Rank Group digital revenue rises 23% amid 15% full-year downturn

Rank Group has reported a 15% downturn in full-year underlying net gaming revenue (NGR) to £585m for 2020 as strong initial performance was curtailed by the coronavirus pandemic.

Underlying operating profit dropped 32%, from £75.7m last year to £51.1m for 2019-20, in a year of two halves for the London-based casino and bingo operator.

In the eight-month pre-Covid-19 period to 29 February, NGR climbed 11%. Operating profit rocketed 61%, with profit growth in all divisions except for Mecca (-4%), including a 121% uptick in venues.

Full-year digital division NGR rose 23% to £145.3m as customers switched to online with venues shut. There was strong performance from Rank’s legacy digital brands, but the acquired Stride business reduced pro forma digital growth to 11% as it underwent safer gambling upgrade costs.

Grosvenor digital revenue also softened during the period as omni-channel opportunities dried up with no retail portfolio available to cross-sell customers from.

Venues NGR dropped 22%, down from £566.6m last year to £439.8m. The operator’s flagship Grosvenor venues reopened from 15 August and are back up and running at 60% of last year’s footfall, although that figure drops to just 40% in London locations due to an ongoing lack of tourism.

Rank said it acted quickly to preserve cash during lockdown, aided by the transformation initiatives implemented in the prior year after John O’Reilly took charge as CEO. The operator has also secured waivers for its financial covenants test on 31 December 2020.

As of 30 June, net debt before IFRS 16 was £63.2m. Debt comprised £128.1m in bank loans, £6.2m in finance leases and £2.5m in overdrafts, offset by cash at bank and in hand of £73.6m.

Rank Group CEO John O’Reilly said: “With positive momentum from the transformation programme, Rank performed very strongly during the first part of the year and into the second half.

“Despite continued good growth in our digital brands, with our venues closed from mid-March, the impact of the Covid-19 pandemic on the group has been significant.

“However, with the huge commitment and dedication of our colleagues, very tight cost control across the business and the support we have received from government, we have carefully navigated the past few months and are now beginning to successfully emerge.

“We know the recovery will take time, but the underlying strength of our business provides us with confidence that we are well equipped to return to full strength,” he added.

Rank CEO John O’Reilly

Rank expects to be at cash breakeven or above in September 2020, before the impact of repaying deferred duty and rent, as cost reduction measures are applied across the business.

Preparation for further transformation is already underway, with three-year plans being developed for each business unit aimed at driving revenue growth and delivering cost efficiencies.

Peel Hunt analyst Ivor Jones said: “Rank is one of the legion of businesses impacted by Covid-19. However, as today’s results demonstrate, its transformation strategy was bearing fruit pre-Covid-19.

“This positions it well for the recovery, when it will compete for customers against a reduced number of surviving leisure venues.

“The group is on track to trade at cash breakeven and has a healthy cash/liquidity cushion.”