Hill & Smith PLC - Annual Report 2025

HILL & SMITH PLC

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

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

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

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

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

£100m

Share buyback over c.18 months

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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

£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

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

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

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.”

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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).

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.”

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

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

India

US Engineered Solutions

UK & India Engineered

Solutions

Galvanizing Services

US Engineered Solutions

UK & India Engineered

Solutions

Galvanizing Services

India

FY25

Revenue

FY25

Revenue

FY25

Underlying

operating profit

FY25

Underlying

operating profit

63% 48% 49%79%

35%

28%

14%

19%

24% 37%

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

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%

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%

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

e emissions, from scope 1 and scope 2

(market-based).

Performance

2023

2024

2025

49,984 tonnes

48,895 tonnes

39,810 tonnes

0.06

0.05

The Group delivered a 19% reduction in total scope 1 and 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

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

75.0 69.4 +8 +12 +8

Underlying operating margin %

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.

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.

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.

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

55.4 50.3 +10 +13 +13

Underlying operating margin %

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.

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

20.9 23.8 -12 -11 -17

Underlying operating margin %

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).

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

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.

Our companies

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:

Organic growth

Enhancing growth through M&A

Sustainability

Strong financial and risk management

Links to relevant KPIs:

Organic revenue growth

Underlying operating profit margin

Underlying cash conversion

Return on invested capital

Leverage

Greenhouse gas emissions

Health and safety

Employee engagement

Governance Financials Shareholder Info

Hill & Smith PLC | Annual Report and Accounts 2025 31

Strategic Report

Stakeholder engagement continued

Our suppliers

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

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.

Our customers

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

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

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

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

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.

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

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

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

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

e per £000’s revenue) 0.05 0.06 0.05 0.03

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

Scope 1 natural gas

Scope 1 other Scope 2

2020 Base 2025 2030 2035 2040

tCO2e emissions (000s)

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

e) 38,322 40,942 -6%

Scope 2 (market-based) (tCO

e) 1,488 15,255 -90%

Total scope 1+2 (market-based) (tCO

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

e) 1,105,071 362,766 205%

Scope 3, category 2: Capital goods (tCO

e) 8,075 4,689 72%

Scope 3, category 3: Fuel and energy-related activities (tCO

e) 7,449 6,239 19%

Scope 3, category 4: Upstream transportation (tCO

e) 30,678 28,569 7%

Scope 3, category 5: Waste (tCO

e) 2,399 3,811 -37%

Scope 3, category 6: Business travel (tCO

e) 1,458 1,500 -3%

Scope 3, category 7: Employee commuting (tCO

e) 4,812 5,469 -12%

Scope 3, category 9: Downstream transportation (tCO

e) 5,197 8,415 -38%

Scope 3, category 10: Processing of sold products (tCO

e) 15,565 9,261 68%

Scope 3, category 11: Use of sold products (tCO

e) 494,520 550,091 -10%

Scope 3, category 12: End-of-life treatment (tCO

e) 618 2,757 -78%

Scope 3, category 13: Downstream leased assets (tCO

e) 302 163 86%

Total scope 3 (all categories) (tCO

e) 1,676,146 983,729 70%

Overall scope 3 emissions intensity (tCO

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.

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

) 108,526 99,241 93,278 84,667 104,795

Water intensity (m

/£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

) 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

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

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

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.

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

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.

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

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

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.

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

b. Management’s role

Strategy

c. Climate-related risks and opportunities

d. Impact of climate-related risks and opportunities

e. Resilience of the organisation’s strategy and business model in climate scenarios

Risk management

f. Risk identification and assessment

g. Managing climate-related risks

h. Integration into overall risk management process

Metrics and targets

i. Metrics for climate-related risks and opportunities Partial

j. Scope 1, 2 and 3 greenhouse gas emission metrics

k. Climate-related targets – scope 1, 2 and 3

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

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

e) – Scope 1: UK

14,580 16,286 16,839 17,308 18,216

Emissions (tCO

e) – Scope 1: Rest of World

23,742 22,858 21,949 21,208 21,922

Location-based emissions (tCO

e) – Scope 2: UK

2,432 2,981 3,122 2,997 3,796

Location-based emissions (tCO

e) – Scope 2: Rest of World

10,983 10,602 10,230 10,828 11,443

Market-based emissions (tCO

e) – Scope 2: UK

88 82 165 296 860

Market-based emissions (tCO

e) – Scope 2: Rest of World

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

e) – Group

1,676,146 896,607 824,999 983,729 n/a

Other greenhouse gas emissions – CH4 (tCO

e) 32.9 33.9 31.9 30.3 34.5

Other greenhouse gas emissions – N2O (tCO

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).

