Delivering
value
Hill & Smith PLC | Annual Report 2025
Group financial highlights
Underlying Statutory
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.
Revenue
£868.8m +2%
(2024: £855.1m)
Underlying operating profit
£151.3m +5%
(2024: £143.5m)
Underlying operating margin
17.4% +60bps
(2024: 16.8%)
Underlying profit before tax
£142.5m +7%
(2024: £132.6m)
Underlying earnings per share
132.2p +8%
(2024: 122.6p)
Revenue
£868.8m +2%
(2024: £855.1m)
Operating profit
£120.1m +4%
(2024: £115.4m)
Operating margin
13.8% +30bps
(2024: 13.5%)
Profit before tax
£111.3m +7%
(2024: £104.5m)
Basic earnings per share
102.7p + 8%
(2024: 95.0p)
Contents
Strategic Report
Hill & Smith investment case 2
Case study: Priority end-market focus 5
Case study: Disciplined capital allocation 6
Case study: Investing for organic growth 8
Chair’s introduction 10
Chief Executive Officer’s review 14
Strategic framework and business model 20
Measuring our performance 22
Operational review 24
Financial review 28
Stakeholder engagement 30
Section 172(1) statement 35
Our approach to sustainability 37
Risk management 60
Group principal risks 2025 63
Non-financial and sustainability information statement 67
Governance
Governance at a glance 68
Introduction to governance 70
Board of Directors 72
Governance report 76
Nomination Committee report 91
Audit Committee report 95
Remuneration Committee report 102
Directors’ report 130
Statement of Directors’ responsibilities 135
Financials
Independent Auditor’s report 136
Consolidated income statement 147
Consolidated statement ofcomprehensive income 148
Consolidated statement of financial position 149
Consolidated statement of changes in equity 150
Consolidated statement of cash flows 151
Notes to the consolidated financial statements 152
Company balance sheet 210
Company statement of changes in equity 211
Notes to the company financial statements 212
Five year summary 222
Shareholder Information
Financial calendar 223
Shareholder information 224
Principal group businesses 226
Contacts and advisors 228
Find out more at
www.hsgroup.com
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 1
Strategic Report
Hill & Smith investment case
High and improving returns profile
delivering superior value for shareholders
Sustainability
at the core of our business model
Disciplined capital allocation
with a strong balance sheet and excellent cash
generation enabling the Group to take advantage of
organic and inorganic growth opportunities
Entrepreneurial culture
supported by an agile, autonomous operating model
Market leadership
with a strong track record in attractive niches with high
barriers to entry
Structural growth
underpinned by the need for infrastructure investment in
our core markets
Delivering long-term stakeholder value
2
Hill & Smith has a long track record of delivering superior value and
returns for shareholders.
Actual/proposed dividend per share
2021 2022 2023 2024 2025
53
49
43
35
31
Underlying EPS
2021 2022 2023 2024 2025
132.2
122.6
105.4
85.4
70.0
Underlying EPS (pence) Dividend per share (pence)
ROIC over five years
2021 2022 2023 2024 2025
26.7%
24.8%
22.0%
19.2%
16.8%
Return on invested capital
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 3
Strategic Report
34%
Proportion of Group revenues generated
from high growth emerging markets
and resilient growth anchors
4
We categorise 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
We prioritise our exposure to high-growth emerging markets and
resilient growth anchors, and in 2025 saw an increase in the
proportion of Group revenues generated from those markets to
34% (2024: 23%), with electrical transmission & distribution and
data centres being the most significant drivers.
Global data centre construction is growing rapidly, particularly in
the US, driven by the demand to support developments in
artificial intelligence and cloud computing. Our US galvanizing
business provides materials coating services to customers
involved in the construction of new data centres, while our
engineered supports and composite businesses provide
products utilised in the construction process. In the UK, our
high-security perimeter fencing and access flooring businesses
provide solutions for data centres globally.
Investment in the US electrical grid is driven by the need to
upgrade ageing infrastructure, supported by both federal and
state investment, and increasing demands on the electric grid
resulting from infrastructure developments. V&S Utilities, our
business supplying substation products and components for
grid infrastructure connectivity, continues to benefit from this
very positive demand backdrop, and our US composites and
galvanizing businesses also face into this market.
Our focus on these end markets sets the ambition for
our operating companies and increasingly informs our
capital allocation priorities, resource planning and
portfolio management.
Priority end-market
focus
We are focused on end markets which serve vital infrastructure and the built
environment, with long-term growth drivers, benefiting from tailwinds given the
growing need for upgrade and renewal to maintain a vibrant economy.
End-market revenues
High growth emerging markets
Resilient growth anchors
Stable growth markets
Cyclically sensitive markets
8%
4%
19%
45%
32%
26%
37%
29%
FY25 FY24
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 5
Strategic Report
Disciplined
capital allocation
Our balance sheet strength and cash-generative business model
provide flexibility in the effective deployment of capital to support our
growth ambitions.
Our first priority is disciplined investment in organic growth,
where we focus on opportunities in our higher-growth, higher-
return end markets. Examples include capacity expansion in
operations facing into rapid growth sectors, product innovation
to continue to support our customers’ needs, and automation
that increases the efficiency of our manufacturing processes.
We intend to invest organic growth capital of around £35m in
our US transmission & distribution and galvanizing operations
over the next two years, increasing capacity within their existing
network of facilities.
Secondly, we remain focused on enhancing our growth
businesses through acquisitions. We follow a structured
approach based on clear criteria, utilising our operating
company and financial frameworks to prioritise targets.
Weplanto invest, on average, around £50m to £70m each
yearon acquisitions. The acquisitions of Freeberg Industrial
Fabrication and Hentech Fabrication that we agreed in March
2026 provide excellent exposure to a number of high growth
priority end markets.
We are committed to creating value for our shareholders,
which includes providing a growing dividend. Our 2025
proposed full year dividend of 53.0p per share represents
growth of 8% on 2024.
Lastly, we will return surplus capital to shareholders when our
leverage is expected to remain low for a sustained period. In
August 2025, having assessed our capital requirements to fund
organic investment, execute on acquisitions and provide
dividend growth, we concluded that we had the capacity to
make capital returns and remain comfortably within our target
leverage range. We therefore commenced a £100m share
buyback programme to be delivered over c.18 months, of which
c.£20m was deployed by the end of 2025.
At 31 December 2025, our covenant leverage was 0.1 times
and headroom against our committed borrowing facilities was
£346.5m, continuing to provide significant investment flexibility
and capacity to support our growth objectives.
1. Organic growth
• Investment in capital projects, talent and innovation
• Focus on higher-growth, higher-return end markets
2. Inorganic growth
• Structured approach based on operating company and financial framework
• Target to invest £50m-£70m per year
3. Dividend growth
• Provide a growing dividend to shareholders
4. Return surplus capital
• Return surplus capital to shareholders if leverage is expected to fall below 0.5 times for
a sustained period
6
£100m
Share buyback over c.18 months
Governance Financials Shareholder InfoStrategic Report
Hill & Smith PLC | Annual Report and Accounts 2025 7
Investing for
organic growth
Our capital allocation policy prioritises organic investment,
focusing our deployment of capital on our higher-growth,
higher-return businesses.
The Paterson Group, our US engineered supports business
based in Waggaman, Louisiana, faces into a broad range of
structural growth markets including energy, clean water, data
centres and semiconductor plants. In 2024, we began the
construction of a new fabrication building at the Waggaman site
to address the strong demand outlook, enhancing our ability to
deliver increasingly large and complex projects. The facility was
completed and became operational in November 2025 at a total
cost of £7.5m. Having achieved the Group’s organic growth
targets in 2025, The Paterson Group carries a strong order book
into 2026 and we remain confident of further good progress in
the coming years.
With current facilities in our US power transmission &
distribution and galvanizing businesses operating at higher
levels of utilisation, we are investing a total of £35m over the
next two years to grow within their existing networks. The
expansion of capacity will enable our operations to continue to
meet anticipated demand growth whilst maintaining market-
leading customer lead times and high service levels,
underpinning growth in our US platform businesses from 2027
into the medium term.
New fabrication building at The Paterson Group, Waggaman, Louisiana
8
£35m
organic growth capital allocated to
US capacity expansion over the next
two years
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 9
Strategic Report
Chair’s introduction
“The results reflect an excellent
performance in our larger, higher-
margin US businesses, where we
continue tosee the benefits from
high levelsof infrastructure
investment.”
Alan Giddins
Chair
10
Performance highlights
This has been another strong performance from Hill&Smith.
TheGroup delivered revenue of £868.8m (2024: £855.1m)
andunderlying operating profit of £151.3m (2024: £143.5m)
representing organic constant currency revenue and operating
profit growth of 3% and 6% respectively. Underlying operating
margins were up at 17.4% (2024: 16.8%) and ROIC increased to
26.7% (2024: 24.8%).
As explained in further detail in Rutger’s CEO review, the results
reflect an excellent performance in our larger, higher-margin US
businesses wherewe continue to see the benefits from high
levels ofinfrastructure investment. By contrast, the UK market
backdrop remains extremely challenging and it is hard
toseethis changing in the short term.
Strategy and M&A
The first action which Rutger undertook upon joining the Board
was to revisit the Group’s strategy. This was presented to the
Board in January 2025 and was a central part of the Board’s
discussions in June when we reviewed the Group’s updated
five-year plan. Consistent with ensuring that the Group’s
resources are focused on our higher-growth end markets, the
Board has also approved a number of significant capex
investments for delivery over the next two years.
M&A is a core lever in the delivery of our strategy,
givingustheopportunity to both acquire complementary
businessesand enter new end markets. We have remained
disciplined in our deal evaluation, and strengthened our
resources focusing on deal sourcing.
In March 2026, we reached agreement to acquire Freeberg
Industrial Fabrication (‘Freeberg’) for a headline consideration of
$36m for 80% of the equity, subject to US regulatory approvals.
Further consideration is payable for the remaining 20% of equity
dependent on future profitability, up to a maximum of $50m.
Freeberg, a leading US designer and manufacturer of custom
enclosures and other engineered solutions, is closely aligned
with our operating company framework and will increase the
Group’s exposure to some of our higher growth priority end
markets. We also completed the bolt-on acquisition of Hentech
Fabrication (‘Hentech’), an Irish manufacturer of engineered
steel solutions primarily for European data centre markets, for
aconsideration of €7.3m. We are pleased to be acquiring two
highly complementary businesses that will help accelerate our
growth, and continue to actively progress a pipeline of further
attractive M&A opportunities.
Further detail on the Group’s strategy is set out on page 20.
Board changes
Hannah Nichols left the Group in April 2025 to take up the
position ofCFO at Coats PLC. Hannah joined Hill & Smith in
September 2019, and during the course of her tenure she led
aprocess of material improvement in our financial reporting,
controls and IT environment. Iwould also like to thank Hannah
for the considerable supportshe gave me when I took on the
Executive Chair role.
Chris McLeish joined the Group as CFO in October 2025.
TheNomination Committee ran an extensive search process
using external headhunters. Chris was the stand-out candidate
from that process and I have been hugely impressed by his
ability to get up to speed on the business and start to have a
positive impact both in the boardroom and across the Group.
Iwould like to thank Mark Else, our Group Financial Controller,
for taking on the interim CFO role ahead of Chris joining.
Leigh-Ann Russell, having re-located to the US, stepped down as
a Non-executive Director in March 2025. Gillian Tomlinson
joined the Board shortly thereafter. Gillian is currently Chief Data
& Digital Officer at Weir Group PLC, a FTSE 100 company. She
has worked across a range ofinternational businesses and
brings a highly complementary skillset as the Group looks at
how to increasingly address theuse of technology across our
businesses and the ever-changing risk of cyber security.
As announced, I will be stepping down as Chair at theMay 2026
AGM having been on the Board since 2017. The Nomination
Committee led a search process for a new Chair. In November
2025, we announced that NickAnderson would be joining as a
Non-executive Director inMarch 2026 and then take over from
me in May 2026. Nickwas previously CEO of Spirax Sarco, and
is a Non-executive Director at BAE Systems and Weir Group.
While not involved inthe formal recruitment process, I have had
the opportunity tospend time with Nick over the last few
months and believe heis extremely well suited, culturally and in
terms of experience, to guide Hill & Smith through the next stage
of its growth.
One topic which I have discussed with Nick is the need to look
at diversity on the Board following Hannah’s departure and
Chris’s appointment as CFO. The balance oftheBoard is now
25% female and 75% male. Nick is fully alignedwith this and will
be prioritising it during his first few months as Chair.
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 11
Strategic Report
Health and safety
Looking after the safety of everyone who works at Hill & Smith is
the Board’s key priority, and is discussed in detail at every Board
meeting. We have in our CEO, CFO and Group Presidents,
individuals who are absolutely committed to continually evolving
our health and safety culture and improving our processes.
We have again seen a reduction in our Lost Time Incident Rates
by9%, following a reduction of 23% in 2024. While we are
travelling in the right direction, there remains more to do as we
aspire to eradicate all serious injuries from our business.
“When visiting Whitlow Electric,
wereceivedverypositive feedback on
thehealth and safety changes which we
hadimplemented post-acquisition.”
Sustainability
We have continued to focus on reducing our greenhouse gas
emissions during 2025, with a 19% reduction in scope 1 and 2
emissions delivered compared to the previous year. Various
initiatives have been rolled out across the Group, most notably
the use of HVO (‘Hydrotreated Vegetable Oil’) in place of diesel
at several of our sites and a range of waste heat capture and
recovery measures, particularly at our galvanizing facilities.
Inaddition, our transition to renewable energy contracts
hascontinued, with 91% of our electricity in 2025 from
renewablesources.
Employees
Our employees are the heartbeat of our business. We employ
over 4,500 people within our operations, split roughly 37% in the
UK, 46% in the US and 17% in India.
In September 2025, we undertook our annual employee
engagement survey. This is a key tool for providing feedback at
the operating company level, while also providing important
insight for the Board. Each operating company, working with the
Group Presidents, hasnowproduced a key set of actions which
have been sharedwith employees.
During the year, we held employee forums at Whitlow Electric
(US), The Paterson Group (US), Birtley (UK) and Lionweld
Kennedy (UK). Typically this involved ten to 12 employees
froma cross section of roles and tenure, but excluding senior
management. I attended each of these meetings, together with
other Non-executive Directors. I was particularly pleased that
atour meeting at Whitlow Electric, which we acquired in
September 2024, we received very positive feedback on
thehealth and safety changes which we had implemented
post-acquisition.
Dividends and AGM
The Board recognises that dividends play an important role
formany investors. The Board is proposing a final dividend
of35.0p (2024: 32.5p), which, if approved, would result in a full
yeardividend of 53.0p (2024: 49.0p), an increase of 8%.
The Annual General Meeting of the Company will be held at
11.00am on 21 May 2026 at TheCranmore Park Conference
Event and Exhibition Centre, Cranmore Avenue, Shirley, West
Midlands, B90 4LF. Iwould encourage shareholders to attend,
either in person or virtually, and use the opportunity to raise any
questions they have with theBoard.
Looking ahead
Hill & Smith is a very different business from the one I joined in
2017. It is far more weighted towards the US, the majority of its
profits come from businesses with scale and market leadership,
and it has an organisational and management structure far
better geared to delivering against an ambitious business plan.
What has not changed, however, is the huge commitment and
the strong entrepreneurial culture and mindset that exists within
our operating companies. Getting to know the people whowork
in our businesses has without doubt been the highlight of my
time on the Board, and in particular during thetwo years that I
took on the role of Executive Chair.
Onbehalf of the Board, I would like to thank all our employees
for their contribution to the ongoing success of the Group.
Alan Giddins
Chair
10 March 2026
Chair’s introduction continued
12
Nick Anderson
Chair designate
In November 2025, we announced the
appointment ofNick Anderson as
Chairdesignate.
Nick joins the Board asaNon-executive Director
inMarch2026, andwill takeover as Chair at the conclusion
ofthe Company’s 2026 AGM. Nick brings astrong
background as a leader ininternational engineering
andmanufacturing operations.
We gathered Nick’s thoughts on joining theBoard.
What attracted you to Hill & Smith?
Hill & Smith is a great business with a strong track record
ofcreating lasting value for its shareholders, which makes
itnaturally an exciting business to join. Its 200-year history
and the Group’s evolution over time make it truly unique.
Ibelieve there are significant opportunities for the Group
within its core infrastructure markets, and I am excited
towork with the Board and the management team
totakeadvantage of them.
What will you bring to the role?
I am passionate about achieving results. I want Hill & Smith
to continue its long track record of excellent performance
and growth while developing as a cohesive Group. I have
significant experience leading an international and
decentralised group, which requires the maintenance of
entrepreneurialism within a framework of effective controls,
which I will bring to bear to support continued development.
Do you believe in the strategy and operating model
ofthebusiness?
Absolutely! The current strategy and operating model have
made the Group what it is today and placed it in a fantastic
position to benefit from end-market growth and operational
excellence. Our decentralised structure enables a more
dynamic approach, one that is agile in responding to market
forces and customer needs. This can help us create and
maintain competitive advantage. I am looking forward
tocontinuing the development of the Group through both
organic and inorganic growth.
As Chair, what tone would you like to encourage?
I want the Hill & Smith Group to be a great place to work;
onewhere everyone feels included and able to contribute.
Hill& Smith has an impressive history, one that every
member of staff can be proud of. I want to preserve
thisanddemonstrate how aninternational business can be
run, ethically, forthebenefitofits stakeholders and also
deliver outstanding shareholder value.
Introducing our new Chair
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 13
Strategic Report
Chief Executive Officer’s review
“I would like to pay tribute to the skill
and commitment of our leadership
teams who, along with colleagues
across the Group, have enabled
usto achieve another year of
robustprogress.”
Rutger Helbing
Chief Executive Officer
14
2025 review
I am pleased to report that the Group has delivered a strong
performance, underpinned by the excellent performance
ofourUS businesses. I would like to pay tribute to the skill
andcommitment of our leadership teams who, along with
colleagues across the Group, have enabled us to achieve
another year of robust progress.
Our US operations now account for 79% of Group underlying
operating profit and continue to benefit from strong demand
forour infrastructure products and solutions, serving a range
ofattractive structural growth markets that are being driven by
ongoing investment to upgrade and onshore vital infrastructure
and support technology change. As expected, our UK businesses
experienced a more challenging market backdrop with weaker
demand, particularly in the second half of the year, delivering a
result which was below the comparative year.
Group revenue for the full year was up 3% on an organic
constant currency (‘OCC’) basis, with growth accelerating to 4%
during the second half of the year. We achieved strong year-on-
year OCC revenue growth in our higher margin US Engineered
Solutions (+6%) and Galvanizing Services (+10%) businesses,
with growth in both accelerating during the second half of the
year. Underlying operating profit was up 8% on a constant
currency basis, with OCC growth of 6%. Underlying operating
margin for the year increased by 60bps to 17.4%, reflecting an
improved portfolio mix, with further margin expansion in our
USEngineered Solutions and Galvanizing Services businesses.
US Engineered Solutions delivered another impressive performance,
with OCC revenue growth of 6% and an increase in operating
margin to 18.0% (2024: 17.8%). Performance reflected high
demand for our products and services across our platform
businesses, which serve a range of attractive structural growth
markets including electricity transmission & distribution, data
centres, water and wastewater, and infrastructure construction.
Momentum increased as the year progressed, with OCC revenue
growth of 8% in the second half.
Galvanizing Services delivered another record performance,
reflecting strong momentum in our higher-margin US business
which delivered 13% OCC revenue growth with volume also up
13%. Volume growth in the US accelerated during the second
half, following a slower start to the year due to adverse weather
conditions. Our UK galvanizing business also delivered good
progress, with 5% OCC revenue growth, driven by a 9% year-on-
year volume increase.
UK & India Engineered Solutions experienced a more challenging
market backdrop. Revenue reduced by 6% on an OCC basis, with
underlying operating profit reducing by 11% in constant
currency, reflecting lower activity levels across many of the
Group’s UK markets while maintaining market share. Whilst we
made good progress in increasing our share of revenue from
data centre end markets via our perimeter security and access
flooring businesses, the overall demand backdrop in the UK
remains weak, with limited visibility around the scale and timing
of recovery in the Group’s key infrastructure and construction
markets. As a result, we are assessing a range of measures to
strengthen our UK operations overall, making our businesses
more resilient in the current environment, and better able to
capitalise upon opportunities as markets recover.
The Group continues to allocate capital in a disciplined way.
During the year we invested a total of around £10m in several
capacity expansion projects to support the growing demand in
US Engineered Solutions. Given the strength and forward visibility
of demand, and with capacity utilisation at higher levels, we will
invest £35m to expand network capacity in our US transmission
& distribution and galvanizing operations over the next two
years, increasing capacity within their existing network of
facilities. Benefits are expected from the 2027 year, with returns
from 2028 at least in line with the Group’s financial framework.
In March 2026, we reached agreement to acquire Freeberg
Industrial Fabrication (‘Freeberg’) for a headline consideration of
$36m (c.£27m) for 80% of the equity, subject to US regulatory
approvals which are expected during the second quarter. Further
consideration is payable for the remaining 20% of equity
dependent on future profitability, up to a maximum of $50m
(c.£37m). Freeberg, a leading US designer and manufacturer of
custom enclosures and other engineered solutions, is closely
aligned with our operating company framework and will
increase the Group’s exposure to some of our higher growth
priority end markets. We also completed the bolt-on acquisition
of Hentech Fabrication (‘Hentech’), an Irish manufacturer of
engineered steel solutions primarily for European data centre
markets, for a consideration of €7.3m (c. £6.4m). We expect the
acquisitions to be earnings enhancing in 2026. We have
strengthened our resources focused on deal sourcing and
continue to actively progress a pipeline of further attractive M&A
opportunities, aligned to our priority end-market framework.
In addition to our growing dividend, we also announced a
£100m share buyback in August 2025, providing additional
returns to shareholders within our capital allocation framework
and reflecting the Group’s strong balance sheet.
The Group remains highly cash generative and continues to
deliver strong returns: cash conversion for the year was 91%
(2024: 99%), above our targeted level of 80%, with return on
invested capital (ROIC) increasing by 190 bps to 26.7%
(2024: 24.8%). The Group’s balance sheet continues to strengthen,
and year end covenant leverage of 0.1 times provides significant
flexibility to support both organic and inorganic investment for
growth alongside shareholder returns from a growing dividend
and the ongoing share buyback programme.
“Performance reflected high demand for our
products and services across our US platform
businesses, which serve a range of attractive
structural growth markets.”
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 15
Strategic Report
Chief Executive Officer’s Review continued
Strategic update
Strategic framework
The Group is exposed to attractive infrastructure and built
environment end markets with structural growth drivers, and has
agile and responsive operating companies well positioned to
succeed, underpinning the Board’s confidence in the Group’s
prospects and ongoing value creation for our shareholders.
TheGroup has made significant progress in recent years and, to
further underpin our growth ambitions, last year we set out our
refreshed purpose, end market focus and operating company
framework, all of which are now firmly embedded across the
business. I am pleased by the impact this is having on the rigour
and consistency of decision-making processes within our local,
regional and central teams.
In addition, during 2025 we established a set of Group-wide
values, being the guiding principles that define the culture of our
organisation:
• Act with care – How we do things is just as important as
whatwe do
• Be bold in what we create – We bring fresh ideas,
curiosityand entrepreneurial energy to everything we make
• Customer first – always – We listen closely and act decisively
to find solutions that add value and help our customers
togrow
• Deliver as a team – We strongly believe working as a team
willalways bring us the best solutions
• Empower through trust – Based on common goals and a
track record of consistent outstanding results
In our decentralised operating model, the ability to attract, retain
and develop the most talented people is central to our success.
These Group values will provide a framework for our talent
development and succession planning programmes, which will
be a critical area of focus for us in the years ahead.
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 innovative value-add
solutions for customers and to drive differentiation versus their
competitors. By doing so, our teams can create and maintain a
source of competitive advantage, enabling us to grow our
market positions over time. Our businesses are also experts in
their specific manufacturing or industrial processes which are
typically low to medium in capital intensity.
Alongside this, our decentralised operating model promotes a
highly driven and entrepreneurial culture where we foster very
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. We have a small
central team responsible for Group capital allocation and
performance management. This team also ensures that the right
controls and KPIs are in place, and works with local management
in setting the ambition for each operating company.
An enhanced focus on priority end markets
We are focused on end markets which serve vital infrastructure
and the built environment, which have long-term growth drivers,
and which 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 set out in March 2025, we categorise 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
This disciplined focus on end market dynamics enables us to
set the ambition for our operating companies to drive further
long-term growth. It also informs our capital allocation, resource
planning and portfolio management decision making.
Over time, we expect to increase our exposure to higher growth
markets, and during 2025 we grew the proportion of our
revenues from high growth emerging markets and resilient
growth anchors to 34% (2024: 23%).
Active portfolio management
The strategic framework we set out 12 months ago has been
crucial in informing the decision-making processes for both
organic and inorganic growth investments.
Our M&A strategy is underpinned by a strong balance sheet,
capable of supporting organic growth while also allowing us to
deploy capital to fund value enhancing acquisitions. We are
pleased to have agreed the acquisitions of Freeberg and
Hentech, providing excellent exposure to a number of our higher
growth priority end markets including data centres and power
generation, and I continue to see significant opportunities to use
M&A to help us accelerate growth. During the year we
strengthened our resources focused on deal sourcing and
remain confident in our pipeline of further attractive
opportunities aligned to our operating company and priority end
market framework.
We continue to take a disciplined approach to portfolio
management. As part of this, in the first quarter of 2025, we
divested two non-core, loss-making businesses (comprising
£12m total revenue in 2024).
16
We have developed a new set of Group Values that bring
together our operating companies as part of Hill & Smith.
Developed with input from the Managing Directors of our
operating companies, our Group Values are designed to
sit alongside those company values that already exist
within our businesses and define how we do business.
Over the next year we will be further rolling out the Group
Values and embedding them in our development reviews.
Our new Group Values
Performance against our medium-term financial
framework
Our disciplined financial framework is one of the foundations of
the Group’s long-term success. I believe that the ability to deliver
organic growth through the cycle, alongside value enhancing
acquisitions, will continue to 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, in line with our disciplined capital allocation
framework, while maintaining a strong balance sheet.
Our medium-term financial targets, which were refreshed last
year, are as follows:
• Organic revenue growth: 5%-7%
• Total revenue growth including acquisitions: 10%+
• Operating profit margin: 18%+
• Return on invested capital (ROIC): 22%+
• Cash conversion: 80%+
• Covenant leverage: 1-2 times
In 2025, the Group performed well against this framework.
Theorganic revenue growth of 3% was solid, and ahead of the
prior year; in particular, growth was within or ahead of our target
range in our higher margin US businesses, with Engineered
Solutions +6% and Galvanizing +13%, partly offset by weaker
market demand in the UK (-3%). Pleasingly, Group OCC revenue
growth accelerated during the second half of the year to 4%,
from 2% during the first half. Going forward, we remain focused
on driving the organic revenue growth of the business, and, for
2026, have introduced a new measure within Group and local
management bonus targets.
Our operating profit margin expanded by 60bps to 17.4%,
reflecting the mix benefit from growth in our higher margin
USbusinesses. We are confident that the Group can deliver
ourtarget of 18%+ operating profit margin through the cycle,
given the structural growth drivers in the US and potential
improvement in UK margins as a result of a combination of
endmarket recovery and the benefit of measures being taken
tostrengthen our UK operations.
Return on invested capital (‘ROIC’) was excellent, strengthening
further to 26.7% (2024: 24.8%), driven by the trading performance
of our higher return US businesses and a continued focus on
capital efficiency across the Group. We retain our ROIC target
ofat least 22%, mindful of maintaining the flexibility to deploy
capital into value enhancing M&A where initial returns may be
below the targeted level.
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, as appropriate,
through the cycle. We achieved a strong outcome of 91% in
2025 with all parts of the business performing in line with, or
above, the Group’s target.
Act with care
How we do things is just as important
aswhat we do
Be bold in what we create
We bring fresh ideas, curiosity
andentrepreneurial energy
toeverythingwemake
Customer first – always
We listen closely and act decisively
tofindsolutions that add value to
helpourcustomers to grow
Deliver as a team
We strongly believe working as a team
willalways bring us the best solutions
Empower through trust
Based on common goals and track record of
consistent outstanding results
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 17
Strategic Report
Chief Executive Officer’s Review continued
Our approach to capital allocation
The Group follows a disciplined approach to capital allocation.
As a first priority, we allocate capital to support organic growth,
with a focus on higher return, structurally growing end markets
aligned with our priority markets. We require our operating
companies to manage working capital efficiently and we invest
selectively in capital projects, talent and innovation to support
future organic growth. Having completed the expansion of our
engineered supports facility in Louisiana in 2025, we plan to
invest further organic growth capital of around £35m in our US
transmission & distribution and galvanizing operations over the
next two years, increasing capacity within their existing network
of facilities. This focused investment in our higher-growth,
higher-return US platform businesses will enable us to capitalise
on the long-term structural growth dynamics in their end
markets. Overall, excluding our new acquisitions, we expect
capital expenditure of £50m in 2026, with around half of this
relating to these major growth investments.
Secondly, 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 and profitability potential. Based on our
highly cash generative model, we continue to target
reinvestment of around £50m – £70m each year on value
enhancing acquisitions aligned with our strategic framework.
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.
Following the Freeberg and Hentech acquisitions, there remains
an active pipeline of M&A opportunities.
Thirdly, we aim to deliver a growing dividend, understanding the
importance of providing consistent and growing returns to our
shareholders. In 2025 we have grown the full year dividend by8%.
Lastly, we will return surplus capital to shareholders where
leverage is expected to fall below 0.5 times for a sustained
period of time. In August 2025, having assessed the capital
requirements of the business to fund organic growth, execute
on acquisitions and provide a growing dividend, the Board
concluded that, given the strength of the Group’s balance sheet
and cash generation, we had the capacity to make an additional
return of capital to shareholders and remain comfortably within
our target leverage range of 1-2x. As a result, the Company
announced a share buyback of £100m over a period of around
18 months. As at 31 December 2025, c.£20m had been returned
to shareholders under this programme.
Adoption of US Dollar for Group reporting
The Group has historically reported its results in Sterling since
this was the primary currency in which the cash flows of the
Group were denominated. Over time, as the asset footprint in
the US has grown, the proportion of the Group’s revenues and
operating profits originating in US Dollars has increased, with
63% and 79% of revenue and underlying operating profit
respectively being generated by our US businesses in 2025.
As such, the Board believes that a change in presentational
currency to the US Dollar will provide investors and other
stakeholders with greater transparency of the Group’s
performance and reduced foreign exchange volatility over time.
The Group intends to report its financial results in US Dollars
starting with the six months ending 30 June 2026, and intends
to publish comparative information on this basis ahead of those
results.
Commencing with the interim dividend for the year ending
31 December 2026, due to be paid in January 2027, dividends
will be declared in US Dollars. Shareholders will continue to
receive dividends in Sterling unless they have elected through
the Company’s registrar to receive dividends in US Dollars.
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 our top priority, and we delivered a 9% reduction in our
Lost Time Incident Rate (LTIR) to 0.30 in 2025 (2024: 0.33).
Weare committed to achieving best-in-class standards for
health and safety for all colleagues, and will be launching a
newcultural change programme entitled “I Own Safety”
acrossthe Group during 2026.
Talented people are critical to the Group’s success, and we have
taken important steps to strengthen our talent pool during the
year. We carried out our annual Group-wide engagement survey
in September 2025, with 88% of our employees participating, up
from 83% last year. Overall, our engagement score improved to
58% (2024: 56%), although this remains below the relevant global
benchmark. Having taken time to listen to, and understand, the
feedback from our employees, we are committed to taking a
range of actions to increase engagement further as we
moveforwards.
“Talented people are critical to the Group’s
success, and we have taken important
stepsto strengthen our talent pool during
the year.”
18
We continued to make good progress in reducing carbon during
2025, achieving a 19% reduction in greenhouse gas emissions
compared to the prior year. A number of important initiatives
have been rolled out across the Group, most notably the use of
HVO (Hydrotreated Vegetable Oil) in place of diesel at several of
our sites and a range of waste heat recovery measures,
particularly at our galvanizing facilities. In addition, our
transition to renewable energy contracts has continued, with
91% of our electricity in 2025 sourced through green tariffs.
Board updates
I was delighted to welcome two new Board members during
2025 whilst also confirming the appointment of our next Chair.
Along with my own appointment as CEO in 2024, this represents
a significant evolution of our Board over the last 18 months.
Chris McLeish joined the Board in October 2025 as Chief Financial
Officer, having performed the same role at Ibstock PLC since
2019. Chris brings a broad skill set and has the experience to
help deliver the next stage of the Hill & Smith growth strategy.
Gillian Tomlinson joined as a Non-executive Director in March
2025. Gillian is Chief Data & Digital Officer at FTSE100
engineering company Weir Group PLC, where she is responsible
for digital strategy and implementation. Gillian brings a highly
complementary skillset to the Board and will provide important
insight and expertise. Leigh-Ann Russell stepped down from the
Board in March 2025 and on behalf of the Board I would like to
thank Leigh-Ann for her contribution during her time with the
Group.
We announced on 19 November 2025 the appointment of
NickAnderson as a Non-executive Director with effect from
11 March 2026. Nick was the Group Chief Executive of FTSE100
industrial engineering company Spirax Group plc between 2014
and 2024, during which time the business experienced a period
of substantial growth; he has had leadership experience spanning
Latin America, Asia, and Europe. Nick is currently a non-executive
director of BAE Systems PLC and Weir Group PLC.
As previously announced, having served as a member of the
Board since 2017 and Chair since 2019, Alan Giddins will retire
from the Board on the date of the next AGM in May 2026, at
which time Nick will assume the roles of Chair of the Board and
Nomination Committee. I am very much looking forward to
working with Nick, and I would like to thank Alan for the
invaluable contribution he has made to Hill & Smith, first as a
Non-executive Director and then as Chair.
Dividend
Given the strong trading performance and confidence in the
Group’s prospects, the Board is recommending a final dividend
of 35.0p per share, making a total dividend for the year of 53.0p
per share (2024: 49.0p), an increase of 8%. The final dividend, if
approved, will be paid on 3 July 2026 to shareholders on the
register on 29 May 2026.
Outlook
The Group is well positioned to deliver further value creation for
shareholders, with exposure to a range of infrastructure and
built environment end markets with attractive and sustained
growth drivers.
We expect the strong trading momentum in the US to continue
in 2026. We remain cautious about the degree of recovery in UK
market conditions and anticipate lower levels of project activity
during 2026. In light of this, we are assessing a range of
measures to strengthen our UK operations overall, making our
businesses more resilient in the current environment, and better
able to capitalise upon opportunities as markets recover. We
continue to see attractive growth opportunities in our Indian
business. We anticipate a slightly increased second half
weighting in Group performance in 2026 compared with 2025.
We note the emerging situation in the Middle East. Whilst the
Group has no operating footprint in the region, we continue to
monitor any potential impacts from broader risks to trade and
cost inflation.
Overall, we are confident of making further good progress in
FY26 and beyond.
Rutger Helbing
Chief Executive Officer
10 March 2026
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 19
Strategic Report
Strategic framework and business model
Our business model and our people together create significant value for our stakeholders
Our purpose
We create value by providing solutions that
increase the resilience of vital infrastructure
and the built environment.
Our businesses
US Engineered Solutions
Our US Engineered Solutions businesses provide a range
of composite and steel solutions for infrastructure
construction including energy transmission & distribution,
data centres, waterfront protection, transportation, and
other industrial facilities. The division also supplies
engineered supports for the water, power and liquid
natural gas markets, seismic protection solutions
forcommercial construction, road work zone safety
products and off-grid solar lighting and power solutions.
UK & India Engineered Solutions
Our UK Engineered Solutions businesses supply
products and services to a range of end markets
including transport infrastructure, residential
construction, data centres, and other industrial and
commercial construction. The division also supplies
hostile vehicle mitigation (HVM) and off-grid solar
lighting solutions. Our business in India manufactures
engineered supports primarily for energy markets.
Galvanizing Services
Our Galvanizing Services operations, based in the US
and UK, increase the sustainability and maintenance
free life of steel products including structural steelwork,
lighting, bridges, and other products for infrastructure
and construction end markets.
Our values
Act with care
Be bold in what we create
Customer first – always
Deliver as a team
Empower through trust
See page 17 for more details
By geography By division
Group overview
US
UK
India
US Engineered Solutions
UK & India Engineered
Solutions
Galvanizing Services
US Engineered Solutions
UK & India Engineered
Solutions
Galvanizing Services
US
UK
India
FY25
Revenue
FY25
Revenue
FY25
Underlying
operating profit
FY25
Underlying
operating profit
63% 48% 49%79%
35%
28%
14%
19%
2%
24% 37%
2%
20
Delivering value for our stakeholders
Investors
53.0p +8%
Dividend per share
132.2p +8%
Underlying earnings per share
26.7% +190bps
Return on invested capital
Our operating company framework
Market dynamics Business model
Management &
culture
Exposure to priority end
markets
High customer intimacy Management capability
Value add solutions Quality of employees
Manufacturing with low/
medium capital intensity
Cultural fit and
collaboration
Leader in defensible niches
Potential for bolt-ons
Decentralised
structure
Disciplined
M&A
Financial framework
Enabling central
team
Commitment to
sustainability
People and communities
4,590
Employees
0.30 -9%
Lost time incident rate
58% +2ppts
Engagement score
The environment
39,810 -19%
Scope 1+2 carbon emissions (tCO
2
e)
0.05 -17%
Carbon intensity ratio
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 21
Strategic Report
Measuring our performance
Organic revenue growth
Percentage change in annual revenue excluding the
effects of acquisitions, disposals and currency
translation.
Performance
Revenue grew by 3% on an organic constant currency
(OCC) basis, with growth accelerating to 4% in the second
half of the year from 2% in the first half. Growth in the year
was predominantly driven by our US businesses, who
achieved or exceeded the Group’s target range, partly
offset by weaker demand in the UK.
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
revenue growththrough the cycle.
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.
Performance
115%
99%
91%
2023
2024
2025
Underlying cash conversion for the year was again strong
at 91%, reflecting the Group’s disciplined approach to
capital allocation. All parts of the business performed in
line with, or above, the Group’s target.
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.
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
2023
2024
2025
22.0%
24.8%
26.7%
ROIC remained strong at 26.7% (2024: 24.8%), driven by
the trading performance of our US businesses and a
continued focus on capital efficiency across the Group.
Link to strategy
We use ROIC to measure our overall capital efficiency, with
a target of achieving returns in excess of 22%, above the
Group’s cost of capital, through the cycle.
Underlying operating profit margin
Underlying operating profit as a percentage of revenue.
Performance
2023
2024
2025
17.4%
14.8%
16.8%
Underlying operating margin improved by 60 basis points
to 17.4% in 2025, reflecting the mix benefit from growth in
our higher margin US businesses.
Link to strategy
Our strategic focus is on investing in higher-return,
higher-growth niche markets with a target of achieving
Group underlying operating margins of 18% + through
thecycle.
2023
2024
2025 3%
5%
0%
22
Leverage
The ratio of net debt to EBITDA, as defined in the
covenant requirements of the Group’s borrowing facility
agreements.
Performance
2023
2024
2025
0.4x
0.3x
0.1x
The Group was highly cash generative in 2025 with
leverage falling to 0.1x. The continued strong cash
generation and financial position enabled the Group to
commence a £100m share buyback programme in August
2025, of which c.£20m was returned to shareholders by
the end of the year.
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 and
deliver returns to 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.
Health and safety
Lost time incident rate (No. of incidents divided by hours
worked x 100,000).
Performance
2023
2024
2025
0.43
0.33
0.30
We delivered a 9% reduction in our Lost Time Incident Rate
(LTIR) to 0.3 in 2025 with continued enhancement of our
groupwide incident management system and focus on our
Nine Life Saving Rules.
Link to strategy
Health and safety is a key priority for the Board and a
focus area for our sustainability strategy. Although we did
not achieve our 2025 LTIR target of 0.275, we remain
firmly committed to improvement through a range of
initiatives such as the launch of the ’I Own Safety’ cultural
change programme.
Employee engagement
The percentage of our worldwide workforce who feel
positively engaged with our Group, as determined by
ourindependent employee engagement survey.
Performance
2023
2024
2025
56%
56%
58%
Employee engagement for 2025 was 58%, up from 56% in
2024. Having taken time to listen to, and understand, the
feedback from our employees, we are committed to taking
a range of actions to increase engagement further as we
move forwards.
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.
Greenhouse gas emissions
CO
2
e emissions, from scope 1 and scope 2
(market-based).
Performance
49,984 tonnes
48,895 tonnes
39,810 tonnes
0.06
0.06
0.05
The Group delivered a 19% reduction in total scope 1 and 2
CO
2
e emissions in 2025 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.
tCO
2
e Intensity ratio
Financial KPIs
Non-financial KPIs
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 23
Strategic Report
Operational review
Our US Engineered Solutions businesses provide a range of
composite and steel solutions for infrastructure construction
including energy transmission & distribution, data centres,
waterfront protection, transportation, and other industrial
facilities. The division also supplies engineered supports for the
water, power and liquid natural gas markets, seismic protection
solutions for commercial construction, road work zone safety
products and off-grid solar lighting and power solutions.
The division delivered a strong performance in 2025, with 10%
revenue and 12% profit growth on a constant currency basis,
reflecting continued demand growth across our larger platform
businesses and a positive contribution from prior year
acquisitions. Underlying operating margins increased by 20bps
to 18.0% (2024: 17.8%) reflecting ongoing investment in our
platform businesses and reduced margins in National Signal,
our US off-grid solar business.
Our composites business continued to see strong demand for
its products and services across a range of infrastructure end
markets including electrical grid infrastructure, industrial
facilities, waterfront protection, and data centre construction.
The business delivered a strong performance, with revenue,
operating profit and operating margin all ahead of the prior year.
Demand for composite utility poles was particularly strong
during the latter part of the year, benefiting from the timing of
customers’ transmission & distribution investment programmes.
Our electrical transmission & distribution business, which supplies
substation products and components for grid infrastructure
connectivity, continued to benefit from a very positive demand
backdrop, and delivered growth in both revenue and operating
profit in the year. Capital Steel and Whitlow, which we acquired
in January and September 2024 respectively, have both been
successfully integrated into the business and are trading well.
We continue to see the transmission & distribution market as
very attractive, with growth driven by the need to upgrade aging
infrastructure, supported by both federal and state investment,
and increasing demands on the electric grid resulting from
infrastructure developments.
Rutger Helbing
Chief Executive Officer
Chris McLeish
Chief Financial Officer
US Engineered Solutions (48% of Group revenue; 49% of Group underlying operating profit)
£m
Reported
%
Constant currency
%
OCC
%2025 2024
Revenue 416.6 390.3 +7 +10 +6
Underlying operating profit
1
75.0 69.4 +8 +12 +8
Underlying operating margin %
1
18.0% 17.8%
Statutory operating profit 49.0 49.5
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.
24
Our engineered supports business delivered further growth
against a record prior year comparator, driven by robust demand
from industrial and infrastructure projects including energy,
clean water, data centres, and semiconductor plant
construction. This more than offset some softness in
commercial construction markets, with the business delivering
strong operating profit margin growth. FM Stainless, which we
acquired in March 2024, continues to perform ahead of our
expectations at the time of the acquisition. The expansion of
our main site in Waggaman, Louisiana, is now complete, with
the factory providing efficient incremental manufacturing
capacity. The order book for 2026 remains healthy, with the
business expected to benefit from its exposure to a diverse
range of end markets.
Given the ongoing soft demand backdrop in National Signal, our
US off-grid solar business, and the potential operational
synergies with the message board division of Hill & Smith Inc.,
our US road products business, in the second half of 2025 we
took the decision to integrate the two, to create a broader
unified product platform with a single manufacturing base in
LaMirada, California. The combined business is operating as
National Signal but is managed by our new Hill & Smith Inc.
management team. The resulting closure of our message board
manufacturing facility in Garland, Texas, and integration into
LaMirada has gone well, and whilst we expect 2026 to be a
transition year, we anticipate the combined business will deliver
an improved margin performance over time from its wider
customer base and integrated manufacturing platform. The
Group recognised non-underlying restructuring costs of £4.8m
relating to the closure of the manufacturing facility in Garland,
and goodwill and other intangible asset impairments totalling
£13.6m relating to National Signal, reflecting a more cautious
view of the likely pace of recovery.
Hill & Smith Inc.’s core road barrier and attenuator business
performed well with revenue and profit ahead of the prior year.
Whilst revenue in the first half was below the comparative
period, actions taken by the new management team resulted
ina stronger second half, especially in crash attenuators.
Giventhis improving picture, the outlook for the business is
encouraging, with demand supported by state and federal
investment to upgrade road infrastructure and the phased
implementation of developments in safety standards.
Overall, prospects for future growth in our US Engineered
Solutions businesses remain strong. Looking ahead, we expect
market growth to be supported by investment to modernise the
ageing electric grid and multi-year state and federal funding to
upgrade infrastructure, alongside private investment from US
manufacturers and producers to onshore vital components
anddeliver additional data centre capacity.
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 25
Strategic Report
Operational review continued
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 and built
environment end markets including industrial and commercial
construction, transport products and infrastructure, and
transmission & distribution.
The division delivered a strong performance in the year, with
10% revenue growth and 13% underlying operating profit growth
on an OCC basis. The operating margin increased by 60bps to
26.0%, with an increase in both the US and UK regions. Both the
US and UK businesses are benefiting from leadership changes,
with recently appointed MDs overseeing improvements in both
operational efficiency and commercial execution.
US
Our US galvanizing business delivered a record performance,
with strong growth in both revenue and operating profit driven
by a 13% increase in volumes, with robust demand from a
balanced mix of end markets.
Following a slower start caused by adverse weather conditions,
growth increased across the year and particularly in the final
quarter, reflecting higher infrastructure-related investments in
several end markets, including construction, electrical
transmission & distribution and technology.
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 our dedicated local teams.
As we look forward, the outlook for US galvanizing remains
positive. The business is well placed to benefit from federal,
state and private investment to support industrial expansion,
infrastructure investment and technology change, as well as
theongoing shift towards onshoring of manufacturing.
UK
In the UK revenue was 5% ahead of the prior year, with a 9%
increase in volumes and marginally lower average pricing
reflecting end-market mix. Volume growth was ahead of the
wider UK market and reflects the benefits of recent
developments in the business including an enhanced customer
focus and improvements in productivity.
