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Vp plc
The Equipment Rental Specialist
Preliminary Results
For the year ended
31 March 2006
Agenda
• Highlights :
– Jeremy Pilkington – Chairman
• Financial Review :
– Mike Holt – Group Finance Director
• Business Review :
– Neil Stothard – Group Managing Director
Highlights
•
Operating profit* +17% to £12.0m
•
PBT* +13% to £11.2m
•
EPS* +12% to 18.3 pence
•
Hire Station profit recovery
•
4 significant acquisitions completed - £36m
•
Markets supportive - outlook positive
*Pre restructuring costs
Financial Review
Mike Holt
Group Finance Director
Financial Highlights
2006
2005
Revenue
£99.4m
£90.0m
+10%
Operating profits
£12.0m
£10.2m
+17%
Operating margins
12.1%
11.3%
+7%
Profit before tax and one-off costs
£11.2m
£9.9m
+13%
Profit before tax
£10.7m
£9.9m
+8%
ROCE
Gearing
15.4%
54%
16.3%
4%
Prior year restated for IFRS
Earnings per share and Dividends
2006
2005
Basic EPS (pre one-off costs)
18.3p
16.3p
+12%
Basic EPS
17.5p
16.3p
+7%
Fully diluted EPS
16.8p
15.8p
+7%
Dividend per share
6.60p
5.75p
+15%
Dividend cover (pre one-off costs)
2.77
2.83
28.8%
28.5%
Tax rate
+1%
Prior year restated for IFRS
Revenue(£m)
99.4
100
80
83.5
90.0
75.5
66.8
60
40
20
0
2002
2003
2004
2005
2006
Profit Before Interest and Tax (£m)
14
12.0
12
10.2
10
8
8.4
9.0
2003
2004
7.2
6
4
2
0
2002
2005
2006
*Pre one-off restructuring costs
Restated for IFRS
Return on Average Capital Employed (%)
%
20
18
16
14
12
10
8
6
4
2
0
16.3
14.7
12.0
2002
15.4
13.2
2003
2004
2005
2006
Restated for IFRS
Dividend / Earnings (pence per share)
Dividend
18
16
14
12
10
8
6
4
2
0
EPS
17.5
16.3
14.1
13.1
10.9
5.75
4.2
4.5
5.0
2002
2003
2004
2005
6.6
2006
Basic EPS restated for IFRS
Balance Sheet
2006
£m
33.6
66.0
99.6
8.3
(2.9)
(4.2)
(7.9)
92.9
(32.6)
60.3
2005
£m
7.5
48.7
56.2
8.5
(3.9)
(3.0)
57.8
(2.4)
55.4
Gearing
54%
4%
Net assets per share
139p
128p
Intangible assets
Property, plant and equipment
Non current assets
Net working capital
Pension obligations
Deferred tax
Deferred consideration
Capital employed
Net debt
Net assets
+£44m
+£(8)m
+£(30)m
+£5m
+9%
Prior year restated for IFRS
Operating Cash Flow
Operating profits
One-off costs
Depreciation
Profits on asset disposals
EBITDA
Change in net working capital
Net cash inflow
2006
£m
12.0
(0.5)
12.2
(2.3)
21.4
2.1
23.5
2005
£m
10.2
11.0
(1.2)
20.0
0.1
20.1
Cash to profit ratio
196%
197%
Cash flow per share
54.1p
46.3p
+17%
+7%
+17%
+17%
Prior year restated for IFRS
Cash Flow
Operating cash flow
Gross capex
Asset disposal
Interest
Tax
Free cash flow
Pensions
Acquisitions
Dividends
Purchase of own shares
Movement in net debt
Fleet investment (including leases)
2006
£m
23.5
(15.5)
6.2
(0.6)
(3.1)
10.5
(0.9)
(36.1)
(2.6)
(1.1)
(30.2)
2005
£m
20.1
(15.1)
6.0
(0.3)
(3.3)
7.4
(0.1)
(0.2)
(2.2)
0.2
5.1
20.8
15
+17%
+42%
+39%
Prior year restated for IFRS
Acquisitions
Consideration Acquired Net
Total
Debt
£m
£m
£m
Pivotal Services
4.5
-
4.5
Trax Portable Access
19.1
7.5
26.6
Bukom
5.7
2.9
8.6
Dudley Vale
3.5
-
3.5
Other
0.8
-
0.8
33.6
10.4
44.0
Deferred contingent consideration
(7.9)
Cash flow
36.1
Net Debt
2006
£m
33.5
1.0
3.7
(5.6)
32.6
2005
£m
8.0
0.1
0.1
(5.8)
2.4
Interest cost
£0.8m
£0.3m
Interest cover
14.5x
33.1x
Bank facilities
£55.0m
£15.5m
Bank loans
Loan notes
HP/Leases
Cash
Net Debt
Financial Summary
• Operating profits (pre one-off costs) up 17% to £12.0m
• Profit before tax up 8% to £10.7m
• Operating cash flows remain strong (1.9x profits)
• Acquisitions totalled £44m (£7.9m deferred)
• Fleet additions totalled £20.8m (+39%)
• Gearing increased to 54% (still modest)
• Interest cost covered 14.5x
• New loan facilities support further growth
Business Review
Neil Stothard
Group Managing Director
Segmental Analysis
Revenues
UK Forks
Groundforce
Airpac Bukom
Hire Station*
Torrent Trackside
TPA
TOTAL
2006
£m
14.3
23.5
5.0
41.9
12.1
2.5
99.4
*Pre £0.5m one-off restructuring costs
2005
£m
12.8
24.6
4.5
34.8
13.3
90.0
Operating Profit
2006
2005
£m
£m
2.1
1.4
5.3
5.8
1.2
1.1
1.9
(0.7)
1.7
2.5
(0.3)
12.0
10.2
+17%
UK Forks
Rough terrain material handling equipment for industry,
residential and general construction
UK Forks
2006
2005
Revenue
£14.3m
£12.8m
+12%
Profit
£2.1m
£1.4m
+50%
Margin
14.5%
11.2%
+29%
Fleet Capex
£3.1m
£3.1m
UK Forks
•
Excellent profit result
•
Good housebuilding and general construction demand
•
National and regional accounts developing well
•
Revenue growth delivered incremental margin
•
Slower final quarter
•
Prospects remain good subject to market
Groundforce
-Groundforce Shorco
-Piletec Dudley Vale
