TIDMVP.
RNS Number : 0040B
Vp PLC
04 June 2019
For immediate release 4 June 2019
Vp plc
('Vp', the 'Group' or the 'Company')
Preliminary Results (unaudited)
Vp plc, the equipment rental specialist, today announces its
Preliminary Results for the year ended 31 March 2019.
Highlights
* 15% increase in profit before tax, amortisation and
exceptional items to record level of GBP46.8 million
(2018: GBP40.6 million)
* 26% growth in revenues to GBP382.8 million (2018:
GBP303.6 million)
* Basic earnings per share, pre-amortisation, increased
12% to 95.1 pence (2018: 84.9 pence)
* Final dividend proposed of 22.0 pence per share,
making a total of 30.2 pence for the full year (2018:
26.0 pence), an increase of 16%
* EBITDA before exceptionals up 20% to GBP101.4 million
(2018: GBP84.3 million)
* Reduced net debt of GBP168.1 million (2018: GBP179.2
million) after funding:
o Capital investment in the rental fleet of GBP63.8 million
(2018: GBP64.9 million)
* Return on average capital employed 14.5% (2018:
14.8%)
* Profit before taxation of GBP33.6 million (2018:
GBP30.8 million) and statutory earnings per share of
65.2 pence (2018: 61.7 pence)
* Exceptional costs of GBP8.6 million (2018: GBP1.7
million) resulting from acquisition integration costs,
business restructuring and regulatory review costs
* The statutory accounts for the year ended 31 March
2019 will be finalised on the basis of the financial
information presented by the Directors in these
preliminary results.
Commenting on the Preliminary Results, Jeremy Pilkington,
Chairman of Vp plc, said:
"Today Vp is reporting another strong set of full year results,
with key financial metrics ahead of last year. In light of these
excellent figures, I am pleased to announce a final dividend
recommendation of 22.0 pence per share, making a total for the year
of 30.2 pence per share, an increase of 16% on last year.
"We have entered the new financial year in excellent shape and
we look forward to the challenges and opportunities of the future
with confidence and excitement."
Neil Stothard, Chief Executive of Vp plc, added: "Vp has started
the new financial year positively and in line with our
expectations. We anticipate that our main markets in the UK will
continue to be supportive, but with slightly slower overall growth
than experienced in recent years influenced by the current
political and economic uncertainty.
I am pleased to say that the international backdrop is also
broadly positive, with opportunities in Australasia with TR Group
and the wider oil and gas exploration and maintenance sectors
too.
"The year ended 31 March 2019 was one of significant development
for Vp, and we were particularly pleased with the quality of the
Brandon Hire integration.
"We were delighted to acquire Sandhurst Ltd just after the
financial year end and look forward to developing the business
further under our ownership."
- Ends -
Enquiries:
Vp plc
Jeremy Pilkington, Chairman Tel: +44 (0) 1423 533 400
jeremypilkington@vpplc.com
Neil Stothard, Chief Executive Tel: +44 (0) 1423 533 400
neil.stothard@vpplc.com
Allison Bainbridge, Group Finance Tel: +44 (0) 1423 533 400
Director
allison.bainbridge@vpplc.com www.vpplc.com
Media enquiries:
Buchanan
Henry Harrison-Topham / Jamie Hooper / Madeleine Tel: +44 (0) 20 7466
Seacombe 5000
Vp@buchanan.uk.com www.buchanan.uk.com
Notes on alternative performance measures:
-- All performance measures stated as before amortisation are
also before impairment of intangibles.
-- Basic earnings per share pre amortisation and exceptionals is
reconciled to basic earnings per share in note 3.
-- Profit before tax, amortisation and exceptionals is
reconciled to profit before tax in the Income Statement.
-- Return on average capital employed is based on profit before
tax, interest, amortisation and exceptionals divided by average
capital employed on a monthly basis using the management accounts.
Profit before tax, interest, amortisation and exceptionals is
reconciled to profit before interest and tax in the Income
Statement.
CHAIRMAN'S STATEMENT
I am delighted to be able to report another set of excellent
results for the Group.
