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Hill & Smith Holdings PLC announced on 19 April 2022 the posting of its 2021 Annual Report and Notice of its 2022 Annual General Meeting (AGM) to shareholders and their availability on its website. Copies of these documents were uploaded to the National Storage Mechanism, and the Board approved the statutory accounts for the year ended 31 December 2021. The announcement also included extracts from the 2021 Annual Report for compliance with Disclosure and Transparency Rule 6.3.5.
| Date | 19 Apr 2022 |
| Time | 09:05:01 |
| Category | AGMs and other meetings |
| ID | 5738I |
Hill & Smith Holdings PLC (the 'Company')
2021 Annual Report and Notice of 2022 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 2022 AGM. The 2021 Annual Report was posted to shareholders, or otherwise notified as being made available on its website www.hsholdings.com on 19 April 2022.
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 2021 Annual Report can be obtained upon request to the Group Company Secretary, Hill & Smith Holdings PLC, Westhaven House, Arleston Way, Shirley, Solihull B90 4LH.
The statutory accounts for the year ended 31 December 2021 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 2021 Annual Report
The information below, headed as Appendix A, B and C, and which is extracted from the 2021 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 2022 (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 2021 Annual Report. All page numbers and cross-references in the extracted information below refer to page numbers in the 2021 Annual Report.
Appendix A - Principal Risks and Uncertainties
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Risk: Reduction in Government spending plans |
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Trend No change |
Description and potential impact Demand for sustainable infrastructure and transport is underpinned by Government spending plans. Changes to these plans could have a detrimental impact on Group revenues.
In November 2021, the Infrastructures Investment and Jobs Act was agreed, confirming substantial US Government infrastructure spending with the associated demand for our products and services in the US. Despite the announced delay to some SMART motorway schemes, the UK Government's confirmed commitment to the next phase of road investment spend (RIS2) remains, presenting great opportunity for our UK businesses.
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Mitigation
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Risk: Changes in global outlook and geopolitical environment |
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Trend Slightly higher
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Description and potential impact The Group operates in a range of end-user markets around the world and may be affected by political, economic or regulatory developments in any of these countries.
Material adverse changes in the political and economic environments in the countries in which we operate, have the potential to put at risk our ability to execute our strategy.
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.
The conflict in Ukraine has created significant uncertainty. The direct exposure from international sanctions for the Group is limited, due to no current direct Russian customers or suppliers. There could however be consequences on the global economic outlook as well as supply chains and utility prices. As a result, an increase in the risk has been recognised.
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Mitigation
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Risk: Increase in competitive pressure |
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Trend No change
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Description and potential impact Increased volatility, uncertainty and slowdown in our markets could result in increased prices and the emergence of new technologies, leading to a loss of customers and/or pricing pressure and as a consequence a loss of sales and reduced profits. |
Mitigation
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Risk: Product failure |
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Trend No change
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Description and potential impact The Group operates in infrastructure markets where it is critical that its products meet customer and legislative requirements and where the consequences of product failure are potentially significant.
Product failure arising from component defects or warranty issues may require remediation including the replacement of defective components or complete products, resulting in direct financial costs to the Group and/or wider reputational risk. |
Mitigation
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Risk: Contractual failure |
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Trend No change
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Description and potential impact The Group delivers its commitments to its customers through a variety of contractual arrangements of both a short and medium term nature.
Weaknesses in the contract tendering process, inappropriate pricing, misalignment of contract terms, ineffective contract management or failure to comply with contractual conditions could result in loss of revenues, pressure on operating margins and wider reputational damage to the Group.
The potential for credit default risk due to the ongoing COVID-19 pandemic has been identified, although this has not yet materialised. The Group continues to closely monitor the position. |
Mitigation
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Risk: Supply chain failure |
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Trend Slightly higher
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Description and potential impact The Group's businesses depend on the availability and timely delivery of raw materials and components, which could be affected by disruption in its supply chain. Supply chain failures as a result of performance, inflation cost, quality and/or insolvency may have an adverse impact on the Group's production capacity and lead to an inability to meet customer requirements, resulting in a reduction in revenues, potential loss of market share and possible reputational damage.
During the year, our operating companies took swift and appropriate action to manage supply chain headwinds. Actions taken included implementing price increases to offset significant input cost inflation, securing supply of raw materials and ensuring the continuity of operations with a backdrop of labour shortages in certain businesses. Whilst we continue to closely monitor and manage these headwinds as we enter 2022, we do recognise a net increase in the risk due to current inflation pressures. The conflict in Ukraine and potential impact on global supply chains and utilities prices is likely to add further inflationary pressure. |
Mitigation
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Risk: IT systems failure |
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Trend Slightly higher
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Description and potential impact The Group relies on the information technology systems used in the daily operations of its operating companies.
