Vp : Preliminary Results (unaudited)

For immediate release

4 June 2019

Vp plc

('Vp', the 'Group' or the 'Company')

Preliminary Results (unaudited)

Vp plc, the equipment rental specialist, today announces its Preliminary Results for the year ended 31 March 2019.

Highlights

· 15% increase in profit before tax, amortisation and exceptional items to record level of £46.8 million (2018: £40.6 million) · 26% growth in revenues to £382.8 million (2018: £303.6 million) · Basic earnings per share, pre-amortisation, increased 12% to 95.1 pence (2018: 84.9 pence) · Final dividend proposed of 22.0 pence per share, making a total of 30.2 pence for the full year (2018: 26.0 pence), an increase of 16% · EBITDA before exceptionals up 20% to £101.4 million (2018: £84.3 million) · Reduced net debt of £168.1 million (2018: £179.2 million) after funding: o Capital investment in the rental fleet of £63.8 million (2018: £64.9 million) · Return on average capital employed 14.5% (2018: 14.8%) · Profit before taxation of £33.6 million (2018: £30.8 million) and statutory earnings per share of 65.2 pence (2018: 61.7 pence) · Exceptional costs of £8.6 million (2018: £1.7 million) resulting from acquisition integration costs, business restructuring and regulatory review costs · The statutory accounts for the year ended 31 March 2019 will be finalised on the basis of the financial information presented by the Directors in these preliminary results.

Commenting on the Preliminary Results, Jeremy Pilkington, Chairman of Vp plc, said:

'Today Vp is reporting another strong set of full year results, with key financial metrics ahead of last year. In light of these excellent figures, I am pleased to announce a final dividend recommendation of 22.0 pence per share, making a total for the year of 30.2 pence per share, an increase of 16% on last year.

'We have entered the new financial year in excellent shape and we look forward to the challenges and opportunities of the future with confidence and excitement.'

Neil Stothard, Chief Executive of Vp plc, added:'Vp has started the new financial year positively and in line with our expectations. We anticipate that our main markets in the UK will continue to be supportive, but with slightly slower overall growth than experienced in recent years influenced by the current political and economic uncertainty.

I am pleased to say that the international backdrop is also broadly positive, with opportunities in Australasia with TR Group and the wider oil and gas exploration and maintenance sectors too.

'The year ended 31 March 2019 was one of significant development for Vp, and we were particularly pleased with the quality of the Brandon Hire integration.

'We were delighted to acquire Sandhurst Ltd just after the financial year end and look forward to developing the business further under our ownership.'

- Ends -

Enquiries:

Media enquiries:

Notes on alternative performance measures:

· All performance measures stated as before amortisation are also before impairment of intangibles.

· Basic earnings per share pre amortisation and exceptionals is reconciled to basic earnings per share in note 3.

· Profit before tax, amortisation and exceptionals is reconciled to profit before tax in the Income Statement.

· Return on average capital employed is based on profit before tax, interest, amortisation and exceptionals divided by average capital employed on a monthly basis using the management accounts. Profit before tax, interest, amortisation and exceptionals is reconciled to profit before interest and tax in the Income Statement.

CHAIRMAN'S STATEMENT

I am delighted to be able to report another set of excellent results for the Group.

Profits before tax, amortisation and exceptional items increased 15% to £46.8 million (2018: £40.6 million) on revenues ahead by 26% to £382.8 million (2018: £303.6 million). Profit before taxation was £33.6 million (2018: £30.8 million). Net debt at the year-end was £168.1 million (2018: £179.2 million) after funding £63.8 million capital investment in the rental fleet (2018: £64.9 million). Our characteristically strong cash flow of £101.4 million (2018 £84.3 million) supports a healthy net debt and EBITDA ratio of 1.7x. There were no acquisitions in the period.

Return on average capital employed remained strong at 14.5% (2018: 14.8%) and earnings per share increased 12% to 95.1 pence per share (2018: 84.9 pence per share).

On the basis of what we consider to be an excellent set of results, particularly given the current uncertain political and economic environment, your Board is recommending a final dividend of 22.0 pence per share, making a total for the year of 30.2 pence per share, an increase of 16%. Subject to shareholders approval at the Annual General Meeting to be held on 25 July 2019, it is proposed to pay the final dividend on 8 August 2019 to members registered at 28 June 2019.

