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 Financial Reporting Standards (IFRS). The financial statements are prepared under the historical cost convention as modified by the revaluation of investments 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 2025. The adoption of these amendments had no material effect on the Group\u2019s financial statements. Certain amendments to accounting standards have been published that are not mandatory for 31 December 2025 reporting periods and have not been early adopted by the Group, including IFRS 18 \u2018Presentation and Disclosure in Financial Statements\u2019, which will be applicable for the year ended 31\u00a0December 2027. With the exception of IFRS 18, these amendments are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. The Group has not yet determined the impact of applying IFRS 18.
The preparation of financial statements in accordance with 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 the 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 in 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 domiciled in the United Kingdom (registration number 03232863). Its registered office and principal place of business is 2nd Floor 5220 Valiant Court, Gloucester Business Park, Brockworth, Gloucester GL3 4FE. 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869162": { "value": "Sterling", "dimensions": { "concept": "ifrs-full:DescriptionOfPresentationCurrency", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869163": { "value": "nearest thousand (\u00a3\u2019000)", "dimensions": { "concept": "ifrs-full:LevelOfRoundingUsedInFinancialStatements", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869164": { "value": "Mears Group PLC", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869165": { "value": "Mears Group PLC", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869167": { "value": "Mears Group PLC", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869161": { "value": "the United Kingdom ", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869160": { "value": "2nd Floor 5220 Valiant Court, Gloucester Business Park, Brockworth, Gloucester GL3 4FE", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869169": { "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\u00a0December 2025. 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 are accounted for using the equity method of accounting. Under this method, the Group\u2019s share of post-acquisition profits or losses is 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869166": { "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 2025 and the budget for 2026. The Group has modelled its cash flow outlook for the period to 30 June 2027 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 2026, 31 December 2026 and 30 June 2027.
The Board approved a budget for 2026 which was considered to reflect solid performance. The forecast was built up on a contract-by-contract basis for the next 12 months and rolled forward. The forecast for 2026 is based upon revenues generated from existing customer relationships, and a business that is generating contract margins that are broadly in line with recent run rates.The forecast assumes no new work is secured. The model also reflects the normalisation of the Asylum (AASC) contract, with revenues reducing to a level reflecting the preferred delivery through dispersed accommodation and the closure of short-term contingent accommodation, such as hotels1. Accounting policies\u00a0continued
Going concern\u00a0continued
In making their going concern assessment, the Directors are required to consider whether there is a reasonable expectation that the Group 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 used a going concern period for this purpose up to 30 June 2027. 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 2026, 31 December 2026 and 30 June 2027. On 31 December 2025, the Group held \u00a370m of undrawn committed borrowing facilities, maturing in December 2029. The principal borrowing facilities are subject to covenants as detailed in the Financial Review on page 46 of the Strategic Report. The\u00a0Strategic 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\u00a0material negative impact on the business or liquidity.
A range of scenarios that encompass the principal risks have been applied to the base case. These downside cases were prepared by management to consider the impact of adverse changes in key variables used within the base case forecast and projections. These downside cases were intended to represent a reasonable worst-case scenario that could affect solvency or liquidity in \u201csevere but plausible\u201d scenarios. No mitigating actions were included within any of these downside scenarios, which was considered conservative and unrealistic.
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\u00a0reverse 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.
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 2027. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Accounts.
Fair value
The Group measures certain assets and liabilities at fair value on a recurring basis, including certain investments and assets in the Group\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 amortised 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:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869174": { "value": "Fair value
The Group measures certain assets and liabilities at fair value on a recurring basis, including certain investments and assets in the Group\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 amortised 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11883717": { "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 periodsUse of judgements and estimates\u00a0continued
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 (note 20);
estimates used in forecasts used to assess future profitability and cash flows (note 20);
judgements involved in the recognition of right of use assets for lease accounting (note 14);
the timing of revenue recognition (note 2);
the recoverability of contract assets (note 17); and
actuarial estimates in respect of defined benefit pension schemes (note 28).
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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869193": { "value": "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 contracts and how the revenue is recognised in accordance with IFRS 15.
Repairs and maintenance contracts
For contracts in this category, the customer raises orders on demand, for example to carry out responsive repairs. Payments from the customer take the form of lump-sum periodic payments, task-based payments, or a mixture of both, 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.
Contracting projects
For contracting projects, the contract states the scope and specification of the works to be carried out, for a fixed price. Typically, this type of contract covers planned and regeneration works that follow a programme across a portfolio of customer properties. Mears is continuously satisfying the single performance obligation of completing the programme as cost is incurred, determining progress against the performance obligation on an output basis. The customer controls the portfolio as the work is being performed on it and, therefore, revenue is recognised over time.
Under the output method, an assessment is made of the value of the work delivered to date against the contractual price for each element of the work to determine the stage of completion. The output method matches the transfer of services to the customer, so is considered a suitable method to determine progress.
Contract variations are always accounted for as if they were part of the existing contract because the nature of the contract means that any additional services required will not be distinct from the originally agreed scope of services. The variations are incorporated into the assessment of the transaction price and progress against the overall performance obligation.
Property and lease income
Where the Group is providing an accommodation and support service, each day of providing the service is a separate performance obligation and revenue is recognised over time for that day. For some contracts, the performance obligation is linked to the service user and revenue is therefore recognised only on days when the accommodation is occupied. For other contracts, the performance obligation is the availability of the service and revenue is therefore not linked directly to occupancy.
Where the transaction price is linked directly to a performance obligation (such as a service user in accommodation for a day), it is allocated to that performance obligation. Contracts typically provide for an amount to be paid that is not linked directly to a performance obligation, such as a monthly amount to contribute to overheads. Where these amounts are small in the context of the overall contract and the number of performance obligations completed in a month is consistent, these amounts are recognised over the month for which they are paid.
In one contract, the element of the price that is not directly linked to a performance obligation is more substantial and the profile of performance obligations completed in a month is highly variable over time. In that instance, the transaction price is allocated across the performance obligations based on the activity in each period across the entire contract life.
Some contracts may include an element of variable revenue related to service credits arising from elements of the service delivery being outside agreed parameters. Management estimates the expected service credits and recognises revenue on the contract only to the extent it is highly probable not to be reversed by service credits.
When the Group arranges for certain goods or services to be provided to its customers by third parties, it evaluates whether it is acting as a principal or an agent in relation to those goods or services. For example, in some contracts the Group arranges and pays for utility services that are delivered directly to the customer. To determine whether it is acting as an agent, the Group assesses whether it controls the goods or services before they are transferred to the customer. If the Group is acting as an agent, it recognises neither revenue from the customer\u2019s payment nor an expense for the amount paid to the supplier. Any amounts paid to the supplier for which reimbursement has not yet been received from the customer are recorded within Other debtors.
Where the Group enters into arrangements with customers for the provision of housing property, an assessment is made as to whether this income is recognised as a lease under IFRS 16, or as service revenue under IFRS 15. 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. Lease income 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 charge is on a unit 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.
Professional services
Professional services includes standalone property compliance services and decarbonisation retrofit analysis. The transaction price for this type of work is either a fixed fee per task or on a time basis. The performance obligations in respect of these services are recognised over time as the Group has an enforceable right to payment for performance completed at any given point.
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.
Gainshare
Across all revenue types, some contracts include an element of gainshare. The details vary by contract, but gainshare is typically a\u00a0reduction in the revenue that would otherwise be due from the customer based on a share of profits generated above a contractual target. Gainshare is typically agreed on an annual basis following the end of each contract year and where the profit share has not been agreed at a period end, management\u2019s best estimate of any profit share due to the customer is recognised as a reduction to revenue and included within repayments due to customers. Estimation uncertainty is typically low, as the calculation of gainshare is prescribed in the contract with the customer.
Critical judgements in applying the Group\u2019s accounting policies
Revenue recognition
The valuation 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 valuation of contract assets. Each\u00a0contract 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 nature is as follows:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Revenue from contracts with customers
\u00a0
\u00a0
Repairs and maintenance
551,071
455,058
Contracting
49,563
77,956
Property income
486,839
551,198
Care services
22,372
22,164
Professional services
5,337
579
Other
140
56
\u00a0
1,115,322
1,107,011
Lease income
20,139
25,499
\u00a0
1,135,461
1,132,510
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 arrears. Lease income is typically invoiced monthly in advance. Payment terms for revenue invoiced are typically 30 to 60 days from the date of invoice.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869176": { "value": "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 stakeholders has included a split between Maintenance and Management. Therefore, management has concluded that providing segmental information along the same lines would be helpful to the users of the financial statements.
