Rank takes £181m loss on video offshoot

Rank, the owner of the Hard Rock Café chain, Grosvenor casinos and Mecca bingo halls, is taking a £181m loss on the sale of Deluxe Media, its video and DVD manufacturing division.

The group announced yesterday its long-awaited plans to sell off Deluxe Media, but said it was considering options for Deluxe Film, which processes film for Hollywood blockbusters and has post-production services. Rank has already said it wants to demerge the division, but Mike Smith, the chief executive, said the process was complex and he would pursue a separation of Deluxe Film only if "it was in the best interests of shareholders".

A buyer has not been found for Deluxe Media, but the group expects to make a loss of £181m on its sale given its current revenues. This charge plunged Rank into the red for the year, giving the group a loss of £83.3m before tax. "The process to sell Deluxe Media is under way and the likely indication is that it will be a trade sale," Mr Smith said. Analysts estimate the business could be sold for £50m.

The spin-off of the Deluxe businesses, which have struggled to adapt to the advent of DVDs and have also lost contracts with several film studios, will leave Rank to concentrate on gaming, hotels and restaurants. Without the exceptional charge, profits at the group fell 10 per cent to £168m, with the main drag on performance coming from Deluxe. Its profits for the year fell 23 per cent to £71m.

Rank had hoped to expand its existing estate of casinos and bingo halls through the forthcoming Gambling Bill, but Mr Smith hit out at the Government for changing its policy on casinos. He wants ministers to allow existing casinos to install more slot machines. At present, only new casinos will be allowed to install up to 1,250 slot machines, while existing venues can have no more than their current limit of 10. "All we are asking for is a level playing field. We do not want a two-tier system. It is not logical," Mr Smith said.

Profits at its Mecca Bingo halls were flat for the year, while profits at its casino division were up 11 per cent. The Hard Rock division had its strongest performance for some time. While turnover was flat at about £232m, profits were up 20 per cent to £27.8m.

In the past, Rank has sold Pinewood film studios, to 3i for £67m, Odeon cinemas, for £280m to Cinven, and Butlins holiday camps, in a £700m deal with Bourne Leisure. Rank has also shed its stake in Universal Studios and its Tom Cobleigh pubs.