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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Vp Plc | LSE:VP. | London | Ordinary Share | GB0009286963 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 25.00 | 4.63% | 565.00 | 545.00 | 570.00 | 565.00 | 565.00 | 565.00 | 15,174 | 16:35:09 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Heavy Constr Eq Rental,lease | 371.52M | 23.01M | 0.5730 | 9.86 | 226.87M |
TIDMVP.
RNS Number : 6710H
Vp PLC
07 December 2020
Press Release 7 December 2020
Vp plc
('Vp' or the 'Group')
Interim Results
'Resilient trading performance despite unique challenges, debt reduced significantly'
Vp plc, the equipment rental specialist, today announces its Interim Results for the six months ended 30 September 2020 (the 'period').
Highlights
Hot Features
Premium
-- Profit before tax, amortisation and exceptional items
at GBP8.6 million (H1 2020: GBP25.9 million)(1)
-- Revenues reduced by 24% to GBP142.1 million (H1 2020:
GBP186.6 million)
-- EPS, pre amortisation and exceptional items, 17.4 pence
per share (H1 2020: 52.5 pence per share) (1)
-- Special dividend proposed of 22.00 pence per share
-- Interim dividend Nil (H1: 2020 8.45 pence)
-- Net debt reduced by GBP41.1 million to GBP118.7 million
(31 March 2020: GBP159.8 million) (1) .
-- Return on average capital employed at 10.3% (H1 2020:
14.5%)(1)
-- EBITDA decreased to GBP34.1 million (H1 2020: GBP51.8
million) (1)
-- Capital investment in rental fleet down 45% at GBP14.6
million (H1 2020: GBP26.6 million)
-- Exceptional costs GBP13.0m (H1 2020: GBP0.7m)
-- Statutory loss before tax of GBP6.0 million (H1 2020:
profit of GBP23.4 million) (1) and statutory earnings
per share of -17.8 pence (H1 2020: 47.3 pence)
Jeremy Pilkington, Chairman of Vp plc, commented: " The resilience and diversity of the Vp offering has once again proved to be an invaluable asset as the Group and its customers recover from the economic impact of Covid-19. Vp's businesses are gradually recovering towards prior year trading levels, buoyed by the positive medium-term outlook for infrastructure investment in the UK. The Group remains in excellent financial condition and is well positioned to take advantage of the uplift in demand and return the business to its historic levels of profitability. The Board is optimistic but also realistic about prospects for the second half and beyond.
"On behalf of the Board I would like to extend a thank you to all our employees, both within the UK and internationally, for their spirit, hard work and determination in the face of unique challenges and uncertainties."
Analyst Briefing:
A conference call for analysts will be held at 09.30am today, 7 December 2020. For dial in details please contact Vp@buchanan.uk.com . A copy of the Half Year Results presentation will be made available this morning at the Group's website: http://www.vpplc.com .
For further information:
Vp plc
Jeremy Pilkington, Chairman Tel: +44 (0) 1423 533
400
Neil Stothard, Chief Executive www.vpplc.com
Allison Bainbridge, Group Finance Director
Media enquiries:
Buchanan
Henry Harrison-Topham / Jamie Hooper Tel: +44 (0) 20 7466
/ George Beale 5000
Vp@buchanan.uk.com www.buchanan.uk.com
(1) Notes on alternative performance measures:
-- The Group adopted the accounting standard IFRS 16 Leases with effect from 1 April 2019 using the modified retrospective approach to transition. The results for the six months ended 30 September 2020 and 30 September 20219 are not directly comparable with those reported in the past under the previous applicable accounting standard, IAS 17 Leases. To provide meaningful comparatives, within note 5(a) the results for the six months ended 30 September 2020 and 30 September 2019 have therefore also been calculated using the previous accounting methodology of IAS 17. Further, as the decision makers currently allocate resource and assess performance primarily on an IAS 17 basis, the alternative performance measures are also disclosed based on IAS 17. See Note 5(a) for a reconciliation of the IAS 17 alternative performance measures to the equivalent IFRS 16 measures. All performance measures stated as before amortisation are also before impairment of intangibles and exceptional items.
-- Basic earnings per share pre amortisation and exceptional items is reconciled to basic earnings per share in note 8.
-- Profit before tax, amortisation and exceptional items is reconciled to profit before tax in the Consolidated Income Statement.
