Thursday July 31, 09:13 AM
Rank Group cautious on outlook as H1 adj profit falls, omits dividend
LONDON (Thomson Financial) - Rank Group PLC (LSE: RNK.L - news) . said it is cautious about the outlook for the rest of the year after it reported a fall in adjusted pretax profit for the first half to end-June to 17.6 million pounds from 37.3 million the prior year.
Revenue at the UK casino and bingo company fell to 257.0 million pounds from 284.6 million pounds and group operating profit before exceptional items was 28.9 million pounds, down from 47.9 million.
Chief executive Ian Burke said the group has now stabilised its financial performance, following a very difficult end to last year. He highlighted that although group revenue and operating profit were substantially lower than in the first six months of last year, Rank's performance reflects a significant improvement compared with the second half of 2007. Group revenue was 2.9 percent higher and group operating profit up by 41.7 percent over the prior half-year.
But he said the trading environment for all of Rank's businesses remains challenging, with rising operating costs and increased financial pressures on customers.
'Over the course of recent months we have experienced a slight weakening in the group's performance,' he said.
The board remains positive on the longer term outlook for the UK gaming market.
Rank said its cost reduction programme is on track to deliver 15 million pounds of savings from a reduction in marketing and promotional expenditure in Mecca Bingo and Grosvenor Casinos, improvements in purchasing and operating efficiencies and a small number of redundancies.
Since the one-year anniversary of the introduction of the English smoking ban on July 1 2007, both Mecca Bingo and Grosvenor Casinos have seen like-for-like growth in spend per head but admissions remain lower than in the same period last year, the group said. This performance reflects in part the relatively robust performances of these businesses in July and August 2007, in the weeks immediately following the introduction of the smoking ban but before the abolition of Section 21 terminals.
Like-for-like revenue in both Blue Square and Top Rank Espana declined during the second quarter of 2008 and this has continued into the start of the second half of the year.
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