Redcape has announced its full-year financial results, along with proposal it delists its dissatisfying shares from the ASX.
Today Redcape Hotel Group Management, as the responsible entity of the Redcape Hotel Group (ASX:RDC), announced financial results for year ending 30 June 2021. The news was highlighted by statutory net profit after tax (NPAT) up 153.6 per cent (to $28.5 million) and operating EDITDA up 29.6 per cent (to $74.1 million).
RDC shares display strong underlying earnings of 10.21 cents per, up 16.0 per cent on pre-COVID (FY19) results. Distribution for FY21 of 8.16 cents represents yield of 8.7 per cent, based on an annualised distribution yield calculated at $0.94 per share, which was the closing price yesterday.
The Group says lessons learned from the FY20 lockdown were “instrumental in delivering the strong result” and stemmed from stronger engagement with staff and customers. It has grown market share through its Publinc Communities program, now implemented across 34 of the 36 pubs.
In a somewhat unexpected move for the company, which listed on the ASX in November 2018, the latest results were accompanied with a delisting proposal.
It offers securityholders the options to retain their existing stake, exit at $1.15 per security, or increase their holding at the same rate, underwritten by Moelis Australia (MA Financial Group).
The buy-back will be through a capped $247 million fund, increasing and drawing from Redcape’s existing debt facilities.
Moelis, the largest securityholder, is supportive and intends to remain invested. Corporate entities and management structure would also remain, continuing to be managed by MA Hotel Management.
Securityholders will meet 10 September to vote on the Proposal, which is subject to conditions including securityholders passing a special resolution and approval by the ASX.
Since listing Redcape has consistently traded at a discount to Directors NAV, which stands at $1.31.
It has likely faced the backlash and disinterest of ethically-driven investors due to its high proportion of earnings through gaming.
Public exposure to gaming was the motivation for Woolworths (ASX:WOW) to spin off Endeavour, encompassing Australia’s largest holder of EGMs, ALH.
Since Endeavour listed, less than two months’ ago, WOW share price has climbed 9.7 per cent to close today at $41.50.
Investors flocked to the opportunity to buy RDC shares today, presuming a guaranteed buy-back of $1.15 in the near future.
The RDC share price rose from $0.94 yesterday to close today at $1.11, with nearly seven million securities changing hands, marking the second-highest day’s trading volume in the company’s history.