-- Return on average capital employed is based on profit before tax, interest, amortisation and exceptional items divided by average capital employed on a monthly basis using the management accounts. Profit before tax, interest, amortisation and exceptional items is reconciled to profit before interest and tax in the Consolidated Income Statement.
The information contained in this announcement is deemed by the Company to constitute inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
CHAIRMAN'S STATEMENT
The Group has had to confront unique challenges in the first half of this financial year.
As the Covid virus struck, it was impossible to know how severe or prolonged the ensuing pandemic might be and what would be the consequences of the associated lockdown.
In April 2020, as many of our markets closed completely or only operated on severely reduced levels of activity, Group monthly revenues dropped by almost 50% compared with the prior year. On a more positive note, many of our businesses were categorised as essential service providers to such sectors as transport, utilities, telecommunications and health and here we were able to maintain a certain level of business functionality.
Our priority throughout this pandemic has been to protect the health of our employees, our customers and other stakeholders.
In response to these sharp reductions in activity the Group ceased all but essential capital investment and recruitment. The Group participated in the UK Government's job retention furlough scheme and whilst this was successful in retaining many jobs in the early part of the financial year we have subsequently had to reduce capacity to better match ongoing demand. Regrettably, this has resulted in approximately 150 redundancies across the Group and the merger or closure of 23 locations in the UK. Since October 2020, we have had no employees on furlough. The Group continues to operate a young, well managed fleet and our rental assets remain of the highest quality and well matched to supporting customers with our long term focus on service and product excellence.
For the six month period to 30 September 2020, profit before tax, amortisation and exceptional items was GBP8.6 million (H1 2020: GBP25.9 million) on revenues 24% lower at GBP142.1 million (H1 2020: GBP186.6 million). During the period, the Group incurred exceptional items of GBP13.0 million (H1 2020: GBP0.7 million). Statutory loss before taxation was GBP6.0 million (H1 2020: profit of GBP23.4 million). Earnings per share pre-amortisation and exceptional items was 17.4 pence per share (H1 2020: 52.5 pence per share). Return on average capital employed ('ROACE') reduced to 10.3% (H1 2020: 14.5%).
The quality of our earnings, coupled with a strong focus on cash management, has enabled us to reduce debt by GBP41.1 million to GBP118.7 million (31 March 2020: GBP159.8 million), an outstanding achievement.
At the time of our preliminary announcement on 10 June 2020, the Board indicated that it would defer the decision on the final dividend until we had a better understanding of how the pandemic would develop. Despite the collapse in Group revenues in early Q1-2020, we have subsequently experienced a recovery, traded profitably in the first half of the year as a whole and now have better visibility through to the end of the financial year. Reflecting our record profits for the year ended 31 March 2020 and a much improved cash position, the Board now feels it is appropriate to pay a special dividend in lieu of the final dividend for the year ended 31 March 2020 of 22.0 pence per share to be paid on 17 January 2021 to shareholders registered as at 18 December 2020.
There is no interim dividend for the current financial year but the Board will take a view for the year as a whole at the time of our preliminary announcement in June 2021. The Board appreciates the importance of income to our shareholders and intends to maintain its longstanding progressive dividend policy.
The Group operates primarily in the UK, but also with substantial activities in the Asia Pacific region and in mainland Europe. The individual business teams have had to cope with differing and ever changing rules of engagement and lockdown restrictions, a pattern that continues to the present time.
The fact that the business has reported an underlying profit for the first half of the financial year is testament to the outstanding performance of employees right across the Group operating under the most difficult circumstances.
As previously reported the Competition and Markets Authority announced on 9 April 2019 that it was investigating three businesses within the temporary groundworks sector of suspected anti-competitive behaviour and which included a part of the Group's excavation support systems business ('Groundforce Shorco'). The turnover of the business concerned represented c. 9% of the Vp plc group turnover for the year ended 31 March 2020.
Previous accounts included a provision of GBP4.5 million in respect of this matter. During the period, as a result of information recently received from the CMA we have made an additional provision of GBP10.87 million, resulting in a total provision of GBP15.37 million. The process is still ongoing, no decision has been reached and this figure represents the Directors' best estimate based on the limited information available and without any admission of culpability. The Directors also consider any further increase in the provision being required to be highly unlikely. The CMA's findings remain provisional and we continue to co-operate fully with their investigation and we await their determination in due course.
