I am delighted with the Board appointments that the Company has been able to make during the year which has returned Spire Healthcare to a strong ...
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Chairman’s Governance letter “I am delighted with the Board appointments that the Company has been able to make during the year which has returned Spire Healthcare to a strong governance footing.” Garry Watts Chairman 27 February 2019 74 | Spire Healthcare Group plc | Annual Report and Accounts 2018
Overview
Changes to your Board during 2018
Individual Event Date
Simon Gordon Stepped down as Chief Financial Officer and 1 March 2018
an Executive Director
Strategic report
Danie Meintjes Ceased to act as Mediclinic International PLC’s 24 May 2018
nominated Non-Executive Director
Dr Ronnie van der Merwe Appointed Mediclinic International PLC’s 24 May 2018
nominated Non-Executive Director
Jitesh Sodha Appointed as Chief Financial Officer and an 1 October 2018
Executive Director
Governance
Dear Shareholder, certain that the skills and experience they bring conducted using short open questions that
to the Group will have a very positive influence produced very useful outputs. The principal
Governance framework on the business in the years ahead. I am equally conclusions of the review were shared with
The success of our business depends on us pleased that Alison Dickinson was promoted the Board in November. It was determined that
maintaining a strong governance framework during the year to Chief Medical Officer. She the Company’s Board continued to operate
in every aspect of what we do. This supports brings a wealth of clinical experience to the effectively, in an open and transparent manner,
effective strategic and operational decision Executive Committee. providing support and challenge to senior
making and risk management. The Board management. A fuller review of the results and
continues to take its responsibilities for Board changes our agreed action plan can be found on pages
effective governance very seriously and our Jitesh joined the Board as an Executive Director 78 and 79 as well as an update on the actions
Non-Executive Directors all provide extensive on 1 October 2018. We have also welcomed identified from last year’s evaluation.
challenge to management. Dr Ronnie van der Merwe, who was appointed
to our Board as a Non-Executive Director in Peter Bamford also separately led the review
In this Annual Report we are reporting against May 2018 by our largest shareholder, Mediclinic of my performance as Chairman of the Board
the UK Corporate Governance Code 2016 (the International PLC. Ronnie is a specialist in conjunction with the other Non-Executive
Financial statements
‘2016 Code’). As a Board we have taken the time anaesthetist who worked in the medical Directors.
to review the requirements of the new UK insurance industry before joining Mediclinic
Corporate Governance Code 2018 (the ‘2018 Group in 1999. He has been chief executive Risk management and corporate culture
Code’) issued by the Financial Reporting Council officer of Mediclinic International PLC since Our risk culture is centred on risk awareness,
and are preparing for its implementation. Whilst June 2018 and previously served as its chief openness, continuous improvement and
this Annual Report provides some additional clinical officer. Ronnie’s experience, both encouraging the right behaviours to ensure an
information on engagement and other issues medical and commercial, greatly strengthens appropriate outcome for both the Company
as required by the 2018 Code, we expect to our Board, and underlines the close relationship and its customers. A review of our principal
report in more detail on these matters when between the two businesses. risks is set out on pages 52 to 59.
the new reporting requirements apply to Spire
Healthcare in the next financial year. Subsequent to the year end, on 27 February 2019, Annual general meeting
Peter Bamford gave notice that he intended to Finally, the Board looks forward to meeting as
Executive management step down as our Senior Independent Director many shareholders as possible at our annual
I was delighted to welcome both Jitesh Sodha on 16 May 2018. I thank Peter for his general meeting which will be held at 11.00am
and John Forrest to Spire Healthcare, as Chief contribution to Spire Healthcare’s Board and on Thursday, 16 May 2019 at the offices of
Financial Officer and Chief Operating Officer for the support he has given me personally. Freshfields Bruckhaus Deringer LLP, 65 Fleet
respectively, in October 2018. Jitesh was most A search for his replacement is underway. Street, London EC4Y 1HS.
Other information
recently chief financial officer of De La Rue plc,
having previously held the same role at 2018 performance evaluation
Greenergy International, and John joined us The Board’s evaluation in 2018 was led by Peter Garry Watts
from Greene King plc, where he was managing Bamford and facilitated internally by the Group Chairman
director for their Pub Partners Business. I am Company Secretary. This year, the review was 27 February 2019
Spire Healthcare Group plc | Annual Report and Accounts 2018 | 75
Corporate Governance report
Compliance with the UK Corporate Governance Code in 2018
The 2016 UK Corporate Governance Code provides the standard for corporate governance in the UK. The Financial Conduct Authority requires listed
companies to disclose whether they have complied with the provisions of the UK Code throughout the financial year under review.
The Company has complied with the principles (and code provisions) of the UK Corporate Governance Code issued in April 2016 (the ‘2016 Code’),
throughout the year except as shown in the following table.
How has the Company not complied with the
UK Code provision provisions of the UK Code? The Board’s response
A.3.1 Garry Watts was not independent on The Non-Executive Directors have
appointment to the Board having previously determined that Garry Watts continues to
served as Executive Chairman of the Company lead the Board effectively.
prior to IPO.
