Business Review

 

Introduction

Hill & Smith continues to deliver a strong performance. In an uncertain political and macroeconomic environment, our focused strategy of developing businesses with market leading positions in growth infrastructure markets, combined with our active portfolio management strategy, has again delivered good organic revenue and profit growth and improved returns on the capital entrusted to us.

 

Our strategy of international diversity, together with the leading positions our businesses hold in their respective markets, continues to underpin our performance. Our US and UK operations grew on the back of continuing infrastructure investment in our chosen end markets and together represented 87% of operating profit in the first half. Organic growth has been supplemented by targeted bolt-on acquisitions and decisive action to restructure or dispose of underperforming assets to drive overall returns and shareholder value.

 

Continuation of our strategy of active portfolio management resulted in us completing one acquisition and one disposal during the first half of 2017.

 

·      In March, we completed the acquisition of the trade and assets of Kenway Corporation ('Kenway') for an aggregate cash consideration of £5.7m. Kenway is a specialist in technologically advanced composite design, manufacturing and field service work across a broad range of industries including marine, power, pulp and paper, transportation and renewable energy. Integrated into our existing composite business, Kenway is trading in line with our expectations.

 

·      In April, we completed the disposal of CA Traffic Limited, a non-core traffic data collection business, to TagMaster AB for a net consideration of £2.6m.

 

In December 2016, following a review of the returns available, we announced a plan to close and exit our roads business in India. The closure process will be completed in the third quarter of 2017.

 

Results

Revenue increased by 13% to £291.8m (2016: £259.3m), of which translational currency benefits contributed £15.0m or 6%. After adjusting for net additional revenue of £14.7m from acquisitions/disposals and reduced revenue from the prior year restructuring of the non-US Pipe Supports businesses of £9.5m, organic revenue growth was £12.3m or 5%. Underlying operating profit improved by 21% to £38.8m (2016: £32.0m), including a positive currency translation of £2.3m. Acquisitions/disposals contributed £1.6m and the benefit of the non-US Pipe Supports restructuring actions a further £1.5m. The organic improvement in underlying operating profit was 4%. Underlying operating margin improved by 100bps to 13.3% (2016: 12.3%), while underlying profit before taxation was 22% higher at £37.4m (2016: £30.7m). Reported operating profit was £35.4m (2016: £21.2m), an increase of 67% on the prior year. Reported profit before tax was £33.5m (2016: £19.4m).

 

Dividend

The Board has declared an interim dividend of 9.4p per share (2016: 8.5p), an 11% increase on the corresponding period last year. The interim dividend will be paid on 4 January 2018 to shareholders on the register on 1 December 2017.

 

Governance and the Board

As reported in the 2016 Annual Report, Bill Whiteley, Chairman, retired at the conclusion of the Annual General Meeting in May 2017. Consequently, Jock Lennox was appointed Chairman of the Board. A search to appoint an additional Non-executive Director to the Board is ongoing.

 

Brexit

It remains too early to assess with any certainty the impact of the decision by the United Kingdom to leave the European Union. In the period since the referendum result in June 2016 we have not experienced any material positive or negative impact. We are confident that our strategy of international diversification along with market leading positions in key infrastructure investment markets will help limit any potential negative impact on the Group. However, we remain vigilant and will react with our customary speed as necessary.

 

Outlook

The Group benefits from the industrial and geographical spread of its markets and businesses, which not only provide a resilient base, but also opportunities for growth. Generating over 80% of revenue and 87% of underlying operating profit from its UK and US operations, the Group principally operates in niche infrastructure markets where the overall outlook remains positive.

 

In Utilities, our UK and US activities are well placed to continue to benefit from the significant investment going into the replacement of ageing infrastructure and new infrastructure projects. In Galvanizing, with wider market conditions remaining favourable, overall we expect our businesses to consolidate their strong market positions and to take advantage of opportunities as they present themselves.

In the UK, the implementation of the Department of Transport's Road Investment Strategy ('RIS') is in the third year of the initial five year plan, which provides certainty of funding through to 2020/21. We therefore have confidence that the Group's road product portfolio will continue to benefit from the increased investment in the UK road infrastructure.

 

Overall, despite increased political and macroeconomic uncertainties, our expectations for the year remain unchanged and 2017 is again expected to be a year of good progress.

