25th Mar 2021 16:30
Date: 25 March 2021
Meggitt PLC
("the Company")
Publication of Annual Report and Accounts 2020 and the Notice of the 2021 Annual General Meeting
The Company has today posted and published on its website https://www.meggitt.com/investors/ its Annual Report and Accounts ("Annual Report") for the year ended 31 December 2020 and Notice of its 2021 Annual General Meeting ("Notice of Meeting").
The Company's Annual General Meeting will be held as a hybrid meeting at 11.00am on Thursday 29 April 2021 at the Company's offices at Pilot Way, Ansty Business Park, Coventry, CV7 9JU, and via live broadcast.
Due to the current UK Government's restrictions on public gatherings, shareholders will not be permitted to attend the Annual General Meeting in person. This is to ensure the safety of both our employees and shareholders. The Company will keep the situation under review and may make further changes to allow shareholder attendance if the UK Government's guidance and restrictions permit this at the time of the Annual General Meeting. Any changes will be announced via RNS and on the Company's website.
Shareholders are invited to participate in the Annual General Meeting via a live broadcast and will be able to ask questions and vote during the meeting. As shareholders will not be able to attend in person, they are encouraged to vote in advance by appointing the Chairman as their proxy by one of the methods set out in the Notice of Meeting.
In compliance with Listing Rule 9.6.1R of the UK Financial Conduct Authority ("FCA"), the Annual Report, Notice of Meeting and Form of Proxy for the 2021 Annual General Meeting will be submitted to the UK Listing Authority and will shortly be available for inspection at the National Storage Mechanism https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
The information included in the preliminary results announcement released on 4 March 2021, together with the information in the Appendices to this announcement which is extracted from the Annual Report, constitute the materials required by the FCA's Disclosure Guidance and Transparency Rule 6.3.5R. This announcement is not a substitute for reading the Annual Report in full and page and note references in the Appendices below refer to page and note references in the Annual Report.
Enquiries:
Meggitt PLC
Marina Thomas, Group Company Secretary ([email protected])
Katie Lewis, Senior Assistant Company Secretary ([email protected])
Simon Grant, Assistant Company Secretary ([email protected])
PRINCIPAL RISKS & UNCERTAINTIES
The Group's strategic objectives can only be achieved if certain risks are taken and managed effectively. We have listed below the most significant risks that may affect our business, although there may be other risks - of which the Group is unaware or are considered less significant - which may affect our performance. The potential impacts of each of our principal risks were considered as part of the viability stress testing and considered to be consistent with, analogous to or less significant than the scenarios modelled.
Approach to COVID-19
Given the wide-ranging impact of COVID-19 on the aviation industry we have assessed the effect on our existing risks and considered resultant emerging risks rather than having a single, standalone COVID-19 risk.
Strategic priorities
1 Strategic Portfolio
2 Customers
3 Competitiveness
4 Culture
Change in risk
↑ Increase
- No change
↓ Decrease
Risk velocity
H High: Impact within 6 months of risk occurring
M Medium: Impact between 6 and 36 months of risk occurring
L Low: Impact after more than 36 months of risk occurring
KPIs
· Financial performance (organic revenue growth, underlying operating profit, ROCE, underlying EPS growth and free cash flow)
· R&D investment
· TRIR (total recordable incident rate)
· Inventory turns
Strategic risks
Risk | Description | Impact | How we manage it | |
Industry changes 1 ↑ H
KPIs: · Financial performance
| Significant variation in demand for air travel and/or our products due to aerospace and defence business downcycles coinciding; serious political, economic, pandemic (including the on-going impacts of COVID-19) or terrorist events; or industry consolidation that materially changes the competitive landscape. | Volatility in revenue and underlying profitability.
| · Demand is managed by monitoring external economic and commercial environment and long-lead indicators whilst maintaining focus on balanced portfolio. · Monitoring international political and tax developments to assess implications of future legislation.
| |
Business model 2 - M KPIs: · Financial performance · R&D investment
| Failure to respond to fundamental changes in our aerospace business model, primarily the evolving aftermarket. This includes more durable parts requiring less frequent replacement, a growing supply of surplus parts, OE customers seeking greater control of their aftermarket supply chain and accelerated pace of new aircraft deliveries leading to the earlier retirement of older aircraft. | Decreased revenue and profit.
