d a nd con sidere d a n upd at e paper cov er i ng t he G roup’ s ongoi ng d i r ec t a nd ind i re c t t a x m at ters. T h is co ver ed c ont i nui ng oper at ion s where t a x re t u r n s submit ted ha ve be en, or a r e l i kel y to be, c ha llenge d b y t he r elev a nt t a x aut hor it y . It a l so r e v iew ed a nd a g r ee d t he t r ea t ment of Ra nk ’s succes sf u l V AT cla i m on slot m ach i nes i ncome a nd a sso ci ate d inter e st f r om 20 0 6 to 2013 at t he F ir s t-tier Tribu n a l a s a n SDI a nd re v iewed d i sclos ur e s for t ra nspa r enc y . T he Com m it t ee c onsider ed t h at m a na gement ’ s be st e st i m ate of ta x li abi l it ies is appr opr i ate. The Rank Group Plc Annual Report 2022 110 Gov ernance A l l member s of t he C omm it tee a r e indep endent Non-Exe c ut iv e Di r ec tor s a nd t he Boa r d is sat ise d t hat t he y ha ve sig n i ca nt know led ge a nd busi ness ex per ien c e in n a nci a l rep or ti ng, r isk ma n ag ement, i nter n a l cont r ol a nd s t r ate g ic ma n ag ement. I n add it ion, I me et t he re qu i rement to br i n g re cent a nd r elev a nt na ncia l ex p er ience to the Com m it tee a nd f u r t her in for ma t ion about my e x per ience ca n be found on p ag e 95. I ca n con r m t hat t he Boa r d is sa t is ed t h at t he Com m it t ee ha s t he res ou rc es a nd ex per t ise to f u l l its r e spon sibil it ie s a nd, h a s compet ence rele va nt to the s ec tor i n wh ich t he Compa ny oper a te s. External audi tor and the e x ternal audit Er nst & Y ou ng L L P (‘E Y’ ) h a s be en t he Compa n y’ s e x ter na l aud itor si nce 2010 . Follow ing a n audit tender pr oc ess conducte d b y t he Com m it tee i n accor d a nce w it h it s r eg u l ator y r equ i r ements wh ich concluded i n June 2019 (the pro ce ss for wh ich wa s det a iled i n t he 2019 A n nua l Repor t) , E Y ’ s r e-a ppoi nt ment as t he auditor of t he Gr oup wa s appr ov ed b y sha reholder s at t he 2019 A n nua l G ener a l Mee t i ng (and at each s ubseq uent A n nua l G ener a l Mee t i ng). T here w a s a ch a nge of e x ter na l aud it pa r tner fol low ing c omplet ion of the 2018/ 19 ex ter na l aud it. T here wer e no cont ra c t ua l or sim i l a r obli gat ions r e st r ict i ng t he Gr oup’ s c hoice of ex ter n a l aud itor. EY i s enga ge d to ex pr es s a n opi n ion on the n a nci a l st atement s. It re v iew s t he dat a cont a i ned i n t he n a nc ia l st at ements to t he ex tent neces sa r y to e x pre ss it s opin ion. It d is cu ss es w it h ma na gement t he rep or ti ng of op era t iona l r es ul ts a nd t he na nc ia l po sit ion of the Gr oup a nd pre sent s nd i ngs to t he Com m it tee. T he Di r ec tor s i n of ce at t he dat e of th is r epor t a r e not awa re of a ny r ele va nt i n for m at ion t ha t ha s not be en ma de av a i lable to E Y a nd each D i re c tor h a s ta ken step s to be a wa r e of a l l such i n for ma t ion a nd to ens ur e it is av a i l able to EY . E Y ’ s aud it r epor t is publis hed on pa ges 1 50 to 159 . In or der to a s ses s t he i ndependence a nd ef fec t iveness of t he ext er na l auditor (i ncludi ng it s obje c t iv it y , m i nds et a nd level of pr ofes siona l sc ept ic ism), the Com m it t ee c a r r ied out a n as se ssment. T h is w as f ac il it a ted b y us e of a que s t ion na ir e wh ic h p o s ed que s t io n s i n rel at ion to d i f fer ent a spe c t s of t he ex t er n a l audit pr o ces s, i ncludi ng t he pla n n in g, exe cut ion a nd qu a l it y of t he audit . Feedb ack wa s s ought f r om members of t he Com m it t ee a nd s en ior ma na gement of t he busi ness a rea s subje c t to t he aud it . T he fee dback w as c onsider ed , d is c uss ed a nd sum m a r i se d b y ma n ag ement a nd rep or ted to t he Com m it tee a nd B oa r d. H av ing conducte d such r e v iew, and r ev iewed over a l l p er for ma nce, we ha ve c oncluded t ha t EY h a s demonst rate d appr opr ia te qua l i cat ions and ex per t is e t h rou ghout t he per io d under r e v iew, and t h at t he aud it pro ces s wa s ef fec t ive. Non-audit services T he Com m it t ee o ver se es t he nat u re a nd a mount of a n y non-audit work u nder ta ken by t he ex ter n a l aud itor to en su re t hat it rem a i ns i ndep endent. Con se quent l y , w e a r e re qu i re d to appr o ve i n ad va nce a ll non-audit ser v ices pr iced abo ve £2 5,00 0, w it h a n y non-audit ser v ice s below s uch a mount b ein g w it h i n t he delega te d aut hor it y of t he Chief Fi na ncia l Of cer ( a lt hough in pr ac t ice he wou ld st i l l not i f y t he sa me to t he Comm it tee) . W hen seek ing e x ter na l acc ount a nc y a dv ice in rel at ion to non-audit m at ters, t he Gr oup ’s pol ic y is to i nv ite compet iti ve tender s where a ppropr i ate. It is a lso t he Group’ s pol ic y to ba la nce t he nee d to m a i nta in audit i ndep endence w it h t he desir abi l it y of ta k ing ad v ice f r om t he leadi n g r m in r el at ion to t he ma t t er concer ned a nd bei ng ef c ient. T he tot a l non-audit fe es p a id to EY d ur ing t he per io d under r e v iew w a s £ 35, 31 4 (2021: £ 37 ,60 0) (inc ludi ng i nter im fee s ). Ra nk h as u se d t he ser v ices of ot her accou nt i ng r m s for non-au d it work dur ing t he per iod under r e v ie w . “ W e co nti n u e to consider t he i mpac t o f t h e B EIS con su lt at ion on ‘ Resto r i ng T r ust i n Aud it a nd C or p or a t e G overna n ce ’ o n t h e G r o u p .” Karen Whi two rt h Chair of the Audit Com mit tee For more information on ou r SD I s, p le as e go to n ote 4 on pa g e 179. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 111 Audit Committee Report Continu ed Out com es fro m 2021/ 22 r eview T h is ye a r’s Comm it tee e va lu at ion exer ci se, fac il it a ted e x ter na l l y by L i nt sto ck L i m ite d, concluded t h at t he C omm it tee c ont inues to oper ate ef fec t ivel y . T he pr oce ss for t he re v ie w is se t out on pa ge 104. Ha v i ng consider ed t he nd i ng s, we ag re ed t h at our foc us for t he for t hcom in g yea r should be: 1. Su pp or t ing a re v ie w of Group na nce cont r ols fol low ing t he ar r iva l of R ich a r d Ha r r is as Ch ief Fi na ncia l Of cer a nd as t he Compa ny f u r t her consider s t he impac t of BE IS on t he Group (i nclud i ng t he prop os ed i nt r oduc t ion of a n aud it a nd a ssu r a nce pol ic y) a nd fee dbac k f rom t he BEIS b ench ma r k i ng work . 2. Cont i nu in g to bu i ld on t he rel at ions h ip a nd develop ef c ient way s of work i ng w it h t he ext er n a l aud itor . 3. En su r i ng t here is cle a r pr ior it i sat ion for t he Com m it t ee i n r ela t ion to its w ork for t he for t hcomi ng ye a r, bea r i ng i n m i nd in pa r t ic ul a r t he cur rent mac r o -e conom ic cond it ions i mpac t i ng t he Group. In c oncludi ng t his r ep or t , I wou ld l i ke to re cog n i se a nd t ha n k t he R a n k ma nag ement a nd na nce te a m, t he i nter n a l audit te a m a nd EY for t heir com m it ment a nd va luable cont r ibut ions o ver t he pa s t t welve mont hs. I look for wa r d to meet ing sh a r eholders a t t he for t hcomi ng A nnua l G enera l Mee t i ng when I w i l l be h app y to t a ke que st ions on t h is r epor t a nd our w ork du r i ng t he ye a r. Ka renW hit wort h Ch a i r of t he Aud it Com m it t ee Audit Committee evaluation It is i ncu mbent on t he Bo a r d to en sur e t ha t a for ma l a nd r igor ous r e v iew of t he ef fec t iveness of t he C omm it tee i s conduct ed each y ea r. Our pr og r e ss a ga i n st l a st ye a r’s ac t ions, a s wel l a s t he outc omes f r om t h is yea r ’ s e va luat ion, a r e se t out below . Out com es fro m 202 0 /21 review 1. Agreed actions T o u nder ta k e a re v ie w of, a nd de velop f u r t her , t he r is k ma n ag ement f ra mework a nd ensu r e t h at t her e is a f ur ther fo cu s on emerg i ng r i sk s (i nclud i ng a s r ega r d s pe ople ). Progress made during 20 21 / 22 T he tender pr oce ss for t he i ntende d inter na l audit ef fec t ivene ss a nd r i sk ma nag ement f ra mework r ev iew wa s plac ed on hold in 2021. As ment ioned ab ove, t he rev iew is a nt icipate d to pr oc ee d du r i ng t he 2022 / 23 na ncia l yea r . T he Com m it t ee’ s r ev iew of t he Compa n y’ s pr i ncipa l r i sk s i ncluded a foc u s on emerg i ng r i sk s. 2. Agreed actions T o fo c us on wa y s of work i ng a nd develop f u r t her the r ela t ionsh ip w it h t he ex ter n a l audit or . Progress made during 20 21 / 22 T he Com m it t ee C ha ir a nd t he C h ief Fi na nc ia l O f c er hav e reg u l a r meet ing s w it h t he ext er n a l aud it pa r t ner . A dd it iona l meet i ng s to ok place du r i n g t he yea r to foc us i n pa r t icu l a r on wa y s of work i ng. 3. Agreed actions T o c ont inue to ens ur e t hat t he Com m it tee is able to foc us on t he key a r ea s of r isk a nd on wh ich to ch a l leng e ma n a gement. Progress made during 20 21 / 22 T he Gr oup’ s c or por at e r isk r eg i st er , a nd mit igat i ng ac t ion s, wer e re v ie we d in de t a i l by t he Comm it tee du r i ng t he yea r . T his include d per iod ic rev iew for eac h identi e d r isk of l i kel i hoo d a nd impa c t a nd r isk appe t ite t h r oughout t he ye a r a nd r esp ec t ive mit igat i ng ac t ion s. T he suppor ti ng k ey r isk ind ica tor s (wit h dene d tolera nce lev els) were a lso r e v iew ed du r i ng t he yea r. The Rank Group Plc Annual Report 2022 112 2021 / 2 2 activity A r ea o f foc u s Matters disc ussed Fr e quenc y Fina ncial report i ng Re v ie wed t he i nteg r it y of al l d r a f t n a nci a l st at ements (i nclud in g na r r at ive ). P Rev iewed acc ount i ng de velopments a nd t heir i mpac t s a nd sign i ca nt acc ount i n g issues. P Rev iewed a nd recom mended a ppro va l of inter i m a nd pr el i m in a r y r esu lt s a n nou ncements. B Rev iewed G r oup accou nt i ng pol icies a nd repor t in g pra ct ices. P Cons idere d appro va l proce ss for con r m i ng a nd r ecom mend i ng to t he Boa r d t h at t he 2021 A n nua l Rep or t is fa i r, bal a nce d a nd under s t a nd able. A Rev iewed a nd recom mended a ppro va l of the A nnua l R epor t, a s r equ i r ed b y t he B oa r d. A Rev iewed appr opr i atenes s of accou nt i ng p olic ies a nd goi ng concer n as su mpt ions. A Rev iewed a nd recom mended i nclu sion of the v iabil it y a nd goi ng concer n st atement s in t he A n nua l R epor t. A Rev iewed T CF D d i sc losu re s a nd compl ia nce w it h ESE F/ X BR L r eq ui r ement s. A Rev iewed Di r ec t or a nd of cer ex pen se s. A Inter n a l aud it Monitor ed t he effe c t iv eness of t he i nter n a l aud it f u nc t ion. P Rev iewed ma jor audit nd i ng s a nd appro ved r emed i at ion pla ns. Q Rev iewed t he 2021/ 22 a n nua l aud it pla n. B Rev iewed t he scope of audit c over a ge a nd appr o ved pl a n ned w ork for 2022 /2 3. A Ex ter n a l aud it Cons idere d t he ex t er na l auditor ’ s r epor ts a nd vie ws. Q Rev iewed t he o b jec t iv it y , i ndependence a nd e x per t ise of t he ext er na l auditor. A Cons idere d t he Aud itor’s Repor t on t he 2020/ 21 a n nua l r esu lt s. A A ss ess ed t he effe c t ivene ss of t he 2020/ 21 ex t er na l audit . A Rev iewed a nd approv ed t he 2021 / 22 a n nua l ex ter n a l aud it pla n and fe e pr opos a l. A Cons idere d t he in it ia l r esu lt s of t he 2021 / 22 ex ter na l aud it . A Rev iewed aud it a nd non-audit fe es i nc ur red d ur ing 2021 / 22. A R isk a nd i nter na l contr ol O ver sa w t he i mplementat ion of ch a nge s to i nter n a l pr oc es ses a s a r e su lt of mat ter s rep or ted a s ke y ev ents t o re g u lat or y bod ies , a nd g u ida nce publ ishe d by r eg ula tor y bod ies as le a r n i ng s for t he ga m i ng i ndu st r y . P Rev iewed r isk ma n ag ement rep or t s a nd Ri sk Com m it t ee upd at es. Q Rev iewed a nd ass ess ed t he cor por ate r i sk r eg is ter (i nclud i ng emer g in g r isk s) . Q Rev iewed a nd mo n it ore d de velopments i n rel at ion to hea lt h a nd sa fet y , i n for ma t ion sec u r it y a nd d at a pro tec t ion. B Rev iewed a nti-money-lau nder i ng ma t ter s a nd mat t ers r el at i ng t o sou rc e of f u nds a nd en ha nce d due d i l igence. B Rev iewed t he ris k ma n a gement f ra mework acr o ss t he G r oup a nd t he inter na l go ver n a nce st r uct u r e (f ur t her det a i l on R a n k ’ s a ppro ach to t he ma na gement of r isk , it s pr i nc ipa l r is k s a nd uncer t a i nt ies a nd t he cont r ol s in pl ace t o mit igate t hem c a n b e found on pa ge s 7 4 t o 81). A Go ver na nc e a nd ot her Receiv ed cor porat e go ver n a nce upd ate s. P Cons idere d a nd appr ove d t a x st ra teg y a nd r ev iewed t a x mat ters. A&P Met pr iv atel y w it h the D ir e c tor of Int er na l Audit a nd t he ex ter n a l aud itor s. Q Rev iewed not i c at ions m ade under t he Gr oup-w ide w h is t leblow i ng pol ic y a nd proc edu r e, ensu r i ng t h at appr opr iat e act ions were ta ken follow i n g inve st i gat ion of noti c at ions, and re v ie wed not i c at ion s made in r ela t ion to the code of conduct , ack no wled g i ng t he ongoi ng nee d for a r ev iew of t he sa me. B Cons idere d mat er ia l lit ig at ion a nd r eg u la tor y mat ter s. B&P Rev iewed t he Com m it t ee’ s ter m s of referenc e and con r med ad herence du r i ng 2021 / 22. A Rev iewed fe edba ck a nd r ec ommend at ions fol lo w i ng Com m it tee e va luat ion. A Rev iewed i nter n a l na ncia l cont r ols. A Key A A n nua l B Biannual Q Qu a r terl y P Per iod ic a l l y The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 113 ESG a nd Safer Gambl ing Com mitt ee Repo r t “The Committee re cognises th at how we consider ESG risk and oppo rt unit y is critical to t he su ccess and sustainabilit y of th e business . ” K a tie M cAlist er Chair of th e ESG & Safer G ambli ng Com mitte e Role and responsibilities T he Com m it t ee i s re spon sible for as sis t i ng t he C ompa ny i n t he for mu la t ion a nd monitor ing of it s E SG s t r ateg y . T he Com m it t ee a lso ha s a p a r tic ul a r fo c us on t he Compa n y’ s appr oa ch to s a fer ga mbl in g. I t s r es pons ibil it ies i nclude: – Appr ov ing t he C ompa ny ’ s E SG a nd sa fer g a mbli ng s t r ate g y . – Rev iew i ng t he Compa ny’ s p er for m a nce ag a i ns t t he st r at eg y , t he effe c t ivene ss of t he st r ate g y and t he gover n a nce i n place t o ensu r e succe ssf u l del i ver y . – Rev iew i ng t he ef fe c t iv eness of R a n k ’ s sy s tems f or identi f y i ng a nd i nter ac t i ng w it h c us tomer s who a r e at r i sk of bec om in g problem ga mbler s. – Rev iew i ng t he r esu lt s of r es ea r c h pro jec t s. – Rev iew i ng how t he s t r ateg y is r ec eive d a nd re ga r de d by t he Compa ny’s st a keholder s a nd ot her intere st ed pa r t ies. – Appr ov ing a l l ESG r ep or t i n g . – Appr ov ing t he app oi nt ment of an y audit or in r ela t ion to work u nder ta ken in c onne c t ion w it h t he str at eg y . T he for ma l ter ms of r efer ence of t he Com m it t ee a r e a va ilable at w w w .r a n k .com or by w rit ten re ques t to t he G r oup G enera l Coun sel & C ompa ny S ec r et a r y , who ac t s as s ec r et a r y to t he Comm it tee. K ey ac tivi tie s duri ng t he year – Appr ove d t he C ompa ny ’ s new E S G st r ate g y and publ icat ion of t he i n it ia l Resp onsible Busi nes s Repor t in Ja nua r y 2022. Mon itor ed pr og r es s tow a r ds a nd approv ed publ icat ion of t he 2022 Sust a inabi l it y Repor t. – O ver sa w i mplementat ion of t he gov er na nce st r uc t u r e to suppor t t he n e w st rateg y . – Discussed a nd a pproved ma n ag ement’ s appr oa ch to de velopi ng its T CF D r ep or t ing f r a me work . – Rev iewed a nd mo n it ore d del iver y of sa fer ga mbli ng i nit iat iv es i n eac h a r ea of t he busi nes s. – Dis c uss ed R a n k ’ s cont r ibut ion to development s acr o ss t he i ndus t r y , inc lud i ng con su l t at ion r e spon s es, work i ng w ith t rade a s soc ia t ions a nd lobby i ng ef for ts i n con ne c t ion w it h t he Gov er n ment’ s r e v ie w of ga mbling legislat ion. Committee membership and attendance Appoi nte d to Com m it te e At tend a nce Cu r r ent members K at ie McA li st er (Cha i r) 1 April 2021 4/4 Lu ci nda Charles- Jon es June 2022 n/a Joh n O’Rei l l y May 201 8 4/4 A lex T hu r sb y Octo ber 2019 4/4 K a r en W h it wor t h N ovem ber 2019 4/4 Ot her mem b ers du r i ng t he yea r Ch r i s Bel l² March 2016 2/2 Susa n Ho oper ³ July 2017 3/3 1. K at ie Mc A li st er w a s app oi nt ed C h a i r w it h ef fe c t 1 Febr u a r y 202 2. 2. Ch r i s B el l s te ppe d do w n f r om t he Com m it tee i n Ja nua r y 2022 f ol low ing h i s r es ig n at io n f r om t he B oa rd . 3. S us a n Ho ope r st epp e d do w n f r om t he C om m it te e in Ja nua r y 2022 . She w a s C ha i r of t he Com m it tee un t i l her de pa r t ur e on 31 Ja nua r y 2022 . Other attendees Gr oup G enera l Coun sel & C ompa ny S ec r et a r y Di r ec tor of C omplia nce & Respon sible Ga mbl i ng Di r ec tor of P ubl ic A f fa ir s Gr os venor Ma nag i ng D i re c tor Mec c a Managing Director Ra nk I nter ac t iv e Ma n ag i ng D i re c tor The Rank Group Plc Annual Report 2022 114 Dear shareholders In my r s t rep or t a s Ch a i r of the E SG & Sa fer G a mbl i ng Com m it tee, I a m plea s ed to pr ov ide a su m ma r y of t he work under ta ken by t he C omm it tee o ver t he pa s t t w elve mont h s a nd pr esent t he prog r ess made i n e volv ing ou r E SG s t r ateg y . T he Gr oup is com m it ted to en su r i ng t he sus ta ina bil it y of its op er at ions b y a l ig n i ng its pr o ces se s a nd pol icies t o inter nat iona l bes t pr ac t ice a s pa r t of its a i m to bu i ld a n e ven more r esi l ient a nd r esp onsible busi ness. We rec og n ise t hat how we consider E SG r isk a nd oppor t un it y is cr it ica l to t he succe ss of ou r busi nes s a nd t ha t our k ey s t a keholder s a r e dema ndi ng g re ater t r a n spa renc y a nd d i sclo su re. At t he b eg i n ni ng of 2 022 we wer e plea se d to lau nch our r s t Respon sible Busi ness Repor t, wh ich pr o v ided a n o ver v iew of t he found at ion work u nder ta ken t o es ta bli sh t he appr opr iat e appr oach to E S G at R a n k . Follow ing t he next s t ag e of work , we a r e del ighted t o publis h our 2 022 Sust a i n abil it y Repor t. E x t rac t s f r om t he r epor t ca n b e found on pa ge s 54 t o 71, a nd t he f u l l r epor t is av a i l able at w w w . ra nk .com. K ey activities La s t yea r , t he Com m it tee det er m i ned t ha t it wou ld pro v ide r ig our, suppor t a nd cha lleng e to t he bus ines s a s it de velops a nd implements it s ne w E SG st rate g y . Follow ing c omplet ion of the m ater i a l it y as se ssment i n 2021, t h is ye a r t he Com m it t ee appr o ved t he four ke y E SG foc us a r e a s t ha t under pin t he st rate g y : 1. Cus tomer ex p er ience – pro v id i ng a sa fe, s ec u re en v i r onment a nd p er sona l ex per ien c e, cr e at i ng a nd m a i nta in i ng good gamb l ing behaviours and prot ec t i ng v ul ner able cu stomer s. 2. Col le ag ue ex p er ience – ed ucat i ng ou r pe ople to enable a nd encour a ge p osit i ve ga m i ng b eha v iour s a nd cre at i ng a f a i r, sa fe a nd inspi r i ng w ork i ng env ir on ment. 3. En v i r on menta l m a n ag ement – ensu r i ng t ha t our op era t ions m i n im i se a n y negat i ve i mpac t s t ha t R a n k ma y ha ve on t he env i r on ment and r e duci ng ou r ca r bon em is sions wher ev er po ssible. 4. Com mun it y enga gement – pro v id i ng a n es sent ia l soc ia l out let for cus tomer s, genera t i ng la s t i ng com mu nit y spi r it , d r iv ing com mu n it y act ion a nd developi ng a genu i ne soc ia l leg ac y . Eac h foc us a rea h a s under ly ing obje c t ive s a nd ba sel i ne K PI s. T he Com m it t ee t hen cha l lenge d t he busi ness t o ensu r e t h at t he C ompa ny ’ s ES G objec t ives r elat e to a nd a r e a ma lga m ate d w it h it s cor pora te objec t ives. T he ref resh of t he Group’ s pu r po se a nd st r ate g ic pil l a r s, appr ov ed b y t he B oa r d , ensu r ed t he integ r at ion of t he fou r ES G foc us a r e a s into t he Group’ s cor p ora te a i ms, a s a r t icu l ate d on pag e 55 of t h is A n nua l Re por t. A s a r esu lt , t he C omm it tee is com for table t h at R a n k ha s a f ul l y integr ated E SG a nd corporate st rateg y goi ng for wa r d s t ha t w i l l enable t he busi ness t o cont i nue to be ma nage d in a su st a i n able a nd re spon sible way . Du r i ng t he yea r t he Com m it tee a l so o ver sa w t he implementa t ion of t he neces sa r y gov er na nce st r uc t u r e to en sur e t hat t her e is ef fe c t ive o ver sight of t he s t r ateg y a nd del iver y of in it iat ive s u nder it. In de velopi ng it s appr oach , t he busi nes s, over s een b y t he Com m it tee, en su re d t h at each e x i st i ng E S G in it i at i ve wa s a lloc ate d to one of t he four fo cu s a r ea s w it h a n ow ner, ti meli ne a nd appr opr i ate K PI s. G oin g for wa r ds , upda tes on e ach i n it ia t ive ( a nd propos ed ne w in it iat ive s ) w il l b e consider ed on a mont h l y ba sis b y t he ma n ag ement-l e vel E S G & Sa fer G a mbl i ng Ste er i ng Com m it tee, wh ich w il l r epor t to t h is C om m it te e on a r eg u la r basi s. T h is w i l l en able us to t r ac k a nd ev a lua te prog r e ss a nd pr o v ide Boa rd-lev el over si ght of per for ma nce a ga i ns t st rate g y , a s wel l as globa l bes t pra c t ices. In it i a l work on e ach of t he fou r foc u s a r ea s wa s pr esent ed to t he Comm it tee du r i ng t he yea r , wh ich pr ompte d more det a iled d isc u ssion on each a rea’ s ke y a i m s a nd in it i at i ves a nd t he ma n ner in wh ich t he broa der E SG s t ra teg y w i l l be embe dde d w it h i n t he bus ines s. T h is i ncluded , for ex a mple, d isc us sion s on col le a g ue enga gement a nd de velopment, a s wel l as br oa der debate on R a n k ’ s w ider soci a l impac t a nd commu nit y-role a s a pr i ma ri l y la nd-ba s ed n at iona l c a si no a nd bin go oper ator. It als o i ncluded ch a l leng i ng ma n ag ement a nd t he Boa rd a s a whole to foc us i n mor e det a i l goi ng for wa r d s on how env i r on menta l mat t er s a r e consider ed w it h i n t he de ci sion-ma k i ng pr oc ess. T he Com m it t ee a lso o ver sa w ma n ag ement’ s w ork w it h c onsu lt a nt pa r tner s to de velop it s r epor t in g f ra mework to t a ke a ccou nt of T a sk For ce on Climat e- rel ated Financi a l Dis clo sures (‘ TCF D’) r e com mendat ions and i n or der to se t Ra nk on a c a rbon ne t zer o pat hwa y . T he Com m it t ee wor ked a longside t he Audit C om m it t ee i n r elat ion to TCF D d isc losu r es se t out i n t h is A nnua l R epor t. Safer gambling initiatives Sa fer g a mbli n g rem a i ns t he Group’ s pr i ma r y fo cu s a r ea . T he Com m it tee ha s been k een to en su r e t h at t he i mpor ta nce of sa fer ga mbli ng w it h i n R a n k ’ s w ider ES G f ra mework is not d i m i n ishe d. We ar e com for t able t h at t h i s ha s not ha ppened . Du r i ng t he yea r t he Com m it tee welcomed rep or ts f r om t he ma nag i ng d i r ec t or s of each b usi ness a rea upd at ing on sa fer ga mbl in g i nit iat ive s. T hes e in it iat ive s t a ke a ‘ c us tomer- rs t’ appr oac h to incr ea si ng prot ec t ion, a s t he Group cont i nues to ev olve it s c us tomer jour ne y s a nd del iver ta rge ted i mpr ov ements for t hos e pla yer s who need ou r suppor t. T he C om mit tee h a s consider ed ne w i nit iat iv es pr esent ed b y ma n ag ement as wel l as t hos e i nt ro duced f u r t her to t he Compa ny ’ s ow n monitor i ng work or a s re qu i re d b y our r e g u lat ors. We ha ve a l so con sidere d ch a ng es r es ul t i ng f rom ne w r eg u la tor y re qu i rement s a nd indu st r y com m it ment s. In a dd it ion, t he C omm it tee welcome d f u r t her work on embedd i ng a s a fer ga mbl in g cu l t u re t hr oughout t he Gr oup. T he a i m of t h is work i s to i ns t i l a consi st ent appro ach i n col lea g ue m ind se t to wa y s of work i ng a nd proce ss es i n l i ne w it h R a n k ’ s pur pos e, deli ver i ng e xcit ing a nd enter ta i n i ng ex p er iences w it hi n a sa fe env i r on ment. One of t he wa y s i n wh ich t h is i s bei ng ac hie ve d is t h r ough a t ra in i ng pr og r a m me bei ng c a r r ied out in conju nct ion wit h G a mC a r e, i n wh ich over 1,1 0 0 col lea g ues w il l t a ke pa r t. T he t ra in i ng is int ended to benet not on ly cu stomer -fac i ng col lea g ues, but a lso t hose t ha t suppor t them to en su r e a cons ist ent a nd ev olv i ng e t hos ac r os s t he Gr oup. T he Com m it t ee w il l r ec eive r epor ts on t he fee dback a nd eva lu at ion of t he t ra in i ng prog r a m me du r i ng t he for t hcom i ng ye a r. Du r i ng t he yea r, the Com m it tee cont i nued to t a ke t he lea d on re v ie w i ng t he G r oup’ s re spon se to t he Ga mbli n g Com m is sion ’ s A n nua l A s su r a nce St at ement, wh ich w as t hen pre sente d to t he B oa r d for appr ov a l pr ior to submi ssion. We al so con sidere d over t he cour se of t he ye a r pr og r es s ag a i ns t t he in it iat ive s h igh l ighte d in such s t atement . The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 115 Safer gambling horizon scanning and industry collaboration T he Com m it t ee r eg a r ds s a fer g a mbli ng as a t opic of key i mpor ta nce t o a l l t he Compa ny’s sta keholder s a nd a n imp or ta nt pa r t of its work i s to con sider t heir v iews on t he Compa n y’ s appr oa ch. W it h t his in m i nd, t he Comm it tee r ec og n is es t h at t he Compa n y ca nnot si mply look at t he in it i at i ves it h a s in-t r a i n a s a r eac t ion to r eg u la t ion, but must a lso pr o -ac t iv ely consider c us tomer , r eg ula tor, collea g ue, sha reholder , p olit ica l a nd w ider public sent i ment in it s pla ns. T he Com m it tee re ceiv es r eg u l a r r epor ts f r om t he Dir ec t or of Publ ic A f f a i r s to ens ur e t hat it rem a i n s up-to - da te on ex ter na l s ent i ment, in uences, dev elopments a nd polit ica l cha nge. It cha lleng es t he bu sine ss to en su r e t ha t it consider s such v iews i n a l l pr oje c t s a nd in it iat ive s acr o ss a ll work s t r ea ms. In pa r t ic ul a r, dur i ng t he yea r , t he Dir e c tor of Publ ic A f f a i r s pre sente d r eg u la r updat es to t he Com m it tee on R a n k ’s ongoing cont r ibut ion to t he G o ver n ment ’ s r ev iew of ga mbl in g leg isl at ion i n t he UK . T he Com m it t ee cont i nues to con sider st a keholder v ie ws a nd thos e of t he indu st r y a nd med ia on t he rev iew . W e note t hat t he G over nment’s Wh ite P aper i s ex pe c te d to be publi shed i m m i nent ly a nd, follo w i ng its publ icat ion, we wi l l c ont inue to mon itor st a keholder r eac t ion a s t he bus ines s as se ss es t he i mpac t of for t hcomi ng cha nges. T he C om mit tee a lso con sidere d t he Com m is sion ’s respon se to it s r emote cu st omer i nter ac t ion consu l t at ion a nd subse quent new r equ i r ements publ ishe d as g uid a nce i n Ju ne 2022 for implementat ion in S ept ember 2022. T he Comm it tee w i l l monitor ef fec t ive i mplementat ion o f a ny cha nges r eq ui r e d to be i mplemented by t he Compa ny . Ra nk ’s contr ibutions to t he Go ver n ment’s re v ie w a nd con su lt at ions h av e a l so ex tende d to sh api ng r esp ons es f r om t he Ca si no Ch apter w it hi n t he Bet t ing a nd Ga mi ng Cou nc il ( ‘BG C ’ ), t he BG C it sel f a nd a l so t he Bi ng o A ss oc iat ion, al l of wh ich a r e i mpor ta nt voice s in r e spe c t of re g u lat or y cha n ge. W e c ont inue to ha ve repr es ent at ion on t he BG C ’s comm it t ee s a nd work i ng g roups, i ncludi ng a ll t hose spe ci c to la nd-base d ga m i ng. ESG and Safer Gambling Committee Repor t Continu ed Research, education, treatment (‘ R E T ’) T he pr opor t ion of ou r R E T c ont r ibut ions dur ing t he yea r wa s ma int a i ned at t he sa me lev el a s t he pre v ious y ea r. As wel l as c ont r ibut i ng to G a mbleAwa r e, such cont r ibut ions i ncluded p ay ments to YGA M a nd Ga mCa r e as p a r t of Ra n k ’ s fou r -ye a r com m it ment to indu st r y S a fer G a mbl in g Com m it ment s. W e a r e com m it ted to ma i nt a i n i ng t he sa me propor tion of R E T cont r ibut ions i n r esp ec t of t he for t hcom i ng yea r, a lt hough t he C omm it tee i s awa re t h at t he appr oach t o R ET p ay ments is b ein g consider ed w it hi n t he Gov er n ment’s re v ie w of ga mbl i ng leg isl at ion. Climate change, net zero planning and T ask Force on Climate-related Financial Disclosures T here h a s be en inc r ea si ng fo cu s f r om st a keholder s a s to how c l im ate c ha n ge w i l l imp ac t compa n ies. We recog n i se t ha t t here a re bo t h i nter n a l a nd e x ter n a l ex pe c t at ions on u s to es t abli sh a c lea r emi ssion s re duct ion str at eg y in l i ne w it h inter nat iona l cli m ate c ha n ge t a r ge t s a nd we a r e work ing w it h consu lt a nt pa r t ner s in or der to s et R a n k on a c a rb on net zer o pat hw a y . Mor e det a i l on t h i s is s et out i n t he 2022 Sust a inabi l it y Repor t. T he Com m it t ee i s a l so cog n i sa nt of t he n e w re qu i rement s u nder Li st ing Ru le 9.8.6R, wh ich t he G roup is r e qu ir e d to adopt t hi s yea r, to include a st a tement in t his A nnua l Repor t set ti ng out w het her ou r cl i mat e - rel ate d na ncia l d is closu r es a r e consi st ent w it h t he recom menda t ions of t he T CF D. Ou r d is clos ur es c a n b e fou nd on pag es 63 to 69 w it h t he compl ia nce sta tement found on pag e 70 of th i s A n nua l R epor t. T he Com m it t ee h a s worke d a long side t he Audit Com m it t ee to en su r e t he int eg r it y of t he Comm it tee’ s cl i mate-relate d r isk process, as w el l a s re v ie w i ng t he r ec og n it ion, mea sur ement , pre sent at ion a nd d i sclo sur e of climate -related mat ters (including impac t on t he Group) . ESG & Safer Gambling Committee eval ua t io n It is i ncu mbent on t he Bo a r d to en sur e t ha t a for ma l a nd r igor ous r e v iew of t he ef fec t iveness of t he C om mit tee i s conducte d eac h ye a r . T he Com m it t ee’ s prog r e ss a ga i n st l a st ye a r’s act ions a re set out b elow . Out com es fro m 202 0 /21 review 1. Agreed actions T o w iden the r em it of t he Com m it t ee to encompas s E SG more br oa d l y , but w it hout losi ng it s foc us on s a fer ga mblin g . Progress made during 20 21 / 22 T he Com m it t ee’ s r em it ha s be en w idened , w it h t he right le vel of empha sis b ein g re t a i ned i n re spe c t of sa fer g a mbl in g . It is com m it t ed to en su r i ng t his r em a i ns t he ca se g oi ng for wa r d s. 2. Agreed actions T o c onsider a nd appr ov e a w ider E SG st r ate g y and t he prior it ies w ith i n t h at st r ate g y to enable t he Com m it tee to a ss es s del iver y ag a i ns t it. Progress made during 20 21 / 22 T he ES G st rate g y h a s be en appr ove d a nd t he pr ior it ies a nd ba s el ine K PIs have b een deter mi ned ba se d on t he ma ter i a l it y as se ssment conduc ted t he prev ious yea r. The Rank Group Plc Annual Report 2022 116 “ S a fer g a mbl i ng i s t he Gro u p ’ s p r ima r y ESG focus ar ea a nd a to pi c of k e y im por ta nc e to a l l ou r st a k eholder s. ” Katie M cAliste r Chair of th e ESG & Safer Gambling Committee Out com es fro m 2021/ 22 r eview T h is ye a r’s Comm it tee e va lu at ion exer ci se wa s fac i l it ate d ex t er na ll y b y L int s toc k Li m ite d a nd concluded t hat t he C omm it tee cont i nues to oper ate ef fe c t iv ely . T he pro ces s for such r e v iew i s set out on pag e 104. Hav i ng con sidere d t he nd in gs, we ag r e ed t hat our pr iorit ies f or t he for t hcom i ng ye a r s hou ld be: 1. T o de velop t he C omm it tee’ s mee t i ng agend a s f u r t her in-l i ne w it h t he new ly develop ed fo cu s a r ea s of C ust omer E x per ience, C ol leag ue Ex per ience, En v i ron ment a l M a na gement a nd Com mun it y En ga gement a nd t hei r ass ociated K PIs. 2. T o ensu r e cle a r acc ount abi l it y for rep or ti ng u nder t he new K PIs, del iver y of act ions a nd t rac k i ng of pr og r es s. In conclusion Ra nk r ec og n is es t he i mpor ta nce of sus ta ina bil it y a nd r esi l ience to a l l ou r st a keholder s a nd t he v a lue of cont inu i ng to dev elop a robus t st rateg y t h at pr ote c t s sha reholder va lue, cr ea tes opp or t un it ies for g ro w th a nd in nova t ion a nd set s t he found at ion for long-ter m succe ss. It is com m it te d to doi ng s o. W e a l so r em a i n com m it t ed to pr o v id i ng a sa fe g a mbli ng en v i r on ment for cus tomer s to enjoy t he ser vice s t ha t we of fer. W e a im to work con st ruc t i vely w it h re g u lat ors t o ensu r e ongoi ng c omplia nce w it h re g u lat or y req ui r ement s a nd our i ndus t r y pe ers t o cont i nue to develop a col l abor at i ve appro ach to s a fer g a mbli ng m at ters s uch as i mpro v i ng t he ident i ca t ion of v u l nerable c us tomers. F i na l ly , w e cont i nue to r ecog nis e t he i mpor ta nce of d r iv in g cu lt ura l cha n ge t h r oughout t he org a n is at ion so a s to en su re t hat sa fer ga mbl in g u nder pi ns a l l a sp ec t s of ou r d e c i s io n - m a k i n g. On be ha l f of t he Comm it tee, I look for wa r d to r epor ti ng on t he fu r t her prog r e ss t h at w i l l be ma de over t he for t hcom i ng ye a r u nder our e x pa nded E S G st r at eg y a nd agend a . Fi na ll y , my app oint ment a s C ha i r fol lowe d t he depa r t ur e of Sus a n Hoop er f r om t he Boa rd at t he end o f Ja nua r y 2 022 a nd I wa nte d to t a ke t hi s oppor tu n it y to t h a n k her for her cont r ibut ion tow a r ds d ri v i ng R a n k ’ s ES G a nd sa fer ga mbli ng a gend a. I n ot her cha nges to t he Comm it tee, I a m del ight ed to welcome Luci nda C ha rles-Jon e s, ou r new indep endent Non-Exe c ut iv e Di r ec tor, as a member . Luci nd a ha s pa r t icu l a r ex p er t ise in p eople, so ci a l a nd env ir on menta l m at ters a nd I look for wa r d to her cont r ibut ion a s we pro g re ss i nto del iv er i ng t he nex t sta ge of our E SG a gend a. I look for wa r d to meet ing sh a r eholders a t t he for t hcomi ng A nnua l G enera l Mee t i ng when I w i l l be h app y to a n s wer a ny ques t ion s on t h i s r epor t. Ka t ie McA l i ster Ch a i r of t he E SG & Sa fer Ga mbl in g Co mmittee Our 2022 Sust ainabil ity Rep or t ca n be f oun d at ww w.rank.com The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 117 Finance Committee Repor t “The Finance Committe e continues to pro vid e an im por tant lev el of o versigh t for material p rojects, estate managemen t and other appr ov als wi t hin i ts delegat ed lev el of auth ori t y . ” Alex Thurs by Chair o f the Finance Committee Committee membership and attendance Appoi nte d to Com m it te e At tend a nce Cu r r ent members A lex T hu r sb y (Ch a ir) Octo ber 2019 8/8 Ri ch ard Harri s May 2022 2/2 Joh n O’Rei l l y May 2018 8/8 Ot her mem b ers du r i ng t he yea r Bil l F loydd¹ N ovem ber 2018 2/2 Si mon H a y² January 2022 4/4 1. Bi l l F lo yd d st epp e d do w n f r om t he C om m it tee i n D e cemb er 2 021 fo l low ing h i s r es ig n at io n f r om t he B oa r d . 2. Si mon Ha y w a s a memb er wh i l s t he wa s i nt er i m C h ief F i na n ci a l O f cer, f r om Ja nu a r y 2022 t o A pr i l 20 22. Other attendees Gr oup G enera l Coun sel & C ompa ny S ec r et a r y Role and responsibilities T he Fi na nce Comm it tee i s aut hor is ed b y t he Boa rd to appr o ve ca pita l ex pend it u r e, ma ke n a nc in g deci sions a nd appro ve cont r ac t ua l comm it ment s for t he G roup up to aut hor ise d l i m it s. It a ls o appr ove s a l l G roup i ns ur a nce c over a nd rev iews Non-Exe c ut iv e Di r ec tor fe es. T he Com m it t ee ac t s a s t he B oa r d ’ s d isclos ur e com m it te e for t he pu r p ose s of t he Ma r ket Abus e Reg u l at ion wh ich c a me into f orce on 3 Jul y 2016 and con siders t he mat er ia l it y of i n for ma t ion a nd deter mi nes d is closu r e obli gat ion s on a t i mely ba sis of a ll such i n for m at ion to r eg u la tor y aut hor it ies i nclud in g t he London St ock E xcha ng e. T he for ma l ter ms of r efer ence of t he Com m it t ee a r e a va ilable at w w w .r a n k .com or by w rit ten re ques t to t he G r oup G enera l Coun sel & C ompa ny S ec r et a r y , who ac t s as s ec r et a r y to t he Comm it tee. K ey ac tivi tie s duri ng t he year – Appr ove d r eg u l ator y new s st at ements ( on aut hor it y delegat ed f r om t he Boa r d). – Rev iewed m at ters r el at i ng to ke y cont r ac t s a nd spend w it hi n it s delegate d lev el of aut hor it y a nd est a te ma n ag ement. – Rev iewed a nd approv ed pr opo sa l s for Gr oup in su r a nce r enewa l. – Rev iewed Non-E xe cut ive Di r ec t or fees. – Rev iewed it s ter ms of refer ence. The Rank Group Plc Annual Report 2022 118 Dear shareholders Du r i ng t he yea r, the Com m it tee cont i nued to pr ov ide a n i mpor ta nt level of over si ght for mater ia l pr ojec t s, e st at e ma n a gement a nd ot her appr ov a l s i n accor d a nce w it h its deleg ate d lev el of aut hor it y . In r e v iew ing t he Comm it tee’ s ter m s of refer ence, t he member s con sidere d its r ole w it hi n t he Compa n y’s gover na nce st r uct u r e, d isc us si ng t ho se ma t t ers t hat were a ppropr iate to b e deter mi ned b y t he E xec ut i ve Di r e c tor s ra t her t ha n t he Com m it t ee, a s wel l a s t hose t ha t wou ld be appr opr ia te to b e consider ed b y t he Com m it t ee a head of submis sion to t he Boa rd. I a m sat i s ed t h at t he re -a l ig n ment fol low i ng t h i s r ev iew w i l l ensu r e t h at t he Com m it t ee cont i nues to op erat e ef fe c t ivel y int o t he for t hcom i n g ye a r. Estat e management and c apital inve s t m e nt Du r i ng t he yea r u nder re v ie w , t he Com m it t ee fo cu se d in p a r tic u la r on suppor ti ng e xec ut i ve pr opos a l s rel at i ng to es t ate m a na gement , w it h 41 lea se event s o cc ur r in g dur ing t he cour se of t he 2021 /202 2 n a nc ia l ye a r . T he Comm it tee a ls o con sidere d t he pr opos ed c ape x spend for ref urbis hment of G ro s venor Merch a nt Cit y , w hich fel l wit hi n it s delegat ed aut hor it y . Mor e in for mat ion about t h i s ref urbis hment c a n be f ound on pa ge 3 4. Utilities T he Com m it t ee mon itor ed o ver t he cou rs e of t he yea r t he posit ion r ega rd i ng esc a l at i ng ut il it ies co st s, t he incr ea si ngl y volat ile ma rket a nd it s i mpac t on t he Compa ny . It con sider e d t he opt ions av a i lable to t he Compan y i n seek ing t o mit igate such i mpac t a nd m a n ag ement’ s prefer red a ppro ach. T he Comm it tee r efer r ed t he mat ter to t he B oa r d a nd pr ov ided upda tes t o t he Boa rd a s appr opr ia te. Group simplication T he Com m it t ee c onsider ed a nd appr o ved t w o subsidi a r y simpl i c at ion exerc is es dur ing t he na ncia l yea r . T he r st of t hese wa s t he m ig r at ion of busi nes s f r om Ra nk Dig it a l E spa na S. A . to Bi ngo sof t Plc, which simpl i e d t he Gr oup’ s oper at i ng st r uct u r e in Spa in. T he s econd of t hes e wa s t he t ra nsfer of ow nersh ip of Ra nk I ntera c t ive (Gibra lt a r) L im it ed ( ‘R IGL ’ ) w it hi n t he Gr oup in pr epa rat ion for t he m ig r at ion of busi ness f r om R a n k D ig it a l G a m i ng (A lder ney) Li m ited a nd Daub Alder ne y Li m ite d to R IGL . T he mig r at ion to ok place on 1 Jul y 2022, c ons olid at i ng t he Ra n k Inter ac t i ve bus ines s u nder one entit y , w it h R IGL bei ng t he operator of t his bu si ness goi ng f or wa r d s. Finance Committee e valuation It is i ncu mbent on t he Bo a r d to en sur e t ha t a for ma l a nd r igor ous r e v iew of t he ef fec t iveness of t he C omm it tee i s conducte d eac h ye a r . T h is C omm it tee’ s prog r e ss a ga i n st l a st ye a r’s act ions, a s w el l as t he outcomes f rom t his y ea r ’ s e va luat ion, a r e set out b elow . Outcomes fr om 2020 / 21 revie w T he onl y ke y ac t ion f r om t he 2020/ 21 re v iew wa s to u nder ta ke a mor e det a i led r e v ie w of t he Com m it t ee’ s ter m s of r eference. T h is to ok place d ur ing t he ye a r, wit h the re v i se d ter m s of refer ence b ein g put to, a nd appr ove d b y , t he Boa r d i n June 2022 . Outcomes fr om 2021 / 22 revie w T h is ye a r’s Comm it tee e va lu at ion exer ci se fac il it a ted e x ter na l l y by L i nt sto ck L i m ite d (f ur t her det a i l s of wh ich ca n be found on pag e 104), concluded th at t he Comm it tee cont i nues to oper ate ef fe c t iv ely . Ha v i ng consider ed t he nd i ng s, t he Com m it te e ag r e ed t h at, wh i l st t her e were no spe ci c a r ea s identi ed for impr ovement , it should cont i nue to eva luate it s role o ver t he cou r se of t he for t hcomi ng ye a r to en su re t hat it s place w ith i n t he Compan y’s gover na nce st r uct u r e rem a i ns a ppropr i ate a nd effe c t iv e. I wou ld of cour s e be h app y to a n sw er a ny que st ions ab out t he r ole of t he Com m it t ee a nd it s ac t i v it ies d ur ing t he yea r u nder r e v iew a t t he for t hcomi ng A n nua l G enera l Mee t in g. A le x T hu r sby Ch a i r of t he Fi na nce Comm it tee The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 119 Role and responsibilities R ol e and responsibilities T he role of t he C omm it tee i s pr i ma r il y to a ssi st t he B oa r d i n se t t i ng t he remu nerat ion packa ge s for t he Compa n y’s E xec ut i ve Di r e c tor s a nd ot her E xe c ut ive Com m it t ee member s. It s ke y re spon sibil it ies ar e to: – Set t he Remunerat ion Polic y . – En su r e t ha t t he Remuner at ion Pol ic y oper ates t o a l ig n t he intere st s of ma n ag ement w it h t ho se of sh a r eholders. – Wit h i n t he ter ms of t he Remuner at ion Polic y ( a s appl icable ) a nd i n con su lt at ion w it h t he Cha i r a nd / or C h ief E xec ut i ve as a ppropr iate, deter mi ne t he tot a l ind i v idua l r emu nerat ion pac k ag e of each E xec ut ive D i re c tor a nd ot her E xec ut i ve Com m it tee member s. – Appr ove t he desig n of, a nd det er m i ne ta rge t s for , a ny per for ma nce r elat ed pay a nd sha r e i ncent ive s chemes for appro va l by t he B oa r d a nd sh a r eholders ( a s appr opr i ate) and t he tot a l an nua l pay ments ma de under such s chemes. – Rev iew pay a nd condit ion s acr os s t he Gr oup a nd t he a l ig n ment of i ncent ive s a nd re wa rd s w it h cu lt u r e. T he for ma l ter ms of r efer ence of t he Com m it t ee a r e a va ilable at w w w .r a n k .com or by w rit ten re ques t to t he G r oup G enera l Coun sel & C ompa ny S ec r et a r y , who ac t s as s ec r et a r y to t he Comm it tee. K ey ac tivi tie s duri ng t he year – Det er m i ni n g oper at ion of t he 2021 /22 a nnua l b onus a nd t he 2021 /22 LT IP a wa r d . – Con r mi ng t he ves t i ng of t he 201 7 /18 four -ye a r block a wa rd, w h ich wa s heav il y impac t ed b y t he pa ndem ic a nd appro v i ng t he new one- of f Rec over y Incent i ve S cheme, wh ich wa s appr ov ed by s ha r eholder s at t he 2021 A n nua l G enera l Meet i ng. – Cont i nui ng to k eep w ider work forc e remu nerat ion ar r a n gements u nder r e v i e w. – Appr ov ing r emuner at ion for new members of t he Exe cut ive Com m it tee, includ i ng for t he C hief Fin a nc ia l Of cer. Remuneration Committee Repor t Committee membership and attendance Appoi nte d to Com m it te e At tend a nce Cu r r ent members Ste ven E som (Cha i r) March 2016 4/4 Lu ci nda Charles- Jon es June 2022 0/0 K a t ie Mc A l i s te r April 2021 4/4 K a r en W h it wor t h Nov ember 2019 4/4 Ot her mem b ers du r i ng t he yea r Ch r i s B el l¹ Jun e 2018 2/2 Susa n Ho oper ² Septem ber 2015 3/3 1. Ch r i s B el l s te ppe d do w n f r om t he Com m it tee i n Ja nua r y 2022 f ol low ing h i s r es ig n at io n f r om t he B oa rd . 2. Su sa n Hoop er st ep pe d do w n f r om t he Com m it tee i n Ja nu a r y 2022 f ol lo w i ng he r re si g na t ion f r o m t he B oa r d . Other attendees Ch ief E xe cut ive Gr oup G enera l Coun sel & C ompa ny S ec r et a r y Bo ard Chai r Grou p H uma n R esourc es Dire c to r Indep endent adv isor to t he Comm it tee Add it ion a l mee t i ngs w ere c onvened on si x occa sions d ur ing t he ye a r to, a mong st o t her t h i ngs , na l i se t he r u les, mea su r es, t a r get s a nd pa r t icipa nt s for the Rec over y Inc ent ive Sc heme, con r m the 2020/21 bonus outcome a nd appro ve remu nerat ion for new appoi nt ments t o t he E xe cut ive Com m it tee. T he Com m it t ee met s epa r at ely du r i ng t he yea r t o d is cu ss m at t er s w it hout ma nag ement pres ent. “T he Commi t tee’ s decisi on-mak ing on remuneration outcomes has been shaped by the o v erall nanc ial per for mance of the Com p an y o v er the nanc ial y ear . ” Ste ven Esom Chair o f the Remunerat ion Committee The Rank Group Plc Annual Report 2022 120 Dear shareholders On be ha l f of t he Boa r d, I a m please d to pre sent R a n k ’s Remunerat ion Com m it tee Repor t for t he yea r ende d 30 June 2022 wh ich ha s b een pr epa r e d in a ccor d a nce w it h t he La r ge a nd Med ium-siz e d Compa n ies a nd Groups (A ccou nt s a nd Repor ts) (A mendment) Reg u la t ions 2013 ( a s a mende d) (t he ‘2013 Reg u l at ions’). T h is r epor t compr is es my a nnua l st atement , our D i re c tor s’ Remunera t ion Polic y , wh ich w as a ppro ve d at t he A nnua l G enera l Meet i ng held on 1 4 O c tober 2021 (‘Pol ic y’ ) a nd ou r A n nua l Repor t on Remunera t ion, wh ich i s pre sente d i n l ine w it h t he Polic y . T h is s ta tement a nd t he A n nua l Re por t on Remunerat ion ar e subjec t to a n adv i sor y vot e at t he 2022 A n nua l G enera l Mee t in g. Over view o f 2021/ 22 A s ment ioned ea rl ier i n t h is A nnua l Repor t, it ha s b een a c ha lleng i ng y ea r, in pa r tic u la r f or our U K venues busi nes se s. T he Gr oup’ s oper at i ng pr ot of £6 6.2m re ec t s t he cont i nued impac t of the pa ndem ic, t he slow r et ur n of ov er sea s cu stomer s to ou r L ondon ca si nos a nd t he pre ssure o n UK con sum er d iscre t io nar y ex pend it u r e. T he Com m it tee’ s dec ision- ma k ing on t he r emuner at ion outcomes for E xec ut i ve Di r e c tor s ha s be en sh ape d b y t he over a l l n a ncia l per for m a nce for t he f u l l na nc ia l ye a r. W h i ls t we sa w a numb er of depa r t ur es at a n E xe c ut ive D i r ec tor a nd s en ior ma n ag ement level du r i ng t he yea r, we al so welcomed a r ri va l s i n t he for m of ou r new Ch ief Fi na nc ia l O f c er a nd new Ma na g i ng Di r e c tor app oi nt ment s for Gr o s venor, Mecc a a nd t he i nter n at iona l busines s. W e r ec og n is e t he ke y ch a l lenge s a nd oppor tu n it ies for ou r bus ines s a nd w i l l cont i nue to ensu re t hat t he E xe c ut ive Di r ec tor s, a nd the sen ior ma nag ement tea m , r ema i n appr opr i atel y incent iv is ed to ach ie ve our s t r ate g ic goa l s. Base salaries T he Com m it t ee r e v iew ed t he E x ec ut iv e Di r ec tor ba s e sa l a r ies dur i ng t he yea r. In 2021, i n r esp ec t of t he C h ief E xec ut i ve, t he Com m it t ee h ad det er m i ned t h at due to COV ID -1 9 no i ncr ea se s hould appl y . Du r i ng t he yea r u nder re v ie w , t he Com m it t ee de ter m i ned to i ncr e a se t he Ch ief E xe cut ive’ s s a l a r y b y 3% in l ine w it h t he over a l l i nc re a ses a wa rde d to t he w ider work for ce a nd th i s inc re a se appl ied w it h ef fec t f rom 1 Apr i l 2022 . T he Com m it t ee w il l con sider a f u r t her re v ie w of E xec ut i ve Di r e c tor ba se s a la r ies at t he appr opr ia te t i me dur ing t he for t hcom i ng ye a r. Pensi on Wit h ef fec t f r om 1 Ja nua r y 2023, t he Chief E xec ut i ve’ s pa y ment s in l ieu of pen sion w i l l be r ed uced f r om 10% of sa la r y ( le ss t he lower ea rn i ng s l i m it) ( s uch 10% ha v i ng be en a g re e d under h is s er v ice ag r e ement when he joined R a n k) to t he rat e cu r rent l y av a i lable to t he major it y of t he UK employ ee s ( c u r r ent l y 3% ). The C h ief Fi na nc ia l O f c er’ s pa y ment s in l ieu of pen sion were a g r ee d at t he r ate c u r r ent l y av a i lable to t he major it y of t he UK employee s when he joined t he Compa ny in M ay 2022 . 2 0 2 1/2 2 b o n u s T he a n nua l b onus for t he 2021 /22 na ncia l yea r was ba se d on a cha l leng i ng pro t a f ter ta x ta r get t h at r epre sente d 100% of t he potent i a l b onus oppor t un it y . T he publishe d pro t a f t er ta x g u re wou ld ha ve r esu lte d i n 100% of t he ma x imu m bonus oppor t un it y bei ng p ay able to t he Ch ief E xe cut ive ba se d on t he for mul a ic outcome of the na ncia l met r ic. Howe ver, t he Com m it t ee de ter m i ned t hat it wa s not appropr iate to i nclude t he a mount r e ceive d by t he Compa ny i n re spe c t of t he V AT cla im refer ence d on page 27 of t h is rep or t w it h i n such g u r e for the pu r po se s of as se ssi ng w het her t he bonus t a r g et s ha d been me t, a nd exerc ise d d i scr e t ion to exclude such a mou nt, r es ul t i ng i n 0% of t he ma x imu m bonus opp or t u n it y bei ng pay able. Fu r ther det a il s on per for ma nce ag a i ns t ta rge t s a r e se t out on pag e 133. T he Ch ief Fin a nci a l Of cer wa s not, in a n y event , ent it le d to a n y bonus i n r esp ec t of t he 2021/ 22 n a nci a l yea r in light of his joinin g date. Reco very Incentiv e Scheme Sha r eholder s w i l l r ec a l l t hat a new remu nerat ion polic y wa s ap pro ve d at t he 2021 A n nua l G ener a l Me et i ng u nder wh ich a new one -of f Recov er y Incent i ve Sc heme (‘R IS’ ) w as i nt r o duced . Ch a l leng i ng n a nci a l t a r get s for net ga m i ng r evenue a nd pro t a f t er ta x for the 2021 /22 n a nc ia l yea r were set , toge t her w it h a r e qu ir ement for cont i nued employ ment (w it hout not ice ). Fu r t her to t he Compa ny ’ s na ncia l per form a nce, such na nc ia l t a r ge t s were not met a nd t he Ch ief E xe c ut ive’ s a wa r d t her efor e lap se d on 30 June 2022. No a wa rd wa s made t o Bi l l F loyd d follo w i ng r ec eipt in Aug us t 2021 of not ice of hi s re sig n at ion f r om t he C ompa n y . 202 2/ 23 b onus s che me a nd ESG T he Com m it t ee h a s ta ken t he oppor tu n it y t h is ye a r to r e consider t he m e a su re s us ed in c onne c t ion w it h t he bonus scheme. Per for m a nce w i l l c ont inue to be b a sed on st r et ch i ng t a r ge ts , but t he Com m it tee ha s deter mi ned t ha t t he n a nc ia l mea su r es (th i s yea r to repr e sent 85% of t he ma x imu m bonus oppor t u n it y) sha l l be ba se d on adjus te d ea r ni ng s befor e i nter es t a nd ta x rat her t h a n pro t a f ter ta x, as t h i s is consider ed to be a be t ter r ee c t ion of t he Compa ny ’ s under ly ing n a nci a l per for ma nce. Howe ver, the Com m it tee w i l l cons ider t he ex tent to w h ich t he Compa n y ha s ef fe c t iv ely m a na ge d bo t h ta x a nd i ntere st l i abil it ies when decid i ng t he qua nt u m of an y na l bonus awa r d. Fu r ther mor e, m i nd f u l of in ves tor sent i ment, it h as d eter m i ned t hat t he rem a i n in g 15% of the ma x i mum bonus oppor tu n it y wi l l be ba s ed on spec i c En v i ron ment a l , So ci a l a nd G o ver n a nce ( ES G ) t a r ge ts. A s fu r t her ex pla i ned on pag es 55 to 71 and 11 4 to 11 7 of t hi s A n nua l Repor t, t he C ompa ny ’ s appr oac h to E SG is de velopin g a nd a s a re su lt , t h is ye a r, a qua l it a t ive ap proa ch w i l l appl y . T h is rem a i ns a k ey a rea of fo cu s for t he Com m it t ee t hough as we go i nto t he ne w na ncia l yea r , as we a r e keen to ens ur e t ha t ES G mea su r es appl ied t o bonus oppor tu n it ies a re r obust , a r e cle a rl y l in k ed to i mplementat ion of t he Compa n y’ s st r ate g y and a r e ree c t i ve of the indu st r y in w h ich we oper ate. W it h t h i s in m i nd, i n add it ion to t he spec i c ES G mea su re, a n over -a r ch i ng s a fer ga mbli ng a ss ess ment w i l l c ont i nue to appl y . Propo se d L TI P gra nt und er t he 2 020 L TI P duri ng 202 2/ 2 3 It is i ntended t h at a n an nua l L T I P aw a r d w i l l be m ade to E x ec ut iv e Di r ec tor s i n 2022 /2 3. T h is i s t he t h i rd a wa rd u nder t he 2020 LTI P , w it h 4 0% of t he aw a r d bei ng ba se d on rel at i ve tot a l s ha r eholder re t u r n , 30% bei ng ba s ed on ea rn i ng s p er sha re a nd 30% bei ng ba s ed on s t r ateg ic mea sur e s. It is i ntended t hat t he C hief E xec ut i ve w i l l r ec eive a n awa r d at 2 00% of sa la r y a nd t he Ch ief Fi na nc ia l O f c er w i l l re cei ve a n a wa r d a t 150% of sa la r y , w it h such a wa rd s to be m ade w it hi n si x week s of t he d ate on w hich t he resu lt s for 2022 a r e a n nounc ed . T he per f or ma nce cond it ions w i l l b e ba se d on per form a nce in t he 2024 / 2025 n a nci a l yea r . Fu r t her det a i l s ca n b e fou nd on pag e 1 42. T he awa rd w i l l ve st , subje c t to mee t i ng t he per for ma nce t a r ge t s a nd cont i nued employ ment, on t he th i r d a n n iver s a r y of gr a nt , a nd w i l l b e subjec t t o a t w o-y ea r post -vesti ng h olding period. