Final Results
VIBROPLANT PLC
15 July 1999
Vibroplant plc: Preliminary Results
Vibroplant plc, the specialist UK plant and tool hire group,
announces its preliminary results for the year ended 31 March 1999:
* Continuing strong growth in pre-tax profit, up 51pc to £3.30m
(1998 : £2.19m; exc. exceptionals £1.46m) on turnover ahead 7pc
to £52.51m (1998 : £49.25m)
* Earnings per share up 70pc to 5.72p (1998 : 3.37p)
* Final dividend of 2.65p, making a maintained total for the year
of 4.05p
* Recovery in construction & industrial services division
continues, with significant margin improvement
* Significant expansion of tool hire division: 18 new branches
opened, boosting nationwide network to 43 locations; strong
revenue growth from recent acquisitions
* Capital expenditure of £15.9m, plus £1.6m on acquisitions,
reflects policy of strong but selective investment
* Following announcement on 28 April, management have now
indicated that they do not intend to proceed with an offer for
the company
Jeremy Pilkington, chairman & chief executive, comments: 'The
outlook for construction activity looks broadly favourable over the
medium term but competitive pressures remain severe, particularly in
general plant and we share the recent well publicised concern within
the sector regarding immediate prospects for the industry.
'Groundforce, Offshore and Safety Services are activities where we
have a strong market share and which continue to offer significant
growth opportunities. Together with our accelerating presence in the
tool hire market and our exposure to the upside of railtrack
expenditure plans, we remain optimistic about prospects in these
areas which will remain the primary focus of our growth strategy.'
CHAIRMAN'S STATEMENT
I am pleased to report continued recovery in the Group's performance
this year.
SUMMARY OF RESULTS
Group profit before tax was £3.30m (1998 : £2.19m; excluding
exceptional items : £1.46m) on turnover up 7% to £52.51m (1998 :
£49.25m). Earnings per share increased to 5.72 pence (1998: 3.37
pence).
The improvement in the profitability of the Construction and
Industrial Services division reported last year continued with
significant margin improvement on a largely static revenue base. The
tool hire division opened a further 18 outlets giving a total of 43
locations across the UK and is now beginning to establish a credible
basis for a national tool hire business. Tool hire and rail
represented 29% of group revenues in the year (1998 : 23%).
Capital expenditure of £15.9m plus a further £1.6m cost of
acquisitions reflected our policy of strong but selective investment.
This level of investment was made with a 1% increase in net gearing
to 38%, underlining the strength of the Group's cash flow.
Net assets increased to £46.42m (1998 : £45.31m) including £0.9m of
goodwill acquired in the year.
The directors are recommending a final dividend of 2.65 pence per
share, payable on 4 October to shareholders on the register at 10
September, giving a maintained total dividend for the year of 4.05
pence per share.
TRADING REVIEW
Vibroplant
As reported in our Interim Statement, we consolidated the
Construction and Industrial Services activities under a single
management structure during the year. General plant, powered access
and compressed air activities now operate as four profit accountable
regions supported by their own call centre. This regional hire centre
structure has enabled progressive improvements to be made in capacity
utilisation and price management, against the background of what
remains a highly competitive market environment.
Delivering superior service to an identified customer base remains
the basic strategy of our service offering. Within a highly value
sensitive market such as the construction industry, it is essential
to deliver this quality service from a competitive cost base. Our
focus during the year has therefore been on delivering the inherently
lower cost base of our regional hire centre structure. As a result
we have achieved significant year on year improvement in net margins.
New investment is only made where the underlying business proposition
demonstrates acceptable returns and during the year investment has
generally been directed in support of customers operating in the more
buoyant utility, house building and industrial sectors.
As Group expansion in other areas continues, we see this discipline
of internal competition for funds improving overall levels of return
on capital, our primary financial measure of business effectiveness.
Investment in fleet in the period totalled £9.7m (1998 : £10.2m).
Groundforce & Safety Services
Despite operating in a highly competitive market, Groundforce has
retained its significant market share position through continuing
innovation, particularly in the creation of new opportunities
demanding increasingly sophisticated engineered solutions.
Safety Services continues to develop new markets to complement its
traditional shoring customer base.
Fleet investment totalled £1.1m (1998 : £1.5m).
Tool Hire
Instant Tool Hire, Cannon Tool Hire, Domindo Tool Hire and 727 Plant
(acquired April 1998) all enjoyed strong revenue growth during the
year through a balanced combination of organic growth, greenfield
start-ups and acquisitions.
Whilst the establishment of a national tool hire business is a key
strategic objective, we recognise the importance and value of local
brand recognition and the loyalty that has been built up over a
period of many years.
Instant has established regional networks in the North West,
Yorkshire and the Midlands and opened new branches in Coventry and
Rotherham using existing Vibroplant premises. The acquisition of ACE
Tool and Plant Services in Walsall and, in May 1999, of Aytee in
Barnsley, extended Instant's network of branches to 11.
Cannon operates in the Kent area. Cannon opened in Tonbridge in
August and in October acquired the whole of the issued share capital
of A.E. Marsh Plant Hire Company Limited in Folkestone. Cannon Tool
Hire operates from 9 branches.
