Well positioned for growth
Hill & Smith PLC
Annual Report & Accounts 2024
Group financial highlights
Revenue
£855.1m +3%
(2023: £829.8m)
Revenue
£855.1m +3%
(2023: £829.8m)
Underlying operating profit
£143.5m +17%
(2023: £122.5m)
Operating profit
£115.4m +11%
(2023: £103.8m)
Underlying operating margin
16.8% +200bps
(2023: 14.8%)
Operating margin
13.5% +100bps
(2023: 12.5%)
Underlying profit before tax
£132.6m +18%
(2023: £111.9m)
Profit before tax
£104.5m +12%
(2023: £93.2m)
Underlying earnings per share
122.6p +16%
(2023: 105.4p)
Basic earnings per share
95.0p +10%
(2023: 86.0p)
All underlying measures exclude certain non-underlying items, which are as detailed in note 5 to the financial statements and described in the Financial Review.
References to an underlying profit measure throughout this Report are made on this basis. Non-underlying items are presented separately in the Consolidated
Income Statement where, in the Directors’ judgement, the quantum, nature or volatility of such items gives further information to provide a proper understanding
of the underlying performance of the business. Underlying measures are deemed alternative performance measures (‘APMs’) under the European Securities
and Markets Authority guidelines and a reconciliation to the closest IFRS equivalent measure is detailed in note 4 to the financial statements. They are presented
on a consistent basis over time to assist in comparison of performance.
Where we refer to organic constant currency (OCC) movements, these exclude the impact of currency translation effects and acquisitions, disposals and closures
of subsidiary businesses. In respect of acquisitions, the amounts referred to represent the amounts for the period in the current year that the business was not held
in the prior year. In respect of disposals and closures of subsidiary businesses, the amounts referred to represent the amounts for the period in the prior year that the
business was not held in the current year. Constant currency amounts are prepared using exchange rates which prevailed in the current year.
Underlying
Statutory
Financials
Independent Auditor’s report
127
Consolidated income statement
Consolidated statement of comprehensive income
138
139
Consolidated statement of financial position
140
Consolidated statement of changes in equity
141
Consolidated statement of cash flows
142
Notes to the consolidated financial statements
143
Company balance sheet
198
Company statement of changes in equity
199
Notes to the Company financial statements
200
Five year summary
210
Shareholder Information
Financial calendar
211
Shareholder information
212
Principal group businesses
214
Directors, contacts and advisors
216
Find out more at
www.hsgroup.com
Strategic Report
Hill & Smith investment case
2
Case study: Structurally growing US end markets
4
Case study: Disciplined M&A
7
Case study: High & improving returns
8
Chair’s introduction
10
Celebrating a 200 year history
14
Chief Executive Officer’s review
16
How we create lasting value
20
An enhanced focus on priority end markets
22
Measuring our performance
28
Operational & financial review
30
Engaging with our stakeholders
38
Section 172
44
Our approach to sustainability
46
Risk management
66
Group principal risks
69
Non-financial and sustainability
information statement
73
Governance
Governance at a glance
Introduction to governance
74
76
Board of Directors
78
Governance report
81
Nomination Committee report
92
Audit Committee report
96
Remuneration Committee report
102
Directors’ report
121
Statement of Directors’ responsibilities
126
Hill & Smith PLC | Annual Report and Accounts 2024
1
Hill & Smith investment case
Delivering long-term stakeholder value
Dividend per share
49.0p +14%
(2023: 43.0p)
Return on invested capital
24.8% +280 bps
(2023: 22.0%)
Creating shareholder value
Hill & Smith has a long track record of delivering superior value
and returns for shareholders.
Structural growth
underpinned by the need for infrastructure
investment in our core markets
Entrepreneurial culture
supported by an autonomous
operating model
Market leader
with strong track record, in attractive
niches with high barriers to entry
High and improving
returns profile
delivering superior value for shareholders
Sustainability
at the core of our business model
Strong balance sheet
supported by excellent cash generation,
enabling the Group to take advantage
of organic and inorganic opportunities
2
Robust capital allocation
Our capital allocation framework enables the effective deployment of capital
to support our growth ambitions.
Inorganic
investment
• Structured approach
based on clear criteria
• Clear alignment with
purpose and strategy
• Returns to exceed
Group WACC within 3
year time frame
Group ROIC target: >22% through the cycle
Underpinned by balance sheet prudence
Target leverage: 1 to 2 times
Organic growth
• Disciplined
investment in capital
projects, talent and
innovation
• Focus on higher
return, higher growth
markets
Dividends
• Provide a growing
dividend to
shareholders
• FY24 total dividend
49.0p per share
Return surplus
capital
• Return surplus capital
to shareholders, if
leverage is expected
to fall below 0.5 times
for a sustained period
3
Strategic Report
Governance
Financials
Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2024
Investment in the US electrical grid is driven both by a need
to upgrade an ageing infrastructure, much of which was built
in the 1960s and 1970s, and also the need to address the
significant growth in electricity consumption coming from new
technologies. We see this as a 10 to 20 year investment cycle
with funding coming from both federal government and publicly
listed utility companies. A number of our businesses are seeing
the benefits of this increased demand, particularly V&S Utilities,
which designs and manufactures steel substation structures.
Our composite and galvanizing businesses also provide products
and services into this fast growing market.
Industrial infrastructure includes the physical investment in
data centres, semiconductor and EV plants, and more general
investment in industrial plants linked to onshoring. The scale
of some of these projects is significant and multi-year, in many
instances funded jointly by public and private sector. The
construction of almost any type of industrial plant plays well to
Hill & Smith. We are able to galvanize the steel, supply the cooling
towers and composite products, such as cable trays, and supply
engineered supports.
The roads and bridges market has been one of the first areas
of US infrastructure investment to materially benefit from
government investment through the Infrastructure Investment
and Jobs Act (‘IIJA’), with a significant proportion of the funding
allocated to surface transportation. Our high margin composite
and galvanizing businesses benefit from this investment alongside
our road safety products business.
Our significant exposure to these attractive, growing end
markets, provides us with confidence that the Group is capable
of delivering on its growth ambitions. We also see significant
opportunities for value enhancing M&A.
Structurally growing
US end markets
In recent years we have seen strong organic growth and margin expansion
in our US businesses, which operate in a range of structurally growing
end markets including investment in the electrical grid, roads and bridges,
and industrial infrastructure.
Other
Industrial
Electrical Grid Infrastructure
Oil, Gas, Chemicals & Energy
Transportation
Other Construction
Roads & Bridges
20%
6%
5%
2%
27%
17%
23%
2024 US revenue
by end market
4
Strategic Report
Governance
Financials
Shareholder Info
5
Hill & Smith PLC | Annual Report and Accounts 2024
6
We continue to identify and secure strategically aligned,
financially accretive businesses, at sensible prices. We are also
able to do this outside of auction processes.
We made four highly complementary US acquisitions in 2024,
including two which have been successfully integrated into
our V&S Utilities business, which designs and manufactures
structural steel for electrical substations.
Capital Steel was acquired in January 2024, giving us a
bridgehead into the New Jersey market. Since acquisition we
have been able to significantly reduce delivery times through
better scheduling, using our existing manufacturing capacity.
We are also starting to see the benefits of cross selling our existing
tapered tubular products into the Capital Steel customer base.
We acquired Whitlow Electric in September 2024, broadening
our geographic footprint in the US, and providing access to new
customers in the attractive southeast market. With a well
invested facility, the acquisition has increased our structural steel
fabrication capacity and presents good opportunities for
cross-selling and margin expansion.
Both businesses are trading ahead of our expectations, reflecting
the high end market demand and also the disciplined approach
we take to pre-acquisition due diligence and post acquisition
integration.
Disciplined M&A
Recent bolt-on acquisitions to V&S Utilities showcase our ability
to use M&A to expand into high growth end markets.
Whitlow Electric
• Acquired in September 2024 for $30.2m
• Broadens geographic footprint into the
Southeast of the US
Capital Steel
• Acquired in January 2024 for $6.3m
• Expands customer base into New Jersey
and provides cross-selling opportunities
Hill & Smith PLC | Annual Report and Accounts 2024
7
Strategic Report
Governance
Financials
Shareholder Info
We require our operating companies to manage working capital
efficiently and we invest in capital projects, talent and innovation
to support future growth. Additionally, we allocate capital
to inorganic investment, with a focus on acquiring financially
accretive businesses with good strategic fit and long-term
growth potential.
We use return on invested capital to measure our overall capital
efficiency, with the improving returns seen over the past five
years demonstrating the success of our strategy and capital
allocation approach. Given this impressive performance, we have
upgraded our target for return on invested capital from 18%
to 22%+ to reflect the stronger returns generated by the portfolio
of businesses within the Group today.
High & improving returns
We follow a disciplined approach to capital allocation, prioritising organic
growth and focusing our investment on our higher growth, higher return
businesses, particularly in the US.
ROIC over five years
2020
2021
2022
2023
2024
24.8%
22.0%
19.2%
16.8%
12.6%
8
Hill & Smith PLC | Annual Report and Accounts 2024
9
Strategic Report
Governance
Financials
Shareholder Info
Chair’s introduction
“We have made considerable progress during
our 200th anniversary year.”
2024 has seen another very strong performance,
for which huge credit is due to both our excellent
leadership team, and also the over 4,500
employees who work across our operations.
It was also the year that Hill & Smith celebrated
its 200th anniversary, having been founded by
Edward Hill and Henry Smith in the West Midlands
in 1824. Achieving 200 years as an independent
company is something I believe all stakeholders
can feel proud of.
10
Performance highlights
The Group delivered revenue of £855.1m (2023: £829.8m)
and underlying operating profit of £143.5m (2023: £122.5m),
representing constant currency revenue and underlying operating
profit growth of 5% and 20% respectively. Underlying operating
margins were up at 16.8% (2023: 14.8%) and ROIC increased
to 24.8% (2023: 22.0%). Underlying EPS grew by 16%.
These results reflect an excellent performance from our higher
margin US businesses, together with the benefits from our recent
US acquisitions. Our core markets in the UK have remained
subdued, particularly leading up to the General Election, and this
impacted the performance of a number of our UK businesses.
Portfolio management
M&A is a key driver of our value creation strategy. During 2024,
we invested in aggregate an expected £58.5m across four
acquisitions within our US Engineered Solutions division.
At the start of the year, we acquired Capital Steel, which supplies
structural steel products and services principally into the
electrical transmission and distribution market, and FM Stainless,
a manufacturer of stainless steel pipe supports and related
products into the water and wastewater markets. The integration
of both businesses has progressed well over the last 12 months,
and has been supported by strong trading.
In the second half of the year, we acquired Trident Industries,
a designer and supplier of composite utility poles into the North
America and Caribbean markets, and Whitlow Electric, a designer
and manufacturer of structural steel and substation components
in the attractive southeastern utility market in the US. Both
businesses are highly complementary, while providing Hill & Smith
with access into a broader customer base.
All four acquisitions were sourced off-market, providing us with
full due diligence access to the businesses and management
teams. Prior to completion of each acquisition, we built detailed
180 day integration plans, pulling in resource from both head
office and our operating companies. Progress against these
plans was then reviewed by the Board six months post-
acquisition.
Over the last 12 months the Board has also been looking at
when and how to exit some of the smaller and more challenged
businesses within the Roads & Security division. This has been
extremely time consuming, and I am pleased that we have been
able to find buyers for two loss making businesses, Hill & Smith
Pty, our Australian road barrier business, and Parking Facilities,
our small UK security gates business, both of which were sold
in Q1 2025.
Board changes
In September 2024, we were delighted to announce the
appointment of Rutger Helbing as Chief Executive Officer,
following which I have stepped back from being Executive Chair,
a role which I had held since July 2022.
Rutger was previously CEO of Tyman PLC, and brings broad
based international manufacturing experience, and excellent
strategic and commercial acumen. I have very much enjoyed
working with Rutger over the last six months, and have been
impressed by the early impact he has had on the business.
Rutger’s appointment, together with the appointment in March
2024 of two new Group Presidents, allowed the Board to re-look
at the split of executive responsibilities and the decision was
made not to continue with the role of Chief Operating Officer,
with the result that Hooman Caman Javvi stepped down from
the Group.
In January 2025, we announced that Hannah Nichols, Chief
Financial Officer, would be leaving the Group following the full
year results. Hannah joined Hill & Smith in 2019 and has played
an important role in driving the development of the Group over
the last five and a half years. Everyone at Hill & Smith wishes
Hannah well in her new role. We are currently undertaking a
search process to identify a suitable successor and will update
shareholders, as appropriate.
Carol Chesney joined the Board in January 2024, as a
Non-executive Director and became Chair of the Audit Committee
in May 2024, when Mark Reckitt retired from the Board. Leigh-
Ann Russell, having relocated to the US, informed the Board that
for work commitment and logistical reasons, she would need
to step down from the Board following the publication of the
2024 results. I would like to thank Leigh-Ann for her significant
contribution over the last four years. We will be looking to appoint
a new Non-executive Director to the Board ahead of the AGM
in May 2025.
£58.5m
We continue to execute against our M&A strategy,
investing in aggregate an expected £58.5m across four
acquisitions within our US Engineered Solutions division.
Hill & Smith PLC | Annual Report and Accounts 2024
11
Strategic Report
Governance
Financials
Shareholder Info
Strategy
Since joining the Group, Rutger and the Executive Committee
have spent time redefining our purpose and refreshing our
operating company framework. This has been an excellent
process, the outputs from which I and the Board are fully
supportive of. It gives Hill & Smith a very clear vision for how
to continue to drive value creation over the medium and
longer term.
Rutger sets out further details of this in the Strategy section
of this report, starting on page 17.
Sustainability
In order to ensure we fully understand the views of all our
stakeholders in setting our priority targets, during the year we
engaged with employees, investors, customers and suppliers to
update our materiality assessment. I am pleased to say that the
results of this engagement showed that our current sustainability
strategy aligns with the expectations of our stakeholders.
A key focus for the business is continuing to reduce our
greenhouse gas emissions in line with our SBTi approved net
zero targets. We have several initiatives throughout the business
to reduce our carbon usage, and further information on this
is contained within our Sustainability Report on page 46.
We have also included for the first time a sustainability target
within our LTIP performance measures. This will be based
on greenhouse gas emissions reductions and is set out in our
Remuneration Report on page 102.
Health and safety
As a Group, we recognise the vital importance of good health
and safety practices in keeping our people safe, and this remains
the Board’s key priority. Since March 2024, health and safety has
reported directly through our two Group Presidents, and I believe
we have seen the positive impact of this change. In particular,
I am pleased to report that we saw a 23% reduction in our Lost
Time Incident Rate in the year.
Further information on our approach to health and safety can be
found on page 53.
Employees
Hill & Smith’s employees are the foundation of the Group’s
success and identity. We employ over 4,500 people within our
operations, a number of whom have joined the Group over the
last two years as we have executed on our M&A strategy.
The retention and development of our employees is critical to the
Group’s ability to deliver on its long term strategy. In September,
we conducted our annual employee engagement survey.
12
Chair’s introduction continued
This is an important feedback mechanism for the Board, as well
as for operating company management. While overall
engagement remains broadly in line with our industrial peers, for
a second year running we, like many organisations, saw a decline
in engagement across our UK workforce. This is something
which the Board and senior management will be prioritising over
the next 12 months, with a focus on ensuring all our operating
companies have a clear set of engagement actions, which are
shared with employees and regularly updated against. By
contrast the engagement level in the US remained the same.
Dividend and AGM
The Board recognises that dividends play an important role for
investors, both current and potential. I am pleased therefore, to
confirm that the Board has proposed a final dividend of 32.5p
(2023: 28.0p) which, if approved, would result in a full year
dividend of 49.0p per ordinary share.
The Annual General Meeting of the Company will be held at
11.00 am on Thursday, 22nd May 2025 at the Cranmore Park
Conference Event and Exhibition Centre, Cranmore Avenue,
Shirley, West Midlands, B90 4LF. The meeting is an ideal forum
for you to raise any questions and I am looking forward to seeing
you there.
Looking ahead
On behalf of our Board, I would like to thank all of our employees
for their contribution to delivering another strong performance
this year.
Looking forward, it is impossible not to reflect on the significant
macro uncertainties facing the world. In particular, it is hard to
predict with certainty how different tariff regimes may impact
on our business and the key economies we serve. What I believe
we can, however, rely on is the fact we have an excellent Chief
Executive Officer and senior leadership team, a highly skilled and
motivated workforce, and a clear and updated strategy capable
of delivering value creation for all stakeholders.
Alan Giddins
Chair
11 March 2025
“A key focus for the business is continuing
to reduce our greenhouse gas emissions in
line with our SBTi approved net zero targets.
We have several initiatives throughout the
business to reduce our carbon usage.”
Hill & Smith PLC | Annual Report and Accounts 2024
13
Strategic Report
Governance
Financials
Shareholder Info
Celebrating a 200 year history
From our origins in the Black Country, the heart of Britain’s
industrial revolution, Hill & Smith PLC has been shaping
the future of sustainable infrastructure for 200 years.
1824
Our company is founded
as Edward Hill & Co
Edward Hill founded the company in Brierley Hill
to capitalise on the booming ironwork and foundry
industries of the Black Country, a key hub of
Britain’s industrial revolution. He saw an
opportunity to manufacture high quality iron
products to support the rapid expansion of the
railways and other industries.
1853
We become Hill & Smith
When Edward died, his interest in the
business was continued by his wife
Emma, alongside her brother Henry
Smith, and they changed its name to
Hill & Smith. This partnership continued
for over half a century, with Hill & Smith
providing a range of products including
fencing, gates and architectural steel
works, as a well as a local galvanizing
plant. The company was already
showing glimpses of the interests
that would continue in the business
to this day.
1906
An expanding customer base
Following Henry’s death at the age of 82, his son
Joseph took over the business, after which the
business was converted into a private limited
company. At around this time, the company’s
expertise in large decorative ironworks was
attracting a range of prestigious and international
customers, including providing fencing for Queen
Victoria’s country estates and ornamental gates
for the King’s Palace of Siam.
1914-1918
Supporting the war effort
With the onset of the First World
War, production turned to
supporting the war effort. During
this time, Hill & Smith produced
around 3.5 million iron screw
pickets, newly designed for securing
barbed-wire defences.
1932
Providing components
for the Sydney
Harbour Bridge
In the inter-war period,
Hill & Smith’s focus turned
back to steel railing and
bridges, including supplying
parts of the iconic Sydney
Harbour Bridge.
14
Chair’s foreword
I feel very fortunate to be chairing Hill & Smith PLC as it marks
its 200th anniversary.
Given the passage of time, the extent to which the Group has
changed since it was founded in 1824 should come as no
surprise. What is more remarkable is how some of its
essential qualities and values have endured. It has long been
a Group that has thrived on entrepreneurialism, on agility,
and on using innovation to identify and capitalise on growth
market opportunities consistent with its core skills.
Today, we are an international Group focused on markets
that enjoy long-term structural tailwinds: growing populations,
urbanisation, climate change, and increasing health and safety
regulation. Against the background of those macro trends,
in an uncertain world, our purpose is clear: we create value
by providing solutions that enhance the resilience of vital
infrastructure and the built environment.
I pay tribute to, and thank, all those colleagues who have been
part of Hill & Smith’s first two centuries, and those who are taking
the Group forward into its third. I thank our customers around the
world for their continued support, and our shareholders for the
faith that they place in our business.
1939–1945
Providing essential
infrastructure
With the advent of the Second
World War, Hill & Smith played an
important role in manufacturing
essential components for military
and infrastructure use. These
included steel structures and
reinforcements for bomb shelters
used across the UK, metal fencing
and anti-tank defences.
1961
Hill & Smith’s first acquisition
In 1960, the business was sold to a group of prominent
West Midlands business men: Tom Hampson-Silk and
Leonard and Clive James. Under new ownership, the
company turned its focus to profitability and expansion.
In 1961, the company made its first ever acquisition,
Tipton Steel Stockholders, marking the beginning of
Hill & Smith’s inorganic growth journey and evidencing the
entrepreneurial ethos that was becoming part of its DNA.
1969
Listing on the London Stock Exchange
Having appointed Denis Hodgetts to run
the business in 1964, the company continued
to grow and transform at pace, making
acquisitions to expand its product range
and increase capacity. In 1969, the now strong
and more broadly based business, listed on
the London Stock Exchange for an initial
market value of £600,000, marking the start
of a new chapter.
1998
The ‘Grove’ revolution
David Grove joined the company in 1998
and played a pivotal role in transforming the
company into the focused infrastructure group
we see today. Grove streamlined operations and
focused on areas where the company had either
a significant market position or differentiated
product offering. This included expanding into
galvanizing services through the acquisitions
of Ash & Lacy in the UK and V&S Galvanizing in
the US, a significant step change for the Group.
2000s
A leading provider of infrastructure
solutions
The company has evolved into a successful
international Group, which creates value
by providing solutions that enhance the
resilience of vital infrastructure and the
built environment.
Hill & Smith PLC | Annual Report and Accounts 2024
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Financials
Shareholder Info
Chief Executive Officer’s Review
“Hill & Smith is well positioned to take
advantage of its strategic market positioning
in high growth sectors and geographies.
We have refocused the Group with our
refreshed purpose and renewed emphasis
on faster, structurally growing end markets.”
16
Strategic update
Initial observations
Since joining Hill & Smith in September 2024, I have had the
opportunity to visit our operating companies and spend time
with our highly driven and talented teams. I have also carried
out a review of the Group strategy and business model, working
collaboratively with our Executive Committee and operating
company senior leaders.
This has confirmed my view that the Group is exposed to
attractive infrastructure and built environment end markets
with structural growth drivers, has agile and responsive operating
companies well positioned to succeed, and therefore has
excellent prospects for further value creation for our
shareholders. The Group has been highly successful in the past
few years and to further underpin our growth ambitions, following
the review of our strategy and business model, we have refreshed
our purpose, end market focus and strategic framework.
Our refreshed purpose
Recognising that the Group has evolved over the years, we have
redefined our purpose as: “We create value by providing solutions
that enhance the resilience of vital infrastructure and the built
environment”. Our purpose crystallises what we want the Group
to be and will serve as an important ‘north star’ for future
strategic decision making.
In the following pages we provide more details on our refreshed
strategy.
Board updates
I was delighted to join the Board as CEO in September 2024,
with Alan Giddins reverting to his previous role of Non-executive
Chair following a short but comprehensive handover. Alan served
as Executive Chair for over two years, during which time the
Group has delivered significant organic and inorganic growth
and made meaningful strategic progress. On behalf of the Board,
I would like to thank Alan for his significant commitment and
contribution, and personally for his support to me throughout the
leadership transition. We are very pleased that he has agreed to
continue as Chair of the Group to ensure continuity of leadership.
In January 2025, we announced that Hannah Nichols, Group CFO
will be leaving the Group at the end of March 2025 to take up
the same position at another company. Hannah has played
an important role in the success of Hill & Smith since being
appointed CFO over five years ago, and we wish her well in
her new role. The search for Hannah's successor is underway,
and we are confident that we will find a high-quality candidate.
Having relocated to the US, Leigh-Ann Russell will step down
from the Board. I would like to thank Leigh-Ann for her significant
contribution during her tenure. We will be looking to appoint a
new Non-executive Director to the Board ahead of the AGM in
May 2025.
Health and safety at Hill & Smith
Health and safety is and will remain our number one priority,
as is evidenced by the fact that it is the first item in each
of my Board reports. Each Board and Executive Committee
meeting discusses health and safety records and incidents
since our previous meeting.
We foster a culture of safety that prioritises the wellbeing
of employees, contractors, and customers.
As some of our operations involve the movement of large
steel structures, we continue to focus on eliminating risk
and ensuring strict safety protocols are identified, monitored
and enforced to keep our people safe.
I am pleased that 2024 has shown a further improvement
in our LTIR rate, as we continue our journey to best in class
safety metrics. We have clear plans to achieve those metrics
and processes in place to track progress against them.
Further information on health and safety performance
is available on page 53.
During the year, we have encouraged our senior management
to share knowledge and lessons learned across the Group,
which has led to increased collaboration and awareness
of best practice.
We owe it to our people to continue our efforts in this area
and to do all we can to work together to reduce our overall
risk, through knowledge and implementation of best practice,
and mental health and wellbeing support.
We want all of our people to come to work safe, work safely
and go home safe at the end of each working day.
Hill & Smith PLC | Annual Report and Accounts 2024
17
Strategic Report
Governance
Financials
Shareholder Info
Q&A with Rutger Helbing
What attracted you to Hill & Smith?
I was immediately excited about the growth opportunities that
Hill & Smith was facing into. Our autonomous and decentralised
operating model allows us to remain close to our customers
and developments within our end markets. As we further refine
our strategic direction, we will continue to drive organic growth,
in addition to seeking and welcoming into the Group, value add
acquisitions that further the achievement of our strategy.
As incoming CEO what are your plans for the business?
Hill & Smith is a successful and well-run business. My core
objectives on joining have been to spend time with each
operating company to better understand each business and its
individual growth drivers. Following that, I carried out a review
of the Group strategy and business model, working
collaboratively with our Executive Committee and operating
company senior leaders.
“I am delighted to have joined Hill & Smith as
CEO and I am excited about the future of our
Group. With our renewed purpose and focus,
I believe that we are well positioned for
further growth.”
What have you learnt from your early conversations
with colleagues?
On joining the Group, I have seen that, within our operating
companies, we have teams that are proud, hardworking,
energetic and highly customer-focused. Our decentralised
model maintains the entrepreneurial culture that allows
our companies to be agile and responsive, driving our
performance. In addition to that, we have in our head office,
a small central team who ensure that the right controls and
KPIs are in place, and support in setting the ambition for each
operating company, enabling our businesses to deliver
on their full potential.
What are your sustainability goals?
I think sustainability always underpins the strategy and I am
fully committed to that, whether it relates to health and safety,
carbon reduction, providing opportunities to grow, or the
engagement of our employees. As part of that, we need to
set stretching ambitions in all those areas and I am pleased
in that context that, for example, we have SBTi approved
targets in relation to our greenhouse gas emissions.
US
59%
UK
38%
Rest of world
3%
2024 Revenue
£855.1m
US
76%
UK
22%
Rest of world
2%
2024 Underlying Operating Profit
£143.5m
18
Chief Executive Officer’s statement continued
Executive Committee
Our Executive Committee is comprised of Rutger Helbing (CEO),
Hannah Nichols (CFO), Nick Adcock (Group President UK
and India), Tim Tehan (Group President US), Joel Whitehouse
(Group Head of Corporate Development) and Karen Atterbury
(Group Company Secretary).
The Executive Committee’s remit is to support the CEO, make and
implement operational decisions, and make recommendations
to the Board where matters require Board approval.
The Committee oversight and management responsibilities are
widespread and cover all aspects of the operational management
of the Group. This includes: preparing the Group budget for
approval by the Board; oversight of operating companies; human
resources planning; risk management and business structure;
business development; and developing and implementing
policies and controls frameworks that support Group values.
Rutger Helbing
Chief Executive Officer
11 March 2025
From left to right: Nick Adcock, Group President UK and India; Joel Whitehouse, Group Head of Corporate Development; Karen Atterbury,
Group Company Secretary; Rutger Helbing, Chief Executive Officer; Hannah Nichols, Chief Financial Officer
Tim Tehan, Group President US
Hill & Smith PLC | Annual Report and Accounts 2024
19
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How we create lasting value
Our business model is proven and supports significant
value creation for our stakeholders.
We create value by
providing solutions that
increase the resilience
of vital infrastructure and
the built environment.
1. Based on 2024 divisional structure. From 1 January 2025, the divisional structure will change (see page 27 for further information)
Galvanizing Services
Supplying a service that
increases the resilience and
maintenance-free life of steel
products
Our business1
Engineered Solutions
Supplying engineered
composite and steel solutions
for a wide range
of infrastructure
Roads &
Security
Supplying products and
services to support road and
highway infrastructure
20
How we create value
The value we create and share
Financial framework
Our financial framework is fundamental to our long-term success.
The ability to deliver organic growth through the cycle, alongside
value enhancing acquisitions, will result in superior earnings growth.
A focus on cash generation and returns enables the cash generated
to be re-invested in high growth, high return opportunities. This is
all delivered within a disciplined capital allocation framework while
maintaining a strong balance sheet.
An enabling central team
We have a small central team who ensure that that the right controls
and KPIs are in place, and support in setting the ambition for each
operating company.
Sustainability supporting growth
Sustainability is core to our business model in terms of how we
operate, the products we manufacture, and the services we offer.
Delivering superior shareholder value
122.6p +16%
Underlying earnings per share
49.0p +14%
Dividend
Employment for local communities
We are committed to ensuring that we offer stable,
inclusive employment for all members of the local
communities
c. 4,500
Employees across 61 sites
Playing our part in sustainability
We are committed to reducing our greenhouse gas
emissions and have signed up to the Science Based
Targets initiative (SBTi)
7,685
No of tonnes of CO2e reduced*
*vs base year, scope 1 and 2
See note on page 64 for additional information
Talented people
Our decentralised model attracts talented people who want to make
a difference and are targeted to drive growth. Our local teams play
a key role in identifying M&A opportunities, building close
relationships with owners and leading on acquisition integration.
Decentralised operating model driving growth
We operate a decentralised model which fosters an agile,
entrepreneurial culture with a strong focus on customer service
and a deep understanding of customer needs.
Disciplined M&A
Acquisitions form a key part of our growth strategy, enabling the
Group to expand into new customers and markets, and into adjacent
technologies. We focus on high quality businesses in structurally
growing markets with attractive growth potential.
Hill & Smith PLC | Annual Report and Accounts 2024
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An enhanced
focus on priority
end markets
We are focused on end markets which serve vital infrastructure and
the built environment, which have multi decade growth drivers and
benefit from secular tailwinds given the growing need for upgrade
and renewal to maintain a properly functioning economy.
Our particular focus is on businesses which are leaders in niche
markets with high barriers to entry and where our offering is
typically a small fraction of the total system cost for customers.
As part of our strategic update, we have carried out an
assessment of the end markets where we currently operate
to identify opportunities to both accelerate growth in our existing
core markets and to expand in attractive, adjacent markets.
We have categorised our end markets into four groups:
• High growth emerging markets: including data centres,
renewables and gigafactories
• Resilient growth anchors: including electrical transmission
& distribution and water infrastructure
• Stable growth markets: including transport products, transport
infrastructure and public construction
• Cyclically sensitive markets: including industrial, residential
and commercial construction
About 68% of total Group revenue in 2024 was derived from
the first three categories, however there is a regional difference,
with these three categories representing c.75% of US revenue
and c.50% of UK and India revenues.
This disciplined and enhanced focus on end market dynamics
enables us to set the ambition for our operating companies
to drive further long-term growth in the most attractive markets.
It will also inform our future capital allocation, resource planning
and portfolio management decision making. Our business model
is proven, and these enhancements will further underpin our
financial and strategic delivery.
22
Hill & Smith PLC | Annual Report and Accounts 2024
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What we look for
in a Hill & Smith
operating company
24
Linked to our refreshed purpose, we have refined the
criteria we will use as a guide to inform our portfolio
management and M&A approach going forward.
Hill & Smith operating company framework
A Hill & Smith operating company has a strong focus on
customer service and a deep understanding of customer needs.
This allows our businesses to create value add solutions for
customers and to drive differentiation versus their competitors.
Our businesses are experts in their specific manufacturing
or industrial processes and are typically low to medium
in capital intensity.
Alongside this, our decentralised operating model promotes
a highly driven and entrepreneurial culture, where we foster highly
capable and agile local management teams who drive growth
in both core and adjacent markets. Our objective is to develop
high quality platform businesses with good potential for bolt-on
M&A. Our local management teams play a key role in identifying
potential M&A opportunities, building close relationships
with owners and leading on acquisition integration.
Role of the centre and Group functions
We have a small central team who ensure that the right controls
and KPIs are in place and support in setting the ambition for each
operating company, enabling our businesses to deliver on their
full potential. To date this approach has worked well and going
forward we see opportunities for the central team to provide
additional support in certain strategic capabilities, such as
business planning with more structured market intelligence,
to further improve the quality of our plans, along with increased
focus on talent management to ensure we have the right
capabilities to deliver on those plans. We encourage our
operating companies to share best practice where relevant
and there is potential to enhance this through the provision
of advanced training in specific areas.
Active portfolio management
We see significant opportunities to use disciplined M&A to help
us expand into new customers and end markets, as well as
adjacent technologies, and ultimately accelerate our strategy.
As part of our recent strategic update, we have assessed
the attractiveness of the Group’s infrastructure and built
environment end markets with a focus on higher growth,
higher margins and lower cyclicality. This assessment
will inform our M&A and portfolio management decisions
in the short to medium term to increase our exposure
to the most attractive, structurally growing markets.
Effective delivery on our M&A strategy requires our central
M&A team to work closely with our operating company leaders
to source opportunities, supported by best-in-class execution
and post-acquisition integration. Our M&A strategy is
underpinned by a strong balance sheet capable of supporting
organic growth while also allowing us to deploy capital
to value enhancing acquisitions.
Hill & Smith PLC | Annual Report and Accounts 2024
25
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Operating profit margin:
18%+
(previously 15%+)
Organic revenue growth:
5-7%
Total revenue growth including acquisitions:
10%+
Cash conversion:
80%+
Covenant leverage:
1-2 times
Return on invested capital (ROIC):
22%+
(previously 18%+)
Our refreshed medium term
financial framework
Our disciplined financial framework is one of the key foundations
of the Group’s long term success. The ability to deliver organic
growth through the cycle, alongside value enhancing acquisitions,
will result in superior earnings growth. A clear focus on cash
generation and returns enables the cash generated to be
re-invested in high growth, high return opportunities. This is
all delivered within a disciplined capital allocation framework
while maintaining a strong balance sheet.
The strong financial performance since the framework was set
two years ago, and the positive outlook for the Group, provide us
with confidence to upgrade certain targets within the framework.
In 2024, the Group performed well against most elements of
the framework. The organic revenue performance was mixed,
reflecting good growth in our higher margin Engineered Solutions
and Galvanizing businesses in the US offset by a subdued market
demand in the UK and specific challenges in our US off-grid solar
lighting business. The Group saw a return to organic revenue
growth in the second half and we expect the portfolio to be able
to deliver 5-7% organic growth through the cycle. Acquisitions
contributed 6% constant currency revenue growth in the year,
in line with the financial framework.
2024 operating profit margin expanded by 200bps to 16.8%, the
increase reflecting the good volume growth in our higher margin
US businesses. Going forward, we are confident that the Group
can deliver 18%+ operating profit margin through the cycle given
the structural growth drivers in the US, potential for UK market
recovery and the flow through benefit of recent portfolio
management actions. Linked to this, we have also upgraded
our targets for return on invested capital to 22%+ to reflect
the stronger returns generated by the current portfolio (24.8%
in 2024), while also providing flexibility to deploy capital into
value enhancing M&A where initial returns are typically below
the targeted level.
Our cash conversion guideline remains unchanged, reflecting
the Group’s track record of strong cash generation, while also
allowing for more significant investment in strategic growth
capex, as appropriate, through the cycle. We aim to maintain
a prudent balance sheet and as such our guideline on covenant
leverage remains unchanged.
Annual performance targets
26
Strategy continued
Our future divisional reporting structure
We have changed our divisional reporting structure in 2025
to better reflect the way the Group is now managed, following
the introduction of a regional Group President structure at the
start of 2024 and the exit of certain non-core Roads & Security
businesses in Q1 2025. This enables a closer focus on
geographic end markets and growth opportunities. The new
divisional structure is as follows:
• US Engineered Solutions: comprising all US operating
companies excluding Galvanizing Services
• UK and India Engineered Solutions: comprising all UK operating
companies and India, excluding Galvanizing Services
• Galvanizing Services: no change
We will report under the new structure in our half-year results
in August 2025.
Sustainability
Sustainability underpins the Group’s growth strategy, and we
remain committed to making progress against our sustainability
focus areas and goals. The health and safety of our people
remains a top priority, and I am pleased to report that we have
delivered a 23% reduction in our Lost Time Incident Rate (LTIR)
rate to 0.33 in 2024. This reflects the enhancements made to our
risk identification and assessment processes with an increased
focus on accident prevention, including the re-launch of our
lifesaving rules. During the year, we successfully implemented
a new Group health and safety management system to make
incident and near miss reporting easier for our people and
to improve root cause analysis.
Given the improved health and safety performance, we have
upgraded our LTIR targets to 0.275 for 2025 (previously 0.75)
and to 0.1 for 2030 (previously 0.25).
Talented people are critical to the Group’s success and during
2024 we launched a high potential programme, a first for the
Group, with the aim of developing and nurturing individuals who
we have identified as potential future leaders. We carried out our
annual Groupwide engagement survey in September 2024 with
83% of our employees participating. It is disappointing that we
did not see an increase in the overall engagement score in 2024
and this will be a significant area of focus for our leadership
team in 2025.
Our focus on carbon reduction continues, with a 3% reduction
in greenhouse gas emissions delivered in the year. During 2024
we engaged decarbonisation consultancies to conduct energy
’treasure hunts’ in five of our sites, which has identified energy
efficiency and carbon reduction opportunities that have been
shared with the wider Group. Alongside this, our US companies
started the transition to renewable energy contracts during the
year and expect to complete this by the end of 2025, with our
UK companies already fully transitioned.
Our updated approach to capital allocation
The Group follows a disciplined approach to capital
allocation:
1. Supporting organic growth
As a priority, we allocate capital to support organic growth,
with a focus on higher return, structurally growing end
markets. We require our operating companies to manage
working capital efficiently and we invest in capital projects,
talent and innovation to support future organic growth,
with around half of 2024 capital expenditure allocated
to growth investments.
2. Inorganic investment for long term growth
We allocate capital to inorganic investment, with a focus on
businesses which have a clear alignment with our purpose,
end market priorities and strategic framework with good
long term growth potential. We follow a structured approach
to acquisitions based on an agreed set of criteria and expect
acquisitions to achieve returns above our Group cost of
capital within a three-year timeframe. Based on our highly
cash generative model, we continue to target to reinvest
around £50m – £70m each year on value enhancing
acquisitions. In 2024, we invested £58.5m on four highly
complementary US acquisitions. Our acquisition pipeline
remains active and is focused on high quality, strategically
aligned opportunities.
3. Delivering strong returns
We aim to deliver a growing dividend, understanding the
importance of providing consistent and growing returns to
our shareholders. The ratio of covenant net debt to EBITDA
is a key metric from a capital management perspective and
we aim to maintain a prudent balance sheet, operating within
a ratio of 1 to 2 times. The Board will consider returning
surplus capital to shareholders through an appropriate
mechanism if leverage is expected to fall below 0.5 times
for a sustained period.
4. Measuring overall efficiency
We use return on invested capital (ROIC) to measure our
overall capital efficiency, with an updated target of achieving
returns in excess of 22%, through the cycle. This target
return is appropriate for a Group that intends to deploy
capital into M&A each year where initial returns will likely
be below the targeted level. We are pleased to report that
the Group’s ROIC in 2024 increased to 24.8% (2023: 22.0%),
the improvement reflecting the strong trading with good
growth in our higher margin businesses and our disciplined
approach to capital allocation, which more than offset the
impact of acquisitions in the year.
Hill & Smith PLC | Annual Report and Accounts 2024
27
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Measuring our performance
Organic revenue growth
Percentage change in annual revenue excluding the effects
of acquisitions, disposals and currency translation.
Underlying cash conversion
Adjusted operating cash flow as a percentage of underlying
operating profit. The calculation of adjusted operating
cash flow is explained in note 4 to the financial statements.
Underlying operating profit margin
Underlying operating profit as a percentage of revenue.
Return on invested capital (ROIC)
Underlying operating profit divided by average invested
capital. Invested capital is defined as the sum of intangible
assets, property, plant and equipment, right-of-use assets,
assets and liabilities held for sale, inventories, trade
and other receivables, and trade and other payables.
Performance
Performance
Performance
Performance
Revenue was flat on an organic constant currency (‘OCC’)
basis against a strong prior year comparator. We saw
a return to organic revenue growth in the second half, with
strong growth in our higher margin Engineered Solutions
and Galvanizing Services businesses in the US (8% and
6% OCC revenue growth respectively). This was offset by
subdued demand in the UK, particularly leading up to the
general election (-5% OCC revenue decline) and the impact
of previously reported challenges in our US off-grid solar
lighting business.
Link to strategy
The Group is exposed to attractive infrastructure and built
environment end markets with structural growth drivers.
This underpins our target of achieving 5-7% organic
growth through the cycle.
Underlying cash conversion for the year was strong
at 99%, reflecting a continued focus on working capital
efficiency and disciplined approach to capital projects,
with around half of 2024 capital expenditure allocated
to growth investments.
Link to strategy
Strong cash generation is fundamental to our strategy,
enabling us to reinvest in organic and inorganic
opportunities and grow returns to shareholders.
Our cash conversion target of 80%+ reflects the Group’s
track record of strong cash generation, while also allowing
for more significant investment in strategic growth capex.
Underlying operating margin increased by 200 basis points
to 16.8% in 2024, the strong performance reflecting an
improved portfolio mix, with good volume growth seen
in our higher margin US businesses.
Link to strategy
Our strategic focus is on investing in higher return, higher
growth niche markets with a refreshed target of achieving
Group underlying operating margins of 18% + through
the cycle.
The Group continued to deliver strong returns in 2024,
achieving a ROIC of 24.8% (2023: 22.0%), the increase
reflecting the faster growth in our larger US businesses
which are typically lower in capital intensity.
Link to strategy
We use ROIC to measure our overall capital efficiency,
with a refreshed target of achieving returns in excess of 22%,
above the Group’s cost of capital, through the cycle. We
consider the ROIC financial framework to be appropriate for
a Group that intends to deploy capital into M&A each year
where initial returns will likely be below the targeted level.
Financial KPIs
Non-financial KPIs
Our KPIs are linked to remuneration. For more details, see page 106.
2022
2023
2024
14%
5%
0%
2022
2023
2024
51%
115%
99%
2022
2023
2024
13.3%
14.8%
16.8%
2022
2023
2024
19.2%
22.0%
24.8%
28
Leverage
The ratio of net debt to EBITDA, as defined in the covenant
requirements of the Group’s borrowing facility agreements.
Health and safety
Lost time incident rate (No. of incidents divided by hours
worked x 100,000).
Greenhouse gas emissions
CO2e emissions, from scope 1 and scope 2 (market-based).
Employee engagement
The percentage of our worldwide workforce who feel
positively engaged with our Group, as determined
by independent employee engagement surveys.
Performance
Performance
Performance
tCO2e
Intensity ratio
Performance
The Group was highly cash generative in 2024 with leverage
falling to 0.3x, after spending c. £50m in the year
on acquisitions, providing significant firepower to invest
in organic and inorganic growth opportunities.
Link to strategy
We seek to maintain conservative leverage that minimises
liquidity risk without compromising our ability to invest
in both organic and inorganic growth opportunities.
The ratio of covenant net debt to EBITDA is a key metric
from a capital management perspective and we aim
to maintain a prudent balance sheet, operating within
a ratio of 1 to 2 times.
We delivered a 23% reduction in our Lost Time Incident Rate
(LTIR) to 0.33 in 2024. This reflects the enhancements
made to our risk identification and assessment processes
with an increased focus on accident prevention including
the re-launch of our lifesaving rules.
Link to strategy
Health and safety is a key priority for the Board and a focus
area for our sustainability strategy. Given the improved
health and safety performance, we have upgraded our LTIR
targets to 0.275 for 2025 (previously 0.75) and to 0.1 for
2030 (previously 0.25).
The Group delivered a 3% reduction in total scope 1 and 2
CO2e emissions in 2024 and is on track to deliver its
greenhouse gas emission reduction targets.
Link to strategy
Greenhouse gas emission reduction and energy efficiency
are focus areas for our sustainability strategy, aligned
with our SBTi commitment to reach net zero GHG
emissions across the value chain by 2050.
Employee engagement for 2024 was 56%, the same as
2023. It is disappointing that we did not see an increase
in the overall engagement score in 2024 and this will be
a significant area of focus for our leadership team in 2025.
Link to strategy
A highly engaged and talented workforce is critical to the
Group’s success. Employee engagement is a focus area
for our sustainability strategy with a target of taking action
to increase employee engagement to 75% by 2030, above
the industry benchmark.
Financial KPIs
Non-financial KPIs
2022
2023
2024
0.7x
0.4x
0.3x
2022
2023
2024
49,295 tonnes
49,392 tonnes
48,133 tonnes
0.07
0.06
0.06
2022
2023
2024
1.1
0.43
0.33
2022
2023
2024
61%
56%
56%
Hill & Smith PLC | Annual Report and Accounts 2024
29
Strategic Report
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Shareholder Info
Operational & Financial Review
2024 review
I am pleased to report that the Group has delivered
a record set of full year results, underpinned by the
excellent performance of our US businesses which
continue to benefit from strong demand for our
infrastructure products and solutions.
Our US operations now account for 76% of Group underlying
operating profit. As expected, our UK businesses delivered a
resilient performance against a more challenging market
backdrop, with subdued demand from certain public sector
customers, particularly in the period leading up to the General
Election.
Revenue for the full year was up 5% and underlying operating
profit was up 20% on a constant currency basis. We saw a return
to organic revenue growth in the second half, with strong year
on year OCC revenue growth in our higher margin Engineered
Solutions (+8%) and Galvanizing Services (+6%) businesses in
the US. This was offset by ongoing subdued demand in the UK
(-5% OCC revenue decline) and the impact of previously reported
challenges in our US off grid solar lighting business. Underlying
operating margin for the full year increased by 200 basis points
to 16.8%, reflecting an improved portfolio mix, with good growth
seen in our higher margin US businesses.
Engineered Solutions delivered excellent revenue and profit
growth alongside margin expansion against a record 2023.
Demand for our products and services remained strong across
all our US businesses, which face into a range of attractive
structural growth markets including electricity transmission
and distribution and infrastructure construction.
Galvanizing Services delivered a record performance reflecting
strong momentum in our higher margin US business, which
delivered a 10% increase in volumes. Our UK business saw some
market recovery in the second half with full year volumes 2%
ahead of 2023.
As expected, revenue in Roads & Security was below 2023,
due to a subdued UK market backdrop and lower customer
demand in our US off grid solar lighting business against a strong
prior year comparator. The division delivered good underlying
operating profit growth compared to 2023, which included
one-off operational improvement costs in US Roads and
non-recurring charges relating to certain UK businesses.
Rutger Helbing
Chief Executive
Hannah Nichols
Chief Financial Officer
30
We continue to successfully execute against our M&A strategy,
with four complementary acquisitions made in 2024 for an
aggregate expected consideration of £58.5m. All our acquired
businesses fit within our existing US Engineered Solutions
portfolio and initial trading has been positive. Acquisitions
contributed c.£46m revenue and c.£10m underlying operating
profit in 2024. In addition, as part of our ongoing approach
of active portfolio management, in the first quarter of 2025,
we successfully divested two of our non-core, loss making
Roads & Security businesses (comprising £12.5m total revenue
in 2024) which further improves the quality of the portfolio.
The Group continues to be highly cash generative and deliver
strong returns, with cash conversion for the full year of 99% and
return on invested capital (ROIC) increasing by 280 bps to 24.8%.
The Group balance sheet continues to strengthen and year end
covenant leverage of 0.3 times provides significant flexibility
to support both organic and inorganic investment.
Dividend
Given the strong trading performance and confidence in the
Group’s prospects, the Board is recommending a final dividend
of 32.5p per share, making a total dividend for the year of 49.0p
per share (2023: 43.0p), an increase of 14%. The final dividend,
if approved, will be paid on 4 July 2025 to shareholders on the
register on 30 May 2025.
Outlook
The Group is well positioned, with exposure to a range of
infrastructure and built environment end markets with attractive
growth drivers. Our US businesses delivered around 76% of
Group underlying operating profit in 2024 and we expect their
strong trading momentum to continue in 2025, underpinned
by investment to upgrade and onshore vital infrastructure and
support technology change. We are closely monitoring the effect
of current trade tensions on our businesses and supply chains
however we do not see a significant impact at this time.
The outlook for our UK businesses in 2025 is likely to remain
challenging given budgetary pressures in the public sector,
however we are cautiously optimistic for some level of recovery.
We continue to see attractive growth opportunities in our Indian
business. Overall, we are confident of another year of good
progress in 2025.
Our focus on structurally growing niche end markets, together
with our proven M&A strategy and the benefits of our agile
operating model, provides confidence that the Group will
continue to make progress in the medium to longer term,
in line with our updated strategic and financial framework.
“Hill & Smith has delivered another record
set of results, underpinned by the excellent
performance in our US businesses, which
continue to benefit from strong demand
for our infrastructure solutions.”
Hill & Smith PLC | Annual Report and Accounts 2024
31
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Engineered Solutions
£m
2024
2023
Reported %
Constant
currency %
OCC %
Revenue
418.7
367.0
+14
+17
+5
Underlying operating profit(1)
77.8
64.4
+21
+25
+10
Underlying operating margin %(1)
18.6%
17.5%
Statutory operating profit
71.2
59.7
1. Underlying measures are set out in note 4 to the financial statements and exclude certain non-underlying items, which are detailed in note 5 to the financial
statements.
Operational Review
Our Engineered Solutions division provides a range of composite
and steel solutions for infrastructure and the built environment
including energy transmission and distribution, marine, rail
and housing. The division also supplies engineered supports
for the water, power and liquid natural gas markets and seismic
protection solutions for infrastructure and commercial
construction.
The division delivered an excellent performance in 2024, with
17% revenue and 25% profit growth on a constant currency basis,
reflecting strong volume growth across our US businesses and
the positive contribution from recent acquisitions. As a result,
underlying operating margin increased by 110 bps to 18.6%
(2023: 17.5%).
US
Our US Engineered Solutions portfolio continued to perform
strongly in 2024 with 8% OCC revenue growth and further
operating margin expansion.
Composites, our largest US business, delivered strong organic
revenue and profit growth in 2024 against a record prior year
comparator. This reflects strong demand for innovative
composite solutions across a range of focus end markets
including electrical grid infrastructure, cable management,
industrial construction, water, and mass transit infrastructure.
The business enters 2025 with a healthy order book and
prospects for further growth are encouraging.
In July 2024 we completed the acquisition of Trident for an initial
consideration after closing adjustments of £7.8m, with further
consideration of up to £25.4m payable based on future revenues
over the five years post-acquisition. Located in Illinois, Trident
is a designer and supplier of highly resilient single and multi-layer
composite utility poles, serving utility company needs across
North America and the Caribbean. The acquisition is highly
complementary to our existing product offering and increases
our exposure to the attractive US electricity transmission and
distribution market. Trident has been successfully integrated,
and trading post acquisition has been positive.
Our business supplying structural steel products for electrical
grid infrastructure delivered an excellent performance in 2024,
with strong organic revenue and profit growth supported
by high customer demand and a deliberate focus on higher
margin projects. We consider US electrical transmission and
distribution to be a very attractive end market with structural
growth driven by the requirement to upgrade ageing
infrastructure and increasing demands on the electric grid
driving capacity expansion.
32
Operational and Financial review continued
In 2024 we made two acquisitions in this subsector to help
realise this growth potential. In January 2024 we acquired Capital
Steel, based in New Jersey, for an initial consideration of £4.9m,
and in September 2024 we acquired Whitlow, based in Georgia,
for a consideration of £24.0m. These acquisitions expand our
geographic footprint, providing access to new customers and
significant cross selling and margin expansion opportunities.
Both businesses have now been fully integrated and trading since
acquisition has been ahead of our expectations. During the year
we also completed the expansion of our existing facility at
Burton, Ohio, which provides additional manufacturing capacity,
and we have investment planned to increase our production
output further in 2025.
Our engineered supports business delivered a record year,
with organic growth driven by significant projects for clean
water initiatives, battery plant production and semiconductor
construction. In March 2024, we acquired FM Stainless, based
in Georgia, for an initial consideration of £6.7m, a manufacturer
of stainless steel pipe supports principally for the attractive
water and waste water market, underpinned by multi-year water
infrastructure investment. The integration into our existing
business has gone smoothly and trading has been ahead
of expectations. Given the positive demand outlook, we have
invested in expanding our existing facility in Waggaman,
Louisiana, and we expect the new facility to be fully operational
in the second half of 2025.
The medium to long term growth prospects across all our
US Engineered Solutions businesses remain positive. We expect
market growth to be supported by investment to upgrade critical
infrastructure and onshore vital components.
UK and India
As expected, our UK businesses, which represented 19% of
divisional revenue in 2024, saw revenue decline by 7%, partly
due to pricing reflecting lower steel input costs, and as a result
profit was lower than 2023. The industrial flooring business
benefitted from good demand from data centre fabrication
projects, however demand from smaller order customers was
more subdued. Our building products business experienced
a continuation of lower demand levels, reflecting the slowdown
in UK house building, with a strong focus on cost management
to maintain operating margins. Both businesses are cautiously
optimistic that that they will see a return to growth in the second
half of 2025.
Our engineered supports business in India delivered good organic
growth in 2024, underpinned by international demand for LNG
projects. The business enters 2025 with a robust order book and
good medium term growth prospects.
Hill & Smith PLC | Annual Report and Accounts 2024
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The Galvanizing Services division offers hot-dip galvanizing
and powder coating services with multi-plant facilities in the
US and the UK. Hot-dip galvanizing is a proven steel corrosion
protection solution which significantly extends the service life
of steel structures and products. The division benefits from
a wide sectoral spread of customers who operate in a range
of infrastructure end markets including industrial construction,
roads and bridges, and transportation.
The division delivered a strong performance with revenue up
2% and underlying operating profit up 13% on a constant
currency basis. Our higher margin US business delivered 7%
revenue growth, reflecting strong customer demand, which was
partly offset by lower revenue in the more challenging UK market,
particularly in the first half. Operating margin increased by 220
bps to 25.4% due to the favourable geographical mix.
US
Our US galvanizing business delivered another impressive
performance, with 6% OCC revenue growth and record operating
profit. The strong revenue growth is attributable to a 9% organic
increase in volumes, partly offset by pricing to reflect lower input
costs. Volumes were sustained by strong demand from baseload
customers in bridge and highway and transportation sectors,
combined with continued growth in utility, data centre, clean
energy segments and the onshoring of manufacturing. As a
result, the business saw good margin expansion in the year and
continues to deliver superior operating margins, with customers
valuing the excellent service, product quality and additional
services provided by the dedicated local teams.
The outlook for US galvanizing in 2025 remains strong,
with ongoing investment in infrastructure, bridge construction,
grid expansion and data centres expected to support continued
volume growth. The business is well positioned geographically
and, in the medium term, expects to benefit from larger privately
funded construction projects and several large semiconductor
chip manufacturing plants already in construction.
UK
2024 was a challenging year for UK galvanizing with the
2023 market slowdown continuing into the first half of 2024.
While H1 volumes were lower than H1 2023, the business saw
good volume growth in the second half supported by sales
actions and some market recovery with full year volumes 2%
ahead of prior year. Market pressure on pricing impacted average
selling prices and as a result revenue was 4% lower than 2023.
The business enhanced its focus on customer service with
simplified operational and commercial structures, strengthened
divisional management and local decision making to encourage
an entrepreneurial culture.
While infrastructure and structural steel markets are expected to
be stable in 2025, we expect good growth in energy transmission
and cable management, linked to data centre growth. Alongside
this, the business is working to offset the impact of expected
higher employment costs from April 2025 through productivity
improvements and cost recovery actions.
Galvanizing Services
£m
2024
2023
Reported %
Constant
currency %
OCC %
Revenue
197.8
196.7
+1
+2
+2
Underlying operating profit(1)
50.3
45.7
+10
+13
+12
Underlying operating margin %(1)
25.4%
23.2%
Statutory operating profit
49.2
43.8
1. Underlying measures are set out in note 4 to the financial statements and exclude certain non-underlying items, which are detailed in note 5 to the financial
Statements.
34
Operational and Financial review continued
The Roads & Security division supplies products and services
to support the delivery of safe road and highway infrastructure,
alongside a range of security products to protect people,
buildings and infrastructure from attack. In addition, the division
includes two businesses which are market leaders in the
provision of off-grid solar lighting and power solutions.
Revenue was 9% lower than last year on a constant currency
basis, attributable to lower H1 revenue in our US off grid solar
lighting business, as previously announced, coupled with
a challenging market backdrop for certain UK businesses.
Underlying operating profit was 26% ahead of 2023 at constant
currency, the prior year including one-off operational
improvement costs for US Roads and non-recurring charges
relating to certain UK businesses.
UK Roads
While revenue was 4% lower than 2023 on an OCC basis,
underlying operating profit was ahead of the prior year. Our rental
barrier business delivered a robust performance with revenue
and profit growth, underpinned by good levels of operations
activity and favourable outcomes on scheme completions.
The wider UK roads portfolio was impacted by reduced demand
and budgetary pressures seen in certain central and local
government customers. As expected, revenue in our off-grid solar
business was below the prior year, however the opportunity
pipeline for 2025 is encouraging. 2023 included certain one-off
charges for product installation rectification in our off grid solar
business and legacy contract provisions in a divested car parking
solutions business, which contributed to the year on year
profit improvement.
We expect 2025 to remain challenging due to continued
budgetary pressures and diminished visibility of project pipeline
following delays to the release of Road Investment Strategy 3.
Our agile market leading businesses remain focused on cost
management and diversification and are well placed to benefit
and deliver healthy returns when the market recovers.
US Roads
Our US Roads portfolio comprises two businesses: our off-grid
solar lighting solutions business and our roadside safety
products business.
As previously highlighted, revenue and profit in our off grid solar
lighting business were significantly below 2023, particularly
in the first half, a strong comparator, with softer demand from
our largest customer as they realigned inventory levels.
The business is taking steps to innovate and diversify its
customer base and the medium term outlook for the business
remains positive, underpinned by a drive towards efficient off
grid solar solutions. The planned move to a new leased facility
successfully took place in June and positions the business
well to deliver against its growth strategy.
Performance in the road traffic safety product business was
ahead of 2023, with focused pricing and cost transformation
actions. While the performance of the core barrier and attenuator
product lines has been encouraging, supported by good customer
demand, we will be taking action to address the non-core, low
margin message board product line, in order to improve the
quality of the business. The continued challenges in message
boards have led to an impairment of goodwill and acquisition
intangibles of £10.6m, and a further £2.6m of impairments
relating to other assets utilised in the message boards business,
all of which were recognised in non-underlying items.
UK Security
Revenue in our small UK security division declined by 6%,
with operating profit at similar levels to the prior year. Our UK
security businesses face challenging end markets with high
levels of competition, so we are taking steps to improve the
quality of our portfolio. In February 2025 we sold Parking
Facilities, a loss-making perimeter access security business.
Our core Security portfolio focuses on higher quality growth
opportunities including security barrier operations and data
centre perimeter security, and the 2025 outlook is positive.
Australia Roads
In January 2025 we divested Hill & Smith Pty Limited, our
subscale, loss making Australian roads business.
Roads & Security
£m
2024
2023
Reported %
Constant
currency %
OCC %
Revenue
238.6
266.1
-10
-9
-9
Underlying operating profit(1)
15.4
12.4
+24
+26
+26
Underlying operating margin %(1)
6.5%
4.7%
Statutory operating (loss)/profit
(5.0)
0.3
1. Underlying measures are set out in note 4 to the financial statements and exclude certain non-underlying items, which are detailed in note 5 to the financial
statements.
Hill & Smith PLC | Annual Report and Accounts 2024
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Results
The Group has delivered a strong set of 2024 results. Revenue
was £855.1m (2023: £829.8m), up 3% on a reported basis.
Revenue was flat on an OCC basis and 5% higher on a constant
currency basis. The strong organic revenue growth seen in
our higher margin US Engineered Solutions and US Galvanizing
businesses was offset by declines in the UK, with a challenging
market backdrop, and lower demand in our US off grid solar
lighting business. Underlying operating profit was £143.5m
(2023: £122.5m), an increase of 17% on a reported basis. OCC
growth was 12% and constant currency growth was 20%.
Operating margins improved to 16.8% (2023: 14.8%) reflecting
the benefits of volume growth in our higher margin US
businesses. Underlying profit before taxation was £132.6m
(2023: £111.9m). Reported operating profit was £115.4m
(2023: £103.8m) and reported profit before tax was £104.5m
(2023: £93.2m). Underlying earnings per share increased
to 122.6p (2023: 105.4p) and reported earnings per share
was 95.0p (2023: 86.0p).
The principal reconciling items between underlying and reported
operating profit are the £13.2m write down of goodwill,
acquisition intangible and other assets relating to our US Roads
business, Hill & Smith Inc., and the amortisation of other
acquisition intangibles of £9.9m. Note 5 to the financial
statements provides further details on the Group’s non-
underlying items.
Cash generation
The Group continues to be highly cash generative, delivering
99% underlying cash conversion in 2024. We expect the Group
to continue to deliver strong cash conversion in 2025, in line
with our financial framework and consistent with historic levels.
The calculation of our underlying cash conversion ratio can
be found in note 5 to the financial statements.
Operating cash flow before movement in working capital was
£175.2m (2023: £151.4m). The working capital inflow in the year
was £0.6m (2023: £22.8m inflow) with a continued focus on
working capital efficiency. Working capital as a percentage of
annualised sales was 15.2%, consistent with prior year
(2023: 15.9%) and debtor days were 62 days (2023: 58 days).
Capital expenditure of £28.6m (2023: £31.8m) represents a multiple
of depreciation and amortisation of 1.3 times (2023: 1.5 times).
During the year we made capital investments to support organic
growth including the expansion and upgrade of our engineered
supports facility in Louisiana, investment in tooling and systems
in our US composites business, and the purchase of an
automated kettle line in one of our US galvanizing plants.
Net financing costs were £10.9m (2023: £10.6m). The net cost
of pension fund financing under IAS 19 was £0.1m (2023: £0.3m),
and the amortisation of costs relating to refinancing activities
was £0.5m (2023: £0.6m).
The Group generated £108.6m of free cash flow in the year
(2023: £104.8m), providing funds to support our acquisition
strategy and dividend policy.
Net debt and financing
Net debt at the end of the year amounted to £96.9m
(31 December 2023: £108.4m). Outflows in the year included
£34.5m for the 2023 interim and final dividends and £47.4m
on M&A activity, principally the four US acquisitions in the year.
Net debt at the year end includes lease liabilities under IFRS 16
of £49.0m (31 December 2023: £43.7m), the increase being
primarily due to our US off-grid solar business moving to a larger
leased facility in June.
The Group’s principal financing facilities comprise a £250m
revolving credit facility, which expires in November 2027 and
$70m senior unsecured notes with maturities in June 2026 and
June 2029, together with a further £6.7m of on-demand local
overdraft arrangements. Throughout the year the Group has
operated well within these facilities and at 31 December 2024,
Financial Review
Financial Results
Underlying*
Statutory
31 Dec 2024
31 Dec 2023
Reported %
Constant
Currency %
OCC %
31 Dec 2024
31 Dec 2023
Change %
Revenue
£855.1.m
£829.8m
+3%
+5%
-
£855.1m
£829.8m
+3%
Operating profit
£143.5m
£122.5m
+17%
+20%
+12%
£115.4m
£103.8m
+11%
Operating margin
16.8%
14.8%
+200bps
13.5%
12.5%
+100bps
Profit before tax
£132.6m
£111.9m
+18%
£104.5m
£93.2m
+12%
Earnings per share
122.6p
105.4p
+16%
95.0p
86.0p
+10%
Dividend per share
49.0p
43.0p
+14%
49.0p
43.0p
+14%
*
Underlying measures are set out in note 4 to the financial statements and exclude certain non-underlying items, which are detailed in note 5 to the financial
statements
36
Operational and Financial review continued
the Group had £265.4m of headroom (£259.0m committed,
£6.4m on demand). Approximately 55% of the Group’s drawn
debt at 31 December 2024 is subject to fixed interest rates,
providing a hedge against recent market movements.
The principal borrowing facilities are subject to covenants that
are measured biannually in June and December, being net debt
to EBITDA of a maximum of 3.0 times and interest cover of a
minimum of 4.0 times. The ratio of covenant net debt to EBITDA
at 31 December 2024 was 0.3 times (31 December 2023: 0.4
times) and interest cover was 20.4 times (31 December
2023: 17.3 times).
Return on Invested Capital
The Group continued to deliver strong returns in 2024, achieving
a return on invested capital of 24.8% (2022: 22.0%), the increase
reflecting the faster growth in our larger, higher margin US
businesses which are typically lower in capital intensity.
Tax
The underlying effective tax rate for the year was 25.6%
(FY 2023: 24.6%). The reported tax charge for the period was
£28.1m (2023: £24.4m) and includes a £5.9m credit
(2023: £3.2m credit) in respect of non-underlying items,
principally relating to impairment charges and the amortisation
of acquisition intangibles. Cash tax paid in the period was
£26.5m (2023: £31.7m).
Exchange rates
The Group is exposed to movements in exchange rates when
translating the results of its overseas operations into Sterling.
Retranslating 2023 revenue and underlying operating profit using
average exchange rates for 2024 would have reduced revenue
by £15.4m and underlying operating profit by £3.4m, mainly due
to Sterling’s overall depreciation against the US Dollar. A one cent
movement in the average US Dollar rate currently results in
an adjustment of approximately £4.0m to the Group’s annual
revenues and £1.0m to annual underlying operating profit.
Non-underlying items
The total non-underlying items charged to operating profit in
the Consolidated Income Statement amounted to £28.1m
(2023: £18.7m). The items were mainly non-cash related and
included the following:
• Impairment charges of £13.2m in respect of goodwill,
acquisition intangible and other assets of Hill & Smith Inc.,
the Group’s US road safety products business
• Losses on the remeasurement of Parking Facilities and
Hill & Smith Pty as assets held for sale at the end of the year
amounting to £3.1m
• Amortisation of acquisition intangible assets of £9.9m
• Expenses related to acquisitions and disposals of £1.9m,
including a credit of £1.0m in respect of previously accrued
deferred consideration relating to the National Signal acquisition.
