For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240605:nRSE1275Ra&default-theme=true
RNS Number : 1275R Vp PLC 05 June 2024
For immediate release 5 June 2024
Vp plc
('Vp', the 'Group' or the 'Company')
Final Results
Solid performance reflects strength of business and diverse end market
exposure
Vp plc, the equipment rental specialist, today announces its audited Final
Results for the year ended 31 March 2024 ('FY24' or the 'year').
Financial Highlights
31 March 2024 31 March 2023 % change
Revenue (£m) 368.7 371.5 (0.8)%
Adjusted PBTAE* (£m) 39.7 40.5 (2.0)%
Return on Average Capital Employed* 14.5% 14.4% 0.7%
Adjusted basic EPS* (pence per share) 74.8 79.0 (5.3)%
Proposed final dividend (pence per share) 27.5 26.5 3.8%
Proposed dividend for the year (pence per share) 39.0 37.5 4.0%
Adjusted EBITDA* (£m) 91.0 92.9 (2.0)%
Net debt excluding lease liabilities* (£m) 125.2 134.4 6.8%
Capital investment in rental fleet (£m) 62.8 59.9 4.8%
Statutory profit before tax (£m) 2.8 30.7 (90.9)%
Statutory (loss)/earnings per share (pence) (13.4) 58.1 (123.1)%
* These measures are explained and reconciled in the Alternative Performance
Measures section below.
· Solid overall performance despite challenges in some end markets, key
metrics encouraging
· Strong Return on Average Capital Employed, slightly ahead of prior
year
· Increased investment in the rental fleet, at £63 million, with a
continued transition towards environmentally friendly solutions
· Robust balance sheet with reduction in net debt. Net debt/EBITDA of
1.4 with significant headroom and well within covenants
· Refinance of £90 million Revolving Credit Facility secured during
the year, complementing existing private placements of £93 million. Three
quarters of year end borrowings fixed at low rates
· Proposed full year dividend increased by 4.0% to 39.0 pence per
share, reflecting confidence in the Group's prospects and maintaining a
30-year uninterrupted track record
· Statutory profit before tax includes the impact of non-cash
impairment of £27.7 million in relation to Brandon Hire Station.
Operational Highlights
· New Group leadership in place, supported by fresh talent and a
simplification of the management structure
· Progression of Group strategy:
· Growth: organic investment and enhanced cross divisional working
· Operational excellence: simplification and consistency underpinned by
digital roadmap
· Continued Environmental, Social and Governance ('ESG') progress -
focused investment in the rental fleet, targets validated by the Science Based
Targets Initiative ('SBTi')
· Strong performance in Infrastructure market with continued demand
from rail, transmission and water, and encouraging progress in the Energy
market
· Challenges remain in General Construction, particularly impacting
Brandon Hire Station and resulting in a non-cash impairment. This division now
has a new management team and its initiatives, including a review of its
branch network, are starting to have a positive impact.
Current Trading and Outlook
· Whilst some economic uncertainty remains, the Group has made a solid
start to the new financial year, which we expect to be in line with the
Board's expectations:
· Infrastructure market remains supportive with a clear pipeline of
projects
· Prospects in Energy market provide confidence
· General Construction market remains challenging. Brandon Hire Station
action plan underway with confidence in medium-term prospects
· Headwinds remain in Housebuilding market, with a slight drop in
activity levels.
Commenting on the Final Results, Anna Bielby, Chief Executive of Vp plc, 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 in FY24 with new leadership and a
refreshed strategy. We 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."
Sell-side analyst meeting
A meeting for sell-side analysts will be held in person at 9:30am (BST) today,
Wednesday 5 June 2024, at Buchanan, 107 Cheapside, London EC2V 6DN. A copy of
the Final Results presentation will be available post 10.30am (BST) on the
Group's website: https://www.vpplc.com/investors
(https://www.vpplc.com/investors)
For retail investors, an audiocast of the Final Results presentation will be
made available after 10:30am (BST):
https://stream.buchanan.uk.com/broadcast/664b0b6118ce6cde5730679d
(https://stream.buchanan.uk.com/broadcast/664b0b6118ce6cde5730679d)
- Ends -
For further information:
Vp plc
Anna Bielby, Chief Executive Tel: +44 (0) 1423 533 400
Keith Winstanley, Chief Financial Officer www.vpplc.com (http://www.vpplc.com)
Media enquiries:
Buchanan
Henry Harrison‐Topham / Jamie Hooper / George Beale Tel: +44 (0) 20 7466 5000
Vp@buchanan.uk.com (mailto:Vp@buchanan.uk.com) www.buchanancomms.co.uk (http://www.buchanancomms.co.uk)
Notes to Editors
Vp plc is a specialist equipment rental business providing equipment, people,
services and support for specialist projects. It focuses on niche sectors
principally in the Infrastructure, Construction, Housebuilding and Energy
markets in the UK and overseas. Businesses include; Groundforce, TPA, Torrent
Trackside, Brandon Hire Station, MEP, ESS, UK Forks, Airpac Rentals and Tech
Rentals.
CHAIR'S STATEMENT
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.
For the year ended 31 March 2024, adjusted profit before tax, amortisation,
impairment of intangible assets and exceptional items* eased marginally to
£39.7 million (2023: £40.5 million) on revenue broadly in line at £368.7
million (2023: £371.5 million). Whilst it is never pleasurable to report a
reduction in profitability, we believe that under the circumstances, this
represents a good result demonstrating once again the ability of our
diversified business exposure to deliver resilient profit in spite of
localised challenges. Reflecting the challenges faced by the UK General
Construction market, we have taken a £27.7 million non-cash impairment charge
against intangible assets, including goodwill, in the Brandon Hire Station
business, referenced in more detail later.
