REG - Phoenix Grp Hldgs - Phoenix Group Holdings - 2014 Annual Results <Origin Href="QuoteRef">PHNX.L</Origin> - Part 8

Phoenix groupAnnouncement

18/03/2015 07:01

- Part 8: For the preceding part double click  ID:nRSR7166Hg 

The rights and obligations attaching to the Company's ordinary shares are set out in the Company's Articles of Association
(the 'Company's Articles') which are available on the Company's website at
www.thephoenixgroup.com/about-us/corporate-governance/
articles-of-association.aspx. 
 
Where the Employee Benefit Trust ('EBT') holds shares for unvested awards, the voting rights for these shares are
exercisable by the trustees of the EBT at their discretion, taking into account the recommendations of the Group. For
shares that have vested into respective sub funds underneath the EBT, the voting rights are exercisable by the trustees of
the respective sub funds at their discretion, taking into account the recommendations of the relevant participant of the
respective sub funds. 
 
Restrictions on transfer of shares 
 
Under the Company's Articles, the Directors may in certain circumstances refuse to register transfers of shares. In
particular, the Board of Directors may refuse to register the transfer of shares to a person who is a Non-Qualified Person
(as defined in the Company's Articles). 
 
Certain restrictions on the transfer of shares may be imposed from time to time by applicable laws and regulations (for
example, insider trading laws), and pursuant to the Listing Rules of the Financial Conduct Authority ('FCA') and the
Group's own share dealing rules whereby directors and certain employees of the Group require the approval of the Company to
deal in the Company's ordinary shares. 
 
Substantial shareholdings 
 
Information provided to the Company pursuant to the FCA's Disclosure and Transparency Rules is published on a Regulatory
Information Service and on the Company's website. As at 17 March 2015, the Company had been notified of the following
significant holdings of voting rights in its shares. 
 
                                      Number of voting rights in shares  Percentage of shares in issue  
 Artemis Investment Management LLP    22,828,932                         10.14                          
 Henderson Global Investors           11,427,356                         5.08                           
 Ameriprise Financial Inc.            11,277,894                         5.01                           
 Nicholas Berggruen Charitable Trust  8,906,712                          3.96                           
 FIL Limited                          8,756,186                          3.89                           
 
 
Annual General Meeting ('AGM') 
 
The AGM of the Company will be held at 32 Commercial Street, St Helier, Jersey JE2 3RU on Thursday, 23 April 2015 at 1pm. 
 
A separate notice convening this meeting will be distributed to shareholders in due course and will include an explanation
of the items of business to be considered at the meeting. 
 
Board 
 
Board of Directors 
 
The membership of the Board of Directors during 2014 is given within the Corporate Governance Report on pages 48 to 49
which are incorporated by reference into this report. Details of directors and their connected persons' beneficial and
non-beneficial interests in the shares of the Company are shown in the Directors' remuneration report. 
 
During 2014 and up to the date of this report, the following changes to the Board took place: 
 
-  Manjit Dale resigned from the Board on 30 April 2014 
 
-  Kory Sorenson joined the Board as a Non-Executive Director with effect from 1 July 2014 
 
-  David Barnes resigned from the Board on 22 October 2014. 
 
Details of related party transactions which took place during the year with directors of the Company and consolidated
entities where directors are deemed to have significant influence, are provided in the Directors' remuneration report and
in note 43 to the IFRS consolidated financial statements. 
 
The rules about the appointment and replacement of directors are contained in the Company's Articles. These state that a
director may be appointed by an ordinary resolution of the shareholders or by a resolution of the directors. If appointed
by a resolution of the directors, the director concerned holds office only until the conclusion of the next AGM following
the appointment. 
 
In accordance with the UK Corporate Governance Code, directors must stand for re-election annually. The Board of Directors
will be unanimously recommending that all of the directors should be put forward for election/re-election at the
forthcoming AGM to be held on 23 April 2015. 
 
The Articles give details of the circumstances in which directors will be treated as having automatically vacated their
office and also state that the Company's shareholders may remove a director from office by passing an ordinary resolution. 
 
The powers of the directors are determined by Cayman Islands Company Law, Cayman Islands common law, the provisions of the
Company's Memorandum and Articles and by any valid directions given by shareholders by way of special resolution. 
 
The directors have been authorised to allot and issue securities and grant options over or otherwise dispose of shares
under Article 14. 
 
At the Company's AGM held on 30 April 2014, shareholders granted the Company authority to purchase up to 10% of its issued
ordinary shares. Any ordinary shares purchased under the authority would, subject to the Cayman Islands Companies Law (as
amended), either be cancelled by operation of law or held in treasury. These authorities were not used during the year or
up to the date of this report. 
 
Subject to obtaining shareholder approval for the renewal of this authority at the forthcoming AGM, the Company is
authorised to make purchases of its own shares under Article 20 and make payment for the redemption or purchase of its own
shares in any manner permitted by the Cayman Islands Companies Law (as amended), applicable law or regulation, including
without limitation, out of capital, profits, share premium or the proceeds of a new issue of shares. The Company held no
treasury shares during the year or up to the date of this report. 
 
