Preliminary Results
Vp PLC
09 June 2005
Press Release 9 June 2005
Vp plc
('Vp' or 'the Group')
Preliminary Results
Vp plc, the equipment rental specialist, today announces its preliminary results
for the year ended 31 March 2005.
Highlights
• Turnover up 8% to £90.0 million (2004: £83.5 million)
• Profit before tax and goodwill up 14% to £9.8 million (2004:
£8.6 million*)
• Earnings per share pre goodwill increased by 14% to 16.00 pence
(2004: 14.05 pence*)
• Total dividend increased by 15% to 5.75 pence (2004: 5.0 pence) based
on recommended final dividend of 4.0 pence per share
• Return on capital employed improved to 17% (2004:16%)
• Net debt of £2.4 million (2004: £7.5 million), representing gearing of
4%, after capital investment of £15.1 million
*Adjusted for prior year exceptional profit of £0.6m on property disposals
Jeremy Pilkington, Chairman commented:
'Our businesses operate in a variety of dynamic economic environments which
continually present challenges, occasionally setbacks, but always opportunities.
With a number of identified opportunities and a very strong balance sheet, we
believe that the outlook for the Group remains positive.'
For further information please contact:
Vp plc
Jeremy Pilkington, Chairman Tel: +44 (0) 1423 533 445
jeremypilkington@vpplc.com www.vpplc.com
Neil Stothard, Group Managing Director
neil.stothard@vpplc.com
Mike Holt, Group Finance Director
mike.holt@vpplc.com
Abchurch
Henry Harrison-Topham / Justin Heath Tel: +44 (0) 20 7398 7700
henry.ht@abchurch-group.com www.abchurch-group.com
CHAIRMAN'S STATEMENT
Results
I am very pleased to report a further year of progress for the Group. Profit
before tax rose 14% (before the prior year exceptional profit on property
disposals) to £9.4 million (2004: £8.2 million excluding £0.6 million
exceptional profit). Turnover rose 8% to £90.0 million.
It is noteworthy that this level of revenue and profit growth has been achieved
organically.
Earnings per share, similarly adjusted for the prior year exceptional, rose by
14% to 15.04 pence and return on capital employed increased to 17% (2004: 16%).
In light of this continued progress your Board is recommending a final dividend
of 4.0 pence per share making a total for the year of 5.75 pence (2004: 5.0
pence), an increase of 15%. The dividend is payable on 3 October 2005 to
shareholders registered as at 9 September 2005.
The Group's excellent operating cash flow has further improved our gearing
position after capital investment totalling £15.1 million. Net debt at 31st
March 2005 stood at £2.4 million (2004: £7.5 million), representing gearing of
4%.
The Board is committed to taking advantage of this financial strength to pursue
both organic and acquisition growth opportunities as they arise.
Overview
Vp comprises five specialist rental businesses, all sharing a core expertise in
asset management. Each business explicitly seeks a market leadership position
within its sector.
The primary markets we serve are:
• Civil engineering and water utilities : Groundforce
• Residential and general construction : UK Forks
• Oil and gas exploration and development - North Sea and Worldwide :
Airpac Oilfield Services
• General construction, repair and maintenance : Hire Station
• Rail infrastructure support : Torrent Trackside
This breadth of market exposure provides us with the resilience to withstand the
impact of adverse trading in any one individual sector.
It was very pleasing to see a number of our businesses achieve ISO 9001 quality
and ISO 14001 environment accreditation during the year.
Business performance
Groundforce has had an excellent year delivering 7% profit growth to £5.7
million on turnover of £24.6 million. UK infrastructure spending remains strong
and evolving safety and regulatory regimes continue to provide us with
opportunities for new product introduction. The new five year asset management
plan for the water industry (AMP4) has now commenced and will help to underpin
the prospects for this important sector as the work programme is rolled out.
UK Forks has produced another very satisfactory result with profits ahead by 11%
at £1.4 million on turnover up by 3% to £12.8 million. UK Forks continues to
experience firm demand from its core housebuilding market as well as from
general construction activity. We continue to leverage the unique business
model of UK Forks and have pleasingly seen a further improvement in ROCE to 14%,
being the fifth consecutive year of improvement.