The non-cash element of these charges was £25.2m.
Further details are set out in note 5 to the financial statements.
Pensions
The Group operates defined benefit pension plans in the UK and
the USA. The IAS 19 deficit of these plans at 31 December 2024
was £0.8m, a reduction of £3.3m from 31 December 2023
(£4.1m). The deficit of the UK scheme, the largest employee
benefit obligation in the Group, was £0.2m (31 December
2023: £3.4m), the reduction mainly due to the Group’s deficit
recovery payments in the year.
The Group continues to be actively engaged in dialogue with
the UK schemes’ Trustees with regards to management, funding
and investment strategies.
Going concern
After making enquiries, the Directors have reasonable expectations
that the Company and its subsidiaries have adequate resources
to continue in operational existence for the foreseeable future
and for the period to 30 June 2026. Accordingly, they continue
to adopt the going concern principle.
When making this assessment, the Group considers whether
it will be able to maintain adequate liquidity headroom above the
level of its borrowing facilities and to operate within the financial
covenants on those facilities. The Group has carefully modelled
its cash flow outlook for the period to June 2026, considering
the ongoing uncertainties in global economic conditions. In this
“base case” scenario, the forecasts indicate significant liquidity
headroom will be maintained above the Group’s borrowing
facilities and financial covenants will be met throughout the
period, including the covenant tests at 30 June 2025,
31 December 2025 and 30 June 2026.
The Group has also carried out “reverse stress tests” to assess
the performance levels at which either liquidity headroom would
fall below zero or covenants would be breached in the period
to 30 June 2026. The Directors do not consider the resulting
performance levels to be plausible given the Group’s strong
trading performance in the period and the resilience of the end
markets in which we operate.
Rutger Helbing
Chief Executive
Hannah Nichols
Chief Financial Officer
Hill & Smith PLC | Annual Report and Accounts 2024
37
Strategic Report
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Stakeholder engagement
Effective engagement with our stakeholders and
listening to their feedback is key to good decision making.
Consideration of their interests drives long term sustainable
value creation and promotes continued growth.
Our people
1 2 3 1 7 8
How we engaged in 2024
• During 2024 we undertook a number of health and safety
improvement initiatives including the launch of a Groupwide
incident management system and the relaunch of the our
nine Life Saving Rules.
• We carried out our fifth annual Groupwide engagement
survey, which had an 83% response rate and included
topics such as health and safety, working conditions,
career development and culture.
• We continued our workforce forums to maintain dialogue
between directors and operating company employees.
A conversation was held on how executive remuneration
aligns with wider Company pay policy.
• We continued to engage with our global Women’s Network
Steering Group, who identified three priorities for 2024:
inclusive hiring; access to mentoring; and provision of female
personal protection equipment.
• All major announcements were issued on the Group intranet
to ensure important developments were accessible to
our people.
Outcomes
Engaging with our employees has enabled us to better
understand their needs and concerns and take appropriate
actions. The results of the annual employee engagement
survey have been reviewed and our Group Presidents are
overseeing the creation and execution of local action plans.
Our people are key to our success and as such it is
important that we listen to their feedback to understand
what matters to them and make our Group a great place
to work. We are committed to providing not only a safe
environment in which to work, but one where ideas are
encouraged and people can flourish. We insist that people
connected with the Group can work safely, are trained
correctly, follow our Code of Conduct, and comply with
all local legal and regulatory requirements.
Board oversight
The Board receives an update on health and safety matters
at each meeting and takes time to consider health and
safety trends, injuries and any root cause that can be acted
upon. More widely, the Board also receives regular updates
on human resources across the Group, including talent
and development programmes.
The views of our people are collected through our annual
employee engagement survey alongside direct feedback
to the Executive Committee. The Board reviews the
feedback and survey results and oversees the creation
of action plans. The Remuneration Committee, under its
mandate delegated by the Board, considers wider workforce
remuneration and benefits when setting executive pay and
cost of living increases.
What matters
• Health, safety and wellbeing
• Reward
• Engagement
• Job security
• Training and development
• Sustainability and the environment
• Reputation and ethical standards
38
Links to strategy:
1 Organic growth
2 Enhancing growth through M&A
3 Sustainability
4 Strong financial and risk management
Our companies
1 2 3 4 1 2 3 4 5 6 7 8
Links to relevant KPIs:
1 Organic revenue growth
2 Underlying operating profit margin
3 Underlying cash conversion
4 Return on invested capital (ROIC)
5 Leverage
6 Greenhouse gas emissions
7 Health and safety
8 Employee engagement
Our decentralised operating model places our operating
companies close to their end markets and under the
management of their own board of directors, fostering agility,
customer intimacy and an entrepreneurial culture. Each
operating company is responsible for delivering an organic
growth target and their performance underpins the success
of Group strategy.
Board oversight
The Board reviews operating company financial performance
as a standing item at each meeting, identifying trends and
taking decisions accordingly. In addition, operating company
management are invited to Board meetings to discuss
matters relating to their own businesses.
The Board also undertakes site visits during the year which
provide an opportunity to meet with local management
and discuss plans and strategy.
The Group has a strict Delegation of Authority in place,
adherence to which is audited by our Group Internal Audit
function. Under the Schedule of Matters Reserved, the Board
has ensured that all significant items of strategy, finance,
ethics and capital spend are reserved for its own attention.
This includes oversight and approval of portfolio management
decisions.
What matters
• Operational and financial performance
• Capital allocation
• Talent and development
• Health, safety and wellbeing
• Reputation and ethical standards
How we engaged in 2024
• In June 2024, the Board conducted a visit to the US.
Companies visited included the Creative Composites Group,
V&S Galvanizing, Hill & Smith Inc. and V&S Utilities.
• Rutger Helbing visited operating businesses as part of
his onboarding to better understand each business and
the day to day matters that are important to them and their
customers / stakeholders.
• A new geographic Group President structure was
introduced during the year with Group Presidents appointed
for the US and UK & India. This new structure enables the
Group Presidents to be more easily available to advise and
assist with strategy, best practice sharing and day to day
management matters.
• The Board approved four acquisitions during 2024, each
having strong long term growth potential, all of which have
been integrated into existing businesses. Additionally, in
2024, the Board approved the strategic decision to exit two
non-core businesses; Hill & Smith Pty and Parking Facilities,
with both disposals completing in early 2025.
Outcomes
Visiting sites and inviting members of operating company
senior management to Board meetings, enables the Board
to speak directly to the management teams and better
understand the issues they face on the ground. Additionally,
it allows the Board to see for themselves the quality
of management beneath Executive Committee level.
The Group President structure has encouraged the
introduction of functional cross-business working groups
to share best practice.
Hill & Smith PLC | Annual Report and Accounts 2024
39
Strategic Report
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Financials
Shareholder Info
Our suppliers
1 3 4 2 3 5 6 7
Our local communities
3 4 6 7
Developing strong relationships between our operating
companies and suppliers is key to the operating efficiency
of our businesses. We actively engage with our suppliers
at operating company level, working closely in partnership
to ensure that they provide the right quality of raw materials
and services to support our commitment to quality products
and competitive customer solutions. We aim to have long
term relationships with suppliers, encouraged through fair
payment practices.
Board oversight
The Board has ultimate oversight of all business related
matters including our supplier policies. Delegated
responsibility for day-to-day supplier engagement lies with
the local operating business. Any significant issues are
reported to the Board via the Executive Directors.
What matters
• Quality
• Fair financial terms
• Long term relationships
• Sustainability and the environment
How we engaged in 2024
• Operating companies regularly met with existing and
potential suppliers to discuss continuity and quality of supply.
• Operating companies worked with key suppliers to ensure
their familiarity with our expectations with respect to ethical
matters as set out in our Code of Business Conduct,
Anti-Bribery & Corruption Policy, and Group Modern Slavery
Policy. Each key supplier provides an annual compliance
certificate confirming their adherence with our values and
terms of service.
• We continued to engage with suppliers on sustainability,
including with respect to the refresh of our materiality
matrix and sustainability focus areas.
Outcomes
Operating companies regularly met with existing and potential
suppliers to discuss continuity and quality of supply.
Additionally, operating companies worked with key suppliers
to ensure their familiarity with our expectations with respect
to ethical matters as set out in our Code of Business Conduct,
Anti-Bribery & Corruption policy, and Group Modern Slavery
Policy. Each key supplier provides an annual compliance
certificate confirming their adherence with our values and
terms of service.
We continued to engage with suppliers on sustainability,
including with respect to the refresh of our materiality matrix
and sustainability focus areas.
We aim to conduct business in a responsible way that aligns
with our purpose and values, and is additive to the
communities that we serve. Our operating companies engage
with their local communities on a business-by-business basis,
supporting local charities and schools, as well as engaging
with local authorities when seeking to develop their businesses.
Board oversight
Much of the day to day engagement with local communities
takes place at local operating company level. Matters
affecting the wider Group are referred to the Board.
What matters
• Reputational and ethical standards
• Sustainability and the environment
• Health, safety and wellbeing
How we engaged in 2024
In 2024 we:
• Continued our charity matching programme
• Encouraged our operating companies to engage with
communities during our annual Sustainability Week,
supporting local charities on a business-by-business basis
Outcomes
Our operating companies support wide-ranging charitable
causes. We have continued our charity matching scheme
whereby our employees can apply for central matching of
charitable donations raised by themselves. During the year
we supported charities such as MacMillan Cancer Support,
the Rob Burrow Centre for Motor Neurone Disease, and
a charity local to our head office, Valley House Shelter.
40
Stakeholder engagement continued
Our customers
1 3 1 6 7
Our operating companies work closely with their customers.
Understand their needs, and the challenges they face,
is fundamental to customer service and allows us to provide
innovative solutions. By building up a detailed understanding
of current customer needs, we can ensure we provide the
right solutions and products to their problems, alongside the
anticipation of future requirements.
Board oversight
Most of the day-to-day customer interaction takes place
at the operating business level.
The Board reviews operating company performance as a
standing item at each meeting, which identifies key customer
matters. Where any significant customer matters are
detected, these will be investigated by the relevant Group
President who will update the Board as appropriate.
What matters
• Quality
• Fair financial terms
• Product innovation
• Long-term relationships
• Sustainability and the environment
How we engaged in 2024
• Our operating companies continued to foster close
relationships with customers to understand their
requirements and develop products and solutions to meet
their needs.
• Continued our focus on sustainability and, as part
of our materiality assessment, we contacted a selection
of customers to better inform our understanding of what
matters to them.
• Most of our businesses are accredited with ISO quality
standards to provide comfort to our customers that we
are able to deliver solutions which meet their requirements.
• All of our businesses are covered by our Code of Business
Conduct which sets out expectations for how we conduct
business, ethically and responsibly.
Outcomes
Developing close relationships with customers is critical
to the success of the Group and fundamential to our business
model. In 2024, our operating companies have continued
our focus on product development, quality and customer
service levels.
We have listened to our customers, alongside other
stakeholder groups, in pulling together our sustainability
materiality assessment which reaffirmed our sustainability
focus areas going forward.
Links to strategy:
1 Organic growth
2 Enhancing growth through M&A
3 Sustainability
4 Strong financial and risk management
Links to relevant KPIs:
1 Organic revenue growth
2 Underlying operating profit margin
3 Underlying cash conversion
4 Return on invested capital (ROIC)
5 Leverage
6 Greenhouse gas emissions
7 Health and safety
8 Employee engagement
Hill & Smith PLC | Annual Report and Accounts 2024
41
Strategic Report
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Financials
Shareholder Info
The environment
3 2 6 8
We play a key role in protecting the world through both the
provision of our sustainable infrastructure products and
services and through how we minimise our environmental
impact as we deliver those products and services.
Board oversight
The CEO keeps the Board apprised of issues that arise
in the course of business through his report to each meeting.
Additionally, the Board receives at least two sustainability
reports per year which are presented by the Group’s Head
of Sustainability. The Group’s Sustainability Committee
comprises members of the Executive Committee and other
senior management, and helps to refine the Group’s
sustainability strategy, which is approved by the Board.
What matters
• Sustainable products including waste and water
management
• Greenhouse gas emission reduction
• Environmentally friendly products and solutions
How we engaged in 2024
• We conducted a sustainability materiality assessment
which included a section on environmental impact.
• We incorporated carbon reduction planning into the
operating company strategic plan and budget processes,
ensuring it is properly considered and budgeted for.
• A number of our operating companies undertook Life Cycle
Assessments for individual products, with five of these
being verified by a third party and published as
Environmental Product Declarations.
• We became a Partner of the United States Department
of Energy’s Better Climate Challenge program, providing
the operating companies with access to free tools and
resources including fully-funded energy audits, use
of diagnostic equipment and training on a range
of sustainability topics.
Outcomes
The impact on the environment has been given more
prominence and consideration in decision making and wider
business activities.
42
Stakeholder engagement continued
Our investors
1 2 3 1 2 3 4 5 6 7
Our investors are the ultimate owners of the business. It is
therefore imperative that the Board understands their views
so it can operate the business in a way that delivers long term
value. We recognise the value of engaging regularly with
our investors. From the investor side, this promotes a better
understanding of senior management and the strategy for
the business. For the Group, this helps the Board to better
understand the views of its investors which are to be taken
into account when making decisions and setting long term
strategy. Our CEO, CFO and Investor Relations team engage
with our investors through a series of meetings, site visits
and presentations.
Board oversight
The Board receives an update on investor relations matters
at each Board meeting. In addition, the Company’s brokers are
invited to attend Board meetings during the year, and provide
feedback from investors. The Chair is accessible to investors
as necessary, and the Senior Independent Director is also
available to provide an alternative channel through which
investors can raise concerns. The Directors all attend the
Company’s AGM in order to discuss any other matters that
shareholders wish to raise.
What matters
• Operational and financial performance
• Capital allocation
• Reputation and ethical standards
• Health, safety and wellbeing
How we engaged in 2024
• During the course of 2024, the Executive Chair, CEO, CFO
and Head of IR met regularly with investors and analysts,
holding over 150 investor meetings with existing and
potential investors. In addition, our new CEO met with
large investors on appointment as part of his
onboarding process.
• The Company’s AGM was held in May 2024, enabling
face-to-face interaction between Board members and
investors.
• We continued our focus on sustainability, and as part of
our materiality assessment, we contacted a selection of
our large shareholders to better inform our understanding
of what matters to them.
Outcomes
Effective investor engagement enables us to take their views
into account when setting the Group’s strategy, making capital
allocation decisions and in wider business decision making.
Links to strategy:
1 Organic growth
2 Enhancing growth through M&A
3 Sustainability
4 Strong financial and risk management
Links to relevant KPIs:
1 Organic revenue growth
2 Underlying operating profit margin
3 Underlying cash conversion
4 Return on invested capital (ROIC)
5 Leverage
6 Greenhouse gas emissions
7 Health and safety
8 Employee engagement
Hill & Smith PLC | Annual Report and Accounts 2024
43
Strategic Report
Governance
Financials
Shareholder Info
The Directors of the Company are required by
section 172 of the Companies Act 2006 to act in
a way that they consider, in good faith, is most likely
to promote the long term, sustainable success of
the Company, for the benefit of its members as
a whole. They are also required to take into account
the interests of key stakeholders. Aside from this
being a statutory duty, the Directors of Hill & Smith
PLC believe that this is simply good business
practice.
Stakeholder engagement
The importance of understanding each stakeholder group is key
to inclusive and effective decision making. Only through
engagement can the needs and concerns of each stakeholder
group be properly understood. The Group’s decentralised
business model helps us develop close links with the markets
we operate in and maintain close customer relationships at
a local level. Further information on how we interact with our
stakeholders is included in the Stakeholder Engagement section
on page 38.
The Board recognises the importance of understanding the
priorities of different shareholder groups to inform the
development of strategy. It also acknowledges that situations
may arise where stakeholder groups have conflicting priorities.
In these circumstances, the Board will seek to understand the
needs and priorities of each group and, by doing so, assess them
individually and collectively from the perspective of its strategic
objectives and the long term sustainable success of the business.
Corporate context
The Group promotes and the Board approves, a range of policies
which consider the interests of the Group’s stakeholder groups
and are important when seeking to achieve an appropriate
balance between their interests. Further information on these
policies are set out in the Ethical Conduct section on page 62.
Throughout the year, each Director remains conscious of their
duty to the members and key stakeholder groups when taking
decisions. Much of the day-to-day engagement takes place at
a local level by our people in our operating companies. Our Group
Presidents keep in close contact with the operating companies,
raising items of importance with the Executive Committee and
ultimately, the Board via the CEO and CFO. Additionally, the Board
undertakes visits to operating companies during the course of
the year and takes time to discuss items that matter to the local
business and community.
The Board receives comprehensive papers from management
during the year, including updates on health and safety
performance, our people and talent management, investor
relations, IT and cyber resilience. Papers and discussions include
the views of key stakeholders and the likely long term impact
of the decision. Additionally, as part of its decision making, the
Board undertakes a rigorous evaluation of each proposal which
includes risks and opportunities, evaluation and other options
which should be considered. This, when combined with the skills,
experience and challenge that the directors bring, creates a solid
bedrock for good decision making and long term success.
Section 172
44
Decision making in action
The Report below sets out three key decisions taken by the Board during 2024 and explains how the matters in section 172
were considered.
Appointment of a new
Chief Executive Officer
M&A strategy and acquisition of
Whitlow Electric Services Company
The decision to exit the Australian
roads market
Stakeholders
considered
People
Companies
Customers
Suppliers
Investors
Local communities
Environment
People
Companies
Customers
Investors
Environment
People
Companies
Customers
Investors
How the Board
made its
decision
• The Chief Executive Officer is
responsible for leading the business
and the development of strategy in
conjunction with the Board. As such
this was a key decision.
• The Board took its time in finding the
right candidate for appointment.
• A role profile was created which was
used by the external search firm as
part of the process.
• The key selection criteria included
cultural fit, experience in similar
industry and manufacturing,
strategic vision, and someone who
was able to lead the Group’s
decentralised operating model in a
way consistent with its values.
• Following an extended search, the
Board was delighted to appoint
Rutger Helbing to the role.
• Further information can be found on
page 92.
• The Group has a stated policy to
acquire businesses with strong long
term growth potential. As part of this,
the CEO provides an update on M&A
pipeline and activities at each Board
meeting.
• The Group Corporate Development
team works with the operating
companies to identify potential
targets which fit with the Group’s
strategic plans.
• The Board had been considering the
acquisition of Whitlow for four
months prior to it being presented as
a final opportunity for approval.
• Key stakeholder considerations on
the decision to acquire Whitlow
included:
• price and strategic rationale
(expanding the geographic
footprint of the V&S Utilities
business into the Southeast of the
US)
• product fit
• cultural fit, skills and experience to
build long term success.
• customer relationships, market
dynamics and customer
requirements and service levels
• In assessing the overall deal, the
Board considered the risks and
opportunities offered by the
acquisition and determined that it
would be beneficial for the Group to
proceed.
• Following a reassessment of the
Australian market for the sale and
rental of temporary vehicle restraint
barriers, the attractiveness of
maintaining the business in the long
term was considered by the Board.
• The Board considered the strategic
rationale and potential financial
returns for retaining and building
the business or conducting a sale
process. It was agreed that the
Australian business had better long
term prospects within a broader
based, larger rental business
operating in the Australian market.
• When considering the sale of
the business:
• Shareholders were at the forefront
of considerations. Financial
advisors were appointed to
maximise the sale proceeds for
a business that had exhibited
weak financial returns.
• Customers – would be better
served with an Australian business
that had a wider offering of
rental products.
• People – the transaction would be
unsettling for our people but within
a larger, local group, the long term
prospects of our people would
improve.
Criteria
considered
A, B, C, D, E, F
A, B, C, D, E, F
A, B, C, E, F
Key
A. The likely consequences of any decision in the long term
B. The interests of the Company’s people
C. The need to foster the Company’s business relationships with suppliers, customers and others
D. The impact of the Company’s operations on the community and the environment
E. The desirability of the Company maintaining a reputation for high standards of business conduct
F. The need to act fairly between members of the Company
Hill & Smith PLC | Annual Report and Accounts 2024
45
Strategic Report
Governance
Financials
Shareholder Info
Our approach to sustainability
Our sustainability strategy
We have seven priorities in our sustainability strategy, across three focus areas:
Our CEO, Rutger Helbing, has Board responsibility for
sustainability and is also a member of the Sustainability
Committee. The Sustainability Committee, led by our Group
Head of Sustainability, Lucinda Farrington-Parker, works
with our operating companies to create actionable plans with
measurable near and medium term targets.
The Committee also includes the Group CFO, our Group
Presidents and a number of other Group employees who are
driving our sustainability strategy forward. The Committee
reports to the Board on a six-monthly basis, providing updates
on progress made against targets.
23%
Reduction in Lost
Time Incident Rate
788,013 kWh
Self generated electricity
14
Participants on our
high potential talent
programme, a first
for the Group
Protecting the world
Saving &
enhancing lives
Sustainable
governance
Greenhouse gas
emissions &
energy efficiency
SDGs: 7, 9, 12,13
Sustainable
products
SDGs: 6, 7, 9, 11,
12, 13, 17
Health, safety
& wellbeing
SDGs: 3, 8, 9
Talent,
development &
engagement
SDGs: 1, 4, 8
Equity, diversity
& inclusion
SDGs: 5, 8, 10
Climate risks &
TCFD
SDGs: 12, 13
Ethical
conduct
SDGs: 8, 16, 17
Our purpose:
We create value by providing solutions that enhance the resilience
of vital infrastructure and the built environment
46
Materiality assessment
Our previous materiality assessment was conducted in 2021.
During 2024, we undertook another assessment to ensure that
we continue to address those sustainability topics of most
relevance to stakeholders and of greatest risk and/or opportunity
to our business. This asked respondents to rate the identified
issues in relation to both financial and impact materiality.
Key findings
The materiality assessment showed that our existing
sustainability strategy is broadly in line with stakeholder
expectations. We received a high number of responses
from all stakeholder groups, showing a high level of engagement
with the sustainability agenda.
Some minor changes have been made to our strategy as a result
of the assessment findings:
• ‘Health and safety’ focus area changed to
‘Health, safety and wellbeing’
• ‘Diversity and inclusion’ focus area changed
to ‘Equity, diversity and inclusion’
• ‘Sustainable products’ focus area updated to include:
• Waste
• Water
• Energy management
• Packaging
Significance to our organisation
Materiality assessment matrix
Resource
efficiency
Employee
engagement
Board
remuneration
Board
accountability
Bribery &
corruption
Business
ethics
Health &
safety
Regulatory
compliance
Human
capital
Risk
management
Human
rights
Product
quality
Direct GHG
emissions
Waste
management
Mental
health
Circular
economy
Water
consumption
Biodiversity
Air
quality
Indirect GHG
emissions
Social
value
Significance to our stakeholders
HIGH
HIGH
LOW
EDI
Energy
management
Protecting the world
Saving & enhancing lives
Sustainable governance
Hill & Smith PLC | Annual Report and Accounts 2024
47
Strategic Report
Governance
Financials
Shareholder Info
Our sustainability metrics and targets
Pillar
Focus area
Target
Progress
2024 actual
2023 actual
2025 target
2030 target
Protecting
the world
Greenhouse gas
emissions and energy
efficiency
Intensity Ratio
(market-based)
(tCO2e per £000’s
revenue)
0.06
0.06
0.05
0.03
Saving and
enhancing lives
Health, safety and
wellbeing
Lost Time Incident
Rate
0.33
0.43
0.275
0.1
Talent, development
and engagement
Engagement score
56%
56%
66%
75%
Equity, diversity and
inclusion
Gender diversity
PLC Board
38%
29%
40%+
40%+
Executive Committee
33%
40%
40%+
40%+
Senior Leaders
22%
19%
20%+
40%+
Ethnic Diversity
PLC Board
13%
14%
10%+
10%+
Executive Committee
0%
20%
10%+
20%+
Senior Leaders
15%
10%
10%+
10%+
Not on track
Slightly behind
On track
Achieved
Preparing for emerging sustainability regulations
Outline of regulations
Actions we are taking
Time horizon
International Sustainability
Standards Board (ISSB)
Formed by the IFRS Foundation to
provide a global baseline for investor
focused sustainability reporting.
• Monitor mandatory reporting
requirements and timelines.
• Align our reporting metrics with
published standards.
2026 – 2027
UK Transition Plan Taskforce (TPT)
Disclosure Framework
Developed by the UK TPT to be the
gold standard for climate transition
plans.
• Monitor mandatory reporting
requirements and timelines.
• Developing our Costed Plan to meet
the disclosure standard.
2026 – 2027
EU Corporate Sustainability
Reporting Directive (CSRD) and
Corporate Sustainability Due
Diligence Directive (CSDDD)
EU legislation to extend the scope
of the Non-Financial Reporting
Directive.
• This is not currently applicable as Hill
& Smith does not have sufficient
turnover in the EU to fall within scope.
N/A
Sustainable Finance Taxonomies
Classification system to define
which economic activities qualify as
sustainable.
• The EU Taxonomy is not applicable to
Hill & Smith, but we will await
announcements on the UK Green
Taxonomy.
TBC subject to
further government
announcements
Taskforce on Nature-related
Financial Disclosures (TNFD)
ISSB has confirmed it will use the
TNFD framework to inform its nature
related investor reporting standard.
• Our Sustainability Committee is
monitoring developments and will
recommend actions for future
disclosure.
TBC subject to ISSB
confirmation
Our approach to sustainability continued
48
Long-term targets
Hill & Smith commits to reduce absolute scope 1 and 2
greenhouse gas emissions by 90% by 2040 from a 2020 base
year and maintain 90% absolute reduction through 2050 from
2040. Hill & Smith also commits to reduce scope 3 greenhouse
gas emissions by 97% per GBP value added by 2050 from
a 2022 base year.
For scope 1 and 2, a market-based and absolute contraction
approach was chosen. For scope 3, an economic intensity
approach was selected due to the changing nature of our
portfolio through organic developments and value enhancing
acquisitions.
Intensity ratio targets
In addition to our approved science-based targets, we also have
an internal target to achieve net zero for scope 1 and 2 by 2040
and we are measuring our near-term progress through reduction
in our carbon intensity ratio (defined as tCO2e per £million revenue).
Our intensity ratio for 2024 has remained stable at 0.06 and
we have reduced our targets for 2025 and 2030 to 0.05 and
0.03 respectively (previously 0.08 and 0.06).
Greenhouse gas emissions and energy efficiency
Protecting the world
Why does it matter?
We recognise that greenhouse gases are a major contributor
to the climate crisis, and we are committed to managing and
reducing the Group’s emissions to support the Paris
Agreement goals.
Our commitments
Science-based targets
Hill & Smith’s near-term, long-term and overarching net zero
emission reduction targets were approved by the Science Based
Targets initiative (‘SBTi’) in December 2023, using a financial year
running from 1 January to 31 December. Our approved science-
based targets are as follows:
Overall net zero target
Hill & Smith commits to reach net zero greenhouse gas
emissions across the value chain by 2050.
Near-term targets
By 2032, Hill & Smith commits to reduce absolute scope 1
and 2 greenhouse gas emissions by 55% from a 2020 base year.
Hill & Smith also commits to reduce scope 3 greenhouse gas
emissions by 60% per GBP value added by 2032 from a 2022
base year.
Target
2024 actual
2023 actual
2025 target
2030 target
Intensity Ratio (market-based) (tCO2e per £000’s revenue)
0.06
0.06
0.05
0.03
Hill & Smith PLC | Annual Report and Accounts 2024
49
Strategic Report
Governance
Financials
Shareholder Info
What have we achieved in 2024?
Actions towards meeting greenhouse gas emissions
reduction targets
A range of emissions reduction and energy efficiency initiatives
have been undertaken by our operating companies during 2024,
including the continued installation of solar panels, purchase
of more energy efficient welding sets, installation of energy
monitoring systems to track individual equipment consumption,
and switching forklift trucks to electric. Two of our UK sites and
two of our US sites have now made the switch to Hydrotreated
Vegetable Oil (‘HVO’) in place of diesel and more are investigating
this opportunity.
Consumption of natural gas for heating in the galvanizing
process contributes 87% of the Group’s total natural gas
consumption, and therefore the use of energy in the galvanizing
process is a key focus area for the Group’s emissions reduction
plan. In 2024, we continued to implement energy efficiency
measures in both our UK and US galvanizing operations including
waste heat recovery systems, kettle covers, and variable frequency
drives, which will contribute to our emissions reduction plan.
In the UK, we trialled the use of a ‘smart burner’ system at
one of our galvanizing sites, which has reduced natural gas
consumption by around 15-20%. This technology is now
being rolled out to the other facilities where it is feasible with
existing systems.
We became a Partner of the US Department of Energy’s Better
Climate Challenge program in February 2024, providing our
operating companies with access to a wide range of free tools
and resources including energy audits, use of diagnostic
equipment and training on sustainability topics. As part
of this program, we held our first ‘Energy Treasure Hunt’ at our
New York galvanizing facility which identified the potential for
20% emissions reductions through a range of energy efficiency
measures. These initiatives are now being considered at other
galvanizing sites across the Group.
99% of our UK electricity requirements and 19% of our US
electricity requirements were sourced through renewable energy
certificates in 2024 and we are continuing to work with our
US businesses on moving towards further renewable electricity
supply over the next year. In addition, we generated 788,013 kWh
of renewable energy from our own solar PV sources on several
sites across the Group.
Work has continued on identifying opportunities to influence
our scope 3 emissions, including contacting suppliers to obtain
more product-specific information (such as recycled content
and production methods for steel), using weight-based rather
than spend-based data and emission factors to improve data
quality, and investigating opportunities for lower embodied
carbon concrete.
We have continued to refine our costed plan which includes
an assessment of the incremental capital, energy, carbon taxes
and other operating costs to support our carbon reduction plan.
The result of this has provided us with the confidence to continue
our commitment to achieving our internal net zero target for
scope 1 and 2 by 2040. Our current expectations are that the
financial impact of achieving this will not have a material impact
on the growth prospects for the Group, with modest levels of
incremental capital investment required. The planned investment
is included above in our costed plan.
0
10
20
30
40
50
60
0
10
20
30
40
50
60
0
10
20
30
40
50
60
Scope 1 natural gas
Scope 1 other
Scope 2
2020 Base
2024
2025
2030
2035
2040
tCO2e emissions (000s)
0
10
20
30
40
50
60
Costed plan
Net-zero scope 1 and 2 emissions by 2040
Protecting the world continued
2020–2025
Implementation of galvanizing energy efficiency measures
Replace forklift fuel with renewables
UK to renewable electricity. US start to move to renewable
electricity
2026–2030
Ongoing galvanizing energy efficiency measures
Trial alternative galvanizing burner technologies
Remaining forklift fuel replaced with renewables
100% of Group move to renewable electricity
2031–2035
Galvanizing plants to alternative burner technology
Commence replacing diesel in commercial vehicles with
renewables
2036–2040
Remaining galvanizing plants to alternative burner technology
Replace diesel in commercial vehicles with renewables
50
Progress against science-based targets
Our progress against our science-based targets is set out below. For further information on how we plan to achieve our targets,
see our costed plan on page 50. 100% of our scope 1, 2 and 3 emissions are included in our science-based targets.
Reporting item
2024
Base year value
(2020)
2024 % change
(from 2020)
Scope 1 (tCO2e)
38,601
40,756
-5%
Scope 2 (market-based) (tCO2e)
9,532
15,062
-37%
Total scope 1+2 (market-based) (tCO2e)
48,133
55,818
-14%
Reporting item
2024
Base year value
(2022)
2024 % change
(from 2022)
Scope 3, category 1: Purchased goods & services (tCO2e)
393,713
373,714
5%
Scope 3, category 2: Capital goods (tCO2e)
7,188
4,530
59%
Scope 3, category 3: Fuel and energy-related activities (tCO2e)
9,230
9,223
0%
Scope 3, category 4: Upstream transportation (tCO2e)
25,216
29,904
-16%
Scope 3, category 5: Waste (tCO2e)
2,200
3,779
-42%
Scope 3, category 6: Business travel (tCO2e)
2,132
1,508
41%
Scope 3, category 7: Employee commuting (tCO2e)
4,915
5,371
-8%
Scope 3, category 9: Downstream transportation (tCO2e)
8,153
8,415
-3%
Scope 3, category 10: Processing of sold products (tCO2e)
13,387
8,330
61%
Scope 3, category 11: Use of sold products (tCO2e)
549,269
560,032
-2%
Scope 3, category 12: End-of-life treatment (tCO2e)
794
2,672
-70%
Scope 3, category 13: Downstream leased assets (tCO2e)
536
163
229%
Total scope 3 (all categories) (tCO2e)
1,016,734
1,007,641
1%
Overall scope 3 emissions intensity (tCO2e/£ value added)
5,912
8,297
-29%
Scope 3 categories 8 (upstream leased assets), 14 (franchises) and 15 (investments) have been assessed and deemed not to be relevant to the Group’s activities.
In accordance with our Greenhouse Gas Emissions Recalculation Policy, in our Basis of Reporting 2024 (available at hsgroup.com/who-we-are/governance/
our-policies/) and the GHG Protocol, our 2020-2023 scope 1, 2 and 3 data has been revised to remove the emissions relating to any operating companies that have
been divested and to include estimates for the emissions from companies that we have acquired in the years since. This may result in stated emissions for previous
years differing from those reported previously, but allows a meaningful comparison of current emissions with base year and historic year emissions. All re-stated
emissions for historic years are available in our Basis of Reporting document on our website.
The DEFRA spend-based emission factors were updated after the 2022 baseline was established; this baseline has been recalculated during 2024 using the updated
emission factors to make it comparable with 2023 and 2024 emission calculations, resulting in significantly lower emissions than previously reported.
Scope 3 emissions intensity uses operating profit in £m for value added.
Our 2025 focus areas
In 2025, we will focus on further developing local emissions
reduction plans for each of our operating companies, considering
both energy efficiency and switching to alternative fuels and/or
technologies, to include scope 1, 2 and 3 emissions. We will look
to partner with external organisations where appropriate to assist
with feasibility studies and the installation of energy efficiency
technology appropriate to each site.
We intend to further develop these plans into a high level Climate
Transition Plan for the Group in line with the Transition Plan
Taskforce Disclosure Framework published in 2023.
How will we measure progress?
We have invested in a sustainability software solution to record
our greenhouse gas emissions. This provides greater visibility
of our emissions and allows us to measure performance against
our targets at both a Group and individual operating company level.
Base verification and assurance of greenhouse gas emissions
We engaged Bureau Veritas to conduct a verification review of
our corporate greenhouse gas emissions inventory for the period
1 January to 31 December 2024. The review was performed to
a limited level of assurance in accordance with the requirements
of the International Standard on Assurance Engagements (‘ISAE’)
3000. The remit of the review included scope 1, scope 2, and all
applicable scope 3 categories.
Bureau Veritas has found no evidence that the above reported
data is not materially correct, with a limited level of assurance.
The results of the assessment can be found on our website,
www.hsgroup.com.
Further information on our annual greenhouse gas inventory,
scope 1, 2 and 3 reporting methodologies and data sources,
exclusions, assumptions and estimations, plus the historic
emission recalculations carried out this year, is available in
our ‘Basis of Reporting 2024’ document, which can be found
on our website, www.hsgroup.com.
Base year recalculation policy and threshold
We have recalculated and restated our base year and historic
year emissions across all scopes to reflect the effects of
acquisitions and divestments. Details of these changes can
be found in our ‘Basis of Reporting 2024’ document. Our
Greenhouse Gas Emissions Recalculation process (included
in the ‘Basis of Reporting’ document) defines a significant change
as a cumulative change of 5% or larger in our total base year
emissions. We have assessed the implications of these
restatements on our science-based targets and have not
identified a need to update the targets. Refer to the Governance
section of the Group website for further information.
Hill & Smith PLC | Annual Report and Accounts 2024
51
Strategic Report
Governance
Financials
Shareholder Info
Sustainable products
Why does it matter?
Delivering solutions that improve the sustainability of our
customers’ operations is central to our Company purpose
and strategy. We believe that our products and services can
play an important role in addressing the challenges associated
with increasing population and urbanisation, climate change
and decarbonisation.
What have we achieved in 2024?
Life Cycle Assessments
During 2024, a number of our operating companies undertook
Life Cycle Assessments (‘LCA’) for individual products, with
five of these being verified by a third party and published
as Environmental Product Declarations (‘EPD’). We expect this
to continue to be an increasing focus area for our customers
going forward.
Waste management and water consumption
Waste generation varies significantly between operating
companies. Some produce very little waste; some generate
high proportions of recyclable waste types (such as steel).
The galvanizing sites generate hazardous waste such as waste
acid and degreaser. We take appropriate actions to ensure
that these materials are disposed of in line with environmental
regulations and recycled where locally possible.
Water use by our operating companies is typically for offices
(toilets, hand washing and cleaning) and for process activities
(such as pre-treatment tanks in our galvanizing facilities).
We monitor the consumption of water across the Group
and encourage sites to reduce consumption where possible.
Our water consumption and waste data for the past five years
is set out below:
Our 2025 focus areas
We will continue to undertake LCAs on key products, with the
publication of EPDs as they are verified.
During 2025 we will increase our monitoring of water
consumption and reduction efforts, particularly on those sites
in areas of high water stress. We will also work to reduce the
impacts of the packaging materials we use.
How will we measure progress?
We will report on the total number of products that have a verified
EPD and aim to increase this number on an annual basis.
We will continue to disclose work done to assess the sustainability
of our products.
Measure
2024
2023
2022
2021
2020
Water consumption (m3)
98,825
92,963
84,667
104,795
95,093
Water intensity (m3 / £000 revenue)
0.12
0.11
0.12
0.17
0.16
Waste generated (tonnes)*
27,982
27,154
25,899
17,355
24,310
• Hazardous
9,961
9,792
9,471
n/a
n/a
• Non-hazardous
18,021
17,362
16,428
n/a
n/a
Waste intensity (tonnes / £000 revenue)
0.033
0.033
0.035
0.028
0.041
Waste recycled (%)
77
82
80
79
79
* The split between hazardous and non-hazardous waste is not available prior to 2022.
Protecting the world continued
52
Health, safety and wellbeing
Why does it matter?
Keeping our employees, customers, and suppliers safe is our
number one priority. Ensuring that our employees work in a safe
environment and can return home to their loved ones at the
end of their working day is of paramount importance.
What have we achieved in 2024?
In 2023, we introduced a regional health and safety
organisational structure to allow the Group health and safety
resources to be closer to individual operating companies within
their region, and to better support the Managing Directors and
the wider health and safety community. This structure was
further strengthened with the introduction of our two regional
Group Presidents during 2024, who provide senior level oversight
and champion the Group health and safety agenda.
In July 2024, the Group successfully launched a Group wide
incident management system. The new system makes it easy
for all employees to report accidents in real time, and also
encourages the reporting of leading indicators such as near
misses, unsafe acts or conditions. In the second half of the year,
we relaunched the Group’s Nine Life Saving Rules, with poster
campaigns and briefings to all operating companies, enhancing
the focus on accident prevention rather than reaction to
accidents. Significant focus was placed on fork lift truck safety
in the latter part of the year and will continue throughout 2025
with the introduction of various pedestrian detection systems,
electronic key control and vehicle impact systems to prevent
personal injuries. The UK Galvanizing division has also introduced
remote dipping to remove people from the highest risk areas
surrounding the galvanizing baths, and significant investment
has been made on vehicle trailers with additional safety features
such as drop sides, additional nets, and hammocks to improve
load security and road safety.
During the year we have sought feedback on operational
and facility improvements through our employee forums,
which include health and safety as a key discussion topic.
To complement this and obtain a comprehensive view from
all employees, we conducted a Group-wide employee safety
culture survey in September 2024. This indicated there is a high
level of understanding of internal health and safety expectations
and employee responsibilities.
While we still have work to do in the area, these efforts have led
to a 23% reduction in our Lost Time Incident Rate (‘LTIR’) to 0.33
in 2024 (2023: 0.43). All lost time incidents were investigated
by health and safety managers alongside members of the local
operational teams. Managing Directors were requested to
present the investigation findings to the Group Presidents
and Executive Committee members to demonstrate elevated
involvement in the process. Learnings from all incidents are
shared with the wider organisation, reinforcing the importance of
keeping our people safe and communicating corrective actions.
Our 2025 focus areas
Our aim continues to be to reduce the number of health and
safety incidents throughout our organisation along with
minimising the severity of lost time incidents.
To support this objective, we will:
• Continue to focus on leading indicators, such as near miss
reporting and safety observations, rather than lagging
indicators
• Continue to drive campaigns focusing on those areas that
represent major risks for the Group’s operating companies
• Elevate our focus on employee behaviours and accountability
• Enhance the delivery of safety training for our people
• Continue to drive campaigns focusing on those areas that
represent major risks for the Group’s operating companies.
How will we measure progress?
We use Lost Time Incident Rate as the key indicator to track
and monitor our progress in health and safety.
Our targets
Given the progress made in 2024, we have revised our LTIR
targets to 0.275 for 2025 (previously 0.75) and to 0.1 for 2030
(previously 0.25).
Saving and enhancing lives
Our targets
Measure
2024 actual
2023 actual
2025 target
2030 target
Lost time incident rate
0.33
0.43
0.275
0.1
Hill & Smith PLC | Annual Report and Accounts 2024
53
Strategic Report
Governance
Financials
Shareholder Info
Talent, development and engagement
Why does it matter?
Talented people are fundamental to the success of our
autonomous business model and help deliver our purpose
and growth ambitions. We need a highly engaged and capable
workforce within our operating companies, and this can only
be done by attracting, developing, supporting, and retaining
the right people. Positive employee engagement and offering
great careers for people increase our productivity, enhance
our reputation, and deliver our growth plans.
What have we achieved in 2024?
In 2024, we have continued our focus on senior level succession,
the development of high potential individuals within our operating
companies, and manager and supervisor training and
development. Within our Managing Director population, we have
had four internal promotions in 2024 which reflects the focus
being placed on internal succession planning. We also launched
our senior talent development programme which included
14 participants based in the US, UK and India.
We ran our annual employee engagement survey in September
2024, with a high participation rate of 83%. While employee
engagement for the overall Group remained static at 56% in 2024
(2023: 56%), the survey results highlighted that there is some
variation in the engagement levels across our operating
companies. Our aspiration is for every company to increase their
employee engagement level every year. To achieve this, we know
that local action plans will be most meaningful and will have the
biggest impact.
We have continued to use apprenticeships as a way of attracting
and developing early career talent. In the UK, 11 new apprentices
joined in 2024, with 33 existing employees enrolling onto an
apprenticeship as a way of upskilling themselves. In November
2024, we held our annual apprenticeship event in Manchester
where we celebrated the achievements of our brilliant UK
apprentices.
In response to the UK Corporate Governance Code requirement
to have a workforce engagement mechanism, we continued with
our Employee Forums in 2024, holding one face-to-face session
in the US in April and one in the UK in May. We complemented
this with virtual sessions in December. Topics included health
and safety, employee engagement, executive remuneration
and employee benefits. We gained valuable feedback and
insights from the process and shared the output of the forums
with our Managing Directors.
Our 2025 focus areas
Understanding the importance of highly engaged people, our
Managing Directors have developed local action plans to address
the areas identified for improvement in the recent engagement
survey. These plans are being overseen by our Group Presidents
to ensure that our employees continue to have regular feedback
on progress being made and to enable employees to give
feedback during the year. Our HR teams have held sessions
to share best practice with the aim of assisting all companies
to increase their engagement levels in 2025.
We will continue to develop our supervisors and managers,
with development programmes planned for 2025. We are
tracking progress that our supervisors and managers make after
completing the programme. We will complete the pilot talent
programme and review effectiveness of this to inform approach
and content for future programmes. We will continue to provide
development for our newer Managing Directors and will be
refreshing our succession plans.
How will we measure progress?
We will continue to measure progress through our engagement
survey against our targets. We will continue to seek further
feedback via various communication channels and will act on
feedback that we receive from our employees during the year.
We will track internal moves at a senior level and for those
supervisors and managers who complete our Enterprise-wide
development programmes.
Our targets
Measure
2024 actual
2023 actual
2022 actual
2025 target
2030 target
Engagement score
56%
56%
61%
66%
75%
Movement in pts
—
-5pts
+6pts
Saving and enhancing lives continued
54
Case study
John Foster, Managing Director
Company: Prolectric
John joined the Group in 2017 as commercial finance
business partner and was promoted to Commercial Director
for VRS Solutions Group, now known as Hill & Smith
Infrastructure, in 2021. During this time, John completed
an MBA and qualified with the Institute of Directors to assist
with his development goal to be a future leader. In 2023,
John was seconded to be Managing Director for Hill & Smith
Australia, successfully performing a strategic review of the
business. Building on this experience, in 2024, John took on
a project director and then interim Managing Director role for
Prolectric, our UK off-grid solar business. We are delighted
that John was permanently appointed as Managing Director
of Prolectric in January 2025.
John was provided with structured development to assist
with his transition to Managing Director including attending
an executive business course and undergoing psychometric
assessments. We are using this approach to assist career
progression to Managing Director, recognising that it
can be a significant transition in terms of role scope
and expectation.
John comments:
“Completing psychometric profiles as part of my transition
into a Managing Director role has been greatly beneficial,
increasing my self-awareness and understanding of my
leadership impact. I also found taking part in strategic
planning and budget processes in my early roles in the Group
increased my strategic understanding, which is important
in a Managing Director role.”
“I have had a fantastic career journey with
Hill & Smith to date, and have been able
to take advantage of career opportunities
in the wider Group. My advice to others
who want to develop into Managing Director
roles is to embrace professional education
and secondment opportunities as they arise.”
Hill & Smith PLC | Annual Report and Accounts 2024
55
Strategic Report
Governance
Financials
Shareholder Info
Equity, diversity and inclusion
Why does it matter?
We aim to employ the best people for the job and help them
thrive. We know that we can only do this by considering talented
people from the whole community, making our business
attractive for them to join and by providing an environment
where they can be themselves and give their best. If we can
provide attractive opportunities for our people, and ensure we
have a workforce that is truly diverse, our business will perform
to its absolute potential and achieve our ambitious economic
growth plans, as well as deliver individual success.
Everyone is actively encouraged to communicate and share
information with colleagues. It is important to us that we create
an inclusive culture, where all voices and perspectives have
an opportunity to be heard.
What have we achieved in 2024?
The 2024 employee survey highlighted that 73% of employees
agreed that Hill & Smith values diversity. This is a good starting
point, but we still have more to do in this area.
The Hill & Smith Women’s Network focused on three workstream
areas during 2024. These were provision of personal protective
equipment (‘PPE’) specifically designed for females, providing
mentors to aid personal development, and providing training and
resources to promote inclusive hiring. During the year we joined
two external Women’s Networks to enable our employees to
benefit from access to a wider network, tools and resources.
In addition, we ran two internal webinars which received positive
feedback and ran a series of focus groups to identify potential
priorities for 2025.
We have continued to see improvement in our 2024 Gender Pay
Gap, with the median and mean pay gap being slightly in favour
of women. We have also reviewed our equal opportunities and
diversity policy and our dignity at work policy, which set out clear
expectations for all employees.
Our apprenticeship scheme is another method of attracting more
diversity into our business.
Our 2025 focus areas
We will focus locally and at a Group level on increasing levels
of diversity, so that we represent the communities that we serve.
This will include continuing to provide tools, resources, and
information in support of this, as well as taking part in national
and international days that celebrate inclusion.
We will roll out equity, diversity and inclusion training in 2025,
to further skills and knowledge for our employees. This will cover
the benefits of a diverse workplace and how everyone can play
a positive role in promoting inclusion in the workplace.
We want to build on the success of our apprenticeship
programme, recognising it is an important way of attracting and
retaining diverse talent. We will recruit additional apprentices and
upskill existing colleagues though apprenticeships where feasible
to do so. We will continue to employ interns within our US businesses.
How will we measure progress?
We will continue to measure gender and ethnic diversity at
a senior level and review the engagement survey scores for
diversity and inclusion to track progress.
Our targets
Gender diversity
2024 actual
2023 actual
2025 target
2030 target
PLC Board
38%
29%
40%+
40%+
Executive Committee
33%
40%
40%+
40%+
Senior leaders
22%
19%
20%+
40%+
Ethnic diversity
2024 actual
2023 actual
2025 target
2030 target
PLC Board
13%
14%
10%+
10%+
Executive Committee
0%
20%
10%+
20%+
Senior leaders
15%
10%
10%+
10%+
Saving and enhancing lives continued
56
Case study
Lora Stadelman, Corporate Marketing Manager
Company: V&S Galvanizing
Lora has always had a passion for the steel industry.
Starting her career as a welder by trade, she found a natural
fit in sales at a local welding supply company and went to the
galvanising plant on a sales call. The operations manager
offered to give her a tour and she was fascinated by what
she saw. They were hiring a sales manager but Lora wasn’t
looking to move roles. However, the VP of Sales and
Marketing called Lora and, following his pitch, she changed
her mind about applying and joined in April 2021.
From January 2025, Lora has moved into her new role of
Corporate Marketing Manager. This is a natural progression
that allows Lora to follow her passion for marketing.
Her manager listens to her ideas and lets her try things out,
which makes the role even more fulfilling.
Lora is actively involved in the Hill & Smith Women’s Network,
and the Association of Women in the Metal Industry.
Lora has enjoyed seeing the progress made by the Hill &
Smith Women’s Network. For example, an opportunity was
identified for all companies to provide female employees
with PPE that is designed for them. Some were doing
so already, and they were able to share their contacts
and experiences.
The Association of Women in the Metal Industry didn’t have
a chapter in her area, so she was encouraged to assemble
a team and start one. This required great teamwork and
the new chapter was given official status in November 2024.
“Trust and cohesiveness are important.
Managers share their knowledge
and that helps us all to grow.”
Hill & Smith PLC | Annual Report and Accounts 2024
57
Strategic Report
Governance
Financials
Shareholder Info
Climate risks and TCFD
Why does it matter?
We recognise that climate change is a pressing global issue
and as a company we are committed to promoting a sustainable
environment and providing updates on our progress in doing so.
To that end, we are pleased to issue our report in response to
the Task Force on Climate-related Financial Disclosures (‘TCFD’)
recommendations.
What have we achieved in 2024?
The TCFD recommendations require companies to disclose
information on their financial and physical risks and opportunities
due to climate change, and how they are being managed. During
2024, we continued to develop our approach to assessing the
impact of climate change on our business operations, strategy,
and financial planning. We are compliant with the recommended
disclosures, apart from partial compliance with Metrics and
Targets. See page 61 for further details.
Sustainable governance
PLC Board
• Responsible for approving and
overseeing the Group’s
sustainability targets
• Receives six-monthly updates
on sustainability progress from
the Sustainability Committee
• Has oversight of TCFD reporting
and disclosures (through the Audit
Committee and Risk Committee)
Sustainability Committee
• Responsible for defining and
delivering the Group’s
sustainability approach and
long-term goals
• Formed in 2021, meeting quarterly
to review and oversee progress
against sustainability targets
• Use of third party specialists
to provide additional insight
and training (including climate
change issues)
• Members include: Group CEO,
Group CFO, Group Presidents,
Group Head of Sustainability
and other senior management
Risk Committee
• Responsible for the methodology
to identify and assess climate-
related risks and opportunities
• Agrees TCFD metrics and targets
with the Sustainability Committee
• Reports significant climate-related
risks and opportunities and
corresponding mitigation plans
to the Audit Committee for
consideration
• Further details about the Risk
Committee can be found on
page 67
How do we ensure good governance?
The Board views oversight and effective management of
environmental, social and governance-related risks as essential
to the Group’s ability to execute its strategy and achieve
long-term sustainable growth. The Board receives six-monthly
updates on progress around sustainability focus areas including
climate-related risks and opportunities. In addition, the annual
budget process includes consideration of operating company
level carbon reduction plans, and during 2024 similar focus was
introduced into the strategic planning process which covers a
five-year timeframe. The evaluation of potential acquisitions also
includes an assessment of the impact on our greenhouse gas
emissions reduction targets. The Audit Committee is responsible
for overseeing the management of climate-related risks and
opportunities and associated metrics and targets. In addition,
the Risk Committee is responsible for identifying and assessing
climate-related risks and opportunities with an established
approach to support this assessment.
58
What is the impact of climate-related risks and opportunities on our strategy?
To understand the impact that climate could have on our business, we performed a high-level assessment based on a range of climate
change scenarios. The selected scenarios represent a range of government policy intervention from very low (resulting in a 4˚C
temperature increase), to significant (2˚C), to aggressive (1.5˚C). The timeframes were selected after consideration of the likely timing
of transition risks, such as carbon pricing, and when significant physical climate changes are expected to materialise:
Scenario
“Global Net Zero by 2050”
Announced pledges
Higher warming
Overview
Global warming is limited to 1.5˚C as
the world reaches global net-zero
emissions by 2050. Transition risks
more prevalent.
Forecasts to what extent announced
ambitions and targets are on path to
deliver global net zero.
High-emissions scenario, consistent
with a future with no policy changes
to reduce emissions. Physical risks
more prevalent.
Temperature increase
~1.5˚C
~2˚C
~4˚C
Timeframes
2030 & 2040
2040
During the year, the Risk Committee completed an assessment
of climate-related risks and opportunities (building on an initial
risk assessment completed in 2021 with PwC) to determine
which risks could have a material impact after considering
both potential financial impact and likelihood. During 2024,
we completed physical climate vulnerability analysis for new
sites acquired in the year, building on the original 2021 analysis,
which remains valid given there has been no change in the
underlying climate analysis tool data since then. The assessment
of transitional risk considered emerging regulatory requirements,
such as carbon pricing.
The output of this assessment has enabled us to identify the
material impacts on our business arising from each of these
selected scenarios. The impacts were assessed without
considering any actions that we might take to mitigate or adapt
to these future climate change scenarios. The main impacts
of the scenarios being:
Transition risk (TCFD, 2017)
Transitioning to a lower-carbon economy may entail
extensive policy, legal, technology and market changes to
address mitigation and adaptation requirements related to
climate change. Depending on the nature, speed and focus
of these changes, transition risks may pose varying levels of
financial and reputational risk to organisations.
Physical risk (TCFD, 2017)
Physical risks resulting from climate change can be event
driven (acute) or longer-term shifts (chronic) in climate
patterns. Physical risks may have financial implications for
organisations, such as direct damage to assets and indirect
impacts from supply chain disruption.
Global warming scenario: 1.5°C and 2°C
As the global economy transitions to a low-carbon state, we have
identified several potential short to medium term risks and
opportunities for the Group:
• The availability of greener technology to adapt to lower emissions
• Increased demand for renewable energy leads to reduced supply
or an increase in the cost of purchasing renewable energy
• The introduction of carbon pricing across our key geographies
increases both our manufacturing costs and the costs of
raw materials
• Potential opportunities for the Group given the existing focus
on sustainable infrastructure products, for example galvanizing
and certain composite applications. Further innovation in new
products and services, in line with our purpose, will present
further growth opportunities. See case studies on page 62.
Other risks identified, but not considered material at this stage,
include reputational damage to the Group’s brand due to climate
inaction or negative climate impact from production/supply chain.
The EU Carbon Border Adjustment Mechanism ‘(CBAM’) reporting
requirements only apply to one of our operating companies,
which has registered with the scheme and reports on imported
steel as required. Quantities imported by this company are
minimal and predominantly from the UK, so should not attract
significant additional taxes once the transitional period ends.
UK CBAM will affect the majority of our UK operating companies,
both in terms of reporting requirements and potential additional
taxes on steel imported from outside of the EU (either directly,
or passed on by distributors). We are monitoring developments
of this scheme and briefing our businesses to ensure they are
prepared; several have already started discussions with their
suppliers to obtain the information that will be needed when
UK CBAM comes into force in 2026.
Our UK operating companies with European customers are being
asked for embodied carbon data to inform their reporting and
we are providing this as and when requested.
Hill & Smith PLC | Annual Report and Accounts 2024
59
Strategic Report
Governance
Financials
Shareholder Info
Sustainable governance continued
Global warming scenario – 4˚C
Under this scenario, we expect to see an increase in the
frequency and magnitude of extreme weather events across
our global operations. This could present multiple challenges
for the Group including:
• Damage to operations from extreme weather events
• Operational downtime due to severe weather conditions
• Difficult working conditions e.g., extreme temperature could
have the potential to lead to reduced working hours or to
an increase in absenteeism
• Potential for an increase in the number of injuries or accidents
when conducting operations.
There are also potential growth opportunities relating to Group
products and services which provide solutions for extreme
weather. See case studies on page 62.
Impact analysis
This scenario may include costs relating to the repair of assets,
increased volatility, business discontinuity and needed resiliency
investments for addressing more severe and frequent natural
disasters that would occur under a warming of 4˚C. Working
alongside PwC, we have analysed the Group’s exposure
to climate hazards at 58 operational sites (2023: 55 sites).
At the end of 2024, the Group had 15 sites at higher risk of one
or more climate hazards with heat being the most significant
threat (9 sites, 16%). The total number of higher risk sites has
increased compared to 2023 (14 sites) due to acquisitions during
2024. In 2040, heat is predicted to remain the most significant
threat to the Group (11 sites, 19%). Overall, 34% of sites have
been identified to be at higher risk from one or more climate
hazards by 2040, which represents c. 26% of 2024 Group
revenue; however, the revenue at risk is much lower as the
complete loss of annual revenue from a site following a climate
hazard event is highly unlikely, as the sites have mitigations
in place as well as the necessary insurance cover. During 2025,
we will begin to assess and test business continuity plans at
our sites most exposed to climate-related physical hazards.
The results of this analysis indicate the importance of taking
action to reduce greenhouse gas emissions to minimise
transition-related risks. It also suggests that, while physical
climate change risks to our future business operations are
relatively low, they may present opportunities for the Group.
Given our focus on sustainable infrastructure, some of our
operating companies already provide products and solutions
to address extreme weather conditions, and we see this as an
opportunity for future growth.
Impact analysis
Under both scenarios, operating costs, particularly relating to carbon pricing, could increase if they are not proactively mitigated.
We have therefore assessed the potential financial impact of carbon pricing relating to our current scope 1 and scope 2 emissions.
The Group is committed to reducing greenhouse gas emissions as demonstrated by our 2040 net-zero ambition (see our costed plan
on page 50) which will substantially mitigate the gross risk exposure to carbon pricing. The financial impact of carbon pricing has been
considered as part of the costed plan. The impact of a potential increase in the cost of renewable energy is not considered material
based on the Group’s current renewable energy consumption. As the Group’s adoption of renewable energy increases, future exposure
to renewable energy pricing will partly be offset by self-generated energy.
Carbon Pricing* Gross Risk Impact (scope 1 and 2)
Annual impact by 2030
1.5°C
2°C
Average annual operating cost increase assuming no proactive carbon reduction
plans are undertaken based on 2024 exit run rate emissions.
Figures as at end of 2023 in brackets
£4.9m
(£4.9m)
Based on $130 per
tonne*
£4.5m
(£4.5m)
Based on $120 per
tonne*
Annual impact by 2040
1.5˚C
2˚C
Average annual operating cost increase assuming no proactive carbon reduction
plans are undertaken based on 2024 exit run rate emissions.
Figures as at end of 2023 in brackets
£7.7m
(£7.7m)
Based on $205 per
tonne*
£6.4m
(£6.4m)
Based on $170 per
tonne*
* Carbon pricing assumptions based on PwC estimates for advanced economies in 1.5˚C and 2˚C scenarios from 2021.
60
How do we manage risk?
The Risk Committee is responsible for identifying, assessing and
managing climate-related risks and opportunities and reporting
significant risks to the Board. This includes consideration
of emerging regulatory requirements, such as carbon pricing.
The impact assessment has identified that some of our operating
companies may be more severely impacted by future climate
change scenarios. The Risk Committee is responsible for actively
working with our operating companies to ensure that appropriate
mitigation strategies are in place using our established Risk
Management Framework (refer to pages 66 to 68 for further
details). Based on the scenario analysis and impact assessment
outlined above, the Board deems climate change to be a Principal
Risk to the Group (see page 70).
How will we measure progress?
The Group has set the following metrics and targets to assess
and manage climate-related risks and opportunities:
• We are committed to reducing our scope 1 and 2 greenhouse
gas emissions to achieve our net zero target by 2040.
In the near term, we are measuring progress through reduction
in our CO2e intensity ratio. Refer to page 49 for further details
of progress to date
• Having established our baseline scope 3 greenhouse gas
emissions, we submitted our proposed near and long-term
targets to SBTi in July 2023 and these were approved in
December 2023
• While we have metrics for climate-related risks, during 2025
we will continue to develop cross-sector metrics for climate-
related opportunities, capital deployment, internal carbon
pricing, and remuneration
• In addition, we currently measure water usage and waste
production and continue to look at ways to minimise
our environmental impact.
Sites at higher risk*
Hazard
2024
no of sites**
2024 %
total sites
2040
no of sites
2040 %
total sites
Flood
4 (3)
7%
6
10%
Wind
4 (3)
7%
5
9%
Precipitation
8 (7)
14%
9
16%
Heat
9 (8)
16%
11
19%
Hail/thunderstorms
6 (5)
10%
6
10%
Drought
1 (2)
2%
2
3%
Wildfire
3 (4)
5%
3
5%
Total unique sites with one or more high risk hazards
15 (14)
26%
20
34%
* PwC’s climate analysis tool assigned each site, for each hazard, an absolute hazard score from 1 to 100. Sites with hazard scores greater than 70 were deemed
higher risk.
** 2023 figures in brackets.
TCFD elements
TCFD recommended disclosures
Compliant
Governance
a. Board oversight
b. Management’s role
Strategy
c. Climate-related risks and opportunities
d. Impact of climate-related risks and opportunities
e. Resilience of the organisation’s strategy in climate scenarios
Risk management
f. Risk identification and assessment
g. Managing climate-related risks
h. Integration into overall risk management process
Metrics and targets
i. Metrics for climate-related risks and opportunities
x
j. Scope 1, 2 and 3 greenhouse gas emission metrics
k. Climate-related targets – scope 1, 2 and 3
Hill & Smith PLC | Annual Report and Accounts 2024
61
Strategic Report
Governance
Financials
Shareholder Info
’StormStrong’ products
Creative Composites Group, US
StormStrong products include utility poles, utility crossarms,
lighting poles, waterfront sheet piles, waterfront pipe piles and
fibre reinforced polymer (‘FRP’) cooling towers. They provide
resilience, durability and corrosion resistance in both grid and
shoreline applications to ensure structural integrity in extreme
weather conditions such as hurricane-force winds, blizzards
and deep freezes. Creative Composites Group also manufactures
’FireStrong’ fire resistant utility poles that can protect the grid
from the excessive heat generated by brush/grass fires.
Rail track flood resilience
Asset International Structures, UK
The “Asset BaFix” track ballast shoulder retention system adds
stability to rail tracks and provides flood resilience to ensure
remote areas of rail networks are not cut off during flooding and
extreme weather.
HVAC Vibration Isolation Systems
Novia, US
Novia’s vibration isolation roof curbs are designed to withstand
significant weather events, such as hurricanes, to protect Heating
Ventilation and Air Conditioning (‛HVAC’) systems and ensure life
and safety critical facilities remain open and operational. Such
facilities include hospitals, police and fire stations, data centres
and educational centres.
Ethical conduct
Why does it matter?
As an international group, we recognise that acting ethically underpins
our commitment to doing business in a responsible manner:
• Protecting ourselves and our employees
• Creating a sense of pride in our employees that we ‘do the
right thing’
• Ensuring transparency when dealing with customers and
suppliers
• Supporting the communities in which we work with fair and
equitable employment policies and opportunities
• Ensuring that terms of business with our suppliers supports
our commitment to ethical conduct and doing business
responsibly
• Maintaining our reputation with all our stakeholders
The Group is committed to treating all people, whether employed
directly by the Group or its operating companies or employed
in its supply chain, fairly and equitably and we are committed
to upholding their human rights. The Group recognises all
individuals’ basic human rights and is committed to respecting
the Universal Declaration for Human Rights. The Group respects
the human rights of all those working for or with us and of the
people in the communities where we operate. We will not knowingly
do business with companies, organisations or individuals that
we believe are not working to basic human rights standards.
Our Group companies comply with all applicable wage and
working-time laws and other laws or regulations affecting the
employer/employee relationship and the workplace. We oppose
the exploitation of all workers, children and young people; we
will not tolerate forced labour, or labour which involves physical,
verbal or psychological harassment or intimidation of any kind;
and we will not employ child labour in any of our operations.
Case study
Products enhancing resilience
to extreme weather
Sustainable governance continued
Asset BaFix product
62
Nor will we permit the exploitation of, or discrimination against,
any vulnerable group. We have a zero tolerance approach to the
fundamental violation of an individual’s basic human rights that
slavery and human trafficking represents. We aim to make a
positive impact on society from our operations. The Group’s
business activities incur a substantial amount of different taxes,
and the Group is committed to complying with tax laws in the
geographies in which it operates and works closely with tax
authorities in those countries. The Group does not operate in
countries considered as partially compliant or non-compliant,
according to the OECD Tax Transparency report and blacklisted
or grey-listed by the EU.
What have we done in 2024?
The Group is committed to conducting its business activities
responsibly and ethically and in accordance with the laws and
regulations applicable to the jurisdictions in which we operate,
and we have a series of policies that support this objective.
These are supported by training and educational programmes
for employees, together with a Group Code of Business Conduct
(‘CoBC’) which underpins all our activities. The CoBC presides
over areas such as health and safety, ethical business practice,
gifts and entertainment, conducting international business,
protection of individuals, resources and assets, and outlines
the Group’s legal and compliance responsibilities in areas such
as anti-bribery and corruption, export laws and regulations,
and international fair and open competition.
