TIDMHILS
RNS Number : 3359V
Hill & Smith Hldgs PLC
15 April 2016
Hill & Smith Holdings PLC (the 'Company')
2015 Annual Report and Notice of 2016 Annual General Meeting
('AGM')
Hill & Smith Holdings PLC has today posted, or otherwise
notified as being available on its website www.hsholdings.com, the
following documents:
1. 2015 Annual Report
2. Notice of 2016 AGM
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 2015 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 2015 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 2015 Annual Report.
The information below, headed as Appendix A, B and C, and which
is extracted from the 2015 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 9 March 2016 (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 2015 Annual Report. All page numbers and
cross-references in the extracted information below refer to page
numbers in the 2015 Annual Report.
Appendix A - Principal Risks and Uncertainties
Risk and potential Mitigation Link to
impact Strategy
----------------- --------------------------- ----------------------------- -----------------------------------
Economic Competitive Implementation
Managing pressure puts of procurement * Portfolio management
the impact downward standards to help
of those force on revenue manage cost
risks growth, market creep. * Geographic diversification
which positioning Ongoing subsidiary
we cannot and profitability. quality assurance
eliminate improvement initiatives. * Target returns and leverage
or mitigate Product differentiation
at source; through product
e.g. quality, delivery * Entrepreneurial culture
global performance, reliability
market and professional
conditions. customer service.
Product development
and geographical
expansion initiatives
are
used to surpass
present competitor
reach.
----------------- --------------------------- ----------------------------- -----------------------------------
Overall market Diversification
or selective into new markets
geographical and territories.
conditions deteriorate New product development.
or there is Close relationship
a between Group and
reduction in subsidiary management.
demand leading Expansion into
to a new export markets.
decline in Government Intra-Group co-operation,
and private leveraging the
sector confidence Group global footprint.
and spending, Contracts negotiated
affecting Group with customers
financial performance. on a Group wide
basis
leveraging Group
size and synergies
between Group companies.
----------------- --------------------------- ----------------------------- -----------------------------------
Volatility in Use of Group procurement
raw materials standards requiring
markets dual sourcing and
reduce availability robust due diligence
and increase of supply chain
cost of partners.
raw materials Hedging against
putting Group raw material price
margins volatility where
under pressure appropriate.
and impacting Contractual protections
Group sought against
financial performance. raw material fluctuation
impacts.
----------------- --------------------------- ----------------------------- -----------------------------------
Foreign exchange At the inception
rates could of contracts involving
impact foreign currency
Group financial cash
performance flows, the Group
by uses derivative
potentially instruments including
eroding commercial forward
margins currency contracts
to mitigate the
risk of subsequent
movements
in foreign exchange
rates.
----------------- --------------------------- ----------------------------- -----------------------------------
**Global economic Diversification
events, profound into new markets
social instability and territories.
or failure of Pursuing opportunities
national in the private
governance in sector.
any of the territories Maintaining close
in relationships with
which we operate Government agencies
impacting our
ability
to manufacture
and ultimately
our
financial performance.
----------------- --------------------------- ----------------------------- -----------------------------------
Human A loss of key Development and
Resources staff and a implementation * Geographic diversification
Recognising failure to of a Group succession
the implement effective planning model,
importance succession driven by the Group * Entrepreneurial culture
of planning could Chief Executive.
recruitment, lead to a loss Implementation
talent of of contractual
management, expertise, impacting protections and
employee technical and retentions in
engagement financial performance. employment contracts.
and employee Group policy supporting
management the training and
to our development of
Group. its
employees.
----------------- --------------------------- ----------------------------- -----------------------------------
A failure to Competitive remuneration,
recruit employees benefits and incentive
who plans offered
have the relevant to employees and
skills, experience regularly benchmarked.
and Development of
attributes could a recruitment process
impact the Group's including competency
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ability to achieve requirements and
its optimum skills gap analysis.
growth Value based culture.
potential.
