Trading Statement - 52 weeks

RNS Number : 2294F

Rank Group PLC

08 January 2010

 

8th January 2010

The Rank Group Plc trading update for 12 and 52 weeks to 27 December 2009 
(all comparisons are with the equivalent periods in 2008)

The Rank Group Plc ('Rank' or the 'Group') announces 3% growth in Group revenue for the 52 weeks to 27 December 2009. This performance was due in large part to the expansion of our casinos business as well as the effect of tax changes contained in the Budget 2009, which increased Mecca Bingo's reported revenue but reduced operating profit. 

During the final 12 weeks of the year, revenue grew by 6% as both Rank Interactive and Grosvenor Casinos delivered improved performances. On a like-for-like basis, revenue increased by 1% in the 52-week period and by 2% in the 12 weeks.  

As a result of the Group's resilient trading performance, its effective cost control measures and its current low cost of financing, Group adjusted earnings per share for 2009 will be significantly higher than in 2008 and will be above the upper end of analysts' forecasts (see note 1). 

Group and segmental revenue to 27 December 2009
	Weeks 41 to 52		Weeks 1 to 52
	Like-for-like*	Total	Like-for-like	Total
Mecca Bingo	0%	2%	0%	2%
Grosvenor Casinos	4%	11%	3%	7%
Top Rank Espana**	(1)%	(1)%	2%	2%
Rank Interactive	7%	7%	(4)%	(4)%
Group	2%	6%	1%	3%

*Like-for-like excludes the effects of club openings and closures 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 declined by 4% between weeks 41 and 52 and by 9% between weeks 1 and 52.

Mecca Bingo

	Weeks 41 to 52		Weeks 1 to 52
	Like-for-like	Total	Like-for-like	Total
Customer visits	(1)%	1%	(4)%	(3)%
Spend per visit	1%	1%	4%	4%
Revenue	0%	2%	0%	2%

Mecca Bingo produced a steady performance over the course of the 52 weeks, with like-for-like revenue in line with 2008. 

During the final 12 weeks, the business maintained like-for-like revenue parity with 2008 in spite of significant disruption caused by the inclement weather conditions in many parts of Britain. Spend per visit grew, principally as a result of product and service improvements to our amusement machines offer and while customer visits were lower, the rate of decline had slowed.

We continued the development of our Mecca 'Full House' club concept, following its launch at Beeston in Nottingham in May 2009. In December 2009 we opened a second 'Full House' at Catford, following a £1.1m refurbishment of the existing Mecca Bingo club. We are investing a further £1.5m to redevelop our Oldbury club under the new format and expect this to open on 28 January 2010.

Grosvenor Casinos

	Weeks 41 to 52		Weeks 1 to 52
	Like-for-like	Total	Like-for-like	Total
Customer visits	7%	20%	5%	13%
Spend per visit	(3)%	(7)%	(3)%	(6)%
Revenue	4%	11%	3%	7%

Grosvenor Casinos produced a positive performance in the 52 weeks with revenue up 7% as a result of the growth of our UK casinos estate. Like-for-like revenue increased by 3% with strong growth in customer visits offsetting a dilution in average spend per visit.

Growth in both revenue and like-for-like revenue accelerated during the final 12 weeks of the year as a result of continued growth in customer visits and the performance of the G Casino brand in particular.

During the final quarter of the year, we opened G Casinos in Coventry (re-branding following acquisition in April), Dundee (new casino) and Sheffield (relocation). We remain on course to grow the G Casino brand to 20 casinos by the end of 2012.

Top Rank Espana

	Weeks 41 to 52		Weeks 1 to 52
	Like-for-like	Total	Like-for-like	Total
Customer visits	(2)%	(2)%	(4)%	(4)%
Spend per visit	2%	2%	6%	6%
Revenue	(1)%	(1)%	2%	2%

Top Rank Espana generated 2% growth in revenue for the 52 weeks, due to the strength of the euro against Sterling. 

In euros, revenue declined by 9% with customer visits and spend per visit down by 4% and 5% respectively. During the final 12 weeks, euro revenue was down by 4% with both customer visits and spend per visit declining at a lower rate than earlier in the year.

Rank Interactive

	Weeks 41 to 52	Weeks 1 to 52
Gaming	14%	7%
Sportsbook	(18)%	(38)%
Revenue	7%	(4)%

Rank Interactive finished the year strongly after a difficult first half. During the final 12 weeks of the year, revenue increased by 7% as a result of an accelerated rate of growth from gaming and a lower rate of decline in sportsbook.

Changes to gaming taxation

In December 2009, HM Government announced that it would reduce the rate of bingo duty from 22% to 20% (having increased it from 15% to 22% in its April Budget). This change is scheduled to take effect at the time of the 2010 Budget.

As announced previously, Rank estimates that this change will benefit the Group by approximately £2.5m in a full year. Whilst the Group has welcomed the move as a step in the right direction, it only mitigates in part the negative impact of tax changes to bingo and card room games (e.g. poker and mah jong) announced in the 2009 Budget. 

The impact of this year's tax changes resulted in Rank incurring approximately £5m of unbudgeted taxation costs during 2009, which is slightly lower than the Group's previous guidance.  

Outlook

During 2009, Rank delivered an encouraging trading performance in an uncertain consumer climate. The Group's land-based businesses each strengthened their market positions through operational improvements and considered investment to enhance standards of service and product.

During 2010, Rank will continue to invest in its businesses, with particular focus on the expansion of the G Casino brand and the development of Mecca's 'Full House' concept. Whilst the outlook for consumer confidence during 2010 is unclear, the board believes that the quality of the Group's customer propositions and the relative strength of its financial position will enable it to continue to progress, improving its competitive position.

Forthcoming announcements

On 25 February 2010, Rank will announce its annual results for the year to 31 December 2009.

ends

Conference call

A conference call for investors and analysts will be held at 8.30am (London time) on Friday 8 January 2010. Dial-in information follows below:

UK (free call): 0800 694 0257
USA (free call): 1866 966 9439
International: [phone]
Passcode: 48921728

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 and published by Rank (at www.rank.com/investors) show a range of analyst estimates for FY09 adjusted earnings per share of 6.8p to 8.1p, with a mean of 7.4p.

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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