VP plc · LSE:VP.
VP — H1 2018 Earnings Presentation
32 slides from VP's earnings presentation, November 2017
Slide 1: Interim Results for the period ended 30 September 2017
1 DRAFT #3 (24 Nov) Presentation Theto Carillion Equipment Rental Specialist 9th June 2010 Interim Results for the period ended 30 September 2017 The Equipment Rental Specialists The Equipment Rental Specialists
Slide 2: Agenda
Agenda 2 Strategy & Highlights Operational Review Financial Review
Slide 3: Strategy & Highlights
3 Strategy & Highlights
Slide 4: Our aim is to create sustainable value
Our aim is to create sustainable value 4 Resilient & proven model First class asset management Specialist equipment rental Buy quality products at competitive prices Market leading positions in niche sectors Maintain assets through rental life cycles Diverse markets in the UK and Overseas Use strong
Slide 5: A positive trading period
A positive trading period 5 ● Excellent progress : 13% uplift in profits ● 12% revenue growth : mix of organic and acquisitions ● Return on average capital employed maintained at 16% ● Fleet investment increased to £32.5m, up 9% Zenith Survey Equipment and Jackson Mechanical Services ● acquired in A
Slide 6: Maintained momentum
Maintained momentum 6 Revenue Profit before tax and amortisation £m £m 320 44 302.9 39.1 40 280 248.7 * 36 34.9 * 240 32 208.7 29.8 205.6 28 26.8 200 183.1 167.0 24 160 20.1 20 21.2 17.4 18.7 136.0 120 121.7 16 16.2 17.2 105.1 101.3 12 12.8 80 84.0 91.3 11.0 8 40 4 0 0 2013 2014 2015 2016 2017 H1 20
Slide 7: Operational Review
7 Operational Review
Slide 8: Key markets
Key markets 8 Infrastructure Construction Housebuilding Oil & Gas
Slide 9: Market growth
Market growth 9 Revenue Growth on H1 H1 Market segment prior year 2018 2017 £m £m Infrastructure* 58.4 52.6 +11% Construction 38.7 33.1 +17% Housebuilding 16.1 13.7 +18% Oil & Gas 10.9 10.3 +6% Other ** 11.9 12.0 - All Markets 136.0 121.7 +12% *Utilities, Rail, Transmission and Facilities Management
Slide 10: Business performance - Group
Business performance - Group 10 H1 2018 H1 2017 £m £m Revenue 136.0 121.7 +12% PBITA 22.4 20.1 +11% Operating margin 16.5% 16.5% o Another excellent UK divisional performance o Group return on capital employed / margins stable and healthy o Good organic growth, supplemented by maiden contributions f
Slide 11: Business performance - UK
Business performance - UK 11 H1 2018 H1 2017 £m £m Revenue 120.3 108.1 +11% PBITA 22.2 19.5 +14% Margin 18.4% 18.0% o Strong specialist tool hire performance o Housebuilding sector has remained supportive o Infrastructure steady, including Water (AMP 6), Transmission and Rail
Slide 12: Business performance - International
Business performance - International 12 H1 2018 H1 2017 £m £m Revenue 15.7 13.7 +15% PBITA 0.3 0.6 -50% Margin 1.7% 4.8% o Profit and revenue growth ex Asia-Pacific within TR Group o Weak trading in Airpac Bukom, marginally improving as year progresses
Slide 13: Fleet investment
Fleet investment 13 H1 2018 H1 2017 £m £m UK 30.4 27.8 International 2.1 2.1 Total fleet capex 32.5 29.9 Disposal proceeds (8.7) (8.1) Net expenditure 23.8 21.8 o 9% growth in net capital investment o UK fleet growth in Hire Station, Torrent and UK Forks o International capex mostly in TR Group
Slide 14: Acquisitions
Acquisitions 14 April 2017 JMS M&E o ○mechanical and electrical specialist tool hire o ○consideration £3.6m April 2017 Zenith Survey Equipment o ○survey and safety equipment rental and sales o ○consideration £3.85m plus £2.3m debt Post half year end November 2017 Brandon Hire o UK specialist tool hi
Slide 15: Brandon Hire
Brandon Hire 15 ● Vp’s largest ever acquisition ● £80m turnover business ● Over 900 employees ● 143 locations throughout the UK ● Strong SME customer base ● Profitable, long established business ● Good business culture and service model fit with Vp ● Creates largest specialist tool hire offer in the
Slide 16: Outlook
Outlook 16 ● Good momentum into H2 after an excellent first half ● Core UK markets stable – infrastructure, construction and housebuild ● Offshore Oil & Gas recovery slower than anticipated but improving backdrop ● Further positive market demand for TR Group ● Brandon Hire and First National acquisi
