Stellar digital growth is not stopping shares in gaming group Rank (RNK) from falling.
Shares in the firm, which owns Mecca Bingo, are down 2.6% to 234p at lunchtime today.
In its full year results, Rank reports that revenue from its UK digital operation is up 15% to £111.5m while operating profit from digital has rocketed 63% to £22.7m.
But operating profit at the firm's bricks and mortar venues is down 9% on last year at £88.2m, which has dragged on performance. Rank says a challenging retail environment in the UK means overall group like-for-like revenue edged up just 1% to £754m.
Yet the group is confident for the year ahead; it has developed two new digital brands: Bellacasino.com soft-launched in July while Luda.com will be launched in the 2017/18 financial year. It has also developed a new digital sports business and refreshed its digital poker services.
It's a 'broadly positive set of results' according to analysts at Goodbody. The broker says cost disciple should help deliver profit growth in Rank's Grosvenor venues this year but Mecca venues are challenging. The broker is anticipating reducing its full year earnings forecast for the year but adds 'strong dividend growth and better than expected net debt are further positives'.
Shore Capital, which has a 'buy' rating on the stock, says the increased operating profit for the year was ahead of its expectations. The broker says: 'The headline figures mask a significantly improved second half performance.' It has a target price of 300p.
Rank chief executive Henry Birch says: 'After a challenging first half, we are very pleased with our second half performance, especially with our digital business.
'We have put in place a number of digital, product and venue-based initiatives for the current financial year which we expect to drive top-line revenues. The new financial year has started well and the board looks to the future with confidence.'
Shareholders are set for a dividend of 7.3p a share, up 12% from a year ago.
