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Impairments push Rank Group to FY loss despite land-based recovery

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Rank Group reported a 5.9% revenue increase to PS681.9m ($868.1m/EUR798.0m) for its financial year 2022-23, despite increased impairment costs that led to a statutory loss.

In the twelve months leading up to June 30, 2018, all segments of operations saw growth. The Rank owned Grosvenor Mecca, and Enracha businesses also experienced a difficult few years due to the pandemic.

The digital division of Rank also saw a notable increase in revenue, which grew 10.4% and reached PS202.9m.

The business suffered a loss due to higher operating costs and impairment charges.

O’Reilly thinks economic pressures have eased

John O’Reilly, the chief executive of O’Reilly Group acknowledged that costs were higher during the evaluation process for the performance in the fiscal year. He said that certain costs have stabilised and the inflation has eased, which will lead to revenue and profit increases in future.

John O’Reilly, ceo of rank says that after Covid and the economic downturns, it is in a position to grow revenue and profit.

O’Reilly stated that “the return of our customers to Grosvenor’s and Mecca’s venues is continuing to increase and the second-half numbers are encouraging after two very difficult years.”

The UK casinos have been hit by a rise in energy prices, high wages, tighter regulations, the return of foreign visitors to London’s casino and more generally, pressures placed on discretionary consumer spending.

However, the energy prices have stabilized, and inflation seems to be now easing. Customers continue to return slowly to our Grosvenor venues as well as our Mecca venues. Now we expect good revenue growth and profits.”

Rank revels in land-based recovery

Gross gaming revenue from this segment was 3.3% higher year-on-year at PS306.3m. The net gaming revenue for this segment increased by 3.3% year-onyear to PS306.3m. Rank stated that this was despite the fact that recovery from pandemic-related lockdowns, and increased affordability restrictions, had been slower than anticipated.

Grosvenor’s London Casino Estate continued to perform at levels below those pre-pandemic. Rank explained that this is largely due to the slow returns of Middle East, East and South-East Asia customers. This group has also referred to the closure of Russell Square Casino.

This is a better read for those in the UK. The net gaming revenues from outside London were 6.0% higher while the visitor numbers rose 7.0%.

Rank, however, recognised a loss of PS53.3m relating 23 venues. The lower than expected trading results and the impairment reversed of PS6.6m on another seven venues were responsible for this.

Mecca to have a “turnaround” in the year

Rank’s Mecca Bingo venues also saw growth, as revenue increased 1.7% from PS136.3m to PS136.3. After a severe decline in land-based bingo due to lockdowns, the group said 2022-23 would be regarded as “a turnaround” year.

The revenue increase was achieved despite Rank’s decision to close permanently 15 venues between 2022 and 23. The Mecca estate was reduced to just 56 venues. Rank said that the 56 venues are now stronger and more appealing to their customers.

Mecca recognized an impairment charge for 70 locations, which included some that were shut down. Rank again attributed this to the fact that performance was lower than expected.

Enracha is ranked high in Spain

Enracha Rank, a Spanish-facing business that operates other venues, had a successful year. The revenue grew 19.9%, to PS36.11m. This was driven by the growth of gaming machines and bingo on main stages.

Enracha’s customer visits also increased 16.0% on an annual basis. Rank did, however, note an impairment charge for this segment of PS4.1m. It said that two venues had performed worse than expected.

Digital revenue exceeds PS200m

Digital revenue was up 10.4% year-on-year to PS202.9m.

This total was made up of PS72.6 million from Mecca, PS57.0 million by Grosvenor and PS24.1 million each for Enracha, Yo and the legacy Stride brands. Rank Gaming acquired Stride Gaming on October 19, 2019 and is continuing to run a few of Stride’s existing brands.

It praised the migration of the Mecca, Grosvenor and RIDE online platforms to RIDE for improving customer service. The group also highlighted the new Spanish racing YoSports website ahead of 2022 Fifa World Cup.

Rank has also announced that it had applied for a license to launch the YoBingo brand of online bingo in Portugal. This process takes longer because no other brand of bingo has been licensed to operate in Portugal.

O’Reilly stated that “our digital business performs strongly, and we have an extensive pipeline of developments for our UK and Spanish brand customers to help drive growth in revenue and profits.”

We are focused on providing a leading cross-channel customer experience to our Grosvenor customers and Mecca clients. Several key developments will be launched during the new financial year.”

Costs and the impact of impairment

In terms of spending, the cost of sales increased by 26.4%, to PS521.3m. Other operating expenses rose 12.9%, at PS274.1m. Rank explained that this was due to significant increases in employment and energy costs as well as absence of furloughs and pandemic support from the government.

These costs include impairment charges of PS118.9m, spread over Rank’s venue businesses. Last year, the figure was PS47.8m.

Rank reported PS12.9m in net finance charges. This left a loss before tax of PS122.7m. The previous year’s profit was PS73.0m, but the total for 2021-22 was improved by an unadjusted VAT claim of PS77.1m.

After accounting for discontinued operations and non controlling interests, the group’s net loss was PS95.3m. Rank achieved a net loss of PS95.3m last year, despite the significant VAT benefit.

O’Reilly said, “I’m grateful for my colleagues in the group, who are continuing to entertain, excite and protect customers and provide support to local communities, as well as contributing fully to our progress on the transformation of Rank.”

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