Rank Group posts strong profit growth on tech investment

The company’s digital segment saw particularly strong growth, with revenue from cross-channel customers up 16%. Key to this was the improvement of Rank’s proprietary technology platform, which underwent a number of enhancements during the year. In particular, Rank highlighted the introduction of a single content management system across all its digital brands in the UK and an improved app for the Grosvenor brand.

The company’s largest division, Grosvenor, saw gaming revenues rise 9% to £331.3m. Mecca increased its revenues by 8% to £136.6m, while Spanish land-based brand Enracha grew 7% to £38.5m. Meanwhile, the company’s digital business grew revenues by 12% to £226m, with particularly strong growth in the UK and Spain, up 11% and 16% respectively.

While separate figures for the fourth quarter were not released, Rank noted a “strong trading performance” in the final three months of the year. Like-for-like gaming revenues grew 14% year-on-year in the period, setting the stage for a strong start to the new financial year.

The company also saw a strong rise in operating profit, with operating profit at £46.5m, more than double the £20.1m reported last year and slightly ahead of analyst consensus. Rank is actively working to optimise costs and reports progress in managing costs. In December 2022, a cost-cutting programme was announced to restore operating profits across the Grosvenor division.

The company's total capital expenditure for 2023-24 was £46.7m, up slightly on the previous year's £44.1m. This investment was focused on both the development of the company's stores and the enhancement of its proprietary technology platform. Labour costs increased by 11% due to wage inflation and the reinstatement of employee bonuses.

In a sign of confidence in the future, Rank's board has recommended the reinstatement of the dividend, proposing 0.85p per share as an annual dividend, with an interim dividend planned for January 2025.

Rank Group CEO John O'Reilly said: "This has been a year of significant financial, operational and strategic progress for Rank. We continue to restore profitability after being hit hard by lockdowns and inflation in recent years.

"Trading performance continues to improve, driven by continued investment in our teams, products and facilities, as well as the continued development of our proprietary technology platform, which is driving growth in our digital business."

Rank has struggled during the pandemic, with its land-based venues in the UK and Spain closed for extended periods. The company made a loss of £82.4m in 2020-21, but recorded an operating profit of £40.4m in 2021-22.

The company saw revenue grow 5.9% in 2022-23, but increased depreciation and amortisation costs resulted in a net loss for the year.