Airpac Oilfield Services has focused over the last couple of years on
diversifying its service offering and extending its geographical presence. This
year's result shows the benefits of this strategy with profits doubling to £1.1
million on revenues ahead by 22% at £4.5 million. We expect the continued
strength of the oil price to support satisfactory levels of international oil
and gas exploration and development over the coming year.
At Hire Station, the loss of £0.7 million was disappointing but almost entirely
attributable to underperformance at Lifting Point, one of our newer product
offerings. Lifting Point has subsequently been merged with our other specialist
activity, Safeforce, and together they represent a much more viable business.
The remaining tools business, after a very poor first quarter, has traded
profitably with the anticipated exception of the extended Christmas and New Year
holiday period. The significant measures taken by management during the year
should enable Hire Station to return to profit in the new financial year.
Torrent produced a very satisfactory result in a year not without its
challenges. Profits rose by 8% to £2.5 million on turnover up 15% to £13.3
million. Post the year end, Torrent learnt that its tender for the provision of
maintenance plant to Network Rail had not been successful. However, Torrent's
renewals workload remains buoyant and opportunities elsewhere within the rail
sector, notably within London Underground, are being developed.
A more detailed commentary on these activities follows in the Business Review.
Appointments
In July we welcomed Mike Holt to the Board as Group Finance Director. This
appointment has enabled Neil Stothard, who has fulfilled this role since joining
the Group in 1997, to take up his new position as Group Managing Director. The
Board believe that this strengthening of the senior management team will better
enable the Group to take advantage of the identified opportunities for
investment and growth.
It remains my pleasurable duty to thank all members of the Group for their
loyalty and hard work during the year which has contributed to the very
satisfactory performance that we are now reporting.
Outlook
Our businesses operate in a variety of dynamic economic environments which
continually present challenges, occasionally setbacks, but always opportunities.
Overall we believe that the outlook for the Group remains positive.
Jeremy Pilkington
Chairman
8 June 2005
Business Review
The Group has delivered another good result for the year ended 31 March 2005
with pre-tax profits of £9.4 million. This represents growth of 14% excluding
the prior year exceptional profit on property disposals. This growth is all the
more impressive given that no acquisitions were made in the year. Revenues grew
by 8% to £90.0 million.
The strong cash generative qualities of the Group were underlined with net debt
reducing by £5.1 million to £2.4 million, representing 4% gearing, after a gross
capital investment of £15.1 million in the year.
The market sectors within which we operate were broadly supportive with
particularly good demand from the oil and gas, civil engineering and rail
sectors.
Groundforce
Excavation support systems and specialist products for the water, civil
engineering and construction industries including Piletec - pile driving and
breaking; Stopper Specialists - pipe integrity testing; Survey Technology -
surveying and water flow measurement.
Turnover £24.6m (2004: £19.3m)
Operating Profit £5.7m (2004: £5.3m)
Investment in Rental fleet £2.6m (2004: £1.8m)
This was a year of further progress for Groundforce, which consolidated its
position as the leading provider of ground support systems and related
activities to the civil engineering and construction sectors. Revenues grew by
27% to £24.6 million, generating a 7% increase in profits to £5.7 million.
Shoring
The shoring activity enjoyed another buoyant year with strong demand from the
contractors engaged in the final year of the AMP 3 programme. In addition a
number of larger civil engineering and construction projects, including Heathrow
Terminal 5, delivered useful revenue growth. Groundforce also supplied a number
of larger, clear-span bracing products to projects in Ireland during the year.
A key focus for operations was the streamlining of the depot structure and the
rationalisation of the multiplicity of shoring products in the hire fleet
resulting from our recent acquisitions. This involved selective disposal and
relocation of certain product lines supported by investment in new product. We
enter the new financial year with the hire fleet in excellent shape.
We anticipate that there will be some slowing down in demand for shoring
products until the AMP 4 programme builds up later in 2005. Longer term,
Groundforce remains very well positioned to satisfy AMP 4 demand for shoring
product over the next 5 years.
The technical design team achieved ISO9001 quality accreditation in the year.
Piletec, Stopper Specialists and Survey Technology
Piletec performed well, gaining market share and expanding its product offering
to include free suspended piling hammers and sheet piles for rental and sales.