 

Operational Review

 

Infrastructure Products

 

	£m		/- %	Constant Currency %
	2017	2016
Revenue	200.9	177.9	13	8
Underlying operating profit	17.8	13.7	30	25
Underlying operating margin %	8.9	7.7
Reported operating profit	15.0	3.5

 

The division supplies engineered products to the roads and utilities markets in geographies where there is sustained long term investment in infrastructure. Revenues increased 13% to £200.9m (2016: £177.9m) including an £8.4m positive impact from exchange rate movements. Acquisitions/disposals contributed a net £14.7m and there was £9.5m of lower revenue from the restructured non-US Pipe Supports operations. Organic revenue growth was £9.4m, or 5%. Underlying operating profit was £17.8m (2016: £13.7m), an increase of £4.1m, with a positive currency translation benefit of £0.5m. Acquisitions/disposals contributed £1.6m and the non-US Pipe Supports restructuring an additional £1.5m. Underlying operating margin improved to 8.9% (2016: 7.7%). Reported operating profit was £15.0m (2016: £3.5m) and included charges of £2.0m relating to restructuring actions taken during the year.

 

Roads

 

	£m		/- %	Constant Currency %
	2017	2016
Revenue	93.8	77.5	21	17
Underlying operating profit	10.2	9.0	13	12
Underlying operating margin %	10.9	11.6
Reported operating profit	8.5	8.1

 

Our Roads segment designs, manufactures and installs temporary and permanent safety products for the roads market. We principally serve the UK market, with an international presence in selected geographies that have a growing demand for innovative tested safety products. Revenues increased by 21% to £93.8m (2016: £77.5m), an organic increase of 9% after a currency benefit of £2.5m and net contribution from acquisitions/disposals of £6.7m. Underlying operating profit of £10.2m was £1.2m higher than the prior year (2016: £9.0m) including £0.1m from positive currency translations.

 

	£m
	2017	2016
Reported operating profit	8.5	8.1
Restructuring actions	1.6	-
Profit on disposal of subsidiary	(0.6)	-
Acquisition costs and amortisation	0.9	0.9
Other items	(0.2)	-
Underlying operating profit	10.2	9.0

 

UK

In the UK, the implementation of the Government's RIS continues to develop in line with our expectations and overall demand for our rental temporary safety barrier has been good. Some delays are being experienced in ongoing works on existing Smart Motorway programmes, which will extend the requirement for our temporary safety barrier on these projects beyond that originally envisaged. A consequence of these delays will be the deferral of the commencement of a number of the next tranche of projects from later in 2017 into early 2018, and with a number of projects currently in design phase this suggests that 2018 will see an acceleration in UK road investment.

 

As expected, as the initial phase of Smart Motorways nears completion, demand for our permanent safety barrier has been stronger than the same period last year. Bridge parapet sales have also been strong as local authorities and Network Rail upgrade ageing bridge infrastructure to protect the rail and road network from potential hostile and accidental vehicle damage. Exports of Brifen, our wire rope safety barrier system, and Bristorm, our high containment anti-terrorist perimeter barrier, were lower than the prior year but recent order intake and enquiry levels indicate a stronger second half of the year.

 

The increased threat of terrorism in the UK has intensified the demand for deployment of our range of hostile vehicle mitigation products, including temporary and permanent, steel and concrete applications in key locations across the country. With a market leading range of solutions, and the ability to respond swiftly, we have completed projects to protect bridges in London, sports and other high profile events. Discussions are also being held with security agencies outside of the UK and we expect this market to continue to grow.

 

Our Variable Message Sign ('VMS') business performed well in the first half with strong sales of new Remotely Operable Temporary Traffic Management ('ROTTM') signs which Highways England are deploying to improve road worker safety where no hard shoulder exists on Smart Motorways. The higher sales of ROTTM have more than offset lower revenue from maintenance activities as a historic ten-year 'supply and maintain' contract with Highways England completed. In June we announced a proposal to commence the rationalisation of the VMS business that will result in the closure of two UK sites and consolidation into our existing facility in the north east. The restructuring is expected to be completed in the first half of 2018 at a cost of £1.4m.

 

On 27 April 2017, we completed the disposal of CA Traffic Limited, a traffic data collection business, to TagMaster AB for a net consideration of £2.6m. Non-core, and unable to deliver the returns that we target from our businesses, in the year to 31 December 2016 CA Traffic Limited reported revenue of £3.9m and an operating loss of £0.2m.