Directors' remuneration and interests 
 
A report on Directors' remuneration is presented within the Directors' remuneration report including details of their
interests in shares and share options or any rights to subscribe for shares in the Company. 
 
Directors' indemnities 
 
Following shareholder approval on 15 March 2010, the Company entered into a deed of indemnity by way of deed poll with its
directors whereby the Company has agreed to indemnify each director against all losses incurred by them in the exercise,
execution or discharge of their powers or duties as a director of the Company, provided that the indemnity shall not apply
to the extent prohibited by any applicable law. 
 
The deed of indemnity remains in force as at the date of signature of this Directors' Report. 
 
Directors' conflicts of interest 
 
The Board has established procedures for handling conflicts of interest in accordance with Cayman Islands law and the
Company's Articles. 
 
On an ongoing basis, directors are responsible for informing the Company Secretary of any new, actual or potential
conflicts that may arise. 
 
All directors and employees of the Company and its subsidiaries are subject to the Group conflicts of interest policy which
has been established to provide a clear framework for an effective system of internal control to manage conflicts of
interest throughout the Group. 
 
Directors' and Officers' liability insurance 
 
The Company maintains Directors' and Officers' liability insurance cover which is renewed annually. 
 
Governance 
 
Going concern 
 
The Group's business activities, together with the factors likely to affect its future development, performance and
position are set out in the Strategic Report. The Strategic Report also provides details of any key events affecting the
Company (and its consolidated subsidiaries) since the end of the financial year. The Strategic Report includes details of
the Group's cash flow and solvency position, including sensitivities for both. Principal risks and their mitigation are
detailed on pages 39 to 41. In addition, the financial statements include, amongst other things, notes on the Group's
borrowings (note 23), management of its financial and insurance risk including market, credit and liquidity risk (note 40),
its commitments and contingent liabilities (notes 42 and 44) and its capital position and management (note 39). The
Strategic Report (on pages 12 to 21) sets out the business model and how we create value for shareholders and
policyholders. 
 
The Board has followed the UK Financial Reporting Council's 'Going Concern and Liquidity Risk: Guidance for Directors of UK
Companies 2009' when performing its going concern assessment. As part of its comprehensive assessment of whether the Group
and the Company are a going concern, the Board has undertaken a review of the valuation and liquidity of its investments as
at the date of preparation of the statement of consolidated financial position. The Board has also reviewed solvency and
cash flow projections under both normal and stressed conditions. 
 
Having thoroughly considered the going concern assessment, including a detailed review of the regulatory capital and cash
flow positions of each principal subsidiary company and the availability across the Group of a range of management actions,
the Board has concluded that there are no material uncertainties that may cast significant doubt about the Group and the
Company's ability to continue as a going concern. The Directors have a reasonable expectation that the Group and the
Company have adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to
adopt the going concern basis of accounting in preparing the annual financial statements. 
 
The new (September 2014) provisions of the UK Corporate Governance Code apply to Phoenix Group Holdings from the financial
year commencing 1 January 2015. We are well-placed to comply with the new going concern provisions and, as required, will
report against them in our 2015 Annual Report. 
 
Corporate governance statement 
 
The disclosures required by section 7.2 of the FCA's Disclosure and Transparency Rules can be found in the Corporate
Governance Report on pages 51 to 59 which is incorporated by reference into this Directors' Report and comprises the
Company's Corporate Governance Statement. The UK Corporate Governance Code (the 'Code') applies to the Company and full
details on the Company's compliance with the Code are included in the Corporate Governance Report. The Code is available on
the website of the Financial Reporting Council - www.frc.org.uk. 
 
Greenhouse gas emissions 
 
All disclosures concerning the Group's greenhouse emissions are contained in the Corporate Responsibility Report forming
part of the Strategic Report on pages 42 to 45. 
 
Financial risk management 
 
The Group operates a Risk Management Framework ('RMF') consisting of several components, as detailed in the Risk management
section of the Strategic Report. The RMF provides a consistent approach to highlighting and controlling key risks
throughout the organisation. This is achieved primarily through review and compliance, at a functional level, with the risk
universe and related policies (and the risk appetites therein). At its highest level the RMF considers the following risks:
strategic, market, credit, insurance, financial soundness and operational. As a result, in preparing the consolidated
financial statements, assessment is given to a broad range of risk categories. 
 
Memorandum and Articles 
 
Changes to the Company's Memorandum and Articles require prior shareholder approval. 
 
The Memorandum and Articles are available on the Company's website at
www.thephoenixgroup.com/about-us/corporate-governance/articles-of-association.aspx. 
 
Re-appointment of the Auditors 
 
During 2014 the Board approved the change in auditor from Ernst & Young Accountants LLP (Netherlands) to Ernst & Young LLP
(UK). Ernst & Young LLP has indicated its willingness to continue in office and a resolution that it is re-appointed will
be proposed at the AGM. 
 
