Final Results

Press Release 7 June 2011 Vp plc ("Vp" or the "Group") Final Results Vp plc, the equipment rental specialist, today announces its Final Results for the year ended 31 March 2011. Highlights *   Revenues increased by 5% to £141.0 million (2010: £134.2 million) *   Profit before amortisation, exceptional items and tax of £13.8 million (2010: £16.0 million) *   Basic earnings per share of 23.42 pence (2010: 24.68 pence) *   Proposed final dividend of 7.7 pence per share to maintain last year's full year dividend of 10.8 pence *   Net debt reduced by £7.8 million to £40.5 million *   Solid balance sheet with strong operational cashflows Jeremy Pilkington, Chairman of Vp plc, commented: "I am delighted to report a very satisfactory set of results given the current trading environment and the continuing recessionary pressures felt in many of our markets.  The Group enters the new financial year with a strong balance sheet and I have every confidence that we will continue to create opportunities and deliver satisfactory business performance over both the short and longer term." - Ends - Enquiries: Vp plc Jeremy Pilkington, Chairman Tel: +44 (0) 1423 533 405 jeremypilkington@vpplc.com Neil Stothard, Group Managing Director Tel: +44 (0) 1423 533 445 neil.stothard@vpplc.com Allison Bainbridge, Group Finance Director Tel: +44 (0) 1423 533 445 allison.bainbridge@vpplc.com www.vpplc.com Media enquiries: Abchurch Communications Sarah Hollins / Mark Dixon Tel: +44 (0) 20 7398 7729 mark.dixon@abchurch-group.com www.abchurch-group.com CHAIRMAN'S STATEMENT I am delighted to report a very satisfactory set of results given the current trading environment and the continuing recessionary pressures felt in many of our markets.  Whilst it is never less than disappointing to report a reduction in profitability, I believe the Group should be very proud of these results. Revenues increased by 5% to £141 million, reversing last year's trend, as we successfully recruited new customers and business.  Profit before tax, exceptionals and amortisation reduced to £13.8 million compared to £16.0 million last year.  This pressure on margins arose principally from changes within our activity mix but there was inevitably some pricing sensitivity in certain markets, though we did see improvement to some hire rates in the second half.  Basic earnings per share were 23.42 pence (2010: 24.68 pence). Rigorous cash management has enabled us to invest £24.2 million in fleet expansion and renewals, whilst simultaneously reducing debt by 16% to £40.5 million.  The prudence and robustness of our accounting policies has once again protected us from the balance sheet write downs deemed necessary by some of our peer group. In the light of these robust results, your Board is recommending the maintenance of the final dividend at 7.7 pence, thus maintaining the full year dividend of 10.8 pence.  Subject to shareholders' approval at the Annual General Meeting in September, it is proposed to pay the dividend on 3 October 2011 to members registered as of 2 September 2011. I am very pleased to welcome to the Board, Allison Bainbridge, who joined as Group Finance Director in March.  Allison most recently held a number of senior financial positions within Kelda Group, the parent company of Yorkshire Water, latterly as Group Finance Director.  Allison is a proven financial leader with a breadth of experience who is already making a valuable contribution to the Group. This year has seen pressures and difficult markets faced by many parts of the Group, but these results reflect the benefit of the strong market positions we hold and the resilience of our strength through diversity business model. The new financial year will undoubtedly present us with further challenges and surprises but it has started well, and we have every confidence that we will continue to create opportunities and deliver satisfactory business performance over both the short and longer term. Jeremy Pilkington Chairman 7 June 2011 BUSINESS REVIEW OVERVIEW Vp plc is a specialist rental business providing products and services to a diverse range of markets including civil engineering, rail, oil and gas exploration, construction, outdoor events and industry, primarily within the UK, but also overseas. The year just ended saw little overall improvement in trading conditions, but against this difficult background the Group delivered another solid profit performance.  Strong cash generation allowed a further reduction in net debt in the period, after absorbing an increased capex spend in support of specific market opportunities particularly in the second half.  The quality of the performance is further underlined by the £7.3 million (9%) increase in shareholder funds, in addition to the £4.5 million of dividends paid to shareholders in the year.   Year ended Year ended 31 March 2011 31 March 2010 Revenue £141.0 million £134.2 million Operating Profit before amortisation and exceptional items £16.5 million £18.6 million Investment in Rental Fleet £24.2 million £13.9 million Operating margin 11.7% 13.9% The benefit of having a diverse business mix was again demonstrated as certain divisions progressed into recovery whilst others felt the impact of reduced market demand.  