05.06.2018

Strong revenue growth at Vp

UK rental group Vp, owner of UK Forks and Higher Access has posted another year of strong growth.

The company saw revenues increase 22 percent to £303.6 million, this included the acquisitions of Brandon Hire, telehandler company First National, the M&E division of JMS and Zenith Survey Equipment. UK revenues were 24 percent higher at £272 million, while international revenues were 10 percent higher at £31.6 million.

Pre-tax profits were £30.8 million – an increase of less than two percent, after allowing for £1.7 million of exceptional one off costs – mostly involving Brandon integration and depot closures, and a £4.8 milion write off of goodwill and other intangibles on the Bukom acquisition, which dates back to 2006. Without these two particular charges profits would have been £37.3 million almost a 25 percent rise.

Looking at UK revenues, the company said that demand for telehandlers at UK Forks remained high whilst the Higher Access spider lift fleet “experienced a more subdued trading period with a combination of a quieter telecoms market and an increased level of competition impacting revenues.”

The Groundforce/TPA, division posted a strong overall trading performance, with the TPA Portable Roadways activity seeing a quieter first half, with utilisation levels improving into the second half, particularly in continental Europe in markets such as Germany.

The Hire Station business, which includes Hire Station, Brandon Hire, ESS Safeforce and MEP which includes a substantial low level access business, posted a strong year and now operates from 200 locations.

The Torrent Trackside rail related rental business had a mixed year but maintained sales and profitability.

Net debt increased just over 80 percent to £179.2 million while capital investment on the rental fleet was 12.5 percent higher at £64.9 million.

Chairman Jeremy Pilkington said: “I am very pleased to report to shareholders on another year of significant progress highlighted by record profits and, with Brandon Hire, the group's largest acquisition. The Brandon acquisition adds a team of around 900 experienced tool hire specialists and our combined tool hire business will operate from over 200 locations across the UK.”

“Shortly after completing this acquisition, we were notified that the transaction was to be reviewed by the Competition and Markets Authority who subsequently cleared the transaction in March 2018. We have, since then, been fully engaged in starting to realise the synergies which attracted us to this opportunity in the first place. We are excited about the potential that this strategic acquisition offers the group both in the immediate and longer term.”

“Our ambitions for the group lie within the UK, Europe and Internationally. The quality of these results demonstrates the strength of our core UK activities whilst in Europe our relatively new business enterprises are starting to gain traction. We envisage further growth here in the future. The International business was inevitably adversely affected by the impact of the low oil price on activity in the global oil and gas sector. However, the recent significant improvements in the oil price encourage us to view the year ahead with a greater degree of optimism.”

“We entered the new financial year in excellent shape and whilst there may be market uncertainties we look forward to the new financial year with confidence.”

Vertikal Comment

On the surface this likes another very good result from Vp, although the current year will be the more telling as the Brandon acquisition has its full effect, along with the benefits of a more buoyant oil industry. It will also be interesting to see how it copes with the challenges facing its Higher Access spider lift business, given that Nationwide Platforms has added substantially to its investment in this area. The spider lift rental market is growing but it is becoming less ‘niche’ which may well require a change of strategy by Vp, or will it decide to focus on other parts of the business?

The company is now a major player in the both the telehandler and general/tool hire market in the UK, but that means it will have to increasingly battle it out with companies such as A-Plant and a recovering Speedy Hire, not to mention strong regional players such as CW.

The company is in good shape and can make decisions fast due to its ownership profile. So, it will be very interesting to see how this year develops.