Vp shows resilience
7 June 2023
Vp’s results released today for the year ending 31 March 2023 shows a resilient performance despite the challenging economic backdrop.
The group, which comprises Brandon Hire Station, Groundforce, portable roadway business TPA, safety specialist ESS, mechanical and electrical equipment provider MEP Hire, Torrent Trackside and UK Forks in this country, along with Airpac Rental and TR Group in Australasia overseas, reports revenues up by 6 per cent to £371.5 million (2022: £350.9 million).
While pre-tax profit fell by 14 per cent to £30.7 million (2022: £35.6 million), Vp states this was due to increased amortisation and impairment charges arising from depot closures and the aborted process to sell the business last year.
The group states that, after a period of little change within the wider UK construction market, some adjustments to recent trends are forecast in the coming 12 months. Housebuilding which has been relatively buoyant for the last two years is predicted to experience moderate contraction in 2023 before recovering in 2024.
Vp believes that infrastructure work will recover to modest growth after a flat 2022 driven by rail, AMP7 (water), Hinkley Point and offshore wind capital investment. The non‐residential new-construction segment, comprising public, private industrial and private commercial output is expected to see modest improvement overall and the repair and maintenance sectors are anticipated to be stable.
Commenting on the results, Jeremy Pilkington, Chairman of Vp, said: "We are pleased to report another solid year of trading with good progress made across all key metrics, with the group successfully navigating a highly volatile macro-economic backdrop.
“The group's return on average capital employed of 14.4 per cent continues to demonstrate our excellent quality of earnings and resilience in times of supply chain disruption and slowing growth in some markets.”
Neil Stothard, Chief Executive, added: "Despite the macro-economic conditions that continue to impact some of our core markets, we are pleased that our performance has remained consistent and in line with the Board's expectations.
“Our revenue rose by 6 per cent during the year to £371.5 million, providing some comfort that the group can progress in a challenging market. The increase was driven both by improving trading conditions in our international businesses, particularly in South East Asia, Australia and New Zealand, and in addition to good progress made in the UK and Europe."
Capital investment in the hire fleet over the period was £59.9 million (2022: £59.8 million). A large proportion of this (£15 million) was in more environmentally friendly products which replaced, in many cases, petrol or diesel driven alternatives.
Vp has achieved the ISO 50001 energy management standard across all of the group's UK network and its scope 3 emissions inventory was completed in the year. The organisation subsequently submitted its science based targets data and hopes to achieve full accreditation during 2023.
Brandon Hire Station delivered modest year-on-year revenue growth. Whilst operating across all three of Vp's largest market segments of construction, infrastructure and housebuilding, it is most exposed to the non‐residential construction market which, the group states, remains subdued and in relative terms more impacted by the overall economic uncertainty.
Interestingly, Brandon states that it increased prices by approximately 10 per cent at the beginning of the calendar year by way of mitigating cost inflation in the business. It merged or closed five depots during the year, reducing the overall branch count to just under 150.
The operation signed a five-year exclusive trading agreement with Watkin Jones plc, a build-to-rent and student accommodation group, and has secured a number of other long standing key account renewals.
The specialist rail business Torrent Trackside enjoyed stronger demand as the year progressed, despite disruption from rail industrial action in the second half of the financial year. Torrent benefited from a revival of CP6 rail activity with most depots across the UK seeing good year-on-year improvements, states Vp.
Torrent’s solar powered Prolectric lighting fleet also experienced a busier year. The business has made a significant commitment to and investment in battery and solar powered rail-specific equipment, which operates at much lower levels of noise and is practically carbon neutral.
The Vp Board has proposed a final dividend of 26.5p per share. If approved, the full year dividend would increase to 37.5p per share.