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 121 Board change s On 1 Ma y 2022 , R ich a r d Ha r ri s, C hief Fi na nc ia l O f c er , w as app oint ed to t he Boa rd. T he Comm it tee appr ov ed t he term s of hi s remu nera t ion pr ior to hi s appoi nt ment a nd such ter m s a r e i n accor d a nce w ith t he Pol ic y . Luci nd a C h a rle s-Jones wa s appoi nt ed to t he Bo a r d a s Non-E xec ut iv e Di r ec tor on 22 June 2022 . Det a i l s of t he pr oce ss for such appoi nt ments a re se t out in t he Nomi nat ions Com m it t ee Rep or t on pages 102 a nd 103. T he det a i l s of t he ter m i na t ion a r r a ng ements for Bi l l F lo ydd , Ch r is Bel l a nd Susa n Hooper , w ho depa r ted a s Di r ec tor s du r i ng t he yea r u nder re v ie w , a r e set out on pa ge 13 6, t he ter m s of wh ich a r e in ac cor da nce w it h t he Pol ic y . W ork force engagement A s wel l a s Ch a i r of t h is C om m it t ee, I a m a l so t he No n-E xecut ive Di r ec tor w it h desi g na te d r esp on sibi l it y for wor k for c e enga gement. T his s ubjec t is c over e d in more det a il on pa ge 36 of t h i s rep or t, but f rom a C om m it te e per s pe c t ive, it s hould be note d t ha t in a t t end in g t he work f orce enga gement for u m s I ensu r ed t hat I wa s av a i lable to d i sc us s exe cut ive remu nerat ion w it h col le ag ue s a nd re por t back to t he Com m it t ee a nd B oa r d a s appr opr i ate. T he Ch ief E xe c ut ive a lso r esp onded to quest ions fr om col lea g ues i n r ela t ion to exe cut i ve r emuner at ion a nd t he appr oac h bei ng t a ken t o w ider Compa n y pa y a s pa r t of hi s re g u la r T ow n Ha l l se ssions. We cont i nue to consider wa y s to i mpro ve f u r t her the lev el of enga gement i n t h is re ga r d for t he for t hcomi n g yea r. Remuneratio n Committee Report Continu ed Looking ahead Ou r Remuner at ion Pol ic y is de sig ned t o be si mple a nd t ra nspa r ent a nd to pr omote ef fec t ive ste wa rd sh ip t ha t is v it a l to t he del iver y of t he Gr oup’ s objec t i ves i n l i ne w it h it s pu r p os e. T o t his end t he Com m it t ee endea vou r s to pr ov ide cla r it y on how pay a nd per for m a nce is r ep or t ed at R a n k a nd how de ci sions ma de by t he Com m it t ee suppor t our pu r pose a nd the st r ate g ic di r e ct ion of the Gr oup. A s we go into t he new n a nci a l yea r , we cont inue to be m i nd f u l of i nves tor v iews on remu nerat ion as we st r ive to en su re t hat ma n ag ement is appr opr iat ely i ncent i v is ed to ach ie ve our s t r ate g ic goa l s. I look for wa r d to r ecei v i ng you r suppor t at our 2 022 AGM, wher e I w i l l b e av a i lable to r espond to a ny quest ions sha r eholder s ma y ha ve on t h i s rep or t or in rel at ion to a ny of t he C omm it tee’ s ac t i v it ies. I n t he mea nt i me, if y ou wou ld li ke t o d is cu ss a n y as pe c t of our Remu nerat ion Polic y , ple as e feel f r ee t o cont ac t me t h r ough t he Com pany Secretar y . Steven E s om Ch a i r of t he Remuner at ion Com m it tee “ M i nd f u l of i nves tor s ent i ment , 1 5 % of t h e m a x im um b onus op p or t u n it y f or 2 02 2 /23 w i l l be based o n ESG targe ts . ” Stev en Esom Chair o f the Remunera tion Comm it tee The Rank Group Plc Annual Report 2022 122 Alig nme nt wit h Provisio n 40 A s pa r t of its r e v iew of t he Remunerat ion Polic y , t he Com m it tee h as c onsider ed t he fac tor s se t out in prov ision 40 of the 2018 UK C or p orat e G ov er na nce Code. I n ou r v iew, the Pol ic y add r es se s t hos e fac tor s as s et out b elow: Clar ity – Our Policy is cl ea rly d isclosed each y ea r i n t he A nnua l R epor t a nd enga gement is s ought f rom s ha r eholder s. Ou r Pol ic y is wel l under sto od b y ou r E xec ut i ve Di r e c tor s a nd t he Com m it tee re ceiv es r eg u l a r upd ate s on work for ce pay a nd bene t s dur ing t he yea r f r om ma n ag ement. T he C omm it tee a nd B oa r d as a w hole a lso r e ceiv e upd ates f rom t he non-e xe cut ive d i r e c tor r e spon sible for work for ce en ga gement (who is a l so t he cha ir of t he Com m it tee) to ensur e t ra nspa r enc y a nd effe c t iv e enga gement. Sim pli city – A k e y objec t i ve of t he Com m it t ee i s to ensu r e t h at ou r exe cut i ve r emuner at ion pol icies a nd prac t ice s a r e ea si l y u nders to od a nd str aig h tfo rward to co mm uni cat e and oper ate. O ur r emuner at ion st r uct u r e is compr is ed of xe d a nd va r i able remu nerat ion, wit h t he per for m a nce cond it ions for va r iable elements clea rly com mun icat ed to, a nd u nder st oo d by , pa r tic ipa nt s. T he move to a nnua l a wa r d s under t he 2020 L T I P r emove d one of the more pr ev iously complex elements. R isk – T he Com m it tee is m i nd f u l of t he need t o ensu r e t h at r i sk s a r i si ng in c onne c t ion w it h r emuner at ion a r r a ng ements a r e identi ed a nd mit igate d. O u r Polic y has b een de sig ned w it h t his i n m i nd, to en su r e t h at in appr opr iat e r isk-ta k ing i s d is cou ra ge d a nd w i l l not be r e wa r de d. It do es so b y mea ns of : (i) t he ba la nce d use of bot h s hor t- a nd long-ter m i ncent ive s; (i i) t he empha sis on e qu it y in ou r incent i ve pla ns, tog et her w it h defer ra l of pa r t of the a n nua l bonus, t he t w o -yea r pos t-vest i ng hold i ng p er iod i n t he 2020 LTIP a nd in-employ ment and po st- ces s at ion sh a r ehold ing g uidel i nes; a nd (i ii ) ma lu s/cla wback pr o v is ions, wh ich spe ci c a l l y inc lude reference to fa ilu re in r isk ma n ag ement. T he C omm it tee a lso ha s ov er r id i ng d i sc re t ion to re duce a wa r d s where out t ur ns a r e not a fa i r a nd ac cu r ate re ec t ion of busi ness per form a nce. Pr ed ict abi l it y – O ur i ncent i ve pla ns a r e subjec t to i nd iv idua l cap s, w it h our sha re pla n s a l so subje c t to ma rket-st a nd a r d d ilut ion l i m it s. Pleas e see pa ge 12 8 for more i n for mat ion on potent ia l r e wa rd pos sibil it ies for di f fer ent le vels of per for ma nce. W her e d is cr et ion may be exer c is ed , t h is i s clea rly st a ted in t he Polic y . Pr opor t iona lit y – T he Comm it tee is mi nd f u l of t he n e e d to ens ur e t h at outcomes do not r ew a r d po or per form a nce a nd t he Pol ic y enables me a n in g f u l a nd appropr iate t a r ge ts t o be s et w it h a sig n i ca nt pr op or t ion li n ke d to long-ter m sha reholder va lue. Dis cr et ions ava ila ble to t he Com m it tee ens ur e t hat aw a r d s ca n be r educe d i f nece ssa r y t o ensu r e t h at outcomes r epr esent a f a i r a nd acc u ra te re ec t ion of busi ness per form a nce. Alignm en t to culture – T he Comm it tee ensu r es t hat mea su r es us ed i n ou r incent i ve st r uct u r e a r e a l i g ned w it h Ra n k ’ s busi ness s t r ate g y and v a lues, for ex a mple t he inclu sion of ES G ta rge t s a nd a sa fer ga mbl in g mea su r e in b onus objec t i ves. Introduction to Remunera tion Policy T h is r epor t set s out t he Polic y for t he Compa n y , w h ich wa s pr epa r e d in accor d a nce w it h the 2013 Re g u lat ions. T he Pol ic y wa s appr ov ed b y sh a r eholders at t he Compa ny’ s A nnua l G enera l Mee t i ng on 1 4 O c tober 2021 r ec eiv i ng a 9 0.52% vote i n fa vou r a nd to ok ef fec t on t hat d ate. T he Pol ic y ha s be en r epr oduce d below for in for mat ion pur pose s a nd upd ate d to re ec t t he pa ss ag e of ti me, such as cha nge in t ense a nd page r efer ences a nd the E xec ut i ve Di r e c tor s’ cur rent r emunera t ion pack a ges f or t he pur pos es of t he ch a r ts il lu st r at ing t he appl ica t ion of t he Polic y in t he comi ng ye a r. T he Com m it t ee r e v iew s t he G r oup ’ s over a l l r emuner at ion ph i losophy a nd st r uct u r e each y ea r t o ensu r e t h at t he f ra mework r ema i n s ef fe c t ive i n suppor t i ng t he Gr oup’ s s t r ate g ic objec t ive s a nd fa irl y re wa rd s ind i v idua ls for t he cont r ibut ion t ha t t he y ma ke t o t he busi nes s, ha v i ng re ga r d to t he size a nd c omplex it y of the Gr oup’ s op era t ions a nd t he nee d to mot i vat e our employ ees. It r e cog n is es t hat t he per for ma nce of t he Compa ny is dependent upon t he qua lit y of its D i re c tor s, sen ior exe cut i ves a nd employees a nd th at t he Gr oup t heref ore s eek s to a t t r ac t , r et a i n a nd mot iv ate sk il led D i re c tor s a nd sen ior exe cut i ves of t he highes t ca l ibr e. In or der to at tr ac t such i nd iv idua ls, t he Comm it tee need s to en su r e t ha t t he r emunera t ion pack a ges pr oper ly r ee c t an i nd iv idual ’s dut ies a nd r esp onsibi l it ies, a re appr opr ia te a nd compe t it iv e (not pay i ng mor e t h a n is nece ssa r y), sensit i ve to pa y el se where w it h i n t he G roup a nd d i r ec t ly l i nk ed to per form a nce. Rem uneration Polic y The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 123 Remuner ation Polic y table T he ke y component s of E xec ut i ve Di r ec t ors’ remu nera t ion a r e su mm a r ised b elow: Base salar y Component and link t o business strategy T o a t t r ac t a nd r et a in sk i l le d, h igh- ca libr e ind i v idua ls to del iver t he Group ’ s st r ateg y . Operation Ba se s a l a r ies a re t y pica l l y r ev iewed a nnua l l y , w it h a ny cha nge norm a l l y ef fe c t iv e f r om 1 Apr i l. A ny inc r ea se s t a ke i nto acc ount : – T he role’ s sc ope, r esp onsibi l it y and ac cou ntabi l it ie s; – Ma rke t po sit ion in g, includi ng p ay le vel s at ot her ga mi ng oper at or s; – G enera l rate s of inc re a se ac r oss t he Group; a nd – T he per f or ma nce and ef fec t ivenes s of t he i nd iv idua l and t he G r o up. Performance metrics Not appl icable, a lt hough t he indi v idua l’ s p er for ma nce w i l l b e ta ken into ac cou nt when deter mi n in g t he level of i ncr e as e, i f a ny . Maximum oppor tunity W h i le t here i s no ma x imu m a n nua l i ncr e as e, or d in a r ily a ny inc re a se s in E xecut ive Di r ec tor s’ ba se sa la r ies w il l b e l im it ed , in p erc ent ag e of bas e sa la r y ter m s, to t hose re ceiv ed b y t he w ider work for ce du r i n g t he yea r . W her e t he Com m it t ee c onsider s it nece ss a r y or appr opr iate, la r ger i nc re a ses m a y be a wa r de d i n ind i v idua l c i r cu m st a nce s, such a s a cha nge i n scop e or re spon sibil it y or a l ig n ment to ma r ket le vel s. For ne w Ex ec ut iv e Dir ec t or hi re s, t he Comm it t ee ha s the ex ibi l it y to se t t he sa l a r y at a b elow-ma rke t lev el in it i a l l y a nd to r ea lig n it over t he follow i ng y ea r s a s t he i nd iv idua l ga i ns e x per ien c e i n t he role. I n excep t iona l c i rc u ms t a nce s, t he Com m it tee ma y a g r ee to pay a bov e-m a rke t level s to s ec u re or r e ta in a n i nd iv idua l who is consider ed b y t he Com mit tee to po sse ss sig n i c a nt a nd rele va nt ex per ien c e wh ich is c r it ica l to t he del iver y of t he G r oup ’s st rat eg y . Insu red an d oth er be ne ts Component and link t o business strategy In su r ed a nd ot her benet s a r e of fer ed to E xec ut i ve Di r ec tor s as p a r t of a compet it i ve r emunera t ion pack a ge. Operation In su r ed bene t s may compr i se pr iv ate hea l t hca re in su ra nce for E xec ut i ve Di r ec t or s a nd depend a nt s, l i fe a ssu r a nce a nd per m a nent hea lt h in sur a nc e. Ot her benet s compri se a ca sh c a r a l low a nce a nd t he fuel cos t of a l l m i leag e (pr iv ate a nd busine ss) . T he a mount of t he cash c a r a l low a nce is r e v iew ed p er iod ica ll y b y t he Com m it tee i n t he l ight of ma rk et cond it ions. Ot her benet s, in l ine w it h the pro v is ion to other employee s, ma y be of fer ed a s appr opr i ate a nd tr av el a nd rel at ed ex p ens es m ay be reimb ursed. T he Com m it t ee r et a ins t he dis cr et ion to offer r eloc at ion as sis t a nce i n t he for m of a n a llow a nce or ot her w i se to supp or t t he movement of exe cut ive ta lent acro ss t he busines s. If pr o v ided , t he Com m it t ee a ims t o ensu r e pa y ment s a r e not exce ssiv e a nd suppor t busines s nee ds. A s such, relo cat ion assi st a nce w il l be re v ie wed on a c a se -by- ca s e ba sis t a k ing i nto ac cou nt fac tor s such as t he ind iv idua l’s cir cu m st a nc es a nd t he ge og r aph ies i nvol ved , mea n i ng t h at t her e is no pr esc r ib ed for mu la f or ca lc u la t i ng t he level or s t r uc t u r e of pay ments. T a x equ a l is at ion a nd ov er sea s ta x ad v is or y fees m a y be pa yable. E xec ut i ve Di r e c tor s ma y pa r t icipate i n H MR C-appr ove d a l l- employee s chemes up to H MR C l im it s. Performance metrics Not a ppl ic able. Maximum oppor tunity It is ant ic ipate d t hat t he pro v i sion of i n su r ed a nd ot her benet s w i l l not form a sig n i ca nt par t of the pack a ge in n a nci a l ter m s. T he cost of t he benet s pr ov ide d ma y cha n ge in acc ord a nce w it h m a rke t cond it ions or i n t he e vent of t he pa y ment of re loc a t ion a s si s t a nc e. Re tirement pro vision s Component and link t o business strategy Rew a r d s sus t a i ned cont r ibut ion and encour a ge s re tent ion of E xec ut i ve Di r ec t ors. Operation E xec ut i ve Di r e c tor s a r e of fer ed member sh ip of t he R a n k Gr oup Ret i r ement Sav ing s Pla n ( t he ‘Pension Pla n’) or a ca sh a l lowa nce of equ iv a lent va lue to the employer ’ s cont r ibution to t he Pen sion Pla n. A n E xec ut i ve Di r ec t or ma y be aut omat ic a l l y en rol le d in T he Ra nk G r oup NE ST Workpl ace Pen sion Scheme (t he ‘Pension Sc heme ’ ) i n acc ord a nce w ith t he Compa ny’s o bl ig at ions u nder t he Pensions Ac t 20 08. Performance metrics Not a ppl ic able. Maximum oppor tunity For a l l new E xe c ut ive D i re c tor app oint ments, t he ma x i mum pen sion contr ibution ( de ned contr ibution or ca sh a l lowa nce ) w i l l be a lig ned w it h t he ma jor it y of t he w ider work for ce (which i s cu r rent l y 3% of base s a l a r y) . T he inc u mbent E xe cut ive Di r ec tor s c u r r ent l y re cei ve a pen sion cont r ibut ion (u p t o a ny m a xi mum c ont r ibut ion lev els s et a n nua l l y by H M RC ) or a ca sh a llo wa nce of 10% of t he E xec ut i ve Di r ec t or’ s ba se sa la r y ( les s t he lower e a r n i ng s l im it) a s pa r t of t heir cont r ac t ua l a rr a ngement s. T he Ch ief E xe c ut ive’ s p ension a l low a nce w i l l a lig n w ith t he ma jor it y of the w ider work force w it h ef fec t f rom 1 Ja nua r y 2023. Remuneration P olicy Continu ed The Rank Group Plc Annual Report 2022 124 Annual b onus Component and link t o business strategy Mot iva tes t he ach ie vement of an nua l st r at eg ic, na ncia l a nd per son a l p er for m a nce. Re wa r d s i nd iv idua l cont r ibut ion to t he succes s of t he Gr oup. Operation Ra nk oper at es a n a nnua l b onus scheme i n wh ich E xe c ut ive Dir ec tors pa r t icipate. T he bonus is b as ed on s t r etc h in g t a r get s s et a n nua ll y . B onus pay out s a r e deter mi ned b y t he Com m it tee a f ter t he yea r end fol low i ng t he C om mit tee’ s a ss es sment of per for m a nce r el at iv e to t he t a r ge ts s et . A ny c a sh b onuses e a r ne d by t he Exe c ut ive D i re c tor s w i l l b e subjec t to a si x -month d efer r a l per iod a nd w i l l be pa id in t he Dec ember fol low i ng t he 30 June na nc ia l ye a r end. A ny b onus ea r ned by t he C h ief E xec ut i ve abo ve 100% of ba se s a l a r y , a nd 80% of base s a la r y for ot her E xec ut i ve Di r ec tor s, w i l l be defer r e d into s ha r e s under t he Ra n k G roup 2020 D efer r ed B onus Pla n (‘t he DBP’) for a per iod of t wo y ea r s a nd wi l l nor m a l l y be se t t led in s ha r es , but ma y be s et tle d i n ca sh i n acc ord a nce w it h t he r u les of t he DBP . T he Com m it t ee r et a ins t he dis cr et ion to over r ide for mu la ic bonus outcomes, b ot h upw a r d a nd dow nwa r d, w here ne ces sa r y , to t a k e accou nt of over a l l or u nderl y i ng C ompa ny p er for ma nce a nd to a l low t he Comm it tee to a ss es s t he qua lit y of ea r n i ng s ov er t he yea r. The C om mit tee w il l con su lt w it h major sh a r eholders pr ior to t he exer c ise of a ny upwa r d d i sc re t ion. Reco ver y a nd w it hhold i ng pr ov i sions appl y up to t he end of t he sec ond n a nc ia l ye a r follo w i ng t he yea r i n re spe c t of which t he awa rd wa s g r a nt ed i n t he e vent of a mat er ia l mis st at ement, a n ac t of gr o ss m is conduct , a n er ror i n t he a ss ess ment of per for m a nce ta rge t s, a mater i a l na ncia l loss to t he Gr oup or a mater ia l deter ior at ion in G roup pro t s wh ich is incon sis tent w it h t he na ncia l per for ma nce of t he ga mi ng indu st r y , ser ious reput at ion a l da m a ge, fa ilu re i n r i sk ma nag ement or cor por ate f a i lur e. Div idend equi va lent s ma y b e pa id i n re spe c t of a ves te d DBP awa r d (nor ma ll y in s ha r e s, but ma y be s et t led i n ca sh i n accor d a nce w it h the r ules of t he DBP) b y refer ence t o d iv idend s w it h r e cor d dat es a r isin g du r i ng t he a wa r d ’s vest i ng per iod. Performance metrics T he bonus w i l l b e ba se d at lea st 5 0% on t he ach ie vement of na ncia l per form a nce t a r ge ts a nd ma y , f r om ti me to t ime a s consider ed appr opr ia te by t he Com m it tee, include non- na nc ia l mea sur e s a nd st rateg ic and / or per s ona l ob jec t iv es. Per for m a nce b elow t h r eshold w i l l r es ul t in z er o pa y ment. Up to 25% of the ma x i mum oppor t un it y ma y b e pay able for ach iev ing a t hr eshold lev el of per for ma nce. A f u l l des cr iption of t he per for ma nce mea su r es i n plac e a nd per form a nce a ga ins t t hem w i l l be pr o v ided i n t he a n nua l remuner at ion re por t on a re t r osp ec t i ve ba si s, to t he ex tent t hey a re not cons idere d to be com mer cia ll y sen sit i ve. Maximum oppor tunity Ch ief E xe cut ive: 150% of ba se s a l a r y . Ot her Exe c ut ive D i re c tor s: 12 0% of ba se sa la r y . Long- term inc entive pla n Component and link t o business strategy T he long-ter m inc ent ive pl a n is i ntende d to a l ig n t he inter est s of t he E xec ut i ve Di r ec t or s a nd sha reholders t hr ough t he c r eat ion of sha r eholder va lue over t he long ter m. Operation Awa rd s a r e nor m a l l y g ra nted a n nua l l y . V es t i ng is u sua ll y on t he t h i r d a n n iver s a r y of t he da te of g ra nt, dependent on t he ach ie vement of st r etc h i ng per form a nce cond it ions mea su re d over a per io d of th r ee n a nci a l yea rs a nd w i l l nor ma ll y be s et tle d in s ha r e s, but ma y be s et t led i n ca sh in ac cor da nce wit h t he r u les of t he LTI P . E xec ut i ve Di r e c tor s a r e re qu i r ed to r et a in ves te d LTI P sha res, net of ta x, for a f ur ther p er iod of t wo yea r s. D u r i ng t his t wo -yea r per iod , a wa r d s wou ld lap se /sha r es wou ld b e for feite d i f t he E xec ut i ve Di r e c tor (i) w as d eter m i ned t o be i n br eac h of t heir ser v ice ag r e ement or (ii ) is eng ag ed b y a compe t itor i n a n exe cut i ve c apac it y , u n less t he Comm it tee ex erc is ed it s d i sc re t ion to a l low t he Exe c ut ive D i re c tor to r et a in t he aw a r d / s ha r e s. T he Com m it t ee r et a ins t he dis cr et ion to over r ide for mu la ic ves t i ng outcomes, b ot h up wa r d a nd do w nw a r d, w here nec es sa r y , to t a ke acc ount of o ver a l l or u nderly ing C ompa ny p er for ma nce. T he Com m it t ee w il l con su lt w it h major sh a r eholders pr ior to t he exer ci se of a n y upwa rd d is cr et ion. Reco ver y a nd w it hhold i ng pr ov i sions appl y up to t he t h i r d a n n iver s a r y of t he awa rd s ves t i ng i n t he e vent of a ma ter ia l mi ss t atement, a n act of g r os s m is conduct , a n er ror in t he as se ssment of per for m a nce t a r get s, a mat er ia l n a nci a l loss to t he Gr oup or a m ater i a l deter iorat ion in Gr oup pro t s wh ich is incon sis tent w it h t he na ncia l per for ma nce of t he ga m i ng indu st r y , ser ious reput at iona l da m ag e, fa i lu r e in r isk ma n ag ement or cor por ate f a i lu re. Performance metrics Per for m a nce ta rge t s may r elat e to bot h na nc ia l a nd non-n a nci a l mea sur e s l in k ed to t he Group’ s long-ter m busi nes s st r at eg y , includ i ng but not l i m ited t o: – Gr oup or busines s un it pro t ; – Gr oup or busi ness u n it r e venue; – Ret u r n on c apit a l ; a nd – St r ateg ic obje c t ive s of t he Gr oup. T he Com m it t ee m ay c hoos e d i f fer ent mea su re s a nd weight i ng s bet ween t hem, if it de ems it appr opr i ate, t a k ing i nto acc ount t he st r ate g ic objec t iv es of t he Compa ny . A t lea st 5 0% of t he awa rd w i l l be subjec t to na ncia l t a r get s a nd / or r ela t ive T SR . For each p er for m a nce met ric, a t hr eshold a nd st retc h lev el of per for ma nce is s et . At t h r e shold, no more t h a n 2 5 % of t he rele va nt elem ent ve st s, r isin g on a st r a ight-l ine ba si s to 100% for per for ma nce be t ween t h r es hold and m a x imum . At t he end of t he appl icable per form a nce p er iod , t he Com m it tee w i l l ha ve abs olute d is cr et ion to deter m i ne t he ex tent t o wh ich t he rele va nt awa r d s w i l l ve st , i f at a l l , ta k in g accou nt of u nderly ing Gr oup, ind iv idua l a nd sha re pr ice p er for m a nce. Maximum oppor tunity T he Ch ief E xe c ut ive m ay r e ceiv e a n a n nua l g ra nt of up to 20 0% of bas e sa la r y a nd ot her E xe c ut ive D i re c tor s m ay r e ceive a n a n nua l g r a nt of up to 150% of ba se s a l a r y . The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 125 Remuneration P olicy Continu ed Reco v er y Incentiv e Scheme ( ‘ RIS’ ) Operation T he R IS i s a one- of f pla n w it h aw a r d s g ra nted shor tl y a f ter t he 2021 A n nua l G ener a l Mee t i ng. V es t i ng w i l l b e: – 50% on the r st a n n i ver sa r y of t he date of gr a nt ; a nd – 50% on t he se cond a n n iver s a r y of t he da te of g r a nt, dependent on t he ach ie vement of per for ma nce cond it ions mea sur e d over t he 2021 /22 n a nc ia l yea r . V es t i ng w i l l nor ma l l y be se t t led in sh a r es but m a y be s et t led in c a sh i n accor d a nce w it h t he ru les of t he R I S. E xec ut i ve Di r e c tor s a r e re qu i r ed to r et a in ves te d R IS s ha r e s, net of ta x, u nt i l t he l ater of si x mont h s fol low i ng t he vest i ng of t he rele va nt awa r d a nd t he a n nou ncement of re su lt s for t he si x- month per iod c om mencin g im me d iat ely pr ior to t he relev a nt ves t i ng dat e. Du r i ng t his hold i ng p er iod , aw a r ds w ould l aps e/sha res wou ld be for feit ed i f t he E xe c ut ive D i re c tor (i ) wa s det er m i ned to be i n br eac h of t heir s er v ice ag r e ement or (ii) i s enga ge d b y a compet itor in a n e xec ut i ve ca pacit y , u n less t he Comm it tee exer ci se d its d iscr e t ion to a l low t he Exe cut ive Di r ec tor t o re t a i n the awar d /shares. T he Com m it t ee r et a ins t he dis cr et ion to over r ide for mu la ic ves t i ng outcomes, b ot h up wa r d a nd do w nw a r d, w here nec es sa r y , to t a ke acc ount of o ver a l l or u nderly ing C ompa ny p er for ma nce. T he Com m it t ee w il l con su lt w it h major sh a r eholders pr ior to t he exer ci se of a n y upwa rd d is cr et ion. Reco ver y a nd w it hhold i ng pr ov i sions appl y i n t he ev ent of a mat er ia l m i ss t atement, a n act of g r os s m isc onduct , a n er r or i n t he as ses sment of per for ma nce ta r ge ts , a mater i a l na ncia l loss to t he Gr oup or a m ater i a l deter iorat ion in Gr oup pro t s wh ich is incon sis tent w it h t he na ncia l per for ma nce of t he ga m i ng indu st r y , ser ious reput at iona l da m ag e, fa i lu r e in r isk ma n a gement or cor pora te f a i lu r e. Performance metrics Per for m a nce t a r ge t s w i l l be s et b y r eferenc e to: – net ga m i ng r e venue; and – pro t s a f ter ta x , w it h bot h ta rge ts nee ded to be met for ves t i ng to occur. At t he end of t he appl icable per form a nce p er iod , t he Com m it tee w i l l ha ve abs olute d is cr et ion to deter m i ne t he ex tent t o wh ich t he rele va nt awa r d s w i l l ve st , i f at a l l , ta k in g accou nt of u nderly ing Gr oup, ind iv idua l, E SG ( E nv ir on menta l, Soc ia l a nd G over na nce) a nd sha re pr ice p er for m a nce. Maximum oppor tunity T he Ch ief Ex ec ut iv e a nd Ch ief Fin a nci a l Of cer may r ec eive a one- of f gr a nt of u p to 1 0 0% of b as e sa la r y in n a nci a l yea r 2021 /22 . In-emplo yment shareh olding requirement Component and link t o business strategy T o c r eat e g re ater a lig n ment be t ween E xe cut ive Di r ec tor s a nd sh a r eholder s . Operation Subjec t to t here bei ng su f cient fr e e oat , E xec ut i ve Di re c tor s a r e re qu i re d to bu i ld a sha rehold in g of 20 0% of bas e sa la r y w it h i n v e yea r s of appoi nt ment. Sha r e s subjec t to unve st ed defer r ed b onus aw a r ds a nd veste d but u nexer ci se d defer r ed bonus aw a r d s, R I S a nd LTIP a wa rd s ma y be i ncluded on a net-of-ta x basi s. Performance metrics Not a ppl ic able. Maximum oppor tunity Not a ppl ic able. Pos t-emplo yment shar eholding requirem ent Component and link t o business strategy T o en su r e cont i nued a l ig n ment of t he long-ter m int ere st s of E xec ut i ve Di r ec t ors a nd sha r eholders p os t-ce ssa t ion. Operation Subjec t to t here bei ng su f cient fr e e oat , E xec ut i ve Di re c tor s a r e re qu i re d to m a i nta in a sh a r eholdi ng e qu iv a lent to t he in- employ ment sh a r eholdi ng r e qu i rement i m med ia tel y pr ior to depa r t ur e (or the ac t ua l sha r e - a nd aw a r d-hold in g on depa r t ur e, if lo wer) for t wo ye a r s po st-c es sat ion. Sh a r es subje c t to u nve ste d defer r ed b onus aw a r ds a nd veste d but u nexer ci se d defer r ed bonus aw a r d s, LTI P a nd R IS a wa rd s ma y be i ncluded on a net-of-ta x basi s. T he re qu i rement w i l l appl y to sh a r es v es t i ng u nder defer r ed bonus, LTI P a nd R I S aw a r ds m ade f r om 11 November 2 020. T here a re appr opr ia te a r r a n gement s in pl ace to en su r e enf orce abi l it y . Performance metrics Not a ppl ic able. Maximum oppor tunity Not a ppl ic able. The Rank Group Plc Annual Report 2022 126 Committe e’s a pproa ch to settin g pay , performance measures and targets T he Com m it t ee i ntend s t h at t he ba se s a l a r y a nd tot a l r emuner at ion of E xe cut ive Di r ec tor s shou ld be c ompet it ive ag a i ns t ot her si m il a r g a m i ng pe er s a nd compa n ies of a broa d ly s im i l a r si ze. Remu nerat ion is bench m a rke d ag a i ns t r ew a r d s av a i lable for equ iv a lent r oles i n suit able compa rator compa n ies, w it h t he a im of pa y ing neit her sig n i ca ntl y abo ve nor below ma rke t level s for eac h element of remuner at ion at t a r get p er for ma nce lev els. T he Com m it t ee a lso con sider s genera l pay a nd the employ ment condit ions of a l l employee s w it h i n t he G r oup a nd is sens it ive t o t hese, t o pre v a i l in g ma rket a nd econom ic cond it ions a nd to g over na nce t r ends when a s ses si ng t he le vel of sa l a r ies a nd remu nera t ion pack a ges of E x ec ut iv e Di r ec tor s a nd ot her mem b er s of t he E xec ut i ve Com m it tee. T he Com m it t ee w il l se t t a r get s for t he d if ferent component s of per f or ma nce- rel ate d r emunera t ion so t h at t he y a r e bo t h appropr iate a nd suf cient l y dema nd i ng in t he contex t of the bu sine ss env ir onment a nd t he ch a l lenge s fac i ng t he G r oup. It re v ie ws a nd selec ts p er for ma nce mea su r es at t he be g in n i ng of e ach a wa r d c ycle under bot h t he an nua l bonus pla n a nd t he L T I P , bei ng i n for med b y t he shor t- and long-ter m pr ior it ies of t he G roup at t he ti me. T he Com m it t ee con sider s t he Gr oup’ s ke y per forma nce ind icators a nd str ategic busi ness pl a n when s elec t i ng mea su r es a nd ca libra t i ng t a r ge t s. T he Com m it t ee is awa re t ha t ta rge ts for bot h n a nci a l a nd non-n a nci a l mea su re s should be appr opr ia tely st r e tch i ng y et ac h ieva ble. Det a i l s of t hes e a r e inc luded in t he A n nua l Repor t each ye a r (other t h a n wher e t he y a r e consider ed b y t he Boa r d to be com merc ia l l y sen sit i ve i n wh ich c as e t hey w il l b e d isc lose d fol low i n g ves t i ng). Factor s t h at t he C om mit tee m ay c onsider include t he s t ra teg ic pla n, t he a n nua l budg et , e conom ic cond it ions, i nd iv idua l s’ a r ea s of r espon sibi l it y , t he C omm it tee’ s ex pe c t at ions o ver t he r elev a nt per iod a nd input f r om t he m ajor it y sh a r eholder . Committee discr etion in operation of var iable pay schemes T he Com m it t ee op era tes u nder t he po wer s it ha s be en delega ted b y t he B oa r d . In add it ion, it compl ies w it h r u les t h at a r e eit her subjec t to s ha r eholder appr ov a l (the LTI P a nd t he R I S) or appr ov a l f r om t he Boa rd (t he a n nua l bonus s cheme a nd t he DBP) . T hese r u les pr ov ide the C omm it tee w it h c er t a i n d i sc re t ions w hich s er ve to ensu r e t h at t he i mplementat ion of t he Polic y is fa i r, bot h to t he i nd iv idua l E xec ut i ve Di r e c tor a nd to sh a r eholders. T he Com m it t ee a lso h as d iscr et ion to set components of r emuner at ion w it hi n a ra nge, f r om t ime to t ime. T he ex tent of such d is cr et ion is set out in t he relev a nt r u les, t he ma x i mum opp or tu n it y or t he per for ma nce met r ics sec t ion of t he Pol ic y . T o en sur e t he ef c ient ad mi n i st r at ion of t he va r iable incent iv e pla n s out l i ned abo ve, t he Com m it tee w i l l appl y cer ta in oper at iona l d iscr e t ions. T hes e i nclude, but a r e not l im ite d to, t he fol low ing: – Selec t ing t he pa r t icipa nt s i n t he pl a ns; – Det er m i ni n g t he t i m in g of gr a nt s of awa rd s a nd / or pa y ment s; – Det er m i ni n g t he qua nt um of aw a r d s a nd / or pa y ment s (w it h i n t he l im it s set out i n t he Pol ic y); – Det er m i ni n g t he choice of ( a nd adju st ment of ) per for ma nc e mea su re s a nd t a r get s for e ach i ncent iv e pla n i n accor d a nce w it h the Pol ic y a nd t he ru les of each pl a n; – Det er m i ni n g t he ex t ent of vest ing ba s ed on t he as se ssment of per form a nce a nd d isc r et ion r elat ing to me as ur ement of per for ma nce i n cer ta i n e vent s such a s a ch a n ge of c ont r ol or r e con st r uct ion; – Det er m i ni n g if a wa rd s need t o be ca sh-s et t led i n excep t iona l ci r cu m st a nce s, such a s for t a x or re g u lat or y rea s ons or wher e t her e is in su f cient fr e e oat or where t he a mount r eq ui r e d to be w ith held for ta x pur pos es is t o be c a sh-se t t led; – O ver r idi ng for mu la ic an nua l b onus outcomes, R I S a nd LTI P ves t i ng outcomes, t a k ing ac cou nt of over a l l or underl y i ng C ompa ny p er for ma nce; – W het her m a lus a nd claw back sh a l l be appl ied to a ny awa rd i n t he r elev a nt ci r cu m st a nce s a nd, i f s o, t he ex tent t o wh ich t he y sha ll b e appl ied; – Ma k ing appr opr ia te ad just ments require d in c er tain circumstan ces, fo r in st a nc e for cha nges i n c apit a l st r uct u r e; – Det er m i ni n g ‘ g oo d lea ver’ s t at us f or incent i ve pla n pur p os es a nd appl y i ng t he appr opr iat e t r eat ment ; a nd – Under t a k i ng t he an nua l r e v ie w of weight i ng of per form a nce mea s ur es a nd set t in g t a r get s for t he an nua l b onus pla n a nd L T I P aw a r d, w here appl icable, f rom y ea r t o yea r. If a n event oc cu r s wh ich r es ul t s in t he a n nua l bonus pl a n, R IS or L T IP per form a nce cond it ions a nd / or t a rge ts b ei ng deeme d no longer appr opr iate (e.g . mat er ia l acqu isit ion or dive st ment or a n u n for es een mat er ia l c ha nge i n ga m i ng r eg u l at ion or ta x at ion wh ich wa s u n for ese en at t he ti me t he mea su re s a nd t a r ge ts w ere s et), the Com m it t ee w i l l h av e t he abi l it y to adjus t appropr iatel y t he mea su re s a nd / or t a r ge t s a nd a lter w eight i ngs , pro v ided t hat t he re v i se d cond it ions a re not mat er ia ll y less cha lleng i ng t ha n t he or ig i n a l cond it ion s. A ny u se of t he ab ove d i sc r et ion wou ld, where r ele va nt , be e x pla i ned i n t he an nua l rep or t on remuner at ion a nd ma y , a s appropr iate, be t he subject of c onsu lt at ion w it h t he Compan y’s major sha r eholder s. Legacy arrangements T he Com m it t ee m ay a ppro ve pa y ment s to sat isf y comm it ment s a g re e d pr ior to t he appr ov a l of t h is P olic y . T h i s inc ludes pre v ious i ncent i ve aw a r d s t ha t a r e cu r r ent l y out st a nd i ng. T he Com m it te e ma y a ls o appr ov e pay ments out side of t he Polic y in or der to s at i sf y legac y a r ra n gements made t o a n employe e pr ior to ( a nd not in contempl at ion of ) promo t ion to t he Boa r d . A l l h is tor ic a wa r d s t h at wer e g r a nte d but rem a i n out st a nd i ng a re el ig ible to ves t, ba se d on t heir or igi na l awa r d ter ms. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 127 Dif fe ren ces i n th e Pol icy for Executive Directors rela tive to the broader emplo yee population T he Pol ic y in pl ace for t he Exe cut ive Di r ec tor s i s in for med by t he s t r uc t u r e oper ate d for t he bro ader employe e popu l at ion. Pay le v els a nd component s va r y b y org a n is at iona l level but t he br oad t hemes a nd ph i losophy r em a i n consi st ent acr o ss t he Gr oup: – Sa l a r ie s a r e re v ie we d a n nua l l y w it h re ga r d to t he same f ac tor s a s t hos e set out in t he Polic y t able for E xec ut i ve Di r e c tor s; – Members of t he Exe cut ive Com m it tee pa r tic ipate i n a n a n nua l bonus pla n a l ig ned w ith t hat of fer ed t o t he E xe cut ive Di r ec tor s. O t her member s of sen ior ma n ag ement pa r tic ipate i n t he sa me pla n , dependent on per for ma nce of t he Gr oup a nd / or per for ma nce of bu si ness d iv i sion, accor d i ng t o t heir r ole a nd le vel; – Member s of t he sen ior ma n a gement tea m ca n b e con sidere d for aw a r d s under t he LTIP . T he se a r e i ntended t o encour a ge sha re ow nersh ip in t he Compan y a nd a l ig n t he m a na gement te a m w it h the st r ate g ic busi ness pl a n; a nd – El ig ibi l it y for and pro v i sion of b enet s a nd a l low a nces v a r ies by lev el a nd loc a l ma rk et pr ac t ice. It is st a nda r d for sen ior ma n ag ement to re cei ve a Compa n y ca r a l low a nce. Pension pr ov ision is over a l l at lower cont r ibution r ate s, w it h t he ma jor it y of the G r oup’ s el ig ible employee s now bei ng aut omat ica l ly enr ol le d into t he NE ST Workpla ce Pension Sc heme w it h cont r ibutions i n li ne w it h legi sla t ive r e qu ir ement s. T he rat e appl icable to t he C h ief E xec ut iv e w i l l be br ought i nto l i ne w it h ef fe c t f r om 1 Ja nua r y 2023. It shou ld be note d t ha t a sign i ca nt pr opor tion of employees rem a i n i n t he Gr oup’ s R et i r ement Sa v i ng s Pla n , w it h c ont r ibut ion level s hi gher t ha n m a nd ator i l y r equ i r ed . 2022 Scenario chart Chie f Exe cut ive 3,500 Minimum Target Maximum Maximum with 50% share price growth for LTIP 3,000 2,500 2,000 1,500 1,000 500 0 Remuneration (£000s) 100% £579 39% 26% 35% 24% 32% 44% 20% 27% £1,480 £2,382 £2,897 53% Chief Finan cial Of cer 3,500 Minimum Target Maximum Maximum with 50% share price growth for LTIP 3,000 2,500 2,000 1,500 1,000 500 0 Remuneration (£000s) 100% £383 45% 25% 30% 29% 32% 39% 24% 26% £860 £1,337 £1,601 50% F i xe d pa y A n nu a l b onu s L ong-term i ncent ives (‘LT IP ’) Minimu m: C ompr ise s t he v a lue of xed p a y us in g t he c u r r ent b as e s a l a r y (b ef or e a ny v olu nt a r y re duc t ions) an d pen sio n a nd t he v a lue o f la s t ye a r ’s bene t s. Ta r g e t : M i n imu m pl us a s su me s ha l f of th e bonu s is e a r ne d a nd t he LTI P ve st s a t 50% . Ma x i mu m : Mi n i mu m plu s a ss u mes f u l l b onu s is e a r ne d a nd t he LTI P ve st i n f u l l . Ma x i mu m w it h 5 0% sha re pr ic e g row th : Ma xi mu m pa y a nd the i mp ac t of a n as su me d 50% sh a r e pr ic e g r ow t h on t he LT I P . Remuner ation for ne w appointments T he Com m it t ee w il l appl y t he Pol ic y to new E xe c ut ive D i re c tor s i n r esp ec t of a l l components of r emuner at ion. B a se sa la r y a nd benet s w i l l be se t in accor d a nce w it h t he Pol ic y a nd r eloca t ion as sis t a nce ma y be pr ov ided for bot h i nter n a l a nd ex ter n a l appoi nt ments , if ne ces sa r y . I n add it ion, t he ma x imu m lev el of a n nua l bonus w hic h ma y be e a r ned i s 150% of ba s e sa l a r y for t he Ch ief E xe c ut ive a nd 120% of ba se sa l a r y for ot her E xe c ut ive D i re c tor s. New E xe c ut ive D i r ec tor s m ay p a r ticipa te in t he L T I P a nd r ecei ve a n a nnua l a wa r d of up to 200% of ba s e sa l a r y . T he Com m it tee ma y a l so m a ke a n a dd it iona l a wa rd of ca s h or sha r e s on t he appoi nt ment of a new E xec ut i ve Di r e c tor in or der to c ompens ate for t he for feit u r e of remu nerat ion fr om a pre v ious employ er . Such a wa r d s wou ld be made t o t he ex t ent prac t ic able on a compa r able ba sis, t a k ing ac cou nt of per for ma nce, t he pr opor t ion of the per for ma nce per iod rem a i n in g a nd t he t yp e of aw a r d. T he Comm it tee w i l l s et appropr iate per for ma nce c ond it ions a nd ves t i ng wou ld be on br oad ly t he sa me t i me hori z on a s t he for feite d aw a r d. New Non-E xe cut ive Di r ec tor s w il l be appoi nte d w it h t he same r emuner at ion elements a s t he ex i st ing Non-E xe cut ive Di r ec tor s. It is not i ntende d t ha t va r iable pay , da y rate s or b enet s in k i nd be offer ed . Approach to terminatio n payments/ l eavers T he Gr oup doe s not bel ieve i n r e wa r d for fa i lu re. T he cir c um st a nces of a n E xe cut ive Directo r’ s te rm inati on (inc lu d ing t he Di r ec tor ’ s per for ma nce) and a n ind i v idua l ’s dut y to m it ig ate los se s a r e ta ken into ac cou nt in e ver y ca s e. Ra nk ’ s pol ic y is to s top or r educe c ompens ator y pay ments to for mer E xe c ut ive D i r ec tor s to t he ex tent t hat t hey re cei ve r emunera t ion f rom o t her employ ment du r i ng t he com pensation per iod. Compen sat or y pay ments a r e l im it ed to a n a mou nt equ a l to ba s e sa l a r y , ca s h ca r a l low a nce, a nd pen sion cont r ibut ion s ( or ca sh a llow a nce) payable u nder appl icable not ice pro v i sions (wh ich sha ll not i n a ny event b e more t ha n a n a mou nt eq ua l to t w elve mont h s of such pa y ment s ). In add it ion, t he Compan y ma y pa y r ea son able out placement a nd leg a l fe es wher e consider ed a ppropr iate a nd ma y pr ov ide a leav ing g i f t and / or le av ing e vent for a n E xec ut i ve Di r e c tor (i nclud in g pay ment of a ny t a x ther eon) wher e t he Com m it tee feel s it is appr opr ia te to do s o, up to a ma x imu m cos t of £1,000. T he Compa ny ma y a l so pa y a n y st at ut or y entit lements or se t t le or comprom ise c la im s i n con ne c t ion w it h a ter mi na t ion of employ ment, where c onsider ed i n t he b est i nter e st s of t he Compa n y . Remuneration P olicy Continu ed The Rank Group Plc Annual Report 2022 128 A n nua l b onus aw a r ds w il l nor m a l l y lap se in t heir ent ir e t y in t he e vent a n i nd iv idual is no longer employe d or ser v i ng t hei r not ice per iod a t t he t i me of pay out. For cer ta i n go od lea ver r ea s ons, a b onus ma y bec ome pay able at t he d is cr e t ion of t he Com m it t ee. W her e t he bonus i s pa yable, t he Com m it t ee r et a ins d i sc r et ion a s to whet her it is a ll pa y able in c a sh or whet her pa r t of it is defer r ed eit her in ca sh or a s defer r ed b onus aw a r ds. Defer r e d bonus aw a r d s held by lea ver s w i l l ord i n a r i l y be for feited, e xcept w here t he pa r tic ipa nt is a ‘good le aver ’ ( d ue to deat h , ill- health, injury , red undancy , b usin ess t ra nsfer or ot her r ea s ons at t he dis cr et ion of t he Com m it t ee) in wh ich ca s e t he defer r ed b onus aw a r ds or d i na r il y ve st on t he nor ma l t imet able. T he Com m it t ee c a n per m it e a rl y ves t i ng at it s d i sc r et ion. LTIP or R I S aw a r d s ( e ach a s appl icable) held by lea ver s (wh ich in t he cas e of t he R I S includes t he par t icipa nt bei n g under not ice) w i l l ord ina ri l y be for feited, e xcep t where t he pa r t icipa nt is a ‘good le aver ’ (du e t o de ath, ill- he a lth, in jur y , red undan c y , busi ness t ra n sfer or ot her r ea son s at t he d isc r et ion of t he Com m it tee) , i n wh ich ca se t heir LTI P or R IS a wa r d w il l or d i na r il y ves t on nor ma l t imet able. T he ex tent t o wh ich a n LTI P or R IS a wa rd w i l l ve st i n t hese s it uat ions wi l l de pend upon t wo fac tor s: (i) t he ex tent to wh ich t he per for ma nce cond it ion s (i f a ny) ha ve, in t he opinion of t he Com m it tee, be en sat i se d over t he or ig i na l per for ma nce mea sur ement per iod; a nd (i i) pr o -ra t in g of the aw a r d to re ec t t he prop or t ion of t he norm a l v est ing p er iod sp ent in s er v ice. T he Com m it t ee c a n de cide to pr o -ra te a n LTI P or R IS a wa r d t o a less er ex t ent (i ncludi ng a s t o ni l) i f it r eg a r ds it a s appropr iate to do s o in t he cir c um s ta nces. In a dd it ion, aw a r d s /sha r es w i l l or d i na ri l y be for feit ed du r i ng t he approx i m atel y si x- mont h hold i ng per iod for t he R IS awa rd s a nd t he t wo-y ea r hold i ng per iod for t he LTIP a wa rd s if t he Exe c ut ive D i re c tor (i) wa s de ter m i ned t o be i n bre ach of t heir ser v ice ag r e ement or (ii ) is eng ag ed b y a compet itor in a n e xec ut i ve ca pacit y , u n less t he Com m it t ee e xerc is ed it s d i sc re t ion to a l low t he Exe cut ive Di r ec tor t o re t a i n the awar d /shares. Change o f control In t he event of a cha nge of cont r ol, t he Com m it t ee h a s absolute d i sc r et ion a s to whet her a nd on wh at ba si s aw a r d s should ves t under t he L T I P a nd / or t he R I S. T he Com m it t ee wou ld nor m a l l y a l low a wa r d s to ves t upon a ch a ng e of cont r ol subjec t to sat isfac t ion of per form a nce c r iter ia a nd re duc t ion on a t ime -app or t ioned ba s is. Executive Dire ctors’ service agreements It is t he G roup’ s pol ic y t h at E xe c ut ive Di r ec tor s h ave r ol l i ng s er v ice ag r eement s. Pr o v i sion D et a ile d ter ms Remunera t ion – Ba se s a l a r y – Pen s ion – Ca sh c a r a l lo wa nce – Pr ivat e hea lt h insu r a nce for D i re c tor a nd dep enda nts – Li fe a s sur a nc e – Per ma nent healt h in su ra nce – Pa r tic ipat ion in a nnua l b onus pla n , subjec t to pl a n r ules – Pa r tic ipat ion in ot her incent ive pl a n s, subjec t t o pla n r ules – 25 d ay s’ pa id a n nua l lea ve, i ncr ea si ng to 3 0 da y s w it h leng t h of ser v ice Not ice p er iod Si x mont hs’ not ice f r om bot h t he Compa ny a nd t he D ir e c tor T er m in at ion payment Pay ment in l ieu of notice e qua l to: – Si x mont hs’ bas e sa la r y – Ca sh c a r a l lo wa nce – Pension supplement – A l l of t he ab ove w ould b e pa id i n mont h ly i ns t a l ment s, subjec t t o a n obli gat ion on t he pa r t of t he Di r ec tor to m it igate h is / her loss such t h at pa y ment s wou ld eit her re duce, or cea s e completely , i n t he e vent t h at t he D ir e c tor ga i ne d new employ ment Rest ric t ive c oven a nt s Du r i ng employ ment and for si x mont h s a f ter leav ing Copies of the E xe cut ive Di re c tor s’ ser v ice contr ac t s a re a va i l able for insp ec t ion at t he Compa ny ’ s r eg is ter ed of c e. Ser v ice a g re ements out li ne t he component s of remu nerat ion paid to t he i nd iv idual E xec ut ive D i re c tor but do not pr es cr ib e how remu nerat ion l e vel s ma y b e adju ste d f r om yea r to yea r. Len g t h of s er v ice ( a s at 3 0 June 2022) for E xe c ut ive D i re c tor s who ser ve d on t he Bo a r d du r i ng t he ye a r, toget her w it h the d ate of t heir re spe c t iv e ser v ice ag reement s, is a s fol low s: Pos it ion Name Date of cont rac t /Com menceme nt da te Le ng th o f Bo a r d se r v ice Ch ief E xe cut ive Joh n O’Rei l l y 30 Apr il 2018/ 7 May 2018 4 yea r s 2 mont h s Ch ief Fi na nc ia l O f c er Ri ch ard Harri s 20 December 2 021 / 1 Ma y 2022 2 mont h s Ch ief Fi na nc ia l O f c er Bil l F loydd 1 November 2018/ 12 November 2018 2 yea r s 8 month s 1 1. Bil l F lo yd d wa s a pp oi nte d to t he Boa rd on 1 M a y 2019. He ste pp ed d ow n f rom t he B o a r d on 31 De ce mbe r 2021 . The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 129 Policy for Non-Executive Directors ( including Chair ) Component P ur pos e a nd l i n k t o business str ateg y Mec ha nic s op er at io n a nd per f or m a nce f r a me work Maximum Fee s T o a t t r ac t a nd r et a in sk i l le d, hig h-calib re in d ivid uals t o appro ve a nd c ha llenge t he Gr oup ’ s st rateg y . Fees a r e re v ie wed i n t he r st qua r ter of eac h ca lenda r yea r to re ec t appr opr iat e ma rke t cond it ions. Fee i ncr ea se s, i f appl icable, a r e ef fec t ive f r om 1 Apr i l. T he ba se fe e includes members h ip of al l B oa rd Com m it tee s. Non-E xec ut i ve Di r ec tor s a r e not ent it led to a ny bene t s in k i nd a nd a re not eli g ible for pension scheme members h ip, bonus or incent i ve a r ra ng ements. Ag g r ega te a n nua l fe es li m ite d to £750,00 0 by t he Compa n y’ s A r t icle s of Assoc iat ion. Cu r r ent fee le vel s a r e set out in t he an nua l r ep or t on remu nerat ion. A l l Non-E xe cut ive Di r ec tor s h av e let t er s of enga gement set t i ng out t hei r dut ies a nd t he ti me com mit ment exp ec te d. T hey a r e appoi nte d for a n i nit ia l per iod of th r e e yea rs, a f ter wh ich t he app oint ment is renew able by mut ua l consent at i nter va ls of not more t h a n t h r ee ye a r s. Non-E xec ut i ve Di r e c tor s’ appoint ment s a r e ter m i n able w it hout compen sat ion. The C ha i r ’ s app oint ment is t er m i nable on t h r e e mon t h s’ not ice. In acc ord a nce w it h the Cor p ora te G over na nce Co de 2018, al l D ir e c tor s of fer t hemsel ves for a n nua l r e- elec t ion b y sha reholder s. T he da te of appoi nt ment of eac h Non-Exe c ut iv e Di r ec tor w ho ser ved du r i ng t he yea r is se t out i n t he t able below . Non-E xec ut ive D ir e ct or Or i g i na l dat e of ap poi nt ment to B oa r d Dat e of le t te r of en ga ge ment T ot a l leng t h of ser v ice Ch r is Bel l 1 Ju ne 2 015 5 M ay 2 015 6 ye a r s 7 month s Lu ci nda Charles- Jon es 22 Ju ne 2022 22 June 2022 < 1 mont h Che w Se ong Au n 10 December 2020 9 Dec ember 2020 1 yea r 6 mont h s Ste ven E som 1 Ma r ch 2016 24 Febr ua r y 2016 6 yea rs 4 mont h s Susa n Ho oper 1 Sept ember 2015 11 Aug ust 2 015 6 yea r s 5 mont h s K a t ie Mc A l i s te r 28 Apr i l 2021 26 Apr i l 2021 1 yea r 2 mont h s A lex T hu r sb y 1 A ug us t 201 7 21 Aug us t 2019 1 4 yea r s 11 mont hs K a r en W h it wor t h 4 Nov ember 2019 4 November 2019 2 yea r s 7 month s 1. A le x T hu r sb y h as a l et ter of en ga ge ment d a te d 21 Au g us t 2019, wh ic h is e f fe c t iv e f r om 17 Oc t ober 2 019 a nd r epl ac e d h is or igi n a l non - exe c ut i ve le t t er of eng a ge ment d at ed 2 1 Ju ne 2017 . External appoin tments T he Com m it t ee r e cog n is es t h at E x ec ut iv e Di r ec tor s m ay b e i nv ite d to b ecome non-exe c ut ive d i r ec t or s in ot her compa n ies a nd t hat t hes e appoi nt ment s ca n en h a nce t heir k nowle dg e a nd ex per ien c e to t he benet of t he Compa ny . Subjec t to pr e-a g r ee d cond it ions , a nd w it h t he pr ior appro va l of the B oa r d , eac h E xec ut i ve Di r e c tor is per mit ted to ac cept one appoint ment as a non-exe c ut ive d ir e c tor i n a not her l is te d compa ny . T he E xec ut i ve Di r e c tor is per mit ted to r et a in a ny fe es pa id for su c h ser v ice. Shareholder engagemen t In de sig n i ng t he Pol ic y , t he C ha i r w r ot e to t he Compa ny’ s m ajor sh a r eholders, IS S, G l as s L ew is a nd t he I nves t ment A ss oc iat ion a nd t he C om mit tee t ook sha reholders’ fee dback i nto acc ount w hen na li sin g t he Polic y . T he Comm it tee in for ms ma jor sha r eholder s in a dv a nce of a ny m ater i a l ch a ng es to t he way t h at t he Pol ic y is i mplemented a nd w i l l of fer a meet i ng t o d is cu ss t he se det a ils , as a ppropr iate a nd / or r eq ui r e d. Statement o f consideration of employ ment conditions elsewhere in th e Gr oup A s des cr ib ed i n t he note s to t he Pol ic y table on page 1 28, t he ov era r c h in g t hemes of t he Polic y i n pl ace for E xe c ut ive Di r ec tor s a r e br oad ly con sis tent w it h t hose a pplie d to t he w ider employe e popu la t ion. T he Com m it tee is i n for med of pay a nd condit ion s in t he wider employe e popu la t ion a nd ta kes t h is i nto ac cou nt when set t in g sen ior exe cut ive pay . Remuneration P olicy Continu ed The Rank Group Plc Annual Report 2022 130 Annual Report on Remuneration T he Di r ec tor s’ Remuner at ion Repor t ha s be en pre pa r ed on b eha lf of t he B oa r d b y t he Com m it tee, u nder t he cha ir -sh ip of Ste ven E som . T he Com m it te e ha s appl ied t he pri nc iples of g oo d gover na nce set out in t he F RC ’ s 2018 UK Cor p ora te G ov er na nce Code a nd, in pr epa r ing t h is r epor t, ha s compl ied w it h t he re qu i rement s of the 2013, 2018 and 2019 R eg u la t ions. T he Compa n y’ s e x ter na l aud itor is r e qu ir e d to r epor t to sha reholders on t he au d ited i n for m at ion cont a i ned i n t h i s re por t and t o st ate whet her, in its opi n ion, it ha s b een pr epa red i n acc ord a nc e w it h t he 2013 Regu l at ions. Dir ect ors’ si ngl e remu ne rat ion gu re ( Aud ite d ) T he table below pre sent s a sin gle remuner at ion g u r e for each Di r ec tor det er m i ned in accor d a nce w it h the 2013 Reg ul at ions for t he yea r s ende d 30 June 2022 a nd 30 June 2021 in r esp ec t of p er for m a nce du r i ng t he yea r s ended on t hose da tes. T h i s r ecor d s t he f u l l ves t i ng of the 2017 /18 L T I P in Ju ne 2021 ( not w it h st a nd i ng t h at it is onl y acce ssible to the E xe cut ive Di re c tor s in acc ord a nce w it h a t h r ee -yea r vest i ng sc hedu le ). Bot h t ables a ls o include pro for m a g u r es for t he Ex ec ut iv e Di re c tor s to re ec t t he ves t i ng sche du le (plea se se e foo t notes t o t he t ables for f u r ther i n for m at ion): Fi xe d pay (£) Pe r for m a nce p ay (£) 2021 / 22 S a la r y/ fees Ta x a bl e bene ts 1 Pension Tota l xe d Ca sh bonu s Defer red bonu s 3-y ea r bloc k LTIP awa r d ves t i ng Tot a l va ri able O t her 2021 /22 t ot a l remuner at ion (£) Exe cut i ve Di re ctor s Joh n O’Rei l l y 503,750 31,259 49,751 584,760 0 0 0² 0 n/a 584,760 John O’Rei l l y (pr o for m a) 2 503,750 31,259 49,751 584,760 0 0 34,663 34,663 n/a 619,423 Bil l F loydd 3 175,000 11,845 17,188 204,033 0 0 0³ 0 n/a 204,033 Ri ch ard Harri s 4 58,833 3,129 1,734 63,696 0 0 n/a 0 212,862 5 276,558 Non-E xec u t ive D i r e c t or s Ch r is Bel l 6 28,677 0 0 28,677 n/a n/a n/a n/a n/a 28,677 Che w Se ong Au n 7 n/a n/a n/a n/a n/a n/a n/a n/a n/a 0 Lu ci nda Charles- Jon es 8 1,346 0 0 1,346 n/a n/a n/a n/a n/a 1,346 Ste ven E som 57,500 0 0 57,500 n/a n/a n/a n/a n/a 57,500 Susa n Ho oper 9 31,208 0 0 31,208 n/a n/a n/a n/a n/a 31,208 K a t ie Mc A l i s te r 51,458 0 0 51,458 n/a n/a n/a n/a n/a 51,458 A lex T hu r sb y 160,000 0 0 160,000 n/a n/a n/a n/a n/a 160,000 K a r en W h it wor t h 60,141 0 0 60,141 n/a n/a n/a n/a n/a 60,141 1. T a xabl e bene t s comp r is e c a r a l lo w a nce , f uel b ene t (ot he r t ha n for R ich a r d H a r r i s), and l i fe , lon g-ter m di sa bi l it y a nd pr i va te me d ic a l i n su r a nc es. 2. Una ud ite d no te: T h e per for m a nce p er iod for t he 2017 /18 b loc k aw a r d en de d on 30 Ju ne 2 021. T he p er for m a nce w a s a ss e ss ed a s a t 30 Ju ne 2 021 a nd f ul l de t a i l s of t he a s se ss ment c a n b e fou nd o n pa ge s 12 4 a nd 1 2 5 of ou r 202 1 A n nua l Rep or t a nd Acc ou nt s. T he a w a r d ve st s , sub jec t t o co nt i nued e mplo y me nt , in t hr e e eq ua l t r a nche s f r om 1 O c tob er 2 021. T he r s t t r a nc he of t he a w a r d ve st e d on 1 Oc t obe r 2021 a nd wa s i ncl ude d in l a s t ye a r’s Rep or t on a pro f or m a ba s is a nd i n t he tab le belo w. The p r o for m a g u r e sho w n i n t he t ab le ab ov e is t he sec ond t r a nc he w h ich w i l l v es t on 1 O c tob er 2 022 , us i ng t he a v er ag e sh a r e pr ice (106.9p) for t he th r e e mont h s to 3 0 Ju ne 202 2. T hi s w i l l be r e s ta te d ne x t ye a r u si ng t he ac t ua l sha r e pr ice when t he aw a r d ve st s. 3. Bi l l F lo yd d st epp e d dow n fr om t he Boa rd on 31 D ec emb er 20 21. T he s e cond t ra nc he a nd t h i r d t r a nc he of h i s 2017 / 18 blo ck a w a r d l aps e d i n f u l l on de pa r t ur e. 4. R ic ha rd Ha rr is wa s a ppo in te d to t he Boa r d o n 1 Ma y 202 2. 5. R ic ha rd H a r r i s r ec ei ve d bu you t aw a r d s co mpr i si ng a c a sh a w a r d of £1 2 ,8 62 i n Ju ne 20 22 i n l ieu of a b onu s for feite d a nd a s h a r e aw a r d of £ 20 0,0 0 0 i n Ma y 2 022 in l ie u of sh a r e a wa rd s for feite d f r om h i s pr e v iou s emplo y er. 6. Ch r i s B el l s tep pe d do w n f r om t he Boa rd on 18 Ja nua r y 2022 . 7 . C he w Se on g Au n do es n ot r ec ei ve a n y pa y me nt for h i s r ole a s a Non -E xe c ut i ve D i r ec t or. 8. Luc i nd a Ch a r le s-Jone s wa s a pp oi nte d to t he Boa rd on 22 J un e 202 2. 9. Sus a n Ho ope r st epp e d do w n f r om t he B o a r d on 31 Ja nu a r y 2022 . The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 131 Fi x ed p a y (£) Per f or m a nc e pa y (£ ) 2020/21 S a l a r y/ fees 1 Ta x a b l e bene t s 2 Pen sion T ot a l xed Ca s h bonu s Defer re d bonu s Blo ck LT IP aw a r d ve st i n g To t a l vari ab le 2020/21 total re mun er at io n (£) Exe cut i ve Di re ctor s Joh n O’Rei l l y 486,539 29,742 48,030 564,311 0 0 179,018 3 179,01 8 743,329 3 John O’Rei l l y (pr o for m a) 4 486,539 29,742 48,030 564,311 0 0 57,317 57,317 621,628 Bil l F loydd 297,436 20,027 29,120 346,583 0 0 82,335 3 82,335 428,91 8 3 Bi l l F loyd d (pr o for ma) 4 297,436 20,027 29,120 346,583 0 0 23,820 23,820 370,403 Non-E xec u t ive D i r e c t or s Ch r is Bel l 51,092 0 0 51,092 n/a n/a n/a n/a 51,092 Che w Se ong Au n 5 n/a n/a n/a n/a n/a n/a n/a n/a 0 Ste ven E som 55,969 0 0 55,969 n/a n/a n/a n/a 55,969 Susa n Ho oper 52,060 0 0 52,060 n/a n/a n/a n/a 52,060 K a t ie Mc A l i s te r 6 8,910 0 0 8,910 n/a n/a n/a n/a 8,910 T a ng Hong C heong 7 n/a n/a n/a n/a n/a n/a n/a n/a 0 A lex T hu r sb y 155,692 0 0 155,692 n/a n/a n/a n/a 155,692 K a r en W h it wor t h 57,432 0 0 57,432 n/a n/a n/a n/a 57,432 1. Exe c ut i ve a n d Non-E xec ut i ve D i r ec t or s i n sit u at t he t i me v olu nte er e d a 20% r e duc t i on i n sa l a r ies a nd fe e s w it h e f fe c t f r om 1 A pr i l 20 20 u nt i l 1 5 Aug ust 2 020. 2. Tax a ble b ene t s c ompr i s e ca r a llo w a nce , f uel b ene t , l i fe, l ong-t er m d isab i l it y an d pr i va te me d ic a l i ns u ra nces . 3. In a cc or da nce w it h the 2 013 R eg u l at io ns , LTI P v es t i ng v a lue s i n r es pe c t of t he 2 017 / 18 blo ck a wa rd , for w h ich t he per f or m a nce p er iod n i she d on 30 Ju ne 2 021, a re sho w n i n t he si n gle r emu ner a t ion g u r e for Jo h n O’R ei l ly a nd Bi l l F lo ydd a s h a v i ng v es t ed i n f u l l on 3 0 Ju ne 202 1. T h i s ha d t he ef fec t of r e cor d i n g t he f u l l v es t i ng in t he 2020 /21 na nc ia l yea r e ve n t hou gh it w a s on l y ac ce ss ible to t hese E xec ut i ve D i r ec t or s i n ac cor d a nc e w it h a th r e e -ye a r v es t i ng s c hed ul e, sub je c t to c ont i nue d ser v ice a nd a pos t-ve s t i ng hol d i ng p er io d. F or Joh n O’ Rei l l y, the g u r es s how n in t he t a ble ha v e be en r e st a te d to i nc lude t he v a l ue of t he r s t t r a nc he wh ic h ve s te d on 1 Oc t obe r 2021 u si n g t he sh a r e pr ice (17 6 .8 p) on the rs t ve st ing d a te of 1 O c tob er 2 021 a nd t wo -t h i r d s of t he f ul l v es t i ng v a lue b y r ef er enc e to 30 J une 2 021. For Bi l l F lo y dd , t he g u r es s how n in t he t a ble ha v e be en r e st a te d to i nc lude t he v a l ue of t he r s t t r a nc he wh ic h ve s te d on 22 N ov emb er 202 1 usi n g t he s ha r e p r ice (152 p) on the rs t ve st ing d a te of 2 2 No vemb er 2 021 a nd t wo -t h i r d s of t he f ul l ve s t i ng v a lue b y r ef er ence t o 30 Ju ne 2 021. B a se d on t he per f or m a nc e cond iti ons as s es se d a s at 3 0 Ju ne 20 21 (see p a ge s 12 4 a nd 1 2 5 of ou r 2021 A nnu a l R epo r t a nd Acco u nt s for f u l l d et a i l of t he ves t i ng c ond i t ion s), a tota l of 97 , 2 57 sh a r e s for t he Ch ie f E xe c ut i ve a nd 47 , 013 sh a r e s for t he Ch ief F i na n ci a l O f cer w er e ex p e c te d to v es t , i n t h r ee e qu a l t r a n che s f r om 1 O c tob er 20 21 (2 2 Nov emb er 20 21 for t he Ch ie f Fi n a nc ia l O f cer) pr o v ide d t h at t he ind i v idu a l s me t t he s er vic e r eq u i re ment s a n d subj ec t t o a po s t-ves t i n g t w o -ye a r hol d i ng p er io d. 4. Una ud it ed no te: T he 2017 /1 8 LTI P a wa r d w a s a ‘ blo ck a wa rd ’ w i t h ve s t i ng i n t h r e e eq ua l tr a nc he s sub jec t t o co nt i nue d emplo y me nt. B a s ed on t he ac t ua l sha r e pr ice appl ic ab le at v es t i ng of t he r st t r a nc he of t he awa rd of 176.8p fo r t he C h ief E x ec ut i ve a nd 152.0 p fo r t he C h ief F in a nc i a l O f c er (due to d i f fere nt ve st ing d a te s) the va l ue of t h at r s t t r a nc he w a s £5 7 , 317 for t he C h ief E xe c ut i ve ( 32 ,419 sha res) a nd £ 23 ,8 20 f or t he C h ief F i na n ci a l O f cer (1 5,671 s ha res) wh ic h wou ld h a ve r e su lt ed in t ot a l r e mune r at ion (r e st a te d on a pr o f or m a ba si s w it h onl y t h at rs t t r a nc he of t he 2 017 /1 8 LTI P b ei ng i nc lude d ) of £6 21,6 28 f or t he C h ief E x ec u t iv e a nd £ 370,4 0 3 for t he C h ief F i na ncia l Of ce r as s t a te d in t he abo ve t a ble. 5. C he w Se on g Au n wa s a pp oi nte d t o t he B oa r d on 10 D ec emb er 20 20. He do e s not r e cei ve a ny pa y men t for h i s r ole a s a Non- E xe c ut i ve D i re c to r. 6. K at ie Mc A li st er w a s app oi nt ed t o t he B oa r d o n 28 A pr i l 2 021. 