Profits fall at Rank Group despite strong digital growth
Rank Group PLC, owner of the Mecca Bingo and Grosvenor Casino chains, saw its full year profits decline 7%, weighed by exceptional items.
Shares fell 3.53% to 232p in morning trading.
Statutory pre-tax profit in the year to 30 June fell to £79.7mln from £85.5mln a year ago, hit by costs related to the underperformance of Grosvenor chains in Southend and Plymouth, the disposal of a Mecca site at Bradford and the restructuring of UK operations.
Revenue dipped to £707.2mln from £708.5mln with the company blaming a “challenging UK retail environment”. A 12% increase in revenue at the group’s UK digital operations and a 23% at the Spanish unit was offset by 3% decline in its UK retail arm.
Rank said following tough trading conditions at the end of the 2015/16 fiscal year and the beginning of 2016/17, it undertook a comprehensive review of its cost base with a particular focus on labour following the introduction of the National Living Wage in April 2016.
The company decided to reduce front-line labour hours, change its remuneration structure, cut management roles at club level and a simplify its organisational structure.
On the back of the actions, employment costs still rose 2% on pay rises and an increase in the minimum wage.
In August the company opened its first Luda bingo venue in Walsall, Birmingham. Two more Luda venues are due to open in Leeds and Weston-super-Mare in the first half of the current year.
“Additionally, the group has put in place a number of digital, product and venue-based initiatives launching in the current financial year which we expect to drive top line revenues,” said chief executive Henry Birch.
“The new financial year has started well and the board looks to the future with confidence.”
The company raised its dividend by 12% to 7.30p as it cut net debt by 70% to £12.4mln and delivered a 6% increase in cash generated from continuing operations to £116.3mln.