Dull end to an era at Rank

INVESTMENT COLUMN
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It was an appropriate end to an era for Rank, with yesterday's full-year figures a suitably uneventful hand-over from chief executive Michael Gifford to his successor, English China Clay's Andrew Teare. Like the Odeon to Butlins group that produced them, they were a mixed bag, solid but unexciting. A dull product, in other words, of a sleeping giant crying out for a dynamic new chief to come and shake things up.

Reported profits actually looked pretty exciting, jumping from pounds 284m to pounds 658m at the pre-tax line. That figure, though, was for the 14 months to a changed December year end and included a pounds 300m profit on the partial disposal a year ago of Rank's stake in its successful associate Rank Xerox.

Underlying profits for calendar year 1995 actually showed a more modest 6 per cent increase. Earnings per share improved 15 per cent to 31.3p, allowing a more generous 19 per cent hike in the dividend for the year to 15.75p.

Three out of four divisions made useful advances with the leisure division, dominated by the Hard Rock Cafe chain, the star performer. Film and leisure, which takes in the Pinewood Studios, had a record year and each of Rank's four holiday brands contributed to that division's 9 per cent advance.

The duffer of the year was the Recreation arm, where bingo operations were clobbered by the Lottery and especially scratchcards. Over 90 per cent of bingo players do the lottery each week, compared to only two thirds of the population as a whole.

Rank has a collection of dominant market positions, operates in long term growth areas and generates piles of cash so it ought to be an extremely attractive investment. Its shares have stagnated for a couple of years, however, as the market waited for someone to come along and unlock the value tied up in an illogical conglomerate.

On a prospective p/e of 14 the shares, up 18p yesterday to 482p, are high enough on fundamental grounds. But Mr Teare has plenty to work with and with demerger and takeover possibilities they are a strong hold.

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