Vp lifts profit margin to more than 16%

Vp, the equipment rental specialist, has unveiled an interim profit margin of 16.5%.

The group’s pre-tax profit was £14m which is £2m higher than in the same period last year.

The latest financial period covers the six months to 30 September 2008.

Turnover was higher at £82m (comparable figure in the same period last year: £76m).

Jeremy Pilkington, chairman of Vp, commented: “We are pleased to report profit improvement and expect that the result for the full year will be satisfactory. 

“It is encouraging to have made progress in the first six months of the financial year against a background of unprecedented turmoil in global financial markets and with the UK economy entering recession. 

“The economic effects of the liquidity problems in the banking sector started to impact our activities only towards the end of the period under review and even then not in all of our business sectors.” 

“We have exposure to regulated markets and infrastructure projects via the water industry, the National Grid transmission upgrade and rail investment. 

“We have only a limited exposure to residential construction, the first and worst hit sector, through our UK Forks business and, to a lesser extent, the Hire Station tool rental activity.”

Over the last 18 months Vp has added a number of new revenue streams to its business mix: most are still relatively small and at an early stage of development.

Capital investment in the rental fleet remained strong at £18m with a further £5m spent on acquisitions. 

Vp ended the period with a financial gearing of 57% (i.e. ratio of debt to assets), up from  51% at the same time last year.

Groundforce

Better margins on strong revenue growth. Benefiting from good demand from the infrastructure and utility sectors as well as early site preparation work for the Olympics. 

Acquisitions made towards the end of the previous financial year, in Ireland and in trenchless technology in the UK, are performing satisfactorily. 

A regional competitor in the UK shoring market has been acquired and is now fully integrated within Groundforce.

UK Forks

As anticipated, the division did not replicate the exceptional performance it delivered in the first half of last year as it was hit by the progressive decline in house building activity during the period. 

Airpac Bukom

Revenues and profits have benefited from the significant capital investment programme of the last two years.

Torrent Trackside

Margins improved on static revenues. There was uncertainty as a result of the relatively weak and unpredictable release of workload by Network Rail. 

“We believe that the flow of work from both Network Rail and the London Underground consortiums will improve going forward,” said Vp.

TPA

Strong first half performance.

Hire Station

An “excellent” uplift in profitability and margins

During the period, Hire Station acquired three businesses:

• A specialist heating solutions provider.
• An opportunistic expansion to its tool operations in the North East.
• An in-house plant company together with an associated three year exclusive supply agreement.

Also, four greenfield branches have been opened.