Interim Management Statement

RNS Number : 9825T

Rank Group PLC

07 October 2010

 

7 October 2010

The Rank Group Plc interim management statement

14 and 40 weeks to 3 October 2010
(all comparisons are with the equivalent periods in 2009)

The Rank Group Plc ('Rank' or the 'Group') announces 7% like-for-like growth in Group revenue for the third quarter of its financial year (14 weeks to 3 October 2010), driven by improvements in each of its businesses. Over the same period, total Group revenue increased by 8%. For the year to date (40 weeks to 3 October) like-for-like revenue is up by 4% and total growth has increased by 7%.

The Group has continued to trade well since the half-year with particularly strong performances from both Grosvenor Casinos and Rank Interactive. Encouragingly, Mecca Bingo achieved like-for-like growth in revenue as a result of improved spend per head; whilst Top Rank Espana has maintained steady growth in a difficult economic environment.

Year-on-year Group and segmental revenue growth for 14 and 40 weeks to 3 October 2010*
	Weeks 27 to 40		Weeks 1 to 40
	Like-for-like	Total	Like-for-like	Total
Grosvenor Casinos**	9%	12%	6%	10%
Mecca Bingo**	2%	2%	0%	4%
Top Rank Espana***	1%	1%	1%	1%
Rank Interactive	26%	26%	15%	15%
Group	7%	8%	4%	7%

* Figures not adjusted for free bets, promotions and customer bonuses.

** Like-for-like excludes the effects of club openings, closures and relocations as well as changes to the tax regimes for bingo and casino card room games in HM Government's Budget 2009.

*** Top Rank Espana performance not adjusted for currency movement. In euros, revenue grew by 8% for weeks 27 to 40; and by 5% for weeks 1 to 40.

Grosvenor Casinos

	Weeks 27 to 40		Weeks 1 to 40
	Like-for-like	Total	Like-for-like	Total
Customer visits	6%	11%	6%	14%
Spend per visit	3%	1%	0%	(3)%
Revenue	9%	12%	6%	10%

Grosvenor Casinos delivered 9% like-for-like revenue growth in the 14-week period with customer visits up 6% and spend per visit improving by 3%. This performance was driven by strong growth in customer visits both in our London and in our provincial casinos.

Like-for-like revenue for the year to date is up by 6% with total revenue ahead by 10%.

During September we opened a predominantly electronic casino at Scarborough in North Yorkshire and we will open a similar venue in Liverpool in December. We will shortly commence work to convert our Grosvenor Casinos in Walsall, Birmingham and Plymouth to our successful G Casino concept, with the clubs due to be re-launched during the first quarter of 2011.

At the end of August 2010, we closed our loss-making casino in Hove. We estimate the cost of closure to be approximately £1.1m in 2010 with the net benefit to operating profit in 2011 to be around £0.5m.

Mecca Bingo

	Weeks 27 to 40		Weeks 1 to 40
	Like-for-like	Total	Like-for-like	Total
Customer visits	0%	0%	0%	0%
Spend per visit	2%	2%	0%	4%
Revenue	2%	2%	0%	4%

Mecca Bingo achieved 2% growth in like-for-like revenue over the 14-week period due to a 2% increase in spend per visit. This reflects management success in improving the quality of our games, our food and drink and the customer service offered in our clubs.

For the year-to-date, revenue is broadly in line with 2009 on a like-for-like basis but ahead by 4% on a total basis.

We will extend the Mecca Full House concept from four to six venues with the re-launch of our clubs in Dagenham and Southend-on-Sea during October and November.

Top Rank Espana

	Weeks 27 to 40		Weeks 1 to 40
	Like-for-like	Total	Like-for-like	Total
Customer visits	0%	0%	1%	1%
Spend per visit	0%	0%	0%	0%
Revenue	1%	1%	1%	1%

Top Rank Espana generated 1% growth in revenue during the 14 weeks as a result of slight growth in both customer visits and spend per visit. In euros, revenue increased by 8%, partly as a result of the improvements we have made to our gaming machines offer.

For the year to date, revenue is ahead by 1% in Sterling and by 5% in euro.

