19 Aug 2016 11:54
LADBROKES GROUP FINANCE PLC
Registered Number 01429533
INTERIM RESULTS
FOR THE HALF YEAR ENDED 30 JUNE 2016
Business and financial review
For the half year ended 30 June 2016
Principal activities
Ladbrokes Group Finance plc (the 'Company') undertook the principal borrowing for Ladbrokes plc and its subsidiaries, invested in loans to other members of the Ladbrokes plc group and undertook associated finance-related activities.
Review of business
The Company continues to provide finance-related services to other members of the Ladbrokes plc group. There haven't been any significant changes to the existing arrangements during the first six months of the financial year. There have also been no significant events that have affected the Company during the same period.
Results and dividends
The financial statements for the half year show a profit after taxation of £37,222,000 (half year ended 30 June 2015: £16,130,000).
The directors do not propose the payment of an interim dividend (half year ended 30 June 2015: £nil).
Key performance indicators
The Company's key financial performance indicators during the year were as follows:
|
| Half year ended 30 June 2016 |
| Half year ended30 June 2015 | Change |
| £000 |
| £000 | % | |
Net finance income |
| 41,901 |
| 16,963 | 147.0 |
Profit before tax |
| 40,368 |
| 15,357 | 162.9 |
Profit/(loss) after tax |
| 37,222 |
| 16,130 | 130.8 |
|
| 30 June2016 |
| 31 December 2015 |
Change |
|
| £000 |
| £000 | % |
Third party interest bearing loans and borrowings |
| (323,859) |
| (323,132) | 0.2 |
Amounts due from group companies |
| 4,616,959 |
| 4,479,221 | 3.1 |
Amount due to group companies |
| (3,841,875) |
| (3,673,049) | 4.6 |
Equity shareholder's funds |
| 524,054 |
| 486,832 | 7.6 |
Percentage of Ladbrokes plc group's gross borrowings at fixed rates (target minimum 25%) |
| 100% |
| 100% | - |
Going concern
In assessing the going concern basis, the directors considered the Company's activities, the financial position of the Company and the Company's financial risk management objectives and policies.
The directors consider that the Company has adequate resources to continue in operational existence for the foreseeable future and that it is therefore appropriate to adopt the going concern basis in preparing its financial statements.
Principal risks and uncertainties
The ultimate parent company, Ladbrokes plc, reviews and evaluates the key risks and uncertainties faced by the Ladbrokes plc group as part of the divisional reviews undertaken at its regular Board meetings. The impact of risks and uncertainties of the Company is considered as part of this review process.
The principal risks and uncertainties which could impact the Company relate to its exposure to foreign currencies and interest rate movements arising from the finance related activities and borrowing which it undertakes on behalf of the Ladbrokes plc group. The Company's risk profile at 31 December 2015 and the policies of the Company for managing these exposures are detailed in note 16 of the Company's annual report and financial statements 2015 (the '2015 Annual Report').
The principal risks and uncertainties included in the 2015 Annual Report are summarised below:
Interest rate risk
The Company is exposed to interest rate risk on interest-bearing loans and borrowings and on cash and cash equivalents.
Foreign currency risk
The Ladbrokes plc group carries out operations through a number of foreign enterprises and has foreign currency exposure to the Australian Dollar and to the Euro arising from foreign currency assets. The exposure of the Ladbrokes plc group to currency risk at a transactional level is monitored and reviewed regularly.
Credit risk
The Company's exposure to credit risk arises from financial assets of the Company (other than those due from fellow subsidiaries of the Ladbrokes plc group), which comprise cash and cash equivalents and derivative instruments. The credit risk to the Company arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.
Liquidity risk
The objective of the Ladbrokes plc group is to maintain a balance between continuity of funding and flexibility through the use of borrowings with a range of maturities.
These risks and uncertainties remain valid at the interim reporting date and have not changed in the period to 30 June 2016.
It is anticipated that the principal risks and uncertainties affecting the Company will remain unchanged for the remaining six months of the financial year.
Future developments
The Company does not anticipate any changes in its activities in the remaining six months of the financial year.
