Vp PLC : Final Results
| Press Release | 4 June 2013 |
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 2013.
Highlights
Profit before tax and amortisation increased 9% to £17.4 million (2012: £16.0 million)
Basic earnings per share pre-amortisation improved 15.3% to 35.47 pence
Revenues of £167.0 million, 3% ahead of prior year (2012: £161.5 million)
Operating margins increased to 11.9% (2012: 11.5%)
Return on average capital employed improved to 13.3% (2012: 13.0%)
Modest increase in net debt to £45.3 million (2012: £40.4 million) after funding:-
Capital investment in the fleet of £22.5 million
Acquisitions of £4.1 million
Tender offer for shares completed at £7.8 million
Final dividend proposed of 9.0 pence per share, making a total of 12.25 pence for the full year (2012: 11.35 pence), an increase of 8%
Solid balance sheet with strong operational cash flow of £39.8 million
Jeremy Pilkington, Chairman of Vp plc, commented:
"The Group has delivered another strong performance with increased profits, margins and return on capital employed. Whilst the economic background still contains significant uncertainties and challenges, this set of results again demonstrates the Group's ability to continue to deliver value for shareholders even within a relatively unsupportive trading environment.
"Each of our businesses continues to work hard to uncover opportunities for investment and growth and we believe that the Group has positive momentum moving into the new financial year. We look forward to another year of progression as we maintain our focus on delivering consistent, quality and sustainable returns over the long 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 / Shabnam Bashir / Jamie Hooper | Tel: +44 (0) 20 7398 7719 |
| jamie.hooper@abchurch-group.com | www.abchurch-group.com |
CHAIRMAN'S STATEMENT
I am very pleased to report a further year of very satisfactory performance for the Group.
Profits before tax and amortisation improved 9% to £17.4 million (2012: £16.0 million) on revenues up 3% at £167.0 million (2012: £161.5 million) reflecting the progress on margin improvement that we have made in the period. Basic earnings per share pre-amortisation increased by 15.3% and return on average capital employed also moved positively to 13.3%.
Borrowings rose £4.9 million to £45.3 million after investing £22.5 million in the rental fleet, funding the £7.8 million share buyback and spending £4.1 million on acquisitions, again demonstrating the strength of our cash flow and excellent working capital management. Gearing remained broadly unchanged at 45%. Post the year end, we renewed our bank facilities on improved terms and with longer maturities.
In recognition of the progress the Group has made this year, the board is recommending a final dividend of 9.0 pence per share (2012: 8.25 pence) making a total for the year of 12.25 pence per share, an uplift of 8% and in line with underlying pre-tax earnings growth. Subject to shareholders' approval at the Annual General Meeting on 23 July 2013, it is proposed to pay the final dividend on 9 August 2013, to members registered as of 12 July 2013.
The activities acquired from Balfour Beatty Group Limited for £4.1 million in July 2012 have been successfully integrated into our ESS Safeforce and UK Forks businesses and are performing in line with our expectations at the time of the acquisition.
Whilst the economic background still contains significant uncertainties and challenges, we feel this set of results again demonstrates the Group's ability to continue to deliver value for shareholders even within a relatively unsupportive trading environment. Each of our businesses continues to work hard to uncover opportunities for investment and growth and we believe that we have positive momentum moving into the new financial year.
On behalf of the shareholders and the Board, it is my pleasurable duty to recognise the contribution of employees throughout the Group towards the achievement of these fine results.
Jeremy Pilkington
Chairman
4 June 2013
BUSINESS REVIEW
Overview
Vp plc is a specialist rental business. Our objective is to deliver sustainable, quality returns on behalf of our shareholders by providing products and services to a diverse range of end markets including construction, civil engineering, rail, water, oil and gas, outdoor events and housebuilding. Our strategy is delivered through our expertise in asset management, exceeding customer expectations, maintaining and utilising our financial strength and retaining and attracting the best people. The Group comprises six specialist, diverse and market leading operating divisions.
