25.11.2008

Vp up 7%

Vp, owner of telehandler manufacturer UK Forks, has reported a seven percent increase in half year revenues to £81.6 million, while pretax profits climbed 13 percent to £13.5 percent.

UK Forks had a more difficult half year than the group as a whole, given its higher dependence on residential construction, however revenues held up relatively well falling three percent to £7.8 million, while operating profits fell back eight percent to £1.54 million.

Capital expenditure on the rental fleet was £17.6 million and will be reduced slightly in the second half, although open to opportunities.

Vp chairman Jeremy Pilkington said: “It is very encouraging for the
Group to have made good progress in the first six months of the financial year against a background of unprecedented turmoil in global financial markets and with the UK economy entering recession. However the economic effects of the liquidity problems in the banking sector started to impact our activities only towards the end of the period under review and even then not in all of our business sectors.”

“As a Group, we have a significant exposure to regulated markets and infrastructure projects via the water industry, the National Grid transmission upgrade and rail investment, as well as, of course our international oil and gas exploration support business. We have only a limited exposure to residential construction, the first and worst hit sector, through our UK Forks business and, to a lesser extent, the Hire Station tool rental activity.”

“Prospects for the trading environment within which the Group operates are more difficult to predict than ever but overall we anticipate that, with the possible exception of oil and gas related work, market conditions will decline further before they improve.”

“Over the last eighteen months we have, both by organic product extension and acquisition, added a number of new revenue streams to our business mix. Whilst most are still relatively small and at an early stage of development, we believe they provide the Group with the seeds for future growth and diversification, whilst remaining within our strategic focus on specialist rental sectors.”

“We expect capital investment to reduce in the second half, reflecting trading conditions, but we retain the flexibility to take advantage of opportunities as they may arise.”

Vertikal Comment

An excellent result from Vp, with UK Forks remaining surprisingly strong given the state of the housing market. The company has relatively low gearing and generates a good deal of cash, as such it is well placed to benefit from any acquisition opportunities that might arise over the next 12 months or so.

The company is taking a well balanced approach to capital investment and should come out of the slow down in excellent shape. Pilkington has been through it all before including the high leverage overseas expansion route (as Vibroplant) and back. His well balanced long term more modest approach is paying dividends for the company’s shareholders.