Vp Regulatory News (VP.)

8 Jun 2006 07:01

Vp PLC08 June 2006 Vp plcCentral House, Beckwith Knowle, Otley Road,Harrogate, North Yorkshire, HG3 1UD. Tel : 01423 533400 Fax : 01423 565657www.vpplc.com Press Release 8 June 2006 Vp plc ("Vp" or "the Group") Preliminary Results Vp plc, the equipment rental specialist, today announces its preliminary resultsfor the year ended 31 March 2006. Highlights • Revenue up 10% to £99.4 million (2005: £90.0 million) • Operating profit up 17% to £12.0 million (2005: £10.2 million)* • Profit before tax up 13% to £11.2 million (2005: £9.9 million)* • Earnings per share improved 7% to 17.5 pence (2005: 16.3 pence) • Total dividend increased by 15% to 6.60 pence (2005: 5.75 pence) based on recommended final dividend of 4.65 pence per share • Return on average capital employed was 15.4% (2005: 16.3%) • Net debt increased to £32.6 million due to acquisitions and increased capital investment (31 March 2005: £2.4 million), representing gearing of 54% • Interest cover 14.5 times (2005: 33.1 times) *Before one-off costs of £0.5 million associated with the acquisition of PivotalServices Jeremy Pilkington, Chairman commented: "This time last year the Board signalled its intention to utilise the financialstrength of the Group more positively. We are pleased that in the period wehave been able to deliver both organic growth and acquisition derivedopportunities in support of our longer term growth aspirations. The main challenge for us as we enter the new financial year is to deliver thepromise offered by the businesses we acquired in 2005/2006, whilst of course notneglecting the continuing profit contribution from our existing businesses. The economic and competitive environment, as always, presents a number ofchallenges but we are cautiously optimistic of our ability to deliver furtherprogress in the year ahead." For further information please contact: Vp plcNeil Stothard, Group Managing Director Tel: +44 (0) 1423 533 445neil.stothard@vpplc.com www.vpplc.com Mike Holt, Group Finance Directormike.holt@vpplc.com Abchurch Sarah Hollins / Justin Heath / Louise Thornhill Tel: +44 (0) 20 7398 7700sarah.hollins@abchurch-group.com www.abchurch-group.com CHAIRMAN'S STATEMENT Results I am pleased to report another year of very satisfactory progress for the Group.Profits before tax rose 13% to £11.2 million (before the £0.5 millionrestructuring charge associated with the Pivotal acquisition). Prior yearprofits restated under adopted IFRS were £9.9 million. Revenue rose 10% to£99.4 million. Earnings per share increased 7% to 17.49 pence (2005: 16.31 pence restated underadopted IRFSs). The Board is recommending a final dividend of 4.65 pence per share making atotal for the year of 6.60 pence (2005: 5.75 pence), an increase of 15%. Thedividend is payable on 2 October 2006 to shareholders registered as at 8September 2006. Highlights of the year include the profit turnaround at Hire Station, theexcellent profit growth at UK Forks and the very significant level ofacquisition activity with £36 million spent on acquisitions during the period.We discuss these in more detail below and in the business review. In addition,£16.9 million was invested in organic fleet expansion and renewal. Net debt at31 March 2006 stood at £32.6 million (2005: £2.4 million), representing gearingof 54%. Strong interest cover of 14.5 times (2005: 33.1 times) supports ourability to pursue future growth opportunities. UK Forks UK Forks had an excellent year with profits rising 44% to £2.1 million onrevenues ahead 11% at £14.3 million. Further good progress was made during the year within the housebuilding market,although we did experience some softening in activity towards the end of theperiod. Demand from general construction and other sectors remained firm. Given the capital intensive nature of this business, we were very pleased to seefurther improvement in the UK Forks return on capital employed to 16% in theperiod. Groundforce As we had expected, infrastructure investment by the water utilities sectorslowed during the year as they transitioned to their new AMP4 five year assetmanagement programme. Demand in other areas remained firm but was notsufficient to fully compensate for the reduction in water related work.Revenues fell by 4% to £23.5 million and profits reduced 9% to £5.3 million. We are now starting to see contracts released under the AMP4 programme and asthis process gathers pace it will help to under-pin business progress later thisyear and further into the future. At the end of November we acquired, for £3.5 million, the business and assets ofDudley Vale, a leading provider of piling equipment to the construction, civilengineering and utilities markets. Dudley Vale's activities have beenintegrated into Piletec, Groundforce's existing piling equipment rental andsales activity. The business now trades as Piletec Dudley Vale. Thecombination of these businesses gives us market leadership in this sector andputs us in a strong position to take full advantage of recovering