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Rank reduces FY guidance despite 220.5% revenue growth in Q3

| By Robert Fletcher
Rank Group has reduced full-year earnings before interest and tax (EBIT) guidance despite reporting a 220.5% year-on-year increase in revenue during the third quarter of its 2021-22 financial year.
Rank Q3

Group net gaming revenue for the three months through to 31 March 2022 amounted to £156.4m (€188.2m/$204.2m), up significantly from £48.7m.

This, Rank said, was a result of its retail venues operating as normal throughout the period, whereas last year most of these facilities were closed for the entire quarter in line with novel coronavirus (Covid-19) rules in Great Britain.

As such, revenue from Grosvenor venues amounted to £69.1m in Q3 of its current financial year, compared to just £100,000 in the same period of the previous financial year.

Mecca venues revenue rocketed from £300,000 to $34.1m, while Enricha locations in Spain generated £8.0m, up 263.6% from £2.2m in Q3 of 2020-21, during which the venues were open for part of the quarter, albeit with strict capacity restrictions.

Turning to digital and revenue from its UK-facing digital operations edged down by 1.5% to £40.0m. Grosvenor digital revenue was up 3.0%, as Rank said it continued to benefit from omnichannel players from its Grosvenor venues, though Mecca digital revenue fell 11.0% due to the anticipated impact of its migration onto the RIDE platform in January.

The performance of its other digital brands, Rank said, continued to be mixed, with a growth of 42.0% in other brands operating on the RIDE platform partly offset by a 25.0% decline in non-proprietary brands following the introduction of affordability restrictions in H1 2021-22 by other operators. 

Rank also noted that revenue from its international digital operations was down 5.5% to £5.2m.

Looking to the start of Q4, Rank said this marks the start of a traditionally low seasonal period for its Grosvenor venues, with visitor numbers usually declining. While it said it does anticipate an improvement in performance after April, Rank added that it is uncertain how the trends in the rate of return of office workers to city centres and overseas customers to London will develop towards the summer.

In line with this, Rank said it would reduce its previously stated EBIT guidance for the full year, with this now being set at between £47.0m and £55.0m, compared to the initial range of £55.0m to £65.0m.

“The performance of our venues softened in March, and this has continued into the first few weeks of Q4, impacting our current expectations for our full year performance,” Rank’s chief executive John O’Reilly said.

“We recognise the pressures on UK consumers but are confident that the improvements we are continuing to make to the customer proposition and the investments in our venues, alongside the gradually reducing impact of the pandemic and, with it, the return of overseas customers, position us well for the year ahead.”

During the quarter, Rank paid a £700,557 regulatory settlement to the Great Britain gambling Commission after a May 2021 review.

The Commission said that the triggers Rank used to identify harmful play “were not always effective”, especially for new customers, and that it was “overly reliant” on a £1,000 30-day net loss threshold. 

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