TIDMVP.
RNS Number : 1985H
Vp PLC
06 June 2017
For immediate release 6 June 2017
Vp plc
('Vp', the 'Group' or the 'Company')
Final Results
Vp plc, the equipment rental specialist, today announces its
Final Results for the year ended 31 March 2017.
Highlights
* 17% increase in profit before tax and amortisation to
GBP34.9 million (2016: GBP29.8 million)
* 19% growth in revenues to GBP248.7 million (2016:
GBP208.7 million)
* Final dividend proposed of 16.0 pence per share,
making a total of 22.0 pence for the full year (2016:
18.85 pence), an increase of 17%
* EBITDA up 20% to GBP71.2 million (2016: GBP59.3
million)
* Return on average capital employed 16% (2016: 16.3%)
* Net debt of GBP98.9 million (2016: GBP86.1 million)
after funding:
o Capital investment in the fleet of GBP57.6
million (2016: GBP45.9 million)
o Acquisitions of GBP10.0 million
* Basic earnings per share, pre-amortisation, increased
12% to 69.52 pence (2016: 62.21 pence)
* Statutory profit before tax of GBP30.3 million (2016:
GBP27.5 million) and statutory earnings per share of
60.31 pence (2016: 57.49 pence)
Commenting on the Final Results, Jeremy Pilkington, Chairman of
Vp plc, said:
"It has been another record-breaking performance for Vp and we
are delighted with the significant progress made within the Group.
Reflecting this excellent set of results, the Board is recommending
a final dividend of 16.0 pence per share making a total for the
year of 22.0 pence per share, an increase of 17%.
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 Vp and
our shareholders."
- Ends -
Enquiries:
Vp plc
Jeremy Pilkington, Chairman Tel: +44 (0) 1423 533
400
jeremypilkington@vpplc.com
Neil Stothard, Chief Executive Tel: +44 (0) 1423 533
400
neil.stothard@vpplc.com
Allison Bainbridge, Group Tel: +44 (0) 1423 533
Finance Director 400
allison.bainbridge@vpplc.com www.vpplc.com
Media enquiries:
Buchanan
Henry Harrison-Topham / Tel: +44 (0) 20 7466
Jamie Hooper 5000
Vp@buchanan.uk.com www.buchanan.uk.com
CHAIRMAN'S STATEMENT
I am delighted to report to shareholders on another record year
for the Group.
Profits before tax and amortisation increased 17% to GBP34.9
million (2016: GBP29.8 million) on revenues ahead by 19% at
GBP248.7million (2016: GBP208.7 million), delivering a very robust
16% return on average capital employed. Reflecting the Group's very
strong cash generation, net debt at the year end was GBP98.9
million (2016: 86.1 million) after funding GBP57.6 million
investment in the rental fleet (2016: GBP45.9 million) and
acquisitions of GBP10.0 million.
Earnings per share increased 12% to 69.5 pence per share (2016:
62.2 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 view of this excellent set of results, the Board is
recommending a final dividend of 16.0 pence per share making a
total for the year of 22.0 pence per share, an increase of 17%.
Subject to shareholders' approval at our Annual General Meeting on
1 August 2017, it is proposed to pay the final dividend on 8 August
2017 to members registered as at 14 July 2017.
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 Pty Ltd ("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 (TRNZ), 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.
It is my pleasure on behalf of shareholders and the Board, to
thank all our employees, whether long serving or newly joined, for
their commitment and hard work which has delivered the outstanding
results we are reporting today.
Jeremy Pilkington
Chairman
6 June 2017
BUSINESS REVIEW
Overview
Vp plc is a specialist rental business providing products and
services to a diverse range of end markets including
infrastructure, construction, housebuilding, and oil and gas. The
Group comprises a UK and an International Division.