Director independence −− Simon Rowlands previously held a senior The Board considers that, excluding the
Independence is determined by ensuring that, position with the Company’s former principal Chairman, half of the Board is independent of
apart from receiving their fees for acting as shareholder, Cinven; and management and free from any business or
directors or owning shares, Non-Executive −− Dr Ronnie van der Merve has been nominated other relationship that could affect the exercise
Directors do not have any other material to act as a Non-Executive Director by of their independent judgement.
relationship or additional remuneration from, Mediclinic International PLC, the principal
or transactions with, the Group, its promoters, shareholder, whose subsidiary, Mediclinic Conflicts of interest
its management or its subsidiaries, which in Jersey Limited (formerly Remgro Jersey Save as set out below, there are no actual or
the judgement of the Board may affect, or Limited), entered into a relationship potential conflicts of interest between any
could appear to affect, their independence agreement with the Company in June 2015 duties owed by the Directors or senior
of judgement. (the ‘Relationship Agreement’). Under the management to the Company and their private
terms of the Relationship Agreement, when interests or other duties. The Board will
The Chairman did not satisfy the independence Mediclinic International PLC controls 15% continue to monitor and review potential
criteria on his appointment to the Board. In or more of the votes, it will be entitled to conflicts of interest on a regular basis.
addition, the Company does not consider the appoint one Non-Executive Director to the
following two Non-Executive Directors to be Board. It controls 29.9% of votes as at Director
independent for the reasons given: 27 February 2019. The Directors believe that
Dr Ronnie van der Merve
the terms of the Relationship Agreement will
enable the Group to carry on its business Conflict
independently of Mediclinic International PLC. Chief executive officer of Mediclinic
International PLC, which controls 29.9% of
the voting rights in the Company as at
27 February 2019
76 | Spire Healthcare Group plc | Annual Report and Accounts 2018
Overview
Key roles and responsibilities
Chairman, Senior Independent Director and the Chief Executive Officer
The Company has set out in writing a division of responsibilities between the Chairman, Senior
Independent Director and the Chief Executive Officer.
Strategic report
Governance
Garry Watts Justin Ash Peter Bamford Daniel Toner
Chairman Chief Executive Officer Deputy Chairman and Senior General Counsel and Group
Independent Director Company Secretary
The Chairman leads the Board The Chief Executive Officer The Board nominates one of the The Group Company Secretary
and is responsible for: manages the Group and is independent Non-Executive supports the Chairman on Board
−− the leadership and overall responsible for: Directors to act as Senior corporate governance matters
effectiveness of the Board; −− developing the Group’s Independent Director and is and is responsible for:
−− a clear structure for the strategic direction for responsible for: −− planning the annual cycle of
operation of the Board and its consideration and approval by −− being an alternative contact for Board and committee meetings
committees; the Board; shareholders at Board level and setting the meeting
−− setting the Board agenda in −− day-to-day management of the other than the Chairman; agendas;
conjunction with the Group Group’s operations; −− acting as a sounding board for −− making appropriate
Company Secretary and Chief −− the application of the Group’s the Chairman; information available to the
Financial statements
Executive Officer; and policies; −− if required, being an Board in a timely manner;
−− ensuring that the Board −− the implementation of the intermediary for Non-Executive −− ensuring an appropriate level
receives accurate, relevant and agreed strategy; and Directors’ concerns; of communication between
timely information about the −− being accountable to, and −− undertaking the annual the Board and its committees;
Group’s affairs. reporting to, the Board on the Chairman’s performance −− ensuring an appropriate level
performance of the business. evaluation; and of communication between
−− when required, leading the senior management and the
recruitment process for a new Non-Executive Directors;
Chairman. −− keeping the Board apprised
of developments in relevant
legislative, regulatory and
governance matters;
−− facilitating a new Director’s
induction and assisting with
professional development,
as required.
Other information
Spire Healthcare Group plc | Annual Report and Accounts 2018 | 77
Corporate Governance report continued
Board and Committee structure and Clinical Governance and Safety Committee The Board has a formal schedule of matters
Ultimate responsibility for the management (‘CGSC’)), as well as the remuneration for the reserved to it and delegates certain matters to
of the Group rests with the Board of Directors. Executive Directors (from their membership of committees. Specific matters reserved for the
The Board focuses primarily upon strategic and the Remuneration Committee). Board considered during the year to
policy issues and is responsible for: 31 December 2018 included reviewing the
−− leadership of the Group; As members of the Nomination Committee, Group’s performance (monthly and year to
−− implementing and monitoring effective the Non-Executive Directors also play a pivotal date), approving capital expenditure, setting
controls to assess and manage risk; role in Board succession planning and the and approving the Group’s strategy and
−− supporting the senior leadership team to appointment of new Executive Directors. annual budget.
formulate and execute the Group’s strategy;
−− monitoring the performance of the Group; and Your Board in 2018 The Board’s plan for 2019
−− setting the Group’s values and standards. During the year, the Board met for nine It is planned that the Board will convene on
scheduled meetings but also convened on seven formal scheduled occasions during 2019,
There is a specific schedule of matters reserved other occasions (normally by telephone) to as well as holding any necessary ad hoc Board
for the Board. discuss certain specific matters of business. and committee meetings to consider non-
Director attendance at scheduled meetings routine business.
The Non-Executive Directors is shown on page 79.
The Non-Executive Directors bring a wide range The Chairman and the other Non-Executive
of skills and experience to the Board. The The agenda at scheduled meetings in 2018 Directors will meet on their own without the
independent Non-Executive Directors covered standing agenda items, including: a Executive Directors present. In addition, the
represent a strong, independent element on review of the Group’s performance from the Senior Independent Director and other
the Board and are well placed to constructively Chief Executive Officer, the current month’s Non-Executive Directors will meet without the
challenge and support management. They help and year to date financial statistics by the Chairman present to discuss matters such as
to shape the Group’s strategy, scrutinise the Chief Financial Officer and a review of clinical the Chairman’s performance.
performance of management in meeting the performance by the Chief Medical Officer. In
Group’s objectives and monitor the reporting addition, the Board received a verbal report from The Board will maintain its focus on the Group’s
of performance. committee chairs, where their committee met pursuit of its 2019 targets and also review
immediately in advance of the scheduled Board succession planning during the year. Its
Their role is also to satisfy themselves with meeting, and the Board regularly received activities will include:
regard to the integrity of the Group’s financial reports on legal and statutory matters. −− review and approve the 2018 Annual Report;
information and to ensure that the Group’s −− review the proposed final dividend for 2018;
internal controls and risk management systems Also in 2018, the Board focused on major −− review the revised five-year strategic plan and
are robust and defensible. elements of the Group’s operations including: approve the 2019 Annual Operating Plan;
−− the implementation of Spire Healthcare’s −− consider specific major themes;
The independent Non-Executive Directors quality agenda; and −− embed the risk management framework;
oversee the adequacy of the risk management −− reviewing and approving certain capital −− review the make up of the Board; and
and internal control systems (from their expenditure items. −− follow a rolling agenda, ensuring proper time
membership of the Audit and Risk Committee for strategic debate.
