Notice of AGM

RNS Number : 7893V

Spire Healthcare Group PLC

10 April 2019

 

Spire Healthcare Group plc

10 April 2019

Annual Report and Notice of Annual General Meeting

Spire Healthcare Group plc (the "Company") released its preliminary announcement of its annual results for the year ended 31 December 2018 ("Preliminary Announcement") on Thursday, 28 February 2019.

Further to that Preliminary Announcement, the Company confirms that its Annual Report and Accounts for the year ended 31 December 2018 ("2018 Annual Report"), 2019 Notice of Annual General Meeting and Form of Proxy have now been published. Printed copies have been posted to shareholders who have requested hard copies.

The Annual General Meeting of the Company will take place at 11.00am on Thursday, 16 May 2019 at the offices of Freshfields Bruckhaus Deringer LLP, 65 Fleet Street, London EC4Y 1HS.

Documents are available on the Company's website as follows:

2018 Annual Report:               www.spirehealthcare.com/AR2018

2019 Notice of Meeting:          www.spirehealthcare.com/Notice2019

In accordance with Listing Rule 9.6.1, the Company will submit its 2018 Annual Report and other shareholder documents to the National Storage Mechanism. These documents should then be available for inspection within two working days at www.hemscott.com/nsm.do.

The Appendix to this announcement contains information required for the purposes of compliance with DTR 6.3.5 (1) of the Disclosure and Transparency Rules, including a Statement of Directors' responsibilities This information is extracted, in full unedited text, from the 2018 Annual Report and should be read in conjunction with the Preliminary Announcement, which contained other information required by DTR 6.3.5 (1), released to the market on Thursday, 28 February 2019.

Enquiries:

Philip Davies, Deputy Company Secretary

Tel: [phone]

Appendix

Principal risks

Principal Risk and Executive Owner(s)	Risk movement in 2017	Risk movement in 2018	Link to Strategy	Risk Description	Risk Impact	Risk Mitigation
1. Patient Safety
(previously: Clinical Care) ·   Group Clinical Director ·   Group Medical Officer	None	Decrease	Famous for quality and clinical care. Most recommended customer experience.	The Group's future growth depends upon its ability to maintain its reputation amongst patients, clinicians and referrers for high-quality services. Failure to have relevant and effective clinical and corporate governance systems that are complied with could result in unsafe patient services, regulatory enforcement and reputational damage.	Breaching healthcare and/or professional regulations will result in adverse regulatory inspection ratings, inadequate clinical quality and/or safety of patients, risk of over-servicing and increase in legal claims. This may also result in reputational damage and a consequent negative impact on patient referrals, a failure to attract and retain high quality staff and consultants and reduced future earnings.	Spire Healthcare continually monitors its clinical standards, policies and procedures and will further strengthen medical governance and oversight in 2019, reporting plans and progress via the Board's Clinical Governance and Safety Committee ('CGSC'). During 2018, regular reporting of management and clinical information has been scrutinised by the Executive Committee and Board. Management information is subject to continuous development to ensure relevance, leverage of underlying clinical insights and benchmarking. There is a schedule of robust and regular clinical reviews by the Clinical team according to the Care Quality Commission's ('CQC') key lines of enquiries planned for 2019. Hospitals are reviewed with a subsequent action plan for improvement that is monitored. The Group will engage on clinical outcomes with workforce and consultants including the Chairs of hospital Medical Advisory Committees with a view to driving up engagement and performance.

 

Principal Risk and Executive Owner(s)	Risk movement in 2017	Risk movement in 2018	Link to Strategy	Risk Description	Risk Impact	Risk Mitigation
2. Government and NHS Policy
(previously: Government) ·   Chief Commercial Officer	Increase	Increase	Famous for quality and clinical care	Change in the short to medium-term public funding of NHS services provision, and/or the prioritisation of this funding to particular service lines over time could adversely reduce the flow of NHS patients to Spire Healthcare. Changes in the service level requirements for providers of NHS services, and service level commitments to members of the public served by the NHS, could adversely impact the attractiveness of privately funded treatment. Changes in fiscal policy could increase the burden of welfare resulting in a reduction of NHS-funded options. A fundamental change in the tariff structure associated with the provision of services to the NHS could result in reduced access to patients, reduced tariffs, or reduced prices leading to reduced revenues and/or margins. Material change in NHS commissioning models could result in a material adverse change to commissioning behaviours impacting volumes.	Reduction of NHS patients and/or associated revenue and profit. Reduction in the operational efficiency of our existing hospital network.	The Group derives revenues from three primary payor groups (PMI, NHS and Self-pay) and this provides a natural 'hedge' against exposure to risks in each of these payors. The Group looks to optimise the mix of revenues across each of these payor groups dependent upon local market circumstances. For example, restricted access to NHS treatment can lead to increased numbers of patients electing to pay privately for their healthcare needs. The Group's service levels are confirmed by regular surveys of patients, GPs and consultants, which provide ongoing feedback to ensure NHS requirements (whether as providers or as commitments to its patients) are met. In addition, the Board regularly reviews the competitiveness of its patient offering (both NHS and private patients). The Group maintains direct engagement with Government via Department of Health, NHS England and NHS Improvement. The Board continually monitors Government policy, NHS requirements and associated tariff structures to consider the need for cost and/or investment reduction, whether in the short, medium or long term. The Group is an active member of the Independent Healthcare Providers Network, contributing across all associated specialist working groups.

