Basis of preparation
The consolidated financial statements of the Group have been prepared in conformity with the requirements of the Companies Act 2006 and in accordance with United Kingdom adopted International Accounting Standards. The financial statements are prepared under the historical cost convention as modified by the revaluation of contingent consideration and assets in the Group\u2019s defined benefit pension schemes. They are presented in Sterling and all values are rounded to the nearest thousand (\u00a3\u2019000).
The accounting policies remain unchanged from the previous year except for the modification of a number of standards with effect from 1\u00a0January 2023. The adoption of these amendments had no material effect on the Group\u2019s financial statements.
The preparation of financial statements in accordance with International Financial Reporting Standards (IFRS) requires the use of estimates and judgements that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year. Although these estimates are based on management\u2019s best knowledge of\u00a0the amounts, actual results may ultimately differ from those estimates. The most significant judgements and estimates made by management in these financial statements are set out in the accounting policies to which they relate.
Government and societal responses to climate change are still developing and are interdependent upon each other, and consequently financial statements cannot capture all possible future outcomes as these are not yet known. There were no material impacts of climate change\u00a0in determining asset and liability valuations and the timing of future cash flows to be incorporated into these financial statements.
Mears Group PLC is the ultimate parent company of the Group. It is incorporated and resident in England and Wales (registration number 03232863). Its registered office and principal place of business is 1390 Montpellier Court, Gloucester Business Park, Brockworth, Gloucester GL3 4AH. Mears Group PLC\u2019s shares are listed on the Main Market of the London Stock Exchange.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6697794": { "value": "Sterling", "dimensions": { "concept": "ifrs-full:DescriptionOfPresentationCurrency", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6697795": { "value": "nearest thousand (\u00a3\u2019000)", "dimensions": { "concept": "ifrs-full:LevelOfRoundingUsedInFinancialStatements", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6697796": { "value": "Mears Group PLC", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6697797": { "value": "Mears Group PLC", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6697799": { "value": "Mears Group PLC", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6697793": { "value": "England and Wales ", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6697792": { "value": "1390 Montpellier Court, Gloucester Business Park, Brockworth, Gloucester GL3 4AH", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6697801": { "value": "Basis of consolidation
The Consolidated Balance Sheet includes the assets and liabilities of the Company and its subsidiaries and is made up to 31 December 2023. Entities for which the Group has the ability to exercise control over financial and operating policies are accounted for as subsidiaries. Control is achieved where the Company has existing rights that give it the current ability to direct the activities that affect the Company\u2019s returns and exposure or rights to variable returns from the entity. Interests acquired in entities are consolidated from the effective date of acquisition and interests sold are consolidated up to the date of disposal.
All significant intercompany transactions and balances between Group enterprises, including unrealised profits arising from intra-group transactions, are eliminated on consolidation; no profit is taken on sales between Group companies.
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group\u2019s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholders\u2019 share of changes in equity since the date of the combination.
A joint venture is a joint arrangement whereby the parties that have joint control have the rights to the net assets of the arrangement. Associates are entities over which the Group does not have control, but has significant influence. Investments in joint ventures and associates\u00a0are accounted for using the equity method of accounting. Under this method, the Group\u2019s share of post-acquisition profits or\u00a0losses\u00a0is recognised in the Consolidated Statement of Profit or Loss; the cost of the investment in a given joint venture or associate, together with the Group\u2019s share of that entity\u2019s post-acquisition changes to shareholders\u2019 funds, is included in investments within the Consolidated Balance Sheet.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6697798": { "value": "Going concern
The Directors do not consider going concern to be a critical accounting judgement. In reaching this determination, the Directors have taken account of the Group\u2019s trading for 2023 and the budget for 2024.
The Group reported a net cash position of \u00a3109.1m on 31 December 2023, but the Directors believe that the average daily net cash, after adjusting for the full year impact of the share buybacks, averaged \u00a350m during 2023, provides a better indication of the underlying position and is a better indicator of the Group\u2019s liquidity. The Group has modelled its cash flow outlook for the period to 30 June 2025 and the base forecast indicates significant liquidity headroom will be maintained above the Group\u2019s borrowing facilities and that financial covenants will be met throughout the period, including the covenant tests on 30 June 2024, 31 December 2024 and 30 June 2025.
The Board approved a budget for 2024 which reflects margin and profit growth compared to the prior year. The 2024 budget is considered to be the base case projection for assessing Going Concern and is based on the following assumptions:
Forecast built up on a contract-by-contract basis for the next twelve months and rolled forward. The forecast for 2024 is based upon revenues generated from existing customer relationships, and a business that is generating contract margins that are in line with recent run rates.
1. Accounting policies\u00a0continued
Going concern\u00a0continued
The forecast assumes no new work is secured. The base case assumes that contracts are resecured on retender, but reflects some revenue reduction from existing clients, when it is currently anticipated that there may be no further opportunity upon expiry of the current contract.
The model also reflects the normalisation of the Asylum (AASC) contract, with revenues reducing to a level closer to the original\u00a0expectation.
The model assumes no significant changes in working capital performance.
The model assumes small scale property purchases to augment the delivery of the AASC contract.
Future dividends continue in line with current policy.
A share buyback programme is assumed to be completed equating to 10% of the issued share capital at the start of the current financial year. No further buybacks have been assumed beyond the current shareholder authority.
The Group is well positioned, underpinned by the non-discretionary nature of the Group\u2019s activities and public sector client group. The Board has communicated its capital allocation policy to stakeholders, and a key pillar of this policy is to maintain a net cash position on a\u00a0daily basis.
In making their going concern assessment, the Directors are required to consider whether there is a reasonable expectation that the\u00a0Group and Company have adequate resources to continue in operational existence for at least 12 months following the signing of these financial statements. The Directors have adopted a going concern period for this purpose up to 30 June 2025. This assessment considers whether the Group will be able to maintain adequate liquidity headroom above the level of its borrowing facilities and to operate within the financial covenants applicable to those facilities, which will be measured on 30 June 2024, 31 December 2024 and 30\u00a0June 2025. On 31 December 2023, the Group held \u00a370m of committed borrowing facilities, maturing in December 2026. The principal borrowing facilities are subject to covenants as detailed in the Finance Review on page 42\u00a0of the Strategic Report. The Strategic Report also details the principal risks and uncertainties and how the Group manages its risks.
In making its assessment of Going Concern, the Board has confirmed that there have been no post balance sheet changes that have a material impact on the business or affect liquidity.
A range of scenarios that encompass the principal risks have been applied to the base case and are set out below. These downside cases were prepared by management to illustrate the impact of adverse changes in key variables used within the base case forecast and projections. These downside cases were intended to illustrate a reasonable worst-case scenario that could affect solvency or liquidity in \u201csevere but plausible\u201d scenarios.
The Directors have considered three scenarios and the following sensitivities have been applied to each downside case:
Downside case 1: a significant reduction of 50% in revenue relating to the Group\u2019s largest contract (AASC).
Downside case 2: a significant margin dilution event, possibly caused by significant operational failure, labour shortages or supply chain disruption. The downside scenario modelled a 1.5% reduction in operating margin. Given the low-margin nature of the business, a small increase in the cost base which is not recovered in charge rate increases can cause significant margin dilution.
Downside case 3: an event linked to a Cyber breach, impacting upon lead operating systems causing an additional 20-days revenue tied up in working capital.
No mitigating actions were included within any of these downside scenarios, which was considered conservative and unrealistic. Before applying mitigations, none of the three downside cases detailed above resulted in the Group exhausting its liquidity or breaching covenants. Mitigating actions that would be available to management include a reduction in central overheads, a reduction in discretionary capital expenditure, changes to\u00a0capital allocation policy (including the ordinary dividend) and more robust working capital management around covenant test dates. In\u00a0addition, upsides that are available to the base case includes generating an improved margin at a local contract level over and above the current run-rate and securing new contract awards.
The Viability Review concluded that climate-related risks would not have a significant impact on the business within the five-year viability review period. As such, climate was not modelled in respect of the shorter Going Concern review period.
The Group has carried out stress tests against the base case to determine the performance levels that would result in a breach of covenants or a reduction of headroom against its borrowing facilities to \u00a3nil. The Directors carried out reverse stress testing, increasing the severity of the assumptions to measure the trigger points at which the going concern of the Group could be impacted. A reverse stress test was conducted to identify the magnitude of trading profit decline required before the Group breaches its debt covenants. All\u00a0stress test scenarios would require a very severe deterioration compared to the base case forecasts.Notes to the financial statements \u2013 Group continued
For the year ended 31 December 2023
1. Accounting policies\u00a0continued
Going concern\u00a0continued
In the most extreme reverse stress test:
The Directors modelled a reduction in profit which would trigger a breach in covenants. The base case annualised profit of c.\u00a340m would need to decline to an annualised loss in excess of \u00a340m. This profit reduction is considered to be remote given Mears\u2019 long-term historical performance. During a Covid-impacted year ended 31 December 2020, Mears reported a loss before tax of c.\u00a315m.
The Directors modelled a reduction in revenue which would trigger a breach in covenants. Revenue would need to decline by in excess of 40% when compared to the base case, to result in a breach of covenants. This revenue reduction is considered to be remote given the high proportion of Mears\u2019 revenue that is attached to long-term contractual arrangements. During a Covid-impacted year ended 31 December 2020, Mears\u2019 revenue declined by less than 10%.
After making these assessments, the Directors consider any scenario or combination of scenarios which could cause the business to be no longer a going concern to be remote. The Directors have a reasonable expectation that the Company and its subsidiaries have adequate resources to continue in operational existence until 30 June 2025. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Accounts.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6710408": { "value": "Fair value
The Group measures certain assets and liabilities at fair value on a recurring basis, including contingent consideration and assets in\u00a0the\u00a0Group\u2019s defined benefit pension schemes.
Trade and other receivables, trade and other payables and other loans are initially measured at fair value and are subsequently held at\u00a0amortised cost. Other assets are measured at fair value when they are assessed for impairment or on classification as held for sale.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Group uses valuation techniques that maximise the use of relevant observable inputs using the following valuation hierarchy, ordered from highest to lowest priority:
Level 1 \u2013 Quoted prices in active markets for identical assets or liabilities.
Level 2 \u2013 Inputs other than quoted prices included in level 1 that are observable either directly or indirectly.
Level 3 \u2013 Unobservable inputs, typically derived from the Group\u2019s own information with any necessary adjustments to eliminate factors specific to the Group.
For assets and liabilities measured at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by assessing the lowest level input that is significant to the most recent measurement.
Details of the particular valuation techniques used by the Group are provided in the relevant notes for each type of asset or liability measured at fair value.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6710409": { "value": "Use of judgements and estimates
The preparation of financial statements requires management to make estimates and judgements that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenditure during the reported period. The estimates and associated judgements are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources.
The estimates and underlying judgements are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
In the preparation of these consolidated financial statements, key estimates and judgements have been made by management concerning the following:
provisions necessary for certain liabilities, including discount rates used in estimating such provisions;
estimates used in forecasts used to assess future profitability;
discount rates used when conducting impairment reviews;
the discounts used and other judgements involved in the recognition of right of use assets for lease accounting;
the timing of revenue recognition;
the recoverability of contract assets; and
actuarial estimates in respect of defined benefit pension schemes.
Actual amounts could differ from those estimates. Further details of key estimates and judgements are provided in the appropriate notes.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6710410": { "value": "2. Revenue
Accounting policy
Revenue is recognised in accordance with IFRS 15 \u2018Revenue from Contracts with Customers\u2019. IFRS 15 provides a single, principles-based, five-step model to be applied to all sales contracts. It is based on the transfer of control of goods and services to customers. The detail below sets out the principal types of contract and how the revenue is recognised in accordance with IFRS 15.
Repair and maintenance contracts
For contracts in this category, the customer raises orders on demand, for example to carry out responsive repairs. Revenue is derived from a\u00a0mixture of lump-sum periodic payments and task-based payments depending on the terms of the individual contract.
Where a lump-sum payment is in place it may cover the administrative element of the contract or may cover the majority of the tasks undertaken within that contract with exclusions to this being charged in addition to the lump-sum charge. For the works covered by the lump-sum payment, the performance obligation is being available to deliver the goods and services in the scope of the contract, not the performance of the individual works orders themselves. Revenue is recognised on a straight-line basis as performance obligations are being met over time.
For works orders not covered by a lump-sum payment, each works order represents a distinct performance obligation and, as the customer controls the asset being enhanced through the works, the performance obligation is satisfied over time. Each works order can be broken down into one or more distinct tasks which are either complete or not complete. The stage of completion of the works order is assessed by looking at which tasks are complete. The transaction price for partly completed works orders is recognised as cost plus expected margin. The transaction price for completed works orders is the invoice value, which is typically determined by a pricing schedule referred to as a Schedule of Rates that provides a transaction price for each particular task.
Some contracts may include an element of variable revenue based on certain key performance indicators (KPIs). These are recognised either at a point in time or over time, depending on the nature of the KPI and the contractual agreement in which it is contained. Where there is uncertainty in the measurement of variable consideration, at both the start of the contract and subsequently, management will consider the facts and circumstances of the contract in determining either the most likely amount of variable consideration when the outcome is binary, or the expected value based on a range of possible considerations. Included within this assessment will be the extent to which there is a high probability that a significant reversal in variable consideration revenues will not occur once the uncertainty is subsequently resolved. This assessment will include consideration of the following factors: the total amount of the variable consideration; the proportion of consideration susceptible to judgements of customers or third parties, for example KPIs; the\u00a0length of time expected before resolution of the uncertainty; and the Group\u2019s previous experience of similar contracts.
Contracting projects
For contracting projects, the contract states the scope and specification of the construction works to be carried out, for a fixed price. Mears is\u00a0continuously satisfying this single performance obligation as cost is incurred, determining progress against the performance obligation on either an input or an output basis. The customer controls the site or output as the work is being performed on it and therefore revenue is recognised over time where there is an enforceable right to payment for works completed to date and the work completed does not create an asset with an alternative use to the Group. An assessment is made of costs incurred to date and the costs required to complete the project. If a project is not deemed to be profitable, the unavoidable costs of\u00a0fulfilling the contract are provided for immediately. This category also includes construction contracts where an end customer has\u00a0not yet been identified and the revenue is recognised at the point of sale of the property, rather than over time.
