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Rank Group braces for inflation squeeze after recovering 90% of pre-pandemic levels 

Published: 03:08 18 Aug 2022 EDT

Rank Group PLC - Rank Group braces for inflation squeeze after recovering 90% of pre-pandemic gaming revenue 

Rank Group PLC (LSE:RNK), the owner of Mecca Bingo and Grosvenor Casinos, warned today that the months ahead will be “challenging” due to after it recovered 90% of its yearly pre-pandemic revenue.

The gaming group's full-year operating profit was in line with reduced guidance but its shares fell 7.4% in early trades this morning after the cautionary outlook statement and the revelation of softer conditions in recent trading across its regional casino estate.

On the plus side, current trading has shown some improvement in London casinos and Mecca, along with digital.

Chief executive John O'Reilly said: "The trading environment across the UK is likely to remain difficult in the months ahead with inflationary pressures squeezing consumer discretionary expenditure and cost increases, particularly in energy prices, putting pressure on profit margins.” 

Venue energy costs were £23mln in the past year, up from £13mln a year earlier, and for the coming year are expected to be around £46mln, based on current market prices.

For the past year to 30 June, Rank almost doubled its underlying gaming revenue to £644mln, up from £325.3mln a year earlier, according to its preliminary annual results statement today. 

Its gaming revenue is now just 10% below where it was before the pandemic in 2019. 

The biggest increase in revenue came from its venues, where underlying net gaming revenue grew 209% to £460.7mln, while digital revenue saw gains of 4% to £183.3mln. 

Operating losses were curbed from £82.4mln in the previous year to £40.4mln, which was in line with its reduced guidance range.  

In its previous two trading statements, the group lowered its operating profit expectations for the full year to £47-55mln from £55mn to £65mln, and then to £40mln, reiterating today that challenging conditions continue to impact its operating margins. 

Rank said it would not pay a dividend for the year to 30 June 2022, despite removing a bank-imposed restriction not to pay dividends in July.  

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