![Jump to content [Access key 'S']](/ir/rnk/images/existing/cleardot.gif){kind=small}
- Board
- Chairman and chief executive
- Board balance and independence
- Appointment of the Board
- Information and professional development
- Performance evaluation
- Re-election of directors
- The Audit Committee
- The Finance Committee
- The Nominations Committee
- The Remuneration Committee
- Meetings attendance
- The executive committee
- Accountability and audit
- Relations with shareholders
- Compliance with the Code provisions
- Risk management and internal control
The policy of the Board is to manage the affairs of the Company in accordance with the principles of the Combined Code (2006) on Corporate Governance and annexed to the Listing Rules of the Financial Services Authority ('the Code'). This statement explains how the Company applies the principles of the Code.
Board
The directors believe that it is essential that the Company should be both led and controlled by an effective Board. The Board has adopted a formal statement of its powers, duties and responsibilities, and recognises that its main functions are as follows:
- agreeing objectives, policies and strategies, and monitoring the performance of the executive management;
- keeping under review the general progress and long-term development of the Group in light of the political, economic and social environments in which it operates;
- controlling and monitoring the financial state and performance of the Group (including investment and financing plans), determining the desired financial ratios and approving the objectives of the Group's business plan;
- deciding on major changes in organisation and the shape of the Group, including entry into new fields of operation and departure from those which are no longer appropriate;
- approving major expenditure and transactions with other companies including, for example, acquisitions, disposals, joint ventures and significant supply arrangements;
- ensuring that the Group pursues sound and proper policies in relation to:
- safety, health and environmental matters; and
- corporate governance;
- delegating clear responsibility and authority to the chairman, committees of the Board, the chief executive, directors or groups of directors, officers and others; and
- giving approval or support, as appropriate, to the most senior appointments in the Group and ensuring that adequate career development, succession and remuneration arrangements exist for them.
There is a formal schedule of matters reserved for the Board's decision.
Regular Board meetings are held (not fewer than eight times in a year). At least one meeting is devoted to strategy, and is held away from the Company's head office. Ad hoc meetings may be convened in between regular meetings to address any matters requiring Board consideration. The chairman holds at least one meeting a year with the non-executive directors without the executive directors being present and, led by the senior independent director, the non-executive directors meet without the chairman present at least once a year to appraise his performance.
The Company has arranged insurance cover in respect of legal action against its directors. To the extent permitted by UK law, the Company also indemnifies the directors. Neither the insurance nor the indemnity provides cover in situations where a director has acted fraudulently or dishonestly.
Chairman and chief executive
There is a clear division of responsibilities at the head of the Company, with the chairman responsible for the effective operation of the Board, encouraging the active participation of all directors, and the chief executive responsible for the running of the Company's businesses. The Board has approved formal statements describing the role and remit of both the chairman and the chief executive, which emphasise this division of their responsibilities.
The Board is mindful of the need to ensure that the chairman has enough time available to devote to the job. Peter Johnson was chairman from 1 March 2007 (succeeding Alun Cathcart who left the Board on 28 February 2007) and the Board is satisfied that his other significant commitments had no material impact upon the amount of time that he was able to devote to his chairmanship of the Group during the year.
Board balance and independence
The Board includes a balance of executive and independent non-executive directors, whose biographical details are given on page 28. Richard Greenhalgh has been the senior independent director since May 2006. The directors have wide-ranging business experience, and no individual, or group of individuals, dominates the Board's decision-making process. The Board also considered Peter Johnson as independent on his appointment as a director.
Appointment of the Board
The Board accepts that there should be a formal, rigorous and transparent procedure for the appointment of new directors. The Board has formalised and adopted terms of reference for its Nominations Committee which are available on request to the company secretary. A report of the Nominations Committee's work during 2007 is given on page 36. The Board has agreed the terms and conditions for the appointment of non-executive directors, which are also available for inspection and comply with the Code. Peter Gill and John Warren will retire by rotation at the Annual General Meeting and, being eligible, are offering themselves for re-appointment. Peter Gill is the Company's finance director and has a service agreement terminable on one year's notice; John Warren is chairman of the Audit Committee and a member of the Nominations and Remuneration Committees, he does not have a service agreement with the Company.
Information and professional development
The Board receives a steady flow of information to enable it to discharge its duties, including a monthly report detailing current and forecast trading results and treasury positions. It also receives regular updates on shareholders' views as part of the monthly report, and more formal briefings on shareholders' views are given to the Board following the presentation of the Company's interim and annual results. Board papers are generally distributed not less than five days in advance of the relevant meeting to allow the directors fully to prepare for meetings, and minutes of committee meetings are circulated to all directors. The Board is kept fully informed of developments within the Company's businesses through regular presentations by divisional management. Induction programmes for newly-appointed directors are devised to ensure that directors spend time with divisional management and can visit operational sites.