Board evaluation
2018 Action plan update
The 2017 Board evaluation identified three principal areas of focus and associated actions to address them during 2018.
Area of focus Actions Progress
1) L eadership and −− Review future composition of the Board and succession −− The appointments of Jitesh Sodha to the Board and of John
succession planning plan having regard for the likely revisions to the UK Forrest and Alison Dickinson to the Executive Committee
Corporate Governance Code in 2018. has significantly strengthened the management team.
−− Support Justin Ash in building capability and succession
in the executive team.
2) Risk management −− Maintain oversight and evaluation of risk management. −− The Audit and Risk Committee and CGSC has continued to
−− Continue to develop internal risk management oversee the development and roll out of risk evaluation
capabilities and processes. and reporting systems across the Group.
−− Oversee General Data Protection Regulation (GDPR) −− Requirements of GDPR have been successfully
implementation project. implemented across Group.
−− Ensure IT security remains robust.
3) Board information −− Review information flows to/from Board. −− A significant redevelopment of reports to the Board and its
committees was undertaken during the year, which the
new Executive Committee will further refine during 2019.
−− Training on listed company obligations and CQC Well Led
domain provided to the Board during the year.
78 | Spire Healthcare Group plc | Annual Report and Accounts 2018
Overview
2019 Action plan
The 2018 Board evaluation identified three principal areas of focus and associated actions to address them during 2019.
Area of focus Actions
1) B
oard succession −− Look to appoint an additional Non-Executive Director with clinical or other healthcare experience.
planning −− Nomination Committee to lead longer term systematic succession plan for Non-Executive Directors.
Strategic report
2) The Board’s agenda −− Continued training for Board members on healthcare issues.
−− Dedicated deep dives on critical topics such as technology in healthcare and the role of critical care in hospitals.
−− New Executive management team to continue its revised reporting to the Board.
3) Strategy and Risk −− Board to further develop strategic implementation and integration with risk appetite and control.
Furthermore, the Board will remain focused on Board meeting attendance Effectiveness
continuous improvement of clinical quality and Board composition
maintain overall responsibility for the Group’s Non-Executive Chairman The Board seeks to ensure that both it and its
system of internal control and risk management Garry Watts 9 (9) committees have the appropriate range of
processes via the relevant Board committees. skills, experience, independence and knowledge
Deputy Chairman and Senior of the Group to enable them to discharge their
Disclosure Committee Independent Director respective duties and responsibilities effectively;
With the implementation of the EU’s Market Peter Bamford1 8 (9) for example, the 2018 Board calendar included
Abuse Regulations in 2016, the Board Executive Directors sessions on clinical and statutory regulations.
established a Disclosure Committee to ensure, The Board considers its size and composition
Justin Ash 9 (9)
under delegated authority from the Board, to be appropriate for the current requirements
Governance
that the Company complies with its disclosure Simon Gordon2 2 (2) of the business but will continue to keep this
obligations, specifically under the Market Jitesh Sodha3 2 (2) under review.
Abuse Regulation and related legislation.
Non-Executive Directors
The Disclosure Committee also manages the Committee composition is set out in the
Company’s share dealing code, ensuring Adèle Anderson 9 (9) relevant committee reports and listed on
colleague compliance and provides training Tony Bourne 9 (9) page 80. No one other than committee chairs
where required. The members of the Disclosure Dame Janet Husband 9 (9) and members of the committees are entitled
Committee are shown on page 80. to participate in meetings of the Audit and Risk,
Danie Meintjes4 2 (3) CGSC, Disclosure, Nomination and Remuneration
Share Schemes Committee Simon Rowlands 7 (9) committees, unless by invitation of the
In addition, the Board delegates certain Dr Ronnie van der Merwe4 6 (6) respective committee chair.
responsibilities in relation to the administration
of the Company’s share schemes on an ad hoc Peter Bamford is the Deputy Chairman and
1 Peter Bamford has indicated his intention to step
basis to the Share Schemes Committee. This down from the Board on 16 May 2019. Senior Independent Director. Biographical
committee operates in accordance with the 2 Simon Gordon stepped down as Chief Financial details of the Directors are set out on pages 86
delegation of authority agreed by the Board. Officer and an Executive Director on 1 March 2018. and 87.
Financial statements
3 Jitesh Sodha was appointed as Chief Financial
Officer and an Executive Director on
Executive Committee 1 October 2018. Appointments to the Board
The Executive Committee meets twice a 4 By letter dated 1 March 2018, Mediclinic Recommendations for appointments to the
month, splitting its time between project work International PLC gave notice that Danie Meintjes Board are made by the Nomination Committee.
would cease to be its nominated Non-Executive
and strategic matters. The Executive As part of the recruitment process the
Director on 24 May 2018 and that instead
Committee delegates certain matters to the Dr Ronnie van der Merwe would be appointed Nomination Committee follows a formal,
Safety, Quality and Risk Committee who have from that date. rigorous and transparent procedure. Further
specific focus on safety, quality and risk information is set out in the Nomination
matters respectively (see the Governance To the extent that Directors are unable to Committee Report on pages 88 and 89.
framework on page 80). attend scheduled meetings, or additional
meetings called on short notice, they will
Board meetings receive the papers in advance and relay their
The attendance of the Directors who served comments to the Chairman for communication
during the year ended 31 December 2018, at the meeting. The Chairman will follow up
at meetings of the Board, is shown in the after the meeting in relation to both the
following table. The number of meetings discussions held and decisions taken.
a Director could attend in the year is shown
Other information
in brackets.
