ANNUAL REPORT AND
ACCOUNTS 2016
Equipment Rental since 1954
www.vpplc.com
In This Report
Strategic Report
02
03
04
06
08
09
10
18
21
21
22
24
About Us
Our Business Model and Strategy
Over 60 Years in Business
Group Businesses
Financial Highlights
Chairman’s Statement
Business Review
Financial Review
Viability Statement
Risk Management
Principal Risks and Uncertainties
Corporate and Social Responsibility
Governance
29
30
34
36
49
52
53
The Board
Governance
Audit Committee Report
Remuneration Report
Directors’ Report
Statement of Directors’ Responsibilities
Independent Auditors’ Report
Financial Statements
57
58
59
60
61
62
63
64
Consolidated Income Statement
Statements of Comprehensive Income
Statements of Changes in Equity
Consolidated Balance Sheet
Parent Company Balance Sheet
Consolidated Statement of Cash Flows
Parent Company Statement of Cash Flows
Notes
Shareholder Information
91
92
Five Year Summary
Directors and Advisors
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Vp plc Annual Report and Accounts 2016
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01
About Us
Vp is a specialist rental business.
Our objective is to deliver sustainable, quality
returns on behalf of our shareholders by providing
products and services to a diverse range of end
markets including infrastructure, construction,
housebuilding and oil and gas, both in the UK and
overseas.
UK AND OVERSEAS
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Vp plc Annual Report and Accounts 2016
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Our Business Model and Strategy
Our aim is to generate sustainable value creation for shareholders and other stakeholders through our expertise in asset
management, by exceeding customer expectations, maintaining and utilising our financial strength and retaining and
attracting the best people.
Embrace change
and look for
innovation yet take
long term view
Use our strong balance
sheet and positive cash
generation to grow through
fleet investment and
acquisitions
Buy quality products
at competitive
prices, maintain our
assets through their
rental life cycle
Aim to provide
'value added' services -
people, training,
design
Deliver product service
reliability and operational
excellence:
- centralised hire desk
- sector leading
IT systems
WE AIM TO
CREATE VALUE
THROUGH SPECIALIST
EQUIPMENT RENTAL IN NICHE
SECTORS WHERE WE HAVE
MARKET LEADING
POSITIONS
Retaining and attracting
the best people and
working safely are key to our
aims of exceeding customer
expectations and
enhancing shareholder
value
Serving diverse markets in the UK and overseas including infrastructure,
construction, housebuilding, oil and gas.
HOW WE MEASURE SUCCESS (KEY PERFORMANCE INDICATORS)
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OBJECTIVE
Specialism and
market leading
positions
Value added services
and operational
excellence
▲
▲
MEASURE
PBTA, revenue growth, margins
Innovation
Asset management
financial strength
▲
People and safety
▲
• ROACE
• EBITDA gearing
• Net debt
• Fleet spend
• Annualised
employee turnover*
• Reportable
accidents*
*shown in CSR report
Vp plc Annual Report and Accounts 2016
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03
Over 60 Years in Business
The Company was founded in 1954 and floated on the UK Stock Market in 1973 as Vibroplant plc.
In 2000, the Company exited its historically core general plant business to focus on higher return specialist activities. At the
same time it changed its name to Vp plc.
Since then the Group has developed a wide range of sector leading, specialist rental businesses serving a diverse range of end
markets in the UK and increasingly, internationally.
1954
Vibratory Roller &
Plant Hire (Northern)
Limited founded
1980
Shoring division
established
1973
Floated on main
market as Vibroplant plc
1954
1973
1980
1975
First move into
specialist plant - Airpac
1982
US powered access
business established
1996
Tool Hire:
Cannon Tool Hire
acquired in 1996
1990
1990
Groundforce
acquired from SGB
1996
Exit from USA;
UK specialist
businesses
expanded
1997
Rail: Torrent
Trackside
acquired
Turnover
1970: £2m
1980: £14m
1990: £70m
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Vp plc Annual Report and Accounts 2016
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2002-2004
Shoring expansion through
acquisition of Mechplant,
Trenchshore & Eve Shorco
2001
Hire Station formed
through merger of
five regional tool
businesses
2000
UK Forks
division created
2001
Renamed Vp plc
2011
Mainland Europe -
Groundforce
2006
Acquisition of
Bukom Oilfield Services
(Airpac Bukom formed)
2015-16
Acquisitions of Test
& Measurement
and Higher Access
2013
Acquisition of
“Mr Cropper”
2013
2016
2006
2010
Geographical expansion:
Global (Airpac Bukom),
Eire (Groundforce),
Germany (TPA)
2005
TPA and ESS
acquired
2014
Vp plc
celebrated its
60th Anniversary
2007-2009
Continuing growth in
specialist areas via
acquisitions of MEP
and UMole
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2000: £55m
2010: £129m
2015: £209m
Vp plc Annual Report and Accounts 2016
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Group Businesses
Hire Station is a major national provider of
small tools, climate, lifting, safety, survey and
pressfitting equipment to industry, construction
and homeowners throughout the UK.
Specialist suppliers of rail infrastructure portable
plant and related trackside services to Network
Rail, London Underground and their appointed
track renewal and project contractors.
Groundforce is the market leading rental provider of
excavation support systems and specialist products for
the water, civil engineering and construction industries
in the UK, the Republic of Ireland and mainland Europe.
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Group Businesses
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UK Forks has established itself as the UK’s leading specialist
hirer of telescopic handlers and tracked access platforms
working closely with our customers to improve safety and
productivity on building sites.
Airpac Bukom Oilfield Services holds a market leading position
in the provision of specialist compressed air and steam
generation services. The business supports industry segments
as diverse as well testing, offshore fabric maintenance, product
transfer, cuttings transportation and LNG fabrication. Our
equipment spreads are mobilised from an unrivalled network
of service facilities located in the UK, Singapore, Australia, U.A.E.
and Latin America.
TPA Portable Roadways is one of Europe’s largest suppliers
of temporary access solutions. Operating from bases in the
UK and Germany, TPA provides equipment rental and
installation of portable roadways, walkways and stairways,
to customers in the transmission, construction, rail and
outdoor events markets.
Vp plc Annual Report and Accounts 2016
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Financial Highlights
GROUP REVENUE
BASIC EARNINGS PER SHARE (PRE AMORTISATION)
208.7
205.6
183.1
161.5
167.0
£208.7m
+1.5%
62.2p
+14.3%
42.0
35.5
30.8
62.2
54.5
2012
2013 2014 2015 2016
2012
2013 2014 2015 2016
PROFIT BEFORE TAX AND AMORTISATION
DIVIDENDS PER SHARE
£29.8m
+11.4%
29.8
26.8
20.1
17.4
16.0
18.85p
+14.2%
14.00
12.25
11.35
18.85
16.50
2012
2013 2014 2015 2016
2012
2013 2014 2015 2016
RETURN ON AVERAGE CAPITAL EMPLOYED
NET DEBT
86.1
16.3%
+0.6%
16.2
16.3
13.3
13.5
13.0
£86.1m
+28.9%
66.8
53.0
45.3
40.4
2012
2013 2014 2015 2016
2012
2013 2014 2015 2016
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Vp plc Annual Report and Accounts 2016
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Chairman’s Statement
I am delighted to report to shareholders
on another year of strong progress for
the Group, both financially and also in
terms of three exciting acquisitions, one
of which, completed just after the year
end, delivers part of our long term
objective to expand the Group’s
overseas presence.
Chairman: Jeremy Pilkington
We have delivered an 11% increase in pre-tax profits at £29.8 million (2015: £26.8 million), beating last year’s record
breaking result. Revenues improved 2% to £208.7 million (2015: £205.6 million). Earnings per share increased 14% to
62.2 pence per share (2015: 54.5 pence per share) and both margins and return on capital employed also moved ahead.
Net debt at the year-end increased to £86.1 million (2015: £66.8 million) after capital expenditure on the rental fleet of
£45.9 million (2015: £49.3 million) and including the £8.1 million outlay on the two acquisitions made during the year.
In view of this excellent set of results, the Board is recommending a final dividend of 13.5 pence per share making a total for
the year of 18.85 pence per share, an increase of 14%. Subject to shareholders’ approval at our Annual General Meeting on
26 July 2016, it is proposed to pay the final dividend on 2 August 2016 to members registered as at 8 July 2016.
It has been a busy period for acquisitions, with two concluded during the year and a third which completed just post the year
end in April.
In November, we acquired Test & Measurement, a long established leader in the hire and sale of electrical instrumentation and
environment monitoring equipment. Test & Measurement has two branches in the UK and now operates as part of our ESS
Safeforce business.
In March, we acquired Higher Access Limited, a market leading hirer of tracked aerial work platforms. These products offer
significant performance advantages over traditional access products and will also complement the service offerings provided by
other businesses within the Group. Higher Access will continue to operate as a standalone business, working alongside our UK
Forks activities.
For some time now, we have been seeking to grow our non-UK revenues, subject to identifying the right quality opportunities.
We were therefore very pleased, in April, to acquire TR Pty Ltd, a market leading specialist provider of test and measurement
equipment, rental and calibration services with 13 branches in Australia, New Zealand and Malaysia. We look forward to
working with the TR team to grow this already excellent business.
It is my great pleasure, as always, to thank everyone for their hard work and loyalty which has made these excellent results
possible but especially this year to extend a very warm welcome to all the new members who have joined the Group.
Jeremy Pilkington
Chairman
7 June 2016
Vp plc Annual Report and Accounts 2016
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09
Business Review
Overview
Vp plc is a specialist rental business
providing products and services to a
diverse range of end markets including
infrastructure, construction, housebuilding
and oil and gas, both in the UK and
overseas.
Revenue
Operating profit before amortisation
Operating margin
Investment in rental fleet
ROACE
Year ended
31 March 2016
£208.7 million
£31.9 million
15.3%
£45.9 million
16.3%
Chief Executive: Neil Stothard
Year ended
31 March 2015
£205.6 million
£28.8 million
14.0%
£49.3 million
16.2%
The Group has made further significant progress in the current year, reporting an 11% increase in operating profits.
Operating profits were £31.9 million which compares with £28.8 million in the prior year. Operating margins again advanced
strongly to 15.3%, and our key measure of profit quality, return on average capital employed, improved to 16.3% (2015: 16.2%)
in the current year.
Market behaviours have been mixed, but generally favourable. Across our four core sectors, we have seen good support in
infrastructure, housebuilding and construction markets, partially mitigated by a challenged oil and gas sector, where demand
has fallen sharply as investment has been cut in response to a period of historically low oil prices.
Critically, the Group continues to deliver strong cash generation which is highlighted by the advance in EBITDA, which grew to
£59.3 million (2015: £53.8 million), an increase of 10%.
Investment in rental fleet was robust at £45.9 million (2015: £49.3 million). Fleet disposals continue to be a key element of
the capital investment process and proceeds increased to £17.2 million (2015: £12.0 million) generating profit on disposal of
£6.2 million (2015: £3.3 million).
In addition to organic investment in the fleet, the Group made two acquisitions in the period, acquiring Test & Measurement
Group Limited for £3.95 million in November 2015 and Higher Access Limited for £4.1 million in March 2016.
We have for some time been alert to opportunities to further expand our trading footprint overseas and we were delighted to
announce, shortly after the end of the financial year, the acquisition of TR Pty Ltd (TR) on 21 April 2016 for a cash consideration
of AUD $17.4 million (Australian dollars) and assumed net debt of AUD $6.6 million. TR adds significantly to the Group’s
existing Asia Pacific trading locations in Perth and Singapore, adding eight branches in Australia, three in New Zealand and two
in Malaysia.
In the coming year, we anticipate that the UK infrastructure market will continue to remain supportive. The current Asset
Management Programme (AMP6) in the water industry is in its second year and we anticipate that we will see activity in this
sector start to pick up later in our financial year.
The non-residential construction market remains mixed, though overall we expect the sector to be positive for the Group.
Equally, housebuilding is expected to remain supportive. The final key market area is oil and gas which represented c.9% of
Group revenues in the year under review. This sector is still challenged by the collapse of the oil price and we expect the
recovery will be over the medium rather than the short term.
The specialist nature of our services continues to provide an attractive, long term support to our customer base and the results
for 2015/16 endorse the quality of our business offer.
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Vp plc Annual Report and Accounts 2016
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Business Review
Rough terrain material handling
equipment and tracked access
platforms for the housebuilding,
general construction and industrial
markets.
Revenue
Operating profit before amortisation
Investment in rental fleet
Year ended
31 March 2016
£20.0 million
£5.2 million
£11.1 million
Year ended
31 March 2015
£18.2 million
£4.0 million
£11.2 million
UK Forks enjoyed another year of strong progress delivering a 30% increase in profits to £5.2 million (2015: £4.0 million).
Revenues grew by 10% from £18.2 million to £20.0 million.
The business experienced similar levels of demand to prior year from both the housebuilding and construction sectors, a point
reinforced by maintained levels of investment in the rental fleet of £11.1 million (2015: £11.2 million). Our diverse customer
base continues to recognise and value the importance of our commitment to delivering outstanding service and backup.
On 1 March 2016 the business acquired Higher Access Limited, specialists in the rental of tracked access platforms to a wide
range of markets including construction, transmission and utilities. Higher Access will work alongside the UK Forks telehandler
activity and we look forward to helping their highly experienced team to continue the development of the business.
In the new financial year, we anticipate that housebuild and construction will remain supportive which, added to further
development of the Higher Access business, points to another year of progress for the division.
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Business Review
Excavation support systems and
specialist products for the water, civil
engineering and construction
industries in the UK, the Republic of
Ireland and mainland Europe.
Revenue
Operating profit before amortisation
Investment in rental fleet
Year ended
31 March 2016
£45.0 million
£9.6 million
£6.5 million
Year ended
31 March 2015
£44.4 million
£8.9 million
£5.7 million
Groundforce delivered another good result, with profits improving to £9.6 million (2015: £8.9 million), a 9% increase
year on year, from revenues of £45.0 million, which were marginally ahead of the prior year.
The shoring division made progress, with good contributions from UK major projects, construction and housebuilding. As anticipated,
demand from the Water Industry (AMP6) was at its cyclical low. Initiatives on new transport and operating structures, instigated
in the prior year, also started to deliver important efficiencies to the business. Within the piling business the overall trading
levels were flat and, like shoring, regional demand was mixed, with Scotland and Ireland more subdued. A review of fleet saw
the successful divestment of the under-utilised vacuum excavator fleet, through trade sales, generating in excess of £1.25 million
of proceeds.
A number of basement propping schemes throughout Europe went live and were completed in the year, the most notable
being in Norway. The on-going Qatar metro contract, for a European based consortium, continued through the year, though our
operations in Germany faced trading headwinds as construction demand softened.
Capital investment into the rental fleet was £6.5 million (2015: £5.7 million). This both augmented the product portfolio and
maintained the quality of the existing fleet.
It is anticipated that next year most markets will be stable but the timing of the release of AMP6 related work will be an
important factor, the current view being that this will begin towards the end of calendar year 2016.
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Vp plc Annual Report and Accounts 2016
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Business Review
Portable roadway access solutions to
the transmission, outdoor events,
construction and utility sectors in the
UK and mainland Europe.
Revenue
Operating profit before amortisation
Investment in rental fleet
Year ended
31 March 2016
£13.6 million
£1.0 million
£4.3 million
Year ended
31 March 2015
£14.6 million
£1.0 million
£2.3 million
TPA experienced a 7% drop in revenue to £13.6 million (2015: £14.6 million) primarily driven by softer levels of
demand in Germany. Despite the reduction in revenue, overall margins improved and operating profits of £1.0 million
were in line with the prior year.
The UK business traded satisfactorily despite a slower than expected transmission sector, a situation that has prevailed since the
break-up of the National Grid Alliances. As a consequence, there was an oversupply of product in the UK market, resulting in
price pressure. This was mitigated, in part, by a planned and progressive re-alignment of the business mix, including the
introduction of new products and services, which has created fresh revenue streams for the UK business.
Germany, like the UK, experienced a shortfall in demand from the key renewables and transmission markets, which were
heavily impacted by delays in project starts, mainly caused by caution surrounding government subsidies and planning
approvals.
Capital expenditure on the rental fleet totalled £4.3 million (2015: £2.3 million), including new products, and in support of
contracts for the new financial year.
We expect improved prospects in the new financial year, with early signs of recovery in transmission activity in the UK, and a
gradual recovery in the German market.
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13
Business Review
Tools and specialist products for
industry, construction and home
owners.
Revenue
Operating profit before amortisation
Investment in rental fleet
Year ended
31 March 2016
£82.5 million
£11.5 million
£17.4 million
Year ended
31 March 2015
£77.0 million
£8.7 million
£20.1 million
Hire Station had an excellent trading year, reporting a profit increase of 32% to £11.5 million (2015: £8.7 million) on
revenues 7% ahead, at £82.5 million (2015: £77.0 million).
Healthy capital investment of £17.4 million, focussed mainly on high demand assets, means that we continue to build one of
the youngest hire fleets in the market. The focus on availability, quality and compliance remains the key to offering operational
excellence to our customers, and this we believe gives us a true competitive advantage. As usual safety has remained at the
top of the agenda and Hire Station was recently named “Safehire Company of the Year” at the prestigious Hire Awards of
Excellence 2016 awards.
The tools business made significant progress during the year, with new locations opened in London, South Wales, Glasgow and
Birmingham. The National Call centre in Manchester has been expanded and during the year we improved our lifting
equipment offer and further enhanced our on-line presence.
ESS Safeforce had another impressive trading year delivering growth in all of its key revenue streams. We successfully
negotiated a five year contract to supply the Valero Milford Haven Oil refinery and the business broadened its product offer
further with the acquisition in November 2015 of Test and Measurement Ltd.
