Rank Group Reports Revenue Surge but Impairments Lead to FY Loss

OCR Editor. - August 17, 2023
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Despite a revenue uptick of 5.9% to £681.9m during the 2022-23 financial year, Rank Group faced increased impairment costs, resulting in a net loss. Elevated operating expenses overshadowed the recovery of its land-based entities and digital growth.

Rank Group has unveiled impressive revenue growth of 5.9%, amounting to £681.9 million for the 2022-23 financial year, as reported by IGB News. Despite this notable achievement, the operator faced challenges that culminated in a net loss due to escalated impairment costs.

The 12 months leading to June 30 it marked a remarkable year-on-year expansion across all operating sectors for Rank Group. This encompassed its prized land-based ventures, Grosvenor, Mecca, and Enracha, which weathered pandemic-induced hardships to experience a rejuvenated outlook. The digital realm equally contributed, with a 10.4% surge in revenue, reaching £202.9 million.

However, the surge in impairment costs and elevated operating expenses overshadow Rank Group's performance. Chief Executive John O'Reilly acknowledged these financial strains while expressing optimism in the face of future growth.

O'Reilly stated, "The return of customers to our Grosvenor and Mecca venues continues to pick up...We now expect to deliver good levels of revenue and profit growth as certain costs stabilize and inflation eases."

The cornerstone of Rank's revenue remains its Grosvenor land-based casino business, generating a robust net gaming revenue of £306.3 million, up by 3.3% from the previous year. This achievement is particularly noteworthy given the slower-than-expected recovery from pandemic-induced disruptions and tightened affordability regulations. Nevertheless, Grosvenor's London casino estate struggled to reclaim pre-pandemic levels due to the gradual return of visitors from the Middle East and East and South-East Asia.

Rank's Mecca bingo venues experienced a 1.7% revenue hike, amounting to £136.3 million, marking a year of turnaround post-pandemic challenges. The closure of 15 venues did not deter this upward trend but led to an enhanced appeal for the 56 remaining venues.

Enracha, Rank's Spanish-facing entity, witnessed a stellar year, with a 19.9% revenue increase to £36.1 million, propelled by gaming machines and main stage bingo. Despite this growth, a £4.1 million impairment charge was noted due to underperforming venues.

The digital domain was equally promising, contributing £202.9 million to Rank's revenue, underpinned by the success of platforms such as Mecca, Grosvenor, Enracha, and Yo. The successful migration of Mecca and Grosvenor online sites to the RIDE platform garnered praise for enhancing the customer experience.

While Rank Group's revenue ascent was admirable, the surge in costs, including an impairment charge of £118.9 million, underscored the financial intricacies of the gaming industry. Elevated energy costs, rising employment expenses, and the absence of government support payments during the pandemic contributed to these challenges. These factors, along with net finance charges of £12.9 million, translated to a pre-tax loss of £122.7 million.

Rank Group's journey to financial recovery and stability encountered significant challenges despite revenue growth. Impairments and heightened operating expenses served as a reminder of the industry's complexities, highlighting the need for careful navigation in a landscape characterized by evolution and transformation.

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