TIDMVP.
Press Release 8 June 2010
Vp plc
("Vp" or "the Group")
Final Results
Vp plc, the equipment rental specialist, today announces its Final Results for
the year ended 31 March 2010.
Highlights
* Revenues of GBP134.2 million (2009 restated: GBP157.5 million)
* Profit before amortisation, exceptional items and tax of GBP16.0 million
(2009: GBP21.7 million)
* Basic earnings per share of 24.68 pence (2009: 36.41 pence)
* Proposed final dividend of 7.7p per share to maintain last year's full
year dividend of 10.8p
* Net debt reduced by GBP17.5 million to GBP48.3 million
* Overseas activities providing important and growing non-UK exposure
* Solid balance sheet with strong operational cashflows
Jeremy Pilkington, Chairman of Vp plc, commented:
"Despite challenging conditions continuing in most of our markets, this has been
another robust performance by the Group. We believe that our combination of
products and markets will continue to stand us in good stead, providing a
compelling mix of downside resilience and upside opportunity. Vp enters the new
year in excellent financial shape, able to sustain the development of the Group
over the longer term, and cope with the shorter term challenges presented by the
current trading environment. Overall, the Board looks forward to the future
with confidence."
- Ends -
Enquiries:
Vp plc
Jeremy Pilkington, Chairman Tel: +44 (0) 1423 533 405
jeremypilkington@vpplc.com
<mailto:jeremypilkington@vpplc.com>
Neil Stothard, Group Managing Director Tel: +44 (0) 1423 533 445
neil.stothard@vpplc.com
<mailto:neil.stothard@vpplc.com>
Mike Holt, Group Finance Director Tel: +44 (0) 1423 533 445
mike.holt@vpplc.com www.vpplc.com <http://www.vpplc.com/>
<mailto:mike.holt@vpplc.com>
Media enquiries:
Abchurch Communications
Sarah Hollins / Mark Dixon Tel: +44 (0) 20 7398 7729
mark.dixon@abchurch-group.com www.abchurch-group.com
<mailto:mark.dixon@abchurch-group.com> <http://www.abchurch-group.com/>
CHAIRMAN'S STATEMENT
In the face of the worst economic downturn since the Depression, I am very
pleased to be able to report results which, under the circumstances, represent a
highly satisfactory outcome for the Group.
Having delivered growth last year despite the onset of the economic downturn,
this year the Group experienced a more severe impact from recessionary
pressures. The Group achieved profit before amortisation, exceptional items and
tax of GBP16.0 million (2009: GBP21.7 million) even as revenues fell by 15% to
GBP134.2 million (2009 restated: GBP157.5 million). Basic earnings per share
decreased to 24.68 pence (2009: 36.41 pence) based on profit before taxation of
GBP14.3 million (2009: GBP20.8 million). Many companies in our sector have been
obliged to make large scale asset write-downs, cut dividends and dilute
shareholder equity to repair unsound balance sheets. Our focus on sustainably
enhancing shareholder value and prudent financial management has enabled us to
avoid these scenarios and, we believe, has vindicated our measured long term
approach to managing the business.
Our emphasis on cash management has enabled the Group to reduce borrowings by
GBP17.5 million to GBP48.3 million (2009: GBP65.8 million) representing a comfortable
financial gearing level of 44%. This has been accomplished even as the downturn
accelerated and whilst continuing to invest GBP14 million in rental assets in
support of specific opportunities and fleet renewal.
Taking into account these excellent results and our view of future prospects for
the Group, the Board is recommending the payment of a final dividend of 7.7
pence per share to maintain last year's full year dividend of 10.8 pence.
Subject to shareholders' approval at the Annual General Meeting in September,
the dividend will be paid on 1 October 2010 to members registered as of 3
September 2010.
Looking ahead, the systemic threats to the global economy seem to have receded
although unpredictable "after-shocks" should be expected for some time. Within
the UK, demand has generally stabilised and some markets, such as rail and
residential construction, are showing signs of growth, albeit from a severely
depressed base.
However, the measures that will have to be taken to reduce public sector
borrowing have not yet impacted economic activity and, in particular, government
capital investment programmes. Public infrastructure investment has become an
important market for several of our businesses and the prospect of cutbacks, not
so much this year (2010/11) as thereafter, causes us to view medium term
prospects with a degree of caution.
