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Hill & Smith Holdings Plc NEX:HILS.GB NEX Ordinary Share GB0004270301
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  -12.00 -0.94% 1,262.00 1,274.00 1,338.00 1,292.00 1,292.00 1,292.00 0.00 16:30:00
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Hill & Smith Hldgs PLC Annual Report and Notice

26/05/2020 7:00am

UK Regulatory (RNS & others)


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TIDMHILS

RNS Number : 8142N

Hill & Smith Hldgs PLC

26 May 2020

Hill & Smith Holdings PLC (the 'Company')

2019 Annual Report and Notice of 2020 Annual General Meeting ('AGM')

Hill & Smith Holdings PLC has posted, or otherwise notified as being available on its website www.hsholdings.com , the Notice of its 2020 AGM. The 2019 Annual Report was posted to shareholders, or otherwise

notified as being made available on its website  www.hsholdings.com   on 17 April 2020. 

In accordance with Listing Rule 9.6.1 a copy of each of these documents has been uploaded to the National Storage Mechanism and will be available for viewing shortly.

A hard copy of the 2019 Annual Report can be obtained upon request to the Company Secretary, Hill & Smith Holdings PLC, Westhaven House, Arleston Way, Shirley, Solihull B90 4LH.

The statutory accounts for the year ended 31 December 2019 have been approved by the Board and will be delivered to the Registrar of Companies following the Company's AGM.

Compliance with Disclosure and Transparency Rule 6.3.5 ('DTR 6.3.5') - Extracts from the 2019 Annual Report

The information below, headed as Appendix A, B and C, and which is extracted from the 2019 Annual Report, is included solely for the purpose of complying with DTR 6.3.5 and the requirements it imposes on how to make public Annual Financial Reports. It should be read in conjunction with the Company's Preliminary Announcement issued on 4 March 2020 (available at www.hsholdings.com ). Together these constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This material is not a substitute for reading the full 2019 Annual Report. All page numbers and cross-references in the extracted information below refer to page numbers in the 2019 Annual Report.

Appendix A - Principal Risks and Uncertainties

 
  Economic 
 Risk: Changes in Government spending plans 
 Trend                                   Description and potential impact         Mitigation 
  No change                              The Group generates the majority of      Our existing entity portfolio 
                                         its revenues from its operations         contains a diversity of product, 
  Link to strategy                       located in the UK and                    market and territory and we 
   *    Portfolio management             the USA. A reduction in UK or US         will continue with this approach. 
                                         Government infrastructure spending,      External strategy review completed 
                                         particularly in relation                 in 2018 and mitigating 
   *    Geographic expansion             to national roads infrastructure in      opportunities identified. 
                                         the UK, could reduce demand for our 
                                         products and services.                   Market and product development 
   *    Target returns and leverage      This includes the impact of Brexit       initiatives. 
                                         which is difficult to determine. 
                                                                                  Co-operation between Group 
   *    Entrepreneurial culture          The financial burden on both             businesses, leveraging the Group's 
                                         Governments from economic downturn may   size/international footprint 
                                         lead to reduced spending                 and exploiting synergies. 
                                         in the principal markets in which the 
                                         Group operates.                          Monitoring of UK businesses and the 
                                                                                  effects of Brexit. 
 
