Vp PLC : Half-yearly report

Press Release 26 November 2013

Vp plc

("Vp" or the "Group" or the "Company")

Interim Results

Vp plc, the equipment rental specialist, today announces its Interim Results for the six months ended 30 September 2013.

Highlights

	Profit before tax and amortisation increased 17% to £12.8 million (2012: £11.0 million)
	Revenues of £91.3 million, 9% ahead (2012: £84.0 million)
	Return on capital employed 13.9% (2012: 13.2%)
	Profit margins improved once again to 14.0% (2012: 13.0%)
	Capital investment in rental fleet 46% higher than the prior year at £18.3 million
	Acquisitions of £4.6 million
	Interim dividend increased to 3.6 pence per share
	Solid balance sheet with strong operational cash flow

Jeremy Pilkington, Chairman of Vp plc, commented:
"The Group has produced another excellent set of results with profits, margins, return on capital and earnings per share all strongly ahead. Substantial capital investment in the rental fleet and the acquisition of Mr Cropper in September demonstrates our confidence in the opportunities for growth. The Board believes the Group is very well placed to continue to deliver further progress for the year as a whole and beyond."

- Ends -

Enquiries:

Vp plc
Jeremy Pilkington, Chairman	Tel: +44 (0) 1423 533 405
jeremypilkington@vpplc.com
Neil Stothard, Group Managing Director	Tel: +44 (0) 1423 533 445
neil.stothard@vpplc.com
Allison Bainbridge, Group Finance Director	Tel: +44 (0) 1423 533 445
allison.bainbridge@vpplc.com	www.vpplc.com

Media enquiries:

Abchurch Communications
Sarah Hollins / Shabnam Bashir / Jamie Hooper	Tel: +44 (0) 20 7398 7719
jamie.hooper @abchurch-group.com	www.abchurch-group.com

CHAIRMAN'S STATEMENT

I am very pleased to report another set of excellent results for the six months to 30^{September 2013. Profit before tax and amortisation increased by 17% to £12.8 million (2012: £11.0 million) on revenues ahead by 9% at £91.3 million (2012: £84.0 million). Return on capital employed improved to 13.9% (2012: 13.2%) and profit margins improved once again to 14.0% (2012: 13.0%). Basic earnings per share rose to 25.73 pence (2012: 21.63 pence).}

Although uncertainties and challenges remain, we have seen a notable improvement in sentiment in certain key market sectors in the UK, particularly within residential and infrastructure investment. This has contributed to the significantly improved performances at Groundforce, UK Forks and Hire Station as reviewed in more detail below.

The scale of opportunities is reflected in the capital investment in rental fleet which was over 46% higher than the prior year at £18.3 million. We also completed the acquisition of Mr Cropper, the UK's leading pile cropping rental company, in September 2013 for a consideration of £4.6 million. Strong operating cash flow absorbed this investment whilst holding period end net borrowings to £56 million (2012: £50 million).

Your board is declaring the payment of an increased interim dividend of 3.6 pence per share (2012: 3.25 pence per share) payable on 3 January 2014 to shareholders on the register as at 6 December 2013.

Review of Operations

Groundforce
Groundforce delivered another strong result with operating profits more than 12% ahead at £4.6 million (2012: £4.1 million) on revenues of £20.8 million (2012: £18.2 million). Pleasingly this performance was based on solid contributions from across the product range and all regions of the UK. Once again, we benefitted from the water companies' AMP5 work programmes as they gathered further momentum.

Our European activity has developed in line with expectations and whilst still relatively small, it continues to make progress and the future prospects that exist for this business remain promising.

Mr Cropper, the pile breaker rental business acquired at the beginning of September 2013, has been successfully integrated within the division and has delivered very satisfactory results in its first two months of trading.

UK Forks
UK Forks delivered an excellent performance with profits 59% ahead of last year at £1.5 million (2012: £1.0 million), on revenues 20% ahead at £8.4 million (2012: £7.0 million). The business has experienced strong and sustained demand, particularly from residential construction and we have made further significant investment in growing the rental fleet in response to high levels of utilisation.

