06.06.2017

Another strong year for Vp

UK based rental group Vp, owner of UK Forks, Hire Station and TPA has reported a 19 percent increase in full year revenues.

Total revenues were £248.7 million, with pre-tax profits 11 percent higher at £30.34 million, the lower percentage of increase due largely to high amortization costs. Net debt at the end of March was £98.9 million 14 percent up on the year. Capital expenditure was 25 percent higher at £57.6 million. This year the company has highlighted the results of its growing international division with revenues up 70 percent to £28.7 million, with operating profits 58 percent higher at £1.9 million.

The company has not yet shown separate results for its UK division, but said: “UK Forks saw growing demand from the housebuilding sector which remained stable and supportive throughout the year. The Higher Access business, acquired in March 2016, completed a first full year in the group. It made excellent progress on good construction and utility demand, supported by investment in widening their product range. Whilst UK Forks and Higher Access both operate in very competitive markets, a sustained focus on the quality of service, product and support is enabling the division to maintain market leadership and to deliver growth.”

“The Hire Station tool and general rental business had an excellent trading year. Growth was delivered in all areas as Hire Station capitalised on the quality of its varied service offering, continuing to secure further market share as well as leveraging the relative stability of their construction, house build, shop fitting, industrial and utility customer base. Fleet investment in the division was strong in support of business growth and the level of return on capital continued to improve. The business made two acquisitions, JMS -M& E and Zenith. The Hire Station operations have been further expanded during the year with nine new or relocated branches added to the network. A simple, but highly focussed, approach to product availability and quality continues to pay off for Hire Station.”

Chairman Jeremy Pilkington said: “I am delighted to report to shareholders on another record year for the group. Earnings per share increased 12 percent to 69.5 pence per share, the rate of increase in earnings per share is lower than that of the growth in profits due to an increase in the effective tax rate this year.”

“In the UK, all of our businesses delivered strong organic growth supported by solid market demand and carefully targeted capital investment into the rental fleets. The UK results were further enhanced by the first full year contribution from Higher Access which we acquired in March 2016. Within the International division, the key development was the acquisition of TR in April 2016. Founded in 1974, TR is the market leader in Australia for technical equipment rental, testing and calibration services. In November 2016, TR acquired Tech Rentals New Zealand, reuniting this business with its original parent. TR and TRNZ have settled in well to the group and delivered a pleasing first time contribution. Overall growth in the International division was slowed by the ongoing challenges faced in the oil and gas market, however we are starting to see some signs of modest stability returning to this sector.”

“We believe that the sectors within which we operate should continue to be broadly supportive over the coming year. We are also very pleased to have completed two further acquisitions in April 2017, JMS M&E and Zenith Survey Equipment. These businesses add a further nine locations to our specialist tool hire business in the UK.”

“Building on this very strong performance and with the positive momentum in the business, we remain confident in our ability to deliver growth in specialist rental markets both in the UK and overseas. Looking ahead, the new financial year has started well and at this very early stage, I believe there is every prospect that we may look forward to another year of significant progress for the group.”

Vertikal Comment

Vp quietly goes from strength to strength, the integration of Higher Access has gone remarkably well with the business appearing to be gaining from the benefits of working within a wider group. UK Forks is almost certainly benefiting from the demise of Hewden as are other companies such as A-Plant. With UK housebuilding high on the political agenda it is likely that demand for rental telehandlers will continue to rise and one hopes that with a major player out of the market rental rates might further improve this year.

The slower growth in pre-tax profits, is a little disturbing, although this is almost certainly due to the group’s conservative accounting and acquisitions, rather than anything else - operating profits improved 17 percent. All said and done this is another excellent result from Vp