Vp Regulatory News (VP.)

9 Jun 2005 07:01

Vp PLC09 June 2005 Press Release 9 June 2005 Vp plc ("Vp" or "the Group") Preliminary Results Vp plc, the equipment rental specialist, today announces its preliminary resultsfor the year ended 31 March 2005. Highlights • Turnover up 8% to £90.0 million (2004: £83.5 million) • Profit before tax and goodwill up 14% to £9.8 million (2004: £8.6 million*) • Earnings per share pre goodwill increased by 14% to 16.00 pence (2004: 14.05 pence*) • Total dividend increased by 15% to 5.75 pence (2004: 5.0 pence) based on recommended final dividend of 4.0 pence per share • Return on capital employed improved to 17% (2004:16%) • Net debt of £2.4 million (2004: £7.5 million), representing gearing of 4%, after capital investment of £15.1 million *Adjusted for prior year exceptional profit of £0.6m on property disposals Jeremy Pilkington, Chairman commented: "Our businesses operate in a variety of dynamic economic environments whichcontinually present challenges, occasionally setbacks, but always opportunities.With a number of identified opportunities and a very strong balance sheet, webelieve that the outlook for the Group remains positive." For further information please contact: Vp plc Jeremy Pilkington, Chairman Tel: +44 (0) 1423 533 445jeremypilkington@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 7700henry.ht@abchurch-group.com www.abchurch-group.com CHAIRMAN'S STATEMENT Results I am very pleased to report a further year of progress for the Group. Profitbefore tax rose 14% (before the prior year exceptional profit on propertydisposals) to £9.4 million (2004: £8.2 million excluding £0.6 millionexceptional profit). Turnover rose 8% to £90.0 million. It is noteworthy that this level of revenue and profit growth has been achievedorganically. Earnings per share, similarly adjusted for the prior year exceptional, rose by14% to 15.04 pence and return on capital employed increased to 17% (2004: 16%). In light of this continued progress your Board is recommending a final dividendof 4.0 pence per share making a total for the year of 5.75 pence (2004: 5.0pence), an increase of 15%. The dividend is payable on 3 October 2005 toshareholders registered as at 9 September 2005. The Group's excellent operating cash flow has further improved our gearingposition after capital investment totalling £15.1 million. Net debt at 31stMarch 2005 stood at £2.4 million (2004: £7.5 million), representing gearing of4%. The Board is committed to taking advantage of this financial strength to pursueboth organic and acquisition growth opportunities as they arise. Overview Vp comprises five specialist rental businesses, all sharing a core expertise inasset management. Each business explicitly seeks a market leadership positionwithin its sector. The primary markets we serve are: • Civil engineering and water utilities : Groundforce • Residential and general construction : UK Forks • Oil and gas exploration and development - North Sea and Worldwide : Airpac Oilfield Services • General construction, repair and maintenance : Hire Station • Rail infrastructure support : Torrent Trackside This breadth of market exposure provides us with the resilience to withstand theimpact of adverse trading in any one individual sector. It was very pleasing to see a number of our businesses achieve ISO 9001 qualityand ISO 14001 environment accreditation during the year. Business performance Groundforce has had an excellent year delivering 7% profit growth to £5.7million on turnover of £24.6 million. UK infrastructure spending remains strongand evolving safety and regulatory regimes continue to provide us withopportunities for new product introduction. The new five year asset managementplan for the water industry (AMP4) has now commenced and will help to underpinthe prospects for this important sector as the work programme is rolled out. UK Forks has produced another very satisfactory result with profits ahead by 11%at £1.4 million on turnover up by 3% to £12.8 million. UK Forks continues toexperience firm demand from its core housebuilding market as well as fromgeneral construction activity. We continue to leverage the unique businessmodel of UK Forks and have pleasingly seen a further improvement in ROCE to 14%,being the fifth consecutive year of improvement. Airpac Oilfield Services has focused over the last couple of years ondiversifying its service offering and extending its geographical presence. Thisyear's result shows the benefits of this strategy with profits doubling to £1.1million on revenues ahead by 22% at £4.5 million. We expect the continuedstrength of the oil price to support satisfactory levels of international oiland gas exploration and development over the coming year. At Hire Station, the loss of £0.7 million was disappointing but almost entirelyattributable to underperformance at Lifting Point, one of our newer productofferings. Lifting Point has subsequently been merged with our other specialistactivity, Safeforce, and