the Ranking group is confident that the pandemic “will see a strong recovery in revenue and profitability,” following a return to profitability in the first half thanks, in part, to improved performance at its sites in the first and second quarters.
“Strong customer demand” in the absence of restrictions, which has been somewhat mitigated by the emergence of the Omicron variant, is reported regarding its retail domain, the gambling group’s online business now being “better positioned to continue to deliver on our digital ambition”.
In the six months to 31 December 2021, Rank saw the group’s underlying net revenue increase 90% year-on-year to £333.5m (2020: £175.9m), although that’s down 19% from £408.5. m registered in 2019.
LFL’s underlying operating profit for the first half of £24.1m contrasts with a loss of £41.2m a year earlier and, according to Rank, reflects the opening of operations of the sites throughout the period as well as the continued impact of COVID-19 on leisure and hospitality. premises. 2019 was ahead by 60% at £59.8m.
A 7% growth in active digital customers in the UK was supported by a 37% increase in marketing investments in the first half of the year.
On a revenue basis, digital NGR increased by 7% to £92.1m (2020: £85.9m and 2019: £99.7m), with the group saying the reopening of sites supported revenue growth from omnichannel customers.
“The successful migration of meccabingo.com earlier this month is the final important step in moving to our internal technology platform,” said John O’Reilly, CEO of Rank.
“We expect to complete the Grosvenor migration this summer, which will free up significant development capacity to enable greater agility and speed in the delivery of products, services and enhanced digital customer experiences, as well as synergies of valuable costs.
“During this interim period, I am pleased with the return of more customers and revenue growth across all of our digital brands.”
The company’s sites division was up 168% year-on-year, but fell 20% from two years earlier, as first-quarter increases were tempered by the reintroduction of restrictions until the second quarter, the number cases across the UK rising once again.
Grosvenor, which saw all 52 sites operational during the period, albeit with social distancing measures and other restrictions in place, recorded revenue of £34.9m compared to a loss of 20, £9 a year earlier. This is down 27% from £48.1m in 2019.
Performance across London was reportedly weaker than the rest of the field initially, but “improved rapidly” once most travel restrictions were lifted in October.
Mecca revenue grew 71% year-on-year from £38.4m to £65.7m (2019: 86.3m), with its Spanish brand Enracha up 66% year-on-year from £8.5m to £14.1m, but down 22% from the £18m generated two years earlier.
“As the trading environment continues to be challenging and cost headwinds put additional pressure on the hospitality sector, we have proven that, in the absence of restrictions, our trade rebounds quickly,” said noted O’Reilly.
“Rank is well positioned to regain the strong revenue and earnings growth momentum we created before the pandemic hit. We have strengthened the balance sheet and, with the return to profitability and cash generation, we have been able to accelerate our transformation program to accelerate revenue growth as restrictions are lifted.
“There remains some uncertainty about the impact of COVID-19 on our business over the coming months, but we are accelerating our transformational investments and are very well positioned competitively to benefit as consumers move out of the pandemic.”
As the group’s digital business is in line with expectations and Mecca Bingo is returning to pre-migration revenue levels, Rank reports “smooth trading” on its sites in the first three weeks of January.
Pending no further material restrictions and with improving trading across its retail business in the second half of the year, Rank expects underlying EBIT for the year ending June 30, 2022 is in the range of £55-65m.
Concluding, O’Reilly expressed his enthusiasm for the publication of the government’s white paper on the ongoing review of gambling: “We look forward to the publication of the UK government’s report game review white paper, expected in the coming months.
“Land-based casinos and bingo clubs are in need of a long overdue modernization and the legislative review will hopefully allow us to deliver a broader and more compelling proposition to our customers.”