Underlying operating margin increased modestly compared to
the prior year, reflecting the impact of higher volumes and a
continuing focus on operational efficiency. Whilst we expect
thebroader macroeconomic backdrop in the UK to remain
challenging in 2026, given the actions taken to improve
thequality of the business, the outlook for the year ahead
remains positive.
Galvanizing Services (24% of Group revenue; 37% of Group underlying operating profit)
£m
Reported
%
Constant currency
%
OCC
%2025 2024
Revenue 212.8 197.8 +8 +10 +10
Underlying operating profit
1
55.4 50.3 +10 +13 +13
Underlying operating margin %
1
26.0% 25.4%
Statutory operating profit 54.3 49.2
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.
26
UK & India Engineered Solutions (28% of Group revenue; 14% of Group underlying operating profit)
£m
Reported
%
Constant currency
%
OCC
%2025 2024
Revenue 239.4 267.0 -10 -10 -6
Underlying operating profit
1
20.9 23.8 -12 -11 -17
Underlying operating margin %
1
8.7% 8.9%
Statutory operating profit 16.8 16.7
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.
Our UK Engineered Solutions businesses supply products and
services to a range of end markets including transport
infrastructure, residential construction, data centres, and other
industrial and commercial construction. The division also
supplies hostile vehicle mitigation (HVM) and off-grid solar
lighting solutions. Our business in India manufactures
engineered supports primarily for energy markets.
Revenue for the year was 10% lower on a constant currency
basis and 6% lower on an OCC basis, reflecting softer demand
across UK road and rail, residential construction and general
infrastructure markets. The UK business experienced
progressive decline in market demand as the year progressed.
Underlying operating profit was 11% lower on a constant
currency basis and 17% lower on an OCC basis, reflecting a
20bps reduction in operating margins. The UK business
benefited from project activity in transport infrastructure
markets which is not expected to repeat in 2026. Considering
the challenging market backdrop, we are assessing a range of
measures to strengthen our UK operations overall, making our
businesses more resilient in the current environment, and better
able to capitalise upon opportunities as markets recover.
As expected, both revenue and underlying operating profit in our
UK roads operations were below the prior year. Visibility and
delivery of major road schemes remain limited, driven by delays
to the release of the UK Government’s Road Investment Strategy
3 (RIS3) which is expected during the 2026 year. This led to a
lower outturn in our temporary rental and permanent barrier
businesses. The project outlook for 2026 remains uncertain and
we have taken steps to adjust the cost base accordingly, whilst
remaining well placed to benefit when activity improves.
Performance across the wider UK roads market was also
impacted by local authority budgetary challenges leading to
subdued activity. While the immediate prospects remain more
muted, RIS3 is expected to provide clarity over the scale and
timing of future infrastructure spending although this is
expected to have limited impact on activity levels in 2026.
The industrial flooring business benefitted from good demand
from data centre fabrication projects and the acquisition of
Hentech will support further growth in this market. Demand
from broader industrial and commercial markets was more
subdued, with customers displaying higher levels of caution
given the broader uncertain economic backdrop.
Our building products business experienced a continuation of
lower demand levels, although a strong focus on productivity
and cost management acted to mitigate the impact on
profitability. We remain cautious around the scale and timing
ofrecovery in UK residential construction markets.
Revenue and profitability across our perimeter security
businesses were ahead of the prior year, with improving mix
driving meaningful growth in operating margins. Performance
reflects good growth in our high security fencing business,
particularly in data centre construction, where the order book
and opportunity pipeline are strong and present significant short
to medium term prospects.
Our UK off-grid solar energy business delivered revenue and
profit growth following a difficult period of trading in 2024, with
improved activity in transport, commercial construction, water
infrastructure, technology and defence end markets. The
business continues to focus on product innovation, and has
seen a growing order book, which is encouraging for further
progress in the year ahead.
Our Indian engineered supports business delivered operating
profit in line with the prior year, with performance, as expected,
improving throughout the year. Revenue was marginally lower
than the prior year, reflecting the timing of major projects.
However, wider market activity levels remain healthy, and the
business has a robust pipeline of future business, underpinned
by international LNG projects.
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 27
Strategic Report
Results
The Group has delivered a good set of 2025 results. Revenue
was £868.8m (2024: £855.1m), up 2% on a reported basis.
Revenue was up 3% on an OCC basis with strong organic growth
in our higher margin US Engineered Solutions and Galvanizing
Services businesses partially offset by declines in the UK,
reflecting a more challenging market backdrop.
Underlying operating profit was £151.3m (2024: £143.5m), an
increase of 5% on a reported basis. OCC growth was 6% and
constant currency growth was 8%. Operating margins improved
to 17.4% (2024: 16.8%) reflecting the benefits of operating
leverage and volume growth in our higher margin US
businesses. Underlying profit before taxation was £142.5m
(2024: £132.6m). Statutory operating profit was £120.1m
(2024: £115.4m) and statutory profit before tax was £111.3m
(2024: £104.5m). Underlying earnings per share increased to
132.2p (2024: 122.6p) and statutory earnings per share was
102.7p (2024: 95.0p).
The principal reconciling items between underlying and
statutory operating profit are: restructuring costs of £4.8m
arising from the closure of our message board manufacturing
facility in Garland, Texas; the £13.6m write down of goodwill
andintangible assets relating to our US off-grid solar business,
National Signal; and the amortisation of other acquisition
intangibles of £10.8m. 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
91% underlying cash conversion in 2025. We expect the Group
to continue to deliver good cash conversion in 2026, in line with
our financial framework. The calculation of our underlying cash
conversion ratio can be found in note 4 to the financial
statements.
Operating cash flow before movement in working capital was
£179.6m (2024: £175.2m). The working capital outflow in the
year was £3.1m (2024: £0.6m inflow) with a continued focus on
working capital efficiency. Working capital as a percentage of
annualised sales was 15.5% (2024: 15.2%) and closing debtor
days were 59 days (2024: 62 days).
Capital expenditure of £34.2m (2024: £28.6m) represents a
multiple of depreciation and amortisation of 1.6 times
(2024: 1.3 times). During the year we made capital investments
of around £10m to support organic growth, including
completion of the expansion and upgrade of our engineered
supports facility in Louisiana, and initial spend on expansion
within our existing US galvanizing facility network. Excluding
theFreeberg and Hentech acquisitions, we anticipate capital
expenditure of around £50m in the 2026 year including major
organic growth capital of £25m to expand capacity in our higher
growth and returning US platform businesses.
Financial review
Net financing costs were £8.8m (2024: £10.9m), including
£0.6m (2024: £0.5m) amortisation of costs relating to
refinancing activities.
The Group generated £106.9m of free cash flow in the year
(2024: £108.6m), providing funds to support our capital
allocation policy.
Net debt and financing
Net debt at the end of the year amounted to £50.8m
(31 December 2024: £96.9m). Outflows in the year included
£39.4m for the 2024 interim and final dividends and £20.2m
returned to shareholders via the buyback programme initiated in
August. Net debt at the year-end includes lease liabilities under
IFRS 16 of £39.9m (31 December 2024: £49.0m), the reduction
being primarily due to exiting the Group’s manufacturing site in
Garland, Texas. Net debt excluding lease liabilities was £10.9m
(2024: £47.9m).
The Group’s principal financing facilities comprise a £300m
revolving credit facility, which was increased and extended
during the year and now expires in November 2029 with an
option for a further one-year extension, and $70m senior
unsecured notes with maturities in June 2026 and June 2029,
together with a further £6.2m of on-demand local overdraft
arrangements. Throughout the year the Group has operated well
within these facilities and at 31 December 2025, had £346.5m
of headroom (£340.3m committed, £6.2m on demand).
Approximately 63% of the Group’s drawn debt at
31 December2025 is subject to fixed interest rates,
providing a hedge against interest rate risk.
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 2025 was 0.1 times (31 December 2024:
0.3 times) and interest cover was 28.4 times (31 December
2024: 20.4 times).
Return on invested capital
The Group continued to deliver strong returns in 2025, achieving
a return on invested capital of 26.7% (2024: 24.8%), the increase
reflecting the faster growth in our larger, higher margin US
businesses which are typically lower in capital intensity, and
continued discipline around capital expenditure and
workingcapital.
Tax
The underlying effective tax rate for the year was 25.5%
(2024: 25.6%). The statutory tax charge for the year was £28.8m
(2024: £28.1m) and includes a £7.5m credit (2024: £5.9m credit)
in respect of non-underlying items, principally relating to
impairment charges and the amortisation of acquisition
intangibles. Cash tax paid in the year was £27.3m
(2024: £26.5m).
28
Exchange rates
The Group is exposed to movements in exchange rates when
translating the results of its overseas operations into sterling.
Retranslating 2024 revenue and underlying operating profit
using average exchange rates for 2025 would have reduced
revenue by £16.8m and underlying operating profit by £4.0m,
mainly due to sterling’s appreciation 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
revenue and £1.0m to annual underlying operating profit.
Given the increasing proportion of the Group’s revenues and
operating profits denominated in US dollars, with effect from the
2026 year we intend to report our results in US dollars. Our
transition to US dollar reporting will eliminate much of this
exchange rate volatility.
Non-underlying items
The total non-underlying items charged to operating profit
intheConsolidated Income Statement amounted to £31.2m
(2024: £28.1m) and included the following:
• Impairment charges of £13.6m in respect of goodwill,
acquisition and other intangible assets of National Signal,
theGroup’s US off-grid solar business
• Costs of £4.8m relating to the closure of the Group’s
messageboard manufacturing facility in Garland, Texas,
andsubsequent relocation of operations to our facility in
LaMirada, California
• Amortisation of acquisition intangible assets of £10.8m
• Expenses related to acquisitions and disposals of £3.1m
The non-cash element of these charges was £27.4m.
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 surplus of these plans at
31 December 2025 was £4.6m, an improvement of £5.4m
from31 December 2024 (£0.8m deficit). The surplus on the
UKscheme, the largest employee benefit obligation in the
Group, was £5.2m (31 December 2024: £0.2m deficit), the
improvement mainly due to the Group’s deficit recovery
payments in the year, which we expect to end in Q1 2026.
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 2027.
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 2027,
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
2026, 31 December 2026 and 30 June 2027.
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 2027. 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 Officer
Chris McLeish
Chief Financial Officer
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 29
Strategic Report
Stakeholder engagement
We recognise that maintaining strong relationships with all our stakeholders and listening to
their feedback is important to good decision making. Consideration and understanding of our
stakeholders’ interests helps to shape our strategy and long-term sustainable value creation
and promote continued growth.
People
A
B
C
1
7
8
Our people are critical to the success of our business. 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 a safe and supportive environment, one
where ideas are encouraged and people can flourish, develop their careers and experience job security. We aim to equip our
people with the tools and knowledge to allow them to work safely, follow our Code of Conduct, and comply with all local legal
and regulatory requirements.
What matters • Health, safety and wellbeing
• Job security
• Reward
• Training and development
• Engagement
• Reputation and ethical standards
• Sustainability and the environment
How the Board
considers this
stakeholder
• The Board receives health and safety updates at each meeting and takes time to consider health and safety trends,
initiatives and their effectiveness.
• The Board receives updates on human resources across the Group, including talent and development programmes
and succession planning.
• We conduct an annual employee engagement survey and the Board reviews feedback and survey results and
oversees the action planning process.
• The Remuneration Committee considers wider workforce remuneration and benefits when setting executive
pay,costof living increases and wider remuneration benefits.
• The Board and Remuneration Committee gave consideration to engagement mechanisms.
How the Board
engages with this
stakeholder and
monitors
effectiveness
• The Board conducts regular visits to operating business and hosts discussions with a wide variety of employees
without management present.
• All major announcements were issued on the Group intranet to ensure our people remained informed of important
matters to the Group.
• The Chair and selected NEDs met with a cross-section of employees at Whitlow Electric, TPG, Lionweld Kennedy
and Birtley. Feedback from these meetings is shared with the Board.
• Further engagement sessions are planned for 2026 at four operating businesses (two in the UK and two in the US).
Outcome for this
stakeholder
• The ‘I Own Safety’ programme has been developed and refined with oversight from the Board. It is a safety culture
programme based on the belief that all incidents are preventable and will focus on empowering all employees to
proactively identify and mitigate existing hazards that may pose a risk. The programme will further build upon
existing initiatives including the Group’s 9 Life Saving Rules.
• Benefits from the ‘I Own Safety’ programme include the education of all employees across every level of the Group on
the importance of taking responsibility for our own safety and those of our colleagues. The programme is
championed by the CEO and Board with support from Managing Directors and their leadership teams with ownership
maintained by all participants. Benefits include fewer injuries and incidents.
• Our succession planning helps us ensure we have in place leadership continuity and organisational resilience. We are
monitoring development progress for identified successors, to ensure critical skills for the future and early
identification of any strategic capability gaps.
• Engaging with our employees through our engagement survey and especially through on site meetings without
management present, has enabled us to better understand their needs and concerns and take appropriate actions.
30
Our companies
A
B
C
D
1
2
3
4
5
6
7
8
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 organic growth and their performance when aggregated, underpins the success of Group strategy.
What matters • Operational and financial performance
• Capital allocation
• Talent and development
• Health, safety and wellbeing
• Reputation and ethical standards
How the Board
considers this
stakeholder
• At each meeting, the Board reviews operating company financial performance as a standing item. In addition,
operating company management is invited to Board meetings to discuss matters relating to their own businesses.
• Every year the Board holds a strategy day at which it considers each operating company in detail. As part of the
process, each operating company submits its own strategic plan which is aggregated into the plan for the Group.
• When taking capital allocation decisions the Board considers the investment needs of each operating business to
enable them to support growth.
• During the year, the Board undertakes site visits 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.
• The annual strategy day considers the strategy of each operating business and how they align with the overall
Group Strategy.
How the Board
engages with this
stakeholder and
monitors
effectiveness
• Board meetings are held at least twice a year at operating businesses and local leadership teams are invited to
present on their business and particular responsibilities. During the year, site visits were made to Whitlow Electric
and The Paterson Group in the US and Hill & Smith Infrastructure and Joseph Ash in the UK.
• Chris McLeish and Gillian Tomlinson visited operating businesses as part of their onboarding to better understand
each business and the day to day matters that are important to them, their customers and stakeholders.
• Operating company management are invited to attend Board discussions on matters relating to their own
businesses alongside the Group Presidents.
• Members of the Board meet with the Managing Directors of the operating companies at the annual management
conference in an informal setting.
• The Group Presidents interact with the Board frequently representing the interests of the operating companies and
reporting on strategy, financial objectives and KPIs.
Outcome for this
stakeholder
• Better Board understanding of the issues the operating companies face on a day-to-day basis.
• The Board can assess the quality of management beneath Executive Committee level.
• The Group President structure has enabled the development of functional cross-business working groups to share
best practice.
• The senior management team obtains exposure to the Group Board and better understands Group drivers.
Links to strategy:
A
 Organic growth
B
 Enhancing growth through M&A
C
 Sustainability
D
 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
5
 Leverage
6
 Greenhouse gas emissions
7
 Health and safety
8
 Employee engagement
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 31
Strategic Report
Stakeholder engagement continued
Our suppliers
A
B
D
2
3
5
6
7
Suppliers are important partners in our business and their commitment to innovation, quality and ethical practices supports our
own strategy and commercial success. 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 in
partnership to ensure that they provide the right quality of products and services to support our commitment to quality products
and competitive customer solutions. We aim to develop long-term relationships with suppliers, encouraged through fair payment
practices.
What matters • Quality
• Fair financial terms
• Long-term relationships
• Sustainability and the environment
How the Board
considers this
stakeholder
• The Board has ultimate oversight of all business-related matters including our supplier policies.
• Delegated responsibility for day-to-day supplier engagement lies with each local operating business. Any
significant issues are reported to the Board via the Executive Directors, or for ethical matters, via the Group
Company Secretary. The Board has regard for quality, fair financial terms, long-term relationships, sustainability
and the environment and ethical practices.
How the Board
engages with this
stakeholder and
monitors
effectiveness
• During 2025, 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 in respect of
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 its adherence to all our
values and terms of service.
• We continued to engage with suppliers on sustainability, including with respect to our sustainability focus areas.
Outcome for this
stakeholder
• Operating companies understand the pressures of suppliers and optimise ways of working and build long-term
relationships, establishing continuity and quality of supply.
• Suppliers understand our expectations relating to ethical sourcing and practices.
Our local communities
C
D
6
7
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.
What matters • Sustainability and the environment
• Health, safety and wellbeing
• Reputational and ethical standards
How the Board
considers this
stakeholder
• Day-to-day engagement with local communities takes place at local operating company level. Matters affecting the
wider Group are referred to the Board.
• The Board is responsible for approving and overseeing the Group’s sustainability targets and receives six-monthly
updates on progress from the Head of Sustainability in addition to more frequent updates from the CEO.
How the Board
engages with this
stakeholder and
monitors
effectiveness
• Our operating companies engage with a wide variety of stakeholders at local level, sponsoring local events,
donating to charities and liaising with local authorities as necessary.
• The Board receives reports of Group community activities, such as the head office volunteering day which
supported a local primary school in creating an outdoor classroom and learning area.
Outcome for this
stakeholder
• We continued our charity matching programme whereby our employees can apply for central matching of
charitable donations raised by themselves. Some of the charities we have matched funding for are: MacMillan,
Cancer Research, Changing Lives, Leonard Cheshire Disability, Love Em Trust, JHF Youth Foundation, Northumbria
Blood Bikes and UNICEF.
• Our operating companies support wide-ranging charitable causes through locally organised charitable events such
as charity walks and raffles.
32
Our customers
A
C
1
6
7
Our operating companies work closely with their customers. Understanding their needs is fundamental to good customer service
and allows us to provide innovative solutions. By building a detailed understanding of customer needs, and the markets in which
they operate, we can ensure we provide the right solutions and products and anticipate future requirements.
What matters • Quality
• Fair financial terms
• Product innovation
• Long-term relationships
• Sustainability and the environment
How the Board
considers this
stakeholder
• The majority of day-to-day customer interaction takes place at the operating company level.
• The Board reviews operating company performance as a standing item at each Board meeting, which identifies key
customer matters such as lead times and quality. Where any significant customer matters are detected, these will
be investigated by the relevant Group President who will update the Board as appropriate.
How the Board
engages with this
stakeholder and
monitors
effectiveness
• In 2025, our operating companies continued to foster close relationships with customers to understand their
requirements and develop products and solutions to meet their current and future needs.
• Our businesses comply with our Code of Business Conduct which sets out expectations for how we conduct
business, ethically and responsibly. Compliance with the Code of Business Conduct is monitored.
Outcome for this
stakeholder
• We continue to listen to our customers, in terms of quality requirements and service levels and expectations.
• We better understand, meet and anticipate our customers’ needs and develop innovative solutions.
• Some of our businesses are accredited with ISO quality standards.
The environment
C
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.
What matters • Sustainable products including waste and water management
• Greenhouse gas emission reduction
• Environmentally friendly products and solutions
How the Board
considers this
stakeholder
• The CEO keeps the Board apprised of issues that arise in the ordinary course of business. Additionally, the Board
receives at least two sustainability reports per year which are presented by the Group’s Head of Sustainability.
These reports contain progress against sustainability objectives, including carbon reduction targets and other
initiatives across the Group and at operating company level.
• The Group’s Decarbonisation Committee comprises our Group Head of Sustainability, Head of Risk and Audit and
Head of Reporting alongside a selection of representatives from our operating companies.
How the Board
engages with this
stakeholder and
monitors
effectiveness
• The Board received two sustainability updates during the year from the Head of Sustainability, in addition to further
monitoring of initiatives during standard Board reporting and at the Group strategy sessions.
• We incorporate carbon reduction planning into the operating company strategic plan and budget process.
• The Board received updates on a project to explore alternatives to the use of gas fired galvanizing equipment.
• We incorporated greenhouse gas reduction targets in the company’s LTIP awards.
Outcome for this
stakeholder
• The impact on the environment has been given more prominence and consideration in decision making and wider
business activities.
• Work to date has allowed us to suggest areas for future improvement.
• A range of emissions reduction and energy efficiency initiatives have been undertaken by our operating companies.
Further information can be found on page 41.
• Several of our UK and US sites have also switched to Hydrotreated Vegetable Oil (‘HVO’) in place of diesel.
• 91% of our global 2025 electricity requirements were sourced through renewable energy instruments.
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 33
Strategic Report
Our investors
A
B
C
1
2
3
4
5
6
7
8
The Company has a mix of individual and institutional shareholders, whose opinions are valued. As our investors are the owners
of our 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.
What matters • Operational and financial performance
• Capital allocation
• Reputation and ethical standards
• Health, safety and wellbeing
How the Board
considers this
stakeholder
• The Board receives an update on investor relations matters at each Board meeting.
• The Company’s brokers are invited to attend certain Board meetings during the year and provide feedback from
investors, specifically following the Company’s half-year and full-year results.
• The Directors all attend the Company’s AGM in order to discuss any other matters that shareholders wish to raise.
How the Board
engages with this
stakeholder and
monitors
effectiveness
• During 2025, the CEO, CFO and Head of Investor Relations met regularly with investors and analysts, holding
investor meetings with existing and potential investors. In addition, our new CFO met with large investors on
appointment as part of his onboarding process.
• The Company’s AGM was held in May 2025, enabling face-to-face interaction between Board members and
investors.
• The Chair, Senior Independent Director and Remuneration Committee Chair are available to meet shareholders as
requested. A specific investor engagement exercise was undertaken in 2025 relating to the implementation of the
remuneration policy for FY25.
• Investors vote on resolutions put to shareholders at the Company’s AGM.
Outcome for this
stakeholder
• 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.
• Responses from major shareholders received as part of the Remuneration Policy review both on the Remuneration
Policy and 2026 implementation were taken into account when finalising metrics and targets (see page 105).
Stakeholder engagement continued
34
Stakeholder engagement takes place at all
levels across the Group and is an important
part of how we deliver our strategy.
The Board recognises the importance of taking the interests of
stakeholders into consideration in its decision making. The
Directors of the Company are required by section 172(1) 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 a range of stakeholders, ensuring that the Company
maintains a reputation for high standards of business conduct
and treats its stakeholders fairly.
Stakeholder engagement
Regular engagement with our stakeholders is important to
develop our understanding of each stakeholder group and key
issues, which underpins decision making by the Board. 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 30.
Meeting the needs of our stakeholders
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. On pages 30 to 34 we have set out our key
stakeholders and an explanation of how we interact with them
as well as providing a summary of some of the outcomes of
ourengagement.
Section 172(1) statement
Effective stakeholder engagement is integral to good governance
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 is set out in the Ethical conduct section on
page 56.
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.
On shareholder engagement, during the year we maintained an
ongoing programme of meetings with institutional shareholders,
keeping them updated on strategy and business performance,
with discussions on corporate governance as required.
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 35
Strategic Report
Decision making in action
The table below sets out three key decisions and explains how the matters in section 172 were considered.
Appointment of a new Chair Integration of Hill & Smith Inc.’s
message board business with
National Signal
Commencement of our share
buyback programme
Stakeholders
considered
People Investors
Companies Local communities
Customers Environment
Suppliers
People Investors
Companies Local Communities
Customers
People
Investors
Why this is a
key decision
• The appointment of the new Chair
is considered to be a key decision
as the Chair is responsible for
high standards of corporate
governance, leading the Board,
and fostering a culture of open
debate.
• The Chair is also responsible for
managing the relationships
between the executive and
Non-executive Directors.
• Both the National Signal and Hill &
Smith Inc. message board
operations have experienced weak
trading conditions in recent periods,
so determining an improvement
strategy was key to supporting
financial performance.
• The Board were cognisant of the
potential impact on our employees
and therefore required clarity on
how the effects could be mitigated.
• Disciplined capital allocation is key to
the Group’s business model. It is
important that the Board fully
understands the Group’s financial
outlook, including its organic and
inorganic investment opportunities,
before determining whether there is
surplus capital available to return to
shareholders.
How the
Board made
its decision
• A role profile was created which
was used by the external search
firm Russell Reynolds as part of the
process.
• The key selection criteria included
consideration of diversity and
cultural fit, previous and recent
experience of multinational
industrial businesses, and
strategic vision.
• Discussions took place with
several candidates prior to a
decision being made.
• In making this decision the Board
considered: the financial impact;
benefits to operational efficiency;
product suite and mix; customer
service levels; and the impact on
employees of both Hill & Smith Inc.
and National Signal.
• The Board considered a range of
financial outcomes including
downside scenarios to assess the
risks of proceeding.
• Management also engaged with
external experts to support the
planning and integration process.
• The Group’s capital allocation policy
prioritises organic and inorganic
investment, but also provides returns
to shareholders through a growing
dividend, and where leverage is
expected to remain low for a
sustained period, through additional
returns of surplus capital.
• In determining whether the Group
had surplus capital available, detailed
financial forecasts were reviewed,
including potential acquisitions, and
the impact that a share buyback
would have on earnings and
valuation. Advice was sought from
Brokers and Financial Advisors in
making the decision andfeedback
was considered from institutional
shareholders.
Outcomes • Following a comprehensive search
process, Nick Anderson was
determined to be the best
candidate for the role
• He joins the Board in March 2026
as Non-executive Director and
Chair designate.
• The integration process went well,
and we anticipate that the
combined business will see
improved financial performance.
• Whilst the plan resulted in closure
of the Garland, Texas facility, the
Group took steps to support
affected employees in finding
alternative employment. Additional
employment opportunities were
also created in California at our new
site.
• In August 2025, we announced the
commencement of a £100m share
buyback programme over
c.18 months.
• The purpose of the programme is to
return capital to shareholders by
reducing the Company’s share
capital, without significantly
increasing leverage or restricting the
Group’s ability to invest in organic
and inorganic growth opportunities.
Criteria
considered
A, B, C, D, E, F A, B, C, D, F A, 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 local communities
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
Section 172(1) statement continued
36
Our approach to sustainability
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
Our sustainability strategy
As per our 2024 materiality assessment, we have seven priorities in our sustainability strategy, across
three focus areas. Our materiality assessment is completed on a three year cycle.
9%
Reduction in Lost Time
Incident Rate compared
to2024
49%
Increase in self generated
electricity compared
to 2024
19%
Reduction in scope 1 & 2
emissions compared
to 2024
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 37
Strategic Report
Our approach to sustainability continued
Our sustainability metrics and targets
Pillar Focus area Target Progress 2025 actual 2024 actual 2025 target 2030 target
Protecting the world
Greenhouse gas
emissions and energy
efficiency
Intensity Ratio
(market-based)
(tCO
2
e per £000’s
revenue)
0.05 0.06 0.05 0.03
Saving and
enhancinglives
Health, safety and
wellbeing
Lost Time Incident
Rate
0.3 0.33 0.275 0.1
Talent, development
and engagement
Engagement score
58% 56% 66% 75%
Equity, diversity and
inclusion
Gender diversity
PLC Board
25% 38% 40%+ 40%+
Executive Committee
17% 33% 40%+ 40%+
Senior Leaders
25% 22% 20%+ 40%+
Ethnic diversity
PLC Board
13% 13% 10%+ 10%+
Executive Committee
0% 0% 10%+ 20%+
Senior Leaders
19% 15% 10%+ 10%+
 Not on track  Slightly behind   On track   Achieved
38
Sustainability governance structure
Our CEO, Rutger Helbing, has Group-level responsibility for sustainability and the Board is responsible for approving our sustainability
strategy. Each priority topic within the strategy has a subject matter expert to lead its implementation, who liaise with individuals
from across the wider Group as needed and report back to the Executive Committee and Board on a regular basis, providing updates
on progress made against targets.
Focus Area Priority Subject Lead Owner Monitoring Governance
Protecting
the world
Greenhouse gas
emissions & energy
efficiency
Head of Sustainability CEO Decarbonisation
Committee
Executive Committee
(quarterly)/Board
(bi-annually)
Sustainable products Head of Sustainability CEO Decarbonisation
Committee
Executive Committee
(quarterly)/Board
(bi-annually)
Saving &
enhancing lives
Health, safety &
wellbeing
Heads of Health &
Safety
Group
Presidents
Executive Committee Board
Talent, development &
engagement
HR Business Partners CEO Executive Committee Board
Equity, diversity &
inclusion
HR Business Partners CEO Executive Committee Board
Sustainable
governance
Climate risks & TCFD Head of Risk &
Internal Audit
CFO Risk Committee Audit Committee
Ethical conduct Company Secretary CEO Executive Committee Board
Preparing for emerging sustainability regulations
Outline of regulations Actions we are taking Time horizon
UK Sustainability Reporting
Standards (UK SRS)
The UK government are assessing
and endorsing the global corporate
IFRS Sustainability Disclosure
Standards.
• 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 carbon emissions
reduction 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
Taskforce on Nature-related
Financial Disclosures (TNFD)
The ISSB has confirmed it will use
the TNFD framework to inform its
nature related investor reporting
standard.
• Our Head of Sustainability is
monitoring developments and will
recommend actions for future
disclosure.
TBC subject to
ISSB confirmation
SB 253: Climate Corporate Data
Accountability Act and SB 261:
Climate-Related Financial Risk
Act (California-specific)
Potential requirement to disclose
greenhouse gas emissions and
climate-related financial risks for
businesses that operate in
California.
• We have reviewed the reporting
requirements and are satisfied that
our current reporting meets them.
TBC subject to
further government
announcements
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 39
Strategic Report
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.
Protecting the world
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 tCO
2
e per £million
revenue). Our intensity ratio for 2025 has reduced to 0.05,
achieving our 2025 target.
Greenhouse gas emissions and energy efficiency
Our targets
Target
2025
actual
2024
actual
2025
target
2030
target
Intensity Ratio (market-based) (tCO
2
e per £000’s revenue) 0.05 0.06 0.05 0.03
40
What have we achieved in 2025?
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 2025,
including the implementation of energy reduction measures at
our galvanizing facilities, switching forklift trucks to electric
versions, installation of more energy-efficient equipment, and
the use of roller shutter doors and insulation to retain heat.
Several of our UK and US sites have also switched to
Hydrotreated Vegetable Oil (‘HVO’) in place of diesel.
Consumption of natural gas for heating in the galvanizing
process contributes 85% of the Group’s total natural gas
consumption, and the use of energy in the galvanizing process
continues to be a key focus area for the Group’s emissions
reduction plan. In 2025, we continued to implement energy
efficiency measures in both our UK and US galvanizing
operations including waste heat recovery systems, smart
burners, and kettle covers. A specific project was also
undertaken to understand potential future alternatives to the use
of gas fired zinc baths at our galvanizing sites, with a watching
brief to ensure we are ready to take advantage of opportunities
as they arise.
As a Partner of the US Department of Energy’s Better Plants
programme, we have continued to make use of the range of free
tools and resources available to us, with a second ‘Energy
Treasure Hunt’ held at our Creative Composites Group site in
Pennsylvania, which identified the potential for 9% energy
savings through a range of energy efficiency measures.
91% of our electricity globally was sourced through renewable
energy agreements in 2025 (99% of UK & India electricity
requirements and 87% of our US electricity requirements). In
addition, we generated 1,173,522 kWh of renewable energy from
our own solar PV sources on several sites across the Group.
Work has continued on improving the accuracy of data used for
ourscope 3 emissions reporting and over half of our key
purchased materials across the Group are now being reported
using an activity-based (weight-based) approach rather than
spend-based. This change in methodology has resulted in an
increase in our reported scope 3 emissions for 2025, especially
as the Defra spend-based emission factors have been updated
resulting in lower emissions for historic years than previously
reported. For example, the activity-based emission factor for
zinc is around ten times the equivalent spend-based emission
factor (as the spend-based factor is very generic and applies to
a wide range of metal types).
Carbon emissions reduction plan
Net zero scope 1 and 2 emissions by 2040
2026–2030
Ongoing galvanizing energy efficiency measures
Trial alternative galvanizing burner technologies
Remaining forklift fuel replaced with renewables
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
Offsetting for remaining unavoidable emissions
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 2025 2030 2035 2040
tCO2e emissions (000s)
0
10
20
30
40
50
60
It is widely recognised that the spend-based approach to carbon
accounting, although useful for providing an understanding of an
organization’s most significant scope 3 emissions, lacks the
accuracy and transparency needed to inform decarbonisation
efforts. Like many other organisations, we are transitioning to
using an activity-based approach for purchased goods, which will
allow us greater opportunity to influence emissions going
forward, for example by specifying more sustainable options
such as recycled content or ‘green steel’.
We have reviewed and updated our carbon emissions reduction
plan and remain confident in our commitment to achieving our
internal net zero target for scope 1 and 2 by 2040. Our current
expectation is that the incremental capital investment, energy
costs, carbon taxes, and operational costs to achieve this will not
have a material impact on the growth prospects for the Group.
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 41
Strategic Report
Our approach to sustainability continued
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carbon emissions reduction plan on page 41. 100% of our scope 1, 2 and 3 emissions are included in our science-based targets.
Reporting item 2025
Base year value
(2020)
2025 % change
(from 2020)
Scope 1 (tCO
2
e) 38,322 40,942 -6%
Scope 2 (market-based) (tCO
2
e) 1,488 15,255 -90%
Total scope 1+2 (market-based) (tCO
2
e) 39,810 56,197 -29%
Reporting item 2025
Base year value
(2022)
2025 % change
(from 2022)
Scope 3, category 1: Purchased goods & services (tCO
2
e) 1,105,071 362,766 205%
Scope 3, category 2: Capital goods (tCO
2
e) 8,075 4,689 72%
Scope 3, category 3: Fuel and energy-related activities (tCO
2
e) 7,449 6,239 19%
Scope 3, category 4: Upstream transportation (tCO
2
e) 30,678 28,569 7%
Scope 3, category 5: Waste (tCO
2
e) 2,399 3,811 -37%
Scope 3, category 6: Business travel (tCO
2
e) 1,458 1,500 -3%
Scope 3, category 7: Employee commuting (tCO
2
e) 4,812 5,469 -12%
Scope 3, category 9: Downstream transportation (tCO
2
e) 5,197 8,415 -38%
Scope 3, category 10: Processing of sold products (tCO
2
e) 15,565 9,261 68%
Scope 3, category 11: Use of sold products (tCO
2
e) 494,520 550,091 -10%
Scope 3, category 12: End-of-life treatment (tCO
2
e) 618 2,757 -78%
Scope 3, category 13: Downstream leased assets (tCO
2
e) 302 163 86%
Total scope 3 (all categories) (tCO
2
e) 1,676,146 983,729 70%
Overall scope 3 emissions intensity (tCO
2
e/£ value added) 9,144 7,743 18%
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 2025 (available at hsgroup.com/who-we-are/governance/
our-policies/) and the GHG Protocol, our 2020-2024 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 in 2025, historic emissions for 2022-2024 have been recalculated using the updated emission factors,
resulting in lower emissions.
Scope 3 emissions intensity uses operating profit in £m for value added.
42
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 2025’ 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 2025’ document on our
website. 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.
Our 2026 focus areas
In 2026, we will continue to develop and implement the local
emissions reduction plans produced by our operating
companies, considering both energy efficiency and switching to
alternative fuels and/or technologies. We will also continue to
improve the accuracy of our scope 3 reporting methodologies,
particularly regarding an activity-based, rather than spend-
based, approach to purchased materials. We will also continue
to research feasible alternatives to natural gas use in the
galvanizing process, working with wider industry partners and
research groups.
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.
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 2025. 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.
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 43
Strategic Report
Our approach to sustainability continued
Water consumption, waste data, and Environmental Product Declarations
Measure 2025 2024 2023 2022 2021
Water consumption (m
3
) 108,526 99,241 93,278 84,667 104,795
Water intensity (m
3
/£000 revenue) 0.12 0.12 0.11 0.12 0.17
Hazardous waste (tonnes) (A) 11,855 9,961 9,792 9,471 n/a
Non-hazardous waste (tonnes) (B) 22,436 18,021 17,362 16,428 n/a
Total waste generated (tonnes) (A+B) 34,291 27,982 27,154 25,899 n/a
Waste intensity (tonnes/£000 revenue) 0.039 0.033 0.033 0.035 0.028
Waste recycled (%) 80% 77% 82% 80% 79%
Water consumption from areas with high water stress (m
3
) 21,746 23,369 18,092 15,660 n/a
Water consumption from areas with high water stress (% of total) 20% 24% 19% 18% n/a
Percentage of corporate operations in high water stress areas 13% 12% 13% 12% n/a
Number of Environmental Product Declarations in place 6 6 6 3 0
Data for hazardous and non-hazardous waste, and water consumption from high water stress areas is not available prior to 2022.
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 2025?
Life Cycle Assessments
We have continued to undertake Life Cycle Assessments (‘LCA’)
for individual products, with six of these having been verified by
a third party and published asEnvironmental Product
Declarations (‘EPD’) and several more expecting to be verified in
2026. We have seen the demand for EPDs increase during the
year and 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.
Water consumption has been considered in the 2025 TCFD
assessment update with drought identified as a physical climate
risk at several sites. Measures to address these risks are
incorporated into individual facility business continuity plans.
100% of our water consumption is from mains supply, we do not
abstract water.
Our water consumption and waste data for the past five years is
set out below. Both our water consumption and waste generation
increased in 2025 compared to previous years. This is in part
due to including data from two new sites, acquired during 2024,
as our historic years’ waste and water data is not restated in the
same way as our GHG emissions data. Both measures were
also impacted as a result of increased productivity at our
galvanizing facilities in both the UK and US, which make
upsignificant proportions of our waste and water data.
Our 2026 focus areas
We will continue to undertake LCAs on key products, with the
publication of EPDs as they are verified.
During 2026 we will increase our monitoring of water
consumption and reduction efforts, particularly on those sites
inareas of high water stress. Several of our US sites have been
looking at opportunities to increase recycling rates for their
waste with improvements expected in 2026.
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.
Sustainable products
44
Health, safety and wellbeing
Saving and enhancing lives
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 2025?
In 2025 we continued to enhance the Group wide incident
management system, ensuring qualitative data and detailed
investigations were being delivered by our operating companies.
The system makes it easy forall employees to report accidents
in real time, and encourages the reporting of leading indicators
such as near misses, unsafe acts or conditions. Throughout
2025, we launched a monthly theme around the Group’s Nine
Life Saving Rules, with individual subject matter poster
campaigns at all operating companies, enhancing the focus on
accident prevention rather than reaction to accidents.
Significant focus was placed on machinery guarding safety
inyear and will continue into 2026 with the focus on ensuring
adequate risk assessment on all workplace machinery is
conducted and adequate controls are implemented to prevent
personal injuries.
During the year we have sought feedback on operational
andfacility improvements through our employee engagement,
whichincludes health and safety as a key discussion topic.
Tocomplement this and obtain a comprehensive view from
allemployees, we conducted a groupwide employee safety
culture survey in September 2025. 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, our efforts have led to a 9%
reduction in the Lost Time Incident Rate (‘LTIR’) to 0.30 in 2025
(2024: 0.33). 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.
In 2025, we launched the Global Safety Alert, ensuring that
repeat incidents with significant learnings are shared to all
locations ensuring preventative measures are implemented.
Our 2026 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:
• Elevate our focus on employee behaviours and accountability
by launching a new cultural change programme, “I Own
Safety” ensuring every employee around the Group is trained
and educated on recognising safe and unsafe behaviours and
enabling them to intervene to prevent incidents from
occurring
• 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
• Continue to improve case management of Lost Time
Incidents
• Enhance the delivery of safety training for our people
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
Although we did not achieve our LTIR 2025 target, management remains firmly committed to attaining it in 2026 and has established
a range of initiatives to support its achievement.
Measure 2025 actual 2024 actual 2025 target 2030 target
Lost time incident rate 0.30 0.33 0.275 0.1
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 45
Strategic Report
Our approach to sustainability continued
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 2025?
In 2025, we have continued our focus on senior level
succession, the development of high potential individuals within
our operating companies, as well as manager and supervisor
training and development. Following on from 2024, where we
saw four internal promotions in our Managing Director
population, we have welcomed two new externally sourced
Managing Directors across our regions. We will continue to
focus on succession planning and internal development
programmes to provide further future talent readiness for
internal opportunities and for our people.
We conducted our annual employee engagement survey in
September 2025, with a high participation rate of 88%, which
was a five percentage point increase on our 2024 participation
rate. Employee engagement for the overall Group increased to
58% (2024: 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 as well asadvancing our
existing employees. In the UK, 11 new apprentices joined in2025,
with 27 existing employees enrolling onto an apprenticeship as
a way of upskilling themselves. In September 2025, we held our
annual Apprenticeship Event in Coombe Abbey in Coventry, where
we celebrated the achievements of our brilliant UK apprentices.
The Board has reviewed the mechanism by which it engages
with its workforce. Instead of continuing with its Employee
Forum, members of the Board now hold direct meetings with
employees from a wide variety of disciplines and seniority levels
at individual operating companies with no senior management
present. These meetings allow direct and confidential feedback
to the NEDs from colleagues on the ground and provide valuable
insights into workforce perceptions on matters such as
remuneration, working conditions, and health and safety.
Pleasesee the Governance Report for more information.
Our 2026 focus areas
Understanding the importance of highly engaged people, our
Managing Directors and their teams 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 employees continue to have
regular feedback on progress being made and to enable
employees to give feedback during the year. Our HR teams will
continue to hold regular sessions toshare best practice with the
aim of assisting all companies toincrease their engagement
levels in 2026.
We will continue to develop our supervisors and managers,
withdevelopment programmes planned for 2026. We are
tracking progress that our supervisors and managers make
after completing the programme. 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 2025 actual 2024 actual 2025 target 2030 target
Engagement score 58% 56% 66% 75%
Talent, development and engagement
46
Kelsy Valko, Chemical Engineering
Supervisor
Creative Composites Group
Kelsy joined Creative Composites Group in May 2022 after
graduating from the University of Pittsburgh with a Bachelor of
Science degree in Chemical Engineering. What began as an
unexpected opportunity close to home quickly became a career
defined by growth and challenge. “Every day is different,” Kelsy
shares. “There’s always a new problem to solve and an opportunity
to keep learning.” That constant evolution is what continues to fuel
her development.
In April 2025, Kelsy was promoted to Chemical Engineering
Supervisor, where she now leads a growing team while supporting
product development, chemical process improvements, tooling and
part estimating, and technical specifications. She also plays a key
role in environmental compliance, working closely with regulatory
agencies to ensure accurate reporting and adherence to standards
across operations.
Beyond her site-based responsibilities, Kelsy supports sustainability
initiatives across the broader Group. She leads carbon footprint
reporting for Creative Composites Group, contributes to
Environmental Product Declarations, and conducts Life Cycle
Assessments for selected products, work that supports the
company’s long-term environmental goals.
With recent retirements creating opportunity within the engineering
department, Kelsy is energized by what lies ahead. She is deeply
invested in mentoring and developing her team, finding fulfilment in
leadership. “I really enjoy training and coaching others,” she says.
“Helping people grow and succeed is one of the most rewarding
parts of my role.” Looking forward, Kelsy sees continued opportunity
to expand her leadership and technical expertise while contributing
to the future of Creative Composites Group.
“Helping people grow and
succeed is one of the most
rewarding parts of my role.”
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 47
Strategic Report
Our approach to sustainability continued
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 2025?
The 2025 employee survey highlighted that 73% of employees
agreed that Hill & Smith values diversity. While this is a good
starting point we still have more to do in this area.
During 2025, the focus was to continue to provide tools,
resources and information in support of increasing levels of
diversity both locally and at a Group level to represent the
communities that we serve. Some of our local operating
companies have seen updates, remodels or new purpose builds
of their facilities to provide an inclusive environment for all
employees, regardless of their gender. We have also received
positive feedback following the introduction of personal
protective equipment (‘PPE’) specifically designed for females.
We have enjoyed celebrating various national and international
days that celebrate inclusion across regions and we continue to
partner with two external Women’s Networks to enable our
employees to benefit from access to a wider network, tools and
resources. Inaddition, we continue to offer variety of inclusive
activities and webinars to raise awareness and open
communication channels, for which we received positive
feedback from our people.
We have seen a slight decline in our 2025 Gender Pay Gap, with
the median and mean pay gap shifting back to favour men,
however, this indicates imbalance in distribution of females
within the Group and its operating companies, which is not
unusual for companies operating within environments like ours,
as opposed to fairness and/or equality of pay.
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 programme
continues to be another method of attracting more diversity into
our businesses.
Our 2026 focus areas
We will continue to focus on increasing levels ofdiversity
acrossour operating companies as well as at the Group level.
We will review our Inclusive Hiring Guide along with our training
modules in 2026 to further develop the skills and knowledge
ofour employees. This will cover the benefits of a diverse
workplace and how everyone can play a positive role in
promoting inclusivity. We will continue to provide tools,
resources, and information in support of this, as well as
takingpart in national and international days that celebrate
diversity and inclusion.
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 in our US
businesses.
As set out in the Chair’s Report, a key priority for our new Chair
will be addressing gender diversity at Board level.
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 2025 actual 2024 actual 2025 target 2030 target
PLC Board 25% 38% 40%+ 40%+
Executive Committee 17% 33% 40%+ 40%+
Senior leaders 25% 22% 20%+ 40%+
Ethnic diversity 2025 actual 2024 actual 2025 target 2030 target
PLC Board 13% 13% 10%+ 10%+
Executive Committee 0% 0% 10%+ 20%+
Senior leaders 19% 15% 10%+ 10%+
Equity, diversity and inclusion
48
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 2025?
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. We are compliant with the recommended disclosures,
apart from partial compliance with Metrics and Targets. See
page 55 for further details. During 2025, we continued to
develop our approach to assessing the impact of climate
change on our business operations, strategy, and financial
planning. We engaged with PwC to complete updated analysis
on physical and transitional climate risk and opportunity.
Climate related targets were added to the remuneration of our
Executive Committee and operating company Managing
Directors (see Remuneration Committee Report for further
details).
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 its sustainability focus areas including climate-
related risks and opportunities. The annual budget process
includes consideration of operating company level carbon
reduction plans, with a similar focus on the strategic planning
process which covers a five-year timeframe. The evaluation of
potential acquisitions 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.
Sustainable governance
Climate risks and TCFD
PLC Board
• Responsible for approving and overseeing the Group’s
sustainability targets
• Receives six-monthly updates onsustainability
progress from the Decarbonisation Committee
• Has oversight of TCFD reporting and disclosures
(through the Audit Committee and Risk Committee)
Decarbonisation Committee
• Responsible for defining and delivering the Group’s
decarbonisation approach and long-term goals
• Formed in 2025, as an evolution from the previous
Sustainability Committee, meeting quarterly to review
and oversee progress against decarbonisation targets
• Members include: Group Head of Sustainability,
representatives from operating companies, 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
Decarbonisation 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61
TCFD governance and responsibilities
TCFD Definitions
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.