7 . Ta ng Ho ng C he ong w a s app oi nt ed t o t he B oa rd on 1 5 Ja nua r y 20 19 a nd st epp e d do w n on 10 De c embe r 202 0. He d id not r e ce iv e a ny p a y ment f or h is r o le as a N on-E x e cu t iv e Di r e c tor. Non-Exe c ut iv e Di r ec tor s a r e ent it led to re cei ve fee s on ly a nd deta ils of t hose re cei ved a re pr ov ide d on pa ge 142. T hese a mounts a r e w it h i n t he ma x imum a n nua l a gg r eg ate a mount of £750,00 0 cu r r ent l y per m it ted b y t he Compa ny’s A r t icle s of Ass oc iat ion. Base salary ( Audited ) T he Com m it t ee r e v iew ed t he E x ec ut iv e Di r ec tor b as e sa la r ies du r i ng t he yea r. In 2021, in r esp ec t of t he Chief E xe c ut ive, t he Com m it t ee h ad det er m i ned t h at due to COV ID - 19 no incre a se shou ld apply . D u r i ng t he ye a r u nder re v iew , t he Com m it tee det er m i ned to i ncr ea se t he Chief E x ec ut iv e’ s s a l a r y by 3% in l i ne w it h the o ver a l l i ncr ea s es a wa r de d to t he w ider work force a nd th i s inc re a se appl ied w it h ef fe c t fr om 1 Apr i l 2022. R ich a r d Ha r r is was app ointe d a s Ch ief Fin a nci a l Of cer on 1 May 2022 and h is sa la r y on appoi nt ment is se t out below. 30 Ju ne 2022 1 A pr il 202 2 1 Ap r i l 202 1 % c ha nge Ch ief E xe cut ive £515,000 £515,000 £500,000 3% Ch ief Fi na nc ia l O f c er £353,000 n/a n/a n/a T he Com m it t ee w il l con sider a f u r t her rev iew of E xec ut i ve Di r ec t or ba se sa la r ies a t t he appr opr ia te t i me dur ing t he fort hcomi ng ye a r. Pensi on T he Ch ief E xe c ut ive a g r ee d t h at , w it h ef fec t f r om 1 Ja nua r y 2023, h is pa y ments in l ieu of pen sion w i l l be r e duced f r om 10% of sa la r y ( less t he lower ea r n i ng s l i m it) ( such 10% ha v i ng b een a g r ee d under h i s ser v ice a g re ement when he joined R a n k) to t he rate c u r r ent l y av a i lable to t he major it y of the U K employees (cur r ent l y 3% ). The Ch ief Fi na nc ia l O f c er’ s pa y ment s in l ieu of pension were a g re ed at t he r ate c u r r ent l y av a i lable to t he major it y of t he UK employe es w hen he joined t he C ompa ny i n Ma y 2022. Annual Report on Remuneration Continu ed The Rank Group Plc Annual Report 2022 132 Annual bonus plan ( Audited ) T he bonus for 2021/ 22 wa s bas ed on a cha lleng i ng t a r ge t t hat wa s se t by t he Com m it t ee at t he st a r t of t he na ncia l yea r . A single na ncia l per form a nce t a r ge t (b a sed on pro t-a f t er -ta x) made up 1 0 0% of the bonus oppor tu n it y . T he pro t-af ter -ta x ta rge t was £ 33.6m as at 30 June 2022. T he t h r eshold for pay ment ag a i ns t t h is t a r ge t was s et at 95% of t a r get (£ 31. 92m) and t her e wa s a st ra ight line to a ma xi mu m of 1 05% (£35. 28m). S t ra ight- l i ne ves t i ng appl ied bet ween t h r e shold and ma x imu m, a s fol low s: Pay out Th re shold (0 %) Ta r g e t ( 5 0 %) Ma x i mu m (100 %) Ac tu a l Payou t (% of m a x) Pr o t-a f t er-t a x £31.92m £33.6m £35.28m £(0.8)m 1 0% 1. For t he n a nc i a l ye a r 2 021 / 22 , t he C omp a ny r e por te d a pr o t-a f ter -t a x of £6 6. 2m , wh ic h in clud ed mo ni es f r om t he V AT cl a i m r efe re nce d on p ag e 27 o f t h is r e por t. T he C om m it t ee d et er m i ne d t h at i t wa s no t appr op r ia te t o i nclud e t he a mo u nt r ec ei ve d by t he Comp a ny i n r e sp ec t o f t he V AT c l a i m for t h e pu r p os e of a s se ss in g whe t her t he bonus t a rge t s h ad b ee n met , a nd e xe rc i se d d i sc r et io n to e xcl ude t h i s a mou nt . T h i s r es ul te d i n a pr o t-a f ter -t a x g u r e for t hese p ur pos e s of £(0. 8)m , re su l t i ng i n 0% of t he ma x imu m bo nus p ay ab le. A n under pin of the busi nes s re t u r n i ng a posit i ve oper at i ng pr ot appl ied , toge t her w it h a sa fer ga mbl i ng as se ssment wh ich could negat i vely i mpac t t he size of a n y bonus a wa r d ba s ed upon we a k nesses i n cont rol s ys tem s, lac k of prog r e ss a ga i n st ke y i n it i at iv es in t he yea r or a s a cons eq uence of enfor cement ac t ion by t he Ga mbli n g Com m is sion. Outcome O ver a l l , t he Comm it tee deter mi ned t h at no bonus would be pay able to t he Chief E xe cut ive. The C hief Fi na ncia l Of cer wa s not, in a n y event , ent it led to a n y bonus in re spe c t of the 2021 / 22 na nc ia l yea r in l ight of his join i ng da te. Ch ie f Ex ecut i ve Ch ie f Fi n a nc ia l Of cer Bonus pa yable for n a nci a l-ba se d per for ma nce 0% n/a Dis cr e t ion applie d ba se d on under pin n/a n/a T ot a l bonus pay able for 2021 /2 2 (% of ma x imu m) 0% n/a Long- term incen tives ( Audited ) T here a re c ur rent l y t wo di f ferent long-ter m i ncent ive s chemes i n plac e for t he E xec ut i ve D ir e c tor s a nd ot her sen ior ma nag ement, na mel y t he legac y four -ye a r block aw a r d gr a nt ed i n 201 7 /18 a nd awa rd s gr a nt ed a n nua l l y under t he 2020 long-ter m incent i ve pla n. 2017 /18 L TI P ( blo ck a ward ) A s rep or t ed la s t yea r, a si ngle LTI P awa rd wa s g ra nted on 28 June 2018 t o John O’Rei l ly ba se d on per for m a nce over a fou r-y ea r per iod end i ng 3 0 June 2021. T he aw a r d ma de cov ere d fou r yea rs of a n nua l g r a nt s. T he p er for m a nce of t he a wa r d w a s as se ss ed a s at 30 June 2021. Fu l l de ta il s of t he per f or ma nce ass es sment a nd ves t i ng outcome c a n be fou nd on pa ges 1 24 a nd 1 25 of ou r 2021 A n nua l Repor t a nd Accou nt s. T he aw a r d ves t s i n t h r ee e qua l tr a nche s st a r t i ng 1 Oc tob er 2021. T he sec ond t ra nche of 32,4 19 w i l l ves t on 1 Oc tober 2022 a nd the t hi r d t ra nche of 32,4 19 w i l l ves t on 1 Oc tober 2 023, i n eac h ca s e subjec t to c ont i nued employ ment. 2021 / 22 L TIP granted during the y ear ( annual award ) A n LTI P aw a r d wa s g r a nte d on 2 3 Sept ember 2021 to Joh n O’Rei l ly , ba s ed on p er for m a nce o ver a t h r ee -ye a r per iod endi ng 30 Ju ne 2024. T he per f or ma nce measu r es a nd ta r ge ts for s uch aw a r d wer e set b y t he C om mit tee i n Aug ust 2021, pr ior to t he g r a nt. Director John O’Rei l l y (Ch ief E xec ut iv e ) Pla n 2020 L T IP Date of g r a nt 23 S eptemb er 2021 Face va lue at g r a nt (% of sa l a r y) 20 0% Face va lue at gr a nt (£) £1 ,000 ,000 Sha r e pr ice a t g ra nt 171 . 8 p Number of sh a r es c ompr ise d i n aw a r d 582 ,07 2 Per for m a nce p er iod 1 July 2021 to 30 Ju ne 2024 Ea rl iest vest date 23 S eptemb er 2024 A s w it h t he 2020/21 g ra nt, 40% of t he awa r d ves t s b y refer ence to r el at iv e tot a l s ha r eholder re t u r n ( ‘RT SR’ ), 30% ves ts b y r efer ence to ea r ni ng s per sh a r e g r ow t h a nd 30% ve st s b y r eferenc e to st rateg ic mea su r es. T he p er for m a nce met rics a re t he s a me as f or t he 2020/21 g r a nt (as set out a bov e ). St r a ight-li ne ves t i ng appl ies for a l l me t r ics b et ween t h r e shold a nd st r etc h. V e st ing is a lso subje c t to a sha re pr ice u nder pi n a nd w i l l t a ke i nto c onsider at ion a ny c u r r ent or imp end in g sa fer g a mbl in g sa nc t ion a nd R a n k ’ s s uit abi l it y to oper ate. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 133 T he st r at eg ic ta rge ts a nd sha r e pr ice u nder pi n a r e deeme d com merc ia ll y sen sit iv e a nd w i l l be d i sc lose d at t he t i me of ves t i ng. We i g h t i n g T hresh ol d target Stretch ta rget T h r es hold v es t i ng ( % of ma x) T SR 40% Med ia n Out p er for m medi a n b y 2 5% 10% EPS 30% 14 .1 p 24 .5p 7. 5 % 10% Gr oup EBI T M a r g i n (% ) 2 . 5% Str ateg ic M ea su res 10 % Dig it a l NGR (£ m) 2 . 5% 10% V enues NGR (£m) 2 . 5% To t a l 10 0% 2 5% Reco very Incentiv e Scheme ( Audited ) At t he 2021 A nnua l G ener a l Me et i ng, sha r eholder s appr ove d t he i nt r oduc t ion of a one- of f Re cov er y Incent i ve Sc heme (R IS) w it h a vie w to ensu r ing t h at t he Exe cut ive Di r ec tor s wer e r et a ined a nd i ncent iv ise d to del iver t he requ i r ed r e cov er y in p er for m a nce fol low ing t he impac t of COVI D -1 9 on the busi nes s, wh i ls t re ec t i ng sh a r eholder inter es ts i n remu nerat ion a rr a n gement s. Follow i ng such appr ov a l , a n awa rd w it h a va lue of 1 0 0% of sa la r y w as g r a nte d on 25 Oct ober 2021 to John O’Reil l y , bas ed on na ncia l per form a nce for t he 2021 /22 n a nc ia l yea r . T he per for m a nce mea su r es a nd ta rge t s for such awa r d were se t by t he Com m it t ee i n July 2021, pr ior to the g ra nt ( subje c t to sh a r eholder appro va l of t he scheme ). The aw a r d s w i l l ve st 50% a f ter one yea r and 50% a f ter t wo yea r s (subjec t to cont i nued employ ment) , a nd wi l l b e subjec t to a s i x -mont h hold i ng per iod on vest i ng. For completeness, it shou ld be note d t h at no such awa rd wa s m ade to B il l F lo ydd a s h i s not ice of re sig na t ion wa s re cei ved i n Aug ust 2021, pr ior to t he 2021 A n nua l Gener a l Me et i ng at wh ich t he r u les of t he RIS w ere a ppro ve d. Director John O’Rei l l y (Ch ief E xec ut iv e ) Pla n Rec over y I ncent iv e Sc heme Date of g r a nt 25 Oc t ober 2021 Face va lue at g r a nt (% of sa l a r y) 10 0 % Face va lue at gr a nt (£) £499 ,99 8 Sha r e pr ice a t g ra nt 16 3 . 5p Number of sh a r es c ompr ise d i n aw a r d 30 5 ,7 7 2 Per for m a nce p er iod 1 July 2022 Ea r l iest ve st da te for r s t in st a lment 25 Oc t ober 2022 (50% ) V es t da te for se cond i ns t a l ment 25 Oc t ober 2023 (5 0% ) Out com e of th e RI S T he follow ing n a nci a l t a r get s for net ga m i ng re venue and pr o ts a f ter ta x for the 2021 /22 n a nci a l yea r applied to t he awa rd, w it h bot h t a rge t s need i ng t o be met for t he awa r d s to ve st . Per fo r ma nc e mea su r e Ta r g e t Ac t u a l a ch ie ve d % ves t i n g NGR £740m £644.0m 0% PA T 1 £33.6m £(0.8)m 1 0% 1. For t he n a nc i a l ye a r 2 021 / 22 , t he C omp a ny r e por te d a pr o t-a f ter -t a x of £6 6. 2m , wh ic h in clud ed mo ni es r e cei ve d f r om t he V A T cl a i m r efe re nce d on p ag e 27 o f t h is A n nua l Rep or t . T he C om m it tee d et er m i ne d t h at it w a s not a ppr op r ia te t o i nclud e t he a mo un t r ec eiv e d by t he Comp a ny i n r e sp ec t of t he V AT cl a i m fo r t he pu r p o se of a ss es si n g whe t her t he RI S t a r g et s h ad b ee n met , a n d exe r ci se d d i sc r et ion to exc lud e t h is a mount . T h i s r es u lte d i n a pr o t-a f ter -t a x g u r e for t hese p u r p os es of £(0. 8)m , r es ul t i ng i n 0% v es t i n g of t he p a r t o f t he R I S aw a r d s ubje c t to PAT . Fu r ther to t he above, t he RIS a wa rd g r a nte d to Joh n O’Rei l ly on 2 5 Oc tober 2 021 laps ed i n f u l l on 30 Ju ne 2022. Appo int men t of Richar d Harri s as Chief Fin anc ial Of cer R icha rd Ha r r is wa s appoi nted a s Ch ief Fin a nc ia l Of cer a nd to t he Boa r d on 1 May 2022. Hi s remu nerat ion pack a ge wa s appr ov ed by t he Com m it t ee a nd is in l i ne w it h t he Polic y . It compr ise s a n a n nua l sa l a r y of £353,0 0 0, a pension al lo wa nce e qua l to tha t re ceive d by t he w ider work for ce ( c u r r ent l y 3% ) a nd benet s i n li ne w it h t he Polic y . R ich a r d is elig ible to pa r tic ipate in t he Compa n y’ s a n nua l bonus sc heme, rec eiv i ng a m a x imu m bonus oppor t u n it y of 120% of sa l a r y , a nd be con sider ed for g r a nt s u nder t he Compa n y’ s LT IP . R icha rd re ceiv ed a ca sh aw a r d on join in g Ra n k of £12, 862 i n lieu of a ca sh bonus for feite d fr om h is pre v ious employer. Su c h pay ment wa s ma de in ac cor da nce w it h t he Pol ic y a nd i s rep ay able if R icha r d wer e to lea ve R a n k w it hi n 12 mont h s of it ha v i ng be en pa id to h i m. In add it ion, on 6 Ma y 2022, R ich a r d re ceiv ed a n aw a r d over 186,6 36 sha r e s to replac e awa rd s gr a nt ed by h is pr ev ious empl o yer wh ich were f or feite d on join i ng t he C ompa ny , t he de ta il s of wh ich a r e se t out on t he follo w i ng pa ge. Such aw a r d wa s g r a nte d out side t he Compa n y’ s LT IP but , sa ve a s ex pr es sl y st at ed ot her w i se i n t he dee d of g r a nt for such aw a r d , is subjec t t o t he r u les of t he LTI P . It wa s made i n acc ord a nce w it h t he exempt ion conta i ned i n Ru le 9 .4. 2(2) of t he UK L is t i ng R ule s a nd t he Pol ic y . V es t i ng i s subjec t to c ont inued employ ment but not subjec t to a ny per for ma nce cond it ion s a nd is i n t wo equa l t ra nches, w it h t he ve st ing d ate for e ach such t ra nche bei ng 13 Ma y 202 3 a nd 16 Ma rc h 2024 r esp ec t ively . Annual Report on Remuneration Continu ed The Rank Group Plc Annual Report 2022 134 Director R icha rd Ha r r is ( C h ief Fin a nc ia l Of cer) Pla n N/ A (ma de in ac cor da nce w it h t he exemp t ion conta ined i n Ru le 9 .4.2(2) of t he UK Li st i n g Ru les a nd t he Pol ic y) Date of g r a nt 6 Ma y 2022 Face va lue at gr a nt (£) £200 ,000 Sha r e pr ice a t g ra nt 1 0 7. 1 6 p Number of sh a r es c ompr ise d i n aw a r d 186,6 36 V es t dat e for r s t in st a l ment 13 Ma y 2023 (5 0% ) V es t da te for se cond i ns t a l ment 16 Mar ch 2 024 (50% ) Appo int men t of new N on- Exe cut ive Dire cto r Lucind a C ha r les-Jones wa s appoi nte d to t he B oa r d a s Non-E xec ut i ve Di r ec t or on 22 June 2022. Her fe es wer e appr o ved b y t he B oa r d at £5 0,00 0 per a n num ( bei ng t he ba se Non-E xec ut i ve Di r ec tor fee pa yable to ot her Non-Exe c ut iv e Dir e c tor s ). Historic C hief Executive pay and total shareholder return chart ( unaudited ) T he ta bles below sho w for mer a nd c ur rent Ch ief E xe c ut ive t ot a l r emuner at ion over t he las t ten ye a r s a nd t heir ach iev ed a n nua l va r iable and long-ter m incent i ve pay aw a r d s as a per cent a ge of the pla n m a x imum . As w it h the sin gle remuner at ion g u r e table abo ve, t he r st t able includes f u l l vest ing of t he 201 7 /18 LTIP i n 2020/21 (not w it hst a nd i ng t h at it is onl y acce ssible to the Ch ief E xe cut ive in accor d a nce w it h a t h r ee -yea r vest i ng sc hedu le ) a nd we ha ve a l so include d pro for ma g u re s in t he ta ble which r eec t t he ac t ua l ves t i ng i n t r a nches – plea s e se e foot not es to t he table for f ur t her i nf or ma t ion) . T he sa me approac h ha s be en t a ken i n t he se cond t able below i n r esp ec t of t he for mer c h ief exec ut i ve a nd t he ve st i ng of t he 201 4 /15 LT IP: Joh n O’R ei l l y (f r om 7 M ay 2 018 ) Si ngle g u r e of tot a l remuner at ion 1 A n nua l ca sh bonu s: ac t ua l pa you t vs . ma xi mu m oppor t un it y LTI P ve s t i ng ra te s a ga i n st ma xi mu m oppor t un it y 2021 /22 (1 2 mont h s) 584,760 0% 0% 2021 /22 ( pro for ma) 3 (12 mont h s) 619,423⁴ 0% 2.0% 2020/21 (1 2 mont h s) 743,329 2 0% 6.1% 2020/21 (pr o for m a) 3 (12 mont h s) 621,628⁵ 0% 2.0% 201 9/20 (12 mont h s) 552,238 0% n/a 20 18 /19 (1 2 mont h s ) 580,328 0% n/a 1. A lo ng w i t h t he o t her E xec ut i ve a n d Non-E xec ut i ve D i r ec t or s, J oh n O’R ei l l y volu nt e er ed a 2 0% r e duc t ion i n s a l a r y w it h ef fec t f r om 1 A pr i l 2 020 u nt il 15 A ug u st 202 0. Hi s co nt r ac t ed s a l a r y cont i nue d to b e u se d for t he pur pos es o f in s ur e d b ene t s. 2. T he g u r e ha s b e en r es t at ed i n t h i s t abl e to i ncl ude t he a c t ua l va lue of t he r s t t r a nc he a t ve st i n g on 1 Oc tober 2 021 a nd t wo -t h i r d s of t he f ul l v a lue of t he 2017 /1 8 bloc k a wa r d LT I P ve st ing b y r ef er enc e to 30 J une 2 021. 3. Unaud i te d not e: T he 2 017 /1 8 LTI P a wa rd w as a ‘ b loc k aw a r d ’ w i t h ve s t i ng i n t h r e e e qua l tr a n che s i n Oc t obe r 2021 , Oc t obe r 202 2 a nd O c tob er 20 23 , sub jec t to co nt i nue d emplo y me nt a nd a p os t-ve s t i ng hol d i ng p er io d. P r o f or m a g ur es h a ve b ee n in clud ed i n t he t a ble to r e e c t t he a c t ua l ves t i ng i n t r a nc he s. 4. Una ud ite d no te: T he g u r e i nclud es t he sec ond t r a nc he of t he 2017 /18 b loc k aw a r d LT I P ve st i n g on 1 O c tob er 20 22 , sub jec t t o co nt i nued e mplo y me nt, usi n g t h r e e-m ont h a ve ra g e sh a r e pr ic e to 3 0 Ju ne 202 2. 5. Una ud it ed no te: T he g u r e ha s b e en r es t at e d to r e ec t t he ac t ua l sha r e pr ice appl ic ab le at v es t i ng of t he r st t r a n che of t he awa rd of 176.8p. T he v a lu e of t h at r s t t r a nche w a s £ 57 , 317 for t he C h ief E xec ut i ve, w h ich r e su l te d i n tot a l remu ner a t ion (r es t at e d on a pr o for ma ba si s w i t h on l y t h at r s t t r a nc he of t he 2017 /18 LT I P bei n g i nclud ed ) of £ 621, 62 8 for t h e Ch ie f E xe c ut i ve i n 202 0/ 21. Hen r y Bi rc h (f r om 6 M a y 2014 un t i l 7 Ma y 2 018) Si ngle g u r e of tot a l remuner at ion A n nua l ca sh bonu s: ac t ua l pa you t vs . ma xi mu m oppor t un it y LTI P ve s t i ng ra te s a ga i n st ma xi mu m oppor t un it y 2 0 1 7/ 1 8 (10 mont hs) £487,006 0.00% n/a 2 0 16 / 17 (12 mont h s) £2,054,662 63.15% 37.50% 2016/1 7 (pr o for ma) 1 (12 mont h s) £1,275,650 63.15% 12.5% 2015/1 6 (1 2 mont h s) £932,639 80.00% n/a 2 0 14 / 1 5 (12 mont hs) £916,010 87.20% n/a 2 0 1 3 / 14 (2 mont h s ) £8 1,850 0.00% n/a 1. Unaud ite d no te: T he pro fo r m a d is clo su r e s et s ou t t he si n gle g u r e i f on ly o ne -t h i r d of t he 2 014 /1 5 LTI P blo ck a w a r d is i nc lude d . The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 135 Ia n B u rke (u nt i l 16 Ma y 20 14) Si ngle g u r e of tot a l remuner at ion 1 A n nua l ca sh bonu s: ac t ua l pa you t vs . ma xi mu m oppor t un it y LTI P ve s t i ng ra te s a ga i n st ma xi mu m oppor t un it y 2 0 1 3 / 14 (1 0. 5 mont h s ) £663,804 0.00% 0.00% 201 2 /1 3 (12 mont h s) £1,267,489 0.00% 96.25% 2011 / 1 2 (18 mont hs) £3,254,000 40.00% 100.00% 1. T h is i nc lude d a n e xce pt io na l di sc r et iona r y bonu s e qu a l to 10 0% of b a se s a l a r y to r ew a r d e xce pt io na l ef for ts of t he the n Ch ie f E xe c ut i ve i n c r ea t i ng a dd it iona l sus t a i n able lo ng-t er m s ha rehol der v a lue v ia t he t r a n sf or m at io n of t he C ompa ny’s ba l a nc e she et , t h at w a s pa id by t h r e e eq ua l in st a l m ent s i n Se pt emb er 201 2 , Apr il 201 3 a nd D ec emb er 2 013. T otal shareh ol der ret urn ( Sou rce: Data strea m ) 250 200 30/06/2012 30/06/2013 30/06/2014 30/06/2015 30/06/2016 30/06/2017 30/06/2018 30/06/2019 30/06/2020 30/06/2021 30/06/2022 150 100 50 0 Value (£) (rebased) R a n k G r oup Plc F TSE 3 50 (exc lud i ng i n ve st ment t r u st s) T h is g r a ph sho w s t he v a lue, b y 30 J un e 202 2, of £ 100 i nv es t ed i n R a n k on 3 0 Ju ne 201 2 , com pa r e d w it h t he va lue o f £100 i n ve st ed i n t he F T SE 35 0 In dex (exc lud i n g In ve st ment Tr us t s) on th e sa me d a te. T he ot her p oi nt s plot te d a r e t he v a lue s at i nt er ven i ng n a nc i a l ye a r - end s. Leaving arrangements (A udited ) Bil l Flo ydd st eppe d dow n fr om t he B oa r d a nd lef t the bu sine ss on 31 Dec ember 2021. He did not r ec eive a n y pa y ment in l ieu of not ice or an y pay ment for los s of ofc e. Bil l d id not recei ve a ny bonus i n res pe c t of the 2021 /22 n a nci a l yea r and a l l h is outs t a nd i ng LTIP awa rd s (2017 /18 L T I P t r a nches 2 a nd 3 and 2020/ 21 L T I P) lap se d in f u l l on his lea v i ng d ate. Hi s r st t r a nche under t he 201 7 /18 LTI P ves ted on 22 No vember 2021 ba s ed on per for ma nce a ch iev ed (see pa ge 132) a nd r ema ins s ubjec t to a t wo -yea r hold i ng p er iod. Ch r i s Bel l ste ppe d dow n f r om t he Boa r d on 18 J a nuar y 2022. He did not re ceive a n y pay ment i n l ieu of n o t ice or an y pay ment for loss of of c e. Susa n Ho oper st eppe d dow n fr om t he B oa r d on 31 Janua r y 2022 . She d id not re ceive a ny pay ment in l ieu of notice or a ny pay ment for loss of ofc e. T he pos it ion adopte d in r el at ion to eac h such depa r t i ng D i re c tor wa s i n acc ord a nce w it h t he Pol ic y . Executive Dire ctor e x ternal appointments ( Unaudited ) John O’Rei l l y is a non-e xec ut i ve d i r ec tor of Weat herby s L i m ited a nd a member of the bo a r d of t r u ste es of t he pris oner bef r iend i ng cha rit y Ne w Br idge Fou nd at ion. Annual Report on Remuneration Continu ed The Rank Group Plc Annual Report 2022 136 Share ownership gu i delines and Directors’ interes ts in shares ( Audited ) Inc re a se d sha r e ow ner sh ip g uidel i nes of 200% of sa l a r y for al l E xe c ut ive D ir e c tor s were appr ov ed at t he 2018 Genera l Meet i ng, subjec t to t here b ein g suf cient fr e e oat. E xe c ut ive D ir e c tor s hav e ve ye a r s to bui ld up sha r eholdi ng s. Sha r ehold i ngs of D i re c tor s of t he Compa ny a nd its s ubsidi a r ies a re not con sidere d to be i n publ ic ha nd s for t he pu r po se s of deter m i n i ng t he suf cienc y of the per cent a ge of sha r es i n public ha nds (t he ‘f r e e oat’ ) in t he c ontex t of qua l i cat ion for a l ist ing on t he UK L A ’ s prem iu m ma rke t. Up unt i l De cember 2021, t he fr ee oa t re qu ir ement wa s 25% a nd, in v iew of t he low level of the Compa n y’ s f r e e oat fol low i ng t he complet ion of Guo co G roup L i mit ed ’s genera l of fer for R a n k i n Jul y 2011, t he sha rehold in g g u ideli nes for E x ec ut iv e Di r ec tor s wer e susp ended. T he susp ens ion was l i f te d on 2 Mar c h 2015 when fr ee oat wa s com for tabl y in exce ss of 25% b ut t he g uidel i nes wer e r e -su spende d on 22 June 2016. Follow i ng a mendment to t he UK L i st i ng R u les on 3 De cember 2021 so a s t o re duce t he fr e e oat re qu i rement level to 10%, the Com m it tee deter m i ned to l i f t t he susp ension a nd re -appl y t he sha r e ow ner sh ip g uidel i nes w it h ef fect f rom 1 Jul y 2022 . Di r ec tor s’ sha r ehold i ngs a nd deta il s of unv es ted s ha r e a wa r d s a s at 30 Ju ne 2021 a nd 30 June 2022 a r e s et out i n t he t able below . A l l a wa r d s wer e ma de a s cond it iona l a wa rd s: Or d i n a r y sh a r es a s a t 30 Ju ne 2021 Ordina ry sha res a s at 30 June 2022 Unvested share aw a r d s sub jec t to p er fo r m a nce cond i t ion s a s at 30 Ju ne 2021 Unvested share aw a r d s sub jec t to co nt i nue d employ ment on ly a s a t 30 Ju ne 2021 Unvested share aw a r d s sub jec t to p er fo r m a nce cond i t ion s a s at 30 Ju ne 2022 Unvested share aw a r d s sub jec t to co nt i nue d employ ment on ly a s a t 30 Ju ne 2022 Non-E xec u t ive D i r e c t or s Ch r is Bel l 29,614 29,614 1 n/a n/a n/a n/a Lu ci nda Charles- Jon es 0 0 n/a n/a n/a n/a Che w Se ong Au n n/a 0 n/a n/a n/a n/a Ste ven E som 90,000 90,000 n/a n/a n/a n/a Susa n Ho oper 20,000 20,000 2 n/a n/a n/a n/a K a t ie Mc A l i s te r n/a 0 n/a n/a n/a n/a A lex T hu r sb y 25,000 25,000 n/a n/a n/a n/a K a r en W h it wor t h 20,000 20,000 n/a n/a n/a n/a Exe cut i ve Di re ctor s Bil l F loydd 45,000 53,282 3 369,177 0 n/a n/a Ri ch ard Harri s n/a 75,000 n/a n/a 0 186,636 Joh n O’Rei l l y 302,748 319,899 8 13,179 0 1,362,832 0 1. Pos it ion a s a t 18 Ja nu a r y 202 2 when C h r i s B el l s tep pe d do w n f r om t he Boa rd . 2. Pos it ion a s a t 31 Ja nua r y 2 022 w hen Su sa n Hoope r st epp e d do w n f r om t he B o a r d. 3. Pos it ion a s a t 31 De cem ber 2 021 w hen Bi l l F l oy dd s te ppe d do w n f r o m t he B oa r d . Dilution limits ( Unaudited ) T he DBP , LTI P a nd R I S, b ei ng t he Compa ny’ s on l y eq uit y-bas ed i ncent iv e pla n s at pr es ent, i ncor p ora te t he c u r r ent In ves t ment A ss oc iat ion g u idel ines on he ad r oom wh ich pr o v ide t ha t over a ll d i lut ion under a ll pl a ns s hould not exc ee d 10% over a ten-yea r per iod in r el at ion to t he Compa ny’ s i ssued s ha r e c apit a l , w it h a f ur ther l i m it at ion of 5% in a ny ten-ye a r per iod for exec ut i ve pla n s. T he a wa r d made t o R icha rd Ha r r is on 6 Ma y 2022 wa s g r a nt ed out side of t he Compa n y’ s LT IP (as a l lo wed for i n Ru le 9. 4. 2(2) of t he U K Li st ing Ru les) a nd w il l be sa t is ed b y ma rk et-pur ch a se d sha r es. T he Com m it t ee mon itor s t he po sit ion a nd pr ior to t he m a k i ng of a n y aw a r d con siders t he effe c t of pot ent ia l v est ing of a wa r d s to en su re t ha t t he Compa ny rem a i n s wit hi n t hes e li m it s. A ny aw a r d s wh ich a re r equ i r ed to be sa t is ed b y ma rk et-pur ch a se d sha r es a r e exclude d f rom t he ca lcu l at ions. No t rea su r y sha res w ere held or ut i l is ed i n t he ye a r ended 30 Ju ne 2022. T he cu r r ent le vel of d i lut ion, ba se d on t he ma x imu m number of s ha r es t hat cou ld ve st a s at 30 Ju ne 2022, a nd on the ba si s t ha t no sha res u nder the Compa ny’ s cu r rent equ it y-base d incent i ve pla n s a r e cu r r ent l y re qu ir e d to be sat i se d by ma rket-pur cha s ed sh a r es (it bei ng note d t h at t he C om mit tee h a s not yet m ade a de cis ion in r elat ion to the sa me al t hough t he c ur rent ex p ec t at ion is t hat aw a r d s wou ld be sat is e d w it h ma r ket-pur ch a se d sha r e s ) is se t out below: Tota l a wa r ds u nde r di s cr et io na r y scheme s a s at 30 Ju ne 2022 Per cent a ge of i s sue d sha re ca pit a l a s at 30 Ju ne 2022 Ma xi mu m number of sh a r es nee de d to sat isf y ex is t i ng u nve ste d awa rd s a s at 30 Ju ne 2022 4,644,856 1 1.02% T ot a l number of sha res i ssued i n r es pe c t of awa rd s g ra nted a f ter 30 Ju ne 2 01 2 Nil 0% To t a l 4,644,856 1.02% 1. For t h e av oid a nc e of doub t, t hi s nu mber r e e c t s t r a nc he 2 a nd t r a nc he 3 of t he 2017 /18 LT I P , wh ic h w i l l ve s t in O c t ober 2 022 a nd Oc tob er 2 02 3 r esp e c t iv el y . For f u r the r in f or m at ion, ple a se s ee p a ge s 12 4 a nd 1 25 o f ou r 2021 A nnu a l Re po r t a n d Acc ou nt s. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 137 Relative imp ortance of spend on pay ( Unaudited ) T he ta ble below show s t he ex p end it u re a nd perc enta ge c ha n ge i n ov era ll sp end on employee r emuner at ion a nd d i st r ibutions p a id to sha reholder s t h r ough t he d iv idend paid a nd sh a r e buyb ack s i n t he ye a r (and pr ev ious yea r) . 2021 /22 2020/21 Percent ag e cha nge O ver a l l e xp end it u r e on pay 1 89.9 £166.6m 14% Div idend paid i n t he yea r Nil Nil n/a Sha r e buybac k Nil Nil n/a State me nt of ch ang e in p ay of a ll Di re ctor s com par ed wi th ot he r emp loyees ( U na udi ted ) T he table below se ts out t he per cent ag e cha n ge in e ach Di r ec tor ’ s ba se sa la r y/fee, benet s a nd a n nua l bonus a mount s for t he yea r ended 30 Ju ne 2022 ver sus pr e v ious ye a r, along side t he aver a ge c ha n ge i n g r oss e a r n i ng s for a l l U K employe es a cr os s t he G roup. T he ‘ s a l a r y’ a nd ‘b enet s’ colum n re ec t s t h at t he Dir e c tor s volunte er ed a re duct ion i n t hei r res pe c t ive sa la r y/fee for the per io d fr om 1 Apr i l 2020 unt i l 15 Aug us t 2020, wit h the ma jor it y of such r ed uct ion apply ing to t he 2019 / 20 na ncia l yea r versu s t he 2020/21 na ncia l yea r (please se e foot not es to t he table for fu r t her in for m at ion): Directors Ye a r 1 Sala r y 2 Bene t s 2 Bonu s Ch ief E xe cut ive 2021/22 vs 2020/21 3.5% 4.2% n/a 2020/21 vs 2019/20 2.4% -1.8% n/a 2019/20 vs 201 8/19 -5.0% -3.8% n/a Ch ief Fi na nc ia l O f c er 4 2021/22 vs 2020/21 -21.4% -31.0% n/a 2020/21 vs 2019/20 4.4% 11.9% n/a 2019/20 vs 201 8/19 470.0% 496.6% n/a Ch r is Bel l 2021/22 vs 2020/21 -43.9% n/a n/a 2020/21 vs 2019/20 0.6% n/a n/a 2019/20 vs 201 8/19 -3.2% n/a n/a Ste ven E som 2021/22 vs 2020/21 2.7% n/a n/a 2020/21 vs 2019/20 2.5% n/a n/a 2019/20 vs 201 8/19 -5.0% n/a n/a Susa n Ho oper 2021/22 vs 2020/21 -40.1% n/a n/a 2020/21 vs 2019/20 2.4% n/a n/a 2019/20 vs 201 8/19 -3.1% n/a n/a K a t ie Mc A l i s te r 2021/22 vs 2020/21 477.5% n/a n/a 2020/21 vs 2019/20 n/a n/a n/a 2019/20 vs 201 8/19 n/a n/a n/a A lex T hu r sb y 2021/22 vs 2020/21 2.8% n/a n/a 2020/21 vs 2019/20 27.2% n/a n/a 2019/20 vs 201 8/19 107.8% n/a n/a K a r en W h it wor t h 2021/22 vs 2020/21 4.7% n/a n/a 2020/21 vs 2019/20 61.7% n/a n/a 2019/20 vs 201 8/19 n/a n/a n/a Che w Se ong Au n 5 2021/22 vs 2020/21 n/a n/a n/a 2020/21 vs 2019/20 n/a n/a n/a 2019/20 vs 201 8/19 n/a n/a n/a A v era ge employ ee s 3 2021/22 vs 2020/21 8.6% 9.3% -44.0% 2020/21 vs 2019/20 7.4% -7.7% 1.6% 2019/20 vs 201 8/19 -10.32% -10.32% -10.32% 1. E xc lude s a ny N on-E x ec ut ive D i re c t or s app oi nt ed d u r i ng 2 021 / 22 . 2. T he E x ec ut ive a nd N on-E x ec ut ive D i re c t or s vol un te er e d a 20% r e duc t ion i n s a l a r y w it h e f fe c t f r om 1 A pr i l 20 20 u nt i l 1 5 Aug u s t 202 0. T he t abl e abo v e re e c t s suc h volu nt a r y r ed uc t ion . Con t r ac te d s a l a r ie s con t i nued t o be u s ed f or t he pu r pos es o f in su r e d be ne t s. 3. Ca l cu l at ed o n ba si s of a l l U K e mplo ye es , i nclud ing t he CEO, w h ich w a s de ter mi ne d to pr o v ide t he mos t mea n i n g f u l c ompa r iso n, a s no emp lo ye es a r e e mplo ye d b y T he R a n k G r oup Plc. F or 2018 / 19, ind i v idu a l co mpe ns at ion element s a re not r e ad i l y a va il able t o comp a r e s epa rat el y a s pr e v iou sl y d is c los ed o n pa ge 1 2 3 of t he 2 020 A n nua l Rep or t a nd Acc ou nt s. 4. T he g u r es f or t he C h ief F i na n ci a l O f cer a re t he s u ms of s a l a r ie s, b ene ts a nd bonu se s r ec ei ve d b y t he for mer a nd c u r r ent C FO s. 5. C hew S e ong A u n do es no t r ec eiv e a n y fe es i n r es pe c t of h i s r ole on t h e Bo a r d. Annual Report on Remuneration Continu ed The Rank Group Plc Annual Report 2022 138 CEO pa y rat io ( Un aud ite d ) T he Com m it t ee c onsider ed t he appr opr i ate c a lc ul at ion appr oac hes for t he CE O pa y ra t io a s set out i n t he 2013 Reg ula t ions. C onsi stent w it h t he approach t a ken for 2021, for th i s yea r it has c hosen O pt ion C, as it bel ie ves t his t o be t he mos t appr opr iat e due to t he cha lleng es of c a lcu l at i ng f ul l-t i me- e qu iv a lent pay f or UK employ ees a s a r e su lt of t he f u rlough sc heme and d i f ferent re t u r n-to -work a r r a ng ements for d i f fer ent employe e popu l at ions. O pt ion C ena bles t he Compa n y to us e da t a ot her t h a n, or i n add it ion to, gender pay gap in for mat ion to identi f y the t h r ee U K employee s as t he bes t equ iv a lent s of the 25t h , 50 t h a nd 75th per cent i les. Ha v i ng ident i e d t hese col lea g ues ba s ed on pay a nd bene t s as at 5 Apr i l 2021, the tot a l r emuner at ion is ca lc u lat ed on a sim i la r basis a s t he Ch ief E xec ut i ve sin gle tota l g ur e of remu nerat ion. T hi s req u ir es: – St a r ti ng w it h collea g ue pay t h at wa s ca lcul at ed ba se d on act u a l ba se pa y , b enet s, a l low a nce s, bonus a nd long-term i ncent ive s for the 12 mont h l y a nd 13 four-we ek l y pay rol l s w it h i n t he fu l l n a nci a l yea r . Ea r ni ng s for par t-ti me col leag ues ar e a n nua l is ed on a f u l l-t ime - eq ui va lent ba si s to a l lo w equ a l compa ri son s; – Add i ng i n t he employer p ens ion cont r ibut ion; – Fut u r e yea rs’ rat ios wi l l b e d is clos ed bu i ld i ng i ncr ementa ll y to show t he rat ios o ver a ten-ye a r per iod; a nd – T o en sur e t he da ta acc u r atel y re ec t s ind i v idua ls at each qua r t i le, t he single g u r e va lues for ind i v idua ls im med i atel y abov e a nd below t he identi ed employe e at each qua r t i le were a l so r ev iewed . T he table below show s t he rat io of Ch ief Exe c ut ive pa y in 2021 / 22 , usin g t he single tot a l g u re r emuner at ion as d is clos ed on pag e 131 to t he compa rable, ind ic at iv e, f ul l-t ime- e qu iva lent tota l r ew a r d of thos e col lea g ues whose pa y is ra n k ed at t he 25t h, 50 t h and 75th per cent i les i n ou r UK w ork for ce. Ye a r 25t h perc enti le ra t io 50 t h perc enti le ra t io 75t h perc enti le ra t io 2022 g u res (Op t io n C ) 30:1 28:1 23:1 2022 g u res (pro for ma) 1 (O p t io n C ) 32:1 29:1 25:1 2021 g u re s 1,2 (O p t io n C ) 39:1 38:1 30:1 2021 g u re s (pro for m a) 1,3 (O p t io n C ) 34:1 32:1 25:1 2020 g u r es (O pt io n A ) 32:1 31:1 24:1 20 2 1/22 Sal ar y 2021 /22 Tota l pa y a nd b ene t s CEO £503,750 £584,760 25t h p erc ent i le £1 8,195 £19,198 50 t h p erc ent i le £20,198 £21,198 75th per cent i le £22,822 £24,903 1. T he 201 3 Re g u la t ion s r eq u i re t he fu l l v a lue o f t he 2017/18 LTI P blo ck a wa rd to b e i ncl ude d in t he 2021 g u r es. I f t he CEO s i ngle g u r e fo r 2021 i s ad ju st ed t o inc lude o n ly t he r st t r a nc he of t he 2017 /18 LT I P (on t he ba si s t h at i t ac t u a l l y ve st s i n e qu a l t r a nc he s ov er t h r e e ye a r s), th i s wou ld h a ve t h e im pac t on C E O to ta l pay a nd b ene t s for 2 021 i nd ic at e d in t he 2021 pr o fo r ma d isc los u re . If t he CE O si ngl e g u r e f or 202 2 is s im i l a r ly a d jus te d to i nc lude o n ly t he sec ond t ra nc he of t he 2017 / 18 LT IP , t h i s wo u ld ha v e t he i mpa c t on t he C EO p a y ra t io fo r 202 2 in d ica te d i n t he 2 022 pr o f or m a d is cl os ur e. 2. T he 202 1 g ur es h a ve b ee n re s t at ed t o in clud e t he ac t u a l v a lue o f t he r s t t r a nc he at v es t i ng o n 1 Oc t obe r 2021 a nd t wo -t hi r d s of t he f u l l v a lue o f t he 20 17 /18 bl oc k LTI P ve s t i ng b y r efe re nce t o 30 Ju ne 2 021. 3. T he 2021 p ro f or m a g u r es h av e be en r e st a te d to r e e c t t he a c t ua l ves t i ng v a lue of t he r st t r a nc he of t he 2017 /18 b loc k aw a r d on 1 O c tob er 2 021. Gender pay gap ( Unaudited ) T he Com m it t ee r e v iew ed a nd appr o ved R a nk ’s Gender Pa y Ga p Repor t, wh ich c a n b e found a t w w w.ra n k.com. T he repor t, i n l ine w ith re g u lat ions prov ides gender pay gap ca lcu lat ions as at 5 A pr i l 2021. In Apri l 2021 a sign i c a nt propor t ion of col lea g ues wer e f ur loughed in r es pons e to n at iona l lockdow ns a nd ot her r es t r ic t ions t hat r educe d t r ad i ng. Th is i mpac t ed t he gender p ay g ap ca lcu lat ions for the sec ond conse c ut ive ye a r as t he G o ver n ment Equ a l it ies Of ce con r med th at t he f u rlough scheme is cla s si e d as tempor a r y leav e, so where c ol leag ue sa la r ies a re not topp ed up to 100%, t hey wer e excluded f rom t he pa y ca lcu lat ions, but included i n t he b onus ca lcul at ion s, where a pplic able. T o put t h i s int o per sp ec t i ve i n ter m s of t he re su lt s t h at wer e r ev iewed b y t he C omm it tee, a s a r esu lt of b ei ng f u rloughed , 93% of collea g ues wer e e xcluded f r om t he gender pa y c a lc ul at ion s. T he publishe d res ul ts sho w mea n a nd medi a n gap i ncr ea se d sl ight l y by 4.6 % a nd 8.7% r esp ec t ively . Howe ver, t he Comm it t ee doe s not bel ieve t hese r esu lt s a r e t r ul y re pre sent at i ve of t he sit u at ion, w it h onl y 4 41 qua l i f y i ng col lea g ues f r om a m a x imum t ot a l of 6,456 col lea g ues included i n t he pay gap a n a l ys is, re pre sent i ng jus t 7% of t he work for ce. T he bonus gap a na l ysi s i ncluded a l l employ ee s. T he mea n gender b onus gap wa s br oa d ly c onsi stent y ea r - on-yea r a nd the med ia n gender bonus gap sig n i ca ntl y impr o ved f r om 22.5% to 5.2%. W h i ls t t he r esu lt s for t his y ea r m ay b e v ie wed a s l a r gel y a rbit r a r y , t he C omm it tee r ema ins c om mit ted t o doin g ever y t h i ng t h at it c a n to r educe a n y gender pa y a nd bonus g aps a nd a dd r ess t he ba la nce of men a nd women employe d i n r oles acr os s t he va r ious job levels w it h i n t he G roup. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 139 Committee activity during the y ear ( Unaudited ) Mat ters d i sc us se d by t he Comm it tee du r i ng t he yea r i nclude t he follo w i ng: – Fi na lisi n g t he r u les for a new r e co ver y incent i ve sc heme for Ex ec ut iv e Di r ec tor s (f u r t her to sha reholder consu l ta t ion, but subjec t to sha reholder appr ova l at t he 2021 A n nua l G ener a l Me et i ng) a nd senior ma nag ement a nd deter m i n i ng t he p er for m a nce mea su r es a nd t a r get s for t he same; – A n a l ysi s of sha reholder vot i ng at t he 2021 An nua l Gener a l Mee t i ng on t he pr opo sed ne w r emunera t ion pol ic y a nd a n nua l remu nerat ion repor t; – Apr i l 2022 xe d pa y re v iew; – 2020/21 a nd 2021 / 22 a nnua l b onus outcomes; – 2022 /2 3 a n nua l b onus pla n s t r uct u re; – 2021 /22 LT IP g r a nt p er for m a nce mea su r es a nd ta r ge t s; – 201 7 /18 a nd 2020/ 21 L T I P gr a nt per for ma nce; – Remunera t ion of t he Ch a i r , i ndep endent Non-Exe c ut ive D i r ec tor a nd E xecut ive Com m it tee member s appoi nte d du r i ng 2021 / 22; – Cor porate gover na nce and reg u lator y mat ters; – E xec ut i ve Di r ec tor sh a r eholdi ng g u idel ine s a nd the Compa n y’s f r e e oat posit ion; – Rev iew a nd appr ov a l of t he a n nua l r emu nerat ion repor t; – Rev iew a nd appr ov a l of t he Compa ny’ s G ender Pa y G ap Rep or t ; a nd – Rev iew i ng t he Com m it tee’ s ef fe c t ivene ss. Advisers to the Commit tee ( Unau dited ) T he Com m it t ee h a s acce ss to e x ter na l i n for ma t ion a nd re se a r ch on ma rket d at a a nd t r end s f r om indep endent consu lt a nts. T he Com m it tee wa s ad v i se d by t he UK E xe cut i ve C ompens at ion prac t ice of A lv a r ez & Ma r s a l (‘ A & M’ ) as e x ter na l r emuner at ion ad v is er s to t he Com m it t ee. A for m a l tender pr oc es s wa s conduc ted i n Ma rch 2 022, pu r sua nt to wh ich t he Com m it t ee de ter m i ned to c ont i nue to work w it h A & M a s it s r et a i ned ad v i sor on r emuner at ion. A & M a r e sig n ator ies t o t he Remuner at ion Con su lt a nt s’ Code of C onduct , wh ich re qu i re s t heir ad v ice to be i mpa r ti a l, a nd t he y hav e con r me d t heir compl ia nce w it h the Co de to the Com m it tee. Du r i ng t he yea r, the Com m it tee r eques te d A& M to adv ise on a l l a sp ec t s of r emunera t ion prac t ice, includi ng b ut not li m ite d to t he pro v i sion of bench ma r k i ng d at a , g uid a nce on for t hcom in g cha nges to a nd applica t ion of remuner at ion r elat ed r eg u l at ions a nd insi ght on ma rke t prac t ice s. A& M wa s pa id fees tot a ll i ng £ 5 1,7 6 4 for ser v ices pr ov ide d to t he Comm it tee dur ing t he yea r (fees ar e ba se d on hour s spent). A& M d id not pro v ide a ny s er v ices ot her th a n ad v ice i n r ela t ion to remu nerat ion pract ice to t he Gr oup dur ing t he perio d under r ev iew and t her ea f ter t he Com mit tee is sa t is ed t h at t he ad v ice pro v ided wa s i ndependent. Committee ev aluation ( Unaudited ) It is i ncu mbent on t he Bo a r d to en sur e t hat a for m a l a nd r i gor ous r ev iew of t he ef fec t iveness of t he C om mit tee i s conduct ed e ach ye a r. Ou r pr og r es s ag a i ns t la s t yea r’ s ac t ions, a s wel l a s t he outcomes fr om t his y ea r ’ s e va luat ion, a r e set out b elow . Out com es fro m 202 0 /21 review Agreed actions Pro g r es s m ade d u r i ng 2 021 / 22 Cont i nui ng to r e v ie w t he a l ig n ment of ma n ag ement incent i ves w it h st r at eg y , pa r tic u la r ly a s t he Compa ny re co ver s f r om t he imp ac t of t he pa ndem ic. T he Retent ion I ncent iv e Sc heme was i nt r o duced to help ens ur e sen ior ma nag ement is re t a i ned a nd incent iv is ed to del i ver a s t he Compa ny re cov er s f r om t he impac t of COV I D - 19 on t he busi nes s. Never t heless, t he Comm it tee note s t ha t t h is a rea c ont inues to b e a work i n pr og r ess. Ma n ag i ng t he tr a n sit ion bet ween t he legac y 201 7 / 18 awa rd to t he new a nnua l L T I P a nd, subje c t to sh a r eholder appro va l, t he g ra nt of the prop ose d r ec over y i ncent ive sc heme. T h is w as s ucces sf u l l y completed w it h g ra nts ma de under t he Retent ion Incent i ve Sc heme dur i n g t h e y e a r. Cont i nui ng to c onsider t he a l ig n ment of sha r eholder v iew s a nd t he nee d to r et a i n, mot i vat e a nd incent iv is e ma n ag ement a nd ensu r e appr opr ia te cha lleng e to pr opos a l s ma de a nd ad v ice r ec eive d. T h is r ema ins a n a re a of ongoi ng r e v iew, but n o ta bly t he appr oac h to t he a n nua l bonus ha s been r e v i site d t h is ye a r a nd a lso i ncludes E SG t a r g et s i n rel at ion to 15% of t he ma x imum b onus oppor tu n it y for E xec ut i ve Di r ec t or s. Annual Report on Remuneration Continu ed The Rank Group Plc Annual Report 2022 140 Out com es fro m 2021/ 22 r eview T h is ye a r’s Comm it tee’ s ev a lua t ion exer ci se, fa ci l it ate d ex ter na l l y b y L i nts toc k L im it ed conclude d t ha t t he Com m it tee cont i nues to opera te ef fec t ively . T he pro ces s for such rev iew is set out on page 104. Hav i n g consider ed t he nd i ngs , we ag re e d t hat ou r foc us for t he for t hcomi ng ye a r shou ld be, i n pa r t icu la r: 1. Rev iew i ng a l ig n ment of ma nag ement incent iv es w it h st r ateg y , pa r t icu la rly i n l ight of t he re f re sh of t he C ompa ny’s st ra teg ic pil la r s th is year. 2. R ev iew in g appr oach t o st a k eholder engag ement f rom a r emuner at ion per sp ec t ive. 3. C onsider i ng w ay s i n wh ich to f ur ther embe d E SG met r ics in r e wa r d . Statemen t of shareholder voting ( Unaudited ) T he ta ble below show s t he vot ing outcome of t he D ir e c tor s’ Remunerat ion Pol ic y a nd t he 2020/21 Di re c tor s’ Remunera t ion Repor t at t he Oc t ober 2021 A n nua l G enera l Meet ing. V o tes a r e sho w n bo t h i ncludi n g a nd exclud i ng t he C ompa ny ’ s ma jor it y sha reholder: Oct obe r 2021 – Appr oval of Dir ect ors ’ Remun era ti on Pol icy No. of vo te s ‘For ’ a nd ‘Discretionar y’ % of vot es c a s t No. of vo te s ‘ Aga inst’ % of vot es c a s t T ot a l no. of vot es c a s t % of tot a l sha r eholders el ig ibl e to vo te No. of vo te s ‘W it h hel d ’ 1 Includ i ng m ajor it y sha reholder 395,127,965 90.52 41,372,471 9.48 436,500,436 93.18 29,918 E xclud i ng ma jor it y sha r eholder 132,162,051 76.16 41,372,471 23.84 2 173,534,522 84.46 29,918 1. A vote ‘w it h held ’ i s not a v ot e i n la w. 2. T he C om m it t ee n ote d t h at w h i l st o ver 9 0% o f a l l vo t i ng s ha reho lder s v ot ed f or t he ne w Po l ic y , o v er 20 % of vo t i ng s ha r e holde r s exc lud i ng t he ma jor it y sh a r ehol der vot ed a g a i n st it . T he o n ly s ubs t a nt ive c ha n ge t o t he P ol ic y f r om t he Remu ner at io n Pol ic y a ppr o ve d t he p re v i ous y ea r (in N ov emb er 202 0) wa s t he inc lus ion of t he Re co ver y I ncen t iv e S chem e. T he C om m it tee r e ec ted on t he leve l of vo te s a ga i n st a nd conc lude d t h at t h i s r em a i ne d a n app r opr i at e one - of f me ch a n i sm t o a l ig n t he in ter e st s of E xec ut i ve D i r ec t or s w i t h bu si ne ss s t r at eg y a nd sh a r ehol der i nt er es t s i n ex cep t ion a l c i r cu m s t a nce s co m in g out o f COV I D -19 and i t wa s s at i s e d t h at it ha d appr o pr i ate ly e ng a ge d w it h majo r sh a r ehol der s i n r es pe c t of t h e pr opo s a l, a nd ta k en t h ei r fe ed bac k i nto a cco u nt. I t shou ld a ls o be no te d t h at , a s a r es u lt of Comp a n y pe r for ma nc e ag a i n st t he cha lle ng i ng na nc ia l ta r g et s s et b y t he C om m it tee , t he C h ief E x ec ut ive’s awa r d h a s l ap se d. Oct obe r 2021 – 2 021 an nua l rep or t on D ire ctor s’ re mun era tio n No. of vo te s ‘For ’ a nd ‘Discretionar y’ % of vot es c a s t No. of vo te s ‘ Aga inst’ % of vot es c a s t T ot a l no. of vot es c a s t % of tot a l sha r eholders el ig ibl e to vo te No. of vo te s ‘W it h hel d ’ 1 Includ i ng m ajor it y sha reholder 432,954,734 99.19 3,533,808 0.8 1 436,488,542 93.18 41,8 12 E xclud i ng ma jor it y sha r eholder 169,988,820 97.96 3,533,808 2.04 173,522,628 84.45 41,8 12 1. A vote ‘w it h held ’ i s not a v ot e i n la w. Du r i ng t he 2021 /2 2 na nc ia l ye a r, t he Cha i r of the Com m it t ee eng ag ed w it h ou r major sh a r eholders (repr es ent i ng 92.18% of sha res as a t 30 June 2021) in r elat ion to the i nt r oduc t ion of t he one- of f Re cov er y Incent i ve Sc heme. Feedbac k f r om sha r eholder s wa s t a ken into acc ount when na li si ng t he scheme. Implementation of policy in 20 2 2/ 23 ( Unaudited ) Salaries Sa l a r ie s w i l l be r e v iew ed du r i ng t he yea r w it h t he cu r r ent ex pe c t at ion t h at a n y cha nges w i l l b e ef fe c t ive 1 A pr i l 202 3. Cu r r ent ba se sa l a r ie s a r e as f ollo ws: – John O’Rei l ly – £ 5 1 5,00 0 – R icha rd Ha r r is – £353,0 0 0 Pension polic y T here w il l be no c ha n ge to p ension a r ra ng ements: – John O’Rei l l y – 10% of contr ac te d sa la r y ( less lo wer ea rn i ng s l i m it) – R icha rd Ha r r is – 3% of contr ac te d sa la r y ( les s lower ea r ni ng s l i m it), sa ve t h at w it h effe c t f r om 1 Ja nua r y 2023, Joh n O’Rei l l y’ s p ay ments in l ieu of pen sion w i l l be r e duced f r om 10% of sa la r y ( less t he lower ea r ni ng s l im it), such 1 0% h av ing b een a g r ee d u nder hi s ser v ice a g r eement when he joined R a n k , to t he rate a va ilable to t he major it y of t he w ider work for ce (cur rent l y 3% ). The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 141 Annual bonus T he ma x imum b onus potent ia l for t he Chief E xec ut i ve is 150% of sa l a r y , a nd 12 0% of sal a r y for t he Ch ief Fin a ncia l Of c er . Per for m a nce w i l l conti nue to b e base d on s t r etc h in g ta r ge t s. Fin a ncia l ta r get s repr es ent i ng 85% of the ma xi mu m bonus o pp or tu n it y wi l l be ba sed on adjus te d ea r n i ng s before i ntere st a nd ta x and non- na nc ia l mea su r es to repr esent 15% of t he ma xi mum bonus oppor t un it y w i l l be ba sed on spe ci c Env ir onment a l , Soc ia l and G ov er na nce (E SG ) t a r ge ts. T h i s is in add it ion to t he cont inued appl icat ion of a sa fer g a mbli ng a s se ssment wh ich cou ld nega t ivel y i mpac t t he si ze of a ny bonus aw a r d ba se d upon wea k ness es i n cont r ol s ys tem s, lack of pr og r es s a ga i n st ke y i n it ia t ive s in t he yea r or a s a con seq uence of enfor cement ac t ion b y t he Ga mblin g Com m is sion. Dis clos ur e of t he t a r ge t s is con sidere d com merc ia ll y sen sit iv e a nd t her efore w il l b e d isc lose d r et r o spe c t ivel y i n nex t ye a r ’ s r epor t. A ny b onus paya ble in exces s of 1 0 0% of sa la r y for t he Ch ief Ex ec ut iv e a nd 80% of s a l a r y for the Ch ief Fi na ncia l Of cer w i l l be defer r ed into s ha r e s under t he deferr e d bonus pla n for t wo ye a r s. T he r ema inder w i l l be p ay able in c a sh. Long- term incentive It is a nt icipat ed t hat a n a n nua l awa r d w i l l b e ma de to E xe cut ive Di r ec t ors i n 2022 / 23. 4 0% of t he aw a r d w i l l ve st b y r efer ence to rel at i ve tot a l s ha r eholder r et u r n , 30% w i l l ve st b y r eference t o under ly ing e a r n i ng s per sh a r e g r ow t h a nd 30% w i l l v est b y r efer ence to st r ate g ic measu r es. It is intended t h at t he Ch ief E xec ut i ve w i l l re ceiv e a n awa r d at 20 0% of sa la r y a nd t he Ch ief Fin a nc ia l Of cer w i l l re cei ve a n a wa r d a t 150% of sa la r y , w it h such aw a r d s to be m ade w it hi n si x we ek s of t he da te of t h is r ep or t . T he per for m a nce cond it ions w i l l be ba s ed on per for m a nce i n t he 2024 /202 5 na nc ia l ye a r. T he a wa rd w i l l ves t, subjec t to mee t i ng t he per f or ma nce ta r ge t s a nd cont i nued employ ment , on t he t h i rd a nn iv ers a r y of g ra nt. V es t i ng w il l t a ke i nto con sidera t ion a ny c u r r ent or impend i ng s a fer g a mbli ng s a nc t ion a nd R a n k ’s suit abil it y to oper at e. T he st r at eg ic ta rge ts a re de emed com merc ia ll y sen sit iv e a nd w i l l be d isclos ed a t t he t i me of vest ing. We i g h t i n g T hresh ol d target Stretch ta rget T h r es hold v es t i ng ( % of ma x) T SR 4 0% Me d i a n Out per for m med ia n by 2 5% 10% Underly i ng E P S 30% 11. 8 p 18.3p or higher 7. 5 % 10% Gr oup EBI T M a r g i n (% ) 2 . 5% Str ateg ic M ea su res 10 % I nterac t ive NGR (£m) 2 . 5% 10% V enues NGR (£m) 2 . 5% To t a l 10 0% 2 5% Non-Executiv e Director fees Non-Exe c ut iv e Di r ec tor a nnua l ba s e a nd add it ional fe es ef fec t iv e 1 Apr i l 2022 c ompr ise: Fee Bo ard Chai r £160,000 Ba se Non-E xe c ut ive a nnua l fe e £50,000 Audit C om m it t ee C ha ir £9,000 Remunera t ion Com m it t ee C ha ir £7,500 ES G a nd Sa fer Ga mbl in g Com m it tee C ha i r £3,500 Sen ior Indep endent Di r ec tor £2,500 1. T he ab ov e fe es h a ve b ee n u nch a n ge d for mor e t ha n si x y ea rs (ot her t ha n t he f ee f or C ha i r of t he ES G & Sa fer Ga mbli n g Co m m it t ee w h ich h a s it s el f b ee n unc h a ng e d si nce t he Com m it tee w a s es t abl i she d i n 201 8). Ap pl ica t ion of i nc r ea s e s to i nde pen dent N on-E x ec u t iv e Di r e c tor f ee s ap pr ov ed b y t he Compa ny’s Fi na nce Com m i t t ee to ap pl y f r om 1 Ap r i l 202 0 wer e no t i mpleme nte d due t o COV I D -19 . T he fee s wer e r e v ie we d a ga in du r i n g t he y ea r a nd th e fol lo w i ng c h a ng es w er e ap pr ov ed b y t he Remu ner a t ion C om m it tee i n r es pe c t of t he Cha ir a nd b y t h e Fi n a nce C om m it te e in r e sp ec t o f t he Non- E xe c ut i ve D i r ec t or s, b ut we re no t i mpleme nte d due t o t he per for m a nce o f t he C ompa ny: (i) C h a i r : £175,00 0 (9 %) , ( i i) B a se No n-E x ec ut ive a n nu a l fe e: £ 52 ,0 0 0 (4 %), (ii i ) Remu ner a t ion C om m it tee C h a i r: £ 9,00 0 ( 20%), (v) ES G a nd S a fe r Ga mbli n g Com m i t te e C ha ir : £9,0 00 (1 57%), and (v i ) Se n ior I ndep end ent D i re c t or : £6 ,0 00 (14 0%) . N o ch a ng e wa s p ro po se d to t he Aud it C om m it t e e Ch a i r fe e. T he d a te fo r im plemen t at ion o f suc h in cr e a se s w i l l b e con sid er ed a g a i n i n Nov emb er 2 022 , sa ve i n r e sp ec t o f t he C ha ir, wher e t he d a te for i mp lemen ta t ion w i l l be 1 A pr i l 2 02 3. Annual Report on Remuneration Continu ed The Rank Group Plc Annual Report 2022 142 T he Di re c tor s pre sent t heir r epor t toget her w it h t he audit ed con sol idat ed n a nci a l st at ements for t he yea r ended 30 June 2022. T he Compa n ies Ac t 200 6 (‘CA 200 6’), the La r g e a nd Mediu m-si ze d Compa n ies a nd G roups (Acc ount s a nd Repor ts) Regu l at ions 20 08, t he Compa n ies ( Di sclo sur e of Audit or Remunerat ion a nd Liabi l it y Lim it at ion A g r e ements) Re g u lat ions 2008 , t he Fin a nci a l Repor t in g Cou nci l ’ s U K Cor p orat e G over na nce Cod e ( Jul y 2018) , t he Fi na ncia l Conduc t Aut hor it y’ s (‘FC A ’ ) Li st ing Ru les (‘L R’ ) a nd t he FCA ’ s Dis clos ur e Ru les a nd Tra nsp a r enc y Ru les (‘D T R’ ) conta i n ma ndator y d isc losu r e req u ir ement s in rel at ion to t h is A n nua l Repor t in r esp ec t of t he yea r ended 30 June 2022. T he Di re c tor s’ Repor t shou ld be rea d in conju nc t ion wit h the St r ateg ic Repor t. St r ateg ic Repor t di sclo su re s – In for ma t ion t hat t he Boa rd cons iders to be of st r ate g ic impor ta nce wh ich wou ld ot her wi se nee d to be d isc lose d in t he Di r ec tor s’ Repor t has be en included i n t he St ra teg ic Repor t as per m it ted by se c t ion 41 4C(11) of t he CA 200 6. Reference s to where t h at in for mat ion ca n be fou nd ar e pr ov ided in t he index below. In f or m at io n re q ui r e d i n t he D i re c to r s’ Rep or t wh ic h ha s b ee n d is cl os ed w it h in t he St r at eg ic Re po r t Lo c at io n in S t r at eg ic R ep or t P ag e nu mbe r Busi nes s desc r ipt ion Ou r busi nes s Inside cov er and 14 Busi nes s objec t iv es, st rateg ie s and l i kel y fut ur e developments Our st r ateg y 40 to 51 52 to 53 Cor p ora te re spon sibil it y: empl o ye es a nd com mun it y (i ncludi ng h i r i ng, conti nui ng employ ment a nd tr a i ni n g, ca r e er development a nd promot ion of d isa bled per son s ) Ou r appr oach to E SG 54 to 71 Div er sit y C ol lea g ues 61 Di v idend s Ch a i r’ s let ter 13 St a keholder enga gement St a keholder enga gement 35 to 39 G oin g concer n a nd v iabi l it y sta tement Compl ia nce st a tements 82 to 83 Gr e en house ga s emi ssion s En v i r on ment 69 to 70 Pa r tic u la r s of imp or t a nt e vent s a f fec t ing t he Compa n y and its subsid ia r y u nder t a ki n gs occ u r r ing a f ter the yea r end Ch a i r’ s let ter a nd Ch ief Exe c ut ive’ s r ev iew 13 an d 16 to 25 Pr incipa l risk s a nd u ncer ta i nt ies R isk ma n ag ement 74 to 8 1 Pr ot s CFO’ s r e v iew 26 to 27 Rese a r ch a nd dev elopment Our st rateg y Cus tomer s a nd cus tomer in sight s St a keholder enga gement 40 to 51 55 to 59 35 to 39 Dis clo sure s req uire d un de r LR 9.8. 4 R For the pur pos es of LR 9 . 