Rank’s digital arm spurs growth but warns of FY2023 potential cost spike

Rank has revealed that its digital arm’s net gaming revenue witnessed a healthy increase by the end of the first quarter, with overall NGR showing a tender increase. 

Publishing its Q1 performance for the new fiscal year, ended September 30, 2022, the firm confirmed that its digital verticals across all of its subsidiaries, including Grosvenor, Mecca and Enracha, made a total of £48.9m – up 13 per cent on Q4 2021/22.

Furthermore, its UK digital operations experienced 13 per cent growth in the first quarter of 2022/23, while the firm’s Spanish performance grew by 12 per cent. 

Grosvenor performed strongly in the quarter with NGR up 25 per cent and has continued to grow well post its migration onto the proprietary RIDE platform at the start of September.  

Mecca’s digital NGR was up one per cent and the remaining UK digital business was up 23 per cent, with particularly strong growth in the Stride brands on the RIDE platform.

John O’Reilly, Chief Executive at Rank Group, 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.”

Collectively, Rank’s like-for-like NGR for the first quarter was up by two per cent to £165.7m. However, although Grosvenor venues saw visits grow in the quarter, lower spend per visit saw NGR fall by five per cent. 

Geographically, London performed strongly, with NGR up 21 per cent, which is said to be driven by a 20 per cent increase in customer visits. 

Looking at venues outside of England’s capital, the firm noted that customer spend levels were “weaker”. There was a 17 percent NGR decline, with average weekly NGR in the quarter was £5.7m, down five per cent on the comparable period but up 12 per cent on Q4 2021/22.

Mecca venues like-for-like NGR grew by two per cent in the quarter, driven by a four per cent increase in customer visits offsetting a two per cent decline in spend per visit. Enracha venues also saw a 24 per cent increase in Q1 to £8.2m.

However, looking towards the future, Rank emphasised that consumer discretionary expenditure is “expected to remain under significant pressure” this year, citing the current inflation issue hitting the UK customer. 

The company did pinpoint that the currency Energy Bill Relief Scheme is positive for Rank and, as a result of its implementation over the six month period of October to March, the firm will now expect energy costs in the current financial year to be £34m, up from £23m FY2022. 

Airing caution for FY2023 annual reports, Rank concluded that those costs could 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, but aim to mitigate said cost pressures “as much as possible”.