Final Results
Vp PLC
11 June 2002
Date : Embargoed until 7.00 a.m. Tuesday 11 June 2002
Contacts : Jeremy Pilkington, Chairman & Chief Executive
Neil Stothard, Finance Director
Vp plc Tel : 01423 533405
A webcast of the results presentation will be available on
12th June 2002 at www.vpplc.com
Vp plc Preliminary Results
Vp plc, the specialist equipment rental group, announces its preliminary results
for the year ended 31 March 2002.
• Turnover of £66.8m (2001 : £59.8m including terminated operations)
• Group profit before tax of £6.2m (2001 : £3.1m including terminated operations)
• Earnings per share up 103% at 10.23p (2001 : 5.03p)
• Recommended final dividend increased to 2.80p per share (2001 : 2.65p) giving
an increased total dividend of 4.20p per share (2001: 4.05p)
• Net debt of £10.6m (31 March 2001 : £12.8m) representing gearing of 23%.
Jeremy Pilkington, Chairman & Chief Executive comments :
'I am pleased to report to shareholders on a year of further significant progress.
We have continued to invest strongly in support of business opportunities across
the Group whilst also reducing gearing with the benefit of strong operational
cash flow. This positions us well to take advantage of investment and
acquisition opportunities as they arise.
We believe we now have an attractive mix of specialist rental activities
enjoying strong market positions and capable of generating both acceptable
levels of growth and return on capital employed. As such, we view the future
with confidence'
CHAIRMAN'S STATEMENT
I am pleased to report to shareholders on a year of further significant progress.
Group profit before tax doubled to £6.2m (2001: £3.1m, after £2.2m loss on
terminated activities) and earnings per share improved by a similar amount to
10.23p (2001 : 5.03p). Turnover rose 12% to £66.8m (2001: £59.8m including £4.3m
from terminated activities). These profit figures for both the current and prior
years are stated after goodwill amortisation; the charge in 2002 was £280k (2001
: £229k). Return on capital employed improved to 12.1% (2001: 7.2%),
representing useful progress towards our longer term target rate of 15%.
In recognition of the progress made this year and to reflect our confidence in
the future, the Board is recommending an increased final dividend of 2.80p per
share (2001: 2.65p per share), giving a total dividend for the year of 4.20p per
share (2001 : 4.05p per share). The dividend will be paid on 1st October 2002 to
shareholders registered at 6th September 2002.
We have continued to invest strongly in support of business opportunities across
the Group whilst also reducing gearing with the benefit of strong operational
cash flow. Capital expenditure including fixed assets from acquisitions,
totalled £16.4m (2001: £21.5m.) Year end borrowings stood at £10.6m (2001:
£12.8m) representing gearing of under 23% (2001: 29%). This positions us well to
take advantage of investment and acquisition opportunities as they arise.
SERVICES
Services comprises four separate businesses with aggregate turnover of £25.6m
(2001: £22.0m) and profit before goodwill, interest and tax of £2.6m (2001:
£2.6m).
UK Forks
UK Forks operates a national fleet of rough terrain material handling equipment
supplying a wide range of industrial, residential and general construction
customers. We are unique in providing this specialist service on a national
basis and in transacting our business through call centres, an operational
strategy that we have pursued for some years now. We believe these features
enable us to deliver tangibly superior levels of service to our target customer
base.
Product introductions include the new 360o rotational machines which deliver
much of the functionality of a crane on a smaller site whilst retaining the
flexibility of the full range of other forklift applications. Also, in response
to increasing Health and Safety regulations, UK Forks in conjunction with UK
Training, offers comprehensive driver instruction and safety awareness
programmes.
The continued buoyancy of the house-building market and an active commercial
build programme has helped UK Forks achieve a very satisfactory result for the
year.
Total investment in fleet was £2.3m (2001: £5.9m).
Groundforce
Groundforce provides designs and equipment to solve a wide variety of excavation
support problems, primarily within the civil engineering and water services
markets. These applications may range from routine utilities street work to the
clear bracing of excavations as large as 20 metres square.
Groundforce delivered a generally satisfactory level of performance but the
delays in the implementation of the water industries' five year asset management
plan (AMP3) and the restrictions imposed on working in rural areas due to the
Foot and Mouth epidemic adversely affected the full year results. Some
improvement in trading was experienced towards the end of the calendar year.
In October we acquired, for a consideration of £3.1m, the shoring business of
Mechplant, one of our principal competitors in this market. Their reputation for
design services and complex installations ideally complements our own strengths
in these areas. This business has been fully integrated into Groundforce and is
performing in line with our expectations.
During the year we introduced a range of piling hammers and pile breakers to the
hire fleet under the name of Piletec. This business is complementary to the core
Groundforce offering and provides an attractive additional revenue stream.
Product research and development was particularly active including the imminent
release of the latest version of our design specification software, updated to
incorporate the Mechplant designs and specifications.
Fleet investment for the year totalled £1.5m (2001:£1.1m).
Airpac
Offshore experienced a slow start to the year in the North Sea sector but our
renewed emphasis on the wider, international oil and gas markets has started to
yield results. This aspect of the business finished the year strongly and I
believe we may look forward to further gains in these markets.
