Rank returns full-year profits but signals choppy 2023 waters
Rank Group Plc has hit its underlying year-end profit guidance of £40m, overcoming continued ‘softer trading conditions’ on its retail venues.
The LSE gambling group’s preliminary results for the 12 months ending 30 June 2022, announced today, detailed continued footfall challenges for Grosvenor venues, in particular across London.
Group 2021/22 NGR totalled £644m, doubling corresponding 2021/20 results of £325m, yet Rank’s headline performance remains 10% behind 2019/20 results of £715m with the group citing a ‘gradual recovery from pandemic conditions’.
“It was a challenging year for our UK venues businesses, with unexpectedly softer trading across the Grosvenor estate in the second half of the year,” group CEO John O’Reilly explained.
“Our nine London casinos, which account for over 38% of Grosvenor’s revenue in normal trading conditions, have seen very weak customer volumes with overseas visitors few in number, and only starting to return in the final few weeks of the year.”
Despite challenges in the capital, Rank’s Venue unit of Grosvenor and Mecca Bingo properties registered an underlying 2021/22 NGR of £460m, up 209% on 2021/20 results of £149m.
2021/22 saw Rank achieve key technical objectives for its Digital division, as all online brands (except Grosvenor) were migrated onto the group’s proprietary RIDE Platform.
Outperforming tough comparatives, underlying Digital NGR grew 4% to £183m (2021/20: £176m) as the online unit achieved a 178% growth in active cross-channel customers.
Rank disclosed a 6x increase in digital operating profits to £18.7m – attributed to tech synergies gained from its integration of new Stride Gaming brands.
“Performance in our digital business continues to improve against a difficult market backdrop,” O’Reilly commented on Digital results.
He added: “The transfer of the Rank brands to our proprietary technology platform is supporting revenue growth and a strong improvement to operating margins which we expect to accelerate with the migration of the Grosvenor brand in the coming weeks.”
Rank’s statutory performance statement saw the group declare a 2021/22 operating profit of £82m, as income reflected a £77m VAT repayment from the government.
Operating expenses saw Rank disclose that group energy costs had doubled to £23m and on a current market price basis may result in an FY2023 charge of £46m.
Benefitting from a stronger cash position, Rank has advanced its Group Transformation Programme, which delivered good returns from the £6.2m Grosvenor investment into new product and £5.3m casino refurbishments.
Providing a trading outlook, group underlying NGR is running 3% ahead of the prior year in the first seven weeks of 2022/23 (Digital +12%)
Leadership maintains confidence of improved Venue performance in the coming weeks, stating that ‘the gradual return of overseas customers to our London casinos’ would offset ‘softer trading conditions’.
Rank anticipates further 2022/23 challenges, with “high inflation hitting consumer discretionary expenditure and inflationary cost pressures, particularly the further rise in energy prices in recent weeks, continuing to impact operating margins.”
Elsewhere Rank awaits the outcome of the White Paper review, on which O’Reilly concluded: “We were disappointed by the delay to the publication of the UK Government’s white paper on gambling regulation.
“The land-based casino and bingo sectors are in need of long overdue modernisation of the regulations which govern their operation, something which the Government recognised in its objectives for the review.
“We expect Rank to be well positioned to benefit from the review when it concludes.”