RANK surprised the City by pegging its final dividend despite a sharp fall in profits, as the group's various leisure interests were hit by poor weather and slowing consumer spending.
Instead of a cut in the final dividend, as had been expected, it is being maintained at 12.75p for a total 2.8% higher at 18.5p, though this is covered just 1.2 times by earnings per share of 23p, down 13%.
The shares rallied 22.25p to 226.25p, where they yield 8%. Encouragement was drawn from signs of improved trading in some activities. Bookings for Butlins holiday camps are up 17% in value terms on a year ago, and sales at Hard Rock cafes have picked up in recent weeks.
''These are the sort of features that are making us feel a little more optimistic about the coming year'', said acting chief executive Douglas Yates.
Yates will hand over to Mike Smith, who joins from Ladbroke, before the end of April.
Last year profits tumbled from #303m to #255m before exceptionals. Including these, and after tax, there was a net loss of #106m.
Chairman Sir Denys Henderson indicated they had hopefully come through the worst of their troubles.
''The investment programme to revitalise our brands is almost complete and will impact positively on 1999'', he commented. He added that Smith had ''an outstanding track record in the leisure business and will hit the ground running when he joins us in April.''
Capital spending is tailing off, with #627m being spent last year, targeted on the Butlins and Haven holiday operations, Mecca Bingo and Universal Studios Escape (a movie-based leisure attraction in Florida), with expenditure of #450m expected for 1999 and #250m for 2000.
Yates said Rank had no plans for major disposals, but was in talks with a number of parties over the sale of its US resorts business - which includes 16 Outdoor World caravan resorts, holiday rental accommodation and a hotel.
Rank has come under severe pressure from investors to break itself up since Andrew Teare quit as chief executive in October. He received an #870,000 payoff.
Yates said although the company had received a number of approaches for various parts of its business, they had all been rejected as undervaluing the assets.
The company had maintained or increased market share across several of its core brands. There was a dearth of blockbuster movies for its Odeon cinemas in the last three months of the year, but the line-up from summer onwards is considered more promising.
The group lost out heavily last year at its Deluxe video duplication operation, which has been rumoured as earmarked for a sell-off.
Rank massively underestimated the size of its contract to print video copies of the blockbuster Titanic movie.
Rather than make the enormous potential profits from scooping the contract, the company had to farm out production to other expensive suppliers because demand was so strong.
Since then, however, Deluxe had made a recovery, the group said. Teare's resignation last October is widely thought to have been prompted by the costly mistake.
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