Rank announces shake-up plans after resignation

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The Independent Online
Rank Organisation's new chief executive Andrew Teare was yesterday forced into making a premature announcement about a pending radical shake-up at the leisure group.

The company had to act when Angus Crichton-Miller resigned as a director after he disputed the board's decision to sell Shearings, the coach holidays company, and declared an interest in buying the business.

Leisure analysts at City stockbroking firms expect Shearings, which has 30 hotels and 320 coaches, to attract bids in excess of pounds 75m.

Rank said that it did not intend to unveil Mr Teare's radical strategic overhaul until the interim results statement, due on 8 August, but that Mr Crichton's expression of interest pre-empted the announcement. Rank is the UK's largest leisure company with diverse interests spanning bingo clubs and Butlins holiday camps, and is valued by the stock market at almost pounds 4bn.

Mr Teare said yesterday: "This announcement was only made because Mr Crichton-Miller announced an interest and therefore had to resign because of a potential conflict of interest. We will tell the market more about our plans in August. Our strategic review will look at the portfolio in the round and will be a very thorough review."

Shearings' net assets were pounds 50m at end-December, but the purchase price is more likely to be determined on an earnings formula, analysts said. The unit's strong cash flow could push the price above pounds 75m, they added.

Last year, Shearings had operating profits of pounds 8m on sales of just over pounds 100m. The holiday division as a whole also includes Butlin's and Haven, and the division's profits have had a bumpy ride. Five years ago it made pounds 64m, but then fell to a pounds 44m profit a year later. It bounced back to pounds 63m last year but is viewed as a drag on the group.

Mr Crichton-Miller, 57, has been with Rank for 14 years. He may not be the only party interested in bidding for Shearings, however. Analysts said that Barr & Wallace Arnold has a near identical business, and other leisure companies may also throw their hats in the ring.

Mr Teare joined Rank from English China Clays in April. So far he has bought out the remaining stake in Hard Rock Cafe for pounds 270m. Analysts expect him to slim down the sprawling Rank group, with Strand Lighting and the precision instruments business both likely to go.