The challenges of Covid-19 had a significant impact on the Group's trading results, particularly in the Maintenance-led activities in the first half of the financial year, which were restricted to the delivery of essential and priority services only. However, in the second half, as lockdown restrictions eased our clients and service users adapted to the changing environment and the Group experienced a lesser impact on work volumes, even during subsequent lockdowns. Accordingly, financial performance recovered strongly in the second half, with all areas of our Maintenance-led and Management-led activities returning to profitability in this period.
Trusted client relationships coupled with sustained investment in technology and people enabled the Group to respond positively and decisively to the enormous operational challenges presented by Covid-19. With its key people, operating infrastructure and customer relationships all retained, the Company is well positioned for a full recovery as restrictions ease.
Following the disposal of the Group's Domiciliary Care and Planning Solution activities, Mears is a smaller and simpler business with a single strategic focus; to be a leading provider of housing solutions. This single Housing segment reported revenues in the period of £805.8m (2019: £881.5m) and adjusted operating profits (pre IFRS-16) of£0.6m (2019: £37.6m)
The second half of 2020 was a stronger season for Mears, which saw the group return to profitability with a £4.8m profit before tax.
In anticipation of a return to dividends, the Group has paid back all monies received in 2021 to date under the UK Government's Job Retention Scheme at a cost of £1.5m
Operations and Workforce
Operational delivery and customer service KPIs remained high, including on our key central government AASC and Key Worker contracts. Maintenance clients quickly transitioned to new ways of working and supported through interim financial arrangements. Throughout the primary focus has always been the safety and well-being of our staff and customers.
Workforce engagement measures remained high and we retain our place on the Sunday Times list of Top 25 Best Big Companies to work for. The staff survey carried out in June 2020 saw our scores reach a new high, reflecting the efforts made on communication and keeping all staff safe, involved and supported. In addition, we saw positive progress on our key workforce measurements in respect of staff retention and diversity.
From its creation in 1988, Mears has sought to differentiate itself with a consistent and long-term focus on the wider societal value, as well as financial value,which it can and should generate. This is reflected by a commitment which can be seen throughout the Group to the lives of the people we support and the communities in which they live, the quality of the staff experience itself and,increasingly, a commitment to change in the environmental agenda. This is a core purpose for the company and, accordingly, for those who work within it.
The strength of the commitment is evidence by the company's continued success over many years in a number of areas, whether it be the FTSE4Good accreditation programme, the Sunday Times' Top 25 Best Big companies to work for or the Royal Society for the Preventions of Accidents Order of Distinction Award. In 2020,we have refocused the work of the Mears Foundation, our staff charity based on give-as-you-earn with employer matching, where we now have an independent chair and, for the first time, a General Manager.
Similarly,the Mears Customer Scrutiny board, chaired by Terrie Alafat, has started its work to help us to improve the way we work with tenants to help them receive the best service from us. The ESG section of the Annual Report gives more details of the very wide range of initiatives which the company has in place to generate social and ultimately value.
During 2020, we appointed our first Head of Carbon Reduction. This individual will help to develop our efforts in two areas. First, to lead our product and business development initiatives to help clients change the way in which we heat residential social housing. In addition, Mears must make its own contribution to the country's net zero target and it will be a priority for the Group this year to develop a more detailed programme to 'green' Mears.
Mears' response to Covid-19 was swift and decisive. Positively, service levels have remained at their traditionally high levels, with many clients directly complimenting the exceptional performance and dedication of the Mears workforce. The Group's IT systems enabled a swift transfer to remote working for many staff.The Group's ability to adapt so quickly to the new methods required for managing the business benefited from the investment made in the core systems over many years, and the customer-centric ethos which has consistently been core to Mears' values.
Mears received tremendous support from its clients throughout this period, which would not have been forthcoming without the strong client relationships built over many years. Accordingly, we have been able to retain our key people, infrastructure, clients and capabilities through the pandemic and are well-positioned to make a full recovery once normality returns.
The demand for the services the Group provides is undiminished by Covid-19 and a back-log of lower priority maintenance-led jobs now requires swift resolution. The health inequalities that the pandemic has so cruelly exposed, will only add further political pressure to increase and upgrade the affordable and social housing stock in the UK.
In adapting to new ways of working, the primary focus has always been the safety and well-being of our staff and of the individual customers to whom services are provided. As with many of our peers, access to PPE was difficult at times but the established procurement routes, together with the support of many clients, helped to keep staff fully protected.
The Group's success depended upon the commitment and engagement of its workforce. Significant extra effort has been put into workforce management and the Group is pleased to put on record its recognition of the dedication and commitment shown by all our staff and our appreciation for the fundamental role they played.
Mears has substantially completed its transition to a focussed, low capital intensity, housing services provider,specialising in the affordable sector and sees growth opportunities driven by:increasing investment in the affordable sector; the Social Housing Whitepaper's call for higher standards and engagement; continued demographic pressure; increasing housing waiting lists; and Government commitments to raise the carbon efficiency of all social housing stock
Mears will further supplement this market growth, through improved upsell/cross sell across the broader housing services,leadership in the de-carbonisation of client's housing stock, participation in new, larger, integrated housing contracts across local and central Government and continuing to evolve its affordable rental and integrated management solutions.
Even with the potential post-Covid economic challenges, Housing is a sector that will be invested in to support economic recovery and indeed to meet longer term challenges, such as those posed by climate change. There is clear opportunity to grow both our maintenance-led and management-led work and indeed we see an increasing number of opportunities that will integrate all of our services.
The responsible approach that we have taken to business through Covid and indeed from the start of Mears, has left us really well placed to benefit from these opportunities.
David Miles, Chief Executive Officer of Mears Group, commented:
"The Mears' business responded with great responsibility and professionalism during the pandemic, both in terms of the ongoing resilience of our operations and supporting the communities where we work. T
The strength of our people, our infrastructure and our client relationships have served us well through Covid-19, while the urgent need for the services Mears provide has only been heightened by it.
"Today, Mears looks after more homes than any other organisation across Local and increasingly Central Government.We have clear leadership in the maintenance market with c.20% share of outsourced contracts and a long-standing reputation for service quality,technology, workforce management and social value. Our range of services within housing management continues to grow and evolve with successful contracts underway providing housing solutions for many of society's most vulnerable groups.
"Together with our strengthened balance sheet and good cash generation, we look forward with confidence."