A new location was opened in Oldham to provide support to Piletec's expansion in
the North.
Stopper Specialists traded well and like Piletec expanded geographically,
opening a new location in Leeds towards the end of the year.
Survey Technology completed its first year with the Group and is now in a
position to establish itself in the market for the hire, sale and maintenance of
survey equipment.
All three businesses achieved ISO 9001 quality, and ISO 14001 environmental,
accreditation in the year.
UK Forks
Rough terrain material handling equipment for industry, residential and general
construction.
Turnover £12.8m (2004: £12.4m)
Operating Profit £1.4m (2004: £1.3m)
Investment in Rental fleet £3.1m (2004: £2.5m)
UK Forks further consolidated its position as the UK's leading specialist hirer
of telescopic handlers delivering 11% profit growth from a 3% increase in
revenue. Return on capital employed increased to 14% in the year, continuing the
trend of improving quality of earnings from this division.
The year included the challenges of intense price competition and the threat of
adverse market conditions in the housebuilding sector. In spite of this,
progress was made in the general construction markets and further growth was
secured in the housebuilding sector. With the Government's objectives for
widening housing opportunity and choice (PPG3) now firmly in place, sites have
had to become more intensively developed and this has led to growth in demand
for the versatility of the machines at the extreme ends of the size range we
offer, i.e. 4 metre and 17 metre machines.
The hire fleet grew by 10% in the year to nearly 1,200 machines.
We continue to develop relationships with a number of larger housebuilders who
recognise the benefits to their businesses of the quality and consistency of
service provided by the unique UK Forks central hire desk and fleet management
regime.
The new financial year has started positively. We anticipate that the market
will remain stable for UK Forks over the coming year and that we will continue
to attract further customers to our consolidated, single source, national
offering.
Airpac Oilfield Services
Equipment and service providers to the international oil and gas exploration and
development markets.
Turnover £4.5m (2004: £3.7m)
Operating Profit £1.1m (2004: £0.5m)
Investment in Rental fleet £0.5m (2004: £0.5m)
Airpac enjoyed an excellent year with profits more than doubling to £1.1
million. Turnover grew to £4.5 million, an increase of 22%. Strong
performances were recorded both in the North Sea and in South East Asia across
all market segments.
Almost half of all revenues are now derived from non-North Sea contracts. This
activity is supported from both our Singapore facility and our UK bases in
Aberdeen and Great Yarmouth depending upon product availability and logistics.
Our Singapore operation continues to consolidate its leading position in the
well testing segment within the Asia-Pacific region and to develop our range of
capabilities across other types of projects.
The oil and gas exploration market has been aided by the comparatively high oil
price resulting in continued oil company spending and improved drilling rig
utilisation. Well testing support operations benefited from a high level of
drilling activity and the offshore structural fabric maintenance market (mainly
in the North Sea) was also busy. Project related revenues were also strong,
primarily generated from pipeline dewatering and drying work. This saw us
provide services to a number of high profile field development projects both
domestically and overseas.
It was also pleasing to see valuable contributions from other emerging
applications for our specialist compressors and steam generators such as drill
cuttings transportation and offshore pipework de-scaling operations. The
provision of skilled operating personnel in support of our contracts was also
buoyant.
During the year we attained ISO9001 and ISO14001 accreditation for our quality
and environmental management systems.
The general market outlook remains positive for the oilfield services sector and
our focus in the coming year will be to capitalise on the current strength of
demand and to fully explore further opportunities for our services in other
international markets.
Hire Station
Tools and specialist products for industry and construction, including Safeforce
- safety and environmental products and Lifting Point - materials handling and
lifting gear hire.
Turnover £34.8m (2004: £36.5m)
Operating Profit £(0.7)m (2004: £(0.4)m)
Investment in Rental fleet £5.7m (2004: £4.2m)
Hire Station completed a very active year of repositioning the business against
a background of disappointing results. Over the period the business has been
re-focussed in all the key areas of operations, hire desks, customer management
and purchasing.
Whilst tools stabilised after a poor opening quarter, and Safeforce continued to
develop, the Lifting Point business had a very poor year.
We enter the new financial year with a Tool Hire Division, incorporating the
Hire Station One Call offering, and a Specialist Products Division, created in
December 2004, incorporating Safeforce and Lifting Point under unified
management.