Whilst the market remains competitive, particularly amongst the larger customers, we see further opportunities for growth especially as the volume of residential completions progresses back towards more normal historic levels.

Airpac Bukom
As anticipated, but disappointingly, profits at Airpac Bukom reduced to £0.7 million (2012: £1.3 million) on revenues flat at £9.6 million (2012: £9.6 million).

The quieter trading conditions experienced by Airpac Bukom in the previous financial year continued into the first quarter with delays to Liquefied Natural Gas ("LNG") projects in the Asia Pacific region and subdued demand from the North Sea fabric maintenance market, further exacerbated by the safety related helicopter groundings. Pleasingly however, we saw a much improved trend into the second quarter with trading levels recovering strongly. With an improved outlook in LNG related activity and stronger trading generally, we expect the business to maintain this improving trend.

Torrent Trackside
Torrent Trackside delivered profits of £1.5 million (2012: £1.7 million) on revenues relatively flat at £10.6 million (2012: £10.5 million) and whilst there has been a small reduction in margin, trading levels remain positive moving into the second half of the year.

Network Rail's procurement processes are being restructured in advance of the new five year investment programme (CP5) which commences in April 2014. We are fully engaged with this process and are well placed to support the successful contractors.

With the rail market continuing to attract sustained investment, Torrent's market leading offer places the business in a strong position to make further progress.

TPA
Profits at TPA improved 7% to £2.7 million (2012: £2.5 million) on revenues marginally ahead at £9.8 million (2012: £9.5 million). Demand from transmission upgrade work and a strong performance from the European activity contributed to this result. Within the UK, careful contract selection in the events market and robust cost management has delivered further improvements in margins. In Germany, the transmission and wind power sectors have, as anticipated, recovered well in the first half of the year.

Hire Station
Hire Station produced excellent first half results with profits 59% ahead at £2.7 million (2012: £1.7 million) on revenues up 9% at £31.9 million (2012: £29.3 million).

All sectors of the business; Tools, ESS Safeforce and MEP, reported improved profits.

The tool business has responded positively to growth and margin initiatives, with the branch network continuing to be strengthened. ESS Safeforce has enjoyed a buoyant first half, with ongoing capital investment to support strong demand. MEP has extended its branch network to improve national coverage and expanded its product offering.

Outlook
These are an excellent set of results which reflect the ability of an outstanding team to cope equally well with challenges and opportunities. Everyone in the Group should be justifiably proud of their achievement.

With sentiment in certain key sectors of the UK economy improving and with some of the wider structural threats receding, we believe the Group is very well placed to continue to deliver further progress for the year as a whole and beyond.

Jeremy Pilkington
Chairman
26 November 2013

Condensed Consolidated Income Statement
For the period ended 30 September 2013

	Note	Six months to 30 Sep 2013	Six months to 30 Sep 2012	Full year to 31 Mar 2013
		(unaudited)	(unaudited)	(audited)
		£000	£000	£000
Revenue	3	91,253	84,021	167,034
Cost of sales		(65,378)	(60,214)	(124,791)
Gross profit		25,875	23,807	42,243
Administrative expenses		(12,677)	(11,898)	(23,377)

Operating profit	3	13,198	11,909	18,866
Net financial expenses		(931)	(1,368)	(2,464)

Profit before amortisation and taxation		12,794	10,963	17,351
Amortisation of intangibles		(527)	(422)	(949)

Profit before taxation		12,267	10,541	16,402
Income tax expense	4	(2,206)	(2,196)	(3,353)
Net profit for the period		10,061	8,345	13,049

Basic earnings per share	7	25.73p	21.63p	33.62p

Diluted earnings per share	7	23.55p	19.96p	30.84p

Dividend per share	8	3.60p	3.25p	12.25p

Interim dividends proposed / paid (£000)		1,439	1,278	1,278
Final dividend paid (£000)		3,520	3,159	3,159

Condensed Consolidated Statement of Comprehensive Income
For the period ended 30 September 2013

