Rank's review gets a cool reception

Rank got a cool reception from the City yesterday for new chief executive Andrew Teare's strategic review of the leisure and entertainment group. Despite most of the details being well flagged over the last week or so, the shares closed 27p lower at 441p, a 6 per cent decline on the day.

As expected, Rank signalled its intention to put its remaining 20 per cent stake in photocopier group Rank Xerox up for sale. The holding is in the books at pounds 930m although if Xerox chooses to buy in the minority, as Rank hopes, it is expected to pay rather more for complete control.

In order to avoid a sizeable tax liability of maybe pounds 200m, Rank will create a new holding company, Rank Group, to sit above two operating companies, Rank Organisation, which will continue to hold the Rank Xerox stake and is up for sale, and a grouping of all its other operations.

Mr Teare also spelt out plans to raise pounds 300m from the disposal of peripheral businesses, including its Shearings coach holiday arm. Speculation is growing that Rank plans to ditch the Pinewood film studios.

Rank plans to focus on four managed businesses: film - mainly duplication operations serving Hollywood studios; holidays, including Butlin's and Haven brands; UK recreation, where names include Odeon, Mecca and Top Rank; and Hard Rock, the themed restaurants group.

Mr Teare has also decided to maintain Rank's link with MCA, with whom the group is developing the Universal City theme park in Florida. It has also agreed in principle to take a stake in a Universal park in Japan.

The interim results for the six months to June were heavily distorted by the profit last year on the sale of part of the Rank Xerox stake and the decision this year to book the dividend from that company rather than Rank's notional share of its profits.

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