Rank Group - Operational efficiencies keep forecasts intact

Similar to last year’s trends, Rank reported that total Venues l-f-l revenues declined by 1%, mainly due to lower customer visits. This was offset by a 16% increase in Digital, where Mecca digital has clearly turned the corner. To reflect the lighter result in Venues, we have lowered our FY18 and FY19 revenue estimates by c 2-3%, but improved operational efficiencies mean that our profit forecasts are largely unchanged. The business model remains highly cash generative, with £4m net cash achieved at H118 and the stock’s trading multiples are attractive at 6.8x EV/EBITDA, 13.6x P/E and 8.1% free cash flow yield for CY18.