Rank Group pre-tax FY profit plunges 40 percent

The UK land and online gambling corporate Rank Group plc posted a dismal set of results Thursday, reporting that it plans to cut costs and boost revenue following a plunge of more than 40 percent in FY pre-tax profits.

Traffic at the group’s bingo and casino assets dropped, and even the digital division saw lower demand. The results prompted the company to reiterate earlier profit warnings.

Key indicators included:

* More focus is being emphasised on the digital business with the appointment of Jim Marsh as chief transformation officer;

* UK digital business revenue grew year-on-year by 9.9 percent;

* However, operating profit in the digital division fell 7.9 percent to GBP 20.9 million, hurt by higher employment costs and taxes following a change in taxation of free bets that started October 2017;

* UK digital business growth slowed down in the second half, with customer visits dropping after the UK Gambling Commission announced tighter regulation on money laundering and stricter customer identification;

* Low win margins and unusually prolonged good weather in the UK hurt Grosvenor casinos, where revenue declined more than 6 percent for the year ended June 30;

* Total revenue fell 2.2 percent to GBP 691 million;

* Full-year operating profit before exceptional items fell nearly 8 percent to GBP 77 million, in line with the company’s revised estimate of profit between GBP 76 million and 78 million;

* In the 12 months to 30 June 2018, like-for-like revenue at Rank dropped by 2.3 percent to GBP 738 million while statutory pre-tax profit tumbled from GBP 79.7 million to GBP 46.7 million;

* Customer visits declined resulting in revenue falling by 9.9 percent in the second half compared to a 2.4 percent fall in the first half;

* Mecca’s bingo revenue fell 2.6 percent in the year driven by a 7.9 percent decline in customer visits;

CEO John O’Reilly, said: “I joined Rank because of its underlying potential. With the backdrop of a disappointing performance in 2017/18, we are now moving quickly to identify the key priorities which will begin to realise the significant underlying potential that I have now seen first-hand since joining the group in early May.

“We are taking steps to increase our focus on the customer, to accelerate growth in the digital business, to drive cost efficiencies across the business and to strengthen our organisational capabilities. This will be delivered within a transformational programme framework, which will ensure that we deliver a growing Rank Group that is fit for the future.”

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