Vp Regulatory News (VP.)

1 Dec 2005 07:02

Vp PLC01 December 2005 Press Release 1 December 2005 Vp plc ("Vp" or "the Group") Interim Results Vp plc, the equipment rental specialist, today announces its interim results forthe six months ended 30 September 2005. Highlights • revenue up 4% to £47.4 million (2004: £45.6 million) • profit before tax rose by 19% to £5.9 million (2004: £4.9 million) before one off integration costs of £0.4 million associated with the recent acquisition of Pivotal Services • earnings per share improved by 10% to 8.96 pence (2004: 8.14 pence) • interim dividend increased by 11% to 1.95p per share (2004: 1.75 pence) • net debt increased to £5.7 million due to acquisitions and increased capital investment (31 March 2005: £2.4 million), representing gearing of 10%• return on capital employed 17.3% (2004: 16.8%) Jeremy Pilkington, Chairman commented: "Vp has made a strong start to the new financial year and created a platformwhich we believe will deliver a satisfactory outcome for the year as a whole.In addition, we are very pleased to have secured three important acquisitionsand look forward to their contribution to future performance." For further information please contact: Vp plc Jeremy Pilkington, Chairman Tel: +44 (0) 1423 533 445jeremy.pilkington@vpplc.com www.vpplc.com Neil Stothard, Group Managing Directorneil.stothard@vpplc.com Mike Holt, Group Finance Directormike.holt@vpplc.com Abchurch Henry Harrison-Topham / Justin Heath Tel: +44 (0) 20 7398 7702henry.ht@abchurch-group.com www.abchurch-group.com CHAIRMAN'S STATEMENT It is some five years since we recognised the potential benefits to be gainedfrom specialisation within the rental market and focussed our efforts on growingour specialist businesses. We believe our earnings track record over thisperiod demonstrates the success of this strategy and that the results we areannouncing today further reinforce the correctness of this decision. RESULTS The Group has progressed on several fronts since the start of the new financialyear; delivery of material earnings growth, completion of significantacquisitions and the securing of improved and extended banking facilities. For the six months ended 30 September 2005, profit before tax rose 19% to £5.9m(2004: £4.9m) before one off costs of £0.4m associated with the integration ofthe recent Pivotal Services Group acquisition. This result is particularlypleasing as it has been achieved on the basis of purely organic improvementwithout any contribution from acquisitions. Revenue increased by 4% to £47.4m(2004: £45.6m). Earnings per share rose by 10% to 8.96p (2004: 8.14p). Returnon capital employed improved to 17.3% (2004: 16.8%). Your Board is declaring an interim dividend of 1.95p per share, an increase of11%. The dividend is payable on 6th January 2006 to shareholders registered asat 9th December 2005. Net debt at 30th September 2005 stood at £5.7m (31 March 2005: £2.4m)representing gearing of 10%. The increase in net debt is after absorbing the£4.5m cost of the Pivotal acquisition and increased capital investment in therental fleet of £8.5m (2004: £5.9m). BUSINESS REVIEW Groundforce produced a satisfactory first half performance, reporting profits of£2.6m (2004: £2.8m). Margins improved but revenue reduced to £11.5m (2004:£12.7m) largely as a result of the anticipated hiatus between the AMP3 and AMP4water infrastructure investment programmes. Groundforce continues to enjoy gooddemand from its core civil engineering and construction markets and is wellpositioned to take advantage of the significant AMP4 workloads as and when theymaterialise. UK Forks had an excellent first half on the back of strong revenue growth.Profits rose significantly to £1.3m (2004: £0.8m) on revenue ahead 17% at £7.5m(2004: £6.4m). The division recorded further successes both in thehousebuilding and general construction sectors and our order book remainsstrong. The seasonality of this market means that the second half of the yearis unlikely to be as strong as the first. Airpac Oilfield Services delivered another strong set of figures with profits of£0.5m (2004: £0.6m) on revenue static at £2.2m (2004: £2.2m). Demand from theNorth Sea market remained buoyant though international project related activitywas marginally lower. Hire