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Scottish smoking ban hits Rank
Message was posted: 08:42 Sep 1st, 2006

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Scottish smoking ban hits Rank Fri Sep 1, 2006 1:00 PM BST140 By Pete Harrison LONDON (Reuters) - Leisure group Rank reported a 3 percent decline in underlying first-half profit on Friday and said Scotland's smoking ban was still hurting trading at its Mecca Bingo division. Chief Executive Ian Burke said a recent strategic review had identified five priorities -- re-energising UK gaming, deciding whether to offload the successful Hard Rock restaurants, exiting its Deluxe Media business, restructuring the balance sheet, and saving 16 million pounds of annual costs. "The strategic plan hits all the right notes, but concerns over the smoking ban prevail," said analyst Anna Barnfather at Jefferies International. Rank's shares fell heavily as the stock market opened, but recovered later and by 11:03 a.m. they were 1 percent up on the day at 215-3/4 pence, valuing the group at around 1.2 billion pounds. Rank has shed household names like Butlin holiday camps, Odeon cinemas and Pinewood film studios, but still suffers criticism for being an old-fashioned conglomerate. It recently sold part of its Deluxe Media and Film arms and is reviewing the future of its successful Hard Rock Cafes as it focuses on its Grosvenor casinos and Mecca bingo clubs. Adjusted profit before tax was 40.7 million pounds in the six months to June 30, compared with 41.9 million pounds a year earlier. "In the gaming division, we continue to generate revenue growth, although trading in Mecca Bingo is held back by the impact of the Scottish smoking ban on our 14 clubs in Scotland," said Burke. "In Grosvenor Casinos, revenue growth has slowed slightly over the last eight weeks but remains strongly ahead for the year to date," he added. Burke said he expected to see similar problems at the group's bingo clubs in England and Wales when smoking is banned there in mid 2007. Rank said it had not yet managed to find buyers for its Deluxe Media DVD distribution units in North America and Europe. "We believe that we will be in a position to have exited Deluxe Media no later than the first half of next year, which gives an indication that discussions are well underway," said Finance Director Peter Gill. "If we did have to close them, we'd close them broadly within the provisions in our accounts, so there should be no black hole with Deluxe Media," he said, referring to the anticipated 57 million pounds cost of exiting Deluxe. The interim dividend was reduced to two pence a share from five pence a share last year. Reuters