Following the acquisition of Brandon Hire in November 2017, the integration process has progressed well and will be largely concluded by the end of this calendar year. The combined business now trades as Brandon Hire Station. Integrating 1,500 people, 200 branches and 200,000 items of rental equipment has been a huge task for both management teams and it is appropriate for me to single them out for special praise for their exceptional work this year. The combined business has traded in line with our expectations at the time of the acquisition and we are confident that Brandon Hire Station will deliver significant benefits for the Group and its shareholders.

The shareholders will no doubt already be aware of the announcement issued by the Competition and Markets Authority (CMA) on 9 April 2019 that it had reached a provisional determination that Vp, together with two other companies, had acted in a manner deemed to be uncompetitive in the market for certain elements of temporary groundworks. Vp is in the process of reviewing these alleged breaches and we expect to be in a position to respond to the CMA shortly. Following accounting standards, as explained in note 2, we have made a theoretical provision for costs which is included in the exceptional items. In the meantime, we will continue to co-operate fully with their investigation.

Post the year end, on 10 May 2019, we announced the acquisition of Sandhurst Limited for £3.325 million. Sandhurst is engaged in the rental of specialist excavator attachments to the construction and civil engineering sectors from five locations across the UK. Going forward, Sandhurst will work alongside the Groundforce piling division to offer an enhanced range of products and services.

The Group's primary business objective is to focus on leveraging our specialist rental expertise to deliver enhanced value creation for shareholders over the long term. We seek to be both provider and employer of choice and we pursue market leadership through the delivery of outstanding levels of customer service and satisfaction. We are characterised by a change positive business culture and a dedication to innovation. We strongly believe that these business objectives remain as relevant and valid today as when we first articulated them nearly twenty years ago.

It remains my great pleasure to thank all our employees for their contribution to these excellent results. Our employees are our unique and defining asset and lie behind whatever success we may continue to enjoy.

We have entered the new financial year in excellent shape and we look forward to the challenges and opportunities of the future with confidence and excitement.

Jeremy Pilkington

Chairman

4 June 2019

BUSINESS REVIEW

OVERVIEW

Vp plc is a rental business providing specialist products and services to a diverse range of end markets including infrastructure, construction, housebuilding, and oil and gas. The Group comprises a UK and an International Division.

	Year ended 31 March 2019	Year ended 31 March 2018
Revenue	£382.8 million	£303.6 million
Operating profit before amortisation and exceptionals	£51.6 million	£44.0 million
Operating margin	13.5%	14.5%
Investment in rental fleet	£63.8 million	£64.9 million
Return on average capital employed	14.5%	14.8%
Operating profit	£38.3 million	£34.2 million

The financial year ended 31 March 2019 saw the business deliver significant progress and growth with an increase of 17% in operating profit before amortisation and exceptional items.

Group operating profits before amortisation and exceptional items were £51.6 million which compares with prior year £44.0 million. Operating margins remained healthy at 13.5% and our key measure of profit quality, return on average capital employed (ROACE), continued to be robust at 14.5%, marginally down on prior year. Revenues grew by 26% to 382.8 million (2018 £303.6 million).

The core end markets which we serve have once again provided a resilient environment for the Group's trading operations, despite the ongoing political and economic uncertainties in the UK, our largest geographic market.

Strong cash generation is a positive characteristic of the Vp business model and EBITDA before exceptionals remained strong, increasing by 20% to £101.4 million (2018: £84.3 million). Net debt at 31 March 2019 was reduced to £168.1 million (2018: £179.2 million).

We continued to invest in our rental fleet with robust gross capital expenditure of £63.8 million very close to last year's peak capex of £64.9 million. Fleet disposal proceeds were improved at £20.0 million (2018: £18.5 million), and generated profit on disposal of £7.6 million (2018: £6.1 million). There were no business acquisitions in the financial year.

After the end of the financial year, on 10 May 2019, we announced the acquisition of the entire issued share capital of Sandhurst Limited for a cash consideration of £3.325million. Sandhurst is engaged in the rental of specialist excavator attachments to the construction and civil engineering sectors from five locations across the UK, and will complement our existing piling business.

