Rank scraps dividend as it furloughs 7,000 workers

(Sharecast News) - Rank warned it would not pay its next dividend as the casino operator said 7,000 of its UK workers had been furloughed under the government's Covid-19 job retention programme.
The FTSE 250 company said it would not recommend a dividend to be paid in October unless all creditors affected by its actions to mitigate Covid-19 had been resolved and it had a clear view of cashflow after reopening venues. Rank said it expected trading to remain difficult even after it reopened its venues.

Rank said about 7,000 of its 7,600 UK employees had been laid off temporarily and would be paid 80% of their salary, paid by the government and topped up by Rank where necessary. The company's executive and non-executive directors have taken a 20% pay cut from 1 April for as long as workers are furloughed.

The operator of Grosvenor casinos and Mecca bingo halls said furlough programmes in the UK and other markets would save it about £8m a month and that the UK's business rates holiday would save another £1m a month. Rank reduced its estimate for the cash impact of venue closures to £10m from earlier calculations of £25m before self-help mitigation and £17m after those actions.

Rank said if all venues stay shut for the rest of the year to the end of June underlying operating profit would be between £48m and £58m after IFRS 16. As a result it expects to meet all its bank covenants during the year.

Like-for-like revenue fell 4% in the three months to the end of March, Rank's third quarter, after rising 10% in the first half. Rank said the business performed well in the first two months of the quarter but that trading weakened towards the end of February and that its venues started to close in the middle of March.

Chief Executive John O'Reilly said: "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."