Profit holds up at Vp on lower revenues

UK rental group Vp, owner of UK Forks, Higher Access and Brandon Hire/Hire Station has published its results for the six months to the end of September.

Total revenues were 3.5 percent lower than in the same period last year at £186.6 million. Pre-tax profits however held up coming in just over two percent lower at £23.3 million.

UK revenues came in almost three percent lower at £170 million, in spite of a small contribution from Sandhurst engineering which the company acquired in May. Operating profits for the UK business however were almost two percent higher at £27.2 million.

The international business, which is based in Australia and New Zealand saw revenues slip seven percent to £16.6 million, with operating profit more than 15 percent lower at £1.1 million.

As a result of the lower revenues the company reduced capital expenditure by almost 28 percent to £26.6 million. Net debt at the end of September was £183.7 million, compared to £188.2 million at the same point last year. The company says that business remains stable and is not changing its full year projections.

Chairman Jeremy Pilkington said: “I am pleased to report a solid set of results for the group which reflect the strength of Vp's fundamentals and the market leading quality of our earnings. For the six month period to 30 September 2019, profits before tax, amortisation and exceptional items were unchanged at £25.9 million on reduced revenues of £186.6 million. Statutory profit before taxation was £23.4 million. Earnings per share pre-amortisation and exceptional items rose marginally to 52.5 pence per share. Return on average capital employed was maintained at a robust 14.5 percent and well ahead of our cost of capital.”

“Against a backdrop of political and economic uncertainty, we consider these results to be a very satisfactory performance and the board is therefore declaring a three percent increase in the interim dividend to 8.45 pence per share.”

Vertikal Comment

This is a lack lustre performance from Vp in comparison with its usual results, however it has taken steps to administrative costs and remains in a very good place from which to take advantage of opportunities in the rental market that are almost certain to emerge over the next year or so.

The company has plenty of upside opportunities in its core divisions, but needs to be careful on cutting back too severely on capital expenditure, an aging fleet can of course cause other costs to rise and reduce the perceived quality of its product offering. The company has a strong balance sheet and close ownership and can therefore focus on the longer term.

All in all not such a bad first half.


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