UK DIVISION

	Year ended 31 March 2019	Year ended 31 March 2018
Revenue	£350.3 million	£272.0 million
Operating profit before amortisation and exceptionals	£49.9 million	£43.0 million
Investment in rental fleet	£57.4 million	£59.7 million

The UK division produced another strong trading performance in the year reporting a 16% increase in operating profit before amortisation and exceptionals to £49.9 million (2018: £43.0 million). Revenues were £350.3 million, 29% ahead of prior year (2018: £272.0 million).

The UK division comprises seven main business groupings: UK Forks, Groundforce, TPA, Brandon Hire Station, ESS Safeforce, MEP, and Torrent Trackside; which have exposure to the infrastructure, housebuilding, construction and industrial sectors, primarily within the UK, but with a growing presence in mainland Europe.

Trading within the UK Forks division was mixed with solid support from the housebuilding sector being balanced by a more challenging environment in general construction. Activity in the telecoms sector was subdued as the scheduled 5G roll out across the UK remained delayed. Investment in fleet was strong, but slightly down on prior year.

In Groundforce / TPA, solid demand from the infrastructure sector, particularly in support of the water industry's Asset Management Programme 6 (AMP 6) underpinned a strong performance in the UK shoring business, with additional demand derived from housing, utilities and highways during the year. Geographically the South and North regions traded well but the Scottish region experiencing softer demand. A number of important major projects were supported including Battersea Power Station, Hinkley Point and the Luton Airport Dart scheme. Elsewhere, the Groundforce Ireland business also traded well, though the Piling division experienced softer demand through the year.

The temporary roadways business TPA delivered a year of improvement in the UK as efficiency and productivity gains improved margins, further supported by good transmission and rail sector demand in the UK. The TPA and Groundforce businesses in mainland Europe made further progress after a soft start to the financial year.

The year under review is the first full year of ownership of the Brandon Hire business, acquired in November 2017. Progress in integrating the Hire Station tools business with Brandon Hire under a single management team has been very good. The combined, newly named, specialist tool hire division, Brandon Hire Station will operate a 200 branch network across the UK on a common IT platform. The two year integration plan will be completed by the end of the calendar year 2019, as originally envisaged. The exceptional costs of integration are disclosed in note 2. Whilst the construction markets within which Brandon Hire Station operates have been relatively flat, synergies identified pre and post the acquisition have already been delivered, and margins and returns have improved considerably as a result. The longer term fleet refreshment programme has proceeded well with strong capex combined with a pro-active divestment programme of old and non-core hire fleet items.

The MEP low level access and press fitting activity had another good year and opened two new locations in support of further regional expansion. ESS Safeforce, our safety, survey and communications business delivered strong revenue growth in the year, driven particularly by success in supporting petrochemical shutdowns in both the UK and the Netherlands. We anticipate further progress in these industrial sectors in the coming year. Fleet investment was healthy and the division opened new locations and expanded existing facilities in support of these initiatives.

The Torrent Trackside business traded well in what has been a particularly volatile period for the UK rail infrastructure sector. The demise of Carillion initially impacted activity levels in the UK rail market with associated work streams paused or cancelled. Eventually this work re-emerged through different channels and Torrent Trackside provided significant support to the associated contractors. The Control Period 5 (CP5) slowed in its final year ahead of the new five year programme, CP6 which commences in 2020. The business continued to reap success by maintaining a keen focus on managing costs and improving service delivery to customers. The CP6 programme comes with a £48 billion budget and Torrent Trackside are well placed to support this over the next five years.

INTERNATIONAL DIVISION

	Year ended 31 March 2019	Year ended 31 March 2018
Revenue	£32.5 million	£31.6 million
Operating profit before amortisation and exceptionals	£1.7 million	£1.0 million
Investment in rental fleet	£6.4 million	£5.1 million

The International division delivered improved profit margins in the year as operating profit before amortisation grew by 70% to £1.7 million (2018: £1.0 million) from revenues up 3% to £32.5 million (2018: £31.6 million).

The International division comprises two main business groupings: Airpac Bukom a global supplier to the oil and gas sector with regional hubs in the UK, Australia and Singapore and TR Group which has operations in Australia, New Zealand, Malaysia and Singapore.

