Despite having successfully completed the acquisition of Gala Casinos, casino operator Rank (RNK) revealed a fairly lacklustre full-year performance - adjusted operating profit fell 1 per cent in the year to £65.1m. But it's a technical breach of listing rules, reflecting the slide in the free float to below the required 25 per cent level, that's likely to be the focus of investor attention.
The problem is that share purchases by institutional investors has taken their holding above 5 per cent - which is therefore excluded from the free-float calculation. When that's added to the hefty 74.5 per cent stake held by Hong Leong subsidiary Guoco, that leaves a free float of just 18.45 per cent. To help tackle that, Guoco declared last month a special half-year dividend in specie of around 88.84m Rank shares - which will cut its stake to 68.8 per cent. But with Prudential now holding a near 7 per cent stake, Guoco's move still isn't enough. Talks have begun to find a compromise.
Operationally, meanwhile, management blamed this year's weather - both excessive cold and heat - for flat customer visits, of 26.9m. Accordingly, like-for-like revenue growth reached a mere 1 per cent. Moreover, investment in technology meant a 10 per cent rise in central costs to £22m.
Broker Investec Securities expects adjusted pre-tax profit of £70.9m for 2014, giving EPS of 13.6p (from 12.4p in 2012).
RANK (RNK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 158p | MARKET VALUE: | £617m | |
| TOUCH: | 157-158p | 12-MONTH HIGH: | 178p | LOW: 120p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 62p* | NET DEBT: | 43% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 540 | 52.0 | 9.90 | 1.35 |
| 2010 | 568 | 73.5 | 13.70 | 2.40 |
| to 30 Jun | (£m) | (£m) | (p) | (p) |
| 2011 | 557 | 181 | 35.0 | 2.66 |
| 2012 | 584 | 45.0 | 8.10 | 3.60 |
| 2013 | 625 | 42.7 | 7.40 | 4.10 |
| % change | +7 | -5 | -9 | +14 |
Ex-div: 11 Sep Payment: 23 Oct *Includes intangible assets of £393m, or 100p a share | ||||
