Infrastructure, building and construction products group Hill & Smith Holdings PLC has today announced record profits for the year ended 31 December 2006, with underlying profit before taxation (before reorganisation and property items) up by 17.6 per cent.

Improved operating margins were the main contributor as profit before taxation rose by [9.4] per cent to £17.3m (2005: £15.8m) and underlying earnings per share rose by 15.3 per cent to 20.7p.

The proposed final dividend has been increased by 24 per cent to 4.2p (2005: 3.4p) and will result in total dividends for the year of 7.2p (2005: 6.00p), an increase of 20%. The 2006 dividends are covered 2.9 times by underlying earnings.

Underlying operating profit at £22.7m was 15.8 per cent ahead of 2005, reflecting organic growth and productivity improvements, while sales of £306.0m were up 10.4 per cent.

Chief executive David Grove said: “We have continued to focus on innovative and value-added products and our growth comes from a balance of organic growth and acquisitions.

"The underlying operating profit of our key Infrastructure Products Group division (IPG) rose by 24.9 per cent and our overall operating profits also rose significantly.  These are real achievements in the face of higher materials and energy costs.”

Mr Grove cites the new range of ‘Flexbeam’ crash barriers and strong sales of ‘Brifen’ wire rope vehicle restraint systems in the US as examples of factors behind the success of IPG in particular, and he explains the impact of acquisitions too:

“Our investment in the area of electronic road signs was rewarded when our Techspan subsidiary, which we bought in 2005, won a share of a £180m Highways Agency contract, the largest ever contract of its type.”

Further increases in transport infrastructure spending seem set to benefit the group in the future and 2006 saw £29.5m invested in acquisitions, capital expenditure and product development.

Late in 2006, Hill & Smith successfully raised £26.8m, net of expenses, through a placing and open offer, to finance further selective acquisitions and organic growth.

The group recently announced plans to invest €26.0m (£17.5m) to increase its one third stake in Zinkinvent GmbH, a German investment company.   If successful, this would give Hill & Smith a controlling interest.

Zinkinvent’s principal asset is its 100 per cent shareholding in Vista NV (Vista), an innovative and profitable trading group, which has extensive galvanizing and lighting column operations in France, Benelux and the USA.

“Delivering from our acquisitions has been a major factor in the group’s success.  For example, 2007 will see immediate efficiencies arising from the acquisition of Metnor’s galvanizing business in Chesterfield” said Mr Grove.  

“We were able to relocate our lighting column business from its previous locations to the Metnor site, which will minimise transport costs and enable columns to be manufactured using the latest and most efficient processes. 

“This new site is the fourth of our galvanizing facilities that are situated adjacent to one of our major manufacturing units.”

Hill & Smith’s share price has continued to rise, outpacing comparative indices significantly over the last five years.