Rank's Deluxe business lost a major DVD contract in May this year

The owner of Hard Rock cafes and Mecca bingo said interim pre-tax profits nearly halved to �29m ($52m).

The figure included �27.1m of restructuring costs at the Deluxe film and video unit. Pre-tax pre-exceptional profits were down 22% to �60.2m.

"This has been a challenging first half for Rank," said chief Mike Smith.

'Opportune time'

Operating profit at the Deluxe unit fell to �19.2m, down from �27.8m in the same period last year.

Rank said the business had lost a major international DVD contract in May this year.

"The board believes that, in principle, and subject to a detailed review of the implications, now would be an opportune time to separate both Deluxe Film and Deluxe Media from the rest of the group," Mr Smith said.

An update on the possible spin-off would be given in early 2005, Rank said.

Operating profit at Rank's gaming division - which also includes Grosvenor casinos - fell 4% to �54.7m, following tighter ID checks at its casinos and lower margins at Mecca bingo.

But the firm said the sector would be boosted by measures in the new Gambling Bill.

"Gaming is well positioned for the now anticipated deregulation of the UK industry," it said.