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Vp plc - The Equipment Rental Specialist Preliminary Results 2008 Jeremy Pilkington - Chairman Neil Stothard – Group Managing Director Mike Holt – Group Finance Director Performance summary Revenue £149.3m +23% Profit before tax and amortisation £20.2m +39% Earnings per share 36.1p +48% Dividend per share 10.5p +27% Operational Review Operational highlights • • • • • • • • Operating profits 41% up at a margin of 15.6% Excellent organic profit growth (82%) Strong capital investment - £43m on rental fleet 8 acquisitions - £11m Strong remediation demand in summer AMP4 buoyant Weak rail market International expansion Strength through diversity Mix Experience in 07/08 Current Status/View Construction 39% Stable Stable Civil Engineering 14% Strong Stable Rail 11% Weak Improving Housebuilding 10% Strong Weakening Oil & Gas 9% Strong Strong Facilities Management 5% Strong Strong Events 4% Strong Strong Transmission 3% Weak Improving Other 5% Stable Stable TOTAL 100% Business performance Revenues PBITA 2008 2007 2008 2007 £m £m £m £m Groundforce 35.0 28.1 +25% 8.7 6.4 +36% Hire Station 57.1 44.9 +27% 5.9 3.1 +90% Airpac Bukom 13.1 10.0 +31% 3.3 2.4 +38% UK Forks 16.1 13.9 +16% 3.2 1.4 +128% TPA 14.0 11.4 +23% 1.2 1.0 +20% Torrent Trackside 14.0 13.1 +7% 0.9 2.0 -55% - - - 0.2 149.3 121.6 23.2 16.5 15.6% 13.6% Group TOTAL Operating Margin +23% +41% Investing for future growth • Groundforce – – – Acquisition of ‘U’ Mole trenchless systems business Expansion into Ireland including acquisition of USS and PTA Acquisition of Redding Hire • Hire Station – – – – 9 new locations for tools including acquisition of ET Hire and DJ Tool Hire Development of ‘virtual hire’ concept Growth of Climate Hire business and Arcotherm acquisition Acquisition of NSS and Able safety businesses • Airpac Bukom – International hub expansion and capital investment programme Investing for future growth • UK Forks – Fleet expansion (+13%) to meet growing demand in general construction and reducing reliance on housebuilding sector • TPA – – Development of MD40 lightweight roll out roadway Further penetration /investment in Germany • Torrent – Acquisition of First Engineering rail plant fleet with 3 year supply agreement Investing for future growth 2008 2007 £m £m Groundforce 8.3 5.9 Hire Station 13.0 8.9 Airpac Bukom 9.9 2.5 UK Forks 7.9 3.4 TPA 3.8 4.9 Torrent Trackside 1.9 3.3 Group 0.5 0.5 TOTAL 45.3 29.4 Disposal proceeds 10.3 9.0 Capital Expenditure Growth strategy progressing well • Continued organic growth – Significant net capital investment (2 x depreciation) – Increasing ‘share of wallet’ • Complementary/bolt on acquisitions – New products (U-Mole) – New markets (Cool Customers, Arcotherm, NSS, PTA, USS) – Consolidations (ET Hire, DJ, Redding, Able, FEL) • International expansion – Oil and gas hubs (Sharjah, Curaçao and Perth) – Ireland (Groundforce and Hire Station) – Germany (TPA) Financial Review Financial highlights 2008 2007 Revenue £149.3m £121.6m +23% EBITA £23.3m £16.5m +41% Operating margins 15.6% 13.6% +15% PBT (pre amortisation) £20.2m £14.5m +39% Net margin 13.5% 11.9% +13% ROCE (pre amortisation) 19.1% 16.5% 7.5x 8.1x Interest Cover Earnings and dividend per share 2008 2007 Pre-intangibles amortisation 36.64p 24.56p +49% Basic 36.09p 24.40p +48% Fully diluted 34.26p 23.24p +47% 10.50p 8.25p +27% 3.5x 3.0x 22.5% 27.6% Earnings per share Dividend Dividend per share Dividend cover Tax rate Components of profit growth (39%) 3.0 (1.1) -8% (0.3) -2% +21% 3.0 20.2 1.0 +21% +7% 14.5 2007 PBTA Acq'ns Organic Growth Margin Improvement Finance Costs Prior Year Property Profit 2008 PBTA Robust balance sheet 2008 2007 £m £m Intangible assets 41.2 36.3 Property, plant and equipment 100.9 76.8 Non current assets 142.1 113.1 Net working capital (1.1) 4.1 Pension obligations (1.4) (2.0) Deferred tax (7.8) (6.4) Deferred consideration (4.6) (6.6) Capital employed 127.2 102.2 Net debt (53.4) (36.6) 73.8 65.6 Net assets Strong cash flow and re-investment 2008 2007 £m £m Operating cash flow 43.1 30.3 Interest (3.1) (2.0) Tax (3.6) (2.9) Underlying free cash flow 36.4 25.4 +43% (45.5) (26.8) +70% Asset disposals 10.3 9.0 +14% Free cash flow 1.2 7.6 Pensions (1.0) (0.4) Acquisitions (10.0) (4.6) Dividends (3.8) (2.9) Purchase of own shares (3.5) (3.7) 0.2 - (16.8) (4.0) Gross capex Exchange Rate Differences Change in net debt +42% Increased net debt but modest gearing 2008 2007 Net debt £53.4m £36.6m Bank facilities £85.0m £55.0m Interest cost £3.1m £2.0m Interest cover 7.5x 8.1x Net debt/EBITDA 1.3x 1.2x Headline gearing 72% 56% Underlying gearing 51% 41% Quality returns Operating Margin (%) Earnings per share (pence) CAGR = 26% Return on Average Capital Employed (%) Dividend per share (pence) CAGR = 20% Financial summary • Pre tax profit growth +39% • Operating margins 15.6% • Operating cash flows +42% Summary Resilient business model • • • • • • • • Strong and growing market positions Diverse offering provides resilience to individual market fluctuations Adding value through products, services and operating efficiency Prior year initiatives and acquisitions provide continuing momentum Balance sheet strong - capacity as required Acquisitions will continue where value is identified Continued profitable growth despite challenges Current year has started well Excellent business momentum and consistency Operating Profit (£m) Revenue (£m) CAGR = 15.6% CAGR = 26.8% Shareholder return Vp Total Shareholder Return Vp plc - The Equipment Rental Specialist Preliminary Results 2008