Mears Group PLC 2016 Annual Financial Report, Notice of 2017 AGM (0432C)

TIDMMER

RNS Number : 0432C

Mears Group PLC

10 April 2017

10 April 2017

Mears Group PLC

("Mears" or "the Group" or "the Company")

2016 Annual Financial Report and Notice of 2017 AGM

The following documents have today been posted or otherwise made available to shareholders:

   --      Annual Financial Report for the year ended 31 December 2016 (the "2016 Annual Report") 

-- Notice of the Annual General Meeting ("AGM") and a circular with explanatory notes for shareholders about the resolutions to be proposed at the AGM ("AGM Circular and Notice")

   --      Form of Proxy for the 2017 AGM 

In accordance with Listing Rule 9.6.1 copies of the above documents, along with the Form of Proxy for the Company's 2017 Annual General Meeting, have been uploaded to the National Storage Mechanism and will be available for viewing shortly at www.morningstar.co.uk/uk/NSM.

The 2016 Annual Report and AGM Circular and Notice are also available on the Company's website at www.mearsgroup.co.uk.

The AGM will be held at 9.30am on Wednesday 7 June 2017 at the offices of Buchanan, 107 Cheapside, London, EC2V 6DN.

In accordance with DTR 6.3.5, this announcement contains in the attached appendix information on the principal risk factors, a responsibility statement and details of related party transactions which has been extracted in full unedited text from the 2015 Annual Report. This information is included herein solely for the purpose of complying with DTR 6.3.5 and the requirement it imposes on the Company as to how it makes public its annual financial report. These extracts should be read in conjunction with the full 2016 Annual Report and is not a substitute for reading the full 2016 Annual Report. A condensed set of financial statements were appended to Mears' final results announcement on 21 March 2017 together with a management report. The statutory accounts for the year ended 31 December 2016 have been approved by the Board and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

For further information, contact:

Mears Group PLC

 
   David Miles, Chief Executive   Tel: [phone] 
  Andrew Smith, Finance           Tel: [phone] 
   Director 
  Alan Long, Executive            Tel: [phone] 
   Director 
 
  www.mearsgroup.co.uk 
 

Buchanan

   Richard Darby/Sophie Cowles                          Tel: [phone] 

www.buchanan.uk.com

About Mears

Mears today employs over 15,000 people, providing services in every region of the UK. In partnership with our Housing clients, we maintain, repair and upgrade the homes of hundreds of thousands of people in communities from remote rural villages to large inner city estates. Mears has extended its activities to provide broader housing solutions to solve the challenge posed by the lack of affordable housing. Our Care teams provide support to around 20,000 people a year, enabling older and disabled people to continue living in their own homes.

We focus on long-term outcomes for people rather than short-term solutions, and invest in innovations that make a positive impact on people's quality of life and on their communities' social, economic and environmental wellbeing.

Appendix

Unedited extract from Annual Financial Report for the year 2016

Principal Risks

Risks are identified as principal based on the likelihood of occurrence and the potential impact on the Group. The Group's principal risks are identified below, together with how we mitigate those risks.

Each principal risk is considered in the context of how it relates to achievement of the Group's strategic objectives. The risk discussion includes assessment of gross risk and net risk. Gross risk reflects the exposure and risk landscape before considering the mitigations in place, with net risk being the residual risk after mitigations. The gross risk movement from the prior year for each principal risk has been assessed and is presented below:

Mitigations in place supporting the management of the risk to a net risk position are also described for each principal risk.

 
 Reputation 
------------------------------------  ------------------------------------------------------------- 
 Definition                            Mitigation 
 We recognise that significant 
  commercial value is attributable       *    In-house IT system developed to provide operational 
  to the Mears brand.                         management with a real-time dashboard of service 
  Poor service delivery would                 delivery indicators. 
  damage our reputation. Both 
  our housing and care markets 
  are close-knit communities             *    Internal auditing of KPI reporting including 'mystery 
  where examples of poor performance          shoppers'. 
  are quickly communicated 
  widely. 
  Furthermore, in Care we                *    Strict process in place for vetting and approval of 
  deliver services to people                  subcontractors. 
  who are elderly and vulnerable. 
  A service delivery failure 
  within our Care division               *    We drive a culture of putting our customers first; 
  could result in the physical                this is continually reinforced within internal 
  harm or, in the most extreme                communications. 
  cases, death of a service 
  user. 
  In the environment of caring           *    Well communicated policy for dealing with press 
  for vulnerable people, there                enquiries and incident management. 
  is a risk of isolated incidents 
  of abuse and neglect which 
  rightly receive significant            *    Care risk plans for dealing with vulnerable 
  press coverage with the                     customers. 
  inevitable reputational 
  damage. 
                                         *    Compliance management of bribery and corruption 
                                              legislation and whistleblowing policy. 
 