Capital investment in the rental fleet was slightly ahead of prior year at
£62.8 million (2023: £59.9 million) as we continue to support specific
investment opportunities with an ongoing emphasis on transitioning towards
more environmentally friendly solutions. Year-end net debt excluding lease
liabilities* was £125.2 million (2023: £134.4 million). Return on Average
Capital Employed* was 14.5% (2023: 14.4%), in line with our long-term target,
an excellent result, which reflects once again the underlying quality of the
Group's earnings. Adjusted earnings per share* of 74.8 pence per share (2023:
79.0 pence per share) includes the impact of the 6% increase from 19% to 25%
of UK Corporation Tax rate.
At the Annual General Meeting, scheduled to be held on Thursday 25 July 2024,
the Board will be recommending payment of a final dividend of 27.5 pence per
share (2023: 26.5 pence per share) making a total for the year of 39.0 pence
per share (2023: 37.5 pence per share). Subject to shareholder approval, it is
proposed to pay the final dividend on 7 August 2024 to members registered at
21 June 2024. This proposed level of dividend is based on our policy to
distribute on a two times covered earnings basis over the cycle and having due
regard to future prospects.
As previously announced, after 26 years with the Company and latterly 19 years
as Managing Director and CEO, Neil Stothard retired from the Board at the end
of September 2023. I wish to repeat on behalf of myself, the Board and the
wider employee and shareholder audience, our appreciation of Neil's
contribution over this period.
Anna Bielby, who joined as Chief Financial Officer (CFO) in January 2023, was
appointed to the position of Chief Executive from 1 September 2023 and has
made an immediate positive impact in her new role. Anna is bringing a welcome
new energy and strategic oversight to the Group and I look forward to working
with her as she drives the business forward.
Keith Winstanley joined as CFO on 1 January 2024, and we look forward to
working with Keith in the months and years ahead.
In addition to these Board changes, we have simplified the senior management
reporting structure, established an Executive Committee, and significantly
strengthened the central senior management team in a number of key roles.
As always the skills and commitment of our employees lie behind everything we
achieve as a business. Our people bring specialist skills, technical prowess
and sharp focus to delivering the right solution for our customers. We
continue to promote our extensive apprentice and graduate schemes which
provide advancement and career progression opportunities and to emphasise
recruitment policies which support diversity in the workplace.
It is therefore my pleasure on behalf of the Board to thank all our employees
for their hard work and commitment during the year that has made these results
possible.
Jeremy Pilkington
Chair
5 June 2024
* These measures are explained and reconciled in the Alternative Performance
Measures section below.
BUSINESS REVIEW
Results
The Group's performance for the year ended 31 March 2024 was encouraging, with
the delivery of a solid set of results against the backdrop of mixed and
challenging markets. This year also represented a significant change for Vp
with a new Chief Executive and leadership team.
Our full-year result of £39.7 million adjusted profit before tax,
amortisation, impairment of intangible assets and exceptional items (PBTAE)*,
represents a resilient performance underpinned by a robust balance sheet,
following successful refinancing of our revolving credit facility in November
2023.
During the year, we continued to generate strong returns with a Return on
Average Capital Employed* of 14.5% (2023: 14.4%), slightly below our target
level of 15%.
Market summary
Our specialist divisions operate across a number of end markets and, as we
have seen this year, this diversity underpins the resilience of our business
model.
The Infrastructure and Energy markets have been supportive during the year,
benefiting Groundforce and Airpac in particular. In contrast, the more
challenging Construction and Housebuilding markets have significantly impacted
Brandon Hire Station, as well as affecting the performance of other divisions,
such as ESS and UK Forks. These businesses have implemented division-specific
action plans where needed, which has led to some restructuring costs, included
within our exceptional costs of £5.8 million.
Strategy
Under new leadership, we have refreshed the Group's strategy and are focused
on growing the business, underpinned by operational excellence. During the
year, we have established an Executive Committee and simplified our management
structure.
Local agility and decision making have been key to Vp's success over the years
and this is an important part of the specialist solutions we have consistently
delivered to our customers. Our local teams will continue to be empowered to
do what they do best. Despite this, our structure carries cost and complexity,
and we believe that this offers opportunities to drive greater simplicity and
consistency. Focus areas include a more group-wide approach to procurement,
property and digital investment improving the overall customer experience.
Our digital roadmap is focused on making our internal processes as efficient
as possible. It will also allow us to work better across our divisions,
therefore making it easier for our customers to do business with us. Our
digital approach will be disciplined, with a focus on enhancing current
capability, supplemented by modest investment in those areas that give the
best returns across the Group.
Under new HR leadership, we have focused on our People strategy, recognising
the importance of our colleagues in supporting our customers. This is
particularly relevant given the skills shortages which have been apparent
across all of our businesses and geographies this year.
We are strong asset managers, and we care for our assets throughout their
lifecycle. During the year, we invested £62.8 million in our fleet to ensure
that our asset base continues to meet our customers' needs. This includes
moving towards green product equivalents, where appropriate.
ESG continues to be a focus area for the business through our engagement with
both customers and our supply chain. Climate change remains an important
agenda item. The emissions from our hire fleet (embodied and usage carbon)
account for c.75% of entire Group emissions. We take seriously our role in
working with our customers and suppliers to address Scope 3 emissions and have
a plan in place to reduce these emissions. We were pleased this year to have
our science-based targets validated by the SBTi.
