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Vp PLC (VP.)

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Thursday 01 December, 2005


Interim Results

01 December 2005

Press Release                                                    1 December 2005

                                     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 2005.


•       revenue up 4% to £47.4 million (2004: £45.6 million)

•       profit before tax rose by 19% to £5.9 million (2004: £4.9 million) 
        before one off integration costs of £0.4 million associated with the 
        recent acquisition of Pivotal Services

•       earnings per share improved by 10% to 8.96 pence (2004: 8.14 pence)

•       interim dividend increased by 11% to 1.95p per share (2004: 1.75 pence)

•       net debt increased to £5.7 million due to acquisitions and increased 
        capital investment (31 March 2005: £2.4 million), representing gearing 
        of 10%
•       return on capital employed 17.3% (2004: 16.8%)

Jeremy Pilkington, Chairman commented:

'Vp has made a strong start to the new financial year and created a platform
which we believe will deliver a satisfactory outcome for the year as a whole.
In addition, we are very pleased to have secured three important acquisitions
and look forward to their contribution to future performance.'

For further information please contact:

Vp plc

Jeremy Pilkington, Chairman                           Tel: +44 (0) 1423 533 445
[email protected]                             

Neil Stothard, Group Managing Director
[email protected]

Mike Holt, Group Finance Director
[email protected]


Henry Harrison-Topham / Justin Heath                 Tel: +44 (0) 20  7398 7702
[email protected]                    


It is some five years since we recognised the potential benefits to be gained
from specialisation within the rental market and focussed our efforts on growing
our specialist businesses.  We believe our earnings track record over this
period demonstrates the success of this strategy and that the results we are
announcing today further reinforce the correctness of this decision.


The Group has progressed on several fronts since the start of the new financial
year; delivery of material earnings growth, completion of significant
acquisitions and the securing of improved and extended banking facilities.

For the six months ended 30 September 2005, profit before tax rose 19% to £5.9m
(2004: £4.9m) before one off costs of £0.4m associated with the integration of
the recent Pivotal Services Group acquisition.  This result is particularly
pleasing as it has been achieved on the basis of purely organic improvement
without any contribution from acquisitions.  Revenue increased by 4% to £47.4m
(2004: £45.6m).  Earnings per share rose by 10% to 8.96p (2004: 8.14p).  Return
on capital employed improved to 17.3% (2004: 16.8%).

Your Board is declaring an interim dividend of 1.95p per share, an increase of
11%.  The dividend is payable on 6th January 2006 to shareholders registered as
at 9th December 2005.

Net debt at 30th September 2005 stood at £5.7m (31 March 2005: £2.4m)
representing gearing of 10%.  The increase in net debt is after absorbing the
£4.5m cost of the Pivotal acquisition and increased capital investment in the
rental fleet of £8.5m (2004: £5.9m).


Groundforce produced a satisfactory first half performance, reporting profits of
£2.6m (2004: £2.8m).  Margins improved but revenue reduced to £11.5m (2004:
£12.7m) largely as a result of the anticipated hiatus between the AMP3 and AMP4
water infrastructure investment programmes.  Groundforce continues to enjoy good
demand from its core civil engineering and construction markets and is well
positioned to take advantage of the significant AMP4 workloads as and when they

UK Forks had an excellent first half on the back of strong revenue growth.
Profits rose significantly to £1.3m (2004: £0.8m) on revenue ahead 17% at £7.5m
(2004: £6.4m).  The division recorded further successes both in the
housebuilding and general construction sectors and our order book remains
strong.  The seasonality of this market means that the second half of the year
is unlikely to be as strong as the first.

Airpac Oilfield Services delivered another strong set of figures with profits of
£0.5m (2004: £0.6m) on revenue static at £2.2m (2004: £2.2m).  Demand from the
North Sea market remained buoyant though international project related activity
was marginally lower.

Hire Station produced profits of £0.9m (2004: loss £0.3m) before the one-off
costs of £0.4m in relation to the recently acquired Pivotal Group.  This profit
turnaround reflects the impact of the measures taken by management last year and
provides a solid base for further progress.  Revenue increased to £20.0m (2004:

Pivotal, acquired in July 2005, comprises two activities; a health & safety and
management training business, and a safety equipment rental business
incorporating a confined space training function.  The former has been
restructured since acquisition, and now trades as Pivotal Performance and the
latter activity has been successfully integrated with our existing Safeforce
business to create ESS Safeforce.

As anticipated Torrent Trackside experienced a reduction in revenue, primarily
due to the loss of the Network Rail maintenance plant contract.  Revenue in the
period was £6.2m (2004: £6.9m).  Profits reduced to £0.8m (2004: £1.3m).
Torrent is a quality business and has responded well to the changes in the
market, repositioning itself to take advantage of other growth opportunities,
including London Underground.


