Vp PLC : Final Results
| 4 June 2015 |
Vp plc
("Vp" or the "Group" or the "Company")
Final Results
Vp plc, the equipment rental specialist, today announces its Final Results for the year ended 31 March 2015.
Highlights
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Jeremy Pilkington, Chairman of Vp plc, commented:
"It has been a record breaking year for the Group with significant progress made across all key metrics including profits, revenue, earnings per share and dividends. The economic environment in both the UK and globally is more positive than for some time and all Group business divisions are identifying significant growth and investment opportunities for the near and long term future."
"The Board believes that Vp's diverse business model coupled with an active pursuit of growth opportunities will help to continue to deliver quality returns for our shareholders. We look forward to the year ahead with much confidence."
- Ends -
Enquiries:
| Vp plc | |
| Jeremy Pilkington, Chairman | Tel: +44 (0) 1423 533 400 |
| jeremypilkington@vpplc.com | |
| Neil Stothard, Group Managing Director | Tel: +44 (0) 1423 533 400 |
| neil.stothard@vpplc.com | |
| Allison Bainbridge, Group Finance Director | Tel: +44 (0) 1423 533 400 |
| allison.bainbridge@vpplc.com | www.vpplc.com |
Media enquiries:
| Abchurch Communications | |
| Henry Harrison-Topham / Jamie Hooper | Tel: +44 (0) 20 7398 7702 |
| Vp@abchurch-group.com | www.abchurch-group.com |
CHAIRMAN'S STATEMENT
It gives me great pleasure to report to shareholders on another excellent, indeed record breaking, year for the Group. Our relentless focus on exceeding and redefining customer expectations, provides the foundation for these results. We only promise what we can deliver and we deliver what we promise.
Profits before tax and amortisation improved by 33% to £26.8 million (2014: £20.1 million) on revenues ahead by 12% at £205.6 million (2014: £183.1 million). This result exceeds, by a considerable margin, our previous best year in 2009 when the Group reported profits of £21.7 million.
All of our key financial metrics have improved significantly. Margins increased to 13% (2014: 11%); return on average capital employed improved by 20% to 16.2% (2014: 13.5%) and basic earnings per share pre-amortisation grew 30% to 54.5 pence per share.
The quality of the Group's earnings is demonstrated by our ability to generate strong and improving cash flows. EBITDA increased by over 21% to £53.8 million. Capital investment in hire fleet of £49.3 million (2014: £38.2 million) was deployed to support growing demand and market share gain across a broad range of sectors. Net debt at the year-end was £66.8 million (2014: £53.0 million).
In view of this outstanding set of results, the Board is recommending a final dividend of 11.5 pence per share making a total for the year of 16.5 pence per share, an increase of 18%. Subject to shareholders' approval at our Annual General Meeting on 21 July 2015, it is proposed to pay the final dividend on 7 August 2015 to members registered as of 10 July 2015.
We see the next few years as offering great opportunities for the Group assisted by the unambiguous General Election result. We are able and determined to take the fullest possible advantage of these opportunities.
As always, on behalf of our shareholders and the Board, it is my great pleasure to thank employees throughout the Group for their loyalty and dedication upon whose efforts these outstanding results rest.
Jeremy Pilkington
4 June 2015
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 rail, transmission, water, civil engineering, construction, housebuilding and oil and gas. The Group comprises six specialist market leading divisions operating in the UK and Overseas.
| Year ended 31 March 2015 | Year ended 31 March 2014 | |
| Revenue | £205.6 million | £ 183.1 million |
| Operating Profit before amortisation | £28.8 million | £ 21.8 million |
| Operating margin | 14.0% | 11.9% |
| Investment in Rental Fleet | £49.3 million | £ 38.2 million |
| ROACE | 16.2% | 13.5% |
I am very pleased to report on another year of substantial progress for the Group with revenues improving to £205.6 million, a 12% increase on the prior year. This growth was primarily organic.
