Rank makes pounds 23.5m provision on hotels

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THE RANK ORGANISATION, the bingo to Butlin's group, has made a provision of pounds 23.5m to allow for a 'possible diminution' in value of the 17 provincial hotels it has put up for sale with an asking price of more than pounds 50m.

Rank is having talks with potential purchasers of the provincial hotels and its five in London, but does not expect any imminent sales.

Michael Gifford, chief executive, said that trading in the provincial hotels 'remained difficult' in the first half to 16 May, though occupancy levels of more than 70 per cent in the London hotels had almost returned to 1990 levels.

The group's holiday bookings are down 10 per cent from the same period last year. Angus Crichton-Miller, managing director of the holidays and hotels division, said that British holidays were losing out to cut-price foreign deals. 'There is a substantial overhang of overseas package holidays which has an effect on our business,' he said.

Profit before tax was pounds 94m in the first half compared with pounds 96m. Turnover was down almost 5 per cent to pounds 935.5m. Cost-cutting measures, including 600 redundancies, and restructurings led to a net exceptional cost, after a pounds 1m positive contribution from disposals, of pounds 2.1m.

The drive to reduce costs is reflected in a four-month wage freeze for all employees. Directors' remuneration has been frozen for a year.

Earnings per share rose to 14.2p from 11.3p. That reflects a reduced tax charge, reduced minority interests, and less paid in preference dividends following the repayment of dollars 200m auction market preference shares in May 1991.

The interim dividend is held at 10.25p.

Rank's share of trading profit from its associate Rank Xerox, the business equipment company, fell to pounds 71.7m from pounds 80.1m. This included a reduced contribution from Fuji Xerox, the Far East arm, which is suffering from the downturn in Japan.

Disappointing performances from the holidays and hotels and the recreation divisions were offset by performances in film and television and leisure.

Profits from the UK holiday business were pulled down by exceptional items, and casinos and amusement centres suffered from lower consumer spending. Film and television was helped by increased productivity, and leisure by a strong performance at the Hard Rock Cafes and the new Wirral leisure complex.

Gearing at the interim stage, when Rank's borrowings reach their seasonal peak, was 70 per cent. Net borrowings were pounds 989.1m.

The shares fell 7p to 624p as many analysts trimmed forecasts. Nigel Hicks of Panmure Gordon has downgraded his pre-tax forecast for the full year to pounds 245m from pounds 255m.