We had a positive cash flow before acquisitions and disposals for the first time in many years

Mike Smith, chief executive, Rank Group

Profits at Rank fell to �186m in 2000, the firm revealed in its first annual earnings statement since selling assets including Odeon cinemas, Pinewood studies and Butlins holiday centres for more than �1.4bn.

But the firm blamed the earnings drop on one-off costs associated with the restructuring, which had "reinvigorated" Rank's trading performance.

"We had a positive cash flow before acquisitions and disposals in 2000 for the first time in many years," said chief executive Mike Smith.

Growth in retained businesses, which include Grosvenor casinos and Mecca bingo halls, "was more than offset by the impact of the substantial reshaping of the group".

Casino plans

Rank also announced measures ranging from the launch of Hard Rock casinos to a further shake up at the firm's Deluxe film processing unit in a drive to underpin future profitability.

Profits at the Hard Rock division rose 13% during the year to �46.3m, despite a decline in franchising income.

The business, which opened a hotel in Florida in January, intends to roll out further cafes in the UK and Continental Europe, with a casino planned for Manchester.

The division has also signed a deal to develop cafes in two Hard Rock casino-based resorts on Indian reservation land in Florida.

"Further opportunities being pursued... reinforce our belief that the brand can profitably lend itself to expansion outside of the restaurant operations," Mr Smith said.

Lost contract

Profits from gaming operations rose 19% to �82.4m, with casino admissions up 4.7% outside London.

A decline in admissions to Mecca bingo halls was offset by a rise in customer spending.

And the division plans to launch a range of internet-based products in 2001 under the Grosvenor and Hard Rock names.

At the Deluxe film laboratories, Rank blamed a poor performance at video duplication operations, which lost a contract from Fox Home Entertainment, for a 13% decline in profits to �73.3m.

The film processing units handled 12% more footage, and Hollywood blockbusters including Erin Brokovich, Castaway and Charlie's Angels.

Deluxe is drawing up plans to rationalise European video duplication operations to "concentrate volumes within the lower cost facilities", Mr Smith said.

City reaction

Investors reacted favourably to Friday's statement, sending Rank shares 6p higher to 190p by the close.

The shares have proved poor performers over the last five years, declining from more than 540p in April 1996 to less than 140p by June last year.