Property income
Where the Group is acting as principal, lessor operating lease revenue is recognised in revenue on a straight-line basis over the\u00a0tenancy.
Where the Group is providing a management service, Mears recognises revenue as an agent (the net management fee) on a\u00a0straight-line basis. Where significant initial costs are required to make good the housing to perform Housing Management activities, the costs directly attributable to the initial upgrade will be recognised as costs incurred to fulfil a contract and held within\u00a0current assets, to the extent that it is determined that costs are recoverable.
Where the Group is providing an accommodation and support service, revenue is recognised at a point in time for each night that the accommodation is occupied.Property income\u00a0continued
Some contracts may include an element of variable revenue based on certain KPIs. This is recognised on the same basis as above.
Where the Group enters into arrangements with customers for the provision of housing, an assessment is made as to whether this income is recognised under IFRS 15 or IFRS 16. The contract between the Group and the customer is deemed to contain a lease where the contract conveys the right to control an identified asset for a period of time in exchange for consideration. In this instance, the rental income is recognised on a straight-line basis over the life of the lease. All such sub-leased residential property leases are classified as operating leases. Revenue in respect of sub-leased residential property is disclosed separately.
Care services
The standalone selling prices for providing care are overtly stated in the contract, and the method of application of the rate of\u00a0charge is on a\u00a0unit of time basis, usually expressed as a rate per visit. Revenue will be recognised in respect of this single performance obligation, by reference to the chargeable rate and time for completed care visits in the period.
From time to time, care contracts with customers include a fixed fee per period for performing a consistent scope of care services. For these contract types, the revenue recognition is consistent with lump-sum payments included in repair and maintenance contracts, as described above.
Other
From time to time, the Group receives revenue that does not fall within any of the categories above but is not individually significant enough to require a specific policy. In these cases, the revenue is considered separately and recognised in accordance with IFRS 15.
Key sources of estimation uncertainty
Contract recoverability
Determining future contract profitability requires estimates of future revenues and costs to complete. In making these assessments there is a degree of inherent uncertainty. The Group utilises the appropriate expertise in determining these estimates and has well-established internal controls to assess and review the expected outcome.
Critical judgements in applying the Group\u2019s accounting policies
Revenue recognition
The estimation techniques used for revenue and profit recognition in respect of contracting and variable consideration contracts require judgements to be made about the stage of completion of certain contracts and the recovery of contract assets. Each contract is treated on its merits and subject to a regular review of the revenue and costs to complete that contract.
The Group\u2019s revenue disaggregated by pattern of revenue recognition is as follows:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Revenue from contracts with customers
Repairs and maintenance
453,981
451,063
Contracting
70,980
83,463
Property income
516,769
376,296
Care services
20,058
19,544
Other
1,005
345
1,062,793
930,711
Lease income
26,534
28,902
1,089,327
959,613
Repairs and maintenance and care service revenue is typically invoiced between 1 and 30 days from completion of the performance obligation. Contracting revenue is typically invoiced based on the stage of completion of the overall contract. Property income is typically invoiced monthly in advance. Payment terms for revenue invoiced are typically 30 to 60 days from the date of invoice.
A maturity analysis of future minimum lessor income as at 31 December is shown in the table below:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Less than 1 year
4,591
3,245
Between 1 and 2 years
2,871
1,537
Between 2 and 3 years
2,871
1,531
Between 3 and 4 years
2,163
1,531
Between 4 and 5 years
1,282
1,150
Over 5 years
5,178
393
18,956
9,387
3. Segment reporting
Accounting policy
Segment information is presented in respect of the Group\u2019s operating segments based on the format that the Group reports to its chief operating decision maker for the purpose of allocating resources and assessing performance.
The Group considers that the chief operating decision maker comprises the Executive Directors of the business.
The Executive Directors manage the Group as a single Housing business, but information provided to the Board and historically to\u00a0stakeholders has included a split between Maintenance, Management and Development. Therefore, management has concluded that providing segmental information along the same lines would be helpful to the users of the financial statements.
2023
2022
Maintenance
\u00a3\u2019000
Management
\u00a3\u2019000
Development
\u00a3\u2019000
Total
\u00a3\u2019000
Maintenance
\u00a3\u2019000
Management
\u00a3\u2019000
Development
\u00a3\u2019000
Total
\u00a3\u2019000
Revenue
543,279
543,345
2,703
1,089,327
535,336
405,776
18,501
959,613
Impairments of right of\u00a0use\u00a0assets
\u2013
6,223
\u2013
6,223
\u2013
\u2013
\u2013
\u2013
Profit/(loss) before tax
22,061
25,711
(854)
46,918
11,777
24,281
(1,114)
34,944
Tax expense
(10,258)
(6,441)
Profit for the year
36,660
28,503
All revenue and all non-current assets arise within the United Kingdom. All of the revenue reported is external to the Group. The Group\u2019s largest single customer relationship is in respect of the Asylum Accommodation and Support Contract (AASC) with the Home Office, included within the Management segment. At the time that this contract was won, the Group expected to report annual revenues of around \u00a3120m, which would, under normal conditions, amount to around 15% of Group revenues. The AASC has experienced elevated volumes as a result of a backlog linked to the challenges of the Covid-19 pandemic. As a result, this customer relationship accounted for over 40% of Group revenues in 2023 and this elevated position has continued into 2024. In the longer term, this contract is expected to reduce back to a normal level. No other customer comprises more than 10% of reported revenue.
For the purposes of the disaggregation of revenue in note 2, all property income and lease income is included within the Management segment and the Development segment contains only contracting revenue. All other revenue is included within the Maintenance segment", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6710414": { "value": "4. Operating costs
Operating costs, relating to continuing activities, include the following:
Note
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Share-based payments
7
1,040
599
Depreciation of property, plant and equipment
14
7,305
8,021
Depreciation of right of use assets
15
50,908
43,486
Impairment of right of use assets
15
6,223
\u2013
Amortisation of acquisition intangibles
13
244
245
Amortisation of other intangibles
13
1,635
2,055
Loss on disposal of property, plant and equipment
54
2
Loss on disposal of intangibles
26
\u2013
Profit on disposal of right of use assets
(180)
(227)
Increase in onerous contract provisions
21
8,784
\u2013
Increase in other provisions
21
5,738
3,617
Fees payable for audit and non-audit services during the year were as follows:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
In respect of continuing activities:
Fees payable to the auditor for the audit of the Group\u2019s financial statements
457
416
Other fees payable to the auditor in respect of:
\u2013 auditing of accounts of subsidiary undertakings pursuant to legislation
550
500
\u2013 additional fees in respect of the prior year audit
145
65
Total auditor\u2019s remuneration
1,152
981
5. Finance income and finance costs
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Interest charge on overdrafts and loans
(638)
(625)
Interest on lease obligations
(9,899)
(7,617)
Finance costs on bank loans, overdrafts and leases
(10,537)
(8,242)
Other interest
(642)
(58)
Interest charge on defined benefit pension obligation
(2)
(74)
Total finance costs
(11,181)
(8,374)
Interest income resulting from short-term deposits
4,360
870
Interest income resulting from defined benefit pension asset
1,164
769
Other interest income
415
394
Total finance income
5,939
2,033
Net finance charge
(5,242)
(6,341)
6. Employees
Staff costs during the year were as follows:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Wages and salaries
176,226
165,348
Social security costs
18,666
16,795
Other pension costs
6,963
8,797
201,855
190,940
The average number of employees of the Group during the year was:
2023
2022
Site workers
2,443
2,482
Carers
559
558
Office and management
2,134
1,950
5,136
4,990
Accounting policy
All share-based payment arrangements are recognised in the consolidated financial statements in accordance with IFRS 2.
The Group operates equity-settled share-based remuneration plans for its employees. All employee services received in exchange for the grant of any share-based remuneration are measured at their fair values. These are indirectly determined by reference to the fair value (excluding the effect of non-market-based vesting conditions) of the share options awarded. Their value is determined at the date of grant and is not subsequently remeasured unless the conditions on which the award was granted are modified. The fair value at the date of the grant is calculated using the Monte Carlo option pricing model and the cost is recognised on a straight-line basis over the vesting period. Adjustments are made to reflect expected and actual forfeitures during the vesting period. For Save As You Earn (SAYE) plans, employees are required to contribute towards the plan. This non-vesting condition is taken into account in\u00a0calculating the fair value of the option at the grant date.
All share-based remuneration is ultimately recognised as an expense in the Consolidated Statement of Profit or Loss. For equity-settled share-based payments there is a corresponding credit to the share-based payment reserve.
Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of\u00a0the shares issued are allocated to share capital, with any excess being recorded as share premium.
As at 31 December 2023 the Group maintained four (2022: three) active share-based payment schemes for employee remuneration.
Details of the share options outstanding and movement during the year are as follows:
2023
2022
Number
\u2019000
Weighted
average
exercise price
p
Number
\u2019000
Weighted
average
exercise price
p
Outstanding at 1 January
4,552
99
4,827
110
Granted
1,132
1
442
1
Forfeited or lapsed
(418)
177
(643)
108
Exercised
(2,713)
94
(74)
116
Outstanding at 31 December
2,553
48
4,552
99
The weighted average share price at the date of exercise for share options exercised during the period was 279p. At 31 December 2023, 0.5m options had vested and were still exercisable at prices between 1p and 429p. These options had a weighted average exercise price of 238p and a weighted average remaining contractual life of 4.5 years.
7. Share-based employee remuneration\u00a0continued
The fair values of options granted were determined using the Monte Carlo option pricing model. Significant inputs into the calculation include the market price at the date of grant, the exercise price and share price volatility. Furthermore, the calculation incorporates an estimate of the future dividend yield and the risk-free interest rate. The share price volatility was determined from the daily log-normal distributions of the Company share price over a period commensurate with the expected life as calculated back from the date of grant. The risk-free interest rate utilised the zero-coupon bond yield derived from UK Government bonds as at the date of calculation for a life commensurate with the expected life. Adjustments are made to reflect expected and actual forfeitures during the vesting period due to failure to satisfy service conditions.
There were 1.13m options granted during the year and 0.42m options that lapsed during the year. The market price at 31 December 2023 was 310p and the range during 2023 was 195p to 311p.
All share-based employee remuneration will be settled in equity. The Group has no legal obligation to repurchase or settle the options.
The Group recognised the following expenses related to share-based payments:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Giving rise to share-based payment reserve:
All-employee schemes
188
165
Executive schemes
852
434
1,040
599
The Group is currently running four active schemes, detailed below:
Sharesave plan (All-employee scheme)
Options are available to all employees. Options are granted for a period of three years. Options are exercisable at a price based on the quoted market price of the Company\u2019s shares at the time of invitation, discounted by up to 20%. Options are forfeited if the employee leaves Mears Group before the options vest, which impacts the number of options expected to vest. If an employee stops saving but continues in employment, this is treated as a cancellation, which results in an acceleration of the share-based payment charge.
Company Share Option Plan (Executive scheme)
The Company operates a discretionary unapproved share plan and a Company Share Option Plan. Options are exercisable at a price below market value at the date of grant and often at nominal value. The vesting period is three years. If the options remain unexercised after a period of 10 years from the date of grant, the options expire. Options are forfeited if the employee leaves Mears Group before the options vest. No awards to Executive Directors are proposed under these plans.
Long-Term Incentive Plan (Executive scheme)
The Long-Term Incentive Plan provides for awards of free shares (i.e. either conditional shares or nominal cost options) normally on an annual basis which are eligible to vest after three years subject to continued service and the achievement of challenging performance conditions. The first award under this scheme was made during 2021. Options are granted under this scheme to key senior management subject to performance conditions as detailed on page 92\u00a0of the Remuneration Report.
Deferred Share Bonus Plan (Executive scheme)
The Deferred Share Bonus Plan relates to annual bonus payments where typically 33% are deferred into shares and vest subject to continued employment. Individuals may be able to receive a dividend equivalent payment on deferred bonus shares at the time of vesting equal to the value of dividends that would have accrued during the vesting period. The dividend equivalent payment may assume the reinvestment of dividends on a cumulative basis. Clawback provisions may apply for three years from the date of payment of\u00a0any bonus or the grant of any deferred bonus share award.
Further details of schemes relating to the Directors can be found in the Report of the Remuneration Committee on pages 76 to 96", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6710554": { "value": "Accounting policy
Current tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities that are unpaid at the balance sheet date. They are calculated according to the tax rates and tax laws applicable to the accounting periods to which they relate, based on the taxable profit for the year.
Where an item of income or expense is recognised in the Consolidated Statement of Profit or Loss, any related tax generated is recognised as a component of tax expense in the Consolidated Statement of Profit or Loss. Where an item is recognised directly to\u00a0equity or presented within the Consolidated Statement of Comprehensive Income, any related tax generated is treated similarly.
Deferred taxation is the tax expected to be repayable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method.
Deferred taxation liabilities are generally recognised on all taxable temporary differences in full with no discounting. Deferred taxation assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability, unless the related transaction is a business combination or affects tax or accounting profit.
Deferred taxation is calculated using the tax rates and laws that are expected to apply in the period when the liability is settled or the asset is\u00a0realised, provided they are enacted or substantively enacted at the balance sheet date. The carrying value of deferred taxation assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which taxable temporary differences can be utilised. Deferred tax is charged or credited to either the Consolidated Statement of Profit or Loss, the Consolidated Statement of Comprehensive Income or equity to the extent that it relates to items charged or credited. Deferred tax relating to items charged or credited directly to equity is also credited or charged to equity.