The Group has delivered another strong performance with increased profits, margins and return on average capital employed (ROACE) despite the on-going challenges of a low growth market background.
| Year ended 31 March 2013 | Year ended 31 March 2012 | |
| Revenue | £167.0 million | £161.5 million |
| Operating profit before amortisation | £19.8 million | £18.5 million |
| Operating margin | 11.9% | 11.5% |
| ROACE | 13.3% | 13.0% |
| Investment in rental fleet | £22.5 million | £32.1 million |
Revenues grew by 3% to £167.0 million, a new record level for the Group. This relatively modest growth demonstrates a focus on revenue quality, rather than quantity. Operating profits before amortisation were £19.8 million, 7% ahead of prior year. Operating margins increased to 11.9% (2012: 11.5%) and return on average capital employed (ROACE) also increased, to 13.3% (2012: 13.0%), demonstrating the success of our focus on quality of returns.
Most markets within which the Group operates delivered growth, in particular infrastructure, housebuild, transmission and water. The one market negative was a subdued performance in oil and gas where the previously highlighted gap in liquefied natural gas (LNG) related activity, after two strong prior years, saw revenues and profits decline.
Capital expenditure on rental fleet was £22.5 million (2012: £32.1 million) as we continued to invest only where the opportunity justified it. In parallel with new investment, the policy of withdrawing from low margin asset types has continued, further contributing to the enhancement of earnings quality. In addition we invested £4.1 million in acquisitions during the year which have integrated well into the business.
Disposal of hire fleet is an important dynamic of the business and generated fleet sale proceeds of £9.6 million (2012: £7.4 million) and profits on disposal of £2.6 million (2012: £2.2 million).
The Group is structured around its diversity and breadth of market exposure and we have, yet again, demonstrated the strength of this position as the net result for shareholders is one of further significant earnings growth.
UK FORKS
Rough terrain material handling equipment for industry, residential and general construction.
| Year ended 31 March 2013 | Year ended 31 March 2012 | |
| Revenue | £14.1 million | £12.6 million |
| Operating profit before amortisation | £2.1 million | £1.5 million |
| Investment in rental fleet | £0.4 million | £8.6 million |
The UK Forks business delivered a strong year on year performance in challenging conditions, reporting profits up 40% at £2.1 million (2012: £1.5 million). We have maintained our construction customer base and have benefited from growth within the national and regional house builders. Further progress has also been made in other market sectors, such as infrastructure.
Hire revenue growth of 12% on the previous year is at the core of the strong divisional performance. Hire rates remain competitive, but despite this we have secured improvements from our long standing customer base, who continue to value our commitment to excellent customer service, high quality equipment and outstanding backup.
Our hire fleet has been developed to enable us to continue to meet customer demands and further enhance the quality of our offering which we believe sets us apart in the market sectors we operate. Capital investment in fleet reduced to £0.4 million (2012: £8.6 million) as the fleet numbers reached a level sufficient to meet current demand.
We have mitigated the impact of supply chain inflation through a combination of effective management of our cost base, as well as achieving increased hire rates and incremental new business during the year.
Looking towards the new financial year we expect little change in market conditions, but we are confident that the business is well placed to build further on the back of new opportunities.
GROUNDFORCE
Excavation support systems, specialist piling solutions and trenchless technology for the water, gas, civil engineering and construction industries.
| Year ended 31 March 2013 | Year ended 31 March 2012 | |
| Revenue | £37.2 million | £32.7 million |
| Operating profit before amortisation | £7.8 million | £6.7 million |
| Investment in rental fleet | £7.3 million | £5.6 million |
Groundforce had an excellent year increasing profits by 16% to £7.8 million from revenues up 14% at £37.2 million.
In the UK, bespoke-designed excavation support opportunities remained robust, as did demand from the infrastructure sector and AMP5. Activity in London was strong and included a portal for Cross Rail at Plumstead and legacy work, post the 2012 Olympics. Outside of the capital, the division was busy in the transmission sector and secured a number of framework agreements in support of the water companies' AMP5 activity.
The business gained full accreditation of ISO18001 and recently gained recognition for innovation and health and safety through a number of construction and civil engineering industry awards.
Piletec continued to perform well despite more national piling contractors closing their doors. A lean structure has enabled the business to respond nimbly to the changes in market demand, whilst capitalising on customer driven opportunities.
In Ireland, where trading conditions remain very tough, market share retention and the introduction of complementary products from within the Group enabled the region to increase its revenue and profits.
