Rank Group racks up £107m in pre-tax losses for fiscal H1 as costs soar

The Rank Group has posted a modest 2% rise in underlying like-for-like net gaming revenue (NGR) to £338.9m.

Underlying operating profit fell 83% YoY from £24.9m to £4.2m, with net debt increasing 11% to £158.3m. The Maidenhead-based firm also pointed to a £15m impact in higher energy costs and wage inflation for the drop in profitability.

This has led to statutory losses of £101.2m for the reporting period.

Energy costs are expected to be £31m for the current period, Rank said, up from £24m from the previous period, with average wage increases rising around 8%.

These increased costs led the group to create new energy efficiency programmes, changes to venue opening hours, as well as renegotiating leases and other contracts to cut costs.

Overall, NGR across the firm’s venues dropped 1% to £236.6m, with Grosvenor Casinos seeing the biggest fall of 5% to £153.4m in this reporting period.

Compared to pre-pandemic levels, venues’ NGR is down 22% from £197.4m.

Visitor numbers went up 5% YoY, with active customers up 4%. However, this positive result is offset by a 9% decline in average customer spend due to the ongoing economic crisis in the UK.

Mecca saw a 4% YoY NGR rise to £65.5m but dropped 20% compared to pre-pandemic levels. Customer visits to Grosvenor rose 4% but were down 29% on pre-pandemic levels.

Rank stated that this downfall came from the “older cohort of customers”.

The group noted: “The impact of the pandemic has been severe on the land-based bingo sector. Whilst customer volumes are growing, the rate of growth is slow and from a much lower base than prior to the pandemic.”

The greatest success for the group over this period is with its Spanish brand Enracha, which has seen a strong recovery since the reopening of venues. Revenue rose 25% YoY to £17.7m.

Financial analyst Russel Pointon, director at Edison Group, said the results show the difficulties the industry is facing, particularly in the UK.

“Casino and bingo operator Rank Group’s interim results demonstrate the tough situation faced by gaming companies with physical locations during a period of high inflation and restricted consumer spending. Rank reported a significant drop in underlying profit due to slower revenue recovery than expected, notably for Grosvenor, and high-cost inflation, which was compounded by a high level of impairment charges.”

To offset these issues on the land-based front, Rank has invested heavily in its digital platforms, which saw its brands now operating on its own proprietary platform.

Digital performance was up 9%, reaching £100.8m, with profit sitting at £2.7m.

Mecca took the majority of revenue with £36.1m, Grosvenor posted £27.8m, and Enranch/Yo achieved £11.6m. Stride Legacy brands achieved £25.3m in revenue for this period.

On the digital performance and what the results mean going forward for Rank, Group CEO John O’Reilly said this success will lead to further improvements in digital.

He said: “We are now in control of our future from a technology standpoint and have the vision and capability to deliver a market-leading cross-channel customer experience in both Grosvenor and Mecca alongside strong and growing support brands in the UK and internationally.”

Rank also noted it had a strong trading period over the festive period and into January, but added that it expects a challenging few months ahead due to the ongoing cost-of-living crisis.

This has led to Rank maintaining its full-year YoY profit guidance of £10m-£20m.

O’Reilly looked ahead to the upcoming year, saying that the firm is eagerly anticipating the publication of the white paper into the Gambling Act 2005 review.

He said: “We continue to look forward to the publication of the UK government’s gambling review white paper. Casino and bingo venues are in need of long overdue modernisation of outdated regulation, which heavily restricts the customer proposition.

“This appears to be widely recognised within the debate surrounding the government’s review and we are hopeful of a positive policy outcome followed by the much needed rapid implementation of new regulation.”