15 June 2004
Vp plc
Preliminary Results
Vp plc, the equipment rental specialist, today announces
its preliminary results for the year ended 31 March 2004.
Highlights
·
Turnover up 11% to £83.5m (2003: £75.5m)
·
Profit before tax up 19% to £8.9m (2003: £7.5m)
·
Earnings per share increased by 18% to 14.59p (2003:
12.36p)
·
Recommended final dividend of 3.4p per share (2003: 3.0p)
giving a total dividend of 5.0p per share (2003: 4.5p) an increase of 11%
·
Return on capital employed improved to 15.1% (2003: 14.4%)
·
Net debt of £7.5m (2003: £6.1m), representing gearing of
14%, after rental fleet investment of £10.8m (2003: £14.1m) and £6.5m of
acquisitions during the year
Jeremy
Pilkington, Chairman and Chief Executive, commented:
“Overall,
the Group has delivered another very satisfactory performance with some
excellent individual results. Hire
Station has been a disappointment but we have taken robust steps which we
believe will provide a sound platform for the future.
Our
ambition remains to deliver sustainable profit growth whilst further improving
return on capital employed and we believe that the constituent elements to
achieve this are in place.
The
Group’s strong balance sheet and low gearing enables us to take advantage of
growth opportunities as they arise, as has been clearly demonstrated by the
successful expansion within Groundforce this year.”
CHAIRMAN'S
STATEMENT
OVERVIEW
I am pleased to report another very satisfactory year for
the Group overall. Profit before tax
rose 19% to £8.9m (2003: £7.5m) on turnover up 11% to £83.5m (2003:
£75.5m). Earnings per share increased
by 18% to 14.6p.
The Board is recommending a final dividend of 3.4p making a
total dividend for the year of 5.0p (2003: 4.5p), an increase of 11%. The dividend is payable on 1 October 2004 to
shareholders registered as of 10 September 2004.
Our strong cash flow has enabled us to maintain gearing at a
very acceptable 14% even in a year when we have invested £10.8m in our rental
fleets and made a number of acquisitions with an aggregate consideration of
£6.5m.
Groundforce
Rental and
sales of excavation support systems to the water, civil engineering and
construction industries, plus three specialist offerings: Piletec – pile
driving and breaking equipment; Stopper Specialists – pipe integrity testing
products; Survey Technology – surveying and water flow measurement instruments.
This was another outstanding year for Groundforce which saw
profits nearly double to £5.3m (2003: £2.7m).
Turnover rose by 58% to £19.3m (2003: £12.2m).
Groundforce experienced strong demand from the civil
engineering sector including several large, one-off projects such as the
Channel Tunnel Rail Link and Heathrow Terminal 5. Activity associated with the third phase of the water utilities
capital investment programme (AMP3) continued and although this five year
infrastructure improvement programme is now nearing its end, planning for its
successor, AMP4, has already commenced.
We are cautiously optimistic that a smooth transition between the two
programmes will be achieved.
Although Groundforce’s core activity remains the design and
provision of ground support systems it has, over the past two years,
considerably extended its complementary range of specialist services. Survey Technology supplies laser and
surveying equipment and hires and services water flow monitoring
equipment.
Piletec hires a broad range of piling hammers, breakers and
sheet piles and Stopper Specialists provides pipe stoppers and testing
equipment.
Piletec and Stopper Specialists are the longer established
of these businesses and both have had a very successful year contributing
significantly to the excellent overall Groundforce achievement.
During the year, Groundforce made four acquisitions. In July 2003, we acquired the share capital
of Trench Shore Limited for £2.7m.
Trench Shore served similar markets to our own ground support business
and in the year ended 31 October 2002 reported turnover of £4.1m and net assets
of £2.5m. In March 2004, we acquired
the business and assets of Eve Shorco, a trading division of Peterhouse Group
PLC for a consideration of £2.15m. Eve
Shorco is a long established supplier of shoring equipment which had net book
value of assets of approximately £2.6m at completion. These two acquisitions have considerably strengthened our
position in the ground support market and improved our coverage of the
important South Eastern region with the addition of three more branches.