The investment in growing the Groundforce business across mainland Europe continued in line with plans. The management team is now in place and a single administration centre in Frankfurt has been established. A measured approach has allowed the business to test customer acceptance of the UK product portfolio and adjust accordingly. Whilst the business inevitably incurred small start up losses, growth came through in the second half and we anticipate moving towards break even during the new financial year.
Capital expenditure on the rental fleet was increased to £7.3 million (2012: £5.6 million) in support of secured new business.
The new financial year holds further good prospects for the division with AMP5 activity expected to peak and the European business building further momentum.
AIRPAC BUKOM OILFIELD SERVICES
Equipment and service providers to the international oil and gas exploration and development markets.
| Year ended 31 March 2013 | Year ended 31 March 2012 | |
| Revenue | £17.4 million | £19.4 million |
| Operating profit before amortisation | £2.0 million | £3.6 million |
| Investment in rental fleet | £2.1 million | £2.0 million |
As expected, Airpac Bukom had a much quieter year with revenues and profitability impacted by a £3.4 million fall in LNG related activity, albeit some of this revenue shortfall was compensated for by improved demand for well testing services. Revenues reduced by 10% to £17.4 million leading to reduced profits of £2.0 million.
In Australia, the completion of the Pluto LNG infrastructure project at Karratha at the beginning of the year meant that revenues fell short of the previous period. However, LNG remains a key opportunity for the business with negotiations underway on a number of projects that we expect to materialise in the new financial year. One such opportunity involves the Queensland Curtis LNG ("QCLNG") project in Queensland where success has recently been achieved for the first phase of testing on Curtis Island. Outside of LNG, activity in Australia increased, with specialist projects and well testing being the main drivers.
Our South East Asia region performed strongly. A range of products was supplied on the Singapore LNG ("SLNG") project on Jurong Island, Singapore, and in December 2012 a contract for the testing of modules being built in Indonesia for the Australia Pacific LNG ("APLNG") project in Australia was undertaken. These modules are destined for delivery to Australia in 2013/14 where further involvement in the project is anticipated. Well test activity increased throughout South East Asia with contracts supplied in Indonesia, Malaysia, Thailand and Myanmar. We have a long established operational presence in Singapore and, coupled with investment in local management, the outlook remains healthy in this region.
In the North Sea, well test activity remained weak. In addition, opportunities in the rig maintenance sector were not as strong as anticipated with a regional shortage of supply helicopters impacting both rig maintenance and well testing activities.
Significant progress was made in certain areas of the Middle East including Kurdistan, where a number of high value rentals were obtained for well test projects. The outlook remains bright in this region.
The African region traded well with good demand, particularly for West Africa and Mozambique. The Americas were quiet, but opportunities going forward are much improved.
Investment in the fleet centred mainly around the refurbishment of core products. Capital expenditure was £2.1 million (2012: £2.0 million).
Whilst Airpac Bukom experienced a quieter trading year, future prospects for the business remain very positive in the LNG, well test and rig maintenance sectors. Our unique global hub network is well developed and as we strengthen regional management, and invest in new products, the business is increasingly positioned to deliver growth.
HIRE STATION
Small tools and specialist equipment for industry and construction.
| Year ended 31 March 2013 | Year ended 31 March 2012 | |
| Revenue | £62.0 million | £60.1 million |
| Operating profit before amortisation | £4.3 million | £3.3 million |
| Investment in rental fleet | £9.4 million | £8.1 million |
Hire Station made further good progress in testing market conditions. Profits increased by 30% to £4.3 million supported by record revenues of £62.0 million.
The division moved its ROACE to in excess of 10% during the year, an important milestone for this business. Intense scrutiny of our asset base during the last couple of years has prompted various divestment decisions where utilisation and returns were poor. Similarly, and more importantly, the review has enabled us to accelerate our investment into new products with better returns and this has played a key part in improving availability, driving revenue and delivering the enhanced returns reported in this statement. Capital expenditure of £9.4 million was up 16% compared to the previous year.
The tool hire division is the largest revenue contributor to Hire Station and operates a national network of branches whose regional day to day activity is supplemented by business generated through our market leading national call centre in Manchester. The call centre processes almost 60% of the revenue generated in tool hire and for the majority of our larger accounts is the preferred method of transacting with our business.