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

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

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

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

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

3/3 N/A N/A N/A

Chris McLeish

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

1/2 2/2 1/2 1/2

Gillian Tomlinson

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

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

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.

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.

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

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

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

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.

Strategic Report Financials Shareholder Info

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

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

Percentage

of executive

management

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

Percentage

of executive

management

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).

Strategic Report Financials Shareholder Info

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

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.

Strategic Report Financials Shareholder Info

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

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.

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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

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

Market leadership

Structural growth

Sustainability

Entrepreneurial culture

High and improving returns profile

Disciplined capital allocation

Relevant principal risk group

Operational

Strategic

Environmental, social and governance

Economic and market conditions

Relevant stakeholder group

People

Companies

Local communities

Suppliers

Customers

The environment

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.

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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.

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.

General governance and Committee oversight

The Board received regular

updates from each of its

Committees

• Deliberated and opined on recommendations received from its

Committees.

Approved potential conflicts of

interests and reviewed the

conflicts.

• Ensured openness and full disclosure to maintain the integrity of

decision making.

• Considered and re-affirmed that the Non-executive Directors

remain independent.

Relevant strategic priorities

Market leadership

Structural growth

Sustainability

Entrepreneurial culture

High and improving returns profile

Disciplined Capital Allocation

Relevant stakeholder group

People

Companies

Local communities

Suppliers

Customers

The environment

Shareholders

Relevant principal risk group

Operational

Strategic

Environmental, social and governance

Economic and market conditions

Governance Report continued

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.

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.

Values

Considered Group values • Established Group values with further work to be undertaken in

2026 to streamline and communicate across our operating

companies.

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.

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.

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.

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.

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.

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.

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.

Relevant strategic priorities

Market leadership

Structural growth

Sustainability

Entrepreneurial culture

High and improving returns profile

Disciplined Capital Allocation

Relevant stakeholder group

People

Companies

Local communities

Suppliers

Customers

The environment

Shareholders

Relevant principal risk group

Operational

Strategic

Environmental, social and governance

Economic and market conditions

Governance Report continued

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

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

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

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.

Strategic Report Financials Shareholder Info

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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

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

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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’.

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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:

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

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

(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

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%

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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Hill & Smith PLC | Annual Report and Accounts 2025 115

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

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.

Strategic Report Financials Shareholder Info

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

£153.6m Actual

£149.8m Target

1. at budgeted exchange rates

Underlying Cash Conversion

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

Strategic Report Financials Shareholder Info

Hill & Smith PLC | Annual Report and Accounts 2025 119

Governance

Implementation of the Remuneration Policy during 2025

Single remuneration figure

Year

Base salary/

fees

Taxable

benefits

Pension

Total fixed pay Annual bonus

LTIP

Other

Total variable

pay

Total ‘Single

Figure’

Rutger Helbing

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

2025 100,962 6,161 6,563 113,686 101,091 – 217,820 318,911 432,597

2024 – – – – – – – – –

Former Directors

Alan Giddins

2025 – – – – – – – – –

2024 512,500 – – 512,500 – – – – 512,500

Hannah Nichols

2025 116,827 3,829 7,594 128,250 – – – – 128,250

2024 405,000 13,045 26,325 444,370 413,682 633,410

– 1,047,092 1,491,462

Hooman Caman

Javvi 2025 – – – – – – – – –

2024 374,578 12,726 24,871 412,175 219,426 321,422

– 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

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

£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

Hannah Nichols

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

£290,612 £118,192 £1,637,935

Current % of salary (based on salary on 31 December 2025)

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

Rutger Helbing 1 April 2025 Nil cost option 68,496 £1,195,940

31 December 2027

Chris McLeish 13 October 2025 Nil cost option 12,918 £269,986

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)

