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TRANSCRIPT
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The Equipment Rental Specialists 1The Equipment Rental SpecialistsThe Equipment Rental Specialists
Vp plcInterim Results for
the period ended
30 September 2015
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The Equipment Rental Specialists 2
AGENDA
Results
Operational Review
Financial Review
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The Equipment Rental Specialists 3
Our strategy
● Aim - to generate sustainable value creation for shareholders
● How - utilising our expertise in asset management
- exceeding customer expectations
- maintaining and utilising our financial strength
- retaining and attracting the best people
● Where - serving diverse markets in the UK and overseas
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The Equipment Rental Specialists 4The Equipment Rental SpecialistsThe Equipment Rental Specialists
Results
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The Equipment Rental Specialists 5
Results summary
H1 H1
2016 2015
Profit before tax and amortisation £17.2m £16.2m +6%
Revenue £105.1m £101.3m +4%
Earnings per share pre amortisation 35.14p 32.81p +7%
Interim dividend per share 5.35p 5.00p +7%
Return on average capital employed 16.1% 14.9%
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The Equipment Rental Specialists 6
Highlights
● Further positive progress - 6% growth in interim profits
● Operating margin increase to 17.3%
● Return on average capital employed improved to 16.1%
● Fleet investment at similar levels to prior year
● Weaker oil and gas and transmission markets
● Infrastructure and housebuild markets driving growth
● Acquisition of Test & Measurement Hire - November 2015
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The Equipment Rental Specialists 7
Revenue and profit profile
Revenue
(£m)
Profit before tax and amortisation
(£m)
Revenues growing Progressive profit trend
The Equipment Rental Specialists
**
*N+1 Singer estimate *N+1 Singer estimate
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The Equipment Rental Specialists 8
Operational Review
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The Equipment Rental Specialists 9
Markets
* Utilities, Rail, Transmission and Facilities Management
House
building
Oil &
Gas
Construction
Infrastructure
H1 H1 Growth/
Market 2016 2015 decline on
Segment £m £m prior year
Rail
Transmission/Water
Construction 28.8 27.6 +4% Election ?
Oil & Gas 10.2 12.2 -17% Oil price
Housebuilding 13.3 10.2 +30% Market share
Other 6.0 6.7 -10%
Total 105.1 101.3 +4%
+5%
Revenue
Infrastructure* 46.8 44.6
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The Equipment Rental Specialists 10
Business performance
2016 2015 2016 2015
£m £m £m £m
9.8 9.1 2.9 2.3 Market share growth, housebuild
24.5 22.6 5.6 5.0 Major projects and construction
8.5 11.2 1.0 1.7 Oil & Gas price
39.2 36.1 6.1 4.8 Excellent performance in stable markets
15.7 13.0 1.7 1.3 CP5 / full year of acquisition
7.4 9.3 0.9 2.0 Weak transmission/renewables
TOTAL 105.1 101.3 18.2 17.2
Operating Margin 17.3% 16.9% Improved margin
Revenues H1 PBITA H1
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The Equipment Rental Specialists 11
Fleet investment supporting growth
H1 H12016 2015£m £m
7.4 5.2 High utilisation, sustained demand
3.6 3.0 Replacement capex
0.4 3.9 Reduced demand
8.4 8.8 Supporting growth
1.7 2.4 Replacement capex
1.9 0.6 Fleet renewal
Total fleet capex 23.4 23.9
Disposal proceeds (9.2) (5.8) Fleet renewal disposal programme
Net expenditure 14.2 18.1
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The Equipment Rental Specialists 12
Operational outlook
● Signs of confidence returning to construction market
● AMP6 not started, but anticipate into 2016
● Transmission - expect improved 2016
● Acquisition bedding in
● Quality of returns remains a key focus
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The Equipment Rental Specialists 13
Financial review
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The Equipment Rental Specialists 14