Spire Healthcare Group plc | Annual Report and Accounts 2018 | 79
Corporate Governance report continued
Governance framework in 2018
Chairman
Garry Watts
Key objectives:
−− ensure effectiveness of the Board;
−− promote high standards of corporate governance;
−− ensure clear structure for the operation of the Board and its committees; and
−− encourage open communication between all Directors.
The Board of Spire Healthcare Group plc
The Board comprises nine Directors – the Non-Executive Chairman, two
Executive Directors and six Non-Executive Directors, four of whom are
deemed to be independent for the purposes of the 2016 UK Corporate
Governance Code. Daniel Toner serves the Board as General Counsel and
Group Company Secretary.
Key objectives:
−− leads the Group;
−− oversees the Group’s system of risk management and internal controls;
−− supports the Executive Committee to formulate and execute the Group’s strategy;
−− monitors the performance of the Group; and
−− sets the Group’s values and standards.
Audit and Risk Clinical Governance and Disclosure Committee Nomination Committee Remuneration
Committee Safety Committee Garry Watts (chair), Justin Peter Bamford (chair), Committee
Adèle Anderson (chair), Dame Janet Husband Ash, Jitesh Sodha, Daniel Dame Janet Husband, Tony Bourne (chair), Adèle
Tony Bourne, Dame Janet (chair), Adèle Anderson, Toner, Antony Mannion Garry Watts Anderson, Peter Bamford
Husband Justin Ash, Tony Bourne,
Garry Watts
Key objectives: Key objectives: Key objectives: Key objectives:
Key objectives:
−− monitors the integrity of −− ensures that the Company −− advises the Board on −− determines the appropriate
−− promotes, on behalf of the
financial reporting; and complies with its disclosure appointments, retirements framework and level for
Board, a culture of
−− assists the Board in its obligations, specifically and resignations from the remuneration of the
high-quality and safe
review of the effectiveness under the Market Abuse Board and its committees; Chairman, Executive
patient care; and
of the Group’s internal Regulation and related and Directors, Group Company
−− monitors specific
control and risk legislation; and −− reviews succession planning Secretary and other
non-financial risks and their
management systems. −− oversees the Company’s for the Board. members of the Executive
associated processes,
Share Dealing Code Committee; and
policies and controls:
including employee training. −− reviews workforce
(i) clinical and regulatory
remuneration and related
risks;
policies.
(ii) health and safety; and
(iii) facilities and plant.
Executive Committee Safety, Quality and Risk Committee
The Group also operates an Executive Committee (convened and chaired by A committee of the Executive Committee that
the Chief Executive Officer). The team generally meets twice a month and its focuses on safety, quality and risk matters across the
members are shown on page 16. Group’s operations.
Key objectives: Key objectives:
−− assists the Chief Executive Officer in discharging his responsibilities; −− reviews the Group’s clinical performance;
−− ensures a direct line of authority from any member of staff to the Chief Executive −− reviews evidence of compliance with statutory notification
Officer; and requirements; and
−− assists in making executive decisions affecting the Company. −− scrutinises all unexpected deaths occurring at hospitals.
80 | Spire Healthcare Group plc | Annual Report and Accounts 2018Overview
Time commitment of the Non-Executive The Group Company Secretary ensures that any All Directors, with the exception of Peter
Directors additional request for information is promptly Bamford, will stand for election or re-election
The Non-Executive Directors each have a letter supplied. The Chairman, through the Group at the annual general meeting in May 2019. The
of appointment which sets out the terms and Company Secretary, ensures that there is an biographical details of each Director standing
conditions of their directorship. An indication of ongoing process to review any internal or for election or re-election is included in the
the anticipated time commitment is provided external training and development needs. 2019 Notice of Meeting. The Board believes
in any recruitment role specification, and each that each of the Directors standing for election
Strategic report
Director’s letter of appointment provides As already noted, in the event of a general is effective and demonstrates commitment to
details of the meetings that they are expected training need, in-house training will be provided their respective roles. Accordingly, the Board
to attend. to the entire Board. Necessary and relevant recommends that shareholders approve the
regulatory updates are provided as a standing resolutions to be proposed at the 2019 annual
Non-Executive Directors are required to set item at each Board meeting in the Group general meeting relating to the election of
aside sufficient time to prepare for meetings, Company Secretary’s report and Board briefing the Directors.
and to regularly refresh and update their skills by external advisers, where appropriate.
and knowledge. In signing their letters of The biographical details of all current Directors
appointment, all Directors have agreed to Information and support are set out on pages 86 and 87.
commit sufficient time for the proper The Board ensures that it receives, in a timely
performance of their responsibilities, manner, information of an appropriate quality Directors’ indemnities
acknowledging that this will vary from year to enable it to adequately discharge its The Directors of the Company have the benefit
to year, depending on the Group’s activities. responsibilities. This is aided by the use of an of a third-party indemnity provision, as defined
online portal. Papers are provided to the by section 236 of the Companies Act 2006, in
Directors are expected to attend all Board and Directors in advance of the relevant Board or the Group’s Articles of Association. In addition,
committee meetings, and any additional committee meeting to enable them to make Directors and officers of the Group are covered
meetings, as required. Each Director’s other further enquiries about any matters prior to the by directors’ and officers’ liability insurance.
Governance
significant commitments were disclosed to the meeting, should they so wish. This also allows
Board at the time of their appointment and Directors who are unable to attend to submit Directors’ conflicts of interest
they are required to notify the Board of any views in advance of the meeting. The Companies Act 2006 provides that
subsequent changes. The Group has reviewed directors must avoid a situation where they
the availability of the Non-Executive Directors Outside the Board papers process, the have, or can have, a direct or indirect interest
and considers that each of them is able to, and Executive Directors provide written updates to that conflicts, or possibly may conflict, with
in practice does, devote the necessary amount the Non-Executive Directors on important the Company’s interests. Directors of public
of time to the Group’s business. business issues, including financial and companies may authorise conflicts and
commercial information. In addition, relevant potential conflicts, where appropriate, if
Induction and training updates on shareholder matters (including a company’s articles of association permit.