Profits before tax, amortisation and exceptional items increased
15% to GBP46.8 million (2018: GBP40.6 million) on revenues ahead by
26% to GBP382.8 million (2018: GBP303.6 million). Profit before
taxation was GBP33.6 million (2018: GBP30.8 million). Net debt at
the year-end was GBP168.1 million (2018: GBP179.2 million) after
funding GBP63.8 million capital investment in the rental fleet
(2018: GBP64.9 million). Our characteristically strong cash flow of
GBP101.4 million (2018 GBP84.3 million) supports a healthy net debt
and EBITDA ratio of 1.7x. There were no acquisitions in the
period.
Return on average capital employed remained strong at 14.5%
(2018: 14.8%) and earnings per share increased 12% to 95.1 pence
per share (2018: 84.9 pence per share).
On the basis of what we consider to be an excellent set of
results, particularly given the current uncertain political and
economic environment, your Board is recommending a final dividend
of 22.0 pence per share, making a total for the year of 30.2 pence
per share, an increase of 16%. Subject to shareholders approval at
the Annual General Meeting to be held on 25 July 2019, it is
proposed to pay the final dividend on 8 August 2019 to members
registered at 28 June 2019.
Following the acquisition of Brandon Hire in November 2017, the
integration process has progressed well and will be largely
concluded by the end of this calendar year. The combined business
now trades as Brandon Hire Station. Integrating 1,500 people, 200
branches and 200,000 items of rental equipment has been a huge task
for both management teams and it is appropriate for me to single
them out for special praise for their exceptional work this year.
The combined business has traded in line with our expectations at
the time of the acquisition and we are confident that Brandon Hire
Station will deliver significant benefits for the Group and its
shareholders.
The shareholders will no doubt already be aware of the
announcement issued by the Competition and Markets Authority (CMA)
on 9 April 2019 that it had reached a provisional determination
that Vp, together with two other companies, had acted in a manner
deemed to be uncompetitive in the market for certain elements of
temporary groundworks. Vp is in the process of reviewing these
alleged breaches and we expect to be in a position to respond to
the CMA shortly. Following accounting standards, as explained in
note 2, we have made a theoretical provision for costs which is
included in the exceptional items. In the meantime, we will
continue to co-operate fully with their investigation.
Post the year end, on 10 May 2019, we announced the acquisition
of Sandhurst Limited for GBP3.325 million. Sandhurst is engaged in
the rental of specialist excavator attachments to the construction
and civil engineering sectors from five locations across the UK.
Going forward, Sandhurst will work alongside the Groundforce piling
division to offer an enhanced range of products and services.
The Group's primary business objective is to focus on leveraging
our specialist rental expertise to deliver enhanced value creation
for shareholders over the long term. We seek to be both provider
and employer of choice and we pursue market leadership through the
delivery of outstanding levels of customer service and
satisfaction. We are characterised by a change positive business
culture and a dedication to innovation. We strongly believe that
these business objectives remain as relevant and valid today as
when we first articulated them nearly twenty years ago.
It remains my great pleasure to thank all our employees for
their contribution to these excellent results. Our employees are
our unique and defining asset and lie behind whatever success we
may continue to enjoy.
We have entered the new financial year in excellent shape and we
look forward to the challenges and opportunities of the future with
confidence and excitement.
Jeremy Pilkington
Chairman
4 June 2019
BUSINESS REVIEW
OVERVIEW
Vp plc is a rental business providing specialist products and
services to a diverse range of end markets including
infrastructure, construction, housebuilding, and oil and gas. The
Group comprises a UK and an International Division.
Year ended Year ended
31 March 2019 31 March 2018
--------------------------------------
Revenue GBP382.8 million GBP303.6 million
----------------- -----------------
Operating profit before amortisation GBP51.6 million GBP44.0 million
and exceptionals
----------------- -----------------
Operating margin 13.5% 14.5%
----------------- -----------------
Investment in rental fleet GBP63.8 million GBP64.9 million
----------------- -----------------
Return on average capital employed 14.5% 14.8%
----------------- -----------------
Operating profit GBP38.3 million GBP34.2 million
----------------- -----------------
The financial year ended 31 March 2019 saw the business deliver
significant progress and growth with an increase of 17% in
operating profit before amortisation and exceptional items.
Group operating profits before amortisation and exceptional
items were GBP51.6 million which compares with prior year GBP44.0
million. Operating margins remained healthy at 13.5% and our key
measure of profit quality, return on average capital employed
(ROACE), continued to be robust at 14.5%, marginally down on prior
year. Revenues grew by 26% to 382.8 million (2018 GBP303.6
million).
