Documents re: 2013 AGM

RNS Number : 8385N

Rank Group PLC

13 September 2013

 

The Rank Group Plc

- Documents re: 2013 AGM

The Rank Group Plc ("Rank") announces that the following documents are now available on its website at www.rank.com/agm:

§ Notice of 2013 annual general meeting

§ Proxy form

§ 2013 annual report and financial statements

Printed copies of these documents are being posted today to those of Rank's shareholders who have requested hard copies.

In addition, a copy of Rank's shareholder notification of online publication of its notice of 2013 annual general meeting and 2013 annual report and financial statements is also available on its website www.rank.com/agm

A printed copy of this document together with the proxy form are also being posted today to those of Rank's shareholders who have not elected for electronic communications and who have not requested hard copy documentation.

Copies of all the above documents have been submitted to the National Storage Mechanism and will shortly be available for inspection at: www.Hemscott.com/nsm.do

In accordance with DTR 6.3.5, this announcement contains information in the attached appendix of the principal risk factors, a responsibility statement and details of related party transactions which has been extracted in full unedited text from Rank's annual report and financial statements for the year ending 30 June 2013. Where page numbers and notes are mentioned in the appendix these refer to page numbers and notes in the annual report and financial statements 2013. A condensed set of financial statements were appended to Rank's preliminary announcement of its 2013 results issued on 15 August 2013.

13 September 2013

Website: www.rank.com

APPENDIX

UNEDITED EXTRACT FROM ANNUAL REPORT AND ACCOUNTS 2013

PRINCIPAL RISKS AND UNCERTAINTIES

We outline below, not listed in any order of materiality, what we are doing to address our principal risks.

Level of Rank shares in public hands

Under Listing Rule 6.1.19R, shares held by persons who have an interest in 5% or more of a listed company's share capital are not regarded as being held in public hands (the "free float").  Under this rule, the shares held by Hong Leong and Prudential plc and subsidiary companies ("Prudential") may not be regarded as being in public hands, with the result that the number of Rank's shares distributed to the public is below the 25% threshold set out in Listing Rule 6.1.19R.  Under Listing Rule 6.1.20R, the FCA may modify Listing Rule 6.1.19R to accept a percentage below 25% if it considers that the market will operate properly with a lower percentage.  Under Listing Rule 5.2.1R, the FCA has the power to cancel the listing of securities if it is satisfied that there are special circumstances that preclude normal regular dealings in them.  Additionally two of the Group's credit facility agreements are currently dependent on the Company remaining listed on a European stock exchange.  To address the free float issue, on 3 July 2013 Guoco announced that it had declared a special interim dividend in specie of approximately 88.84 million Rank shares representing 22.74% of Rank (the "Distribution").  Rank understands that the Distribution is expected to reduce the overall interest of Hong Leong from 74.5% to 68.6%.  However, due to the fact that Prudential's shares are not regarded as being in public hands, the free float remains below the 25% threshold.  The Company remains in discussions with the UKLA and Prudential regarding this.

Integration of Grosvenor and Gala casinos

As reported on page 40, Rank completed its acquisition of 19 Gala casinos on 12 May 2013.  Although the integration of Grosvenor and Gala casinos was carefully planned over many months prior to completion and three months have elapsed since completion, Rank may still face unforeseen difficulties with the integration of the operations and personnel of Gala Casinos into that of Grosvenor's existing businesses including:

§ difficulties in integrating the financial, technological and management standards, processes, procedures and controls of the two businesses;

§ difficulties in managing the increased scope, geographic diversity and complexity of an enlarged group of casinos;

§ unforeseen additional capital expenditure requirements;

§ failure to mitigate contingent and/or assumed liabilities; and

§ the unexpected loss of key personnel and customers.

If Rank fails to integrate the Gala and Grosvenor casino businesses successfully, this may require more time and additional resources than originally anticipated or divert management attention which could have a negative impact on the results of the Group's operations.

Rank's project integration team continues to work so as to minimise the integration risks.

Online gaming platform

The Group is in the course of planning to replace its online gaming platform, which is of significant strategic importance to the Group.  This will be the single largest IT project that it has undertaken in recent years.  The key risks for this project include failure to select the optimum supplier, failure to specify correctly the Group's requirements with the result that the platform is not fit for purpose; failure to define clearly the governance structure for the project; failure to deliver the project on time and on budget; failure to manage adequately the transition from the existing platform; and failure to provide for an appropriate exit strategy.

The project is still in the planning process, with the governance structure in the course of being agreed and roles and responsibilities allocated.  The Group will engage external specialist advice and assistance where required in order to ensure that the project is successful.

IT security

The Group is highly dependent on technology and advanced information systems and these systems may fail or be vulnerable to hacker intrusion, malicious viruses and other cyber crime attacks which may cause systems failure and business disruption.  Whilst we employ prevention measures, such attacks are by their nature technologically sophisticated and may be difficult or impossible to detect and defend. If our prevention measures should fail or be circumvented, our reputation may be harmed and current or potential customers may be deterred from using our services, which in turn could have a material adverse effect on our financial performance.

We have policies and procedures in place to safeguard our customer data and to respond swiftly to breaches and attempted breaches of the Group's IT systems.  Systems' penetration testing is carried out regularly and our IT policies and procedures are regularly reviewed in the light of developments.  We continue to increase our IT security resource as our brands grow online and as we deploy more technology into our clubs.  During the year we have recruited a head of information security who is in the process of building an enhanced team.  We have also appointed a chief information officer who will be starting with the Group in September 2013.  We have also bolstered our technological capability during the year with the appointment of a director of technical operations and our internal audit capabilities by the appointment of a head of corporate and systems audit.

