Rank ponders Deluxe move

Leisure group Rank today said it may spin-off its film and media division after reporting sharply lower profits during a “challenging” first half.

The London-based firm said it was investigating the possibility of separating the Deluxe arm, whose loss of a major contract reduced profits by £23.1m (€33.9m).

This contributed a fall in pre-tax profits to £29m (€42.6m) from £53.8m (€79m) last time, with profits also down at Rank’s gaming and Hard Rock Café divisions.

Rank said that subject to a detailed review, “now would be an opportune time to separate both Deluxe Film and Deluxe Media from the rest of the group”. No details were given on what form of action is being considered.

The company said in May that Deluxe had failed to renew a contract to make and distribute DVDs in Europe on behalf of an unnamed studio.

Rank also owns 34 Grosvenor casinos, the Mecca bingo hall chain and more than 100 Hard Rock Cafes in 38 countries.

The gaming division, which saw operating profits fall by 4% in the six months to June 30, was showing signs of improvement after difficult trading conditions in the first half.

Within casinos, increased competition and the introduction of EU legislation requiring guest identification hit the performance of provincial casinos in particular.

Although the removal of admission fees in the UK in the final quarter of last year had a positive effect on Mecca bingo, it also resulted in lower margins.

But Rank was upbeat about the British government’s proposed shake-up of gambling laws. It said the core elements of the Gambling Bill – including the introduction of more slot machines and sports betting into casinos – were expected to be positive for the industry.

“Gaming is well positioned for the now anticipated deregulation of the UK industry,” it added.

Operating profits at Hard Rock fell to £11.6m (€17m) from £13.3m (€19.5m), but Rank said that after a long period of uncertainty in international travel and tourism markets, there were signs that market conditions may be improving.