Our relationship with Network Rail continues to go from strength to strength and we experienced a 14% increase in activity from this, our largest account, over the year. Recent announcements from Network Rail regarding their expenditure plans through CP5 give us optimism that activity at current levels can be sustained. Our Virtual Hire business welcomed more partners during the year and we now have over 50 customers using this service.
Two of the key areas of focus within the business are product availability and reliability. We have spent the last 18 months, through our "Project Transform" programme, standardising and improving the way we maintain and service our highly utilised items and this has increased reliability, reduced breakdowns on site and improved the customer experience. At the same time, we have shifted the resource within the branches more towards equipment testing and servicing and this has improved equipment availability, delivering the appropriate revenue benefits whilst allowing us to manage our capital expenditure more wisely.
We have also strengthened the management structure for the coming year with the appointment of a Managing Director for the tool hire business. This is a new role and an important step change in delivering the growth planned for the coming years.
ESS Safeforce, the division's specialist safety rental business, had another excellent year with growth in all of its key revenue streams. We opened a new location in Heathrow with its own confined space training centre, as well as a new branch in Aylesford.
A key development during the year was the successful acquisition of Balfour Beatty's in house safety, survey and communications assets underpinned by a three year exclusive trading agreement. Revenues since the acquisition in July 2012 have been in line with those anticipated.
In October 2012, we carried out a 56 day shutdown at the Milford Haven Oil Refinery utilising our shutdown monitoring system. This was their largest shutdown for many years and our involvement helped deliver an excellent end result. This experience and endorsement will prove extremely beneficial as we promote the service to other refineries around the UK and mainland Europe.
The MEP Hire business, which supplies specialist press fitting and electro fusion equipment delivered further revenue growth to a mechanical and electrical market place that remains challenging. New locations were opened in Bristol, Heathrow, Durham and Burton upon Trent. Hire Station has one of the largest fleets of low level access machines within the market and many MEP customers utilise these products and in the future we intend to further develop this product range within the MEP business.
Hire Station has made satisfactory progress over the past year. We are always working to improve and are not afraid to challenge the existing business models that we operate. Our objective remains to grow revenue, margins and returns and we look forward to another year of progress.
TPA
Portable roadway systems, primarily to the UK market, but also in mainland Europe.
| Year ended 31 March 2013 | Year ended 31 March 2012 | |
| Revenue | £14.9 million | £14.6 million |
| Operating profit before amortisation | £1.3 million | £1.2 million |
| Investment in rental fleet | £2.4 million | £5.1 million |
Whilst TPA's revenues were broadly level with prior year at £14.9 million, operating profits were ahead by 9% at £1.3 million. This was primarily driven by the UK, where a significant shift in business mix aided operational efficiency during the summer, and delivered an improved quality of earnings.
As a direct consequence of this approach, the UK business reduced its exposure to summer events, with a corresponding uptake from all other sectors. Notably, transmission demand increased throughout the year, with TPA operating as a key framework supplier whilst rail and construction offered consistent opportunities. A more planned approach to sector mix enabled the division to optimise resources and gain the operational efficiencies which delivered the improved results.
The plastic pitch covers, bought at the end of the prior year, were well utilised, supporting concert tours for a number of headline acts. We expect this trend to continue into the new financial year.
In Germany, a more developed operating structure allowed the business to widen its customer base. However, certain large contracts being undertaken by transmission customers were delayed and the combined benefit did not flow through in the fiscal year, leading to quieter trading in the region. We anticipate a reversal of this trend in the new financial year.
In both the UK and Germany, generation of profitable revenue throughout the winter remains a key task and pleasingly, improvement was experienced in the second half where a steady growth in the order book was evident.
Capital investment of £2.4 million in fleet was significantly below prior year, as the business concentrated on optimising returns from the existing fleet.
Prospects for TPA both in the UK and in Germany, remain positive for the new financial year.
TORRENT TRACKSIDE
Suppliers of rail infrastructure portable plant and specialist rail services to Network Rail, London Underground and their respective contractor bases.
| Year ended 31 March 2013 | Year ended 31 March 2012 | |
| Revenue | £21.4 million | £22.1 million |
| Operating profit before amortisation | £2.2 million | £2.2 million |
| Investment in rental fleet | £0.9 million | £2.9 million |
Torrent have again produced an excellent result in markets that continue to receive significant investment but face year on year challenges to deliver increased productivity, efficiency gains and unit price reduction. Revenues marginally reduced at £21.4 million, delivered operating profits in line with prior year at £2.2 million. Post the rapid expansion in 2012, this year has been one of consolidation for Torrent, improving relationships and contract performance measurements with the key customers of the business.