Operating profits reached a record £28.8 million, a 32% increase on the prior year, with operating margins advancing strongly to 14.0% (2014: 11.9%). We maintain a clear focus on the quality of the returns generated from the assets employed in the business. It is therefore very pleasing to note that we made significant progress in the year as return on average capital employed (ROACE) increased to an excellent 16.2% (2014: 13.5%).
Whilst markets have generally been supportive, we have experienced some variance within individual sectors. Housebuilding, construction and elements of infrastructure have generated strong demand in the period. By contrast the oil and gas sector, primarily driven by the oil price fall in the latter half of 2014, and the UK transmission sector have been quieter.
The strongly cash generative nature of the Group was once again highlighted by EBITDA, which grew to £53.8 million (2014: £44.3 million).
Investment in rental fleet increased to £49.3 million (2014: £38.2 million) as demand for our services increased, particularly in those divisions supporting the general construction and housebuilding markets. As previously reported, the Group acquired the trackside plant and equipment rental business of Balfour Beatty Rail Ltd in July 2014 for a consideration of £5.5 million. Proceeds from fleet disposals continue to be a key element of capital investment considerations and they increased to £12.0 million (2014: £8.6 million) generating profit on disposal of £3.3 million (2014: £2.9 million).
The Board's view of the markets into the new financial year is broadly in line with 2014/15. We anticipate construction and housebuilding will carry on at similar levels, though we expect some recovery in transmission, balanced by a quieter year for the UK water sector as the new AMP6 programme enters its typically low spending first year. Whilst there has been some recovery in the oil price since late 2014, we expect this market to continue to be tough but with opportunity.
The results for the year further endorse the Group's strategy to focus on specialist equipment rental providing valued expertise to our customers across a wide range of end markets, both in the UK and overseas.
UK FORKS
Rough terrain material handling equipment for industry, residential and general construction
| Year ended 31 March 2015 | Year ended 31 March 2014 | |
| Revenue | £18.2 million | £ 16.3 million |
| Operating Profit before amortisation | £4.0 million | £ 2.5 million |
| Investment in rental fleet | £11.2 million | £ 7.0 million |
UK Forks made further substantial progress in the year with profits increasing by 62% to £4.0 million (2014: £2.5 million). Increased demand was experienced from both the general construction and housebuilding sectors and as a result, revenues grew by 12% to £18.2 million (2014: £16.3 million).
UK Forks has developed an excellent reputation for quality throughout its customer base and this attribute continues to underpin the businesses' position as the UK market leader and supplier of choice in the housebuilding sector. Gains in the construction and infrastructure sectors have further strengthened UK Forks' position in the tele-handler rental market.
A healthy level of business growth led to capital investment in rental fleet increasing to £11.2 million (2014: £7.0 million). Successful disposal of retiring fleet remains an element of the business, and net of machine sales, the average fleet numbers increased by 13% during the year.
A strong platform has been established through quality revenue gains and robust management of the cost base, which positions UK Forks well for further expansion across all its market sectors.
GROUNDFORCE
Excavation support systems, specialist piling equipment and trenchless technology for the water, gas, civil engineering and construction industries in the UK and mainland Europe
| | Year ended 31 March 2015 | Year ended 31 March 2014 |
| Revenue | £44.4 million | £42.3 million |
| Operating Profit before amortisation | £8.9 million | £7.9 million |
| Investment in Rental Fleet | £5.7 million | £8.0 million |
Groundforce reported another excellent result with profits increasing to £8.9 million (2014: £7.9 million) on revenues 5% ahead of prior year at £44.4 million.
Within the UK, demand from the Water Industry (AMP5) was maintained throughout the year, as contracts were closed-out prior to the commencement of the next investment programme (AMP6). Housing offered extra opportunity, as new sites were opened and demand also filtered through from the commercial property sector, where groundworks for fresh developments began, particularly in the South East. New depot openings in Aberdeen and East Anglia have widened the distribution network for the UK during the year.
Piletec progressed well completing the integration of Mr Cropper which relocated into enhanced operational locations. U Mole delivered improvement with new products being introduced. The markets in Ireland remain weaker, but the business grew revenues, as it leveraged the two depots opened at the end of last year.