Airpac Bukom supports a wide range of onshore and offshore oil and gas markets: well test; pipeline testing; rig and maintenance; and LNG markets worldwide. Whilst progress has been relatively modest, Airpac Bukom did experience tentative signs of improvement in the sector. The historically strong well test market has remained weak in recent years due to reduced exploration and production (E&P) spend by the oil majors. The business has been active in growing alternative onshore markets which also utilise Airpac Bukom's product and service expertise. The market recovery is slow but we remain confident of delivering future improvement going forward.

The TR Group which is Australasia's leading technical equipment rental business provides test and measurement, communications, calibration and audio visual solutions across the region. The year was one of further progress, in particular, in Australia and Malaysia. Overall the TR Group has a number of progressive new product and service offers which are planned to deliver further business momentum in the coming year and beyond.

OUTLOOK

The Group has started the new financial year positively and in line with expectations. We believe that our main markets in the UK will be largely supportive, but with a slower growth than experienced in recent years. The International backdrop is also broadly positive and we expect to deliver on fresh initiatives in both Australasia for TR, and the wider oil and gas exploration and maintenance sectors.

The year just finished was one of significant development for the Group, and we are particularly pleased with the quality of the Brandon Hire integration process.

We continue to assist the CMA investigation into the groundworks rental market.

We were delighted to acquire Sandhurst Ltd just after the financial year end and look forward to developing the business further under our ownership. We will continue to pursue opportunities to progressively expand the Vp business, as we have always done. Whilst the UK in particular has some wider political and economic uncertainties, we remain confident that we can deliver further positive development for the Group over the next financial year.

Neil Stothard

Chief Executive

4 June 2019

Consolidated Income Statement (unaudited)

for the year ended 31 March 2019

	Note	2019 Unaudited £000		2018 Audited £000
Revenue	1	382,830		303,639
Cost of sales		(295,539)		(229,477)
Gross profit		87,291		74,162
Administrative expenses		(48,968)		(39,927)
Operating profit before amortisation and exceptional items	1	51,571		44,018
Amortisation and impairment	1	(4,632)		(8,101)
Exceptional items	2	(8,616)		(1,682)
Operating profit		38,323		34,235
Net financial expense		(4,742)		(3,421)
Profit before taxation, amortisation and exceptional items		46,829		40,597
Amortisation and impairment	1	(4,632)		(8,101)
Exceptional items		(8,616)		(1,682)
Profit before taxation		33,581		30,814
Taxation	5	(7,759)		(6,448)
Profit attributable to owners of the parent		25,822		24,366
		Pence		Pence
Basic earnings per share	3	65.20		61.72
Diluted earnings per share	3	63.66		60.95
Dividend per share paid and proposed	6	30.20		26.00

Consolidated Statement of Comprehensive Income (unaudited)

for the year ended 31 March 2019

					2019 Unaudited £000			2018 Audited £000
Profit for the year					25,822			24,366
Other comprehensive income/(expense): Items that will not be reclassified to profit or loss
Re-measurements of defined benefit pension schemes					536			275
Tax on items taken to other comprehensive income					(1)			(50)
Impact of tax rate change					-			(65)
Items that may be subsequently reclassified to profit or loss
Foreign exchange translation difference					(493)		(900)
Effective portion of changes in fair value of cash flow hedges					(614)			444
Total other comprehensive income					(572)			(296)
Total comprehensive income for the year					25,250			24,070

Consolidated Statement of Changes in Equity (unaudited)

for the year ended 31 March 2019

		2019 Unaudited £000			2018 Audited £000
Total comprehensive income for the year			25,250			24,070
Dividends paid			(10,853)			(8,983)
Net movement relating to shares held by Vp Employee Trust			(3,297)			(822)
Share option charge in the year			2,395			2,446
Tax movements to equity			944			444
Impact of tax rate change			-			(25)
Change in Equity			14,439			17,130
Equity at start of year			154,446			137,316
Equity at end of year			168,885			154,446