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 49
Strategic Report
Our approach to sustainability continued
Our approach
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. We engaged PwC to help perform this assessment for both transition and physical climate risk, building
upon the work first completed for us in 2021. Timeframes were selected in line with our near and long-term climate goals and after
consideration of the likely timing of transition risks, such as carbon pricing, and when significant physical climate changes are
expected to materialise.
Physical climate vulnerability analysis for operational sites across the Group was completed using PwC’s climate modelling software.
This analysis was an enhancement on the original 2021 modelling due to the addition of higher resolution hazard data, improved
scenario-specific outputs, and new modules to estimate the financial impact of hazards. The assessment of transitional risk was
also enhanced with the development of a carbon pricing risk model using updated market data and regulatory requirements (such as
the EU Carbon Border Adjustment Mechanism (‘CBAM’), the EU Emissions Trading Scheme (‘ETS’), UK CBAM, and UK ETS).
The output of the transition and physical risk assessments have enabled us to identify the material impacts on our business arising
from each of the selected scenarios. The impacts were assessed without considering any actions that we might take to mitigate or
adapt to these future climate change scenarios.
50
Climate related risks and opportunities
The existing TCFD risk register as maintained by the Risk Committee was used as a starting point to determine which risks could
have a material impact after considering both potential financial impact and likelihood. PwC benchmarked this against our sector and
peers to identify additional risks and opportunities. The risks and opportunities deemed more significant at an unmitigated level are
shown below.
Risk category Risk Additional considerations
Transition
Market
Increased demand for renewable energy may
lead to reduced supply of renewable energy or
an increase in the cost of purchasing
renewable energy.
Short to medium term time horizon.
The acceptability of Renewable Energy Certificates/Guarantees
of Origin (RECs/REGOs), green tariffs, and on-site generation is
being reviewed by regulatory and standard bodies. Updates to
guidance from the GHG Protocol for scope 2 emissions are
expected in late 2027.
Transition
Technology
Sourcing new greener technology which may
be unavailable/require high capital investment
and the risk of stranded high carbon assets
e.g. alternative heat source for galvanizing.
Medium term time horizon.
Work is continuing to identify the technology to deliver our
carbon emissions reduction plan. The risk of stranded high
carbon assets is currently deemed low due to their useful
economic lives in relation to anticipated carbon pricing
timelines.
Transition
Policy & Legal
Increasing operational and supplier costs due
to government legislation designed to reduce
emissions.
Short to medium term time horizon.
Introduction/expansion of CBAM increases costs for emissions-
intensive imports and can affect exports. Work is underway to
consider how this could impact us.
Physical
Acute
Disruption or damage to building and contents
at manufacturing and operational sites due to
extreme weather, causing production delays
and potential damage/loss of products/
materials.
Medium term time horizon.
Climate-driven events damaging or disrupting upstream
activities such as external utilities (power, telecoms) are also
relevant. There is also a risk of insurance cost escalation and
coverage restrictions in response to acute physical risks.
Physical
Chronic
1. Rising average temperatures increase
cooling energy needs and shorten HVAC/
electrical equipment life.
2. Extreme heat reduces worker productivity
and raises health/safety risks.
Medium term time horizon.
Existing measures in place to deal with extreme heat include
shifting work times to avoid peak temperatures, increasing rest
breaks, and providing ice vests and electrolyte drinks. Further
mitigations are being considered by our operating companies.
Opportunities
Products and
services
1. Innovation in new products & services could
provide a competitive advantage and extend
product range into premium markets e.g.
floodproofing/windproofing.
2. Reduce embodied carbon in final products to
be ahead of future regulation and enhance
market reputation.
Short to medium term time horizon.
There are opportunities for the Group given our 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 55 for
our existing products that mitigate against extreme climate.
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 51
Strategic Report
Our approach to sustainability continued
Physical risk hazards under the >4°C 2050 scenario
Sites at higher risk*
Hazard
2025
no of sites
2025 %
total sites
2050
no of sites
2050 %
total sites
Flood 3 5% 3 5%
Wind 1 2% 4 7%
Rainfall 8 13% 8 13%
Heat 5 8% 9 15%
Hail/thunderstorms 8 13% 5 8%
Drought 6 10% 8 13%
Wildfire 0 0% 0 0%
Total unique sites with one or more high risk hazards 15 25% 15 25%
* 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.
Climate
scenarios
< 2°C
SSP 1 –
RCP2.6
2-3°C
SSP 2 –
RCP4.5
>4°C
SSP 5 –
RCP8.5
End of century
temperature
rise
1.6ºC
(0.9–2.4ºC)
2.8ºC
(1.8–4.1ºC)
4.5º C
(2.9–6.1ºC)
Source Jupiter™ Intelligence data based on IPCC’s
6
th
Coupled Model Intercomparison Project
(“CMIP – 6”)
The following time frames for assessment were chosen to
align them with Group sustainability targets.
• Short term (3 years) – 2030 aligns with our short term
carbon reduction target (2032)
• Medium term (10 years) – 2040
• Long term (20-30 years) – 2050 Aligns with our net zero
target
Impact analysis – Physical risk
The analysis completed by PwC considered the risk level across
three Intergovernmental Panel of Climate Change (‘IPCC’)
scenarios; global warming of <2˚C, 2-3˚C, and >4˚C by 2100 from
a 1900 baseline. The IPCC scenarios are recommended as a key
public source of data by the TCFD. This allowed for the
relationship between risk and temperature rises to be assessed
for each site. The analysis presented here is focused on the
>4˚C scenario to demonstrate the worst-case scenario across
60 operational sites. Risk scores were modelled out to 2050
(our long-term SBTi target). This scenario may include costs
relating to the repair of assets, increased volatility, business
discontinuity, and investment in resilience measures for
addressing more severe and frequent natural disasters.
At the end of 2025, the Group had 15 sites at higher risk of one
ormore climate hazards with extreme precipitation and hail/
thunder being the most significant threats with eight sites
deemed higher risk. By 2050, heat is predicted to be the most
significant threat to the Group with nine sites deemed higher
risk. 15 sites have been identified to be at higher risk from one
or more climate hazards by 2050, which represents c. 20% of
2025 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 2026 we will share the climate risk assessments from
PwC’s 2025 review with operating companies such that
business continuity plans, mitigations, and strategic plans can
be updated as necessary.
52
Stated Policies Scenario
(STEPS)
A scenario which reflects current
policy settings based on a sector–
by–sector and country–by–country
assessment of the energy – related
policies in place as of the end of
August 2024, as well as those that
are under development.
Net Zero Emissions by 2050
Scenario (NZE)
A scenario which sets out a
pathway for the global energy sector
to achieve Net Zero CO
2
emissions
by 2050.
Announced Pledges Scenario
(APS)
A scenario which assumes that all
climate commitments made by
governments and industries around
the world as of the end of August
2024 are implemented as stated.
Lower warming
Higher carbon cost
Higher warming
Lower carbon cost
Impact analysis – Transition risk
The impact of carbon pricing on our operations was modelled
across three International Energy Agency (‘IEA’) scenarios, as
set out below, over two emission trajectories (‘steady state
emissions’ whereby our emissions remain stable and ‘Net zero
flight path’ whereby our emissions reduction targets are
delivered). The analysis here focuses on scope 1 and scope 2
emissions. Due to the uncertainty surrounding potential
passthrough costs for scope 3, it has not been included in the
analysis. As carbon pricing regulation develops, taxation may
impact passthrough costs on our products and services in our
supply chain; equally the costs of carbon taxation could be
passed on in part to customers. We will continue to complete
analysis to understand how this will be applied to our products
and customers in the future to more accurately quantify
transition risk relating to carbon pricing.
Operating costs relating to carbon pricing could increase if they
are not proactively mitigated. Under the higher carbon cost NZE
scenario the Group could be subject to an annual cost of
£11.7m by 2050 for scope 1 and 2 emissions (see the Carbon
pricing impact table on page 53). This cost would drop to £1.5m
if our net zero targets were achieved (see the carbon pricing
impact table on page 53 for further details). TheGroup is
committed to reducing greenhouse gas emissions as
demonstrated by our 2040 net zero ambition (see our carbon
emissions reduction plan on page 41) which will substantially
mitigate our gross risk exposure to carbon pricing. Future
exposure to renewable energy pricing will partly be offset by
self-generated energy.
IEA scenarios
Carbon pricing impact* – Scope 1 & 2 under NZE, APS, & STEPS
Annual impact by 2032 NZE APS STEPS
Average annual operating cost – Steady state emissions**
Average annual operating cost – Net zero flight path***
£7.3m
£4.2m
£6.7m
£3.9m
£2.0m
£1.2m
Annual impact by 2040
Average annual operating cost – Steady state emissions**
Average annual operating cost – Net zero flight path***
£9.6m
£1.2m
£8.1m
£1.1m
£2.1m
£0.3m
Annual impact by 2050
Average annual operating cost – Steady state emissions**
Average annual operating cost – Net zero flight path***
£11.7m
£1.5m
£9.4m
£1.2m
£2.3m
£0.3m
*Based on PwC’s carbon pricing modelling of our operations
**Further proactive carbon reduction measures are not undertaken by the Group
***Our publicly stated net zero commitments are achieved
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 53
Strategic Report
Our approach to sustainability continued
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 60 to 62 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 64).
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 CO
2
e intensity ratio. Refer to page 40 for
further details of progress to date.
• We have near term, long term and net zero targets for scope
1, scope 2 and all relevant scope 3 emissions approved by the
SBTi and report on progress against these on an annual basis
(refer to pages 40 to 43 for further details).
• In addition, we currently measure water usage, waste
production, and the number of EPDs and continue to look at
ways to minimise ourenvironmental impact.
CBAM
The EU Carbon Border Adjustment Mechanism (‘CBAM’)
reporting requirements directly apply to only 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. 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.
UK CBAM will affect most of our UK operating companies,
bothin terms of reporting requirements and potential additional
taxes on steel and aluminium 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; many have already started discussions
with their suppliers to obtain the information that will be needed
when UKCBAM comes into force in 2027. Should the emissions
allowance cap remain at its current and forecast levels, we are
unlikely to face tax obligations from CBAM, although there
remains some uncertainty here. Reducing our Scope 3 emissions
as well as shifting towards alternative suppliers for steel and
aluminium may help to reduce any potential tax obligations.
Conclusion
The results of our impact analysis highlight 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.
54
Products enhancing resilience
toextremeweather
’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.
TCFD compliance
TCFD elements TCFD recommended disclosures Compliant
Governance
a. Board oversight
ü
b. Management’s role
ü
Strategy
c. Climate-related risks and opportunities
ü
d. Impact of climate-related risks and opportunities
ü
e. Resilience of the organisation’s strategy and business model in climate scenarios
ü
Risk management
f. Risk identification and assessment
ü
g. Managing climate-related risks
ü
h. Integration into overall risk management process
ü
Metrics and targets
i. Metrics for climate-related risks and opportunities Partial
j. Scope 1, 2 and 3 greenhouse gas emission metrics
ü
k. Climate-related targets – scope 1, 2 and 3
ü
Our TCFD disclosure is aligned with the requirements of UK Listing Rule 6.6.6(8) by including climate-related financial disclosures
consistent with the 11 TCFD recommendations. While we have metrics for climate-related risks, during 2026 we will continue to
develop cross-sector metrics for climate-related opportunities, capital deployment, and internal carbon pricing.
Novia’s vibration isolation roof curb
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 55
Strategic Report
Our approach to sustainability continued
What have we done in 2025?
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 sets out
expectations for everyone working for and on behalf of the
Group and covers 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.
34such issues were reported and investigated in 2025 (2024: 44).
During 2025, and as part of our whistleblowing programme, we
ensured that our employees received annual whistleblowing
training and ensured that this was communicated at all levels
within the organisation. Additionally, we have been refining the
process for whistleblowing investigations to ensure there are no
reprisals, in addition to ensuring confidentiality when
investigations are ongoing. Additionally, we have rolled out in
person or video conference training for anyone involved in
whistleblowing investigations to support the effective and timely
undertaking of those investigations.
We have also been focussed on updating our processes,
policies and procedures for the implementation of the Economic
Crime and Corporate Transparency Act 2023. We have
undertaken our risk assessment and updated our policies and
processes to ensure compliance.
Why does it matter?
As an international group, we recognise our responsibility to act
in an ethical manner, not only to meet regulatory obligations, but
more importantly to be a good corporate citizen and ensure our
positive impact on employees, suppliers, customers and the
communities in which we operate.
Our ethical policies help to support our Group and operating
company reputations in the markets in which we operate
through:
• Protecting our employees and creating a sense of pride that
we ‘do the rightthing’
• Promoting transparency with customers and suppliers
• Supporting the communities in which we work with fair and
equitable employment policies and opportunities
• Ensuring that our terms of business with our suppliers
support our commitment to ethical conduct and doing
business responsibly
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 at least basic
human rights standards.
Our Group and operating 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. 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.
Ethical conduct
56
How do we ensure we are compliant?
• Annual Modern Slavery audits
• Board oversight of all whistleblowing reports
• Approval of ethical policies by the Board or Executive
Committee
• Maintain online training to ensure compliance with relevant
legislation
• Annual certification by Group operating companies that they
have complied with policies issued by the Group, and in
particular with the CoBC
Our 2026 focus areas
During 2026 we will be focussing on the following projects to
support our ethical practices:
• reviewing our compliance and ethical online training to
improve completion rates and ensure courses are allocated to
the most appropriate members of staff
• roll-out our legal AI tool to support the inclusion of all
appropriate ethical clauses, including ethical clauses within
our contracts
• reviewing our Equal Opportunities and Diversity and Data
Protection Policies to ensure they are appropriate throughout
the jurisdictions in which we operate
Ongoing compliance
We regularly review operating companies’ standard terms
andconditions across the Group to ensure they demand the
highest standards of ethical behaviour. Each agreement
includes ethical requirements, including a supplier’s obligation
to comply with the UK Modern Slavery Act or similar local legal
obligations. We will be rolling out an additional legal AI tool to
support our operating companies in reviewing contractual
agreements. Under our Supply Chain Policy our operating
companies undertake additional due diligence for key suppliers
prior to commencing to trade and to obtain an annual
compliance certificate which confirms that they comply with our
ethical policies and CoBC.
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 to manage such
reports to an acceptable level.
We will continue to conduct our dealings with tax authorities
withhonesty, integrity, respect and fairness and in a spirit of
co-operative compliance.
Specific ethical policies have been developed and are available
on the Group’s website www.hsgroup.com, including:
• Supply Chain Policy
• Code of Business Conduct
• Anti-bribery & Corruption Policy
• Modern Slavery Policy
• Whistleblowing Policy
• Group Fraud & Economic Crime Policy
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 57
Strategic Report
Our approach to sustainability continued
Sustainability data
2025 2024 2023 2022 2021
Product research & development
Spend on R&D £2.1m £3.4m £3.3m £2.8m £1.9m
Percentage of revenue 0.2% 0.4% 0.4% 0.4% 0.3%
Environmental
Environmental penalties £nil £nil £nil £nil £nil
Carbon Disclosure Project (‘CDP’) Rating B C B B D
Group water usage (m3) 108,526 99,241 93,278 84,667 104,795
Waste to landfill (tonnes) 7,017 6,338 4,769 5,138 3,600
Recycled waste (tonnes) 27,274 21,644 22,385 20,761 13,775
Percentage of waste recycled 80% 77% 82% 80% 79%
Greenhouse gas emission
Emissions (tCO
2
e) – Scope 1: UK
1
14,580 16,286 16,839 17,308 18,216
Emissions (tCO
2
e) – Scope 1: Rest of World
1
23,742 22,858 21,949 21,208 21,922
Location-based emissions (tCO
2
e) – Scope 2: UK
1
2,432 2,981 3,122 2,997 3,796
Location-based emissions (tCO
2
e) – Scope 2: Rest of World
1
10,983 10,602 10,230 10,828 11,443
Market-based emissions (tCO
2
e) – Scope 2: UK
1
88 82 165 296 860
Market-based emissions (tCO
2
e) – Scope 2: Rest of World
1
1,400 9,668 11,031 11,202 11,557
Intensity ratio 0.05 0.06 0.06 0.07 0.09
Scope 3 (tCO
2
e) – Group
1
1,676,146 896,607 824,999 983,729 n/a
Other greenhouse gas emissions – CH4 (tCO
2
e) 32.9 33.9 31.9 30.3 34.5
Other greenhouse gas emissions – N2O (tCO
2
e) 72 93 104 105 112
Energy consumption
Energy consumption UK (kWh) (A) 90,013,230 97,654,369 98,888,542 101,832,122 109,189,625
Energy consumption rest of world (kWh) (B) 160,034,147 153,287,049 147,422,059 144,810,961 149,913,575
Energy consumption total (kWh) (A+B) 250,047,377 250,941,418 246,310,601 246,643,083 259,103,200
Percentage of energy used derived from renewablesources 17% 8% 6% 6% 6%
Aggregate energy consumption from renewable sources 42,638,013 20,277,181 14,639,328 14,668,685 15,427,961
Health and safety
No. of workplace fatalities 0 0 0 0 0
No. of lost time injuries 28 30 35 85 142
LTIR 0.30 0.33 0.43 1.1 1.7
No. of near miss reports 725 990 1,969 2,217 2,126
ISO Standards
Percentage of Operating Companies ISO 9001 certified 71% 68% 68% 68% 74%
Percentage of Operating Companies ISO 14001 certified 47% 42% 37% 37% 37%
Percentage of Operating Companies ISO 45001 certified 41% 37% 26% 26% 21%
Ethical conduct
Charitable donations £135,619 £119,618 £98,985 £62,000 £39,000
Whistleblowing reports made by employees 34 44 10 12 2
Modern slavery audits carried out Yes Yes Yes Yes Yes
1. In accordance with our Greenhouse Gas Emissions Recalculation Policy, in our Basis of Reporting 2025 (available at hsgroup.com/who-we-are/governance/
our-policies/) and the GHG Protocol, our 2020-2024 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. Our GHG emissions reporting meets the requirements of Streamlined Energy and Carbon Reporting regulations (SECR).
58
2025 2024 2023 2022 2021
Talent and employment practices
No. of Group employees (as at 31 Dec) 4,590 4,559 4,336 3,817 4,402
Voluntary (regrettable) attrition rate 18% 18% 9% 14% 14%
Percentage of employees with access to a recognised
TradeUnion 3% 3% 5% 11% 18%
UK Gender Pay Gap (Median Hourly Pay Gap) 8.2% -1.0% -0.1% 2.8% -4.5%
Training spend £1.0m £0.8m £0.9m £0.8m £0.6m
Total no. of days training 8,083 5,285 5,799 5,626 4,119
Average annual hours of training per employee 1.76 1.16 1.34 1.47 0.94
UK apprenticeships 82 66 60 55 49
Percentage of UK operating companies utilising the
Apprenticeship Levy 78% 70% 83% 89% 57%
Employees participating in training & development 2,734 2,506 3,527 2,386 156
Percentage of employees participating in training
& development that are female 6% 8% 9% 10% 17%
Engagement
Engagement survey participation 88% 83% 83% 80% 62%
Engagement score 58% 56% 56% 61% 55%
Inclusion engagement score 73% 73% 73% 69% 63%
Gender diversity
M F M F M F M F M F
PLC Directors 6 2 5 3 5 2 5 3 5 3
Executive Committee 5 1 4 2 3 2 4 2 4 2
No. of subsidiary directors 41 7 40 9 46 10 39 7 49 3
No. of senior leaders 102 36 100 28 109 26 78 20 201 38
Percentage of PLC Directors 75% 25% 62% 38% 71% 29% 62% 38% 62% 38%
Percentage of Executive Committee 83% 17% 67% 33% 60% 40% 67% 33% 67% 33%
Percentage of subsidiary directors 85% 15% 82% 18% 82% 18% 85% 15% 94% 6%
Percentage of senior leaders 74% 26% 78% 22% 81% 19% 80% 20% 84% 16%
Total percentage of Group employees 88% 12% 89% 11% 89% 11% 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 and Safety Policy
• Equal Opportunities and Diversity Policy
• Tax Strategy
• Sustainability Policy
• Code of Business Conduct
• Fraud and Economic Crime Policy
• Anti-bribery and Corruption Policy
• Modern Slavery Policy
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 59
Strategic Report
Risk management
The Group has an established Enterprise Risk
Management Framework that identifies,
evaluates, manages and monitors risk.
Risk management
Effective risk management is critical to delivering our strategy.
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
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 is
integrated 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 their own risks, using a
standardised risk register format. This ensures risk
management is effectively embedded in a way that fits each
specific operating environment and risk horizon.
Within the Framework, the following roles and responsibilities exist:
The Board has responsibility for:
• overall ownership and accountability for risk management
• ensuring the Directors have the appropriate skills, knowledge
and experience to effectively assess the Group Principal Risks
and carry out their duties effectively
• evaluating the Group Principal Risks and overseeing
theirmanagement
• establishing Group risk appetite
• the external reporting of risk and viability
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
• Receives reports from the Risk Committee regarding operating company and
Group level risks
• Reviews and challenges risk information and target positions
• 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
60
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 management 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 2025 of the Principal Risks and
uncertainties that might threaten the Group’s business model,
future performance, solvency and liquidity (see pages 63 to 66
for the Group’s Principal Risks and Uncertainties).
The Board accepts a level of risk in pursuit of its strategic
objectives. The risk of action (or inaction) is assessed by the
Board in decision making such that the Group will not 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
During 2025, the Audit Committee established risk appetite
categories for the Board to use to classify the Group’s Principal
Risks (see pages 63 to 66 for the Group’s Principal Risks and
Uncertainties).
Risk appetite
Risk Appetite
Category Definition Principal Risks
Averse Low tolerance to risk, regardless of the
required control effort
• Product failure
• IT systems failure & cyber
• Health and safety
• Compliance with laws and regulations
Balanced Proportionate controls to balance strategic
objectives and potential negative impact
• Changes in global economic outlook & geopolitical environment
• Increase in competitive pressure
• Climate change
• Attract, retain, and develop our people
Receptive Elevated risk accepted to exploit
opportunities with improved returns
• Reduction in US infrastructure spend
• Portfolio management
• Product development and innovation
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 61
Strategic Report
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
Risk in 2025
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 groupwide 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 challenge the validity of the risks and their
mitigations and to identify any risks 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.
Risk analysis
The Audit Committee reviewed in depth feedback from the Risk
Committee on the Group’s Principal Risks. Following detailed
debate, the Committee concluded that the supply chain failure
Principal Risk should be amalgamated within the global
economic outlook and geopolitical environment Principal Risk,
with the remaining principal risks continuing to reflect the
Principal Risks the Group faces. An increase in the exposure
from the ‘Change in global economic outlook and geopolitical
environment’ and ‘IT systems failure and cyber’ Principal Risks
have been highlighted. The remaining Principal Risks have
remained stable. For further details see pages 63 to 66.
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 2025, the
Risk Committee identified, assessed and monitored emerging
risks. The results from our latest emerging risks identification
and assessment exercise were presented at the March 2026
Audit Committee. The prioritised emerging risks below will be
monitored throughout 2026 to determine which are covered by
existing initiatives, which require further mitigation plans, and
which require a watching brief. Whether these emerging risks
could amplify or exacerbate existing risks or if they should be
recognised as standalone risks in our corporate risk register will
also be considered.
Emerging risk Timescale
Escalation of geopolitical tensions impacting
supply chain and/or customer demand
Short (0-2 yrs)
Artificial Intelligence – opportunity & threat Short (0-2 yrs)
Shifting workplace preferences Medium
(3-5yrs)
Availability of raw materials Long (5yrs +)
Risk in 2026 and beyond
The key focus during 2026 will include:
• evaluation of operating company business continuity plans
considering the updated physical climate risk analysis by PwC
• 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 management continued
62
Group principal risks 2025
Risk Description and potential impact Mitigation
Reduction in US
infrastructure spending
Category: Economic &
market conditions
Risk appetite: Receptive
Risk movement: No
change
Our growth is supported by multi-year planned
government spending to upgrade US infrastructure,
support 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 US federal government administration.
Confidence also remains in private investment in
electricity transmission and distribution infrastructure.
• 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.
Change in global
economic outlook and
geopolitical environment
Category: Economic &
market conditions
Risk appetite: Balanced
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. Global events could negatively
impact our supply chains and the Group’s production
capacity, leading to an inability to meet customer
requirements.
Geopolitical tensions have heightened with the recent
conflict in the Middle East and tariffs under the US
federal government. We continue to monitor the risk in
terms of the impact on our supply chains, energy costs,
and end markets.
• The Group has a diverse portfolio of operating
companies with exposure to a range of
infrastructure and built environment end
markets.
• 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.
• Group procurement standards, including robust
due diligence of supply chain partners and the
requirement for dual sourcing where available.
Increase in competitive
pressure
Category: Economic &
market conditions
Risk appetite: Balanced
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. New
entrants to our markets could impact our market share
and margins.
• 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
Category: Operational
Risk appetite: Averse
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.
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 63
Strategic Report
Risk Description and potential impact Mitigation
Climate change
Category: ESG
Risk appetite: Balanced
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.
Climate change transition costs could also inflate the
price of the goods we purchase.
• Decarbonisation 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.
• Carbon emissions reduction 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 37 to
59.
IT systems failure &
cyber
Category: Operational
Risk appetite: Averse
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
2025, 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 2025.
• IT controls manual in place, mandating a robust
set of information security controls covering
basic cyber hygiene, system back-up procedures,
hardware/software protection, tabletop
exercises, and monthly security training for all
employees.
• Ongoing programme of IT controls compliance
reviews completed by Internal Audit.
Portfolio management
Category: Strategic
Risk appetite: Receptive
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 robustly 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 identified 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
Category: Strategic
Risk appetite: Receptive
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 technologies 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.
Group principal risks 2025 continued
64
Risk Description and potential impact Mitigation
Failure to attract, retain
and develop an
appropriately diverse,
skilled and experienced
workforce
Category: Operational
Risk appetite: Balanced
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.
• Training and development programme for high-
potential talent.
• Board-level review of succession planning
for senior leaders.
• Bespoke coaching and mentoring for identified
MD successors to support development.
• Training and development programme
for supervisors and line managers.
• Continued use of internships, apprenticeships
and other vocational courses for specialist
and technical roles.
• Annual engagement survey results inform
operating company and Group-level action plans
to improve engagement.
Prevention of harm or
injury to people
Category: ESG
Risk appetite: Averse
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 reduced by 9% to 0.3, but the 2025 target of
0.275 was not achieved.
• Launch of ‘I Own Safety’ cultural change
programme in 2026 to train every employee on
recognising safe and unsafe behaviours.
• 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.
• Monitoring and review of LTI rates with all LTI
incidents investigated and findings presented
to the Executive Committee.
• 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
Category ESG
Risk appetite: Averse
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 Business 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.
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 65
Strategic Report
Risk heatmap (net risk positions)
1 Reduction in US infrastructure spend
2 Change in global economic outlook
and geopolitical environment
3 Increase in competitive pressure
4 Product failure
5 Climate change
Impact
Likelihood
6 IT systems failure and cyber
7 Portfolio management
8 Product development and innovation
9 Attract, retain and develop our people
10 Health and safety
11 Compliance with laws and regulations
Operational Strategic Environmental, Social & Governance Economic & market conditions
Group principal risks 2025 continued
66
Non-financial and sustainability
information statement
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 58 and 59) and on our website.
Reporting
requirement
Policies and standards
which govern our approach Additional information See Page No.
Environmental
matters
• Environment Policy* • Sustainability Report including:
• Our sustainability strategy
• Protecting the World
• Saving and enhancing lives
• Sustainable governance
• Risk: TCFD
• Non-financial KPIs
37 to 59
Employees • Group Code of Business Conduct*
• Health and Safety Policy*
• Sustainability Plan including:
• Health, safety, and wellbeing
• Talent, development, and engagement
• Equity diversity, and inclusion
• Ethical conduct
• Non-financial KPIs
45 to 48
Human rights • Equal Opportunities & Diversity Policy*
• Board Diversity Policy*
• Data Protection Policy
• Modern Slavery Policy*
• Modern Slavery Statement
• Gender Pay
• Human rights
• Sustainability Plan including:
• Equity, diversity, and inclusion
45 to 48
Community • Individual subsidiary approach • Stakeholder engagement 32
Anti-bribery and
corruption
• Anti-bribery & Corruption Policy*
• Supply Chain Policy*
• International Competition Law Policy
• Gifts & Entertainment Policy
• Whistleblowing Policy*
• Sustainability Plan including:
• Ethical conduct
56 to 57
Description of the
business model
• Our Strategy
• Strategic framework and business model
— 2 to 21
Description of the
Principal Risks and
uncertainties and
impact of business
activities
• Strategic framework and business model
• Risk Framework
• Group principal risks 2025
— 2 to 21 and
60 to 66
Non-financial key
performance
indicators
• Employee engagement
• Diversity
• Lost time injury rate
• Greenhouse gas emissions
• Water and waste
— 58 to 59
Those policies marked with an asterisk can be found on the Company’s website hsgroup.com/who-we-are/governance/our-policies/
The Strategic Report on pages 2 to 67 was approved by the Board and signed on its behalf by:
Rutger Helbing
Chief Executive Officer
10 March 2026
Governance Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 67
Strategic Report
As a leading international provider of solutions that enhance the resilience of vital
infrastructure and the built environment, and as a responsible business, Hill & Smith PLC
believes that strong corporate governance is essential to create value for our stakeholders
and support our long-term sustainable success. Robust and proportionate governance
iscrucial for the successful delivery of our strategy.
The Governance Report consolidates governance reporting and provides context that explains how the Company’s governance
arrangements, and the Board’s activities, have contributed to the delivery of our strategy. As a result, you will find that governance
reporting may be found elsewhere in other section reports, including the section 172(1) statement on page 35.
Links between elements of the Governance Report and more detailed examples in the Strategic Report that seek to outline our
approaches to themes within the UK Corporate Governance Code are highlighted throughout.
Governance at a glance
Meeting attendance
During 2025, the Board met on ten occasions, the Audit Committee on four occasions, the Nomination Committee on eight
occasions and the Remuneration Committee onsix occasions. This table provides details of scheduled meetings and the
attendance of each Director.
Board
Audit
Committee
Nomination
Committee
Remuneration
Committee
Alan Giddins 10/10 N/A 8/8 6/6
Rutger Helbing 10/10 N/A N/A N/A
Hannah Nichols
1
3/3 N/A N/A N/A
Chris McLeish
1
2/2 N/A N/A N/A
Tony Quinlan 10/10 4/4 8/8 6/6
Farrokh Batliwala 10/10 4/4 8/8 6/6
Carol Chesney 10/10 4/4 8/8 6/6
Pete Raby 10/10 4/4 8/8 6/6
Leigh-Ann Russell
2
1/2 2/2 1/2 1/2
Gillian Tomlinson
3
6/7 2/2 4/5 3/4
1. Hannah Nichols stepped down from the Board on 14 April 2025, Mark Else attended Board meetings as interim CFO prior to Chris McLeish joining the
Board on 13 October 2025
2. Leigh-Ann Russell stepped down from the Board and all committees on 12 March 2025
3. Gillian Tomlinson was appointed to the Board and all committees on 25 March 2025 was unable to attend a Nomination Committee, Remuneration
Committee and Board meeting, due to commitments agreed prior to her appointment.
Governance highlights in 2025
• Announced the appointment of Nick Anderson as a
Non-executive Director and Chair designate
• Appointed Gillian Tomlinson as a Non-executive Director
andoversaw her onboarding and induction
• Appointed Chris McLeish as Chief Financial Officer
Major Board decisions in 2025
• Approved the commencement of a £100m share buyback
• Approved the refinancing of bank borrowing facilities
• Approved the Group’s Preliminary and Interim results
• Integration of Hill & Smith Inc.’s message board business
withNational Signal
68
Board diversity
(as at 31 December 2025)
The Board is committed to promoting the importance of
diversity, equity and inclusion across our business and we
remain committed to having a Board that is diverse in all
respects. A copy of our Board Diversity Policy, which outlines
our approach to diversity and inclusion in respect of the
Boardand its committees, can be found on our website at
www.hsgroup.com.
The Nomination Committee reviews the structure, size and
composition of the Board and its committees to ensure that an
appropriate balance of skills, diversity of thought, background
and working style is represented. It also considers the output of
the Board’s annual performance review relating to items within
its remit, including matters relating to Board composition. When
identifying suitable candidates for recommendation to the
Board, the Nomination Committee considers candidates on
merit, against objective criteria, having due regard to the
benefits of diversity and the current composition of the Board.
As at 31 December 2024, Board composition was 62.5% male
and 37.5% female. During 2025, two female directors stepped
down from the Board, with one female and one male director
appointed. Consequently at 31 December 2025, the Board
comprised 75% male and 25% female.
Board gender
Male 6
2Female
Board ethnicity
White
Ethnic group
7
1
Our governance framework
Hill & Smith PLC Board
Nomination
Committee
Audit Committee
Risk
Committee
Remuneration
Committee
Decarbonisation
Committee
Executive Committee
Group
Presidents
Operating
Company Boards
The Board is comprised of the Chair, Senior Independent Director, Non-executive Directors, the Group Chief Executive and the Chief
Financial Officer. Our Non-executive Directors bring to the Board independent judgement and experience of a wide range of financial,
commercial and industry experience. The Board is responsible collectively for ensuring leadership through effective review and
oversight. Board meetings are structured to allow discussion and decisions to be made on strategy and in accordance with items set
out in the matters reserved for the Board. It has delegated various operational decisions to several Board and management
committees. The following pages set out the responsibilities of the three main Board committees and their focus areas during the
year. The Schedule of Matters Reserved for the Board and the Terms of Reference of the Board committees can be found on the
Company’s website 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-level committee that reports directly to the Audit Committee to support the Audit Committee
and Board with their risk management and internal control responsibilities.
The Decarbonisation Committee is a management level committee that reports directly to the Executive Committee quarterly via the
Head of Sustainability. The Board receives updates at least twice a year which supports its oversight and development of the
sustainability strategy.
Each of our operating companies has its own leadership team reporting to the Group Presidents.
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 69
Governance
The report that follows, in conjunction with the Nomination,
Audit and Remuneration Committee reports, demonstrates what
I believe are the Group’s high standards of governance and
details our key activities and development throughout the year.
A strong andeffective corporate governance framework is
important to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.
The Board isfocused on making sure that our Governance
framework isaligned with stakeholder expectations and the
principles ofthe UK Corporate Governance Code 2024 (the ‘Code’).
Board changes in 2025
Hannah Nichols left the Board in April 2025. Following a
comprehensive search process, led by Russell Reynolds, an
external search firm with no connection to the Company or its
directors, Chris McLeish wasappointed by the Board as the
Group’s new Chief Financial Officer on 13 October 2025. I would
like to thank Mark Else, our Group Financial Controller, for taking
on the interim CFO role ahead of Chris joining.
Gillian Tomlinson joined the Board as a Non-executive Director
on 25 March 2025, following a comprehensive search process
also led by Russell Reynolds. Leigh-Ann Russell stepped down
from the Board on 12 March 2025, having relocated to the US.
Board changes in 2026
In November 2025 the Group announced that I would be
stepping down as Chair after the May 2026 AGM, having first
joined the Board in 2017. Following a thorough search process
undertaken by the Nomination Committee and led by Pete Raby
(independent Non-executive Director), the Board appointed Nick
Anderson as Non-executive Director with effect from March
2026 and Chair from the conclusion of the 2026 AGM. Nick will
also Chair the Nomination Committee.
Board skills and experience
A well-rounded, effective and entrepreneurial Board is
comprised of Directors with appropriate andcompatible skills,
knowledge and experience, 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 (see pages 72 to74).
Introduction to Governance
Incommencing all Board searches, webriefed the external
search firm based on the Board’s view of the additional skills
that would be additive to discussion and debate, and which
would enhance strategy and decision making.
In accordance with the Code and UK Listing Rules, we were also
conscious of the need to consider diversity in all its forms to
support effective decision making and reduce therisk of
groupthink. We therefore provided a clear brief tothesearch
firm to produce a diverse list of candidates, including gender,
ethnicity and personal attributes. Despite this, for both the CFO
and Chair searches, the standout candidates were both male.
As set out in my Chair Report, I have discussed Board diversity
with Nick Anderson, and he will be prioritising this in his first few
months as Chair.
Board effectiveness
We again undertook an internal questionnaire based 2025 Board
effectiveness review, with input from both the Board and senior
members of the Group’s management team. I am pleased 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 2026.
Alan Giddins
Chair
On behalf of the Board, I am pleased to present Hill& Smith PLC’s Governance Report
for the year ended 31 December 2025.
70
I am especially pleased that feedback from both the Board and
senior management supported the view that there was a culture
of openness in how the Board functions, the way in which it
discusses key issues and how it provides feedback to management.
UK Corporate Governance Code
The Statement of Compliance with the principles and provisions
of the Code can be found on page 76. The Board monitors
corporate governance developments at each meeting and the
Audit Committee are pleased with the progress with the
preparations for the implementation of Provision 29 which will
be reported on in the 2026 annual report.
Culture and values
Our decentralised model encourages an entrepreneurial culture
of accountability, responsibility and stakeholder loyalty. It allows
our operating companies to remain close to their end markets
and customers, and maintain their agility within their industry,
fostering innovation and excellent customer service.
The Board assesses culture throughout the year by listening and
responding to our various stakeholders. Considerations
included:
• the outcomes of the engagement survey
• health and safety policies, practices and key indicators
• customer satisfaction as part of operating company
presentations
• operating efficiency
• environmental considerations
• whistleblowing reports
• investor feedback through the executive directors
• undertaking site visits.
This year the Directors held a number of onsite employee
forums without management being present. This has helped to
gather valuable, honest feedback on the challenges that our
people face every day and the opportunities available for making
the Group a better place to work. Feedback from these sessions
was reported to the Board.
During the year we undertook a groupwide exercise to re-look at
our values. This was led by our CEO and approved by the Board,
with full engagement across our operating companies. This was
an extremely valuable exercise, culminating in an updated set of
values to be communicated across the Group. Further detail on
the work undertaken is set out on page 17.
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 2025, the Board has
received updates on whistleblowing cases at each of its
meetings, ensuring that appropriate responses and actions were
being taken and that appropriate training was in place to
support this.
Board visits
We place huge value on engagement with our stakeholders,
including our employees at all levels. During 2025, the Board
visited a number of sites tomeet with local management teams,
tour sites and schedule specific meetings with employees with
no management present. Formal visits include a presentation
from the operating company on its 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. Further
details of Board visits can be found on page 79.
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. During 2025, an ’I Own Safety’ initiative
was established as a formal vision for the Company’s safety
culture and related performance with the aim of improving
Health and Safety across the Group and our operating
companies. This programme was developed by the Head of
Health and Safety in each region, in alignment with the Executive
Committee and with Board oversight.
Sustainability continues to be of significant importance
toourstakeholders. The Board regularly receives sustainability
updates from our Group Head of Sustainability. In 2025, we
continued to work on key initiatives including overseeing US
sites continuing to switch to green electricity and with smart
burner and waste heat recovery being rolled out across the UK
galvanizing sites. Looking forward, we have identified a number
of initiatives and opportunities for sustainability improvements
in 2026. Further information about our sustainability progress is
onpages 37 to 59.
Key areas of focus for 2026
The Board will prioritise the following areas during 2026:
• Board diversity and long-term Board succession
• senior level talent and development
• further improvement in our approach to health and safety
• delivery of our key initiatives linked to greenhouse
gasreduction
Alan Giddins
Chair
10 March 2026
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 71
Governance
Board of Directors
Alan Giddins
Non-executive Chair
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qualified as a chartered accountant
with KPMG.
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.
Alan is also Chair of Watkin Jones plc.
Chris McLeish
Chief Financial Officer
Appointed to the Board:
13 October 2025
Chris joined the Group in October 2025
and prior to joining was CFO at Ibstock
plc. A Chartered Accountant, Chris brings
with him over 30 years of international
finance experience gained within
international companies such as
Tate&Lyle PLC. His expertise spans
manufacturing, media, and technology,
with demonstrable success in many
senior operational and financial roles.
In addition to his finance responsibilities,
Chris is also the Executive Director with
accountability for IT and cyber matters.
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.
72
Tony Quinlan
Senior Independent Non-executive
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.
Tony was recently appointed Chair of
NextEnergy Solar Fund Limited and is the
Senior Independent Director and Audit
Chair of Costain Group PLC. He has
served on the Board of Associated British
Ports and was Deputy Chair for the Port
of London Authority, where he also
chaired the Audit Committee.
Farrokh Batliwala
Independent Non-executive
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.
Committee membership
Nomination Committee Audit Committee Remuneration Committee Chair
Carol Chesney
Independent Non-executive
Appointed to the Board:
1 January 2024
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.
Since April 2018, Carol has served as
aNon-executive Director and Chair of
theAudit Committee of Hunting plc.
Inaddition, she is Senior Independent
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, where she
also served as Audit Committee Chair.
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 73
Governance
Pete Raby
Independent Non-executive
Appointed to the Board:
2 December 2019
Pete is an engineer by background
withadegree and PhD in electronic
engineering from the University of Leeds.
Pete serves as a Non-executive Director
at Chemring Group plc. Pete was CEO
ofMorgan Advanced Materials plc
from2015 to 2025. Prior to that, he
heldvarious roles at Cobham plc,
andbefore that he was a partner at
McKinsey & Company.
Gillian Tomlinson
Independent Non-executive
Appointed to the Board:
25 March 2025
Gillian is an accomplished business
leader with over 25 years of experience
driving growth and transformation
globally. She brings expertise in digital
technologies, data and AI, IT/information
security, and innovation, witha proven
track record of shaping strategies that
deliver sustainable value and advantage
across developed and emerging markets.
Currently Chief Data & Digital Officer at
Weir Group PLC, Gillian has led
enterprise-wide programmes that unlock
innovation, enhance performance, and
strengthen resilience.
Previous roles include Chief Data Officer
at both RSA Insurance Group PLC and
Whitbread PLC, Enterprise Data Change
Programme Manager at HSBC HTS
Global Banking, and Markets and Head of
Data Quality, Commercial Chief Operating
Officer at Lloyds Banking Group.
Karen Atterbury
Group Company Secretary
Appointed:
19 August 2024
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.
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.
Board of Directors continued
74
Rutger Helbing
Chief Executive Officer
See page 72
Nick Adcock
Group President – UK and India
Appointed:
March 2024
Nick has held senior roles in the
automotive, industrial and energy
sectors. He was formerly Divisional MD
of Trillium Flow Technologies, an
engineered flow control group. Prior to
that Nick had 12 years with IMI plc
running different businesses, latterly as
President of the IMI CCI group of
companies. Nick is a Non-executive
Director at Vexve Oy.
Chris McLeish
Chief Financial Officer
See page 72
Tim Tehan
Group President – US
Appointed:
March 2024
Tim was formerly a regional president
within CRH Americas Materials, a
vertically integrated building materials
supplier in North America. Prior to CRH,
Tim held commercial and general
management roles at Sensata
Technologies, a leading supplier of
power management solutions, and
program management and corporate
development roles at Eaton Corporation,
a diversified industrial manufacturer. He
began his career as an Officer in the
United States Army serving both
domestically and overseas.
Joel Whitehouse
Corporate Development Director
Appointed:
October 2006
Joel has held a number of roles in the
Group and is currently responsible for
mergers and acquisitions. Prior to joining
Hill & Smith, Joel was a Senior Finance
Manager for HSBC’s Global Commercial
Banking division based in London and
Hong Kong and spent four years in
Corporate Finance at Old Mutual
Securities.
Karen Atterbury
Group Company Secretary
See page 74
Executive Committee
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 75
Governance
Governance Report
The Board is responsible for the effective governance of Hill & Smith PLC and for the Group’s
governance framework. The Board sets the Group’s strategy, while overseeing and monitoring
management performance and the Group internal control and risk framework.
UK Corporate Governance Code and Compliance Statement
The new UK Corporate Governance Code was published in 2024 (the ‘Code’) which is issued by the Financial Reporting Council
andisavailable at www.frc.org.uk.
The principles and provisions of the Code apply to the financial years beginning on or after 1 January 2025, the exception being
Provision 29 (which relates to the monitoring of the Company’s risk management and internal control framework), which is effective
for accounting periods beginning on or after 1 January 2026. Hill & Smith PLC is a company listed on the London Stock Exchange
andisrequired to report under the applicable Code to assess governance arrangements. Our Board Governance report reflects the
requirements of the Code in force as at 31 December 2025 and during 2025, the Company complied with the principles and
provisions of the Code.
Hill& Smith PLC has assessed its application of the Code under theheadings detailed below:
Page
1. Board leadership and company purpose
A. Effective Board Page 82
B. Purpose, values, strategy and culture Pages 71 and 87 to 90
C. Governance framework and controls Page 69
D. Stakeholder engagement Pages 30 to 34
E. Workforce policies and practices Pages 46 to 48
2. Division of responsibilities
F. Board roles Page 79
G. Independence and division of responsibilities Page 79
H. Non-executive Director responsibilities Page 79
I. Board key activities Pages 87 to 90
3. Composition, succession and evaluation
J. Appointments to the Board Pages 91 to 94
K. Board skills, experience and knowledge Pages 72 to 74
L. Annual evaluation of the Board Pages 82
4. Audit, risk and internal control
M. Financial reporting and internal and external audit Pages 95 to 101
N. Assessment of the Company’s position and prospects Page 84
O. Risk management and internal control framework Pages 95 to 101
5. Remuneration
P. Remuneration aligned to company purpose and values and linked to strategy Pages 102 to 129
Q. Remuneration Policy Pages 107 to 118
R. Remuneration linked to performance Pages 102 to 129
76
Board leadership and company purpose
About the Board
One of the Board’s principal roles is to provide strategic
leadership to the Group. The Board establishes the purpose,
strategy, culture and values of the Group and is collectively
responsible for its long-term success. The Group has a clear
purpose, which is embedded in the Board’s thinking.
Our operating companies
Hill & Smith PLC is committed to high standards of governance
across the Group. The Group is comprised of the holding
company and its principal operating companies, listed on pages
226 and 227. 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, who are members of the
Executive Committee, alongside the Chief Executive Officer,
Chief Financial Officer, the Group Head of Corporate
Development and the 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 (supplemented by ad hoc meetings as necessary),
discussions and site visits. Updates are regularly provided at
Board meetings by individuals including the Chair, Committee
Chairs, the Chief Executive Officer, the Chief Financial Officer
and the Group Company Secretary. The Board is directly
supported bythree committees: Audit; Nomination; and
Remuneration. Membership of these committees is set out
onpages 72 and 74 of this report.
