Hill & Smith Regulatory News (HILS)

19 May 2011

Hill & Smith Holdings PLC

("Hill & Smith" or "the Group")

Acquisition of ATA Bygg-och Markprodukter AB ("ATA")

Strategic Expansion into the Scandinavian Infrastructure Market

The Board of Hill & Smith announces that the Group has today completed the acquisition of ATA of Sweden for Swedish Krona ("SEK") 100 million (c.£9.8 million*) in cash, on a debt free cash free basis, to be financed from the Group's existing bank facilities. 

Formed in 1967, ATA is a family owned, distributor of road safety barriers and manufacturer and distributor of road signage, to the infrastructure market in Sweden. The business operates from four depot locations in Sweden and has headquarters in Stockholm. 

ATA's product portfolio comprises permanent road safety barriers, a temporary road safety barrier rental fleet, crash cushions and road signs, including variable message signing. ATA's temporary road safety barrier rental model is similar to that of Hill & Smith's "Varioguard" product in the UK and offers further opportunity to increase our representation in the road maintenance market, as well as providing additional utilisation capacity for our existing rental fleet.

In 1980 ATA was the first major service contractor to supply the Swedish Road Administration and has used its knowledge of local road regulations to provide appropriate solutions for its customers, including the planning of road traffic signage.

This acquisition allows the Group to enter a strong infrastructure market with a leading distributor and supplier that has an established and complementary product portfolio. ATA also provides the Group with potential for expansion in Sweden and into other parts of Scandinavia, consistent with its strategy for international market and earnings growth.

The last audited financial statements for ATA for the year ended 31 December 2010 disclosed total revenue of SEK 133.1million (c.£13.0 million*), EBITDA of SEK 25.1million (c.£2.5 million*), EBIT of SEK 23.1million (c.£2.3 million*) and gross assets of SEK 106.8 million (c.£10.5 million*). The acquisition is expected to be earnings enhancing for 2011 and the Board is confident in the prospects of the business thereafter.

Mr Peter Lundström, principal shareholder and current Chief Executive of ATA, will remain with the business along with other senior executive personnel. Mr Lundström will continue in his role as Chief Executive.

ATA has previously rented two properties from subsidiaries owned by Mr Lundström and will continue to do so on two new rental agreements, each for a period of five years and at a total annual market rental of SEK 5.434 million (c.£0.5 million*), which will be subject to annual adjustment based upon the consumer price index movement.

Customary representations and warranties have been included in the sales and purchase agreement and the Group has retained SEK 15.0 million (c.£1.5 million*) through an escrow account for a maximum period of eighteen months against any potential warranty claims.

Commenting on the acquisition, Derek Muir, Chief Executive of Hill & Smith Holdings plc, said:

"ATA provides Hill & Smith with an exciting opportunity to enter the Swedish infrastructure market and a platform for future growth across Scandinavia. Our respective product portfolios and areas of expertise are well aligned, and the combination provides scope for future extension of our offering across other international markets. The acquisition further broadens our international footprint which is an important element in our overall strategy."

* translated at an exchange rate of SEK 10.2 : £1

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 2011 or in future years will necessarily match or exceed the Group's historical earnings per share.

For further information, please contact:

Derek Muir, Group Chief Executive Tel: +44 (0) 121 704 7430

Hill & Smith Holdings PLC

John Olsen/Barnaby Fry Tel: +44 (0) 203 128 8100

MHP Communications

Notes to Editors

Headquartered in the UK and quoted on the London Stock Exchange (LSE: HILS.L), Hill & Smith Holdings PLC employs some 3,250 staff operating in 6 countries. In the year to 31 December 2010, it generated revenues of £374.2 million.

The Group's operations are organised into three business segments:

Infrastructure Products: for the core markets of roads and utilities - with products and services such as permanent and temporary road safety barriers, fencing, overhead sign gantries, street lighting columns, bridge parapets, demountable car parks, glass reinforced plastic railway platforms, variable road messaging solution, traffic data collection systems, plastic drainage pipes and pipe supports for the power and LNG markets, energy grid components and security fencing. Our businesses operate from the UK, France, USA, Canada, Thailand and China.

Galvanizing Services: providing zinc and other coating services for a wide range of products including fencing, lighting columns, structural steelwork, bridges, agricultural and other products for the infrastructure and construction markets. Services are delivered from a network of galvanizing operations in the UK, France and USA.

Building and construction products: supplying products such as roofing systems, safety handrails and flooring, lintels and doors, all with a range of uses including large infrastructure projects involving schools and other public and industrial buildings. All plants are based in the UK.