Financial highlights – continuing progress
H1 H1 Full Year
2016 2015 2015
Revenue £105.1m £101.3m +4% £205.6m
EBITDA £31.4m £29.2m +8% £53.8m
Profit before tax and amortisation £17.2m £16.2m +6% £26.8m
Net margin 16.4% 16.0% 13.0%
ROACE 16.1% 14.9% 16.2%
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The Equipment Rental Specialists 15
Earnings per share – 7% increase
H1 H1
2016 2015
Basic EPS (pre amortisation) 35.14p 32.81p +7%
Profit for period pre tax and amortisation £17.2m £16.2m +6%
Weighted average number shares 38.9m 39.0m
Tax rate 20.5% 21.2%
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The Equipment Rental Specialists 16
Dividend per share – 7% increase
Dividend per share (pence)
Interim Dividend Full Year Dividend
16.5
H1 H1 FY
2016 2015 2015
Basic EPS 33.37p 31.36p +6% 51.03p
Dividend per share 5.35p 5.00p +7% 16.5p
Dividend cover 6.2x 6.3x 3.1x
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The Equipment Rental Specialists 17
Robust ROACEA
ve
rag
e C
ap
ita
l E
mp
loye
d £
m
RO
AC
E
Average Capital
Employed £mROACE
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The Equipment Rental Specialists 18
Strong balance sheet
H1 FY H12016 2015 2015£m £m £m
Rental equipment (fleet) 137.2 131.6 123.5
Other property, plant and equipment 18.7 16.2 12.3
Goodwill and intangibles 42.5 43.4 44.4
Net working capital 0.9 (9.3) (1.7)
Deferred tax/pension (3.1) (3.3) (3.2)
Net debt (81.8) (66.8) (65.4)
Net assets 114.4 111.8 109.8
Gearing 72% 60% 60%
Debtor days 56 58 59
Debt write off as % revenue 0.3% 0.3% 0.2%
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The Equipment Rental Specialists 19
17Financial performance - strong cash generation
Cash inflows
Cash outflows
Other
£10.9m
Increase in net debt
£15.0m
Net capex £20.6m
EBITDA : £31.4m
Working
Capital
£6.7m
Tax /
Interest
£3.7m
Dividends
£4.5m
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The Equipment Rental Specialists 20
17Bank facilities
H1 May2016 2015£m £m
Committed facilities
Due to expire Oct '17 30 30
Due to expire Oct '17 20 20
Due to expire May '20 45 45
Overdraft facilities 5 5
Total facilities 100 100
Step up facility 20 20
30 Sep 31 Mar2015 2015£m £m
Net debt 81.8 66.8
Headroom 18.2 33.2
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The Equipment Rental Specialists 21
17Headroom for growth
Lower interest costs higher EBITA
Greater than 3 times
EBITA
Interest
Cover
Considerable headroom
Less than 2.5 timesNet Debt /
EBITDA
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The Equipment Rental Specialists 22
Supplementary schedules
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The Equipment Rental Specialists 23
17Cash flow
H1 H1 FY
2016 2015 2015
£m £m £m
Operating profits 17.3 16.4 27.1
Depreciation / Amortisation 14.1 12.8 26.7
EBITDA 31.4 29.2 53.8
Changes in working capital (6.7) (3.0) 2.5
Gross capex (29.8) (24.3) (52.9)
Asset disposal profit (3.1) (2.1) (3.3)
Proceeds from disposals 9.2 5.7 12.0
Acquisitions - (5.4) (5.4)
Interest (1.0) (0.9) (2.0)
Tax (2.7) (0.9) (2.9)
Dividends (4.5) (4.0) (6.0)
Other (7.8) (6.7) (9.6)
Cash movement (change in net debt) (15.0) (12.4) (13.8)
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The Equipment Rental Specialists 24
17Effective rate of tax
H1 H1
2016 2015
% %
Standard rate 20.0 21.0
Impact of tax rate change on deferred tax - -
Permanent disallowables 0.3 0.4
Chattels (0.9) (0.7)
Prior year adjustments - -
Non qualifying depreciation 0.4 0.5
Overseas tax 0.7 -
Effective rate 20.5 21.2
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The Equipment Rental Specialists 25
17Net working capital
H1 FY H1 Cashflow
Movement
2016 2015 2015 FY 2015
£m £M £m H1 2016
Inventories 5.0 6.5 5.7 1.5
Trade debtors 35.6 36.2 36.5 0.6
Prepayments and other debtors 8.4 4.9 7.9 (3.5)
Trade creditors (16.8) (17.7) (14.9) (0.9)
Accruals, other creditors and tax (31.3) (39.2) (36.9) (7.9)
Net working capital 0.9 (9.3) (1.7) (10.2)
Capital creditors movement 2.5
Other cashflow swap/tax 1.0
Cashflow changes in debtors, creditors and stock (6.7)
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The Equipment Rental Specialists 26
