Rank Group suffers 41% slump in profits as bingo and casino customers drop
The company said like-for-like revenue for the full year was down 2.3%.
Rank Group has pledged to charge ahead with a turnaround plan after profits fell 41%, having suffered from stricter checks on punters and a drop in bingo and casino customers.
The group saw pre-tax profit for the year to June 30 tumble 41.4% to £46.7 million, against a 2.3% fall in like-for-like revenue to £738 million.
Rank Group said it was a “challenging year” primarily due to a “disappointing performance” from its Grosvenor Casinos business, which suffered a 6.1% drop in revenue over the period.
The business was knocked in by part extreme weather earlier in the year, as well as lower gambling margins from some of its major players.
That was alongside a drop in casino-goers following more stringent checks on customers linked to new guidelines published by the UK Gambling Commission last September.
Mecca Bingo was also hit by a slump in customer visits, which fell 7.9% over the year.
However, it said new bingo concepts like Big Bingo Bash, Bonkers Bingo and student events were helping boost visits and a subsequent rise in revenue and profits.
While operating profit for Mecca fell 4.3%, Rank Group said it was a smaller decline than expected thanks to improved cost controls.
Rank Group chief executive John O’Reilly assured the company is now pushing ahead with a turnaround plan following its poor performance.
“With the backdrop of a disappointing performance in 2017/18, we are now moving quickly to identify the key priorities which will begin to realise the significant underlying potential that I have now seen first-hand since joining the group in early May.”
“We are taking steps to increase our focus on the customer, to accelerate growth in the digital business, to drive cost efficiencies across the business and to strengthen our organisational capabilities.
“This will be delivered within a transformational programme framework, which will ensure that we deliver a growing Rank Group that is fit for the future.”
Rank Group shares were down more than 6% in morning trading.
Ed Monk, an associate director for Fidelity Personal Investing’s share dealing service, said: “Investors have been betting against Grosvenor Casino and Mecca Bingo operator Rank Group since its profit warning in April and that seems unlikely to change after the final results today.
“The company itself described the last year as ‘challenging’ and this was reflected in falling revenue that justifies the previous profit warning.”
He said the results show the digital business is growing but “not fast enough” to make up for fewer visits to its casinos and bingo halls.
Digital revenue for the year was up 9% at £122.5 million.
“The silver lining for investors has been the company’s dividend, which has been growing,” Mr Monk said, noting the 2.1% rise in Rank Group’s dividend to 7.45p per share.
“The payment is becoming less secure, however, as sales suffer,” Mr Monk added.