The Group's overseas activities, at present most strongly represented by Airpac
Bukom but also with a growing presence in Europe for some of our other
businesses, give us an important and growing non-UK exposure.
We believe that the combination of our robust product portfolio and diverse end
markets, together with the Group's financial strength, will continue to provide
a compelling mix of downside resilience and upside opportunity for the future.
As always, it is my pleasure to acknowledge the skills and dedication of
employees throughout the Group who have delivered exceptional service and
performance under the most trying circumstances this year.
Jeremy Pilkington
Chairman
8 June 2010
BUSINESS REVIEW
OVERVIEW
Vp plc is a specialist equipment rental business providing products and services
to a diverse range of markets including civil engineering, rail, oil and gas
exploration, construction, outdoor events and industry.
The performance of the Group, in spite of the very difficult trading conditions
in most markets, was extremely robust and demonstrated the quality, breadth and
overall resilience of the Vp businesses. The Group was explicitly profitable,
strongly cash generative and finished the year with a balance sheet net asset
value GBP7 million stronger than at the start.
Revenue GBP134.2 million (2009 restated: GBP157.5
million)
Operating Profit before GBP18.6 million (2009: GBP25.4 million)
amortisation and exceptional items
Investment in Rental Fleet GBP13.9 million (2009: GBP28.4 million)
Operating margin 13.9% (2009: 16.1%)
The divisional businesses have all been affected to varying degrees by the
recessionary conditions experienced in the UK. The publicly funded
infrastructure markets generally held up well but general construction remained
depressed. Whilst house building was quiet for most of the year we did see some
tentative signs of recovery in the final quarter. In the regulated sector,
water related demand (AMP4) was good until, as expected, the programme drew to
an end in the second half. Furthermore, transmission activity remained good,
though rail remained very subdued.
Operating profits before amortisation and exceptional items decreased 27% to
GBP18.6 million, on revenues 15% reduced at GBP134.2 million. Operating margins
before amortisation reduced from 16.1% to a creditable 13.9% in the year.
The development of the business overseas has continued, in particular for Airpac
Bukom, TPA and Groundforce. Overseas revenues now represent 15% of total group
revenues.
Most of the businesses had to take cost reduction actions during the year to
mitigate the impact of lower demand. This involved a combination of wage
freezes, working hour reductions, vehicle and fleet reductions and a small
number of depot closures/mergers. These were difficult but necessary actions
given the extreme uncertainty prevailing at the start of the financial year but
have left the Group well positioned to capitalise on any upturn.
The focus of the management teams has been to protect profitability where
possible, whilst focussing on cash conservation through controlled capital
investment and strong working capital management. This has successfully
delivered a net reduction in Group borrowings of GBP17.5 million in the year.
Investment in rental fleet was halved to GBP13.9 million, to reflect the reduction
in demand for growth capital expenditure whilst maintaining replacement
investment in the rental fleet. Proceeds from fleet disposals totalled GBP8.5
million, leading to a 'net' cash investment in fleet of GBP5.4 million (2009:
GBP17.6 million) in the period. The long life nature of much of our rental fleet
allows us to flex our capital investment profile to suit market conditions
without creating an investment spike at a later date.
GROUNDFORCE
Excavation support systems, specialist solutions and trenchless technology for
the water, gas, civil engineering and construction industries.
Revenue GBP32.9 million (2009 restated: GBP40.6 million)
Operating Profit before GBP9.2 million (2008: GBP11.0 million)
amortisation
Investment in Rental Fleet GBP3.5 million (2009: GBP6.8 million)
Whilst Groundforce experienced a revenue fall of 19%, the profit result of GBP9.2
million demonstrates the excellent quality of the business.
As expected, AMP4 demand underpinned revenues at the start of the year though
water activity slowed as anticipated in the second half as the programme
completed. Major propping activity performed well again with the second Tyne
Tunnel project successfully completing in the autumn. Demand from
infrastructure project work in general and Olympic site work in particular held
up well.
Overall the shoring activity had another good year although house building and
commercial development remained very subdued. The specialist divisions of
Piletec, Easiform and U Mole who have greater exposure to general contracting
suffered relatively more than shoring. U Mole experienced a slow year for
product sales, but rental demand was satisfactory and growing. The market in
Ireland remained very challenging as lack of infrastructure investment limited
demand. The Group continues to establish a European mainland presence and is
making good progress on a number of fronts as we expand the geographic reach of
our specialist shoring activity. The Harbray acquisition announced following
the year end will be integrated within the division. Capital investment of GBP3.5
million was mostly fleet replacement.