 

Operating with a lower cost base following the rationalisation completed at the end of 2016, our lighting column business continues to perform well. With its enhanced product offering following the acquisition of Signature last year, the business is capitalising on cross selling opportunities into the local authority and contractor markets and the outlook remains favourable.

 

Non-UK

Our Scandinavian business increased revenue compared to the same period in the prior year but competition in the barrier market reduced margins and profitability was similar to the prior year. We continue to make steady progress in Norway, while in Sweden we have invested further in our temporary rental safety barrier fleet, where demand is strong around Stockholm as a major upgrade to the road network commences.

 

In France, our lighting column business operates in a competitive market and, although profitable, endured a first half below our expectations. Order intake improved markedly towards the end of the period suggesting a stronger second half.

 

Employing both a rental and a direct sale market approach, pleasing progress continues to be made in promoting our temporary safety barrier in both the USA and Australia. In the USA, acceptance of our temporary steel barrier, Zoneguard, as an alternative to concrete is now well established in a number of States and continues to gain recognition elsewhere, including Canada. In Australia, revenue was at similar levels to the prior year despite the exceptional one-off order of 19.8km supplied in the first half last year. Encouragingly, we have supplied an increasing number of smaller projects as acceptance gains traction. In the second quarter, we secured a supply contract for 16km of Zoneguard and 8km of ancillary products which will be delivered early in the second half of the year. Both the USA and Australia improved profitability against the same period prior year, establishing new benchmarks for each business.

 

In December 2016, following an assessment of the local market and outlook, we announced a plan to close and exit our manufacturing and sales facility in India. The closure process will be completed in the third quarter of 2017.

 

Utilities

 

	£m		/- %	Constant Currency %
	2017	2016
Revenue	107.1	100.4	7	1
Underlying operating profit	7.6	4.7	62	49
Underlying operating margin %	7.1	4.7
Reported operating profit	6.5	(4.6)

 

Our Utilities segment provides industrial flooring, plastic drainage pipes, security fencing, steel and composite products for a wide range of infrastructure markets including energy creation and distribution, rail, water and house building. The requirements for new power generation in emerging economies and replacement of ageing infrastructure in developed countries provide excellent opportunities for the Group's utilities businesses. Revenues increased by 7% to £107.1m (2016: £100.4m). Benefits from currency translation of £5.9m and an £8.0m contribution from recent acquisitions were partly offset by the prior year restructuring and closure programme of our non-US Pipe Supports business (£9.5m lower revenue year on year). Organically, revenue was similar to the prior year. Underlying operating profit was £7.6m

(2016: £4.7m) including a positive currency impact of £0.4m, first time contribution from acquisitions of £0.6m and a £1.5m benefit from the non-US Pipe Supports restructuring.

 

	£m
	2017	2016
Reported operating profit	6.5	(4.6)
Restructuring actions	0.4	9.2
Acquisition costs and amortisation	0.7	0.1
Underlying operating profit	7.6	4.7

 

In the US, our power transmission substation business performed well but fell short of the prior year's strong comparatives. Day to day packaging and steel work through framework agreements with key US utilities remains strong but an absence of larger contracts reduced revenue and profitability below our expectations. Investment in US electricity distribution looks set to continue so we expect the larger projects to return in due course.

 

Our composite material business performed at similar levels to the first half last year with a continued absence of large projects a key feature, although a number of larger contracts are nearing order stage and we expect an improved performance in the second half. On 27 March 2017, we completed the acquisition of the trade and assets of Kenway Corporation ('Kenway'), a specialist in technologically advanced composite design, manufacturing and field service work across a broad range of industries including marine, power, pulp and paper, transportation and renewable energy. Cash consideration of £5.7m was paid at acquisition with a further £0.5m due in 2018. Kenway has been integrated into our Creative Pultrusions business and furthers our strategy of enhancing our product offering to end users within infrastructure markets.

 

In the UK, results from our utilities businesses continue to be mixed. Our plastic pipe, industrial flooring and security access covers businesses all anticipated increased spend from the water industry Asset Management Period 6 ('AMP6'). Now in year three of the five year investment cycle design, delays and therefore project release dates continue to be issues despite numerous customer commitments. Despite the AMP6 delays, the plastic pipe business enjoyed strong demand for storm water attenuation tanks for flood alleviation in the UK housing market. The industrial flooring operation enjoyed a pick up in small day to day business as a result of general UK infrastructure investment. A good first half result was delivered by the security access covers business despite delays to expected AMP6 orders.