In September 2003, we acquired In Depth for £0.45m. In Depth rents and provides service support
for water flow monitoring equipment.
This acquisition further extends the range of our specialist water industry
offering.
In February 2004, we acquired the laser and survey equipment
rental business and assets of Sokkia Limited for £1.15m. This acquisition considerably strengthens
our existing laser and survey business and the addition of branches in Crawley,
Crewe and Birmingham improves our national coverage.
All these acquisitions have been fully integrated within
Groundforce and are performing in line with our expectations.
Investment in rental fleet totalled £1.8m (2003: £1.4m).
UK Forks
Hire of rough terrain material handling equipment and accessories to
the housebuilding and construction industry.
UK Forks made another solid contribution with profits of
£1.3m (2003: £1.3m) on turnover of £12.4m (2003: £10.8m).
Since its inception just four years ago, UK Forks has
established itself as the UK’s leading specialist hirer of telescopic handlers
and associated equipment working closely with our customers to identify
opportunities to improve safety and productivity on building sites. The fleet of well over a thousand machines
enjoys particularly high levels of utilisation due to centralised booking,
efficient fleet management and market sector targeting.
Market conditions remain positive particularly in the key
housebuilding sector and we welcome the recognition of the necessity for long
term planning to improve the national housing stock.
Investment in rental fleet totalled £2.5m (2003: £2.9m).
Airpac
Oilfield Services
Servicing the international oil and gas exploration and development
markets with specialist air compressors and associated equipment.
This year has been Airpac’s first full year as a pure
oilfield services support business following the disposal of its onshore rental
business in 2002. Profits rose 22% to £533k (2003: £436k) on turnover of £3.7m
(2003: £4.1m, excluding onshore turnover).
Airpac has continued to develop its
market leading position in the provision of specialist compressed air and
on-site steam and nitrogen generation services supporting industry segments as
diverse as well testing, structural fabric maintenance, pipeline dewatering and
underbalanced drilling.
Project activity in the South East Asia
market, serviced out of our Singapore base, was relatively weak in the first
half but the order book for 2004/5 is considerably stronger. North Sea activity remained healthy during
the period.
Although Airpac is the smallest of our Group businesses, we
believe that its established reputation within this highly specialist sector
offers excellent growth opportunities in this global market.
Investment in rental fleet totalled £0.5m (2003: £0.9m).
Hire Station
Rental and
sale of tools, small equipment and allied services to industry, construction
and homeowners, plus three specialist offerings: Safeforce – safety and environmental
products, Lifting Point - materials handling and lifting gear hire, One Call –
national call centre for tool hire.
Turnover was static at £36.5m (2003:
£36.2m) but reorganisation and rationalisation costs of approximately £0.5m
resulted in a loss for the year of £0.4m.
Like for like profit for the prior year was £0.9m.
This result reflects a very disappointing
year for Hire Station, but one in which I believe we have started to lay the
foundations for the future. As reported
in my interim results statement, a number of measures have been taken to
restore this business to a more acceptable performance including the
appointment in November 2003 of John Singleton as Managing Director. His new management team has launched a
series of initiatives to reduce costs and deliver sales growth. These include the consolidation of three
administrative centres into a single national accounting centre,
rationalisation of the senior and middle management structures, refocusing of
the sales effort and closure of a number of branches. These changes have reduced the overhead cost base and will give
us a clearer emphasis on revenue and profit growth in the future.
Safeforce had an extremely busy year creating a national
network of locations, the most recent of which started trading in Leeds in
February 2004. Lifting Point has also
had a very active year adding a number of new locations to its network. Both of these branch-opening programmes had
a negative effect on profit in the period but the infrastructure now exists on
which to build profitable revenue growth.