Year ended Year ended
31 March 2017 31 March 2016
--------------------------- ----------------- -----------------
Revenue GBP248.7 million GBP208.7 million
--------------------------- ----------------- -----------------
Operating Profit before GBP37.8 million GBP31.9 million
amortisation
--------------------------- ----------------- -----------------
Operating margin 15.2% 15.3%
--------------------------- ----------------- -----------------
Investment in Rental GBP57.6 million GBP45.9 million
Fleet
--------------------------- ----------------- -----------------
Return on Average Capital
Employed 16.0% 16.3%
--------------------------- ----------------- -----------------
The Group has made further significant progress in the current
year, reporting a 18% increase in operating profits before
amortisation.
Operating profits before amortisation were GBP37.8 million which
compares with GBP31.9 million in the prior year. Operating margins
remained healthy at 15.2%, and our key measure of profit quality,
return on average capital employed, continued to be robust at
16.0%. Revenues in the year grew by 19% to GBP248.7 million (2016:
GBP208.7 million).
Consistent with the previous financial year, market conditions
have been varied, but generally favourable. Across our four core
sectors, we have seen good support in the infrastructure,
housebuilding and construction markets, whereas our international
exposure to oil and gas, and mining, remained a challenge for our
businesses that serve those sectors.
Importantly, the Group continues to deliver strong cash
generation from operations, highlighted by an increase of 20% in
EBITDA, which grew to GBP71.2 million (2016: GBP59.3 million).
Investment in rental fleet remained strong at GBP57.6 million
(2016: GBP45.9 million) delivering growth and ensuring maintenance
of a young, high quality rental fleet. Fleet disposal proceeds
reduced slightly to GBP16.7 million (2016: GBP17.2 million)
generating profit on disposal of GBP5.8 million (2016: GBP6.2
million).
In addition to organic fleet investment, the Group made two
acquisitions in the period. TR Pty Ltd ('TR') was acquired in
Australia on 21 April 2016 for a cash consideration of AUS $17.4
million (Australian dollars) and assumed net debt of AUS $6.6
million. TR subsequently purchased Tech Rentals NZ Ltd ('TRNZ') on
25 November 2016 for a cash consideration of NZ $2.592 million (New
Zealand dollars). TRNZ is engaged in the specialist rental of test
& measurement equipment and calibration services in New
Zealand. The business is complementary to TR which provides these
same services in Australia and Malaysia, and consolidates TR's
position as the number one technical equipment rental group in
Australasia.
Post the year end, we have made two further acquisitions. On 7
April 2017, we announced the acquisition of the mechanical &
electrical rental and sales activity of Jackson Mechanical Services
(UK) Limited ('JMS M&E') for a cash consideration of GBP3.6
million. Operating from locations in Harpenden and Leeds, JMS
M&E has integrated within Hire Station, Vp's specialist tool
hire business.
On 25 April 2017, we announced the acquisition of the entire
issued share capital of Zenith Survey Equipment Limited ('Zenith')
for a cash consideration of GBP3.85 million plus assumed debt of
GBP2.3 million. Zenith is engaged in the specialist rental and sale
of survey & safety equipment from seven locations across the
UK. Zenith will also be integrated within Hire Station.
UK DIVISION
Year ended Year ended
31 March 2017 31 March 2016
===================================== ================= =================
Revenue GBP220.0 million GBP193.6 million
===================================== ================= =================
Operating Profit before amortisation GBP35.9 million GBP30.7 million
===================================== ================= =================
Investment in rental fleet GBP53.9 million GBP44.5 million
===================================== ================= =================
Vp's UK division had an excellent trading year delivering a 17%
increase in operating profits before amortisation to GBP35.9
million (2016: GBP30.7 million). Revenues grew by 14% to GBP220.0
million (2016: GBP193.6 million). The UK division comprises four
main business groupings: UK Forks, Groundforce/TPA, Hire Station
and Torrent Trackside. All four enjoyed good demand from their end
markets.
The UK Forks activity continued to experience steady 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.
In Groundforce/TPA, the core shoring activity made good progress
in the financial year, with the combination of sustained demand in
the water sector from Asset Management Programme 6 (AMP 6) and
successes on basement excavation projects particularly in the
London region. Demand for the wider range of Groundforce services
was mixed across the regions of the UK, though strong in the South
East. Activity in mainland Europe, whilst still relatively small,
was steady and improving, and we anticipate further progress in
this region in the coming financial year. Portable roadway activity
was satisfactory against a highly competitive and over supplied
market backdrop, particularly in the UK.