The scope of Board decisions
The Board oversees the Group with reference to a formal
schedule of matters reserved for the Board, which details
matters considered to be of significance to the Group due
totheir strategic, reputational or financial importance or
consequence. These include:
Strategy
• Group strategy and operating plans
• Business development including acquisitions
anddivestments
• Capital allocation
Performance and reward
• Approval of annual budgets
• Review of monthly performance
• Setting appropriate remuneration structures
Internal control
• Risk management, internal controls, financial reporting and
audit
• Compliance with laws and regulations
• Cyber security
Environmental, social and governance
• Corporate governance
• Ethical standards
• Health and Safety
• Environmental matters
• Succession planning
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 s.172 Statement can be
found on page 35 of this report.
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
Chief Executive Officer and Chief Financial Officer met with
institutional shareholder representatives in the UK, Europe and
US. 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.
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 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 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, as they did in advance
ofthe2025 AGM. 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.
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Hill & Smith PLC | Annual Report and Accounts 2025 77
Governance
Engagement with employees
The Board is cognisant of provision 5 of the Code and has spent
time considering the most appropriate method to engage
withits employees. The Board made the decision to initiate a
programme of workforce meetings and site visits involving
Non-executive Directors. These were led by the Chair and
involved visiting four of our operating companies, including
Whitlow Electric which was acquired in 2024.
Feedback during these meetings has been valuable in informing
the Board’s views of Group culture and the matters important to
employees. More information can be found in the Stakeholder
engagement on page 30.
Hill & Smith PLC 2026 Annual General Meeting
The Hill & Smith PLC 2026 Annual General Meeting (‘AGM’) will
be held at Cranmore ParkConference, Event & Exhibition Centre,
Cranmore Avenue, Shirley, West Midlands, B90 4LF at 11.00am
on Thursday 21 May2026.
The Company welcomes the attendance of shareholders
attheAGM, where the Directors will be available to answer
questions on the business of the meeting and the performance
of the Group. The details of the AGM can be foundin the Notice
of Meeting.
The Company’s Annual Report and 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 structure
PLC Board
Nomination Committee
The Nomination Committee
comprised the Chair oftheBoard,
the 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Nomination Committee can be
found in theCommittee’s report
onpages 91 to 94.
Audit Committee
The Audit Committee comprised the
Chair ofthe Committee and the
other 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 pages
95 to 101 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pages 95 to 101.
Remuneration Committee
The Remuneration Committee
comprised the Chair of
theCommittee, the Chair of the
Board and the other 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
Remuneration Committee can be
found in the Committee’s report
onpage 102 to 129.
Governance Report continued
78
Division of Board responsibilities
Summary
There is a clear division of responsibilities between the Chair,
the Senior Independent Director andthe Chief Executive Officer
which is set out in writing and available on our website.
Alongside is the terms of reference of each Board Committee
and the schedule of matters reserved for the Board’s attention.
Each of these documents is reviewed and approved by the
Board annually.
The Chair is responsible for the leadership and effective working
of the Board in directing the Company. The relatively 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 Senior Independent Director is available to shareholders
ifthey have concerns which contact via the Chair or Chief
Executive Officer has failed to resolve. Additionally, they act
asasounding board to the Chair.
TheExecutive Directors provide information to the Board via
their regular written reports and the presentation of proposals
for Board approval.
The Non-executive Directors have no managerial responsibility
within the Group, are ineligible for any performance 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.
In the instance where the Directors may have concerns about
the operation of the Board or management of the Company that
cannot be resolved, their concerns are recorded in the Board
minutes. On instances of resignation, Non-executive Directors
are asked to provide a written statement to the Chair for
circulation to the Board if they have any such concerns. In 2025
the Directors had no such concerns.
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. It reviews progress against the strategic
objectives, formulates budgets and proposals on strategy and
resource allocation, and receives regular reports on human
resources, Health and Safety, internal audit, compliance and
whistleblowing, legal, investor relations andcorporate affairs.
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.
Further detail of these site visits in 2025 can be found on page 89.
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Hill & Smith PLC | Annual Report and Accounts 2025 79
Governance
Composition, succession and evaluation
The Board comprises of the Chair, theChiefExecutive Officer, the
Chief Financial Officer, the Senior Independent Director (‘SID’)
andfour independentNon-executive Directors. The individual
biographies ofthe Board members can be found on pages 72 to
74. At31 December 2025, 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.
In accordance with the Code and on the recommendation of the
Nomination Committee, each Director will stand for election or
re-election at the Group’s 2026 AGM.
Board profile
The 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), alongside different lengths of tenure,
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.
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 company board and
overseenby the Group Presidents.
Board conflicts of interest
The Board has a formal approach for dealing with conflicts of
interest 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 its 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 impact.
Conflicts of interest are a standing item onthe Board agenda, in
addition to being subject to an annual review process.
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72to74.
Independence
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.
Support available to the Board
The Board is supported by the Group Company Secretary,
whoensures that adequate communication and information
flow takes place 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. The Group Company Secretary also ensures
that the Board has the necessary policies, processes, information,
time and resources that it needs to function effectively.
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 controls 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 under review.
Governance Report continued
80
Group diversity
The Board is committed to ensuring that recruitment 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 understands that greater diversity
in the workforce will enhancethe quality of decision making
through differing viewsand backgrounds.
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
more focus is required to achieve greater diversity across the
Group. We will review our various initiatives, including ensuring
that hiring processes do not discourage or discriminate against
diverse candidates.
Board diversity
The Board Diversity Policy provides an overview of the Board’s
approach to diversity and inclusion in respect of the Board and
its committees. A copy of our Board Diversity Policy is available
on our website at www.hsgroup.com. The Board is keen to
ensure that its membership reflects diversity in a broad sense,
and new appointments and succession plans are made
basedon merit, factoring in diversity of skills, experience,
demographics, education, professional background and other
personal attributes, to ensure the Board has a range of insights
and perspectives for challenge needed in decision making.
On 31 December 2025, Board membership was 12.5% ethnically
diverse and comprised 25% female and 75% male. The Board
has therefore met the Parker review target of having atleast one
individual from a minority ethnic background.
On 31 December 2024, the Board had 37.5% female directors
with a female CFO. As shown in the table below, with the
departure of two female directors during the year, the Company
does not currently meet the UK Listing Rules target of 40%
female, nor is one of the senior Board positions (Chair, Chief
Executive Officer, Senior Independent Director or Chief Financial
Officer) held by a woman. The Board is committed to ensuring
that it has the right balance of skills, views and experience
among its Directors and it believes in the benefits of diversity.
However, it is important in any role search, to ensure that the
right candidate is appointed from the candidates that present
themselves for consideration.
As set out in the Chair’s Report, consideration of Board diversity
will be a key priority for the new Chair.
Formore details see the table below.
Gender representation (as at 31 December 2025)
Number
of Board
members
Percentage
of the Board
Number of senior
positions on the Board
(Chair, CEO, CFO and SID)
Number in executive
management
1
Percentage
of executive
management
1
Men 6 75% 4 3 75%
Women 2 25% — 1 25%
Not specified — — — — —
Ethnic representation (as at 31 December 2025)
Number
of Board
members
Percentage
of the Board
Number of senior
positions on the Board
(Chair, CEO, CFO and SID)
Number in
executive
management
1
Percentage
of executive
management
1
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).
For the purposes of the FCA Listing Rules, gender identity and ethnic background are reported in the tables above. This information
has been collated by questionnaire from each Board member or senior manager.
The Group includes in its Annual Report and Accounts, 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 48 formore details).
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Hill & Smith PLC | Annual Report and Accounts 2025 81
Governance
Director induction, training and development
The Board has refreshed its induction procedures during the year
with all new Directors being provided with a tailored induction
programme. Further information can be found on page 94.
Directors are also given 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.
Director training included attendance at seminars, forums,
conferences and working groups, as well as the provision of
information from the Group Company Secretary and subject
matter experts.
Evaluating the Board’s performance
2024 outcomes
The 2024 Annual Report and Accounts outlined the results
oftheBoard’s internal evaluation of its own effectiveness which
was led by the Chair and Group Company Secretary. The Board
reviewed progress against the recommendations with the
following outcomes:
• The Group’s purpose had been refreshed
• The Non-executive Directors have engaged with members
ofthe senior leadership teams outside meetings and
engagement mechanisms have enabled discussions with
awider cross section of the workforce
• Oversight of resource and succession planning had developed
with more visibility at Board level
2025 evaluation
TheBoard again undertook an internal effectiveness review led
by the Chair and the Group Company Secretary. The evaluation
was conducted by means of confidential online questionnaires.
The results of the evaluation exercise indicated that the Board
continued to be highly performing. Additionally, the feedback
from senior management was overwhelmingly positive with the
Board being seen as a cohesive Group that works well and
makes effective decisions. It was clear that good progress had
been made on the previous review with notable improvements
being seen in many key areas. The Board agreed the following
priorities for 2026:
• Further review of the Group’s ESG goals and objectives
• Additional emphasis on talent management
• Further opportunities to develop Director training and
development as part of the Board events programme
Each Committee considered its own results and agreed
anaction plan for 2026.
Audit, risk and internal control
There is a strong framework of internal controls, and the work
ofour Internal Audit team provides assurance to the Board that
Hill& Smith is a well-run company.
Internal audit
During 2025, our Internal Audit team conducted audits across
thebreadth ofour business, including compliance reviews
against the Group Financial Controls and Group IT Controls
Manuals. TheAudit Committee received updates arising out
ofeach internal audit and also reviewed and approved the
annual audit plans for 2026 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 is 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 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). There is also a six-monthly
report on operating company risk management, updates on the
corporate risk register, and the status of the groupwide 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.
Governance Report continued
82
This process has been in place throughout 2025, 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
• The embedding of a senior management top-down approach
to complement the work of the Risk Committee
More information on the Group’s principal risks areshown on
pages 63 to 66.
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 Code for the year ended 31 December 2025, and up to the
date of approving the Annual Report and financialstatements.
Looking ahead, Provision 29 of the Code will require the Board
to monitor the Group’s risk management and internal control
framework and provide a declaration in the annual report as to
the effectiveness of the Group’s material controls. The Audit
Committee hasbeen considering management’s proposals for
identifying ‘material controls’ for these purposes within the
Group andthereporting to the Audit Committee on the
effectiveness of those controls, ahead of implementation of the
new rules andreporting.
Additionally, the Board:
• Ensured maintenance of a sound system of internal control
and risk management
• 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
• Reviewed the adequacy of the Group’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
• Approved relevant policies as appropriate
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 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 pages
95 to 101.
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Hill & Smith PLC | Annual Report and Accounts 2025 83
Governance
Longer-term outlook and Viability Statement
The Directors have considered the prospects of the Group over the
four-year period immediately following the 2025 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 22 to 23, and in addition net debt, liquidity and
financing requirements. In conducting the review of the Group’s
prospects, the Directors assessed the 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 67). 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 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:
• 25% decrease in revenues in the Group’s larger US platform
businesses, reflecting the importance of US infrastructure
spend to the Group’s strategy
• 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 2025, with a borrowing facility
headroom of £346.5m and a history of strong cash generation,
with cash conversion averaging in excess of 80% over the last
10 years. The Directors also noted that the assessment included
an assumption that the Group will repay the $70m of Senior
Unsecured Notes that are due to mature in June 2026 and June
2029, and that the Group expects to buy back shares at a cost
of c.£80m during 2026 and the early part of 2027 in line with
previous announcements.
Whilst the Group’s core bank borrowing facility matures in
November 2029, shortly before the end of the assessment
period, the Directors noted that the agreement includes a
one-year extension option, and based on past experience and
normal market practice, they have a reasonable expectation that
the facility will be extended or renegotiated before that date.
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 2029.
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 2025 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 the Auditor
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2025, 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
135 andthe Independent Auditor’s Report on pages 136 to 146.
Governance Report continued
84
Executive pay
Salary
Short-term annual bonus, including
a50% deferred bonus
Three-year long-term incentive
arrangement, plus two year holding
period for Executive Directors
Executive Director salary package
Executive Director pay arrangements are made up of three
elements as set out in the graphic below, comprising salary, a
short-term annual 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 its
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105 of the Group’s
Remuneration Report.
Remuneration
About our Remuneration Policy
The current Directors’ Remuneration Policy was last approved
byshareholders at the 2023 AGM and will therefore next be
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; and 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
do not reward failure.
The Directors’ Remuneration Policy is created to align with
Company purpose and values and its implementation is tailored
to concentrate on the Group’s Strategic priorities. The Directors’
Remuneration Policy can be found on pages 107 to 118, while
the Directors’ Remuneration Report on pages 102 to 129 sets
out the remuneration of the Executive Directors for 2025 and
how the policy will be implemented in 2026.
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 85
Governance
Site visits and engagement
The Board ensures it provides clear, responsible leadership to the Group. In order to
do so it believes in the importance of listening to its workforce to inform decision-
making. It therefore holds meetings at operating companies each year and conducts a
number of site visits.
The Board’s interaction with key stakeholders is set out onpages 30 to 34. 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 pages 35 and 36.
From left to right: Tim McCarty – EHS Manager, Tony Quinlan – NED, Tim Tehan – Group President US
86
Board activities
This section gives details on how the Board has spent its time in meetings during 2025, andwhich stakeholders have been
represented in our thinking.
We have also demonstrated which of our principal risks have been addressed and how these items have been supported in our
strategic priorities and outcomes.
Relevant strategic priorities
1
Market leadership
2
Structural growth
3
Sustainability
4
Entrepreneurial culture
5
High and improving returns profile
6
Disciplined capital allocation
Relevant principal risk group
1
Operational
2
Strategic
3
Environmental, social and governance
4
Economic and market conditions
Relevant stakeholder group
1
People
2
Companies
3
Local communities
4
Suppliers
5
Customers
6
The environment
7
Shareholders
Board activity Key decisions and outcomes
Relevant strategic priority,
risk and stakeholders
Strategy
Review of strategic plans
Reviewed the strategic plan,
including receiving regular
updates on progress, and
considered any new initiatives or
adjustments.
The Board monitored progress
against strategic initiatives and
considered dynamic portfolio
management to align with
current strategy.
• Received updates from Group businesses, enhancing the Board’s
understanding and providing challenge and guidance to operating
companies.
• Strategic plan and people plan considered and agreed.
• AI and IT strategy and management explored.
• Evolved M&A strategy agreed including adjacency horizon
scanning covered at the strategy meeting.
1
2
4
5
1
2
1
2
7
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Hill & Smith PLC | Annual Report and Accounts 2025 87
Governance
Board activity Key decisions and outcomes
Relevant strategic priority,
risk and stakeholders
Governance
Board and management changes
Reviewed the Board
composition and received
recommendations from the
Nomination Committee on
appointments to the Board and
Committees
• Considered and approved the appointment to the Board of an
additional Non-executive Director, Gillian Tomlinson.
• Considered and approved the appointment of anewCFO, Chris
McLeish.
• Considered and approved the appointment ofNickAnderson as
Chair.
• Managing Director succession planning undertaken.
• Nomination Committee discussed Executive Committee
succession and plans agreed.
1
4
2
3
1
2
7
Board composition and effectiveness
Annual review undertaken to
assess Board and Committee
performance as well as the
performance of the Chair and
individual directors
• Conducted an internal evaluation of the performance of the Board,
its committees and of individual Directors and considered its
results.
• Agreed objectives and improvement actions for the Board and
monitored progress against the previous year’s action plan.
1
4
2
3
1
7
General governance and Committee oversight
The Board received regular
updates from each of its
Committees
• Deliberated and opined on recommendations received from its
Committees.
3
4
5
6
1
2
3
4
1
2
7
Approved potential conflicts of
interests and reviewed the
register of actual and potential
conflicts.
• Ensured openness and full disclosure to maintain the integrity of
decision making.
• Considered and re-affirmed that the Non-executive Directors
remain independent.
1
2
4
2
1
2
4
5
7
Relevant strategic priorities
1
Market leadership
2
Structural growth
3
Sustainability
4
Entrepreneurial culture
5
High and improving returns profile
6
Disciplined Capital Allocation
Relevant stakeholder group
1
People
2
Companies
3
Local communities
4
Suppliers
5
Customers
6
The environment
7
Shareholders
Relevant principal risk group
1
Operational
2
Strategic
3
Environmental, social and governance
4
Economic and market conditions
Governance Report continued
88
Board activity Key decisions and outcomes
Relevant strategic priority,
risk and stakeholders
People and culture
Health and Safety
Monitored Health and Safety
performance and agreed
improvements in policy and
practice
• 9% reduction in lost time incident rate.
• Considered and approved the implementation of a safety culture
initiative to be implemented in 2026.
3
4
1
3
1
2
3
Employee engagement
Ensured that a formal method of
employee engagement is in
place. Considered employee
feedback in decision making.
See page 78
• Discussed the themes arising from the 2025 employee
engagement survey. Took into account employee views and
opinions.
• Agreed new employee engagement mechanism and met with
employees across the Group, including a cross-section of
employees at The Paterson Group, Whitlow Electric, Birtley and
Lionweld Kennedy, to obtain direct feedback from colleagues.
Feedback covered areas including Health and Safety, investment,
benefits and HR and Reward and appropriate actions agreed.
3
4
1
3
1
2
Values
Considered Group values • Established Group values with further work to be undertaken in
2026 to streamline and communicate across our operating
companies.
1
3
4
1
3
1
2
3
4
5
Culture and conduct
Monitored the Group’s culture,
including metrics on employee
engagement, attrition and
conduct matters
• Tested how embedded culture is, through meeting colleagues
throughout the business.
• Discussed the employee engagement findings.
2
4
1
3
1
2
Stakeholder engagement
Listened to the views of a range
of stakeholders through
consultations and engagement
and considered their
requirements as a whole
• The Chief Executive Officer and Chief Financial Officer met with
institutional shareholder representatives in the UK, Europe and US.
• The Board received reports from the Company’s brokers and
financial public relations agency detailing feedback from
shareholders following the Group’s results announcements.
• The Board met with shareholders at the 2025 AGM and reviewed
the 2025 AGM proxy results and engaged with proxy
recommendation agencies.
• Received regular updates regarding employee relations,
apprenticeships and succession planning across the Group.
2
4
3
1
2
Sustainability
Oversaw the Group’s ESG and
sustainability activities,
reporting processes, controls
and disclosures
• The Board received sustainability updates and discussed key
Group sustainability initiatives.
• Received and approved the sustainability plan for inclusion in the
Annual Report and Accounts.
• Received regular updates on the Group’s sustainability
performance.
• The Remuneration Committee approved sustainability targets for
inclusion in the Annual Bonus and LTIP Schemes.
3
5
3
6
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 89
Governance
Board activity Key decisions and outcomes
Relevant strategic priority,
risk and stakeholders
Financial reporting, risk and internal controls
For further information please see our section on risk management on pages 60 to 62 of this report, our Audit Committee Report on
pages 95 to 101 along with the financials on pages 136 to 222
Principal and emerging risks
Approved principal and
emerging risk disclosures
• Performed a robust assessment of the Company’s principal and
emerging risks.
• Approved the risk management disclosures.
• Considered the Group’s risk appetite, following recommendation
from the Audit Committee.
1
2
3
5
2
4
1
2
4
5
6
7
Effectiveness of internal controls
Reviewed the effectiveness of
the risk management and
internal control framework
• Monitored the effectiveness of the risk management and internal
control framework.
• Concluded, supported by a recommendation from the Audit
Committee, that the Group’s internal control environment had
operated effectively during 2025.
• Received updates on the Group’s approach to the identification and
monitoring of material controls.
3
5
3
4
2
4
7
Financial reporting
Approved Group financial results
and disclosures
• Reviewed the 2024 performance and results and approved the
Annual Report and Accounts.
• Approved results announcements and trading updates.
• Recommended a final dividend and approved an interim dividend in
line with dividend policy.
1
5
6
4
1
2
7
Other financial matters • Approved and commenced a £100m share buyback programme.
• Approved the annual budget.
• Approved an extension of the Group’s revolving credit facility.
2
5
6
1
2
4
1
2
7
Relevant strategic priorities
1
Market leadership
2
Structural growth
3
Sustainability
4
Entrepreneurial culture
5
High and improving returns profile
6
Disciplined Capital Allocation
Relevant stakeholder group
1
People
2
Companies
3
Local communities
4
Suppliers
5
Customers
6
The environment
7
Shareholders
Relevant principal risk group
1
Operational
2
Strategic
3
Environmental, social and governance
4
Economic and market conditions
Governance Report continued
90
Nomination Committee Report
Alan Giddins
Chair
I am pleased to present the Nomination Committee Report for the
year ended 31 December 2025.
“The Nomination Committee is responsible
for the identification of skills to support the
achievement of strategy and ensuring that
the Group is led by high performing
individuals with the optimum blend of skills
for long-term value creation.”
Board changes
A substantial part of our work during the year has been
focussed on Board and Committee composition and overseeing
changes to Board roles. We have announced a number of
Director appointments duringthe year, with the appointment
process led by the Nomination Committee.
I will be standing down from the Board at our AGM in May 2026
when I will have completed nearly nine years on the Board. Led
by Pete Raby, the Committee undertook a thorough external
search for my replacement, which included a diverse list of
candidates provided by Russell Reynolds. We were delighted to
appoint Nick Anderson who will be joining the Board on
11 March 2026 as a Non-executive Director, taking over from me
as Chair of the Board and Nomination Committee following the
AGM.
Following the resignation of Hannah Nichols, the Nomination
Committee undertook a recruitment process for a new CFO.
Wewere pleased to appoint Chris McLeish to the role with
effect from 13 October 2025. Chris joined the business from
Ibstock PLC and brings to the Board experience of a wide range
of international financial leadership roles, including in the US.
The Board was also pleased to appoint Gillian Tomlinson to the
Board as a Non-executive Director with effect from 25 March
2025, following the departure of Leigh-Ann Russell due to her
relocation to the US. The Nomination Committee undertook
askills assessment of the Board which identified the benefit of
additional skills in IT and Data Security. As Chief Data & Digital
Officer for The Weir Group PLC, Gillian brings with her extensive
skills in IT and cyber security which are hugely beneficial
totheBoard and the Group as a whole.
Part of our role is to oversee the pipeline for succession to
senior management positions and as such our role extended to
undertaking a succession planning exercise for Executive
Committee roles.
Diversity and inclusion
We understand the importance of achieving a balance of skills,
experience, gender and personal strengths on the Board to
support effective decision making. During the year the
Committeereviewed its Board Diversity Policy which is available
on the Group website. Prior to appointing Russell Reynolds as
the lead search agent for the candidate searches undertaken
during the year, the Committee had a full discussion on the
benefits of diversity and the requirements set out in the UK
Listing Rules. Specific instructions were given that diverse lists
of candidates should be presented for each search. Further
information on these search processes can be found on page 93.
Following the departure of Hannah Nichols and Leigh-Ann
Russell from the Board, and the appointment of Gillian
Tomlinson, the gender balance is 25% female and 75% male.
The Committee will be actively looking to improve diversity of
the Board over the next 12 months.
The Group’s diversity statistics as required by the UK Listing
Rules are set out on page 81.
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 91
Governance
Nomination Committee Report continued
Priorities for 2026
Our key priorities for 2026 are:
• Review diversity and inclusion initiatives operating throughout
the Group and specifically consider gender diversity at the
Board level
• Continue to refine Board and senior leadership succession
plans and development plans
• Review succession planning mechanisms at operating
company level to ensure the strength, breadth and diversity of
the talent pipeline
The following report sets out in detail the work that we have
undertaken during the year under review.
Alan Giddins
Chair
10 March 2026
Board skills matrix (as at 31 December 2025)
The Directors bring a broad range of experience and skills to support the Group’s growth strategy.
43 5 6 7 8
Number of skilled Board members
Financial expertise
Leadership & executive management
International business
Sales, marketing
and commercial
Strategic
thinking
Health & safety management
and oversight
Risk management
and assurance
Human resources
Sustainability
Investor relations
Engineering, product
development and design
Public sector and
government strategy
Manufacturing
and operations
Mergers &
Acquisitions
Compliance oversight
Digital and information
technology strategy and
governance
92
Board appointment process
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 inclusion and equal opportunity.
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 consideration
• each candidate, including any internal candidates, 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 recommend
the candidate’s appointment to the Board
• the Board discusses and approves the appointment
This process was used in the appointments of Gillian
Tomlinson, Chris McLeish and Nick Anderson. When dealing
with the appointment of the new Chair of the Board and
Committee, the Committee was chaired by Pete Raby,
Independent Non-executive Director. Russell Reynolds, who
have no connection to the Company or its Directors, undertook
all the searches for the vacancies during the year.
Where appropriate internal candidates were also considered
aspotential candidates to ensure the best possible Board
appointment.
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 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. Further information is available on
page 116.
Skills review
The Board skills review was updated 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.
Theaddition of Gillian Tomlinson to the Board has strengthened
the Board’s skills in IT and cyber security.
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.
Key activities and areas of focus
The Nomination Committee aims to spread matters delegated
to it by the Board across its meetings, so that all items are
considered during the year. The Committee confirms that it has
completed the items delegated to it during the year under
review.
The key activities and areas of focus of the Nomination
Committee during the year were:
• oversaw the recruitment of Gillian Tomlinson as Non-
executive Director
• oversaw the recruitment of Chris McLeish as CFO
• oversaw the recruitment of Nick Anderson as Non-executive
Director and Chair designate
• updated the Board’s skills matrix for the Board changes
madeduring the year
• focused on Executive Committee succession planning,
supplemented by Board discussions on succession planning
within the operating companies
Membership and attendance at meetings
The Nomination Committee was chaired by Alan Giddins during
the year, except when it was dealing with his own succession,
atwhich time, it was chaired by Pete Raby. Appointments
to the Nomination Committee are made by the Board. Details of
the members and their attendance at meetings are set out on
page 68.
This composition continues to meet the Code requirement that
the majority of the members are independent Non-executive
Directors. 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 advisors
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.
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 93
Governance
Board induction
Following their appointment to the Board, each new Director
receives a detailed induction pack and tailored induction
programme relevant to their experience, expertise and
committee membership. In particular, new Directors are actively
encouraged to visit 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.
As part of the induction programme, each new Director will
typically meet other Board members, members of the Executive
Committee, senior management team and key external advisors
including the Company’s Auditor, joint brokers and
Remuneration advisor.
Key topics include:
• Business and market overview
• Board insights, expectations, current issues and priorities
• Group policies, values and ethical matters
• Site visits to operating businesses
Following Chris McLeish’s appointment, the above programme
was supplemented with additional site visits to the Group’s US
and UK businesses and discussions with key people throughout
the Group.
Retirement and re-election
The Company’s 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. However,
incompliance with the UK Corporate Governance Code, all
Directors will be subject to re-election at this year’s AGM except
for Alan Giddins who willstep down from the Board.
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 and their individual performance
throughout the year.
Following review, the Board, supported by the Nomination
Committee, is of the opinion that each Director putting
themselves forward for election or 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.
Succession planning
Various succession planning discussions have taken place
during the year specifically as part of the consideration of Board
appointments. Succession planning discussions have also been
held for Executive Committee and senior management roles
with full consideration given to diversity performance.
This report forms part of the Corporate Governance Report
andis signed on behalf of the Nomination Committee by:
Alan Giddins
Chair
10 March 2026
Nomination Committee Report continued
January to March
• Oversaw the recruitment of Gillian Tomlinson as
Non-executive Director and recommended her
appointment to the Board
• Considered and recommended to the Board the
Nomination Committee Report for inclusion in
the Annual Report and Accounts
• Reviewed the structure and composition of the
Board
• Reviewed and updated the Committee’s terms of
reference
• Reviewed the time commitment of the Non-
executive Directors
• Reviewed the role descriptions of the Chair, CEO
and Senior Independent Director
• Considered and approved the policy on approving
external appointments
• Reviewed the results of the Committee
effectiveness review and those elements of the
Board performance review as they relate to size,
diversity and composition of the Board.
April to June
• Oversaw the recruitment of Chris McLeish as
CFO and recommended his appointment to the
Board
July to September
• Reviewed Board skills and experience
October to December
• Oversaw the recruitment of Nick Anderson as
Non-executive Director prior to taking the office
of Chair of the Board and Nomination Committee
and recommended his appointment to the Board
94
Audit Committee Report
Carol Chesney
Chair
I am pleased to present my report as Chair of the Audit Committee.
This report is intended to give an account of the Committee and its
activities for the year.
“In January 2026, the Audit Committee
approved the internal audit plan for the coming
year which includes assessment of the Group’s
material controls in preparation for our UK
Corporate Code Provision 29 declaration.”
The business model of Hill & Smith delegates substantial
authority to the operating companies, which enables an
entrepreneurial approach. Each operating company is
responsible for ensuring that it has an effective set of internal
controls and a robust control environment, which place
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 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 remain a key focus area for the Committee resulting in
the current investment plan in ongoing security enhancements.
In January 2026, the Audit Committee approved the internal
audit plan for the coming year which includes testing of the
Group’s material controls in preparation for our UK Corporate
Governance Code Provision 29 declaration required for 2026,
while continuing the primary work of monitoring our operating
companies’ compliance with our Group controls and policies.
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 our
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 60 to 62.
Following Ernst & Young LLP’s (‘EY’) audit of the Group’s
financial statements in relation to the year ended 31 December
2024, the Committee met EY’s lead partner to identify any
improvement areas for the 2025 audit as part of a continuous
improvement cycle. In August 2025, we discussed and agreed
the plan for EY’s year-end audit procedures and agreed their fee
in October 2025. The audit of our 2025 financial statements is
the sixth 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. During the year the EY’s lead partner,
Helen McLeod-Jones, rotated off the audit in accordance with
regulations having been in place for five years, and was replaced
by Adrian Roberts.
This Audit Committee Report explains how the Committee
has discharged its responsibilities during 2025, and considers
the specific topics of:
• primary areas of judgement considered by the Committee
in relation to the 2025 financial statements
• internal controls
• risk assessment, management and mitigation
• assessment of the effectiveness of external audit
• assessment of the effectiveness of internal 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 Thursday 21 May 2026.
Carol Chesney
Chair
10 March 2026
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 95
Governance
Committee membership and purpose
During the year, and to the date of this report, the Audit
Committee comprised:
• Carol Chesney
• Pete Raby
• Tony Quinlan
• Gillian Tomlinson (appointed 25 March 2025)
• Leigh-Ann Russell (resigned 12 March 2025)
• Farrokh Batliwala
Attendees at each of the meetings included, by invitation,
the Chair, the 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 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
January March
• Update on key matters relating to the 2024 audit
• Goodwill and intangible asset impairment review
• Summary of findings from operating company balance
sheet reviews
• 2025 Internal Audit Plan
• 2025 Internal Audit Charter
• Internal Audit update
• Material Controls update (in readiness for Provision 29 of
the UK Corporate Governance Code)
• Audit Committee Evaluation and Action Plan
• Terms of Reference and Annual Workplan
• Private meetings with the external auditor and the Head
of Risk & Internal Audit
• Key issues and judgements relating to the 2024 financial
statements
• Report from external auditor on the financial statements for
the year ended 31 December 2024
• Financial statements and Annual Report for the year ended
31 December 2024, including the statements on going
concern, viability, and fair, balanced and understandable
• Internal Audit update
• Group risk and principal risks review
• Review of the 2024 TCFD disclosures
• Material Controls update (in readiness for Provision 29 of the
UK Corporate Governance Code)
• Private meetings with the external auditor and the Head
of Risk & Internal Audit
• Introduction of new EY lead partner Adrian Roberts
Audit Committee Report continued
• 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 controls, and risk
management systems
• monitoring and reviewing the effectiveness of the Company’s
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 their remuneration and terms of
engagement
• 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 implementing and monitoring policy
on the engagement of the external auditor to supply non-audit
services, ensuring there is prior approval of non-audit services
and consideration of the impact this may have on
independence
• reporting to the Board on how it has discharged its
responsibilities
96
August October
• Key issues and judgements relating to the Interim Results
• Internal Audit update including ERP post-implementation
reviews
• Summary of findings from operating company balance
sheet reviews
• External auditor planning report for the 2025 audit
• Assessment of the external auditor’s objectivity,
independence and effectiveness
• Private meetings with the external auditor and the Head
of Risk & Internal Audit
• External auditor update and confirmation of their 2025 audit
fee
• Internal audit update
• Group risk and principal risks review
• Material Controls update (in readiness for Provision 29 of the
UK Corporate Governance Code)
• Group Non-Audit Services Policy
• Private meetings with the external auditor and the Head
of Risk & Internal Audit
Governance
Carol Chesney, Committee Chair, is specifically identified as
the Committee member having recent and relevant financial
experience, thereby complying with Provision 24 of the UK
Corporate Governance Code 2024 (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 CFO, the external audit
partner at EY and the Group Head of Risk & Internal Audit, the
latter two 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.
Primary areas of judgement considered by the
Committee in relation to the 2025 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 147 to 209.
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
£139.1m at 31 December 2025. 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 National Signal,
Prolectric and ATG Access.
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Hill & Smith PLC | Annual Report and Accounts 2025 97
Governance
National Signal
Following a strong performance in 2023, National Signal’s
results in 2024 and 2025 have been impacted by lower demand,
particularly from its largest customer, leading to lower revenues
and profitability. While the Group’s strategy continues to be one
of customer diversification and product innovation, market
demand for solar products has been impacted by some shift in
sentiment away from sustainability-focused products, together
with a slower than anticipated market penetration from newer
products. The combination of these factors led the Board to
reassess the business’ future prospects, which in addition to
reflecting a more muted outlook for solar lighting, concluded
that the pace of growth across other elements of the product
range was likely to be slower than previously anticipated, and
that future gross margins were likely to be impacted by pricing
pressures given the weaknesses in demand. Consequently, the
impairment review based on this revised assessment concluded
that National Signal’s future cash flows were not sufficient to
support its carrying value, resulting in a full impairment of the
acquisition goodwill of £6.7m and the acquisition intangible
assets of £6.7m. After reviewing management’s forecasts for
future performance, focusing 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 subsequent to the Group’s
acquisition of the business in 2021, Prolectric’s 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 result
for 2025 was more positive. 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 ongoing shift in Prolectric’s focus towards more resilient
sectors, and tailwinds from corporate sustainability initiatives.
The resulting impairment calculations indicated headroom of
£15.0m (2024: £4.4m), the increase reflecting Prolectric’s
improved performance in 2025 and a more encouraging outlook.
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.
ATG Access
Following several years of growth, in 2025 ATG experienced a
downturn in performance, principally reflecting lower UK
demand due to the weak economic backdrop. Management’s
projections for the business result in calculated headroom of
£6.1m, slightly lower than the prior year (£8.3m). The
Committee noted management’s acknowledgement that there
could be variations in the pace of recovery in underlying UK
markets and in growth across ATG’s other markets, challenging
them on the assumptions underpinning the model including the
rates of growth in both domestic and export markets, and the
margins assumed across the product range. In conclusion, the
Committee concurred with management’s view that no
impairment was required but agreed that it was plausible that
projected revenue growth rates and product gross margin
improvements may not be achieved. 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 175 to 182.
Defined benefit pension scheme valuation
The net defined benefit pension surplus under IAS 19 amounted
to £4.6m at 31 December 2025, including gross liabilities of
£49.2m. The Committee reviews benchmarks and assumptions
that are provided by the Group’s actuaries and used to value the
liabilities for the Group’s defined benefit pension 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.
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 a primary area of judgement, given
the relatively significant value of non-underlying items in 2025,
the Committee challenged management on the presentation of
those items. The discussion focused largely on business
reorganisation costs resulting from strategic actions taken in
the US message board operation, and the net losses on disposal
of two of the Group’s smaller businesses in the early part of the
year. The Committee concurred with management’s view.
Audit Committee Report continued
98
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 2025,
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
• How the function will discharge its responsibilities: 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 17 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
• External audit reports, including the results of early audit
procedures and the audit findings in relation to the year-
end audit
The 2025 Internal Audit Plan balanced the focus of the function
between groupwide Principal Risks and operating company level
risks. It included post implementation reviews for new ERP
systems at two operating companies. The lessons learned from
these reviews have been shared across the Group for the further
ERP implementations planned for 2026. During 2025 work was
also completed to identify and document the Group’s material
controls in preparation for Provision 29 of the revised UK
Corporate Governance Code.
Operating company level reviews, focusing on baseline internal
controls, were conducted during the year (eight in relation
to financial controls and six in relation to IT controls). Where
internal audit work found instances of control weakness or
non-compliance with Group policy, the findings were discussed
with 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.
The decentralised business model of the Group 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.
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Hill & Smith PLC | Annual Report and Accounts 2025 99
Governance
Risk management
Risk management process
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. The risk management and
reporting process provides the Committee with information
onhow operating companies perceive their risks and how they
relate to the Group’s Principal Risks.
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 62.
Risk Committee
The Risk Committee reviews, discusses and validates the risk
submission data received from the operating companies in
addition to the Group-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 operating company risk appetite and help inform
the Board’s overall risk appetite.
During 2025, the Risk Committee directed particular attention
toHealth and Safety, IT security, succession planning, and
innovation. 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 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 60 to 66.
TCFD
The TCFD (Task force 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.
During 2025, PwC was engaged to perform analysis on the
Group’s climate-related risks, by identifying transitional and
physical risks and opportunities in future climate scenarios,
building on and updating its previous detailed analysis in 2021.
The results were incorporated into the Group’s 2025 TCFD
disclosures, as reviewed at the March 2026 Audit Committee
meeting. The Group’s TCFD disclosures can be found in the
Sustainability Report on pages 37 to 59.
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, a Group
President or the Audit Committee Chair. This policy can
befound on the Group’swebsite.
Any incidents reported, whether through the whistleblowing
hotline or direct to the Group Company Secretary or any other
member of Group management, are investigated under
the supervision of the Group Company Secretary and resolved
appropriately. Reports raised on these cases, including the
investigative process, the conclusions, and any lessons to be
learned from these events, are shared with the Board. During the
year, the whistleblowing procedures were reinforced to clarify
that whistleblowing cases raised directly with operating
company management teams should also be reported
centrallyto Group.
Assessment of effectiveness of external audit
The areas that the Committee considers in relation to the
external auditor are performance in discharging the audit of the
financial statements, independence and objectivity,
and reappointment and remuneration.
Audit Committee Report continued
100
Performance in discharging the audit
The external auditor, EY, provided the Committee with its plan
for undertaking the 2025 audit during the Committee meeting
in August 2025. 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 National Signal and
Prolectric, the risk of fraud in revenue recognition, inventory
provisioning, pension valuation, and the assumptions applied to
the fair value of defined contingent consideration for the 2024
Trident acquisition. 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 2025 audit. The Committee discussed the
issues raised in the report, particularly in relation to the areas
highlighted, at their meeting in March 2026. 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.
Independence and reappointment of the external
auditor
The external auditor confirmed its policies on ensuring auditor
independence and provided the Committee with a report on their
audit and quality procedures. This report was considered and
the Committee was satisfied of the auditor’s independence.
To help maintain independence, the Group has a policy that
before any former employee of the external auditor may be
employed by the Group, careful consideration is given to
whether auditor independence will be adversely affected, and
approval of the Audit Committee is required. There were no
such instances during the year.
The Committee reviewed the independence and objectivity of
the external auditor during the year and confirmed that it
considers EY to remain independent. The Committee also
considers that the Company has complied with the Statutory
Audit Services for Large Companies Market Investigation
(Mandatory Use of Competitive Tender Processes and Audit
Committee Responsibilities) Order 2014 for 2025.
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.
EY was appointed as the Group’s auditors in June 2020.
HelenMcLeod-Jones was the lead partner up to and including
the audit for 2024 and was then compelled to rotate off
to ensure continued independence. Adrian Roberts became
thelead partner for the 2025 audit.
Auditor remuneration
At the October 2025 meeting, the Committee discussed and
approved the proposed audit fee for 2025. The c.10% reduction
in the fee compared to 2024 primarily reflected the Group’s
decision to take parental guarantee exemptions from statutory
audit at six UK operating companies, which the Committee
agreed had negligible impact on the overall quality and coverage
of the Group audit, and the absence of acquisitions in 2025.
During 2025, no fees were paid to the auditor for non-audit
services relating to other assurance services (2024: £nil).
Further details of these amounts are included in note 8 of the
financial statements.
Carol Chesney
Chair of the Audit Committee
10 March 2026
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 101
Governance
Remuneration Committee Report
Tony Quinlan
Chair
Our Remuneration Policy review during the year confirmed the Policy
is working effectively in aligning pay and performance while
supporting our values and long-term strategic goals.
“The Remuneration Policy has operated as
intended with a strong relationship between
performance and reward.”
On behalf of the Remuneration Committee (the ‘Committee’),
Iam pleased to share with you our Directors’ Remuneration
Report for the year ended 31 December 2025. This report is
divided into three sections: my statement, the revised Directors’
Remuneration Policy to be put to shareholders at the 2026
Annual General Meeting, and our Annual Report on
Remuneration for the year ended 31 December 2025.
Business context
In 2025, the Group has delivered a record set of full year results.
Within our US business both Engineered Solutions and
Galvanizing Services have delivered excellent results in the
context of strong infrastructure demand in the US. Our UK
businesses saw a reduction inrevenues and profitability and
continue to face a more challenging market backdrop. In the
light of this we are reviewing opportunities to improve the
resilience of our UK businesses.
The Group is reporting revenue of £868.8m and underlying
operating profit of £151.3m. Underlying operating margin
continued to increase at 17.4% with underlying earnings per
share showing an 8% increase to 132.2p per share.
In addition to delivering strong financial performance, 2025 has
been a year of continued strategic progress with the divestment
of two non-core small-scale businesses, which improved the
quality of our portfolio, at the same time as optimising our
organisation structure, to ensure that we are set up to maximise
the opportunities in our growth markets.
2025 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 2025, the Group set salary increase budgets at between 2% and
8%, 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 2025, the annual bonus was based on financial measures
(80% weighting) and personal objectives (20% weighting).
Along with our CEO, our recently appointed CFO, Chris McLeish,
was entitled to a bonus for 2025 albeit on a pro-rata basis
subject to performance for the proportion of the year he was
inemployment. Hannah Nichols, our former CFO, was not
entitled to a bonus following her resignation and cessation
ofemployment in April 2025.
102
Aligned to the strong financial performance delivered during
2025, the formulaic outcome from the financial targets was
81.6% 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 120 and
121. Bonuses earned as a percentage of the maximum were
80% for the CEO and 82% for the CFO. Given the financial
performance and strategic progress delivered during 2025, and
the overall stakeholder experience, the Committee did not
consider it necessary to use any discretion in relation to the
operation of the bonus plan. In line with the Policy, half of the
bonuses earned will be deferred into shares for two years, to
ensure long-term alignment with the interests of shareholders.
Long-term incentive outcomes
There were no Executive Directors eligible to receive vested
share awards from the 2023 awards, with neither our CEO nor
our new CFO in post at the time the awards were granted.
Ourformer CFO’s award lapsed on the cessation of her
employment. The awards granted in 2023 were subject to
performance against Underlying Earnings Per Share (‘UEPS’)
and relative Total Shareholder Return (‘TSR’) targets tested
overthe period from 1 January 2023 to 31 December 2025.
In relation to TSR performance, the Company was measured
against the FTSE 250, excluding financial services companies
and investment trusts, and ranked 11 out of 106 companies.
The UEPS, at 31 December 2025 was 132.2p, which resulted ina
compound annual growth rate in UEPS of 12.9% over
theperformance period. With regard to both TSR and UEPS,
themaximum targets were exceeded resulting in full vesting.
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
2023 long-term incentive is appropriate. The Committee also
considered the impact of share buybacks during the
performance period and concluded that the level of out-
performance of the UEPS target was such that the share
buybacks did not impact vesting. 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.
Leadership changes
Chris McLeish joined the Board as CFO on13 October 2025,
replacing Hannah Nichols who ceased employment with the
Company on 14 April 2025.
Chris McLeish was appointed on a base salary of £450,000,
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 well into the top half of the FTSE 250, the
Committee was comfortable that setting his salary at this level
was appropriate.
For 2025, Mr McLeish was eligible to receive a pro-rated bonus
based on an annual maximum of up to 125% of salary, and in
line with the Policy, and as agreed in connection with his
recruitment, he received an LTIP award with a value at grant of
60% of salary (versus normal Policy for the CFO of 150% of
salary) in 2025. This award is subject to the same performance
targets applicable to wider participants, including the CEO, in the
long-term incentive plan. In addition, to facilitate the recruitment
of Mr McLeish, it was agreed that replacement awards would be
granted in relation to awards forfeited in connection with joining
Hill & Smith. The replacement awards included converting
shares in his former employer, Ibstock, into Hill & Smith shares
on joining. With regard to his Ibstock 2023 and 2024 long-term
incentive plan awards that were replaced, the replacement
awards will vest based on applying the original Ibstock
performance targets to these awards at the normal vesting date.
Vested shares will be subject to a two year holding period.
Replacement 2023, 2024 and 2025 deferred share bonus
awards were also granted that will vest ontheir original
vestingdates.
Directors’ Remuneration Policy review
The Committee undertook a comprehensive review of the
effectiveness of the current Policy during the year and
concluded that the current pay model was working
effectively and so no material changes to the Policy structure
were needed. In reaching this conclusion the Committee noted
the positive feedback from our executive leadership and the
robust relationship between performance and reward.
However,to take account of the growth in the size of
Hill & Smith relative to market since the last Policy renewal
at the 2023 AGM, the Committee concluded that it would
be appropriate to increase the annual award opportunity
under our long-term incentive plan at the same time as
updating our Policy for recent developments in ‘best practice’.
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 103
Governance
Shareholder support for 2025
Remuneration Report:
99.9%
CEO and CFO salary increase for 2026:
3%
2025 annual bonus max for CEO:
150%
of salary
2026 Executive Committee salary
increase range:
3% to 8%
2025 annual bonus max for new CFO
(pro-rated for period of employment):
125%
of salary
Non-executive Director 2026 base
feeincrease:
12%
The main changes that we are proposing are as follows:
1. An increase to the annual award limit under our long-term
incentive plan to 200% of salary from 175% of salary. At the
time of our last Policy review, Hill & Smith was ranked around
150
th
in the FTSE 250 Index (with a market cap of circa
£900m). Since then, the Company has grown significantly
relative to market with our ranking in the FTSE 250 Index now
around 70
th
(with a market cap of circa £1.9bn). In this
context, and with a heavy US footprint, the Committee
concluded that it was appropriate to have the flexibility to
grant awards at up to 200% of salary in line with standard
FTSE 250 market practice. This change will enable the
Committee to manage internal pay compression pressures for
the next three-year period.
