2016 Annual Financial Report, Notice of 2017 AGM

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 Director	Tel: [phone]
Alan Long, Executive Director	Tel: [phone]
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 to the Mears brand. Poor service delivery would damage our reputation. Both our housing and care markets are close-knit communities where examples of poor performance are quickly communicated widely. Furthermore, in Care we deliver services to people who are elderly and vulnerable. A service delivery failure within our Care division could result in the physical harm or, in the most extreme cases, death of a service user. In the environment of caring for vulnerable people, there is a risk of isolated incidents of abuse and neglect which rightly receive significant press coverage with the inevitable reputational damage.	·      In-house IT system developed to provide operational management with a real-time dashboard of service delivery indicators. ·      Internal auditing of KPI reporting including 'mystery shoppers'. ·      Strict process in place for vetting and approval of subcontractors. ·      We drive a culture of putting our customers first; this is continually reinforced within internal communications. ·      Well communicated policy for dealing with press enquiries and incident management. ·      Care risk plans for dealing with vulnerable 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 over 15,000 employees who are critical to the success of our contract performance. Attracting and maintaining good relations with employees and the investment in their training and development is essential to the efficiency and sustainability of the Group's operations. Delivery of strategic objectives increases our ability to attract, motivate and retain talent. In addition, the Care division is facing a challenging environment where the ability to recruit and retain carers is restricting performance	·      We induct and train all new starters. This induction ensures that all new employees understand our strategy, vision and values. All Care staff have access to NVQ training. ·      We regularly review and benchmark our remuneration packages to ensure that they remain competitive. ·      In Care, we are investing in an innovative recruitment process to ensure an increase in the volume and quality of carers. Local Care branches are targeted on a monthly basis in the areas of recruitment and 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. ·      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 and customers is of utmost importance. In addition, it is vital to maintaining the confidence our customers and clients have in our business.	·      Significant investment in the centralised health, safety and environment (HSE) function to maintain consistency and quality. ·      We have comprehensive safe systems of work which are 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 Group's ability to trade. In addition, it is essential that the security of customer, employee and Company confidential data is maintained. A major breach of information security could have a major negative financial and reputational impact on the business. The risk landscape of IT and data is constantly increasing with deliberate acts of cyber crime becoming more sophisticated and frequent across all markets.	·      The Business Continuity Plan is constantly reviewed and frequently tested to ensure it is fit for purpose. ·      Business continuity and IT disaster recovery management resource is convened at short notice to manage the response and any associated risk to the Group. ·      Various information security policies and standards are in place with a focus on network security, access controls, encryption, system security, data protection and information handling. ·      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 £12.4m at 31 December 2016. The core debt required to satisfy the day-to-day requirements of the business is in the region of £85m. This represents significant headroom against the £140m unsecured revolving credit facility, with an additional accordion mechanism allowing the facility to be increased to a maximum of £200m, 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
	£'000	£'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 £0.2m (2015: £nil). At 31 December 2016, the Group was owed £0.2m (2015: £nil) by YourMK LLP.

 

END

 

 

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