There are further challenges ahead for Groundforce in the coming year as the
water related activity experiences a slow year ahead of AMP5 picking up, but the
quality and breadth of the Groundforce divisional activities should underpin the
performance of this business.
UK FORKS
Rough terrain material handling equipment for industry, residential and general
construction.
Revenue GBP10.6 million (2009 restated: GBP16.9 million)
Operating Profit before GBP0.0 million (2009: GBP1.2 million)
amortisation
Investment in Rental Fleet GBP0.1 million (2008: GBP1.3 million)
As anticipated, trading conditions continued to be extremely challenging
throughout the year for UK Forks, however the Group has seen some partial
recovery in demand during the final quarter. The division reported a break even
result (2009: profit GBP1.2 million) on revenues 37% down on prior year. The lack
of demand from the housing market continued but this was exacerbated by a rapid
decline in general construction demand. The combination of these two factors
led to the sharp fall in revenues and hence profitability for the year. Early
cost actions helped to mitigate the impact of the revenue shortfall. The
combination of improving demand and a lower cost base saw UK Forks creditably
return to profitability in the second half, thus eliminating the small first
half loss.
Capital investment in fleet was minimal in the year as the focus remained on
disposing of surplus equipment to match the fleet, as closely as possible, to
current demand patterns. Disposals of surplus fleet generated proceeds of GBP2
million and healthy profits even at the bottom of the trading cycle,
demonstrating the prudence of our depreciation policy.
The new financial year has started positively for the division and we have seen
an improvement in house building demand in particular. Tight cost management
has created a lean structure which is nevertheless capable of responding to a
recovery in demand which should lead to further business progress in the year
ahead. Capital investment will resume albeit on a modest basis.
AIRPAC BUKOM OILFIELD SERVICES
Equipment and service providers to the international oil and gas exploration and
development markets.
Revenue GBP15.7 million (2009: GBP14.7 million)
Operating Profit before amortisation GBP3.9 million (2009: GBP3.9 million)
Investment in Rental Fleet GBP4.6 million (2009: GBP6.3 million)
Airpac Bukom reported static operating profits of GBP3.9 million. Revenues
increased by 7% to GBP15.7 million, largely as a result of favourable exchange
movements.
Activity during 2009 in many of our oil and gas market segments was, as
predicted, affected by the significantly reduced oil price and lower oil demand
against the backdrop of adverse general global economic conditions. Combined
with the impacts of the credit market squeeze, this had the consequence of an
overall reduction in exploration and production capital expenditures of roughly
15% from the oil majors. This resulted in a contraction of exploration and
appraisal drilling by oil operators and deferral of a number of offshore
projects with a subsequent knock on effect on the demand for our well testing
packages.
The geographic spread of our operations with rental activities in over 60
countries, local support network and our diverse range of service offerings has
provided some insulation to this challenging business environment.
Within our main well testing market, the impact on activity has varied by
region. Asia, Caspian, Former Soviet Union (FSU) and Middle East regions were
quieter whilst Africa and Latin America held up well. Maintenance related
activity in the North Sea was reduced, though this was partially offset by
improved offshore operations support with oil operators.
The division has continued to pursue a wider range of applications and new
markets to better exploit the highly specialised capabilities of the fleet. In
late 2009, we were very pleased to have been awarded the compression services
contract by Woodside for the Pluto LNG (Liquefied Natural Gas) Project in
Australia. Throughout 2010, the Pluto LNG project will engage a large spread of
our equipment, much of which was added in the course of the last year, supported
by a team of our operators.
Though capital expenditure was reduced on the levels of recent years, we
continued to grow our offer with the acquisition of sand filters, heat
exchangers and coflexip hoses. Airpac Bukom has also further developed the high
pressure fleet of compressors, booster compressors and desiccant dryers to
support pipeline, product transfer and LNG works.
Whilst the pace at which demand will recover remains uncertain for the coming
year, the business is well positioned to capitalise on what we see as an
inevitable upturn. We have seen a marked improvement in oil prices, demand
forecasts and capital spend estimates by oil companies giving cause for optimism
that exploration and production growth will resume in 2010. We remain confident
that the medium to long term view is positive for the oilfield services sector
and Airpac Bukom.