----------------- --------------------------- ----------------------------- -----------------------------------
The geographical Use of internal
spread of communications
management and systems, e.g. Group
the appointment intranet.
of new management Regular international
teams could conferences held
compromise effective at the subsidiary
communication level.
and responsiveness A formal delegation
impacting the of authorities
Group's strategic structure has enhanced
goals. ownership and control,
whilst encouraging
entrepreneurial
drive
and spirit.
Entrepreneurship
is encouraged as
a key tenet of
the Group's
business strategy
and the adoption
of a singular business
culture
is, therefore,
not always possible
and flexibility
in the Group's
management style
is favoured instead.
The Group Code
of Business Conduct
establishes core
behaviours
expected of all
staff.
----------------- --------------------------- ----------------------------- -----------------------------------
Operational A failure to Ongoing subsidiary
Ensuring manage our property site assessment * Portfolio management
that portfolio effectively, of future space
we could lead to and
take production downtime efficiency requirements * Geographic diversification
all necessary and reduce and related investment
steps our potential in additional
to manage for increased capacity or equipment. * Target returns and leverage
risk income Subsidiary businesses
in our generation. are strengthening
manufacturing Production capability business continuity * Entrepreneurial culture
plants and plans to ensure
and our capacity restrictions that they are equipped
installation could reduce to handle business
activity our continuity events,
both ability to meet including leveraging
in our demand. Downtime their proximity
facilities caused by plant to other
and in failure, loss Group subsidiaries
the field. of utilities and working with
or natural catastrophe the IT Steering
could suppress Committee
performance to mitigate systems
on an extended downtime risks.
basis. Subsidiary businesses
implement local
health, safety
and
environmental controls
which are monitored
by health and
safety committee
meetings and an
external specialist.
----------------- --------------------------- ----------------------------- -----------------------------------
Insufficient Subsidiary discretion
investment in to engage in research
research and development
and development activities, subject
and/or a failure to budgetary constraints.
to Robust quality
innovate restricting controls in place.
organic growth Dedicated quality
and compliance resources
geographical in most affected
diversification subsidiaries who
ultimately have conducted
resulting in research and implemented
the longer term controls to ensure
financial responsiveness
goals being to regulator and
compromised. customer
Regulatory approvals information
and customer requests and audits.
approvals can Board consideration
delay the of emerging risks
introduction including seeking
of products external
which are specialist support
developed by and internal identification
the Group, ultimately of emerging risks
resulting in at
the short to both the subsidiary
medium term and Group level.
financial goals Both the onset
being compromised. of the risk
and the potential
opportunities it
may generate for
the Group
are being considered.
Acquisition of
new subsidiary
businesses which
have advanced
IT solutions and
could be applied
Group-wide.
----------------- --------------------------- ----------------------------- -----------------------------------
Active portfolio Comprehensive
management is and structured
a key due diligence protocols
tenet of the are
Group's strategy deployed in respect
and as of investigating
such, if the target businesses
management of and
our merger contractual assurances
and acquisitions are sought from
activity, integrations sellers to mitigate
and business any
restructuring identified issues
is ineffective, or risks.
the Group may Employment contract
not meet its terms and conditions
strategic are aligned post
and business integration
goals and financial between Group employees
performance and new employees,
targets. facilitating smooth
integration.
Formal Board level
approvals are required
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in accordance with
the Group's delegation
of authority structure
for any acquisitive
activity.
A standardised
and proven 100
Day Integration
Plan is followed
post-acquisition
to streamline the
integration process
----------------- --------------------------- ----------------------------- -----------------------------------
Inadequate and The Group's IT
weak IT systems Steering Committee
can reviews IT systems
affect the Group's capability,
financial performance suitability and
and its ability integrity on a
to be responsive regular basis.
to its The capital expenditure
customers. approval process
is used to test
the
suitability of
proposed IT system
enhancements.
IT Policies are
included in the
Group policy manual.