Improvements were experienced in the housebuilding and rail sectors whilst subdued well testing demand in the oil and gas market and an anticipated quieter first year of the AMP5 water programme impacted Airpac Bukom and Groundforce respectively. Revenues were 5% ahead at £141.0 million generating operating profits before amortisation and exceptional items of £16.5 million, a reduction of 11%.  The change in the divisional mix of results led to a fall in operating margin from 13.9% to 11.7%, but these are still very good in the context of the market environment and in comparison to our quoted peer group. Despite relatively flat market conditions, the Group continues to innovate and secure growth opportunities.  We were particularly pleased to secure a five year contract with Network Rail for the exclusive provision of rail plant services and tool rental, an important business win for both Torrent Trackside and Hire Station.  The majority of the exceptional costs of £0.6 million in the year relate to the headcount reductions on the Network Rail contract as we resized the transferred activity to the required level of future operational support. The excellent organic profit recovery within UK Forks, was supplemented at the end of October 2010 with the acquisition of a customer's telehandler fleet supported by a three year sole supply deal. Capital expenditure on rental fleet increased by 74% to £24.2 million (2010: £13.9 million).  The pace of fleet investment increased in the second half and included £3 million on the telehandler acquisition noted above, together with a £4 million investment in fleet in support of the new Network Rail contract.  Over the course of the previous two years the Group pro-actively reduced the size of its fleet in certain divisions.  This process has slowed this year as the fleet sizes began to balance with demand and utilisation levels started to increase.  As a result, sale proceeds on fleet reduced to £7.2 million (2010: £8.7 million) but still generated profits on sale of £2.3 million.  The maintained quality of the fleet disposal margins demonstrate the robustness of the fleet valuation and the appropriate nature of our depreciation policies. GROUNDFORCE Excavation support systems, specialist solutions and trenchless technology for the water, gas, civil engineering and construction industries.   Year ended Year ended 31 March 2011 31 March 2010 Revenue £30.3 million £32.9 million Operating Profit before amortisation and exceptional items £6.7 million £9.2 million Investment in Rental Fleet £3.8 million £3.5 million Groundforce remained the Group's largest profit contributor and delivered healthy margins, albeit on a lower turnover.  This softening of income was caused by three key elements; limited demand from the newly commenced AMP5 programme, a subdued construction and infrastructure market and a decline in capital sales to the USA.  These factors were generally anticipated and the division responded accordingly. The core shoring business experienced the anticipated reduction in activity from AMP contracts and general construction.  Infrastructure demand held up well as did activity on the Olympic sites.  Revenues from Europe continued to improve and success was enjoyed on a number of large Civil Engineering projects including in Sweden and Germany.  The trading environment in the Republic of Ireland remains tough but the business is well placed to secure work from those key contractors that remain active.  Despite the year being relatively quiet for shoring, the prospects going forward remain positive for this high quality business. U Mole enjoyed a strong year, developing a market leading position in vacuum excavation products, which complement its trenchless technology product range.  Despite a challenging market Piletec also performed well, managing fleet levels carefully and consolidating its market leading position as a number of competitors exited the market.  The small Harbray Plant Hire acquisition announced in May 2010 was successfully integrated within the division. The establishment of an operational footprint in mainland Europe progressed, with the opening of a new depot in Hanover in the final quarter of the financial year. Capital expenditure was marginally increased on the prior year and directed at the replacement and realignment of the rental fleet. The breadth of end markets served by Groundforce should enable some recovery in activity in the coming year, helped by the AMP5 programme, general construction demand and further progress within Europe. UK FORKS Rough terrain material handling equipment for industry, residential and general construction.   Year ended Year ended 31 March 2011 31 March 2010 Revenue £10.8 million £10.6 million Operating Profit before amortisation and exceptional items £1.1 million £0.0 million Investment in Rental Fleet £4.4 million £0.1 million The UK Forks business enjoyed a much improved performance, reporting profits of £1.1 million compared with a break even result in the prior year.  