2. Clarifying that our policy maximum for annual bonus
opportunity is set at 150% of salary for all Executive
Directors. There is no change to our intended application of
Policy for FY26 which will remain a maximum annual bonus
opportunity of 150% of salary for the CEO and 125% of salary
for the CFO.
3. Introducing flexibility to reduce bonus deferral (e.g., by 50%)
once our 200% of salary share ownership guidelines have
been met. This follows the additional flexibility included in the
2024 Investment Association’s Principles of Remuneration.
With incentives at Hill & Smith purposefully weighted towards
long-term performance, and 200% of salary share ownership
guidelines, the Committee was comfortable that this
approach balances alignment with shareholders and flexibility
for executives.
4. A broadening of our clawback and malus provisions to
enable the Committee to lapse the share awards of a ‘good
leaver’ should they take up comparable employment with
another company (e.g., following leaving by way of
retirement).
5. Clarifying the Policy wording on the treatment of deferred
share bonus awards on cessation of employment. This is that
deferred bonus awards will be retained until their normal
vesting date following cessation of employment unless the
Committee determines otherwise in which case they may
accelerate vesting (e.g., on death) or lapse the award (e.g.,
gross misconduct).
Remuneration Committee Report continued
104
Looking forward to 2026
Base salary
The salary of the CEO was increased by 3% to £703,500
effective 1 January 2026. This compares to an average
budgeted salary increase for the indirect workforce in our UK
operating companies of 3.1%. The base salary of the CFO, set at
£450,000 on appointment, was also increased by 3%
to£463,500.
Variable remuneration
The annual bonus arrangements for 2026 will have maximum
opportunities of 150% and 125% of salary respectively for the
CEO and CFO. The performance measures for the annual bonus
have been updated for 2026 with organic revenue growth to be
introduced to better align with our current short-term priorities
and our published financial framework. The metrics that will
apply are underlying operating profit (60%), organic revenue
growth (20%, this is a new measure), cash conversion (10%,
previously 20%) and non-financial targets aligned with strategy
and individual role (10%, previously 20%).
Our intention with regard to the 2026 long-term incentive awards
is to grant at 200% of salary to the CEO, being aligned to the
revised Policy maximum as detailed above, and 175% of salary
for the CFO, recognising current FTSE 250 market grant levels
for companies of a comparable size. The Committee has taken
the higher quantum (+25% of salary for both roles) into account
when setting the performance targets. Performance targets
remain challenging, UEPS (50%), relative TSR (40%) and
greenhouse gas emissions which align with our adoption of
science-based carbon reduction targets (10%). The specific
target ranges are detailed on page 129.
Non-executive Director fees
The Non-executive Director base fee has been realigned
following benchmarking against three distinct Groups: a
bespoke sector peer group, a peer group with similar market
capitalisations, and a high-growth peer group. It is considered
important that the Group continues to attract high-performing
Non-executive Directors, and given the fee levels specifically for
our sector, the Non-executive Director fees have been increased
to £67,000 (12% increase) with additional Committee Chair
feesbeing increased by 22% to £13,500 with effect from
1 January 2026. The increase to the fees is also considered
commensurate with the increased time commitment of the role
given the current size and complexity of the Group.
As announced on 19 November 2025, Nick Anderson will
become Non-executive Board Chair with effect from May 2026.
His fee has been set at £320,000 with effect from his
assumption of the Chair role, with his initial fee on joining the
Board being the standard NED base fee of £67,000.
Employee and shareholder engagement
With regard to the renewal of the Directors’ Remuneration Policy
at the 2026 AGM, the Committee consulted shareholders
totalling over 50% of the shareholder register. The feedback
received during those discussions was generally supportive,
noting that the proposals were well justified. During
consultation, the choice of performance metrics was discussed,
including the weighting in the annual bonus on cash and
whether there was scope to include ROIC. The Committee
concluded that retaining cash conversion with a 10% weighting
alongside organic revenue growth at a 20% weighting best
reflected priorities for 2026. However, the Committee resolved
to review the choice of metrics prior to the start of 2027. The
Committee would like to thank shareholders for their feedback
during its discussions on the 2026 Policy renewal.
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.
As outlined more fully on page 77, 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.
Conclusion
The Committee recognises the strong performance that has
been delivered during 2025 and believes that remuneration
outcomes fairly reflect this performance.
The whole Directors’ Remuneration Report (excluding the Policy)
is subject to the advisory vote. The 2026 Policy is subject to a
binding shareholder vote. I hope it is clear from the new Policy
and the way we are proposing to apply policy in 2026 that we
continue to take account of the feedback of our shareholders,
and we look forward to receiving your support for the Policy and
Remuneration Report at the upcoming Annual General Meeting.
Tony Quinlan
Chair
10 March 2026
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 105
Governance
Remuneration Committee Report continued
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 2026
Base salary
andbenefits
Enables the Group to recruit and retain Executive
Directors
CEO — £703,500 (3% increase)
CFO — £463,500 (3% increase)
Pension To provide post-retirement benefits for Executive
Directors
CEO — 6.5% of salary
CFO — 6.5% of salary
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.
Once the Executive Directors have met the shareholding
requirement (i.e. have a shareholding of 200% of salary),
the bonus deferral requirement may be reduced (e.g. to
50% of the current level of deferral requirement). Any
such decision would be taken having had regard to
emerging market practice at the time.
2026 performance measures:
• Underlying operating profit (60%)
• Organic revenue growth (20%, new)
• Cash conversion (10%, previously 20%)
• Non-financial aligned with strategy and individual role
(10%, previously 20%)
Maximum opportunity:
• CEO 150% of salary
• CFO 125% of salary
LTIP To incentivise the achievement of longer term
Grouptargets
Three-year performance period, with a further two-year
holding period
2026 performance measures:
Relative TSR (40%), growth in UEPS (50%) and
greenhouse gas emissions reduction (10%) targets
Grant size:
CEO — 200% of salary
CFO – 175% of salary
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
More details can be found on pages 102 to 129.
106
Directors’ Remuneration Policy
This report has been prepared in accordance with the provisions
of the Companies Act 2006, The Large and Medium Sized
Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2008 and the subsequent amendments, and the UK
Listing Authority Listing Rules. In addition, the report has been
prepared on a “comply or explain” basis with regard to the UK
Corporate Governance Code 2024. The Remuneration Policy
described in this section is intended to apply for three years and
will be applicable from the date of approval by shareholders
atthe Company’s 2026 AGM.
Determining the Remuneration Policy
The Committee is responsible for the development,
implementation, and review of the Directors’ Remuneration
Policy. In addressing this responsibility, the Committee works
with management and external advisors to develop proposals
and recommendations. The Committee considers the source of
information presented to it, takes care to understand the detail
and ensures that independent judgement is exercised when
making decisions. The Remuneration Committee works
alongside other Board Committees as needed.
When setting the Remuneration Policy, the Committee
considered the Company’s strategic objectives over both the
short and the long term, the external market and market best
practice. In addition, the Committee also considered the
alignment across the business as well as stakeholder views.
Summary of the proposed changes: 2026
Remuneration Policy
The Remuneration Committee undertook a comprehensive
review of the effectiveness of the current Policy and as a result
of the Policy achieving a strong alignment between pay and
performance concluded that no major changes were needed. As
a result, there is no change to the pay model. However,
inrecognition of the Company’s growth in size relative to
themarket, as evidenced by delivering upper quartile total
shareholder return over the past three years and the Company
ranking around 70
th
out of the 250 companies within the FTSE
250 Index as at the end of February 2026, the Company is to
increase the long-term incentive opportunity available within the
Policy.
In addition to the above, a number of minor amendments
tothePolicy are also to be made which include (i) to introduce
flexibility to review the level of bonus deferral once the
Company’s share ownership guidelines are met (ii) an update
tothe trigger events included in our clawback and/or malus
provisions (i.e., recovery and/or withholding) in the annual
bonus and long-term incentive plans and (iii) to clarify the
treatment ofdeferred bonus shares on cessation of
employment. These changes are being made as a result of the
updates included inthe 2024 UK Corporate Governance Code
and the additional flexibility afforded to companies in the
Investment Association Principles of Remuneration 2024. Other
changes are limited to minor modifications to wording, to better
reflect amendments to share plan rules and the practical
operation of the Policy.
A summary of the changes is included in the table overleaf.
Directors’ Remuneration Policy
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Hill & Smith PLC | Annual Report and Accounts 2025 107
Governance
Summary of proposed changes
Summary of current Policy Proposed changes
Annual Bonus
Maximum:
• CEO: 150%
• Other Executive Directors: 125%
Deferral: 50% of any bonus awarded will be deferred
into shares for two years.
Pay-out schedule: The level of payout at threshold will
normally be limited to 0% of maximum.
Discretion: Committee may override the formulaic
outcome.
Recovery & withholding trigger events: misstatement
of financial results, misconduct, error, reputational
damage, corporate failure and failure of acceptable
health and safety standards.
Timeline: Applies for up to two years following the
payment of the cash bonus.
Maximum:
• 150% of salary for Executive Directors
For 2026, there is no proposed change to the operation
of Policy and so the maximum opportunity for the CFO
will remain at 125% of salary in 2026.
Deferral: Once the Executive Directors have met the
shareholding requirement (i.e., have a shareholding of
200% of salary), the bonus deferral requirement may be
reduced (e.g., to 50% of the current level of deferral).
Any such decision would be taken having had regard to
emerging market practice at the time.
Recovery & withholding trigger events: add recovery
following retirement if another comparable role is
taken.
Timeline considered appropriate in light of market
practice and the nature of the Hill & Smith business.
LTIP
Vehicle: Performance Share Plan.
Maximum
• CEO 175% of salary
• Other Executive Directors 150% of salary
Performance conditions
• Based on financial metrics and/or shareholder return
metrics and/or strategic metrics.
• No more than 20% of maximum will vest for
threshold performance
Vesting & holding period: Three-year performance
period with a two-year holding period.
Discretion: Committee may override the formulaic
outcome.
Recovery & withholding trigger events: the same
trigger events as above.
Timeline: up to two years following the end of the
relevant holding period for LTIP awards.
Maximum:
• 200% of salary for Executive Directors
For 2026, as a result of the Company’s growth relative
to market, and aligning with typical FTSE 250 award
levels, the award sizes will be:
• CEO 200% of salary
• CFO 175% of salary
Recovery & withholding trigger events: add recovery
following retirement if another comparable role is
taken.
Timeline considered appropriate in light of market
practice and the nature of the Hill & Smith business.
Other
Where a deferred bonus award is granted, if the
participant leaves as a “good leaver” during the deferral
period, the award will ordinarily continue and be
released at the ordinary release date, although the
Remuneration Committee retains discretion to release
the award at the date of cessation or to shorten the
deferral period.
Deferred bonus awards will be retained until their
normal vesting date following cessation of
employment unless the Committee determines
otherwise in which case they may accelerate vesting
(e.g., on death) or lapse the award (e.g., gross
misconduct).
Directors’ Remuneration Policy continued
108
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. Directors may receive tax reimbursement
ifthey are reimbursed for expenses incurred in connection with performing their duties and those expenses
areconsidered taxable benefits.
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 is 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.
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Hill & Smith PLC | Annual Report and Accounts 2025 109
Governance
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.
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, normally 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.
Oncethe Executive Directors have met the shareholding requirement (i.e., have a shareholding of 200% of salary),
the bonus deferral requirement may be reduced (e.g., to 50% of the current level of deferral). Any such decision
would be taken having had regard to emerging market practice at the time.
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 (see page 113).
Maximum
opportunity
The maximum bonus opportunity is up to 150% of base salary.
For 2026, the maximum limits that will apply will be:
• CEO: 150% of salary
• CFO: 125% of salary
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 revenue and profit
• operating margins
• cash conversion
• return on invested 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 (normally 0% below threshold), 50% at the target level of performance and 100% at maximum.
Performance between the relevant points increases on a graduated scale. 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.
Directors’ Remuneration Policy continued
110
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 this table.
Maximum
opportunity
The annual LTIP maximum opportunity is up to 200% of base salary.
For 2026, the maximum limits that will apply will be:
• CEO: 200% of base salary
• CFO: 175% 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) normally 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
graduated 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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Hill & Smith PLC | Annual Report and Accounts 2025 111
Governance
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, but will not apply to shares purchased or acquired pursuant to all-employee share plans.
Post-employment, each Executive Director is normally 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:
• fees may be paid wholly or partly in shares
• the Chair is paid a single consolidated fee
• the Non-executive Directors are paid a basic fee plus additional fees for Chairship of a Committee
• the Senior Independent Director also receives an additional fee in respect of this role
• additional fees may be paid for taking on additional roles or for additional time commitments and may include
allowances in relation to non-executives travelling from overseas to attend Board meetings.
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.
Directors’ Remuneration Policy continued
112
Recovery and withholding 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
• where an individual was treated as a ‘good leaver’ within
aCompany incentive plan by reason of retirement but
subsequently became employed elsewhere in a paid
executiverole.
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.
Explanation of chosen performance measures and
how targets are set
Performance measures are selected that reflect the Group’s
strategy. Stretching performance targets are set each year for
the annual bonus and LTIP awards. In setting these stretching
performance targets, the Remuneration Committee will take into
account a number of different reference points such as the
Group’s business plans and strategy.
With regard to annual performance, a majority of the bonus is
normally linked to underlying profit-growth performance and
other key short-term measures such as cash conversion and
revenue growth, in addition to personal and/or strategic targets.
The precise measures and targets are selected and set each
year based on the Company’s objectives at that time.
With regard to long-term performance, the Remuneration
Committee normally links awards to shareholder return and
underlying EPS as metrics that are aligned with the Company’s
growth strategy and shareholders. In addition, other metrics,
such as sustainability targets, are also often utilised to ensure
that growth is delivered sustainably. The precise measures and
targets are selected and set each year based on the Company’s
medium to long-term objectives at that time.
The UEPS and TSR performance conditions attaching to the
LTIP align management’s objectives to those of shareholders
and rewards for the delivery of year-on-year growth and delivery
of value to shareholders.
The Remuneration Committee retains the discretion to adjust
the performance targets and measures where it considers it
appropriate to do so. For example, to reflect changes in the
strategy or structure of the business or in prevailing market
conditions and to assess performance on a fair and consistent
basis from year to year.
Operation of share plans
The Remuneration Committee retains discretion to operate the
Company’s share plans in accordance with their rules, including
the ability to adjust awards in the event of a variation of capital
or other relevant corporate event, and settle awards, in whole or
in part, in cash. The Remuneration Committee would only settle
an Executive Director’s award in cash in exceptional
circumstances (such as where there was a regulatory restriction
on the delivery of shares) or in connection with the settlement
oftax liabilities arising in respect of the acquisition of shares.
Differences in the Group’s policy for the remuneration
of employees generally
The Group aims to provide a remuneration package that is
market-competitive in the employee’s jurisdiction of
employment and which:
• is appropriate to attract, retain, motivate and reward, without
paying more than necessary;
• is fairly and consistently applied; and
• includes an element of incentive to share in the financial
success of the Group through: annual bonuses, based upon
the performance of individual business units; executive share
options; and a UK SAYE scheme/US Employee Share
Purchase Plan, all of which are aligned to the strategic
objectives and performance of the Group.
Similar principles of reward apply to employees with
performance-related pay operated widely through the Company,
at levels appropriate to each role, and designed to reward for
delivering the Company’s plans.
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Hill & Smith PLC | Annual Report and Accounts 2025 113
Governance
The illustrative performance charts above are based on the proposed Remuneration Policy as set out on pages 107 to 118.
Indeveloping the scenarios, the following assumptions have been made:
Minimum
CEO – £787,930
CFO – £503,618
Consists of total fixed pay – i.e., base salary, benefits and pension
• Base salary is the latest salary effective at 1 January 2026.
• Taxable benefits as per single figure table for the year ended 31 December 2025.
• Pension is based on base salary effective at 1 January 2026.
In-line with expectations
(Target)
CEO – £1,702,480
CFO – £1,013,468
Consists of:
• Total fixed pay, as set out above.
• Annual bonus pays out at 60% of maximum for target performance (i.e., 90% of base salary based
on a CEO maximum potential for 2026 of 150% of base salary, and 75% of salary based on a CFO
maximum of 125% of salary).
• LTIP pays out at 20% of maximum for threshold vesting (i.e., 40% of base salary based on a CEO
maximum for 2026 of 200% of base salary, and 35% of base salary based on a CFO maximum for
2026 of 175% of base salary).
Maximum
CEO – £3,250,180
CFO – £1,894,118
Consists of:
• Total fixed pay, as set out above.
• Full pay-out of annual bonus – i.e., CEO: 150% of base salary, CFO: 125% of base salary.
• Full vesting of LTIP awards – i.e., CEO: 200% of base salary and CFO: 175% of base salary.
Maximum plus share price
growth
CEO – £3,953,680
CFO – £2,299,680
Consists of:
• Total fixed pay, as set out above.
• Full pay-out of annual bonus – i.e., CEO: 150% of base salary, CFO: 125% of base salary.
• Full vesting of LTIP awards – CEO: 200% of base salary and CFO: 175% of base salary.
• 50% share price growth.
Directors’ Remuneration Policy continued
Illustrative Performance scenarios for 2026
£787,930
100% 46%
37%
17%
£1,702,480
43%
£3,250,180
24%
33%
53%
£3,953,680
20%
27%
£503,618
100% 50%
34%
16%
£1,013,468
43%
£1,894,118
26%
31%
53%
£2,299,680
22%
25%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Maximum Maximum
plus share
price growth
TargetMinimumMaximum
plus share
price growth
MaximumTargetMinimum
Chief Executive Officer Chief Financial Officer
Fixed pay Annual bonus LTIP LTIP with 50% share price growth
114
Approach to recruitment remuneration
The objective of this Policy is to allow the Remuneration Committee to offer remuneration packages which:
• facilitate the recruitment of individuals of sufficient calibre to develop and deliver the business strategy and shareholder value;
• reflects the key principles of the Group’s wider remuneration philosophy; and
• seek to ensure that arrangements are in the best interests of the Company, and not to pay more than is appropriate.
Typically the individual will be transitioned onto a remuneration package that is consistent with the Policy set out above. However,
theRemuneration Committee retains the discretion to make remuneration decisions or include other remuneration components
orawards which are outside the Policy elements set out on pages – 107 to 118 where it considers it necessary. However, this
discretion isnot uncapped; in determining appropriate remuneration arrangements:
• the Remuneration Committee will not offer non-performance related incentive payments;
• the quantum of variable remuneration will be limited as set out below;
• the quantum and structure of the package on offer will be determined taking into account that for similar positions in the market;
and
• the package will be determined having due regard to the experience of the candidate and the interests of the Company
anditsshareholders.
The following elements may also be considered by the Remuneration Committee for inclusion in a recruitment package for
anExecutive Director:
Compensation for forfeited
awards on leaving a
previous employer
The Remuneration Committee may make awards on hiring an external candidate to compensate the
candidate for the forfeiture of any award entered into with a previous employer. In determining any
such ‘buy-out’ the Remuneration Committee will consider all the relevant factors regarding the
forfeited arrangements, which may include the likelihood of the awards vesting should the external
candidate have remained in their previous employment, the form in which they were granted
(e.g.,cash or shares) and the time over which they would have vested. Generally, buy-out awards
willbe made on a comparable basis to those remuneration arrangements forfeited.
Where considered appropriate, buy-out awards will be subject to forfeiture or claw back on early
departure.
Initial incentive awards The maximum remuneration for a newly appointed Executive Director, excluding any compensation
for forfeited awards as detailed above, is as set out below.
The Remuneration Committee may also alter the performance measures, performance period
andany deferral arrangements or holding period applying to the annual bonus and LTIP if the
circumstances of the recruitment merit such an alteration; the rationale will be clearly explained
inasubsequent Directors’ Remuneration Report.
Maximum variable
remuneration (excluding
buy-out awards)
The maximum level of variable remuneration which may be awarded to any Director is 350% of base
salary (consisting of 150% annual bonus and 200% LTIP).
The Remuneration Committee would seek to implement any share awards referred to in this section under the Company’s existing
share plans. However, in connection with the recruitment of an Executive Director, the Remuneration Committee may implement
anew arrangement in accordance with paragraph 9.3.2(2) of the Listing Rules.
Where a position is filled internally, any ongoing remuneration obligations or outstanding variable pay elements shall be allowed to
continue according to the original terms, with the exception of pension contributions which will be reduced in line with this policy.
Where necessary, the Group will pay appropriate relocation costs and the Remuneration Committee will seek to ensure that no more
than necessary is paid.
Fees payable to a newly appointed Chair or Non-executive Director will be in line with the fee policy in place at the time
ofappointment.
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Governance
Service contracts and loss of office payments
Executive Directors’ service contracts
The letters of appointment for Non-executive Directors and service contracts for Executive Directors are available for inspection at
the Company’s registered office during normal office hours. The current Executive Directors have service contracts with the
Company, all with a rolling 12-month notice period and are not fixed term. Details are included in the following table and their
remuneration for FY25 is included in the single figure table on page 120.
Service contract date Date of appointment
Notice period/unexpired
term
Rutger Helbing 18 September 2024 19 September 2024 12 months
Chris McLeish 29 April 2025 13 October 2025 12 months
Non-executive Directors’ letters of appointment
The Chair and each of the Non-executive Directors are appointed for an initial three-year term under terms set out in their letters of
appointment. Their appointment can be terminated by the Board without compensation for loss of office subject to the notice periods
in their respective letters. The notice periods, applicable from either party is three months. The Chair and each of the Non-executive
Directors usually serve a second three-year term, subject to performance review, and can serve a further term of three years subject
to rigorous review by the Nomination Committee.
Details of the Non-executive Directors’ letters of appointment are shown in the table below.
Date first
appointed to the Board
Date last appointed to the
Board
Date elected/re-elected
at AGM
Unexpired period
of service contract/letter
of appointment
Non-executive Directors
Alan Giddins 3 October 2017 19 September 2024
1
22 May 2025 6 months
Farrokh Batliwala 1 April 2022 1 April 2025 22 May 2025 24 months
Carol Chesney 1 January 2024 1 January 2024 22 May 2025 9 months
Gillian Tomlinson 25 March 2025 25 March 2025 22 May 2025 24 months
Tony Quinlan 2 December 2019 2 December 2025 22 May 2025 32 months
Pete Raby 2 December 2019 2 December 2025 22 May 2025 32 months
1. Reflects the date that Alan Giddins reverted to the role of Non-executive Chair
Directors’ Remuneration Policy continued
116
Appointments for Non-executive Directors are governed by letters of engagement. Under the terms of their engagement, the notice
period to be given by the Non-executive Directors to the Company is three months and the Company is obliged to give the same
length of notice. Discretion is retained to terminate with or without due notice or paying any payment in lieu of notice dependent
onwhat is considered to be in the best interests of the Company in the particular circumstances.
Where the Remuneration Committee retains discretion, as outlined above, it will be used to provide flexibility in certain situations,
taking into account the particular circumstance of the Director’s departure and recent performance of the company.
The policy on Executive Director service contracts and payment for loss of office is summarised below. For the avoidance of doubt,
the leaver provisions summarised below in relation to the LTIP apply to LTIP awards in respect of 2023 and later years, with earlier
awards being subject to the policy applying at the date of the award.
Notice period
for termination
by the company
Each current Executive Director is entitled to 12 months’ notice.
The Remuneration Committee may set a notice period of between six months and 12 months for any future
Executive Director.
Notice period
for termination
by the employee
Each current Executive Director is required to give 12 months’ notice of termination.
The Remuneration Committee may set a notice period of between six months and 12 months for any future
Executive Director.
Payment in lieu of
notice
Base salary, pension contributions and benefits for the duration of the notice period or a payment in lieu of notice
may be made at the discretion of the Company.
Other incentives
The Remuneration Committee also has discretion to incorporate payments under the performance-linked elements
of the package under ‘good leaver’ scenarios.
• If the Executive Director leaves during the annual bonus performance year, a bonus payment may be made at
the Remuneration Committee’s discretion. Typically for ‘good leavers’, bonus amounts (as determined by the
Remuneration Committee) will be pro-rated for time in service during the bonus year and will be, subject to
performance, paid at the usual time, although the Remuneration Committee retains discretion not to apply time
pro-rating and to accelerate the payment of bonuses in appropriate circumstances. Where bonus deferral would
otherwise apply, the Remuneration Committee retains discretion to pay the whole of the bonus for the year of
cessation in cash.
• Under the Company’s LTIP:
• If a participant leaves as a “good leaver” before an award has vested, that award will ordinarily continue until
the ordinary vesting date, when the extent of vesting will be determined by reference to the extent to which
the performance conditions have been satisfied, although the Remuneration Committee retains discretion to
vest the award sooner (and assess performance conditions accordingly). The extent to which the award vests
will ordinarily be reduced to reflect the proportion of the performance period for which the Executive Director
was employed, but the Remuneration Committee has discretion not to apply this proportionate reduction.
Theaward will ordinarily be released to the participant at the end of the originally anticipated holding period,
although the Remuneration Committee retains discretion to release the award sooner, but would do so only
inexceptional circumstances (including cessation due to death or ill-health).
• If a participant leaves for any reason (other than summary dismissal, in which case the award will lapse) after
an award has vested but before it has been released (i.e. if the participant leaves during that holding period),
the award will ordinarily be released to them on the ordinary release date, although the Remuneration
Committee retains discretion to release the award sooner.
• Where a deferred bonus award is granted the award will ordinarily continue and be released at the ordinary
release date, although the Remuneration Committee retains discretion to release the award at the date of
cessation, shorten the deferral period (e.g. on death) or lapse the award (e.g. in the event of gross misconduct).
• For the purposes of the LTIP and any deferred bonus award, ‘good leaver’ means cessation due to death, injury,
ill-health, redundancy, or any other circumstance that the remuneration committee deems appropriate.
• Were an award to be made in accordance with Listing Rule 9.3.2(2). then the leaver provisions would be
determined at the time of the grant.
Other payments
In appropriate circumstances, other payments may be made in the event of a termination of an Executive
Director’s employment in respect of, for example, accrued holiday and legal and outplacement fees. SAYE options
may be exercised on termination of employment to the extent permitted by the rules of the scheme, which do not
provide discretion for the Remuneration Committee in respect of the treatment on termination. Awards under any
other all employee share plan would be treated in accordance with the rules of that plan.
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Hill & Smith PLC | Annual Report and Accounts 2025 117
Governance
Statement of considerations elsewhere in the Company
When setting the policy for Directors’ remuneration, the Remuneration Committee has regard to the pay and employment conditions
elsewhere within the Group, although employees are not formally consulted on Directors’ remuneration policy.
This includes consideration of:
• salary increases for the general employee population;
• overall spend on annual bonus;
• participation levels in the annual bonus, long term incentive and share option plans;
• Company-wide benefits (including pension) offerings; and
• any other relevant factors as determined by the Remuneration Committee.
The Remuneration Committee takes into account ad-hoc information as provided to it from time to time as required by the UK
Corporate Governance Code.
Discretion and existing contractual arrangements
The Remuneration Committee reserves the right to make any remuneration payments and payments for loss of office (and to
exercise any discretion in respect of any such payment) notwithstanding that they are not in line with the policy, set out above, where
the terms of the payment were agreed:
i. before the policy came into effect, provided that the terms of the payment were consistent with any applicable shareholder-
approved directors’ remuneration policy in force at the time they were agreed or were otherwise approved by shareholders; or
ii. at a time when the relevant individual was not a Director of the Company (or other person to whom the policy set out above
applies) and, in the opinion of the Remuneration Committee, the payment was not in consideration for the individual becoming
aDirector of the Company (or other such person).
For these purposes “payments” includes the Remuneration Committee satisfying awards of variable remuneration and, in relation
toan award over shares, the terms of the payment are “agreed” at the time the award is granted.
Statement of consideration of shareholder views
The Company is committed to ongoing dialogue and seeks shareholder views ahead of making significant changes to its
remuneration policies. The Remuneration Committee consulted with major shareholders in connection with the determination
ofthispolicy and took into account feedback received when finalising its approach.
Directors’ Remuneration Policy continued
118
Reward linked to performance
Underlying Operating Profit
1
£153.6m Actual
£149.8m Target
1. at budgeted exchange rates
Underlying Cash Conversion
1
90% Actual
83.2% Target
1. at budgeted exchange rates
Chris McLeish:
82%
of maximum opportunity
Rutger Helbing:
80%
of maximum opportunity
Total annual bonus plan – outcome, including
achievement of personal objectives
January to March
• Consideration of the leaver terms of our
departing CFO
• Determination of variable pay outturns for the
2024 bonus and 2022 LTIP
• Confirmation of the Executive Directors’ annual
bonus targets and objectives for 2025
• Approval of LTIP 2025 award
• Approved the Directors’ Remuneration Report
April to August
• Consideration of the remuneration terms of our
new CFO
• Consideration of the 2026 Directors’
Remuneration Policy
• Engaged with investors on the 2025
implementation of the Remuneration Policy
• Approval of SAYE 2025 award
• Consideration of market update as provided by
the Committee’s advisor
September to December
• Consideration of remuneration for the role of
Board Chair
• Ongoing work on the 2026 Directors’
Remuneration Policy
• 2026 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 2026
• Consideration of market update as provided by
the Committee’s advisor
• Consideration of metrics to be used in Executive
Directors’ short and long term incentive plans
• Consideration of the Group’s Gender PayGap
During the year to 31 December 2025, the Remuneration
Committee consisted of Tony Quinlan (Chair), Farrokh
Batliwala,Carol Chesney, Pete Raby, Leigh-Ann Russell
(until12 March 2025), Gillian Tomlinson (from 25 March 2025)
and Alan Giddins.
During the year, the Committee considered the following:
Directors’ Annual Remuneration Report
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Hill & Smith PLC | Annual Report and Accounts 2025 119
Governance
Implementation of the Remuneration Policy during 2025
Single remuneration figure
Year
Base salary/
fees
1
Taxable
benefits
2
Pension
3
Total fixed pay Annual bonus
4
LTIP
5
Other
9
Total variable
pay
Total ‘Single
Figure’
Rutger Helbing
6
2025 683,400 38,702 44,421 766,523 823,053 – – 823,053 1,589,576
2024 188,115 11,755 12,228 212,098 235,898 – – 235,898 447,996
Chris McLeish
7
2025 100,962 6,161 6,563 113,686 101,091 – 217,820 318,911 432,597
2024 – – – – – – – – –
Former Directors
Alan Giddins
6
2025 – – – – – – – – –
2024 512,500 – – 512,500 – – – – 512,500
Hannah Nichols
7
2025 116,827 3,829 7,594 128,250 – – – – 128,250
2024 405,000 13,045 26,325 444,370 413,682 633,410
8
– 1,047,092 1,491,462
Hooman Caman
Javvi 2025 – – – – – – – – –
2024 374,578 12,726 24,871 412,175 219,426 321,422
8
– 540,848 953,023
Totals 2025 901,189 48,692 58,578 1,008,459 924,144 – 217,820 1,141,964 2,150,423
2024 1,480,193 37,526 63,424 1,581,143 869,006 954,832 – 1,823,838 3,404,981
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 £22,558.78 and £2,795.70 was paid to Rutger Helbing and Chris McLeish respectively 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 below.
5. Represents the value of shares vested under the rules of the Hill & Smith LTIP, in respect of the performance period ended 31 December 2025. A description
ofthe basis on which awards vested and the value can be found on page 121.
6. The amounts paid to Rutger Helbing and Alan Giddins represent the value paid in relation to time served as an Executive Director (or in Alan Giddins’ case,
Executive Chair) during the year.
7. Chris McLeish joined the Board on 13 October 2025 and Hannah Nichols resigned from the Board on 14 April 2025.
8. These LTIP awards have been recalculated based on the share price on the date of vesting (12 March 2025) of £18.72.
9. Chris McLeish received compensation and buyout awards to reflect awards that were forfeited as a result of him taking up his appointment with the Group. The
buyout awards set out in the table above include replacement share awards for his unvested Ibstock Deferred Bonus Awards, being, 2023 deferred bonus
buyout of 5,088 shares, 2024 deferred bonus buyout of 1,782 shares and 2025 deferred bonus buyout of 3,552 shares all valued at £20.90 being the average
mid-market close price for the day immediately preceding the date of grant (£106,339, £37,244 and £74,237 respectively). Each buyout award was calculated
using the relative value of Ibstock plc shares to those of the company’s shares valued over a 30 day period prior to the date of grant. The value of the LTIP
Buyout awards for Chris McLeish will be included in the single figure table for the year in which they vest. Details of shares awarded are set out on page 123.
2025 Annual Bonus
Rutger Helbing and Chris McLeish were eligible to earn bonuses for 2025 of up to 150% and 125% of salary respectively.
Thebonusto be paid to Chris McLeish will be pro-rated based on time in office.
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 profit
1
60% £149.8m £157.3m £153.6m 75.5%
Underlying cash conversion 20% 83.2% 90% 90% 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.
Directors’ Annual Remuneration Report continued
120
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 • Present an updated Group strategic and financial
framework and set out a clear vision and agreed
definition of strategic focus in adjacent markets.
• Continue the Group’s M&A strategy (including
divestments) and develop the pipeline for
acquisitions.
• Review senior succession planning, including
leading the recruitment of a high quality CFO.
• Strategic and financial frameworks fully defined
and incorporated in the strategic planning
process and review of multiple adjacent markets.
• The exit of Parking Facilities and Australia was
completed and the pipeline for acquisitions
refreshed with updated plan.
• Succession planning for the Executive Committee
and Managing Director roles undertaken.
• Successful recruitment of CFO.
Chris McLeish • Build relationships across both the Group
companies and finance functions in support of
improved budgeting process
• Complete budget process and deliver to the Board
• Strong early engagement with Group companies
and finance team.
• Budget delivered ahead of Board schedule with
clarity and groupwide buy-in to the process
Achievement (personal objectives)
Rutger Helbing 75% of maximum
Chris McLeish 82% of maximum
The Committee considered the formulaic outturn of the annual bonus for 2025 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 2025 and the 7% growth in underlying profit before tax.
The cash bonus and deferred bonus earned in respect of 2025 are as follows.
Executive Director Total bonus earned Bonus paid in cash Bonus paid as an award of deferred shares
Rutger Helbing £823,053 £411,526 £411,527
Chris McLeish
1
£101,091 £50,545 £50,546
1. The bonus paid to Chris McLeish has been pro-rated for time served on the Board during the year
LTIP awards vesting in respect of 2025
Rutger Helbing and Chris McLeish were not in post when the 2023 awards were granted and so were not eligible for vesting.
Theaward granted to Hannah Nichols in 2023 over 36,067 shares lapsed on her cessation of employment.
With regard to performance against the conditions set at grant, this is set out below. The awards were subject to performance
conditions based on UEPS growth over the three-year performance period ended 31 December 2025 (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 2026, the Remuneration Committee approved the extent to which the awards vested for participants other than Executive
Directors as set out below:
Performance targets Vesting Actual performance Actual vesting
UEPS annual compound
growth rate over three years
Threshold 4%
Maximum 12%
20%
100%
12.9% 100%
TSR Median
Upper quartile
20%
100%
TSR ranked 11 out of 106 100%
Considering the financial performance of the Group and taking into account the disposals and acquisitions made in the three-year
performance period, the Committee was comfortable that the targets were no more or less challenging than when they were
originally set.
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Hill & Smith PLC | Annual Report and Accounts 2025 121
Governance
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.
Rutger Helbing Chris McLeish
3
Hannah Nichols
1
Shareholding requirement 200% 200% 200%
Shareholding on 31 December 2025 10,000 — 3,106
Vested LTIP awards and all deferred share awards
on 31 December 2025 (net of tax and NIC) 3,580 5,523 73,433
Total shares 13,580 5,523 76,539
Share value
2
£290,612 £118,192 £1,637,935
Current % of salary (based on salary on 31 December 2025)
1
42% 26% 404%
Shareholding requirement met No No Yes
1. Data shown at the date Hannah Nichols stood down from the Board on 14 April 2025.
2. Share value based on mid-market close price on 31 December 2025 of £21.40.
3. Chris McLeish joined on 13 October 2025.
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 2025 and the date of
publication of this report.
Share awards granted during the year
LTIP awards
During the year to 31 December 2025, 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 period
3
Rutger Helbing 1 April 2025 Nil cost option 68,496 £1,195,940
1
31 December 2027
Chris McLeish 13 October 2025 Nil cost option 12,918 £269,986
2
31 December 2027
1. Calculated by reference to the share price of £17.46 being the average mid-market close price for the day immediately preceding the date of grant.
2. Calculated by reference to the share price of £20.90 being the average mid-market close price for 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.
The performance conditions for these awards are as follows:
Vesting amount
UEPS compound annual growth rate over
three years (50% of the award) TSR (40% of the award)
2
GHG reduction target
(10% of the award)
3
0% vesting Less than 4% Below median Less than 17%
20% vesting
1
4% Median 17%
Maximum vesting
1
14% Upper quartile 26%
1. Straight line vesting will apply between these two points.
2. Relative to the FTSE 250 (excluding investment trusts and financial services companies).
3. 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
Directors’ Annual Remuneration Report continued
122
Chris McLeish Buyout awards
In addition to the above, to facilitate the recruitment of Chris McLeish, the following awards were granted to compensate for the
awards forfeited in his previous employer, Ibstock PLC. The awards mirror the form and structure, along with the vesting periods,
ofwhat was given up. All awards that were subject to performance conditions and holding periods remain subject to the performance
conditions and two year holding periods as detailed below.
Date of award Type of award Number of shares
Maximum face value
ofaward
1
Exercisable from
2023 LTIP Buyout 13 October 2025 Nil cost option 19,789 £413,590 3 April 2028
2024 LTIP Buyout 13 October 2025 Nil cost option 24,082 £503,314 3 April 2029
2023 Deferred Bonus Buyout 13 October 2025 Nil cost option 5,088 £106,339 16 March 2026
2024 Deferred Bonus Buyout 13 October 2025 Nil cost option 1,782 £37,244 22 March 2027
2025 Deferred Bonus Buyout 13 October 2025 Nil cost option 3,552 £74,237 20 March 2028
1. Calculated by reference to the share price of £20.90 being the average mid-market close price for the day immediately preceding the date of grant.
With regard to the 2023 LTIP Buy-Out, this will vest to the extent that the 2023 Ibstock LTIP Award vests. This will depend on the
extent to which the performance conditions are met and include Ibstock’s relative TSR performance against a comparator group for
30% of the award, Ibstock’s adjusted annual EPS for 25% of the award, Ibstock’s average annual ROCE for 25% of the award and ESG
metrics for the remaining 20% of the award. Details are set out in Ibstock’s 2023 Annual Report.
With regard to the 2024 LTIP Buy-Out, this will vest to the extent that the 2024 Ibstock LTIP award vests. This will depend on the
extent to which the performance conditions are met and include Ibstock’s relative TSR performance against a comparator group for
20% of the award, Ibstock’s adjusted EPS for 30% of the award, Ibstock’s average annual ROCE for 30% of the award and ESG metrics
for the remaining 20% of the award. Details are set out in Ibstock’s 2024 Annual Report.
The above awards are subject to Hill & Smith’s standard malus and clawback provisions and the replacement LTIP awards and
deferred share bonus plan awards are subject to the standard leaver provisions in each of Hill & Smith’s equivalent plans. These
areas detailed on page 113. Vested shares (net of tax) are also expected to be retained towards the Company’s share ownership
guidelines.
Deferred Share awards
Additionally, as previously announced, Rutger Helbing and Hannah Nichols received a Deferred Bonus share award in 2025 as shown
in the followingtable:
Director Date of Grant Number of shares Face value Vesting date
Rutger Helbing 1 April 2025 6,755 £117,949 1 April 2027
Hannah Nichols 1 April 2025 11,846 £206,841 1 April 2027
SAYE
The interests of Executive Directors who served in 2025 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
2025
1
Period that
option is exercisable
From To
Hannah Nichols 2022 £7.94 3,778 — — — 3,778 1 Jan 2026 1 July 2026
Rutger Helbing 2025 £16.52 — 1,861 — — 1,861 1 Jan 2031 1 July 2031
1. Or at the date of leaving the Board.
Chris McLeish does not currently participate in the SAYE.
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 123
Governance
Statement of Executive Directors’ shareholding and interest in shares
Unvested
Type Owned outright
Vested but not
exercised
1,5
Subject to
performance
conditions
Not subject to
performance
conditions
Total at
31 December 2025
Rutger Helbing Shares 10,000 — — — 10,000
LTIP
1
— — 93,048 — 93,048
Deferred Share Plan — — — 6,755 6,755
Market value options
2
— — — — —
SAYE options
3
— — — 1,861 1,861
Chris McLeish Shares — — — — —
LTIP — — 12,918 — 12,918
Buyout award — — 43,871 10,422 54,293
Market value options — — — — —
SAYE options — — — — —
Hannah Nichols
4
Shares 3,106 — — — 3,106
LTIP
1
— 82,740 68,312 — 151,052
Deferred Share Plan
1
— 32,101 — 23,711 55,812
Market value options
2
— 1,078 — — 1,078
SAYE options
3
— — — 3,778 3,778
1. Including those vested but still in holding period.
2. The market value options granted under the tax-advantaged part of the ESOS as part of the LTIP award granted in 2020 to Hannah Nichols are subject tothe
same performance conditions as those LTIP awards.
3. A breakdown of SAYE awards is shown on page 123.
4. All amounts shown for Hannah Nichols are at the date she stepped down from the Board (14 April 2025). All in flight LTIP awards lapsed on cessation (LTIP
awards over 68,312 shares).
5. No options have been exercised during the year under review, or up to the date Hannah Nichols stepped down from the Board.
Loss of office payments and payments to
formerDirectors
Hannah Nichols
As announced on 7 January 2025 Hannah Nichols resigned and
stepped down from the Board on 14 April 2025. The following
payments, as disclosed in last year’s Directors’ Remuneration
Report, were made after due consideration was given to her
contractual rights, the relevant plan rules and associated
discretions within those plan rules and the Directors’
Remuneration Policy:
Salary and benefits
Hannah Nichols received her normal remuneration in
accordance with her service agreement up to and including
14 April 2025, when she ceased to be employed by the Group.
No further payments relating to salary or benefits will be made
to Ms Nichols following her departure from the Group with the
Committee determining, with the agreement of Ms Nichols, that
there would be no payment in lieu of notice for the balance of
her unexpired notice period.
Deferred Annual Bonus Plan Awards
Consistent with the provisions included in the Deferred Bonus
Plan, and as a result of the Deferred Bonus Plan awards having
been earned in connection with performance in prior years, the
Committee determined that Hannah Nichols’ unvested DBP
awards granted on 1 April 2025 and 19 March 2024 over 11,846
and 11,865 shares respectively, will vest in full on the normal
vesting dates, subject to the rules of the DBP. Any dividend
equivalents accrued in respect of these awards will be paid in
the form of additional shares and capable of exercise thereafter.
Any shares acquired in connection with these awards will
remain subject to the rules of the Deferred Bonus Plan, including
provisions relating to malus and clawback.
Long Term Incentive Plan Awards
The inflight awards under the Hill & Smith Long Term Incentive
Plan (the ‘LTIP’) granted to Hannah Nichols on 19 March 2024
and 16 March 2023 in the form of nil-cost options over 32,245
and 36,067 shares respectively lapsed on cessation of
employment.
Vested shares previously granted under the LTIP will be retained
and remain subject to relevant holding periods. These shares
are also subject to the terms of the clawback provisions as set
out in the LTIP rules and Directors’ Remuneration Policy.
There were no other loss of office payments made to past
Directors during the year ended 31 December 2025.
External directorships
Details of external appointments held by Executive Directors
and the fees retained during FY25 are outlined below:
Hannah Nichols was paid a fee of £19,987 in respect of her Non-
executive Directorship atOxfordInstruments plc for the period
to 14 April 2025 when she stepped down from the Board.
Directors’ Annual Remuneration Report continued
124
Non-executive Directors
Non-executive Director single figure comparison
Director Role Board fees
Other
fees
Taxable
benefits
Annual
bonus LTIP Pension
Total ‘Single
Figure’ 2025
1
Total ‘Single
Figure’ 2024
1
Alan Giddins
2
Chair 320,000 — — — — — 320,000 53,333
Tony Quinlan Senior Independent Director 82,000 — — — — — 82,000 85,192
Farrokh Batliwala
3
Non-executive Director 60,502 — — — — — 60,502 58,384
Carol Chesney Non-executive Director 71,000 — — — — — 71,000 63,833
Pete Raby Non-executive Director 60,000 — — — — — 60,000 58,000
Gillian Tomlinson
4
Non-executive Director 46,154 — — — — — 46,154 —
Former Directors
Leigh-Ann Russell
5
Non-executive Director 15,000 — — — — — 15,000 58,000
Mark Reckitt Non-executive Director — — — — — — — 28,333
TOTAL 654,656 — — — — — 654,656 405,075
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 as 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. Gillian Tomlinson was appointed to the Board on 25 March 2025.
5. Leigh-Ann Russell stepped down from the Board on 12 March 2025.
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
2025 2024
Alan Giddins 97,350 93,125
Farrokh Batliwala 4,000 2,000
Carol Chesney 1,054 —
Tony Quinlan 3,111 3,111
Pete Raby 5,020 5,020
Leigh-Ann Russell
1
2,000 2,000
Gillian Tomlinson — —
1. Leigh-Ann Russell stepped down from the Board on 12 March 2025 and the shareholding shown above is at that date.
There was no change in these beneficial interests between 31 December 2025 and 10 March 2026. 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.