All directors have access to the advice and services of the company secretary, who is responsible for ensuring that Board procedures are followed, and to independent professional advice, if required, at the Company's expense.
Performance evaluation
The evaluation process for the performance of the Board as a whole, and that of individual directors, was carried out through a questionnaire process between the chairman and each director. This was designed to provide an objective assessment and covered the areas of Board process and administration, and the contribution made by each individual. In addition, led by Richard Greenhalgh, the chairman's performance was evaluated by means of a questionnaire. The outcomes of these assessments were then reported to, and discussed by, the whole Board. The conclusion was reached that the Board continues to function effectively and that both the Board and its committees were discharging their duties in full accordance with their terms of reference.
The performance of the Remuneration Committee during the year was also appraised by the Board. The Audit Committee's performance and the effectiveness of the external audit process were evaluated through the completion of suitable questionnaires. The results of these evaluations, which were carried out by the members of the Committee, were then reviewed by the Board.
Re-election of directors
All directors are subject to re-appointment by shareholders at the first Annual General Meeting following their appointment, and thereafter at intervals of not more than three years apart. Non-executive directors are engaged for an initial period of three years, subject to their re-appointment having been confirmed by shareholders as described above.
The Board is satisfied that the chairman, and each non-executive director, is able to devote the necessary amount of time required to attend to the Company's affairs.
The Audit Committee
Rank's Audit Committee is comprised solely of independent non-executive directors. Details of the committee's membership throughout 2007 are as follows:
| Date first appointed | |
| John Warren | January 2006 |
| Brendan O'Neill* | October 2004 |
| Bill Shannon | April 2006 |
* Resigned 31 December 2007
John Warren has chaired this committee since April 2006.
The Board is satisfied that all members of the committee have recent and relevant financial experience. Normally the chairman, chief executive, finance director and the company secretary (as head of internal audit) attend committee meetings, as do representatives of the external auditors.
The Audit Committee's responsibilities are set out on page 29, its terms of reference are available on request to the company secretary.
The committee meets at least annually with the external auditors without management being present. The committee keeps under review the independence and objectivity of the external auditors, and their effectiveness. In particular, the committee oversees the nature and amount of non-audit work undertaken by PricewaterhouseCoopers LLP each year to ensure that external auditor independence is safeguarded. All non-audit services above a value of £50,000 to be performed by the external auditors are required to be approved by the Audit Committee in advance and the Group's policy is that, where appropriate, non-audit work is put out to competitive tender. Details of the year's fees paid to the external auditors are given in note 3 to the financial statements.
During the year, the Gambling Commission undertook a compliance review of the Grosvenor and Mecca businesses and the results of that review were considered by the committee.
The Finance Committee
The Finance Committee's responsibilities are set out on page 29.
Alun Cathcart chaired this committee until Peter Johnson took over from him on 1 March 2007.
The Nominations Committee
The Nominations Committee's responsibilities are set out on page 29.
Peter Johnson replaced Alun Cathcart as chairman of the committee on 1 March 2007.
During 2007, the committee met formally on four occasions and endorsed the re-appointment of Richard Greenhalgh as a non-executive director and also, taking into account the existing balance of skills, knowledge and experience on the Board, assessed the need for a replacement non-executive director for Brendan O'Neill following his retirement on 31 December 2007.
The Remuneration Committee
The Remuneration Committee is comprised solely of independent nonexecutive directors. Richard Greenhalgh has chaired the Committee since April 2006, with Bill Shannon and John Warren being its other members. The committee meets not less than twice a year and is responsible for determining the remuneration packages of the chairman, the executive directors and other members of the executive committee. Details of the Remuneration Committee's deliberations during 2007 are contained in the remuneration report on pages 30 to 34, which also summarises the Company's remuneration policy and contains details of directors' remuneration. The committee met formally on seven occasions during 2007.
Meetings attendance
Details of attendances (actual, and possible in brackets) of directors and committee members at the principal Board and committee meetings held in 2007 were as follows:
| Board (Total 10) |
Audit (Total 4) |
Rem (Total 7) |
Nom (Total 4) |
Finance (Total 21) |
|
| Alun Cathcart* | 1(2) | - | - | 1(1) | 1(3) |
| Peter Johnson | 10(10) | - | - | 4(4) | 17(18) |
| Ian Burke | 10(10) | - | - | 4(4) | 19(21) |
| Peter Gill | 10(10) | - | - | - | 19(21) |
| Richard Greenhalgh | 10(10) | - | 7(7) | 3(4) | - |
| Brendan O'Neill** | 10(10) | 4(4) | - | 4(4) | - |
| Bill Shannon | 9(10) | 3(4) | 7(7) | 4(4) | - |
| John Warren | 10(10) | 4(4) | 7(7) | 4(4) | - |
* Resigned 28 February 2007
** Resigned 31 December 2007
In the few instances when a director was not able to attend Board or committee meetings, his comments on the papers to be considered at that meeting were relayed in advance to the relevant chairman.