The MEP business supplies specialist press fitting and electro fusion equipment and low level access equipment to the mechanical
and electrical sector. Revenues and profits moved ahead strongly in the year, supported by new locations in London and
enhancement of existing locations.
The Hire Station division has entered the new financial year in excellent shape and the end markets that it serves are all
expected to be supportive.
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Business Review
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Infrastructure equipment and
services for the railway renewals
and maintenance industry.
Revenue
Operating profit before amortisation
Investment in rental fleet
Year ended
31 March 2016
£32.5 million
£3.4 million
£5.2 million
Year ended
31 March 2015
£29.9 million
£3.4 million
£4.7 million
Torrent Trackside delivered profits of £3.4 million (2015: £3.4 million) in the year from revenues up 9% on the prior
year, at £32.5 million.
During the year the contractual relationship with Network Rail has continued to work well. The business experienced good
demand on both plain line track renewals, as well as switches and crossings work, and had a busy year on the London
Underground infrastructure programme, servicing Track Partnership, a joint venture between Balfour Beatty and TFL. Torrent
secured new work on the Crossrail project with Carillion and excelled during the Christmas programme, one of the largest it
has ever undertaken.
The Government is committed to investing in a programme of electrification to upgrade the UK railway network, and in Control
Period 5 there are numerous high profile projects notably Great Western, Midland Mainline and the North West Liverpool to
Manchester scheme. We have invested to create a large and modern fleet of portable overhead line products for use on these
projects. Total fleet capex was £5.2 million (2015: £4.7 million).
During the year there were two long awaited reports issued about the future shape of the industry. The Hendy and Shaw
reports address, respectively, the rail enhancement programme, and railway funding and devolution, and both were viewed
positively by Torrent. Equally, in Network Rail, we have excellent relationships both centrally and at route level and feel well
placed to support any structural changes that may occur in the future.
The current year has started well and opportunities remain in what is always a changing and demanding market place. Torrent
Trackside has an exemplary reputation for safety, service and delivery and remains well positioned to capitalise on those
opportunities.
Vp plc Annual Report and Accounts 2016
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15
Business Review
Equipment and service providers to
the international oil and gas
exploration and development
markets.
Revenue
Operating profit before amortisation
Investment in rental fleet
Year ended
31 March 2016
£15.2 million
£1.2 million
£1.4 million
Year ended
31 March 2015
£21.5 million
£2.8 million
£5.3 million
Further deterioration in global oil prices meant that trading conditions remained difficult across most of our service
offerings. As oil companies curtailed capital expenditure on exploration and production projects, well testing activity
continued the downward trend first experienced in the second half of the prior year and this has impacted activities
across most of our regions. Whilst revenues and profits reduced as a consequence of the prevailing market conditions,
the business remained profitable. Operating profits were £1.2 million (2015: £2.8 million) generated from revenues of
£15.2 million (2015: £21.5 million).
We did see resilience in our trading in the Americas and the scope of our presence in Australia saw that region perform ahead
of expectation. Liquid Natural Gas (LNG) infrastructure projects again provided the major source of revenue in Australia. On the
LNG contracts at Curtis Island in Queensland, testing work was completed on the QCLNG site and APLNG wound down towards
the end of the year. New awards were secured on the Wheatstone and Ichthys facilities in Western Australia and the Northern
Territory respectively.
Investment in fleet was £1.4 million, well down on the prior year spend of £5.3 million. Whilst management has further
aligned costs and structure to meet what will remain a challenging trading environment over the next 12 months, we continue
to be engaged in discussions on new added-value opportunities, and at the end of the year, secured a major geothermal
project in Scandinavia.
The short term trading background remains challenging but the Airpac Bukom team are focused on maximising returns from a
quiet market place, with the prospect of some recovery in the medium term as oil and gas prices return to levels more viable
for exploration and production investment.
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Business Review
Prospects
We enter the new financial year in good shape, with most end markets offering supportive trading environments and
with the prospect of fresh contributions from the three newly acquired businesses.
In particular, the acquisition of TR Group Pty underlines our determination to expand our trading horizons both in terms of
product and geography. We believe that opportunity exists to further leverage Vp’s key skill sets in equipment rental both in
the UK and in overseas markets.
Reflecting this, and catalysed by the TR acquisition, we have, in the new financial year, started to report the Group’s performance
in two distinct segments. These are UK and International: International being defined as the consolidated performance of
Airpac Bukom and TR, with the UK containing the consolidated performance of all other businesses within the Group.
Vp has, in the year under review, reported good progress, with further improvement in profit margins and returns, delivered
from a relatively modest growth in revenues. This trend is expected to continue as the varying demands of supportive
infrastructure, housebuilding and construction markets play against a challenged oil and gas sector.
The new financial year has started well and we look forward to another year of progression for Vp and our shareholders.
Neil Stothard
Chief Executive
7 June 2016
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17
Financial Review
Group revenues increased by 1.5% to £208.7
million (2015: £205.6 million). Profit before
tax and amortisation rose by 11.4% to £29.8
million (2015: £26.8 million) with PBTA
margins increasing to 14% (2015: 13%). The
return on average capital employed improved
on prior year to 16.3% (2015: 16.2%).
Group Finance Director: Allison Bainbridge
EARNINGS PER SHARE, DIVIDEND AND SHARES
Basic earnings per share before the amortisation of intangibles increased from 54.45 pence to 62.21 pence, an increase of 14%.
Basic earnings per share after the amortisation of intangibles was 57.49 pence (2015: 51.03 pence).
It is proposed to increase the final dividend to 13.5 pence per share. If approved, the full year dividend would be increased by
2.35 pence (14%) to 18.85 pence with a dividend cover of 3.3 times (2015: 3.3 times) based on earnings per share before
amortisation. The final dividend will be paid on 2 August 2016 to all shareholders on the register on 8 July 2016. At March 2016,
40.2 million shares were in issue of which 1.1 million shares were held by the Employee Trust. The average number of shares in
issue during the year was 38.9 million (2015: 38.9 million) after adjusting for shares held by the Employee Trust.
BALANCE SHEET
Net assets increased by £9.6 million to £121.4 million representing net assets per share of 302 pence (2015: 278 pence).
The Group’s balance sheet is summarised below:
As at
31 March 2016
£'million
As at
31 March 2015
£'million
Property, plant and equipment
167.2
Intangible assets / goodwill
Working capital
Pension asset
Deferred tax liability
Net debt
Net assets
46.4
(2.3)
1.5
(5.3)
(86.1)
121.4
147.8
43.4
(9.3)
1.1
(4.4)
(66.8)
111.8
Property, plant and equipment increased by
£19.4 million to £167.2 million. The movement
in the year mainly comprised; £52.0 million
(2015: £56.3 million) total capital expenditure
and £5.1 million from acquisitions, offset by
£27.4 million total depreciation and £10.9
million net book value of disposals. Rental
equipment at £147.2 million (2015: £131.6
million) accounts for 88% of property, plant
and equipment net book value. Expenditure on
equipment for hire was £45.9 million (2015:
£49.3 million) and depreciation of rental
equipment £24.7 million (2015: £22.4 million).
The Group carried forward £7.1 million (2015: £7.5 million) of intangible assets and £39.3 million (2015: £35.9 million) of
goodwill at 31 March 2016. The movement in the year reflects £5.3 million additions in respect of the acquisitions of Test &
Measurement Group Limited and Higher Access Limited, less amortisation and impairment of intangibles and goodwill of £2.3
million. Taking into account current and budgeted financial performance the Board remains satisfied with the carrying value of
these assets.
Debtor days reduced to 56 days compared to 58 days in the previous year. Gross trade debtors were £42.2 million at 31 March
2016 (2015: £41.2 million). Bad debt and credit note provisions totalled £3.8 million (2015: £5.0 million) equivalent to 9%
(2015: 12%) of gross debtors. The bad debt write off for the year ended 31 March 2016 as a percentage of total turnover was
0.4% (2015: 0.3%).
The Group’s defined benefit pension plan has a surplus of £1.5 million which is recorded as an asset on the balance sheet.
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Financial Review
CASH FLOWS AND NET DEBT
The Group continues to generate strong cash flows and EBITDA totalled £59.3 million (2015: £53.8 million). After funding
significant capital expenditure and acquisitions, net debt increased by £19.3 million from £66.8 million at 31 March 2015 to
£86.1 million at 31 March 2016. The Group’s cash flow is summarised below:
2016
£'million
2015
£'million
EBITDA
Cash generated from operations
Capital expenditure
Proceeds from disposals
Interest and tax
Dividends
Acquisitions
Other (EBT shares)
Cash movement
Finance leases acquired
Change in net debt
59.3
47.9
(50.2)
17.2
(6.9)
(6.6)
(7.1)
(10.5)
(16.2)
(3.1)
(19.3)
53.8
54.5
(52.9)
12.0
(4.9)
(6.0)
(5.4)
(11.1)
(13.8)
-
(13.8
)
After adjusting for movements in capital
creditors of £1.8 million, cash flows in respect
of capital expenditure were £50.2 million
(2015: £52.9 million).
Proceeds from disposal of assets amounted to
£17.2 million (2015: £12.0 million), producing
a profit on disposal of £6.2 million (2015: £3.3
million). This level of profit on disposal is
higher than the historical experience due to a
combination of asset management and one off
items. The margin on profit on sale from
disposals of fleet assets at 36% (2015: 27%)
reflects prudent depreciation policies and
strong asset management.
Net interest expense for the year totalled £2.1
million (2015: £2.0 million). Interest cover before
amortisation was 15.2 times (2015: 14.2 times)
and Net Debt/EBITDA was 1.45 (2015: 1.24), both comfortably within our banking covenants of greater than 3 times and lower
than 2.5 times respectively. Gearing calculated as net debt divided by total equity was 71% (2015: 60%).
In November 2015 the Group acquired the entire share capital of Test and Measurement Group Limited for consideration of £4.0
million and in February 2016 we also acquired the entire share capital of Higher Access Limited for £4.1 million. The cash cost of
these acquisitions was £7.1 million after adjusting for cash acquired with the businesses. The acquisition of Higher Access Limited
included the assumption of finance lease liabilities which have increased net debt.
Dividend payments to shareholders totalled £6.6 million (2015: £6.0 million), and cash investment in own shares on behalf of
the Employee Benefit Trust (EBT) during the year was £10.6 million (2015: £11.1 million).
CAPITAL STRUCTURE AND TREASURY
The Group finances its operations through a combination of shareholders’ funds, bank borrowings, finance leases and operating
leases. The capital structure is monitored using the gearing ratio quoted above. The Group’s funding requirements are largely
driven by capital expenditure and acquisition activity. As at 31 March 2016 the Group had £95 million (2015: £85 million) of
committed revolving credit facilities comprising: a £45 million three year facility expiring May 2020, a £30 million four and a
half year facility expiring in October 2017 and a £20 million facility also expiring in October 2017. On 11 April 2016 the Group
took out an additional facility of £20 million which expires May 2020 by making use of the step up facility. The Group therefore
now has committed facilities of £115 million, an uncommitted step up facility of £5 million and an overdraft facility of £5
million (2015: £5 million). These facilities are with Lloyds Bank plc and HSBC Bank plc. Borrowings under the Group’s bank
facilities are priced on the basis of LIBOR plus a margin, the interest rate margin is linked to the net debt to EBITDA leverage of
the Group.
The Group has exposure to movements in interest rates on its borrowings, which is managed by maintaining a mix of fixed
and floating interest rates. The Group has eight interest rate swaps held to hedge the risk of exposure to changes in interest
rates, these swaps have fixed interest rates net of bank margin at between 0.98% and 1.40% and are detailed in note 15 on
page 78 of the accounts. In the year ended 31 March 2016, the fixed element of borrowings was £33.0 million or 41% of
average net debt for the year.
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19
Financial Review
The Group is exposed to movements in exchange rates for both foreign currency transactions and the translation of net assets
and income statements of foreign subsidiaries. The Group regards its interests in overseas subsidiary companies as long term
investments and manages its translational exposures through the currency matching of assets and liabilities where possible.
The matching is reviewed regularly with appropriate risk mitigation performed, where necessary. The Group has exposure to a
number of foreign currencies. During the year the Group had twelve foreign exchange hedges to reduce the risk of rate
fluctuations between US dollars and Sterling in the year ended 31 March 2016. It also has a further nine foreign exchange
hedges between US dollars and Sterling covering the period from 1 April 2016 to 30 June 2017. In addition to the US dollar
hedges the Group also had Australian dollar and Singapore dollar hedges in the year.
TAXATION
The overall tax charge on profit before tax was £5.1 million (2015: £5.2 million), an effective rate of 18.6% (2015: 20.8%).
The current year tax charge was increased by £15,000 (2015: £36,000 increase) in respect of adjustments relating to prior
years. The underlying tax rate was 18.5% (2015: 20.7%) before prior year adjustments. The effective tax rate was also reduced
by 1.3% (£0.3 million) as a result of a reduction in the deferred tax liability due to the reduction in the future standard tax rate
in the UK to 19%. This reflects the reduction in the rate to 19% for the year ended 31 March 2018, but does not reflect the
expected further reduction to 17% in the year ended 31 March 2021 as it is deemed that a significant proportion of the
deferred tax balance as at 31 March 2016 will reverse before 31 March 2020. A more detailed reconciliation of factors affecting
the tax charge is shown in note 7 to the Financial Statements.
SHARE PRICE
During the year the Company’s share price increased by 0.15% from 659 pence to 660 pence, compared to a 3% increase in
the FTSE small cap index excluding investment trusts. The Company’s shares ranged in price from 640 pence to 816 pence and
averaged 720 pence during the year.
Allison Bainbridge
Group Finance Director
7 June 2016
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Viability Statement
The Directors have assessed the viability of the Group up to 31 March 2018.
The directors have assessed the prospects of the Group in accordance with provision C.2.2 of the UK Corporate Governance
Code 2014 with reference to the Group’s current position, its strategy, risk appetite, and the potential impact of the principal
risks and how these are managed. During the financial year the Group has developed regular reporting of the lead indicators
relating to the principal risks.
The assessment of the Group’s prospects by the Directors covers the two years to 31 March 2018 and is underpinned by
management’s 2016 - 2018 business plan which includes projections of the Group’s profit performance, cash flow, investment
plans and returns to shareholders.
The forecasts have been subject to sensitivity analysis, involving the flexing of key assumptions reflecting severe but plausible
scenarios. A range of scenarios have been modelled to reflect changing circumstances with respect to the principal risks facing
the Group together with the likely effectiveness of mitigating actions that would be executed by the Directors. These scenarios
include consideration of the impact of a downturn in economic activity, the loss of market share and the crystallisation of a
financial risk.
Based on this assessment, the Directors have a reasonable expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the two year assessment period.
Risk Management
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.
RISK ASSESSMENT
During the year the Board continued to develop the Group’s risk management framework. Our approach identifies risks arising
in all parts of the Group, using both a top down and a bottom up approach. Once identified, the impact and probability of risks
are determined and scored on both a gross (before mitigation) and net (after mitigation) basis. These risk scores are
documented in risk registers which are maintained at a divisional and group level. The risk registers change as new risks
emerge and others diminish. Risk registers are subject to ongoing review based upon business activity.
The risk profile for each division is used to determine the programme of work carried out by Internal Audit. The risk
assessments are captured in consistent reporting formats, enabling Internal Audit to consolidate the risk information and
summarise the key risk in the form of a group risk profile. Mitigation action plans against each risk continue to be monitored
on a regular basis. Further information is provided on pages 22 and 23 in our principal risks and uncertainties section along
side the mitigating activities to address them.
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Risk Management
Our risk reporting framework is set out below:
Board
l Sets the Group strategy
l Establishes risk appetite and the policy to reduce risk
l Ensures appropriate financial and operational controls
▲
Divisional Boards
l Determine appropriate control procedures are in place
l Review performance against budget and forecasts
l Identify, mitigate, monitor and review risks
are in place
l Regularly monitors Group risks using lead indicators
▲
Audit Committee
l Monitors the integrity of the Group’s financial reporting
process
l Approves the annual audit programme
l Reviews the work of Internal Audit
l Reviews the effectiveness of internal controls
l Monitors the statutory audit
▲
Internal Audit
l Risk based programme of internal audit project work
l Compliance testing and assurance
l Production of KPI data on the Group’s key risks
l Maintenance of Group Risk Register
l High level risk review (strategic, reputational, fraud
and loss)
Principal Risks and Uncertainties
The Directors carry out a robust assessment of the principal risks facing the Group and have
implemented lead indicator reporting on these risks. The principal risks in the current risk
register are:
RISK DESCRIPTION
MITIGATION
Market risk
A downturn in economic recovery
could result in worse than expected
performance of the business, due to
lower activity levels or prices.
Competition
The equipment rental market is
already competitive and could
become more so, impacting market
share, revenues and margins.
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.
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.
CHANGE
FROM 2015
➜
➜
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Principal Risks and Uncertainties
RISK DESCRIPTION
MITIGATION
CHANGE
FROM 2015
Investment/Product
Management
In order to grow it is essential the
Group obtains first class products at
attractive prices and keeps them well
maintained.
People
Retaining and attracting the best
people is key to our aim of
exceeding customer expectations
and enhancing shareholder value.
Safety
The Group operates in industries
where safety is a key consideration
for both the wellbeing of our
employees and customers that hire
our equipment. Failure in this area
would impact our results and
reputation.
Financial risks
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.
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 16.3% in
2015/16. The quality of the Group’s fleet disposal
margins also demonstrate robust asset management
and appropriate depreciation policies.
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.
The Group has robust health and safety policies and
management systems. Our induction and training
programmes reinforce these policies.