Station produced profits of £0.9m (2004: loss £0.3m) before the one-offcosts of £0.4m in relation to the recently acquired Pivotal Group. This profitturnaround reflects the impact of the measures taken by management last year andprovides a solid base for further progress. Revenue increased to £20.0m (2004:£17.4m). Pivotal, acquired in July 2005, comprises two activities; a health & safety andmanagement training business, and a safety equipment rental businessincorporating a confined space training function. The former has beenrestructured since acquisition, and now trades as Pivotal Performance and thelatter activity has been successfully integrated with our existing Safeforcebusiness to create ESS Safeforce. As anticipated Torrent Trackside experienced a reduction in revenue, primarilydue to the loss of the Network Rail maintenance plant contract. Revenue in theperiod was £6.2m (2004: £6.9m). Profits reduced to £0.8m (2004: £1.3m).Torrent is a quality business and has responded well to the changes in themarket, repositioning itself to take advantage of other growth opportunities,including London Underground. ACQUISITIONS In addition to the acquisition of Pivotal in July 2005, since the period end wehave separately reported on two further acquisitions. In November, we acquired Trax Portable Access Limited (TPA), a rental businessspecialising in the temporary roadway and access market, for an initial cashconsideration of £11.5m. This may be augmented by up to a further £7.9m under a3-year earn-out arrangement. TPA fits well with our strategic objectives interms of market position, return on capital employed and earnings growth. Thehighly experienced management team are remaining with the business which webelieve is capable of significant further development. We are very pleased towelcome TPA as a new division within Vp. Also in November, we acquired the business and assets of Dudley Vale from GEEquipment Services Limited for a cash consideration of £3.5m. Dudley Vale rentsand sells piling equipment to the construction and civil engineering sectors andwill be integrated with our existing Piletec operations within Groundforce. Thecombined business will have an excellent market position and will trade asPiletec Dudley Vale. OUTLOOK We are very pleased to have secured three important acquisitions for Vp sincethe start of the current financial year and look forward to their contributionto future performance. At the beginning of November we arranged new bank funding comprising a 5-year,£45m revolving credit line. This facility leverages our financial strength insupport of our strategic growth objectives. Vp has made a strong start to the new financial year and created a platformwhich we believe will deliver a satisfactory outcome for the year as a whole. Jeremy PilkingtonChairman1 December 2005 Vp plc Consolidated Income Statement Note Six months Six months to Full year to to 30 Sep 30 Sep 2004 2005 31 Mar 2005 (unaudited) (unaudited) (unaudited) £000 £000 £000 Revenue 47,387 45,601 90,044 Cost of sales (32,640) (31,486) (61,958) Gross profit 14,747 14,115 28,086 Administration expenses (9,127) (9,024) (17,746) Operating profit before financing costs 5,620 5,091 10,340 Financial income 115 55 135 Financial expenses (249) (211) (443)Profit before tax 5,486 4,935 10,032 Income tax expense 3 (1,589) (1,417) (2,824) Profit for the period attributable to equityholders of the parent 3,897 3,518 7,208 Earnings per 5p ordinary share 5 8.96 p 8.14 p 16.62 p Diluted earnings per 5p ordinary share 5 8.66 p 7.86 p 16.09 p Dividend per share 6 1.95 p 1.75 p 5.75p Dividends paid and proposed (£000) 846 761 2,502 Consolidated Statement of Recognised Income and Expense Six months to Six months to Full year to 30 Sep 2005 30 Sep 2004 31 Mar 2005 (unaudited) (unaudited) (unaudited) £000 £000 £000 Tax on items taken direct to equity (66) - 393 Actuarial losses on defined benefit pension scheme - - (1,310) Foreign exchange translation difference - 5 4 Net income recognised directly to equity (66) 5 (913) Profit for the period 3,897 3,518 7,208 Total recognised income and expense for the period 3,831 3,523 6,295 Vp plc Consolidated Balance Sheet Note 30 Sep 2005 31 Mar 2005 30 Sep 2004 (unaudited) (unaudited) (unaudited) £000 £000 £000 Assets