For employees who wish to raise concerns without fear of reprisal
or victimisation, we provide an external confidential, independent
whistleblowing hotline and email facility, available in local
languages. Employees can also contact senior managers within
their business, the Group Company Secretary, or the Chair of the
Audit Committee, without fear of reproach. 44 such issues were
reported and investigated in 2024 (2023: 10). During 2024,
we issued updated whistleblowing training to our employees
and ensured that this was communicated at all levels within
the organisation. We believe this heightened awareness resulted
in the increase in whistleblowing reports and this is seen as
a positive reflection of the awareness across the Group.
Specific policies have been developed and the following are
available on the Group website www.hsgroup.com:
• Supply Chain Policy
• Code of Business Conduct
• Anti-bribery & Corruption Policy
• Modern Slavery Policy
• Whistleblowing Policy
Our 2025 focus areas
We regularly review operating companies’ standard terms
and conditions of purchase, and standard long term supply
agreements across the Group. The terms and agreements must
include requirements concerning ethical operations, including
provisions addressing a supplier’s obligation to comply with
the UK Modern Slavery Act or similar local legal obligations.
We will conduct annual audits to ensure that we fulfil our
obligations under the UK Modern Slavery Act.
We will act in accordance with our CoBC, upholding our zero-
tolerance approach to bribery and corruption. We will monitor
and investigate all whistleblowing reports as well as learning
the lessons from such incidents in order to manage such reports
to an acceptable level. Additionally, we are rolling out more
detailed training across the Group on undertaking best practice
whistleblowing investigations.
We will continue to conduct our dealings with tax authorities
with honesty, integrity, respect and fairness and in a spirit of
co-operative compliance.
How do we ensure we are compliant?
• Annual Modern Slavery audits
• Board oversight of all whistleblowing reports
• Annual approval of all ethical policies by the Board or Executive
Committee
• Maintain online training to ensure compliance with relevant
legislation
• Annual certification by Group operating subsidiaries that they
have complied with policies issued by the Group, and in
particular with the CoBC.
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63
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Governance
Financials
Shareholder Info
Sustainability data
2024
2023
2022
2021
2020
Product research & development
Spend on R&D
£3.4m
£3.3m
£2.8m
£1.9m
£2.0m
Percentage of revenue
0.4%
0.4%
0.4%
0.3%
0.3%
Environmental
Environmental penalties
£nil
£nil
£nil
£nil
£nil
Carbon Disclosure Project (‘CDP’) Rating
C
B
B
D
C
Group water usage (m3)
98,825
92,963
84,667
104,795
95,093
Solid waste to landfill (tonnes)
6,338
4,769
5,138
3,600
5,165
Recycled waste (tonnes)
21,644
22,385
20,761
13,755
19,145
Percentage of recycled waste
77%
82%
80%
79%
79%
Greenhouse gas emissions
Emissions (tCO2e) – Scope 1: UK (1)
16,041
17,060
17,518
18,362
17,689
Emissions (tCO2e) – Scope 1: Rest of World (1)
22,560
21,640
20,902
21,611
23,068
Location-based emissions (tCO2e) – Scope 2: UK (1)
3,063
3,201
3,072
3,896
3,849
Location-based emissions (tCO2e) – Scope 2: Rest
of World (1)
10,995
10,705
10,234
10,668
10,486
Market-based emissions (tCO2e) – Scope 2: UK (1)
82
164
428
1,094
4,477
Market-based emissions (tCO2e) – Scope 2: Rest
of World (1)
9,450
10,528
10,477
10,787
10,585
Intensity ratio
0.06
0.06
0.07
0.09
0.10
Scope 3 (tCO2e) – Group (1)
1,016,734
862,259
1,007,641
n/a
n/a
Other greenhouse gas emissions – CH4 (tCO2e)
67
64
61
66
63
Other greenhouse gas emissions – N2O (tCO2e)
137
155
156
165
157
Energy consumption
Energy consumption UK (kWh)
95,875,309
100,338,137
103,246,843
110,355,033
104,827,829
Energy consumption rest of world (kWh)
150,792,407
144,927,420
142,328,304
147,407,078
154,029,308
Energy consumption total (kWh)
246,667,716
245,265,557
245,575,147
257,762,111
258,857,137
Health and safety
No. of workplace fatalities
0
0
0
0
0
No. of lost time injuries
30
35
85
142
109
LTIR
0.33
0.43
1.1
1.7
1.5
No. of near miss reports
990
1,969
2,217
2,126
955
Ethical conduct
Charitable donations
£119,618
£98,985
£62,000
£39,000
£21,000
Whistleblowing reports made by employees
44
10
12
2
3
Modern slavery audits carried out
Yes
Yes
Yes
Yes
Yes
Talent and employment practices
No. of Group employees (as at 31 Dec)
4,559
4,336
3,817
4,402
4,398
Voluntary (regrettable) attrition rate
18%
9%
14%
14%
6%
Percentage of employees with access to a
recognised Trade Union
3%
5%
11%
18%
18%
UK Gender Pay (Median Pay Gap)
-1.0%
-0.1%
2.8%
-4.5%
0.1%
Training spend
£0.8m
£0.9m
£0.8m
£0.6m
£0.4m
Total no. of days training
5,285
5,799
5,626
4,119
4,000
UK apprenticeships
66
60
55
49
34
Percentage of UK sites utilising the
Apprenticeship Levy
89%
83%
89%
57%
49%
Employees participating in training & development
2,506
3,527
2,386
156
111
Percentage of employees participating in training
& development that are female
8%
9%
10%
17%
10%
1.In accordance with our Greenhouse Gas Emissions Recalculation Policy, in our Basis of Reporting 2024 (available at hsgroup.com/who-we-
are/governance/our-policies/) and the GHG Protocol, our 2020-2023 scope 1, 2 and 3 data has been revised to remove the emissions relating
to any operating companies that have been divested and to include estimates for the emissions from companies that we have acquired during
those years. This may result in stated emissions for previous years differing from those reported previously, but allows a meaningful
comparison of current emissions with base year and historic year emissions.
Sustainable governance continued
64
2024
2023
2022
2021
2020
Engagement
Engagement survey participation
83%
80%
80%
62%
n/a
Engagement score
56%
56%
61%
55%
n/a
Inclusion engagement score
73%
73%
69%
63%
n/a
Gender diversity
M
F
M
F
M
F
M
F
M
F
PLC Directors
5
3
5
2
5
3
5
3
5
2
Executive Committee
4
2
3
2
4
2
4
2
n/a
n/a
No. of subsidiary directors
40
9
46
10
39
7
49
3
66
5
No. of senior leaders
100
28
109
26
78
20
201
38
174
39
Percentage of PLC Directors
62%
38%
71%
29%
62%
38%
62%
38%
71%
29%
Percentage of Executive Committee
67%
33%
60%
40%
67%
33%
67%
33%
n/a
n/a
Percentage of subsidiary directors
82%
18%
82%
18%
85%
15%
94%
6%
93%
7%
Percentage of senior leaders
78%
22%
81%
19%
80%
20%
84%
16%
82%
18%
Total percentage of Group employees
89%
11%
89%
11%
90%
10%
90%
10%
90%
10%
Sustainability Policies
The Group has several policies that support its Sustainability Plan. These are listed below, and can be found at https://hsgroup.com/
• Product Responsibility Policy
• Conflicts Mineral Policy
• Supply Chain Policy
• Environment Policy
• Health & Safety Policy
• Equal Opportunities & Diversity Policy
• Tax Strategy
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Shareholder Info
also set delegated authority levels to provide the framework for
assessing risks and ensuring that they are escalated to the
appropriate levels of management, including up to the Board
where appropriate, for consideration and approval.
Enterprise risk management framework
The Group operates an Enterprise Risk Management Framework
(the ‘Framework’) that ensures a consistent and proportionate
approach is used to identify, evaluate, manage and monitor risks
across all our operating companies. The Framework integrates
with the Group’s internal controls and compliance policies and is
supported by the internal and external audit programmes.
It uses a tiered approach to risk management, with risk registers
at operating companies and a corporate level risk register feeding
into the Group’s Principal Risks, with flows of information
and assurance (see Figure 1). In keeping with the Group’s
entrepreneurial approach, individual operating companies record
and manage unique risks outside of the Group’s Principal Risks
as they see fit. This ensures risk management is effectively
embedded in a way that fits each specific operating environment
and risk horizon.
The Group has an established Enterprise Risk
Management Framework that identifies, evaluates,
manages and monitors risk. Enhancements have
been implemented during 2024 to further improve
and embed the risk management process.
Risk management
Effective risk management is critical to the achievement of our
strategic drivers of organic growth, portfolio management, strong
cash generation and sustainability. The Group benefits from an
Enterprise Risk Management Framework that is integrated into
the ongoing business activities of our operating companies.
Responsibilities
While the Board has delegated the ongoing discussion of risk
and risk management to the Audit Committee and Executive
Management, the Board is responsible for the overall
stewardship of our system of risk management and internal
control. It has established the level of risk that is acceptable to
our businesses in the pursuit of our strategic objectives. It has
Risk management
Figure 1 Risk Management Process
The Board
• Sets strategy
• Determines overall risk appetite
• Identifies and manages principal risks
Audit Committee
• Oversees the risk management process
• Reviews and challenges risk information and target positions from
operating companies
• Identify, assess and manage operating company level risks
• Set risk targets for identified risks
• Complete risk improvement actions
• Sets risk management methodology
• Advises operating companies on best practice
• Interrogates and calibrates risk information from operating companies
• Provides challenge and insight
• Maintains the corporate level risk register
• Reports risk information to the Audit Committee
• Advises the Audit Committee on new and emerging risks
Operating Companies
Risk Committee
66
Within the Framework, the following roles and responsibilities exist:
The Board:
• retains overall ownership and accountability for risk management
• ensures the Directors have the appropriate skills, knowledge
and experience to effectively assess the Group Principal Risks
and carry out their duties effectively
• evaluates the Group Principal Risks and oversees their
management
• establishes Group risk appetite
• directs the external reporting of risk and viability
The Audit Committee
Supports the Board by:
• monitoring and directing the Risk Management Framework,
risk appetite and associated internal controls, including
the influencing factors of culture and reward
• ensuring there is a link between the Group Principal Risks
and the Group’s internal and external audit programmes
• reviewing internal and external sources of assurance and
information to enable it to recommend to the Board where
changes may be needed to the Risk Management Framework
and/or Group Principal Risks
• reviewing the detail of external reporting
The Risk Committee
Supports the Audit Committee by:
• acting as a conduit between the Group and our operating
companies, supporting the dissemination of the Enterprise
Risk Management Framework and risk appetite down from
the Board, and flow of information and assurance back
up to the Board
• helping executive management to embed the framework
by designing and implementing procedures, tools and training
• proactively analysing and challenging the assessment,
management and monitoring of operating company risk
registers and day-to-day risk management
• ensuring the Board and Audit Committee are provided
with sufficient information to discharge their
responsibilities effectively
The Executive Committee
Supports the Risk Committee by:
• ensuring operating companies are effectively embedding
the Group’s Enterprise Risk Management Framework and
are maintaining live risk registers that are actively managed
• overseeing the completion of risk reporting with escalation
of any significant matters to the Risk Committee in a
timely manner
• advising the Risk Committee on appropriate levels of target
risk and on actions that may be required to ensure effective
identification and mitigation of risk
• providing updates on action plans and control enhancements
for risks in the corporate level risk register
Risk appetite
The framework clarifies how risk is to be managed in a way
that satisfies the decentralised operating model of the Group
(see Figure 2). The approach has allowed the Board to consider
its appetite in the light of the Group’s business model and carry
out a robust assessment during 2024 of the principal risks and
uncertainties that might threaten the Group’s business model,
future performance, solvency and liquidity (see pages 69 to 72
for the Group’s Principal Risks and Uncertainties).
The Board accepts a level of risk in pursuit of its strategic
objectives. Hill & Smith PLC assesses the risk of action
(or inaction) as part of every decision and does not allow
the Group to take risks that would harm the long-term interests
of its strategy, shareholders and stakeholders, including the
environment. For example, this might mean:
• pursuing or not pursuing an acquisition, or requiring greater
assurance and comfort before proceeding through the due
diligence process
• not entering into contracts that place an onerous contractual
or reputational burden on the Group
• not entering geographic locations where bribery and corruption
are accepted or tolerated
• not using certain chemicals or treatments (or changing
existing treatments) that are harmful to the environment
A single statement signifying the risk appetite of the Group is
difficult to articulate due to its diverse nature, multiple geographic
locations, markets and products. Risk appetite categories have
been established for the Group’s principal risks (see pages 69
to 72 for the Group’s principal risks and uncertainties). The Board
demonstrates its risk appetite by the decisions it has taken
(and not taken) during the year.
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Risk analysis
The Board reviewed in depth feedback from the Risk Committee
on the Group’s Principal Risks. Following detailed debate,
the Board concluded that the Group’s Principal Risk Register
continued to reflect the Principal Risks the Group faced. An
increase in the exposure from the ‘changes in global economic
outlook and geopolitical environment’, and ‘IT systems failure’
Principal Risks have been highlighted. The remaining Principal
Risks have remained stable. For further details see pages 69 to 72.
Risk activities
Activities undertaken to enhance the Group’s approach to risk
in 2024 included:
• in conjunction with Lockton Companies LLP, development
and launch of a revised risk register template and reporting
tool for our operating companies
• virtual seminars and one-to-one sessions to introduce
the revised risk register template and to provide ongoing
training on the principles of risk management.
Emerging risks
As part of our commitment to continuously evaluate our strategy
and product offering, the Risk Committee thoroughly considers
emerging risks in the context of future opportunities and threats
to the Group’s business model. During 2024, the Risk Committee
identified, assessed and monitored emerging risks, with
a session hosted by Lockton on emerging risks to provide
an external perspective. The results from the emerging risks
analysis were presented at the March 2025 Audit Committee and
the prioritised emerging risks will be monitored throughout 2025.
Emerging risk
Timescale
Escalation of geopolitical tensions impacting
supply chain and/or customer demand
Short (0-2 yrs)
Shifting workplace preferences
Medium (3-5yrs)
Increasing focus on sustainability credentials
Medium (3-5yrs)
Availability of raw materials
Long (5yrs +)
Risk in 2025 and beyond
The key focus during 2025 will include:
• completion of operating company business continuity tabletop
exercises to help develop and improve business continuity plans
• continued assessment of the Principal Risks facing the Group
and operating companies including those that might threaten
the Group’s business model, future performance, solvency
and liquidity
• continued evaluation and identification of emerging risks
that might disrupt the business models and strategies
of our operating companies.
Risk in 2024
Risk Committee
The Committee met formally four times during the year and
comprises the Group Chief Financial Officer, Group Head of Risk
& Internal Audit, Group Company Secretary, Group Director of
Corporate Development, Group Financial Controller, Group Chief
Legal Officer, Group IT Director and the Group Presidents,
plus representatives of the Group’s three business segments.
The Committee reviews and validates the risk reports from
the operating companies as well as the corporate risk register,
before presenting a six-monthly group wide report to the Audit
Committee for discussion on both operating company level risks
and Group risks. Review and feedback is provided by the Audit
Committee to further question the validity and mitigations of
the risks presented and to identify others not already considered.
This process ensures that risks are not just the product of a
bottom-up approach but are also examined from the top down.
Figure 2 Risk Management Framework
Governance
Culture and strategy • Risk appetite
Reporting and assurance
Core risk management process
Identify • Assess and quantify
Manage • Monitor
Infrastructure
Tools, systems & data • Policies
Procedures • Roles & responsibilities
68
Risk management continued
Risk
Description and potential impact
Mitigation
Reduction in US
infrastructure spending
Risk movement: No change
Our growth is supported by multi-year planned
government spending to upgrade US infrastructure,
technology change and private investment from US
manufacturers and producers to onshore vital
components. Changes to these plans could have
a detrimental impact on Group revenues.
We remain confident that infrastructure investment
will continue to form part of national spending plans
under the new US federal government administration.
• Cross-party support for core infrastructure
investment plans.
• Our portfolio covers diverse products,
markets and territories.
• Market and product development initiatives.
• Strategic planning process overseen by the
Executive Committee and Board to anticipate
and mitigate potential downside risks.
Changes in global
economic outlook and
geopolitical environment
Risk movement: Increase
Material adverse changes in the political and economic
environments in the end-user markets in which we
operate have the potential to put at risk our ability
to execute our strategy.
2024 has seen continued geopolitical tensions, including
the potential introduction of tariffs under the new US
federal government administration. We continue to
monitor the risk, however we currently expect this to have
limited impact on our supply chains and end markets.
• The Group has a diverse portfolio of operating
companies with exposure to a range of
infrastructure and built environment end markets.
• Strong balance sheet with low leverage and mix
of fixed and floating rate debt.
• Current and future financial performance is
continuously monitored, facilitating rapid response
to changes in market conditions.
• In line with our entrepreneurial model, our
decisions are made close to our markets and our
businesses are agile and responsive to changes
in their external competitive landscape.
Increase in competitive
pressure
Risk movement: No change
Increased volatility, uncertainty and slowdown in our
markets could result in increased competition, leading
to a loss of customers and/or pricing pressure and
consequently a loss of sales and reduced profits.
• The Group holds leading positions in niche
infrastructure markets with high barriers to entry.
• In line with our entrepreneurial model, our
decisions are made close to our markets and our
businesses are agile and responsive to changes
in their competitive landscape.
• Our operating companies strive to provide superior
products and high service levels to customers,
while aiming to ensure there is no dependency
on any one customer.
Product failure
Risk movement: No change
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.
• Products tested, approved and accredited
by regulatory bodies.
• Quality control protocols fully implemented
and continuously monitored.
• Contractual controls in place to minimise
economic impacts.
• Product liability insurance cover maintained
globally.
• Litigation supported/managed by external
legal specialists.
Group principal risks 2024
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Risk
Description and potential impact
Mitigation
Climate change
Risk movement: No change
Failure to adapt to and manage the threats and
opportunities from climate change could have significant
reputational, financial and operational impacts on the
Group. Chronic changes in climate and extreme weather
events may disrupt our operations and supply chains.
Transitioning to a low-carbon economy may present
technological challenges and the high energy demand
of some of our operations could incur carbon taxes.
• Sustainability Committee to oversee and govern
our carbon reduction plans and initiatives.
• TCFD analysis to understand the risks and
opportunities arising from climate change,
including climate scenario modelling to evaluate
the threat from extreme weather.
• Costed plan established to set out how we will
achieve net zero (for scopes 1 and 2) by 2040,
reducing our exposure to transition risks.
• Insurance cover, continuity planning and extreme
weather protocols in place to mitigate our
exposure from physical risks.
• See Our Approach to Sustainability (including our
TCFD report) for further details, pages 46 to 65.
Supply chain failure
Risk movement: No change
The Group’s businesses depend on the availability and
timely delivery of raw materials and components. Supply
chain failures due to availability, cost inflation, quality and/
or insolvency may have an adverse impact on the Group’s
production capacity and lead to an inability to meet
customer requirements.
Climate change transition costs could also inflate the
price of the goods we purchase.
• Group procurement standards, including robust
due diligence of supply chain partners and the
requirement for dual sourcing where available.
• Regular interaction and assessment of
performance/ financial status of key suppliers.
• Group oversight of material procurement contracts
ensuring robust contractual protections.
• Contingency plans in place throughout the supply
chain, such as purchasing additional stock of key
raw materials, and securing additional supply
chain capacity.
IT systems failure
Risk movement: Increase
The Group relies on the information technology systems
used in the daily operations of its operating companies.
A failure of those systems or cyber attack could have
a significant operational impact on the Group, impacting
customer service, revenue and margins.
During the year the global cyber threat has continued to
evolve, with the proliferation of advanced cyber intrusion
tools lowering the barrier for entry to criminals and states
alike. The UK's National Cyber Security Centre (NCSC)
has warned that ransomware remains one of the most
pervasive cyber threats to UK organisations.
Given this, while there has been continued enhancement
of the Group’s IT security controls during 2024, the Board
considers the risk to be heightened.
• The Board maintains a watching brief on IT and
cyber risk and has overseen significant investment
across the Group to enhance IT security controls.
• Wholesale network security improvements
completed during 2024.
• IT controls manual, mandating a robust set of
information security controls covering basic cyber
hygiene, system back-up procedures, hardware/
software protection, table top exercises, and
security training.
• Ongoing programme of IT controls compliance
reviews completed by Internal Audit.
70
Group principal risks 2024 continued
Risk
Description and potential impact
Mitigation
Portfolio management
Risk movement: No change
The Group’s growth strategies include the acquisition
of businesses to complement or supplement its existing
activities. Failure to execute an effective acquisition due
diligence and integration programme could have
a significant impact on the Group’s ability to generate
sustainable profitable growth for shareholders.
• All potential acquisitions are tightly evaluated
to ensure they fit within our purpose and core
strategic goals.
• Due diligence protocols deployed in relation
to assessment of target businesses, including
financial, commercial, environmental and legal.
• Contractual protections and assurances sought
from sellers to mitigate subsequent identification
of risks.
• Board approval required for Group acquisitions,
in line with its Schedule of Matters Reserved.
• Post-acquisition integration plans established
for all acquisitions, with regular performance
monitoring and reporting to the Board.
Failure to take advantage
of product development
and innovation
Risk movement: No change
The Group operates in core 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.
• Entrepreneurial culture and autonomous structure
to encourage innovation and enable agile response
to a changing competitive landscape.
• Our acquisitions strategy brings innovative
products and technology to our portfolio.
• Board monitoring of emerging risks alongside
external specialist support, where both the risks
identified and the potential opportunities arising
are considered.
• Active Intellectual Property management
within individual operating companies overseen
by Group.
Failure to attract, retain
and develop an
appropriately diverse,
skilled and experienced
workforce
Risk movement: No change
Talented employees are fundamental to the success of
the Group. We aim to employ the best people for the job,
and we know we can only do this by considering talented
people from the whole community.
Failure to attract, develop and retain high-quality
individuals may impact our ability to deliver against
our strategic goals.
• New training and development programme
for high potential talent launched in 2024.
• Board level review of succession planning
for senior leaders.
• Bespoke coaching and mentoring for identified
MD successors to support development.
• Training and development programme in place
for supervisors and line managers.
• Continued use of internships, apprenticeships and
other vocational courses for specialist
and technical roles.
• Appropriate remuneration and benefits, together
with bonus opportunities and incentive plans
offered to employees.
• Annual engagement survey results inform local
operating action plans to improve engagement.
• Women’s network to attract, retain and develop
female employees.
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Risk
Description and potential impact
Mitigation
Prevention of harm or
injury to people
Risk movement: No change
The Group is committed to ensuring the health,
safety and wellbeing of all employees and third parties.
The Group operates multiple manufacturing facilities,
where a failure in the Group’s health and
safety procedures could lead to injury or to the death
of employees or third parties.
Our LTIR has reduced by 23% to 0.33 in 2024. Given the
performance we have updated our target for 2025 to
0.275 from 0.75, reflecting that health and safety is a key
focus area for the Group. Our 2030 target has also been
reduced to 0.1 from 0.25.
• Culture of zero tolerance promoted by the Board
with clear targets and improvement metrics.
• Regional health and safety organisational structure
to allow Group health and safety resource to be
closer to the individual operating companies.
• Groupwide incident management system launched
in July 2024.
• Monitoring and review of LTI rates with all LTI
incidents investigated and findings presented
to the Executive Committee. Improvement
recommendations are implemented and shared
across the Group to minimise any reoccurrence.
• Regular health and safety site audits.
• Health and safety forums to monitor performance
and share best practice.
• External health and safety accreditations and
relationships maintained with regulatory bodies.
Violation of applicable
laws and regulations
Risk movement: No change
The Group’s operations must comply with a range of
national and international laws and regulations including
those related to modern slavery, anti-bribery and
corruption, human rights, employment, GDPR,
trade/export compliance and competition/anti-trust.
A failure to comply with 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.
• Group Code of Conduct sets out required
approach for all staff.
• Mandatory training for employees including
Modern Slavery, Anti-Bribery and Corruption, and
Competition Law compliance.
• Programme of audits undertaken on a cyclical
basis to review operating companies’ compliance
with regulatory requirements.
• Software solutions implemented globally to ensure
compliance with trade and export legislation.
• Externally hosted whistleblowing hotline available
to all employees to allow them to raise concerns
in confidence or anonymously, if preferred.
• Toolkits issued to all UK operating companies
to aid compliance with GDPR.
72
Group principal risks 2024 continued
We aim to comply with the non-financial and sustainability reporting requirements contained in S414CA and S414CB of the Companies
Act 2006. The table below, and the information it refers to, is intended to help readers understand our position on key non-financial
matters. Further non-financial information is available in our Sustainability section (page 64 to 65) and on our website.
Reporting
requirement
Policies and standards
which govern our approach
Additional information
See Page No.
Environmental
matters
• Environment Policy*
• Sustainability Plan including:
• Our Approach
• Protecting the World
• Saving and enhancing lives
• Sustainable Governance
• Risk: TCFD
• Non-financial KPIs
46 to 65
Employees
• Group Code of Business Conduct*
• Health & Safety Policy*
• Sustainability Plan including:
• Health and safety
• Succession planning and talent
management
• Group learning and development
• Wellbeing
• Risk: talent, diversity, recruitment and
retention of key employees
• Non-financial KPIs
53 to 57
Human rights
• Equal Opportunities & Diversity Policy*
• Board Diversity Statement*
• Data Protection Policy*
• Modern Slavery Policy*
• Sustainability Plan including:
• Diversity & inclusion
• Gender Pay
• Human rights
53 to 57
Community
• Individual subsidiary approach
• Stakeholder engagement
40
Anti-bribery and
corruption
• Anti-bribery & Corruption Policy*
• Supply Chain Policy*
• International Competition Law Policy
• Gifts & Entertainment Policy
• Whistleblowing Policy*
• Sustainability Plan including:
• Sustainable Governance
• Risk: violation of applicable laws and
regulations
62 to 63
Description of the
business model
• Our Strategy
• Our Business model
—
2 to 27
Description of the
principal risks and
uncertainties and
impact of business
activities
• Our Business Model
• Risk Framework
• Principal Risks and Uncertainties
—
2 to 27 and
66 to 72
Non-financial key
performance indicators
• Employee engagement
• Diversity
• Lost time injury rate
• Greenhouse gas emissions
• Water and waste
—
48 & 52
Those policies marked with an asterisk can be found on the Company’s website hsgroup.com/who-we-are/governance/our-policies/
Non-financial and sustainability
information statement
Hill & Smith PLC | Annual Report and Accounts 2024
73
Strategic Report
Governance
Financials
Shareholder Info
Governance at a glance
Hill & Smith PLC takes governance arrangements very seriously as they are the
foundation of good management and decision making. With the appointment of Rutger
Helbing, we have returned to a more standard structure where the Chair runs the Board
and the Chief Executive Officer manages the business.
Governance Highlights
Meeting attendance
During 2024, the Board met on 10 occasions, the Audit Committee on four
occasions, the Nomination Committee on seven occasions and the Remuneration
Committee on seven occasions.
Board
Audit
Committee
Nomination
Committee
Remuneration
Committee
Alan Giddins
10/10
N/A
2/2
1/1
Rutger Helbing1
3/3
N/A
N/A
N/A
Hannah Nichols
10/10
N/A
N/A
N/A
Hooman Caman Javvi2
6/7
N/A
N/A
N/A
Tony Quinlan
10/10
4/4
7/7
7/7
Carol Chesney
10/10
4/4
7/7
7/7
Mark Reckitt3
4/4
2/2
1/1
3/3
Pete Raby
10/10
4/4
7/7
7/7
Leigh-Ann Russell4
9/10
4/4
5/7
5/7
Farrokh Batliwala
10/10
4/4
7/7
7/7
1. Rutger Helbing appointed to the Board as Chief Executive Officer on 19 September 2024.
2. Hooman Caman Javvi appointed to the Board as Chief Operating Officer on 30 January 2024
and stood down from the Board on 19 September 2024.
3. Mark Reckitt retired from the Board on 23 May 2024.
4. Leigh-Ann Russell was unable to attend one Board meeting for personal reasons.
Major Board decisions
• Approved the appointment of Rutger Helbing
as Chief Executive Officer
• Approved the Group’s Preliminary
and Interim Statements
• Approved the Group’s 2025 Budget
• Approved the acquisitions of Capital Steel,
FM Stainless, Trident Industries and Whitlow
Electric
• Commenced processes to dispose of two
non-core Roads & Security businesses which
were completed in Q1 2025
• Approved an updated Group Strategy
Appointed Rutger Helbing as
Chief Executive Officer and
oversaw his induction
Successful acquisition and
integration of four acquired
businesses into our governance
framework
Step change in the talent and
development programmes
across the business
Review performed of the skills
and experience required and
present on the Board
74
Board diversity
(as at 31 December 2024)
The Board is committed to taking advantage
of the benefits of diversity of thought and
experience in respect of the composition
of the Board.
As at 31 December 2024, the Board was
62.5% male and 37.5% female. In order to
meet the Listing Rule target to have 40%
female representation on the Board, without
any of the current directors stepping down,
it would be necessary to appoint an additional
Non-executive Director. In the short term it is
not felt beneficial to increase the number of
individuals on the Board, but this will be kept
under review following the appointment of
a new CFO and a Non-executive Director
to replace Leigh-Ann Russell.
Board gender
Male
5
3
Female
Board ethnicity
White
Ethnic group
7
1
The composition of the Board is
62.5% male and 37.5% female
Our governance framework
Hill & Smith PLC Board
Nomination
Committee
Audit Committee
Risk
Committee
Remuneration
Committee
Sustainability
Committee
Executive Committee
Group
Presidents
Operating Company
Boards
The Board takes decisions on strategy and in relation to items
set out in the matters reserved for the Board. It has delegated
various operational decisions to several Board and management
committees (see above). The following pages set out the
responsibilities of the three main Board committees and what
they have achieved during 2024. The schedule of matters
reserved for the Board and Terms of Reference of each Board
committee can be found at www.hsgroup.com.
The Executive Committee assists the Chief Executive in carrying
out the day-to-day management of the activities of the Group.
The Risk Committee is a management committee that reports
directly to the Audit Committee to support the Audit Committee
and Board with their risk management and internal control
responsibilities.
The Sustainability Committee is a management level committee
that reports directly to the Executive Committee, and at least
twice a year, the Head of Sustainability will report directly to
the Board.
Each of our operating companies has their own management
team and reports directly to our Group Presidents, who also
sit on our Executive Committee.
Hill & Smith PLC | Annual Report and Accounts 2024
75
Strategic Report
Governance
Financials
Shareholder Info
On behalf of the Board, I am pleased to present
Hill & Smith PLC’s Governance Report for the year
ended 31 December 2024.
Maintaining high standards of governance and acting ethically
are vital ingredients to supporting the long term sustainable
success of the Group. We understand the importance of the
Board leading by example and promoting the desired culture
and values throughout the organisation. All Board members
are therefore expected to act with honesty, integrity and actively
promote the Group’s values.
Board changes in 2024
Following an extensive search process, the Board appointed
Rutger Helbing to the role of Chief Executive Officer on
19 September 2024. After a short hand over period, I stepped
back to a Non-executive Chair role, having held the Executive
Chair position since July 2022.
Rutger’s appointment, together with the appointment of two
new Group Presidents, allowed the Board to re-look at the split
of executive responsibilities and the decision was made not
to continue with the role of Chief Operating Officer, with the result
that Hooman Caman Javvi stepped down from the Group.
Carol Chesney joined the Board on 1 January 2024 as a Non-
executive Director and took over from Mark Reckitt as Chair of
the Audit Committee on Mark’s retirement following the 2024
AGM.
Board changes in 2025
On 7 January 2025, we announced the resignation of Hannah
Nichols as Chief Financial Officer and that she would leave the
Group following the full year results. Hannah joined Hill & Smith in
2019 and has played an important role in driving the development
of the Group over the last five and a half years. We are currently
undertaking a search process to identify a suitable successor
to Hannah and will update shareholders as appropriate.
Leigh-Ann Russell, having relocated to the US, has informed
the Board that for work commitment and logistical reasons,
she will need to step down from the Board following the
publication of the 2024 results. I would like to thank Leigh-Ann
for her significant contribution over the last four years. We will
be looking to appoint a new Non-executive Director to the Board
ahead of the AGM.
Introduction to Governance
Board skills and experience
An effective Board is comprised of Directors with appropriate
and compatible skills, which can support executive management
in setting the Group’s strategy, oversee its implementation and
promote long term sustainable growth.
In navigating the Board changes outlined above, it was important
that we fully understood the skills and experience required to
deliver our long term strategy and then map them against the
skills and experience on the Board. The results of this exercise
are available in the Nomination Committee report on page 92.
In commencing our search for a new Non-executive Director,
we briefed the external search firm based on the Board’s view of
what additional skills would be additive to discussion and debate,
and would enhance strategy and decision making.
We were also conscious of the need to consider diversity in all
of its forms to support effective decision making and reduce
the risk of groupthink. We have therefore given a clear brief
to the search firm to produce a diverse list of candidates,
including gender, ethnicity and personal attributes.
Alan Giddins
Chair
76
Board effectiveness
Following on from the externally facilitated effectiveness review
conducted during 2023, we undertook an internal, questionnaire
based 2024 Board effectiveness review, with input both from the
Board and senior members of the Group management team. I
am pleased to confirm that the review confirmed that the Board
and each of its committees continued to perform to a high
standard. The detailed output was considered by the Board and
each committee, and improvement plans agreed for
implementation during 2025.
I am especially pleased that the review considered that Board
dynamics continued to be good with discussions held in a culture
of openness and that all Directors felt able to fully contribute.
Whistleblowing
We recognise the importance of building a culture where our
employees, as well as external third party stakeholders, are able
to raise matters of importance and that any matters raised will be
dealt with diligently and thoroughly without fear of reprisal. We do
however recognise that there might be times when individuals
would prefer to raise matters in confidence and anonymously.
We therefore maintain an anonymous portal where matters can
be reported. During 2024, we issued updated whistleblowing
training to all employees and ensured that this was communicated
at all levels within the organisation. From an organisational
perspective we have also refreshed how reports are handled
when they are received and are providing specific training
on investigation procedure.
Board visits
We place great value on engagement with our stakeholders,
including our employees at all levels. During 2024, our Directors
visited a number of sites to meet with local management teams,
tour sites and speak to employees. Formal visits include a
presentation from the operating company on their strategy and
end markets. Outside the formal Board visits, Non-executive
Directors are encouraged to arrange informal site visits, which
create excellent engagement opportunities with employees.
As part of Rutger Helbing’s onboarding he visited operating
businesses around the Group and took the time to discuss key
aspects of their business, including market dynamics, products
and services, customers and strategy.
During 2025, a schedule of Board visits has been agreed,
including visiting some of our recent acquisitions.
M&A
We continued our targeted M&A strategy with the acquisitions
of Capital Steel, FM Stainless, Trident Industries and Whitlow
Electric in 2024. Once acquired, we have implemented a detailed
180 day integration plan, progress against which is reviewed
formally by the Board.
Health, safety and the environment
Health and safety continues to be a priority focus for the
Board, with a formal health and safety update provided
at each Board meeting. Following the appointment of our two
Group Presidents in March 2024, we changed the reporting lines
for health and safety, and this, together with the full engagement
of our Chief Executive Officer, is having a positive impact. In
particular, I am pleased that our LTI rate once again decreased
across the year.
Sustainability continues to be of significant importance
to our stakeholders. The Board regularly receives sustainability
updates from our Group Head of Sustainability and you can read
more about our sustainability progress on pages 46 to 65.
Our Remuneration Committee has agreed that this is the right
time to implement a greenhouse gas emissions reduction
measure as part of our LTIP performance targets. More
information can be found on page 116.
Key areas of focus for 2025
The Board will prioritise the following areas during 2025:
• CFO and Non-executive Director appointments
• Long term Board succession
• Senior level talent and development
• Further improvement in our approach to health & safety
• Delivery of our key initiatives linked to greenhouse
gas reduction
Alan Giddins
Chair
11 March 2025
Hill & Smith PLC | Annual Report and Accounts 2024
77
Strategic Report
Governance
Financials
Shareholder Info
Board of Directors
Alan Giddins
Non-executive Chair N R
Appointed to the Board:
3 October 2017
Alan was formerly a Managing Partner
and Global Head of Private Equity at 3i
Group plc, and a member of its Executive
Committee. He has extensive experience
sitting on the boards of international
businesses. Prior to joining 3i, he spent
13 years in investment banking advising
a broad range of quoted companies.
Alan is also Chair of Watkin Jones plc
and a Non-executive Director of Big
Society Capital, a leading social
impact‑led investor.
Between July 2022 and September 2024,
Alan held the position of Executive Chair,
following the departure of the Group’s
Chief Executive Officer, and prior to the
appointment of Rutger Helbing.
Rutger Helbing
Chief Executive Officer
Appointed to the Board:
19 September 2024
Rutger joined the Group in September
2024. Prior to joining, Rutger was Chief
Executive Officer at Tyman PLC and
Devro plc. He brings strategic insight and
wide-ranging experience across different
industries, geographies and the value
chain. His earlier career was spent in
commercial and operational divisional
finance roles in blue chip global
manufacturing businesses including
Unilever, ICI and AkzoNobel.
Hannah Nichols
Chief Financial Officer
Appointed to the Board:
16 September 2019
Hannah joined the Group in September
2019. Prior to joining, Hannah had a
14-year career in BT Group plc, most
recently as Chief Financial Officer, Asia
Middle East and Africa for BT Global
Services based in Singapore. Hannah also
held a number of commercial roles
at Cable & Wireless prior to joining BT.
In January 2024, Hannah was appointed
a Non-executive Director and Audit
Committee Chair of Oxford
Instruments plc.
78
Carol Chesney
Independent Non-executive
A N R
Appointed to the Board:
1 January 2024
Since April 2018, Carol has served as a
Non-executive Director and Chair of the
Audit Committee of Hunting plc. In
addition, she is a Non-executive Director
and Chair of the Audit Committees of IQE
plc and Imagination Technologies Group
Limited. Past Non-executive roles include
Renishaw plc and Biffa plc, for which she
also served as Audit Committee Chair.
Until 2018, Carol served as the Company
Secretary of Halma plc, a FTSE 100
health, safety and environmental
technology group, where her role included
corporate governance, legal compliance,
M&A, equity incentives, pensions, internal
audit management, taxation, property,
health and safety compliance,
environmental reporting and anti-bribery
and corruption compliance.
N
A
R
R
Committee membership
Nomination Committee
Audit Committee
Remuneration Committee
Chair
Tony Quinlan
Senior Independent Non-executive
A N R
Appointed to the Board:
2 December 2019
Tony has had a successful international
career as a plc Director in major
technology, industrial, energy and retail
companies. He was most recently CEO
of Laird plc, where he led a successful
turnaround and then took it from listed
to private ownership under Advent
International.
In addition, Tony is a Senior Independent
Director and Audit Chair of Costain Group
PLC, and has served as Deputy Chair
for the Port of London Authority, where
he also chaired the Audit Committee.
Farrokh Batliwala
Independent Non-executive
A N R
Appointed to the Board:
1 April 2022
Farrokh was formerly President of the
Connect and Control Technologies
division of ITT Inc., a US listed industrials
group. Farrokh has significant
international operational and leadership
experience, combined with having held
senior roles in both strategy and mergers
and acquisitions.
Prior to joining ITT, Farrokh held senior
management roles at both Eaton
Corporation and Pratt & Whitney.
Farrokh lives on the East Coast of the US.
Hill & Smith PLC | Annual Report and Accounts 2024
79
Strategic Report
Governance
Financials
Shareholder Info
Karen Atterbury
Group Company Secretary
Leigh-Ann Russell
Independent Non-executive
A N R
Appointed to the Board:
1 April 2021
Leigh-Ann is Chief Information Officer,
Global Head of Engineering and member
of the Executive Committee at BNY.
Prior to joining BNY, Leigh-Ann was
a member of BP’s executive leadership
team. As Executive Vice President,
Innovation & Engineering her role covered
Chief Scientist, Chief Technology Officer
and Chief Digital Officer. Prior to that,
Leigh-Ann was BP’s Chief Procurement
Officer, where she was accountable for
its safe, ethical and competitive
supply chain.
Leigh-Ann’s career is based in engineering
and operations. Her previous roles have
included Engineering Manager and
Operations Manager and Vice President
of Technical Functions, where she led
the Process Safety, Engineering
and Operations discipline at BP.
Pete Raby
Independent Non-executive
A N R
Appointed to the Board:
2 December 2019
Pete has been the Chief Executive of
Morgan Advanced Materials plc since
August 2015. Prior to that, he was the
President of the Communications and
Connectivity sector within Cobham plc.
In his nine-year career with Cobham, he
held a number of senior leadership roles
covering strategy, technology, business
transformation, and business leadership.
Prior to Cobham, Pete was a partner
at McKinsey & Company in London,
specialising in strategy and operations
in the aerospace, defence, and power
and gas sectors.
Appointed 19 August 2024
Karen is a Fellow of the Chartered
Governance Institute and has over
20 years’ commercial company
secretarial experience. Prior to joining,
Karen held senior company secretarial
positions at a number of listed companies
including Renishaw plc, RPS Group plc
and Headlam Group plc. Karen has
specialised in corporate governance,
compliance and mergers and
acquisitions. She also has a strong
background in group insurance, risk
management and subsidiary governance.
Karen has day-to-day responsibility for the
legal and company secretarial team and
is responsible for providing governance
advice and guidance to the Board and
senior management.
80
Board of Directors continued
Governance Report
The Board is ultimately responsible for the good
governance, strategy, management, performance
and long term sustainable success of the Group.
Basis of this report
We have used the UK Corporate Governance Code 2018
(the ‘Code’) to assess our governance arrangements during 2024.
Hill & Smith is listed on the London Stock Exchange and has
assessed its application of the Code under the headings of:
• Board leadership and company purpose
• Division of responsibilities
• Composition, succession and evaluation
• Audit, risk and internal control
• Remuneration
Compliance statement
Hill & Smith PLC is a company listed on the London Stock
Exchange. During 2024, the Company fully complied with
the provisions of the UK Corporate Governance Code 2018
(the ‘Code’), with the exception of the requirement that the roles
of Chair and Chief Executive should not be performed by the
same person.
Alan Giddins was appointed Executive Chair in July 2022 while
a search for a permanent Chief Executive Officer was undertaken.
During this time, the Company was not in compliance with
provisions 9 and 10 of the Code. On 19 September 2024, Rutger
Helbing was appointed as the Company’s new Chief Executive
Officer. On the same date, Alan Giddins resumed his role as
Non-executive Chair. From this date the roles of Chair and Chief
Executive Officer have been performed by different people.
Board Leadership
About the Board
The Board sets the culture and values within which our
businesses operate and is collectively responsible for the
long term success of the Company. The Chair sets the culture
of the Board, ensuring it is operating appropriately, effectively
and with integrity. This in turn forms the basis of the ethics
and values that our Chief Executive Officer, supported by the
Executive Committee, is responsible for embedding across
the Group.
Our operating businesses
Hill & Smith PLC (the ‘Group’) comprises the holding company
and its principal operating companies, listed on page 213 to 214.
The Group’s businesses are directly supervised by local operating
boards. There are clear lines of delegated authority and
businesses are given a high degree of autonomy to promote their
activities in an entrepreneurial fashion. The Managing Directors
of our businesses report to the Group through one of the Group
Presidents. The Group Presidents are members of the Executive
Committee, alongside the Chief Executive Officer, Chief Financial
Officer, the Group Head of Corporate Development Director and
Group Company Secretary. Details of the Group’s business model
can be found on pages 20 to 21.
The Chief Executive Officer and Chief Financial Officer receive
regular reports on the performance of the operating companies,
and the Group Presidents are responsible for ensuring a
consistent application of governance, operational procedures
and Group policies and practices.
Board framework
The Board operates within a framework of scheduled Board
meetings, discussions and site visits. The Board is directly
supported by three committees: Audit; Nomination; and
Remuneration. Membership of these committees is set out
on pages 78 to 80 of this report.
The scope of Board decisions
The Board manages the Group with reference to a formal
schedule of matters reserved for the Board, which is applied
across three key pillars: strategy, internal control, and
environmental, social and governance.
Strategy
• Group strategy and operating plans
• Business development including acquisitions and divestments
• Major capital investments and divestitures
Internal control
• Risk management, financial reporting and audit
• Financing, treasury and taxation
• Pension benefits and liabilities
• Compliance with laws and regulations
• Cyber security
Environmental, social and governance
• Corporate Governance
• Ethical standards
• Health and safety
• Environmental matters
• Succession planning
• Compliance with the Group’s Code of Business Conduct
Our Section 172 Statement
All Board members are aware of their obligations under
s.172 of the Companies Act 2006, and their decisions and
considerations that have s.172 implications are accurately
reflected in Board minutes. The Board’s 2024 s.172 Statement
can be found on page 44 of this report.
Where other businesses within the Group are required to make
a s.172 Statement, these reports can be found within the Annual
Report and Accounts for those entities.
Hill & Smith PLC | Annual Report and Accounts 2024
81
Strategic Report
Governance
Financials
Shareholder Info
Engagement with shareholders
The Board manages the Group on behalf of its shareholders,
and undertakes this responsibility in such a way as to maximise
shareholder value over the long term and to advance the interests
of all stakeholders. In this respect, during the year, the Executive
Chair/Chief Executive Officer and Chief Financial Officer met with
institutional shareholder representatives in the UK, Europe and
USA. Feedback from these meetings is included within the
materials shared with the Board. The Board also receives reports
from the Company’s brokers and financial public relations agency
detailing feedback from institutional shareholders following
the Group’s interim and full year results announcements.
Feedback and dialogue
All Board Directors are available to meet with shareholders
to discuss matters of interest and can be contacted through the
Group Company Secretary. The Chair and Tony Quinlan, Senior
Independent Director, are available to meet with shareholders
concerning corporate governance issues, if so required.
No concerns regarding the running of the Company or any
proposed action were received or recorded from shareholders
in the year under review or to the date of this report.
The Remuneration Committee Chair and Group Company
Secretary also engage with shareholders and the investor
community as and when required. Copies of all trading updates
and Interim and Annual Reports are posted on the Company’s
website, together with details of key financial and shareholder
information, governance statements, Group policies and
corporate and organisational structure.
Hill & Smith PLC Annual General Meeting (‘AGM’)
The Hill & Smith PLC 2025 AGM will be held at Cranmore Park
Conference, Event & Exhibition Centre, Cranmore Avenue, Shirley,
West Midlands, B90 4LF at 11am on Thursday, 22 May 2025.
The Company welcomes the attendance of shareholders at the
meeting, where you will be able to speak to the Directors and
find out more about the Company’s performance in the first part
of 2025. The details of the 2025 AGM can be found on page 211
and in the Notice of Meeting.
The Company’s Annual Report & Accounts and Notice of Meeting
are published as soon as the time required for their printing
allows, in order to provide the maximum time in advance of the
AGM for feedback to be received from shareholders. Proxy votes
submitted by shareholders for the AGM are collated and
aggregated independently by the Company’s registrars, provided
at the AGM and published on the website shortly after the
conclusion of that meeting.
Board Leadership and Company Purpose
Summary
One of the Board’s principal roles is to provide strategic
leadership to the Group. The Group has a clear purpose, which is
embedded in the Board’s thinking. We create value by providing
solutions that enhance the resilience of vital infrastructure and
the built environment and this informs our M&A, sustainability,
capital allocation priorities and health and safety activities.
Division of responsibilities
Summary
There is a clear division of responsibilities between the Chair
and the Chief Executive Officer which is set out in writing and
available on our website at https://hsgroup.com/who-we-are/
governance/roles-and-responsibilities/. The Chair is responsible
for the leadership and effective working of the Board. The small
size of the Board ensures all Directors contribute fully to the
discussions and decisions. The Chair drives the Board agenda
and determines how the Board should use the time available
to it during meetings. The Chief Executive Officer is responsible
for the management of the Group, executing strategy and
development, meeting financial objectives, implementing policies
and maintaining controls. The Executive Directors provide
information to the Board via their regular written reports and the
presentation of proposals for Board approval.
Role of Non-executive Directors
The Non-executive Directors have no managerial responsibility
within the Group, are ineligible for any share-based remuneration
and are independent of the Company. The Non-executive
Directors provide oversight, challenge, strategic guidance and
specialist support to the Executive Directors.
• Board members visited a number of operating companies
and met with local management and employees enabling
them to further understand local cultures, communities
and underpinning our commitment to all stakeholders.
• The Board received regular Governance and Legal updates,
enabling the Board to assess any impact and take any
necessary action.
2024 key points
• The appointment of a new CEO allowed for the roles
of Chair and CEO to be separated, complying with best
practice under the UK Corporate Governance Code.
• Under the new CEO, the Board undertook a review of
the Group’s purpose and strategy.
• The strategic plan was reviewed during the year,
which includes updates from Group businesses and
the consideration of new initiatives or adjustments.
82
Governance Report continued
Board Committees
PLC Board
Nomination Committee
At 31 December, the Nomination
Committee comprised the Chair of
the Board, Senior Independent Director
and the independent Non-executive
Directors.
The Nomination Committee leads
the process of Board appointments
and supports the Board in succession
planning for the Board and senior
management, making
recommendations to the Board
as appropriate.
The terms of reference of the
Nomination Committee can be found
at www.hsgroup.com and more
information on the work of
the Committee can be found in
the Committee’s report on page 92.
Audit Committee
At 31 December, the Audit Committee
comprised the Chair of the Committee
and the independent Non-executive
Directors. While the Chair of the Board
is invited to attend meetings they are
not a formal member.
The Audit Committee has
responsibility for planning and
reviewing the Group’s audit processes,
interim and full year results, internal
controls and risk management systems
(see page 99 for more information).
The Audit Committee is additionally
supported by the Risk Committee,
comprising employees from across
the Group and representatives from
some of our operating companies.
The terms of reference of the Audit
Committee can be found at www.
hsgroup.com and more information
on the work of the Committee can
be found in the Committee’s report
on page 96.
Remuneration Committee
At 31 December, the Remuneration
Committee comprised the Chair of
the Committee, the Chair of the Board
and the independent Non-executive
Directors.
The Remuneration Committee has
responsibility for the creation, approval
and implementation of the Company’s
Remuneration Policy in respect of the
Executive Directors, Group Company
Secretary and senior executives.
The terms of reference of the
Remuneration Committee can be
found at www.hsgroup.com and more
information on the work of the
Committee can be found in the
Committee’s report on page 102.
All Non-executive Directors were considered to have sufficient
time to meet their Board responsibilities. There are clear divisions
of responsibilities between the leadership of the Board and the
executive leadership of the Group, and these have been approved
by the Board and can be found at https://hsgroup.com/who-we-
are/governance/roles-and-responsibilities/.
Executive Committee
The Executive Committee takes its authority from the Chief
Executive Officer. It is not a committee of the Board but provides
a valuable forum for senior executives to discuss matters of
importance and support the Chief Executive Officer.
The Executive Committee is the senior management body
for the Group and monitors and manages the performance of
the business, reviews progress against the strategic objectives
and formulates budgets and proposals on strategy and resource
allocation, receives regular reports on human resources, health
and safety, internal audit, compliance and whistleblowing, legal,
investor relations and corporate affairs.
Frequency of meetings
During 2024, the Board met on 10 scheduled occasions,
the Audit Committee met on four occasions, the Nomination
Committee met seven times and the Remuneration Committee
met on seven occasions. The attendance of each Director is set
out on page 74.
Board visits to operations
Site visits are an important, regular feature of the Board calendar.
They provide an excellent opportunity for the Board to engage
with a wide group of employees and they also facilitate the
Non-executive Directors’ understanding of our businesses.
In 2024, the Board undertook visits to the following operating
companies: Creative Composites Group; V&S Galvanizing;
Hill & Smith Inc.; and V&S Utilities. At these visits, time was
dedicated to both formal and informal discussions with employees.
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Board decision making
The Board ensures it provides clear,
responsible leadership to the Group in order
to create sustainable long term success,
ensuring there is an appropriate risk and
control framework and resources to deliver
its strategy. The activities undertaken by
the Board during the year are set out on
the opposite page.
The Board’s interaction with key stakeholders is set out
on pages 38 to 43. Three examples of key decisions taken
by the Board during the year, along with how the Directors
considered stakeholder interests when discharging their
duties, are set out on page 45.
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Governance
• Reviewed the committee terms of reference and
a number of policy documents as part of the Group’s
Governance Framework
• Undertook an internal evaluation for 2024 considering
the Board’s performance, that of individual directors
and its Committees and created action plans. Ensured
actions from the 2023 evaluation were completed
• Received regular governance and legal updates and
assessed any impact
• Reviewed and approved the Modern Slavery Statement
to be published on the Group’s website
Stakeholder engagement
• Received feedback from external advisors and investors
following the publication of full year and half year results
• Met with shareholders at the 2024 AGM and reviewed
the 2024 AGM proxy results
• Received regular updates regarding employee relations,
apprenticeships and succession planning across the Group
• Met with investors at roadshows following half year
and full year results announcements
• Agreed the pay and bonus framework for the Group
• Visited Group sites
• Reviewed and analysed the results of the employee
engagement survey
Board composition and effectiveness
• Received updates from each of its committees
• Considered and approved any potential conflicts
of interests at each meeting
• Reviewed and updated the Board workplan which
included proposed site visits for 2025
• Appointed Carol Chesney as Non-executive Director
and Chair of the Audit Committee following Mark
Reckitt’s retirement from the Board
• Considered and approved the appointment of Rutger
Helbing as the CEO, agreed his remuneration and
planned his induction and onboarding
• Reviewed the position of COO following the appointment
of the new CEO and agreed that the position
was redundant
Strategy
• Reviewed the strategic plan, including receiving regular
updates on progress, and considered any new initiatives
or adjustments
• Received updates from a variety of Group businesses
• Received M&A updates including post-acquisition
reviews, as well as updates on acquisition pipeline,
progress and approval of all acquisitions was reserved
to its consideration
• Active portfolio management of Group businesses
to align with current strategy
Sustainability
• Received and approved the sustainability plan which
was to be included in the Annual Report and Accounts
• Received regular updates on the Group’s sustainability
performance
Financial reporting and controls
• Reviewed the 2023 results and performance and
approved the 2023 Annual Report and Accounts
together with the supporting statements to the market
• Received regular trading updates from across the Group
• Reviewed and approved quarterly market updates
including the 2024 interim results and provided
investors with trading updates
• Recommended a final dividend payment put to
shareholders at the 2024 AGM and approved the
payment of an interim dividend payment in line with
the Group dividend policy
• Received and reviewed Group budgets including those
from individual businesses looking at performance
against budget and forecast
Other
• Received regular updates on health and safety initiatives
and reporting on any lost time incidents
• Agreed a strategy of employee engagement through 2024
• Reviewed and agreed capital expenditure within the
Group’s framework in relation to property acquisitions
and maintenance of the Group’s estate
• Received six-monthly IT updates which included
a review of projects including ERP and cyber security,
and agreed the IT control framework
Board activities
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Board conflicts of interest
The Board has a formal approach for dealing with conflicts of
interests and external appointments, and this approach has been
reviewed during the year. All Directors are required to disclose all
significant third-party appointments prior to joining the Board and,
once on the Board, before taking on any additional external
appointments. The Group Company Secretary supports the Board
with their consideration of any actual or potential conflicts and
makes recommendations as to whether the relevant matters
should be authorised by the Board. The Board will then consider
whether or not a conflict exists and if so, what measures should be
taken, if any, to mitigate the conflict. The Company has complied
with these procedures.
During the year under review, the Board confirms that it was not
aware of any situations that conflicted with the interests of the
Company, other than those that may arise from Directors’ other
appointments, as disclosed in their biographies on pages 78 to 80.
Support available to the Board
The Board is supported by the Group Company Secretary,
who ensures adequate communication and information flow
between Board members. The Group Company Secretary is also
responsible for assisting the Chair in all matters relating to
corporate governance, including the Board evaluation process.
At the invitation of the Board, other members of the management
team attend Board meetings to present on matters relating to
their areas of responsibility, including regulatory compliance,
investor relations, sustainability, risk management and internal
control and information technology and cyber security.
The directors and management of operating companies are
also supported by the central function, which includes legal
and compliance, risk management, internal audit, treasury,
taxation and corporate development.
All Directors have access to the advice and services of the
Group Company Secretary and are able to take independent
professional advice, when necessary, at the Company’s expense,
although no Director felt it necessary to seek such advice in the
year ended 31 December 2024.
2024 Key Points
• We reviewed our schedule of matters reserved for the
Board, the responsibilities of the Chair, Chief Executive
Officer and Senior Independent Director
• We visited a number of Group sites enabling direct
engagement with our people
• We reviewed and strengthened our whistleblowing policy
process and procedures
Composition, succession
and evaluation
At 31 December 2024, the Board comprised the Chair,
the Chief Executive Officer, the Chief Financial Officer, Senior
Independent Director (‘SID’) and four independent Non-executive
Directors. The individual biographies of the Board members can
be found on pages 78 to 80. At 31 December 2024, 71% of the
Board (excluding the Chair but including the SID) comprised
independent Non-executive Directors exceeding the requirement
that at least half of the Board, excluding the Chair, is made
up of independent directors.
Following an internally facilitated evaluation of the performance
of the Board (see page 88 for more details), and on the
recommendation of the Nomination Committee, each Director
on the Board will stand for election/re-election at the Group’s
forthcoming Annual General Meeting (‘AGM’) with the exception
of the Chief Financial Officer, Hannah Nichols, who will leave
the business at the end of March 2025 and Leigh-Ann Russell,
who will step down from the Board following the publication
of the 2024 results.
Board profile
Our Directors have a broad range of backgrounds across industry,
investment management and professional services. Their diverse
and balanced mix of skills and business experience (see page 92)
contributes to the effective functioning of the Board, its
Committees, and the quality of decision making. This diversity
of thought and professional attributes ensures that matters are
effectively debated and challenged, and that no individual or group
dominates the Board’s decision making processes. This was
confirmed by the Nomination Committee during the year.
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Taking into account the provisions of the Code, the Board
has determined that, during the year under review, none of the
Non-executive Directors had any relationship or circumstance
which would affect their performance, and the Board considers
all of the Non-executive Directors to be independent in character
and judgement. There is an effective procedure in place to deal
with conflicts of interest, which are dealt with by the Board as
and when they arise. Conflicts of interest are a standing item
on the Board agenda, in addition to being subject to an annual
review process.
Succession planning
The Nomination Committee has responsibility for evaluating
medium and long term Board, Executive Committee and
groupwide senior executive succession planning, and for
making recommendations to the Board as appropriate.
A formal appraisal process is undertaken for all operating
company Managing Directors.
At a local level, each operating company is required to maintain
its own succession plan, which is regularly reviewed and refreshed
by each operating Board and overseen by the Group Presidents.
Group diversity
The Board is committed to ensuring that recruitment into the
Group is undertaken based on merit, regardless of age, disability,
marital or civil partner status, pregnancy and maternity, race,
colour, nationality, ethnic or national origin, religion or belief,
gender or sexual orientation. The Board places significant
emphasis on ensuring that greater diversity is brought into the
workforce, to enhance the quality of decision making through
differing views and backgrounds.
For the purposes of the UK Listing Rules, gender identity and
ethnic background are reported in the tables below. This
information has been collated by questionnaire from each Board
member or senior manager.
The manufacturing industry is not traditionally strong in gender
diversity but in order to reach its full potential it is important that
it reflects the society in which it operates. It is clear that we have
more work to do and we will therefore continue to focus on
achieving greater diversity, in all its forms, across our senior
manager population and the Group as a whole.
Gender identity (as at 31 December 2024)
Number of Board
members
Percentage of the
Board
Number of senior
positions on the Board
(Chair, CEO, CFO and SID)
Number in executive
management1
Percentage of
executive
management1
Men
5
62.5%
3
3
75%
Women
3
37.5%
1
1
25%
Not specified
—
—
—
—
—
Ethnic identity (as at 31 December 2024)
Number of Board
members
Percentage of the
Board
Number of senior
positions on the Board
(Chair, CEO, CFO and SID)
Number in executive
management1
Percentage of
executive
management1
White British or other White
7
87.5%
4
4
100%
Mixed/Multiple Ethnic Group
—
—
—
—
—
Asian/Asian British
1
12.5%
—
—
—
Black/African/Caribbean/Black British
—
—
—
—
—
Other Ethnic Group
—
—
—
—
—
Not specified
—
—
—
—
—
1. Executive Management is defined as the Executive Committee (excluding Board Directors).
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As part of this commitment, the Group includes in the annual
report details of the numbers of men and women at Board level;
the number of men and women who are ‘senior leaders’
(i.e. those employees with authority and responsibility for
planning, directing and controlling the activities of the central
function or the operating companies); and the number of men
and women across the organisation as a whole (see page 56
for more details).
Board diversity
On 31 December 2024, Board membership comprised 37.5%
female and 62.5% male and was 12.5% ethnically diverse.
The Board is committed to ensuring that it has the right balance
of skills, views and experience among its directors. The Board
is cognisant of the FTSE Women’s Leaders Review and Parker
Review targets regarding gender and ethnic diversity on the
Board. The Board has met the FRC targets of having a senior
position on its board of directors being held by a woman, and
at least one individual is from a minority ethnic background.
For more details see the table on page 87. The Board has
considered whether to appoint an additional female Non-
executive Director to the Board in order to satisfy the 40%
requirement as enshrined in the FCA Listing Rules. At the current
time the Board does not feel it would be beneficial to increase
the size of the Board, but will continue to review this position
following the upcoming Board changes.
Director training and development
All Directors are provided with the opportunity and are
encouraged to attend regular training to ensure they are kept
up to date on relevant legal developments or changes, best
practice and changes to commercial and financial risks.
Typical training for Directors includes attendance at seminars,
forums, conferences and working groups, as well as the provision
of information from the Group Company Secretary.
Evaluating the Board’s performance
2023 outcomes
The 2023 Annual Report and Accounts outlined the results
of the external interview-based Board evaluation exercise
that was conducted by Gould Consulting. The Board reviewed
progress against the recommendations with the following outcomes:
• The appointment of the Chief Executive Officer and return
of Alan Giddins to the role of Chair, had been carefully
and successfully managed
• The additional governance arrangements implemented
following Alan Giddins taking up the role of Executive Chair
had been effective
• The Group’s talent and development programmes had been
improved including in relation to high potential employees
• Operational risk matrices had continued to develop.
2024 evaluation
Following the external evaluation undertaken during 2023, the
Board performed an internal evaluation of its own effectiveness
during 2024 which was led by the Chair and Group Company
Secretary. The evaluation was conducted by means of
confidential online questionnaires. The questionnaires were
tailored to include matters raised during the 2023 evaluation
as areas for improvement, to monitor progress in those areas,
alongside additional governance questions. The results of the
evaluation noted positive evolution in several key areas including:
the retention of Non-executive Director only sessions; increasing
the visibility of key people updates, which were provided as part
of the Chief Executive’s review to each Board meeting; and the
formalisation of the annual board agenda, allowing greater input
from Non-executive Directors to the Board work plan.
The Board discussed the full results of the evaluation exercises
and considered the following priorities for 2025:
• Re-evaluate the Group’s purpose and key markets
• Consider more opportunities for the Non-executive Directors
to engage with members of the senior leadership team outside
the Boardroom and additionally the wider workforce
• Continue work to develop diversity initiatives throughout the
organisation and plan for diversity at Board and senior
management level.
Audit, risk and internal control
There is a strong framework of internal controls, and the work
of our Internal Audit team gives confidence to the Board that
Hill & Smith PLC is a well-run company.
Internal audit
During 2024, our Internal Audit team conducted audits across
the breadth of our business, including a review of compliance
with the Group Financial Controls Manual and Group IT Controls
Manual. The Audit Committee received updates arising out of
internal audits. The Audit Committee also reviewed and approved
the annual audit plans for 2025, as prepared by the Head of Risk
and Internal Audit.
Risk management
The Board has overall responsibility for ensuring that there
is a process to identify, evaluate and manage any significant
risks that may affect the achievement of the Group’s strategic
objectives, for internal control, and for reviewing the effectiveness
of these processes.
The risk management and internal control system is designed
to manage, rather than eliminate, the risk of failing to achieve
business objectives, and can provide only reasonable, and not
absolute, assurance against material misstatement or loss.
The assessment and control of risk are considered by the Board
to be fundamental to achieving the Group’s corporate objectives.
An ongoing process for identifying, evaluating and managing
the significant risks faced by the Group and assessing the
effectiveness of related controls has been established by the
Board to ensure an acceptable risk/reward profile across the
Group. The review of the effectiveness of risk management and
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Governance Report continued
Additionally, the Board:
• Ensured maintenance of a sound system of internal control
and risk management;
• Reviewed the adequacy and security of the Company’s
arrangements for its employees and contractors to raise
concerns, in confidence, about possible wrongdoing in
financial reporting or other matters. The Board continues
to ensure that these arrangements allow proportionate and
independent investigation of such matters and appropriate
follow up action;
• Considered and approved the half-yearly report, any other
interim management statements and any preliminary
announcement of results;
• Declared the interim dividend and recommended the final
dividend;
• Approved any significant changes in accounting policies
or practices; and
• Approved treasury policies, including foreign currency
exposure and the use of financial derivatives.
Going concern
The Board has considered the Group’s status as a going concern,
and the Directors have assessed the future funding requirements
of the Group and the Company and compared them to the level
of committed available borrowing facilities. The assessment
included a review of both divisional and Group financial forecasts,
financial instruments and hedging arrangements, for the
18 months from the balance sheet date. Major assumptions have
been compared to external reference points, such as
infrastructure spend forecasts across our chosen market
sectors, government spending plans on road and other
infrastructure, zinc and steel prices, and economic growth
forecasts. This assessment showed that the Group will have
sufficient headroom in the foreseeable future and the likelihood
of breaching borrowing covenants in this period is considered to
be remote. Having undertaken this work, the Directors are of the
opinion that the Group has adequate committed resources to
fund its operations for the foreseeable future and so determine
that it is appropriate for the financial statements to be prepared
on a going concern basis.