In addition to the acquisition of Pivotal in July 2005, since the period end we
have separately reported on two further acquisitions.

In November, we acquired Trax Portable Access Limited (TPA), a rental business
specialising in the temporary roadway and access market, for an initial cash
consideration of £11.5m.  This may be augmented by up to a further £7.9m under a
3-year earn-out arrangement.  TPA fits well with our strategic objectives in
terms of market position, return on capital employed and earnings growth. The
highly experienced management team are remaining with the business which we
believe is capable of significant further development.  We are very pleased to
welcome TPA as a new division within Vp.

Also in November, we acquired the business and assets of Dudley Vale from GE
Equipment Services Limited for a cash consideration of £3.5m.  Dudley Vale rents
and sells piling equipment to the construction and civil engineering sectors and
will be integrated with our existing Piletec operations within Groundforce.  The
combined business will have an excellent market position and will trade as
Piletec Dudley Vale.


We are very pleased to have secured three important acquisitions for Vp since
the start of the current financial year and look forward to their contribution
to future performance.

At the beginning of November we arranged new bank funding comprising a 5-year,
£45m revolving credit line.  This facility leverages our financial strength in
support of our strategic growth objectives.

Vp has made a strong start to the new financial year and created a platform
which we believe will deliver a satisfactory outcome for the year as a whole.

Jeremy Pilkington
1 December 2005

Vp plc

Consolidated Income Statement

                                                 Note       Six months       Six months to      Full year to
                                                            to 30 Sep         30 Sep 2004
                                                               2005                             31 Mar 2005
                                                           (unaudited)        (unaudited)       (unaudited)
                                                                   £000                £000             £000

Revenue                                                          47,387              45,601           90,044

Cost of sales                                                  (32,640)            (31,486)         (61,958)

Gross profit                                                     14,747              14,115           28,086

Administration expenses                                         (9,127)             (9,024)         (17,746)

Operating profit before financing costs                           5,620               5,091           10,340

Financial income                                                    115                  55              135

Financial expenses                                                (249)               (211)            (443)
Profit before tax                                                 5,486               4,935           10,032

Income tax expense                                   3          (1,589)             (1,417)          (2,824)

Profit for the period attributable to equity
holders of the parent                                             3,897               3,518            7,208

Earnings per 5p ordinary share                       5           8.96 p              8.14 p          16.62 p

Diluted earnings per 5p ordinary share               5           8.66 p              7.86 p          16.09 p

Dividend per share                                   6           1.95 p              1.75 p            5.75p

Dividends paid and proposed (£000)                                  846                 761            2,502

Consolidated Statement of Recognised Income and Expense

                                                           Six months to       Six months to      Full year to
                                                             30 Sep 2005         30 Sep 2004       31 Mar 2005
                                                              (unaudited)         (unaudited)       (unaudited)
                                                                    £000                £000              £000

Tax on items taken direct to equity                                 (66)                   -               393

Actuarial losses on defined benefit pension scheme                     -                   -           (1,310)

Foreign exchange translation difference                                -                   5                 4

Net income recognised directly to equity                            (66)                   5             (913)

Profit for the period                                              3,897               3,518             7,208

Total recognised income and expense for the period                 3,831               3,523             6,295

Vp plc

Consolidated Balance Sheet

                                                     Note        30 Sep 2005         31 Mar 2005      30 Sep 2004
                                                                  (unaudited)        (unaudited)      (unaudited)
                                                                        £000               £000             £000


Property, plant and equipment                                         51,285             48,676           47,901
Intangible assets                                                      9,845              7,468            7,434
Total non current assets                                              61,130             56,144           55,335

Inventories                                                            2,580              2,136            2,098
Trade and other receivables                                           26,260             22,069           23,131
Cash and cash equivalents                                              2,395              5,755            4,794
Total current assets                                                  31,235             29,960           30,023

Interest bearing loans and borrowings                                   (37)              (159)            (238)
Income tax payable                                                   (1,876)            (1,628)          (1,925)
Trade and other payables                                            (18,608)           (13,407)         (15,583)
Total current liabilities                                           (20,521)           (15,194)         (17,746)

Interest bearing loans and borrowings                                (8,051)            (8,033)          (8,000)
Employee benefits                                                    (3,744)            (3,916)          (2,594)
Deferred tax liabilities                                             (2,909)            (3,068)          (3,530)
Total non current liabilities                                       (14,704)           (15,017)         (14,124)

Net assets                                                            57,140             55,893           53,488


Issued capital                                                         2,309              2,309            2,309
Share premium                                                         16,192             16,192           16,192
Revaluation reserve                                                      301                301              419
Retained earnings                                                     38,311             37,064           34,541
Total equity attributable to equity                   4               57,113             55,866           53,461
holders of parent

Minority interest                                                         27                 27               27

Total equity                                                          57,140             55,893           53,488

