The Rank Group (LSE:RNK) reported underlying operating profit of £78.6m for the 12 months to 30 June, up 21% from £64.8m the prior year, as gaming machine performance and digital growth drove a fifth consecutive year of like-for-like revenue growth across the business.
Like-for-like net gaming revenue rose 6% to £834.1m, with underlying operating margin improving to 9.4% from 8.1%.
Separately disclosed items of £22.9m, including a £6.5m loss from the previously flagged payment fraud in Spain and a £5m provision for a proposed regulatory settlement with the Gambling Commission, pulled statutory operating profit down to £55.7m from £60.1m.
Net free cash flow came in at £25.5m, and net cash pre-IFRS 16 stood at £56.8m at year-end, with net debt of £147.2m on an IFRS 16 basis after the group refinanced a new four-year £120m revolving credit facility in June.
The board recommended a final dividend of 2.50p per share, taking the total for the year to 3.50p, up 35% on the prior year.
Grosvenor casino venues delivered average weekly revenue of £7.6m, up 5%, aided by a rollout of 850 gaming machines across 37 casinos, while digital like-for-like revenue grew 8% for the year and accelerated to 12% in the fourth quarter despite Remote Gaming Duty rising to 40% from 21% from 1 April.
"There is material growth runway ahead, most obviously for our Grosvenor casino venues where gaming machines optimisation is an area of sharp focus and significant opportunity," said Richard Harris, chief executive of The Rank Group.
Group revenue is up 8% for the first six weeks of the new financial year, with digital up 10% and Grosvenor gaming machine revenue up 15%, though Rank warned digital profitability "will inevitably step down" in 2025/26 due to the annualised RGD impact, reiterating its medium-term ambition of at least £100m underlying operating profit.
News Intelligence what this means for the company
Rank Group delivered 21% underlying profit growth to £78.6m on the back of five consecutive years of like-for-like revenue growth, with digital accelerating to 12% in Q4 despite a doubling of Remote Gaming Duty to 40%. The board raised its total dividend 35% and reiterated a medium-term target of at least £100m underlying operating profit, though it flagged that digital profitability will step down in 2025/26 as the full-year RGD impact materialises.
The profit beat and dividend hike signal confidence in the underlying business momentum, but the warning that digital profitability will decline next year due to the RGD tax rise tempers the growth narrative. Rank's ability to hit its £100m+ profit target will depend on whether venue-based gaming (particularly the 850 gaming machines rolled out across Grosvenor casinos) can offset the digital headwind.
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