Taxation and regulation

Adverse change (fiscal and regulatory) in legislation continues to be one of our biggest risks.

Changes in political and social attitudes to gambling in our key markets and negative publicity surrounding the gambling industry could influence regulators' perception of gambling and could lead to increased gambling regulation.  This could have an adverse effect on our business and profitability and prevent us from providing gambling services.

We are subject to gambling taxation and levies in Great Britain and the other countries in which we operate.  Any increases in the levels of taxation or levies to which we are subject, or the implementation of any new taxes or levies to which we will be subject, could have a material adverse effect on our business, financial condition and results of operations.  For further information please see our tax fact file on page 43. 

We participate actively in trade bodies' presentations to Government and opposition parties.  As we have done in previous years, during the period under review, we have arranged key stakeholder familiarisation visits to some of our sites in order that stakeholders can have an opportunity to see our businesses in operation.  This enables stakeholders to gain a better understanding of the positive effect of our business activities, including the provision of a safe environment within which adults can enjoy gambling, the creation of employment and the generation of revenues for the Exchequer.

An explanation of Rank's approach to regulatory and fiscal reform can be found at www.rank.com/downloads/gameplan_vol1_april_2013.pdf or by written request to the company secretary.

External events

Customers may be prevented or deterred from accessing our clubs due to factors such as extreme weather, illness or disease epidemics, terrorist threats, strikes and public transport system failures.  Whilst these matters are outside our direct sphere of influence, we continue to work hard to better prepare ourselves for such eventualities, particularly in terms of co-ordinating with our interactive businesses and making sure that employees can get to work.

Loss of licences

Rank's gaming licences are fundamental to its operation and therefore the loss of them would be catastrophic for Rank.  This fact has fostered a heavily compliant culture within Rank.  Rank has a dedicated compliance function that is independent of operations and a separate internal audit function that is independent of both operations and the compliance function.  Rank maintains a strong and open relationship with the Gambling Commission, the body responsible for regulating commercial gambling in the United Kingdom.  Since entering the online gaming market, Rank has worked hard to build a similarly strong and open relationship with the Alderney Gambling Control Commission, which is responsible for the regulation of eGambling in the States of Alderney where our remote gambling operations are licensed.  Our responsible gambling and anti money laundering review committees meet quarterly to review topical issues, trends and statistics and their findings are reported to our audit committee.  We also have a director of security who is supported by an experienced security team who have built informal relationships with police forces in the areas in which we operate so that if problems arise there are open channels of communication.

Economic environment

The uncertain economic environment, higher indirect taxation and unemployment could adversely affect our customers' expenditure on leisure activities and we therefore monitor customer spending closely.  We are constantly looking to identify ways to improve our offer so that we become our customers' leisure destination of choice.  We maintain a programme of active engagement with members of our banking panel.

Liquidity risk

Liquidity risk is the risk that the Group will not have sufficient funds to meet its liabilities.  Cash forecasts identifying liquidity requirements are produced monthly and sensitivity tested.   A three-year forecast is produced annually to facilitate planning for future financing needs.  Management actively manages the Group's financing requirements and the range of maturities on its debt.  The Group also has unutilised revolving credit facilities that help to mitigate liquidity risk.

DIRECTORS' RESPONSIBILITY STATEMENT

Each of the directors named on pages 48 and 49 confirms that to the best of their knowledge:

§ the financial statements, prepared in accordance with the financial statements under International Financial Reporting Standards (IFRSs) as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company and the undertakings included in the consolidation taken as a whole; and

§ the directors' report (which incorporates the Group operating and financial review) includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the risks and uncertainties that they face.

RELATED PARTIES

Group

Details of compensation of key management are disclosed in note 27.

Entities with significant influence over the Group

On 7 June 2011, Guoco Group Limited (Guoco), a company incorporated in Bermuda, and listed on the Hong Kong stock exchange, acquired a controlling interest in The Rank Group Plc. At 30 June 2013, Guoco owned 74.5% (30 June 2012: 74.5%) of the Company's shares through a wholly owned subsidiary undertaking, Rank Assets Limited. The ultimate parent undertaking of Guoco is Hong Leong Company (Malaysia) Berhad which is incorporated in Malaysia.

Tim Scoble and Mike Smith were appointed as non-executive directors by shareholders at the Company's annual general meeting on 22 April 2010 as appointees of Guoco. Mike Smith resigned as a director with effect from 30 April 2011 and Tim Scoble became independent on 30 April 2012. During the 12 months ended 30 June 2013, payments of £nil (18 months ended 30 June 2012: £63,333) were made to Guoco-controlled companies in relation to their fees.

During the period The Gaming Group Limited, a wholly owned subsidiary of the Company, entered into an agreement, subject to the satisfaction of certain legal conditions, to purchase five non-operating casino licences from Clermont Leisure (UK) Limited for a maximum total consideration of £6.0m. Clermont Leisure (UK) Limited is an entity subject to common control. The valuation of the licences was carried out by a third party on an arm's length basis.  This transaction has not yet completed and consequently there are no transactions or balances reflected in the financial statements in respect of the transaction.

Company

The following transactions with subsidiaries occurred in the period:

	12 months ended 30 June 2013	18 months ended 30 June 2012
	£m	£m
Interest payable to subsidiary undertaking	(27.9)	(39.6)

During the period, Rank Group Finance Plc, a subsidiary of the Company, provided additional cash to the Company of £14.8m (18 months ended 30 June 2012: £22.8m).

 

END

 

 

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