Rank Group confident in full-year as it integrates Stride

(Sharecast News) - Gambling operator The Rank Group announced its interim results for the six months ended 31 December on Thursday, reporting that group underlying net gaming revenue grew 10% in the period to £377.5m, with underlying operating profit rising 70% to £55.1m, before the impact of IFRS 16.
The FTSE 250 company said reported NGR and operating profit also grew in the period, up 14% and 117% to £397.4m and £56.1m, respectively.

During the period, on 4 October, Rank completed the acquisition of Stride Gaming, and post-completion Stride contributed £18.1m of net gaming revenue and £1.4m of operating profit in the half-year.

On the operational front, the group said it was continuing to focus on initiatives which were driving revenue growth, cost savings and improved ways of working through the transformation programme.

Central to that, Rank said, was creating "more exciting, entertaining and safe" environments and experiences for customers

Following the acquisition of Stride in October, Rank said the implementation of a "comprehensive" integration plan was underway

In the quarter prior to completion, Stride's net gaming revenue declined by 15%, and by 2% in the quarter post-acquisition.

Rank reported strong like-for-like net gaming revenue growth in digital, with its Grosvenor brand there up 21% and Mecca ahead 13%.

It said its Yo operation underperformed, with like-for-like net gaming revenue down 2%, although the board said it remained "confident" in its future prospects.

Grosvenor venues like-for-like net gaming revenue grew 15%, with a "strong" trading performance across its London casinos, and a "positive" customer response to key investments into product, technology and facilities reported.

Mecca venues like-for-like net gaming revenue was down 1%, with growth in gaming machines offset by lower customer visits impacting bingo and interval games revenue.

Rank said its investment in the Spanish Enracha venues estate had supported a 9% improvement in international venues like-for-like net gaming revenue.

The company said it delivered a number of "key" safer gambling initiatives in the first half, with a programme of further developments scheduled for the second half.

First half cost savings delivered from the company's casino operating model changes were said to be on track to deliver annualised savings of £19m.

Rank added that "strong" cash flow generation led to better-than-expected underlying net debt of £59.0m, as the board hiked the dividend by 30% to 2.8p for the period.

Looking ahead, Rank said its full-year expected underlying operating profit was expected to be between £113m and £123m, or £105m to £115m pre IFRS 16.

It said "good progress" was being made with the integration of Stride, with the board expecting cost synergies to be in line with the £13m guidance, largely to flow through in the 2021 and 2022 financial years.

"We are pleased with the group's first half performance which demonstrates that the transformation programme is delivering the right results," said chief executive officer John O'Reilly.

"The revenue growth in our digital business and across our Grosvenor and Enracha venues shows that we are moving in the right direction in key areas of our business.

"We remain on track and are confident in our ability to deliver operational and financial improvements underscored by a relentless commitment to delivering exciting, entertaining and safe gambling environments and experiences for our customers."

O'Reilly said the successful integration of Stride into the business would ensure that it benefited from "strong" synergies, proprietary technology and a "first-class" digital team, all of which would position the group for the second half.

"These are a good set of numbers and are a testament to our committed and talented colleagues across the group who have worked hard to deliver them."

At 0930 GMT, shares in The Rank Group were up 2.32% at 287p.