Consolidated Balance Sheet (unaudited)

as at 31 March 2019

	Note	2019 Unaudited		2018 Audited
				Restated*
		£000		£000
Non-current assets
Property, plant and equipment		248,651		239,739
Intangible assets		89,670		94,317
Employee benefits		2,732		2,230
Total non-current assets		341,053		336,286
Current assets
Inventories		7,809		8,620
Trade and other receivables		80,433		70,872
Cash and cash equivalents	4	29,044		18,194
Total current assets		117,286		97,686
Total assets		458,339		433,972
Current liabilities
Interest bearing loans and borrowings	4	(17,659)		(10,218)
Income tax payable		(2,184)		(2,365)
Trade and other payables		(81,720)		(70,455)
Total current liabilities		(101,563)		(83,038)
Non-current liabilities
Interest bearing loans and borrowings	4	(179,485)		(187,148)
Deferred tax liabilities		(8,406)		(9,340)
Total non-current liabilities		(187,891)		(196,488)
Total liabilities		(289,454)		(279,526)
Net assets		168,885		154,446
Equity
Issued share capital		2,008		2,008
Capital redemption reserve		301		301
Share premium account		16,192		16,192
Foreign currency translation reserve		(780)		(287)
Hedging reserve		(323)		291
Retained earnings		151,460		135,914
Total equity attributable to equity holders of the parent		168,858		154,419
Non-controlling interests		27		27
Total equity		168,885		154,446

*The restatement of the prior year consolidated balance sheet reflects the fair value adjustments in regards to prior year acquisitions as disclosed in Notes 9, 10 and 26 of the Annual Report and Accounts for the year ended 31 March 2019.

Consolidated Statement of Cash Flows (unaudited)

for the year ended 31 March 2019

		2019		2018
		Unaudited		Audited
	Note	£000		£000
Cash flow from operating activities
Profit before taxation		33,581		30,814
Share based payment charge		2,395		2,446
Depreciation	1	49,768		40,319
Amortisation and impairment	1	4,632		8,101
Financial expense		4,830		3,496
Financial income		(88)		(75)
Profit on sale of property, plant and equipment		(7,583)		(6,095)
Operating cash flow before changes in working capital		87,535		79,006
Decrease / (increase) in inventories		853		(1,049)
Increase in trade and other receivables		(9,518)		(6,225)
Increase in trade and other payables		13,818		1,907
Cash generated from operations		92,688		73,639
Interest paid		(4,696)		(3,190)
Interest element of finance lease rental payments		(221)		(213)
Interest received		88		75
Income tax paid		(7,948)		(7,014)
Net cash generated from operating activities		79,911		63,297
Cash flow from investing activities
Disposal of property, plant and equipment		19,969		18,518
Purchase of property, plant and equipment		(74,588)		(71,571)
Acquisition of businesses and subsidiaries (net of cash acquired)		-		(49,660)
Net cash used in investing activities		(54,619)		(102,713))
Cash flow from financing activities
Purchase of own shares by Employee Trust		(3,297)		(822)
Repayment of borrowings		(44,000)		(29,036)
Proceeds from new loans		37,000		79,000
New finance leases		108		348
Capital element of hire purchase/finance lease agreements		(1,551)		(1,275)
Dividends paid		(10,853)		(8,983)
Net cash (used in) /generated from financing activities		(22,593)		39,232
Increase / (decrease) in cash and cash equivalents		2,699		(184)
Effect of exchange rate fluctuations on cash held		(70)		(395)
Cash and cash equivalents at the beginning of the year		9,503		10,082
Cash and cash equivalents at the end of the year		12,132		9,503

NOTES

The preliminary results have been prepared on the basis of the accounting policies which are set out in Vp plc's annual report and accounts for the year ended 31 March 2019. With the exception of the new standards below, the accounting policies applied are in line with those applied in the annual financial statements for the year ended 31 March 2018.

EU Law (IAS Regulation EC1606/2002) requires that the consolidated accounts of the Group for the year ended 31 March 2019 be prepared in accordance with International Financial Reporting Standards ('IFRSs') as adopted for use in the EU ('adopted IFRSs').

Whilst the financial information included in this preliminary announcement has been computed in accordance with adopted IFRSs, this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements in June 2019.

The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 March 2019 or 2018. Statutory accounts for 31 March 2018 have been delivered to the registrar of companies, and those for 31 March 2019 will be delivered in due course. The auditor has reported on those accounts; the reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 31 March 2018. The statutory accounts for the year ended 31 March 2019 will be finalised on the basis of the financial information presented by the Directors in these preliminary results and will be delivered to the registrar of companies following the Annual General Meeting of Vp plc.

