Rank plans digital overhaul after profit slump
Operator reveals online revamp as a "challenging and highly competitive" environment is blamed for 40% fall in bingo profit
Rank Group chairman Ian Burke has revealed plans to make sweeping changes to its digital business after he attributed a “challenging and highly competitive” environment for a poor set of H1 FY14 results.
The group’s Mecca Bingo brand in particular struggled with digital operating profit from the vertical for the six-month period ended 31 December 2013 falling 40% year-on-year to £6.8m.
Hot weather in July 2013 was also blamed for the performance with the total online customer visits for the period falling 5% year on year to 2.3 million despite the number of registered users increasing 3% to 234,000.
High IT and marketing costs also impacted bottom line performance, with Burke having previously said that a high marketing spend was needed just to “preserve the revenues we’ve got”.
Burke said that the firm intends to redesign its websites, improve content management systems and overhaul its online games offering, paying particular attention to mobile bingo products.
Mecca Bingo mobile revenue for the period increased by 24% year-on-year with the platform now responsible for 22% of total revenue for the brand.
The company will also reduce the number of third party applications it maintains while outsourcing a number of non-core elements, and Burke indicated that such revenue and profit improvement plans are expected to deliver results during the second half of the financial year.
The group’s Grosvenor Casino brand fared slightly better however, reducing its H1 losses by 50% to £0.9m. Revenue increased by 32% year-on-year to £5.8m aided by the launch of live casino products, which are now the brand’s largest revenue stream.
Total group revenues, which include its bricks and mortar businesses, totalled £352.4m, up 16% on the previous year however profit before tax was down 23% to £27.7m.
The Rank Group’s share price fell by 1.5p in early morning trading on the back of the poor results, and Panmure Gordon analyst Simon French has said consensus earnings forecasts for 2014 are now likely to fall to around £71m.