 

Principal Risk and Executive Owner(s)	Risk movement in 2017	Risk movement in 2018	Link to Strategy	Risk Description	Risk Impact	Risk Mitigation
3. Compliance and Regulation
(previously: Compliance with laws, regulations and other applicable requirements) ·   General Counsel and Group Company Secretary ·   Group Clinical Director	Increase	Increase	Best place to practise.	The Group operates in a highly regulated environment, including complying with the requirements of, for example, the CQC, NHS Improvement and the CMA. Failure to comply with laws, regulations or regulatory standards e.g. CQC/HIS/HIW, GMC, HSE, CMA, NHS Improvement, NHS England, HMRC, DPA 2018 (GDPR) may expose the Group to patient claims, fines, penalties, damage to reputation, suspension from the treatment of NHS patients, loss of hospital licence and loss of private patients.	The Group may not be able to operate one or more of its hospitals, due to regulatory breaches which could lead to loss of licence to practise at one or more sites causing a significant reduction in profit.	The Group continues to strengthen its Group-wide risk management framework (and associated policies and procedures) to ensure that risks are mitigated as far as possible, with the Executive Committee having appropriate visibility to ensure robust decision-making. The Group has the ability to monitor and react to the changing regulatory framework of a listed company in the healthcare sector. The Group has a significant centralised clinical services team which assists hospitals in establishing and maintaining a high level of clinical performance. Emerging legal or regulatory changes are monitored by the Board, the Executive Committee, the Audit and Risk Committee and the CGSC, in addition to consultations with external advisers and industry briefings. Identification and reporting of Data protection and associated risks are managed by the Data Protection Officer and brought to the attention of the Board by the General Counsel.

 

Principal Risk and Executive Owner(s)	Risk movement in 2017	Risk movement in 2018	Link to Strategy	Risk Description	Risk Impact	Risk Mitigation
4. Insurance
(previously: no change) ·   General Counsel and Group Company Secretary	None	None	Best place to practise.	Spire Healthcare could be subject to litigation for actions by third parties or may be found liable for damages which may not be covered by its insurance policies, if the claims are in excess of cover or claims are not covered by the Group's insurance due to other policy limitations or exclusions or where it has failed to comply with the terms of the policy.	The Group's insurance premiums may increase and, if there is a significant deterioration in its claims experience, insurance may not be available on acceptable terms. There may also be costs relating to damages and defence costs.	The Group reviews and maintains insurance to mitigate the possibility of a major loss. Adequacy of cover is reviewed annually with the Group's brokers. Personal injury claims relating to: patient, third-party and employees are partially covered by third-party liability insurance and is partially self-insured up to predetermined levels, above which its third-party liability insurance applies.
5. Concentration of PMI market
(previously: no change) ·   Chief Commercial Officer	None	None	First choice for private patients.	The PMI market is concentrated, with the top four companies (Bupa, AXA, Aviva and VitalityHealth having a market share estimated at over 85%. Loss of an existing contractual relationship with any of the key insurers could significantly reduce revenue and profit. Further consolidation of the PMI market could adversely impact Spire Healthcare's relative negotiating power in any ongoing commercial arrangements.	Reduction of PMI patients and/or associated revenue and profit. Reduction in the operational efficiency of our existing hospital network.	The Group works hard to maintain good relationships and a joint product/patient health offering with the PMI companies, which, in the opinion of the Directors, assists the healthcare sector as a whole in delivering high-quality patient care. The Board believes continuing to invest in its well-placed portfolio of hospitals provides a natural fit to the local requirements of all the PMI providers. The Group seeks to ensure we have long-term contracts in place with our PMI partners to avoid co-termination of contractual arrangements.