workloads. Airpac Bukom Oilfield Services After a doubling of profits last year, Airpac made further progress in growingprofits by 10% to £1.2 million on revenues ahead 12% at £5.0 million. In March,Airpac acquired one of its leading competitors, Bukom Oilfield Services, for£5.7 million plus assumed debt of £3.0 million. The combined business nowtrades as Airpac Bukom Oilfield Services and has doubled our market share inthis specialised sector. Bukom offers a similar range of services to Airpac but with a broader geographicexposure, particularly in the expanding markets of Africa, Australia and SouthAmerica and some enhanced product capabilities. The oilfield services sector is currently enjoying robust health on the back ofstrong oil prices. The scale of the combined business should enable us tobetter take advantage of the attractive growth opportunities in this market. Weexpect to make further significant capital investment in this business. Hire Station Hire Station has made a very pleasing recovery to profitability in the year.Profits of £1.9 million, before one off restructuring costs of £0.5m associatedwith the Pivotal acquisition, compared with a prior year loss of £0.7 million.Revenue improved 21% to £41.9 million. The core tools business contributed a very solid profit performance and progresswas also achieved within the Lifting Point activity. In July, Hire Station acquired the ESS Safety Services and Pivotal Trainingbusiness from Babcock International Group plc. ESS offers a very similar rangeof rental, service and sales products to our own Safeforce activity. Thebusinesses have been merged and, trading as ESS Safeforce, have a strong marketposition in a specialist field where regulatory pressure is a significant driverto growth. Following this acquisition, Lifting Point has been repositionedwithin the general tools rental business where it will benefit from costsynergies and greater market exposure, as we expand the number of locationsoffering lifting equipment. Pivotal Performance provides a range of management development, health andsafety and construction and operative skills training. Restructuring costs of£0.5 million were incurred in respect of rationalising and repositioning thePivotal training business which now benefits from a more appropriate operatingcost base. The management of Hire Station is to be congratulated for their significantachievement in delivering this first stage in Hire Station's recovery. Torrent Trackside As we anticipated at the beginning of this financial year, a changing railmarket and in particular the loss of the Network Rail plant maintenance contractdid have a significant negative impact on revenues and profitability at Torrent.Revenues fell to £12.1 million (2005: £13.3 million) and profits reduced to£1.7 million (2005: £2.5 million). Torrent has responded to the loss of this important contract through costreduction and restructuring measures and has achieved useful success inreplacing these lost volumes with new customer wins. Supply chain relationships now appear to have stabilised, at least for theimmediate term, and with a very significant repair and upgrade workloadprogramme ahead, Torrent is cautiously optimistic regarding the current year. TPA In November we acquired Trax Portable Access Limited (TPA) for an initialconsideration of £11.5 million; further additional consideration of up to £7.9million may be payable dependent upon the financial performance of the companyin each of the three years commencing 1 January 2006, 2007 and 2008. TPA is a leading supplier of portable roadways, bridging, fencing and barriersystems to the power transmission, telecommunications, construction, defence andrail markets. TPA operates in the UK, with satellite activities in the Republicof Ireland, France and Germany. TPA represents a new product area for the Group and will operate as a separatebusiness unit led by the retained management team. TPA occupies the same strongmarket position and employs the same core skills of asset management that arecommon to all Vp businesses. We believe that TPA represents an ideal sixthbusiness stream to supplement the Group's longer-standing businesses. Trading performance in the initial period since acquisition encompassed the slowwinter period and was below expectations with a reported loss of £0.3 million onrevenues of £2.5 million. Since the beginning of the new financial year activity has picked upsignificantly and we expect a satisfactory first full year contribution. Outlook This time last year the Board signalled its intention to utilise the financialstrength of the Group more positively. We are pleased that in the period wehave been able to deliver both organic growth and acquisition derivedopportunities in support of our longer term growth aspirations. The main challenge for us as we enter the new financial year is to deliver thepromise offered by the businesses we acquired in 2005/2006, whilst of course notneglecting the continuing profit contribution from our existing businesses. The