GHG reduction target

(10% of the award)

0% vesting Less than 4% Below median Less than 17%

20% vesting

4% Median 17%

Maximum vesting

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

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

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

— — 93,048 — 93,048

Deferred Share Plan — — — 6,755 6,755

Market value options

— — — — —

SAYE options

— — — 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

Shares 3,106 — — — 3,106

LTIP

— 82,740 68,312 — 151,052

Deferred Share Plan

— 32,101 — 23,711 55,812

Market value options

— 1,078 — — 1,078

SAYE options

— — — 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

Total ‘Single

Figure’ 2024

Alan Giddins

Chair 320,000 — — — — — 320,000 53,333

Tony Quinlan Senior Independent Director 82,000 — — — — — 82,000 85,192

Farrokh Batliwala

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

Non-executive Director 46,154 — — — — — 46,154 —

Former Directors

Leigh-Ann Russell

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

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)%

263.3%

n/a 3.6% 11.2% (3.7)% 3.4% (68.3)%

(74.1)%

n/a

2023 — 2024 4.9% 2.0%-10.0% (3.2)%

n/a n/a 4.6% n/a 21.5%

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%

n/a n/a n/a n/a n/a (71)%

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%

n/a 249%

n/a n/a n/a n/a n/a n/a n/a n/a

2023 — 2024 n/a 153.0%

n/a n/a n/a n/a n/a n/a n/a (7.5)%

n/a n/a

2022 — 2023 n/a 20.3%

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%

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%

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

percentile

pay ratio

Median

pay ratio

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

percentile Median 75

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

percentile and at median but reduced at the 75

percentile. The median pay ratio is less than

the 75

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

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

£20.2m N/A N/A

Overall spend on pay

£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

(40% of the award)

GHG reduction target

(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

% of issued share capital

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.

Strategic Report Governance Shareholder Info

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 prot 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 prot 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)

Prot 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)

Prot 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

Prot for the year 82.5 76.4

Items that may be reclassied subsequently to prot 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 reclassied subsequently to prot or loss

Actuarial gain/(loss) on dened benet pension schemes 26 1.7 (0.2)

Taxation on items that will not be reclassied to prot 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 benet 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 benet 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

Capital

£m

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 –

Prot 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 benet 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

Prot 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 benet 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 benet 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

Prot before tax 111.3 104.5

Add back net nancing costs 7 8.8 10.9

Operating prot 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 modication 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 benets 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 benet trust 19 (4.5) (1.2)

Dividends paid 11 (39.4) (34.5)

Costs associated with renancing 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

Strategic Report Governance Shareholder Info

Hill & Smith PLC | Annual Report and Accounts 2025 151

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

signicant effect on the Group Financial Statements and estimates with a signicant 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 indenite 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

identied 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 renanced 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.

152

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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 dened 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 signicant 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 signicantly 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 signicantly contributes to the ability to continue

producing outputs and is considered unique or scarce or cannot be replaced without signicant 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

denition 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 identiable 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 reects

management’s judgement of the fair value of the individual intangible asset calculated by reference to the net present value of future

benets accruing to the Group from the utilisation of the asset, discounted at an appropriate discount rate.

Certain US brands are considered to have an indenite life and are therefore subject to annual impairment testing (see accounting

policy ‘Impairment of assets’). In determining that these brands have indenite 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 specic 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 identiable and unique software products controlled

by the Group, and it is probable that future economic benets 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 specic 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 benets

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.

154

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155

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 benet.

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 signicant part initially recognised is derecognised upon disposal (i.e. at the date

the recipient obtains control) or when no future economic benets 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 indenite 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 signicant cash generating unit,

which are no larger than operating segments as dened 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

Hill & Smith PLC | Annual Report and Accounts 2025 155

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

reects current market assessments of the time value of money and the risks specic to the asset.

Non-current assets held for sale and discontinued operations

The Group classies 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 classication 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 classication 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

signicant 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 classication.

Property, plant and equipment, intangible assets and right-of-use assets are not depreciated or amortised once classied as held for

sale.