For more information see the Audit Committee report on page 96.
internal control is covered through Internal Audit’s quarterly reports
to the Audit Committee (covering controls compliance, the status
of audit action remediation and audits completed in the period)
and a six-monthly report on operating company risk management,
updates on the corporate risk register, and the status of the Group
wide principal risks. The Board has neither identified nor been
advised of any failings or weaknesses during the year which it has
determined to be material or significant.
This process has been in place throughout 2024, and up to the
date of approving the Annual Report and financial statements.
The key elements of this process are:
• A comprehensive system of monthly reporting from key
executives, identifying performance against budgets and
forecasts;
• Analysis of variances, major business issues, key performance
indicators and regular forecasting;
• Well-defined policies governing appraisal and approval
of capital expenditure and treasury operations;
• Six-monthly submissions from all operating companies
detailing the risks they have identified and what controls
and assurances they have in place to mitigate these risks;
• A review of the corporate risk register, in terms of
completeness and accuracy with the senior management
team and the executive directors;
• The use of a Risk Committee to monitor, validate and report
on the Groupwide risk assessment process;
• Audit Committee discussion of the corporate risk register and
the risk management system with subsequent reports to the
Board; and
• The embedding of a senior management top-down approach
to complement the work of the Risk Committee.
More information on the Group’s key risks and uncertainties is
shown on pages 69 to 72.
Internal controls
The Board maintains overall responsibility for embedding key
controls within the Group. Together with the Audit Committee,
the Board reviewed the effectiveness of the Group’s risk
management and internal control systems in accordance with
the UK Governance Code for the year ended 31 December 2024,
and up to the date of approving the Annual Report and
financial statements.
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Longer term outlook and Viability Statement
The Directors have considered the prospects of the Group over
the four-year period immediately following the 2024 financial
year. This longer term assessment process supports the Board’s
statements on both viability, as set out below, and going concern,
as set out on page 99. A four-year period was determined as the
most appropriate as it is the remaining period covered by the
Group’s annual strategic planning process, which sets the long
term direction of the Group and is reviewed at least annually by
the Directors. The Board concluded that a period of longer than
four years would not be meaningful for the purpose of concluding
on longer term viability.
The strategic planning process considered metrics which enable
the assessment of the Group’s key performance indicators
(see pages 28 to 29), and in addition net debt, liquidity and
financing requirements. In conducting the review of the Group’s
prospects, the Directors assessed the four-year plan alongside
the Group’s current financial position, the Group’s strategy and
the principal risks facing the Group (all of which are detailed in
the Strategic Report on pages 2 to 73). This robust assessment
considered the impact of the principal risks on the business
model and on future performance, liquidity and solvency.
Stress tests were applied to the Group’s four-year plan, whereby
factors associated with the economic risks faced by the Group
were applied to the plan in a number of diverging scenarios.
The developed scenarios were designed to be plausible, yet severe:
• a 25% decrease in revenues in the Group’s larger US platform
businesses, reflecting the importance of US infrastructure
spend to the Group’s strategy
• a 10% reduction in revenues across our other operating
companies
In making this viability statement, the Directors considered the
mitigating actions that would be taken by the Group in the event
that the principal risks of the Company become realised. The
Directors also took into consideration the Group’s financial
position at 31 December 2024 with a borrowing facility headroom
of £265.4m and a history of strong cash generation, with cash
conversion averaging in excess of 80% over the last ten years.
The Directors noted that the Company’s core revolving credit
facility matures in November 2027, before the end of the
four-year assessment period. However, based on past experience
and normal market practice, the Directors have a reasonable
expectation that this facility will be renewed or renegotiated
before that date. The Directors also concluded that there would
be sufficient headroom in the Group’s existing facilities to repay
the $35m of Senior Unsecured Notes that are due to mature
in June 2026. Taking this information into account, the Directors
have assessed the viability of the Group and, based on the
procedures outlined above, in addition to activities undertaken
by the Board in its normal course of business, confirm that they
have a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due over
the period to 31 December 2028.
Fair, balanced and understandable financial reporting
The Board received a recommendation from the Audit
Committee that the Group’s position and prospects had been
assessed and reported on in the Annual Report in a way that
was fair, balanced and understandable. Prior to making the
recommendation to the Board, the Committee reviewed a report
received from the management responsible for the preparation
of the Annual Report detailing how the report had been compiled.
The Committee considered the information laid out in the Annual
Report and concluded:
• that the process by which the allocation of responsibility
for the preparation of certain sections of the Annual Report
to individuals in the central team and their review by external
advisors was fit for purpose
• that the information given represented the whole story of the
business’s performance in 2024 and did not mislead the reader
by excluding any negative aspects of performance, that the
disclosures of the Group’s business segments and key
messages are consistently delivered throughout the document,
and that KPIs are clear and appropriate and linked to both the
Group’s strategy and remuneration incentives
• that it was a suitable document to inform both existing and
prospective shareholders about the financial and non-financial
performance of the business, with the messages delivered in
the Directors’ Report, including the Operating and Financial
Review and the financial statements being balanced and
consistent, and that the report set out a detailed and fair
representation of the Group’s activities and performance,
and that certain matters have been identified and discussed
between management, the Audit Committee and EY in order
to correctly disclose the performance, controls and prospects
of the Group
• that the document allowed shareholders to follow the whole
story of the Group’s financial and non-financial performance
in 2024, giving them a clear and understandable picture of the
Group’s business model, key drivers and commercial operations
The respective responsibilities of the Directors and External
Auditor in connection with the financial statements are explained
in the Statement of Directors’ Responsibilities on page 126
and the Independent Auditor’s Report on pages 127 to 137.
2024 key points
• Continued strengthening of our cyber resilience
• Continued our roll out of standardised business continuity
planning process to our operating companies
• Evaluated our risk management tools and framework,
to ensure we are getting the most value from our reporting
• Considered our material controls in the light of the 2024
Corporate Governance Code
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2024 key points
• Continued with offering Restricted Stock Units to a wider
population than previous share-based awards, used as
a tool to motivate and retain key employees.
• Approved changes to management bonus metrics,
in order to better align with the Group’s key performance
metrics and strategy.
Remuneration
About our Remuneration Policy
The current Directors’ Remuneration Policy was last approved
by shareholders at the 2023 AGM and will be next presented
to shareholders for approval in 2026. The purpose of this policy
is to enable the Group to recruit and retain Directors of sufficient
calibre to develop and deliver our business strategy and create
shareholder value; to ensure remuneration arrangements are in
the best interests of the Group, in line with the wider workforce,
do not pay more than is appropriate, and does not reward failure.
More information on the Group’s current Remuneration Policy is
available in the summary policy table on pages 117 to 120 of the
Directors’ Remuneration Report.
The Directors’ Remuneration Report on pages 102 to 120 sets
out the remuneration of the Executive Directors for 2024.
Our Executive Director salary package
Our Executive Director pay arrangements are made up of three
fundamental elements as set out in the graphic below, comprising
salary, a short term cash bonus, and a longer three-year incentive
arrangement. This balance ensures the package adequately
reflects the need for long term decisions benefiting the business
and provides a level of short term remuneration to retain high
calibre individuals within the business.
Pay increases
The Remuneration Committee is acutely aware of the pressures
facing many employees. While each operating company sets
their own pay policy, the Committee continues to take into
consideration wider workforce pay increases when setting
increases for its Executive Directors and Executive Committee.
More information is available on page 103 of the Group’s
Remuneration Report.
Executive pay
Salary
Short term annual bonus, including
a 50% deferred bonus
Three-year long term incentive
arrangement
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I am pleased to present the Nomination Committee
report for the year ended 31 December 2024.
This report is intended to give an account of the
Committee and its activity. The Nomination
Committee continues to play a key role in the
stewardship of the Company.
Strengthening our Board
For the first part of the year, Tony Quinlan chaired this Committee
while I continued my role as Executive Chair. I would like to thank
Tony for undertaking this role. On the appointment of Rutger
Helbing on 19 September 2024, I reverted to Non-executive Chair
and resumed my duties as Chair of the Nomination Committee.
Chief Executive appointment
Following an extensive search, the Nomination Committee
recommended the appointment of Rutger Helbing, which the Board
subsequently approved, with effect from 19 September 2024.
Rutger’s appointment, together with the appointment in March
2024 of two new Group Presidents, allowed the Board to
re-define the split of executive responsibilities and the decision
was made not to continue with the role of Chief Operating Officer,
with the result that Hooman Caman Javvi stepped down from
the Group.
Other Director changes
The Board appointed Carol Chesney as a Non-executive director
on 1 January 2024. Carol replaced Mark Reckitt as Chair of the
Audit Committee following the 2024 AGM.
Following a relocation to the US, Leigh-Ann Russell informed
the Board that for work commitment and logistical reasons
she would need to stand down from the Board following the
publication of the 2024 results. I would very much like to thank
Leigh-Ann for her significant contribution over the last four years.
We will be looking to appoint a new Non-executive Director
to the Board ahead of the 2025 AGM.
Following the resignation of Hannah Nichols from the Board, as
previously announced, the Committee has appointed an external
party to undertake a search process for Hannah’s successor.
Both of the above searches are being undertaken by Russell
Reynolds who have no other links to the Group. Prior to
appointment of Russell Reynolds, the Committee had a full
discussion on the diversity requirements set out in the UK Listing
Rules, and gave specific instructions to Russell Reynolds to
present a diverse list of candidates for consideration. Further
information on these search processes can be found on
page 94.
Nomination Committee Report
Board skills matrix (as at 31 December 2024)
The Directors bring a broad range of experience and skills to support the Group’s growth strategy.
Public sector and government strategy
Digital and information technology strategy
and governance
Human resources
Sustainability
Sales, marketing and commercial
Engineering, product development
and design
Manufacturing and operations
Compliance oversight
Health & safety management and oversight
International business
Risk management and assurance
Investor relations
Mergers & Acquisitions
Strategic thinking
Financial expertise
Leadership and executive management
Alan Giddins
Chair
92
Diversity and inclusion
The Committee is committed to ensuring that the Board,
Executive Committee and senior management have a diverse
mix of skills, experience, knowledge and background.
In considering diversity, gender plays an important role but
the Board also takes into account social and ethnic background,
alongside other cognitive and personal strengths.
It is important for the long term health of the Group that new
appointments are made on merit to ensure that the best
candidate fitting the skill requirements is appointed. However,
as a Committee we believe in the value that diversity, in all
its forms, can bring to the decision making process.
The Group’s diversity statistics as required by the UK Listing
Rules are set out on page 87. We will continue to consider
diversity as a key consideration in future Board appointments.
Priorities for 2025
In our last report we outlined our priorities for 2024 which,
in addition to concluding the appointment of the CEO, included
reviewing the development plans for each member of the
Executive Committee. There have been significant changes to
the Executive Committee during the year, including the appointment
of two new Group Presidents (one each in the UK and US)
and the appointment of a new Group Company Secretary.
Our key priorities for 2025 are:
• Complete the appointments of a new CFO and a new
Non-executive Director
• Update the succession plan to include short term and
long term succession planning for Board and Executive
Committee roles
• Review succession planning at operating company level to
ensure the strength, breadth and diversity of the talent pipeline
• Continue the focus on senior level development needs.
The following report sets out in detail the work that we have
undertaken during the year under review.
Alan Giddins
Chair
11 March 2025
Main role and key responsibilities
The key areas of focus for the Committee are: to review
the structure, size and composition of the Board (taking into
consideration the outcome of the Board evaluation exercise)
and recommend to the Board any changes required; to plan
for succession, taking into account diversity of gender, social
and ethnic backgrounds, cognitive and personal strengths;
and to identify and nominate, for the approval of the Board,
candidates to fill vacancies as and when they arise.
The Committee is also responsible for making recommendations
to the Board concerning Board committees and the re-election
of Directors at the AGM.
Full details of responsibilities delegated to the Nomination
Committee by the Board are set out in the written terms
of reference which are available on the Company’s website.
Activities of the Nomination Committee
during the year
The Nomination Committee aims to spread matters delegated
to it by the Board across its meetings, so that all items are
considered during the financial year. The Committee confirms
that it has completed the items delegated to it during the year
under review. In addition to matters relating specifically to its
terms of reference, agendas incorporate matters arising and
topical items upon which the Nomination Committee has
chosen to focus.
The key activities of the Nomination Committee during the year
in discharging its principal areas of responsibility are shown
in the table on page 94.
Membership and attendance at meetings
The Nomination Committee was chaired by Tony Quinlan until
19 September 2024 when Alan Giddins reverted to his previous
position of Non-executive Chair and resumed the Chair of this
Committee. Appointments to the Nomination Committee are
made by the Board. Details of the members and their attendance
at meetings is set out on page 74.
This composition continues to meet the Code requirement
that the majority of the members are independent Non-executive
Directors and there is no executive presence in line with best
practice. Only members of the Nomination Committee are
entitled to be present at meetings but other Directors (including
the CEO), members of the Executive Committee and advisers
may be invited to attend at the discretion of the Chair. The Group
Company Secretary performs the role of Secretary to the
Committee. No Director is involved in any decisions regarding
their own continuation in office, re-appointment or re-election,
including the Chair.
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Appointment, skills
and succession
• Recommended the
appointment of Carol
Chesney
• Recommended the
appointment of a new
CEO
• Recommended that
Alan Giddins return to
be Non-executive Chair
• Performed a full review
of skills and experience
requirements by the
Board
• Appointment of COO
and reorganisation of
Executive
responsibilities later in
the year
• Commenced the
search for a new CFO
• Commenced the
search for a new
Non-executive Director
• Assessed the tenure of
Non-executive
Directors
Reporting
• Considered and
recommended to the
Board the Nomination
Committee Report for
inclusion in the Annual
Report and Accounts
Evaluation
• Reviewed the results of
the Committee
effectiveness
evaluation
• Reviewed the results of
the Board performance
evaluation as it relates
to size, diversity and
composition of the
Board
Governance
• Reviewed the structure
and composition of the
Board
• Reviewed and updated
the terms of reference
of the Committee
• Reviewed the time
commitment of the
Non-executive
Directors
• Agreed that the
Non-executive
Directors remain
independent
• Recommended the
re-election of all
Non-executive
Directors
• Reviewed the role
descriptions of the
Chair, CEO and Senior
Independent Director
• Considered and
approved the policy on
approving external
appointments
Nomination Committee activities
Board changes and appointment
The Committee has procedures in place for a formal, rigorous
and transparent process for Board appointments, ensuring that
appointments to the Board are made on merit, against objective
criteria, and promote diversity of gender, social and ethnic
backgrounds, cognitive and personal strengths.
The standard procedure in place for appointment to the roles
of Chair or Non-executive positions is set out below:
• Board vacancy is identified and the Committee meets to
confirm what additional skills and experience would support
the achievement of Group strategy, to inform a detailed brief
for the recruitment consultancy
• Appoint and brief an independent recruitment consultancy
to carry out a market appraisal. Search firms for Board and
senior roles are selected on the basis that they can put forward
a diverse list of candidates for consideraton
• Each candidate is considered on merit and against the
comprehensive candidate brief developed by the Committee
• Interviews and meetings are held with the Committee and
other Directors
• The Committee meets to debate and, if thought fit approve,
the candidate’s appointment
• The Board discusses and approves the appointment.
This process was used in the appointment of Carol Chesney
during the year and is being followed with the current Non-
executive Director and Chief Financial Officer searches.
With the consideration of the candidates for Executive positions,
over and above the process outlined, the Committee also
considered internal candidates to ensure that the best possible
candidate was appointed. Heidrick & Struggles, who had no
connection to the Company, undertook the search for the CEO.
The Company’s current Articles of Association provide that each
Director will retire from office and shall be eligible for re-election
at the third annual general meeting after the general meeting at
which he or she was appointed or last re-elected. Nevertheless,
in line with the Code, all Board members will stand for election
or re-election at the 2025 AGM.
All Non-executive Directors are appointed to the Board for an
initial three-year term which may be extended by two further
three-year terms, subject to ongoing performance and
independence evaluations. The letters of appointment for
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Nomination Committee Report continued
all Non-executive Directors (alongside the service contracts
of the Executive Directors) are available for inspection at the
Company’s registered office. Copies are also made available
at the Company’s Annual General Meeting for 15 minutes prior
to the meeting and throughout. The letters of appointment clearly
state the time commitment required by each Director and this
is reviewed annually.
Skills review
A full skills review against those required for the achievement
of Group strategy was undertaken during the year. The results
of that skills assessment are outlined on page 92. Generally skills
and experience on the Board were considered to be sufficient
and appropriate to support Group strategy, however, further skills
in IT/cyber and human resources would be of benefit.
Board induction
Upon joining, each new Director receives a tailored induction
programme relevant to their experience, expertise and committee
membership. In particular new Directors are actively encouraged
to visit Group operating companies to meet senior management
and other members of staff to aid their understanding of each
operating business and understand the matters our people are
dealing with on a daily basis.
An induction programme will typically include (but is not
limited to):
• Background information about Group strategy
• Briefings on directors’ duties and responsibilities, including
those relevant to a UK listed company
• Information on Board meetings, matters reserved for the Board
and terms of reference for Board committees and procedures
• Group policies
• Financial budgets
• Meetings with Executive Committee members; Head
of Internal Audit and Risk and other members of senior
management;
• Site visits to operating businesses;
• Meetings with the External Auditor, brokers and remuneration
consultants
Following Rutger Helbing’s appointment, the above programme
was followed with site visits to the Group’s US and UK businesses
and discussions with key people throughout the Group.
Retirement and re-election
Each Director has been subject to a performance evaluation
and the Committee has conducted its own annual review of the
appropriateness of the Directors’ skills and experience, their time
commitment to the Company, and their contribution to the Board
during the year. As part of this review, each Director confirmed
that they continue to allocate sufficient time to discharge
their responsibilities effectively, and the Committee evaluates
their ability to do so taking into consideration other external
commitments in addition to their individual performance
throughout the year, and their skills and experience set against
agreed strategy.
Following review, the Board, supported by the Nomination
Committee, is of the opinion that each Director putting
themselves forward for re-election, continues to make
an effective and valuable contribution and demonstrates
commitment to their role. It therefore recommends that
shareholders approve the resolutions to be proposed to
the forthcoming AGM relating to the re-election of Directors.
Advice
The Nomination Committee has access to such information
and advice as it deems necessary, either from within the
Company or externally at the Company’s expense. This may
include the appointment of external executive search consultants
or other expert advisors, where appropriate.
This report forms part of the Corporate Governance Report and
is signed on behalf of the Nomination Committee by:
Alan Giddins
Chair of the Nomination Committee
11 March 2025
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It is my pleasure to present my first report as Chair
of the Audit Committee. This report is intended to
give an account of the Committee and its activity.
The business model of Hill & Smith delegates substantial
authority to the business units, which enables an entrepreneurial
approach. Each operating company is responsible for ensuring
that it has an effective set of internal controls and control
environment, which places responsibility on its Managing
Director and Finance Director. The Group Financial Controls
Manual provides detailed guidance on the nature and frequency
of the internal controls required at each operating company.
This is supplemented by the Group Information Technology (‘IT’)
Controls Manual, which sets out the minimum level of IT controls
required at each operating company to ensure IT resilience and
cyber security. IT infrastructure and related controls remains a
key focus area for the Committee, resulting in the current
investment plan in IT and cyber security.
In January 2025, the Audit Committee approved an internal audit
plan for 2025, which included work to define the Group’s material
operational, reporting and compliance controls ahead of the
implementation of the UK Corporate Governance Code changes,
while continuing the primary work of monitoring our business
units’ compliance with our Group policies and controls.
The Risk Committee, as requested by the Audit Committee,
has continued to build upon the risk assessment methodology,
to build a clear picture of the risks being considered by the
operating companies and the actions to mitigate them, and
to facilitate discussions on risk appetite. More information
on the risk management process adopted by the Group can
be found on pages 66 to 68.
Following Ernst & Young LLP’s (‘EY’) audit of the Group’s financial
statements in relation to the year ended 31 December 2023, the
Committee met EY’s lead partner to assess improvements that
should be implemented for the 2024 audit. In July 2024,
we discussed and agreed the plan for their year end audit
procedures and agreed the fee in September 2024. The audit
of our 2024 financial statements is the fifth audit that EY have
conducted, and the Committee remains satisfied with their levels
of independence, objectivity and professional judgement and
the oversight they give to our financial statements.
“The Risk Committee, as requested by the
Audit Committee, has continued to build
upon the risk assessment methodology,
to build a clear picture of the risks facing
the Group and its operating companies.”
Audit Committee Report
This Audit Committee Report explains how the Committee
has discharged its responsibilities during 2024, and considers
the specific topics of:
• primary areas of judgement considered by the Committee
in relation to the 2024 financial statements
• internal controls
• risk assessment, management and mitigation
• assessment of effectiveness of external audit
I trust you will find this report a helpful insight into the activities
undertaken on your behalf. I should be delighted to answer any
questions you might have and hope to see you at our AGM
on 22 May 2025.
Carol Chesney
Chair
11 March 2025
2024
timeline
• Update on key matters relating to the
2023 audit
• Goodwill and intangible asset
impairment review
January
Carol Chesney
Chair
96
Committee membership and purpose
During the year, and to the date of this report, the Audit
Committee comprised:
Carol Chesney (appointed 1 January 2024)
Mark Reckitt (retired on 23 May 2024)
Pete Raby
Tony Quinlan
Leigh-Ann Russell
Farrokh Batliwala
Attendees at each of the meetings included, by invitation,
the Executive Chair/Chief Executive Officer; the Chief Financial
Officer; the Group Financial Controller; the Group Head of Risk
& Internal Audit; the external auditor, EY; and, where appropriate,
other advisors. Time is also allowed for the Committee to speak
with the external auditor and the Group Head of Risk & Internal
Audit without the presence of the executive management.
The overall purpose of the Audit Committee is one of oversight
and monitoring of the entire financial reporting and control
process, to ensure the integrity of the Group’s financial
statements and assurance over them. The Committee fulfils
this remit by undertaking the following roles and responsibilities:
• monitoring the integrity of the financial statements of the
Company and reviewing significant financial reporting
judgements contained in them
• reviewing areas of the financial statements that require
particular judgement
• providing advice (where requested by the Board) as to whether
the Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary
for shareholders to assess the Company’s financial position,
performance, business model and strategy
• reviewing the Company’s internal financial controls, internal
control, and risk management systems
• monitoring and reviewing the effectiveness of the Company’s
approving the Internal Audit Charter and annual audit plan
• reviewing outputs from the Group’s risk management process,
ensuring that operating companies are correctly identifying,
articulating and measuring their risks, and mitigating controls
• making recommendations to the Board about the appointment,
re-appointment and removal of the external auditor, and
approving the remuneration and terms of engagement of the
external auditor
• reviewing and monitoring the external auditor’s independence
and objectivity
• reviewing the effectiveness of the external audit process,
taking into consideration relevant UK professional and
regulatory requirements
• developing and implementing policy on the engagement
of the external auditor to supply non-audit services, ensuring
there is prior approval of non-audit services and considering
the impact this may have on independence
• reporting to the Board on how it has discharged its responsibilities
Governance
Carol Chesney, Committee Chair, is specifically identified as
the Committee member having recent and relevant financial
experience, thereby complying with provision 23 of the UK
Corporate Governance Code 2018 (‘the Code’).
Carol is a qualified Chartered Accountant and previously held the
position of Company Secretary, and prior to that, Group Financial
Controller of Halma plc from 1995 to 2018. She is a Non-
executive Director and Chair of the Audit Committees of Hunting
plc, IQE plc, and Imagination Technologies Group Limited.
During the year, the Chair of the Audit Committee has maintained
regular contact with the external audit partner at EY as well
as the Group Head of Risk & Internal Audit outside Committee
meetings and without the management of the business present.
In these meetings, a wide range of matters are discussed,
including specific issues encountered in their work across the
Group as well as changes in financial reporting and governance
landscape, the Company’s readiness to accommodate these
developments, and our approach to managing risk and
assurance generally.
During the year, the Committee met on four occasions according
to the requirements of the Company’s financial calendar,
covering the agenda items, set out below.
March
July
September
• Key risks and judgements relating to
the 2023 financial statements
• Report from external auditor on the
financial statements for the year
ended 31 December 2023
• Financial statements and Annual
Report for year ended 31 December
2023, including the statements on
going concern, viability, and fair,
balanced and understandable
• Internal audit update
• Group risk and principal risks review
• Review of the 2023 TCFD disclosure
• Key issues and judgements relating
to the Interim Results
• Interim results for the six months
ended 30 June 2024
• Internal audit update
• Summary of findings from balance
sheet reviews
• External auditor planning report
• External auditor quality and
independence assessment
• External auditor update and
confirmation of 2024 fee
• Internal audit update
• Group risk and principal risks
review
• Private meetings with the
external auditor and the Head
of Risk & Internal Audit
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Primary areas of judgement considered by the
Committee in relation to the 2024 accounts
To discharge its responsibility to consider accounting and
financial reporting integrity, the Committee carefully considers
key judgements applied in the preparation of the consolidated
financial statements, which are set out on pages 138 to 197.
The Committee’s review included consideration of the following
key accounting judgements:
Valuation of goodwill and indefinite life assets
The value of goodwill and indefinite life assets amounted to
£152.6m at 31 December 2024. The review of such assets
is based on a calculation of value in use, using cash flow
projections based on financial budgets and strategic plans
prepared by senior management and approved by the Board.
The economic conditions experienced in the UK and the US
are reflected in the assessment of the future performance
of businesses across the Group. The Committee reviews and
challenges the half-yearly and annual impairment testing carried
out on the carrying value of goodwill and other intangible assets
across the relevant cash generating units. Business plans, which
are signed off by the Board, are reviewed and challenged as part
of the audit by the external auditor, EY, which then reports to the
Committee on this work. As part of this review, the Committee
considered the assessments made in respect of Hill & Smith Inc.
and Prolectric.
Hill & Smith Inc.
Hill & Smith Inc.’s performance between 2022 and 2024 has
been subdued and impacted by operational challenges and
consequent improvement costs. The operational challenges have
related primarily to the trailer-mounted message board division,
operating out of the Garland, Texas facility. While demand across
the rest of the product portfolio gradually improved in 2024 and
the operational challenges were largely addressed, demand for
message boards saw further weakening driven by market
competition and some supply chain constraints. The combination
of ongoing difficulties in the message board division and a slower
recovery elsewhere led management and the Board to reassess
the business’s future prospects, which in addition to reflecting a
significantly more muted outlook for message boards, concluded
that the pace of growth across certain other elements of the
product range was likely to be slower than previously anticipated.
Consequently the impairment review based on this revised
assessment concluded that a full impairment of the acquisition
goodwill of £8.6m and of the remaining acquisition intangible
assets of £2.0m was appropriate. After reviewing management’s
forecasts for future performance, focussing on the reasons for
the changes in outlook on each of the business’s product lines,
and challenging the assumptions adopted, the Committee agreed
with management’s conclusions.
Prolectric
Following a strong performance in our UK off-grid solar energy
business in 2022, Prolectric’s results in 2023 and 2024 were
impacted by a downturn in the UK construction market leading
to lower revenues and profitability, and the impact of a historical
product installation issue on operations. Management’s
projections assume that medium term revenue growth will
be above long-term averages due to a combination of a recovery
in UK construction, the favourable resolution of the product
installation issue, a shift in Prolectric’s focus towards the more
resilient facilities management sector, and tailwinds from
corporate sustainability initiatives. The resulting impairment
calculations indicated headroom of £4.4m (2022: £15.6m),
the reduction reflecting a more conservative view on the pace
of recovery given UK economic conditions. The Committee
challenged management on the basis for their projections and
on the rates of recovery assumed in Prolectric’s key end markets.
In conclusion, the Committee concurred with management’s view
that no impairment was required. The Committee agreed with
management, however, that it was plausible that projected
revenue growth rates may not be achieved and that the
calculations were also sensitive to the assumed gross margins.
The Committee studied the sensitivities to the revenue and
margin forecasts that management had prepared, together with
the disclosure of those sensitivities in the financial statements,
concluding that they were appropriate.
The disclosures made in respect of the sensitivities around
impairment calculations can be found in note 12 to the financial
statements on pages 163 to 173.
Defined benefit pension scheme valuation
Net defined benefit pension obligations under IAS 19 amounted
to £0.8m at 31 December 2024. The Committee reviews
benchmarks and assumptions that are provided by the Group’s
actuaries and used to value the pension liabilities for the Group’s
defined benefit schemes. The underlying assumptions based
on market conditions and the characteristics of the schemes are
reviewed by management and the external auditor and reported
to the Committee.
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Audit Committee Report continued
Taxation
The Group makes judgements in relation to uncertain tax
positions, regarding the outcome of negotiations with and
enquiries from HM Revenue & Customs and other tax authorities
in other jurisdictions. Judgements have been made by management
following discussion with the Group’s tax advisors and internal
review. The Committee has reviewed the analysis behind these
judgements and confirms its agreement that the Group’s tax
provisions are appropriate.
Other areas of judgement
While not considered to be primary areas of judgement, the
Committee’s discussions in relation to the 2024 accounts also
included the following:
• Given the relatively significant value of non-underlying items
in 2024, the Committee challenged management on the
presentation of those items. The discussion focused largely
on losses incurred on impairment charges and the losses on
remeasurement of assets held for sale at the end of the year.
The Committee concurred with management’s view.
• Following the acquisitions of Capital Steel, FM Stainless,
Trident Industries and Whitlow Electric during the year,
the Committee challenged management on the acquisition
accounting, focusing on the appropriateness of fair value
adjustments and the approach taken to valuation of acquisition
intangibles. The Committee concurred with management’s
approach, noting the work of independent valuations experts
in relation to the purchase price allocation under IFRS 3.
Going concern
The Committee advises the Board on whether it believes
it appropriate to adopt the going concern principle in preparing
the Group’s financial statements. In making this assessment,
the Committee received and reviewed management forecasts
for the Group’s future cash flow performance, challenging
the assumptions on which those forecasts are based. In 2024,
the Committee received forecasts based on various scenarios
and considered what would be required for the Group to breach
its borrowing covenants or extinguish its borrowing facilities
in the next 18 months, following the balance sheet date.
Following a robust assessment of the forecasts, the Committee
concluded that adoption of the going concern principle was
appropriate for both the half year and full year results. The
Committee also reviewed and approved the going concern
disclosures that are included in the financial statements.
Internal audit
Internal audit function
The internal audit function is overseen by the Group Head of Risk
& Internal Audit. The Audit Committee annually reviews and
approves the Internal Audit Charter that sets out:
• The function’s purpose: to evaluate the effectiveness of
internal controls, risk management and governance processes
independently and objectively; and
• How the function will discharge its responsibility, primarily
by preparing and executing a risk-based audit plan, identifying
opportunities to improve internal control, risk management
and governance processes, and by verifying that
improvements agreed with management are implemented
within a reasonable timeframe.
In accordance with the Internal Audit Charter, the Audit
Committee and executive management ensure that the internal
audit function has free and unrestricted access to the Group’s
records, physical properties, and personnel pertinent to
conducting its activities and remains free from inappropriate
management influence or other restrictions on its ability
to perform its work in an objective and effective manner.
Internal control
The Audit Committee is responsible for ensuring that the Group’s
system of internal control is embedded within all operating
companies. The Committee monitors the adequacy and
effectiveness of the Group’s internal control processes through
review and discussion of:
• The proposed internal audit plan, ensuring that it is aligned
to the Principal Risks of the business, adjusted to respond
to unexpected events, and receives regular progress updates
on the delivery of the objectives of the plan;
• The 18 internal audit reports and associated findings
presented throughout the year, together with the progress
made by management in addressing the issues identified
on a timely basis;
• Executive management reports and presentations, including
updates on specific areas provided at the request of the
Committee;
• Accounting judgements, including the carrying value of
goodwill and intangible assets of Hill & Smith Inc. and
Prolectric;
• External audit reports, including the results of early audit
procedures and the audit findings in relation to the year
end audit.
The 2024 Internal Audit Plan balanced the focus of the function
between Groupwide Principal Risks and operating company level
risks. It included a Groupwide thematic review of inventory
management, which concluded that there was room for
improvement in the maturity of inventory management across
the Group. While several planned ERP implementations across
the Group will help address this, it is crucial that there is sufficient
training and management buy-in, to ensure the full capabilities
of the enhanced systems are utilised.
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Operating company level reviews, focusing on baseline internal
controls, were conducted during the year (14 in relation
to financial controls and three in relation to IT controls).
Where internal audit work found instances of control weakness,
or non-compliance with Group Policy, the findings were
discussed by the Audit Committee. Such control weaknesses
are taken seriously by management and the Audit Committee
seeks to ensure that their cause is understood, and mitigating
actions are taken to limit the potential for recurrence. Plans
are discussed and timelines agreed with the relevant businesses,
and these are monitored by the Internal Audit function to ensure
compliance. Where operating companies fail to implement
such corrective actions within a reasonable period as agreed,
the Audit Committee is informed and further escalation
measures are taken.
During the year, the Audit Committee challenged management
on the gap between the self-assessment of financial controls
compliance that operating companies complete and that
of Internal Audit validated financial controls compliance.
For 2025, there will be enhanced scrutiny of the self-assessments
completed by operating companies and revised guidance will
be issued on how to complete them.
The decentralised business model of Hill & Smith means
that it is considered unlikely that a weakness at an individual
operating company would have a material impact when
taken in the context of the Group as a whole.
Effectiveness of internal audit
The Audit Committee is responsible for monitoring and reviewing
the effectiveness of the Group’s internal audit function.
As noted above, the Audit Committee reviewed and approved
the risk-based audit plan and monitored progress with its
completion. Changes to the plan arising in the year, including
the completion of additional work, were discussed and approved
by the Audit Committee.
Throughout the year, the Audit Committee discussed the internal
audit function’s outputs with the Group Head of Risk & Internal
Audit and executive management. The Audit Committee was
satisfied that the internal audit function is operating effectively
and that the level of experience within the department was
appropriate to meet the Group’s needs during the year.
Risk management
The risk management process is continually kept under review
to ensure that outcomes from the operating companies’ risk
submissions provide the necessary information for the Audit
Committee to conduct a robust assessment of the risks affecting
the Group as a whole. A risk management and reporting template
provides the Committee with more information on how operating
companies perceive their risks and how they relate to the Group’s
Principal Risks. Through this process, operating company
management are continually monitored and supported to ensure
their risk mitigations are suitable to meet the Board’s appetite
for the risks identified.
Risk management process
Every year, the Committee seeks to improve the Group’s risk
management processes to ensure that the Group’s principal risks
and uncertainties are correctly identified by virtue of a top-down/
bottom-up approach using the experiences of the Audit
Committee and the Group’s operating companies. In this, the
Audit Committee is supported by the Group’s Risk Committee,
whose membership can be found on page 68.
The Risk Committee oversees the risk management process,
which is one of continual improvement. The risk management
and reporting template was developed during the year, supported
by a programme of training that was delivered to all management
teams across the Group via online webinars and user guides.
The Risk Committee reviews, discusses and validates the risk
submission data received from the operating companies in
addition to the corporate level risk register. The Audit Committee
has received reports from the Risk Committee, detailing the
Groupwide risk assessment process, the movements in major
risks, and updates on operating companies’ risk mitigation
activity, together with their attitude to risk as measured
by a ‘target’ risk score. The Committee uses this information
to determine the risk appetite within the Group’s operating
companies and help inform the Board’s overall risk appetite.
During 2024, the Committee directed that particular attention
be paid to the Health and Safety and IT Security principal risks.
The Committee noted that the prevention of harm or injury
to employees was a major area of focus across the Group and
that it was a regular topic of discussion within the Executive
Committee as well as the Board itself.
During the year, the Committee received updates regarding IT
resilience and cyber security from the Group IT Director and the
Chief Information Security Officer. Regular updates on operating
company compliance with the Group IT Controls Manual were
provided by Internal Audit.
More information on the activities of the Risk Committee and
the Group’s Principal Risks can be found on pages 66 to 72.
TCFD
The TCFD (Taskforce on Climate-related Financial Disclosures)
recommendations, published in 2017, encourage companies
to disclose information on their financial risks and opportunities
arising from climate change, and how these are being managed.
In 2021, the Group engaged PwC to perform analysis to enable
a better understanding of our climate-related risks, by identifying
transitional and physical risks and opportunities in future climate
scenarios. In 2022, 2023, and 2024, PwC were further engaged to
perform assessments of the physical risks for operational sites
acquired in those years. The results from PwC’s ongoing work
were reviewed at the March 2025 Audit Committee, following
which the Committee approved the 2024 disclosures relating
to TCFD, which can be found in the Group’s Sustainability Report
on pages 46 to 65.
100
Audit Committee Report continued
Whistleblowing
The Group has a written policy, which states that if any employee
in the Group has reasonable grounds to believe that the Group’s
Code of Business Conduct is being breached by any person or
group of people, they are able to report such incidents through
an externally hosted internet reporting system and/or a telephone-
based whistleblowing hotline or, if necessary, to the Group
Company Secretary or a Group President or the Chair of the
Audit Committee. This policy can be found on the Group website.
Any incidents reported, whether through the whistleblowing
hotline or direct to the Group Company Secretary or any other
member of Group-level management, are investigated under
the supervision of the Group Company Secretary and resolved
appropriately. Reports raised by the Group Company Secretary
on these cases, on the investigative process, the conclusions,
and any lessons to be learned from these events, are shared
with the Board.
Assessment of effectiveness of external audit
There are several areas that the Committee considers in relation
to the external auditor: performance in discharging the audit
of the financial statements; independence and objectivity;
and reappointment and remuneration.
External auditor performance
The external auditor, EY, provided the Committee with their plan
for undertaking the 2024 audit during the Committee meeting
in July 2024. This highlighted the proposed approach and scope
of the audit and identified the key issues in detail, being the
valuation of goodwill in relation to Hill & Smith Inc. and Prolectric;
the risk of fraud in revenue recognition; inventory valuation and
pension assumptions and valuation. The Committee debated,
and appropriately challenged the basis for these areas before
agreeing the proposed approach and scope of the external audit.
As events evolved through the year, the audit risks have,
accordingly, been revisited by EY.
The external auditor prepared a detailed report of its findings
in respect of the 2024 audit. The Committee discussed the
issues raised in the report, particularly in relation to the areas
highlighted, at their meeting in March 2025. The Committee
questioned and challenged the work undertaken, the findings
and the key assumptions made, with particular attention
to the areas of audit risk identified.
Auditor independence and rotation
The external auditor confirmed its policies on ensuring auditor
independence and provided the Committee with a report on their
own audit and quality procedures. This report was considered
during the period under review and the Committee was satisfied
of the auditor’s independence. To help maintain auditor
independence, the Group has a policy whereby, before any former
employee of the external auditor may be employed by the Group,
careful consideration is given to whether the independence
of the auditor will be adversely affected, and approval of the
Audit Committee is required. There were no such instances
during the year.
EY were appointed as the Group’s auditors in June 2020,
and they have confirmed to us that, as the partner in charge,
Helen McLeod-Jones will be the lead partner up to and including
the audit for 2024 before being compelled to rotate off the audit
to ensure continued independence.
Audit and non-audit fees
At the October 2024 meeting, the Committee discussed and
approved the proposed audit fee for 2024. The Committee noted
that the c.25% increase in the fee reflected scope increases due
to the four acquisitions made during the year, the inflationary
cost pressures across the professional services industry, revised
auditing standards, and increased technology costs, partly
offset by efficiencies and other changes in the Group’s portfolio.
The Committee maintained the approach of minimising
the non-audit work carried out by the external auditor.
The Committee’s Non-audit Services Policy meets the detailed
requirements of audit legislation, which restricts the use of the
external auditor for activities including compiling accounting
records, certain aspects of Internal Audit, IT consultancy,
tax services except in exceptional circumstances, and advice
to the Remuneration Committee.
For any non-audit/additional services set out in section
5.40 of the FRC’s ethical standard 2019, the policy provides
for approval by the Audit Committee. A report is submitted
to the Audit Committee of any non-audit services carried out
by the external auditor, irrespective of value, to ensure that
the aggregated spend with the external auditor will not exceed
70% of the audit fee.
During 2024, no fees were paid to the auditor for non-audit
services relating to other assurance services (2023: £13,000).
In 2024, non-audit fees represented 0% of audit fees of £2.0m
(2023: 0.8%). Further details of these amounts are included
in note 8 of the financial statements on page 160.
Carol Chesney
Chair of the Audit Committee
11 March 2025
Hill & Smith PLC | Annual Report and Accounts 2024
101
Strategic Report
Governance
Financials
Shareholder Info
Our Remuneration policy is designed to incentivise
the achievement of stretching objectives while
supporting our values and long term strategic goals.
As Chair of the Remuneration Committee and on behalf of the
Board, I am pleased to share with you our report on Directors’
remuneration for the year ended 31 December 2024. The Annual
Report on Remuneration (pages 105 to 116) describes how the
Remuneration Policy (the ‘Policy’) has been applied during the
year and how we intend to implement our Policy for 2025.
I would like to thank those shareholders who provided feedback
on remuneration matters ahead of our 2024 AGM. I was pleased
that our Directors’ Remuneration Report received 98.7%
shareholder support, reflecting the ongoing support from
shareholders of our approach to remuneration.
Business context
In 2024, the Group has again delivered a record set of results.
Our large US platform businesses have demonstrated excellent
results as they continue to benefit from strong demand
for infrastructure products and solutions. Our UK businesses
demonstrated resilience against a more challenging
market backdrop.
The Group is reporting revenue of £855.1m and underlying
operating profit of £143.5m. Underlying operating margin
continued to increase at 16.8% with underlying earnings
per share showing a 16% increase to 122.6p per share.
In addition to delivering excellent financial performance, 2024 has
continued the progress of improving the quality of our portfolio
of businesses. Four acquisitions have been made during the year,
each value enhancing and increasing our exposure to lucrative
US geographies and utility markets. Additionally, we commenced
the process to divest two of the Group’s non-core Roads &
Security businesses, both of which completed in Q1 2025.
Leadership changes
On 19 September 2024, the Board was pleased to announce that
Rutger Helbing would join the Board as Chief Executive Officer
with immediate effect. This allowed Alan Giddins, who had been
Executive Chair since July 2022, to step back from his executive
role and revert to his previous position of Non-executive Chair.
Mr Helbing was appointed on a base salary of £670,000,
positioning him at the market median base salary level for a FTSE
250 company. Given the calibre and experience of the individual,
and the fact that Hill & Smith is an international business ranked
in the top half of the FTSE 250, the Committee was comfortable
that setting his salary at this level was appropriate.
For 2024, Mr Helbing was eligible to receive a pro-rated bonus
based on an annual maximum of up to 150% of salary, and in line
with the Policy he will receive a maximum LTIP of 175% of salary
for 2025. On joining, as agreed in connection with his appointment,
Mr Helbing was granted a pro-rata 2014 LTIP award at 75%
of salary to provide immediate alignment with the Company's
medium to long term objectives.
In respect of his role as Non-executive Chair, Mr Giddins’ fee level
on reverting back to the role, was set at £320,000. Whilst this fee
level is positioned around the upper quartile of FTSE 250 Chair
roles, the Committee considered it appropriate, mindful of the
size, complexity and international reach of Hill & Smith, and the
expected time commitment of the role.
With the appointment of a new CEO, the Board also undertook
a review of responsibilities amongst our senior executives.
As a result of this, the role of Chief Operating Officer, undertaken
by Hooman Caman Javvi, was made redundant, and Mr Caman
Javvi stepped down from the Board on 19 September 2024.
Full details of the leaver arrangements for Mr Caman Javvi can
be found later in this report.
The Board also announced on 7 January 2025, that our Chief
Financial Officer, Hannah Nichols, had decided to leave the
business. She will leave the Group at the end of March 2025
after the publication of the full year results. Her remuneration
arrangements on cessation of employment will be treated
consistently with the Directors’ Remuneration Policy and
a summary has been included later in this report.
Remuneration Committee Report
Tony Quinlan
Chair
102
2024 remuneration outcomes
Workforce remuneration
The Committee remains cognisant of the ongoing scrutiny
in relation to executive remuneration and the need to ensure
that remuneration outcomes are appropriate within the context
of the wider stakeholder experience.
In 2024, the Group set salary increase budgets at between
2% and 10%, depending on country and local circumstances.
We continued to focus on measures within our operating
companies that enable a good standard of living, targeted salary
adjustments, financial education, and voucher programmes.
Annual bonus outcomes
For 2024, having been in employment for the full financial year
and remaining in employment to the payment date, the CFO
was entitled to receive a full year annual bonus. Our CEO and
COO were both entitled to pro-rated bonus payments based
on time in employment. The 2024 annual bonus was based on
financial measures (80% weighting) and personal objectives
(20% weighting). Aligned to the strong financial performance
delivered during 2024, the formulaic outcome from the financial
targets was 82.1% of maximum.
The Committee determined that this formulaic outcome
represents a fair reflection of the financial and strategic
performance of the business during the year, and agreed that
no discretion should be applied to adjust it.
Details of the outturns against individual financial performance
measures and personal objectives are set out on pages 107 and
108. In line with the Policy, half of the bonuses earned by the CEO
and CFO will be deferred into shares for two years, to ensure long
term alignment with the interests of shareholders. The annual
bonus for Hooman Caman Javvi, having had regard to past
practice for employees made redundant, and in recognition that
Hooman Caman Javvi's bonus at the commencement of the year
was set to reflect non-PLC Director terms and his tenure was
limited as a PLC Director due to his redundancy, will be paid
100% in cash in line with contractual commitments.
As set out in the 2022 and 2023 Remuneration Report,
our Executive Chair Alan Giddins has not participated in any
variable remuneration arrangements since his appointment.
The Remuneration Committee, taking external legal and
governance advice and in consultation with Alan, felt this best
preserved the independence of the position, allowing him
to revert to his role as Non-executive Chair.
“The Committee is satisfied that the
Remuneration Policy has operated
as intended.”
Shareholder support for 2024 Remuneration Report:
98.7%
approval
CEO salary increase for 2025:
2%
2024 annual bonus max for CEO:
150%
of salary (prorated for time in office)
2025 Executive Committee salary increase range:
2% to 4%
Maximum bonus for new CFO in 2025:
125%
of salary
Non-executive Director 2025 base fee increase:
3.5%
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Financials
Shareholder Info
Long term incentive outcomes
With regard to our long term performance, our 2022 long term
incentive award is eligible to vest based on performance from
1 January 2022 to 31 December 2024. The portion of this award
vesting was determined based on performance against
Underlying Earnings Per Share (‘UEPS’) and Relative Total
Shareholder Return (‘TSR’) targets.
In relation to TSR performance, the Company was measured
against the FTSE 250, excluding financial services companies
and investment trusts, and ranked 26 out of 129 companies. The
UEPS, at 31 December 2024 was 122.6p, with the overall financial
performance for the full year being strong. The application of the
performance conditions supports full vesting of the LTIP.
Considering the financial performance of the Company and
taking into account the disposals and acquisitions made in the
three-year performance period and the progress against
non-financial metrics achieved during the performance period,
the Committee is comfortable that the formulaic outturn of the
2022 long term incentive is appropriate. As such the Committee
agreed that no discretion should be applied to adjust the
formulaic outcome.
The Committee is satisfied that the Remuneration Policy has
operated as intended, and in reaching this conclusion took into
account overall Company performance and other information,
such as internal pay ratios and shareholder feedback.
Employee and shareholder engagement
Our Board members visited a number of operating companies
in both the US and UK during the year and solicited feedback
on a broad range of topics that included remuneration,
operational performance and structure, and how our structures
align with strategy. We additionally ran a full and anonymised
employee survey. These mechanisms enabled the Board to
better understand the views of our employees, which then inform
Board discussions.
Additionally, the CEO and CFO regularly attend our workforce
employee forums. A discussion was held on executive remuneration
and how executive pay decisions are made, in addition to how
executive remuneration links to wider workforce remuneration.
As outlined more fully on page 82, the Chair of the Remuneration
Committee and the Group Company Secretary make themselves
available to discuss with investors any aspect of Remuneration
that they wish to discuss. Additionally, the Chair of the Remuneration
Committee makes himself available at the Company’s AGM
to discuss matters of remuneration with the Company’s
shareholders. The Company also engages with each of the proxy
agencies prior to the AGM.
Looking forward to 2025
Base salary
The base salary of the current CFO will remain unchanged for
2025, while the salary of the CEO will be increased by 2% to
£683,400 effective 1 January 2025. This compares to an average
budgeted salary increase for the workforce in our UK operating
companies of 2.6%.
Variable remuneration
The annual bonus and long term incentive arrangements for
2025 will be aligned to the Policy with the maximum opportunity
being 150% and 175% of salary respectively for the CEO
and following the appointment of a new CFO, 125% and 150%
of salary respectively. The current CFO will not be entitled
to participate in the 2025 annual bonus or receive a 2025 LTIP.
Performance measures for the annual bonus are unchanged from
2024 and will be subject to challenging underlying operating profit
(60%), cash conversion (20%) and non-financial (20%) targets.
The long term incentive will continue to operate with challenging
UEPS (50%), relative TSR (40%) and, for the first time, greenhouse
gas emissions (10%) targets to align with our adoption of
science-based carbon reduction targets.
Non-executive Director fees
The Non-executive Director base fee has been increased
to £60,000 (3.5% increase) with additional fees being increased
by 10% with effect from January 2025. When considering these
increases the Board took into account the time requirement
each Director was expected to give and wider market context.
See page 116 for more details.
Conclusion
The Committee recognises the excellent performance that
has been delivered during 2024 and believes that remuneration
outcomes fairly reflect this performance.
2025 will mark the final year of our current three-year Policy
cycle, with a new Policy being presented to shareholders
for approval at the 2026 AGM. The Committee has already
commenced work to review the existing Policy and identify
any potential changes. We look forward to engaging with
shareholders ahead of the 2026 AGM to set out any
proposed changes.
We hope that having read this report you will be able to vote in
support of the resolution for the Annual Report on Remuneration
at our 2025 AGM.
Tony Quinlan
Chair
11 March 2025
104
Remuneration Committee Report continued
Directors’ annual remuneration report
During the year to 31 December 2024, the Remuneration
Committee consisted of Tony Quinlan (Chair), Farrokh Batliwala,
Carol Chesney, Pete Raby, Leigh-Ann Russell and Mark Reckitt
(until he retired from the Board on 23 May 2024). Alan Giddins
joined the Committee on 19 September 2024 when he reverted
to his role of Chair.
During the year, the Committee considered the following:
Underlying Operating Profit1
£144.0m Actual
£137.4m Target
1. at budgeted exchange rates
Hannah Nichols:
81.7%
of maximum opportunity
Rutger Helbing:
82.6%
of maximum opportunity
Underlying Cash Conversion1
99% Actual
85% Target
1. at budgeted exchange rates
Reward linked to performance
Total annual bonus plan – outcome, including
achievement of personal objectives
January to March
• Determination of variable pay outturns for the 2023
bonus and 2021 LTIP as reported in last year’s
Directors’ Remuneration Report
• Confirmation of the Executive Directors’ annual
bonus targets and objectives for 2024
• Approval of LTIP 2024 award
• Consideration of the Group’s Gender Pay statement
April to August
• Approval of SAYE 2024 award
September to December
• Consideration and approval of the remuneration
arrangements for our new CEO
• Consideration of the leaving arrangements for the COO
• 2025 salary review for Executive Directors and
members of the Group’s Executive Committee,
having considered the range of increases applied
to the wider workforce
• Executive Directors’ bonus plan for 2025
• Consideration of market update as provided by the
Committee’s adviser
• Consideration of metrics to be used in Executive
Directors’ short and long term incentive plans
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Shareholder Info
Remuneration at a glance
To incentivise our employees to achieve our strategy, we provide market competitive remuneration which is aligned with our
shareholders’ experience.
Remuneration Policy and structure summary
Element
Purpose/structure
Operation for 2025
Base salary
and benefits
Enables the Group to recruit and retain Executive
Directors
CEO — £683,400 (2% increase)
CFO — £405,000 (no increase)1
Pension
To provide post-retirement benefits for Executive
Directors
CEO — 6.5% of salary
CFO — 6.5% of salary1
Annual bonus
To incentivise the achievement of short term
Group targets
Performance measures and targets are reviewed and
set annually by the Remuneration Committee. At least
50% of bonus will be based on financial measures
50% of any bonus is deferred into shares for two years
2025 performance measures:
Underlying operating profit (60%), underlying cash
conversion (20%), and individual personal objectives,
including health and safety and sustainability (20%)
Maximum opportunity:
CEO 150% of salary
CFO 125% of salary1
LTIP
To incentivise the achievement of longer term
Group targets
Three-year performance period, with a further two-year
holding period
2025 performance measures:
Relative TSR (40%), growth in UEPS (50%) and
greenhouse gas emissions reduction (10%) targets
Grant size:
CEO — 175% of salary
CFO – 150% of salary1
Shareholding
guidelines
To encourage shareholder alignment both during and
after employment
200% shareholding for Executive Directors during
employment and for two years after employment ends
1. The current CFO has no entitlement to a 2025 annual bonus payment or a 2025 award under the LTIP.
More details can be found on pages 107 to 110
Financial performance
Alignment with shareholders
Alignment with the wider workforce
£143.5m
Underlying operating profit
50%
Proportion of annual bonus received in shares
CEO: 2%
CFO: 0%
Salary increase for Executive Directors
16.8%
Underlying operating
profit margin
200%
Shareholding guideline (% of salary)
2% – 10%
Salary increase budgets for the wider workforce
99%
Underlying cash conversion
100%
LTIP awards subject to a mandatory two-year
holding period
6.5%
Pension contributions (or payment in lieu)
for Executive Directors
£39.4m
Dividends paid to shareholders
211
of our people with an interest in long term
share awards
6.5%
Company contribution available for UK employees
More details can be found on pages 117 to 120
106
Remuneration Committee Report continued
Implementation of the Remuneration Policy during 2024
Single remuneration figure
Year
Base salary/
fees1
Taxable
benefits2
Pension3
Total fixed pay
Annual bonus4
LTIP5
Total variable
pay
Total ‘Single
Figure’
Rutger Helbing6
2024
188,115
11,755
12,228
212,098
235,898
—
235,898
447,996
2023
—
—
—
—
—
—
—
—
Hannah Nichols
2024
405,000
13,045
26,325
444,370
413,682
686,532
1,100,214
1,544,584
2023
374,523
12,822
24,344
411,689
447,086
548,474
995,560
1,407,249
Alan Giddins6
2024
512,500
—
—
512,500
—
—
—
512,500
2023
584,554
—
—
584,554
—
—
—
584,554
Hooman Caman Javvi6, 7
2024
374,578
12,726
24,871
412,175
219,426
348,379
567,805
979,980
2023
—
—
—
—
—
—
—
—
Totals
2024
1,480,193
37,526
63,424
1,581,143
869,006
1,034,911
1,903,917
3,485,060
2023
959,077
12,822
24,344
996,243
447,086
548,474
995,560
1,991,803
1. The amount of base salary received in the year.
2. The taxable value of benefits received in the year: Membership of the Company’s healthcare scheme, income protection scheme, personal accident insurance,
car (or cash allowance), ill health and life assurance. A total of £7,225.21 was paid to Rutger Helbing in lieu of subsistence, which is subject to PAYE and NIC
deductions.
3. Pension was provided as a cash allowance paid in lieu of pension at 6.5% base salary.
4. Annual bonus is the value of the bonus earned in respect of the financial period under review, including the amount deferred into shares. A description of how
the bonus pay out was determined can be found on pages 107 to 108.
5. Represents the value of shares vested under the rules of the Hill & Smith LTIP, in respect of the performance period ended 31 December 2024. A description
of the basis on which awards vested and the value can be found on page 108.
6. The amounts paid to Rutger Helbing, Alan Giddins and Hooman Caman Javvi represent the value paid in relation to time served as an Executive Director
(or in Alan Giddins’ case, Executive Chair) during the year.
7. Hooman Caman Javvi additionally received a contribution of £5,500+vat towards his legal fees in connection with his departure arrangements.
2024 Annual Bonus
Rutger Helbing, Hannah Nichols and Hooman Caman Javvi were eligible to earn bonuses for 2024 of up to 150%, 125% and 100%
of salary respectively. The bonus to be paid to Rutger Helbing and Hooman Caman Javvi will be pro-rated based on time in office.
For Rutger Helbing and Hannah Nichols, in line with the Policy, 50% of any bonus is paid in cash and the remaining 50% is deferred into
shares for two years, with no performance conditions, and subject, ordinarily, to continued employment.
The extent to which bonuses were earned is summarised below:
Measure
Weighting
Target — 50% of maximum
Maximum — 100%
of maximum
Actual performance
Actual bonus earned
(% of maximum)
Underlying operating profit1
60%
£137m
£150m
£144m
76%
Underlying cash conversion1
20%
85%
95%
99%
100%
Personal objectives
20%
The bonus earned by reference to the satisfaction of personal objectives was determined by
the Committee based on its assessment of the extent to which the objectives were achieved,
as described below
1. For the purposes of calculating the annual bonus, underlying operating profit and underlying cash conversion are calculated at budgeted rates of exchange.
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107
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Governance
Financials
Shareholder Info
The personal objectives set for each Executive Director are summarised below, along with the key achievements (adjusted as necessary
as a result of commercial sensitivities).
Executive Director
Objectives
Key achievements
Rutger Helbing
• Strong early engagement across the Group
• Undertake a rigorous budget process with final
budget demonstrating appropriate stretch
• Initial review of Group strategy in relation to its
markets and businesses
• Excellent and proactive engagement with operating
companies
• Well run budget process including sufficient stretch
across the Group
• Strategy and business model reviewed, with a
refreshed purpose, end market focus and operating
company framework
Hannah Nichols
• Enhance and redefine operating company KPIs and
forward looking indicators
• Provide clear leadership of the Group’s information
security and ERP strategy
• Review the process for Group-level balance sheet
reviews and asses the efficiency of the process
• KPIs reviewed and redefined
• ERP strategy developed, agreed and progressing
in line with plan
• Board approved cyber security improvements
completed and progressing in line with plan
Hooman Caman Javvi
• Lead the Group strategy process and deliver the
2024 health and safety roadmap
• Deliver a successful exit from under performing
portfolio companies
• Strategy review approved by the Board. Health and
safety LTI rate reduced by 23% to 31 December 2024
• Exit processes commenced and led with disposals
completed in Q1 2025
Achievement (personal objectives)
Rutger Helbing
84.7% of maximum
Hannah Nichols
80.3% of maximum
Hooman Caman Javvi
75.0% of maximum
The Committee considered the formulaic outturn of the annual bonus for 2024 to be appropriate and reflected the financial and
non-financial performance of the business during the year (with the extent of achievement against the financial and non-financial
targets being broadly consistent); therefore, no discretion was applied. In confirming the bonus outcomes, the Committee noted
the positive shareholder return generated during 2024 and the 18% growth in underlying profit before tax.
The cash bonus and deferred bonus earned in respect of 2024 are as follows.
Executive Director
Total bonus earned
Bonus paid in cash
Bonus paid as an award of deferred shares
Rutger Helbing1
£235,898
£117,949
£117,949
Hannah Nichols
£413,682
£206,841
£206,841
Hooman Caman Javvi2
£219,426
£219,426
—
1. The bonus paid to Rutger Helbing has been pro-rated for time served on the Board during the year
2. The bonus paid to Hooman Caman Javvi has been pro-rated for service and 100% paid in cash
LTIP awards vesting in respect of 2024
Hannah Nichols and Hooman Caman Javvi were made LTIP awards in 2022 of 31,487 and 17,655 shares respectively. These awards
vested subject to the achievement of performance conditions based on UEPS growth over the three-year performance period ended
31 December 2024 (as regards 50% of the award) and TSR relative to the FTSE 250, excluding investment trusts and financial services
companies (as regards 50% of the award).
On 6 March 2025, the Remuneration Committee approved the extent to which the awards vested, and the value included in the single
figure of remuneration table as a result is set out below:
Performance targets
Vesting
Actual performance
Actual vesting
UEPS annual compound
growth rate over three years
Threshold 3%
Maximum 11%
20%
100%
16%
100%
TSR
Median
Upper quartile
20%
100%
TSR ranked 26 out of 129
100%
108
Remuneration Committee Report continued
Considering the financial performance of the Company and taking into account the disposals and acquisitions made in the three-year
performance period, the Committee is comfortable that the targets were no more or less challenging than when they were originally set.
Number of
shares
granted
Number of
shares to
lapse
Number of
dividend
equivalent
shares
Number of
shares to vest
Total
Estimated
value
(£000)1
Hannah Nichols
31,487
—
2,349
31,487
33,836
687
Hooman Caman Javvi
17,655
1,676
1,191
15,979
17,170
348
1. The value of shares is calculated by reference to the average share price for the three months to 31 December 2024, being £20.29.
Executive Director shareholding guidelines
The Company’s guidelines are that Executive Directors must hold 200% of their base salary in shares.
In order to meet this requirement, Directors are required to build up such by retaining at least half of any shares earned through
incentive arrangements until that shareholding requirement is met. Shares awarded as part of the deferred bonus arrangements
also count towards this requirement. Although not subject to shareholding requirements, Alan Giddins has been included in the table
below with the % salary based on that paid during his tenure as Executive Chair.
Rutger Helbing
Hannah Nichols
Alan Giddins
Hooman Caman Javvi1
Shareholding requirement
200%
200%
—
200%
Shareholding on 31 December 2024
10,000
3,106
93,125
—
Vested LTIP awards and all deferred share awards
on 31 December 2024 (net of tax and NIC)
—
48,801
—
9,275
Total shares
10,000
51,907
93,125
9,275
Share value2
186,800
969,619
1,739,575
173,267
Current % of salary / date the individual stood down from the Board
(based on salary on 31 December 2024)
28
239
283
46
1. Data shown at the date Hooman Caman Javvi stood down from the Board (19 September 2024).
2. Share value based on mid-market close price on 31 December 2024 of £18.68.
Executive Directors are required to retain at least 50% of any shares earned under the LTIP and the deferred bonus scheme until
the shareholding guideline is achieved. There was no change in these beneficial interests between 31 December 2024 and the date
of publication of this report.
Share awards granted during the year
During the year to 31 December 2024, the Committee approved awards, under the rules of the LTIP, to the Executive Directors as follows:
Date of award
Type of award
Number of shares
Maximum face value of
award
Performance period3
Rutger Helbing
19 September 2024
Nil cost option
24,552
£502,4971
31 December 2026
Hannah Nichols
19 March 2024
Nil cost option
32,245
£607,4962
31 December 2026
Hooman Caman Javvi4
19 March 2024
Nil cost option
25,212
£474,9942
31 December 2026
1. Calculated by reference to the share price of £20.47 being the average mid-market close price for the three business days immediately preceding the date of grant.
2. Calculated by reference to the share price of £18.84 being the mid-market close price from the day immediately preceding the date of grant.
3. After the end of the performance period, the LTIP awards will be subject to an additional two-year holding period before they are released.
4. The treatment of Hooman Caman Javvi’s awards is outlined in the section relating to payments to past directors. The number of shares vesting will be pro-rated
for service.
The performance conditions for these awards are as follows:
Vesting amount
UEPS compound annual growth rate over three years (50% of the award)
TSR (50% of the award)2
0% vesting
Less than 5%
Below median
20% vesting1
5%
Median
Maximum vesting1
14%
Upper quartile
1. Straight line vesting will apply between these two points.
2. Relative to the FTSE 250 (excluding investment trusts and financial services companies).
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Financials
Shareholder Info
SAYE
The interests of Executive Directors who served in 2024 in options for ordinary shares in the Company, granted under the Company’s
SAYE schemes, are included in the following table:
Year
Grant price
Awards held at
31 December
2023
Granted during
the year
Exercised during
the year
Lapsed during
the year
Awards held at
31 December
20241
Period that
option is exercisable
From
To
Hannah Nichols
2022
£7.94
3,778
—
—
—
3,778
1 Jan 2026
1 July 2026
Hooman Caman Javvi
2022
£7.94
3,778
—
—
—
3,778
1 Jan 2026
1 July 2026
1. Or at the date of leaving the Board.
Rutger Helbing does not participate in the SAYE.
Statement of Executive Directors’ shareholding and interest in shares
Unvested
Type
Owned outright
Vested but not
exercised1
Subject to
performance
conditions
Not subject to
performance
conditions
Total at
31 December 2024
Hannah Nichols
Shares
3,106
—
—
—
3,106
LTIP1
—
48,111
99,799
—
147,910
Deferred Share Plan
—
18,803
—
25,163
43,966
Market value options2
—
1,078
—
—
1,078
SAYE options3
—
—
—
3,778
3,778
Rutger Helbing
Shares
10,000
—
—
—
10,000
LTIP1
—
—
24,552
—
24,552
Deferred Share Plan
—
—
—
—
—
Market value options2
—
—
—
—
—
SAYE options3
—
—
—
—
—
Hooman Caman Javvi4
Shares
—
—
—
—
—
Buy-out award
—
—
—
10,593
10,593
LTIP
—
—
64,053
—
64,053
Deferred Share Plan
—
—
—
6,908
6,908
Market value options2
—
—
2,311
—
2,311
SAYE options3
—
—
—
3,778
3,778
1. Including those vested but still in holding period.
2. The market value options were granted under the tax-advantaged part of the ESOS as part of the LTIP award granted in 2020 to Hannah Nichols and 2023 to
Hooman Caman Javvi and are subject to the same performance conditions as those LTIP awards.
3. A breakdown of SAYE awards is shown above.
4. All amounts are shown for Hooman Caman Javvi at the date he stepped down from the Board (19 September 2024).
110
Remuneration Committee Report continued
will be determined by reference to the achievement of
performance targets during a performance period comprised
of the three years commencing on 1 January of the year
of grant applicable to each award. Due to his redundancy,
Mr Caman Javvi will retain the benefit of these awards but
the number of shares in respect of which the award will
ultimately vest will be pro-rated to reflect the period of his
employment to 19 September 2024 compared with the
performance period. The awards will vest and can be exercised
at the normal time but, where applicable, can only be
exercised following a two-year holding period.
