REG - Vp PLC - Interim Results
28/11/2023 07:00
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RNS Number : 8273U Vp PLC 28 November 2023
Press Release 28 November 2023
Vp plc
('Vp' or the 'Group')
Interim Results
Solid performance reflects strength of business and leading position in
diverse end markets
Vp plc, the equipment rental specialist, today announces its Interim Results
for the six months ended 30 September 2023 ('H1 2024' or the 'period').
Financial highlights
H1 2024 H1 2023 Change
Revenue (£m) 190.9 186.5 2.4%
Adjusted profit before tax, amortisation, impairment of intangible assets and 21.9 21.5 1.9%
exceptional items* (£m)
Return on Average Capital Employed* 14.7% 14.4% 0.3pp
Adjusted basic EPS before amortisation, impairment of intangible assets and 40.3 42.5 (5.2%)
exceptional items* (pence per share)
Interim dividend (pence per share) 11.5 11.0 4.5%
Adjusted EBITDA* (£m) 47.8 47.8 -
Net debt excluding lease liabilities* (£m) 133.4 148.9 (10.4%)
Capital investment in rental fleet (£m) 27.8 33.8 (17.8%)
Statutory profit before tax (£m) 19.9 17.9 11.2%
Statutory profit before tax, amortisation, impairment of intangible assets and 21.7 21.4 1.4%
exceptional items (£m)
· Strong first half across key metrics, ahead of prior period
· Increase in Return on Average Capital Employed (ROACE*)
· Continued investment in the rental fleet with £28 million Fleet
Capex in the period
· Robust balance sheet with gearing and interest cover well within
covenants. Leverage expected to be c.1.5x at end of year
· Refinance of £90 million Revolving Credit Facility ('RCF') secured,
complementing existing private placements of £93 million, with 70% of period
end borrowings fixed at low rates
· Interim dividend increased by 4.5% to 11.5 pence per share,
reflecting confidence in the Group's prospects
Operational highlights
· Strong performance, particularly in Infrastructure with continued
demand from rail, transmission and water sectors
· Continued ESG** progress - focussed investment in the rental fleet,
Science Based Targets recently validated by the SBTi***
* These measures are explained and reconciled in Note 14: Alternative
Performance Measures
** Environmental Social Governance *** Science Based Targets initiative
* Greater emphasis on Digital, with innovations including carbon calculators to
improve the customer experience
· Refreshed leadership, with new CEO in place and CFO joining in
January 2024
Current H2 2024 Trading and Outlook
· Despite the immediate market challenges, particularly in Construction
which has been soft and Housebuilding which has been subdued but stable, the
Group continues to make progress and leverage opportunities in its specialist
markets
· Recent HS2 announcements should not impact short term business
performance. Lost HS2 opportunities should, in part, be replaced by activity
from alternative rail initiatives
· Operational excellence remains a priority with continued progress on
the Group's Digital roadmap
· ESG remains an important part of the Group's strategy and its
day-to-day operations
· Strong balance sheet and recently refinanced RCF positions the Group
well to exploit both organic and M&A opportunities
· New leadership team in Brandon Hire Station executing tactical
actions alongside a wider operational review in order to drive margin
improvements. This will lead to minor restructuring activities and some
exceptional items in H2
· The Board is confident in the Group's ability to deliver
sector-leading returns and anticipates a full year performance broadly in line
with market expectations.
Commenting on the Interim Results, Jeremy Pilkington, Chairman of Vp plc,
said:
"We have delivered a solid performance with continuing sector leading returns
in the period reflecting the strength of our diverse business offering. We are
particularly pleased to have maintained net margin and a strong return on
average capital employed, demonstrating high quality of earnings in difficult
market conditions.
"Having multiple sector exposure diversifies our revenue streams and has
contributed to the robust performance in the period, with infrastructure
demand remaining supportive, and whilst there are immediate challenges within
general construction, I am confident that the actions taken will be of benefit
in the medium term. The Group continues to produce strong operating cash flows
and maintains a solid financial base, having refinanced our RCF in November on
similar terms for a further three years, and we are well positioned for
growth.
"Vp has an excellent track record of successfully navigating difficult markets
and the diversity of our operations provides us with a solid foundation from
which to grow the business both organically and via acquisitions. We remain
confident in the Group's ability to drive demand for our products and services
which embrace our customers' needs for sustainable and digital solutions.