Revenue
620,437
515,024
1,135,461
555,813
576,697
1,132,510
Cost of sales
(465,416)
(404,206)
(869,622)
(420,722)
(458,535)
(879,257)
Gross profit
155,021
110,818
265,839
135,091
118,162
253,253
Administrative costs
(122,648)
(68,163)
(190,811)
(109,191)
(72,517)
(181,708)
Share of profits of associates
(40)
52
12
1,014
\u2013
1,014
Net finance income/(costs)
4,108
(15,660)
(11,552)
4,673
(13,091)
(8,418)
Profit before tax
36,441
27,047
63,488
31,587
32,554
64,141
Tax expense
\u00a0
\u00a0
(17,549)
\u00a0
\u00a0
(17,205)
Profit for the year
\u00a0
\u00a0
45,939
\u00a0
\u00a0
46,936
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 \u00a3160m for 2025, which would, under normal conditions, amount to around 15% of Group revenues. The AASC has continued to experience elevated volumes and as a result, this customer relationship accounted for over 30% of Group revenues in 2025. 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. All other revenue is included within the Maintenance segment, except \u00a38.0m (2024: \u00a3nil) of repairs and maintenance income that is included in the Management segment", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869194": { "value": "5. Finance income and finance costs
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Interest charge on overdrafts and loans
(560)
(957)
Interest on lease obligations
(14,851)
(12,698)
Finance costs on bank loans, overdrafts and leases
(15,411)
(13,655)
Other interest
(667)
(93)
Interest charge on defined benefit pension obligation
\u2013
(37)
Total finance costs
(16,078)
(13,785)
Interest income resulting from short-term deposits
2,521
3,791
Interest income resulting from defined benefit pension asset
1,249
926
Other interest income
756
650
Total finance income
4,526
5,367
Net finance charge
(11,552)
(8,418)
6. Employees
Staff costs during the year were as follows:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Wages and salaries
204,108
189,290
Social security costs
24,549
20,513
Other pension costs
7,815
4,882
\u00a0
236,472
214,685
The average number of employees of the Group during the year was:
\u00a0
2025
2024
Site workers
2,828
2,552
Carers
612
632
Office and management
2,076
2,287
\u00a0
5,516
5,471
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 calculating 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\u00a0equity-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 2025, the Group maintained four (2024: four) active share-based payment schemes for employee remuneration.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869195": { "value": "Details of the share options outstanding and movement during the year are as follows:
\u00a0
2025
2024
\u00a0
Number
\u2019000
Weighted
average
exercise price
p
Number
\u2019000
Weighted
average
exercise price
p
Outstanding at 1 January
4,353
139
2,553
48
Granted
713
1
2,628
206
Forfeited
(237)
289
(130)
250
Exercised
(674)
10
(698)
37
Outstanding at 31 December
4,155
128
4,353
139
The weighted average share price at the date of exercise for share options exercised during the year was 393p. The weighted average remaining contractual life of options outstanding at 31 December 2025 was 6.4 years. At 31 December 2025, 0.3m options had vested and were still exercisable at prices between 1p and 429p (weighted average of 288p).
The weighted average fair value of options granted was 368p. The fair values of executive scheme options granted, which included a market-related performance condition, were determined using the Monte Carlo model, while those for all-employee schemes used the Black-Scholes-Merton option pricing model. Significant inputs into the calculations included the market price at the date of grant, the exercise price and share price volatility. Furthermore, the calculations incorporated 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 0.71m options granted during the year and 0.24m options that were forfeited during the year. The market price at 31\u00a0December 2025 was 358p and the range during 2025 was 312p to 418p.
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:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Giving rise to share-based payment reserve:
\u00a0
\u00a0
All-employee schemes
533
416
Executive schemes
1,753
2,206
\u00a0
2,286
2,622
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 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 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. Options are granted under this scheme to key senior management subject to performance conditions as detailed on pages 90 to 100 of 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 any 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 page 94.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869178": { "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 equity 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 realised, 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.
8. Tax expense\u00a0continued
Tax recognised in the Consolidated Statement of Profit or Loss:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
United Kingdom corporation tax
16,895
16,567
Adjustment in respect of previous periods
(69)
406
Total current tax charge recognised in Consolidated Statement of Profit or Loss
16,826
16,973
Deferred taxation charge:
\u00a0
\u00a0
\u2013 on defined benefit pension obligations
362
358
\u2013 on share-based payments
(258)
(466)
\u2013 on capital allowances
(189)
209
\u2013 on amortisation of acquisition intangibles
(97)
(61)
\u2013 on corporate tax losses
\u2013
(274)
\u2013 on fair value adjustments
331
(14)
\u2013 other timing differences
70
73
Adjustment in respect of previous periods
504
407
Total deferred taxation recognised in Consolidated Statement of Profit or Loss
723
232
Total tax charge recognised in Consolidated Statement of Profit or Loss
17,549
17,205
The charge for the year can be reconciled to the profit for the year as follows:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Profit for the year before tax
63,488
64,141
Profit for the year multiplied by standard rate of corporation tax in the United Kingdom for the year of 25.0% (2024: 25.0%)
15,872
16,035
Effect of:
\u00a0
\u2013 expenses not deductible for tax purposes
474
222
\u2013 income not subject to tax
\u2013
(395)
\u2013 previously unrecognised losses
\u2013
(274)
\u2013 permanent tax differences in respect of assets
768
803
\u2013 adjustment in respect of prior periods
435
814
Actual tax charge
17,549
17,205
Deferred tax is recognised on temporary differences between the treatment of items for both tax and accounting purposes. Deferred\u00a0tax on the amortisation of acquisition intangibles is a temporary difference and arises because no tax relief is due on this kind\u00a0of 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. There are no losses for which deferred tax is not recognised.
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 the financial statements. Permanent differences in respect of assets arise where certain types of capital expenditure do not qualify for tax relief.
The following tax has been charged to other comprehensive income or equity during the year:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Deferred tax (credit)/charge recognised in other comprehensive income
\u00a0
\u00a0
\u2013 on defined benefit pension obligations
(3)
537
Total deferred tax (credit)/charge recognised in other comprehensive income
(3)
537
Current tax credit recognised directly in equity
\u00a0
\u00a0
\u2013 on share-based payments
(362)
(409)
Total current tax credit recognised in equity
(362)
(409)
Deferred tax charge/(credit) recognised directly in equity
\u00a0
\u00a0
\u2013 on share-based payments
163
(156)
Total deferred tax charge/(credit) recognised in equity
163
9. Dividends
Accounting policy
Dividend distributions payable to equity shareholders are included in \u201cCurrent financial liabilities\u201d 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:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Final 2024 dividend of 11.25p (2024: final 2023 dividend of 9.30p) per share
9,271
8,660
Interim 2025 dividend of 5.60p (2024: interim 2024 dividend of 4.75p) per share
4,615
4,273
\u00a0
13,886
12,933
10. Earnings per share
\u00a0
2025
p
2024
p
Earnings per share
55.70
50.27
Diluted earnings per share
53.86
48.86
For the purpose of calculating earnings per share (EPS), earnings have been calculated as follows:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Profit for the year
45,939
46,936
Attributable to non-controlling interests
283
(410)
Earnings
46,222
46,526
10. Earnings per share\u00a0continued
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.
\u00a0
2025
Millions
2024
Millions
Weighted average number of shares in issue:
82.99
92.56
Dilutive effect of share options
2.82
2.66
Weighted average number of shares for calculating diluted earnings per share
85.81
95.22
The opening number of shares in issue for 2026 is shown below:
\u00a0
2026
Millions
Opening number of shares in issue
86.5
Treasury shares to exclude
(4.1)
Opening number of shares in issue for calculating basic earnings per share
82.4
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 recognised 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\u00a0least 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.
\u00a0
Note
\u00a3\u2019000
Gross carrying amount
\u00a0
At 1 January 2024 and 1 January 2025
121,868
Acquisition of a subsidiary
21
3,117
Assets classified as held for sale
22
(6,779)
At 31 December 2025
118,206
Accumulated impairment losses
\u00a0
At 1 January 2024, 1 January 2025 and 31 December 2025
\u2013
Carrying amount
\u00a0
At 31 December 2025
118,206
At 31 December 2024
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:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Maintenance (excluding Housing with Care)
65,670
69,332
Management
33,447
33,447
Housing with Care
19,089
19,089
\u00a0
118,206
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. At 30 September 2025, impairment reviews were performed by comparing the carrying value with the value in use for the groups of CGUs to which goodwill has been 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 CGUs to exceed its recoverable amount.
The rates used were as follows:
\u00a0
Post-tax
discount rate
Pre-tax
discount rate
Volume
growth rate
(years 1\u20133)
Volume
growth rate
(years 4\u20135)
Terminal
growth
\u00a0rate
Maintenance
9.35%
11.90%
5.00%
2.00%
2.00%
Management
9.35%
11.07%
2.00%
2.00%
2.00%
Housing with Care
9.35%
11.67%
3.00%
3.00%
2.00%
No indicators of impairment arose between 30 September 2025 and 31 December 2025 to indicate that the impairment assessment should be updated.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869179": { "value": "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 values of the assets in the group are not reliably measurable. Intangible assets are amortised over the useful economic lives 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\u00a0prepare 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 on 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:
Acquisition intangibles\t\u2013 over the period expected to benefit, typically five to ten years
Development expenditure\t\u2013 over the useful life of the resulting software, typically five to ten years
Purchased software\t\u2013 20% p.a., straight line
The useful economic lives of intangible assets are reviewed annually and amended if appropriate.