The operation in Germany remains relatively small as the business seeks to gain market share. It has however, provided the platform to undertake a number of major contracts throughout Europe, including a basement car park in Paris and major harbour work in Bremerhaven. It also acted as the facilitator to a high profile contract in Qatar for an existing European client, which was commenced during Q4. Whilst technically challenging, this project readily illustrated the quality of solutions offered by the Groundforce engineered products.
Capital investment on rental equipment was £5.7 million (2014: £8.0 million).
We anticipate that trading levels in the coming year will be stable as improved construction demand balances the challenge presented by the slowdown during the transition between AMP cycles in the water sector. However, with Groundforce trading across a broad customer base, in a variety of sectors, it is well placed for further progress.
AIRPAC BUKOM
Equipment and service providers to the international oil and gas exploration and development markets
| Year ended 31 March 2015 | Year ended 31 March 2014 | |
| Revenue | £21.5 million | £ 20.2 million |
| Operating Profit before amortisation | £2.8 million | £ 2.0 million |
| Investment in Rental Fleet | £5.3 million | £ 5.8 million |
Airpac Bukom reported improved results with profits increasing to £2.8 million (2014: £2.0 million) on revenues 6% ahead at £21.5 million (2014: £20.2 million). The division's result was achieved against an increasingly challenging market environment, driven by the deterioration in the price of oil in the latter part of 2014. As a consequence, revenues in the second half softened.
The LNG (Liquified Natural Gas) sector continued to offer opportunities in the Asia Pacific region. Services were provided in South East Asia for the testing of the manufactured modules for two major LNG contracts in Australia, APLNG and Ichthys. Manufacture of the former completed during the financial year although our engagement in the project has continued with the testing of the installation phase on Curtis Island in Australia. Progress was also made on the installation phases of the QCLNG and GLNG contracts, also on Curtis Island.
Rentals to the well testing market generally suffered in the second half, as the impact of the oil price drop took hold. Airpac Bukom secured a number of long term contracts which have provided some resilience and the division has maintained a presence in some early production projects in the Middle East. However, most geographical regions were affected by reductions in capital investment by the major oil companies.
Capital expenditure on equipment was £5.3 million (2014: £5.8 million) as the division continued to update the rental fleet to meet customer demand.
There is little doubt that the oil and gas industry is experiencing extremely testing conditions which are likely to remain in the immediate term. Volumes and prices are being affected across most sub-sectors and management has reshaped the business to suit. As a consequence, the year ahead will be challenging, but we remain confident that opportunities will continue to be available, albeit reduced in number.
HIRE STATION
Small tools and specialist equipment for industry and construction
| Year ended 31 March 2015 | Year ended 31 March 2014 | |
| Revenue | £77.0 million | £66.2 million |
| Operating Profit before amortisation | £8.7 million | £4.8 million |
| Investment in Rental Fleet | £20.1 million | £13.4 million |
Hire Station continued to enjoy increasingly supportive markets throughout the year and this enabled the business to once again deliver record revenues of £77.0 million up 16.0% on the prior year. Profits increased strongly to £8.7 million (2014: £4.8 million).
The tools business made further excellent progress delivering double digit revenue growth and a strong increase in profitability. New locations were opened in London to support growing activity in this region and we have relocated a number of provincial depots to larger premises. Our focus on availability, quality and compliance ensures that our customers continue to get a first class service. This philosophy has generated loyalty and a greater share of wallet from our customer base.
ESS Safeforce had another record year with growth in all of its key revenue streams. The depots at Port Talbot, Exeter and Dublin, which opened in the previous year, all flourished and delivered profits well ahead of schedule. Our trading branch in Rotterdam got off to a satisfactory start with a number of significant contract wins, which provided the backdrop for accelerated investment in both resource and fleet.
The MEP business, which supplies specialist press fitting and electro fusion equipment, also has the largest fleet of low level access machines in Europe. Servicing predominantly the M&E sector, the business has been very busy during the year expanding its footprint with new locations in London, where the greatest demand for product exists, as well as investing in established locations to support new customer wins. During the year, we supplied to projects in Finland and the Netherlands, supporting UK contractors, with further opportunities going forward.
