‘Covid brought out the best in the business’ says group as it focuses on the future
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Tool rental group Vp says that the pandemic has “brought out the very best in the business” as it reports its full year results for the period ending 31 March 2021
The Harrogate-based business noted that its results were nearly at pre-Covid levels, with revenue for the year of £308m (2020: £362.9m), and ahead of expectations.
Referring to 2020 as a year of “unique challenges” the business added that the majority of its revenue decline was suffered early on in the reporting period, in March and April when Covid lockdowns had the largest impact on all sectors. Since then the business has progressively recovered, finishing the year with revenue run rate at 95% of the previous year.
“We’re pleased that after a very difficult and challenging year we’ve seen an excellent business recovery”, said Vp’s chief executive Neil Stothard. “We finished the year well in March and momentum into the new year is very good and are excited about the prospects for the coming year.”
Stothard noted that as a result of remaining “open and available” to customers throughout the pandemic the business was able to benefit from the rapid return of infrastructure, construction and housebuilding sectors – the latter of which was shut down for approximately six to eight weeks.
The results also demonstrated the impact of the pandemic globally with Vp’s UK operations seeing revenues fall by 15% and its international operations which include TR Group – Australasia’s leading technical equipment rental group, dropping by 16%.
Commenting on this Stothard said: “I think the main difference if I contrast the UK with Australia and New Zealand is that the latter have been very successful in quelling the virus by very severe lockdown processes, which has helped in those jurisdictions as opposed to the UK where we had a pretty terrible Covid experience last year.
“But in business terms it has sort of flipped around around because in the UK we’ve seen a growing confidence in business to get on and recover, while in Australia and New Zealand although they’re desperate to get on and recover there’s also a nervousness about any outbreak because they’ve not had the wide ranging vaccination programme, meaning there can be borders closed overnight which is affecting business confidence.”
The turbulance of the 2021 financial year, also saw the Competition and Markets Authority announce in December that one of the Group’s businesses, Groundforce, had been found to be involved in anto-competitive behaviour aloingside two other major suppliers of groundworks products, incurring a fine of £11.2m
Following the provisional findings which were released in 2019, the group included an exceptional cost in its 2019 results of £4.5m, as a result of this the business has in its 2021 results posted a further £7.5m exceptional cost in relation to the regulatory review – with £6.8m relating to the remaining fee of the fine and a further £0.7m for professional fees incurred as a result of the action.
Commenting on the CMA action, Jeremy Pilkington, chairman of Vp said: “We fundamentally disagree with the conclusions of the CMA but the Board reluctantly decided that it was not in the best interests of the business to contest this finding given the uncertainty of the process, the costs and the continued distraction that it would represent to senior management. Vp has always prided itself on a corporate ethic of fairness, integrity and respect. We believe that our behaviour continues to exemplify these values irrespective of the CMA’s findings.”
Looking ahead Stothard said the business is “firmly looking forwards rather than backwards after the most testing year for everyone”.
“The market backdrop for Vp is positive. Major infrastructure sectors, such as water, rail and transmission are primed for escalating growth in the coming year, added to which other major projects such as HS2 and Hinkley Point will continue to drive demand. We see the residential construction market continuing to be supportive as housebuilders maintain their build programmes. Whilst the general construction sector has been slightly slower to recover, we are seeing positive signs of a sustained improvement in this key and large market.”
He added that the business has “resilient characteristics” that have enabled it “consistently combat the most challenging of conditions”.
“Twelve months ago I said that we had entered the pandemic with an excellent business and that as best as we can manage, we planned to exit with an equally excellent business. I believe this plan has been achieved.
“As a team we are excited about the prospects for the coming year which we approach with increasing confidence as each day comes.”