A modest, but sustained, recovery in house building demand together with the benefit of the robust cost actions taken early in the downturn helped to improve margins.  Hire revenue grew by 21% reflecting this increased demand.  The much reduced fleet disposal programme delivered sale proceeds of £0.4 million (2010: £2.0 million) and hence the relatively small net increase in total revenues year on year. The revenue growth was delivered from both house building and general construction markets.  The overall numbers of telehandlers available in the UK market shrank significantly during 2008 and 2009 as many surplus machines were disposed of into overseas markets.  We have gradually rebuilt the fleet over the last 12 months and our historic, and continuing, focus on high quality service delivery has seen the division secure increased market share.  The Group's financial strength enables the division to respond more quickly to new opportunities within a market place where choice may have become more limited. Whilst the business has suffered cost inflation on transport, fuel, spares and capital purchases, we have also been able to secure some improvement to hire rates in the period. Capital investment in the fleet increased to £4.4 million in the year after minimal spend last year.  Within that investment is the acquisition of 150 telehandlers from one of our larger customers supported by a three year exclusive hire arrangement. The new financial year has commenced positively and we anticipate the opportunity to grow the business further over the next 12 months. AIRPAC BUKOM OILFIELD SERVICES Equipment and service providers to the international oil and gas exploration and development markets.   Year ended Year ended 31 March 2011 31 March 2010 Revenue £17.5 million £15.7 million Operating Profit before amortisation and exceptional items £2.7 million £3.9 million Investment in Rental Fleet £1.3 million £4.6 million Trading conditions proved challenging for Airpac Bukom during the year as the anticipated global improvement in well test activity failed to materialise.  This affected performance in many of our regions, none more so than the North Sea, where the number of exploration and appraisal wells operating in the final quarter of 2010 was the lowest since 1999.  Pleasingly since the year end, activity levels have improved in this region. Whilst the business delivered revenue of £17.5 million, 11% up on prior year, a change in business mix, adverse currency exchange and contract timing contributed to a reduced profit of £2.7 million. The Pluto LNG project in Karratha, Western Australia continued during the year, but behind schedule.  The resultant delayed revenues should be secured in the new financial year. The Africa region weakened later in the year, being impacted by the social and political unrest in a number of countries including Libya, Tunisia and Egypt.  The Middle East improved in the second half of the year with increasing opportunities for our products in the region. The business is well positioned to take advantage of an improving global well testing market going forward.  With an unrivalled operational footprint that covers the major exploration areas worldwide and the recent strengthening of the management team, the short to medium term prospects for the division are much improved. TORRENT TRACKSIDE Suppliers of rail infrastructure portable plant and specialist services to Network Rail, London Underground and their appointed contractor base.   Year ended Year ended 31 March 2011 31 March 2010 Revenue £14.9 million £10.6 million Operating Profit before amortisation and exceptional items £1.6 million £0.2 million Investment in Rental Fleet £2.9 million £0.8 million Torrent delivered an excellent recovery on the back of an improvement in revenues from our key customer relationships and a full year benefit from the cost reduction measures implemented in the prior year. In December 2010, Torrent were awarded a five year contract to manage and maintain Network Rail's portable plant fleet further cementing our credentials as the provider of choice for the national rail infrastructure contractor base. Torrent also secured material improvements in revenues from London Underground activities, supported in part by the purchase of elements of the Jarvis Fastline underground fleet from the administrator early in the year. The rail industry remains dynamic, with further change expected following the appointment of new senior management at Network Rail and the anticipated impact of the McNulty report. Capital expenditure in the year increased significantly to £2.9 million in support of new opportunities and increased demand from our existing rail infrastructure contractor customer base. As the market leading portable rail plant specialist, Torrent remains very well positioned to demonstrate value added services to the sector during this period of further change. TPA Portable roadway systems, primarily to the UK market, but also in mainland Europe and the Republic of Ireland.   