8.4C R, det a i l s of the ex i st ence of the cont r oll i ng sh a r eholder rela t ionsh ip ag r eement , re qu ir e d to be di sc lose d in acc ord a nce w it h LR 9 .8.4 R, c a n be found on pag e 1 4 4. T her e a re no ot her di sc losu re s re qu i re d under t h i s Lis t i ng Ru le. Directors T he Di re c tor s who ser ved dur ing t he per io d under re v ie w a re: Na me P os it ion Notes Ch r i s Bel l Sen ior Independent Di r ec t or St eppe d dow n f r om t he Boa r d on 18 J a nuar y 2022 Lucind a Ch a rles -Jones Non-E xe cu t iv e Di r ec t or App ointe d to t he Boa r d 22 June 2022 Che w Seon g Aun Non-E xe c ut i ve Di r e c tor Ste ven Es om Non-Exe c ut i ve Di r e c tor Bil l Floyd d Ch ief Fin a nci a l Of cer S teppe d dow n f r om t he Boa r d on 31 D ec ember 2021 Ri ch ard Harri s C h ief Fi na nc ia l O f c er A ppoi nte d to the Bo a r d on 1 May 2022 Susa n Hoop er Non-E x ec ut ive Di r e c tor Ste ppe d dow n f r om t he Boa r d on 3 1 Ja nua r y 2022 K at ie McA lis ter Non-E xe c ut i ve Di r e c tor John O’Rei l ly C h ief Exe c ut ive A lex T hur sby Cha ir K a r en W h it wor t h Non-Ex ec ut iv e Di re c tor a nd Sen ior Indep endent Dir e c tor Appoi nte d Sen ior Independent Di r ec t or on 18 Ja nua r y 2022 Direc tor s’ R eport The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 143 Inc orp ora tio n and reg iste re d of ce T he Ra n k G roup Plc is incor p orat ed i n Engl a nd a nd W a les u nder compa ny r eg is t r at ion number 031 4 0769 . It s reg ister ed of ce is at TOR , Sa i nt-C loud W a y , Ma iden head SL 6 8BN. Stock mark et listing T he ord i na r y sh a r es of t he Compa ny ha ve be en li ste d on the Of ci a l Li st a nd t r aded on t he ma i n ma rk et of t he London Stock E xc ha n ge for lis te d sec u r it ies si nce 7 Oc tober 1996 (Sha re Co de: R NK a nd ISI N: GB0 0B1L 5QH97 ). Th is is cl a ssi ed a s a prem ium l is t i ng. T he sha re reg i st ra r is Eq ui n it i L i m ited . Share capital T he Compa ny ’ s aut hor is ed sh a r e capit a l a s at 30 June 2022 w a s £180m (£180 m as at 30 June 2021 ), div ided into 1, 296,0 0 0,00 0 ord i na r y sha res of 13 8 / 9 p each. T he ord ina r y sh a r es a r e li st ed on t he London Stock E xc ha n ge a nd ca n be held in cer ti cat ed or uncer t i c ate d for m. T her e were 4 68,429,5 41 sha r es in is sue at t he per iod end ( 4 68,429,5 41 as at 30 June 2021 ), which wer e held b y 9,296 r eg is ter ed sha reholders (9,569 as at 30 June 2021 ). Det a i ls of movements i n issue d sha r e capit a l ca n be found in note 25 of t he Fin a nci a l Statements. Ra nge Tota l n o. of registered sha r eholder s % of holder s Tota l n o. of sha res % of is sue d sha re capit a l 1 – 1,000 8,007 86.13 1,419,858 0.30 1,001 – 5,000 945 10.17 1,927,514 0.41 5,001 – 1 0,0 00 97 1.04 665,784 0.14 10 ,0 01 – 1 0 0,00 0 152 1.64 5,178,504 1.11 1 00, 001 – 1 ,000 ,000 66 0.71 26,457,683 5.65 1,00 0,001 a nd abov e 29 0.31 432,780,198 92.39 To t a l s 9,296 100.00% 468,429,541 100.00% Signican t shareholders GuoLi ne Capit a l A s set s L i mit ed (‘GuoLi ne’), the ul t i mat e pa r ent compa ny of Guoco Gr oup Li m ite d (‘Guoco’), ha s a cont r ol l in g inter es t in R a n k cons eq uent upon t he genera l of fer made b y its Hong-Kong-lis ted subsid ia r y compa ny , Guoco, v ia it s whol ly- ow ne d subsidi a r y , Ra nk A ss et s Li m ite d (then k now n as A l l Globa l I nve st ment s Li m ite d), and wh ich completed on 15 Jul y 2011. GuoLi ne bec a me t he ult ima te pa r ent compa ny of Guoco (i n plac e of Hong Leon g Compa n y ( Ma l ay si a) Berha d (‘Hong Le ong’ ), w h ich wa s pre v iousl y its pa rent compa ny) on 1 6 Apr i l 2021 as a re su lt of an i nter n a l re st r uct u r e of the ma jor it y sha reholder ( t he ‘Re st r uct u r e’). GuoLine is ba se d in Jers e y a nd, toge t her w it h it s subsid ia r ie s, is enga ged i n t he busi ness es of ban k ing a nd n a nci a l ser v ices, ma nu fac t u r ing a nd d ist ribut ion, proper t y development a nd inve st ments and hospit a l it y and leisu r e. Guoco is a n i nve st ment holdi ng compa ny . T he pr inc ipa l ac t iv it ies of it s subsid ia r ies a nd as soc ia ted compa nies inc lude inv es t ment, pr oper t y de velopment, na ncia l ser v ices a nd hospit a l it y a nd leisu re. Fu r t her in for m at ion on the Guoco g r oup of compan ies ca n be found at w w w .g uo co.com. Follow i ng t he Res t r uc t u r e, Hong Leong held a residua l 195,000 sh a r es (0. 0 4% ) i n Ra n k v i a its whol ly- ow ne d subsidi a r y Hong Leong Ma n ag ement Co. Sdn B erha d, wh ich wer e t ra nsfer r e d to GuoLi ne Ov er sea s L im it ed (Guoco’ s i m med ia te pa r ent compa ny) on 27 May 2021. A s at 30 June 2022 and as at t he da te of th i s rep or t , GuoLi ne’ s inter es t is held as fol low s: – 52.04% – R a n k A ss et s L im it ed , a whol ly- ow ne d subsidi a r y of Guoco; – 4.09% – GuoLine O ver s ea s Li m ite d. On 10 N o vember 2014, Ra n k entere d into a n ag r e ement w it h Hong Leon g a nd Guoc o in acc ord a nce w it h the re qu i rement s of LR 9.2.2 A R(2)( a) (the ‘Relat ionship Ag r e ement’ ). F u r t her to the Rest ruc t u r e, Hong Leon g, G uoco a nd R a n k ag r e ed to novat e t he Relat ions hip A g re ement such t ha t w it h ef fec t f r om 16 A pr i l 2021, the pa r tie s to the Rela t ionsh ip Ag r e ement a r e Ra n k , Guoc o a nd GuoLi ne. The ter m s of the Rela t ionsh ip Ag r e ement rema in unchanged. Du r i ng t he per io d under re v ie w Ra nk ha s complie d w it h t he indep endence pro v i sions included i n t he Relat ions h ip Ag r e ement. So fa r as Ra n k is aw a r e, t he indep endence pro v ision s included i n t he Relat ion sh ip Ag r eement ha ve been complie d w it h dur ing t he per io d under re v ie w by Hong Le ong, GuoLine, Guoc o a nd as soc ia tes. So f a r as R a n k is aw a r e, t he proc u r ement obligat ion s included i n t he Relat ion sh ip Ag r eement ha ve been complie d w it h dur ing t he per io d under re v ie w by t he Hong Leon g, G uoLi ne, Guoco a nd a ss oc iate s. Directors’ Report Continu ed The Rank Group Plc Annual Report 2022 144 Inte rest s of 3% or mo re A s at 30 Ju ne 2022 and 31 Ju l y 2022 the follow ing i ntere st s of 3 % or more of t he t ot a l vot i ng r ight s at t ac hed to ord i na r y sha res ha ve been d isc lose d in r esp ons e to Sec t ion 793 of the CA 200 6 not ices iss ued by t he Compa n y . As a t 30 Jun e 2022 As a t 31 July 2 022 Sha reholder % held Voting right s % held V ot i ng rights GuoLi ne Capit a l A s set s L i mit ed 56.14 262,965,914 56.14 262,965,914 A mer ipr is e Fi na nc ia l , Inc. a nd its g r oup of c ompa n ies ( T hr ead ne ed le Ret a il Fu nds – L in ke d St r ate g ies ) 9.35 43,782,766 9.35 43,792,901 Aber for t h Pa r t ner s 5.56 26,042,835 5.56 26,042,835 M&G I nves t ment s 4.16 19,474,112 3.95 18,485,070 abr d n 3.18 14,897,367 3.19 14,936,8 18 Pola r C apit a l 3.18 14,877,630 3.18 14,877,630 T he follow ing i nter es ts of 3% or more of t he tot a l vot i ng r ight s at tache d to ord i na r y sh a r es ha ve be en noti ed to t he Compa ny in accor d a nce w it h t he FCA ’ s DT R s. D ue to the fac t t h at t he DT R s onl y r equ i r e noti cat ion w here t he per cent ag e vot i ng r ight s re ach , exce ed or fa l l belo w 3 % a nd eac h 1 % t h re shold above 3%, ther e is a di f fer ence be t ween d isc losu r es made pu r sua nt to t he DTR s a nd t hose d i sclos ed i n re spon se to Se c t ion 793 of t he C A 200 6 not ices iss ued by t he Compa n y as se t out above. A s pe r FC A DT Rs d i sc los u r es as a t 17 Aug u st 2 02 2 Sha reholder Dat e l a st no t i e d u nde r DT R % held Vo t i n g r i g h t s GuoLi ne Capit a l A s set s L i mit ed 19 April 2021 56.10% 262,770,914 Hong Leon g Compa ny ( M a la y sia) Ber had 19 April 2021 0.04% 195,000 A mer ipr is e Fi na nc ia l , Inc. a nd its g r oup of c ompa n ies 10 Decem ber 2015 7.65% 29,870,389 A r temi s Inv es t ment Ma na gement LL P 31 May 2017 4.94% 19,287,793 Aber for t h Pa r t ner s 11 May 2022 5.13% 24,032,891 M&G Plc 1 8 May 2022 4.94% 23,169,044 Under LR 6. 1.1 9 R , sha r e s held b y per s ons who have a n i nter es t in 5% or more of a li ste d compa ny ’ s sha re capit a l a r e not re ga r de d as bei ng i n public ha nds (t he ‘f ree oa t’ ). U nder t h is r u le, t he sha r e s held by GuoLi ne, A mer ipr ise Fi n a nci a l a nd Aber for t h Pa r t ners a r e not reg a r ded as b ein g in public ha nd s. T he Compa ny’s f re e oat po sit ion ( acc ord ing to re spon se s to Se ct ion 793 not ices) as at 30 June 2022 wa s 28. 50% (27 .6 8% as at 30 June 2021 ). Rights and restrictions at taching to shares V otin g right s Eac h ord i na r y sha r e ca r ries t he ri ght to one vote at gener a l meet i ng s of t he Compa ny . Me eting ri ghts Reg is ter ed holders of ord i n a r y sha r e s a r e entit led to at tend a nd spea k at genera l meet i ng s a nd to appoi nt prox ies. Informat ion rights Holders of ord i na r y sh a r es a r e ent it led to re ceiv e t he Compa ny’s A nnua l Repor t a nd Fin a nc ia l St at ements. Share transfer restr ictions T here a r e no spec i c re st ric t ions on t he tr a n sfer of sha r e s conta i ned i n t he Compa n y’ s A r t icles of As so ci at ion. T he Compa ny is not awa re of an y ag r e ements be t w een t he holders of Ra n k sha res t h at ma y re su lt in r es t r ic t ions on t he tr a n sfer of sha r e s or th at ma y res ul t in r es t r ic t ions on vot i ng r ight s. V a riatio n of rig hts Subjec t to applicable leg isl at ion, t he r ight s at t ac hed to Ra nk ’ s or d i na r y sha res m ay be va r ied wit h the w r it ten consent of t he holders of at leas t t h re e -q ua r ter s in nomi na l va lue of t hose sha r es , or by a spe ci a l r esolut ion pa s sed a t a genera l meet i ng of t he ord i na r y sh a r eholders. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 145 Dir ect ors’ p ower s in re la tio n to sha res Allotment and issue of shares Subjec t to t he prov isions of the CA 200 6, a nd subjec t to a ny re solut ion pa sse d by t he Compa ny pu r sua nt to t he CA 2006 a nd ot her sha r eholder ri ghts, sh a r es in R a n k ma y be iss ued w it h such r ight s a nd res t r ict ions as t he Compa ny may b y ord i n a r y res olut ion decide. If t her e is no such re solut ion or so far a s t he Compa ny does not ma k e spec i c pr ov i sion, t hey ma y be issue d as R a n k ’s B oa r d ma y dec ide. Su b jec t to t he Compa ny ’ s A r t icles of As soc ia t ion, t he CA 200 6 a nd ot her sha reholder right s, u n iss ued sha res a r e at the d isp os a l of t he Boa r d. T he Compa ny cu r r ent l y has no sha reholder aut hor it y to al lot a nd g ra nt right s over a ny prop or t ion of t he Compa n y’ s u n iss ued sha re capit a l, nor does it h ave sha reholders’ aut hor it y to al lot a nd g ra nt right s over ord i n a r y sha r es w it hout r st ma k in g a pro r at a of fer to al l ex ist i ng or d i na r y sha reholders. Neit her of t hes e author it ies i s re qu i re d for t he pu r pose of al lot ti ng sha res pur s ua nt to employee sh a r e schemes. Market purchas es of own sh ares T he Compa ny cu r r ent l y has no sha reholder aut hor it y to ma ke ma rk et pur c ha se s of its ow n sh a r es. A s t he Boa r d ha s no pres ent intent ion of ma k ing a ma r ket sh a r e pur c ha se of its ow n sha r es, t h is sha reholder approv a l w i l l not be sought at t he for t hcom i ng A n nua l Genera l Meet i ng. Directors’ ot her powers Subjec t to legi sla t ion, t he Dir e c tor s ma y exer ci se a l l t he pow er s per m it t ed b y t he Compa n y’ s Memora ndu m a nd A r t icles of As soc ia t ion. A copy of the se ca n be obta ined b y w r it i ng to t he Gr oup Gener a l Cou ns el & Compa ny Se cr e ta r y , or f rom Compa n ies House. Change of control T he Compa ny ’ s pr i ncipa l ter m loa n a nd cr ed it fac i l it y ag re ement s conta i n pro v i sions t hat , on a cha ng e of contr ol of Ra n k , im me d iat e repa y ment ca n be dema nde d of al l ad va nces a nd an y accr ued inter es t. T he prov isions of the Compa ny’ s sha re schemes a nd incent ive pla ns m ay c ause opt ions a nd awa rd s gr a nt ed to employee s to ves t in t he event of a ta ke over. A cha n ge of contr ol ma y a l so a f fe c t licence s to opera te, as sp ec i e d in t he pro v i sions of the Ga mblin g Ac t 2005, A lder ne y eG a mbl i ng Reg u la t ions 20 09 ( a s a mended ), G ibr a lt a r G a mbli n g Act 200 5 a nd t he Span i sh Ga m i ng Ac t 2011. Politica l donations No polit ica l donat ions wer e made du r i ng t he per iod u nder re v iew. It has b een R a n k ’s long-s t a nd i ng prac t ice not to ma ke ca sh pa y ment s to pol it ica l pa r tie s a nd the Bo a r d intend s t ha t t hi s w i l l rem a i n t he ca se. Howe ver, t he C A 200 6 is ver y broad ly dr a f ted a nd cou ld catc h ac t iv ities such a s f und i ng sem i n a r s a nd ot her f unc t ion s to which pol it ic ia n s a r e inv ited , suppor t i ng cer ta in bod ies i nvol ved in pol ic y r ev iew and l aw ref or m a nd matc h in g employee s’ do nat ion s to cer t a i n cha rit ies. A ccor d i ngl y , as in pre v ious yea r s, t he Dir ec t or s wi l l be seek i ng sha reholders’ aut hor it y for polit ica l donat ions a nd pol it ica l expend it ur e at t he for t hcom i ng A n nua l G ener a l Meet ing in c a se a ny of Ra nk ’s a c t iv ities a r e in ad ver tent ly c aught by t he leg isl at ion. Discl osure of i nformati on to audito r Eac h of the Di r ec tor s of t he Compa ny at t he date of t h is r epor t con rm s t ha t: – So fa r a s t he Di re c tor is aw a r e, t here is no infor mat ion needed by t he Compa ny’s audit or in c onne c t ion w it h pr epa r ing t heir r epor t of which t he Compa ny ’ s audit or is una wa re; a nd – He/she has t a ken a l l t he step s t hat he/she ought t o have t a ken a s a Di re c tor in or der to ma ke h im sel f / her sel f aw a r e of an y in for m at ion neede d by t he Compa n y’ s aud itor in con nec t ion w ith prep a r i ng t hei r rep or t a nd to es tabl i sh t ha t t he Compa ny’s aud itor is a wa r e of th at i nf or ma t ion. B y order of t he Boa r d Luisa W right Gr oup Gener a l Cou n sel & Compa ny Secretar y 1 7 Aug ust 2022 Directors’ Report Continu ed The Rank Group Plc Annual Report 2022 146 Annual R e port and Financial Statements T he Di re c tor s a r e res pons ible for prep a r i ng t he A n nua l Rep or t (i nclud i ng t he Di re c tor s’ Repor t , t he St ra teg ic Repor t, t he Di re c tor s’ Remunerat ion Repor t and t he Cor p orat e G over na nce St atement) and t he Fin a nc ia l St atement s of the G roup a nd t he Compa ny , in accord a nce w it h appl icable Unite d K i ngdom l aw a nd reg ula t ions. Compa n y law r equ i r es t he Di r ec tor s to prep a r e Gr oup and Compa n y na ncia l st atement s for each n a ncia l yea r. Under t ha t law, t he Dir ec tor s ha ve elec te d to prep a r e Gr oup and Compa n y na ncia l st atement s in acc ord a nce w it h UK -a dopte d Inter nat iona l Account i ng St a nd a r d s a nd in accor d a nce w it h t he Compa n ies Ac t 20 06 (‘CA 200 6’). Under compa ny l aw t he Di r ec tor s must not appro ve t he Gr oup a nd Compa n y na nc ia l st a tements u n less t he y a r e sat i se d t hat t he y g ive a t r ue a nd fa i r v iew of t he sta te of af fa i r s of the Gr oup a nd Compa n y a nd of t he prot or loss of t he Gr oup for th at per io d. In pr epa r ing t he Gr oup and Compa ny na ncia l st at ements, t he Di r ec tor s a r e require d to : – Selec t su it able accou nt in g pol icies in acc ord a nce w it h IA S 8 Accou nt i ng Polic ies, Ch a ng es in Acc ount ing Es t i mat es a nd Er ror s a nd t hen apply t hem consis tent l y; – Pr e sent in for mat ion, includ i ng accou nt i ng pol icies, i n a ma n ner t hat pro v ides r elev a nt, r el iable, compa r able a nd under st a ndable in for ma t ion; – Ma ke judgement s a nd accou nt i ng est ima tes t h at a r e re as onable a nd pr udent; – Pr o v ide add it iona l dis closu r es when compli a nce wit h t he sp ec i c requ i rement s in U K -a dopte d Inter nat iona l Acc ount ing St a nda rd s is in su f c ient to enable user s to under st a nd the impac t of pa r tic ul a r t ra nsac t ion s, ot her events a nd condit ion s on the Gr oup a nd Compa ny ’ s n a nci a l posit ion a nd na l per for m a nce; – St ate whet her t he Group a nd Compa ny na ncia l st at ements ha ve be en prepa red in acc ord a nce w it h CA 2006 a nd UK-adopted I nter n at iona l Account i ng St a nda rd s, subjec t to a ny ma ter i a l depa r t ur e s di sclo se d a nd expl a i ned in t he na ncia l st a tements; a nd – Pr epa re t he Fi na nc ia l St at ements on t he goin g concer n bas is un le ss it is appropr iate to pre su me th at t he Gr oup a nd Compa ny w i l l not cont inue in bus i ne ss. Accoun ting records T he Di re c tor s a r e res pons ible for ke epi ng adeq uate acc ount ing re cor d s t ha t ar e suf cient to show a nd expl a i n t he Gr oup a nd Compa ny ’ s t r a n sac t ions a nd d is clos e w it h r ea son able accu r ac y , at a ny t i me, t he na ncia l po sit ion of the Gr oup and t he Compa n y a nd ensur e t h at t he Gr oup and Compa n y na nc ia l st a tements compl y w it h t he Compa n ies Ac t 200 6. Safeguarding assets T he Di re c tor s a r e a ls o accou ntable for sa feg ua r d in g t he ass et s of t he Group a nd t he Compa ny a nd hence for ta k i ng re a sonable ste ps for t he prev ent ion and dete c t ion of fr aud and ot her ir reg u l a r it ie s. Corporate website T he ma i ntena nce and int eg r it y of Ra n k ’s cor p orat e website (w w w .r a n k .com) , on wh ich t h is A n nua l Rep or t and Fi na nc ia l St atement s a re publi shed , is t he Boa r d ’s re spon sibil it y . W e would d r aw at tent ion to t he fac t t hat leg is lat ion i n t he Unite d K i ngd om on the prepa rat ion a nd publicat ion of n a nci a l st atement s ma y d if fer fr om t hat i n ot her jur i sd ic t ions. Statement o f Directors’ responsibilities T he A n nua l Repor t and Fi n a nci a l St atement s a re t he re spon sibi l it y of, a nd ha ve been appr ov ed b y , the Di r ec t or s. Eac h of the Di r ec tor s na med on pages 95 to 96 con r ms t hat to t he bes t of his / her k no wle d g e: – T he A n nua l Repor t and Fi n a nci a l St atement s, ta ken as a whole, a re fa i r, ba l a nced a nd u nder st a nd able and pro v ide t he in for m at ion neces sa r y for sha r eholders to a ss es s t he Group’ s per for ma nce, busi nes s model a nd strateg y; – T he Gr oup and Compa n y Fi na nc ia l St atement s, prepa red i n accor da nce wit h UK-adopted I nter n at iona l Account i ng St a nda rd s a nd in accor d a nce w it h t he Compa n ies Ac t 200 6, give a tr ue a nd fa i r v iew of t he ass et s, l iabi l it ies, n a nc ia l posit ion a nd prot of t he Compa ny a nd t he under ta k ing s included i n t he cons olid at ion ta ken as a whole; and – T he St ra teg ic Repor t inc ludes a r e v iew of t he development and per for ma nce of t he busi ness a nd t he pos it ion of the Gr oup a nd Compa ny a nd t he under ta ki n gs included i n t he consol id at ion ta k en as a whole, toget her w it h a desc r ipt ion of t he r isk s a nd u ncer t a int ies t ha t t hey fac e. On beh a l f of the Bo a r d John O’Reil l y Ch ief E xec ut i ve Richard Har ris Ch ief Fi na nc ia l O f c er 1 7 Aug ust 2022 Dire ctors ’ Re sp onsibili ties The Rank Group Plc Annual Report 2022 St rate gi c rep or t Gove rn an ce r ep or t Financial st atements Overview 147 The Rank Group Plc Annual Report 2022 148 Financial st a tements In t his se ction: W e have set ou t o ur na ncial state m en t s fo r t h e y ea r en ded 30 Jun e 2 02 2, to get he r wit h the n otes to su ch state me nts and our ve-y ea r rev iew . T h is sec t io n also in clu des our ind epe nd en t a udito r’ s re por t, wh i ch inc lu des its fo r ma l a u d it op i nio n in respect o f t h e y ea r en ded 30 Jun e 2 02 2. Shar eh ol de r in fo r mat io n ca n be f oun d o n page 2 13 . 15 0 I nd epe nd en t a udito r’ s re por t 1 60 G rou p i nc om e stat em en t 1 6 1 Grou p state me nt of com pre he nsiv e i nc ome 1 62 Ba la nce shee t s 1 6 4 St ate m ents of cha nges in equi t y 1 66 St ate m ents of ca sh ow 1 6 7 No tes to the na n cia l state m en t s 2 12 Five-y ea r re v iew 213 Sh a r eholder in for m at ion The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 149 Opinion In ou r opin ion: – T he Ra n k G roup Plc’ s Gr oup n a nci a l st atement s a nd Pa r ent Compa ny na ncia l st at ements (the ‘ n a ncia l st atement s’) g ive a t r ue a nd fa i r v iew of t he st ate of t he Gr oup ’s a nd of t he Pa rent Compa n y’ s a f fa ir s a s at 30 June 2022 a nd of the Gr oup’ s pr o t for the yea r t hen ended; – t he Gr oup n a nci a l st at ements ha ve been pr oper ly pr epa r ed i n accor d a nce w it h U K -a dopte d inter n at ion a l acco unt ing st a nd a r d s; – t he Pa rent Compa ny n a nc ia l st atement s ha ve been pr operl y pre pa r ed in acc ord a nce w it h UK -ad opte d inter nat iona l account i ng st a nda r ds a s appl ied in accor d a nce w it h sec t ion 408 of the Compa n ies Ac t 20 06; a nd – t he na nc ia l s ta tements h ave be en prep a r ed i n accor da nce wit h t he re qu i rement s of t he Compa n ies Act 200 6. W e hav e audite d the na nc ia l st atement s of T he Ra n k Gr oup plc (t he ‘Par ent Compa n y’ ) a nd its subsid ia r ies ( t he ‘G roup’) for t he yea r ended 30 June 2022 wh ich compr is e: Gro up P aren t c om pan y Con sol id at ed ba l a nce sheet a s at 30 June 2022 Ba l a nce shee t as at 30 June 2022 Con sol id at ed income st atement for the yea r then ende d St atement of cha nges i n equ it y for the yea r then ende d Con sol id at ed st atement of comp r ehen s iv e income for t he yea r t hen ended Relat ed notes 1 to 35 to the n a nci a l st atement s includ i ng a sum m a r y of sign i c a nt acco unt ing pol icie s Con sol id at ed st atement of cha nges i n equ it y for the yea r then ende d Con sol id at ed st atement of ca sh ow s for the yea r t hen ended Relat ed notes 1 to 35 to the n a nci a l st atement s, includ i ng a sum m a r y of sign i c a nt acco unt ing pol icie s T he na nc ia l r epor t in g f ra mework t hat ha s be en applied i n t heir pr epa r at ion is appl icable law and UK -a dopte d inter n at iona l accou nt i ng st a nd a r d s a nd as re ga r d s t he Pa r ent Compa ny n a nci a l st at ements, a s appl ied in accor d a nce w it h sec t ion 408 of the Compa n ies Ac t 20 06. Basis for opinion W e conduct ed ou r audit in acc ord a nce w it h I nter n at iona l St a nda r ds on Aud it i ng ( U K ) ( IS A s ( U K )) a nd applicable law. Ou r re spon sibil it ies under t hose st a nd a r d s a r e f ur t her desc r ibe d in t he Aud itor’ s re spon sibil it ies for t he au d it of t he na ncia l st at ements se c t ion of our repor t. W e bel iev e t hat t he aud it ev idence we ha ve obta ined is su f c ient a nd appropr ia te to pro v ide a basi s for our opin ion. Independence W e a r e indep endent of the Gr oup and Pa r ent Compa ny i n accor da nce wit h the et h ica l requ i r ements t h at a r e relev a nt to our aud it of the na ncia l st at ements i n t he UK , i ncludi n g t he FRC ’ s Et h ic a l St a nda rd as appl ied to l is ted publ ic intere st ent it ies , a nd we have f u l lle d our ot her et h ica l re spon sibil it ies in accor da nce wit h t hese r eq ui r ements. T he non-au d it s er vice s proh ibited b y t he FR C’s E t h ica l Sta nd a r d were not pro v ided to t he Group or the Pa rent Compa ny and we rem a i n indep endent of the Gr oup and t he pa r ent compa ny i n conduct i ng t he audit . Conclusi ons relating to going concern In aud it i ng t he na nc ia l s t atement s, we ha ve concluded t ha t t he Dir e c tor s’ use of t he goin g concer n bas is of account ing i n t he prepa rat ion of the na ncia l st a tements is appr opr iate. O ur e va luat ion of t he Di r ec tor s’ ass es sment of the Gr oup and Pa r ent Compa ny ’ s abi lit y to cont i nue to adopt t he goin g concer n ba sis of ac coun ting in cl ude d: – In conju nc t ion w it h our wa lk t hr ough of the Gr oup’ s na nc ia l st a tement close pro ces s, we con r med our under s ta ndi ng of Ra nk ’s g oin g concer n as se ssment pro ces s as wel l a s t he re v iew cont r ols i n plac e in re lat ion to the goi ng concer n model a nd ma n ag ement’ s Boa rd memora nda ; – W e ha ve obta ined a n u nders t a nd i ng of ma n ag ement’ s r at iona le f or the us e of t he goin g concer n ba sis of account ing. T o ch a l leng e t he completeness of the as se ssment , we have i ndependent l y identi ed fac t ors t h at ma y ind ic ate event s or cond it ions t ha t ma y ca st doubt over t he ent it y’ s abil it y to cont i nue a s a going concer n; – W e ha ve per forme d t he follow i n g pro cedures ; Managements’ assessmen t and assumptions – W e con r med our under s t a nd i ng of Ra n k ’ s goi ng concer n asse ssment pro ces s, inc ludi ng how pr i ncipa l a nd emerg i ng r i sk s were con sidere d; – W e obt a i ned t he ca sh ow for ec a st models pr epa r e d by ma n a gement to 31 A ug us t 2023 use d by t he Bo a r d in it s as se ssment, c heck ing t hei r a r it h me t ica l acc u ra c y a nd ag r ee d t he fore ca st s to t he Boa rd appr ove d bud ge t s; – W e ev a lua ted t he appr opr ia teness of the du ra t ion of the goin g concer n as se ssment per iod to 31 Augu st 202 3 a nd consider ed t he ex i stence of a ny sig n i ca nt e vent s or condit ions be yond t h is per iod base d on the Gr oup’ s long-ra nge pla n and k now ledg e a r is in g fr om ot her a r ea s of t he audit; – W e a sse ss ed t he re a sona bleness of t he ca sh o w fore ca s t by a na ly sis of ma n ag ement’ s h is tor ica l forec a st i ng acc ur ac y and under s ta ndi ng how a ny a nt icipate d impac t of r isi ng i n at ion on consu mer spend in g a nd conti nued re co ver y post COV I D - 19 ha s been model led . W e per forme d rev er se st r es s tes t i ng to under s ta nd h o w se ver e t he dow n side scen a r io would nee d to be to re su lt in negat ive liqu id it y or a cov ena nt br each . T he ass es sment re ec t s a l l ma t u r i ng debt t h roug h to 31 A ug us t 2023; – W e under s to od t he key a ss umpt ions use d by ma nag ement in prepa ri ng t he model l i ng a nd cor r obora ted t hos e to ev iden ce f rom ex ter na l sour ces wher e av a i lable, a nd consider ed cont r a r y ev iden ce by con sider i ng indu st r y da ta a nd forec a st s a nd an a l ys t exp ec t at ions; – T he audit pro ce du re s per for med in ev a luat ing t he Di r ec tor s’ as ses sment were p er for me d by t he Gr oup audit tea m , howev er , we a l so con sidere d t he na nc ia l a nd non- na ncia l in for mat ion commu n icate d to us f rom our component tea m s a s sour ce s of potent i a l cont r a r y ind ica tor s wh ich ma y ca st doubt over t he G oin g Concer n a ss es sment. Independent auditor ’ s repor t T o the members o f The R ank Gro up Plc The Rank Group Plc Annual Report 2022 150 Bank cov enant compliance – W e obt a i ned a l l t he Gr oup’ s bor r ow ing fac i l it y ag re ements a nd per for med a deta i led ex a mi na t ion of al l a g r eement s, to as ses s t heir cont i nued ava i l abi l it y to the Gr oup t h r oughout the goi ng concer n per iod. W e in sp ec te d a l l bor r o w i ng fac il it y ag r e ements to ensur e completeness of cov ena nt s ident i ed b y ma n ag ement. W e chec ked t he acc u rac y of ma n ag ement’ s co vena nt forec as t model on the ba se ca s e, ver i f y in g input s to boa rd appro ve d fore ca s ts a nd faci l it y ag r eement ter m s; – W e cons idere d t he adequac y of fore ca s t liqu id it y as per t he bas e ca se a nd dow n side forec a st a nd appl ied sens it iv it y a na ly sis; – W e ev a lua ted t he compl ia nce of t he Gr oup w it h debt coven a nt s in t he fore ca s t per iod b y rep er for m i ng ca lc u la t ions of the co vena nt test s. W e f u r ther a ss ess ed t he impa c t of the dow n side r isk scen a r ios on c oven a nt compli a nce a nd applie d sensit iv it y a na ly sis. Stress testing and ev aluation of management’s plans for future actions – W e cons idere d ma n ag ement’ s dow n side ri sk scena rio 1 and dow nside r isk scen a r io 2 o f t he Gr oup’ s ca sh ow fore ca s t models a nd t hei r impac t on fore ca s t liqu id it y and for ec a st cov ena nt compl ia nce. Spe ci c a l l y , we consider ed whet her t he down side r isk s wer e re a sona bly po ssible, but not un r ea l i st ic a nd f ur t her consider ed whet her t he adv er se ef fec t s cou ld a r is e ind i v idua l l y a nd col lec t i vely; – W e cons idere d t he rev er se st r e ss tes t to under st a nd what it would ta ke to bre ach av a i la ble liqu idit y a nd ex h aust cov ena nt head r o om; – W e cons idere d t he li kel i hood of ma n ag ement’ s abi l it y to exec ute fea sible mit ig at i ng ac t ions av a i l able to re spond to t he dow n side ri sk scen a r io ba se d on our under st a nd i ng of the Gr oup a nd t he sec tor, i nclud i ng consider i ng whe t her t hose m it iga t i ng ac t ions wer e cont rol l able by ma n ag ement. Disclosures – W e a sse ss ed t he appr opr iat eness of the goi ng concer n d is clos ur es i n desc r ibi ng t he r isk s a ss oc iate d w it h t he Gr oup’ s abi l it y to conti nue as a goi ng concer n for t he per iod up to t he 31 Au g us t 2023. Our ke y obser vations – T he Di re c tor s’ ass ess ment forec a st s t ha t t he Group w i l l ma i nt a i n su f c ient liqu id it y th r oughout t he goin g concer n as se ssment per iod . T h is i ncluded t w o dow n side scen a r ios w it h sever e but plausible decl i nes i n re venue and inc re a se d in at ionar y i mpac t s. – T he sev ere dow nside scena r io assu med f u l l repa y ment of schedu le d debt rep ay ments over t he goin g concer n per iod , no new re n a nc in g over t he goi ng concer n per io d, a cent r a l cont i ngenc y r educ t ion aga in st budge t per for ma nce, of fs et by m it ig at i ng ac t ions w it h i n ma n a gements cont r ol. Ma n ag ement consider such a scena r io to be hig h ly u n l ikel y , howe ver, i n such un l i kel y event ma nag ement consider t ha t t he impac t ca n be m it ig ate d by f u r t her cash a nd cos t sa v i ng mea su re s wh ich a re w it hi n t heir cont r ol , or t h r ough ex ter na l f u nd ra is in g, or a combin at ion of bot h dur ing t he goi ng concer n per iod. T he Group’ s pr inc ipa l sou rc e of fu nd i ng ex tend s be yond t he goi ng concer n per io d (to 2 024 / 2025). Going Concern Conclusion Ba se d on the work we ha ve per for med, we hav e not i dent ie d a ny ma ter ia l uncer ta int ies rela t i ng to e vent s or c ond it ions t ha t, i nd iv idua ll y or colle c t ivel y , ma y ca st sig n i ca nt dou b t on the Gr oup a nd Par ent Compa n y’ s abi l it y to conti nue as a going concer n for a per iod to 31 A ug us t 2023. In r elat ion t o t he Group a nd Pa r ent Compa n y’ s r epor t in g on how the y hav e appl ied t he UK Cor p ora te G ov er na nce Cod e, we have not h i ng ma ter ia l to add or dr aw at tent ion to in rel at ion to t he Di r ec tor s’ sta tement in t he na ncia l st atement s about whet her t he Di r ec tor s consider ed it appr opr iat e to adopt t he goi ng concer n ba sis of accou nt i ng. Ou r resp ons ibil it ies a nd the re spon sibil it ie s of the Di r ec t ors w it h resp ec t to goi ng concer n a r e desc r ibe d in t he r eleva nt sec t ions of t hi s repor t. Howe ver, becaus e not al l f ut ur e event s or condit ions ca n be pre d ic ted , t h is st at ement is not a g ua r a nte e a s to the Gr oup’ s abil it y to cont i nue as a going concer n . Over view o f our au dit a pp roa ch Audit s cope – W e per for med an aud it of the complete na ncia l i nf or ma t ion of s i x components a nd au d it pr oc edu r es on sp ec i c ba la nces for a fu r ther t went y-t wo components. – T he components wher e we per for me d f u l l or spec i c audit pr oce du r es accou nte d for 1 0 0% of Revenue, 96 % of Pr o t befor e ta x a nd 99% of T ot a l as se t s. Ke y audit ma t ter s – Impa ir ment a nd impa i r ment re ver s a l of ta ng ible a nd int a ng ible as se t s – Compl ia nce w it h laws a nd r eg u la t ions – Rev enue re cog n it ion inc ludi ng t he r isk of ma na gement over ride Mater ia l it y – O vera l l G r oup mater ia lit y of £3.5m wh ich repr es ent s 0.5 % of re venue. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 151 An overvi ew of t he sc op e of th e Parent compan y and Group audits T ailoring the scope Ou r as se ssment of audit r isk , ou r ev a luat ion of ma ter ia lit y a nd our a l loc at ion of per for m a nce mat er ia lit y deter m i ne our audit sc ope for each compa n y w it h i n t he Gr oup. T a ken toget her, th is enable s us to for m a n opin ion on the consol id ate d na ncia l st at ements. W e t a ke i nto accou nt siz e, r isk pr o le, t he org a n is at ion of the Gr oup a nd effe c t iv eness of Gr oup-w ide cont r ols, ch a ng es i n t he busines s env i r on ment and ot her fac tor s such as r ec ent inter n a l aud it re su lt s when a ss e ss i ng t he lev el of work to be per for med at each compa n y . In a ss es sin g t he ri sk of mater i a l mi ss t atement to t he Gr oup n a nci a l st atement s, a nd to ensu r e we had adeq uate qua nt itat i ve cov era ge of sig n i ca nt accou nt s in t he na ncia l st at ements, of the for t y-eig ht repor t in g components of the Gr oup, we selec ted t went y-eight components co ver i ng ent it ies w it hi n Unite d K i ngdom , A lder ne y , Ma lt a , Spa in , Gibr a lt a r, Maur it ius , and I nd ia , wh ich repr es ent t he pri nc ipa l busi ness u n it s w it h i n t he Gr oup. Of t he t w ent y- eight components sele c ted , we per for med an aud it of the complete na ncia l i nf or ma t ion of s i x components (‘ f u l l sc ope components’) wh ich wer e selec te d ba se d on thei r siz e or ri sk cha rac ter ist ics. For the r ema i n i ng t w ent y-t wo components (‘spe ci c sc ope / spe ci ed pro ce du re s components’), we per for med audit pro ce dur e s on spec i c accou nt s w it h i n t hat component t ha t we consider ed h ad t he potent ia l for t he g re ate st i mpac t on the sig n i c a nt accou nt s in t he na ncia l st at ements eit her bec aus e of the si ze of t hese accou nt s or t heir r i sk pro le. T he rep or t i n g components wher e we per for med audit pro ce dur e s accou nted for 99% (2021: 99% ) of the G roup’ s re venue, 87% (2021: N/ A) of the Gr oup’ s pr o t befor e ta x and 97% (2021: 99% ) of t he Gr oup’ s T ot a l a ss et s. For the cu r r ent yea r, t he f ul l sc ope component s cont r ibute d 86% (2 021: 83% ) of the G roup’ s re venue, 64% (2021: N / A) of t he Group’ s pro t befor e ta x and 70% (2021: 7 5% ) of t he Gr oup’ s T ot a l a ss et s. T he spec i c scop e components cont r ibuted 13% ( 2021: 1 6% ) of the Gr oup’ s re venue, 23% ( 2021: N/ A) of the Gr oup’ s pro t befor e ta x and 27% (2021: 24 % ) of t he Gr oup’ s T o t a l as se t s. T he audit scop e of thes e components ma y not have i ncluded tes t i ng of a l l sig ni ca nt accou nt s of the component but wi l l ha ve cont r ibute d to t he cover ag e of sign i c a nt accou nt s test ed for t he Gr oup. T he Pr i ma r y T e a m per forme d spec i e d pro ce dur e s on ca sh a nd over head ex pen se s for th r e e components. T he pro ce du re s per for med included , indep endent con r m at ion of ca sh , vouchi ng ex p ens es to in voice a nd a na ly tica l rev iews. For one of t hes e components t he P r i ma r y T ea m a l so per for med spec i e d proc edu r es ov er cer ta i n a spe c t s of revenue, as des cr ibed in t he R isk se c t ion abov e. T he rema in i ng t w ent y components toge t her repr es ent less t ha n 0 .1 % of the Gr oup’ s r ev enue. For t hes e components, we per for med other pr oce du r es, inc ludi ng a na ly tica l rev iew , tes t i ng of consol id at ion jour n a l s, int erc ompa ny el im i n at ions a nd foreig n c u r r enc y t ra nsla t ions to re spond to a ny potent i a l r isk s of mater ia l m i ss t atement to t he Gr oup n a nci a l st at ements. T he cha r t s to the r ight i l lust rate t he cov era ge obta i ned f r om t he work per for med by ou r audit tea ms. Changes from the prior year T here ha ve be en mi n i ma l cha ng es in scopi ng f r om t he prior yea r. Ther e have been s ome modi c at ion s to spec i c scop e ent it ies to re ec t h igher level s of act iv it y w it h i n cer ta i n ent it ies compa r e d to the pr ior per iod to ma i nt a i n appropr iate co ver a g e. Re venue Assets Prot bef ore tax Fu l l scope 8 6% Spec i c scope 1 3% Spec i ed pr oc edu r es 1% Ot her 0% Fu l l scope 70 % Spec i c scope 2 7% Spec i ed pr oc edu r es 2% Ot her 1% Fu l l scope 6 4% Spec i c scope 2 3% Spec i ed pr oc edu r es 9% Ot her 6% Independent auditor’ s report Continu ed The Rank Group Plc Annual Report 2022 152 Inv olvemen t with component teams In es t abl ish i ng ou r over a l l appr oach to t he Gr oup audit , we deter m i ned t he t yp e of work t ha t neede d to be under ta ken at eac h of the component s by us, a s t he pri m a r y audit eng ag ement tea m, or by component audit ors f r om ot her EY globa l net w ork r m s a nd non-EY audit r m s opera t i ng under ou r ins t r uct ion. For six f u l l scop e components a nd eighte en of the spe ci c scop e components, aud it pro cedu r es wer e per for med di r ec t ly by t he pr im a r y audit tea m . For the four spe c i c scope components , where t he work wa s per for med by component audit ors , we deter m i ned t he appropr iate level of inv olvement to enable us to deter m i ne t ha t suf cient audit ev iden ce had be en obta ined a s a basis for our opin ion on the Gr oup as a whole. T he Gr oup audit tea m cont i nued to follo w a prog r a m me of pla n ned v i sit s t hat ha s be en desig ne d to en su r e th at t he Senior Stat utor y Audit or and sen ior team member s vi sit t wo of the fou r spec i c scop e locat ions each yea r. Dur i n g t he cur rent yea r ’ s aud it c ycle, v isit s were u nder t a k en by the pr im a r y audit tea m to t he EY comp onent tea m in Spa i n a nd the Gr a nt T hornt on component te a m in Mau r it ius. T hese v isit s in volve d di sc us si ng t he audit appr oach w it h the component tea m a nd a n y issues a r isin g fr om t hei r work , meet i ng w it h loca l ma n a gement, at t end in g pla n n i ng a nd closi ng meet ing s, re v ie w i ng rele va nt au d it work ing pap er s on releva nt r isk ar ea s a nd per for m i ng a site v isit of a club in Spai n. T he pr i ma r y tea m inter ac te d re g u la r ly w it h the component tea m s where appr opr i ate du r i ng va r ious st a ges of t he audit , re v iew ed r elev a nt work i ng pap er s a nd were r esp onsible for the sc ope a nd di r ec t ion of t he audit pro ces s. T h is, tog et her w it h t he add it ional pro ce dur e s per for me d at Gr oup level, ga ve us appr opr iate e v idence for our opin ion on t he Gr oup n a nci a l st at ements. Climate change T here ha s be en inc r ea si ng int ere st f r om st a keholder s as to how cl i ma te cha nge w i l l impac t T he R a n k Gr oup Plc. T he Group ha s deter mi ned t ha t t he most sig n i ca nt f ut u r e impac t s f r om cli m ate ch a ng e on t heir oper at ions wi l l be pr i ma ri l y as a re su lt of incr ea s ed cos t of energ y . T hese a r e ex pla i ned on pag es 63 -7 0 i n t he re qu i re d T a sk Forc e for Cli m ate r elat ed Fi na nc ia l D isc losu r es a nd on page 76 i n t he pr inc ipa l r isk s a nd u ncer t a i nt ies , wh ich for m pa r t of t he ‘O t her in for mat ion’ , rat her th a n t he audite d na ncia l st atement s. Ou r pro ce du re s on thes e d isc losu r es t her efore con sis te d solely of consider i ng whe t her t hey a r e mat er ia ll y incon sis tent w it h t he na ncia l st at ements or our k nowle dge obt a i ned i n t he cour se of the aud it or other w is e appea r to be mater ia l ly miss tated . A s ex pla i ned i n note 1, the ba sis of prep a r at ion, consider at ion of cli m ate cha nge impac t on t he judgements i n t he accou nt s is not considere d to hav e a mat er ia l i mpac t at t h is t i me. Go ver n ment a l a nd soc iet a l re spon se s to cl im ate ch a ng e r isk s a r e st i l l de velopin g, a nd ar e inter dep endent upon each ot her , a nd cons equent l y na ncia l st at ements ca nnot cap t u re a l l p ossible f ut u r e outcomes as t hese a r e not yet k now n. The deg r ee of cer ta i nt y of these c ha n ges ma y a l so mea n t ha t t hey ca nnot be t a ken int o accou nt when deter m i n i ng as se t a nd liabi l it y va lua t ions a nd t he ti m i ng of f ut u re c a sh ow s under t he re qu ir ement s of UK - adopte d Inter nat iona l Account i ng St a nda rd s (‘IF R S ’ ). Ou r audit ef for t in consider i n g cl im ate cha nge wa s foc use d on eva luat i ng ma n ag ement’ s as se ssment of t he i mpac t of cl i mat e r isk a nd t he cost s of energ y bein g appropr iatel y ree c te d in t he as se ssment of the ca rr y ing va lue of as set s, i mpa i r ment of ass et s, r educ t ion of economic usef u l li ves of ta ng ible and int a ng ibl e a ss et s, pro v i sions a nd fa i r va lue measu r ement a nd as soc ia ted d i sclo sur e s where va lues a r e deter m i ned t h r ough model l i ng f ut u r e ca sh ow s, bei ng t he impa ir ment tes t s of ta ngible a nd int a ng ible as se t s and r elat ed d isc losu r es. W e a l so ch a l leng ed t he Di r ec tor s’ considerat ions of cl i mat e cha ng e in t hei r as se ssment of going concer n a nd v iabi l it y and a ss oc iat ed d is closu r es. K ey au dit m at ters Ke y audit ma t ter s a r e t hos e mat t er s t hat , in ou r profes siona l judg ment, wer e of most sig n i ca nce in our aud it of the na ncia l st atement s of the c ur rent per iod a nd include t he most sig n i c a nt as se sse d r isk s of mater i a l m iss t atement (whet her or not due to fr aud) t hat we ident i e d. T hes e mat ter s included t hos e wh ich had t he g re ate st ef fe c t on: the over a ll aud it st r ate g y , t he a l loc at ion of resou r ce s in t he audit ; a nd di r ec t i n g t he effor ts of t he enga gement tea m . T hese ma t ter s wer e add r es se d in t he contex t of our aud it of the na ncia l st at ements a s a whole, a nd in our opin ion t here on, a nd we do not pr o v ide a sepa r at e opin ion on thes e mat t er s. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 153 Ri sk Ou r r e sp ons e to t he ri sk Ke y obs er va t ion s co mmu n ic at e d to t he A ud it C om m it tee Impa ir ment a nd impa ir ment rever s a l of t a ng ible a nd int a ng ible a ss et s cou ld be mater ia l ly m iss tat ed. Impa i r ment cha r ge of £4 7 .8 milli on (2 02 1: nil) a nd i mpa i r ment rever s a l of £22.0 mil l ion (2021 : n i l) Refer to t he Audit Com m it t ee Repor t (page 107 ); Account i ng pol icies (pa ge 16 7 ); a nd note 1 4 of the Con sol ida ted Fi n a nci a l St atement s (pag e 188) At 30 June 2022 t he ca r r y i ng va lue of t a n g ible a nd i nt a ng ible as se t s was £ 708.3 m i l l ion (2021: £750.6 mil l ion), £ 43 8.9 mi l l ion (2021: £435. 3 mi l l ion) of which r elat e to inde n it e li fe int a n g ible asse t s (pr i ma r il y ca si no a nd ot her ga mi n g licence s ) a nd go od w i l l. T h is is a n a r ea of foc us due to t he sig n i ca nce of t he ca r r y in g va lue of the a sse t s bei ng as se ss ed a nd t he level of ma n ag ement judgement re qu i re d in t he a ssu mpt ions impac t ing t he impa ir ment as se ssment. T her e a r e ind ica tor s of impa i r ment a nd impa ir ment re ver sa ls acr os s venues as t he venues reop ened a nd t rad ing ac t iv it y r e-bu i lt fol low i ng t he impac t on t he venues of the closu r e per iod s a nd res t r ict ions a r i sin g f rom COV I D - 19 . T he ma i n as su mpt ions us ed in t he impa ir ment as se ssment a r e re venue reco ver y pos t COVI D -1 9 shor t-ter m g r ow t h rat es, a ssu med f ut ur e cost inc re a se s and t he d is cou nt rat e, ea r n i ng s mult iples a nd t he long-term g r ow t h ra te. In t he pr ior yea r, no impa ir ment or rev er sa l of impa ir ment wa s re cog n is ed as venues cont i nued to be impac t ed b y COVI D - 19 re st r ict ions or in some ca se s closu r es a nd t he rel ate d re co ver ies po st r e- op eni ng rem a i ned at a n ea r ly st a ge. T he below pro ce dur e s were per for med by t he P r i ma r y tea m for al l components. W e ga i ned a n u nder st a nd i ng of t he contr ol s t h r ough a wa l k t hr ough of the pr oce ss ma nag ement has i n place to as se ss i mpa i r ment a nd re ver s a l of impa i r ment. W e va lida ted t h at t he met hodolog y of the impa i r ment exer c ise cont i nues to be consis tent w it h t he re qu i rement s of IA S 36 Impa ir ment of As set s, i ncludi n g appropr i ate ident i ca t ion of ca sh generat ing u n its for va lue in us e ca lc u la t ions. W e con r med t he mat hema t ica l acc u ra c y of t he models. Below we su m ma r ise t he pro ced ur es p er for me d in rel at ion to t he ke y as su mpt ions for t he ta ng ible (i ncludi ng r ig ht-of-use as set s) and int a n g ible asse t s impa i r ment r e v iew. – W e a na ly se d ma na gement s’ long t er m fore c as t s underl y i ng t he impa i r ment re v iew aga i n st pre - C OVI D - 19 per for ma nce. In add it ion, we considered t he for ec a st s ag a i ns t per for m a nce since r eop en in g t he venues post-lockdo w n a nd t h ir d pa r t y fut u r e econom ic forec a st s i ncor por at i n g t he incr ea se i n cos t of liv ing impac t ing con sumer spend i ng for t he UK a nd Spa n ish e conomie s. W e cor r obor ate d fore ca s t s to budget s appr ove d by t he Boa rd. – W e re -p er for me d ca lc u lat ions in t he models to check mat hemat ica l acc u r ac y . – Cr it ic a l l y cha llenge d ma n a gement’ s abi l it y to forec a st acc u ra tely t h r ough compa r i ng ac t ua l per for m a nce ag a i ns t fore ca s t per for ma nce a nd cor r obor at i ng t he re as ons for dev iat ions. – W e a l so per forme d sensit iv it y an a l ysi s on ea r n i ng s mult iples a nd week ly Net Ga m i ng Re venue (NG R) for al l ca s h generat i n g un it s (CGUs ) a nd gr ow t h ra tes appl ied to ca sh o ws for cer ta i n CGUs to deter m i ne t he pa ra meters t h at – should t he y a r is e – may g ive a di f fer ent conclusion as to t he ca rr y i ng v a lues of ass et s a sse ss ed . T he sensit iv it ies per forme d were ba se d on rea son able pos sible cha nges to ke y as su mpt ions deter mi ned b y ma n ag ement being re venue rec over y po st- COV ID -1 9, sho r t-ter m gr o w t h rates , d isc ount r ate, EBI T D A mult ipl e a nd long-ter m g ro w th r ate s. W e ha ve cor r obor ate d t ha t t he rea son able poss ible cha nge as su mpt ions appl ied b y ma na gement a r e re a sonable by compa r i ng t he u nderly ing a ssu mpt ion s to ex ter n a l d at a such as e conomic a nd indus t r y fore ca s t s. W e re -per for med t he models to ensu r e t hat t her e were cor rec t ly ca lc u la ted . – W e ha ve a sse ss ed a ssu med f ut ur e cost s to t h i r d pa r t y pro jec t ion s on in at ion, co st of energ y and wa ge s. – For par t ia ll y impa i r ed a ss et s we consider ed t he sen sit iv it y of cha ng es i n fore ca s ts a ga i n st c ur rent t ra d in g a nd budgete d t ra d i ng a nd t he sensit i v it y of either f ur t her impa i r ments or impa ir ment re ver sa ls a nd where ma ter ia l, ensu r ed t h at t he impac t of th i s consider at ion wa s adequ atel y d isc lose d in t he sen sit iv ities. – A ss ess ed t he head r oom on t he re cov erable a mount be t ween t he ca lc u la ted v a lue in use a nd ca rr y i ng v a lue of the CGUs to ensu re d isc losu r es of t he impac t of rea son ably po ssible cha nges i n as su mpt ions a nd t he impac t on t he ca r r y ing va lu e of a sse t s was adequate. – For the r ight-of-use a ss et s, we tes ted t h at t he as se ts h ad been appropr iatel y a l loca ted to t he cor r e c t ca sh genera t i ng un it a nd t ha t a va lue in use ca lcul at ion w a s per for me d in l ine w it h I A S 36. Add it ion a l l y , we va lid ate d t hat ma ter i a l cha nges to t he r ight-of-use as se t in t he per iod wer e appr opr iat e. In add it ion, we worked wit h our EY i nter n a l va luat ion special ists to: – Indep endent ly v a l idat ed a nd cor r obor ate d t he di scou nt ra tes appl ied by ma nag ement to su pp or ti ng e v idence a nd bench ma rk t he di scou nt ra tes to i ndust r y a vera ge s /t rends. Ba se d on our audit pro ce dur e s we have concluded t he impa i r ment cha rge of £47 .8 m il l ion a nd t he impa i r ment re ver s a l of £22.0 mi l l ion wa s re cog n i se d appr opr ia tel y . W e h igh l ighte d t hat a re a sonabl y pos sible cha n ge in cer ta in ke y as su mpt ions, includ i ng r evenue re cov er y as su mpt ions po st- COVI D -1 9, s hor t ter m g ro w th r ate s, cha nge in d isc ount r ate, long ter m g ro w th a nd t he ea r ni ng s mult iples t h at a r e use d to deter mi ne the ter m i n a l va lue for cer t a i n CG Us, cou ld lead to fu r t her impa ir ment cha rge s. W e ha ve concluded app r opriate disclosures ha ve been i ncluded in t he na ncia l st at ements a s re qu i re d under t he accou nt i ng st a nd a r d s. Independent auditor’ s report Continu ed The Rank Group Plc Annual Report 2022 154 Ri sk Ou r r e sp ons e to t he ri sk Ke y obs er va t ion s co mmu n ic at e d to t he A ud it C om m it tee Compl i a nce w it h law s a nd r eg u l at i ons Refer to t he Audit Com m it t ee Repor t (page 107 ); Account i ng pol icies (pa ge 173 ); a nd note 33 of the Con sol ida ted Fi n a nci a l St atement s (pag e 21 0) T he lega l a nd licen si ng f ra mework for ga m in g rem a i ns a n a r ea of foc us for t he Ga mbl i ng Com m is sions in t he UK a nd Spa i n. T he evol v i ng env i r on ment, w it h ter r itor y speci c re g u lat ions, ma kes compl ia nce a n inc re a si ngly complex a r ea w it h t he potent ia l for nes a nd or licence w it hd r aw a l for non-c ompl ia nc e. Op er ator s a r e f ur t her re qu ir e d to meet a nt i-money lau nder i ng obl ig a t ion s . Judgement is applied i n est ima t i ng a mount s pa yable to reg ula tor y aut horit ies, or cus tomer s, in cer ta i n jur isd ict ions. Th i s gi ves r is e to a ri sk over t he acc ur ac y of accr u a l s, pro v is ions a nd d isc losu r e of conti ngent li abi l it ies a nd t he rela ted income st atement ef fe c t. T he r isk rel at i ng to compl ia nc e w it h la w s and r eg u l at ions inc re a se d dur i ng 2021 / 22 (plea se refer to t he r isk ma n ag ement st ra teg y on page 7 4) W e per forme d t he follow ing pro ce du re s: – W e under s to od t he Gr oup’ s pr oce ss a nd rel ate d cont r ols ov er t he identi c at ion a nd mit igat ion of reg u lat or y and lega l r i sk s a nd t he rela ted acc ount i n g and d is clos ur e. – W e re ad r eg u la tor y cor re spondence a nd enqu ir ies made t hr ough t he yea r, man a gement’ s r esp ons e t here to a nd t heir a sse ssment of potent ia l exp osu r e as at 30 June 2022. – W e inq ui r ed of ma n a gement and t he Gr oup’ s i nter n a l lega l cou nsel r ega rd i ng a ny i ns t a nce s of mater ia l breache s in re g u lat or y or l icence compl ia nce t h at nee ded to be d is clos ed or req ui r ed p otent ia l prov i sions to be re cor de d. – Dis c uss ed w it h man a gement its i nter pr et at ion a nd a pplic at ion of relev a nt la ws a nd re g u lat ions as wel l as a n a l ysi s of the r is k s in r esp ec t of t he Gr oup ’s op er at ions i n un r eg u la te d ma rke t s. – W e re ad t he cu stomer compla i nt log a nd ass es se d how mat t er s ra i se d were concluded on. – En ga ged E Y ga m i ng t a x a nd lega l sp ec ia l i st s to a ssi st us in u nder st a nd i ng t he r isk s i n re spe c t of ga mi n g dut ies in jur isd ict ions where t he appropr i ate t a x t r ea t ment is uncer ta i n. – T e ste d ma n a gement’ s pr oc edu r es ov er a nt i-mon e y lau nder i n g re g u lat ions and en ha nce d due di l igence pr oc edu r es, for a sa mple of player s for bot h ven ue s a nd dig it a l i n t he UK a nd Spa i n: – obta ined a nd re ad k now you r cu stomer ( K YC) doc u menta t ion to ensu r e t hat it wa s in l i ne wit h the re qu i r ements of t he Gr oup’ s pol icie s. – where a n y cha n ges to l i m it s had be en gr a nte d in t he yea r , for a sample of cus tomer s we obta i ned t he accou nt t ra nsac t ion hi st or y and pro ce du re s a nd ver i ed t h at t hes e were i n li ne w it h t he relev a nt pol icies a nd la ws a nd r eg u la t ions. – we a na l y se d t he lis t of self- exclude d user s for t he yea r to ver i f y t ha t t he number of day s of exclusion req uest ed b y t he user ha s pa sse d befor e acce ss wa s g ra nted to t he user . – A ss ess ed appr opr ia tenes s of dis closu r es i n t he A n nua l Repor t and Accou nt s by compa r ing t he d isc losu r es ag a i ns t t he req ui r ements under I nter n at iona l Fi n a nci a l Repor t i ng St a nda rd s. Ba se d on our audit pro ce dur e s per for me d, we concluded t ha t ma n ag ement ha ve appropr iately a ss es se d a nd accou nted for t he na ncia l i mplica t ions for non-compl ia nce w it h laws a nd reg u l at ions a nd t h at d isc losu r es in t he n a nci a l st atement s a r e appropr i ate. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 155 Ri sk Ou r r e sp ons e to t he ri sk Ke y obs er va t ion s co mmu n ic at e d to t he A ud it C om m it tee Revenue re cog n it ion includ i ng t he r isk of ma n ag ement over r ide ( £6 44. 0 milli on, 2021 : £ 329 .6 m i ll ion) Refer to t he Audit Com m it t ee Repor t (page 107 ); Account i ng pol icies (pa ge 16 7 ); a nd note 2 of the Con sol ida ted Fi n a nci a l St atement s (pag e 1 76) Ou r as se ssment is t ha t t he major it y of re venue t ra nsac t ion s, for bot h t he venues and d ig it a l bus ine sse s, a r e non-complex, w it h n o judgement applied o ver t he a mou nt re cor de d . W e cons ider ther e is a potent ia l for ma na gement over ride to ach iev e re venue ta r ge ts v i a topside ma nua l j our na l ent r ies pos te d to re venue. Ou r pro ce du re s were des ig ned to tes t our a sse ssment t ha t re venue should be cor r el ate d closel y to ca sh ba n ke d (for the Ret a i l bus ines s ), a nd to cus tomer ba la nces a nd ca sh (for the Dig it a l bu sine ss) , a nd to identi f y t he ma nua l adju st ment s t ha t a re m ade to re venue for f u r t her test i ng. W e upd ate d our under s t a nd i ng of the r evenue pro ces se s a nd teste d cer ta i n ke y na nc ia l a nd I T cont r ols ov er t he rec og n it ion and mea sur ement of re venue in the a r ea s most su scep t ible to ma n ag ement over r ide. For rev enue i n eac h f u l l a nd spec i c scop e audit loc at ion: – W e per forme d wa l k th r ough s of sign i c a nt cl a sse s of rev enue t ra nsac t ion s to under st a nd sig n i c a nt pro ce ss es a nd identi f y a nd as ses s t he desig n ef fec t iveness of ke y contr ol s. – For 99 . 3% o f r e venue, we used dat a a n a l y tics to ols to per form a cor r ela t ion an a l ys is to identi f y t hose r ev enue jou r n a l s for which t he cor r esp ondi ng ent r y wa s not to cas h (for Reta i l) a nd ca s h or cu stomer ba l a nces (for Dig it a l ). T hese identi e d ent r ies i ncluded V AT , c us tomer incent iv es, bin go dut y and jack po t prov isions a nd we obta i ne d cor rob orat ing e v idence for such entr ies. T he rem a i n in g 0. 7% of rev enue was subst a nt i vel y test ed – For a s a mple of m ater ia l cus tomer incent iv es we obta i ned e v idence t ha t t he exp ens e wa s cor r ec t l y net t ed of f ag a i ns t re venue. – W e ver i ed t he reco g nit ion a nd meas ur ement of r e venue by tr aci ng a sa mple of t ra n sac t ion s, selec te d at ra ndom t h r oughout t he yea r, to ca sh ba n ke d to ver i f y the acc u rac y of r ep or t ed r evenue. – For venu e s, we at tende d a nd re -per forme d ca sh cou nts at a sa mple of th i r t y-t wo ca sino a nd bin go venues, selec te d usi ng a r isk-base d appro ach a nd a l so inc luded a ra ndom sa mple, at yea r end to ver if y t he appropr i ate c ut-of f of rev enue. – For the Spa ni sh venues, we at tended a nd re-p er for me d ca sh count s at a sa mple of s i x venues, selec te d usin g a ri sk- b as ed appr oac h a nd a ls o included a ra ndom s a mple, at yea r end to ver if y t he appropr iate cut-of f of r e venue. Dig it a l se g ment spec i c pro ce dur e s: – W e appl ied da ta a n a l y tic s tools to r e-p er for m t he mont h ly re conci l ia t ion bet ween re venue, ca sh a nd cu stomer ba l a nces. – For each bra nd , usi ng tes t accou nt s in t he li ve ga m i ng env i r on ment, we test ed t he int er fac e bet ween ga mi ng ser ver s, dat a wa rehouse a nd t he accou nt i ng s ys tem. Ba se d on our audit pro ce dur e s we concluded t ha t re venue, and adju st ment s to re venue, ar e appr opr ia tely re cog n i se d a nd re cor ded . In t he pr ior yea r, ou r aud itor’s r epor t included a ke y audit mat ter in r elat ion to goi ng concer n. In t he cu r r ent yea r, the ca sh po sit ion ha s st r eng t hened due to the re ceipt of net £77 mi l l ion in r ela t ion to the HM RC V AT ca s e, £8. 