Independent review
This half-yearly report has not been audited or reviewed by auditors.
Statement of directors' responsibilities
The directors confirm that this condensed set of interim financial information has been prepared in accordance with Financial Reporting Standard 104: Interim Financial Reporting, issued by the Financial Reporting Council, and that the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R namely:
§ an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year, and
§ material related party transactions in the first six months and any material changes in the related party transactions described in the last annual report.
The directors of the Company are listed in the Company's annual report and accounts for the year ended 31 December 2015. A J Bushnell resigned as director on 15 July 2016. G K H Mason was appointed as a director on 15 July 2016. There were no other changes to the list of Company directors.
By order of the Board
V ParmarDirector19 August 2016
Income statement (unaudited)
for the half year ended 30 June 2016
| Notes | Half year ended30 June 2016 |
| Half year ended30 June 2015 |
|
| £'000 |
| £'000 |
|
|
|
|
|
Finance income | 4 | 81,402 |
| 61,655 |
|
|
|
|
|
Finance expense | 4 | (39,501) |
| (44,692) |
|
|
|
|
|
Net finance income |
| 41,901 |
| 16,963 |
|
|
|
|
|
Administrative expenses |
| (1,698) |
| (1,637) |
|
|
|
|
|
Foreign exchange gains/losses |
| 165 |
| 31 |
|
|
|
|
|
Profit on ordinary activities before income tax |
| 40,368 |
| 15,357 |
|
|
|
|
|
Income tax charge/(credit) | 5 | (3,146) |
| 773 |
|
|
|
|
|
Profit and total comprehensive income for the year attributable to equity holders |
| 37,222 |
| 16,130 |
|
|
|
|
|
|
|
|
|
|
There are no items of other comprehensive income in the years presented. Therefore, no separate statement of other comprehensive income has been prepared.
Balance sheet (unaudited)
at 30 June 2016
|
| 30 June |
| 31 December |
| Notes | 2016 |
| 2015 |
|
| £'000 |
| £'000 |
ASSETS |
|
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
Trade and other receivables |
| 3,058 |
| 6,580 |
Deferred tax assets |
| - |
| 3,146 |
|
| 3,058 |
|
9,726 |
|
|
|
|
|
Current assets |
|
|
|
|
Trade and other receivables |
| 4,622,776 |
| 4,479,824 |
Cash and cash equivalents |
| 72,129 |
| 1,845 |
|
| 4,694,905 |
|
4,481,669 |
|
|
|
|
|
Total assets |
| 4,697,963 |
| 4,491,395 |
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables | 6 | (4,074,940) |
| (3,681,431) |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Trade and other payables | 6 | (98,969) |
| (323,132) |
|
|
|
|
|
Total liabilities |
| (4,173,909) |
| (4,004,563) |
Net assets |
| 524,054 |
|
486,832 |
|
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
Issued share capital |
| 20,350 |
| 20,350 |
Retained earnings |
| 503,704 |
| 466,482 |
Equity shareholders' equity |
| 524,054 |
|
486,832 |
Statement of changes in equity (unaudited)
for the half year ended 30 June 2016
| Issued share capital |
| Retained earnings |
| Total shareholders' equity |
| £'000 |
| £'000 |
| £'000 |
|
|
|
|
|
|
At 1 January 2015 | 20,350 |
| 308,709 |
| 329,059 |
|
|
|
|
|
|
Profit for the period | - |
| 16,130 |
| 16,130 |
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2015 | 20,350 |
| 324,839 |
| 345,189 |
|
|
|
|
|
|
At 1 January 2016 | 20,350 |
| 466,482 |
| 486,832 |
|
|
|
|
|
|
Profit for the period | - |
| 37,222 |
| 37,222 |
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2016 | 20,350 |
| 503,704 |
| 524,054 |
Notes to the financial statements (unaudited)
for the half year ended 30 June 2016
1. | Corporate information
|
| Ladbrokes Group Finance plc (the 'Company') is a limited liability company incorporated and domiciled in the United Kingdom whose debt is publicly traded.
