Annual Report, Sustainability Strategy & AGM
Thursday 22 October 2020
Volution Group plc
Annual Report and Accounts 2020 including new Sustainability Strategy
Notice of Annual General Meeting
Volution Group plc ("Volution", the "Group" or the "Company", LSE: FAN), a leading international designer and manufacturer of energy efficient indoor air quality solutions, announces that following the release on 8 October 2020 of the Company's Preliminary Announcement of Final Results for the year ended 31 July 2020, it has today posted and made available to shareholders on its website, www.volutiongroupplc.com the documents listed below:
· Annual Report and Accounts 2020 including Volution's new Sustainability Strategy
· Notice of Annual General Meeting 2020
· Form of Proxy for Annual General Meeting 2020
Copies of these documents are also being submitted to the Financial Conduct Authority's National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism
In accordance with the United Kingdom Government's public health guidelines on COVID-19 and in the interests of the safety and wellbeing of our shareholders, the AGM will be held as a closed meeting with the minimum quorum of two management shareholders present. Shareholders will not be permitted to attend. The Board recommends that shareholders appoint the Chairman of the AGM as their proxy rather than a named person who will not be permitted to attend the meeting.
As it is not possible for the Board to meet shareholders in person at the AGM, any questions that shareholders would like to raise can be sent by email to investors@volutiongroupplc.com ahead of the AGM.
A condensed set of financial statements and information on important events that have occurred during the year ended 31 July 2020 and their impact on the financial statements, were included in the Company's Preliminary Announcement of Final Results made on 8 October 2020, which is available on the Company's website referred to above. That information together with the information set out below in the appendices to this announcement (which is extracted from the Annual Report and Accounts 2020), constitute the material required by Disclosure Guidance & Transparency Rule 6.3.5 which is required to be communicated to the media in full unedited text through a Regulatory Information Service. This announcement is not a substitute for reading the full Annual Report and Accounts 2020.
- ends -
Enquiries:
Volution Group plc
Michael Anscombe, Company Secretary +44 (0) 1293 441562
Legal Entity Identifier: 213800EPT84EQCDHO768.
Note to Editors:
Volution Group plc (LSE: FAN) is a leading international designer and manufacturer of energy efficient indoor air quality solutions.
Volution Group comprises 16 key brands across three regions:
UK: Vent-Axia, Manrose, Diffusion, National Ventilation, Airtech, Breathing Buildings, Torin-Sifan.
Continental Europe: Fresh, PAX, VoltAir, Kair, Air Connection, inVENTer, Ventilair.
Australasia: Simx, Ventair.
For more information, please go to: www.volutiongroupplc.com
APPENDICES
Appendix A: Directors' Responsibility Statement
The following Directors' Responsibility Statement is extracted from page 104 of the Annual Report and Accounts 2020 and is repeated in this announcement solely for the purpose of complying with DTR 6.3.5. The statement relates to the full Annual Report and Accounts 2020 and not the extracted information contained in this announcement:
The Directors are responsible for preparing the Annual Report and the Group and parent company financial statements in accordance with applicable law and regulations.
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 Financial Reporting Standards (IFRSs) as adopted by the European Union and 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 the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the pro�it or loss of the Group and Company for that period. In preparing the financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- state whether applicable IFRSs as adopted by 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 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 and, as regards the Group financial statements, Article 4 of the IAS Regulation.
The Directors 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 Directors 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 on pages 58 and 59, confirms that, to the best of their knowledge:
- the Company financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 Reduced Disclosure Framework and applicable law), give a true and fair view of the assets, liabilities, financial position and profit of the Company;
- the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and
- the 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 they face.
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 and Company's auditor is unaware;
- 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 and Company's auditor is aware of that information; and
- the financial statements on pages 114 to 163 were approved by the Board of Directors on 8 October 2020 and signed on its behalf by Ronnie George and Andy O'Brien.