Generally, reference materials are provided, analysts’ reports) are also provided to
including information about the Board, its the Board. The Board has established formal procedures to
committees, directors’ duties, procedures for authorise situations where a Director has an
dealing in the Group’s shares and other All Directors have access to the advice and interest that conflicts, or may possibly conflict,
regulatory and governance matters, and services of the Group Company Secretary. with the interests of the Company – a
Directors are advised of their legal and other There is also an agreed procedure in place for Situational Conflicts. Directors declare
Financial statements
duties, and obligations as directors of a Directors, in the furtherance of their duties, to Situational Conflicts, so that they can be
listed company. take independent legal advice, if necessary, at considered for authorisation by the non-
the Group’s expense. conflicted directors.
On joining the Board, it is the responsibility of
the Chairman and Group Company Secretary Election of Directors In considering a Situational Conflict, these
to ensure that all newly appointed Directors All the Directors, except Danie Meintjes who Directors act in the way they consider would
receive a full and formal induction which is stepped down from the Board, offered be most likely to promote the success of the
tailored to their individual needs. The induction themselves for election or re-election at the Group, and may impose limits, or conditions,
programme includes a comprehensive fourth annual general meeting in May 2018. when giving authorisation or, subsequently,
overview of the Group, dedicated time with Directors will in future be elected or re-elected if they think this is appropriate.
other Directors and senior management, as in accordance with the requirements of the
well as guidance on the duties, responsibilities 2018 Code. The Group Company Secretary records the
and liabilities as a director of a listed company. consideration of any conflict and any
Directors visit hospitals in order to gain an authorisations granted. The Board believes
understanding of the business operations and that the system it has in place for reporting
culture. These activities formed part of the Situational Conflicts continues to operate
induction programme for both Dr Ronnie van effectively.
Other information
der Merwe and Jitesh Sodha.
Spire Healthcare Group plc | Annual Report and Accounts 2018 | 81Corporate Governance report continued
Accountability This means that the Directors are in a position All Directors are expected to attend the
The Audit and Risk Committee to consider carefully the impact of incentive Company’s annual general meeting, providing
The Audit and Risk Committee Report is set out arrangements on the Group’s risk profile and to shareholders with the opportunity to question
on pages 94 to 97 and identifies its members, ensure the Group’s Remuneration Policy and them about issues relating to the Group, either
whose biographies are set out on page 87. programme are structured, so as to accord with during the meeting, or informally afterwards.
the long-term objectives and risk appetite of
The report describes the Audit and Risk the Group. Modern slavery
Committee’s work in discharging its In line with our values, we are committed to
responsibilities during the year ended Financial and non-financial risk acting ethically and with integrity in all our
31 December 2018, and its terms of reference The Clinical Governance and Safety Committee, business dealings. This includes working to
can be found on the Group’s website at with the Audit and Risk Committee, collectively ensure that modern slavery and human
www.investors.spirehealthcare.com. ensure that the control and monitoring of both trafficking does not touch our business or
financial and non-financial risks is satisfactory. supply chain. Our approach to tackling this
Risk management and internal control issue has evolved since our first transparency
The Board has overall responsibility for In addition, both committees seek to ensure, statement. An internal, multi-department
establishing and maintaining a sound system as far as practicable, there are no elements working group was established to develop
of risk management and internal control, and omitted or unnecessarily duplicated, and that a plan of action to build on the work already
for reviewing its effectiveness. This system is all critical judgements receive the correct level done. This plan includes conducting in-depth
designed to manage rather than eliminate, the of challenge. due diligence on certain high-risk suppliers
risks facing the Group and safeguard its assets. (already underway), repeating the high-level
No system of internal control can provide Relations with shareholders due diligence for the majority of Group
absolute assurance against material The Board is committed to communicating suppliers (by spend) and rolling-out targeted
misstatement or loss. The Group’s system is with shareholders and stakeholders in a clear training to a wider base of staff in accordance
designed to provide the Directors with reasonable and open manner, and seeks to ensure effective with their role (including registered managers
assurance that issues are identified on a timely engagement through the Group’s regular and our network of Freedom to Speak Up
basis and are dealt with appropriately. communications, the annual general meeting Guardians). We have maintained mandatory
and other investor relations activities. contractual requirements on suppliers to
The Audit and Risk Committee and the Clinical comply with the provisions of the Modern
Governance and Safety Committee, whose The Group undertakes an ongoing programme Slavery Act and hold their own suppliers to
reports are set out on pages 94 to 97 and pages of meetings with investors, which during 2018 the same standards.
90 and 93, respectively, assist the Board in was led by the Chief Executive Officer and the
reviewing the effectiveness of the Group’s risk Director, Investor Relations and Strategy. A copy of our latest Modern Slavery Act
management system and internal controls, During the year, there were in excess of 250 statement can be found on our website at
including financial, clinical, operational and individual meetings, conference presentations, www.investors.spirehealthcare.com.
compliance controls. group lunches and telephone briefings with
investors.
Executive compensation and risk
Only independent Non-Executive Directors are The Chairman, Senior Independent Director
allowed to serve on the Audit and Risk Committee and committee chairs remain available for
and Remuneration Committee. The Non- discussion with shareholders on matters under
Executive Directors are therefore able to bring their areas of responsibility, either through
their experience and knowledge of the activities contacting the Group Company Secretary or
of each committee to bear when considering the directly at the annual general meeting.
critical judgements of the other.