One Call had a very solid year. Total revenues were up on prior year and some significant
business wins were gained, particularly in the retail market.
Investment in rental fleet totalled £4.2m
(2003: £6.2m).
Torrent
Trackside
Hire of
portable track repair and renewals equipment, trackside lighting and related
support services to rail infrastructure maintenance companies.
As highlighted in my statement last year, we did not expect
a repetition this year of Torrent’s exceptional 2003 performance. Torrent nevertheless produced an excellent
result with profits of £2.3m (2003: £3.1m).
Turnover rose marginally to £11.6m (2003: £11.3m).
The announcement by Network Rail in October 2003 that it was
taking track maintenance contracts back in-house caused considerable uncertainty
within the industry and led to the deferral of some project work.
The transition to in-house management of maintenance
contracts is now largely completed and we are pleased that the renewals
contracts have been awarded thereby permitting this work to be undertaken.
Given the ongoing changes within the rail sector and the
inevitable political dimension to the decision making process, it is difficult
to predict the likely structure for the industry with any reasonable degree of
certainty. However, the need for very
significant investment in the rail infrastructure network is inescapable and
Torrent is excellently placed both in terms of expertise and market share to
benefit from the promised future spending.
Investment in rental fleet totalled £1.8m (2003: £2.7m).
Management changes
The Group’s activities have grown to
a size and diversity where the Board now considers it appropriate to strengthen
the senior management team. I am
therefore pleased to report that Neil Stothard has been appointed Group
Managing Director with responsibility for operational management of the Group’s
five businesses. I shall become
Executive Chairman. Neil will be
succeeded as Group Finance Director in July 2004 by Mike Holt who joins us from
Rolls- Royce Group plc. These Board
changes have been announced earlier today.
The Board believes that this new
management structure will assist us to take full advantage of the many growth
opportunities that we continue to identify.
SUMMARY AND
OUTLOOK
Overall, the Group has delivered another very satisfactory
performance with some excellent individual results. Hire Station has been a disappointment but we have taken robust
steps which we believe will provide a sound platform for the future.
Our ambition remains to deliver sustainable profit growth
whilst further improving return on capital employed and we believe that the
constituent elements to achieve this are in place.
The Group’s strong balance sheet and low gearing enables us
to take advantage of growth opportunities as they arise, as has been clearly
demonstrated by the successful expansion within Groundforce this year.
Jeremy Pilkington
Chairman and Chief Executive
|
|
Notes |
2004 £000 |
|
2003 £000 |
|
|
|
|
|
|
Turnover
|
|
83,497 |
|
75,546 |
|
|
|
|
|
|
|
Trading profit |
|
20,211 |
|
18,687 |
|
|
|
|
|
|
|
|
(11,180) |
|
(10,282) |
|
|
|
|
|
|
|
|
Operating profit before goodwill
amortisation |
|
9,031 |
|
8,405 |
|
|
|
|
|
|
|
Amortisation of
goodwill |
|
(377) |
|
(318) |
|
|
|
|
|
|
|
Operating profit |
|
8,654 |
|
8,087 |
|
|
|
|
|
|
|
Profit on disposal
of properties |
|
643 |
|
- |
|
|
|
|
|
|
|
Profit on ordinary activities before
interest |
|
9,297 |
|
8,087 |
|
|
|
|
|
|
|
|
(429) |
|
(581) |
|
|
|
|
|
|
|
|
Profit on ordinary activities before
taxation |
|
8,868 |
|
7,506 |
|
|
|
|
|
|
|
Taxation |
5 |
(2,529) |
|
(2,119) |
|
|
|
|
|
|
Profit for the financial year
|
|
6,339 |
|
5,387 |
|
|
|
|
|
|
Dividends
|
7 |
(2,142) |
|
(1,964) |
|
|
|
|
|
|
|
Retained profit for the financial
year |
|
4,197 |
|
3,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per 5p
ordinary share |
6 |
14.59p |
|
12.36p |
|
|
|
|
|
|
|
Earnings per 5p
ordinary share before goodwill amortisation |
6 |
15.46p |
|
13.08p |
|
|
|
|
|
|
|
Dividend per 5p
ordinary share |
7 |
5.00p |
|
4.50p |
All the activities
reflected in the profit and loss account are continuing, as defined by FRS 3.
