annual report and financial statements 2009
the rank group plc
a new
perspective
on gaming
inside
– the customer experience a 360
o
perspective
– mecca full house so much more
– g casino one amazing venue directors’ report
overview
1 group highlights
2 group overview
4 chairman’s statement
directors’ report
business review
6 chief executive’s review
7 market review
8 strategy
14 risk management
16 bingo
22 casinos
28 interactive
30 operating responsibly
35 finance review
38 tax fact file
directors’ report
governance
40 board of directors
42 corporate governance
46 accountability and audit
48 remuneration report
55 other statutory information
statutory reports and
ﬁnancial statements
58 independent auditors’ report
59 group income statement
59 groupstatementof
comprehensiveincome
60 balance sheets
61 statement of changes in equity
62 cash ﬂow statements
63 notes to the ﬁnancial statements
other information
106 five year review
107 shareholder information
108 glossary
our aim is to create
fun and enjoyment
for our customers
through gamingbased
leisure experiences
our approach is
underpinned by our
business principles
• fairness
• responsibility
• and sustainability
a
b
c
d
contents the rank group plc annual report and financial statements 2009 1
how we have performed
directors’ report group highlights
–operatinghighlights–
– resilient performance
in challenging
market conditions
– significant growth in adjusted
earnings per share
– stepup in capital investment
to support growth strategy
– further reduction in group
net debt
– dividend payments resumed
£580m
operating profit
2008 £603m
09 08 07
580
683
603
operating proﬁt £m
£5205m
statutory
revenue
2008 £5054m
09 08 07
5205
5110
5054
statutory revenue £m
£485m
adjusted profit
before tax
2008 £405m
09 08 07
485
462
405
adjusted proﬁt before tax £m
£1868m
net debt
2008 £2265m
09 08 07
1868
3169
2265
net debt £m
 before adjustment for free bets promotions and customer bonuses
 before exceptional items
£5400m
revenue
2008 £5222m
09 08 07
5400
5344
5222
revenue £m
89p
adjusted earnings
per share
2008 73p
09 08 07
89
74
73
adjusted earnings per share pence 2 the rank group plc annual report and financial statements 2009
our businesses
directors’ report group overview
–ouroperations–
rank is a leading european
gaming and betting
company headquartered in
great britain and listed on the
london stock exchange
mecca bingo
mecca bingo is a leading operator of
bingo clubs the business is headquartered
in maidenhead england and operates
clubs under the mecca bingo brand in
great britain
top rank españa
top rank españa operates 11 premium
bingo clubs in spain the business is
headquartered in barcelona and operates
clubs in the provinces of madrid catalonia
andalucia and galicia
grosvenor casinos
grosvenor casinos is a leading operator of
casinos the business is headquartered in
maidenhead england and operates casinos
in great britain under the grosvenor and
g casino brands it also operates two
casinos in belgium
rank interactive
rank interactive is a remote gaming and
betting business its principal brands are
meccabingocom bingo and games
bluesqcom sports betting casino poker
and games and gcasinocom casino
rank interactive is based in alderney
channel islands and its primary market
is great britain it provides betting and
gaming websites in english danish
french german spanish and swedish
revenue operatingprofit
 before adjustment for free bets promotions and customer bonuses
 before exceptional items
£2330m
2008£2276m
£323m
2008£379m
£362m
2008£358m
£309m
2008£259m
£56m
2008£69m
£2200m
2008£2062m
£508m
2008£526m
£75m
2008£76m the rank group plc annual report and financial statements 2009 3
–operatingmarkets–
the group operates businesses
in great britain spain and
belgium and provides business
services to gaming operators in
a number of additional markets
great britain
mecca bingo 103 clubs
grosvenor casinos 35 casinos
rank interactive
– bluesqcom
– meccabingocom
– grosvenorcasinoscom
– gcasinocom
– 888sportcom
employees 8170
spain
top rank españa 11 clubs
rank interactive
– bingouniversalcom
– apuestauniversalcom
– 888sportcom
employees 607
belgium
grosvenor casinos 2 casinos
employees 180
note
888sportcom is a sports betting website owned and
operated by 888 holdings plc in return for a share of
revenue rank interactive supplies a ‘white label’ online
sports betting service to customers of 888com through
888sportcom
mecca bingo
grosvenorg casinos 4 the rank group plc annual report and financial statements 2009
directors’ report chairman’s statement
– overview of 2009 –
rank has delivered strong growth
in earnings in 2009 as a
consequence the board has
recommended a resumption
of dividend payments
peter johnson
chairman
a change in culture allying broader retail
expertise to our strong understanding
of the gaming market and its
regulatory framework
since 2008 rank has appointed new
managing directors in its three largest
businesses each has an operational
background in either leisure retail or
online retail
in june 2009 mark v jones an
experienced operator of pubs and
restaurants joined us as managing
director of mecca bingo to lead the
transformation of that business
reflecting this cultural shift rank
has started to build a reputation for
innovation in the development
refinement and deployment of new
concepts and new customer experiences
in leisure based around gaming
in 2009 the group stepped up the
pace of expansion for its proven g casino
format by the end of the year the
g casino brand had grown from six to
ten casinos with each delivering levels of