Tax recognised in the Consolidated Statement of Profit or Loss:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
United Kingdom corporation tax
10,854
6,449
Adjustment in respect of previous periods
39
(675)
Total current tax charge recognised in Consolidated Statement of Profit or Loss
10,893
5,774
Deferred taxation charge:
\u2013 on defined benefit pension obligations
480
(41)
\u2013 on share-based payments
(119)
27
\u2013 on capital allowances
(483)
65
\u2013 on amortisation of acquisition intangibles
(75)
(65)
\u2013 on short-term temporary timing differences
\u2013
149
\u2013 on corporate tax losses
\u2013
264
\u2013 other timing differences
57
18
Adjustment in respect of previous periods
(495)
250
Total deferred taxation recognised in Consolidated Statement of Profit or Loss
(635)
667
Total tax charge recognised in Consolidated Statement of Profit or Loss on continuing operations
10,258
6,441
Total tax charge recognised in Consolidated Statement of Profit or Loss on discontinued operations
\u2013
48
Total tax charge recognised in Consolidated Statement of Profit or Loss
10,258
6,489
The charge for the year can be reconciled to the result for the year as follows:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Profit for the year on continuing operations before tax
46,918
34,944
Profit for the year on discontinued operations before tax
\u2013
542
Result for the year before tax
46,918
35,486
Result for the year multiplied by standard rate of corporation tax in the United Kingdom for the period of 23.5% (2022: 19.0%)
11,039
6,742
Effect of:
\u2013 expenses not deductible for tax purposes
88
362
\u2013 income not subject to tax
(352)
(264)
\u2013 tax impact of employee share schemes
(61)
129
\u2013 adjustment in respect of prior periods
(456)
(480)
Actual tax charge
10,258
6,489
Deferred tax is recognised on temporary differences between the treatment of items for both tax and accounting purposes. Deferred tax on the amortisation of acquisition intangibles is a temporary difference and arises because no tax relief is due on this kind of amortisation.
Tax losses generated in previous years which are expected to be utilised against future profits are recognised as a deferred tax asset and a subsequent charge arises as those losses are utilised. No deferred tax asset is recognised in respect of losses of \u00a31.4m (2022: \u00a325.5m) across several entities in the Group as it is not expected that they will be eligible to be utilised against profits in the future. The reduction in unrecognised losses during the year is due to those in respect of two dormant Group entities being written off, as there was no prospect of them being utilised in future.
Capital allowances represent tax relief on the acquisition of property, plant and equipment and are spread over several years at rates set by legislation. These differ from depreciation, which is an estimate of the use of an item of property, plant and equipment over its useful life. Deferred tax is recognised on the difference between the remaining value of such an asset for tax purposes and its carrying value in\u00a0the accounts.
Relief is provided from UK Corporation Tax on the difference between the exercise price of share options exercised by employees and their market value at the point of exercise. During 2023, an all-employee share scheme vested that had been granted in 2020 when the Group\u2019s share price was significantly lower. This resulted in significant relief on the exercise of the share options that is not anticipated to\u00a0reoccur.
The following tax has been charged to other comprehensive income or equity during the year:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Deferred tax credit recognised in other comprehensive income
\u2013 on defined benefit pension obligations
(1,482)
(2,449)
Total deferred tax credit recognised in other comprehensive income
(1,482)
(2,449)
Current tax credit recognised directly in equity
\u2013 on share-based payments
(991)
\u2013
Total current tax credit recognised in equity
(991)
\u2013
Deferred tax charge/(credit) recognised directly in equity
\u2013 on share-based payments
124
(142)
Total deferred tax charge/(credit) recognised in equity
124
(142)
BEPS Pillar Two
Pillar Two legislation has been enacted in the UK and will be effective for the Group\u2019s financial year beginning 1 January 2024. The Group has performed an assessment of its potential exposure to Pillar Two income taxes based on the most recent information available regarding the financial performance of the constituent entities in the Group. Based on the assessment performed, the Pillar Two effective tax rate is above 15% and management is not currently aware of any circumstances under which this might change. Therefore, the Group does not expect a potential exposure to Pillar Two top-up taxes.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6710556": { "value": "9. Discontinued activities
During 2020, the Group completed the disposal of its Domiciliary Care business and disposed of its Planning Solutions business. The 2022 financial statements recognised profit after tax and operating cash outflows of \u00a30.5m in respect of discontinued activities, as well as a \u00a37.3m cash inflow representing the final receipt of contingent consideration in respect of the Planning Solutions business. There are no amounts recognised in 2023 and further details of the disposals are available in the prior year financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6697808": { "value": "10. Dividends
Accounting policy
Dividend distributions payable to equity shareholders are included in \u2018Current financial liabilities\u2019 when the dividends are approved in a general meeting prior to the balance sheet date.
The following dividends were paid on ordinary shares in the year:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Final 2022 dividend of 7.25p (2022: final 2021 dividend of 5.50p) per share
7,932
6,092
Interim 2023 dividend of 3.70p (2022: interim 2022 dividend of 3.25p) per share
3,828
3,600
11,760
9,692
The Directors recommend a final dividend of 9.30p per share. This has not been recognised within the consolidated financial statements as no obligation existed at 31 December 2023.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6697809": { "value": "11. Earnings per share
Continuing
Discontinued
Continuing and discontinued
2023
p
2022
p
2023
p
2022
p
2023
p
2022
p
Earnings per share
32.90
25.07
\u2013
0.44
32.90
25.51
Diluted earnings per share
31.94
24.51
\u2013
0.43
31.94
24.94
For the purpose of calculating earnings per share (EPS), earnings have been calculated as follows:
Continuing
Discontinued
Continuing and discontinued
2023
\u00a3\u2019000
2022
\u00a3\u2019000
2023
\u00a3\u2019000
2022
\u00a3\u2019000
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Profit for the year
36,660
28,503
\u2013
494
36,660
28,997
Attributable to non-controlling interests
(1,456)
(690)
\u2013
\u2013
(1,456)
(690)
Earnings
35,204
27,813
\u2013
494
35,204
28,307
The calculation of EPS is based on a weighted average of ordinary shares in issue during the year. The diluted EPS is based on a weighted average of ordinary shares calculated in accordance with IAS 33 \u2018Earnings per Share\u2019, which assumes that all dilutive options will be exercised. IAS 33 defines dilutive options as those whose exercise would decrease earnings per share or increase loss per share from continuing operations.
2023
Millions
2022
Millions
Weighted average number of shares in issue:
106.99
110.96
Dilutive effect of share options
3.23
2.52
Weighted average number of shares for calculating diluted earnings per share
110.22
113.48
The opening number of shares in issue for 2024 is shown below:
2024
Millions
Opening number of shares in issue
101.55
Treasury shares to exclude
(1.89)
Opening number of shares in issue for calculating earnings per share
99.66
Accounting policy
Goodwill arises on the acquisition of subsidiaries and represents any excess of the cost of the acquired entity over the Group\u2019s interest in the fair value of the entity\u2019s identifiable assets and liabilities acquired, and is capitalised as a separate item. Goodwill is\u00a0recognised as an intangible asset.
Under the business combinations exemption of IFRS 1, goodwill previously written off directly to reserves under UK Generally Accepted Accounting Practice (GAAP) is not recycled to the Consolidated Statement of Profit or Loss on calculating a gain or loss on disposal.
Impairment
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows: Cash Generating Units (CGUs). Goodwill is allocated to those groups of CGUs, that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which goodwill is monitored for internal management purposes.
Goodwill or groups of CGUs that include goodwill and those intangible assets not yet available for use are tested for impairment at least annually. All other individual assets or CGUs are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised in the Consolidated Statement of Profit or Loss for the amount by which the asset\u2019s or CGU\u2019s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal discounted cash flow evaluation. Impairment losses recognised for groups of CGUs, to which goodwill has been allocated, are credited initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro-rata to the other assets in the group of CGUs. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6710559": { "value": "Goodwill
arising on
consolidation
\u00a3\u2019000
Purchased
goodwill
\u00a3\u2019000
Total
\u00a3\u2019000
Gross carrying amount
At 1 January 2022
114,831
4,042
118,873
Acquisition of subsidiary
2,995
\u2013
2,995
At 1 January 2023 and 31 December 2023
117,826
4,042
121,868
Accumulated impairment losses
At 1 January 2022, 1 January 2023 and 31 December 2023
\u2013
\u2013
\u2013
Carrying amount
At 31 December 2023
117,826
4,042
121,868
At 31 December 2022
117,826
4,042
121,868
Goodwill on consolidation arises on the excess of cost of acquisition over the fair value of the net assets acquired on purchase of a company.
Purchased goodwill arises on the excess of cost of acquisition over the fair value of the net assets acquired on the purchase of the trade and assets of a business by the Group.
Goodwill is not amortised but is reviewed for impairment on an annual basis or more frequently if there are any indications that goodwill may be impaired. Goodwill acquired in a business combination is allocated to groups of CGUs according to the level at which management monitors that goodwill. Goodwill is carried at cost less accumulated impairment losses.
The carrying value of goodwill is allocated to the following groups of CGUs:
Goodwill arising
on consolidation
Purchased
goodwill
Total
2023
\u00a3\u2019000
2022
\u00a3\u2019000
2023
\u00a3\u2019000
2022
\u00a3\u2019000
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Maintenance (excluding Housing with Care)
65,290
65,290
4,042
4,042
69,332
69,332
Management
33,447
33,447
\u2013
\u2013
33,447
33,447
Housing with Care
19,089
19,089
\u2013
\u2013
19,089
19,089
117,826
117,826
4,042
4,042
121,868
121,868
The Group\u2019s cash inflows are largely independent at the individual branch level and each branch is therefore considered a CGU. However, the goodwill of the Group contributes to the cash inflows of multiple CGUs. It is therefore allocated to groups of CGUs and monitored for internal management purposes primarily at the operating segment level. The goodwill of Housing with Care is separately monitored and therefore allocated to a separate group of CGUs to which it relates.
An asset is impaired if the carrying value exceeds the CGU\u2019s recoverable amount, which is based on value in use. At 30 September 2023 impairment reviews were performed by comparing the carrying value with the value in use for the groups of CGUs to which goodwill has\u00a0been allocated.
The value in use for each group of CGUs is calculated from the Board-approved one-year budgeted cash flows and extrapolated cash flows for the next four years discounted at a post-tax discount rate over a five-year period with a terminal value. The impairment reviews incorporated a terminal growth assumption, which is conservative when compared with the UK long-term growth rate and the underlying demographics, which will be positive for the Group\u2019s core markets.
The estimated growth rates are based on knowledge of the relevant sector and market and represent management\u2019s base level expectations for future growth. Changes to revenue and direct costs are based on past experience and expectation of future changes within the markets of the CGUs. All CGUs have the same access to the Group\u2019s treasury function and borrowing arrangements to finance their operations.
Management considers that reasonably possible changes in these assumptions would not cause the carrying amount of a group of\u00a0CGUs to exceed its recoverable amount.
The rates used were as follows:
Post-tax
discount rate
Pre-tax
discount rate
Volume
growth rate
(years 1\u20135)
Terminal
growth
\u00a0rate
Maintenance
10.90%
14.93%
2.00%
1.50%
Management
10.90%
13.21%
2.00%
1.50%
Housing with Care
10.90%
15.00%
3.00%
1.50%
Accounting policy
In accordance with IFRS 3 (Revised) \u2018Business Combinations\u2019, an intangible asset acquired in a business combination is deemed to have a cost to the Group of its fair value at the acquisition date. The fair value of the intangible asset reflects market expectations about the probability that the future economic benefits embodied in the asset will flow to the Group. Where an intangible asset might be separable, but only together with a related tangible or intangible asset, the group of assets is recognised as a single asset separately from goodwill where the individual fair\u00a0values of the assets in the group are not reliably measurable. Intangible assets are amortised over the useful economic life of those assets.
Development costs incurred on software development are capitalised when all the following conditions are satisfied:
Completion of the software module is technically feasible so that it will be available for use.
The Group intends to complete the development of the module and use it.
The software will be used in generating probable future economic benefits.
There are adequate technical, financial and other resources to complete the development and to use the software.
The expenditure attributable to the software during its development can be measured reliably.
Development costs not meeting the criteria for capitalisation are expensed as incurred. Careful judgement by management is applied when deciding whether the recognition requirements for development costs have been met. This is necessary as the economic success of any development is uncertain and may be subject to future technical problems at the time of recognition. Judgements are based on the information available at each balance sheet date. In addition, all internal activities related to the research and development of new software are continually monitored by management.
The cost of an internally generated intangible asset comprises all directly attributable costs necessary to create, produce and prepare the asset to be capable of operating in the manner intended by management. Directly attributable costs include employee costs incurred on software development.
Amortisation commences upon completion of the asset and is shown within other administrative expenses. Until the asset is\u00a0available for use\u00a0on completion of the project, the assets are subject to impairment testing only. Development expenditure is\u00a0amortised over the period expected to benefit.
The identifiable intangible assets and associated periods of amortisation are as follows:
Order book
\u2013 over the period of the order book
Client relationships
\u2013 over the period expected to benefit
Supplier relationships
\u2013 over the period expected to benefit
Development expenditure
\u2013 over the useful life of the resulting software, typically five to ten years
Software
\u2013 25% p.a., reducing balance
The useful economic lives of intangible assets are reviewed annually and amended if appropriate.
Acquisition intangibles
Development
expenditure
\u00a3\u2019000
Software
\u00a3\u2019000
Total intangibles
\u00a3\u2019000
Client
relationships
\u00a3\u2019000
Order
book
\u00a3\u2019000
Supplier
relationships
\u00a3\u2019000
Total acquisition
intangibles
\u00a3\u2019000
Gross carrying amount
At 1 January 2022
65,987
17,770
2,172
85,929
21,142
\u2013
107,071
Reclassification
\u2013
\u2013
\u2013
\u2013
\u2013
6,087
6,087
Additions
\u2013
\u2013
\u2013
\u2013
1,090
274
1,364
Acquired with subsidiary
\u2013
\u2013
\u2013
\u2013
1,117
\u2013
1,117
Disposals
(61,097)
(17,770)
(2,172)
(81,039)
\u2013
(85)
(81,124)
At 1 January 2023
4,890
\u2013
\u2013
4,890
23,349
6,276
34,515
Additions
\u2013
\u2013
\u2013
\u2013
1,041
458
1,499
Disposals
\u2013
\u2013
\u2013
\u2013
(5,996)
(4,012)
(10,008)
At 31 December 2023
4,890
\u2013
\u2013
4,890
18,394
2,722
26,006
Amortisation
At 1 January 2022
63,338
17,770
2,172
83,280
17,181
\u2013
100,461
Reclassification
\u2013
\u2013
\u2013
\u2013
\u2013
5,426
5,426
Provided in the year
245
\u2013
\u2013
245
1,849
206
2,300
Eliminated on disposal
(61,097)
(17,770)
(2,172)
(81,039)
\u2013
(85)
(81,124)
At 1 January 2023
2,486
\u2013
\u2013
2,486
19,030
5,547
27,063
Provided in the year
244
\u2013
\u2013
244
1,415
220
1,879
Eliminated on disposal
\u2013
\u2013
\u2013
\u2013
(5,996)
(3,986)
(9,982)
At 31 December 2023
2,730
\u2013
\u2013
2,730
14,449
1,781
18,960
Carrying amount
At 31 December 2023
2,160
\u2013
\u2013
2,160
3,945
941
7,046
At 31 December 2022
2,404
\u2013
\u2013
2,404
4,319
729
7,452
Development expenditure is an internally developed intangible asset and relates to the development of the Group\u2019s Housing job management system and decarbonisation assessment software.
