Rank Group revenue rebounds from Covid-19 hit in 2021/22

Rank Group has posted a 98% year-on-year (YoY) increase in its group net gaming revenue (NGR) in 2021/22 to £644m, thanks to the return of its flagship venues business following the Covid-19 pandemic.

Releasing its financial update for the period, the FTSE-listed operator confirmed group operating profits of £82.1m, up from a negative loss figure of £92.9m a year prior. However, this figure was influenced by a £77.1m VAT repayment from HMRC relating to a prior legal case.

Rank’s underlying operational profits for 2021/22 amounted to £40.4m, a figure in line with previous guidance provided and due in part to “difficult trading conditions” in Grosvenor venues, particularly in London.

Divisionally, Rank’s venues business was the big winner during 2021/22, with venue NGR rising 209% YoY to £460.7m following the return of normal trading after the pandemic.

Grosvenor venues saw revenue growth of 275% during 2021/22 to £296.6m, while the Mecca business reported a 149% YoY revenue increase to £134m over the same period. Rank’s Spain-based Enracha business benefitted from an 89% YoY revenue spike during 2021/22, hitting £30.1m.

Digital underlying NGR increased by 4% YoY over the same period to £183.3m, with the operator reporting a 178% growth in active cross-channel customers.

Rank also confirmed a six-fold increase in underlying digital operating profit, which rose to £18.7m, buoyed by integrations arising from Rank’s acquisition of the Stride gaming business.

Within the UK-facing digital brands, Mecca’s NGR declined 3% YoY, while Grosvenor’s grew 7% and the Stride legacy brands grew 11%.

Yo and Enracha, grew NGR by 4%, despite marketing investment being down 51% against the prior year following the advertising and other restrictions introduced by the Spanish government in May 2021

Within the international digital business, Enracha online was successfully migrated onto the Yo proprietary technology platform, with Enracha launching its first sportsbook offering during Q4.

Rank has confirmed that a Yo sports betting platform is currently in development for launch in H1 2022/23.

Updating the market on the migration of Rank Group brands to the RIDE! platform, Rank confirmed the migration of Mecca brands in January, with the final Grosvenor brand set to migrate during Q1 2022/23.

“The strong cash position has enabled the acceleration of the group’s Transformation 2.0 programme, which is focused on improving the customer offer and growing customer numbers, has delivered good returns from the £6.2m Grosvenor investment into new product and £5.3m casino refurbishments,” Rank said in a statement accompanying the results.

In addition to confirming its migration plans, Rank has cited the continuance of its environment, social and governance (ESG) programme with new developments including a new online markers of harm model, a new risk model across Grosvenor casinos and the rolling out of a new machine management system in its Mecca bingo halls.

Expanding on the group’s performance during 2021/22, Rank Group CEO John O’Reilly immediately addressed losses at Grosvenor’s London casinos, suggesting the group had fallen victim to “very weak” customer volumes and the cost-of-living crisis.

“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,” O’Reilly said.

“Whilst we have been seeing improvements in London in recent weeks, the trading environment across the UK is likely to remain difficult in the months ahead with inflationary pressures squeezing consumer discretionary expenditure and cost increases, particularly in energy prices, putting pressure on profit margins.

“However, we are taking actions to drive further efficiencies in the venues businesses, and we are seeing strong revenue growth in properties which have recently benefitted from our accelerated capital investment programme.”

O’Reilly continued: “Performance in our digital business continues to improve against a difficult market backdrop.

“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,” the Rank CEO added.