We provide support to our customers exercising their
responsibility to their own workforces when using our
equipment.
At the year end the Group had a revolving credit facility
of £95 million and 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. Debtor days reduced to 56 days at the year end
and bad debts as a percentage of turnover remained low
at 0.4% (2015: 0.3%).
➜
➜
➜
➜
Contractual risk
Ensuring that the Group commits to
appropriate contractual terms is
essential; commitment to
inappropriate terms may expose the
Group to financial and reputational
damage.
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
robust procedures for managing non standard contractual
obligations.
➜
➜
Decreased risk ➜ Increased risk ➜ No change
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23
Corporate and Social Responsibility
OVERVIEW
The Group has always conducted its business responsibly and ethically. Corporate and social responsibility forms an integral part
of our business strategy and is focussed on our people, health and safety, the environment and our communities.
Our People
– recruitment
– retention
– opportunity
Our Communities
– investments
– people initiatives
Environment
– energy and
resource efficiency
– mandatory greenhouse
gas reporting
Health & Safety
– initiatives
– monitoring
– training
OUR PEOPLE
Recruitment
Our continued business success is reliant upon the skills, talent and commitment of our global workforce. Retaining and attracting
the best people supports our aims of exceeding our customers’ expectations and enhancing shareholder value. We continue to
attract new talent to the Group as well as nurturing and promoting talent from within the business.
Vp recognises the need to train the engineers of the future
and has successfully operated apprentice schemes for many
years. We work closely with the Construction Industry Training
Board to recruit and support our apprentices in a two-year
Level 2 Apprenticeship in Plant Maintenance. They then
progress onto a Level 3 Advanced Apprenticeship which takes
a further year.
We currently have 39 apprentices across the UK, 16 are
completing their first year, 13 are completing their second
year and 10 will complete their apprenticeships this year.
We are recruiting a further 16 apprentices to start in
September 2016.
Katie Long (pictured) from our UK Forks business won Best
Apprentice under 25 at the 2015 Women in Construction
awards. The awards are now in their tenth year of providing a
showcase for the brightest and the best female achievers in
the construction industry. Katie has almost completed her
Level 2 NVQ in Plant Maintenance and will start the
Advanced Level 3 in September 2016.
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Corporate and Social Responsibility
One of our businesses, Groundforce, runs an engineering undergraduate placement programme in partnership with local
universities. This initiative has become a pivotal factor in attracting the highest calibre graduates. The programme is an
excellent way of blending education with professional experience, as well as helping to forge closer links with local
universities. One of our placement students, Steven Taylor, was awarded “Outstanding Performance on Placement 2014/15”.
He has now been offered a position with us and we will continue to support him in his final two years of his engineering
degree.
The Group is an equal opportunity employer committed to providing the same level of opportunity to all, regardless of creed,
colour, age, sex, disability or sexual orientation. We recognise that a diverse workforce promotes innovation and business
success. The rental industry traditionally has more men than women employees; however women are represented at all levels
of our organisation, including the board.
Workforce by gender
Board of directors
Senior management
All employees
Male
4
37
1,599
Female
1
8
306
Female %
20
18
16
Retention
Retaining talented people is vital to our continued success.
We aim to make the Group an employer of choice who maintains a good relationship with its employees. We take our duty of
care to our employees seriously; we encourage them to achieve an appropriate work life balance and we provide access to
confidential advice and support on personal issues such as health and financial problems.
Employee share ownership is encouraged and where practical the Group offers the opportunity to participate in share schemes.
At 31 March 2016, approximately 48% (2015: 41%) of our UK employees were participating in the Save As You Earn Scheme.
A major contributory factor in our success in delivering operational excellence and outstanding customer service is the
continuity provided by long service which is recognised and celebrated by the business. As a group, over 46% of our
employees have in excess of five years’ service and a further 21% have more than ten years’ service. We aim to keep
employee turnover as low as possible. In general the rental industry suffers from fairly high staff turnover within certain roles,
particularly within the first year. Our employee turnover was 19% in the year (2015: 18%).
We operate extensive training programmes which commence with a detailed induction programme and then progress to cover
all technical skills that our employees require to carry out their roles. Management development programmes are run for all
individuals new to management roles and we actively encourage and sponsor individuals to develop themselves through
further education programmes.
Human Rights
At Vp, we believe in the rights of individuals and take our responsibilities seriously with regard to all our employees, as well as
those who may be affected by our activities. We have policies in place, such as our whistle blowing procedure which protects
our employees. These policies are embedded in our day to day operations and therefore whilst we do not manage human
rights matters separately we continue to assess potential risks in this area and we rate the risk in our business as low.
Modern Slavery Act 2015
Vp fully supports the Modern Slavery Act 2015. Vp plc is a specialist rental business with the majority of our activity taking
place in the UK. The Group does not tolerate any slavery or human trafficking within its business operations and we expect all
those in our supply chain to comply with our values. Our procurement activities are aligned to our company values and to the
laws of the countries in which we operate. We take a risk based approach regarding our supply chain; where possible we build
longstanding relationships with our suppliers and make clear our expectations of behaviour and we have systems in place to
encourage the reporting of concerns. In the small number of instances where we assess the risk to be relatively high we carry
out checks to ensure compliance with stated policies and procedures.
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In 2015/16 in the excavation support
Several of the
Corporate and Social Responsibility
HEALTH & SAFETY
A good reputation for health and safety is fundamental and a major selling point for our business. It is essential that we
provide equipment that is safe to use and that we ensure that accidents and dangerous occurrences are avoided.
General health and safety training is provided as part of the induction process for all new employees. In addition, role
appropriate health and safety training is also provided. Our policies and procedures are designed to ensure that the health and
safety of all our employees, customers and anyone else affected by our activities is appropriately safeguarded.
Hire Station was recently
We are committed to improving and raising standards of health and safety within all our businesses and with our customers.
In 2015/16 we were delighted when the General Manager of Groundforce Training Services, was awarded Chartered Member
(CMIOSH) within The Institute of Occupational Safety and Health (IOSH), an internationally recognised and highly valued health
and safety qualification underlining our commitment to helping to ensure both our own and our customers’ workplace is safe,
healthy and sustainable.
The award
We also work to ensure that our transport operations are safe. Several of the Group’s divisions have been awarded FORS (Fleet
Operator Recognition Scheme) Bronze accreditation. The FORS standard represents a quality and performance benchmark based
on legal compliance, safety, environmental protection and operational efficiency and is further recognition that the Group
operates to standards regarded as some of the highest in the industry. Hire Station is the only major hirer to hold this
accreditation nationwide.
Key initiatives in the past
These centres focus on specialist lifting and
In addition to significant
Our continued focus on promoting and developing a
safe place to work has ensured Health & Safety is
genuinely embedded into our culture. Hire Station was
recently recognised as the “SafeHire Company of the
year 2016” at the Hire Association Europe Awards. The
award recognised that innovation and compliance are
at the core of everything we do. Key initiatives in the
past twelve months included the opening of Lifting
Centres of Excellence at locations countrywide. These
centres focus on specialist lifting and material
handling equipment and have been set up with the
necessary testing equipment to ensure compliance
with the Lifting Operations and Lifting Equipment
Regulations 1998 legislation.
The Lifting Centres of Excellence
We ended the year with an Accident Frequency Rate
of 0.12, an improvement on our 2015 rate of 0.26.
The AFR is calculated by multiplying the number of
RIDDOR reportable accidents by 100,000 (the average
number of hours worked in a lifetime), divided by the
overall number of hours worked by all members of
staff. Reportable accidents under the Reporting of
Injuries Disease and Dangerous Occurrences regulations 1995 fell to 4 in the year (2015: 9).
Accident frequency rate
2016
0.12
2015
0.26
2014
0.48
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Vp plc Annual Report and Accounts 2016
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We have also
The AFR is calculated by multiplying the number of RIDDOR
Reportable accidents under the Reporting of Injuries Disease and
We actively
In most cases the monies
Corporate and Social Responsibility
COMMUNITY
We aim to have a positive impact on the communities in which we operate.
We actively encourage our teams to support their communities by providing their
time and enthusiasm to raise money for local and national charities. In most
cases the monies raised by employees are matched by the Group.
During the year we donated over £41,000 (2015: £28,000) to charities. This
included donations in support of employees participating in fund raising activities.
Alongside Group led events, our employees proactively support charities on an
individualised basis through participation in a host of demanding physical
challenges, raising funds for the likes of Myeloma Cancer Research, Heart UK,
Cancer Research UK, Marie Curie and many other local charities.
ESS Safeforce also teamed up with Gregg’s bakery charity group, The Greggs
Foundation, to sponsor the launch of a new breakfast club at the Olympic
Academy Primary School in Wellingborough.
UK Forks provided the use of a 10m telehandler via their customer ISG, which
was featured in the BBC 1 programme “DIY SOS: The Big Build Veterans’ Special”.
The machine was used as part of a project to help transform 62 homes across
two Manchester streets for military veterans and their families.
This
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Throughout 2015 she took part in The Yorkshire Warrior,
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27
The
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Corporate and Social Responsibility
ENVIRONMENT
We are aware of the impact our operations have on the environment and it is our policy to ensure that we minimise any
adverse impacts from our operations.
Greenhouse gas emissions data for the year is set out below:
Scope 1
Scope 2
Scope 3
Direct emissions resulting from
combustion of fuels
Indirect emissions from electricity
purchased
Other indirect emissions,
e.g. road freight
Tonnes CO2e
Tonnes CO2e
Tonnes CO2e
2016
2015
2014
13,138
13,091
12,789
2016
2015
2014
2,510
2,645
2,689
2016
2015
2014
5,290
5,097
4,766
Normalised Tonnes of CO2 per £m revenue (intensity measure)
2016
2015
2014
100
101
111
Whilst during this year absolute CO2 emissions have increased, once adjusted for higher activity levels normalised CO2
emissions actually reduced by 1.0% from 101.3 tonnes per £1 million of revenue to 100.3 tonnes per £1 million of revenue.
We have reported on all of the emissions sources required under Companies Act 2006 (Strategic Report and Directors’ Reports)
Regulations 2013. The method we have used to calculate GHG emissions is the GHG Protocol Corporate Accounting and
Reporting Standard (revised edition), together with the latest emission factors from Defra. Waste disposal, waste recycling and
business travel have not been included as the data has not been collected.
We are fully compliant with the government guidelines on the Energy Savings Opportunity Scheme (ESOS). ESOS is a mandatory
energy assessment scheme for organisations in the UK that meet the qualifications criteria. The Group was required to carry
out an ESOS assessment by December 2015. The assessment was undertaken by energy and environmental consultants.
STRATEGIC REPORT
The strategic report has been signed on behalf of the Board by:
Neil Stothard
Chief Executive
7 June 2016
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The Board
Jeremy Pilkington BA (Hons)
Chairman
Neil Stothard MA, FCA
Chief Executive
Appointment
Appointed to the board in 1979 and
became Chairman in 1981.
Experience
Jeremy was Chairman and Chief
Executive between 1981 and 2004.
Committee membership
Chairman of the Nomination
Committee.
Appointment
Appointed to the board as Finance
Director in 1997 and became Group
Managing Director in 2004 and
subsequently Chief Executive.
Experience
Neil previously held Finance Director
roles in the business travel manage-
ment and logistics sectors. He is a non
executive director of Wykeland Group
Limited and was previously a non
executive director of Scarborough
Building Society.
Committee membership
None
Allison Bainbridge MA, FCA
Group Finance Director
Appointment
Appointed to the board as Finance
Director in March 2011.
Experience
Allison was previously Group Finance
Director of Kelda Group Limited, the
holding company of Yorkshire Water
and also Finance Director of Yorkshire
Water.
Committee membership
None
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Steve Rogers BSc, FCA, JP
Non-executive Director
Phil White BCom, FCA, CBE
Non-executive Director
Appointment
Appointed to the board in October
2008.
Experience
Steve retired as a senior partner of
PricewaterhouseCoopers in 2007. He is
a non-executive director of Arran Isle
Group (formerly Heywood Williams
Plc). He is a trustee and treasurer of
the Leeds Community Foundation.
Committee membership
Chairman of the Audit Committee and
a member of the Remuneration and
Nomination Committees.
Appointment
Appointed to the board in April 2013.
Experience
Phil is a chartered accountant and has
extensive experience within both
listed and private companies. He is
Chairman of Kier Group Plc, Lookers
Plc and Unite Group Plc as well as a
non-executive director of Stagecoach
Group Plc.
Committee membership
Chairman of the Remuneration
Committee and member of the Audit
and Nomination Committees.
Vp plc Annual Report and Accounts 2016
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29
Governance
INTRODUCTION FROM THE CHAIRMAN
As a Board, we believe that good governance rests upon principles of fairness, integrity and respect for others. We believe
these principles underpin the long term success of the Company, helping us to deliver our strategic and growth objectives.
The Corporate Governance Report is set out on pages 30 to 33. This section of the annual report sets out how we manage the
Group and how we comply with the provisions of the UK Corporate Governance Code. Vp continues to maintain and review its
systems, processes and policies to support its governance practices.
I am pleased to report that we have complied with the provisions of the code. Our Statement of Compliance is set out below.
We are mindful of the ethical foundation of good governance and as a Board we are committed to acting responsibly and with
integrity towards all our stakeholders.
Jeremy Pilkington
Chairman
7 June 2016
CORPORATE GOVERNANCE
A review has been performed of the Company’s compliance with the code published by the Financial Reporting Council (’FRC’) in
September 2014 and which was effective for the year ends beginning on or after October 2014. We have also had regard to the FRC
guidance on Board Effectiveness (March 2011) and FRC guidance on Audit Committees (September 2012). The Board confirms that
throughout the year ended 31 March 2016 the Company has been in compliance with all of the provisions of the Codes. The following
paragraphs explain how the Company has applied good governance and the relevant principles of the Codes.
LEADERSHIP
The role of the Board is to provide entrepreneurial leadership of the Company, whilst maintaining good corporate governance,
highest standards of behaviour and managing risk. The Board reviews its progress against this objective on a regular basis. The
Board exercises control over the performance of each operating company within the Group, principally by monitoring performance
against agreed budgetary targets. The names and biographic details of the members of the board are set out on page 29.
Length of service of director
Balance of directors
Balance of directors
31 March 2016
31 March 2016
31 March 2016
One to two years
Two to three years
Four to six years
More than six years
Gender
Male
Female
-
1
1
3
Role
4
1
Executive Chairman
Executives
Non executives
1
2
2
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Governance
The Board has a clearly documented schedule of matters reserved for its approval, including strategy, annual budgets, major
capital expenditure, significant investments or disposals and treasury policy. In certain areas, specific responsibility is delegated
to committees of the Board within defined terms of reference.
The roles of the Chairman and Chief Executive are separate and clearly defined. The Chairman, Jeremy Pilkington, is responsible
for the effective working of the Board and leading the development of the strategic agenda for the Group. The Chairman is also
responsible for promoting a culture of openness and debate, in addition to ensuring constructive and productive relations
between executive and non-executive directors. Chief Executive, Neil Stothard, has operational responsibility for the
management of the Group’s business and for implementation of the strategy as agreed by the Board.
Our senior independent director, Steve Rogers, is available to shareholders if they request a meeting or have concerns which
contact through normal channels has failed to resolve. No such requests were received during the year.
EFFECTIVENESS
Committees
The board has established three principal Board committees to which it has delegated certain responsibilities. They are the
Audit Committee, Remuneration Committee and Nominations Committee. The roles, membership and activities of these
committees are described in more detail below.
Meetings
In the year ended 31 March 2016, the Board met seven times. In addition, the Board also met on an ad hoc basis to deal with
urgent business including the consideration and approval of major transactions. The table below lists the directors’ attendance
at the Board meetings and Committee meetings during the year ended 31 March 2016.
Board
Audit
Remuneration
Number of meetings held
Executive directors
Jeremy Pilkington
Neil Stothard
Allison Bainbridge
Non-executive directors
Steve Rogers
Phil White
7
7
7
7
7
7
3
-
-
-
3
3
2
-
-
-
2
2
Whilst Jeremy Pilkington, Neil Stothard and Allison Bainbridge are not members of the Audit Committee, they did attend all
meetings; they also attended, in part, certain of the Remuneration Committee meetings. There were no nomination committee
meetings.
The non-executive directors provide a strong and independent monitor on the performance of both the Group and its executive
management.
The Board is satisfied that the Chairman and each of the non-executive directors committed sufficient time during the year to
enable them to fulfil their duties as directors of the company.
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31
Governance
Independence
The Board considers the non-executive directors to be independent under the provisions of the Codes on the basis that they are not
members of management and are free of any business or other relationships that could materially interfere with, or reasonably be
perceived to materially interfere with, the independent exercise of their judgement.
Appointments to the Board
The Nominations Committee is chaired by the Company’s Chairman, Jeremy Pilkington, with the two non-executive directors also on
the committee. The Nomination Committee meets as required to ensure that appointments to Board roles within the Group are made
after due consideration of the relevant and necessary skills, knowledge and experience of the potential candidates. In addition it
considers succession planning in order to ensure the continued ability of the Group to compete effectively in the market place. The
Group’s policy on diversity is set out on page 25 in the Strategic Report.
The Nominations Committee has written terms of reference, which are available on the Company’s website at www.vpplc.com
Induction, development and support
All new directors receive a full, formal and tailored induction on joining the Board, including meetings with senior
management and advisers and visits to the Group’s operational locations. The Board calendar is planned to ensure that
directors are briefed on a wide range of topics throughout the year and are given the opportunity to visit sites and discuss
aspects of the business with employees. The Board recognises the importance of continued training for the individual directors
and they are encouraged to attend external seminars and briefings appropriate to their role on the Board.