The Hire Station business, comprising three elements: Hire
Station (tool hire); ESS Safeforce (safety and survey); and MEP
(press fitting tools and low level access) 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, housebuild, 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. As highlighted above, shortly after the year
end the business made two acquisitions: the first was JMS, a
mechanical & electrical equipment rental and sales business
which will be integrated within MEP. The second was Zenith,
specialists in survey & safety rental and sale, and this
business will be integrated within ESS Safeforce. 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.
The UK rail market remained busy during the year and Torrent
Trackside rose to the challenge from customers to deliver cost
savings. A focus on service delivery, compliance and safety has
helped Torrent maintain its position as the supplier of choice for
small rail portable plant in the UK rail market. The business has
defended margins by further improving operational efficiency and
delivering internal cost savings. Torrent continues to play an
important role in support of Network Rail and was awarded a
contract extension during the year. As plain line renewal work has
reduced due to CP5 expenditure restraints, Torrent has been busy in
support of a number of the major nominated contractors on switches
and crossings (S+C) work. The Government has reiterated its
commitment to invest in the major UK electrification programme and
we look forward to engaging with that major initiative. Capital
investment has been directed to support that particular area of
activity.
INTERNATIONAL DIVISION
Year ended Year ended
31 March 31 March
2017 2016
===================================== =============== ===============
Revenue GBP28.7 GBP15.2
million million
===================================== =============== ===============
Operating Profit before amortisation GBP1.9 million GBP1.2 million
===================================== =============== ===============
Investment in rental fleet GBP3.7 million GBP1.4 million
===================================== =============== ===============
Operating profits before amortisation in the International
division were GBP1.9 million (2016: GBP1.2 million), an increase of
53%, on revenues of GBP28.7 million (2016: GBP15.2 million). The
International division comprises two business groupings: Airpac
Bukom and TR Group and the increase in profitability is wholly due
to the acquisition of TR Group in April 2016.
Airpac Bukom, which provides compressors and steam generators in
support of a range of global energy applications, continued to
experience challenging trading conditions in the oil and gas
segment. Well testing and rig maintenance demand remained very
subdued, but LNG held up well in Australia. Exploration activity
reduced further as operators maintained a tight control on all
areas of spend with major contracts either delayed or postponed.
Trading improved in the second half of the year, albeit modestly,
as some stability returned, primarily driven by the recovery in oil
price. Inquiry levels have started to increase in certain
territories and we anticipate a continuation of a slow, but choppy,
recovery in the market.
TR, which operates in Australia, New Zealand and Malaysia, made
an 11 month contribution to the Vp Group during the financial year.
In November 2016, TR Group acquired Tech Rentals New Zealand,
broadening the test and measurement offering to New Zealand.
Despite some impact from the oil and gas market and reduced demand
from the Australian mining sector, this was balanced by good
progress in other key markets such as telecommunications, utilities
and defence. Overall TR has settled in well and delivered a
satisfactory first trading period in the Group.
Outlook
The new financial year has started in line with our expectations
against the backdrop of an excellent prior year trading performance
for the Group. Expectations for our core markets are for a
relatively similar pattern of demand over the new year.
We anticipate that the UK construction market will continue to
be stable, with modest overall growth in Housing and
non-residential construction, a small reduction in repair and
maintenance, and stability in the infrastructure segment. From an
international viewpoint, we see the possibility of some marginal
improvement in the oil and gas sector. The increased commitment to
infrastructure investment from the Australian State and National
Governments should create a positive market backdrop for TR.
Vp has good momentum and this should be further enhanced by the
two April 2017 acquisitions, referred to earlier.
We are targeting further growth both in the UK and in our
International division. Notwithstanding the increased prospect of
inflationary pricing pressures, the UK election and Brexit
negotiations, subject to a stable economic backdrop, Vp is well
positioned to deliver further progress for the business, the
employees and our shareholders in the coming year.