The core end markets which we serve have once again provided a
resilient environment for the Group's trading operations, despite
the ongoing political and economic uncertainties in the UK, our
largest geographic market.
Strong cash generation is a positive characteristic of the Vp
business model and EBITDA before exceptionals remained strong,
increasing by 20% to GBP101.4 million (2018: GBP84.3 million). Net
debt at 31 March 2019 was reduced to GBP168.1 million (2018:
GBP179.2 million).
We continued to invest in our rental fleet with robust gross
capital expenditure of GBP63.8 million very close to last year's
peak capex of GBP64.9 million. Fleet disposal proceeds were
improved at GBP20.0 million (2018: GBP18.5 million), and generated
profit on disposal of GBP7.6 million (2018: GBP6.1 million). There
were no business acquisitions in the financial year.
After the end of the financial year, on 10 May 2019, we
announced the acquisition of the entire issued share capital of
Sandhurst Limited for a cash consideration of GBP3.325million.
Sandhurst is engaged in the rental of specialist excavator
attachments to the construction and civil engineering sectors from
five locations across the UK, and will complement our existing
piling business.
UK DIVISION
Year ended Year ended
31 March 2019 31 March 2018
=====================================
Revenue GBP350.3 million GBP272.0 million
================= =================
Operating profit before amortisation GBP49.9 million GBP43.0 million
and exceptionals
================= =================
Investment in rental fleet GBP57.4 million GBP59.7 million
================= =================
The UK division produced another strong trading performance in
the year reporting a 16% increase in operating profit before
amortisation and exceptionals to GBP49.9 million (2018: GBP43.0
million). Revenues were GBP350.3 million, 29% ahead of prior year
(2018: GBP272.0 million).
The UK division comprises seven main business groupings: UK
Forks, Groundforce, TPA, Brandon Hire Station, ESS Safeforce, MEP,
and Torrent Trackside; which have exposure to the infrastructure,
housebuilding, construction and industrial sectors, primarily
within the UK, but with a growing presence in mainland Europe.
Trading within the UK Forks division was mixed with solid
support from the housebuilding sector being balanced by a more
challenging environment in general construction. Activity in the
telecoms sector was subdued as the scheduled 5G roll out across the
UK remained delayed. Investment in fleet was strong, but slightly
down on prior year.
In Groundforce / TPA, solid demand from the infrastructure
sector, particularly in support of the water industry's Asset
Management Programme 6 (AMP 6) underpinned a strong performance in
the UK shoring business, with additional demand derived from
housing, utilities and highways during the year. Geographically the
South and North regions traded well but the Scottish region
experiencing softer demand. A number of important major projects
were supported including Battersea Power Station, Hinkley Point and
the Luton Airport Dart scheme. Elsewhere, the Groundforce Ireland
business also traded well, though the Piling division experienced
softer demand through the year.
The temporary roadways business TPA delivered a year of
improvement in the UK as efficiency and productivity gains improved
margins, further supported by good transmission and rail sector
demand in the UK. The TPA and Groundforce businesses in mainland
Europe made further progress after a soft start to the financial
year.
The year under review is the first full year of ownership of the
Brandon Hire business, acquired in November 2017. Progress in
integrating the Hire Station tools business with Brandon Hire under
a single management team has been very good. The combined, newly
named, specialist tool hire division, Brandon Hire Station will
operate a 200 branch network across the UK on a common IT platform.
The two year integration plan will be completed by the end of the
calendar year 2019, as originally envisaged. The exceptional costs
of integration are disclosed in note 2. Whilst the construction
markets within which Brandon Hire Station operates have been
relatively flat, synergies identified pre and post the acquisition
have already been delivered, and margins and returns have improved
considerably as a result. The longer term fleet refreshment
programme has proceeded well with strong capex combined with a
pro-active divestment programme of old and non-core hire fleet
items.
The MEP low level access and press fitting activity had another
good year and opened two new locations in support of further
regional expansion. ESS Safeforce, our safety, survey and
communications business delivered strong revenue growth in the
year, driven particularly by success in supporting petrochemical
shutdowns in both the UK and the Netherlands. We anticipate further
progress in these industrial sectors in the coming year. Fleet
investment was healthy and the division opened new locations and
expanded existing facilities in support of these initiatives.
