Rank's 2009 results: growth at last, but online still weak

RANK has started to reverse its bad fortune, the UK gaming group’s full-year 2009 results reveal, with the company deciding to pay a dividend despite divisions including online arm Rank Interactive continuing to fare badly.

The company, which owns the Mecca Bingo, Grosvenor Casinos, Top Rank Espana and Rank Interactive brands, reported 2009 revenue of £540m, up 3.4% year-on-year (YoY) from the £522.2m the company recorded in 2008.

Its earnings before interest and tax (EBIT) was £58m, down 4% YoY but marginally ahead of market expectations.

The Grosvenor Casinos arm takes the credit for the improvement, as the only division to record a boost in operating profit, which rose 19% YoY from £25.9m to £30.9m.

All other groups saw a fall in profits, with online arm Rank Interactive, which until last year reported under the company’s Blue Square sports betting brand, the only division not to at least show improve revenues. The online operation dipped 3% to £50.8m from £52.6 in 2008.

Highlights for Rank Interactive in 2009 included an April relaunch of MeccaBingo.com, and the September launch of Gcasino.com to support a push on the company’s land-based G Casinos, which combine bingo with food and drink and poker in higher-profile venues, and have grown in number to 10 from their launch in 2006.

The company also launched an advertising campaign for MeccaBingo.com in October and November that saw revenue growth for the site, while online casino revenue returned to growth in the final quarter of the year after seven consecutive quarters of year-on-year decline.

Rank Interactive’s fall in operating profit from £7.6m to £7.5m (1%) was mild compared to that of other non-profitable groups, with operating profit at its core Mecca Bingo arm falling to £32.3m from £37.9m (15%), and at Top Rank Espana from £6.9m to £5.6m (19%).

However the company won plaudits from analysts for its relative return to form overall.

Nick Batram of KBC Peel Hunt said Rank has achieved a “good set of figures against a tough backdrop” and “shows a business that is now very much moving on to the front foot, driven by a strong casino offering and a bingo operation that has stabilised”.

James Hollins of Daniel Stewart said the brokerage has a “bearish stance” toward the company which had “a strong start to the year in online and casinos”.

Rank described current trading as ‘strong’, with like-for-like revenue growth of 5%, driven particularly by online bingo and casino (9%) and higher attendance levels and a strong margin, at Grosvenor Casinos (14%).

A statement read: “The current year is forecast to be a period of gradual, if fragile, economic recovery in Britain, Rank’s key market; whilst the outcome of the forthcoming general election is likely to influence the regulator and tax landscape for gaming and betting in Britain.