Rank Group revenues rise 10% in H2 as transformation plan pays dividends
Double-digit jump reported in all key verticals as operating profits soar by 87%
Rank Group today reported a 10% year-on-year lift in net gaming revenue (NGR) for the second half of 2019, buoyed by a double-digit rise in its digital business.
Net revenue reached £377.5m during the period to the end of December 2019, with underlying operating profits leaping by 87% year-on-year to £59.8m. Revenues from Rank’s digital business were up by 14% annually to £65.2m.
Digital results were particularly strong in Rank’s Grosvenor business, where NGR rose by 21% year-on-year, and its Mecca business, which saw NGR increase by 13%.
Like-for-like revenue from the YoBingo business, which primarily focuses on the Spanish and Portuguese markets, dipped 2% year-on-year. However, the operator said it remains confident of the future prospects of the business.
The group’s venues business also rose by double digits, with H2 2019 revenues hitting £312.3m, marking a 10% increase.
The operator confirmed that cost-cutting in its casino operating model during H1 2019 is on track to deliver savings of £19m per annum.
CEO John O’Reilly said he was pleased with the group’s performance during the year, adding that it demonstrated the digital transformation programme was “delivering the right results”.
“The revenue growth in our digital business and across our Grosvenor and Enracha venues shows we are moving in the right direction in key areas of our business,” O’Reilly added.
Rank Group began a three-year digital transformation programme in 2018, pledging to become a £1bn international revenues business by 2023. The programme has seen the group refine its digital operating model as well as undertaking several cost cutting exercises, as detailed in EGR Intel’s January interview with O’Reilly.
Rank said full-year underlying profits are expected to be between £113m and £123m.
Analyst firm Peel Hunt said positive figures were the result of the group’s digital business finally living up to its promise, but claimed there was plenty of transformation “still in the tank” over the next two years.
“The operational changes and investments in the core business are clearly working, and we are optimistic that, with Stride, Rank’s Digital strategy may pay off more quickly and more materially than we are forecasting.
“Today’s interims reassure that the momentum is being maintained. We reiterate our Buy recommendation and 320p target price,” Peel Hunt added.