	Six months to	Six months to	Full year to
	30 Sep 2013	30 Sep 2012	31 Mar 2013
	(unaudited)	(unaudited)	(audited)
	£000	£000	£000
Profit for the period	10,061	8,345	13,049
Other comprehensive income:

*Items that will not be reclassified to profit or loss*
Actuarial gains on defined benefit pension scheme	-	-	697
Tax on items taken direct to equity	-	-	(166)
Impact of tax rate change	(86)	(52)	(42)
Foreign exchange translation difference	(100)	(166)	45
*Items that may be subsequently reclassified to profit or loss*

Effective portion of changes in fair value of cash flow hedges	480	183	196

Other comprehensive income	294	(35)	730

Total comprehensive income for the period	10,355	8,310	13,779

Condensed Consolidated Statement of Changes in Equity
For the period ended 30 September 2013

	Six months to	Six months to	Full year to
	30 Sep 2013	30 Sep 2012	31 Mar 2013
	(unaudited)	(unaudited)	(audited)
	£000	£000	£000
Total comprehensive income for the period	10,355	8,310	13,779
Tax movements to equity	1,383	795	1,258
Impact of tax rate change	(80)	(10)	(42)
Share option charge in the period	904	781	1,225
Net movement relating to Treasury Shares and shares held by Vp Employee Trust	(613)	1,170	(1,922)
Dividends to shareholders	(3,520)	(3,159)	(4,437)
Change in equity during the period	8,429	7,887	9,861
Equity at the start of the period	100,922	91,061	91,061
Equity at the end of the period	109,351	98,948	100,922

Condensed Consolidated Balance Sheet
At 30 September 2013

	Note	30 Sep 2013	31 Mar 2013	30 Sep 2012
		(unaudited)	(audited)	(unaudited)
		£000	£000	£000
Non-current assets
Property, plant and equipment	5	117,883	110,577	114,474
Goodwill	6	35,575	33,989	33,989
Intangible assets	6	6,053	5,290	5,817
Employee benefits		268	80	-
Total non-current assets		159,779	149,936	154,280
Current assets
Inventories		5,508	5,679	5,223
Trade and other receivables		45,139	33,256	36,336
Cash and cash equivalents		4,858	8,712	5,932
Total current assets		55,505	47,647	47,491
Total assets		215,284	197,583	201,771
Current liabilities
Interest bearing loans and borrowings		(50)	(24,000)	(26,000)
Income tax payable		(2,565)	(1,539)	(2,748)
Trade and other payables		(37,561)	(34,838)	(36,798)
Total current liabilities		(40,176)	(60,377)	(65,546)
Non-current liabilities
Interest bearing loans and borrowings		(61,003)	(30,000)	(30,000)
Employee benefits		-	-	(827)
Deferred tax liabilities		(4,754)	(6,284)	(6,450)
Total non-current liabilities		(65,757)	(36,284)	(37,277)
Total liabilities		(105,933)	(96,661)	(102,823)

Net assets		109,351	100,922	98,948

Equity
Issued capital		2,008	2,008	2,309
Capital redemption reserve		301	301	-
Share premium		16,192	16,192	16,192
Hedging reserve		(314)	(794)	(807)
Retained earnings		91,137	83,188	81,227
Total equity attributable to equity holders of parent		109,324	100,895	98,921

Minority interest		27	27	27
Total equity		109,351	100,922	98,948

Condensed Consolidated Statement of Cash Flows
For the period ended 30 September 2013