By order of the Board
Ronnie George
Chief Executive Officer
8 October 2020
Andy O'Brien
Chief Financial Officer
8 October 2020
Appendix B: Principal Risks and Uncertainties
The following is extracted from pages 46 to 53 of the Annual Report and Accounts 2020 and is repeated in this announcement solely for the purpose of complying with DTR 6.3.5. The information relates to the full Annual Report and Accounts 2020 and not the extracted information contained in this announcement:
The Board is committed to protecting and enhancing the Group's reputation and assets in the interests of shareholders as a whole, while having due regard to the interests of all stakeholders. It has overall responsibility for the Group's system of risk management and internal control.
The Group's businesses are affected by a number of risks and uncertainties. These may be impacted by internal and external factors, some of which we cannot control. Many of the risks are similar to those found by other companies of similar scale and operations.
The risks and uncertainties facing the Group have been considered in the context of the continuing COVID-19 pandemic, as well as the potential implications from any changes in the trading relationship between the UK and the European Union (EU) from 1 January 2021. More detail of the specific risk associated with the new relationship yet to be negotiated between the UK and the EU can be found on pages 47 and 48. A specific assessment of the potential risks and our approach to management of these risks can be found on pages 50 to 53.
Our approach
Risk management and maintenance of appropriate systems of control to manage risk are the responsibilities of the Board and are integral to the ability of the Group to deliver on its strategic priorities. The Board has developed a framework of risk management which is used to establish the culture of effective risk management throughout the business by identifying and monitoring the material risks, setting risk appetite and determining the overall risk tolerance of the Group. To enhance risk awareness, embed risk management and gain greater participation in managing risk across the Group, a programme of employee communication continues with all new employees receiving a brochure on joining Volution.
The Group's framework of risk management is monitored by the Audit Committee, under delegation from the Board. The Audit Committee is responsible for overseeing the effectiveness of the internal control environment of the Group.
BDO LLP (BDO) continued to act in the capacity of internal auditor and provide independent assurance that the Group's risk management, governance and internal control processes are operating effectively. BDO continued to act in this capacity throughout the financial year ended 31 July 2020.
Identifying and monitoring material risks
Material risks (including emerging risks) that we consider may lead to threats to our business model, strategy and liquidity are identified through our framework of risk management, our analysis of individual processes and procedures (bottom-up approach) and a consideration of the strategy and operating environment of the Group (top-down approach).
The risk evaluation process begins in the operating businesses with an annual exercise undertaken by management to identify and document the significant strategic, operational, financial and accounting risks facing the businesses. This process ensures risks are identified and monitored and management controls are embedded in the businesses' operations.
The risk assessments from each of the operating businesses are then considered by Group management, which evaluates the principal risks of the Group with reference to the Group's strategy and operating environment for review by the Board.
Our principal risks and uncertainties
The 2018 UK Corporate Governance Code (the 2018 Code) states that the Board is responsible for determining the nature and extent of the principal risks it is willing to take in achieving its strategic objectives and that it should maintain sound risk management and internal control systems. In accordance with provision 29 of the 2018 Code, the Directors confirm that they have carried out a robust assessment of the principal risks facing the Group, including those which would threaten the business model, future performance, solvency or liquidity.
Set out in this section of the Strategic Report are the principal risks and uncertainties which could affect the Group and which have been determined by the Board, based on the robust risk evaluation process described above, to have the potential to have the greatest impact on the Group's future viability. During this review we also considered the emerging risks facing the Group, the main one being the COVID-19 pandemic, and any impact on our assessment of principal risks. For each risk there is a description of the possible impact of the risk to the Group, should it occur, together with strategic consequences and the mitigation and control processes in place to manage the risk. This list is likely to change over time as different risks take on larger or smaller significance.
UK relationship with the European Union
Following the referendum outcome in June 2016, the UK left the EU on 31 January 2020. Since that date, the UK Government and European Commission have been negotiating the framework for the future relationship and any new agreement would operate from 1 January 2021. At the time of writing it is unclear what trading relationship the UK will have with the EU from 1 January 2021.