                                                                                  Exposure to longer term 
                                                                                  infrastructure investment 
                                                                                  programmes. 
                                        ---------------------------------------  ------------------------------------- 
 Risk: Changes in global outlook and geopolitical environment 
 Trend                                   Description and potential impact         Mitigation 
  Slightly higher                        The Group operates in a range of         The Group has a diverse portfolio of 
                                         end-user markets around the world and    businesses with exposure to a range 
  Link to strategy                       may be affected by                       of markets and geographies, 
   *    Portfolio management             political, economic or regulatory        limiting exposure to any one country 
                                         developments in any of these             or market sector. 
                                         countries. 
   *    Geographic expansion                                                      Current and future financial 
                                         Material adverse changes in the          performance is continuously 
                                         political and economic environments in   monitored, facilitating rapid 
   *    Target returns and leverage      the countries in which                   response 
                                         we operate, have the potential to put    to changes in market conditions. 
                                         at risk our ability to execute our 
   *    Entrepreneurial culture          strategy.                                The Group has is closely monitoring 
                                                                                  on a business-by-business basis, the 
                                         As an international group operating in   identified operational 
                                         six countries and selling into           and financial risks arising from the 
                                         numerous others the                      UK's exit from the EU. 
                                         impact of Brexit is difficult to 
                                         quantify.                                In respect of the Covid-19 virus, 
                                                                                  Group companies had purchased raw 
                                         The global outbreak of the Covid-19      materials ahead of the 
                                         virus is a developing situation, and     Chinese New Year and this offers 
                                         at this stage we                         some mitigation in the short term. 
                                         are not in the position to speculate     Companies have also been 
                                         on its future impact on the business.    provided with a list of actions to 
                                                                                  implement to mitigate any issues. 
                                        ---------------------------------------  ------------------------------------- 
 Commercial & Financial 
 Risk: Increase in competitive pressure 
 Trend                                Description and potential impact         Mitigation 
  No change                           Increased volatility, uncertainty and    The holding of leading positions in 
                                      slowdown in our markets could result in  niche markets of infrastructure 
  Link to strategy                    increased prices                         products and galvanizing 
   *    Target returns and leverage   and the emergence of new technologies,   services with high barriers to entry. 
                                      leading to a loss of customers and/or    In line with our entrepreneurial model, 
                                      pricing pressures                        our decisions are made close to our 
   *    Entrepreneurial culture       and as a consequence a loss of sales     markets and our 
                                      and reduced profits.                     businesses are agile and responsive to 
                                      The impact of Brexit may lead to a       changes in their competitive landscape. 
                                      change in trade tariffs and/or a         Regular subsidiary Board meetings that 
                                      weakening of sterling,                   review market and customer activity. 
                                      causing a resultant increase in prices   Our subsidiary businesses aim to 
                                      for raw materials and this will be       provide superior products and high 
                                      unknown until the                        service levels to customers, 
                                      end of the 'transition period' on 31     whilst aiming to ensure there is no 
                                      December 2020.                           dependency on any one particular 
                                                                               customer. 
                                      ---------------------------------------  --------------------------------------- 
 Risk: Product failure 
 Trend                                   Description and potential impact         Mitigation 
  No change                              The Group operates in infrastructure     Products tested, approved and 
                                         markets where it is critical that its    accredited by regulatory bodies. 
  Link to strategy                       products meet customer 
   *    Target returns and leverage      and legislative requirements and where   Quality control protocols fully 
                                         the consequences of product failure      implemented and continuously 
                                         are potentially                          monitored. 
   *    Entrepreneurial culture          serious. 
                                                                                  Contractual controls in place to 
                                         Significant product failure arising      minimise economic impacts. 
                                         from component defects or warranty 
                                         issues may require                       Insurance cover maintained globally 
                                         remediation including the replacement    with insurance partners. 
                                         of defective components or complete 
                                         products, resulting                      Litigation supported/managed by 
                                         in direct financial costs to the Group   external legal specialists. 
                                         and/or wider reputational risk. 
                                                                                  Thematic review recommendations made 
                                                                                  in 2019 for prioritisation during 
                                                                                  2020. 
                                        ---------------------------------------  ------------------------------------- 
 Risk: Contractual failure 
  Trend                                  Description and potential impact         Mitigation 
   No change                             The Group delivers its commitments to    Group material contract review 
                                         its customers through a variety of       process ensures specialist central 
   Link to strategy                      contractual arrangements                 oversight of key contractual 
    *    Target returns and leverage     of both a short and medium-term          arrangements. 
                                         nature. 
                                                                                  Contracts training for key staff. 
    *    Entrepreneurial culture         Weaknesses in the contract tendering 
                                         process, inappropriate pricing,          Dedicated quantity surveyors and 
                                         misalignment of contract                 contracts managers embedded in 
                                         terms, ineffective contract management   subsidiary management structures 
                                         or failure to comply with contractual    to control projects. 
                                         conditions could 
                                         result in loss of revenues, pressure     Litigation supported/managed by 
                                         on operating margins and wider           external legal specialists. 
                                         reputational damage to 
                                         the Group.                               Insurance cover maintained globally 
                                                                                  with insurance partners. 
                                         The availability of debt finance to 
                                         some of our markets sectors may change 
                                         as lenders' appetite 
                                         for risk decreases. 
                                        ---------------------------------------  ------------------------------------- 
 Operational 
 Risk: Supply chain deficiency 
 Trend                                   Description and potential impact         Mitigation 
  No change                              The Group's businesses depend on the     Group procurement standards in 
                                         availability and timely delivery of      place, including robust due 
  Link to strategy                       raw materials and                        diligence of supply chain partners 
   *    Target returns and leverage      purchased components, which could be     and requiring dual sourcing where 
                                         affected by disruption in its supply     available. 
                                         chain. A small number 
   *    Entrepreneurial culture          of businesses use supply chains from     Maintenance of relationships with 
                                         both the Far East and the USA.           key suppliers through regular 
                                                                                  interaction and assessment 
                                         Supply chain failures as a result of     of performance/financial status. 
                                         performance, cost, quality and/or 
                                         insolvency may have                      Oversight of material procurement 
                                         an adverse impact on the Group's         contracts ensuring robust 
                                         production capacity and lead to an       contractual protections. 
                                         inability to meet customer 
                                         requirements, resulting in reduction     Goods inwards and stock management 
                                         in revenues, potential loss of market    processes in place to reduce the 
                                         share and possible                       likelihood of defects 
                                         reputational damage.                     in or shortage of raw materials. 
 
