16 May 2012

Hill & Smith Holdings PLC

Interim Management Statement

Hill & Smith Holdings PLC ("Hill & Smith" or "the Group") issues its Interim Management Statement covering the period from 1 January 2012 to 15 May 2012 ahead of its Annual General Meeting which is to be held at 11.00am today, Wednesday 16 May 2012, at The Village Hotel, The Green Business Park, Shirley, Solihull, West Midlands, B90 4GW.

Group Overview

The overall performance of the Group in the period has exceeded our expectations, with the momentum of the stronger trading seen in the second half of 2011 continuing in the first four months of 2012.  We are encouraged by the healthy order intake in the utilities businesses, and the UK roads activity along with galvanizing volumes have been ahead of our expectations for the period.

We have seen good organic revenue growth, supplemented by first time contributions from last year's acquisitions of The Paterson Group and ATA Sweden, resulting in operating profits ahead of the prior year period.  We remain clearly focused on increasing our margins and continuing to drive revenue growth to build on this strong start to the year. 

Our expectation for the first half of 2012 was for a stronger performance than for the same period in 2011.  Whilst the performance to date is above our earlier expectations, it is too early to anticipate the outcome for the full year and we retain an element of caution in our outlook.

Infrastructure Products

Both our USA based utilities fabrication business (V&S Utilities) and our glass reinforced plastic business (Creative Pultrusions) achieved excellent organic growth in the period and both continue to generate healthy order intake.

The Bergen Pipe Supports business has seen an improvement in the USA and the order intake in Asia has remained strong.  We have benefitted from a number of large contract awards for pipe supports for power generation projects in India, LNG projects in Australia and the Middle East.

The UK water industry Asset Management Programme (AMP5) is now in its third year and our order book continues to grow as large diameter plastic pipework and access systems projects are won.

During the period two Managed Motorway Programmes started as planned. This, aided by good weather in the UK, saw strong demand for our road infrastructure products in the first four months.  We do however, expect a period of reduced activity either side of the Olympics this summer, where projects on the M1 and M25 will have been completed and new projects are delayed until after the Olympics.

A further six roads projects were announced by the Roads minister on 8 May 2012 and will be added to the UK roads programme, which is now looking encouraging for our products from 2013 through to 2015.

Whilst the international markets for our road infrastructure products have been below expectations during the first four months, the enquiry pipeline supports the view of an improved trading environment in the second half of 2012.

Galvanizing Services

Production volumes were ahead of the same period last year with the USA business continuing to perform well, boosted by strong demand for galvanizing utility poles, bridges and solar frames.  Our UK plants have also benefitted from increased demand for galvanizing structural steel, together with an increase in our road infrastructure products production.  Galvanizing volumes in France were ahead of 2011, although we retain a cautious outlook due to the economic and political climate.

Financial position

As at 30 April 2012 our net debt was £91.3 million compared to £103.8 million at 31 December 2011.  The Group continues to be cash generative and remains well financed to pursue its strategic objectives.

During the period we have seen Sterling strengthen against the Euro and slightly weaken against the US Dollar giving an overall translational headwind for the Group's operating results.  If the first four months' average exchange rates of €1.20 and $1.58 had been applied to our 2011 results, it is estimated that our revenue and operating profit would have been, respectively, 0.5% and 1% lower.

Ends

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Notes to Editors

Hill & Smith Holdings PLC is an international group with leading positions in the design, manufacture and supply of infrastructure products and galvanizing services to global markets.  It serves its customers from facilities principally in the UK, France, USA, Thailand, Sweden and China.

The Group's operations are organised into two main business segments:

Infrastructure Products For the core markets of road and utilities, supplying products and services such as permanent and temporary road safety barriers, street lighting columns, bridge parapets, gantries, temporary car parks, "GRP" railway platforms, variable road messaging solutions, traffic data collection systems, plastic drainage pipes, pipe supports for the power and liquid natural gas markets, energy grid components, industrial flooring, handrails, access covers and security fencing.

Galvanizing Services which provides zinc and other coatings for a wide range of products including fencing, lighting columns, structural steel work, bridges, agricultural and other products for the infrastructure and construction markets.

Headquartered in the UK and quoted on the London Stock Exchange (LSE: HILS.L), Hill & Smith Holdings PLC employs some 3,500 staff across 50 sites, principally in 6 countries.