• Existing Executive Share Option Scheme option: Mr Caman
Javvi holds an option granted in 2023. The number of shares
in respect of which the option will vest is determined by
reference to the achievement of applicable performance
targets. Mr Caman Javvi will retain the benefit of this option
but the number of shares in respect of which the option may
ultimately be exercised will be pro-rated to reflect the period
of his employment to 19 September 2024 compared with
the vesting period.
• Existing SAYE option: Mr Caman Javvi holds an option
granted under the Hill & Smith SAYE Scheme which, in
accordance with the scheme rules, will be retained and can
be exercised in accordance with its terms within the six
months following his date of leaving.
• All other awards will lapse on termination of employment
in accordance with their terms.
• Legal fees: Mr Caman Javvi received a contribution of £5,500
plus VAT towards legal fees in connection with his departure
arrangements.
• No further payments are to be made to Mr Caman Javvi in
connection with his loss of office or the cessation of his
employment.
Hannah Nichols
On 7 January 2025 the Company announced the resignation
of Hannah Nichols from the Board. The following payments will
be made in line with her contractual entitlements and rules
of the relevant incentive plans:
• Ms Nichols’ contractual 12 month notice period began
on 7 January 2025 and she will be paid her salary and
contractual benefits until she leaves the Company.
On her cessation of employment she will not receive any
further salary or benefit payments.
• She will receive a discretionary bonus for the financial year
ending 31 December 2024 having been in employment for the
full year. In line with the Policy, the bonus will be paid 50%
in cash and 50% deferred shares.
• In line with the relevant plan rules, with deferred bonus awards,
the Committee determined that the 2022 and 2023 previously
earned deferred bonus awards will remain eligible to vest
on their normal vesting dates.
• All other incentive plan awards will lapse on cessation
of employment in line with the relevant plan rules.
There were no other loss of office payments made to past
Directors during the year ended 31 December 2024.
Loss of office payments and payments to former
Directors
Hooman Caman Javvi
As announced on 19 September 2024, the role of Chief Operating
Officer was made redundant and therefore Hooman Caman Javvi
received the following payments. All payments are in line with
the Directors’ Remuneration Policy as approved by shareholders
at the 2023 AGM.
• Mr Caman Javvi’s contractual 12 month notice period began
on Thursday, 19 September 2024. He remained in employment,
in line with his contractual notice period, until 5 January 2025
when his employment was terminated in order for Mr Caman
Javvi to commence alternative employment. During this period,
he continued to receive salary, pension allowance and
certain benefits.
• PILON: Mr Caman Javvi’s employment with the Company
ended on 5 January 2025 when he commenced alternative
employment. He ceased to receive salary, pension allowance
and certain benefits from that date.
• Bonus: Mr Caman Javvi was eligible for a discretionary bonus
for the financial year ending 31 December 2024, pro-rated
for his service from 1 January up to 19 September 2024,
paid at the normal time and subject to achievement of
performance measures.
• Outplacement support: outplacement support was eligible
to be provided up to the value of £50,000 plus VAT.
No outplacement support was paid during the year
to 31 December 2024 nor will it be paid, as Mr Caman
Javvi obtained alternative employment.
• Statutory redundancy payment: a statutory redundancy
payment of £2,100 was made.
• In-flight awards: the Remuneration Committee considered the
contribution that Mr Caman Javvi has made during his tenure
and the fact that the role of Chief Operating Officer had been
made redundant. Therefore, in line with the default in the
various plans, he was a ‘good leaver’ and his awards were
treated as follows:
• Buy-out Award: Mr Caman Javvi holds an award over
10,593 Hill & Smith shares. He will retain this award which
was fully vested as at 16 March 2024 and discretion has
been exercised so that it will remain exercisable in
accordance with its terms.
• Existing Deferred Bonus Awards: Mr Caman Javvi holds
awards under the Deferred Bonus Plan granted in 2023
and 2024. The awards are in respect of bonuses earned
in 2022 and 2023 respectively. In line with the relevant rules,
Mr Caman Javvi retained his previously earned deferred
bonus awards. The Committee determined that both awards
will be eligible for exercise from March 2025 with both
awards relating to bonuses earned prior to being promoted
to a PLC Director.
• Existing LTIP Awards: Mr Caman Javvi holds LTIP awards
granted in March 2022, March 2023, and March 2024.
The number of shares which are subject to these awards
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Non-executive Directors
Non-executive Director single figure comparison
Director
Role
Board fees
Other fees
Taxable benefits
Annual
bonus
LTIP
Pension
Total ‘Single
Figure’ 20241
Total ‘Single
Figure’ 20231
Alan Giddins2
Chair
53,333
—
—
—
—
—
53,333
—
Tony Quinlan
Senior Independent
Director
85,192
—
—
—
—
—
85,192
70,133
Farrokh Batliwala3
Non-executive Director
58,384
—
—
—
—
—
58,384
55,823
Carol Chesney
Non-executive Director
63,833
—
—
—
—
—
63,833
—
Pete Raby
Non-executive Director
58,000
—
—
—
—
—
58,000
55,455
Leigh-Ann Russell
Non-executive Director
58,000
—
—
—
—
—
58,000
55,455
Mark Reckitt4
Non-executive Director
28,333
—
—
—
—
—
28,333
64,725
Annette Kelleher5
Non-executive Director
—
—
—
—
—
—
—
26,969
TOTAL
405,075
—
—
—
—
—
405,075
328,560
1. The Non-executive Directors do not participate in any variable arrangements. Separate sections for fixed and variable pay are not included.
2. Fees for Alan Giddins reflect those paid to him once his role reverted to being Non-executive Chair.
3. Farrokh Batliwala’s fee is set in GBP which is then converted to USD for payment. The total disclosed reflects the equivalent amount converted back to GBP.
4. Mark Reckitt stepped down from the Board on 23 May 2024.
5. Annette Kelleher stepped down from the Board on 25 May 2023.
The Non-executive Directors do not have service contracts, only letters of appointment, and fees for Non-executive Directors are
determined by the Executive Directors in light of market best practice and with reference to the time commitment and responsibilities
associated with the role. The Non-executive Directors do not participate in any decision in relation to the determination of their fees and
are not eligible for performance-related bonuses or the grant of awards under any Group incentive scheme. No pension contributions
are made on their behalf.
Non-executive Director shareholding
2024
2023
Alan Giddins
93,125
89,225
Farrokh Batliwala
2,000
2,000
Carol Chesney
—
—
Leigh-Ann Russell
2,000
2,000
Mark Reckitt1
4,000
4,000
Pete Raby
5,020
5,020
Tony Quinlan
3,111
3,111
1. Mark Reckitt stepped down from the Board on 23 May 2024 and the shareholding shown above is at that date.
There was no change in these beneficial interests between 31 December 2024 and 11 March 2025. The Non-executive Directors do not
hold any share awards or share options.
Non-executive Directors do not have a shareholding guideline, but they are encouraged to buy shares in the Company.
112
Remuneration Committee Report continued
The following parts of the Remuneration Report are not subject to Audit
Annual percentage change in the remuneration of Directors and employees
The table below shows the annual percentage change in each Director’s salary/fees, benefits and bonus between the year ended
31 December 2023 and the year ended 31 December 2024, and the average percentage change in the same remuneration over the
same period in respect of the employees of the Company on a full-time equivalent basis. Although the regulations require us only
to show the average percentage change for the employees of the Company, we have provided additional disclosure showing the
average change for the Group’s wider workforce.
The average employee change has been calculated by reference to the mean of employee pay.
Average
employee
Wider
workforce
Hannah
Nichols
Alan
Giddins
Leigh-Ann
Russell
Mark
Reckitt
Pete
Raby
Tony
Quinlan
Farrokh
Batliwala
Hooman
Caman
Javvi
Carol
Chesney
Rutger
Helbing
Salary/
fees
2023 — 2024
4.9% 2.0%-10.0%
8.1%
(3.2)%2
4.6%
(56.2)%3
4.6%
21.5%4
4.6%
n/a
n/a
n/a
2022 — 2023
5.4% 1.3%-10.0%
5.0%
4.0%
3.0%
3.0%
3.0%
3.0%
3.0%
n/a
n/a
n/a
2021 — 2022
4.1%
2.0%-9.0%
3.0%
3.0%
3.0%
3.0%
3.0%
3.0%
n/a
n/a
n/a
n/a
2020 — 2021
2.9%
2.9%
2.0%
2.0%
n/a
2.0%
2.0%
2.0%
n/a
n/a
n/a
n/a
2019 — 2020
2.9%
2.9%
2.9%
2.5%
n/a
2.5%
2.5%
2.5%
n/a
n/a
n/a
n/a
Taxable
benefits
2023 — 2024
n/a
n/a
1.7%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2022 — 2023
n/a
n/a
1.4%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2021 — 2022
n/a
n/a
0.3%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2020 — 2021
n/a
n/a
5.0%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2019 — 2020
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Annual
bonus
2023 — 2024
n/a
153%1
(7.5)%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2022 — 2023
n/a
20.3%1
30%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2021 — 2022
n/a
44.5%1
(8)%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2020 — 2021
n/a
340.3%1
454.4%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2019 — 2020
n/a
112.0%1
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
1. The bonus figures were taken from those senior executives operating on similar incentivised arrangements to the CFO and capable of influencing the Group’s
performance.
2. Alan Giddins’ salary / fees include fees paid both as Executive and Non-executive Chair.
3. Mark Reckitt retired from the Board on 23 May 2024.
4. Tony Quinlan was paid a fee for being Chair of the Remuneration and Nomination Committees from 1 January 2024. His fee for chairing the Nomination
Committee ended when Alan Giddins took the Chair back on 19 September 2024.
Single Figure of the Chief Executive compared to the wider workforce
This is our sixth year of reporting the CEO pay ratio and the table below sets out our CEO pay ratio figures.
As in previous years, the Company has opted to use option B of the Pay Ratio regulations. Gender Pay Gap information has recently
been collated to meet our Gender Related Pay Gap (‘GRPG’) reporting requirements for 2023/24, to identify the three relevant
employees. The rationale behind adopting this option is that data required to meet both BEIS and GRPG regulations has to be collected
for our UK-based employees and this option allows both to be completed, efficiently and effectively in the time allowed to make any
relevant public statements.
Year
Method
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
2024
Option B
25:1
20:1
23:1
2023
Option B
17:1
18:1
15:1
2022
Option B
39:1
37:1
32:1
2021
Option B
68:1
63:1
41:1
2020
Option B
26:1
44:1
33:1
2019
Option B
43:1
39:1
38:1
Pay details for the individuals are set out below.
2024
CEO/Executive Chair1
25th percentile
Median
75th percentile
Salary
£700,615
£34,581
£38,813
£41,118
Total remuneration
£960,496
£38,118
£49,013
£42,146
1. Calculated using the amount earned while performing the role of the CEO taken from the single figure table.
The ratio has increased from 2023 on account of the incoming CEO receiving variable remuneration, including a pro-rated annual
bonus. The median pay ratio is less than the pay ratio for the 75th percentile, due to the individual at median receiving a larger bonus.
Hill & Smith PLC | Annual Report and Accounts 2024
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Shareholder Info
In this context, the Committee considers that the median ratio for 2024 is consistent with the pay, reward and progression policies
for employees as a whole.
Pay for performance
The graph below shows the Company’s TSR performance over the 10 years to 31 December 2024 as compared to the FTSE 250.
Total shareholder return
0
50
100
150
200
250
300
350
400
450
31 Dec 2024
31 Dec 2023
31 Dec 2022
31 Dec 2021
31 Dec 2020
31 Dec 2019
31 Dec 2018
31 Dec 2017
31 Dec 2016
31 Dec 2015
31 Dec 2014
Hill & Smith
FTSE 250
The table below details the CEO/Executive Chair’s single figure remuneration and actual variable pay outcomes over the same period.
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Derek Muir
Paul
Simmons
Paul
Simmons
Paul
Simmons
Alan
Giddins
Alan
Giddins
Alan
Giddins
Rutger
Helbing
CEO/Executive Chair
Single Figure (£000)
1,894 2,134 2,085 1,506
1,187
980
318
1,781
798
257
585
512
448
Annual bonus (% of max.)
100
100
94
19
43
19
19
88
72
n/a
n/a
n/a
83
LTIP vesting (% of max)
98
100
100
100
31
36
n/a
100
Nil
n/a
n/a
n/a
n/a
Relative importance of spend on pay
2024
2023
% Change
Dividends paid in respect of the financial year
£39.4m
£34.5m
14.2%
Overall spend on pay1
£227.2m
£203.2m
11.7%
1. This includes a 7% change in the average number of people employed by the Group. See note 6 to the accounts on page 159.
114
Remuneration Committee Report continued
Statement of shareholder voting
The following table shows the results of the vote on the Annual Remuneration Report at the 2024 AGM and the binding vote on the
current Remuneration Policy at the 2023 AGM.
For
Against
Withheld
Remuneration Policy (2023)
% of votes cast
98.46%
1.54%
6,275 votes were withheld in
relation to this resolution (<0.01%)
61,858,119
967,984
Remuneration Report (2024)
% of votes cast
98.69%
1.31%
55,599 votes were withheld in
relation to this resolution (<0.01%)
62,134,207
825,108
Advisors
Korn Ferry were appointed as external advisor to the Remuneration Committee in 2022 following a competitive tender process.
Korn Ferry did not provide any services other than in relation to advising the Remuneration Committee during the year and the
Committee is satisfied that no conflict of interest can arise as a result of these services. Korn Ferry has voluntarily signed up to
the Remuneration Consultants Group Code of Conduct. In view of these factors, the Committee is satisfied that the advice it receives
from Korn Ferry is objective and independent. For the year under review, Korn Ferry received fees of £55,192 in connection with its work
for the Committee, which were charged on a time cost basis.
The Chief Executive Officer (and prior to his appointment, Executive Chair) and Chief Financial Officer, attend Remuneration Committee
meetings by invitation to provide advice and respond to specific questions, but are not in attendance when their own remuneration
is discussed. The Group Company Secretary acts as Secretary to the Remuneration Committee, but is similarly not in attendance when
their own remuneration is discussed.
How the Remuneration Policy will be implemented for 2025
Executive Directors
Salary
Base salaries as from 1 January 2025 are:
Rutger Helbing
£683,400
Hannah Nichols
£405,000
As detailed in the Remuneration Committee Chair Review on pages 102 to 104, Rutger Helbing’s base salary has been increased by 2%.
This compares to a range of salary increases provided to the wider workforce within our operating companies, of 2% to 10% for 2025.
Pension and benefits
The pension contribution for both Executive Directors is 6.5% of base salary.
Annual bonus
The maximum opportunity for Rutger Helbing will be 150% of salary.
The bonus is structured so that 50% of the opportunity will be earned for achieving a stretching level of on-target performance and any
bonus earned will be paid as to 50% in cash and 50% in deferred shares.
For the 2025 financial year the bonus metrics and weightings will be:
• Underlying operating profit (60%)
• Underlying cash conversion (20%)
• Individual personal objectives, including a health and safety target and a sustainability target (20%)
The Committee does not consider it appropriate to prospectively disclose the targets under the annual bonus plan due to issues of
commercial sensitivity. However, detailed retrospective disclosure of the financial targets and the sustainability and individual strategic
objectives, and performance against them, will be included in next year’s Directors’ Remuneration Report. As was the case in 2024,
the range of financial targets approved for 2025 have been set in the context of current business planning and the current economic
outlook. Overall, the targets are considered similarly challenging to those set in prior years in the current market context.
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LTIP
The 2025 LTIP award for Rutger Helbing will be 175% of salary. The award will be subject to performance conditions based on relative
TSR, UEPS growth and greenhouse gas reduction as set out below.
Hannah Nichols will not be eligible to receive an LTIP grant in respect of 2025.
UEPS compound annual growth rate over three years (50% of the award)1
TSR1,2 (40% of the award)
GHG reduction target1
(10% of the award)
Vesting amount
Less than 4%
Below median
0-17%
0% vesting
4%
median
17%
20% vesting
14%
Upper quartile
26%
100% vesting
1. GHG vesting schedule has an intermediate vesting step with 50% vesting at a 21% reduction with straight line vesting between threshold (20% vesting at a
reduction of 17%), target (50% vesting at a 21% reduction) and maximum (100% vesting at a 26% reduction). Other targets vest on a straight line basis from the
threshold performance level to maximum
2. Relative to the FTSE 250 (excluding investment trusts and financial services companies).
The range of UEPS targets was set having had regard to current business planning, driven by a combination of organic and inorganic
growth, the current economic outlook, and market expectations for the future performance of the business. Overall, the targets are
considered similarly challenging to those set in prior years in the current market context. The greenhouse gas reduction targets
are introduced for the first time for the 2025 LTIP award and have been set based on our 2032 and 2050 SBTi commitments.
The Committee will undertake a final review of the targets and broader terms of the awards prior to grant.
Non-executive Directors
The fees of the Non-executive Directors are reviewed regularly to ensure they are in line with the market so the Company can attract
and retain individuals of the highest calibre.
In December 2024, the Board approved a 3.5% increase to the base fee for the Non-executive Directors for 2025. The fees for additional
roles are as follows:
2025
2024
Chair1
£320,000
£320,0001
Non-executive Director
£60,000
£58,000
Senior Independent Director
£11,000
£10,000
Audit Committee Chair
£11,000
£10,000
Nomination Committee Chair
£11,000
£10,000
Remuneration Committee Chair
£11,000
£10,000
1. Upon appointment of Rutger Helbing, Alan Giddins reverted to being the Non-executive Chair, receiving an annual fee of £320,000.
Tony Quinlan
Chair of the Remuneration Committee
11 March 2025
116
Remuneration Committee Report continued
Annual Remuneration Policy Report
The Company’s Directors’ Remuneration Policy (the ‘Policy’) was approved at the 2023 AGM and took effect from the close of that
meeting. The below provides a summary of the Policy, with the full policy as approved by shareholders being included in the Company’s
2022 Annual Report and Accounts, which is available at https://hsgroup.com/investors/reports-and-presentations/
Policy table for Directors’ base salary
Purpose and link to strategy
To recruit and retain Executive Directors. Provides fixed remuneration for the Executive Directors, which
reflects the individual’s experience and the size and scope of the Executive’s responsibilities.
Operation
Normally reviewed annually and fixed for 12 months. Salaries are determined by the Remuneration
Committee taking into account a range of factors, which may include, but are not limited to:
• the size and scope of the role;
• individual and Group performance;
• the range of salary increases (in percentage terms) applied to the wider workforce;
• total organisational salary budgets; and
• pay levels for comparable roles in companies of a similar size and complexity.
Any salary increases may be implemented over such time as the Remuneration Committee deems
appropriate.
Maximum opportunity
Ordinarily salary increases will not exceed the range of salary increases awarded to other employees
in the Group (in percentage of salary terms). However, salary increases may be above this level in
certain circumstances as required, for example to reflect:
• increase in scope or responsibility;
• performance in role; or
• an Executive Director being moved to market positioning over time.
No maximum salary opportunity has been set out in this policy report to avoid setting expectations
for Executive Directors.
Performance metrics
Not applicable.
Benefits
Purpose and link to strategy
To recruit and retain Executive Directors. Ensures the overall package is competitive. Participation in the
SAYE promotes staff alignment with the Group and a sense of ownership.
Operation
Executive Directors are entitled to various benefits, including but not limited to, membership of the
Group’s healthcare scheme, personal accident insurance, ill health, life assurance and car (or equivalent
cash allowance).
Other benefits may be provided based on individual circumstances. Such benefits may include, but are
not limited to expatriate housing, relocation allowances, or overseas tax support.
The SAYE is a tax qualifying monthly savings scheme facilitating the purchase of shares at a discount
as permitted by the applicable legislation (currently up to a maximum discount of 20%). SAYE options
may be exercised in the event of a change of control to the extent permitted by the rules of the scheme.
Executive Directors may also participate in any other all employee share plan adopted by the Company,
on the same basis as other qualifying employees.
Maximum opportunity
Whilst the Remuneration Committee has not set an absolute maximum on the level of benefits
Executive Directors receive, the value of benefits is set at a level which the Remuneration Committee
considers is appropriately positioned against companies of a similar size and complexity in the relevant
market and at rates competitive in the area of life accident and health insurance. SAYE scheme
contribution as permitted in accordance with the relevant tax legislation. The level of participation in any
other all-employee share plan will be determined in accordance with the rules of that plan and will be the
same for Executive Directors as for other qualifying employees.
Performance metrics
Not applicable.
Pension
Purpose and link to strategy
To recruit and retain Executive Directors and to provide post-retirement benefits.
Operation
The Group may make a payment either into a defined contribution plan or as a separate cash allowance.
Group contributions or cash allowances are determined as a percentage of base salary.
Maximum opportunity
An amount as a percentage of base salary not exceeding the typical contribution available in respect
of the location of employment of the Director (e.g. currently the typical rate available to the UK-based
workforce is 6.5% of salary).
Performance metrics
Not applicable.
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Annual bonus
Purpose and link to strategy
Rewards the achievement of annual financial targets and/or the delivery of strategic/individual
objectives.
Operation
Performance measures and targets are reviewed and set annually by the Remuneration Committee.
Bonus pay out is determined by the Remuneration Committee after the year end, based on audited
performance, where appropriate, against those targets.
The Remuneration Committee has the discretion to amend the bonus pay out should any formulaic
output not produce an appropriate result for either the Executive Directors or the Company, taking
account of overall performance, or because the formulaic output is inappropriate in the context of
circumstances that were unexpected or unforeseen at the start of the performance period.
Where an annual bonus is earned, 50% of the amount earned will be delivered in the form of shares
in the Company, deferred for a period of two years. Deferral of any bonus is subject to a de minimis limit
of £5,000.
At its discretion, the Remuneration Committee may award dividend equivalents to reflect dividends that
would have been paid over the deferral period on shares subject to deferred bonuses. These dividend
equivalents will ordinarily be paid in shares and may assume the reinvestment of dividends.
Deferred bonus awards will vest in the event of a change of control.
Malus and clawback provisions apply to the annual bonus as described below this table.
Maximum opportunity
The maximum bonus opportunity is up to 150% of base salary for the CEO and up to 125% of base
salary for any other Executive Director.
Performance metrics
The bonus will be based on the achievement of targets related to key business objectives, with the
performance measures and respective weightings each year dependent on the Group’s strategic
priorities. Financial performance measures may include, for example:
• measures based on earnings per share
• budgeted profit
• operating margins
• cash conversion
• return on capital
At least 50% of bonus will be based on financial measures. Subject to the Remuneration Committee’s
discretion to amend formulaic outputs, for financial targets, normally 0% of the maximum is payable for
achieving the threshold performance target (0% below threshold), 50% at the target level of performance
and 100% at maximum. For strategic and individual performance measures, bonus will be earned
between 0% and 100% of the opportunity based on the Remuneration Committee’s assessment of the
extent to which the relevant measure has been achieved.
118
Remuneration Committee Report continued
Long Term Incentive Plan (‘LTIP’)
Purpose and link to strategy
Incentivises Executive Directors to achieve higher returns for shareholders over a longer timeframe.
A clawback applies to unvested awards enabling the Company to mitigate risk. The post-vesting holding
period aligns the interests of Executive Directors with those of the shareholders over a further period.
Operation
The Remuneration Committee may grant awards as conditional share awards, nil cost share options or
forfeitable shares or such other form as has the same economic effect.
Awards are typically granted annually and vesting is subject to achievement of performance measures,
normally assessed over at least three years. The Remuneration Committee has the discretion to adjust
the vesting outcome should any formulaic output not reflect overall performance, or because the
formulaic output is inappropriate in the context of circumstances that were unexpected or unforeseen
at the grant date, or if there exists any other reason why an adjustment is appropriate.
Vested shares are subject to an additional two-year holding period before they are released to the Executive
Directors (so that they can exercise the award and acquire them). Alternatively, the Remuneration
Committee may grant an award on the basis that the Executive Director can acquire shares following
vesting, but that, other than as regards sales of shares to cover tax liabilities, the Executive Director
is not permitted to dispose of shares until the end of the two-year holding period.
Unvested LTIP awards will vest and be released early on a change of control (or other relevant events),
taking into account the extent to which the performance conditions have been satisfied and pro-rating
to reflect the proportion of the performance period that has elapsed, although the Remuneration
Committee has discretion not to apply time pro-rating. Vested LTIP awards which are subject to
a holding period are released, to the extent vested, in the event of a change of control.
At its discretion, the Remuneration Committee may award dividend equivalents to reflect dividends
that would have been paid over the vesting period and holding period on shares that vest. These
dividend equivalents will ordinarily be paid in shares and may assume the reinvestment of dividends.
The Remuneration Committee may, at its discretion, structure awards as approved LTIP awards
comprising both a tax qualifying option granted under the Executive Share Option Scheme (‛ESOS’)
and an LTIP award. Approved LTIP awards enable the participant and the Company to benefit from tax
qualifying option treatment in respect of part of the award, without increasing the pre-tax value delivered
to the participant. The approved LTIP awards consist of a tax qualifying option and an LTIP award with
the vesting of the LTIP award scaled back to take account of any gain made on exercise of the tax
qualifying option. Other than to enable the grant of up to £60,000 (from April 2023) in value of HMRC
approved options as part of an approved LTIP award, the Company will not grant awards to Executive
Directors under the ESOS.
Malus and clawback provisions apply to the entire LTIP as described below.
Maximum opportunity
The annual LTIP maximum in respect of any financial year is:
• CEO: 175% of base salary
• any other Executive Director: 150% of base salary
Shares subject to a tax qualifying option granted as part of an approved LTIP award are not taken into
account for the purposes of this limit, because, as referred to in the box under the heading ‘Operation’,
the unapproved LTIP option is scaled back to reflect the gain made on the exercise of the tax qualifying
ESOS option.
Performance metrics
Awards vest subject to the achievement of performance measures assessed over the performance
period (normally three financial years). The performance measures are reviewed annually to ensure
they remain relevant and aligned to the Group’s strategy.
Performance measures will be based on financial metrics, and/or share price growth related metrics,
and/or strategic metrics.
Subject to the Remuneration Committee’s discretion to amend formulaic outputs, for achievement
of the threshold level of performance (the minimum level of performance for vesting to occur) up to 20%
of the maximum opportunity will vest for each element.
For achievement of maximum performance 100% of the maximum opportunity will vest; there is usually
straight-line vesting between threshold and maximum performance.
Where an option under the ESOS is granted as part of an Approved LTIP award, the same performance
condition applies to the ESOS option as applies to the LTIP award, save as required by the applicable
tax legislation.
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Shareholding guidelines
Purpose and link to strategy
To encourage strong shareholder alignment both during and after employment with the Company.
Operation
Each Executive Director is required to hold 50% of the shares acquired through the LTIP and any
deferred bonus plan award (after sales to cover tax and any exercise price) until the value of their total
shareholding is equal to 200% of their annual base salary.
Shares subject to award under the deferred bonus plan and vested shares subject to awards under the
LTIP, which are subject to a holding period, count towards the shareholding requirement on a net of
assumed tax basis.
Shares subject to LTIP awards which are capable of exercise count towards the limit on a net of
assumed tax basis.
In addition, a post-employment shareholding requirement will apply only to shares acquired pursuant
to LTIP and the deferred bonus plan granted in respect of 2020 and future years, but will not apply
to shares purchased or acquired pursuant to all employee share plans and will not apply to LTIP
or deferred bonus plan awards granted in respect of earlier years.
Post-employment, each Executive Director is expected to maintain such of their shares, which are
subject to the post-employment shareholding policy, as have a value equal to the in-service shareholding
guideline (which requires the holding of shares during employment with a value equal to 200% of salary)
for a period of two years after leaving. In either case, the number of relevant shares held at leaving must
be retained if this is less than the in-service guideline.
Share ownership guidelines only apply to permanent Executive Director positions and in exceptional
circumstances the Committee may disapply the post-employment share ownership guideline
(e.g. death).
Maximum opportunity
Not applicable.
Performance metrics
Not applicable.
Chair and Non-executive fees
Purpose and link to strategy
Fees are set at a level that reflects market conditions and is sufficient to attract individuals with
appropriate knowledge and experience.
Operation
Fees are reviewed periodically and are determined by the Board. The fee structure is as follows:
• the Chair is paid a single consolidated fee
• the Non-executive Directors are paid a basic fee plus additional fees for Chairmanship of a Committee
• the Senior Independent Director also receives an additional fee in respect of this role
• fees may be paid wholly or partly in shares
• additional fees may be paid for taking on additional roles or for additional time commitments.
The Non-executive Directors do not participate in any of the Group’s share incentive plans, nor do they
receive any pension contributions. Non-executive Directors may be eligible for benefits such as the use
of secretarial support, travel costs or other benefits that may be appropriate. These benefits may include
the reimbursement of any tax liability if they are reimbursed for expenses incurred in the performance
of their duties and those expenses are considered taxable benefits.
Maximum opportunity
Fees are subject to an overall cap as set out in the Company’s Articles of Association from time to time.
Fees are based on the time commitment and responsibilities of the role.
Fees are appropriately positioned against comparable roles in companies of a similar size and
complexity in the relevant market.
Performance metrics
Not applicable.
Recovery provisions
The Committee may, at any time within two years following the determination of the annual bonus, or two years following vesting of the
LTIP, determine that malus and/or clawback shall apply in the event of:
• a material misstatement in the Group’s financial results for the bonus year
• the Remuneration Committee reasonably determining that the participant has been guilty of gross misconduct
• an error in assessing any applicable performance condition
• reputational damage to the Group
• corporate failure
• a failure of acceptable health and safety standards
Before the vesting of an LTIP award, the Remuneration Committee may also decide to reduce or cancel the award if any of the above
events occur.
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Remuneration Committee Report continued
Directors’ Report
(and other statutory disclosures)
The Directors present their report, together with the
audited financial statements, for the year ended
31 December 2024. This report contains additional
information which the Directors are required by law
and regulation to include within the Annual Report
and Accounts. In conjunction with the information
from the Chair’s Introduction on page 10 to the
Statement of Directors’ Responsibilities on page
126, this section constitutes the Directors’ Report
in accordance with the Companies Act 2006.
Principal activities
The principal activities of the Group are the manufacture and
supply of Engineered Solutions, Galvanizing Services and Roads
& Security products and services mainly in the UK, USA and India.
The principal activity of the Company is that of a holding
company and its subsidiaries are listed on page 208. Further
details of the Group’s activities and future plans are set out
in the Strategic Report on pages 2 to 73.
Strategic report and future developments
The Group is required by the Companies Act 2006 to include
a Strategic Report in this document. The information that fulfils
the requirements of the Strategic Report, and which is
incorporated in this report by reference, can be found on page 2
to page 73. The Strategic Report includes certain disclosures
required to be contained in the Directors’ Report as follows:
the viability statement (page 90), approach to diversity (page 56),
workforce engagement (page 54), an indication of likely future
developments (page 16, Chief Executive Officer’s Review), and
the approach to risk management (pages 66 to 72).
Corporate governance statement
The corporate governance statement as required by the Financial
Conduct Authority’s Disclosure and Transparency Rules (DTR)
7.2.1 is set out on page 81 and is incorporated into this report
by reference.
Acquisitions
January 2024 – the acquisition of the business and assets
of Capital Steel from its shareholder, Robert Hickman, who
stayed with the business. The cash consideration was £5.5m.
Further cash consideration of up to $1.2m (c.£1.0m) is payable,
conditional on Capital Steel’s achievement of financial
performance targets in the two years post-acquisition.
March 2024 – the acquisition of the business and assets of FM
Stainless from its principal shareholder, Chad Hood, who stayed
with the business. The cash consideration was £6.8m. Further
cash consideration of c.£0.4m is payable, conditional on
achievement of financial performance targets in the year
following acquisition.
July 2024 – the acquisition of the business and assets of Trident
for a cash consideration of £8.1m. Further cash consideration
of up to £25.4m is payable based on future revenues over the five
years post-acquisition. The business was acquired from two
private shareholders. The management team, who were not
shareholders, stayed with the business.
September 2024 – the acquisition of the business and assets
of Whitlow from its shareholder, Bruce Whitlow, who stayed with
the business. The cash consideration was £24.0m.
Post balance sheet events
As part of the Group’s active portfolio management, in the first
quarter of 2025, the Group successfully divested two of its
non-core, loss making Roads and Security businesses, Hill &
Smith Pty Limited and Parking Facilities Limited; both of which
were classified as held for sale as at 31 December 2024
(see note 14 for further details).
Financial results and ordinary dividends
The Group profit before taxation for the year amounted to
£104.5m (2023: £93.2m). Group revenue at £855.1m, 3% up
on 2023 (£829.8m). Operating profit at £115.4m, up 11% on 2023
(£103.8m).
The full results for the year and financial position at 31 December
2024 are shown in the Consolidated Income Statement on page
138 and Statement of Financial Position on page 140.
The Directors recommend the payment of a final dividend of
32.5p per ordinary share (2023: 28.0p) which, together with the
interim dividend of 16.5p per ordinary share (2023:15.0p per
ordinary share) paid on 7 January 2025, makes a total
distribution for the year of 49.0p per ordinary share (2023: 43.0p
per ordinary share). Subject to shareholders approving this
recommendation at the AGM, the final dividend will be paid on
4 July 2025 to shareholders on the register at the close of
business on 30 May 2025. The latest date for receipt of Dividend
Re-investment Plan elections is 13 June 2025.
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Share capital summary
Exchange trade
The Company’s ordinary shares are listed
on the Main Market of the London Stock
Exchange
Class
Single class of ordinary shares of 25p
each
Issued share
capital 1 January
2024
80,195,569
Total new ordinary
shares issued
during the year
247,822
Issued share
capital
31 December 2024
80,443,391
Rights and
obligations
All issued shares rank equally. Rights and
obligations attaching to the Company’s
shares are set out in the Company’s
Articles of Association
Further details can be found in note 24 on pages 188 to 189
of the Group financial statements.
Details of the results for the year are shown on the Consolidated
Income Statement on page 138 and the business segment
information is given on pages 153 to 155.
There are no restrictions on the transfer of shares in the
Company provided they are fully paid up and the Company
does not hold any lien over them, and, as the shares rank equally,
none of them carry any special rights with regards to control
of the Company. Such equal rights apply to shares acquired
through any of the Company’s employee share schemes and
those shares so acquired carry no lesser or greater rights than
shares acquired in the Company in any other way. Accordingly
there are no restrictions on voting rights attaching to any shares,
whether relating to the level of shareholding or otherwise.
The Company is not aware of any arrangements between
shareholders of the Company that may result in restrictions on
the transfer of ordinary shares or voting rights.
Resolutions are sought at each AGM to permit the Company
to allot, subject to shareholder approval, new shares under
specific circumstances. They are a function of addressing
funding or share scheme needs and not a tool for employing
anti-takeover measures.
In relation to the purchase by the Company of its own shares,
the rules relating thereto are set out in the Company’s Articles
of Association, which state that the Directors’ powers to
authorise such purchase by the Company are subject to the
provisions of the relevant statutes and also the UK Listing
Authority requirements, as the Company’s shares are listed on
the London Stock Exchange. No shares were held in treasury.
Articles of Association
The Company’s Articles of Association may only be amended
by a special resolution at a general meeting of shareholders.
The Company’s Articles of Association were last amended at the
general meeting held on 17 May 2018 with the updated articles
being filed with the Registrar of Companies.
Directors
The names of the Directors of the Company who served throughout the year, including brief biographies, are set out on pages 78 to 80.
Changes to the Board during the period are set out on page 92. Details of the Non-executive Directors’ Letters of Appointment are set
out below:
Date of appointment
Length of service
Expected end date
Alan Giddins
3 October 2017
7 years 3 months
30 September 2026
Farrokh Batliwala
1 April 2022
2 year 9 months
31 March 2031
Carol Chesney
1 January 2024
1 Year 0 months
31 December 2033
Leigh-Ann Russell
1 April 2021
3 years 9 months
31 March 20301
Pete Raby
2 December 2019
5 years 1 month
30 November 2028
Tony Quinlan
2 December 2019
5 years 1 month
30 November 2028
1. Leigh-Ann Russell will step down from the Board on 12 March 2025.
122
Directors’ Report (and other statutory disclosures) continued
Directors’ interests
The interests of the Directors in the share capital of Hill & Smith
PLC, as at 31 December 2024, are set out on page 110.
Appointment and replacement of Directors
The appointment and replacement of Directors of the Company
is governed by its Articles of Association, the UK Corporate
Governance Code, the Companies Acts and related legislation.
Directors can be appointed by ordinary resolution at a general
meeting or by the Board. If a Director is appointed by the Board,
such Director will hold office until the next AGM and shall then
be eligible for election at that meeting. All Directors are subject
to annual election by shareholders at the AGM in line with the
provisions of the UK Corporate Governance Code.
Conflicts
Under the Companies Act 2006 and the provisions of the
Company’s Articles of Association, the Board is required
to consider potential conflicts of interest. The Company has
established formal procedures for the disclosure and review
of any conflicts, or potential conflicts, of interest, which the
Directors may have and for the authorisation of such conflict
matters by the Board. To this end, the Board considers and,
if appropriate, authorises any conflicts, or potential conflicts,
of interest as they arise and reviews any such authorisation
annually. New Directors are required to declare any conflicts,
or potential conflicts, of interest to the Board at the first Board
meeting after his or her appointment. The Board believes that
the procedures established to deal with conflicts of interests
are operating effectively.
Directors’ and officers’ liability
The Company maintains an appropriate level of Directors’ and
Officers’ insurance whereby Directors are indemnified against
liabilities to third parties to the extent permitted by the
Companies Act 2006.
Financial instruments
The financial risk management objectives and policies are
detailed in note 23 on pages 182 to 188.
Research and development
During the year, the Group spent a total of £3.4m (2023: £3.3m)
on research and development.
Political and charitable donations
The Company’s policy is not to make any donations for political
purposes in the UK or to donate to political parties or incur
political expenditure outside the UK. Accordingly, neither the
Company nor its subsidiaries made any political donations or
incurred political expenditure in the financial period under review
(2023: £nil).
The Company actively encourages each of its businesses to build
strong relationships with the communities in which they operate
and where they predominantly recruit from. As part of this focus
the Company has in place a Charitable Donations Policy
which supports locally focused charitable giving and community
involvement by each of the Company’s businesses, allowing
local communities to benefit directly. An outline of the
Company’s approach to charitable donations is given as part
of the Sustainability Report on page 46.
Charitable giving is undertaken through both monetary and
product donations to good local causes. Monetary donations
made during the year in support of charitable causes nationally,
and those of interest to employees amounted to
£119,618 (2023: £98,985).
Employment policies
Details of the Group’s employment policies are available on the
Company’s website.
Modern Slavery Act
The Board fully supports the aims of the Modern Slavery Act
and the Company has a zero tolerance approach to slavery and
human trafficking.
Our suppliers are expected to engage and adhere to the Hill &
Smith Code of Business Conduct and the Company will work with
all suppliers to ensure compliance. If any supplier is found to be
involved in any form of Modern Slavery or unethical behaviour,
the Company will look to suspend or cease trading with that
supplier. Full information can be found in the Company’s Modern
Slavery Statement which is published annually on the Company’s
website and which details the actions undertaken to prevent
slavery and human trafficking in both the Company’s
organisation and its supply chain.
Human rights
We support the United Nations’ Universal Declaration of Human
Rights and have policies and processes in place to ensure that
we act in accordance with our cultural values which encompass
areas such as equal opportunities, diversity, inclusion and
respect, anti-corruption and bribery, whistleblowing and fraud.
We do not believe this to be a material issue in our business.
The Hill & Smith Code of Business Conduct sets out the standards
we expect with respect to: health, safety and the environment;
fair, honest and ethical business practices (including bribery
and corruption); gifts and entertainment; competition laws; export
controls and sanctions; and people (including equal opportunities,
conflicts of interest, harassment, labour laws and anti-slavery).
This Code of Business Conduct applies to everyone engaged
by the Group including: Directors and officers; employees; and
contractors, consultants, representatives and agents; and
commercial intermediaries.
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Employment of disabled persons
It is our policy that people with disabilities should have full and
fair consideration for vacancies within the Group having regard
for their aptitudes and abilities. Where existing employees
become disabled, it is the Company’s policy wherever practicable
to provide continuing employment under normal terms and
conditions and to provide training and career development
wherever appropriate.
Equal opportunities
We are committed to the elimination of unlawful and unfair
discrimination, and the fair and equal treatment of all. The heart
of the Company’s approach to its people is the provision of an
environment where everyone can fulfil their potential and where
colleagues from all backgrounds can feel confident in their ability
to achieve their best. The Company has in place various policies
to ensure this is reflected in the culture of the business (including
an Equal Opportunities policy and a Dignity at Work policy).
Contravention of these policies is treated as a disciplinary matter
and may result in dismissal.
Change of control/significant agreements
There are no agreements between the Group and its Directors
or employees providing for compensation for loss of office
or employment that occurs because of a change of control,
other than revised notice periods and termination payments
for Hannah Nichols.
The Group has a revolving credit facility and unsecured notes,
which include change of control provisions. Under these
provisions, a change in ownership/control of the Company
could result in the withdrawal of these facilities.
All of the Company’s share schemes contain provisions relating
to a change in control. Outstanding options and awards normally
vest and become exercisable on a change of control subject
to the satisfaction of any performance conditions at that time.
The Directors consider that there are no contractual, or other,
arrangements, such as those with major suppliers, which
are likely to materially influence, directly or indirectly, the
performance of the business and its values. Furthermore, there
are no contracts of significance subsisting during the financial
year between any Group undertaking and a controlling
shareholder or in which a Director is or was materially interested.
Disclosure of information to auditor
The Directors who held office at the date of approval of this
Directors’ Report confirm that, so far as they are each aware:
there is no relevant audit information of which the Company’s
auditor is unaware; each Director has taken all the steps that
they ought to have taken as a Director to make themselves
aware of any relevant audit information and have established
that the Company’s auditor is aware of that information.
A statement by the Directors on their responsibilities in respect
of the Annual Report and Accounts is given on page 126 and
a statement by the Auditor on their responsibilities is given
on page 136.
External auditor
Ernst & Young LLP have indicated their willingness to continue
as Auditor and their reappointment has been approved by the
Audit Committee. Resolutions to reappoint them and to authorise
the Directors to determine their remuneration will be proposed
at the 2025 AGM.
Annual General Meeting
The Annual General Meeting of the Company will be held
at 11.00am on Thursday, 22 May 2025 at Cranmore Park
Conference, Event & Exhibition Centre, Cranmore Avenue,
Shirley, West Midlands, B90 4LF, United Kingdom. Notice is sent
to shareholders separately with this Report, together with
an explanation of the special business to be considered at the
meeting, which is also available on the Company’s website
at www.hsgroup.com.
Other important dates can be found in the Financial Calendar
on page 210.
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Directors’ Report (and other statutory disclosures) continued
Shareholder
Number of ordinary shares1
% of issued share capital2
abrdn
7,792,399
9.71
BlackRock
6,175,078
7.10
Vanguard Group
3,778,735
4.71
Invesco
3,384,836
4.22
AXA Framlington Investment Managers
3,144,476
3.92
1. Represents the number of voting rights last notified to the Company by the respective shareholder in accordance with DTR 5.1.
2. Based on the total shares held in the Company as at the notification date.
By order of the Board
Karen Atterbury
Group Company Secretary
11 March 2025
Rights under employees’ share schemes
As at 31 December 2024, VG, as trustee of the Hill & Smith Group
Employee Trust Company Limited (‘Trust’), held 70,318 shares,
approximately 0.9% of the issued share capital of the Company
(excluding treasury shares) for the purpose of satisfying options
and awards under the various employee share schemes operated
by the Company. VG waives dividends due on all of their total
holding. Details of employee share schemes are set out in note
24 to the financial statements. Details of long term incentive
schemes for the Directors are shown in the Remuneration Report
on pages 188 to 189.
Securities carrying special rights
There are no requirements for prior approval of any transfers and
no person holds securities in the Company carrying special rights
with regard to control of the Company.
Substantial shareholdings
Notifications of the following voting interests in the Company’s
ordinary share capital had been received by the Company
(in accordance with Chapter 5 of the DTR), with the information
received from the discloser stated to be correct at the time
of disclosure.
As at and up to 31 December 2024, the persons set out in the
table below have notified the Company, pursuant to DTR 5.1,
of their interests in the voting rights in the Company’s issued
share capital.
On the 5 March 2025, the Company received notification from
BlackRock that the number of ordinary shares they now hold
is 6,203,505 shares, being 7.69% of the issued share capital
at the time of notification.
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Statement of Directors’ responsibilities
Statement of Directors’ Responsibilities in respect
of the Annual Report, Strategic Report,
Directors’ Report and the financial statements
The Directors are responsible for preparing the Annual Report,
Strategic Report, the Directors’ Report and the Group and Parent
Company financial statements in accordance with applicable law
and regulations. Company law requires the Directors to prepare
Group and Parent Company financial statements for each
financial year. Under that law, they are required to prepare
the Group financial statements in accordance with UK-adopted
International Accounting Standards and applicable law and
have elected to prepare Parent Company financial statements
in accordance with UK accounting standards, including FRS 101
Reduced Disclosure Framework. Under company law, the
Directors must not approve the Financial Statements unless they
are satisfied that they give a true and fair view of the state of
affairs of the Group and Parent Company and of their profit or
loss for that period. In preparing each of the Group and Parent
Company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable, relevant,
reliable and prudent;
• for the Group financial statements, state whether they have
been prepared in accordance with UK adopted international
accounting standards;
• for the Parent Company financial statements, state whether
applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained
in the Parent Company financial statements;
• assess the Group and Parent Company’s ability to continue
as a going concern, disclosing, as applicable, matters related
to going concern; and
• use the going concern basis of accounting unless they either
intend to liquidate the Group or the Parent Company or to
cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent
Company’s transactions and disclose with reasonable accuracy,
at any time, the financial position of the Parent Company and
enable them to ensure that its financial statements comply with
the Companies Act 2006. They are responsible for such internal
control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error, and have general responsibility
for taking such steps as are reasonably open to them to
safeguard the assets of the Group and to prevent and detect
fraud and other irregularities. Under applicable law and
regulations, the Directors are also responsible for preparing
a Strategic Report, Directors’ Report, Directors’ Remuneration
Report and Corporate Governance Statement that comply with
that law and those regulations.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect
of the annual financial report
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.
By order of the Board
Karen Atterbury
Group Company Secretary
11 March 2025
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Opinion
• Hill & Smith PLC’s Group financial statements and Parent Company financial statements (the “financial statements”) give a true and
fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2024 and of the Group’s profit for the
year then ended;
• The Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;
• The Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
• The financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Hill & Smith PLC (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended
31 December 2024 which comprise:
Group
Parent company
Consolidated Income Statement
Company Balance Sheet
Consolidated Statement of Comprehensive Income
Company Statement of Changes in Equity
Consolidated Statement of Financial Position
Related notes 1 to 16 to the financial statements including material
accounting policy information
Consolidated statement of Changes in Equity
Consolidated Cash Flow Statement
Related notes 1 to 28 to the financial statements,
including material accounting policy information
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK
adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the Parent
Company financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure
Framework” (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group and Parent Company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group nor the Parent Company and we remain
independent of the Group and the Parent Company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group and Parent Company’s
ability to continue to adopt the going concern basis of accounting included:
• Understanding the process undertaken by management to perform the going concern assessment, including the evaluation of
current global macro-economic factors on the Group and the Group’s access to available sources of liquidity;
• Evaluating the appropriateness of the duration of the going concern assessment period to 30 June 2026 and considering the
existence of any significant events or conditions beyond this period, based on our inquiries of management, the Group’s 4 year
Strategic Plan and knowledge arising from other audit procedures.
• Obtaining management’s going concern assessment, including the cash flow forecasts and covenant calculations for the going
concern period to 30 June 2026. We verified these forecasts were consistent with the Board approved forecasts ensuring the
operating profit, working capital adjustments and resultant cashflows in the going concern assessment matched those in the
forecasts. The Group has modelled a base case, which is consistent with the assumptions used in the Group’s impairment
assessments. Additionally, two primary reverse stress tests have been modelled, which determine a) the additional revenue downside
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which could be absorbed before the Group runs out of liquidity and b) the revenue downside which would be required for the Group to
breach its financial covenants under its core borrowing facilities;
• Obtaining the signed agreements for the Group’s credit facilities and, through inspection, confirming the terms of these, including the
level of facilities and basis of covenants were consistent with those considered in management’s assessment;
• Confirming that management’s forecasts included the repayment of a portion of the Senior Unsecured Notes totalling £28.0m which
are due to be repaid in June 2026 being within the going concern period;
• Assessing the reasonableness of the key assumptions underpinning the Group’s forecasts in the context of other supporting
evidence gained from our audit procedures on goodwill impairment reviews. This included consideration of trends in Group
performance and other external market studies and data, such as analyst and industry forecasts. In particular, we assessed the
achievability of the revenue projections in management’s base case and downside scenario to the Group’s performance and external
industry forecasts;
• Assessing the historical accuracy of management’s forecasting for the past seven years, by comparing the Group’s actual results to
Board approved budgets and re-forecasts, to further challenge the prospective financial information included in the going concern
assessment;
• Scrutinising the results of management’s reverse stress test scenario and assessing whether the changes to key assumptions which
resulted in the Group either exhausting all of its liquidity or breaching covenants on the Group’s borrowing facilities were plausible.
This was achieved by considering the drop in revenues required for the Group to either run out of liquidity or breach covenants and
comparing this reduction to the fall in the Group’s actual results achieved through the course of the COVID-19 pandemic (being when
the Group had the lowest level of revenues and profits in the past five years). We also considered mitigating actions, assessing
whether they were within management’s control and whether they were supported by actual mitigations achieved historically;
• Testing the clerical accuracy of the models used to prepare the Group’s going concern assessment through re-computation of
the models;
• Performing sensitivity analysis to challenge management’s assessment of the impact of climate change based on their latest costed
plan; and
• Ensuring the appropriateness of the Group’s disclosures concerning the going concern basis of preparation by verifying these met
regulatory and legislative requirements.
The audit procedures performed to address this risk were performed by the Group audit team.
We observed that the Group achieved the forecasts that it was targeting in 2024. We observed the significant liquidity that the Group
has at its disposal that can be utilised should it be required.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group and Parent Company’s ability to continue as a going concern for a
period to 30 June 2026.
In relation to the Group and Parent Company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this
report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s ability
to continue as a going concern.
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Overview of our audit approach
Audit scope
• We performed an audit of the complete financial information of 5 trading components and 1 non-trading
component and audit procedures on specific balances for a further 25 components.
• We performed centralised procedures on the following accounts:
goodwill, acquired intangibles, loans and borrowings including associated financial expenses, investments in
subsidiary undertakings (Parent Company), retirement benefit obligations, equity (Group and Parent Company),
intercompany eliminations and consolidation journals.
• For certain accounts the audit procedures were completed by a combination of ourselves, as the primary team,
and by component auditors. These included cash and cash equivalents, right of use assets and liabilities,
income tax liabilities, deferred tax assets, deferred tax liabilities and classification of underlying / non-
underlying expenses.
Key audit matters
• Revenue recognition – the risk of management override through inappropriate manual journals to revenue or
inappropriate revenue cut-off
• Carrying value of goodwill in relation to the Prolectric and Hill & Smith Inc Cash Generating Units (“CGUs”)
• Valuation of inventory provisions
• Valuation and completeness of acquisition intangibles and valuation of contingent consideration on acquisitions
Materiality
• Overall Group materiality of £6.6m which represents 5% of adjusted operating profit.
• Parent Company materiality is determined to be £5.5 million which is 1.5% of equity.
An overview of the scope of the Parent Company and Group audits
Tailoring the scope
In the current year our audit scoping has been updated to reflect the new requirements of ISA (UK) 600 (Revised). We have followed a
risk-based approach when developing our audit approach to obtain sufficient appropriate audit evidence on which to base our audit
opinion. We performed risk assessment procedures, with input from our component auditors, to identify and assess risks of material
misstatement of the Group financial statements and identified significant accounts and disclosures. When identifying components at
which audit work needed to be performed to respond to the identified risks of material misstatement of the Group financial statements,
we considered our understanding of the Group and its business environment, the potential impact of climate change, the applicable
financial framework, the Group’s system of internal control at the entity level, the existence of centralised processes, applications and
any relevant internal audit results.
We determined that centralised audit procedures can be performed on all components in the following audit areas: goodwill impairment
assessments, elimination of intercompany balances and transactions over the course of the year, taxation, external loans and borrowings
and the associated interest charges, dividends and distributable reserve testing, testing of land and building related ROU assets and lease
liabilities, obtaining bank confirmations for all bank accounts held by the Group and consolidation adjustments.
We identified 20 components as individually relevant to the Group due to relevant events and conditions underlying the identified risks
of material misstatement of the Group financial statements being associated with the reporting components or a pervasive risks of
material misstatement of the Group financial statements or a significant risk or an area of higher assessed risk of material
misstatement of the Group financial statements being associated with the components. We did not identify any components of the
Group as individually relevant due to materiality or financial size of the component relative to the Group.
For those individually relevant components, we identified the significant accounts where audit work needed to be performed at these
components by applying professional judgement, having considered the Group significant accounts on which centralised procedures
will be performed, the reasons for identifying the financial reporting component as an individually relevant component and the size of
the component’s account balance relative to the Group significant financial statement account balance.
We then considered whether the remaining Group significant account balances not yet subject to audit procedures, in aggregate, could
give rise to a risk of material misstatement of the Group financial statements. We selected 11 components of the Group to include in
our audit scope to address these risks.
Having identified the components for which work will be performed, we determined the scope to assign to each component.
Of the 31 components selected, we designed and performed audit procedures on the entire financial information of 6 components (“full
scope components”). For 9 components, we designed and performed audit procedures on specific significant financial statement
account balances or disclosures of the financial information of the component (“specific scope components”). For the remaining 16
components, we performed specified audit procedures to obtain evidence for one or more relevant assertions.
Our scoping to address the risk of material misstatement for each key audit matter is set out in the Key audit matters section of our
report below.
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Involvement with component teams
In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each of the
components by us, as the Group audit engagement team, or by component auditors from other EY global network firms operating
under our instruction. Of the 6 full scope components, audit procedures were performed on 2 of these directly by the primary audit
team. Of the 25 components where we perform specific audit procedures, 18 of these were performed directly by the primary
audit team.
For the remaining 11 components, where the work was performed by component auditors, we determined the appropriate level of
involvement to enable us to determine that sufficient audit evidence had been obtained as a basis for our opinion on the Group as
a whole.
The Group audit team continued to follow a programme of planned visits that has been designed to ensure that the Senior Statutory
Auditor visits the overseas full scope component locations on a rotational basis. During the current year’s audit cycle, visits were
undertaken by the primary audit team to the component teams in the United States of America. These visits involved discussing the
audit approach with the component team and any issues arising from their work, meeting with local management, visiting subsidiary
operational sites, attending closing meetings and reviewing key audit working papers.
Where relevant, the Key Audit Matters sections provides detail of the level of involvement we had with component auditors to enable us to
determine that sufficient audit evidence had been obtained as a basis for our opinion on the Group financial statements as a whole.
We maintained continuous and open dialogue with the component audit teams in addition to holding formal meetings to ensure that we
are fully aware of their progress and the results of their procedures. Close meetings for full, specific and specified procedures components
(excluding those performed by the primary team) were held either in person or via video conference in January and February 2025 and
were attended by the Senior Statutory Auditor and/ or other members of the primary audit team. This, together with the additional
procedures performed at Group level, gave us appropriate evidence for our opinion on the Group financial statements.
Climate change
Stakeholders are increasingly interested in how climate change will impact Hill & Smith PLC. The Group has determined that the most
significant future impacts from climate change on their operations will be from transitioning to a lower carbon economy (transition
risk). These are explained on pages 58 to 62 in the required Task Force On Climate Related Financial Disclosures and on page 70 in the
principal risks and uncertainties. All of these disclosures form part of the “Other information,” rather than the audited financial
statements. Our procedures on these unaudited disclosures therefore consisted solely of considering whether they are materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appear to be materially
misstated, in line with our responsibilities on “Other information”.
In planning and performing our audit we review management’s assessment of the potential impacts of climate change on the Group’s
business and any consequential material impact on its financial statements.
The Group has explained how they have reflected the impact of climate change in their financial statements and in their Sustainability
Plan and how this aligns with their commitment to the aspirations of the Paris Agreement to achieve a carbon net zero target by 2040
for Scopes 1 and 2. The Basis of Preparation (Note 1) includes management’s assessment of the impact of climate change. These
disclosures, alongside information in the Strategic Report, explain how emerging regulatory requirements have been considered within
management’s “costed plan”. Management concluded that no issues were identified which would impact the carrying value of long and
indefinite lived assets nor have any other material impact on the financial statements.
Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating management’s
assessment of the impact of climate risk, physical and transition, their climate commitments, the effects of material climate risks
disclosed on page 61 and whether these have been appropriately reflected in judgements and estimates following the requirements of
UK adopted international accounting standards. This included challenging management’s assessment that the most relevant impact of
climate risks related to assets with indefinite and long lives and whether the carrying value of these assets could be impacted by
measures taken to address global warming. As part of this evaluation, we performed our own risk assessment, supported by our
climate change internal specialists, to determine the risks of material misstatement in the financial statements from climate change
which needed to be considered in our audit.
We also challenged the Directors’ considerations of climate change risks in their assessment of going concern and viability and
associated disclosures.
Based on our work, whilst we have not identified the impact of climate change on the financial statements to be a standalone key
audit matter, we have considered the impact on the following key audit matter: carrying value of goodwill in relation to Prolectric
and Hill & Smith Inc cash generating units. Details of the impact, our procedures and findings are included in our explanation of key
audit matters below.
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Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
Risk
Our response to the risk
Key observations
communicated
to the Audit Committee
Revenue recognition
The risk of management override through
inappropriate manual journals to revenue or
inappropriate revenue cut-off (£855.1m,
2023: £829.8m)
Procedures to respond to this risk were performed by both the primary audit team and
component teams.
Cut-off
There is a risk of inappropriate revenue
recognition if deliveries or revenue from the
provision of services are recorded in the wrong
period. This includes any estimation of revenue
recorded over time and completion of projects.
The level of risk associated to this key audit
matter is unchanged from the prior year.
We performed the following audit procedures at 5 full and 9 specific scope locations
where revenue is in scope. Revenue at these locations represents 81% of the total
revenue balance of £855.1m. These procedures were additionally performed at 11
trading components at which we performed specified procedures, representing a
further 19% of the total revenue balance before intra-Group eliminations.
We performed walkthroughs of the process by which revenue is recognised and
recorded at the full, specific and specified procedures scope locations.
For all trading components at which we performed specified procedures, data analytics
procedures were performed over the correlation of sales and cash receipts to test the
existence and occurrence of revenue being recorded in the correct period.
We performed cut-off testing procedures at each of the full and specific scope locations
to confirm the transactions had been appropriately recorded in the income statement
with reference to IFRS 15 and corroborated that control of the products had been
transferred to the customer by:
• Analysing the contract and terms of the sale to determine that the Group had fulfilled
the requirements of the contract and earned the right to revenue at the balance sheet
date;
• Confirming revenue could be reliably measured by reference to underlying
documentation; and
• Obtaining third party evidence such as delivery documentation and evidence of
customer acceptance at the year end date to verify the revenue had been recorded in
the correct period.
For engineered solutions revenue earned on provision of installation services, for a sample
of items we obtained evidence from the customer to confirm the stage of completion of
the installation at the year end to corroborate revenue was recognised in the correct
period and reflective the level of installation that has taken place in the year.
Where the Group recognises revenue over time on non-standard products, we
confirmed for a sample of transactions the Group’s right to payment for these products
by agreeing to the terms and conditions of the signed sales contract to ensure the
requirements of IFRS 15 had been met to recognise revenue in the current period. We
also enquired of operational personnel and inspected inventory ledgers and bill of
materials to confirm the products were non-standard and that significant re-work would
be required for the product to be sold via other means.
We examined post year end credit notes to assess any evidence of inappropriate
revenue recognition cut-off for the year ended 31 December 2024.
For all locations we performed analytical procedures to compare revenue recognised with
our expectations, management’s forecasts and, where possible, external market data.
Our audit procedures
did not identify
evidence of material
misstatements related
to revenue recognition
and we found no
evidence of
management bias.
Management override
As revenue is a key performance indicator for
external communication and a key input into
management’s earnings based incentives, we
also identified a risk of management override
through inappropriate manual topside
revenue journal entries being processed.
The level of risk associated to this key audit
matter is unchanged from the prior year.
At all in scope components we obtained and reviewed break downs of all manual
journals and for all material revenue journals and a sample of non-material revenue
journals we agreed the journal entries to underlying documentation to verify the
appropriateness of the revenue being recognised.
We assessed for evidence of management bias by testing all material manual journals
either side of the year end and agreeing journal entries to appropriate supporting evidence.
Revenue at these in scope components represents 94% of the total revenue balance.
For all components, we performed analytical procedures to compare revenue recognised
with our expectations, management’s forecasts and, where possible, external market data.
Our procedures
performed did not
identify any
unsupported manual
adjustments to revenue
or any unexplained
anomalies from our
revenue analytics.
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Risk
Our response to the risk
Key observations
communicated
to the Audit Committee
Carrying value of goodwill in relation to Hill & Smith Inc (£0.0m, 2023: £8.7m) and Prolectric (£5.5m, 2023: £5.5m)
Prolectric, originally acquired in 2021, has had a
track record of growth until the current year. A
combination of a slow down in their industry,
and operational challenges has reduced
headroom and increased sensitivity applicable
to this CGU.
Hill & Smith Inc. manufactures and sells a range
of traffic management solutions as well as the
sale and rental of crash prevention products.
The Hill & Smith Inc CGU performance has not
been in line with management’s forecasts nor
market expectations since 2022. Actions were
taken in the prior year to improve future trading
performance which have not yielded the
expected results. This led to management
reassessing the business’ future prospects,
which reflected muted profitability and slower
pace of growth than previously anticipated and
resulted in a £10.6m impairment of the CGUs
intangible assets.
The estimated recoverable amount for CGUs is
subjective due to the inherent uncertainty
involved in forecasting future growth and
profitability of the CGUs and the rate at which
the cash flows generated by the CGUs should
be discounted. A relatively small change in key
assumptions could give rise to a material
change in the estimated recoverable amount
of goodwill.
The effect of these matters is that, as part of
our risk assessment, we determined that the
value in use of goodwill has a high degree of
estimation uncertainty, with a potential range of
reasonable outcomes greater than our
materiality for the Financial Statements as a
whole.
The Financial Statements (Note 12) disclose the
sensitivity estimated by the Group.
Procedures to respond to this risk were performed by the primary audit team.
We examined management’s methodology and the model used for assessing the
valuation of the Hill & Smith Inc and Prolectric CGUs to understand the composition of
future cash flow forecasts and the process undertaken to prepare them.
We checked the underlying cash flows were consistent with the Board approved budgets.
We also re-performed the calculations in the model to test the mathematical integrity.
We performed detailed testing with support from our valuation specialists to critically
assess and corroborate the key inputs of the forecast cash flows including:
• Independently constructing our own expectation of the discount rates for a market
participant from first principles using input from our internal specialist valuations team;
• Analysing the historical accuracy of budgets versus actual results to determine the
reliability of cash flow forecasting based on past experience;
• Assessing the achievability of the budget and strategic plan results by considering
factors including historic results, and performance since lockdowns, drivers of
growth and reasonableness of margins;
• Challenging the medium and long-term forecast growth rates used by considering
evidence available such as industry and country forecasts and inflation data; and
• Analysing available information to identify any contrary evidence, including views
provided in analyst reports, and specifically for Hill & Smith Inc., market studies; and
• Assessing the impact of climate change on future forecasts, and how it has been
included in each assessment. This included challenging the completeness of
Management’s climate change “costed plan” which considers the financial impact of
their climate related commitments.
Specifically for each CGU, we further focussed on:
• For Prolectric, we agreed orders received in the last quarter of 2024 and first two
months of 2025 to support the near term growth forecasts for the CGU;
• For Hill & Smith Inc. we benchmarked expectations around future growth rates with
externally produced market studies and challenged if it was feasible for these growth
rates to be applied to the business.
• Our risk assessment also considered whether there was an incentive by management
to overstate the impairment charge for Hill & Smith Inc. We developed an independent
alternative scenario using mid-point assumptions of our internally developed ranges.
• We further challenged the achievability of management’s planned turnaround actions
and considered the timing and feasibility of completing these.
We assessed the disclosures in respect of goodwill and intangibles with reference to
the requirements of IAS 36 and confirmed their consistency with the audited
impairment models.
We challenged the completeness of range of scenarios considered in the sensitivity
analysis undertaken by management.
We assessed whether the disclosures in relation to the key assumptions around
Prolectric were adequate given the sensitivity of the level of headroom to possible
changes in these key assumptions.
All audit procedures performed to address this risk have been wholly performed by the
primary audit team.
Our year end audit
procedures did not
identify evidence of
material misstatement
regarding the carrying
value of goodwill in the
Group.
We consider the
impairment recognised
in relation to the Hill &
Smith Inc related CGU
to be materially stated
and appropriately
disclosed in non-
underlying items.
Management has
appropriately included
sensitivity analysis
disclosures in Note 12
to the Financial
Statements to reflect
the level of estimation
uncertainty for
Prolectric.
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Risk
Our response to the risk
Key observations
communicated
to the Audit Committee
Valuation of inventory provisions (Net inventory value – £100.7m, 2023: £106.1m)
The valuation of inventory across the Group is
dependent on establishing appropriate valuation
processes including estimation of excess and
obsolete stock. The assessment of how much
excess and obsolete inventory exists requires
judgement to be applied in finalising the inventory
valuation and level of provisioning required. If
these judgements are not appropriate then there is
a risk that inventory is incorrectly valued.
