Rank expects FY profit hit from Covid-19 disruption
Rank Group believes its profit for the fiscal year ended 30 June 2020 will come in at the lower end of its guidance following the disruption caused by the novel coronavirus (Covid-19) pandemic.
In a trading update published the day before it begins to reopen its Mecca Bingo hall estate in England tomorrow (4 July), Rank said underlying profit for the year would be closer to the £48m (€53m/$60m) of its £48m to £58m projections. This, it said, was due to costs associated with preparing for the venues' reopening.
However, investments in making its Grosvenor Casino estate safe for customers will take longer to pay off, with the UK government yet to set a date for these venues to reopen. Rank said it was working with the government and industry body the Betting and Gaming Council to set a date for the resumption of activity.
For Mecca, 35 bingo halls will inititally be reopened, with a further 30 to follow in a phased approach throughout July and August. This would include – when given the green light by governments – its Scottish and Welsh venues.
A further 12 will remail closed until October to give the operator time to assess their viability. This would require some restructuring of the cost base and format of the venues, including renegotiations of rents.
All venues will have social distancing measures and controlled entry and exit in place, as well as frequent cleaning of all surfaces to prevent transmission of Covid-19.
Looking abroad, Rank's Enracha bingo halls have all reopened, after receiving government clearance on 10 June. Revenue in the following 20 days to 30 June has been approximately 60% of pre-pandemic levels.
While the land-based business has been hit hard by Covid-19, Rank said its digital arm continued to trade well, delivering aggregate Q4 revenue growth of circa 17% on a proforma basis. This included Stride Gaming’s pre-acquisition performance, with Rank having taken control of the business in October 2019.
Rank noted that this growth came despite the impact of additional responsible gaming and customer due diligence controls being implemented for Stride's main brands.
The operator said it had a robust financial position, with cash and available facilities of approximately £140m as of 1 July, and the board expecting Rank to meet its banking covenants at 30 June.
Monthly net cash outflow also looks set to be in line with previous guidance. The reopening of Mecca will likely reduce monthly outgoings from around £10m a month to £7m, with cashflow to be positive upon the reopening of Grosvenor, assuming revenues are in line with those achieved in Enracha.
“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,” Rank chief executive John O'Reilly said.
“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.”
Rank plans to post the preliminary results for its full financial year on 19 August.