 

Our security fencing business continued to perform well with a wide range of installations protecting the UK rail network, power generation and other critical infrastructure sites.

 

Demand for solar frames was lower than the same period last year, as developers adapt their return model away from the reliance on the now removed tax credits under the UK Renewable Obligation to one of battery storage and timed release of the stored power into the national grid. Once the technology is proven and sold to investors we expect further orders to recommence.

 

Our building products business, supplying composite residential doors, steel lintels and builders' metalwork, enjoyed good volumes on the back of a continuing strong UK housing market and results were ahead of the same period in the prior year.

 

In our US pipe supports business the requirement for engineered pipe supports in the power sector has continued although activity in the petrochemical sector is lower year on year. Our industrial hangers business has benefitted from the consolidation of branches serving the north east market and the new eastern region service centre, located between New York and Philadelphia, is now fully operational. We are seeing the benefits of a more focussed, efficient operation and expect performance to continue to improve in the second half of 2017.

 

In India we have successfully completed the expansion of our pipe supports facility. The increased capacity enables us to service our international customers, with global supply agreements for the supply of pipe supports into major power projects in geographies such as Japan, Indonesia and Egypt, as well as our domestic customers in the Indian market. Our strategic partnership with a Saudi Arabian manufacturer enables us to have local manufactured content when supplying pipe supports projects in the Middle East. We are encouraged by the market outlook in India and the Far East, both of which remain strong with a large programme to build both coal and gas fired powerstations together with LNG terminals. The backlog for the second half is healthy and we look forward to a strong performance in the first year of the newly consolidated pipe supports business.

 

Galvanizing Services

 

	£m		/- %	Constant Currency %
	2017	2016
Revenue	90.9	81.4	12	3
Underlying operating profit	21.0	18.3	15	5
Underlying operating margin %	23.1	22.5
Reported operating profit	20.4	17.7

 

The Galvanizing Services division offers corrosion protection services to the steel fabrication industry with multi-plant facilities in the UK, France and the USA. Revenue increased by 12% to £90.9m (2016: £81.4m) including positive currency translation of £6.6m. Organic revenue growth was 3%. Underlying operating profit of £21.0m (2016: £18.3m) included a £1.8m currency benefit. The organic improvement in profitability was £0.9m. Underlying operating margin was a record 23.1% (2016: 22.5%).

 

	£m
	2017	2016
Reported operating profit	20.4	17.7
Acquisition amortisation	0.6	0.6
Underlying operating profit	21.0	18.3

 

USA

Located in the north east of the country, Voigt & Schweitzer is the market leader with seven plants offering local services and extensive support to fabricators and product manufacturers involved in highways, construction, utilities and transportation.

 

As expected, and against strong comparatives, volumes were 16% below the same period in 2016, principally due to a large LNG project which ran through the first half and concluded in the third quarter of 2016. Alternative energy demand was also materially lower year on year, particularly with respect to solar frames as the industry awaits a clear direction with regard to US energy policy. Day to day infrastructure demand remains robust and at similar levels to the prior year. Management focus on maintaining operational efficiency along with the improved mix of products galvanized resulted in strong profitability, albeit marginally lower than the prior year.

 

France

France Galva has ten strategically located galvanizing plants each serving a local market. We act as a key part of the manufacturing supply chain in those markets and have delivered a high level of service and quality to maintain our position as market leaders.

 

Volumes were 2% lower than the same period prior year, a credible result in a time of Presidential elections and the inevitable disruption that it brings. Competition remains strong but encouragingly there are signs of improving sentiment emerging in the French and wider European markets, which may alleviate current pricing pressures. Despite the marginally lower volume, the business delivered improved margin and profitability.

 

UK

Our galvanizing businesses are located on ten sites, four of which are strategically adjacent to our infrastructure products manufacturing facilities.

 

Volumes in the UK were driven by ongoing infrastructure investment and increased by 6% compared to the same period in the prior year. Investment in our key galvanizing facilities over the past few years has enabled us to broaden our service offering and drive operational efficiency. As a consequence, the business again delivered improved profitability and margin.
 

Financial Review

Cash generation and financing

Operating cash flow before movement in working capital was £47.5m (2016: £31.6m), the improvement on last year reflecting the record underlying first half profits. The working capital outflow in the period was £16.6m (2016: £4.8m), which arose from a combination of normal seasonal trading patterns, organic growth in revenues and the impact of commodity price increases on raw material inventories, particularly zinc where the impact was approximately £5.0m. As a result, working capital as a percentage of annualised sales increased to 16.1% (31 December 2016: 14.2%), however debtor days fell to 57 days (31 December 2016: 61 days).