As an employer, we have direct impacts on the wellbeing, professional
development and economic reward of our workforce with responsibility for
creating an inclusive and positive working environment. Our teams are tasked
with extending our culture into our supply chains and communities where we
live and operate. Our social value strategy will be a key area for further
development this year.
We have a strong growth track record and have refreshed our corporate
development strategy during the year.
Divisional performance
While our divisions typically operate in more than one market, the majority of
our divisions are principally aligned to one of our four major market segments
of Infrastructure, Construction, Housebuilding or Energy.
Infrastructure
Groundforce UK
A market-leading rental and design provider of excavation support systems and
specialist products to the water, civil engineering and construction
industries across the UK, the Republic of Ireland and mainland Europe.
Groundforce has delivered a market-leading performance and strong year-on-year
growth. The division has supported a number of varying projects, across rail,
utilities and transmission. Within rail, Groundforce supported HS2 on over 30
sites across London and the Midlands, with involvement in larger projects
relating to sewer and utility diversions in London. Utilities remains a
consistent sector of project work, with AMP7 ending in March 2025, including
the Anglian Water Strategic Pipeline Alliance.
Groundforce continues to focus on customer service, including digital
innovations such as the self-service tools "Your Solution" and "Your
Solution+" platforms, aimed at enhancing customer experience and streamlining
project delivery.
In mainland Europe, Groundforce grew year-on-year leading to the addition of a
further operational site to support local markets and the pipeline of projects
anticipated for the coming year.
TPA
One of Europe's largest suppliers of temporary access solutions providing
portable roadways and temporary access solutions to customers in the
transmission, construction, rail and outdoor events markets.
TPA UK achieved year-on-year growth principally driven by activity in the
portable roadways sector. Market conditions remained stable in power
transmission and utilities, however, there was a slowdown in the last quarter
of the year.
The division has recently opened a new southern depot to support growth and
increase local operational capacity in the South East of England and the
transition from CP6 to CP7 within the rail sector is expected to present new
opportunities in the coming year. TPA also has a strong pipeline in the events
sector for the summer.
TPA Europe operates principally in the power transmission market, where we
have seen strong growth and further opportunity leading to increased capital
investment to meet demand. The power transmission and renewables sectors in
Germany and across Europe are anticipated to remain supportive in the coming
year.
Torrent Trackside
Specialist suppliers of rail infrastructure, portable plant and related
trackside services, principally to Network Rail and their appointed track
renewal, maintenance and project contractors.
Torrent Trackside has grown year-on-year, despite ongoing disruption caused by
UK-wide industrial action, which led to the cancellation of several track
projects. Notable projects include the TransPennine route upgrade programme,
covering on-track activities for both the East and West legs, and the Core
Valley Lines project led by Transport for Wales.
The end of CP6 saw a slight reduction in activity but we anticipate a good
level of projects and maintenance from CP7 as we move into the new financial
year. In the light rail sector, which includes London Underground, activity
has been lower than expected.
Throughout the year, this division has placed a strong emphasis on
environmental impact with over 70% of the fleet purchased this year being zero
carbon at point of use.
Construction
Brandon Hire Station
The leading provider of tools and specialist rental products to industry,
construction and home owners across the UK.
Brandon Hire Station experienced challenging trading conditions throughout the
year, leading to a disappointing performance and lower activity levels than
last year. The high operational gearing of this division means that market
challenges impact financial performance quickly and significantly. Fleet
investment in this division reduced during the year to match activity levels.
As a result of the division's performance, intangible assets, including
goodwill, of £27.7 million have been written off during the year.
Under a new management team, a review of the business was undertaken midway
through the year. The new team is focused on a number of initiatives around
pricing, cost control and process. In addition, the division is refocusing the
business to better serve target customers.
Actions in the year also include reviewing and optimising the branch network,
leading to a number of closures and consolidations. As a result of these
changes, restructuring exceptional costs were incurred during the year.
Notwithstanding the above, Brandon Hire Station remains a significant element
of the Group's revenues and plays an important part in supporting some of our
biggest customers. Despite the continuing uncertainty in the General
Construction market, the self-help measures taken, coupled with a truly
national footprint, leaves the division well placed to respond quickly to any
market upturn in the coming financial year.
MEP
The UK's largest provider of mechanical and electrical press fittings and low
level access platforms to the construction, fit out, mechanical and electrical
markets.
MEP delivered a strong year securing a number of large contracts in London,
which provide a significant opportunity for growth.
With two new locations opening during the year, the network of depots within
MEP represents true national coverage with major hubs supporting the UK's
largest cities.
Key project focus, particularly in London, relates to regeneration programmes,
with a clear shift from traditional office space fit-outs, to multifunctional
operating spaces. Outside of major projects, the focus for the core business
remains on non-residential projects, which gives optimism going into the
coming year.
MEP has, however, felt the effects of a challenging credit market within the
year, due to the prevalence of smaller subcontractors within its customer
base.
ESS
The leading specialist provider of safety, survey, communications and test and
measurement equipment rental in the UK.
Market conditions were challenging during the year, particularly in the survey
sector. Despite this, the business responded well with a clear action plan,
including the finalisation of its regionalisation programme, to right-size its
physical footprint across the UK.
Other areas of the business performed strongly, including test and measurement
and industrial projects, with key customers utilising a range of products and
services to support major projects in the Energy market.
ESS remains at the forefront of innovation, particularly in communications
products, collaborating closely with manufacturers to develop customer-centric
solutions, which have had significant traction in the rail sector.
Momentum across ESS was positive in the fourth quarter of the year with a
number of key projects in the pipeline leading to optimism for the year ahead.