A failure or impairment of those systems or any inability to effectively implement new systems could cause a loss of business and/or damage to the reputation of the Group, together with significant remedial costs.
Poor security controls and procedures could lead to our operating companies being susceptible to cyberattack, potentially resulting in significant IT failure and associated disruption.
During the year, the global cyber threat has continued to evolve, with increasing numbers of organised criminal groups carrying out sophisticated ransomware attacks, for example. As a result of the conflict in Ukraine, the UK's National Cyber Security Centre (NCSC) has warned of heightened cyber risk across UK, US and European businesses. Whilst there has been enhancement of the Group's IT security controls during the year to improve mitigation against cyber-attacks, we recognise at a net level there has been an increase in the risk.
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Mitigation
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Risk: Portfolio management |
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Trend No change
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Description and potential impact The Group's growth strategies include the acquisition of businesses around the world that complement or supplement its existing activities. Failure to execute an effective acquisition and integration programme would have a significant impact on the Group's ability to generate sustainable profitable growth for shareholders. Targeted disposals are also required to ensure the strategic objectives of the Group can be achieved. |
Mitigation
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Risk: Lack of investment in product development and innovation |
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Trend No change
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Description and potential impact The Group operates in global infrastructure markets where continuous innovation is integral to the Group's product offering and where a failure to innovate could result in product obsolescence, the entry of new competitors and/or loss of market share. The development of new products and technologies carries risk including the failure to develop a commercially viable offering within an acceptable timeframe. |
Mitigation
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Risk: Talent, development, diversity, recruitment and retention of key employees |
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Trend Slightly higher
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Description and potential impact The changing nature of the demographics from which we source our employees and the ways in which they like to work can make it difficult to attract and retain both skilled and unskilled labour. We need to ensure effective recruitment channels and make the necessary investment to develop and retain high-quality individuals in key positions to guarantee the long-term success of the business. We need to ensure the diversity of our workforce reflects the communities in which we work. Without talented employees we will be unable to deliver our strategic aims.
During the year some of our operating companies have continued to find it challenging to attract and retain direct labour due to very competitive labour local markets impacted by COVID and hence an increase in the risk has been recognised. |
Mitigation
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Risk: Prevention of harm or injury to people |
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Trend No change
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Description and potential impact The Group is committed to preventing all health and safety incidents and ensuring the health, safety and wellbeing of all employees and third parties. The Group operates a number of manufacturing facilities around the world, a failure in the Group's health & safety procedures could lead to injury or to the death of employees or third parties.
During the year, the Group has followed all local guidelines to ensure that our facilities are COVID secure and our employees are safe. Measures first introduced during 2020 were continued, such as enhanced cleaning and hygiene procedures, social distancing, track and trace procedures, provision of face masks and taking all reasonable steps to help people work from home where appropriate to do so. In addition, we are mindful of the mental wellbeing of our employees during this difficult time and have offered appropriate support and assistance. |
Mitigation
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Risk: Violation of applicable laws and regulations |
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Trend No change
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Description and potential impact The Group's global operations must comply with a range of national and international laws and regulations including those related to anti-bribery and corruption, human rights and employment, GDPR, trade/export compliance and competition/anti-trust.
A failure to comply with any applicable laws and regulations could result in civil or criminal liabilities and/or individual or corporate fines and could also result in debarment from Government-related contracts, restrictions on ability to trade or rejection by financial counterparties as well as reputational damage.
Our exposure to breaching sanctions placed on Russia is low due to no current direct Russian customers and suppliers. Our export compliance software performs daily screening of our customer and supplier databases against global sanctioned and denied party lists with any changes in status flagged. |
Mitigation
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Appendix B - Responsibility Statement of the Directors pursuant to Disclosure and Transparency Rule 4
The following statement is extracted from page 112 of the 2021 Annual Report and is repeated here for the purposes of compliance with DTR 6.3.5. This statement relates solely to the 2021 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
As of 1 January 2021, key management personnel 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 94 to 104 and the members of the Executive Board who are not also Directors of the Group, and in the related party details on page 182 (note 14) of the 2021 Annual Report.
Alex Henderson
Company Secretary
Hill & Smith Holdings PLC
Tel: +44 (0) 121 704 7430