Assets and liabilities classied 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 simplied 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 specic assets and liabilities or to

specic 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.

156

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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 prot 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 prot or loss. When the hedged part of a net

investment is disposed of, the associated cumulative amount in the translation reserve is transferred to prot or loss as an

adjustment to the prot 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 outow of economic benets 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 reects current market assessments of the time value

of money and, when appropriate, the risks specic 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 reects 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 specied 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 full 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 signicant 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 dened 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 specic 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 specied in the sales contract. To estimate the variable

consideration for these expected future rebates, the Group applies the most likely amount method to reect 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 signicant 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 classies 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 classies 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 satised 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 dened 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 dened benet pension schemes is calculated separately for each scheme by

estimating the amount of future benet that employees have earned in return for their service in the current and prior periods. This

benet 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 qualied 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 prot and the interest cost on the

net dened benet 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 dened benet 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 reect 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 reect

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 prot 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 prot or loss, the interest expense on lease

liabilities, and nancial expenses related to renancing. 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 prot 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

Hill & Smith PLC | Annual Report and Accounts 2025

161

1. Group Accounting Policies continued

Income tax continued

Current tax is the expected tax payable on the taxable prot for the year. Taxable prot differs from net prot 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 identied

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 signicant exposure to Pillar Two income taxes to result given the relatively low level of protability 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 prot, 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 prots 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 prot 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 indenite 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 reect 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 dened benet pension decit, certain estimates and assumptions about the scheme have

been made, notably the ination rates, discount rates, mortality and pension increases. The factors affecting these assumptions are

inuenced 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 reect 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 classication 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 reect 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

Prot

£m

Underlying

operating

prot

£m*

Revenue

£m

Reported

Operating

Prot

£m

Underlying

operating

prot

£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)

Prot before taxation 111.3

142.5

104.5

132.6

Taxation (28.8)

(36.3)

(28.1)

(34.0)

Prot 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 dened 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 unsatised or partially satised 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 prot

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 prot before tax 142.5 132.6

Non-underlying items included in operating prot (31.2) (28.1)

Reported prot 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 prot 75.0 69.4 20.9 23.8 55.4 50.3 151.3 143.5

Non-underlying items

Prot 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 prot 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 prot 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 prot 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

prot

£m

Revenue

£m

Underlying

operating

prot

£m

Revenue

£m

Underlying

operating

prot

£m

Revenue

£m

Underlying

operating

prot

£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% –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 prot

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

Dened benet pension scheme decit 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 cashows:

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 renancing under IFRS 9 2.3 1.5

Covenant net debt (A) 13.2 49.4

Underlying operating prot 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

Prot 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 classication, 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 prot 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)

Prot 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 benet 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 benets 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 renancing 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 prot in the Consolidated Income Statement 28.8 28.1

Deferred Tax (note 16)

Relating to dened benet 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

Prot before taxation 111.3 104.5

Prot 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

Benets from international nancing arrangements — current and prior years (0.1)

(0.1)

Local tax incentives –

(0.1)

Overseas prots 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

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

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

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

Reclassications –

–

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

Reclassications –

–

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 specic 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 reect 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 reect 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 specic 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 reect

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 specic 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 reect 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 specic 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 reect 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 indenite life intangible assets within the Galvanizing Services - US CGU, are performed by analysing the carrying value

allocated to each signicant CGU against its value in use. All goodwill is allocated to specic 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

reect 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.

180

Hill & Smith PLC | Annual Report and Accounts 2025

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 signicant 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 protability. Whilst our strategy continues to be one of customer diversication 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 reecting 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.

Strategic Report Governance Shareholder Info

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

protability. 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, reecting 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 prot 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 prot 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 reecting 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 prot 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 prot margin 2026-2030 Base case 40.0% 6.1

Zero headroom 35.3% –

H&S sensitivity 31.5% (5.0)

182

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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)

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

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 classication of

the two businesses as held for sale, their recoverable amount was estimated, with no impairment loss being identied. Following the

classication, 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.

184

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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)

Modication (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)

Modication (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

Strategic Report Governance Shareholder Info

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 prot 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 prot 13.9 14.1

Interest expense relating to lease liabilities 2.0 2.0

Charged to prot 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).