Neil Stothard
Chief Executive
6 June 2017
Consolidated Income Statement
for the year ended 31 March 2017
Note 2017 2016
GBP000 GBP000
---------- ----------
Revenue 1 248,740 208,746
Cost of sales (181,807) (149,758)
Gross profit 66,933 58,988
Administrative expenses (33,688) (29,395)
---------- ----------
Operating profit before
amortisation 1 37,757 31,891
Amortisation (4,512) (2,298)
---------- ----------
Operating profit 33,245 29,593
Net financial expense (2,906) (2,093)
Profit before taxation
and amortisation 34,851 29,798
Amortisation (4,512) (2,298)
---------- ----------
Profit before taxation 30,339 27,500
Taxation 4 (6,687) (5,112)
---------- ----------
Profit attributable to
owners of the parent 23,652 22,388
---------- ----------
Pence Pence
Basic earnings per share 2 60.31 57.49
Diluted earnings per share 2 58.65 54.51
Dividend per share paid
and proposed 5 22.00 18.85
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2017
2017 2016
GBP000 GBP000
------ ------
Profit for the year 23,652 22,388
Other comprehensive income/(expense):
Items that will not be reclassified
to profit or loss
Re-measurements of defined benefit
pension schemes 366 122
Tax on items taken to other comprehensive
income (70) (23)
Impact of tax rate change - (39)
Foreign exchange translation difference 783 693
Items that may be subsequently
reclassified to profit
or loss
Effective portion of changes in
fair value of cash flow hedges 367 581
Total other comprehensive income 1,446 1,334
Total comprehensive income for
the year 25,098 23,722
------ ------
Consolidated Statement of Changes in Equity
for the year ended 31 March 2017
2017 2016
GBP000 GBP000
-------- ---------
Total comprehensive income for
the year 25,098 23,722
Dividends paid (7,632) (6,568)
Net movement relating to shares
held by Vp Employee Trust (4,493) (10,567)
Share option charge in the year 2,525 1,904
Tax movements to equity 468 1,123
Impact of tax rate change - (31)
Change in Equity 15,966 9,583
Equity at start of year 121,350 111,767
-------- ---------
Equity at end of year 137,316 121,350
-------- ---------
Consolidated Balance Sheet
as at 31 March 2017
Note 2017 2016
Restated*
GBP000 GBP000
---------- -----------
Non-current assets
Property, plant and equipment 195,569 167,201
Intangible assets 47,512 46,363
Employee benefits 1,928 1,534
---------- -----------
Total non-current assets 245,009 215,098
---------- -----------
Current assets
Inventories 5,166 5,363
Trade and other receivables 49,723 44,817
Cash and cash equivalents 3 15,070 11,374
---------- -----------
Total current assets 69,959 61,554
---------- -----------
Total assets 314,968 276,652
---------- -----------
Current liabilities
Interest bearing loans
and borrowings 3 (5,823) (7,730)
Income tax payable (1,514) (931)
Trade and other payables (55,270) (51,567)
---------- -----------
Total current liabilities (62,607) (60,228)
Non-current liabilities
Interest bearing loans
and borrowings 3 (108,180) (89,778)
Deferred tax liabilities (6,865) (5,296)
---------- -----------
Total non-current liabilities (115,045) (95,074)
---------- -----------
Total liabilities (177,652) (155,302)
---------- -----------
Net assets 137,316 121,350
---------- -----------
Equity
Issued share capital 2,008 2,008
Capital redemption reserve 301 301
Share premium account 16,192 16,192
Hedging reserve (153) (520)
Retained earnings 118,941 103,342
---------- -----------
Total equity attributable to
equity holders of the parent 137,289 121,323
Non-controlling interests 27 27
---------- -----------
Total equity 137,316 121,350
---------- -----------
* Cash and cash equivalents and interest bearing loans and
borrowings have been restated following the change in accounting
policy required by the updated interpretation of IAS 32 as
described in the notes. The change has had no impact on net
assets.
