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Share Name Share Symbol Market Type Share ISIN Share Description
Mears Group Plc LSE:MER London Ordinary Share GB0005630420 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -5.00 -2.65% 183.50 179.00 183.00 184.00 182.00 182.00 27,678 12:53:17
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Support Services 805.8 -15.2 40.2 4.6 204

Mears Group PLC Annual Financial Report and Notice of AGM

27/05/2021 2:45pm

UK Regulatory (RNS & others)


Mears (LSE:MER)
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TIDMMER

RNS Number : 0827A

Mears Group PLC

27 May 2021

 
 
 

27 May 2021

Mears Group PLC

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

Annual Financial Report 2020 and Notice of Annual General Meeting 2021

The Annual Financial Report for the year ended 31 December 2020 (the "2020 Annual Report") and Notice of Annual General Meeting 2021 (the "2021 Notice of Meeting") has today been posted or otherwise made available to shareholders. In accordance with Listing Rule 9.6.1, a copy of these documents have been uploaded to the National Storage Mechanism and will be available for viewing shortly at https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism .

The 2020 Annual Report and 2021 Notice of Meeting are also available on the Company's website at https://www.mearsgroup.co.uk .

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 have been extracted in full unedited text from the 2020 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 2020 Annual Report and is not a substitute for reading the full 2020 Annual Report. A condensed set of financial statements were appended to Mears' final results announcement on 12 May 2021 together with a management report. The statutory accounts for the year ended 31 December 2020 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: +44(0)7778 220 185 
  Officer 
 Andrew Smith, Finance Director       Tel: +44(0)7712 866 461 
 Alan Long, Executive Director        Tel: +44(0)7979 966 453 
 Joe Thompson, Investor Relations     Tel: +44(0)7980 844 580 
 www.mearsgroup.co.uk 
 
 

About Mears

Mears currently employs around 6,000 people and provides 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 and to provide accommodation and support for the most vulnerable.

We focus on long-term outcomes for people rather than short-term solutions and invest in innovations that have a positive impact on people's quality of life and on their communities' social, economic and environmental wellbeing. Our innovative approaches and market leading positions are intended to create value for our customers and the people they serve while also driving sustainable financial returns for our providers of capital, especially our shareholders.

Appendix

Unedited extract from Annual Financial Report for the year 2020

Principal risks and uncertainties

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.

Principal Risks

Each principal risk is considered in the context of how it relates to the 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 the significant 
  commercial value attributable               *    In-house IT system developed to provide operational 
  to the Mears brand. Our                          management with a real-time dashboard of service 
  success in securing larger                       delivery indicators. 
  and more complex contracts, 
  such as the new Asylum contract, 
  increases the risk of reputational          *    Internal auditing of KPI reporting including 'mystery 
  damage in the event of failure.                  shoppers'. 
 
  Poor service delivery would 
  damage our Reputation. Both                 *    Strict process in place for vetting and approval of 
  our Housing and Care markets                     subcontractors. 
  are close-knit communities 
  where examples of poor performance 
  are quickly communicated                    *    We drive a culture of putting our customers first; 
  widely.                                          this is continually reinforced through internal 
                                                   communications. 
  In the environment of caring 
  for vulnerable people, there 
  is a risk of isolated incidents             *    Well-communicated policy for dealing with press 
  of abuse and neglect, which                      enquiries and incident management. 
  rightly receive significant 
  press coverage with the 
  inevitable reputational                     *    Care risk plans for dealing with vulnerable 
  damage.                                          customers. 
 
 
                                              *    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 around 
  6,000 people 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 investment 
  in their training and development 
  are essential to the efficiency             *    We regularly review and benchmark our remuneration 
  and sustainability of the                        packages to ensure that they remain competitive. In 
  Group's operations. Delivery                     Care, we are investing in an innovative recruitment 
  of strategic objectives                          process to ensure an increase in the volume and 
  increases our ability to                         quality of carers. Local Care branches are targeted 
  attract, motivate and retain                     on a monthly basis in the areas of recruitment and 
  talent.                                          retention. 
 
 
                                              *    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. 
 
 
                                              *    Expansion of apprenticeships. 
 
 
                                              *    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 maintain 
  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 the importance of health and safety is 
                                                   emphasised together with detailed method statements 
                                                   for working safely. 
 