Tool Hire
After a difficult first quarter the financial performance of tools improved,
moving into profits apart from during the extended Christmas and New Year
holiday season.
The business is now organised into five regions supported by the
well-established One Call central hire desk. The first regional hire desk was
launched in the North West towards the end of the year and we have seen
excellent customer acceptability with year on year contract and revenue growth
in this region.
Specialist Products
At the end of 2004 the Safeforce and Lifting Point businesses were merged to
form the Specialist Products division. This created a more streamlined business
capable of delivering growth from its network of ten locations across the UK
supported by a national hire desk. The central booking system provides the
point of contact for major customers and complements the service provided at
branch level. This is similar to the business model successfully adopted
elsewhere within Vp.
Safeforce, still a relatively new business, produced year on year revenue growth
of 33%.
Lifting Point had a very poor year and was responsible for the majority of the
loss reported by Hire Station. The merger with Safeforce was vital to the
creation of a cost base which the Lifting Point business could sustain going
forward. This is now in place.
The combined activity has started the new financial year well and we are hopeful
of a much improved performance from Specialist Products in the coming year.
With a very difficult year behind it we believe this business will provide
opportunities for profit growth in the future.
Torrent Trackside
Portable rail infrastructure equipment, lighting and related services for the
railway renewals and maintenance industry.
Turnover £13.3m (2004: £11.6m)
Operating Profit £2.5m (2004: £2.3m)
Investment in Rental fleet £1.5m (2004: £1.8m)
This has been a challenging year in the rail industry but Torrent have produced
another strong performance and continued growth, with all revenue streams
showing improvement. Revenues increased by 15% to £13.3 million and operating
profit increased 8% to £2.5 million.
Torrent has continued to strengthen its position in the specialist rail support
market by supplying a comprehensive single source solution to customers'
requirements. Torrent remains the supplier of choice for most major rail
contractors.
The market has changed considerably since Network Rail became the primary
maintenance contractor and it was disappointing not to have been selected by
Network Rail for the provision of maintenance plant. However, we are well
positioned nationally to provide secondary level support to the maintenance
element going forward.
Torrent has been successful in the expansion of its track renewals customer base
and in London Underground related activity, where we have been engaged in the
supply of plant, trackside lighting and operator training services.
Compliance continues to play a central role in our customer service and we are
justifiably proud of the consistently good results we achieve in the rail
industry's 'Link up' audit and certification process.
Going forward, the major renewals contractors have a clear indication of their
work stream and are reducing their plant holdings and looking to the hire market
to satisfy their needs. This should assist in securing our work levels over the
next financial year, where we expect market activity to remain strong but
competitive.
Prospects
The Group enters the new financial year with significant growth aspirations
supported by a strong financial position.
Neil Stothard
Group Managing Director
8 June 2005
Consolidated profit and loss account
For the year ended 31 March 2005
Notes 2005 2004
£000 £000
Turnover 90,044 83,497
Trading profit 21,177 20,211
Depreciation (11,045) (11,180)
Operating profit before goodwill amortisation 10,132 9,031
Amortisation of goodwill (429) (377)
Operating profit 9,703 8,654
Profit on disposal of properties - 643
Profit on ordinary activities before interest 9,703 9,297
Net interest payable (348) (429)
Profit on ordinary activities before taxation 9,355 8,868
Taxation 5 (2,831) (2,529)
Profit for the financial year 6,524 6,339
Dividends 7 (2,502) (2,142)
Retained profit for the financial year 4,022 4,197
Earnings per 5p ordinary share 6 15.04p 14.59p
Earnings per 5p ordinary share before goodwill 6 16.00p 15.46p
amortisation
Earnings per 5p ordinary share before goodwill 6 16.00p 14.05p
amortisation and exceptional property profits
Dividend per 5p ordinary share 7 5.75p 5.00p
All the activities reflected in the profit and loss account are continuing, as
defined by FRS 3.