TORRENT TRACKSIDE
Suppliers of rail infrastructure portable plant and specialist services to
Network Rail, London Underground and their appointed contractor base.
Revenue GBP10.6 million (2009: GBP14.0 million)
Operating Profit before amortisation GBP0.2 million (2009: GBP1.2 million)
Investment in Rental Fleet GBP0.8 million (2009: GBP1.2 million)
The rail market continued to be extremely subdued for the majority of the
financial year, though there were some signs of improvement in the final
quarter. Revenues fell by 24% to GBP10.6 million leading to reduced profits of
GBP0.2 million (2009: GBP1.2 million). The anticipated release by Network Rail of
Plain Line renewals and Switches & Crossings (S&C) workbanks to the Integrated
Management Team (IMT) contractors did not materialise. This made for a
difficult trading year for all contractors in the rail sector and Torrent was no
exception. The business responded by reducing the cost base to mitigate some of
the impact of reduced revenues.
Prospects for the new financial year are brighter. The business now has a lower
and more flexible cost structure which should help improve margins. There are a
number of specific rail projects which Torrent hope to support in the coming
year together with a reasonable expectation that the CP (controlled spend
period) 4 programme will increase investment in track renewal going forward.
TPA
Portable roadway systems, primarily to the UK market, but also in mainland
Europe and the Republic of Ireland.
Revenue GBP14.2 million (2009: GBP15.6 million)
Operating Profit before amortisation GBP2.2 million (2009: GBP1.7 million)
Investment in Rental Fleet GBP0.5 million (2009: GBP4.0 million)
TPA made good progress in a tough market, growing profits by 29% to GBP2.2
million, on a reduced revenue of GBP14.2 million (2009: GBP15.6 million) reflecting
further improvement in operational processes and fixed cost reduction.
TPA operates in three main sectors; Outdoor Events, Transmission and
Construction. The former was stable during the year with most key events being
repeated in the UK. The business secured a three year supply agreement with the
National Grid Alliance for the supply of services on transmission work.
However, demand from this sector was lower than the prior year and coupled with
a weakening construction market, led to the reduction in revenues.
Within the UK, the management team continued to develop a more flexible working
structure to cope better with the seasonal fluctuation in demand which is an
intrinsic characteristic of the business. This and other process improvements
created a more variable cost base which better matched the timing of activity
and revenues. As a result, profits improved despite reduced revenues. In
Europe, TPA GmbH maintained its momentum, growing revenues and expanding the
fleet. The key demand in Europe emanates from the energy sector, which is less
seasonal, and activity remained solid throughout the year.
Investment in the fleet was minor and restricted to replacement of damaged
assets and this, together with a robust focus on working capital, enabled strong
cash generation in the year.
The outlook for TPA's markets is mixed, with Transmission expected to grow and
Outdoor Events to be stable. Construction is anticipated to remain weak but no
worse than this year. Demand in Europe is felt to be relatively stable for the
next two years. A clear focus on revenue generation assisted by the securing of
longer term supply agreements with key customers will be the strategy going
forward.
HIRE STATION
Small tools and specialist equipment for industry and construction.
Turnover GBP50.1 million (2009: GBP55.7 million)
Operating Profit before amortisation GBP3.2 million (2009: GBP6.4 million)
Investment in Rental Fleet GBP4.5 million (2009: GBP8.8 million)
In the market where the downturn has been at its most severe, Hire Station's
resilient business model, complemented by swift and focussed management action
has delivered a very creditable profit result. All of the trading arms of Hire
Station delivered profits in the year.
Whilst revenues of GBP50.1 million were 10% down on prior year, this compares very
favourably with our main competitors, where revenues have typically fallen at a
rate in excess of 20%, confirming our view that we have successfully increased
market share in the year. Operating profits of GBP3.2 million are testament to
the strong financial controls we have in place and the flexibility of our
trading model which allows us to rapidly adjust our cost base to absorb revenue
fluctuations. This remains a key differentiating strength of the business.
Capex of GBP4.5 million was predominantly replacement spend. Sales proceeds of
GBP2.4 million were generated as we continued to cleanse our fleet of obsolete and
underutilised assets. Going into 2010/11, we have one of the youngest fleets in
the market and significant additional revenue potential available as utilisation
improves on the back of recovering demand.
