12th Oct 2007 15:04
Rank Group PLC12 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 forthe 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'sUK retail businesses, Mecca Bingo and Grosvenor Casinos, have experienced asignificant deterioration in revenue in recent weeks. This is largelyattributable to a combination of the loss of Section 21 gaming terminals (asrequired by the Gambling Act 2005 from 1 September 2007) and the bans on smokingin enclosed public places, which have been in effect across the whole of the UKsince 1 July 2007. While the recent trading difficulties affecting our UK retail businesses areworse than we had anticipated, we understand that they are shared by the broaderUK bingo club and casino markets and are not unique to Rank. Our interactive business, Blue Square continued to deliver impressive growthwhile 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 UKbingo clubs were subsequently impacted by the loss of the highly popular Section21 gaming terminals. This compounded the negative effects of bans on smoking inenclosed public spaces, leading to a significant deterioration in revenue from 1September 2007. In the five weeks following the removal of our Section 21 terminals, Mecca Bingolike-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%, whilein Scotland (where the smoking ban was introduced in March 2006) it was 6% lowerthan in the comparable period in 2006. Our focus remains the protection of revenue in the light of recent changes inlegislation, adapting our clubs, our products and our service to improve thecustomer experience. We have now gained licensing approval for outside gaming areas at 28 of ourclubs and 14 of these are now in operation. In addition we have extendedhandheld electronic bingo to 78 of our clubs. Notwithstanding the recentnegative trading, both of these initiatives have made valuable contributions totheir club revenues. We continue to explore opportunities to develop improvedgaming 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% declinein admissions. Grosvenor Casinos In the 40 week period since the start of the financial year like-for-likerevenue has been in line with the comparable period last year, with a marginalincrease in spend per head offsetting a 1% decline in admissions. During the last five weeks, revenue was down 9% with admissions 1% lower andspend per head down by 8%. The fall in spend per head is attributable largely tothe effects of the smoking ban on customer dwell times, which has reduced winfrom table and machine gaming. In addition, the requirement to remove Section 21gaming terminals has had an impact in some casinos. Towards the end of September 2007, we commenced our first advertising campaignfor our UK casinos, targeting new customers principally through local andregional press and radio advertising. Also in September we gained a licence to operate a casino in Edinburgh. In totalwe have gained ten new casino licences over the past three years, providing thegroup 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 thecomparable period in 2006, with an exceptionally strong performance from ourgaming 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 ofvolatility and a lack of visibility unprecedented in the UK gaming industry.Should the disappointing levels of recent weeks' trading continue through tothe end of the year (and given the relatively high level of fixed costs withinMecca Bingo and Grosvenor Casinos) group operating profit for the full yearwould be significantly lower than in 2006. The board remains committed to its strategy of developing modern leisure-basedbusinesses to benefit from the growing popularity of gaming activities. We willcontinue to take vigorous action to meet the immediate challenges facing ourbusinesses while retaining our focus on the long term growth opportunities forRank. Ends Conference call: A conference call for investors and analysts will be held at3.30pm today (Friday 12 October). To access this call, please follow the dial-ininstructions below. UK: 0800 6940 257USA: 1866 966 9439International: +44 (0) 1452 555 566 Passcode: 20637879 Enquiries: The Rank Group PlcDan Waugh, director of investor relations: 01628 504053 M: CommunicationsNick Miles/ James Hill: 020 7153 1530 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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