Rank Group (RNK) restructured the operating model of its Grosvenor casino division in December 2018, reducing labour hours and simplifying management structures. The difference was immediate, generating savings of £8.2m in the six months to June 2019 with a further £11.3m expected in the current year. Growth has been strong, too, with a 15 per cent increase in like-for-like net gaming revenue for the division in the six months to December 2019.
Cost control has remained an area of focus for management. The group has been stripping out inefficiencies in recent years, in a bid to generate annualised savings of £19m. The withdrawal of Grosvenor’s reward programme in the first half of 2019 led to savings of £6.1m in the period. Management said this, along with other cost-saving initiatives completed in prior periods, contributed to a 70 per cent increase in underlying operating profit. Now, the focus will begin to shift towards revenue growth opportunities.
One such opportunity is the acquisition of Stride Gaming, which completed in October last year. Management is planning to use the company to boost its digital capabilities, creating the second-largest player in the UK online bingo market and the sixth-largest in UK online gaming overall. Early indications are that the integration is going well, with £13m in synergies anticipated after the current financial year.
Broker Peel Hunt is forecasting adjusted EPS of 21.4p for the full year, up from 14.8p last year.
| RANK GROUP (RNK) | ||||
| ORD PRICE: | 284p | MARKET VALUE: | £ 1.11bn | |
| TOUCH: | 283-286p | 12-MONTH HIGH: | 291p | LOW: 144p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 104p* | NET DEBT**: | 15%** | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 348 | 22.8 | 4.80 | 2.15 |
| 2019 | 397 | 49.3 | 10.2 | 2.80 |
| % change | +14 | +116 | +113 | +30 |
| Ex-div: | 13 Feb | |||
| Payment: | 13 Mar | |||
| *Includes intangible assets of £533m, or 136p a share **Excludes £242m in lease liabilities | ||||
