Group optimistic of building back as its profits hit by challenging start to the year
Tool rental group Vp has recorded a drop in profit and revenues for the first half of the year to 30 September.
The Harrogate-based business, which previously referred to 2020 as a year of “regrouping and rebuilding”, reported a £8.6m profit and stated it had reduced net debt by £41.1m against a backdrop of continued disruption caused by Covid-19
Pre tax profit was down two thirds on the previous year with revenues down 24% to £142.1m. Despite this and following a record financial year in 19/20 for the business, the firm has selected to pay a special dividend of 22p per share – equating to circa £8.67m.
The group also reported exceptional costs of £13m with the majority of this – £11.14m – relates to a proposed “worst case scenario” fine from an ongoing CMA investigation. The CMA has previously revealed it has found evidence of collusion with two other suppliers of groundwork products.
Neil Stothard, CEO of Vp told TheBusinessDesk.com, that the business had been managed with “great focus” over this period which saw a severe drop in activity at the start, caused by the pandemic.
“One of the real positives coming out of this period is that we’ve been able to reduce our net debt at the end of September to £118.7m. That’s the result of careful management of capital expenditure, working capital management and overall cost control.”
He added that since this period the business has confirmed that it would be losing 150 jobs through redundancy and added that the headcount was actually down from about 3200 to 3000, with a number of roles not being replaced alongside the announced redundancies.
Looking ahead Stothard said he and the board are sanguine about the future and how quickly revenues might recover into 2021.
Of its three key markets – infrastructure, general construction and house building, he explained that: “Infrastructure represents 40% of group revenue structure and we believe it will be one of the more positive recoveries and a positive area for the business.”
In contrast, Stothard predicts general construction will recover more slowly and explained that this will be dependent on “improvements in confidence” both business and otherwise with the vaccine for Covid-19.
Jeremy Pilkington, chairman of Vp, added: “The Group remains in excellent financial condition and is well positioned to take advantage of the uplift in demand and return the business to its historic levels of profitability. The Board is optimistic but also realistic about prospects for the second half and beyond.”
