G Casino and Mecca Bingo owner Rank Group hailed a breakthrough tax relief yesterday, but warned of another change that would hit its future performance.
The firm revealed a plunge in profits, but said a reduction in bingo duty from 20% to 10% from June 30 had prompted it to sign-off on the construction of three new bingo halls in the UK and re-start the refurbishment programme for its existing venues.
It also said the rate reduction meant the group could provide better value for customers in terms of game prizes and funds.
However, Rank warned the introduction of remote gaming duty (RGD) at a rate of 15% in December a tax which applies to all online gaming activity involving a financial transaction would impact on trading going forward.
“Rank has been working hard on assessing the full impact of RGD and developing ways to reduce the negative impact on shareholder value, for example through the renegotiation of key digital contracts and reviewing the effectiveness of digital marketing campaigns.
“The group anticipates the majority of the duty cost will impact digital profitability,” the firm said as it revealed a full-year profits plunge yesterday.
Statutory group revenues in the year to June 30 climbed from £596.2 million to £678.5m but pre-tax profits in the period fell from £42.7m in 2013 to £14.4m.
The firm returned a pre-tax profit figure before exceptional items of £63.4m for the year marginally down on the £64.6m of 2013 but a more than doubling of one-off costs to £49m severely impacted on the bottom line.
The bulk of the cash, a sum of more than £30m, relates to an ongoing tax struggle with the HMRC over output VAT on amusement machines.
The company had received a payout from HMRC in 2010 in relation to output VAT but had to hand back the cash in April this year after a hearing at the Court of Appeal found in favour of the tax authority.
Rank which operates the G Casino in Dundee’s Westport and also has two Mecca bingo halls in the city, said the case would be the subject of further appeal proceedings next spring.
Henry Birch, who took over as group chief executive in May following Ian Burke’s decision to step aside, said the firm had seen an improved performance in the second half of the year following a “challenging” first six months.
The group, which has more than three million registered players and hosted almost 28 million customer visits to its venues last year, said the current financial year had started satisfactorily.
“Since the beginning of July, performance has been in line with management’s expectations and ahead of last year,” the company said.
“While such a short trading period can be distorted by external factors, we are satisfied with the underlying trends.”
Shares closed down 1.20p at 168.80p.