TOUGH YEAR FOR RANK

7 March 2008

Public smoking bans, taxation and removal of a thousand slot machines challenges UK group


The British gambling group Rank plc which includes Mecca Bingo, Grosvenor Casinos and the Blue Square online gambling group among its subsidiaries has survived a tough year, battling public smoking bans, higher taxation and the enforced removal of a thousand lucrative slot machines. It shows in the lacklustre performance for 2007.

Revenue was down at GBP 534.4 million (2006: GBP 549.6 million) and full-year pre-tax profit from continuing operations, before one-offs, fell to GBP 52.3 million (2006: GBP 53.9 million).

In common with some of its rivals, Rank’s internet gambling division Blue Square.com turned in a positive performance with revenues rising 14.9 percent to GBP 52.1 million (2006: GBP 39.2 million) with operating profit well up at GBP 10.9 million, compared with GBP 7.8 million in 2006.

In the first eight weeks of the year bingo like-for-like revenue fell by 13.5 percent, while that from casinos dropped by 13.4 percent.

Chief Executive Ian Burke said: "We expect 2008 to be a challenging year for Rank. "Our priority is to overcome the near-term issues facing our businesses."

Burke defended the company's decision to transfer the management of its pension plans to Goldman Sachs, earning it at least GBP 20 million and saving it more than GBP 30 million in contribution costs. He pointed out that there were 20 000 people in the funds, only 600 of whom were current employees.

The transfer of Rank's GBP 700 million pension scheme clears the way for a sell-off or splitting of the firm, analysts opined.

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