The Group has applied IFRS 9 Financial Instrumentswhich replaces IAS 39 related to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting. The adoption of IFRS 9 from 1 April 2018 primarily resulted in changes in the Group's accounting policy for impairment of financial assets. In accordance with the transitional provisions of IFRS 9, comparative figures have not been restated. In addition, the impact of IFRS 9 has not been adjusted within opening reserves due to the revised policy having an immaterial impact of £0.1 million as of 31 March 2018.

The Group has applied IFRS 15 Revenue from Contracts with Customersas issued in May 2014. In accordance with the new transition provisions of IFRS 15 the new rules have been adopted retrospectively. There was £nil cumulative effect of initially applying this Standard as an adjustment to the opening balance of retained earnings. The adoption of IFRS 15 did not result in significant changes to the Group's accounting policies and had no impact to the amounts recognised in the consolidated financial statements.

The financial statements were approved by the Board of Directors on 4 June 2019.

1. Business Segments

	Revenue		Depreciation, amortisation and impairment		Operating profit before amortisation and exceptional items
	2019	2018	2019	2018	2019	2018
	Unaudited	Audited	Unaudited	Audited	Unaudited	Audited
	£000	£000	£000	£000	£000	£000
UK	350,308	271,989	48,282	37,966	49,838	43,001
International	32,522	31,650	6,118	10,454	1,733	1,017
Total	382,830	303,639	54,400	48,420	51,571	44,018

Operating profit before amortisation and exceptional items is reconciled to profit before tax in the Income Statement. In addition, all performance measures stated as before amortisation are also before impairment of intangibles.

The amortisation and impairment charge of £4.6 million (2018: £8.1 million) includes £0.7 million (2018: £5.3 million) in relation to impairment of goodwill and intangibles.

Furthermore, return on average capital employed is based on profit before tax, interest, amortisation and exceptionals divided by average capital employed on a monthly basis.

2. Exceptional Items

During the year, the Group incurred £8,616,000 (2018: £1,682,000) of exceptional costs in relation to regulatory review costs; integration of the Brandon Hire Group Holdings Limited acquisition; together with restructuring costs in relation to severance payments and depot closure costs within Hire Station and Airpac.

The Competition and Markets Authority (CMA) announced on 9 April 2019 that it is investigating three major suppliers of groundworks products to the construction industry. The CMA has provisionally found that the 3 businesses, including a part of the Group's excavation support system business (Groundforce), were involved in suspected anti-competitive behaviour. The CMA's findings are, at this stage in its investigation provisional and do not necessarily lead to a decision that the companies have breached competition law. We continue to work on our response to the CMA's findings. At this point in the process we cannot make an accurate estimate of the likely cost that may subsequently arise in the event that the CMA were to decide in the future that a breach of competition law has taken place. However, accounting standard IAS 37 requires us to provide an amount in these accounts and accordingly we have included a figure of £4.5 million as an exceptional cost. This figure is in the arithmetic midpoint of a range of possible outcome (£0 to £9.0 million) that we have calculated based upon previous cases and CMA published guidance and without any admission of culpability.

In the prior year £1,682,000 in relation to the acquisition of Brandon Hire Group Holdings Limited. These one off costs related to the professional fees and legal costs associated with the acquisition process and the Competition and Markets Authority (CMA) review of the acquisition, together with restructuring costs in relation to severance payments and depot closure costs. The CMA review was subsequently concluded in March 2018 with the acquisition being cleared by the CMA. These are analysed as follows:

	2019 Unaudited	2018 Audited
	£000	£000
Professional fees, legal costs and CMA costs	-	1,141
Regulatory review costs	4,500	-
Integration costs	3,004	-
Restructuring costs	1,112	541
Total	8,616	1,682

3. Earnings Per Share

The calculation of basic earnings per share of 65.20 pence (2018: 61.72 pence) is based on the profit attributable to equity holders of the parent of £25,822,000 (2018: £24,366,000) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2019 of 39,603,000 (2018: 39,476,000), calculated as follows:

	2019 Unaudited	2018 Audited
	Shares	Shares
	000s	000s
Issued ordinary shares	40,154	40,154
Effect of own shares held	(551)	(678)
Weighted average number of ordinary shares	39,603	39,476

Basic earnings per share before the amortisation of intangibles was 95.14 pence (2018: 84.91 pence) and is based on an after tax add back of £11,855,000 (2018: £9,154,000) in respect of the amortisation of intangibles and exceptional items.

