Casino and bingo operator Rank Group (RNK) said like-for-like revenues fell 58% for the first half to 31 December impacted by revenues being closed 45% of the available operating days due to Covid-19 restrictions. The shares fell 3.8% to 121.4p.
Revenues from venues dropped 70% on a like-for-like basis to £90.9 million while digital revenues were 1% higher at £66 million including the Stride brands.
POSITIONED TO WEATHER THE STORM
The company made an operating loss of £41.8 million. The balance sheet was bolstered by the equity placing of £70 million in November 2020 and banks agreed to a 12-month extension to the firm’s existing debt covenant waivers until March 2022 if at least £50 million of quarterly liquidity was maintained.
At the period end the company had available banking facilities of £128.3 million, marginally ahead of the group’s projections and an £11.7 million reduction over the six months.
In addition, the group will receive £25 million from the sale its Blankenberge Casino in Belgium as well as a potential £13 million from a HMRC duty claim, taking total liquidity to £166 million. Rank finished the period with net debt of £45 million.
The groups’ average cash outflow is around £15 million a month while the venues are closed, excluding rent payment deferrals.
SCENARIO PLANNING
The company expects venues to remain closed until after Easter and then a gradual reopening with all venues open from July, with the 11pm curfew initially remaining in place.
The group assumes trading initially achieves 70% of pre-Covid levels rising to 100% by the end of the 2022 financial year.
Under this scenario the group expects to return to neutral or positive cash generation within the first three months, like the company experienced after the first lockdown.
The group has conducted sensitivity analysis based around later reopening and trading levels remaining below pre-Covid levels, concluding that it will continue to meet its liquidity tests.
Shore Capital commented, ‘The reopening of its casino and bingo estates should allow a refinancing, of what is in effect a conservative balance sheet, providing the firepower to take advantage of the likely distress across the sector and build scale in its digital offering.’