There is a great sense of enthusiasm throughout the Group, driven in part by a
refreshed leadership team, which makes us optimistic for the future and our
ability to continue to deliver an attractive level of returns for our
shareholders."
- Ends -
For further information:
Vp plc Tel: +44 (0) 1423 533 400
Jeremy Pilkington, Chairman www.vpplc.com (http://www.vpplc.com)
Anna Bielby, Chief Executive
Media enquiries:
Buchanan
Henry Harrison‐Topham / Jamie Hooper / George Beale Tel: +44 (0) 20 7466 5000
Vp@buchanan.uk.com (mailto:Vp@buchanan.uk.com) www.buchanancomms.co.uk (http://www.buchanancomms.co.uk)
The person responsible of the arrangement for the release of this announcement
on behalf of Vp plc is Anna Bielby, Chief Executive.
CHAIRMAN'S STATEMENT
I am pleased to report solid Interim Results demonstrating a resilient
performance against a background of macro-economic challenges.
Financial Performance
In the period to 30 September 2023, adjusted profit before tax, amortisation,
impairment of intangible assets and exceptional items* ('Adjusted PBTAE') rose
1.9% to £21.9 million (H1 2023: £21.5 million) on revenue 2.4% ahead at
£190.9 million (H1 2023: £186.5 million). This achieved a net margin* of
11.5%, consistent with the prior period. Statutory profit before tax was
£19.9 million (H1 2023: £17.9 million).
The Group's interest cost rose by £0.9 million compared with the prior
period, mainly due to increases in Sterling Overnight Indexed Average
('SONIA'). We remain in a strong position with 70% of the Group's period-end
debt fixed at low rates into the medium term. In November 2023, we
successfully refinanced our revolving credit facility of £90 million for an
additional three years, on similar terms and with an increase to the accordion
from £20 million to £30 million.
Adjusted earnings per share pre-amortisation, impairment of intangible assets
and exceptional items* ('Adjusted Basic EPS') fell 5.2% to 40.3 pence per
share (H1 2023: 42.5 pence per share), largely due to changes in the rate of
corporation tax.
Return on Average Capital Employed* improved to 14.7% (H1 2023: 14.4%),
demonstrating the high and sustainable quality of the Group's earnings.
The Group continues to have a strong balance sheet:
· We have a young, well-maintained fleet and continue to invest with
capex of £27.8 million (H1 2023: £33.8 million) in the period. Around two
thirds of this spend was either zero emissions at point of use or represented
the transition towards lower emission technologies.
· We have maintained our Days' Sales Outstanding (DSO) at 61, despite a
more challenging credit environment.
· Net debt excluding lease liabilities* is £133.4 million, which is
£15.5 million lower than the comparative period. Pre-IFRS 16 gearing is below
1.5x leaving the Group well placed to exploit organic and M&A
opportunities as they arise.
Reflecting these results and our confidence of the prospects of the Group, the
Board is declaring an interim dividend of 11.5 pence per share (H1 2023: 11.0
pence per share) an increase of 4.5%, payable on 10 January 2024 to
shareholders registered at 8 December 2023. As previously stated, the dividend
cover target is 2x over the cycle and the interim dividend announced today
continues the Group's 30 year uninterrupted dividend track record.
ESG remains an important element of our strategy and we have continued to make
progress, including SBTi validation of our Science Based Targets received in
November. ESG is embedded into our day to day operations and we have been
working closely with our suppliers and customers on initiatives such as the Vp
Capture system and TPA's carbon comparison model.
Our well-established Digital capabilities give us a platform to improve both
the customer experience and our operational processes. We continue to develop
new initiatives such as YourSolution Pro in Groundforce, a self-service design
solution adding value to our customers. Further progress on the Group's
Digital roadmap is expected in the remainder of the year.
Business performance
Our key infrastructure markets including water (AMP7), rail (CP6) and
transmission were supportive, whilst elsewhere general construction activity
remained soft. Housebuilding fundamentals are, in our view, positive over the
medium term and current activity is stable but marginally below prior year
levels.
The announcement of the cancellation of HS2 beyond Birmingham was not
unexpected and will have little impact on immediate business activity. We hope
that activity from alternative rail initiatives, replacing HS2, will provide
opportunities for TPA UK and Groundforce in particular.