Acquisition intangibles
Development
expenditure
\u00a3\u2019000
\u00a0Purchased
software
\u00a3\u2019000
Total
intangibles
\u00a3\u2019000
Customer
relationships
\u00a3\u2019000
Brand
\u00a3\u2019000
Total
acquisition
intangibles
\u00a3\u2019000
Gross carrying amount
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
At 1 January 2024
4,890
\u2013
4,890
18,394
2,722
26,006
Additions
\u2013
\u2013
\u2013
1,204
238
1,442
Disposals
\u2013
\u2013
\u2013
(1,443)
(344)
(1,787)
At 1 January 2025
4,890
\u2013
4,890
18,155
2,616
25,661
Acquisition of subsidiary
4,701
972
5,673
\u2013
\u2013
5,673
Additions
\u2013
\u2013
\u2013
1,638
64
1,702
Disposals
\u2013
\u2013
\u2013
(12,798)
(919)
(13,717)
Assets classified as held for sale
(4,890)
\u2013
(4,890)
\u2013
\u2013
(4,890)
At 31 December 2025
4,701
972
5,673
6,995
1,761
14,429
Amortisation
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
At 1 January 2024
2,730
\u2013
2,730
14,449
1,781
18,960
Provided in the year
245
\u2013
245
1,478
521
2,244
Eliminated on disposal
\u2013
\u2013
\u2013
(1,443)
(344)
(1,787)
At 1 January 2025
2,975
\u2013
2,975
14,484
1,958
19,417
Provided in the year
363
24
387
1,664
203
2,254
Eliminated on disposal
\u2013
\u2013
\u2013
(12,798)
(919)
(13,717)
Assets classified as held for sale
(3,220)
\u2013
(3,220)
\u2013
\u2013
(3,220)
At 31 December 2025
118
24
142
3,350
1,242
4,734
Carrying amount
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
At 31 December 2025
4,583
948
5,531
3,645
519
9,695
At 31 December 2024
1,915
\u2013
1,915
3,671
658
6,244
Acquisition intangibles relate entirely to customer relationships recognised at fair value on historical acquisitions.
Development expenditure is an internally developed intangible asset and relates to the development of the Group\u2019s contract management system and decarbonisation assessment software. It is amortised over its useful economic life of either five or ten years, depending on the resulting software.
All amortisation is included within other administrative expenses.", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869199": { "value": "Accounting policy
Items of property, plant and equipment are stated at historical cost, net of depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset\u2019s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow into the Group 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\t\u2013 2% p.a., straight line
Leasehold improvements\t\u2013 over the period of the lease or expected useful life of the improvements if shorter, straight line
Plant and machinery\t\u2013 33% p.a., straight line
Equipment\t\u2013 25% p.a., straight line
Fixtures and fittings \u2013 50% p.a., straight line
Motor vehicles\t\u2013 20% p.a., straight line
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 \u201cAdministrative expenses\u201d 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 good 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.
In order to manage a significant number of short-life assets, which can be individually difficult to track, the Group\u2019s policy is to eliminate low-cost assets once they are fully depreciated.
124
Mears Group PLC\u00a0Annual Report and Accounts 2025
Strategic report
Corporate governance
Financial statements
Shareholder information
13. Property, plant and equipment\u00a0continued
\u00a0
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
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
At 1 January 2024
24,788
26,744
183
15,398
559
67,672
Additions
26,413
703
15
2,680
78
29,889
Disposals
(115)
(24)
\u2013
(1,587)
(20)
(1,746)
Eliminated on expiry of useful life
\u2013
(16,437)
(94)
(6,573)
(437)
(23,541)
Disposals on sale and leaseback
(22,725)
\u2013
\u2013
\u2013
\u2013
(22,725)
At 1 January 2025
28,361
10,986
104
9,918
180
49,549
Additions
43,242
126
324
1,759
4
45,455
Acquired with subsidiary
\u2013
\u2013
\u2013
201
93
294
Transfers between categories
\u2013
\u2013
1,064
(1,064)
\u2013
\u2013
Disposals
(284)
(1,025)
\u2013
(1,220)
(143)
(2,672)
Eliminated on expiry of useful life
\u2013
(3,382)
(226)
(1,685)
\u2013
(5,293)
Assets classified as held for sale
\u2013
\u2013
(16)
(77)
(14)
(107)
Disposals on sale and leaseback
(25,490)
\u2013
\u2013
\u2013
\u2013
(25,490)
At 31 December 2025
45,829
6,705
1,250
7,832
120
61,736
Depreciation
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
At 1 January 2024
335
18,374
144
9,773
513
29,139
Provided in the year
789
3,788
24
2,158
24
6,783
Eliminated on disposal
(4)
(10)
\u2013
(1,069)
(14)
(1,097)
Eliminated on expiry of useful life
\u2013
(16,437)
(94)
(6,573)
(437)
(23,541)
Disposal on sale and leaseback
(571)
\u2013
\u2013
\u2013
\u2013
(571)
At 1 January 2025
549
5,715
74
4,289
86
10,713
Provided in the year
1,041
2,582
473
2,517
26
6,639
Transfers between categories
\u2013
\u2013
389
(389)
\u2013
\u2013
Eliminated on disposal
(14)
(615)
\u2013
(823)
(67)
(1,519)
Eliminated on expiry of useful life
\u2013
(3,382)
(226)
(1,685)
\u2013
(5,293)
Assets classified as held for sale
\u2013
\u2013
(1)
(35)
(4)
(40)
Disposal on sale and leaseback
(683)
\u2013
\u2013
\u2013
\u2013
(683)
At 31 December 2025
893
4,300
709
3,874
41
9,817
Carrying amount
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
At 31 December 2025
44,936
2,405
541
3,958
79
51,919
At 31 December 2024
27,812
5,271
30
5,629
94
Sale and leaseback
On 22 December 2025, the Group entered into a sale and leaseback arrangement in respect of 199 residential properties with a carrying value of \u00a324.8m that had previously been acquired on the open market. Further details of this transaction are provided in note\u00a02", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869180": { "value": "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 the 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 exercised.
The Group has elected to account for short-term leases and leases of low value assets using the practical expedients. Instead of recognising a right of use asset and a lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.
In the Consolidated Balance Sheet, right of use assets and lease liabilities are presented separately.
Critical judgements in applying the Group\u2019s accounting policies
The Group holds a considerable number of 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; and
determining the lease term.
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 Group does not in practice have the right to control the use of the asset and the key decision-making rights are retained by the supplier; and
where a wider agreement for a supply of services includes a lease component which meets the definition of a lease under IFRS\u00a016.
Investment property
Included within right of use assets are certain properties classified as investment properties in accordance with IAS 40. These properties are leased primarily to earn rentals from sub-leasing. The Group has chosen to apply the cost model to all investment property and, therefore, measurement is in line with IFRS 16 as described above.
Investment
property
Assets that are used directly
within the business
Total
\u00a3\u2019000
\u00a0
Residential
property
\u00a3\u2019000
Residential
property
\u00a3\u2019000
Offices
\u00a3\u2019000
Motor
vehicles
\u00a3\u2019000
Gross carrying amount
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
At 1 January 2024
151,564
190,257
10,384
44,674
396,879
Additions*
12,683
70,557
1,811
10,695
95,746
Sale and leaseback
\u2013
11,257
\u2013
\u2013
11,257
Disposals
(1,369)
(37,759)
(1,885)
(11,606)
(52,619)
At 1 January 2025
162,878
234,312
10,310
43,763
451,263
Additions*
3,595
66,601
1,843
11,327
83,366
Acquired with subsidiary
\u2013
\u2013
182
\u2013
182
Sale and leaseback
\u2013
10,623
\u2013
\u2013
10,623
Disposals
(354)
(23,203)
(1,204)
(5,112)
(29,873)
Assets classified as held for sale
\u2013
\u2013
(515)
\u2013
(515)
At 31 December 2025
166,119
288,333
10,616
49,978
515,046
Depreciation
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
At 1 January 2024
46,385
88,535
6,387
21,923
163,230
Provided in the year
8,967
42,604
1,673
9,005
62,249
Impairments
633
\u2013
\u2013
\u2013
633
Eliminated on disposals
(1,298)
(32,782)
(1,885)
(11,055)
(47,020)
At 1 January 2025
54,687
98,357
6,175
19,873
179,092
Provided in the year
9,548
50,685
1,787
9,780
71,800
Impairments
856
\u2013
\u2013
\u2013
856
Eliminated on disposals
(354)
(19,166)
(1,204)
(4,943)
(25,667)
Assets classified as held for sale
\u2013
\u2013
(343)
\u2013
(343)
At 31 December 2025
64,737
129,876
6,415
24,710
225,738
Carrying amount
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
At 31 December 2025
101,382
158,457
4,201
25,268
289,308
At 31 December 2024
108,191
135,955
4,135
23,890
272,171
*\tAdditions includes both new underlying assets and remeasurement of the right of use asset for changes in the lease terms.
During the year, the Group entered into a sale and leaseback arrangement in respect of 199 residential properties. Further details of\u00a0this transaction can be found in note 23.
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 \u00a322.0m (2024: \u00a325.5m). Direct\u00a0operating expenses of \u00a319.6m (2024: \u00a322.2m), excluding impairments, arose from investment property that generated rental income during the year. 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
The Group recognised an impairment loss of \u00a30.9m (2024: \u00a30.6m) in respect of certain right of use assets classified as investment property. These property portfolios are held to collect rent income, either directly from tenants or from Local Authorities. While trading in respect of these properties remained broadly in line with expectations during 2025, the Group\u2019s impairment assessments at 31\u00a0December 2025 resulted in an additional impairment.