Airpac Onshore continued to experience a very competitive pricing environment
and against the background of unpredictable timing in any recovery in levels of
demand, we have disposed of certain under-utilised assets during the period.
Against this generally unhelpful trading environment we are very pleased to have
been successful in securing a long-term sole supply agreement at the Devonport
dockyard. This contract was secured against fierce competition on the basis of
the quality of service and technical expertise that we were able to offer the
client.
Fleet investment totalled £1.1m (2001: £1.8m).
Safeforce
This small, but fast growing and innovative business has had a very successful
year.
Product extensions and the recruitment of more customers to the asset management
service pushed revenues and profits ahead strongly.
During the year Safeforce launched the Group's dedicated training offering, UK
Training. UK Training is complimentary to the entire range of the Group's rental
activities and has already established an impressive offering of courses and an
extensive customer base.
Investment in fleet totalled £0.2m (2001 : £0.2m.)
HIRE STATION
Although profit before goodwill interest and tax improved 4% to £2.8m (2001:
£2.7m) and turnover rose to £33.0m (2001: £27.7m), it has nevertheless been a
disappointing year in certain areas for Hire Station, marring what would
otherwise have been a satisfactory year of progress and consolidation.
A number of management changes have been made to address these areas of under-
performance and I am pleased to report the appointment of Andrew Makepeace as
Managing Director, Hire Station. Andrew's background includes recent experience
of the UK rental industry and previous time within the consumer goods market. In
addition, new Regional Directors have been appointed for the South East and
Northern regions. We believe that we now have a balanced senior management team
combining extensive industry experience with the challenge of a fresh
perspective. This team is focused on improving returns and delivering the next
phase of Hire Station's ambitious growth programme.
There has also been considerable branch level activity during the year. We made
two single branch acquisitions in Cardiff and Stoke which have been integrated
within the Western region. We opened a further seven branches, including
additional Lifting Points, and relocated, or amalgamated with larger neighbours,
a further six. Three branches were closed.
Investment in hire fleet was £5.1m (2001: £6.6m).
TORRENT TRACKSIDE
Torrent has now established itself as the leading independent provider of non-
operator plant and trackside lighting services to the rail infrastructure
maintenance and renewals industry. With many years experience in supplying this
specialist sector, demand for Torrent's services produced strong revenue growth
accompanied by an impressive increase in profits.
Profits before goodwill, interest and tax rose by 50% to £1.8m (2001: £1.2m) on
revenues ahead by 41% to £8.2m (2001: £5.8m).
The uncertainties regarding the future structure of the rail industry have not
yet materially impacted routine, day-to-day maintenance activity but they have,
in certain areas added to the delays already affecting some of the larger scale
capital investment projects. We hope that an early clarification of the future
structure of the industry will enable the investment necessary to provide an
effective rail network to take place.
Investment in the hire fleet was £1.8m (2001: £1.1m).
EMPLOYEES
Three years ago we launched a continuing series of employee-wide Save-As-You-
Earn share option schemes. The first of these have now matured and I am very
pleased that the performance of the share price over the past twelve months
means that participating employees, together with shareholders in general, stand
to benefit.
The single most important differentiating factor in a high-contact, service
industry such as ours is the attitude and skill level of frontline operational
staff. We are committed to maintaining this advantage by recruiting, retaining
and developing the best staff in the business and my thanks go to all of them
for their contribution this past year.
PROSPECTS
The year we are now reporting is the first set of full year results following
our withdrawal from traditional, general plant hire.
A positive consequence of the scale of the changes that the Group has undergone
is that there is now within the Group both a broad recognition of the need for
continuous change in response to business challenges and, most importantly, the
capability and resilience to meet these challenges.
We believe we now have an attractive mix of specialist rental activities
enjoying strong market positions and capable of generating acceptable levels of
both growth and return on capital employed. As such, we view the future with
confidence.
Jeremy Pilkington
Vp plc
Consolidated profit and loss account for the year ended 31 March 2002
Notes 2002 2001
£000 £000
Restated
Turnover 66,847 59,822
Trading profit 17,585 13,996
Depreciation (10,406) (9,691)
Operating profit before goodwill amortisation 7,179 4,305
Amortisation of goodwill (280) (229)
Operating profit 6,899 4,076
Profit on termination of businesses 5 - 30
Profit on ordinary activities before interest 6,899 4,106
Net interest payable (727) (1,047)
Profit on ordinary activities before taxation 6,172 3,059
Taxation 6 (1,664) (827)
Profit for the financial year 4,508 2,232
Dividends 8
- Interim paid (615) (618)
- Final proposed (1,222) (1,150)
Retained profit for the financial year 2,671 464
Earnings per 5p ordinary share 7 10.23p 5.03p
Earnings per 5p ordinary share before goodwill amortisation 7 10.87p 5.55p
Dividend per 5p ordinary share 8 4.20p 4.05p
All the activities reflected in the profit and loss account are continuing, as
defined by FRS 3.
Comparative figures have been restated to reflect the adoption of FRS19 on
deferred tax.
