Rank Group (RNK) H2 2016 earnings summary

Executive summary

• LFL revenue grew across all brands and channels; digital revenue rose 11%, EBITDA increased 2%, and adjusted EPS grew 5%.

• Retail businesses experienced a weaker Q4, while the full-year underlying operating performance was solid.

• Growth investments included a new digital platform, venue upgrades and technology; final dividend increased 18%.

Financial highlights

• FY 2015/16 gross revenue was £753.0m, up 2%; reported operating profit was £82.4m, down 2%.

• Operating profit before Remote Gaming Duty (RGD) was £94.0m, up 4%; EBITDA was £128.2m, up 2%.

• Adjusted EPS rose 5% to 15.4p; profit for the period was £74.7m versus £74.8m in FY 2014/15.

• Strong operating cash generation reduced net debt to £41.2m from £52.0m at 30 June 2015.

Outlook and guidance

• FY 2016/17 capital expenditure guidance: £60m–£70m; continued deleveraging expected despite higher planned investment.

• FY 2016/17 effective tax rate forecast: 20%–22%; cash tax rate on adjusted profit forecast: 17%–19%.

• Priorities include double-digit Mecca digital revenue growth, a new retail bingo concept, digital brand launches and a single account and wallet across digital and retail.

• Trading in the last seven weeks was in line with expectations.