Transcript Document

The Equipment Rental Specialist
Interim Results
For the six months ended
30 September 2006
Rental and sale of specialist products and services to construction, civil
engineering, rail, oil and gas exploration, events and industrial markets
Introduction
Jeremy Pilkington – Chairman
Neil Stothard – Group Managing Director
Mike Holt – Group Finance Director
Financial Review
Mike Holt
Group Finance Director
Financial Highlights
H1
H1
30 Sep 06 30 Sep 05
Revenue
£61.3m
£47.4m
+29%
PBIT
£8.8m
£5.6m
+56%
Operating Margin
14.3%
11.9%
+20%
PBT
£7.8m
£5.5m
+42%
31 Mar 06
ROCE
16.0%
15.4%
Gearing
57%
54%
Net Debt
£34.7m
£32.6m
Earnings per Share and Dividend
H1
H1
Full Year
30 Sep 06
30 Sep 05
31 Mar 06
Basic EPS
12.71p
8.96p
+42%
17.49p
Fully diluted EPS
12.16p
8.66p
+40%
16.83p
Dividend per share
2.25p
1.95p
+15%
6.60p
Tax Rate
30.0%
29.0%
28.8%
Balance Sheet
30 Sep 06
31 Mar 06
30 Sep 05
£m
£m
£m
Property, plant and equipment
69.6
66.1
51.3
Intangibles/Goodwill
33.8
33.6
9.8
Non Current Assets
103.4
99.7
61.1
Net Working Capital
7.7
8.3
7.8
Pension Obligations
(2.7)
(2.9)
(3.7)
Deferred Tax
(4.7)
(4.2)
(2.9)
Deferred Consideration
(7.9)
(7.9)
-
Capital Employed
95.7
92.9
62.3
Net Debt
(34.7)
(32.6)
(5.7)
Net Assets
61.0
60.3
56.6
Operating Cash Flow
H1
H1
Full Year
30 Sep 06 30 Sep 05
31 Mar 06
£m
£m
Operating Profit
8.8
5.6
Depreciation
6.9
5.7
12.2
Profits on asset disposals
(1.1)
(1.0)
(2.3)
EBITDA
14.6
10.3
Change in net working capital
(0.2)
(0.6)
1.8
Share option provision
0.5
0.2
0.3
Operating cash flow
14.9
9.9
Cash to profit ratio
169%
177%
203%
Cash flow per share
35p
23p
54p
69 days
70 days
68 days
Debtor days
£m
+56%
+42%
+51%
11.5
21.4
23.5
Cash Flow
H1
H1
Full Year
30 Sep 06
30 Sep 05
31 Mar 06
£m
£m
£m
14.9
9.9
23.5
(15.1)
(8.3)
(15.5)
3.3
2.7
6.2
Interest
(0.6)
(0.1)
(0.6)
Tax
(0.9)
(1.4)
(3.1)
1.6
2.8
10.5
Pensions
(0.2)
(0.2)
(0.9)
Acquisitions
(0.1)
(4.8)
(36.1)
-
-
(2.6)
Purchase of own shares
(3.4)
(1.1)
(1.1)
Movement in net debt
(2.1)
(3.3)
(30.2)
Fleet Investment
14.3
11.3
34.3
Operating cash flow
Capex
Asset disposals
Free cash flow
Dividend
Net Debt
30 Sep 06
31 Mar 06
30 Sep 05
£m
£m
£m
Bank loans
36.5
33.5
8.0
Loan notes
0.1
1.0
-
HP leases
3.1
3.7
0.1
Cash
(5.0)
(5.6)
(2.4)
Net Debt
34.7
32.6
5.7
Interest Cover
9.0x
14.5x
41.9x
Bank Facilities
£55m
£55m
£15.5m
Excellent Financial Health
• Operating cash flows remain strong (1.7x profits)
• Gearing remains relatively modest (57%)
• Interest cover remains robust (9x)
• Balance sheet capable of supporting further growth
Business Review
Neil Stothard
Group Managing Director
Vp’s Investment Case
• Specialist business with diversified market exposure
• Strong services element
• Market leading positions
• Excellent cash generation and financial strength
• Proven management team with strength in depth
• Consistent performer with good returns
Vp Markets Exposure
Construction
6% 4%
Civil Engineering
8%
34%
8%
Rail
Housebuilding
Oil and Gas
10%
Other
Events
12%
18%
Transmission
Markets
Market
Background
Vp Division
Construction / Housing Stable
Hire Station, UK Forks, Groundforce, TPA
Civil Engineering
Water slow
Groundforce, Hire Station, TPA, UK Forks
Oil and Gas
Strong global
Airpac Bukom Oilfield Services
Rail
Less volatile
Torrent Trackside, TPA, Groundforce
Transmission
£1bn 5 year plan
TPA, Hire Station
Events
Strong, seasonal
TPA, Hire Station
Business Performance
• Record operating profits up 56% to £8.8m
• 30% of profit growth is organic
• Substantial revenue growth
• Operating margins improved by 20%
• Fleet investment £14.3m (+26%)
• ROCE 16%
Segmental Analysis
H1 Sales
H1 Profits
30 Sep 06
30 Sep 05
30 Sep 06
30 Sep 05
£m
£m
£m
£m
Groundforce
13.0
11.5
+13%
2.8
2.6
+8%
UK Forks
6.9
7.5
-8%
0.7
1.3
-49%
Airpac Bukom
5.0
2.2
+127%
1.2
0.5
+146%
Hire Station
21.2
19.4
+9%
1.6
0.9
+79%
Torrent Trackside
6.6
6.2
+6%
0.9
0.8
+18%
TPA
7.7
-
1.8
-
Continuing Operations
60.4
46.8
9.0
6.0
Pivotal
0.9
0.6
(0.2)
(0.4)
TOTAL
61.3
47.4
8.8
5.6
14.3%
11.9%
Operating Margin
+29%
+50%
Main Influences This Period
• Acquisitions integrated successfully
• AMP4 activity remained quiet
• Oil and gas buoyant
• Construction and Housebuilding steady
• Events market seasonality
• Non-core training business sold to management
Growth Strategy Progressing Well
• Interim results endorse growth plan initiatives to date
• Organic capital investment has been strong
• Product diversification in most areas
• New markets e.g. transmission, events
• New activities e.g. formwork, pipe fitting
• Acquisition post half year end – MEP Hire
Maintaining Momentum
140
18
Revenue (£m)
121.5
120
80
75.5
83.5
11.5
12
90.0
10
8.4
9.0
10.2
8
60
6
40
4
20
2
0
0
2003
2004
2005
2006
25
2007
22.5
Earnings (pence per share)
20
16.31
15
15.8
PBIT (£m)
14
99.4
100
16
13.09
17.49
14.06
10
5
0
Actuals
2003
20
18
16
14
12
10
8
6
4
2
0
2004
ROCE (%)
2005
16.3
14.7
13.2
Brewin Forecast
2006
2007
15.4
16.0
Share Price
VP Total Shareholder Return
700
600
Vp
FTSE Small Cap
500
400
300
200
100
0
Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06
Source: Bloomberg
Outlook
Jeremy Pilkington
Chairman
Future
• Excellent organic growth opportunities for our businesses
• Potential for further acquisitive expansion
• Balance sheet very capable of further leverage
• Consistent strategy to lead in our chosen markets
• Overall the markets we serve are in robust health with
good visibility
• Our growth strategy remains on course
The Equipment Rental Specialist
Interim Results
For the six months ended
30 September 2006
Rental and sale of specialist products and services to construction, civil
engineering, rail, oil and gas exploration, events and industrial markets