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(Sharecast News) - Gambling operator, the Rank Group reported full-year like-for-like underlying operating profit of £20.3m in its preliminary results on Thursday - in line with its revised guidance from April, but down significantly from the prior year's £42.5m.
The London-listed company said the second half showed a stronger performance than the first, boasting like-for-like operating profit of £16.1m, compared to £4.2m in the first six months of the year.
Venue like-for-like net gaming revenue experienced growth of 6% year-on-year, with that momentum reportedly carrying into the first quarter of the new period.
Digital sectors meanwhile flourished, with underlying net gaming revenue growth of 10% on the year.
Its like-for-like operating profit rose 7%, reaching £18.8m.
Despite those increases, however, underlying venue operating profit declined 27%, or £14.8m, from the prior year.
That was put down to hikes in costs, including a £15.9m increase in employment and a £5.4m increase in energy.
For the 2024 financial year, Rank said it was set to fix 70% of its energy costs, expecting total energy expenditure of around £20m, which would be lower than the £28.6m it paid in the 2023 period.
During the year, the firm concluded its refinancing with £100m in committed revolving credit facilities that would last until November 2024, and would then reduce to £75m through to February 2025.
Given the group's robust balance sheet, it said it was poised to continue its investments in both the digital and venues sectors.
That positioned them well, especially in light of upcoming reforms from the UK Government's review of gambling legislation that was targeting land-based bingo and casino venues.
On a statutory basis, Rank Group posted an operating loss of £109.8m, which included £118.9m in impairment charges owing to underperformance during the year, and £7.7m for the closure of 16 venues.
Looking ahead, Rank said like-for-like net gaming revenue for the group was already up 16% year-on-year in the new financial period.
It said that while Grosvenor venues had shown growth of 17% in net gaming revenue in the initial six weeks, Mecca venues had surged due to wet weather in July and early August, with a 17% increase in net gaming revenue.
Digital net gaming revenue also recorded an increase of 13% in the first six weeks of the 2024 financial year.
Despite inflation and the surge in interest rates, Rank Group said it was optimistic about witnessing a considerable increase in revenue and profitability for 2024.
Given the current challenging trading conditions, Rank's board had decided against proposing a full-year dividend.
However, it said it was aiming to resume dividend payments as soon as circumstances would allow.
"The return of customers to our Grosvenor and Mecca venues continues to pick up and our second half numbers give cause for optimism after a very challenging couple of years," said chief executive officer John O'Reilly.
"During that time, our UK venues have faced a surge in energy costs, high wage inflation, a tightening in the regulatory environment, the slow return of overseas visitors to London's casinos and the more general pressures on the consumer's discretionary expenditure.
"However, energy costs have stabilised, inflation appears to now be easing, customers continue to slowly return to both our Grosvenor and our Mecca venues and we now expect to deliver good levels of revenue and profit growth."
O'Reilly said Rank's digital business was performing strongly, adding that it had a strong pipeline of customer-facing developments in both its UK and Spanish brands to drive revenue and profit growth.
"We are very focussed on delivering a market leading cross-channel experience for our Grosvenor and Mecca customers with several key developments landing during this new financial year.
"The UK Government's white paper on gambling reform sets out a number of important public policies which will enable the land-based bingo and casino sectors to modernise the customer proposition to better meet the needs of today's consumers.
"The delivery of the secondary legislation to enable these reforms cannot come soon enough and we are well advanced with plans to maximise these opportunities."
At 1102 BST, shares in the Rank Group were down 0.93% at 88.57p.
Reporting by Josh White for Sharecast.com.