UK Division
Trading in the UK division has continued to improve as the half year progressed and by the end of October monthly revenues had been restored to 89% of prior year levels in the UK business.
The recovery has been most pronounced in our MEP, Torrent and TPA (UK and Europe) divisions. ESS Safeforce (survey and safety rental) has also enjoyed a good recovery.
The Brandon Hire Station business, more dependent on the general construction market, has been slower to rebound but has seen a sustained revenue improvement as the branch network fully re-opened from August onwards. Brandon Hire Station, which merged or closed 23 branches in the period, remains the largest stand alone tool hire business in the UK, operating from 162 branches nationwide.
Groundforce, has seen a slower recovery in civil engineering activity however, at the time of writing, we are starting to see a renewed uplift in demand. This will be further enhanced as the new AMP7 five year infrastructure investment programme is progressively released during 2021. The housebuilding sector largely closed in April but then experienced a sharp recovery as sites re-opened from May. UK Forks continues to support this vital national and growing market.
International Division
The International division, comprising Airpac Bukom and TR Group, experienced their own challenges. Whilst the oil and gas sector remained open, Airpac Bukom encountered restrictions in specific regions which led to contracts being delayed, postponed or cancelled. TR Group, which operates primarily in Australia and New Zealand, continued to trade throughout but was inevitably impacted by the severe restrictions in these jurisdictions. Looking forward, as restrictions have been eased, we expect to see a recovery heading into 2021.
Outlook
We enter the second half of our financial year with cautious optimism. Our businesses are gradually recovering towards prior year trading levels, buoyed by the positive medium term outlook for infrastructure investment in water (AMP7), Rail (CP6 and HS2), transmission and utilities.
The Group is fortunate to have one of the longest serving and most experienced management teams in the rental sector and this experience has helped us to navigate this crisis and, as importantly, has put us in a very strong position to capitalise on the recovery phase that will follow.
Although at the height of the pandemic we were obliged to reduce the service capacity of many of our businesses, an early and brave decision was made by local managers to maintain customer facing staff. This robust approach has generated significant goodwill with our customers, many of whom have said that they felt abandoned at times by their other service providers. I am sure that this has strengthened our customer relationships and will give us trading advantage as they return to fuller levels of activity.
We are optimistic but also realistic about prospects for the second half and beyond. The Group remains in excellent financial condition and we are well positioned to take advantage of both organic and acquisition opportunities as they arise as we return the business to its historical levels of profitability.
Twenty years ago we re-structured the Group to offer a first class, specialist equipment rental service across a range of end markets which exhibited different cyclical behaviours. The resilience and diversity of our offer has once again proved to be an invaluable asset as we and our customers recover from the economic impact of Covid-19.
As we hopefully put this extremely difficult period behind us, it is incumbent on me on behalf of the Board to extend a heartfelt thank you to all our employees, both within the UK and internationally, for their spirit, hard work and determination in the face of unique challenges and uncertainties.
Jeremy Pilkington
Chairman
7 December 2020
Condensed Consolidated Income Statement
For the period ended 30 September 2020
Six months Six months Full year
to 30 Sept to 30 Sept to 31 Mar
2020* 2019 2020
(unaudited) (unaudited) (audited)
Note GBP000 GBP000 GBP000
------------- --- --------------- --- -------------------
Revenue 3 142,089 186,585 362,927
Cost of sales (117,423) (142,328) (292,746)
------------- ---
Gross profit 24,666 44,257 70,181
Administrative expenses (26,683) (16,504) (32,975)
------------- --- --------------- --- -------------------
Operating profit
before amortisation
and exceptional
items 5 12,417 30,250 55,480
Amortisation and
impairment (1,650) (1,833) (16,756)
Exceptional items 4 (12,784) (664) (1,518)
------------- --------------- -------------------
Operating (loss)/profit 3 (2,017) 27,753 37,206
Net financial expense 5 (4,140) (4,478) (8,840)
Profit before taxation,
amortisation and
exceptional items 5 8,477 25,772 46,640
Amortisation and
impairment (1,650) (1,833) (16,756)
Exceptional items 4 (12,984) (664) (1,518)
------------- --------------- -------------------
(Loss)/Profit before
taxation 5 (6,157) 23,275 28,366
Taxation 6 (1,115) (4,735) (9,779)
------------- --- --------------- --- -------------------
(Loss)/Profit attributable
to owners of the
parent (7,272) 18,540 18,587
Pence Pence Pence
Basic earnings per
share 8 (18.31) 46.84 46.92
Diluted earnings
per share 8 (18.31) 45.70 46.17
Special Dividend
per share 9 22.00 - -
Dividend per share 9 - 8.45 8.45
*IFRS 16 was adopted on 1 April 2019 for statutory reporting. As a result, the primary statements are shown on IFRS 16 basis. Note 5(a) provides the impact on the consolidated income statement for the periods ended 30 September 2020, including the GBP1.6 million positive impact on operating profit before amortisation and exceptional items (GBP10.8 million pre-IFRS 16), GBP1.7 million adverse impact on net financial expense (GBP2.2 million pre-IFRS 16) and GBP0.1 million adverse impact on profit before taxation, amortisation and exceptional items (GBP8.6 million pre-IFRS 16).