A positive construction sector, together with secured opportunities, led to the business increasing investment in the fleet to £20.1 million (2014: £13.4 million). Hire Station continues to have one of the youngest fleets in the market. This investment, together with our efficient workshop procedures, has meant that product availability has given us a competitive advantage as demand has increased.
These record results together with significant investment in the branch network give Hire Station a strong platform for further profitable growth in the coming year.
TPA
Rental and installation of portable roadways throughout the UK and mainland Europe
| Year ended 31 March 2015 | Year ended 31 March 2014 | |
| Revenue | £14.6 million | £15.8 million |
| Operating Profit before amortisation | £1.0 million | £1.8 million |
| Investment in Rental Fleet | £2.3 million | £1.0 million |
TPA experienced a mixed year, as revenues decreased by 8% to £14.6 million, with profits reducing to £1.0 million (2014: £1.8 million).
In the UK, demand from the construction and rail markets in particular showed upside, but this could not offset the contract delays and reductions in the transmission sector following the break-up of the Electricity Alliances. This, together with an unseasonally dry winter, served to create a market spike in product availability depressing prices and utilisation.
In Europe, the business progressed on two fronts. Firstly, growth from an increased customer base provided greater revenue stability and secondly, the development of a more robust management structure in Germany, which will underpin future growth prospects for the region.
Capital expenditure in rental fleet increased to £2.3 million (2014: £1.0 million), including investment in new products specific to targeted markets.
The outlook for TPA for the coming year is improved, with an anticipated uplift from the transmission sectors in the UK and further positive development of the European activity.
TORRENT TRACKSIDE
Suppliers of rail infrastructure portable plant and specialist services to Network Rail, London Underground and their respective contractor base
| Year ended 31 March 2015 | Year ended 31 March 2014 | |
| Revenue | £29.9 million | £22.3 million |
| Operating Profit before amortisation | £3.4 million | £2.8 million |
| Investment in Rental Fleet | £4.7 million | £3.0 million |
Torrent Trackside made further good progress in the year with revenues of £29.9 million, up 34% on the prior year, generating profits of £3.4 million (2014: £2.8 million)
Torrent experienced a year of high demand with the division busy on track renewals, rail projects and track maintenance activities. In addition, activity was busy on the London Underground infrastructure programme. During the year the UK rail industry embarked on Control Spend Period 5 (CP5), which is now well underway after a slow start in the early months of the year. This is a five year funded plan for the maintenance, enhancement and renewal of track on the UK national rail network.
During the course of the year Torrent acquired the plant assets, depots and staff of the track plant and equipment division of Balfour Beatty Rail. The acquisition also enhanced Torrent's depot network in the South East where there is the greatest density of track, and as a result new locations were secured at Romford, Ashford, Eastleigh and Ruislip.
Investment in fleet increased to £4.7 million (2014: £3.0 million) both to refresh the fleet and also in support of new growth opportunities.
The rail market continues to be well funded, buoyant and challenging. The industry maintains its focus on delivering improved productivity, efficiency gains and unit price reductions. Torrent's market leadership places it well to meet those demands whilst continuing to deliver service excellence to both existing and new customers.
PROSPECTS
The year ended 31 March 2015, generated the best ever financial results for Vp plc.
Moving into the new financial year, the constituent business units are well positioned to reap the benefits of sustained market demand particularly in general construction, housebuilding and large elements of the infrastructure sector. Oil and gas presents some shorter term challenges, but overall the Group continues to be well positioned in markets which are generally supportive.
We expect to actively invest in the infrastructure of the Group in the coming year, recruiting more talent, expanding the branch network and investing strongly in fleet. This will ensure that the Group is fit and ready to deliver further incremental growth.
Trading into the new financial year has started well and the Board is confident of making further positive progress for shareholders this year.