To enable the Board to function effectively and assist directors to discharge their responsibilities, full and timely access is given
to all relevant information. In the case of Board meetings, this consists of a comprehensive set of papers, including latest
available management accounts, regular business progress reports and discussion documents regarding specific matters. In
addition, senior managers are regularly invited to Board meetings and make business presentations to the Board. During Board
meetings, the non-executives routinely interrogate the performance of the business and seek further information as necessary
on specific topics.
Whilst the Board generally meets at the Group head office in Harrogate, some meetings are held at other Group locations
giving the directors the opportunity to review the operations and to meet local management. During the year two of the seven
board meetings was held at another Group location.
There is an agreed procedure for directors to take independent professional advice at the Company’s expense if deemed
necessary for the correct performance of their duties. The Company Secretary, Allison Bainbridge, who is also the Group Finance
Director, is available to all directors to provide advice and she is responsible for ensuring that Board procedures are followed
and that all applicable rules and regulations are complied with. The Board continues to keep the Company Secretary role under
review, but feels that the combination of the roles continues to work well for the business as a whole.
Performance evaluation
The evaluation of the Chairman, the Board and its committees in 2016 was conducted by way of a review completed by all of
the directors, the results of which were considered by the entire Board. Based upon this evaluation, the Board concluded that
performance in the past year had been good. The outcome of the evaluation will be used to make further improvements
where appropriate, to ensure the performance of the Board continues to be optimised.
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Governance
Re-election
From 2015 all directors have retired at each Annual General Meeting (‘AGM’) and offer themselves for re-election by
shareholders. Accordingly, all the directors will retire at the AGM in July 2016 and their details are provided on page 29.
Accountability
The directors and auditor set out their respective responsibilities for preparing and reviewing the financial statements in the
statement of directors’ responsibilities on page 52 and the independent auditor’s report on pages 53 to 56.
RELATIONS WITH SHAREHOLDERS
The Board encourages engagement with major institutional shareholders and other stakeholders. The executive directors present
the Group’s interim and full year results to brokers and analysts and also meet fund managers, brokers, analysts and the media
on a regular basis to discuss business strategy, results and other issues. Presentation material used in these briefings is published
on the Company’s website www.vpplc.com
While the non-executive directors do not ordinarily attend these meetings, they are available if required by shareholders. Feedback
from these meetings, collated by N+1 Singer and Buchanan Communications, is reviewed by the Board as a whole.
The Board encourages all shareholders to attend and ask questions at the Annual General Meeting which is attended by all
directors. The Board also actively encourages communication with employees and details of this are noted in the Directors’
Report.
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33
Audit Committee Report
STATEMENT FROM STEVE ROGERS, CHAIRMAN OF THE
AUDIT COMMITTEE
I am pleased to present our Audit Committee report for the year ended
31 March 2016. The Committee assists the Board in discharging its
responsibility for oversight and monitoring of financial reporting, risk
management and internal control.
In line with the Corporate Governance Code the Committee has
reviewed the Group’s financial reports and has advised the Board that it
considers the report to be fair, balanced and understandable, and
provides the information necessary for shareholders to assess the Company’s position, performance, business model and strategy.
Steve Rogers
As a Fellow of the Institute of Chartered Accountants in England and Wales, and a retired senior partner of
PricewaterhouseCoopers, I am considered to have relevant financial experience of sufficient depth to be able to perform my
role as Committee Chairman.
There were three committee meetings during the year which were all attended by the Committee members, and by invitation
the Chairman, Chief Executive, Group Finance Director and Head of Internal Audit. The Group Financial Controller and the
external auditor were invited to and attended two of these meetings.
RESPONSIBILITIES
The Audit Committee assists the Board in its oversight and monitoring of financial reporting, risk management and internal
controls.
The principal responsibilities are:
l review the financial statements (half yearly and annual reports) and announcements relating to the financial performance of
the Group;
l oversee the relationship with the external auditor, including the external audit process, audit and non audit fees and
independence and make recommendations to the Board on the appointment of the external auditor;
l review the Group’s internal financial controls and risk management systems and assess the effectiveness of those systems;
l monitor and review the effectiveness of the internal audit function;
l oversee the Group’s policies and procedures for handling allegations from whistle blowers.
FINANCIAL REPORTING
We reviewed the integrity of the half yearly and annual financial statements of the Group. This included discussions with
management and took account of the views of the external auditor. The key area reviewed was the existence and carrying
value of the rental fleet. Management carry out at least bi-annual stock checks on the existence of the rental fleet and review
the appropriateness of the useful lives and residual lives assigned to rental equipment. We are satisfied with the existence of
assets in the fleet and that the judgements taken are appropriate and consistent with prior years.
EXTERNAL AUDIT
The Committee oversees the Group’s relationship with the external auditor and formally reviews the relationship, policies and
procedures to ensure their independence. PwC were appointed as external auditors on 15 October 2014. The Committee
assessed the effectiveness of the external audit process during the year, based upon the Committee’s interactions with the
external auditor and through feedback from the Group Finance Team and Internal Audit. As a result the Committee has satisfied
itself that PwC continue to provide an effective audit service to the Company and its subsidiaries and the Committee has made
a recommendation to the Board that a resolution for the re-appointment of PwC be proposed at the AGM.
34
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Audit Committee Report
The Group has policies and procedures in place to ensure that independence and objectivity of the external auditor is not
impaired. These include restrictions on the types of services that they can provide, in line with APB Ethical Standards on
Auditing. PwC also provides confirmation to the Committee on the arrangements and safeguards it has in place to maintain its
independence and objectivity. The Committee continues to be satisfied with their independence.
The total fees payable to PwC for the year ended 31 March 2016 (together with a comparison for the year ended 31 March
2015) can be found in note 3 to the consolidated financial statements. The non-audit services related to the half year review
and overseas accountants reports.
RISK MANAGEMENT AND INTERNAL CONTROLS
The Audit Committee has responsibility for reviewing risk management systems and the effectiveness of these systems. The
responsibilities and processes in respect of risk management are described in detail on pages 21 and 22.
There is in place an ongoing process for identifying, evaluating and managing significant risks faced by the Group. This process
is regularly reviewed by the Board. Risk Management Reports, prepared by the operating divisions supported by Internal
Audit, were submitted to the Committee at its meeting in July 2015. The Reports identified the significant risks to the Group,
highlighted controls that mitigate the risks and the resultant post-mitigation risk. The Committee also considered the tolerance
levels (risk appetite) that the Group is prepared to accept.
During the year the Committee monitored and reviewed the effectiveness of the Group’s internal control systems, accounting
policies and practices, risk management procedures and compliance controls.
The Group’s internal control systems are designed to manage rather than eliminate business risk. They provide reasonable but
not absolute assurance against material mis-statement or loss. Such systems are necessary to safeguard shareholders’
investment and the Group’s assets and depend on regular evaluation of the extent of the risks to which the Group is exposed.
Management is responsible for establishing and maintaining adequate internal control over financial reporting to the Group.
The Committee is of the view that the Group continues to operate a well-designed system of internal control.
INTERNAL AUDIT
The Group’s internal audit function comprises a team of three qualified auditors. The purpose of the department is to support
the business in its achievement of objectives and facilitate and aid effective risk management. Internal audit provides
assurance that the Group’s process for managing internal control is effective and appropriate to the level of risk facing the
Group.
During the year the Chairman of the Committee met privately with the Head of Internal Audit on two occasions. In addition
the Head of Internal Audit attended each Committee meeting, where his reports were reviewed and discussed in detail.
The Committee considered the results of the internal audits and the adequacy of management’s response to matters raised in
them, including the time taken to resolve any such matters. The Committee were satisfied with both the reports and the
responses.
WHISTLE BLOWING
The Group has a formal whistle blowing process, whereby any employee may contact nominated members of senior
management to raise concerns they may have in complete anonymity. These concerns will then be investigated
independently and the results shared with the whistle blower for further discussion if necessary. This process is communicated
to all employees and details are available on the Group intranet. The Committee monitors the Group’s whistle blowing policy.
At the 2016 AGM, I shall be available to respond to any questions shareholders may raise on this report or on any of the
Audit Committee’s activities.
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Chairman of the Audit Committee
7 June 2016
Vp plc Annual Report and Accounts 2016
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35
Remuneration Report
Annual Statement
DEAR SHAREHOLDER
On behalf of the Board, I am pleased to present our Directors’
Remuneration Report for the year ended 31 March 2016. This has been
prepared in accordance with the requirements of the Companies Act 2006
and the Large and Medium-sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013.
REMUNERATION POLICY AND IMPLEMENTATION 2015/16
Phil White
As set out in the annual report on remuneration, the Group has continued to perform well against our key simple and
transparent measures of growth in profit before tax and amortisation and earnings per share (EPS), whilst continuing to exceed
our minimum return on average capital employed (ROACE) target of 12%. 2015/16 ROACE was a very satisfactory 16.3%. Our
bonus and long-term incentive structures are based on challenging targets, which we believe are in line with market best
practice. The Committee believes that the current year pay outcomes reflect the current year’s performance.
In 2015/16 profit before taxation and amortisation at £29.8 million grew by 11% on the previous year. Consequently,
executive directors will qualify for bonuses of 27% of base salary, out of a maximum of 100%, in line with the profit growth
achieved by the Group against the challenging targets we set as a business.
Our 2012 LTIP award which was based upon EPS growth, vested in July 2015 at 100% of the total award reflecting the
excellent financial performance of the Group in the challenging market conditions of 2012 to 2015. Our 2013 LTIP award is due
to vest at 100% in July 2016, again as a result of strong compound annual growth performance in EPS of 20% per annum
between 2013 and 2016 (calculated using fixed assumptions on tax rate and number of shares in issue).
REMUNERATION POLICY FOR 2016/17
The Committee is not proposing to make any changes to the Remuneration Policy for the year ending 31 March 2017.
The Remuneration Policy is set out overleaf. A review of Executive Directors base salaries was carried out during the year.
The increases effective from 1 April 2016 are set out on page 45. The annual bonus scheme for 2016/17 will operate in a
similar manner to prior years, with financial targets linked to profitability. The maximum bonus opportunity is 100% of salary.
The performance conditions for the 2016/17 LTIP awards will be consistent with 2015/16 policy and will be based upon
achievement of target growth in EPS over a three year period and the achievement of a minimum ROACE. The policy allows for
awards equating to 100% of base salary to be granted to Executive Directors in July 2016.
ALIGNMENT WITH SHAREHOLDERS
We continue to be mindful of our shareholders’ interests. Our share ownership guidelines and claw back provisions for the
annual bonus and long term incentive scheme support an on-going commitment to the business from our executives and
continued alignment of shareholder and executive objectives.
We are proud of the support we have received in the past from our shareholders, with 98.3% approval for our Remuneration
Policy in 2014 and 99.5% approval for our Remuneration Report last year. The Directors’ Remuneration Policy is not subject to a
shareholder vote this year but has been reproduced on the following pages for ease of reference. However, a resolution to
approve the Annual Report on Remuneration will be proposed at the forthcoming AGM on 26 July 2016. We hope that we will
continue to receive your support.
This report has been approved by the Board and is signed on its behalf by:
Phil White
Chairman Remuneration Committee
7 June 2016
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Directors’ Remuneration Policy (unaudited)
Consistent with current legislation, the directors’ Remuneration Policy Report, which has operated from 1 April 2014,
was put to a binding shareholder vote and was approved and became formally effective at the 2014 AGM.
POLICY OVERVIEW
The Group aims to balance the need to attract, retain and motivate executive directors of an appropriate calibre with the need to
be cost effective, whilst at the same time rewarding exceptional performance. The Committee has designed a remuneration policy
that balances those factors, taking account of prevailing best practice, investor expectations and the level of remuneration and pay
awards made generally to employees of the Group.
In addition to the above, the remuneration policy for the executive directors is based on the following key principles:
l A significant proportion of remuneration should be tied to the achievement of specific and stretching performance conditions
that align remuneration with the creation of shareholder value and the delivery of the Group’s strategic plan.
l There should be a focus on sustained long term performance measured over clearly specified timescales, encouraging
executives to take action in line with the Group’s strategic plan.
l Individuals should be rewarded for success but steps should be taken, within contractual obligations, to prevent rewards for
failure.
SUMMARY REMUNERATION POLICY
The table below summarises the directors’ Remuneration Policy for 2014 onwards:
ELEMENT
Base salary
PURPOSE AND LINK
TO THE STRATEGY
To attract, retain and motivate
individuals with skills and
experience required to deliver
the strategy. To provide a
competitive fixed reward.
Pension
To provide retirement benefits.
PERFORMANCE
METRICS
None.
None.
OPERATION
OPPORTUNITY
Base salaries are reviewed
annually, and any changes are
effective from 1 April in the
financial year.
All executives are either
members of a defined
contribution scheme or receive
a cash allowance in lieu of
pension contribution.
There is no prescribed maximum
annual increase. The Committee
also considers average increases
across the Group. Current salary
levels are set out on page 45.
The executive chairman receives
a cash equivalent pension
contribution of 25% of salary,
benefits and bonus.
Other executive directors receive
a pension contribution ranging
between 15% and 17.5% of
base salary or an equivalent
cash allowance.
Taxable
Benefits
To provide market consistent
benefits.
Cost of providing benefits paid
monthly or as required for one
off events.
Car allowance, health insurance
and other benefits paid from
time to time.
None.
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37
Directors’ Remuneration Policy (unaudited)
ELEMENT
PURPOSE AND LINK
TO THE STRATEGY
OPERATION
OPPORTUNITY
Annual Bonus
To incentivise achievement of
demanding performance targets.
Long Term
Incentive Plan
To drive sustained long term
performance that supports the
creation of shareholder value.
Share
Matching
Scheme
To encourage share ownership
and alignment with
shareholders.
Up to 100% of base salary.
Normal grant limit of 100%
of base salary.
Maximum award of shares
to the value of 10% of
salary.
Annual bonuses are generally paid
three months after the end of the
financial year to which they relate.
Clawback provisions apply in the
event of a material misstatement
of the results.
Annual grant of nil cost options
which normally vest after 3 years
based on the achievement of
profit targets, a minimum ROACE
requirement and continual service.
Clawback provisions apply in the
event of a material misstatement
of the results.
Annual grant of nil cost options in
proportion to the number of
shares purchased by an executive
director from their own funds.
Clawback provisions apply in the
event of a material misstatement
of the results.
PERFORMANCE
METRICS
Growth in profit
before tax and
amortisation.
Subject to a vesting
period of three years
and the achievement
of target growth in
EPS over a three year
period.
Minimum ROACE
requirement, currently
set at 12%.
Achievement of
target growth in EPS
over a three year
period and a
minimum ROACE,
currently set at 12%.
Save As
You Earn
To encourage share participation
in the entire workforce.
HMRC approved plan under which
regular monthly savings are made
over a 3 year period and can be
used to fund the exercise of an
option whereby the exercise price
is discounted by up to 20%.
None.
Maximum permitted savings
of £300 per month across all
ongoing share save contracts
in line with current
legislation.
Share
Ownership
Guidelines
To increase alignment between
executives and shareholders.
Shareholding to be built up over 5
years.
100% of salary for executive
directors.
None.
Non-Executive
Director Fees
Reflects time commitments and
responsibilities and fees paid by
similar sized companies.
Cash fees paid, reviewed on an
annual basis.
No prescribed maximum
annual increase.
None.
Notes to the policy table
The performance targets are determined annually by the Committee and are set at a challenging level. The Committee is of the
opinion that the performance targets for the annual bonus and the long term incentive are commercially sensitive and that it
would be detrimental to the interests of the Group to disclose them before the start of the financial year. The targets will be
discussed after the end of the relevant financial year in that year’s remuneration report.
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Directors’ Remuneration Policy (unaudited)
CHANGES TO REMUNERATION POLICY
There have been no changes to the remuneration policy from that operating in 2014/15.
ILLUSTRATION OF APPLICATION OF REMUNERATION POLICY
The chart below illustrates the total remuneration for each executive director that could result from the proposed remuneration
policy in 2016/17 under three different performance scenarios.
Jeremy Pilkington
Percentages/Amounts (£’000)
Minimum
100%
Total £644
Basic salary, benefits and pension
Annual bonus
LTIP
On plan
60%
Maximum
44%
20%
28%
20%
Total £1,174
28%
Total £1,704
Neil Stothard
Percentages/Amounts (£’000)
Minimum
100%
Total £429
Basic salary, benefits and pension
Annual bonus
LTIP and share matching
On plan
54%
22%
24%
Total £789
Maximum
37%
30%
33%
Total £1,148
Allison Bainbridge
Percentages/Amounts (£’000)
Minimum
100%
Total £309
Basic salary, benefits and pension
Annual bonus
LTIP and share matching
On plan
54%
22%
24%
Total £577
Maximum
37%
30%
33%
Total £845
The value of base salary for 2016/17 is set out in the Base Salary table on page 45.
The value of taxable benefits in 2016/17 is taken to be the value of taxable benefits received in 2015/16 as shown in the
single total figure of remuneration table set out on page 42. On plan performance assumes bonus payout of 50% of salary and
LTIP and share matching scheme vesting at 50% of maximum award. Maximum performance assumes 100% payout of all
incentives. Share price appreciation has not been included in the calculation.
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39
Directors’ Remuneration Policy (unaudited)
CONSIDERATION OF EMPLOYMENT CONDITIONS ELSEWHERE IN THE GROUP
Our approach to annual salary reviews is consistent across the Group, with consideration given to the level of experience,
responsibility, individual performance and salary levels in comparable companies.
Most employees are eligible to participate in an annual bonus scheme. The maximum opportunities available are based upon
the seniority and responsibility of the role with business area specific metrics incorporated where appropriate.