| · Alignment of Group, divisional and functional strategy processes. · Dedicated full-service aftermarket organisation. · Long-term customer agreements including SMARTSupport® packages to create tailored solutions for customers throughout the product life cycle enabling more effective performance monitoring and more predictable pricing. · Investment in research and development to maintain and enhance Meggitt's intellectual property. | |
Climate change 3 ↑ M KPIs: · Financial performance · R&D investment | Failure to adapt to the transition and physical impacts of climate change, including: - government legislation to limit air travel; - regulations limiting greenhouse gas emissions from aviation come into effect faster than technical solutions; - societal attitudes shifting against air travel (e.g. "flight shaming"); - acute physical risks such as the increased likelihood of extreme weather events; and - chronic physical risks such as changing weather patterns including rising temperatures and sea levels. | Decreased revenue and profit, damage to operational performance and reputation.
| · Continued dialogue with governments, industry bodies and customers to maintain awareness of evolving aviation sector requirements. · Continued focus on developing technologies to support sustainable aviation and on reducing the carbon intensity of our production operations. · Allocation of two-thirds of innovation budget to sustainable solutions. · Reduction in Group carbon footprint through new facilities, more efficient production processes and using green energy sources. · Comprehensive business continuity plans across the Group, supported by an insurance programme subject to annual renewal. · Long-term weather considerations as part of site footprint strategy.
These are considered further as part of the TCFD disclosures on page 71. | |
Operational risks | ||||
Quality escape/ equipment failure 3 - H
KPIs: · Financial performance | Defective product leading to in-service failure, accidents, the grounding of aircraft or prolonged production shut-downs for the Group and its customers. | Decreased revenue and profit, damage to operational performance and reputation.
| · System safety analysis, verification and validation policy and processes, combined with quality and customer audits and industry certifications. · Meggitt Production System (MPS). · Supplier quality assurance process. | |
Business interruption 3 ↑ H KPIs: · Financial performance | A catastrophic event such as natural disasters (including earthquake - the Group has a significant operational presence in Southern California); civil unrest, military conflict or terrorist activity; or a pandemic (including further impacts from COVID-19) could lead to infrastructure disruption and/or property damage which prevents the Group from fulfilling its contractual obligations. | Decreased revenue and profit, damage to operational performance and reputation. | · Group-wide business continuity and crisis management plans, subject to regular testing and also invoked during 2020 in response to COVID-19. · Comprehensive insurance programme, renewed annually and subject to property risk assessment visits. | |
Project/programme management 3 - M KPIs: · Financial performance · R&D investment | Failure to meet new product development programme milestones and certification requirements and successfully transition new products into manufacturing as production rates increase. This also covers lower than expected production volumes, including programme cancellations or delays, notably the 737 MAX. | Failure to deliver financial returns against investment and/or significant financial penalties leading to decreased profit and damage to reputation. | · Rigorous commercial and technological reviews of bids and contractual terms before entering into programmes. · Continuous review of programme performance through the Programme Lifecycle Management (PLM) process including: o regular monitoring of the end-market performance of key OE programmes; o internal review process, to stress-test readiness to proceed at each stage of key programmes; and o regular monitoring of the financial health of customers. | |
Customer satisfaction 2 - M
KPIs: · Financial performance · Inventory turns | Failure to meet customers' cost, quality and delivery standards or qualify as preferred suppliers. | Failure to win future programmes resulting in decreased revenue and profit. | · Creation of a customer-facing organisational structure including a dedicated aftermarket division. · Regular monitoring of customer scorecards and ensuring responsiveness to issues via Voice of the Customer process. · Functional excellence in operations, project management and engineering. · Increased utilisation of low-cost manufacturing base. | |