Consolidated Statement of Cash Flows
for the year ended 31 March 2017
Note 2017 2016
GBP000 GBP000
------------------------------------------ ----- --------- ---------
Cash flow from operating activities
Profit before taxation 30,339 27,500
Pension fund contributions in
excess of service cost - (369)
Share based payment charge 2,525 1,904
Depreciation 1 33,481 27,375
Amortisation and impairment 1 4,512 2,298
Financial expense 2,920 2,097
Financial income (14) (4)
Profit on sale of property, plant
and equipment (5,809) (6,246)
--------- ---------
Operating cash flow before changes
in working capital 67,954 54,555
Decrease in inventories 197 1,132
Increase in trade and other receivables (3,125) (2,101)
Increase/(Decrease) in trade and
other payables 4,860 (5,729)
--------- ---------
Cash generated from operations 69,886 47,857
Interest paid (2,738) (2,097)
Interest element of finance lease
rental payments (183) (4)
Interest received 14 4
Income tax paid (4,539) (4,840)
--------- ---------
Net cash generated from operating
activities 62,440 40,920
--------- ---------
Cash flow from investing activities
Disposal of property, plant and
equipment 16,686 17,179
Purchase of property, plant and
equipment (64,649) (50,237)
Acquisition of businesses and
subsidiaries (net of cash and
overdrafts) (9,984) (7,068)
--------- ---------
Net cash used in investing activities (57,947) (40,126)
--------- ---------
Cash flow from financing activities
Purchase of own shares by Employee
Trust (4,493) (10,566)
Repayment of borrowings (3,897) -
Proceeds from new loans 19,000 16,000
Capital element of hire purchase/finance
lease agreements (636) (497)
Dividends paid (7,632) (6,568)
--------- ---------
Net cash used in financing activities 2,342 (1,631)
--------- ---------
Increase/(decrease) in cash and
cash equivalents 6,835 (837)
Effect of exchange rate fluctuations
on cash held (1,270) 118
Cash and cash equivalents at the
beginning of the year 4,517 5,236
---------
Cash and cash equivalents at the
end of the year 10,082 4,517
--------- ---------
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 2017. The accounting policies
applied are in line with those applied in the annual financial
statements for the year ended 31 March 2016 other than the updated
IFRSIC interpretation of IAS32 which means we can no longer offset
the bank overdraft against cash balances.
EU Law (IAS Regulation EC1606/2002) requires that the
consolidated accounts of the Group for the year ended 31 March 2017
be prepared in accordance with International Financial Reporting
Standards ("IFRSs") as adopted for use in the EU ('adopted
IFRSs').
Whilst the financial information included in this preliminary
announcement has been computed in accordance with adopted IFRSs,
this announcement does not itself contain sufficient information to
comply with IFRSs. The Company expects to publish full financial
statements in June 2017.
The financial information set out above does not constitute the
Company's statutory accounts for the year ended 31 March 2017 or
2016. Statutory accounts for 31 March 2016 have been delivered to
the registrar of companies, and those for 31 March 2017 will be
delivered in due course. The auditor has reported on those
accounts; the reports were (i) unqualified, (ii) did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying the report and (iii) did not contain
a statement under section 498 (2) or (3) of the Companies Act 2006
in respect of the accounts for 31 March 2017 or 31 March 2016.
The financial statements were approved by the Board of Directors
on 6 June 2017.
1. Business Segments
Revenue Depreciation Operating profit
and amortisation before amortisation
2017 2016 2017 2016 2017 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- -------- -------- --------- --------- ----------- ----------
UK 220,015 193,555 32,196 26,012 35,871 30,659
International 28,725 15,191 5,797 3,661 1,886 1,232
--------------- -------- -------- --------- --------- ----------- ----------
Total 248,740 208,746 37,993 29,673 37,757 31,891
--------------- -------- -------- --------- --------- ----------- ----------
2. Earnings Per Share
The calculation of basic earnings per share of 60.31 pence
(2016: 57.49 pence) is based on the profit attributable to equity
holders of the parent of GBP23,652,000 (2016: GBP22,388,000) and a
weighted average number of ordinary shares outstanding during the
year ended 31 March 2017 of 39,215,000 (2016: 38,942,000),
calculated as follows:
2017 2016
Shares Shares
000s 000s
Issued ordinary shares 40,154 40,154
Effect of own shares held (939) (1,212)
------- --------
Weighted average number of ordinary
shares 39,215 38,942
------- --------
Basic earnings per share before the amortisation of intangibles
was 69.52 pence (2016: 62.21 pence) and is based on an after tax
add back of GBP3,610,000 (2016: GBP1,838,000) in respect of the
amortisation of intangibles.
