Rank sets £1bn for expansion

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The Independent Online
Rank Organisation is primed to spend more than £1bn on expansion over the next four years. This is in addition to the £120m that will be ploughed annually into improving existing businesses.

Some £820m of the £1bn will be spent in six key areas. They are the phase two development of Universal City Florida; Oasis holiday villages; bingo clubs; film operations; multi-leisure centres, and Hard Rock cafes. The remaining £180m will be spent on other businesses, including Butlin's holiday camps, amusement centres, and fruit machines.

Michael Gifford, chief executive, yesterday spelt out the company's plans during a meeting with leisure analysts. He also intimated that, contrary to recent reports, he was likely to be still at the helm at the end of the four-year programme.

Lucrative share options are the main reason why senior managers of Rank are unlikely to want to leave before the profit benefits from expansion start to flow through. Senior staff reaped £1.8m from options alone last year.

Mr Gifford hinted that Rank may retain most of its reduced 20 per cent shareholding in Rank Xerox until the turn of the century. He said that if the stake - reduced by the recent £620m buy-back deal with Xerox - was held for another six years, the tax bill on disposal would be minimal.

Expansion of the Universal Studios film park will soak up most of the spending pot, although the company aims to open at least four Oasis villages at a cost of about £300m. These will be modelled on the up-market, all- weather Center Parcs owned by Scottish & Newcastle Breweries.

Bingo, which has continued to thrive in recession, is to be expanded in new edge-of-town sites in the UK, but Rank plans to establish a stronger footing in Spain and Canada. It has only one bingo club in Spain, but customers spend more than £50 a head, against an average outlay of £12 by customers in UK clubs. Canada is ripe for expansion with the industry about to benefit from deregulation.

About £120m of the money will be spent equally on building more multi- leisure centres and opening Hard Rock cafes.

The presentation came too late to have an impact on Rank's shares. They fell 4p to 392p in line with the market.