Interim Results
For the six months ended 30 September 2004
Jeremy Pilkington
Chairman
Neil Stothard
Group Managing Director
Mike Holt
Group Finance Director
Business Overview
Vp is an equipment rental specialist
-
diverse portfolio of specialist businesses
-
core expertise in asset management
-
excellent cash flow qualities
-
strong financial position
Highlights
PBT increased 15% to £4.7m
EPS improved 16% to 7.5 pence
Return on capital employed increased to 17%
Interim dividend increased 9% to 1.75 pence
Financial Review
Mike Holt
Group Finance Director
Financial Highlights
H1
H1
30 Sept 04 30 Sept 03
£m
£m
Turnover
45.6
40.9
+11%
PBT (pre-goodwill)
4.9
4.3
+16%
PBT (post-goodwill)
4.7
4.1
+15%
EPS
7.52 p
6.47 p
+16%
Interim Dividend
1.75 p
1.6 p
+9%
17%
14%
+24%
3.4
7.7
ROCE
Net Debt
Balance Sheet
30 Sept 04
£m
31 Mar 04
(Restated)
£m
30 Sept 03
(Restated)
£m
Intangible fixed assets
Tangible fixed assets
7.0
48.1
55.1
7.1
49.9
57.0
6.5
50.2
56.7
Net Working capital
Provisions
6.7
(4.0)
6.6
(4.3)
5.7
(4.3)
Capital employed
Net debt
Net assets
57.8
(3.4)
54.4
59.3
(7.5)
51.8
58.1
(7.7)
50.4
Gearing
6.3%
14.5%
15.3%
118
112
109
Net assets per share (pence)
Cash Flow
H1
30 Sept 04
£m
H1
30 Sept 03
£m
9.3
7.6
Net capital expenditure
(3.6)
(4.5)
Net interest
(0.2)
(0.2)
Tax
(1.5)
(0.8)
Free cash flow
4.0
2.1
Acquisitions and disposals
0.1
(3.1)
-
(0.2)
4.1
(1.2)
Operating cash flow
Share purchases
Movement in net debt
Operating Cash Flow
H1
30 Sept 04
£m
H1
30 Sept 03
£m
Operating profit
5.1
4.5
+15%
Depreciation
5.7
5.4
+6%
Profit on sale of fixed assets
(0.4)
(0.5)
Change in net working capital
(1.1)
(1.8)
9.3
7.6
182%
171%
Net cash inflow
Cash to profit ratio
+22%
International Financial
Reporting Standards
Key areas
-
Pensions
-
Share option hedging
Year ending 31 March 2005 to be reported under UK GAAP
-
UITF17/38 adjustments
Reconciliation to IFRS post full year results
30 September 2005 interims – IFRS mandatory
Operational Review
Neil Stothard
Group Managing Director
Groundforce
Rental and sales of excavation support
systems to the water, civil engineering
and construction industries, plus three
specialist offerings: Piletec – pile
driving
and
breaking;
Stopper
Specialists – pipe integrity testing;
Survey Technology – surveying and
water flow measurement.
Segmental Analysis - Groundforce
H1 Sales
30 Sept 04 30 Sept 03
£m
£m
H1 Profit
30 Sept 04 30 Sept 03
£m
£m
Groundforce
12.7
8.4
2.8
2.2
+26%
UK Forks
6.4
6.2
0.8
0.8
-
Airpac Oilfield Services
2.2
1.9
0.6
0.3
+100%
Hire Station
17.4
18.8
(0.3)
0.1
-
Torrent Trackside
6.9
5.6
1.3
1.1
+25%
TOTAL
45.6
40.9
5.1
4.5
Groundforce
Market Leader
Good demand from AMP3
Integration of acquisitions
Specialist businesses progressing
Growth opportunities
Well positioned for AMP4
UK Forks
Hire of rough terrain material
handling equipment to industry,
residential
and
general
construction.
Segmental Analysis – UK Forks
H1 Sales
30 Sept 04 30 Sept 03
£m
£m
H1 Profit
30 Sept 04 30 Sept 03
£m
£m
Groundforce
12.7
8.4
2.8
2.2
+26%
UK Forks
6.4
6.2
0.8
0.8
-
Airpac Oilfield Services
2.2
1.9
0.6
0.3
+100%
Hire Station
17.4
18.8
(0.3)
0.1
-
Torrent Trackside
6.9
5.6
1.3
1.1
+25%
TOTAL
45.6
40.9
5.1
4.5
UK Forks
Steady market conditions
Focused product investment
Further progress with major housebuilders
Unique offering to the market
Airpac Oilfield Services
Rental of specialist air
compressors and
associated equipment to
the international oil and
gas exploration and
development markets.