8 mi l l ion in con nec t ion to Belg iu m sa le in t he pr ior yea r a nd t he clubs tr ad i ng for t he major it y of the yea r . A s such, we do not c onsider goi ng concer n to be a ke y audit mat ter for the cu r r ent yea r au d it . Independent auditor’ s report Continu ed The Rank Group Plc Annual Report 2022 156 Our application of materiality W e apply t he concept of mat er ia lit y in pla nn i ng a nd per for mi ng t he audit , in e va lu at i ng t he ef fec t of identi ed mi ss t atement s on the audit a nd i n for mi ng our aud it opin ion. Mate ria lit y T he mag n it ude of a n om is sion or mi ss t atement t ha t, i nd iv idua ll y or in t he ag g re gat e, could r ea son ably be ex p ec te d to in uence the ec onomic deci sions of t he user s of the n a nci a l st at ements. Mater ia l it y prov ides a b as is for deter mi n in g t he nat u r e and ex tent of our audit pr oce du r es. W e deter mi ned ma ter ia lit y for the Gr oup to be £ 3.5 mi l l ion (2021: £2. 3 mi l l ion) , wh ich is 0.5 % r e venue (2021: 0.7% ) of re venue. W e bel ieve t h at re venue prov ides us w it h a n appr opr ia te meas ur e g iven t he volat il it y of the Gr oup’ s pr ot abi l it y which is yet to re co ver to a level repr es ent at iv e of the sc a le of the busi nes s follo w i ng t he impac t of COVI D -1 9 pa ndem ic enfor ce d tra din g r estri cti on s. W e deter mi ned ma ter ia lit y for the Pa r ent Compa ny to be £7 .7 mi l l ion (2021: £7 .0 mi l l ion) , wh ich is 1 % (2021: 1 % ) of equ it y . T he Pa rent Compan y is a non -t rad i ng ent it y and as such , equ it y is the most rele va nt mea sur e to t he st a keholder s of the ent it y . Performance mat eriality T he applica t ion of mater ia lit y at the ind i v idua l accou nt or b a la nce l e vel . It is set at a n a mount to re duce to a n appropr i atel y low level t he probabi l it y th at t he ag g re gat e of uncor r ec t ed a nd unde tec t ed mi ss t atement s excee d s mater ia l it y . On t he basis of our risk a ss ess ments, toge t her wit h ou r as se ssment of t he G r oup ’s over a l l cont r ol env ir on ment, our judgement wa s t ha t per for m a nce ma ter ia lit y wa s 50% (2021: 50% ) of our pla n n in g mater ia l it y , na mel y £1.8 mi l l ion (2021: £1.2 mi l l ion) . W e ha ve set p er for m a nce mat er ia lit y at t h is per cent a ge to ta ke into accou nt t he in her ent l y high-r i sk nat u r e of the i ndust r y in wh ich t he Gr oup opera tes a s wel l as t he impac t COV I D - 19 has h ad on the Gr oup’ s oper at ions. W e ha ve a l so t a ken i nto consider at ion cha nges w it hi n t he Gr oup a nd t he impac t t h is cou ld hav e on the oper at ions of t he Gr oup. Audit work at component loc at ions for t he pur pose of obta in i ng audit co ver ag e over sig n i ca nt n a nci a l st atement accou nt s is under ta ken base d on a percent a ge of tota l per for ma nce mat er ia lit y . T he per form a nce mat er ia l it y set for eac h component is ba se d on the rel at i ve sca le and r isk of t he component to the Gr oup as a whole and our a ss ess ment of t he risk of mi ss t atement at t ha t component. In t he cu r r ent yea r , t he ra nge of per for ma nce mater ia lit y a l loc ate d to components wa s £0.4 mi l l ion to £1. 1 mi l l ion (2021: £0.2 mi l l ion to £0.6 mi l l ion) . Reporting threshold A n a mount belo w wh ich identi e d mi ss t atement s a re con sidere d as b ein g clea r ly t r i v ia l. W e ag r e ed w it h the Audit C omm it tee t h at we would r epor t to them a l l uncor rec t ed audit d i f fer ences i n exces s of £0.2 mi l l ion (2021: £0. 1 m i l l ion) , wh ich is set at 5% of pla n n i ng mat er ia lit y , as wel l as d i f fer ences below t h at t h r eshold t hat , i n our v iew, wa r ra nte d repor ti n g on qua lit at i ve gr ou nds. W e ev a lua te a ny u ncor r ec te d mi ss t atement s aga i n st bot h t he qua nt it at i ve mea sur e s of mater ia lit y d isc us se d abov e a nd in l ight of other rele va nt qua l ita t iv e consider at ions i n for m in g our opin ion. Other information T he ot her in for m at ion compr ise s t he in for mat ion included i n t he A nnua l Repor t set out on page s 1 to 1 49 , inc ludi ng t he v e-y ea r r ev iew and t he sha reholder in for mat ion set out on pages 212 to 214, ot her t ha n the na nc ia l s ta tement s and our aud itor’s r ep or t t her eon. T he Di r ec t ors a r e res pons ible for t he o t her in for m at ion conta ined w it hi n t he A n nua l Repor t. Ou r opin ion on the na ncia l st at ements does not cov er t he other i n for ma t ion and , excep t to the ex t ent ot her wi se ex pl icit l y st ate d in t h i s rep or t , we do not expr es s a ny for m of as su ra nce conclusion there on. Ou r re spon sibil it y is to re ad t he ot her in for mat ion and , in doi ng so, consider whet her t he ot her in for m at ion is mater i a l l y incon sis tent w it h t he na ncia l st at ements or our k nowle dge obt a i ned i n t he cour se of the aud it, or ot her wi se app ea r s to be mat er ia l ly mi ss ta ted . If we ident if y such mat er ia l i ncons ist encies or appa r ent mat er ia l m is st a tements, we a r e re qu i re d to deter m i ne whet her t h is g ive s r is e to a mater i a l m is st atement in t he n a nci a l st atement s t hems elve s. If, ba se d on t he work we hav e per for me d, we conclude t hat t here is a mat er ia l mis st atement of t he ot her in for m at ion, we a r e re qu i re d to rep or t tha t fac t. W e ha ve not h i ng to rep or t i n t h is re ga r d . Opinions on o t her matters prescribed by th e Companies A ct 2006 In ou r opin ion, t he pa r t of t he Di re c tor s’ Remunera t ion Repor t to be au d it ed ha s been pr oper ly pr epa r ed i n accor d a nce w it h t he Compa n ies Ac t 20 06. In ou r opin ion, bas ed on t he work under ta ken in t he cour se of t he audit : – t he in for m at ion gi ven in t he St r at eg ic Repor t and t he Di r ec tor s’ Repor t for t he na ncia l yea r for w h ich t he n a nci a l st atement s a r e prepa red is con sis tent w it h t he na ncia l st at ements; a nd – t he St ra teg ic Repor t and t he Di re c tor s’ Repor t have be en prep a r ed i n accor d a nce w it h appl icable lega l require me nts . Ma tte rs on w hich we a re re qui red to rep or t by e xce pti on In t he l ight of the k nowle dg e and under s ta ndi ng of t he Gr oup and t he Pa r ent Compa n y a nd its env i r on ment o b t a i ned in t he cour s e of the audit , we hav e not identi ed ma ter ia l mis st at ements in t he St r ateg ic Repor t or the Di r ec tor s’ Repor t . W e ha ve not h i ng to rep or t i n re spe c t of the fol low i ng mat ter s in r elat ion to wh ich t he Compa n ies Ac t 20 06 r equ i r es us to re por t to you if, i n our opin ion: – adeq uate acc ount ing re cor d s hav e not been kep t by t he Pa r ent Compa ny , or re t u r n s adequ ate for our aud it have not been r ec eive d f rom br a nches not v isit ed by us; or – t he Pa rent Compa ny n a nc ia l st atement s a nd t he pa r t of t he Di re c tor s’ Remunera t ion Repor t to be au d it ed a r e not in ag r eement w it h t he accou nt i ng re cor d s a nd ret u r n s; or – cer ta i n d is closu r es of Di re c tor s’ remu nerat ion sp ec i e d by la w a r e not made; or – we hav e not recei ved a l l the in for m at ion a nd expla nat ions we requ i r e for our audit . The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 157 Corporate G ov ernance Statement W e ha ve re v ie we d t he Dir ec t or s’ s t atement in r elat ion t o goin g concer n, longer -ter m v iabi l it y and t h at pa r t of the Cor p orat e G over na nce St atement rel at i ng to t he Gr oup a nd compa ny’s c omplia nce wit h the pro v i sions of t he U K Cor por ate G ov er n a nce Cod e spec i e d for our re v iew b y t he Li st i n g Rule s. Ba se d on the work under ta ken as pa r t of our audit , we hav e concluded t hat ea ch of the fol low i ng elements of t he Cor por at e G over na nce St atement is mat er ia ll y consi st ent wit h the na ncia l st at ements or our k now led ge obta ined du r i ng t he audit : – Di r ec tor s’ sta tement w it h re ga r d s to t he appropr iatenes s of adopti ng t he goi ng concer n ba sis of accou nt i ng set out on page 82; – Di r ec tor s’ expl a n at ion as to it s as se ssment of the compa n y’ s pr osp ec t s, t he per iod t h is a ss es sment cover s a nd why t he per iod is appr opr i ate set out on page 82; – Di r ec tor ’ s st at ement on w het her it ha s a rea s onable ex pe c t at ion t hat t he Gr oup w i l l be able to conti nue in operat ion a nd meet s it s lia bil it ies set out on pa ge 82; – Di r ec tor s’ sta tement on fai r, bal a nce d a nd under st a ndable set out on p ag e 109; – Boa rd ’ s con r mat ion t hat it has c a r r ied out a robust a ss ess ment of t he em er g i ng a nd pr inc ipa l r isk s se t out on page 83; – T he sec t ion of the A n nua l Repor t t h at desc r ibe s t he re v iew of ef fec t iveness of r isk ma nag ement and int er na l contr ol sy s tems se t out on page; a nd; – T he sec t ion desc r ibi ng t he work of the Audit C omm it tee se t out on p ag e 1 0 7 . Responsibilities of Directors A s ex pla i ned more f u l l y in t he Di r ec tor s’ Resp onsibi l it ies St atement set out on page 1 47 , t he Di r ec tor s a r e re spon sible for t he prep a r at ion of the na ncia l st at ements a nd for bein g sat i se d t hat t he y g ive a t r ue a nd fa i r v iew, a nd for such i nter n a l cont r ol as t he di r ec t or s deter m i ne is neces sa r y to enable t he prepa r at ion of n a nci a l st atement s t ha t a re f r ee f r om mat er ia l mi ss t atement, whet her due to fraud or err or . In pr epa r ing t he na ncia l st at ements, t he Di re c tor s a r e res pons ible for a s ses si ng t he Gr oup and Pa r ent Compa n y’ s abi l it y to cont inue as a goi ng concer n , di sclo sin g, as appl icable, mat ter s rel ate d to going concer n a nd usi ng t he goin g concer n ba sis of accou nt in g un les s t he Dir e c tor s eit her intend to liqu id ate t he Gr oup or the Pa r ent Compa ny or to cea se oper at ions, or ha ve no rea l i st ic a lter nat i ve but to do so. Audit or ’s responsi bilities for the aud it of the n anc ial sta tem ent s Ou r objec t i ves a r e to obta in re a sonable as su r a nce about whet her t he na ncia l st atement s as a whole ar e f r ee f r om mat er ia l m is st a tement, whet her due to f raud or er ror, and to issue a n audit or’ s rep or t tha t includes ou r opin ion. Rea son able ass ur a nce is a h igh level of ass ur a nce, but is not a gua ra nte e t ha t a n audit conduc ted i n accor da nce wit h IS A s ( UK ) wi l l a l wa ys de tec t a mat er ia l mi ss t atement when it exi st s. Mi ss ta tements c a n a r i se f r om fr aud or err or a nd a r e consider ed ma ter ia l if, ind i v idua l l y or in t he ag g re gate, t he y cou ld rea s onabl y be ex pe c ted to i n uence t he econom ic decision s of users t a ken on t he basi s of thes e na ncia l st at ements. Exp lana tion as to wh at ex tent the au dit was co nside red c apab le of dete cting i rregu lariti es, including fraud Ir reg u l a r it ie s, includ i ng f raud , a re in st a nc es of non-compli a nce w it h la w s a nd reg u l at ions. We de sig n pro ce du re s in l i ne wit h our resp ons ibil it ies, out l i ned abo ve, to detec t i r r eg u l a r it ies, includi ng f raud. T he r i sk of not de te c t i ng a mater i a l mi ss t atement due to fr aud is higher t ha n t he r isk of not detec t i ng one resu lt ing f rom er r or, as fr aud may i nvol ve del iber ate concea lment by , for exa mple, for ger y or intent ional m is repr es ent at ions, or t h r ough col lusion. T he ex tent to wh ich our pro ce dur e s a re c apable of detec t i ng ir reg u l a r it ie s, includ i ng f raud is det a ile d b elo w . Howe ver, t he pr ima r y r esp onsibi l it y for t he pre vent ion a nd detec t ion of fr aud re st s w it h bot h thos e cha rge d w it h go ver n a nce of the compa n y a nd ma na gement. – W e obt a i ned a n under s ta ndi ng of t he lega l a nd re g u la tor y fr a me work s t ha t a r e applicable to t he Gr oup and deter mi ned t ha t t he most sig n i ca nt a r e t he Compa n ies Act 20 0 6, t he UK Ga mblin g Com m ission, G a mbl in g Act 200 5, Money Lau nder i ng re g u lat ions, T he A lder ne y Ga mbl i ng Cont r ol Com m is sion, T he Span i sh Ga mi ng Ac t a nd Licen se Cond it ions & T he Code of Pr ac t ice 20 08. I n add it ion, we concluded t ha t t here a r e cer ta i n sig n i c a nt law s a nd reg u l at ions wh ich ma y ha ve a n ef fec t on t he deter m i na t ion of the a mount s a nd dis closu r es in t he n a nci a l st atement s bein g the Li st i ng Ru les of the UK Li st ing Aut hor it y , a nd thos e law s and re g u lat ions relat ing to da ta pr ote c t ion, employ ment law a nd t a x leg is lat ion. Independent auditor’ s report Continu ed The Rank Group Plc Annual Report 2022 158 – W e under s to od how T he Ra n k G roup Plc is comply i ng w it h thos e f ra mework s by ma k in g enqui r ies of ma n ag ement, inter na l aud it, t hos e re spon sible for lega l a nd compl ia nce pr oce du r es a nd t he compa ny se cr et a r y . W e cor r obor ate d our enqu ir ies th r ough ou r re v iew of boa r d m i nutes, paper s pr ov ided to the Audit C omm it tee, cor r e spondence re ceiv ed f r om reg ula tor y bod ies a nd in for mat ion rela t i ng to t he Gr oup’ s a nt i-money lau nder i ng pro ce dur e s as pa r t of our wa l k th r ough pr oce du r es. – W e a sse ss ed t he sus cept ibi l it y of the Gr oup’ s n a nci a l st at ements to mat er ia l mi ss t atement, i nclud in g how fr aud mi ght occ ur b y meet i ng w it h ma n ag ement wit hi n va r ious par ts of t he busi ness to under s t a nd where t he y consider ed t her e wa s susc ept ibi l it y to f raud . W e a ls o consider ed per for ma nce ta rge t s and t hei r in uence on ma n ag ement to ma na ge ea r ni ng s or in uence the per cep t ions of a na l y st s. W e cons idere d t he prog r a m mes a nd cont r ols t h at t he Gr oup has es t abl ishe d to add r es s t he ri sk identi e d , or th at ot her w ise pr ev ent, det er and det ec t f raud ; and how sen ior ma n ag ement monitor s t hos e prog r a m mes a nd cont r ols. W her e t h is r isk w as con sidere d to be hig her , we per for med audit pro ce dur e s to add re ss eac h identi ed f raud r isk . – Ba se d on th i s under st a ndi ng we desig ne d our audit pr oc edu r es to identi f y non-compli a nce w it h such la w s a nd reg u l at ions. O ur pr oc edu r es inv olve d audit pr oc edu r es i n resp ec t of ‘Complia nce wit h laws a nd re g u la t ions’ ( a s des cr ibed abov e ) a s wel l as a re v ie w of boa r d mi nutes to ident i f y n on- compli a nce w it h such la w s and re g u lat ions; rev iew of r ep or t ing to t he Audit C omm it tee on compli a nce w it h re g u lat ions; enquir ies wit h the Gr oup’ s genera l couns el, Gr oup ma n ag ement a nd inter na l audit ; tes t i ng of ma nua l jour n a l s a nd re v iew of cor r esp ondence f rom Reg ula tor y aut horit ies. – T he Gr oup operat es in t he ga m i ng indu st r y wh ich is a high l y re g u lat ed env i r on ment. T he Sen ior Stat ut or y Audit or ha s ex per ience ser v i ng cl ient s in a va r iet y of public UK- l i st ed compa n ies inc ludi ng t hos e in h igh ly re g u lat ed env i r on ments. She re v iew ed t he ex per ience a nd ex per t ise of t he enga gement tea m to ens ur e t h at t he tea m h ad t he appropr i ate compe tence a nd capabi l it ies, wh ich i ncluded t he use of exp er ts where appr opr ia te. – A s t he ga m in g indus t r y is hi gh ly re g u lat ed , we have obt a i ned a n under s ta ndi ng of t he reg u l at ions a nd t he potent i a l impac t on t he Gr oup and in a ss es sin g t he contr ol env i r on ment we ha ve consider ed t he compl ia nce of t he Gr oup to the se re g u lat ions as pa r t of ou r audit pr oc edu r es, wh ich i ncluded a re v ie w of a n y sign i c a nt cor r esp ondence re ceiv ed f r om t he reg u l ator. – Ou r over se a s tea ms spe ci ca l l y repor ted on thei r pro ce du re s a nd nd i ng s in rel at ion to comp l i a nce w it h t he a ppl icable la ws a nd re g u lat ions. Thes e nd in gs were d i sc us sed w it h the tea m and suppor ti ng work p aper s r ev iewed for a sa mple of lo ca t ions. A fu r ther desc r ipt ion of ou r re spon sibil it ie s for the aud it of the na ncia l st at ements is loca ted on t he Fin a nc ia l Rep or t ing Cou nci l ’ s website at htt ps:/ / w w w . f r c.org. uk / audit ors re spon sibil it ies. Th is des cr iption for ms pa r t of our auditor ’ s rep or t. Ot her m at ter s we are re qu ire d to address – Follow ing a compet iti ve tender pro ces s, we were r eapp oint ed by t he Compa ny at its A nnua l G ener a l Meet i ng on 1 7 Oc t ober 2019 t o audit t he na nc ia l st atement s for t he yea r endi ng 30 June 2020 a nd subsequent n a ncia l per iod s. – T he per iod of tot a l un i nter r upted enga gement includ i ng pre v ious rene wa l s a nd re appoi nt ment s is t h ir teen yea r s , cover i n g t he yea r s endi ng 31 D ec ember 2010 t o 30 June 2022. – T he non-au d it s er vice s proh ibited b y t he FRC ’s Et hica l Sta nd a r d were not pro v ided to t he Gr oup or the Pa r ent Compa n y a nd we rema i n i ndependent of the Gr oup a nd t he Par ent Compa n y in conduc t i ng t he audit . – T he audit opin ion is consi stent w it h the add it iona l repor t to the audit com m it tee Use of o ur re por t T h is r epor t is made solely to t he compa ny’s members , as a bod y , in acc ord a nce w it h Ch apter 3 of Pa r t 16 of t he C ompa n ies Ac t 200 6. Ou r aud it work has b een u nder t a k en so t ha t we might st at e to the compa n y’ s members t hos e mat ter s we ar e re qu i r ed to st ate to t hem in a n aud itor’s r ep or t a nd for no other pu r po se. T o t he fu l les t ex tent per m it ted by l aw, we do not accept or as su me resp onsibi l it y t o an yone other t ha n t he compa ny a nd t he compa ny’s member s as a bod y , for ou r audit work, for th i s repor t, or for the opin ions we ha ve for med. Annie Graham ( Senior stat utor y auditor ) for and on beha lf of Er nst & Y ou ng L LP , St at utor y Aud itor Gla sgow 18 Augu st 2022 The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 159 G roup income statemen t for t he yea r ended 30 J une 20 22 Y e a r ende d 30 Ju ne 2022 Year e nde d 30 Ju ne 2 021 Note Unde rl y i ng £m Sep a ra tel y disclosed item s (not e 4) £m Tot a l £m Und erl yi ng £m Se pa r at el y disclosed ite ms (no te 4) £m To t a l £m Con t inuing ope rat ions Revenue 2 644.0 – 644.0 329.6 – 329.6 Cos t of sa les (386.5) (25.8) (412.3) (305.4) – (305.4) Gro ss pro t 257.5 (25.8) 231.7 24.2 – 24.2 Ot her operat ing i ncome 2,18 3.6 88.3 91.9 64.4 – 64.4 Ot her operat ing co st s (221.3) (20.2) (241.5) (173.1) (8.4) (181.5) Group operat ing pro t (los s) 2,3 39.8 42.3 82.1 (84.5) (8.4) (92.9) Finan cing: – na nce cost s (13.1) – (13.1) (14.0) – (14.0) – n a nc e i nco me 0.1 – 0.1 0.1 – 0.1 – ot her na ncia l ( loss es) gai n s (0.4) 5.6 5.2 (0.5) – (0.5) T o t a l net na ncing ( ch a r ge) i ncome 5 (13.4) 5.6 (7.8) (14.4) – (14.4) Pr ot ( los s ) b efore ta xat ion 26.4 47.9 74.3 (98.9) (8.4) (107.3) Ta x a t io n 6 (6.4) (10.5) (16.9) 10.1 0.3 10.4 Pr ot ( los s ) for t he yea r fr om co ntinuin g o pera tion s 20.0 37.4 57.4 (88.8) (8.1) (96.9) Dis cont i nued operat ions – prot 8 – 8.8 8.8 1.1 23.8 24.9 Pr ot ( los s ) for t he yea r 20.0 46.2 66.2 (87.7) 15.7 (72.0) Att ribut able to: Equ it y holders of t he pa rent 20.0 46.2 66.2 (87.8) 15.7 (72.1) Non-c ont r ol l i n g i nter es t – – – 0.1 – 0.1 20.0 46.2 66.2 (87.7) 15.7 (72.0) Ea r n i ngs ( los s ) per sh a re at t r ibut able to equ it y sha r eholders – ba s ic 10 4.3p 9.9p 14.2p (20.1)p 3.6p (16.5)p – d i lute d 10 4.3p 9.9p 14.2p (20.1)p 3.6p (16.5)p Ea r n i ngs ( los s ) per sh a re – co ntinuin g o pera tion s – ba s ic 10 4.3p 8.0p 12.3p (20.3)p (1.9)p (22.2)p – d i lute d 10 4.3p 8.0p 12.3p (20.3)p (1.9)p (22.2)p Ea r n i ngs per sh a re – di sc ont inued ope rat ions – ba s ic 10 – 1.9p 1.9p 0.2p 5.5p 5.7p – d i lute d 10 – 1.9p 1.9p 0.2p 5.5p 5.7p The Rank Group Plc Annual Report 2022 160 G roup statement of comprehe nsi v e income for t he yea r ended 30 J une 20 22 Note Y e a r ende d 30 June 2022 £m Y e a r end ed 30 Ju ne 2021 £m Compr ehen sive i nc ome: Pr o t ( los s ) for t he yea r 66.2 (72.0) Ot her c omprehensive i ncome: Items t hat ma y be recl as si e d subsequent l y to prot or loss: E xch a ng e adju st ment s net of t a x – (4.2) Items t hat ma y not be recla s si ed subs equent ly to pro t or loss: Ac t ua ri a l ga i n on ret ir ement benet s net of ta x 31 0.1 0.2 T o t a l comprehensive i ncome (lo ss) f o r the yea r 66.3 (76.0) Att ribut able to: Equ it y holders of t he pa rent 66.3 (76.1) Non-c ont r ol l i n g i nter es t – 0.1 66.3 (76.0) T he ta x ef fe c t of items of compr ehensi ve inc ome is d isc lose d i n note 6. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 161 Balan ce sheets at 30 J une 20 22 Gr oup Compa ny Note As a t 30 June 2022 £m A s at 30 Ju ne 2021 £m As a t 30 June 2022 £m A s at 30 Ju ne 2021 £m As set s Non-c u r r ent a s se t s In ta ngi bl e ass ets 11 493.6 504.6 – – Pr op er t y , pla nt a nd equipment 12 113.1 117.4 – – Right - of -use assets 13 101.6 128.6 – – Inv es t ments i n subsid ia r ies 15 – – 1,131.8 1,131.8 Defer r e d ta x a sse t s 23 1.4 3.6 – – Ot her rec eiva bles 17 6.7 5.1 – – 716.4 759.3 1,131.8 1,131.8 Cu r rent a ss et s In ventor ies 16 2.3 2.0 – – Ot her rec eiva bles 17 34.2 16.3 – – G over nment g r a nt s 18 – 0.8 – – Income t a x rec eiva ble 20 8.1 10.1 – – Ca sh a nd s hor t-ter m depo sit s 27 97.9 69.6 – – 142.5 98.8 – – T o t a l a sset s 858.9 858.1 1,131.8 1,131.8 Li abil it ie s Cu r r ent lia bi li t ies Trade a nd ot her pa yables 19 (131.1) (126.3) (0.4) (0.6) Le a se l iabi l it ies 32 (40.4) (42.2) – – I ncome t a x p a ya ble 20 (4.2) (3.1) – – Fi na nc ia l l i abi l it ies – nan cial guar ant ee s 21 – – (2.6) (3.1) – loa ns a nd bor ro w i ng s 21 (33.9) (39.4) (387.1) (371.9) P r o v i s ion s 24 (6.9) (5.4) (0.1) (0.1) (216.5) (216.4) (390.2) (375.7) Net cur r ent liabi l it ie s (74.0) (117.6) (390.2) (375.7) Non-cur r ent liabi l it ies Trade a nd ot her pa yables 19 – – – – Le a se l iabi l it ies 32 (141.3) (164.7) – – Fi na nc ia l l i abi l it ies – loa ns a nd bor ro w i ng s 21 (44.1) (77.7) – – Defer r e d ta x l iabi l it ies 23 (20.5) (18.3) – – P r o v i s ion s 24 (5.6) (16.0) (0.9) (0.9) Ret i r ement benet oblig at ions 31 (3.6) (3.8) – – (215.1) (280.5) (0.9) (0.9) T o t a l li abi lit ies (431.6) (496.9) (391.1) (376.6) Net as set s 427.3 361.2 740.7 755.2 The Rank Group Plc Annual Report 2022 162 Gr oup Compa ny Note As a t 30 June 2022 £m A s at 30 Ju ne 2021 £m As a t 30 June 2022 £m A s at 30 Ju ne 2021 £m Capit a l a nd res er ves at t r ibut a ble to the Compa ny’ s equ it y sha reholder s Sha r e c apit a l 25 65.0 65.0 65.0 65.0 Sh a re p remium 25 155.7 155.7 155.7 155.7 Capit a l r e dempt ion re ser ve 33.4 33.4 33.4 33.4 E xch a ng e t ra nsl at ion re ser ve 14.6 14.6 – – Reta ined ear ni ngs 158.7 92.6 486.6 501.1 T o t a l equ it y before non-cont rol l i ng inter est 427.4 361.3 740.7 755.2 Non-c ont r ol l i n g i nter es t 15 (0.1) (0.1) – – T o t a l sha r eholders’ equit y 427.3 361.2 740.7 755.2 T he loss for t he yea r ended 30 Ju ne 2022 for t he Compa n y wa s £14.5m ( yea r ended 30 June 2021: loss of £ 7 .9m) . T hese n a nci a l st at ements wer e appro ve d by t he Boa rd on 1 7 Aug us t 2022 a nd signe d on its beha lf b y: John O’Reil ly Richard Har ris Ch ief E xe cut ive Chief Finan cial Ofcer The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 163 Statemen ts of chang es in equit y for t he yea r ended 30 J une 20 22 Gro up Sha re capit a l £m Sha re pre mium £m Capit a l re dem pt ion reser ve £m Exc ha ng e trans lati on reser ve £m Ret a i ne d ear n ings ( l o ss) £m Reserves at t r ib ut able to t he G r oup’s equ it y sha r eholders £m Non- cont r oll i ng int erest £m To t a l equ it y £m At 1 July 2020 54.2 98.4 33.4 18.8 161.3 366.1 (0.2) 365.9 Compr ehen sive i nc ome: ( Lo ss) pr o t for t he yea r – – – – (72.1) (72.1) 0.1 (72.0) Ot her comprehensi ve inc ome: E xch a ng e adju st ment s net of ta x – – – (4.2) – (4.2) – (4.2) Ac t ua ri a l ga in on re t i rement bene t s net of ta x – – – – 0.2 0.2 – 0.2 Tota l compr ehensi ve (lo ss) income for the yea r – – – (4.2) (71.9) (76.1) 0.1 (76.0) IF R S 16 adopt ion defer r ed ta x adju st ment 1 – – – – 3.4 3.4 – 3.4 Iss ue of sha r e ca pita l (see note 25 ) 10.8 57.3 – – – 68.1 – 68.1 T ra nsact ions wit h ow ners: Debit in r e spe c t of employee s ha r e sc hemes in clu ding tax – – – – (0.2) (0.2) – (0.2) At 30 June 202 1 65.0 155.7 33.4 14.6 92.6 361.3 (0.1) 361.2 Compr ehen sive i nc ome: Pr o t for t he yea r – – – – 66.2 66.2 – 66.2 Ot her comprehensi ve inc ome: E xch a ng e adju st ment s net of ta x – – – – – – – – Ac t ua ri a l ga in on re t i rement bene t s net of ta x – – – – 0.1 0.1 – 0.1 Tota l compr ehensi ve inco me for the yea r – – – – 66.3 66.3 – 66.3 T ra nsact ions wit h ow ners: Debit in r e spe c t of employee s ha r e sc hemes in clu ding tax – – – – (0.2) (0.2) – (0.2) At 30 June 2022 65.0 155.7 33.4 14.6 158.7 427.4 (0.1) 427.3 1. Y e a r end ed 3 0 Ju ne 202 1 ad jus t me nt r el at i n g to de fer r e d t a x o n lea s e ba l a nc e s t ha t w as n ot co ns ider e d ma te r ia l by t he D i r ec t or s. The Rank Group Plc Annual Report 2022 164 Comp a ny Sha re capit a l £m Sha re pre mium £m Capit a l re dem pt ion reser ve £m Exc ha ng e trans lati on reser ve £m Ret a i ne d ear n ings (losses ) £m Reserves at t r ib ut able to t he C o m p a n y ’s equ it y sha r eholders £m Non- cont r oll i ng int erest £m To t a l equ it y £m At 1 July 2020 54.2 98.4 33.4 – 509.0 509.0 – 695.0 Lo ss a nd to ta l comprehen sive e x pen se for t he yea r – – – – (7.9) (7.9) – (7.9) Iss ue of sha r e ca pita l (see note 25 ) 10.8 57.3 – – – – – 68.1 At 30 June 202 1 65.0 155.7 33.4 – 501.1 501.1 – 755.2 Lo ss a nd to ta l comprehen sive e x pen se for t he yea r – – – – (14.5) (14.5) – (14.5) At 30 June 2022 65.0 155.7 33.4 – 486.6 486.6 – 740.7 The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 165 St ateme nts of cas h ow for t he yea r ended 30 J une 20 22 Gr oup Compa ny Note Ye a r e n d e d 30 June 2022 £m Ye a r e n d e d 30 Ju ne 2021 £m Ye a r e n d e d 30 June 2022 £m Ye a r e n d e d 30 Ju ne 2021 £m Ca sh ows f rom oper at i ng act iv i t ies Ca sh gener ate d f r om (used i n) opera t ions 26 171.3 (15.3) 15.5 – Inter e st r ec eive d 5.8 0.1 – – Inter e st pa id (12.1) (15.0) (15.5) – Ta x p a i d (9.9) (1.4) – – Net cash generat ed f rom (used in) operat i ng act ivit ies 155.1 (31.6) – – Ca sh ows f rom i nvest ing act iv itie s Purchas e o f in tangib le asse ts (14.5) (15.9) – – P ur c ha se of pr oper t y , pla nt and e qu ipment (26.1) (6.3) – – Pr o ce ed s f r om sa le of busines s 8 8.8 25.2 – – Acqu is it ion of a subsidi a r y , ne t of ca sh ac qu ir e d (0.6) – – – Net cash (used i n) generate d fr om inves t i ng act iv i t ies (32.4) 3.0 – – Ca sh ows f rom na ncing act ivit ies Iss ue of sha r e ca pita l – 68.1 – – Repa y ment of ter m loa n s (29.6) (19.7) – – ( Repa y ment) d ra wdow n of re volv ing c r ed it f aci l it ies (11.0) 11.0 – – Le a se pr i ncipa l pay ment s (53.7) (31.8) – – Net cash (used i n) generate d fr om n a nci ng act ivit ies (94.3) 27.6 – – Net incre as e ( de cre a se) i n ca sh a nd shor t -ter m depo sit s 28.4 (1.0) – – Ef fec t of exch a ng e ra te ch a ng es (0.1) (0.5) – – Ca sh a nd s hor t-ter m depo sit s at s ta r t of ye a r 69.6 71.1 – – Ca sh a nd short-term depo sit s at end of yea r 27 97.9 69.6 – – The Rank Group Plc Annual Report 2022 166 Not es to t he nanc ial st ateme nts 1 General i nfor mation and accounting policies General infor mation T he consol id ate d na nc ia l s ta tements of T he Ra nk G roup Plc (‘ t he Compa ny’) a nd it s subsid ia r ie s (toget her ‘t he Gr oup ’ ) for t he yea r ende d 30 Ju ne 2022 were aut hor is ed for is sue i n accor d a nce w it h a r es olut ion of t he Di re c tor s on 1 7 Au g us t 2022. T he Compa n y is a publ ic li m ite d compa ny wh ich is l is te d on t he L ondon Stock E xch a ng e a nd is i ncor p orat ed a nd domic ile d in E n gla nd a nd Wales u nder re g ist rat ion number 0 31 4 076 9. T he add r es s of its reg i ster e d of ce is T OR, Sa i nt-C loud W ay , Ma iden head , SL6 8BN. T he Gr oup oper ate s ga m i ng s er v ices in G re at Br it a i n (i nclud in g t he Cha n nel Isl a nds) , Spa in a nd I nd ia . In for mat ion on t he Gr oup’ s s t r uct u re, i nclud i ng it s subsid ia r ie s, is pr ov ided in note 15. Summar y of sign ica nt accou nting policies T he pr i ncipa l acc ount ing p olic ies appl ied in t he prepa r at ion of t hes e cons ol idat ed a nd Compa ny n a nci a l st at ements a r e set out b elow . T he se pol icie s ha ve be en consi st ent ly a pplie d to a l l p er iod s pre sente d, e xcept w here note d below. 1.1 Bas is of prep arati on T he consol id ate d a nd Compa ny n a nci a l st atement s ha ve b een pr epa r e d u nder t he h is tor ic a l c os t con vent ion . 1.1.1 Stateme nt of compli ance T he consol id ate d a nd Compa ny n a nci a l st atement s ha ve b een pr epa r e d i n accor d a nce w it h UK-adopted I nter n at iona l Accounti ng Sta nda r ds. UK-ad opted Intern at ional Account ing St a nda rd s includes s t a nd a r ds i ssue d by t he Inter nat iona l Account i ng St a nd a r d s Boa r d (‘I A SB’) th at a r e endorse d for us e in t he UK. 1.1. 2 G oing co nce rn In a dopt i ng t he goi ng c oncer n ba si s for prepa r ing t he na ncia l i n for ma t ion, t he Di r ec tor s h av e consider ed t he circumstan ces im pa c ting th e Grou p during t he yea r as det a i le d in t he operat i n g re v ie w on pag es 1 2 to 27 , i nclud i ng t he budg et for 2022/ 2 3 (‘ t he ba se c a se’), a nd re cent t ra d i ng per for ma nce, a nd have r e v iew ed t he Gr oup’ s pr o jec te d compl ia nce w ith it s ba n k i ng c oven a nt s a nd acc es s to f u nd i ng opt ions for t he 1 2 mont hs end i ng 31 Aug us t 2023 for t he going concer n per iod. T he Di r ec tor s r e cog n is e t h at t her e is uncer ta int y at t h is t i me c ause d b y t he slower t h a n a nticipat ed r et ur n of c us tomers to U K la nd-ba s ed leisu r e enter ta in ment venues, t he impa c t of cu r r ent ge opol it ica l in uences on consu mer sent iment a nd d isp osable i ncomes, inc re a se in i n at ion rat es a nd t he overa ll i mpac t on con su mer dema nd . T he Di r ec t ors not e t ha t t h is h a s had a n impac t on t he acc u rac y of budget i ng a nd fore ca s t i ng in t he 2021 /2 2 na nc ia l yea r, a nd w it h t r ad i ng b ei ng wea ker t ha n a nt icipate d upon t he r eop en in g of venues, t h is h a s be en consider ed b y m a na gement when set t in g t he ba se c a se for t he 2022 / 23 na ncia l yea r . T he Di r ec tor s h av e re v ie wed a nd cha lleng ed m a na gement ’ s a ss umpt ions on t he Gr oup’ s b as e ca s e. Ke y cons iderat ion s a r e t he a ssu mpt ions on t he levels of cu stomer v i sit s i n t he venues busi ness es, t he number of r s t t ime a nd re t u r n i ng depos itor s in t he dig it a l busines se s, a nd t he aver a ge le vel of spend p er v isit for each . T he ke y ba se c a se a s sump t ions on cos ts a re a s fol low s: – Pay rol l co st s a r e ad jus ted for i ncr e a ses in t he Nationa l M i n i mum Wage a nd a pay r ise is a wa rded i n A pr i l 2023; – Rent due dur i ng t he 2022/ 23 n a nc ia l yea r i s pa id on t i me; – A l l t a x a nd dut y is pa id on t ime; – Capit a l e x pend it u r e is i n l i ne w it h st rateg ic plans; a nd – St a nda rd pa y ment ter ms a r e a ssu med for supplier pa y ment s. A l low a nce i s made for one - of f cos t s as so ci ate d w it h i mplementat ion o f t he Gr oup ’ s st rateg ic plan. T he ba se c a se cont a i n s cer ta i n d isc r et iona r y c os ts w it h in m a n ag ement cont r ol t ha t cou ld be r educe d i n t he ev ent of a re venue dow nt u r n . T hes e include re duct ions to over head s, r educ t ion to ma rk et i ng c ost s, r e duct ions to t he venues’ oper at i ng co st s a nd r e duct ion s to ca pita l ex pend it u r e. T he comm it ted n a nci ng po sit ion in t he ba se c a se w it hi n t he goi ng concer n as se ssment per iod is t ha t t he G roup cont i nues to ha ve acce ss t o t he fol low i ng com m it te d fac i l it ies: – T er m loan of £ 78.8m w hich r e duces to £4 4.4m i n Ma y 202 3 due to a sche du led loa n r epa y ment; a nd – Rev olv i ng c r ed it f ac il it ies (‘RCF ’) of £8 0.0m, r educi n g to £ 55.0m in Ju l y 2023. At t he d ate of appr o va l of t he consol idat ed a nd Compa ny n a nci a l st at ements, t he ter m loa n w a s £78. 8m a nd t he £ 80.0m RCF wa s u nd r a w n . In u nder ta k ing t heir as se ssment , t he Di r ec tor s a lso r ev iewed c ompli a nce w it h t he ba n k i ng c oven a nt s ( ‘Coven a nt s’) wh ich a r e tes te d bi-a n nua l l y at June a nd Dec ember. The Gr oup ex p ec t s to mee t t he Cov ena nt s a t Dec ember 2022 a nd Ju ne 2023 a nd h av e av a i lable c a sh to mee t li abi l it ies a s t he y fa ll due. Sensitivity Analysis T he bas e ca se pla n reec t s t he Di r ec tor s’ bes t es t i ma te of t he f ut u r e pr osp ec t s of t he busi ness. A nu mber of plau sible but sev ere do w n s ide r isk s, i nc lud in g c on sid er at ion of pos sible mit ig at i ng ac t ions, hav e be en model led w it h pa r tic ul a r fo cu s on t he potent i a l i mpac t to ca sh ow s, ca sh head r o om a nd cov en a nt compl i a nc e t h r oughout t he goin g concer n p er iod . T he potent ia l impa c t on t he Gr oup of a combin at ion of scen a r ios o ver a nd ab ove t hose i ncluded i n t he ba s e ca s e pla n h a s a ls o be en te ste d. T he t wo dow nside scen a r ios mo del led a r e: (i) cus tomer/ de pos itor number s a nd /o r aver a ge sp end per v i sit a r e below b a se ca se e x pe c t at ions, of f se t by d ir ec t co st m it ig at ion s; a nd (i i) a s for scen a r io (i) , but t a k in g t he re venue decl i ne ac ro ss t he Group f u r t her to r e ec t more r ecent per for ma nce i n t he la s t qua r ter of t he 2021 /22 n a nc ia l yea r , a long w it h a 5 % i n at ion a r y impac t on t he va r iable cos t ba se, i n add it ion to the 8% a l r ead y i ncluded i n t he ba se c a se, t o re ec t add it iona l i mpac t on underly ing cos t s due to g eop ol it ic a l in uences a nd pre ssu r es on con su mer s’ disp os able incomes , of fs et b y re duc t ion in cont r ol l able op er at i n g co st s. Hav ing mod el led t he dow nside scen a r ios , t he ind ica t ion is t h at t he G r oup would cont i nue to meet it s Co vena nts i n bot h ca ses a nd ha ve a va i l able ca sh to me et l iabi l it ies. Accor d i ngl y , t he Di r ec tor s h av e a re a sonable ex p ec t at ion th at t he G roup ha s ade qua te r esou r ce s to cont i nue in oper at iona l e x i stence for a p er iod a t lea st t h r ough 31 Aug ust 2 023. For t hese r e a sons , t he Di r ec tor s c ont inue to adopt t he going concer n ba si s for t he pre pa r at ion of t hes e cons olid ate d a nd Compa ny n a nci a l st atement s a nd i n pr epa r i ng t he cons olid ate d a nd Compa ny n a nci a l st atement s t he y do not i nclude a ny adju st ment s t h at wou ld be r e qu ir e d to be ma de i f t hey w ere pr epa red on a b as is ot her t h a n goi ng concer n. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 167 1 General i nfor mation and accounting policies ( continued ) Going concer n stat ement Ba se d on the Gr oup’ s ca sh ow fore c a st s a nd busi nes s pla n , t he Di r ec t ors b el ieve t ha t the Gr oup w il l genera te suf cient ca sh to meet it s l i abil it ies as t he y fa ll due for t he per iod up to 31 Aug us t 202 3. In m a k i ng such st at ement, t he Di r e c tor s h igh l ight fore ca s t i ng acc u r ac y i n r elat ion to the level of t r ad i ng p er for ma nce ach ie ved as t he key sen sit i v it y in t he approve d base case. T he Di r ec tor s h av e consider ed t wo dow n side scena r ios which ree c t a r e duced t ra d i ng per for ma nce a nd in a t iona r y impac t s on t he cost ba se. I n t hes e e vents , t he Gr oup wi l l gener ate su f c ient ca sh to meet it s l i abil it ies as t he y fa ll due a nd meet co ven a nt r equ i r ements for t he perio d to 31 Aug ust 2 023. 1.1. 3 Accounting estim ates and judgemen ts In t he applicat ion o f t he Group’ s ac coun ting po lici es, the D irectors a re re qu i re d to m a ke judg ements, e st i m ates a nd a ssu mpt ions. T he est i ma tes a nd as so ci ate d a ssu mpt ions a re ba se d on hi st or ica l e x per ience a nd ot her fact ors t ha t a r e cons idere d to be r elev a nt . Ac t ua l re su lt s ma y d i f fer f r om t he se es t i ma tes. T he est ima tes a nd underl y i ng as su mpt ions a re r ev iewed on a n on goi ng ba sis. Re v i sions to acc ount ing e st i ma tes a r e re cog n i se d in t he per iod i n wh ich t he est ima te is r e v is ed i f t he rev ision af fec t s onl y t h at p er iod or i n t he per iod of the re v i sion a nd f ut u r e per io ds i f t he r e v is ion a f fe c ts b ot h c u r r ent a nd f ut ur e per io ds. Crit ical accoun ting judgements T he fol low i ng a r e t he cr it ica l a ccou nt i ng judgements , apa r t f rom t hose in volv ing est ima tes (wh ich a r e de a lt w it h sepa r atel y below) t ha t t he Di r ec t ors h av e made i n t he pro ce ss of appl y i ng t he G r oup ’ s accou nt i ng pol ic ies a nd t h at ha ve t he most sig n i c a nt ef fec t on t he a mount s re cog n i se d in t he consol idat ed a nd compa ny n a nci a l st at ements. ( a ) Se parate ly di scl ose d items ( ‘ SD I s’ ) T he Gr oup sepa ratel y d is clos es cer t a i n cos t s a nd inc ome t hat i mpa i r t he v isibil it y of t he underl y i ng p er for ma nce a nd t r end s bet ween p er iod s. T he SDIs a r e ma ter i a l a nd in f req uent in na t u re a nd /or do not rel ate t o underl y i n g busi ness per for ma nce. Judgement is r eq ui r ed i n deter mi n in g whet her a n it em should b e cla s si e d as a n SDIs or included w it h i n t he under ly ing r esu lt s. SDIs include but a r e not l i m ited t o: – A mor t is at ion of a cqu i r e d i nt a ng ible asset s; – Pr o t or loss on di spos a l of busi ness es; – Cos t s or income a ss oc iat ed to t he closu r e of venues; – Acqu is it ion a nd d isp osa l cost s i nclud i ng cha nges to defer re d or cont i ngent con s ider a t ion; – Imp a i r ment c ha rg es; – Rev er sa l of i mpa i r ment ch a r ge s; – P rop er t y-rela te d pr ov isions; – Res t r uc t u r i ng co st s a s pa r t of a n a n nou nc e d pr o g r a mme; – Ret r a n sl at ion a nd r emea su rement of foreig n c u r r enc y cont i ng ent con s ider a t ion; – Di sc ont i nued op era t ion s; a nd – T a x impac t of a l l t he above. For f ur t her det a i l of t hos e item s include d as SDIs, r efer to not e 4. ( b ) Clim ate cha ng e T he Gr oup cont i nues to cons ider t he impac t of c l im ate c ha nge in t he cons olid ate d a nd compa ny n a nci a l st atement s a nd con sider s t ha t t he most sig n i ca nt impac t would be i n rel at ion to t he cos t of energ y to t he G roup for wh ich bes t es t i ma tes h ave b een f ac tor ed i nto f ut u r e fore ca s t s, t he c a r r y i ng v a lue of as se t s in t he account s, a lb eit t h is i s not consider ed t o ha ve a ma ter i a l i mpac t at t he cu r r ent t i me a nd t he us ef u l ec onomic l i fe of assets. ( c ) Dilapidation costs T he pro v i sion repr es ents t he est i ma ted cos t of d i lapid at ion at t he end of t he lea se ter m of cer ta in pr oper tie s. T he pro v i sion is re v ie wed p er iod ica ll y a nd ree c t s judgement in t he inter pr et at ion of l e a se ter m s a nd negot iat ion posit ions wit h la nd lor d s inc ludi ng t he li kel i hood t hat t he cu r r ent lea s ehold proper t ies ma y be subjec t to r e dev elopment at the end of lea se ter m. K ey sourc es of estimation uncertainty T he est ima tes a nd ass umpt ions which h a ve a sign i ca nt r i sk of causi ng a mater ia l adju st ment to t he c a r r y ing a mou nt s of as se t s a nd l iabi l it ies w it hi n t he nex t na ncia l yea r ar e d isc us se d below . T he Gr oup ba se d its a s su mpt ions a nd est i ma tes on pa ra meters a va i l able when the na ncia l st atement s wer e pr epa r ed . E x i st ing ci r cu m st a nce s a nd a ssu mpt ions about f ut u r e dev elopments, howe ver, may ch a n ge due to ma rk et ch a n ges or c i rc u ms t a nces a r is in g t ha t a r e be yond t he contr ol of t he Gr oup. Su c h cha n ges a r e r ee c ted i n t he as su mpt ions w hen t hey o cc ur. ( a ) Estim ated im pa irme nt or subsequen t rev ersal of pr eviously recognised impairment f or non - nan cia l asse ts Det a i l s of t he G roup’ s accou nt i ng p olic y in r el at ion to i mpa i r ment s a nd impa ir ment re ver s a l s a r e d isc lose d i n note 1.1 4. T he appl icat ion of t he pol ic y r eq ui r es t he use of acc ou nt in g es t i mat es i n deter mi n i ng t he re co ver able a mount of ca s h-genera t i ng un it s to w h ich t he goo d w i l l, i nt a ng ible asset s, right -of- use asset s and propert y , pla nt a nd e qu ipment ar e a ss oc iat ed . T he re co ver able a mount is t he higher of t he fa i r va lue less cos ts of d i spo sa l and v a lue in u se. E st i m ates of f a i r va lue l e ss c ost s of di spo sa l ar e p er for me d int er na ll y b y ex per ien c ed s en ior ma na gement suppor ted b y k nowle dg e of sim i l a r t ra nsac t ion s a nd ad v ice f r om ex ter na l ex per ts or, if appl icable, of fer s r ec eive d. V a lue i n use i s ca lcul at ed us in g es t im ate d ca sh ow pr oje c t ions f r om st r ateg ic pla n s a nd na nc ia l budg et s, d is cou nted b y selec t i ng a n appropr i ate r ate for e ach ca sh-g enerat ing u n it. Cons ist ent w it h pr ior yea r , t he Group ha s a ss ess ed t he conti nui ng i mpac t of COVI D -1 9 r i sk int o t he impa ir ment te st i ng of goo dw il l a nd non-c u r r ent a ss et s a nd included a dd it iona l sensit i v it y a na ly sis i n t he d isc losu r es. T he ke y judg ement is t he level of t r ad i ng i n t he venu e s a nd it s re co ver y fol low i ng r eop en in g, overa ll mac r oe conomic cond it ions a nd its i mpac t on est i ma te d fut ur e ca sh ow s. Fu r ther det a i l s of t he as su mpt ions, e st ima tes a nd sens it iv it y a r e d i sclos ed i n note 14. T he Compa n y a l so te st s a n nua ll y t he ca r r yi ng v a lue of its i nv es t ments in subsid i a r ies. T he applicat ion of t h i s pol ic y r equ i r es t he u se of es t i mat es a nd judgements i n de ter m i n i ng t he r ec over able a mount of t he subsid ia r y u nder ta k ing s. T he re co ver able a mount is de ter m i ned b y apply ing a n e st ima ted v a lua t ion mult iple to budge ted f utu r e ea rn i ng s a nd deduc t i ng es t i ma ted c os t s of di spo sa l (fa i r va lue l e ss c ost s of d i spo sa l ) a nd / or b y usi ng d is cou nted ca s h ows (va lue i n use) , a long w it h considera t ion of t he underl y i ng net a sse t s a nd ma rket ca pita li sat ion a nd is d is clos ed i n note 14. Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 168 ( b ) Determination of the fair v alues of int angible assets T he Gr oup es t i mat es t he fa ir va lue of acqu i r ed i nt a ng ible a sse t s a r i sin g f r om busi ness c ombin at ions b y sele c t i ng a nd appl y i ng appr opr i at e va luat ion met hod s. T hese i nclude t he r el ief f rom r o ya l t y and mult i-per iod exces s ea r ni ng s va luat ion met hod s, bot h of w h ich req ui r e sig n i c a nt est ima tes t o be ma de. E x a mples i nclude est ima t i ng ex pe c te d ca sh ow s a nd identi f y i ng appr opr i ate r oy a lt y a nd d isc ount r ate s. T he fa ir va lue o f each acquired inta ng ibl e asset is amor tised over t he resp ec t i ve a ss et s es t i mat ed u sef u l li fe. T he Gr oup uses pr ojec t ed n a nci a l in for mat ion toge t her w it h c ompa r able indu st r y i n for m at ion a s wel l a s apply ing its o w n e xp er ience a nd k nowledg e of t he indu st r y i n ma ki n g such judgement s a nd es t i mat es. W her e a t h i r d pa r t y is inv olve d to de ter m i ne t he fa i r v a lue of t he acqu i r ed i nt a ng ible a sse t s, t he ke y as su mpt ions r e v iew ed b y t he G r oup include ca sh o w proje c t ions, ter m i n a l g ro w th r at es a nd d i scou nt r ate s as w el l as a s ensit iv it y a na lysi s. ( c ) Inc ome ta xes T he Gr oup is subje c t to i ncome ta xes in nu merou s jur isd ic t ions a nd a s such re qu i re s judgement s to be m ade a s wel l as b es t es t i mat es a nd a s su mpt ions. Judgement must be a pplie d in a s se ssi ng t he l ik ely outcome of cer ta in t a x mat t er s whose n a l outcome ma y not be deter mi ned for a number of y ea r s. T hese judgements a re r ea ss es se d in e ach p er iod unt i l t he outcome is na l ly deter m i ned t h r ough re solut ion w it h a t a x aut hor it y a nd / or t h r ough a lega l proc es s. Di f fer ences a r is in g f r om cha nges i n judgement or f rom n a l r esolut ion ma y be mat er ia l and w i l l be c ha r g ed or c re d ite d to t he G r oup income st a tement in t he relev a nt per io d. Wit h i n t he G r oup’ s net i ncome ta x re ceiv able of £ 3. 9 m (30 Ju ne 2021: £7 .0m r e ceiv able ) a r e a mou nt s of £0.3m pay able (30 Ju ne 2021: £0.3m) th at r ela te to u ncer t a i n t a x posit ions. The G r oup ev a luat es u ncer ta i n item s, wher e t he t a x judgement is subje c t to i nter pr et at ion and rem a i ns t o be a g r ee d w it h t he relev a nt t a x aut hor it y . P r ov isions for unc er t a i n item s a r e made u si ng a n e st i m at ion of t he most li kel y t a x exp ec t ed to b e pa id , ba se d on a qua l it a t ive a s ses sment of a l l r elev a nt in for mat ion. I n as se ssi ng t he appropr ia te pro v i sion for uncer ta i n item s, t he G r oup consider s pr og r es s made i n d i sc us sions w it h t a x aut hor it ies, ex p er t adv ice on t he li kel y outcome a nd r ec ent dev elopments i n ca se l aw. Fur t her det a i ls of i ncome t a x a re disclosed in no te 20. 1.1.4 Chan ges in acc ounting p olicy and disclosures ( a ) Stan dard s, a men dme nts to and interp retations o f exist ing stan da rds ado pted by the G roup Se ver a l new, and a mend ment s to, ex i st i ng IF R S s t a nda rd s a nd i nter pr et at ions, issue d by t he I A SB , were ef fe c t ive f r om 1 July 2021 a nd ha ve be en adopte d b y t he G roup dur ing t he per iod w it h no si g ni ca nt impac t on t he consol idat ed r es ul ts or na ncia l po sit ion of the Gr oup. ( b ) Stan dard s, a men dme nts to an d interp retations o f exist ing stan da rds that are n ot yet ef fecti ve T he Gr oup ha s not ea rly adopt ed a ny st a nd a r d, a mendment or inter pret at ion t ha t wa s is sued but i s not yet ef fe c t iv e. 1. 2 Consolidat ion T he consol id ate d na nc ia l s ta tements compr is e t he n a nci a l st at ements of t he pa r ent a nd it s subsid ia r ies as at 30 Ju ne 2022. C ont rol i s ach ie ved w hen t he Gr oup is ex p ose d , or ha s r ight s, to v a r i able re t u r n s f r om its i nv olvement w it h the inv es tee a nd has t he abil it y to a f fe c t t hose re t u r n s t h r ough it s pow er over t he inv es tee. Spe ci c a l l y , t he Gr oup contr ol s a n i nves te e if , a nd on ly i f , t he Gr oup ha s ( a) po wer o ver t he i nves te e, ( b) expo su re, or r ight s, to va r iable re t u r n s f r om t he inv es tee, a nd ( c ) abi l it y to us e it s pow er to a f fe c t t hos e re t u r n s. T he Gr oup re -a s ses se s whet her or not it cont r ols a n i nv est ee i f fa c ts a nd ci r cu m st a nce s i nd icate t hat t her e a r e cha nges to one or more of t he th r ee element s of cont r ol . Con s ol ida t ion of a subs id ia r y beg i n s when t he Gr oup obt a i ns c ont rol over t he su b sid ia r y a nd c ea se s when t he Gr oup lose s cont r ol of t he subsid ia r y . A ss et s, l iabi l it ies, i ncome a nd ex p ens es of a subsidi a r y acqu i r ed or d i spo se d of dur ing t he yea r a r e inc luded in t he cons olid ate d na ncia l st at ements f r om t he dat e t he Gr oup ga ins c ont rol u nt i l t he d ate t he Gr oup cea s es to c ont rol t he subsidia r y . If t he Group los es cont r ol of a subsid ia r y , it dere cog n i ses t he rela ted a s set s ( inc ludi ng goo d w i l l), liabi l it ies a nd ot her components of equ it y , w h ile a n y r esu lt a nt g a i n or loss i s re cog n i se d in t he Group i ncome st atement. Inter compa ny t ra nsac t ion s, ba l a nce s a nd un r ea li sed g a i ns on t ra n sac t ions b et ween Gr oup compa n ies a r e el i m i nat ed . Unrea lised losses are a lso elim inated un les s t he t r a n sac t ion prov ides e v idence of a n impa ir ment of t he a ss et t r a n sfer r e d. Accou nt i ng p olic ies a s appl ied to subsid ia r ie s ha ve be en ch a ng ed wher e nece ssa r y t o ensu r e con sis tenc y w it h t he pol icies adop ted b y t he G r oup. T he Gr oup ha s no ma ter ia l as soc ia tes. 1.3 Business combinations and goodwill Busi nes s combina t ions a r e accou nted for usi ng t he ac qu isit ion met ho d. T he consider at ion t r a n sfer r ed i n a bu si ness combin at ion is mea su r ed a t t he acqu i sit ion dat e a nd r epre sent s t he a gg r eg ate f a i r va lue of as se ts t ra n sfer r ed a nd liabi l it ies i nc ur re d. A mou nts pa y able in r esp ec t of defer red or cont i n gent c ons idera t ion a r e r e co g n is ed at fa i r v a lue at t he acq ui sit ion da te a nd included i n c onsider at ion t r a ns fer r ed . T he subse quent unw ind of a ny d i scou nt is re cog n i se d as a n SDI in na nce co st i n t he Gr oup income s ta tement. O t her cont i n gent consider at ion t h at eit her is w it hi n t he scop e of IF R S 9 or w it hi n t he sc ope of ot her st a nd a r d s is r emea su r ed a t fa i r va lue at eac h re por ti ng d at e a nd ch a ng es i n fa i r va lue a r e r ec og n ise d a s a n SDI in t he Gr oup income s ta tement. C ha nges i n t he fa i r v a lue of cont in gent con siderat ion re cog n i se d as a na ncia l l iabi l it y th at qua l i f y a s mea su rement p er iod ad just ments ( bei ng 1 2 mont hs f r om t he ac qu isit ion dat e ) a re ad just ed r et rosp ec t ively , w it h cor r e sp ond i ng ad ju st ment s ag a i n st goo d w i l l. Ma ter ia l cha n ges t hat do not qua l i f y a s mea su rement p er iod ad just ments a r e re cog n i se d a s a n SDI in t he G r oup i ncome s t a te ment . W hen t he G roup acq ui r es a bu si ness, it as ses se s t he n a nci a l a sse t s acqu i re d a nd l iabi l it ies a ss ume d for appr opr iat e cla s si c at ion a nd desig na t ion in accor d a nce w it h the cont r ac t ua l ter m s, econom ic ci rc u m st a nce s a nd per t i nent cond it ions a s at t he acqui sit ion dat e. G oo dw il l is i n it i a l l y mea su re d at c ost , bei ng t he exc es s of t he ag g re gat e of t he acqu is it ion dat e fa i r v a lue of t he consider at ion t r a n sfer r ed o ver t he f a i r va lue of the net identi able a mount s of t he as se t s acqu i r ed a nd t he liabi l it ies a s sume d in e xch a nge for t he busines s combin at ion. Identi able i nta ngible as se ts a r e re cog n i se d sepa ratel y f r om go od w i l l. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 169 1 General i nfor mation and accounting policies ( continued ) If t he agg r ega te of t he acq ui sit ion da te fa i r va lue of the cons iderat ion tr a nsfer re d is lower t ha n t he fa ir va lue of the a sse t s, li abi l it ies a nd cont i ng ent l iabi l it ies i n t he busi ness a cqu i re d , t he d i f fer ence is re cog n i se d t h r ough t he G roup i ncome st atement . If t he in it ia l a ccou nt i ng for a busi nes s combin at ion is i ncomplete b y t he end of t he rep or t ing p er iod i n wh ich t he combin at ion occ u r s, t he G r oup repor t s pro v i siona l a mou nt s for items for w h ich t he accou nt i ng is i ncomplete. T ho se pro v i siona l a mou nt s a r e adju ste d du r i ng t he mea su rement per iod ( s ee ab ov e ), or add it iona l ass et s or l iabi l it ies a re re cog n i se d, to re ec t new i n for m at ion obta ined ab out fac t s a nd c ir c u ms t a nces t ha t ex i ste d at t he acqui sit ion da te t h at , if k now n , wou ld ha ve a f fec ted t he amou nts recog n ised at t hat date. Acqu is it ion cos ts i nc ur re d a r e ex pen se d as a n SDI. 1.4 Revenue reco gnition Rev enue consis ts of t he fa ir v a lue of sa le s of goo ds a nd ser vice s net of sa le s t a xe s, rebat es a nd d i scou nt s. T he fa i r v a lue of fr e e be ts , promot ions a nd cu stomer bonus es ( ‘customer i ncent iv es’) a r e a l so de ducte d f r om appr opr ia te re venue st r ea ms. ( a ) Gami ng win – C asino Rev enue for casi nos i ncludes g a m i ng w i n befor e deduc t ion of ga m i ng-rel ate d dut ies. A lt hough dis clos ed a s r e venue, ga m i ng w i n – ca si no is acc ount ed for a nd me et s t he de n it ion of a g a i n under IF R S 9 ‘Fi na nc ia l I n st r ument s’ . Ga m i ng r e venue includes g a i ns a nd losses a ri si ng wher e cu stomer s pla y a ga i n st t he h ou se. D ue to t he nat ur e of t he t ra nsac t ion, the a mou nt of t he pay ment the G roup m ay b e oblig ed to pa y to t he c us tomer is u ncer t a in. T he na ncia l i ns t r u ment is t herefor e a der iv at iv e a nd is i n it ia ll y r ec og n ise d at f a i r va lue a nd subse quent l y r emea su re d to f a i r va lue w it h cha ng es i n fa ir va lue recor de d in t he Group i ncome st atement. T he in it ia l fa i r va lue is genera l l y t he a mou nt st a k ed by t he cust omer a nd includes a djus t ment for cu stomer i ncent ive s, such a s f r e e bet s, promot ions a nd cus tomer bonuse s, wher e appl icable. T he in st r ument is subs equent l y remea s ur e d when t he re su lt of t he t ra nsac t ion is k now n a nd t he a mou nt pay able is con r me d. T h is movement ma y be a ga in or a loss. G a i n s a nd loss es a r e of fs et on t he ba sis t hat t he y a r ise f r om sim i l a r t r a n sac t ion s. Such ga i ns a nd loss es a r e r ec orde d i n re venue. ( b ) Gami ng win – Slots and othe r digital products Rev enue for bingo i s net of cu stomer cont r ibut ion to pr i z es but g r os s of compa ny cont r ibute d pr i ze s. It is net of a n y sa le s ta xes but b efore de duc t ion of ga m i ng- rel ate d dut ies. Re venue for poker r epr esent s t he ra ke re ceive d. R evenue for ot her d ig it a l pro duct s, i nclud i ng i nter ac t ive g a mes, repr es ent s ga m i ng w in befor e de duct ion o f ga m i ng-rel ate d dut ies. T he G r oup’ s i ncome ea r ned fr om t he above item s is r ec og n is ed when cont r ol of t he goo d s or ser v ices a r e t ra nsfer r e d to t he c ust omer a nd is w it hi n t he scop e of IF R S 15. ( c ) Food , beverag e and others Rev enue fr om foo d, b ev era ge a nd other sa les i s r eco g n ise d at t he point of sa le when cont r ol of t he goo d s or ser v ices a r e t ra nsfer r e d to t he c ust omer a nd is w it hi n t he scop e of IF R S 15. 