Our UK businesses, as well as those based in Continental Europe, are substantially "domestic" suppliers of goods to their own markets with relatively limited cross-border sales activity. We have reviewed the tariffs that would apply to any cross-border sales of our products between the UK and EU in the event of no trading relationship being agreed and these would be at an estimated tariff level of up to 3%. We do not believe the commerciality of these transactions would be materially impacted.
On the supply chain side, our primary non-UK supply comes from China, and so (aside from any heightened foreign exchange rate volatility) is not materially impacted. Border delays are recognised as a potential source of disruption, and as such we will continue to monitor the risk and remain agile to adjusting inventory levels and orders with our key suppliers in the run up to 31 December 2020.
We have undertaken an analysis of the risks and operational challenges to our business resulting from no trading relationship being agreed and consideration of these risks has been incorporated into the Group's principal risks as appropriate.
With a strong direct presence in the EU, the Board believes that Volution is well placed to respond to changes to future trading arrangements between the EU and the UK. Whilst it is clear that the uncertainty of a trade deal being agreed could have an impact on confidence and activity levels in the UK, our UK-based revenues account for less than 50% of the Group's overall revenues. In the longer term, as an international business with good logistics capabilities and an expanding geographic presence, we consider we have greater flexibility to withstand any UK-specific challenges.
We recognise that significant uncertainty will remain until a trade deal may be agreed and as such our understanding of potential risks and impacts is being regularly reviewed and assessed.
COVID-19 risk
At the beginning of the COVID-19 outbreak in January 2020, our initial focus, working with our Chinese supply partners, was to ensure continuation of supply of critical materials and components to our various businesses in the UK, Continental Europe and Australasia. Whilst a number of our suppliers did have to stop operating for a period of time, the agility of our supply chain teams both in China and in our operating businesses, coupled with sensible inventory holdings in our businesses, enabled us to continue uninterrupted supply to our customers.
As the scale of the pandemic escalated through March and all of our businesses began to be impacted, our local management teams, supported by Group guidance and with regular sharing of information and learnings across the Group, moved quickly and with agility to ensure a safe working environment for all of our employees. Those employees able to work remotely were supported and helped to do so, whilst our production facilities were reviewed to ensure appropriate social distancing with enhanced cleaning, hygiene and protection measures such as temperature checking being adopted to ensure the safety of our employees. At the date of this report all of our facilities are operational.
We entered the COVID-19 crisis with a robust balance sheet and significant financial headroom within our banking facilities. Our teams acted decisively across the Group to reduce costs and to protect liquidity. The finance teams have also been performing additional cash forecasting and stress testing to ensure Volution has sufficient liquidity, not just to survive the current COVID-19 crisis but also to ensure the Group emerges in a strong position, able to invest for growth going forward, whether organically or through acquisition. Further detail on our financial response and liquidity actions and position can be found in the Financial Review on page 40.
People and talent is a key risk and rightly so, because it is only with our talented employees that we are able to navigate our way through these unprecedented times. Volution's culture and values, notably commitment, professionalism and customer service, have also been critical to the resilient manner in which our teams have approached the challenges of COVID-19.
With the pandemic still very much prevalent, and ever changing government instructions and guidance, it is clear that COVID-19 will continue to affect our markets, customers, suppliers and employees. We have evaluated how COVID-19 has impacted and continues to impact our assessment of principal risks on pages 50 to 53.
Risks associated with the UK leaving the EU and negotiating a trade agreement to operate from 1 January 2021
|
Potential Risk |
Likelihood |
Potential impact |
Mitigation |
|
Increases in tariffs and duty on goods and raw materials imported into the UK from the EU and exported to the EU |
Likely |
Low |
The Group has considered the potential cost impact of World Trade Organisation tariffs coming into force for exports from the UK and imports into the UK, and the resultant cost of these potential tariffs is not expected to be material to the Group as a whole. |
|
Regulatory risks relating to potential changes to UK and EU-based law and regulation including product approvals |
Likely |
Low |
In the short to medium term we do not expect UK or EU approvals for our products to markedly change. Both CE and the proposed UKCA marking schemes will be aligned and based on the same international standards. |
|
Exchange rate volatility and reduction in the value of Sterling along with the associated increase in the costs of goods from overseas |
Likely |
Low |
To hedge against transactional foreign exchange risk we use forward foreign exchange contracts to cover around 80-90% of our expected US Dollar purchases for a period of 12-18 months from inception. Our global trading mix and product sourcing arrangements mean that historically we have had a natural gross margin hedge against a depreciation in Sterling versus the Euro at a Group level.
