17 May 2016
Hill & Smith Holdings PLC
Good start to the year, trading ahead of expectations
Hill & Smith Holdings PLC ('Hill & Smith' or 'the Group'), the international group with leading positions in the supply of infrastructure products and galvanizing services to global markets, today issues a trading update covering 1 January 2016 to 30 April 2016 (the 'period') ahead of its Annual General Meeting to be held later today.
The Board is pleased to report that trading in the period has been encouraging and is ahead of the expectations that it set out at the time of reporting its 2015 preliminary results in March.
Revenue for the period was £163.1m (2015: £153.2m), a 2% organic increase after adjusting for currency translation and acquisitions/disposals. The positive translational impact of the strengthening of the US Dollar and the Euro against Sterling increased revenue by 3% versus average exchange rates in the first half of 2015. Underlying operating profit and operating margin are ahead of the same period last year.
Markets - summary
Infrastructure - Roads
In the UK, implementation of the Government's Road Investment Strategy continues to develop in line with our expectations and demand for our temporary safety barriers is strong. Order intake has remained encouraging for variable message signs which bodes well for the rest of the year.
On 13 May, we completed the acquisition of Safety and Security Barrier Holdings Limited ("Hardstaff Barriers") for a total cash consideration of £11m on a debt free, cash free basis. The consideration will be funded from the Group's existing bank facilities. Hardstaff Barriers are a privately owned business specialising in the sale and rental of fully tested temporary and permanent pre-cast concrete barriers for site and vehicle protection, and complement our existing range of vehicle restraint systems. They have also developed a quick-deploy, high security perimeter system for the protection of critical infrastructure in vulnerable locations with products supplied across the UK and Europe. The business will complement and further enhance our existing range of hostile vehicle mitigation products. In the year ended 31 March 2016 the business generated revenue and adjusted EBITDA of £3.8m and £1.3m respectively. The acquisition is expected to be earnings enhancing in the first full year of ownership.
Internationally, we continue to make progress in each of our chosen geographies and results are ahead of prior year. On 1 April 2016, we completed the acquisition of FMK Trafikprodukter AB ("FMK") for a cash consideration of £2.9m. Additional deferred payments of £0.6m are due on achievement of certain targets. FMK designs and manufactures safety barriers, noise reduction screens and bridge parapets for the Scandinavian market and is based in Sweden. In year ended 30 April 2015, FMK had turnover of £3.9m and EBITDA of £0.2m. The acquisition of FMK and its suite of products will accelerate the growth plans of our existing Scandinavian roads business.
Infrastructure - Utilities
As expected, demand patterns in the UK were below those of a strong comparative period in the prior year. However, order intake has been good and current backlogs support a much improved second and third quarter of the year.
In the US, the transmission substation business continues to perform strongly. Despite significant quoting opportunities, our composite material operation has experienced a slower than expected start to the year resulting in lower profitability. On 20 January 2016, we completed the acquisition of the trade and assets of E.T. Techtonics, Inc. ("ETT"), a leading designer of composite bridges for pedestrian, equestrian and light vehicle applications. The company has a patented design and has engineered and installed over 700 walkway systems using their PRESTEK® system. Cash consideration of $1.8m was paid at acquisition with a further $0.2m due in 2016. ETT will be integrated into the Creative Pultrusions business and furthers our strategy of enhancing our product offering to end users within infrastructure markets.
In March 2016, we announced the restructuring of our non-US Pipe Supports businesses with operations in the UK, Thailand, China and India. The restructuring programme is proceeding to plan and is expected to be completed in early 2017. In the US, although the performance of the business remains below par, we have experienced improved demand and profitability.
Reported volumes were 10% ahead (organically 5%) of the same period in 2015. Solar and wider infrastructure markets continue to drive a strong performance in the US with volumes and profitability ahead of prior year. Volumes improved marginally year on year in France although economic conditions remained subdued and lower margins resulted. In the UK, volumes and profitability were aided by the acquisition, in November 2015, of Premier Galvanizing which continues to perform well and in line with the acquisition rationale.
Net debt at 30 April 2016 was £97.6m compared to £91.5m at 31 December 2015, principally reflecting normal seasonality of working capital and the spend on acquisitions.
The Group today announces that it has amended and extended its syndicated revolving credit facility. The £210m multi currency facility has been amended on favourable terms and its term extended by 2 years to 26 April 2021. The financial covenants remain unchanged.
On the outlook Derek Muir, Group Chief Executive, commented:
"The Group has delivered a strong start to the year despite mixed end market conditions. Although some markets are expected to remain challenging, 2016 is again expected to be a year of good progress."
The proposed 2015 final dividend of 13.6 pence per share, announced on 9 March 2016, will, subject to shareholder approval, be paid on 1 July 2016 to those shareholders on the register at the close of business on 27 May 2016. The ex-dividend date is 26 May 2016.
The Group's interim results for the six months ending 30 June 2016 are scheduled to be announced on 4 August 2016.
- Ends -
This announcement contains forward looking statements which are made in good faith based on the information available at the time of its approval. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a number of risks and uncertainties that are inherent in any forward looking statement which could cause actual results to differ materially from those currently anticipated. Nothing in this document should be regarded as a profits forecast.
For further information, please contact:
Hill & Smith Holdings PLC
Derek Muir, Group Chief Executive Tel: 44 (0)121 704 7430
Mark Pegler, Group Finance Director
John Olsen/Andrew Leach/Ollie Hoare Tel: 44 (0)20 3128 8100
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, Norway, India and Australia.
The Group's operations are organised into three main business segments:
Infrastructure Products - Roads, supplying products and services such as permanent and temporary road safety barriers, street lighting columns, bridge parapets, gantries, temporary car parks, variable road messaging solutions and traffic data collection systems.
Infrastructure Products - Utilities, supplying products and services such as pipe supports for the power and liquid natural gas markets, energy grid components, "GRP" railway platforms and flood prevention barriers, plastic drainage pipes, 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 4,000 staff across 54 sites, principally in 8 countries.