The Company reports its financial results to
shareholders twice a year, with the publication
of its annual and half yearly financial reports.
In conjunction with these announcements,
presentations or teleconference calls are held
with institutional investors and analysts, and
copies of any presentation materials issued are
made available through the Company’s website
at www.investors.spirehealthcare.com.
82 | Spire Healthcare Group plc | Annual Report and Accounts 2018Overview
Annual general meeting
Shareholders are encouraged to participate at the Company’s annual general meeting, ensuring that there is a high level of accountability and
identification with the Group’s strategy and goals. A summary of the proxy voting for the 2018 annual general meeting was made available via the
London Stock Exchange and on the Company’s website as soon as reasonably practicable on the same day as the meeting.
Summary of resolution Total votes for % Total votes against % Number of votes withheld
1 2017 Annual Report and Accounts 99.92 0.08 12,076
Strategic report
2 2017 Directors’ Remuneration Report 84.56 15.44 792,196
3 Directors’ Remuneration Policy 99.41 0.59 1,779
4 Final Dividend 100.00 0.00 0
5 to 11 Election or re-election of Directors Between Between Maximum
83.45 and 99.76 0.24 and 16.55 2,719,086
12 Reappointment of Auditors 99.73 0.27 5,550
13 Auditors’ remuneration 100.00 0.00 567
14 Political expenditure 96.76 3.24 4,662
15 Authority to allot shares 98.56 1.44 5,104
16 Disapplication of statutory pre-emption rights* 98.73 1.27 2,013
17 Disapplication of statutory pre-emption rights for 95.19 4.81 4,558
an acquisition*
18 Authority to purchase own shares* 99.67 0.33 884
Governance
19 General meetings to be held on 14 clear days’ notice* 98.04 1.96 884
* Special resolution.
The Corporate Governance Report has been approved by the Board and signed on its behalf by:
Daniel Toner
General Counsel and Group Company Secretary
27 February 2019
Financial statements
Other information
Spire Healthcare Group plc | Annual Report and Accounts 2018 | 83Board of Directors
1. Garry Watts 2. Justin Ash 3. Jitesh Sodha
Non-Executive Chairman Chief Executive Officer Chief Financial Officer
4. Peter Bamford 5. Dame Janet Husband 6. Tony Bourne
Deputy Chairman and Senior Independent Non-Executive Independent Non-Executive
Independent Director Director Director
7. Adèle Anderson 8. Dr Ronnie van der Merwe 9. Simon Rowlands
Independent Non-Executive Director Non-Executive Director Non-Executive Director
8 7 6
1
84 | Spire Healthcare Group plc | Annual Report and Accounts 2018Board diversity Board tenure Board composition
Overview
% % %
Male 78% 0–3 years 56% Independent NED 44%
Strategic report
Female 22% 3–6 years 44% Non-independent NED 22%
6–9 years 0% Executive 22%
Chairman 11%
Governance
2 3 9
Financial statements
Other information
4 5
Spire Healthcare Group plc | Annual Report and Accounts 2018 | 85Board of Directors continued
1. Garry Watts Company in London and Paris, and a non-
Board committee membership:
Non-Executive Chairman executive board member and chair of the audit
A Audit and Risk Committee and risk committee of Al Nadhi Medical Company.
C D N
C C
linical Governance and 3. Jitesh Sodha
Safety Committee Garry Watts joined the Group as Executive Chief Financial Officer
D Disclosure Committee Chairman in 2011 before becoming Non-
Executive Chairman between Admission and D E
N Nomination Committee March 2016. He again served as Executive
R Remuneration Committee Chairman between March 2016 and June 2017 Jitesh Sodha was appointed Chief Financial
before resuming his Non-Executive Chairman Officer and an Executive Director at the start
Committee Chair role in July 2017. The Company does not of October 2018.
Management committee membership: consider Garry to be independent due to his
previous executive role. Skills and previous experience
E Executive Committee Jitesh graduated from New College, Oxford
Current external appointments with a degree in Philosophy, Politics and
Committee Chair
−− chairman of BTG plc* Economics, and is a CIMA qualified accountant.
−− chairman of Foxtons Group plc He has worked in a range of businesses with an
−− non-executive director of Coca-Cola international footprint, most recently as Chief
European Partners Ltd Financial Officer of De La Rue plc. He was
previously Chief Financial Officer of Greenergy
Skills and previous experience International, Mobilestreams Plc, where he led
A chartered accountant by profession and the IPO, and T-Mobile International UK.
former partner at KPMG, Garry’s extensive
business knowledge and leadership on other 4. Peter Bamford
listed company boards, including SSL Deputy Chairman and Senior Independent
International plc and Celltech Group plc, has Director
ensured a seamless transition from private
to public for the Company. He has a deep N R
understanding of the healthcare sector having
served as a member of the UK Medicines and Peter Bamford was appointed as Deputy
Healthcare Products Regulatory Agency Chairman and Senior Independent Director in
Supervisory Board for 17 years. Garry was also May 2017.
previously an executive director of Medeva plc,
deputy chairman of Stagecoach Group plc and Current external appointments
a non-executive director of Protherics plc. −− chairman of Superdry Plc
−− chairman of B&M European Value Retail S.A.
2. Justin Ash
Chief Executive Officer Skills and previous experience
Peter was chairman of Six Degrees Holdings
C D E Limited from 2011 to 2015 and a non-executive
director of Rentokil Initial plc from 2006 until
Justin Ash was appointed Chief Executive 2016. He was also a director of Vodafone Group
Officer and an Executive Director at the end plc from 1998 to 2006 where he held senior
of October 2017. executive roles including chief marketing
officer, chief executive of Northern Europe,
Current external appointments Middle East and Africa and chief executive
−− non-executive chairman of The New World of Vodafone UK.
Trading Company Co.
