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Betting Firm Rank Scraps Dividend Payment
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12-Dec-2007, 12:21
Bingo, casino and online betting firm Rank scrapped its final dividend payment on Wednesday, blaming tough trading in its bingo and casino businesses. Rank said its Mecca bingo like-for-like revenues in the 14 weeks since Sept 1. were down 18 percent, admissions were down 15 percent and spend per head fell 3 percent. It 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.
"The short-term trading outlook for Rank remains challenging," the firm said in a statement.
The firm 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. Rank said bingo revenues were showing signs of stabilising with spend per head recovering slightly despite the number of players going into its clubs continuing to drop.
Analysts are worried that the decline in casino and bingo earnings could see Rank breach its borrowing terms 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 30 million pounds of projects.
Rank's share price slumped more than 20 percent after a profit warning in October and closed on Tuesday at 105.50 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 U.S. firm's UK casinos for a 28 percent stake in Rank. Malaysian gambling giant Genting and, according to reports, the Richardson family, have since taken near 10 percent stakes in the firm.