economic and competitive environment, as always, presents a number ofchallenges but we are cautiously optimistic of our ability to deliver furtherprogress in the year ahead. Jeremy PilkingtonChairman8 June 2006 BUSINESS REVIEW The year ended 31 March 2006 has seen significant developments and acquisitionactivity in support of the continuing growth aspirations of the Group. In theyear under review we have added a sixth division, TPA, acquired two marketleading niche businesses, Dudley Vale and ESS (via the Pivotal acquisition), andlatterly acquired Bukom Oilfield Services, doubling the size of our successfulAirpac Oilfield Services activity. Profits before tax grew to £10.7 million. This represents a 13% increase inprofits before the £0.5 million restructuring charge arising from the PivotalGroup acquisition. Revenues grew by 10% to £99.4 million. Net debt increased by £30.2 million to £32.6 million after taking into accounttotal cash consideration and assumed debt in the acquisitions of £36.1 million.Gearing increased to 54% after gross capital expenditure of £18.1 million.Interest cover was 14.5 times (2005: 33.1 times). Markets were generally supportive in oil and gas, housebuilding, and generalconstruction, but the water and rail sectors provided a reduced level of demandfor our services in the year. UK Forks Rough terrain material handling equipment for industry, residential and generalconstruction. Revenue £14.3m (2005: £12.8m) Operating Profit £2.1m (2005: £1.4m) Investment in Rental Fleet £3.1m (2005: £3.1m) UK Forks produced excellent results in the year, profits increasing by 44%driven in part by a 11% improvement in revenue. The business continued toimprove return on capital employed. Revenue growth was sustained over the course of the year mainly driven bysuccess with a number of national housebuilding and construction businesses.Whilst site activity was at healthy levels for the majority of the year, we didexperience some slow down in the final quarter. We anticipate that growth inthe current year will reflect a more muted market outlook. In the housebuilding sector pressure increased on the supply chain to take costout of the system creating an appetite for national supply agreements. It wasin support of these requirements that UK Forks were able to offer their uniqueoffering of telehandlers on a national basis. In addition, supply chainagreements were secured with a number of large general construction customers,particularly in the specialist areas of roofing and cladding. Investment in the fleet was driven by the needs of the market. With the densityof housebuilding sites increasing, developments are taller than ever before -flats and apartments now account for over 40% of domestic build. Whilst thisled to a requirement for larger telehandlers it also meant that sites weretighter, fuelling the need for the more specialist rotational products. Newfleet consequently covered all applications - the smallest being the 4 metreproducts designed for operating in height restricted areas with the largestbeing the versatile 25 metre rotational telehandler. The current range of over1,200 machines therefore reflects an evolving market place where health andsafety issues are ever more prevalent. In the year ended 31 March 2006, UK Forks enjoyed the benefits of investing inlong term relationships with key customers. This philosophy continues into theNew Year with further investment planned to consolidate our key customersupport. Groundforce Excavation support systems and specialist products for the water, civilengineering and construction industries, including Piletec Dudley Vale - piledriving and breaking; Stopper Specialists - pipe integrity testing; SurveyTechnology - surveying and water flow measurement. Revenue £23.5m (2005: £24.6m) Operating Profit £5.3m (2005: £5.8m) Investment in Rental Fleet £2.2m (2005: £2.5m) Groundforce maintained its market leading position during the year but asanticipated, revenues were held back by the time delay in the water industryasset management programmes (AMP), the end of AMP3 and the commencement of AMP4.Revenues reduced by £1.1 million to £23.5 million and profits of £5.3 millionwere 9% down on prior year. Shoring The shoring business performed very satisfactorily in spite of the delay toAMP4. Revenue was also adversely impacted by the finalisation of ourinvolvement in key construction contracts, such as Heathrow T5 and CTRL.Generation of revenue therefore relied on the traditional civil engineering andhousing sectors, which remained buoyant. Overseas activity also contributed,with business enjoyed from Ireland, France and the USA. The streamlining of the operational base that commenced in 2004 wassubstantially completed early in the year and the benefit was evident in theprofit line. Automation of a number of operational processes ensured that thebusiness further increased its efficiency. Ongoing projects continued to ensurethat the fleet holding was optimised and aligned to future demand. New productswere also