TIDMHILS
RNS Number : 0819W
Hill & Smith Hldgs PLC
21 April 2021
Hill & Smith Holdings PLC (the 'Company')
2020 Annual Report and Notice of 2021 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 2021 AGM. The 2020 Annual Report was posted to shareholders,
or otherwise
notified as being made available on its website www.hsholdings.com on 21 April 2021.
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 2020 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 2020 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 2020 Annual Report
The information below, headed as Appendix A, B and C, and which
is extracted from the 2020 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 10 March 2021 (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 2020 Annual Report. All page numbers and
cross-references in the extracted information below refer to page
numbers in the 2020 Annual Report.
Appendix A - Principal Risks and Uncertainties
Economic
Risk: Reduction in Government spending plans
Trend Description and potential impact Mitigation
Slightly lower The Group generates the majority of Our existing entity portfolio
its revenues from its operations contains diverse products,
Link to strategy located in the UK and markets and territories and we
* Portfolio management the USA and whilst it is possible will
that Government spending plans will continue with this approach.
be under increasing
* Enhancing organic growth scrutiny, it is likely that Market and product development
infrastructure investment will initiatives.
continue to be a key part of
* Agile decision making national Co-operation between Group
spending plans, particularly in the businesses, leveraging the
short to medium term. Group's size/ international
footprint
In March 2020, the UK government and exploiting synergies.
confirmed its commitment to the
next phase of road investment Monitoring of UK businesses and
spend (RIS2) at GBP27.4bn. In the the effects of Brexit.
US, there is optimism for a
Federal-funded road investment Exposure to longer term
bill under the Biden infrastructure investment
administration. The Group is well programmes.
placed to benefit from these
investments
and possible short term "shovel
ready" schemes to stimulate
economic growth, although a
reduction
in UK or US Government
infrastructure spending, could
reduce demand for our products and
services.
------------------------------------ ----------------------------------
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
end-user markets around the world of businesses with exposure to a
Link to strategy and may be affected by range of markets and geographies,
* Portfolio management political, economic or regulatory limiting exposure to any one
developments in any of these country or market sector.
countries.
* Enhancing organic growth Current and future financial
Material adverse changes in the performance is continuously
political and economic environments monitored, facilitating rapid
* Agile decision making in the countries in which response
we operate, have the potential to to changes in market conditions.
put at risk our ability to execute
our strategy. The Group is closely monitoring
on a business-by-business basis,
Whilst Brexit has not had a the identified operational
material direct effect on the and financial risks arising from
Group, it creates the potential the UK's exit from the EU
for market disruption in the short
term.
The COVID-19 pandemic continues to
create uncertainty in the global
economic outlook. The
diverse portfolio of Group
businesses with exposure to a range
of markets and geographies,
continues to help mitigate this
exposure.
------------------------------------ ----------------------------------
Commercial & Financial
Risk: Increase in competitive pressure
Trend Description and potential impact Mitigation
No change Increased volatility, The holding of leading positions
uncertainty and slowdown in our in niche markets of sustainable
Link to strategy markets could result in infrastructure and transport
* Operational Excellence increased prices safety with high barriers to
and the emergence of new entry.
technologies, leading to a loss In line with our entrepreneurial
* Enhancing organic growth of customers and/or pricing model, our decisions are made
pressure close to our markets and our
and as a consequence a loss of businesses are agile and
* Agile decision making sales and reduced profits. responsive to changes in their
competitive landscape.
Regular subsidiary Board meetings
that review market and customer
activity.
Our subsidiary businesses aim to
provide superior products and high
service levels to customers,
whilst aiming to ensure there is
no dependency on any one
particular customer.
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Risk: Product failure
Trend Description and potential impact Mitigation
No change The Group operates in Products tested, approved and
infrastructure markets where it is accredited by regulatory bodies.
Link to strategy critical that its products meet
* Operational Excellence customer Quality control protocols fully
and legislative requirements and implemented and continuously
where the consequences of product monitored.
* Sustainability failure are potentially
serious. Contractual controls in place to
minimise economic impacts.
Significant product failure arising
from component defects or warranty Insurance cover maintained
issues may require globally with insurance partners.
remediation including the
replacement of defective components Litigation supported/managed by
or complete products, resulting external legal specialists.
in direct financial costs to the
Group and/or wider reputational Thematic Internal Audit review
risk. completed across the Group during
2019 with recommendations
implemented in 2019 and 2020.
------------------------------------ ----------------------------------
Risk: Contractual failure
Trend Description and potential impact Mitigation
No change The Group delivers its commitments Group material contract review
to its customers through a variety process ensures specialist
Link to strategy of contractual arrangements central oversight of key
* Strong financial controls of both a short and medium- term contractual
nature. arrangements.