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 125
Governance
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 2024 and the year ended 31 December 2025, 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
Alan
Giddins
Rutger
Helbing
Chris
McLeish
Farrokh
Batliwala
Carol
Chesney
Tony
Quinlan
Pete
Raby
Hannah
Nichols
Leigh-Ann
Russell
Gillian
Tomlinson
Salary/
fees
2024 — 2025 3.7% 2.0%-8.0% (43.4)%
2
263.3%
6
n/a 3.6% 11.2% (3.7)% 3.4% (68.3)%
5
(74.1)%
4
n/a
2023 — 2024 4.9% 2.0%-10.0% (3.2)%
2
n/a n/a 4.6% n/a 21.5%
3
4.6% 8.1% 4.6% n/a
2022 — 2023 5.4% 1.3%-10.0% 4.0% n/a n/a 3.0% n/a 3.0% 3.0% 5.0% 3.0% n/a
2021 — 2022 4.1% 2.0%-9.0% 3.0% n/a n/a n/a n/a 3.0% 3.0% 3.0% 3.0% n/a
2020 — 2021 2.9% 2.9% 2.0% n/a n/a n/a n/a 2.0% 2.0% 2.0% n/a n/a
Taxable
benefits
2024 — 2025 n/a n/a n/a 229%
6
n/a n/a n/a n/a n/a (71)%
5
n/a n/a
2023 — 2024 n/a n/a n/a n/a n/a n/a n/a n/a n/a 1.7% n/a n/a
2022 — 2023 n/a n/a n/a n/a n/a n/a n/a n/a n/a 1.4% n/a n/a
2021 — 2022 n/a n/a n/a n/a n/a n/a n/a n/a n/a 0.3% n/a n/a
2020 — 2021 n/a n/a n/a n/a n/a n/a n/a n/a n/a 5.0% n/a n/a
Annual
bonus
2024 — 2025 n/a 14.3%
1
n/a 249%
6
n/a n/a n/a n/a n/a n/a n/a n/a
2023 — 2024 n/a 153.0%
1
n/a n/a n/a n/a n/a n/a n/a (7.5)%
5
n/a n/a
2022 — 2023 n/a 20.3%
1
n/a n/a n/a n/a n/a n/a n/a 30% n/a n/a
2021 — 2022 n/a 44.5%
1
n/a n/a n/a n/a n/a n/a n/a (8)% n/a n/a
2020 — 2021 n/a 340.3%
1
n/a n/a n/a n/a n/a n/a n/a 454.4% n/a n/a
1. The bonus figures were taken from those senior executives operating on similar incentivised arrangements to the CEO and capable of influencing
theGroup’sperformance.
2. Alan Giddins’ salary/fees include fees paid both as Executive and Non-executive Chair in the appropriate years.
3. 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.
4. Leigh-Ann Russell stepped down from the Board on 12 March 2025.
5. Hannah Nichols stepped down from the Board on 14 April 2025.
6. Rutger Helbing joined the Board on 19 September 2024.
Directors’ Annual Remuneration Report continued
126
Single Figure of the Chief Executive Officer compared to the wider workforce
This is our seventh 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 2024/25, 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
25
th
percentile
pay ratio
Median
pay ratio
75
th
percentile
pay ratio
2025 Option B 25:1 20:1 21:1
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.
2025 CEO 25
th
percentile Median 75
th
percentile
Salary £683,400 £26,853 £34,581 £33,031
Total remuneration £1,589,576 £27,704 £35,395 £33,835
The ratio has remained static at the 25
th
percentile and at median but reduced at the 75
th
percentile. The median pay ratio is less than
the 75
th
pay ratio due to the individual at median working a larger number of hours. In this context, the Committee considers that the
median ratio for 2025 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 2025 as compared to the FTSE 250. The
Committee believes that this is the most appropriate broad index for comparison, because the Company is a member.
Total shareholder return
0
50
100
150
200
250
300
350
400
450
31 Dec 202531 Dec 202431 Dec 202331 Dec 202231 Dec 202131 Dec 202031 Dec 201931 Dec 201831 Dec 201731 Dec 201631 Dec 2015
Hill & Smith
FTSE 250
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 127
Governance
Directors’ Annual Remuneration Report continued
The table below details the CEO/Executive Chair’s single figure remuneration and actual variable pay outcomes over the same period.
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Derek
Muir
Paul
Simmons
Paul
Simmons
Paul
Simmons
Alan
Giddins
Alan
Giddins
Alan
Giddins
Rutger
Helbing
Rutger
Helbing
CEO/Executive Chair
Single Figure (£000) 2,134 2,085 1,506 1,187 980 318 1,781 798 257 585 512 448 1,590
Annual bonus (% of max) 100 94 19 43 19 19 88 72 n/a n/a n/a 83 80
LTIP vesting (% of max) 100 100 100 31 36 n/a 100 Nil n/a n/a n/a n/a n/a
Relative importance of spend on pay
2025 2024 % Change
Dividends paid in respect of the financial year £42.4m £39.4m 7.6%
Share buyback
1
£20.2m N/A N/A
Overall spend on pay
2
£234.3m £227.2m 3.1%
1. There were no shares repurchased in 2024.
2. This includes a -0.2% change in the average number of people employed by the Group. See note 6 to the accounts on page 170.
Statement of shareholder voting
The following table shows the results of the vote on the Annual Remuneration Report at the 2025 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 (2025)
% of votes cast 99.93% 0.07%
323,133 votes were withheld in
relation to this resolution (<0.1%)62,555,563 41,954
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 £101,682 in connection with
itswork for the Committee, which were charged on a time cost basis.
The Chief Executive Officer 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 2026 (Subject to Audit)
Executive Directors
Salary
Base salaries as from 1 January 2026 are:
Rutger Helbing £703,500
Chris McLeish £463,500
As detailed in the Remuneration Committee Chair Review on pages 102 to 105, Rutger Helbing and Chris McLeish have both received
a base salary increase of 3%. This compares to a range of salary increases provided to the wider workforce within our operating
companies, of 2% to 8% for 2026.
Pension and benefits
The pension contribution for both Executive Directors is 6.5% of base salary.
128
Annual bonus
The maximum opportunity for Rutger Helbing will be 150% of salary and Chris McLeish 125% 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 2026 financial year the bonus metrics and weightings will be as follows, with revenue growth being introduced to better
alignwith our current short-term priorities and our financial framework:
• Underlying operating profit (60%)
• Organic revenue growth (20%, this is a new measure for 2026)
• Cash conversion (10%, previously 20%)
• Non-financial aligned with strategy and individual role (10%, previously 20%)
The Committee does not consider it appropriate to prospectively disclose the targets under the annual bonus plan due to 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 2025,
the range of financial targets approved for 2026 has 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.
LTIP
The 2026 LTIP award for Rutger Helbing will be 200% of salary and for Chris McLeish 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. As detailed in the
Chair’s introductory letter, the size of awards has been set to align with current market practice and the quantum has been
considered as part of setting the target ranges for 2026.
UEPS compound annual growth rate
overthree years (50% of the award)
TSR
1
(40% of the award)
GHG reduction target
2
(10% of the award) Vesting amount
Less than 4% Below median Less than 0% 0% vesting
4% Median 0% 20% vesting
14% Upper quartile 6% 100% vesting
1. Relative to the FTSE 250 (excluding investment trusts and financial services companies).
2. The GHG vesting schedule has an intermediate vesting step with 50% vesting at a 3% reduction with straight line vesting between threshold (20% vesting at a
reduction of 0%), target (50% vesting at a 3% reduction) and maximum (100% vesting at a 6% reduction). Other targets vest on a straight line basis from the
threshold performance level to maximum.
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 appropriately challenging in the current market context having taken into account the quantum of the awards. The
greenhouse gas reduction targets were 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 2025, the Board approved a 12% increase to the base fee for the Non-executive Directors for 2026 following amarket
review of fees paid by similar companies and current and expected future time commitment of the roles. The fees for additional roles
are also shown below:
2026 2025
Chair £320,000 £320,000
Non-executive Director £67,000 £60,000
Senior Independent Director £13,500 £11,000
Audit Committee Chair £13,500 £11,000
Nomination Committee Chair £13,500 £11,000
Remuneration Committee Chair £13,500 £11,000
Tony Quinlan
Chair
10 March 2026
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 129
Governance
The Directors present their report, together
with the audited consolidated financial
statements of the Group, for the year
ended31 December 2025.
This report contains additional information which the Directors
are required by law and regulation to include within the Annual
Report and Accounts. This Directors’ Report, the Governance
Report on pages 68 to 129 andthe Strategic Report on pages 2
to67 comprise the ‘management report’ forthe purpose of the
Financial Conduct Authority’s Disclosure and Transparency
Rule(DTR) 4.1.8R. Other information relevant to the Report is
incorporated by reference, including information relevant
pursuant to the UK Corporate Governance Code (‘Code’) and the
UK Listing Rule 6.6.1R.
In accordance with Section 414C(11) of the Act, some matters
have been included in our Strategic Report that would otherwise
be required to be disclosed in this Directors’ Report. Both the
Strategic Report on pages 2 to 67 and the Governance Report on
pages 68 to 129 are incorporated into the Directors’ Report by
reference.
Taken together, the Strategic and Governance Reports, along
with this Directors’ Report are intended to provide a fair,
balanced and understandable assessment of the development
and performance of the Group’s business during the year and
itsposition at the end of the year; our business model; strategy;
likely future business developments; and any principal risks
anduncertainties associated with our business.
Directors’ Report
(and other statutory disclosures)
The following specific information required in the Directors’
Report is included either in the Directors’ Report or in other
sections of this Annual Report and is incorporated by reference
as detailed below:
Information Reported In Pages
Authority to purchase
own shares
Directors’ report 132
Board diversity
targets
Governance report 81
Chief Executive
Officer’s review
Strategic report 14 to 19
Director’s interests in
the Company’s shares
Remuneration
Committee report
124 to 125
Emissions reporting Strategic report
Our Sustainability section
located on our corporate
website
58 to 59
Employee
engagement
Strategic report 30
Employment of
disabled persons
Directors’ report 133
Engagement with
suppliers, customers
and others
Strategic report 30 to 34
Financial Instruments Consolidated financial
statements – note 23
192 to 198
Future business
developments
Strategic report 2 to 67
Internal controls Audit Committee report 99
Major shareholder’s
interests
Directors’ report 134
Post balance sheet
events
Directors’ report 131
Results and dividends Directors’ report 131
Risk Management Strategic report 60 to 62
Viability statement Governance report 84
130
Principal activities
The principal activities of the Group are the manufacture and
supply of Engineered Solutions and Galvanizing 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 221. Further details of the Group’s activities and future
plans are set out intheStrategic Report on pages 2 to 67.
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 76 and is incorporated into
this report byreference.
Post balance sheet events
In March 2026 the Group reached agreement to acquire 80% of
the equity of Freeberg Industrial Fabrication LLC for a headline
cash consideration of $36m on a debt free, cash free basis.
Further consideration of up to $50m is payable for the remaining
20% of equity, linked to the achievement of future profit targets.
The acquisition is subject to US regulatory approvals, which the
Group expects in the second quarter of 2026. Located in
Escondido, California, Freeberg is a leading US designer and
manufacturer of custom enclosures and other engineered
solutions that serve data centre, power generation, and other
infrastructure markets.
In March 2026 the Group also completed the acquisition of the
trade and assets of Hentech Fabrication Limited for a headline
consideration of €7.3m. Located in Wexford, Ireland, Hentech is
a designer, manufacturer and installer of engineered steel
solutions, focused on access flooring and other industrial
fabrication.
Financial results and ordinary dividends
The Group profit before taxation for the year amounted
to£111.3m(2024: £104.5m). Group revenue at £868.8m, 2%
upon2024 (£855.1m). Operating profit at £120.1m, up 4%
on2024 (£115.4m).
The full results for the year and financial position at
31 December 2025 are shown in the Consolidated Income
Statement on page 147 and Consolidated Statement of
Financial Position onpage 149 and the business segment
information is given on pages 163 to 165.
The Directors recommend the payment of a final dividend of35.0p
per ordinary share (2024: 32.5p) which, together with the interim
dividend of 18.0p per ordinary share (2024:16.5p per ordinary
share) paid on 7 January 2026, makes a total distribution for
theyear of 53.0p per ordinary share (2024: 49.0p per ordinary
share). Subject to shareholders approving this recommendation
at the AGM, the final dividend will be paid on3 July 2026 to
shareholders on the register at the close ofbusiness on
29 May2026. The latest date for receipt of Dividend
Re-investment Plan elections is 12 June 2026.
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 2025
80,443,391
Total new ordinary shares
issued during the year
235,272
Number of shares purchased
and cancelled during the year
(940,913)
Issued share capital
31 December 2025
79,737,750
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 198 to 200
ofthe Group financial statements.
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.
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 131
Governance
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. More information can be found on page 80.
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 192 to 193.
Research and development
During the year, the Group spent a total of £2.1m (2024: £3.4m)
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 (2024: £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 32.
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 £135,619
(2024: £119,618).
Employment policies
Details of the Group’s employment policies are available on the
Company’s website.
Shareholder authority for purchase of own shares
Directors’ powers to authorise the purchase by the Company of
its own shares are subject to the Articles of Association, the
provisions of the relevant statutes and also the UK Listing
Authority requirements. No shares are held in treasury.
At the Company’s AGM held on 22 May 2025, shareholders
authorised the Company to buy back up to an aggregate of
4,023,960 ordinary shares of 25p each (representing
approximately 5% of the Company’s issued share capital). This
authority will last until the 2026 AGM or if earlier, 22 August
2026. Under this authority there is a minimum and maximum
price to be paid for such shares. Any shares that are bought
back may be held as treasury shares or cancelled upon
completion of the purchase, thereby reducing the Company’s
share capital. A further resolution requesting the authority to
repurchase up to 10% issued share capital, will be put to
shareholder vote.
On 13 August 2025 the Company announced its intention to
return surplus capital of up to £100,000,000 to its shareholders
through a share buyback programme. As part of this share
buyback programme, as at 9 March 2026, the Company had
purchased 1,481,212 ordinary shares of 25 pence each with
anominal value of £370,303, for a total consideration of
£32,513,023 (including costs). All shares purchased have
beencancelled.
Directors
The Directors of the Company who served during the year, are
set out on page 68. Details of their service contracts/letters of
appointment can be found on page 116.
Directors’ interests
The interests of the Directors in the share capital of Hill & Smith
PLC, as at 31 December 2025, are set out on page 124 and 125.
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.
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 Act 2006 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.
Directors’ Report (and other statutory disclosures) continued
132
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 on the Company’s
website and which details the actions undertaken to prevent
slavery and human trafficking in both its organisation and
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.
Code of Business Conduct
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; contractors, consultants,
representatives and agents; and commercial intermediaries.
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.
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.
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 135
andastatement by the Auditor on their responsibilities
isgivenon page 145.
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 133
Governance
Directors’ Report (and other statutory disclosures) continued
Major shareholders
Major shareholders do not have different voting rights from those of other shareholders. Information provided to the Company
bymajor shareholders pursuant to the DTRs is published via the Regulatory Information Service and is available on our website
atwww.hsgroup.com. As at 31 December 2025, the Company had been notified under Rule 5 of the DTRs of the following holding
ofvoting rights in its share.
On 3 March 2026, the Company received notification from BlackRock that the number of ordinary shares they now hold isbelow 5%
of the issued share capital atthe time of notification.
Shareholder Number of ordinary shares
1
% of issued share capital
2
BlackRock 4,199,517 5.00%
Aberdeen Group plc Below 5% Below 5%
Vanguard Group 3,778,735 4.71%
Norges Bank 2,445,397 3.067%
1. Based on the total shares held in the Company as at the notification date
2. The percentage of voting rights detailed above was calculated at the time of the relevant disclosures made
By order of the Board
Karen Atterbury
Group Company Secretary
10 March 2026
Rights under employees’ share schemes
As at 31 December 2025, VG, as trustee of the Hill & Smith
Group Employee Benefit Trust (‘Trust’), held 46,842 shares,
approximately 0.06% 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 102 to 129.
Employee Share Plans
The Company offers an HMRC approved all-employee sharesave
plan available to all UK employees. For the first time the
Company has offered a US employee Share Purchase Plan
available to all its US employees.
273 of our people have an interest in long term share awards.
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.
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 2026 AGM.
Annual General Meeting
The Annual General Meeting of the Company will be held
atCranmore Park Conference, Event & Exhibition Centre,
Cranmore Avenue, Shirley, West Midlands, B90 4LF at 11.00am
on Thursday, 21 May 2026. 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 223.
134
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 2025 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
• 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 Report and Accounts 2025
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
• 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
10 March 2026
Strategic Report Financials Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 135
Governance
Independent auditor’s report to the
members of Hill & Smith PLC
Opinion
In our 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 2025 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 2025 which comprise:
Group Parent Company
Consolidated Statement of Financial Position as at
31 December 2025
Company Balance sheet as at 31 December 2025
Consolidated Income Statement for the year then ended Company Statement of Changes in Equity for the year then ended
Consolidated Statement of Comprehensive Income for
theyear then ended
Related notes 1 to 16 to the financial statements including
material accounting policy information
Consolidated Statement of Changes in Equity for the
yearthenended
Consolidated Statement of Cash Flows for the year
thenended
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 or the Parent Company and we
remain independent of the Group and the Parent Company in
conducting the audit.
136
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 2027 (the ‘going
concern period’) and considering the existence of any
significant events or conditions beyond this period, based
onour inquiries of management, our review of the Group’s
four-year strategic plan and knowledge arising from other
audit procedures;
• Obtaining management’s assessment for the going concern
period, including the cash flow forecasts and covenant
calculations, and assessing whether the cash flows were
bothconsistent with the board approved 2026 budget and
forecasts through 30 June 2027, and with the assumptions
used in the Group’s impairment assessments;
• Testing the clerical accuracy of the models used to prepare
the Group’s going concern assessment through re-
computation of themodels;
• 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;
• 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 and other intangible assets 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 to the Group’s performance and external
industryforecasts;
• Assessing the historical accuracy of management’s
forecasting for the past six 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 six years). We also considered mitigating actions,
assessing whether they were within management’s control
and whether they were supported by actual mitigations
achieved historically;
• Performing sensitivity analysis to challenge management’s
assessment of the impact of climate change based on their
latest costed plan; and
• Assessing the appropriateness of the Group’s disclosures
concerning the going concern basis of preparation by
whetherthese met regulatory and legislative requirements.
Key observations:
• The going concern period is appropriate, having given due
consideration to the covenant testing dates which are tested
every six months;
• Management’s forecasts appropriately include the repayment
of a portion of the Senior Unsecured Notes totalling $35m
which is due to be repaid in June 2026; and
• Our consideration of other evidence, including analyst and
industry forecasts, did not contradict the assumptions in
managements forecasts.
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 2027.
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.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 137
Financials
Overview of our audit approach
Audit scope
• We performed an audit of the complete financial information of 5 components and the Parent Company, and
audit procedures on specific balances for a further 18 components.
• We performed central procedures over: goodwill and other intangible assets impairment, loans and
borrowings and the associated financial expenses, retirement benefit obligations, equity, intercompany
eliminations, dividend and distributable reserves, and consolidation journals.
• For certain accounts the audit procedures were completed by a combination of the primary audit team and by
component auditors. These included: cash and cash equivalents, right-of-use assets and lease liabilities,
current tax assets and liabilities, deferred taxes assets and liabilities, taxation in the income statement and
statement of comprehensive income, and the classification of underlying/non-underlying items.
Key audit
matters
• Revenue recognition – the risk of management override through inappropriate manual journals to revenue or
inappropriate assumptions in calculating over-time revenue leading to acceleration of revenue recognition.
• Inappropriate assumptions used in the impairment models of cash generating units where an impairment is
within a plausible scenario resulting in an incorrect carrying value of goodwill and other intangible assets.
Materiality
• Overall Group materiality of £6.7m which represents 5% of adjusted Operating profit.
• Parent Company materiality is determined to be £5.3m, which is 1.5% of equity.
An overview of the scope of the Group and Parent
Company audits
Tailoring the scope
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 as detailed in the overview of our audit
approach.
We then identified 21 components as individually relevant to
theGroup due to the 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. No
components of the Group were identified as individually relevant
due to materiality or financial size relative to the Group, that
have not been already as identified as individually relevant from
a risk perspective.
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 3 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 24 components selected, we designed and performed
audit procedures on the entire financial information of 6
components (“full scope components”), which included the
Parent Company. For 7 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 11 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.
Independent auditor’s report to the members of Hill & Smith PLC continued
138
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 Primary audit engagement
team, or by component auditors 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 18 components where we perform specific audit procedures,
12 of these were performed directly by the primary auditteam.
For the remaining 10 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.
In addition to these visits, the primary audit team interacted
regularly with the component teams where appropriate during
various stages of the audit, reviewed relevant working papers
and were responsible for the scope and direction of the
auditprocess.
Where relevant, the section on key audit matters details 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 as a whole.
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 failing to adapt to and manage threats
and opportunities from climate change and transitioning to a
lower carbon economy (transition risk). These are explained on
pages 49-55 in the required Task Force on Climate Related
Financial Disclosures and on pages 63-66 in the principal risks
and uncertainties. They have also explained their climate
commitments on page 52. All of these disclosures form part of
the “Other information,” rather than the audited financial
statements. Therefore, our procedures on these unaudited
disclosures 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 in note 1 how they have reflected the
impact of climate change in their financial statements.
Additionally, in their Sustainability Plan management disclose
how this aligns with their commitment to the aspirations of the
Paris Agreement and long-term targets of a 90% reduction in
scope 1 and 2 greenhouse gas emissions by 2040 from a 2020
base year which is maintained through 2050. 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 pages 49-55 and whether
these have been appropriately reflected in the 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: “Inappropriate assumptions used in
the impairment models of cash generating units where an
impairment is within a plausible scenario resulting in an
incorrect carrying value of goodwill and other intangible assets”.
Details of the impact, our procedures and findings are included
in our explanation of key audit matters below.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 139
Financials
Risk Our response to the risk
Revenue recognition – the risk of
management override through
inappropriate manual journals to
revenue (£868.8m, 2024: £855.1m)
Revenue is a key performance
indicator for external stakeholders
and a key driver in influencing
earnings on which management
incentives are based.
We identified a risk of management
override through inappropriate
manual topside revenue journal
entries being processed.
Procedures performed to address this fraud risk are performed by component teams at 5 full
scope and 7 specific scope components where revenue is in scope. Revenue at these
components represents 81% of the total consolidated revenue balance of £868.8m. Revenue
procedures were additionally performed at 8 components designated as specified procedures
representing a further 15%. We performed centralised procedures over the eliminations of
intercompany revenues which comprised (4%) of total revenue.
At each of these components we performed walkthroughs of the process by which revenue is
recognised and recorded to understand the standard flow of transactions and the design and
implementation of controls in place to address the risk of material misstatement to revenue.
We obtained and reviewed breakdowns of all manual journals. For all individually material
revenue journals outside of the standard flow of transactions and a sample of individually
immaterial journals outside of our expectations where the cumulative impact of a trend
exceeded our testing thresholds, we agreed the journal entries to underlying documentation
to assess the appropriateness of the revenue being recognised.
For all relevant components we performed data analytics procedures over the correlation of
sales to debtors and to cash receipts to test the existence and occurrence of revenue being
recorded in the correct period.
For the remaining components, to address the residual risk of material misstatement, we
performed analytical review procedures to identify anything unusual or outside our
expectation.
Key observations communicated to the audit committee
Our procedures performed did not identify any unsupported manual adjustments to revenue or any unexplained anomalies from our
revenue analytics.
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.
Independent auditor’s report to the members of Hill & Smith PLC continued
140
Risk Our response to the risk
Revenue recognition – the risk of
management override through
inappropriate assumptions in
calculating over-time revenue
leading to acceleration of revenue
recognition (£288.6m,
2024: £269.7m)
There is a risk of inappropriate
revenue recognition if revenue
fromthe provision of services is
recorded in the wrong period.
Ourkey audit matter principally
focuses on where there is
estimation in the calculation of
revenue recorded over time and
completion of projects.
Our risk in the current year has
been revised to isolate the
population of revenue to over-time
revenue as that has a higher level
of cut-off risk due to the level of
judgement involved the
determination of whether revenue
should be recorded.
Procedures covering revenue recognised over time are performed by component teams at 4
full scope, 3 specific scope and 2 specified procedures components, comprising 94% of the
over-time revenue of £288.6m.
We performed cut-off testing procedures at all components where revenue is in scope to
confirm the transactions had been appropriately recorded in the income statement with
reference to IFRS 15 and assesses whether 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;
• assessing whether 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 assess whether the revenue had been recorded in the
correct period.
We also performed the following additional procedures where applicable:
• 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 assess
whether revenue was recognised in the correct period and reflective the level of installation
that has taken place in the year.
• 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 assess whether the requirements of IFRS 15 had been met to recognise revenue
in the current period. We also enquired of non-finance personnel and inspected inventory
ledgers and bill of materials to confirm for a sample of products that they were non-
standard/bespoke and hence can be recognised over time under IFRS 15.
• We examined post year end credit notes to assess any evidence of inappropriate revenue
recognition cut-off for the year ended 31 December 2025.
Key observations communicated to the audit committee
Our audit procedures did not identify evidence of material misstatements related to revenue recognition and we found no evidence
of management bias.
Risk Our response to the risk
Inappropriate assumptions used in
the impairment models of cash
generating units where an
impairment is within a plausible
scenario resulting in an incorrect
carrying value of goodwill and other
intangible assets
In accordance with note 12 of the
financial statements, Prolectric,
National Signal and ATG cash
generating units (‘CGUs’) have
plausible scenarios where an
impairment of the goodwill and
intangibles assets could occur.
Procedures to respond to this risk were performed by the primary audit team.
We performed walkthroughs of the process by which management undertake to assess
impairment of goodwill and other intangible assets to understand the standard flow of
transactions and the design and implementation of controls in place to address the risk of
material misstatement.
We performed the following procedures to gain assurance that the carrying values of the
CGUs were fairly stated:
• Examining management’s methodology for determining the value in use of the CGUs;
• Understanding the composition of management’s future cash flow forecasts and the
process undertaken to prepare them;
• Checking for each CGU that the underlying cash flows were consistent with the Budget and
strategic plan submitted to, and approved by, the Board; and
• Re-performing the calculations in each CGU impairment model to test the mathematical
integrity.
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Hill & Smith PLC | Annual Report and Accounts 2025 141
Financials
Risk continued Our response to the risk continued
The carrying value of goodwill and
intangibles associated with the
Prolectric, National Signal and ATG
CGUs was £9.5m, £13.7m and
£9.8m, respectively, as at
31 December 2025. These CGUs
operate in markets where there is
limited third party market data and
headroom in the models is
sensitive to reasonably plausible
changes in assumptions, which
could result in a material
impairment occurring. Our risk
wasspecific to these CGUs.
A significant risk arises due to
thehigher level of estimation
uncertainty associated with the
significant assumptionsin
determining the value in use of
theCGUs.
We performed detailed testing to critically assess the key inputs of the forecast cash flows
including:
• With support from our valuation specialists, independently constructing our own
expectation of the discount rates for a market participant;
• 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 benchmarking the
significant assumptions to comparable, independent, third-party benchmarks and considering
factors including historical results, drivers of growth and the reasonableness of margins;
• Challenging the budget and strategic plan support for the cashflow projections for each
CGU by understanding key drivers such as level of recurring revenue and sources of
forecast growth;
• Analysing available information to identify any contrary evidence, including consideration of
competitor performance and views provided in analyst reports; 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.
For all CGUs, we calculated the degree to which the discount rate and operating profit would
need to fluctuate before an impairment was identified and considered the likelihood of this
occurring.
Specifically, we further focused on:
• For Prolectric and ATG, we independently developed a range of alternative scenarios by
considering plausible changes to significant assumptions included in the budget and
strategic plans for each CGU. This included: revenue, gross margins and overheads.
Additionally, we benchmarked the long-term growth rate to third-party benchmarks to
conclude on the reasonableness of the rate applied.
• We challenged the completeness of range of scenarios considered in the sensitivity
analysis undertaken by management and assessed whether the disclosures in relation to
the key assumptions around Prolectric and ATG were adequate given the sensitivity of the
level of headroom to possible changes in these key assumptions.
• For National Signal, we assessed whether the impairment charge was appropriately allocated
to the remaining assets of the CGU in accordance with IAS 36, Impairment of Assets.
• Our risk assessment also considered whether there was an incentive by management to
overstate the impairment charge for National Signal, challenging whether there were
indicators of an over conservative estimate through benchmarking growth rates to
externally available industry reports, historical performance of the CGU and the trailer-
mounted message boards previously manufactured by Hill & Smith Inc.
We assessed the disclosures in respect of goodwill and other intangible assets with reference to
the requirements of IAS 36 and evaluated their consistency with the audited impairment models.
Key observations communicated to the audit committee
Our year end audit procedures did not identify evidence of material misstatement regarding the carrying value of goodwill or other
intangible assets. We consider the impairment recognised in relation to the National Signal 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 and ATG.
Independent auditor’s report to the members of Hill & Smith PLC continued
142
In the prior year, our auditor’s report included a key audit matter
in relation to the valuation of inventory provisions (gross
inventory balance £97.2m, 2024: £100.1m). Given the turnover
of inventory, the consistent policy applied which has a low level
of complexity and management judgement, and with no material
errors in the prior year, we no longer consider this accounting
estimate to be a key audit matter.
As there have been no acquisitions in the current year, the key
audit matter on the valuation and completeness of goodwill and
acquisition intangibles is not applicable.
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 £6.7m
(2024: £6.6m), which is 5% (2024: 5%) of adjusted operating
profit. We believe that adjusted operating profit provides us with
the most relevant performance measure to the stakeholders of
the Group asitexcludes material non-recurring items.
We determined materiality for the Parent Company to be £5.3m
(2024: £5.5m), which is 1.5% (2024: 1.5%) of equity.
During the course of our audit, we reassessed initial materiality
and revisited our scoping assessments to ensure that sufficient
appropriate evidence has been obtained to address the risk of
material misstatement.
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%
(2024: 75%) of our planning materiality, namely £5.0m
(2024: £4.9m). 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 £1.1m to £3.0m
(2024: £0.7m to £2.8m).
Starting
basis
Materiality
Adjustments
£120.1m
Reported operating profit
£13.6m
National Signal impairment
£133.7m
Totals adjusted operating profit
£6.7m
Materiality (5% of adjusted operating profit)
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 143
Financials
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 £0.3m
(2024: £0.3m), 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 1-135, 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.
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 83;
• 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 84;
• Directors’ 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 84;
• Directors’ statement on fair, balanced and understandable set
out on page 84;
• Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on
page 82;
• The section of the annual report that describes the review of
effectiveness of risk management and internal control
systems set out on page 82; and
• The section describing the work of the audit committee set
out on page 95.
Independent auditor’s report to the members of Hill & Smith PLC continued
144
Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement set out on page 135, 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 to 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.
• We understood how Hill & Smith PLC is complying with those
frameworks by making enquiries of management at the Group
and Component level, 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.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 145
Financials
• 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 to revenue 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, Component
management at the relevant components; 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 14 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 six years, covering
the years ending 31 December 2020 to 31 December 2025.
• 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.
Adrian Roberts (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Birmingham
10 March 2026
Independent auditor’s report to the members of Hill & Smith PLC continued
146
Consolidated Income Statement
Year ended 31 December 2025
Hill & Smith PLC | Annual Report and Accounts 2025
147
2025 2024
Notes
Underlying
£m
Non-
underlying*
£m
Tot al
£m
Underlying
£m
Non-
underlying*
£m
Total
£m
Revenue 3 868.8 – 868.8 855.1 – 855.1
Cost of sales (515.3) – (515.3) (513.3) – (513.3)
Gross prot 353.5 – 353.5 341.8 – 341.8
Distribution costs (26.4) – (26.4) (26.8) – (26.8)
Administrative expenses (176.1) (31.2) (207.3) (172.0) (28.1) (200.1)
Other operating income 0.3 – 0.3 0.5 – 0.5
Operating prot 3,4 151.3 (31.2) 120.1 143.5 (28.1) 115.4
Financial income 7 0.8 – 0.8 0.5 – 0.5
Financial expenses 7 (9.6) – (9.6) (11.4) – (11.4)
Prot before taxation 142.5 (31.2) 111.3 132.6 (28.1) 104.5
Taxation 9 (36.3) 7.5 (28.8) (34.0) 5.9 (28.1)
Prot for the year attributable to the
owners of the parent 106.2 (23.7) 82.5 98.6 (22.2) 76.4
Basic earnings per share 10 102.7p 95.0p
Diluted earnings per share 10 101.6p 93.9p
* The Group’s definition of non-underlying items is included in the Group Accounting Policies on page 160 and further details on non-underlying items are
included in note 5.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 147
Financials
Consolidated Statement of
Comprehensive Income
Year ended 31 December 2025
148
Notes
2025
£m
2024
£m
Prot for the year 82.5 76.4
Items that may be reclassied subsequently to prot or loss
Exchange differences on translation of overseas operations 23 (30.4) 5.6
Exchange differences on foreign currency borrowings designated as net investment hedges 23 4.1 (0.6)
Items that will not be reclassied subsequently to prot or loss
Actuarial gain/(loss) on dened benet pension schemes 26 1.7 (0.2)
Taxation on items that will not be reclassied to prot or loss 9 (0.5) –
Other comprehensive (loss)/income for the year (25.1) 4.8
Total comprehensive income for the year attributable to owners of the parent 57.4 81.2
148
Consolidated Statement of Financial
Position
Year ended 31 December 2025
Hill & Smith PLC | Annual Report and Accounts 2025
149
Notes
2025
£m
2024
£m
Non-current assets
Intangible assets 12 202.5 236.0
Property, plant & equipment 13 185.4 185.1
Right-of-use assets 15 36.8 43.2
Retirement benet surplus 26 5.2 –
Deferred tax assets 16 0.1 0.1
430.0 464.4
Current assets
Assets held for sale 14 – 12.7
Inventories 17 97.2 100.1
Trade and other receivables 18 161.9 162.5
Current tax assets 2.4 1.3
Cash and cash equivalents 19 70.4 55.0
331.9 331.6
Total assets 761.9 796.0
Current liabilities
Liabilities held for sale 14 – (6.9)
Trade and other liabilities 20 (129.6) (133.5)
Current tax liabilities (2.8) (0.7)
Provisions 22 (11.6) (7.1)
Lease liabilities 15 (8.6) (9.1)
Loans and borrowings 20 (26.4) (0.8)
(179.0) (158.1)
Net current assets 152.9 173.5
Non-current liabilities
Other liabilities 21 (7.0) (11.2)
Provisions 22 (2.3) (2.3)
Deferred tax liabilities 16 (11.8) (12.3)
Retirement benet obligations 26 (0.6) (0.8)
Lease liabilities 15 (31.3) (36.9)
Loans and borrowings 21 (54.9) (98.7)
(107.9) (162.2)
Total liabilities (286.9) (320.3)
Net assets 475.0 475.7
Equity
Share capital 24 19.9 20.1
Share premium 49.0 47.0
Other reserves 5.1 4.9
Translation reserve 1.6 27.9
Retained earnings 399.4 375.8
Total equity 475.0 475.7
Approved by the Board of Directors on 10 March 2026 and signed on its behalf by:
RA Helbing CM McLeish
Director Director
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 149
Financials
Consolidated Statement of Changes
in Equity
Year ended 31 December 2025
150
Notes
Share
Capital
£m
Share
Premium
£m
Other
Reserves
£m
Translation
Reserve
£m
Retained
Earnings
£m
Total
Equity
£m
At 1 January 2024 20.0 44.6 4.9 22.9 332.1 424.5
Comprehensive income –
Prot 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 benet 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
Comprehensive income
Prot for the year – – – – 82.5 82.5
Other comprehensive loss for the year – – – (26.3) 1.2 (25.1)
Transactions with owners recognised directly in equity
Dividends 11 – – – – (39.4) (39.4)
Credit to equity of share-based payments 24 – – – – 2.9 2.9
Own shares held by employee benet trust – – – – 0.3 0.3
Satisfaction of long-term incentive and deferred bonus awards – – – – (4.8) (4.8)
Tax taken directly to the Consolidated Statement of Changes in Equity 9 –
– – – 1.1 1.1
Shares issued 24 – 2.0 – – – 2.0
Repurchase of shares 24 (0.2) – 0.2 – (20.2) (20.2)
At 31 December 2025 19.9 49.0 5.1 1.6 399.4 475.0
At 31 December 2024 a total of 70,318 shares were held in an employee benet trust for the purpose of settling awards granted to
employees under equity-settled share based payment plans. The cost of these shares, amounting to £1.3m, was included within
retained earnings at that date. During 2025, 248,476 shares have been issued in settlement of awards to employees and a further
225,000 shares purchased, leaving 46,842 shares held at 31 December 2025, at a cost of £1.0m included within retained earnings.
All shares repurchased by the Group under its share buyback programme were cancelled at the point of repurchase.
150
Consolidated Statement of Cash flows
Year ended 31 December 2025
Hill & Smith PLC | Annual Report and Accounts 2025
151
Notes
2025
£m
2024
£m
Prot before tax 111.3 104.5
Add back net nancing costs 7 8.8 10.9
Operating prot 3,4 120.1 115.4
Adjusted for non-cash items:
Share-based payments 6,24 2.9 3.4
Loss on disposal of subsidiaries 5 0.4 –
Gain on disposal of non-current assets 8 (0.4) (0.4)
Loss on disposal of assets held for sale 8,14 – 0.2
Depreciation of owned assets 8,13 20.5 20.8
Amortisation of intangible assets 8,12 12.1 11.1
Right-of-use asset depreciation 8,15 10.1 10.4
Gain on lease termination 15 – (0.6)
Gain on lease modication 15 (0.6) –
Release of accrued contingent consideration – (1.7)
Research & development expenditure credit (0.2) (0.5)
Impairment of non-current assets 8,12,13,15 14.7 14.0
Loss on remeasurement of assets held for sale 5,14 – 3.1
Operating cash ow before movement in working capital 179.6 175.2
(Increase)/decrease in inventories (2.3) 9.3
Increase in receivables (2.4) (11.8)
Increase in payables 1.6 3.1
Increase in insurance reimbursement asset 18,22 (3.6) (3.8)
Increase/(decrease) in provisions and employee benets 0.2 (3.4)
Net movement in working capital (6.5) (6.6)
Cash generated by operations 173.1 168.6
Purchase of assets for rental to customers (1.3) (2.3)
Income taxes paid (27.3) (26.5)
Interest paid 7 (6.6) (8.8)
Interest paid on lease liabilities 15 (2.0) (2.0)
Net cash from operating activities 135.9 129.0
Interest received 7 0.8 0.5
Proceeds on disposal of non-current assets 1.1 1.1
Proceeds on disposal of assets held for sale – 2.3
Purchase of property, plant and equipment (29.2) (21.3)
Purchase of intangible assets 12 (3.7) (5.0)
Acquisitions of subsidiaries 12 – (44.5)
Deferred consideration in respect of prior year acquisitions (3.1) (2.1)
Disposals of subsidiaries 5 7.4 –
Net cash used in investing activities (26.7) (69.0)
Issue of new shares 24 0.8 2.5
Repurchase of shares 24 (20.2) –
Purchase of shares for employee benet trust 19 (4.5) (1.2)
Dividends paid 11 (39.4) (34.5)
Costs associated with renancing during the year 19 (1.3) –
Repayment of lease liabilities 15,19 (9.5) (9.0)
Cash paid on early termination of lease contract – (0.1)
New loans and borrowings 19 42.0 62.5
Repayments of loans and borrowings 19 (55.4) (63.7)
Net cash used in nancing activities (87.5) (43.5)
Net increase in cash and cash equivalents net of bank overdraft 21.7 16.5
Cash and cash equivalents net of bank overdraft at the beginning of the year 51.3 34.4
Effect of exchange rate
uctuations
(3.3) 0.4
Cash and cash equivalents net of bank overdraft at the end of the year 19 69.7 51.3
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Financials
Notes to the Consolidated Financial
Statements
Hill & Smith PLC | Annual Report and Accounts 2025
152
1. Group Accounting Policies
Hill & Smith PLC is a company incorporated in the UK. The consolidated nancial statements of Hill & Smith PLC and its subsidiaries
(the “Group”) are presented for the year ended 31 December 2025.
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 Financial Reporting
Standards. The Company has elected to prepare its Parent Company Financial Statements, which are presented on pages 210 to 221,
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
signicant effect on the Group Financial Statements and estimates with a signicant risk of material adjustment in the next year are
discussed in note 2.
Basis of preparation
The consolidated nancial statements comprise the nancial statements of the Company, Hill & Smith PLC, and its subsidiaries as at
31 December 2025. 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 nancial 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 nancial 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 indenite 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 24, 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
identied that would impact the carrying values of such assets or have any other impact on the nancial 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 nancial 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 nancial
statements. The Group’s going concern assessment period is the 18-month period from the balance sheet date to 30 June 2027
(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 nancial covenants on those
facilities.
At 31 December 2025, the Group had £353.5m of committed borrowing facilities, and a further £6.2m of on-demand facilities.
The Group renanced its revolving credit facility in November 2025, entering into an ‘Amend and Extend’ addendum to the original
agreement signed in November 2022. The amendments include increasing the total facility to £300m and extending the term for
another two years to November 2029. The Group also holds $70m of 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
£1.7m. The amount drawn down under these committed facilities at 31 December 2025 was £82.9m, which together with cash and
cash equivalents of £69.7m gave total headroom of £346.5m (£340.3m committed, £6.2m on demand). The Group has not made any
changes to its principal borrowing facilities between 31 December 2025 and the date of approval of these nancial statements.
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153
1. Group Accounting Policies continued
Going concern and liquidity risk continued
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 dened in the facilities agreements
which are adjusted from the equivalent IFRS amounts. The ratio of net debt to EBITDA at 31 December 2025 was 0.1 times and
interest cover was 28.4 times. Note 23 to the Financial Statements sets out more information on the Group’s objectives, policies and
processes for managing its capital, its nancial risk management objectives, details of its nancial instruments and hedging
activities, and its exposures to credit and liquidity risk.
The Group has carefully modelled its cash ow outlook for the period to 30 June 2027, taking account of the current global economic
conditions. In this ‘base case’ scenario, the forecasts indicate signicant liquidity headroom will be maintained above the Group’s
borrowing facilities and nancial covenants will be met throughout the period, including the covenant tests at 30 June 2026, 31
December 2026 and 30 June 2027.
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 29% compared with current expectations throughout the
18-month period ending 30 June 2027. A reduction in headroom against borrowing facilities to nil would occur if the Group
experienced a sustained revenue reduction of 28% compared with current expectations for the 18-month period ending 30 June 2027,
noting that the stress test assumes repayment of $35m of Senior Unsecured Notes on expiry of the agreement in June 2026. 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 2025
The following amendments and interpretations apply for the rst time in 2025, and therefore were adopted by the Group:
• Amendments to IAS 21 – Lack of exchangeability
The amendment noted above has not had a material impact on the nancial 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 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.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 153
Financials
Notes to the Consolidated Financial Statements
continued
154
1. Group Accounting Policies continued
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 rst 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 signicantly 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 signicantly contributes to the ability to continue
producing outputs and is considered unique or scarce or cannot be replaced without signicant cost, effort, or delay in the ability to
continue producing outputs.
Contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Where it meets the
denition of a nancial 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 ows. 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 identiable 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 reects
management’s judgement of the fair value of the individual intangible asset calculated by reference to the net present value of future
benets accruing to the Group from the utilisation of the asset, discounted at an appropriate discount rate.
Certain US brands are considered to have an indenite life and are therefore subject to annual impairment testing (see accounting
policy ‘Impairment of assets’). In determining that these brands have indenite 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 specic 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 identiable and unique software products controlled
by the Group, and it is probable that future economic benets will ow 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 specic 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 benets
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.
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1. Group Accounting Policies continued
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 benet.
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.
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 nancial year
end and adjusted prospectively, if appropriate.
An item of property, plant and equipment and any signicant part initially recognised is derecognised upon disposal (i.e. at the date
the recipient obtains control) or when no future economic benets 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 indenite 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 signicant cash generating unit,
which are no larger than operating segments as dened in IFRS 8 – Segmental reporting.
The carrying amounts of the Group’s other non-nancial 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.
Strategic Report Governance Shareholder Info
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Financials
Notes to the Consolidated Financial Statements
continued
156
1. Group Accounting Policies continued
Impairment of assets continued
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 ows are discounted to their present value using a pre tax discount rate that
reects current market assessments of the time value of money and the risks specic to the asset.
Non-current assets held for sale and discontinued operations
The Group classies 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 classication 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 (disposal group), excluding nance costs and income tax expense.
The criteria for held for sale classication 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
signicant 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 classication.
Property, plant and equipment, intangible assets and right-of-use assets are not depreciated or amortised once classied as held for
sale.
Assets and liabilities classied as held for sale are presented separately as current items in the Group’s Consolidated Statement of
Financial Position.
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 simplied 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 nancial instruments of the Group are used to hedge its exposure to interest rate and foreign currency risks arising from
operational, nancing and investment activities.
In accordance with its treasury policy, the Group does not hold or issue derivative nancial 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 objective and strategy for undertaking
the hedge transaction. This process includes linking all derivatives designated as hedges to specic assets and liabilities or to
specic rm commitments or forecast transactions. The Group also documents its assessment, at hedge inception and on a half
yearly basis, as to 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 ows 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.
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157
1. Group Accounting Policies continued
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 offset, included as a component of cash and cash
equivalents for the purpose of the 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 routinely
sweeping cash balances within each bank. Consequently, the balances have been offset in the nancial 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 ows 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 prot or loss.
Foreign currency differences arising on the retranslation of a nancial 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 prot or loss. When the hedged part of a net
investment is disposed of, the associated cumulative amount in the translation reserve is transferred to prot or loss as an
adjustment to the prot or loss on disposal.
The principal exchange rates used were as follows:
2025 2024
Average Closing Average Closing
Sterling to US Dollar (£1 = USD) 1.32 1.35
1.28 1.25
Sterling to Indian Rupee (£1 = INR) 114.93 120.85 106.95 107.22
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 nished 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 outow of economic benets 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 ows at a pre tax rate that reects current market assessments of the time value
of money and, when appropriate, the risks specic to the liability. When discounting is used, the reduction in the provision due to the
passage of time is recognised as a nance cost.
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan and the
restructuring either has commenced or has been announced publicly. Future operating costs are not provided for.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 157
Financials
Notes to the Consolidated Financial Statements
continued
158
1. Group Accounting Policies continued
Provisions continued
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 reects 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: xed 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 purchase 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.
Revenue
Revenue is measured based on the consideration specied 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 full 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 signicant nancing 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.
UK & India and US Engineered Solutions
For standard products that are manufactured, revenue is recognised when goods are accepted by customers, which is usually on
delivery depending on the Incoterms dened 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.
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159
1. Group Accounting Policies continued
UK & India and US Engineered Solutions continued
Certain of the Group’s businesses in the Engineered Solutions segments manufacture non-standard products that are specic 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 in these segments 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 specied in the sales contract. To estimate the variable
consideration for these expected future rebates, the Group applies the most likely amount method to reect 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 signicant revenue reversal in the future.
Certain of the Group’s businesses in these segments 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 the rental of temporary road barrier are included in cost of sales.
The Group classies 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 to, or collected by, the customer.
The Group classies 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.
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 satised 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 nances.
Obligations for contributions to dened contribution pension schemes are recognised as an expense in the Consolidated Income
Statement as incurred.