Neil Stothard
Group Managing Director
4 June 2015
Consolidated Income Statement
for the year ended 31 March 2015
| Note | 2015 £000 | 2014 £000 | ||
| Revenue | 1 | 205,602 | 183,064 | |
| Cost of sales | (148,773) | (133,470) | ||
| Gross profit | 56,829 | 49,594 | ||
| Administrative expenses | (29,733) | (28,883) | ||
| Operating profit before amortisation | 1 | 28,780 | 21,831 | |
| Amortisation | | (1,684) | (1,120) | |
| Operating profit | 27,096 | 20,711 | ||
| Net financial expense | (2,023) | (1,778) | ||
| Profit before taxation and amortisation | 26,757 | 20,053 | ||
| Amortisation | (1,684) | (1,120) | ||
| Profit before taxation | 25,073 | 18,933 | ||
| Taxation | 4 | (5,202) | (3,238) | |
| Profit attributable to owners of the parent | 19,871 | 15,695 | ||
| Pence | Pence | |||
| Basic earnings per share | 2 | 51.03 | 39.78 | |
| Diluted earnings per share | 2 | 47.01 | 36.31 | |
| Dividend per share paid and proposed | 5 | 16.50 | 14.00 |
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2015
| 2015 | 2014 | |||||
| £000 | £000 | |||||
| Profit for the year | 19,871 | 15,695 | ||||
| Other comprehensive (expense)/income: Items that will not be reclassified to profit or loss | | |||||
| Remeasurements of defined benefit pension scheme | (55) | 233 | ||||
| Tax on items taken to other comprehensive income | 12 | (53) | ||||
| Impact of tax rate change | - | (118) | ||||
| Foreign exchange translation difference | (1,028) | (181) | ||||
| Items that may be subsequently reclassified to profit or loss | ||||||
| Effective portion of changes in fair value of cash flow hedges | (1,011) | 704 | ||||
| Total other comprehensive (expense)/income | (2,082) | 585 | ||||
| Total comprehensive income for the year | 17,789 | 16,280 | ||||
Consolidated Statement of Changes in Equity
for the year ended 31 March 2015
| 2015 | 2014 | ||
| £000 | £000 | ||
| Total comprehensive income for the year | 17,789 | 16,280 | |
| Dividends paid | (5,986) | (4,962) | |
| Net movement relating to shares held by Vp Employee Trust | (11,059) | (8,593) | |
| Share option charge in the year | 1,894 | 1,735 | |
| Tax movements to equity | 1,145 | 2,876 | |
| Impact of tax rate change | - | (274) | |
| Change in Equity | 3,783 | 7,062 | |
| Equity at start of year | 107,984 | 100,922 | |
| Equity at end of year | 111,767 | 107,984 |
Consolidated Balance Sheet
as at 31 March 2015
| Note | 2015 | 2014 | ||
| £000 | £000 | |||
| Non-current assets | ||||
| Property, plant and equipment | 147,817 | 124,834 | ||
| Intangible assets | 43,394 | 41,351 | ||
| Employee benefits | 1,043 | 689 | ||
| Total non-current assets | 192,254 | 166,874 | ||
| Current assets | ||||
| Inventories | 6,495 | 5,352 | ||
| Trade and other receivables | 41,102 | 38,356 | ||
| Cash and cash equivalents | 3 | 5,236 | 8,978 | |
| Total current assets | 52,833 | 52,686 | ||
| Total assets | 245,087 | 219,560 | ||
| Current liabilities | ||||
| Interest bearing loans and borrowings | 3 | - | (17) | |
| Income tax payable | (1,948) | (632) | ||
| Trade and other payables | (54,988) | (44,396) | ||
| Total current liabilities | (56,936) | (45,045) | ||
| Non-current liabilities | ||||
| Interest bearing loans and borrowings | 3 | (72,000) | (62,000) | |
| Deferred tax liabilities | (4,384) | (4,531) | ||
| Total non-current liabilities | (76,384) | (66,531) | ||
