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Rank returns to profit with open venues

The group was helped by improved trading conditions, and is making headway with its digital offering
Rank returns to profit with open venues
  • Venue revenues explode after periods of closure
  • Progress made on the digital front

Rank (RNK) relies on in-person experience for a significant chunk of its revenues. Its venues contributed 72 per cent of total sales in the half, compared with an even split between digital and venue revenue in the 2020 full-year results. That shows that the gambling group, which runs the Grosvenor casinos and Mecca bingo clubs, was particularly badly hit by the pandemic. But there were green shoots to be seen in these results, as the company returned to profit – though investors don’t have a full house just yet.

Total revenues were up by almost 90 per cent, as its casinos and bingo halls enjoyed a resurgence after a dismal period of closures and restrictions in the prior year. Grosvenor was a standout performer, with sales up 275 per cent to £162mn. While the last two months of the period were impacted by Omicron curtailments, the future for the business suddenly looks a lot brighter.

Notwithstanding the importance of physical venues, progress on the digital side is encouraging. Digital revenues crept up by 7 per cent to £92mn. Post-period, the Mecca bingo website was migrated to Rank’s proprietary trading platform – this technology is a key part of digital growth plans, with Grosvenor also to be migrated in the summer.

Consensus forecasts have the shares trading on a 12-month forward PE ratio of 11 times. While progress has been made, and the company will benefit from a context of loosening restrictions, Rank isn’t out of the woods yet – underlying operating profit was still down by 59 per cent compared with the pre-pandemic era. Hold.  

Last IC view: Hold, 176p, 19 Aug 2021

RANK (RNK)    
ORD PRICE:151pMARKET VALUE:£ 707m
TOUCH:151-153p12-MONTH HIGH:217pLOW: 120p
DIVIDEND YIELD:NilPE RATIO:12
NET ASSET VALUE:95p*NET DEBT:32%
Half-year to 31 DecTurnover (£m)Pre-tax (£m)Earnings per share (p)Dividend per share (p)
2020178-59.4-12.2-
2021334102.117.4-
% change+88---
Ex-div:-   
Payment:-   
*Includes intangible assets of £504mn, or 108p a share