−− chair of Independent Healthcare Providers Prior to this, Peter held senior positions with
Network WH Smith plc (being a director between 1995
and 1997), Tesco plc and Kingfisher plc. He has
Skills and previous experience served on the boards of public companies for
Justin was previously chief executive of Oasis the last 23 years and has extensive experience
Dental Care between 2008 and 2017 before in developing and growing businesses and
leading its sale to Bupa. Prior to this, he was brands internationally. Peter was also a director
managing director of Lloyds Pharmacy and has of PRS for Music Limited between 2008 and
held several other senior retail positions 2014, including as chairman from 2010.
including general manager of KFC in the UK/
Ireland, and commercial director of Allied
* Until mid-2019 when the sale of BTG plc to Boston Domecq Spirits and Wines (Europe). Justin was
Scientific is expected to complete. previously a senior consultant with Bain and
86 | Spire Healthcare Group plc | Annual Report and Accounts 2018Overview
On 27 February 2019, Peter Bamford gave Tony has also previously served as a non- 9. Simon Rowlands
notice that he intended to step down as a executive director of Bioquell Plc, Southern Non-Executive Director
Director on 16 May 2019. A search is underway Housing Group, and the charity, Scope.
for his replacement. Simon Rowlands was appointed a Non-
7. Adèle Anderson Executive Director in June 2014, although he
5. Dame Janet Husband Independent Non-Executive Director served in a similar capacity prior to Admission
Independent Non-Executive Director having been an appointment of Cinven, the
Strategic report
A C R Company’s former principal shareholder. The
A C N Company does not consider Simon to be
Adèle Anderson was appointed an independent independent due to the senior position he held
Dame Janet Husband was appointed an Non-Executive Director in July 2016. with Cinven.
independent Non-Executive Director in
June 2014. Current external appointments Current external appointments
−− senior independent director and chair of the −− non-executive director of MD Medical Group
Current external appointments audit committee of intu properties plc Investment plc
−− Emeritus Professor of Radiology at the −− member of the audit committee of the −− founding partner of Africa Platform Capital
Institute of Cancer Research Wellcome Trust
−− senior adviser of Royal Marsden NHS Skills and previous experience
Foundation Trust Skills and previous experience Simon’s extensive knowledge of the Company
Adèle has gained extensive financial experience and its markets, combined with his wise
Skills and previous experience throughout her career and has significant counsel over a number of years, were among
Having trained in medicine at Guy’s Hospital knowledge of audit committees. Until July the reasons he was asked to continue to serve
Medical School, Dame Janet’s extensive career in 2011, she was a partner in KPMG LLP and held as a member of the Board following Cinven’s
healthcare allows her to bring invaluable insight a number of senior roles across their business sale of their shareholding in 2015. He was a
Governance
and knowledge of the healthcare industry. including chief financial officer of KPMG UK, founding partner of the private equity firm
chief executive officer of KPMG’s captive Cinven until 2013, establishing and leading its
She has previously served as a non-executive insurer and chief financial officer of KPMG healthcare team, and then served as a senior
director of Royal Marsden NHS Foundation Trust, Europe. Adèle was a non-executive director adviser until 2017. Simon founded a new
and was a specially appointed commissioner to of easyJet plc until February 2019. private equity firm in 2016 focused on
the Royal Hospital Chelsea, was president of healthcare and consumer sectors of Sub-
the Royal College of Radiologists, chaired the 8. Dr Ronnie van der Merwe Saharan Africa. Prior to joining Cinven, he
National Cancer Research Institute in the UK Non-Executive Director worked with an international consulting firm
and was a non- executive director of Nuada on multidisciplinary engineering projects in
Medical Group. Dame Janet was appointed as Dr Ronnie van der Merwe was appointed as the UK and southern Africa.
Professor of Diagnostic Radiology at the a Non-Executive Director in May 2018. The
University of London, Institute of Cancer Company does not consider Ronnie to be Daniel Toner
Research, in addition to more than 30 years as independent as he has been appointed to the General Counsel and Group Company
a practising consultant radiologist at the Royal Board by the Company’s principal shareholder, Secretary (Photo shown on page 16)
Marsden Hospital. Mediclinic International PLC, under the terms
of the relationship agreement with them. Daniel Toner joined Bupa Hospitals as
Financial statements
6. Tony Bourne head of legal in 2006 before being appointed
Independent Non-Executive Director Current external appointments General Counsel and Group Company
−− Chief executive officer of Mediclinic Secretary upon Spire Healthcare’s formation
A C R International PLC in 2007 and is a solicitor by profession.
He oversees all legal activity at Spire
Tony Bourne was appointed an independent Skills and previous experience Healthcare, ensures compliance with
Non-Executive Director in June 2014. Ronnie is a specialist anaesthetist who worked statutory and regulatory requirements,
in the medical insurance industry before joining and that decisions of the Board of Directors
Current external appointments the Mediclinic Group in 1999 as Clinical are realised. Daniel is also the Company’s
−− non-executive director of Barchester Manager. He established the Clinical Whistleblowing Officer.
Healthcare Limited Information, Advanced Analytics, Health
−− non-executive director of Totally plc Information Management and Clinical Services Skills and previous experience
functions at Mediclinic, and subsequently Daniel is an award-winning lawyer who brings
Skills and previous experience served as the Mediclinic Group’s Chief Clinical considerable legal, commercial and healthcare
Tony brings considerable knowledge of the Officer. He was appointed as an executive experience to Spire Healthcare, having
healthcare industry to his role having been director of Mediclinic International Limited in previously worked in both law firms (most
chief executive of the British Medical 2010 up to the combination of the businesses recently Freshfields Bruckhaus Deringer), in
Other information
Association for nine years until 2013. Prior to of the Company (then Al Noor Hospitals Group businesses across a range of sectors and for the
this he was in investment banking for over plc) and Mediclinic International Limited. commercial directorate of the UK Department
25 years, including as a partner at Hawkpoint of Health.
and as global head of the equities division and
a member of the managing board of Paribas.