1.5 Se gment re por tin g Op era t i ng seg ment s a r e r epor ted i n a ma n ner con sis tent w it h the i nter n a l rep or ti ng pr ov ided to t he ch ief oper at i n g dec ision-ma ker s. T he chief oper at i ng dec ision-ma ker s, w ho a r e re spon sible for a l loc at i ng r es ou rc es a nd a s ses si ng per for ma nce of t he oper at i n g seg ment s, ha ve been ident i e d as t he sen ior ma n ag ement tea m (t he compo sit ion of wh ich is d i sclos ed on pa ge 9 4 a nd at w w w . ra nk .com) , wh ich m a ke s st r at eg ic a nd op era t ion a l de c ision s. T he Gr oup repor ts ve seg ment s: Dig it a l , G ro s venor venues, Mecc a venues, En r ach a venues a nd C ent ra l cost s. – UK d ig it a l , En r ach a d ig it a l, Y oBi ngo a nd St r ide i s a sin gle oper at i ng se g ment wh ich is k now n as D ig it a l , – Gr os venor venues co ver a l l U K c a si nos, – Mecc a venues cov er s a l l U K bin go h a l l s, a nd – En r ach a venues co ver s a l l Spa nis h- fac in g venues. 1.6 Non-current asset s held for sal e and dis continued operation s T he Gr oup cla ssi es non-c ur rent as se t s a nd d isp os a l of a n a ss et a s held for sa le i f t heir c a r r y ing a mou nt s w i l l be r e cov ere d pr i ncipa l l y t h r ough a sa le tr a n sac t ion rat her th a n t hr ough cont i nui ng u se. Non-c ur rent a ss et s a r e mea su r ed a t t he lower of t hei r ca r r yi ng a mount a nd fa i r va lue les s cos t s to sel l . Cos t s to sel l a re t he inc rement a l c ost s d i r e ct ly at tr ibutable to t he di spo sa l of a n as se t, exc ludi ng n a nce cos t s a nd inc ome ta x ex pen se. T he cr iter ia for h eld for sa le cl a ssi c at ion is r ega rded a s met on l y when t he s a le is hi gh ly pr obable a nd t he a ss et is a va ila ble for im med iate sa le in it s pre sent cond it ion. Ac t ions r eq ui r ed t o complete t he sa le should i nd icat e t ha t it is u n l i kely t hat sig n i ca nt cha ng es to t he sa le w i l l be made or t hat t he dec ision to s el l w i l l be w it hd r aw n. Ma n ag ement must be com m it te d to t he plan t o sel l t he a s set a nd t he sa le e xp ec t ed to b e complete d w it h i n one yea r f rom t he da te of the cl a ssi c at ion. Pr op er t y , pla nt a nd equipment, r ight-of- use a s set s a nd inta ngible a ss et s a r e not depre ci ate d or amor ti se d once cla ssi ed as held for sa le. A ss et s a nd lia bil it ies cla ssi e d as held for sa le a r e pr es ented s epa r at ely a s c u r r ent items i n t he ba la nce she et s. Di sc ont i nued op era t ion s a r e e xclude d f rom t he resu lt s of cont i nu in g oper at ions a nd a r e pre sente d a s a si ngle a mou nt as pro t or loss a f t er ta x fr om d isc ont i nued oper at ions i n t he G r oup income st atement . 1.7 Foreign currency transl ation T he consol id ate d a nd compa ny na ncia l st atement s a r e pr es ented i n U K ster l in g (‘t he pres enta t ion cu r r enc y ’), wh ich is a lso t he Compa n y’ s f unc t iona l c u r r enc y . Item s included i n t he na nc ia l s ta tements of each of t he Group’ s ent it ies a r e mea su r ed usi ng t he c u r r enc y of t he pr i ma r y econom ic env i r onment i n wh ich t he ent it y oper ates ( ‘t he fu nc t iona l c u r r enc y ’). ( a ) T ransactions and balances Foreig n c u r r enc y t r a n sac t ion s a r e t ra nsla te d into t he fu nc t iona l c u r r enc y usi ng t he e xcha nge ra tes pr e va il i ng at t he dat e of t he t r a ns ac t ions. For eig n exc ha n ge ga i ns a nd losses r e su lt i ng f r om t he set t lement of such tr a n sac t ions a nd f rom t he t r a ns lat ion at yea r -end e xch a nge r at es of moneta r y a ss et s a nd l ia bil it ie s denomi na ted i n for eig n c u r r encies a r e re cog n i se d in t he Group i ncome st atement in n a nce cos t s or income. Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 170 ( b ) Group com pani es T he res ul ts a nd n a nci a l po sit ion of al l t he Gr oup compa n ies (none of which h a s t he cu r r enc y of a hy per -i n at iona r y e conomy) t ha t ha ve a f u nc t iona l c u r r enc y d i f fer ent f rom t he present a t ion cu r r enc y a r e t ra nsla te d into t he pres enta t ion cu r r enc y a s fol low s: (i) ass et s a nd l iabi l it ies f or each b a la nce sheet pr e sente d a r e t r a ns lat ed a t t he closi ng r ate on t he bal a nce s heet d ate. T he closi ng eu r o r ate a ga ins t U K ster li n g wa s 1.1 6 (3 0 June 2021: 1.1 6); (i i) income a nd e x pen ses for e ach i ncome st atement a r e t r a n sl ate d at a vera ge exch a ng e ra tes u n les s t h is a ver a ge is not a r ea son able approx ima t ion of t he cu mul at i ve ef fe c t of t he ra tes pre va il i ng on t he t r a n sac t ion dates, in w h ich ca se i ncome a nd ex p ens es a r e t r a ns lat ed at t he rate s pre va il i ng on t he dat es of t he t r a n sac t ions. The aver a ge eu r o ra te a ga i n st U K st erl i ng wa s 1.21 ( yea r ende d 30 June 2021: 1.1 3 ); a n d (i ii ) a l l r esu lt i ng e xch a ng e d if ferences a re re cog n i se d as a s epa r at e component of equ it y . W hen a forei g n oper at ion is s old, such exch a ng e d i f fer ences a r e r ec og n is ed i n t he Gr oup income s t atement, a s pa r t of t he ga i n or loss on s a le. G oo d w i l l a nd fa ir va lue ad just ments a r i sin g on t he acqu isit ion of a foreig n ent it y ar e t r e ate d as a s se ts a nd liabi l it ies of t he foreig n ent it y and t ra n sla ted a t t he closi ng r at e. 1.8 Fin anci al assets Fi na nc ia l a s se ts w it h in t he scope of IF R S 9 a r e cla ss i ed a s na ncia l a ss et s at in it i a l re cog n it ion, a s subs eq uentl y mea su r ed a t a mor t i se d cos t , fa i r v a lue t h r ough ot her comprehen sive i ncome (‘OC I’ ), and f a i r va lue t h r ough pro t or loss. T he cla ss i ca t ion of na ncia l a ss et s at i nit ia l r eco g n it ion depend s on t he na ncia l a sse t’s c ont ra c t ua l c a sh ow cha rac ter ist ics a nd t he Group’ s busi nes s model for ma n a g in g t hem. T he G r oup in it i a l l y meas ur e s a n a nci a l a sse t at its fa i r va lue plus, in t he ca s e of a na nci a l as se t not at fai r va lue t hr ough pro t or loss, t ra n sac t ion co st s. In or der for a na ncia l a ss et to be cla s si e d a nd measu r ed at a mor ti se d cos t or fa i r va lue th r ough OC I, it nee d s to g ive r is e to ca sh ow s t hat a r e ‘solely pay ment s of pr inc ipa l a nd i nter es t (‘ SPPI’)’ on the pr i ncipa l a mou nt out st a nd i ng. Th i s as se ssment is r efer r e d to a s t he SPPI test a nd is per for med at a n ins t r ument level. For pur p os es of subse quent mea su r ement, na ncia l a sse t s a re cl a ssi ed in t wo categor ies: – Fi na nc ia l a s se ts d esig n ate d at fa ir va lue t h r ough O CI w it h no rec ycl in g of cu mul at i ve ga ins a nd losses upon dere cog n it ion ( e qu it y in st r uments); and – Fi na nc ia l a s se ts a t fa i r v a lue t h r ough pro t or loss. ( a ) Financi al assets de signa ted at fair valu e throug h OCI ( e quit y instruments ) Upon in it i a l r ec og n it ion, t he G r oup ca n elec t to cl a ssi f y i r r ev oc ably it s e qu it y inv es t ments a s e qu it y in st r ument s desig n ate d at fa ir va lue th r ough OC I when t hey meet t he de n it ion of eq uit y under I AS 32 Fi n a nci a l I ns t r uments: Pr e sent at ion a nd a r e not held for t ra d i ng. T he cla ss i ca t ion is deter m i ned on a n instrume nt -by -in st rume nt b asis . Gains a nd losse s on thes e na ncia l a sse t s a re never r ec ycled to pro t or loss. Div idends a r e re cog n i se d a s ot her i ncome in t he Gr oup income s ta tement when t he r ight of pay ment has b een e st abl ishe d, e xcept when t he Group bene t s fr om such pro ce ed s a s a r eco ver y of pa r t of t he cos t of the na ncia l a ss et , in wh ich ca se, such ga i n s a r e re cor de d in O CI. E qu it y in st ru ment s desig n ate d at f a i r va lue t h r ough OC I a r e not subjec t to i mpa i r ment as se ssment. T he Group elec t ed to c la s si f y its non-l is ted e qu it y inv es t ments u nder t his categ or y . ( b ) Finan cial asset s at fair value throug h prot or loss Fi na nc ia l a ss et s at fa i r va lue t hr ough pro t or loss include na ncia l a sse t s held fo r t ra d i ng, n a nci a l as se t s desig na ted upon in it i a l r ec og n it ion at fa ir va lue th r ough pro t or loss, or na nc ia l a ss et s ma nd ator ily r e qu i re d to b e mea su re d at fa i r va lue. Fi na nc ia l a ss et s a r e cla s si e d as held for t r ad i ng i f t he y a r e ac qu ir e d for t he pur pos e of sel l i ng or r epur c ha si ng i n t he nea r ter m. Fin a nc ia l a s set s w ith c a sh ow s t hat a r e not solely pa y ments of pr i ncipa l a nd inter e st a r e cla s si e d a nd mea sur e d at fa i r va lue t h r ough pro t or loss, i r r e spe c t ive of t he busines s model. Fi na nc ia l a ss et s at fa i r va lue t hr ough pro t or loss a re c a r r ied in t he Ba la nce sheet at fa i r va lue wit h ne t cha nges i n fa ir va lue re cog n i se d in t he Group i ncome st atement. Derecognition A na nc ia l a ss et ( or, where applicable, a pa r t of a na nc ia l a ss et or pa r t of a g r oup of sim i la r n a nc ia l a ss et s) i s pri m a r i l y dere cog n i se d (i.e. remov ed f r om t he Gr oup’ s Ba la nce shee t) when: – T he r ights to r ec eive ca sh o ws f r om t he a sse t ha ve ex pi r ed ; or – T he Gr oup ha s t r a n sfer r e d its r ights to re ceiv e ca sh ow s f r om the a ss et or has as su med a n obl iga t ion to pa y t he re ceiv ed ca s h ows i n f u l l w it hout mat er ia l d ela y to a t h i r d pa r t y . 1.9 Financial liabilities Fi na nc ia l l i abi l it ies w it hi n t he scop e of IF R S 9 a r e cla ss i ed , at in it i a l r ecog nit ion, as n a nc ia l l iabi l it ies at fa i r va lue t hr ough pro t or loss, loa ns a nd bor row ing s or paya bles. A l l na ncia l l iabi l it ies a r e re cog n i se d in it i a l l y at f a i r va lue a nd , in t he cas e of loa ns a nd bor r ow i ng s a nd pay ables, net of d i r ec t ly at tr ibutable t ra nsac t ion co st s. T he G r oup a nd compa ny ’ s n a nci a l li abi l it ies include t ra de a nd ot her pa ya bles, loa n s a nd bor r ow ing s i ncludi ng b a n k ov erd r a f ts a nd na nc ia l g u a r a nte e contr ac t s. T he subseq uent m e a su rement of na nc ia l li abi l it ies depend s on thei r cla s si c at ion, a s de sc r ibe d be low: ( a ) Financi al liabi lities at fair value throug h prot or loss Fi na nc ia l l i abi l it ies at f a i r va lue t h r ough pro t or loss include na ncia l l iabi l it ies held for t rad i ng a nd na ncia l l iabi l it ies desig n ate d upon i nit ia l r eco g n it ion as at fa i r va lue t h r ough pro t or loss. Ga i n s or losse s on l iabi l it ies held for t r ad i ng a r e re cog n i se d in t he Group i ncome st atement . Fi na ncia l l iabi l it ies de sig n ate d upon in it i a l r ec og n it ion at fa ir va lue t h r ough pro t or loss a re de sig na ted at t he in it i a l d ate of r ec og n it ion, a nd on l y i f t he cr it er ia i n IF R S 9 a re sa t is ed . ( b ) Finan cial liab ilitie s at amor tised cost ( l oan s and borrowin gs ) A f ter in it i a l r ec og n it ion, i nter es t-bea r i ng loa ns a nd bor ro w i ng s a r e subse quent l y mea sur e d at a mor ti se d cos t usi n g t he ef fec t ive inter e st r ate ( ‘EI R’ ) met ho d. Ga ins a nd losses a re r eco g n ise d i n t he Gr oup income s ta tement when t he li abi l it ies a r e der ec og n is ed a s wel l a s t h r ough t he EI R a mor ti sa t ion pro ces s. A mor ti se d cos t is c a lc ul ate d b y t a k i ng into a ccou nt a ny d i scou nt or pr em ium on acqu isit ion and fee s or cos t s t h at a r e a n i nteg r a l pa r t of t he EI R . T he E IR a mor t i sa t ion is included a s na nce co st s in t he Group i ncome st atement. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 171 1 General i nfor mation and accounting policies ( continued ) ( c ) Financial guarantee contracts ( Company only ) Fi na ncia l g ua r a ntee c ont r ac t s i ss ued by t he Compa ny a r e t hos e cont r ac t s t h at re qu i re a p ay ment to be made to rei mbu r se t he holder for a loss it i ncu r s bec aus e t he spec i e d debtor fa i ls to ma ke a pay ment when due in accor d a nce w it h t he ter m s of a debt in st r ument . Fi na ncia l g ua r a nte e cont r ac t s a r e i n it ia ll y mea su r ed at fa i r v a lue by ap ply i ng t he est i ma ted probabi l it y of default to t he ca sh out o w should def aul t occ u r a nd subs equent l y a mor t i si ng ov er t he ex p ec te d leng t h of the g ua r a nte e, to t he ext ent t ha t t he g ua ra nte e is not ex p ec te d to b e ca l led. Subseq uent ly , t he l iabi l it y is mea su re d at t he h igher of t he bes t es t i ma te of t he ex p end it u re re qu i re d to s et t le the pr es ent oblig at ion at t he r epor t in g da te or t he a mou nt re cog n i se d less c u mul at i ve a mor t isat ion. Derecognition A na nc ia l l iabi l it y is dere cog n is ed when t he oblig at ion under t he liabi l it y is d is ch a r ge d or ca ncel led or ex pir es. W hen a n ex is t i ng n a nci a l l iabi l it y is repl ace d by a nother f r om t he s a me lender on subst a nt ia ll y d i f fer ent ter m s, or t he ter m s of a n ex i st ing l iabi l it y a r e subst a nt i a l l y mod i e d, such a n exch a ng e or modi cat ion i s t re ate d as t he dere cog n it ion o f t he orig i n a l l iabi l it y a nd t he r ecog nit ion of a new l iabi l it y . T he d i f fer ence in t he resp ec t i ve c a r r y i ng a mount s is r e cog n i sed i n t he Group i ncome s t a te ment . Of fs et ting o f na ncia l ins trum ents Fi na nc ia l a ss et s a nd na ncia l l iabi l it ies a r e of fs et a nd t he net a mount is r epor ted in t he Ba l a nce she et if t her e is a cu r r ent l y enf orce able lega l r ight to of fse t t he re cog n i se d a mount s a nd t here is a n intent ion to set t le on a net ba s is, to r ea li se t he a sse t s a nd se t t le t he liabi l it ies s i m u l t a n e o u s l y. 1.10 Lea ses T he Gr oup lea se s va r ious proper t ies a nd equ ipment. Rent a l c ont rac t s a re ma de for va r ious xed per iod s. Le a se ter m s a r e negot i ate d on a n i nd iv idua l basi s a nd conta in a w ide r a ng e of d if ferent ter m s a nd cond it ions. T he lea s e ag r e ements do not impo se a ny coven a nt s, but lea s ed as se t s ma y not be us ed a s s ec u r it y for borrow i ng purposes. T he Gr oup a sse ss es at c ont rac t i ncep t ion whet her a cont r ac t i s, or cont a i ns, a lea s e. T ha t is, i f t he cont r ac t con ve ys t he right to cont r ol t he use of an ident i ed a ss et for a per iod of t ime in e xcha nge for con siderat ion. Leases a re recog nised a s a right -of -use as se t a nd a cor r es pond i ng l iabi l it y at t he dat e at wh ich t he lease d a ss et is a va ila ble for use b y t he G r oup. Each lea se p ay ment is a l lo cat ed b et ween t he l ia bil it y a nd na nce cost . T he n a nce cos t is cha rge d to t he G roup i ncome st atement ov er t he lea se per iod so a s to pr oduce a con st a nt per iod ic rate of int ere st on t he rema i n i ng ba l a nce of t he l iabi l it y for each p er iod . T he r ight-of-use a ss et i s depre c iate d ov er t he shor ter of t he ass et ’ s us ef u l l i fe a nd t he lea se ter m on a st ra ight -li ne ba sis. A ss et s a nd l iabi l it ies a ri si ng f r om a lea se a r e in it i a l l y mea su r ed on a pr es ent va lue ba sis. L ea s e li abi l it ies, wher e appl icable, include t he net pr es ent va lue of t he fol low i ng lea s e pay ments: – Fi xe d pa y ment s (i ncludi n g in- subst a nce xe d pa y ments) , les s an y lea se incentives receivabl e; – V a r i able lea se pa y ment s t h at a r e ba se d on a n inde x or a ra te; – A mou nts e x pe c ted t o be pa yable b y t he less ee u nder r esidua l v a lue g ua ra nte es; – T he exer ci se pr ice of a pu r ch a se opt ion if t he lessee i s r ea son ably c er t a i n to exer ci se t h at opt ion; and – Pay ments of pen a lt ies for t er m i nat ing t he leas e, if t he lea se ter m r ee c ts t he less ee ex erc isi ng t hat opt ion. V a r i able lea se pa y ment s t h at a r e not ba se d on a n inde x or a ra te a r e not pa r t of t he lea se l iabi l it y , b ut t hey a re r ec og n is ed in t he Group i ncome st atement when t he event or c ondit ion th at t r ig ger s t hose pay ments oc cu r s. T he ca r r y ing a mount of leas e l iabi l it ies is remea s ur e d if t her e is a modi c at ion, a cha nge i n t he lea se ter m, a cha nge i n t he lea se pa y ment s or a ch a ng e in t he as se ssment of a n opt ion to pu r ch a se t he underl y i ng a s se t. T he lea se pa y ment s a r e d is cou nte d usi ng t he int ere st r ate i mpl icit i n t he lea se. If t hat r ate c a n not be de ter m i ned , t he less ee’ s i ncr ementa l bor r ow i ng r at e is use d, b ei ng t he r ate t hat t he less ee w ould ha ve to pa y to b or r ow t he f u nd s nece ss a r y to obt a i n a n a ss et of si m i la r v a lue in a sim i l a r e conomic env i r on ment w it h sim i l a r ter ms a nd cond it ions. R ight-of-use a ss et s, w here appl icable, a r e mea su re d at co st c ompr isi ng t he fol low ing: – T he a mount of t he i n it ia l measu r ement of leas e l iabi l it y; – A ny le a se pa y ment s mad e at or befor e t he com mencement date le ss a n y lea se incent i ves r e ceiv ed ; a nd – A ny i n it i a l d i r ec t co st s. T he depre c iat ion per iod for t he r ight-of- use a s set i s f r om t he lea se c ommencement dat e to t he ea rlier of t he end of t he lea se ter m or t he end of t he us ef u l l i fe of t he as se t, a s fol low s: – La nd and bu i ld in gs up to 32 ye a r s; a nd – F leet a nd mach i nes up to 5 yea rs. Pay ments a sso c iate d w it h shor t-ter m lea ses a nd leas es of low-va lue a ss et s a r e re cog n i se d on a st r a ight-li ne ba sis a s a n ex pen se i n t he G r oup income st atement . Shor t-ter m lea se s a r e lea se s w it h a le a se ter m of 12 mont h s or less. I n de ter m i n i ng t he lea se ter m, ma n ag ement consider s a l l fac t s a nd c ir c u ms t a nces t hat cr e ate a n econom ic incent i ve to ex erc is e a n ex t en sion opt ion . E x t en sion opt ion s a r e onl y i ncluded i n t he lea se t er m i f t he lea se is r ea son ably c er t a in to be e x tende d ( or not ter m i na ted ). The a ss ess ment is re v ie wed i f a sign i ca nt e vent or a sign i c a nt cha nge in c i rc u ms t a nce s occ u r s wh ich a f fec ts t hi s as se ssment a nd t h at is w it h in t he contr ol of t he Gr oup as a le ss ee. W her e appropr iate t he G r oup wi l l s ub-let prop er t ies which a re va ca nt i n or der to der ive le a se i ncome, wh ich is show n net of l ease cost s. Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 172 1.1 1 Pro visions, contingen t liabilities and regulat or y matters Pr o v is ions a r e r eco g n ise d when t he Gr oup ha s a pr es ent lega l or con st ruc t i ve obliga t ion as a r e su lt of pa st e vent s, it is more l ikel y t h a n not th at a n out o w of re sou r ces w il l be r e qu ir e d to se t t le the obliga t ion a nd t he a mou nt ca n b e r eli ably est ima ted . P r ov i sions a r e mea su r ed a t t he bes t es t i ma te of t he ex pend it ur es r eq ui r ed to se t t le t he o bl ig at ion. I f t he ef fe c t of t he t i me va lue of money is m ater i a l, pr o v is ions a r e d isc ount ed u sin g a pre -t a x rate t hat re ec t s, wher e appropr i ate, t he r isk s spe ci c to t he l iabi l it y . W her e di scou nt i ng is us ed , t he i ncr ea se i n t he prov i sion due to t he pa ss ag e of t i me is r eco g ni se d a s a na nce co st . Cont i ngent l i abil it ies ar e p os sible obl ig a t ion s a nd pr e s ent ob l ig a t ion s t ha t a r e not probable or not rel i ably mea sur able. Cont i ng ent li abi l it ies a r e d isc lose d but not accou nte d. How ev er , d isc losu r e is not r equ i r ed i f pa y ment is remote. T he Group’ s pol ic y is to en ga ge col lab ora t ivel y w it h reg u l ator s a nd add r es s a ny c oncer ns r a i se d a s soon a s pos sible. The G r oup ta k es lega l adv ice, as a ppropr iate, a s to t he m a n ner in w hich it should r esp ond to ma t ter s r a i se d a nd t he potent ia l outcome. Howe ver, for the ma jor it y of t hese mat ters, t he Bo a r d is un able to qua nti f y rel i ably t he l i kel i hoo d, t i mi ng a nd out ow of fu nd s t hat m ay re su lt , if a ny . For ma ter i a l ma t ter s w here a n out ow of f u nds is pr obable and ca n be mea su r ed r el iabl y ba se d on t he la tes t in for mat ion av a i lable at t he repor ti n g dat e, a mount s ha ve b een r e cog n is ed i n t he cons olid ate d a nd compa ny n a nci a l st atement s w it hi n P ro v i sions. 1.12 Proper t y , pl ant and equi pment Pr op er t y , pla nt a nd equipment is s ta te d at cos t , net of acc umu la te d depre ci at ion a nd impa ir ment. Such c ost i ncludes ex pend it u r e t h at is d ir ec t l y at t r ibut able to t he acq ui sit ion of t he items. Subse quent cos t s a r e inc luded in t he ass et ’ s c a r r y i ng a mount or r ec og n is ed a s a sep a r ate a s set , as a ppropr iate, on ly w hen it is pr obable t hat f ut u r e econom ic benet s as so cia ted w it h t he item wi l l o w to the G roup a nd t he cost of t he item ca n be mea sur e d r eli ably . A ll ot her r epa i r s a nd ma inten a nce a r e ch a r ge d to t he i ncome st atement du r i ng t he na ncia l per iod in wh ich t hey a re i ncu r r ed . Depr ec iat ion is ca lc ul ate d on a ss et s usi ng t he st r a ight-l ine met hod to a l loc ate t heir cos t less r e sidua l v a lues ov er t heir est ima ted u sef ul l ive s, a s fol low s: – Fr e ehold a nd lea se hold prop er t y 50 y ears or lease term if l ess – Ref u rbish ment of pr oper t y 5 to 20 years or lease term – Fixt ures, ttings, pla nt a nd ma ch i ne r y 3 to 20 years La nd is not deprec ia ted . Residua l va lues a nd us ef u l l ive s a r e re v ie wed a t eac h ba l a nce she et d ate, a nd adju ste d pr os pe c t ivel y , i f appr opr i ate. A n item of pr oper t y , pla nt and e qu ipment is der ec og n ise d upon d is pos a l or when no fut u r e econom ic benet s a r e ex pe c ted f rom it s u se or d is pos a l. A ny ga i n or los s a r is in g on dere cog n it ion o f t he ass et ( c a lc ul ate d a s t he d i f fer ence be t ween t he net d isp os a l pr oce e ds a nd the c a r r y i ng a mount of t he a ss et) is i ncluded i n t he i ncome s t a te ment . Pr e - open i ng co st s a r e e xp en sed t o t he Gr oup income s ta tement as i nc ur re d. A ss et s u nder cons t r uc t ion i ncluded i n prop er t y , pla nt a nd equ ipment ar e a mou nts rel at i ng t o ex pend it ur e for as se ts i n t he cou r se of con st r uct ion. 1.13 Intangib le asset s ( a ) Go odwill G oo dw il l r epr esent s t he excess of t he fai r va lue of t he con siderat ion tr a ns fer r ed o ver t he fa i r v a lue of t he Gr oup’ s sh a r e of t he net identi able as se ts les s t he liabi l it ie s as su med at t he date of acq ui sit ion. G o od w i l l on acqu isit ions is include d in i nt a ng ible as se t s. G oo dw il l is t es ted a nnua l l y for impa ir ment a nd is a lloc at ed to t he relev a nt ca sh-g enerat ing u n it or g r oup of cas h- genera t i ng u n its for t he pur p ose of impa ir ment tes t i ng. A cas h-gener at i ng u n it is t he sma l le st identi able gr oup of ass et s t ha t generate s cas h in ow s, t ha t ar e la r gel y indep endent of the ca sh i n ow s f r om ot her as se t s or gr oups of a ss et s. A f ter i n it ia l re cog n it ion, g oo dw il l is me a sur e d at co st less a n y acc u mul ate d impa ir ment los ses. ( b ) Casino and othe r gamin g licences and concessions T he Gr oup capit a lis es ac qu ir e d ca si no a nd ot her ga m i ng l icence s a nd conces sions. Ma n ag ement bel ieve s t ha t ca si no a nd ot her ga m i ng l icence s, w it h the exc ept ion of sev en ( 7 ) venues i n En r ach a , ha ve inde nite l iv es a s t here is no fores ee able li m it to t he per iod ov er wh ich t he l icences a r e ex pe ct ed to gener ate net ca sh i n ow s a nd eac h l icence holds a va lue o ut side t he prop er t y i n wh ich it r esides. E ach l icence is r ev iewed a nnua l l y for i mpa i r ment. ( c ) Sof t ware and devel opme nt Cos t s t h at a r e d i r ec t l y a ss oc iat ed w ith t he pro duct ion a nd development of ident i able a nd un ique sof t w a r e pro duc ts c ont r ol led by t he Group, a nd t h at a r e ex p ec te d to genera te econom ic benet s exce ed i ng cos t s be yond one yea r, a re r e cog n is ed as i nt a n g ible ass et s for bo t h ex ter na l ly pur c ha se d a nd i nter n a l l y de veloped sof t wa r e. Di r ec t co st s include spe ci c employee c os ts for s of t wa r e de velopment. Sof t wa re acq ui r ed a s p a r t of a busines s combin at ion is r ec og n is ed at f a i r va lue at t he d ate of acq ui sit ion. Cos t s a sso c iate d w it h ma i nta in i ng computer sof t wa re pr og r a m mes a r e re cog n i se d as a n exp en se a s i ncu r r ed . (d) B r a n d s Repre sent s t he f a i r va lue of bra nds a nd t ra dema rk as set s ac qu ir e d in b usi ness combin at ions a t t he acqu is it ion dat e. ( e ) Cus tomer re latio nship s Repre sent s t he f a i r va lue of c ust omer rel atio ns ac quired in bus ines s combin at ions a t t he acqu is it ion dat e. A mor ti sat ion is r e cog n i sed on a s t r a ight- li ne ba si s over t he est i mat ed u sef u l l i fe of int a ng ibl e a s se ts u n les s such l iv es a r e inde nite. T he est ima ted u sef u l l ive s a r e as f ollo ws: – Ca si no a nd ot her ga m i ng l icences 10 y ears or ind enite – Sof t w a r e a nd dev elopment 3 to 5 years – Br a nd s 10 y ears – Cu s tome r relat ionships 4 y ears The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 173 1 General i nfor mation and accounting policies ( continued ) 1.14 Impairme nt or subseq uent reversal of previou sly reco gnis ed impa irment for non-nanc ial assets A ss et s th at ha ve an inde n ite usef u l l ife a r e not subjec t to depr e cia t ion or a mor t i sat ion a nd a r e tes te d a n nua l l y for i mpa i r ment. A ss et s t h at a r e subje c t to depr ec iat ion o r a mor t i sa t ion a re r e v ie wed for i mpa i r ment whenever e vent s or ch a ng es i n ci r cu m st a nce s i nd icate t hat t he ca r r y in g a mount m ay not b e re co ver able or where t hey i nd ica te a pr ev iously r ec og n ise d impa ir ment ma y no longer be r e qu i re d. A n i mpa i r ment loss i s r eco g n ise d a s t he a mount b y wh ich a n ass et ’ s c a r r y i ng a mount e xcee d s its r e co vera ble a mount. T he re co ver able a mount is t he higher of a n as se t’s fai r va lue less cos t s of d ispo sa l and va lue i n use. For t he pu r p ose s of a ss essi n g impa ir ment, a s se ts a re g r ouped a t t he lowes t lev els for wh ich t here a r e sepa ratel y identi able ca sh i n o ws ( c a sh-g enerat i n g un it s) . T he exp ec t ed ca s h ows gener ate d by t he ass et s a r e d is cou nted u si ng appropr iate d isc ount r ate s t hat r ee c t t he t i me va lue of money a nd r i sk s a sso ci ate d w it h t he gr oups of as se ts. If a n impa i r ment loss i s r eco g n ise d, t he ca r r yi ng a mount of t he as se t ( c a sh-gener at i ng u n it) is r educe d to it s re co vera ble a mount. A n impa ir ment loss is r eco g n ise d a s a n ex p ens e i n t he Gr oup i ncome s t a te ment i m me d iat el y . A ny i mpa i r ment is al lo ca ted pr o -ra t a acr os s a l l a s set s i n a c a sh-gener at i ng u n it un les s t her e is a n i nd ica t ion t ha t a cla s s of ass et shou ld be impa i r ed i n t he r s t in st a nc e or a fa i r ma rket va lue exi st s for one or more as se ts. O nce a n a s set h a s been w r it ten do w n to it s f a i r va lue l e ss cos t s of d ispo sa l then a ny rem a i n in g impa ir ment is a lloc ate d eq ua l l y a mong st a l l ot her a s set s. W her e a n i mpa i r ment loss subs eq uentl y re ver s es, t he c a r r y i n g a mount of t he a ss et ( c a sh-gener at i ng u n it) is i ncr ea se d to t he re v i se d es t i mat e of its r e cov erable a mou nt, but on ly to t he ex tent t h at t he i ncr ea s ed ca r r y ing a mount does not e xcee d t he ca r r y ing a mount t ha t wou ld hav e be en deter mi ned ha d no impa i r ment l o ss b een re cog n i se d for t he as se t ( c a sh-gener at i ng un it) i n pr ior yea r s. Re ver s a l s a r e a l loc ate d pro -r at a acr o ss a l l a s se ts i n t he cas h- genera t i ng u nit u n les s t her e is a n i nd ica t ion t ha t a cl as s of a sse t shou ld be r ev er se d in t he r st i ns t a nce or a fa ir m a rke t va lue ex i st s for one or more a ss et s. A r ev er sa l of a n impa ir ment los s is r ec og n ise d i n t he Gr oup income s ta tement im me d iat ely . A n i mpa i r ment loss r e cog n i se d for goo dw il l is nev er re ver s ed i n subse quent per iods. 1.15 Employee bene t costs ( a ) Pension obligations T he Gr oup operat es a de ned cont r ibut ion pla n u nder which t he Gr oup pay s xed cont r ibut ions t o a sepa rate ent it y . T he Gr oup ha s no f u r ther pa y ment obl igat ions once t he cont r ibut ions h av e be en pa id. T he cont r ibut ions a re r eco g n ise d a s employe e bene t exp ens e when t hey a r e due. T he Gr oup a l so ha s a n un f u nded p ension com m it ment rel at i ng to t hr e e for mer E xec ut i ves of t he Group. T he a mount re cog n i se d in t he bal a nce s heet i n r esp ec t of t he com m it ment is t he pr esent v a lue of t he obliga t ion at t he ba l a nce s heet d ate, toge t her w it h a djus t ment for ac t ua ri a l ga i ns or lo sse s. T he Gr oup r eco g n ise s ac t ua r ia l ga ins a nd losses i m med i atel y in t he Group st a tement of ot her comprehen sive i ncome. T he inter e st co st a r is in g on t he com m it ment is r ec og n ise d in net n a nce cos t s. ( b ) Share-bas ed com pen satio n T he Gr oup oper ate s sha re -ba sed p ay ment schemes for employe es of it s subsid ia r ies whereb y t he Compa ny ma ke s aw a r d s of its o w n sh a r es to emplo yee s of its subsid ia r ie s, a nd a s such r eco g n ise s a n inc re a se i n t he co st of i nve st ment i n it s subsid ia r ie s equ iv a lent to t he equit y- set t led sh a r e -bas ed p ay ment cha r ge re cog n i se d in its subsid ia r ies’ na nci a l st atement s, w it h t he cor r esp ondi ng c r ed it bei ng r ec og n is ed d i r ec t ly in e qu it y . T he cos t of equ it y-set t led t r a n sac t ions w it h employ ees f or awa rd s is mea su r ed by r efer ence to t he f a i r va lue at t he date on wh ich t he y a r e g ra nted. T he fa ir v a lue is det er m i ned b y usi ng a n a ppropr iate pr ici ng mo del. T he cos t of equ it y-set t led t r a n sac t ions is re cog n i se d, to get her wit h a c or r esp ond in g inc re a se i n eq uit y , over t he per iod i n wh ich t he per form a nce a nd /or ser v ice cond it ions a r e f u l l le d (the vest ing per iod ). The c umu la t ive e x pen se re cog n i se d for equ it y-set t led t r a n sac t ions at eac h re por ti ng d at e unt il t he ve st i ng dat e re ec t s t he ex tent to wh ich t he ves t i ng per iod ha s ex pi re d a nd t he G r oup’ s bes t es t i ma te of t he number of e qu it y in st ru ment s t h at w i l l u lt i m atel y ves t. T he income s ta tement ex pen se or c r ed it for a per iod r epr es ent s t he movement in cu mul at ive ex pen se r e cog n is ed a s at t he beg i n n i ng a nd end of t h at per iod. No ex pen se is r e cog n i se d for awa rd s t h at do not ult ima tel y ves t, e xcept for e qu it y- set t led t r a n sac t ion s where v es t i ng is cond it iona l upon a m a rk et or non-vest i ng cond it ion, wh ich a r e t r e ate d a s ves t i ng ir resp ec t ive of whet her or not t he ma rket or non- v est ing cond it ion is sat i se d , pro v ided t hat ser v ice cond it ions ar e al so satised. W her e t he ter m s of a n eq uit y-se t t led t ra nsac t ion aw a r d a re mod i ed, t he mi n i mum e x pen se r ec og n ise d is t he ex pen se a s i f t he ter ms had not b een mod i e d, i f t he orig i n a l ter m s of the awa rd a r e met . A n a dd it iona l exp ens e is re cog n i se d for any mod i cat ion t hat inc re a se s t he tot a l f a i r va lue of t he sha re -bas ed p ay ment tr a n sac t ion or is ot her w ise bene ci a l to t he employee a s mea sur e d at t he date of mod i c at ion. W her e a n eq uit y-se t t led awa rd is ca ncel le d, it i s t r eat ed a s i f it ve ste d on t he dat e of ca nc el lat ion, and a n y ex p ense not yet r ec og n is ed for t he a wa r d i s re cog n i se d im med iatel y . T his i ncludes a ny awa rd where non-ves t i ng cond it ion s w it h i n t he cont r ol of eit her t he ent it y or the employ ee a r e not met. Howe ver, if a new a wa rd is subst it uted for t he ca ncelle d aw a r d, a nd desig n ate d a s a re placement aw a r d on t he dat e t h at it is g r a nte d, t he ca ncel led a nd new aw a r d s a r e t r eat ed a s i f t he y wer e a mod i c at ion of the or ig i na l awa r d, a s desc r ibe d i n t he pr ev ious pa ra g r aph. A ll ca ncel l at ions of equ it y-set t led t ra nsac t ion awa rd s a r e t r ea ted e qua ll y , r ega r d le ss of whet her t he ent it y or t he employe e ca nc els t he a w a rd . T he d i lut ive ef fe c t of out st a nd i ng op t ions is re ec t ed a s add it iona l sh a r e d ilut ion in t he computat ion of d i luted e a r n i ng s per sh a r e. T he pro ce ed s r ec eive d net of a ny d i r ec t ly at t ribut able t r a n sac t ion co st s a r e c re d ite d to sha re c apit a l (nomi na l va lue ) a nd sh a r e prem iu m when t he opt ions a re exer c ise d. ( c ) Bo nus pla ns T he Gr oup re cog n i se s a l iabi l it y in r esp ec t of t he bes t es t i mat e of bonuse s pa yable where c ont rac t ua l l y oblige d to do s o or where a p as t pr ac t ice ha s c r eate d a co nstru ctiv e o bli ga ti on . Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 1 74 1.16 Cash an d shor t -term de posit s Ca sh compr i se s ca sh i n h a nd a nd ba l a nce s w it h ba nk s a nd on- dema nd deposit s. Shor t-ter m dep osit s a r e shor t ter m, hi gh ly l iqu id inv es t ments t hat a r e r ead ily conver t ible to k now n a mounts of c a sh. T hey i nclude shor t -t er m dep osit s or ig i na l ly pur c ha se d w it h mat u r it ie s of t h re e mont hs or le ss. 1.1 7 Inven tories Inv entor ies a r e v a lued at t he lower of cost a nd net r ea l i sable va lue . C os t of in ventor y is deter mi ned on a ‘r st-in , r st-out ’ ba sis. T he cost of n ishe d goo ds compr i se s goo d s pur c ha se d for r esa le. Net r ea l i sable va lue is the es t i ma te d sel l i ng pr ice in t he ord i na r y cou r se of bu si ness. W hen nece ss a r y , pr o v is ion is made for obsolete a nd slow-m o v i ng i nv entor ies. 1.18 T axatio n ( a ) Current tax Cu r r ent t a x a s se ts a nd liabi l it ies for t he cu r r ent a nd pr ior per iods a r e mea su r ed as t he amou nt ex pe c te d to be p a id or to be r ec over e d f r om t he ta x at ion aut hor it ies. T he ta x ra tes a nd ta x law s use d to c ompute t he a mount a re t hos e t ha t a r e enac t ed , or subst a nt i vel y enac te d, b y t he repor ti n g dat e. Cu r r ent t a x r el at i ng to it ems r e cog n is ed d ir e c t l y in e qu it y is r eco g n ise d i n equ it y a nd not t he income s ta tement. Ma n ag ement eva luates p osit ion s ta ken in t he ta x re t u r n s w it h r e spe c t to sit u at ions in w h ich appl icable ta x re g u lat ions ar e subjec t to i nter pret at ion at each r epor ti n g dat e a nd es t abl ishes pr o v ision s where appr opr ia te. ( b ) Deferre d tax Defer r e d ta x is pr ov ided usi ng t he l iabi l it y met hod on temp ora r y d i f fer ence s a r i si ng bet ween t he ta x base s of a ss et s a nd li abi l it ies a nd t hei r c a r r y i ng a mounts i n t he na nc ia l st a tements. Howe ver, if deferr e d ta x a r i ses f rom t he i n it ia l r e cog n it ion of a n as se t or l iabi l it y in a t r a n sac t ion, o t her t ha n a busi ness c ombin at ion, t h at at t he ti me of t he t r a ns ac t ion a f fe c t s neit her accou nt i ng nor t a xa ble pr o t or lo ss, it is not accou nte d for . D efer r ed t a x is deter mi ned us in g t a x rat es (and l aw s ) t hat ha ve b een en ac ted or subst a nt i vel y enac te d b y t he ba l a nce she et dat e a nd a r e ex p ec te d to appl y when t he rel ate d defer r e d ta x a sse t is r ea lis ed or t he defer r ed t a x li abi lit y is s et t led. Defer r e d ta x a sse t s a r e re cog nis ed to t he ex tent t hat it is pr obable t ha t f ut u r e t a x able pro t w i l l be av a i lable ag a i ns t wh ich t he tempor a r y d i f fer ences c a n be ut il is ed . Defer r e d ta x a sse t s a nd l iabi l it ies a re of fs et when t her e is a leg a l l y en forc eable r ight to se t of f c ur rent t a xat ion a ss et s ag a i ns t cu r r ent t a xat ion liabi l it ies a nd it i s t he int ent ion to set t le t hese on a net ba si s. Defer r e d ta x is pr ov ided on tempora r y d if ferences a ri si ng on i nve st ment s i n subsid ia r ie s, excep t wher e t he t i m in g of t he re ver s a l of t he temp ora r y d i f fer ence i s cont r ol led b y t he Gr oup a nd it is pr obable t ha t t he tempor a r y d i f fer ence w i l l not re ver s e in t he forese eable f ut ur e. ( c ) Sal es tax Rev enues, ex pen se s a nd a sse t s a r e re cog n i se d net of t he a mount of s a les ta x except: – W her e t he sa le s ta x inc u r r ed on a pur c ha se of a s set s or ser v ice s is not re co vera ble fr om t he t a xat ion author it y , in w h ich ca se t he sa les t a x is re cog n i sed as p a r t of the co st of ac qu isit ion of t he as se t or as p a r t of the e xp ens e item a s appl ic able; a nd – For re ceiv ables a nd pa yables t hat a r e st ate d w it h t he a mount of sa les t a x i ncl ude d . T he net a mount of s a les t a x re cov erable f rom , or pa yable to, t he t a x a t ion aut hor it y is i ncluded a s pa r t of re ceiv ables or pay ables i n t he ba l a nce s heet . 1.19 Share capital Or d i na r y sh a r es a r e cla s si e d as eq uit y . 1. 20 Dividends Div idends propo se d by t he Boa r d of Di r ec tor s a nd u npa id at t he per iod end a r e not rec og n is ed in t he n a nci a l st at ements unt i l t hey ha ve be en appr ov ed b y sha reholders a t t he A n nua l G enera l Meet i ng. Inter i m d i v idends a re r eco g n ise d when pa id. 1. 21 Sepa rately dis close d items The Group se pa rately discloses those items w h ich a r e re qu i re d to g i ve a f u l l under s ta ndi ng of t he Gr oup’ s na ncia l per for ma nce a nd a id compa rabi l it y of t he Gr oup’ s r e su lt be t w een p er iod s. Such items a re con sidere d by t he Dir e c tor s to re qu i re s epa r at e d isc losu r e due to t hei r siz e or na t u re i n r ela t ion to t he Gr oup. 1. 2 2 Govern ment g rants G over nment g r a nt s a r e re cog n i se d wher e t here i s r ea son able as su ra nce t hat t he g ra nt wi l l b e re cei ved , a nd a l l a t t ac hed cond it ions w i l l b e compl ied w it h . W hen t he g ra nt rela tes to a n exp ens e item , it is r eco g n ise d a s i ncome on a sy st emat ic ba sis o ver t he per iods t h at t he r ela te d cos t s, for wh ich it is i ntende d to compen sate, a re ex p ens ed . The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 175 2 Segment al reporting ( a ) Segment inf ormation – operati ng segments Y e a r ende d 30 Ju ne 2022 Di gital £m Gr os veno r V enues £m Mec ca V enues £m En r ach a V enues £m Cent ra l Costs £m Tot a l £m Con t inuing ope rat ions Revenue 183.3 296.6 134.0 30.1 – 644.0 Ot her operat ing i ncome – 2.6 1.0 – – 3.6 Underlyi ng operat ing pro t (los s) 18.7 45.1 (0.8) 7.5 (30.7) 39.8 Sepa ratel y d is clos ed it ems (14.5) 15.5 34.4 7.6 (0.7) 42.3 Segme nt resul t 4.2 60.6 33.6 15.1 (31.4) 82.1 Fina nce costs (13.1) Fi n a nc e i nc ome 0.1 Ot her n a ncia l ga in 5.2 Pr ot b efore ta xat ion 74.3 Ta x a t io n (16.9) Pr ot for t he yea r fr om cont i nui ng operat ions 57.4 Ot her s eg ment items – cont inu i ng operat ion s Capit a l e x pend it u r e (15.2) (14.0) (8.0) (1.1) (2.3) (40.6) Depr e ci at ion and a mor t i sa t ion (13.2) (32.4) (15.1) (1.3) (5.4) (67.4) SDI from cont i nu ing oper at ions V AT cl a i m – net of cos t s – 29.8 47.7 – (0.4) 77.1 Impa ir ment ch a r ge s – (26.9) (20.9) – – (47.8) Impa ir ment r ever s a l s – 13.3 – 8.7 – 22.0 P rop er t y-rela te d pr ov isions – – 10.4 – – 10.4 A mor ti sat ion of acq ui r ed i nt a n g ible ass et s (11.7) – – – – (11.7) Closu r e of venues – (0.7) (2.8) (1.1) – (4.6) Integr at ion costs (2.8) – – – – (2.8) Ga in on reme as ur ement of pre v ious ly e x is t i ng int erest in j oin t ve nture 0.8 – – – – 0.8 Busi nes s t ra nsfor ma t ion cost s (0.7) – – – (0.3) (1.0) Acqu is it ion a nd d isp osa l cost s (0.1) – – – – (0.1) Y e a r end ed 3 0 Ju ne 202 1 Dig ita l £m Grosve no r Ve n u e s £m Mec ca Ve n u e s £m En r a ch a Ve n u e s £m Cen t r a l Costs £m To t a l £m Con t inuing ope rat ions Revenue 177.4 79.2 55.5 17.5 – 329.6 Ot her operat ing i ncome – 45.3 18.2 0.3 0.6 64.4 Underlyi ng operat ing pro t (los s) 3.2 (40.7) (18.9) (0.2) (27.9) (84.5) Sepa ratel y d is clos ed it ems (14.5) 13.3 (3.8) (0.6) (2.8) (8.4) Segme nt resul t (11.3) (27.4) (22.7) (0.8) (30.7) (92.9) Fina nce costs (14.0) Fi n a nc e i nc ome 0.1 Ot her n a ncia l losses (0.5) Los s before t a x at ion (107.3) Ta x a t io n 10.4 Los s for the yea r f rom cont inui ng operat ions (96.9) Ot her s eg ment items – cont inu i ng operat ion s Capit a l e x pend it u r e (13.3) (2.3) (2.1) (1.0) (3.5) (22.2) Depr e ci at ion and a mor t i sa t ion (13.7) (32.9) (16.4) (1.5) (5.8) (70.3) SDI from cont i nu ing oper at ions Integr at ion costs (2.0) – – – (0.3) (2.3) A mor ti sat ion of acq ui r ed i nt a n g ible ass et s (11.8) – – – – (11.8) P rop er t y-rela te d pr ov isions – 0.5 (0.7) – – (0.2) Busi nes s t ra nsfor ma t ion cost s (0.7) (0.8) (1.0) (0.6) (2.5) (5.6) Closu r e of venues – – (2.1) – – (2.1) Ga mi ng dut y ref und – 13.6 – – – 13.6 Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 176 T he Gr oup re por ts se g menta l in for m at ion on t he ba sis b y wh ich t he chief oper at i ng de c ision-ma ker s ut i l i se i nter n a l r epor t in g w it h i n t he b us i ne ss . Follow ing t he sa le of its Bla nkenber g e Ca si no in Belg iu m in t he pr ior yea r, M a na gement re ned t he pre v iously rep or t ed ‘I nter na t iona l V enues’ segment to ‘E n r ach a V enues’ which s olely oper ate s i n Spa i n. Ot her operat ing i ncome for bot h p er iod s r ela ted t o G ov er n ment g ra nts r ecei ved f rom r eimbu r sement of employe e cos t s rel at i ng t o st a f f f u rloughed due to COV I D - 19 under t he C oron av ir u s Job Retent ion Sc heme, Lo ca l Rest r ict ions Suppor t Gra nts a nd Re st a r t Gr a nt s to suppor t busines se s du r i ng na t iona l lo ckdo w n p er iod s a nd per iods of loc a l r es t r ic t ions. A ss et s a nd l iabi l it ies h av e not been s eg mente d as t hi s in for mat ion is not pr ov ided to t he ch ief oper at i ng de ci sion-ma ker s on a r eg u la r ba sis. Capit a l e x pend it u r e compr i ses c a sh ex p end it u r e on prop er t y , pla nt a nd equipment a nd ot her i nt a ng ible a sse t s. ( b ) Geo grap hical info rmatio n T he Gr oup oper ate s in t hr ee m a i n ge og r aph ica l a rea s ( U K , C ont inent a l Eu r ope a nd Re st of World) . ( i ) Revenue from customer s by g eo graphi cal are a base d on loca tion of custome r Y e a r ende d 30 June 2022 £m Y e a r end ed 30 Ju ne 2021 £m UK 588.7 286.7 Cont i nent a l Eur op e 51.0 38.6 Res t of World 4.3 4.3 Tota l r evenue 644.0 329.6 ( i i ) No n-current assets by geo graphi cal area b ased on lo cati on of assets As a t 30 June 2022 £m A s at 30 Ju ne 2021 £m UK 641.3 693.7 Cont i nent a l Eur op e 75.1 65.6 T o t a l non-cu r rent a ss et s 716.4 759.3 Wit h t he except ion of t he U K , no ind iv idua l cou nt r y cont r ibute d more t ha n 15% of consol idat ed s a les or a ss et s. ( c ) T otal revenue and prot from ope ration s Revenue P rot Note Y e a r ende d 30 June 2022 £m Y e a r end ed 30 Ju ne 2021 £m Y e a r ende d 30 June 2022 £m Y e a r end ed 30 Ju ne 2021 £m Fr om cont inu i ng op er at ion s 644.0 329.6 57.4 (96.9) Fr om d i sc ont i nued op er at ion s 8 – 4.6 8.8 24.9 644.0 334.2 66.2 (72.0) ( d ) T otal revenue by income stre am Y e a r ende d 30 June 2022 £m Y e a r end ed 30 Ju ne 2021 £m Rev enue reco g n ise d u nder IF R S 9 Ga mi ng w i n – C as ino 496.8 237.2 Rev enue reco g n ise d u nder IF R S 15 Ga mi ng w i n – Bing o 79.5 65.8 Ga mi ng w i n – Poker 19.1 5.6 Ga mi ng w i n – ot her dig it a l pr od uct s 4.3 4.3 Food a nd bever a ge 39.0 11.4 O t he r 5.3 5.3 T ot a l re venue rec og n is ed u nder IF R S 15 147.2 92.4 Tota l r evenue 644.0 329.6 The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 177 2 Segment al reporting ( continued ) ( e ) T otal cost anal ysis by segment T o i ncr e a se t r a n spa r enc y , t he G r oup ha s dec ided to i nclude add it ion a l d is clos ur e a n a l ys in g tot a l c ost s b y t y pe a nd seg ment. A re conci l ia t ion of tot a l co st s, b efore SDI, b y t y pe a nd seg ment is as f ollo ws: Y e a r ende d 30 Ju ne 2022 Di gital £m Gr os veno r V enues £m Mec ca V enues £m En r ach a V enues £m Cent ra l Co st s £m Tot a l £m Employ ment and r ela ted c os ts 24.3 103.9 43.0 14.6 19.9 205.7 T a xes a nd dut ies 40.5 60.5 25.1 1.6 1.4 129.1 Direct costs 48.1 23.6 19.9 2.4 – 94.0 Depr e ci at ion and a mor t i sa t ion 13.2 32.4 15.1 1.3 5.4 67.4 Ma rketi ng 33.2 5.9 5.8 1.7 0.1 46.7 Pr op er t y co st s 0.5 8.7 4.5 0.6 1.7 16.0 O t he r 4.8 19.1 22.4 0.4 2.2 48.9 T o t a l cost s befor e SDI 164.6 254.1 135.8 22.6 30.7 607.8 Cos t of sa les 386.5 Op era t i ng cos t s 221.3 T o t a l cost s befor e SDI 607.8 Y e a r end ed 3 0 Ju ne 202 1 Di g it a l £m Grosve no r Ve n u e s £m Mec ca Venues £m En r a ch a Ve n u e s £m Cen t r a l C os t s £m To t a l £m Employ ment and r ela ted c os ts 20.5 85.1 38.5 11.4 19.5 175.0 T a xes a nd dut ies 42.2 21.4 14.4 1.5 0.6 80.1 Direct costs 53.0 10.6 8.8 2.5 – 74.9 Depr e ci at ion and a mor t i sa t ion 13.7 32.9 16.4 1.5 5.8 70.3 Ma rketi ng 35.4 2.0 3.5 0.3 – 41.2 Pr op er t y co st s 0.9 3.4 0.2 0.5 1.6 6.6 O t he r 8.5 9.8 10.8 0.3 1.0 30.4 T o t a l cost s befor e SDI 174.2 165.2 92.6 18.0 28.5 478.5 Cos t of sa les 305.4 Op era t i ng cos t s 173.1 T o t a l cost s befor e SDI 478.5 T he Gr oup re por ts se g menta l in for m at ion on t he ba sis b y wh ich t he chief oper at i ng de c ision-ma ker s ut i l i se i nter n a l r epor t in g w it h i n t he b us i ne ss . 3 Prot for the year – ana lysis by nat ure T he follow ing item s hav e been ch a r ge d in a r r iv i ng at t he pro t ( loss) for t he y ea r befor e n a nci ng a nd t a x a t ion fr om cont i nui ng oper at ions: Y e a r ende d 30 June 2022 £m Y e a r end ed 30 Ju ne 2021 £m Employ ee bene t ex pen se 189.9 166.6 Cos t of i nventor ies r e cog n is ed a s e x pen se 18.7 6.4 A mor t is at ion of i nt a ng ibles 15.4 16.2 De pr e c ia t ion – ow ne d as se t s (i ncludi ng £ 2 3.5m ( ye a r ended 3 0 June 2021: £2 7 . 7m) wit hi n co st of sa les ) 25.4 29.9 – r ight-of-use a ss et s (i nclud i ng £ 24. 9 m ( yea r ended 3 0 June 2021: £22 .2 m) wit hi n co st of sa les ) 26.6 23.8 Op era t i ng lea se r ent a l s pa yable – sub-lea s e i ncome – 0.1 A ss et s w r it ten of f – 0.5 SDI – operat ing (i ncome) cost s (see note 4) (42.3) 8.4 Audit or s’ remunera t ion for audit s er v ices 1.0 0.8 Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 178 In t he yea r , t he Gr oup’ s audit or s, Er n st & Y oun g LL P , includ i ng its net work r m s, ea r ne d t he follow ing fee s: Y e a r ende d 30 June 2022 £m Y e a r end ed 30 Ju ne 2021 £m Audit s er v ices – Fees pa yable to t he Compa ny ’ s aud itor for the pa r ent compa ny a nd cons ol idat ed n a nci a l st atement s 1.0 0.8 Ot her ser vice s – Fees pa yable for t he rev iew of Group’ s inter i m con sol idat ed n a nci a l st at ements – – 1.0 0.8 £ 35,00 0 ( y ea r ende d 30 June 2021: £ 35,0 00) of t he aud it fee s rel ate d to t he pa rent compa n y . It is the Gr oup’ s pol ic y to ba la nc e t he need to ma i nt a i n auditor i ndependence w it h t he bene t of ta k i ng ad v ice f r om t he lead i ng r m in t he a r ea concer ne d a nd the desi r abi l it y of b ein g ef c ient. 4 Sepa rat ely di scl ose d items ( SD Is ) Note Y e a r ende d 30 June 2022 £m Y e a r end ed 30 Ju ne 2021 £m Con t inuing ope rat ions V AT cl a i m – net of cos t s 77.1 – Impa ir ment ch a r ge s 11, 12, 13 (47.8) – Impa ir ment r ever s a l s 11, 12, 13 22.0 – P rop er t y-rela te d pr ov ision 24 10.4 (0.2) A mor ti sat ion of acq ui r ed i nt a n g ible ass et s (11.7) (11.8) Closu r e of venues (4.7) (2.1) Integr at ion costs (2.8) (2.3) Ga in on reme as ur ement of pre v ious ly e x is t i ng i nter es t i n joint vent u r e 35 0.8 – Busi nes s t ra nsfor ma t ion cost s (0.9) (5.6) Acqu is it ion a nd d isp osa l rela te d cos t s 35 (0.1) – Ga mi ng dut y ref und – 13.6 Separate ly disclosed it ems 1 42.3 (8.4) Inter e st on V AT cla i m 5 5.6 – Ta x a t io n 6 (10.5) 0.3 Sepa r ately d is clos ed item s rel at i ng to cont i nu ing op erat ion s 1 37.4 (8.1) Separate ly disclosed it ems relating to d iscontinued operations 1 Pr o t on di spo sa l of busi nes s 8.8 23.8 Ta x a t io n – – T ota l separate ly disclosed i tems 1 46.2 15.7 1. It is G r oup p ol ic y t o r ev er s e sep a r at el y d i sc los e d ite ms i n t he s a me l i ne a s t h ey w er e or i g i na ll y r ec og n i se d . V A T claim On 30 Ju ne 2021, t he Gr oup wa s i n for med t hat t he Fi r st-t ier Tribu na l (‘F T T ’) h ad a l lo wed t he appea l of t he Group on it s cl a i m to be r ef u nded V AT pa id on t he t a k i ng s f r om ga m i ng m ach i nes du r i ng t he per iod Apr il 20 06 t o Ja nua r y 2013. W h i ls t t h is i s a po sit iv e dec ision for the Gr oup, HM RC hav e a number of avenues of ap pea l before t h is ma t t er reac hes a de n it iv e conclusion, beg i n n i ng w it h a n i nit ia l 56 - d ay p er iod f rom t he d ate of dec is ion in wh ich to lo dge a n appea l and a g r ee t he exac t g u a r a nte e of t he cla im w it h the Gr oup. Due to t h is , t he t r a ns ac t ion wa s d i sclos ed a s c ont in gent a ss et s i n t he Gr oup’ s A n nua l Re por t for the ye a r end i ng 30 Ju ne 2021. On 2 De cember 2 021, t he ref und ha s be en r ec eive d in r el at ion to t h i s cl a i m compr isi ng £ 7 7 .5m pr i ncipa l a nd inter es t of £5.6m, w it h co st s d ir e c t l y inc ur red a mou nt i ng to £0.4m. T h is con r ms t he closu re of t he cla i m a nd t he Gr oup ass es se d no fu r t her appea l oppor tu n it ies t o a ny pa r t ies. T h is i s a mat er ia l, one- of f a mou nt a nd as s uch ha s be en exc luded f r om under ly ing r esu lt s. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 179 4 Sepa rat ely di scl ose d items ( cont inu ed ) Imp airme nt charges and reversa ls Du r i ng t he yea r, the Gr oup r eco g ni se d i mpa i r ment cha rge s of £47 .8m r ela t i ng to G r os venor venues a nd Mecc a clubs. T he i mpa i r ment s were r e cog n i sed f or va r ious rea son s, i nclud in g lower t h a n a nt icipated p er for m a nce p ost-pa ndem ic, low lev el of fore ca s t ea rn i ng s, or a dec ision to clos e venues. Du r i ng t he yea r, the Gr oup a l so r ec og n is ed a r e ver sa l of prev iously i mpa i r ed a ss et s of £2 2.0m r ela t i ng to G r os venor venues a nd En r ach a venues. The r ev ers a l s were d r iven by bet ter t ha n ant icipat ed per form a nce a nd impr ov ed out look i n t he identi e d Gr os venor a nd En r ac ha venues. T he impa ir ment a nd i mpa i r ment r ever s a l s a r e ma ter ia l, non-c as h a nd non-oper at iona l rel ate d item s a nd a s such, h av e be en excluded f rom u nderl y i ng r e su lt s. Property-r elated provisions In pr ior year s a nd as a r esu lt of t he CO V ID - 19 lock dow n , t he Gr oup det er m i ned it wa s pr obable t ha t t he y w i l l be r e qu ir e d to ma ke pay ments u nder a prop er t y a r r a n gement for wh ich t he l iabi l it y w i l l r ev er t t o t he Gr oup if t he tena nt defau lt s. A pr o v ision of £10. 4m w a s re cog n i se d, b ein g t he pre sent v a lue of t he a mount ex p ec t ed to b e pa id ov er t he rem a i n i ng ter m of the lea se. Du r i ng t he cur rent yea r , t he G r oup have r e - con sidere d t h is pr o v ision i n l ight of t he cu r rent ci r cu m st a nc es a nd sit u at ion for bot h t he Gr oup, t he g ua r a ntor s a nd the pr oper t y t ena nt s. It wa s de ter m i ned t hat pa y ment is no longer pr obable a nd t her efore, t he prov i sion wa s r elea se d in f ul l. T h is i s a mat er ia l, one- of f pr ov i sion a nd as s uch ha s be en exc luded f r om under ly ing r es ul ts c onsi stent w ith t he orig i n a l r ec og n it ion of t he pro v is ion. Amor tisatio n of acquire d intangib le asset s Acqu i r ed i nt a ng ible a sse t s a r e a mor t ised o ver t he life of t he ass et s w it h the c ha r ge b ei ng i ncluded i n t he G roup’ s rep or ted a mor t i sa t ion ex pen se. G iven t he se ch a r ge s a r e ma ter ia l a nd non-ca sh i n n at u r e, t he Gr oup’ s underl y i ng r e su lt s ha ve be en ad just ed to exclude t he amor ti sa t ion exp ens e of £1 1.7 m (2021: £11.8m) relat i ng to t he acqu i r ed i nta ngible as se t s of Str ide, Y oBin go a nd R ia lto. Closure of venu es Du r i ng t he cur rent yea r , t he G r oup made t he de ci sion to close a nu mber of Mecc a venues. £4.7m (2021: £2.1m) of cost s rel at i ng t o t hes e venues, includ i ng d i l apidat ion repa i r s to wh ich t he asse t s wer e pre v ious ly i mpa i r ed a nd redu nd a nc y co st s d i r ec t ly at tr ibuted to t he se venues, had b een e x pen se d dur ing t he yea r . T hese a re ma ter i a l co st s i ncu r r e d outs ide of usua l bu si ness ac t iv it ies a nd a s such h av e be en excluded f rom under ly ing r es ul ts. Integrat ion costs Du r i ng t he yea r, £2.8m of cos t s (2021: £2 .3m) ha ve be en exc luded f r om underl y i n g oper at i ng r esu lt s of t he Group. T hese c ost s ha ve be en i ncu r r ed t o re ad y t he R I DE propr iet a r y pl at for m, acqu i re d i n t he St r ide acqui sit ion, to m ig r ate t he legac y R a n k br a nd s. Mecc abin go.com success f u l ly m ig rate d in Ja nuar y 2022 a nd g r o sv enorc as ino.com is ex pe c te d to m ig r ate i n S eptember. Cos t s d i re c t l y a ss oc iate d w it h t he integ r at ion of busines s acqu isit ions a re c ha rge d to t he G r oup income st atement . Such items a re mat er ia l , i n f r equent i n nat ur e a nd a r e not con sidere d to be p a r t of the u nderl y i ng bus ine ss per for ma nce. Gai n on reme asure ment of p revious ly existi ng interes t in joi nt venture Du r i ng t he yea r, a gai n of £0.8m w a s re cog n i se d on t he reme as ur ement of t he pre v iously ex ist i ng i nter es t in a joi nt vent u r e fol low i ng t he complet ion of t he pur ch a se of R a n k I nter ac t iv e Li m ite d (pr e v iousl y A sper s O n l i ne Li m ite d), see note 3 5. T he ga i n is i n f r e quent in n at u r e a nd doe s not repr e sent u nderly ing p er for ma nce a nd ha s b een e xcluded f r om u nderl y i ng r esu lt s. Business transformation costs T h is wa s a mult i-ye a r cha nge prog r a m me for t he Group foc us ed a r ou nd re venue gr ow t h, cos t sa v i ng s, ef c iencies a nd ensu r i ng t he ke y enabler s a r e i n place. T he tr a n sfor ma t ion prog r a m me w as s t a r ted i n Ja nua r y 2019 and i s now ex p ec te d to complete b y 30 Ju ne 2023 ex tende d f r om t he pr ev iously t a r ge ted c omplet ion dat e of 31 December 2021 due to COV I D - 19 . T he mult i-ye a r ch a ng e pr og ra mme is a m ater ia l, i n f r eq uent prog r a m me a nd is not c onsider ed to b e pa r t of t he underl y i ng b usi ness per for ma nc e. Acquisitio n and dispo sal rela ted costs Acqu is it ion and d isp os a l rel ate d cos t s include non-rec ur r in g cost s to pr ofession a l r m s t ha t have r esu lt ed f r om acqu isit ion or pot ent ia l d isp osa l of subsidia r y . T h i s ha s b een pr es ented a s a n SD I d ue to its one - of f nat ur e. Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 180 Gami ng dut y re fund Du r i ng t he prior yea r , t he G roup succe ssf ul l y concluded t he leg a l pr oce ss t o re cl a i m ga m i ng d ut y on cas ino ch ips pr o v ided b y t he ca si no to t he pla yer f r e e of ch a r ge r ela t i ng to t he p er iod f r om 20 06 t o 2013. T h is fol lowe d a judgement for a not her casi no oper ator, wh ich st at ed t hat f r ee c h ips should not b e include d in t he ca lcu l at ion of g ro ss g a m i ng y ield for ga m i ng dut y pu r p ose s. T he a mou nt re cog n i se d of £13.6m was t he gam i ng d ut y cla i m of £13.3m plus i nter es t re cei ved of £ 0.3m. T hese h av e be en remo ved f rom u nderly ing op erat ing r es ul ts a s t hey a r e ma ter ia l, in f req uent in na t u re a nd do not repr esent underl y i ng p er for m a nce. T h is i ncome was cl a ssi ed w it h i n oper at i ng co st s wh ich is where t he cos t s were pr e v iousl y deduc ted . Prot on sale of busine ss Ch a r ge s or cr ed it s a s so cia ted w it h t he d isp os a l of pa r t or a l l of a busi nes s ma y a r i se. Such d isp os a l s ma y r esu lt i n one t i me impac t s t ha t in order to a l lo w compa rabi l it y mea ns t he Gr oup remov es t he pro t or loss f rom t he u nderly ing oper at i ng r esu lt s. T he Belg iu m ca si no sa le wa s repor ted i n t he A n nua l Repor t and Acc ount s at 30 June 2021 at a pr o t of £23.8m . On 2 Aug ust 2021 a nd subse quent to t he sa le, the G roup wa s a dv ise d by t he buyer of t he outcome of a sa l a r y moder at ion ca s e, t he outcome for wh ich wa s identi ed i n t he sa le and pu r cha s e ag r eement a s bein g ret a ined i n fav our of t he Gr oup. T his leg a l ca se h as b een found i n fav our of t he Gr oup a nd accor d i ngl y on 6 Aug u st 2021, t he G r oup rec eive d add it ional pr o ce ed s of € 3. 7m a nd a f u r t her €6.3m on 29 June 2022. T h is h a s been r e cog n i se d as a n add it iona l g a i n on sa le of t he subsid i a r y . T he Gr oup al so ma de t he deci sion to relea se £0.2 m of the wa r ra nt y prov ision ass oc iate d w it h t he Bel g ium ca si no sa le due to pas sa ge of t ime, se e note 24. T axation T he ta x impa c t of a l l of t he abo ve item s a r e a l so con sider ed not to b e pa r t of t he underl y i ng op era t ions of t he G roup. 5 Financing Y e a r ende d 30 June 2022 £m Y e a r end ed 30 Ju ne 2021 £m Con t inuing ope rat ions Fi n a nc e c os t s: Inter e st on debt a nd b or r ow i n gs (4.5) (4.0) A mor ti sat ion of is sue cos t s on bor r ow ing s (1.9) (2.2) Inter e st pa ya ble on leas es (6.7) (7.8) T o t a l n a nce co st s (13.1) (14.0) Fi n a nc e i nc ome: Inter e st i ncome on net in ves t ments i n lea s es 0.1 0.1 Inter e st i ncome on shor t-ter m ba nk depo sit s – – T o t a l n a nce i ncome 0.1 0.1 Ot her n a nci a l loss es (0.4) (0.5) T o t a l net na ncing cha r ge befor e SDIs (13.4) (14.4) SDI – inter es t on V AT cl a i m 5.6 – T o t a l net na ncing cha r ge (7.8) (14.4) Ot her n a ncia l losses i nclude foreig n exch a ng e losse s on loan s a nd bor r ow i n gs. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 181 6 T axation Y e a r ende d 30 June 2022 £m Y e a r end ed 30 Ju ne 2021 £m Cu r rent inc ome ta x Cu r r ent i ncome ta x – UK (0.7) 6.7 Cu r r ent i ncome ta x – over se a s (3.5) (0.1) Cu r r ent i ncome ta x on SDI (3.3) (0.9) A mou nts (under) over pr ov ided in pr ev ious per iod (5.4) 1.4 T o t a l cu r rent income t a x (char ge) cred it (12.9) 7.1 Defer r ed t a x Defer r e d ta x – UK 0.2 4.9 Defer r e d ta x – over s ea s (1.4) 2.7 Res ta tement of defer r ed t a x due to rate c ha nge (0.2) (5.3) Defer r e d ta x on SDI (7.2) 1.2 A mou nts o ver (under) prov ided in pr ev ious per iod 4.6 (0.2) T o t a l deferr ed t a x ( ch a r ge) c red it (note 23 ) (4.0) 3.3 T a x (char ge) c re d it in t he income st at ement (16.9) 10.4 T he ta x on t he Gr oup’ s pro t befor e t a x a t ion di f fer s f r om t he sta nda r d rat e of UK cor por at ion t a x i n t he per iod of 1 9.00% ( yea r en d ed 30 June 2021: 19 .00% ). T he di f ferences a r e e x pla i ned b elow: Y e a r ende d 30 June 2022 £m Y e a r end ed 30 Ju ne 2021 £m Pr o t ( los s ) befor e t a x at ion on cont i nui ng oper at ions 74.3 (107.3) T a x cha r ge c a lcu l ate d at 19 .00% on prot b efore t a xat ion ( ye a r ended 30 June 2021: 1 9.00% ) (14.1) 20.4 Ef fec ts of : Income (expen se s ) not de duct ibl e for ta x pur pos es 0.8 (2.4) Di f fer ence i n over s ea s t a x rate s (3.0) (4.9) Res ta tement of defer r ed t a x due to rate c ha nge (0.2) (5.3) Adju st ment s r ela t i ng to pr ior per iods (0.8) 1.2 Defer r e d ta x not re cog n i se d 0.4 1.4 T a x (char ge) c re d it in t he income st at ement (16.9) 10.4 T a x on SDI s T he ta x at ion impa c ts of SDIs a r e d i sclo se d below: Y e a r ende d 30 Ju ne 2022 Year e nde d 30 Ju ne 2 021 Cu r r ent inc ome t a x £m Defer red ta x £m Tot a l £m Curren t inc ome t a x £m Defer re d ta x £m To t a l £m V AT cl a i m – net of cos t s (4.6) (11.1) (15.7) – – – Net i mpa i r ment cha rge s 1.3 3.3 4.6 – – – P rop er t y-rela te d pr ov isions (0.6) (1.4) (2.0) – – – A mor ti sat ion of acq ui r ed i nt a n g ible ass et s – 1.1 1.1 – 1.1 1.1 Closu r e of venues 0.5 0.4 0.9 0.3 – 0.3 Integr at ion costs 0.1 0.3 0.4 0.4 0.1 0.5 Busi nes s t ra nsfor ma t ion cost s – 0.2 0.2 1.0 – 1.0 Ga mi ng dut y ref und – – – (2.6) – (2.6) T a x (char ge) c re d it on SDI (3.3) (7.2) (10.5) (0.9) 1.2 0.3 Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 182 Factors af fec ting future taxatio n T he Gr oup operat es in a number of ter r itor ies and so t he Gr oup’ s pr ot s a r e subjec t to t a x i n va r ious ju r is d ic t ions. T he Gr oup monitor s income t a x developments i n t hes e ter r itor ies wh ich cou ld a f fe c t t he G r oup ’ s t a x l i abi l it ies. T he G roup note s re cent de velopments i n rel at ion to t he OECD inclu sive Fr a me work on Ba se Er o sion and P ro t Sh i f t i ng, w it h t he new r u les ex pe c te d to apply to accou nt i ng per iod s b eg i n n in g on or a f t er 31 December 2 023. T he G roup doe s not ex p ec t t he se to h ave a m ater ia l i mpac t on t he Gr oup’ s ta x ch a r ge. UK cor porat ion t a x is ca lcu l ate d at 19 .00% ( ye a r ended 30 June 2021: 1 9. 0 0% ) of t he est i ma ted a ss es sable pro t for t he per iod. T a xat ion for overs ea s oper at ions is ca lcul ate d at t he loca l pr ev a i l i ng r ate s. On 3 Ma rch 2021, t he Cha ncel lor of t he E xc hequer a n nounce d t he i ncr ea s e in t he ma i n ra te of UK c or por at ion ta x f r om 19 .0 0% to 25.00% for t he yea r s t a r t in g 1 Apr i l 202 3. T h is c ha n ge w as s ubst a nt i vely en ac te d on 24 Ma y 2021. On 20 Ju l y , t he Go ver n ment of Gibr a lt a r a nnou nced t he incr ea se i n t he m a i n ra te of cor p ora t ion ta x f r om 10 .0 0% to 12 .50% ef fec t iv e f rom 1 A ug us t 2021. Bot h of t hese rate i ncr ea s es w i l l inc re a se t he a mount of ca sh t a x pa y ment s to be made b y t he Group. 7 Results a tt ribu tab le to th e Parent Com pa ny T he Compa n y ha s elec t ed to t a k e t he exempt ion under Sec t ion 408 of t he Compa n ies A c t 20 06 not to pr es ent t he pa r ent compa n y income st a tement. T he los s for t he yea r ended 30 June 2022 for t he Compan y wa s £14.5m ( yea r ended 30 June 2021: loss of £ 7 .9m) . 8 Disc onti nue d ope rat ion s ( a ) Desc ription On 29 Oc tober 2020, t he Gr oup an nou nced t he dec ision by t he Boa rd t ha t it had entere d into a cont r ac t of sa le in re spe c t of its Bla n kenb erg e Ca si no in Belg iu m, a whol ly- ow ne d subsidi a r y . T he sa le of Bla n kenber g e Ca si no was subjec t to r eg u l ator y appro va ls by t he Bel g ium Ga mi ng Com m is sion and Bl a n kenber ge Cit y Cou nci l. Wit h al l r eg u la tor y appro va l s obta ined , t he sa le completed on 1 Apr i l 2021, a nd t her efor e wa s r epor ted a s a d i scont i nued oper at ion at 30 Ju ne 2021. Fi na nc ia l i n for m at ion r ela t i ng to t he d isc ont inued op era t ion for t he per iod t o t he da te of d isp os a l is s et out b elow . ( b ) Finan cial pe rfo rmanc e and cash ow informati on T welve mont h s ended 30 June 2022 £m Ni ne mont hs ende d 31 Ma r ch 2021 £m Re v enue – 4.6 Cos t of sa les – (0.7) Gro ss pro t – 3.9 Ot her operat ing co st s – (2.4) Underlyi ng operat ing pro t – 1.5 Ta x a t io n – (0.4) Underlyi ng pro t for the per iod f r om di scont i nued operat ions – 1.1 Ga in on sa le of t he subsid ia r y a f ter t a xat ion 8.8 23.8 Pr ot for t he per iod f rom d is cont i nued operat ion 8.8 24.9 Net ca sh i n ow f r om oper at i ng ac t iv itie s – 1.5 Net ca sh i n ow f r om in ves t i ng ac t iv ities 8.8 23.8 Net cash i n ow f rom subsid i a r y 8.8 25.3 On 2 Aug ust 2021 a nd subse quent to t he sa le, the G r oup wa s ad v is ed b y t he bu yer of t he outcome of a sa l a r y moder at ion c as e t he outcome for which wa s identi ed in t he sa le a nd pur c ha se a g re ement as bei ng r et a i ned i n fav our of t he Gr oup. Th is lega l cas e ha s been f ound i n fa vou r of t he G roup a nd acc ord ingl y on 6 Aug us t 2021, t he G roup r ec eive d add it ion a l pr oce ed s of € 3.7 m a nd a f u r t her €6.3m on 29 Ju ne 2022. T h i s ha s be en r ec og n ise d a s a n ad d it iona l g a i n on sa le of t he subsid i a r y . The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 183 8 Disc onti nue d ope rat ion s ( co ntin ue d ) ( c ) D etails of the sale of the subs idia r y Ni ne mont hs ende d 31 Ma r ch 2 021 £m Enter pr ise v a lue 25.0 W ork ing c apit a l 0.2 T ota l proceeds 25.2 Le ss: A ss et s held for sa le (0.6) P ro v ision for wa r ra nt ies (0.8) Tr a n s ac t io n c os t s (0.1) Foreig n exc ha nge 0.1 Ga i n on sa le 23.8 In t he ev ent th at t he pro v i sion for war ra nt ies is not ca l le d upon over t he ve -ye a r per iod , t h is a mou nt w il l b e relea se d to t he Gr oup income st atement a s add it iona l pr o t on sa le. Dur ing t he yea r, the Gr oup re cog n is ed £0. 2m add it iona l prot on sa le w it h i n t he SDI of t he cons olid ate d G roup i ncome st atement , se e note 4. W e do not ex p ec t a ny ta x to a r i se on t he d i spo sa l a s a ny ga i n on d isp os a l is c over e d by t he substa nti a l sh a r eholdi ng e xempt ion. T he ca r r y ing v a lue of t he a sse t s a nd l iabi l it ies at t he date of t he s a le a r e show n below in a ccor da nce w it h I F R S re qu i r ements. Ca sh a nd s hor t-ter m depo sit s r ema i ned a n as set of t he Group upon complet ion of t he sa le. A s at 31 Ma rc h 2021 £m As set s In ta ngi bl e ass ets 0.9 Pr op er t y , pla nt a nd equipment 0.5 Ot her rec eiva bles 1.6 Income t a x rec eiva ble 0.3 As set s held for sale 3.3 Li abil it ie s Trade a nd ot her pa yables (2.7) I ncome t a x p a ya ble – Li abi lit ies di re ct l y as soc iat ed w it h as set s held for sa le (2.7) Net ass et s di re ct l y as so ciat ed w it h d isp os a l gr oup 0.6 9 Divi den ds pa id to equ it y hol der s No d iv idend i n re spe c t of t he yea r ended 30 June 2022 w il l be r e com mended at t he An nua l Gener a l Mee t i ng on 13 Oc t ober 2022 ( ye a r ended 30 Ju ne 2021: n il). Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 184 10 Earnin gs pe r shar e ( a ) Basic earn ings pe r share Y e a r ende d 30 Ju ne 2022 Year e nde d 30 Ju ne 2 021 Unde rl y i ng SDI To t a l Underlying SDI To t a l Pr ot ( los s ) at t r ibut a ble to equit y sh a reholders Cont i nu i ng op er at ion s £20.0m £37.4m £57.4m £(88.9)m £(8.1)m £(97.0)m Di sc ont i nued op era t ion s – £8.8m £8.8m £1.1m £23.8m £24.9m To t a l £20.0m £46.2m £66.2m £(87.8)m £15.7m £(72.1)m W eighte d average number of ord i na r y shar es in i ss ue 468.4m 468.4m 468.4m 437.3m 437.3m 437.3m Ba sic ea r n ing s (lo ss) per shar e Cont i nu i ng op er at ion s 4.3p 8.0p 12.3p (20.3)p (1.9)p (22.2)p Di sc ont i nued op era t ion s – 1.9p 1.9p 0.2p 5.5p 5.7p To t a l 4.3p 9.9p 14.2p (20.1)p 3.6p (16.5)p ( b ) Dilute d earnin gs per sh are Di luted e a r ni ng s per sh a r e is c a lc ul at ed b y ad just ing t he weight ed a ver ag e number of or d i na r y sh a r es i n is sue to a ss ume conv er sion of a l l d i lut ive p otent i a l or d i na r y sh a r es. Y e a r ende d 30 Ju ne 2022 Year e nde d 30 Ju ne 2 021 Unde rl y i ng SDI To t a l Underlying SDI To t a l W eighte d av era ge nu mber of or d in a r y sh a r es i n i ss ue 468.4m 468.4m 468.4m 437.3m 437.3m 437.3m Number of sha re s use d for fu l ly di lute d ea r n ing s per sha r e 468.4m 468.4m 468.4m 437.3m 437.3m 437.3m Di luted ea r n i ng s (los s) p er sha r e Cont i nu i ng op er at ion s 4.3p 8.0p 12.3p (20.3)p (1.9)p (22.2)p Di sc ont i nued op era t ion s – 1.9p 1.9p 0.2p 5.5p 5.7p To t a l 4.3p 9.9p 14.2p (20.1)p 3.6p (16.5)p The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 185 11 I ntangible assets Gro up Note Goodw il l £m Ca si no a nd ot her gam ing licences a nd conces sions £m Sof t w a r e a nd development £m Br a nd s a nd cu st omer re la t ion sh ip s £m To t a l £m Cost At 1 July 2020 220.2 280.3 118.8 21.9 641.2 Ad d i t ion s – 0.4 14.1 0.9 15.4 Disposal s – – (3.3) – (3.3) Business d isposed 8 – – (0.1) (0.9) (1.0) Rea lloc at ion b et we en categories 1 – – 0.6 – 0.6 E xch a ng e adju st ment s (2.0) (2.9) (0.2) (0.6) (5.7) At 30 June 202 1 21 8.2 277.8 129.9 21.3 647.2 Ad d i t ion s 35 2.1 – 11.0 1.4 14.5 Disposal s – – – – – E xch a ng e adju st ment s – 0.1 (0.2) – (0.1) At 30 June 2022 220.3 277.9 140.7 22.7 661.6 Ag g re gat e a mor t is at i on a nd i mpa ir ment At 1 July 2020 – 62.9 49.8 7.5 120.2 Ch a r ge for t he ye a r – 0.1 22.7 5.2 28.0 Disposal s – – (3.3) – (3.3) Impa ir ment ch a r ge s – – 0.6 – 0.6 Business d isposed 8 – – (0.1) – (0.1) E xch a ng e adju st ment s – (2.3) (0.1) (0.4) (2.8) At 30 June 202 1 – 60.7 69.6 12.3 142.6 Ch a r ge for t he ye a r – 0.1 21.8 5.2 27.1 Impa ir ment ch a r ge s – 13.4 – – 13.4 Impa ir ment r ever s a l – (15.0) – – (15.0) E xch a ng e adju st ment s – (0.1) – – (0.1) At 30 June 2022 – 59.1 91.4 17.5 168.0 Net bo ok va lue at 30 Ju ne 2021 21 8.2 217.1 60.3 9.0 504.6 Net book value at 30 June 20 22 220.3 218.8 49.3 5.2 493.6 1. Ma nag eme nt iden t i e d £ 0.6m of a s se t s wh ic h shou ld b e r e cl a ss i e d f r om pr op er t y, pla nt a n d eq uip ment t o i nt a ng i ble a ss et s . T he se h av e be en r e e c te d i n t he re c la s si ca t ion l i ne i n t he no te a bo ve. A mor ti sat ion c ha r ge for t he yea r of £2 7 .1m (30 June 2021: £ 28.0m) compr is es of £11. 7m (30 Ju ne 2021: £11.8m) recog n i se d in r e spe c t of SDI r ela t i ng to cont i nui ng oper at ions a nd £15.4m (30 June 2021: £1 6.2 m) in resp ec t of oper at i ng pr ot be fore SDI. Net i mpa i r ment cha rge s for t he yea r of £1.6m (30 June 2021: £0.6m) have be en r eco g n ise d i n re spe c t of SDI rel at i ng to c ont inu i ng oper at ions, c ompr isi ng of a n i mpa i r ment ch a r ge of £15.0m a nd impa i r ment re ver s a l s of £13.4m. Sof t wa re i ncludes int er na ll y-gener ate d computer sof t w a r e a nd de velopment tech nolog y wit h a net book v a lue of £3. 2m (3 0 June 2021: £5. 5m) . I ncluded i n sof t wa r e a nd development ar e a ss et s i n t he cou r se of con st r uct ion of £1.0m (30 Ju ne 2021: £1.5m) . Bra nds a nd cus tomer rel at ionsh ips a r e fa i r va lue a djus t ment s t hat a r os e on acqui sit ion. Int a n g ible ass et s h ave b een r e v iew ed for i mpa i r ment a s se t out in note 14. Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 186 12 Prope r ty, p la nt and equ ipm ent Gro up Note La nd a nd bu i ld i ng s £m Fix tu res, t t ing s, pla nt a nd mac h ine r y £m To t a l £m Cost At 1 July 2020 113.3 468.7 582.0 Ad d i t ion s 1.0 5.7 6.7 Disposal s (0.5) (5.1) (5.6) Business d isposed 8 – (3.3) (3.3) Write of f of ass et s – (0.5) (0.5) Rea lloc at ion b et we en categories 1 (1.4) 0.8 (0.6) Rea lloc at ion b et we en categories 2 (1.9) – (1.9) E xch a ng e adju st ment s (0.7) (3.9) (4.6) At 30 June 202 1 109.8 462.4 572.2 Ad d i t ion s 0.5 25.6 26.1 Disposal s – (5.1) (5.1) E xch a ng e adju st ment s – (0.1) (0.1) At 30 June 2022 110.3 482.8 593.1 Acc umu l ate d depr e ci at i on a nd i mpa ir ment At 1 July 2020 66.9 370.5 437.4 Ch a r ge for t he ye a r 4.0 25.9 29.9 Disposal s (0.5) (5.0) (5.5) Business d isposed 8 – (2.8) (2.8) Rea lloc at ion b et we en categories 2 (0.8) – (0.8) E xch a ng e adju st ment s (0.1) (3.3) (3.4) At 30 June 202 1 69.5 385.3 454.8 Ch a r ge for t he ye a r 2.7 22.7 25.4 Impa ir ment ch a r ge s 1.9 8.5 10.4 Impa ir ment r ever s a l – (5.2) (5.2) Disposal s – (5.1) (5.1) E xch a ng e adju st ment – (0.3) (0.3) At 30 June 2022 74.1 405.9 480.0 Net bo ok va lue at 30 Ju ne 2021 40.3 77.1 117.4 Net book value at 30 June 20 22 36.2 76.9 113.1 1. Ma nag eme nt iden t i e d £ 0.6m of a s se t s wh ic h shou ld b e r e cl a ss i e d f r om pr op er t y, pla nt a n d eq uip ment t o i nt a ng i ble a ss et s . T he se h av e be en r e e c te d i n t he re c la s si ca t ion l i ne i n t he no te a bo ve. 2. Ma n a ge ment ide nt i ed £ 1.1m of ne t a s se t s wh ic h shou ld b e r e cl a ss i e d f r om pr op er t y, pla nt a nd e q uip ment t o r ig ht-o f-us e a ss et s . T he se h av e b een r e e c te d i n t he re c la s si ca t ion l i ne s i n t he not e ab ov e. Net i mpa i r ment cha rge s for t he yea r of £5.2 m (30 Ju ne 2021: £n i l) ha ve be en r ec og n ise d i n r esp ec t of SDI rel at i ng to c ont i nui ng oper at ions, c ompr isi ng of a n i mpa i r ment ch a r ge of £10. 4 m a nd i mpa i r ment r ev ers a l s of £ 5.2m. T here wer e no impa ir ment ch a r ges or re ver sa ls i n t he pr ior yea r . Included i n pr oper t y , pla nt and e qu ipment ar e a ss et s i n t he cou r se of con st r uct ion of £13.8m (3 0 June 2021: £1. 7m) . The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 187 13 R ight-of-use assets Gro up R ight-of-us e la n d a nd bui ld i ngs £m R ight-of-us e e et a n d machines £m To t a l £m Cost At 1 July 2020 186.4 5.0 191.4 Ad d i t ion s 6.6 – 6.6 Disposal s (0.2) – (0.2) Rea lloc at ion b et we en categories 1 1.9 1.9 E xch a ng e adju st ment s (0.3) – (0.3) At 30 June 202 1 194.4 5.0 199.4 Ad d i t ion s 21.9 – 21.9 At 30 June 2022 216.3 5.0 221.3 Acc umu l ate d depr e ci at i on a nd i mpa ir ment At 1 July 2020 44.7 1.6 46.3 Ch a r ge for t he ye a r 23.0 0.8 23.8 Rea lloc at ion b et we en categories 1 0.8 – 0.8 E xch a ng e adju st ment s (0.1) – (0.1) At 30 June 202 1 68.4 2.4 70.8 Ch a r ge for t he ye a r 25.0 1.6 26.6 Impa ir ment ch a r ge s 24.0 – 24.0 Impa ir ment r ever s a l (1.8) – (1.8) E xch a ng e adju st ment s 0.1 – 0.1 At 30 June 2022 115.7 4.0 119.7 Net bo ok va lue at 30 Ju ne 2021 126.0 2.6 128.6 Net book value at 30 June 20 22 100.6 1.0 101.6 1. Ma nag eme nt iden t i e d £1.1 m of ne t a ss et s w h ich s hou ld b e re c la s si ed f rom pr op er t y, pla nt a n d eq u ipment t o r ig ht-o f-us e a ss e ts . T he se h a ve b ee n re e c te d i n t he re c la s si ca t ion l i ne s i n t he not e ab ov e. Net i mpa i r ment cha rge s for t he yea r of £22. 2m (3 0 June 2021: £n i l) h ave b een r e cog n is ed i n r esp ec t of SDI r elat ing to c ont inu i ng oper at ions, c ompr isi ng of a n i mpa i r ment ch a r ge of £ 24.0m a nd i mpa i r ment r e ver sa l s of £1.8m . T here w ere no i mpa i r ment ch a r ge s or re ver sa ls i n t he pr ior yea r . 14 Impai rment revi ews Grou p T he Gr oup cons iders e ach venue to be a s epa r at e ca sh-g enerat ing u n it (‘CG U’ ). The G roup’ s d ig it a l oper at ions consis t of t he U K d ig it a l busi ness a nd the I nter n at iona l dig ita l bu si ness. U K d ig it a l a nd Inter n at iona l dig it a l ar e ea ch a ss es se d as s epa r at e CGUs. T he i nd iv idu a l Gr os venor venues a r e a gg r eg ate d for t he pu r po se s of a l loc at i ng t he Gro s venor goo dw il l. A s at 30 June 2022, goo dw il l a nd inde nite l i fe int a ng ibl e a ss et s cons idere d sign i ca nt i n compa r i son to t he Gr oup’ s tot a l ca r r y in g a mount of such a s set s h ave b een a llo cat ed to g r oups of CG Us as fol lo ws: Goodw il l I nt a n g ible as se t s 2021 /22 £m 2020/21 £m 2021 /22 £m 2020/21 £m Gr os venor – g r oup of CGUs 1 80.9 80.9 206.4 210.4 UK d i g ita l CGUs 108.5 106.4 – – Inter nat iona l dig it a l CGUs 30.9 30.9 – – E n r a ch a CG Us 2 – – 12.2 6.7 To t a l 220.3 21 8.2 218.6 217.1 1. E ac h Gr o s veno r venue i s a se pa r a te C GU. E ach v enue hol ds a t le a st one l ic enc e, bu t ca n hold mul t iple l ic enc es , wh ic h re pr es ent s a n inde n it e l i fe i nt a n g ible a s se t. T he i nd iv idua l G r o s veno r venue s a r e a gg r e ga te d for t he pur pos es o f a l lo ca t i ng t he Gr os v enor g oo d w i l l . 2. Ea ch E n r ac h a venue i s a se pa r a te C GU. A s no i nd i v idu a l ve nue CG U is s ig n i ca nt in c ompa ri so n to t he t ot a l c a r r y i n g a mou nt s of i nt a ngi ble a ss e ts a nd ot her a s se t s, t he ve nue CG Us ha ve b e en pr e se nte d on a gg r e ga te d ba s is. Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 188 T he ca r r y ing a mount s of t he Gr oup ’s non- n a nc ia l a ss et s, ot her t ha n inventor ies a nd defer r ed t a x ass et s, a r e re v ie wed at eac h rep or ti ng d ate t o deter mi ne whet her t her e is a ny ind ica t ion of impa i r ment a s r eq ui r ed b y I A S 36. If a n y such i nd icat ion ex ist s, t hen t he as se t’s or CG U’ s r eco ver able a mount is est ima ted . For good w i l l a nd int a n g ible asse t s t hat h ave i nde n ite l iv es, t he re co ver able amou nt of t he rel ate d CG U or g roup of CG Us is est ima ted e ach y ea r a t t he sa me t i me. T he re co ver able a mount is de ter m i ned b as ed on t he hi gher of the f a i r va lu e le ss co st s of d i spo sa l a nd va lue in us e. T he nat ur e of t he tes t r equ i r es t h at t he D ir e c tor s exer c ise jud gement a nd esti mat ion. T he impa i r ment tes t wa s conducte d in Ju ne 2022, a nd ma na gement is sat ise d t hat t he a ssu mpt ions us ed wer e appr opr iat e. T e st i n g is ca r r ied out b y a l loc at ing t he c a r r y i ng v a lue of t hes e as se t s to CG Us, as s et out abo ve, a nd de ter m i n i ng t he r ec over able a mount s of t hose CGUs. T he ind iv idua l CGUs were r s t tes ted for impa ir ment a nd t hen the g r oup of CG Us to which go od w i l l is a l loc ate d wer e tes te d. W here t he re co ver able a mount exc ee d s t he ca rr y i ng v a lue of t he CG Us, t he as set s w ith i n t he CGUs ar e consider ed not t o be i mpa i r ed . If t here a r e legac y impa i r ment s for such a ss et s, exc ept go od w i l l , t hes e a r e cons idere d for re ver s a l. T he re co ver able a mount s of a l l CG Us or gr oup of CGUs h ave b een c a lc u lat ed w ith r efer ence to t heir va lue i n use. Value in u se ca lc u la t ions a r e bas ed upon es t i mat es of fut ur e ca sh ow s der ive d f r om the G roup’ s st r ateg ic pla n for t he follo w i ng t h r ee yea rs. T he st r ateg ic pla n is upd ate d in t he n a l qua r ter of the n a nci a l yea r and ha s been appr ov ed b y t he Boa r d of Dir e c tor s. Fut u r e ca sh ow s w i l l a ls o include a n est i m ate of long-term g r ow t h ra tes wh ich a r e est ima ted b y busi ness u n it. Pr e -t a x dis cou nt rate s a re appl ied to eac h CGU or gr oup of CGUs’ c a sh ow s a nd ree c t bot h the t ime va lue of money a nd t he ri sk s t ha t apply to t he ca sh ow s of th at CGU or g roup of CGUs. T hese es t i mat es ha ve be en ca lc u lat ed by ex ter na l exp er t s a nd a r e bas ed on t y pical debt a nd equ it y cos ts for l is ted ga mi ng a nd bet t in g compa n ies w it h si m il a r r i sk pro les. The ra tes adopt ed a r e d isc lose d in t he table below . Pre-tax disc ount rate Lon g-te r m g r ow t h r at e 2021 /22 2020/21 2021 /22 2020/21 Gr os venor venues 11.3% 10.5% 2% 2% Mecc a venues 11.3% 10.5% 0% 0% UK d i g ita l 13.0% 12.8% 2% 2% Inter nat iona l dig it a l 14.7% 14.0% 2% 2% En r ach a venues 12.5% 11.7% 2% 2% E x pen se s ar e a ss ess ed se pa r atel y by ca teg or y . A ssu mpt ions include an ex tr ap olat ion of rec ent cos t in at ion t r end s, k now n in at ion t r ends such a s n at iona l liv ing w ag e a nd a n ex p ec t at ion th at co st s w i l l b e inc u r r ed i n l i ne w it h a g r ee d cont r ac t ua l rate s. W her e a CGU does not hav e goo dw il l or inde n it e li fe int a n g ible ass et s, t he CGU is on ly a ss es se d for impa i r ment where a n ind ic ator of impa i r ment to t he ass oc iat ed de nite l i fe int a ng ible, r ight-of-use as se t s a nd /or proper t y , pla nt a nd equ ipment is identi e d. T he approac h to deter m i ne re co ver able amou nts for a CGU w it hout go od w i l l or inde n it e li fe int a n g ibles is t he sa me as t ha t desc r ibe d abo ve a nd is de ter m i ned ba s ed on t he h igher of fa ir va lue l e ss c ost s of d i spo sa l a nd va lue in us e. A s a re su lt of t he pr oc edu r es out l i ned ab ov e, t he fol low i ng i mpa i r ment ch a r ge s a nd i mpa i r ment re ver s a l h ave b een r e cog n i sed d ur ing t he yea r and d i sclo sed w it h in SDIs i n t he G r oup income st atement . P r o p e r t y, pla nt an d eq uip ment £m R ight-of-us e asset £m Int a n g ible assets £m Tot a l £m Impa i r ment cha rg es Gr os venor venues 1 (5.4) (8.1) (13.4) (26.9) Mecc a venues 2 (4.9) (16.0) – (20.9) (10.3) (24.1) (13.4) (47.8) Impa i r ment r ever sa l s Gr os venor venues 1 2.9 1.1 9.3 13.3 En r ach a venues 3 2.3 0.7 5.7 8.8 5.2 1.8 15.0 22.0 Net impa ir ment ( ch a r ge) r evers a ls (5.1) (22.3) 1.6 (25.8) 1. Impa i r m ent c ha r g e a nd r e ve r sa l a re r ec or de d a t t he d i f fe re nt i nd i v idu a l G r os v enor v enue CG Us. T h e tot a l va lue i n us e of t he CGUs w her e a n i mpa ir me nt ch a r g e or i mpa ir me nt r ev er s a l w a s re c og n i se d to t a l le d to £1 32.7m. 2. I mpa i r me nt c ha r g e a nd r e ve r sa l a re r ec or de d at t he di f f er ent i nd i v id ua l M ec ca v enue CG Us. T he tot a l v a lue i n u se of t he CGUs w her e a n i mp a i r men t ch a r ge o r i mpa ir me nt r ev er s a l w a s re c og n i se d to t a l le d to £ 2 3.2 m. 3. Imp a i r me nt ch a r g e a nd r e ver s a l a r e r e cor d ed a t t he d i f f er ent i nd i v idu a l E n r ac ha v enue C GUs . T he to t a l v a lue i n us e of t he C G Us wher e a n impa ir me nt ch a r g e or i mpa ir me nt r ev er s a l w a s re c og n i se d to t a l le d to £ 25.7m. Ot her th a n E n r ach a venues, wh ich per for med wel l i n t he ye a r, al l ot her M e cc a clubs a nd s ome Gr os venor venues ha ve i nd icator s of impa i r ment, pr im a r i l y cau se d b y lower t h a n a nt ic ipated p er for ma nce po st t he pandem ic, a nd low le vel of for ec a st e a r n i ng s, or a dec ision to clo se venues. T h is f ur t her res u lted t o a dec ision to c lose a nu mber of Mecc a clubs wh ich r esu lt ed i n i mpa i r ment of £1.8m. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 189 14 Impai rment revi ews ( co ntin ue d ) Du r i ng t he yea r, the Gr oup a l so r ec og n is ed a r e ver sa l of prev iously i mpa i r ed a ss et s of £2 2.0m r ela t i ng to G r os venor venues a nd En r ach a venues. The r ev ers a l s were d r iven by bet ter t ha n ant icipat ed per form a nce a nd impr ov ed out look i n t he identi e d Gr os venor a nd En r ac ha venues. Sensiti vit y of im pairm ent review T he ca lcul at ion of va lue in use i s most s ensit i ve to t he follow i ng a s su mpt ions: – re venue g ro w th – di scount rates – g ro w th r ate s use d to ex t r apol ate c a sh ow be yond t he fore ca s t per iod Rev enue gr ow t h − the Gr oup prepa red c as h ow pro jec t ions der i ved f r om t he most re cent budge t for the yea r endin g 30 June 2023 a nd t he Group’ s med ium-ter m st rate g ic plan to 30 June 2025, which appl ied a gr o w t h rate re ec t i ng ma nag ement’ s st rateg y for a p er iod of t h re e (3) ye a r s ba se d on pa st p er for ma nce a nd ex p ec t at ions of fut ur e ch a nge s i n t he ma r ket a nd Group’ s oper at i ng model . Discount rates − Discou nt ra tes r epre sent t he cu r r ent ma r ket a ss ess ment of t he risk s sp ec i c to each CG U, t a ki n g into cons iderat ion t he ti me va lue of mon e y a nd i ndi v idua l ris k s of the underl y i ng a ss et s t h at ha ve not been incor porat ed i n t he ca sh ow es t i mat es. T he di scou nt ra te ca lc u la t ion is bas ed on t he spec i c ci r cu m st a nce s of the Gr oup a nd its oper at i ng se g ments a nd is der iv ed f r om its w eighted a ver a ge co st of ca pita l ( W ACC ). The W ACC ta kes int o accou nt bot h debt a nd equ it y . T he cost of eq uit y is der ived f r om t he ex pe c te d re t u r n on i nve st ment b y t he G roup’ s in ves tor s. T he co st of debt is b as ed on t he inter est-bea r in g bor r ow ing s t he G roup is oblige d to ser v ice. Seg ment-spe ci c r i sk is incor porat ed b y apply i ng i nd iv idua l bet a fac tor s. T he bet a fac tor s a r e ev a luat ed a n nua l l y ba se d on pu bl icl y ava il able ma rket d at a . Adjus t ment s to t he dis cou nt rat e a re ma de to fac tor in t he spe ci c amou nt a nd ti m i ng of t he f ut u r e ta x ows i n order to re ec t a pre -t a x dis cou nt rate. Gr ow t h r ate est im ates − Mediu m-ter m g r ow t h rate s appl ied to t he va lue-i n-use c a lcu l at ions of each CG U re ec t ma nag ement’ s st r ate g y for a per iod of t h r ee ( 3) yea r s. T er m i n a l va lues were de ter m i ned us in g a long-ter m g r ow t h a ssu mpt ion for eac h CG U noted in t he table abov e. T he Gr oup ass es se d t he impac t of cli ma te ch a nge i n t he impa i r ment re v ie w a nd consider s t ha t t he most sign i ca nt i mpac t s would be i n rel at ion to t he cost of energ y to t he G r oup for wh ich bes t es t i ma tes h ave b een f ac tor ed i nto f utu r e for ec a st s. T he G roup con st a nt ly monitor s t he lates t go ver n ment leg isl at ion i n rel at ion to c l im ate r el ate d mat ter s. At t he c u r r ent t i me, no legi sla t ion ha s be en pa ss ed t ha t w i l l i mpac t t he Gr oup. T he Gr oup w i l l ad just t he key a ssu mpt ions used i n v a lue in u se c a lc ul at ion s a nd sen sit iv it y to c ha nges in a s su mpt ions shou ld a ch a nge b e r eq ui r ed . T he Gr oup ha s c a r r ied out sensit i v it y a na ly sis on t he r ea s onable pos sible cha nges i n ke y a ssu mpt ions in t he i mpa i r ment tes t s for ( a) each CG U or gr oup of CG Us to which go od w i l l ha s be en a l loca ted a nd ( b) it s venue CGUs (includ in g inde n it e li fe int a n g ible asse t s ). For Gr os venor venues a nd Mecc a venues, t he fol low ing s ensit iv it ies wou ld r esu lt i n ch a n ges to t he rec og n is ed i mpa i r ment s. No re as onable po ssible ch a ng es i n a ssu mpt ion s w i l l r esu lt i n a n i mpa i r ment a nd t her efor e no sens it iv it y a n a l ys is ha s b een d i sc lose d for Dig it a l C GUs a nd E n rac ha v enues. Grosv enor V enues CGUs Ke y A s su mp t ion R ea son able Po ss ible Ch a ng e Im pact on im pairmen t £m Rev enue Gro w th 1 0% de cr ea s e i n re venue in y ea r 1 – L ondon I ncrease (7.5) 10% decr ea se i n r e venue in ye a r 1 – Res t of UK Increa se (2.6) 10% incr ea se i n r e venue in yea r 1 – London Decrea se 4.9 Pr e -t a x di scou nt r ates 10% incr ea se i n r e venue in yea r 1 – Rest of U K Decr ease 1.3 1 % dec r ea se i n d i scou nt r ate s Decr ease 2.8 1 % i ncr ea se i n d i scou nt r ates Increa se (3.3) Long-ter m gr ow t h r ate s 1 % de cr ea s e in long-ter m gr ow t h r ate s I ncrease – 1 % i ncr ea se i n long-ter m g r ow t h r ate s Decrea se – Me cca Venues CGUs Ke y A s su mp t ion R ea son able Po ss ible Ch a ng e Im pact on im pairmen t £m Rev enue Gro w th 10% decr ease in rev enue in y ear 1 I ncrease (5.7) 10% incr ease in rev enue in year 1 Decrea se 4.7 Pr e -t a x di scou nt r ates 1% decrease in discou nt rates Decrease 0.9 1% incr ease in discount rates Increa se (0.9) Long-ter m gr ow t h r ate s 1% decrease in l ong–term g rowth rates Increase (0.3) 1% incr ease in long–ter m gr owth rates Decrea se 0.3 Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 190 Co m p a ny T he Compa n y a l so te st s a n nua ll y t he ca rr y ing v a lue of its i nve st ment s i n subsid ia r ies, bei ng it s i nves t ment s in R a nk Nemo ( T went y-Five) Li m ited , a hold in g compa ny f or a l l compa n ies w it hi n t he Group, w it h t he except ion of Ra nk G r oup Fin a nce plc wh ich ac ts a s t he Gr oup’ s n a nci ng compa n y . Cons ist ent w it h pr ior yea r , t he reco ver able a mount w a s ca lc u la ted b y r efer ence to v a lue in u se. T he ca lcu lat ion o f v a lue i n use for Ra nk Nemo ( T went y-Five ) L i m ited is ba s ed upon est ima tes of f ut u re c a sh ow s fr om t he Gr oup’ s CG Us and der iv ed f r om t he Gr oup’ s st r ate g ic pla n for t he fol low ing t h r e e yea rs a nd , wher e re qu i re d , adju st ment s for long-ter m pr ov i sions, lea s e l iabi l it ies a nd net inter compa ny posit ions. T he key a s su mpt ions u nderl y i ng t he for ec a st s a re t hos e des cr ib ed ab ove w it h re ga r d s to t he i mpa i r ment tes t i ng of t he G roup’ s CGUs. T he va lue i n use of t he Compa ny’s inves t ment in R a nk G r oup Fin a nce Plc is e st i m ate d ba se d on t he net a sse t s of t he compa n y wh ich pr i ncipa l l y con sis t of a mor t i se d cos t r ecei vables a nd so is cons idere d to appr ox i m ate va lue in use. No impa i r ment s were ident i e d in t he ca r r y ing va lue of t he Compa n y’ s i nve st ment s in subsid ia r ies. For CG Us, no rea son able possible cha nges i n a ssu mpt ions w il l r e su lt i n a n i mpa i r ment a nd t her efore no s ensit i v it y a na ly sis ha s b een d isclos ed . 15 Investme nts ( a ) Group investments On 21 Apr il 2022 , Ra nk complete d t he pu r cha s e of t he r ema i n i ng 50% s ha r ehold in g in R a nk I nter ac t ive L i m ite d (for merl y k now n as A sper s O n l ine L i m ite d) for £1.3m m ade up of (i) c as h cons iderat ion of £1 (i i) loa n r epa y ment o f £ 0.5m a nd (i i i) defer r e d consider at ion of £0.8m, r efer to note 35 for de t a i ls. ( b ) Compa ny in vest ments Comp a n y – i nve s t ment i n s ubsid ia r ie s As a t 30 June 2022 £m A s at 30 Ju ne 2021 £m Cost At s ta r t of yea r 1,452.3 1,452.3 At end of yea r 1,452.3 1,452.3 Pr ov i sion for impa ir ment At s ta r t of yea r 320.5 320.5 At end of yea r 320.5 320.5 Net bo ok va lue at s ta r t of yea r 1,131.8 1,131.8 Net book value at end of y e a r 1,131.8 1,131.8 T he Compa ny c a lcu l ate s a rec over able a mount of its subsid ia r ies base d upon the Bo a r d appro ve d st r ateg ic pla n s a nd busi ness model s a nd, w here r eq ui r ed , ad jus t ments for long-ter m pr o v ision s a nd net i nterc ompa ny p osit ions ar e m ade. T he Compa n y ow n s d i r ec t l y or i nd ir e c t l y 100% (unle ss ot her w i se note d) of t he or d i na r y sh a r e ca pita l and v ot i ng r ight s of t he fol low ing compa nies: Na me Cou nt r y of incor p ora t ion Pr i nc ipa l ac t iv itie s Reg i st er ed o f c e ad d r es s Daub A lder ne y Li m ite d A l der ney Inter ac t iv e ga m i ng I nch a l l a, L e V a l, A lder ney G Y9 3UL QSB Ga m i ng L i m ited A lder ney Int er me d ia r y hold in g comp a ny La C or vee Hous e, La C or vee, A lder ne y , G Y9 3T Q Ra nk D ig it a l G a m i ng (A lderne y) Li m ite d A l der ney Inter ac t ive g a m i ng L a Cor ve e House, L a Cor ve e, A lder ne y , G Y9 3T Q 8Ba l l Ga mes Li m ited 9 En gl a nd a nd W a le s Ma r ket i n g ser v ices TOR , S a i nt- C loud Way , Ma iden head SL6 8BN Gr os venor C as inos (G C ) L i mit ed En gl a nd a nd W a le s C a si no s T OR , S a i nt- C loud Way , Ma iden head SL6 8BN Gr os venor C as inos L i m ite d E ngl a nd a nd W a le s C a si no s T OR , S a i nt- C loud Way , Ma iden head SL6 8BN Linkc o Limi ted Engl a nd a nd Wale s P r oce ssi ng of c r ed it t r a n sfer s TOR , Sa int- C loud Way , Ma iden head SL6 8BN Luda Bin go L im it ed E ngl a nd a nd W a les Dor ma nt TOR , Sa int- C loud Way , Ma iden head SL6 8BN Mecc a Bing o Li m ite d E ngl a nd a nd W a les So ci a l a nd Bin go clubs TOR , Sa int- C loud Way , Ma iden head SL6 8BN The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 191 Na me Cou nt r y of incor p ora t ion Pr i nc ipa l ac t iv itie s Reg i st er ed o f c e ad d r es s Ra nk ( U.K.) H old i ng s L i m ited E ngl a nd a nd W a le s Dor ma nt T OR , S a i nt- C loud Way , Ma iden head SL6 8BN Ra nk C as ino Hold in gs L i m ite d En gl a nd a nd W a le s I nter med ia r y hold i ng comp a ny T OR , S a i nt- C loud Way , Ma iden head SL6 8BN Ra nk D ig it a l Hold in gs L i m ite d E ngl a nd a nd W a le s I nter med ia r y holdi ng compa ny T OR , S a i nt- C loud Way , Ma iden head SL6 8BN Ra nk D ig it a l L i m ited E n gla nd a nd Wale s Suppor t s er v ices to i nter ac t iv e ga mi ng TOR , Sa int- C loud Way , Ma iden head SL6 8BN Ra nk G r oup Fin a nce Plc 1 En gl a nd a nd W a le s Fu nd i ng op era t ions for t he G roup TOR , Sa int- C loud Way , Ma iden head SL6 8BN Ra nk G r oup Ga m i ng D iv i sion Li m ite d En gl a nd a nd W a le s I nter med ia r y hold i ng comp a ny a nd prop er t y ser v ice s TOR , Sa int- C loud Way , Ma iden head SL6 8BN Ra nk G r oup Holdi ngs L i m ite d E ngl a nd a nd Wale s Dor ma nt TOR , Sa int- C loud Way , Ma iden head SL6 8BN Ra nk L eisu r e Hold in gs L i m ite d E ngl a nd a nd W a les I nter med ia r y hold i n g compa ny a nd cor p or at e ac t i v it ies TOR , Sa int- C loud Way , Ma iden head SL6 8BN Ra nk L eisu r e L i mit ed E n gla nd a nd Wale s Adu lt g a m i ng cent r es i n Me cca a nd Gr os venor C as inos v enues TOR , Sa int- C loud Way , Ma iden head SL6 8BN Ra nk L eisu r e Mac h ine S er v ices Li m ite d En gl a nd a nd W a le s Dor ma nt TOR , Sa int- C loud Way , Ma iden head SL6 8BN Ra nk Nemo ( T w ent y-Five ) Li m ite d 1 En gl a nd a nd W a le s I nter med ia r y hold i ng comp a ny T OR , S a i nt- C loud Way , Ma iden head SL6 8BN Ra nk O v er sea s Hold i ngs Li m ite d En gl a nd a nd W a le s I nter med ia r y hold i ng comp a ny T OR , S a i nt- C loud Way , Ma iden head SL6 8BN RO Nomi nee s L im it ed E n gla nd a nd Wale s Dor ma nt TOR , Sa int- C loud Way , Ma iden head SL6 8BN Spaceba r Med ia Li m ite d E n gla nd a nd Wale s De velopment a nd ma i nten a nce of onlin e gaming soft ware Unit 450 H igh gate S t ud ios 53 -79 Highgate Road, Kentish T ow n, London , N W5 1TL St r ide T oge t her L im it ed 9 En gl a nd a nd W a le s Suppor t ser v ices to i ntera c t ive ga mi ng Unit 9 01 Highg ate S t ud ios 53 -79 Highgate Road, Kentish T ow n, London , N W5 1TL T he Ga mi ng G r oup Li m ited E ng la nd a nd W a le s Ca s i nos T OR , Sa int- C loud Way , Ma iden head SL6 8BN T he Ra nk O rg a n is at ion L i mit ed En gl a nd a nd W a le s Dor ma nt TOR , Sa int- C loud Way , Ma iden head SL6 8BN T h i nk B e yond Med ia Li m ite d 9 En gl a nd a nd W a le s Ma r ket i n g ser v ices Unit 4 41/ 2 H ighga te St ud ios 5 3-79 Highgate Road, Kentish T ow n, London , N W5 1TL Ra nk I nter ac t iv e Li m ite d (for merly k now n a s A sper s On l i ne Li m ite d) 7 En gl a nd a nd W a le s I ntera c t ive g a m i ng T OR , S a i nt- C loud Way , Ma iden head SL6 8BN Upperl i ne Ma rke t i ng Li m ite d 6, 9 En gl a nd a nd W a le s Suppor t ser v ices to i ntera c t ive ga mi ng TOR , Sa int- C loud Way , Ma iden head SL6 8BN MRC D ev elopments L im it ed E n gla nd a nd Wale s Dor ma nt TOR , S a int- C loud Way , Ma iden head SL6 8BN R a n k P r e ci s ion I nd us t r ie s Li m ite d 5 En gl a nd a nd W a le s Dor ma nt TOR , Sa int- C loud Way , Ma iden head SL6 8BN Ra nk Spe ci a l it y Cat er i ng Li m ite d 5 En gl a nd a nd W a le s Dor ma nt TOR , Sa int- C loud Way , Ma iden head SL6 8BN A ss oc iate d L eisu r e Fr a nce Pr op er t ies SCI 4 Fr a nce Dor m a nt Z i Sud, 12 R ue des Pet its C ha mp s, 354 0 0, St Ma lo, Fr a nce A ss oc iate d L eisu r e Fr a nce SAR L 4 Fr a nce Dor m a nt 4 Rue Jos eph Monier, 92859 Rueil Ma l m a is on, Ca des, F ra nce Ra nk D ig it a l S er vice s (Gibra l ta r ) Li m ite d Gib ra lt a r Ma rke t i ng ser v ice s Se cond F loor, I c om House, 1 / 5 I r is h T own , G ib ral tar Ra nk I nter ac t iv e (Gibra lt a r) Li m ite d 8 Gib ra lt a r Dor m a nt S econd F loor, Icom House, 1 /5 I r i sh T own , G ib ral tar Not es to the nanci al stat eme nts Continu ed 15 Investme nts ( c onti nue d ) The Rank Group Plc Annual Report 2022 192 Na me Cou nt r y of incor p ora t ion Pr i nc ipa l ac t iv itie s Reg i st er ed o f c e ad d r es s Mi nd f u l Med ia Li m ite d Gue r n s e y Dor ma nt K i ng sw a y House, Ha v i l l a nd St r e et , St Peter P or t , Guer n se y , G Y1 2QE Pa ssion Ga mi ng P r i vat e Li m ite d 2 Ind ia On l i ne oper ator of d ig it a l ca r d ga mes i n I nd ia 2nd F loor, SCO No 350, Sec t or 9 , Urba n Es t ate, Pa nchk u l a , Ha r ya na, Ind ia Netbo os t Med ia L i m ite d I sr ael Ma rket i ng s er v ices 5 Ha’Chi l a z on St r ee t, R a mat Ga n, Isr ael S. T .R. F i na nc ia l s L i mit ed 3 Isr ael Dor m a nt 58 Ha ra ke ve t St. E le c t r a Cit y T o wer T el-Av iv 677 701 6 Is ra el St r ide G a m i ng L i m ited Jer sey Int er me d ia r y holdi n g compa ny 1 2 Ca st le St re et , St . Helier Jer se y J E 2 3R T Bin gos of t Plc Ma lt a I nter ac t iv e ga m i ng Vault 14, Level 2 , V a llet ta W ater f ront , F lor ia na, F R N 1914, Ma lt a St r ide G a m i ng Spa i n Plc 5 Ma lt a Dor ma nt Le vel 3, V a l let a Bu ild i n gs, Sout h St r ee t, Val let ta V L T 1103, Ma lt a SRG Ser v ices L i m ite d M au r it ius Sha red s er v ices suppor t Suite 221 Gra nd B a y Busi ness Pa rk, Gr a nd Ba y 30515, Repu bl ic of Mau r it ius St r ide I nve st ment L i m ited Mau r it iu s Inte r me d ia r y hold ing c ompa n y c /o Maur i Ex p er ta Ltd ., 12 t h L ev el, T o wer 1, Nex teracon T ow er s, C yb erc it y , E bene, Republic of Mau r it ius Shi f t te ch ( P t y) L im ite d Sout h A f r ica De velopment and m a i ntena nce of onlin e gaming soft ware Unit 10, 1 0 Pepp er St r e et , Cap e T o w n, Wester n Cape 80 01, S out h A f r ic a Cont ic i n SL Spa i n O per at or of pa rk i ng f or soc ia l and bingo clu bs Ca l le Ba lmes N º 268 -270 1st F loor, 080 0 6, Ba r celona , Spa i n G ot f or SA Spa i n So ci a l a nd bi ng o clubs Ca r rer del Pa pa P ius X I, 114, 08208 Sabad el l, Ba r celon a, Spa i n Rank Ca taluña SA Sp a i n S oc ia l a nd bingo c lubs Ca l le B a l mes N º 268 -270 1st Floor, 080 0 6, Ba r celona , Spa i n Ra nk C ent r o SA Spa in S oc ia l a nd bingo c lubs Ca l le E sp oz y mi na Nº 8, 1s t cent r o, 2801 2, Ma d r id, Spa in Ra nk D ig it a l E spa ñ a SA Spa i n I nter ac t ive g a m i ng C a l le Ba l mes N º 268 -270 1st Floor, 080 0 6, Ba r celona , Spa i n Ra nk Hold in g Es pa ñ a SA Spa i n I nter med ia r y hold i ng comp a n y Ca lle Ba lmes N º 268 -270 1 st F loor, 080 0 6, Ba r celona , Spa i n R a n k S t ad iu m A nda lucia SL Spa i n A rc ade a nd sp or t s b et ti ng Ca l le Ba l me s Nº 268 -270 1st Flo or , 080 0 6, Ba r celona , Spa i n T op R a n k A nda luci a SA Spa in S oc ia l and bi ngo c lubs Conde Robledo 1, 140 08, C or doba, Spa i n V er d ia le s SL Spa in S oc ia l a nd bingo c lubs Sala Andalu cía, Ro nda, Capuch i nos 19 , 41008, S e v i l la , Spa i n Ra nk A merica I nc. 5 U. S . A . D or m a nt T he C or p ora t ion Tr us t C ompa n y , 120 9 Or a ng e St r ee t , Wi l m i ng t on, DE 1 9 801, USA 1. Di r e c t l y held b y t he C omp a ny. 2. 51 % i nv es t men t a nd ye a r e nd 31 Ma r c h. 3. Y e a r end 31 Au g u st . 4. Y e a r e nd 31 Oc t ober. 5. Year e nd 31 De ce mbe r. Str ide Ga mi ng Sp a i n plc h a s co mm ence d d i ss olu t ion on 30 A pr il 20 22 . 6. Pr i nc ip a l ac t i v it ies a r e ca rr ied out i n M a lt a t hr ou gh it s Ma lt a br a nch . 7 . Ac qu i r e d t he r em a i n i ng 5 0% ow ner sh ip i n joi nt v ent u r e i nte r es t on 1 A pr i l 20 22 , se e not e 35. 8. C ha n ge p r i nc ipa l a c t iv it y f r om D or m a nt t o I nte ra c t i ve G a m i ng e f fe c t iv e 1 Ju l y 202 2. 9. R a nk G r oup plc h a s is sue d pa rent a l gu a r a nt ee e xe mpt i n g t he C ompa ny f r om t he r e qu i r emen ts o f t he C ompa nie s Ac t 20 0 6 r el at ed t o t he au d it of i nd i v idu a l ac co un t s by v ir tue of s 479A of t he A c t. T he pr i ncipa l ac t i v it ies a re c a r r ied out in t he cou nt r y of incor pora t ion as i nd icat ed ab ove u n les s ot her w is e noted . A l l subsid i a r y under ta ki n gs h ave a 30 Ju ne yea r end un less o t her w ise i nd icat ed . The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 193 15 Investme nts ( c onti nue d ) ( c ) N on-contro lling intere st ( N CI ) Set out below is t he su m ma r ised n a nc ia l i n for ma t ion for the subsidi a r y t ha t ha s non-cont r ol l in g inter es t s. T he amou nt s di sclo se d for each s ubsidi a r y a r e befor e i nter compa ny el i m i na t ions. Non-cont r ol l i ng i nter es t a r i ses on 49% of t he net a ss et s of Pa ssion G a m i ng P r iv ate L i m ite d wh ich wa s v a lued u sin g t he pr opor tiona te sha re met hod p er I FR S 3. As a t 30 June 2022 £m A s at 30 Ju ne 2021 £m Cu r r ent a ss et s 1.5 1.0 Cu r r ent l iabi l it ies (1.7) (1.3) Cu r rent net a ss ets (0.2) (0.3) Non-c u r rent a s se t s 0.1 0.1 Non-c u r r ent a s se t s 0.1 0.1 Net as set s (0.1) (0.2) Accum u lated N CI (0.1) (0.1) 16 Inventories Gr oup As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m Finished goods 2.3 2.0 T here w ere no w r ite dow n s of in ventor y in t he yea r (30 Ju ne 2021: £n i l). 17 Othe r rece ivabl es Gr oup As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m Cu r r ent Ot her rec eiva bles 10.7 7.8 Le ss: pr ov isions for impa ir ment of ot her r ec eivables (1.6) (1.6) Ot her rec eiva bles – net 9.1 6.2 Net i nves t ment i n lea se 1.4 3.1 P r epa y ment s 23.7 7.0 Ot her r ec eivables – cu r rent 34.2 16.3 Non-c u r r ent Ot her rec eiva bles 6.7 3.7 Net i nves t ment i n lea se – 1.4 Ot her r ec eivables – non-cur r ent 6.7 5.1 Grou p T he Di r ec tor s c onsider t h at t he c a r r y i ng v a lue of ot her r ecei vables a pprox ima te to t heir fa i r va lue. A s at 30 Ju ne 2022 ot her r ecei vables of £1. 3m (30 Ju ne 2021: £1.0m) were pa st due but not i mpa i re d. T he ot her cl a sse s w it hi n re cei vables do not cont a i n i mpa i r ed a s set s. T he ma x imu m ex p osu r e to cr e d it r i sk at t he r epor t i ng da te is t he fa ir v a lue of eac h cla s s of re cei vable ment ioned abov e. T he Gr oup does not hold a ny c ol lat era l as s ec u r it y . Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 194 18 Governme nt grant s Gr oup As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m At the st a r t of t he ye a r 0.8 11.9 Recei vable i n t he yea r 3.6 64.4 Ca sh r ec eive d (4.4) (75.5) At the end of the yea r – 0.8 G over nment g r a nt s ha ve be en r ecei ve d under t he Corona v i r us Job Retent ion Sc heme in t he U K a nd si m il a r s chemes i n ot her cou nt r ies in w h ich t he Gr oup oper ate s. In a dd it ion, L oc a l Re st ric t ions Suppor t Gr a nt s a nd Res t a r t Gr a nt s wer e a l so r ec eive d i n t he pr ior yea r. Lo ca l Rest r ict ions Suppor t Gr a nt s wa s a g r a nt f u nd i ng sc heme wh ich suppor ted busi nes se s t ha t wer e re qu i re d to c lose du r i ng n at iona l lockdo w n p er iod s a nd per iods of loc a l r es t r ic t ions. T he Rest a r t Gr a nt sc heme suppor te d bus ines s w it h a one-of f g r a nt , to r e open sa fely as C OVI D -1 9 r es t r ic t ions wer e l i f t ed . 19 T ra de an d othe r payab les Gr oup Compa ny As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m Cu r r ent T rade payab le s 35.8 25.7 – – So cia l sec u r it y a nd ot her t a xat ion 29.3 22.7 – – Ot her payable s 32.5 38.0 0.4 0.6 Accruals 33.5 39.9 – – T ra de and ot her payables – cu r rent 131.1 126.3 0.4 0.6 T ra de and ot her payables – non-cur r ent – – – – Included w it hi n ot her pay ables is £5.9m (2021: £5. 9 m) reg a r d i ng a UK Ga mblin g comm i ssion ne issued to Daub A lder ne y Li m ite d, a St r ide l icens ed ent it y . 20 Inc ome ta x Gr oup As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m Income t a x rec eiva ble 8.1 10.1 I ncome t a x p a ya ble (4.2) (3.1) Net income ta x receivable 3.9 7.0 The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 195 21 F inan cial assets and liabilities ( a ) Interest -be arin g loans an d borrowing s Gr oup As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m Cu r rent inter es t -bea ri ng loa ns a nd bor r ow i ngs Oblig at ions u nder lea se s 40.4 42.2 T er m loan s 34.4 29.6 Rev olv i ng c r ed it f ac il it y – 11.0 Ot her c u r rent loa ns Acc r ued i nter es t 0.5 0.4 Una mor t ised f aci l it y fee s (1.0) (1.6) T o t a l cu r rent inter est-bea r ing loa n s a nd bor row i ng s 74.3 8 1.6 Non-cur r ent intere st- b ea r i ng loa n s and bor r ow i ngs Oblig at ions u nder lea se s 141.3 164.7 T er m loan s 44.4 78.8 Ot her non-c ur r ent loan s Una mor t ised f aci l it y fee s (0.3) (1.1) T o t a l non-cur r ent intere st- b ea r i ng loa n s and bor r ow i ngs 185.4 242.4 T o t a l inter est-bear i ng loa n s a nd borr ow i ngs 259.7 324.0 Sterlin g 259.7 324.0 T o t a l inter est-bear i ng loa n s a nd borr ow i ngs 259.7 324.0 T e rm loan faci lities T he £12 8.1m ter m loa n si g ned on 31 May 2019 ha s int ere st pa y able on a per iod ic ba si s depend i ng on t he loa n d raw n. T he faci l it y ca r rie s a oat in g rat e of intere st wh ich , on 1 Ja nua r y 2022 , cha nged f r om LI BOR to SON I A . T he tota l term loa n at 30 June 2022 wa s £78.8m ( 30 Ju ne 2021: £1 0 8.4m) , a r e duct ion in t he yea r fol lo w i ng t he se cond sc hedu led r epa y ment of £ 29 .6m m ade i n Ma y 2022. T he ter m loa n h a s a ma t u r it y dat e of May 2 023 (£ 3 4.4m) and M ay 202 4 ( 4 4.4m). Revolving cred it facilitie s ( ‘ RCF’ ) On 6 Ju ly 2 021, t he Gr oup sig ned a new t wo -yea r (plus one-yea r option) fac il it y for £2 5m. T he G roup’ s t w o ex i st ing fa ci l it ies w hich w ere sig ned on 29 Febr ua r y a nd 2 Mar c h 2020, w it h e x pir y d ate s of May 2 024 (£4 0.0m) a nd Febru a r y 2025 (£15.0m). Intere st on a ll t h r e e fac il it ies is payable on a per iod ic basi s depend i ng on the loa n d r aw n . T he faci l it ies a l l c a r r y a oat i ng ra te of inter es t wh ich were ba se d on LIB OR unt i l it t ra nsit ioned to SONI A on 1 Ja nua r y 2022. At 30 June 2022, £ n il of RCF wa s d r aw n (30 June 2021: £11.0m) , pr ov idi ng t he Gr oup w it h £ 8 0.0m of und r aw n comm it ted fac i l it ies. Cove na nts T he Gr oup’ s ba n k ing fac i l it ies re qu i re it to meet t wo n a nc ia l co vena nt test s bia n nua l l y , a net de b t to ea r n i ng s befor e inter es t , ta x, depre ci at ion, a mor ti sat ion a nd SDI’s ( ‘EBI T DA ’ ) rat io of no more t ha n 3x , a nd a n EBI T DA to intere st ch a r ge of no less th a n 3x . In June 2020, the G roup’ s fore ca s ts i nd icate d t ha t t he Gr oup would li kel y fa i l to meet bot h n a nci a l cov ena nt te st s at t he 31 D ec ember 2020 tes t i ng d ate, t her efor e t he G roup se c ur e d a cov ena nt w a iv er for 12 mont hs. A f ur t her 12-mont h ex t ension to t he co ven a nt wa i ver s wa s subse quent ly s ec u r ed i n Novemb er 2020 a nd ex pi r ed on 30 Ju ne 2022. D u r i ng t he wa iver per iod t he Gr oup met t he mi n i mum c a sh a nd av a i lable fa ci l it ies p osit ion of no less t ha n £ 50.0m wh ich wa s t est ed qu a r terly . F rom 1 Ju l y 2022, t he Group r ev er t ed to t he t wo na ncia l co vena nt tes t s which a r e tes te d bia n nua l l y . Co m p a ny T he Compa n y d id not hold any e x ter na l i nter es t bea r in g loa ns or b or r ow ing s at 30 Ju ne 2022 (30 Ju ne 2021: £n i l). The Compa n y held inter e st b ea r ing loa n s w it h ot her Gr oup compa n ies at 30 Ju ne 2022 of £ 387 .1m ( 30 June 2021: £ 372. 8m) . ( b ) Hed ging ac tiviti es T he Gr oup ha s not c a r r ie d out a ny hed g i ng ac t i v it ies i n eit her perio d. Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 196 ( c ) Fair values T he table below is a compa r i son by cl a ss of t he ca r r y i ng a mou nt s a nd fa ir v a lue of the Gr oup and Compa ny’ s n a nci a l in st r ument s at 30 June 2022 a nd 30 June 2021. Carr y ing a mo unt Fa i r va lue Gr oup As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m Fi na nci a l a sset s: Loa n s a nd recei vables Ot her rec eiva bles Lev el 2 3.8 4.8 3.8 4.8 Ca sh a nd s hor t-ter m depo sit s Level 1 97.9 69.6 97.9 69.6 To t a l 101.7 74.4 101.7 74.4 Fina ncial liabilit ies: Ot her n a nci a l li abi l it ies Inter e st b ea r ing loa n s a nd bor row ing s – Obl igat ions under lea se s Level 2 181.7 206.9 181.7 206.9 – F loat i n g ra te bor r o w i ng s Lev el 2 78.8 119.4 78.8 119.4 – Ot her Lev el 2 – 0.4 – 0.4 Trade a nd ot her pa yables Lev el 2 101 .8 103.6 101.8 103.6 To t a l 362.3 430.3 362.3 430.3 Carr y ing a mo unt Fa i r va lue Compa n y As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m Fina ncial liabilit ies: Ot her n a nci a l li abi l it ies Trade a nd ot her pa yables 0.4 0.6 0.4 0.6 Fi na ncia l g ua r a ntee c ont r ac t s 2.6 3.1 2.6 3.1 A mou nts o wed t o subsid ia r y u nder t a ki n gs 387.1 371.9 387.1 371.9 To t a l 390.1 375.6 390.1 375.6 T he fa i r va lue of the na ncia l a ss et s a nd li abil it ies ar e included at t he a mount at wh ich t he in st r ument cou ld be excha nged i n a cu r r ent t ra nsac t ion b et ween w i l l i ng pa r t ies, o t her t ha n in a for ce d or liqu ida t ion sa le. T he fol low i n g met hod s a nd a ss ump t ions appl y: – Ca sh a nd shor t-ter m depo sit s, ot her re ceiv ables a nd ot her na nc ia l l iabi l it ies appr ox ima te to t heir ca rr y ing a mount s la rgel y due to t he shor t-ter m m at u r it ies of t hese i ns t r uments; a nd – T he fa i r va lue of xed r ate bor r o w i ng s is bas ed on pr ice quota t ions at t he repor t i ng da te. Fair value hierarchy T he Gr oup uses t he fol low i ng h iera r ch y to deter m i ne t he ca r r y i ng v a lue of na ncia l i ns t r u ment s t hat a r e mea su re d at fa i r va lu e: Le vel 1: quote d (unad jus te d) pr ices i n ac t ive ma r ket s ident ica l a s set s or l i abil it ies. Le vel 2: ot her tech n iques wh ich use i nput s which h ave a sig n i c a nt ef fec t on t he re cor ded fa i r va lue t hat a r e not base d on obser vable ma rk et d at a. Le vel 3: tech n iques wh ich use i nput s which h ave a sig n i c a nt ef fec t on t he rec ord ed fa i r va lue t hat a r e not base d on obser v able ma rk et d at a. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 197 22 Fin anc ial risk m ana ge ment ob je cti ves and pol ici es Financial risk fact ors T he Gr oup and Compa n y’s pr i nc ipa l na ncia l l iabi l it ies compr is e loa ns a nd bor r o w i ng s, t rad e and ot her pa yables a nd n a nci a l g ua r a nte e cont r ac t s. T he ma in pu r p os e of thes e na nc ia l l iabi l it ies is to n a nce t he Gr oup’ s oper at ions. The Gr oup ha s ot her re ceiv ables, a nd c a sh a nd shor t-term dep osit s t hat der iv e d i re c t l y f r om it s oper at ions. T he Gr oup is ex p os ed to m a rk et r i sk , cr ed it ri sk a nd l iqu idit y r i sk . T he Gr oup’ s over a l l na ncia l r i sk ma n ag ement prog ra mme foc us es on t he unpre d ict abi l it y of n a nci a l ma r ket s a nd seek s to m i ni m is e potent i a l ad ver se ef fe c t s on the Gr oup’ s n a nc ia l per for ma nce. T he Gr oup’ s s en ior ma n ag ement over se es t he ma na gement of t hese r isk s. T he Fi na nce Com mit tee i s suppor ted b y t he Gr oup’ s sen ior ma n ag ement, wh ich ad v is es on na nc ia l r i sk s a nd t he appropr i ate n a nci a l r isk go ver n a nce f r a mew ork for the Gr oup. The Fi na nce Com m it t ee pr ov ide s as sur a nc e t hat t he Gr oup’ s n a nc ia l r i sk -t a ki n g act i v it ies a r e go ver ne d by appr opr iate p olic ies a nd proc edu r es a nd t he n a nci a l r is k s a re ident i e d, mea su r ed a nd ma n a ged i n accor d a nce w it h G roup pol icies a nd r isk app et ite. T he Boa r d of Di re c tor s re v ie w a nd ag r ee pol icies for ma n a g in g each of t hese r i sk s, wh ich a r e sum m a r i sed b elow . ( a ) Market risk Ma rke t r isk is t he r isk t h at t he fa i r va lu e of f ut u r e ca sh ow s of a n a ncia l ins t r u ment w i l l uct u ate be cau se of cha nges in m a rke t pr ices. Fi n a nci a l i ns t r uments a ffe c te d by m a rk et r i sk inc lude loan s a nd b or r ow i ng s a nd dep osit s. T he sen sit iv it y a n a l y ses i n t he fol low ing s ec t ion s rel ate t o t he pos it ions a s at 30 Ju ne 2022 a nd 30 Ju ne 2021. T he sensit iv it y an a l ys es ha ve be en prepa red on t he basi s t ha t t he amou nt of n e t debt, t he ra t io of x ed to oat i ng r ate s of the debt a nd t he propor t ion of na ncia l ins t r u ment s in for eig n cu r r encies a r e a l l con st a nt . ( i ) Fore ign cu rrency r isk Foreig n c ur renc y r isk is t he r i sk t hat t he fa i r va lue of f ut u r e ca sh ow s of a n a nci a l in st r ument w i l l uct uate bec aus e of cha ng es in for eig n e xcha nge ra tes. T he Group’ s ex po su re t o t he r i sk of cha nges i n for eig n exc ha n ge r ate s rel ate s pr i ma ri l y to t he G r oup’ s oper at i ng ac t i v it ies (when r e venue or exp ens e is denom in ate d i n a d i f fer ent cu r r enc y f rom t he Gr oup’ s f u nct iona l cu r r enc y) a nd t he Gr oup’ s net in ves t ment s in for eig n subsid ia r ies. T he Gr oup’ s c u r r ent pol ic y i s not to hedg e for eig n cu r renc y r i sk . For eign curr ency sensi tivity T he fol low i ng t able demons t ra tes t he sensit i v it y of a pos sible cha n ge i n t he US dol la r and eu r o, w it h a ll ot her va r iables held con st a nt , to t he Gr oup’ s pro t befor e ta x a nd the G roup’ s equ it y . T he Gr oup’ s ex p osu r e to foreig n c ur renc y ch a nge s for a l l ot her cu r r encies is not ma ter ia l. Ef fec t on pr o t b ef or e t a x E f fe c t on e qu i t y As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m Ch a ng e in for eig n e xcha nge ra tes: + 10.0% U S $ (0.1) (0.1) – – - 10.0 % US $ 0.2 0.1 – – + 10.0% e u r o (0.6) (0.2) 7.6 6.8 - 10.0 % e u r o 0.7 0.3 (9.9) (6.8) ( i i ) Cash ow and fai r valu e interest rate ri sk Inter e st ra te r isk is t he r is k t hat t he fa i r va lue or f ut u r e ca sh ow s of a n a nci a l in st r ument w i l l uct uate bec aus e of cha ng es i n ma rke t inter e st r ate s. T he Gr oup’ s ex po su re t o t he r isk of c ha nges i n ma rket i ntere st r at es r ela tes pr i m a r i l y to t he G r oup ’ s long-ter m debt obliga t ions w it h oa t i ng int ere st r ates. Hi stor ica l ly t he Gr oup ha s ma n ag ed it s inter es t rat e r isk b y hav ing a ba l a nced p or t f olio of xe d a nd va r ia ble rate loa n s and bor r ow ing s, t he Gr oup polic y of ma i nt a i n i ng bet ween 4 0% a nd 60% of its bor r ow i ng s at a xe d rat e of intere st . At 30 June 2022, t he Gr oup is operat ing w it h i n t he pol ic y w it h 43% of the bor r ow ing s at a xed r ate of inter e st (30 June 2021: 58% ). Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 198 ( i ii ) Intere st rate sen siti vit y T he ta ble below demons t r ates t he sensit i v it y to a po ssible cha nge i n inter e st r ate s on income a nd e qu it y for t he yea r w hen t h is movement is appl ied to t he ca r r y i ng v a lue of loa ns, b or r ow ing s, ca s h a nd shor t-ter m de posit s. Ef fec t on pr o t b ef or e t a x As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m Sterlin g: 100 ba sis p oint i ncr ea s e (0.6) (1.1) 200 b a sis poi nt i ncr ea s e (1.2) (2.2) T here w a s no impac t on e qu it y in eit her ye a r a s a con se quence of loa n a r r a n gements. Due to c u r r ent low i ntere st r at es, a n y f u r ther de cl i ne wou ld not hav e a mat er ia l impac t on i ncome a nd equ it y for t he yea r . A s such, sens it iv it y to a de cr e as e i n int ere st r ate s ha s not b een pr es ented . T he Gr oup did not enter into a ny xe d-to -o at i ng or oat i ng-to - xed inter e st ra te sw aps i n eit her yea r. ( b ) Credit risk Cr ed it r i sk is t he ri sk t ha t a counter par t y wi l l not meet its obl igat ions under a n a ncia l ins t r u ment or cus tomer cont rac t , lead i ng to a na nc ia l los s. The G roup is ex po se d to cr ed it r i sk fr om it s opera t i ng ac t iv ities (pr i m a r i l y for other r ecei vables) and f rom it s na ncing ac t iv ities, i nclud in g deposit s w it h ban k s a nd na ncia l i ns t it ut ions , foreig n exc ha n ge t ra nsac t ion s a nd ot her n a nci a l in s t r u ment s. Financial instrumen ts and cash d eposits Cr ed it r i sk f rom ba l a nce s w it h ba n k s a nd na ncia l i ns t it ut ion s is ma na ge d by t he Gr oup’ s tr e as ur y depa r t ment in accor d a nce w it h t he Gr oup’ s p ol ic y . I nv es t ments of su r plus fu nd s a r e ma de on ly w it h appro ve d cou nter pa r t ies a nd w ith i n c re d it l i m it s a ssig ne d to eac h cou nter pa r t y . Cou nter p a r t y cr e d it l im it s a r e re v ie wed b y t he Ch ief Fin a nci a l Of cer a nd may be upd ate d t h r oughout the yea r subject to t he appr ov a l of t he G r oup ’s Fina nce Com m it te e. T he l i mit s a re se t to m i ni m i se t he concent r at ion of risk s a nd ther efor e m it igat e na ncia l loss t h r ough pot ent ia l counter pa r t y fa i lur e. T he cr ed it wor t h i nes s of each c ount er pa r t y is chec ked a ga ins t i ndependent cr e d it r at i ng s on at lea st a w eek ly ba sis, w it h a mi n i mum rat ing of ‘BB’ . T he Gr oup predom i na nt ly inv es ts w it h its lendi ng ba n k s when appr opr iat e. Sa le s to r et a i l c us tomers a re se t t led in c a sh or usi ng m ajor c r ed it a nd debit c a r ds a nd ther efor e t he ex p osu r e to cr e d it r i sk is not consider ed sig n i c a nt . No cr ed it l i m it s wer e exc ee ded du r i ng t he repor t in g per io d a nd ma nagement do es not ex p ec t a ny mater ia l loss es f r om non-per for ma nce of its c ounter pa r ties. ( c ) Liq uidit y risk Liqu id it y ri sk is t he r isk t ha t t he Gr oup wi l l not hav e suf cient fu nd s to meet its l iabi l it ies. C as h fore ca s ts ident i f y in g t he liqu id it y re qu i rement s of t he G roup a r e pr oduce d mont h ly . T he c a sh for ec a st s a r e sen sit i v it y tes ted for d if fer ent scen a r io s a nd a r e re v iewed re g u la r ly . Fore ca s t na nc ia l head room a nd debt coven a nt compl ia nce is r ev iewed mont h ly du r i ng t he mont h-end pro ce ss to ensu r e suf cient head r oom ex i st s for at leas t a 12-mont h per iod . Due to t he dy n a m ic nat u r e of the under ly ing busi nes se s, Gr oup tr ea s ur y a i ms to ma int a i n ex ibi l it y in fu nd i ng b y keepi ng com m it t ed cr ed it line s ava ilable. A t hr e e -yea r s t ra teg ic fore ca s t is prepa red a n nua ll y to faci l it at e pla n n i ng for fut ur e na nc i ng need s. Ma n ag ement act iv ely ma nag es t he Gr oup’ s n a nci ng r eq ui r ements a nd t he ra nge of mat u r it ies on its debt . T he Gr oup’ s c ore debt f ac il it ies compri se of £ 80.0m bi-lat era l re volv ing c r ed it f aci l it ies ( 30 Ju ne 2021: £55.0m) ex pir ing Ju l y 2023 (£2 5m) , Ma y 2024 (£ 4 0.0m) and Febr ua r y 202 5 (£15.0m) , a nd the £ 78.8m ter m loan f aci l it y (30 Ju ne 2020: £108.4m) . T he G r oup proa c t ivel y ma nag es it s r elat ionships w it h it s lendi ng g r oup. T he f und i ng pol ic y of t he Gr oup is to ma int a i n , as fa r a s prac t icable, a br oad p or t f olio of debt div er si ed b y sou rc e a nd mat u r it y , a nd to ma i nta in com m it t ed fac i l it ies su f c ient to cover sea s ona l pe a k a nt icipat ed bor row ing re qu i r ements. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 199 22 Fin anc ial risk m ana ge ment ob je cti ves and pol ici es ( co nti nue d ) T he table below su m ma r ises t he ma t u r it y pro le of t he Gr oup ’s na nci a l l iabi l it ies ba se d on contr ac t u a l und i scou nte d pay ments. On de ma nd £m Le ss t h a n 12 mont hs £m 1 to 2 yea rs £m 2 to 5 yea rs £m Gr eat er t h a n 5 yea r s £m Tot a l £m At 30 June 2022 Inter e st-bea r ing loa n s a nd b or r ow i ng s 1 – 36.3 45.2 – – 81.5 Trade a nd ot her pa yables – 101.8 – – – 101 .8 Le a se l iabi l it ies – 40.4 25.8 72.8 42.7 181.7 – 178.5 71.0 72.8 42.7 365.0 At 30 June 202 1 Inter e st-bea r ing loa n s a nd b or r ow i ng s 1 – 42.1 35.8 45.1 – 123.0 Trade a nd ot her pa yables – 101.8 – – – 101.8 Le a se l iabi l it ies – 42.2 25.6 73.0 66.1 206.9 – 1 86.1 61.4 118.1 66.1 431.7 1. In ter e st p a y ment s o n t he i nte re s t-be a r i n g loa n s a nd b or row in gs h a ve b ee n pr oje c te d u nt i l t he in st r umen t s ma t u r e. T he ba nk f ac i l it y int er es t pa y ments w er e ba s e d on c ur rent S ON I A a s a t t he r ep or ti n g d ate . Capit al management A s a resu lt of t he di f cu lt cond it ions t h at dev eloped i n t he glo b a l capit a l mar ket s in r ec ent yea r s, t he Gr oup’ s obje c t ive s when ma n ag i n g capit a l h av e be en to ens ur e cont inui ng ac ces s to ex ist i ng debt f aci l it ie s a nd to ma nag e t he bor r o w i ng co st of t ho se fac i l it ies in or der to m i n i m ise t he Group’ s int ere st c ha r g e. Cons ist ent w it h ot hers i n t he ga m i ng i ndus t r y , t he G roup mon itor s capit a l on the ba si s of lever a ge r at io. T he rat io is ca lc ul ate d a s net debt div ided by EBI T DA. Net debt is ca lcul ate d a s tota l bor ro w i ng s (i ncludi ng ‘ loa n s a nd bor r ow i n gs’ as show n i n t he consol ida ted ba l a nce sheet) less c a sh a nd shor t-ter m depos its , accr ued inter est a nd u na mor t ise d fac il it y fee s. EBI T DA is ca lcu l ate d as oper at i ng pro t befor e SDI, deprec iat ion a nd amor t isat ion f r om conti nu in g opera t ions. As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m T ot a l loan s a nd b or r ow i ng s (note 21) 259.7 324.0 Le ss: Ca s h a nd shor t-ter m dep osit s (97.9) (69.6) Le ss: Acc r ue d int ere st (0.5) (0.4) Le ss: Una mor ti se d fac i l it y fees 1.3 2.7 Net debt 162.6 256.7 Op era t i ng pro t ( los s ) befor e SDI fr om cont inu i ng oper at ions 39.8 (84.5) Add : D epr ec ia t ion a nd a mor t i sa t ion 67.4 70.3 E B I T DA 107.2 (14.2) Leve rage rati o 1.5 (18.1) Due to t he impac t of COVI D - 19 on the Gr oup’ s per for ma nce, i n t he prior yea r the Gr oup generate d a negat iv e EBI T DA and l ik ew i se, a negat i ve lev era ge r at io at 3 0 June 2021. T he Gr oup’ s per for ma nce st a r te d to r ec over du r i ng t he yea r w it h levera ge r at io of 1.5 (30 Ju ne 2021: (18. 1) ). Collateral T he Gr oup d id not pledge or hold a ny c ol lat era l at 30 June 2022 ( 30 June 2021: £n i l). Co m p a ny T he ma x imu m ex p osu r e to cr e d it r i sk at t he r epor t i ng da te is t he fa ir v a lue of its c a sh a nd short-ter m de pos its of £ n i l (30 Ju ne 2021: £n i l). T he Compa ny doe s not have a n y ot her sign i c a nt ex p osu r e to na nc ia l r i sk s. Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 200 23 Defe rre d tax T he a na l y sis of defer re d t a x i ncluded in t he n a ncia l sta tements at t he end of the yea r is a s follo ws: Gr oup As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m Defer r e d ta x a sse t s: Acceler ate d capit a l a l lowa nc es 14.6 19.6 T a x losse s ca rr ied for w a r d 9.2 9.6 Ot her UK tempor a r y d i f fer ences 5.8 5.8 Defer re d ta x asset s 29.6 35.0 Defer r e d ta x l iabi l it ies: Ot her over sea s t empor a r y d if ferences (3.5) (1.9) Busi nes s combina t ions – acqu i re d int a n g ibles (0.7) (0.3) Busi nes s combina t ions – non-qua li f y in g prop er t ies (0.6) (0.7) T emp ora r y d i f fer ence s on UK c a si no licence s (43.9) (46.8) Defer re d ta x liabi l it ies (48.7) (49.7) Net deferred t a x liabi l it y (19.1) (14.7) Defer r e d ta x a sse t s a nd l iabi l it ies a re of fs et when t here is a lega ll y en forc eable r ight to of fset c u r r ent t a x a s se ts a nd cu r r ent ta x li abi l it ies a nd it is t he intent ion to se t t le the ba l a nce s on a net ba sis. D efer r ed t a x as se ts a nd liabi l it ies of £ 28. 2m ( 30 June 2021: £ 31.4m) ha ve be en of fs et a nd d i sc lose d on t he ba l a nce she et a s fol low s: Gr oup As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m Defer r e d ta x a sse t s 1.4 3.6 Defer r e d ta x l iabi l it ies (20.5) (1 8.3) Net deferred t a x liabi l it y (19.1) (14.7) T he deferr e d ta x a s se ts r eco g n ise d ar e re co ver able aga i ns t fut ur e ta xable pro t s th at t he Dir ec t or s consider mo r e l ik ely t ha n not to occ ur on t he ba sis of ma nag ement fore ca s ts. T he Gr oup ha s U K t a x lo sse s of £0.4m (30 Ju ne 2021: £0.6m ) a nd over sea s t a x loss es of £16. 1 m (30 Ju ne 2021: £15. 7m) tha t a r e ca rr ied for wa r d for offs et ag a i ns t su itable f ut u r e ta xa ble prot s. No defer r ed t a x a ss et ha s be en re cog n i sed i n rel at ion to t hese los ses a s no ut i l isa t ion is c ur rent l y a nt icipat ed . Include d in u n r ec og n is ed t a x losse s a r e loss es of £1.9m t hat w il l ex pi r e be t ween 2026 a nd 2029. Ot her l o ss es w i l l be ca rr ied for wa rd inde n itel y . T he Gr oup ha s U K ca pita l losse s ca rr ied for w a r d of £7 79m ( 30 June 2021: £78 0m). Thes e loss es h ave no ex pi r y d ate a nd a r e a va ilable for of fse t a ga i ns t f ut ur e UK c ha r g eable ga i n s. No defer r ed t a x as set ( 30 Ju ne 2021: £n il ) ha s be en r ec og n ise d i n re spe c t of t hes e capit a l lo sse s a s no f u r t her uti l is at ion is c u r r ent l y a nt icipat ed . T e mpo rar y dif feren ces ass ocia ted with Gro up investments T here w a s no defer r ed t a x lia bil it y r eco g n ise d (30 Ju ne 2021: £n i l) for t a xes t ha t wou ld be pa yable on t he u n r emit ted e a r n i ng s of cer t a in subsid ia r ies. T he Gr oup ha s deter mi ned t hat a ny u n r em it t ed e a r n i ng s t h at do not fa ll w it hi n t he d iv idend exempt ion int r o duced i n t he Fi n a nce Ac t 20 0 9 w i l l not be d i st r ibuted i n t he fore se eable f ut u r e a nd t he pa rent compa n y does not for e see g i v i ng such cons ent at t he ba la nce shee t d ate. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 201 23 Defe rre d tax ( co nti nue d ) T he defer r ed t a x included i n t he G r oup income st at ement is a s fol lows: Gr oup Ye a r ended 30 Ju ne 2022 £m Ye a r ended 30 Ju ne 2021 £m Defer re d ta x in the i ncome st atement Acceler ate d capit a l a l lowa nc es (5.0) 4.0 T a x losses (0.3) 9.6 Busi nes s combina t ions – proper t y lease fa ir va lue adju st ment s 0.1 (0.3) T emp ora r y d i f fer ence s on UK c a si no licence s 2.9 (11.5) Ot her tempora r y d i f fer ence s (1.7) 1.5 T o t a l deferr ed t a x ( ch a r ge) c red it (4.0) 3.3 T he defer r ed t a x movement on t he ba l a nce shee t is a s fol low s: Gr oup 30 Ju ne 2022 £m 30 Ju ne 2021 £m A s at st a r t of yea r (14.7) (21.6) E xch a ng e adju st ment s (0.1) 0.1 Acqu is it ion of Ra n k I nter ac t i ve L im it ed (0.3) – Defer r e d ta x ( c ha r g e ) c r ed it i n t he i ncome st atement (4.0) 3.3 Defer r e d ta x cr e d it to eq uit y – 3.5 As at end of y e a r (19.1) (14.7) 24 Provision s Gr oup P ro pe r t y- related pr ov i sion s £m Disposal pr ov i sion s £m Restru c turing pr ov i sion s £m Indirect ta x pr ov i sion £m Pay pr ov i sion £m W arranty pr ov i sion £m To t a l £m At 1 Ju ly 2021 15.2 3.9 0.1 1.2 0.2 0.8 21.4 Ch a r ge to t he income st atement – SDI 3.8 – – – – – 3.8 Relea se to t he income st atement – SDI (10.4) – (0.1) – (0.1) (0.3) (10.9) Ut i l ise d i n t he yea r (1.8) – – – – – (1.8) At 30 June 2022 6.8 3.9 – 1.2 0.1 0.5 12.5 Curren t 5.2 0.3 – 1.2 0.1 0.1 6.9 Non-c u r rent 1.6 3.6 – – – 0.4 5.6 To t a l 6.8 3.9 – 1.2 0.1 0.5 12.5 Pr o v is ions hav e been ma de bas ed on ma n ag ement’ s be st es t i ma te of the f ut u r e ca sh ow s, t a k i ng i nto accou nt t he r isk s a sso c iate d w it h e ach obl igat ion. Property-r elated provisions T he ba l a nce a s at 30 Ju ne 2021 compr is ed of £4. 8m of d i lapid at ions pr o v ision s a nd a pr oper t y-rel ate d pr ov i sion of £10 .4m. In pr ior yea rs a nd as a r esu lt of t he CO V ID - 19 lock dow n , t he Gr oup det er m i ned it wa s pr obable t ha t it wou ld be r eq ui r ed t o ma k e pay ments u nder a prop er t y a r r a n gement for wh ich t he l iabi l it y w i l l r ev er t t o t he Gr oup if t he tena nt defau lt s. A pr o v ision of £10. 4m wa s r eco g n ise d, b ei ng t he pr es ent va lue of t he a mount e x pe c ted t o be pa id over t he rem a i n i ng ter m of t he lease. Du r i ng t he cur rent yea r , t he G r oup have r e - con sidere d t h is pr o v ision i n l ight of t he cu r rent ci r cu m st a nc es for bo t h t he G roup, t he g ua r a ntor s a nd the pr oper t y t ena nt s. It wa s de ter m i ned t hat pa y ment is no longer pr obable a nd t her efore, t he prov ision was r elea s ed in f ul l. Du r i ng t he yea r, and a s a re su lt of t he de cis ion to ex it a nu mber of lea ses a t t hei r ex pi ra t ion, t he Gr oup ha s r e cog n is ed a dd it iona l pro v i sion of £3.8m w h ich repr e sent s R a n k ’s best es t i ma te to ex it t he proper t ies a nd r et ur n t hem to t heir or ig i na l st ate. Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 202 Disposal provisions Pr o v is ion ha s be en made for leg ac y i ndus t r i a l d i sea s e a nd per s ona l i nju r y cl a i ms, a nd other d i r ec t ly at tr ibutable cos t s a r i sin g a s a cons equence of t he s a le or closu r e of pre v iously ow ned busi ness es. T he t i m i ng of a n y per son a l i nju r y cla im s is u ncer ta i n a nd t her efor e t hese c la ims h av e be en inc luded in t he mat u r it y a na lys is ba se d on ma nag ement’ s b est e st ima tes. T he disp os a l pr ov isions held compr i se t he fol low i n g: As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m Le gac y i ndu st r ia l d is ea se a nd pers ona l i nju r y cl a i ms 3.8 3.8 O t he r 0.1 0.1 T ota l disposa l pro v isions 3.9 3.9 Restructuring provisions T he ba l a nce of £0.1m as a t 30 June 2021 r ela tes to r em a i n in g SDI res t r uct u r i ng a nd r eloc at ion cos t s wh ich h ave b een f ul l y completed a nd set t led du r i ng t he yea r ended 30 Ju ne 2022. Indi rect tax provisio n T he ind i r ec t t a x pro v is ion rela tes t o a n a mus ement mach i ne l icence dut y cla i m b y H MRC . T he ba l a nce of £1. 2m (30 Ju ne 2021: £1.2m) repr es ent s t he Dir e c tor s’ best es t i mat e of the out ow l i kel y to ar ise. Pay provision T he ba l a nce of £0.1m (30 Ju ne 2021: £0.2m) rel ate s to t he r ema in i ng se t t lemen t s a s soc ia ted w it h t he Nat iona l M i n i mum W a ge Reg u la t ions for t ho se employe es for whom t he G r oup is st i l l i n cont ac t for pa y ment det a ils. Warrant y provisi on A s a resu lt of t he Gr oup’ s sa le of its Bla nkenb erg e Ca si no in Belg iu m, a wa r r a nt y pro v is ion of £ 0.8m wa s re cog n is ed i n SDI as at 30 June 2021. T h is a mount repr es ente d Ra nk ’ s b es t es t i mat e of li abi l it y in r elat ion to cer t a i n i ndem nit ies and w a r r a nt ie s pro v ided to t he pur ch a ser. I n t he event t h at t he pro v ision for wa r r a nt ies i s not ca l led upon over t he ve -ye a r per iod, t h is a mount w i l l be r elea se d to t he Gr oup income sta tement as a n add it iona l prot on sa le. Du r i ng t he yea r , t he Gr oup rec og n is ed £0.2 m add it iona l pr o t on sa le w it h i n t he SDI of t he Gr oup income st a tement. T he r elea se i n t he ye a r r epr esent s R a n k ’ s bes t es t i ma te of l iabi l it y t hat h av e now pa ss ed due to t he pa ss ag e of t ime i n wh ich t he purc ha s er ca n no longer c la im. Co m p a ny Pr o v is ion ha s be en made for leg ac y i ndus t r i a l d i sea s e a nd per s ona l i nju r y cl a i ms r ela t i ng to a pr e v iousl y clos ed bu si ness. T he ti m i ng of a ny per s ona l inju r y cla ims i s u ncer t a in a nd t her efor e t hese c la ims h av e be en inc luded in t he mat u r it y a na ly sis ba se d on ma nag ement’ s bes t es t i ma tes. T he d i spo sa l pr o v is ions held compr ise t he follow i ng : As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m Curren t 0.1 0.1 Non-c u r rent 0.9 0.9 T o t a l legac y i ndust r i a l d is ea se a nd p ers ona l inju r y cl a i ms 1.0 1.0 The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 203 25 Shar e capit al and res er ves As a t 30 Jun e 2022 A s at 3 0 Jun e 2021 Num ber m Nomi n a l va lue £m Numb er m Nomi na l va lue £m Aut hor is ed or d i na r y s ha r e s of 13 8 / 9 p each 1,296.0 1 80.0 1,296.0 180.0 Issued and fully paid As a t 30 Jun e 2022 A s at 3 0 Jun e 2021 Num ber m Nomi n a l va lue £m Numb er m Nomi na l va lue £m At s ta r t of t he yea r 468.4 65.0 390.7 54.2 Sha r e s iss ued i n yea r – – 77.7 10.8 At end of t he yea r 468.4 65.0 468.4 65.0 Share pre mium As a t 30 Jun e 2022 A s at 3 0 Jun e 2021 Num ber m Nomi n a l va lue £m Numb er m Nomi na l va lue £m At s ta r t of t he yea r 468.4 155.7 390.7 98.4 Sha r e s iss ued i n yea r – – 77.7 57.3 At end of t he yea r 468.4 155.7 468.4 155.7 On 24 No vember 2020, t he G roup is sued 7 7 ,7 4 6,020 ord ina r y s ha r e s as p a r t of a sha r e plac i ng a nd pa ra l lel r et a i l of fer, cor re spond i ng to 19 .9% of tota l sh a r es i ssue d. E ach sh a r e ha s t he sa me r ight to r ecei ve d iv idends a nd r epre sent s one vote a t sha reholders’ meet i ng s. Sha r e pr em ium pr oc ee d s in a dd it ion to t he nom in a l v a lue of t he sha r e s iss ued, w ere i ncluded i n sh a r e pr em ium, le ss t he co st s as so ci ate d w it h t he issue of new eq uit y . T ot a l sha r es i n i ssue at 30 Ju ne 2022 a r e 4 68,429,5 41 (2021: 46 8,429,541) . 26 Notes to ca sh ow Reconc i l iat ion of pro t( los s ) for t he yea r to ca sh gener ate d ( u se d) f r om opera t ions: Gr oup Compa ny Note Ye a r e n d e d 30 Ju ne 2022 £m Ye a r e n d e d 30 Ju ne 2021 Re stated £m Ye a r e n d e d 30 Ju ne 2022 £m Ye a r e n d e d 30 Ju ne 2021 Re stated £m Pr o t ( los s ) for t he yea r 66.2 (72.0) (14.5) (7.9) Ad jus t ment s for : – – Depr e ci at ion and a mor t i sa t ion 67.4 71.2 – – A ss et s w r it ten of f – 0.5 – – Net na ncing ch a r ge 13.4 14.4 15.5 8.9 Income t a x exp ens e ( c r ed it) 6.4 (10.1) – – Sh a r e -b a se d p a y me nt s (0.3) (0.2) – – Sepa ratel y d is clos ed it ems (46.2) (15.7) – – 106.9 (11.9) 1.0 1.0 Inc re a se i n i nventor ies (0.3) (0.1) – – ( Inc re a se) decr ea se i n ot her rec eivable s (18.4) 4.8 – – Inc re a se (decr ea se) in t r ade a nd ot her payables 12.5 (14.0) 14.6 (1.0) 100.7 (21.2) 15.6 – Ca sh ut i l i sat ion of pr ov isions (see note 24) (1.8) – (0.1) – Ca sh r ec eipt s in r e spe c t of sepa r at ely d i sc lose d items 72.4 5.9 – – Ca sh generate d fr om ( u se d in) operat ions 171.3 (15.3) 15.5 – T he Gr oup res t ate d t he prior yea r c as h ow for ma t to st a r t fr om pro t ( loss) for t he y ea r i ns tea d of operat i ng pr o t (lo ss) . T h is met hod pro v ides more compr ehensiv e in for m at ion wh ich would be us ef u l to t he rea der of the cons ol idate d a nd compa ny n a nci a l st at ements. Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 204 27 Cash and sh or t-term dep osit s Gr oup As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m Ca sh at b a n k a nd on ha nd 77.9 59.6 Shor t-ter m dep osit s 20.0 10.0 To t a l 97.9 69.6 T he a na lys is of ca s h a nd shor t-ter m dep osit s b y c u r r enc y is a s fol low s: Gr oup As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m Sterlin g 80.5 55.6 Eur o 14.1 11.6 Othe rs 3.3 2.4 To t a l 97.9 69.6 Ca sh at ba n k ea r ns inter es t at oat i ng r ate s bas ed on da ily ba nk depo sit rat es. Shor t-ter m depo sit s ar e ma de for va r y i ng per iod s depend i ng on t he i m med i ate c a sh r equ i r ements of t he G r oup and e a r n i nter es t at t he respe c t i ve shor t-ter m de posit r at es. Included i n c a sh is £ 8.0 m (2021: £7 .1m) rel at i ng to c u stomer f u nd s wh ich is m atc hed b y l iabi l it ies to c us tomer s of equ a l va lue wit h i n t ra de a nd ot her pa ya bles (note 19 ). Co m p a ny At 30 Ju ne 2022 t he Compa n y ha d ca sh a nd shor t-term de pos its of £ n i l (30 Ju ne 2021: £n i l). 28 Reco nci lia tio n of cash ow fro m nan cin g acti vit ies Re conc i l iat ion of net debt : Gr oup As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m Ca sh a nd c a sh e qu iva lents 97.9 69.6 Loa ns a nd bor row ing s (78.8) (119.4) Le a se l iabi l it ies (181.7) (206.9) Net debt (162.6) (256.7) For the pur pos e of the st atement s of cas h ow , c as h a nd ca sh equ iv a lent s compr ise t he fol low i ng : Gr oup As a t 30 Ju ne 2022 £m A s at 30 Ju ne 2021 £m Ca sh at b a n k a nd on ha nd 77.9 59.6 Shor t-ter m dep osit s 20.0 10.0 To t a l 97.9 69.6 Ch a ng es in l iabi l it ies a r isin g fr om n a nci ng ac t i v it ies: Tran sa ct i on s yea r en ded 30 Ju ne 2022 As a t 30 Ju ne 2022 £m Ca sh o w Non- c a sh cha nges A s at 30 Ju ne 2021 £m Le a se l iabi l it ies 18 1.7 (53.7) 28.5 206.9 T er m loan s 78.8 (29.6) – 108.4 Rev olv i ng c r ed it f ac il it y – (11.0) – 11.0 T ot a l bor row i ngs 260.5 (94.3) 28.5 326.3 The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 205 29 Empl oyees and Di rec tors ( a ) Employee bene t expens e for the Group durin g the year Ye a r e n d e d 30 Ju ne 2022 £m Ye a r e n d e d 30 Ju ne 2021 £m W ages and sala r ies 168.4 148.5 So cia l sec u r it y cos t s 16.7 13.8 Pension co st s 5.1 4.5 Sh a r e -b a se d p a y me nt s (0.3) (0.2) 189.9 166.6 T he Compa n y ha s no employe es ( yea r ended 30 Ju ne 2021: ni l). ( b ) A vera ge month ly numbe r of employees Full -time Ye a r e n d e d 30 Ju ne 2022 Pa r t- t i m e Ye a r e n d e d 30 Ju ne 2022 Tot a l Ye a r e n d e d 30 Ju ne 2022 Fu l l-t i me Ye a r e n d e d 30 Ju ne 2021 Pa r t-t ime Ye a r e n d e d 30 Ju ne 2021 To t a l Ye a r e n d e d 30 Ju ne 2021 Gr os venor V enues 2,558 1,515 4,073 2,661 1,569 4,230 Mecc a V enues 573 1,385 1,958 572 1,633 2,205 Dig it a l 660 17 677 600 27 627 En r ach a V enues 435 70 505 487 75 562 Cen t ra l Costs 343 17 360 286 23 309 4,569 3,004 7,573 4,606 3,327 7,933 ( c ) Ke y ma nage ment co mpe nsatio n Ye a r e n d e d 30 Ju ne 2022 £m Ye a r e n d e d 30 Ju ne 2021 £m Sa l a r ie s a nd shor t-ter m employee bene t s (inc ludi ng so ci a l se cu r it y cos t s ) 2.3 2.5 T er mi na t ion benet s – 0.1 Pos t-employ ment benet s 0.1 0.2 Sh a r e -b a se d p a y me nt s 0.1 – 2.5 2.8 Included i n ke y m a n ag ement compens at ion a r e bonus es of £n i l i n r esp ec t of t he c u r r ent yea r (y ea r ende d 30 Ju ne 2021: £0.2m) . Ke y ma n ag ement is de ned as t he E xe cut ive Di re c tor s of the G roup a nd t he ma na gement tea m, deta ils of wh ich a r e set out on page 94 a nd at w w w . ra nk .com. Fu r t her det a i ls of t he emolument s r ec eive d by t he Exe c ut ive D i re c tor s a r e i ncluded i n t he Remuner at ion Rep or t . ( d ) Directo rs’ intere sts T he Di r ec tor s’ inter e st s i n sha res of t he Compa ny , inc ludi ng c ondit iona l aw a r ds u nder t he L ong- T er m Incent iv e Pla n , a r e det a i le d in t he Remunerat ion Rep or t . ( e ) T otal emo lume nts of the Direc tors of The Rank Group plc Ye a r e n d e d 30 Ju ne 2022 £m Ye a r e n d e d 30 Ju ne 2021 £m Sa l a r ie s a nd shor t-ter m employee bene t s (inc ludi ng so ci a l se cu r it y cos t s ) 1.3 1.1 Pos t-employ ment benet s 0.1 0.1 Sh a r e -b a se d p a y me nt s 0.1 – 1.5 1.2 No Dir e c tor accr ued benet s under de ned benet pen sion schemes in eit her yea r nor is a member o f t he G roup’ s de ned cont r ibution pen sion pla n i n eit her yea r . Fu r t her det a i ls of emolu ments r ec eive d b y Di r ec tor s, i nclud i ng t he a gg r eg ate a mou nt of ga i ns m ade b y Di r ec tor s upon t he vest i ng of cond it iona l sha r e a wa r d s, a r e d i sclo sed i n t he Remunerat ion Rep or t on pa ge 1 20. Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 206 30 Share-based p ayments Du r i ng t he yea r ended 30 Ju ne 2022, t he Compa ny oper ate d a n e qu it y-set tle d L ong- T er m I ncent i ve Pla n (‘LTIP ’ ). Fur t her det a i ls of t he LTIP a re i ncluded i n t he Remuner at ion Repor t on pag es 1 20 to 1 22. T he LTI P is a n equ it y-set tle d scheme a nd det a il s of t he movements in t he n u mber of sh a r es a re show n below: As a t 30 Ju ne 2022 A s at 30 Ju ne 2021 Out s ta ndi ng at s t a r t of t he yea r 7,518,376 4,860,348 Gr a nted 3,937,473 3,396,884 Exercised (98,489) – Expired (1,802,540) – For feited (1,445,966) (738,856) Out s ta ndi ng at end of t he yea r 8,108,854 7,518,376 W eighte d av era ge r em a i n in g l ife 1.6 y ears 2.4 years W eighte d av era ge f a i r va lue for sha re s g r a nte d dur ing t he yea r (p) 101.13p 96.7p T here a r e ve L T IP awa rd s cu r r ent l y in is sue dur i ng t he n a ncia l yea r ended 30 June 2022. L TIP – 2 01 7 / 18 a ward V es t s in t hr ee t ra nches; 3 3.3% in O c tober 2021, 33.3% i n Oc tober 202 2 a nd 33.3% in O c tober 202 3. A l l LT IP a wa r d s ha ve £ n i l exer ci se pr ice. L TIP – 2 020 / 21 award V es t s in a si n gle t ra nche in De cember 202 3. A l l LTI P a wa r d s ha ve £ n il e xer ci se pr ice. L TIP – 2 021 / 22 award V es t s in a si n gle t ra nche in Sep tember 2024. A ll LT IP a wa rd s ha ve £n i l e xerc is e pr ice. Recover y Ince ntive Scheme ( RI S ) – 2021 / 22 award V es t s in a si n gle t ra nche in June 202 3 for t he non-exe c ut iv e R IS . V es t s in t wo t r a nche s; 50% in O c tober 2022 a nd 50% in Oc t ober 2023 for t he exe cut ive R IS . A l l R I S a wa r d s ha ve £ n il e xer ci se pr ice. L TIP – 2021 / 22 Exe c award V es t s in a t wo t r a nches , 50% i n Ma y 2023 a nd 50% in Ma rch 2024. A l l LTIP a wa rd s ha ve £ ni l e xerc is e pr ice. T he number of LTI P aw a r d s a nd t he fa ir va lue per sha r e g r a nte d dur ing t he yea r wer e a s fol lows: 30 Ju ne 2022 30 Ju ne 2021 Nu mbe r 2,215,812 3,396,884 W eighte d av era ge f a i r va lue per sha r e 74.1p 96.7p T he number of R I S aw a r d s a nd t he fa i r v a lue per sh a r e g r a nte d dur ing t he yea r wer e a s fol lows: 30 Ju ne 2022 30 Ju ne 2021 Nu mbe r 1,535,025 – W eighte d av era ge f a i r va lue per sha r e 162.9p – T he fa i r v a lue of t he L T IP a nd R IS a wa rd s g ra nted du r i ng t he yea r is ba se d on t he ma rket va lue of the sha re a wa r d at g r a nt d ate le ss t he ex pe c te d va lue of d iv idends forg one. The fol low ing t able l is t s t he input s u sed i n a s ses si ng t he f a i r va lue of t he sh a r e aw a r ds: 30 Ju ne 2022 30 Ju ne 2021 Div idend yield (% ) 2.00 2.00 V es t i ng per iod ( ye a r s ) 2.00 3.00 W eighte d av era ge s ha r e pr ice (p) 173.0 139.7 T he number of LTI P E xe c aw a r d s a nd t he fa i r v a lue per sh a r e of t he LTI P E xec a wa rd s g ra nted du r i ng t he ye a r wer e a s fol low s: 30 Ju ne 2022 30 Ju ne 2021 Nu mbe r 186,636 – W eighte d av era ge f a i r va lue per sha r e 110.1p – The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 207 30 Share-based p ayments ( co ntinued ) T he fa i r v a lue of t he L T IP E xe c awa rd s g r a nted d ur ing t he yea r is ba s ed on t he m a rke t va lue of t he sh a r e aw a r d at g r a nt d ate les s t he ex pe c te d va lue of d iv idends forg one. The fol low ing t able l is t s t he input s u sed i n a s ses si ng t he f a i r va lue of t he sh a r e aw a r ds: 30 Ju ne 2022 30 Ju ne 2021 Div idend yield (% ) 2.00 2.00 V es t i ng per iod ( ye a r s ) 2.00 3.00 W eighte d av era ge s ha r e pr ice (p) 106.0 139.7 T o t he ex tent t h at g r a nt s a r e subjec t to non-ma rket ba se d per form a nce c ondit ions, t he ex pen se r ec og n is ed i s ba se d on ex pe c t at ions of t hese c ondit ions bein g met , wh ich a r e r ea ss es se d at eac h ba l a nce she et d ate. T he G r oup re cog n is ed a £ 0.3m cr ed it (30 June 2021: £1. 1 m ch a r ge) i n oper at i ng pr o t for cost s of the sc heme in the c ur rent yea r. 31 Retiremen t benets Dened contr ibution scheme T he Gr oup oper ate s t he R a n k Gr oup St a keholder Pen sion Pla n ( ‘t he Pl a n’) wh ich is ex ter na ll y f u nded a nd the Pla n ’ s a s set s a re held sepa r at ely f r om G r oup as set s. D u r i ng t he ye a r ended 3 0 June 2022 , t he Gr oup cont r ibute d a tot a l of £2.4m ( ye a r ende d 30 June 2021: £5. 3m) to t he P la n . T here wer e no sign i c a nt cont r ibut ions out st a nd i ng at t he ba l a nce shee t dat e in eit her yea r. Other pension commitment T he Gr oup ha s a n u n f u nde d pen sion comm it ment relat i ng t o t h r ee for mer exec ut ive s of t he Gr oup. At 30 Ju ne 2022, t he G r oup ’s com m it ment wa s £ 3.6m (30 June 2021: £ 3.8m). The Gr oup pa id £0. 2m ( y ea r ende d 30 June 2021: £0. 2m) in p ension pa y ment s du r i ng t he yea r . T he ac t ua ri a l ga in a r isin g on t he com m it ment, r es ul t i ng f r om t he ch a ng es i n a ssu mpt ion s out l i ned below i n t he yea r wa s £0.1m ( yea r ended 30 June 2021: £0.2 m) before t a xa t ion a nd £0.1m a f ter t a xa t ion ( ye a r ended 3 0 June 2021: £0.2m). 30 Ju ne 2022 % p.a . 30 Ju ne 2021 % p.a . Discount rate 3.8 1.9 Pension i ncr ea se s 4.9 3.3 T he oblig at ion ha s be en c a lcu l ate d usi ng t he S2 mor t a l it y tables w it h a 1.5% per a n num i mpro vement in l i fe e x pe c ta ncy . 32 Leases Group a s a Lesse e T he Gr oup lease s va r ious proper ties a nd eq uipment. Rent a l cont r ac t s a re m ade for va r ious xed per iod s ra ngi ng up to 93 yea r s. Le a se ter ms a r e negot i ate d on a n i nd iv idua l basi s a nd cont a i n a w ide r a ng e of d if ferent ter m s a nd cond it ion s. T he lea se a g r eement s do not impo se a ny coven a nt s, but lea s ed a ss et s m ay not b e use d a s se c ur it y for b or r ow i ng pu r pose s. In de ter m i n i ng t he lea s e ter m, m a n ag ement consider s a l l f ac t s a nd ci r c um st a nces t ha t cr ea te a n e conom ic incent iv e to exer c ise a n ex tension opt ion. E x t ension opt ions a re on ly i ncluded i n t he lease ter m if t he lea s e is r ea son ably c er ta i n to b e ex t ended (o r not ter m i na ted ). T he asse ssment is re v ie wed i f a sign i ca nt e vent or a sign i c a nt cha nge in ci r c um st a nces occ ur s wh ich a f fe c t s t h is as se ssment a nd t h at is w it h in t he contr ol of t he G roup a s a less ee. Set out b elow a r e t he c a r r y i n g a mount s of lea se l i abi lit ies a nd t he movements d ur ing t he perio d: 30 Ju ne 2022 £m 30 Ju ne 2021 £m As at 1 Ju ly 2021 206.9 240.5 Ad d i t ion s 21.9 3.0 Acc re t ion of inter es t 6.6 – Pa y ments (53.7) (36.4) Foreig n exc ha nge – (0.2) As at 30 June 2022 18 1.7 206.9 Cu r r ent l iabi l it ies 40.4 42.2 Non-c u r rent l i abi l it ie s 141.3 164.7 To t a l 18 1.7 206.9 Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 208 T he mat ur it y a na ly sis of lea se l i abil it ies a re d i sc lose d below: As a t 30 Jun e 2022 Pr e sent v a lue of t he minimum lea s e payments £m Tot a l minimum lea s e payments £m Wit h i n 1 ye a r 40.4 47.0 A f ter 1 yea r but w it h in 2 ye a r s 25.8 30.1 A f ter 2 yea r s but w it hi n 5 ye a r s 72.8 85.2 A f ter 5 yea r s 42.7 50.2 18 1.7 212.5 Le ss: tot a l fut ur e inter e st ex p ens es (30.8) Pr es ent value of leas e lia bil it ies 18 1.7 T he fol low i ng a r e t he amou nts r e cog n is ed i n t he G r oup income st at ement: Ye a r e n d e d 30 Ju ne 2022 £m Depreciation ex pense of righ t-of -use assets 26.6 Inter e st ex p ens e on lea se l ia bil it ies 6.7 T o t a l a mount rec og n is ed i n the i ncome st atement 33.3 T he Gr oup ha s se ver a l le a se cont r ac t s t h at i nclude ex ten sion a nd ter m i n at ion opt ions. T he se opt ion s a r e negot i ate d by m a n ag ement to pro v ide ex ibi l it y in ma na g i ng t he lea sed -as se t por t folio a nd al ig n wit h t he Gr oup’ s busi nes s need s. Ma n ag ement exerc ise s sig ni ca nt judgement in de ter m i n i ng whet her thes e ex tension a nd ter m i na t ion opt ions a r e r ea s onabl y cer ta i n to b e exer ci se d. Group a s a less or T he Gr oup is pa r t y to a number of lea sehold pr oper t y c ont ra c ts. W here appr opr iat e t he G roup w i l l sub -let prop er ties w h ich a r e vac a nt , in or der to der ive lea se i ncome wh ich is sho w n net of lea se c os ts. L e a se i ncome as a t 30 June 2022 f r om lea s e cont r ac t s in w h ich t he Gr oup sub-let s cer ta in pr oper t y s pace is £1.0 m ( ye a r ended 30 Ju ne 2021: £1.6m) . Fut u r e m i ni mu m rent a ls re cei vable under non- ca ncell able opera t i ng lea se s a s at 30 Ju ne a re a s fol lo ws: As a t 30 Ju ne 2022 Tot a l minimum lea s e payments £m Wit h i n 1 ye a r 2.6 A f ter 1 yea r but w it h in 2 ye a r s 0.9 A f ter 2 yea r s but w it hi n 5 ye a r s 1.1 A f ter 5 yea r s 2.1 To t a l 6.7 Capital commitments At 30 Ju ne 2022, t he Group ha s cont r ac t s pl ace d for f ut u r e capit a l e x pend it u r e of £15.3m (3 0 June 2021: £6.9m) . The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 209 33 Conti nge nt lia bili tie s and cont in gent as sets Conti ng ent l iabilities Grou p Pr op ert y arr angements T he Gr oup ha s cer ta in pr oper t y a rr a n gement s under w hich r ent a l p ay ments re ver t to t he G roup i n t he e vent of defau lt b y t he t h i r d pa r t y . At 30 Ju ne 2022, it i s not consider ed pr obable t ha t t he t h i r d pa r t y w il l def aul t. A s s uch, no pro v i sion ha s be en re cog nis ed i n r ela t ion to t hes e a r r a n gements. I f t he t hi rd p a r t y wer e to de fau lt on t hes e a r r a n gements , t he oblig at ion for t he Gr oup wou ld be £1.1m on a discounted basis. Legal and regulat o ry land scape Gi ven t he na t u re of t he lega l a nd re g u lat or y la nd sc ape of t he indust r y , f r om t i me to t i me t he Gr oup r ecei ves not ices a nd com mun icat ions fr om r eg u l ator y aut hor it ies a nd ot her pa r ties i n r esp ec t of it s ac t i v it ies a nd is subjec t to compl ia nce as ses sments of its l icen se d ac t iv ities. T he Gr oup rec og n ise s t ha t t here is u ncer t a int y over an y nes or cha r ge s t ha t may b e lev ied b y reg ula tor s as a re su lt of pas t event s a nd depend i ng on t he stat us of such re v ie ws, it i s not a lw a ys p os sible to rel iabl y es t i ma te t he l i kel i hood , t i m i ng a nd va lue of potent ia l ca sh out ow s. Co m p a ny At 30 Ju ne 2022, t he Compan y ha s m ade g ua ra nte es to s ubsidi a r y u nder t a k ing s of £79.5m (30 June 2021: £108. 7m) . 34 Relate d par t y tra nsa cti ons Grou p Det a i l s of compen sat ion paid to ke y m a na gement a r e d i sclo sed i n note 29. Entities with signi cant inu enc e over the Group Guoco G r oup Lim it ed (‘Guo co’), a c ompa ny i ncor por ate d in B er muda , a nd lis te d on the Hong Kong Stoc k Exc ha nge ha s a contr ol l i ng inter e st i n T he R a n k G r oup Plc. The u lt i ma te pa r ent u nder t a ki n g of Guoco i s GuoL ine C apita l As se t s Li m ite d ( ‘GuoLi ne’) wh ich is incor porat ed i n Jer se y . At 30 Ju ne 2021, ent it ies cont r ol le d by G uoLi ne ow ne d 56.1 % of t he C ompa ny ’ s sh a r es, i nclud i ng 52.0% t h r ough Guoc o’ s w holl y-o w ned subs idi a r y , R a nk A s set s L i m ite d, t he Compan y’s imme d iat e pa r ent under ta k in g . Hong L e ong Compa ny ( Ma lay sia) Ber had ( ‘Hong Leon g’) wa s t he ult ima te pa r ent compa ny of Guoco u nt i l 1 6 A pr i l 2021 whereupon, fol low i ng a n i nter n a l re st r uct u r e, GuoL ine be c a me t he u lt i mat e pa r ent compa n y of Guoc o. For fu r ther i n for m at ion se e pa ge 144. Co m p a ny T he fol low i ng t r a n sac t ions w it h subsid ia ries o cc u r r ed i n t he ye a r : Ye a r e n d e d 30 Ju ne 2022 £m Ye a r e n d e d 30 Ju ne 2021 £m Inter e st pa ya ble to subsidi a r y u nder t a k ing (15.0) (9.8) Du r i ng t he yea r, Ra n k Gr oup Fi na nce Plc, a subsidia r y of t he Compa ny , r ecei ved c a sh f r om t he C ompa ny of £ 0. 1 m ( y ea r ende d 30 June 2021: re ceive d c as h f r om t he Compa n y of £6 8.1m) . Not es to the nanci al stat eme nts Continu ed The Rank Group Plc Annual Report 2022 210 35 Acquisit ion of su bsid iar y under tak in gs On 21 Apr il 2022 , t he Gr oup complete d t he pur c ha se of t he rema i n i ng 50% s ha r ehold i ng of R a n k I nterac t ive L im ite d (for merl y k now n as A sper s On l i ne Li m ite d) for a t ot a l con siderat ion £1.3m. Of t h is c onsider at ion, £ 0.5m wa s pa id i n ca sh on c omplet ion in l ieu of t he outs t a nd i ng loa n ba la nce t he Compan y owe d to t he seller a nd £0.8m i n c ont in gent con siderat ion. The cont i ng ent consider at ion w i l l be eq u iva lent to a perc enta ge of t he n e t ga m i ng r e venue generat ed f r om t he ac qu ir e d c ust omer dat aba s e. A pre sent va lue of £0 .8m ha s been pr o v is iona l l y re cog nis ed for t he conti ngent c onsider at ion a nd is dep endent upon t he da te a compe t i ng on l i ne ga m i ng oper at ion is established. At t he d ate of ac qu isit ion, t he fa ir v a lue of as se t s acqu i r ed a nd l i abil it ies ass ume d, g oo dw il l a nd con sidera t ion, i ncludi ng t he fa ir v a lue of t he Gr oup’ s pr e -acqu i sit ion 50% sha rehold in g at t he ac qu isit ion d ate, a r e out l i ned b elow . T he fa ir v a lue of oper at iona l c a sh a nd t rade a nd ot her pa yables t ot a l l i ng £ 0.5m cor r esp onds to t heir bo ok va lue. £m Customer relationships 1.4 Cash 0.1 Trade a nd ot her pa yables (0.6) Defer r e d ta x l iabi l it y (0.4) Net ass et s acqui r ed 0.5 Good wi ll 2.1 T ot a l considerat ion 2.6 T he fa i r v a lue of each comp onent of considera t ion is a n a l ys ed a s: £m Cash 1 – Loa n set tlement 0.5 Cont i n gent c a sh con sider at ion 0.8 Fai r va lue of p r e v ious ly e x is t i ng i nter es t in joi nt vent u r e 1.3 To t a l 2.6 1. Ca s h con sid er at io n of £1 for s h a r es. T he identi e d int a n g ible ass et s re cog n is ed se pa r atel y f rom go od w i l l a r e a s follow s: £m Customer relationships 1.4 To t a l 1.4 T he goo d w i l l con sis ts of f utu r e r ev enue oppor t u n it ies at t r ibut able to new c us tomer s, t he new br a nd s a nd de velopment of tech nolog y a nd a mount s t hat a r e r equ i r ed for gener a l op era t iona l pu r p os es. No a mou nt of t he goo d w i l l r eco g n ise d is e xp ec t ed to b e de duct ible for ta x pur pos es. At t he d ate of ac qu isit ion, t he Group r ec og n ise d a ga in of £0.8m on r emea su r ement of its pr e-a cqu isit ion 50% sha r eholdi ng a nd acqu isit ion relat ed co st s of £0.02m bot h of which wer e r ec og n is ed a s SDIs i n t he Gr oup i ncome st atement. In t he yea r en d ed 30 June 2022, R a n k Inter ac t i ve Li m ite d cont r ibute d st at ut or y rev enue of £0.8m and pr ot b efore t a x o f £ n il . If t he acqu isit ion had occ u r r ed a t t he beg i n n i ng of t he ye a r, the cont i nui ng s t at utor y r e venues of t he ent it y in t he 12 mont h s to 30 Ju ne 2022 wou ld hav e be en £6.1m a nd los s befor e t a x would ha ve b een £ 0.2m. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 211 Fi v e y ear re vi ew Ye a r ended 30 Ju ne 2022 £m Ye a r ended 30 Ju ne 2021 £m Ye a r ended 30 Ju ne 2020 (restated) £m Ye a r ended 30 Ju ne 20 19 £m Ye a r ended 30 Ju ne 2018 £m Con t inuing ope rat ions Re v enue 644.0 329.6 629.7 695.1 691.0 Op era t i ng pro t ( los s ) befor e sepa ratel y d isc lose d items 39.8 (84.5) 49.1 75.7 77.0 Sepa ratel y d is clos ed it ems 42.3 (8.4) (27.6) (36.7) (26.9) Gr oup opera t i ng pro t ( los s ) 82.1 (92.9) 21.5 39.0 50.1 T ot a l net na ncin g cha r g e (7.8) (14.4) (8.1) (4.4) (3.4) Pr o t ( los s ) befor e t a x at ion 74.3 (107.3) 13.4 34.6 46.7 Ta x a t io n (16.9) 10.4 (5.2) (7.0) (10.8) Pr o t ( los s ) a f ter ta xat ion f r om cont i nui ng oper at ion s 57.4 (96.9) 8.2 27.6 35.9 Di sc ont i nued op era t ion s 8.8 24.9 1.2 1.5 – Pr o t ( los s ) for t he yea r 66.2 (72.0) 9.4 29.1 35.9 Ba sic ea r n i ng s ( loss) per ord in a r y sha r e 4.3p (20.1)p 7.0p 15.3p 15.0p T ot a l ord i na r y d i v idend (i nclud in g prop ose d) p er or d in a r y sh a r e 0.00p 0.00p 2.80p 7.65p 7.45p Group f und s employed Int a n g ible ass et s, pr oper t y , pla nt and e qu ipment and right - of -use assets 708.3 750.6 8 10.7 609.3 630.6 P r o v i s ion s (12.4) (21.4) (18.9) (46.8) (41.6) Ot her net lia bil it ie s (106.0) (111.3) (128.4) (166.2) (183.2) T o t a l f und s employed at year-end 589.9 617.9 663.4 396.3 405.8 Fi na nce d by Or d i na r y sh a r e c apit a l a nd r es er ves 427.3 361.2 365.9 398.1 396.5 Net ( c a sh) debt 162.6 256.7 297.5 (1.8) 9.3 589.9 617.9 663.4 396.3 405.8 A verag e number of emp lo yees (000s) 7.6 7.9 8.4 9.0 9.9 The Rank Group Plc Annual Report 2022 212 Shareholder infor ma tion 202 2/ 23 na nci al cal en dar Not appl ic able Record d ate for 2021 /22 n a l d iv idend 13 Oc tober 2 022 A nnua l G ener a l Me et i ng a nd tr ad i ng upd at e Not appl ic able Pay ment date for 2021 /2 2 na l d i v idend 26 Ja nua r y 2023 Inter im r esu lt s a nnouncement Annual G eneral Meeting T he 2022 A n nua l Gener a l Mee t i ng ( ‘ AGM’ ) w i l l be held on 13 Oc tob er 2022, pr ov idi ng a va luable oppor t u n it y for com mun icat ion bet ween t he Bo a r d a nd sha r eholders. Fu r ther de ta il s on how sha reholders w il l be able to pa r t icipate i n t he m e et ing w i l l be det a iled a s pa r t of t he AGM not ice. Sha r eholder s w i l l be i nv ited to vo te on t he for ma l res olut ions cont a i ned i n t he AGM not ice. T he f u l l tex t of notice of t he meet i ng, toge t her w it h expl a na tor y notes, w i l l be s et out i n a sepa rate do c ument at w w w . ra nk .com. If a s ha r eholder ha s chosen p aper i n for m at ion, t he n o t ice w i l l be enclos ed w ith t heir ha r d c opy of t h i s A n nua l Re por t. Sha reholders w ish in g to cha nge t hei r elec t ion ma y do so a t a ny t i me by cont ac t i ng t he Compa ny’s re g ist ra r, deta i l s of wh ich c a n be fou nd below a nd on ou r websit e at w w w.ra n k .com. Sha r eholder s ma y us e elec t r on ic mea ns to vote, or ap poi nt a prox y to vot e on t heir beha lf , at t he a n nua l a nd ot her genera l meet i ng s of t he Compa ny . Follow ing t he meet in g, the bu sine ss pre sent at ion, v ot i ng r esu lt s a nd a sum ma r y of t he quest ions and a nsw ers a re m ade av a i lable at w w w .ra nk .com, or i n pr i nted for m at on r e ques t . Registrar A l l ad mi n is t ra t iv e enqui r ie s rel at i ng to sha r e s should, i n t he r st in st a nce, be d i r ec te d to t he Compan y’s reg ist ra r ( quot ing r efer ence number 1 235 ) a nd clea r ly s t ate t he reg is ter ed sh a r eholder’ s na me a nd ad d re ss. Plea s e w r it e to T he Ra nk G r oup Plc reg is t r a r, Equi n it i L i m ite d, A spe c t House, Sp encer Road , La ncin g, W es t Suss ex BN99 6D A ( T el: f r om t he UK 0371 38 4 2098 1 a nd f r om outside t he UK + 4 4 121 415 7047 1 ). T here i s a tex t phon e a va il able on 0371 38 4 2255 1 for sha r eholder s w it h hea r i ng d i f cu lt ies. 1. Li ne s a r e op en 0 8:30 t o 17 :30, Mo nd ay t o Fr ida y (exclud i n g publ ic hol id a y s i n En gl a nd a n d Wale s) . Sharevie w T he Sha r e v ie w por tf olio ser v ice f r om t he Compa n y’ s r eg i st r a r g i ves s ha r eholder s more cont r ol of t hei r R a n k sha res a nd ot her i nves t ment s inc ludi ng: – d ir e c t acce ss to d at a held for t hem on t he sha re r eg is ter i ncludi ng r e cent sh a r e movements a nd div idend deta i l s; – a re cent va luat ion of t heir p or t folio; a nd – a ra nge of in for m at ion a nd pr ac t ica l help for sha r eholder s i ncludi ng ho w t hey c a n elec t to r ec eive com mu n icat ions e l e c t r o n i c a l l y. It is ea s y a nd f r e e to se t up a por t folio – sha reholders w il l jus t nee d t he sha reholder refer ence pr i nte d on t heir prox y for m or d iv idend stat ion er y . Plea se v isit t he follow i n g website for mor e det a i l s: w w w. s h a r e v i e w.c o . u k . Paym ent of divi de nds T he Compa n y doe s not oper ate a d iv idend re -i nves t ment pla n. Sh a r eholders ma y nd it more conv enient to m a ke a rr a n gements to ha ve d iv idends pa id d i re c t l y to t hei r ba n k acc ount . T he ad va ntag es of t h i s a r e t ha t t he d iv idend is cre d ite d to a sha reholder’ s ba nk acc ount on t he pay ment date, t her e is no nee d to pr es ent cheque s for pay ment and t her e is no r i sk of cheques b ei ng los t in t he post . T o s et up a d iv idend mand ate or t o cha nge a n ex ist i ng m a nda te plea se c ontac t Equ i n it i L i m ite d, ou r r eg is t r a r, whose conta c t det a i l s a r e abo ve. A lt er n at iv ely , sha reholders w ho use E qu i n it i ’ s Sha re v iew ca n log on to w w w .sh a r e v iew .co.uk a nd fol low t he onl i ne i n st r uc t ions. Shareholder information A w ide ra nge of in for m at ion for sha reholders a nd inve stor s is a v a i lable in t he Inves tor s a r ea of t he Ra n k G roup website: w w w .ra nk .com. Frequ ent ly asked qu esti ons W e h ave a s ha r eholder ‘ f r equent l y a ske d quest ions ’ s ec t ion on o u r web site wh ich pro v ides a nsw ers t o ma n y ques t ions: w w w.ra n k .com / en /i n ves tor s /sh a r eholder - centre /faqs.htm l. Capit al gai ns tax For t he pur pose of c a lc ul at i n g UK c apit a l ga i ns t a x on a d isp osa l of ord i na r y sh a r es in t he Compa ny held since 31 Ma r c h 1982 (i ncludi ng s ha r e s held in t he pr ede ce ssor compa ny , T he Ra n k Or g a n is at ion Plc ), t he pr ice of t he Compa n y’ s or d i n a r y sha res at t ha t da te wa s 190 p per sh a r e. T h is pr ice should b e adju ste d for t he ef fe c t s of t he r ight s is sue in Ja nua r y 1990, t he enha nced sha re a lt er na t ive i n Ju ly 1993, t he su b - d iv i sion a nd cons ol idat ion of sh a r es i n Ma r ch 199 4, t he en ha nced sc r ip d iv idend in M a r ch 1998, a nd the 18 for 25 sub - d iv ision a nd s ha re con s ol ida t ion (al ig ned w it h t he 65p speci a l d i v idend pay ment ) wh ich took pl ace i n Ma r c h 20 07 . More in for mat ion re ga r d i ng t hese adju st ment s is av a i l able on w w w .r a n k .com. Shareholder security W e a r e a wa r e t hat sha reholders c a n on occ a sion re ceiv e un sol icit ed telephone ca l ls concer n i ng t heir Ra nk sh a r es. T he se com mun icat ions tend to be f r om ov er sea s- ba se d ‘br oker s’ who of fer a prem iu m pr ice for your R a nk sh a r es but a sk y ou to ma ke a n upf ront pa y ment , t y pica l l y i n t he for m of a n in su r a nce bond . W e r e com mend t hat befor e pa y i ng a n y money you: – obta in t he na me of the per s on a nd r m cont ac t i ng you; – check t he FCA re g is ter at ht tp s:/ / re g ist er . fca .org. u k to ens ur e t he y a r e aut hor is ed ; – use t he deta i l s on t he FC A re g ist er to contac t t he r m ; – ca l l the FC A Con su mer Helpli ne on 080 0 111 6 768 (f re ephone ) i f t her e a r e no contac t de t a i ls on t he FCA reg i st er or you a r e told t he y a r e out of dat e; a nd – sea rch t he FCA ’ s l i st of u naut horis ed r m s a nd ind iv idua ls to av oid doing busi ness w it h: w w w.fca.org. u k / consu mer s /u naut hor i se d- r ms- indiv idua ls. If you us e a n unaut hori se d r m to buy or sel l s ha r e s or ot her in ves t ment s, you w i l l not ha ve acc es s to t he Fi n a nci a l Ombudsm a n S er v ice or Fi na nc ia l S er v ices Compen sat ion Scheme (‘FS C S’ ) if t hi ng s g o w r o n g. Below, plea s e nd t he li n k to the FCA ’ s website wh ich g i ves i n for m at ion on sc a m s a nd sw i nd les , which sh a r eholders m ay nd helpf u l: w w w .fc a .org.uk / con su mer s / pro tec t-you r sel f-s ca ms. The Rank Group Plc Annual Report 2022 St rate gi c rep or t Governanc e r ep ort Financial statements Overview 213 Fu r ther i n for m at ion on f r aud ca n b e found at w w w.ac t io n f r a ud .pol ice.uk . Ac t ion Fr aud’s h elpl i ne is 030 0 1 23 2 04 0. W e r ec om mend th at you r ep or t a ny at t empte d sha re f r auds to t he author it ies , since pr o v id i ng i n for ma t ion w it h r eg a r d to how t he f r auds ter s ha ve c ontac t ed a nd dea lt w it h you w i l l a ss ist t he author it ies in u nder st a ndi ng t he f r auds ter s’ wa y of oper at i ng so a s t o enable t hem to d i sr upt a nd pre vent t hese ac t iv ities a nd pro se cut e t hem. ShareGif t Sha r eholder s w it h a v er y sma l l nu mber of sha r e s, t he va lue o f w h ich ma y ma ke it une conomica l to sel l, m a y w is h to consider don at i ng t hem to c ha rit y t h r ough Sha reG i f t , a r eg i ster e d cha r it y ad m i n ist ere d b y T he Or r Mack i ntos h Foundation. Fu r ther i n for m at ion about Sha r e Gi f t is av a i lable at w w w . sha reg i f t.org or by w r it i ng to: Sh a reGift PO Box 722 53 London SW1 P 9LQ T el : 020 7930 3737 For a ny ot her i n for m at ion plea se conta c t t he fol low i ng p er sons a t our re g ist ere d of ce: Luis a Wright , Gr oup G ener a l Cou n sel & Compa n y Se cr et a r y Sa ra h Powell , Di r ec t or of Inv es tor Rela t ion s & Cor por at e Com mu n ica t ions Regi ster ed of ce T he Ra nk G r oup Plc, TOR , Sa int- C loud Way , Ma iden head SL6 8BN T el : 01 62 8 50 4 0 0 0 T he Ra nk G r oup Plc Reg is ter ed i n E ngl a nd a nd W a les Compa n y number : 031 4 0769 Shareholder information Continu ed The Rank Group Plc Annual Report 2022 214 For more informa tio n, visi t our website. w w w . rank.com P r i nte d b y Pa rk Com mu n icat ions. T he mat er ia l used i n t h i s bo ok is 100% re c yc led . T he paper m i l l a nd pri nter a r e b ot h re g ist ere d w it h the For es t r y Ste wa r d sh ip Cou nci l ( F SC )® a nd add it iona l l y ha ve t he En v i ron ment a l M a na gement Sy s tem IS O 14001. It ha s be en pr i nted u si ng 100% of f shore w ind elec t r ic it y sour ce d f r om UK w ind a nd a l l t he in k s u se d a r e vege t able bas ed . Desig ne d a nd produced by Gat her .london The Rank Gro up Plc TOR S a i nt - C l o u d Wa y Ma iden he a d SL6 8BN T el : 01 62 8 50 4 0 0 0 www . ra nk . c o m Compa n y re g ist rat ion numb er: 0314076 9
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