The tools business has made steady progress during the year maintaining a tight
control of the cost base but at the same time expanding the key account sales
effort to address the many opportunities created by the recession. Customer
loyalty during this difficult trading period has been severely tested as many
have sought supply savings. We have approached this challenge constructively
and maintained or grown relationships further as a result. The National Call
centre in Manchester has once more grown its transaction levels as branch
telephone traffic migrates centrally. In addition, further successes with our
virtual hire arrangement means we now have 21 partners on board. This
incremental activity has been absorbed by the Call centre at little or no extra
cost. The business moved onto the Group's in-house IT platform at the end of
the year. The execution of this major project has been extremely smooth,
delivered on time and at a very reasonable cost and its benefits were quickly
recognised by customers and staff alike.
The specialist safety rental business, ESS Safeforce had another excellent year
cementing its position as market leader and preferred supplier for safety
equipment and services in the UK. Revenue growth was derived from a number of
areas including major petrochemical shutdowns at which ESS Safeforce supported
the clients with hire, sales, training and an onsite labour presence.
Investment in breathing air trailers continued and helped to secure new
customers. The training business was again busy with almost 20,000 people
receiving accredited qualifications.
MEP continues to progress well with a new branch in Birmingham opened during the
year and an expanded operation in Manchester. MEP has been engaged on Olympic
projects via our Heathrow site.
Climate Hire & Sales had an excellent year and benefited from its newly
established national footprint. Although the summer was poor for air
conditioning units, the winter saw a strong performance from both our heating
product range and our disaster recovery products.
PROSPECTS
During the year we have experienced periods of great uncertainty and seen
reduced demand in certain of our markets. Although some volatility will remain
in individual sectors, we anticipate that there will be overall stability for
the Group in the new financial year. We will continue to manage the business
carefully in the near term, balancing our focus on maintaining a strong balance
sheet with our commitment to embrace suitable opportunities, both organic and
acquisitive. The Group announced the acquisition of Harbray Plant Hire Limited
last month and where quality opportunities such as this are identified, we will
pursue them with vigour.
We enter the new financial year in excellent financial shape and ready to
sustain the development of the Group over the longer term, whilst coping with
the shorter term challenges of the current trading environment.
Neil Stothard
Group Managing Director
8 June 2010
Consolidated Income Statement
For the year ended 31 March 2010
Note 2010 2009
(Restated)
GBP000 GBP000
=-------------------------------------------------------------------------------
Revenue 1 134,163 157,470
Cost of sales (99,350) (114,331)
=-------------------------------------------------------------------------------
Gross profit 34,813 43,139
Administrative expenses (17,869) (18,617)
=-------------------------------------------------------------------------------
+-------------+ +----------+
Operating profit before amortisation and 1 | 18,610| | 25,431|
exceptional items | | | |
| | | |
Amortisation |(1,323) (343)| | (909)|
Exceptional items 2 | | | -|
+-------------+ +----------+
=-------------------------------------------------------------------------------
Operating profit 16,944 24,522
Net financial expense (2,605) (3,687)
=-------------------------------------------------------------------------------
+-------------+ +----------+
Profit before amortisation, exceptional items | 16,005| | 21,744|
and taxation | | | |
| | | |
Amortisation | (1,323)| | (909)|
Exceptional items 2 | (343)| | -|
+-------------+ +----------+
Profit before taxation 14,339 20,835
Taxation 5 (4,094) (5,701)
=-------------------------------------------------------------------------------
Net profit for the year 10,245 15,134
=-------------------------------------------------------------------------------
Pence Pence
Basic earnings per share 3 24.68 36.41
Diluted earnings per share 3 24.36 35.30
Dividend per share paid and proposed 6 10.80 10.80
=-------------------------------------------------------------------------------
The restatement of the prior year figures relates solely to the effect of IAS16
on revenue and cost of sales. There was no profit effect.
