Last year's Point of Consumption (PoC) tax - a new 15 per cent duty on online revenues earned from UK-based customers - changed the game for London's gambling companies. Rank's (RNK) finance director Clive Jennings says the group already owes £800,000 since the tax's introduction in December 2014, which equates to £11m on all digital profits by the financial year-end.
But chief executive Henry Birch is optimistic about the group's online future. Alongside its interim figures, the company announced a deal with Bede Gaming to develop a new digital platform. The new platform allows Rank to develop a more personal site for its users, with more control over which games and brands are featured. Mr Birch said migration to the new platform will take time, but the plan is to get the Grovesnor casino brand up and running before the end of 2015.
Despite the regulatory headwinds, Rank is doing well online. Digital revenues grew 16 per cent in the first half, and digital operating profits were up by an impressive 75 per cent. And if you discount last year’s £34m tax provision, it's clear that group pre-tax profits have recovered. On an adjusted basis, pre-tax profits rose 29 per cent to £35.8m.
Analysts at Peel Hunt expect pre-tax profit of £71m this year, giving EPS of 14p. This is up from £62.5m and 12.4p, respectively, in 2014.
| RANK GROUP (RNK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 183p | MARKET VALUE: | £717m | |
| TOUCH: | 166-168p | 12-MONTH HIGH: | 179p | LOW: 128p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 70p* | NET DEBT: | 35% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 337 | -6.2 | 0.3 | 1.4 |
| 2014 | 343 | 36.3 | 11.3 | 1.6 |
| % change | +2 | - | - | +19 |
Ex-div: 12 Feb Payment: 20 Mar *Includes intangible assets of £391m, or 100p a share | ||||