Housebuilding
UK Forks
One of the UK's leading specialist hirers of telescopic handlers operating
across construction and housebuilding sites across the UK.
The UK Housebuilding market, although steady, remains subdued. The strength of
UK Forks' customer relationships has allowed it to successfully retain all
core customers, both national and regional, albeit at reduced volumes.
UK Forks has responded well to the challenging market conditions by
demonstrating rigorous cost controls and managing its fleet size carefully,
helped by strong ties with suppliers and manufacturers.
Although the outlook for Housebuilding remains subdued in the short term, when
the market improves the business is well placed to capitalise.
Energy
Airpac
A supporter of a wide range of oil and gas markets, servicing well testing,
pipeline, rig maintenance and liquefied natural gas (LNG) markets worldwide.
Airpac's performance in the Energy markets delivered strong year-on-year
growth.
Asia performed particularly well, benefiting from various LNG shutdowns and
projects, which we expect to leverage further in the coming year. Europe
represented a more subdued landscape, marked by project delays and
postponements. Meanwhile, Australia showed a gradual recovery, with revenue
streams from a range of projects including plant maintenance, new pipelines,
and other initiatives.
The wider macro-economic and political environment creates opportunity for
Airpac, as focus remains on the maintenance of existing plant and facilities
within the sector. Airpac has made investments in electric compressors,
aligning with customers' green initiatives, especially in geothermal projects.
The pipeline of projects in the current financial year remains optimistic,
particularly across Asia.
Other
Tech Rentals
Australasia's leading technical equipment rental group providing test and
measurement, communications, calibration and audio visual solutions in
Australia, New Zealand and South East Asia.
Tech Rentals recorded a strong performance against a backdrop of challenging
geographical markets and subdued business confidence in Australia. Key markets
of events, defence and aviation allowed Tech Rentals to deliver year-on-year
growth.
Anna Bielby
Chief Executive
5 June 2024
* These measures are explained and reconciled in the Alternative Performance
Measures section below.
FINANCIAL REVIEW
Trading performance
The Group has delivered an encouraging financial performance against a
challenging backdrop with Group revenue remaining broadly flat at £368.7
million (2023: £371.5 million). Adjusted profit before taxation,
amortisation, impairment of intangible assets and exceptional items* (PBTAE)
decreased to £39.7 million (2023: £40.5 million) with net operating margin
at 10.8% (2023: 10.9%). Statutory profit before tax was £2.8 million (2023:
£30.7 million). Return on Average Capital Employed* was 14.5% (2023: 14.4%).
Segmental performance
Revenue generated by the Group's UK segment was £330.1 million (2023: £333.5
million), while operating profit before amortisation and impairment of
goodwill, trade names and customer relationships and exceptional items was
flat at £45.5 million (2023: £45.6 million) - a resilient performance given
the challenges in the UK General Construction market.
The Group's International segment, assisted by exposure to international
energy markets, delivered pleasing growth, with revenue increasing by 1.3% to
£38.6 million (2023: £38.1 million). Operating profit before amortisation
and impairment of goodwill, trade names and customer relationships and
exceptional items increased by 50% to £4.8 million (2023: £3.2 million).
Exceptional items
This year, the Group has recorded exceptional items of £5.8 million (2023:
£5.0 million). These items have been reported separately due to their size,
nature or irregularity and in order to better understand the underlying
performance of the Group. Exceptional items comprise £1.6 million of costs
from changes to the Group's Board and senior leadership team alongside branch
closure costs of £4.2 million, mainly in relation to Brandon Hire Station.
Impairment of intangible assets
Intangible assets have been impaired by £28.1 million (2023: £1.2 million).
The majority of the impairment (£27.7 million) has been recorded against
assets initially recognised on the acquisition of Brandon Hire in November
2017. This non-cash impairment has reduced the carrying value of goodwill,
trade names, and customer relationships by £25.9 million, £0.7 million and
£1.1 million respectively.
The impairment has been calculated by comparing the carrying value of the cash
generating unit assets against their recoverable amount.
As discussed further in the Business Review, Brandon Hire Station performed
disappointingly during the year, due to challenging trading conditions in the
General Construction market.
Earnings per share, dividend and shares
Adjusted basic earnings per share before amortisation, impairment of
intangible assets and exceptional items ('Adjusted basic earnings per share')*
decreased from 79.0 pence to 74.8 pence. The decrease of 4.2 pence includes
the impact of the increase in the UK Corporation Tax Rate in the current year.
After taking into account amortisation, exceptional items and impairment
charges the Group recorded a basic loss per share of (13.4) pence (2023:
earnings per share of 58.1 pence). The Board has recommended a final dividend
of 27.5 pence per share. If approved, the full-year dividend would increase to
39.0 pence per share with dividend cover of 1.9 times (2023: 2.1 times) based
upon adjusted basic earnings per share. At 31 March 2024, 40.2 million shares
were in issue, of which 609,000 were held by Vp's Employee Trust.
Balance sheet
Total property, plant and equipment increased by £4.5 million to £256.9
million. The movement in the year mainly comprised £69.9 million (2023:
£66.9 million) of capital expenditure offset by depreciation of £44.1
million (2023: £46.9 million) and £17.8 million (2023: £15.7 million) of
disposals (net book value).
Rental equipment at £226.0 million (2023: £220.6 million) accounts for 88.0%
of property, plant and equipment net book value. Expenditure on equipment for
hire was £62.8 million (2023: £59.9 million) and depreciation of rental
equipment was £38.8 million (2023: £40.9 million).
Intangible assets reduced from £57.7 million to £28.6 million, predominately
due to the impairment charge noted earlier.