We continue to experience high demand for our products and services across the UK rail network and from London Underground and other light rail and tram systems.
2014 is the final year of Network Rail Control Spend Period 4 (CP4) and it is forecast that the market will remain in good health for the coming year. Control Spend Period 5 (CP5) is likely to produce a change in the contractor landscape on rail infrastructure projects and Torrent is in an excellent position to benefit. We have also identified new and complementary areas of plant hire and service provision within the rail market that will further strengthen our market position and enhance our reputation as the only rail specific portable plant hire company in the market.
The rail market remains both buoyant and challenging, but our market leadership positions us well to secure new opportunities and to continue to deliver excellence to our customers.
Prospects
We remain positive in our expectations for the new financial year. We anticipate that our UK activities will, again, receive little help from market growth, and business will continue to be secured by being innovative, maintaining high quality equipment and services, and treating health and safety as a priority. We have growth initiatives across all of our divisions and we will utilise the financial strength of the Group to invest in opportunities as they arise.
We remain ambitious to further develop our overseas businesses, in mainland Europe with TPA and Groundforce, and internationally with Airpac Bukom.
We look forward to another year of progression for the Group as we maintain our focus on delivering consistent, quality and sustainable returns for shareholders over the long term.
Neil Stothard
Group Managing Director
4 June 2013
Consolidated Income Statement
for the year ended 31 March 2013
| Note | 2013 £000 | 2012 Restated £000 | ||
| Revenue | 1 | 167,034 | 161,514 | |
| Cost of sales | (124,791) | (120,910) | ||
| Gross profit | 42,243 | 40,604 | ||
| Administrative expenses | (23,377) | (22,737) | ||
| Operating profit before amortisation | 1 | 19,815 | 18,500 | |
| Amortisation | (949) | (633) | ||
| Operating profit | 18,866 | 17,867 | ||
| Net financial expense | (2,464) | (2,539) | ||
| Profit before amortisation and taxation | 17,351 | 15,961 | ||
| Amortisation | (949) | (633) | ||
| Profit before taxation | 4 | 16,402 | 15,328 | |
| Taxation | 4 | (3,353) | (3,101) | |
| Net profit for the year | 13,049 | 12,227 | ||
| Pence | Pence | |||
| Basic earnings per share | 2 | 33.62 | 29.63 | |
| Diluted earnings per share | 2 | 30.84 | 28.26 | |
| Dividend per share paid and proposed | 5 | 12.25 | 11.35 |
The restatement of the prior year has not affected reported profit, only revenue and cost of sales. This is explained in the notes.
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2013
| 2013 | 2012 | |||
| £000 | £000 | |||
| Profit for the year | 13,049 | 12,227 | ||
| Other comprehensive income: Actuarial gains/(losses) on defined benefit pension scheme | 697 | (1,355) | ||
| Tax on items taken to other comprehensive income | (166) | 354 | ||
| Impact of tax rate change | (42) | (98) | ||
| Effective portion of changes in fair value of cash flow hedges | 196 | 684 | ||
| Foreign exchange translation difference | 45 | (182) | ||
| Total other comprehensive income | 730 | (597) | ||
| Total comprehensive income for the year | 13,779 | 11,630 |
Consolidated Statement of Changes in Equity
for the year ended 31 March 2013
| 2013 | 2012 | ||
| £000 | £000 | ||
| Total comprehensive income for the year | 13,779 | 11,630 | |
| Dividends paid | (4,437) | (4,457) | |
| Net movement relating to Treasury Shares and shares held by Vp Employee Trust | (1,922) | (9,268) | |
| Share option charge in the year | 1,225 | 1,415 | |
| Tax movements to equity | 1,258 | 233 | |
| Impact of tax rate change | (42) | (20) | |
| Change in Equity | 9,861 | (467) | |
| Equity at start of year | 91,061 | 91,528 | |
| Equity at end of year | 100,922 | 91,061 |
During the year 6,030,747 ordinary shares held in treasury were cancelled and therefore £301,000 has been transferred from issued share capital to a capital redemption reserve. There were no other changes in issued share capital or share premium.