Domindo operates in Shropshire and North Wales. In April 1999, this
network was further increased with the acquisition of the whole of
the issued share capital of Praisefirst Limited, trading as Renter
Center. Renter Center has depots in Melksham, Swindon and Chippenham
and represents the Group's first tool hire operation in the South
West. Domindo, including Renter Center, operates from 9 branches.
727 Plant operates primarily in London and Essex. Since acquisition
this business has expanded quickly opening further branches in
Docklands, Dartford, Heathrow and Milton Keynes. In November, 727
acquired Saville Hire Limited in Peterborough bringing its number of
branches to 9.
A key initiative for the tool hire business during the year was the
introduction of a standard I.T. platform. This has now been
successfully implemented across the whole depot network so that all
tool hire depots utilise a common point of sale transaction system.
The planned expansion of the tool network this year will involve a
significant number of greenfield openings. New openings are not
expected to trade profitably in their first months of operation and
this expansion will therefore hold back profit growth in the year.
Investment in small tools during the year totalled £3.6m (1998 : £2.0m).
Rail
Torrent Trackside operates primarily in support of the railtrack
maintenance sector from a network of 5 depots across the country.
During the year, the national dispute by railtrack personnel has held
back maintenance work with an adverse affect on trading. Our
withdrawal from low margin activities reduced revenue year on year
but has had a positive impact on profitability. There has been some
recent encouraging movement in resolving the rail dispute and
Torrent's strong market position and reputation will enable it to
capitalise on new work as it is released.
MANAGEMENT BUY-OUT
The Company announced on 28 April 1999 that members of its senior
management had indicated that they were investigating the possibility
of making an offer for the Company. Management have now indicated
that they do not intend to proceed with an offer and discussions have
therefore terminated. The estimated costs incurred by the Company in
relation to these discussions, of £125,000, have been provided in the
accounts.
The whole board remain committed to continuing the Company's existing
strategy with a view to enhancing shareholder value.
OUTLOOK
The outlook for construction activity looks broadly favourable over
the medium term but competitive pressures remain severe, particularly
in general plant. We share the recent well publicised concern within
the sector regarding immediate prospects for the industry.
The consolidation of the plant hire sector over the last two years
has led to a reduction in the number of providers who like ourselves
are able to offer true national coverage. Choice will always be a
customer requirement and these structural changes have therefore been
broadly positive for the Group. Unfortunately, this consolidation
has not yet had any significant impact on the over capacity within
the industry.
Groundforce, Offshore and Safety Services are activities where we
have a strong market share and which continue to offer significant
growth opportunities. Together with our accelerating presence in the
tool hire market and our exposure to the upside of railtrack
expenditure plans, we remain optimistic about prospects in these
areas which will remain the primary focus of our growth strategy.
I wish to express on behalf of all shareholders our thanks for
another year of commitment and loyalty from our staff.
Jeremy Pilkington 14 July 1999
Vibroplant plc
Trading results for the year ended 31 March 1999
Continuing activities
Existing Acquisitions Total Total
Notes Operations
1999 1999 1999 1999
(unaudited)(unaudited) (unaudited)
£000 £000 £000 £000
Turnover 50,321 2,189 52,510 49,250
Trading Profit 14,733 512 15,245 14,073
Depreciation and (10,232) 237 (10,469) (11,019)
amortisation of
goodwill
Operating Profit 4 4,501 275 4,776 3,054
Release from US
disposal 4 - 435
provision
Profit on ordinary
activities 4,776 3,489
Net interest payable (1,472) (1,301)
Profit on ordinary
activities before
taxation 3,304 2,188
Taxation 5 (662) (630)
Profit for the
financial year 2,642 1,558
Dividends 7
- Interim paid (635) (647)
- Final proposed (1,224) (1,224)
Retained profit /
(loss) 783 (313)
for the financial
year
Earnings per 5p
ordinary 6 5.72p 3.37p
share
Dividend per 5p
ordinary 7 4.05p 4.05p
share
Vibroplant plc
Consolidated balance sheet
31 March 1999 31 March 1998
(unaudited)
£000 £000 £000 £000
Fixed assets
Intangible assets - goodwill 877 -
Investments 552 -
Tangible assets 57,912 55,687
59,341 55,687
Current assets
Stocks 2,024 1,692
Debtors 16,236 17,686
Cash at bank and in hand 43 22
18,303 19,400
Creditors: amounts falling due
within one year (17,843) (19,521)
Net current assets / 460 (121)
(liabilities)
Total assets less current 59,801 55,566
liabilities
Creditors: amounts falling due
after more than one year (13,250) (10,049)
Provisions for liabilities and (133) (207)
charges
Net assets 46,418 45,310
Capital and reserves
Called up share capital 2,309 2,309
Share premium account 16,192 16,192
Revaluation reserve 2,180 2,530
Profit and loss account 25,710 24,252
Equity shareholders' funds 46,391 45,283
