Final Results
Vp PLC
10 June 2003
10 June 2003
Vp plc
Preliminary Results
Vp plc, the equipment rental specialist, today announces its preliminary results
for the year ended 31 March 2003.
Highlights
• Turnover up 13% to £75.5m (2002: £66.8m)
• Profit before tax up 21% to £7.5m (2002: £6.2m)
• Earnings per share increased by 21% to 12.36p (2002: 10.23p)
• Recommended final dividend increased 7% to 3.0p per share (2002: 2.8p)
giving a total dividend of 4.5p per share (2002: 4.2p)
• Return on capital employed improved to 14.4%, an increase of 19%
• Net debt of £6.1m (2002: £10.6m), representing gearing of 12%, after
rental fleet investment of £14.1m (2002: £12.0m) during the year
Jeremy Pilkington, Chairman & Chief Executive commented:
'I am pleased to report another very satisfactory year for the Group, in which
we have again achieved significant improvements against our key measures of
profit growth, earnings per share and return on capital employed.
'The current economic outlook contains a number of uncertainties but the breadth
of business sectors within which we operate, some with strong safety and
regulatory elements, gives us a degree of resilience to individual economic
cycles. In addition, the Group's low gearing gives us defensive strength in the
event of a downturn but equally the capability to exploit growth opportunities
as they are identified.
'These strengths, together with the Group's improved financial performance, give
us reason to view the new financial year with cautious optimism.'
For further information please contact:
Vp plc
Jeremy Pilkington, Chairman & Chief Executive
Neil Stothard, Group Finance Director Tel: 020 7444 4140 (10 June only)
Tel: 01423 533405 (thereafter)
Bankside
Sarah Carrell/Henry Harrison-Topham Tel: 020 7444 4140
CHAIRMAN'S STATEMENT
FINANCIAL OVERVIEW
I am pleased to be able to report another very satisfactory year for the Group
in which we have again achieved significant improvements against our key
measures of profit growth, earnings per share and return on capital employed.
Profits before tax rose 21% to £7.5m (2002: £6.2m) on turnover ahead by 13% at
£75.5m (2002: £66.8m). Earnings per share improved 21% to 12.36p per share and
return on capital employed improved to 14.4%, an increase of 19%.
The Board is recommending a 7% increase in the final dividend to 3.0p per share,
making a total dividend for the year of 4.5p (2002: 4.2p). The dividend is
payable on 1 October 2003 to shareholders registered as of 5 September 2003.
Our strong cash flow has enabled us to reduce borrowings to £6.1m (2002: £10.6m)
at the year end, representing gearing of 12%, whilst at the same time investing
£14.1m (2002: £12.0m) in expanding and renewing our rental fleets.
SERVICES
Services is made up of four specialist businesses, Groundforce, UK Forks, Airpac
Oilfield Services and Safeforce, each focused on its own target market.
Operating profit rose 77% to £4.6m (2002: £2.6m) on turnover 15% ahead at
£29.4m.
Groundforce
Rental, sale and design of shoring systems and allied services to the water,
civil engineering and construction industries.
An excellent result with operating profits up 109% at £2.3m (2002: £1.1m),
driven by turnover growth of 31% at £11.3m (2002: £8.6m).
Healthy demand from the general market was augmented by improved activity from
the water industry's AMP3 five year asset management plan. The first full year
contribution from the Mechplant shoring business following its acquisition in
October 2001 further supported this excellent profit result. In terms of year
on year comparisons, it should be remembered that the prior year contained the
foot and mouth epidemic which severely disrupted the timing of projects in many
rural areas.
Following the transfer into Hire Station of the safety rental activity of
Safeforce, the remaining two elements of Safeforce, which are Stopper
Specialists and Laser & Survey, will in future be managed by Groundforce. This
will give Groundforce customers access to three additional services allied to
the mainstream shoring systems business; the rental of specialist pile driving
and pile breaking equipment through Piletec; the rental of pipe testing and
water flow management systems through Stopper Specialists and the rental and
sale of construction and civil engineering laser levelling and aligning
equipment through Laser & Survey.
Investment in rental fleet totalled £1.4m (2002: £1.5m).
UK Forks
Hire of rough terrain, material handling equipment and accessories to the
housebuilding and construction industry.
UK Forks had a relatively flat, but nevertheless satisfactory, year. Turnover
rose marginally to £10.6m (2002: £10.1m) generating operating profits of £1.3m
(2002: £1.3m).
We believe considerable further scope exists to develop long term supply
relationships, particularly with our housebuilding customers, although we
recognise that these arrangements may take some time to yield results.
Investment in rental fleet totalled £2.9m (2002: £2.3m).
Safeforce
Specialists in the hire, sale and servicing of safety and related equipment.
Safeforce had a very successful year, aided in part by maiden contributions from
the acquisitions in October 2002 of Stopper Specialists and Laser & Survey.
Operating profits rose 67% to £0.5m (2002: £0.3m) on turnover ahead by 60% at
£2.4m (2002: £1.5m).