Condensed Consolidated Statement of Comprehensive Income
For the period ended 30 September 2020
Six months Six months Full year
to to to
30 Sept 30 Sept 31 Mar
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
(Loss)/Profit for the period (7,272) 18,540 18,587
Other comprehensive income/(expense):
Items that will not be reclassified
to profit or loss
Actuarial gains on defined benefit
pension scheme - - 368
Tax on items taken to other
comprehensive income - - 86
Impact of tax change - - 47
Items that may be subsequently
reclassified to profit or loss
Foreign exchange translation
difference 2,509 644 (1,045)
Effective portion of changes
in fair value of cash flow hedges 212 (357) (482)
Other comprehensive income/(expense) 2,721 287 (1,026)
Total comprehensive (expense)/income
for the period (4,551) 18,827 17,561
------------ ------------ ----------
Condensed Consolidated Statement of Changes in Equity
For the period ended 30 September 2020
Note Six months Six months Full year
to to to
30 Sept 2020 30 Sept 31 Mar
2019 2020
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Total comprehensive
(expense)/ income for
the period (4,551) 18,827 17,561
Tax movements to equity 62 (309) (648)
Impact of tax rate change - - (33)
Share option charge
in the period 543 1,151 758
Net movement relating
to shares held by Vp
Employee Trust (1,516) (1,998) (2,396)
Dividends to shareholders 9 - (8,705) (12,055)
Change in equity during
the period (5,462) 8,966 3,187
Equity at the start
of the period 169,921 168,885 168,885
Effect of changes in
accounting standards - (2,151) (2,151)
Equity at the end of
the period 164,459 175,700 169,921
------------- ------------ -----------
There were no movements in issued share capital, the capital redemption reserve or share premium in the reported periods.
Condensed Consolidated Balance Sheet
At 30 September 2020
Note 30 Sept 31 Mar 30 Sept
2020 2020 2019
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Non-current assets
Property, plant and equipment 7 237,472 247,761 252,319
Goodwill 50,906 50,636 63,975
Intangible assets 22,209 23,631 25,361
Right of use assets 60,071 68,566 74,857
Employee benefits 2,986 3,018 2,674
------------ ------------ -------------
Total non-current assets 373,644 393,612 419,186
------------ ------------ -------------
Current assets
Inventories 7,780 9,073 7,825
Trade and other receivables 66,331 84,263 87,977
Cash and cash equivalents 10 35,728 20,094 14,907
Income tax receivable 752 1,003 245
Total current assets 110,591 114,433 110,954
------------ ------------ -------------
Total assets 484,235 508,045 530,140
------------ ------------ -------------
Current liabilities
Interest bearing loans
and borrowings 10 (17,664) (6,161) (4,310)
Lease liabilities (16,490) (17,692) (18,911)
Trade and other payables (91,033) (75,186) (69,543)
------------ ------------ -------------
Total current liabilities (125,187) (99,039) (92,764)
------------ ------------ -------------
Non-current liabilities
Interest bearing loans
and borrowings 10 (136,766) (173,739) (194,343)
Lease liabilities (46,995) (54,158) (58,937)
Deferred tax liabilities (10,828) (11,188) (8,396)
------------ ------------ -------------
Total non-current liabilities (194,589) (239,085) (261,676)
------------ ------------ -------------
Total liabilities (319,776) (338,124) (354,440)
------------ ------------ -------------
Net assets 164,459 169,921 175,700
------------ ------------ -------------
Equity
Issued share capital 2,008 2,008 2,008
Capital redemption reserve 301 301 301
Share premium 16,192 16,192 16,192
Foreign currency translation
reserve 684 (1,825) (136)
Hedging reserve (593) (805) (680)
Retained earnings 145,840 154,023 157,988
------------ ------------ -------------
Total equity attributable
to equity
