The resolution of a prolonged takeover battle last year has left Rank free to focus on improving its underlying business, with investment in its bingo halls and casinos helping to pull in punters - but this strong operational performance doesn't make its shares attractive.
Even after stripping out the £128m exceptional gain from VAT refunds last year, underlying operating profits rose 3 per cent to £64.1m. Across its operating divisions, Grosvenor Casinos delivered the greatest sales growth in the mature estate, up 4.4 per cent to £249m. However, with better marketing after a relaxation on local advertising bans, profits rose by 12.8 per cent to £40.6m.
The Mecca Bingo halls benefited from a wide-ranging re-fit programme to install new games and services, with profit growth running double that of sales at 4.4 per cent to £31m. Rank interactive took advantage of increasing smart phone use to increase sales by 24.4 per cent to £71.8m, with profits 15.2 per cent higher at £9.1m. Management was cautious about the outlook for consumer spending this year, but chief executive Ian Burke noted an increase in bingo spend and a general shift towards younger players that could allow Rank to open more halls, alongside a mooted takeover of Gala Casinos.
Broker Investec forecasts normalised pre-tax profits of £62.4m and EPS of 11.4p in 2012 (from £56.7m and 10.3p last year).
RANK GROUP (RNK) | ||||
---|---|---|---|---|
ORD PRICE: | 138p | MARKET VALUE: | £539m | |
TOUCH: | 138-139p | 12-MONTH HIGH: | 163p | LOW: 109p |
DIVIDEND YIELD: | 1.5% | PE RATIO: | 4 | |
NET ASSET VALUE: | 56p* | NET CASH: | £25m |
Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2007 | 534 | 7.1 | 7.7 | 2.00 |
2008 | 522 | -26.1 | -1.3 | nil |
2009 | 540 | 52.0 | 9.9 | 1.35 |
2010 | 568 | 73.5 | 13.7 | 2.40 |
2011 | 590 | 194 | 39.4 | 2.10 |
% change | +4 | +164 | +188 | -13 |
Ex-div:15 Feb Payment:29 Mar *Includes intangible assets of £154m, or 39p a share |