As referred to elsewhere, with effect from April 2003 Safeforce has been split
into its three constituent parts. Its safety business has transferred into Hire
Station and the stopper and laser rental businesses will come under the
management of Groundforce where there is a close and natural fit with a shared
civil engineering customer base.
Investment in rental fleet totalled £0.3m (2002: £0.2m).
Airpac Oilfield Services
Servicing the international oil and gas exploration and development markets with
specialist air compressors and associated equipment.
This has proven to be a very significant year for Airpac with the disposal of
its non-core, onshore activity for £1.8m during the second half of the financial
year. The rationalisation and exit costs associated with this divestment are
reflected in these results. Airpac, renamed Airpac Oilfield Services, is now a
pure oil and gas exploration and development support business and will be better
able to expand its scope of operation beyond its established North Sea market.
Turnover fell to £5.1m (2002: £5.4m) as we progressively reduced fleet in
anticipation of a complete exit from onshore activity. Operating profits
improved to £0.4m from a loss of £0.1m in the previous year reflecting the costs
taken out of the onshore business and the growing contribution from the retained
oil and gas services business.
During the year we established an operational support base in Singapore to
improve the service to our customers in the South East Asian market which is now
representing an increasing proportion of our activity.
Investment in rental fleet totalled £0.9m (2002: £1.1m).
HIRE STATION
Rental and sale of tools, small equipment and allied services to industry,
construction and homeowners, plus three specialist offerings : Safeforce - hire
and sale of safety and survey products, asset management and training services,
Lifting Point - materials handling and lifting gear hire, One Call - national
call centre for tool hire.
During the year, the new management team at Hire Station has implemented
significant restructuring of the business designed to improve sales volume and
margin, including the reorganisation of the business into three geographical
regions from four together with the elimination of a regional head office. The
full benefit of these measures will only be felt in full during the course of
the current financial year. In addition, weak trading, particularly in the
Greater London and South West regions, was exacerbated by the start-up costs of
new branch openings and product launches. Turnover rose to £34.8m (2002:
£33.0m) but operating profit fell to £0.6m (2002: £2.8m).
Despite these disappointing results, we remain confident that Hire Station is
capable of delivering competitive margins although this will only be achieved
progressively.
There are also a number of exciting developments within Hire Station. These
include the extension of the One Call Warehouse concept into Birmingham and a
second location in London, and the launch of a new Safeforce @ Hire Station
business. The safety equipment rental activities previously conducted within
Services will be consolidated into Hire Station Safeforce in the current
financial year. We believe additional market penetration can be achieved
utilising the resources and locations of the Hire Station infrastructure to
bring service delivery closer to the customer. Safeforce now operates out of
six locations and we plan to expand Safeforce further during the current year.
Lifting Point, our specialist materials handling and lifting gear hire business,
grew its network to eleven outlets and will in future operate as a distinct
business.
Investment in rental fleet totalled £5.9m (2002: £5.1m).
TORRENT TRACKSIDE
Hire of portable track repair and renewals equipment, trackside lighting and
related support services to rail infrastructure maintenance companies.
Torrent had an excellent year with a 72% increase in operating profit to £3.1m
(2002: £1.8m) on revenues ahead by 38% at £11.3m (2002: £8.2m).
This exceptional performance was partially due to demand from several major
projects, including the Channel Tunnel Rail Link, but was for the most part a
result of Torrent's long term policy of investing in skills, systems and rental
assets in anticipation of future rail infrastructure investment.
From its seven locations, Torrent provides true 24 hour x 365 day service and
national coverage to meet the very particular and demanding working patterns of
the rail industry.
We anticipate that the current financial year will be once again successful for
Torrent but would not expect a repetition of the exceptional levels of year on
year growth that we have seen this year.
Investment in rental fleet totalled £2.7m (2002: £1.8m).
OUTLOOK
The current economic outlook contains a number of uncertainties but the breadth
of business sectors within which we operate, some with strong safety and
regulatory elements, gives us a degree of resilience to individual economic
cycles. In addition, the Group's low gearing gives us defensive strength in the
event of a downturn but equally the capability to exploit growth opportunities
as they are identified.
These strengths, together with the Group's improved financial performance, give
us reason to view the new financial year with cautious optimism.
Jeremy Pilkington
Chairman & Chief Executive
Vp plc
Consolidated profit and loss account for the year ended 31 March 2003
Notes 2003 2002
£000 £000
Turnover 75,546 66,847
Trading profit 18,687 17,585
Depreciation (10,282) (10,406)
Operating profit before goodwill amortisation 8,405 7,179
Amortisation of goodwill (318) (280)
Operating profit 8,087 6,899
Net interest payable (581) (727)
Profit on ordinary activities before taxation 7,506 6,172
Taxation 5 (2,119) (1,664)
Profit for the financial year 5,387 4,508
Dividends 7
- Interim paid (654) (615)
- Final proposed (1,310) (1,222)
Retained profit for the financial year 3,423 2,671
Earnings per 5p ordinary share 6 12.36p 10.23p
Earnings per 5p ordinary share before goodwill 6 13.08p 10.87p
amortisation
Dividend per 5p ordinary share 7 4.50p 4.20p
All the activities reflected in the profit and loss account are continuing, as
defined by FRS 3.