Development expenditure is amortised over its useful economic life of either five or ten years, depending on the resulting software. The\u00a0weighted average remaining economic life of the asset is 3.8 years (2022: 3.9 years).
All amortisation is included within other administrative expenses.", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6710574": { "value": "Accounting policy
Items of property, plant and equipment are stated at historical cost, net of depreciation. Historical cost includes expenditure that is\u00a0directly attributable to the acquisition of the items. Subsequent costs are included in the asset\u2019s carrying amount or recognised as\u00a0a\u00a0separate asset, as\u00a0appropriate, only when it is probable that future economic benefits associated with the item will flow into the\u00a0Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Consolidated Statement of Profit or Loss during the financial period in which they are incurred.
Freehold land is not depreciated. Depreciation on other assets is calculated to write down the cost less estimated residual value over their estimated useful economic lives. The rates generally applicable are:
Freehold buildings
\u2013 2% p.a., straight line
Leasehold improvements
\u2013 over the period of the lease or expected useful life of the improvements, straight line
Plant and machinery
\u2013 20% p.a., straight line
Equipment
\u2013 20% p.a., straight line
Fixtures and fittings
\u2013 50% p.a., straight line
Motor vehicles
\u2013 25% p.a., reducing balance
Accounting policy\u00a0continued
Residual values are reviewed annually and updated if appropriate. The carrying value is reviewed for impairment in the period if events or changes in circumstances indicate the carrying value may not be recoverable. An asset\u2019s carrying value is written down immediately to its recoverable amount if the asset\u2019s carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within \u2018Administrative expenses\u2019 in the Consolidated Statement of Profit or Loss.
Identifying whether there are indicators of impairment in respect of property, plant and equipment involves some judgement and a\u00a0good understanding of the drivers of value behind the asset. At each reporting period an assessment is performed in order to determine whether there are any such indicators, which involves considering the performance at both a contract and business level, and any significant changes to the markets in which we operate. This is not considered to be a critical judgement or an area of significant uncertainty.
Freehold
property
\u00a3\u2019000
Leasehold
improvements
\u00a3\u2019000
Plant and
machinery
\u00a3\u2019000
Fixtures,
fittings and
equipment
\u00a3\u2019000
Motor
vehicles
\u00a3\u2019000
Total
\u00a3\u2019000
Gross carrying amount
At 1 January 2022
1,027
24,395
1,558
29,355
984
57,319
Reclassification
\u2013
\u2013
\u2013
(6,087)
\u2013
(6,087)
Additions
1,635
4,508
\u2013
1,988
\u2013
8,131
Acquired with subsidiary
\u2013
\u2013
\u2013
10
19
29
Disposals
\u2013
(2)
(1,166)
(10,386)
(488)
(12,042)
At 1 January 2023
2,662
28,901
392
14,880
515
47,350
Additions
22,126
682
\u2013
2,893
44
25,745
Disposals
\u2013
(2,839)
(209)
(2,375)
\u2013
(5,423)
At 31 December 2023
24,788
26,744
183
15,398
559
67,672
Depreciation
At 1 January 2022
98
12,129
1,243
22,166
971
36,607
Reclassification
\u2013
\u2013
\u2013
(5,426)
\u2013
(5,426)
Provided in the year
17
3,914
227
3,856
7
8,021
Eliminated on disposals
\u2013
(2)
(1,166)
(10,384)
(488)
(12,040)
At 1 January 2023
115
16,041
304
10,212
490
27,162
Provided in the year
220
5,172
40
1,850
23
7,305
Eliminated on disposals
\u2013
(2,839)
(200)
(2,289)
\u2013
(5,328)
At 31 December 2023
335
18,374
144
9,773
513
29,139
Carrying amount
At 31 December 2023
24,453
8,370
39
5,625
46
38,533
At 31 December 2022
2,547
12,860
88
4,668
25
20,188
Accounting policy
Where an asset is subject to a lease, the Group recognises a right of use asset and a lease liability on the balance sheet. The right of use asset is measured at cost, which matches the initial measurement of the lease liability and any costs expected at the end of\u00a0the lease, and then depreciated on a straight-line basis over the lease term.
The lease liability is measured at the present value of the future lease payments discounted using the Group\u2019s incremental borrowing rate. Lease payments include fixed payments, variable payments based on an index and payments arising from options reasonably certain to be\u00a0exercised.
The Group has elected to account for short-term leases and leases of low value assets using the practical expedients. Instead of\u00a0recognising a\u00a0right of use asset and a lease liability, the payments in relation to these are recognised as an expense in profit or\u00a0loss on a straight-line basis over the lease term.
In the Statement of Financial Position, right of use assets and lease liabilities are presented separately.
Critical judgements in applying the Group\u2019s accounting policies
The Group holds more than 15,000 leases across its portfolio of residential properties, offices and vehicles. Whilst the Group endeavours to standardise the form of leases, operational demands dictate that many leases have specific wording to address particular operational needs and also to manage the associated operational and financial risks. As such, each lease requires individual assessment and the Group is required to make key judgements which include:
the identification of a lease;
assessing the right to direct the use of the underlying asset;
determining the lease term; and
an assessment as to the level of future lease payments, including fixed and variable payments.
The most typical challenges encountered and which form the key judgements are:
where the lease contains a one-way no-fault break in Mears\u2019 favour, the Group measures the obligation based on the Group\u2019s best estimate of its future intentions;
where the lessor has a right of substitution meaning that the lessor can swap one property for another without Mears\u2019 approval;
where Mears does not in practice have the right to control the use of the asset and the key decision making rights are retained by\u00a0the\u00a0supplier;
where a wider agreement for a supply of services includes a lease component which meets the definition of a lease under IFRS516; and
the assessment of the fixed lease payments where the lease obligation to the landlord is based on a pass-through arrangement in which Mears only makes lease payments to the owner to the extent that the property is occupied and to the extent that rents are received from the tenant.
Key sources of estimation uncertainty
Additions and remeasurements to right of use assets in respect of lease agreements are equivalent to the present value (or\u00a0change\u00a0in present value) of the relevant lease obligation. Unless there is an interest rate implicit in the lease itself, the Group\u2019s Incremental Borrowing Rate (IBR) is used to calculate the present value of future lease payments. Estimation is required in deriving an appropriate IBR. Management believe that the best approximation for IBR is the currently applicable margin from the grid contained within the Group\u2019s rolling credit facility (RCF) agreement, added to an appropriate base rate. The Group\u2019s RCF is linked to\u00a0SONIA so that is considered the most appropriate base rate to use.
The sensitivity of the lease liability to the assumption used in these estimations is indicated in note 20.
Investment property
Included within right of use assets are certain properties classified as investment properties in accordance with IAS 40. These\u00a0properties are leased primarily in order to earn rentals from sub-leasing. The Group has chosen to apply the cost model to\u00a0all\u00a0investment property and therefore measurement is in line with IFRS 16 as described above.
Investment
property
Assets that are used directly
within the\u00a0business
Total
\u00a3\u2019000
Residential
property
\u00a3\u2019000
Residential
property
\u00a3\u2019000
Offices
\u00a3\u2019000
Motor
vehicles
\u00a3\u2019000
Gross carrying amount
At 1 January 2022
141,134
103,466
11,428
31,040
287,068
Additions*
5,631
38,441
608
8,008
52,688
Disposals
(3,019)
(5,921)
(1,529)
(1,491)
(11,960)
At 1 January 2023
143,746
135,986
10,507
37,557
327,796
Additions*
8,816
59,148
869
10,073
78,906
Disposals
(998)
(4,877)
(992)
(2,956)
(9,823)
At 31 December 2023
151,564
190,257
10,384
44,674
396,879
Depreciation
At 1 January 2022
26,203
40,406
5,399
10,111
82,119
Provided in the year
9,043
25,422
1,799
7,222
43,486
Eliminated on disposals
(2,901)
(5,516)
(1,529)
(1,295)
(11,241)
At 1 January 2023
32,345
60,312
5,669
16,038
114,364
Provided in the year
8,747
32,183
1,710
8,268
50,908
Impairments
6,223
\u2013
\u2013
\u2013
6,223
Eliminated on disposals
(930)
(3,960)
(992)
(2,383)
(8,265)
At 31 December 2023
46,385
88,535
6,387
21,923
163,230
Carrying amount
At 31 December 2023
105,179
101,722
3,997
22,751
233,649
At 31 December 2022
111,401
75,674
4,838
21,519
213,432
*\tAdditions includes both new underlying assets and remeasurement of the right of use asset for changes in the lease terms.
The Group previously sub-divided assets that are sub-leased to customers between investment property and other residential property. Having reviewed the details of other residential properties, management considers that all sub-leased properties meet the definition of investment property.
Investment property included above represents properties held by the Group primarily to earn rentals, rather than for use in the Group\u2019s other activities. The amount included in lease income in note 2 in respect of these properties is \u00a326.5m (2022: \u00a328.9m). Direct operating expenses of \u00a324.0m (2022: \u00a325.8m), excluding impairments, arose from investment property that generated rental income during the period. The carrying value of the right of use asset in respect of investment property is considered to be approximately equal to its fair value.
Impairment
In respect of its investment property, the Group has seen a deterioration in trading, predominantly as a result of increased regulation together with above-inflation maintenance and service cost increases. The poor financial performance combined with increasing interest rates were recognised by management as an indicator of impairment on certain portfolios of investment property assets.
In carrying out impairment assessments, management prepared detailed cash flow forecasts for the life of the underlying leases on these properties and discounted them using an appropriate rate, in order to estimate the value in use.
In many cases, the Group\u2019s customer contract associated with these portfolios benefits from Nominations Agreements with Local Authorities, which contain income protection clauses. The discount rate for each portfolio of properties was therefore set by reference to publicly available market yield information, adjusted for the relative risk associated with each scheme, taking account of any income protections, as well as other risk factors such as maintenance responsibilities. This resulted in a range of discount rates being applied, from 6.6% to 7.5%.
Impairment\u00a0continued
As a result of management\u2019s impairment review, several portfolios were identified where the value in use was lower than the carrying amount of the right of use asset. As such, an impairment has been applied to those properties as detailed in the table above. The impact of the impairment on the Statement of profit or loss has been recognised within cost of sales.
Included within the impairment above were two individually significant properties. The first is due to run until 2041 and its future cash flow forecast was discounted at 6.6%, resulting in an impairment of \u00a33.3m. The second is due to continue until 2038 and its future cash flow forecast was discounted at 7.2%, resulting in an impairment of \u00a31.8m. All other impairments in aggregate totalled \u00a31.1m.
If all discount rates used had been 0.5 percentage points lower, the overall impairment would have been \u00a30.8m lower. If annual net cash inflows were 10% (or \u00a30.3m) higher across all properties, the impairment would have been \u00a32.3m lower.
Lease liabilities are separately presented on the face of the Consolidated Statement of Financial Position as shown below:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Current
54,492
44,376
Non-current
199,948
181,045
254,440
225,421
The Group had not committed to any leases which had not commenced at 31 December 2023. The majority of the Group\u2019s property leases contain variable lease payments that vary annually either by reference to an index, such as the Consumer Prices Index (CPI), or\u00a0based on market conditions each year. The potential impact of this variation depends on future events and therefore cannot be quantified, but the Group would typically expect commensurate adjustments to income derived from these properties.
A smaller number of property leases contain termination or extension options. Management has assessed whether it is reasonably certain that the extension or termination options will be exercised, which is then reflected in the valuation. In some cases, a portfolio of leases with similar lease terms is considered together and, where a\u00a0rolling notice period is available to the Group, an average expected lease life may be applied.
The Group has elected not to recognise a lease liability for short-term leases and leases of low value. Payments made under such leases are expensed on a straight-line basis. Certain leases incorporate variable lease payments that are not included in the measurement of lease liabilities in accordance with IFRS 16. The expense relating to payments not included in the measurement of the lease liability is as follows:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Short-term leases
57,281
46,683
Low value leases
948
1,096
Variable lease payments
979
1,236
The portfolio of short-term leases to which the Group is committed at the end of the reporting period is not dissimilar to the portfolio to\u00a0which the above disclosure relates.
Other disclosures relating to lease liabilities are provided in the table below:
Note
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Depreciation of right of use assets during the year
15
50,908
43,486
Impairment of right of use assets during the year
15
6,223
\u2013
Additions to right of use assets during the year
15
78,906
52,688
Carrying value of right of use assets at the year end
15
233,649
213,432
Interest on lease liabilities during the year
5
9,899
7,617
Total cash outflow in respect of leases during the year
25
58,048
50,827
Accounting policy
Investments include those over which the Group has significant influence but which it does not control. These are categorised as associates. It\u00a0is presumed that the Group has significant influence where it has between 20% and 50% of the voting rights in the investee unless indicated otherwise. The Group also holds investments in joint ventures where the Group and other parties have joint control over their activities.
The basis by which associates and joint ventures are consolidated in the Group financial statements is through the equity method, as outlined in the basis of consolidation.
In addition to associates and joint ventures, the Group holds investments in entities over which it does not exert significant influence. These are accounted for at fair value through profit or loss.
