Interim Results
Vp PLC
04 December 2006
Press Release 4 December 2006
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 2006.
Highlights
• Revenues up by 29% to £61.3 million (2005: £47.4 million)
• Operating profits grew 56% to £8.77 million (2005: £5.62 million)
• Profit before tax up 42% to £7.80 million (2005: £5.49million)
• Interim dividend of 2.25 pence per share, an increase of 15% (2005: 1.95 pence)
• Net debt of £34.7 million (31 March 2006: £32.6 million), representing modest gearing of 57%
Jeremy Pilkington, Chairman of Vp plc, commented:
'These excellent interim results endorse our growth plan for the Group and
maintain our record of consistent performance. Organic capital investment has
been strong across all areas of our business, but in particular the results
reflect the successful integration and further development of last year's
acquisitions and the continuing recovery in profitability at Hire Station. Over
30% of the profit increase in the period came from organic growth.
'Overall the markets we serve are in good health with strong growth prospects
over the short to medium term and we enjoy the human and financial resources to
take advantage of expansion opportunities as they arise. Our strategy remains
to lead in our chosen markets.'
For further information please contact:
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
Mike Holt, Group Finance Director Tel: +44 (0) 1423 533 445
mike.holt@vpplc.com
Abchurch
Justin Heath / Louise Thornhill Tel: +44 (0) 20 7398 7700
justin.heath@abchurch-group.com www.abchurch-group.com
CHAIRMAN'S STATEMENT
I am very pleased to report an excellent set of results for the Group for the
six month period to 30 September 2006.
Operating profits grew 56% to £8.77 million (2005 : £5.62 million) on revenues
ahead by 29% to £61.3 million (2005 : £47.4 million). These results build on
our achievement of compound annual earnings growth in excess of 14% over the
previous four years. In recognition of this progress, your Board is declaring
an interim dividend of 2.25 pence per share, an increase of 15%. The dividend
is payable on 11 January 2007 to shareholders registered as of 15 December 2006.
Net debt at 30 September 2006 stood at £34.7 million (31 March 2006: £32.6
million), representing modest gearing of 57%.
Business Review
These excellent interim results endorse our growth plan for the Group and
maintain our record of consistent performance. Organic capital investment has
been strong across all areas of our business, but in particular the results
reflect the successful integration and further development of last year's
acquisitions and the continuing recovery in profitability at Hire Station. Over
30% of the profit increase in the period came from organic growth.
Considering individual markets, the first six months has seen very buoyant oil
and gas activity but, not altogether unsurprisingly, continued delays in the
implementation of the AMP4 water industry capital investment programme in the
UK. The construction and housebuilding sectors have remained stable in the
period. The acquisition of TPA last November gives us new exposure to the power
transmission and events sectors. Activity within TPA's key summer events market
produces a significant seasonality in TPA's earnings and to a lesser extent, the
Group results.
Groundforce produced a very satisfactory first half performance. The evolution
of new products and capabilities continues, including the recent introduction of
a new 250 tonne strutting system and the expansion into concrete formwork. The
Dudley Vale business, acquired last year, has integrated well and has performed
in line with expectations.
As anticipated, UK Forks did not repeat last year's strong first half
performance. The reduced activity levels seen in the final quarter of last year
remained both in the housebuilding and general construction sectors. The market
for UK Forks is stable and we continue to see opportunities for the business
going forward.
Airpac Bukom delivered significant growth in the period, benefiting from the
first full six month contribution from the acquisition of Bukom Oilfield
Services in March 2006. Airpac Bukom is now a leading supplier of its
specialist services to the oil and gas exploration and development industry.
Whilst oil prices have fallen back from their recent highs we are confident in
the future strength of this market as it seeks to meet rapidly expanding global
demand, particularly from the developing economies. The merged business has
progressed well and significant capital investment is planned as we embrace the
broadened geographical and product opportunities that our customer base offers
to us.
Hire Station delivered further substantial improvement in profits and margins.
Both the tool hire business and safety equipment business, ESS Safeforce,
performed well. During the period we sold the non-core Pivotal Performance
business, a provider of management development training, contained within the
ESS acquisition made last year, to management. Since the period end, Hire
Station has acquired, for a cash consideration of £3.3 million, MEP Hire
Limited, a Scottish based company specialising in the rental and sale of pipe
fitting equipment. We believe MEP's product range and expertise will fit well
alongside Hire Station's existing activities.
Torrent Trackside had a very satisfactory first half performance having
responded successfully to the challenges presented by the changes within the
rail industry. Further growth opportunities have been developed, including an
increasing demand from London Underground based work.
TPA, acquired in November 2005, had a strong first half. TPA's earnings are, as
expected, significantly skewed by their Summer events programme although
construction related activities, particularly transmission work, will continue
throughout the winter period.
Outlook
This period sees the first results of the Group's significant progress in
strengthening and extending its portfolio of business activities through a
mixture of strong organic investment and selective acquisition activity.