The calculation of diluted earnings per share of 58.65 pence
(2016: 54.51 pence) is based on profit attributable to equity
holders of the parent of GBP23,652,000 (2016: GBP22,388,000) and a
weighted average number of ordinary shares outstanding during the
year ended 31 March 2017 of 40,330,000 (2016: 41,069,000),
calculated as follows:
2017 2016
Shares Shares
000s 000s
Weighted average number of ordinary
shares 39,215 38,942
Effect of share options in issue 1,115 2,127
------- -------
Weighted average number of ordinary
shares (diluted) 40,330 41,069
------- -------
Diluted earnings per share before the amortisation of
intangibles was 67.60 pence (2016: 58.99 pence).
3. Analysis of Net Debt
At At
31 March 1 April
2017 2016
GBP000 GBP000
Cash and cash equivalents (15,070) (11,374)
Bank overdraft 4,988 6,857
---------- ---------
Cash and cash equivalents as
per cash flow statement (10,082) (4,517)
Current finance lease debt 835 873
Non current debt 108,180 89,778
---------- ---------
Net debt 98,933 86,134
---------- ---------
Year end gearing (calculated as net debt expressed as a
percentage of shareholders' funds) stands at 72% (2016: 71%).
As at 31 March 2017 the Group had GBP120 million (2016: GBP95
million) of committed revolving credit facilities. The year on year
increase in the facilities reflects an additional facility of GBP20
million taken out in April 2016 using the step up facility and the
replacement of the two facilities which were due to expire in
October 2017, which totalled GBP50 million, with a new facility of
GBP55 million taken out in December 2016. In addition, there is an
overdraft facility of GBP5 million (2016: GBP5 million) and a new
uncommitted step up facility of GBP20 million.
4. Taxation
The charge for taxation for the year represents an effective tax
rate of 22.0% (2016: 18.6%). The effective tax in the prior year
was reduced by 1.3% (GBP0.3 million) as a result of a reduction in
the deferred tax liability due to the reduction in the future
standard rate in the UK to 19%. This reflects the reduction in the
rate to 19% for the year ended 31 March 2018. The expected further
reduction to 17% for the year ended 31 March 2021 is not reflected
at either year end as it is deemed that a significant proportion of
the deferred tax balance will reverse before 31 March 2020. The
effective tax rate excluding adjustments in respect of prior years
is 21.5% (2016: 18.5%).
5. Dividend
The Board has proposed a final dividend of 16.0 pence per share
to be paid on 8 August 2017 to shareholders on the register at 14
July 2017. This, together with the interim dividend of 6.00 pence
per share paid on 4 January 2017, makes a total dividend for the
year of 22.00 pence per share (2016: 18.85 pence per share).
6. Principal risks and uncertainties
The Board is responsible for determining the level and nature of
risks it is appropriate to take in delivering the Group's
objectives, and for creating the Group's risk management framework.
The Board recognises that good risk management aids effective
decision making and helps ensure that risks taken on by the Group
are adequately assessed and challenged.
The Group has an established risk management strategy in place
and regularly reviews divisional and department risk registers as
well as the summary risk registers used at board level. A risk
register is prepared as part of the due diligence carried out on
acquisitions and the methodology is subsequently embedded.
All risk registers have a documented action plan to mitigate
each risk identified. The progress made on the action plan is
considered as part of the risk review process. The summary
divisional and departmental risk registers and action plans were
reviewed at risk meetings held in April 2017. In all cases it is
considered that the risk registers are being used as working
documents which provides the required assurance that existing risks
are being managed appropriately. In addition, the risk registers
provide a process for recognising, scoring and thus appropriately
managing new risks.
