Summer showers bring cheer to Rank's bingo halls

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Rank has been one of the beneficiaries of the awful summer weather after the rain helped mitigate the effects of the smoking ban at its Mecca Bingo halls.

Shares in the company surged 9 per cent, up 13.5p to 167.5p, after Rank, which also runs Grosvenor Casinos and Blue Square gaming website, said first-half pre-tax profits, adjusted for the disposals of its Hard Rock Café and US Holidays businesses, rose to £37.3m, up from £21.9m a year earlier, and ahead of analysts' forecasts. Revenues climbed to £284.6m from £277.3m.

Since the introduction of the smoking ban, like-for-like revenues at its bingo halls had slumped 4.4 per cent, far less than the 12 per cent feared by senior analysts at Morgan Stanley. Analysts said the poor weather had meant gaming fans took refuge at bingo halls instead of spending summer days outdoors. Increased promotion had also had an impact. Ian Burke, chief executive, said: "We have undertaken a significant amount of work to prepare Mecca Bingo for the challenge of the smoking ban in England, which took effect on 1 July 2007. We believe that the actions we have taken will help to stabilise the business in the short term but we are also focused on the longer term modernisation and subsequent growth of Mecca Bingo."

The company has invested aboutund £2m getting the bingo halls ready for the ban, and nearly 80 per cent of its sites across the UK now have outside enclosures, many containing hand-held electronic bingo units so that smokers can continue to play while enjoying a cigarette outside. Mecca has also closed nine underperfoming clubs.

Rank will also be affected by the reclassification of gaming machines under the 2005 Gambling Act which comes into effect on September 1 and will mean a reduction in the number of high jackpot machines paying up to £500 at Mecca, which will limited to four per club. In the casinos there will be a limit of 20 machines per club.

But Mecca is launching Mecca Millionaire, a slot machine which is designed to pay out a £1m jackpot approximately every 45 days.

Rank warned that trading in the second half would be more challenging as the smoking ban would have a greater impact in autumn and winter.

Mr Burke said: "The UK gambling market has entered a dynamic phase in its development, driven by changes in social attitudes, the modernisation of gambling laws ... and investment in modern licensed gaming premises. While continuing to address the near-term challenges facing our businesses, we remain focused on the long-term growth opportunities within gaming."