 
                                         *    We induct and train all new starters. This induction 
                                              ensures that all employees understand our values and 
                                              it reinforces the Group's culture. 
 
 
                                         *    We ensure that staff are properly trained for their 
                                              roles. We ensure that we deliver relevant training 
                                              and implement best practice. 
------------------------------------  ------------------------------------------------------------- 
 People 
------------------------------------  ------------------------------------------------------------- 
 Definition                            Mitigation 
 The Group employs over 15,000 
  employees who are critical             *    We induct and train all new starters. This induction 
  to the success of our contract              ensures that all new employees understand our 
  performance. Attracting                     strategy, vision and values. All Care staff have 
  and maintaining good relations              access to NVQ training. 
  with employees and the investment 
  in their training and development 
  is essential to the efficiency         *    We regularly review and benchmark our remuneration 
  and sustainability of the                   packages to ensure that they remain competitive. 
  Group's operations. Delivery 
  of strategic objectives 
  increases our ability to               *    In Care, we are investing in an innovative 
  attract, motivate and retain                recruitment process to ensure an increase in the 
  talent.                                     volume and quality of carers. Local Care branches are 
  In addition, the Care division              targeted on a monthly basis in the areas of 
  is facing a challenging                     recruitment and retention. 
  environment where the ability 
  to recruit and retain carers 
  is restricting performance             *    At the senior end of the business, we have increased 
                                              our focus on succession planning and increased our 
                                              investment in senior management development. Our 
                                              Senior Leadership programme has identified a 
                                              cross-section of the Group's brightest talent that we 
                                              would envisage will play central roles in our future 
                                              business. 
 
 
                                         *    The investment in an in-house dedicated training 
                                              division to provide a range of employee development 
                                              services through two academies in Rotherham and 
                                              Brentwood. 
 
 
                                         *    An annual appraisal process is completed for all 
                                              employees to ensure that all people receive feedback 
                                              in respect of their performance and to identify 
                                              future training and development requirements. We hold 
                                              a national accreditation as an Investor in People. 
 
 
                                         *    We are continually looking to improve our position as 
                                              an employer of choice by improving the level of 
                                              engagement with our employees through formal 
                                              communications, awards to recognise success, local 
                                              events and family fun days. 
 
 
                                         *    We are continually monitoring our future skills 

                                              requirements. 
 
 
                                         *    We regularly undertake employee surveys to gauge 
                                              employee satisfaction and engagement, and any 
                                              barriers to high level performance. 
------------------------------------  ------------------------------------------------------------- 
 Health and safety 
------------------------------------  ------------------------------------------------------------- 
 Definition                            Mitigation 
 Prevention of injury or 
  loss of life for both employees        *    Significant investment in the centralised health, 
  and customers is of utmost                  safety and environment (HSE) function to maintain 
  importance. In addition,                    consistency and quality. 
  it is vital to maintaining 
  the confidence our customers 
  and clients have in our                *    We have comprehensive safe systems of work which are 
  business.                                   well communicated through a robust and coordinated 
                                              internal training regime. 
 
 
                                         *    We have robust processes for inducting new staff to 
                                              ensure importance of health and safety is emphasised 
                                              together with detailed method statements for working 
                                              safely. 
 
 
                                         *    Regular HSE training and updates are held, 
                                              predominantly delivered by the internal function. 
 
 
                                         *    Independent review of health and safety cases by 
                                              insurers where recommendations of change are 
                                              implemented. 
 
 
                                         *    Internal Health and Safety auditing takes place using 
                                              third party validation. 
 
