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Digital Sales Help Boost Rank Group’s Profits

Rank Group
Sharelines
  • Rank Group's digital revenue increases 21% despite a £6.6 million Point Of Consumption Tax bill

  • Plans are in place to improve its online poker offering, Grosvenor Poker

Rank Group Plc, owners of the Grosvenor Casinos and Mecca Bingo brands, reported a 4% increase in group revenues and 19% surge in pre-tax profits thanks in part to significant increase in the popularity of its digital products.

Revenue from Rank’s digital arm increased 21% with profits climbing 14% to £3.1 million despite the 15% Point Of Consumption Tax, which cost the company £6.6 million, eating into those profits.

The 50% cut to bingo duty, something that came into force in March 2014, helped Rank’s Mecca bingo operation increase revenues by 2%, with its Grosvenor Casinos revenue increasing by 8%.

Overall, group revenue was reported as £738.3 million for the year to June 20, with pre-tax profits increasing by an impressive 19% to £74.1 million.

“Alongside our strong operating performance, we have made good progress on our strategic objectives that we outlined 12 months ago, and we have a clear strategy for delivering sustainable profitable growth across all our brands,” said Henry Birch, chief executive.

“We firmly believe that alongside growth in digital gambling, there will continue to be sustained demand for venue-based gambling in bingo clubs and casinos which offer an experience that cannot be digitised. Moreover, we believe that consumer trends will increasingly favour companies that can offer services across digital and retail channels and successfully offer a joined-up experience to our customers.”

Birch added that trading in the seven weeks up to August 16 was in line with the expectations of Rank’s management team and that investors will benefit from the profit increase as Rank is increasing its dividend to 5.6 pence per share, 24% more than the previous dividend.

Revenue from Rank’s digital arm increased 21% with profits climbing 14% to £3.1 million despite the 15% Point Of Consumption Tax, which cost the company £6.6 million, eating into those profits.

Expansion and investment forthcoming

Rank now plans to make significant investment in its current property portfolio by spending £4.5 million on upgrading 18 of its 58 Grosvenor Casinos and an undisclosed amount on opening an additional three Mecca bingo halls.

Plans are also in place for increasing its online poker platform, Grosvenor Poker, on the iPoker Network with the financial presentation citing “digital poker product development” as being a priority for 2015/16.

Grosvenor Poker should benefit from the recent scrapping of the two-tier system previously employed on the iPoker Network. Previously on the lower tier of the network, the Source Based Rake system has done away with the old method and resulted in all traffic being merged once again.

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