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2010
Note 2010 2009
GBP000 GBP000
=-------------------------------------------------------------------------------
Profit for the year 10,245 15,134
Other comprehensive income:
Actuarial gains/(losses) on defined benefit pension scheme 726 (1,882)
Tax on items taken directly to equity (203) 527
Effective portion of changes in fair value of cash flow 439 (3,154)
hedges
Foreign exchange translation difference (39) 274
=-------------------------------------------------------------------------------
Total other comprehensive income 923 (4,235)
=-------------------------------------------------------------------------------
Total comprehensive income for the year 11,168 10,899
=-------------------------------------------------------------------------------
Consolidated Statement of Changes in Equity
For the year ended 31 March 2010
2010 2009
GBP000 GBP000
=-------------------------------------------------------------------------------
Total comprehensive income for the year 11,168 10,899
Dividends paid (4,510) (4,505)
Net movement relating to Treasury Shares and shares held by Vp (85) (3,166)
Employee Trust
Share option charge in the year 434 442
Tax movements on equity 1 (285)
=-------------------------------------------------------------------------------
Change in Equity 7,008 3,385
Equity at start of year 77,179 73,794
=-------------------------------------------------------------------------------
Equity at end of year 84,187 77,179
=-------------------------------------------------------------------------------
Included in total comprehensive income for the year is a credit to the hedging
reserve of GBP439,000 (2009: GBP3,154,000 charge). There were no changes in issued
Share Capital or Share Premium.
Consolidated Balance Sheet
As at 31 March 2010
Note 2010 2009
(Restated)
GBP000 GBP000
=-----------------------------------------------------------------------------
ASSETS
Non-current assets
Property, plant and equipment 98,635 107,889
Intangible assets 39,826 41,197
=-----------------------------------------------------------------------------
Total non-current assets 138,461 149,086
=-----------------------------------------------------------------------------
Current assets
Inventories 3,813 5,463
Trade and other receivables 27,330 32,856
Cash and cash equivalents 4 1,385 551
=-----------------------------------------------------------------------------
Total current assets 32,528 38,870
=-----------------------------------------------------------------------------
Total assets 170,989 187,956
=-----------------------------------------------------------------------------
LIABILITIES
Current liabilities
Interest bearing loans and borrowings 4 (49,692) (681)
Income tax payable (263) (2,289)
Trade and other payables (25,493) (30,473)
=-----------------------------------------------------------------------------
Total current liabilities (75,448) (33,443)
Non-current liabilities
Interest bearing loans and borrowings 4 (18) (65,707)
Employee benefits (1,127) (3,194)
Deferred tax liabilities (10,209) (8,433)
=-----------------------------------------------------------------------------
Total non-current liabilities (11,354) (77,334)
=-----------------------------------------------------------------------------
Total liabilities (86,802) (110,777)
=-----------------------------------------------------------------------------
Net assets 84,187 77,179
=-----------------------------------------------------------------------------
EQUITY
Issued share capital 2,309 2,309
Share premium account 16,192 16,192
Hedging reserve (3,167) (3,606)
Retained earnings 68,826 62,257
=-----------------------------------------------------------------------------
Total equity attributable to equity holders of the 84,160 77,152
parent
Minority interests 27 27
=-----------------------------------------------------------------------------
Total equity 84,187 77,179
=-----------------------------------------------------------------------------
The restatement of the prior year figures relates solely to hindsight
adjustments to prior year acquisitions.
Consolidated Statement of Cash Flows
For the year ended 31 March 2010
Note 2010 2009
GBP000 GBP000
=-------------------------------------------------------------------------------
Cash flow from operating activities
Profit before taxation 14,339 20,835
Pension fund contributions in excess of service cost (2,214) (204)
Share based payment charge 434 442
Depreciation 1 18,901 18,964
Amortisation of intangibles 1,323 909
Financial expense 2,622 3,715
Financial income (17) (28)
Profit on sale of property, plant and equipment (3,375) (3,825)
=-------------------------------------------------------------------------------
Operating cashflow before changes in working capital 32,013 40,808
Decrease/(increase) in inventories 1,650 (348)
Decrease in trade and other receivables 5,484 741
Decrease in trade and other payables (1,919) (6,073)
=-------------------------------------------------------------------------------
Cash generated from operations 37,228 35,128
Interest paid (2,453) (3,711)
Interest element of finance lease rental payments (156) (199)
Interest received 17 28
Income tax paid (4,546) (5,991)
=-------------------------------------------------------------------------------
Net cash flow from operating activities 30,090 25,255
=-------------------------------------------------------------------------------
Cash flow from investing activities
Disposal of property, plant and equipment 8,718 10,799
Purchase of property, plant and equipment (16,744) (34,211)
Acquisition of businesses (net of cash and overdrafts) 19 (6,013)
=-------------------------------------------------------------------------------
Net cash flow from investing activities (8,007) (29,425)
=-------------------------------------------------------------------------------
Cash flow from financing activities
Purchase of own shares by Employee Trust (85) (3,166)
Repayment of borrowings (20,000) (20,401)
Proceeds from new loans 4,000 29,000
Capital element of hire purchase/finance lease (678) (1,216)
agreements
Dividends paid (4,510) (4,505)
=-------------------------------------------------------------------------------
Net cash flow from financing activities (21,273) (288)
=-------------------------------------------------------------------------------
Increase/(decrease) in cash and cash equivalents 810 (4,458)
Effect of exchange rate fluctuations on cash held 24 22
Cash and cash equivalents at the beginning of the year 551 4,987
=-------------------------------------------------------------------------------
Cash and cash equivalents at the end of the year 1,385 551
=-------------------------------------------------------------------------------
NOTES
The final results have been prepared on the basis of the accounting policies
which are to be set out in Vp plc's annual report and accounts for the year
ended 31 March 2010.