IT/Systems failure 1 ↑ H KPIs: · Financial performance | A breach of IT security due to increasingly more sophisticated cyber crime/terrorism resulting in intellectual property or other sensitive information being lost, made inaccessible, corrupted or accessed by unauthorised users. This also includes the loss of critical systems such as SAP due to poorly executed implementation or change of control; poor maintenance, business continuity or back‑up procedures and the failure of third parties to meet service level agreements. | Decreased revenue and profit, damage to operational performance and reputation. | · Information Security infrastructure, policies and procedures supported by a Group wide security awareness programme. · Intelligence sharing on threats with government and security bodies including the FBI, CPNI and NCSC. · Group-wide intellectual property protection programme. · Management of third party service providers and risks, including resilience and disaster recovery processes. · Rolling programme of system upgrades (including SAP implementation) to replace legacy systems. · Defined vulnerability management policy with monitoring capability to ensure that vulnerabilities are identified and appropriately patched. · Dedicated cyber-security protective monitoring resources, employing industry-leading technical controls and procedures. | |
Supply chain 1 - M KPIs: · Financial performance · Inventory turns | Failure or inability of critical suppliers to supply unique products, capabilities or services preventing the Group from satisfying customers or meeting contractual requirements. | Decreased revenue and profit, damage to operational performance and reputation. | · Supplier excellence framework combined with integrated commercial and procurement approach to contractual terms and conditions including development of long‑term agreements. · Local sourcing strategy to improve operational efficiency and minimise potential impacts and disruption from cross‑border tariffs. · Maintenance of buffer inventory for critical and sole‑source suppliers. · Implementation of measures to mitigate counterfeit and fraudulent parts at high‑risk facilities. | |
Group change management 3 - M KPIs: · Financial performance · Inventory turns | Failure to successfully, simultaneously, deliver the significant change programmes currently in process and planned, including site consolidation activity such as Ansty Park and investments in new carbon manufacturing facilities in the USA. | Decreased revenue and profit, increased costs, damage to operational performance and reputation. | · PMO oversight of large capital projects. · Dedicated site consolidation and property management teams for Ansty Park. · Regular monitoring by Executive Committee through operational and project reviews. · HPS implementation at new/expanded sites. | |
People 4 - H KPIs: · Financial performance · Inventory turns | Failure to attract, retain or mobilise people due to factors including industrial action, workforce demographics, lack of training, availability of talent and inadequate compensation. | Decreased revenue and profit, damage to operational performance. | · Embedding of High Performance Culture. · Action plans to improve employee engagement. · Graduate and apprentice programmes in partnership with schools and universities. · Regular oversight by Executive Committee. · Creation of Employee Resource Groups to foster diversity, boost employee engagement and enable global collaboration. | |
Corporate risks | ||||
Legal and compliance 3 - H KPIs: · Financial performance · TRIR | Significant breach of increasingly complex trade compliance, bribery and corruption, US Government contracting, ethics, intellectual property, data protection or competition/antitrust laws and facilitation of tax evasion. | Damage to reputation, loss of supplier accreditations, suspension of activity, fines from civil and criminal proceedings. | · Continuing investment in compliance programmes including Board‑approved policies and rollout of training and IT solutions. · Regular monitoring of ethics and anti-bribery programme by Corporate Responsibility Committee. · On‑going trade compliance programme including third‑party audits. · Comprehensive ethics programme including training, anti‑corruption policy and 'Speak Up' Line. · Third‑party and internal audits including HS&E and Anti-Bribery & Corruption. · HPS implementation to enhance safety measures, validated by third‑party audits. | |
Financial risks | ||||
Pension funding 3 ↑ M KPIs: · Financial performance |
| Higher pension scheme funding contributions resulting in decreased cash and profit.
| · Triennial valuation process and deficit funding agreement with UK Pension Trustees. · Continued monitoring of asset allocations and funding levels for all schemes. · Closure of UK and US defined benefit schemes to future accrual. | |
Liquidity 3 ↑ M KPIs: · Financial performance | Financial risk management is considered in detail on pages 172 to 173. | Inability to access financing on normal commercial terms.
| · Maintaining sufficient headroom in committed credit facilities and against covenants in those facilities. · Arranging funding with maturities spread over several years or the ability to terminate early at little or no cost to the Group. | |
Oversight of risk and internal control
The Board is responsible for risk management and internal control and for maintaining and reviewing its financial and operational effectiveness. The Board has taken into account the guidance provided by the FRC on risk management and internal control in carrying out its duties. The system of internal control is designed to manage, but not to eliminate, the risk of failure to achieve business objectives and to provide reasonable, but not absolute, assurance against material misstatement or loss.
