Rank Group’s online gambling operations are saving its British bacon after the company furloughed 90% of its retail staff due to the COVID-19 pandemic.
In a trading update issued Monday, Rank said its statutory revenue in the three months ending March 31 was up 5% from the same period last year despite the closure of its retail operations to minimize further COVID-19 transmission.
The retail shutdown led to revenue declines across all retail segments, including Grosvenor venues (-5%), Mecca venues (-17%) and international venues in Spain and Belgium (-12%).
On the flip side, digital revenue was up 21% for the quarter and the company said digital operations posted further growth following the retail shutdown. The digital column was also bolstered by Rank’s acquisition last year of UK rival online bingo and casino operator Stride Gaming.
Rank has furloughed around 7,000 of its 7,600-strong UK workforce but says the UK government’s bailouts for both payroll costs and rates relief – as well as similar programs in Belgium and Spain – were cushioning the blow. Senior execs have volunteered to take a 20% salary and fee cut as of April 1 “for as long as our colleagues are in furlough.”
The combined effort of Rank’s mitigation efforts – including negotiations with suppliers and landlords – and government bailouts means the company’s monthly cash outflow rate will be reduced to £10m from May 2020. The company says it has around £166m in available cash and facilities.
Should its venues remain closed until the end of Rank’s fiscal year on June 30, the company projects its annual operating profit will come in between £48m-£58m, which the company expects will allow it to “meet all its bank covenants” as of that date.
In the present environment, Rank said predicting the future was a mug’s game, but the company said it was “preparing for difficult trading conditions when we reopen our venues business.”
The company is scrapping plans to issue a dividend this October unless it somehow emerges from this trying experience with no excess debts and has the “necessary visibility on future cashflows following the reopening of our venues.”
Rank CEO John O’Reilly thanked the UK taxman and treasury for their “tremendous support” while praising Rank staff for “how they have responded to the decision we have had to take as well as for their selfless response and contribution to the national effort.”