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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
  -24.00 -2.75% 850.00 850.00 870.00 870.00 834.00 834.00 4,821 16:35:20
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Support Services 362.9 28.4 46.9 18.1 341

Vp PLC Interim Results

07/12/2020 7:00am

UK Regulatory (RNS & others)


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

 
 --   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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