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Burke returns to Rank as Guoco stops short


RANK GROUP


tumultuous month has seen the Rank Group survive as a listed company long enough to post a slight increase in operating profit before exceptional items for the first half of the year of £29.5m, compared to £28.6m the previous year.


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The volatility behind the ownership of the firm appeared to have come to head with The Guoco Group announcing it held 74.5 per cent of Rank shares - not enough to delist the company - after an aggressive approach to buy up shares with an offer the Rank Board felt devalued the company but could have left share- holders with even less. This caused chief executive Ian Burke and finance director Paddy Gallagher to resign, which in itself persuaded Guoco to change its offer and implement some safeguards for Rank shareholders who didn’t want to sell up


This move has persuaded Burke back into the fold, and is now chairman and chief executive. Rank has since also appointed Clive Jennings as group finance director, and as a director of the company. The company’s growth for the first half of the year, while hardly ground breaking, has been driven partly by a 1.5 per cent increase in customer visits to 11.5m and spend-per-visit up by one per cent to £22.71 led by a strong performance at Mecca Bingo.


Burke commented on the latest results: “During the first half of 2011 we have maintained the progress of recent years as rising customer numbers drive profit and revenue. We have a portfolio of some of the strongest brands in UK gaming and the ability to reach our cus- tomers through our estate of well-invested venues, our high quality websites and increasingly via mobile chan- nels. The strength of our first-half results reflects the success of our efforts to entertain and delight our cus- tomers, with both customer visits and customer numbers up across the group.”


Rank Interactive increased revenue by 24.1 per cent to £34.0m, led by a strong performance from the Mecca Bingo brand. Operating profit rose by 17.4 per cent to £2.7m as the business said it balanced strong trading with sustained investment in key brands and start-up costs for a new brand in Spain. As in 2010, management expects the business to benefit from first half invest- ment to deliver a stronger second half performance. Mobile gaming achieved particularly strong growth and accounted for 5.8 per cent of total revenue in the period (compared with 2.4 per cent during the first half of 2010). In January, several mobile applications were launched for the Mecca Bingo and Blue Square brands and by the end of the period more than 70,000 customers had downloaded them.


The firm said: “One key measure of our success is the extent to which customers choose to play with our brands across multiple distribution channels. During the first half of 2011, the proportion of Rank Group cus- tomers using our brands both online and offline increased from 2.9 to 3.1 per cent. The low level of cross- over represents an area of opportunity for Rank, partic- ularly as the use of mobile communications devices for gaming increases in popularity.”


CLIVE JENNINGS: RETURNS TO RANK AS GROUP


FINANCE DIRECTOR


HORSERACING GENERATES 42.1 PER CENT OF BETFAIR’S SPORTS REVENUES


Webis Holdings has said that it will keep online bookmaker Bet- internet up and running because of its potential going forward. In a trading update, the company said: “The sportsbook business has shown sufficient signs of progress for the board to continue with


Betfair promises big B


etfair is hoping that next year will see the betting exchange kick on after


what it has described as a challenging 12 months. The company saw an 8.1 per cent increase in revenues for the year to £368.6m, with a 54.4 per cent increase in profit after tax to £35.1m, which would be a healthy return for most companies. The problem for Betfair is that during its flotation last October the company was promoted as a certainty for expansion into multiple international markets, but investors have been under- whelmed by the progress during this short period. Chief executive David Yu, who has announced that he will leave the firm when his contract expires next year, anticipates big things from


28 BettingBusinessInteractive • AUGUST 2011


the company in 2012: “The last 12 months have pre- sented challenges and we have redoubled our efforts and focused the business on a clear vision of how to deliver stronger revenue growth in the future. FY12 will be an important year of execution for us, albeit against the backdrop of an unclear economic outlook. Many of the new products we expect to drive future growth will launch in the second half of the year. Accordingly, we expect to make progress in FY12 and for growth to accelerate in the following years.


“The timing and impact of regulatory developments remain uncertain and diffi- cult to predict, although our product plans will leave us well placed to react to any such change. We also expect to continue improving Core


Betfair adjusted EBITDA margin towards our medium- term target of 30 per cent.” Sports revenues for the year grew by 10 per cent, helped by the 2010 World Cup. The number of bets matched, matched volume and total customer losses all increased by around 20 per cent with revenues growing broadly in line with them. Horseracing showed a marginal decline year-on- year, being harder-hit by weak UK economic condi- tions as well as a shift from betting on racing towards other sports. Over the year, revenue from football gen- erated 42.3 per cent of sports revenues with horseracing achieving 42.1 per cent. Betfair’s exchange brings in 92 per cent of the sports rev- enues, but 8 per cent is derived from its bookmaker activities - a slight increase


on the previous year. Yu explained: “We made improvements to our sports product during the year - adding significantly more in- play football matches, an innovative Cash Out feature for football, extensions to our horseracing multiples product and further exclu- sive content for Betfair cus- tomers. Some new products required further tweaking after launch to improve per- formance, and the revenue uplift we were expecting came later in the year than originally anticipated. We also began work on our new integrated Exchange and sportsbook product, which will continue in FY12.” Betfair’s games segment - incorporating casino, arcade and its own proprietary exchange games - generates 18 per cent of core Betfair revenue. Poker revenue


The world’s biggest betting exchange is hoping to fulfil the hopes and drea BETFAIR


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