The Torrent Trackside business traded well in what has been a
particularly volatile period for the UK rail infrastructure sector.
The demise of Carillion initially impacted activity levels in the
UK rail market with associated work streams paused or cancelled.
Eventually this work re-emerged through different channels and
Torrent Trackside provided significant support to the associated
contractors. The Control Period 5 (CP5) slowed in its final year
ahead of the new five year programme, CP6 which commences in 2020.
The business continued to reap success by maintaining a keen focus
on managing costs and improving service delivery to customers. The
CP6 programme comes with a GBP48 billion budget and Torrent
Trackside are well placed to support this over the next five
years.
INTERNATIONAL DIVISION
Year ended Year ended
31 March 2019 31 March 2018
=====================================
Revenue GBP32.5 million GBP31.6 million
================ ================
Operating profit before amortisation GBP1.7 million GBP1.0 million
and exceptionals
================ ================
Investment in rental fleet GBP6.4 million GBP5.1 million
================ ================
The International division delivered improved profit margins in
the year as operating profit before amortisation grew by 70% to
GBP1.7 million (2018: GBP1.0 million) from revenues up 3% to
GBP32.5 million (2018: GBP31.6 million).
The International division comprises two main business
groupings: Airpac Bukom a global supplier to the oil and gas sector
with regional hubs in the UK, Australia and Singapore and TR Group
which has operations in Australia, New Zealand, Malaysia and
Singapore.
Airpac Bukom supports a wide range of onshore and offshore oil
and gas markets: well test; pipeline testing; rig and maintenance;
and LNG markets worldwide. Whilst progress has been relatively
modest, Airpac Bukom did experience tentative signs of improvement
in the sector. The historically strong well test market has
remained weak in recent years due to reduced exploration and
production (E&P) spend by the oil majors. The business has been
active in growing alternative onshore markets which also utilise
Airpac Bukom's product and service expertise. The market recovery
is slow but we remain confident of delivering future improvement
going forward.
The TR Group which is Australasia's leading technical equipment
rental business provides test and measurement, communications,
calibration and audio visual solutions across the region. The year
was one of further progress, in particular, in Australia and
Malaysia. Overall the TR Group has a number of progressive new
product and service offers which are planned to deliver further
business momentum in the coming year and beyond.
OUTLOOK
The Group has started the new financial year positively and in
line with expectations. We believe that our main markets in the UK
will be largely supportive, but with a slower growth than
experienced in recent years. The International backdrop is also
broadly positive and we expect to deliver on fresh initiatives in
both Australasia for TR, and the wider oil and gas exploration and
maintenance sectors.
The year just finished was one of significant development for
the Group, and we are particularly pleased with the quality of the
Brandon Hire integration process.
We continue to assist the CMA investigation into the groundworks
rental market.
We were delighted to acquire Sandhurst Ltd just after the
financial year end and look forward to developing the business
further under our ownership. We will continue to pursue
opportunities to progressively expand the Vp business, as we have
always done. Whilst the UK in particular has some wider political
and economic uncertainties, we remain confident that we can deliver
further positive development for the Group over the next financial
year.