customer visits and revenue significantly
higher than the average across the
remainder of the estate
the year also saw the launch of
the mecca ‘full house’ club concepts
the first mecca ‘full house destination’
opened in nottingham in may 2009
offering a new style of gamingbased
social entertainment aimed principally
at women the early performance of the
club has been encouraging and we have
a year of progress
o
ver the course of the year
rank delivered a total return
to shareholders of 226 as
the stock market responded
positively to the group’s
revenue growth the effectiveness of
its cost control measures and further
substantial reductions in net debt and
financial leverage
operating successfully
at the heart of rank’s strategy to achieve
longterm growth in earnings per share
is a focus on reaching out to a wider
customer base extending both the reach
and the relevance of our businesses
in order to achieve this the board
recognised that it needed to bring about
shareholder return
total shareholder return
three years
adjusted earnings per share
pence
dividend payments
three years
0
24
48
72
96
120
10 09 08 07
ftse 350 travel  leisure ftse 350 rank
09 08 07
74
73
89
09 08 07
20
nil
135
kpi kpi
shares in rank have underperformed the ftse 350 in
recent years as the effect of negative legislative changes
to the taxation and operation of landbased gaming
businesses in britain caused the market to reduce
forecast earnings for the group
between 2007 and 2009 rank grew adjusted earnings
per share by 203 as the group stabilised its operating
performance and achieved substantial reductions in
net debt
as part of management’s response to the difficult trading
conditions rank suspended payment of dividends in 2007
following a review of the group’s capital structure the
board has recommended the resumption of dividend
payments from may 2010 the rank group plc annual report and financial statements 2009 5
now developed two additional sites under
the format
at the same time the group achieved
much closer integration between its
online and landbased gaming brands
exploiting opportunities for revenue and
cost synergies
operating responsibly
the benefits of the group’s actions are
reflected not simply in its financial
performance but also in forwardlooking
measures which indicate the success
of our businesses in engaging
with both customers and
employees during the
year the group
achieved increases in
satisfaction and
engagement scores
from both customers
and employees
the ability of our
businesses to delight
and entertain their
customers in a safe and
social environment is
fundamental to our strategy
within this framework the
group recognises its responsibility
to minimise the incidence of any
negative issues particularly around
problem gambling
whilst we are continually seeking
improvement we are nevertheless proud
of our record with regard to
understanding managing and mitigating
problem gambling for example in
20089 of the 22691 incidences of
underage gambling in britain reported by
the gambling commission only seven
or 003 took place in our premises
we recognise too that we have a
responsibility to our shareholders to our
employees and to our customers to
engage fully with regulators and
governments to help shape a supportive
and responsible operating environment
for our businesses
we have recently set out a
new vision for the british
gaming industry based
around the principles of
fairness responsibility
and sustainability this
forms the basis for the
group’s future
engagement with the
gambling
commission the
government and the
wider political
establishment our peer
companies and other
interested parties
capital structure and
dividend policy
during 2009 the group carried out
a review of its capital structure and
dividend policy against a background
of operational improvements significant
growth in earnings per share and a
sustained reduction in net debt as a
result of this review rank intends to
adjust its capital structure to target a level
of around 25 times net debt to ebitda
over the medium term
in addition the board has determined
to recommend a resumption of dividend
payments beginning with a 135p per
share final dividend for 2009 the dividend
will be paid on 5 may 2010 to shareholders
on the register at 6 april 2010
we plan to adopt a progressive
dividend policy taking into
consideration the group’s capital
investment requirements and the stability
of the wider operating and economic
environment within this context the
board intends to set dividends such that
rank achieves a dividend cover of around
30 times over the medium term
outlook
while the board is pleased with
the progress achieved during 2009
opportunities and challenges lie ahead
the current year is forecast to be a period
of gradual if fragile economic recovery
in the uk rank’s key market see market
review page 7 whilst the outcome of the
forthcoming general election is likely to
influence the regulatory and tax landscape
for gaming and betting in britain
rank’s primary focus remains on
delivering service excellence to our
customers as a means of generating value
for our shareholders the board believes
that the quality of rank’s customer
propositions its standards of service and
insight and the indepth strength of its
management team give the group
a platform for sustainable growth
peter johnson
chairman
24february2010
“the ability of
our businesses to
delight and entertain
customers in a safe and
social environment
is fundamental to
our strategy”


Summary:
 – the gambling
market –
the global economic recession
impacted gaming and betting in
2009 this section assesses the
