Interim Results - 6 Months to 30 September 1999
Vibroplant PLC
25 November 1999
Jeremy Pilkington, Chairman & Chief Executive
Neil Stothard, Finance Director
Vibroplant plc Tel: 020 7831 3113 (25.11.99)
Tel: 01423 533400 (thereafter)
Steve Jacobs/Peter Otero
Financial Dynamics Tel: 020 7831 3113
Vibroplant plc: Interim Results
Vibroplant plc, the specialist UK plant and tool hire group, announces its
interim results for the six months ended 30 September 1999:
* Pre-tax profit increased to £2.1m (1998 - £2.0m) on turnover of £26.6m
(1998 - £27.0m)
* Earnings per share 3.22p (1998: 3.76p)
* Maintained interim dividend of 1.4p
* Strong operating cash flow at £8.0m (1998 - £6.0m)
* Net debt reduced by 28%to £12.8m since March 1999, representing gearing
of 27.1% (31.3.99 - 38%)
* Rapid expansion of the tool hire businesses
* 'Hire Station' launched in October, creating a national tool hire desk
aimed at customers with a preference for a single order point
Jeremy Pilkington, chairman & chief executive, comments:
'I am pleased to report further progress in our specialist rental activities,
where both revenues and profitability have increased significantly. In
contrast, the Construction/Industrial services business has remained highly
competitive and faces a prospect of continuing oversupply in the second half,
which also includes the uncertainty of activity levels during the Winter
period.'
CHAIRMAN'S STATEMENT
Interim Results
In my last report to shareholders I highlighted certain specialist rental
activities which represented the primary focus of our growth strategy for the
business. These include tool hire, Torrent Trackside, Groundforce and Safety
Services. I am pleased to report further progress in these areas where both
revenues and profitability have increased significantly.
In contrast, the Construction/Industrial Services business has remained highly
competitive. In particular, despite enjoying historically high levels of
utilisation against the background of a relatively buoyant market, this
business has suffered price erosion over the first six months of the financial
year leading to a fall in both revenues and margin.
Profit before tax for the six months ended 30 September 1999 increased
slightly to £2.1m (1998 - £2.0m). Group operating profits at £2.4m (1998 -
£2.8m) reflected the reduction in turnover to £26.6m (1998 - £27.0m).
Earnings per share for the period were 3.22 pence (1998 - 3.76 pence, a figure
which benefited from a reduced tax charge).
Dividend
The Directors propose a maintained interim dividend of 1.4 pence per share,
payable on 10 January 2000, to shareholders registered as at 10 December 1999.
Operational Review
Vibroplant
Turnover in the period was £18.0m (1998 - £19.6m), generating operating
profits of £1.5m (1998 - £2.1m). The reduction in operating profits is due
almost entirely to reduced levels of plant sales activity.
The results for the Construction and Industrial Services division for the
first half reflect the severe competitive pressures resulting from over
supply within the general plant hire market. The return on capital employed
in this business is unacceptable and we continue to focus investment on those
products, within a coherent product mix, which offer improved levels of
return. As a result, capital investment in the Construction and Industrial
Services fleet was significantly lower at £2.5m (1998 - £6.8m).
Groundforce offers an extensive range of excavation support products and
performed well in the period. This division continues its profitable
expansion by offering a value adding combination of highly engineered product,
technical support advice and temporary works designs which deliver improved
productivity to customers and compliance with current safety and environmental
requirements. Safety Services provides a range of specialist confined space
entry and associated safety products. Whilst only a relatively small
business, Safety Services generates good returns and enjoys substantial growth
opportunities. Investment in Groundforce and Safety Services fleet totalled
£0.7m (1998 - £0.7m).
Tool Hire and Rail
Turnover for the period was £8.6m (1998 - £7.4m), generating operating profits
of £0.9m (1998 - £0.7m).
The rapid growth of our tool hire network continued with expansion in all four
regions. Through Cannon, Instant, 727 and Domindo we now operate from a
network of 45 branches across the United Kingdom.
