Rank Group tumbles into the red as Covid shuts venues

Bingo and casino operator Rank Group has tumbled into the red after lockdown restrictions in an "exceptionally challenging" first half closed its venues.

The owner of Mecca Bingo and Grosvenor Casinos said group net gaming revenues tumbled 55% in the six months to 31 December, to £177.6m. Underlying digital NGR nudged 1% higher to £66.0m, but the venues reported a 70% plunge on the same basis, to £90.9m.

As a result, the operating loss was £52.9m compared to a profit of £55m a year previously. Pre-tax losses were £59.4m against pre-tax profits of £48.2m in 2019.

Rank said the first half had been "challenging", with the pandemic either closing venues outright or meaning they were operating but under restrictions. The estate was closed for 45% of the available opening days during the six months.

Chief executive John O’Reilly said: "There is no doubt that the impact of the Covid-19 pandemic has been far beyond anything we or any other leisure operator could have imagined or planned for.

"The ever-changing restrictions, coupled with curfews, which in particular have a seismic impact on our Grosvenor venues, have resulted in an exceptionally challenging first half."

Looking ahead, Rank said it was making "good progress" in developing its digital offering, and was seeing an improving performance in the division.

But it conceded that the outlook for the group "reflects the successful roll-out of the vaccine and the speed with which the hospitality reopens and restrictions are eased".

All leisure venues, including Rank’s, are currently closed in line with the third national lockdown.

O’Reilly said: "There continues to be uncertainty looking ahead, particularly as our venues remain closed and we have no firm guidance as to when we will be reopen. We remain focused on managing our liquidity position and, following the successful £70m equity placing in November 2020, combined with the support of our lending banks, I believe we have the balance sheet strength to survive an extended period of closure."

Greg Johnson, analyst at Shore Capital - which has a ‘buy’ rating on the FTSE 250 stock - said: "Before Covid, Rank was on track to generate earnings before interest, tax, depreciation and amortisation of around £150m. We had set out a roadmap for profitability to build towards £200m, primarily through the build out of its digital offering. We continue to believe that this remains achievable over the medium term.

"The reopening of its casino and bingo estates should allow a refinancing, of which 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."

Shares in Rank fell as trading got underway on Thursday, losing 2% to 124.12p by 0815 GMT.