Negative year for Vp
UK rental group Vp has published its full year results with lower revenues and a pre-tax loss for the year, however its telehandler, low level access and mat/trackway business held up well.
Total revenues fell 15 percent on the year to £308 million, of which the UK represented £281.3 million – also down 15 percent – while revenues from its international operations were 16 percent lower at £26.7 million. Most of the shortfall appears to have come from the Brandon tool hire business with a major impact in the first quarter due to construction industry shutdowns.
The pre-tax loss was £2.3 million - compared to a profit of £28.4 million last year - comes from a number of things including the lower revenues which had a £22 million impact on the gross profit and a £14 million jump in exceptional costs, which was partly due to fines, penalties and legal costs associated with the Competitions Authority ruling
in December. Other factors included higher administration costs, some of which would have been associated with the closure or merging of 25 locations and mostly at Brandon. Finally, the company cut used equipment sales from its fleet by almost 20 percent, to match lower capital investment, cutting £4.6 million from last year's profit on the disposals.
Capital investment in the rental fleet was £40.2 million, down 18 percent on the prior year. Net debt was cut from just under £160 million to £121.9 million, a 24 percent reduction. This held reduce finance costs by £1.1 million.
The UK Forks telehandler division reportedly had a “satisfactory year” and recovered well from a difficult first few months. The operation cut back on capital investment but stepped up investment in 360 degree and heavy duty models, while orders have been placed for compact battery electric units. The company has also been trialling the use of hydrogenated vegetable oil (H.V.O) in the telehandler fleet. Utilisation is now very high with long lead times on new machines beginning to cause issues.
Chief executive Neil Stothard, said: “Across Vp, we are now firmly looking forwards rather than backwards after the most testing year for everyone across the business. We finished the year well and I am pleased to confirm that we have maintained this into April and May of the new financial year which has started strongly for us.”
“The market backdrop for Vp is positive. Major infrastructure sectors, such as water, rail and transmission are primed for escalating growth in the coming year, added to which other major projects such as HS2 and Hinkley Point will continue to drive demand. We see the residential construction market continuing to be supportive as housebuilders maintain their build programmes. Whilst the general construction sector has been slightly slower to recover, we are seeing positive signs of a sustained improvement in this key and large market.”
“We have taken robust action over the last twelve months to streamline our divisional activities where necessary and I am confident that we are well placed to deliver significant progress over the next year. 12 months ago, I said that we had entered the pandemic with an excellent business and that as best as we can manage, we planned to exit with an equally excellent business. I believe this plan has been achieved.”
Chairman Jeremy Pilkington added: “I am very pleased to report on what we consider an extremely satisfactory outcome, given the unique challenges that the business has faced this year. We did initially participate in the Government's job retention scheme, but all use of furlough support was ended in October 2020. At no time did the company access Government support loans or seek funding from shareholders. Throughout the period the Company operated within its existing banking covenants although we did secure a precautionary, temporary easing of these measures, which ultimately were neither required nor utilised.”
“I would like to extend a special thanks to all our employees at this time as they have responded to these unprecedented challenges with a courage and energy that has been remarkable to witness.”
All in all, this is not as bad a result as it could have been, given the dreadful start to the year. The key thing is the management appears to have done a good job in maintaining the company's operations, as well as employee and customer relations, placing the business in a good place and shape to resume growth and continue to build the company without becoming over - or highly- leveraged.
In hindsight it would have done well to have maintained or increased its investment in the telehandler and aerial lift fleets, rather than reduced net debt so much. But then hindsight is a wonderful thing, that by its very nature none of us have when it would be most useful.