Gross trade debtors were £71.4 million at 31 March 2024 (2023: £77.6
million). Days sales outstanding has decreased by 1 day from 59 to 58 days as
the external credit environment has remained stable yet challenging. Bad debt
and credit note provisions totalled £4.9 million (2023: £4.6 million)
equivalent to 6.9% (2023: 5.9%) of gross debtors. The impairment of trade
receivables for the year as a percentage of total revenue was 1.0% (2023:
0.9%).
The Group's defined benefit pension schemes have a net surplus of £1.9
million (2023: £2.3 million), which is recorded as an asset on the balance
sheet on the basis that the Company has an unconditional right to a refund of
the surplus of its main scheme.
Cash flows and net debt
Year-end net debt excluding lease liabilities* decreased by £9.2 million to
£125.2 million.
The Group continues to generate strong cash flows with £108.7 million (2023:
£80.2 million) generated from operations.
The year-on-year increase includes the impact of a £9.8 million improvement
in working capital, with pro-active management remaining an important area of
focus.
Cash outflows for the purchase of property, plant and equipment were £71.4
million (2023: £63.3 million). Proceeds from disposal of assets totalled
£25.3 million (2023: £24.9 million), generating a profit on disposal of
£7.5 million (2023: £9.2 million).
Net interest outflows, excluding IFRS 16 interest, for the year were £6.3
million (2023: £5.4 million). This additional cost was largely due to the
increase in Sterling Overnight Index Average (SONIA) during the year. Interest
cover before amortisation and IFRS 16 interest was 7.3 times (2023: 8.3 times)
and the gearing ratio of adjusted Net Debt/EBITDA was 1.36 (2023: 1.44), both
are calculated in accordance with our bank facility agreements and are
comfortably within our covenants of greater than 3.0 times and lower than 2.5
times respectively. Net interest expense including IFRS 16 was £9.6 million
(2023: £8.6 million). Cash tax was £9.2 million (2023: £5.5 million).
Dividend payments to shareholders totalled £15.0 million (2023: £14.5
million), and cash investment in own shares on behalf of the Employee Benefit
Trust (EBT) during the year was £0.7 million (2023: £1.1 million).
Capital structure
The Group finances its operations through a combination of shareholders'
funds, bank borrowings and leases. The Group allocates its capital using a
disciplined capital allocation policy that prioritises organic growth and
ordinary dividends. The capital structure is monitored using the gearing ratio
quoted above.
In November, the Group was pleased to renegotiate its revolving credit
facility (RCF) for a further three years, including a refreshment of our
banking club (HSBC, Lloyds, Bank of Ireland). The updated RCF provides £90
million of credit and expires in November 2026. The terms of the facility are
broadly unchanged, other than an increase in the uncommitted accordion
facility from £20 million to £30 million.
At the year-end date, the Group had £183.0 million debt capacity (2023:
£183.0 million) comprising £90 million committed revolving credit facilities
and £93 million private placement agreements. The Group has two private
placement agreements both with low fixed interest rates. The placements expire
in January 2027 and November 2028. At 31 March 2024, £132.0 million of the
combined facilities were drawn down (2023: £146.0 million). In addition to
the committed facilities, the Group's net overdraft facility at the year-end
was £7.5 million (2023: £7.5 million). Borrowings under the Group's RCF are
priced on the basis of SONIA plus a margin. The interest rate margin is linked
to the net debt to EBITDA leverage of the Group.
The Board has evaluated the facilities and covenants on the basis of the
2025/26 long-term forecasts which have been prepared taking into account the
current economic climate, together with a severe but plausible downside
scenario. All scenarios retain adequate headroom against borrowing facilities
and fall within existing covenants.
This evaluation gives the Directors confidence that the Group has adequate
resources to continue in operation over the viability period.
Treasury
The Group has exposure to movements in interest rates on its borrowings, which
is managed by maintaining a mix of fixed and floating debt. The fixed element
of year-end borrowings was £93.0 million, which was c.75% of net debt
excluding lease liabilities.
The Group is exposed to movements in exchange rates for both foreign currency
transactions and the translation of net assets and income statements of
foreign subsidiaries. The Group regards its interests in overseas subsidiary
companies as long-term investments and manages its transactional exposures
through the currency matching of assets and liabilities where possible.
The matching is reviewed regularly with appropriate risk mitigation performed,
where necessary. During the year the Group has not had any foreign exchange
hedges.
Taxation
The overall tax charge for the year was £8.1 million (2023: £7.7 million).
The effective rate was significantly higher than the prior year predominately
due to goodwill impairment charges not being deductible for tax.
Keith Winstanley
Chief Financial Officer
5 June 2024
* These measures are explained and reconciled in the Alternative Performance
Measures section below.
