Rank Group back in black as management makes pledge to restore pre-pandemic profitability and growth momentum
Rank Group has reported an 87.9% year-on-year rise in net revenue to £333.7m for the six months ending 31 December 2021.
The group’s land-based Grosvenor Casino brand brought in the most revenue at £161.6m, compared to just £43.1m in the prior corresponding period.
Online brands were the next biggest earner for Rank, generating £92.1m amid a 7.2% increase, while its Mecca Bingo venues generated £65.7m, up from £38.4m last year.
The operator’s Spain-based Enracha brand contributed the remaining £14.1m, up from just £8.5m in 2020.
After cost of sales of £198.4m, the operator declared gross profit of £135.3m, up 217.6%, but faced total other operating costs of £123.2m.
However, after accounting for other total other operating income of £90.9m, including a VAT refund of £77.1m, the business declared an operating profit of £103.0m, a major increase on the £52.9m operating loss in the final six months of 2020.
After other finance related costs, Rank showed a total profit before taxation of £102.1m and, after paying £20.6m in taxes, a total profit from continuing operations of £81.5m, up from a total loss from continuing operations of £49.6m in the prior year period.
The business earned a further £3.1m from discontinued operations, giving it a final net profit for the period of £84.6m, which was wholly attributable to equity holders of its parent company, compared to a net loss of £48.6m in 2020.
These figures gave Rank a total earnings per share figure of 18.1p, or 17.4p from continuing operations, compared to a total loss per share of 11.9p in the same period in 2020.
The operator currently holds total assets worth £947.8m, with total liabilities of £503.2m giving net assets of £444.6m.
It said the Covid-19 pandemic had continued to impact the group’s performance during the period, but both its Grosvenor and Enracha land-based businesses had performed strongly, which it said provides evidence that the end of the pandemic will see a strong recovery in revenue and profitability.
The Mecca Bingo business was more severely impacted by recent rises in the number of Covid cases in the UK, but Rank’s digital brands were able to return to growth during the period.
“While the trading environment continues to be challenging and cost headwinds are applying additional pressure on the hospitality sector, we have proven that with no restrictions, our trading rebounds quickly,” said Rank CEO John O’Reilly.
“Rank is well positioned to regain the robust revenue and profit growth momentum we had created before the pandemic struck. We have strengthened the balance sheet and, with the return to profitability and cash generation, we have been able to accelerate our transformation programme to drive faster revenue growth as restrictions are lifted.”
The operator said it expects underlying EBIT for the year ending 30 June 2022 to fall between £55m and £65m.
Shares in the business are trading up 6.2% today, at 158p per share at the time of writing.
London-based investment bank Peel Hunt reiterated its Buy rating and 240p target price. Analyst Ivor Jones said: “While the published results bear little relation to the potential of the business once it recovers, there were promising green shoots, in Grosvenor Venues and in the Digital business in particular.
“Covid-19 restrictions have weighed on current trading and energy cost inflation is having a meaningful impact on the cost base, but we believe that trading as restrictions are removed will be sufficiently strong to offset this,” he added.