Rank ramps up digital spend as revenues flat line
Group admits it needs to "step up" its digital capabilities as Mecca Bingo brand sees drop in full-year revenues
The Rank Group says it will increase investment into its digital business after mixed results for its casino and bingo brands saw full-year online revenues grow just 2% to £72.4m.
Digital revenues for the year ended 30 June were boosted by a 43% year-on-year increase in mobile revenues to £18.9m, however Rank’s flagship Mecca Bingo business proved a drag on growth as revenues fell 4% to £58.9m.
Customer numbers at Mecca were also down, falling 5% to 229,000, while EBITDA slumped 19% to £18.3m.
Rank said the “highly competitive digital market” within the vertical and a reallocation of shared IT and other overheads following the group’s disposal of the Blue Square business contributed to a 25% slump in operating profit from online bingo to £15.9m.
Meanwhile the firm’s Grosvenor Casino brand fared better as revenues increased 38% year-on-year to £13.5m, boosted by a 43% increase in customers to 50,000.
EBITDA from the brand stood at £1.1m compared to a £0.6m loss in the previous year as digital marketing costs fell, and Grosvenor’s new live casino product was now said to be making a “material contribution” to the brand’s total performance.
Having invested a combined £3.3m in the group’s digital businesses throughout the 2013-14 financial year, Rank said it plans to double that investment and plough £6.7m into the group’s digital arm “ mainly Mecca “ throughout 2014-15 in an attempt to increase its capabilities.
As well as hiring new CEO Henry Birch in May, Rank also recruited former William Hill director of egaming Colin Cole-Johnson as its group director of digital and cross-channel services, with the group now planning to “put in place a number of building blocks” to support its digital overhaul.
Investment in bingo had however led to a number of “significant” upgrades to its mobile offering, resulting in a 41% year-on-year increase in Mecca mobile revenues.
“We recognise that we need to step up our capability in [the digital] area if we are to meet the changing needs of our customers and to capture a greater share of the digital market,” the company’s results disclosure stated.
Total Rank Group revenues, including its retail division, totalled £707.7m, up 13% on the £625m recorded the previous year.
Rank’s share price remained largely flat in early morning trading and stands at 169.9p at the time of writing.