Our medium term objective of establishing a national tool hire business was
significantly advanced with the launch in October of 'The Hire Station'. The
Hire Station is a national tool hire desk, targeted at those customers whose
preference is for a single order point irrespective of their working location
across the country. This customer base is generally distinct from that served
through our local outlets and thus provides new, incremental volume for each
of the regional companies. We are confident that this development will
accelerate the expansion of our tool hire activities across the U.K.
A number of important steps have been taken in the period to create a sound
and sustainable platform for further growth. Tool hire activities are now
managed on a regional basis, with profit and loss accountability at the
regional and area level. Building on the introduction last year of a uniform
I.T. and accounting platform, the businesses have developed common pricing and
marketing structures and integrated purchasing policies to maximise
efficiencies in procurement.
As previously reported, Renter Center was acquired in April and has been
successfully incorporated into the Domindo business. Aytee, acquired in May,
has been merged into Instant. The aggregate cost of investment in these
acquisitions was £0.8m.
Since the half year Thanet (Hire) Limited, a single location outlet in
Margate, was acquired by the Group and the business and assets transferred to
Cannon.
In addition to acquisitions, we continue our programme of organic growth via
either greenfield sites or existing Vibroplant locations. Instant expanded
their business into Scotland utilising existing Vibroplant sites in Glasgow
and Paisley and opened a stand-alone greenfield branch in Leicester. Cannon
opened in Crawley in October; Domindo opened in Stoke and 727 opened in the
Vibroplant depot at Milton Keynes .
New tool hire outlets can take up to twelve months to achieve a cumulative
profit, and this level of organic growth has necessarily had a short term
negative impact on reported profits. Investment in tool hire fleet assets in
the period totalled £2.0m (1998 - £1.8m).
At Torrent Trackside, our rail infrastructure rental business, there has been
a reduction in half-year on half-year turnover relating to the planned
withdrawal from activities which were low margin and no longer core to the
business. The profitability of Torrent improved significantly in the first
half compared with 1998/99. Investment in rail fleet assets in the period
totalled £0.2m (1998 - £0.2m).
Balance Sheet and Cash Flow
The selective approach to capital investment and further improvements in
working capital management have led to cash inflow from operating activities
of £8.0m (1998 - £6.0m). Net debt at 30 September was £12.8m (£17.7m at 31
March 1999), a reduction of £4.9m in the period. This represents gearing of
27.1% on shareholders funds of £47.2m.
Directors
We are pleased to announce that with effect from Tuesday 4 January 2000, Mr.
Peter Parkin will be joining Vibroplant Plc as a Non-executive Director. Mr.
Parkin has extensive experience of the construction industry, including having
been Chairman and prior to this, Chief Executive of Raine plc. With effect
from the same date, Mr. Stuart Doughty will be retiring as a Non-executive
Director.
We take this opportunity to welcome Mr. Parkin to the Board and to thank Mr.
Doughty for his contribution over the last three and a half years.
Outlook
We believe that the general plant sector will continue to suffer from
oversupply in the second half, which also includes the uncertainty of activity
levels during the Winter period.
Elsewhere, good progress has been made in growing our specialist rental
activities and we expect continuing improvement in the second half.
It remains my pleasure to thank all our staff for their commitment and
contribution to the business during the period.
