31st Jan 2014 08:25
LONDON (Alliance News) - Rank Group PLC Friday said it swung to a loss in the first half of its financial year as its Grosvenor Casinos and Mecca Bingo venues suffered a sharp drop in profits, but it said it still expects cost-cutting measures to start kicking in during the second half of the year and it raised its dividend.
The owner of casinos and bingo venues reported a pretax loss of GBP6.2 million for the six months to end-December, compared with a profit of GBP28.2 million a year earlier, even though revenues rose to GBP337.0 million, from GBP290.6 million.
Its cost of sales, operating costs and finance costs all rose sharply, while operating profit at its Grosvenor Casinos fell 26% on a like-for-like basis and was down 38% in its Mecca business. Its London operations suffered because its London Park Tower casino also underperformed against a strong year-earlier period.
"As previously stated, cost reduction and revenue enhancement actions are in place to improve results in the second half," it said in a statement. "Management anticipates operating profit in the second half, excluding the impact of the acquired casinos, will be broadly in line with the comparable period last year."
It raised its interim dividend 8% to 1.35 pence, which it said reflected its confidence in its outlook.
Rank bought 19 casinos from Gala in May last year, which was one of the reasons finance costs were up. It said it has already invested GBP11.9 million in refurbishing the properties and adding products. It said the portfolio is trading well.
It said it will now focus on cutting costs, stabilising its Mecca business, developing its Grosvenor Casinos through product improvement and design, and building its digital business, particularly for mobiles.
It said it is also preparing for an anticipated increase in the online gambling duty to 15% from December 1.
Rank Group shares were up 0.7% at 137 pence early Friday.
By Steve McGrath; [email protected]; @SteveMcGrath1
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