REG - Hill & Smith Hdgs. - 2015 Annual Report and Notice of 2016 AGM <Origin Href="QuoteRef">HILS.L</Origin> - Part 2
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›› From a transactional perspective, Group companies operatea common set of reporting policies and procedures. Aninternal audit
programme underpins compliance and furtherrequirements are communicated via the Group intranet anddirectly to the financial
professionals around the Group.›› The Group benefits from centralised cash and banking controlsand the Group Financial
Controller acts to govern and monitor allfinancial controls applicable across the Group.›› Regular monitoring of tax
developments in relevant jurisdictionsassists to ensure that the Group utilises the most appropriate taxstructures.›› Specialist
and/or local independent tax advice is sought as appropriate from reputable accounting practices.
Legal &RegulatoryEnsuring compliancewith the lawsand regulationswhich govern theoperations in theterritories in whichwe operate. The impact of regulatory changessuch as green initiatives (includingcarbon footprint results) acts to createadditional process steps, enhancedprocurement requirements andincreases costs and administrativeeffort, ultimately impacting margins.This could also result in the non achievementof Group environmentalaspirations. ›› These requirements are managed by specialists through agreed · Target returns and leverage· Entrepreneurial culture
Group initiatives including: economies of bulk purchasing, siteusage monitoring and reporting, energy market intelligence andcarbon commitment management.The dilution of the Group's valuableintellectual property can result in lostearnings, particularly via the copyingof product in the Asia-Pacific region.Insufficient Intellectual Property Rights('IPR') monitoring could lead to a loss ofbrand protection, patent protection andincrease competitive pressures. ›› Use of patent attorneys with global remit.›› Use of in-region IPR specialist legal advice.›› Central IPR register and
management of renewals, authoriseduses and assignments.›› Contractual protections obtained to protect Group IPR wherepossible.››
Monitoring of IP registrations to ensure consistent protection.
A violation of competition/anti-trustlaws could result in downtime, fines,penalties and adverse reputationalconsequences for the Group by bothcustomers and investors. There mayalso be personal consequences for theGroup's Directors. ›› The Group Code of Business Conduct ('CBC') requires that theGroup conducts its business in an open, vigorous and
competitivefashion.›› Competition compliance manual implemented by each Groupsubsidiary.›› Online competition training and
testing undertaken globally byall key employees, including the Board.›› Simulated dawn raids are undertaken each year to
auditsubsidiary compliance.›› Competition assessments are included in material contractreviews.›› The Group has a whistleblowing
hotline and email to allowemployees to raise concerns in confidence, or anonymously ifpreferred.›› A direct reporting
relationship between the Group Risk &Compliance Counsel and the Chief Executive and AuditCommittee emphasises the commitment to
furtherstrengthening the Group's compliance culture.
A violation of international importand export non-compliance (includingtrading, restricted parties andsanctioned countries compliance) canresult in the denial of export privileges,the imposition of fines and penalties,diverted management time andpersonal implications for the violatorstogether with adverse implications forGroup financial performance, facilitiesand reputation. ›› The Group CBC requires that the Group must trade in accordancewith all valid international economic sanctions and
legalrequirements for the import and export of goods, technologyand services.›› Restricted party screening software and
procedures have beenglobally implemented by the Group.›› An International Trade Compliance Policy was issued in responseto the
changing legislative and financing landscape surroundingsanctions.›› Central analysis and advice is provided in respect to
theadministration of trade with both routine and less routinecountries and territories.
A violation of health, safety andenvironmental laws and regulationsor the impact of health, safety andenvironmental accidents and incidentsaffects employees, communitiesand operations and impacts Groupreputation and financial performance. ›› Robust health and safety policies and procedures are deployed.›› Use of the health and safety cloud monitoring and
reportingframework - see page 42.›› Retention of an external health, safety and environmentalconsultant.›› Open relationship
with regulatory bodies.›› Health and safety committee monitoring.›› A culture of zero tolerance in respect of health and safety
violations is promoted by the Board.