Year ended Year ended 31 March 2011 31 March 2010 Revenue £14.0 million £14.2 million Operating Profit before amortisation and exceptional items £1.4 million £2.2 million Investment in Rental Fleet £1.5 million £0.5 million TPA's revenues were similar to the prior year at £14.0 million, but the profits were adversely impacted by a change in the mix of business and rising variable costs, particularly in transportation, both in the UK and Germany. In the UK, the outdoor events sector was stable with a consistent demand from key events and a number of longer term agreements were secured.  Whilst construction related demand continued at a subdued level, the rail sector was more buoyant.  The transmission sector activity arising from our preferred supplier status with the National Grid alliance contributed well to the overall performance of the business in the year. In Germany, after a satisfactory start to the year, revenue softened in the last quarter, due to extreme weather conditions and lower demand from the energy sector.  The region continues to develop, with local management expanding the operational support structure and implementing robust systems and procedures.  We continue to develop new relationships within the European customer base. The division was awarded BS14001 (environmental) and BS8901 (sustainable management system for events) accreditations during the year.  The latter is a prerequisite for suppliers to the tier 1 contractors at the 2012 Olympics. Investment in the rental fleet increased on prior year, primarily due to the purchase of plastic pitch covers for outdoor stadia events both in the UK and in Europe. The outlook for 2011/12 is positive, with an ongoing requirement from the National Grid and a steady build up to the Olympics adding to demand.  We believe construction will be stable and Europe should provide further growth opportunities. HIRE STATION Small tools and specialist equipment for industry and construction.   Year ended Year ended 31 March 2011 31 March 2010 Turnover £53.5 million £50.1 million Operating Profit before amortisation and exceptional items £3.0 million £3.2 million Investment in Rental Fleet £10.3 million £4.5 million The Hire Station business delivered a strong result, despite the construction market continuing to be soft throughout the year.  After a challenging first half, the second half saw a marked improvement, with activity in the final quarter in particular being very encouraging. Revenues of £53.5 million were 7% ahead of prior year with all Hire Station businesses delivering growth.  The profit result of £3.0 million was similar to the prior year with the small reduction in margin influenced by an increase in vehicle and fuel costs. Capital expenditure of £10.3 million was more than double the previous year and included almost £4 million to support the 5 year Network Rail contract win.  This contract commenced in March 2011 and therefore minimal revenues are included in these reported numbers. Headcount remained broadly static during the year and our low staff turnover record remains a key factor in allowing us to deliver consistently high levels of service to our customers. The tools business has made good progress during the year maintaining a tight control on the cost base but at the same time investing for growth.  Several key account wins in addition to Network Rail put us in a strong position for the coming year.  We have increased our geographical coverage with new branch openings in Aberdeen, Port Talbot and Carlisle.  We also took the opportunity to relocate two of our larger branches, in Livingston and Southampton doubling the operational capacity of these operations. The specialist safety rental business, ESS Safeforce, had another strong year delivering double digit revenue growth.  We have made further inroads into the petrochemical shutdown market securing some significant wins for the new financial year.  Additional training centres were added in Leeds and Runcorn and another hire centre was established in South Wales to satisfy growing demand in this area. MEP continues to progress well with new branches in Aberdeen and Croydon opened during the year.  A planned opening in Southampton in the first quarter of the new financial year will take the number of locations to nine.  This provides comprehensive coverage in most of the key markets in the UK and we have exciting plans for this business as we seek to deliver further growth. The Climate Hire business had a similar year to the prior year.  The poor summer hampered demand for air conditioning units and coolers, but the winter was very busy as a result of the extreme temperatures in early November 2010 and this elevated demand continued well into February. The business has weathered the last two years better than most tool hirers and delivered profits when others have struggled.  This is a testament to the quality of the business.  The key challenge going forward is to deliver growth in what is still a very fragmented market but with better quality margins.  We have plenty of initiatives in progress within the business and are optimistic about prospects for the coming year. PROSPECTS The Group enjoyed a generally upbeat finish to the financial year and despite the extended holiday period in April, the new financial year has continued in a similar vein.  