Associates
\u00a3\u2019000
Other
investments
\u00a3\u2019000
Total
\u00a3\u2019000
At 1 January 2022
648
65
713
Share of profit
858
\u2013
858
Distributions received
(300)
\u2013
(300)
At 1 January 2023
1,206
65
1,271
Share of profit
486
\u2013
486
Distributions received
(1,135)
\u2013
(1,135)
At 31 December 2023
557
65
622
Other investments represents the Group\u2019s 6.16% holding in Mason Topco Limited, which is mandatorily held at fair value through profit or loss. There have been no changes in the fair value of the investment during the year (2022: none).
Associates
Set out below is the investment in an associate as at 31 December 2023, which in management\u2019s opinion is significant to the Group:
Nature of
relationship
Proportion
held
Country of
registration
Carrying value
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Pyramid Plus South LLP
Associate
30%
England
and Wales
557
1,206
Pyramid Plus South LLP is a repairs and maintenance service provider that is central to one of the Group\u2019s contracts. The Group\u2019s client for the contract holds the remaining 70% interest in the entity.
Associates\u00a0continued
During the year, the Group received distributions of \u00a31.1m (2022: \u00a30.3m) from Pyramid Plus South LLP. Summarised financial information for Pyramid Plus South LLP for the year is shown below:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Revenue and profits
Revenue
24,802
21,600
Expenses
(23,183)
(18,738)
Profit for the year
1,619
2,862
Other comprehensive income
\u2013
\u2013
Total comprehensive income
1,619
2,862
Share of profit at 30%
486
858
Net assets
Non-current assets
\u2013
\u2013
Current assets
7,497
7,795
Current liabilities
(4,666)
(3,763)
Non-current liabilities
\u2013
\u2013
Total assets less total liabilities
2,831
4,032
Cash and cash equivalents of \u00a31.9m (2022: \u00a32.5m) were included in current assets above.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6711067": { "value": "The subsidiary undertakings within the Group at 31 December 2023 are shown below:
Proportion held
Country of registration
Nature of business
3c Asset Management Limited*
100%
England and Wales
Dormant
Heather Housing Limited*
100%
England and Wales
Housing provision
Helcim Group Limited
100%
England and Wales
Dormant
Helcim Homes Limited
100%
England and Wales
Dormant
IRT Energy Limited
100%
Scotland
Dormant
IRT Surveys Limited
100%
Scotland
Housing technology provider
Let to Birmingham Limited
100%
England and Wales
Housing management services
Manchester Working Limited
80%
England and Wales
Housing services
Mears Community Housing Limited
100%
Scotland
Dormant
Mears Energy Limited
100%
England and Wales
Dormant
Mears Estates Limited
100%
England and Wales
Grounds maintenance
Mears Extra Care Limited*
100%
England and Wales
Provision of care
Mears Facility Management Limited*
100%
England and Wales
Dormant
Mears Home Improvement Limited
100%
England and Wales
Housing services
Mears Homes Limited
100%
England and Wales
Dormant
Mears Housing Management Limited
100%
England and Wales
Housing management services
Mears Housing Management (Holdings) Limited*
100%
England and Wales
Intermediate holding company
Mears Housing Portfolio (Holdings) Limited
100%
England and Wales
Intermediate holding company
Mears Housing Portfolio 4 Limited
100%
England and Wales
Dormant
Mears Insurance Company Limited*
99.99%
Guernsey
Insurance services
Mears Learning Limited
90%
England and Wales
Dormant
Mears Limited*
100%
England and Wales
Housing services
Mears New Homes Limited
100%
England and Wales
Housebuilding
Mears Property Company Limited
100%
England and Wales
Property acquisition
Proportion held
Country of registration
Nature of business
Mears Property Company 2 Limited
100%
Scotland
Property acquisition
Mears Scotland (Housing) Limited
100%
Scotland
Dormant
Mears Scotland LLP
66.67%
Scotland
Housing services
Mears Social Housing Limited
100%
England and Wales
Dormant
Mears Supported Living Limited*
100%
Scotland
Provision of care
Mears Wales Limited
100%
England and Wales
Dormant
MHM Property Services Limited
100%
England and Wales
Maintenance services
Morrison Facilities Services Limited*
100%
Scotland
Maintenance services
MPM Housing Limited
100%
England and Wales
Dormant
MPS Housing Limited
100%
England and Wales
Housing services
O&T Developments Limited
100%
England and Wales
Housing management services
Omega Housing Limited
100%
England and Wales
Housing registered provider
Plexus UK (First Project) Limited
100%
England and Wales
Housing registered provider
RepairMyHome CIC
100%
England and Wales
Dormant
Scion Group Limited*
100%
England and Wales
Dormant
Scion Property Services Limited
100%
England and Wales
Dormant
Scion Technical Services Limited
100%
England and Wales
Maintenance services
Tando Homes Limited
100%
England and Wales
Housing management services
Tando Property Services Limited
100%
England and Wales
Housing management services
* Held directly by Mears Group PLC.
All subsidiary undertakings prepare accounts to 31 December.
The Group includes the following three subsidiaries with non-controlling interests: Manchester Working Limited, Mears Learning Limited and Mears Scotland LLP. The table below sets out selected financial information in respect of those subsidiaries:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Revenue and profits
Revenue
64,513
63,061
Expenses and taxation
(60,337)
(61,764)
Profit for the year
4,176
1,297
Other comprehensive expense
\u2013
\u2013
Total comprehensive income
4,176
1,297
Profit for the year allocated to non-controlling interests
1,456
690
Total comprehensive expense allocated to non-controlling interests
\u2013
\u2013
Net assets
Non-current assets
65
93
Current assets
20,710
19,643
Current liabilities
(10,668)
(13,074)
Non-current liabilities
(1,232)
(1,963)
Total assets less total liabilities
8,875
4,699
Equity attributable to shareholders of Mears Group PLC
5,927
3,207
Non-controlling interests
2,948
1,492
Total equity
8,875
4,699
The following UK subsidiaries will take advantage of the audit exemption set out within Section 479A of the Companies Act 2006 for the year ended 31 December 2023:
Registration
number
Heather Housing Limited
07713632k
Helcim Group Limited
07526612
IRT Surveys Limited
SC227199
Let to Birmingham Limited
08757503
Mears Estates Limited
03720903
Mears Extra Care Limited
03689426
Mears Home Improvement Limited
03716517
Mears Housing Management Limited
03662604
Mears Housing Management (Holdings) Limited
04726480
Mears New Homes Limited
08780839
Mears Property Company Limited
14425736
Mears Property Company 2 Limited
SC750308
Mears Supported Living Limited
SC662805
MHM Property Services Limited
07448134
Morrison Facilities Services Limited
SC120550
MPM Housing Limited
03528320
MPS Housing Limited
11655167
O&T Developments Limited
05692853
Scion Group Limited
03905442
Scion Technical Services Limited
03671450
Tando Homes Limited
09260353
Tando Property Services Limited
07405761
Accounting policy
Inventories are stated at the lower of cost and net realisable value. Cost is the actual purchase price of materials.
Work in progress is included in inventories after deducting any foreseeable losses and payments on account not matched with revenue. Work in progress represents costs incurred on new build residential construction projects where the eventual sale will be of the completed property. Work in progress is stated at the lower of cost and net realisable value. Cost comprises materials, direct labour and any subcontracted work that has been incurred in bringing the inventories and work in progress to their present location and condition.
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Materials and consumables
1,463
1,329
Work in progress
\u2013
5,550
1,463
6,879
The Group consumed inventories totalling \u00a386.3m during the year (2022: \u00a393.9m). No items are being carried at fair value less costs to\u00a0sell\u00a0(2022: \u00a3nil).
", "dimensions": { "concept": "ifrs-full:DisclosureOfInventoriesExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6711070": { "value": "Accounting policy
Trade receivables represent amounts due from customers in respect of invoices raised. They are initially measured at their transaction price and subsequently remeasured at amortised cost.
Retention assets represent amounts held by customers for a period following payment of invoices, to cover any potential defects in\u00a0the work. Retention assets are included in trade receivables and are therefore initially measured at their transaction price.
Contract assets represent revenue recognised in excess of the total of payments on account and amounts invoiced.
Critical judgements and key sources of estimation uncertainty
The estimation techniques used for revenue in respect of contracting require judgements to be made about the stage of completion of certain contracts and the recovery of contract assets. Each contract is treated on its merits and subject to a regular review of the revenue and costs to complete that contract. Contract assets represent revenue recognised in excess of the total of payments on account and amounts invoiced.
However, due to the estimation uncertainty across numerous contracts each with different characteristics, it is not practical to provide a quantitative analysis of the aggregated judgements that are applied, and management does not believe that disclosing a\u00a0potential range of\u00a0outcomes on a consolidated basis would provide meaningful information to a reader of the accounts", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6711338": { "value": "2023
\u00a3\u2019000
2022
\u00a3\u2019000
Current assets
Trade receivables
23,230
21,483
Contract assets
79,703
84,797
Contract fulfilment costs
768
1,283
Prepayments and accrued income
18,929
13,257
Other debtors
4,060
7,514
Total trade and other receivables
126,690
128,334
Included in trade receivables is \u00a33.4m (2022: \u00a34.3m) in respect of retention payments due in more than one year.
Trade receivables are normally due within 30 to 60 days and do not bear any effective interest rate. All trade receivables and accrued income are subject to credit risk exposure.
The maximum exposure to credit risk in relation to trade receivables and accrued income at the balance sheet date is the fair value of\u00a0trade receivables and accrued income. The Group\u2019s customers are primarily a mix of Local and Central Government and Housing Associations where credit risk is minimal. The Group\u2019s customer base is large and unrelated and, accordingly, the Group does not have a\u00a0significant concentration of credit risk with any one counterparty.
The amounts presented in the balance sheet in relation to the Group\u2019s trade receivables and accrued income balances are presented net of\u00a0loss allowances. The Group measures loss allowances at an amount equal to lifetime expected credit losses using both quantitative and qualitative information and analysis based on the Group\u2019s historical experience, and forward-looking information.
The ageing analysis of trade receivables is as follows:
2023
2022
Gross
amount due
\u00a3\u2019000
Expected
credit loss
\u00a3\u2019000
Carrying
value
\u00a3\u2019000
Gross
amount due
\u00a3\u2019000
Expected
credit loss
\u00a3\u2019000
Carrying
value
\u00a3\u2019000
Not past due
20,110
(158)
19,952
18,661
(986)
17,675
Less than three months past due
2,168
(627)
1,541
3,051
(504)
2,547
More than three months past due
2,674
(937)
1,737
1,946
(685)
1,261
Total trade receivables
24,952
(1,722)
23,230
23,658
(2,175)
21,483
For expected credit losses with large organisations, such as Government bodies or Housing Associations, expected credit losses are calculated on an individual basis, taking account of all the relevant factors applicable to the amount outstanding. The Group has no history of\u00a0defaults with these types of customers, so expected credit losses relate to specific disputed balances.
For individual tenant customers, expected credit losses are calculated based on the Group\u2019s historical experience of default by applying a percentage based on the age of the customer\u2019s balance.
The movement in expected credit loss during the year is shown below:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
At 1 January
2,175
7,006
Changes in amounts provided
1,482
1,208
Amounts utilised
(1,935)
(6,039)
At 31 December
1,722
2,175
The movement in contract assets during the year is shown below:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
At 1 January
84,797
97,680
Recognised on completion of performance obligations
1,050,778
906,415
Invoiced during the year
(1,055,872)
(919,298)
At 31 December
79,703
84,797
Included in other debtors is an amount of \u00a32.3m (2022: \u00a32.9m) recoverable from the Group\u2019s fronting insurers. The Group manages its insurance risk through a captive insurance company. Whilst the Group is effectively paying a premium to itself, the premium passes through a third-party fronting insurer, which results in a matching other debtor and other creditor.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6711339": { "value": "19. Trade and other payables
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Trade payables
58,651
55,854
Accruals
72,147
60,278
Social security and other taxes
22,203
26,343
Contract liabilities
28,491
23,672
Other creditors
5,543
4,866
187,035
171,013
Due to the short duration of trade payables, management considers the carrying amounts recognised in the Consolidated Balance Sheet to be a reasonable approximation of their fair value.
The movement in contract liabilities during the year is shown below:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
At 1 January
23,672
27,843
Revenue recognised in respect of contract liabilities
(12,015)
(24,296)
Payments received in advance of performance obligations being completed
16,834
20,125
At 31 December
28,491
23,672
Contract liabilities relate to payments received from the customer on the contract, and/or amounts invoiced to the customer in advance of the Group performing its obligations on contracts where revenue is recognised either over time or at a point in time. These amounts are expected to be recognised within revenue within one year of the balance sheet date.
Included in other creditors is an amount of \u00a32.3m (2022: \u00a32.9m) payable to the Group\u2019s fronting insurers as described in note 18.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6711340": { "value": "Critical judgements and key sources of estimation uncertainty
By definition, provisions require estimates to be made of future outcomes and the eventual outflow may differ significantly from the amount recognised at the end of the year. Management have estimated provisions based on all relevant information available to them. For individually material provisions further information has been provided on the maximum likely outflow, in addition to the best estimate.
The carrying value of each class of provisions is shown below:
2023
2022
Current
\u00a3\u2019000
Non-current
\u00a3\u2019000
Total
\u00a3\u2019000
Current
\u00a3\u2019000
Non-current
\u00a3\u2019000
Total
\u00a3\u2019000
Onerous contract provisions
1,898
6,886
8,784
\u2013
\u2013
\u2013
Property provisions
520
761
1,281
475
360
835
Insurance provisions
2,623
1,388
4,011
2,305
805
3,110
Legal and other provisions
3,365
750
4,115
6,000
1,945
7,945
Total provisions
8,406
9,785
18,191
8,780
3,110
11,890
A summary of the movement in provisions during the year is shown below:
Onerous
contract
provisions
\u00a3\u2019000
Property
provisions
\u00a3\u2019000
Insurance
provisions
\u00a3\u2019000
Legal
and other
provisions
\u00a3\u2019000
Total
\u00a3\u2019000
At 1 January 2023
\u2013
835
3,110
7,945
11,890
Provided during the year
8,784
491
2,227
3,020
14,522
Utilised during the year
\u2013
\u2013
(1,326)
(6,850)
(8,176)
Unused amounts reversed
\u2013
(45)
\u2013
\u2013
(45)
At 31 December 2023
8,784
1,281
4,011
4,115
18,191
Onerous contract provisions
During the year, the Group has identified a small number of contracts, with remaining terms ranging from less than 1 year to 33 years, under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefit expected to be received under it. These unavoidable costs are the lower of the cost of fulfilling the contract and any compensation or penalties of exiting from the\u00a0contract.