In carrying out impairment assessments, management prepared detailed cash flow forecasts for the lives of the underlying leases on these properties and discounted them using an appropriate rate, in order to estimate the value in use. The range of discount rates used in these calculations was from 6.70% to 7.25%.
The impact of the impairments on the Consolidated Statement of Profit or Loss has been recognised within cost of sales.
127
Lease liabilities are separately presented on the face of the Consolidated Balance Sheet as shown below:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Current
80,652
66,861
Non-current
238,069
230,641
\u00a0
318,721
297,502
The Group had not committed to any leases which had not commenced at 31 December 2025. 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.
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\u00a0lease liabilities in accordance with IFRS 16. The expense relating to payments not included in the measurement of the lease liability is as follows:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Short-term leases
68,623
64,678
Low value leases
503
850
Variable lease payments
737
859
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.
14
71,800
62,249
Impairment of right of use assets
14
856
633
Additions to right of use assets arising from new leases or modifications
14
83,366
95,746
Additions to right of use assets arising from sale and leaseback
14
10,623
11,257
Carrying value of right of use assets at the year end
14
289,308
272,171
Interest on lease liabilities during the year
5
14,851
12,698
Total cash outflow in respect of leases during the year
27
83,198
70,605
134
Other disclosures relating to lease liabilities are provided in the table below:
\u00a0
Note
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Depreciation of right of use assets
Accounting policy
Investments include those over which the Group has significant influence but which it does not control. These are categorised as associates. It is 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 2024
557
65
622
Share of profit
1,014
\u2013
1,014
Increase in fair value
\u2013
785
785
Distributions received
(147)
\u2013
(147)
At 1 January 2025
1,424
850
2,274
Share of profit
12
\u2013
12
Increase in fair value
\u2013
1,500
1,500
At 31 December 2025
1,436
2,350
3,786
Other investments represents the Group\u2019s 6.16% holding in Mason Topco Limited, which is mandatorily held at fair value through profit or loss. During the year, management reassessed the fair value of this holding, increasing it by \u00a31.5m (2024: \u00a30.8m). This increase in fair value was recognised in administrative expenses in the Consolidated Statement of Profit or Loss.
Mason Topco Limited is an unquoted holding company that owns Terraquest Solutions Limited, following the disposal of that business by the Group in 2020. The fair value was assessed based on the latest available financial information in respect of the business, as well as several assumptions, including an estimate of the price/earnings (P/E) ratio that might be achieved, based on the original transaction (7.7x) and reflecting a suitable discount for lack of control and marketability (45%).
If the P/E ratio had been higher by 1.0x, the fair value would have been \u00a30.7m higher. If the discount for lack of control and marketability had been 20 percentage points lower, the fair value would have been \u00a30.8m higher.
Associates
Set out below are the investments in associates as at 31 December 2025, which in management\u2019s opinion are significant to the Group:
\u00a0
\u00a0
\u00a0
\u00a0
Carrying value
\u00a0
Nature of
relationship
Proportion
held
Country of
registration
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Pyramid Plus South LLP
Associate
30%
United
\u00a0Kingdom
1,384
1,424
MPC 1 Holdco Limited
Associate
25%
United
\u00a0Kingdom
52
\u2013
MPC 3 Holdco Limited
Associate
25%
United
Kingdom
\u2013
\u2013
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.
The holding in MPC 1 Holdco Limited (MP1) results from the sale and leaseback transaction completed in 2024. The holding in MPC 3 Holdco Limited (MP3) results from the sale and leaseback transaction described in note 23. These entities relate to similar transactions with the same third party and have identical ownership structures. As such, they are presented in aggregate in the table below.
During the year, the Group received distributions of \u00a3nil (2024: \u00a30.1m) from Pyramid Plus South LLPAssociates\u00a0continued
Summarised financial information for MP1 and MP3 in aggregate and for Pyramid Plus South LLP for the year is shown below:
MP1/MP3
Pyramid Plus South LLP
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Revenue and profits
\u00a0
\u00a0
\u00a0
\u00a0
Revenue
2,010
\u2013
30,435
44,406
Expenses
(1,804)
\u2013
(30,568)
(41,025)
Profit for the year
206
\u2013
(133)
3,381
Other comprehensive income
\u2013
\u2013
\u2013
\u2013
Total comprehensive income
206
\u2013
(133)
3,381
Share of profit
52
\u2013
(40)
1,014
Net assets
\u00a0
\u00a0
\u00a0
\u00a0
Non-current assets
47,162
22,154
\u2013
\u2013
Current assets
1,192
\u2013
13,728
12,071
Current liabilities
(122)
\u2013
(9,113)
(7,323)
Non-current liabilities
(48,026)
(22,154)
\u2013
\u2013
Total assets less total liabilities
206
\u2013
4,615
4,748
Cash and cash equivalents of \u00a32.5m (2024: \u00a33.2m) were included in current assets above.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869184": { "value": "The subsidiary undertakings within the Group at 31 December 2025 are shown below:
Registered address/entity
Proportion held
Country of registration
Nature of business
2nd Floor, Unit 5220 Valiant Court, Gloucester Business Park, Brockworth, Gloucester, GL3 4FE
Auburn Ainsley Limited
100%
United Kingdom
Dormant
Heather Housing Limited*
100%
United Kingdom
Housing provision
Helcim Group Limited
100%
United Kingdom
Dormant
Helcim Homes Limited
100%
United Kingdom
Dormant
Manchester Working Limited
80%
United Kingdom
Housing services
Mears Energy Limited
100%
United Kingdom
Dormant
Mears Estates Limited
100%
United Kingdom
Grounds maintenance
Mears Extra Care Limited*
100%
United Kingdom
Provision of care
Mears Facility Management Limited*
100%
United Kingdom
Dormant
Mears Homes Limited
100%
United Kingdom
Dormant
Mears Housing Management Limited
100%
United Kingdom
Housing management services
Mears Housing Management (Holdings) Limited*
100%
United Kingdom
Intermediate holding company
Mears Learning Limited
90%
United Kingdom
Dormant
Mears Limited*
100%
United Kingdom
Housing services
Mears New Homes Limited
100%
United Kingdom
Housebuilding
Mears Social Housing Limited
100%
United Kingdom
Dormant
Mears Wales Limited
100%
United Kingdom
Dormant
MPM Housing Limited
100%
United Kingdom
Dormant
MPS Housing Limited
100%
United Kingdom
Housing services
O&T Developments Limited
100%
United Kingdom
Housing management services
Omega Housing Limited
100%
United Kingdom
Housing registered provider
Pennington Asbestos Limited
100%
United Kingdom
Dormant
Pennington Audit Limited
100%
United Kingdom
Dormant
Pennington Choices Group Limited*
100%
United Kingdom
Intermediate holding company
Pennington Choices Limited
100%
United Kingdom
Compliance services
Pennington Fire Limited
100%
United Kingdom
Proportion held
Country of registration
Nature of business
Plexus UK (First Project) Limited
100%
United Kingdom
Housing registered provider
RepairMyHome C.I.C.
100%
United Kingdom
Online marketplace for housing maintenance
Scion Group Limited*
100%
United Kingdom
Dormant
Scion Property Services Limited
100%
United Kingdom
Dormant
Scion Technical Services Limited
100%
United Kingdom
Dormant
Tando Homes Limited
100%
United Kingdom
Housing management services
Tando Property Services Limited
100%
United Kingdom
Housing management services
Phoenix House, 1 Souterhouse Road, Coatbridge, Scotland, ML5 FAA
IRT Surveys Limited
100%
United Kingdom
Housing technology provider
Mears Property Company 2 Limited
100%
United Kingdom
Property acquisition
Mears Property Company 4 Limited
100%
United Kingdom
Property acquisition
Mears Scotland (Housing) Limited
100%
United Kingdom
Dormant
Mears Scotland LLP
66.67%
United Kingdom
Housing services
Morrison Facilities Services Limited*
100%
United Kingdom
Maintenance services
Pennington Ainsley Limited
100%
United Kingdom
Dormant
Dumyat Technology Centre, Alva Industrial Estate, Alva, Scotland, FK12 5DW
Mears Supported Living Limited*
100%
United Kingdom
Provision of care
1 North Albert House, South Esplanade, St\u00a0Peter Port, Guernsey, GY1 1AJ
Mears Insurance Company Limited*
99.99%
Guernsey
Insurance services
*\tHeld directly by Mears Group PLC.
