Rank Group (RNK) H2 2009 earnings summary

Executive summary

• Gross revenue rose to £540.0m from £522.2m; operating profit fell to £58.0m from £60.3m. Adjusted profit before tax increased to £48.5m from £40.5m.

• Net debt declined to £186.8m from £226.5m; a final dividend of 1.35p per share was recommended for 2009.

Financial highlights

• Adjusted EPS was 8.9p versus 7.3p; adjusted profit excludes discontinued operations, exceptional items and specified pension, bond and financial items.

• Profit for the period was £38.5m, versus a £4.9m loss; profit before tax was £52.0m versus a £26.1m loss.

• Operating cash inflow was £54.6m versus £67.6m; operating cash flow before capital expenditure was £87.3m versus £90.2m.

• Total operating costs rose 4.4% to £482.0m; like-for-like costs were held in line with 2008 excluding portfolio, FX and taxation changes.

Outlook and guidance

• Forecast 2010 capital investment of £40m–£45m, focused on G Casino expansion and the Mecca Bingo new-concept rollout.

• Target net debt of approximately 2.5x EBITDA over the medium term; current leverage was 2.2x EBITDA, with no change to banking covenants.

• Current trading began positively in 2010, with higher customer visits and a high London casino win margin.

• Planned initiatives include extending 24-hour casino opening, Play Points and cook-to-order food service during 2010.