Overall the markets we serve are in good health with strong growth prospects
over the short to medium term and we enjoy the human and financial resources to
take advantage of opportunities as they arise. Our strategy remains to lead in
our chosen markets.
The Group is well positioned to deliver a satisfactory result for the year as a
whole.
Jeremy Pilkington
Chairman
4 December 2006
Consolidated Income Statement
As at 30 September 2006
Note Six months to 30 Six months to 30 Full year to
Sep 2006 Sep 2005 31 Mar 2006
(unaudited) (unaudited)
£000 £000 £000
Revenue 3 61,263 47,387 99,396
Cost of sales (42,159) (34,258) (72,092)
Gross profit 19,104 13,129 27,304
Administrative expenses (10,333) (7,509) (15,842)
Operating profit before financing costs 3 8,771 5,620 11,462
Financial income 58 115 188
Financial expenses (1,034) (249) (978)
Profit before tax 7,795 5,486 10,672
Income tax expense 4 (2,339) (1,589) (3,070)
Profit for the period attributable to equity
holders of the parent 5,456 3,897 7,602
Earnings per 5p ordinary share 6 12.71p 8.96 p 17.49 p
Diluted earnings per 5p ordinary share 6 12.16p 8.66 p 16.83 p
Dividend per share 7 2.25p 1.95 p 6.60p
Dividends paid and proposed (£000) 954 846 2,824
Consolidated Statement of Recognised Income and Expense
As at 30 September 2006
Six months to Six months to Full year to
30 Sep 2006 30 Sep 2005 31 Mar 2006
(unaudited) (unaudited)
£000 £000 £000
Tax on items taken direct to equity - (66) (67)
Actuarial gains on defined benefit pension - - 231
scheme
Effective portion of changes in fair value of
cash flow hedges
130 - (89)
Net income / (expense) recognised directly to 130 (66) 75
equity
Profit for the period 5,456 3,897 7,602
Total recognised income and expense for the 5,586 3,831 7,677
period
Consolidated Balance Sheet
As at 30 September 2006
Note 30 Sep 2006 31 Mar 2006 30 Sep 2005
(unaudited) (unaudited)
£000 £000 £000
Non-current assets
Property, plant and equipment 69,584 66,054 51,285
Intangible assets 33,848 33,637 9,845
Total non-current assets 103,432 99,691 61,130
Current assets
Inventories 3,372 3,119 2,580
Income tax receivable - 34 34
Trade and other receivables 30,034 28,177 26,226
Cash and cash equivalents 4,988 5,587 2,395
Assets classified as held for resale 217 - -
Total current assets 38,611 36,917 31,235
Total assets 142,043 136,608 92,365
Current liabilities
Interest bearing loans and borrowings (3,073) (2,148) (37)
Income tax payable (2,213) (1,235) (1,876)
Trade and other payables (23,702) (21,793) (19,126)
Total current liabilities (28,988) (25,176) (21,039)
Non-current liabilities
Interest bearing loans and borrowings (36,616) (36,062) (8,051)
Employee benefits (2,734) (2,894) (3,744)
Other payables (7,930) (7,930) -
Deferred tax liabilities (4,734) (4,223) (2,854)
Total non-current liabilities (52,014) (51,109) (14,649)
Total liabilities (81,002) (76,285) (35,688)
Net assets 61,041 60,323 56,677
Equity
Issued capital 2,309 2,309 2,309
Share premium 16,192 16,192 16,192
Hedging reserve 41 (89) -
Retained earnings 42,472 41,884 38,149
Total equity attributable to equity 61,014 60,296 56,650
holders of parent
Minority interest 27 27 27
Total equity 5 61,041 60,323 56,677
Consolidated cash flow statement
As at 30 September 2006
Note Six months to Six months to Full year to
30 Sep 2006 30 Sep 2005 31 Mar 2006
(unaudited) (unaudited)
£000 £000 £000
Cash generated from operations 8 14,681 9,741 22,610
Interest paid (522) (226) (710)
Interest element of finance lease rental (91) (5) (111)
payments
Interest received 58 115 188
Income tax paid (894) (1,426) (3,120)
Net cash from operating activities 13,232 8,199 18,857
Cash flows from investing activities
Purchase of property, plant and equipment (15,052) (8,321) (15,506)
Proceeds from sale of plant and equipment 3,267 2,687 6,181
Acquisitions net of cash acquired (91) (4,647) (28,955)
Net cash used in investing activities (11,876) (10,281) (38,280)
Cash flows from financing activities
(Repurchase) / sale of own shares (3,434) (1,123) (1,073)
Repayment of borrowings - - (8,000)
Repayment of loan notes (941) (125) (125)
New loans 3,000 - 33,500
Payment of finance lease liabilities (580) (30) (2,475)
Dividends paid - - (2,572)
Net cash used in financing activities (1,955) (1,278) 19,255
Net decrease in cash and cash equivalents (599) (3,360) (168)
Cash and cash equivalents at beginning of 5,587 5,755 5,755
period
Cash and cash equivalents at end of period 4,988 2,395 5,587
Notes to the Interim Financial Statements
1. Basis of Preparation
Vp plc (the 'Company') is a company domiciled in the United Kingdom. The
Consolidated Interim Financial Statements of the Company for the half year ended
30 September 2006 comprise the Company and its subsidiaries (together referred
to as the 'Group').