The level of risk associated to the element of the
inventory provisioning key audit matter is
unchanged from the prior year.
The level of risk associated to the valuation of
gross inventory value has decreased from the
prior year reflecting the ERP IT system upgrades
and enhancement to inventory valuation
processes that have taken place across the
Group. This led to the removal of the gross
inventory valuation risk from the key audit matter.
Procedures to respond to this risk were performed by both the primary audit team and
component teams.
We performed the following audit procedures at 5 full, 9 specific scope, and 3 specified
procedures components where inventory is in scope. Inventory at these components
represents 90% of the total inventory balance.
We performed walkthroughs of inventory valuation methods at each of the full and
specific scope components where inventory was in scope.
Of the components in scope for inventory, we were able to physically attend all counts
to observe any physical evidence of obsolescence.
We obtained evidence to support that inventory is held at the lower of cost and net
realisable value by assessing the adequacy of excess and obsolete provisions held
against inventory. This included comparing forecast product usage to customer orders,
considering historical usage, historical accuracy of provisioning and understanding
management’s future plans to utilise the inventory.
We performed clerical procedures on the formulaic calculations to evaluate the accuracy of
the inventory provisioning. On occasion, management makes adjustments to the formulaic
provision calculations. We evaluated the assumptions and judgements applied by
management in determining the provision recorded in the Financial Statements.
The basis for assessing
the adequacy of the
excess and obsolete
inventory provisions
across the Group is
considered appropriate.
Valuation and completeness of goodwill and acquisition intangibles £45.4m (2023: £36.8m) and valuation of contingent consideration arising
from acquisitions £13.2m (2023: £nil)
During the year the Group made four
acquisitions recognising goodwill and
identifiable intangible assets of £45.4m.
There is a high level of estimation uncertainty
and subjectivity associated with valuing the
intangible assets.
Three of the acquisitions have deferred
consideration associated to them which is
variable based on the future economic
performance of the businesses. Estimations
are required at the acquisition date of how
much deferred consideration will be payable.
An amount of £14.3m has been assumed in
determining the goodwill balance for these
acquisitions.
If the estimations used to value the
identifiable intangible assets and deferred
consideration are not appropriate there is a
risk the goodwill, identifiable intangible assets
and deferred consideration balances are
materially misstated.
Procedures to respond to this risk were performed by the primary audit team.
We obtained an understanding of the acquisitions through inquiry of management. This
included understanding the methodology and process undertaken to identify and prepare
valuation of the acquired intangible assets. We also walked through the controls over the
valuation of the acquired intangible assets, valuation of deferred consideration and
understood management’s process to comply with IFRS 3 Business Combinations.
We performed detailed testing of the acquisitions, with support from our valuation
specialists to critically assess and corroborate the key inputs of the valuation including:
• Independently, using EY’s valuation specialists, constructed our own expectation of
the weighted average cost of capital, royalty rate and internal rate of return and
compared them to those derived by management;
• Analysing the historical accuracy of budgets versus actual results to determine the
reliability of cash flow forecasting based on past experience;
• Verifying opening balances to ensure that they are correctly incorporated into the
consolidation for the Group financial statements through a detailed monthly trend
analysis of the assets and liabilities acquired;
• Challenging the completeness of intangible assets identified through the acquisition
accounting process; and
• Assessing the competence of managements specialists engaged to perform the
valuation of the acquired intangibles.
Using publicly available third-party market data sources we performed procedures to
benchmark managements assumptions and to understand the extent to which the changes in
the key assumptions gave rise to a materially different valuation for the intangible assets. This
included developing a range of alternative scenarios, sensitising the assumptions we
considered most subject to change using plausible variations on those assumptions.
The assumptions used in our alternative scenarios considered:
• Appropriateness of the valuation methodologies applied to each separately
identifiable intangible asset identified;
• Understanding assumptions made by management, such as; weighted average cost
of capital, royalty rate and internal rate of return and compared them to our
independently calculated range; and
• Benchmarking of the royalty rate and discount rate assumptions to other
transactions which have occurred within the sector.
We have scrutinised the Sale and Purchase Agreements and assessed the appropriateness of
management’s calculations in determining the consideration paid for the business.
We assessed whether the disclosures in the group financial statements were in
accordance with the requirements of IFRS 3.
For the acquisitions made where deferred consideration existed, we scrutinised the
agreements to understand the requirements needed for payment to be made, assessed
the classification of contingent consideration, obtained management’s models and tested
the significant assumptions and clerical accuracy without exception.
Our year end audit
procedures did not
identify evidence of
material misstatement
regarding the value of
goodwill, identifiable
intangible assets and
deferred consideration
arising on the
acquisitions.
We have confirmed the
disclosures included
within Note 12 provide
the required
information per IFRS 3
Business Combinations.
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Governance
In the current year, the following changes have been reflected in our Key Audit Matters (“KAMs”):
• For the year ended 31 December 2023, our Key Audit Matter on impairment included the carrying value of assets in the ATG Access
CGU. This is no longer considered a Key Audit Matter given the actual performance of ATG Access and the resultant available
headroom compared to the carrying value of the assets in the CGU.
• For the year ended 31 December 2023, our auditor’s report included a Key Audit Matter in relation to the gross valuation of inventory
and the establishment of standard costing bases. The strengthening of standard costing bases and ERP IT System upgrades that
have taken place across the Group have improved access to information related to inventory valuation techniques and accordingly
we no longer consider this element of inventory valuation to be a Key Audit Matter.
• The increased cash and deferred consideration paid for acquisitions during the year ended 31 December 2024 and associated
goodwill and intangible assets recognised on these acquisitions has led to an increased risk of material misstatement associated
to the acquisitions. This has led to the inclusion of this risk as a Key Audit Matter.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the
audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the
economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our
audit procedures.
We determined materiality for the Group to be £6.6 million (2023: £5.2 million), which is 5% (2023: 5%) of adjusted operating profit.
We believe that adjusted operating profit provides is the most relevant performance measure to the stakeholders of the Group
as it excludes material non-recurring items.
We initially calculated materiality for the Group to be £6.5 million based on 5% of forecast adjusted operating profit. The final results
were higher than management’s initial forecast. Therefore, we reassessed final materiality to be £6.6 million based on 5% of adjusted
operating profit.
£115.4m
Reported operating profit
£16.4m
Impairment
£131.8m
Adjusted operating profit
£6.6m
Materiality (5% of adjusted operating profit)
Adjustments
Materiality
Starting basis
We determined materiality for the Parent Company to be £5.5 million (2023: £5.3 million), which is 1.5% (2023: 1.5%) of equity.
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Independent auditor’s report to the members of Hill & Smith PLC continued
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that
performance materiality was 75% (2023: 75%) of our planning materiality, namely £4.9 million (2023: £3.9 million). We have set
performance materiality at this percentage due to our expectation of misstatements being low.
Audit work was undertaken at component locations for the purpose of responding to the assessed risks of material misstatement
of the Group financial statements. The performance materiality set for each component is based on the relative scale and risk of the
component to the Group as a whole and our assessment of the risk of misstatement at that component. In the current year, the range
of performance materiality allocated to components was £0.7 million to £2.8 million (2023: £0.4 million to £2.5 million).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £0.3 million
(2023: £0.3 million), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other
relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report set out on pages 1 to 126, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there
is a material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• The information given in the strategic report and the directors’ report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
• The strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course
of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if,
in our opinion:
• Adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received
from branches not visited by us; or
• The Parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
• Certain disclosures of directors’ remuneration specified by law are not made; or
• We have not received all the information and explanations we require for our audit.
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Governance
Corporate Governance Statement
We have reviewed the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance
Statement relating to the Group and company’s compliance with the provisions of the UK Corporate Governance Code specified for
our review by the UK Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on page 89;
• Directors’ explanation as to its assessment of the company’s prospects, the period this assessment covers and why the period
is appropriate set out on page 90;
• Director’s statement on whether it has a reasonable expectation that the Group will be able to continue in operation and meets
its liabilities set out on page 90;
• Directors’ statement on fair, balanced and understandable set out on page 90;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 88;
• The section of the annual report that describes the review of effectiveness of risk management and internal control systems set
out on page 88; and
• The section describing the work of the audit committee set out on page 96.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 126, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and Parent company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery
or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the
company and management.
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most
significant which are directly relevant to specific assertions in the Financial Statements are those that relate to the reporting
framework (UK adopted international accounting standards, United Kingdom Generally Accepted Accounting Practice, the
Companies Act 2006 and the UK Corporate Governance Code). In addition, we concluded that there are certain significant laws and
regulations which may have an effect on the determination of the amounts and disclosures in the Financial Statements being the
UK Listing Rules and those laws and regulations relating to data privacy, health & safety and employee matters.
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Independent auditor’s report to the members of Hill & Smith PLC continued
• We understood how Hill & Smith PLC is complying with those frameworks by making enquiries of management, Internal Audit,
those responsible for legal and compliance procedures and the Company Secretary. We corroborated our enquiries through our
review of Board minutes, papers provided to the Audit Committee and correspondence received from regulatory bodies. We also
observed the oversight of those charged with governance, the culture of honest and ethical behaviour and whether a strong
emphasis is placed on fraud prevention and deterrence, which may reduce opportunities for fraud to take place.
• We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur,
by meeting with management from various parts of the business to understand where it considered there was susceptibility to fraud.
We also considered performance targets and their influence on efforts made by management to manage earnings or influence
the perceptions of analysts. We considered the programmes and controls that the Group has established to address risks identified,
or that otherwise prevent, deter and detect fraud; and how senior management monitors those programmes and controls.
Where the risk was considered to be higher, we performed audit procedures to address each identified fraud risk. These procedures
included testing manual journals and were designed to provide reasonable assurance that the Financial Statements were free from
fraud or error.
• Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations.
Our procedures involved journal entry testing, with a focus on manual consolidation journals and journals indicating large or unusual
transactions based on our understanding of the business; scrutiny of management specialist reports; enquiries of internal and
external legal counsel, Group management, Internal Audit, full and specific scope component management; and focused testing,
as referred to in the key audit matters section above. As appropriate, we also involved EY specialists to assist with our procedures.
• Component teams reported any non-compliance with laws and regulations through their audit deliverables based on the procedures
detailed in the previous paragraph. Further, the Group team communicated any instances of non-compliance with laws and
regulations to component teams through regular interactions with local EY teams.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters we are required to address
• Following the recommendation from the audit committee we were appointed by the company on 14th July 2020 to audit the financial
statements for the year ending 31 December 2020 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is 5 years, covering the years ending
31 December 2020 to 31 December 2024.
• The audit opinion is consistent with the additional report to the audit committee.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions
we have formed.
Helen McLeod-Jones (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Birmingham
11 March 2025
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137
Strategic Report
Financials
Shareholder Info
Governance
Consolidated Income Statement
Year ended 31 December 2024
Notes
2024
2023
Underlying
£m
Non-
underlying*
£m
Total
£m
Underlying
£m
Non-
underlying*
£m
Total
£m
Revenue
3
855.1
—
855.1
829.8
—
829.8
Cost of sales
(513.3)
—
(513.3)
(513.1)
—
(513.1)
Gross profit
341.8
—
341.8
316.7
—
316.7
Distribution costs
(26.8)
—
(26.8)
(24.7)
—
(24.7)
Administrative expenses
(172.0)
(28.1)
(200.1)
(169.9)
(18.7)
(188.6)
Other operating income
0.5
—
0.5
0.4
—
0.4
Operating profit
3, 4
143.5
(28.1)
115.4
122.5
(18.7)
103.8
Financial income
7
0.5
—
0.5
0.5
—
0.5
Financial expenses
7
(11.4)
—
(11.4)
(11.1)
—
(11.1)
Profit before taxation
132.6
(28.1)
104.5
111.9
(18.7)
93.2
Taxation
9
(34.0)
5.9
(28.1)
(27.6)
3.2
(24.4)
Profit for the year attributable to the owners of the
parent
98.6
(22.2)
76.4
84.3
(15.5)
68.8
Basic earnings per share
10
95.0p
86.0p
Diluted earnings per share
10
93.9p
85.0p
*
The Group’s definition of non-underlying items is included in the Group Accounting Policies on page 151 and further details on non-underlying items are included in note 5.
138
Consolidated Statement
of Comprehensive Income
Year ended 31 December 2024
Notes
2024
£m
2023
£m
Profit for the year
76.4
68.8
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of overseas operations
23
5.6
(19.4)
Exchange differences on foreign currency borrowings designated as net investment hedges
23
(0.6)
4.2
Items that will not be reclassified subsequently to profit or loss
Actuarial loss on defined benefit pension schemes
26
(0.2)
(0.4)
Taxation on items that will not be reclassified to profit or loss
9
—
0.1
Other comprehensive income/(loss) for the year
4.8
(15.5)
Total comprehensive income for the year attributable to owners of the parent
81.2
53.3
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Governance
Consolidated Statement
of Financial Position
31 December 2024
Notes
2024
£m
2023
£m
Non-current assets
Intangible assets
12
236.0
205.7
Property, plant & equipment
13
185.1
184.4
Right-of-use assets
15
43.2
41.8
Corporation tax receivables
9
—
1.6
Deferred tax assets
16
0.1
0.4
464.4
433.9
Current assets
Assets held for sale
14
12.7
2.5
Inventories
17
100.1
106.1
Trade and other receivables
18
162.5
137.3
Current tax assets
1.3
0.8
Cash and cash equivalents
19
55.0
34.4
331.6
281.1
Total assets
796.0
715.0
Current liabilities
Liabilities held for sale
14
(6.9)
—
Trade and other liabilities
20
(133.5)
(119.6)
Current tax liabilities
(0.7)
(3.9)
Provisions
22
(7.1)
(6.6)
Lease liabilities
15
(9.1)
(8.0)
Loans and borrowings
20
(0.8)
(1.4)
(158.1)
(139.5)
Net current assets
173.5
141.6
Non-current liabilities
Other liabilities
21
(11.2)
(1.0)
Provisions
22
(2.3)
(2.6)
Deferred tax liabilities
16
(12.3)
(9.9)
Retirement benefit obligations
26
(0.8)
(4.1)
Lease liabilities
15
(36.9)
(35.7)
Loans and borrowings
21
(98.7)
(97.7)
(162.2)
(151.0)
Total liabilities
(320.3)
(290.5)
Net assets
475.7
424.5
Equity
Share capital
24
20.1
20.0
Share premium
47.0
44.6
Other reserves
4.9
4.9
Translation reserve
27.9
22.9
Retained earnings
375.8
332.1
Total equity
475.7
424.5
Approved by the Board of Directors on 11 March 2025 and signed on its behalf by:
RA Helbing
Director
HK Nichols
Director
Company Number: 671474
140
Consolidated Statement
of Changes in Equity
Year ended 31 December 2024
Notes
Share capital
£m
Share premium
£m
Other reserves
£m
Translation
reserve
£m
Retained
earnings
£m
Total equity
£m
At 1 January 2023
20.0
42.8
4.9
38.1
289.2
395.0
Comprehensive income
Profit for the year
—
—
—
—
68.8
68.8
Other comprehensive loss for the year
—
—
—
(15.2)
(0.3)
(15.5)
Transactions with owners recognised directly in
equity
Dividends
11
—
—
—
—
(28.0)
(28.0)
Credit to equity of share-based payments
24
—
—
—
—
3.7
3.7
Own shares held by employee benefit trust
—
—
—
—
(1.6)
(1.6)
Satisfaction of long-term incentive and deferred
bonus awards
—
—
—
—
(1.0)
(1.0)
Tax taken directly to the Consolidated Statement of
Changes in Equity
9
—
—
—
—
1.3
1.3
Shares issued
24
—
1.8
—
—
—
1.8
At 31 December 2023
20.0
44.6
4.9
22.9
332.1
424.5
Comprehensive income
Profit for the year
—
—
—
—
76.4
76.4
Other comprehensive income for the year
—
—
—
5.0
(0.2)
4.8
Transactions with owners recognised directly in
equity
Dividends
11
—
—
—
—
(34.5)
(34.5)
Credit to equity of share-based payments
24
—
—
—
—
3.4
3.4
Own shares held by employee benefit trust
—
—
—
—
1.6
1.6
Satisfaction of long-term incentive and deferred
bonus awards
—
—
—
—
(2.8)
(2.8)
Tax taken directly to the Consolidated Statement of
Changes in Equity
9
—
—
—
—
(0.2)
(0.2)
Shares issued
24
0.1
2.4
—
—
—
2.5
At 31 December 2024
20.1
47.0
4.9
27.9
375.8
475.7
At 31 December 2023 a total of 156,484 shares were held in an employee benefit trust for the purpose of settling awards granted
to employees under equity-settled share based payment plans. The cost of these shares, amounting to £2.9m, was included within
retained earnings at that date. During 2024, 161,760 shares have been issued in settlement of awards to employees and a further
75,594 shares purchased, leaving 70,318 shares held at 31 December 2024, at a cost of £1.3m included within retained earnings.
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Strategic Report
Financials
Shareholder Info
Governance
Consolidated Statement
of Cash Flows
Year ended 31 December 2024
Notes
2024
£m
2023
£m
Profit before tax
104.5
93.2
Add back net financing costs
7
10.9
10.6
Operating profit
3, 4
115.4
103.8
Adjusted for non-cash items:
Share-based payments
6, 24
3.4
4.1
Loss on disposal of subsidiaries
5
—
4.2
(Gain)/loss on disposal of non-current assets
8
(0.4)
0.2
Loss/(gain) on disposal of assets held for sale
8, 14
0.2
(0.7)
Depreciation of owned assets
8, 13
20.8
19.7
Amortisation of intangible assets
8, 12
11.1
9.6
Right-of-use asset depreciation
8, 15
10.4
9.3
Gain on lease termination
15
(0.6)
(0.1)
Release of accrued contingent consideration
(1.7)
—
Research & development expenditure credit
(0.5)
—
Impairment of non-current assets
8, 12, 13, 15
14.0
1.3
Loss on remeasurement of assets held for sale
5, 14
3.1
—
Operating cash flow before movement in working capital
175.2
151.4
Decrease in inventories
9.3
15.0
(Increase)/decrease in receivables
(11.8)
8.0
Increase/(decrease) in payables
3.1
(0.2)
Increase in insurance reimbursement asset
19, 22
(3.8)
—
Decrease in provisions and employee benefits
(3.4)
(0.8)
Net movement in working capital
(6.6)
22.0
Cash generated by operations
168.6
173.4
Purchase of assets for rental to customers
(2.3)
(2.3)
Income taxes paid
(26.5)
(31.7)
Interest paid
7
(8.8)
(8.9)
Interest paid on lease liabilities
15
(2.0)
(1.3)
Net cash from operating activities
129.0
129.2
Interest received
7
0.5
0.5
Proceeds on disposal of non-current assets
1.1
0.8
Proceeds on disposal of assets held for sale
2.3
2.5
Purchase of property, plant and equipment
(21.3)
(26.7)
Purchase of intangible assets
(5.0)
(2.8)
Acquisitions of subsidiaries
13
(44.5)
(48.4)
Deferred consideration in respect of prior year acquisitions
(2.1)
(2.8)
Disposals of subsidiaries
5
—
(0.2)
Net cash used in investing activities
(69.0)
(77.1)
Issue of new shares
24
2.5
1.8
Purchase of shares for employee benefit trust
19
(1.2)
(2.6)
Dividends paid
11
(34.5)
(28.0)
Costs associated with refinancing during the year
19
—
(0.5)
Repayment of lease liabilities
19
(9.0)
(9.4)
Cash paid on early termination of lease contract
(0.1)
—
New loans and borrowings
19
62.5
73.9
Repayment of loans and borrowings
19
(63.7)
(76.3)
Net cash used in financing activities
(43.5)
(41.1)
Net increase in cash and cash equivalents net of bank overdraft
16.5
11.0
Cash and cash equivalents net of bank overdraft at the beginning of the year
34.4
24.8
Effect of exchange rate fluctuations
0.4
(1.4)
Cash and cash equivalents net of bank overdraft and overdraft classified as held for sale at the end
of the year
19
51.3
34.4
142
Notes to the Consolidated
Financial Statements
1. Group Accounting Policies
Hill & Smith PLC is a company incorporated in the UK. The consolidated financial statements of Hill & Smith PLC and its subsidiaries
(the “Group”) are presented for the year ended 31 December 2024.
The Group Financial Statements have been prepared and approved by the Directors in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006 and UK-adopted International Accounting Standards.
The Company has elected to prepare its Parent Company Financial Statements, which are presented on pages 198 to 209, in
accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”).
The Accounting Policies set out below have, unless otherwise stated, been applied consistently in all periods presented in these Group
Financial Statements. Judgements made by the Directors in the application of these Accounting Policies that have a significant effect
on the Group Financial Statements and estimates with a significant risk of material adjustment in the next year are discussed in note 2.
Basis of preparation
The consolidated financial statements comprise the financial statements of the Company, Hill & Smith PLC, and its subsidiaries as
at 31 December 2024. Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
The acquisition date is the date on which control is transferred to the acquirer. The financial statements of subsidiaries are included
in the Group Financial Statements from the date that control commences until the date that control ceases.
In preparing the consolidated financial statements, management has considered the impact of climate change, taking into account
the relevant disclosures in the Strategic Report, including those made in accordance with the recommendations of the Taskforce
on Climate-related Financial Disclosures. This included an assessment of assets with indefinite and long lives and how they could
be impacted by measures taken to address global warming. As outlined in the Operational and Financial Review on page 30, physical
climate change presents a relatively low risk to the Group’s future business operations and transition risks are also expected to have
a relatively low impact when considered together with the mitigating actions that the Group intends to take. As such, no issues were
identified that would impact the carrying values of such assets or have any other impact on the financial statements.
Measurement convention
The Group Financial Statements are prepared on the historical cost basis except where the measurement of balances at fair value is
required as explained below. The Group Financial Statements are presented in Sterling and all values are stated in million (£m) rounded
to one decimal place, except where otherwise indicated.
Going concern and liquidity risk
In determining the appropriate basis of preparation of its financial statements, the Directors are required to assess whether the Group
can continue in operational existence for the foreseeable future, at least 12 months from the date of approval of these financial
statements. The Group’s going concern assessment period is the 18-month period from the balance sheet date to 30 June 2026
(referred to throughout as ‘the going concern period’). When making this assessment, the Group considers whether it will be able
to maintain adequate liquidity headroom above the level of its borrowing facilities and to operate within the financial covenants
on those facilities during the going concern period.
At 31 December 2024, the Group had £308.1m of committed borrowing facilities, of which only £28.5m matures within the going
concern period, and a further £6.7m of on-demand facilities. The Group’s principal debt facilities include: its core £250m revolving credit
facility, which expires in November 2027; $70m of US Senior Unsecured Notes, one tranche ($35m) of which is due to expire in June
2026 and the second tranche ($35m) is due to expire in June 2029; and other local committed borrowing facilities of £2.1m. The
amount drawn down under these committed facilities at 31 December 2024 was £100.7m, which together with cash and cash
equivalents (including any overdrafts classified as held for sale) of £51.6m gave total headroom of £265.4m (£259m committed, £6.4m
on demand). The Group has not made any changes to its principal borrowing facilities between 31 December 2024 and the date
of approval of these financial statements. The only significant changes to liquidity headroom during that period were the disposals
of Hill & Smith Pty and Parking Facilities (see Note 14 for further details) which positively impacted headroom.
The principal borrowing facilities are subject to covenants that are measured biannually in June and December, being net debt to
EBITDA of a maximum of 3.0x and interest cover of a minimum of 4.0x, based on measures as defined in the facilities agreements
which are adjusted from the equivalent IFRS amounts. The ratio of net debt to EBITDA at 31 December 2024 was 0.3 times and interest
cover was 20.4 times. Note 23 to the Financial Statements sets out more information on the Group’s objectives, policies and processes
for managing its capital, its financial risk management objectives, details of its financial instruments and hedging activities, and its
exposures to credit and liquidity risk.
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Going concern and liquidity risk continued
The Group has carefully modelled its cash flow outlook for the going concern period, taking account of the current global economic
conditions. In this ‘base case’ scenario, the forecasts indicate significant liquidity headroom will be maintained above the Group’s
borrowing facilities and financial covenants will be met throughout the period, including the covenant tests at 30 June 2025,
31 December 2025 and 30 June 2026. The base case scenario assumes full repayment of the first tranche of US Senior Unsecured
Notes ($35m) which are due to expire in June 2026.
The Group has carried out stress tests against the base case to determine the performance levels that would result in a breach of covenants or
a reduction of headroom against its borrowing facilities to nil. For a breach of covenants to occur during the relevant period, the Group would
need to experience a sustained revenue reduction of 32% compared with current expectations throughout the going concern period. A reduction
in headroom against borrowing facilities to nil would occur if the Group experienced a sustained revenue reduction of 33% compared with
current expectations for the going concern period. The Directors do not consider any of these scenarios to be plausible given the generally
positive outlook across the infrastructure markets in which the Group operates. The Directors also noted the Group’s ability to continue its
operations throughout the COVID-19 pandemic, noting that revenues fell by only 22% in the second quarter of 2020, the worst-affected period.
Furthermore, the Group has several mitigating actions under its control including minimising capital expenditure to critical requirements,
reducing levels of discretionary spend, rationalising its overhead base and curtailing future dividend payments which, although not forecast to
be required, could be implemented in order to be able to meet the covenant tests and to continue to operate within borrowing facility limits.
After making these assessments, the Directors have reasonable expectation that the Company and its subsidiaries have adequate
resources to continue in operational existence during the going concern period. Accordingly, they continue to adopt the going concern
basis in preparing the Annual Report and Financial Statements.
New IFRS standards and interpretations adopted during 2024
The following amendments and interpretations applied for the first time in 2024, and therefore were adopted by the Group:
• Amendments to IAS 1 — Classification of liabilities as current or non-current and non-current liabilities with covenants
• Amendments to IFRS 16 — Lease Liability in a Sale and Leaseback
• Amendments to IAS 7 and IFRS 7 — Supplier Finance Arrangements
These amendments have not had a material impact on the financial statements.
New IFRS standards and interpretations to be adopted in the future
The following standards and interpretations, which are not yet effective and have not been early adopted by the Group, will, where
relevant, be adopted in future accounting periods:
To be adopted for year-ending 31 December 2025:
• Amendments to IAS 21 — Lack of exchangeability
To be adopted for year-ending 31 December 2026:
• Amendments to IFRS 9 and IFRS 7 — Classification and Measurement of Financial Instruments
• IFRS 9 and IFRS 7 — Contracts Referencing Nature-dependent Electricity
To be adopted for year-ending 31 December 2027:
• IFRS 18 — Presentation and Disclosure in Financial Statements
• IFRS 19 — Subsidiaries without Public Accountability
The above changes are not expected to have a material impact on the Group.
Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate
of the consideration transferred, which is measured at acquisition date fair value. Acquisition-related costs are expensed as incurred and
included in non-underlying costs (see accounting policy ‘non-underlying items’). Fair value adjustments are always considered to be provisional
at the first year end date after the acquisition to allow the maximum time to elapse for management to make a reliable estimate.
The Group determines that it has acquired a business when the acquired set of activities and assets include an input and a substantive
process that together significantly contribute to the ability to create outputs. The acquired process is considered substantive if it is
critical to the ability to continue producing outputs, and the inputs acquired include an organised workforce with the necessary skills,
knowledge, or experience to perform that process or it significantly contributes to the ability to continue producing outputs and is
considered unique or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs.
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1. Group Accounting Policies continued
Contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Where it meets the definition
of a financial liability, the fair value will be re-measured at each subsequent reporting period and the re-remeasurement will be recognised as a
non-underlying charge or credit in the consolidated income statement. The determination of fair value is based on discounted cash flows. The key
assumptions take into consideration the probability of meeting each performance target and the discount factor (see note 23 for further details).
Intangible assets — Goodwill
Goodwill on acquisition of subsidiaries is initially measured at cost and comprises the excess of the fair value of the purchase
consideration paid for subsidiaries over the Group’s share of the fair value of the identifiable assets and liabilities acquired. After initial
recognition, goodwill is measured at cost less impairment losses (see accounting policy ‘Impairment of assets’).
Intangible assets — Other
Other intangible assets that are acquired by the Group as part of a business combination, such as brands, patents and customer lists,
are stated at cost less accumulated amortisation and impairment losses (see accounting policy ‘Impairment of assets’). Cost reflects
management’s judgement of the fair value of the individual intangible asset calculated by reference to the net present value of future
benefits accruing to the Group from the utilisation of the asset, discounted at an appropriate discount rate.
Certain US brands are considered to have an indefinite life and are therefore subject to annual impairment testing (see accounting
policy ‘Impairment of assets’). In determining that these brands have indefinite lives, consideration was given to the extent of their
trading history, which in all cases exceeds 50 years, their prominence in the markets in which they operate, and the nature of the
products sold under those brands in the context of potential for future development. For other brands, patents and customer lists,
amortisation is provided equally over the estimated useful economic life of the assets concerned, currently up to 20 years. Amortisation
of such items is recorded as a non-underlying item within administrative expenses (note 5).
Where computer software is non-cloud based and not an integral part of a related item of computer hardware, the software is treated
as an intangible asset. Acquired computer software licences are capitalised on the basis of costs incurred to acquire and bring into use
the specific software. Where software is cloud-based (stored, managed and available through the cloud), the associated licence costs
generally do not meet the criteria for recognition of an intangible asset since cloud-based arrangements generally do not provide a
resource that the Group can control. Accordingly, such licenses are expensed to the Consolidated Income Statement. The development
and implementation of a cloud-based system could give rise to an intangible asset. Each cloud-based computing arrangement is
considered on a case-by-case basis. Where it is determined that a cloud computing arrangement does not include an intangible asset,
the implementation costs are expensed to the Consolidated Income Statement.
An internally generated intangible asset arising from the Group’s development of computer systems (including websites) is recognised
if, and only if, the costs are directly associated with the production of identifiable and unique software products controlled by the Group,
and it is probable that future economic benefits will flow to the Group. Amortisation is provided equally over the estimated useful
economic life of the assets concerned, currently up to seven years.
Trade licences are amortised over the specific term granted to each individual licence.
An intangible asset is derecognised upon disposal (i.e. at the date the recipient obtains control) or when no future economic benefits
are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the asset) is included in the Consolidated Income Statement.
Intangible assets — Research and development costs
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset
when the Group can demonstrate:
• The technical feasibility of completing the intangible asset so that the asset will be available for use or sale;
• Its intention to complete and its ability and intention to use or sell the asset;
• How the asset will generate future economic benefits;
• The availability of resources to complete the asset; and
• The ability to measure reliably the expenditure during development.
The expenditure capitalised includes the cost of materials, direct labour and an appropriate amount of directly attributable overheads.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation
and accumulated impairment losses (see accounting policy ‘Impairment of assets’). Amortisation of the asset begins when
development is complete and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation
is recorded in administrative expenses. During the period of development, the asset is tested for impairment annually.
Other development expenditure is recognised in the Consolidated Income Statement as an expense as incurred.
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Property, plant, equipment and depreciation
Property, plant and equipment are recorded in the Group’s Consolidated Statement of Financial Position at cost less accumulated
depreciation and any recognised impairment loss. Cost includes, where appropriate, directly attributable costs incurred in bringing each
asset to its present condition and location.
Assets in the course of construction are stated at cost, net of any accumulated impairment losses.
Certain of the Group’s Roads businesses routinely generate revenue from the rental of assets to customers. Such assets are accounted
for as plant and equipment. If an asset that is held for rental is sold, the asset is transferred from property, plant and equipment
to inventories at the carrying amount when the asset ceases to be rented. The proceeds from the sale of such assets are recognised
as revenue in the Consolidated Income Statement.
Depreciation is provided to write off the cost or deemed cost less the estimated residual value of property, plant and equipment
(excluding assets in the course of construction) by equal instalments over their estimated useful economic lives as follows:
Buildings and leasehold improvements
5 to 50 years
Plant, machinery and vehicles
up to 20 years
No depreciation is provided on freehold land.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end
and adjusted prospectively, if appropriate.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal (i.e. at the date
the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising
on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset)
is included in the Consolidated Income Statement when the asset is derecognised.
Repair and maintenance costs are recognised in the Consolidated Income Statement as incurred.
Impairment of assets
For goodwill and intangible assets that have an indefinite life, the recoverable amount is assessed at each year end date, or when
indicators of impairment exist, and an impairment loss is recognised, where appropriate, for the amount by which the asset’s carrying
amount exceeds its recoverable amount. Impairment reviews are undertaken at the level of each significant cash generating unit, which
are no larger than operating segments as defined in IFRS 8 — Segmental reporting.
The carrying amounts of the Group’s other non-financial assets, other than inventories (see accounting policy ‘Inventories’) and deferred
tax balances (see accounting policy ‘Deferred taxation’), are reviewed at each year end date to determine whether there is an indication
of impairment. If such an indication exists, the relevant asset’s recoverable amount is estimated. An impairment loss is recognised
whenever the carrying amount of the asset or its cash generating unit exceeds its recoverable amount.
The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair value less costs to sell. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset.
Non-current assets held for sale and discontinued operations
The Group classifies non-current assets and disposal groups as held for sale if their carrying amount will be recovered principally
through sale rather than through continuing use. On initial classification as held for sale, non-current assets and disposal groups are
measured at the lower of the previous carrying amount and fair value less costs to sell with any adjustments taken to the Consolidated
Income Statement. The same applies to gains and losses on subsequent remeasurement. Costs to sell are the incremental costs
directly attributable to the disposal of an asset or disposal group, excluding finance costs and income tax expense.
The criteria for held for sale classification are regarded as met only when the sale is highly probable, and the asset or disposal group
is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that
significant changes to the sale will be made or that the decision to sell will be withdrawn. The Group must be committed to the plan to
sell the asset and the sale expected to be completed within one year from the date of the classification.
Property, plant and equipment, intangible assets and right-of-use assets are not depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately as current items in the Group’s Consolidated Statement
of Financial Position.
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Notes to the Consolidated Financial Statements continued
1. Group Accounting Policies continued
Financial instruments
Financial assets and liabilities are recognised in the Group’s Consolidated Statement of Financial Position when the Group becomes
party to the contractual provisions of the instrument.
Trade receivables and trade payables are initially measured at fair value. Subsequent to initial recognition, they are carried at amortised
cost using the effective interest method, and in the case of trade receivables, less any impairment losses. Impairment losses are
measured using an expected credit loss model. The Group uses the simplified approach to measure expected credit losses for trade
receivables and therefore does not track changes in credit risk, but instead recognises a loss allowance based on lifetime expected
credit losses at each reporting date. Further details are provided in note 23(e).
Derivative financial instruments of the Group are used to hedge its exposure to interest rate and foreign currency risks arising from
operational, financing and investment activities.
In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. However,
derivatives that do not qualify for hedge accounting are accounted for as trading instruments, as follows:
• Derivative financial instruments are stated at fair value. The unhedged gain or loss on remeasurement to fair value is recognised
immediately in the Consolidated Income Statement.
• The fair value of foreign exchange contracts is the estimated amount that the Group would receive or pay to terminate such
contracts at the year end date, taking into account the forward exchange rates prevailing at that date.
To qualify for hedge accounting the hedging relationship must meet several conditions with respect to documentation, probability
of occurrence, hedge effectiveness and reliability of measurement. At the inception of the transaction, the Group documents the
relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking
the hedge transaction. This process includes linking all derivatives designated as hedges to specific assets and liabilities or to specific
firm commitments or forecast transactions. The Group also documents its assessment, at hedge inception and on a half yearly basis,
of whether the derivatives that are used in hedging transactions have been, and are likely to continue to be, effective in offsetting
changes in fair value or cash flows of hedged items.
Interest bearing borrowings are recognised initially at fair value. Subsequent to initial recognition, interest bearing borrowings are stated
at amortised cost with any difference between cost and redemption value being recognised in the Consolidated Income Statement over
the period of the borrowings on an effective interest basis.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral
part of the Group’s cash management are, where there is a right of and intention to offset, included as a component of cash and cash
equivalents for the purpose of the Consolidated Financial Statement and Consolidated Statement of Cash Flows. The Group’s bank
arrangements and facilities with Barclays Bank plc provide the legally enforceable right to offset and the Group demonstrates its intention
to offset by regularly sweeping cash balances within each bank. Consequently, the balances have been offset in the financial statements.
Foreign currencies
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Any gain or loss on
translation of monetary foreign currency assets and liabilities arising from a movement in exchange rates subsequent to initial
measurement is included as an exchange gain or loss in the Consolidated Income Statement.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange
rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value
are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined.
The assets and liabilities of overseas subsidiary undertakings, including goodwill and fair value adjustments arising on acquisition,
are translated at the closing exchange rate. Income statements and cash flows of such undertakings are translated into Sterling at
weighted average rates of exchange, other than substantial transactions that are translated at the rate on the date of the transaction.
The adjustments to period end rates are taken to the cumulative translation reserve in equity and reported in the Consolidated
Statement of Comprehensive Income. When an overseas operation is disposed of, in part or in full, the relevant amount in the
translation reserve is transferred to profit or loss.
Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment in a foreign
operation are recognised and reported in the Consolidated Statement of Comprehensive Income, to the extent that the hedge is
effective. To the extent that the hedge is ineffective, such differences are recognised in profit or loss. When the hedged part of a net
investment is disposed of, the associated cumulative amount in the translation reserve is transferred to profit or loss as an adjustment
to the profit or loss on disposal.
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Foreign currencies continued
The principal exchange rates used were as follows:
2024
2023
Average
Closing
Average
Closing
Sterling to US Dollar (£1 = USD)
1.28
1.25
1.24
1.27
Sterling to Indian Rupee (£1 = INR)
106.95
107.22
102.68
106.08
Sterling to Australian Dollar (£1 = AUD)
1.94
2.02
1.87
1.87
Inventories
Inventories are stated at the lower of cost and net realisable value. In determining the cost of raw materials, consumables and goods
purchased for resale, either the FIFO or average cost method is used depending on the nature of the inventory. Cost for work in
progress and finished goods comprises direct materials, direct labour and an appropriate proportion of attributable overheads.
Provisions
A provision is recognised in the Consolidated Statement of Financial Position when the Group has a present legal or constructive
obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation,
and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions
are determined by discounting the expected future cash flows at a pre tax rate that reflects current market assessments of the time
value of money and, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due
to the passage of time is recognised as a finance cost.
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan and the restructuring
has either commenced or been announced publicly. Future operating costs are not provided for.
In accordance with the Group’s environmental policy and applicable legal requirements, a provision for site restoration in respect
of contaminated land is recognised as an obligation arises.
Provisions relating to legal claims or disputes are recognised when it is probable that the Group will be required to settle claims against
it as a result of a past event and the amount of the obligation can be reliably estimated. The Group recognises a provision based on the
expected settlement amount for the claim. A separate receivable (or ’reimbursement asset’) from insurers is recognised within other
receivables to the extent it is virtually certain of being received.
Leases
To the extent that a right-of-control exists over an asset subject to a lease and with a lease term exceeding one year, the Group recognises
a right-of-use asset, representing the underlying lease asset, and a lease liability, representing the Group’s obligation to make lease
payments. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any
lease payments made at or before the commencement date, any initial direct costs incurred and an estimate of the dismantling,
removal and restoration costs as required by the terms of the lease contract.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the
end of the useful life of the right-of-use asset or the end of the lease term. If ownership of the leased asset transfers to the Group at the
end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life
of the asset. The right-of-use assets are also subject to review for impairment (see accounting policy ‘Impairment of assets’).
The lease liability is measured at the present value of the future lease payments discounted using the Group’s incremental borrowing
rate, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar
economic environment with similar terms and conditions. Future lease payments include fixed payments, variable lease payments
that depend on an index or a rate (initially measured using the index or rate as at the commencement date), amounts expected to
be payable under a residual guarantee, and the exercise price of purchased options where it is reasonably certain that the option will
be exercised. Finance charges, representing the unwinding of the discount rate, are recognised in the Consolidated Income Statement
over the period of the lease.
Lease payments for low value assets and short term leases (less than 12 months) are recognised as an expense on a straight-line basis
over the lease term.
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Notes to the Consolidated Financial Statements continued
1. Group Accounting Policies continued
Revenue
Revenue is measured based on the consideration specified in a contract with a customer for the provision of goods and services.
The amount recognised excludes sales taxes and is adjusted for any discounts or volume rebates that are included in the contract.
It includes consideration received from the customer for freight activities only if the transportation activities are required to fulfil
a performance obligation. If the transportation activities are determined to be a separate performance obligation, an entity will only
recognise the consideration as revenue if the entity is determined to be acting as principal in the agreement, otherwise the consideration
received from the customer for transport costs is recognised net of the related cost, rather than as revenue. The Group’s contracts with
customers do not contain significant financing components and payment terms are generally customary to the jurisdictions in which
each subsidiary operates.
The Group recognises revenue when it transfers control over a good or service to a customer. The following information sets out the
Group’s approach to the nature and timing of the satisfaction of performance obligations in contracts with customers in each of its
operating segments and the related revenue recognition policies.
Engineered Solutions and Roads & Security
For standard products that are manufactured, revenue is recognised when goods are accepted by customers, which is usually on
delivery depending on the Incoterms defined in the contract. The Group also enters into certain contracts which require customers
to inspect and accept goods that have been manufactured but retained in the Group’s facilities; in these cases the customer is deemed
to have accepted the product when they have provided evidence of their acceptance and revenue is therefore recognised at that point,
assuming that the other criteria set out in IFRS 15 have been met.
Certain of the Group’s businesses in the Engineered Solutions and Roads & Security segments manufacture non-standard products that
are specific to customer requirements and therefore require a high degree of customisation. The Group has determined that in these
cases a product with no alternative use is created. Where the contractual terms are such that if the contract is terminated by the
customer then the Group has a right to reimbursement of the costs incurred including a reasonable margin, revenue is recognised over
time i.e. before the completed goods are delivered to the customer’s premises. Progress is generally determined using input methods
(such as costs incurred), unless the circumstances of the contract are such that output methods (such as milestones reached) are
considered more appropriate.
In some cases the Group provides installation of its products to customers as an additional service. Revenue from installation services
is recognised over the period that the installation takes place, which is generally less than one month.
Certain of the Group’s businesses engage in contracts with customers which include variable consideration. This occurs where the
Group provides retrospective sales volume rebates to certain customers once, amongst other matters, the quantity of goods purchased
during a predetermined period exceeds thresholds specified in the sales contract. To estimate the variable consideration for these
expected future rebates, the Group applies the most likely amount method to reflect the consideration that the Group is entitled to.
Variable consideration is only recognised to the extent that it is highly probable that the inclusion will not result in a significant revenue
reversal in the future.
Certain of the Group’s Roads businesses routinely generate revenue from the rental of assets to customers. Revenue from these rental
agreements is recognised over the period over which the assets are available to the customer. If an asset that is held for rental is sold,
the asset is transferred from property, plant and equipment to inventories at the carrying amount when the asset ceases to be rented.
The proceeds from the sale of such assets are recognised as revenue in the Consolidated Income Statement. Transportation costs
relating to the rental of temporary road barrier are included in cost of sales.
The Group classifies proceeds from the sale of scrap products generated in the manufacturing process within revenue.
Galvanizing Services
Contracts with customers in the Galvanizing Services segment are generally simple. Revenue is recognised at a point in time, which
is when the galvanized goods are either despatched or collected by the customer.
The Group classifies proceeds from the sale of by-products generated during the galvanizing process within revenue.
Contract assets
Contract assets primarily relate to the rights to consideration for work completed but not billed at the reporting date. Contract assets
are transferred to receivables when the rights become unconditional.
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Contract liabilities
Contract liabilities arise when the Group receives consideration from customers based on an agreed billing schedule, as established
in the contract, which may not correspond with the pattern of performance under the contract. Where consideration has been received
but a performance obligation not satisfied at the reporting date, a contract liability is recorded in the Consolidated Statement
of Financial Position.
Retirement benefits
The Group operates pension schemes under which contributions by employees and by the sponsoring companies are held in trust
funds separated from the Group’s finances.
Obligations for contributions to defined contribution pension schemes are recognised as an expense in the Consolidated Income
Statement as incurred.
The Group’s net obligation in respect of defined benefit pension schemes is calculated separately for each scheme by estimating
the amount of future benefit that employees have earned in return for their service in the current and prior periods. This benefit is
discounted to determine its present value, and the fair value of any scheme assets is deducted. The discount rate is the yield at the
year end date on AA rated bonds that have maturity dates approximating to the terms of the Group’s obligations. The calculation
is performed by a qualified actuary using the projected unit method. Scheme assets are valued at bid price.
In the Consolidated Income Statement, current and past service costs are recognised in operating profit and the interest cost on the
net defined benefit obligations is included in financial expense.
All actuarial gains and losses in calculating the Group’s obligation in respect of defined benefit schemes are recognised annually and
reported in the Consolidated Statement of Comprehensive Income.
Share-based payment transactions
The Group issues equity settled share-based payments to certain employees, including those in the form of buy-out awards or deferred
bonus awards. The fair value of shares/options granted is recognised as an employee expense, with a corresponding increase in equity
reserves. The fair value is calculated at the grant date and spread over the period during which the employees become unconditionally
entitled to the shares/options. The Black—Scholes model has been adopted as the method of evaluating the fair value of the options
where vesting is based on non-market conditions, while a Monte Carlo Simulation is used where vesting is based on market conditions.
The amount recognised as an expense is adjusted to reflect the actual number of awards for which the related service and non-market
vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of
awards that do meet the related service and non-market performance conditions at the vesting date. For share-based payment awards
with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there
is no adjustment for differences between expected and actual outcomes.
The fair value of amounts payable to employees in respect of share appreciation rights settled in cash is recognised as an employee
expense and corresponding increase in liabilities. The fair value of the liability is remeasured at each reporting date and spread over
the period during which employees become unconditionally entitled to the payment.
Financial income and expense
Financial income comprises interest income on funds invested and gains on the fair value of financial assets and liabilities at fair value
through profit or loss. Interest income is recognised as it accrues in the Consolidated Income Statement using the effective interest
method.
Financial expense comprises interest expense on borrowings, interest cost on net pension scheme obligations, unwinding of discounts,
losses on the fair value of financial assets and liabilities at fair value through profit or loss, the interest expense on lease liabilities, and
financial expenses related to refinancing. All borrowing costs are recognised in the Consolidated Income Statement using the effective
interest method.
150
Notes to the Consolidated Financial Statements continued
1. Group Accounting Policies continued
Non-underlying items
Non-underlying items are presented separately in the Consolidated Income Statement where, in the Directors’ judgement, the quantum,
nature or volatility of such items gives further information to obtain a fuller understanding of the underlying performance of the
business. The following are included by the Group in its assessment of non-underlying items:
• Gains or losses arising on disposal, closure, restructuring or reorganisation of businesses that do not meet the definition
of discontinued operations
• Amortisation of intangible fixed assets arising on acquisitions, which can vary depending on the nature, size and frequency
of acquisitions in each financial period
• Expenses associated with acquisitions and disposals, comprising professional fees incurred, any consideration which, under IFRS 3
is required to be treated as a post-acquisition employment expense, and changes in contingent consideration payable on acquisitions
• Impairment charges in respect of tangible or intangible fixed assets, or right-of-use assets
• Changes in the fair value of derivative financial instruments
• Significant past service items or curtailments and settlements relating to defined benefit pension obligations resulting from material
changes in the terms of the schemes.
The non-underlying tax charge or credit comprises the tax effect of the above items.
Details in respect of the non-underlying items recognised in the current and prior year are set out in note 5 to the Financial Statements.
Income tax
Income tax on the profit or loss for the year represents the sum of the tax currently payable and deferred tax. Income tax is recognised
in the Consolidated Income Statement except to the extent that it relates to items either recognised in other comprehensive income
or directly in equity.
Current tax is the expected tax payable on the taxable profit for the year. Taxable profit differs from net profit as reported in the
Consolidated Income Statement because it excludes items of income or expense that are not taxable or deductible. The Group’s liability
for current tax is calculated using tax rates enacted or substantively enacted at the year end date, and any adjustments to tax payable
in respect of previous years.
Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which the Group operates, with effect from
1 January 2024. An assessment of the potential exposure to Pillar Two income taxes has been performed, noting that the Group
primarily operates in the UK and US where Pillar Two effective tax rates are higher than 15%. Currently the only jurisdiction identified
where the transitional safe harbour relief may not be available is in respect of the Group’s small trading operation in Ireland, however
the Group does not expect a significant exposure to Pillar Two income taxes to result given the relatively low level of profitability
in the Irish entity.
Deferred taxation
Deferred tax is provided in full using the Consolidated Statement of Financial Position liability method and represents the tax expected
to be payable or recoverable on the temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not
deductible for tax purposes, the initial recognition of assets and liabilities not resulting from a business combination that affects neither
accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will not reverse in the
foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or substantively enacted at the year end date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the
asset can be utilised. The carrying amount of deferred tax assets is reviewed at each year end date and reduced to the extent that
it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group
intends to settle its current tax assets and liabilities on a net basis.
Ordinary dividends
Dividends are recognised as a liability in the period in which they are approved by the Company’s shareholders.
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2. Accounting judgements, estimates and assumptions
The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and reported amounts of income, expenses, assets and liabilities.
Actual results may differ from these estimates.
Impairment of goodwill (note 12)
Estimates
The determination of whether goodwill and other indefinite life intangible assets should be impaired requires the estimation of future
cash flows and growth factors adopted by each cash generating unit (“CGU’s”). Furthermore, discount rates applied to these cash flows
are determined by reference to the markets in which they operate and are risk adjusted to reflect risks and opportunities existing
for each CGU. These factors are all affected by prevailing market and economic factors outside the Group’s control. Further information
on this issue, including sensitivity analyses for certain CGUs, is included in note 12.
Actuarial assumptions on pension obligations (note 26)
Estimates
In determining the valuation of the UK defined benefit pension deficit, certain estimates and assumptions about the scheme have
been made, notably the inflation rates, discount rates, mortality and pension increases. The factors affecting these assumptions
are influenced by wider macro-economic factors that are largely outside of the Group’s control. A sensitivity analysis of the impact
of changes in key assumptions is set out in note 26.
Taxation (notes 9 and 16)
Judgements
Liabilities for uncertain tax positions require management judgements in respect of tax audit issues and exposures in each of the
jurisdictions in which the Group operates. Where management judges that a tax position is uncertain, a current tax liability is held for
anticipated taxes that are considered to be probable based on the information available. The key judgement area for the Group is the
pricing of intercompany goods and services and other cross border transactions between subsidiaries in different countries.
Estimates
Management is required to make an estimate of the current tax liability together with an assessment of the temporary differences
which arise as a consequence of different accounting and tax treatments. Liabilities for uncertain tax positions also require
management estimates in respect of the amount of tax that may become payable. Management engages with professional advisors in
making its assessment and, if appropriate, will liaise with the relevant tax authorities to resolve the matter. The tax liability is reassessed
in each period to reflect management’s best estimate in light of the information available. Included in the current tax payable is a liability
of £6.0m (2023: £4.5m) for uncertain tax positions. In addition, £0.6m (2023: £0.6m) of the deferred tax liability relates to uncertain tax
positions. Depending on the conclusions of any tax audits conducted by the tax authorities in the various jurisdictions in which the
Group operates, management estimate the range of possible outcomes to be between £nil and £8.4m (2023: £nil to £6.1m) and
therefore it is possible that, if the outcomes are different to those estimated by management, the difference may materially impact the
income tax charge / (credit) in the year in which the matter is concluded. Further information is set out in note 9 and note 16.
Non-current assets held for sale (note 14)
Judgements
The criteria for held for sale classification are regarded as met only when the sale is highly probable, and the asset or disposal group
is available for immediate sale in its present condition. Determining whether a sale is highly probable can require some judgement and
requires analysis of all relevant facts and circumstances as at the balance sheet date.
152
Notes to the Consolidated Financial Statements continued
3. Segmental information
Business segment analysis
The Group has three reportable segments which are Engineered Solutions, Roads & Security and Galvanizing Services. The Group’s
internal management structure and financial reporting systems differentiate between these segments, and, in reporting, management
have taken the view that they comprise a reporting segment on the basis of the following economic characteristics:
• The Engineered Solutions segment contains a group of businesses supplying products characterised by a degree of engineering
expertise, to public and private customers involved in the construction of facilities serving the utilities and other infrastructure
markets;
• The Roads & Security segment contains a group of businesses supplying products designed to ensure the safety and security of
roads and other national infrastructure, many of which have been developed to address national and international safety standards,
to customers involved in the construction of that infrastructure; and
• The Galvanizing Services segment contains a group of companies supplying galvanizing and related materials coating services
to companies in a wide range of markets including construction, agriculture and infrastructure.
Corporate costs are allocated to reportable segments in proportion to the revenue of each of those segments.
Segmental Income Statement
2024
2023
Revenue
£m
Reported
operating
profit
£m
Underlying
operating
profit*
£m
Revenue
£m
Reported
operating
profit
£m
Underlying
operating
profit*
£m
Engineered Solutions
418.7
71.2
77.8
367.0
59.7
64.4
Roads & Security
238.6
(5.0)
15.4
266.1
0.3
12.4
Galvanizing Services
197.8
49.2
50.3
196.7
43.8
45.7
Group
855.1
115.4
143.5
829.8
103.8
122.5
Net financing costs
(10.9)
(10.9)
(10.6)
(10.6)
Profit before taxation
104.5
132.6
93.2
111.9
Taxation
(28.1)
(34.0)
(24.4)
(27.6)
Profit after taxation
76.4
98.6
68.8
84.3
*
Underlying operating profit is stated before non-underlying items as defined in the Group Accounting Policies on page 151 and is the measure of segment profit
used by the Chief Operating Decision Maker, who is the Chief Executive. The reported operating profit columns are included as additional information.
Transactions between operating segments are on an arm’s length basis similar to transactions with third parties. Galvanizing Services
sold £4.9m (2023: £5.2m) of products and services to Roads & Security and £3.3m (2023: £2.5m) of products and services to
Engineered Solutions. Engineered Solutions sold £0.1m (2023: £0.6m) of products and services to Roads & Security. These internal
revenues, along with revenues generated from within their own segments, have been eliminated on consolidation.
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3. Segmental information continued
In the following tables, revenue from contracts with customers is disaggregated by primary geographical market, major product/service
lines and timing of revenue recognition. Revenue by primary geographical market is defined as the end location of the Group’s product
or service. The table also includes a reconciliation of the disaggregated revenue with the Group’s reportable segments.
Primary geographical markets
Engineered Solutions
Roads & Security
Galvanizing Services
Total
2024
£m
2023
£m
2024
£m
2023
£m
2024
£m
2023
£m
2024
£m
2023
£m
UK
74.9
80.6
146.3
155.0
80.9
83.9
302.1
319.5
Rest of Europe
9.4
8.2
13.5
11.0
—
—
22.9
19.2
North America
316.4
259.2
74.5
90.4
116.9
112.8
507.8
462.4
The Middle East
10.0
12.5
1.2
1.9
—
—
11.2
14.4
Rest of Asia
6.2
5.5
0.5
0.7
—
—
6.7
6.2
Rest of the world
1.8
1.0
2.6
7.1
—
—
4.4
8.1
418.7
367.0
238.6
266.1
197.8
196.7
855.1
829.8
Major product/service line
Manufacture, supply and installation
of products
418.7
367.0
215.0
241.2
—
—
633.7
608.2
Galvanizing Services
—
—
—
—
197.8
196.7
197.8
196.7
Rental of assets to customers
—
—
23.6
24.9
—
—
23.6
24.9
418.7
367.0
238.6
266.1
197.8
196.7
855.1
829.8
Timing of revenue recognition
Products and services transferred at a
point in time
212.7
172.7
174.9
208.1
197.8
196.7
585.4
577.5
Products and services transferred
over time
206.0
194.3
63.7
58.0
—
—
269.7
252.3
418.7
367.0
238.6
266.1
197.8
196.7
855.1
829.8
The Group has no material unsatisfied or partially satisfied performance obligations at the balance sheet date that have an expected
duration of more than one year and therefore has taken the practical expedient under IFRS 15 not to disclose such details.
Additional segmental analysis
Capital expenditure and amortisation/depreciation
2024
2023
Capital
expenditure
£m
Impairment
losses,
amortisation
and
depreciation
£m
Capital
expenditure
£m
Impairment
losses,
amortisation
and
depreciation
£m
Engineered Solutions
13.3
10.7
11.7
7.4
Roads & Security
8.5
27.1
8.2
14.9
Galvanizing Services
5.6
7.7
11.0
7.7
Total Group
27.4
45.5
30.9
30.0
Property, plant and equipment (note 13)
22.4
22.5
28.1
20.4
Intangible assets (note 12)
5.0
23.0
2.8
9.6
Total Group
27.4
45.5
30.9
30.0
The 2024 amounts for impairment losses, amortisation and depreciation relating to the Roads and Security segment included asset
impairments of £13.2m relating to H&S Inc. as explained in note 5.
154
Notes to the Consolidated Financial Statements continued
3. Segmental information continued
Geographical analysis
Total assets
2024
£m
2023
£m
UK
292.8
262.8
Rest of Europe
4.0
3.6
North America
473.9
419.6
Asia
17.4
16.0
Rest of the world
7.9
13.0
Total Group
796.0
715.0
Non-current assets
2024
£m
2023
£m
UK
168.4
181.0
Rest of Europe
1.5
0.8
North America
291.1
239.8
Asia
3.4
3.2
Rest of the world
—
9.1
Total Group
464.4
433.9
Capital expenditure
2024
£m
2023
£m
UK
9.1
12.7
Rest of Europe
0.5
0.3
North America
17.1
16.6
Asia
0.6
0.6
Rest of the world
0.1
0.7
Total Group
27.4
30.9
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4. Alternative Performance Measures
The Group presents Alternative Performance Measures (“APMs”) in addition to its statutory results. These are presented in accordance
with the Guidelines on APMs issued by the European Securities and Markets Authority. The principal APMs are:
• Underlying profit before taxation
• Underlying operating profit
• Underlying operating margin
• Organic and constant currency measures of change in revenue and underlying operating profit
• Underlying cash conversion ratio
• Capital expenditure to depreciation and amortisation ratio
• Covenant net debt to EBITDA ratio
• Underlying earnings per share. A reconciliation of statutory earnings per share to underlying earnings per share is provided in note 10.
All underlying measures exclude certain non-underlying items, which are detailed in note 5. References to an underlying profit measure
are made on this basis and, in the opinion of the Directors, aid the understanding of the underlying business performance as they
exclude items whose quantum, nature or volatility gives further information to obtain a fuller understanding of the underlying
performance of the business. APMs are presented on a consistent basis over time to assist in comparison of performance.
Reconciliation of underlying to reported profit before tax
2024
£m
2023
£m
Underlying profit before tax
132.6
111.9
Non-underlying items included in operating profit
(28.1)
(18.7)
Reported profit before tax
104.5
93.2
Reconciliation of underlying to reported operating profit by segment
Engineered Solutions
Roads & Security
Galvanizing Services
Total
2024
£m
2023
£m
2024
£m
2023
£m
2024
£m
2023
£m
2024
£m
2023
£m
Underlying operating profit
77.8
64.4
15.4
12.4
50.3
45.7
143.5
122.5
Non-underlying items
Amortisation of acquisition
intangibles
(5.1)
(3.0)
(3.7)
(4.2)
(1.1)
(1.2)
(9.9)
(8.4)
Business reorganisation costs
—
—
—
(0.2)
—
—
—
(0.2)
Impairment of assets
—
—
(13.2)
(0.6)
—
—
(13.2)
(0.6)
Loss on remeasurement of assets
held for sale
—
—
(3.1)
—
—
—
(3.1)
—
Expenses related to acquisitions
and disposals
(1.5)
(1.7)
(0.4)
(2.9)
—
(0.7)
(1.9)
(5.3)
Loss on disposal of subsidiaries
—
—
—
(4.2)
—
—
—
(4.2)
Reported operating profit/(loss)
71.2
59.7
(5.0)
0.3
49.2
43.8
115.4
103.8
Calculation of underlying operating margin
Engineered Solutions
Roads & Security
Galvanizing Services
Total
2024
£m
2023
£m
2024
£m
2023
£m
2024
£m
2023
£m
2024
£m
2023
£m
Underlying operating profit
77.8
64.4
15.4
12.4
50.3
45.7
143.5
122.5
Revenue
418.7
367.0
238.6
266.1
197.8
196.7
855.1
829.8
Underlying operating margin (%)
18.6%
17.5%
6.5%
4.7%
25.4%
23.2%
16.8%
14.8%
156
Notes to the Consolidated Financial Statements continued
4. Alternative Performance Measures continued
Measures of organic and constant currency change in revenue and underlying operating profit
Organic constant currency measures exclude the impact of currency translation movements, acquisitions, disposals and closures
of subsidiary businesses. In respect of acquisitions, the amounts referred to represent the amounts for the period in the current year
that the business was not held in the prior year. In respect of disposals and closures of subsidiary businesses, the amounts referred to
represent the amounts for the period in the prior year that the business was not held in the current year. Constant currency amounts are
prepared using exchange rates which prevailed in the current year.
Engineered Solutions
Roads & Security
Galvanizing Services
Total
Revenue
£m
Underlying
operating profit
£m
Revenue
£m
Underlying
operating profit
£m
Revenue
£m
Underlying
operating profit
£m
Revenue
£m
Underlying
operating profit
£m
2023
367.0
64.4
266.1
12.4
196.7
45.7
829.8
122.5
Impact of exchange rate movements
from 2023 to 2024
(9.0)
(2.1)
(2.9)
(0.2)
(3.5)
(1.1)
(15.4)
(3.4)
2023 translated at 2024 exchange
rates (A)
358.0
62.3
263.2
12.2
193.2
44.6
814.4
119.1
Acquisition, disposals and closures
44.1
9.4
(1.9)
—
1.3
0.4
43.5
9.8
Organic growth/(decline) (B)
16.6
6.1
(22.7)
3.2
3.3
5.3
(2.8)
14.6
2024 (C)
418.7
77.8
238.6
15.4
197.8
50.3
855.1
143.5
Organic growth % (B divided by A)
4.6%
9.8%
-8.6%
26.2%
1.7%
11.9%
-0.3%
12.3%
Constant currency change % ((C-A)
divided by A)
17.0%
24.9%
-9.3%
26.2%
2.4%
12.8%
5.0%
20.5%
Calculation of underlying cash conversion ratio
2024
£m
2023
£m
Underlying operating profit
143.5
122.5
Calculation of adjusted operating cash flow:
Cash generated by operations
168.6
173.4
Purchase of assets for rental to customers
(2.3)
(2.3)
Purchase of property, plant and equipment
(21.3)
(26.7)
Purchase of intangible assets
(5.0)
(2.8)
Repayment of lease liabilities
(9.0)
(9.4)
Proceeds on disposal of non-current assets and assets held for sale
3.4
3.3
Defined benefit pension scheme deficit payments
3.7
3.7
Add back: Cash flows relating to non-underlying items
4.0
1.9
Adjusted operating cash flow
142.1
141.1
Underlying cash conversion (%)
99%
115%
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4. Alternative Performance Measures continued
Calculation of capital expenditure to depreciation and amortisation ratio
2024
£m
2023
£m
Calculation of capital expenditure:
Purchase of assets for rental customers
2.3
2.3
Purchase of property, plant and equipment
21.3
26.7
Purchase of intangible assets
5.0
2.8
28.6
31.8
Calculation of depreciation and amortisation:
Depreciation of property, plant and equipment
20.8
19.7
Amortisation of development costs
1.1
1.0
Amortisation of other intangible assets
0.1
0.2
22.0
20.9
Capital expenditure to depreciation and amortisation ratio
1.3x
1.5x
Calculation of covenant net debt to EBITDA ratio
2024
£m
2023
£m
Net debt (note 19)
96.9
108.4
Lease liabilities
(46.0)
(43.7)
Lease liabilities classified as held for sale
(3.0)
—
Amounts related to refinancing
1.5
2.0
Covenant net debt (A)
49.4
66.7
Underlying operating profit
143.5
122.5
Depreciation of owned assets
20.8
19.7
Right-of-use asset depreciation
10.4
9.3
Amortisation of development costs
1.1
1.0
Amortisation of other intangible assets
0.1
0.2
Underlying EBITDA
175.9
152.7
Adjusted for:
Lease payments
(11.0)
(10.4)
Share-based payments expense
3.4
4.1
Annualised EBITDA of subsidiaries acquired/disposed
5.5
3.5
Covenant EBITDA (B)
173.8
149.9
Covenant net debt to EBITDA (A divided by B)
0.3
0.4
158
Notes to the Consolidated Financial Statements continued
5. Non-underlying items
Included in operating profit
2024
£m
2023
£m
Loss on disposal of subsidiaries
—
(4.2)
Business reorganisation costs
—
(0.2)
Impairment of assets (a)
(13.2)
(0.6)
Loss on remeasurement of assets held for sale (b)
(3.1)
—
Amortisation of acquisition intangibles
(9.9)
(8.4)
Expenses related to acquisitions and disposals (c)
(1.9)
(5.3)
Total non-underlying items
(28.1)
(18.7)
Notes:
a) The impairment charge of £13.2m relates to H&S Inc., the Group’s US road products business, comprising £8.6m of goodwill and £2.0m of acquisition intangible
assets (explained in note 12), and a further £1.5m relating to property, plant and equipment, £0.7m relating to other intangible assets and £0.4m relating to
right-of-use assets. In assessing the carrying value of the H&S Inc. CGU, the projected cash flows showed that its message boards division, operating out of
Garland, Texas, is not expected to generate sufficient future cash flows to support the carrying value of the property, plant and equipment and intangible fixed
assets utilised in that part of the business. We therefore assessed the fair value less costs of disposal of those assets, concluding that their fair value was £2.2m
lower than their previous carrying value. Similarly an impairment of £0.4m was recognised in respect of the fair value of the Garland property right-of-use asset,
reflecting its estimated recoverable value.
b) The loss on remeasurement of assets held for sale relates primarily to the two businesses classified as individual disposal groups as at 31 December 2024,
as explained in note 14. The carrying amounts were reduced to their fair value less costs to sell, resulting in a loss on remeasurement of £3.1m.
c) Expenses related to acquisitions and disposals include a credit of £1.7m in respect of previously accrued contingent consideration on the National Signal
acquisition that is not now expected to be paid, and additional costs of £0.4m relating to the Group’s disposal of its small, loss-making Berry Systems business in
2023, together with professional fees incurred on the four US acquisitions in 2024 and the two disposals initiated in 2024 which have been classified as disposal
groups (see note 14 for further details).