Rank Interactive

	Weeks 27 to 40		Weeks 1 to 40
	Like-for-like	Total	Like-for-like	Total
Sportsbook	34%	34%	(2)%	(2)%
Games	24%	24%	18%	18%
Revenue	26%	26%	15%	15%

Rank Interactive grew revenue by 26% during the 14-week period, as a result of investment in marketing, the re-launch of the Blue Square sports betting site and an improvement in sports book margin. Sports betting, bingo and casino all achieved strong revenue growth but poker declined.

For the year to date, revenue is ahead by 15% with strong performances from bingo and casino offsetting lower contributions from sports betting and poker.

Regulation and taxation

Over the course of the summer, we engaged with the Department for Culture, Media and Sport on the matter of regulatory reform for gaming in Great Britain. In particular we discussed the Conservative Party's commitment to positive change for licensed bingo clubs. Whilst timing is at present unclear, it is our understanding that the coalition Government does intend to honour these commitments.

Separately, we note that the Government is still considering changes to the regulation of remote gambling in Great Britain as well as the taxation of amusement machines. We have made it clear that we would support these measures so long as they are delivered within the context of a broader equalisation of regulatory and fiscal conditions for land-based operators.

Outlook

The board is encouraged by the sustained performance improvements achieved by each of Rank's businesses during the period and expects full year performance to be around the top end of analysts' forecasts. Whilst the consumer environment is likely to remain challenging for some time to come, the Group is in a strong financial position and has made considerable progress in improving the standard of its products and services.

Forthcoming announcements

Rank will publish a pre-close trading update on 9 December 2010. The Group's full-year financial results will be released on 25 February 2011.

Ends

Conference call

A conference call for investors and analysts will be held at 8.30am (London time) on Thursday 7 October 2010. Dial-in information follows below:

UK (free call): 0800 694 0257
USA (free call): 1866 966 9439
International: [phone]
Passcode: 12949484

A replay of the conference call will shortly be available from the Rank Group's website (www.rank.com).

Contacts:

The Rank Group
Dan Waugh, director of investor relations                              01628 504053 

Financial Dynamics
Ben Foster/Marc Cohen                                                         020 7831 3113 

Notes to editors: 

1. Analysts' forecasts

Consensus forecasts compiled by Rank show a range of analyst estimates for FY10 adjusted earnings per share of 9.0p to 9.5p, with a mean of 9.3p.

2. About The Rank Group Plc
The Rank Group Plc is a leading European gaming and betting business, based in the UK and listed on the London Stock Exchange (RNK.L). Its principal activities are the operation of bingo clubs and casinos with complementary interactive gaming and bookmaking services.

Rank's operations comprise:

·     Grosvenor Casinos - 35 casinos in Great Britain; two casinos in Belgium

·     Mecca Bingo - 103 bingo clubs in Great Britain

·     Top Rank Espana - 11 bingo clubs in Spain

·     Rank Interactive - online and mobile gaming and betting. Branded websites include bluesq.com, meccabingo.com and gcasino.com.

Rank's businesses receive more than 20 million customer visits per year and the Group employs around 8,000 team members.

For more information about The Rank Group, visit www.rank.com.

3. Effects of tax changes
On 22 April 2009, the Chancellor of the Exchequer announced a reform of bingo taxation. As a consequence, from 27 April 2009, revenue from games of bingo is no longer subject to VAT. However, the rate of bingo duty increased from 15% to 22% (and was subsequently reduced to 20% in March 2010). The effect of this change is to magnify reported revenue (which is stated on a post-VAT basis) and to depress operating profit (due to significantly higher duty, which is accounted for as a cost of sales).

4. Mecca 'Full House'

'Full House' is the project name for Mecca Bingo's new concept club. The first Full House Destination club was opened in Beeston, Nottingham in May 2009. Since then, three Mecca Bingo clubs have been converted to the Full House Destination format. The clubs are branded as 'Mecca - so much more' and while they retain bingo as a core product they also feature enhanced bar and restaurant areas (with table service), an electronic bingo lounge and a broad range of amusement machines.

5. G Casino

G Casino is a modern gaming-based leisure venue. Launched in Manchester in June 2006, G Casino will be extended from 12 to 15 locations in the first half of 2011.

G Casino is differentiated from most traditional casinos through its broad range of gaming and non-gaming activities, with large poker rooms, sports lounges, restaurants and stylish bars as well as traditional and electronic casino games.

G Casino attracts significantly higher levels of customer visits and has a higher proportion of female customers than traditional casinos.

 

END

 

 

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