During the period, we have seen the difficulties that previously affected
supply chains ease, however staff and skills shortages have emerged as near
universal themes across our businesses and geographies. Higher interest rates
have not only raised our borrowing costs but have also adversely impacted the
viability of certain elements of our customer base, particularly at
sub-contractor level. Despite this, we have maintained DSO levels in line with
the comparative period.
In UK Forks, activity has settled at a lower level since the beginning of the
calendar year, largely down to subdued housebuilding activity. In response, we
have re-emphasised cost management disciplines and re-sized the fleet to
better align with current demand. Supportive markets have enabled this
business to dispose of surplus fleet at a useful profit in the period and we
expect residual values to be maintained going forward. Pricing improvements
have been achieved and the business is now well positioned to take full
advantage of any future upturn in demand.
Brandon Hire Station has suffered from the softness of the general
construction market and its performance is materially below prior year levels.
Now led by a new management team, targeted revenue and cost initiatives will
significantly improve profitability in this highly operationally geared
business into H2 and beyond. Brandon Hire Station remains the only tools and
small plant provider able to service its customer base from a truly national
footprint. The latent capacity of a young, well-maintained rental fleet will
enable the business to respond to an upturn in demand without requiring
significant additional capital investment.
MEP suffered from a slightly slower start to the year with some major project
delays in London, but momentum is building and we expect the business to
deliver another good performance for the year as a whole. Whilst well
controlled, bad debt experience has deteriorated as its sub-contractor
customer base has experienced cash flow challenges.
ESS has faced the same market challenges as elsewhere in the Group, but
significant opportunities exist to refocus and expand the product offering on
the back of a leaner cost base following last year's successful restructuring
exercise.
Groundforce is enjoying a period of strong trading with particular
contributions from water (AMP7) and other major infrastructure projects. In
Europe, Groundforce has performed well benefitting from significant project
activity.
Torrent Trackside enjoyed a solid first half ahead of prior year levels,
supported by CP6 workloads. Torrent is more a maintenance rather than
new-build oriented provider and the curtailment of the HS2 programme will not
therefore have a major negative impact and indeed, if promised investment
elsewhere in the network is delivered, there may be an overall benefit to the
business.
TPA UK has enjoyed an excellent first half with supportive markets, nimble
contract selection and effective cost management. TPA in Europe has had a
much-improved first half with all its major markets performing strongly and a
very positive forward order book.
TR has enjoyed satisfactory trading across its various geographies of
Australia, New Zealand and wider South East Asia.
Airpac has benefitted from supportive fundamentals in most geographies and
markets including exploration, distribution and infrastructure maintenance and
renewed activity on LNG projects. Airpac has taken advantage of these
opportunities with bold investment timing and significant pricing improvements
with the Asia-Pacific region having been particularly strong. Growing concerns
over energy security and the increasing adoption of a more pragmatic approach
towards net zero will be supportive in the medium term.
Board Changes
It is my pleasure to welcome Anna Bielby as the Group's new Chief Executive,
taking over from Neil Stothard who retired from the Group at the end of
September. Anna joined as Chief Financial Officer in January 2023 and has
already had an immediate impact in her new role. We also look forward to
welcoming Keith Winstanley as our new CFO in January 2024.
Neil and I worked together at Vp for over 26 years. During this time we
confronted numerous challenges and oversaw huge change within the business. On
behalf of myself, the Board, all our colleagues in the Group and our wider
stakeholder base, I would like to thank Neil most sincerely for his
outstanding contribution to the Group over this time and wish him every
enjoyment of his well-earned retirement.
Outlook
We have delivered a solid performance with sector leading returns in the
period reflecting the strength of our diverse business offering. We are
particularly pleased to have maintained net margin and a strong return on
average capital employed demonstrating high quality of earnings in difficult
market conditions.
Having multiple sector exposure diversifies our revenue streams and has
contributed to the robust performance in the period, with infrastructure
demand remaining supportive. Whilst there may be immediate challenges within
general construction, I am confident that the measures taken will start to be
of near-term benefit. The Group continues to produce strong operating cash
flows and maintains a solid financial base, having refinanced our RCF in
November on similar terms for a further three years. We are well positioned
for growth.
Vp has an excellent track record of successfully navigating difficult markets
and the diversity of our operations provides us with a solid foundation from
which to grow the business both organically or via acquisitions. We remain
confident in the Group's ability to drive demand for our products and services
whilst embracing our customers' needs for sustainable and digital solutions.
