Trading Statement: 49 weeks t

RNS Number : 6263X

Rank Group PLC

09 December 2010

 

9^th December 2010

The Rank Group Plc trading update for nine and 49 weeks to 5 December 2010
(all comparisons are with the equivalent periods in 2009)

The Rank Group Plc ('Rank' or the 'Group') announces continued growth for the nine weeks to 5 December 2010. Management now expects Group earnings per share for 2010 to be towards the top end of analysts forecasts (see note 1).

Rank achieved a 3% increase in like-for-like revenue during the nine-week period with total revenue up 4%. For the year to week 49, Group revenue was up 7% and like-for-like revenue ahead by 4%. This performance was driven principally by continued strong trading in Grosvenor Casinos.

Group and segmental revenue to 5 December 2010*
	Weeks 41 to 49		Weeks 1 to 49
	Like-for-like	Total	Like-for-like	Total
Grosvenor Casinos**	8%	9%	7%	10%
Mecca Bingo**	(1)%	(1)%	0%	3%
Top Rank Espana***	5%	5%	2%	2%
Rank Interactive	5%	5%	13%	13%
Group	3%	4%	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 10% for weeks 41 to 49; and by 6% for weeks 1 to 49.

Grosvenor Casinos

	Weeks 41 to 49		Weeks 1 to 49
	Like-for-like	Total	Like-for-like	Total
Customer visits	3%	7%	5%	13%
Spend per visit	5%	2%	1%	(2)%
Revenue	8%	9%	7%	10%

Grosvenor Casinos grew like-for-like revenue by 8% in the nine-week period with customer visits up in both London and the provinces. Spend per visit increased by 5%.

For the year to week 49, the business achieved 10% growth in revenue and was up by 7% on a like-for-like basis.

We have continued to invest in the enhancement and expansion of our casinos estate. Today sees the relaunch of our Birmingham casino following its conversion to the successful G Casino format. With 13 G Casinos now trading and two additional conversions due in early 2011, we remain on track to achieve our target of 20
G Casinos by the end of 2012. In addition, we will open a small electronic casino in Liverpool later this month, taking our total number of casinos in Great Britain to 36.

Mecca Bingo

	Weeks 41 to 49		Weeks 1 to 49
	Like-for-like	Total	Like-for-like	Total
Customer visits	(5)%	(5)%	(1)%	(1)%
Spend per visit	4%	4%	1%	4%
Revenue	(1)%	(1)%	0%	3%

Mecca Bingo like-for-like revenue declined by 1% in the nine-week period as the recent cold weather had a severe impact on customer visits (down 32% during the week to 5 December 2010). Improvements to the quality of food and drink in clubs contributed to a 4% increase in spend per visit, which partly offset the lower number of visits.

For the year to week 49, the business achieved 3% growth in revenue, with like-for-like revenue in line with the comparative period in 2009.

We have recently converted our Mecca Bingo clubs in Dagenham and Southend-on-Sea to the Full House format. We now have six Full House clubs and will continue to assess their performance before determining further roll-out plans.

Top Rank Espana

	Weeks 41 to 49		Weeks 1 to 49
	Like-for-like	Total	Like-for-like	Total
Customer visits	2%	2%	1%	1%
Spend per visit	3%	3%	1%	1%
Revenue	5%	5%	2%	2%

Top Rank Espana achieved 5% revenue growth in the nine-week period in Sterling. In euro, the business grew revenue by 10% with operational improvements and continued enhancements to gaming machines behind a 8% increase in euro spend per visit. Customer visits in the period were up by 2%.

For the year to week 49, the business achieved 2% growth in Sterling revenue and 6% growth in euro. We consider this a highly creditable performance given the backdrop of challenging economic conditions in Spain.

Rank Interactive

	Weeks 41 to 49	Weeks 1 to 49
Games	11%	17%
Sports	(24)%	(6)%
Revenue	5%	13%

Rank Interactive achieved a 5% increase in revenue during the nine-week period as continued growth from Meccabingo.com and gcasino.com offset weakness in sportsbook and poker.  

For the year to week 49, the business has achieved a 13% increase in revenue.

Regulatory changes

There are a number of proposed changes to regulation, taxation and legislation which may influence the future performance of Rank's businesses.

In Spain, where Rank operates 11 bingo clubs under Top Rank Espana, a ban on smoking tobacco in public places is expected to take effect from 2 January 2011. This will extend a partial ban introduced in 2006.

Meanwhile the Madrid Regional Authority has proposed a one-year trial reduction in bingo duty from 22% of stakes to 15% in order to benefit customer payouts. Rank has welcomed this proposal and hopes that it will be extended beyond the one-year trial and that it may be adopted by other regional authorities in Spain.

In Britain, the Department for Culture, Media and Sport has proposed measures to enhance the quality and range of gaming machines available in licensed bingo clubs and arcades. The proposals are subject to a period of consultation, scheduled to conclude on 25 January 2011. Rank has welcomed these proposals.

Outlook

Rank has achieved sustained revenue and earnings growth in the year to date, despite the difficult economic environment. The outlook for 2011 remains challenging with the increase in the standard rate of VAT and public sector redundancies likely to have a negative effect on consumer sentiment in Great Britain. Nevertheless, the board is confident that Rank's customer focus, its sustained investment in the quality of its assets and its operational momentum have put the Group in a strong competitive position for the year ahead.

Forthcoming announcements

Rank will announce its annual results for the year to 31 December 2010 on 25 February 2011.

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Conference call

A conference call for investors and analysts will be held at 8.30am (London time) on Thursday, 9 December 2010. Dial-in information follows below:

UK (free call): 0800 694 0257
USA (free call): 1866 966 9439
International: [phone]
Passcode:26478799

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

Contacts:

The Rank Group Plc investor relations
Dan Waugh                                                                             01628 504053
Philip Munn                                                                              01628 504149            

Financial Dynamics
Ben Foster/Marc Cohen                                                         020 7831 3113

Notes to editors: 

1. Analysts' forecasts

Consensus forecasts compiled and published by Rank (at www.rank.com/investors) show a range of analyst estimates for FY10 adjusted earnings per share of 9.5p to 9.8p, with a mean of 9.6p. Analyst estimates for FY11 adjusted earnings per share range from 9.9p to 10.8p, with a mean of 10.3p.

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%. 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).

In December 2009, HM Treasury announced that the rate of bingo duty would be reduced from 22% to 20% at the time of the 2010 Budget. Even at 20%, the rate of bingo duty will be one-third higher than the 15% rate applied to the majority of gaming and betting activities in the UK.

4. Mecca 'Full House'

'Full House' is the project name for Mecca Bingo's new concept club. The first Full House was opened in Beeston, Nottingham in May 2009. The club is branded as 'Mecca - so much more' and while it retains bingo as a core product it also features 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 had been extended to ten locations by the end of 2009.

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.

 

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