186

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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.

Strategic Report Governance Shareholder Info

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 satised as at 31 December 2024 offset by contracts that are in progress at 31 December 2025.

188

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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 classied as held for sale – (3.4)

Cash and cash equivalents net of bank overdraft and overdraft classied 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 classied as held for sale – (3.0)

Net debt (50.8) (96.9)

Change in net debt

Operating prot 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 benets 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 renancing activities (0.6) (0.5)

Purchase of shares for employee benet 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.

Strategic Report Governance Shareholder Info

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 renancing 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 renancing 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.

190

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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

rectication

£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

identied 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 rectication

The £0.4m provision brought forward was in respect of an issue identied 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

reect 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 signicant 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 signicant.

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

signicant 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 signicantly, 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 signicant 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 condence 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 denes 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 signicant changes in the Group’s approach to capital management during the year.

Strategic Report Governance Shareholder Info

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 classication 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 classied 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 classied 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 dened 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.

194

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195

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 classied 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 Signicant 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 insignicant 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

Strategic Report Governance Shareholder Info

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 insignicant.

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

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 dened 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.

196

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197

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 signicant 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 signicant

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 signicant 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

Strategic Report Governance Shareholder Info

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)

Reclassications (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 Benet 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.

198

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199

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

-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).

200

Hill & Smith PLC | Annual Report and Accounts 2025

201

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

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

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 specied 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 benet assets and obligations are detailed below:

£m

2025

£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 benet 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 benets on

a dened benet and dened contribution basis. The Scheme is closed to future accrual and is subject to the statutory scheme

specic funding requirements outlined in UK legislation. The weighted average maturity (the ‘duration’) of the dened benet 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 decit 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 qualied 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 prot of £2.9m (2024: £3.0m), which

includes the costs of the dened contribution and the dened benet 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 signicant being:

Ris

Description

Volatile asset returns The dened benet 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

decit. 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.

Ination risk A signicant proportion of the dened benet obligation is indexed in line with price ination, with

higher ination 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 ination 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%

Ination - RPI 2.9% 3.3%

Ination - 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 ination in the UK has at times been signicantly higher than we have seen in previous years. The

Group has made an allowance for this higher ination experience within the liabilities of the Scheme. Over the duration of the

Scheme’s liabilities, market expectations of ination (which have been used to derive the ination assumptions above) are

signicantly 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 dened contribution benets which are equal in value and are excluded from the

following gures. The fair values of Scheme assets in respect of the dened benet scheme, which are not intended to be realised in

the short term and may be subject to signicant 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

Diversied growth funds 9.4 8.4

Liability Driven Investment ("LDI") funds 11.9 10.6

Alternatives* 3.6 12.1

Unquoted Investment Funds

With prots 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 benet 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 ination 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 reect the size and shape of the Scheme’s interest rate and ination 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 ination linked bonds issued by the UK Government as well as

xed rate bonds. Secure Income Assets Funds (Alternatives) are invested in a diversied 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

Dened

contribution

schemes

£m

Dened

benet

schemes

£m

Tot al

£m

Dened

contribution

schemes

£m

Dened

benet

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 prot 2.6 0.3 2.9 2.7 0.3 3.0

Interest on net Scheme surplus – – – – 0.1 0.1

Total charge to prot 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 dened benet 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

Benets paid (3.6) (3.8)

Closing dened benet 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

Benets 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

Dened benet scheme 1.3 4.0

Dened 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 signicant

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

Ination rate

(+0.1% p.a.)

£m

Ination 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 dened benet

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 signicant assumption, keeping all other assumptions constant. As such the sensitivity analyses may not be representative of an

actual change in the dened benet 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 benets.

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 conrmed the implications of not having a conrmation 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 reected in these nancial statements.

Further, the Government has conrmed 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 dened benet pension plan comprising current and deferred pensioners such that

no future benets accrue. The average duration of the dened benet plan obligation at the end of the reporting period is

approximately 7 years (2024: 7 years).

