Rank Interactive revenues up despite Blue Square struggles
Revenues from under-review sports betting arm fall though overall mobile growth continues.
Rank Group saw revenues from its online arm increase by 12% year-on-year, it announced in financials for the six months ended 31 December, but its loss making Blue Square sports betting arm saw losses double as the listed company’s board continues to discuss its future.
Rank’s largely land-based Grosvenor Casino brand saw the greatest percentage growth, rising by 91% to £4.4m, while the £30.4m in revenues generated by Meccabingo.com (up 10.9% year-on-year) represents the majority of revenues generated by the group’s interactive business.
The number of meccabingo.com customers was also up, from 196,000 in H1 2011-12 to 227,000 in this period, however the arm saw operating profit fall by 3% year-on-year to £11.4m.
Mobile was particularly strong during the six-month period, with revenues up 172% with around 18% of its digital revenues from its Mecca brand generated via mobile, however the performance of Blue Square Bet that was placed “under review” earlier this month, was described as “disappointing” by chief executive Ian Burke.
Blue Square saw its operating loss more than double to £4.8m following an increase in marketing spend, with sports betting revenue falling by 23.4% to £3.6m and being overtaken by revenue from games on the platform, which rose to £4m. The £7.6m total represented a decline of £6.2m.
Asked by Investec analyst James Hollins what the costs would be to sell the business it acquired from the Intercapital Group in 2003 for £65m, Burke (pictured) responded that it was “too early” in the strategic review process and that he would update the market “as soon as we can”. “There is no timeframe, we don’t want to rush this,” he said, at the same time adding that it is in the interests of the group to move the process as “speedily” as possible but equally to do it [Blue Square and its staff] “justice”.
The operator explained in a statement today that “The review [of Blue Square] remains underway and an update will be provided in due course.”
Burke described the results as “Satisfactory…in what is a challenging economic environment” and said “Allowing for the slow start to the second half we remain confident in our prospects for the remainder of the year and in our longer-term growth strategy.”
“This will be achieved by developing further our gaming-based entertainment brands as well as engaging positively with Governments to ensure that our activities make positive social and economic contributions to the jurisdictions in which we operate,” he added.
Meanwhile, a decision from the Competition Commission on Rank’s proposed acquisition of Gala Coral’s land-based casino estate, approved by shareholders last July, is due by 20 February at the latest.
Analyst Nick Batram of Peel Hunt retained his firm’s ‘Buy’ recommendation, saying “We have seen at William Hill how dramatic the re-rating can be when the shape of the business changes, and ultimately we believe this will occur at Rank.”