Spire Healthcare Group plc
6 April 2021
2020 Annual Report and 2021 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 2020 ("Preliminary Announcement") on Thursday, 4 March 2021.
Further to that Preliminary Announcement, the Company confirms that its Annual Report and Accounts for the year ended 31 December 2020 ("2020 Annual Report"), 2021 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 following documents are available on the Company's website:
2020 Annual Report: www.spirehealthcare.com/AR2020
2021 Notice of Meeting: www.spirehealthcare.com/Notice2021
In accordance with Listing Rule 9.6.1, the Company will submit its 2020 Annual Report and other shareholder documents to the National Storage Mechanism. These documents should then be available for inspection within two working days at https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
Arrangements for the Annual General Meeting in light of COVID-19
The Annual General Meeting of the Company will be held at 2.00pm on Thursday, 13 May 2021 at 3 Dorset Rise, London EC4Y 8EN (the "2021 AGM").
Due to the COVID-19 pandemic and the legislation and government guidance prohibiting public gatherings and restricting non-essential travel, shareholders will not be able to attend the 2021 AGM.
The Board always welcomes questions from shareholders and we request that these are submitted by e-mail to companysecretary@spirehealthcare.com . We will ensure that answers to questions are placed on the Company's website ahead of the meeting.
Details of the resolutions to be proposed at the 2021 AGM are set out in the 2021 Notice of Meeting. The voting results of all resolutions put before the 2021 AGM will be announced to the market following the meeting.
Should government guidelines change, and shareholders be able to attend the 2021 AGM in person, we will advise this via the Company's website, www.spirehealthcare.com and via a Regulatory Information Service.
Appendix
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 2020 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, 4 March 2021.
Enquiries:
Philip Davies
Company Secretary
Tel: 07803 508348
Appendix
Principal risks
Principal Risk | Risk Description | Risk Impact | Risk Mitigation |
1. Patient Safety and Clinical Quality | |||
Executive Owner(s) Group Clinical Director Group Medical Director
Risk movement in 2019 Decrease
Risk movement in 2020 No change
Link to Strategy Uncompromising on patient safety and clinical care.
| There is a risk to the provision of high-quality patient care due to: Nosocomial Covid-19 infection A shortage of skilled workforce (see Risk 1); Clinical and non-clinical staff and Consultants failing to follow guidelines, standards and policies resulting in patient harm; and, Failing to learn from incidents and Patient Notification Exercises
| Reputational and financial loss could occur if the Group fails to address adequately issues identified by incidents, audits, complaints, PROMs, National Registries, Whistleblowing, Freedom to speak up, workforce feedback and the internal Patient Safety Quality Reviews and Care Quality Commission. | In response to the COVID-19 pandemic, the Group introduced a specific infection prevention control programme to minimise the risk of hospital acquired COVID-19 infections that included: Red, Amber & Green patient pathways, PPE, Testing of patients, colleagues and Consultants.
The Group maintains controls to mitigate against a failure of patient safety and clinical quality: A reporting culture of openness and shared learning from Ward-to-Board, with a FSUG at each site Incident reporting via a database with central oversight Continual monitoring of clinical standards, reporting progress via the Clinical Governance and Safety Committee (CGSC). A schedule of robust and regular hospital audits including the Patient Safety and Quality Reviews, with an action plan for improvement. Colleague induction, clinical competencies requirements and mandated training. Reporting on clinical outcomes with workforce and Consultants including the Chairs of hospital Medical Advisory Committees. |
2. Workforce | |||
Executive Owner(s) Human Resources Director
Risk movement in 2019 Increase
Risk movement in 2020 No change
Link to Strategy First choice for private healthcare
Uncompromising on patient safety and clinical care
| There is a global shortage of nursing and allied healthcare practitioners. In addition, the Group has an ageing workforce. The Covid-19 pandemic has caused up to 10%-15% of the workforce to be absent at its peak.
