t added that Grosvenor casino like-for-like revenues were down 7 percent, admissions were down 5 percent and spend per head was down 2 percent.
Rank has had a torrid time over last year with its bingo business hammered by a ban on smoking in its clubs and by the forced removal of around 950 lucrative slot machines, while its casinos have also been hurt by a surprise hike in tax. "The short-term trading outlook for Rank remains challenging," Rank said in a statement.
It said bingo revenues were showing signs of stabilizing; with spend per head recovering slightly despite the number of players going into its clubs continuing to drop.
"There has been little or no improvement in trading since its mid-October profit warning and with winter now here it is hard to see any improvement until spring at the earliest," said analysts at Merrill Lynch. "Its Spanish Bingo and Blue Square operations are also starting to slow," they added.
"Having stabilized the revenues and taken actions on the cost we now have to rebuild the admissions," Chief Executive Ian Burke told Reuters. Analysts are worried that the decline in casino and bingo earnings could see Rank breach its borrowing agreements with banks.
Rank said it expected to stay within banking covenants as long as trading did not deteriorate further, but scrapped its planned 4 pence final dividend and said it was shelving us$ 61.41 million of projects. "The way trading looks we have taken a package of measures that we think are sensible," finance chief Peter Gill told Reuters.
"In a typical year we would do some fairly significant refurbishments or extend clubs, develop new bingo sites. Basically we have deferred those projects for 6 to 9 months to see how 2008 pans out," added Burke.
Rank’s share price slumped more than 20 percent after a profit warning in October and fell almost 6 percent in early trading to 101.5 pence, compared with a price around 300 pence two years ago. The share price fall has sparked media and market speculation that the firm could be a takeover target.
Media reports say Rank rejected an offer from Harrah’s to effectively swap the US firm’s UK casinos for a 28 percent stake in Rank. Malaysian gambling giant Genting has since taken a near 10 percent stake in the firm, while the Richardson family has taken a similar holding through Contracts For Difference. "The Genting investment represents confidence in the businesses we have," said Burke.
"We have been in contact with them (the Richardsons) and will be contact with them after today... Investors that have CFDs, we would make the case they should convert that into equity," he added.