                                                                                  Contingency plans are in place 
                                                                                  within the relevant businesses and 
                                                                                  throughout the supply chain 
                                                                                  to mitigate these risks, such as 
                                                                                  purchasing additional stock of key 
                                                                                  raw materials and securing 
                                                                                  additional supply chain capacity. 
                                        ---------------------------------------  ------------------------------------- 
 Risk: Weaknesses in IT systems 
 Trend                                 Description and potential impact           Mitigation 
  No change                            The Group relies on the information        External specialist support with the 
                                       technology systems used in the daily       development and oversight of IT 
  Link to strategy                     operations of its                          system change programmes. 
   *    Target returns and leverage    subsidiaries. 
                                                                                  Disaster recovery plans documented, 
                                       A failure or impairment of those systems   tested and monitored by Group 
                                       or any inability to effectively            businesses. 
                                       implement new systems 
                                       could cause a loss of business and/or      The Group's Policy Manual 
                                       damage to the reputation of the Group,     incorporates IT policies in respect 
                                       together with                              of system back-up procedures 
                                       significant remedial costs.                and hardware/software protection. 
 
                                       Breakdowns in controls and security        The Board maintains a watching brief 
                                       procedures could cause the Group to        on IT risks, particularly cyber 
                                       become susceptible                         risk, and has commissioned 
                                       to cyber risks.                            a project of improvement for 2019. 
 
                                                                                  Report recommended the formalisation 
                                                                                  of an IT infrastructure. 
 
                                                                                  Separate IT systems within each of 
                                                                                  the businesses means that any 
                                                                                  illegal external activity 
                                                                                  is focused on a subsidiary rather 
                                                                                  than the Group as a whole. 
                                      -----------------------------------------  ------------------------------------- 
 Risk: Acquisition strategy failure 
 Trend                                 Description and potential impact           Mitigation 
  No change                            The Group's growth strategies include      External strategy review completed 
                                       the acquisition of businesses around the   in 2018, providing a road map for 
  Link to strategy                     world that                                 future M&A activity, 
   *    Portfolio management           complement or supplement its existing      and acted upon during 2019. 
                                       activities. 
                                                                                  Board approval required for Group 
   *    Geographic diversification     Failure to execute an effective            acquisitions, in line with the Group 
                                       acquisition and integration programme      Board's Schedule of 
                                       would have a significant                   Matters Reserved. 
   *    Target returns and leverage    impact on the Group's ability to 
                                       generate sustainable profitable growth     Due diligence protocols deployed in 
                                       for shareholders.                          relation to assessment of target 
                                                                                  businesses, including 
                                                                                  financial, commercial, legal and 
                                                                                  others where appropriate. 
 