The interim financial statements of the Company for the half year ended 30 June 2016 were authorised for issue in accordance with a resolution of the directors on 19 August 2016.
The principal activities of the Company are described in the business and financial review.
|
2. | Basis of preparation
|
| The annual report and financial statements of the Company for the year ended 31 December 2015 were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and Companies Act 2006.
The interim condensed financial statements for the half year ended 30 June 2016 have been prepared in accordance with Financial Reporting Standard 104: Interim Financial Reporting, issued by the Financial Reporting Council. The interim condensed financial statements do not include all of the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company's annual financial statements at 31 December 2015.
The interim financial statements for the six months ended 30 June 2015 were consolidated financial statements because the Company was the parent undertaking of a group. At 31 December 2015 the Company was no longer the parent undertaking of a group following the disposal of its subsidiary undertakings during the year. As a result, the financial statements presented for the year ended 31 December 2015 and the interim financial statements for the six months ended 30 June 2016 are the individual company financial statements. The comparative figures disclosed for the six months ended 30 June 2016 are also those of the individual company.
The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Company's annual report and financial statements for the year ended 31 December 2015.
These condensed interim financial statements have not been subject to a full audit or audit review and do not constitute statutory financial statements as defined in section 434 of the Companies Act 2006. The annual report and financial statements for the year ended 31 December 2015 were approved by the directors of the Company on 22 June 2016 and have been filed with the Registrar of Companies. The report of the auditors on those financial statements was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.
|
| Going concern
|
| After making enquiries, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. The Company therefore continues to adopt the going concern basis in preparing these interim financial statements. |
|
|
| 3. | Segmental analysis
| ||||||
|
| The Company's principal activity of borrowing for Ladbrokes plc and its subsidiaries represents a single operating segment in the United Kingdom and therefore no additional segmental information is required.
| ||||||
| 4. | Finance income and expense | ||||||
|
|
| ||||||
|
|
| Half year ended30 June 2016 |
| Half year ended30 June 2015 |
| ||
|
|
| £'000 |
| £'000 |
| ||
|
|
|
|
|
|
| ||
| Bank interest receivable |
| 73 |
| - |
| ||
| Interest receivable from parent company |
| 17,191 |
| 40,921 |
| ||
| Interest receivable from fellow subsidiary companies |
| 64,138 |
| 20,734 |
| ||
| Total interest income for financial assets measured at amortised cost(1) |
| 81,402 |
| 61,655 |
| ||
|
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
| Total finance income |
| 81,402 |
| 61,655 |
| ||
|
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
| Bank loans and overdrafts |
| (17) |
| (1,111) |
| ||
| Bonds at amortised cost |
| (11,510) |
| (11,449) |
| ||
| Interest payable to fellow subsidiary companies |
| (27,974) |
| (32,132) |
| ||
| Total interest expense for financial liabilities measured at amortised cost(1) |
| (39,501) |
| (44,692) |
| ||
|
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
| Total finance expense |
| (39,501) |
| (44,692) |
| ||
|
|
|
|
|
|
| ||
| Net finance income |
| 41,901 |
| 16,963 |
| ||
|
|
|
|
|
|
| ||
| (1) Calculated using the effective interest method
|
|
|
|
|
| ||
|
|
| ||||||
| 5. | Taxation | ||||||
| The total tax charge for the half year ended 30 June 2016 was £3,146,000 (30 June 2015: credit of £773,000). In 2015 it was announced that the standard rate of UK corporation tax will be reduced from 20% to 19% from 1 April 2017, with a further reduction to 18% from 1 April 2020. However, the Chancellor, in his Budget on 16 March 2016, announced that the main rate of corporation tax will be cut further to 17% from 1 April 2020. There is no deferred tax asset at 30 June 2016 as all losses have been utilised (31 December 2015: asset £3,146,000).