The largest single component within onerous contract provisions is \u00a34.2m relating to a single Community Housing contract which is\u00a0reported within the Management segment. The remaining balance of \u00a34.6m relates to the Maintenance segment.
In identifying the excess of costs over expected economic benefits, the Group has prepared cash flow forecasts for the lifetime of each contract, based on management\u2019s best estimates. For contracts where the time value of money is material, these cash flow forecasts have then been discounted using an appropriate discount rate. The forecasts have modelled real cash flows and as such, a real discount rate has been applied.
Recognising that by their nature there is variability in future-looking cash flow forecasts, an appropriate risk factor has been applied when selecting the discount rates, resulting in rates that are lower than the real risk-free rate. The range of discount rates used is between 0.3% and 1.5%, depending on the relative uncertainty of the cash flows.
If the discount rates used were 0.5 percentage points higher in each case, the onerous contract provision would have been \u00a30.3m lower.
The provisions recognised are also sensitive to the underlying cash flow forecasts. If the anticipated annual net cash outflow, ranging from \u00a30.2m to \u00a31.3m across the difference contracts and forecast years, was 10% lower, the onerous contract provision would have been \u00a30.9m lower.
Property provisions
Property provisions represent the expected costs of reinstating several office properties to their original condition upon termination of\u00a0the lease.
Insurance provisions
The Group self-insures certain fleet and liability risks. Provisions for claims are recognised in respect of both claims received but not concluded, which are expected to be settled within one year, and claims incurred but not received, which are treated as non-current. The value of these provisions is estimated based on past experience of claims.
Legal and other provisions
Legal and other provisions primarily relate to previously completed customer contracts where management is aware of probable liabilities and future losses associated with work defects. This also includes other supply chain claims.
The opening provision at 1 January 2023 included one abnormally large claim where a former customer asserted that the Group had acted in breach of contract, the Group having previously served a notice of termination. The matter had been referred to adjudication with a total claim value of \u00a39.3m, against which management, having considered a range of possible outcomes, had provided a sum of\u00a0\u00a35.7m, which was believed to represent the best estimate of the likely outcome. The matter concluded with a final loss of \u00a36.6m plus\u00a0interest.
The closing provision includes one customer related defects claim which is the subject of active litigation, against which management has provided \u00a31.6m (2022: \u00a31.5m) against a total claim value of \u00a36.9m. Management has received external technical support and believes this provision represents the best estimate of the likely outcome. A separate supply chain claim relating to the value of works delivered is\u00a0the\u00a0subject of litigation, against which management has provided \u00a30.5m (2022: \u00a30.5m) against a claim value of \u00a35.1m, much of which is considered to\u00a0be without merit and liability denied.
The remaining claims account for a provision of \u00a32.0m, but the range of possible outcomes is narrow and any risk to the downside is not\u00a0material.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6711342": { "value": "Accounting policy
The Group uses a limited number of financial instruments comprising cash and liquid resources, borrowings and various items such as trade receivables and trade payables that arise directly from its operations. The main purpose of these financial instruments is\u00a0to\u00a0finance the Group\u2019s operations. The Group seeks to finance its operations through a combination of retained earnings and borrowings and investing surplus cash on deposit. The Group uses financial instruments to manage the interest rate risks arising from its operations and sources of finance but has no interests in the trade of financial instruments.
Financial assets and liabilities are recognised in the Consolidated Balance Sheet when the Group becomes party to the contractual provisions of the instrument. The principal financial assets and liabilities of the Group are as follows:
Financial assets
Investments in unlisted equities that do not convey control or significant influence over the underlying entity are recognised at fair value. They are subsequently remeasured at fair value with any changes being recognised in the Consolidated Statement of Profit or Loss.
Contingent consideration is held by the Group in order to collect the associated cash flows but until the amount is determined, these are not solely payments of principal and interest and therefore these assets are measured both initially and subsequently at\u00a0fair value, with any changes being recognised in the Consolidated Statement of Profit or Loss.
Loan notes and other non-current debtors are held by the Group in order to collect the associated cash flows and not for trading. They are therefore initially recognised at fair value and subsequently measured at amortised cost, less any provision for impairment.
Financial assets generated from goods or services transferred to customers are presented as either trade receivables or contract assets. All of the Group\u2019s trade receivables are short-term in nature, with payments typically due within 60 days of the works being performed. The Group\u2019s contracts with its customers therefore contain no significant financing component.
Mears recognises a loss allowance for expected credit losses on financial assets subsequently measured at amortised cost using the \u2018simplified approach\u2019. Individually significant balances are reviewed separately for impairment based on the credit terms agreed with the customer. Other balances are grouped into credit risk categories and reviewed in aggregate.
Trade receivables and cash at bank and in hand are non-derivative financial assets with fixed or determinable payments that are not\u00a0quoted in\u00a0an active market. Trade receivables are initially recorded at fair value net of transaction costs, being invoiced value less any provisional estimate for impairment should this be necessary due to a loss event. Trade receivables are subsequently remeasured at invoiced value, less an updated provision for impairment. Any change in their value through impairment or reversal of\u00a0impairment is recognised in the Consolidated Statement of Profit or Loss.
Cash and cash equivalents include cash at bank and in hand and bank deposits available at short notice that are subject to an insignificant risk of changes in value. Bank overdrafts are presented as current liabilities in the Consolidated Balance Sheet but are\u00a0included within cash and cash equivalents within the Statement of Cash Flows, as they are used as part of the Group\u2019s cash management process and regularly repaid. The Group also considers its revolving credit facility to be an integral part of its cash management, although this facility has not been utilised during 2022 or 2023.
Following initial recognition, financial assets are subsequently remeasured at amortised cost using the effective interest rate method.
Financial liabilities
The Group\u2019s financial liabilities are trade payables, lease liabilities, deferred and contingent consideration and other creditors. They\u00a0are included in the Consolidated Balance Sheet line items \u2018Trade and other payables\u2019, \u2018Lease liabilities\u2019 and \u2018Other non-current\u00a0liabilities\u2019.
Bank and other borrowings are initially recognised at fair value net of transaction costs. Gains and losses arising on the repurchase, settlement or cancellation of liabilities are recognised respectively in \u2018Finance income\u2019 and \u2018Finance costs\u2019. Borrowing costs are recognised as an expense in the period in which they are incurred with the exception of those which are directly attributable to the\u00a0construction of a qualifying asset, which are capitalised as part of that asset.
Trade payables on normal terms are not interest bearing and are stated at their fair value on initial recognition and subsequently at\u00a0amortised cost.
Critical judgements
Included within financial liabilities is a credit facility arising from banking arrangements to provide supplier financing. Judgement has been required to determine whether cash flows arising from this facility are financing or operating in nature, and whether the cash flows from the financial institution are deemed to be cash flows of the Group. Management has determined that this facility is financing in nature, as it allows suppliers to receive cash earlier than they would under our normal payment cycle, and that the cash flows of the financial institution related to these transactions are, in substance, cash flows of the Group and should be reflected in the cash flow statement of the Group (see other credit facilities in note 25).
22. Financial instruments\u00a0continued
Categories of financial instruments
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Non-current assets
Fair value (level 3)
Investments \u2013 other investments
65
65
Amortised cost
Loan notes and other non-current debtors
4,458
4,073
Current assets
Amortised cost
Trade receivables
23,230
21,483
Other debtors
4,060
7,514
Short-term financial assets
7,090
1,963
Cash at bank and in hand
138,756
98,138
173,136
129,098
Non-current liabilities
Fair value (level 3)
Contingent consideration
\u2013
(438)
Amortised cost
Lease liabilities
(199,948)
(181,045)
Deferred consideration
\u2013
(244)
(199,948)
(181,289)
Current liabilities
Fair value (level 3)
Contingent consideration
(581)
\u2013
Amortised cost
Overdrafts and other short-term borrowings
(36,699)
\u2013
Trade payables
(58,651)
(55,854)
Lease liabilities
(54,492)
(44,376)
Other creditors
(4,710)
(4,614)
Deferred consideration
(252)
(252)
(154,804)
(105,096)
(177,674)
(153,587)
The amount recognised as an allowance for expected credit losses on trade receivables during 2023 was \u00a31.5m (2022: \u00a31.2m).
The IFRS 13 hierarchy level categorisation relates to the extent the fair value can be determined by reference to comparable market values. The classifications range from level 1, where instruments are quoted on an active market, through to level 3, where the assumptions used to\u00a0arrive at fair value do not have comparable market data.
The fair values of investments in unlisted equity instruments are determined by reference to an assessment of the fair value of the entity to\u00a0which they relate. This is typically based on a multiple of earnings of the underlying business.
There have been no transfers between levels during the year.
Fair value information
The fair value of the Group\u2019s financial assets and liabilities approximates to the book value as disclosed above.
Financial risk management
The Group\u2019s activities expose it to a variety of financial risks: market risk (including interest rate risk and price risk); credit risk; and liquidity risk. The main risks faced by the Group relate to the availability of funds to meet business needs and the risk of credit default by\u00a0customers. The Group\u2019s overall risk management programme focuses on the unpredictability of financial markets and seeks to\u00a0minimise potential adverse effects on the Group\u2019s financial performance.
Risk management is carried out under policies and guidelines approved by the Board of Directors.
22. Financial instruments\u00a0continued
Borrowing facilities
The Group\u2019s borrowing facilities are drawn on as required to manage its cash needs. Banking facilities are reviewed regularly and extended and replaced in advance of their expiry.
The Group had a revolving credit facility of \u00a370.0m with Barclays Bank PLC, HSBC Bank PLC and Citi. In order to assist with short-term day-to-day treasury requirements, this facility includes an overdraft carve out with Barclays Bank PLC of \u00a310m, which was temporarily increased to \u00a322.3m at the year end, leaving \u00a347.7m available to draw on the revolving credit facility.
The Group pays a margin over and above SONIA on bank borrowings when it uses its facility. The margin is based on the ratio of Group consolidated net borrowings to Group consolidated adjusted EBITDA and could have varied between 1.75% and 2.75% during the year.
Details of the Group\u2019s banking covenants are provided on page 42.
Overdrafts and other short-term borrowings
At 31 December 2023, the Group had overdrafts of \u00a325.5m (2022: \u00a3nil) and other credit facilities of \u00a311.2m (2022: \u00a3nil). Overdrafts were utilised alongside highly liquid cash equivalents, such as money market facilities, for the purposes of cash management during the year. For the purpose of the Consolidated Cash Flow Statement overdraft facilities have been included within cash and cash equivalents.
Other credit facilities are short-term borrowings due within no more than 60 days and are also used as part of the Group\u2019s cash management process.
The entire balance of overdrafts and other short-term borrowings was repaid in full on 2 January 2024.
Interest rate risk management
The Group finances its operations through a mixture of retained profits and bank borrowings from major banking institutions at floating rates of\u00a0interest based on SONIA.
The Group\u2019s policy is to accept a degree of interest rate risk, provided the effects of the various potential changes in rates remain within certain\u00a0prescribed parameters.
At 31 December 2023, the Group had minimal exposure to interest rate risk relating to borrowing costs.
Liquidity risk management
The Group seeks to manage liquidity risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely\u00a0and profitably.
Management monitors rolling forecasts of the Group\u2019s liquidity reserve (comprising undrawn borrowing facilities and cash and cash equivalents) on the basis of expected cash flows. This is carried out centrally for the Group as a whole in accordance with internal practice and limits.
The quantum of committed borrowing facilities of the Group is regularly reviewed and is designed to exceed forecast peak gross debt levels. For short-term working capital purposes, the Group utilises bank overdrafts as required. These facilities are regularly reviewed and are renegotiated ahead of their expiry date.
The table below shows the undiscounted maturity profile of the Group\u2019s financial liabilities:
Within 1 year
\u00a3\u2019000
1\u20132 years
\u00a3\u2019000
2\u20135 years
\u00a3\u2019000
Over 5 years
\u00a3\u2019000
Total
\u00a3\u2019000
2023
Non-derivative financial liabilities
Overdrafts and other short-term borrowings
36,699
\u2013
\u2013
\u2013
36,699
Trade payables
58,651
\u2013
\u2013
\u2013
58,651
Lease liabilities
58,492
44,707
88,428
114,418
306,045
Other creditors
4,710
\u2013
\u2013
\u2013
4,710
Deferred and contingent consideration
833
\u2013
\u2013
\u2013
833
2022
Non-derivative financial liabilities
Trade payables
55,854
\u2013
\u2013
\u2013
55,854
Lease liabilities
47,320
37,821
68,502
116,218
269,861
Other creditors
4,614
\u2013
\u2013
\u2013
4,614
Deferred and contingent consideration
260
860
\u2013
\u2013
1,120
22. Financial instruments\u00a0continued
Credit risk management
The Group\u2019s credit risk is primarily attributable to its trade receivables, contract assets and work in progress.
Trade receivables are normally due within 30 to 60 days. Trade and other receivables included in the Consolidated Balance Sheet are stated net of an expected credit loss provision which has been estimated by management following a review of individual receivable accounts. There is no Group-wide rate of provision and provision made for debts that are overdue is based on prior default experience and known factors at the balance sheet date. Receivables are written off against the expected credit loss provision when management considers that the debt is no longer recoverable.
Housing customers are typically Local and Central Government and Housing Associations. The nature of these customers means that credit risk is minimal. Other trade receivables contain no specific concentration of credit risk as the amounts recognised represent a\u00a0large number of\u00a0receivables from various customers.
The Group continually monitors the position of major customers and incorporates this information into its credit risk controls. External credit ratings are obtained where appropriate.
Details of the ageing of trade receivables are shown in note 18.