introduced throughout the year as we continued to provide innovativesolutions to our customer base. We anticipate that more substantive demand will commence from AMP4 during thecoming year and Groundforce Shorco is positioned to meet that demand which woulddeliver incremental revenue growth. Piletec Dudley Vale, Stoppers and Survey Piletec's revenues were adversely affected by the lack of AMP4 work inparticular, resulting in a quieter year. However, towards the end of theperiod, signs of improvement were evident and during that time, the business andassets of Dudley Vale, a competitor of Piletec, were acquired from GE Capital toform Piletec Dudley Vale. The integration was substantially complete by theyear end and the combined business is in excellent shape to benefit from theincrease in demand from the water sector and the planned flood alleviationprojects. Stoppers performed to expectation and consolidated its business with a newlocation in the North which was profitable in its first year of operation. Survey progressed throughout the year, finessing the revenue, rationalising thefleet holding and creating a central hire and sale desk, a concept wellestablished in other Vp businesses. Towards the end of the year, the surveyassets of Birse plc were acquired together with an ongoing rental agreement.The consolidated survey business is now well placed to grow organically withlimited increase in the cost base. Airpac Bukom Oilfield Services Equipment and service providers to the international oil and gas exploration anddevelopment markets. Revenue £5.0m (2005: £4.5m) Operating Profit £1.2m (2005: £1.1m) Investment in Rental Fleet £0.8m (2005: £0.5m) Airpac benefited from an active oilfield services sector across most of itsmarkets and produced another very satisfactory result. Profits at £1.2 millionwere 10% ahead on improved revenue of £5.0 million, up 12%. This was animportant year for Airpac with the acquisition of Bukom Oilfield Services inMarch 2006 for a consideration of £5.7 million. Bukom Oilfield Services,similar in size to Airpac, doubled the size of the division in a single step.The results incorporate three weeks' revenues of the expanded business, nowrenamed Airpac Bukom Oilfield Services. The continued strength of the oil price encouraged ongoing healthy levels ofglobal oil company spending. This in turn created high demand for oilfieldsupport services with Airpac's equipment fleet well placed to benefit fromserving a wide variety of oilfield segments and applications. The well testing market in both the North Sea and Asia Pacific, where we provideoperated air compressor and steam generator packages, was buoyed by highdrilling rig utilisation in support of exploration and production activities.Our Singapore operation continued to expand its support to customers in this andother markets throughout the region. Similarly, we enjoyed high demand for our specialist compressors from largecontractors supporting repair, maintenance and modification works on theoffshore platform infrastructure, particularly in the North Sea. Bukom Oilfield Services has historically been focussed on supportinginternational well testing operations. Geographically this provides us withaccess into new markets in Africa, North and South America and the Middle Eastwhilst at the same time strengthening our position in Asia Pacific. Thebusiness now has a truly international dimension supporting activities in morethan 50 countries. The addition of new products to the fleet via theacquisition such as steam exchangers, sand filters and coflexip hoses enables usto provide wider package solutions for our well testing clients whilstcomplementing our existing air and steam offering to that market. The fundamentals of our markets remain strong and with our expanded fleetcapacity, geographic coverage and product range, combined with a much strongerinternational focus the business is well positioned to benefit from the manyopportunities that the oil and gas market will offer. Hire Station Small tools and equipment for industry and construction, including thespecialist ESS Safeforce (safety and environmental products) and Lifting Point(material handling and lifting gear hire activities). Revenue £41.9m (2005: £34.8m) Operating Profit*/(Loss) £1.9m (2005: £(0.7)m) Investment in Rental Fleet £7.3m (2005: £5.7m) *before Pivotal Group restructuring costs Hire Station, after a year of repositioning in 2005, delivered an excellentturnaround back to profit in the year. Revenue grew by 21% including a part year contribution from the ESS acquisition.Encouragingly, organic revenue improved by almost 10%, buoyed by some strongkey account wins. Tool Hire The tools business has made solid progress and we have continued to invest inhigh demand core product rental assets through the branch network. The strongavailability of these assets has been a key factor in growing the number oftrading accounts. We have also invested in our National Hire Desk in Manchester, which nowtransacts almost 40% of annual tool