TIDMMER
RNS Number : 6032X
Mears Group PLC
30 April 2019
30 April 2019
Mears Group PLC
("Mears" or "the Group" or "the Company")
2018 Annual Financial Report
The Annual Financial Report for the year ended 31 December 2018
(the "2018 Annual Report") has today been posted or otherwise made
available to shareholders. In accordance with Listing Rule 9.6.1, a
copy of this document has been uploaded to the National Storage
Mechanism and will be available for viewing shortly at
www.morningstar.co.uk/uk/NSM.
The 2018 Annual Report is also available on the Company's
website at 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 2018
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
2018 Annual Report and is not a substitute for reading the full
2018 Annual Report. A condensed set of financial statements were
appended to Mears' final results announcement on 19 March 2019
together with a management report. The statutory accounts for the
year ended 31 December 2018 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
www.mearsgroup.co.uk
Buchanan
Mark Court/Sophie Wills/Catriona Flint Tel: +44(0)20 7466 5000
mears@buchanan.uk.com
About Mears
Mears employs over 10,000 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. Our Care teams provide support to over 15,000
people a year, enabling the elderly and those living with
disabilities 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
2018
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 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.
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 * In-house IT system developed to provide operational
value attributable to the management with a real-time dashboard of service
Mears brand. Our success delivery indicators.
in securing larger and more
complex contracts, such
as the new Asylum * Internal auditing of KPI reporting including 'mystery
contract, increases the shoppers'.
risk of reputational
damage in the event of failure.
* Strict process in place for vetting and approval of
Poor service delivery would subcontractors.
damage our
reputation. Both our Housing
and Care * We drive a culture of putting our customers first;
markets are close-knit communities this is continually reinforced through internal
where communications.
examples of poor performance
are quickly
communicated widely. * Well communicated policy for dealing with press
enquiries and incident management.
In the environment of caring
for vulnerable
people, there is a risk * Care risk plans for dealing with vulnerable
of isolated incidents customers.
of abuse and neglect, which
rightly receive
significant press coverage * Compliance management of bribery and corruption
with the legislation and whistleblowing policy.
inevitable reputational
damage.
* 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 10,000
people * We induct and train all new starters. This induction
who are critical to the ensures that all new employees understand our
success of our strategy, vision and values. All Care staff have
contract performance. Attracting access to NVQ training.
and
maintaining good relations
with employees * We regularly review and benchmark our remuneration
and the investment in their packages to ensure that they remain competitive.
training and
development are essential
to the efficiency * An annual appraisal process is completed for all
and sustainability of the employees to ensure that all people receive feedback
Group's operations. in respect of their performance and to identify
Delivery of strategic objectives future training and development requirements. We hold
increases a national accreditation as an Investor in People.
our ability to attract,
motivate and retain
talent. In addition, the * In Care, we are investing in an innovative
Care division is facing recruitment process to ensure an increase in the
a challenging environment volume and quality of carers. Local Care branches are
where the ability targeted on a monthly basis in the areas of
to recruit and retain carers recruitment and retention.
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.
-- 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 * Significant investment in the centralized health,
employees and customers safety and environment (HSE) function to maintain
is of utmost consistency and quality.
importance. In addition,
it is vital to maintain
the confidence our customers * We have comprehensive safe systems of work which are
and clients have in our well communicated through a robust and coordinated
business. 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.
* Creation of a Compliance Committee to monitor and
oversee health and safety strategy, performance 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.
* 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.
* A Group health and safety strategy and plan are
produced annually.
------------------------------------ -------------------------------------------------------------------
IT and data
------------------------------------ -------------------------------------------------------------------
Definition Mitigation
A major incident or catastrophic
event * The Business Continuity Plan is constantly reviewed
could impact on the Group's and frequently tested to ensure it is fit for
ability to trade. purpose.
In addition, it is essential
that the security
of customer, employee and * Business continuity and IT disaster recovery
Company management resource is convened at short notice to
confidential data is maintained. manage the response and any associated risk to the
A major Group.
breach of information security
could have
a major negative financial * General Data Protection Regulation (GDPR) steering
and reputational group
impact on the business.
The risk landscape
of IT and data is constantly * Information security penetration is externally tested
increasing with to recommend improvements which are then implemented.
deliberate acts of cyber-crime
becoming
more sophisticated and frequent * Data Security Committee in place to monitor and
across review both physical data security and IT data
all markets. security.
* GDPR implementation plan and steering group.
------------------------------------ -------------------------------------------------------------------
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report,
the Remuneration Report and the 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
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 101 'Reduced Disclosure
Framework'. 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's 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 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, is 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 GBP65.9m at 31 December 2018. The core
debt required to satisfy the day-to-day requirements of the
business is in the region of GBP120m. This represents significant
headroom against the GBP155m unsecured revolving credit facility,
with an additional accordion mechanism allowing the facility to be
increased to a maximum of GBP45m, maturing in November 2022. After
reviewing the Group 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:
2018 2017
% %
----------- ----- -----
Directors 0.3 0.4
----------- ----- -----
Key management personnel's compensation is as follows:
2018 2017
GBP'000 GBP'000
------------------------------------------------------- -------- --------
Salaries including social security costs 1,778 1,765
Contributions to defined contribution pension schemes 121 161
Share-based payments 100 150
------------------------------------------------------- -------- --------
1,999 2,076
------------------------------------------------------- -------- --------
Further details of Directors' remuneration are disclosed within
the Remuneration Report.
Dividends totaling GBP0.04m (2017: GBP0.04m) were paid to
Directors during the year.
Transactions with other related parties
During the year the Group made additional loans to YourMK LLP,
an entity in which the Group is a 50% member, totaling GBP0.1m
(2017: GBP0.2m). At 31 December 2017, the Group was owed GBP0.5m
(2017: GBP0.4m) by YourMK LLP.
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END
ACSCKKDDNBKDAQN
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