----------------- --------------------------- ----------------------------- -----------------------------------
Supply chain Implementation
failures through of Group procurement
performance, standards requiring
cost and/or dual
solvency sourcing and robust
issues could due diligence of
destabilise supply chain partners.
production Robust contractual
capability and protections sought.
ultimately lead Dedicated procurement
to a functions at subsidiary
reduction in level.
sales performance. Regular interaction
with key suppliers
helps maintain
relationships and
understand supplier
capacity, performance
and financial status.
----------------- --------------------------- ----------------------------- -----------------------------------
**Project delay Diversification
or cancellation into new markets
(internal and territories.
or external Pursuing opportunities
factors) including in the private
a sector.
reduction in Maintaining close
government spending, relationships with
inclement weather customers.
or a delay in
the
new product
approvals process.
----------------- --------------------------- ----------------------------- -----------------------------------
Commercial The cost of Regulatory approvals,
& Financial remediating testing and accreditations * Portfolio management
Mitigating product failures obtained.
internal or defects caused Rigorous quality
and external by production control protocols * Geographic diversification
commercial or are fully implemented
and quality issues and
financial can lead to enhanced whenever * Target returns and leverage
trading claims for possible.
risks loss and damage, Policies in respect
in our adverse customer of handling product * Entrepreneurial culture
day to perceptions, failures have been
day reputational strengthened.
business and financial Contractual controls
activities. consequences help mitigate the
for the Group. economic impacts.
Insurance cover
is provided globally
by insurers of
repute.
Litigation is
managed by external
legal specialists
from reputable
firms.
----------------- --------------------------- ----------------------------- -----------------------------------
The size of Products and geographical
the Group's markets diversification.
available Ongoing monitoring
customer base, of the timing and
together with trends in government
the funding for road
risk of losing and infrastructure
key customers, spending.
changes Generation of
in customer contractual guidance
buying behaviours and precedent
or documentation to
significant preserve contractual
worsening of terms.
contractual Contracts reviewed
terms could under the delegation
result in Group of authorities
financial structure.
under performance.
----------------- --------------------------- ----------------------------- -----------------------------------
An inability Subsidiary cash
to collect cash management is monitored
in by the Group finance
accordance with function.
customer payment Standardisation
terms, obtain of payment terms.
credit insurance The delegation
or an of authorities
increase in process results
anticipated in contractual
bad debts would payment terms being
result in an centrally reviewed
inability to and approved.
plan financially Credit ratings
with any certainty agencies continue
and achieve to be used as a
the source of risk
Group's financial assessment and
ambitions. credit insurance
is effectively
deployed.
----------------- --------------------------- ----------------------------- -----------------------------------
The Group's Contract precedents
ability to ensure and guidance have
it does been produced and
not accept unduly new standard terms
onerous contractual produced for certain
commitments subsidiary businesses.
is central to Further work ongoing
its in this sphere
commercial risk during 2016.
management and Advice in respect
to to contractual
mitigate the risk is available
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risks of poor to the Group,
performance together with legal,
due to factors commercial and
within or outside financial support
of its from the
control. This, central team.
together with The operation
ineffective of the delegation
contracts management of authorities
post award, process requires
could pressurise Group senior management
margins and and/or Executive
increase Director approval
liabilities for the execution
ultimately impacting of material contracts.
the Roll out of contracts
Group's financial training in the
performance UK and US during
and 2015,
reputation. further training
to be held during
2016.
Certain of the
Group's subsidiaries
have appointed
dedicated
quantity surveyors
and contracts managers
to control their
projects.
----------------- --------------------------- ----------------------------- -----------------------------------
Future investment From a transactional
projects and perspective, Group
the companies operate
growth in foreign a common set of
earnings for reporting policies
the Group and procedures.
are adversely An
affected. The internal audit
Group is programme underpins
affected by compliance and
the short term further
risk that its requirements are
earnings may communicated via
be impacted the Group intranet
by certain and
financial risks directly to the
e.g. credit financial professionals
and liquidity around the Group.
risks and foreign The Group benefits
exchange volatility. from centralised
The cash and banking
Group operates controls
in a range of and the Group Financial
different Controller acts
jurisdictions, to govern and monitor
political and all
fiscal regimes, financial controls
which present applicable across
operating and the Group.
cultural Regular monitoring
risks of tax developments
in relevant jurisdictions
assists to ensure
that the Group
utilises the most
appropriate tax
structures.