* High cash conversion Weaknesses in the contract Contracts training for key staff.
tendering process, inappropriate
pricing, misalignment of contract Dedicated quantity surveyors and
terms, ineffective contract contracts managers embedded in
management or failure to comply subsidiary management structures
with contractual conditions could to control projects.
result in loss of revenues,
pressure on operating margins and Litigation supported/managed by
wider reputational damage to external legal specialists.
the Group.
Insurance cover maintained
The potential for credit default globally with insurance partners.
risk due to the ongoing COVID-19
pandemic has been identified, Trade credit insurance policies
although this has not yet in place in the UK, France and
materialised. The Group continues India which mitigate exposure.
to closely monitor the position.
------------------------------------ ----------------------------------
Operational
Risk: Supply chain failure
Trend Description and potential impact Mitigation
Slightly higher The Group's businesses depend on Group procurement standards in
the availability and timely place, including robust due
Link to strategy delivery of raw materials and diligence of supply chain
* Enhancing organic growth purchased components, which could partners
be affected by disruption in its and requiring dual sourcing where
supply chain. Supply chain available.
* Agile decision making failures as a result of
performance, cost, quality and/or Maintenance of relationships with
insolvency may have an adverse key suppliers through regular
impact interaction and assessment
on the Group's production capacity of performance/ financial status.
and lead to an inability to meet
customer requirements, Oversight of material procurement
resulting in a reduction in contracts ensuring robust
revenues, potential loss of market contractual protections.
share and possible reputational
damage. Goods inwards and stock
management processes in place to
During 2020 the supply of key raw reduce the likelihood of defects
materials and components was not in or shortage of raw materials.
impacted by the COVID-19
pandemic, helped in part by local Contingency plans are in place
contingency planning around buffer within the relevant businesses
stock levels and supplier and throughout the supply chain
sourcing arrangements as first to mitigate these risks, such as
developed in response to Brexit. purchasing additional stock of
key raw materials and securing
The Group is currently experiencing additional supply chain capacity.
challenges relating to the global
increases in steel costs
and whilst we are managing
availability issues and are well
placed to pass price increases
to customers, we do recognise an
increase in the exposure from the
risk.
------------------------------------ ----------------------------------
Risk: IT systems failure
Trend Description and potential impact Mitigation
No change The Group relies on the information Business Continuity and Disaster
technology systems used in the Recovery plans documented, tested
Link to strategy daily operations of its and monitored by Group
* Agile decision making subsidiaries. businesses.
A failure or impairment of those The Group's Policy Manual
* Operational excellence systems or any inability to incorporates IT policies in
effectively implement new systems respect of system back-up
could cause a loss of business procedures
* Strong financial controls and/or damage to the reputation of and hardware/software protection.
the Group, together with
significant remedial costs. The Board maintains a watching
brief on IT risks, particularly
Poor security controls and cyber risk which is a focus
procedures could lead to our area for improvement.
businesses being susceptible to
cyber-attack, Ongoing project for the
potentially resulting in enhancement of IT security
significant IT failure and controls and maturity across the
associated disruption. Group.
Separate IT systems within each
subsidiary means that any illegal
external activity is unlikely
to jeopardise the Group as a
whole.
IT Director recruited to the
Group in 2020, responsible for IT
strategy and cyber security
risk.
Periodic guidance issued to
subsidiaries on current and
prevalent cyber-attack threats.
------------------------------------ ----------------------------------
Risk: Acquisition strategy failure
Trend Description and potential impact Mitigation
No change The Group's growth strategies Board approval required for Group
include the acquisition of acquisitions, in line with the
Link to strategy businesses around the world that Group Board's Schedule of
* Targeted M&A complement or supplement its Matters Reserved.
existing activities. Failure to
execute an effective acquisition Due diligence protocols deployed
* Portfolio Management and integration programme would in relation to assessment of
have a significant impact on the target businesses, including
Group's ability to generate financial, commercial, legal and
* Sustainability sustainable profitable growth for others where appropriate.
shareholders.
Contractual protections and
assurances sought from sellers to
mitigate subsequent
identification
of risks.
Post-acquisition integration
plans established for all
material acquisitions with
regular
performance monitoring and
reporting to the Board.
------------------------------------ ----------------------------------
Risk: Lack of investment in product development and innovation
Trend Description and potential impact Mitigation
No change The Group operates in global Entrepreneurial culture
infrastructure markets where established through a
Link to strategy continuous innovation is integral decentralised management
* Enhancing organic growth to the Group's product offering and structure, ensuring
where a failure to innovate could that Group businesses are agile
result in product obsolescence, and responsive to changes in
* Operational excellence and innovation the entry of new competitors and/or their competitive environments.
loss of market share. The The Group actively
development of new products encourages and supports research
* Strong financial controls and technologies carries risk and development programmes at
including the failure to develop a subsidiary level where knowledge
commercially viable offering of the market and needs of our
within an acceptable timeframe. customers is greatest.