                                                                                  Contractual protections and 
                                                                                  assurances sought from sellers to 
                                                                                  mitigate subsequent identification 
                                                                                  of risks. 
 
                                                                                  '100 Day' post-acquisition 
                                                                                  integration plan established for all 
                                                                                  material acquisitions with 
                                                                                  regular performance monitoring and 
                                                                                  reporting to the Board. 
                                      -----------------------------------------  ------------------------------------- 
 Risk: Lack of product development and innovation 
 Trend                                 Description and potential impact           Mitigation 
  No change                            The Group operates in global               Entrepreneurial culture established 
                                       infrastructure markets where continuous    through a decentralised management 
  Link to strategy                     innovation is integral                     structure, ensuring 
   *    Portfolio management           to the Group's product offering and        that Group businesses are agile and 
                                       where a failure to innovate could result   responsive to changes in their 
                                       in product obsolescence,                   competitive environments. 
   *    Geographic expansion           the entry of new competitors and/or loss   The Group actively encourages and 
                                       of market share.                           supports research and development 
                                                                                  programmes at subsidiary 
   *    Target returns and leverage    The development of new products and        level where knowledge of the market 
                                       technologies carries risk including the    and needs of our customers is 
                                       failure to develop                         greatest. 
   *    Entrepreneurial culture        a commercially viable offering within an 
                                       acceptable timeframe.                      Executive Board approval of product 
                                                                                  development proposals within the 
                                                                                  Group's capital spend 
                                                                                  approval policies. Active 
                                                                                  Intellectual Property management, by 
                                                                                  individual business units overseen 
                                                                                  by Group. Dedicated quality 
                                                                                  compliance resources in place across 
                                                                                  Group businesses, ensuring 
                                                                                  responsiveness to regulator and/or 
                                                                                  customer approval requirements. 
 
                                                                                  Board monitoring of emerging risks 
                                                                                  alongside external specialist 
                                                                                  support, where both the risks 
                                                                                  identified and the potential 
                                                                                  opportunities arising are 
                                                                                  considered. 
                                      -----------------------------------------  ------------------------------------- 
 Human Resources 
 Risk: Failure to recruit and retain key employees 
 Trend                                 Description and potential impact            Mitigation 
  Slightly higher                      The Group encourages an entrepreneurial     Implementation of contractual 
                                       culture through a decentralised             protections and retentions in 
  Link to strategy                     management structure.                       employment contracts of senior 
   *    Entrepreneurial culture                                                    management and other key employees. 
                                       The changing nature of the demographics 
                                       from which we source our employees and      Training and development of 
   *    Geographic expansion           the ways in                                 employees, which includes a 
                                       which they like to work can make it         programme of IOD and ILM courses 
                                       difficult to attract and retain both        for 
   *    Target returns and leverage    skilled and unskilled                       senior management and identified 
                                       labour as well as hampering our ability     potential successors, and 
                                       to attract, develop and retain              apprenticeship and other vocational 
                                       high-quality individuals                    courses for specialist and 
                                       in key positions and could affect the       technical roles. 
                                       long-term success of the Group. 
                                                                                   Appropriate remuneration and 
                                                                                   benefits, together with bonus 
                                                                                   opportunities and incentive plans 
                                                                                   offered to employees. 
 
