Rank Group issues future costs warning as net profit slips in H1

Following a dip in net profit at Rank Group during the first half of its financial year, outgoing CEO John O’Reilly has warned that the operator will face further cost challenges in 2026 and beyond as it adapts to increased tax rates in the UK.

For the six months through to 31 December 2025, revenue was higher across all segments of the Rank business. As such, total net gaming revenue for the period climbed 5% year-on-year to £420 million ($579.8 million).

However, increased costs across several areas, including taxation resulted in group net profit for the period decreasing 26% to £18.5 million.

Higher UK gambling tax to challenge Rank

Commenting on H1, O’Reilly was largely upbeat about the performance, noting the increase in revenue across all businesses under the Rank umbrella. However, he referenced higher costs moving forward, particularly the upcoming rise in UK gambling tax.

In November, the government confirmed remote gaming duty will rise from 21% to 40% in April this year. A new general betting duty for remote betting – applicable to online betting profit only – will also be introduced in April 2027 at 25%, up from 15%. Both were in addition to the statutory levy that came into effect last April.

O’Reilly described the Remote Duty rise as a “significant blow” to the UK market in Novmber. However, he said the abolition of bingo duty, announced alongside the tax rises, would help to sustain jobs and investment in the land-based sector.

“The second half of the year will bring further cost headwinds, principally in our UK digital business, which will be impacted by the UK government’s huge increase in tax rates,” said O’Reilly following the results. “We have already executed measures to mitigate some of this impact, while continuing to prioritise customer experience, and the group will respond with agility as a heavily disrupted landscape takes shape in the UK.”

Widespread growth at Rank

Focusing on revenue growth at Rank in its H1, the Grosvenor venues business again drew the most revenue at £204 million – a rise of 6%. This was helped by the installation of a further 850 gaming machines introduced across the estate.

Incidentally, these additions were made possible by land-based casino reforms, which came into effect last July. These allowed for more machines on specific floor spaces, ranging from 25 machines for areas measuring 280 square metres to 80 machines for venues exceeding 500 square metres.

In bingo, the Mecca venues business saw revenue increase 4% year-on-year to £67 million in H1. This was despite a 1% decline in customer visit volumes, while one Mecca venue – in Scarborough – closed during the period.

Rank’s other land-based business, Enracha in Spain, also reported an increase in revenue, rising 6% to £21 million. Customer visits were flat but spend per visit grew 6%, with additional spend driving enhanced liquidity and stronger prize boards.

As for digital, this segment reported the most growth, with revenue up 8% to £114.8 million in H1. Average revenue per customer in H1 increased 18% year-on-year during the period.

Digital revenue in the UK improved 9%, with revenue from the Grosvenor digital offering up 17% and Mecca digital revenue 5% higher. In Spain, improvements across the YoBingo, YoCasino and YoSports brands helped revenue rise 1%.

Higher costs offset revenue growth

Turning to spending, cost of sales was the main outgoing at £236.7 million, up 3.5%. Other operating costs climbed 4.1% to £153.3 million, leaving £31.3 million in operating profit, a drop of 11.1%.

Finance-related costs of £7.4 million meant a pre-tax profit of £23.9 million, down 18.7% year-on-year. After increased taxation costs of £5.4 million, net profit for the half year stood at £18.5 million, a 25.7% drop from the previous year.

“We continue to deliver improving results which demonstrate the resilience of the group and our ability to take advantage of the opportunities available to us, both online and in our venues,” O’Reilly said.

“Customers recognise the investment and improvements we have been making and are responding enthusiastically. Both the underlying metrics and medium-term outlook for the business remain encouraging, and we have the building blocks in place to capitalise on the opportunities ahead of us.”

Harris to take the helm at Rank

Incidentally, today (29 January) marks the final day of O’Reilly’s tenure as CEO of Rank. It was confirmed earlier in January that he would be stepping down from the role, with Chief Financial Officer Richard Harris becoming interim CEO.

O’Reilly took on the position of CEO in May 2018 after a spell as a non-executive director at William Hill. Prior to this, he was managing director of GVC’s Coral Interactive within the Gala Coral Group.

“As I retire as CEO, I would like to pay tribute to my highly talented colleagues across the group for their enduring commitment to our customers which has again delivered another strong set of results,” O’Reilly said. “I am delighted that, as interim CEO, Richard Harris will now take Rank to the next stage of what I am sure is a very bright future.”

It was also recently confirmed that John Ott, a former senior advisory partner at advisory Bain & Company, had taken over as Rank’s chairman.