Specialist and/or
local independent
tax advice is sought
as appropriate
from reputable
accounting practices.
----------------- --------------------------- ----------------------------- -----------------------------------
Legal The impact of These requirements
& regulatory changes are managed by * Target returns and leverage
Regulatory such as green specialists through
Ensuring initiatives agreed
compliance (including * Entrepreneurial culture
with carbon footprint
the laws results) acts
and regulations to create
which additional process
govern steps, enhanced
the procurement
operations requirements
in the and
territories increases costs
in which and administrative
we operate. effort, ultimately
impacting margins.
This could also
result in the
non achievement
of Group environmental
aspirations.
----------------- --------------------------- ----------------------------- -----------------------------------
Group initiatives Use of patent
including: economies attorneys with
of bulk purchasing, global remit.
site Use of in-region
usage monitoring IPR specialist
and reporting, legal advice.
energy market Central IPR register
intelligence and management
and of renewals, authorised
carbon commitment uses and assignments.
management. Contractual protections
The dilution obtained to protect
of the Group's Group IPR where
valuable possible.
intellectual Monitoring of
property can IP registrations
result in lost to ensure consistent
earnings, particularly protection.
via the copying
of product in
the Asia-Pacific
region.
Insufficient
Intellectual
Property Rights
('IPR') monitoring
could lead to
a loss of
brand protection,
patent protection
and
increase competitive
pressures.
----------------- --------------------------- ----------------------------- -----------------------------------
A violation The Group Code
of competition/anti-trust of Business Conduct
laws could result ('CBC') requires
in downtime, that the
fines, Group conducts
penalties and its business in
adverse reputational an open, vigorous
consequences and competitive
for the Group fashion.
by both Competition compliance
customers and manual implemented
investors. There by each Group
may subsidiary.
also be personal Online competition
consequences training and testing
for the undertaken globally
Group's Directors. by
all key employees,
including the Board.
Simulated dawn
raids are undertaken
each year to audit
subsidiary compliance.
Competition assessments
are included in
material contract
reviews.
The Group has
a whistleblowing
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hotline and email
to allow
employees to raise
concerns in confidence,
or anonymously
if
preferred.
A direct reporting
relationship between
the Group Risk
&
Compliance Counsel
and the Chief Executive
and Audit
Committee emphasises
the commitment
to further
strengthening the
Group's compliance
culture.
----------------- --------------------------- ----------------------------- -----------------------------------
A violation The Group CBC
of international requires that the
import Group must trade
and export non-compliance in accordance
(including with all valid
trading, restricted international economic
parties and sanctions and legal
sanctioned countries requirements for
compliance) the import and
can export of goods,
result in the technology
denial of export and services.
privileges, Restricted party
the imposition screening software
of fines and and procedures
penalties, have been
diverted management globally implemented
time and by the Group.
personal implications An International
for the violators Trade Compliance
together with Policy was issued
adverse implications in response
for to the changing
Group financial legislative and
performance, financing landscape
facilities surrounding
and reputation. sanctions.
Central analysis
and advice is provided
in respect to the
administration
of trade with both
routine and less
routine
countries and territories.
----------------- --------------------------- ----------------------------- -----------------------------------
A violation Robust health
of health, safety and safety policies
and and procedures
environmental are deployed.
laws and regulations Use of the health
or the impact and safety cloud
of health, safety monitoring and
and reporting
environmental framework - see
accidents and page 42.
incidents Retention of an
affects employees, external health,
communities safety and environmental
and operations consultant.
and impacts Open relationship
Group with regulatory
reputation and bodies.
financial performance. Health and safety
committee monitoring.
