Vp maintains growth although profits down
By Murray Pollok14 June 2011
Vp plc, the UK equipment rental specialist, grew its revenues by 5% to £141.0 million for the year to 31 March 2011, with profits before tax, exceptional items and amortisation falling by 14% to £13.8 million.
Jeremy Pilkington, Vp's chairman, described the results as very satisfactory given current trading conditions. He said the reduced profitability was the result of pressure on pricing in some markets and a changed mix in its business.
Vp said it had seen improvements in the housebuilding and rail sectors - served by its UK Forks and Torrent Trackside divisions, respectively - while subdued well testing demand in the oil and gas market and a quiet first year of the AMP5 water utility investment programme impacted Airpac Bukom and Groundforce, respectively.
The company's six divisions reported varying trading. Groundforce's revenues fell by 8% to £30.9 million, although it remained profitable, and UK Forks saw a small drop in revenue to £10.8 million but it returned to an operating profit of £1.1 million compared to break-even in the previous year.
Airpac Bukom Oilfield Services saw revenues rise by 11.4% to £17.5 million, and the Torrent Trackside business reported a 40% increase in revenues to £14.6 million, partly fuelled by a five year contract with Network Rail.
The portable roadway business, TPA, saw revenues almost unchanged at £14.0 million, with profits down a third, impacted by rising transportation costs in the UK and Germany.
Vp's biggest business is its tool hire operation Hire Station, which saw a 7% increase in revenues to £53.5 million and operating profits almost unchanged at £3.0 million. Vp said a challenging first half of the year had been followed by a "marked improvement" in the second half.
Neil Stothard, Vp group managing director, said the company had seen an upbeat finish to the year which had continued in the new financial year; "We approach the new financial year positively and though we expect that market conditions will remain no better than stable, we are confident that opportunities are available to all of our divisions.
"We accelerated investment in the rental fleet in the second half of the year and we expect to continue that trend in support of further opportunities going forward."
The company increased by 74% its fleet investment last year, spending £24.2 million compared to £13.9 million in the previous year. This investment included £3 million to acquire the telehandler fleet of a customer and £4 million investment in support of Vp's new Network Rail contract.