Revenue 1970: £2m 1980: £14m 1990: £70m 2000: £55m 2010: £129m 2013: £167m 2014: £183m
2014Vp plc
Celebrates its
60th Anniversary
1954Vibratory Roller & Plant Hire
(Northern) Limited founded
1973Floated on main market
Vibroplant plc
1980Shoring division
established
1982US powered access
business established
1996Tool Hire:
Cannon Tool Hireacquired in 1996
2001Hire Station formed
through merger of5 regional tool
businesses
2002-2004Shoring expansion
through acquisitionof Mechplant,
Trenchshore &Eve Shorco
2006Acquisition of Bukom
Oilfield Services(Airpac Bukom formed)
1975First move into
specialistplant - Airpac
1990Groundforce
acquired fromSGB
1996Exit from USA;
UK specialist businessesexpanded
1997Rail: Torrent
Trackside acquired
2000UK Forks
divisioncreated
2001Renamed Vp plc
2005TPA and
ESSacquired
2007 - 2009Continuing growth in
specialist areas viaacquisitions of MEP and
U Mole
2010Geographical expansion:
Global (Airpac Bukom).Eire (Groundforce),
Germany (TPA)
1954
19731980 1990
2006
2011Mainland Europe -
Groundforce
2014
Group history – 1954 to date
2015: £206m
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The Equipment Rental Specialists 27
National hire of telescopic handlers/rough terrain forklifts:
• Only UK national telehandler specialist
• Fleet of c.1700 machines
• Strategically located distribution network
Markets:
• General construction, housebuild and industry
Opportunities:
• Housebuilding, construction recovery, new products and
market share growth
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The Equipment Rental Specialists 28
UK market leaders in the rental and sale of shoring
products and solutions:
• Groundforce has the largest excavation support fleet
in the UK and Ireland
• Plus, specialist products and services
° Piletec & Mr Cropper – piling equipment
° Stopper Specialists – pipeline pressure testing
° ‘U’ Mole – trenchless technology
Markets:
• Civil engineering (including regulated AMP
programme), construction and housebuilding
Opportunities:
• Infrastructure, construction and Europe
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The Equipment Rental Specialists 29
International rental of high pressure air compressors,
steam generators and specialist equipment supported
by skilled engineers:
• Global network of six service and distribution facilities
located in the UK (Aberdeen and Great Yarmouth),
Singapore, Australia, Middle East and Latin America
• Rental assignments in more than 60 countries
Markets:
• Well testing, rig maintenance, gas transfer, LNG
Opportunities:
• Leveraging global network via regional hubs
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The Equipment Rental Specialists 30
Tool hire and specialist equipment for construction and industry:
• Local tool hire branches supported by national call centre
• Plus specialist products and services
° ESS Safeforce
– safety equipment and confined space training
° MEP
– press fitting, electrofusion and low level access
Markets:
• Construction, industry, civil engineering, housebuild, DIY
Opportunities:
• Specialist products, construction sector and market share growth
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The Equipment Rental Specialists 31
Provision of rail specific light plant, trackside lighting
and skilled trackside personnel:
• Genuine 24/7 x 365 national support
• The widest range of specialist portable rail equipment
in the UK
• Significant safety and compliance barriers to entry in
a regulated market
Markets:
• Maintenance and renewals projects on national rail
network, London Underground and Network Rail
maintenance contract
Opportunities:
• CP5, maintenance, London Underground
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The Equipment Rental Specialists 32
One of Europe’s largest suppliers of temporary access
solutions:
• Operations in UK, Republic of Ireland and Germany
• Skilled installation of bespoke roadways and
walkways
Markets:
• Transmission, construction, rail and outdoor events
Opportunities:
• Regulated transmission programme, new products
and European growth