 

Principal Risk and Executive Owner(s)	Risk movement in 2017	Risk movement in 2018	Link to Strategy	Risk Description	Risk Impact	Risk Mitigation
6. Availability of Key Clinical and Medical Professionals
(previously: Availability of key medical staff) ·   Group Clinical Director ·   Chief Operating Officer	None	Increase	Famous for quality and clinical care. Best place to practice. Best place to work.	There is an increasing aging workforce amongst key medical staff. This coupled with a shortage of nursing staff, specific skill-set practitioners and legislative restrictions may lead to a shortage of medical staff.	Patient safety may be impacted as well as cause delays due to a lack of suitable clinical staff which could also see not only a decline in the Group's profits but affect the growth of complex surgical procedures and ongoing treatment of higher-risk patients. This may also result in a fall of referrals from key insurers. There is uncertainty regarding worker status post-Brexit. It is envisaged the length of time to hire staff from the EU will increase which will have an impact on costs due to flexibility of current workforce. The market may see salary rates rise as competition for staff increases, there may be compliance issues with IR35 and, as a result, the Group's costs may increase.	The Board focuses on staff retention, with trends and changes in our staff survey informing our strategy for engagement with a focus on incentives, staff development and training. The Board has a significant appetite to further improve staff engagement ensuring the people who run our services are at the fore front of the Group. Management deploys productivity tools and pursues opportunities to reduce clinical nursing time spent on non-clinical activities to optimise the effectiveness of its clinical staff base. The Group undertakes continuous investment in its equipment, facilities and services to retain high-quality consultants and also provides theatre capacity to new consultants. This is confirmed by good consultant satisfaction levels, which is consistent with last year. The Group has put in place a new, centralised recruitment processes and works with a range of partners to ensure we secure the best talent and closely monitors vacancy levels to ensure key roles are filled. The Group has developed an overseas recruitment capability to secure highly trained healthcare workers from outside the EU where local recruitment is unsuccessful.

 

Principal Risk and Executive Owner(s)	Risk movement in 2017	Risk movement in 2018	Link to Strategy	Risk Description	Risk Impact	Risk Mitigation
7. Macroeconomics
(previously: no change) ·   Chief Commercial Officer	None	Increase	First choice for private patients.	Approximately 65% of the Group's revenue is dependent on private patients having PMI, paid by their employer or paid by the individual, or being able to afford its services (Self-pay). In an economic downturn, the numbers of insured individual's falls with the level of employment and individuals have reduced real income to fund insurance or Self-pay for procedures. This would have an adverse effect on the Group's business, the results of its operations and prospects.	Reduction of Private patients and associated revenue and profit contributions. Reduction in the operational efficiency of our existing hospital network.	The Board manages this risk by regularly reviewing market conditions and economic indicators to assess whether actions are required. As successfully employed in the last economic downturn, if the private market contracts, the Group can try to reduce costs and future investment to improve profit and cash flow, and may be able to offer the released capacity to the NHS at its lower tariff, reducing the impact on profit. Macroeconomic conditions may put comparable finance strain on competitors, who may not be as well positioned to respond. Opportunities may arise from reduced competition or market consolidation.
8. Competitor Challenge
(previously: no change) ·   Chief Commercial Officer	None	None	First choice for private patients. Most recommended customer experience. Best place to work.	Spire Healthcare operates in a highly competitive market. New or existing competitors may enter the market of one or more of our existing hospitals, or offer new services. This could lead to uncertainly if a new strategy materially changed the existing operating model. In turn this could potentially impact the way in which the NHS and PMI providers' commission work.	The potential impact would be the loss of market share due to a new competitor and reduced profitability and cash flow.	The market has seen increased pressure in 2018 and the Group maintains a watching brief on new and existing competitor activity and retains the ability to react quickly to changes in patient and market demand. The Group considers that a partial mitigation of the impact of competitor activity is ensured by providing patients with high-quality clinical care and by maintaining good working relationships with GPs and consultants.

 

Principal Risk and Executive Owner(s)	Risk movement in 2017	Risk movement in 2018	Link to Strategy	Risk Description	Risk Impact	Risk Mitigation
9. Cyber Security
(previously: no change) ·   Chief Financial Officer	None	None	Famous for quality and clinical care. Most recommended customer experience. Best place to practice.	The Group faces the challenges of a continually evolving external cyber threat landscape, and could become vulnerable to computer viruses, break-ins and similar disruption from unauthorised tampering. The level of risk to Spire Healthcare's IT architecture and systems continues to grow as the volume of cyber security threats are increasing and becoming more sophisticated.	The Group's business could be disrupted if its information systems fail or if its databases are breached, destroyed or damaged. This could cause financial and reputational impacts. The Group could also be subject to litigation by third-parties.	The Group's technical IT teams continually monitor these developments as a business as usual activity. Working with a number of specialist and industry leading technical partners, multiple layers of business protection have been created through the use of advanced intrusion detection and protection systems, web access firewalls and advanced content filtering to combat denial of service attacks. Business processes are also kept under review and user education regularly carried out to minimise the possibility of ransomware incidents. Regular third-party penetration testing is performed on Spire Healthcare's core IT systems. New IT system developments are subject to rigorous penetration testing prior to release. This approach allows the Group to keep pace with the increasing risk profile, ensuring the risk to Spire Healthcare remains stable.