All subsidiary undertakings prepare financial statements 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:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Revenue and profits
\u00a0
\u00a0
Revenue*
(106)
34,091
Expenses and taxation
(400)
(32,540)
(Loss)/profit for the year
(506)
1,551
Other comprehensive expense
\u2013
\u2013
Total comprehensive income
(506)
1,551
(Loss)/profit for the year allocated to non-controlling interests
(283)
410
Total comprehensive income allocated to non-controlling interests
(283)
410
Net assets
\u00a0
\u00a0
Non-current assets
\u2013
24
Current assets
10,905
11,420
Current liabilities
(1,434)
(1,056)
Non-current liabilities
(284)
(365)
Total assets less total liabilities
9,187
10,023
Equity attributable to shareholders of Mears Group PLC
6,112
6,665
Non-controlling interests
3,075
3,358
Total equity
9,187
10,023
Subsidiaries\u00a0continued
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 2025:
\u00a0
Registration
number
Heather Housing Limited
07713632
Helcim Group Limited
07526612
IRT Surveys Limited
SC227199
Mears Estates Limited
03720903
Mears Extra Care Limited
03689426
Mears Housing Management Limited
03662604
Mears Housing Management (Holdings) Limited
04726480
Mears New Homes Limited
08780839
Mears Property Company 2 Limited
SC750308
Mears Property Company 4 Limited
SC833017
Mears Supported Living Limited
SC662805
Morrison Facilities Services Limited
SC120550
MPS Housing Limited
11655167
O&T Developments Limited
05692853
Pennington Choices Group Limited
13811500
Pennington Choices Limited
03945920
RepairMyHome C.I.C.
15087336
Scion Group Limited
03905442
Scion Technical Services Limited
03671450
Tando Homes Limited
09260353
Trade receivables represents amounts due from customers in respect of invoices raised. They are initially measured at their transaction price and subsequently remeasured at amortised cost less loss allowance.
Retention assets represents amounts held by customers for a period following payment of invoices, to cover any potential defects in the work. Retention assets are included in trade receivables and are, therefore, initially measured at their transaction price.
Contract assets represents 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 potential range of outcomes on a consolidated basis would provide meaningful information to a reader of the financial statements.
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Current assets
\u00a0
\u00a0
Trade receivables
23,921
20,940
Contract assets
98,692
84,335
Contract fulfilment costs
\u2013
148
Prepayments and accrued income
26,104
Other debtors
6,317
3,314
Total trade and other receivables
155,034
133,205
Included in trade receivables is \u00a33.6m (2024: \u00a32.7m) 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 significant 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 loss 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.
The ageing analysis of trade receivables is as follows:
\u00a0
2025
2024
\u00a0
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
20,398
(171)
20,227
18,378
(181)
18,197
Less than three months past due
4,103
(547)
3,556
3,032
(637)
2,395
More than three months past due
2,254
(2,116)
138
1,979
(1,631)
348
Total trade receivables
26,755
(2,834)
23,921
23,389
(2,449)
20,940
Expected credit losses relate to individual tenant customers and are calculated based on the Group\u2019s historical experience of default by applying a percentage based on the age of the customer\u2019s balance. Any remaining uncollected debt is written off once the tenant has left the property and a significant period of time has elapsed, at which point the likelihood of recovery is negligible.
132
Mears Group PLC\u00a0Annual Report and Accounts 2025
Strategic report
Corporate governance
Financial statements
Shareholder information
17. Trade and other receivables\u00a0continued
Expected credit losses in respect of the majority of the Group\u2019s customers are rare, as Housing Associations, Local Authorities and Central Government do not typically default on debts. Where exceptional circumstances require an expected credit loss provision in respect of these customer types, they are assessed individually based on all the relevant facts.
The movement in expected credit loss during the year is shown below:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
At 1 January
2,449
1,722
Changes in amounts provided
403
727
Amounts utilised
(18)
\u2013
At 31 December
2,834
2,449
No expected credit loss is typically required in respect of contract assets as they relate entirely to Housing Associations, Local Authorities and Central Government customers, which do not typically default on debts. The movement in contract assets during the year is shown below:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
At 1 January
84,335
79,703
Recognised on completion of performance obligations
1,094,537
1,093,075
Invoiced during the year
(1,080,180)
(1,088,443)
At 31 December
98,692
84,335
Included in contract assets is a balance of \u00a323.9m recognised in respect of a single Maintenance contract, elements of which are subject to a dispute. The Directors have referred this dispute to an adjudication and may seek other routes of legal recourse in due course. The Group has taken legal advice and engaged an independent expert with quantity surveying proficiency. The carrying value reflects the Directors\u2019 best estimate of the likely outcome. The Directors recognise that there is litigation risk associated with any claim. Based on the information available to the Directors, a range of possible outcomes is considered to be +/- \u00a32.0m above and below this net balance. The uncertainty is expected to be resolved within the next financial year, and the final settlement could result in a recovery which is either greater than or less than the net contract asset recognised at 31 December 2025.
Other debtors are primarily amounts receivable from customers in respect of \u201cpass through\u201d arrangements, where the Group is acting as an agent for the customer in respect of certain goods or services", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11881636": { "value": "2025
\u00a3\u2019000
2024
\u00a3\u2019000
Materials and consumables
824
1,173
The Group consumed inventories totalling \u00a379.9m during the year (2024: \u00a381.8m). No items are being carried at fair value less costs to sell (2024: \u00a3nil).
131
Mears Group PLC\u00a0Annual Report and Accounts 2025
Strategic report
Corporate governance
Financial statements
Shareholder information
\u00a0
2025
\u00a3\u2019000
2024
(restated)
\u00a3\u2019000
Trade payables
58,688
51,723
Accruals
51,649
48,355
Social security and other taxes
26,458
27,734
Contract liabilities
22,209
20,835
Repayments due to customers
23,516
41,141
Other creditors
2,529
2,490
\u00a0
185,049
192,278
During the year, the Financial Reporting Council\u2019s (FRC) Corporate Reporting Review Team reviewed the Group\u2019s financial statements for the year ended 31 December 2024. The FRC sought clarification on the treatment of amounts due to customers under gainshare arrangements as contract liabilities. This review resulted in the Group restating the comparatives in the table above to reflect gainshare and other repayments due to customers in a new line separately from contract liabilities. The FRC has subsequently closed its review.
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.
133
Mears Group PLC\u00a0Annual Report and Accounts 2025
Strategic report
Corporate governance
Financial statements
Shareholder information
18. Trade and other payables\u00a0continued
The movement in contract liabilities during the year is shown below:
\u00a0
2025
\u00a3\u2019000
2024
(restated)
\u00a3\u2019000
At 1 January
20,835
17,260
Revenue recognised in respect of contract liabilities
(19,108)
(13,936)
Payments received in advance of performance obligations being completed
20,482
17,511
At 31 December
22,209
20,835
20. Provisions
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 has estimated provisions based on all relevant information available to it. 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:
\u00a0
2025
2024
\u00a0
Current
\u00a3\u2019000
Non-current
\u00a3\u2019000
Total
\u00a3\u2019000
Current
\u00a3\u2019000
Non-current
\u00a3\u2019000
Total
\u00a3\u2019000
Onerous contract provisions
1,156
7,800
8,956
794
7,408
8,202
Property provisions
1,283
993
2,276
849
993
1,842
Insurance provisions
2,334
1,949
4,283
2,774
1,364
4,138
Legal and other provisions
1,250
\u2013
1,250
6,400
\u2013
6,400
Total provisions
6,023
10,742
16,765
10,817
9,765
20,582
A summary of the movement in provisions during the year is shown below:
\u00a0
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 2025
8,202
1,842
4,138
6,400
20,582
Provided during the year
1,649
524
1,933
2,525
6,631
Utilised during the year
(535)
\u2013
(1,788)
(7,175)
(9,498)
Unused amounts reversed
(360)
(90)
\u2013
(500)
(950)
At 31 December 2025
8,956
2,276
4,283
1,250
16,765
Onerous contract provisions
The Group has identified two contracts, one expiring during 2026, the other with a remaining term of 31 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 contract.
The largest component within onerous contract provisions is \u00a38.2m (2024: \u00a36.8m) relating to a single Community Housing contract which is reported within the Management segment. The remaining balance of \u00a30.8m (2024: \u00a31.4m) 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 the contract where the time value of money is material, these cash flow forecasts have then been discounted using an appropriate discount rate.
Recognising that by their nature there is variability in future-looking cash flow forecasts, the cash flows for the Community Housing contract have incorporated an appropriate risk factor, before discounting at the relevant risk-free rate for the maturity profile. The\u00a0discount rate used was a real rate, in line with the cash flows modelled, and was set at 2.55% at 31 December 2025.
If the discount rate used was 0.5 percentage points higher, the onerous contract provision would have been \u00a30.5m lower.
The provisions recognised are also sensitive to the underlying cash flow forecasts. If the anticipated annual net cash outflow, ranging from \u00a30.4m to \u00a30.8m across the different 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 claims20. Provisions\u00a0continued
Legal and other provisions
Legal and other provisions relate to previously completed customer contracts where management is aware of probable liabilities and\u00a0future losses associated with work defects or other commercial disputes. The balance reduced significantly in the period, with the\u00a0settlement of the two highest value claims. Of these two claims, one settled with a shortfall compared to the opening provision, and the second settled below the opening provision. In aggregate, these two claims carried a provision at 31 December 2024 of \u00a35.7m and settled at a combined cost of \u00a37.2m, with the net shortfall of \u00a31.5m being charged to the income statement in the period", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11883081": { "value": "21. Acquisition
On 14 September 2025, the Group acquired 100% of the issued share capital of Pennington Choices Group Limited, a provider of building compliance services. This acquisition has enhanced the Group\u2019s ability to deliver compliance services to its key customer groups, which remains a key pillar of the Group\u2019s strategy.
