| Mecca Bingo Upbeat as Rank Shares Rise |
| Friday, 31 July 2009 00:00 |
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Rank Group the operator of Mecca Bingo have seen the share price rise today by 7.5 percent up form 69.75p to 75p. The rise comes on the back of the announcement for the first half year trading report that saw a rise in profits by 40 percent. The investors welcomed the news as confidence in the gaming sector is growing. The gaming and bingo firm have also raised caution over the immediate future as the majority of the recent bingo profit has since been subjected to a much larger tax rate. The first half results only contain 2 months of the new tax increase, the result for the remaining part of the year could meant the profit for Mecca bingo will cost the firm £9.4 million annually. Chief Executive of Rank Ian Burke said "the group had performed well during the first half, achieving profitable revenue growth in a difficult economic environment and had managed a reduction in debt." The Mecca Bingo Group in conjunction with the Bingo Association will continue to press the Government on the issue of GPT. The Bingo Group has also laid out a clear strategy in development of their existing bingo estate and some of the existing new product trials in the new Mecca Bingo club at Beeston will be rolled out to other bingo halls within the Mecca bingo estate. As for the future of the online Mecca Bingo brand Burke went on to say "We have set out a clear strategy for growth within the UK gaming market, expanding our portfolio of G Casinos, delivering operational improvements in Mecca Bingo and repositioning Rank Interactive to prioritise its gaming websites and meccabingo.com in particular" It is encouraging to see the Bingo industry is turning a corner and against all the odds appear to be clawing its way back to the position it deserve. The trading conditions in bingo clubs have now stabilised but a couple of factors need to be addressed if the bingo industry is to survive. The Government need to apply a fair tax system and return to the 15 percent gross profits tax level that Mr Gordon Brown promised in his original budget. Some bingo companies are carrying a debt burden that is disproportionate to level of trade they do. It is not the fact that many bingo clubs make losses because they do not get enough customers, it is largely down to the fact that they do not have enough turnover to service the interest payments on the existing debts. Some clubs may have been over trading at the time of acquisitions and may mean that the debt holding on the club exceeds its trading conditions. It does not necessarily make a bad investment if the debt levels were written down.31st Jul 09
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