The Group's ability to attract and retain clinical practitioners, in particular, is affected by: Growth of waiting lists affecting more nurses required in NHS/IS reducing availability of colleagues. Demand for nursing/healthcare workers increases resulting in more competitive pay rates. Government respond by raising pay in the NHS. Government immigration policy and the post Brexit labour market The impact of the NHS Agenda for Change causing inflationary wage pressure Our business strategy of increasing complexity of medical procedures that requires a higher skilled workforce The changing Pensions and Tax (IR35) landscape that might reduce the availability of Consultants, bank and agency staff. The reduction in elective activity within Trusts reducing the training opportunities for new Consultants. | The Group is able to provide safe patient care only with delays to treatment because of scarce resources.
Over the medium to long term, this could result in a decline in the Group's profits and affect expected revenue growth from more complex surgical procedures and treatment of higher-risk patients.
| The Group seeks to retain staff through: A common purpose and a positive workplace culture. Maintaining competitive pay and benefits. Responding to key metrics such as staff turnover, rookie staff levels (less than one-years' service), vacancy rates and levels of positive engagement from staff surveys. Continuous investment in its equipment, facilities and services to retain high-quality clinicians. The Group seeks to recruit staff through: A centralised recruitment processes An overseas recruitment capability to secure skilled healthcare workers from outside the EU where necessary. Offering apprenticeship programmes to support the development of clinical and non-clinical teams across the business. Working with the Royal Colleges to offer Consultant-training opportunities in the private sector. Building of local bank staff pools The Group manages immediate staff shortages with agency and bank workers. |
3. PMI Market Dynamics | |||
Executive Owner(s) Chief Commercial Officer
Risk movement in 2019 Decrease
Risk movement in 2020 No change
Link to Strategy First choice for private healthcare
Improving revenue, profit and cash.
| The PMI market is concentrated, with the top four companies (Bupa, AXA, Aviva and VitalityHealth) having a market share estimated at over 85%.
In addition to this market concentration, the major PMI providers are collaborating on service line tenders to increase their purchasing power. There is a risk that the PMI providers will put cost before clinical quality.
The Group has individual contractual relationships for the provision of its services with all the major PMI providers. These contracts come up for renewal on a recurring basis. There is a risk that renewal of contract terms cannot be secured on historical terms.
Following the COVID-19 pandemic, the speed of recovery of the PMI market for the Group is uncertain. There is a risk that PMI patient volumes will not recover to pre-pandemic levels as quickly as the Group anticipates. | Loss of, or renewal at lower tariffs, of an existing contractual relationship with any of the key insurers could significantly reduce revenue and profit for the Group.
A slower recovery of the PMI market could reduce revenues and profits in the short term.
| 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 Group ensures it has long-term contracts in place with its PMI partners to avoid co-termination of contractual arrangements.
The Group believes continuing to invest in its well-placed portfolio of hospitals provides a natural fit to the local requirements of all the PMI providers long term.
The Group continues to invest in efficiency programmes to ensure that it can offer cost effective high quality patient care. |
4. Macroeconomics | |||
Executive Owner(s) Chief Commercial Officer
Risk movement in 2019 Increase
Risk movement in 2020 Increase
Link to Strategy First choice for private healthcare.
Improving revenue, profit and cash.
| In 2019, before the COVID-19 pandemic, the Group derived c.70% of its revenue from private patients, either through insurance paid for by their employer or themselves, or patients paying for services directly. In 2020, as reported elsewhere, that model changed completely after March 2020 when the NHS contracted private healthcare providers to support the pandemic response.
Since May 2020, and under the current NHS contractual arrangements in England, Scotland and Wales, the Group is able to use unutilised capacity for private patients.
Given the uncertain economic outlook, there is a risk that post the COVID-19 pandemic, private patients may not be able to access private healthcare to the same pre-pandemic levels because of either: capacity constraints from contracted NHS work to address the NHS waiting lists for Elective treatment; or loss of insurance cover if withdrawn by an employer or patients lose employment; or they suffer a loss of disposal income. | Reduction of Private patients and associated revenue and profit contributions.
Reduction in the operational efficiency of our existing hospital network.
| The evidence available to the Group indicates that the COVID-19 pandemic has left high levels of pent up demand for the Group's services.