holders of parent 164,432 169,894 175,673
Non-controlling interest 27 27 27
Total equity 164,459 169,921 175,700
------------ ------------ -------------
Condensed Consolidated Statement of Cash Flows
For the period ended 30 September 2020
Note Six months Six months Full year
to to to
30 Sept 30 Sept 31 Mar
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Cash flows from operating
activities
(Loss)/Profit before taxation (6,157) 23,275 28,366
Adjustment for:
Share based payment charges 543 1,151 758
Depreciation 7 23,279 23,525 46,160
Depreciation of right of use
assets 11,748 11,007 22,177
Amortisation and impairment
of intangibles 1,650 1,833 16,756
Net financial expense 4,140 4,478 8,840
Profit on sale of property,
plant and equipment (3,573) (5,224) (8,939)
------------ ------------ -----------
Operating cash flow before
changes in working capital
and provisions 31,630 60,045 114,118
Decrease/(increase) in inventories 1,293 49 (1,215)
Decrease/(increase) in trade
and other receivables 17,972 (7,069) (3,890)
Increase/(decrease) in trade
and other payables 18,484 (13,607) (8,898)
------------ ------------ -----------
Cash generated from operations 69,379 39,418 100,115
Interest paid (2,301) (2,319) (4,454)
Interest element of finance
lease payments (19) (63) (92)
Interest received 10 28 10
Income tax paid (1,152) (7,204) (10,694)
------------ ------------ -----------
Net cash flows from operating
activities 65,917 29,860 84,885
Cash flows from investing
activities
Proceeds from sale of property,
plant and equipment 8,492 10,839 21,381
Purchase of property, plant
and equipment (18,652) (29,386) (54,686)
Acquisition of businesses
and subsidiaries (net of cash
and overdrafts) - (3,325) (3,325)
------------ ------------ -----------
Net cash flows used in investing
activities (10,160) (21,872) (36,630)
Cash flows from financing
activities
Purchase of own shares by
Employee Trust (1,516) (1,998) (2,396)
Repayment of loans (37,000) (7,000) (94,000)
New loans - 22,000 89,000
Payment of lease liabilities (13,524) (13,457) (26,530)
Dividends paid 9 - (8,705) (12,055)
------------ ------------ -----------
Net cash flows used in financing
activities (52,040) (9,160) (45,981)
Net (decrease)/increase in
cash and cash equivalents 3,717 (1,172) 2,274
Effect of exchange rate fluctuations
on cash held 259 30 (259)
Cash and cash equivalents
at beginning of period 14,147 12,132 12,132
------------ ------------ -----------
Cash and cash equivalents
at end of period 10 18,123 10,990 14,147
------------ ------------ -----------
Notes to the Condensed Financial Statements
1. Basis of Preparation
Vp plc (the "Company") is incorporated and domiciled in the United Kingdom. The Condensed Consolidated Interim Financial Statements of the Company for the half year ended 30 September 2020 consolidate the financial information of the Company and its subsidiaries (together referred to as the "Group").
This interim announcement has been prepared in accordance with the Disclosure and Transparency Rules of the UK Financial Services Authority and the requirements of IAS 34 ("Interim Financial Reporting") as adopted by the EU. The accounting policies applied are consistent for all periods presented and are in line with those applied in the annual financial statements for the year ended 31 March 2020, which were prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU.
The interim announcement was approved by the Board of Directors on 7 December 2020.
The Condensed Consolidated Interim Financial Statements do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The comparative figures for the financial year ended 31 March 2020 are extracted from the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies.
The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 March 2020.