The purchase consideration was \u00a39.5m plus \u00a30.3m for excess working capital, comprised entirely of cash on completion. The assets and liabilities recognised as a result of the acquisition were as follows:
\u00a3\u2019000
Intangible assets
5,673
Property, plant and equipment
294
Right of use assets
182
Trade and other receivables
3,147
Bank and cash
897
Trade and other payables
(1,867)
Lease liabilities
(182)
Deferred tax
(1,475)
Net identifiable assets acquired
6,669
Goodwill
3,117
Net assets acquired
9,786
The goodwill is attributable to the workforce and the expected synergies from combining the operations of the acquired business with those of the existing Group. It will not be deductible for tax purposes.
The gross contractual amount and fair value of trade and other receivables is \u00a33.1m. The customers of the acquired business are largely Local Authorities and Housing Associations with very limited risk of default.
The acquired business contributed revenues of \u00a34.6m and net profit of \u00a30.1m for the period from 14 September to 31 December 2025. If\u00a0the acquisition had occurred on 1 January 2025, consolidated revenue and profit for the year ended 31 December 2025 would have been \u00a31,147.2m and \u00a345.9m respectively.
\u00a3\u2019000
Cash consideration
9,786
Cash acquired
(897)
Net outflow of cash \u2013 investing activities
8,889
During the year, management identified that one of its subsidiaries, Morrison Facilities Services Limited (\u2018MFS\u2019), had met the criteria to be treated as held for sale. MFS is a provider of facilities management services with a focus on the education and healthcare sectors and has historically been reported within the Maintenance segment.
A competitive sales process was commenced to identify whether a buyer could be found for MFS at a suitable price. Towards the end of 2025, the Group entered into an exclusivity agreement with a potential buyer to sell MFS for \u00a318.0m on a debt- and cash-free basis with a normal level of working capital. MFS was therefore considered as held for sale at the year end.
The sale completed on 2 March 2026 on the basis set out above. A breakdown of the fair value of assets and liabilities of the disposal group held for sale at 31 December 2025 is set out below:
\u00a3\u2019000
Goodwill
6,779
Intangible assets
1,670
Property, plant and equipment
67
Right of use assets
172
Pension assets
585
Inventories
87
Trade and other receivables
5,688
Bank and cash
3,328
Assets classified as held for sale
18,376
Trade and other payables
(8,476)
Lease liabilities
(171)
Current tax liabilities
(228)
Deferred tax liabilities
(270)
Liabilities associated with assets classified as held for sale
(9,145)
Net assets held for sale
9,231
MFS does not represent a separate major line of business or geographical area of operations for the Group and it has therefore not been classified as a discontinued operation.
The assets and liabilities included above are separately identifiable as belonging to the disposal group, with the exception of goodwill, which is an appropriate proportion of the goodwill allocated to the Maintenance group of CGUs. This proportion has been determined by comparing the estimated fair value of the group of CGUs including the disposal group and excluding the disposal group", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869186": { "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 to\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 interest 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.
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 \u201csimplified approach\u201d. 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 quoted in an 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 impairment 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. The Group also considers its revolving credit facility to be an integral part of its cash management, although this facility was not drawn at 31 December 2024 or 2025.
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 and other creditors. They are included in the Consolidated Balance Sheet line items \u201cTrade and other payables\u201d and \u201cLease liabilities\u201d.
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 \u201cFinance income\u201d and \u201cFinance costs\u201d. Borrowing costs are recognised as an expense in the period in which they are incurred.
Trade payables on normal terms are not interest bearing and are stated at their fair value on initial recognition and subsequently at\u00a0amortised cost.
138
24. Financial instruments\u00a0continued
Categories of financial instruments
\u00a0
2025
\u00a3\u2019000
2024
(restated*)
\u00a3\u2019000
Non-current assets
\u00a0
\u00a0
Fair value (level 3)
\u00a0
\u00a0
Investments \u2013 other investments
2,350
850
Amortised cost
\u00a0
\u00a0
Loan notes and other non-current receivables
20,196
10,195
Current assets
\u00a0
\u00a0
Amortised cost
\u00a0
\u00a0
Trade receivables
23,921
20,940
Other debtors
6,317
3,314
Cash and cash equivalents
48,479
91,404
\u00a0
78,717
115,658
Non-current liabilities
\u00a0
\u00a0
Amortised cost
\u00a0
\u00a0
Lease liabilities
(238,069)
(230,641)
Current liabilities
\u00a0
\u00a0
Amortised cost
\u00a0
\u00a0
Trade payables
(58,688)
(51,723)
Lease liabilities
(80,652)
(66,861)
Repayments due to customers
(23,516)
(41,141)
Other creditors
(2,529)
(2,490)
\u00a0
(165,385)
(162,215)
\u00a0
(302,191)
(266,153)
*\tThe comparative figures have been restated to reflect repayments due to customers, as detailed in note 18.
The amount recognised as an allowance for expected credit losses on trade receivables during 2025 was \u00a30.4m (2024: \u00a30.7m).
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 arrive 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 which 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 customers. The Group\u2019s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group\u2019s financial performance.
Risk management is carried out under policies and guidelines approved by the Board of Directors.
24. 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 has a revolving credit facility of \u00a370.0m with Barclays Bank PLC and HSBC Bank PLC. 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.
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 1.45% and 2.75% during the year.
During the year, the Group agreed an extension to its existing borrowing facilities that were originally due to mature in December 2026. As part of this extension, the banking consortium was reduced from three banks to two, resulting in Citi departing. The extension was agreed at a lower margin range (1.45%-2.45% compared with 1.75%-2.75%) but with the same available amount. The facility now expires in December 2029.
Details of the Group\u2019s banking covenants are provided on page 46.
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 interest 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 prescribed parameters.
At 31 December 2025, 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 and 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:
\u00a0
Within 1 year
\u00a3\u2019000
1\u20132 years
\u00a3\u2019000
2\u20135 years
\u00a3\u2019000
Over 5 years
\u00a3\u2019000
Total
\u00a3\u2019000
2025
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Non-derivative financial liabilities
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Trade payables
58,688
\u2013
\u2013
\u2013
58,688
Lease liabilities
84,901
70,537
118,603
96,209
370,250
Repayments due to customers
23,516
\u2013
\u2013
\u2013
23,516
Other creditors
2,529
\u2013
\u2013
\u2013
2,529
2024
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Non-derivative financial liabilities
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Trade payables
51,723
\u2013
\u2013
\u2013
51,723
Lease liabilities
70,229
61,906
109,019
104,224
345,378
Repayments due to customers
41,141
\u2013
\u2013
\u2013
41,141
Other creditors
2,490
\u2013
\u2013
\u2013
24. 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 large number of receivables from various customers.
The Group continually monitors the position of major customers and incorporates this information into its credit risk controls. External\u00a0credit ratings are obtained where appropriate.
Details of the ageing of trade receivables are shown in note 17.
Loan notes receivable
Loan notes with a carrying value of \u00a35.1m (2024: \u00a34.7m) were received as part of the disposal of the Terraquest Group. They are repayable in December 2028 and accrue interest at 10% per annum.
Loan notes with a carrying value of \u00a35.2m (2024: \u00a35.3m) were received as part of the sale and leaseback transaction completed in 2024. Interest is payable monthly at 5% per annum. They are repayable in 2039 or on the event of a further sale of the properties by the buyer.
During the year, the Group entered into a sale and leaseback transaction as detailed in note 23. As part of this transaction, the Group received loan notes with a carrying value of \u00a36.5m. Interest accrues monthly at 4% per annum on the balance outstanding and the loan notes are repayable in 2039 or on the event of a further sale of the properties by the buyer.
During the year, the Group provided a loan of \u00a33.2m to MPC 3 Holdco Limited, an associate. The loan was utilised to fund the acquisition by MPC 3 Holdco Limited of a portfolio of properties that were being leased by the Group from a third party. The Group\u2019s lease arrangement was unchanged as a result of this transaction. Interest accrues monthly at 10% per annum on the balance outstanding and the loan notes are repayable in 2039 or on the event of a further sale of the properties by the buyer.
All loan notes are presented in non-current assets.
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 other 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 of 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 sell assets to reduce debt.
The Group monitors its equity and net cash (or debt) as capital. The year-end total of equity is that indicated in the Consolidated Balance Sheet and the net cash position is detailed in note 27", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869188": { "value": "\u00a3\u2019000
Total
\u00a3\u2019000
At 1 January 2024
(4,799)
698
569
\u2013
1,295
(540)
(128)
\u2013
(2,905)
(Debit)/credit to Consolidated Income Statement
(319)
466
(56)
274
(872)
61
14
200
(232)
Credit to Consolidated Statement of Changes in\u00a0Equity
\u2013
156
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
156
Debit to Consolidated Statement of Comprehensive\u00a0Income
(537)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(537)
At 31 December 2024
(5,655)
1,320
513
274
423
(479)
(114)
200
(3,518)
(Debit)/credit to Consolidated Income Statement
(390)
258
(57)
\u2013
(20)
96
(543)
(67)
(723)
Debit to Consolidated Statement of Changes in\u00a0Equity
\u2013
(163)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(163)
Credit to Consolidated Statement of Comprehensive\u00a0Income
3
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
3
Transfer to assets held\u00a0for\u00a0sale
146
\u2013
\u2013
\u2013
(293)
417
\u2013
\u2013
270
Resulting from business combinations
\u2013
\u2013
\u2013
\u2013
(57)
(1,418)
\u2013
\u2013
(1,475)
At 31 December 2025
(5,896)
1,415
456
274
53
(1,384)
(657)
133
(5,606)
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 future periods is dependent on the Company\u2019s share price at the date of exercise. The estimated future tax deduction is based on the options\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 Comprehensive Income.