The Group's functions are responsible for determining Group policies and processes. The businesses are responsible for implementing them, with internal and/or external audits to confirm business unit compliance. The key features of the risk management and internal control system are described below, including those relating to the financial reporting process, as required under the Disclosure Guidance and Transparency Rules (DGTR):
· Group policies - key policies are approved by the Board and other policies are approved by Group functions;
· process controls - for example financial controls including the Group Finance Policies and Procedures Manual, the bid approval process, programme lifecycle management reviews, IT security framework and risk management; and
· the forecasting, budget and strategic plan processes.
The Group's programmes for insurance and business continuity form part of our risk management and internal control framework.
· The following features allow the Group to monitor the effective implementation of policies and process controls by business units:
· a business performance review process (including financial, operational and compliance performance);
· semi-annual business unit, product group and divisional sign-off of compliance with Group policies and processes;
· compliance programmes and external audits (including trade compliance, ethics, anti-corruption, health, safety and environmental);
· an effective internal audit function which, primarily, performs business unit reviews by rotation (including finance, programme management, IT, HR, ethics, anti-bribery & corruption and business continuity); and
· a whistleblowing line to enable employees to raise concerns.
To review the effectiveness of the system of internal controls, the Board and Audit Committee applied the following processes and activities in 2020 and up to the date of approval of the Annual Report:
· reviews of the risk management process, risk register and risk appetite statement;
· written and verbal reports to the Audit Committee from internal and external audit on progress with internal control activities, including:
o Reviews of business processes and activities, including action plans to address any identified control weaknesses and recommendations for improvements to controls or processes;
o The results of internal audits;
o Internal control recommendations made by the external auditors; and
o Follow-up actions from previous internal control recommendations.
· regular compliance reports from the Group General Counsel and Director, Corporate Affairs;
· regular reports on the state of the business from the Chief Executive and Chief Financial Officer;
· presentation on IT security activities and plans from the Chief Information Officer and the Chief Information Security Officer;
· strategy reviews, review of the five-year financial plan and review and approval of the 2021 budget;
· written reports to the Corporate Responsibility Committee on the effectiveness and outcomes of whistleblowing procedures; and
· reports on insurance coverage and uninsured risks.
The risk management and internal control systems have been in place for the year under review and up to the date of approval of the Annual Report, and are regularly reviewed by the Board. The Board monitors executive management's action plans to implement improvements in internal controls that have been identified following the above mentioned reviews and reports. The Board confirms that it has not identified any significant failings or weaknesses in the Group's systems of risk management or internal control as a result of information provided to the Board and resulting discussions.
Viability statement
In accordance with the provision 31 of the 2018 Code, as part of their assessment of the Group's viability, the directors have assessed the prospects of the Group and its ability to meet its liabilities as they fall due.
Response to COVID-19 and impact on Meggitt's viability
During 2020, along with the rest of the civil aerospace sector, Meggitt responded to the pressures caused by the COVID-19 pandemic. Year on year, the Group's revenues fell by £592m (26%) and as such, the last 12 months have tested the Group's viability.
The first actions of the Group secured liquidity, and over the year the Group's funding structure has proved to be secure and resilient. In the first half, the Group secured a forward start on its RCF for one year on $575m to September 2022, and in November successfully refinanced $300m of debt. The Group also became an eligible issuer under the Bank of England's CCFF facility. However, the Group has not issued commercial paper under this facility at 31 December 2020 and at no point during 2020 was the Group viable only through access to these funds.
The Group has also addressed its structural cost base. As at the end of 2020, our global headcount is 26% or 3,319 lower than at the end of 2019. Overall, though £592m of revenue have beenlost year on year, the fall in underlying operating profit has been £212m, meaning for every £3 of revenue lost, just under £2 has been saved on cost. The Group also generated cash in the year with free cash flow (after interest and tax) of £32m and net debt lower by £138m year on year. The Group has received a small amount of support under government furlough schemes. The benefit to the income statement has not been critical to viability.
Meggitt's diversified business model has also proved robust. Though the Group's civil aerospace business has come under pressure, the defence business is up 4% on an organic basis and defence now represents 46% of the Group's revenue. In addition, the Group's global manufacturing base has proved resilient during 2020, with manufacturing capacity largely maintained through the pandemic despite significant levels of infection in both the UK and USA. Meggitt has benefitted from both globally distributed facilities and diverse end markets.