hire revenues. A significant number of ourmajor customers deal through the central desk taking advantage of thestreamlined call handling and administrative process. The introduction of a real time extranet facility has given our customers themost up to date management information in the market place. The product range was expanded during the year and amongst the many new productslaunched, Hire Station were first to market with two new products, "Towermatic"and "Pop Up Scissor", both manufactured in response to the new working at heightregulations. We enjoyed very successful trading with our seasonal products - heating andcooling revenues particularly were well up on prior year. The introduction during the year of the new Hand Arm Vibration (HAV) regulationsand erection guidelines on tower were welcomed by our business. Operationally,we responded quickly and in the case of alloy tower, we invested heavily in newcomponents to ensure all branches could meet the new guidelines. During the year, we have expanded the National account sales team and plan toincrease this further in 2007 on the back of some very positive results. The specialist lifting business, Lifting Point, had an improved year and inNovember we added a further 13 satellite locations to the current network.These satellites supported by the main hubs offer the higher return and higherdemand product lines. Plans are in place to extend this in the new financialyear as we seek to build distribution across all tool locations. Overall the business enters the new financial year in good shape with therestructuring of 2005 beginning to pay dividends and translating into realprofit growth. We plan to add a further 8 to 10 locations to our branchnetwork, which we believe will give us the optimum geographical infrastructureof c.80 branches for our service offering. ESS Safeforce The specialist safety rental business Safeforce was boosted during the yearthrough the acquisition of ESS Safety Services, (via the Pivotal Servicesacquisition), one of the longest established businesses in the safety equipmentmarket. We rebranded the two businesses as ESS Safeforce which is nowpositioned as the market leading specialist rental, hire, sales and servicebusiness for safety equipment in the UK. ESS Safeforce has adopted the successful Vp model of centralising transactionsthrough a national hire desk based in Wellingborough, and is supported by anational distribution infrastructure. In addition to its strong asset base, ESSSafeforce also offers a range of confined space training courses to its nationalcustomer base. In the year ending 31 March 2006, around 20,000 delegates passedthrough its training venues. The integration of the two safety businesses is now complete, and with theprospects for good demand for safety equipment particularly as AMP4 commences,ESS Safeforce is well placed to capitalise on any market upturn. Pivotal Performance Following the acquisition of the Pivotal Group, the training business PivotalPerformance was significantly restructured to aid the elimination of losseswhich had plagued the business pre-acquisition. The division finished the yearwith a small trading loss before restructuring costs. The focus of the businessgoing forward is on the delivery of behavioural safety training, managementdevelopment and consultancy. Torrent Trackside Infrastructure equipment and services for the railway renewals and maintenanceindustry. Revenue £12.1m (2005: £13.3m) Operating Profit £1.7m (2005: £2.5m) Investment in Rental Fleet £2.4m (2005: £1.5m) This has been a year of change and consolidation in the rail industry. However,Torrent have retained their number one status in the market of rail portableplant, assisted by considerable growth in London Underground activity. Asanticipated activity levels dropped in the year with revenue reduced by 9% to£12.1 million and operating profits of £1.7 million, down £0.8 million on prioryear. Torrent are now established as a major support supplier for Network Rail's plantmaintenance work, having lost out on the main plant supply contract. Althoughmargins have been depressed this revenue stream has assisted in maintainingactivity levels in a market where many suppliers have encountered considerablereductions in demand. Our status as the major portable rail plant supplier has been furtherstrengthened with the recent inclusion of additional specialist rail plant,broadening our product portfolio. These new products also offer additionalrevenue potential as they can be supplied with operators to increase reliabilityand customer productivity. Torrent's compliance and IT standards have been taken to a new level during theyear and whilst adding to our overheads, we see this support service as animportant part of our offering, and highlighting our commitment to providing aquality service to all of our customers. Network Rail are determined to increase punctuality, reliability and ridequality for passengers. Major contractors' workloads are already in place andwe are well positioned