Consolidated Balance Sheet
as at 31 March 2013
| Note | 2013 | 2012 | ||
| £000 | £000 | |||
| Non-current assets | ||||
| Property, plant and equipment | 110,577 | 110,680 | ||
| Intangible assets | 39,279 | 38,966 | ||
| Employee benefits | 80 | - | ||
| Total non-current assets | 149,936 | 149,646 | ||
| Current assets | ||||
| Inventories | 5,679 | 4,826 | ||
| Trade and other receivables | 33,256 | 34,997 | ||
| Cash and cash equivalents | 3 | 8,712 | 5,582 | |
| Total current assets | 47,647 | 45,405 | ||
| Total assets | 197,583 | 195,051 | ||
| Current liabilities | ||||
| Interest bearing loans and borrowings | 3 | (24,000) | (1) | |
| Income tax payable | (1,539) | (1,476) | ||
| Trade and other payables | (34,838) | (47,654) | ||
| Total current liabilities | (60,377) | (49,131) | ||
| Non-current liabilities | ||||
| Interest bearing loans and borrowings | 3 | (30,000) | (46,000) | |
| Employee benefits | - | (1,046) | ||
| Deferred tax liabilities | (6,284) | (7,813) | ||
| Total non-current liabilities | (36,284) | (54,859) | ||
| Total liabilities | (96,661) | (103,990) | ||
| Net assets | 100,922 | 91,061 | ||
| Equity | ||||
| Issued share capital | 2,008 | 2,309 | ||
| Capital redemption reserve | 301 | - | ||
| Share premium account | 16,192 | 16,192 | ||
| Hedging reserve | (794) | (990) | ||
| Retained earnings | 83,188 | 73,523 | ||
| Total equity attributable to equity holders of the parent | 100,895 | 91,034 | ||
| Non-controlling interests | 27 | 27 | ||
| Total equity | 100,922 | 91,061 | ||
Consolidated Statement of Cash Flows
for the year ended 31 March 2013
| Note | 2013 | 2012 | ||
| £000 | £000 | |||
| Cash flow from operating activities | ||||
| Profit before taxation | 16,402 | 15,328 | ||
| Pension fund contributions in excess of service cost | (429) | (487) | ||
| Share based payment charge | 1,225 | 1,415 | ||
| Depreciation | 1 | 21,173 | 20,169 | |
| Amortisation | 1 | 949 | 633 | |
| Financial expense | 2,484 | 2,575 | ||
| Financial income | (20) | (36) | ||
| Profit on sale of property, plant and equipment | (2,569) | (2,199) | ||
| Operating cash flow before changes in working capital | 39,215 | 37,398 | ||
| (Increase)/decrease in inventories | (796) | 562 | ||
| Decrease /(increase) in trade and other receivables | 1,741 | (1,690) | ||
| (Decrease)/increase in trade and other payables | (401) | 3,099 | ||
| Cash generated from operations | 39,759 | 39,369 | ||
| Interest paid | (2,504) | (2,558) | ||
| Interest element of finance lease rental payments | - | (3) | ||
| Interest received | 20 | 36 | ||
| Income tax paid | (3,809) | (3,530) | ||
| Net cash flow from operating activities | 33,466 | 33,314 | ||
| Cash flow from investing activities | ||||
| Disposal of property, plant and equipment | 9,609 | 7,370 | ||
| Purchase of property, plant and equipment | (29,635) | (34,596) | ||
| Acquisition of businesses (net of cash and overdrafts) | (4,117) | - | ||
| Net cash flow from investing activities | (24,143) | (27,226) | ||
| Cash flow from financing activities | ||||
| Purchase of own shares by Employee Trust and Company | (9,767) | (1,422) | ||
| Repayment of borrowings | (5,000) | (30,000) | ||
| Proceeds from new loans | 13,000 | 30,000 | ||
| Capital element of hire purchase/finance lease agreements | (1) | (20) | ||
| Dividends paid | (4,437) | (4,457) | ||
| Net cash flow from financing activities | (6,205) | (5,899) | ||
| Increase in cash and cash equivalents | 3,118 | 189 | ||
| Effect of exchange rate fluctuations on cash held | 12 | (116) | ||
| Cash and cash equivalents at the beginning of the year | 5,582 | 5,509 | ||
| Cash and cash equivalents at the end of the year | 8,712 | 5,582 |
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 2013. The accounting policies applied are in line with those applied in the annual financial statements for the year ended 31 March 2012 with the exception that revenue and cost of sales for the prior year have been restated. The restatement does not affect profit and reflects the Group's revised view that revenue from commercial disposals of fleet assets is not from routine sales of fleet and hence should not be reported in revenue. The restatement reduces revenue and cost of sales for the year ended 31 March 2012 by £2.0 million.
