Building and construction products group Hill & Smith is smiling - just like the flashing speed warnings made by one of its most recent acquisitions.

It has produced another set of record results, notching pretax profits up by 56 per cent for the year to the end of December.

Improved margins - 7.1 per cent from 5.6 per cent - boosted profit before taxation to £15.8 million from £10.1 million.

Underlying pretax profits excluding the effect of reorganisation and property items were 33 per cent ahead at £15.7 million.

The final dividend is increased by 24 per cent to 3.40p and will result in total dividends for the year of 6p, 20 per cent ahead.

These are covered three times by underlying earnings.

Underlying earnings per share rose by 35 per cent to 17.92p.

Operating profit at £19.6 million surged 30 per cent, mainly resulting from strong organic growth and productivity improvements.

Sales, at £277.3 million, were three per cent up.

Chief executive David Grove said: "We have increased our market share in key areas of our business, especially in the transport infrastructure sector, and have significantly increased efficiency and operating margins.

"Our programme of investment in product development continues to pay off with much of our profit improvement coming from organic growth and productivity gains.

"We will continue to invest in order to build and sustain competitive advantages in growing markets".

Product developments included the introduction of Flexbeam, a new range of crash barrier systems.

Capital investment totalled £12.3 million, much of which was designed to improve production processes and extend the product range.

Major contract wins for the group included supply agreements for street lighting in Manchester, Islington and Sunderland and for safety barriers for the M25 and for Ireland's M7 motorway.

Last August the group, which employs 2,400 people, 800 of whom are in the West Midlands, bought the business and assets of Techspan, a supplier of electronic information signs used on the road network, in railway stations and airports.

"By adding Techspan to our portfolio, we have signaled our intent to invest further in the high technology end of the transport infrastructure market," said Mr Grove.

"Our acquisition last monthy of Counters & Accessories, the UK's leading supplier of electronic traffic counting and speed warning signs, is another indication of our strategy of continuing to shape the business for the future."

Based in Milton Keynes, and picked up in a £5 million deal, Counters & Accessories is the business behind SID - a portable device which tracks drivers from 100 metres away and beams up their speed on a roadside board.

Hill & Smith is hoping to cash in on Government plans for further increases in transport infrastructure spending.

Last year, the group took a 33 per cent stake in Zinkinvent, which controls a galvanizing and lighting pole fabricating business with operations in the Benelux countries, France and the US.

Yesterday it said that since May 2005, when the investment was made, the group's share of profits had been ahead of expectations.

It plans to buy the remaining 67 per cent of Zinkinvent once issues raised by due diligence have been satisfied.

Underlying profits advanced in all three of the group's product divisions, Building and Construction, Industrial and Infrastructure, with a particularly strong performance from the latter where sales increased by 12.2 per cent to £107.4 million and underlying operating profit jumped 42.8 per cent to £13 million.

But Joseph Ash Galvanizing had to axe plants in Birmingham and Hartlepool after facing "substantial increases in zinc prices and escalating energy costs".

Building and Construction saw underlying operating profit increase by 6.7 per cent to £4.8 million on sales reduced by 1.7 per cent to £131.8 million helped by an "excellent performance" from Ash & Lacy Building Systems.

Industrial Products posted underlying operating profits up 19.2 per cent to £1.8 million.

In the last five years Hill & Smith's share price has risen by 233 per cent, compared with a four per cent fall in the FTSE All Share Index.