09.06.2005

VP profits up 12%

VP, the group previously known as Vibroplant, has reported its preliminary results for the year ending March 31 2005.
Group revenues rose by eight percent to £90 million, while operating profits increased by 12 percent to £10.1 million.

Profits after good will depreciation and interest but excluding exceptional gains on property sales, rose by 14 percent to £9.4 million.

The business now comprises five sectors, UK forks, the largest UK telehandler rental company, Hire station a mid range tool and lifting gear hire company, Torrent trackside a rail maintenance business, Airpac oilfield services, and Groundforce excavation support services such as shoring.

UK forks had a good year in terms of profitability, with operating income up 11 percent to £1.4 million and return on capital up 14 percent. Revenues though, barely beat inflation, rising by three percent in spite of an increase of over 100 units in the telehandler fleet to 1,200 units.

UK says that it saw intense price competition during the year, particularly in the house building sector. Demand at the extremes of its range including compact four metre units and the largest 17 metre models increased significantly.

While difficult, UK forks managed to increase its share of the house building market and made progress in the general construction sector.

The new fiscal year which began in April, has seen a positive start and the management anticipate a stable year in spite of the weakening housing market.

Hire Station, was the only business in the group that posted negative revenue growth and negative results. Revenues fell by five percent to £34.8 million, while losses increased by 75 percent to (-700,000).

The tool hire business had a very poor first quarter but from then on picked up and traded profitably. The Hire Station result was largely dragged down by the significant losses at Lifting Point, the recently established specialist hire business that offers everything form IPAF training and aerial lifts to Slings and material lifts.

At the end of 2004 Lifting point was merged with Safeforce, the division that hires out a range of safety items from safety harnesses and anchors to Respirators and gas detection devices. Safeforce saw growth during the year of 33 percent. The merged business has started the year off well according to VP and promises to do significantly better in 2005/6.

The strongest feature of the year for VP was its rapidly improved cash flow, with $4.7 of free cash generated, after spending over £15 million on new equipment and paying £2.23 million in dividends. This combined with a reduction of £387,000 in loans outstanding, reduced VP’s net debt to only £2.4 million.

VP Chairman, Jeremy Pilkington commented: “The Group has delivered another good result for the year ended 31 March 2005 with pre-tax profits of £9.4 million. This represents growth of 14 percent, excluding the prior year exceptional profit on property disposals. This growth is all the more impressive given that no acquisitions were made in the year. Revenues grew by 8 percent to £90.0 million.

The strong cash generative qualities of the Group were underlined with net debt reducing by £5.1 million to £2.4 million, representing 4 percent gearing, after a gross capital investment of £15.1 million in the year.

The Board is committed to taking advantage of this financial strength to pursue both organic and acquisition growth opportunities as they arise".


Vertikal Comment

VP is now a very strong business in financial terms with a good spread to its business. With the number of new House starts dropping and Network Rail having appointed Amec and HSS as its primary rail specific hire equipment supplier and genreal tool hire supplier respectively, VP will have its share of challenges in the current year.

However it has plenty of opportunity for growth in each of its five sectors. With cash begining to accumulate and virtually no gearing it will need to look at bolt on acquisitions or greater investment in organic growth it is to maintain the shareholder returns of recent years over the long term.