Rank's digital growth softens full-year profit slump
Rank Group has confirmed flat sales and a 22% year-on-year fall in operating profit in its annual figures, despite digital growth driving an improved performance in the six months until 30 June.
Rank’s operating profit slumped to £39.0m (€42.4m/$47.0m) from £50.1m in the year through to the end of June, with like-for-like revenue slipping from £731.3m to £729.5m and statutory turnover edging up from £691.0m to £695.1m.
However, as the company presses on with its strategy to build a more extensive digital offering to offset a slowdown in traffic at its bingo and casino venues, digital like-for-like net gaming revenue increased year-on-year by 11% from £95.3m to £105.5m.
Total digital net gaming revenue including YoBingo, which was acquired in May 2018, improved by 23% year-on-year.
Next year’s digital net gaming figures are set to receive a further boost with the pending acquisition of online casino and bingo operator Stride Gaming. After Stride shareholders voted overwhelmingly in favour of a proposed £115.3m takeover last month, Rank confirmed today (August 22) that it expects the deal to close in the final three months of 2019.
Rank also pointed to an operating profit of £42.2m in the second half of the year, with the company’s transformation programme, which was launched in December 2018, “driving improved group performance and new ways of working”.
Rank made £10.7m of savings over the 12-month period after adopting a new operating model for its Grosvenor Casinos brand. Further savings of £11.3m from the new model are anticipated in the 2019-20 financial year, not taking into account wage increases.
The annual figures also included £28.6m of exceptional costs, includes an £8.0m provision for technical non-compliance with UK national minimum wage regulations.
“We are pleased with the group's second half performance and the full-year results, especially given the challenges we faced in the first half of the year,” chief executive John O'Reilly (pictured) said.
“The transformation programme is pivotal to our growth strategy both in the UK and internationally.
“We are excited by the important initiatives that are being implemented across each of our businesses. We have made a good start to the transformation of Rank and there remains a lot of improvement to be delivered.
“The acquisition of Stride, which we expect to complete in 2019-20, will help step change our digital business, deliver strong synergies, bring proprietary technology in house and create one of the UK's leading online gaming businesses.”
Rank also confirmed non-executive director Alex Thursby as the company’s new chair. Thursby will succeed Ian Burke who announced in May that he would not be standing for a new term in the role at Rank’s annual general meeting on October 17.
Thursby joined the Rank board in August 2017 and has chaired the audit committee since October 2017. The search for a new audit committee chair has commenced.
Senior independent director Chris Bell said: “We carried out a formal and rigorous appointment process and it was clear that Alex was the best candidate to become Rank's chair. Alex has a wealth of experience in compliance and risk governance in regulated sectors and, having been on the board since August 2017, has a solid understanding of Rank.”