The ability for patients to access private care does not appear presently to be constrained financially. The Group understands that private medical insurance policy renewals and sales remain healthy, and the Group has itself seen higher enquiries from self-pay patients than in 2019 with a rapid recovery in self-pay patient care seen in Q4 2020.
In the medium to long term, the Group seeks to have flexibility to respond to changing economic circumstances with a blend of private and NHS funded work that does not leave the Group over reliant on one income source, supported by an efficient cost base. |
5. Competitor Challenge | |||
Executive Owner(s) Chief Commercial Officer
Risk movement in 2019 No change
Risk movement in 2020 No change
Link to Strategy First choice for private healthcare.
Key partner of the NHS. | The Group 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.
In the current economic environment, there is a risk that the pressures on competitors results in irrational market behaviour manifesting itself in low pricing on tenders or self pay.
| The potential impact would be the loss of market share due to aggressive competitor activity a new competitor and reduced profitability and cash flow. | 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 General Practitioners and Consultants.
The Group continues to invest in the brand and deliver an effective acquisition capability both direct and via our partners in order to protect our market position. It has also strengthened its pricing and tendering capabilities.
Despite the COVID-19 pandemic, the Group plans to maintain its investment into the estate and clinical equipment to differentiate our proposition.
The Group monitors the market for opportunities, should they arise, to acquire or open facilities in specific geographies creating incremental volume. |
6. Insurance & Indemnity | |||
Executive Owner(s) Group General Counsel
Risk movement in 2019 Decrease
Risk movement in 2020 No change
Link to Strategy Uncompromising on patient safety and critical care
| The Group procures insurance from global insurers and syndicates with a presence in the Lloyds of London insurance market.
The Group 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.
As a substantive buyer of corporate insurance, the Group could be faced with increased premiums, reduced cover or withdrawal of cover because of hardening global insurance markets. | 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 with coverage being maintained or increased depending on that advice.
Personal injury claims relating to patients, third parties and employees are covered by insurance once predetermined deductible levels have been reached.
The Group engages in consultation information events relating to indemnity and has developed a bespoke affinity insurance product MedicaInsure to provide Consultants with a high-quality, regulated alternative to discretionary cover. The Group has made robust representations to Government and the Paterson Inquiry with regard to the need to end discretionary indemnity and to regulate the medical defence organisations. |
7. Liquidity and Covenants | |||
Executive Owner(s) Chief Financial Officer
Risk movement in 2019 Decrease
Risk movement in 2020 No change
Link to Strategy Improving revenue, profit and cash
| The Group may not have sufficient liquidity to meet its financial liabilities as they fall due, or breach financial covenants linked to its borrowings.
The Group may not be able to refinance on favourable terms.
| 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. | The Group actively monitors and manages its liquid asset position, its financial liabilities falling due and the cover against its loan covenants is actively focused on cash management and capital expenditure.
At the onset of the COVID-19 pandemic, the Group was able to engage positively with its banking group with the result that the Group benefited from covenant waivers in 2020. For June 2021, the banking group has again agreed to waive the covenant tests under its current loan agreements, and provide additional headroom for the December 2021 covenant tests. Note 22 to the Financial Statements describes the extended facility to 2023.
The Group retains access to an unutilised £100m (reducing to £87m from July 2022 until July 2023) revolving credit facility should its current cash position materially deteriorate.
The Group has a solid asset base with the ability to leverage in a short timescale, if required. The Board has considered the risk in detail as part of its assessment of the viability of the Group. |
8. Government & NHS Policy | |||
Executive Owner(s) Chief Commercial Officer
Risk movement in 2019 Increase
Risk movement in 2020 No change
Link to Strategy Key partner of the NHS.
| The COVID-19 pandemic has seen significant changes in the way the NHS has interacted with the private healthcare sector. NHS England has contracted at a national level for the first time.
The Group expects the NHS to continue to develop the pre-pandemic policy of regional Integrated Care Systems.
There is a risk that the developments in the provision of healthcare in the UK could result in a short- to medium-term material change in NHS commissioning models and/or changes in the tariff structures.