together they represent a much more viable business.The remaining tools business, after a very poor first quarter, has tradedprofitably with the anticipated exception of the extended Christmas and New Yearholiday period. The significant measures taken by management during the yearshould enable Hire Station to return to profit in the new financial year. Torrent produced a very satisfactory result in a year not without itschallenges. Profits rose by 8% to £2.5 million on turnover up 15% to £13.3million. Post the year end, Torrent learnt that its tender for the provision ofmaintenance plant to Network Rail had not been successful. However, Torrent'srenewals workload remains buoyant and opportunities elsewhere within the railsector, notably within London Underground, are being developed. A more detailed commentary on these activities follows in the Business Review. Appointments In July we welcomed Mike Holt to the Board as Group Finance Director. Thisappointment has enabled Neil Stothard, who has fulfilled this role since joiningthe Group in 1997, to take up his new position as Group Managing Director. TheBoard believe that this strengthening of the senior management team will betterenable the Group to take advantage of the identified opportunities forinvestment and growth. It remains my pleasurable duty to thank all members of the Group for theirloyalty and hard work during the year which has contributed to the verysatisfactory performance that we are now reporting. Outlook Our businesses operate in a variety of dynamic economic environments whichcontinually present challenges, occasionally setbacks, but always opportunities.Overall we believe that the outlook for the Group remains positive. Jeremy PilkingtonChairman8 June 2005 Business Review The Group has delivered another good result for the year ended 31 March 2005with pre-tax profits of £9.4 million. This represents growth of 14% excludingthe prior year exceptional profit on property disposals. This growth is all themore impressive given that no acquisitions were made in the year. Revenues grewby 8% to £90.0 million. The strong cash generative qualities of the Group were underlined with net debtreducing by £5.1 million to £2.4 million, representing 4% gearing, after a grosscapital investment of £15.1 million in the year. The market sectors within which we operate were broadly supportive withparticularly good demand from the oil and gas, civil engineering and railsectors. Groundforce Excavation support systems and specialist products for the water, civilengineering and construction industries including Piletec - pile driving andbreaking; Stopper Specialists - pipe integrity testing; Survey Technology -surveying and water flow measurement. Turnover £24.6m (2004: £19.3m)Operating Profit £5.7m (2004: £5.3m)Investment in Rental fleet £2.6m (2004: £1.8m) This was a year of further progress for Groundforce, which consolidated itsposition as the leading provider of ground support systems and relatedactivities to the civil engineering and construction sectors. Revenues grew by27% to £24.6 million, generating a 7% increase in profits to £5.7 million. Shoring The shoring activity enjoyed another buoyant year with strong demand from thecontractors engaged in the final year of the AMP 3 programme. In addition anumber of larger civil engineering and construction projects, including HeathrowTerminal 5, delivered useful revenue growth. Groundforce also supplied a numberof larger, clear-span bracing products to projects in Ireland during the year. A key focus for operations was the streamlining of the depot structure and therationalisation of the multiplicity of shoring products in the hire fleetresulting from our recent acquisitions. This involved selective disposal andrelocation of certain product lines supported by investment in new product. Weenter the new financial year with the hire fleet in excellent shape. We anticipate that there will be some slowing down in demand for shoringproducts until the AMP 4 programme builds up later in 2005. Longer term,Groundforce remains very well positioned to satisfy AMP 4 demand for shoringproduct over the next 5 years. The technical design team achieved ISO9001 quality accreditation in the year. Piletec, Stopper Specialists and Survey Technology Piletec performed well, gaining market share and expanding its product offeringto include free suspended piling hammers and sheet piles for rental and sales.A new location was opened in Oldham to provide support to Piletec's expansion inthe North. Stopper Specialists traded well and like Piletec expanded geographically,opening a new location in Leeds towards the end of the year. Survey Technology completed its first year with the Group and is now in aposition to establish itself in the market for the hire, sale and maintenance ofsurvey equipment. All three businesses achieved ISO 9001 quality, and ISO 14001 environmental,accreditation in the year. UK Forks Rough terrain material