There are no unused tax losses that have not been recognised for the purposes of deferred tax.
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 financial statements. Hence, the tax base of acquisition intangible assets arising on consolidation is \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.
25. Deferred taxation
Deferred tax is calculated on temporary differences under the liability method.
Deferred tax relates to the following:
Pension scheme \u00a3\u2019000
Share- based payments \u00a3\u2019000
Leases \u00a3\u2019000
Tax
losses \u00a3\u2019000
Capital allowances \u00a3\u2019000
Acquisition intangibles \u00a3\u2019000
Fair value adjustments \u00a3\u2019000
It is expected that \u00a30.2m of the net deferred tax liability will be settled within 12 months, with the remaining \u00a35.4m being settled after 12\u00a0months.
142
Mears Group PLC\u00a0Annual Report and Accounts 2025
Strategic report
Corporate governance
Financial statements
Shareholder information
26. Share capital and reserves
Classes of reserves
Share capital represents the nominal value of shares that have been issued. Mears Group PLC does not have a limited amount of authorised shares.
Share premium represents the difference between the nominal value of shares issued and the total consideration received.
The capital redemption reserve represents the nominal value of shares previously issued that have since been repurchased and cancelled by the Group.
Treasury shares are equity instruments of the Group that have been reacquired. They are recognised at cost and deducted from equity as a separate 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 or otherwise extinguished. Upon exercise or derecognition of the option, 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 Company was entitled to the merger relief offered by the Companies Act 2006.
Share capital and premium
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Allotted, called up and fully paid
\u00a0
\u00a0
At 1 January: 90,764,444 (2024: 101,551,082) ordinary shares of 1p each
3,489
3,348
Issue of 30,003 (2024: 153,880) shares on exercise of share options
60
251
Cancellation of 4,319,819 (2024: 10,940,518) shares following share buybacks
(43)
(110)
At 31 December:86,474,628 (2024: 90,764,444) ordinary shares of 1p each
3,506
3,489
During the year 30,003 (2024: 153,880) ordinary 1p shares were issued in respect of share options exercised.
Capital redemption reserve
2025
\u00a3\u2019000
2024
(restated)
\u00a3\u2019000
At 1 January: 23,103,356 (2024: 12,162,838) ordinary shares of 1p each
231
121
Cancellation of 4,319,819 (2024: 10,940,518) shares following share buybacks
43
110
At 31 December: 27,423,175 (2024: 23,103,356) ordinary shares of 1p each
274
231
During the year, 4,319,819 (2024: 10,940,518) shares were repurchased by the Group and cancelled at a cost of \u00a316.2m (2024: \u00a340.3m).
In the financial statements for the year ended 31 December 2024, the cumulative total nominal value of shares repurchased and cancelled was credited to retained earnings. Following a review, the cumulative total nominal value of shares repurchased is now presented as a capital redemption reserve.
Treasury shares
\u00a0
Thousands
\u00a3\u2019000
At 1 January 2025
4,461
14,985
Acquired during the year
400
1,619
Disposed of during the year
(150)
(552)
Distributed to satisfy the exercise of share options during the year
(644)
(2,155)
At 31 December 2025
4,067
13,897
The following non-operating cash flow adjustments have been made to the profit for the year before tax:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Depreciation
78,439
69,032
Impairment of right of use assets
856
633
Loss on disposal of assets
710
358
Loss on sale and leaseback transaction
122
283
Amortisation
2,254
2,244
Share-based payments
2,286
2,622
IAS 19 pension movement
(200)
(544)
Movement in fair value of investments
(1,500)
(785)
Share of profits of associates
(12)
(1,014)
Finance income
(4,526)
(5,367)
Finance cost
16,078
13,785
Total
94,507
81,247
Movements in financing liabilities during the year are as follows:
\u00a0
Revolving
credit facility
\u00a3\u2019000
Lease
liabilities
\u00a3\u2019000
Total
\u00a3\u2019000
At 1 January 2024
\u2013
254,440
254,440
Inception of new leases*
\u2013
95,746
95,746
Sale and leaseback
\u2013
10,971
10,971
Termination of leases
\u2013
(5,748)
(5,748)
Interest
440
12,698
13,138
Arrangement fees
31
\u2013
31
Cash outflows including in respect of capital and interest
(471)
(70,605)
(71,076)
At 1 January 2025
\u2013
297,502
297,502
Inception of new leases*
\u2013
83,366
83,366
Liabilities acquired with subsidiary
\u2013
182
182
Sale and leaseback
\u2013
10,533
10,533
Termination of leases
\u2013
(4,344)
(4,344)
Liabilities directly related to assets classified as held for sale
\u2013
(171)
(171)
Interest
438
14,851
15,289
Arrangement fees
27
\u2013
27
Cash outflows including in respect of capital and interest
(465)
(83,198)
(83,663)
At 31 December 2025
\u2013
318,721
318,721
*\tIncluding modifications to existing leases resulting in a change in lease liabilities.
Cash outflows in respect of lease liabilities include \u00a314.9m (2024: \u00a312.7m) in respect of interest paid and \u00a368.3m (2024: \u00a357.9m) in respect of discharge of the underlying lease liabilities.
For the purpose of the Consolidated Cash Flow Statement, cash and cash equivalents comprise the following at 31 December:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Bank and cash
43,479
85,404
Readily available deposits
5,000
6,000
Bank and cash attributable to assets held for sale
3,328
\u2013
\u00a0
51,807
91,404
Accounting policy
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 kind 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 the 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 scheme as calculated on an IAS 19 basis and any deficit payment or surplus receipt due is recognised in the Consolidated Statement of Profit or Loss as a settlement.
The Group\u2019s contributions to the scheme are paid in accordance with the rules of the scheme and the recommendations of the scheme 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 actuals each time a triennial valuation takes place.
145
Accounting policy\u00a0continued
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 of 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.
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 appropriate 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 is 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 information 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869191": { "value": "Defined contribution schemes
The Group operates a defined contribution Group personal pension scheme for the benefit of certain employees. The Group contributes to personal 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 \u00a36.0m (2024: \u00a34.8m) to these schemes.
Defined benefit schemes
The Group participated in 15 (2024: 15) 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 on the basis that decisions over the use of such a surplus require the principal employer\u2019s consent and can include paying the surplus to the employers. The Group has, therefore, recognised those surpluses in accordance with IFRIC 14.
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 this 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 different basis from IAS 19 and, therefore, may result in a different surplus or deficit position. Where the scheme is in surplus on\u00a0a 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 Group has, therefore, recognised any surplus in these schemes only to the extent that it will benefit from reduced contributions in the period prior to the expiry of the associated contract28. Pensions\u00a0continued
Defined benefit schemes\u00a0continued
Management is aware of the Court of Appeal ruling in the case of Virgin Media Ltd v NTL Pension Trustees II Ltd & Others, regarding amendments to benefits for contracted out schemes. During 2024 the Group pension scheme administrators and trustees performed an initial review of rules amendments and identified a number of matters that require further investigation. In June 2025 the UK Government announced its intention to produce legislation which would allow retrospective approval of rule changes for which there was no contemporaneous actuarial certification. This legislation is included in the Pensions Bill 2025 which is expected to receive Royal Assent in 2026. Given this development it is not expected that the court ruling will have an impact on the liabilities of the Group\u2019s pension schemes.
The disclosures in respect of the two (2024: two) Group defined benefit schemes and the 13 (2024: 13) other defined benefit schemes in this 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 2025 by qualified independent actuaries using the projected unit funding method.