The economic policy of HM Government post the COVID-19 pandemic is unknown. There is a risk that future economic policy is unfavourable to the healthcare sector as a whole. | Changes to NHS commissioning models, if adverse, could lead to reduced access to patients, reduced tariffs, or reduced prices adversely influencing revenues and/or margins.
A reduction in patient volumes could lead to a reduction in the operational efficiency of our existing hospital network.
Changes in HM Government fiscal policy or spending policy towards corporate organisations, or the healthcare sector in particular, could materially affect the profitability of the Group. | Historically, the Group derived 70% of its revenues from PMI and Self-pay patients that provided a natural hedge against exposure to Government and NHS policy. Post pandemic, the Group will seek to recover its private revenues as far as possible to restore that hedge.
The Group has successfully secured accreditation on the NHS Framework to be considered for future contracts.
Through the COVID-19 pandemic, the Group has increased its relationships with the Government via DoHSC, NHS England, NHS Improvement and maintained close communications with NHS leads in Scotland, Wales, the local Trusts and Commissioners. Contact is both direct and through the Independent Healthcare Providers Network where the Group contributed staff across working groups set up to manage the private sector's response to the COVID-19 pandemic. |
9. UK-EU Trade Relations | |||
Executive Owner(s) Chief Financial Officer Chief Operating Officer
Risk movement in 2019 Decrease
Risk movement in 2020 No change
Link to Strategy First choice for private healthcare.
Key partner of the NHS.
Uncompromising on patient safety and clinical care.
Improving revenue, profit and cash. | On 30 December 2020, the UK and European Union signed the UK-EU Trade and Cooperation Agreement (TCA). The Agreement introduced new trading relationships between the EU and UK. Whilst the TCA clarified tariff regimes for many physical goods, new border procedures and custom duties came into force on 1 January 2021 with member states of the EU.
80% of the Group consumable supplies are sourced from, or via, the EU.
There is a risk that the Group's operations may experience disruption from the new border procedures.
| The Group may experience disruption to the Group's business including: Supply Chain e.g. Medicines Consumables Prostheses Food Transport disruption Cross border data flows | In 2019, the Group undertook a risk assessment. It developed comprehensive plans across all key risk areas to minimise disruption, including: utilising its national supply chain and distribution centre to efficiently utilise stock; undertaking supplier assurance; liaising with NHS England and the Department of Health planning team and promoting the EU settlement scheme to relevant staff.
In 2021, the Group's Brexit Steering Committee continues to monitor the Group's resilience to the identified key risk areas. The Group has maintained its pre-Brexit key supply levels as a precautionary measure. To date there has been minimal disruption to the Group's operations. |
10. Information Governance and Security | |||
Executive Owner(s) Chief Financial Officer
Risk movement in 2019 Increase
Risk movement in 2020 Increase
Link to Strategy First choice for private healthcare.
Key partner of the NHS.
Uncompromising on patient safety and clinical care.
Improving revenue, profit and cash. | The Group has to maintain and manage a range of physical and digital data assets including patient records, commercial information and staff data.
Personal data has to be managed in compliance with the principles set out in the Data Protection Act 2018 and the General Data Protection Regulations (GDPR).
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.
Healthcare and pharmaceutical organisations saw increased hostile cyber activity in 2020 because of the COVID-19 pandemic. The group anticipates that the Healthcare sector will remain a higher risk sector from cyber-attacks. | The Group's business could be disrupted if its information systems fail are breached, destroyed or damaged.
Staff and patient data could be stolen or compromised.
The Group could also be subject to litigation by third parties and law enforcement agencies.
A successful cyber-attack and a breach of data security could result in: material costs to recover operations, material financial penalties for breaches of Data Protection law, compensation for patients or staff if personal data is compromised; and, Reputational damage.
| The Group has a governance structure, with Board oversight, that monitors the risk and mitigations for information governance. To support the governance structure the Group has a range of policies and practices covering information governance. All staff have to complete annual mandatory training on information governance and data protection.