Included in taxation
The tax effect of the above items is a credit to the income statement of £5.9m (2023: £3.2m).
6. Employees
2024
No.
2023
No.
The average number of people employed by the Group during the year
Engineered Solutions
2,286
2,054
Roads & Security
987
1,018
Galvanizing Services
1,358
1,264
Total Group
4,631
4,336
2024
£m
2023
£m
Total employee benefit expense for the year
Wages and salaries
192.5
171.4
Share-based payments (note 24)
3.4
4.1
Social security costs
26.2
23.1
Pension costs (note 26)
5.1
4.6
227.2
203.2
2024
£m
2023
£m
Remuneration of key management personnel
Remuneration in relation to short term benefits
4.8
2.8
Share based payments
1.7
0.8
Company contributions to money purchase pension plans
0.1
0.1
6.6
3.7
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Governance
6. Employees continued
Key management personnel are those persons having authority and responsibility for planning, directing, and controlling the activities of
the Group, directly or indirectly, including any directors (whether executive or otherwise) of the Group. Key management personnel are
considered to be the Board of Directors of Hill & Smith PLC and the members of the Executive Board who are not also Directors of the
Group.
Further details of the Directors’ remuneration and share interests are given in the Directors’ Remuneration Report on pages 102 to 120.
7. Net financing costs
2024
£m
2023
£m
Interest on bank deposits
0.5
0.5
Financial income
0.5
0.5
Interest on loans and borrowings
(8.8)
(8.9)
Interest on lease liabilities (note 15)
(2.0)
(1.3)
Financial expenses related to refinancing activities
(0.5)
(0.6)
Interest cost on net pension scheme deficit (note 26)
(0.1)
(0.3)
Financial expense
(11.4)
(11.1)
Net financing costs
(10.9)
(10.6)
8. Expenses and auditor’s remuneration
2024
£m
2023
£m
Income statement charges
Depreciation of property, plant and equipment
(20.8)
(19.7)
Right-of-use asset depreciation
(10.4)
(9.3)
Short term leases
(3.7)
(1.0)
Low value leases
(0.1)
—
Loss on disposal of non-current assets
—
(0.2)
Loss on disposal of assets held for sale
(0.2)
—
Research and development expenditure
(1.5)
(1.0)
Amortisation of acquisition related intangibles
(9.9)
(8.4)
Amortisation of development costs
(1.1)
(1.0)
Amortisation of other intangible assets
(0.1)
(0.2)
Impairment losses:
Intangible fixed assets
(11.9)
—
Tangible fixed assets
(1.7)
(0.7)
Right-of-use lease assets
(0.4)
(0.6)
Income statement credits
Gain on disposal of assets held for sale
—
0.7
Gain on lease terminations
0.6
0.1
Gain on disposal of non-current assets
0.4
—
Foreign exchange gain
0.4
0.2
Sublease income (note 15)
0.1
0.1
Notes to the Consolidated Financial Statements continued
160
8. Expenses and auditor’s remuneration continued
A detailed analysis of the auditor’s remuneration worldwide is as follows:
2024
£m
2023
£m
Audit of the Company’s Annual Accounts
0.7
0.5
Audit of the Company’s subsidiaries
1.3
1.1
2.0
1.6
A description of the work of the Audit Committee is set out in the Audit Committee Report on pages 96 to 101 and includes an
explanation of how auditor objectivity and independence is safeguarded when non-audit services are provided by the auditor. Audit-
related assurance services totalled £nil (2023: £13,000).
9. Taxation
2024
£m
2023
£m
Current tax
UK corporation tax
4.1
4.1
Overseas tax at prevailing local rates
23.4
20.7
Adjustments in respect of prior years
(2.3)
1.3
25.2
26.1
Deferred tax (note 16)
UK deferred tax
3.7
1.1
Overseas tax at prevailing local rates
(2.4)
(0.4)
Adjustments in respect of prior years
1.6
(2.4)
2.9
(1.7)
Tax on profit in the Consolidated Income Statement
28.1
24.4
Deferred Tax (note 16)
Relating to defined benefit pension schemes
—
(0.1)
Tax on items taken directly to other comprehensive income
—
(0.1)
Current tax
Relating to share-based payments
(0.2)
—
Deferred tax (note 16)
Relating to share-based payments
0.4
(1.3)
Tax taken directly to the Consolidated Statement of Changes in Equity
0.2
(1.3)
The tax charge in the Consolidated Income Statement for the period is higher (2023: higher) than the standard rate of corporation tax in
the UK. The differences are explained below:
2024
£m
2023
£m
Profit before taxation
104.5
93.2
Profit before taxation multiplied by the effective rate of corporation tax in the UK of 25.0% (2023: 23.5%)
26.1
21.9
Expenses not deductible/income not chargeable for tax purposes
3.1
2.3
Benefits from international financing arrangements — current and prior years
(0.1)
(0.1)
Local tax incentives
(0.1)
(0.1)
Overseas profits taxed at higher/(lower) rates
(0.2)
1.5
Adjustments in respect of prior years
(0.7)
(1.1)
Tax charge
28.1
24.4
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Governance
9. Taxation continued
In October 2017, the European Commission opened a state aid investigation into the Group Financing Exemption in the UK Controlled
Foreign Company (‘CFC’) legislation, announcing in April 2019 that it believed in certain circumstances the CFC regime constituted
State Aid. In 2021 the Group received a charging notice from HMRC requiring it to pay £1.6m in respect of state aid that HMRC
considers had been unlawfully received in previous years, which was paid in full in February 2021.
Applications to annul the Commission’s decision had been made in prior years by the UK Government, the Group and other affected
taxpayers. The EU General Court delivered its decision on these applications in June 2022, finding in favour of the Commission.
In August 2022, the UK Government and several multinationals, including the Group, appealed against the General Court’s decision. The
appeal was heard by the Court of Justice of the European Union (‘CJEU’) on 10 January 2024, and the CJEU’s judgement was delivered
on 19 September 2024 overturning the Commission’s original decision. Following this, HMRC have enacted legislation which will
provide for the tax, and interest, to be repaid, which we expect to be in 2025.
10. Earnings per share
The weighted average number of ordinary shares in issue during the year was 80.4m (2023: 80.0m), diluted for the effects of the
outstanding dilutive share options 81.4m (2023: 81.0m). Diluted earnings per share takes account of the dilutive effect of all
outstanding share options disclosed in note 24, calculated using the treasury share method. Underlying earnings per share have
been shown because the Directors consider that this provides valuable additional information about the underlying performance
of the Group.
2024
2023
Pence per
share
£m
Pence per
share
£m
Basic earnings
95.0
76.4
86.0
68.8
Non-underlying items*
27.6
22.2
19.4
15.5
Underlying earnings
122.6
98.6
105.4
84.3
Diluted earnings
93.9
76.4
85.0
68.8
Non-underlying items*
27.2
22.2
19.1
15.5
Underlying diluted earnings
121.1
98.6
104.1
84.3
* Non-underlying items as detailed in note 5.
11. Dividends
Dividends paid during the year
2024
2023
Pence per
share
£m
Pence per
share
£m
Interim dividend paid in relation to year-ended 31 December 2022
—
—
13.0
10.4
Final dividend paid in relation to year-ended 31 December 2022
—
—
22.0
17.6
Interim dividend paid in relation to year ended 31 December 2023
15.0
12.0
—
—
Final dividend paid in relation to year ended 31 December 2023
28.0
22.5
—
—
Total
43.0
34.5
35.0
28.0
162
Notes to the Consolidated Financial Statements continued
11. Dividends continued
Dividends declared in respect of the year
2024
2023
Pence per
share
£m
Pence per
share
£m
Interim dividend declared in relation to year-ended 31 December 2023
—
—
15.0
12.0
Final dividend declared in relation to year-ended 31 December 2023
—
—
28.0
22.5
Interim dividend declared in relation to year ended 31 December 2024
16.5
13.3
—
—
Final dividend proposed in relation to year ended 31 December 2024
32.5
26.1
—
—
Total
49.0
39.4
43.0
34.5
The final dividend for 2024 was proposed after the year end date and was not recognised as a liability at 31 December 2024,
in accordance with IAS 10.
12. Intangible assets
Goodwill
£m
Brands
£m
Customer lists
£m
Capitalised
development
costs
£m
Contracts,
licences and
other assets
£m
Total
£m
Cost
At 1 January 2023
160.4
28.6
66.8
21.4
17.9
295.1
Exchange adjustments
(5.3)
(1.2)
(2.2)
(0.1)
(0.4)
(9.2)
Acquisitions of subsidiaries
17.2
1.3
16.3
—
2.0
36.8
Reclassification from tangible fixed assets
—
—
—
0.2
0.6
0.8
Additions
—
—
—
2.1
0.7
2.8
Disposals of subsidiaries
(8.6)
(0.2)
(3.9)
(0.9)
(0.4)
(14.0)
At 31 December 2023
163.7
28.5
77.0
22.7
20.4
312.3
Exchange adjustment
1.8
0.3
1.5
—
0.1
3.7
Acquisitions of subsidiaries
8.1
1.5
31.7
—
4.1
45.4
Additions
—
—
—
1.9
3.1
5.0
Transfers to assets held for sale
(1.6)
(0.9)
(9.1)
—
(0.1)
(11.7)
Reclassifications
—
—
—
0.8
(0.8)
—
At 31 December 2024
172.0
29.4
101.1
25.4
26.8
354.7
Amortisation and impairment losses
At 1 January 2023
29.0
13.7
42.1
15.6
12.1
112.5
Exchange adjustments
(0.9)
(0.5)
(1.1)
—
(0.2)
(2.7)
Reclassification from tangible fixed assets
—
—
—
—
0.5
0.5
Disposals of subsidiaries
(8.0)
(0.2)
(3.9)
(0.7)
(0.5)
(13.3)
Amortisation charge for the year
—
0.9
4.6
1.0
3.1
9.6
At 31 December 2023
20.1
13.9
41.7
15.9
15.0
106.6
Exchange adjustments
0.4
0.1
0.3
(0.2)
0.2
0.8
Transfers to assets held for sale
(1.6)
(0.9)
(9.1)
—
(0.1)
(11.7)
Amortisation charge for the year
—
0.9
6.2
1.1
2.9
11.1
Impairment
8.6
0.3
1.7
1.1
0.2
11.9
Reclassifications
—
—
—
0.8
(0.8)
—
At 31 December 2024
27.5
14.3
40.8
18.7
17.4
118.7
Carrying values
At 1 January 2023
131.4
14.9
24.7
5.8
5.8
182.6
At 31 December 2023
143.6
14.6
35.3
6.8
5.4
205.7
At 31 December 2024
144.5
15.1
60.3
6.7
9.4
236.0
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Governance
12. Intangible assets continued
2024
Capital Steel
In January 2024 the Group acquired the trade and assets of Capital Steel for cash consideration after working capital adjustments
of £5.5m. Capital Steel is a structural steel electrical infrastructure manufacturer which provides engineering and fabrication
capabilities on a range of structural steel and substation components, principally for the electrical utility and heavy highway
construction end markets. The acquisition was a highly strategic bolt-on acquisition opportunity for V&S Schuler and subsequent
to acquisition the business has become part of V&S Utilities, within the Group’s Engineered Solutions division.
Details of the acquisition are set out below:
Pre-acquisition
carrying
amount
£m
Provisional
policy
alignment and
fair value
adjustment
£m
Total
£m
Intangible Assets
Customer lists
—
1.9
1.9
Brand name
—
0.3
0.3
Order backlog
—
0.7
0.7
Property, plant and equipment
0.2
—
0.2
Right-of-use assets
0.4
0.3
0.7
Inventories
2.4
(0.5)
1.9
Other current assets
1.9
0.7
2.6
Total assets
4.9
3.4
8.3
Lease liabilities
(0.4)
(0.3)
(0.7)
Current liabilities
(2.9)
(0.1)
(3.0)
Total liabilities
(3.3)
(0.4)
(3.7)
Net assets
1.6
3.0
4.6
Consideration
Initial consideration paid in the year
4.9
Working capital adjustments paid in the year
0.6
Fair value of contingent consideration due within one year
0.3
Fair value of contingent consideration due between one and two years
0.3
Goodwill
1.5
Brands, customer lists and the order backlog have been recognised as specific intangible assets as a result of the acquisition.
The residual goodwill is attributable to opportunities with new customers as the business expands its product and customer base, and
Capital Steel’s highly skilled workforce. Capital Steel will form part of the V&S Utilities CGU for the purpose of annual goodwill
impairment testing. Policy alignment and fair value adjustments have been made to align the accounting policies of the acquired
business with the Group’s accounting policies and to reflect the fair value of assets and liabilities acquired. In respect of leases,
the Group measured the acquired lease liabilities using the present value of the remaining lease payments at the date of acquisition.
The right-of-use assets were measured at an amount equal to the lease liabilities and adjusted to reflect the terms of the leases relative
to market terms. The fair value of the current assets acquired includes £1.9m of trade receivables, which have a gross value of £1.9m.
As part of the acquisition agreement, contingent consideration has been agreed. The amount of contingent consideration is dependent on
revenue and adjusted EBITDA for the two-year period ending 31 December 2025. The maximum contingent consideration payable is
£1.0m. As at the acquisition date, the fair value of the contingent consideration was estimated to be £0.6m, calculated on a probability-
weighted basis.
Post-acquisition the acquired business has contributed £11.6m revenue and £3.0m underlying and reported operating profit, which are
included in the Group’s Consolidated Income Statement. As the acquisition was made on 5 January 2024, the Group’s results for the
year would be materially unchanged had the acquisition been made on 1 January 2024. The Group incurred expenses of £0.5m relating
to the acquisition, £0.3m of which were incurred in the current year, and are included in non-underlying costs (see note 5).
164
Notes to the Consolidated Financial Statements continued
12. Intangible assets continued
FM Stainless
In March 2024 the Group acquired the trade and assets of FM Stainless for a cash consideration after working capital adjustments
of £6.8m. FM Stainless is a fabricator and distributor of high-alloy, stainless steel engineered pipe supports, expansion anchors
and fasteners. The acquisition is a highly strategic bolt-on opportunity for The Paterson Group (‘TPG’) and subsequent to acquisition the
business has become part of TPG, within the Group’s Engineered Solutions division.
Details of the acquisition are set out below:
Pre-acquisition
carrying
amount
£m
Provisional
policy
alignment and
fair value
adjustment
£m
Total
£m
Intangible Assets
Brand name
—
0.2
0.2
Customer lists
—
2.6
2.6
Order backlog
—
0.3
0.3
Property, plant and equipment
0.1
1.5
1.6
Inventories
2.0
(0.4)
1.6
Other current assets
1.3
—
1.3
Total assets
3.4
4.2
7.6
Current liabilities
(0.3)
(0.4)
(0.7)
Total liabilities
(0.3)
(0.4)
(0.7)
Net assets
3.1
3.8
6.9
Consideration
Initial consideration paid in the year
6.7
Working capital adjustments paid in the year
0.1
Fair value of contingent consideration due within one year
0.4
Goodwill
0.3
Brands, customer lists and the order backlog have been recognised as specific intangible assets as a result of the acquisition.
The residual goodwill is attributable to opportunities with new customers as the business expands its product and customer base,
opportunities for expansion into new territories/geographies, and FM Stainless’ highly skilled workforce. Policy alignment and fair value
adjustments have been made to align the accounting policies of the acquired business with the Group’s accounting policies and to
reflect the fair value of assets and liabilities acquired. The fair value of the current assets acquired includes £1.3m of trade receivables,
which have a gross value of £1.3m.
As part of the acquisition agreement, contingent consideration has been agreed. The amount of contingent consideration is dependent
on adjusted EBIT for the 12-month period ending 31 March 2025. The maximum contingent consideration payable is £0.4m. As at the
acquisition date, the fair value of the contingent consideration was estimated to be £0.4m, calculated on a probability-weighted basis.
Post-acquisition the acquired business has contributed £6.5m revenue and £1.2m underlying and reported operating profit, which are
included in the Group’s Consolidated Income Statement. If the acquisition had been made on 1 January 2024, the Group’s results for
the year would have shown revenue of £856.3m, underlying operating profit of £143.8m and reported operating profit of £115.7m. The
Group incurred expenses of £0.3m relating to the acquisition, which are included in non-underlying costs (see note 5).
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Governance
12. Intangible assets continued
Trident
In July 2024 the Group acquired the trade and assets of Trident for cash consideration after closing and working capital adjustments of
£8.2m and further cash consideration of up to £25.4m, payable based on future revenues over the five years post-acquisition. Located
in Greater St Louis, Illinois, Trident is a designer and supplier of composite utility poles, serving utility company needs across North
America and the Caribbean. The business has a long-term outsourced manufacturing relationship with Enduro Composites, and will
become part of the Creative Composites Group, within the Engineered Solutions division.
Details of the acquisition are set out below:
Pre-acquisition
carrying
amount
£m
Provisional
policy
alignment and
fair value
adjustment
£m
Total
£m
Intangible Assets
Customer lists
—
16.0
16.0
Brand names
—
0.4
0.4
Order backlog
—
1.7
1.7
Property, plant and equipment
0.2
(0.1)
0.1
Right-of-use assets
—
0.1
0.1
Inventories
1.8
—
1.8
Other current assets
3.2
—
3.2
Total assets
5.2
18.1
23.3
Lease liabilities
—
(0.1)
(0.1)
Current liabilities
(3.9)
—
(3.9)
Non-current liabilities
(0.7)
(0.2)
(0.9)
Total liabilities
(4.6)
(0.3)
(4.9)
Net assets
0.6
17.8
18.4
Consideration
Initial consideration paid in the year
7.8
Working capital adjustments paid in the year
0.4
Fair value of contingent consideration due within one year
3.7
Fair value of contingent consideration due between two and five years
9.6
Goodwill
3.1
Brands, customer lists and the order backlog have been recognised as specific intangible assets as a result of the acquisition.
The residual goodwill is attributable to opportunities with new customers as the business expands its product and customer base,
opportunities for expansion into new territories/geographies, and Trident’s highly skilled workforce. Trident will form part of the Creative
Composites Group CGU for the purpose of annual goodwill impairment testing. Policy alignment and fair value adjustments have been
made to align the accounting policies of the acquired business with the Group’s accounting policies and to reflect the fair value of
assets and liabilities acquired. The fair value of the current assets acquired includes £3.2m of trade receivables, which have a gross
value of £3.2m.
As part of the acquisition agreement, contingent consideration has been agreed. The amount of contingent consideration is dependent
on revenue over the five years subsequent to acquisition. The maximum contingent consideration payable is £25.4m. As at the
acquisition date, the fair value of the contingent consideration was estimated to be £13.3m, calculated on a probability-weighted basis.
Post-acquisition the acquired business has contributed £7.2m revenue and £1.8m underlying and reported operating profit, which
are included in the Group’s Consolidated Income Statement. If the acquisition had been made on 1 January 2024, the Group’s results
for the year would have shown revenue of £865.5m, underlying operating profit of £146.2m and reported operating profit of £118.1m.
The Group incurred expenses of £0.4m relating to the acquisition, which are included in non-underlying costs (see note 5).
166
Notes to the Consolidated Financial Statements continued
12. Intangible assets continued
Whitlow Electric
In September 2024 the Group acquired the trade and assets of Whitlow Electric Service Company (“Whitlow”) for initial cash
consideration of £24.0m. Located in Elberton, Georgia, Whitlow designs and manufactures a range of structural steel and substation
components for the US electrical infrastructure market. Whitlow will become part of V&S Utilities, within the Engineered Solutions
division, and builds on the successful acquisition and integration of Capital Steel, broadening the geographic footprint in the US
and providing new customers in the attractive Southeast market and increasing the Group’s structural steel fabrication capacity,
presenting opportunities for cross selling and margin expansion.
Details of the acquisition are set out below:
Pre-acquisition
carrying
amount
£m
Provisional
policy
alignment and
fair value
adjustment
£m
Total
£m
Intangible Assets
Brand name
—
0.6
0.6
Customer lists
—
11.2
11.2
Order backlog
—
1.4
1.4
Property, plant and equipment
1.1
4.5
5.6
Inventories
1.2
(0.6)
0.6
Other current assets
1.8
0.7
2.5
Total assets
4.1
17.8
21.9
Current liabilities
(1.4)
—
(1.4)
Total liabilities
(1.4)
—
(1.4)
Net assets
2.7
17.8
20.5
Consideration
Consideration paid in the year
24.0
Working capital adjustments receivable within one year
(0.3)
Goodwill
3.2
Brands, customer lists and the order backlog have been recognised as specific intangible assets as a result of the acquisition.
The residual goodwill is attributable to opportunities with new customers as the business expands its product and customer base,
opportunities for expansion into new territories/geographies, and Whitlow’s highly skilled workforce. Whitlow will form part of the V&S
Utilities CGU for the purpose of annual goodwill impairment testing. Policy alignment and fair value adjustments have been made to
align the accounting policies of the acquired business with the Group’s accounting policies and to reflect the fair value of assets and
liabilities acquired. The fair value of the current assets acquired includes £1.8m of trade receivables, which have a gross value of £1.8m.
Post-acquisition the acquired business has contributed £6.0m revenue and £0.9m underlying and reported operating profit, which are
included in the Group’s Consolidated Income Statement. If the acquisition had been made on 1 January 2024, the Group’s results for
the year would have shown revenue of £868.6m, underlying operating profit of £145.5m and reported operating profit of £117.4m. The
Group incurred expenses of £0.5m relating to the acquisition, which are included in non-underlying costs (see note 5).
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Governance
12. Intangible assets continued
2023
Enduro Composites, Inc.
On 17 February 2023 the Group acquired 100% of the share capital of Enduro Composites, Inc. (“Enduro”) for cash consideration after
working capital adjustments of £28.7m. Enduro, located in Houston, Texas, is a designer, manufacturer and supplier of engineered
composite solutions focused on industrial and infrastructure market segments. Enduro has become part of the Creative Composites
Group within the Group’s Engineered Solutions division.
Details of the acquisition are set out below:
Pre-acquisition
carrying amount
£m
Policy alignment
and fair value
adjustments
£m
Total
£m
Intangible Assets
Brands
—
1.0
1.0
Customer lists
—
9.9
9.9
Order backlog
—
1.6
1.6
Property, plant and equipment
2.7
(0.2)
2.5
Right-of-use assets
—
2.3
2.3
Inventories
4.5
(0.5)
4.0
Current assets
6.5
(0.1)
6.4
Deferred tax asset
1.4
—
1.4
Cash and cash equivalents
1.8
—
1.8
Total assets
16.9
14.0
30.9
Lease liabilities
—
(2.3)
(2.3)
Current liabilities
(4.8)
(0.3)
(5.1)
Corporation tax
—
(0.2)
(0.2)
Deferred tax liability
—
(2.9)
(2.9)
Total liabilities
(4.8)
(5.7)
(10.5)
Net assets
12.1
8.3
20.4
Consideration
Total consideration
28.7
Goodwill
8.3
Cash flow effect
Consideration paid in the year of acquisition
28.7
Cash acquired with the business
(1.8)
Net cash consideration shown in the Consolidated Statement of Cash Flows
26.9
Brands, customer lists and an order backlog were recognised as specific intangible assets as a result of the acquisition. The residual
goodwill arising, which was allocated to the Engineered Solutions segment, primarily represents the highly skilled workforce, future
technological advantages and potential for geographical expansion afforded to the Group. Policy alignment and fair value adjustments
were made to align the accounting policies of the acquired business with the Group’s accounting policies and to reflect the fair value of
assets and liabilities acquired. In respect of leases, the Group measured the acquired lease liabilities using the present value
of the remaining lease payments at the date of acquisition. The right-of-use assets were measured at an amount equal to the lease
liabilities and adjusted to reflect the terms of the leases relative to market terms. The fair value of the current assets acquired included
£5.8m of trade receivables, which had a gross value of £6.2m.
168
Notes to the Consolidated Financial Statements continued
12. Intangible assets continued
Korns Galvanizing Company Inc.
On 8 March 2023 the Group acquired the business and assets of Korns Galvanizing Company Inc. (“Korns”) for a cash consideration of
£9.4m. Korns, located in Johnstown, Pennsylvania, has a single site specialising in spin galvanizing and has a customer base spread
across a wide range of infrastructure related end markets, including commercial construction, fire protection, oil & gas and utilities.
Details of the acquisition are set out below:
Pre-acquisition
carrying amount
£m
Policy alignment
and fair value
adjustments
£m
Total
£m
Intangible Assets
Customer lists
—
1.6
1.6
Property, plant and equipment
1.2
—
1.2
Inventories
0.5
(0.1)
0.4
Current assets
0.3
—
0.3
Total assets
2.0
1.5
3.5
Current liabilities
(0.2)
(0.1)
(0.3)
Total liabilities
(0.2)
(0.1)
(0.3)
Net assets
1.8
1.4
3.2
Consideration
Total consideration
9.4
Goodwill
6.2
Cash flow effect
Consideration paid in the year of acquisition
9.4
Cash acquired with the business
—
Net cash consideration shown in the Consolidated Statement of Cash Flows
9.4
Customer lists were recognised as a specific intangible asset as a result of the acquisition. The residual goodwill arising, which
was allocated to the US Galvanizing CGU within the Galvanizing Services segment, primarily represents the highly skilled workforce and
potential for geographical expansion afforded to the Group. Policy alignment and fair value adjustments were made to align
the accounting policies of the acquired business with the Group’s accounting policies and to reflect the fair value of assets and
liabilities acquired. The fair value of the current assets acquired included £0.3m of trade receivables, which had a gross value of £0.3m.
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12. Intangible assets continued
United Fiberglass of America Inc.
On 16 November 2023 the Group acquired the business and assets of United Fiberglass of America Inc. (“United Fiberglass”) for cash
consideration after working capital adjustments of £12.4m. United Fiberglass, located in Springfield, Ohio, is a designer, manufacturer
and supplier of composite pipe, conduit and bridge drain infrastructure systems. The business has become part of Creative Composites
Group, within our Engineered Solutions division. The business is highly complementary to our existing composite activities and
will further accelerate our strategy in this exciting and growing market, expanding our customer base and product range, while also
providing additional manufacturing capability.
Details of the acquisition are set out below:
Pre-acquisition
carrying amount
£m
Policy alignment
and fair value
adjustments
£m
Total
£m
Intangible Assets
Brand name
—
0.3
0.3
Customer lists
—
4.0
4.0
Order backlog
—
0.4
0.4
Property, plant and equipment
0.6
2.4
3.0
Inventories
1.8
(0.1)
1.7
Current assets
1.2
—
1.2
Total assets
3.6
7.0
10.6
Current liabilities
(0.7)
—
(0.7)
Total liabilities
(0.7)
—
(0.7)
Net assets
2.9
7.0
9.9
Consideration
Total consideration
12.4
Goodwill
2.5
Cash flow effect
Consideration paid in the year of acquisition (2023)
11.8
Working capital adjustments paid in 2024
0.6
Total cash consideration
12.4
Brands, customer lists and an order backlog were recognised as specific intangible assets as a result of the acquisition. The residual
goodwill arising, which was allocated to the Engineered Solutions segment, primarily represents the highly skilled workforce, future
technological advantages and potential for geographical expansion afforded to the Group. Policy alignment and fair value adjustments
were made to align the accounting policies of the acquired business with the Group’s accounting policies and to reflect the fair value of
assets and liabilities acquired. The fair value of the current assets acquired included £1.1m of trade receivables, which had a gross
value of £1.2m.
Conn-Fab Sales, Inc.
In December 2023, we acquired the equipment, inventory, customer lists, order book and intellectual property of Conn-Fab Sales, Inc.
(“Conn-Fab”), which specialises in adapter curbs, rails, and other customised rooftop seismic support solutions. The acquisition
supports the expansion of our existing product portfolio and geographical reach across the US and southern Canada. Consideration
paid in the year of acquisition was £0.3m. A further £0.5m was payable over the 18 months following acquisition, once the qualifying
accepted order value (as agreed at acquisition date) has converted to sale; £0.3m of this was paid during 2024 and is included in the
Consolidated Statement of Cash Flows. The remainder is expected to be paid during 2025. As the fair value of assets acquired was
minimal, the total consideration of £0.8m was allocated to customer lists acquired.
170
Notes to the Consolidated Financial Statements continued
12. Intangible assets continued
Cash generating units with significant amounts of goodwill
2024
£m
2023
£m
Engineered Solutions
Creative Composites Group*
32.7
19.3
V&S Utilities
10.6
5.7
Enduro Composites*
—
8.3
Others <£5m individually
4.1
5.2
Roads & Security
National Signal
7.1
7.0
ATG Access
4.7
4.7
H&S Inc.
—
8.7
Hill & Smith Infrastructure
9.8
9.8
Mallatite
9.6
9.6
Prolectric
5.5
5.5
Others <£5m individually
0.2
0.2
Galvanizing Services
USA
33.3
32.7
UK
26.9
26.9
144.5
143.6
* Enduro Composites now forms part of the Creative Composites Group and has therefore been incorporated into the Creative Composites Group CGU for the
purposes of goodwill impairment testing.
Goodwill impairment reviews have been carried out on all CGUs to which goodwill is allocated.
Methodology and assumptions
Impairment tests on the carrying values of goodwill and certain brand names* of £8.1m (2023: £8.0m), which are the Group’s only other
indefinite life intangible assets, are performed by analysing the carrying value allocated to each significant CGU against its value in use.
All goodwill is allocated to specific CGUs, which are in all cases no larger than operating segments. Value in use is calculated for each
CGU as the net present value of that unit’s discounted future cash flows. These cash flows are based on budget cash flow information
for a period of one year and strategic plans for 2026 through 2028, both of which are prepared taking into account a range of factors
including past experience, the forecast future trading environment and macroeconomic conditions in the Group’s key markets. The
cash flows beyond the strategic plan period use growth rates which reflect the long-term historical growth in GDP of the economies in
which each CGU is located, excluding 2020 and 2021 given the sharp economic movements in those years due to COVID-19. The
long-term growth rates are 2.0% in the UK and 2.5% in the USA.
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12. Intangible assets continued
Summary of results of goodwill impairment reviews
The calculated headroom between value in use and carrying value of each of the Group’s CGUs with significant amounts of goodwill,
together with the pre-tax discount rates applied, are set out below. The pre-tax discount rates are derived from a market participant’s
cost of capital and risk adjusted for individual CGUs’ circumstances.
2024
2023
Goodwill
£m
Headroom/
(impairment)
£m
Discount
rate
Goodwill
£m
Headroom/
(impairment)
£m
Discount
rate
Creative Composites Group
32.7
457.4
14.3%
19.3
185.6
15.3%
V&S Utilities
10.6
155.1
14.4%
5.7
95.5
15.2%
Hill & Smith Infrastructure
9.8
49.8
14.8%
9.8
26.7
14.8%
ATG Access
4.7
8.3
14.8%
4.7
5.5
14.6%
Mallatite
9.6
31.5
14.9%
9.6
30.0
14.8%
Prolectric
5.5
4.4
14.7%
5.5
15.6
14.4%
H&S Inc.
8.6
(10.6)
14.7%
8.7
15.9
15.0%
National Signal
7.1
21.5
14.1%
7.0
38.9
15.1%
Galvanizing Services — USA*
33.3
332.4
14.4%
32.7
210.4
15.2%
Galvanizing Services — UK
26.9
55.1
15.0%
26.9
90.6
14.6%
* The Group’s only other indefinite life intangible assets relate to brand names allocated to the Galvanizing Services — USA CGU.
Based on the methodology set out above, the impairment review for H&S Inc. concluded that the carrying value of the business
exceeded its estimated recoverable amount and accordingly an impairment charge of £10.6m has been recognised, comprising a full
impairment of the goodwill of £8.6m and the remaining acquisition intangible assets of £2.0m.
H&S Inc. manufactures, sells and rents a range of work zone protection products including crash attenuators, trailer-mounted message
boards, and temporary road safety barriers, to construction contractors and traffic specialists across the US roads market. The
business’ performance in 2022 and 2023 was subdued and was impacted by operational challenges and consequent improvement costs.
The operational challenges related primarily to the trailer-mounted message board division, operating out of the Garland, Texas facility.
Whilst demand across the rest of the product portfolio gradually improved in 2024 and the operational challenges were largely
addressed, demand for message boards saw further weakening driven by market competition and some supply chain constraints. The
combination of ongoing difficulties in the message board division and a slower recovery elsewhere led the Board to reassess the
business’ future prospects, which in addition to reflecting a significantly more muted outlook for message boards, concluded that the
pace of growth across certain other elements of the product range was likely to be slower than previously anticipated. Consequently the
impairment review based on this revised assessment concluded that H&S Inc.’s future cash flows were not sufficient to support its
carrying value, resulting in a full impairment of the acquisition goodwill of £8.6m and of the remaining acquisition intangible assets of
£2.0m.
172
Notes to the Consolidated Financial Statements continued
12. Intangible assets continued
Sensitivities
The Group has applied sensitivities to assess whether any reasonable possible changes in assumptions could cause an impairment of
the goodwill in any CGU that would be material to these Consolidated Financial Statements. The sensitivity analyses did not identify any
potential impairment for any CGU, with the exception of Prolectric.
Prolectric
Prolectric manufactures, sells and rents a range of off-grid solar energy products including temporary and permanent solar lighting,
lighting towers and hybrid power generators, to construction contractors, hire companies and private businesses across the UK
infrastructure markets. Following strong performance subsequent to the Group’s acquisition of the business in 2021, its results in 2023
were impacted by a downturn in the UK construction market as well as operational challenges, which led to lower revenues and
profitability. As expected, performance in 2024 remained subdued while the operational challenges were resolved, however recent order
intake rates have improved and the pipeline for 2025 is encouraging. The Group’s projections for the business result in calculated
headroom of £4.4m, lower than the prior year (£15.6m) reflecting a more cautious assumption on the rate of recovery. We acknowledge
that there could be variations in the pace of recovery in underlying UK construction activity and in growth across Prolectric’s other
markets, and if lower than that assumed in our projections, could result in a future impairment. Revenue growth and gross profit
margins are the key assumptions on which the impairment calculations are most sensitive. The following table provides information on
the impact on calculated headroom of possible scenarios for each of those key assumptions (independently in each case), the first
showing the Board approved projections, the second the assumptions that result in zero headroom, and the third a severe but plausible
downside scenario which would trigger a material impairment. The calculations are not particularly sensitive to other assumptions such
as long-term growth rates or the discount rate and we do not believe that there are any reasonable possible changes in assumptions for
these metrics that could lead to a material impairment.
Input
Scenario
Sensitivity
applied %
Headroom/
(impairment)
£m
Compound annual revenue growth 2025-2029
Base case
24.9%
4.4
Zero headroom
23.0%
—
H&S sensitivity
20.2%
(5.0)
Average gross profit margin 2025-2029
Base case
46.5%
4.4
Zero headroom
44.5%
—
H&S sensitivity
41.6%
(5.0)
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13. Property, plant and equipment
Land and
buildings
£m
Plant,
machinery and
vehicles
£m
Total
£m
Cost
At 1 January 2023
107.1
229.3
336.4
Exchange adjustments
(4.4)
(5.4)
(9.8)
Acquisitions of subsidiaries
3.9
2.6
6.5
Additions
6.8
21.3
28.1
Disposals of subsidiaries
(0.4)
(0.8)
(1.2)
Transfers from right-of-use lease asset
—
1.1
1.1
Transfers to inventory
—
(6.9)
(6.9)
Transfers to assets held for sale
(3.4)
—
(3.4)
Reclassification to intangible fixed assets
—
(0.8)
(0.8)
Reclassification
2.4
(2.4)
—
Disposals
(1.6)
(12.9)
(14.5)
At 31 December 2023
110.4
225.1
335.5
Exchange adjustments
1.5
1.1
2.6
Acquisitions of subsidiaries
3.8
3.7
7.5
Additions
7.2
15.2
22.4
Transfers to inventory
—
(1.5)
(1.5)
Transfers to assets held for sale
(0.1)
(9.9)
(10.0)
Disposals
(0.5)
(10.5)
(11.0)
At 31 December 2024
122.3
223.2
345.5
Depreciation and impairment losses
At 1 January 2023
31.3
118.8
150.1
Exchange adjustments
(1.5)
(2.1)
(3.6)
Disposals of subsidiaries
(0.4)
(0.7)
(1.1)
Disposals
(1.9)
(11.6)
(13.5)
Transfers to assets held for sale
(0.9)
—
(0.9)
Transfers from right-of-use lease asset
—
0.2
0.2
Reclassification to intangible fixed assets
—
(0.5)
(0.5)
Charge for the year
3.8
15.9
19.7
Impairment
0.7
—
0.7
At 31 December 2023
31.1
120.0
151.1
Exchange adjustments
0.5
0.7
1.2
Disposals
(1.2)
(9.1)
(10.3)
Transfers to asset held for sale
—
(2.6)
(2.6)
Transfers to inventory
—
(1.5)
(1.5)
Charge for the year
4.0
16.8
20.8
Impairment
—
1.7
1.7
At 31 December 2024
34.4
126.0
160.4
Carrying Values
At 1 January 2023
75.8
110.5
186.3
At 31 December 2023
79.3
105.1
184.4
At 31 December 2024
87.9
97.2
185.1
The gross book value of land and buildings includes freehold land of £18.0m (2023: £17.8m). Included within plant, machinery and
vehicles are assets held for rental with a cost of £95.8m (2023 £103.9m) and accumulated depreciation of £54.2m (2023: £51.5m)
174
Notes to the Consolidated Financial Statements continued
14. Assets and liabilities held for sale
2024
£m
2023
£m
Assets held for sale
At 1 January
2.5
1.8
Disposals
(2.5)
(1.8)
Transfers from property, plant and equipment (note 13)
7.4
2.5
Transfers from right-of-use assets (note 15)
2.8
—
Transfers from working capital
5.7
—
Loss on remeasurement
(3.1)
—
Exchange adjustments
(0.1)
—
Total assets held for sale at 31 December
12.7
2.5
Liabilities held for sale
Lease liabilities (note 15)
(3.0)
—
Deferred tax liability (note 16)
(0.5)
—
Bank overdraft
(3.4)
—
Total liabilities held for sale at 31 December
(6.9)
—
Total net assets held for sale at 31 December
5.8
2.5
Following a strategic review during 2024, the Group took the decision to seek buyers for Hill & Smith Pty Limited, the Group’s Australian
roads business, and Parking Facilities Limited, one of our smaller UK security businesses. At 31 December 2024, in each case the Group
had committed to a sale, actively marketed the business and was in advanced stages of negotiation with the buyer. Subsequent to the
year end, in January 2025 the sale of Hill & Smith Pty’s trade and assets was completed and in February 2025 we sold our shareholding
in Parking Facilities.
In accordance with IFRS 5, the assets and liabilities of the businesses have been recognised as disposal groups held for sale
at 31 December 2024 and reported separately in the Consolidated Statement of Financial Position.
Immediately before the classification of the two businesses as held for sale, their recoverable amount was estimated, with
no impairment loss being identified. Following the classification, losses on remeasurement of £1.1m relating to Parking Facilities
and £2.0m related to Hill & Smith Pty Limited were recognised to reduce the carrying amount of the assets in the disposal groups
to their fair value less costs to sell.
Assets held for sale at 31 December 2023 represented a property held by one of the Group’s UK roads businesses, which was sold in
December 2024 for a consideration of £2.3m resulting in a loss on disposal of £0.2m.
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15. Leases
The leases held by the Group can be split into two categories: land and buildings, and plant and equipment. The Group leases various
properties for its manufacturing and distribution activities. Plant and equipment includes all other leases, such as vehicles and
machinery.
The movements in the carrying value of the right-of-use assets and lease liabilities in the years ended 31 December 2023 and
31 December 2024 were as follows:
Land and
buildings
£m
Plant and
equipment
£m
Total
£m
Right-of-use assets
At 1 January 2023
29.5
9.2
38.7
Acquisitions of subsidiaries
2.2
0.1
2.3
Additions
10.6
4.1
14.7
Disposals of subsidiaries
(0.1)
(0.2)
(0.3)
Terminations
(2.2)
(0.1)
(2.3)
Depreciation charge for the year
(5.6)
(3.7)
(9.3)
Transfers to property, plant and equipment
—
(0.9)
(0.9)
Re-measurement
0.1
0.1
0.2
Impairment
(0.6)
—
(0.6)
Effect of movements in foreign exchange
(0.7)
—
(0.7)
At 31 December 2023
33.2
8.6
41.8
Acquisition of subsidiaries
0.8
—
0.8
Additions
8.4
7.5
15.9
Terminations
(1.5)
(0.1)
(1.6)
Depreciation charge for the year
(6.2)
(4.2)
(10.4)
Transfers to assets held for sale
(2.7)
(0.1)
(2.8)
Re-measurement
(0.3)
(0.1)
(0.4)
Impairment
(0.4)
—
(0.4)
Effect of movement in foreign exchange
0.3
—
0.3
At 31 December 2024
31.6
11.6
43.2
2024
£m
2023
£m
Lease liabilities
At 1 January
43.7
39.3
Additions
16.0
14.6
Terminations
(2.2)
(2.4)
Interest expense
2.0
1.3
Disposals of subsidiaries
—
(0.3)
Acquisitions of subsidiaries
0.8
2.3
Lease payments
(11.0)
(10.4)
Re-measurement
(0.5)
—
Effects of movements in foreign exchange
0.2
(0.7)
Transfers to liabilities held for sale
(3.0)
—
At 31 December
46.0
43.7
176
Notes to the Consolidated Financial Statements continued
15. Leases continued
The following table shows the breakdown of the lease expense between amounts charged to operating profit and amounts charged to
finance costs:
2024
£m
2023
£m
Depreciation of right-of-use assets
10.4
9.3
Short-term lease expense
3.7
1.0
Low-value lease expense
0.1
—
Sublease income
(0.1)
(0.1)
Charged to operating profit
14.1
10.2
Interest expense relating to lease liabilities
2.0
1.3
Charged to profit before taxation
16.1
11.5
The maturity of the lease liabilities at 31 December was as follows:
2024
£m
2023
£m
Due within one year
9.1
8.0
Due between one and two years
7.8
6.7
Due between two and three years
6.5
5.5
Due between three and four years
5.7
4.1
Due between four and five years
5.0
3.0
Due after more than five years
11.9
16.4
Total lease liabilities
46.0
43.7
The Group has several lease contracts that include extension and termination options. These options are negotiated by management to
provide flexibility in managing the leased asset portfolio and align with the Group’s business needs. Management exercise judgement in
determining whether these extension and termination options are reasonably certain to be exercised.
Set out below are the:
• Undiscounted potential future rental payments relating to periods following the exercise date of extension that are not included in the
lease term; and
• Undiscounted future rental payments relating to periods that are included in the lease term as the break clauses are not expected to
be exercised.
2024
2023
Within five
years
£m
More than five
years
£m
Total
£m
Within five
years
£m
More than five
years
£m
Total
£m
Extension options expected not to be exercised
0.4
20.5
20.9
0.3
9.4
9.7
Termination options expected not to be exercised
0.8
3.2
4.0
1.3
5.3
6.6
The Group has lease contracts that have not yet commenced as at 31 December 2024. The total future lease payments for these
non-cancellable lease contracts are £2.6m (2023: £4.5m).
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16. Deferred taxation
Intangible
Assets
£m
Property, plant
and equipment
£m
Inventories
£m
Retirement
obligation
£m
Other timing
differences
£m
Total
£m
At 1 January 2023
(8.7)
(12.8)
(0.1)
1.8
8.3
(11.5)
Exchange adjustments
0.2
0.3
0.1
—
(0.2)
0.4
Acquisitions of subsidiaries
(2.8)
(0.3)
0.2
—
1.4
(1.5)
Credited/(charged) for the year in the Consolidated Income
Statement
0.9
(4.4)
0.4
(0.9)
5.7
1.7
Credited for the year in the Consolidated Statement of
Comprehensive Income
—
—
—
0.1
—
0.1
Credited for the year in the Consolidated Statement of Changes
in Equity
—
—
—
—
1.3
1.3
At 31 December 2023
(10.4)
(17.2)
0.6
1.0
16.5
(9.5)
Exchange adjustments
0.1
—
—
—
—
0.1
Transfer to liabilities held for sale
—
2.4
—
—
(1.9)
0.5
Credited/(charged) for the year in the Consolidated Income
Statement
5.0
(0.6)
0.2
(0.8)
(6.7)
(2.9)
Charged for the year in the Consolidated Statement of
Changes in Equity
—
—
—
—
(0.4)
(0.4)
At 31 December 2024
(5.3)
(15.4)
0.8
0.2
7.5
(12.2)
2024
£m
2023
£m
Deferred tax assets
0.1
0.4
Deferred tax liabilities
(12.3)
(9.9)
Deferred tax liability
(12.2)
(9.5)
The deferred tax asset of £7.5m (2023: £16.5m) in respect of other timing differences includes £1.9m (2023: £10.3m) in relation to tax
losses and £2.9m (2023: £2.9m) in relation to share based payments.
No deferred tax asset has been recognised in respect of other tax losses of £16.2m (2023: £16.5m) as their future use is uncertain.
There is no time limit on the carrying forward of the losses. The losses are predominantly capital losses.
No deferred tax liability is recognised on temporary differences of £0.3m (2023: £0.7m) relating to the unremitted earnings of overseas
subsidiaries as the Group is able to control the timings of the reversal of these temporary differences and it is probable that they will not
reverse in the foreseeable future. The Group does not expect this to crystallise into a cash expense in the near future.
17. Inventories
2024
£m
2023
£m
Raw materials and consumables
62.5
64.4
Work in progress
5.1
9.6
Finished goods and goods for resale
32.5
32.1
100.1
106.1
The amount of inventories expensed to the Consolidated Income Statement in the year was £432.2m (2023: £442.6m). The value
of inventories written down and expensed in the Consolidated Income Statement during the year amounted to £4.8m (2023: £3.7m).
178
Notes to the Consolidated Financial Statements continued
18. Trade and other receivables
2024
£m
2023
£m
Trade and other current receivables
Trade receivables
129.3
118.4
Prepayments
7.2
6.2
Other receivables
3.0
0.9
Insurance reimbursement asset (note 22)
3.8
—
Contract assets
19.2
11.8
162.5
137.3
The movements in contract assets and contract liabilities (note 20) during the year correspond to the completion of performance
obligations partially satisfied as at 31 December 2023 offset by contracts that are in progress at 31 December 2024.
19. Cash and borrowings
2024
£m
2023
£m
Cash and cash equivalents in the Consolidated Statement of Financial Position
Cash and cash equivalents net of bank overdrafts*
55.0
34.4
Bank overdraft+
(0.3)
—
Bank overdraft classified as held for sale
(3.4)
—
Cash and cash equivalents net of bank overdrafts and overdraft classified as held for sale
51.3
34.4
Interest bearing loans and other borrowings
Amounts due within one year
(0.5)
(1.4)
Amounts due after more than one year
(98.7)
(97.7)
Lease liabilities due within one year
(9.1)
(8.0)
Lease liabilities due after more than one year
(36.9)
(35.7)
Lease liabilities classified as held for sale
(3.0)
—
Net debt
(96.9)
(108.4)
Change in net debt
Operating profit
115.4
103.8
Non-cash items
59.8
47.6
Operating cash flow before movement in working capital
175.2
151.4
Net movement in working capital
0.6
22.8
Increase in insurance reimbursement asset
(3.8)
—
Decrease in provisions and employee benefits
(3.4)
(0.8)
Operating cash flow
168.6
173.4
Income taxes paid
(26.5)
(31.7)
Net financing costs paid
(8.3)
(8.4)
Capital expenditure
(28.6)
(31.8)
Proceeds on disposal of non-current assets and assets held for sale
3.4
3.3
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Governance
19. Cash and borrowings continued
2024
£m
2023
£m
Free cash flow
108.6
104.8
Dividends paid
(34.5)
(28.0)
Acquisitions of subsidiaries
(47.4)
(53.5)
Disposals of subsidiaries
—
(0.2)
Amortisation of costs associated with refinancing activities
(0.5)
(0.6)
Purchase of shares for employee benefit trust
(1.2)
(2.6)
Issue of new shares
2.5
1.8
Lease additions, terminations and remeasurements
(13.3)
(12.6)
Leases disposed of
—
0.3
Interest on lease liabilities
(2.0)
(1.3)
Net debt decrease
12.2
8.1
Effect of exchange rate fluctuations
(0.7)
3.2
Net debt at the beginning of the year
(108.4)
(119.7)
Net debt at the end of the year
(96.9)
(108.4)
*Included within cash and cash equivalents net of bank overdrafts are overdrafts amounting to £19.9m (2023: £19.6m) for which the Group has a legally enforceable
right of offset and the intention to settle on a net basis.
+Represents an overdraft for which the Group has no right of offset.
Reconciliation of movements in financial liabilities to cash flows arising from financing activities
2024
£m
2023
£m
Interest bearing loans and other borrowings and lease liabilities
At 1 January
142.8
144.2
New loans and borrowings
62.5
73.9
Repayment of loans and borrowings
(63.7)
(76.3)
Repayment of lease liabilities
(9.0)
(9.4)
Costs associated with refinancing during the year
—
(0.5)
Cash flows used in financing activities
(10.2)
(12.3)
Other changes
Effect of exchange rate fluctuations
0.8
(3.2)
Amortisation of costs associated with refinancing activities
0.5
0.6
Lease changes:
Effect of exchange rate fluctuations
0.2
(0.7)
New leases
16.0
14.6
Terminations
(2.2)
(2.4)
Re-measurement
(0.5)
—
Acquisitions of subsidiaries
0.8
2.3
Disposals of subsidiaries
—
(0.3)
Interest expense
2.0
1.3
Interest paid
(2.0)
(1.3)
At 31 December
148.2
142.8
180
Notes to the Consolidated Financial Statements continued
20. Current liabilities
2024
£m
2023
£m
Interest bearing loans and borrowings
Loans and borrowings
0.5
1.4
Bank overdrafts
0.3
—
0.8
1.4
Trade and other current liabilities
Trade Payables
61.5
53.4
Other taxation and social expenses
4.2
4.1
Accrued expenses
46.4
47.0
Contingent consideration on acquisitions
4.5
—
Deferred consideration on acquisitions
—
2.2
Contract liabilities
13.3
9.3
Fair value derivatives
0.1
0.3
Other payables
3.5
3.3
133.5
119.6
During the year, £8.6m (2023: £2.0m) of revenue was recognised in respect of contract liabilities present as at 1 January 2024.
21. Non-current liabilities
2024
£m
2023
£m
Interest bearing loans and borrowings
Loans and borrowings
98.7
97.7
98.7
97.7
Other non-current liabilities
Contract liabilities > 1 year*
1.1
—
Contingent consideration on acquisitions
10.1
—
Deferred consideration on acquisitions
—
1.0
11.2
1.0
* Contract liabilities > 1 year do not represent partially satisfied performance obligations as at the balance sheet date.
22. Provisions
Environmental
£m
Restructuring
£m
Product
rectification
£m
Other
£m
Total
£m
At 1 January 2023
1.2
3.4
—
1.8
6.4
Exchange adjustments
—
—
—
(0.1)
(0.1)
Charged during the year
—
1.1
3.1
—
4.2
Utilised during the year
—
(1.2)
(0.1)
—
(1.3)
At 31 December 2023
1.2
3.3
3.0
1.7
9.2
Exchange adjustments
—
—
—
—
—
Charged during the year
—
—
—
4.3
4.3
Utilised during the year
—
(1.2)
(1.4)
—
(2.6)
Released during the year
—
—
(1.2)
(0.3)
(1.5)
At 31 December 2024
1.2
2.1
0.4
5.7
9.4
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22. Provisions continued
2024
£m
2023
£m
Provisions — amounts due within one year
7.1
6.6
Provisions — amounts due after more than one year and less than five years
2.3
2.6
9.4
9.2
Environmental provisions
Environmental provisions recognise the estimated cost of remediating contaminated land at a number of the Group’s operating sites,
where it is considered probable that the Group will be obliged to carry out the necessary remediation work. Primarily the issues
identified relate to sites acquired through acquisitions of businesses. As a consequence of the nature of the liabilities, the timescales
are uncertain and the provisions represent the Directors’ best estimate of the associated costs. The Group has sought expert external
valuations where appropriate.
Restructuring provisions
Restructuring provisions represent the cash costs of closing or rationalising operations. The provisions represent the Directors’
best estimate of the liabilities arising and are expected to be settled within the next twelve months. The provision of £3.3m
at 31 December 2023 included £2.7m relating to the closure of the Group’s variable message sign business that was announced
in 2021, of which £1.1m has been utilised during 2024. The remaining provision is expected to be utilised in 2025.
Product rectification
The £3.0m provision brought forward was in respect of an issue identified with the historical installation of certain products by our UK
off-grid solar business. The issue has been substantially resolved in 2024 and the total cost of remediation was less than had been
estimated, resulting in a £1.2m release in the year. The remaining provision of £0.4m is expected to be utilised in 2025.
Other provisions
Other provisions relate to various matters including obligations in respect of property dilapidations and legal claims or disputes which
arise from various legal actions, proceedings or other claims that are pending against the Group’s operating companies and are based
on management’s best estimates of the most likely outcome, taking into account the opinions of legal counsel. The charge for the year
includes £3.3m recognised in the current year relating to a claim which arose during the year and is fully covered by an insurance policy;
a corresponding asset has been recognised within the Group’s insurance reimbursement asset (note 18).
23. Financial instruments
(a) Management of financial risks
Overview
The Group has exposure to a number of risks associated with its use of financial instruments.
This note presents information about the Group’s exposure to each of these risks, the Group’s objectives, policies and processes
for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout
these Consolidated Financial Statements.
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits
and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect
changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures,
aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Group Audit Committee oversees how management monitors compliance with the Group’s risk management policies and
procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. A programme
of commercial, operating, financial and third party reviews is in place to assist the Group Audit Committee with its assessment of the
effectiveness of risk management and internal control procedures.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises from cash and cash equivalents, derivative financial instruments and principally from the Group’s receivables
from customers. The maximum exposure to credit risk for receivables and other financial assets is represented by their carrying amount.
182
Notes to the Consolidated Financial Statements continued
23. Financial instruments continued
The Group has a policy of insuring a substantial majority of receivables in its UK businesses, which account for 39% (2023: 45%) of the
Group’s trade receivables. Any residual uninsured risk is spread across a significant number of customers. In our US businesses, which
account for 53% (2023: 46%) of the Group’s trade receivables, our operating companies have a policy of taking out trade references
before granting credit limits and selectively insuring against credit risk where it is deemed appropriate by management. Purchase limits
are established for each customer and are reviewed regularly. Customers that fail to meet the Group’s benchmark creditworthiness
may transact with the Group only on a prepayment basis. The Group’s other overseas businesses operate on a similar basis to the US.
As a result of these policies, impairment losses are not significant.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach
to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due,
under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
It is the Group’s policy to minimise its liquidity risk in terms of limiting the amounts of loans and borrowings maturing within the
next 12 months. As at 31 December 2024 all such debt was covered by cash and cash equivalents netting to £54.2m positive current
liquidity (2023: £33.0m).
The Group’s principal UK revolving credit facility is unsecured, has a value of £250m and has a maturity in November 2027. Along with
various other secured and on demand lines of credit, including bank overdrafts, the Group has access to bank borrowing facilities of
£258.8m at 31 December 2024 (2023: £256.6m).
In addition, in 2019 the Group signed an agreement with an institutional investor for a private placement of $70m Senior Unsecured
Notes. The issue consisted of two equal tranches with maturities in June 2026 and June 2029 respectively.
At 31 December 2024, the Group’s total committed borrowing facilities were £308.1m (2023: £307.3m) and the amount undrawn at this
date was £207.5m (2023: £206.2m).
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and commodity prices will affect the
Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimising the return on risk. The Group buys and sells derivatives in the
ordinary course of business, and also incurs financial liabilities, in order to manage market risks. All such transactions are carried out
within the guidelines set by the Board. Refer to note 23(f) for further details.
Counterparty risk
A group of relationship banks provides the bulk of the banking services, with pre-approved credit limits set for each institution. Financial
derivatives may be entered into with these core banks and the underlying credit exposure to these instruments is included when
considering the credit exposure to the counterparties. At the end of 2024 credit exposure including cash deposited did not exceed
£12.9m with any single institution (2023: £6.8m).
Currency risk
The Group publishes its Consolidated Financial Statements in Sterling, but conducts business in several foreign currencies, including
significant operations based in the US. This results in foreign currency exchange risk due to exchange rate movements, which will affect
the Group’s transaction costs and, more significantly, the translation of the results and net assets of its foreign operations. The Group’s
translation reserve includes a gain of £5.6m (2023: loss of £19.4m), principally as a result of Sterling’s depreciation against the US
Dollar in 2024, representing this translation effect on overseas earnings and net assets.
The trading currency of each operation is predominantly in the same denomination. However, the Group uses forward exchange
contracts to minimise currency risk where appropriate. The Group does not apply hedge accounting to these derivative financial
instruments.
The Group has hedged its investment in its US operations by way of financing the acquisitions through like denominations of its bank
borrowings and the Senior Unsecured Notes. The Group’s investments in other subsidiaries are not hedged because fluctuations
on translation of their assets into Sterling are not significant to the Group.
Interest rate risk
The Senior Unsecured Notes account for 56% (2023: 55%) of the Group’s outstanding gross borrowings at 31 December 2024 and attract
a fixed rate of interest averaging 3.92% (2023: 3.92%) per annum. All other borrowings bear interest at floating rates. At the current time
the Group feels that this ratio of fixed to floating borrowings is appropriate but continues to monitor it in the context of economic
indicators and wider market conditions.
Hill & Smith PLC | Annual Report and Accounts 2024
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23. Financial instruments continued
Insurance
The Group purchases insurance for commercial, legal and contractual reasons. The Group retains insurable risk where external
insurance is not commercially viable.
Capital management
The Group maintains a strong capital base so as to maintain investor, creditor and market confidence and to sustain future
development of the business. The Board monitors both the demographic spread of shareholders, as well as the return, which the Group
defines as total shareholders’ equity and the level of dividends to ordinary shareholders.
The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the
advantages and security afforded by a sound capital position.
There are financial covenants associated with the Group’s borrowings, which are interest cover and EBITDA to net debt. The Group
comfortably complied with these covenants in 2024 and 2023.
The Group’s revolving credit facility and Senior Unsecured Notes are both subject to two covenants: the Group is required to maintain a
minimum interest cover of 4.0 to 1; and the Group is required to maintain a net debt to EBITDA ratio of less than 3.0 to 1. The revolving
credit facility is also subject to an additional covenant which requires the aggregate of the assets of all Obligors to the facility to be
at least 80% of the gross assets of the Group, and similarly the aggregate of the profits before interest and tax of all Obligors to be
at least 80% of the profits before interest and tax of the Group. The covenants are tested every six months until the maturity of the
respective borrowings. As set out in the going concern disclosure on page 143, the Group has no indication that it will have difficulty
complying with these covenants.
There were no significant changes in the Group’s approach to capital management during the year.
(b) Total financial assets and liabilities
The table below sets out the Group’s accounting classification of its financial assets and liabilities and their fair values as at
31 December. The fair values of all financial assets and liabilities are not materially different to the carrying values.
Fair
Value
£m
Amortised
cost
£m
Total carrying
value
£m
Cash and cash equivalents net of bank overdraft*
—
55.0
55.0
Bank overdraft+
—
(0.3)
(0.3)
Bank overdraft classified as held for sale
—
(3.4)
(3.4)
Loans and other borrowings due within one year
—
(0.5)
(0.5)
Loans and other borrowings due after more than one year
—
(98.7)
(98.7)
Lease liabilities due within one year
—
(9.1)
(9.1)
Lease liabilities due after more than one year
—
(36.9)
(36.9)
Lease liabilities classified as held for sale
—
(3.0)
(3.0)
Derivative liability
(0.1)
—
(0.1)
Other assets
—
136.1
136.1
Other liabilities
—
(111.4)
(111.4)
Contingent consideration
(14.6)
—
(14.6)
Total as at 31 December 2024
(14.7)
(72.2)
(86.9)
Cash and cash equivalents net of bank overdraft*
—
34.4
34.4
Loans and other borrowings due within one year
—
(1.4)
(1.4)
Loans and other borrowings due after more than one year
—
(97.7)
(97.7)
Lease liabilities due within one year
—
(8.0)
(8.0)
Lease liabilities due after more than one year
—
(35.7)
(35.7)
Derivative liability
(0.3)
—
(0.3)
Other assets
—
119.3
119.3
Other liabilities
—
(106.9)
(106.9)
Total as at 31 December 2023
(0.3)
(96.0)
(96.3)
*Included within cash and cash equivalents net of bank overdrafts are overdrafts amounting to £19.9m (2023: £19.6m) for which the Group has a legally enforceable
right of offset and the intention to settle on a net basis.
+Represents an overdraft for which the Group has no right of offset.
184
Notes to the Consolidated Financial Statements continued
23. Financial instruments continued
Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined
as follows:
• Level 1: unadjusted quoted prices in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either as a direct price or
indirectly derived from prices.
• Level 3: inputs for the asset or liability that are not based on observable market data.
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Derivative liabilites
—
(0.1)
—
(0.1)
Contingent consideration
—
—
(14.6)
(14.6)
Total at 31 December 2024
—
(0.1)
(14.6)
(14.7)
Derivative liabilities
—
(0.3)
—
(0.3)
Total at 31 December 2023
—
(0.3)
—
(0.3)
At 31 December 2024 the Group did not have any assets or liabilities classified at Level 1 in the fair value hierarchy (2023: nil). There
have been no transfers in any direction in the year.
Details of the contingent consideration which arose on the acquisitions made during the year (see note 12) are set out below.
The fair value of the contingent consideration liability as at 31 December 2024 was materially equal to the fair value determined as
at the acquisition dates. No re-measurements have been recognised in the Consolidated Income Statement during the current year.
Valuation technique
Significant unobservable inputs
Sensitivity of the input to fair value
Contingent consideration liability
Discounted cash flow method
• Probability weighted revenue
• Discount rate
• 10% increase/(decrease) in the
probability weighted revenues
would result in an increase/
(decrease) in the fair value of
the liability by £1.4m.
• 100bps increase/(decrease) in
the discount rate would result
in an increase/(decrease) in the
fair value of the liability by
£0.3m.
The Group’s financial assets, excluding short term receivables, consist mainly of cash and call deposit accounts.
Where cash surpluses arise in the short term, interest is earned based on a floating rate related to bank base rate or SONIA/SOFR.
Where the Group’s funding requirements allow longer term investment of surplus cash, management will review available options
to obtain the best possible return whilst maintaining an appropriate degree of access to the funds.
The Group’s financial liabilities, excluding short term creditors, are set out below. Fixed rate financial liabilities comprise US Dollar
denominated Senior Unsecured Notes. Floating rate financial liabilities comprise Sterling and US Dollar bank loans and overdrafts, and
lease liabilities. The floating rate bank loans and overdrafts bear interest at rates related to bank base rates or SONIA/SOFR. The
floating rates of the lease liabilities are determined using the Group’s incremental borrowing rate, being the rate that the lessee would
have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and
conditions.
Each subsidiary has financial assets and liabilities which are predominantly in the same denomination as that subsidiary’s functional
currency. The financial assets and liabilities not denominated in the functional currency of these entities are insignificant to the Group.
Certain UK subsidiaries hold £56.0m (2023: £68.1m) of US Dollar denominated interest bearing loans, which are predominantly used to
fund the Group’s US operations and are designated as a hedge of the net investment in those foreign operations. The foreign currency
loss of £0.6m (2023: gain of £4.2m) for the effective portion was recognised in the Consolidated Statement of Comprehensive Income
netted against exchange differences on translation of foreign operations. Any ineffective portion recognised in the Consolidated Income
Statement is insignificant.
Hill & Smith PLC | Annual Report and Accounts 2024
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Governance
23. Financial instruments continued
Fixed rate financial liabilities
Weighted average
interest rate
%
Weighted average period for
which rate is fixed
Years
US Dollar at 31 December 2024
3.9
3.0
US Dollar at 31 December 2023
3.9
4.0
(c) Maturity profile
The table below sets out the contractual cash flows associated with the Group’s financial liabilities analysed by maturity:
Effective
interest rate
Carrying
amounts
£m
Contractual
cash flows
£m
Due within one
year
£m
Due between
one and two
years
£m
Due between
two and five
years
£m
Due after more
than five years
£m
Unsecured loans and borrowings
Floating
42.6
(51.7)
(2.7)
(2.7)
(46.3)
—
Senior Unsecured Notes
3.92%
56.0
(62.6)
(2.2)
(29.6)
(30.8)
—
Lease liabilities
Floating
46.0
(52.9)
(10.5)
(9.2)
(19.8)
(13.4)
Other liabilities
n/a
125.9
(125.9)
(124.8)
(1.1)
—
—
Contingent consideration
8.6%*
14.6
(17.3)
(4.1)
(3.7)
(9.5)
—
Derivative liabilities
n/a
0.1
(0.1)
(0.1)
—
—
—
Total at 31 December 2024
285.2
(310.5)
(144.4)
(46.3)
(106.4)
(13.4)
Unsecured loans and borrowings
Floating
44.1
(57.3)
(4.3)
(2.9)
(50.1)
—
Senior Unsecured Notes
3.92%
55.0
(63.9)
(2.2)
(2.2)
(31.4)
(28.1)
Lease liabilities
Floating
43.7
(51.6)
(9.5)
(7.8)
(14.7)
(19.6)
Other liabilities
n/a
114.6
(114.6)
(113.6)
(1.0)
—
—
Derivative liabilities
n/a
0.3
(0.3)
(0.3)
—
—
—
Total at 31 December 2023
257.7
(287.7)
(129.9)
(13.9)
(96.2)
(47.7)
*This is the discount rate applied to discount future cash flows back to their present value. Further details of the method used to calculate the fair value of the
contingent consideration liability are set out on page 185 above.