There is a great sense of enthusiasm throughout the Group, driven in part by a
refreshed leadership team, which makes us optimistic for the future and our
ability to continue to deliver an attractive level of returns for our
shareholders. The Board anticipates a full year performance broadly in line
with market expectations.
It is my pleasure to thank all our employees for their hard work and
commitment in contributing to these positive half year results.
Jeremy Pilkington
Chairman
28 November 2023
* These measures are explained and reconciled in Note 14: Alternative
Performance Measures
Condensed Consolidated Income Statement
For the period ended 30 September 2023
Six months to Restated* Full year to
30 Sept 2023 Six months to 31 Mar 2023
Note £000 30 Sept 2022 £000
£000
Revenue 3 190,920 186,487 371,519
Cost of sales (141,318) (139,615) (284,176)
Gross profit 49,602 46,872 87,343
Administrative expenses (22,977) (23,378) (44,763)
Impairment losses on trade receivables (1,828) (1,654) (3,305)
Operating profit before amortisation, impairment of intangible assets and 26,591 25,377 48,775
exceptional items
Amortisation and impairment of intangible assets (1,794) (1,669) (4,490)
Exceptional items 4 - (1,868) (5,010)
Operating profit 3 24,797 21,840 39,275
Net financial expense (4,901) (3,982) (8,569)
Profit before tax, amortisation, impairment of intangible assets and 21,690 21,395 40,206
exceptional items
Amortisation and impairment of intangible assets (1,794) (1,669) (4,490)
Exceptional items 4 - (1,868) (5,010)
Profit before tax 19,896 17,858 30,706
Taxation 5 (5,513) (4,281) (7,696)
Profit after tax 14,383 13,577 23,010
Pence Pence Pence
Basic earnings per share 7 36.43 34.24 58.05
Diluted earnings per share 7 36.12 33.86 57.76
Dividend per share 8 11.50 11.00 37.50
*In accordance with IAS1, impairment losses on trade receivables are required
to be presented separately on the face of the Income Statement. Previously
such losses were presented within Cost of Sales. This was corrected at 31
March 2023 and the comparative restated accordingly.
Condensed Consolidated Statement of Comprehensive Income
For the period ended 30 September 2023
Six months to Six months to Full year to
30 Sept 2023 30 Sept 2022 31 Mar 2023
£000 £000 £000
Profit for the period 14,383 13,577 23,010
Other comprehensive (expense)/income:
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension scheme - - (319)
Tax on items taken to other comprehensive income - - 5
Impact of tax rate change - - 58
Items that may be subsequently reclassified to profit or loss
Foreign exchange translation difference (772) 1,602 502
Other comprehensive (expense)/income (772) 1,602 246
Total comprehensive income for the period 13,611 15,179 23,256
Condensed Consolidated Statement of Changes in Equity
For the period ended 30 September 2023
Note Six months to Six months to Full year to
30 Sept 2023 30 Sept 2022 31 Mar 2023
£000 £000 £000
Total comprehensive income for the period
13,611 15,179 23,256
Tax movements to equity (12) (133) 62
Impact of tax rate change - - 16
Share option charge in the period 463 675 580
Net movement relating to shares held by Vp Employee Trust
(698) (535) (1,096)
Dividends to shareholders 8 (10,460) (10,112) (14,471)
Change in equity during the period 2,904 5,074 8,347
Equity at the start of the period 174,932 166,585 166,585
Equity at the end of the period 177,836 171,659 174,932
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 2023
Note 30 Sept 2023 31 Mar 2023 30 Sept 2022
£000 £000 £000
Non-current assets
Property, plant and equipment 6 250,890 252,385 254,984
Goodwill 44,584 44,649 44,997
Intangible assets 12,386 13,099 15,834
Right of use assets 58,883 54,637 52,822
Employee benefits 2,240 2,300 2,670
Total non-current assets 368,983 367,070 371,307
Current assets
Inventories 9,321 8,915 8,657
Trade and other receivables 83,755 81,513 86,903
Cash and cash equivalents 9 9,214 11,140 9,428
Income tax receivable 496 736 -
Total current assets 102,786 102,304 104,988
Total assets 471,769 469,374 476,295
Current liabilities
Interest bearing loans and borrowings 9 (49,815) - -
Lease liabilities (16,056) (14,622) (14,172)
Trade and other payables (70,135) (72,184) (74,380)
Income tax payable - - (854)
Total current liabilities (136,006) (86,806) (89,406)