Slide 17: Financial Review
17 Financial Review
Slide 18: Financial highlights – PBTA up 13%
Financial highlights – PBTA up 13% 18 H1 2018 H1 2017 FY 2017 Revenue £136.0m £121.7m +12% £248.7m EBITDA £41.1m £36.3m +13% £71.2m Profit before tax and amortisation £21.2m £18.7m +13% £34.9m Net margin 15.6% 15.4% 14.0% ROACE 16.0% 15.6% 16.0%
Slide 19: Earnings per share – 17% increase
Earnings per share – 17% increase 19 H1 2018 H1 2017 44.2p 37.9p +17% Basic EPS (pre amortisation) £21.2m £18.7 m +13% Profit for period before tax and amortisation 39.3m 39.1m Weighted average number of shares 17.7% 20.7% Tax rate
Slide 20: Interim dividend – 13% increase
Interim dividend – 13% increase 20 H1 2018 H1 2017 FY 2017 44.2p 37.9p +17% 69.52p Basic EPS (pre amortisation) 6.80p 6.00p +13% 22.00p Interim dividend per share 6.5x 6.3x 3.2x Dividend cover Dividend per share (pence) 25 22.00 18.85 20 16.5 14.0 15 12.25 11.35 10 5 6.00 6.8 5.0 5.35 3.1 3.3 3.6 0
Slide 21: Strong ROACE
Strong ROACE 21 300 18% 17% 16.3% 275 16.2% Average Capital Employed - £m 16.0% 16.0% 16% 250 250 15% ROACE % 236 225 14% 13% 200 196 12% 175 177 11% 150 10% FY 15 FY 16 FY 2017 H1 2018
Slide 22: Robust balance sheet
Robust balance sheet 22 H1 2018 FY 2017 Movement H1 2017 FY17 to H118 £m £m £m £m Property, plant and equipment 211.8 195.6 16.2 188.4 Goodwill and intangibles 50.1 47.5 2.6 50.3 Net working capital 6.4 (1.9) 8.3 2.4 Other (4.7) (5.0) 0.3 (4.5) Net debt (115.4) (98.9) (16.5) (107.5) Net assets 148.2
Slide 23: Healthy EBITDA, strong investment
Healthy EBITDA, strong investment 23 Cash inflows EBITDA : £41.1m Cash outflows Working Tax / Acquisitions Dividends Other Net capex £24.0m Capital Interest £9.8m £6.3m £3.1m £10.5m £3.9m Increase in net debt £16.5m
Slide 24: Bank facilities
Bank facilities 24 17 Post H1 FY Period End 2018 2017 Facilities £m £m £m Committed 200 130 120 Overdraft 5 5 5 Total 205 135 125 Step up - 10 20 H1 FY 2018 2017 Actual Borrowing £m £m Net debt 115 99 Headroom 20 26
Slide 25: Covenants
Covenants 25 Greater than 3 times 15.24 15.19 14.23 12.28 12.99 EBITA Interest Cover 8.04 Mar 13 Mar 14 Mar 15 Mar 16 Mar 17 H1 18 3.0 2.5 2.00 2.0 Less than 2.5 times Net Debt / 1.45 1.39 1.50 1.5 1.10 1.20 1.24 EBITDA 1.0 0.5 0.0 FY 13 FY 14 FY 15 FY 16 FY 17 H1 18 Post period end Headroom for gro
Slide 26: Any Questions?
26 Any Questions?
Slide 27: Supplementary Schedules
27 Supplementary Schedules
Slide 28: Group history – 1954 to date
Group history – 1954 to date 28 2016 Acquisition of Higher Access and TR Pty (Australia) 2001 Hire Station formed through merger of 5 regional tool businesses 2017 1954 2005 2000 TPA and ESS Vibratory Roller & Plant Hire UK (Northern) Limited founded acquired 1990 Forks 2017 Groundforce division Acq
Slide 29: UK Division International Division
29 UK Division Rough terrain material handling equipment and tracked access platforms Excavation support systems and specialist products Tool hire, safety equipment, press fitting and low level access Infrastructure equipment and services to the railway renewals and maintenance sector Portable roadw
Slide 30: Cash flow
Cash flow 30 H1 2018 H1 2017 FY 2017 £m £m £m Operating profits 21.6 19.2 33.2 Depreciation / Amortisation 19.5 17.1 38.0 EBITDA 41.1 36.3 71.2 Changes in working capital (10.5) (4.7) 1.9 Gross capex (32.6) (33.6) (64.6) Asset disposal profit (3.2) (3.3) (5.8) Proceeds from disposals 8.7 8.1 16.7 Ac
Slide 31: Effective rate of tax
Effective rate of tax 31 H1 2018 H1 2017 % % Standard rate 19.0 20.0 Impact of tax rate change on deferred tax (1.8) - Permanent disallowables 0.5 0.4 Chattels (0.9) (1.3) Prior year adjustments - 0.4 Non qualifying depreciation 0.5 0.6 Overseas tax 0.4 0.6 Effective rate 17.7 20.7
Slide 32: Net working capital
Net working capital 32 H1 2018 FY 2017 H1 2017 Cashflow £m £m £m movement H1 2018 Inventories 6.3 5.2 5.4 (1.1) Trade debtors 49.2 43.7 44.3 (5.5) Prepayments and other debtors 7.9 6.0 7.1 (1.9) Trade creditors (23.1) (21.5) (19.6) 1.6 Accruals, other creditors and tax (33.9) (35.3) (34.8) (1.4) Net