We approach the new financial year positively and though we expect that market conditions will remain no better than stable, we are confident that opportunities are available to all of our divisions.  We accelerated investment in the rental fleet in the second half of the year and we expect to continue that trend in support of further opportunities going forward. We have emerged from the downturn in better financial shape than many in our sector.  We expect this to provide competitive advantage in securing market share, as we are able to contemplate investment where others may not. We are optimistic about the future prospects for the Group and look forward to delivering further tangible progress for shareholders in the coming year. Neil Stothard Group Managing Director 7 June 2011 Consolidated Income Statement for the year ended 31 March 2011   Note 2011   2010 £000 £000 ---------------------- Revenue 1 140,959 134,163 Cost of sales   (106,461)   (99,350) ---------------------- Gross profit   34,498   34,813 Administrative expenses   (19,577)   (17,869) ---------------------- +---------+ +--------+ Operating profit before amortisation and exceptional 1 | 16,472| | 18,610| items | | |  | | | | | Amortisation and impairment of intangibles   | (962)| | (1,323)| Exceptional items 2 | (589)| | (343)| +---------+ +--------+ ---------------------- Operating profit   14,921   16,944 Net financial expense   (2,687)   (2,605) ---------------------- +---------+ +--------+ Profit before amortisation, exceptional items and   | 13,785| | 16,005| taxation | | | | | | | | Amortisation and impairment of intangibles   | (962)| | (1,323)| Exceptional items 2 | (589)| | (343)| +---------+ +--------+ Profit before taxation   12,234   14,339 Taxation 5 (2,451)   (4,094) ---------------------- Net profit for the year   9,783   10,245 ----------------------     Pence   Pence Basic earnings per share 3 23.42   24.68 Diluted earnings per share 3 23.24   24.36 Dividend per share paid and proposed 6 10.80   10.80 Consolidated Statement of Comprehensive Income for the year ended 31 March 2011     2011   2010     £000   £000 ---------------- Profit for the year   9,783   10,245 Other comprehensive income: Actuarial gains on defined benefit pension scheme 526 726 Tax on items taken directly to equity   (147)   (203) Impact of tax rate change   (77)   - Effective portion of changes in fair value of cash flow hedges   1,493   439 Foreign exchange translation difference   11   (39) ---------------- Total other comprehensive income   1,806   923 ---------------- Total comprehensive income for the year   11,589   11,168 ---------------- Consolidated Statement of Changes in Equity for the year ended 31 March 2011   2011   2010   £000   £000 ------------------ Total comprehensive income for the year 11,589   11,168 Dividends paid (4,509)   (4,510) Net movement relating to Treasury Shares and shares held by Vp (392)   (85) Employee Trust Share option charge in the year 624   434 Tax movements on equity 24   1 Impact of tax rate change 5   - ------------------ Change in Equity 7,341   7,008 Equity at start of year 84,187   77,179 ------------------ Equity at end of year 91,528   84,187 ------------------ There were no changes in issued Share Capital or Share Premium. Consolidated Balance Sheet as at 31 March 2011   Note 2011   2010     £000   £000 -------------------- Non-current assets Property, plant and equipment   101,286   98,635 Intangible assets   39,599   39,826 -------------------- Total non-current assets   140,885   138,461 -------------------- Current assets Inventories   5,388   3,813 Trade and other receivables   33,307   27,330 Cash and cash equivalents 4 5,509   1,385 -------------------- Total current assets   44,204   32,528 -------------------- Total assets   185,089   170,989 -------------------- LIABILITIES Current liabilities Interest bearing loans and borrowings 4 (20,020)   (49,692) Income tax payable   (897)   (263) Trade and other payables   (37,178)   (25,493) -------------------- Total current liabilities   (58,095)   (75,448) Non-current liabilities Interest bearing loans and borrowings 4 (26,001)   (18) Employee benefits   (178)   (1,127) Deferred tax liabilities   (9,287)   (10,209) -------------------- Total non-current liabilities   (35,466)   (11,354) -------------------- Total liabilities   (93,561)   (86,802) -------------------- Net assets   91,528   84,187 -------------------- EQUITY Issued share capital   2,309   2,309 Share premium account   16,192   16,192 Hedging reserve   (1,674)   (3,167) Retained earnings   74,674   68,826 -------------------- Total equity attributable to equity holders of the 91,501   84,160 parent Non-controlling interests   27   27 -------------------- Total equity   91,528   84,187 -------------------- Consolidated Statement of Cash Flows for the year ended 31 March 2011   Note 2011   2010     £000   £000 -------------------------------------------------------------------------------- Cash flow from operating activities Profit before taxation   12,234   14,339 Pension fund contributions in excess of service cost   (423)   (2,214) Share based payment charge   624   434 Depreciation 1 18,558   18,901 Amortisation and