Jeremy Pilkington 24 November 1999
Vibroplant plc
Consolidated profit and loss account
Notes Six months Six months Year to
to 30 Sept to 30 Sept 31 March
1999 1998 1999
(unaudited) (unaudited)
£000 £000 £000
Turnover 26,622 26,982 52,510
Trading Profit 7,584 8,084 15,245
Depreciation and
amortisation (5,161) (5,251) (10,469)
Operating Profit 2,423 2,833 4,776
Net interest payable (340) (792) (1,472)
Profit on ordinary
activities before
taxation 2,083 2,041 3,304
Taxation (625) (306) (662)
Profit on ordinary
activities after
taxation 1,458 1,735 2,642
Dividends
- Interim 6 (611) (647) (635)
- Final - - (1,224)
Retained profit for the
period 847 1,088 783
Earnings per 5p
ordinary share 5 3.22p 3.76p 5.77p
Fully diluted earnings
per 5p ordinary
share 5 3.21p 3.76p 5.77p
Dividend per 5p
ordinary share 6 1.40p 1.40p 4.05p
Vibroplant plc
Consolidated balance sheet
30 Sept 1999 31 March 1999 30 Sept 1998
(unaudited) (unaudited)
£000 £000 £000 £000 £000 £000
Fixed assets
Intangible assets
- goodwill 1,373 877 492
Tangible assets 56,039 57,912 58,311
Investments 525 552 -
57,937 59,341 58,803
Current assets
Stocks 2,094 2,024 1,765
Debtors 15,158 16,236 19,525
Cash at bank and
in hand 1,082 43 29
18,334 18,303 21,319
Creditors:
amounts falling
due within one
year (18,481) (17,843) (18,692)
Net current
(liabilities) /
assets (147) 460 2,627
Total assets less
current
liabilities 57,790 59,801 61,430
Creditors:
amounts falling
after more than
one year (10,402) (13,250) (15,032)
Provisions for
liabilities and
charges (134) (133) -
Net assets 47,254 46,418 46,398
Capital and
reserves
Called up share
capital 2,309 2,309 2,309
Share premium
account 16,192 16,192 16,192
Revaluation
reserve 1,969 2,180 2,490
Profit and loss
account 26,757 25,710 25,380
Equity
shareholders'
funds 47,227 46,391 46,371
Equity minority
interests 27 27 27
47,254 46,418 46,398
Vibroplant plc
Consolidated cash flow statement
Note Six months Six months Year to
to 30 Sept to 30 Sept 31 March
1999 1998 1999
(unaudited) (unaudited)
£000 £000 £000
Cash flow from operating
activities 7 8,010 5,977 13,805
Net cash outflow from
returns on investments
and servicing of finance (340) (792) (1,472)
Tax paid (9) (514) (172)
Net cash outflow from
capital expenditure
and financial investment (1,262) (4,934) (8,454)
Net cash outflow from
acquisitions and
disposals (897) (907) (1,628)
Equity dividends paid - - (1,859)
Cash inflow / (outflow)
before management of
liquid resources and
financing 5,502 (1,170) 220
Net (outflow) / inflow
from financing (1,730) 4,112 2,312
Increase in cash in the
year 3,772 2,942 2,532
Vibroplant plc
Notes
1. Basis of preparation
The interim financial statements have been prepared on the basis of the
accounting policies set out in the Group's financial statements as at 31
March 1999 with the exception that the Group has amended its policies to
take account of new Financial Reporting Standard 15. In accordance with
the new Standard the Group will not adopt a policy of revaluation for
land and buildings, however, as permitted by the transitional
arrangements in the Standard, it will retain the current book amounts of
those properties which have previously been revalued.
An estimated tax rate of 30% has been used in the profit and loss account
to reflect the estimated tax charge for the full year.
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. Trading performance of acquisitions
The trading performance of acquisitions in the period is not material in
Group terms and therefore has not been disclosed separately.
4. Reconciliation of movements in consolidated shareholders' funds for the
six months ended 30 September 1999
Six months to Year to 31 Six months to
30 Sept 1999 March 1999 30 Sept 1998
(unaudited) (unaudited)
£000 £000 £000
Profit for the period 1,458 2,642 1,735
Dividends (611) (1,859) (647)
847 783 1,088
Goodwill (write off) /
write back (11) 325 -
Net increase in
shareholders' funds 836 1,108 1,088
Opening shareholders'
funds 46,391 45,283 45,283
Closing shareholders'
funds 47,227 46,391 46,371
5. Earnings per share have been calculated on 45,295,000 shares (1998:
46,185,000) being the weighted average number of shares in issue during
the year. Fully diluted earnings per share have been calculated on
45,388,539 shares (1998: 46,185,000).