Spire Healthcare Group plc | Annual Report and Accounts 2018 | 87Nomination Committee report
Nomination Committee
at a glance
Committee membership and meeting Committee meetings
7
attendance
The Nomination Committee members at
the end of 2018 and the number of meetings
they each attended during the year were as
follows (the maximum number of meetings
that the member could have attended is
also shown):
Committee
meetings
Committee member attended in
Member since Position in Company 2018
Peter Bamford May 2017 Deputy Chairman and Senior 7/7
(Committee Chair) Independent Director
Dame Janet Husband July 2014 Independent Non-Executive Director 7/7
Garry Watts July 2016 Non-Executive Chairman 7/7
Nomination Committee members’ biographies are shown on pages 86 and 87.
The Nomination Committee’s terms of reference can be found at
www.investors.spirehealthcare.com
The majority of Nomination Committee Process for Board appointments
members were independent Non-Executive When considering a Board appointment, the
Directors at all times during the year in line Nomination Committee draw up a specification
with the provisions of the UK Corporate for the Director, taking into consideration the
Governance Code 2016. The Board appoints specific role together with the balance of
the Chair of the Committee, who must be skills, knowledge and experience of its
either the Chairman of the Board or an existing Board members, the diversity of the
independent Non-Executive Director. If Board and the independence of continuing
members are unable to attend a meeting Board members, together with the ongoing
they have the opportunity beforehand to requirements and strategic development
discuss any agenda items with the Chair of the Group. Care is taken to ensure that
of the Committee. proposed appointees have sufficient time
to devote to the role and do not have any
The Group Company Secretary, or their conflicts of interest.
appointed nominee, acts as secretary to
the Committee. The Nomination Committee utilises the
services of an executive search firm to identify
Role and responsibilities appropriate candidates, ensuring that the
The Nomination Committee’s foremost search firm appointed does not have any other
priorities are to ensure that the Group has conflicts with the Group. In addition, the
the best possible leadership and to plan for Nomination Committee will only use those
both Executive and Non-Executive Director firms that have adopted the Voluntary Code of
succession. Its prime focus is therefore on Conduct addressing gender diversity and best
composition of the Board, for which practice in search assignments. A long list of
appointments will be made on merit against potential appointees is reviewed, followed by
objective criteria. The Nomination Committee the shortlisting of candidates for interview
advises the Board on these appointments, based upon the objective criteria identified
oversees the recruitment processes, and also in the specification. Committee members
considers retirements and resignations from interview the shortlisted candidates together
the Board and its other committees. The with other Directors as appropriate, and
Nomination Committee regularly examines identify a preferred candidate. Following
succession planning based on the Board’s these meetings, and subject to satisfactory
balance of experience, overall diversity and references, the Nomination Committee make
the leadership skills required to deliver the a formal recommendation to the Board on
Company’s strategy. the appointment.
88 | Spire Healthcare Group plc | Annual Report and Accounts 2018Overview
“The Committee’s principal activities in
the year have been the development
of the Executive Committee and
Strategic report
reviewing Board composition.”
Peter Bamford
Chair, Nomination Committee
Governance
Dear Shareholder, The Committee has actively engaged with While Spire Healthcare employs a large
Justin Ash to support him in his plans to majority of female staff and the Company’s
As Chair of the Nomination Committee (the further strengthen the Company’s senior gender pay gap is lower than average, we
‘Committee’), I am pleased to present our management team. All members of the recognise that there is further progress to be
report for the year ended 31 December 2018. Committee met with candidates for the Chief made towards better gender representation
Operating Officer role and John Forrest was at Board and senior leadership levels. Our aim
The Committee has played a key role in the selected as the lead candidate. Since the is to move to 33% female representation on
identification and appointment of the right beginning of this year, the Committee has the Board and Executive Committee as soon
individuals to the Company’s Board and reviewed and agreed the appointment of as practicable, commensurate with selection
senior leadership team during the year. It has Shelley Thomas as Spire Healthcare’s new being on qualification and merit.
also assisted in their ongoing evaluation Group Human Resources Director.
and development. Re-election of Directors
I have today announced my intention to step The Committee met in early 2019 to review
In light of the requirements of the UK down from the Board and will leave Spire the continuation in office and potential
Corporate Governance Code 2018 and Healthcare on 16 May 2019. A search for my reappointment of all members of the Board.
Financial statements
recognising that a number of Directors are replacement has commenced. Following this review, the Committee
approaching six years of service on the Board, recommended to the Board that all Directors
we have begun a review of the Board’s Performance evaluation be reappointed, and hence all Directors, except
composition and succession plans. In November, the Committee completed its for myself as I will be stepping down from the
annual performance evaluation. In discussing Board as mentioned, will seek election or
Director and senior management changes the findings, it was agreed that the Committee re-election at the annual general meeting
Following Simon Gordon’s decision to step down would continue to focus on the development in May.
from Spire Healthcare’s Board from 1 March of skills and capabilities within the Executive
2018, the Committee in conjunction with Justin Committee and other members of the senior
Ash, commenced a focused search for a new leadership team, and on succession planning Peter Bamford
Chief Financial Officer. The Committee was for the Board and Executive Committee. Chair, Nomination Committee
pleased to review a list of individuals for the role 27 February 2019
with Jitesh Sodha being the preferred Diversity and inclusion
candidate. Heidrick & Struggles assisted in the We reviewed and considered the annual
executive search. publication of the Hampton-Alexander review of
gender leadership in FTSE companies, and in this
year’s Annual Report we again publish details of
Other information
the Company’s staff diversity and gender pay
gap, in line with reporting requirements (see the
Resources and responsibilities section on pages
38 and 42). The chart on page 85 also illustrates
the diversity of the Board in terms of gender.
Spire Healthcare Group plc | Annual Report and Accounts 2018 | 89You can also read
