Rank Group Plc Announces Preliminary Results with Sustained Growth and Dividend Resumption

Rank Group has reported a 9% increase in Like-for-Like Net Gaming Revenue (NGR), reaching £734.4 million. This growth spans all business areas, including both physical venues and digital operations. The Like-for-Like underlying operating profit has also performed exceptionally well, rising to £46.5 million, more than double the previous year's £20.1 million and slightly exceeding analysts' expectations.

The underlying operating profit for the second half of the year was £24.8 million, up 14% from £21.7 million in the first half of the year, demonstrating ongoing operational improvement. Strong trading in the fourth quarter, with a 14% year-on-year increase in NGR LFL, provides a positive momentum heading into the 2024/25 financial year.

Solid Financial Position and Dividends

Net cash pre-IFRS 16 at the end of the year stood at £20.9 million, a significant improvement from the previous year’s deficit of £5.9 million, indicating stronger cash flows as trading conditions improve. The group’s strong balance sheet is supported by debt facilities totaling £120 million, including a £30 million Term Loan due in October 2026 and a £90 million Revolving Credit Facility (RCF) expiring in January 2027. The total undrawn RCF as of June 30, 2024, was £78.5 million.

The Board has recommended a final dividend of 0.85 pence per share, marking the resumption of dividend payments to shareholders following a period of suspension. This decision reflects the Board’s confidence in the improving trading and financial position of the group. Additionally, an interim dividend for 2024/25 is expected to be declared alongside the half-year results in January 2025.

Strategic Investments and Development

During the year, Rank invested £46.7 million in enhancing its venues and developing proprietary technology. Key investments included the implementation of a single content management system serving all UK-facing brands, the launch of an in-house developed app for the Grosvenor brand, and the successful build of a central engagement platform that unifies the customer database across all UK-facing businesses. Total capital expenditure for 2024/25 is expected to be around £60 million.

The group has also made significant strides in its Environmental, Social, and Governance (ESG) program, with the net zero plan underway, key technology developments enhancing customer protections, and continued strong engagement with local communities.

Operational Highlights

Grosvenor: Like-for-Like NGR grew 9% year-on-year, with London up 10% and the rest of the UK up 8%. Customer visits increased by 9%, while spend per visit decreased by 1%. Active customers grew by 2%.

Mecca: Like-for-Like NGR increased by 8% compared to the previous year, with customer visits up 2% and spend per visit rising by 6%. 44% of the 187,000 new customers in the year were under 35 years old, reflecting Mecca’s continued broad appeal.

Enracha: Like-for-Like NGR grew 7%, with customer visits up 6% and spend per visit increasing by 1%.

Digital: Like-for-Like NGR in digital grew 12% year-on-year, nearing the top end of the annual growth opportunity outlined at the November Capital Markets Day. Growth was particularly strong in the Grosvenor and Mecca cross-channel brands, as well as the Yo brand in Spain.

The group successfully completed the sale of its stake in the Indian rummy brand, Passion Gaming, in June 2024, and is in advanced discussions regarding the sale of its non-proprietary digital business in the UK, with the transaction expected to complete in the coming months.

Outlook

Rank Group has started the new financial year with strong momentum, with Group NGR up 10% in the first six weeks of 2024/25 compared to the same period last year. With inflation easing, disposable incomes rising, ongoing investment in the customer proposition, and a strong pipeline of growth initiatives, the group is confident in its future prospects.

John O'Reilly, Chief Executive of Rank Group Plc, commented: “This has been a year of strong financial, operational, and strategic progress for Rank. We are continuing to rebuild profitability following the impact of lockdowns and significant inflationary pressures experienced in recent years. Trading continues to improve due to ongoing investment in our people, products, and facilities within our venue businesses, as well as the continued development of our proprietary technology which drives the growth of our digital business.”

“With important developments in our proprietary technology now in place, we are increasingly delivering a seamless and tailored cross-channel experience for our customers, leveraging our key area of competitive advantage. We are well-positioned to take advantage of the much-needed land-based reforms that will further modernize our casino and bingo propositions to better meet today’s customer expectations, and we look forward to the Government confirming the timetable for the required secondary legislation.”

“We have started the new financial year with the same momentum as we finished the previous one, with strong performance across all businesses. With inflation receding, disposable incomes improving, continued investment in the customer proposition, and a robust pipeline of growth initiatives, we are confident in the Group's future prospects.”

• Net Gaming Revenue (NGR) is revenue minus customer incentives.
• Underlying measures exclude the impact of amortization of acquired intangibles, profit or loss on disposal of businesses, acquisition and disposal costs, impairment charges, and other specific items.
• EBIT is operating profit before specific items.
• Underlying earnings per share is calculated by adjusting profit attributable to equity shareholders to exclude specific items.
• '2023/24' refers to the 12-month period ending June 30, 2024, and '2022/23' refers to the 12-month period ending June 30, 2023.
• Like-for-Like (LFL) measures are disclosed to show the impact of club openings, closures, acquired businesses, foreign exchange movements, and discontinued operations.
• The Group results reference 'underlying' results alongside statutory results for a clearer view of the business’s underlying performance.