The Group's approach to transaction risk management is to enter into forward exchange contracts for the purchase of the budgeted monthly net expenditure in US Dollars for a rolling period. The Group's treasury function hedges this exposure by using forward foreign exchange contracts put in place to cover around 80-90% of these transactions for 12-18 months from inception. |
|
Queues and delays at UK and EU ports as a result of increased customs checks |
Likely |
Medium |
We will continue to monitor this risk in the run up to 31 December 2020 and if deemed sensible will assess whether to increase supplies from our UK businesses to some of our European businesses prior to this date. |
|
Labour force impacts, particularly the mobility of the workforce and availability of talent |
Unlikely |
Low |
We note the increased pressure on the availability of lower skilled labour in recent years, and the reduction in migration from EU countries since the Brexit referendum. As noted on page 52 however, we believe that some of these workforce availability pressures will be reduced at least in the near term, due to COVID-19 and unemployment levels in the UK. We are not critically reliant on our workforce having to travel extensively between the EU and the UK, or the need to source EU workers on UK contracts. |
Principal Risks
Risk | Impact | Strategic consequence | Likelihood | Potential impact | Risk Direction | Impact of COVID-19 | Mitigation |
Economic risk
A decline in general economic activity and/or a specific decline in activity in the construction industry, including, but not exclusively, an economic decline caused by the COVID-19 pandemic and the new relationship between the UK and the EU from 1 January 2021. | Demand for our products serving the residential and commercial construction markets would decline. This would result in a reduction in revenue and profitability | Our ability to achieve our ambition for continuing organic growth would be adversely affected | Possible | High | Pre-Covid: Increasing
Post Covid: Increasing
| COVID-19 has impacted and will continue to impact economic outlook and confidence in a number of regions in which we operate. That said we believe that government responses and any stimulus packages deployed are likely to be supportive and help underpin construction demand, and will focus on energy efficient and sustainable technologies including ventilation systems | Geographic spread from our international acquisition strategy helps to mitigate the impact of local fluctuations in economic activity. New product development, the breadth of our product portfolio and the strength and specialisation of our sales forces should allow us to outperform against a general decline. We have a strong presence in the RMI market, which is more resilient to the effects of general economic decline affecting the construction industry. This remains true even under current circumstances. Our business is not capital intensive and our operational flexibility allows us to react quickly to the impact of a decline in volume.
|
Acquisitions
We may fail to identify suitable acquisition targets at an acceptable price or we may fail to complete or properly integrate the acquisition. | Revenue and profitability would not grow in line with management's ambitions and investor expectations. Failure to properly integrate a business may distract senior management from other priorities and adversely affect revenue and profitability. Financial performance could be impacted by failure to integrate acquisitions and to secure possible synergies. | Our strategic ambition to grow by acquisition may be compromised. | Possible | Medium | Pre-Covid: Stable
Post- Covid: Stable
| COVID-19 may affect the cost or timing of any potential acquisitions but could also be an opportunity for the Group with potential acquisitions coming to the market. Our strong cash position means we are well positioned to benefit if any attractive opportunities arise. | The ventilation industry in Europe remains fragmented with many opportunities to court acquisition targets. Senior management has a clear understanding of potential targets in the industry and a track record of twelve acquisitions since IPO in June 2014. Management is experienced in integrating new businesses into the Group. Our policy of rigorous due diligence prior to acquisition and a structured integration process post-acquisition has been maintained. |
Foreign exchange risk
The exchange rates between currencies that we use may move adversely. | The commerciality of transactions denominated in currencies other than the functional currency of our businesses and/or the perceived performance of foreign subsidiaries in our Sterling denominated consolidated financial statements may be adversely affected by changes in exchange rates. | Our ambition to grow internationally through acquisition exposes us to increasing levels of translational foreign exchange risk. | Possible | Medium | Pre-Covid: Increasing
Post-Covid: Increasing
| COVID-19 has impacted the customer demand and supply chain patterns, which could lead to unpredictable hedging of currencies. We believe that the increased economic uncertainty in the context of COVID-19 (and Brexit) makes it likely that in the near-term exchange rates may continue to see heightened levels of volatility. | Significant transactional risks are hedged by using forward currency contracts to fix exchange rates for the ensuing financial year. Revaluation of foreign currency denominated assets and liabilities is partially hedged by corresponding foreign currency bank debt. |
IT Systems including cyber breach
We may be adversely affected by a breakdown in our IT systems or a failure to properly implement any new systems.