Vp plc
Consolidated balance sheet at 31 March 2003
31 March 2003 31 March 2002
£000 £000 £000 £000
Fixed assets
Intangible assets - goodwill 5,814 5,388
Tangible assets 49,689 51,024
Investments - own shares 1,532 1,521
57,035 57,933
Current assets
Stocks 2,180 2,293
Debtors 18,764 16,792
Cash at bank and in hand 3,330 1,050
24,274 20,135
Creditors: amounts falling due within one year (18,619) (18,569)
Net current assets 5,655 1,566
Total assets less current liabilities 62,690 59,499
Creditors: amounts falling due after more than one year (8,365) (8,704)
Provisions for liabilities and charges (4,377) (4,270)
Net assets 49,948 46,525
Capital and reserves
Called up share capital 2,309 2,309
Share premium account 16,192 16,192
Revaluation reserve 832 1,230
Profit and loss account 30,588 26,767
Equity shareholders' funds 49,921 46,498
Equity minority interests 27 27
49,948 46,525
Vp plc
Consolidated cash flow statement for year ended 31 March 2003
31 March 2003 31 March 2002
£000 £000 £000 £000
Cash flow from operating activities 16,644 15,087
Return on investments and servicing of finance
Interest paid (564) (354)
Interest received 21 22
Interest element of finance lease rental payments (73) (321)
Net cash outflow from returns on investments and
servicing of finance (616) (653)
Taxation
UK corporation tax paid (2,035) (1,062)
Capital expenditure and financial investment
Purchase of tangible fixed assets (15,285) (13,460)
Purchase and sale of investments (25) (474)
Sale of tangible fixed assets 8,997 8,273
Net cash outflow from capital expenditure and financial
investment (6,313) (5,661)
Acquisitions and disposals
Purchase of businesses (net of cash and overdraft
purchased) (1,460) (3,440)
Equity dividends paid (1,875) (1,785)
Cash inflow before financing 4,345 2,486
Financing
Medium term loans (133) 1,874
Loan notes (1,039) (1,112)
Capital element of finance lease rental payments (893) (3,468)
Net outflow from financing (2,065) (2,706)
Increase /(decrease) in cash in the year 2,280 (220)
Vp plc
Notes
1. Basis of preparation
This announcement has been prepared on a consistent basis with the accounting
policies set out in the Group's financial statements as at 31 March 2002.
2. Total recognised gains and losses
All recognised gains and losses for both years are reflected in the consolidated
profit and loss account.
3. Trading performance of acquisitions
As a result of the integration of the acquisitions into the existing businesses,
including the transfer of assets between depots, it is not possible to disclose
separately the effect of the acquired businesses on the Group results for the
year.
4. Reconciliation of movements in consolidated shareholders'
funds for the year ended 31 March 2003
2003 2002
£000 £000
Profit for the financial year 5,387 4,508
Dividends (1,964) (1,837)
3,423 2,671
Goodwill write off - (6)
Net increase in shareholders' funds 3,423 2,665
Opening shareholders' funds 46,498 43,833
Closing shareholders' funds 49,921 46,498
5. The slightly lower than expected current and prior year effective tax
rates are due to the write back of over provisions from previous years.
6. Earnings per share have been calculated on 43,600,602 shares (2002:
44,057,076) being the weighted average number of shares in issue during the
year.
7. The Directors are proposing a final dividend of 3.00 pence (2002: 2.80
pence) per share making a total dividend for the year of 4.50 pence (2002: 4.20
pence) per share which is payable on 1 October 2003 to shareholders on the
register on 5 September 2003.
8. Reconciliation of operating profit to net cash inflow from operating
activities.
2003 2002
£000 £000
Operating profit 8,087 6,899
Depreciation 10,282 10,406
Amortisation of goodwill 318 280
Profit on sale of tangible fixed assets (1,738) (2,163)
Decrease in stocks 133 65
Increase in debtors (1,473) (1,889)
Increase in creditors 1,035 1,489
Net cash inflow from operating activities 16,644 15,087
9. Analysis of net debt
As at Cash Other As at
1 April 2002 Flow Non-cash 31 March 2003
Changes
£000 £000 £000 £000
Cash at bank and in hand 1,050 2,280 - 3,330
Medium term loans (8,387) 133 - (8,254)
Loan notes (1,944) 1,039 70 (835)
Finance leases and hire purchase (1,281) 893 - (388)
(10,562) 4,345 70 (6,147)
10. The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 March 2003 or 2002. The statutory
accounts for 2002 have been delivered to the registrar of companies and those
for 2003 will be delivered following the Company's Annual General Meeting. The
auditors have reported on these accounts; their reports were unqualified and did
not contain a statement under section 237 (2) or (3) of the Companies Act 1985.
Copies of the full accounts for the year ended 31 March 2003 will be posted to
shareholders in early August and the Annual General Meeting will be held on 9
September 2003.
This information is provided by RNS
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