Loan notes receivable
The loan notes included within non-current assets were received as part of the disposal of the Terraquest Group. They are repayable in\u00a0December 2028 and accrue interest at 10% per annum. Their carrying value including accumulated interest at 31 December 2023 was\u00a0\u00a34.2m (2022: \u00a33.8m).
Short-term financial assets
Short-term financial assets are fixed-term deposits with financial institutions held for investment purposes rather than for cash management. All short-term financial assets have a maturity at inception of 12 months or less and are held for the purpose of generating returns.
Contingent consideration receivable
The table below shows the movements in contingent consideration receivable:
\u00a3\u2019000
At 1 January 2022
6,531
Movement in fair value of contingent consideration
802
Received during the year
(7,333)
At 1 January 2023 and 31 December 2023
\u2013
Deferred and contingent consideration payable
The table below shows the movements in deferred and contingent consideration payable:
Deferred
\u00a3\u2019000
Contingent
\u00a3\u2019000
Total
\u00a3\u2019000
At 1 January 2022
\u2013
\u2013
\u2013
Fair value of deferred and contingent consideration on acquisition of IRT Surveys Limited
496
438
934
At 1 January 2023
496
438
934
Unwinding of discount on deferred consideration
16
\u2013
16
Movement in fair value of contingent consideration
\u2013
143
143
Paid during the year
(260)
\u2013
(260)
At 31 December 2023
252
581
833
Deferred consideration payable is initially measured at fair value by discounting the contractual amount due using a discount rate based on the assessed cost of debt for the Group. It is subsequently measured at amortised cost.
Contingent consideration payable is measured at fair value based on management\u2019s expectation of the amount that will be payable. This\u00a0figure is then discounted at an appropriate rate. The value of contingent consideration could vary by up to \u00a30.6m based on the number of active properties being managed by software developed by the acquired business at the second anniversary of acquisition.
22. Financial instruments\u00a0continued
Capital management
The Group\u2019s objectives when managing capital are:
to safeguard the Group\u2019s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for\u00a0other stakeholders;
to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk; and
to maintain an optimal capital structure to reduce the cost of capital.
The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in light\u00a0of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or\u00a0sell\u00a0assets to reduce debt", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6711344": { "value": "23. Deferred taxation
Deferred tax is calculated on temporary differences under the liability method.
Deferred tax relates to the following:
Consolidated
Balance Sheet
Consolidated Statement
of Profit or Loss
Other movements
At
31 December
2023
\u00a3\u2019000
At
31 December
2022
\u00a3\u2019000
2023
\u00a3\u2019000
2022
\u00a3\u2019000
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Pension schemes
(4,799)
(5,800)
(481)
66
1,482
2,449
Share-based payments
698
704
118
(26)
(124)
142
Tax losses
\u2013
\u2013
\u2013
(249)
\u2013
\u2013
Provisions
\u2013
\u2013
\u2013
(149)
\u2013
\u2013
Acquisition intangibles
(540)
(601)
61
61
\u2013
\u2013
Capital allowances
1,295
317
978
(330)
\u2013
\u2013
Leases
569
625
(56)
(43)
\u2013
\u2013
Fair value of software development
(128)
(143)
15
3
\u2013
(146)
(2,905)
(4,898)
635
(667)
1,358
2,445
Other movements are recognised in the Consolidated Statement of Comprehensive Income in respect of pension schemes and in the Consolidated Statement of Changes in Equity in respect of share-based payments.
In accordance with IFRS 2 \u2018Share-based Payment\u2019, the Group has recognised an expense for the consumption of employee services received as consideration for share options granted. A tax deduction will not arise until the options are exercised. The tax deduction in\u00a0future periods is dependent on the Company\u2019s share price at the date of exercise. The estimated future tax deduction is based on the\u00a0options\u2019 intrinsic value at the balance sheet date.
The cumulative amount credited to the Consolidated Statement of Profit or Loss is limited to the tax effect of the associated cumulative share-based payment expense. The excess has been credited directly to equity. This is presented in the Consolidated Statement of\u00a0Comprehensive Income.
In addition to those recognised, unused tax losses totalling \u00a31.4m (2022: \u00a325.5m) have not been recognised as management does not\u00a0consider that it is probable that they will be recovered.
Intangible assets acquired as part of a business combination are capitalised at fair value at the date of the acquisition and amortised over their useful economic lives. The UK tax regime calculates tax using the individual financial statements of the members of the Group and not the consolidated accounts. Hence, the tax base of acquisition intangible assets arising on consolidation is \u00a3nil. Furthermore, no\u00a0UK tax relief is available on the majority of acquisition intangibles within individual entities, so the tax base of these assets is also \u00a3nil. The estimated tax effect of this \u00a3nil tax base is accounted for as a deferred tax liability which is released over the period of amortisation of the associated acquisition intangible asset.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6711345": { "value": "24. Share capital and reserves
Classes of reserves
Share capital represents the nominal value of shares that have been issued.
Share premium represents the difference between the nominal value of shares issued and the total consideration received.
Treasury shares are equity instruments of the Group that are reacquired. They are recognised at cost and deducted from equity as\u00a0a\u00a0separate reserve.
The share-based payment reserve represents employee remuneration which is credited to the share-based payment reserve until the\u00a0related share options are exercised. Upon exercise the share-based payment reserve is transferred to retained earnings.
The merger reserve relates to the difference between the nominal value and total consideration in respect of acquisitions, where the\u00a0Company was entitled to the merger relief offered by the Companies Act 2006.
Share capital
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Allotted, called up and fully paid
At 1 January: 111,000,889 (2022: 110,926,510) ordinary shares of 1p each
1,110
1,109
Issue of 2,713,031 (2022: 74,379) shares on exercise of share options
27
1
Cancellation of 12,162,838 (2022: nil) shares following share buybacks
(121)
\u2013
At 31 December: 101,551,082 (2022: 111,000,889) ordinary shares of 1p each
1,016
1,110
During the year 2,713,031 (2022: 74,379) ordinary 1p shares were issued in respect of share options exercised. In addition, 12,162,838 (2022: nil) shares were repurchased by the Group and cancelled.
Share premium
\u00a3\u2019000
At 1 January 2022
82,265
Issue of shares on exercise of share options
86
At 1 January 2023
82,351
Issue of shares on exercise of share options
2,530
Capital reduction
(82,549)
At 31 December 2023
2,332
On 11 October 2023, following approval by the High Court, the Group cancelled the entire amount of its share premium account, resulting in an increase in distributable reserves of \u00a382.5m. The balance at 31 December 2023 reflects the excess of the exercise price over the nominal value of shares issued after 11 October 2023.
Treasury shares
Thousands
\u00a3\u2019000
At 1 January 2022 and 1 January 2023
\u2013
\u2013
Acquired by the EBT during the year
1,891
5,122
At 31 December 2023
1,891
5,122
25. Notes to the Consolidated Cash Flow Statement
The following non-operating cash flow adjustments have been made to the result for the year before tax:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Depreciation
58,213
51,508
Impairment of right of use assets
6,223
\u2013
Profit on disposal of assets
(101)
(224)
Amortisation
1,879
2,299
Share-based payments
1,040
599
IAS 19 pension movement
(758)
859
Share of profits of associates
(486)
(858)
Finance income
(5,939)
(2,033)
Finance cost
11,182
8,374
Total
71,253
60,524
Movements in financing liabilities during the year are as follows:
Revolving
credit facility
\u00a3\u2019000
Other credit
facilities
\u00a3\u2019000
Lease
liabilities
\u00a3\u2019000
Total
\u00a3\u2019000
At 1 January 2022
\u2013
\u2013
216,890
216,890
Inception of new leases*
\u2013
\u2013
52,688
52,688
Termination of leases
\u2013
\u2013
(947)
(947)
Interest
424
\u2013
7,617
8,041
Arrangement fees
201
\u2013
\u2013
201
Cash outflows including in respect of capital and interest
(625)
\u2013
(50,827)
(51,452)
At 1 January 2023
\u2013
\u2013
225,421
225,421
Inception of new leases*
\u2013
\u2013
78,907
78,907
Termination of leases
\u2013
\u2013
(1,739)
(1,739)
Increase in facility
\u2013
11,244
\u2013
11,244
Interest
502
\u2013
9,899
10,401
Arrangement fees
38
\u2013
\u2013
38
Cash outflows including in respect of capital and interest
(540)
\u2013
(58,048)
(58,588)
At 31 December 2023
\u2013
11,244
254,440
265,684
*\tIncluding modifications to existing leases resulting in a change in lease liabilities.
Cash outflows in respect of lease liabilities include \u00a39.9m (2022: \u00a37.6m) in respect of interest paid and \u00a348.1m (2022: \u00a343.2m) in respect of discharge of the underlying lease liabilities.
Other credit facilities are banking facilities that allow suppliers to receive cash from the financial institution at a date earlier than our normal payment cycle. The increase in facility is a net movement over the year (see note 22, critical judgements).
For the purpose of the Consolidated Cash Flow Statement, cash and cash equivalents comprise the following at 31 December:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Bank and cash
2,755
98,138
Readily available deposits
136,000
\u2013
138,755
98,138
Bank overdrafts
(25,454)
\u2013
Cash and cash equivalents
113,301
98,138
Accounting policy
Retirement benefit obligations
The Group operates both defined benefit and defined contribution pension schemes as follows:
Defined contribution pensions
A defined contribution plan is a pension plan under which the Group pays fixed contributions to an independent entity. The Group has no legal obligations to pay further contributions after payment of the fixed contribution.
The contributions recognised in respect of defined contribution plans are expensed as they fall due. Liabilities and assets may be recognised if underpayment or prepayment has occurred and are included in current liabilities or current assets as they are normally of a short-term nature.
The assets of the schemes are held separately from those of the Group in an independently administered fund.
Defined benefit pensions
The Group contributes to defined benefit schemes which require contributions to be made to separately administered funds.
A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and salary. The legal obligations for any benefits from this\u00a0kind of pension plan remain with the Group, even if plan assets for funding the defined benefit plan have been set aside.
Scheme liabilities are measured using the projected unit funding method, applying the principal actuarial assumptions at the balance sheet date. Assets are measured at market value. In accordance with IFRIC 14, the asset that is recognised is restricted to\u00a0the amount by which the IAS 19 service cost is expected, over the lifetime of the scheme, to exceed funding contributions payable in respect of accruing benefits, or to the amount of any unconditional right to a refund, if greater.
Where the Group has a contractual obligation to make good any deficit in its share of a Local Government Pension Scheme (LGPS) but also has the right to recover the costs of making good any deficit from the Group\u2019s client, the fair value of that guarantee asset has been recognised and disclosed. Movements in the guarantee asset are taken to the Consolidated Statement of Profit or Loss and to the Consolidated Statement of Comprehensive Income to match the movement in pension assets and liabilities.
The Group recognises the pension liability and guarantee assets separately on the face of the Consolidated Balance Sheet.
Actuarial gains and losses are taken to the Consolidated Statement of Comprehensive Income as incurred. For this purpose, actuarial gains and losses comprise both the effects of changes in actuarial assumptions and experience adjustments arising because of differences between the previous actuarial assumptions and what has actually occurred.
Other movements in the net surplus or deficit are recognised in the Consolidated Statement of Profit or Loss, including the current service cost, any past service cost and the effect of curtailments or settlements. The net interest cost is also charged to the Consolidated Statement of Profit or Loss. The amount charged to the Consolidated Statement of Profit or Loss in respect of these plans is included within operating costs.
When the Group ceases its participation in a defined benefit pension scheme, the difference between the carrying value of the\u00a0scheme as calculated on an IAS 19 basis and any deficit payment or surplus receipt due are recognised in the Consolidated Statement of Profit or Loss as\u00a0a settlement.
The Group\u2019s contributions to the scheme are paid in accordance with the rules of the scheme and the recommendations of\u00a0the\u00a0scheme actuary.
Defined benefit assets
Assets for Group schemes are based on the latest asset information provided by the scheme administrators.
Scheme assets for Other schemes have been estimated by rolling forward the published asset position from the previous year using market index returns over the period. This is considered to provide a good estimate of the fair value of the scheme assets and the values will be updated to\u00a0actuals each time a triennial valuation takes place.
Defined benefit liabilities
A number of key estimates have been made, which are given below, and which are largely dependent on factors outside the control\u00a0of the Group:
inflation rates;
mortality;
discount rate; and
salary and pension increases.
Details of the particular estimates used are included in this note. Sensitivity analysis for these key estimates is included below.
Accounting policy\u00a0continued
Retirement benefit obligations\u00a0continued
Defined benefit liabilities continued
Where the Group has a contractual obligation to make good any deficit in its share of an LGPS but also has the right to recover the costs of making good any deficit from the Group\u2019s client, the fair value of that asset has been recognised and disclosed. The right to recover costs is limited to exclude situations where the Group causes the scheme to incur service costs in excess of those which would have been incurred were the members employed within Local Government. Management has made judgements in respect of whether any of the deficit is as a result of such situations.
The right to recover costs is also limited to situations where any cap on employer contributions to be suffered by the Group is not set so as to contribute to reducing the deficit in the scheme. Management, in conjunction with the scheme actuaries, has made judgements in respect of the predicted future service cost and contributions to the scheme to reflect this in the fair value of the asset recognised.