impairment of intangibles 1 962   1,323 Financial expense   2,689   2,622 Financial income   (2)   (17) Profit on sale of property, plant and equipment   (2,348)   (3,375) -------------------- Operating cashflow before changes in working capital   32,294   32,013 (Increase)/decrease in inventories   (1,571)   1,650 (Increase)/decrease in trade and other receivables   (5,898)   5,484 Increase/(decrease) in trade and other payables   9,029   (1,919) -------------------- Cash generated from operations   33,854   37,228 Interest paid   (2,677)   (2,453) Interest element of finance lease rental payments   (31)   (156) Interest received   2   17 Income tax paid   (3,065)   (4,546) -------------------- Net cash flow from operating activities   28,083   30,090 -------------------- Cash flow from investing activities Disposal of property, plant and equipment   7,188   8,718 Purchase of property, plant and equipment   (21,911)   (16,744) Acquisition of businesses (net of cash and overdrafts)   (690)   19 -------------------- Net cash flow from investing activities   (15,413)   (8,007) -------------------- Cash flow from financing activities Purchase of own shares by Employee Trust   (392)   (85) Repayment of borrowings   (46,500)   (20,000) Proceeds from new loans   43,000   4,000 Capital element of hire purchase/finance lease   (189)   (678) agreements Dividends paid   (4,509)   (4,510) -------------------- Net cash flow from financing activities   (8,590)   (21,273) -------------------- Increase in cash and cash equivalents   4,080   810 Effect of exchange rate fluctuations on cash held   44   24 Cash and cash equivalents at the beginning of the year   1,385   551 -------------------- Cash and cash equivalents at the end of the year   5,509   1,385 -------------------- NOTES The final results have been prepared on the basis of the accounting policies which are set out in Vp plc's annual report and accounts for the year ended 31 March 2011. The following new standard was effective from 1 July 2009 and has been reflected in this statement: * IFRS3 (revised), "Business combinations". The only change in this standard that has affected this statement is the requirement to expense acquisition costs. This has not had a material effect on the reported result. EU Law (IAS Regulation EC1606/2002) requires that the consolidated accounts of the Group for the year ended 31 March 2011 be prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted for use in the EU ('adopted IFRSs'). Whilst the financial information included in this preliminary announcement has been computed in accordance with adopted IFRS, this announcement does not itself contain sufficient information to comply with IFRS.  The Company expects to publish full financial statements in July 2011. The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 March 2011 or 2010.  Statutory accounts for 31 March 2010 have been delivered to the registrar of companies, and those for 31 March 2011 will be delivered in due course.  The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 31 March 2011 or 31 March 2010. The financial statements were approved by the board of directors on 7 June 2011. 1.Business Segments   Revenue Depreciation and Operating profit amortisation before amortisation and exceptional items   2011 2010 2011 2010 2011 2010   £000 £000 £000 £000 £000 £000 -------------------------------------------------------------------------------- Groundforce 30,314 32,874 3,702 4,209 6,711 9,169 UK Forks 10,789 10,625 1,645 1,758 1,055 16 Airpac Bukom 17,451 15,677 3,640 3,434 2,701 3,865 Hire Station 53,536 50,121 6,874 7,179 2,953 3,223 Torrent Trackside 14,903 10,635 1,643 1,885 1,618 175 TPA 13,966 14,231 1,569 1,437 1,434 2,162 Group - - 447 322 - - -------------------------------------------------------------------------------- Total 140,959 134,163 19,520 20,224 16,472 18,610 -------------------------------------------------------------------------------- 2. Exceptional Items During the year the Group incurred £589,000 of employment restructuring costs (2010: £456,000). In the prior year there was also an exceptional credit of £113,000 from the disposal of a freehold property. 3. Earnings Per Share The calculation of basic earnings per share of 23.42 pence (2010: 24.68 pence) is based on the profit attributable to equity holders of the parent of £9,783,000 (2010: £10,245,000) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2011 of 41,776,000 (2010: 41,514,000), calculated as follows:   2011 2010   Shares Shares   000's 000's Issued ordinary shares 46,185 46,185 Effect of own shares held (4,409) (4,671) -------------------- Weighted average number of ordinary shares 41,776 41,514 -------------------- Basic earnings per share before the amortisation of intangibles and exceptional items was 26.09 pence (2010: 27.57 pence) and is based on an after tax add back of £1,117,000 (2010: £1,200,000) in respect of the amortisation of intangibles and exceptional items. The calculation of diluted earnings per share of 23.24 pence (2010: 24.36 pence) is based on profit attributable to equity holders of the parent of £9,783,000 (2010: £10,245,000) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2011 of 42,096,000 (2010: 42,056,000), calculated as follows:   2011 2010   Shares Shares   000's 000's Weighted average number of ordinary shares 41,776 41,514 Effect of share options in issue 320 542 ------------------ Weighted average number of ordinary shares (diluted) 42,096 42,056 ------------------ There are additional options which are not currently dilutive, but may become dilutive in the future.  