The Group's IT team have a cyber-security strategy for continuous improvement based on industry standards. It covers the processes from identifying specific risks, to protecting physical and digital data assets through to recovery in the event of a successful cyber-attack.
The Group works with a number of industry leading technical partners to provide: multiple layers of business protection through the use of advanced detection and protection systems, Regular third-party penetration testing on new and existing IT systems. Assessment of maturity of control environment against international control frameworks. |
11. COVID-19 Pandemic (NEW) | |||
Executive Owner(s) The whole Executive Committee, led by the Chief Executive Officer.
Risk movement in 2019 N/A
Risk movement in 2020 Increase
Link to Strategy Uncompromising on patient safety and clinical care.
First choice for private healthcare.
Key partner of the NHS.
Improving revenue, profit and cash. | Repeated waves of infection occur that risk overwhelming the NHS and forcing HM Government to re-introduce severe lock-down measures either regionally or nationally. | Further lockdown measures could adversely impact Spire Healthcare's operations and its profitability by: Reducing the amount of elective procedures the hospitals can carry out because of additional Infection Prevention Control measures or patients reluctance to attend hospital. A substantive number of staff have to self-isolate because they or household members show symptoms, are tested positive or are instructed to self-isolate by the HM Government's contact tracing operations. Spire Healthcare hospitals are required to support local NHS trusts that declare Surge, preventing them from treating private patients. There is a short-term risk of material financial losses under the current contract to 31 March 2021 before mitigations. Consultants and anaesthetists are required to support their NHS trusts to treat Covid-19 patients reducing their availability to undertake work in Spire Healthcare facilities. | To maximise the utilisation of the hospitals the Group has: Negotiated a short-term contract from 1 Jan 2021 - 31 March 2021 based on activity with a minimum activity underpin. Negotiated national contracts with the NHS to support them to provide capacity for treating the backlog of elective procedures. Maintained capacity within the contractual arrangements with the NHS for PMI and Self-pay patients (overridden in Surge scenarios). Maintained close links with the Consultant community and support them build their private patient activities. Maintained the Infection Prevention Control measures to reduce the risk of cross contamination amongst staff at Spire Healthcare facilities. These measures include regularly testing all staff and patients for COVID-19. The Group is supporting the national vaccination programme. Frontline clinical staff will be prioritised with NHS frontline clinical staff. |
12. Brand Reputation | |||
Executive Owner(s) Chief Commercial Officer
Risk movement in 2019 Increase
Risk movement in 2020 No change
Link to Strategy First choice for private healthcare.
Key partner of the NHS. | The COVID-19 pandemic has resulted in a substantial amount of positive media coverage for the Group. The Group's actions to support the NHS has generated a substantial amount of goodwill at national and regional level within the NHS.
Its brand presence within the consumer and NHS & HM Government is higher than at any point.
The Group's future growth depends upon its ability to maintain, and continue to enhance, its reputation amongst patients, clinicians and other stakeholders.
As the Group's brand presence grows, the risk increases that adverse events such as: patient notifications and recalls; mishandling of patient data; or, a breach of law or regulation will have a more material impact on the Group. | If we fail to protect or grow the brand it may harm our ability: to maintain or grow income to attract and retain the best staff and clinicians to win new contracts to raise capital at competitive rates to meet our regulatory obligations
| The Group's primary mitigations against damage to its brand reputation is through the good management of its principal risks, in particular: Patient safety and clinical quality; Cyber security and data protection; and, Compliance and regulation.
Specifically in 2021 the Group will: Continue to support the NHS through the COVID-19 pandemic; Continue to focus on enhanced infection prevention control to minimise patient and staff risk from COVID-19 Substantially complete its response to the recommendations of the Independent Inquiry into the issues raised by Ian Paterson Launch its first national television advertising campaign focused on its core purpose.
The Group has built greater capability to manage its social media, online presence and public relations during 2020. |
13. Compliance & Regulation | |||
Executive Owner(s) Group General Counsel Chief Financial Officer Chief Commercial Officer Chief Operating Officer Group Clinical Director Group Medical Director
Risk movement in 2019 No change
Risk movement in 2020 Increase
Link to Strategy First choice for private healthcare.
