Rank 'set to sell off film unit'

Leisure group Rank could unveil plans to demerge its film services unit and sell its media business, reports claim.

Rank, formerly famous for the Carry On series, will expose the shake-up at the announcement of its results on Friday, the Sunday Telegraph reported. Advisors Goldman Sachs are understood to have valued its demerged Deluxe Film unit at £300m, the report added. Speculation of a possible shake-up has mounted since Rank announced a study into a possible demerger in September. Since Mike Smith's appointment as chief executive in 1999, the group has focused on fewer businesses and embarked on a major cost-cutting programme which has seen it dispose of a number of businesses, including the Odeon cinema chain and the Pinewood studios. The move left the group with three core divisions: gaming, Hard Rock and Deluxe Films, which provides technical services to Hollywood studios.

Rank now aims to concentrate on its gaming, bars and hotels business, including extending its Hard Rock brand to its casinos - trials of which have been a success. It also owns Deluxe Media, which makes and distributes DVDs and videos. However, that business is seen as less successful. Last year it made profits of £21.5m on a turnover of £392.1m and experts suggest its success in moving to DVDs from VHS video could make it an attractive target for a private equity buyer. A spokesman for the firm refused to comment on the reports, but said any results from the demerger study were likely to be set out when it unveiled its results on Friday. Analysts predict the firm is likely to report a slight drop in annual pre-tax profits to £170m from £194m last year. Formed in the 1940s the firm was a leading UK film producer and cinema owner for many years. It has now diversified into a range of other leisure activities - mainly in the UK - including hotels, roadside service areas and holiday centres. It now owns 34 Grosvenor casinos, the Mecca Bingo chain and more than 100 Hard Rock Cafes in 38 countries.
