Interim Results

Vp PLC
02 December 2004


Press Release                                                   2 December 2004



                                     Vp plc

                             ('Vp' or 'the Group')

                                Interim Results


Vp plc, the equipment rental specialist, today announces its interim results for
the six months ended 30 September 2004.



Highlights

•  turnover up 11% to £45.6 million (2003: £40.9 million)

•  profit before tax (pre goodwill) increased by 16% to £4.9 million 
   (2003: £4.3 million)

•  profit before tax increased by 15% to £4.7 million (2003: £4.1 million)

•  earnings per share improved by 16% to 7.52 pence (2003: 6.47 pence)

•  interim dividend increased by 9% to 1.75p per share (2003: 1.6 pence)

•  net debt reduced to £3.4 million (31 March 2004: £7.5 million),
   representing gearing of 6%

•  return on capital employed 17% (2003: 14%)


Jeremy Pilkington, Chairman commented:



'Our performance in the first half of this financial year underlines the breadth
and strength of our business units.  We will continue to use our financial
strength in support of growth within all our business areas.'

For further information please contact:


Vp plc
Jeremy Pilkington, Chairman                            Tel: [phone]
[e-mail]                                        www.vpplc.com
Neil Stothard, Group Managing Director
[e-mail]
Mike Holt, Group Finance Director
[e-mail]

Abchurch
Henry Harrison-Topham / Justin Heath                   Tel: [phone]
[e-mail]                               www.abchurch-group.com





CHAIRMAN'S STATEMENT



FINANCIAL OVERVIEW



I am pleased to report on a further period of very satisfactory progress for Vp
in the six months to 30 September 2004.  The overall performance of the Group
was strong, delivering a 15% increase in profit before tax, to £4.7 million
(2003: £4.1 million) on  turnover rising by 11% to £45.6 million (2003: £40.9
million).  Earnings per share improved in line with profit growth to 7.52 pence
(2003: 6.47pence).



The excellent cash generative qualities of the Group were demonstrated by a cash
inflow from operating activities of £9.3 million (2003: £7.6 million).  Capital
investment in the rental fleet totalled £7.8 million (2003: £6.2 million).  No
acquisitions were made in the period.  Net debt at 30 September 2004 was £3.4
million (31 March 2004: £7.5 million) representing gearing of 6% on shareholders
funds of £54.4 million.  Return on capital employed rose to 17% (2003: 14%).



Recognising the performance and prospects for the Group, the Board has declared
an increased interim dividend of 1.75 pence per share (2003: 1.60 pence), an
increase of 9%.  This dividend will be payable on 7 January 2005 to Shareholders
registered as at 10 December 2004.



BUSINESS OVERVIEW



Groundforce



Rental and sales of excavation support systems to the water, civil engineering
and construction industries, plus three specialist offerings: Piletec - pile
driving and breaking; Stopper Specialists - pipe integrity testing; Survey
Technology - surveying and water flow measurement.



Groundforce has again produced excellent results on the back of broadly based
demand for both the core excavation support products and its specialist
services.  Turnover rose by 51% to £12.7 million (2003: £8.4 million) and
operating profits were 26% ahead at  £2.8 million (2003: £2.2 million).



The core shoring activity enjoyed good trading and last year's acquisitions
provided additional impetus to strong underlying organic growth.  Demand
continues from the run out of the current five year water industry asset
management plan (AMP3) which ends in March 2005.  We look forward to an early
implementation of the subsequent AMP4 programme.



The specialist activities within the division, Piletec, Stoppers and Survey
Technology all progressed well in the period.



UK Forks



Hire of rough terrain material handling equipment to industry, residential and
general construction.



UK Forks had a satisfactory first half.  Turnover rose 3% to £6.4 million (2002:
£6.2 million) and the business reported operating profits of £0.8 million (2003:
£0.8 million).  Progress continues to be made across all markets including
residential construction where stronger alliances with a number of major
housebuilders offer the prospect of increased market share.



Airpac Oilfield Services



Rental of specialist air compressors and associated equipment to the
international oil and gas exploration and development markets.



Turnover increased by 16% to £2.2 million (2003: £1.9 million) and operating
profits doubled to £0.6 million (2003: £0.3 million).   Airpac enjoyed an
excellent period of trading with both the North Sea and international markets,
including our Singapore based operation, being very positive.  The current high
price of crude oil is supporting a buoyant level of exploration and development
activity.



Hire Station



Rental and sale of small tools to industry and construction plus two specialist
offerings: Safeforce - safety and environmental products, Lifting Point -
materials handling and lifting gear hire.