Neil Stothard
Chief Executive
4 June 2019
Consolidated Income Statement (unaudited)
for the year ended 31 March 2019
Note 2019 2018
Unaudited Audited
GBP000 GBP000
----------- ----------
Revenue 1 382,830 303,639
Cost of sales (295,539) (229,477)
Gross profit 87,291 74,162
Administrative expenses (48,968) (39,927)
----------- ----------
Operating profit before amortisation
and exceptional items 1 51,571 44,018
Amortisation and impairment 1 (4,632) (8,101)
Exceptional items 2 (8,616) (1,682)
----------- ----------
Operating profit 38,323 34,235
Net financial expense (4,742) (3,421)
Profit before taxation, amortisation
and exceptional items 46,829 40,597
Amortisation and impairment 1 (4,632) (8,101)
Exceptional items (8,616) (1,682)
----------- ----------
Profit before taxation 33,581 30,814
Taxation 5 (7,759) (6,448)
----------- ----------
Profit attributable to owners
of the parent 25,822 24,366
----------- ----------
Pence Pence
Basic earnings per share 3 65.20 61.72
Diluted earnings per share 3 63.66 60.95
Dividend per share paid and proposed 6 30.20 26.00
Consolidated Statement of Comprehensive Income (unaudited)
for the year ended 31 March 2019
2019 2018
Unaudited Audited
GBP000 GBP000
----------- ---------
Profit for the year 25,822 24,366
Other comprehensive income/(expense):
Items that will not be reclassified to
profit or loss
Re-measurements of defined benefit pension
schemes 536 275
Tax on items taken to other comprehensive
income (1) (50)
Impact of tax rate change - (65)
Items that may be subsequently reclassified
to profit
or loss
Foreign exchange translation difference (493) (900)
Effective portion of changes in fair value
of cash flow hedges (614) 444
Total other comprehensive income (572) (296)
Total comprehensive income for the year 25,250 24,070
----------- ---------
Consolidated Statement of Changes in Equity (unaudited)
for the year ended 31 March 2019
2019 2018
Unaudited Audited
GBP000 GBP000
------------------------------------------------------- -------------
Total comprehensive income for the year 25,250 24,070
Dividends paid (10,853) (8,983)
Net movement relating to shares held by Vp
Employee Trust (3,297) (822)
Share option charge in the year 2,395 2,446
Tax movements to equity 944 444
Impact of tax rate change - (25)
Change in Equity 14,439 17,130
Equity at start of year 154,446 137,316
--------- ---------
Equity at end of year 168,885 154,446
--------- ---------
Consolidated Balance Sheet (unaudited)
as at 31 March 2019
Note 2019 2018
Unaudited Audited
Restated*
GBP000 GBP000
----------- ----------
Non-current assets
Property, plant and equipment 248,651 239,739
Intangible assets 89,670 94,317
Employee benefits 2,732 2,230
----------- ----------
Total non-current assets 341,053 336,286
----------- ----------
Current assets
Inventories 7,809 8,620
Trade and other receivables 80,433 70,872
Cash and cash equivalents 4 29,044 18,194
----------- ----------
Total current assets 117,286 97,686
----------- ----------
Total assets 458,339 433,972
----------- ----------
Current liabilities
Interest bearing loans and borrowings 4 (17,659) (10,218)
Income tax payable (2,184) (2,365)
Trade and other payables (81,720) (70,455)
----------- ----------
Total current liabilities (101,563) (83,038)
Non-current liabilities
Interest bearing loans and borrowings 4 (179,485) (187,148)
Deferred tax liabilities (8,406) (9,340)
----------- ----------
Total non-current liabilities (187,891) (196,488)
----------- ----------
Total liabilities (289,454) (279,526)
----------- ----------
Net assets 168,885 154,446
----------- ----------
Equity
Issued share capital 2,008 2,008
Capital redemption reserve 301 301
Share premium account 16,192 16,192
Foreign currency translation
reserve (780) (287)
Hedging reserve (323) 291
Retained earnings 151,460 135,914
----------- ----------
Total equity attributable to equity holders
of the parent 168,858 154,419
Non-controlling interests 27 27
----------- ----------
Total equity 168,885 154,446
----------- ----------
*The restatement of the prior year consolidated balance sheet
reflects the fair value adjustments in regards to prior year
acquisitions as disclosed in Notes 9, 10 and 26 of the Annual
Report and Accounts for the year ended 31 March 2019.
Consolidated Statement of Cash Flows (unaudited)
for the year ended 31 March 2019
2019 2018
Unaudited Audited
Note GBP000 GBP000
---------------------------------------------------- ----- ---------- -----------
Cash flow from operating activities
Profit before taxation 33,581 30,814
Share based payment charge 2,395 2,446
Depreciation 1 49,768 40,319
Amortisation and impairment 1 4,632 8,101
Financial expense 4,830 3,496
Financial income (88) (75)
Profit on sale of property, plant and equipment (7,583) (6,095)
---------- -----------
Operating cash flow before changes in working
capital 87,535 79,006
Decrease / (increase) in inventories 853 (1,049)
Increase in trade and other receivables (9,518) (6,225)
Increase in trade and other payables 13,818 1,907
---------- -----------
Cash generated from operations 92,688 73,639
Interest paid (4,696) (3,190)
Interest element of finance lease rental
payments (221) (213)
Interest received 88 75
Income tax paid (7,948) (7,014)
---------- -----------
Net cash generated from operating activities 79,911 63,297
---------- -----------
Cash flow from investing activities
Disposal of property, plant and equipment 19,969 18,518
Purchase of property, plant and equipment (74,588) (71,571)
Acquisition of businesses and subsidiaries
(net of cash acquired) - (49,660)
---------- -----------
Net cash used in investing activities (54,619) (102,713))
---------- -----------
Cash flow from financing activities
Purchase of own shares by Employee Trust (3,297) (822)
Repayment of borrowings (44,000) (29,036)
Proceeds from new loans 37,000 79,000
New finance leases 108 348
Capital element of hire purchase/finance
lease agreements (1,551) (1,275)
Dividends paid (10,853) (8,983)
---------- -----------
Net cash (used in) /generated from financing
activities (22,593) 39,232
---------- -----------
Increase / (decrease) in cash and cash equivalents 2,699 (184)
Effect of exchange rate fluctuations on
cash held (70) (395)
Cash and cash equivalents at the beginning
of the year 9,503 10,082
----------
Cash and cash equivalents at the end of
the year 12,132 9,503
---------- -----------
NOTES
The preliminary 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 2019. With the exception of
the new standards below, the accounting policies applied are in
line with those applied in the annual financial statements for the
year ended 31 March 2018.
