City File: Test for Rank

If you believed half the rumours, Rank Organisation wouldn't have much of a business left. It has admitted trying to get rid of its London hotels, but has repeatedly denied its willingness to sell its underperforming film business. There were even stories that it was prepared to shed its share in Rank Xerox, which accounted for pounds 137m of last year's pounds 324m pre-tax profits.

Rank Xerox is due to report a 30 per cent fall this year and the remaining businesses seem becalmed. Nevertheless, the shares have been floating on cloud nine, up from 450p last autumn to their present 768p.

Profits are likely to be pretty static, with any increase coming not from business dynamism but reduced interest on Rank's near- pounds 1bn debt and loss elimination (notably on the US video distribution business that lost pounds 15m last year). So the shares must be a sell until Rank shows some sort of creative capacity, either as a business builder or a seller.