Turnover in the period was £17.4 million (2003: £18.8 million) with an operating
loss of £0.3 million (2003: profit of £0.1 million).  This loss, whilst
disappointing, disguises the significant progress made during the first half
within this recovering business.  Trading in the first quarter was weak but a
steady recovery saw the core tool hire business move into profit in the second
quarter.  Progress in the relatively new Safeforce and Lifting Point businesses
has been slower than anticipated.  The management of these specialist activities
has been merged to accelerate the rate of improvement.



Torrent Trackside



Hire of portable rail infrastructure equipment, lighting and related services to
the rail renewals and maintenance industry.



Turnover rose 23% to £6.9 million (2003: £5.6 million) with operating profit
increasing 25% to £1.3 million (2003: £1.1 million).  Whilst we have experienced
the anticipated margin pressure at Torrent, this result represents a highly
creditable performance.  The renewals sector has been strong and maintenance
activity has continued at a satisfactory but reduced level.



GROUP OUTLOOK



Our performance in the first half of this financial year underlines the breadth
and strength of our business units.  We will continue to use our financial
strength in support of growth within all our business areas.



We expect a satisfactory outcome for the year.





Jeremy Pilkington
Chairman
2 December 2004




Vp plc
Consolidated profit and loss account


                                            Notes       Six months to        Six months to              Year to
                                                          30 Sep 2004          30 Sep 2003          31 Mar 2004
                                                           (unaudited)         (unaudited)

                                                                  £000                £000                 £000

Turnover                                                        45,601              40,917               83,497

Trading profit                                                  10,818               9,858               20,211

Depreciation                                                   (5,709)             (5,395)             (11,180)

Operating profit before goodwill                                                                          9,031
amortisation                                                     5,109               4,463

Amortisation of goodwill                                         (211)               (174)                (377)

Operating profit                                                 4,898               4,289                8,654

Profit on disposal of properties                                     -                   -                  643


Profit on ordinary activities before
interest                                                         4,898               4,289                9,297

Net interest payable                                             (188)               (210)                (429)

Profit on ordinary activities before
taxation                                                         4,710               4,079                8,868

Taxation                                                       (1,460)             (1,264)              (2,529)

Profit on ordinary activities after
taxation                                                         3,250               2,815                6,339

Dividends                                      4                 (761)               (698)              (2,142)




Retained profit for the period                                   2,489               2,117                4,197

Earnings per 5p ordinary share                 5                 7.52p               6.47p               14.59p

Diluted earnings per 5p ordinary share         5                 7.26p               6.33p               14.20p

Earnings per 5p ordinary share before          5                 8.01p               6.87p               15.46p
goodwill amortisation

Dividend per 5p ordinary share                 4                 1.75p               1.60p                5.00p





All the activities reflected in the profit and loss account are continuing as
defined by FRS 3.






Vp plc
Consolidated balance sheet


                                       30 Sep 2004                31 Mar 2004                30 Sep 2003
                                       (unaudited)                                            (unaudited)
                                                                    Restated                   Restated

                                        £000         £000           £000        £000           £000        £000
Fixed assets

Intangible assets - goodwill           7,052                       7,136                      6,453
Tangible assets                       48,073                      49,911                     50,245
                                                   55,125                     57,047                     56,698

Current assets
Stocks                                 2,098                       2,018                      1,934
Debtors                               23,131                      21,694                     21,713
Cash at bank and in hand               4,794                       1,087                      1,207
                                      30,023                      24,799                     24,854

Creditors: amounts falling due
within one year                     (18,491)                    (17,384)                   (26,463)

Net current assets /
(liabilities)                                      11,532                      7,415                    (1,609)

Total assets less current
liabilities                                        66,657                     64,462                     55,089

Creditors: amounts falling due
after more than one year                          (8,203)                    (8,313)                      (403)

Provisions for liabilities and
charges                                           (4,044)                    (4,319)                    (4,325)


Net assets                                         54,410                     51,830                     50,361



Capital and reserves
Called up share capital                             2,309                      2,309                      2,309
Share premium account                              16,192                     16,192                     16,192
Revaluation reserve                                   599                        599                        832
Profit and loss account                            35,283                     32,703                     31,001
Equity shareholders' funds                         54,383                     51,803                     50,334
Equity minority interests                              27                         27                         27
                                                   54,410                     51,830                     50,361




Vp plc
Consolidated cash flow statement

                                                Note          Six months to      Six months to          Year to
                                                                30 Sep 2004        30 Sep 2003      31 Mar 2004
                                                                (unaudited)        (unaudited)
                                                                       £000              £000              £000

Net cash inflow from operating activities          6                  9,283             7,622            16,791

Net cash outflow from returns on investments
and servicing of finance                                              (196)             (203)             (442)

Tax paid                                                            (1,521)             (819)           (2,407)


Net cash outflow from capital expenditure
and financial investment                                            (3,578)           (4,675)           (6,484)

Net cash inflow / (outflow) from
acquisitions and disposals                                               55           (3,087)           (6,465)


Equity dividends paid                                                     -                 -           (1,984)


Cash inflow / (outflow) before management of
liquid resources and financing                                        4,043           (1,162)             (991)


Net outflow from financing                                            (341)             (961)           (1,252)

Increase / (decrease) in cash in the period                           3,702           (2,123)           (2,243)





Vp 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
2004, with the exception that the Group has amended its policies to take account
of UITF 17 (Revised) and UITF 38 in relation to the cost of share options and
the presentation in the Balance Sheet of shares held by the Employee Trust.
Prior year adjustments have been made to the Balance Sheet to reflect the
adoption of these new standards. No prior year adjustments have been made to the
Profit and Loss account on the basis that the difference is not material.


