Pre-tax profits at Rank Group fell over 40 per cent during a “challenging year” for the UK-listed gambling company, hit by a “disappointing performance” at Grosvenor Casinos and fewer people visiting Mecca Bingo halls.
The company has faced a tumultuous few months, issuing a profit warning in April and appointing the industry veteran John O’Reilly in May to take over as chief executive from the outgoing Henry Birch.
On Thursday, reporting results for the 12 months ended 30 June 2018, Rank said that pre-tax profits fell 41 per cent to £46.7m, while revenues also dropped close to 2.3 per cent to £691.0m. Shares fell 6 per cent in early trade in London.
The company said that the falls were primarily due to a 6.1 per cent drop in revenues at Grosvenor Casinos to £373m, its chain of casino venues.
It blamed a number of factors, including; “enhanced customer due diligence” requirements from the UK regulator Gambling Commission, which has demanded more stringent checks on punters; lower win margins from high rollers; and “adverse weather” at the start of the 2018.
The company also said it had suffered impairment charges worth £26.9m due to a number of “exceptional” costs, such as the underperformance of five casinos and the closure of another in Bradford.
Revenues at its Mecca division also fell 2.6 per cent to £208.1m, thanks to a 7.9 per reduction on people attending the bingo halls.
However, revenues at its digital business continued to grow, with sales from Rank’s gambling sites up nearly 10 per cent to £122.5m as punters increasingly switch to betting online.
But the company also warned that there was a “slowdown” in its growth from its UK digital sites in the second half of the financial year, which were related to the new due diligence requirements for customers.
Rank said it expected its performance for the next 12 months to be “in line with the current consensus expectations” with analysts predicting pre-tax profits of £78.1m. That would require the group to almost completely reverse its losses this year.
Mr O’Reilly said he had implemented a turnaround plan, based around cost controls and renewed focus on the group’s digital business to spur growth.
He said: “I joined Rank because of its underlying potential. 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.”
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