The calculation of diluted earnings per share of 63.66 pence (2018: 60.95 pence) is based on profit attributable to equity holders of the parent of £25,822,000 (2018: £24,366,000) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2019 of 40,564,000 (2018: 39,976,000), calculated as follows:

	2019 Unaudited	2018 Audited
	Shares	Shares
	000s	000s
Weighted average number of ordinary shares	39,603	39,476
Effect of share options in issue	961	500
Weighted average number of ordinary shares (diluted)	40,564	39,976

Diluted earnings per share before the amortisation of intangibles and exceptional items was 92.88 pence (2018: 83.85 pence).

4. Analysis of Net Debt		At 31 March 2019 Unaudited £000	At 1 April 2018 Audited £000
Cash and cash equivalents		(29,044)	(18,194)
Bank overdraft		16,912	8,691
Cash and cash equivalents as per cash flow statement		(12,132)	(9,503)
Current finance lease debt		747	1,527
Non current debt		179,485	187,148
Net debt		168,100	179,172

Year end gearing (calculated as net debt expressed as a percentage of shareholders' funds) stands at 100% (2018: 116%).

As at 31 March 2019 the Group had £200 million (2018: £200 million) of committed revolving credit facilities. In addition to the committed facilities, the Group net overdraft facility at the year-end was £7.5 million (2018: £5 million).

5. Taxation

The charge for taxation for the year represents an effective tax rate of 23.1% (2018: 20.9%). The rate of tax is expected to reduce to 17% in the year ending 31 March 2021. The effective tax rate excluding prior year adjustments and disallowable expenses is 20.6% (2018: 19.4%).

6. Dividend

The Board has proposed a final dividend of 22.0 pence per share to be paid on 8 August 2019 to shareholders on the register at 28 June 2019. This, together with the interim dividend of 8.20 pence per share paid on 11 January 2019, makes a total dividend for the year of 30.2 pence per share (2018: 26.00 pence per share). The ex-dividend date will be 27 June 2019 and the last day to elect to participate in the dividend reinvestment plan will be 12 July 2019.

7. Principal risks and uncertainties

The Board is responsible for determining the level and nature of risks it is appropriate to take in delivering the Group's objectives, and for creating the Group's risk management framework. The Board recognises that good risk management aids effective decision making and helps ensure that risks taken on by the Group are adequately assessed and challenged.

The Group has an established risk management strategy in place and regularly reviews divisional and department risk registers as well as the summary risk registers used at board level. A risk register is prepared as part of the due diligence carried out on acquisitions and the methodology is subsequently embedded.

All risk registers have a documented action plan to mitigate each risk identified. The progress made on the action plan is considered as part of the risk review process. The summary divisional and departmental risk registers and action plans were reviewed at risk meetings held in May 2019. In all cases it is considered that the risk registers are being used as working documents which provides the required assurance that existing risks are being managed appropriately. In addition, the risk registers provide a process for recognising, scoring and thus appropriately managing new risks.

The risk registers are reviewed at the start (to facilitate the planning process) and at the end of each internal audit project. A post audit risk rating is agreed with management. If new risks are identified following an audit project they are added to the relevant risk register. Heat maps illustrating post audit risk ratings and new risks are provided to the board in each published internal audit report.

To promote risk awareness amongst group and divisional employees, risk registers have now been disseminated further down levels of management.

Further information is provided below on our principal risks and mitigating actions to address them.

Market risk

Risk description

An economic downturn (as a result of economic cycles, political and Brexit related uncertainty) could result in worse than expected performance of the business, due to lower activity levels or prices.

Mitigation

Vp provides products and services to a diverse range of markets with increasing geographic spread. The Group regularly monitors economic conditions and our investment in fleet can be flexed with market demand. We have reviewed potential Brexit related risks including exchange rates, tariffs, human resources and legislation and have concluded that other than market uncertainty the risks are assessed as relatively low impact.

Competition

Risk description

The equipment rental market is already competitive, and could become more so, potentially impacting market share, revenues and margins.

Mitigation

Vp aims to provide a first class service to its customers and maintains significant market presence in a range of specialist niche sectors. The Group monitors market share, market conditions and competitor performance and has the financial strength to maximise opportunities.

Investment/product management

Risk description

In order to grow, it is essential the Group obtains first class products at attractive prices and keeps them well maintained.