The Group’s net surplus or obligation in respect of dened benet pension schemes is calculated separately for each scheme by
estimating the amount of future benet that employees have earned in return for their service in the current and prior periods. This
benet 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 qualied actuary using the projected unit method. Scheme assets are valued at bid price. The terms of
the scheme give the Group the right to recover any surplus assets and therefore the Group recognise any calculated IAS 19 surplus in
the Consolidated Statement of Financial Position. Tax calculated on pension movements during the year is recognised in the
Consolidated Statement of Other Comprehensive Income.
In the Consolidated Income Statement, current and past service costs are recognised in operating prot and the interest cost on the
net dened benet obligations is included in nancial expense.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 159
Financials
Notes to the Consolidated Financial Statements
continued
160
1. Group Accounting Policies continued
Retirement benefits continued
All actuarial gains and losses in calculating the Group’s surplus or obligation in respect of dened benet 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 reect 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 reect
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 nancial assets and liabilities at fair
value through prot 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 nancial assets and liabilities at fair value through prot or loss, the interest expense on lease
liabilities, and nancial expenses related to renancing. All borrowing costs are recognised in the Consolidated Income Statement
using the effective interest method.
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 (Revised) 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 non-underlying 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 prot 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.
160
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161
1. Group Accounting Policies continued
Income tax continued
Current tax is the expected tax payable on the taxable prot for the year. Taxable prot differs from net prot 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 identied
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 signicant exposure to Pillar Two income taxes to result given the relatively low level of protability 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
nancial 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 or taxable prot, 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 prots 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 prot 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.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 161
Financials
Notes to the Consolidated Financial Statements
continued
162
2. Accounting judgements, estimates and assumptions
The preparation of the Group’s consolidated nancial 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 indenite life intangible assets should be impaired requires the estimation of future
cash ows and growth factors adopted by each cash generating unit. Furthermore, discount rates applied to these cash ows are
determined by reference to the markets in which they operate and are risk adjusted to reect risks and opportunities existing for each
cash generating unit. These factors are all affected by prevailing market and economic factors outside the Group’s control. Further
information on this issue, including sensitivity analyses, is included in note 12.
Actuarial assumptions on pension obligations (note 26)
Estimates
In determining the valuation of the UK dened benet pension decit, certain estimates and assumptions about the scheme have
been made, notably the ination rates, discount rates, mortality and pension increases. The factors affecting these assumptions are
inuenced 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 reect management’s best estimate in light of the information available. Included in the current tax
payable is a liability of £6.7m (2024: £6.0m) for uncertain tax positions. In addition, £nil (2024: £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 £8.2m
(2024: £nil and £8.4m) 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.
Non-current assets held for sale (note 14)
Judgements
The criteria for held for sale classication 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 requires judgement and
analysis of all relevant facts and circumstances as at the balance sheet date.
162
Hill & Smith PLC | Annual Report and Accounts 2025
163
3. Segmental information
Business segment analysis
The Group previously reported three operating segments: Engineered Solutions, Galvanizing Services and Roads & Security. During
the year ended 31 December 2025, the Group has reassessed its reportable segments under IFRS 8 Operating Segments and has
determined that these are now US Engineered Solutions, UK & India Engineered Solutions, and Galvanizing Services. The Board
concluded these changes better reect the way the Group is now managed, enabling closer focus on geographic end markets and
growth opportunities. The Group’s internal management structure and nancial 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
characteristics:
•
The US Engineered Solutions segment comprises all US operating companies excluding Galvanizing Services;
•
The UK & India Engineered Solutions segment comprises all UK operating companies and India, excluding Galvanizing Services;
and
•
The Galvanizing Services segment contains a group of companies supplying galvanizing and related materials coating services.
Corporate costs are allocated to reportable segments in proportion to the revenue of each of those segments.
The revised segmental structure was effective from 1 January 2025. As required by IFRS 8, comparative segment information for the
US Engineered Solutions and the UK & India Engineered Solutions segments for the year ended 31 December 2024 has been restated,
as indicated by “restated” throughout these Consolidated Financial Statements. The restatement does not result in any change to the
results of the Galvanizing Services segment or the consolidated Group.
2025 2024 (restated)
Revenue
£m
Reported
Operating
Prot
£m
Underlying
operating
prot
£m*
Revenue
£m
Reported
Operating
Prot
£m
Underlying
operating
prot
£m*
US Engineered Solutions 416.6
49.0
75.0
390.3
49.5
69.4
UK & India Engineered Solutions 239.4
16.8
20.9
267.0
16.7
23.8
Galvanizing Services 212.8
54.3
55.4
197.8
49.2
50.3
Group 868.8
120.1
151.3
855.1
115.4
143.5
Net nancing costs (8.8)
(8.8)
(10.9)
(10.9)
Prot before taxation 111.3
142.5
104.5
132.6
Taxation (28.8)
(36.3)
(28.1)
(34.0)
Prot after taxation 82.5
106.2
76.4
98.6
* Underlying operating profit is stated before non-underlying items as defined in the Group Accounting Policies on page 160 and is the measure of segment
profit used by the Chief Operating Decision Maker, who is the Chief Executive Officer. 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 £1.0m (2024 (restated): £0.9m) of products and services to US Engineered Solutions and £6.8m (2024 (restated):
£7.4m) of products and services to UK & India Engineered Solutions. UK & India Engineered Solutions sold £0.2m (2024 (restated):
£0.2m) of products and services to US Engineered Solutions. These internal revenues, along with revenues generated from within
their own segments, have been eliminated on consolidation.
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 dened 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.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 163
Financials
Notes to the Consolidated Financial Statements
continued
164
3. Segmental information continued
US Engineered Solutions
UK & India Engineered
Solutions
Galvanizing Services Total
Primary Geographical Markets
2025
£m
2024
(restated)
£m
2025
£m
2024
(restated)
£m
2025
£m
2024
£m
2025
£m
2024
£m
UK 0.1 – 188.8 221.2 85.2 80.9 274.1 302.1
Rest of Europe 0.2 0.2 27.0 22.7 – – 27.2 22.9
North America 414.5 388.2 1.7 2.7 127.6 116.9 543.8 507.8
The Middle East 1.5 1.3 7.9 9.9 – – 9.4 11.2
Rest of Asia – 0.1 11.9 6.6 – – 11.9 6.7
Rest of the world 0.3 0.5 2.1 3.9 – – 2.4 4.4
416.6 390.3 239.4 267.0 212.8 197.8 868.8 855.1
Major product/service lines
Manufacture, supply and installation of products 411.7 385.3 225.7 248.4 – – 637.4 633.7
Galvanizing Services – – – – 212.8 197.8 212.8 197.8
Rental of assets to customers 4.9 5.0 13.7 18.6 – – 18.6 23.6
416.6 390.3 239.4 267.0 212.8 197.8 868.8 855.1
Timing of revenue recognition
Products and services transferred at a point in
time 200.0 210.4 156.1 177.2 212.8 197.8 568.9 585.4
Products and services transferred over time 216.6 179.9 83.3 89.8 – – 299.9 269.7
416.6 390.3 239.4 267.0 212.8 197.8 868.8 855.1
The Group has no material unsatised or partially satised 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
2025
£m
2024 (restated)
£m
Capital
expenditure
£m
Impairment losses,
amortisation and
depreciation
£m
Capital
expenditure
£m
Impairment losses,
amortisation and
depreciation
£m
US Engineered Solutions 13.5 28.6 13.4 25.7
UK & India Engineered Solutions 11.0 10.6 8.4 12.1
Galvanizing Services 10.1 7.6 5.6 7.7
Total Group 34.6 46.8 27.4 45.5
Property, plant and equipment (note 13) 30.9 20.9 22.4 22.5
Intangible assets (note 12) 3.7 25.9 5.0 23.0
Total Group 34.6 46.8 27.4 45.5
The 2025 amounts for impairment losses, amortisation and depreciation relating to the US Engineered Solutions segment included
asset impairments of £14.7m relating to National Signal and H&S Inc. as explained in note 5. The 2024 amounts include asset
impairments of £13.2m relating to H&S Inc.
164
Hill & Smith PLC | Annual Report and Accounts 2025
165
3. Segmental information continued
Geographical analysis
Total assets
2025
£m
2024
£m
UK 251.1 292.8
Rest of Europe 3.9 4.0
North America 483.6 473.9
Asia 20.5 17.4
Rest of the world 2.8 7.9
Total Group 761.9 796.0
Non-current assets
2025
£m
2024
£m
UK 168.9 168.4
Rest of Europe 1.4
1.5
North America 256.5
291.1
Asia 3.2
3.4
Total Group 430.0
464.4
Capital expenditure
2025
£m
2024
£m
UK 12.3
9.1
Rest of Europe –
0.5
North America 21.7
17.1
Asia 0.6
0.6
Rest of the world –
0.1
Total Group 34.6
27.4
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.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 165
Financials
Notes to the Consolidated Financial Statements
continued
166
4. Alternative Performance Measures continued
All underlying measures exclude certain non-underlying items, which are detailed in note 5. References to an underlying prot
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
2025
£m
2024
£m
Underlying prot before tax 142.5 132.6
Non-underlying items included in operating prot (31.2) (28.1)
Reported prot before tax 111.3 104.5
Reconciliation of underlying to reported operating profit by segment
US Engineered Solutions
UK & India Engineered
Solutions Galvanizing Services Total
2025
£m
2024
(restated)
£m
2025
£m
2024
(restated)
£m
2025
£m
2024
£m
2025
£m
2024
£m
Underlying operating prot 75.0 69.4 20.9 23.8 55.4 50.3 151.3 143.5
Non-underlying items
Prot on disposal of subsidiaries – – 1.1 – – – 1.1 –
Business reorganisation costs (3.7) – – – – – (3.7) –
Impairment of assets (14.7) (13.2) – – – – (14.7) (13.2)
Loss on remeasurement of assets held for
sale – – – (3.1) – – – (3.1)
Amortisation of acquisition intangibles (7.2) (6.2) (2.5) (2.6) (1.1) (1.1) (10.8) (9.9)
Expenses related to acquisitions and
disposals (0.4) (0.5) (2.7) (1.4) – – (3.1) (1.9)
Reported operating prot 49.0 49.5 16.8 16.7 54.3 49.2 120.1 115.4
Calculation of underlying operating margin
US Engineered Solutions UK & India Engineered Solutions Galvanizing Services Total
2025
£m
2024
(restated)
£m
2025
£m
2024
(restated)
£m
2025
£m
2024
£m
2025
£m
2024
£m
Underlying operating prot 75.0 69.4 20.9 23.8 55.4 50.3 151.3 143.5
Revenue 416.6 390.3 239.4 267.0 212.8 197.8 868.8 855.1
Underlying operating prot margin (%) 18.0% 17.8% 8.7% 8.9% 26.0% 25.4% 17.4% 16.8%
166
Hill & Smith PLC | Annual Report and Accounts 2025
167
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.
US Engineered Solutions
UK & India Engineered
Solutions Galvanizing Services Total
Revenue
£m
Underlying
operating
prot
£m
Revenue
£m
Underlying
operating
prot
£m
Revenue
£m
Underlying
operating
prot
£m
Revenue
£m
Underlying
operating
prot
£m
2024 (restated)
390.3
69.4
267.0 23.8
197.8 50.3
855.1 143.5
Impact of exchange rate movements from 2024 to 2025
(11.8)
(2.4)
(1.4) (0.3)
(3.6) (1.3)
(16.8) (4.0)
2024 translated at 2025 exchange rates (A)
378.5
67.0
265.6 23.5
194.2 49.0
838.3 139.5
Acquisitions and disposals
16.2
2.5
(10.1) 1.5
– –
6.1 4.0
Organic growth/(decline) (B)
21.9
5.5
(16.1) (4.1)
18.6 6.4
24.4 7.8
2025 (C)
416.6
75.0
239.4 20.9
212.8 55.4
868.8 151.3
Organic growth % (B divided by A)
6%
8%
–6% –17%
10% 13%
3% 6%
Constant currency change % ((C-A) divided by A)
10%
12%
–10% –11%
10% 13%
4% 8%
Calculation of underlying cash conversion ratio
2025
£m
2024
£m
Underlying operating prot
151.3
143.5
Calculation of adjusted operating cash ow:
Cash generated by operations
173.1
168.6
Purchase of assets for rental to customers
(1.3) (2.3)
Purchase of property, plant and equipment
(29.2) (21.3)
Purchase of intangible assets
(3.7) (5.0)
Repayment of lease liabilities
(9.5) (9.0)
Proceeds on disposal of non-current assets and assets held for sale
1.1
3.4
Dened benet pension scheme decit payments
3.8
3.7
Add back: Cash ows relating to non-underlying items
3.3
4.0
Adjusted operating cash ow
137.6
142.1
Underlying cash conversion (%)
91% 99%
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 167
Financials
Notes to the Consolidated Financial Statements
continued
168
4. Alternative Performance Measures continued
Calculation of capital expenditure to depreciation and amortisation ratio
2025
£m
2024
£m
Calculation of capital expenditure cashows:
Purchase of assets for rental customers 1.3 2.3
Purchase of property, plant and equipment 29.2 21.3
Purchase of intangible assets 3.7 5.0
34.2 28.6
Calculation of depreciation and amortisation:
Depreciation of property, plant and equipment 20.5 20.8
Amortisation of development costs 1.1 1.1
Amortisation of other intangible assets 0.2 0.1
21.8 22.0
Capital expenditure to depreciation and amortisation ratio 1.6x 1.3x
Calculation of covenant net debt to EBITDA ratio
2025
£m
2024
£m
Reported net debt 50.8 96.9
Lease liabilities (39.9) (46.0)
Lease liabilities included in liabilities held for sale – (3.0)
Amounts related to renancing under IFRS 9 2.3 1.5
Covenant net debt (A) 13.2 49.4
Underlying operating prot 151.3 143.5
Depreciation of owned assets 20.5 20.8
Right-of-use asset depreciation 10.1 10.4
Amortisation of development costs 1.1 1.1
Amortisation of other intangible assets 0.2 0.1
Underlying EBITDA 183.2 175.9
Adjusted for:
Lease payments (11.5) (11.0)
Share-based payments expense 2.9 3.4
Annualised EBITDA of subsidiaries acquired/disposed – 5.5
Covenant EBITDA (B) 174.6 173.8
Covenant net debt to EBITDA (A divided by B) 0.1 0.3
168
Hill & Smith PLC | Annual Report and Accounts 2025
169
5. Non-underlying items
Included in operating profit
2025
£m
2024
£m
Prot on disposal of subsidiaries (a) 1.1 –
Business reorganisation costs (b) (3.7) –
Impairment of assets (c) (14.7) (13.2)
Loss on remeasurement of assets held for sale (a) – (3.1)
Amortisation of acquisition intangibles (10.8) (9.9)
Expenses related to acquisitions and disposals (3.1) (1.9)
Total non-underlying items (31.2) (28.1)
Notes:
a) Following a strategic review in 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
accordance with IFRS 5, the assets and liabilities of the businesses were recognised as disposal groups held for sale. Following
the classication, losses on remeasurement of £1.1m relating to Parking Facilities and £2.0m related to Hill & Smith Pty Limited
were recognised in 2024 to reduce the carrying amount of the assets in the disposal groups to their fair value less costs to sell.
In January 2025 the sale of Hill & Smith Pty’s trade and assets was completed and in February 2025 the Group sold its
shareholding in Parking Facilities. The prot on disposal for each disposal group was as follows:
Parking
Facilities
Hill & Smith
Australia Pty Total
Consideration 2.8 5.7 8.5
Net assets disposed (2.2) (5.2) (7.4)
Prot on disposal 0.6 0.5 1.1
The Group also incurred legal fees and other disposal costs of £1.5m, comprising cash costs of £1.1m in the year and a further
£0.4m expected to be spent in 2026, which are included within ‘expenses related to acquisition and disposals’.
b) Business reorganisation costs of £3.7m relate to the closure of the Group’s trailer-mounted message board manufacturing
facility in Garland, Texas, during the second half of the year. Message board operations have now been relocated to National
Signal’s La Mirada, California facility. The costs include £1.9m of inventory write-downs and other net closure expenses of
£1.8m. A further impairment charge of £1.1m was recognised, comprising £0.5m relating to property right-of-use assets, £0.2m
relating to capitalised development costs and £0.4m relating to tangible xed assets.
c) In addition to the Garland closure, impairment of assets also includes a full impairment of goodwill and acquisition intangible
assets relating to National Signal, the Group’s US off-grid solar business. In assessing the carrying value of the National Signal
CGU, the Board concluded that National Signal’s future cash ows were not sufficient to support its carrying value, resulting in an
impairment of the acquisition goodwill of £6.7m, acquisition intangible assets of £6.7m and capitalised development costs of
£0.2m.
Impairment losses in the prior year related to H&S Inc., the Group’s US road products business.
Included in taxation
The tax effect of the above items is a credit to the income statement of £7.5m (2024: £5.9m).
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 169
Financials
Notes to the Consolidated Financial Statements
continued
170
6. Employees
The average number of people employed by the Group during the year
2025
£m
2024 (restated)
£m
US Engineered Solutions 1,524 1,420
UK & India Engineered Solutions 1,741 1,853
Galvanizing Services 1,358 1,358
Total Group
4,623 4,631
Total employee benet expense for the year
2025
£m
2024
£m
Wages and salaries 197.4 192.5
Share-based payments (note 24) 2.9 3.4
Social security costs 28.4 26.2
Pension costs (note 26) 5.6 5.1
234.3 227.2
Remuneration of key management personnel
2025
£m
2024
£m
Remuneration in relation to short term benets 4.7 4.8
Share based payments 1.6 1.7
Company contributions to money purchase pension plans 0.2 0.1
6.5 6.6
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 Committee 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 129.
7. Net financing costs
2025
£m
2024
£m
Interest on bank deposits 0.6 0.5
Other interest receivable 0.2 –
Financial income 0.8 0.5
Interest on loans and borrowings (6.7) (8.8)
Interest on lease liabilities (note 15) (2.0) (2.0)
Financial expenses related to renancing activities (0.6) (0.5)
Interest cost on net pension scheme surplus (note 26) – (0.1)
Unwinding of discount and effect of changes in discount rate on deferred consideration (0.3) –
Financial expense (9.6) (11.4)
Net nancing costs (8.8) (10.9)
170
Hill & Smith PLC | Annual Report and Accounts 2025
171
8. Expenses and auditor’s remuneration
2025
£m
2024
£m
Income statement charges
Depreciation of property, plant and equipment (20.5) (20.8)
Right-of-use asset depreciation (10.1) (10.4)
Short term leases (3.6) (3.7)
Low value leases (0.3) (0.1)
Research and development expenditure (0.7) (1.5)
Loss on disposal of assets held for sale – (0.2)
Amortisation of acquisition related intangibles (10.8) (9.9)
Amortisation of development costs (1.1) (1.1)
Amortisation of other intangible assets (0.2) (0.1)
Impairment losses:
Intangible xed assets (13.8) (11.9)
Tangible xed assets (0.4) (1.7)
Right-of-use lease assets (0.5) (0.4)
Income statement credits
Gain on disposal of non-current assets 0.4 0.4
Foreign exchange gain – 0.4
Sublease income (note 15) 0.1 0.1
Gain on lease terminations – 0.6
Gain on revaluation of leases 0.6 –
A detailed analysis of the auditor’s remuneration worldwide is as follows:
2025
£m
2024
£m
Audit of the Company’s Annual Accounts 0.6 0.7
Audit of the Company’s subsidiaries 1.2 1.3
1.8
2.0
A description of the work of the Audit Committee is set out in the Audit Committee Report on pages 95 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 (2024: £nil).
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 171
Financials
Notes to the Consolidated Financial Statements
continued
172
9. Taxation
2025
£m
2024
£m
Current tax
UK corporation tax 5.4 4.1
Overseas tax at prevailing local rates 22.8
23.4
Adjustments in respect of prior years 0.6
(2.3)
28.8
25.2
Deferred tax
UK deferred tax 1.4 3.7
Overseas tax at prevailing local rates (0.3)
(2.4)
Adjustments in respect of prior years (1.1)
1.6
–
2.9
Tax on prot in the Consolidated Income Statement 28.8 28.1
Deferred Tax (note 16)
Relating to dened benet pension schemes 0.5 –
Tax on items taken directly to other comprehensive income 0.5
–
Current tax
Relating to share-based payments (0.5) (0.2)
Deferred tax (note 16)
Relating to share-based payments (0.6)
0.4
Tax taken directly to the Consolidated Statement of Changes in Equity (1.1)
0.2
The tax charge in the Consolidated Income Statement for the period is higher (2024: higher) than the standard rate of corporation tax
in the UK. The differences are explained below:
2025
£m
2024
£m
Prot before taxation 111.3 104.5
Prot before taxation multiplied by the effective rate of corporation tax in the UK of 25.0% (2024: 25.0%) 27.8 26.1
Expenses not deductible/income not chargeable for tax purposes 1.8 3.1
Benets from international nancing arrangements — current and prior years (0.1)
(0.1)
Local tax incentives –
(0.1)
Overseas prots taxed at higher/(lower) rates (0.2)
(0.2)
Adjustments in respect of prior years (0.5)
(0.7)
Tax charge 28.8
28.1
172
Hill & Smith PLC | Annual Report and Accounts 2025
173
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
considered 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, nding 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 enacted legislation to provide for the tax, and interest, to
be repaid, of which £1.6m was received by the Group in March 2025.
10. Earnings per share
The weighted average number of ordinary shares in issue during the year was 80.3m (2024: 80.4m), diluted for the effects of the
outstanding dilutive share options to 81.2m (2024: 81.4m). 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.
2025 2024
Pence
per share £m
Pence
per share £m
Basic earnings 102.7 82.5 95.0 76.4
Non-underlying items* 29.5 23.7 27.6 22.2
Underlying earnings 132.2 106.2 122.6 98.6
Diluted earnings 101.6 82.5 93.9 76.4
Non-underlying items* 29.2 23.7 27.2 22.2
Underlying diluted earnings 130.8 106.2 121.1 98.6
* Non-underlying items as detailed in note 5.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 173
Financials
Notes to the Consolidated Financial Statements
continued
174
11. Dividends
Dividends paid during the year
2025 2024
Pence
per share £m
Pence
per share £m
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
In
terim dividend paid in relation to year ended 31 December 2024 16.5 13.3 – –
Final dividend paid in relation to year ended 31 December 2024 32.5 26.1 – –
Total 49.0 39.4
43.0 34.5
Dividends declared in respect of the year
2025 2024
Pence
per share £m
Pence
per share £m
Interim dividend declared in relation to year ended 31 December 2024 – – 16.5 13.3
Final dividend declared in relation to year ended 31 December 2024 – – 32.5 26.1
In
terim dividend declared in relation to year ended 31 December 2025 18.0 14.5 – –
Final dividend proposed in relation to year ended 31 December 2025 35.0 27.9 – –
Total 53.0 42.4
49.0 39.4
The nal dividend for 2025 was proposed after the year end date and was not recognised as a liability at 31 December 2025, in
accordance with IAS 10.
174
Hill & Smith PLC | Annual Report and Accounts 2025
175
12. Intangible assets
Goodwill
Brands
Customer Lists
Capitalised
Development Costs
Contracts, licences
and other assets
Total
Cost
At 1 January 2024 163.7
28.5
77.0
22.7
20.4
312.3
Exchange adjustments 1.8
0.3
1.5
–
0.1
3.7
Acquisitions of subsidiaries 8.1
1.5
31.7
–
4.1
45.4
Transfer to assets held for sale (1.6)
(0.9)
(9.1)
–
(0.1) (11.7)
Additions –
–
–
1.9
3.1
5.0
Reclassications –
–
–
0.8
(0.8)
–
At 31 December 2024 172.0 29.4 101.1 25.4 26.8 354.7
Exchange adjustment (7.8) (1.7) (5.6) (0.3) (1.1) (16.5)
Additions – – – 1.4 2.3 3.7
At 31 December 2025 164.2 27.7 95.5 26.5 28.0 341.9
Amortisation and impairment losses
At 1 January 2024 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
Reclassications –
–
–
0.8
(0.8)
–
At 31 December 2024 27.5 14.3 40.8 18.7 17.4 118.7
Exchange adjustments (1.6) (0.8) (1.9) (0.1) (0.8) (5.2)
Amortisation charge for the year – 0.9 7.3 1.1 2.8 12.1
Impairment 6.7 0.8 5.9 0.4 – 13.8
At 31 December 2025 32.6 15.2 52.1 20.1 19.4 139.4
Carrying values
At 1 January 2024 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
At 31 December 2025 131.6 12.5 43.4 6.4 8.6 202.5
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 175
Financials
Notes to the Consolidated Financial Statements
continued
176
12. Intangible assets continued
2024 acquisitions
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 since acquisition the business
has become part of V&S Utilities, within the Group’s US Engineered Solutions division.
Details of the acquisition are set out below:
Pre-acquisition
carrying amount
£m
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 of acquisition
4.9
Working capital adjustments paid in the year of acquisition
0.6
Fair value of contingent consideration due within one year of acquisition
0.3
Fair value of contingent consideration due between one and two years of acquisition
0.3
Goodwill 1.5
Brands, customer lists and the order backlog were recognised as specic intangible assets as a result of the acquisition. The residual
goodwill was attributable to opportunities with new customers as the business expands its product and customer base, and Capital
Steel’s highly skilled workforce. Capital Steel formed part of the V&S Utilities CGU for the purpose of annual goodwill impairment
testing during the current year. 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 reect 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 reect the terms of the
leases relative to market terms. The fair value of the current assets acquired included £1.9m of trade receivables, which have a gross
value of £1.9m. As part of the acquisition agreement, contingent consideration was 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 was £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. During the current year, £0.3m was paid, with the fair value of the remaining
payment measured at £0.3m.
176
Hill & Smith PLC | Annual Report and Accounts 2025
177
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 was a highly strategic bolt-on opportunity for The Paterson Group (‘TPG’) and subsequent to acquisition
the business became part of TPG, within the Group’s US Engineered Solutions division.
Details of the acquisition are set out below:
Pre-acquisition
carrying amount
£m
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 of acquisition
6.7
Working capital adjustments paid in the year of acquisition 0.1
Fair value of contingent consideration due within one year of acquisition
0.4
Goodwill 0.3
Brands, customer lists and the order backlog were recognised as specic intangible assets as a result of the acquisition. The residual
goodwill was 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 were made to align the accounting policies of the acquired business with the Group’s accounting policies and to reect
the fair value of assets and liabilities acquired. The fair value of the current assets acquired included £1.3m of trade receivables,
which had a gross value of £1.3m. As part of the acquisition agreement, contingent consideration was agreed. The amount of
contingent consideration was dependent on adjusted EBIT for the 12-month period ending 31 March 2025. The maximum contingent
consideration payable was £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. During 2025, contingent consideration of £0.1m was paid, leaving £0.2m to be
paid in the rst quarter of 2026.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 177
Financials
Notes to the Consolidated Financial Statements
continued
178
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 ve 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 had a long-term outsourced manufacturing relationship with Enduro Composites and
became part of the Creative Composites Group within the US Engineered Solutions division.
Details of the acquisition are set out below:
Pre-acquisition
carrying amount
£m
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 of acquisition
7.8
Working capital adjustments paid in the year of acquisition 0.4
Fair value of contingent consideration due within one year of acquisition
3.7
Fair value of contingent consideration due between two and ve years of acquisition 9.6
Goodwill 3.1
Brands, customer lists and the order backlog were recognised as specic intangible assets as a result of the acquisition. The residual
goodwill was 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 has become part of the Creative
Composites Group CGU for the purpose of annual goodwill impairment testing. 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 reect 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 was agreed. The amount of contingent consideration is dependent on
revenue over the ve 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. During the current year, £2.7m has been paid in respect of the contingent consideration, with the fair value of the remaining
contingent consideration estimated to be £10.2m.
178
Hill & Smith PLC | Annual Report and Accounts 2025
179
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 became part of V&S Utilities, within the US 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
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 of acquisition
24.0
Working capital adjustments receivable within one year of acquisition
(0.3)
Goodwill 3.2
Brands, customer lists and the order backlog were recognised as specic intangible assets as a result of the acquisition. The residual
goodwill was 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 became part of the V&S Utilities CGU
for the purpose of annual goodwill impairment testing. 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 reect 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.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 179
Financials
Notes to the Consolidated Financial Statements
continued
180
12. Intangible assets continued
Cash generating units with significant amounts of goodwill
2025
£m
2024
£m
(restated)
US Engineered Solutions
Creative Composites Group 30.3 32.7
V&S Utilities 9.8 10.6
National Signal – 7.1
Others <£5m individually 1.8 1.9
UK & India Engineered Solutions
ATG Access 4.7 4.7
Hill & Smith Infrastructure 9.8 9.8
Mallatite 9.6 9.6
Prolectric 5.5 5.5
Others <£5m individually 2.4 2.4
Galvanizing Services
USA 30.8 33.3
UK 26.9 26.9
131.6 144.5
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 £7.5m (2024: £8.1m), which are the Group’s only
other indenite life intangible assets within the Galvanizing Services - US CGU, are performed by analysing the carrying value
allocated to each signicant CGU against its value in use. All goodwill is allocated to specic 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 ows.
These cash ows are based on budget cash ow information for 2026 and strategic plans for 2027 through 2029, 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 ows beyond the strategic plan period use growth rates which
reect 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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181
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 signicant 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.
2025 2024
Goodwill
£m
Headroom/
(impairment)
£m
Discount
rate
Goodwill
£m
Headroom/
(impairment)
£m
Discount
rate
Creative Composites Group 30.3 421.5 14.5% 32.7 457.4 14.3%
V&S Utilities 9.8 226.5 14.5% 10.6 155.1 14.4%
Hill & Smith Infrastructure 9.8 67.6 14.9% 9.8 49.8 14.8%
ATG Access 4.7 6.1 15.0% 4.7 8.3 14.8%
Mallatite 9.6 22.5 15.2% 9.6 31.5 14.9%
Prolectric 5.5 15.0 14.9% 5.5 4.4 14.7%
Hill & Smith Inc. – – – 8.6 (10.6) 14.7%
National Signal 6.7 (13.6) 14.4% 7.1 21.5 14.1%
Galvanizing Services – USA* 30.8 347.4 14.6% 33.3 332.4 14.4%
Galvanizing Services – UK 26.9 54.3 15.4% 26.9 55.1 15.0%
* 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 National Signal concluded that the carrying value of the business
exceeded its estimated recoverable amount and accordingly an impairment charge of £13.6m has been recognised, comprising a full
impairment of the goodwill of £6.7m, the remaining acquisition intangible assets of £6.7m and £0.2m of capitalised development
costs.
National Signal is a US designer, manufacturer and supplier of off-grid solar and hybrid power lighting solutions. Following a strong
performance in 2023, its results in 2024 and 2025 have been impacted by lower demand, particularly from its largest customer,
leading to lower revenues and protability. Whilst our strategy continues to be one of customer diversication and product innovation,
market demand for solar products has been impacted by some shift in sentiment away from sustainability-focused products,
together with a slower than anticipated market penetration from newer products. The combination of these factors led the Board to
reassess the business’ future prospects, which in addition to reecting a more muted outlook for solar lighting, concluded that the
pace of growth across other elements of the product range was likely to be slower than previously anticipated, and that future gross
margins were likely to be impacted by pricing pressures given the weaknesses in demand. Consequently, the impairment review
based on this revised assessment concluded that National Signal’s future cash ows were not sufficient to support its carrying value,
resulting in a full impairment of the acquisition goodwill of £6.7m, the acquisition intangible assets of £6.7m and capitalised
development costs of £0.2m.
In the prior year, the impairment review of H&S Inc. concluded that its future cash ows 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.
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 and ATG Access.
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Hill & Smith PLC | Annual Report and Accounts 2025 181
Financials
Notes to the Consolidated Financial Statements
continued
182
12. Intangible assets continued
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 a 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
protability. As expected, performance in 2024 remained subdued while the operational challenges were resolved, however recent
order intake rates have improved and the result for 2025 was more positive. The Group’s projections for the business result in
calculated headroom of £15.0m, an increase of £10.6m on the prior year, reecting the recovery that Prolectric has delivered in 2025
and the resulting improvement in the outlook. However, we acknowledge that there could be variations in the pace of further 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 prot 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 rst 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 2026-2030 Base case 19.1% 15.0
Zero headroom 13.8% –
H&S sensitivity 11.7% (5.0)
Average gross prot margin 2026-2030 Base case 47.0% 15.0
Zero headroom 38.2% –
H&S sensitivity 35.0% (5.0)
ATG Access
ATG Access operates in niche security markets, manufacturing and distributing hostile vehicle mitigation and related products. Its
future performance is largely dependent on the UK and global security products markets, which itself is inherently dependent on both
public/customer behaviour and broader economic conditions. Following several years of growth, in 2025 ATG experienced a
downturn in performance, principally reecting lower UK demand due to the weak economic backdrop. The Group’s projections for
the business result in calculated headroom of £6.1m, lower than the prior year (£8.3m). We acknowledge that there could be
variations in the pace of recovery in underlying UK markets and in growth across ATG’s other markets, and if lower than that assumed
in our projections, could result in a future impairment. Revenue growth and gross prot 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 rst 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 2026-2030 Base case 8.9% 6.1
Zero headroom 6.0% –
H&S sensitivity 3.4% (5.0)
Average gross prot margin 2026-2030 Base case 40.0% 6.1
Zero headroom 35.3% –
H&S sensitivity 31.5% (5.0)
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183
13. Property, plant and equipment
Land and
buildings
Plant, machinery
and vehicles Total
Cost
At 1 January 2024 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
Exchange adjustments (6.9)
(7.4) (14.3)
Additions 16.2
14.7
30.9
Transfers to inventory –
(7.9) (7.9)
Disposals (0.5)
(9.3)
(9.8)
At 31 December 2025 131.1 213.3 344.4
Depreciation and impairment losses
At 1 January 2024 31.1
120.0
151.1
Exchange adjustments 0.5
0.7
1.2
Disposals (1.2)
(9.1) (10.3)
Transfers to assets 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
Exchange adjustments (2.0) (3.2) (5.2)
Disposals (0.4) (8.8) (9.2)
Transfers to inventory – (7.9) (7.9)
Charge for the year 4.2 16.3 20.5
Impairment – 0.4 0.4
At 31 December 2025 36.2 122.8 159.0
Carrying Values
At 1 January 2024 79.3
105.1
184.4
At 31 December 2024 87.9
97.2
185.1
At 31 December 2025 94.9 90.5 185.4
The gross book value of land and buildings includes freehold land of £17.1m (2024: £18.0m). Included within plant, machinery and
vehicles are assets held for rental with a cost of £85.5m (2024: £95.8m) and accumulated depreciation of £49.8m (2024: £54.2m).
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 183
Financials
Notes to the Consolidated Financial Statements
continued
184
14. Assets held for sale
2025
£m
2024
£m
Assets held for sale
At 1 January 12.7 2.5
Exchange adjustments (0.1) (0.1)
Transfers from property, plant and equipment (note 13) – 7.4
Transfers from right-of-use assets (note 15) – 2.8
Transfers from working capital – 5.7
Disposals (12.6) (2.5)
Loss on remeasurement – (3.1)
Total assets held for sale at 31 December – 12.7
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
Following a strategic review in 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.
In accordance with IFRS 5, the assets and liabilities of the businesses were recognised as disposal groups held for sale at 31
December 2024 and reported separately in the Consolidated Statement of Financial Position. Immediately before the classication of
the two businesses as held for sale, their recoverable amount was estimated, with no impairment loss being identied. Following the
classication, losses on remeasurement of £1.1m relating to Parking Facilities and £2.0m related to Hill & Smith Pty Limited were
recognised in 2024 to reduce the carrying amount of the assets in the disposal groups to their fair value less costs to sell.
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.
There were no assets or liabilities held for sale at 31 December 2025.
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185
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 2024 and 31
December 2025 were as follows:
Land and
buildings
£m
Plant, machinery
and vehicles
£m
Total
£m
Right-of-use assets
At 1 January 2024 33.2
8.6
41.8
Acquisitions 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 movements in foreign exchange 0.3
–
0.3
At 31 December 2024 31.6 11.6 43.2
Additions 3.1 4.2 7.3
Terminations – (0.1) (0.1)
Depreciation charge for the year (5.7) (4.4) (10.1)
Modication (1.9) – (1.9)
Impairment (0.5) – (0.5)
Effect of movements in foreign exchange (1.1) – (1.1)
At 31 December 2025 25.5 11.3 36.8
2025
£m
2024
£m
Lease Liabilities
At 1 January 46.0 43.7
Additions 7.3 16.0
Terminations (0.1) (2.2)
Interest expense 2.0 2.0
Acquisitions of subsidiaries – 0.8
Lease payments (11.5) (11.0)
Re-measurement – (0.5)
Modication (2.5) –
Effects of movements in foreign exchange (1.3) 0.2
Transfers to liabilities held for sale – (3.0)
At 31 December 39.9 46.0
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Hill & Smith PLC | Annual Report and Accounts 2025 185
Financials
Notes to the Consolidated Financial Statements
continued
186
15. Leases continued
The following table shows the breakdown of the lease expense between amounts charged to operating prot and amounts charged
to nance costs:
2025
£m
2024
£m
Depreciation of right-of-use assets 10.1 10.4
Short-term lease expense 3.6 3.7
Low-value lease expense 0.3 0.1
Sublease income (0.1) (0.1)
Charged to operating prot 13.9 14.1
Interest expense relating to lease liabilities 2.0 2.0
Charged to prot before taxation 15.9 16.1
The maturity of the lease liabilities at 31 December was as follows:
2025
£m
2024
£m
Due within one year 8.6 9.1
Due between one and two years 7.2 7.8
Due between two and three years 6.3 6.5
Due between three and four years 5.5 5.7
Due between four and ve years 4.0 5.0
Due after more than ve years 8.3 11.9
Total lease liabilities 39.9 46.0
The Group has several lease contracts that include extension and termination options. These options are negotiated by management
to provide exibility 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.
2025 2024
Within ve years
£m
More than ve
years
£m
Tot al
£m
Within ve years
£m
More than ve
years
£m
Total
£m
Extension options expected not to be exercised 1.5 12.2 13.7 0.4 20.5 20.9
Termination options expected not to be exercised 0.8 3.0 3.8 0.8 3.2 4.0
The Group has lease contracts that had not yet commenced as at 31 December 2025. The total future lease payments for these non-
cancellable lease contracts are £2.0m (2024: £2.6m).
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187
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 2024 (10.4) (17.2) 0.6 1.0 16.5 (9.5)
Exchange adjustments 0.1 – – – – 0.1
Transfer to asset 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)
Credited 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)
Exchange adjustments – 0.7 (0.1) – (0.2) 0.4
Credited/(charged) for the year in
Consolidated Income Statement 3.3 (0.7) – (0.9) (1.7) –
Charged for the year in the
Consolidated Statement of
Comprehensive Income – – – (0.5) – (0.5)
Credited for the year in the
Consolidated Statement of Changes in
Equity – – – – 0.6 0.6
At 31 December 2025 (2.0) (15.4) 0.7 (1.2) 6.2 (11.7)
2025
£m
2024
£m
Deferred tax assets 0.1 0.1
Deferred tax liabilities (11.8) (12.3)
Deferred tax liability (11.7) (12.2)
The deferred tax asset of £6.2m (2024: £7.5m) in respect of other timing differences includes £nil (2024: £1.9m) in relation to tax
losses and £3.6m (2024: £2.9m) in relation to share based payments. No deferred tax asset has been recognised in respect of other
tax losses of £18.8m (2024: £16.2m) 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 £0.7m (2024: £0.3m)
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.
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Hill & Smith PLC | Annual Report and Accounts 2025 187
Financials
Notes to the Consolidated Financial Statements
continued
188
17. Inventories
2025
£m
2024
£m
Raw materials and consumables 55.8 62.5
Work in progress 6.4 5.1
Finished goods and goods for resale 35.0 32.5
97.2 100.1
The amount of inventories expensed to the Consolidated Income Statement in the year was £443.8m (2024: £432.2m). The value of
inventories written down and movement in the inventory provision during the year amounted to a credit of £0.2m (2024: charge of
£4.8m).
18. Trade and other receivables
2025
£m
2024
£m
Trade and other current receivables
Trade receivables 124.9 129.3
Prepayments 6.6 7.2
VAT receivable 1.5 –
Other receivables 4.1 3.0
Reimbursement asset 7.4 3.8
Unpaid share premium (note 24) 1.2 –
Contract assets 16.2 19.2
161.9 162.5
The movements in contract assets and contract liabilities (note 21), during the year correspond to the completion of performance
obligations partially satised as at 31 December 2024 offset by contracts that are in progress at 31 December 2025.
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189
19. Cash and borrowings
2025
£m
2024
£m
Cash and cash equivalents in the Consolidated Statement of Financial Position
Cash and cash equivalents net of bank overdrafts* 70.4 55.0
Bank overdraft+ (0.7) (0.3)
Bank overdraft classied as held for sale – (3.4)
Cash and cash equivalents net of bank overdraft and overdraft classied as held for sale 69.7 51.3
Interest bearing loans and other borrowings
Amounts due within one year (25.7) (0.5)
Amounts due after more than one year (54.9) (98.7)
Lease liabilities due within one year (8.6) (9.1)
Lease liabilities due after more than one year (31.3) (36.9)
Lease liabilities classied as held for sale – (3.0)
Net debt (50.8) (96.9)
Change in net debt
Operating prot 120.1 115.4
Non-cash items 59.5 59.8
Operating cash ow before movement in working capital 179.6 175.2
Net movement in working capital (3.1) 0.6
Increase in insurance reimbursement asset (3.6) (3.8)
Increase/(decrease) in provisions and employee benets 0.2 (3.4)
Operating cash ow 173.1 168.6
Income taxes paid (27.3) (26.5)
Net nancing costs paid (5.8) (8.3)
Capital expenditure (34.2) (28.6)
Proceeds on disposal of non-current assets and assets held for sale 1.1 3.4
Free cash ow 106.9 108.6
Dividends paid (39.4) (34.5)
Acquisitions of subsidiaries (including deferred consideration) (3.1) (47.4)
Disposals of subsidiaries 7.4 –
Amortisation of costs associated with renancing activities (0.6) (0.5)
Purchase of shares for employee benet trust (4.5) (1.2)
Issue of new shares 0.8 2.5
Leases disposed of 3.0 –
Lease additions, terminations and remeasurements (4.7) (13.3)
Repurchase of shares (20.2) –
Interest on lease liabilities (2.0) (2.0)
Net debt decrease 43.6 12.2
Effect of exchange rate uctuations 2.5 (0.7)
Net debt at the beginning of the year (96.9) (108.4)
Net debt at the end of the year (50.8) (96.9)
* Included within cash and cash equivalents net of bank overdrafts are overdrafts amounting to £29.3m (2024: £19.9m) 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.
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Hill & Smith PLC | Annual Report and Accounts 2025 189
Financials
Notes to the Consolidated Financial Statements
continued
190
19. Cash and borrowings continued
Reconciliation of movements in financial liabilities to cash flows arising from financing activities
2025
£m
2024
£m
Interest bearing loans and other borrowings and lease liabilities
At 1 January 148.2 142.8
New loans and borrowings 42.0 62.5
Repayments of loans and borrowings (55.4) (63.7)
Repayment of lease liabilities (9.5) (9.0)
Costs associated with renancing during the year (1.3) –
Cash ows used in nancing activities (24.2) (10.2)
Other changes
Effect of exchange rate uctuations (4.3) 0.8
Amortisation of costs associated with renancing activities 0.6 0.5
Lease changes:
Effect of exchange rate uctuations (1.4) 0.2
New leases 7.3 16.0
Terminations (0.1) (2.2)
Re-measurement (2.5) (0.5)
Acquisitions of subsidiaries – 0.8
Disposals of subsidiaries (3.1) –
Interest expense 2.0 2.0
Interest paid (2.0) (2.0)
At 31 December 120.5 148.2
20. Current liabilities
2025
£m
2024
£m
Interest bearing loans and borrowings
Loans and borrowings 25.7 0.5
Bank overdrafts 0.7 0.3
26.4 0.8
Trade and other current liabilities
Trade payables 66.5 61.5
Other taxation and social expenses 4.9 4.2
Accrued expenses 40.4 46.4
Contingent consideration on acquisitions 3.7 4.5
Contract liabilities 11.0 13.3
Fair value derivatives – 0.1
Other payables 3.1 3.5
129.6 133.5
During the year, £10.8m (2024: £8.6m) of revenue was recognised in respect of contract liabilities present as at 1 January 2025.
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191
21. Non-current liabilities
2025
£m
2024
£m
Interest bearing loans and borrowings
Loans and borrowings 54.9 98.7
54.9 98.7
Other non-current liabilities
Contract liabilities > 1 year* – 1.1
Contingent consideration on acquisitions 7.0 10.1
7.0 11.2
* Contract liabilities > 1 year do not represent partially satisfied performance obligations as at the balance sheet date.
22. Provisions
Environmental
£m
Restructuring
£m
Product
rectication
£m
Legal Claims
£m
Other
£m Total
At 1 January 2024 1.2
3.3
3.0
–
1.7 9.2
Charged during the year –
–
–
4.2
0.1 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 4.2 1.5 9.4
Exchange adjustments (0.1) – – – – (0.1)
Charged in the year – 3.0 – 4.6 – 7.6
Utilised in the year – (2.0) (0.2) (0.8) – (3.0)
At 31 December 2025 1.1 3.1 0.2 8.0 1.5 13.9
2025
£m
2024
£m
Amounts due within one year 11.6
7.1
Amounts due after more than one year and less than ve years 2.3
2.3
13.9
9.4
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
identied 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 £2.1m at 31
December 2024 included £1.6m relating to the closure of the Group’s variable message sign business that was announced in 2021.
£0.9m of this provision has been utilised during 2025, and the remainder is expected to be utilised in 2026. The charge for the year of
£3.0m includes £2.4m in respect of the closure of the H&S Inc’s operations based in Garland, Texas, as explained in note 5. £1.1m of
this provision has been utilised during 2025, with the remaining £1.3m expected to be utilised in 2026.
Product rectication
The £0.4m provision brought forward was in respect of an issue identied with the historical installation of certain products by our
UK off-grid solar business. £0.2m of this provision has been utilised during 2025, and the remaining provision of £0.2m is expected to
be utilised in 2026.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 191
Financials
Notes to the Consolidated Financial Statements
continued
192
22. Provisions continued
Legal claims
Legal claims relate to claims or disputes arising 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 £3.7m recognised in the current year relating to a claim that is fully
covered by an insurance policy; a corresponding asset has been recognised within the Group’s insurance reimbursement asset
(note 18).
