UK casino and bingo giant Rank Group beat expectations with a 4 percent increase in fiscal 2015 revenues to £738.3 million (US.14 billion) and operating profit up 16 percent to £84 million (0 million).
The growth was mainly driven by a 21 percent surge in digital revenues generated by the company’s online and remote gambling divisions. Digital customers now comprise around 12 percent of total group revenues in line with a strategic shift in operations launched under CEO Henry Birch, who joined the company last year after heading online betting for famed British bookmaker William Hill.
Digital operating profit was up for the year by 14 percent to £3.1 million despite a new 15 percent point-of-consumption tax on online gambling that has cost the group £6.6 million since it was introduced by the UK government last December.
Revenues from the company’s Grosvenor Casinos and Mecca Bingo divisions rose 8 percent and 2 percent, respectively, the latter boosted by a 50 percent cut in the national bingo tax that took effect in March 2014.
Birch said, “We believe that consumer trends will increasingly favor companies that can offer services across digital and retail channels and successfully offer a joined-up experience to our customers.”
He also said he isn’t ruling out acquisitions in the digital sector, which currently is experiencing a major wave of consolidation, with competitors 888 Holdings vying with GVC Holdings to buy Bwin.party and Ladbrokes recently agreeing to merge with competitor Coral Group and Paddy Power joining forces with Betfair.
Driving the consolidation from the UK perspective are the point-of-consumption tax, higher marketing costs and the threat of a regulatory clampdown on a highly lucrative betting shop trade in electronic table games.
“The only way to survive with more tax coming is to get bigger,” said analyst Sophie Blandford of Daniel Stewart Securities.
Rank raised its full-year dividend to 5.6 pence per share from 4.5 pence in 2014, bumping the company’s London-listed stock 3 percent on the news. The stock has risen 61 percent over the past year.