Property, plant and equipment 51,285 48,676 47,901Intangible assets 9,845 7,468 7,434Total non current assets 61,130 56,144 55,335 Inventories 2,580 2,136 2,098Trade and other receivables 26,260 22,069 23,131Cash and cash equivalents 2,395 5,755 4,794Total current assets 31,235 29,960 30,023 LiabilitiesInterest bearing loans and borrowings (37) (159) (238)Income tax payable (1,876) (1,628) (1,925)Trade and other payables (18,608) (13,407) (15,583)Total current liabilities (20,521) (15,194) (17,746) Interest bearing loans and borrowings (8,051) (8,033) (8,000)Employee benefits (3,744) (3,916) (2,594)Deferred tax liabilities (2,909) (3,068) (3,530)Total non current liabilities (14,704) (15,017) (14,124) Net assets 57,140 55,893 53,488 Equity Issued capital 2,309 2,309 2,309Share premium 16,192 16,192 16,192Revaluation reserve 301 301 419Retained earnings 38,311 37,064 34,541Total equity attributable to equity 4 57,113 55,866 53,461holders of parent Minority interest 27 27 27 Total equity 57,140 55,893 53,488 Vp plc Consolidated cash flow statement Note Six months to Six months to Full year to 30 Sep 2005 30 Sep 2004 31 Mar 2005 (unaudited) (unaudited) (unaudited) £000 £000 £000 Cash generated from operations 7 9,741 9,283 20,148 Interest paid (231) (251) (485)Interest received 115 55 135Income taxes paid (1,426) (1,521) (3,277)Net cash from operating activities 8,199 7,566 16,521 Cash flows from investing activities Purchase of property, plant and equipment (8,321) (6,253) (15,145)Proceeds from sale of plant and equipment 2,687 2,728 5,957Acquisitions net of cash acquired (4,647) 55 (204)Net cash used in investing activities (10,281) (3,470) (9,392) Cash flows from financing activities (Repurchase) / sale of own shares (1,123) (53) 153Repayment of borrowings - (100) (111)Repayment of loan notes (125) (95) (120)Payment of finance lease liabilities (30) (146) (156)Dividends paid - - (2,231)Net cash used in financing activities (1,278) (394) (2,465) Net (decrease)/increase in cash and cash (3,360) 3,702 4,664equivalentsCash and cash equivalents at beginning of period 5,755 1,087 1,087Effect of exchange rate fluctuations on cash held - 5 4Cash and cash equivalents at end of period 2,395 4,794 5,755 Vp plc Notes to the Interim Financial Statements 1. Basis of Preparation EU law (IAS Regulation EC 1606/2002) requires that the next annual consolidatedfinancial statements of the Group, for the year ending 31 March 2006, beprepared in accordance with accounting standards adopted for use in the EuropeanUnion (EU) further to the IAS Regulation (EC 1606/2002) ("accounting standardsadopted by the EU"). This interim financial information has been prepared on the basis of therecognition and measurement requirements of IFRS in issue that either areadopted by the EU and effective (or available for early adoption) at 31 March2006 or are expected to be adopted and effective (or available for earlyadoption) at 31 March 2006, the Group's first annual reporting date at which itis required to use accounting standards adopted by the EU. Based on theserecognition and measurement requirements the board has made assumptions aboutthe accounting policies expected to be applied when the first annual financialstatements are prepared in accordance with accounting standards adopted by theEU for the year ending 31 March 2006. These are set out below in note 2. The accounting standards adopted by the EU that will be effective (or availablefor early adoption) in the annual financial statements for the year ending 31March 2006 are still subject to change and to additional interpretations andtherefore cannot be determined with certainty. Accordingly, the accountingpolicies for that annual period will be determined finally only when the annualfinancial statements are prepared for the year ending 31 March 2006. The effect of IFRS, including the required reconciliations, on the Group'scomparative figures were set out in our recent announcement "The Impact ofInternational Financial Reporting Standards" which was issued on 18 November2005. 