The unsecured bank borrowings bear interest based on SONIA/SOFR, plus a margin (as defined in the facilities agreement) which varies
depending on the Group’s ratio of net debt to EBITDA.
The Group had the following undrawn committed facilities at 31 December, in respect of which all conditions precedent had been met:
2024
£m
2023
£m
Undrawn committed borrowing facilities
207.5
206.2
(d) Fair values
The fair value of forward currency exchange contracts realised in the Consolidated Income Statement as part of fair value derivatives amounted to
£nil (2023: £nil). The fair values of the Group’s other financial instruments at 31 December 2024 and 2023 were not materially different to their
carrying value. Fair values were calculated using market rates where available, otherwise cash flows were discounted at prevailing rates.
(e) Credit risk
Exposure to credit risk
The exposure to credit risk is substantially mitigated by the credit insurance employed by the Group. In the absence of this insurance
the maximum credit exposure on the carrying value of financial assets at the reporting date was:
Carrying amount
2024
£m
2023
£m
Trade and other receivables and contract assets at amortised cost
151.5
131.1
Cash and cash equivalents at the end of the year
55.0
34.4
Total
206.5
165.5
186
Notes to the Consolidated Financial Statements continued
23. Financial instruments continued
Carrying value of trade receivables by geography
2024
£m
2023
£m
UK
48.8
53.3
Rest of Europe
2.8
3.2
North America
69.0
54.6
Rest of the world
8.7
7.3
Total
129.3
118.4
Carrying value of trade receivables by business segment
2024
£m
2023
£m
Engineered Solutions
67.8
37.0
Roads & Security
33.8
51.6
Galvanizing Services
27.7
29.8
Total
129.3
118.4
Impairment losses
The Group maintains a level of credit insurance covering a significant part of its trade receivables which mitigates against possible
impairment losses. An impairment assessment is performed at each reporting date to assess whether there has been a significant
increase in the credit risk. Expected credit loss rates are calculated individually for each business within the Group and are based
on historical observed default rates, adjusted for forward-looking information where applicable, which is based on available
macroeconomic information. The assessment of the correlation between forecast economic conditions and expected future credit
losses is an estimate but is not determined to be a significant estimate as the Group does not expect future credit losses to be
materially different to the credit losses estimated at the reporting date. The charge to the Consolidated Income Statement in the year in
respect of the expected loss of trade receivables was £1.5m (2023: £1.5m). The Group does not require collateral in respect of trade
and other receivables. The Group does not have trade receivables or contract assets for which no loss allowance is recognised because
of collateral.
The ageing of trade receivables at the reporting date was:
2024
2023
Gross
£m
Provisions
£m
Net
£m
Gross
£m
Provisions
£m
Net
£m
Not past due
83.6
—
83.6
77.1
—
77.1
Past due 1 — 30 days
25.7
(0.1)
25.6
26.8
(0.1)
26.7
Past due 31 — 120 days
14.6
(0.4)
14.2
11.6
(0.2)
11.4
Past due more than 120 days
7.5
(1.6)
5.9
7.1
(3.9)
3.2
Total
131.4
(2.1)
129.3
122.6
(4.2)
118.4
The movements in provisions for impairment of trade receivables are as follows:
£m
At 1 January 2023
3.4
Exchange Adjustments
(0.1)
Acquisitions of subsidiaries
0.5
Charged in the year
1.5
Utilised in the year
(1.1)
At 31 December 2023
4.2
Exchange Adjustments
(0.1)
Charged in the year
1.5
Utilised in the year
(2.4)
Reclassifications
(1.1)
At 31 December 2024
2.1
Hill & Smith PLC | Annual Report and Accounts 2024
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Shareholder Info
Governance
23. Financial instruments continued
(f) Market Risk — Sensitivity analysis
In managing interest rate and currency risks the Group aims to reduce the impact of short term fluctuations on the Group’s earnings.
Over the longer term, however, permanent changes in foreign exchange and interest rates may have an impact on consolidated
earnings. At the end of the reporting periods, the effects of hypothetical changes in interest and currency rates are as follows:
• Based on average month end net debt balances, if interest rates had varied throughout the year by 1% the positive or negative
variation on the year’s result would have been £1.4m, which would directly impact on the Consolidated Income Statement.
• Based on a 10% weakening in Sterling against all currencies throughout the year, the impact on the total group underlying operating
profit in the Consolidated Income Statement would have been a gain of £9.6m and the impact on equity would have been an increase
of £44.8m.
• Based on a 10% strengthening in Sterling against all currencies throughout the year, the impact on the total group underlying
operating profit in the Consolidated Income Statement would have been a loss of £7.9m and the impact on equity would have been a
decrease of £36.6m.
24. Called up share capital
2024
£m
2023
£m
Allotted, called up and fully paid
80.4m ordinary shares of 25p each (2023: 80.2m)
20.1
20.0
In 2024 the Company issued 0.2m shares under its various share option schemes (2023: 0.2m), realising £2.5m (2023: £1.8m).
Each ordinary share carries equal voting rights and there are no restrictions on any share.
Options outstanding over the Company’s shares
The Group operates a number of employee share schemes categorised as follows:
• Save As You Earn (“SAYE”) schemes — SAYE is a tax qualifying monthly savings scheme facilitating the purchase of shares at a
discount as permitted by the applicable legislation (currently up to a maximum discount of 20%). SAYE options may be exercised
in the event of a change of control to the extent permitted by the rules of the scheme. Such schemes are typically issued annually, are
either three or five years and are offered to employees in the UK
• Long Term Incentive Plans (“LTIP”), Restricted Stock Units (“RSU”) and Executive Share Option Schemes (“ESOS”) — the
Remuneration Committee may, at its discretion, structure awards as approved awards comprising a tax qualifying option granted
under the ESOS, RSU and LTIP awards. LTIP and RSU awards are at nil cost and ESOS is a costed option
• Buy-out awards — on joining the Company, certain senior managers may forfeit long term incentive awards at their previous
employer. The Company may compensate them for these awards by granting awards over Hill & Smith shares. The awards are
at nil cost.
The number of options outstanding by scheme is as follows:
2024
2023
Number
of shares
Option
price range (p)
Number
of shares
Option
price range (p)
SAYE schemes †
714,415
794p to 1,640p
823,938
794p to 1,485p
LTIP awards †^
517,481
—
567,808
—
ESOS awards †^
93,926
316p to 1,113p
265,233
316p to 1,113p
RSU awards †
86,550
—
44,400
—
Buy-out awards
75,496
—
21,187
—
Outstanding at the end of the year
1,487,868
1,722,566
Exercisable at the year end
168,049
288,173
Not exercisable at the year end
1,319,819
1,434,393
Outstanding at the end of the year
1,487,868
1,722,566
† Options may be exercised early under the terms of this scheme if employees meet the criteria of ‘good leaver’, which encompasses circumstances such
as retirement or redundancy. Otherwise, awards will vest if the participants continue to be in employment at the vesting date.
^ Vesting of awards under the LTIP and ESOS schemes is subject to various financial performance criteria.
188
Notes to the Consolidated Financial Statements continued
24. Called up share capital continued
The remaining weighted average life of the outstanding share options is 5 years 0 months (2023: 5 years 0 months).
The movement and weighted average exercise prices of share options during the year are as follows:
Weighted
average
exercise
price (p)
2024
Millions of
options
2024
Weighted
average
exercise
price (p)
2023
Millions of
options
2023
Outstanding at the beginning of the year
610
1.7
655
1.8
Granted during the year
483
0.4
480
0.3
Exercised during the year
(733)
(0.4)
(810)
(0.2)
Lapsed during the year
(405)
(0.2)
(583)
(0.2)
Outstanding at the end of the year
559
1.5
610
1.7
The weighted average share price on the dates of exercise of share options during the year was 1,913p (2023: 1,483p), and the weighted average fair value of
options and awards granted in the year was 1,636p (2023: 1,214p). The weighted average exercise price of outstanding options exercisable at the year-end was
1,110p (2023: 1,102p).
Share-based payments — options
The fair value of services received in return for share options granted is measured by reference to the fair value of the share options
granted. The estimate of the fair value of the services received is measured based on the Black—Scholes model where vesting is based
on non-market conditions, or a Monte Carlo Simulation where vesting is based on market conditions. The contractual life is the life of
the option in question and the growth in dividend yield is based on the best current estimate of future yields over the contractual period.
The expected volatility is wholly based on the historical volatility (calculated based on the weighted average remaining life of the share
options), adjusted for any expected changes to future volatility due to publicly available information.
Share options have been granted to qualifying employees in line with HMRC approved or unapproved schemes. Other than the LTIP,
RSU and Buy-out awards, the strike price for the option is made based on the market values of shares at the date the option is offered.
As explained in the Directors Remuneration Report on pages 102 to 120, bonuses awarded to the Executive Directors include an
element awarded in shares, deferred for a period of two years. The Group has determined the fair value of such awards to be equal to
their cash equivalent. The resulting charge is included in the expense arising from share-based payments in the year to which the
awards relate.
The key assumptions for the grants in the current and prior year were as follows:
2024
2023
SAYE
LTIP/RSU
Buy-out
awards
SAYE
LTIP/RSU
Buy-out
awards
Expected share price volatility (%)
30%/19%
28%
n/a
24%/15%
32%
n/a
Dividend yield (%)
2.17%
0.0%
n/a
2.07%
0.0%
n/a
Option life (years)
3/5
3
n/a
3/5
3
n/a
Risk free interest rate (%)
4.0%/4.1%
4.2%
n/a
4.6%/4.5%
3.4%
n/a
The total expense recognised for the period arising from share-based payments is as follows:
2024
£m
2023
£m
Equity-settled
3.4
3.7
Cash-settled
—
(0.4)
Total expensed during the year
3.4
4.1
The carrying amount of the liability in relation to cash-settled share-based payments at the end of the year was £0.4m (2023: £0.7m).
Hill & Smith PLC | Annual Report and Accounts 2024
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Governance
25. Guarantees and other financial commitments
(a) Guarantees
Subsidiary audit exemptions
Hill & Smith PLC has issued guarantees over the liabilities of the following predominantly non-trading UK subsidiaries as at
31 December 2024 under Section 479C of the Companies Act 2006. These entities are exempt from the requirements of the Act relating
to the audit of individual accounts by virtue of Section 479A of the Act:
Company Name
Company Number
Bergen Pipe Supports Limited
00926644
Bergen Pipe Supports Group Limited
01013871
Hill & Smith (International) Limited
11331411
Hill & Smith (Americas) Limited
07269581
Hill & Smith (Americas) 2 Limited
10783462
Hill & Smith (Americas) 3 Limited
12060645
Asset International Structures Limited
15082506
Hill & Smith Overseas Limited
06614400
Hill & Smith (Treasury) Limited
06814150
Hill & Smith (USA) Limited
06876775
Hardstaff Barriers Limited
02791285
Cobaco Holdings Limited
08317210
Signpost Solutions Limited
01084535
Mallatite Minor Structures & Products Limited
13717429
Bowater Doors Limited
13738120
Expamet Limited
13748629
VMS Newco Limited
12968560
Varley & Gulliver Limited
00330433
Ash & Lacy Limited
00047169
Ash & Lacy Manufacturing Limited
03008964
Ash & Lacy Services Limited
02798286
Hawkshead Properties Limited
00562451
Redman Fisher Engineering Limited
00169316
Hill & Smith (Australia) Limited
14411306
Widnes Galvanising Limited
02206443
Black Oldco Limited
14466538
The Group had no financial guarantee contracts outstanding as at 31 December 2024.
(b) Capital commitments
2024
£m
2023
£m
Contracted for but not provided in the accounts
3.6
5.6
190
Notes to the Consolidated Financial Statements continued
25. Guarantees and other financial commitments continued
(c) Operating lease receivables
The total future minimum commitments receivable under non-cancellable operating leases are analysed as follows:
2024
2023
Land and
Buildings
£m
Other
£m
Land and
Buildings
£m
Other
£m
Within one year
0.1
7.4
0.1
6.4
Between one and two years
—
0.6
—
0.7
0.1
8.0
0.1
7.1
(d) Purchase commitments
Certain Group companies enter into purchase commitments which obligate the Group to buy specified amounts of raw materials from
sellers at a future point in time (usually within one year from the balance sheet date). These commitments are summarised as follows:
2024
£m
2023
£m
Contracted for but not provided in the accounts
22.7
19.1
26. Pensions
Total
The total Group retirement benefit assets and obligations are detailed below:
UK
£m
US
£m
2024
£m
UK
£m
US
£m
2023
£m
Total fair value of scheme assets
47.0
2.6
49.6
48.5
2.7
51.2
Present value of scheme funded obligations
(47.2)
(3.2)
(50.4)
(51.9)
(3.4)
(55.3)
Retirement benefit obligation
(0.2)
(0.6)
(0.8)
(3.4)
(0.7)
(4.1)
United Kingdom
The Group operates one main pension scheme in the UK, the Hill & Smith 2016 Pension Scheme (‘the Scheme’), providing benefits on
a defined benefit and defined contribution basis. The Scheme is closed to future accrual and is subject to the statutory scheme specific
funding requirements outlined in UK legislation. The weighted average maturity (the ‘duration’) of the defined benefit plan obligations
at the end of the reporting period is approximately 9 years (2023: 10 years).
The assets of the Scheme are administered by Trustees and are kept entirely separate from those of the Group. The Trustees undertake
a full funding valuation of the Scheme every three years, which is used to determine the rates at which the Group contributes to the
Scheme, with the objective of providing the funds required to meet pension obligations as they fall due.
The Group remains actively engaged in dialogue with the Scheme’s Trustees with regard to management, funding and investment
strategy. Following the triennial funding valuation of the Scheme as at April 2022, the Group continues to have a deficit recovery plan
with the Trustees that requires cash contributions of £3.7m per annum until March 2026. The results of the triennial valuation have
been incorporated in the IAS 19 position at 31 December 2024, updated by an independent qualified actuary.
The Consolidated Income Statement for the year includes a pension charge within operating profit of £3.0m (2023: £3.3m), which includes
the costs of the defined contribution and the defined benefit sections of the Scheme. All actuarial gains and losses are recognised
immediately in the Consolidated Statement of Comprehensive Income.
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Governance
26. Pensions continued
The Scheme exposes the Group to a number of risks, the most significant being:
Risk
Description
Volatile asset returns
The defined benefit obligation is calculated using a discount rate set with reference to high quality
corporate bond yields. If assets underperform against this discount rate, this will create a plan deficit.
The Scheme holds a proportion of its assets in growth assets which are expected to outperform
corporate bonds in the long term. However, returns are likely to be volatile in the short term, potentially
resulting in short term cash requirements and an increase in the deficit recorded in the Consolidated
Statement of Financial Position. The allocation to growth assets is monitored to ensure it remains
appropriate given the Scheme’s long term objectives.
Changes in bond yields
A decrease in corporate bond yields will increase the funding and accounting liabilities, although this
will be partially offset by an increase in the value of the Scheme’s investments in Liability Driven
Investment and bond funds.
Inflation risk
A significant proportion of the defined benefit obligation is indexed in line with price inflation, with higher
inflation leading to higher liabilities. This risk will be partially offset by the Scheme’s Liability Driven
Investments, which will increase in value in line with market inflation expectations.
Life expectancy
The majority of the Scheme’s obligations are to provide a pension for the life of each of the members,
so increases in life expectancy will result in an increase in the liabilities.
The principal assumptions used to value the Scheme’s liabilities at 31 December:
2024
2023
Rate of increase in salaries
n/a
n/a
Rate of increase in pensions payment
3.2%
3.1%
Discount rate
5.4%
4.5%
Inflation — RPI
3.3%
3.2%
Inflation — CPI
2.4%
2.3%
Mortality table
114%/117%
114%/117%
CMI 2023
CMI 2022
1.25%
1.25%
The mortality assumptions imply the following expected future lifetimes from age 65:
2024
2023
Males currently aged 45
21.8 years
21.6 years
Females currently aged 45
24.4 years
24.1 years
Males currently aged 65
20.6 years
20.4 years
Females currently aged 65
23.0 years
22.7 years
The assumptions have been chosen by the Directors from a range of possible actuarial assumptions which, due to the timescales
covered, may not be borne out in practice. The Group takes advice from an independent actuary regarding the appropriateness of the
assumptions used.
Over the last three years, short-term inflation in the UK has at times been significantly higher than we have seen in previous years.
The Group has made an allowance for this higher inflation experience within the liabilities of the Scheme. Over the duration of the
Scheme’s liabilities, market expectations of inflation (which have been used to derive the inflation assumptions above) are
significantly lower than this recent experience.
192
Notes to the Consolidated Financial Statements continued
26. Pensions continued
Assets and liabilities
The Scheme holds assets and liabilities in respect of defined contribution benefits which are equal in value and are excluded from
the following figures. The fair values of Scheme assets in respect of the defined benefit scheme, which are not intended to be realised
in the short term and may be subject to significant change before they are realised, are detailed below. In addition, the value of the
Scheme liabilities, which is derived from cash flow projections over an average period of approximately 9 years (the weighted average
term maturity of the Scheme’s liabilities) and which is therefore inherently uncertain is also set out below.
Market value
2024
£m
Market value
2023
£m
Assets
Quoted Investment Funds
Equities
3.6
—
Bonds
7.0
15.6
Diversified growth funds
8.4
—
Liability Driven Investment ("LDI") funds
10.6
15.0
Alternatives*
12.1
12.2
Unquoted Investment Funds
With profits policies
1.0
0.9
Cash
4.3
4.8
Total fair value of Scheme assets
47.0
48.5
Present value of Scheme funded obligations
(47.2)
(51.9)
Retirement benefit obligation
(0.2)
(3.4)
* Alternatives are investments in asset classes other than traditional equities, bonds, property and cash. They include investments in private equity, private credit,
hedge funds, infrastructure, and renewable energy investments.
In 2017 the Group and the Trustees undertook an investment review of the Scheme. The intention of the strategy for the Scheme is to
reduce a proportion of interest rate and inflation risk by investing a portion of the Scheme’s assets in Liability Driven Investment funds.
This strategy resulted in an initial shift between bonds and LDI funds in the asset categories in 2017. The strategy was reassessed as
part of the April 2019 triennial valuation exercise, which resulted in a further shift from growth assets to bonds in 2020, reducing the
level of risk in the Scheme’s asset strategy. The Scheme’s LDI investment is structured as investment in a number of unit-linked funds
of short and long-dated nominal and index-linked government bonds, some of which are leveraged, held with the Scheme’s investment
manager. This is designed to reflect the size and shape of the Scheme’s interest rate and inflation exposure. Following the April 2022
triennial valuation, there has been no further change to the previously agreed strategy.
Assets in the bonds and equities categories, which account for approximately 23% (2023: 32%) of total Scheme assets, have quoted
market prices in active markets. Excluding cash, the balance of £32.1m (2023: £28.1m) represents the Scheme’s investment in LDI
funds and Secure Income Assets Funds. The LDI funds are invested in inflation linked bonds issued by the UK Government as well
as fixed rate bonds. Secure Income Assets Funds (Alternatives) are invested in a diversified portfolio of infrastructure debts, private
corporate debts and real estate debts. The sensitivity of these funds to changes in interest rates is measured using hedging multiples.
Where asset prices are not directly derivable, an accurate price is determined from a subset of observable market data.
Total expense recognised in the Consolidated Income Statement
2024
2023
Defined
contribution
schemes
£m
Defined benefit
schemes
£m
Total
£m
Defined
contribution
schemes
£m
Defined benefit
schemes
£m
Total
£m
Current service costs
1.9
—
1.9
2.3
—
2.3
Expenses
0.8
0.3
1.1
0.5
0.5
1.0
Charge to operating profit
2.7
0.3
3.0
2.8
0.5
3.3
Interest on net Scheme deficit
—
0.1
0.1
—
0.2
0.2
Total charge to profit before tax
2.7
0.4
3.1
2.8
0.7
3.5
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Governance
26. Pensions continued
Change in the present value of the defined benefit obligations
2024
£m
2023
£m
Opening defined benefit obligations
51.9
51.4
Interest cost
2.3
2.4
Actuarial (gain)/loss arising from:
Financial assumptions
(3.5)
1.6
Demographic assumptions
0.2
(1.0)
Experience assumptions
0.1
1.4
Benefits paid
(3.8)
(3.9)
Closing defined benefit obligations
47.2
51.9
Changes in fair values of Scheme assets
2024
£m
2023
£m
Opening fair value of assets
48.5
44.9
Interest income
2.2
2.2
Return on plan assets excluding interest income
(3.6)
1.6
Employer contributions
3.7
3.7
Benefits paid
(3.8)
(3.9)
Closing fair value of assets
47.0
48.5
Actual return on Scheme assets
(1.4)
3.8
Expected employer contributions in the following year
Defined benefit scheme
4.0
4.0
Defined contribution schemes
1.9
2.0
Amounts recognised in the Consolidated Statement of Comprehensive Income
% of Scheme
assets/
liabilities %
2024
£m
% of Scheme
assets/
liabilities %
2023
£m
Return on plan assets excluding interest income
(8)
(3.6)
3
1.6
Changes in assumptions underlying the present value of Scheme obligations
7
3.2
(4)
(2.0)
Amount recognised in the year
(1)
(0.4)
(1)
(0.4)
The table below shows the sensitivity of the Consolidated Statement of Financial Position to certain changes in the significant pension
assumptions:
Balance at
31 December
2024
£m
Increase in
pensions
payment
(+0.1% p.a.)
£m
Decrease in
pensions
payment
(-0.1% p.a.)
£m
Discount rate
(+0.1% p.a.)
£m
Discount rate
(-0.1% p.a.)
£m
Inflation rate
(+0.1% p.a.)
£m
Inflation rate
(-0.1% p.a.)
£m
Life expectancy
(+1 year)
£m
Life expectancy
(-1 year)
£m
Value of funded
obligations
(47.2)
(47.4)
(47.0)
(46.8)
(47.6)
(47.5)
(46.9)
(49.3)
(45.1)
Fair value of plan assets
47.0
47.0
47.0
47.0
47.0
47.0
47.0
47.0
47.0
Deficit
(0.2)
(0.4)
(0.0)
0.2
(0.6)
(0.5)
0.1
(2.3)
1.9
The sensitivity analyses above have been determined based on a method that extrapolates the impact on the defined benefit obligation
as a result of changes in key assumptions occurring at the end of the year. The sensitivity analyses are based on a change in a significant
assumption, keeping all other assumptions constant. As such the sensitivity analyses may not be representative of an actual change
in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation from one another.
194
Notes to the Consolidated Financial Statements continued
26. Pensions continued
The Group has considered the requirements of IFRIC 14. The terms of the Scheme give the Group the right to recover any surplus
assets in the Scheme upon wind up and therefore management have concluded that there is no impact on the amounts recognised
in respect of retirement benefit obligations.
The Group is aware of the Court of Appeal’s ruling on 25 July 2024 in the case of Virgin Media v NTL Pension Trustees II Limited
(and others) which confirmed the implications of not having a confirmation from the actuary in accordance with Section 37 of the
Pension Schemes Act 1993, when rule changes were made to pension schemes such as the Group’s UK Scheme, between 6 April 1997
and 6 April 2016. The Board of Trustees of the Hill & Smith Pension Scheme, which is responsible for compliance with Section 37,
is continuing to liaise with its professional advisers in respect of rule changes that occurred in the relevant period. An initial compliance
investigation has been completed and, based upon the information currently available, we are not aware of any material omissions
in compliance, hence the Group does not expect any material change to the pension accounting reflected in these financial statements.
USA
In the US, Bergen Pipe Supports, Inc. operates a defined benefit pension plan comprising current and deferred pensioners such that
no future benefits accrue. The average duration of the defined benefit plan obligation at the end of the reporting period is approximately
7 years (2023: 7 years).
The Group also operates defined contribution plans in a number of other overseas operations. The amount contributed to these plans
during the year was £2.1m (2023: £1.2m).
The Consolidated Income Statement for the year includes a pension charge within operating profit of £2.1m (2023: £1.3m), which includes
the costs of the defined contribution schemes and the defined benefit schemes.
Actuarial valuations of the above schemes were carried out by independent actuaries as at 31 December 2024. All actuarial gains and
losses are recognised immediately in the Consolidated Statement of Comprehensive Income.
The principal assumptions used by the actuaries:
2024
2023
Rate of increase in salaries
n/a
n/a
Discount rate
5.31%
4.68%
Inflation
0.00%
0.0%
Mortality table
PRI — 2012 Private
Retirement Plans;
Scale MP — 2021
improvements
PRI — 2012 Private
Retirement Plans; Scale
MP — 2021
improvements
Assets and liabilities
The fair values of scheme assets, which are not intended to be realised in the short term and may be subject to significant change
before they are realised, and the value of the scheme liabilities, which is derived from cash flow projections over long periods and which
is therefore inherently uncertain, are as follows:
Market value
2024
£m
Market value
2023
£m
Assets
Insured fixed interest assets quoted in active markets
2.5
2.7
Cash
0.1
—
Total fair value of scheme assets
2.6
2.7
Present value of Scheme funded obligations
(3.2)
(3.4)
Retirement benefit obligation
(0.6)
(0.7)
Cash and other insured fixed interest assets — where assets are held in cash or a policy with a fixed interest asset allocation,
the expected long term rate of return is taken to be the yields generally prevailing on such assets as at the year end date.
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Governance
26. Pensions continued
Total expense recognised in the Consolidated Income Statement
2024
2023
Defined
contribution
schemes
£m
Defined benefit
schemes
£m
Total
£m
Defined
contribution
schemes
£m
Defined benefit
schemes
£m
Total
£m
Current service costs
2.0
0.1
2.1
1.2
0.1
1.3
Charge to operating profit
2.0
0.1
2.1
1.2
0.1
1.3
Interest on net Scheme deficit
—
—
—
—
0.1
0.1
Total charge to profit before tax
2.0
0.1
2.1
1.2
0.2
1.4
Change in the present value of the defined benefit obligation
2024
£m
2023
£m
Opening defined benefit obligations
3.4
3.4
Interest cost
0.1
0.2
Actuarial (gain)/loss arising from:
Financial assumptions
(0.1)
0.1
Demographic assumptions
—
(0.2)
Experience assumptions
—
0.3
Benefits paid
(0.2)
(0.2)
Exchange adjustments
—
(0.2)
Closing defined benefit obligations
3.2
3.4
Changes in fair values of scheme assets
2024
£m
2023
£m
Opening fair value of assets
2.7
2.7
Return on plan assets excluding interest income
0.1
0.2
Interest on plan assets
0.1
0.1
Employer contributions
—
0.1
Admin expenses
(0.1)
(0.1)
Benefits paid
(0.2)
(0.2)
Exchange adjustments
—
(0.1)
Closing fair value of assets
2.6
2.7
Actual return on Scheme assets
0.2
0.3
Expected employer contributions in the following year
Defined contribution schemes
2.0
1.2
Amounts recognised in the Consolidated Statement of Comprehensive Income
% of Scheme
assets/
liabilities %
2024
£m
% of Scheme
assets/
liabilities %
2023
£m
Experience loss on scheme obligations
—
—
(9)
(0.3)
Return on plan assets excluding interest income
4
0.1
7
0.2
Changes in assumptions underlying the present value of Scheme obligations
3
0.1
2
0.1
Amount recognised in the year
7
0.2
—
—
The Group considers that any reasonable sensitivities applied to the assumptions for the overseas schemes would not have a material
impact on the Consolidated Financial Statements.
196
Notes to the Consolidated Financial Statements continued
27. Related Party Transactions
As explained in note 6, the key management personnel are considered to be the Board of Directors of Hill & Smith PLC and the members
of the Executive Board who are not also Directors of Hill & Smith PLC. The Board of Directors’ remuneration can be seen in the Directors’
Remuneration Report on pages 102 to 120. The combined remuneration of key management personnel can be seen in note 6 to the
financial statements on page 159.
28. Subsequent events
As part of the Group’s active portfolio management, in the first quarter of 2025, the Group successfully divested two of its non-core,
loss making Roads and Security businesses, Hill & Smith Pty Limited and Parking Facilities Limited; both of which were classified
as held for sale as at 31 December 2024 (see note 14 for further details).
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Governance
Company Balance Sheet
31 December 2024
Notes
2024
£m
2023
£m
Non-current assets
Tangible assets
4
1.1
1.4
Right-of-use assets
5
0.3
0.3
Deferred tax asset
6
3.0
7.2
Investments
7
320.0
290.1
Debtors due in more than one year
8
74.3
102.6
398.7
401.6
Current assets
Debtors
9
15.4
12.3
Cash and cash equivalents
0.1
0.1
15.5
12.4
Total assets
414.2
414.0
Creditors: amounts falling due within one year
Bank loans and overdrafts
10, 11
(15.1)
(15.8)
Lease Liabilities
5
(0.1)
(0.1)
Other creditors
10
(37.5)
(53.3)
(52.7)
(69.2)
Net current liabilities
(37.2)
(56.8)
Total assets less current liabilities
361.5
344.8
Non-current liabilities
Creditors: amounts falling due after more than one year
11
(10.0)
0.2
Provisions: pension liabilities
12
—
(0.1)
Net assets
351.5
344.9
Share capital and reserves
Called up share capital
13
20.1
20.0
Share premium
47.0
44.6
Capital redemption reserve
0.2
0.2
Retained earnings
284.2
280.1
Total equity
351.5
344.9
The Company has taken advantage of the exemption permitted by section 408 of the Companies Act 2006 not to publish its individual
profit and loss account and related notes. The Company made a profit attributable to the equity shareholders of £36.5m in the year
(2023: £49.5m).
Approved by the Board of Directors on 11 March 2025 and signed on its behalf by:
RA Helbing
HK Nichols
Director
Director
Company Number: 671474
198
Company Statement of Changes in Equity
31 December 2024
Called up share
capital
£m
Share premium
£m
Capital
redemption
reserve
£m
Retained
earnings
£m
Total equity
£m
At 1 January 2023
20.0
42.8
0.2
257.0
320.0
Comprehensive income
Profit for the year
—
—
—
49.5
49.5
Other comprehensive income for the year
—
—
—
0.1
0.1
Transactions with owners recognised directly in equity
Dividends
—
—
—
(28.0)
(28.0)
Credit to equity of share-based payments
—
—
—
3.7
3.7
Satisfaction of long-term incentive and deferred bonus awards
—
—
—
(2.6)
(2.6)
Tax taken directly to the Consolidated Statement of Changes in Equity
—
—
—
0.4
0.4
Shares issued
—
1.8
—
—
1.8
At 31 December 2023
20.0
44.6
0.2
280.1
344.9
Comprehensive income
Profit for the year
—
—
—
36.5
36.5
Transactions with owners recognised directly in equity
Dividends
—
—
—
(34.5)
(34.5)
Credit to equity of share-based payments
—
—
—
3.4
3.4
Own shares held by employee benefit trust
—
—
—
1.6
1.6
Satisfaction of long-term incentive and deferred bonus awards
—
—
—
(2.8)
(2.8)
Tax taken directly to the Consolidated Statement of Changes in Equity
—
—
—
(0.1)
(0.1)
Shares issued
0.1
2.4
—
—
2.5
At 31 December 2024
20.1
47.0
0.2
284.2
351.5
Details of share options and related share-based payments are contained in note 24 to the Group Financial Statements.
Transactions of the Group sponsored Employee Benefit Trust (‘EBT’) are included in the Company Financial Statements. In particular,
the EBT’s purchase of shares in the Company to satisfy shares awarded under Long Term Incentive Plans and other remuneration
agreements is debited directly to equity.
Distributable reserves
The Company maintains a policy of recognising gains arising from intra-group transactions as distributable only once a formal legal
opinion has been sought to confirm the position, after all steps required to execute a transaction have been duly completed. The legal
opinions required under this policy will be sought no later than the point at which the reserves in question are required to be accessed
for the purposes of distribution. In line with this policy the Company has available to it distributable reserves of not less than £106.8m
(2023: £102.8m), representing 2.7 times (2023: 3.0 times) cover of the current year proposed dividend. When required the Company can
receive dividends from its subsidiaries to further increase its distributable reserves; the Company’s UK trading subsidiaries had reserves
of approximately £89.4m available for distribution at 31 December 2024 (2023: £44.8m). Further reserves are available for distribution
from trading subsidiaries located overseas, subject to local regulations.
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Notes to the Company Financial
Statements
1. Company Principal Accounting Policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the
Company’s Financial Statements, except as noted below.
Basis of preparation
These Financial Statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (‘FRS 101’).
In preparing these Financial Statements, the Company applies the recognition, measurement and disclosure requirements of Financial
Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”) and in accordance with applicable accounting standards but
makes amendments where necessary in order to comply with the Companies Act 2006 and has set out below where advantage of the
FRS 101 disclosure exemptions has been taken.
Under section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its own profit and loss account.
As the Consolidated Financial Statements include the equivalent disclosures, the Company has taken the available exemptions under
FRS 101 in respect of the following disclosures:
• IFRS 2 Share Based Payments in respect of Group settled share based payments
• A Cash Flow Statement and related notes
• Disclosures in respect of transactions with wholly owned Group companies
• The effects of new but not yet effective IFRSs.
The Accounting Policies set out on pages 200 to 203 have, unless otherwise stated, been applied consistently to all periods presented
in these Financial Statements.
Measurement convention
The Financial Statements are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair
value: derivative financial instruments, financial instruments classified as fair value through profit or loss or as fair value through other
comprehensive income, and liabilities for cash-settled share-based payments. Non-current assets and disposal groups held for sale
are stated at the lower of previous carrying amount and fair value less costs to sell.
Accounting judgements, estimates and assumptions
The preparation of the Company’s Financial Statements requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and reported amounts of income, expenses, assets and liabilities. Actual results may differ
from these estimates.
Significant estimates are required in determining whether impairment of the Company’s investments in subsidiaries exists, which
requires estimation of the investments’ value in use. A process similar to the impairment review performed on the Group’s goodwill and
other indefinite life intangible assets is undertaken. Key assumptions include the estimation of future cash flows, growth factors and
discount rates.
There are no significant judgements used by management in preparing the Company’s Financial Statements.
Investments in subsidiary undertakings
In the Company’s Financial Statements, investments in subsidiary undertakings are carried at cost less impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form
an integral part of the Company’s cash management are, where there is a right of and intention to offset, included as a component of
cash and cash equivalents. The Group’s bank arrangements and facilities with Barclays Bank plc provide the legally enforceable right
to offset and the Group demonstrates its intention to offset by regularly sweeping cash balances within each bank. Consequently,
the balances have been offset in the Balance Sheet.
Foreign currencies
Transactions in foreign currencies are translated to the Company’s functional currency at the foreign exchange rate ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the
functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised
in the profit and loss account.
200
1. Company Principal Accounting Policies continued
Financial instruments
Trade and other debtors and amounts owed by subsidiary undertakings
Trade and other debtors and amounts owed by subsidiary undertakings are recognised initially at fair value. Subsequent to initial
recognition they are measured at amortised cost using the effective interest method, less any impairment losses.
Trade and other creditors and amounts owed to subsidiary undertakings
Trade and other creditors and amounts owed to subsidiary undertakings are recognised initially at fair value. Subsequent to initial
recognition they are measured at amortised cost using the effective interest method.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses.
Provisions
A provision is recognised in the Balance Sheet when the Company has a present legal or constructive obligation as a result of a past
event, that can be reliably measured, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability.
Tangible fixed assets and depreciation
Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses.
Where parts of an item of tangible fixed assets have different useful lives, they are accounted for as separate items of tangible fixed
assets.
Depreciation is charged to the profit and loss account on a straight-line basis over the estimated useful lives of each part of an item
of tangible fixed assets. Land is not depreciated. The estimated useful lives are as follows:
Leasehold improvements
life of the lease
Plant, machinery and vehicles
up to 20 years
Depreciation methods, useful lives and residual values are reviewed at each balance sheet date.
Where computer software is non-cloud based and is an integral part of a related item of computer hardware, the software is treated
as a tangible asset. Acquired computer software licences are capitalised on the basis of costs incurred to acquire and bring into use
the specific software.
Leases
To the extent that a right-of-control exists over an asset subject to a lease and with a lease term exceeding one year, the Company
recognises a right-of-use asset, representing the underlying lease asset, and a lease liability, representing the Company’s obligation
to make lease payments. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or before the commencement date, any initial direct costs incurred and an estimate of the
dismantling, removal and restoration costs as required by the terms of the lease contract.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the
end of the useful life of the right-of-use asset or the end of the lease term. If ownership of the leased asset transfers to the Company
at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful
life of the asset. The right-of-use assets are also subject to impairment.
The lease liability is measured at the present value of the future lease payments discounted using the Company’s incremental
borrowing rate, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value
in a similar economic environment with similar terms and conditions. Future lease payments include fixed payments, variable lease
payments that depend on an index or a rate (initially measured using the index or rate as at the commencement date), amounts
expected to be payable under a residual guarantee and the exercise price of purchased options where it is reasonably certain that
the option will be exercised. Finance charges, representing the unwinding of the discount rate, are recognised in the profit and loss
account over the period of the lease.
Lease payments for low value assets and short-term leases (less than 12 months) are recognised as an expense on a straight-line basis
over the lease term.
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1. Company Principal Accounting Policies continued
Pension scheme arrangements
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’s net obligation
in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that
employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present
value, and the fair values of any plan assets (at bid price) are deducted. The Company determines the net interest on the net defined
benefit liability/asset for the period by applying the discount rate used to measure the defined benefit obligation at the beginning
of the annual period to the net defined benefit liability/asset.
The discount rate is the yield at the reporting date on bonds that have a credit rating of at least AA that have maturity dates
approximating to the terms of the Company’s obligations and that are denominated in the currency in which the benefits are expected
to be paid.
Remeasurements arising from defined benefit plans comprise actuarial gains and losses, the return on plan assets (excluding interest)
and the effect of the asset ceiling (if any, excluding interest). The Company recognises them immediately in other comprehensive
income and all other expenses related to defined benefit plans in employee benefit expenses in profit or loss.
Certain of the Company’s employees are members of Group-wide defined benefit schemes. The net defined benefit cost of the plans
is allocated to participating entities based on the contracting entity of the participating employees of the scheme. The contributions
payable by the participating entities are determined on the same basis.
Share-based payments
Share-based payment arrangements in which the Company receives goods or services as consideration for its own equity instruments
are accounted for as equity-settled share-based payment transactions, regardless of how the equity instruments are obtained by the
Company.
The grant date fair value of share-based payments awards granted to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period in which the employees become unconditionally entitled to the awards. The fair value
of the awards granted is measured using an option valuation model, taking into account the terms and conditions upon which the
awards were granted. The amount recognised as an expense is adjusted to reflect the actual number of awards for which the related
service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based
on the number of awards that do meet the related service and non-market performance conditions at the vesting date. For share-based
payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such
conditions and there is no true-up for differences between expected and actual outcomes.
Share-based payment transactions in which the Company receives goods or services by incurring a liability to transfer cash or other
assets that is based on the price of the Company’s equity instruments are accounted for as cash-settled share-based payments.
The fair value of the amount payable to employees is recognised as an expense, with a corresponding increase in liabilities, over
the period in which the employees become unconditionally entitled to payment. The liability is remeasured at each Balance Sheet date
and at settlement date. Any changes in the fair value of the liability are recognised as personnel expense in profit or loss.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except to the
extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in
equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively
enacted at the Balance Sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition
of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business
combination, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable
future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount
of assets and liabilities, using tax rates enacted or substantively enacted at the Balance Sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the
temporary difference can be utilised.
202
Notes to the Company Financial Statements continued
1. Company Principal Accounting Policies continued
Ordinary dividends
Dividends are recognised in the Financial Statements in the period in which they are approved by the Company’s shareholders.
Dividend income is recognised in the Profit and Loss Account on the date the Company’s right to receive payment is established.
Financial guarantee contracts
Where the Company provides guarantees relating to bank borrowings and other liabilities of other Group companies, under IFRS 9 such
contracts are initially recognised in the financial statements at fair value at the time the guarantee is issued. The company estimates
the fair value of the financial guarantee as being the difference between the net present value of the contractual cash flows required
under a debt instrument and the net present value of the contractual cash flows that would have been required without the guarantee.
Subsequent to initial recognition, the company’s liability under each guarantee is measured at the higher of the amount initially
recognised less the cumulative amount of income recognised in accordance with the principals of IFRS 15 Revenue from Contracts
with Customers and the loss allowance that would be recorded on the exposure. A financial guarantee liability is derecognised when
the liability underlying the guarantee is discharged or cancelled or expires if the guarantees withdrawn or cancelled.
2. Profit before taxation
Fees paid to Ernst & Young LLP and its associates for audit and non-audit services to the Company itself are not disclosed in the
individual Financial Statements of Hill & Smith PLC because the Group Financial Statements are required to disclose such fees
on a consolidated basis.
3. Dividends
Dividends paid during the year
2024
2023
Pence per
share
£m
Pence per
share
£m
Interim dividend paid in relation to year-ended 31 December 2022
—
—
13.0
10.4
Final dividend paid in relation to year-ended 31 December 2022
—
—
22.0
17.6
Interim dividend paid in relation to year ended 31 December 2023
15.0
12.0
—
—
Final dividend paid in relation to year ended 31 December 2023
28.0
22.5
—
—
Total
43.0
34.5
35.0
28.0
Dividends declared in respect of the year
2024
2023
Pence per
share
£m
Pence per
share
£m
Interim dividend declared in relation to year-ended 31 December 2023
—
—
15.0
12.0
Final dividend declared in relation to year-ended 31 December 2023
—
—
28.0
22.5
Interim dividend declared in relation to year ended 31 December 2024
16.5
13.3
—
—
Final dividend proposed in relation to year ended 31 December 2024
32.5
26.1
—
—
Total
49.0
39.4
43.0
34.5
The final dividend for the year was proposed after the year end date and was not recognised as a liability at 31 December 2024,
in accordance with IAS 10.
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4. Tangible fixed assets
Short leasehold
properties
£m
Plant,
machinery and
vehicles
£m
Total
£m
Cost or valuation
At 1 January 2024
0.4
1.7
2.1
At 31 December 2024
0.4
1.7
2.1
Depreciation
At 1 January 2024
0.1
0.6
0.7
Charge for the year
0.1
0.2
0.3
At 31 December 2024
0.2
0.8
1.0
Net book value
At 31 December 2024
0.2
0.9
1.1
At 31 December 2023
0.3
1.1
1.4
5. Leases
The movements in the carrying value of the right-of-use assets and lease liabilities in the year ended 31 December 2024 are as follows:
Land and
buildings
£m
Plant and
equipment
£m
Total
£m
Right-of-use assets
Balance at 1 January 2024
0.2
0.1
0.3
Additions
—
0.2
0.2
Depreciation charge for the year
(0.1)
(0.1)
(0.2)
At 31 December 2024
0.1
0.2
0.3
Total
£m
Lease Liabilities
Balance at 1 January 2024
0.4
Additions
0.2
Lease payments
(0.2)
At 31 December 2024
0.4
The following table shows the breakdown of the lease expense between amounts charged to operating profit and amounts charged to
finance costs:
2024
£m
2023
£m
Depreciation of right-of-use assets
0.2
0.1
Charged to operating profit and profit before taxation
0.2
0.1
The maturities of the lease liabilities at 31 December were as follows:
2024
£m
2023
£m
Due within one year
0.1
0.1
Due between one and two years
0.2
0.1
Due between two and three years
0.1
0.1
Due between three and five years
—
0.1
Total lease liabilities
0.4
0.4
204
Notes to the Company Financial Statements continued
6. Deferred tax asset
2024
£m
2023
£m
Deferred tax asset at 1 January
7.2
2.9
(Charge)/credit for the year in the profit and loss account
(4.1)
3.9
(Charge)/credit for the year directly in equity
(0.1)
0.4
Deferred tax asset at 31 December
3.0
7.2
Other timing differences
3.0
7.2
7. Fixed asset investments
Shares in
subsidiary
undertakings
£m
Total
£m
Cost
At 1 January 2024
386.3
386.3
Additions
29.9
29.9
Disposal
(46.4)
(46.4)
At 31 December 2024
369.8
369.8
Provisions
At 1 January 2024
96.2
96.2
Disposal
(46.4)
(46.4)
At 31 December 2024
49.8
49.8
Net book value
At 31 December 2024
320.0
320.0
At 31 December 2023
290.1
290.1
A list of the businesses owned by the Company is given in note 16. All of the Company’s subsidiaries are wholly owned.
8. Debtors due in more than one year
2024
£m
2023
£m
Amounts owed by subsidiary undertakings
74.3
102.6
74.3
102.6
Amounts owed by subsidiary undertakings are repayable on demand and, if required, can be called upon at the sole discretion of the
Company. As the Company does not intend to call on these balances in the next 12 months, they have been classified as debtors due in
more than one year. The Company charges interest on these balances at a rate that approximates to the interest rate that it pays on its
external borrowing facilities (further details of which are set out in note 23 of the Group Financial Statements).
9. Debtors
2024
£m
2023
£m
Amounts owed by subsidiary undertakings
6.7
5.9
Corporation tax
6.2
4.2
Other debtors
0.4
0.5
Prepayments and accrued income
2.1
1.7
15.4
12.3
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10. Creditors: amounts falling due within one year
2024
£m
2023
£m
Bank loans and overdrafts (note 11)
Bank overdrafts
15.1
15.8
15.1
15.8
Other creditors
Trade creditors
3.0
1.5
Other taxation and social security
0.2
0.2
Accruals
5.0
5.6
Other creditors
1.6
1.5
Amounts owed to subsidiary undertakings
27.7
44.5
37.5
53.3
11. Creditors: amounts falling due after more than one year
The Company’s interest bearing loans and borrowings are detailed below. Further information on the Company’s exposure to interest
rate and foreign currency risk is provided in note 23 of the Group Financial Statements.
2024
£m
2023
£m
Bank loans
9.7
(0.5)
Lease liabilities
0.3
0.3
10.0
(0.2)
The Company’s bank loans and borrowings are also analysed below into the periods in which they mature:
2024
£m
2023
£m
Amounts due within one year (note 10)
15.1
15.8
Amounts due after more than one year:
Between two and five years
9.7
(0.5)
24.8
15.3
In the prior year the Company had no bank loans falling due after more than one year. The £0.5m bank loan in 2023 represented
unamortised bank fees.
12. Pension liabilities
The Company contributes to the Group’s Hill & Smith 2016 Pension Scheme, which has sections providing benefits accruing in the
future on a defined benefit basis and on a defined contribution basis. Details of the Scheme and the most recent actuarial valuations
are contained in note 26 to the Group Financial Statements. There are also separate personal pension plans.
The Company’s profit for the year includes a pension charge of £0.4m (2023: £0.4m), which includes the costs of the defined
contribution schemes and the defined benefit schemes.
13. Called up share capital
2024
£m
2023
£m
Allotted, called up and fully paid
80.4m ordinary shares of 25p each (2023: 80.2m)
20.1
20.0
In 2024 the Company issued 0.2m shares under its various share option schemes (2023: 0.2m), realising £2.5m (2023: £1.8m).
Details of share options and related share-based payments are contained in note 24 to the Group Financial Statements.
Each ordinary share carries equal voting rights and there are no restrictions on any share.
206
Notes to the Company Financial Statements continued
14. Guarantees
Subsidiary audit exemptions
Hill & Smith PLC has issued guarantees over the liabilities of the following predominantly non-trading UK subsidiaries as at
31 December 2024 under Section 479C of the Companies Act 2006. These entities are exempt from the requirements of the Act
relating to the audit of individual accounts by virtue of Section 479A of the Act:
Company Name
Company Number
Bergen Pipe Supports Limited
00926644
Bergen Pipe Supports Group Limited
01013871
Hill & Smith (International) Limited
11331411
Hill & Smith (Americas) Limited
07269581
Hill & Smith (Americas) 2 Limited
10783462
Hill & Smith (Americas) 3 Limited
12060645
Asset International Structures Limited
15082506
Hill & Smith Overseas Limited
06614400
Hill & Smith (Treasury) Limited
06814150
Hill & Smith (USA) Limited
06876775
Hardstaff Barriers Limited
02791285
Cobaco Holdings Limited
08317210
Signpost Solutions Limited
01084535
Mallatite Minor Structures & Products Limited
13717429
Bowater Doors Limited
13738120
Expamet Limited
13748629
VMS Newco Limited
12968560
Varley & Gulliver Limited
00330433
Ash & Lacy Limited
00047169
Ash & Lacy Manufacturing Limited
03008964
Ash & Lacy Services Limited
02798286
Hawkshead Properties Limited
00562451
Redman Fisher Engineering Limited
00169316
Hill & Smith (Australia) Limited
14411306
Widnes Galvanising Limited
02206443
Black Oldco Limited
14466538
The Company guarantees the bank loans, overdrafts and other borrowings of certain subsidiary undertakings. The amount outstanding
at 31 December 2024 was £97.1m (2023: £100.2m).
15. Related party transactions
The Company has related party relationships with its key management personnel and with its subsidiaries (either directly or
indirectly controlled).
The related party transactions with key management personnel are considered by the Company to be the same as those of the Group
and are set out in note 6 to the Group Financial Statements.
The Company has taken the available exemption under FRS 101 not to disclose transactions with wholly owned Group companies.
Hill & Smith PLC | Annual Report and Accounts 2024
207
Strategic Report
Financials
Shareholder Info
Governance
16. Subsidiaries
Incorporated in the UK
AAJG Holdings Limited (H)
Access Design & Engineering Limited (D)
Ash & Lacy Limited (H)*
Ash & Lacy Manufacturing Limited (H)
Ash & Lacy Services Limited (H)
Asset International Limited (D)
Asset International Structures Limited (R)
ATG Access Ltd (R)
A W Thorne Limited (D)*
Barkers Engineering Limited (R, G)
Bergen Pipe Supports Group Limited (H)*
Bergen Pipe Supports Limited (D)
Berry Safety Systems Limited (D)*
Black Oldco Limited (R)
Bipel Group plc (D)
Birtley Group Limited (E, G) *
Bowater Doors Limited (E)
Bromford Steel Limited (D)
Bytec Limited (D)
Carrington Packaging Limited (D)
Cobaco Holdings Limited (H)
Cobaco Limited (D)
Cooper Securities (Dudley) Limited (D)
Cooper Securities Limited (D)
Dee Organ Limited (D)
Expamet Building Products Limited (D)
Expamet Limited (E)
Forgen Renewables Limited (D)
Hawkshead Properties Limited (H)
Hardstaff Barriers Limited (D)
Hill & Smith (Americas) Limited (H)
Hill & Smith (Americas) 2 Limited (D)
Hill & Smith (Americas) 3 Limited (D)
Hill & Smith (Australia) Limited (H)
Hill & Smith (Treasury) Limited (D)*
Hill & Smith (USA) Limited (D)
Hill & Smith (VSG) Limited (D)
Hill & Smith Galvanized Products
Limited (D) *
Hill & Smith Group Limited (D)
Hill & Smith PLC (H)
Hill & Smith (International) Limited (D)
Hill & Smith Infrastructure Products Group
Limited (D)
Hill & Smith Infrastructure Limited (R)*
Hill & Smith Overseas Limited (H)*
Hill & Smith Pension Trustees Limited (D) *
H&S Expamet Limited (D)
J. & F. Pool Limited (D)
Jevons Tools Limited (D)
Joseph Ash Limited (G)
Lionweld Steel Limited (D)
Lionweld Kennedy Flooring Limited (E)*
Mallatite Limited (R)*
Mallatite Minor Structures & Products
Limited (R)
Medway Galvanising Company Limited (G)
Parking Facilities Ltd (R)
Pipe Supports Overseas Limited (H)*
Post & Column Limited (D)
Premier Galvanizing Limited (G)
Prolectric Services Limited (R)
Redman Architectural Metalwork Limited
(D) Redman Fisher Engineering Limited (D)
Safety and Security Barrier Holdings
Limited (D)
Signature Limited (D)
Signpost Solutions Limited (D)
Tegrel Limited (D)*
Telford Galvanizers Limited (D)
The Global Tank and Foundry
(Wolverhampton) Limited (D)
Variable Message Signs Limited (D)
Varley & Gulliver Limited (D)
Vista Galvanizing (UK) Limited (D)
VMS Newco Limited (R)
Western Galvanizers Limited (D)
Widnes Galvanising Limited (G)
Wombwell Foundry Limited (D)
(E) Engineered Solutions
(R) Roads & Security
(G) Galvanizing
(D) Dormant
(H) Holding Company
* Directly held by Hill & Smith PLC
All of the above subsidiaries have a year end date of 31 December and are included in the consolidated results of the Group.
The Company holds 100% of the share capital of all businesses, either directly or indirectly, unless otherwise stated. All of the above
subsidiaries have a registered office address at Westhaven House, Arleston Way, Shirley, Solihull, B90 4LH, England.
208
Notes to the Company Financial Statements continued
16. Subsidiaries continued
Incorporated in the USA
Balance Oldco Inc. (D)
Bergen Pipe Supports, Inc. (E)
Carpenter & Paterson, Inc. (E)
Creative Pultrusions, Inc. (E)
CPK Manufacturing LLC (E)
CPCA Manufacturing LLC (E)
Enduro Composites, Inc. (E)
Hill & Smith Group Holdings, Inc. (H)
Hill & Smith US Group Inc (H)
Hill & Smith, Inc. (R)
National Signal LLC (R)
Novia Corporation (E)
Prolectric US Inc. (D)
Voigt & Schweitzer LLC (H)
V&S Whitlow Electric LLC (E)
V&S Capital Steel LLC (E)V&S Amboy
Galvanizing LLC (G)
V&S Columbus Galvanizing LLC (G)
V&S Delaware Galvanizing LLC (G)
V&S Detroit Galvanizing LLC (G)
V&S Korns Galvanizing (G)
V&S Lebanon Galvanizing LLC (G)
V&S Memphis Galvanizing LLC (G)
V&S New York Galvanizing LLC (G)
V&S Schuler Engineering, Inc. (E)
V&S Schuler Tubular Products LLC (E)
V&S Taunton Galvanizing, LLC (G)
(E) Engineered Solutions
(R) Roads & Security
(G) Galvanizing
(D) Dormant
(H) Holding Company
* Directly held by Hill & Smith PLC
Incorporated in Australia
Hill & Smith Pty Limited (R)
Incorporated in Jersey
Hill & Smith (Jersey) Limited (H)
Vista Limited (H)
Incorporated in India
Bergen Pipe Supports (India) Private
Limited (E)
Hill & Smith Infrastructure Products India
Private Limited (D)
Incorporated in Ireland
Redman Fisher Limited (E)
Hill & Smith (Ireland) Unlimited Company (D)
Incorporated in Norway
ATA Hill & Smith AS (R)
Incorporated in Spain
Prolectric Solar Lighting SL (D)
All of the above subsidiaries not incorporated in the UK have a year end date of 31 December, with the exception of Bergen Pipe
Supports (India) Private Limited and Hill & Smith Infrastructure Products India Private Limited, which each have a year end of 31 March.
All of the subsidiaries listed above are included in the consolidated results of the Group. The Company holds 100% of the share capital
of all businesses, either directly or indirectly.
Hill & Smith PLC | Annual Report and Accounts 2024
209
Strategic Report
Financials
Shareholder Info
Governance
Five Year Summary
Continuing operations
2024
£m
2023
£m
2022
£m
2021
£m
2020
£m
Revenue
855.1
829.8
732.1
625.2
588.4
Underlying operating profit
143.5
122.5
97.1
77.3
64.7
Underlying profit before taxation
132.6
111.9
87.9
71.1
57.3
Shareholders’ funds
475.7
424.5
395.0
339.6
320.5
Pence
Pence
Pence
Pence
Pence
Underlying earnings per share
122.6
105.4
85.4
70.0
57.9
Proposed dividends per share
49.0
43.0
35.0
31.0
26.7
210
Financial calendar
Annual General Meeting
Thursday 22 May 2025
Trading Update
Thursday 22 May 2025
Ex-dividend date for 2024 final dividend
Thursday 29 May 2025
Record date 2024 final dividend
Friday 30 May 2025
Dividend Reinvestment Plan — last date for election
Friday 13 June 2025
2024 final dividend payable
Friday 4 July 2025
Announcement of 2025 interim results
Wednesday 13 August 2025
Trading Update
Wednesday 26 November 2025
Hill & Smith PLC | Annual Report and Accounts 2024
211
Strategic Report
Shareholder Info
Governance
Financials
Shareholder Base
Holdings of shares at 10 March 2025
Range of Shareholders
Number of Holders
%
Number of Shares
%
1 — 500
549
31.79
98,194
0.12
501 — 1000
229
13.26
178,787
0.22
1001 — 5000
457
26.46
1,116,174
1.39
5001 — 50,000
289
16.73
4,701,496
5.84
50,001 — 100,000
72
4.17
5,210,868
6.48
100,001 — 500,000
94
5.44
22,541,887
28.01
500,001 — 1,000,000
19
1.10
12,249,529
15.22
Above 1,000,001
18
1.04
34,369,268
42.71
1,727
100.0
80,466,203
100.0
Shareholder Base
Number of Holders
%
Number of Shares
%
Individuals
1,189
68.85
2,732,975
3.40
Institutions
529
30.63
77,591,682
96.43
Other corporate
9
0.52
141,546
0.18
1782
100.0
80,309,876
100.0
Dividend History — Dividend per Share
2024
2023
2022
2021
2020
Interim
16.5p
15.0p
13.0p
12.0p
9.2p
Final
32.5p
28.0p
22.0p
19.0p
17.5p
49.0p
43.0p
35.0p
31.0p
26.7p
Shareholder information
Annual General Meeting
The AGM will be held on Thursday 22 May 2025 at 11.00am
at Cranmore Park Conference and Exhibition Centre, Cranmore
Avenue, Shirley, Solihull, B90 4LF. Full details are contained within
the Notice of AGM. A proxy card is also enclosed with this
statement for voting. Alternatively, you can vote electronically
as explained below.
Communication with Shareholders and Analysts
Directors meet with major shareholders and potential investors
following interim and final results, and at other times if requested.
Presentations for analysts are also held on the day of these
announcements and we keep in regular contact with analysts
throughout the year.
Corporate Information
The Annual and Interim Reports are the main forms of
communication with our shareholders. We have updated our
website to supplement these reports with additional information.
The website address is www.hsgroup.com and includes share price
information, investor relations information and contact details.
212
Electronic proxy voting
To lodge your proxy vote via the internet, log on to www.
investorcentre.co.uk/eproxy. You will need the Control number,
Shareholder Reference number (‘SRN’) and PIN number printed
on your Form of Proxy where you will find the full instructions.
Shareholding online
Computershare Investor Centre gives access to view your
holdings online. To register click on Investor Centre on the
Computershare home page www.computershare.com and follow
the instructions.
You will be able to:
• View all your holding details for companies registered with
Computershare.
• View the market value of your portfolio.
• Update your contact address and personal details online.
• Access current and historical market prices.
• Access trading graphs.
• Add additional shareholdings to your portfolio.
Share dealing
Share dealing services are available through Computershare
Investor Services PLC. Log on to www.computershare.com/
sharedealingcentre for internet share dealing and for telephone
dealing call 0370 703 0084.
Dividend Reinvestment Plan (‘DRIP’)
The Company offers shareholders the facility to reinvest their
cash dividends to buy more shares in the Company.
• The service allows you to increase your shareholding in
an easy and convenient way.
• Online application process enables you to participate easily
and securely: www.investorcentre.co.uk.
• Click on ‘Register’ to sign up to the Investor Centre. This will
allow you to carry out a number of share related transactions
online, including opting for the DRIP.
• You will be required to fill in your SRN and your postcode,
together with your email address. You will also be asked to
select a user name (ID) and password of your choice.
• Once registered select ‘Dividend Plans’ from the left hand
menu and amend your current cash dividend instruction,
confirming acceptance of the DRIP terms and conditions.
• DRIP shares will be purchased as soon as possible on
or after the dividend pay date.
Shareholder helpline number
There is a Computershare helpline for shareholders who have
enquiries about their shareholdings. The dedicated helpline
number is 0370 707 1058.
Hill & Smith PLC | Annual Report and Accounts 2024
213
Strategic Report
Shareholder Info
Governance
Financials
Principal Group businesses
US Engineered Solutions
United States
Creative Composites Group
Fiber reinforced polymer (FRP) composite solutions
214 Industrial Lane, Alum Bank
Pennsylvania 15521 USA
Tel: +1 (814) 839 4186
www.creativecompositesgroup.com
V&S Utilities
Electrical transmission and distribution substation structures
2240 Allen Avenue S.E.
Canton, Ohio 44707 USA
Tel: +1 (330) 452 5200
www.vsschuler.com
The Paterson Group
Engineered pipe support solutions and ancillary products
434 Latigue Road
Waggaman, LA 70094 USA
Tel: +1 (504) 431 7722
www.pipehangers.com
Novia Corporation Inc.
Vibration and seismic control solutions
1 Northwestern Drive
Salem, New Hampshire 03079 USA
Tel: +1 (603) 898 8600
www.cp-novia.com
National Signal LLC
Solar light towers, message signs and other construction
equipment
14489 Industry Circle
La Mirada, CA 90638 USA
Tel: +1 714-441-7707
www.nationalsignalinc.net
Hill & Smith Inc.
Roadside and workzone safety products and solutions
2740 Airport Drive, Suite 310/320
Columbus, Ohio 43219 USA
Tel: +1 (614) 340 6294
www.hillandsmith.com
UK & India Engineered Solutions
United Kingdom
Hill & Smith Infrastructure Limited
Temporary and permanent road safety barriers, vehicle restraint
systems, security solutions, bridge parapets and retained earth
systems
Springvale Business & Industrial Park
Bilston, Wolverhampton WV14 0QL
Tel: +44 (0) 1902 499400
www.hill-smith.co.uk
Mallatite Limited
Lighting columns and traffic safety solutions
Holmewood Industrial Estate, Hardwick View Road,
Holmewood, Chesterfield,
Derbyshire S42 5SA
Tel: +44 (0) 1246 593280
www.mallatite.co.uk
Prolectric Services Limited
Sustainable lighting, power and security solutions
35 Hither Green Industrial Estate,
Clevedon BS21 6XU
Tel: +44 (0)1275400570
www.prolectric.co.uk
ATG Access LTD
Hostile vehicle mitigation and perimeter security solutions
Cobaco House, North Florida Road
Haydock Industrial Estate, Haydock,
Merseyside WA11 9TP
Tel: +44 (0) 8456 757574
www.atgaccess.com
Barkers Engineering Limited
Perimeter security solutions
Duke Street, Fenton, Stoke-on-Trent,
Staffordshire ST4 3NS
Tel: +44 (0) 1782 319264
www.barkersengineering.com
214
Birtley Group Ltd
Galvanized lintels, construction fittings, composite doors,
builders’ metalwork & plasterers’ accessories
Mary Avenue, Birtley,
County Durham DH3 1JF
Tel: +44 (0) 191 410 663
www.birtleygroup.co.uk
Lionweld Kennedy Flooring Ltd
Open steel flooring, handrailing and ancillary products
Marsh Road, Middlesbrough TS1 5JS
Tel: +44 (0) 1642 24515
www.lk-uk.com
India
Bergen Pipe Supports (India) Private Ltd
Engineered pipe support solutions
Incorporated in India
Plot No.12, Ground Floor
‘RADHA’
Mangala Nagar Main Road
Porur, Chennai 600116
India
Tel: +91 8576 305 666
www.pipesupports.com
Galvanizing Services
United Kingdom
Joseph Ash Limited
Galvanizing services
Alcora Building 2, Mucklow Hill
Halesowen, West Midlands B62 8DG
Tel: +44 (0) 121 504 2560
www.josephash.co.uk
United States Of America
Voigt & Schweitzer LLC
Galvanizing services
987 Buckeye Park Road,
Columbus, Ohio 43207
USA
Tel: +1 (614) 449 8281
www.hotdipgalvanizing.com
Note: Divisional reporting structure as of 1 January 2025.
Hill & Smith PLC | Annual Report and Accounts 2024
215
Strategic Report
Shareholder Info
Governance
Financials
Contacts
Registered Office
Hill & Smith PLC
Westhaven House
Arleston Way
Shirley
Solihull
West Midlands
B90 4LH
Tel: +44 (0) 121 704 7430
Fax: +44 (0) 121 704 7439
Registration Details
Registered in England and Wales Company Number: 671474
Company Website
www.hsgroup.com
Company Secretary
Karen Atterbury
Professional Advisers
Auditor
Ernst & Young LLP
No. 1 Colmore Square
Birmingham
B4 6HQ
Brokers and Financial Advisors
Numis Securities Limited
45 Gresham St
London
EC2V 7BF
Jefferies International Limited
100 Bishopsgate
London
EC2N 4JL
Principal Bankers
Barclays Bank Plc
Midlands Corporate Banking Centre
PO Box 3333
1 Snowhill
Snow Hill Queensway Birmingham
B3 2WN
Contacts and advisors
Lawyers
Gowling WLG
Two Snowhill
Birmingham
B4 6WR
Financial Public Relations
MHP Group
60 Great Portland Street
London
W1W 7RT
Registrars
Registrars
Computershare Investor Services PLC
PO Box 82
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
Tel: +44 370 702 0003
Fax: +44 370 703 6101
216
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