Rank pushes digital message

Rank pushes digital message

Thursday, January 26, 2017
Bingo and casino operator shows online progress

Rank said the trading environment was “challenging” after it announced half-year figures which showed profits falling back 17 percent largely off the back of a fall in operating profit in both the land-based casino and bingo businesses.

In a conference call with analysts, chief executive Henry Birch admitted it had been a tough year but he suggested that both the company’s brand offerings were performing well compared with their peers. “We think we are taking market share in both casino and bingo,” he claimed.

Total group revenues rose 2 percent on a like-for-like basis with land-based Grosvenor Casino and Mecca Bingo revenues flat on a like-for-like basis but each down 2 percent in actual revenues to £202m and £108m respectively.

The two elements of the business which saw absolute growth over the period were the digital arm, where revenues were up 11 percent to £52.4m, and the Spanish Enracha operation which enjoyed a 33 percent revenue uplift to £16.2m (or an 11 percent rise on a constant currency basis).

Birch was keen to push the message that the digital business was back on track following the Bede integration. “After a period of disruption, the platform is working well,’ he said. The Mecca Bingo online business was flat in revenue terms but the Grosvenor Casino site saw revenue rise 39 percent to £19.3m.

In particular, Birch stressed the progression in total online revenues over the period with the first quarter seeing 6 percent growth and the second weighing in with a 13 percent rise.

Ivor Jones, analyst at Numis, said: “The Bede platform appears to be delivering on its initial promise; it provides data for real-time analytics, allows for sophisticated tailoring of bonuses (and even specific game content) to higher-value players and helps reduce the provision of bonuses to low-value players.”

Jones added that with a Grosvenor-branded (and Kambi-powered) sportsbook now in place and with single-wallet and single account functionality in train, the company was “well placed to catch-up with more mature online competitors.”

In talking about the single wallet efforts, Birch admitted the company had to do more to encourage more omni-channel customers. “Customer research shows there is a huge addressable market of Grosvenor casino visitors who play online,” he said.

New regulations regarding recently introduced AML guidelines lay behind the problematic performance at Grosvenor Casino with Birch saying there was evidence the extra checks with regard to transactions that were above £2,000 were having an as-yet-unquantifiable impact on the business. Customer visits fell 6 percent over the period, although spend per visit rose 4 percent.

At the Mecca Bingo venues like-for-like customer visits were down 6 percent but this was again mitigated by a higher spend per visit which rose 5 percent. The 7 percent fall in operating profit to £13.3m at Mecca was caused in part by the imposition of the National Living Wage over the period.

One disappointment mentioned in the results statement was the inability of the company to source and get planning permission for its new concept bingo and slot hall venues. Birch said the company was struggling to persuade councils of the need for these types of venue on the high street.

Simon Davies, analyst at Canaccord Genuity, said Rank was always set to deliver a weak set of first-half results. “But we see this as an operational low point, with easier comparatives for its second half, and the beginnings of some momentum in its digital business.”

Totally Gaming says: The M&A excitement of the past six months aside, Rank is in the midst of a self-help programme that – if it works – will have implications for the company above and beyond its digital revenue stream.

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