A culture of zero
tolerance in respect
of health and safety
violations is promoted
by the Board.
----------------- --------------------------- ----------------------------- -----------------------------------
Were any member A direct reporting
of the Group relationship between
to the Group Risk
commit a violation &
of Anti-Bribery Compliance Counsel
& and the Chief Executive
Corruption laws, and Audit
(including breach Committee emphasises
by the commitment
a commercial to further
intermediary strengthening the
appointed Group's compliance
by the Group, culture.
such as an agent
or
distributor),
the resultant
consequences
could include
fines, adverse
publicity,
claims from
customers, loss
of
management time
and personal
consequences
for those found
to be
in violation
of the same,
ultimately
impacting Group
financial performance
and conformance
with its strategic
plans.
----------------- --------------------------- ----------------------------- -----------------------------------
Non-compliance Group policies
with employment on employees' rights
in the workplace.
laws. The Group CBC
requires that the
Group comply with
local laws
. including employment
laws and regulations.
All subsidiary
businesses have
access to local,
dedicated
employment law
expertise.
Whistleblowing
hotline allows
for reporting of
potential noncompliance
with local employment
laws.
----------------- --------------------------- ----------------------------- -----------------------------------
** Fraudulent The Group CBC
conduct by employees requires that the
or Group apply the
external parties. Group's Anti-
Bribery & Corruption
Policy and expressly
prohibits improper
payments in all
business dealings,
in every country
around the
world.
The Group Gifts
& Entertainment
policy tightly
controls how we
give or receive
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business gifts,
entertainment and
hospitality.
A rolling programme
of online anti-bribery
and corruption
training and testing
is undertaken by
new employees.
A commercial intermediaries
protocol operates
in the context
of
the appointment
of third party
representatives
e.g. agents and
distributors.
The Group has
a whistleblowing
hotline and email
to allow
employees to raise
concerns in confidence,
or anonymously
if
preferred.
The Group CBC
continues to be
the central focus
for setting out
ethical behaviours.
Close monitoring
by the Group finance
team of monthly
financial
information.
Whistleblowing
hotline allows
for reporting of
potential
fraudulent conduct
by employees.
----------------- --------------------------- ----------------------------- -----------------------------------
** Identified, by the enhanced risk assessment process, as a new
risk in 2015.
Board confirmation of principal risks and uncertainties
The Board is satisfied that the Group operates an effective risk
management process and confirms that it has conducted a robust
assessment of the principal risks facing the Group. It considers
that the risks identified in the above table correctly summarise
the principal risks and uncertainties facing the Group together
with the remediation and mitigation activities that are being used
to address such risks.
The Board has overall responsibility for the Group's risk
management programme including implementing and monitoring the
following:
Operational, financial and compliance internal controls;
Ensuring that the current risk management process remains a
suitable means of establishing the correct risk culture;
Ensuring that the Group's risk profile is managed and
controlled; and
Ensuring that there is consideration as to how much risk the
Group is willing to take in pursuit of the strategic objectives and
ensuring that such risks are managed appropriately and within
acceptable parameters.
The principal risks and uncertainties facing the Group, set out
above, include detail as to how these risks are being effectively
managed to accord with the Group's risk appetite, as established by
the Board. This appetite being the amount of risk that the Board is
willing to take in pursuit of its strategic objectives as outlined
on pages 18 to 27.
Appendix B - Directors Responsibilities Statement pursuant to
Disclosure and Transparency Rule 4
The following statement is extracted from page 84 of the 2015
Annual Report and is repeated here for the purposes of compliance
with DTR 6.3.5. This statement relates solely to the 2015 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 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 66 to 80, and in the
related party details on page 129 (note 25) of the 2015 Annual
Report.
Alex Henderson
Company Secretary
Hill & Smith Holdings PLC
Tel: +44 (0) 121 704 7430
This information is provided by RNS
The company news service from the London Stock Exchange
END
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