 
                                              *    Compliance Committee to monitor and oversee health 
                                                   and safety strategy and performance, regulatory 
                                                   compliance and risk management. 
 
 
                                              *    Closer review of buildings safety compliance (post 
                                                   Grenfell) in higher risk areas, e.g. Housing 
                                                   Management. 
 
 
                                              *    Regular HSE training and updates are held, 
                                                   predominantly delivered by the in-house training 
                                                   function. 
 
 
                                              *    Internal health and safety auditing takes place using 
                                                   third party validation. 
------------------------------------  ------------------------------------------------------------------ 
 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           *    General Data Protection Regulation (GDPR) steering 
  with deliberate acts of                          group. 
  cyber-crime becoming more 
  sophisticated and frequent 
  across all markets.                         *    Information security penetration is externally tested 
                                                   to recommend improvements which are then implemented. 
 
 
                                              *    Data Security Committee in place to monitor and 
                                                   review both physical data security and IT data 
                                                   security. 
 
 
                                              *    GDPR implementation plan and steering group. 
------------------------------------  ------------------------------------------------------------------ 
 

Statement of Directors' responsibilities

The Directors are required to prepare the financial statements for the Company and the Group at the end of each financial year in accordance with all applicable laws and regulations. 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 apply them consistently; 
   --      make judgements and accounting estimates that are reasonable; 

-- state whether the Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards ('IFRSs') adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and with international accounting standards in conformity with the Companies Act 2006;

-- state for the Company Financial Statements whether United Kingdom Accounting Standards and applicable law, including Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS 101") have been followed; and

-- prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company and the Group will continue in business.

The Directors are responsible for ensuring that the Group keeps proper accounting records which disclose with reasonable accuracy the financial position of the Group and the Company to enable them to ensure that the Financial Statements comply with the Companies Act 2006 and, as regards the Consolidated Financial Statements, IFRSs adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. The Directors are also responsible for the system of internal control, for safeguarding the assets of the Group and the Company, and taking reasonable steps to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the directors are also responsible for preparing a strategic report, directors' report, directors' remuneration report and corporate governance statement that comply with that law and those regulations. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website.

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.

The Board confirms that to the best of its knowledge:

-- that 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 Group and the undertakings included in the consolidation taken as a whole; and

-- that the Annual Report includes a fair review of the development and performance of the business and the position of the Group 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, is fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Group's performance, business model and strategy.

Going Concern

We principally operate in robust defensive markets where spend is largely non-discretionary and our contracts tend to be long-term partnerships. The Group reported net cash of GBP56.9m at 31 December 2020. The core debt required to satisfy the day-to-day requirements of the business is in the region of GBP70m. This represents significant headroom against the GBP120m unsecured revolving credit facility, with an additional accordion mechanism allowing the facility to be increased to a maximum of GBP200m, maturing in November 2022.

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.

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 29 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:

 
              2020   2019 
                 %      % 
-----------  -----  ----- 
 Directors     0.6    0.3 
-----------  -----  ----- 
 

Key management personnel's compensation is as follows:

 
                                                             2020      2019 
                                                          GBP'000   GBP'000 
-------------------------------------------------------  --------  -------- 
 Salaries including social security costs                   2,063     1,634 
 Contributions to defined contribution pension schemes        131       130 
 Share-based payments                                         340         - 
-------------------------------------------------------  --------  -------- 
                                                            2,534     1,764 
-------------------------------------------------------  --------  -------- 
 

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

No dividends were paid to Directors during the year (2019: GBP0.04m).

Transactions with other related parties

During the year the Group made an additional short-term loan to YourMK LLP, an entity in which the Group is a 50% member, totalling GBP0.2m (2019: GBP0.1m). This loan was repaid during the period. At 31 December 2020, the Group was owed GBP0.5m (2019: GBP0.5m) by YourMK LLP.

During the year the Group provided maintenance services to Pyramid Plus South LLP, an entity in which the Group is a 30% member, totalling GBP7.9m (2019: GBP6.5m). At 31 December 2020, GBP0.9m (2019: GBP0.8m) was due to the Group in respect of these transactions. Pyramid Plus South LLP also made recharges of certain staff costs to the Group totalling GBP0.1m (2019: GBPnil). There were no amounts outstanding at 31 December 2020 in respect of these recharges (2019: GBPnil).

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END

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