Bingo and casinos operator Rank was the biggest faller on the FTSE 250 yesterday, dropping 15¼p to close at 109¾p after a downgrades by analysts. Financial Times. The Times. The Daily Telegraph
Rank warned on Friday that full-year operating profits would be ‘significantly lower’ because of the smoking ban and the removal of 950 terminals under the new Gaming Act.
Investec predicted further profit downgrades.
ABN Amro questioned whether Rank’s banking covenants would be breached, calculating that its net debt could be up to £340m, which would take total debt to a level five times pretax profit.
Several analysts commented that the dividend policy, under which the group committed to hold dividends at 6p for 2007, was unsustainable.
‘A cut looks inevitable, and for the sake of the group finances should be done this year,’ said Mark Reed of Landsbanki.
Dresdner warned that the group’s pretax earnings could drop 55%, having previously predicted the decline would be 33%.