Vp plc
|
|
31 March
2004 |
|
31 March 2003 |
|||
|
|
£000 |
£000 |
|
£000 |
£000 |
|
|
Fixed assets |
|
|
|
|
|
|
|
Intangible assets –
goodwill |
7,136 |
|
|
5,814 |
|
|
|
49,911 |
|
|
49,689 |
|
||
|
Investments – own
shares |
2,315 |
|
|
1,532 |
|
|
|
|
|
59,362 |
|
|
57,035 |
|
|
|
|
|
|
|||
|
Current assets |
|
|
|
|
|
|
|
Stocks |
2,018 |
|
|
2,180 |
|
|
|
Debtors |
21,694 |
|
|
18,764 |
|
|
|
Cash at bank and in
hand |
1,087 |
|
|
3,330 |
|
|
|
|
24,799 |
|
|
24,274 |
|
|
|
|
|
|
|
|
|
|
|
Creditors: amounts falling due within
one year |
(17,384) |
|
|
(18,619) |
|
|
|
|
|
|
|
|
|
|
|
Net current assets |
|
7,415 |
|
|
5,655 |
|
|
|
|
|
|
|
|
|
|
Total assets less current liabilities |
|
66,777 |
|
|
62,690 |
|
|
|
|
|
|
|
|
|
|
Creditors: amounts falling due after
more than one year |
|
(8,313) |
|
|
(8,365) |
|
|
|
|
|
|
|
|
|
Provisions for liabilities and
charges
|
|
(4,319) |
|
|
(4,377) |
|
|
|
|
|
|
|
|
|
Net assets
|
|
54,145 |
|
|
49,948 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital and reserves
|
|
|
|
|
|
|
|
Called up share
capital |
|
2,309 |
|
|
2,309 |
|
|
Share premium
account |
|
16,192 |
|
|
16,192 |
|
|
Revaluation reserve |
|
599 |
|
|
832 |
|
|
Profit and loss
account |
|
35,018 |
|
|
30,588 |
|
Equity shareholders’ funds
|
|
54,118 |
|
|
49,921 |
|
|
Equity minority interests |
|
27 |
|
|
27 |
|
|
|
|
54,145 |
|
|
49,948 |
|
Vp plc
|
31 March
2004 |
|
31 March 2003 |
|||
|
|
£000 |
£000 |
|
£000 |
£000 |
|
|
|
|
|
|
|
|
Cash flow from operating activities |
|
16,791 |
|
|
16,644 |
|
|
|
|
|
|
|
Return
on investments and servicing of finance
|
|
|
|
|
|
|
Interest paid |
(435) |
|
|
(564) |
|
|
Interest received |
18 |
|
|
21 |
|
|
Interest element of
finance lease rental payments |
(25) |
|
|
(73) |
|
|
Net cash outflow from returns on
investments and servicing of finance |
|
(442) |
|
|
(616) |
|
|
|
|
|
|
|
Taxation
|
|
|
|
|
|
|
UK corporation tax
paid |
|
(2,407) |
|
|
(2,035) |
|
|
|
|
|
|
|
|
Capital expenditure and financial
investment |
|
|
|
|
|
|
Purchase of
tangible fixed assets |
(13,068) |
|
|
(15,285) |
|
|
Purchase and sale
of investments |
(793) |
|
|
(25) |
|
|
Sale of tangible
fixed assets |
7,377 |
|
|
8,997 |
|
Net
cash outflow from capital expenditure and financial investment
|
|
(6,484) |
|
|
(6,313) |
|
|
|
|
|
|
|
Acquisitions and disposals
|
|
|
|
|
|
|
Purchase of
subsidiaries and businesses (net of cash and overdraft purchased) |
|
(6,465) |
|
|
(1,460) |
|
|
|
|
|
|
|
Equity dividends paid
|
|
(1,984) |
|
|
(1,875) |
|
|
|
|
|
|
|
Cash (outflow) / inflow before
financing
|
|
(991) |
|
|
4,345 |
|
|
|
|
|
|
|
|
Financing |
|
|
|
|
|
|
Medium term loans |
(143) |
|
|
(133) |
|
|
Loan notes |
(590) |
|
|