A tax rate of 31% has been used in the profit and loss account to reflect the
estimated tax charge for the full year.


The Group has reviewed the implications of implementing International Financial
Reporting Standards (IFRS).  Results for the full year ending 31 March 2005 will
be reported under UK GAAP.  The 2005 interim results will be the first set of
results for which IFRS is mandatory and a reconciliation to IFRS will be
provided for comparative purposes.



2. Total recognised gains and losses


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 six months ended 30 September 2004


                                                          Six months to            Year to   Six months to 
                                                            30 Sep 2004        31 Mar 2004     30 Sep 2003
                                                            (unaudited)                        (unaudited)
                                                                   £000               £000            £000

          Profit for the period                                   3,250              6,339           2,815
          Dividends                                               (761)            (2,142)           (698)
          Net increase in shareholders' funds                     2,489              4,197           2,117
          Net movement in the period for gains/
          losses on share options and disposal of
          shares                                                    139                 10              14
          Net movement in shares held by Employee
          Trust at cost                                            (53)              (793)           (186)
          Foreign exchange difference                                 5                  -               -
          Increase in shareholders' funds                         2,580              3,414           1,945
          Opening shareholders' funds                            51,803             49,921          49,921
          Prior year adjustments:
          Reclassification of shares held by
          Employee Trust at cost                                      -            (1,715)         (1,715)
          Reversal of provision for cost of share
          options                                                     -                183             183
          Closing shareholders' funds                            54,383             51,803          50,334





4. The Directors are proposing an interim dividend of 1.75 pence (2003: 1.60
pence) per share payable on 7 January 2005 to shareholders on the register on 10
December 2004.  The profit and loss account charge for dividends reflects the
adjustments for the interim and final dividends waived by the Vp Employee Trust
in relation to the shares it holds for the Group's share option schemes.



5. Earnings per share have been calculated on 43,232,175 shares
(2003: 43,525,026) being the weighted average number of shares in issue during
the year. Diluted earnings per share have been calculated on 44,785,682 shares
(2003: 44,439,546).



6. Reconciliation of operating profit to net cash inflow from operating 
activities.

                                                             Six months to        Six months to       Year to
                                                               30 Sep 2004          30 Sep 2003   31 Mar 2004
                                                               (unaudited)          (unaudited)
                                                                      £000                 £000          £000

       Operating profit                                              4,898                4,289         8,654
       Depreciation                                                  5,709                5,395        11,180
       Amortisation of goodwill                                        211                  174           377
       Profit on sale of tangible fixed assets                       (405)                (482)       (1,209)
       (Increase) / decrease in stocks                                (80)                  258           175
       Increase in debtors                                         (1,367)              (1,810)       (1,922)
       Increase / (decrease) in creditors                              317                (202)         (464)

       Net cash inflow from operating activities                     9,283                7,622        16,791





7. Analysis of net debt (unaudited)
                                                            As at     Cash flow        Exchange         As at
                                                       1 Apr 2004                   differences   30 Sep 2004

                                                             £000          £000            £000          £000


Cash at bank and in hand                                    1,087         3,702               5         4,794
Medium term loan                                          (8,111)           100               -       (8,011)
Loan notes                                                  (245)            95               -         (150)
Finance leases and hire purchase                            (223)           146               -          (77)

                                                          (7,492)         4,043               5       (3,444)



Other information


Comparative figures


The comparative figures for the financial year ended 31 March 2004 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 Vp plc


Introduction


We have been engaged by the company to review the financial information set out
on pages 5 to 9 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.


This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Listing
Rules of the Financial Services Authority.  Our review has been undertaken so
that we might state to the company those matters we are required to state to it
in this report and for no other purpose.  To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the company
for our review work, for this report, or for the conclusions we have reached.



Directors' responsibilities



The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules which 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 guidance contained in Bulletin 1999/
4: Review of interim financial information issued by the Auditing Practices
Board for use in the United Kingdom. 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 modifications that
should be made to the financial information as presented for the six months
ended 30 September 2004.



KPMG Audit Plc
Chartered Accountants
Leeds
2 December 2004




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