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Record Profits
24 Jul 2006
Wednesday March 8th 2006
Infrastructure, building and construction products group Hill & Smith Holdings PLC has announced record profits for the year ended December 31, 2005 with pre tax profits up by 56 per cent and dividends up by 20 per cent.
Improved profit margins boosted profit before taxation to £15.8m (2004 £10.1m).
Underlying pre tax profits (excluding the effect of reorganisation and property items) were 33 per cent ahead at £15.7m
The proposed final dividend has been increased by 24 per cent to 3.40p (2004: 2.75p) and will result in total dividends for the year of 6.00p (2004: 5.00p), an increase of 20%. The 2005 dividends are covered three times by underlying earnings.
The record profit is reflected in underlying earnings per share, which rose by 35 per cent to 17.92p.
Underlying operating profit at £19.6m was 30 per cent ahead of the previous year, mainly resulting from strong organic growth and productivity improvements. Sales, at £277.3m, were 3 per cent up in 2005.
Chief executive David Grove said: "We have increased our market share in key areas of our business, especially in the transport infrastructure sector, and have significantly increased efficiency and operating margins.
"Our programme of investment in product development continues to pay off with much of our profit improvement coming from organic growth and productivity gains.
"We will continue to invest in order to build and sustain competitive advantages in growing markets".
Product developments included the introduction of Flexbeam, a new range of crash barrier systems, which is already leading the market.
There was a continuing substantial capital investment programme (£12.3m in
2005), much of which was designed to improve production processes and extend the product range.
Major contract wins for the group in 2005 included supply agreements for PFI street lighting in Manchester, Islington and Sunderland and for safety barriers for the M25 and for Ireland’s M7 motorway.
In line with Hill & Smith’s declared strategy, investment in core businesses and organic growth has been supplemented with carefully targeted acquisitions and investments.
In August 2005, the group bought the business and assets of Techspan, a leading edge supplier of electronic information signs used on the road network, in railway stations and airports.
"By adding Techspan to our portfolio, we have signaled our intent to invest further in the high technology end of the transport infrastructure market" said Mr Grove.
"Our acquisition, in February 2006, of Counters and Accessories Ltd, the UK’s leading supplier of electronic traffic counting and speed warning signs, is another indication of our strategy of continuing to shape the business for the future."
Hill & Smith is looking forward to increasing revenues still further as a result of the UK government’s plans for further increases in transport infrastructure spending.
Apart from Infrastructure Products, Hill & Smith’s other divisions also traded successfully in 2005, all showing profit improvements.
Last year, the group invested in European and US galvanizing businesses through a 33 per cent stake in Zinkinvent GmbH. Since May 2005, when the investment was made, the group’s share of profits has been ahead of expectations.
The 2005 results crown five years of achievement for Hill & Smith. Dividends have increased every year during that period, which has seen the share price rise by 233 per cent, compared with a four per cent fall in the FTSE All Share Index
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