2. Accounting Policies Vp's accounting policies have been applied consistently to all periods presentedand are in line with those applied in the last annual financial statements forthe year ended 31 March 2005, with the exception of the following changes to theaccounting policies which have been adopted in order to comply with IFRS. Goodwill Goodwill represents the excess of the fair value of the purchase price over thefair value of the net assets acquired as part of a business combination.Goodwill is assumed to have an indefinite useful economic life and under IFRS 3,"Business Combinations", is not amortised, but is reviewed annually forimpairment and carried in the balance sheet at cost less any accumulatedimpairment losses. The Group has applied the exemption under IFRS 1 that allows goodwill in respectof acquisitions made prior to 1 April 2004 to remain at deemed cost as statedunder UK GAAP, that is net of amortisation to that date. Dividends In accordance with IAS 10, "Events after the Balance Sheet Date", dividendsdeclared after the balance sheet date are not accrued at that balance sheet datebecause the liability does not represent an obligation as defined by IAS 37, "Provisions, Contingent Liabilities and Contingent Assets". Each dividend willtherefore be recognised in the period in which it is approved rather than in theperiod to which it relates. Share Based Payments IFRS 2, "Share-based Payments", requires that the fair value of share options becharged to the Income Statement based upon their fair value at the date ofgrant. The charge is recognised evenly over the vesting period of the options. The fair values are calculated using an appropriate option pricing model. TheGroup's Approved, Unapproved and Save as you Earn (SAYE) schemes have beenvalued using the Black-Scholes model and the Income Statement charge is adjustedto reflect the expected number of options that will vest based on expectedlevels of performance and the expected number of employees leaving the Group.The fair values of the Group's Long Term Incentive Plan (LTIP) and ShareMatching options are calculated using a discounted grant price model againadjusted for expected performance and employees leaving the Group. The Group has chosen to adopt the exemption whereby IFRS 2 is only applied tooptions granted after 7 November 2002. Financial Instruments The Group's only financial instrument is an interest rate swap. Under IAS 39, "Financial Instruments: Recognition and Measurement" this is accounted for in thebalance sheet at fair value and any movement in fair value is taken to theIncome Statement, unless the transaction is designated as part of a hedgingrelationship in which case any changes to that fair value are accounted for inequity and then released to the Income Statement to match the settlement ofinterest under the swap. Employee Benefits Under IAS 19, "Employee Benefits" the Group's pension deficits are recorded asbalance sheet liabilities and the actuarial gains and losses associated withthis liability are to be recognised in the Statement of Recognised Income andExpense as they arise. All actuarial gains and losses at 1 April 2004, the dateof transition to IFRS, were recognised. Actuarial gains and losses occur whenthe actual returns on scheme assets differ from those initially expected by theactuary. Taxation The charge for taxation is based on the results for the year and takes intoaccount full provision for deferred taxation due to temporary timing differencesbetween the carrying value of an asset or liability and its tax base. 3. Income Taxes Income tax on profit before tax is based on an effective tax rate of 29% toreflect the estimated tax charge for the full year. 4. Statement of Changes in Equity Six months to Six months to Full year to 30 Sep 2005 30 Sep 2004 31 Mar 2005 (unaudited) (unaudited) (unaudited) £000 £000 £000 Total recognised income and expense for the 3,831 3,523 6,295period Tax movements to equity 50 171 241 Share option charge in the year and gains/losses 229 157 276on share options and disposal of shares Net movement in shares held by Vp Employee Trust (1,123) (53) 153at cost Dividends to shareholders (1,740) (1,452) (2,214) Change in equity during the period 1,247 2,346 4,751 Equity at the start of the period 55,866 51,115 51,115 Equity at the end of the period 57,113 53,461 55,866 5. Earnings Per Share Earnings per share have been calculated on 43,502,560 shares (2004: 43,232,175)being the weighted average number of shares in issue during the period. Dilutedearnings per share have been calculated on 44,995,224 shares (2004: 44,785,682). 