The Rank Group has acknowledged a conscious need to contribute to the wider societal effort, as a significant short-term economic impact of the current crises is addressed in a trading update.
Expecting underlying operating profit in the region of £48m-£58m should venues remain closed until the June 30, 2020, culmination of the financial year, mitigating efforts have reduced monthly cash outflow rate to approximately £10m from next month. This is down from previous estimations of £25m and £17m.
With in the region of 7,000 of 7,600 members of the Rank UK workforce furloughed, executive and non-executive directors have also volunteered a 20 per cent reduction. As a result of the UK Government’s Coronavirus Job Retention Scheme, and similar schemes in Spain and Belgium, a cash impact of approximately £8m per month will be felt.
Addressing ongoing VAT claims it was said: “The group has a small number of long running VAT claims. At the outset of the lockdown period, Rank requested repayment from HMRC of £25.2m in relation to VAT paid on slot machine revenue between 2002 and 2005 to maximise its liquidity and this was received in early April. Subsequently on 15 April 2020, following an appeal heard in January, the Upper Tribunal ruled in favour of Rank.
“If HMRC is granted permission to appeal this latest decision and the Court of Appeal rules in favour of HMRC, Rank would be required to repay the £25.2m. In that scenario, we do not expect any repayment to be made for at least 12 months. In addition, we have reached agreement with HMRC to defer circa £40m of tax and duty that was due to be paid in April 2020, initially until 30 June 2020.”
Vowing to vigilantly heighten the identification of any signs of gambling related harm across digital businesses, Rank has also signed up to the Blue Light Card charity initiative as well as working with MPs and local councils to ensure kitchens are maximised to provide vulnerable people with hot meals.
John O’Reilly, CEO of Rank, explained: “With the tremendous support we have received from HM Treasury and HMRC, together with our own mitigations, we have established a robust financial position to address and withstand an extended period of economic turmoil.
“Given the uncertainty we face and continued social distancing measures likely to be in place for some time to come, we continue to work to protect cash and to prepare for the reopening of our venues in as safe a way as possible.
“I am enormously proud of our colleagues and how they have responded to the decisions we have had to take as well as their selfless response and contribution to the national effort. We know how important our venues are in many local communities and we’ve answered the call to contribute by stepping up to help those who need it most right now.”
Providing a quarterly update Rank saw group like-for-like revenue fall four per cent (2019: +10 per cent), in a period which saw international venues close from March 14 and all Grosvenor and Mecca entities shutdown from March 20.
Grosvenor digital grew NGR 27 per cent in the quarter driven by continued growth in new players and strong levels of returning players, with the proportion from multi-channel players increasing to 44 per cent.
Mecca digital saw a 20 per cent increase due to continued strong operational execution, with Yo’s NGR for the quarter up 9 per cent as YoCasino continued to perform in line with launch plans. Since the closure of our UK and Spanish venues, digital NGR growth rates are said to have increased further. Overall for the quarter Grosvenor, Mecca and international venues’ revenue decreased five per cent, 17 per cent and 12 per cent, respectively.