Senior managers can qualify to participate in the LTIP and share matching schemes. Performance conditions are consistent for
all participants, while award sizes vary by organisational level.
Employees can qualify to participate in approved and unapproved share option schemes whereby they are granted rights to
acquire shares at a predetermined price, which cannot be less than the midmarket price on the dealing day immediately
before the date of the award. Awards under these schemes are not granted to executive directors.
All UK employees are eligible to participate in the Company’s SAYE scheme on the same terms.
APPROACH TO RECRUITMENT
The Group operates in a highly competitive market. The Committee’s approach to remuneration on recruitment is to pay
sufficient to attract appropriate candidates to the role.
The package of a new executive director is likely to include the same elements, and be subject to similar constraints as those
of existing executive directors.
The Committee may make an award in respect of a new appointment to ‘buy out’ incentive arrangements forfeited on leaving
a previous employer on a like-for-like basis. In doing so, the Committee will consider relevant factors including time to vesting,
any performance conditions attached to these awards and the likelihood of those conditions being met. Any such ‘buy-out’
awards will typically be made under existing annual bonus and LTIP schemes, although in exceptional circumstances the
Committee may exercise discretion under Listing Rule 9.4.2R to make awards using a different structure. Any ‘buy-out’ awards
would have a fair value no higher than the awards forfeited.
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Directors’ Remuneration Policy (unaudited)
DATE OF DIRECTORS’ SERVICE CONTRACTS OR LETTER OF APPOINTMENT
Director
Date of service contract/letter of appointment
Jeremy Pilkington
Neil Stothard
Allison Bainbridge
Steve Rogers
Phil White
10 June 2002
10 June 2002
15 February 2011
10 September 2008
15 April 2013
The service agreements of the executive directors are terminable by either the Company or the director on twelve months’
notice. The contracts contain no specific provision for compensation for loss of office, other than an obligation to pay salary and
benefits for any notice period waived by the company. Non-executive directors are appointed under letters of appointment that
may be terminated on six months notice. There were no other significant contracts with directors.
The terms and conditions of appointment of non-executive directors are available for inspection by any person at the
Company’s registered office during normal business hours and at the AGM.
APPROACH TO LEAVERS
The Company’s policy is to limit severance payments on termination to pre-established contractual arrangements. Such
contracts contain no specific provision for compensation for loss of office, other than an obligation to pay for any notice period
waived by the Company, where pay is defined as salary plus benefits only.
In the event an executive leaves for any reason, non vested LTIP and share matching awards will normally lapse.
The Committee retains discretion to alter these provisions on a case-by-case basis following a review of circumstances and to
ensure fairness for both shareholders and participants.
CONSIDERATION OF SHAREHOLDER VIEWS
The Committee considers shareholder feedback received at the AGM each year. This feedback, plus any feedback received
during other meetings, is then considered as part of the Group’s annual review of remuneration policy.
In addition, the Committee will seek to engage directly with major shareholders and their respective bodies should any
material changes be made to the remuneration policy.
Details of votes cast for and against the resolution to approve last year’s remuneration report are set out on page 48 of the
annual report on remuneration.
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41
Annual Report on Remuneration
SINGLE TOTAL FIGURE OF REMUNERATION (audited)
The following table shows a single total figure of remuneration for the year ended 31 March 2016 together with the comparative
figures for 2015.
Salaries
and fees
Taxable
benefits
Pensions
£000
£000
£000
Annual
bonus
£000
LTIP
Share
matching
Total
£000
£000
£000
Executive directors
Jeremy Pilkington
Neil Stothard
Allison Bainbridge
Non-executive directors
Steve Rogers
Phil White
TAXABLE BENEFITS
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
471
464
336
331
244
240
38
38
38
38
44
44
26
26
16
16
-
-
-
-
161
243
59
58
37
36
-
-
-
-
127
464
91
331
66
240
-
-
-
-
810
1,044
578
749
391
503
-
-
-
-
-
-
59
75
38
50
-
-
-
-
1,613
2,259
1,149
1,570
792
1,085
38
38
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Taxable benefits consist primarily of company car or car allowance and private health care insurance.
PENSION BENEFITS
Neil Stothard received 17.5% of base salary and Allison Bainbridge received 15% of base salary in lieu of pension contributions. Jeremy
Pilkington received 25% of salary, bonus and benefits in lieu of pension contributions.
ANNUAL BONUS PAYMENTS
The annual bonus outturn presented in the table was based on performance against growth in Group profit before tax and
amortisation targets as measured over the 2016 financial year.
Maximum
Growth in
Growth in
(% of salary) PBTA required PBTA required
for maximum
for threshold
bonus
bonus
Actual
growth
in PBTA
Actual % Actual bonus
£000
of salary
Jeremy Pilkington
Neil Stothard
Allison Bainbridge
%
100
100
100
%
5
5
5
%
25
25
25
%
11
11
11
%
27
27
27
£000
127
91
66
No changes have been made to the maximum opportunity available under the 2016/17 bonus scheme.
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Annual Report on Remuneration
VESTING OF LTIP AND SHARE MATCHING AWARDS (audited)
The LTIP and share matching amount included in the 2015/16 single total figure of remuneration is in respect of the conditional
share award granted in July 2013. Vesting is dependent on earnings per share performance over the three years ended 31
March 2016, achievement of a minimum return on average capital employed of 12% and continued service until July 2016.
The performance targets for this award, and actual performance against those targets, was as follows:
Metric
Earnings per share*
Performance
condition
Threshold
target
Stretch
target
Actual % Vesting
Normalised EPS compound annual
growth rate of 4.1% pa (0% vesting)
10% pa (100% vesting) actual 20% pa
35.86 pence 41.24 pence
EPS
EPS
53.43 pence
EPS
100
ROACE
Minimum of 12.0%
12.0%
N/A
16.3%
see above
*EPS is measured on a net basis, in accordance with International Financial Reporting Standards, but assuming a fixed
corporation tax charge on profits currently at the rate of 28% and excluding any amortisation and exceptional items shown on
the face of the Income Statement or in the notes to the Company’s accounts and utilising the whole of the issued ordinary
share capital of the Company, assuming a constant level of issued Ordinary Share Capital over the three years, in this case
40.154 million shares.
Return on average capital employed is calculated by dividing the profit before interest and tax by the aggregate of average net
assets and average net debt consistent with those shown in the management accounts of the Company for the relevant
financial year.
The LTIP award details for the executive directors are as follows:
Jeremy Pilkington
Neil Stothard
Allison Bainbridge
Number of shares
at grant
Number of shares
to vest
Estimated value of
shares vesting*
116,200
83,000
56,100
116,200
83,000
56,100
£000
810
578
391
*The award of the LTIP above was based upon the policy of awarding up to an equivalent of 100% of salary. The share price at
the time of the award was £3.89. As the awards have not yet vested the weighted average share price for the last three
months of the financial year 2015/16 of £6.97 has been used to estimate the value at vesting.
The share matching awards for executive directors are as follows:
Jeremy Pilkington
Neil Stothard
Allison Bainbridge
Number of shares
at grant
Number of shares
to vest
Estimated value of
shares vesting*
N/A
8,500
5,500
N/A
8,500
5,500
£000
N/A
59
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*As the awards have not yet vested the weighted average share price for the last three months of the financial year 2015/16
of £6.97 has been used to estimate the value at vesting.
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Annual Report on Remuneration
SHARE SCHEME INTERESTS AWARDED DURING THE FINANCIAL YEAR (audited)
The following awards were granted to executive directors:
Executive
Scheme Basis of award
granted
Date of
Share price at
grant date of grant £
Number of
shares
Face value
£000
Performance
Period end date
Jeremy Pilkington
Neil Stothard
Allison Bainbridge
LTIP
100% of salary
9 July 2015
7.70
61,100
470
31 March 2018
LTIP
Share matching
SAYE
100% of salary
10% of salary
N/A
9 July 2015
5 Aug 2015
8 July 2015
LTIP
Share matching
SAYE
100% of salary
10% of salary
N/A
9 July 2015
5 Aug 2015
8 July 2015
7.70
7.70
7.70
7.70
7.70
7.70
43,600
4,400
580
31,600
3,200
580
336
34
4
243
25
4
31 March 2018
31 March 2018
N/A
31 March 2018
31 March 2018
N/A
The share price at the date of grant has been used to calculate the face value of the awards granted.
PAYMENTS TO PAST DIRECTORS AND FOR LOSS OF OFFICE
No payments were made to past directors or for loss of office in the year ended 31 March 2016.
OUTSTANDING SHARE AWARDS (audited)
The table below sets out details of outstanding share awards held by executive directors. Details of vested awards are shown in
the statement of directors’ shareholdings and share interests on page 45.
Executive
Scheme
Grant
date
Exercise
price
£
No. of
shares at
31 Mar 2015
Granted
during
the year
Vested
during
the year
Lapsed
during
No. of
shares at
the year 31 Mar 2016
Exercise
End of
period performance
period
Jeremy Pilkington
Total LTIP
Various
Nil
524,400
61,100
166,000
Neil Stothard
Total LTIP
Various
Total Share Matching
Various
SAYE
SAYE
2012
2013
SAYE
2014
SAYE
2015
Total SAYE
Allison Bainbridge
Total LTIP
Various
Total Share Matching
Various
SAYE
2013
SAYE
2014
SAYE
2015
Total SAYE
Nil
Nil
1.97
2.82
5.30
6.20
Nil
Nil
2.82
5.30
6.20
250,700
43,600
119,000
25,500
4,400
12,000
1,827
638
679
-
3,144
-
-
-
580
580
1,827
-
-
-
1,827
171,400
31,600
80,000
17,000
3,200
8,000
1,276
679
-
1,955
-
-
580
580
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
311,500
July 2015
31 Mar 2015
to July 2025 to 31 Mar 2018
July 2015
31 Mar 2015
to July 2025 to 31 Mar 2018
July 2015
31 Mar 2015
to July 2025 to 31 Mar 2018
N/A
October 2016
to March 2017
October 2017
to March 2018
October 2018
to March 2019
N/A
N/A
N/A
July 2015
31 Mar 2015
to July 2025 to 31 Mar 2018
July 2015
31 Mar 2015
to July 2025 to 31 Mar 2018
October 2016
to March 2017
October 2017
to March 2018
October 2018
to March 2019
N/A
N/A
N/A
175,300
17,900
-
638
679
580
1,897
123,000
12,200
1,276
679
580
2,535
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Annual Report on Remuneration
STATEMENT OF DIRECTORS’ SHAREHOLDINGS AND SHARE INTERESTS (audited)
Executive
Shareholding as
% of salary at
31 Mar 2016
Shares
beneficially
owned at
31 Mar 2016
Shares
beneficially
owned at
31 Mar 2015
Options
vested
but not yet
exercised
31 Mar 2016
Options
vested
but not yet
exercised
31 Mar 2015
Outstanding Outstanding
share
matching
awards1
LTIP
awards1
Outstanding
SAYE
awards
Jeremy Pilkington
Neil Stothard
Allison Bainbridge
Steve Rogers
*
1585%
111%
-
29,220
806,921
41,000
-
29,220
66,000
174,000
794,921
33,000
-
-
-
-
-
-
-
-
Phil White
1 Unvested LTIP and share matching awards are subject to performance conditions
-
-
-
-
311,500
175,300
123,000
-
-
-
17,900
12,200
-
-
-
1,897
2,535
-
-
The share price used to calculate the value of shares beneficially owned for the purposes of establishing shareholding as a
percentage of salary is the share price as at 31 March 2016: £6.60.
*During the year Jeremy Pilkington was interested in shares owned by Ackers P Investment Company Limited. This company is
ultimately controlled by a number of trusts of which, for the purposes of Sections 252 to 255 of the Companies Act 2006,
Jeremy Pilkington is deemed to be a connected person. As at 31 March 2016 Ackers P Investment Company Limited owned
20,181,411 shares (2015: 20,181,411 shares).
The LTIP awards outstanding in respect of Jeremy Pilkington are notional shares which would be settled by a cash payment.
The executive directors are each in compliance with the company’s requirements to hold shares equivalent to at least 100% of
salary.
There were no changes in the interests of the directors between 31 March 2016 and 7 June 2016.
IMPLEMENTATION OF THE REMUNERATION POLICY FOR THE YEAR ENDING 31 MARCH 2017 (unaudited)
A summary of how the directors’ remuneration policy will be applied during the year ended 31 March 2017 is set out below.
BASE SALARY
The Committee approved a 1.5% increase in base salary for Jeremy Pilkington, Neil Stothard and Allison Bainbridge from 1 April
2015 and the following base salary increases with effect from 1 April 2016:
Jeremy Pilkington
Neil Stothard
Allison Bainbridge
Steve Rogers
Phil White
2017
£000
471
343
255
38
38
2016
£000
471)
336)
244)
38)
38)
% increase
0.0%
2.0%
4.5%
0.0%
0.0%
A salary increase averaging 2% across the Group was awarded at the annual pay review, effective from 1 April 2016.
During the year Neil Stothard served as a non-executive director of Wykeland Group and received a fee of £17,000 for his services.
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45
Annual Report on Remuneration
IMPLEMENTATION OF THE REMUNERATION POLICY FOR THE YEAR ENDING 31 MARCH 2017
(unaudited) – continued
PENSION ARRANGEMENTS
There are no proposed changes to pension arrangements for the executive directors.
ANNUAL BONUS
The maximum bonus potential for the year ending 31 March 2017 will remain at 100% of salary for all executive directors.
Awards will be based upon the achievement of a challenging growth target in profit before tax and amortisation.
The Committee is of the opinion that the performance targets for the annual bonus and long term incentive are commercially
sensitive and that it would be detrimental to the interests of the Group to disclose them before the start of the financial year.
The targets will be disclosed after the end of the relevant financial year in that year’s remuneration report.
LONG TERM INCENTIVES
Consistent with past awards the extent to which any LTIP awards granted in 2016 will vest will be dependent upon the
achievement of a challenging target growth in the Group’s earnings per share.
Clawback provisions in the event of significant misstatement of the results will apply to both the annual bonus and the long
term incentive.
PERFORMANCE GRAPH AND TABLE (unaudited)
The following graph charts the Total Shareholder Return of the Group and the FTSE Small Cap Index over the seven year period
from 31 March 2009 to 31 March 2016.
)
0
0
1
o
t
d
e
s
a
b
e
R
(
e
c
i
r
P
600.00
500.00
400.00
300.00
200.00
100.00
000.00
31-Mar-09
31-Mar-10
31-Mar-11
31-Mar-12
31-Mar-13
31-Mar-14
31-Mar-15
31-Mar-16
The FTSE Small Cap index excluding investment trusts is regarded as an appropriate bench mark for the Group’s shareholders.
Total shareholder return is defined as the total return a shareholder would receive over the period inclusive of both share price
VP plc
FTSE Small Cap (excl. Inv. Trusts)
growth and dividends.
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Annual Report on Remuneration
PERFORMANCE GRAPH AND TABLE (unaudited) – continued
The total remuneration and award rates of the Executive Chairman across the same period were as follows:
Single figure (£000)
Annual bonus % of maximum
LTIP vesting % of maximum
2010
614
20%
0%
2011
1,080
100%
44.6%
2012
1,919
100%
82%
2013
1,795
84%
95.1%
2014
2,042
52%
100%
2015
2,259
100%
100%
2016
1,613
27%
100%
The maximum annual bonus as a percentage of salary was increased from 50% to 100% in 2013/14.
PERCENTAGE CHANGE IN EXECUTIVE CHAIRMAN’S REMUNERATION (unaudited)
The table below shows the percentage change in the Executive Chairman’s salary, benefits and annual bonus between the
financial year ended 31 March 2015 and 31 March 2016 compared to the percentage change for UK employees of the Group
for each of these elements of pay.
Salary
Taxable Benefits
Annual Bonus*
2015
£000
464
044
235
Jeremy Pilkington
2016
£000
471
044
464
% change
01.5%
00.0%
97.4%
UK employees
% change
04.6%
11.0%
49.8%
The percentage change for UK employees is based upon a consistent set of employees and is calculated using P60 and P11D
data.
*To be comparable to the data for the UK employees the annual bonus for Jeremy Pilkington disclosed above is the bonus paid
in the relevant tax year.
RELATIVE IMPORTANCE OF SPEND ON PAY (unaudited)
The following table shows the Group’s actual spend on pay (for all employees) relative to dividends.
Staff costs
Dividends
£m
£m
2015
69.5
6.4
2016
71.3
7.4
% change
3
15
Dividend figures relate to amounts payable in respect of the relevant financial year and includes proposed final dividend of
13.5 pence.
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47
Annual Report on Remuneration
REMUNERATION COMMITTEE (unaudited)
The Group’s approach to executive directors’ remuneration is determined by the Board on the advice of the Remuneration
Committee.
The primary role of the Committee is to:
l Review, recommend and monitor the level and structure of remuneration for executive directors;
l Approve the remuneration packages for executive directors;
l Determine the balance between base pay and performance related elements of the package so as to align directors’ interests
to those of shareholders.
The Committee’s terms of reference are set out on the Company’s website.
The members of the Remuneration Committee, all independent non-executive directors, during the year under review were as
follows:
l Phil White
l Steve Rogers
Biographical information on Committee members and details of attendance at the Committee meetings during the year are set
out on pages 29 and 31. The Remuneration Committee has access to independent advice where it considers appropriate. No
advice has been sought during 2015/16.