 

Capital expenditure of £9.3m (2016: £9.9m) represents a multiple of depreciation and amortisation of 1.0 times

(2016: 1.1 times), in line with the Group's normal level of spend. Significant purchases during the period included £1.9m of Zoneguard temporary road safety barrier to support growth in our US and Swedish markets.

                                                                                                                                      

Group net debt at 30 June 2017 was £109.1m, a reduction of £2.9m since 31 December 2016 (£112.0m).

                                                                                      

Change in net debt

	6 months ended 30 June 2017 £m	6 months ended 30 June 2016 £m	Year ended 31 December 2016 £m
Change in net debt
Operating profit	35.4	21.2	51.8
Non-cash items	12.1	10.4	26.5
Operating cash flow before movement in working capital	47.5	31.6	78.3
Net movement in working capital	(16.6)	(4.8)	(0.1)
Change in provisions and employee benefits	(1.6)	7.2	-
Operating cash flow	29.3	34.0	78.2
Tax paid	(9.0)	(6.9)	(15.7)
Net financing costs paid	(1.3)	(1.4)	(2.8)
Capital expenditure	(9.3)	(9.9)	(21.7)
Proceeds on disposal of non-current assets	1.9	0.1	3.6
Free cash flow	11.6	15.9	41.6
Dividends paid	(6.7)	(5.5)	(16.2)
Acquisitions	(5.3)	(14.2)	(37.4)
Disposals	2.6	-	-
Issue of new shares	0.1	0.7	0.8
Amortisation of costs associated with revolving credit facilities	(0.2)	(0.2)	(0.4)
Satisfaction of long term incentive payments	(1.5)	(1.4)	(2.0)
Net debt decrease/(increase)	0.6	(4.7)	(13.6)
Effect of exchange rate fluctuations	2.3	(3.3)	(6.9)
Net debt at the beginning of the period	(112.0)	(91.5)	(91.5)
Net debt at the end of the period	(109.1)	(99.5)	(112.0)

 

The net debt to EBITDA ratio under the Group's principal banking facility was 1.1 times at 30 June 2017 (31 December 2016: 1.2 times), with the increase in underlying operating profit compensating for the outflow of working capital. Interest cover was 37.5 times (31 December 2016: 33.2 times).

 

Tax

The underlying effective tax rate for the period was 24.0% (year ended 31 December 2016: 24.0%) and is the estimated effective rate for the full year. The tax charge for the period was £8.1m (2016: £6.2m), including a £0.9m credit in respect of non-underlying charges, principally relating to business reorganisation costs and amortisation of acquisition intangibles. Cash tax paid in the period was £9.0m (2016: £6.9m), in line with the underlying income statement tax charge of £9.0m (2016: £7.4m).

 

Finance costs

Net financing costs for the period were £1.9m (2016: £1.8m) with an underlying element of £1.4m (2016: £1.3m). Underlying operating profit covered net underlying finance costs 27.7 times (2016: 24.6 times). The non-underlying element of finance costs of £0.5m (2016: £0.5m) represents the net cost of pension fund financing of £0.3m and £0.2m amortisation of refinancing fees capitalised in prior years.

 

Non-underlying items

The total non-underlying items charged to operating profit in the Consolidated Income Statement amounted to £3.4m (2016: £10.8m) and comprise the following:

 

	Income Statement Charge £m	Cash in the period £m	Future cash £m	Non-cash £m
Business reorganisation costs	(2.0)	(0.6)	(1.4)	-
Profit on disposal of subsidiary	0.6	2.6	-	(2.0)
Acquisition costs	(0.2)	(0.2)	-	-
Amortisation of acquisition intangibles	(2.0)	-	-	(2.0)
Pension settlement gains	0.2	-	-	0.2
	(3.4)	1.8	(1.4)	(3.8)

 

·      Business reorganisation costs of £2.0m relate to three restructuring actions taken by the Group.

 

-       In June 2017 the Group initiated a rationalisation of its Variable Message Signs business that will result in the closure of two of its operating sites and the consolidation of activities into the remaining site in Hebburn, UK. The business has been operating across three sites since the acquisitions of VMS and Tegrel in 2014/15 and expects to take advantage of cost savings and efficiencies as a result. The anticipated cost of the rationalisation is £1.4m.