Mitigation

Vp has well established processes to manage its fleet from investment decision to disposal. The Group's return on average capital employed was a healthy 14.5% (2018: 14.8%) in 2018/19. The quality of the Group's fleet disposal margins also demonstrate robust asset management and appropriate depreciation policies.

People

Risk description

Retaining and attracting the best people is key to our aim of exceeding customer expectations and enhancing shareholder value.

Mitigation

Vp offers well structured reward and benefit packages, and nurtures a positive working environment. We also try to ensure our people fulfil their potential to the benefit of both the individual and the Group, by providing appropriate career advancement and training.

Safety

Risk description

The Group operates in industries where safety is a key consideration for both the well-being of our employees and the customers that hire our equipment. Failure in this area would impact our results and reputation.

Mitigation

The Group has robust health and safety policies, and management systems. Our induction and training programmes reinforce these policies. We have compliance teams in each division.

We provide support to our customers exercising their responsibility to their own workforces when using our equipment.

Financial risks

Risk description

To develop the business Vp must have access to funding at a reasonable cost. The Group is also exposed to interest rate and foreign exchange fluctuations which may impact profitability and has exposure to credit risk relating to customers who hire our equipment.

Mitigation

The Group has a revolving credit facility of £200 million and maintains strong relationships with all banking contacts. Our treasury policy defines the level of risk that the Board deems acceptable. Vp continues to benefit from a strong balance sheet, with growing EBITDA, which allows us to invest into opportunities.

Our treasury policy requires a significant proportion of debt to be at fixed interest rates and we facilitate this through interest rate swaps. We have agreements in place to buy or sell currencies to hedge against foreign exchange movements. We have strong credit control practices and use credit insurance where it is cost effective. Average debtor days were 58 (2018: 59) days and bad debts, as a percentage of revenue remained low at 0.5% (2018: 0.5%).

Contractual risks

Risk description

Ensuring that the Group commits to appropriate contractual terms is essential; commitment to inappropriate terms may expose the Group to financial and reputational damage.

Mitigation

The Group mainly engages in supply only contracts. The majority of the Group's hire contracts are governed by the hire industry standard terms and conditions. Vp has defined and robust procedures for managing non-standard contractual obligations.

Legal and regulatory requirements

Risk description

Failure to comply with legal or regulatory obligations culminating in financial penalty and/or reputational damage.

Mitigation

The Group mitigates this risk utilising:

· Specialist Project Committees (e.g. GDPR) with ongoing responsibility to review key compliance areas and investigate breaches and non-conformance;

· Assurance routines from Group Internal Audit and External Auditors;

· Comprehensive training and awareness programmes rolled out to wider business (including GDPR, Modern Slavery, Competition Law, Bribery and Corruption) by representatives from Group Finance, HR, Internal Audit and IT;

· Established whistleblowing policy circulated to all employees;

· Use of legal advisers where required.

8. Forward Looking Statements

The Chairman's Statement and Business Review include statements that are forward looking in nature. Forward looking statements involve known and unknown risks, assumptions, uncertainties and other factors which may cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Except as required by the Listing Rules and applicable law, the Company undertakes no obligation to update, review or change any forward looking statements to reflect events or developments occurring after the date of this report.

9. Annual Report and Accounts

The Annual Report and Accounts for the year ended 31 March 2019 will be posted to shareholders before the end of June 2019.

Directors' Responsibility Statement in Respect of the Annual Financial Report (extracted from the Annual Financial Report)

We confirm that to the best of our knowledge:

· The Group and Parent Company financial statements which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group and Parent Company; and

· The Business Review and Financial Review, which form part of the Directors' Report, include a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with the description of the principal risks and uncertainties that they face.

10. Alternative Performance Measures

(i) All performance measures stated as before amortisation are also before impairment of intangibles.

(ii) Basic earnings per share pre amortisation and exceptionals is reconciled to basic earnings per share in note 3.

(iii) Profit before tax, amortisation and exceptionals is reconciled to profit before tax in the Income Statement.

(iv) Return on average capital employed is based on profit before tax, interest, amortisation and exceptionals divided by average capital employed on a monthly basis using the management accounts. Profit before tax, interest, amortisation and exceptionals is reconciled to profit before interest and tax in the Income Statement.

For and on behalf of the Board of Directors.

J F G Pilkington Director

A M Bainbridge Director

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