Mecca Bingo and Grosvenor Casino owner Rank (RNK) is reaping the rewards of its digital investment with its revamped online and mobile offerings driving double-digit pre-tax profit growth in the 12 months to 30 June. The £973 million cap introduced a long-term growth strategy in August 2014 which included building a strong digital division to appeal to customers who are increasingly switching from traditional bingo halls to online.
The investment is clearly paying off. Revenue in Rank’s digital division is up 21% in the year to 30 June while operating profit is 14% higher despite the introduction of Remote Gaming Duty on 1 December. A 19% rise in the group’s adjusted pre-tax profit to £74.1 million sends the shares 3.2% higher to 258p. Shareholders are set for a double-whammy with a 24% increase in the dividend to 5.6p per share.
Rank believes demand for venue-based gambling in bingo clubs and casinos will continue, although venue-based revenue is up by just 2%.
Henry Birch has achieved an impressive turnaround since he became chief executive in May 2014, with the shares rising 59% in the past 12 months.
There is the potential for further progress as the major parts of Rank’s digital development are still to come. The company is creating a ‘single wallet’ which customers can use at venues and online and it’s on track to move to the Bede gaming platform, which will give it greater control and speed over product development. Peel Hunt has increased its target price from 268p to 289p following today's results.