Hill & Smith Regulatory News (HILS)

18 Nov 2008 15:57



18 November 2008 

Hill & Smith Holdings PLC

Disposal of Express Reinforcements Limited

The Board of Hill & Smith Holdings PLC ("Hill & Smith" or the "Company") announces that Hill & Smith has agreed to dispose of its wholly owned subsidiary Express Reinforcements Limited ("Express") to Celsa Steel Service (UK) Limited and related affiliates ("Celsa Group") for a cash consideration of £12.8 million. Cash balances of £2.3 million are included within the sale. The net cash proceeds from the disposal of £10.5 million will be applied by Hill & Smith in reducing the Group's net indebtedness.

Express is a supplier of steel reinforcing bar and mesh for the UK construction market.

In its audited accounts for the year ended 31 December 2007, Express reported revenues of £69.0 million and profit before tax of £1.9 million. At 31 December 2007, Express had gross assets of £33.0 million (including cash balances of £3.2 million) and net assets of £6.7 million.

Hill & Smith has agreed to sell Express at a consideration structured against a targeted level of net assets. The consideration will, if required, be adjusted following the agreement of completion accounts. 

The directors expect that the disposal will have a marginally dilutive effect on the Groups earnings but the Group will be exiting from a high volume low margin business at a premium to net asset value. Express is non-core to the Group, operates in a highly competitive market and has required significant amounts of senior management time. 

The current local management team will continue with Express under the new ownership of the Celsa Group.

Commenting on the disposal, Derek Muir, Chief Executive of Hill & Smith said:

"Express is a non-core business focused solely on the steel reinforcing bar and mesh market and is better suited to being part of the Celsa Group who specialise in this market. Our strategy continues to be expansion, through both investment in new product development and by selective acquisitions, where above average growth and returns can be anticipated."

Enquiries:

Derek Muir, Group Chief Executive  Chris Hardie

Hill & Smith Holdings PLC  Arden Partners plc

Mobile: 07703 535540  Tel: 020 7398 1639

Tel: 0121 704 7430