Consolidated Income Statement
for the year ended 31 March 2024
Note 2024 2023
£000 £000
Revenue 1 368,691 371,519
Cost of sales (275,703) (284,176)
Gross profit 92,988 87,343
Administrative expenses (48,644) (44,763)
Impairment losses on trade receivables (3,743) (3,305)
Impairment of intangible assets (28,120) -
Operating profit before amortisation and impairment of goodwill, trade names
and customer relationships and exceptional items
1 49,496 48,775
Amortisation and impairment of goodwill, trade names and customer (31,198) (4,490)
relationships
Exceptional items 2 (5,817) (5,010)
Operating profit 12,481 39,275
Net financial expense (9,635) (8,569)
Profit before tax, amortisation and impairment of goodwill, trade names and
customer relationships and exceptional items
39,861 40,206
Amortisation and impairment of goodwill, trade names and customer (31,198) (4,490)
relationships
Exceptional items 2 (5,817) (5,010)
Profit before tax 2,846 30,706
Income tax expense 5 (8,137) (7,696)
(Loss) / profit after tax (5,291) 23,010
Pence Pence
Basic (loss) / earnings per share 3 (13.41) 58.05
Diluted (loss) / earnings per share 3 (13.41) 57.76
Dividend per 5p ordinary share interim paid and final deferred 6 39.0 37.5
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2024
2024 2023
£000 £000
(Loss) / profit for the year (5,291) 23,010
Other comprehensive (expense) / income:
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension schemes (391) (319)
Tax on items taken to other comprehensive income 248 5
Impact of tax rate change - 58
Items that may be subsequently reclassified to profit or loss
Foreign exchange translation difference (1,522) 502
Total other comprehensive (expense) / income (1,665) 246
Total comprehensive (expense) / income for the year (6,956) 23,256
Consolidated Statement of Changes in Equity
for the year ended 31 March 2024
2024 2023
£000 £000
(Loss) / profit for the year (5,291) 23,010
Other comprehensive (expenses) / income (1,665) 246
Dividends to shareholders (14,997) (14,471)
Net movement relating to shares held by Vp Employee Trust (706) (1,096)
Share based payments expense 767 580
Tax movements to equity (20) 62
Impact of tax rate change - 16
Change in equity (21,912) 8,347
Equity at start of year 174,932 166,585
Equity at end of year 153,020 174,932
Consolidated Balance Sheet
as at 31 March 2024
Note 2024 2023
£000 £000
Non-current assets
Property, plant and equipment 256,944 252,385
Intangible assets 28,572 57,748
Right of use assets 58,645 54,637
Employee benefits 1,853 2,300
Total non-current assets 346,014 367,070
Current assets
Inventories 9,548 8,915
Trade and other receivables 74,753 81,513
Income tax receivable 3,582 736
Cash and cash equivalents 4 6,061 11,140
Total current assets 93,944 102,304
Total assets 439,958 469,374
Current liabilities
Lease liabilities 4 (16,319) (14,622)
Overseas income tax payable (1,501) -
Trade and other payables (71,720) (72,184)
Total current liabilities (89,540) (86,806)
Non-current liabilities
Interest-bearing loans and borrowings 4 (131,280) (145,508)
Lease liabilities 4 (45,642) (43,896)
Other payables (667) -
Provisions (3,160) (1,612)
Deferred tax liabilities (16,649) (16,620)
Total non-current liabilities (197,398) (207,636)
Total liabilities (286,938) (294,442)
Net assets 153,020 174,932
Equity
Issued share capital 2,008 2,008
Capital redemption reserve 301 301
Share premium 16,192 16,192
Foreign currency translation reserve (2,040) (518)
Retained earnings 136,559 156,949
Total equity 153,020 174,932
Consolidated Statement of Cash Flows
for the year ended 31 March 2024
2024 2023
Note £000 £000
Cash flow from operating activities
Profit before taxation 2,846 30,706
Share based payment charge 767 580
Depreciation 44,138 46,853
Depreciation of right of use asset 16,488 16,305
Amortisation and impairment of intangible assets 32,054 4,490
Release of arrangement fees 427 287
Financial expense 9,693 8,602
Financial income (58) (32)
Profit on sale of property, plant and equipment (7,456) (9,175)
Operating cash flow before changes in working capital and provisions 98,899 98,616
Increase in inventories (633) (959)
Decrease/(increase) in trade and other receivables 6,760 (5,452)
Increase/(decrease) in trade and other payables 2,082 (12,079)
Increase in provisions 1,548 100
Cash generated from operations 108,656 80,226
Interest paid (6,521) (5,413)
Interest element of lease liability payments (3,315) (3,038)
Interest received 58 32
Income taxes paid (9,233) (5,496)
Net cash generated from operating activities 89,645 66,311
Cash flow from investing activities
Proceeds from sale of property, plant and equipment 25,273 24,855
Purchase of property, plant and equipment (71,375) (63,312)
Purchase of intangible assets (963) -
Net cash used in investing activities (47,065) (38,457)
Cash flow from financing activities
Purchase of own shares by Employee Trust (706) (1,096)
Repayment of borrowings (76,000) (29,000)
Drawdown of borrowings 62,000 30,000
Arrangement fees (655) -
Capital element of lease liability payments (17,275) (15,921)
Dividends paid (14,997) (14,471)
Net cash used in financing activities (47,633) (30,488)
Net decrease in cash and cash equivalents (5,053) (2,634)
Effect of exchange rate fluctuations on cash held (26) 157
Cash and cash equivalents net of overdrafts at the beginning
of the year 11,140 13,617
Cash and cash equivalents net of overdrafts at the end of the year
4 6,061 11,140
NOTES
The final results have been prepared on the basis of the accounting policies
which are set out in Vp plc's annual report and accounts for the year ended 31
March 2024. The accounting policies applied are in line with those applied in
the annual financial statements for the year ended 31 March 2023 and conform
with UK-adopted International Accounting Standards ('UK-adopted IASs'). The
financial statements have also been prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act
2006.
Whilst the financial information included in this announcement has been
computed in accordance with UK-adopted IASs, this announcement does not itself
contain sufficient information to comply with UK-adopted IASs. The Company
expects to publish full financial statements in June 2024.