(1,039) |
|
|
Capital element of
finance lease rental payments |
(519) |
|
|
(893) |
|
|
Net outflow from financing |
|
(1,252) |
|
|
(2,065) |
|
|
|
|
|
|
|
|
(Decrease) / increase in cash in the
year |
|
(2,243) |
|
|
2,280 |
Vp plc
Notes
|
1. |
Basis of preparation |
This
announcement has been prepared on a consistent basis with the accounting
policies set out in the Group’s financial statements as at 31 March 2003.
|
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 2004 |
|
|
|
2004 £000 |
|
2003 £000 |
|
|
Profit for the financial year
|
6,339 |
|
|
|
|
Dividends |
(2,142) |
|
(1,964) |
|
|
Net increase in shareholders’ funds |
4,197 |
|
3,423 |
|
|
Opening shareholders’ funds |
49,921 |
|
46,498 |
|
|
Closing shareholders’ funds |
54,118 |
|
49,921 |
|
5. |
The current and
prior year effective tax rates are slightly lower than expected due to the
write back of over provisions from previous years. |
|
6. |
Earnings per share
have been calculated on 43,444,660 shares (2003: 43,600,602) being the
weighted average number of shares in issue during the year. |
|
7. |
The Directors are
proposing a final dividend of 3.40 pence (2003: 3.00 pence) per share making
a total dividend for the year of 5.00 pence (2003: 4.50 pence) per share
which is payable on 1 October 2004 to shareholders on the register on 10
September 2004. |
|
8. |
Reconciliation of operating profit to
net cash inflow from operating activities |
|
|
|
2004 |
|
2003 |
|
|
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
Operating profit
|
8,654 |
|
|
|
|
Depreciation |
11,180 |
|
10,282 |
|
|
Amortisation of
goodwill |
377 |
|
318 |
|
|
Profit on sale of
tangible fixed assets |
(1,209) |
|
(1,738) |
|
|
Decrease in stocks |
175 |
|
133 |
|
|
Increase in debtors |
(1,922) |
|
(1,473) |
|
|
(Decrease) /
increase in creditors |
(464) |
|
1,035 |
|
|
|
|
|
|
|
|
Net cash inflow
from operating activities |
16,791 |
|
16,644 |
|
9. |
Analysis of net debt |
|
|
As at 1 April 2003 |
Cash Flow |
Acquisitions |
As at 31 March
2004
|
|
£000 |
£000 |
£000 |
£000 |
|
|
Cash at bank and in
hand |
3,330 |
(2,243) |
1,087 |
|
|
Medium term loans |
(8,254) |
143 |
- |
(8,111) |
|
Loan notes |
(835) |
590 |
- |
(245) |
|
Finance leases and
hire purchase |
(388) |
519 |
(354) |
(223) |
|
|
(6,147) |
(991) |
(354) |
(7,492) |
|
10. |
The
financial information set out above does not constitute the company’s
statutory accounts for the years ended 31 March 2004 or 2003. The statutory accounts for 2003 have been
delivered to the registrar of companies and those for 2004 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 2004 will be posted to shareholders in
July and the Annual General Meeting will be held on 7 September 2004. |