Vp plc

Consolidated cash flow statement

                                                   Note        Six months to      Six months to     Full year to
                                                                 30 Sep 2005        30 Sep 2004      31 Mar 2005
                                                                  (unaudited)        (unaudited)      (unaudited)
                                                                        £000               £000             £000

Cash generated from operations                        7                9,741              9,283           20,148

Interest paid                                                          (231)              (251)            (485)
Interest received                                                        115                 55              135
Income taxes paid                                                    (1,426)            (1,521)          (3,277)
Net cash from operating activities                                     8,199              7,566           16,521

Cash flows from investing activities

Purchase of property, plant and equipment                            (8,321)            (6,253)         (15,145)
Proceeds from sale of plant and equipment                              2,687              2,728            5,957
Acquisitions net of cash acquired                                    (4,647)                 55            (204)
Net cash used in investing activities                               (10,281)            (3,470)          (9,392)

Cash flows from financing activities

(Repurchase) / sale of own shares                                    (1,123)               (53)              153
Repayment of borrowings                                                    -              (100)            (111)
Repayment of loan notes                                                (125)               (95)            (120)
Payment of finance lease liabilities                                    (30)              (146)            (156)
Dividends paid                                                             -                  -          (2,231)
Net cash used in financing activities                                (1,278)              (394)          (2,465)

Net (decrease)/increase in cash and cash                             (3,360)              3,702            4,664
Cash and cash equivalents at beginning of period                       5,755              1,087            1,087
Effect of exchange rate fluctuations on cash held                          -                  5                4
Cash and cash equivalents at end of period                             2,395              4,794            5,755

Vp plc

Notes to the Interim Financial Statements

1.         Basis of Preparation

EU law (IAS Regulation EC 1606/2002) requires that the next annual consolidated
financial statements of the Group, for the year ending 31 March 2006, be
prepared in accordance with accounting standards adopted for use in the European
Union (EU) further to the IAS Regulation (EC 1606/2002) ('accounting standards
adopted by the EU').

This interim financial information has been prepared on the basis of the
recognition and measurement requirements of IFRS in issue that either are
adopted by the EU and effective (or available for early adoption) at 31 March
2006 or are expected to be adopted and effective (or available for early
adoption) at 31 March 2006, the Group's first annual reporting date at which it
is required to use accounting standards adopted by the EU.  Based on these
recognition and measurement requirements the board has made assumptions about
the accounting policies expected to be applied when the first annual financial
statements are prepared in accordance with accounting standards adopted by the
EU for the year ending 31 March 2006.  These are set out below in note 2.

The accounting standards adopted by the EU that will be effective (or available
for early adoption) in the annual financial statements for the year ending 31
March 2006 are still subject to change and to additional interpretations and
therefore cannot be determined with certainty.  Accordingly, the accounting
policies for that annual period will be determined finally only when the annual
financial statements are prepared for the year ending 31 March 2006.

The effect of IFRS, including the required reconciliations, on the Group's
comparative figures were set out in our recent announcement 'The Impact of
International Financial Reporting Standards' which was issued on 18 November

2.         Accounting Policies

Vp's accounting policies have been applied consistently to all periods presented
and are in line with those applied in the last annual financial statements for
the year ended 31 March 2005, with the exception of the following changes to the
accounting policies which have been adopted in order to comply with IFRS.


Goodwill represents the excess of the fair value of the purchase price over the
fair value of the net assets acquired as part of a business combination.
Goodwill is assumed to have an indefinite useful economic life and under IFRS 3,
'Business Combinations', is not amortised, but is reviewed annually for
impairment and carried in the balance sheet at cost less any accumulated
impairment losses.

The Group has applied the exemption under IFRS 1 that allows goodwill in respect
of acquisitions made prior to 1 April 2004 to remain at deemed cost as stated
under UK GAAP, that is net of amortisation to that date.


In accordance with IAS 10, 'Events after the Balance Sheet Date', dividends
declared after the balance sheet date are not accrued at that balance sheet date
because the liability does not represent an obligation as defined by IAS 37, '
Provisions, Contingent Liabilities and Contingent Assets'. Each dividend will
therefore be recognised in the period in which it is approved rather than in the
period to which it relates.

Share Based Payments

IFRS 2, 'Share-based Payments', requires that the fair value of share options be
charged to the Income Statement based upon their fair value at the date of
grant. The charge is recognised evenly over the vesting period of the options.

The fair values are calculated using an appropriate option pricing model. The
Group's Approved, Unapproved and Save as you Earn (SAYE) schemes have been
valued using the Black-Scholes model and the Income Statement charge is adjusted
to reflect the expected number of options that will vest based on expected
levels of performance and the expected number of employees leaving the Group.
The fair values of the Group's Long Term Incentive Plan (LTIP) and Share
Matching options are calculated using a discounted grant price model again
adjusted for expected performance and employees leaving the Group.