EU Law (IAS Regulation EC1606/2002) requires that the
consolidated accounts of the Group for the year ended 31 March 2019
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 2019.
The financial information set out above does not constitute the
Company's statutory accounts for the year ended 31 March 2019 or
2018. Statutory accounts for 31 March 2018 have been delivered to
the registrar of companies, and those for 31 March 2019 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 2018. The statutory
accounts for the year ended 31 March 2019 will be finalised on the
basis of the financial information presented by the Directors in
these preliminary results and will be delivered to the registrar of
companies following the Annual General Meeting of Vp plc.
The Group has applied IFRS 9 Financial Instruments which
replaces IAS 39 related to the recognition, classification and
measurement of financial assets and financial liabilities,
derecognition of financial instruments, impairment of financial
assets and hedge accounting. The adoption of IFRS 9 from 1 April
2018 primarily resulted in changes in the Group's accounting policy
for impairment of financial assets. In accordance with the
transitional provisions of IFRS 9, comparative figures have not
been restated. In addition, the impact of IFRS 9 has not been
adjusted within opening reserves due to the revised policy having
an immaterial impact of GBP0.1 million as of 31 March 2018.
The Group has applied IFRS 15 Revenue from Contracts with
Customers as issued in May 2014. In accordance with the new
transition provisions of IFRS 15 the new rules have been adopted
retrospectively. There was GBPnil cumulative effect of initially
applying this Standard as an adjustment to the opening balance of
retained earnings. The adoption of IFRS 15 did not result in
significant changes to the Group's accounting policies and had no
impact to the amounts recognised in the consolidated financial
statements.
The financial statements were approved by the Board of Directors
on 4 June 2019.
1. Business Segments
Revenue Depreciation, Operating profit
amortisation before amortisation
and and exceptional items
impairment
2019 2018 2019 2018 2019 2018
Unaudited Audited Unaudited Audited Unaudited Audited
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- ---------- -------- ---------- -------- ------------- ----------
UK 350,308 271,989 48,282 37,966 49,838 43,001
International 32,522 31,650 6,118 10,454 1,733 1,017
--------------- ---------- -------- ---------- -------- ------------- ----------
Total 382,830 303,639 54,400 48,420 51,571 44,018
--------------- ---------- -------- ---------- -------- ------------- ----------
Operating profit before amortisation and exceptional items is
reconciled to profit before tax in the Income Statement. In
addition, all performance measures stated as before amortisation
are also before impairment of intangibles.
The amortisation and impairment charge of GBP4.6 million (2018:
GBP8.1 million) includes GBP0.7 million (2018: GBP5.3 million) in
relation to impairment of goodwill and intangibles.
Furthermore, return on average capital employed is based on
profit before tax, interest, amortisation and exceptionals divided
by average capital employed on a monthly basis.
2. Exceptional Items
During the year, the Group incurred GBP8,616,000 (2018:
GBP1,682,000) of exceptional costs in relation to regulatory review
costs; integration of the Brandon Hire Group Holdings Limited
acquisition; together with restructuring costs in relation to
severance payments and depot closure costs within Hire Station and
Airpac.
