Rank Group (LSE:RNK) PLC (LSE:RNK) said all of its bingo and casino venues are now trading positively and performing ahead of expectations following the easing of lockdown restrictions.
Revenue in the group’s Grosvenor venues in the 13-week period to 15 August has been 19% below the same 13-week period of 2019 (pre-pandemic), with average weekly revenue of £5.7mln ahead of the cash break-even level of £4.4mln. Since restrictions were eased on 19 July, the average weekly revenue has been £6.0mln.
In the Mecca business, revenue over the same 13-week period was 21% below 2019, with average weekly revenue of £2.6mln marginally ahead of the cash break-even level of £2.4mln. Since restrictions were eased on 19 July, the average weekly revenue has been £2.7mln.
The recovery follows a tough year for the group, which saw underlying net gaming revenue (NGR) in the 12 months to the end of June halve to £288.2mln from £575.6mln the year before.
The digital business disappointed, with underlying NGR down 6% year-on-year at £136.3mln while the physical venues, which were hit hard by lockdown restrictions, saw underlying NGR slump 65% to £151.9mln.
The collapse in revenues resulted in a loss before tax of £72.0mln versus a profit the year before of £9.4mln.
The underlying loss per share was 20.3p, compared to positive earnings per share the previous year of 6.7p.
At the end of June, net debt stood at £49.8mln, representing a 13% improvement on net debt of £57.0mln 12 months earlier. The group said it is confident that it will continue to meet its liquidity and covenant tests.
“Good progress is being made in our digital businesses and there is a renewed sense of confidence as we focus on the growth initiatives within our clearly defined transformation programme,” said John O’Reilly, the chief executive.
“Rank was delivering strong revenue and profit growth before the pandemic and the steps we have taken over the last 18 months, particularly in carefully managing our liquidity and developing the transformation plans, will enable the group to return to that growth trajectory as the impact of the pandemic reduces and consumer confidence for indoor leisure experiences grows,” he added.
“The government's current review of gambling legislation provides a once in a generation opportunity to deliver the much-needed modernisation of existing land-based gambling regulations which date back over fifty years and impose unnecessary restrictions on our ability to meet the needs of today's consumers,” O’Reilly said.
"Clearly there is still some uncertainty how the pandemic will impact our businesses over the next few months; however, we are confident that with our leading bingo and casino brands, supported by a proven transformation programme and strengthened balance sheet, we are competitively well placed to benefit as the hospitality sector and its consumers emerge from the pandemic," O’Reilly concluded.
Shares in Rank were down 3.5% at 176.8p in the wake of the results.
Peel Hunt said the results were consistent with the 1 July trading update.
"Rank’s transformation programme continues to deliver (see TheVic.com for an example of a custom website for a single venue), and the facilities are in place to support further investment. Additionally, modest regulatory changes are possible, which could materially benefit Rank’s bottom line. With the reopening at an early stage, we reiterate our 240p target price and Buy recommendation," the broker said.
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