The Group has chosen to adopt the exemption whereby IFRS 2 is only applied to
options granted after 7 November 2002.

Financial Instruments

The Group's only financial instrument is an interest rate swap.  Under IAS 39, '
Financial Instruments: Recognition and Measurement' this is accounted for in the
balance sheet at fair value and any movement in fair value is taken to the
Income Statement, unless the transaction is designated as part of a hedging
relationship in which case any changes to that fair value are accounted for in
equity and then released to the Income Statement to match the settlement of
interest under the swap.

Employee Benefits

Under IAS 19, 'Employee Benefits' the Group's pension deficits are recorded as
balance sheet liabilities and the actuarial gains and losses associated with
this liability are to be recognised in the Statement of Recognised Income and
Expense as they arise.  All actuarial gains and losses at 1 April 2004, the date
of transition to IFRS, were recognised.  Actuarial gains and losses occur when
the actual returns on scheme assets differ from those initially expected by the


The charge for taxation is based on the results for the year and takes into
account full provision for deferred taxation due to temporary timing differences
between the carrying value of an asset or liability and its tax base.

3.         Income Taxes

Income tax on profit before tax is based on an effective tax rate of 29% to
reflect the estimated tax charge for the full year.

4.         Statement of Changes in Equity
                                                      Six months to        Six months to        Full year to
                                                        30 Sep 2005          30 Sep 2004         31 Mar 2005
                                                         (unaudited)          (unaudited)         (unaudited)
                                                               £000                 £000               £000

Total recognised income and expense for the                   3,831                3,523              6,295

Tax movements to equity                                          50                  171                241

Share option charge in the year and gains/losses                229                  157                276
on share options and disposal of shares

Net movement in shares held by Vp Employee Trust            (1,123)                 (53)                153
at cost

Dividends to shareholders                                   (1,740)              (1,452)            (2,214)

Change in equity during the period                            1,247                2,346              4,751

Equity at the start of the period                            55,866               51,115             51,115

Equity at the end of the period                              57,113               53,461             55,866

5.         Earnings Per Share

Earnings per share have been calculated on 43,502,560 shares (2004: 43,232,175)
being the weighted average number of shares in issue during the period.  Diluted
earnings per share have been calculated on 44,995,224 shares (2004: 44,785,682).

6.         Dividends

The Directors have declared an interim dividend of 1.95 pence (2004: 1.75 pence)
per share payable on 6 January 2006 to shareholders on the register at 9
December 2005.  The cost of dividends in the Statement of Changes in Equity
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

7.         Reconciliation of profit before financing costs to net cash generated
from operations
                                                      Six months to        Six months to       Full year to
                                                        30 Sep 2005          30 Sep 2004        31 Mar 2005
                                                         (unaudited)          (unaudited)        (unaudited)
                                                               £000                 £000               £000

Cash flows from operating activities

Profit before tax                                             5,486                4,935             10,032
Depreciation                                                  5,655                5,709             11,045
Profit on sale of tangible fixed assets                     (1,010)                (405)            (1,190)
Interest expense                                                134                  156                308
Increase in inventories                                       (204)                 (80)               (94)
Increase in trade and other receivables                     (2,183)              (1,367)              (251)
Increase in trade and other payables                          1,863                  335                298
Cash generated from operations                                9,741                9,283             20,148

8.         Analysis of Net Debt (unaudited)
                                            As at                 Cash         Acquisitions             As at
                                         1 Apr 05                 Flow                              30 Sep 05
                                             £000                 £000                 £000              £000
Cash in hand and at bank                    5,755              (3,360)                    -             2,395
Medium term loan                          (8,000)                    -                    -           (8,000)
Loan notes                                  (125)                  125                    -                 -
Finance leases and hire purchases            (67)                   30                 (51)              (88)
                                          (2,437)              (3,205)                 (51)           (5,693)

Comparative Figures

The comparative figures for the financial year ended 31 March 2005 are not the
Group's statutory accounts for that financial year.  Those accounts which were
prepared under UK GAAP 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


We have been engaged by the company to review the financial information set out
pages 4 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.

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 financial statements except where any changes, and the reasons
for them, are disclosed.

As disclosed in note 1 to the financial information, the next annual financial
statements of the group will be prepared in accordance with IFRS as adopted for
use in the European Union.

The accounting policies that have been adopted in preparing the financial
information are consistent with those that the directors currently intend to use
in the next annual financial statements.  There is, however, a possibility that
the directors may determine that some changes to these policies are necessary
when preparing the full annual financial statements for the first time in
accordance with those IFRSs adopted for use by the European Union.

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 2005.

KPMG Audit Plc
Chartered Accountants

1 December 2005

                      This information is provided by RNS
            The company news service from the London Stock Exchange                                                  

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