|Chancellor Gordon Brown’s budget announcement that remote gambling will be hit with a 15 percent tax rate, have caused shares in leading Leisure and Gaming Group Rank to tumble by more than 7 percent.|
Shares in Rank fell over 16p to 208p, taking their dip over the past two sessions to 11 percent.
Prior to Gordon’s Brown’s announcement, Rank had confirmed that it would maintain this year's dividend payout, but financial experts have suspected that this may now prove difficult for the company.
“We are concerned that the 6p dividend of 2006 may not be held this year or in the following two years with thin cover on EPS of 6.7p to 7.9p,” said analyst Nigel Hicks from Investment Bank Cazenove.
Evolution analyst Nigel Parson added to a succession of broker downgrades, slashing his expected price for the stock to 195p from 270p and changing his recommendation to sell from add.
He said: “The changes to casino duty have wiped out all Rank's forecast casino growth and reduced its attractiveness as a buyout target.”
The increased casino taxes are expected to cut £8 million off Rank's annual profits and three of its casinos are likely to have to pay the top 50 percent rate for Gaming Duty. Companies in Rank's portfolio include Mecca Bingo, Top Rank Espana, Grosvenor Casinos, and Blue Square.