The Competition and Markets Authority (CMA) announced on 9 April
2019 that it is investigating three major suppliers of groundworks
products to the construction industry. The CMA has provisionally
found that the 3 businesses, including a part of the Group's
excavation support system business (Groundforce), were involved in
suspected anti-competitive behaviour. The CMA's findings are, at
this stage in its investigation provisional and do not necessarily
lead to a decision that the companies have breached competition
law. We continue to work on our response to the CMA's findings. At
this point in the process we cannot make an accurate estimate of
the likely cost that may subsequently arise in the event that the
CMA were to decide in the future that a breach of competition law
has taken place. However, accounting standard IAS 37 requires us to
provide an amount in these accounts and accordingly we have
included a figure of GBP4.5 million as an exceptional cost. This
figure is in the arithmetic midpoint of a range of possible outcome
(GBP0 to GBP9.0 million) that we have calculated based upon
previous cases and CMA published guidance and without any admission
of culpability.
In the prior year GBP1,682,000 in relation to the acquisition of
Brandon Hire Group Holdings Limited. These one off costs related to
the professional fees and legal costs associated with the
acquisition process and the Competition and Markets Authority (CMA)
review of the acquisition, together with restructuring costs in
relation to severance payments and depot closure costs. The CMA
review was subsequently concluded in March 2018 with the
acquisition being cleared by the CMA. These are analysed as
follows:
2019 2018
Unaudited Audited
GBP000 GBP000
Professional fees, legal costs and CMA
costs - 1,141
Regulatory review costs 4,500 -
Integration costs 3,004 -
Restructuring costs 1,112 541
Total 8,616 1,682
----------- ---------
3. Earnings Per Share
The calculation of basic earnings per share of 65.20 pence
(2018: 61.72 pence) is based on the profit attributable to equity
holders of the parent of GBP25,822,000 (2018: GBP24,366,000) and a
weighted average number of ordinary shares outstanding during the
year ended 31 March 2019 of 39,603,000 (2018: 39,476,000),
calculated as follows:
2019 2018
Unaudited Audited
Shares Shares
000s 000s
Issued ordinary shares 40,154 40,154
Effect of own shares held (551) (678)
----------- ---------
Weighted average number of ordinary shares 39,603 39,476
----------- ---------
Basic earnings per share before the amortisation of intangibles
was 95.14 pence (2018: 84.91 pence) and is based on an after tax
add back of GBP11,855,000 (2018: GBP9,154,000) in respect of the
amortisation of intangibles and exceptional items.
The calculation of diluted earnings per share of 63.66 pence
(2018: 60.95 pence) is based on profit attributable to equity
holders of the parent of GBP25,822,000 (2018: GBP24,366,000) and a
weighted average number of ordinary shares outstanding during the
year ended 31 March 2019 of 40,564,000 (2018: 39,976,000),
calculated as follows:
2019 2018
Unaudited Audited
Shares Shares
000s 000s
Weighted average number of ordinary shares 39,603 39,476
Effect of share options in issue 961 500
----------- ---------
Weighted average number of ordinary shares
(diluted) 40,564 39,976
----------- ---------
Diluted earnings per share before the amortisation of
intangibles and exceptional items was 92.88 pence (2018: 83.85
pence).
4. Analysis of Net Debt At At
31 March 1 April
2019 2018
Unaudited Audited
GBP000 GBP000
Cash and cash equivalents (29,044) (18,194)
Bank overdraft 16,912 8,691
----------- ---------
Cash and cash equivalents as per cash
flow statement (12,132) (9,503)
Current finance lease debt 747 1,527
Non current debt 179,485 187,148
----------- ---------
Net debt 168,100 179,172
----------- ---------
Year end gearing (calculated as net debt expressed as a
percentage of shareholders' funds) stands at 100% (2018: 116%).
As at 31 March 2019 the Group had GBP200 million (2018: GBP200
million) of committed revolving credit facilities. In addition to
the committed facilities, the Group net overdraft facility at the
year-end was GBP7.5 million (2018: GBP5 million).
5. Taxation
The charge for taxation for the year represents an effective tax
rate of 23.1% (2018: 20.9%). The rate of tax is expected to reduce
to 17% in the year ending 31 March 2021. The effective tax rate
excluding prior year adjustments and disallowable expenses is 20.6%
(2018: 19.4%).