Following the change in auditor there is no cap on auditor liability in place in relation to audit work carried out on the
consolidated IFRS financial statements, MCEV supplementary information and the Group's UK subsidiaries' individual
financial statements. 
 
Details of fees paid to Ernst & Young during 2014 for audit and non-audit work are disclosed in note 11 to the IFRS
consolidated financial statements. 
 
Disclosure of information to Auditors 
 
The Directors who held office at the date of approval of this Directors' Report confirm that, so far as they are aware,
there is no relevant audit information of which the Company's auditor is unaware and that each director has taken all the
steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to
establish that the Company's auditor is aware of that information. 
 
Group Company Secretary 
 
The Group Company Secretary throughout the period was Gerald Watson. 
 
Contractual/other 
 
Significant agreements impacted by a change
of control of the Company 
 
There are change of control clauses contained in certain of the Group's financing agreements. The Group's £900 million
unsecured bank facility has, like the Group's previous two facilities agreements, a provision which would enable the
lending banks to require repayment of all amounts borrowed following a change of control. The £300 million unsecured bonds
may also be required to be redeemed following a change of control. Whether such redemption is required will depend on the
impact of a change of control on any existing rating applying to the £300 million unsecured bonds, or, if no rating applies
at the time of the change of control, whether a rating is obtained subsequently. 
 
In addition, certain provisions of the Articles relating to the City Code on Takeovers and Mergers apply in connection with
a takeover bid. 
 
All of the Company's employee share and incentive plans contain provisions relating to a change of control. Outstanding
awards and options would normally vest and become exercisable on a change of control, subject to the satisfaction of any
performance conditions and pro rata reduction as may be applicable under the rules of the employee share incentive plans. 
 
Apart from the aforementioned, there are a number of agreements that take effect, alter or terminate upon a change of
control of the Company, such as commercial contracts. None is considered to be significant in terms of their potential
impact on the business of the Group. 
 
Essential contracts or arrangements 
 
There are a number of relationships with third parties which are of significant value to the Group. Apart from the current
£900 million unsecured bank facility, £300 million unsecured bonds, the £200 million Phoenix Life Limited Tier 2 bonds and
the £428 million new subordinated notes, no single relationship is considered to be essential to the Group. 
 
Group employees 
 
The Group is committed to achieving equality of opportunity and the equal treatment of all our people and those applying to
join us. To this end, all our people share an obligation to their colleagues, customers and business partners to provide a
safe, fair and equitable working environment in which every individual can seek, obtain and continue employment without
experiencing any unfair or unreasonable discrimination. 
 
The Group recognises the need to treat people with disabilities fairly and equally including where an employee becomes
disabled during their employment. Full and fair consideration is given to internal and external applications from disabled
people for employment and further career opportunities, including training and development. Internal and external
applicants are asked if they have any special requirements when invited to attend an interview and reasonable provisions
are made to meet the applicant's request. Applicants are considered on the basis of the job requirements and their ability
and competencies, also taking into consideration any appropriate reasonable workplace adjustments. 
 
The Group provides the opportunity for employees to participate in the Company's all-employee share schemes, Sharesave and
Share Incentive Plan, to facilitate share ownership in the Company. 
 
Employee practice 
 
Phoenix Group continues to communicate with staff across a wide variety of channels, including regular news bulletins via
the intranet, staff magazines and newsletters, Executive Committee presentations and other face-to-face briefings. The
staff briefings and Executive Committee presentations typically include updates on the Company's strategy and plans,
progress against key financial and operational targets, regulatory and risk management updates and review of economic or
other factors which could affect the Company's strategy and performance. Regular feedback mechanisms are also in place,
ensuring communication at Phoenix is a continuous two-way dialogue. 
 
The views and opinions of staff are sought through Phoenix's annual Engagement Survey and more regular interim surveys and
employee communication and engagement forums. Phoenix undertakes meaningful consultation with staff representatives on all
major organisational changes and other matters affecting employees. 
 
Other matters 
 
The Board has prepared a Strategic Report which provides an overview of the development and performance of the Group's
business for the year ended 31 December 2014, covers the future developments in the business of Phoenix Group Holdings and
its consolidated subsidiaries, and provides details of any important events affecting the Company and its subsidiaries
after the year end. For the purposes of compliance with DTR 4.1.5R(2) and DTR 4.1.8R, the required content of the
'Management Report' can be found in the Strategic Report and this Directors' Report, including the sections of the Annual
Report and Accounts incorporated by reference. 
 
In addition, the Directors at the date of this report consider that the Annual Report and Accounts, taken as a whole,
provides users (who have a reasonable knowledge of business and economic activities) the information necessary to assess
the Group's performance, business model and strategy and is fair, balanced and understandable. 
 
Other information 
 
For the purposes of Listing Rule 9.8.4C R, the information required to be disclosed under Listing Rule 9.8.4 R can be found
within the following sections of the Report and Accoun