The Group also operates dened 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 prot of £2.7m (2024: £2.1m), which

includes the costs of the dened contribution schemes and the dened benet 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%

Ination 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 signicant 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 benet 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

Dened

contribution

schemes

£m

Dened benet

schemes

£m

Tot al

£m

Dened

contribution

schemes

£m

Dened benet

schemes

£m

Total

£m

Current service costs 2.6 0.1 2.7 2.0 0.1 2.1

Charge to operating prot 2.6 0.1 2.7 2.0 0.1 2.1

Interest on net Scheme decit – – –

– – –

Total charge to prot 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 dened benet 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 –

Benets paid (0.2) (0.2)

Exchange adjustment (0.2) –

Closing dened benet 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)

Benets 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

Dened benet scheme – –

Dened 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 prot 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 benet 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 prot and loss account and related notes. The Company made a prot 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

Capital

£m

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

Prot 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 benet 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

Prot 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 benet 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 Benet 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 conrm 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 prot 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 classied as fair value through prot 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.

Signicant 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 indenite life intangible assets is undertaken. Key assumptions include the estimation of future cash ows, growth factors

and discount rates.

There are no signicant 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 prot 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 outow of economic benets will be required to settle the obligation.

Provisions are determined by discounting the expected future cash ows at a pre-tax rate that reects risks specic 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 prot 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 specic 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 reects 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 prot 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

Dened benet plans

A dened benet plan is a post-employment benet plan other than a dened contribution plan. The Company’s net obligation in

respect of dened benet pension plans is calculated separately for each plan by estimating the amount of future benet that

employees have earned in return for their service in the current and prior periods; that benet 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 dened

benet liability/surplus for the period by applying the discount rate used to measure the dened benet obligation at the beginning of

the annual period to the net dened benet 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 benets are expected

to be paid.

Remeasurements arising from dened benet 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 dened benet plans in employee benet expenses in prot or loss.

Certain of the Company’s employees are members of Group-wide dened benet schemes. The net dened benet 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 reect 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 reect

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 prot or loss.

Taxation

Tax on the prot or loss for the year comprises current and deferred tax. Tax is recognised in the prot 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 prot 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 prots 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 Prot 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 prot and amounts charged

to nance costs:

2025

£m

2024

£m

Depreciation of right-of-use assets 0.1 0.2

Charged to prot 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 prot 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 classied 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 renancing actions.

12. Pension liabilities

The Company contributes to the Group’s Hill & Smith 2016 Pension Scheme, which has sections providing benets accruing in the

future on a dened benet basis and on a dened 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 dened benet surplus of £0.2m as at 31 December 2025 (2024: £nil). The Company’s prot for the year includes

a pension charge of £0.4m (2024: £0.4m), which includes the costs of the dened contribution schemes and the dened benet

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

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 prot 151.3 143.5 122.5 97.1 77.3

Underlying prot 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

Computershare Investor Centre gives access to view your

holdings online. To register click on Investor Centre on the

Computershare home page www.computershare.com and

follow the instructions.

You will be able to:

• View all your holding details for companies registered with

Computershare

• View the market value of your portfolio

• Update your contact address and personal details online

• Access current and historical market prices

• Access trading graphs

• Add additional shareholdings to your portfolio

Share dealing

Share dealing services are available through Computershare

Investor Services PLC. Log on to www.computershare.com/

sharedealingcentre for internet share dealing and for telephone

dealing call 0370 703 0084.

Dividend Reinvestment Plan (‘DRIP’)

The Company offers shareholders the facility to reinvest their

cash dividends to buy more shares in the Company.

• The service allows you to increase your shareholding in

an easy and convenient way

• Online application process enables you to participate easily

and securely: www.investorcentre.co.uk

• Click on ‘Register’ to sign up to the Investor Centre. This will

allow you to carry out a number of share related transactions

online, including opting for the DRIP

• You will be required to fill in your SRN and your postcode,

together with your email address. You will also be asked to

select a user name (ID) and password of your choice

• Once registered select ‘Dividend Plans’ from the left hand

menu and amend your current cash dividend instruction,

confirming acceptance of the DRIP terms and conditions

DRIP shares will be purchased as soon as possible on

or after the dividend pay date.

Shareholder helpline number

There is a Computershare helpline for shareholders who have

enquiries about their shareholdings. The dedicated helpline

number is 0370 707 1058.

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

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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