handling equipment for industry, residential and generalconstruction. Turnover £12.8m (2004: £12.4m)Operating Profit £1.4m (2004: £1.3m)Investment in Rental fleet £3.1m (2004: £2.5m) UK Forks further consolidated its position as the UK's leading specialist hirerof telescopic handlers delivering 11% profit growth from a 3% increase inrevenue. Return on capital employed increased to 14% in the year, continuing thetrend of improving quality of earnings from this division. The year included the challenges of intense price competition and the threat ofadverse market conditions in the housebuilding sector. In spite of this,progress was made in the general construction markets and further growth wassecured in the housebuilding sector. With the Government's objectives forwidening housing opportunity and choice (PPG3) now firmly in place, sites havehad to become more intensively developed and this has led to growth in demandfor the versatility of the machines at the extreme ends of the size range weoffer, i.e. 4 metre and 17 metre machines. The hire fleet grew by 10% in the year to nearly 1,200 machines. We continue to develop relationships with a number of larger housebuilders whorecognise the benefits to their businesses of the quality and consistency ofservice provided by the unique UK Forks central hire desk and fleet managementregime. The new financial year has started positively. We anticipate that the marketwill remain stable for UK Forks over the coming year and that we will continueto attract further customers to our consolidated, single source, nationaloffering. Airpac Oilfield Services Equipment and service providers to the international oil and gas exploration anddevelopment markets. Turnover £4.5m (2004: £3.7m)Operating Profit £1.1m (2004: £0.5m)Investment in Rental fleet £0.5m (2004: £0.5m) Airpac enjoyed an excellent year with profits more than doubling to £1.1million. Turnover grew to £4.5 million, an increase of 22%. Strongperformances were recorded both in the North Sea and in South East Asia acrossall market segments. Almost half of all revenues are now derived from non-North Sea contracts. Thisactivity is supported from both our Singapore facility and our UK bases inAberdeen and Great Yarmouth depending upon product availability and logistics.Our Singapore operation continues to consolidate its leading position in thewell testing segment within the Asia-Pacific region and to develop our range ofcapabilities across other types of projects. The oil and gas exploration market has been aided by the comparatively high oilprice resulting in continued oil company spending and improved drilling rigutilisation. Well testing support operations benefited from a high level ofdrilling activity and the offshore structural fabric maintenance market (mainlyin the North Sea) was also busy. Project related revenues were also strong,primarily generated from pipeline dewatering and drying work. This saw usprovide services to a number of high profile field development projects bothdomestically and overseas. It was also pleasing to see valuable contributions from other emergingapplications for our specialist compressors and steam generators such as drillcuttings transportation and offshore pipework de-scaling operations. Theprovision of skilled operating personnel in support of our contracts was alsobuoyant. During the year we attained ISO9001 and ISO14001 accreditation for our qualityand environmental management systems. The general market outlook remains positive for the oilfield services sector andour focus in the coming year will be to capitalise on the current strength ofdemand and to fully explore further opportunities for our services in otherinternational markets. Hire Station Tools and specialist products for industry and construction, including Safeforce- safety and environmental products and Lifting Point - materials handling andlifting gear hire. Turnover £34.8m (2004: £36.5m)Operating Profit £(0.7)m (2004: £(0.4)m)Investment in Rental fleet £5.7m (2004: £4.2m) Hire Station completed a very active year of repositioning the business againsta background of disappointing results. Over the period the business has beenre-focussed in all the key areas of operations, hire desks, customer managementand purchasing. Whilst tools stabilised after a poor opening quarter, and Safeforce continued todevelop, the Lifting Point business had a very poor year. We enter the new financial year with a Tool Hire Division, incorporating theHire Station One Call offering, and a Specialist Products Division, created inDecember 2004, incorporating Safeforce and Lifting Point under unifiedmanagement. Tool Hire After a difficult first quarter the financial performance of tools improved,moving into profits apart from during the extended Christmas and New Yearholiday season. The business is now organised into five regions supported by thewell-established One Call central hire desk. The first regional hire desk waslaunched in the North West