VP profits up on regulated industries workload

VP plc improved its profitability in the year to 31 March helped by steady demand in the UK’s regulated industries sector and an improving housebuilding market, which offset a challenging construction market and a drop in its oil and gas related business.

Operating profits rose by 5.6% to £18.9 million on revenues up 3% to £167.0 million. Its Groundforce, UK Forks and Hire Station divisions all posted significant profit increases.

Neil Stothard, group managing director, said VP expected the regulated industries sectors “are going to be equally busy in the next 12 months as the last 12. In terms of the AMP5 [water authority] programme, we’re in the fourth year – the peak year – and we’ve got that to come…The regulated market is still looking pretty decent in the medium term.”

The Groundforce business, which rents specialist heavy duty shoring equipment and hydraulic struts in the UK and in mainland Europe, saw profits rise 16% of revenues of £37.2 million, up 14%.

The business is benefitting from continued investment by water authorities through the AMP5 programme, and the company is now investing in its mainland European operation, with a regional base in Frankfurt, Germany. “That’s a medium to long-term contributor, rather than short term. It remains in a start-up phase”, said Mr Stothard of the German office.

The UK forks business, which rents telescopic handlers to housebuilders as well as the infrastructure and construction sectors, managed to increase prices with some of its long standing customers. UK Fork’s profits were up 40% at £2.1 million on revenue growth of 12% to £14.1 million.

VP’s largest business, the tool hire chain Hire Station, benefitted from rail investment, with a 14% increase in activity with Network Rail, its largest customer, during the year as part of the CP4 investment programme (Control Spend Period 4). Revenues rose by 3% to £62.0 million but profits were up 30% to £4.3 million.

The Hire Station business also includes a MEP Hire division for mechanical, electrical and plumbing customers, and this now includes Hire Station’s fleet of several thousand low level aerial platforms. Mr Stothard said the company would continue to invest in its access fleet, which already numbers several thousand units, including the new Pecolift from Power Towers.

Performing less well was the Airpac Bukom Oilfield Services division, which rents compressors and other equipment for well testing and LNG projects. A £3.4 million fall in LNG activity, offset by a £2.0 million increase in its core well testing business, saw overall revenues fall by 10% to £17.4 million, with profits down 45% to £2.0 million.

Mr Stothard said VP was encouraged by the growth in the core well-testing activity and said it was expecting LNG-related activity to recover; “We remain very keen and positive about the Airpac business”.

Capital expenditure in 2012 was around £22.5 million and Mr Stothard said it was likely to move back up to the £30 million range invested in 2011, “based on our knowledge of opportunities across the whole business.”

VP operates six specialist rental divisions in products including tool hire, shoring, telehandlers, temporary tracks, compressors and railway equipment.