The company have also announced that they are likely to transfer its pension funds to an insurer and are engaged in “active discussions” with interested parties such as Paternoster, Legal & General, Aviva and AIG.  The company’s pension fund has 20,000 members and assets worth £650 million. 

The company has seen profits falling recently mainly due to the smoking ban, taxation and the withdrawal of section 21 machines from its casinos.  Its bingo operation, Mecca, has seen revenue fall by as much as 18 percent in the 14 weeks since September. Reuters business news also reports that admissions are down 15 percent and spend per head has decreased by 3 percent.

Rank’s Grosvenor casino operation has seen revenue fall by 7 percent, admissions down 5 percent and spend per head down 2 percent over the same period.

There is some good news for Rank despite the group’s troubles.  Its Internet operation, Blue Square, has seen sales rise by 34 percent and Top Rank Espana, the group’s Spanish bingo clubs, has seen sales increase by 8 percent.  These two operations have however, seen growth slowdown in recent weeks.

A statement issued by Rank pointed out that bingo revenues are starting to stabilise with spend per head showing a modest improvement despite a fall in the number of players visiting its clubs.  The statement also acknowledged that the trading outlook for Rank is challenging in the short-term.

Analysts at Merril Lynch said, “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.  Spanish bingo and Blue Square operations are also starting to slow.”

Rank has scrapped its 4 pence final dividend and has shelved its budget of £30 million which would have been spent on new projects.  The group has said it expects to stay within its banking covenant as long as it doesn’t see a further fall in trading. 

Rank’s shares a year ago were trading at around 246p now that figure has fallen to around 101p.  There is speculation of a takeover with several companies rumoured to be interested.  This follows the developments of the past two weeks whereby two companies have bought near 10 percent stakes in Rank.  Malaysian firm, Genting, was the first company to announce it had bought a stake in Rank.  Earlier this week Richardson Capital also announced it was taking over almost 10 percent of the company.

Lee Richardson, a director of Richardson Capital said Rank is undervalued. “Rank has 45 casino licences – those licences are no longer being dished out like candy so they are a valuable commodity.
“The share price has taken a real hammering and we believe we are getting in at value,” said Mr Richardson.

Source:http://www.onlinecasinopress.co.uk/