                                                                                   Recruitment process developed to 
                                                                                   include competency requirements and 
                                                                                   skills gap analysis. 
                                      -----------------------------------------  ------------------------------------- 
 Legal & Regulatory 
 Risk: Failure to comply with applicable health and safety legislation 
 Trend                                 Description and potential impact           Mitigation 
  No change                            The Group operates a number of             Regular health and safety 
                                       manufacturing facilities around the        monitoring, supported by an external 
  Link to strategy                     world.                                     independent health, safety 
   *    Target returns and leverage                                               and environmental consultant, both 
                                       A failure in the Group's health and        in the UK & the US. Use of an online 
                                       safety procedures could lead to            'safety cloud' reporting 
   *    Entrepreneurial culture        environmental damage or                    framework. 
                                       to injury to or death of employees or 
                                       third parties, with a consequential        UK & US Health & Safety Forums 
                                       impact on operations                       monitor performance and share best 
                                       and the increased risk of regulatory or    practice. 
                                       legal action being taken against the 
                                       Group. Any such                            Culture of zero tolerance in respect 
                                       action could result in both financial      of health & safety violations 
                                       damages and damage to reputation.          promoted by the Board and 
                                                                                  disseminated throughout Group 
                                                                                  businesses supported with 
                                                                                  appropriate HR policies and the 
                                                                                  Business 
                                                                                  Code of Conduct. 
 
                                                                                  External health and safety 
                                                                                  accreditations and relationships 
                                                                                  maintained with regulatory bodies. 
 
                                                                                  Health and safety as a priority area 
                                                                                  of focus for new acquisitions. 
 
                                                                                  Any incident with serious outcomes 
                                                                                  is followed up and investigated 
                                                                                  thoroughly and improvement 
                                                                                  recommendations are implemented to 
                                                                                  minimise any reoccurrence. 
                                      -----------------------------------------  ------------------------------------- 
 Risk: Violation of applicable laws and regulations 
 Trend                                 Description and potential impact           Mitigation 
  No change                            The Group's global operations must         Group Code of Conduct sets out 
                                       comply with a range of national and        required approach for all staff. 
  Link to strategy                     international laws 
   *    Target returns and leverage    and regulations including those related    Staff training provided on 
                                       to anti-bribery and corruption, human      Anti-Bribery and Corruption and 
                                       rights and employment,                     Competition Compliance. 
   *    Entrepreneurial culture        GDPR, trade/export compliance and 
                                       competition/anti-trust.                    Programme of audits undertaken on a 
                                                                                  cyclical basis to review subsidiary 
                                       A failure to comply with any applicable    compliance with regulatory 
                                       laws and regulations could result in       requirements, including for example 
                                       civil or criminal                          simulated 'dawn raids'. 
                                       liabilities and/or individual or 
                                       corporate fines and could also result in   Software solutions implemented 
                                       debarment from government-related          globally to ensure compliance with 
                                       contracts, restrictions on ability to      trade and export legislation. 
                                       trade or rejection by financial 
                                       counterparties as well                     Externally hosted whistleblowing 
                                       as reputational damage.                    hotline available to all employees 
                                                                                  to allow them to raise 
                                                                                  concerns in confidence or 
                                                                                  anonymously, if preferred. 
 
                                                                                  Modern Slavery compliance programme 
                                                                                  continued through 2019. 
 
                                                                                  Toolkits issued to all UK 
                                                                                  subsidiaries to aid compliance with 
                                                                                  local GDPR and continued training 
                                                                                  provided throughout 2019. 
                                      -----------------------------------------  ------------------------------------- 
 
 

Appendix B - Directors Responsibilities Statement pursuant to Disclosure and Transparency Rule 4

The following statement is extracted from page 101 of the 2019 Annual Report and is repeated here for the purposes of compliance with DTR 6.3.5. This statement relates solely to the 2019 Annual Report and is not connected to the extracted information set out in this announcement or the Preliminary Announcement.

We confirm that to the best of our knowledge:

- the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and

- the strategic report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

We consider the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the group's position and performance, business model and strategy.

Appendix C - Related Party Transactions

The key management are considered to be the Board of Directors of Hill & Smith Holdings PLC, whose remuneration can be seen in the Directors' Remuneration Report on pages 80 to 88, and in the related party details on page 174 (note 13) of the 2019 Annual Report.

Alex Henderson

Company Secretary

Hill & Smith Holdings PLC

Tel: +44 (0) 121 704 7430

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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