Hill & Smith's growth strategy is in tune with the changing times, as Ian Halstead discovers... May has always been a time of celebration, as the spring finally gives way to summer - at least officially - and the landscape's renaissance begins. Hill & Smith's employees weren't quite dancing round may-poles last month, but there was certainly a very buoyant mood at the Shirley-based plc. May's AGM heard an upbeat trading announcement from chief executive David Grove, following record year-end profits and dividends. Days later, Hill & Smith's Bilstonbased subsidiary Asset International announced its biggest-ever order - 25 kilometres of Varioguard barriers to protect workers widening the M1. And the month ended with welcome news from the Office of Fair Trading, that the proposed £10 million acquisition of Metnor's galvanising operations would not be delayed by an inquiry. May was certainly rather special, but there have been plenty of memorable moments along the way for Hill & Smith since Mr Grove took charge. The entrepreneur first acquired a 20 per cent stake in the struggling plc in 1998 - backed by Close Brothers Private Equity - and, following major shareholder unrest, later moved up to become chief executive. Two years on, and the swift success and extent of Grove's turn-round strategy was symbolised by Hill & Smith's £70 million acquisition of the much-larger Ash & Lacy. The latter's finance director, Chris Burr, came on board and has stayed to enjoy the ride. "The logic of David's growth strategy was always evident. The Ash & Lacy deal was clearly earningsenhancing, and, although it meant taking on significant debt, that has been managed," he recalls. The last six years has seen a series of acquisitions and disposals by Hill & Smith. Mr Burr cites last August's purchase of Techspan Systems for almost £900,000 as typical of Mr Grove's ability to spot under-valued assets, and transform their performance. The company, which designs and manufactures sophisticated large electronic information screens for the transport sector, had been trading at a loss. To previous owners - engineering giant Jarvis - it was a peripheral activity, but Techspan has become a key component of Hill & Smith's transport infrastructure operations. Its customer information screens can now been seen at Manchester Piccadilly, King's Cross and Gatwick, among many other high-profile places. Techspan's R&D team has also pioneered the use of systems able to carry pictures, as well as text. Earlier this year, H&S paid some £5 million to acquire traffic data recording specialist Counters & Accessories. "It's only a small business at the moment, but has significant synergies with both Techspan and some of our other subsidiaries," says Mr Burr. The acquisition and subsequent success of wire rope maker Brifen is another tribute to mr Grove's talent-spotting technique. "It makes crash barriers for use in less demanding locations than motor-ways, such as bypasses," says Mr Burr. "We bought it from the receiver three years ago, and set out to find new geographical markets for its products." Brifen's rope barriers now sell throughout Scandinavia - where drifting snow has been a perennial cause of difficult road conditions - and in the Middle East, where shifting sands are an equally ever-present problem. Organic growth has also been important to the group's steady progress during the Grove years. "We recognised that because of forthcoming European legislation our traditional barriers and parapets would soon be no longer appropriate," says Mr Burr. "Over a period of something like 18 months, we invested a couple of million on product development, and are now reaping the rewards." The success of Varioguard - a temporary steel barrier - has been based on innovation. "It's much lighter than the old concrete barriers, so it's faster to install and remove, which is important for construction companies, as time on site is very valuable," says Mr Burr. "Road-users also benefit as it takes much less time to put the barriers down before work can start." Varioguard's success has been underpinned by an unexpected rise in productivity on all road schemes where it has been used. "It's stronger than other barriers, which gives the workers more confidence. Even the most experienced people look over their shoulders when traffic is busy, but that doesn't happen with this system," says Mr Burr. One unexpected order - very much of the post-9/11 era - came from the Labour Party, which used Varioguard to offer anti-terrorist protection to delegates at its 2004 and 2005 annual conferences. The barriers were also hired to keep back the protestors who swarmed around Gleneagles for the G8 Summit. According to Mr Burr, Hill & Smith's growth strategy has been equally in tune with the changing times. "For years, the construction sector had a very poor record for health and safety, but now companies are focused on products which help protect their employees," he says. "It's not all about price and margins, although they remain important, customers now want to receive a wider range of benefits and services." Hill & Smith is now searching for a new chief executive to succeed Mr Grove as he moves to executive chairman following the 2007 AGM. There'll certainly be no shortage of applicants, and the arrival of Metnor's £10 million galvanising business will make the vacancy even more attractive. The biggest difficulty the new recruit will face though is trying to better the achievements of his boss. ..SUPL: | 