Diluted earnings per share before the amortisation of intangibles and exceptional items was 25.89 pence (2010: 27.21 pence). 4.Analysis of Debt     At At 31 March 1 April 2011 2010 £000 £000 --------------------- Cash and cash equivalents   (5,509) (1,385) Current debt   20,020 49,692 Non current debt   26,001 18 --------------------- Net debt   40,512 48,325 --------------------- Year end gearing (calculated as net debt expressed as a percentage of shareholders' funds) stands at 44% (2010: 57%).  Excluding investment in own shares at market value of £10.5 million (2010: £7.8 million), underlying financial gearing for business activities was 29% (2010: 44%). The Group is currently in discussions with banks to replace the £20 million facility which expires in September 2011.  The new facility is expected to be agreed well ahead of the current facility's expiry.  The new facility will reflect the Group's current assessment of business requirements and the strong platform for growth which has been established in the last two years.  The Group also has a £35 million committed three year facility which is due to expire in May 2013 and overdraft facilities totalling £10 million. 5.Taxation The charge for taxation for the year represents an effective tax rate of 20.0% (2010: 28.6%).  The tax charge was reduced by £0.8 million (6.4%) to reflect the adjustment to the deferred tax balance as a result of the future standard tax rate of 26% in the UK.  The effective tax rate excluding adjustments in respect of prior years is 20.8% (2010: 27.7%). 6.Dividend The Board has proposed a final dividend of 7.70 pence per share to be paid on 3 October 2011 to shareholders on the register at 2 September 2011.  This, together with the interim dividend of 3.10 pence per share paid on 5 January 2011 makes a total dividend for the year of 10.80 pence per share (2010: 10.80 pence per share). 7.        Risks and Uncertainties The Group comprises a number of businesses serving different markets and manages the risks inherent to these activities.  The key external risks include general economic conditions, competitor actions, the effect of legislation, credit risk and business continuity.  Internal risks relate mainly to investment and controls failure risk.  The Group seeks to mitigate exposure to all forms of risk where practicable and to transfer risk to insurers where cost effective.  The diversified nature of the Group limits the exposure to external risk within a particular market.  Exposure to credit risk in relation to customers, banks and insurers is managed through credit control practices including credit insurance which limits the Group's exposure to bad debts via an aggregate first loss policy which covers just over half of the Group's accounts receivable.  Business continuity plans exist for key operations and accounting centres.  The Group is an active acquirer and acquisitions may involve risks that might materially affect the Group performance.  These risks are mitigated by extensive due diligence and appropriate warranties and indemnities from the vendors. Taking into account these risk mitigation actions and the treasury management policies described in the 31 March 2011 accounts, the Group's exposure to market, liquidity and credit risk is considered to be within normal parameters and represents a level of acceptable risk. 8.        Forward Looking Statements The Chairman's Statement and Business Review include statements that are forward looking in nature.  Forward looking statements involve known and unknown risks, assumptions, uncertainties and other factors which may cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements.  Except as required by the Listing Rules and applicable law, the Company undertakes no obligation to update, review or change any forward looking statements to reflect events or developments occurring after the date of this report. 9.        Annual Report and Accounts The Annual Report and Accounts for the year ended 31 March 2011 will be posted to shareholders on or around 29 July 2011. Directors' Responsibility Statement in Respect of the Annual Financial Report (extracted from the Annual Financial Report) We confirm that to the best of our knowledge: * The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and * The Business Review and Financial Review, which form part of the Directors' Report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with the description of the principal risks and uncertainties that they face. For and on behalf of the Board of Directors J F G Pilkington A Bainbridge Director Director This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Vp PLC via Thomson Reuters ONE [HUG#1521594]

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