Rank Group, a leading gambling company in the United Kingdom, has reported a 41% decline in its profits for the financial year ended June 2018. The firm blamed stricter checks and a drop in bingo and casino customers for the drop. It has, however, vowed to put in place a turnaround plan that will see it increase its profits in the coming years.
The group registered a pre-tax drop of 41.4% to £46.7 million for the year that ended on 30th June 2018. At the same time, its revenue dropped by 2.3% to £691 million for the period.
While releasing the report, Rank Group described the previous financial year as a “challenging year.” The group blamed “a disappointing performance” that is registered in its Grosvenor Casinos business which experienced a 6.1% drop in revenues to £373 million in the accounting period.
According to the group, several factors caused the poor performance. First, it blamed the new guidelines that were published by the United Kingdom Gambling Commission in September last year. The “enhanced due diligence” requirements for the customers require that more stringent checks are done on punters. As a result, the number of casino goers has declined.
Business was also stalled by the adverse weather conditions that were experienced at the start of the year. Many casino and bingo lovers were forced to stay at home due to the weather and this in return led to a decrease in revenue for the group.
Its Mecca Bingo division registered a 7.9% decline in customer visits over the year. As a result, the division’s revenue dropped by 22.6% to £208.1 million. The operating profits for Mecca declined by 4.3%. However, Rank Group reported that the fall was smaller than expected and attributed the good performance to improved cost controls.
The group also blamed lower win margins for high rollers as a factor reducing traffic to its business. Alongside the poor operating environment, the firm made impairment charges of £26.9 million. The company termed the charges as “exceptional” and included the closure of a casino in Bradford and under performance of five other casinos.
Following the announcement, the group’s shares fell by 6.1% in the London stock exchange. Ed Monk, who is an associate director at Fidelity Personal Investing share dealing platform said that the company’s profit warning in early April coupled with the consistent rise in dividend has eased the situation.
However, the group’s digital business grew by 9% to £122.5 million. The results are indicative that punters were increasingly opting for online betting. Though there was growth in the digital platform, the company reported that there was a slowdown in the second half of the financial year. The slowdown was attributed to the new customer requirements.
John O’Reilly, an industry veteran, and the group’s chief executive said that the company is focusing on a turnaround plan after its decline in profits. “We are now moving quickly to identify key priorities which will begin to realize the significant potential that I have seen first-hand since joining the group in early May.”
He outlined the steps the group was taking by saying “We are taking steps to increase our focus on the customer, to accelerate growth in the digital business, to drive cost efficiencies across the business and to strengthen our organizational capabilities.”