 

Principal Risk and Executive Owner(s)	Risk movement in 2017	Risk movement in 2018	Link to Strategy	Risk Description	Risk Impact	Risk Mitigation
10. Liquidity and Covenant risk
(previously: no change) ·   Chief Financial Officer	None	None	All five current strategic objectives.	The Group may not have sufficient liquid resources to meet its financial liabilities as they fall due, or breach financial covenants linked to its borrowings.	Failure to meet its obligations or covenants would have a substantial adverse effect on the Group's reputation and may lead to borrowings becoming repayable earlier than contracted for. This would have a direct impact on the delivery of strategy and site improvements as well as media attention.	The Group has a solid asset base with the ability to promptly leverage in a short timescale, if required. The Group actively monitors and manages its liquid asset position, its financial liabilities falling due and the cover against its loan covenants. The Group is also actively focused on cash management and capital expenditure, and continues to maintain close working relationships with a highly supportive banking group. The Board has considered the risk in detail as part of its assessment of the viability of the Company.
11. No-deal Brexit
(previously: not listed) ·   General Counsel and Group Company Secretary	NEW	Increase	Famous for quality and clinical care. Best place to practise. Best place to work.	The Group potentially faces significant impacts if there is a no-deal Brexit. If the UK leaves the European Union without a post-Brexit trade agreement the Group may be impacted in a number of areas including: ·   Supply Chain Medicines Consumables Prostheses Food ·   Patient numbers ·   Workforce ·   Transport disruption ·   Cash-flow. ·	The Group may experience major disruption in key function areas, increased costs, and see a significant reduction in patient numbers. The Group may experience increased difficulty in recruiting and retaining EEA employees. The Group may find supply of medicines, consumables; drugs (especially those with short-life spans) and other key items are not available or severely restricted, which may impact the Group's ability to operate.	The Board is continually monitoring the implications and effects of Brexit through the Group's Brexit committee which is putting in place measures to ensure disruption is as minimal as reasonably possible.

 

Statement of Directors' responsibilities

The Directors are responsible for preparing the Annual Report and Accounts for the year ended 31 December 2018, including the Consolidated financial statements and the Parent Company financial statements, Directors' Report, including the Directors' Remuneration Report and the Strategic Report in accordance with applicable law and regulations. Under that law, the Directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union and Article 4 of the IAS Regulation and have elected to prepare the Parent Company financial statements in accordance with IFRS, as adopted by the EU.

Company law requires the Directors to prepare such financial statements for each financial year. Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company on a consolidated and individual basis, and of the profit or loss of the Company on a consolidated basis for that period.

In preparing these financial statements, the Directors are required to:

·  select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;

·  make judgements and estimates that are reasonable and prudent;

·  present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

·  provide additional disclosures when compliance with the specific requirements in IFRS as adopted by the EU is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's and Company's financial position and financial performance;

·  state that the Group's and Company's financial statements have complied with IFRS as adopted by the EU, subject to any material departures disclosed and explained in the financial statements; and

·  prepare the financial statements on a going concern basis, unless it is not appropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions, and disclose, with reasonable accuracy at any time, the Company's financial position and enable them to ensure compliance with the Companies Act 2006. They are also responsible for safeguarding the Company's assets and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Each of the Directors, whose names and functions are listed on pages 86 and 87, confirms that:

·  to the best of their knowledge, the Consolidated financial statements and the Parent Company financial statements, which have been prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Company on a consolidated and individual basis;

·  to the best of their knowledge, the Strategic Report and the Directors' Report include a fair review of the development and performance of the business and the position of the Company on a consolidated and individual basis, together with a description of the principal risks and uncertainties that it faces; and

·  they consider that the Annual Report and Accounts for the year ended 31 December 2018, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

Related party transactions

Key management personnel

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group,

directly or indirectly. They include the Board and Executive Committee, as identified on pages 84 to 87.

Compensation for key management personnel is set out in the table below:

Key management compensation

(£ million)                                                                                                            2018        2017

Salaries and other short term employee benefits                                                2.9           3.5

Post-employment benefits                                                                                   0.3           0.4

Share-based payments                                                                                         0.4           0.9

                                                                                                                              3.6           4.8

Further information about the remuneration of individual Directors is provided in the audited part of the Directors' Remuneration Report on

pages 101 to 109.

There were no transactions with related parties external to the Group in the year to 31 December 2018 (2017: nil).

 

END

 

 

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