The Group continues to be in a healthy financial position with total banking facilities at the period end of GBP207.5 million, including an overdraft facility. Since the year end net debt has decreased by GBP41.1 million to GBP118.7 million, which is GBP65.0 million lower than 30 September 2019. The Board has evaluated the banking facilities and the associated covenants on the basis of current forecasts, taking into account the current economic climate, the refinancing and an appropriate level of sensitivity analysis. These forecasts have been subjected to sensitivity analysis, involving the flexing of key assumptions reflecting severe but plausible scenarios, including a downturn in economic activity and a slower than planned recovery from Covid-19. Based on this assessment, the Directors have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due.
Having reassessed the principal risks the Directors consider it appropriate to adopt the going concern basis of accounting in preparing the interim financial information.
2. Risks and Uncertainties
The principal risks and uncertainties facing the Group and the ways in which they are mitigated are described on page 20 and 21 of the 31 March 2020 Annual Report and Accounts. The principal risks and uncertainties are market, competition, investment / product management, people, safety, financial, contractual and legal and regulatory requirements, which remain the same for this interim financial report.
3. Summarised Segmental Analysis
Revenue Operating Profit Before Amortisation
and Exceptional Items
Sept Sept Mar Sept Sept Mar
2020 2019 2020 2020 2019 2020
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
UK 128,880 170,016 331,005 11,483 29,133 53,672
International 13,209 16,569 31,922 934 1,117 1,808
142,089 186,585 362,927 12,417 30,250 55,480
-------- -------- -------- ------------- ------------ ------------
Amortisation and impairment (1,650) (1,833) (16,756)
Exceptional items (12,784) (664) (1,518)
------------- ------------ ------------
Operating (Loss)/Profit (2,017) 27,753 37,206
------------- ------------ ------------
Assets Liabilities
Sept 2020 Mar 2020 Sept Sept 2020 Mar 2020 Sept
2019 2019
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
UK 444,407 468,465 486,700 310,005 328,791 345,316
International 39,828 39,580 43,440 9,771 9,333 9,124
484,235 508,045 530,140 319,776 338,124 354,440
---------- --------- -------- ---------- --------- --------
Net Assets
Sept Mar 2020 Sept 2019
2020
GBP000 GBP000 GBP000
UK 134,402 139,674 141,384
International 30,057 30,247 34,316
164,459 169,921 175,700
-------- --------- ----------
3. Summarised Segmental Analysis (continued)
Below summarises the disaggregation of revenue from contracts with customers from the total revenue disclosed in the Condensed Consolidated Income Statement:
Sept 2020 Sept 2019 Mar 2020
GBP000 GBP000 GBP000
Equipment hire 103,650 138,323 273,524
Services 28,658 33,512 58,569
Sales of goods 9,781 14,750 30,834
Total revenue 142,089 186,585 362,927
-------------------- -------------------- -------------------
4. Exceptional Items
During the period the Group incurred GBP12,984,000 of exceptional costs. These are analysed as follows:
Sept 2020 Sept 2019 Mar 2020
GBP000 GBP000 GBP000
Regulatory review costs 11,137 - 834
Restructuring costs 1,647 664 684
Exceptional Items in Operating
Profit 12,784 664 1,518
Financing expense 200 - -
Exceptional Items in Net Financial 200 - -
Expense
-------------------- -------------------- -------------------
Total Exceptional Items 12,984 664 1,518
-------------------- -------------------- -------------------
As previously disclosed, the Competition and Markets Authority (CMA) announced on 9 April 2019 that it was investigating three major suppliers of groundworks products to the construction industry. The CMA has provisionally found that three businesses, including a part of the Group's excavation support system business (Groundforce Shorco), were involved in suspected anti-competitive behaviour. The CMA's findings are still provisional and do not necessarily lead to a decision that the companies have breached competition law.
In the prior year accounts, as required by accounting standard IAS 37, we provided a figure of GBP4.5 million as an exceptional cost which has been brought forward to these accounts.
During the period, as a result of information recently received from the CMA and in accordance with IAS 37 we have included an additional provision of GBP10,870,000, resulting in a total provision of GBP15,370,000. The process is still ongoing, no decision has been made and this figure represents the Directors' best estimate based on the limited information available and without any admission of culpability. The Directors also consider any further increase in the provision being required to be highly unlikely. The Group also incurred professional fees of GBP267,000 relating to this matter which are classified as exceptional.
During the period the Group also incurred GBP1,647,000 of exceptional costs in relation to restructuring costs across the Group and financing expenses of GBP200,000 relating solely to Covid-19 covenant amendments, as reported in the March 2020 Annual Report and Accounts.
