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Presentation to Carillion

Explore the sound performance of VP plc amidst weak economic background, reduced profits, and challenging markets. Discover strategic responses, revenue trends, capital expenditure, and operational outlook in this comprehensive presentation.

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Presentation to Carillion

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  1. Vp plc Interim Results for the six months ended 30 September 2009 • Presentation • to Carillion 9th June 2010 The Equipment Rental Specialists The Equipment Rental Specialists

  2. Summary

  3. Sound performance in difficult markets • Economic background remains weak • Profit reduced, but good result in the circumstances • Appropriate cost actions to match weakening demand • Strong cash generation – debt reduced • Maintained dividend • Financial position further strengthened

  4. Operational review

  5. Challenging times - successful response • £10m profit • Reduced fixed cost base by 7% • Reduced capex 60% • Generated £5m proceeds from fleet sales • Reduced working capital by £2m • No acquisitions in the period • £11m cash generated in first 6 months

  6. Revenue and Operating Profit Revenue (£m) Operating Profit (£m) 11.3 71.1

  7. Business performance

  8. Divisional performance Track renewals activity subdued Torrent Trackside Well test steady LNG good Events good Transmission quieter Airpac Bukom TPA Vp UK Forks Hire Station Housebuild stabilised General construction downturn Groundforce Reduced demand AMP 4 closing

  9. Divisions • Divisions/markets have experienced downturn at different times • Responses largely divisional specific • Business opportunities do exist: • investment in sales and marketing • improved co-ordination between divisional sales teams • we are opening many doors • targeting a greater share in a flat market • financial covenant of Vp is increasingly an asset with customers • rebranding – better alignment with Vp plc

  10. Rebranding Divisions rebranded to better reflect association with Vp whilst explicitly maintaining the specialist focus that customers value

  11. Capital expenditure

  12. Strength through diversity

  13. Overseas growth % of Total Group Revenue 10% 8% 13% Overseas Revenue 5% 1% • Overseas activities have continued to grow in the last 4 years and now represent 13% of Group Revenues • Primarily Airpac Bukom, but also TPA, Groundforce and Hire Station

  14. Operational outlook • Business remains well balanced, with broad market base • More challenges ahead – fundamentals weak • Effective asset management and long term financial conservatism is • paying dividends • Handling change is in the Group’s culture – it is not one-off in nature • We aim to secure market share and capitalise on the upturn when it • comes

  15. Financial Review

  16. Financial highlights

  17. Components of pre-tax profit

  18. Cost saving measures (fixed costs)

  19. Earnings and dividend per share

  20. Rental fleet

  21. Net working capital

  22. Focus on debt reduction

  23. Modest gearing, comfortably within covenants Net debt Underlying gearing -17% -23% Interest cover (12 months) Net debt / EBITDA (12 months) -7% Unchanged bank facilities of £80m; £50m matures November 2010

  24. Quality returns Operating Margin (%) Return on Average Capital Employed (%) Dividend per share (pence) Earnings per share (pence)

  25. Conclusion

  26. Sector leading performance • Quality earnings • No asset write downs • No bank restructuring • No equity funding required • Balance sheet strengthened organically • Maintained dividend • Good margins • £11m cash – all units cash positive • These are very good results, in a very poor market

  27. Outlook • Market fundamentals are weak but relatively stable • Opportunities are available with increased focus on sales and marketing • Cash generation will remain a key measure • Diversity and financial strength will enable long term progress

  28. Vp plc Interim Results for the six months ended 30 September 2009 • Presentation • to Carillion 9th June 2010 The Equipment Rental Specialists The Equipment Rental Specialists

  29. Supplementary schedules

  30. Robust balance sheet

  31. Operating cash flow (before changes in working capital)

  32. Shareholder value

  33. Effective rate of tax

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