HILL & SMITH HOLDINGS PLC

Acquisition of Creative Pultrusions, Inc

The Board of Hill & Smith Holdings PLC ("Hill & Smith" or the "Company") announces that Hill & Smith has agreed to acquire all of the share capital of Creative Pultrusions Inc, ("Creative Pultrusions"), a leading US manufacturer of glass reinforced plastic ("GRP") products used in the infrastructure market, for a consideration of up to US$21.0m in cash.

Hill & Smith, through its UK subsidiary Redman Fisher, already had an established trading relationship with Creative Pultrusions as a result of a marketing and manufacturing agreement entered into in 2006. This agreement enabled Redman Fisher to manufacture pultruded GRP products at its Telford factory in the UK. Creative Pultrusions has over the last two years been providing technological assistance to support Redman Fisher and will now play a key role in the expansion of the Group's product offering. 

Creative Pultrusions is a well established privately-owned business which has its main manufacturing facility in Alum Bank, Pennsylvania. Formed in 1972 by its current chief executive and principal shareholder Mr Robert Sweet, Creative Pultrusions manufactures a wide range of GRP products for use in the transportation, construction, utilities and electrical sectors.

Creative Pultrusions is known as an industry leader, offering high-strength pultruded products designed and manufactured to provide lasting performance in highly corrosive environments. Easily fabricated, the components offer corrosion resistance and light weight benefits when compared to traditional materials. 

In its audited accounts for the year ended 31 August 2007, Creative Pultrusions reported revenues of $32.7m, EBITDA of $3.7m (adjusted to exclude non-recurring costs of $0.4m). At 31 August 2007, Creative Pultrusions had gross assets of $15.1m. The vendors have undertaken to repay the entire net indebtedness of Creative Pultrusions at completion, such that Hill & Smith will acquire the business on a debt free cash free basis.

Completion is scheduled to take place on 12 September 2008 when US$17.75m of the total consideration will be payable. Hill & Smith are retaining through an escrow account $2.25m for a maximum period of two years against (a) any warranty claims that may be made by Hill & Smith under the sale and purchase agreement and/or (b) any shortfall in net assets or working capital at completion below their represented levels of $9.4 million and $4.1 million respectively. Hill & Smith will pay the remaining $1.0m of consideration if Creative Pultrusions achieves its profit target for the year ending 31 August 2009. 

Mr Robert Sweet, founder and major shareholder, is retiring from Creative Pultrusions immediately following completion. He will be succeeded as chief executive by the company's current chief operating officer, Mr Shane Weyant. There will be no other changes in the senior operational management of the business.

The Directors believe that the acquisition will be earnings enhancing for Hill & Smith in the first full year of ownership (note).

Commenting on the acquisition Derek Muir, Hill & Smith's Chief Executive, said:

"We are delighted to be announcing the acquisition of this high quality company, which represents a major step in the continuing development of our overseas businesses. Creative Pultrusions' innovative approach will significantly add to the product offering of our Infrastructure Products division."

Note: The statement regarding earnings enhancement does not constitute a profit forecast nor should it be taken to mean that the earnings per share of Hill & Smith in the year ending 31 December 2008 or in future years will necessarily match or exceed the Company's historical earnings per share.

Enquiries:

Derek Muir, Group Chief Executive

Hill & Smith Holdings PLC

Tel: 0121 704 7430

Chris Hardie

Arden Partners plc

Tel: 020 7398 1639

Edward Carter/Rhiannon Jones

Freshwater UK

Tel: 0121 633 7775