EU Law (IAS Regulation EC1606/2002) requires that the consolidated accounts of the Group for the year ended 31 March 2013 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 IFRSs, this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements in June 2013.
The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 March 2013 or 2012. Statutory accounts for 31 March 2012 have been delivered to the registrar of companies, and those for 31 March 2013 will be delivered in due course. The auditor has reported on those accounts; the reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the 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 2013 or 31 March 2012.
The financial statements were approved by the board of directors on 4 June 2013.
1. Business Segments
| Revenue | Depreciation and amortisation | Operating profit before amortisation | ||||
| 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
| UK Forks | 14,061 | 12,595 | 2,629 | 2,070 | 2,099 | 1,462 |
| Groundforce | 37,165 | 32,692 | 4,015 | 3,648 | 7,833 | 6,738 |
| Airpac Bukom | 17,450 | 19,447 | 3,458 | 3,543 | 2,015 | 3,561 |
| Hire Station | 62,017 | 60,081 | 8,454 | 7,527 | 4,323 | 3,338 |
| TPA | 14,897 | 14,597 | 1,540 | 1,931 | 1,310 | 1,178 |
| Torrent Trackside | 21,444 | 22,102 | 1,655 | 1,720 | 2,235 | 2,223 |
| Group | - | - | 371 | 363 | - | - |
| Total | 167,034 | 161,514 | 22,122 | 20,802 | 19,815 | 18,500 |
2. Earnings Per Share
The calculation of basic earnings per share of 33.62 pence (2012: 29.63 pence) is based on the profit attributable to equity holders of the parent of £13,049,000 (2012: £12,227,000) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2013 of 38,818,000 (2012: 41,268,000), calculated as follows:
| 2013 | 2012 | |
| Shares | Shares | |
| 000's | 000's | |
| Issued ordinary shares | 40,154 | 46,185 |
| Effect of own shares held | (1,336) | (4,917) |
| Weighted average number of ordinary shares | 38,818 | 41,268 |
Basic earnings per share before the amortisation of intangibles was 35.47 pence (2012: 30.76 pence) and is based on an after tax add back of £721,000 (2012: £468,000) in respect of the amortisation of intangibles.
The calculation of diluted earnings per share of 30.84 pence (2012: 28.26 pence) is based on profit attributable to equity holders of the parent of £13,049,000 (2012: £12,227,000) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2013 of 42,308,000 (2012: 43,269,000), calculated as follows:
| 2013 | 2012 | |
| Shares | Shares | |
| 000's | 000's | |
| Weighted average number of ordinary shares | 38,818 | 41,268 |
| Effect of share options in issue | 3,490 | 2,001 |
| Weighted average number of ordinary shares (diluted) | 42,308 | 43,269 |
Diluted earnings per share before the amortisation of intangibles was 32.55 pence (2012: 29.34 pence).
3. Analysis of Net Debt
| At 31 March 2013 £000 | At 1 April 2012 £000 | ||
| Cash and cash equivalents | (8,712) | (5,582) | |
| Current debt | 24,000 | 1 | |
| Non current debt | 30,000 | 46,000 | |
| Net debt | 45,288 | 40,419 |
Year end gearing (calculated as net debt expressed as a percentage of shareholders' funds) stands at 45% (2012: 44%).
In April 2012 the Group paid £7.8m to the shareholders who took up the tender offer for shares.
On 15 May 2013 the existing bank facilities, including the facility which was due to expire on 31 May 2013, were replaced by a £35 million revolving credit facility which expires in May 2016 and a £30 million four and a half year revolving credit facility which expires in October 2017.