-Stopper Specialists
-Survey Technology
Excavation support systems and specialist products for the
water, civil engineering and construction industries
Groundforce
2006
2005
Revenue
£23.5m
£24.6m
-4%
Profit
£5.3m
£5.8m
-9%
Margin
22.3%
23.4%
-5%
Fleet Capex
£2.2m
£2.5m
Groundforce
•
Profits reduced as anticipated
•
Good performance from Shoring division
•
AMP4 delay affected Specialist divisions
•
Piling division expanded via Dudley Vale acquisition
•
Survey business consolidated – Birse purchase
•
Formwork division established
•
Remains well placed to leverage off AMP4 driven activity
Groundforce – Dudley Vale acquisition
• Acquired November 2005 from GE
• Rental and sale of piling hammers and pile breakers
• Merged with Piletec division of Groundforce
• Trading as Piletec Dudley Vale
Airpac Bukom Oilfield Services
-Aberdeen
-Great Yarmouth
-Singapore
Equipment and service providers to the international oil and
gas exploration and development markets
Airpac Bukom Oilfield Services
2006
2005
Revenue
£5.0m
£4.5m
+11%
Profit
£1.2m
£1.1m
+9%
Margin
24.9%
25.2%
-
Fleet Capex
£0.8m
£0.5m
Airpac Bukom Oilfield Services
•
Solid profit performance
•
Strong demand for North Sea well testing and rig
maintenance
•
Acquisition of Bukom delivers new products and
geographical expertise
•
Significant additional investment committed for new
financial year
•
Market prospects remain positive
Bukom Oilfield Services
• Acquired March 2006
• Long established competitor
• Leading international supplier of equipment and services
to global oil and gas exploration market
• Doubles size of our oil and gas business
• Improves our penetration of African and South
American markets
• Increases breadth of products to offer to our customers
• Integration has gone well
Hire Station
-Hire Station
-ESS Safeforce
-Lifting Point
Tools and specialist products for industry and construction
Hire Station
2006
2005
Revenue
£41.9m
£34.8m
+20%
Profit
£1.9m
£(0.7)m
-
Margin
4.6%
(1.9)%
-
Fleet Capex
£7.3m
£5.7m
Hire Station
• Excellent turnaround to profit
• Good organic growth in tools
• Central hire desk operating well
• Strong investment levels in core products
• Continuing sales success
• Lifting Point expanded via additional satellites
• Pivotal Services Group acquisition
Pivotal Services Group acquisition
• Acquired July 2005 from Babcock
• Loss making business restructured at £0.5m cost
• Market leader in safety rental, servicing and sales
• Confined Space entry training complementary offering
• Integration with Safeforce, trading as ESS Safeforce
• Health & Safety and Management Development training
trading as Pivotal Performance
Torrent Trackside
Portable rail infrastructure equipment, lighting and related
services for the railway renewals and maintenance industry
Torrent Trackside
2006
2005
Revenue
£12.1m
£13.3m
-10%
Profit
£1.7m
£2.5m
-32%
Margin
14.3%
18.9%
-24%
Fleet Capex
£2.4m
£1.5m
Torrent Trackside
•
Renewals demand quieter but stable
•
Reduced revenue levels from Network Rail plant
maintenance contract
•
Success in continuing as secondary provider in
maintenance market
•
Good progress on London Underground
•
Product expansion
•
Market has improved in short term and the year
finished well
TPA
Portable roadway systems, bridging, fencing and barriers
TPA
2006
(since acq.)
Revenue
£2.5m
Profit
£(0.3)m
Margin
(11.1)%
Fleet Capex
£1.1m
TPA
•
Acquired November 2005
•
Separate trading division of Vp
•
Portable aluminium roadways and barriers
•
Events, construction, rail and power transmissions markets
•
Experienced management team
TPA
•
Quiet winter trading period
•
New Year has started strongly
•
Significant additional investment to meet current demand
•
Events market good
•
Construction activity improving
•
Business positioned for further growth
•
Market opportunities remain strong
•
Prospects for current year positive
Summary
• Another year of significant development for Vp
• Further good progress for established business
• Excellent turnaround at Hire Station
• UK Forks performance very strong
• Certain markets quieter, but medium term remains
positive
Summary
• Leveraging balance sheet to create growth opportunities
• Identified and secured four quality acquisitions
• All command or complement significant market positions
• All fit our core skill set
• Integration process has gone well
• Impetus for further growth in current year and beyond
• Enter the the new financial year in excellent shape
Total Shareholder Return
600.0
500.0
VP plc
FTSE Small Cap
400.0
300.0
200.0
100.0
0.0
Jun-01
Jun-02
Jun-03
Jun-04
Jun-05
Jun-06