STATEMENT OF VOTING AT GENERAL MEETING
At the last AGM held on 21 July 2015 the voting results in respect of the Remuneration Report Annual Statement were as
follows:
Votes cast in favour
Votes cast against
Total votes cast
Abstentions
Remuneration Report
31,797,331
155,707
31,953,038
490,256
99.5%
0.5%
100%
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Vp plc Annual Report and Accounts 2016
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Directors’ Report
The directors of Vp plc present their annual report and the audited financial statements of the Group and Parent
Company for the year ended 31 March 2016.
PRINCIPAL ACTIVITIES
The principal activity of the Group is equipment rental and associated services.
STRATEGIC REPORT
Pursuant to Sections 414 A – D Companies Act 2006, the business review has been replaced with a strategic report, which can
be found on pages 2 to 28.
RESULTS AND DIVIDEND
Group profit after tax for the year was £22.4 million (2015: £19.9 million). The directors recommend a final dividend of 13.5 pence
per share.
The final dividend will be paid on 2 August 2016 to all shareholders on the register as at 8 July 2016.
DIRECTORS
Details of the directors of the Company who were in office during the year and up to the date of signing the financial
statements are given on page 29. Details of directors’ interests in shares are provided in the Directors’ Remuneration Report on
page 45. The directors’ exposures to conduct and liability issues are mitigated by Directors and Officers insurance cover where
applicable.
SHARE CAPITAL
Details of the Company’s share capital structure are shown in note 18 to the accounts. All shares have the same voting rights.
SUBSTANTIAL SHAREHOLDERS
As at 7 June 2016 the following had notified the Company of an interest of 3% or more in the Company’s issued ordinary share
capital.
Number of
Ordinary Shares
Percentage of Issued
Ordinary Shares
Ackers P Investment Company Limited
Schroders plc
Discretionary Unit Fund Managers Limited
JP Morgan Asset Management (UK) Limited
20,181,411
2,451,648
2,250,000
2,094,442
Jeremy Pilkington is a director of Ackers P Investment Company Limited which is the holding company of Vp plc.
%
50.26
6.11
5.60
5.22
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49
Directors’ Report
DISCLOSURE OF INFORMATION UNDER LISTING RULE 9.8.4.
The directors confirm that the company has entered into a relationship agreement with Ackers P Investment Company Limited
(a controlling shareholder) and has complied with the independence provisions of the agreement. As far as the directors are
aware, the controlling shareholder and its associates have also complied with the independence provision.
EMPLOYEES
The directors are committed to maintaining effective communication with employees on matters which affect their occupations
and future prospects while at the same time increasing their awareness of the Group’s overall activities and performance.
This communication takes the form of comprehensive team briefings to all employees together with regular Group and
divisional newsletters.
It is the policy of the Group to employ and train disabled people whenever their skills and qualifications allow and suitable
vacancies are available. If existing employees become disabled, every effort is made to find them appropriate work and
training is provided if necessary.
POLITICAL AND CHARITABLE CONTRIBUTIONS
The Group made no political contributions during the year. Donations to charities amounted to £41,000 (2015: £28,000).
The donations made in the year principally relate to sponsorship of employee driven fund raising activities on behalf of local
and national charities.
SUPPLIER PAYMENT POLICY
It is the Company’s policy to make payment to suppliers on agreed terms. The Company seeks to abide by these payment
terms whenever it is satisfied that the supplier has provided the goods or services in accordance with the agreed terms and
conditions. The number of days purchases outstanding at 31 March 2016 was 25 days (2015: 32 days). This figure fluctuates
dependent on the creditor position for fleet purchases at the year end compared to the average purchases during the year.
TAXATION PRINCIPLES
We operate in accordance with our Tax Principles, which can be found at www.vpplc.com. In 2015/16 Vp plc paid £4.8 million
in corporate taxes. We are a responsible corporate tax payer and conduct our affairs to ensure compliance with all laws and
relevant regulations in the countries in which we operate.
CONTRACTS
There are no disclosures required under S417 of the Companies Act in relation to contractual or other arrangements with
customers or suppliers.
PURCHASE OF OWN SHARES
A resolution is to be proposed to authorise the Company to purchase its own shares, subject to certain specific limits. This
resolution is in accordance with the current guidelines issued by the Investment Committees of the Association of British
Insurers and the National Association of Pension Funds and will be proposed as a special resolution. The maximum and
minimum prices that may be paid for an Ordinary Share in exercise of such powers is set out in Resolution 11(b) and 11(c) of
the Notice of Meeting. The directors undertake to shareholders that they will not exercise the ability to purchase the
Company’s own shares unless to do so would result in an increase in earnings per share and would be in the best interest of
shareholders generally.
The Company would consider holding any of its own shares that it purchases pursuant to the authority conferred by this
resolution as treasury shares provided that the number so held did not at any time exceed 10% of the Company’s issued share
capital. This would give the Company the ability to re-issue treasury shares quickly and cost-effectively and would provide the
Company with additional flexibility in the management of its capital base. During the year ended 31 March 2016 the Company
did not acquire any shares under the authority of the resolution passed at the Annual General Meeting.
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Directors’ Report
GOING CONCERN
The Business Review on pages 10 to 17 sets out the Group’s business activities, markets and outlook for the forthcoming year
and beyond. This is supported by the Financial Review on pages 18 to 20 which sets out the Group’s current financial position,
including its cashflows, net debt and borrowing facilities and also outlines the Group’s treasury management objectives, policies
and processes. It is also supported by the Viability Statement on page 21.
Notes 14 and 15 (‘Interest Bearing Loans and Borrowings’ and ‘Financial Instruments’) to the financial statements give further
information on the Group’s borrowings, financial instruments and liquidity risk.
The Group is in a healthy financial position. At the year end the Group had total banking facilities of £100 million, which are
subject to bank covenant testing, together with a step up facility of £25 million.
The Board has evaluated the facilities and covenants on the basis of the budget for 2016/17 which has been prepared taking
into account the current economic climate, together with appropriate sensitivity analysis. On the basis of this testing and taking
into account the increase in the facilities in April 2016, as set out in the Financial Review, the directors have a reasonable
expectation that the Group has adequate resources to continue in operation for the foreseeable future. For this reason the
going concern basis has been adopted in the preparation of the financial statements.
CORPORATE GOVERNANCE
The Corporate Governance Statement on pages 30 to 33 forms part of the Directors’ Report.
INDEPENDENT AUDITOR
The directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware, there
is no relevant audit information of which the Company’s auditors are unaware; and all directors have taken all the steps that
they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the
Company’s auditors are aware of that information.
In accordance with Section 489 of the Companies Act 2006, a resolution for the re-appointment of PricewaterhouseCoopers LLP
as auditors of the Company is to be proposed at the forthcoming Annual General Meeting.
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By Order of the Board
Allison Bainbridge
Group Finance Director
7 June 2016
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51
Statement of Directors’ Responsibilities
IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS
The directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the financial statements
in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have
prepared the Group and Parent Company financial statements in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or
loss of the Group for that period. In preparing these financial statements, the directors are required to:
l select suitable accounting policies and then apply them consistently;
l make judgements and accounting estimates that are reasonable and prudent;
l state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures
disclosed and explained in the financial statements;
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and
enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act
2006 and, as regards the group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding
the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
The directors are responsible for the maintenance and integrity of the company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The directors whose names appear on page 29 confirm that to the best of their knowledge:
l The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a
whole: and
l 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.
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Independent Auditors’ Report
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF Vp plc
Report on the financial statements
Our opinion
In our opinion:
l Vp plc’s Group financial statements and Parent Company financial statements (the “financial statements”) give a true and fair view of the state
of the Group's and of the Parent Company's affairs as at 31 March 2016 and of the Group's profit and the Group’s and the Parent Company’s
cash flows for the year then ended;
l the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (“IFRSs”) as adopted
by the European Union;
l the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied
in accordance with the provisions of the Companies Act 2006; and
l the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial
statements, Article 4 of the IAS Regulation.
What we have audited
The Financial Statements included within the Annual Report and Accounts (the “Annual Report”) comprise:
l the Consolidated and Parent Company Balance Sheets as at 31 March 2016;
l the Consolidated Income Statement and Statements of Comprehensive Income for the year then ended;
l the Consolidated and Parent Company Statements of Cash Flows for the year then ended;
l the Statements of Changes in Equity for the year then ended; and
l the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information.
Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the financial statements. These are cross-
referenced from the financial statements and are identified as audited. The financial reporting framework that has been applied in the preparation of
the financial statements is IFRSs as adopted by the European Union, and applicable law and, as regards the Parent Company financial statements, as
applied in accordance with the provisions of the Companies Act 2006.
Our audit approach
Overview
Materiality
Audit scope
Areas of
focus
l Overall group materiality: £1.4 million which represents 5% of profit before tax.
l
l
The Group audit team performed an audit of the complete financial information of the four financially significant
reporting units with the Group.
As a result of this scoping we obtained coverage over 97% of the Group’s external revenues and 98% of the Group’s
profit before tax.
l Existence of rental equipment.
l Valuation of rental equipment.
The scope of our audit and our areas of focus
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (“ISAs (UK & Ireland)”).
We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. In particular, we looked
at where the directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal controls,
including evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and effort, are identified as “areas
of focus” in the table below. We have also set out how we tailored our audit to address these specific areas in order to provide an opinion on the
financial statements as a whole, and any comments we make on the results of our procedures should be read in this context. This is not a complete
list of all risks identified by our audit.
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53
Independent Auditors’ Report
Area of focus
How our audit addressed the area of focus
Existence of rental equipment
Refer to page 34, page 64 (accounting
policy) and page 73 (financial
disclosures)
We focused on this area because the
Group holds a significant quantum of
rental equipment in the normal course
of its business.
The net book value of rental equipment
is £147.2 million (2015: £131.6 million).
Given the number of assets and the
frequency of movement (through
purchases, hires and sales) there is the
potential for assets to go missing or
their movements to be mis-recorded.
This results in complexity in maintaining
an accurate fixed asset register.
Valuation of rental equipment
Refer to page 34, page 64 (accounting
policy) and page 73 (financial
disclosures)
We focused on this area because there
is significant management judgement
involved in estimating the useful
economic lives, estimated residual
values and impairment of the rental
assets.
The utilisation of rental equipment is
key to supporting their valuation so a
downturn in the trading performance in
a particular market or reporting unit
presents an inherent impairment risk.
Our audit work in respect of the existence of rental equipment included understanding and evaluating
management’s key controls in this area, checking the correct recording of rental asset movements on
the fixed asset register, and substantively testing the existence of a sample of assets.
We tested the operating effectiveness of controls in place over the accurate recording of rental
equipment purchases and disposals. For a sample of rental equipment purchases in the year we
agreed to invoice and capitalisation onto the fixed asset register, checking the value and the useful
economic life applied. For a sample of rental equipment disposed of in the year, we agreed to
disposal documentation, sales invoices and cash receipts where appropriate and removal from the
fixed asset register.
We agreed a sample of rental equipment out on hire to signed delivery notes. We did not identify
any material exceptions from this work.
We attended a sample of year end rental equipment counts and:
l considered the design and effectiveness of count controls by understanding and observing the
count procedures; and
l counted a sample of assets and reconciled these to both management’s count and the fixed
asset register.
Our testing did not identify rental equipment that was on the fixed asset register, but not either on
hire to customers or in the Group’s possession at the year end.
Our audit work in respect of the valuation of rental equipment comprised an assessment of the
accuracy of estimates made by management in previous years, an analysis of utilisation statistics,
integrity checks over the underlying fixed asset data and performing an impairment review using
management’s budgeted trading performance. We tested the appropriateness of useful economic
lives and estimated residual values applied by management through consideration of any
profits/losses on disposal of rental equipment and the level of fully written down assets still
generating revenue, noting no evidence of systematic under or over depreciation of the assets.
We tested the integrity of the data held within the fixed asset registers, given the reliance upon
this information for our impairment analysis. This comprised scanning the entire population of
assets for inappropriate entries (such as assets with negative cost), indications of incorrect
application of the Group’s accounting policies (such as assets with a useful economic life
inconsistent with the type of asset) or evidence that the useful economic life assigned is not being
applied correctly in the fixed asset register. We did not identify any material exceptions from this
work.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole,
taking into account the geographic structure of the Group, the accounting processes and controls operated by the Group, and the industry in which the
Group operates.
The Group’s accounting process is structured around a Group finance function at its head office in Harrogate. Within the head office, a supporting finance
function exists in the form of a shared service centre utilised for five of the Group’s six divisions which operate in the UK and overseas. The Group also
maintains local finance teams for each of its six divisions, which are based at the operational locations of each division.
The Group’s reporting units vary significantly in size and we identified 14 reporting units, 4 of which, in our view, required an audit of their complete
financial information, due to their size or risk characteristics.
In establishing the overall approach to the Group audit, we determined that all work could be performed by us, the Group audit team. Together, the
reporting units subject to audit procedures generated 97% of Group revenues and 98% of Group profit before tax.
We performed specific audit procedures over central functions and areas of significant judgement, including taxation, goodwill, pension obligations and
share based payments.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on individual
financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and on the financial statements as a
whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall group materiality
£1.4 million (2015: £1.3 million).
How we determined it
5% of profit before tax.
Rationale for benchmark applied
We applied this benchmark because, in our view, this is the most relevant metric against which the
performance of the Group is measured.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £70,000 (2015: £100,000) as
well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
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Independent Auditors’ Report
Going concern
Under the Listing Rules we are required to review the directors’ statement, set out on page 51, in relation to going concern. We have nothing to
report having performed our review.
Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to the
Directors’ statement about whether they considered it appropriate to adopt the going concern basis in preparing the financial statements.
We have nothing material to add or to draw attention to.
As noted in the directors’ statement, the directors have concluded that it is appropriate to adopt the going concern basis in preparing the financial
statements. The going concern basis presumes that the Group and Parent Company have adequate resources to remain in operation, and that the
directors intend them to do so, for at least one year from the date the financial statements were signed. As part of our audit we have concluded
that the directors’ use of the going concern basis is appropriate. However, because not all future events or conditions can be predicted, these
statements are not a guarantee as to the Group’s and Parent Company’s ability to continue as a going concern.
Other required reporting
Consistency of other information
Companies Act 2006 opinions
In our opinion:
l The information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are
prepared are consistent with the financial statements; and
l The information given in the Corporate Governance Statement set out on pages 30 to 33 with respect to internal control and risk
management systems and about share capital structures is consistent with the financial statements.
ISAs (UK & Ireland) reporting
Under ISAs (UK & Ireland) we are required to report to you if, in our opinion:
l Information in the Annual Report is:
− Materially inconsistent with the information in the audited financial statements; or
− Apparently materially incorrect based on, or materially inconsistent with, our knowledge of the
Group and Parent Company acquired in the course of performing our audit; or
− Otherwise misleading.
l The statement given by the directors on page 34, in accordance with provision C.1.1 of the UK Corporate
Governance Code (the “Code”), that they consider the Annual Report taken as a whole to be fair,
balanced and understandable and provides the information necessary for members to assess the Group’s
and Parent Company’s performance, business model and strategy is materially inconsistent with our
knowledge of the Group and Parent Company acquired in the course of performing our audit.
We have no exceptions
to report.
We have no exceptions
to report.
l The section of the Annual Report on page 34, as required by provision C.3.8 of the Code, describing
the work of the Audit Committee does not appropriately address matters communicated by us to the
Audit Committee.
We have no exceptions
to report.
The Directors’ assessment of the prospects of the Group and of the principal risks that would threaten the solvency
or liquidity of the Group
Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to:
l the Directors’ confirmation on page 21 of the Annual Report, in accordance with provision C.2.1 of
the Code, that they have carried out a robust assessment of the principal risks facing the Group,
including those that would threaten its business model, future performance, solvency or liquidity.
l the disclosures in the Annual Report that describe those risks and explain how they are being
managed or mitigated.
l the Directors’ explanation on page 21 of the Annual Report, in accordance with provision C.2.2 of the Code, as
to how they have assessed the prospects of the Group, over what period they have done so and why they
consider that period to be appropriate, and their statement as to whether they have a reasonable expectation
that the Group will be able to continue in operation and meet its liabilities as they fall due over the period of
their assessment, including any related disclosures drawing attention to any necessary qualifications or
assumptions.
We have nothing
material to add or to
draw attention to.
We have nothing
material to add or to
draw attention to.
We have nothing
material to add or to
draw attention to.
Under the Listing Rules we are required to review the Directors’ statement that they have carried out a robust assessment of the principal
risks facing the Group and the Directors’ statement in relation to the longer-term viability of the Group. Our review was substantially less in
scope than an audit and only consisted of making inquiries and considering the Directors’ process supporting their statements; checking
that the statements are in alignment with the relevant provisions of the Code; and considering whether the statements are consistent with
the knowledge acquired by us in the course of performing our audit. We have nothing to report having performed our review.
Vp plc Annual Report and Accounts 2016
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Independent Auditors’ Report
Adequacy of accounting records and information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion:
l we have not received all the information and explanations we require for our audit; or
l adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches
not visited by us; or
l the Parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this responsibility.
Directors’ remuneration
Directors’ remuneration report - Companies Act 2006 opinion
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.
Other Companies Act 2006 reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors’ remuneration specified by law are
not made. We have no exceptions to report arising from this responsibility.
Corporate governance statement
Under the Companies Act 2006 we are required to report to you if, in our opinion, a corporate governance statement has not been prepared by the
Parent Company. We have no exceptions to report arising from this responsibility.
Under the Listing Rules we are required to review the part of the Corporate Governance Statement relating to ten further provisions of the Code.
We have nothing to report having performed our review.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Statement of Directors' Responsibilities, the directors are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK & Ireland). Those
standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the Parent Company’s members as a body in accordance with Chapter 3 of
Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent
in writing.
