08.06.2010

Vp down 15%

Vp – owner of UK based telehandler rental company UK Forks has reported full year revenues of £134.2 million a decline of almost 15 percent on last year, while pre-tax profits dropped 31 percent to £14.34 million. Net debt was cut to £48.3 million £65.8 million representing a financial gearing level of just 44 percent.

However the group’s telehandler division, UK Forks, saw revenues decline by 37 percent to £10.6 million, although demand began to improve in the fourth quarter.

In terms of operating profit the division broke-even this year, compared to a profit of £1.2 million last year. A tough start created a first half loss which was made up by a profitable second half, thanks to improving revenues, a lower cost base and profitable used equipment sales.

Capital expenditure on the rental fleet was cut from £1.3 million last year to just £100,000, while disposals of surplus machines generated £2 million, along with “healthy profits” thanks to the company’s depreciation policy. The company says that capital investment will resume this year “albeit on a modest basis”.

The new financial year has started off positively for the telehandler business with an improvement in house building demand in particular.


Hire Station Vp’s general rental business saw revenues decline 10 percent to £50.1 million, while operating profits were halved to £3.2 million along with capital investment in the rental fleet which was cut from £8.8 million to £4.5 million.

The Group’s temporary roadway division TPA, saw revenues slip nine percent to £14.2 million, but operating profits improved almost 30 percent to £2.2 million.

Other divisions include Torrent Trackside, Airpac Bukom Oilfield services and Groundforce.

Vp chairman Jeremy Pilkington said: “Looking ahead, the systemic threats to the global economy seem to have receded although unpredictable "after-shocks" should be expected for some time. Within the UK, demand has generally stabilised and some markets, such as rail and residential construction, are showing signs of growth.”

“However, the measures that will have to be taken to reduce public sector borrowing have not yet impacted economic activity and, in particular, government capital investment programmes. Public infrastructure investment has become an important market for several of our businesses and the prospect of cutbacks, not so much this year (2010/11) as thereafter, causes us to view medium term prospects with a degree of caution.”

Vertikal Comment

This is an excellent result for Vp overall and very credible for UK Forks, given the challenges in this market. The company’s conservative policy in terms of debt has certainly looks wise now and so it seems has its depreciation policy.

The group’s stated depreciation policy for rental equipment ranges from 10 to 33 percent a year straight line. Based on the comments in this year’s UK Forks results one has to assume that it depreciates telehandlers over five years, otherwise turning a “Healthy profit on used sales is a challenge”



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