6. The Directors are proposing an interim dividend of 1.40 pence (1998: 1.40
pence) per share payable on 10 January 2000 to shareholders on the
register on 10 December 1999. The charge in the profit and loss account
for the current period reflects an adjustment for the interim and final
dividends waived by Vibroplant Trustees Limited with regard to the shares
held for the Group's SAYE scheme.
7. Reconciliation of operating profit to net cash inflow from operating
activities
Six months to Six months to Year to
30 Sept 1999 30 Sept 1998 31 March
(unaudited) (unaudited) 1999
£000 £000 £000
Operating profit 2,423 2,833 4,776
Depreciation and
amortisation 5,161 5,251 10,469
Profit on sale of tangible
fixed assets (908) (1,245) (2,371)
Increase in stocks (21) - (179)
Decrease / (increase) in
debtors 967 (1,271) 1,168
Increase / (decrease) in
creditors 388 409 (58)
Net cash inflow from
operating activities 8,010 5,977 13,805
8. Analysis of net debt (unaudited)
As at Cash Other As at
1 April Flow Acquisitions Non-cash 30 Sept
1999 Changes 1999
£000 £000 £000 £000 £000
Cash at bank and in
hand 43 1,039 - - 1,082
Overdraft (2,733) 2,733 - - -
Medium term loan (6,000) - - - (6,000)
Loan notes (42) 42 - (300) (300)
Finance leases and
hire purchases (8,988) 1,688 - (261) (7,561)
(17,720) 5,502 - (561) (12,779)
Other Information
Year 2000
As set out in the financial statements for the year ending 31 March 1999 the
Group is aware of the risks and uncertainties associated with the effect of
Year 2000 on its operations and those of its customers and suppliers. To
address these issues the Group has a defined Year 2000 policy based on British
Computer Society Standards; it has also adopted the Society's Definition of
Conformity (PD2000-1). The Year 2000 assessment project team, which the Group
has set up has two clear objectives:
* To ensure that the Year 2000 issues, and the Group's policy towards
them are understood throughout the Group and;
* To compile a comprehensive inventory of all IT components and
services in use in the Group and ensure their compliance.
Due to the complex nature of the issues it is not possible to say with
absolute certainty that all of the risks associated with Year 2000 have been
resolved. However, the Group's Year 2000 project is now almost complete. The
estimated total cost of Year 2000 compliance is £700,000. The majority of
these costs are of a capital nature and include a significant element which
would have been incurred in the normal course of events.
Comparative figures
The comparative figures for the financial year ended 31 March 1999 are not the
Group's statutory accounts for that financial year. Those accounts have been
reported on by the Group's auditors and delivered to the Registrar of
Companies. The report of the auditors was unqualified and did not contain a
statement under Section 237(2) or (3) of the Companies Act 1985.
Independent review report by KPMG Audit plc to Vibroplant Plc
Introduction
We have been instructed by the company to review the financial information set
out on pages 6 to 10 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The Listing
Rules of the London Stock Exchange require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where they are to be
changed in the next annual accounts in which case any changes, and the reasons
for them, are to be disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4: Review of interim financial information issued by the Auditing
Practices Board. A review consists principally of making enquiries of group
management and applying analytical procedures to the financial information and
underlying financial data and, based thereon, assessing whether the accounting
policies and presentation have been consistently applied unless otherwise
disclosed. A review is substantially less in scope than an audit performed in
accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit. Accordingly we do not express an audit opinion on the
financial information.
Review conclusion
On the basis of our review we are not aware of any material modification that
should be made to the financial information as presented for the six months
ended 30 September 1999.
KPMG Audit plc
Chartered Accountants
Leeds
24 November 1999
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