To an extent, regulation and its consequences overshadowed these half-year results from casino operator
Operationally, the figures revealed a mixed performance. For example, a high win margin at London-based Grosvenor Casinos meant revenues there grew 13 per cent to £144.5m, with corresponding operating profits up a third to £25.4m. However, that was offset by much slower growth at Mecca Bingo, where higher costs meant profits tumbled 15 per cent to £22.5m. Overall customers visits in the period were slightly ahead at 14.37m, with average spend per visit up 4.6 per cent to £21.71. What's worrying investors, though, is the start to the second half after Rank blamed heavy snow for fewer customer visits. Management now expects a combination of disruption and high-fixed costs at its venues to result in a £3m revenue hit this year.
Peel Hunt downgraded its end-June 2013 forecasts by 4 per cent and now expects pre-tax profit of £61.7m, with EPS of 11.5p (from £61.5m and 11.5p in 2012).
|ORD PRICE:||152p||MARKET VALUE:||£594m|
|TOUCH:||152-153p||12-MONTH HIGH:||159p||LOW: 110p|
|DIVIDEND YIELD:||2.5%||PE RATIO:||25|
|NET ASSET VALUE:||60p*||NET CASH:||£62.6m|
|Half-year to 31 Dec||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Ex-div: 20 Feb
Payment: 22 Mar
*Includes intangible assets of £215m, or 55p a share
Rank's shares have risen over 30 per cent since the end of July and now trade on a not overly cheap 13 times forecast earnings. Add the group's mixed trading performance to a backdrop of competition issues, and catalysts for further upside are hard to spot. Hold.
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