Vp plc
Consolidated balance sheet at 31 March 2002
31 March 2002 31 March 2001
Restated
£000 £000 £000 £000
Fixed assets
Intangible assets - goodwill 5,388 4,889
Tangible assets 51,024 51,183
Investments - own shares 1,521 1,130
57,933 57,202
Current assets
Stocks 2,293 2,277
Debtors 16,792 15,191
Cash at bank and in hand 1,050 1,270
20,135 18,738
Creditors: amounts falling due within one year (18,569) (25,337)
Net current assets / (liabilities) 1,566 (6,599)
Total assets less current liabilities 59,499 50,603
Creditors: amounts falling due after more than one year (8,704) (2,344)
Provisions for liabilities and charges (4,270) (4,399)
Net assets 46,525 43,860
Capital and reserves
Called up share capital 2,309 2,309
Share premium account 16,192 16,192
Revaluation reserve 1,230 1,520
Profit and loss account 26,767 23,812
Equity shareholders' funds 46,498 43,833
Equity minority interests 27 27
46,525 43,860
Vp plc
Consolidated cash flow statement for year ended 31 March 2002
31 March 2002 31 March 2001
£000 £000 £000 £000
Cash flow from operating activities 15,087 10,856
Return on investments and servicing of finance
Interest paid (354) (564)
Interest received 22 16
Interest element of finance lease rental payments (321) (444)
Net cash outflow from returns on investments and (653) (992)
servicing of finance
Taxation
UK corporation tax paid (1,062) (784)
Capital expenditure and financial investment
Purchase of tangible fixed assets (13,460) (18,820)
Purchase and sale of investments (474) (389)
Sale of tangible fixed assets 8,273 8,491
Net cash outflow from capital expenditure and financial (5,661) (718)
investment
Acquisitions and disposals
Purchase of businesses (net of cash and overdraft (3,440) (1,211)
purchased)
Equity dividends paid (1,785) (1,788)
Cash inflow before financing 2,486 5,363
Financing
Medium term loans 1,874 (93)
Loan notes (1,112) (57)
Capital element of finance lease rental payments (3,468) (4,136)
Net outflow from financing (2,706) (4,286)
(Decrease) / increase in cash in the year (220) 1,077
Vp plc
Notes
1. Basis of preparation
This announcement has been prepared on the basis of the accounting policies
set out in the Group's financial statements as at 31 March 2001, with the
exception that the Group has amended its policies to take account of
Financial Reporting Standard 19. In accordance with FRS19 deferred tax is
now provided on the basis of the full potential liability, no discounting has
been applied. A prior year adjustment has been made to restate the
comparative profit and loss and balance sheet figures to reflect the change
in policy.
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 2002
2002 2001
£000 £000
Profit for the financial year 4,508 2,232
Dividends (1,837) (1,768)
2,671 464
Goodwill (write off) / write back (6) 300
Net increase in shareholders' funds 2,665 764
Opening shareholders' funds 43,833 46,489
Prior year adjustment - (3,420)
Closing shareholders' funds 46,498 43,833
5. Prior year exceptional item
The profit before tax in the prior year was after the following exceptional
credit:
2002 2001
£000 £000
Profit on termination of businesses - 30
The prior year exceptional profit relates to the termination of part of the
business. This was commenced in the year ended 31 March 2000 following a
strategic review. The profit is the net of profit on disposal of general
plant fleet less termination costs associated with closing that part of the
business.
6. The slightly lower than expected current and prior year effective tax rates
are due to the write back of over provisions from previous years.
7. Earnings per share have been calculated on 44,057,076 shares
(2001: 44,339,232) being the weighted average number of shares in issue
during the year.
8. The Directors are proposing a final dividend of 2.80 pence (2001: 2.65 pence)
per share making a total dividend for the year of 4.20 pence (2001: 4.05
pence) per share which is payable on 1 October 2002 to shareholders on the
register on 6 September 2002.
9. Reconciliation of operating profit to net cash inflow from operating activities.
2002 2001
£000 £000
Operating profit 6,899 4,076
Exceptional business termination costs - (939)
Depreciation 10,406 9,691
Amortisation of goodwill 280 229
Profit on sale of tangible fixed assets (2,163) (1,785)
Decrease / (increase) in stocks 65 (71)
(Increase) / decrease in debtors (1,889) 1,827
Increase / (Decrease) in creditors 1,489 (2,172)
Net cash inflow from operating activities 15,087 10,856
10. Analysis of net debt
As at Cash Other As at
1 April 2001 Flow Non-cash 31 March 2002
Changes
£000 £000 £000 £000
Cash at bank and in hand 1,270 (220) - 1,050
Medium term loans (6,513) (1,874) - (8,387)
Loan notes (3,113) 1,112 57 (1,944)
Finance leases and hire purchase (4,476) 3,468 (273) (1,281)
(12,832) 2,486 (216) (10,562)
11. The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 March 2002 or 2001. The
statutory accounts for 2001 have been delivered to the registrar of companies
and those for 2002 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 2002 will be posted
to shareholders in July and the Annual General Meeting will be held on 10
September 2002.
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