Key partner of the NHS.
Uncompromising on patient safety and clinical care. | The increasing range and complexity of the legislation and regulation which impact on the Group, plus the fact that, alongside many other complex and highly-regulated entities, the Group fully expects that the legal and regulatory landscape in which it operates will change and become more onerous, complex and demanding, means that this is considered an area of potential risk for the Group and its operations.
In addition, as the UK makes the transition from being part of the EU, there will be flux in legal and regulatory developments, potentially arising from the interpretation of retained EU law by the UK courts or from the direction taken by the UK following the end of the transition period; it is not possible to determine with any degree of certainty the speed, impact or direction of forthcoming legal or regulatory change. This will therefore require monitoring, compliance and assurance. | Failure to comply with laws, regulations or regulatory standards may expose the Group to claims, fines, penalties, and damage to reputation, suspension from the treatment of NHS patients, loss of hospital licence and loss of private patients.
New laws and regulations may require new compliance programmes to provide assurance that the Group is in compliance increasing overhead costs.
| The Group has a Ward-to-Board system of governance that ensures compliance with law and regulation and provides the pathways to add different elements of compliance, should regulation/laws change and thus the need arise.
Key components that support the Ward-to-Board governance structure for compliance and regulation include: A dedicated legal team and company secretary that, with external counsel, monitors legal and regulatory developments and advises the group thereon. Regular, role specific, mandatory training for all staff (both clinical and non-clinical) across a range of the most important legal and regulatory compliance areas, e.g. data protection, health & safety laws and safeguarding. Centralised clinical and non-clinical internal audit teams that carry out site audits and assists hospitals in establishing and maintaining a high level of internal control. |
Statement of Directors' responsibilities
The Directors are responsible for preparing the annual report and the group financial statements in accordance with applicable United Kingdom law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the group and parent company financial statements in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 (and IFRSs adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union). Under company law the directors must not approve the group financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and the company and of the profit or loss of the group and the company for that period.
Under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules, group financial statements are required to be prepared in accordance with IFRSs adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
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 accounting estimates that are reasonable and prudent;
- present information in a manner that provides relevant, reliable, comparable and understandable information;
- provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the group's financial position and financial performance;
- in respect of the group financial statements, state whether IFRSs in conformity with the Companies Act 2006 and IFRSs adopted pursuant to Regulation(EC) No 1606/2002 as it applies in the European Union have been followed, subject to any material departures disclosed and explained in the financial statements;
- in respect of the parent company financial statements, state whether IFRSs in conformity with the Companies Act 2006 have been followed, subject to any material departures disclosed and explained in the financial statements, and
- prepare the financial statements on the going concern basis unless it is appropriate to presume that the company and/ or the group will not continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's and group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the company and the group financial statements comply with the Companies Act 2006 and, with respect to the group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the group and parent company and group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible for preparing a strategic report, directors' report, directors' remuneration report and corporate governance statement that comply with that law and those regulations. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website.
Each of the Directors confirms that, to the best of their knowledge:
- that the consolidated financial statements, prepared in accordance with IFRSs in conformity with the Companies Act 2006 and IFRSs adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the parent company and undertakings included in the consolidation taken as a whole;
- that the annual report, including the strategic report, includes a fair review of the development and performance of the business and the position of the company and undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and
- that they consider the annual report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company's position, performance, business model and strategy.
Related party transactions
31. 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 120 to 123.
Compensation for key management personnel is set out in the table below:
Key management compensation
(£m) | 2020 | 2019 |
Salaries and other short term employee benefits | 4.4 | 3.6 |
Post-employment benefits | 0.5 | 0.5 |
Termination benefits | 0.4 | - |
Share-based payments | 0.8 | 0.8 |
| 6.1 | 4.9 |
Further information about the remuneration of individual Directors is provided in the audited part of the Directors' Remuneration Report on pages 146 to 155.
There were no transactions with related parties external to the Group in the year to 31 December 2020 (2019: nil).