|
|
|
6. | Unsecured loans and bank overdrafts | |||||||
|
| |||||||
|
|
| 30 June |
| 31 December |
| ||
|
|
| 2016 |
| 2015 |
| ||
|
|
| £'000 |
| £'000 |
| ||
| Current |
|
|
|
|
| ||
| Unsecured: |
|
|
|
|
| ||
| Bank overdrafts |
| 298 |
| - |
| ||
| 7.625% bonds due 2017 |
| 224,592 |
| - |
| ||
| Amounts due to group companies |
| 3,841,875 |
| 3,673,049 |
| ||
|
|
|
|
|
|
| ||
| Total current interest-bearing loans and borrowings |
| 4,066,765 |
| 3,673,049 |
| ||
|
|
|
|
|
|
| ||
| Non-current |
|
|
|
|
| ||
| Unsecured: |
|
|
|
|
| ||
| 7.625% bonds due 2017 |
| - |
| 224,239 |
| ||
| 5.125% bonds due 2022 |
| 98,969 |
| 98,893 |
| ||
|
|
|
|
|
|
| ||
| Total non-current interest-bearing loans and borrowings |
| 98,969 |
| 323,132 |
| ||
|
|
|
|
|
|
| ||
| Total interest-bearing loans and borrowings |
| 4,165,734 |
| 3,996,181 |
| ||
|
|
| ||||||
| The Company has undrawn committed bank facilities of £346,800,000 at 30 June 2016 and 31 December 2015. |
| ||||||
|
|
| ||||||
| 7. | Financial instruments and fair value disclosures |
| |||||
|
|
|
| |||||
|
| There are no financial assets or liabilities that are measured at fair value at 30 June 2016. |
| |||||
|
|
|
| |||||
|
| Assets and liabilities designated as at fair value through profit or loss and as available-for-sale are carried at fair value. The fair value of cash and short term deposits approximates to book value due to its short-term maturity. The fair value of the £225 million 7.625% bond at 30 June 2016 was £231.9m million (31 December 2015: £239.7 million) and is classified as a level 1 fair value measurement for disclosure purposes, as the fair value is determined based on quoted prices in active markets for identical liabilities. The fair value of the £100 million 5.125% bond at 30 June 2016 was £101.7 million (31 December 2015: £98.3 million) and is classified as a level 1 fair value measurement for disclosure purposes, as the fair value is determined based on quoted prices in active markets for identical liabilities. The amortised cost of interest-bearing loans and borrowings, with the exception of the £225 million 7.625% bond and the £100 million 5.125% bond, and the carrying value of all other assets and liabilities, approximates to fair value.
Derivatives |
| |||||
| The Company classifies all derivatives as level 2 financial instruments, as their fair value is determined based on techniques for which all significant inputs are observable, either directly or indirectly.
|
| ||||||
| 8. | Contingent liabilities | ||||||
| Under the terms of cross guarantee agreements, the Company has jointly and severally guaranteed the liabilities of certain other Ladbrokes plc group companies in respect of their current accounts held with UK clearing banks. The amounts under the guarantees are limited to any credit balances on current accounts held by the Company with these banks. At 30 June 2016, the aggregate amount of such credit balances was £nil (31 December 2015: £7,000).
The Company has jointly and severally guaranteed the value added tax liability of Ladbrokes plc companies within the group registration which amounted to nil at 30 June 2016 (31 December 2015: £174,000) |
9. | Post balance sheet events |
On 26 July 2016 the CMA (Competition & Markets Authority) issued its final findings report on the proposed merger between the company's ultimate parent entity, Ladbrokes plc, and Gala Coral Group Limited, with completion subject to adherence to a set of conditions, primarily the sale of 250-400 shops.
The company has in place facilities of £1,350,000,000 which are contingent upon the completion of the proposed merger with the Coral Group. The facilities comprise three tranches, one term loan with a maturity, subject to extension options, of July 2018 and two revolving credit facilities with maturities of June 2019 and October 2020 respectively. On completion of the merger, the existing bilateral revolving credit facilities of £350,000,000 will be cancelled.
The Facilities Agreement was amended in June 2016 to allow for borrowings under the £600,000,000 term loan tranche to be extended, at the option of the borrower, for an additional period of six months to July 2018.