Shares in Mecca Bingo operator Rank rallied today as the group delivered the first signs its business was overcoming the lingering effects of the smoking ban in Scotland.

While reiterating that profits later this year would be hit by the introduction of the ban in England, Rank said that the rate of revenue decline in Scotland had slowed to just 1 per cent in recent weeks.

For the six months to June as whole, revenue in Scotland was down 10 per cent with admissions 13 per cent lower.

Rank said: “In recent weeks we have begun to see some early signs of recovery.”

The comments came in a trading update which showed like-for-like revenues across the group as a whole rose 5 per cent in the first half of the year, buoyed by a 37 per cent surge at BlueSquare, its interactive gaming arm.

Shares climbed 6.5p to 187p. Matthew Gerard, analyst at Investec, said: “They’ve beaten my expectations in every division.”

Rank, the UK’s second-biggest bingo operator, has been investing around £2 million to prepare its Mecca Bingo halls for the smoking ban in England, which takes effect from July 1.

Nearly 80 per cent of its sites across the UK now have outside enclosures with many containing electronic bingo machines so that smokers can continue to play while enjoying a cigarette.

It has also closed nine underperfoming clubs, including the Reading site made famous last October when Prince William spent an evening playing bingo with Army friends.

Last year, Rank reported a 17 per cent profits fall at Mecca following the introduction of the ban in Scotland.

Ian Burke, Rank's chief executive, said that the group was as well prepared as it could be for the ban in England.

“Our approach to the smoking ban is to focus on the changing needs of our customers and to adapt our product offer accordingly,” he said.

“The initiatives we are introducing are designed to make sure that our customers’ experience of bingo is enhanced rather than impaired by the smoking ban, with consistently attractive prizeboards, the development of electronic bingo products and the creation of outside enclosures where customers can continue to play bingo.”

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