The following new standards and amendments to standards have become effective
from 1 January 2009 and hence are reflected in this statement:
* IAS 1 (revised), "Presentation of Financial Statements". The most
significant change within IAS 1 (revised) is the requirement to produce a
statement of comprehensive income setting out all items of income and
expense relating to non-owner changes in equity. There is a choice between
presenting comprehensive income in one statement or in two statements
comprising an income statement and a separate statement of comprehensive
income. The Group has elected to present an income statement and a separate
statement of comprehensive income. In addition, IAS 1 (revised) requires the
statement of changes in shareholders' equity to be presented as a primary
statement.
* Amendments to IFRS 2, "Share Based Payments", clarifies the treatment of
cancelled options, whereby if a grant of an option over equity instruments
is cancelled the Group shall account for the cancellation as an acceleration
of vesting and shall recognise immediately the amount that would have been
recognised over the remainder of the vesting period. The effect of this for
the year to 31 March 2010 was not material.
* IFRS 8, "Operating Segments" replaces IAS 14, "Segment reporting" and
requires the disclosure of segment information on the same basis as the
management information provided to the chief operating decision maker. The
adoption of this standard has not resulted in a change in the Group's
reportable segments.
* An amendment to IAS 16, "Property, Plant and Equipment", classifies proceeds
from the sale of ex rental assets as revenue. As a result revenue and cost
of sales recognised in the consolidated statement of income have increased
by GBP4,676,000 for the year to 31 March 2010 and GBP6,525,000 for the year
ended 31 March 2009.
EU Law (IAS Regulation EC1606/2002) requires that the consolidated accounts of
the group for the year ended 31 March 2010 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 IFRS, this announcement does not itself
contain sufficient information to comply with IFRS. The Company expects to
publish full financial statements in July 2010.
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 March 2010 or 2009. Statutory accounts
for 31 March 2009 have been delivered to the registrar of companies, and those
for 31 March 2010 will be delivered in due course. The auditors have reported
on those accounts; their reports were (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 in respect of the accounts for
31 March 2009 nor a statement under section 498 (2) or (3) of the Companies Act
2006 in respect of the accounts for 31 March 2010.
The financial statements were approved by the board of directors on 8 June 2010.
1.Business Segments
Revenue Depreciation Operating profit
before amortisation
and exceptional
items
2010 2009 2010 2009 2010 2009
(Restated)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
=---------------------------------------------------------------------
Groundforce 32,874 40,606 3,554 3,597 9,169 11,004
UK Forks 10,625 16,901 1,719 2,378 16 1,238
Airpac Bukom 15,677 14,733 3,434 2,702 3,865 3,882
Hire Station 50,121 55,650 6,639 6,518 3,223 6,385
Torrent Trackside 10,635 13,952 1,796 1,998 175 1,231
TPA 14,231 15,628 1,437 1,394 2,162 1,691
Group - - 322 377 - -
=---------------------------------------------------------------------
Total 134,163 157,470 18,901 18,964 18,610 25,431
=---------------------------------------------------------------------
2.Exceptional Items
During the year the Group made a profit of GBP113,000 from the disposal of a
freehold property and incurred GBP456,000 of employment termination costs.