Non-current liabilities
Interest bearing loans and borrowings 9 (92,786) (145,508) (158,370)
Lease liabilities (46,570) (43,896) (42,053)
Provisions (1,663) (1,612) (895)
Deferred tax liabilities (16,908) (16,620) (13,912)
Total non-current liabilities (157,927) (207,636) (215,230)
Total liabilities (293,933) (294,442) (304,636)
Net assets 177,836 174,932 171,659
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 (1,290) (518) 577
Retained earnings 160,625 156,949 152,581
Total equity 177,836 174,932 171,659
Condensed Consolidated Statement of Cash Flows
For the period ended 30 September 2023
Note Six months to Six months to Full year to
30 Sept 2023 30 Sept 2022 31 Mar 2023
£000 £000 £000
Cash flows from operating activities
Profit before taxation
19,896 17,858 30,706
Adjustment for:
Share based payment charges 463 675 580
Depreciation 6 22,664 23,831 46,853
Depreciation of right of use assets 8,367 8,098 16,305
Amortisation and impairment of intangibles 1,794 1,669 4,490
Net financial expense 4,901 3,982 8,569
Profit on sale of property, plant and equipment (4,350) (5,041) (9,174)
Release of arrangement fees 93 149 287
Operating cash flow before changes in working capital and provisions 53,828 51,221 98,616
Increase in inventories (406) (701) (959)
Increase in trade and other receivables (2,242) (10,846) (5,452)
Increase/(decrease) in trade and other payables 535 (8,034) (11,979)
Cash generated from operations 51,715 31,640 80,226
Interest paid (3,268) (2,462) (5,413)
Interest element of lease liability payments (1,634) (1,482) (3,038)
Interest received 16 4 32
Income tax paid (4,999) (3,465) (5,496)
Net cash flows from operating activities 41,830 24,235 66,311
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
12,845 12,202 24,855
Purchase of property, plant and equipment (33,840) (36,013) (63,312)
Purchase of intangible assets (176) - -
Net cash flows used in investing activities (21,171) (23,811) (38,457)
Cash flows from financing activities
Purchase of own shares by Employee Trust (698) (535) (1,096)
Repayment of loans (17,000) (10,000) (29,000)
New loans 14,000 24,000 30,000
Capital element of lease liability payments (8,505) (8,188) (15,921)
Dividends paid 8 (10,460) (10,112) (14,471)
Net cash flows used in financing activities (22,663) (4,835) (30,488)
Net decrease in cash and cash equivalents (2,004) (4,411) (2,634)
Effect of exchange rate fluctuations on cash held 78 222 157
Cash and cash equivalents at beginning of period 11,140 13,617 13,617
Cash and cash equivalents at end of period 9 9,214 9,428 11,140
Notes to the Condensed Financial Statements
1. Basis of Preparation
Vp plc (the "Company") is a company limited by shares, incorporated and
domiciled in the United Kingdom. Its registered office and principal place of
business is Central House, Beckwith Knowle, Otley Road, Harrogate, North
Yorkshire, HG3 1UD. Its shares are listed on the London Stock Exchange. The
Condensed Consolidated Interim Financial Statements of the Company for the
half year ended 30 September 2023 consolidate the financial information of the
Company and its subsidiaries (together referred to as the "Group").
The condensed interim financial statements have been prepared using accounting
policies set out in the Annual Report and Accounts 2023. They are unaudited
and have not been reviewed by the Company's auditor. This report has been
prepared in accordance with the UK-adopted International Accounting Standard
34 'Interim Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct Authority.
The results for the year ended 31 March 2023 and the Consolidated Balance
Sheet as at that date are abridged from the Group's Annual Report and Accounts
2023 which have been delivered to the Registrar of Companies. The auditor's
report on those accounts included a material uncertainty related to going
concern as the Group's revolving credit facility had an expiry date within the
going concern assessment period. The RCF has since been refinanced on similar
terms and extended to November 2026.
The condensed interim financial statements do not constitute statutory
accounts within the meaning of Section 434 of the Companies Act 2006.
The interim announcement was approved by the Board of Directors on 28 November
2023.
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 2023.
