Rank Group details 55% growth in H1 amid impending UK gaming reforms

Rank-Group

Rank Group has revealed a 55% rise in operating profit to £32.9m during H1 for FY 2024/25 in its interim financial report. The gaming entity saw improvement throughout its retail venues and digital-only services – with like-for-like net gaming revenue (NGR) across all ventures up 13% to £401.8m over the previous year. Statutory operating profit also climbed to £40.2m, an increase of 148% against H1 2023/24.

Land-based venues attained £281.6m in NGR as Mecca and Grosvenor land-based bingo halls and casinos were earmarked as particularly reliable sources of income. Grosvenor exceeded internal projections as it attracted £7.3m NGR weekly, and that figure is expected to hit £8m during the medium term.

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The report also indicates tangible benefits for Mecca venues stemming from signage schemes and continued investment in gaming machines, as that branch of Rank Group’s estate enjoyed 6% NGR growth. 

Enracha, another retail leg overseen by Rank, onboarded 7% more customers and gained 7% NGR on the previous year. 

Digital revenue rose 14% following successful launches of in-house services for Grosvenor and Mecca. Rank anticipates that like-for-like NGR for the digital side of the business will improve by 8-12% CAGR (compound annual growth rate) and see increased operating margin despite upcoming regulatory reforms that may negatively impact the company. 

On costs – the group’s capital expenditure for H1 stood 41% higher than that seen during the last fiscal year. In turn, Rank reported an 82% drop in net free cash flow – with that figure now sitting at £4.3m.

A £20.1m increase in profit after tax outlines Rank’s ongoing productive monetary trajectory. Compared to H1 2023/24, the organisation improved its profit after tax by 228%. For context, the group’s tax rate for H1 2024/25 was 19.8%, while H2 for the same year is expected to land between 19% and 21%. 

Rank noted that net debt was at £111.8m as of 31 December 2024. The group’s debt has decreased by 23% year-on-year. The debt comprises: £30m of term loan, £14m of drawn revolving credit facilities and £136.0m in finance leases; offset by cash at bank of £68.2m. 

Moreover, Rank reiterated a communication from 9 January that it had extended £100m of its £120m revolving credit facility for an additional 12 months – promising “appropriate financing” throughout the next three years. 

Crucially for investors, Rank delivered its first post-pandemic dividend payout – at £0.65 dividends per share. 

Rank chief executive, John O’Reilly, gave his thoughts on the company’s performance: “We are pleased to deliver another good set of results as we continue to take advantage of the growth opportunities available to us and maintain a strong momentum across all of our businesses.”

O’Reilly also touched on potential concerns regarding government-imposed gambling reforms set to go live in H2 2025: 

“The second half will see inflationary employment cost headwinds and the negative financial impact of some of the measures in the Gambling Act, but we are confident that our ability to both grow revenues and secure further cost efficiencies will help us to sustain our positive profit trajectory. We are readying ourselves to take full advantage of the benefits of the land-based legislative reforms which we expect to see implemented from summer 2025.”

Specifically, Rank will face new maximum bet limits for online slots and a fresh statutory levy placed on all UK gaming operators. It is estimated that the cumulative annual gross impact resulting from both domestic changes will sit in the region of £12.5m. 

In addition, the firm’s employee engagement score jumped two points to 8.1, evidencing the group’s continued and successful investment towards its colleagues.