Other provisions
Other provisions relate to various matters including obligations in respect of onerous leases and property dilapidations.
23. Financial instruments
(a) Management of financial risks
Overview
The Group has exposure to a number of risks associated with its use of nancial 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
reect 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, nancial 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 nancial loss to the Group if a customer or counterparty to a nancial instrument fails to meet its contractual
obligations, and arises from cash and cash equivalents, derivative nancial instruments and principally from the Group’s receivables
from customers. The maximum exposure to credit risk for receivables and other nancial assets is represented by their carrying
amount.
The Group has a policy of insuring a substantial majority of receivables in its UK businesses, which account for 41% (2024: 39%) of
the Group’s trade receivables. Any residual uninsured risk is spread across a signicant number of customers. In our US businesses,
which account for 53% (2024: 53%) 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 signicant.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its nancial 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 2025 all such debt was covered by cash and cash equivalents netting to £44.0m positive current
liquidity (2024: £54.2m).
The Group’s principal UK revolving credit facility was increased and extended in November 2025, now having a value of £300m (2024:
£250m) and a maturity of November 2029 with a further one-year extension option (2024: maturity of 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
£307.8m at 31 December 2025 (2024: £258.8m).
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193
23. Financial instruments continued
Liquidity risk continued
In addition, in 2019 the Group signed an agreement with an institutional investor for a private placement of $70m new senior
unsecured notes (“Senior Unsecured Notes”). The issue consisted of two equal tranches with maturities in June 2026 and June 2029
respectively.
At 31 December 2025, the Group’s total committed borrowing facilities were £353.5m (2024: £308.1m) and the amount undrawn at
this date was £270.6m (2024: £207.5m).
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 nancial 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 nancial 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 2025, credit exposure including cash deposited did not
exceed £16.6m with any single institution (2024: £12.9m).
Currency risk
The Group publishes its Consolidated Financial Statements in Sterling, but conducts business in several foreign currencies, including
signicant 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 signicantly, the translation of the results and net assets of its foreign operations.
The Group’s translation reserve includes a loss of £30.4m (2024: gain of 5.6m), principally as a result of Sterling’s appreciation
against the US Dollar in 2025, 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 nancial
instruments.
The Group has hedged its investment in its US operations by way of nancing 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 uctuations on
translation of their assets into Sterling are not signicant to the Group.
Interest rate risk
The Senior Unsecured Notes account for 63% (2024: 56%) of the Group’s outstanding gross borrowings at 31 December 2025 and
attract a xed rate of interest averaging 3.92% (2024: 3.92%) per annum. All other borrowings bear interest at oating rates. At the
current time the Group feels that this ratio of xed to oating borrowings is appropriate but continues to monitor it in the context of
economic indicators and wider market conditions.
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 to maintain investor, creditor and market condence 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 denes as
total shareholders’ equity and the level of dividends and other returns of capital 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 nancial covenants associated with the Group’s borrowings, which are interest cover and EBITDA to net debt. The Group
comfortably complied with these covenants in 2025 and 2024.
There were no signicant changes in the Group’s approach to capital management during the year.
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Hill & Smith PLC | Annual Report and Accounts 2025 193
Financials
Notes to the Consolidated Financial Statements
continued
194
23. Financial instruments continued
(b) Total financial assets and liabilities
The table below sets out the Group’s accounting classication of its nancial assets and liabilities and their fair values as at 31
December. The fair values of all nancial assets and liabilities are not materially different to the carrying values.
Designated at fair
value Amortised cost Total carrying value
Cash and cash equivalents net of bank overdraft* – 70.4 70.4
Bank overdraft+ – (0.7) (0.7)
Loans and other borrowings due within one year – (25.7) (25.7)
Loans and other borrowings due after more than one year – (54.9) (54.9)
Lease liabilities due within one year – (8.6) (8.6)
Lease liabilities due after more than one year – (31.3) (31.3)
Derivative asset 0.1 – 0.1
Other assets – 137.7 137.7
Other liabilities – (109.9) (109.9)
Contingent consideration (10.7) – (10.7)
Total as at 31 December 2025 (10.6) (23.0) (33.6)
Cash and cash equivalents net of bank overdraft* – 55.0 55.0
Bank overdraft+ – (0.3) (0.3)
Bank overdraft classied 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 classied 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)
* Included within cash and cash equivalents net of bank overdrafts are overdrafts amounting to £29.3m (2024: £19.9m) 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.
Fair value hierarchy
The table below analyses nancial instruments carried at fair value, by valuation method. The different levels have been dened 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.
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23. Financial instruments continued
Fair value hierarchy continued
Level 1 Level 2 Level 3 Total
Derivative assets – 0.1 – 0.1
Contingent consideration – – (10.7) (10.7)
Total at 31 December 2025 – 0.1 (10.7) (10.7)
Derivative liabilities – (0.1) – (0.1)
Contingent consideration – – (14.6) (14.6)
Total at 31 December 2024 – (0.1) (14.6) (14.7)
At 31 December 2025 the Group did not have any assets or liabilities classied at Level 1 in the fair value hierarchy (2024: nil). There
have been no transfers in any direction in the year.
The following table presents the changes in Level 3 instruments for the year ended 31 December 2025:
Contingent
consideration
£m
At 1 January 2025 (14.6)
Payments of contingent consideration 3.1
Unwinding of discount on contingent consideration (0.3)
Exchange adjustments 1.1
At 31 December 2025 (10.7)
Details of the contingent consideration which arose on the acquisitions made during the prior year (see note 12) are set out below.
During the year £3.1m has been paid in respect of contingent consideration. As at 31 December 2025, the fair value of the contingent
consideration liability was materially equal to the fair value determined at the acquisition dates, with any movement in the future
expected cash ows being off-set by the movement in the discount rate at the year-end date. No re-measurements have therefore
been recognised in the Consolidated Income Statement during the current year.
Valuation technique Signicant unobservable inputs Sensitivity of the input to fair value
Contingent
consideration liability
Discounted cash
ow 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 £1.0m.
• 500bps increase/(decrease) in the discount rate would result in
an (decrease)/increase in the fair value of the liability by £1.1m.
The Group’s nancial 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 oating 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 nancial liabilities, excluding short term creditors, are set out below. Fixed rate nancial liabilities comprise US Dollar
denominated Senior Unsecured Notes. Floating rate nancial liabilities comprise Sterling and US Dollar bank loans and overdrafts,
and lease liabilities. The oating rate bank loans and overdrafts bear interest at rates related to bank base rates or SONIA/SOFR. The
oating 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 nancial assets and liabilities which are predominantly in the same denomination as that subsidiary’s functional
currency. The nancial assets and liabilities not denominated in the functional currency of these entities are insignicant to the
Group.
Certain UK subsidiaries hold US Dollar denominated interest bearing loans totalling £51.9m (2024: £56.0m), 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 gain of £4.1m (2024: loss of £0.6m) for the effective portion was recognised in the Consolidated Statement of
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Hill & Smith PLC | Annual Report and Accounts 2025 195
Financials
Notes to the Consolidated Financial Statements
continued
196
23. Financial instruments continued
Fair value hierarchy continued
Comprehensive Income netted against exchange differences on translation of foreign operations. Any ineffective portion recognised
in the Consolidated Income Statement is insignicant.
Fixed rate nancial liabilities
Weighted average
interest rate
%
Weighted average
period for
which rate is xed
Years
US Dollar at 31 December 2025 3.9 2.0
US Dollar at 31 December 2024
3.9 3.0
(c) Maturity profile
The table below sets out the contractual cash ows associated with the Group’s nancial liabilities, including estimated interest
payments, analysed by maturity:
Effective interest rate
Carrying amounts
£m
Contractual cash
ows
£m
Due within one
year
£m
Due between one
and two years
£m
Due between two
and ve years
£m
Due after more
than ve years
£m
Unsecured loans and borrowings Floating 28.7 (37.0) (1.5) (1.6) (33.9) –
Senior Unsecured Notes 3.92% 51.9 (55.9) (27.4) (1.0) (27.5) –
Lease liabilities Floating 39.9 (45.8) (10.1) (8.5) (17.9) (9.3)
Contingent consideration 8.1%* 10.7 (12.4) (3.6) (3.1) (5.7) –
Other liabilities n/a 110.0 (110.0) (110.0) – – –
Total at 31 December 2025 241.2 (261.1) (152.6) (14.2) (85.0) (9.3)
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)
* 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 195 above.
The unsecured bank borrowings bear interest based on SONIA/SOFR, plus a margin (as dened 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:
2025
£m
2024
£m
Undrawn committed borrowing facilities 270.6 207.5
(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 (2024: £nil). The fair values of the Group’s other nancial instruments at 31 December 2025 and 2024 were not
materially different to their carrying value. Fair values were calculated using market rates where available, otherwise cash ows were
discounted at prevailing rates.
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23. Financial instruments continued
(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 nancial assets at the reporting date was:
Carrying amount
2025
£m
2024
£m
Trade and other receivables and contract assets at amortised cost 145.2 151.5
Cash and cash equivalents at the end of the year 70.4 55.0
Total 215.6 206.5
Carrying value of trade receivables by geography
2025
£m
2024
£m
United Kingdom
46.5
48.8
Rest of Europe
3.7
2.8
North America
64.4
69.0
Rest of World
10.3
8.7
124.9
129.3
Carrying value of trade receivables by business segment
2025
£m
2024 (restated)
£m
US Engineered Solutions 50.8 55.1
UK & India Engineered Solutions 43.9 46.5
Galvanizing Services 30.2 27.7
Total 124.9 129.3
Impairment losses
The Group maintains a level of credit insurance covering a signicant 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 signicant
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 signicant 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 £0.3m (2024: £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:
2025 2024
Gross
£m
Provisions
£m
Net
£m
Gross
£m
Provisions
£m
Net
£m
Not past due 86.4 – 86.4 83.6 – 83.6
Past due 1 - 30 days 21.8 – 21.8 25.7 (0.1) 25.6
Past due 31 - 120 days 12.4 (0.5) 11.9 14.6 (0.4) 14.2
Past due more than 120 days 5.9 (1.1) 4.8 7.5 (1.6) 5.9
Total 126.5 (1.6) 124.9 131.4 (2.1) 129.3
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Hill & Smith PLC | Annual Report and Accounts 2025 197
Financials
Notes to the Consolidated Financial Statements
continued
198
23. Financial instruments continued
The movements in provisions for impairment of trade receivables are as follows:
£m
At 1 January 2024 4.2
Exchange Adjustments (0.1)
Charged in the year 1.5
Utilised in the year (2.4)
Reclassications (1.1)
At 31 December 2024 2.1
Charged in the year 0.3
Utilised in the year (0.8)
At 31 December 2025 1.6
(f) Market Risk – Sensitivity analysis
In managing interest rate and currency risks the Group aims to reduce the impact of short term uctuations 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 £0.5m, which would directly impact 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 £11.0m and the impact on equity would have been an
increase of £42.3m.
• 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 £9.0m and the impact on equity would have been
a decrease of £34.6m.
24. Called up share capital
2025
£m
2024
£m
Allotted, called up and fully paid 79.5m ordinary shares of 25p each (2024: 80.4m) 19.9 20.1
Allotted, called up, unpaid 0.2m ordinary shares of 25p each (2024: nil) – –
In 2025 the Company issued 0.2m shares under its various share option schemes (2024: 0.2m), realising £2.0m (2024: £2.5m). Of
this amount, £1.2m related to shares that were allotted and called up on 31 December 2025 for the purpose of satisfying share option
schemes maturing on 1 January 2026, but with the funds clearing in early January 2026. These shares have been disclosed
separately in the above table with a separate receivable recognised (see note 18).
At the 2025 AGM, shareholders granted the Company the authority to repurchase up to 4,023,960 ordinary shares. The authority for
purchase of the ordinary shares will expire at the end of the next Annual General Meeting of the Company in 2026 or, if earlier, at the
close of business on 22 August 2026. Ordinary shares purchased by the Company pursuant to these authorities will either be
cancelled or held in the Employee Benet Trust. During the year, all shares purchased by the Company as part of the buyback
programme have been cancelled. As at the year end date, the Group had a contractual right to terminate the share buyback
programme, therefore any liability recognised would be limited to the Group’s obligation to pay for shares already purchased on its
behalf but not yet paid for. As at 31 December 2025, the liability in respect of this was £nil.
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24. Called up share capital continued
Number of shares
Nominal value
£m
At 1 January 2025 80,443,391 20.1
Issued during the year 235,272 –
Repurchased during the year (940,913) (0.2)
At 31 December 2025 79,737,750 19.9
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 or similar schemes 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:
2025 2024
Number
of shares
Option
price range (p)
Number
of shares
Option
price range (p)
SAYE schemes † 585,499 794p to 1,652p 714,415 794p to 1,640p
LTIP awards †^ 451,977 –
517,481 –
ESOS awards †^ 78,110 316p to 1,113p 93,926 316p to 1,113p
RSU awards † 123,888 –
86,550 –
Buy-out awards 87,050 –
75,496 –
Outstanding at the end of the year 1,326,524
1,487,868
Exercisable at the year end 118,748
168,049
Not exercisable at the year end 1,207,776
1,319,819
Outstanding at the end of the year 1,326,524
1,487,868
† 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 ordinarily 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.
The remaining weighted average life of the outstanding share options is 5 years 0 months (2024: 5 years 0 months).
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 199
Financials
Notes to the Consolidated Financial Statements
continued
200
24. Called up share capital continued
Options outstanding over the Company’s shares continued
The movement and weighted average exercise prices of share options during the year are as follows:
Weighted
average exercise
price (p)
2025
Millions of
options
2025
Weighted
average exercise
price (p)
2024
Millions of
options
2024
Outstanding at the beginning of the year 559 1.5 610 1.7
Granted during the year 634 0.4 483 0.4
Exercised during the year (485) (0.4) (733) (0.4)
Lapsed during the year (579) (0.2) (405) (0.2)
Outstanding at the end of the year 600 1.3 559 1.5
The weighted average share price on the dates of exercise of share options during the year was 2,079p (2024: 1,913p), and the
weighted average fair value of options and awards granted in the year was 1,550p (2024: 1,636p). The weighted average exercise
price of outstanding options exercisable at the year-end was 1,113p (2024: 1,110p).
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 either 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 129, 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:
2025 2024
SAYE LTIP/RSU Bu
y
-out awards SAYE LTIP Buy-out awards
Expected share price volatility (%) 26%/17% 22% n/a 30%/19% 28% n/a
Dividend yield (%) 2.33% 0.0% n/a 2.17% 0.0% n/a
Option life (years) 3/5 3 n/a 3/5 3 n/a
Risk free interest rate (%) 3.9%/4.0% 4.2% n/a 4.0%/4.1% 4.2% n/a
The total expense recognised for the period arising from share-based payments is as follows:
2025 2024
Equity-settled 2.9 3.4
Cash-settled – –
Total expensed during the year 2.9 3.4
The carrying amount of the liability in relation to cash-settled share-based payments at the end of the year was £nil (2024: £0.4m).
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Hill & Smith PLC | Annual Report and Accounts 2025
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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 2025 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 Numbe
r
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 Limited 02621328
Mallatite Minor Structures & Products Limited 13717429
ATG Access Limited 02643622
Bowater Doors Limited 13738120
Expamet Limited 13748629
Barkers Engineering Limited 00597466
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
Lionweld Kennedy Flooring Limited 05274797
Medway Galvanising Company Limited 01808205
Premier Galvanizing Limited 03873106
Prolectric Services Limited 04607208
Hill & Smith VRS Limited 16376823
Hill & Smith Tipi Newco Limited 16376962
Black Oldco Limited 14466538
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 201
Financials
Notes to the Consolidated Financial Statements
continued
202
25. Guarantees and other financial commitments continued
The Group had no nancial guarantee contracts outstanding as at 31 December 2025.
(b) Capital commitments
2025
£m
2024
£m
Contracted for but not provided in the accounts 4.7 3.6
(c) Operating lease receivables
The total future minimum commitments receivable under non-cancellable operating leases are analysed as follows:
2025 2024
Land and Buildings
£m
Other
£m
Land and Buildings
£m
Other
£m
Within one year – 6.6 0.1 7.4
Between one and ve years – – – 0.6
– 6.6 0.1 8.0
(d) Purchase commitments
Certain Group companies enter into purchase commitments which obligate the Group to buy specied 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:
2025
£m
2024
£m
Contracted for but not provided in the accounts 28.2 22.7
26. Pensions
Total
The total Group retirement benet assets and obligations are detailed below:
U
K
£m
US
£m
2025
£m
UK
£m
US
£m
2024
£m
Total fair value of scheme assets 51.3 2.5 53.8 47.0 2.6 49.6
Present value of scheme funded obligations (46.1) (3.1) (49.2) (47.2) (3.2) (50.4)
Retirement benet surplus/(obligation) 5.2 (0.6) 4.6 (0.2) (0.6) (0.8)
United Kingdom
The Group operates one main pension scheme in the UK, the Hill & Smith 2016 Pension Scheme (‘the Scheme’), providing benets on
a dened benet and dened contribution basis. The Scheme is closed to future accrual and is subject to the statutory scheme
specic funding requirements outlined in UK legislation. The weighted average maturity (the ‘duration’) of the dened benet plan
obligations at the end of the reporting period is approximately 8 years (2024: 9 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 decit 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 2025, updated by an independent qualied actuary. The triennial valuation
as at April 2025 is expected to be nalised in the rst half of 2026.
The Consolidated Income Statement for the year includes a pension charge within operating prot of £2.9m (2024: £3.0m), which
includes the costs of the dened contribution and the dened benet sections of the Scheme. All actuarial gains and losses are
recognised immediately in the Consolidated Statement of Comprehensive Income.
202
Hill & Smith PLC | Annual Report and Accounts 2025
203
26. Pensions continued
United Kingdom continued
The Scheme exposes the Group to a number of risks, the most signicant being:
Ris
k
Description
Volatile asset returns The dened benet obligation is calculated using a discount rate set with reference to high quality
corporate bond yields. If assets underperform against this discount rate, this could create a plan
decit. 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 decrease in the surplus 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.
Ination risk A signicant proportion of the dened benet obligation is indexed in line with price ination, with
higher ination 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 ination 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:
2025 2024
Rate of increase in salaries n/a n/a
Rate of increase in pensions payment 2.9% 3.2%
Discount rate 5.4% 5.4%
Ination - RPI 2.9% 3.3%
Ination - CPI 2.0% 2.4%
Mortality table 114%/117% 114%/117%
CMI 2024 CMI 2023
1.25% 1.25%
The mortality assumptions imply the following expected future lifetimes from age 65:
2025 2024
Males currently aged 45 22.2 years 21.8 years
Females currently aged 45 24.5 years 24.4 years
Males currently aged 65 20.9 years 20.6 years
Females currently aged 65 23.1 years 23.0 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 four years, short-term ination in the UK has at times been signicantly higher than we have seen in previous years. The
Group has made an allowance for this higher ination experience within the liabilities of the Scheme. Over the duration of the
Scheme’s liabilities, market expectations of ination (which have been used to derive the ination assumptions above) are
signicantly lower than this recent experience.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 203
Financials
Notes to the Consolidated Financial Statements
continued
204
26. Pensions continued
Assets and liabilities
The Scheme holds assets and liabilities in respect of dened contribution benets which are equal in value and are excluded from the
following gures. The fair values of Scheme assets in respect of the dened benet scheme, which are not intended to be realised in
the short term and may be subject to signicant change before they are realised are detailed below. In addition, the value of the
Scheme liabilities, which is derived from cash ow projections over an average period of approximately 8 years (the weighted average
term maturity of the Scheme’s liabilities) and which is therefore inherently uncertain is also set out below.
Market value
2025
£m
Market value
2024
£m
Assets
Quoted Investment Funds
Equities 6.6 3.6
Bonds 7.6 7.0
Diversied growth funds 9.4 8.4
Liability Driven Investment ("LDI") funds 11.9 10.6
Alternatives* 3.6 12.1
Unquoted Investment Funds
With prots policies – 1.0
Cash 12.2 4.3
Total fair value of Scheme assets 51.3 47.0
Present value of Scheme funded obligations (46.1) (47.2)
Retirement benet surplus/(obligation) 5.2 (0.2)
* 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 ination 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 reect the size and shape of the Scheme’s interest rate and ination 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 28% (2024: 23%) of total Scheme assets, have quoted
market prices in active markets. Excluding cash, the balance of £24.9m (2024: £32.1m) represents the Scheme’s investment in LDI
funds and Secure Income Asset Funds. The LDI funds are invested in ination linked bonds issued by the UK Government as well as
xed rate bonds. Secure Income Assets Funds (Alternatives) are invested in a diversied 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.
204
Hill & Smith PLC | Annual Report and Accounts 2025
205
26. Pensions continued
Total expense recognised in the Consolidated Income Statement
Dened
contribution
schemes
£m
Dened
benet
schemes
£m
Tot al
£m
Dened
contribution
schemes
£m
Dened
benet
schemes
£m
Total
£m
Current service costs 1.9 – 1.9 1.9 – 1.9
Expenses 0.7 0.3 1.0 0.8 0.3 1.1
Charge to operating prot 2.6 0.3 2.9 2.7 0.3 3.0
Interest on net Scheme surplus – – – – 0.1 0.1
Total charge to prot before tax 2.6 0.3 2.9 2.7 0.4 3.1
Change in the present value of the defined benefit obligations
2025
£m
2024
£m
Opening dened benet obligations 47.2 51.9
Interest cost 2.5 2.3
Actuarial (gain)/loss arising from:
Financial assumptions (0.6) (3.5)
Demographic assumptions 0.3 0.2
Experience assumptions 0.3 0.1
Benets paid (3.6) (3.8)
Closing dened benet obligations 46.1 47.2
Changes in fair values of Scheme assets
2025
£m
2024
£m
Opening fair value of assets 47.0 48.5
Interest income 2.5 2.2
Return on plan assets excluding interest income 1.7 (3.6)
Employer contributions 3.7 3.7
Benets paid (3.6) (3.8)
Closing fair value of assets 51.3 47.0
Actual return on Scheme assets 4.2 (1.4)
Expected employer contributions in the following year
Dened benet scheme 1.3 4.0
Dened contribution schemes 1.9 1.9
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 205
Financials
Notes to the Consolidated Financial Statements
continued
206
26. Pensions continued
Amounts recognised in the Consolidated Statement of Comprehensive Income
% of Scheme
assets/
liabilities %
2025
£m
% of Scheme
assets/
liabilities %
2024
£m
Return on plan assets excluding interest income 3 1.7 (8) (3.6)
Changes in assumptions underlying the present value of Scheme obligations – – 7 3.2
Amount recognised in the year 3 1.7 (1) (0.4)
The table below shows the sensitivity of the Consolidated Statement of Financial Position to certain changes in the signicant
pension assumptions:
Balance at 31
December
2025
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
Ination rate
(+0.1% p.a.)
£m
Ination rate
(-0.1% p.a.)
£m
Life
expectancy
(+1 year)
£m
Life
expectancy
(-1 year)
£m
Value of funded obligations (46.1) (46.3) (45.9) (45.7) (46.5) (46.4) (45.8) (48.2) (44.0)
Fair value of plan assets 51.3 51.3 51.3 51.3 51.3 51.3 51.3 51.3 51.3
Surplus 5.2 5.0 5.4 5.6 4.8 4.9 5.5 3.1 7.3
The sensitivity analyses above have been determined based on a method that extrapolates the impact on the dened benet
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 signicant assumption, keeping all other assumptions constant. As such the sensitivity analyses may not be representative of an
actual change in the dened benet obligation as it is unlikely that changes in assumptions would occur in isolation from one
another.
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 benets.
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 conrmed the implications of not having a conrmation 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. A 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 reected in these nancial statements.
Further, the Government has conrmed that it will legislate to provide a remedy for any such issues, with that legislation expected to
come into force in 2026. The Board of Trustees, in conjunction with their legal and actuarial advisers, will take any steps needed to
address the issue once the legislation is nalised.
USA
In the US, Bergen Pipe Supports, Inc. operates a dened benet pension plan comprising current and deferred pensioners such that
no future benets accrue. The average duration of the dened benet plan obligation at the end of the reporting period is
approximately 7 years (2024: 7 years).
The Group also operates dened contribution plans in a number of other overseas operations. The amount contributed to these plans
during the year was £2.6m (2024: £2.1m).
The Consolidated Income Statement for the year includes a pension charge within operating prot of £2.7m (2024: £2.1m), which
includes the costs of the dened contribution schemes and the dened benet schemes.
Actuarial valuations of the above schemes were carried out by independent actuaries as at 31 December 2025. All actuarial gains and
losses are recognised immediately in the Consolidated Statement of Comprehensive Income.
206
Hill & Smith PLC | Annual Report and Accounts 2025
207
26. Pensions continued
USA continued
The principal assumptions used by the actuaries:
2025 2024
Rate of increase in salaries n/a n/a
Discount rate 5.31% 5.31%
Ination 0.0% 0.0%
Mortality table PRI - 2012 Private PRI - 2012 Private
Retirement Plans; Retirement Plans;
Scale MP – 2021 Scale MP – 2021
improvements 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 signicant change
before they are realised, and the value of the scheme liabilities, which is derived from cash ow projections over long periods and
which is therefore inherently uncertain, are as follows:
Market value
2025
£m
Market value
2024
£m
Assets
Insured xed interest assets quoted in active markets 2.5 2.5
Cash – 0.1
Total fair value of scheme assets 2.5 2.6
Present value of Scheme funded obligations (3.1) (3.2)
Retirement benet obligation (0.6) (0.6)
Cash and other insured xed interest assets – where assets are held in cash or a policy with a xed 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.
Total expense recognised in the Consolidated Income Statement
2025 2024
Dened
contribution
schemes
£m
Dened benet
schemes
£m
Tot al
£m
Dened
contribution
schemes
£m
Dened benet
schemes
£m
Total
£m
Current service costs 2.6 0.1 2.7 2.0 0.1 2.1
Charge to operating prot 2.6 0.1 2.7 2.0 0.1 2.1
Interest on net Scheme decit – – –
– – –
Total charge to prot before tax 2.6 0.1 2.7 2.0 0.1 2.1
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 207
Financials
Notes to the Consolidated Financial Statements
continued
208
26. Pensions continued
Change in the present value of the defined benefit obligation
2025
£m
2024
£m
Opening dened benet obligations 3.2 3.4
Interest cost 0.1 0.1
Actuarial (gain)/loss arising from:
Financial assumptions 0.1 (0.1)
Demographic assumptions – –
Experience assumptions 0.1 –
Benets paid (0.2) (0.2)
Exchange adjustment (0.2) –
Closing dened benet obligations 3.1 3.2
Changes in fair values of scheme assets
2025
£m
2024
£m
Opening fair value of assets 2.6 2.7
Return on plan assets excluding interest income 0.1 0.1
Interest on plan assets 0.1 0.1
Employer contributions 0.1 –
Admin expenses (0.1) (0.1)
Benets paid (0.2) (0.2)
Exchange adjustments (0.1) –
Closing fair value of assets 2.5 2.6
Actual return on Scheme assets 0.2 0.2
Expected employer contributions in the following year
Dened benet scheme – –
Dened contribution schemes 2.6 2.0
208
Hill & Smith PLC | Annual Report and Accounts 2025
209
26. Pensions continued
Amounts recognised in the Consolidated Statement of Comprehensive Income
% of Scheme
assets/
liabilities %
2025
£m
% of Scheme
assets/
liabilities %
2024
£m
Experience loss on scheme obligations (3) (0.1) – –
Return on plan assets excluding interest income 4 0.1
4 0.1
Changes in assumptions underlying the present value of Scheme
obligations (3) (0.1)
3 0.1
Exchange rate adjustment on assets and liabilities 17 0.1 – –
Amount recognised in the year – –
7 2.0
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.
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 129. The combined remuneration of key management personnel can be seen in
note 6 to the nancial statements on page 170.
28. Subsequent events
In March 2026 the Group reached agreement to acquire 80% of the equity of Freeberg Industrial Fabrication Corp. for a headline cash
consideration of $36m on a debt free, cash free basis. Further consideration of up to $50m is payable for the remaining 20% of equity,
linked to the achievement of future prot targets. The acquisition is subject to US regulatory approvals, which the Group expects in
the second quarter of 2026. Located in Escondido, California, Freeberg is a leading US designer and manufacturer of custom
enclosures and other engineered solutions that serve data centre, power generation, and other infrastructure markets.
In March 2026 the Group also completed the acquisition of Hentech Fabrication Limited for a headline cash consideration of
€7.3m. Located in Wexford, Ireland, Hentech is a designer, manufacturer and installer of engineered steel solutions, focused on
access ooring and other industrial fabrication.
Acquisition accounting for both is currently ongoing.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 209
Financials
Company Balance Sheet
Hill & Smith PLC | Annual Report and Accounts 2025
210
Notes
2025
£m
2024
£m
Non-current assets
Tangible assets 4 0.8 1.1
Right-of-use assets 5 0.3 0.3
Retirement benet surplus 12 0.2 –
Deferred tax asset 6 2.2 3.0
Investments in subsidiaries 7 320.0 320.0
Debtors due in more than one year 8 69.6 74.3
393.1 398.7
Current assets
Debtors 9 9.1 9.2
Current tax asset 7.2 6.2
Cash and cash equivalents 7.2 0.1
23.5 15.5
Total assets 416.6 414.2
Creditors: amounts falling due within one year
Bank loans and overdrafts 10,11 (28.3) (15.1)
Lease Liabilities 5 (0.1) (0.1)
Other creditors 10 (32.3) (37.5)
(60.7) (52.7)
Net current liabilities (37.2) (37.2)
Total assets less current liabilities 355.9 361.5
Non-current liabilities
Creditors: amounts falling due after more than one year 11 – (10.0)
Net assets 355.9 351.5
Equity
Share capital 13 19.9 20.1
Share premium 49.0 47.0
Other reserves 0.4 0.2
Retained earnings 286.6 284.2
Total equity 355.9 351.5
The Company has taken advantage of the exemption permitted by section 408 of the Companies Act 2006 not to publish its
individual prot and loss account and related notes. The Company made a prot attributable to the equity shareholders of £63.4m in
the year (2024: £36.5m).
Approved by the Board of Directors on 10 March 2026 and signed on its behalf by:
RA Helbing CM McLeish
Director Director
Company Number: 671474
210
Company Statement of Changes
in Equity
Hill & Smith PLC | Annual Report and Accounts 2025
211
Share
Capital
£m
Share
Premium
£m
Capital
redemption
reserve
£m
Retained
Earnings
£m
Total
Equity
£m
At 1 January 2024 20.0 44.6 0.2 280.1 344.9
Comprehensive income
Prot 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 benet 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
Comprehensive income
Prot for the year – – – 63.4 63.4
Transactions with owners recognised directly in equity
Dividends
– – – (39.4) (39.4)
Credit to equity of share-based payments
– – – 2.9 2.9
Own shares held by employee benet trust – – – 0.3 0.3
Satisfaction of long-term incentive and deferred bonus awards – – – (4.8) (4.8)
Tax taken directly to the Consolidated Statement of Changes in Equity
– – – 0.2 0.2
Shares issued – 2.0 – – 2.0
Repurchase of shares (0.2) – 0.2 (20.2) (20.2)
At 31 December 2025
19.9 49.0 0.4 286.6 355.9
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 Benet 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 conrm 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
£108.7m (2024: £106.8m), representing 2.6 times (2024: 2.7 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 £80.4m available for distribution at 31 December 2025 (2024: £89.4m). Further reserves
are available for distribution from trading subsidiaries located overseas, subject to local regulations.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 211
Financials
Notes to the Company Financial
Statements
Hill & Smith PLC | Annual Report and Accounts 2025
212
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 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 prot 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 212 to 215 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 nancial instruments, nancial instruments classied as fair value through prot 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.
Signicant 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 indenite life intangible assets is undertaken. Key assumptions include the estimation of future cash ows, growth factors
and discount rates.
There are no signicant 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 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 prot and loss account.
212
Hill & Smith PLC | Annual Report and Accounts 2025
213
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 outow of economic benets will be required to settle the obligation.
Provisions are determined by discounting the expected future cash ows at a pre-tax rate that reects risks specic to the liability.
Tangible fixed assets and depreciation
Tangible xed assets are stated at cost less accumulated depreciation and accumulated impairment losses.
Where parts of an item of tangible xed assets have different useful lives, they are accounted for as separate items of tangible
xed assets.
Depreciation is charged to the prot and loss account on a straight-line basis over the estimated useful lives of each part of an item
of tangible xed 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 specic 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 reects 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: xed 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 prot 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.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 213
Financials
Notes to the Company Financial Statements
continued
214
1. Company Principal Accounting Policies continued
Pension scheme arrangements
Dened benet plans
A dened benet plan is a post-employment benet plan other than a dened contribution plan. The Company’s net obligation in
respect of dened benet pension plans is calculated separately for each plan by estimating the amount of future benet that
employees have earned in return for their service in the current and prior periods; that benet 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 dened
benet liability/surplus for the period by applying the discount rate used to measure the dened benet obligation at the beginning of
the annual period to the net dened benet liability/surplus.
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 benets are expected
to be paid.
Remeasurements arising from dened benet 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 dened benet plans in employee benet expenses in prot or loss.
Certain of the Company’s employees are members of Group-wide dened benet schemes. The net dened benet 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 reect 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 reect
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 prot or loss.
Taxation
Tax on the prot or loss for the year comprises current and deferred tax. Tax is recognised in the prot 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 nancial 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 prot 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 prots will be available against which the
temporary difference can be utilised.
214
Hill & Smith PLC | Annual Report and Accounts 2025
215
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 Prot 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 nancial statements at fair value at the time the guarantee is issued. The company
estimates the fair value of the nancial guarantee as being the difference between the net present value of the contractual cash ows
required under a debt instrument and the net present value of the contractual cash ows 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 nancial 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
2025 2024
Pence per share £m Pence per share £m
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
Interim dividend paid in relation to year-ended 31 December 2024 16.5 13.3
– –
Final dividend paid in relation to year-ended 31 December 2024 32.5 26.1
– –
Total 49.0 39.4 43.0 34.5
Dividends declared in respect of the year
2025 2024
Pence per share £m Pence per share £m
Interim dividend declared in relation to year-ended 31 December 2024 – – 16.5 13.3
Final dividend declared in relation to year-ended 31 December 2024 – – 32.5 26.1
Interim dividend declared in relation to year-ended 31 December 2025 18.0 14.5
– –
Final dividend declared in relation to year-ended 31 December 2025 35.0 27.9
– –
Total 53.0 42.4 49.0 39.4
The nal dividend for the year was proposed after the year end date and was not recognised as a liability at 31 December 2025, in
accordance with IAS 10.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 215
Financials
Notes to the Company Financial Statements
continued
216
4. Tangible fixed assets
Short leasehold
properties
£m
Plant, machinery
and vehicles
£m Total
Cost or valuation
At 1 January 2025 0.4 1.7 2.1
At 31 December 2025 0.4 1.7 2.1
Depreciation
At 1 January 2025 0.2 0.8 1.0
Charge for the year 0.1 0.2 0.3
At 31 December 2025 0.3 1.0 1.3
Net book value
At 31 December 2025 0.1 0.7 0.8
At 31 December 2024 0.2 0.9 1.1
5. Leases
The movements in the carrying value of the right-of-use assets and lease liabilities in the year ended 31 December 2025 are as
follows:
Right-of-use assets
Land and
buildings
£m
Plant and
equipment
£m
Tot al
£m
Balance at 1 January 2025 0.1 0.2 0.3
Additions – 0.1 0.1
Depreciation charge for the year – (0.1) (0.1)
At 31 December 2025 0.1 0.2 0.3
Lease liabilities
Tot al
£m
At 1 January 2025 0.4
Additions 0.1
Lease payments (0.2)
At 31 December 2025 0.3
The following table shows the breakdown of the lease expense between amounts charged to operating prot and amounts charged
to nance costs:
2025
£m
2024
£m
Depreciation of right-of-use assets 0.1 0.2
Charged to prot before taxation 0.1 0.2
216
Hill & Smith PLC | Annual Report and Accounts 2025
217
5. Leases continued
The maturities of the lease liabilities at 31 December were as follows:
2025
£m
2024
£m
Due within one year 0.1 0.1
Due between one and two years 0.2 0.2
Due between two and three years – 0.1
Total lease liabilities 0.3 0.4
6. Deferred tax asset
7. Fixed asset investments
Shares in
subsidiary
undertakings
£m
Total
£m
Cost
At 1 January 2025 369.8 369.8
At 31 December 2025 369.8 369.8
Provisions
At 1 January 2025 49.8 49.8
At 31 December 2025 49.8 49.8
Net book value
At 31 December 2025 320.0 320.0
At 31 December 2024 320.0 320.0
A list of the businesses owned by the Company is given in note 16. All of the Company’s subsidiaries are wholly owned.
2025
£m
2024
£m
Deferred tax asset at 1 January 3.0 7.2
Charge for the year in the prot and loss account (1.0) (4.1)
Credit/(charge) for the year directly in equity 0.2 (0.1)
At 31 December 2.2 3.0
Other timing differences 2.2 3.0
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 217
Financials
Notes to the Company Financial Statements
continued
218
8. Debtors due in more than one year
2025
£m
2024
£m
Amounts owed by subsidiary undertakings 69.6 74.3
69.6 74.3
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 classied 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
2025
£m
2024
£m
Amounts owed by subsidiary undertakings 5.5 6.7
Other debtors 0.4 0.4
Prepayments 2.0 2.1
Unpaid share premium 1.2 –
9.1 9.2
10. Creditors: amounts falling due within one year
2025
£m
2024
£m
Bank loans and overdrafts
Loans and borrowings (0.1) –
Bank overdrafts 28.4 15.1
28.3 15.1
Other creditors
Trade Payables 2.2 3.0
Other taxation and social expenses 0.2 0.2
Accrued expenses 5.1 5.0
Other payables 1.8 1.6
Amounts owed to subsidiary undertakings 23.0 27.7
32.3 37.5
218
Hill & Smith PLC | Annual Report and Accounts 2025
219
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.
2025
£m
2024
£m
Bank loans (0.2) 9.7
Lease liabilities 0.2 0.3
– 10.0
The Company’s bank loans and borrowings are also analysed below into the periods in which they mature:
2025
£m
2024
£m
Amounts due within one year 28.3 15.1
Amounts due after more than one year
Between two and ve years (0.2) 9.7
28.1 24.8
The Company has no bank loans falling due after more than one year at 31 December 2025. The £0.2m bank loan above represents
unamortised fees associated with renancing actions.
12. Pension liabilities
The Company contributes to the Group’s Hill & Smith 2016 Pension Scheme, which has sections providing benets accruing in the
future on a dened benet basis and on a dened 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 had a dened benet surplus of £0.2m as at 31 December 2025 (2024: £nil). The Company’s prot for the year includes
a pension charge of £0.4m (2024: £0.4m), which includes the costs of the dened contribution schemes and the dened benet
schemes.
13. Called up share capital
2025
£m
2024
£m
Allotted, called up and fully paid 79.5m ordinary shares of 25p each (2024: 80.4m) 19.9 20.1
Allotted, called up, unpaid 0.2m ordinary shares of 25p each (2024: nil) – –
In 2024 the Company issued 0.2m shares under its various share option schemes (2024: 0.2m), realising £2.0m (2024: £2.5m).
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.
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 219
Financials
Notes to the Company Financial Statements
continued
220
14. Guarantees
Hill & Smith PLC has issued guarantees over the liabilities of the following predominantly non-trading UK subsidiaries as at 31
December 2025 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:
The Company guarantees the bank loans, overdrafts and other borrowings of certain subsidiary undertakings. The amount
outstanding at 31 December 2025 was £84.3m (2024: £97.1m).
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.
Company Name Company Numbe
r
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
Lionweld Kennedy Flooring Limited 05274797
Medway Galvanising Company Limited 01808205
Premier Galvanizing Limited 03873106
Prolectric Services Limited 04607208
Hill & Smith VRS Limited 16376823
Mallatite Limited 02621328
ATG Access Limited 02643622
Barkers Engineering Limited 00597466
Hill & Smith Tipi Newco Limited 16376962
Black Oldco Limited 14466538
220
Hill & Smith PLC | Annual Report and Accounts 2025
221
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
(UKI)
ATG Access Ltd (UKI)
A W Thorne Limited (D)*
Barkers Engineering Limited (UKI, G)
Bergen Pipe Supports Group Limited (H)*
Bergen Pipe Supports Limited (D)
Berry Safety Systems Limited (D)*
Black Oldco Limited (UKI)
Bipel Group plc (D)
Birtley Group Limited (UKI, G)
Bowater Doors Limited (UKI)
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 (UKI)
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 VRS Limited (UKI)
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 (UKI)*
Hill & Smith Overseas Limited (H)*
Hill & Smith Pension Trustees Limited (D) *
Hill & Smith Tipi Newco Limited (UKI)
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 (UKI)*
Mallatite Limited (UKI)*
Mallatite Minor Structures & Products Limited
(UKI)
Medway Galvanising Company Limited (G)
Pipe Supports Overseas Limited (H)*
Post & Column Limited (D)
Premier Galvanizing Limited (G)
Prolectric Services Limited (UKI)
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 (UKI) Limited (D)
VMS Newco Limited (UKI)
Western Galvanizers Limited (D)
Widnes Galvanising Limited (G)
Wombwell Foundry Limited (D)
Incorporated In The USA
Balance Oldco Inc. (D)
Bergen Pipe Supports, Inc. (US)
Carpenter & Paterson, Inc. (US)
Creative Pultrusions, Inc. (US)
CPK Manufacturing LLC (US)
CPCA Manufacturing LLC (US)
Enduro Composites, Inc. (US)
Hill & Smith Group Holdings, Inc. (H)
Hill & Smith US Group Inc (H)
Hill & Smith, Inc. (US)
National Signal LLC (US)
Novia Corporation (US)
Prolectric US Inc. (D)
Voigt & Schweitzer LLC (H)
V&S Whitlow Electric LLC (US)
V&S Capital Steel LLC (US)
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. (US)
V&S Schuler Tubular Products LLC (US)
V&S Taunton Galvanizing, LLC (G)
Incorporated in Australia
Hill & Smith Pty Limited (UKI)
Incorporated in India
Bergen Pipe Supports (India) Private Limited
(UKI)
Hill & Smith Infrastructure Products India
Private Limited (D)
Incorporated in Ireland
Redman Fisher Limited (UKI)
Hill & Smith (Ireland) Unlimited Company (D)
Incorporated in Norway
ATA Hill & Smith AS (UKI)
Incorporated in Spain
Prolectric Solar Lighting SL (D)
All of the above subsidiaries have a year end date of 31 December, with the exception of Hill & Smith Tipi Newco Limited, which has a
year end date of 30 April 2026, 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.
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.
(UKI) UK & India Engineered Solutions
(US) US Engineered Solutions
(G) Galvanizing
(D) Dormant
(H) Holding Company
* Directly held by Hill & Smith PLC
Strategic Report Governance Shareholder Info
Hill & Smith PLC | Annual Report and Accounts 2025 221
Financials
Five Year Summary
Hill & Smith PLC | Annual Report and Accounts 2025
222
Continuing operations
2025
£m
2024
£m
2023
£m
2022
£m
2021
£m
Revenue 868.8 855.1 829.8 732.1 625.2
Underlying operating prot 151.3 143.5 122.5 97.1 77.3
Underlying prot before taxation 142.5 132.6 111.9 87.9 71.1
Shareholders’ funds 475.0 475.7 424.5 395.0 339.6
Pence Pence Pence Pence Pence
Underlying earnings per share 132.2 122.6 105.4 85.4 70.0
Proposed dividends per share 53.0 49.0 43.0 35.0 31.0
222
Financial calendar
Annual General Meeting Thursday 21 May 2026
Trading Update Thursday 21 May 2026
Ex-dividend date for 2025 final dividend Thursday 28 May 2026
Record date 2025 final dividend Friday 29 May 2026
Dividend Reinvestment Plan — last date for election Friday 12 June 2026
2025 final dividend payable Friday 3 July 2026
Announcement of 2026 interim results Wednesday 12 August 2026
Trading Update Thursday 26 November 2026
Strategic Report Governance Financials
Hill & Smith PLC | Annual Report and Accounts 2025 223
Shareholder Info
Shareholder information
Shareholder base
Holdings of shares at 10 March 2026
Range of Shareholders Number of Holders % Number of Shares %
1 — 500 523 31.17 93,427 0.12
501 — 1,000 230 13.71 178,926 0.23
1,001 — 5,000 438 26.10 1,098,926 1.38
5,001 — 50,000 290 17.28 4,508,456 5.68
50,001 — 100,000 57 3.40 4,124,398 5.20
100,001 — 500,000 103 6.14 23,784,538 29.97
500,001 — 1,000,000 19 1.13 12,423,348 15.65
Above 1,000,000 18 1.07 33,156,316 41.78
1,678 100.0 79,368,335 100.0
Shareholder base
Number of Holders % Number of Shares %
Individuals 1,139 67.88 2,930,669 3.69
Institutions 532 31.70 76,409,729 96.27
Other corporate 7 0.42 27,937 0.04
1,678 100.0 79,368,335 100.0
Dividend history — dividend per share
2025 2024 2023 2022 2021
Interim 18.0p 16.5p 15.0p 13.0p 12.0p
Final 35.0p 32.5p 28.0p 22.0p 19.0p
53.0p 49.0p 43.0p 35.0p 31.0p
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.
Annual General Meeting
The AGM will be held on Thursday, 21 May 2026 at 11.00am
at Cranmore Park Conference and Exhibition Centre, Cranmore
Avenue, Shirley, Solihull, B90 4LF. Full details are contained
within the Notice of Meeting. A proxy card is also enclosed
withthis statement for voting. Alternatively, you can vote
electronically as explained below.
224
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
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holdings online. To register click on Investor Centre on the
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follow the instructions.
You will be able to:
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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.
Strategic Report Governance Financials
Hill & Smith PLC | Annual Report and Accounts 2025 225
Shareholder Info
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
226
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
Voigt & Schweitzer LLC
Galvanizing services
987 Buckeye Park Road,
Columbus, Ohio 43207
USA
Tel: +1 (614) 449 8281
www.hotdipgalvanizing.com
Strategic Report Governance Financials
Hill & Smith PLC | Annual Report and Accounts 2025 227
Shareholder Info
Contacts and advisors
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 Advisors
Auditor
Ernst & Young LLP
No. 1 Colmore Square
Birmingham
B4 6HQ
Brokers and Financial Advisors
Deutsche Bank AG
21 Moorfields
London
EC2Y 9DB
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
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
228
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