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: Talent, development, diversity, recruitment and retention of key employees
Trend Description and potential impact Mitigation
Slightly higher The changing nature of the Implementation of contractual
demographics from which we source protections and retentions in
Link to strategy our employees employment contracts of senior
* Management incentives aligned and the ways in which they like to management and other key
work can make it difficult to employees.
attract and retain both skilled
* Talent development and unskilled labour. We need to Training and development of
ensure effective recruitment employees, which includes a
channels and make the necessary programme of IOD and ILM courses
* Agile decision making investment to develop and retain for
high-quality individuals in key senior management and identified
positions to guarantee the potential successors, and
long-term success of the business. apprenticeship and other
We need to ensure the diversity of vocational
our workforce reflects courses for specialist and
the communities in which we work. technical roles.
Without talented employees we will
be unable to deliver Appropriate remuneration and
our strategic aims. benefits, together with bonus
opportunities and incentive
During the year some of our plans
subsidiaries have found it offered to employees.
challenging to attract and retain
unskilled Recruitment process developed to
labour due to competitive labour include competency requirements
local markets and hence a slight and skills gap analysis.
increase in the risk has
been recognised.
------------------------------------ ----------------------------------
Legal & Regulatory
Risk: Prevention of harm or injury to people
Trend Description and potential impact Mitigation
No change The Group operates a number of Monthly health & safety reporting
manufacturing facilities around the for all subsidiaries via online
Link to strategy world. A failure in the tools.
* Operational excellence Group's health & safety procedures
could lead to injury or to the Regular audits of UK, US, Sweden
death of employees or third and India including assessment of
* Sustainability parties, with a consequential our COVID secure arrangements.
impact on operations and the
increased risk of regulatory or Local audits completed in France,
* Agile decision making legal action being taken against periodically overseen by Group.
the Group. Any such action could
result in both financial Health & Safety Forums to monitor
damages and damage to reputation. performance and share best
practice.
During the year the Group has
followed all local guidelines to Culture of zero tolerance in
ensure that our facilities respect of health & safety
are COVID secure and our employees violations promoted by the Board
are safe. Actions taken include and
introducing enhanced cleaning disseminated throughout Group
and hygiene procedures, businesses.
implementing social distancing and
track and trace procedures, External health & safety
provision accreditations and relationships
of face masks and taking all maintained with regulatory
reasonable steps to help people bodies.
work from home where appropriate
to do so. In addition, we are Health & safety as a priority
mindful of the mental wellbeing of area of focus for new
our employees during this acquisitions.
difficult time and have offered
appropriate support and assistance. Monitoring of LTI rates
Any LTI event is followed up and
investigated thoroughly and
improvement recommendations are
implemented to minimise any
reoccurrence.
Reduction of the Group's LTI
rates is a key focus for
Management and the Board in 2021.
------------------------------------ ----------------------------------
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
* Operational excellence and regulations including those Staff training provided on
related to anti-bribery and Anti-Bribery and Corruption and
corruption, human rights and Competition Compliance.
* Sustainability employment, Programme of audits undertaken on
GDPR, trade/export compliance and a cyclical basis to review
competition/anti-trust. subsidiary compliance with
* Strong financial controls regulatory
A failure to comply with any requirements, including for
applicable laws and regulations example simulated 'dawn raids'.
could result in civil or criminal
liabilities and/or individual or Software solutions implemented
corporate fines and could also globally to ensure compliance
result in debarment from with trade and export
Government-related legislation.
contracts, restrictions on ability
to trade or rejection by financial Externally hosted whistleblowing
counterparties as well hotline available to all
as reputational damage. employees to allow
them to raise concerns in
There is no significant concern confidence or anonymously, if
regarding legislative changes post preferred.
Brexit, however the Group
will continue to keep a watching Modern Slavery compliance
brief in this area and seek programme continued through 2020.
external advice if necessary.
Toolkits issued to all UK
subsidiaries to aid compliance
with local GDPR.
------------------------------------ ----------------------------------
Appendix B - Responsibility Statement of the Directors pursuant
to Disclosure and Transparency Rule 4
The following statement is extracted from page 103 of the 2020
Annual Report and is repeated here for the purposes of compliance
with DTR 6.3.5. This statement relates solely to the 2020 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 83 to 93, and in the
related party details on page 178 (note 13) of the 2020 Annual
Report.
Alex Henderson
Company Secretary
Hill & Smith Holdings PLC
Tel: +44 (0) 121 704 7430
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