UPDATE: Rank Upbeat About 2H After 1H Profit Soars

29th Jul 2010 10:30

(Adds detail, CEO comment, analyst comment, share price.) By Hannah Benjamin Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Rank Group PLC (RNK.LN) Thursday said it is optimistic about its second half despite lingering consumer spending pressures, after it posted a surge in first-half pretax profit due to more customers being attracted to its casinos and bingo halls. The Mecca Bingo and Grosvenor Casinos operator said that while it had seen some improvement in underlying trading conditions, it expects low economic growth and low consumer spending growth for the foreseeable future. "We're focusing on things we can improve ourselves, for example ensuring we offer good value for customers and improve things like food," Chief Executive Ian Burke told journalists on a conference call. All of Rank's businesses grew during its first half to June 30, as it attracted new customers and also encouraged existing ones back to its venues. The positive momentum has continued so far in its second half, with comparable revenue rising in the first four weeks of the new half across each of its businesses. Rank's Grosvenor Casinos performed the best in the first half. Profit here climbed 20% to GBP17.6 million from GBP14.7 million, while comparable revenue rose 3.9%. This compares with a 1% fall in comparable revenue at Mecca Bingo. First-half pretax profit leaped to GBP67.4 million from GBP27 million a year earlier, while total revenue climbed to GBP296.6 million from GBP255.9 million. Rank's performance got a boost from a rise in the number of customers visiting Mecca Bingo for the first time in more than a decade. Overall customer numbers across its businesses rose nearly 12% in the six months to June 30 and it now has more than 2.5 million customers who are also spending more, as the amount customers spent at each visit on average climbed 1.5% on the year in the half to GBP22.48. Rank is focusing future investment on its G Casinos concept, which combines traditional casino gambling with food and drink, entertainment and community games such as card room poker. G Casinos would be larger than typical casinos, and Rank plans to open three new-build G Casinos by the end of 2012 and convert at least three Grosvenor Casinos to the G Casinos brand. Rank said the average number of weekly customer visits to its G Casinos is more than 70% higher than the average for a provincial casino in the U.K. Investec Securities analyst Andrew Fitchie resumed coverage on Rank with a "buy" rating and 137 pence price target and told clients: "In the medium term, we see continued investment driving both volumes and spend across each division." At 0916 GMT, Rank shares were up 8 pence, or 7%, at 117 pence, outperforming a 0.3% rise in the Dow Jones U.K. Smaller Companies index. Rank reintroduced a midway dividend of 0.74 pence, having not paid one at the same stage a year earlier. -By Hannah Benjamin, Dow Jones Newswires; 44-20-7842-9298; [email protected] (END) Dow Jones Newswires July 29, 2010 05:30 ET (09:30 GMT)