Gaming group is facing a challenge

Mar 1 2008 by Iain Laing, The Journal

GAMING group Rank has braced investors for another tough year despite signs of improved trading at its Mecca Bingo clubs.

The firm – hit by last year’s smoking bans, restrictions on money-spinning games machines and a consumer slowdown – saw underlying profits fall 7% to £68.3m in 2007.

Rank expects a “challenging” 2008 but said it saw signs of a “modest improvement” at Mecca, even though like-for-like revenues fell 13.5% in the eight weeks to February 24.

Rank closed 11 bingo clubs in a year where Mecca’s operating profits fell by more than 31% to £43.6m – although it has this month opened a new site in Thanet, Kent, taking club numbers to 103.

The company is tackling the ban with plans to provide outside enclosures at 50 of its clubs by the end of the year, and running “interval bingo” games for smoking punters.

The introduction of handheld electronic bingo terminals across 99 clubs allows visitors to play more games, while the chain will also improve its food offering, Rank said.

The company, which has seen its shares slump by almost half since October, outlined plans to save a further £15m by cutting marketing spending and overhead costs.

Rank has also pruned back investment plans for its Grosvenor Casinos chain and transferred its pension scheme to a subsidiary of investment bank Goldman Sachs, saving more than £30m a year in payments. The group operates 32 casinos and holds licences for a further 13 but trading was also hit by the ban as well as higher casino gaming duties in 2007.