The Group continues to be in a healthy financial position with total banking
facilities at the period end of £190.5 million, including an overdraft
facility. Since the year end net debt excluding lease liabilities has reduced
by £1.0 million to £133.4 million, which is £15.5 million lower than 30
September 2022. The Board has evaluated the banking facilities and the
associated covenants on the basis of current forecasts, taking into account
the current economic climate. 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.
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 pages 39 to 42 of the 31 March 2023 Annual
Report and Accounts. The principal risks and uncertainties are market,
competition, investment / fleet management, people, safety, financial,
contractual, legal and regulatory requirements, climate change and IT
resilience which remain the same for this interim financial report.
3. Summarised Segmental Analysis
Revenue Operating Profit Before Amortisation, Impairment of Intangible Assets and
Exceptional Items
Sept Sept Mar Sept Sept Mar
2023 2022 2023 2023 2022 2023
£000 £000 £000 £000 £000 £000
UK 171,276 166,932 333,453 24,196 23,820 45,564
International 19,644 19,555 38,066 2,395 1,557 3,211
190,920 186,487 371,519 26,591 25,377 48,775
Amortisation and impairment of intangible assets (1,794) (1,669) (4,490)
Exceptional items - (1,868) (5,010)
Operating Profit 24,797 21,840 39,275
Assets Liabilities
Sept 2023 Mar 2023 Sept Sept 2023 Mar 2023 Sept 2022
2022
£000 £000 £000 £000 £000 £000
UK 430,108 427,056 433,870 279,754 279,951 292,261
International 41,661 42,318 42,425 14,179 14,491 12,375
471,769 469,374 476,295 293,933 294,442 304,636
Net Assets
Sept 2023 Mar 2023 Sept 2022
£000 £000 £000
UK 150,354 147,105 141,609
International 27,482 27,827 30,050
177,836 174,932 171,659
Below summarises the disaggregation of revenue from contracts with customers
from the total revenue disclosed in the Condensed Consolidated Income
Statement:
Sept 2023 Sept 2022 Mar 2023
£000 £000 £000
Equipment hire 143,297 140,889 275,257
Services 32,666 31,234 65,045
Sales of goods 14,957 14,364 31,217
Total revenue 190,920 186,487 371,519
4. Exceptional Items
During the half year to 30 September 2023, the Group incurred no exceptional
costs. In H1 2023, the Group incurred £1.9 million of exceptional costs in
relation to formal sale process costs and restructuring costs.
Sept 2023 Sept 2022 Mar 2023
£000 £000 £000
Formal sales process - 1,837 1,687
Restructuring costs - 31 3,323
Total Exceptional Items - 1,868 5,010
5. Income Tax
The effective tax rate is 27.7% in the period to 30 September 2023 (H1 2023:
24.0%). The effective rate for the period reflects the current standard tax
rate of 25% (H1 2023: 19%), as adjusted for estimated permanent differences
for tax purposes offset by gains covered by exemptions. The rate includes the
effect of higher statutory tax rates levied in Australia and Germany.
6. Property, Plant and Equipment
Sept 2023 Mar 2023 Sept 2022
£000 £000 £000
Opening carrying amount 252,385 247,526 247,526
Additions 31,327 66,860 37,151
Depreciation (22,664) (46,853) (23,831)
Disposals (9,426) (15,680) (7,158)
Effect of movements in exchange rates (732) 532 1,296
Closing carrying amount 250,890 252,385 254,984
The value of capital commitments at 30 September 2023 was £10,313,000 (31
March 2023 £10,715,000).
7. Earnings Per Share
Earnings per share have been calculated on 39,482,946 shares (H1 2023:
39,651,301 shares) being the weighted average number of shares in issue during
the period excluding those shares held by Vp Employee Trust. Diluted earnings
per share have been calculated on 39,820,019 shares (H1 2023: 40,099,143
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 39.83 pence (H1 2023: 42.34 pence) and was based on an
after-tax add back of £1,345,000 (H1 2023: £3,213,000) in respect of the
amortisation of intangibles and exceptional items. Diluted earnings per share
before amortisation of intangibles and exceptional items was 39.50 pence (H1
2023: 41.87 pence).
8. Dividends
The Directors have declared an interim dividend of 11.50 pence per share (H1
2023: 11.00 pence) payable on 10 January 2024 to shareholders on the register
at 8 December 2023. The dividend declared will absorb an estimated £4.537
million (H1 2023: £4.359 million) 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.