4. Exceptional Items (continued)
In the prior year ended 31 March 2020, the Group incurred GBP1,518,000 of exceptional costs in relation to regulatory review costs and continued restructuring costs regarding severance payments primarily within Hire Station Limited. Of this, GBP664,000 was incurred during the six month period to 30 September 2019.
Exceptional costs are excluded from the profit measures reported in the strategic report on the basis that they are non-recurring in nature.
5. Income Statement Reporting
(a) Impact on reporting of IFRS 16
IFRS 16 Leases was adopted from 1 April 2019. For comparative purposes with previous years, key reporting measures are also calculated using the previous accounting methodology of IAS 17.
Basic earnings per share before the amortisation of intangibles and exceptional items decreased by 0.56 pence for the period to 30 September 2020 as a result of IFRS 16, compared to the previous accounting methodology of IAS 17. The financial impact of the transition on the Group's Consolidated Income Statement and EBITDA is set out below:
Sept 2020 Sept 2020 Sept 2020
Excluding IFRS 16
IFRS 16 Impact Reported
GBP000 GBP000 GBP000
Operating profit before amortisation
and exceptional items 10,800 1,617 12,417
Operating loss (3,634) 1,617 (2,017)
EBITDA 34,079 13,365 47,444
Net financial expense before exceptional
items (2,193) (1,747) (3,940)
Profit before taxation, amortisation
and exceptional items 8,607 (130) 8,477
Loss before taxation (6,027) (130) (6,157)
Operating profit before amortisation and exceptional items, segment assets and segment liabilities all increased as a result of the change in accounting policy. The IFRS 16 adjustments that have been posted to each segment for the half year ending 30 September 2020 are as follows:
Operating Profit before Amortisation and Exceptional Items
Pre IFRS 16 Per
IFRS 16 Adjustment Note 3
GBP000 GBP000 GBP000
UK 9,921 1,562 11,483
International 879 55 934
10,800 1,617 12,417
--------- ------------ --------
5. Income Statement Reporting (continued)
(a) Impact on reporting of IFRS 16 (continued)
Assets Liabilities
Pre IFRS 16 Adjustment Per Note 3 Pre IFRS 16 Adjustment Per Note 3
IFRS 16 IFRS
16
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
UK 386,462 57,945 444,407 248,805 61,200 310,005
International 37,702 2,126 39,828 7,486 2,285 9,771
424,164 60,071 484,235 256,291 63,485 319,776
--------- ------------------- ----------- -------- ------------------- -----------
(b) Government support during Covid-19 Pandemic
During the period, the Group received government support of GBP8.4 million in relation to various job retention schemes. This was in a variety of countries in which the Group operates. This has been accounted for as a reduction in costs in the Income Statement.
6. Income Tax
The effective tax rate is -18.1% in the period to 30 September 2020 (H1 2020: 20.3%). The effective rate for the period reflects the current standard tax rate of 19% (H1 2020: 19%), as adjusted for estimated permanent differences for tax purposes offset by gains covered by exemptions. The effective tax rate before amortisation and exceptional items is 21.1% (H1 2020: 20.0%).
7. Property, Plant and Equipment
Sept 2020 Mar 2020 Sept 2019
GBP000 GBP000 GBP000
Opening carrying amount 247,761 248,651 248,651
Additions 16,183 56,339 30,467
Acquisitions - 1,774 1,798
Depreciation (23,279) (46,160) (23,525)
Disposals (4,919) (12,442) (5,615)
Effect of movements in exchange
rates 1,726 (401) 543
-------------------- ------------------- --------------------
Closing carrying amount 237,472 247,761 252,319
-------------------- ------------------- --------------------
The value of capital commitments at 30 September 2020 was GBP8,685,000 (31 March 2020 GBP8,291,000).
8. Earnings Per Share
Earnings per share have been calculated on 39,711,727 shares (H1 2020: 39,581,748 shares) being the weighted average number of shares in issue during the period. Diluted earnings per share have been calculated on 40,419,282 shares (H1 2020: 40,569,647 shares) adjusted to reflect conversion of all potentially dilutive ordinary shares. The calculation of diluted earnings per share does not assume conversion, exercise, or other issue of potential ordinary shares that would have an antidilutive effect on earnings per share. Basic earnings per share before the amortisation of intangibles and exceptional items was 16.84 pence (H1 2020: 52.10 pence) and was based on an after tax add back of GBP13,959,000 (H1 2020: GBP2,081,000) in respect of the amortisation of intangibles and exceptional items. Diluted earnings per share before amortisation of intangibles and exceptional items was 16.54 pence (H1 2020: 50.83 pence).