Overall, though far from over, the Group's response to COVID-19 has been encouraging. Nearly 12 months into the most severe crisis to hit aerospace in living memory, Meggitt continues tobe viable.
Assessment of prospects
The Board believes that, despite the impact of COVID-19 in 2020, the prospects for the Group continue to be favourable in the medium to long-term.
· We believe that the desire for individuals to travel remains and that air travel will play a critical part in meeting that demand
o Growth in civil aerospace markets will return despite the near term impact of COVID-19; we provide equipment to all major new platforms entering service in the near future
o Meggitt has provided equipment to over 73,000 in service aircraft, and with an average aircraft lifespan of 25 years,our aftermarket will be providing meaningful revenues to the Group for decades to come
· We are diversified by end market and by customer
o We supply into both civil (43% revenue) and defence (46%) aircraft markets, and into selected energy markets (8%)
o Our revenues are split broadly evenly between equipment sales and aftermarket
o We work with a diverse group of customers from across the globe. Our top 10 customers generate less than 50% of our revenue
· We invest for the long term and protect our know-how
o We invest in market leading technology. We continue to spend, on average, 5-7% of revenue on R&D through the cycle
o Our physical capital base is renewed regularly. We have maintained our investment levels in 2020 (£90m of capital expenditure vs. £94m in 2019)
o We grow, manage and defend our intellectual property portfolio robustly
o We continue to invest in next generation technologies to support a sustainable future for aviation and power generation
o We seek to attract and retain colleagues who can enable the extraordinary
· We manufacture based on quality, consistency and value
o We manage our manufacturing facilities using HPS (previously MPS), a tiered improvement programme, providing a roadmap to best in class manufacturing.
o We operate a globally distributed manufacturing infrastructure, producing both in the OECD and in lower cost locations
· We have robust liquidity and a strong financial base
o The Group has reduced its levels of debt by over £100m to £773m in spite of the financial pressure of the last 12 months. The Group generated free cash flow in 2020
o Our gearing ratio at the end of 2020 was 2.2x (net debt / EBITDA) and interest cover was 9.8x, both well within our covenant limits
o We have £1.5bn of committed facilities as at 31 December 2020, and a headroom of £908m
Assessment period
The Board considered the Group's principal risks as detailed in our risk register, and assessed the impact, likelihood and timeframe over which the risks might crystallise. It also considered over what timeframe certain business and sector changes currently impacting the Group would likely be resolved.
1. Recovery of the civil aerospace market: Many industry observers including IATA see the civil aerospace market recovering to 2019 levels by 2024-25.
2. Refinancing: The Group expects to have refinanced a significant proportion of its debt, including its RCF by 2023-24.
3. Evolution of Meggitt: The Group has a number of projects, including the completion of the move into Ansty Park and other footprint reduction efforts, which are expected to complete within the next five years.
4. Programme investment: The Group typically expects the investment cycle of five years for engineering development programmes.
The Board concluded that these four major activities would be largely resolved in a five-year time frame and as such, five years continues to be the correct timeframe over which to assess viability and risk impact.
Assessment of viability and risk stress tests
The Group is modelling a progressive recovery in activity in the civil aerospace market from a low point in late 2020 and early 2021. Though a number of outcomes are possible, the Group believes that a full recovery in the civil aerospace market is likely by 2024-25 and it is on this baseline that the Group's viability has been tested.
Using the output of the Group's long-term planning activity, the Group has created two adverse downside scenarios. These are modelled against a baseline "COVID recovery" scenario detailed in note 1 of the consolidated financials statements and the financial impact quantified should a number of risks within those scenarios crystallise within a five-year period.
1. Loss of a major customer
The aviation sector is reliant on a well-developed system of global regulations and equipment qualifications to ensure confidence in the sector's functioning. In addition, particularly when working with the defence arms of governments, security of data and adherence to military protocols is critical.
The Group has modelled the impact of a significant loss of revenue following a regulatory or compliance failure at Meggitt. Censure for non-compliance is severe, whether through the loss of access to government contracts, or the grounding of fleet which are deemed to be unsafe.
