Static year for Vp

UK rental group Vp - owner of telehandler rental company UK Forks, low level access specialist MEP and Brandon Hire Station has published its full year results for the 12 months to the end of March.

Total group revenues were £368.7 million a fall of 0.8 percent on the same period in 2023 made up as follows:

Revenues: £330.1 million – 1%
Operating profit: £45.5 million - £100,000 down on last year.

Revenues: £38.6 million +1.3%
Operating profit: £4.8 million +50%

Pre-tax profit plummeted 91 percent to £2.8 million, however this includes a £27.7 million non-cash write down of Brandon Hire assets – largely goodwill and brand value, compared to a £1.2 million write off last year. It also includes £5.8 million of exceptional costs - compared to £5 million last year. The £5.8 million was made up of £1.6 million of cost generated by changes to the board and senior management team, plus £4.2 million costs for branch closures, mainly relating to Brandon Hire Station.

If exceptionals and write downs are excluded the pre-tax profit would have been £36.3 million compared to £ 36.9 million on the same basis. A fall of 1.6%.

Capital Expenditure
Capital expenditure on the rental fleet totalled £63 million an increase of
Five percent on last year.

Net Debt
Net debt was reduced by 6.8 percent to £125.2 million thanks to strong cash flow over the 12 months.

Chief executive Anna Bielby said: "The group has again delivered sector leading returns, led by a strong performance in Infrastructure. Whilst some economic uncertainty remains, particularly in construction and housebuilding, we remain confident in our ability to react to changes in end markets and take advantage of economic improvements. We have made considerable progress with new leadership and a refreshed strategy and are excited about the future and have confidence in our ability to both grow the business and drive value through simplifying the way we work."

Chairman Jeremy Pilkington added: “I am pleased to report a solid overall performance for the group despite the particular challenges that we have faced in the UK General Construction market. Elsewhere, our international and infrastructure operations have enabled the majority of our businesses to move forward strongly in the period. Capital investment in the rental fleet was slightly ahead of prior year as we continue to support specific investment opportunities with an ongoing emphasis on transitioning towards more environmentally friendly solutions.”

Vertikal Comment

On the surface the bottom line looks dreadful – a 91 percent fall in pre-tax profit on static revenues. However, we have a new management team which is far more corporate than its predecessors, and as is typical for such an incoming chief executive the first year is an opportunity to ‘sweep the stable clean’ and write off all sorts of things leaving a clean slate for their first full year – business school 101.

More worrying is suggestions in the report that the new management has been directly involved in the restructuring at Brandon. The new management team is accountant heavy – a formula that does not always work in this business, especially when it calls the shots on customer related strategies.

We will have a better understanding of how things are working when the half year results are published later in the year. Otherwise not a dreadful underlying result given the state of the slow down in housebuilding and commercial construction.