Rank to create 3,000 jobs as it buys back pounds 350m in shares
Friday 21 February 1997
News of the job creation plans accompanied full-year figures showing a slump in profits as new chief executive Andrew Teare's deck-clearing write-offs took effect. Rank's shares jumped 19.5p to 434.5p, however, as the market focused on the promise of a share buyback and the prospect of Rank finally securing a sale of its remaining 20 per cent stake in Rank Xerox.
Mr Teare said yesterday Rank would be seeking approval from its shareholders to buy back up to 10 per cent of its shares at a cost of around pounds 350m at the current share price. A sale of the Rank Xerox stake would easily cover a repurchase, with analysts believing Xerox, the most likely buyer, might pay pounds 1bn to take complete control of the office equipment business.
Rank's new jobs are to be created around the country with 880 slated for a new Oasis Forest Holiday Village in Cumbria. A further 750 jobs are pencilled in for 10 Mecca bingo clubs, to add to the division's existing 133. Southampton is to get a new pounds 25m multi-leisure centre which will create jobs for 300.
Mr Teare, who has been in the job for just under a year after moving from English China Clays, is under mounting pressure to return Rank to a growth tack. Since his appointment, the leisure group's shares have fallen from a high of 545p to as low as 403.5p.
He said yesterday: "During 1996, we undertook a reappraisal of all aspects of our business and a period of change and restructuring has followed. The steps we have taken are making the company more focused, entrepreneurial and forward looking."
Mr Teare also confirmed that Rank is seeking buyers for its film distribution business, which has a catalogue of films including the Carry On series and newer classics such as Strictly Ballroom. He poured cold water, however, on expectations that the division, which also owns the famous symbol of a man striking a gong, might raise between pounds 100m and pounds 150m, with analysts now suggesting a price tag of about pounds 70m.
During the year the rationalisation of Rank's previously disparate interests included the sale of Precision Industries, an engineering business, for pounds 66m, holiday group Shearings for pounds 75m and Kingston Plantation for pounds 30m. Acquisitions, totalling pounds 460m, compared with pounds 60m in 1995 and included the American Hard Rock Cafes and Tom Cobleigh, the pub chain.
Excluding exceptional items, operating profits rose 13 per cent to pounds 290m during 1996, in line with expectations, struck from a 9 per cent rise in turnover to pounds 2.08bn.
Underlying earnings per share slipped from 24.3p to 24.1p, allowing an 8 per cent rise in the dividend to 17p.
Reported profits were hit by a number of one-off items, including a pounds 232m exceptional charge to cover permanent diminution in property values and pounds 35m of restructuring charges. That compared with a pounds 236m one-off profit in 1995 on the sale of part of the Rank Xerox stake and resulted in a fall in pre-tax profits from pounds 515m to pounds 65m.
Three of Rank's four core divisions reported double-digit profit growth, with film and entertainment services the star performer. The film arm was boosted by a high number of Hollywood releases. At home, Pinewood studios reported record profits.
Hard Rock, which was reunited with its American sister company during the year, grew through acquisitions but saw sales at existing restaurants fall 4 per cent. This was mainly thanks to poor performances in Paris, which was hit by terrorism and a wave of BSE-inspired anglophobia, and in Orlando and Nashville.
The Hard Rock brand is being boosted by the launch of a record label and a new American cable television series, Hard Rock Live, which starts next month with $30m sponsorship from the car maker Pontiac.
In leisure, Odeon cinemas enjoyed a record year thanks to films such as Independence Day and Toy Story. Bingo shrugged off the woes afflicting most of the industry since the introduction of the National Lottery, with admissions 10 per cent higher in the second half. Casinos enjoyed higher admissions and a better win ratio.
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