Rank Group (RNK) H2 2000 earnings summary

Executive summary

• Continuing-business revenue was £645.4m vs £682.7m; operating profit rose to £96.0m from £86.8m, up 11%.

• Profit before tax increased to £82.8m from £42.1m; EPS rose to 9.2p from 2.5p.

• Management highlighted strong Gaming, improvement at Hard Rock, resilient Deluxe, robust cash flow and a 5% interim dividend increase.

Financial highlights

• Continuing-business turnover was £645.4m vs £682.7m; adjusted for listed comparability items and currency, turnover was £616m vs £623m, an underlying decline of 1%.

• Continuing-business operating profit was £96.0m vs £86.8m; Gaming £45.6m vs £39.5m, Hard Rock £24.0m vs £21.9m, and Deluxe £22.7m vs £23.5m.

• Profit before tax was £82.8m vs £42.1m; EPS was 9.2p vs 2.5p.

• Exceptional items totaled £6.5m, including a £14.4m Arkansas sale-and-leaseback gain, £6.9m Deluxe Video Europe restructuring charge and £1.0m charge from other disposals.

Outlook and guidance

• FY capital expenditure estimate was £110m–£125m: Gaming £45m–£50m, Hard Rock £30m–£35m and Deluxe £35m–£40m.

• Second-half interest expense was expected to decline following interest-rate swaps and refinancing of £65m fixed debt.

• Gaming growth and development were priorities; Grosvenor Internet Gaming was expected later in 2001, while Hard Rock development included hotels and casinos.

• Management viewed Gambling Review recommendations as a growth opportunity, with investment requirements considered containable; timing of new legislation remained uncertain.