| Failure of our IT and communication systems could affect any or all of our business processes and have significant impact on our ability to trade, collect cash and make payments. | We could temporarily lose sales and market share and could potentially damage our reputation for customer service. | Possible | Medium | Pre-Covid: Increasing
Post-Covid: Increasing
| We believe there is increased risk due to COVID-19 as there is the potential for: • new risks linked to employees working from home; and • an increase in targeted phishing campaigns and fraud attempts. | Disaster recovery and data backup processes are in place, operated diligently and tested regularly. A significant Enterprise Resource Planning system has been implemented for several key sites. A disaster failover site has been implemented. We have a three-layered system of network security protection against cyberattack or breaches of security. This infrastructure is maintained to withstand increasingly sophisticated worldwide cyber threats. We also undertake regular cyber security testing and training of our employees. We have commenced a process of internal and external penetration testing with quarterly monitoring checks.
|
Customers
A number of our business derive meaningful amounts of their revenue from key customers. Failure to maintain relationships with these key customers, or with heating and ventilation consultants, could result in revenue loss. | Any deterioration in our relationship with a key customer could have an adverse effect on our revenue from that customer. | Our organic growth ambitions and Operational Excellence may be adversely affected. | Possible | Low | Pre-Covid: Stable
Post-Covid: Increasing
| COVID-19 has increased the risk that customers could fall into financial difficulties or change the way they do business, moving to more online trading and reduction in stock levels. | Our geographic diversity reduces the risk associated with key customers, most of whom only operate in single countries. We have strong brands, recognised and valued by our end users, and this gives us continued traction through our distribution channels and with consultants and specifiers. We have a very wide range of ventilation and ancillary products that enhance our brand proposition and make us a convenient "one-stop-shop" supplier. We continue to develop new and existing products to support our product portfolio and brand reputation. We focus on providing excellent customer service.
|
Regulatory environment
Laws or regulation relating to the carbon efficiency of buildings, the efficiency of electrical products and compliance may change. | The shift towards higher value-added and more energy efficient products may not develop as anticipated resulting in lower sales and profit growth. If our products are not compliant and we fail to develop new products in a timely manner we may lose revenue and market share to our competitors. | Our organic growth ambitions may be adversely affected. We may need to review our acquisition criteria to reflect the dynamics of a new regulatory environment. We may have to redirect our new product development activity. | Possible | Medium | Pre-Covid: Stable
Post-Covid: Decreasing
| COVID-19 has further heightened consumers' and regulators /governments' awareness of air quality and the role ventilation can play. We therefore believe that in addition to the already supportive regulatory backdrop and drivers around carbon and energy efficiency, COVID-19 is likely to place additional emphasis on governments developing appropriate regulations in support of improving indoor air quality. | We participate in trade bodies that help to influence the regulatory environment in which we operate and as a consequence we are also well placed to understand future trends in our industry. With the proposed UK Future Homes Standard and the European Green Deal along with the Healthy Homes Standards in New Zealand, favourable regulatory tailwinds have continued to develop. This is especially true since the outbreak of COVID-19. We are active in new product development and have the resource to react to and anticipate necessary changes in the specification of our products.