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 March 2024 or 2023. Statutory
accounts for 31 March 2023 have been delivered to the registrar of companies,
and those for 31 March 2024 will be delivered in due course. The auditor has
reported on those accounts; the reports were (i) unqualified, and (ii) did not
contain a statement under section 498 (2) or (3) of the Companies Act 2006 in
respect of the accounts for 31 March 2024.
The financial statements were approved by the Board of Directors on 4 June
2024.
Going Concern
The going concern basis has been adopted in preparation of the consolidated
financial statements. The Board has evaluated funding, facilities and
covenants on the basis of the budget for 2024/25 (including 2025/26 long-term
forecast) and has performed sensitivity analysis on them.
The Group and Parent Company forecast positive cash inflows through a pipeline
of existing and new hire agreements and other services; the Group and Parent
Company also have sufficient finance facilities available. The assessment
included an analysis of the Group's and Parent Company's current financial
position, ability to trade, principal risks facing the Group, and the
effectiveness of its strategies to mitigate the impact of liquidity risks. On
the basis of these procedures, the Board has a reasonable expectation that the
Group and Parent Company has adequate resources to continue in operational
existence for at least the next 12 months from the date of approval of these
financial statements. The financial statements do not include the adjustments
that would result if the Group and Parent Company were unable to continue as a
going concern.
1. Business Segments
Operating profit
before amortisation and impairment of goodwill, trade names and customer
relationships and exceptional items
Revenue
2024 2023 2024 2023
£000 £000 £000 £000
UK 330,068 333,453 44,684 45,564
International 38,623 38,066 4,812 3,211
Total 368,691 371,519 49,496 48,775
Operating profit before amortisation and impairment of goodwill, trade names
and customer relationships and exceptional items is reconciled to profit
before tax in the Income Statement.
2. Exceptional Items
During the year, the Group incurred costs which were identified as being
exceptional.
2024 2023
£000 £000
Restructuring and reorganisations 5,817 3,323
Costs associated with Formal Sale Process - 1,687
Total Exceptional items 5,817 5,010
Current year restructuring and reorganisation costs include costs relating to
changes to the Group's Board and Senior leadership team (£1.6 million) and
branch closure costs (£4.2 million). Costs relating to Board and leadership
changes are considered exceptional due to the size and irregularity. Branch
closure costs are deemed exceptional due to their size and nature. Branch
closure costs include redundancies, property exit costs and the write-off of
assets that can no longer be used. In all cases, these closures and
reorganisations were part of a one-off process and were completed by 31 March
2024.
Costs associated with the Formal Sale Process in the prior year were
professional fees which were incurred by the Group as part of the procedure.
This was a one-off process, which is deemed to be exceptional.
The exceptional items above result in a reduction of £1.5 million (2023:
£0.6 million) in the tax charge.
The net cash outflow from activities associated with exceptional items is
£4.0 million (2023: £2.4 million).
3. Earnings Per Share
The calculation of basic loss per share of (13.41) pence (2023: earnings of
58.05 pence) is based on the loss after tax of £5,291,000 (2023: profit of
£23,010,000) and a weighted average number of ordinary shares outstanding
during the year ended 31 March 2024 of 39,470,000 (2023: 39,635,000),
calculated as follows:
Shares Shares
000s 000s
Issued ordinary shares 40,154 40,154
Effect of own shares held (684) (519)
Weighted average number of ordinary shares 39,470 39,635
The calculation of diluted loss per share of (13.41) pence (2023: earnings of
57.76 pence) is based on the loss after tax of £5,291,000 (2023: profit of
£23,010,000) and a weighted average number of ordinary shares outstanding
during the year ended 31 March 2024 of 39,683,000 (2023: 39,835,000),
calculated as follows:
Shares Shares
000s 000s
Weighted average number of ordinary shares 39,470 39,635
Effect of share options 213 200
Weighted average number of ordinary shares (diluted) 39,683 39,835
The calculation of diluted earnings per share in the current year does not
assume conversion, exercise, or other issue of potential ordinary shares that
would have an antidilutive effect on earnings per share.
4. Analysis of Net Debt
As at 31 Mar 2023 Cash movements Non-cash movements As at 31 Mar 2024
£000 £000 £000 £000
Secured loans 146,000 (14,000) - 132,000
Arrangement fees (492) (655) 427 (720)
Cash and cash equivalents (11,140) 5,053 26 (6,061)
Net debt excluding lease liabilities 134,368 (9,602) 453 125,219
Lease liabilities 58,518 (20,590) 24,033 61,961
Net debt including lease liabilities 192,886 (30,192) 24,486 187,180
Year-end gearing (calculated as net debt excluding lease liabilities expressed
as a percentage of shareholders' funds) stands at 81% (2023: 76%).
As at 31 March 2024, the Group had £183.0 million (2023: £183.0 million) of
debt capacity comprising committed revolving credit facilities of £90.0
million and private placements of £93.0 million. In addition to the committed
facilities, the Group net overdraft facility at the year-end was £7.5 million
(2023: £7.5 million).
5. Taxation
The charge for taxation for the year represents an effective tax rate of
285.9% (2023: 25.1%). The underlying tax rate was 27.1% (2023: 21.1%) before
exceptional items, adjustments to tax in respect of prior years, impact of tax
rate changes and impairment of intangible assets.
6. Dividend
The Board has proposed a final dividend of 27.5 pence per share to be paid on
7 August 2024 to shareholders on the register at 21 June 2024. Including the
interim dividend of 11.5 pence per share, this makes a total dividend for the
year of 39.0 pence per share (2023: 37.5 pence per share).
The ex-dividend date will be 20 June 2024 and the last day to elect to
participate in the dividend reinvestment plan will be 5 July 2024.
