Rank Group PLC
12 October 2007
12 October 2007
Rank Group Plc Trading Statement
40 weeks to 7 October 2007
Rank Group announces 2% like-for-like growth in continuing group revenues for
the 40 weeks to 7 October 2007. Total sales for the continuing group are 1%
below the comparable period in 2006.
However, after an encouraging start to the second half of the year, the group's
UK retail businesses, Mecca Bingo and Grosvenor Casinos, have experienced a
significant deterioration in revenue in recent weeks. This is largely
attributable to a combination of the loss of Section 21 gaming terminals (as
required by the Gambling Act 2005 from 1 September 2007) and the bans on smoking
in enclosed public places, which have been in effect across the whole of the UK
since 1 July 2007.
While the recent trading difficulties affecting our UK retail businesses are
worse than we had anticipated, we understand that they are shared by the broader
UK bingo club and casino markets and are not unique to Rank.
Our interactive business, Blue Square continued to deliver impressive growth
while our Spanish bingo clubs business, Top Rank Espana performed well.
Segmental and group revenue for 40 weeks to 7 October 2007
Like-for-like revenue Total revenue
(adjusted for club openings,
closures & relocations)
Mecca Bingo (2)% (5)%
Top Rank Espana 8% 8%
Grosvenor Casinos 0% (3)%
Blue Square 38% 38%
Group 2% (1)%
Mecca Bingo
Having delivered an encouraging start to the second half of the year, our UK
bingo clubs were subsequently impacted by the loss of the highly popular Section
21 gaming terminals. This compounded the negative effects of bans on smoking in
enclosed public spaces, leading to a significant deterioration in revenue from 1
September 2007.
In the five weeks following the removal of our Section 21 terminals, Mecca Bingo
like-for-like revenue declined by 19% across the UK with admissions down by 13%
and spend per head down by 7%. Revenue in England and Wales fell by 22%, while
in Scotland (where the smoking ban was introduced in March 2006) it was 6% lower
than in the comparable period in 2006.
Our focus remains the protection of revenue in the light of recent changes in
legislation, adapting our clubs, our products and our service to improve the
customer experience.
We have now gained licensing approval for outside gaming areas at 28 of our
clubs and 14 of these are now in operation. In addition we have extended
handheld electronic bingo to 78 of our clubs. Notwithstanding the recent
negative trading, both of these initiatives have made valuable contributions to
their club revenues. We continue to explore opportunities to develop improved
gaming and non-gaming products in our bingo clubs.
Top Rank Espana
Revenue from our Spanish bingo clubs business, Top Rank Espana, had grown by 8%
in the 40 week period. Spend per head was ahead by 10%, off-setting a 1% decline
in admissions.
Grosvenor Casinos
In the 40 week period since the start of the financial year like-for-like
revenue has been in line with the comparable period last year, with a marginal
increase in spend per head offsetting a 1% decline in admissions.
During the last five weeks, revenue was down 9% with admissions 1% lower and
spend per head down by 8%. The fall in spend per head is attributable largely to
the effects of the smoking ban on customer dwell times, which has reduced win
from table and machine gaming. In addition, the requirement to remove Section 21
gaming terminals has had an impact in some casinos.
Towards the end of September 2007, we commenced our first advertising campaign
for our UK casinos, targeting new customers principally through local and
regional press and radio advertising.
Also in September we gained a licence to operate a casino in Edinburgh. In total
we have gained ten new casino licences over the past three years, providing the
group with significant opportunity to add scale and widen distribution.
Blue Square
Our interactive business, Blue Square, has maintained a strong rate of growth.
For the first 40 weeks of the financial year revenue is 38% ahead of the
comparable period in 2006, with an exceptionally strong performance from our
gaming products. Revenue growth from our online bingo and games brand,
Meccabingo.com has been particularly impressive.
Outlook
The coincidence of a number of external factors has resulted in a period of
volatility and a lack of visibility unprecedented in the UK gaming industry.
Should the disappointing levels of recent weeks' trading continue through to
the end of the year (and given the relatively high level of fixed costs within
Mecca Bingo and Grosvenor Casinos) group operating profit for the full year
would be significantly lower than in 2006.
The board remains committed to its strategy of developing modern leisure-based
businesses to benefit from the growing popularity of gaming activities. We will
continue to take vigorous action to meet the immediate challenges facing our
businesses while retaining our focus on the long term growth opportunities for
Rank.
Ends
Conference call: A conference call for investors and analysts will be held at
3.30pm today (Friday 12 October). To access this call, please follow the dial-in
instructions below.
UK: 0800 6940 257
USA: 1866 966 9439
International: +44 (0) 1452 555 566
Passcode: 20637879
Enquiries:
The Rank Group Plc
Dan Waugh, director of investor relations: 01628 504053
M: Communications
Nick Miles/ James Hill: 020 7153 1530
This information is provided by RNS
The company news service from the London Stock Exchange
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