Rank Group cash outflows to narrow with Mecca reopening
Gambling operator the Rank Group announced on Friday that it was expecting a reduction in its monthly cash outflow, to £7m from £10m, as it prepares to reopen its Mecca Bingo venues.
The FTSE 250 company said its underlying operating profit for the year ended 30 June was expected to be at the lower end of its previously-provided guidance range of £48m to £58m after IFRS16, due to the venue reopening costs being expensed.
It said monthly net cash outflow had also been in line with its previous guidance, with cash and available facilities at 1 July standing at around £140m.
The board was still expecting that Rank would meet its banking covenants at 30 June.
It explained that, with the reopening of Mecca, it was expecting its monthly cash outflow to be reduced from around £10m per month to £7m per month, and to be cash flow positive on the reopening of Grosvenor, assuming that revenues were in line with those achieved in Enracha, and before the repayment of deferred duty and rental payments.
The board was continuing to review opportunities for maintaining appropriate levels of liquidity for the group, the board said.
Working with the Betting and Gaming Council (BGC) trade body, Rank Group said it was continuing to engage with the government as it looked to secure a date for the reopening of the Grosvenor casino estate.
Its Enracha clubs in Spain started to reopen from 10 June, and were now all open, with revenues around 60% of pre Covid-19 levels.
The digital business continued to trade well, the board said, delivering aggregate fourth quarter revenue growth of about 17% on a proforma basis.
That 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.
Rank said its Mecca venues would have “extensive” social distancing measures and signage on reopening from 4 July, with 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.
Initially, Rank said it would open 35 venues in England, with a further 30 venues expected to open in “a phased approach” throughout July and August including, when permitted, its venues in Scotland and Wales.
The remaining 12 venues would remain closed until October while the company assessed their ongoing viability.
Some restructuring of the cost base and format of those venues was “likely to be necessary” to allow them to reopen, including renegotiation of rents.
Rank said it would announce its preliminary results on 19 August.
At 0856 BST, shares in Rank Group were up 0.66% at 145.95p.