The executive committee
The executive committee is not a committee of the Board. Its role is to assist the chief executive in fulfilling his responsibilities for directing and promoting the profitable operation and development of the Group, consistent with the primary objective of creating long-term shareholder value. The names of its current members, and the positions that they hold within the Company, are set out on page 29.
Accountability and audit
The process by which the Board applies the principles of accountability and audit is set out below; a statement of the directors' responsibilities in relation to the financial statements is given on page 39.
Relations with shareholders
The Company maintains an active dialogue with its institutional shareholders and city analysts through a planned programme of investor relations, and regular meetings are held with principal shareholders. The outcome of these meetings is reported to the whole Board to ensure it keeps in touch with shareholder opinion. The programme includes formal presentations of the interim and the full year results.
All shareholders are welcome to attend the Annual General Meeting and private investors are encouraged to take advantage of the opportunity given to ask questions. The chairmen of the Audit, Remuneration and Nominations Committees attend the meeting and are available to answer questions, as appropriate. A summary presentation of the Company's results and development plans is given by the chief executive at the Annual General Meeting prior to the commencement of the formal business of that meeting.
Compliance with the Code provisions
Save in respect of the length of the contractual notice period of the newlyappointed chief executive, which did not reduce from 24 months to 12 months until 6 March 2007, the Company has, throughout the year, complied fully with the provisions of the Code.
Risk management and internal control
The Board maintained the procedures necessary to comply with the requirements of the existing code relating to internal control as described in the October 2005 publication entitled ‘Internal Control: Revised Guidance for Directors on the Combined Code' (Turnbull Report). In relation to Code provision C.2.1, the Board reports below on the procedures that have been applied in reviewing the effectiveness of the system of internal control.
The Board confirms that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Company. The process has been in place throughout the year and up to the date of approval of the Annual Report and financial statements. It is regularly reviewed by the Board and accords with the guidance set out in the Turnbull Report.
The directors acknowledge that they are responsible for the Group's system of internal control, for setting policy on internal control and for reviewing the effectiveness of internal control. The role of management is to implement Board policies on risk and control. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable, and not absolute, assurance against material misstatement or loss.
Considerable importance is placed on maintaining a strong control environment. In particular, there is a simple organisational structure with clearly drawn lines of accountability and delegation of authority; adherence to specified codes of conduct is required at all times and the Board actively promotes a culture of quality and integrity.
A risk assessment process was established in 2006 which is designed to identify the key strategic, operational, financial and compliance risks that the business faces. It includes an analysis of the likelihood and impact for each of the risks identified. For the key risks, action plans have been developed and are monitored as part of management's procedures.
As part of the risk management process, the Audit Committee and the Board is provided with a report detailing significant risks facing the Group. In order to further develop a full risk assessment for the Group, an executive workshop identified strategic, operational, compliance and financial issues faced by the business and ranked the key issues based on their impact and likelihood.
The Group has an internal audit function that reports to the company secretary which is, additionally, supported by Ernst and Young LLP. Detailed control procedures exist throughout the operations of the Group and compliance is monitored by management, internal auditors and, to the extent they consider necessary to support their audit report, the external auditors. Additionally, a separate compliance function monitors day-to-day adherence to the provisions of the Gambling Act and other licensing obligations.
The Audit Committee has reviewed the effectiveness of the system of internal control during the year ended 31 December 2007. This has included consideration of the Group-wide risk assessment and the results of self-certification of internal control exercises undertaken throughout the Group. The Audit Committee has also considered reports from the external auditors.
During the year, reports were submitted to the Committee from the internal audit team summarising the work planned and undertaken, recommending improvements and describing the actions taken by management. The risk assessment process and the risk-driven annual internal audit plan were also presented for approval by the Audit Committee.
The Audit Committee has reported the results of its work to the Board. The Board has considered these reports when undertaking its review of the effectiveness of the Group's system of internal control.
Going concern
In adopting the going concern basis for preparing the financial statements the directors have considered the issues impacting the Group during 2007 as detailed in the business review on pages 4 to 20 and have reviewed the Group’s projected compliance with its banking covenants detailed above. Based on the Group’s cash flow forecasts and operating budgets, which take into account management’s actions on capital expenditure, cost control and the suspension of the dividend and assuming that trading continues broadly in line with current levels, the directors believe that the Group will generate sufficient cash to meet its borrowing requirements for at least the next 12 months and comply with its banking covenants.