Annual profits to beat forecasts at Rank

(Sharecast News) - The Rank Group said annual profits would come in ahead of expectations on Thursday, despite a backdrop of higher costs and regulatory uncertainty. Updating on trading, the owner of Mecca Bingo and Grosvenor Casinos, as well as a clutch of digital brands, said group like-for-like net gaming revenue jumped 11% in the year to 30 June to around £795m.

As a result, it now expects to post full-year like-for-like operating profits of at least £63m, comfortably ahead of consensus.

As at 0945 BST, shares in the FTSE 250 firm were up 2% at 139.92p.

John O'Reilly, chief executive, said: "We have enjoyed a very strong year of earnings growth despite the significant cost and regulatory headwinds we have faced from the start of the fourth quarter.

"The momentum experienced in the first three quarters has continued, with strong trading in the fourth quarter, resulted in profits being ahead of expectations.

"We are at an exciting inflection point for the group, with the land-based casino reforms now law and coming into force from 22 July. At that point, we will begin the process of securing licence variations...ahead of the rollout of additional gaming machines across the Grosvenor estate."

The government has spent several months reviewing the 2005 Gambling Act, causing uncertainty across the industry. However, its reforms were ultimately welcomed by Rank, as they will allow casinos in England and Wales to add profitable gaming machines.

Rank has previously said it plans to introduce 882 new machines to the estate, on top the 1,367 it already houses.

The industry, in common with the wider hospitality sector, has also seen a spike in costs, on the back of higher employer National Insurance contributions and a rise in the minimum wage.

Greg Johnson, analyst at Shore Capital, said: "We anticipate further progress in the 2026 full-year and beyond, as the group delivers on management's twin aspirations for both digital and underlying Grosvenor venues.

"We see material upside to earnings over the medium term, as more gaming machines are rolled out and sports betting permitted and will update our estimates accordingly. Despite the recent rally this opportunity is yet to be reflected in the share price."

Rank - which is a house stock at Shore Cap - is due to publish full-year numbers on 14 August.