It was announced by the Board of Hill & Smith on 25 May 2005 that the Company had agreed to subscribe €25.0m in cash for a 33.3% shareholding in Zinkinvent and to advance an interest bearing loan to Zinkinvent of €10.0m. It was also announced that Hill & Smith had entered into an exclusivity agreement, expiring on 31 December 2005, enabling Hill & Smith to acquire all the remaining shares in Zinkinvent.

Zinkinvent is a privately owned German holding company controlling 86% of Vista NV (“Vista”), a Belgian company. Vista is a galvanizing and lighting pole fabricating business with significant operations in Benelux, France and the USA with many similarities to Hill & Smith’s existing galvanizing and IPG businesses in the UK.

Hill & Smith has over recent months been carrying out extensive due diligence on Zinkinvent and Vista. Whilst progress with due diligence is well advanced, the Board does not expect to be in a position to reach agreement for the purchase of the remaining Zinkinvent shares before the expiry of the exclusivity period on 31 December 2005. The Board intends to continue discussions and negotiations with a view to concluding such an agreement during the course of 2006.

A further update will be provided when Hill & Smith issues its preliminary announcement of results for the year to 31 December 2005, which is expected to be in early March 2006.

Disposal and Sale and Leaseback

On Friday 9 December 2005 the Company exchanged unconditional contracts for the disposal of the surplus land and buildings at Rea Street, Digbeth, Birmingham, following the closure of the Joseph Ash Galvanizing operation at this site in April 2005, and the sale and leaseback of all the land and buildings at Charles Henry Street, Digbeth, Birmingham operated by the Envirotanks division. Completion of both transactions will take place on Friday 16 December 2005.

Total gross proceeds from the transactions will be £2.647m generating net cash proceeds of £2.550m and an exceptional profit of £0.430m. The leaseback of the Envirotanks site in Charles Henry Street is for a ten year term at a rental of £88,000 p.a. subject to review in the fifth year.