3.Earnings Per Share
The calculation of basic earnings per share of 24.68 pence (2009: 36.41 pence)
is based on the profit attributable to equity holders of the parent of
GBP10,245,000 (2009: GBP15,134,000) and a weighted average number of ordinary shares
outstanding during the year ended 31 March 2010 of 41,514,000 (2009:
41,562,000), calculated as follows:
2010 2009
Shares Shares
000's 000's
Issued ordinary shares 46,185 46,185
Effect of own shares held (4,671) (4,623)
--------------------
Weighted average number of ordinary shares 41,514 41,562
--------------------
Basic earnings per share before the amortisation of intangibles and exceptional
items was 27.57 pence (2009: 37.99 pence) and is based on an after tax add back
of GBP1,200,000 (2009: GBP654,000) in respect of the amortisation of intangibles and
exceptional items.
The calculation of diluted earnings per share of 24.36 pence (2009: 35.30 pence)
is based on profit attributable to equity holders of the parent of GBP10,245,000
(2009: GBP15,134,000) and a weighted average number of ordinary shares outstanding
during the year ended 31 March 2010 of 42,056,000 (2009: 42,872,000), calculated
as follows:
2010 2009
Shares Shares
000's 000's
Weighted average number of ordinary shares 41,514 41,562
Effect of share options in issue 542 1,310
------------------
Weighted average number of ordinary shares (diluted) 42,056 42,872
------------------
There are additional options which are not currently dilutive, but may become
dilutive in the future. Diluted earnings per share before the amortisation of
intangibles and exceptional items was 27.21 pence (2009: 36.83 pence).
4.Analysis of Debt
At At
31 March 1 April
2010 2009
GBP000 GBP000
=---------------------------------------------------
Cash and cash equivalents (1,385) (551)
Current debt 49,692 681
Non current debt 18 65,707
=---------------------------------------------------
Net debt 48,325 65,837
=---------------------------------------------------
Year end gearing (calculated as net debt expressed as a percentage of
shareholders' funds) stands at 57% (2009: 85%). Excluding investment in own
shares at market value of GBP7.8 million (2009: GBP7.7 million), underlying
financial gearing for business activities was 44% (2009: 69%).
The Group has agreed terms for a GBP35 million committed revolving credit facility
through to June 2013 to replace its GBP50 million committed five year revolving
credit facility which is due to expire in November 2010. The new facility is
expected to be signed within the next few weeks, well ahead of the current
facility's expiry. The sizing of the new facility reflects the lower projected
borrowing profile of the Group. The Group also has a GBP20 million committed
three year revolving credit facility which is due to expire in September 2011,
which the Group will seek to refinance next year, and overdraft facilities
totalling GBP10 million.
5.Taxation
The charge for taxation for the year represents an effective tax rate of 28.6%
(2009: 27.4%). The effective tax rate excluding adjustments in respect of prior
years is 27.7% (2009: 29.4%).
6.Dividend
The Board has proposed a final dividend of 7.7 pence per share to be paid on 1
October 2010 to shareholders on the register at 3 September 2010. This,
together with the interim dividend of 3.10 pence per share paid on 6 January
2010 makes a total dividend for the year of 10.8 pence per share (2009: 10.80
pence per share).
7. Post Balance Sheet Events
On 14 May 2010 the Group acquired a small pipe testing equipment rental
business, Harbray Plant Hire Limited, which augments the business within
Groundforce for a net cash investment of GBP0.6m.
8.Risks and Uncertainties
The Group comprises a number of businesses serving different markets and manages
the risks inherent to these activities. The key external risks include general
economic conditions, competitor actions, the effect of legislation, credit risk
and business continuity. Internal risks relate mainly to investment and
controls failure risk. The Group seeks to mitigate exposure to all forms of
risk where practicable and to transfer risk to insurers where cost effective.
The diversified nature of the Group limits the exposure to external risk within
a particular market. Exposure to credit risk in relation to customers, banks
and insurers is managed through credit control practices including credit
insurance which limits the Group's exposure to bad debts via an aggregate first
loss policy which covers nearly half of the Group's accounts receivable.
Business continuity plans exist for key operations and accounting centres. The
Group is an active acquirer and acquisitions may involve risks that might
materially affect the Group performance. These risks are mitigated by extensive
due diligence and appropriate warranties and indemnities from the vendors.
Taking into account these risk mitigation actions and the treasury management
policies described in the 31 March 2010 accounts, the Group's exposure to
market, liquidity and credit risk is considered to be within normal parameters
and represents a level of acceptable risk.
9.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.
10.Annual Report and Accounts
The Annual Report and Accounts for the year ended 31 March 2010 will be posted
to shareholders on or about 30 July 2010.
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, includes 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 PilkingtonM J Holt
DirectorDirector
[HUG#1422245]
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