6. Dividend
The Board has proposed a final dividend of 22.0 pence per share
to be paid on 8 August 2019 to shareholders on the register at 28
June 2019. This, together with the interim dividend of 8.20 pence
per share paid on 11 January 2019, makes a total dividend for the
year of 30.2 pence per share (2018: 26.00 pence per share). The
ex-dividend date will be 27 June 2019 and the last day to elect to
participate in the dividend reinvestment plan will be 12 July
2019.
7. 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.
The Group has an established risk management strategy in place
and regularly reviews divisional and department risk registers as
well as the summary risk registers used at board level. A risk
register is prepared as part of the due diligence carried out on
acquisitions and the methodology is subsequently embedded.
All risk registers have a documented action plan to mitigate
each risk identified. The progress made on the action plan is
considered as part of the risk review process. The summary
divisional and departmental risk registers and action plans were
reviewed at risk meetings held in May 2019. In all cases it is
considered that the risk registers are being used as working
documents which provides the required assurance that existing risks
are being managed appropriately. In addition, the risk registers
provide a process for recognising, scoring and thus appropriately
managing new risks.
The risk registers are reviewed at the start (to facilitate the
planning process) and at the end of each internal audit project. A
post audit risk rating is agreed with management. If new risks are
identified following an audit project they are added to the
relevant risk register. Heat maps illustrating post audit risk
ratings and new risks are provided to the board in each published
internal audit report.
To promote risk awareness amongst group and divisional
employees, risk registers have now been disseminated further down
levels of management.
Further information is provided below on our principal risks and
mitigating actions to address them.
Market risk
Risk description
An economic downturn (as a result of economic cycles, political
and Brexit related uncertainty) 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. We have reviewed potential Brexit related risks
including exchange rates, tariffs, human resources and legislation
and have concluded that other than market uncertainty the risks are
assessed as relatively low impact.
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 14.5% (2018: 14.8%) in 2018/19. 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 both the well-being of 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. Our induction and training programmes reinforce these
policies. We have compliance teams in each division.
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
The Group has a revolving credit facility of GBP200 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 significant 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. Average debtor days were 58 (2018: 59) days and bad
debts, as a percentage of revenue remained low at 0.5% (2018:
0.5%).
Contractual risks
Risk description
Ensuring that the Group commits to appropriate contractual terms
is essential; commitment to inappropriate terms may expose the
Group to financial and reputational damage.
Mitigation
The Group mainly engages in supply only contracts. The majority
of the Group's hire contracts are governed by the hire industry
standard terms and conditions. Vp has defined and robust procedures
for managing non-standard contractual obligations.
Legal and regulatory requirements
Risk description
Failure to comply with legal or regulatory obligations
culminating in financial penalty and/or reputational damage.
Mitigation
The Group mitigates this risk utilising:
-- Specialist Project Committees (e.g. GDPR) with ongoing
responsibility to review key compliance areas and investigate
breaches and non-conformance;
-- Assurance routines from Group Internal Audit and External Auditors;
-- Comprehensive training and awareness programmes rolled out to wider business (including GDPR, Modern Slavery, Competition Law, Bribery and Corruption) by representatives from Group Finance, HR, Internal Audit and IT;
-- Established whistleblowing policy circulated to all employees;
-- Use of legal advisers where required.
8. 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.
9. Annual Report and Accounts
The Annual Report and Accounts for the year ended 31 March 2019
will be posted to shareholders before the end of June 2019.
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 Group and Parent Company financial statements which have
been prepared in accordance with IFRSs as adopted by the European
Union, give a true and fair view of the assets, liabilities,
financial position and profit of the Group and Parent Company;
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.
10. Alternative Performance Measures
(i) All performance measures stated as before amortisation are
also before impairment of intangibles.
(ii) Basic earnings per share pre amortisation and exceptionals
is reconciled to basic earnings per share in note 3.
(iii) Profit before tax, amortisation and exceptionals is
reconciled to profit before tax in the Income Statement.
(iv) Return on average capital employed is based on profit
before tax, interest, amortisation and exceptionals divided by
average capital employed on a monthly basis using the management
accounts. Profit before tax, interest, amortisation and
exceptionals is reconciled to profit before interest and tax in the
Income Statement.
For and on behalf of the Board of Directors.
J F G Pilkington A M Bainbridge
Director Director
- Ends -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UGUWWQUPBGBW
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June 04, 2019 02:00 ET (06:00 GMT)
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