Consolidated balance sheet
At 31 March 2005
31 March 2005 31 March 2004
Restated
£000 £000 £000 £000
Fixed assets
Intangible assets - goodwill 7,039 7,136
Tangible assets 48,676 49,911
55,715 57,047
Current assets
Stocks 2,136 2,018
Debtors 22,069 21,694
Cash at bank and in hand 5,755 1,087
29,960 24,799
Creditors: amounts falling due within one year (16,925) (17,384)
Net current assets 13,035 7,415
Total assets less current liabilities 68,750 64,462
Creditors: amounts falling due after more than one year (8,479) (8,313)
Provisions for liabilities and charges (4,009) (4,319)
Net assets 56,262 51,830
Capital and reserves
Called up share capital 2,309 2,309
Share premium account 16,192 16,192
Revaluation reserve 430 599
Profit and loss account 37,304 32,703
Equity shareholders' funds 56,235 51,803
Equity minority interests 27 27
56,262 51,830
Consolidated cash flow statement
For year ended 31 March 2005
Notes 31 March 2005 31 March 2004
£000 £000 £000 £000
Cash flow from operating activities 8 20,148 16,791
Return on investments and servicing of
finance
Interest paid (479) (435)
Interest received 135 18
Interest element of finance lease rental (6) (25)
payments
Net cash outflow from returns on
investments and servicing of finance (350) (442)
Taxation
UK corporation tax paid (3,277) (2,407)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (15,145) (13,068)
Purchase and sale of investments 153 (793)
Sale of tangible fixed assets 5,957 7,377
Net cash outflow from capital expenditure
and financial investment (9,035) (6,484)
Acquisitions and disposals
Purchase of subsidiaries and businesses
(net of cash and overdraft purchased) (204) (6,465)
Equity dividends paid (2,231) (1,984)
Cash inflow / (outflow) before financing 5,051 (991)
Financing
Medium term loans (111) (143)
Loan notes (120) (590)
Capital element of finance lease rental (156) (519)
payments
Net outflow from financing (387) (1,252)
Increase / (decrease) in cash in the year 9 4,664 (2,243)
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 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 Vp 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 in
either the current or preceding financial year.
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 2005
2005 2004
Restated
£000 £000
Profit for the financial year 6,524 6,339
Dividends (2,502) (2,142)
Retained profit for the period 4,022 4,197
Share option charge in the year and gains/ losses on
disposal of shares 253 10
Net movement in shares held by Vp Employee Trust at
cost 153 (793)
Foreign exchange difference 4 -
Net increase in shareholders' funds 4,432 3,414
Opening shareholders' funds 51,803 48,389
(originally £54,118,000 before deducting prior year
adjustments of £2,315,000)
Closing shareholders' funds 56,235 51,803
5. The current and prior year effective tax rates are slightly lower than the underlying rate due to the
write back of over provisions from previous years.
6. Earnings per share have been calculated on 43,374,133 shares (2004: 43,444,660) being the weighted
average number of shares in issue during the year. A full reconciliation between earnings per share
and adjusted earnings per share will be given in the statutory accounts.
7. The Directors are proposing a final dividend of 4.00 pence (2004: 3.40 pence) per share making a
total dividend for the year of 5.75 pence (2004: 5.00 pence) per share which is payable on 3 October
2005 to shareholders on the register on 9 September 2005.
8. Reconciliation of operating profit to net cash inflow from operating activities
2005 2004
£000 £000
Operating profit 9,703 8,654
Depreciation 11,045 11,180
Amortisation of goodwill 429 377
Profit on sale of tangible fixed assets (1,190) (1,209)
(Increase) / decrease in stocks (94) 175
Increase in debtors (251) (1,922)
Increase / (decrease) in creditors 506 (464)
Net cash inflow from operating activities 20,148 16,791
9. Analysis of net debt
As at Cash Other non cash As at
changes
1 April Flow 31 March
2004 2005
£000 £000 £000 £000
Cash at bank and in hand 1,087 4,664 4 5,755
Medium term loans (8,111) 111 - (8,000)
Loan notes (245) 120 - (125)
Finance leases and hire purchase (223) 156 - (67)
(7,492) 5,051 4 (2,437)
10. The financial information set out above does not constitute the company's statutory accounts for the
years ended 31 March 2005 or 2004. The statutory accounts for 2004 have been delivered to the
registrar of companies and those for 2005 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 2005 will be posted to shareholders in July
and the Annual General Meeting will be held on 8 September 2005.
This information is provided by RNS
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