	Note	Six months to	Six months to	Full year to
		30 Sep 2013	30 Sep 2012	31 Mar 2013
		(unaudited)	(unaudited)	(audited)
		£000	£000	£000
Cash flows from operating activities Profit before taxation		12,267	10,541	16,402
Adjustment for:
Pension fund contributions in excess of service cost		(188)	(219)	(429)
Share based payment charges		904	781	1,225
Depreciation	5	10,833	10,396	21,173
Amortisation of intangibles		527	422	949
Net financial expense		931	1,368	2,464
Profit on sale of property, plant and equipment		(1,305)	(1,301)	(2,569)
Operating cash flow before changes in working capital and provisions		23,969	21,988	39,215
Decrease / (increase) in inventories		208	(340)	(796)
(Increase)/decrease in trade and other receivables		(10,279)	(1,339)	1,741
Decrease in trade and other payables		(300)	(1,745)	(401)
Cash generated from operations		13,598	18,564	39,759
Interest paid		(990)	(1,394)	(2,504)
Interest received		7	9	20
Income tax paid		(1,749)	(1,551)	(3,809)
Net cash from operating activities		10,866	15,628	33,466
Investing activities
Proceeds from sale of property, plant and equipment		4,144	3,936	9,609
Purchase of property, plant and equipment		(17,157)	(15,149)	(29,635)
Acquisition of businesses (net of cash and overdrafts)		(4,503)	(4,117)	(4,117)
Net cash from investing activities		(17,516)	(15,330)	(24,143)

Cash flows from financing activities
Purchase of Treasury Shares and own shares by Employee Trust		(613)	(6,675)	(9,767)
Repayment of loans		(54,000)	(3,000)	(5,000)
New loans		61,000	13,000	13,000
Payment of hire purchase and finance lease liabilities		-	(1)	(1)
Dividends paid	8	(3,520)	(3,159)	(4,437)
Net cash used in financing activities		2,867	165	(6,205)

Net (decrease)/increase in cash and cash equivalents		(3,783)	463	3,118
Effect of exchange rate fluctuations on cash held		(71)	(113)	12
Cash and cash equivalents at beginning of period		8,712	5,582	5,582
Cash and cash equivalents at end of period		4,858	5,932	8,712

Notes to the Condensed Financial Statements

1. Basis of Preparation
Vp plc (the "Company") is a company domiciled in the United Kingdom. The Condensed Consolidated Interim Financial Statements of the Company for the half year ended 30 September 2013 comprise the Company and its subsidiaries (together referred to as the "Group").

This interim announcement has been prepared in accordance with the Disclosure and Transparency Rules of the UK Financial Services Authority and the requirements of IAS34 ("Interim Financial Reporting") as adopted by the EU. The accounting policies applied are consistent for all periods presented and are in line with those applied in the annual financial statements for the year ended 31 March 2013, which were prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU.

The interim announcement was approved by the Board of Directors on 25 November 2013.

The Condensed Consolidated Interim Financial Statements do not include all the information required for full annual Financial Statements.

The comparative figures for the financial year ended 31 March 2013 are extracted from the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditor and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 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; these form the basis of the judgements relating to 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.

As stated in the year end accounts, the Group continues to be in a healthy financial position. Since the year end net debt has increased by £10.9 million to £56.2 million. The Group's total banking facilities are £70 million, including an overdraft facility. The Board has evaluated these facilities and the associated covenants on the basis of current forecasts, taking into account the current economic climate and an appropriate level of sensitivity analysis. On this basis the Directors have a reasonable expectation that the Group has adequate resources to continue in operation for the foreseeable future and to manage its business risks. For this reason the going concern basis has been adopted in the preparation of these financial statements.

2. Risks and Uncertainties
There are a number of risks and uncertainties which could have a material impact on the Group's performance.

The principal risks faced by the Group, and the activities undertaken to mitigate them, as at 31 March 2013 were set out on page 25 of the 31 March 2013 Financial Statements. Nothing has occurred since these Financial Statements were published to change the Group's view on these risks. The Group's exposure to risk is therefore considered by the Board to be within normal parameters and represents an acceptable level of risk.

3. Summarised Segmental Analysis

	Revenue		Operating Profit
	Sept 2013	Sept 2012	Sept 2013	Sept 2012

	£000	£000	£000	£000
Groundforce	20,818	18,197	4,628	4,123
UK Forks	8,408	7,022	1,518	957
Airpac Bukom	9,646	9,560	679	1,315
Torrent Trackside	10,633	10,452	1,487	1,709
TPA	9,826	9,518	2,707	2,529
Hire Station	31,922	29,272	2,706	1,698
	91,253	84,021	13,725	12,331
Amortisation			(527)	(422)
			13,198	11,909

4. Income Tax
The effective tax rate of 18.0% in the period to 30 September 2013 (30 September 2012: 20.8%) is made up of two elements. Firstly, an estimated underlying tax rate of 22.4% (30 September 2012: 23.8%) which reflects the current standard rate of tax of 23%, as adjusted for estimated permanent differences for tax purposes offset by gains covered by exemptions. Secondly there is a release of £0.5m (4.4%) from the deferred tax balance as a result of the enacted changes in the future UK corporation tax rate from 23% to 20% in future periods.