6. Dividends The Directors have declared an interim dividend of 1.95 pence (2004: 1.75 pence)per share payable on 6 January 2006 to shareholders on the register at 9December 2005. The cost of dividends in the Statement of Changes in Equityreflects the adjustments for the interim and final dividends waived by the VpEmployee Trust in relation to the shares it holds for the Group's share optionschemes. 7. Reconciliation of profit before financing costs to net cash generatedfrom operations Six months to Six months to Full year to 30 Sep 2005 30 Sep 2004 31 Mar 2005 (unaudited) (unaudited) (unaudited) £000 £000 £000 Cash flows from operating activities Profit before tax 5,486 4,935 10,032Depreciation 5,655 5,709 11,045Profit on sale of tangible fixed assets (1,010) (405) (1,190)Interest expense 134 156 308Increase in inventories (204) (80) (94)Increase in trade and other receivables (2,183) (1,367) (251)Increase in trade and other payables 1,863 335 298Cash generated from operations 9,741 9,283 20,148 8. Analysis of Net Debt (unaudited) As at Cash Acquisitions As at 1 Apr 05 Flow 30 Sep 05 £000 £000 £000 £000Cash in hand and at bank 5,755 (3,360) - 2,395Medium term loan (8,000) - - (8,000)Loan notes (125) 125 - -Finance leases and hire purchases (67) 30 (51) (88) (2,437) (3,205) (51) (5,693) Comparative Figures The comparative figures for the financial year ended 31 March 2005 are not theGroup's statutory accounts for that financial year. Those accounts which wereprepared under UK GAAP have been reported on by the Group's auditors anddelivered to the Registrar of Companies. The report of the auditors wasunqualified and did not contain a statement under Section 237(2) or (3) of theCompanies Act 1985. Independent review report by KPMG Audit Plc to Vp plc Introduction We have been engaged by the company to review the financial information set outpages 4 to 10 and we have read the other information contained in the interimreport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the company in accordance with the terms of ourengagement to assist the company in meeting the requirements of the ListingRules of the Financial Services Authority. Our review has been undertaken sothat we might state to the company those matters we are required to state to itin this report and for no other purpose. To the fullest extent permitted bylaw, we do not accept or assume responsibility to anyone other than the companyfor our review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules which require that the accounting policies and presentation applied to theinterim figures should be consistent with those applied in preparing thepreceding annual financial statements except where any changes, and the reasonsfor them, are disclosed. As disclosed in note 1 to the financial information, the next annual financialstatements of the group will be prepared in accordance with IFRS as adopted foruse in the European Union. The accounting policies that have been adopted in preparing the financialinformation are consistent with those that the directors currently intend to usein the next annual financial statements. There is, however, a possibility thatthe directors may determine that some changes to these policies are necessarywhen preparing the full annual financial statements for the first time inaccordance with those IFRSs adopted for use by the European Union. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4Review of interim financial information issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of makingenquiries of group management and applying analytical procedures to thefinancial information and underlying financial data and, based thereon,assessing whether the accounting policies and presentation have beenconsistently applied unless otherwise disclosed. A review is substantially lessin scope than an audit performed in accordance with Auditing Standards andtherefore provides a lower level of assurance than an audit. Accordingly, we donot express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2005. KPMG Audit PlcChartered AccountantsLeeds 1 December 2005 This information is provided by RNS The company news service from the London Stock Exchange