towards the end of the year and we have seenexcellent customer acceptability with year on year contract and revenue growthin this region. Specialist Products At the end of 2004 the Safeforce and Lifting Point businesses were merged toform the Specialist Products division. This created a more streamlined businesscapable of delivering growth from its network of ten locations across the UKsupported by a national hire desk. The central booking system provides thepoint of contact for major customers and complements the service provided atbranch level. This is similar to the business model successfully adoptedelsewhere within Vp. Safeforce, still a relatively new business, produced year on year revenue growthof 33%. Lifting Point had a very poor year and was responsible for the majority of theloss reported by Hire Station. The merger with Safeforce was vital to thecreation of a cost base which the Lifting Point business could sustain goingforward. This is now in place. The combined activity has started the new financial year well and we are hopefulof a much improved performance from Specialist Products in the coming year. With a very difficult year behind it we believe this business will provideopportunities for profit growth in the future. Torrent Trackside Portable rail infrastructure equipment, lighting and related services for therailway renewals and maintenance industry. Turnover £13.3m (2004: £11.6m)Operating Profit £2.5m (2004: £2.3m)Investment in Rental fleet £1.5m (2004: £1.8m) This has been a challenging year in the rail industry but Torrent have producedanother strong performance and continued growth, with all revenue streamsshowing improvement. Revenues increased by 15% to £13.3 million and operatingprofit increased 8% to £2.5 million. Torrent has continued to strengthen its position in the specialist rail supportmarket by supplying a comprehensive single source solution to customers'requirements. Torrent remains the supplier of choice for most major railcontractors. The market has changed considerably since Network Rail became the primarymaintenance contractor and it was disappointing not to have been selected byNetwork Rail for the provision of maintenance plant. However, we are wellpositioned nationally to provide secondary level support to the maintenanceelement going forward. Torrent has been successful in the expansion of its track renewals customer baseand in London Underground related activity, where we have been engaged in thesupply of plant, trackside lighting and operator training services. Compliance continues to play a central role in our customer service and we arejustifiably proud of the consistently good results we achieve in the railindustry's "Link up" audit and certification process. Going forward, the major renewals contractors have a clear indication of theirwork stream and are reducing their plant holdings and looking to the hire marketto satisfy their needs. This should assist in securing our work levels over thenext financial year, where we expect market activity to remain strong butcompetitive. Prospects The Group enters the new financial year with significant growth aspirationssupported by a strong financial position. Neil StothardGroup Managing Director8 June 2005 Consolidated profit and loss accountFor the year ended 31 March 2005 Notes 2005 2004 £000 £000 Turnover 90,044 83,497 Trading profit 21,177 20,211 Depreciation (11,045) (11,180) Operating profit before goodwill amortisation 10,132 9,031 Amortisation of goodwill (429) (377) Operating profit 9,703 8,654 Profit on disposal of properties - 643 Profit on ordinary activities before interest 9,703 9,297 Net interest payable (348) (429) Profit on ordinary activities before taxation 9,355 8,868 Taxation 5 (2,831) (2,529) Profit for the financial year 6,524 6,339 Dividends 7 (2,502) (2,142) Retained profit for the financial year 4,022 4,197 Earnings per 5p ordinary share 6 15.04p 14.59p Earnings per 5p ordinary share before goodwill 6 16.00p 15.46pamortisation Earnings per 5p ordinary share before goodwill 6 16.00p 14.05pamortisation and exceptional property profits Dividend per 5p ordinary share 7 5.75p 5.00p All the activities reflected in the profit and loss account are continuing, asdefined by FRS 3. Consolidated balance sheetAt 31 March 2005 31 March 2005 31 March 2004 Restated £000 £000 £000 £000Fixed assetsIntangible assets - goodwill 7,039 7,136Tangible assets 48,676 49,911 55,715 57,047 Current assetsStocks 2,136 2,018Debtors 22,069 21,694Cash at bank and in hand 5,755 1,087 29,960 24,799 Creditors: amounts falling due within one year (16,925) (17,384) Net current assets 13,035 7,415 Total assets less current liabilities 68,750 64,462 Creditors: amounts falling due after more than one year (8,479) (8,313) Provisions for liabilities and charges (4,009) (4,319) Net assets 56,262 51,830 Capital and reserves Called up share capital 2,309 2,309Share premium account 16,192 16,192Revaluation reserve 430 599Profit and loss account 