|
Supply chain and raw materials
Raw materials or components may become difficult to source because of material scarcity or disruption of supply, including as a consequence of the COVID-19 pandemic and the new relationship between the UK and the EU from 1 January 2021. The increased friction and potential for "trade war" and disputes primarily between the US and China could also destabilise supply chain activity. | Sales and profitability may be reduced during the period of constraint. Prices for input materials may increase and our costs may increase. | Organic growth may be reduced. Our product development efforts may be redirected to find alternative materials and components. Operational Excellence may be adversely affected. | Possible | Medium | Pre-Covid: Increasing
Post-Covid: Increasing
| At the beginning of the COVID-19 outbreak, our initial focus, working with our Chinese supply partners, was to ensure continuation of supply of critical materials and components to our various businesses in the UK, Europe and Australasia. Whilst a number of our suppliers did have to stop operating for a period of time, the agility of our supply chain teams both in China and in our operating businesses, coupled with sensible inventory holdings in our businesses, enabled us to continue uninterrupted supply to our customers. | We establish long-term relationships with key suppliers to promote continuity of supply and where possible we have alternative sources identified. We will continue to monitor stock levels and order patterns in the run up to 1 January 2021 and where deemed necessary will adjust inventory levels to help mitigate any disruptions in supply.
|
Innovation
We may fail to innovate commercially or technically viable products to maintain and develop our product leadership position. | Scarce development resource may be misdirected and costs incurred unnecessarily. Failure to innovate may result in an ageing product portfolio which falls behind that of our competition. | Our organic growth ambitions depend in part upon our ability to innovate new and improved products to meet and create market needs. In the medium term, failure to innovate may result in a decline in sales and profitability. Operational Excellence may be adversely affected. | Possible | Low | Pre-Covid: Stable
Post-Covid: Stable
| COVID-19 has not impacted our innovation process. | Our product innovation is driven by a deep understanding of the ventilation market and its economic and regulatory drivers. The Group starts with a clear marketing brief before embarking on product development. |
People
Our continuing success depends on retaining key personnel and attracting skilled individuals. | Skilled and experienced employees may decide to leave the Group, potentially moving to a competitor. Any aspect of the business could be impacted with resultant reduction in prospects, sales and profitability. | Our competitiveness and growth potential, both organic and inorganic, could be adversely affected. Operational Excellence may be adversely affected. | Unlikely | Low | Pre-Covid: Stable
Post-Covid: Decreasing
| There have been no significant changes to the supply and retention of quality employees across the wider workforce since the COVID-19 outbreak. We believe that retention is likely to be a lower risk in the near term as staff will be less likely to take the risk of changing employment in these uncertain times. | Regular employee appraisals allow two-way feedback on performance and ambition. A Management Development Programme was initiated in 2013 to provide key employees with the skills needed to grow within the business and to enhance their contribution to the business.
|
Appendix C: Related Party Transactions
The following description of related party transactions involving the Company and its subsidiaries during the financial year ended 31 July 2020 is extracted from page 151 of the Annual Report and Accounts 2020 and is repeated in this announcement solely for the purpose of complying with DTR 6.3.5:
Transactions between Volution Group plc and its subsidiaries, and transactions between subsidiaries, are eliminated on consolidation and are not disclosed in this note. A breakdown of transactions between the Group and its related parties is disclosed below.
No related party loan note balances exist at 31 July 2020 or 31 July 2019.
There were no material transactions or balances between the Company and its key management personnel or members of their close family. At the end of the period, key management personnel did not owe the Company any amounts.
The Companies Act 2006 and the Directors' Remuneration Report Regulations 2013 require certain disclosures of Directors' remuneration. The details of the Directors' total remuneration are provided in the Directors' Remuneration Report (see pages 81 to 100).
Compensation of key management personnel
| 2020 | 2019 |
| £000 | £000 |
Short-term employee benefits | 2,749 | 2,816 |
Share-based payment change (see note 34) | 58 | 834 |
Total | 2,807 | 3,650 |
Key management personnel is defined as the CEO, the CFO and the eleven (2019: ten) individuals who report directly to the CEO.
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