The Consolidated Interim Financial statements do not include all the information
required for full annual Financial Statements.
2. Accounting Policies
Vp's accounting policies have been applied consistently to all periods presented
and are in line with those applied in the annual financial statements for the
year ended 31 March 2006.
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
3. Summarised Segmental Analysis (unaudited)
Revenue Operating Profit
Sept 2006 Sept 2005
Inter- Inter- 2006 2005
External Segment Total External Segment Total
Revenue Revenue Revenue Revenue Revenue Revenue
£000 £000 £000 £000 £000 £000 £000 £000
Groundforce 13,010 - 13,010 11,547 - 11,547 2,752 2,554
UK Forks 6,930 180 7,110 7,498 150 7,648 667 1,295
Airpac Bukom 4,998 - 4,998 2,249 - 2,249 1,248 507
Hire Station 22,121 150 22,271 19,943 130 20,073 1,353 490
Torrent 6,566 - 6,566 6,150 - 6,150 910 774
Trackside
Trax Portable 7,638 - 7,638 - - - 1,841 -
Access
61,263 330 61,593 47,387 280 47,667 8,771 5,620
4. Income Tax
Income tax on profit before tax is based on an effective tax rate of 30% to
reflect the estimated tax charge for the full year.
5. Statement of Changes in Equity
Six months to Six months to Full year to
30 Sep 2006 30 Sep 2005 31 Mar 2006
(unaudited) (unaudited)
£000 £000 £000
Total recognised income and expense for the 5,586 3,831 7,677
period
Tax movements to equity - 50 489
Share option charge in the period 497 162 292
Gains on disposal of shares 47 67 80
Net movement in shares held by Vp Employee (3,434) (1,123) (1,073)
Trust at cost
Dividends to shareholders (1,978) (1,740) (2,572)
Change in equity during the period 718 1,247 4,893
Equity at the start of the period 60,323 55,430 55,430
Equity at the end of the period 61,041 56,677 60,323
6. Earnings Per Share
Earnings per share have been calculated on 42,934,732 shares (2005: 43,502,560)
being the weighted average number of shares in issue during the period. Diluted
earnings per share have been calculated on 44,869,566 shares (2005: 44,995,224).
7. Dividends
The Directors have declared an interim dividend of 2.25 pence (2005: 1.95 pence)
per share payable on 11 January 2007 to shareholders on the register at 15
December 2006. The cost of dividends in the Statement of Changes in Equity is
after adjustments for the interim and final dividends waived by the Vp Employee
Trust in relation to the shares it holds for the Group's share option schemes.
8. Reconciliation of profit before tax to net cash generated from
operations
Six months to Six months to Full year to
30 Sep 2006 30 Sep 2005 31 Mar 2006
(unaudited) (unaudited)
£000 £000 £000
Cash flows from operating activities
Profit before tax 7,795 5,486 10,672
Pension fund contribution in excess of service
cost
(160) (224) (791)
Share based payment charges 497 162 292
Depreciation 6,899 5,655 12,224
Amortisation of intangibles 12 - 4
Profit on sale of tangible fixed assets (1,131) (1,010) (2,275)
Interest expense 976 134 790
Increase in inventories (253) (204) (559)
Increase in trade and other receivables (1,662) (2,183) (579)
Increase in trade and other payables 1,708 1,925 2,832
Cash generated from operations 14,681 9,741 22,610
9. Analysis of Net Debt (unaudited)
As at Cash As at
1 Apr 06 Flow 30 Sep 06
£000 £000 £000
Cash in hand and at bank 5,587 (599) 4,988
Medium term loan (33,500) (3,000) (36,500)
Loan notes (1,011) 941 (70)
Finance leases and hire purchases (3,699) 580 (3,119)
(32,623) (2,078) (34,701)
Comparative Figures
The comparative figures for the financial year ended 31 March 2006 are extracted
from the company's statutory accounts for that financial year. Those accounts
have been reported on by the company's auditors and delivered to the Registrar
of Companies. The report of the auditors was (i) unqualified, (ii) did not
include a reference to any matters to which the auditors drew attention by way
of emphasis without qualifying their report, and (iii) did not contain a
statement under section 237(2) or (3) of the Companies Act 1985.
Independent review report to Vp plc
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 September 2006 which comprises the unaudited
Consolidated Income Statement, the unaudited Consolidated Statement of
Recognised Income and Expense, the unaudited Consolidated Balance Sheet, the
unaudited Consolidated Cash Flow Statement and the related notes. 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 of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/
4: Review of interim financial information issued by the Auditing Practices
Board for use in the UK. 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 excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with
International Standards on Auditing (UK and Ireland) 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 2006.
KPMG Audit Plc
Chartered Accountants
Leeds
4 December 2006
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