TIDMMER
RNS Number : 1484P
Mears Group PLC
05 June 2020
5 June 2020
Mears Group PLC
("Mears" or "the Group" or "the Company")
Annual Financial Report 2019 and Notice of Annual General
Meeting 2020
The Annual Financial Report for the year ended 31 December 2019
(the "2019 Annual Report") and Notice of Annual General Meeting
2020 (the "2020 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 2019 Annual Report and 2020 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 2019
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
2019 Annual Report and is not a substitute for reading the full
2019 Annual Report. A condensed set of financial statements were
appended to Mears' final results announcement on 27 May 2020
together with a management report. The statutory accounts for the
year ended 31 December 2019 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
About Mears
Mears currently employs around 7,500 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
2019
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.
COVID-19
The uncertainty as to the future impact on the Group of the
recent COVID-19 outbreak is a critical short-term risk. As detailed
in the Directors' Report and within the Viability Statement, the
Board has completed an assessment as to the impact to the Group in
the event of a significant deterioration in revenues and
productivity. This most severe downside scenario is currently
considered unlikely, however it is difficult to predict the overall
outcome and impact of COVID-19 at this stage. The Board believes
that in this most severe downside scenario, there is a risk that
the Group's funding requirement could exceed its existing committed
debt facilities. Only the specific downside scenario detailed
within the Viability Statement would indicate the existence of a
material uncertainty which may cast significant doubt about the
Group's ability to continue as a going concern.
The Consolidated Financial Statements do not include the
adjustments that would result if the Group was unable to continue
as a going concern.
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
of abuse and neglect, which Well-communicated policy for dealing with
rightly receive significant press enquiries and incident management.
press coverage with the * Care risk plans for dealing with vulnerable
inevitable reputational customers.
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 around We induct and train all new starters. This
8,000 people who are critical induction ensures that all new employees understand
to the success of our contract our strategy, vision and values. All Care
performance. Attracting staff have access to NVQ training.
and maintaining good relations * We regularly review and benchmark our remuneration
with employees and investment packages to ensure that they remain competitive. In
in their training and development Care, we are investing in an innovative recruitment
are essential to the efficiency process to ensure an increase in the volume and
and sustainability of the quality of carers. Local Care branches are targeted
Group's operations. Delivery on a monthly basis in the areas of recruitment and
of strategic objectives retention.
increases our ability to
attract, motivate and retain
talent. In addition, the * At the senior end of the business, we have increased
Care division is facing our focus on succession planning and increased our
a challenging environment investment in senior management development. Our
where the ability to recruit senior leadership programme has identified a
and retain carers is restricting cross-section of the Group's brightest talent that we
performance. 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 Significant investment in the centralised
loss of life for both employees health, safety and environment (HSE) function
and customers is of utmost to maintain consistency and quality.
importance. In addition, * We have comprehensive safe systems of work which are
it is vital to maintain well communicated through a robust and coordinated
the confidence our customers internal training regime.
and clients have in our
business.
* 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 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.
* 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 The Business Continuity Plan is constantly
event could impact on the reviewed and frequently tested to ensure it
Group's ability to trade. is fit for purpose.
In addition, it is essential * Business continuity and IT disaster recovery
that the security of customer, management resource is convened at short notice to
employee and Company confidential manage the response and any associated risk to the
data is maintained. A major Group.
breach of information security
could have a major negative
financial and reputational * General Data Protection Regulation (GDPR) steering
impact on the business. group.
The risk landscape of IT
and data is constantly increasing
with deliberate acts of Information security penetration is externally
cyber-crime becoming more tested to recommend improvements which are
sophisticated and frequent then implemented.
across all markets. * 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 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.
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
32 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:
2019 2018
% %
----------- ----- -----
Directors 0.3 0.4
----------- ----- -----
Key management personnel's compensation is as follows:
2019 2018
GBP'000 GBP'000
------------------------------------------------------- -------- --------
Salaries including social security costs 1,634 1,778
Contributions to defined contribution pension schemes 130 121
Share-based payments - 100
------------------------------------------------------- -------- --------
1,764 1,999
------------------------------------------------------- -------- --------
Further details of Directors' remuneration are disclosed within
the Remuneration Report.
Dividends totaling GBP0.04m (2018: 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
(2018: GBP0.1m). At 31 December 2019, the Group was owed GBP0.5m
(2018: 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, totaling GBP6.5m (2018: GBP0.5m). At 31 December 2019,
GBP0.8m (2018: GBP0.5m) was due to the Group in respect of these
transactions.
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END
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