37,304 32,703Equity shareholders' funds 56,235 51,803 Equity minority interests 27 27 56,262 51,830 Consolidated cash flow statementFor year ended 31 March 2005 Notes 31 March 2005 31 March 2004 £000 £000 £000 £000 Cash flow from operating activities 8 20,148 16,791 Return on investments and servicing offinance Interest paid (479) (435)Interest received 135 18Interest element of finance lease rental (6) (25)paymentsNet cash outflow from returns oninvestments and servicing of finance (350) (442) Taxation UK corporation tax paid (3,277) (2,407) Capital expenditure and financialinvestmentPurchase of tangible fixed assets (15,145) (13,068)Purchase and sale of investments 153 (793)Sale of tangible fixed assets 5,957 7,377Net cash outflow from capital expenditureand financial investment (9,035) (6,484) Acquisitions and disposals Purchase of subsidiaries and businesses(net of cash and overdraft purchased) (204) (6,465) Equity dividends paid (2,231) (1,984) Cash inflow / (outflow) before financing 5,051 (991) FinancingMedium term loans (111) (143)Loan notes (120) (590)Capital element of finance lease rental (156) (519)paymentsNet outflow from financing (387) (1,252) Increase / (decrease) in cash in the year 9 4,664 (2,243) Notes 1. Basis of preparation This announcement has been prepared on a consistent basis with the accountingpolicies set out in the Group's financial statements as at 31 March 2004, withthe exception that the Group has amended its policies to take account of UITF 17(Revised) and UITF 38 in relation to the cost of share options and thepresentation in the balance sheet of shares held by the Vp Employee Trust.Prior year adjustments have been made to the balance sheet to reflect theadoption of these new standards. No prior year adjustments have been made tothe profit and loss account on the basis that the difference is not material ineither the current or preceding financial year. 2. Total recognised gains and losses All recognised gains and losses for both years are reflected in the consolidatedprofit and loss account. 3. Trading performance of acquisitions As a result of the integration of the acquisitions into the existing businesses,including the transfer of assets between depots, it is not possible to discloseseparately the effect of the acquired businesses on the Group results for theyear. 4. Reconciliation of movements in consolidated shareholders' funds for the year ended 31 March 2005 2005 2004 Restated £000 £000 Profit for the financial year 6,524 6,339 Dividends (2,502) (2,142) Retained profit for the period 4,022 4,197 Share option charge in the year and gains/ losses on disposal of shares 253 10 Net movement in shares held by Vp Employee Trust at cost 153 (793) Foreign exchange difference 4 - Net increase in shareholders' funds 4,432 3,414 Opening shareholders' funds 51,803 48,389 (originally £54,118,000 before deducting prior year adjustments of £2,315,000) Closing shareholders' funds 56,235 51,803 5. The current and prior year effective tax rates are slightly lower than the underlying rate due to the write back of over provisions from previous years. 6. Earnings per share have been calculated on 43,374,133 shares (2004: 43,444,660) being the weighted average number of shares in issue during the year. A full reconciliation between earnings per share and adjusted earnings per share will be given in the statutory accounts. 7. The Directors are proposing a final dividend of 4.00 pence (2004: 3.40 pence) per share making a total dividend for the year of 5.75 pence (2004: 5.00 pence) per share which is payable on 3 October 2005 to shareholders on the register on 9 September 2005. 8. Reconciliation of operating profit to net cash inflow from operating activities 2005 2004 £000 £000 Operating profit 9,703 8,654 Depreciation 11,045 11,180 Amortisation of goodwill 429 377 Profit on sale of tangible fixed assets (1,190) (1,209) (Increase) / decrease in stocks (94) 175 Increase in debtors (251) (1,922) Increase / (decrease) in creditors 506 (464) Net cash inflow from operating activities 20,148 16,791 9. Analysis of net debt As at Cash Other non cash As at changes 1 April Flow 31 March 2004 2005 £000 £000 £000 £000Cash at bank and in hand 1,087 4,664 4 5,755Medium term loans (8,111) 111 - (8,000)Loan notes (245) 120 - (125)Finance leases and hire purchase (223) 156 - (67) (7,492) 5,051 4 (2,437) 10. The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2005 or 2004. The statutory accounts for 2004 have been delivered to the registrar of companies and those for 2005 will be delivered following the Company's Annual General Meeting. The auditors have reported on these accounts; their reports were unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. Copies of the full accounts for the year ended 31 March 2005 will be posted to shareholders in July and the Annual General Meeting will be held on 8 September 2005. This information is provided by RNS The company news service from the London Stock Exchange