Rank, the bingo, casino and online gaming company controlled by Hong Kong investment firm Guoco Group, has reduced its dividend and seen a significant decline in revenue at its operations in Spain, but the casino business is coming up trumps.
The company's results for the six months to the end of December also show revenues at £295.9m, up 3.2% compared to the second six months of 2010.
Operating profit over the period rose to £34.6m, an increase over 2010 of 3.6%.
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The company is in the process of changing its fiscal year-end to June 30th to fall in line with majority shareholder Guoco, so it also published figures for the whole of 2011. Total revenues in 2011 were £589.9m, a 3.9% gain on 2010 while operating profit climbed to £64.1m, up 3.4%. Market consensus for 2011 revenue was £584.3m.
Adjusted profit before tax rose to £58.8m from £55.2m in 2010. The figure was below market expectations of £59.5bn.
Amongst the company's key metrics, the second half of the year saw the group entertain 2.756m customers, a rise of 4.6% over 2010m while customer visits rose 4.9% to 14.24m. This may be encouraging for Rank investors but observers will be less than impressed by the 1.6% drop in spend per visit seen between July and December.
Rank blames this on "a reduced win margin in Grosvenor's London casinos along with tough trading conditions in Top Rank Espaa".
Just how bad the situation in Spain is can be seen by the 19.9% decline in the division's second half revenues to £14.9m. The economic problems in the country are well known but Rank says the introduction of a ban on smoking in public places has also been a major factor.
The picture was a lot brighter at Grosvenor Casinos, where revenue rose 3.1% and operating profit improved 10.9% from the second half of 2010. Mecca Bingo also had a result, with operating profit up 8.0% despite only boosting revenue by 1.4%.
It was the online business, Rank Interactive, which showed the most eye-catching growth but unfortunately this is still a relatively minor part of the business. Rank Interactive's revenue in the second half of 2011 rose 24.8% to £37.8m while operating profit surged 14.3% to £6.4m.
The second interim dividend has been announced at 1.10p, down on the equivalent figure of 1.66p per share for 2010.
"We anticipate that the final dividend for the 18 month period [i.e. through to the new fiscal year-end] will be in line with our medium term aim of growing dividends faster than earnings as we target a level of 3.0 times dividend cover," the group said.
On January 30th Rank said it was in discussions to buy the casinos owned by rival Gala, with press reports indicating the bid might come in at around £250m. Rank had nothing new to add to last month's brief admission that it is in talks with Gala.
Net cash at the end of December was £25m. On January 13th 2012 Rank signed new five year loan facilities totalling £80.0m with its relationship banks which will mature in 2017. These replaced the £200.0m revolving credit facility which had been due to mature in April 2012.
Market reaction to the update has been positive, with the shares gaining 0.7% by 8:21am. Over the last 12 months the stock has gained 10%.
BS