5. Property, Plant and Equipment

	Sept 2013	Sept 2012	Mar 2013
	£000	£000	£000
Carrying amount 1 April	110,577	110,680	110,680
Additions	19,542	14,085	25,285
Acquisitions	1,458	2,798	2,798
Depreciation	(10,833)	(10,396)	(21,173)
Disposals	(2,839)	(2,635)	(7,040)
Effect of movements in exchange rates	(22)	(58)	27
Closing carrying amount	117,883	114,474	110,577

The value of capital commitments at 30 September 2013 was £10,010,000 (31 March 2013 £2,943,000).

6. Goodwill and intangibles
On 3 September 2013 Vp plc acquired the share capital of Mr Cropper Limited for £4.6 million and the business and net assets of the acquired company have been transferred to Vp plc. The acquisition has been consolidated into these results using provisional completion figures. On this basis the fair value of net assets acquired was £3.0 million including intangibles of £1.3 million leaving goodwill of £1.6 million.

7. Earnings Per Share
Earnings per share have been calculated on 39,104,381 shares (2012: 38,579,093 shares) being the weighted average number of shares in issue during the period. Diluted earnings per share have been calculated on 42,730,495 shares (2012: 41,810,258 shares) adjusted to reflect conversion of all potentially dilutive ordinary share options. Basic earnings per share before the amortisation of intangibles was 26.77 pence (2012: 22.46 pence) and was based on an after tax add back of £406,000 (2012: £321,000). Diluted earnings per share before amortisation of intangibles was 24.49 pence (2012: 20.73 pence).

8. Dividends
The Directors have declared an interim dividend of 3.60 pence (2012: 3.25 pence) per share payable on 3 January 2014 to shareholders on the register at 6 December 2013. The dividend proposed at the year end was subsequently approved at the AGM in July and £3,520,000 was paid in the period (2012 paid: £3,159,000). 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.

9. Analysis of Net Debt

	As at	Cash	Acquisition	As at
	1 Apr 13	Flow		30 Sep 13
	£000	£000	£000	£000
Cash in hand and at bank less overdrafts	8,712	(3,951)	97	4,858
Revolving credit facilities	(54,000)	(7,000)	-	(61,000)
Finance leases and hire purchases	-	-	(53)	(53)
	(45,288)	(10,951)	44	(56,195)

The Group's bank facilities comprise a £35 million committed three year revolving credit facility which expires in May 2016, a £30 million committed four and a half year revolving credit facility expiring in October 2017 and overdraft facilities totalling £5 million.

10. Related Party Transactions
Transactions between Group Companies, which are related parties, have been eliminated on consolidation and therefore do not require disclosure.

11. Forward Looking Statements
The Chairman's Statement includes 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.

Responsibility statement of the directors in respect of the half-yearly financial report

We confirm that to the best of our knowledge:

· the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU

· the interim management report includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

By order of the Board
26 November 2013

The Board
The Directors who served during the 6 months to 30 September 2013 were:

Jeremy Pilkington (Chairman)
Neil Stothard
Allison Bainbridge
Peter Parkin (resigned 23 July 2013)
Steve Rogers
Phil White (appointed 15 April 2013)

Independent Review Report to Vp plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2013 which comprises the condensed consolidated interim income statement, the condensed consolidated interim statement of comprehensive income, the condensed consolidated interim balance sheet, the condensed consolidated interim statement of changes in equity, the condensed consolidated interim cash flow statement and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

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 Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA"). 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 half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2013 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

Lindsey Crossland

For and on behalf of KPMG Audit Plc

Chartered Accountants

Leeds

26 November 2013

This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
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

HUG#1745657