| Total liabilities | (133,320) | (111,576) | ||
| Net assets | 111,767 | 107,984 | ||
| Equity | ||||
| Issued share capital | 2,008 | 2,008 | ||
| Capital redemption reserve | 301 | 301 | ||
| Share premium account | 16,192 | 16,192 | ||
| Hedging reserve | (1,101) | (90) | ||
| Retained earnings | 94,340 | 89,546 | ||
| Total equity attributable to equity holders of the parent | 111,740 | 107,957 | ||
| Non-controlling interests | 27 | 27 | ||
| Total equity | 111,767 | 107,984 | ||
Consolidated Statement of Cash Flows
for the year ended 31 March 2015
| Note | 2015 | 2014 | ||
| £000 | £000 | |||
| Cash flow from operating activities | ||||
| Profit before taxation | 25,073 | 18,933 | ||
| Pension fund contributions in excess of service cost | (409) | (376) | ||
| Share based payment charge | 1,894 | 1,735 | ||
| Depreciation | 1 | 25,023 | 22,507 | |
| Amortisation | 1 | 1,684 | 1,120 | |
| Financial expense | 2,024 | 1,790 | ||
| Financial income | (1) | (12) | ||
| Profit on sale of property, plant and equipment | (3,277) | (2,862) | ||
| Operating cash flow before changes in working capital | 52,011 | 42,835 | ||
| (Increase)/decrease in inventories | (854) | 364 | ||
| Increase in trade and other receivables | (2,746) | (3,525) | ||
| Increase in trade and other payables | 6,114 | 7,581 | ||
| Cash generated from operations | 54,525 | 47,255 | ||
| Interest paid | (2,016) | (1,848) | ||
| Interest element of finance lease rental payments | (2) | (5) | ||
| Interest received | 1 | 12 | ||
| Income tax paid | (2,873) | (3,949) | ||
| Net cash generated from operating activities | 49,635 | 41,465 | ||
| Cash flow from investing activities | ||||
| Disposal of property, plant and equipment | 11,982 | 8,554 | ||
| Purchase of property, plant and equipment | (52,887) | (39,535) | ||
| Acquisition of businesses and subsidiaries (net of cash and overdrafts) | (5,405) | (4,498) | ||
| Net cash used in investing activities | (46,310) | (35,479) | ||
| Cash flow from financing activities | ||||
| Purchase of own shares by Employee Trust | (11,059) | (8,593) | ||
| Repayment of borrowings | (10,000) | (54,000) | ||
| Proceeds from new loans | 20,000 | 62,000 | ||
| Capital element of hire purchase/finance lease agreements | (17) | (36) | ||
| Dividends paid | (5,986) | (4,962) | ||
| Net cash used in financing activities | (7,062) | (5,591) | ||
| (Decrease)/increase in cash and cash equivalents | (3,737) | 395 | ||
| Effect of exchange rate fluctuations on cash held | (5) | (129) | ||
| Cash and cash equivalents at the beginning of the year | 8,978 | 8,712 | ||
| Cash and cash equivalents at the end of the year | 5,236 | 8,978 |
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 2015. The accounting policies applied are in line with those applied in the annual financial statements for the year ended 31 March 2014.
EU Law (IAS Regulation EC1606/2002) requires that the consolidated accounts of the Group for the year ended 31 March 2015 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 2015.
The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 March 2015 or 2014. Statutory accounts for 31 March 2014 have been delivered to the registrar of companies, and those for 31 March 2015 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 2015 or 31 March 2014.
The financial statements were approved by the Board of Directors on 4 June 2015.
