Rank Group benefits from strong digital performance
The Rank Group announces the following trading update for the quarter to 30 September 2022.
Group like-for-like Net Gaming Revenue (‘NGR’) for the first quarter ended 30 September 2022 was up 2% to £165.7m. On a channel basis, digital grew NGR by 13% and venues like-for-like NGR was down by 2%.
Grosvenor venues saw visits grow in the quarter, however, with lower spend per visit, NGR fell by 5%. London performed strongly, with NGR up 21% driven by a 20% increase in customer visits. This was more than offset by a 17% NGR decline from our venues outside of London where customer spend levels were weaker. Average weekly NGR in the quarter was £5.7m, down 5% on the comparable period but up 12% on Q4 2021/22.
Mecca venues like-for-like NGR grew by 2% in the quarter, driven by a 4% increase in customer visits offsetting a 2% decline in spend per visit.
Digital NGR grew by 13% in the quarter with good growth across both the UK business, which was up 13%, and the Spanish operations, up 12%. Grosvenor performed strongly in the quarter with NGR up 25% and has continued to perform well post its successful migration onto the proprietary RIDE platform at the start of September. Mecca digital NGR was up 1% and the remaining UK digital business was up 23%, with particularly strong growth in the Stride brands on the RIDE platform.
Consumer discretionary expenditure is expected to remain under significant pressure this year with inflation likely to remain high for some time, despite the positive impact of the energy price cap, and the impact of rising interest rates. We expect to see some continued impact of these external pressures on the business, particularly in the Grosvenor venues outside of London.
The recently announced Energy Bill Relief Scheme is welcomed by the Group and, as a result of its implementation over the 6-month period October to March, we now expect energy costs in the current financial year to be circa £34m, up from £23m in FY22. This assumes that no further support is available beyond March 2023 and the Group will be exposed to market prices for the final three months of the financial year. A number of efficiency programmes are underway to reduce our future energy consumption.
Other inflationary pressures continue to present an increasing challenge to the Group, particularly in our venues businesses, with wage inflation, food input price increases and supply chain pressures all pushing up costs. FY23 costs will also be higher due to the non-recurring government support of rates relief and furlough payments received in the first quarter of the prior financial year. We continue to focus on initiatives that mitigate these cost pressures as much as possible.
John O’Reilly, Chief Executive, said: “It is pleasing to see increasing visits in this new financial year together with strong growth in the digital business, where we are starting to see the benefits of investments in our proprietary technology platform and our cross-channel offering, with encouraging growth in both the UK and Spain.
Whilst it is a challenging trading environment and we expect this to continue in the months ahead, we remain committed to delivering Rank’s market leading, exciting and entertaining proposition to our customers. The Group has a number of key initiatives underway to improve long term revenues. These include some key refurbishment projects and new electronic roulette and jackpot games in Grosvenor; improving the gaming machine offering in Mecca; increased personalisation and a stronger live casino offering in the UK digital business and the recent launch of Yo Sports in Spain. The Group has the benefit of a strong balance sheet, enabling us to continue investing in the business through this period.”