4. Taxation
The charge for taxation for the year represents an effective tax rate of 20.4% (2012: 20.2%). The tax charge was reduced by £0.4 million (2.2%) to reflect the adjustment to the deferred tax balance as a result of the future standard tax rate of 23% in the UK. The effective tax rate excluding adjustments in respect of prior years is 21.6% (2012: 20.5%).
5. Dividend
The Board has proposed a final dividend of 9.0 pence per share to be paid on 9 August 2013 to shareholders on the register at 12 July 2013. This, together with the interim dividend of 3.25 pence per share paid on 3 January 2013 makes a total dividend for the year of 12.25 pence per share (2012: 11.35 pence per share).
6. Principal risks and uncertainties
The Board has overall accountability for ensuring that risk is effectively managed across the Group and, on behalf of the Board, the Audit Committee reviews the effectiveness of the Group's risk process.
During 2011/12 the Group's risk process was refreshed. Potential risks were identified and reviewed by all business areas and measured against a defined set of likelihood and impact criteria. Action plans with defined ownership and timeframes for completion have been prepared for any gap identified in internal controls. During 2012/13, progress against action plans has been monitored and new risks identified. The risk profile for each business area is used to determine the programme of work carried out by internal audit. The risk assessments are captured in consistent reporting formats, enabling internal audit to consolidate the risk information and summarise the key risk in the form of a Group risk profile. Action plans against each risk will continue to be monitored on a regular basis. Further information is provided below on our principal risks and mitigating actions to address them.
Market risk
Risk description
A downturn in economic recovery could result in worse than expected performance of the business, due to lower activity levels or prices.
Mitigation
Vp provides products and services to a diverse range of markets with increasing geographic spread. The Group regularly monitors economic conditions and our investment in fleet can be flexed with market demand.
Competition
Risk description
The equipment rental market is already competitive, and could become more so, potentially impacting market share, revenues and margins.
Mitigation
Vp aims to provide a first class service to its customers and maintains significant market presence in a range of specialist niche sectors. The Group monitors market share, market conditions and competitor performance and has the financial strength to maximise opportunities.
Investment/product management
Risk description
In order to grow, it is essential the Group obtains first class products at attractive prices and keeps them well maintained.
Mitigation
Vp has well established processes to manage its fleet from investment decision to disposal. The Group's return on average capital employed was a healthy 13.3% in 2012/13. The quality of the Group's fleet disposal margins also demonstrate robust asset management and appropriate depreciation policies.
People
Risk description
Retaining and attracting the best people is key to our aim of exceeding customer expectations and enhancing shareholder value.
Mitigation
Vp offers well structured reward and benefit packages, and nurtures a positive working environment. We also try to ensure our people fulfil their potential to the benefit of both the individual and the Group, by providing appropriate career advancement and training.
Safety
Risk description
The Group operates in industries where safety is a key consideration for the well being of both our employees and the customers that hire our equipment. Failure in this area would impact our results and reputation.
Mitigation
The Group has robust health and safety policies, and management systems and our induction and training programmes reinforce these policies.
We provide support to our customers exercising their responsibility to their own workforces when using our equipment.
Financial risks
Risk description
To develop the business Vp must have access to funding at a reasonable cost. The Group is also exposed to interest rate and foreign exchange fluctuations which may impact profitability and has exposure to credit risk relating to customers who hire our equipment.
Mitigation
The Group has a revolving credit facility of £65.0 million and maintains strong relationships with all banking contacts. Our treasury policy defines the level of risk that the Board deems acceptable. Vp continues to benefit from a strong balance sheet, with growing EBITDA, which allows us to invest into opportunities.
Our treasury policy requires a tangible proportion of debt to be at fixed interest rates, and we facilitate this through interest rate swaps. We have agreements in place to buy or sell currencies to hedge against foreign exchange movements. We have strong credit control practices and use credit insurance where it is cost effective. Debtor days improved during the year and bad debts, as a percentage of revenue, remained low at 0.7% (2012: 0.9%).
7. 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.
8. Annual Report and Accounts
The Annual Report and Accounts for the year ended 31 March 2013 will be posted to shareholders on or around 21 June 2013.
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 Director | A M Bainbridge Director |
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
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