Rank Group warns of financial impact of venue closures18th March 2020 2:23 pm GMT
London-listed gaming operator Rank Group has warned that the closure of its UK casino and bingo venues will result in monthly net cash costs of around £25m before mitigating actions.
Rank Group said Wednesday that its performance at the start of the year was in line with the guidance issued in January However, in the past three weeks the company has seen a slowdown in trading across its UK venues, while in recent days there has been a sharper decline. Despite this slowdown, the company said that its UK venues remained profitable last week.
Outside the UK, Rank has closed its venues in Spain and Belgium following movement restrictions, with substantial support from those governments to subsidise payroll costs as the operator temporarily lays off staff. Its digital business continues to operate as normal with staff working from home.
The UK government has now advised people to avoid leisure venues and Rank estimates that the impact of closures would result in monthly net cash costs of approximately £25m before mitigating actions, and around £17m with mitigation. In addition, the company has tax and duty payments of around £40m which are due in April.
“At this stage, given the continued uncertainty, the board does not believe it appropriate to provide financial guidance for the current financial year ending 30 June 2020,” Rank added.
The company maintains a strong balance sheet with net debt at the end of February of £32m, which is funded by the Stride acquisition facility of £128m. The operator also has undrawn Revolving Credit Facilities of £85m, of which £30m expires on 29 September, £40m in 2024 and £15m in 2025. Total available cash and facilities after customer deposits at the end of February stood at £163m.
Shares in Rank Group plc (LSE:RNK) were trading up 0.73 per cent at 111.00 pence per share in London Wednesday afternoon, having hit a new 52-week low of 93.25 pence per share on Tuesday.