01 02 Governance 03 04 Viability statement In accordance with the Code, the Directors are required to assess the viability of the Group. The Committee’s opinion continues to be that a period of three years is appropriate to assess the Group’s viability given the nature of the business and the regulatory investment and planning cycles. We have also had careful regard over the year to changes to: • the Group’s principal risks and uncertainties, including those that will threaten our business model, future performance and solvency or liquidity, and the way in which those risks and uncertainties are managed; • the current financial and operational position of the Group, including future cash flows and capital allocation, allocated capital expenditure and funding requirements; and • downside stress-testing. We discussed our analysis with management and the full Board. The Group’s 2018 viability statement can be found on page 52. Fair, balanced and understandable reporting At the request of the Board, we reviewed the 2018 Annual Report to consider whether it provided a true and fair view of the Group’s affairs at the end of the year and provided shareholders with the necessary information in a fair, balanced and understandable way in order to enable them to assess the Group’s performance, business model and strategy. We did this by satisfying ourselves that there was a robust process of review and challenge at different levels within the Group to ensure balance and consistency. We reviewed several drafts of the 2018 Annual Report and directly reviewed the overall messages and tone of the Annual Report with the CEO and CFO. We also considered other information regarding the Group’s performance and business presented to the Board during the period, both from management and the external auditor. After consideration of all of this information, we are satisfied that, when taken as a whole, the Annual Report and Accounts is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Group’s performance, business model and strategy. Committee effectiveness review An externally facilitated review of the Committee was performed over the year. Further information on the review methodology can be found in the Corporate Governance Report on page 69. The evaluation principally addressed the composition of the Committee, the review and testing of the work of the internal and external auditors, the quality of financial reporting, the assessment of internal controls and risk management within the scope of the Committee’s responsibilities, and the division of responsibilities between the Committee and the Clinical Quality and Safety Committee. The effectiveness evaluation concluded that the Committee operates and performs effectively. On the basis of the evaluation, the Committee has committed to considering ways of working more closely with the Clinical Quality and Safety Committee over the course of 2019. Such an approach will allow a holistic look at some of the strategic themes arising from both clinical and non-clinical audits, including business culture and the timeliness and effectiveness of measures to manage risks identified from the internal audit process. Looking ahead to 2019 Based on the results of the evaluation and further internal discussion, our priorities for 2019 include: • assuring continued integrity and balance in the Group’s financial reporting, with a particular focus on cash flow reporting; • improved coordination of work with Clinical Quality and Safety Committee on overlapping areas of operational, clinical and financial risk; • working with management and internal audit to ensure continued focus on the most material matters, including continued improvement in the effectiveness and coverage of internal controls; • evaluating the effectiveness of the internal audit function, including the efficacy of internal audit recommendations to management; and • assuring that the external auditors deliver on the service levels and responsiveness agreed during the audit tender process. 81