Rank Group raises dividend as profit dips but revenue ticks up

Rank Group PLC on Thursday reported lower statutory profit but increased underlying earnings, and a higher dividend, for its latest 12 months.

Its stock was trading 3.8% higher at 103.60 pence on Thursday morning in London.

The Maidenhead, England-based gaming operator's pretax profit totalled £39.2 million for the year ended June 30, down 15% from £45.9 million the year before. Basic earnings per share fell 22% to 6.4p from 8.2p.

However, Rank declared an interim dividend of 3.50p per share, up 35% from 2.60p.

Underlying operating profit climbed 21% to £78.6 million from £64.8 million. Reported operating profit decreased 7.3% to £55.7 million.

Reported net gaming revenue rose 5.0% to £835.0 million from £795.4 million. Group underlying like-for-like NGR, which excludes the impact from venue openings, closures, foreign exchange movements, discontinued operations, and markets that have been open for less than 12 months, rose 5.8% to £834.1 million from £788.4 million.

Rank said all its businesses had shown growth "for a fifth consecutive year, reflecting the return on capital investments and strong growth in gaming machine performance across the group."

Figures excluded by the underlying results are referred to in Rank's report as "separately disclosed items". Expenses related to these more than quadrupled on-year to £23.3 million from £5.5 million.

"We have taken decisive cost actions across the group in response to the higher taxation of the UK digital gaming industry," commented Chief Executive Richard Harris. "I am particularly pleased that we exited the year with strong momentum in our digital business...There is material growth runway ahead, most obviously for our Grosvenor casino venues where gaming machines optimisation is an area of sharp focus and significant opportunity."

However, he claimed that pushes for higher taxes "continue to cast clouds over a regulated industry that is proud to support jobs across the country...The government has supported bingo clubs like ours in recent years and any tax increase would have a material impact on commercial viability."

Looking ahead, Rank believes it ended the year "with strong trading momentum" and has "made a good start to the new financial year with Group NGR up 8% for the first six weeks," including 10% digital revenue growth and 15% growth from Grosvenor gaming machines.

It reiterated its goal of generating at least £100 million in medium-term underlying operating profit, but added that despite its "decisive mitigating actions," profitability for its digital arm "will inevitably step down" in the current year.

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