In its latest trading statement the Rank Group has declared a 2% decline in total revenue for the 49 weeks to 9 December 2007. Group operating profit for the year is expected to be in line with market expectations. The update, released this morning, was followed by an 8% slide in the company’s share price.

Rank states that the smoking ban, restrictive changes to gaming regulations and weakening consumer confidence have resulted in an uncertain outlook next year. This uncertainty has resulted in the Rank Board declaring that no final dividend will be paid for 2007. The company has also reviewed capital spending plans for 2008 and decided to defer a number of major projects. Next year’s guidance on capital expenditure has been revised from £50 million to £20 million.

The gradual weakening in consumer confidence has been noticed in Spain also. Top Rank Espana has recorded a softening in admissions over the last quarter. Mecca Bingo in England and Wales experienced a 16% fall in admissions for the 14 weeks from 1 September 2007, and a 13% decline in Scotland. At Grosvenor Casinos the drop in admissions was 5%.

The company trading statement commented, “While the decline in admissions is disappointing we have seen continued growth in active membership, with strong growth in new member sign-ups in those clubs that have received advertising support since the end of September 2007.”

It continued, “We will continue with our strategy of making selective investments to upgrade the quality of our casinos portfolio and we intend to open two new G Casinos, at Thanet in Kent (a relocation of the Grosvenor Casino Ramsgate licence) during the first half of 2008 and at Aberdeen (a new licence) in the second half of the year.”

The Grosvenor Casino in Liverpool will be closed at the end of the year, something the company blames on the Government’s sudden and unexpected decision to increase gaming duty from April 2007. The licence will be retained with an intention to develop on an alternative site in the medium term.

Blue Square, Rank’s interactive division, saw like-for-like revenue grow 34% during the 49 weeks of 2007. The performance was driven by the success of interactive gaming products, particularly meccabingo.com. Blue Square has also made progress with its strategy to pursue growth beyond the UK, including online bingo for the Spanish market due to be launched early next year.

Summing up the outlook Rank states, “The short-term trading outlook for Rank remains challenging. However, the Board remains confident in its long-term strategy to generate value for shareholders by taking advantage of the anticipated growth in leisure-based gambling, primarily in the UK. Rank intends to provide an update on this strategy and the prospects for its businesses at the presentation of its preliminary results on 29 February 2008.” (E-12.12.07)

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