After a challenging first half, Casino operator Rank (RNK) has reassured investors with a rather more pleasing second-half performance. A focus on improving value for customers, cost-cutting and a better-targeted capital expenditure programme helped push the second-half's operating profit - after stripping out exceptionals - up 21 per cent over the first half's outcome to £39.7m.
The group also benefited from a £107m revenue boost from newly acquired casinos, which helped revenue at Rank's Grosvenor Casinos to grow 30 per cent to £391m. Consequently, casino operating profit rose 20 per cent to £57m. In fact, over 70 per cent of the £44m of capital investment in the year went into the Grosvenor brand.
The government's decision to halve bingo duty to just 10 per cent will soothe investors, too. That said, finance director Clive Jennings says the group's digital profits will suffer an £11m blow when the new 15 per cent remote gaming duty is introduced in December. Rank has also appealed against its VAT case with HMRC after it was forced to repay £30m in May in order to settle outstanding payments dating back to 2002.
Broker Peel Hunt expects adjusted pre-tax profit of £72.7m for the 2015, giving adjusted EPS of 13.8p (from £62.5m and 12.4p in 2014).
RANK (RNK) | ||||
---|---|---|---|---|
ORD PRICE: | 170p | MARKET VALUE: | £664m | |
TOUCH: | 168-170p | 12-MONTH HIGH: | 179p | LOW: 125p |
DIVIDEND YIELD: | 2.6% | PE RATIO: | 38 | |
NET ASSET VALUE: | 62p* | NET DEBT: | 57% |
Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2010 | 568 | 73.5 | 13.7 | 2.4 |
to 30 Jun | (£m) | (£m) | (p) | (p) |
2011 | 557 | 181.0 | 35.0 | 2.66 |
2012 | 584 | 45.0 | 8.1 | 3.6 |
2013 | 625 | 42.7 | 7.4 | 4.1 |
2014 | 708 | 14.4 | 4.5 | 4.5 |
% change | +13 | -66 | -39 | +10 |
Ex-div: 10 Sep Payment: 22 Oct *Includes intangible assets of £390m, or 100p a share |