Key sources of estimation uncertainty
The net position on defined benefit pension schemes is a key source of estimation uncertainty. Given the importance of this area and to ensure\u00a0appropriate estimates are made based on the most relevant information available, management has continued to engage with third party advisers in assessing each of the underlying assumptions. The discount rate is derived from the return on corporate bond yields, and whilst this\u00a0is largely observable, any change in discount rates in the future could have a material impact on the carrying value of the defined benefit obligation. Similarly, inflation rates and mortality assumptions impact the defined benefit obligation as they are used to model future salary increases and the duration of pension payments. Whilst current assumptions use projected future inflation rates and the most up to date\u00a0information available on expected mortality, if these estimates change, the defined benefit obligation could also change materially in future periods", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6717362": { "value": "Defined contribution schemesThe Group operates a defined contribution Group personal pension scheme for the benefit of certain employees. The Group contributes to\u00a0personal pension schemes of certain Directors and senior employees. The Group operates a stakeholder pension plan available to all employees. During the year, the Group contributed \u00a34.5m (2022: \u00a34.4m) to these schemes.Defined benefit schemesThe Group participated in 16 (2022: 17) principal defined benefit schemes on behalf of a number of employees which require contributions to be made to separately administered funds.These pension schemes are operated on behalf of Mears Group PLC, Mears Limited, Morrison Facilities Services Limited, Mears Extra Care Limited and their subsidiary undertakings. The assets of the schemes are administered by trustees in funds independent from the assets of the Group.The Group schemes are no longer open to new members and have no particular concentration of investments, so expose the Group only to typical risks associated with defined benefit pension schemes including the risk that investments underperform compared with movements in the scheme liabilities. The Group has an unconditional right to a refund of any surplus within the Group schemes and has therefore recognised those surpluses in accordance with IFRIC 14.Management is aware of the High Court ruling in the case of Virgin Media Ltd v NTL Pension Trustees II LtdOthers, regarding amendments to benefits for contracted out schemes. The Group is waiting for the outcome of an appeal scheduled for June 2024, as\u00a0well as confirmation from the Government as to whether it intends to issue new regulations in response. The pension scheme administrators and trustees have not as yet carried out a search or review of historical actuarial certification dating back to 1997 and, as\u00a0such, management is not in a position to assess whether either Group scheme will be impacted, or to quantify any impact. It remains unclear whether this case could have an impact on the Other schemes in which the Group participates.In certain cases, the Group will participate under Admitted Body status in the LGPS. The Group will contribute for a finite period until the end of the particular contract. The Group is required to pay regular contributions as detailed in the scheme\u2019s schedule of contributions. In some cases, these contributions are capped and any excess can be recovered from the body from which the employees originally transferred. Where the Group has a contractual right to recover the costs of making good any deficit in the scheme from the Group\u2019s client, the fair value of that asset has been recognised as a separate pension guarantee asset. Certain judgements around the value of\u00a0this asset have been made and are discussed in the judgements and estimates disclosure within the accounting policies.Upon exiting an LGPS, the surplus or deficit position of the scheme will be calculated by the Scheme Actuary on a funding basis. This\u00a0is\u00a0a\u00a0different basis from IAS 19 and therefore may result in a different surplus or deficit position. Where the scheme is in surplus on a funding basis on exit, the pension authority has discretion over whether and to what extent the surplus will be distributed to the outgoing employer.The disclosures in respect of the two (2022: two) Group defined benefit schemes and the 14 (2022: 15) other defined benefit schemes in\u00a0this note have been aggregated. Details of movements in pension guarantee assets are presented in a separate table.The costs and liabilities of the schemes are based on actuarial valuations. The latest full actuarial valuations for the schemes were updated to 31 December 2023 by qualified independent actuaries using the projected unit funding method.", "dimensions": { "concept": "ifrs-full:DescriptionOfRetirementBenefitPlan", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6717361": { "value": "Defined benefit schemes\u00a0continued
The principal actuarial assumptions at the balance sheet date are as follows:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Rate of increase of salaries
2.80%
3.00%
Rate of increase for pensions in payment \u2013 based on CPI with a cap of 5%
2.40%
2.55%
Rate of increase for pensions in payment \u2013 based on RPI with a cap of 5%
2.70%
2.80%
Rate of increase for pensions in payment \u2013 based on CPI with a cap of 3%
2.00%
2.05%
Rate of increase for pensions in payment \u2013 based on RPI with a cap of 3%
2.15%
2.20%
Discount rate
4.50%
4.75%
Retail prices inflation
2.80%
3.00%
Consumer prices inflation
2.40%
2.60%
Life expectancy for a 65-year-old male*
21.0 years
21.5 years
Life expectancy for a 65-year-old female*
23.6 years
24.1 years
*\tThis assumption is set on a scheme-by-scheme basis, taking into account the demographics of the relevant members. The figures disclosed are an average across all\u00a0schemes.
The amounts recognised in the Consolidated Balance Sheet are:
2023
2022
Group
schemes
\u00a3\u2019000
Other
schemes
\u00a3\u2019000
Total
\u00a3\u2019000
Group
schemes
\u00a3\u2019000
Other
schemes
\u00a3\u2019000
Total
\u00a3\u2019000
Quoted assets
Equities
1,473
45,399
46,872
\u2013
59,914
59,914
Bonds
94,184
17,576
111,760
103,829
21,380
125,209
Property
\u2013
520
520
\u2013
957
957
Pooled investment vehicles
Multi-asset funds
20,381
470
20,851
17,417
1,068
18,485
Alternative asset funds
2,724
\u2013
2,724
4,783
78
4,861
Return seeking funds
1,923
784
2,707
2,035
746
2,781
Other assets
Equities
\u2013
14,507
14,507
\u2013
14,447
14,447
Bonds
\u2013
4,121
4,121
\u2013
4,004
4,004
Property
2,008
9,137
11,145
4,193
10,174
14,367
Derivatives
2,790
\u2013
2,790
1,822
291
2,113
Cash and other
6,040
19,049
25,089
6,153
20,639
26,792
Investment liabilities
Derivatives
(2,029)
\u2013
(2,029)
(12,209)
(9)
(12,218)
Group\u2019s estimated asset share
129,494
111,563
241,057
128,023
133,689
261,712
Present value of funded scheme liabilities
(109,659)
(83,342)
(193,001)
(104,351)
(98,412)
(202,763)
Pension surplus/deficit
19,835
28,221
48,056
23,672
35,277
58,949
Scheme surpluses not recognised as assets
\u2013
(28,393)
(28,393)
\u2013
(38,413)
(38,413)
Pension asset/(liability) recognised
19,835
(172)
19,663
23,672
(3,136)
20,536
Pension guarantee assets
\u2013
\u2013
\u2013
\u2013
3,136
3,136
Defined benefit schemes\u00a0continued
The amounts recognised in the Consolidated Statement of Profit or Loss are as follows:
2023
2022
Group
schemes
\u00a3\u2019000
Other
schemes
\u00a3\u2019000
Total
\u00a3\u2019000
Group
schemes
\u00a3\u2019000
Other
schemes
\u00a3\u2019000
Total
\u00a3\u2019000
Current service cost
843
1,595
2,438
1,705
3,553
5,258
Settlement and curtailment
\u2013
58
58
\u2013
(242)
(242)
Administration costs
347
\u2013
347
409
\u2013
409
Total operating charge
1,190
1,653
2,843
2,114
3,311
5,425
Net interest
(1,162)
(1,528)
(2,690)
(769)
(464)
(1,233)
Effects of limitation of recognisable surplus related to net interest
\u2013
1,528
1,528
\u2013
643
643
Total charged to the result for the year
28
1,653
1,681
1,345
3,490
4,835
Actuarial gains and losses recognised in other comprehensive income (OCI) are as follows:
2023
2022
Group
schemes
\u00a3\u2019000
Other
schemes
\u00a3\u2019000
Total
\u00a3\u2019000
Group
schemes
\u00a3\u2019000
Other
schemes
\u00a3\u2019000
Total
\u00a3\u2019000
Return on plan assets in (below)/above that recorded in net\u00a0interest
(1,877)
7,741
5,864
(70,326)
(25,802)
(96,128)
Actuarial gain/(loss) arising from changes in demographic\u00a0assumptions
1,840
202
2,042
8
(34)
(26)
Actuarial (loss)/gain arising from changes in financial\u00a0assumptions
(2,058)
(579)
(2,637)
58,597
86,474
145,071
Actuarial loss arising from liability experience
(3,671)
(11,547)
(15,218)
(2,994)
(737)
(3,731)
Effects of limitation of recognisable surplus related to OCI movements
\u2013
4,428
4,428
\u2013
(48,227)
(48,227)
Total (losses)/gains recognised in OCI
(5,766)
245
(5,521)
(14,715)
11,674
(3,041)
Changes in the present value of the defined benefit obligations are as follows:
2023
2022
Group
schemes
\u00a3\u2019000
Other
schemes
\u00a3\u2019000
Total
\u00a3\u2019000
Group
schemes
\u00a3\u2019000
Other
schemes
\u00a3\u2019000
Total
\u00a3\u2019000
Present value of obligations at 1 January
104,351
98,412
202,763
159,261
275,828
435,089
Current service cost
843
1,595
2,438
1,705
3,553
5,258
Interest on obligations
4,855
3,205
8,060
3,144
4,094
7,238
Plan participants\u2019 contributions
201
455
656
210
470
680
Benefits paid
(4,480)
(1,505)
(5,985)
(4,358)
(6,407)
(10,765)
Contract transfer
\u2013
(30,284)
(30,284)
\u2013
(92,419)
(92,419)
Settlements
\u2013
(460)
(460)
\u2013
(1,004)
(1,004)
Actuarial (gain)/loss arising from changes in demographic\u00a0assumptions
(1,840)
(202)
(2,042)
(8)
34
26
Actuarial loss/(gain) arising from changes in financial\u00a0assumptions
2,058
579
2,637
(58,597)
(86,474)
(145,071)
Actuarial loss arising from liability experience
3,671
11,547
15,218
2,994
737
3,731
Present value of obligations at 31 December
109,659
83,342
193,001
104,351
98,412
202,763
Defined benefit schemes\u00a0continued
Changes in the fair value of the plan assets are as follows:
2023
2022
Group
schemes
\u00a3\u2019000
Other
schemes
\u00a3\u2019000
Total
\u00a3\u2019000
Group
schemes
\u00a3\u2019000
Other
schemes
\u00a3\u2019000
Total
\u00a3\u2019000
Fair value of plan assets at 1 January
128,023
133,689
261,712
196,912
296,571
493,483
Expected return on plan assets
6,017
4,733
10,750
3,913
4,558
8,471
Employer\u2019s contributions
1,957
1,236
3,193
2,081
1,432
3,513
Plan participants\u2019 contributions
201
455
656
210
470
680
Benefits paid
(4,480)
(1,505)
(5,985)
(4,358)
(6,407)
(10,765)
Scheme administration costs
(347)
\u2013
(347)
(409)
\u2013
(409)
Contract transfer
\u2013
(33,782)
(33,782)
\u2013
(136,371)
(136,371)
Settlements
\u2013
(1,004)
(1,004)
\u2013
(762)
(762)
Return on plan assets (below)/above that recorded in net\u00a0interest
(1,877)
7,741
5,864
(70,326)
(25,802)
(96,128)
Fair value of plan assets at 31 December
129,494
111,563
241,057
128,023
133,689
261,712
Changes in the fair value of guarantee assets are as follows:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Fair value of guarantee assets at 1 January
3,136
12,975
Transferred in on scheme entry
\u2013
525
Transferred out on scheme exit
(3,136)
(4,768)
Recognised in the Consolidated Statement of Profit or Loss
Guarantee asset movement in respect of service cost
408
1,053
Guarantee asset movement in respect of net interest
\u2013
105
Recognised in other comprehensive income
Guarantee asset movement in respect of actuarial losses
(408)
(6,754)
Fair value of guarantee assets at 31 December
\u2013
3,136
Funding arrangements are agreed for each of the Group\u2019s defined benefit pension schemes with their respective trustees. The\u00a0employer\u2019s contributions expected to be paid during the financial year ending 31 December 2024 amount to \u00a33.2m.
Each of the schemes manages risks through a variety of methods and strategies to limit downside in falls in equity markets, movement in\u00a0inflation and movement in interest rates.
The Group\u2019s defined benefit obligation is sensitive to changes in certain key assumptions. The sensitivity analysis below, prepared using the same methods and assumptions used above, shows how a reasonably possible increase or decrease in a particular assumption, in\u00a0isolation, results in an increase or decrease in the present value of the defined benefit obligation as at 31 December 2023. This analysis excludes the impact on pension schemes with a guarantee in place as there would be no net impact on the balance sheet for these schemes.
\u00a3\u2019000
\u00a3\u2019000
Rate of inflation \u2013 decrease/increase by 0.1%
(1,766)
2,415
Rate of increase in salaries \u2013 decrease/increase by 0.1%
(380)
521
Discount rate \u2013 decrease/increase by 0.1%
2,110
(2,902)
Life expectancy \u2013 decrease/increase by 1 year
(5,480)
7,321
27. Capital commitments
The Group had no capital commitments at 31 December 2023 or at 31 December 2022.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6711349": { "value": "28. Contingent liabilities
The Group has guaranteed that it will complete certain Group contracts that it has commenced. At 31 December 2023 these guarantees amounted to \u00a311.1m (2022: \u00a313.1m).
The Group had no other contingent liabilities at 31 December 2023 or at 31 December 2022.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6711350": { "value": "29. Related party transactions
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 26.
Subsidiaries
The Group has a central treasury arrangement in which all subsidiaries participate. Management does not consider it meaningful to set out details of transfers made in respect of this treasury arrangement between companies, nor does it 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:
2023
%
2022
%
Directors
0.3
0.5
Key management personnel\u2019s compensation is as follows:
2023
\u00a3\u2019000
2022
\u00a3\u2019000
Salaries including social security costs
1,783
1,714
Contributions to defined contribution pension schemes
56
134
Share-based payments
694
434
2,533
2,282
Further details of Directors\u2019 remuneration are disclosed within the Remuneration Report.
Dividends totalling \u00a30.04m (2022: \u00a30.06m) were paid to Directors during the year.
Transactions with other related parties
During the year the Group provided maintenance services to Pyramid Plus South LLP, an entity in which the Group is a 30% member, totalling \u00a312.1m (2022: \u00a310.2m). Pyramid Plus South LLP also made recharges of certain staff costs to the Group totalling \u00a30.2m (2022:\u00a0\u00a30.2m). At 31 December 2023, \u00a31.4m (2022: \u00a31.0m) was due to the Group in respect of these transactions. Pyramid Plus also owed\u00a0the Group \u00a30.1m (2022: \u00a30.6m) in respect of agreed distributions", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6697826": { "value": "public limited company ", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6697828": { "value": "England and Wales", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_6697827": { "value": "1390 Montpellier Court, Gloucester Business Park, Brockworth, Gloucester GL3 4AH", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } } } }