Investors Press Rank To Make Changes

Rank is facing demands from large investors to make sweeping changes to its business after a year of protracted disposal talks and widespread under-performance across the leisure conglomerate.

Some shareholders are agitating for a speedy break-up of the business to unlock shareholder value. Others would like to see changes at senior management level, possibly including the removal of the chief executive, Mike Smith.

They are furious that performance at the group's core gaming divisions - Grosvenor casinos and Mecca Bingo - appear to lag behind rival Gala. They are also frustrated by Mr Smith's inability to find a buyer for Deluxe Film, the group's film processing business, and Deluxe Media, which makes DVDs and VHS tapes.

Earlier this month the group announced flat operating profits for the first half of 2005 and Mr Smith warned there was no recovery in sight this year despite a range of bingo and casino deregulation coming into force in October.

Amid persistent reports that private equity houses are circling Rank, impatient shareholders are frustrated that the group's share price has underperformed in the last 18 months. Some are thought to believe that the only way a recovery can be instigated is to oust the chief executive, while others are looking to him for reassurances that every possible avenue to achieve growth is being pursued.

Fidelity, the largest institutional shareholder with a 12% stake, is thought to be among the investors frustrated by the performance. Fidelity declined to comment.

The investment fund is thought to have bought its shares in the group at prices between 300p and 330p. The shares were as low as 250p in May but have come back to close above 290p at the end of last week.

Since his appointment six years ago, Mr Smith has attempted to sharpen Rank's focus on UK gaming, disposing of Butlins holiday camp, Pinewood film studios, Odeon Cinemas and Tom Cobleigh pubs. But his vision of a group focused on a range of gambling businesses suffered a setback three years ago when it lost the race to acquire Coral, Britain's third-largest bookmaker.

Mr Smith has also been unable to find a buyer for the final part of what was the Rank film empire through the sale of Deluxe. After unsuccessful attempts, the business was again put up for sale in November last year. Mr Smith concedes the process is taking longer than expected, but is "pretty hopeful" a deal can be struck on Deluxe Media this year. Deluxe Film is proving more complicated. Rank declined to comment last night.