Rank predicts marginal drop in full year results despite digital growth

UK-listed gaming operator Rank Group said Monday that it expects results from continuing operations for the full financial year to be marginally below last year, despite continued growth from its digital business during the third quarter ended May 5th.

Rank reported a 2 per cent increase in revenues from continuing operations for the eighteen week period ended May 5th, with marginal growth across all three of the company’s brands, Grosvenor Casinos, Mecca Bingo and Enracha.

Q3 2012/13

Revenues from Grosvenor Casinos were up 1 per cent, with results impacted by the recent cold weather in the UK which contributed to a 5 per cent fall in customer visits. Venues revenues remained flat year-on-year, while digital revenues grew by 70 per cent although from a low base.

The company said that the growth in digital customer numbers was partly driven by an increase investment in marketing.

For the 44-week period, total revenues were up 8 per cent, with venues revenues climbing 7 per cent and digital revenues growing 64 per cent.

Revenues from Mecca rose 2 per cent during the 18-week period following a continued good performance from its digital channel which saw revenues climb 16 per cent compared to the same period last year.

Venues revenue fell by 1 per cent following a 7 per cent drop in customer visits due to the impact of snow and the prolonged cold weather, despite a 7 per cent increase in spend per visit. For the 44-week period, total revenues were up 2 per cent, with digital revenues increasing 14 per cent, offsetting a 1 per cent decline in venues revenues.

Rank’s Spanish brand Enracha saw revenues increase by 1 per cent despite a 4 per cent drop in customer visits, while spend per visit rose 5 per cent. For the 44-week period, total revenues fell by 3 per cent.

Rank’s discontinued Blue Square Bet business saw revenues fall by 24 per cent during the 18-week period.

For the full 44-week period, total revenues from continuing operations increased by 5 per cent. Including the discontinued Blue Square operations, revenues were up 4 per cent year-on-year.

“Unsurprisingly, our venues were affected by the persistent freezing weather conditions during the third quarter,” said Rank chairman and CEO Ian Burke. “Against that backdrop, we feel our businesses have performed reasonably well.  

“We remain confident in the group's long-term growth strategy and its increasing focus on the growth areas of digital and casino venues.”

Rank confirmed that all of the conditions for the acquisition of Gala Casinos have been fulfilled, with the company completing the acquisition of the company yesterday.

“I am delighted that we have completed the acquisition of Gala Casinos,” continued Burke. “The addition of 19 casinos creates a market leading position for our Grosvenor Casinos brand, taking us into 11 new markets in the UK.”

Rank said that as a result of the temporary impacts of the abnormal weather during the winter period and a weak London win margin in the last 18 weeks, the company expects its 2012/13 results from continuing businesses (including the contribution from Gala Casinos) to be marginally below last year.

Shares in Rank Group plc (Co. Data) (LSE:RNK) have dropped 3.61 per cent to 160.00 pence per share in London this morning following the announcement.