Rank digital profits flat despite revenue growth
UK operator reports 168% mobile growth, but rise in software and marketing costs hits bottom line
Rank Group said digital profit was flat for the financial year ended 30 June 2013 despite reporting 16% growth in its digital revenues driven by mobile and its Grosvenor Casino brands.
Revenue in the group’s digital business increased to £70.6m, with 72% growth in the Grosvenor Casino brand, but a weaker performance from its Mecca Bingo division meant the bingo vertical’s EBITDA fell by 3% to £22.6m.
The announcement comes despite a 168% increase in revenues for its mobile businesses, with revenues increasing 30% year on year to £13.2m. Thirty percent of the company’s digital customers now play games on its mobile platform, up from the 2012 figure of 23%.
Digital revenue from the group’s Grosvenor Casino brand increased 72% year on year to £9.3m, but the division reported an EBITDA loss of £0.6m, up from a £1.3m loss in the previous year, with Rank citing costs incurred by marketing strategies and software royalty payments.
The brand did, however, more than double its customer base to more than 35,000 in the period.
Rank’s Mecca business fared slightly better, with revenue increasing 10% to £61.3m, but profit shrank to £21.1m, down £500k from the figure it recorded in the previous financial year.
Rank attributed the slump to increased software royalties. Rank has continued to boost Mecca’s online offering in recent months, announcing slots deals with Bally and Greentube in recent months, whilst also renewing its previous deal with GameAccount.
The group stated that digital remains a key strategy moving forward, with investment into its digital distribution channels to continue into next year and plans for online slots launch in Spain through its Enracha brand.
The group’s spin-off of its ailing Blue Square Bet business to Betfair for £5m in April resulted in a loss of £2m after costs relating to asset impairment, redundancies and onerous contracts amounted to £7m.