RANK SCRAPS FINAL DIVIDEND

14 December 2007

Poor bingo and casino results blamed


Online gambling group Rank plc was in the business news spotlight again this week, with dismal news that the group has scrapped its final dividend as a result of indifferent results from its bingo and casino operations. The group has been a target for at least three companies recently buying in to its shares despite difficult trading conditions as a result of taxation and stricter anti-smoking laws.

Land bingo revenues at the group's Mecca venues in the 14 weeks since September began were down 18 percent, admissions were down 15 percent and spend per head fell 3 percent, reports Reuters business news.

Grosvenor land casino like-for-like revenues were down 7 percent, admissions were down 5 percent and spend per head was down 2 percent.

"The short-term trading outlook for Rank remains challenging," Rank said in a statement, which pointed out that bingo revenues were showing signs of stabilising, with spend per head recovering slightly despite a drop in the number of players visiting its clubs.

"There has been little or no improvement in trading since its mid-October profit warning and with winter now here it is hard to see any improvement until spring at the earliest," said analysts at Merrill Lynch. "Spanish Bingo and Blue Square operations are also starting to slow," they added.

"Having stabilised the revenues and taken actions on the cost we now have to rebuild the admissions," Chief Executive Ian Burke told Reuters.

Rank said it expected to stay within banking covenants as long as trading did not deteriorate further, but scrapped its planned 4 pence final dividend and said it was shelving GBP 30 million pounds of projects.

"The way trading looks we have taken a package of measures that we think are sensible," finance chief Peter Gill told Reuters.

"In a typical year we would do some fairly significant refurbishments or extend clubs, develop new bingo sites. Basically we have deferred those projects for 6 to 9 months to see how 2008 pans out," added Burke.

Rank's Blue Square online sports-betting and gaming operation was one major bright spot in the trading statement. Blue Square saw growth in like-for-like revenue of 34 percent in the 49 weeks to 9 December, driven mainly by growth in its gaming operations, notably at Meccabingo.com.

The Rank group remains optimistic that Blue Square will achieve further success following the announcement of its white-label deal with online gambling group 888. The group is also developing an online bingo business in Spain which the company hopes to launch in the first quarter of 2008.

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