• Mecca Bingo
• Top Rank España
• Grosvenor Casinos
• Blue Square
• Contact Us

Revenue from our UK bingo clubs business Mecca edged lower to £261.7m and operating profit before exceptional items was down by 18.9% to £63.2m. Spend per head growth of 0.7% helped to offset a 1.6% decline in admissions, which in turn was driven by a drop in average frequency of visit. The contraction of operating margin was due in part to an additional £3.3m of rental costs and the estimated £4.5m profit impact of the Scottish ban on smoking in enclosed public areas.

In the 40 weeks between the introduction of the smoking ban and the end of the year, our Scottish clubs experienced a 15% decline in like-for-like revenue. Admissions were 6% lower than in 2005 and spend per head was down by 9%. By contrast, our clubs in England and Wales increased like-for-like revenue by 1% over the same period.

During the year we opened three new clubs, at Crewe, Edinburgh and Paisley and we exited seven clubs, at Aintree, Brighton, Dingle, Easterhouse, Edinburgh, Portsmouth and Stepney. At 31 December 2006 Mecca operated 113 clubs across the UK, including 14 in Scotland and four in Wales.

We have made good progress towards our goals of rebuilding Mecca's share of the bingo market and checking admissions decline. Mecca's share of 'National Game' ticket sales increased from 27.6% in 2005 to 28.8% in 2006. Active membership increased by 3.5%, with 1.1 million members visiting our clubs in 2006.

Our gain in market share resulted from our efforts to improve the competitive positioning of our product by offering consistently high quality, high prize bingo. During 2006 we paid out more than £205m in main stage bingo prizes, representing a 10% increase over 2005. To achieve this we cut the average level of participation fee charged on main stage bingo from 19.0% to 15.3%.

While the immediate effect of this approach has been to reduce revenue, it has proved successful in checking admissions decline. During the second half of the year, Mecca generated modest like-for-like admissions growth in England and Wales.

Gaming machines were the principal area of revenue growth, contributing £72.8m or 27.8% of Mecca's total revenue in 2006. At the end of 2006 our portfolio comprised 374 Section 31 'jackpot' machines, 949 Section 21 terminals and 3,993 AWP machines. From September 2007 we will be required to remove all Section 21 terminals. To counter the loss of these terminals we are introducing a range of improvements to our electronic gaming product. The ability to upgrade our AWP jackpots from £25 to £35 will help to offset this impact. During 2007 we will continue to improve the overall quality of our machines product.

Our long term priorities in Mecca are to drive underlying revenue momentum by focusing on admissions growth and to improve margins through more efficient club management. In the short term we are taking steps to mitigate the negative impacts of the smoking ban and the loss of Section 21 gaming terminals.

Bingo is particularly vulnerable to a smoking ban because of: the high propensity of our members to smoke; the structured nature of bingo's gameplay; the regulatory constraints that restrict innovation; a high fixed-cost base; and the physical constraints of premises licensed for bingo. Our strategy focuses on each of these factors, effecting a coordinated series of countermeasures.

'We are making bingo gameplay more flexible through the introduction of a higher degree of variation between main stage and interval games and by expanding the use of linked games.'

We are making bingo gameplay more flexible through the introduction of a higher degree of variation between main stage and interval games and by expanding the use of linked games. We continue to develop desktop and portable electronic bingo solutions, which give members greater choice in how they play bingo and which have had a positive effect on average book sales.

We are encouraged by the early results from our community outreach marketing initiative which seeks to introduce bingo to new and lapsed customers, particularly to non-smokers.

By the time that the smoking ban is implemented in England on 1 July, we will have introduced sheltered outside enclosures at the majority of our clubs. In turn we will apply for licensing approval to allow gaming in these enclosures, giving those of our members who smoke the chance to continue to enjoy their bingo.

We have carried out a thorough review of our estate to identify those clubs most at risk from the smoking ban and where appropriate we will seek to exit vulnerable locations, either through licence relocations or outright disposals. In February 2007 we completed the sale of our Hounslow club and later that month we announced that we would close a further nine clubs.

^ Back to Top