in the new financial year to satisfy demand for topquality plant and associated services in support of this workload. Whilst Torrent experienced a quieter year, this excellent business remains atthe top of its market and is well positioned to remain a key supplier to therail maintenance and renewal market in the future, notwithstanding ourexpectation of further volatility in the market going forward. TPA TPA is a leading supplier of portable roadways, fencing, barriers, bridges andpedestrian ground access systems, primarily in the UK but also in Ireland andmainland Europe. The markets served by TPA include the European events market,rail, construction, telecommunications and power transmission. The acquisition of TPA in November 2005 marked the addition of a new division toVp. A relatively young business and the fastest growing in its sector, weidentified a rare opportunity to invest in a business of such quality. Therevenue in the period since November was £2.5 million, delivering a smalloperating loss of £0.3 million. We have invested £1.1m in the rental fleet sinceacquisition. The winter represents their quietest trading period, and this wasaccentuated by a combination of exceptionally dry weather conditions and slowconstruction demand. We anticipate that the highly experienced management teamwill drive TPA to clear market leadership in the near term. The company'sexcellent commitment to customer service was underlined by TPA winning aprestigious Queens Award for Enterprise in the product innovation categoryduring 2005. Activity levels since the start of the new financial year have been very goodand further significant investment in portable roadways and barriers has beenmade in support of this demand. TPA recently opened their new satellite depotin Scotland. Prospects for this business remain excellent. Prospects We are well placed as we enter the new financial year to capitalise on thepotential created from the substantial investments made in the latter half ofthe year, and believe that the markets which we serve will be broadly supportivein the coming year. We remain focussed on delivering further growth andopportunities for further relevant expansion will be pursued as appropriate. Neil StothardGroup Managing Director8 June 2006 Financial Highlights Consolidated Income StatementFor the year ended 31 March 2006 Note 2006 2005 £000 £000Revenue 1 99,396 90,044Cost of sales (72,092) (64,551) Gross profit 27,304 25,493 Administrative expenses (15,842) (15,297) Operating profit 1 11,462 10,196 Financial income 188 135Financial expense (978) (443) Profit before taxation 10,672 9,888 Taxation 5 (3,070) (2,815) Profit for the year 7,602 7,073 Pence PenceEarnings per 5p ordinary share 2 17.49 16.31Diluted earnings per 5p ordinary share 2 16.83 15.79Dividend per 5p ordinary share paid and 6 6.60 5.75proposed Consolidated Statement of Recognised Income and ExpenseFor the year ended 31 March 2006 Note 2006 2005 £000 £000 Actuarial gains/(losses) on defined benefit pension schemes 231 (1,310) Tax on items taken directly to equity (67) 393 Effective portion of changes in fair value of cash flowhedges (89) - Foreign exchange translation difference - 4 Net income recognised direct to equity 75 (913) Profit for the year 7,602 7,073 Total recognised income and expense for the year 3 7,677 6,160 Consolidated Balance SheetAs at 31 March 2006 Note 2006 2005 £000 £000ASSETS Non-current assetsIntangible assets 33,637 7,468Property, plant and equipment 66,054 48,676Total non-current assets 99,691 56,144 Current assetsInventories 3,119 2,136Income tax receivable 34 140Trade and other receivables 28,177 21,929Cash and cash equivalents 4 5,587 5,755Total current assets 36,917 29,960Total assets 136,608 86,104 LIABILITIESCurrent liabilitiesInterest bearing loans and borrowings 4 (2,148) (159)Trade and other payables (21,793) (13,925)Income tax payable (1,235) (1,628)Total current liabilities (25,176) (15,712) Non-current liabilitiesInterest bearing loans and borrowings 4 (36,062) (8,033)Employee benefits (2,894) (3,916)Other payables (7,930) -Deferred tax liabilities (4,223) (3,013)Total non-current liabilities (51,109) (14,962)Total liabilities (76,285) (30,674) Net assets 60,323 55,430 EQUITYIssued share capital 2,309 2,309Share premium account 16,192 16,192Hedging reserve (89) -Retained earnings 41,884 36,902Total equity attributable to equity holders of the parent 60,296 55,403Minority interests 27 27Total equity 3 60,323 55,430 Consolidated Cash Flow StatementFor the year ended 31 March 2006 2006 2005 £000 £000Cash flow from operating activitiesProfit before taxation 10,672 9,888Pension fund contributions (above) / below service cost (791) 12Share based payment charge 292 206Financial income (188) (135)Financial expense 978 443Intangible amortisation 4 -Depreciation 12,224 11,045Profit on disposal of property, plant and equipment (2,275) (1,190) Operating profit before changes in working capital 20,916 20,269Increase in inventories (559) (94)Increase in trade and other receivables (579) (251)Increase in trade and other payables 2,832 207 Cash generated from operations 22,610 20,131Interest element of finance lease rental payments (111) (6)Interest received 188 135Interest paid (710) (479)Income tax paid (3,120) (3,277)Net cash flow from operating activities 18,857 16,504 Cash flow from investing activitiesAcquisition of businesses (28,955) (204)Purchase of property, plant and equipment (15,506) (15,145)Disposal of property, plant and equipment 6,181 5,957Net cash flow from investing activities (38,280) (9,392)Net cash flow before financing activities (19,423) 7,112 Cash flow from financing activities(Repurchase)/sale of own shares (1,073) 153Repayment of borrowings (8,000) (111)Repayment of loan notes (125) (120)Proceeds from new loans 33,500 -Capital element of Hire Purchase Agreements (2,475) (156)Dividends paid (2,572) (2,214)Net cash flow from financing activities 19,255 (2,448) (Decrease)/increase in cash and cash equivalents (168) 4,664Cash and cash equivalents at the beginning of the year 5,755 1,087Effect of exchange rate fluctuations on cash held - 4Cash and cash equivalents at the end of the year 5,587 5,755 NOTES The preliminary results have been prepared on the basis of the accountingpolicies which are to be set out in Vp plc's annual report and accounts for theyear ended 31 March 2006. EU Law (IAS Regulation EC1606/2002) requires that the consolidated accounts ofthe group for the year ended 31 March 2006 be prepared in accordance withInternational Financial Reporting Standards ("IFRS's") as adopted for use in theEU ('adopted IFRS's'). The financial information set out above does not constitute the company'sstatutory accounts for the years ended 31 March 2006 or 2005. The statutoryaccounts for 2005 have been delivered to the registrar of companies and thosefor 2006 will be delivered following the Company's Annual General Meeting. Theauditors have reported on these accounts; their reports were unqualified and didnot contain a statement under section 237 (2) or (3) of the Companies Act 1985. Details of how the group's results and financial position are impacted by thechange to adopted IFRS's are set out in the group's IFRS restatement reportwhich was issued on 18 November 2005. Since the announcement a refinement ofthe share option models for cash settled options has led to a further charge of£144,000 for the year ended 31 March 2005 and an associated reduction indeferred tax. The preliminary results were approved by the board of directors on 7 June 2006. 1. Business Segments Revenue Depreciation Operating profit (loss) and amortisation 2006 2005 2006 2005 2006 2005 £000 £000 £000 £000 £000 £000Groundforce 23,542 24,629 2,313 2,389 5,258 5,766UK Forks 14,307 12,843 2,416 1,994 2,071 1,438Airpac Bukom 4,997 4,480 757 671 1,242 1,131Hire Station 41,937 34,787 4,531 4,158 1,433 (650)Torrent Trackside 12,134 13,305 1,485 1,541 1,733 2,511TPA 2,479 - 428 - (275) -Group - - 298 292 - -Total 99,396 90,044 12,228 11,045 11,462 10,196 Group costs have been allocated across the trading divisions and included above. 2. Earnings Per Share Basic earnings per share is based on the profit after taxation of £7.6m (2005:£7.1m) and the weighted average number of 5p ordinary shares in issue during theyear of 43,460,000 (2005: 43,374,000). 2006 Weighted 2005 Average Shares Weighted Number 000's Average Shares Number 000's Earnings per share pence Earnings per share Earnings £000 Earnings pence £000Basic earnings 7,602 43,460 17.49 7,073 43,374 16.31Share options - 1,697 - - 1,423 -Diluted earnings 7,602 45,157 16.83 7,073 44,797 15.79 3. Consolidated Statement of Changes in Equity 2006 2005 £000 £000Total recognised income and expense for the year 7,677 6,160Dividends paid (2,572) (2,214)Net movement in shares held by Vp Employee Trust at cost (1,073) 153Share option charge in the year 292 206Gains/(losses) on disposal of shares 80 (12)Tax movements on equity 489 241Change in Equity 4,893 4,534Equity at start of year 55,430 50,896Equity at end of year 60,323 55,430 4. Analysis of Debt At At 31 March 1 April 2006 2005 £000 £000 Cash and cash equivalents (5,587) (5,755)Current debt 2,148 159Non current debt 36,062 8,033Net debt 32,623 2,437 Year end gearing (calculated as net debt expressed as a percentage ofshareholders' funds) stands at 54% (2005: 4%). 5. Taxation The charge for taxation for the year represents an effective tax rate of 28.8%(2005: 28.5%). The effective tax rate excluding adjustments in respect of prioryears is 29.6% (2005: 31.0%). 6. Dividend The Board has proposed a final dividend of 4.65 pence per share to be paid on 2October 2006 to shareholders on the register at 8 September 2006. This,together with the interim dividend of 1.95 pence per share paid on 6 January2006 makes a total dividend for the year of 6.60 pence per share. 7. Annual Report and Accounts The Annual Report and Accounts for the year ended March 2006 will be posted toshareholders on or about 28 July 2006. 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