Casino-operator Rank (RNK) will have to deliver a better performance by its financial year-end in June if it is to rectify sliding profits in the first half. Several factors, including the July heat wave, contributed to a 14 per cent decline in underling operating profit to £32.7m. Revenues jumped 16 per cent to £337m, but only thanks to the £179m acquisition of 19 Grosvenor casinos last March - a deal that turned the company's cash pile into net debts of £135m.
The group is now turning its attention to upcoming changes in the tax and regulatory environment: in December, a new 15 per cent duty for online gambling outfits could generate a further £10m in costs for Rank. But chief executive Ian Burke says the legislation is not unjustified, and that a bigger concern is the significant disparity of taxes for different gambling services. Next month, Rank is due to make a £31m repayment to the tax authorities over machine-game duty relating to the period 2002-2005.
Last year’s free-float concerns have largely been put to rest. Although negotiations are ongoing with the UK Listing Authority regarding the volume of Rank shares in public hands, a special dividend declared last September went a long way towards correcting the problem.
Broker Peel Hunt expects adjusted pre-tax profits of £63.1m for 2014, giving adjusted EPS of 11.9p (from £64.6m and 12.3p in 2013).
| RANK GROUP (RNK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 135p | MARKET VALUE: | £ 527m | |
| TOUCH: | 134-136p | 12-MONTH HIGH: | 178p | LOW: 125p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 61 | |
| NET ASSET VALUE: | 59p* | NET DEBT: | 59% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 291 | 28.2 | 4.8 | 1.25 |
| 2013 | 337 | -6.2 | -0.4 | 1.35 |
| % change | +16 | - | - | +8 |
Ex-div: 19 Feb Payment: 21 Mar *Includes intangible assets of £398m or 102p a share | ||||