Equity minority interests 27 27
46,418 45,310
Vibroplant plc
Consolidated cash flow statement for year ended 31 March 1999
31 March 1999 31 March 1998
(unaudited)
£000 £000 £000 £000
Cash flow from operating 13,805 10,365
activities
Return on investments and
servicing
of finance
Interest paid (710) (408)
Interest received 52 305
Interest element of finance
lease (814) (1,066)
rental payments
Net cash outflow from return
on investment and servicing of (1,472) (1,169)
finance
Taxation
UK corporation tax paid (172) (136)
Capital expenditure and
financial
investment
Purchase of tangible fixed (14,332) (16,640)
assets
Purchase of investments (552) -
Sale of tangible fixed assets 6,430 5,903
Net cash outflow for capital
expenditure and financial
investment (8,454) (10,737)
Acquisitions and disposals
Purchase of businesses (net of
cash and overdraft purchased) (1,628) (8,892)
Equity dividends paid (1,859) (1,871)
Cash inflow / (outflow) before
management of liquid
resources and 220 (12,440)
financing
Management of liquid resources
Investments in bank managed - 7,900
funds
Fixed term US dollar deposit - 1,527
Net cash inflow from
management of - 9,427
liquid resources
Financing
Medium term loan 6,000 -
Loan notes 42 -
Capital element of finance (3,730) (3,426)
lease rental payments
Net inflow / (outflow) from
financing 2,312 (3,426)
Increase / (decrease) in cash
in the year 2,532 (6,439)
Vibroplant Plc
Notes
1. Basis of preparation
This announcement has been prepared on the basis of the
accounting policies set out in the Group's financial statements
as at 31 March 1998 with the exception that the Group has
amended its policies to adopt new Financial Reporting Standards
FRS 10 and 11. The effect of these new standards is that
goodwill on acquisitions in the financial year has been
capitalised and is being amortised over its useful life.
Goodwill relating to earlier financial periods which had been
written off to reserves has not been restated.
2. Total recognised gains and losses for the year ended 31 March
1999
All recognised gains and losses for the reporting periods are
reflected in the consolidated profit and loss account.
3. Reconciliation of movements in consolidated shareholders' funds
for the year ended 31 March 1999
1999 1998
(unaudited)
£000 £000
Profit for the financial 2,642 1,558
year
Dividends (1,859) (1,871)
783 (313)
Goodwill write back /
(write off) 325 (4,147)
Net increase / (reduction)
in shareholders' funds 1,108 (4,460)
Opening shareholders' 45,283 49,743
funds
Closing shareholders' 46,391 45,283
funds
4. Prior year exceptional items
The prior year operating profit is stated after an exceptional
credit of £297,000 resulting from a change in depreciation
method for hire plant.
The release from the US disposal provision in the previous year
resulted mainly from the finalisation of a specific legal
action.
5. The low effective tax rate reflects the benefit to the tax
charge of an agreement with the Inland Revenue relating to the tax on
the sale of the US business in 1996.
6. Earnings per share have been calculated on 46,185,000 shares
(1998: 46,185,000) being the weighted average number of shares in
issue during the year.
7. The Directors are proposing a final dividend of 2.65 pence
(1998: 2.65 pence) per share making a total dividend for the year of
4.05 pence (1998: 4.05 pence) per share which is payable on 4 October
1999 to shareholders on the register on 10 September 1999
8. Reconciliation of operating profit to net cash inflow from
operating activities.
1999 1998
(unaudited)
£000 £000
Operating profit 4,776 3,054
Depreciation and
amortisation 10,469 11,019
of goodwill
Profit on sale of tangible
fixed assets (2,371) (2,129)
Increase in stocks (179) (156)
Decrease / (increase) in 1,168 (1,338)
debtors
Decrease in creditors (58) (85)
Net cash inflow from
operating 13,805 10,365
activities
9. Analysis of net debt (unaudited)
As at Cash Other As at
1 April Flow Acquis Non- 31 March
98 itions cash 99
Changes
£000 £000 £000 £000 £000
Cash at bank and
in hand 22 21 - - 43
Overdraft (5,244) 2,511 - - (2,733)
Medium term loan - (6,000) - - (6,000)
Loan notes - (42) - - (42)
Finance leases
and hire purchase (11,679) 3,730 (186) (853) (8,988)
(16,901) 220 (186) (853) (17,720)
10. The financial information set out above, which was approved by
the Directors on 14 July 1999, does not constitute the company's
statutory accounts for the years ended 31 March 1999 or 1998. The
financial information for 1998 is derived from the statutory accounts
for 1998 which have been delivered to the registrar of companies.
The auditors have reported on the 1998 accounts; their report was
unqualified and did not contain a statement under section 237 (2) or
(3) of the Companies Act 1985. The statutory accounts for 1999 will
be finalised on the basis of the financial information presented by
the directors in this preliminary announcement and will be delivered
to the registrar of companies following the company's Annual General
Meeting.
Copies of the full accounts for the year ended 31 March 1999 will be
posted to shareholders in August and the Annual General Meeting will
be held on Monday 20 September 1999.
Latest directors dealings
- 2 hours ago SSP Group
- 2 hours ago Real Estate Investors
- 2 hours ago WPP
- 2 hours ago Spectris
- 3 hours ago Clarkson