prospects for gaming in rank’s
main geographic markets
the rank group plc annual report and financial statements 2009 7
state of play
great britain
w
ith annual revenues in
excess of £11bn britain
is one of the largest
gaming and betting
markets in europe
nevertheless in 2009 the economic
recession caused a 25 contraction in
industrywide revenues according to
estimates from keynote research
within this picture certain sectors
are likely to have fared better than others
national lottery operator camelot
delivered steady revenue growth in the
year the prevalence of internetbased
gambling continued to increase and a
number of operators including rank
reported improvements in gaming
machine revenue however some
traditional landbased activities such
as overthecounter sports betting and
bingo played in bingo clubs appeared
to decline
regulatory changes
the major regulatory changes in 2009
focused on revisions to amusement
machine regulations britain’s bingo clubs
were perhaps the biggest beneﬁciaries
of the changes with a doubling of the
maximum allocation of category b3
machines and an increase in stakes
and prizes on category c machines
unrestricted in bingo clubs and
amusement arcades
separately there were a number
of changes to gaming taxation in the
budget see tax fact ﬁle page 38 which
negatively impacted bingo clubs and
certain casinos
economic outlook
at the end of 2009 britain emerged from
economic recession muted growth in
gross domestic product gdp during
the ﬁnal quarter of 2009 broke a trend
of six consecutive quarters of decline
top ten gambling
companies by uk revenue
revenue £m year ending
gala coral 1210 sept 2008
william hill 910 dec 2009
ladbrokes 777 dec 2009
camelot 604 mar 2009
rank group 486 dec 2009
bet365 289 mar 2009
tote 224 mar 2009
genting stanley 187 dec 2009
betfair 154 apr 2009
betfred 139 mar 2008
source company reportsrank estimates where uk
data unavailable
 company accounts for 2009 unavailable
the economic intelligence unit forecasts
that the economy will grow by 24 in
2010 and 26 in 2011 unemployment
is forecast to peak at 91 during
2011 and with the national debt at
record levels and interest rates forecast
to rise over time economists fear that
economic recovery is likely to be gradual
and fragile
spain
despite the effects of economic depression
the spanish gambling market remains one
of the largest in europe
in 2008 spanish gaming generated
revenues of €52bn according to
datamonitor this was expected to dip
in 2009 as the spanish economy declined
by 48 the national unemployment rate
more than doubled between 2007 and
2009 and at 182 is at present one of the
highest in europe
according to the most recently
available data from the comisión
nacional del juego cnj the overall
gambling market grew revenue slightly
during 2008 although casinos and bingo
clubs experienced declines
economic outlook
according to the economic intelligence
unit the economy will begin to grow
again in 2010 whilst unemployment is
forecast to peak at 198 during 2010
the route to economic recovery for spain
is forecast to be a long and gradual one
belgium
according to datamonitor the belgian
gambling market generated revenues of
€9587m in 2008 of this the country’s
nine casinos generated €1160m or 121
of the total whilst overall gambling
revenues were expected to dip in 2009 the
market is forecast to grow again from 2010
economic outlook
according to the economist intelligence
unit the belgian economy will return to
growth during 2010 whilst unemployment
is forecast to peak at 95 in the year
before gradually recovering in 2011
and 2012
12f 11f 10f 09e 08 07
british gambling market revenues
20072012 £bn
96
114
112
114
117
121
source keynote research
directors’ report market review a 8 the rank group plc annual report and financial statements 2009
strategic update
a directors’ report strategy
t
he group is focused on
generating positive returns
for shareholders based upon
sustainable growth in earnings
per share
we will do this by creating a
gamingbased leisure business with
leading standards of customer service
and entertainment
in this way the group aims to
beneﬁt from growth in consumer
demand in markets where regulatory
conditions often serve to restrict
competitor supply growth
1
to deepen our understanding
of customer preferences to
shape product innovation create
service differentiation and
build enduring relationships
2
to strengthen our position
in great britain whilst assessing
longerterm growth
opportunities overseas
3
to work positively with
governments regulators and other
relevant stakeholders to create an
environment which supports
both responsible operation
and commercial sustainability
underpinned by our
business principles of
fairness responsibility
and sustainability
strategic aims what happened in 2009
– major improvements to electronic
gaming product and service
– launch of after dark gaming
– table service food and drink
introduced in six mecca bingo clubs
– 24hour opening in 17 casinos
– play points extended to eight casinos
– no progress on customer rewards
programmes for mecca bingo and
rank interactive
– g casino brand reaches ten casinos
– acquisition of two new
casino licences
– successful launch of mecca
‘full house’ concepts
– greater integration between
landbased and online gaming
– increases in market share for
landbased businesses
– no further expansion into
overseas markets
– increase in amusement machine
entitlements for bingo clubs in
both britain and spain
– significant increases in taxation
for bingo and card room games
– crossparty commitments to reduce
rate of bingo duty