9. Dividends
The Directors have declared a special dividend of 22.00 pence per share payable on 17 January 2021 to shareholders on the register at 18 December 2020. This is in lieu of the final dividend for the Financial Year ended 31 March 2020. The dividend declared will absorb an estimated GBP8,672,000.
The comparative dividend relating to the Financial Year ended 31 March 2019 was 22.00 pence (H1 2020: GBP8,705,000 was paid). The interim dividend to 30 September 2019 was 8.45 pence per share, absorbing GBP3,350,000 of shareholders' funds.
The cost of dividends in the Statement of Changes in Equity is after adjustments for the interim and final dividends waived by the Vp Employee Trust in relation to the shares it holds for the Group's share option schemes.
10. Analysis of Net Debt
As at Cash As at
1 Apr 2020 Flow 30 Sep 2020
GBP000 GBP000 GBP000
Cash and cash equivalents 20,094 15,634 35,728
Bank overdraft (5,947) (11,658) (17,605)
Revolving credit facilities
/ loans (174,000) 37,000 (137,000)
Arrangement Fees 535 (41) 494
Finance leases excluded
under IFRS 16 (488) 169 (319)
----------- --------- ------------
(159,806) 41,104 (118,702)
----------- --------- ------------
In January 2020, the Group refinanced GBP65.0 million of secured bank loans held with Lloyds Bank plc and HSBC Bank plc with a private placement with PGIM, Inc. at a value of GBP65.0 million maturing in January 2027 and has a GBP135.0 million facility which expires in December 2021, together with overdraft facilities totalling GBP7.5 million.
11. Related Party Transactions
Transactions between Group Companies, which are related parties, have been eliminated on consolidation and therefore do not require disclosure. The Group has not entered into any other related party transactions in the period which require disclosure in this interim statement.
12. Contingent Liabilities
In an international group a variety of claims arise from time to time in the normal course of business. Such claims may arise due to actions being taken against group companies as a result of investigations by fiscal authorities or under regulatory requirements. Provision has been made in these consolidated financial statements against any claims which the directors consider are likely to result in significant liabilities.
13. Forward Looking Statements
The Chairman's Statement includes 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.
14. Alternative Performance Measures
(i) All performance measures stated as before amortisation are also before impairment of intangibles and exceptional items.
(ii) Basic earnings per share pre amortisation and exceptional items is reconciled to basic earnings per share in note 8.
(iii) Profit before tax, amortisation and exceptional items is reconciled to profit before tax in the Consolidated Income Statement.
(iv) Return on average capital employed is based on profit before tax, interest, amortisation and exceptional items divided by average capital employed on a monthly basis using the management accounts. Profit before tax, interest, amortisation and exceptional items is reconciled to profit before interest and tax in the Consolidated Income Statement.
Responsibility statement of the directors in respect of the half-yearly financial report
We confirm that to the best of our knowledge:
-- the condensed consolidated set of interim financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
By order of the Board
7 December 2020
The Board
The Directors who served during the six months to 30 September 2020 were:
Jeremy Pilkington (Chairman)
Neil Stothard (Chief Executive)
Allison Bainbridge (Group Finance Director)
Steve Rogers (Non-Executive Director)
Phil White (Non-Executive Director)
Independent review report of Vp plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Vp plc's condensed consolidated interim financial statements (the "interim financial statements") in the interim results of Vp plc for the 6 month period ended 30 September 2020 (the "period").
Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the Condensed Consolidated Balance Sheet as at 30 September 2020;
-- the Condensed Consolidated Income Statement and Condensed Consolidated Statement of Comprehensive Income for the period then ended;
-- the Condensed Consolidated Statement of Changes in Equity for the period then ended -- the Condensed Consolidated Statement of Cash Flows for the period then ended; and -- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim results of Vp plc have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The interim results, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim financial statements in the interim results based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Leeds
7 December 2020
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END
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December 07, 2020 02:00 ET (07:00 GMT)
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