-       Following a strategic review of the US Pipe Supports business, in March 2017 the Group completed a rationalisation of its branch structure resulting in the closure of three of the seven existing branches and the consolidation of their operations into one strategically located service centre between New York and Philadelphia to serve the eastern region. The cost of this programme was £0.4m.

-       In December 2016, having reassessed the prospects in the market, the Group announced the closure of its roads business in India. The prior year results included a charge of £1.9m in respect of the closure. A further charge of £0.2m has been recognised in 2017.

 

·      In April 2017 the Group sold its traffic data collection business, CA Traffic Limited, to TagMaster AB for a consideration of £2.7m (after costs). Net assets disposed were £2.1m resulting in a profit on disposal of £0.6m. 

 

·      Acquisition costs of £0.2m relate to the acquisition completed during the period, further details of which are set out below.

 

·      Amortisation of acquisition intangibles was £2.0m.

 

·      Pension settlement gains of £0.2m arose on the settlement of outstanding defined benefit liabilities with certain pension scheme members who took transfers of their pension entitlement during the period.

 

Further details are set out in note 6 to the Financial Statements.

 

Acquisition

In March 2017 we completed the acquisition of the trade and assets of Kenway, a specialist in technologically advanced composite design, manufacturing and field service work across a broad range of industries including marine, power, pulp and paper, transportation and renewable energy. Consideration for the acquisition was £6.2m and intangible assets arising amounted to £5.1m, comprising customer relationships of £0.8m, brand valuation of £0.7m and residual goodwill of £3.6m.

 

Pensions

The Group operates defined benefit pension plans in the UK, France and the USA. The IAS19 deficit of these plans at

30 June 2017 was £24.6m, a reduction of £2.7m from 31 December 2016 (£27.3m). The reduced deficit relates to the UK scheme and was driven by a reduction in future inflation assumptions and a positive asset performance, partly offset by a 5bps fall in the discount rate during the period. A number of the UK scheme's members took transfer values of their pension entitlement during the period resulting in a net settlement gain of £0.2m, which has been reported as a non-underlying credit to the income statement.

 

Following the triennial valuation of the Group's UK defined benefit pension arrangements at April 2015, the Group has agreed deficit reduction plans in place that require annual cash contributions amounting to £2.3m for the period to April 2020. Following the prior year merger of the previous two UK schemes, a formal valuation of the new scheme as at April 2016 is in progress and will be reported on in the Group's 2017 Annual Report. The Group continues to be actively engaged in dialogue with the schemes' Trustees with regard to management, funding and investment strategies.

 

Principal Risks and Uncertainties

The Group has a process for identifying, evaluating and managing the principal risks and uncertainties that it faces, and the Directors have reconsidered these principal risks and uncertainties during the period. It is the Directors' opinion that the principal risks set out on pages 32 to 34 of the Group's Annual Report and Accounts for the year ended 31 December 2016, remain applicable to the current financial year.

 

Going Concern

The Group continues to meet its day to day working capital and other funding requirements through a combination of long term funding and short term overdraft borrowings. The Group's principal financing facility is a £210m multi-currency revolving credit agreement which expires in April 2021.

 

The Group actively manages its strategic, commercial and day to day operational risks and through its Treasury function operates Board approved financial policies, including hedging policies that are designed to ensure that the Group maintains an adequate level of funding headroom and effectively mitigates foreign exchange and other financial risks.

 

After making due enquiry, the Directors have reasonable expectation that the Company and its subsidiaries have adequate resources to continue in operational existence for the foreseeable future and therefore adopt the going concern principle.

 

Directors' Responsibility Statement

We confirm that to the best of our knowledge:

 

·      The condensed set of Financial Statements has been prepared in accordance with IAS 34: Interim Financial Reporting as adopted by the EU;

 

·      The interim management report includes a fair review of the information required by:

 

a)    DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of Financial Statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

 

b)    DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period including any changes in the related party transactions described in the last Annual Report that could do so.

 

This report was approved by the Board of Directors on 10 August 2017 and is available on the Company's website (www.hsholdings.com).

 

 

 

J F Lennox                    D W Muir                                  M Pegler

Chairman                    Group Chief Executive             Group Finance Director

                                                                                          Managing Director - UK Utilities division

 

10 August 2017