Were any member of the Group tocommit a violation of Anti-Bribery &Corruption laws, (including breach bya commercial intermediary appointedby the Group, such as an agent ordistributor), the resultant consequencescould include fines, adverse publicity,claims from customers, loss ofmanagement time and personalconsequences for those found to bein violation of the same, ultimatelyimpacting Group financial performanceand conformance with its strategicplans. ›› A direct reporting relationship between the Group Risk &Compliance Counsel and the Chief Executive and AuditCommittee
emphasises the commitment to furtherstrengthening the Group's compliance culture.
Non-compliance with employmentlaws.. ›› Group policies on employees' rights in the workplace.›› The Group CBC requires that the Group comply with local lawsincluding
employment laws and regulations.›› All subsidiary businesses have access to local, dedicatedemployment law expertise.››
Whistleblowing hotline allows for reporting of potential noncompliancewith local employment laws.
** Fraudulent conduct by employees orexternal parties. ›› The Group CBC requires that the Group apply the Group's Anti-Bribery & Corruption Policy and expressly prohibits
improperpayments in all business dealings, in every country around theworld.›› The Group Gifts & Entertainment policy tightly
controls how wegive or receive business gifts, entertainment and hospitality.›› A rolling programme of online anti-bribery and
corruptiontraining and testing is undertaken by new employees.›› A commercial intermediaries protocol operates in the context
ofthe appointment of third party representatives e.g. agents anddistributors.›› The Group has a whistleblowing hotline and email
to allowemployees to raise concerns in confidence, or anonymously ifpreferred.›› The Group CBC continues to be the central focus
for setting outethical behaviours.›› Close monitoring by the Group finance team of monthly financialinformation.››
Whistleblowing hotline allows for reporting of potentialfraudulent conduct by employees.
** Identified, by the enhanced risk assessment process, as a new risk in
2015.
Board confirmation of principal risks and uncertainties
The Board is satisfied that the Group operates an effective risk management
process and confirms that it has conducted a robust assessment of the
principal risks facing the Group. It considers that the risks identified in
the above table correctly summarise the principal risks and uncertainties
facing the Group together with the remediation and mitigation activities that
are being used to address such risks.
The Board has overall responsibility for the Group's risk management programme
including implementing and monitoring the following:
›› Operational, financial and compliance internal controls;
›› Ensuring that the current risk management process remains a suitable means
of establishing the correct risk culture;
›› Ensuring that the Group's risk profile is managed and controlled; and
›› Ensuring that there is consideration as to how much risk the Group is
willing to take in pursuit of the strategic objectives and ensuring that such
risks are managed appropriately and within acceptable parameters.
The principal risks and uncertainties facing the Group, set out above, include
detail as to how these risks are being effectively managed to accord with the
Group's risk appetite, as established by the Board. This appetite being the
amount of risk that the Board is willing to take in pursuit of its strategic
objectives as outlined on pages 18 to 27.
Appendix B - Directors Responsibilities Statement pursuant to Disclosure and
Transparency Rule 4
The following statement is extracted from page 84 of the 2015 Annual Report
and is repeated here for the purposes of compliance with DTR 6.3.5. This
statement relates solely to the 2015 Annual Report and is not connected to the
extracted information set out in this announcement or the Preliminary
Announcement.
We confirm that to the best of our knowledge:
- The Financial Statements, prepared in accordance with the applicable set
of accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
- The Strategic Report includes a fair review of the development and
performance of the business and the position of the issuer and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties they face.
We consider the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the Group's position and performance, business model
and strategy.
Appendix C - Related Party Transactions
The key management are considered to be the Board of Directors of Hill & Smith
Holdings PLC, whose remuneration can be seen in the Directors' Remuneration
Report on pages 66 to 80, and in the related party details on page 129 (note
25) of the 2015 Annual Report.
Alex Henderson
Company Secretary
Hill & Smith Holdings PLC
Tel: +44 (0) 121 704 7430
This information is provided by RNS
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