After Rank Group PLC (LSE:RNK) revealed that Spanish police were investigating a payment fraud that was likely to put a £6.2 million dent in its bottom line, house brokers Shore Capital and Peel Hunt revealed that the casino owner has put in place additional controls with immediate effect.
The fraud is "unwelcome but of modest impact", said analyst Ivor Jones at Peel Hunt.
"Rank is following the path of other companies hit by payment fraud and intends to tighten controls further. Happily, the group is in a financial position to absorb the cost and carry on with its plans."
Greg Johnson at Shore Cap said with the fraud likely to be treated as a separately disclosed item, there will be no effect on adjusted profit before tax.
However, he said it will of course hit expected cash levels, leading him to reduce his year-end net cash estimate by £6 million to roughly £44 million to reflect the payments from the fraud, "which at this stage we do not expect to be recovered," with the reduction equivalent to around 1.5p per share.
With Rank due to report interim results on 29 January, Johnson said he expects them to show "continued strong momentum and the first benefits from land-based casino reform, which we believe is transformational to the outlook for Rank".