Rank Group expect profit slump as Covid-19 hits revenue
The Rank Group will commence the reopening of its Mecca bingo clubs from tomorrow, 4 July 2020.
Mecca venues will have extensive social distancing measures and signage; colleague-controlled entry and exit; reconfigured service points to account for social distancing and frequent and extensive cleaning of all surfaces, including tables and machines. Hand sanitiser will be available to customers prior to entry and throughout the venue.
Initially Rank will be opening 35 venues in England. A further 30 venues are expected to open in a phased approach throughout July and August including, when permitted, our venues in Scotland and Wales. The remaining 12 venues will remain closed until October whilst the company assess their ongoing viability. Some restructuring of the cost base and format of these venues is likely to be necessary to allow them to reopen, including renegotiation of rents.
Working with the casino trade body, the Betting and Gaming Council (BGC), the Group is continuing to engage with Government as we seek to secure a date for the reopening of Grosvenor’s casino estate. We will provide a further update when progress can be announced. Our Enracha clubs in Spain started to reopen from 10 June and all are now open. Revenues have been at approximately 60% of pre Covid-19 levels.
The Digital business continued to trade well, delivering aggregate Q4 revenue growth of circa 17% on a proforma1 basis. This was despite the impact on Stride’s proprietary brands of additional safer gambling and customer due diligence measures implemented to bring them in line with Rank policy.
Underlying operating profit for the year ended 30 June 2020 is expected to be at the lower end of the previously provided guidance range of £48m to £58m after IFRS16 (£40m to £50m pre-IFRS16) due to the venues reopening costs being expensed.
Monthly net cash outflow has also been in line with previous guidance, with cash and available facilities at 1 July of approximately £140m.
The Board still expects that Rank will meet its banking covenants at 30 June 2020. With the reopening of Mecca, we expect the monthly cash outflow to be reduced from circa £10m per month to £7m per month and to be cashflow positive upon the reopening of Grosvenor, assuming that revenues are in line with those achieved in Enracha, and before the repayment of deferred duty and rental payments. We continue to review opportunities for maintaining appropriate levels of liquidity for the Group.
John O’Reilly, CEO of Rank Group, commented:“I am pleased that we will be able to start welcoming our loyal Mecca customers back into their clubs on Saturday and we are all looking forward to doing what we do best. As ever, the health, safety and wellbeing of all our customers and colleagues remains front and centre of everything that we do, and we have created safe environments for our customers to come and enjoy themselves once again. Our Grosvenor venues are also ready to safely open and we are working hard to ensure we receive the support of Government to reopen our casinos soon. Our colleagues are very keen to get back to work to pick up the progress we had been making prior to lockdown.”