 
                                         *    Annual Group Health and Safety strategy and plan are 
                                              produced. 
------------------------------------  ------------------------------------------------------------- 
 IT and data 
------------------------------------  ------------------------------------------------------------- 
 Definition                            Mitigation 
 A major incident or catastrophic 
  event could impact on the              *    The Business Continuity Plan is constantly reviewed 
  Group's ability to trade.                   and frequently tested to ensure it is fit for 
  In addition, it is essential                purpose. 
  that the security of customer, 
  employee and Company confidential 
  data is maintained. A major            *    Business continuity and IT disaster recovery 
  breach of information security              management resource is convened at short notice to 
  could have a major negative                 manage the response and any associated risk to the 
  financial and reputational                  Group. 
  impact on the business. 
  The risk landscape of IT 
  and data is constantly increasing      *    Various information security policies and standards 
  with deliberate acts of                     are in place with a focus on network security, access 
  cyber crime becoming more                   controls, encryption, system security, data 
  sophisticated and frequent                  protection and information handling. 
  across all markets. 
 
                                         *    Information security penetration is externally tested 
                                              to identify improvement recommendations which are 
                                              then implemented. 
 
 
                                         *    Data Security Committee in place to monitor and 
                                              review both physical data security and IT data 
                                              security. 
------------------------------------  ------------------------------------------------------------- 
 

Unedited extract from Annual Financial Report for the year 2016 (continued)

Statement of Directors' responsibilities

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and have elected to prepare the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice including FRS 102 'The Financial Reporting Standard Applicable in the UK and the Republic of Ireland' (United Kingdom Accounting Standards 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 and profit or loss of the Group and the Company for that period. In preparing these financial statements, the Directors are required to:

   --      select suitable accounting policies and then apply them consistently; 
   --      make judgements and estimates that are reasonable and prudent; 

-- state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

-- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

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 the Company and enable them to ensure that the financial statements and Remuneration Report comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors confirm that:

-- so far as each Director is aware there is no relevant audit information of which the Company's auditor is unaware; and

-- the Directors have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

To the best of our knowledge:

-- the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

-- the Annual Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

The Directors are responsible for preparing the Annual Report in accordance with applicable law and regulations. The Board considers the Annual Report and Accounts, taken as a whole, as fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

Going concern

We principally operate in robust defensive markets, Social Housing and Care, where spend is largely non-discretionary and our contracts tend to be long-term partnerships.

The Group had net debt of GBP12.4m at 31 December 2016. The core debt required to satisfy the day-to-day requirements of the business is in the region of GBP85m. This represents significant headroom against the GBP140m unsecured revolving credit facility, with an additional accordion mechanism allowing the facility to be increased to a maximum of GBP200m, maturing in July 2020.

After reviewing the Group's and Company's budget for the next financial year and longer-term plans, the Directors consider that, as at the date of approving the financial statements, it is appropriate to adopt the going concern basis in preparing the financial statements.

Unedited extract from Annual Financial Report for the year 2016 (continued)

Related Party Transactions and Remuneration of key management personnel

Identity of related parties

The Group has a related party relationship with its pension schemes, its subsidiaries and its Directors.

Pension schemes

Details of contributions to pension schemes are set out in note 24 to the financial statements.

Subsidiaries

The Group has a central treasury arrangement in which all subsidiaries participate. The Directors do not consider it meaningful to set out details of transfers made in respect of this treasury arrangement between companies, nor do they consider it meaningful to set out details of interest or dividend payments made within the Group.

Transactions with key management personnel

The Group has identified key management personnel as the Directors of Mears Group PLC.

Key management personnel held the following percentage of voting shares in Mears Group PLC:

 
              2016   2015 
                 %      % 
-----------  -----  ----- 
 Directors     0.4    0.4 
-----------  -----  ----- 
 

Key management personnel's compensation is as follows:

 
                                                             2016      2015 
                                                          GBP'000   GBP'000 
-------------------------------------------------------  --------  -------- 
 Salaries including social security costs                   1,762     1,513 
 Contributions to defined contribution pension schemes        195       195 
 Share-based payments                                         150       150 
-------------------------------------------------------  --------  -------- 
                                                            2,107     1,858 
-------------------------------------------------------  --------  -------- 
 

Further details of Directors' remuneration are disclosed within the Remuneration Report.

Transactions with other related parties

During the year the Group made a loan to YourMK LLP, an entity in which the Group is a 50% member, totaling GBP0.2m (2015: GBPnil). At 31 December 2016, the Group was owed GBP0.2m (2015: GBPnil) by YourMK LLP.

This information is provided by RNS

The company news service from the London Stock Exchange

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April 10, 2017 04:40 ET (08:40 GMT)