This scenario is modelled to unfold in parallel with the recovery from COVID-19. Given necessary lead times to find alternative sources of supply, the full impact of this loss of customer scenario would take 12 months to be felt, during which time the civil AM recovery is underway in the underlying base case. The maximum impact of the scenario would be in 2023, when the Group is refinancing a number of facilities.
2. Major business disruption event
As the Group is currently experiencing a significant demand-side business disruption event in COVID-19, in testing the Group's viability, a supply-side shock has been considered. Specifically, manufacturing disruption in California as a result of a natural disaster.
On the Group's risk matrix, business disruption continues to be one of the highest impacting risks on the Group's financial performance, disrupting relationships with both major customers and suppliers.
The Group used knowledge of previous business disruption events to model the impact on the Group's future plans. As modelled, the Group is able to weather the earthquake event without needing to conclude any additional refinancing.
The Group has modelled the financial impact of the risks articulated above, together with mitigating actions. Mitigating actions include a reduction in investment both in PP&E and R&D or curtailment of indirect expenditure and headcount reduction. Levers such as dividend suspension or material reduction in discretionary spend are somewhat reduced in their effectiveness, as these actions have already been taken in response to COVID-19. However, the Group continues to sell into diverse end markets and enjoys long dated aftermarket revenue and technologically differentiated products. The Group would find it challenging should a second external shock occur before the recovery from COVID-19 is established. However, the Group continues to believe that both the scale of the potential mitigating levers available to it and the favourable outcomes achieved in 2020 against COVID-19 by it provide buffers to mitigate the impact of these scenarios.
Statement of viability
Based on the results of the analysis, the Board has a reasonable expectation that the Group will continue in operation and be able to meet its liabilities as they fall due over the five-year period of assessment.
Statement of directors' responsibilities in respect of the financial statements
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the Group financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. Additionally, the Financial Conduct Authority's Disclosure Guidance and Transparency Rules require the directors to prepare the Group financial statements in accordance with international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. The directors have prepared the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 "Reduced Disclosure Framework", and applicable law).
Under company law, 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 Group and Company and of the profit or loss of the Group for that period. In preparing the financial statements, the directors are required to:
· select suitable accounting policies and then apply them consistently;
· state whether international accounting standards in conformity with the requirements of the Companies Act 2006 and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union have been followed for the Group financial statements and United Kingdom Accounting Standards, comprising FRS 101 have been followed for the Company financial statements, subject to any material departures disclosed and explained in the financial statements;
· make judgements and accounting estimates that are reasonable and prudent; and
· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.
The directors are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006.
The Board are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors' confirmations
The Board consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and Company's position and performance, business model and strategy.
Each of the directors, whose names and functions are listed in the Board of Directors confirm that, to the best of their knowledge:
· the Group financial statements, which have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies inthe European Union, give a true and fair view of the assets, liabilities, financial position and loss of the Group;
· the Company financial statements, which have been prepared in accordance with United Kingdom Accounting Standards, comprising FRS 101, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and
· the Strategic report and this Directors' Report includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that it faces.
In the case of each director in office at the date the Directors' Report is approved:
· so far as the director is aware, there is no relevant audit information of which the Group's and Company's auditors are unaware; and
· they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the Group's and Company's auditors are aware of that information.
Fair, balanced and understandable
The Board of directors as at the date of this report consider that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position, performance, business model and strategy. The Board has made this assessment on the basis of a review of the accounts process, a discussion on the content of the Annual Report assessing its fairness, balance and understandability, together with the confirmation from executive management that the Annual Report is fair, balanced and understandable.
16. Related party transactions
During the year, the Group made sales to the joint ventures of £0.7m (2019: £2.9m) and purchases from the joint ventures of £0.6m (2019: £0.1m). Transactions between the Company and its subsidiaries have been eliminated on consolidation.
The remuneration of key management personnel of the Group, which is defined for 2020 as members of the Board and the Group Executive Committee, is set out below.
2020£'m | 2019£'m | |
Salaries and other short-term employee benefits | 4.7 | 10.8 |
Share-based payment (credit)/expense | (0.5) | 2.5 |
Total | 4.2 | 13.3 |
Full details of all elements in the remuneration package of each director, together with directors' share interests and share awards, are disclosed in the Directors' remuneration report on pages 114 to 141 which forms part of these consolidated financial statements.
Related Shares:
MGGT.L