First-half revenues spark at Rank Group

(Sharecast News) - Rank Group posted a jump in half-year earnings on Thursday, sending shares in the gaming and gambling specialist higher, despite slightly softer trading in the second quarter. The FTSE 250 owner of Mecca Bingo and Grosvenor Casinos said group underlying like-for-like net gaming revenue (NGR) rose 6% in the six months to 31 December, to £419.8m. Within that, NGR rose 5% at venues, to £296.1m, while digital NGR sparked 8% at £123.7m.

Underlying operating profits rose 22% to £40.6m, while the interim dividend was raised 54% to 1p. Interim pre-tax profits fell 19% to £23.9m, weighed down by £9.7m of one-off costs.

Rank acknowledged that the second quarter had been "slightly softer".

However, looking to the second half, and it said trading over the Christmas and New York period had been strong, with January's performance in line with expectations.

Rank continued: "The significant increase in remote gaming duty to 40% for the UK digital business, and the increase in the National Living Wage in Grosvenor and Mecca, will impact profitability in the fourth quarter.

"However, the group's mitigating actions to offset as much of this impact as possible are well advanced. Our strong first half performance underpins our confidence in delivering full-year performance in line with expectations."

As at 0900 GMT, the stock was trading 4% higher at 94.9p.

Greg Johnson, analyst at Shore Capital, said: "Rank's results showed material year-on-year operating profit growth, demonstrating excellent conversion on robust revenue growth across all divisions, and despite a slightly softer trading backdrop in the second quarter.

"We see these results underpinning our unchanged full-year estimates and the medium-term target for operating profit to reach £100m."

Rank is a house stock at Shore Capital.