Segmental Analysis - Airpac
H1 Sales
30 Sept 04 30 Sept 03
£m
£m
H1 Profit
30 Sept 04 30 Sept 03
£m
£m
Groundforce
12.7
8.4
2.8
2.2
+26%
UK Forks
6.4
6.2
0.8
0.8
-
Airpac Oilfield Services
2.2
1.9
0.6
0.3
+100%
Hire Station
17.4
18.8
(0.3)
0.1
-
Torrent Trackside
6.9
5.6
1.3
1.1
+25%
TOTAL
45.6
40.9
5.1
4.5
Airpac Oilfield Services
Supportive crude oil price
Strong demand in North Sea
Singapore project demand good
Investment in existing and new products
Repair & maintenance, well test and pipelines
Growth opportunities
Hire Station
Rental and sale of small tools to
industry and construction plus
two specialist offerings:
Safeforce – safety and
environmental products, Lifting
Point - materials handling and
lifting gear hire.
Segmental Analysis – Hire Station
H1 Sales
30 Sept 04 30 Sept 03
£m
£m
H1 Profit
30 Sept 04 30 Sept 03
£m
£m
Groundforce
12.7
8.4
2.8
2.2
+26%
UK Forks
6.4
6.2
0.8
0.8
-
Airpac Oilfield Services
2.2
1.9
0.6
0.3
+100%
Hire Station
17.4
18.8
(0.3)
0.1
-
Torrent Trackside
6.9
5.6
1.3
1.1
+25%
TOTAL
45.6
40.9
5.1
4.5
Hire Station
Recovery programme on track
Q1 –v- Q2 focus shift – internal reorganisation → external
business winning
Internal



Core product identification
Investment in recruitment and training
Stability restored to structure
External



Business wins - new products
One Call developments
Specialist businesses
Torrent Trackside
Hire of portable rail infrastructure
equipment, lighting and related
services to the rail renewals and
maintenance industry.
Segmental Analysis – Torrent Trackside
H1 Sales
30 Sept 04 30 Sept 03
£m
£m
H1 Profit
30 Sept 04 30 Sept 03
£m
£m
Groundforce
12.7
8.4
2.8
2.2
+26%
UK Forks
6.4
6.2
0.8
0.8
-
Airpac Oilfield Services
2.2
1.9
0.6
0.3
+100%
Hire Station
17.4
18.8
(0.3)
0.1
-
Torrent Trackside
6.9
5.6
1.3
1.1
+25%
TOTAL
45.6
40.9
5.1
4.5
Torrent Trackside
Excellent performance
Renewals business – Network Rail Contracts awarded
Maintenance business – Holding regime
Network Rail tender – Long term contracts
London Underground – New area for growth
Markets
8%
18%
15%
37%
5%
17%
Residential
Non-residential
Water and Civils
Oil and Gas
Rail
RMI
Group Outlook
Jeremy Pilkington
Chairman
Turnover
Actuals
Brewin Forecast
91.0
100
83.5
75.5
80
66.8
59.8
60
45.6
40
H1
20
£m
0
2001
2002
2003
2004
2005
2005
Profit Before Tax (pre Goodwill)
Actuals
Brewin Forecast
9.5
10
8.6
7.8
8
6.5
4.9
6
3.3
4
H1
2
£m 0
2001
2002
2003
2004
2005
2005
Return on Capital Employed
17.1
15.7
18
14.8
16
14
12
12.4
10
8
6
7.3
H1
4
2
£m 0
2001
2002
2003
2004
2005
Dividends Earnings per Share
Dividends
EPS
16
14.59
14
12.36
12
10.23
10
7.52
8
6
5.03
4.05
4.2
4.5
5.0
4
1.75
H1
2
£p
H1
0
2001
2002
2003
2004
2005
Total Shareholder Return
400.0
350.0
300.0
250.0
Vp plc
FTSE Small Cap
200.0
150.0
100.0
50.0
0.0
Sep-99
Sep-00
Sep-01
Sep-02
Sep-03
Sep-04
Group Outlook
Overall outlook for the Group very positive
-
UK Infrastructure spend set to continue
-
Safety and regulatory regimes supporting growth
Strength of balance sheet and cash flow permits organic and
acquisition growth and gives defensive quality
Breadth of markets served gives earnings resilience
Good opportunities exist in all our chosen markets
Not ‘buying’ growth at the expense of profit quality
Group Outlook
Quality of product and service winning market share
All levels of management strongly incentivised to deliver
earnings growth in their business
5 years of earnings growth and improved returns from internally
generated cash flow without recourse to increased external
funding