Rank to sever links with film industry

Leisure group Rank prepared today to bring the curtain down on a 60-year relationship with the film industry by announcing the separation of its Deluxe unit.

The company – formerly famous for making hundreds of films including the Carry On series – said it was in discussions with potential buyers of its Deluxe Media unit that makes and distributes DVDs and videos.

Rank said it was also pursuing options for its Deluxe Film business, which offers technical services to Hollywood studios, with a demerger or trade sale the likely outcomes.

The company, which owns the Hard Rock Café and Mecca bingo chains, was founded in the early 1940s and carved its reputation as a leading UK film producer and cinema owner.

The separation of Deluxe would complete an overhaul that has seen Rank sell other businesses related to the film industry, including Pinewood film studios and the Odeon cinema chain.

Details emerged as Rank said pre-tax profits fell to £168.1m (€243.4m) during the 12 months to December 31 from £187.1m (€270.9m) a year earlier.

Although profits from gaming and Hard Rock were higher than a year ago, it was the opposite story at Deluxe owing to “a much weaker film schedule than in previous years” and the loss of two contracts in 2003.

Chief executive Mike Smith said: “The board is convinced of the strategic merit of separating Deluxe Film and working towards a solution.

“However, the issues involved are complex and the board is determined to ensure that any separation will be undertaken only if it is in the best interests of shareholders.”

A one-off charge of £181.4m (€262.7m) has been booked in its accounts for the loss on disposal of Deluxe Media, he added.

Rank owns 36 Grosvenor casinos, the Mecca bingo chain and more than 100 Hard Rock Cafes in 38 countries.

A strong second-half performance enabled its gaming division to enjoy another year of profits growth, while the group continued to invest in its portfolio of bingo halls with clubs at Burton and Bolton among a quartet to be relocated during the year.

Like-for-like sales were positive at Hard Rock and the group said at least four sites would open this year to complement the eight new franchised cafes which began trading in 2004.

Rank said current trading patterns were in line with hopes, although a lower win percentage at its provincial casinos has offset better profits at the Clermont, one of its flagship sites in London.

Hard Rock has seen like-for-like sales kick on from last year, while DVD volumes at Deluxe Media have been strong to counter a decline in demand for videos.