9. Analysis of Net Debt
As at Cash Non-cash As at
1 Apr 2023 Flow Movements 30 Sep 2023
£000 £000 £000 £000
Cash and cash equivalents 11,140 (1,926) - 9,214
Secured loans (146,000) 3,000 - (143,000)
Arrangement Fees 492 - (93) 399
Net debt excluding lease liabilities (134,368) 1,074 (93) (133,387)
Lease liabilities (58,518) 10,139 (14,247) (62,626)
Net debt including lease liabilities (192,886) 11,213 (14,340) (196,013)
The Group has two private placements with PGIM Inc. for £65 million (drawn
down in January 2020) and £28 million (drawn down in April 2021). The Group
also has committed revolving credit facilities of £90 million which was
refinanced in November 2023. The Group also has overdraft facilities of £7.5
million, leading to total available facilities of £190.5 million.
10. 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.
11. 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.
12. Post balance sheet event
On 23 November 2023, the Group refinanced its committed revolving credit
facility with a new three year, £90 million facility. The revolving credit
facility agreement also includes a £30 million uncommitted accordion
facility. Financial covenants associated with the revolving credit facility
remain unchanged from the previous facility.
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. Statements in respect of the Group's
performance in the year to date are based upon unaudited management accounts
for the period 1 April 2023 to 30 September 2023. Nothing in this announcement
should be construed as a profit forecast.
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
The Board monitors performance principally through adjusted and like-for-like
performance measures. Adjusted profit and earnings per share measures exclude
certain items including the impact of IFRS16, amortisation of intangible
assets, goodwill impairment charges and exceptional items.
The Board believes that such alternative measures are useful as they exclude
one-off (amortisation, impairment of intangible assets and exceptional items)
and non-cash (amortisation of intangible assets) items which are normally
disregarded by investors, analysts and brokers in gaining a clearer
understanding of the underlying performance of the Group from one year to the
next when making investment and other decisions. Equally, IFRS16 is excluded
from measures used by these same stakeholders and so is removed from certain
APMs.
The key measures used as APMs are reconciled below:
Sep 2023 Sep 2022 Mar 2023
£000 £000 £000
Profit before tax as per Income Statement 19,896 17,858 30,706
Adjustment to remove IFRS 16 impact 188 62 283
Adjusted profit before tax APM 20,084 17,920 30,989
Amortisation and impairment of intangible assets 1,794 1,669 4,490
Exceptional items - 1,868 5,010
Adjusted profit before tax, amortisation, impairment of intangible assets and 21,878 21,457 40,489
exceptional items APM (PBTAE)
Interest (excluding interest on lease liabilities) 3,271 2,503 5,542
Adjusted operating profit before tax, amortisation, impairment of intangible 25,149 23,960 46,031
assets and exceptional items APM
Depreciation (excluding depreciation of right of use of assets) 22,664 23,831 46,853
Adjusted EBITDA APM 47,813 47,791 92,884
Net margin of 11.5% is calculated by dividing adjusted profit before tax,
amortisation, impairment of intangible assets and exceptional items by
revenue.
Sep 2023 Sep 2022 Mar 2023
pence pence pence
Basic earnings per share 36.4 34.2 58.1
Impact of amortisation, impairment of intangible assets and exceptional items 3.4 8.1 20.3
after tax
Impact of IFRS 16 0.5 0.2 0.6
Adjusted basic earnings per share APM 40.3 42.5 79.0
14. Alternative Performance Measures (continued)
Sep 2023 Sep 2022 Mar 2023
£000 £000 £000
Net debt including lease liabilities 196,013 205,167 192,886
Lease liabilities (62,626) (56,225) (58,518)
Net debt excluding lease liabilities APM 133,387 148,942 134,368
Return on average capital employed (ROACE) is based on adjusted operating
profit before tax, amortisation, impairment of intangible assets and
exceptional items as defined above divided by average capital employed on a
monthly basis using the management accounts excluding IFRS16.
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 UK-adopted IAS 34 Interim Financial
Reporting;
· 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
28 November 2023
The Board
The Directors who served during the six months to 30 September 2023 were:
Jeremy Pilkington (Chairman)
Neil Stothard (Chief Executive, resigned 30 September 2023)
Anna Bielby (Chief Executive, previously Chief Financial Officer until 1
September 2023)
Phil White (Non-Executive Director)
Stuart Watson (Non-Executive Director)
Mark Bottomley (Non-Executive Director)
- Ends -
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