Rank to cut 240 jobs and shut its head office as smoking ban bites

The bingo-to-casinos group Rank will take the knife to 240 jobs and shut its head office as it battles against a smoking ban in Scotland, which is to be extended to England and Wales next year.

Revenues at Rank's 14 Mecca bingo clubs in Scotland slid 14 per cent in the 13 weeks after the ban was introduced there at the end of March. The Scottish clubs held back trading at the bingo division, where first-half operating profits dropped 16.7 per cent to £36m.

Rank has introduced linked interval games, more flexible sessions and hand-held electronic terminals to combat falling sales at its Scottish bingo halls. It also unveiled a package of cost-cutting measures, saying it would save £10m by laying off 200 staff at Mecca Bingo. Another 40 jobs will go after the closure of the head office in Connaught Place in London, with corporate functions to be merged with the gaming divisional support operations in Maidenhead, saving an extra £6m.

The new chief executive, Ian Burke, said the smoking ban could lead to a new wave of consolidation in the sector as scores of smaller bingo halls have already shut in Scotland and others would be sold. He noted the company's bigger rival Gala had bought 70 bingo businesses since 1998 while Rank had merely acquired two. "We've under-invested," he said, vowing to change that.

He said admissions at Rank's bingo halls had fallen 5-6 per cent annually for the past few years and his goal was to stabilise the business. "We're getting close to stabilising the revenues now, stripping out the impact from the smoking ban," he said.

Rank is in the middle of reviewing its successful Hard Rock chain, which analysts believe could be sold off for £450-500m, as well as selling off the remainder of its Deluxe Media operations. It is turning itself into a pure gaming operator focused on bingo and casinos as restrictions on the industry are being relaxed.

Rank's underlying pre-tax profits, excluding exceptional restructuring costs and discontinued operations, fell nearly 3 per cent to £40.7m in the six months to June. Headline pre-tax profits dropped 39 per cent to £19.9m.