The risk registers are reviewed at the start (to facilitate the
planning process) and at the end of each internal audit project. A
post audit risk rating is agreed with management. If new risks are
identified following an audit project they are added to the
relevant risk register. Heat maps illustrating post audit risk
ratings and new risks are provided to the board in each published
internal audit report.
To promote risk awareness amongst group and divisional
employees, risk registers have now been disseminated further down
levels of management.
Further information is provided below on our principal risks and
mitigating actions to address them.
Market risk
Risk description
A downturn in economic recovery could result in worse than
expected performance of the business, due to lower activity levels
or prices.
Mitigation
Vp provides products and services to a diverse range of markets
with increasing geographic spread. The Group regularly monitors
economic conditions and our investment in fleet can be flexed with
market demand.
Competition
Risk description
The equipment rental market is already competitive, and could
become more so, potentially impacting market share, revenues and
margins.
Mitigation
Vp aims to provide a first class service to its customers and
maintains significant market presence in a range of specialist
niche sectors. The Group monitors market share, market conditions
and competitor performance and has the financial strength to
maximise opportunities.
Investment/product management
Risk description
In order to grow, it is essential the Group obtains first class
products at attractive prices and keeps them well maintained.
Mitigation
Vp has well established processes to manage its fleet from
investment decision to disposal. The Group's return on average
capital employed was a healthy 16.0% (2016: 16.3%) in 2016/17. The
quality of the Group's fleet disposal margins also demonstrate
robust asset management and appropriate depreciation policies.
People
Risk description
Retaining and attracting the best people is key to our aim of
exceeding customer expectations and enhancing shareholder
value.
Mitigation
Vp offers well structured reward and benefit packages, and
nurtures a positive working environment. We also try to ensure our
people fulfil their potential to the benefit of both the individual
and the Group, by providing appropriate career advancement and
training.
Safety
Risk description
The Group operates in industries where safety is a key
consideration for the well being of both our employees and the
customers that hire our equipment. Failure in this area would
impact our results and reputation.
Mitigation
The Group has robust health and safety policies, and management
systems. Our induction and training programmes reinforce these
policies.
We provide support to our customers exercising their
responsibility to their own workforces when using our
equipment.
Financial risks
Risk description
To develop the business Vp must have access to funding at a
reasonable cost. The Group is also exposed to interest rate and
foreign exchange fluctuations which may impact profitability and
has exposure to credit risk relating to customers who hire our
equipment.
Mitigation
The Group has a revolving credit facility of GBP120 million and
maintains strong relationships with all banking contacts. Our
treasury policy defines the level of risk that the Board deems
acceptable. Vp continues to benefit from a strong balance sheet,
with growing EBITDA, which allows us to invest into
opportunities.
Our treasury policy requires a significant proportion of debt to
be at fixed interest rates, and we facilitate this through interest
rate swaps. We have agreements in place to buy or sell currencies
to hedge against foreign exchange movements. We have strong credit
control practices and use credit insurance where it is cost
effective. Debtor days reduced to 51 (2016: 56) days at the year
end and bad debts, as a percentage of revenue remained low at 0.4%
(2016: 0.4%).
Contractual risks
Risk description
Ensuring that the Group commits to appropriate contractual terms
is essential; commitment to inappropriate terms may expose the
Group to financial and reputational damage.
Mitigation
The Group mainly engages in supply only contracts. The majority
of the Group's hire contracts are governed by the hire industry
standard terms and conditions. Vp has defined and robust procedures
for managing non-standard contractual obligations.
7. 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.
8. Annual Report and Accounts
The Annual Report and Accounts for the year ended 31 March 2017
will be posted to shareholders before the end of June 2017.
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 IFRSs as adopted by the European
Union, 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 A M Bainbridge
Director Director
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAKKSESXXEFF
(END) Dow Jones Newswires
June 06, 2017 02:00 ET (06:00 GMT)
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