7. Intangible Assets
The performance of Brandon Hire Station in the year has resulted in an
impairment of goodwill and intangible assets.
The carrying value of intangible assets and goodwill has been assessed for
impairment by reference to its recoverable amount, being the higher of its
value in use and fair value less costs of disposal. Value in use has been
estimated using cash flow projections over a period of five years derived from
the approved budget for the coming year and subsequent year's long-range
forecast.
Impairment modelling resulted in the full impairment of goodwill (£25.8
million), alongside partial impairments of Trade Names (£0.8 million) and
Customer Relationships (£1.1 million) resulting in impairment charges of
Brandon Hire Station intangible assets of £27.7 million.
A further £0.4 million of other intangible assets were impaired during the
year, resulting in a total Group impairment charge of £28.1 million.
8. Principal risks and uncertainties
The Group has an established risk management framework which identifies,
assesses, and mitigates key risks facing the business. The principal risks and
uncertainties facing the Group are set out in detail on pages 39 to 42 of the
Annual Report and Accounts for the year ended 31 March 2023, a copy of which
is available on the Group's website.
During the year, a refreshed review of the Group's principal risks was
performed which included considering the scope of the risk description.
These risks include: market & competition, fleet management &
investment, people & culture, health & safety, financial risk, legal
(including contractual) & regulatory requirements, environmental, and
technology & IT resilience.
With the exception of market & competition and people & culture, the
Board considers the principal risks and uncertainties as at 31 March 2024 to
be the same as those described in the Report and Accounts for year ended 31
March 2023.
The level of market & competition risk is considered to have increased
given the worsening activity levels in some or our end markets, whilst the
risk associated with people & culture has also increased, principally due
to challenges faced in attracting and retaining staff in some areas.
The Group continues to closely monitor risks to ensure our operational
resilience remains strong and has robust measures in place to identify and
manage potentially disruptive events should they arise.
9. Forward Looking Statements
The Chairman's Statement and Business Review include statements that are
forward looking in nature. Forward looking statements involve known and
unknown risks, assumptions, uncertainties and other factors which may cause
the actual results, performance or achievements of the Group to be materially
different from any future results, performance or achievements expressed or
implied by such forward looking statements. Except as required by the Listing
Rules and applicable law, the Company undertakes no obligation to update,
review or change any forward looking statements to reflect events or
developments occurring after the date of this report.
10. Annual Report and Accounts
The Annual Report and Accounts for the year ended 31 March 2024 will be
provided to shareholders before the end of June 2024.
Alternative Performance Measures
The Board monitors performance principally through adjusted and like-for-like
performance measures. Adjusted profit and earnings per share measures exclude
certain items including the impact of IFRS16, amortisation of acquired
intangible assets and goodwill impairment charges and exceptional items.
The Board believes that such alternative measures are useful as they exclude
one-off (amortisation, impairment of intangible assets and exceptional items)
and non-cash (amortisation of intangible assets) items which are normally
disregarded by investors, analysts and brokers in gaining a clearer
understanding of the underlying performance of the Group from one year to the
next when making investment and other decisions. Equally, IFRS 16 is excluded
from measures used by these same stakeholders and so is removed from certain
APMs.
The key measures used as APMs are reconciled below.
2024 2023
£'000 £'000
Profit before tax as per Income Statement 2,846 30,706
Adjustment to remove IFRS 16 impact (154) 283
Adjusted profit before tax APM 2,692 30,989
Amortisation and impairment of goodwill, trade names, and customer 31,198 4,490
relationships
Exceptional items 5,817 5,010
Adjusted profit before tax, amortisation, impairment of intangible assets and 39,707 40,489
exceptional items APM (PBTAE)
Interest (excluding interest on lease liabilities) 6,319 5,542
Adjusted operating profit, amortisation, impairment of intangible assets and 46,026 46,031
exceptional items APM
Depreciation (excluding depreciation of right of use assets) 44,994 46,853
Adjusted EBITDA APM 91,020 92,884
Adjusted PBTAE and adjusted operating profit exclude amortisation and
impairment of goodwill, trade names and customer relationships but include
amortisation of software of £856,000 in 2024 (2023: nil).
Adjusted operating margin is calculated by dividing adjusted operating profit
before amortisation, impairment of intangible assets and exceptional items by
revenue.
2024 2023
Pence Pence
Basic earnings per share (13.4) 58.1
Impact of amortisation, impairment of intangible assets and exceptional items 88.5 20.3
after tax
Impact of IFRS 16 (0.3) 0.6
Adjusted basic earnings per share APM 74.8 79.0
2024 2023
£'000 £'000
Net debt including lease liabilities 187,180 192,886
Lease liabilities (61,961) (58,518)
Net debt excluding lease liabilities APM 125,219 134,368
Return on Average Capital Employed (ROACE) is based on adjusted operating
profit before amortisation and exceptional items as defined above divided by
average capital employed on a monthly basis using the management accounts.
Directors' Responsibility Statement in Respect of the Annual Financial Report
(extracted from the Annual Financial Report)
We confirm that to the best of our knowledge:
· The Group and Parent Company financial statements which have been
prepared in accordance with UK-adopted IASs give a true and fair view of the
assets, liabilities, financial position and profit of the Group and Parent
Company; and
· The Business Review and Financial Review, which form part of the
Directors' Report, include a fair review of the development and performance of
the business and the position of the Company and the undertakings included in
the consolidation taken as a whole, together with the description of the
principal risks and uncertainties that they face.
For and on behalf of the Board of Directors.
J F G Pilkington K J Winstanley
Director Director
- ENDS -
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR FIMBTMTBMTAI