1. Business Segments
| Revenue | Depreciation and amortisation | Operating profit before amortisation | ||||
| 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
| UK Forks | 18,247 | 16,301 | 3,487 | 2,841 | 4,025 | 2,482 |
| Groundforce | 44,350 | 42,298 | 5,010 | 4,600 | 8,833 | 7,917 |
| Airpac Bukom | 21,460 | 20,201 | 3,769 | 3,466 | 2,753 | 2,035 |
| Hire Station | 77,031 | 66,174 | 10,222 | 9,192 | 8,731 | 4,798 |
| TPA | 14,585 | 15,786 | 1,015 | 1,582 | 1,009 | 1,779 |
| Torrent Trackside | 29,929 | 22,304 | 2,820 | 1,534 | 3,429 | 2,820 |
| Group | - | - | 384 | 412 | - | - |
| Total | 205,602 | 183,064 | 26,707 | 23,627 | 28,780 | 21,831 |
2. Earnings Per Share
The calculation of basic earnings per share of 51.03 pence (2014: 39.78 pence) is based on the profit attributable to equity holders of the parent of £19,871,000 (2014: £15,695,000) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2015 of 38,940,000 (2014: 39,451,000), calculated as follows:
| 2015 | 2014 | |
| Shares | Shares | |
| 000s | 000s | |
| Issued ordinary shares | 40,154 | 40,154 |
| Effect of own shares held | (1,214) | (703) |
| Weighted average number of ordinary shares | 38,940 | 39,451 |
Basic earnings per share before the amortisation of intangibles was 54.45 pence (2014: 41.97 pence) and is based on an after tax add back of £1,330,000 (2014: £862,000) in respect of the amortisation of intangibles.
The calculation of diluted earnings per share of 47.01 pence (2014: 36.31 pence) is based on profit attributable to equity holders of the parent of £19,871,000 (2014: £15,695,000) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2015 of 42,273,000 (2014: 43,222,000), calculated as follows:
| 2015 | 2014 | |
| Shares | Shares | |
| 000s | 000s | |
| Weighted average number of ordinary shares | 38,940 | 39,451 |
| Effect of share options in issue | 3,333 | 3,771 |
| Weighted average number of ordinary shares (diluted) | 42,273 | 43,222 |
Diluted earnings per share before the amortisation of intangibles was 50.15 pence (2014: 38.31 pence).
3. Analysis of Net Debt
| At 31 March 2015 £000 | At 1 April 2014 £000 | ||
| Cash and cash equivalents | (5,236) | (8,978) | |
| Current debt | - | 17 | |
| Non current debt | 72,000 | 62,000 | |
| Net debt | 66,764 | 53,039 |
Year end gearing (calculated as net debt expressed as a percentage of shareholders' funds) stands at 60% (2014: 49%).
On 11 May 2015 the Group replaced the £35 million revolving credit facility which was due to expire in May 2016 with a new £45 million revolving credit facility which expires in May 2020. The Group therefore now has committed facilities of £95 million and in addition has an uncommitted step up facility for a further £20 million and an overdraft facility of £5 million.
4. Taxation
The charge for taxation for the year represents an effective tax rate of 20.8% (2014: 17.1%). The prior year tax charge was reduced by £1.1 million (5.7%) to reflect the adjustment to the deferred tax balance as a result of the future standard tax rate of 20% in the UK. There was no equivalent adjustment this year. The effective tax rate excluding adjustments in respect of prior years is 20.7% (2014: 17.7%).
5. Dividend
The Board has proposed a final dividend of 11.5 pence per share to be paid on 7 August 2015 to shareholders on the register at 10 July 2015. This, together with the interim dividend of 5.00 pence per share paid on 2 January 2015, makes a total dividend for the year of 16.5 pence per share (2014: 14.00 pence per share).
6. Principal risks and uncertainties
The Board is responsible for determining the level and nature of risks it is appropriate to take in delivering the Group's objectives, and for creating the Group's risk management framework. The Board recognises that good risk management aids effective decision making and helps ensure that risks taken on by the Group are adequately assessed and challenged.
Our approach identifies risks arising in all parts of the Group, using both a top down and bottom up approach. Once identified, the impact and probability of risks are determined and scored at both a gross (before mitigation) and net (after mitigation basis). These risk scores are documented in risk registers which are maintained at a divisional and Group level. Risk registers are subject to ongoing review based upon business activity.
The risk profile for each division 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 risks in the form of a Group risk profile. Mitigation action plans against each risk 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 16.2% in 2014/15. 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
At the year end the Group had a revolving credit facility of £85.0 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 were broadly unchanged at 58 at the year end and bad debts, as a percentage of revenue, remained low at 0.3% (2014: 0.6%).
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 2015 will be posted to shareholders on or around 19 June 2015.
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, include 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 issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Vp PLC via Globenewswire
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