Rank Group sees profit rebound in FY21/22 at $48M despite "continued challenges" for Grosvenor venues

UK-based gaming giant Rank Group announced it has hit its underlying year-end profit guidance of GBP 40 million ($48.1 million), overcoming continued “softer trading conditions” on its retail venues, and bouncing from a GBP 107.3 million ($128.9 million) loss in 2020-2021. The group’s preliminary results for the 12 months ending June 30 detailed ongoing challenges for its Grosvenor properties, particularly across London. 

Rank’s 2021/22 NGR totaled GBP 644 million ($775.9 million), doubling the 2020/21 results for the comparable period. Nonetheless, the group’s headline performance remains 10% behind pre-pandemic levels, which accounted for GBP 715 million ($861.5 million). The group cited in its report a “gradual recovery” from pandemic conditions. 

Group CEO John O’Reilly explained in the report that 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."

The company’s 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," the CEO added. 

Grosvenor Casino Newcastle

Despite these challenges, Rank’s venue unit of Grosvenor and Mecca Bingo properties registered an underlying 2021/22 NGR of GBP 460 million ($554.3 million), up 209% on 2021/20 results of GBP 149 million ($179.5 million). 

The company achieved key technical objectives for its Digital division throughout the period, as all online brands - with the exception of Grosvenor - were migrated onto the group’s proprietary RIDE Platform. 

Underlying Digital NGR grew 4% to GBP 183 million ($220 million) from GBP 176 million ($212 million) last year, supported by a 178% growth in active cross-channel customers. Rank disclosed a 6x increase in digital operating profits to GBP 18.7 million ($22.5 million), attributed to tech synergies gained from its integration of new Stride Gaming brands. 

On the company’s digital results, O’Reilly said that its performance “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."

Rank’s statutory performance statement saw the group declare an operating profit of GBP 82 million ($98.7 million), as income reflected a GBP 77 million ($92.7 million) VAT repayment from the government. 

Interior of one of Rank's Mecca Bingo properties

Benefitting from a stronger cash position, Rank has advanced its Group Transformation Programme, which saw positive returns from the GBP 6.2 million ($7.4 million) Grosvenor investment into new products and GBP 5.3 million ($6.3 million) casino refurbishments. 

Providing a trading outlook, the group underlying NGR is running 3% ahead of the prior year in the first seven weeks of 2022/23, with Digital ahead by 12%. There is confidence that the Venue segment performance will improve in the coming weeks, as the gradual return of overseas customers to London casinos would offset softer trading conditions. 

The company also anticipated 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." 

Rank also awaits the outcome of the highly expected 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."

He also pointed out that land-based casino and bingo sectors are in the need of long overdue modernization of the regulations which govern their operation, “something which the Government recognized in its objectives for the review. We expect Rank to be well positioned to benefit from the review when it concludes."

See Rank's full FY21/22 preliminary results here.