Rank admits Mecca Bingo online ‘behind schedule’

Rank admits Mecca Bingo online ‘behind schedule’

Tuesday, August 23, 2016
CEO Henry Birch pins hopes on Mecca revival and new bingo brand

Rank chief executive Henry Birch admitted Mecca Bingo’s digital relaunch was about six months behind schedule after migrating to the new Bede platform in the first quarter of this year.

His comments came after the publication of the company’s annual results which showed digital revenues up 2% for the year to £66.2m. However, as previously communicated in a trading statement in May, the Mecca Bingo digital operation saw total revenues decline 5% in the 19 weeks to 8 May. The introduction of remote gaming duty, meanwhile, meant that operating profits for Mecca Bingo digital fell nearly 40% to £8.6m.

Talking to analysts, Birch laid the blame for the poor second-half Mecca Bingo online performance on “significant stability” issues with the Bede platform and problems related to the introduction of new guidelines from the UK Gambling Commission on self-exclusion.

“I’m aware that others have reported a similar process,” he said referring to the problems spoken about by William Hill. “Although not at (that) scale, it has impacted our VIPs. As a result, although our core business grew by 8% on the year, our VIP business declined by about the same amount.”

However, he said the company was hopeful that Mecca bingo online would be seeing double-digit growth in the second half of this calendar year. “Although we were frustrated with (financial) second-half performance, what we saw was an improving state of affairs albeit clearly not where we wanted to be,” he said. He added that he hoped that the imminent integration of new content from the likes of Net Ent would help improve the situation. The company hopes to add over 100 new games to its various digital brands.

Birch talked briefly about the failed consortium bid for William Hill and refused to comment on the prospects of a straight tie-up with bid partner 888. “We work well with them but haven’t got much more to say at the moment,” he said.

Birch said that results from the Mecca Bingo land-based business continued to “confound” those who suggested the business was in an irreversible decline. While total revenue was down 1% at £221.5m, on a like-for-like basis it was up 2% while EBITDA rose 9% to £45.5m.

The company also said it was pressing ahead with plans for later in the year to launch a new multi-channel bingo brand. The company said several locations had been identified for new bingo halls and the online brand launch would in the first six months of next year. It confirmed that the new brand was being aimed at a different demographic to Mecca.

Faring better from the Bede transition was the Grosvenor Casinos business where digital revenues rose 37% to £30.5m. Even with the impact of RGD, online operating profit rose 71% to £5.3m. The company said improved marketing and bonusing had helped drive a 77% increase in first-time depositors in the year. The digital operation was boosted in the final weeks of the quarter by the soft launch of a sportsbook (provided by Kambi) under the Grosvenor Casino brand and a new poker operation. Birch said neither offering had truly been “pushed in anger” as yet.

The casinos business saw revenues rose 2% for the year to £408.1m but higher player rebate costs and loyalty scheme expenses mean that EBITDA fell 1% to £85.9m. Customer incentives more than doubled at the Grosvenor venues, from £6.7m to £15.9m.

In terms of improving the customer loyalty, the company has introduced a new My Mecca app and is trialling a digital membership scheme for its bingo clubs. It also said it had enhanced its data analytics and CRM teams including the provision on a new data platform and tools.

Total group revenue rose 2% to £753m with group EBITDA before exceptionals also up 2% to £128.2m. Net debt declined by 22% to £41.2m. Birch said the company was be effectively debt free as of the end of the next financial year.

Totally Gaming Says: The launch of a new bingo brand is an unexpected twist in the Rank story given the long standing success of the Mecca Bingo name - one of two blue chip bingo brands in the UK. However Rank's biggest competitors in the online bingo space all run multiple bingo brands in order to attract a wide demographic, so perhaps the company is dipping its toe into that model.

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