The principal actuarial assumptions at the balance sheet date are as follows:
\u00a0
2025
2024
Rate of increase of salaries
2.85%
3.05%
Rate of increase for pensions in payment \u2013 based on CPI with a cap of 5%
2.50%
2.60%
Rate of increase for pensions in payment \u2013 based on RPI with a cap of 5%
2.70%
2.85%
Rate of increase for pensions in payment \u2013 based on CPI with a cap of 3%
2.05%
2.10%
Rate of increase for pensions in payment \u2013 based on RPI with a cap of 3%
2.15%
2.25%
Discount rate
5.60%
5.50%
Retail prices inflation
2.85%
3.05%
Consumer prices inflation
2.55%
2.65%
Life expectancy for a 65-year-old male*
21.4 years
21.2 years
Life expectancy for a 65-year-old female*
23.6 years
23.6 years
Pension-age life expectancy for a 45-year-old male*
22.4 years
22.4 years
Pension-age life expectancy for a 45-year-old female*
25.3 years
25.3 years
Group
schemes
\u00a3\u2019000
Other
schemes
\u00a3\u2019000
Total
\u00a3\u2019000
Group
schemes
\u00a3\u2019000
Other
schemes
\u00a3\u2019000
Total
\u00a3\u2019000
Quoted assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Equities
\u2013
53,897
53,897
1,781
54,765
56,546
Bonds
64,555
16,183
80,738
59,865
20,894
80,759
Pooled investment vehicles
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Property
\u2013
1,087
1,087
1,905
\u2013
1,905
Multi-asset funds
18,191
4,166
22,357
48,145
3,617
51,762
Alternative asset funds
1,856
11,511
13,367
2,095
3,781
5,876
Return seeking funds
1,151
\u2013
1,151
1,548
1,307
2,855
Other assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Equities
\u2013
15,736
15,736
\u2013
7,053
7,053
Bonds
29,917
5,011
34,928
\u2013
4,529
4,529
Property
\u2013
9,738
9,738
\u2013
14,920
14,920
Derivatives
1,481
\u2013
1,481
707
60
767
Cash and other
3,491
4,761
8,252
6,212
4,505
10,717
Investment liabilities
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Derivatives
(858)
(15)
(873)
(3,379)
\u2013
(3,379)
Group\u2019s estimated asset share
119,784
122,075
241,859
118,879
115,431
234,310
Present value of funded scheme liabilities
(96,449)
(74,804)
(171,253)
(97,210)
(76,705)
(173,915)
Pension surplus
23,335
47,271
70,606
21,669
38,726
60,395
Scheme surpluses not recognised as assets
\u2013
(45,924)
(45,924)
\u2013
(37,150)
(37,150)
Pension assets
23,335
1,347
24,682
21,669
1,576
23,245
Assets classified as held for sale
\u2013
(585)
(585)
\u2013
\u2013
\u2013
Pension assets recognised
23,335
762
24,097
21,669
1,576
23,245
The amounts recognised in the Consolidated Balance Sheet are:
\u00a0
2025
2024
Defined benefit schemes\u00a0continued
The amounts recognised in the Consolidated Statement of Profit or Loss are as follows:
\u00a0
2025
2024
\u00a0
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
561
1,174
1,735
809
1,490
2,299
Past service cost
\u2013
\u2013
\u2013
\u2013
224
224
Settlement and curtailment
\u2013
\u2013
\u2013
\u2013
(2,413)
(2,413)
Administration costs
441
\u2013
441
489
\u2013
489
Total operating charge
1,002
1,174
2,176
1,298
(699)
599
Net interest
(1,215)
(2,206)
(3,421)
(926)
(1,261)
(2,187)
Effects of limitation of recognisable surplus related to net interest
\u2013
2,122
2,122
\u2013
1,298
1,298
Total charged to the profit for the year
(213)
1,090
877
372
(662)
(290)
Actuarial gains and losses recognised in other comprehensive income (OCI) are as follows:
\u00a0
2025
2024
\u00a0
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 (below)/above that recorded in net interest
(1,773)
5,288
3,515
(12,755)
(377)
(13,132)
Actuarial (loss)/gain arising from changes in demographic assumptions
(624)
10
(614)
1,337
178
1,515
Actuarial gain arising from changes in financial assumptions
2,785
2,883
5,668
10,739
10,029
20,768
Actuarial (loss)/gain arising from liability experience
(225)
(558)
(783)
984
(11)
973
Effects of limitation of recognisable surplus related to OCI movements
\u2013
(7,502)
(7,502)
\u2013
(7,459)
(7,459)
Total gains recognised in OCI
163
121
284
305
2,360
2,665
Changes in the present value of the defined benefit obligations are as follows:
\u00a0
2025
2024
\u00a0
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
97,210
76,705
173,915
109,659
83,342
193,001
Current service cost
561
1,174
1,735
809
1,490
2,299
Past service cost
\u2013
\u2013
\u2013
\u2013
224
224
Interest on obligations
5,220
4,097
9,317
4,821
3,740
8,561
Plan participants\u2019 contributions
168
386
554
191
410
601
Benefits paid
(4,774)
(2,839)
(7,613)
(5,210)
(2,305)
(7,515)
Settlements
\u2013
(2,384)
(2,384)
\u2013
\u2013
\u2013
Actuarial (loss)/gain arising from changes in demographic assumptions
624
(10)
614
(1,337)
(178)
(1,515)
Actuarial gain arising from changes in financial assumptions
(2,785)
(2,883)
(5,668)
(10,739)
(10,029)
(20,768)
Actuarial (loss)/gain arising from liability\u00a0experience
225
558
783
(984)
11
(973)
Present value of obligations at\u00a031\u00a0December
96,449
74,804
171,253
97,210
76,705
173,915
Defined benefit schemes\u00a0continued
Changes in the fair value of the plan assets are as follows:
\u00a0
2025
2024
\u00a0
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
118,879
115,431
234,310
129,494
111,563
241,057
Expected return on plan assets
6,435
6,303
12,738
5,747
5,001
10,748
Employer\u2019s contributions
1,290
740
2,030
1,901
1,139
3,040
Share of surplus received
\u2013
\u2013
\u2013
\u2013
(2,413)
(2,413)
Plan participants\u2019 contributions
168
386
554
191
410
601
Benefits paid
(4,774)
(2,839)
(7,613)
(5,210)
(2,305)
(7,515)
Scheme administration costs
(441)
\u2013
(441)
(489)
\u2013
(489)
Settlements
\u2013
(3,234)
(3,234)
\u2013
2,413
2,413
Return on plan assets (below)/above that\u00a0recorded in net interest
(1,773)
5,288
3,515
(12,755)
(377)
(13,132)
Fair value of plan assets at 31 December
119,784
122,075
241,859
118,879
115,431
234,310
Changes in the fair value of guarantee assets are as follows:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Fair value of guarantee assets at 1 January
\u2013
\u2013
Recognised in the Consolidated Statement of Profit or Loss
\u00a0
\u00a0
Guarantee asset movement in respect of service cost
346
516
Guarantee asset movement in respect of net interest
(50)
\u2013
Recognised in other comprehensive income
\u00a0
\u00a0
Guarantee asset movement in respect of actuarial losses
(296)
(516)
Fair value of guarantee assets at 31 December
\u2013
\u2013
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 2026 amount to \u00a31.7m.
Each of the schemes manages risks through a variety of methods and strategies to limit downside in falls in equity markets, movement in inflation 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 isolation, results in an increase or decrease in the present value of the defined benefit obligation as at 31 December 2025. 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.
\u00a0
\u00a3\u2019000
\u00a3\u2019000
Rate of inflation \u2013 decrease/increase by 0.1%
(1,600)
1,600
Rate of increase in salaries \u2013 decrease/increase by 0.1%
(381)
381
Discount rate \u2013 decrease/increase by 0.1%
1,996
(1,996)
Life expectancy \u2013 decrease/increase by 1 year
(4,762)
29. Capital commitments
The Group had no capital commitments at 31 December 2025 or at 31 December 2024.
30. Contingent liabilities
The Group has received two legal claims relating to historical regeneration work from separate Local Authorities. In one case, the authority has indicated a potential claim value of \u00a311.0m, although only limited substantiation and detail have been provided. The Group has denied liability. In the second case, no claim value has been specified, although the original works had a contract sum of \u00a34.3m. The Group does not consider either claim to have merit.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:213800DHCALLH8IRJV57", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "shtag_11869201": { "value": "31. 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 28.
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 at 31 December:
\u00a0
2025
%
2024
%
Directors
0.7
0.5
Key management personnel\u2019s compensation is as follows:
\u00a0
2025
\u00a3\u2019000
2024
\u00a3\u2019000
Salaries including social security costs
1,909
1,910
Contributions to defined contribution pension schemes
22
19
Share-based payments
720
1,477
\u00a0
2,651
3,406
Further details of Directors\u2019 remuneration are disclosed within the Remuneration Report.
Dividends totalling \u00a30.1m (2024: \u00a30.1m) 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 \u00a316.4m (2024: \u00a316.4m). Pyramid Plus South LLP also made recharges of certain staff costs to the Group totalling \u00a30.7m (2024:\u00a0\u00a30.7m). At 31 December 2025, \u00a35.7m (2024: \u00a30.2m) was due to the Group in respect of these transactions. Pyramid Plus also\u00a0owed the Group \u00a31.3m (2024: \u00a31.0m) in respect of agreed distributions.
During the year, the Group leased properties from Housing Ventures MPC1 Limited, a subsidiary of MPC 1 Holdco Limited, an entity in\u00a0which the Group is a 25% member, totalling \u00a32.0m (2024: \u00a3nil). No amounts were due at 31 December 2025 in respect of these transactions. The Group also held a loan note issued by MPC 1 Holdco Limited with a balance of \u00a35.2m (2024: \u00a35.3m), as described in\u00a0note 24.
As part of the sale and leaseback transaction described in note 23, the Group received a loan note from MPC 3 Holdco Limited of \u00a36.5m, as detailed in note 24. The balance at 31 December 2025 was \u00a36.5m.
During the year, the Group made loans totalling \u00a33.2m (2024: \u00a3nil) to MPC 3 Holdco imited, an associate. These loans were used to acquire a portfolio of properties that were being leased to the Group from a third-party landlord. Further information about the loans are included in note 24. The amount outstanding at 31 December 2025 was \u00a33.2m.150
Mears Group PLC\u00a0Annual Report and Accounts 2025
Strategic report
Corporate governance
Financial statements
Shareholder information