What an audit of financial statements involves
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:
l whether the accounting policies are appropriate to the Group’s and the Parent Company’s circumstances and have been consistently applied and
adequately disclosed;
l the reasonableness of significant accounting estimates made by the directors; and
l the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing the directors’ judgements against available evidence, forming our own judgements, and
evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis
for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both.
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial
statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired
by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the
implications for our report.
Steve Denison (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Leeds
7 June 2016
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Consolidated Income Statement
for the Year Ended 31 March 2016
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit before amortisation
Amortisation
Operating profit
Financial income
Financial expenses
Profit before taxation and amortisation
Amortisation
Profit before taxation
Income tax expense
Profit attributable to owners of the parent
Basic earnings per 5p ordinary share
Diluted earnings per 5p ordinary share
Dividend per 5p ordinary share interim paid
and final proposed
Note
2
2
9
3
6
6
9
7
20
20
19
2016)
£000)
208,746)
(149,758)
58,988)
(29,395)
31,891)
(2,298)
29,593)
4)
(2,097)
29,798)
(2,298)
27,500)
(5,112)
22,388)
57.49p
54.51p
18.85p
2015)
£000)
205,602)
(148,773)
56,829)
(29,733)
28,780)
(1,684)
27,096)
1)
(2,024)
26,757)
(1,684)
25,073)
(5,202)
19,871)
51.03p
47.01p
16.50p
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Statements of Comprehensive Income
Consolidated Statement of Comprehensive Income
for the Year Ended 31 March 2016
Profit for the year
Other comprehensive income/(expense):)
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension scheme
Tax on items taken to other comprehensive income
Impact of tax rate change
Foreign exchange translation difference
Note
24
7
7
Items that may be subsequently reclassified to profit or loss
Effective portion of changes in fair value of cash flow hedges
Total other comprehensive income/(expense)
Total comprehensive income for the year attributable to owners of the parent
Parent Company Statement of Comprehensive Income
for the Year Ended 31 March 2016
Profit for the year
Other comprehensive income/(expense):)
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension scheme
Tax on items taken to other comprehensive income
Impact of tax rate change
Items that may be subsequently reclassified to profit or loss
Effective portion of changes in fair value of cash flow hedges
Total other comprehensive income/(expense)
Total comprehensive income for the year
Note
24
7
7
2016)
£000)
22,388)
122)
(23)
(39)
693)
581)
1,334)
23,722)
2016)
£000)
10,397)
122)
(23)
(39)
581)
641)
11,038)
2015)
£000)
19,871)
(55)
12)
-)
(1,028)
(1,011)
(2,082)
17,789)
2015)
£000)
13,576)
(55)
12)
-)
(1,011)
(1,054)
12,522)
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Statements of Changes in Equity
Consolidated Statement of Changes in Equity
for the Year Ended 31 March 2016
)
)Capital)
Share) Redemption)
)
Share)
Reserve) Premium)
Capital)
)
Non-)
Hedging) Retained) cont rolling)
Interest)
Earnings)
Reserve)
Note
£000)
£000)
£000)
£000)
£000)
£000)
)
Total)
Equity)
£000)
Equity at 1 April 2014
Total comprehensive income for the year
2,008)
-)
301)
-)
16,192)
-)
(90)
(1,011)
Tax movements to equity
Share option charge in the year
Net movement relating to
shares held by Vp Employee Trust
Dividend to shareholders
Total change in equity during the year
Equity at 31 March 2015
Total comprehensive income for the year
Tax movements to equity
Impact of tax rate change
Share option charge in the year
Net movement relating to
shares held by Vp Employee Trust
Dividend to shareholders
Total change in equity during the year
7
19
7
7
19
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
(1,011)
89,546)
18,800)
1,145)
1,894)
(11,059)
(5,986)
4,794)
27) 107,984)
17,789)
-)
-)
-)
-)
-)
-)
1,145)
1,894)
(11,059)
(5,986)
3,783)
2,008)
-)
301)
-)
16,192)
-)
(1,101)
581
94,340)
23,141)
27) 111,767)
23,722)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
)-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
581)
1,123)
(31)
1,904)
(10,567)
(6,568)
9,002)
-)
-)
-)
-)
-)
-)
1,123)
(31)
1,904)
(10,567)
(6,568)
9,583)
Equity as at 31 March 2016
2,008)
301)
16,192)
(520)
103,342)
27) 121,350)
Parent Company Statement of Changes in Equity
for the Year Ended 31 March 2016
)
Share)
Capital)
Equity at 1 April 2014
Total comprehensive income for the year
Tax movements to equity
Share option charge in the year
Net movement relating to
shares held Vp Employee Trust
Dividend to shareholders
Total change in equity during the year
Equity at 31 March 2015
Total comprehensive income for the year
Tax movements to equity
Impact of tax rate change
Share option charge in the year
Net movement relating to
shares held by Vp Employee Trust
Dividend to shareholders
Total change in equity during the year
Note
£000)
2,008
-)
Capital)
Redemption)
Reserve)
£000)
)301)
-)
)
Share)
Premium)
£000)
16,192)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
)
Hedging)
Reserve)
£000)
(90)
(1,011)
-)
-)
-)
-)
(1,011)
-)
-)
-)
-)
-)
2,008)
-)
301)
-)
16,192)
-)
(1,101)
581
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
581)
(520)
7
19
7
7
19
Retained)
Earnings)
£000)
35,852)
13,533)
1,145)
1,894)
)
Total)
Equity)
£000)
54,263)
12,522)
1,145)
1,894)
(11,059)
(11,059)
(5,986)
(473)
(5,986)
(1,484)
35,379)
10,457)
1,123)
(31)
1,904)
52,779)
11,038)
1,123)
(31)
1,904)
(10,567)
(10,567)
(6,568)
(3,682)
(6,568)
(3,101)
31,697)
49,678)
Equity at 31 March 2016
2,008)
301)
16,192)
Vp plc Annual Report and Accounts 2016
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59
Consolidated Balance Sheet
at 31 March 2016
Non-current assets
Property, plant and equipment
Intangible assets
Employee benefits
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Interest-bearing loans and borrowings
Income tax payable
Trade and other payables
Total current liabilities
Non-current liabilities
Interest-bearing loans and borrowings
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued share capital
Capital redemption reserve
Share premium
Hedging reserve
Retained earnings
Total equity attributable to
equity holders of the parent
Non-controlling interest
Total equity
Note
8
9
24
11
12
13
14
16
14
17
18
2016)
£000)
167,201)
46,363)
1,534)
215,098)
5,363)
44,817)
4,517)
54,697)
269,795)
(873)
(931)
(51,567)
(53,371)
(89,778)
(5,296)
(95,074)
(148,445)
121,350)
2,008)
301)
16,192)
(520)
103,342)
121,323)
27)
121,350)
2015)
£000)
147,817)
43,394)
1,043)
192,254)
6,495)
41,102)
5,236)
52,833)
245,087)
-)
(1,948)
(54,988)
(56,936)
(72,000)
(4,384)
(76,384)
(133,320)
111,767)
2,008)
301)
16,192)
(1,101)
94,340)
111,740)
27)
111,767)
The financial statements on pages 57 to 90 were approved and authorised for issue by
the Board of Directors on 7 June 2016 and were signed on its behalf by:
Jeremy Pilkington
Chairman
Company number: 481833
Allison Bainbridge
Director
60
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Parent Company Balance Sheet
at 31 March 2016
Non-current assets
Property, plant and equipment
Intangible assets
Investments in subsidiaries
Employee benefits
Total non-current assets
Current assets
Inventories
Trade and other receivables
Income tax receivable
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Interest-bearing loans and borrowings
Income tax payable
Trade and other payables
Total current liabilities
Non-current liabilities
Interest-bearing loans and borrowings
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued share capital
Capital redemption reserve
Share premium
Hedging reserve
Retained earnings
Total equity
Note
8
9
10
24
11
12
13
14
16
14
17
18
2016)
£000)
89,294)
18,678)
27,930)
1,534)
137,436)
1,416)
54,750)
490)
657)
57,313)
194,749)
(6,485)
-)
(45,387)
(51,872)
(89,748)
(3,451)
(93,199)
(145,071)
49,678)
2,008)
301)
16,192)
(520)
31,697)
49,678)
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2015)
£000)
78,679)
17,150)
25,830)
1,043)
122,702)
1,951)
51,155)
-)
1,555)
54,661)
177,363)
(4,263)
(672)
(44,992)
(49,927)
(72,000)
(2,657)
(74,657)
(124,584)
52,779)
2,008)
301)
16,192)
(1,101)
35,379)
52,779)
The financial statements on pages 57 to 90 were approved and authorised for issue by
the Board of Directors on 7 June 2016 and were signed on its behalf by:
Jeremy Pilkington
Chairman
Company number: 481833
Allison Bainbridge
Director
Vp plc Annual Report and Accounts 2016
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Consolidated Statement of Cash Flows
for the Year Ended 31 March 2016
Note
8
9
Cash flows from operating activities
Profit before taxation
Adjustments for:
Pension fund contributions in excess of
expense recognised in Income Statement
Share based payment charges
Depreciation
Amortisation and impairment
Financial expense
Financial income
Profit on sale of property, plant and equipment
Operating cash flow before changes in
working capital and provisions)
Decrease/(increase) in inventories
Increase in trade and other receivables
(Decrease)/increase in trade and other payables
Cash generated from operations
Interest paid
Interest element of finance lease rental payments
Interest received
Income taxes paid
Net cash generated from operating activities
Investing activities
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Acquisition of businesses and subsidiaries (net of cash acquired)
25
Net cash used in investing activities
Cash flows from financing activities
Purchase of own shares by Employee Trust
Repayment of borrowings
New loans
Payment of finance lease liabilities
Dividend paid
Net cash used in financing activities
Net decrease in cash and cash equivalents
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents as at the beginning of the year
Cash and cash equivalents as at the end of the year
19
2016)
£000)
27,500)
(369)
1,904)
27,375)
2,298)
2,097)
(4)
(6,246)
54,555)
1,132)
(2,101)
(5,729)
47,857)
(2,097)
(4)
4)
(4,840)
40,920)
17,179)
(50,237)
(7,068)
(40,126)
(10,566)
-)
16,000)
(497)
(6,568)
(1,631)
(837)
118)
5,236)
4,517)
2015)
£000)
25,073)
(409)
1,894)
25,023)
1,684)
2,024)
(1)
(3,277)
52,011)
(854)
(2,746)
6,114)
54,525)
(2,016)
(2)
1)
(2,873)
49,635)
11,982)
(52,887)
(5,405)
(46,310)
(11,059)
(10,000)
20,000)
(17)
(5,986)
(7,062)
(3,737)
(5)
8,978)
5,236)
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Parent Company Statement of Cash Flows
for the Year Ended 31 March 2016
Note
8
9
Cash flows from operating activities
Profit before taxation
Adjustments for:
Pension fund contributions in excess of
expense recognised in Income Statement
Share based payment charges
Depreciation
Amortisation
Financial expense
Financial income
Profit on sale of property, plant and equipment
Operating cash flow before changes in
working capital and provisions)
Decrease/(increase) in inventories
(Increase)/decrease in trade and other receivables
Decrease in trade and other payables
Cash generated from operations
Interest paid
Interest element of finance lease rental payments
Interest received
Income taxes paid
Net cash generated from operating activities
Investing activities
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Acquisition of businesses and subsidiaries (net of cash acquired)
25
Net cash used in investing activities
Cash flow from financing activities
Purchase of own shares by Employee Trust
Repayment of borrowings
New loans
Payment of finance lease liabilities
Dividend paid
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents as at the beginning of the year
Cash and cash equivalents net of overdraft as
at the end of the year
19
2016)
£000)
12,767)
(369)
1,904)
11,866)
472)
2,091)
(4)
(4,047)
24,680)
535)
(2,558)
(1,803)
20,854)
(2,097)
(3)
4)
(1,823)
16,935)
10,246)
(24,153)
(3,718)
(17,625)
(10,566)
-)
16,000)
(473)
(6,568)
(1,607)
(2,297)
(2,708)
(5,005)
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£000)
16,209)
(409)
1,894)
11,585)
570)
2,034)
(1)
(2,259)
29,623)
(487)
3,031)
(7,519)
24,648)
(2,015)
(2)
1)
(835)
21,797)
7,300)
(26,216)
-)
(18,916)
(11,059)
(10,000)
20,000)
(17)
(5,986)
(7,062)
(4,181)
1,473)
(2,708)
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Notes
(forming part of the financial statements)
1. SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
Vp plc is a public limited company which is listed on the London Stock Exchange and incorporated and domiciled in Great Britain. These consolidated
Financial Statements of Vp plc for the year ended 31 March 2016, consolidate those of the Company and its subsidiaries (together referred to as
the “Group”). The Parent Company’s Financial Statements present information about the Company as a separate entity and not about the Group.
Basis of preparation
Both the Parent Company Financial Statements and the Group Financial Statements have been prepared and approved by the directors in
accordance with International Financial Reporting Standards (IFRSs) and IFRS Interpretations Committee (IFRSIC) interpretations as adopted by the
EU and the Companies Act 2006 applicable to company reporting under IFRS. In publishing the Parent Company Financial Statements here together
with the Group Financial Statements, the Company has taken advantage of the exemptions in s408 of the Companies Act 2006 not to present its
individual income statement and related notes that form part of these approved Financial Statements.
The Financial Statements are presented in sterling, rounded to the nearest thousand. They are prepared on a going concern basis (further details
are provided in the Directors’ Report) and historic cost basis except that derivative financial instruments and cash settled share options are stated
at fair value.
Accounting policies and restatements
The Group’s accounting policies are set out below and have been applied consistently to all periods presented in these consolidated Financial
Statements. There were no changes to IFRSs or IFRSIC interpretations that have had a material impact on the Group for the year ended 31 March 2016.
Future standards
At the date of approval of these financial statements the following standards and interpretations were in issue but not yet effective:
l IFRS 9 ‘Financial instruments’ (effective for accounting periods commencing on or after 1 January 2018).
l IFRS 15 ‘Revenue from contracts with customers’ (effective for accounting periods commencing on or after 1 January 2017).
The adoption of these Standards and Interpretations is not expected to have a material impact on the financial statements of the Group or Parent
Company. Both of these standards are still subject to EU endorsement.
In addition the following standard is expected to have a significant impact on the Group and Company, however the Group is still considering the
impact.
l IFRS 16 ‘Leases’ (effective for accounting periods commencing on or after 1 January 2019). This standard is still subject to EU endorsement.
Basis of consolidation
Subsidiaries are those entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the
financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently
are exercisable or convertible are taken into account. The Financial Statements of subsidiaries are included in the consolidated Financial
Statements from the date that control commences until the date that control ceases.
Property, plant and equipment
Property, plant and equipment are stated at cost or deemed cost less accumulated depreciation and impairment losses.
Certain items of property, plant and equipment that had been revalued to fair value on or prior to 1 April 2004, the date of transition to adopted IFRSs,
are measured on the basis of deemed cost, being the revalued amount at the date of that revaluation, as permitted by the exemption in IFRS 1.
Leases under which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Plant and equipment
acquired by way of finance leases is stated at an amount equal to the lower of its fair value and the present value of the minimum lease payments
at the inception of the lease, less accumulated depreciation and impairment losses. Operating lease payments are accounted for as described in
the accounting policy on operating leases.
Where the information is available assets acquired via acquisitions are recorded in the accounting records on a gross cost and accumulated
depreciation basis.
Depreciation is provided by the Group to write off the cost or deemed cost less estimated residual value of tangible fixed assets using the
following annual rates:
Land and Buildings - Freehold buildings
Land and Buildings - Leasehold improvements
Rental equipment
Motor vehicles
Other - Computers
Other - Fixtures, fittings and other equipment
–
–
–
–
–
–
2% straight line
Term of lease
7% - 33% straight line depending on asset type
25% straight line
33% straight line
10% - 20% straight line
Estimates of residual values are reviewed at least annually and adjustments made as appropriate. Any profit generated on disposal is credited to
cost of sales. No depreciation is provided on freehold land.
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Notes
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
Business combinations and goodwill
For acquisitions on or after 1 April 2010, the Group measures goodwill at the acquisition date as:
l the fair value of the consideration transferred; plus
l the recognised amount of any non-controlling interests in the acquiree; plus
l the fair value of the existing equity interest in the acquiree; less
l the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
Costs related to the acquisition are expensed to the income statement as incurred.
In respect of acquisitions between 1 April 2004 and 1 April 2010, goodwill represents the difference between the cost of the acquisitions and the
fair value of identifiable net assets and contingent liabilities acquired. Costs related to the acquisition were capitalised as part of the cost of the
acquisition.
Goodwill is stated at cost less any accumulated impairment losses and is included on the balance sheet as an intangible asset. It is allocated to
cash generating units and is not amortised, but tested annually for impairment against expected future cash flows from the cash generating unit
to which it is allocated.
The Group has chosen not to restate business combinations prior to 1 April 2004 on an IFRS basis as permitted by IFRS 1. Goodwill is included on
the basis of deemed cost for the transactions which represent its carrying value at the date of transition to adopted IFRSs.
Other intangible assets
Intangible assets other than goodwill that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses.
Amortisation is included within cost of sales within the Income Statement. The rate of amortisation attempts to write-off the cost of the intangible
asset over its estimated useful life using the following rates:
Customer related intangibles
– up to 10 years
Supply agreement
–
the initial term of the agreement
Trade names
– over the estimated initial period of usage, normally 10 years
No amortisation is provided where trade names are expected to have an indefinite life.
Impairment
The carrying amounts of non financial assets are reviewed at each balance sheet date to determine whether there is any indication of impairment.
If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an
asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised through the Income Statement. For goodwill
and assets that have an indefinite useful life the recoverable amount is tested at each balance sheet date.
Investments
In the Company’s Financial Statements, investments in subsidiary undertakings are stated at cost less impairment.
Dividends received and receivable are credited to the Company’s Income Statement to the extent that the Company has the right to receive payment.
Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
Raw materials and consumables stock is held primarily for the repair and maintenance of fleet assets. Goods for resale relate to stock held for sale.
The basis of expensing stock is either on a first-in first-out basis or weighted average basis depending on the system used within each division.
Trade and other receivables
Trade and other receivables are stated at their due amounts less impairment losses.
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Notes
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of
the Group’s cash management are included as a component of cash and cash equivalents for the purposes of the Statement of Cash Flows.
Interest bearing loans and borrowings
Financial assets and liabilities are recognised on the balance sheet when the Group becomes party to the contractual provision of the instrument.
Interest bearing borrowings are recognised initially at fair value less directly attributable transaction costs. Subsequent to initial recognition,
interest bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the Income
Statement over the periods of the borrowings on an effective interest basis.
Taxation
The charge for taxation is based on the results for the year and takes into account full provision for deferred taxation due to temporary differences.
Deferred tax is provided using the balance sheet liability method to provide for temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at
the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can
be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax
assets and liabilities are not discounted and are offset where amounts will be settled on a net basis as a result of a legally enforceable right.
Current tax is the expected tax payable on the taxable income for the year, using rates enacted at the balance sheet date, and any adjustment
to tax payable in respect of prior years.
Trade and other payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost.
Employee benefits – pensions
Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred.
The Group’s net obligation in respect of its defined benefit pension plan is calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value
of any plan assets is deducted. The liability discount rate is the yield at the balance sheet date on AA credit rated bonds that have maturity dates
approximating to the terms of the Group’s obligations. The calculation is performed by a qualified actuary using the projected unit credit method.
The Group’s net obligation is recorded as a balance sheet asset or liability and the actuarial gains and losses associated with this balance sheet
item are recognised in the Statement of Comprehensive Income as they arise. Actuarial gains and losses occur when actuarial assumptions differ
from those previously envisaged by the actuary or when asset returns differ from the liability discount rate. An asset for the surplus has been
recognised on the basis that it is recoverable prior to wind up of the scheme, however the balance sheet position is sensitive to small fluctuations
in the assumptions made.
When the benefits of the plan are improved, the proportion of the increased benefit relating to past service by employees is recognised as an
expense in the Income Statement on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits
vest immediately, the expense is recognised immediately in the Income Statement.
The full service cost of the pension scheme is charged to operating profit.
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1. SIGNIFICANT ACCOUNTING POLICIES (continued)
Dividend
Dividends are recognised as a liability in the period in which they are approved, however interim dividends are recognised on a paid basis.
Share Capital
Ordinary shares are classified as equity.
Employee trust shares
The Group has an employee trust (the Vp Employee Trust) for the warehousing of shares in support of awards granted by the Company under its
various share option schemes. The Group accounts include the assets and related liabilities of the Vp Employee Trust. In both the Group and Parent
Company accounts the shares in the Group held by the employee trust are treated as treasury shares, are held at cost, and presented in the
balance sheet as a deduction from retained earnings. The shares are ignored for the purpose of calculating the Group’s earnings per share.
Treasury shares
When share capital recognised as equity is repurchased and classified as treasury shares the amount of the consideration paid is recognised as a
deduction from equity. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and
the resulting surplus or deficit on the transaction is transferred to/from retained earnings.
Derivative financial instruments
Interest rate and exchange rate swaps are accounted for in the balance sheet at fair value and any movement in fair value is taken to the Income
Statement, unless the swap is designated as an effective hedge of the variability in cash flows, an “effective cash flow hedge”.
Where a derivative financial instrument is designated as an effective cash flow hedge, the effective part of any gain or loss on the derivative
financial instrument is recognised directly in equity. If a hedge of a forecasted transaction subsequently results in the recognition of a financial
asset or a financial liability, the associated gains and losses that were recognised directly in equity are reclassified into profit or loss in the same
period or periods during which the asset acquired or liability assumed affects profit or loss (i.e. when interest income or expense is recognised).
For cash flow hedges, other than those covered by the preceding policy statement, the associated cumulative gain or loss is removed from equity
and recognised in the Income Statement in the same period or periods during which the hedged item affects profit or loss.
When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the hedge relationship but the hedged
forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in equity and is recognised in accordance with the
above policy when the transaction occurs. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss
recognised in equity is recognised immediately in the Income Statement.
The fair value of interest rate swaps is the estimated amount the Group would receive or pay to terminate the swap at the balance sheet date,
taking into account current and future interest rates and the current creditworthiness of the swap counterparties. The fair value of the exchange
rate swap is the estimated amount the Group would receive or pay to terminate the swap at the balance sheet date taking account of current
and future exchange rates. The carrying value of hedge instruments is presented within other payables.
Financial guarantee contracts
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its group, the Company
considers these to be insurance arrangements, and accounts for them as such. In this respect, the Company treats the guarantee contract as a
contingent liability until such time as it becomes probable that the Company will be required to make a payment under the guarantee.
Revenue
Revenue represents the amounts (excluding Value Added Tax) derived from the hire of equipment and the provision of goods and services to
third party customers during the year. Revenue from equipment hire, which is the vast majority of Group revenues, is recognised from the start
of hire through to the end of the agreed hire period predominately on a time apportioned basis. Revenue from the sale of goods is recognised
when the significant risks and rewards of ownership have been transferred to the buyer and revenue from services rendered is recognised in the
Income Statement in proportion to the stage of completion of the transaction at the balance sheet date. As the Group does not in the course of
its ordinary activities routinely dispose of equipment held for hire any sales proceeds are shown as a reduction in cost of sales.
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Notes
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
Share based payments
The fair value of share options is charged to the Income Statement based upon their fair value at the date of grant with a corresponding increase
in equity. The charge is recognised evenly over the vesting period of the options. The liabilities for cash settled share based payment arrangements
are measured at fair value.
The fair values are calculated using an appropriate option pricing model. The Group’s Approved, Unapproved and Save As You Earn (SAYE) schemes
have been valued using the Black-Scholes model and the Income Statement charge is adjusted to reflect the expected number of options that will
vest, based on expected levels of performance against non-market based conditions and the expected number of employees leaving the Group.
The fair values of the Group’s Long Term Incentive Plan (LTIP) and Share Matching scheme are calculated using a discounted grant price model,
again adjusted for expected performance against non-market based conditions and employees leaving the Group. Amendments to IFRS 2, “Share
Based Payments”, clarified the treatment of cancelled options, whereby if a grant of equity instruments is cancelled the Group shall account for the
cancellation as an acceleration of vesting and shall recognise immediately the amount that would have been recognised over the remainder of the
vesting period.
Any cash settled options are valued at their fair value as calculated at each period end, taking account of performance criteria and expected
numbers of employees leaving the Group and the liability is reflected in the balance sheet within accruals.
The parent company recharges the subsidiary entities with the fair value of the share options relating to the employees associated with that entity.
Foreign currencies
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated using the rate of exchange ruling at the balance sheet date and the gains or losses on translation
are included in the Income Statement. Non-monetary assets and liabilities that are stated at fair value are translated to sterling at the foreign
exchange rates ruling at the date the values were determined.
The assets and liabilities of foreign operations are translated at foreign exchange rates ruling at the balance sheet date. The revenues and
expenses of foreign operations are translated at rates approximating to the foreign exchange rates ruling at the date of the transactions. Foreign
exchange differences arising on retranslation are recognised directly in equity.
Operating leases - leasor
The Group’s rental fleet is hired to customers under simple operating leases with no contingent rent, purchase clauses or escalation clauses.
Operating leases - leasee
Payments made under operating leases are recognised in the Income Statement on a straight line basis over the term of the lease. In general
the Group is party to leases for property, vehicles, office equipment and rehired rental fleet. These leases are primarily simple operating leases
with no contingent rent, purchase clauses or escalation clauses.
Accounting estimates and judgements
The key accounting policies, estimates and judgements used in preparing the Group’s Annual Report and Accounts for the year ended 31 March
2016 have been reviewed and approved by the Audit Committee. The areas of principal accounting uncertainty are estimated useful lives of rental
assets, including residual values and assumptions relating to pension costs. In addition the testing for impairment of goodwill and other intangibles
requires significant estimates and judgements relating to cash flows.
The Group continually reviews depreciation rates and using its judgement adopts a cautious policy in assessing estimated useful economic lives
of fleet assets (see page 64). The rate of technological and legislative change is factored into the estimates, together with the diminution in value
through use and time. The Group also takes account of the profit or loss it makes on the disposal of fixed assets in determining whether
depreciation policies are appropriate.
The key assumptions and sensitivities applied to pensions are disclosed in note 24. The pension scheme position is derived using actuarial
assumptions for inflation, future salary increases, discount rates and mortality rates which are inherently uncertain. Due to the relative size of the
scheme, small changes to these assumptions can give rise to a significant impact on the pension scheme position reported in the Balance Sheet.
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1. SIGNIFICANT ACCOUNTING POLICIES (continued)
Goodwill and other intangibles are tested for impairment by reference to the expected estimated cash generated by the business unit. This is
deemed to be the best approximation of value, but is subject to the same uncertainties as the cash flow forecast being used. Further details are
provided in note 9.
In addition the Group’s results are subject to fluctuations caused by the cash settled share options and national insurance costs on unapproved
share options as these are required to be re-measured at each reporting date based on the Company share price. Changes in the Company’s share
price during the reporting period therefore impact the charge to the Income Statement for cash settled options and national insurance, including
vested but not exercised options, as well as unvested options. The impact of a 10 pence increase in share price would increase the charge to the
Income Statement by £43,000 (2015: £77,000).
2. SEGMENT REPORTING
Segment reporting is presented in respect of the Group’s business and geographical segments. The Group’s current reportable segments are the
six business units as described on pages 6 and 7. Total external revenue in 2016 was £208,746,000 (2015: £205,602,000). Inter-segment pricing
is determined on an arm’s length basis. Included within revenue is £16.2 million (2015: £16.0 million) of revenue relating to the sale of goods,
the rest of the revenue is service related including primarily hire revenue. Segment results, assets and liabilities include items directly attributable
to a segment as well as those that can be allocated on a reasonable basis.
Geographical segments
Revenue is generated mainly within the United Kingdom with no single overseas geographical area accounting for more than 10% of the Group
revenue. Total overseas revenue was £25.7 million (2015: £30.1 million). In addition, all material assets and liabilities of the Group are accounted
for by UK based companies. The Group has one operating branch of a UK registered company operating in another country within the EU, namely
a branch of Hire Station Limited operating in Holland.
Business segments
2016
Internal)
Revenue)
£000)
493)
186)
-)
1,747)
29)
574)
Revenue
Total)
Revenue)
£000)
External)
Revenue)
£000)
20,477)
45,194)
15,191)
84,233)
32,518)
14,162)
18,247)
44,350)
21,460)
77,031)
29,929)
14,585)
2015
Internal)
Revenue)
£000)
528)
205)
-)
1,209)
344)
289)
External)
Revenue)
£000)
19,984)
45,008)
15,191)
82,486)
32,489)
13,588)
Total)
Revenue)
£000)
18,775)
44,555)
21,460)
78,240)
30,273)
14,874)
UK Forks
Groundforce
Airpac Bukom
Hire Station
Torrent Trackside
TPA
Operating
profit before
amortisation
2016)
2015
£000)
£000)
5,226)
9,584)
1,232)
11,491)
3,369)
989)
4,025)
8,833)
2,753)
8,731)
3,429)
1,009)
208,746)
3,029)
211,775)
205,602)
2,575)
208,177)
31,891)
28,780)
A reconciliation of operating profit before amortisation to profit before tax is provided in the Income Statement.
The segmental split above is provided on the basis of the Group reporting structure in 2015/16. Following the acquisition of TR Group Pty Limited
in April 2016 it has been decided to realign the Group reporting in 2016/17 to reflect the greater influence of international activities on the Group’s
results. As a result, from next year’s financial statements, we will be reporting two segments, namely UK and International. To aid the transition
between the old and new segmental reporting, set out below is the revenue and operating profit before amortisation as it would be reported if
the new segments were already in place for 2015/16.
Revenue
External)
Revenue)
£000)
193,555)
15,191)
2016
Internal)
Revenue)
£000)
Total)
Revenue)
£000)
3,029)
196,584)
-)
15,191)
External)
Revenue)
£000)
184,142)
21,460)
2015
Internal)
Revenue)
£000)
2,575)
-)
Total)
Revenue)
£000)
186,717)
21,460)
UK
International
Operating
profit before
amortisation
2016)
2015
£000)
£000)
30,659)
1,232)
26,027)
2,753)
208,746)
3,029)
211,775)
205,602)
2,575)
208,177)
31,891)
28,780)
In next year’s financial statements we will also report all the other segmental disclosures on this basis.
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Notes
2. SEGMENT REPORTING (continued)
Business segments
Assets
Liabilities
Net Assets
UK Forks
Groundforce
Airpac Bukom
Hire Station
Torrent Trackside
TPA
Group/unallocated
UK Forks
Groundforce
Airpac Bukom
Hire Station
Torrent Trackside
TPA
Group/unallocated
2016)
£000)
43,435)
49,583)
26,998)
88,528)
20,744)
34,017)
6,490)
2015)
£000)
31,605)
50,139)
31,162)
75,921)
20,378)
30,082)
5,800)
2016)
£000)
8,066)
7,886)
4,563)
20,237)
6,804)
6,844)
94,045)
2015)
£000)
4,643)
9,981)
6,717)
18,740)
7,733)
5,731)
79,775)
2016)
£000)
35,369)
41,697)
22,435)
68,291)
13,940)
27,173)
(87,555)
2015)
£000)
26,962)
40,158)
24,445)
57,181)
12,645)
24,351)
(73,975)
269,795)
245,087)
148,445)
133,320)
121,350)
111,767)
Acquired
Assets
Capital
Expenditure
Depreciation and
Amortisation
2016)
£000)
6,518)
-)
-)
3,838)
-)
-)
-)
10,356)
2015)
£000)
-)
-)
-)
-)
5,116)
-)
-)
5,116)
2016)
£000)
11,282)
7,884)
1,290)
18,988)
5,466)
4,602)
2,524)
52,036)
2015)
£000)
11,542)
6,663)
5,528)
21,466)
5,040)
2,449)
3,649)
56,337)
2016)
£000)
3,549)
5,244)
3,661)
12,078)
3,915)
783)
443)
29,673)
2015)
£000)
3,487)
5,010)
3,769)
10,222)
2,820)
1,015)
384)
26,707)
Acquired assets relate primarily to tangible and intangible assets acquired as a result of acquisitions. Capital expenditure relates to tangible fixed
assets acquired in the normal course of business.
Included within segmental assets above is goodwill and indefinite life intangibles in relation to the following cash generating units:
Groundforce £10.4 million (2015: £10.4 million), Airpac Bukom £4.8 million (2015: £4.8 million), UK Forks £2.0 million (2015: £nil), TPA £9.3
million (2015: £9.3 million) and Hire Station £14.2 million (2015: £12.8 million).
3. OPERATING PROFIT
Operating profit is stated after charging/(crediting):
Amortisation of intangible assets
Depreciation of property, plant and equipment – owned
Depreciation of property, plant and equipment – leased
Operating leases - Rent of land and buildings
Operating leases - Hire of other assets
Profit on disposal of plant and equipment
Amounts paid to auditors:
Audit fees – parent company annual accounts
Audit fees – other group companies
Audit fees – total group
)
Audit related assurance services
2016)
£000)
2,298)
27,332)
43)
4,599)
13,969)
(6,246)
62)
69)
131)
16)
2015)
£000)
1,684)
24,994)
29)
4,315)
13,558)
(3,277)
62)
69)
131)
16)
Amounts paid to the Company’s auditors in respect of services to the Company, other than audit of the Company’s Financial Statements, have not
been disclosed as the information is only required to be disclosed on a consolidated basis.
The level of profit on disposal is higher than historical experience due to a combination of asset management and one off items.
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Notes
4. EMPLOYMENT COSTS
Group
The average monthly number of persons employed by the Group (including directors) during the year, analysed by category, was as follows:
Number of employees
Operations
Sales
Administration
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Defined benefit pension costs
Other pension related costs
Share option costs including associated social security costs - equity settled
Share option costs including associated social security costs - cash settled
2016)
1,358)
225)
260)
1,843)
2016)
£000)
60,831)
5,658)
(18)
1,455)
2,471)
909)
71,306)
2015)
1,259)
208)
259)
1,726)
2015)
£000)
58,792)
5,605)
(27)
1,474)
2,548)
1,110)
69,502)
5. REMUNERATION OF DIRECTORS
The Group’s key management are the executive and non-executive directors. The aggregate remuneration paid to or accrued for the directors for
services in all capacities during the year is as follows:
Basic remuneration including bonus and benefits
Cash allowances/pension contributions
Share options
2016)
£000)
1,497)
257)
1,876)
3,630)
2015)
£000)
2,232)
337)
2,421)
4,990)
Further details of directors’ remuneration, pensions and share options, including the highest paid director, are given in the Remuneration Report
on pages 36 to 48.
6. FINANCIAL INCOME AND EXPENSES
Financial income:
Bank and other interest receivable
Financial expenses:
Bank loans, overdrafts and other interest
Finance charges payable in respect of finance leases and hire purchase contracts
2016)
£000)
4)
(2,093)
(4)
(2,097)
2015)
£000)
1)
(2,022)
(2)
(2,024)
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Notes
7. INCOME TAX EXPENSE
Current tax expense)
UK Corporation tax charge at 20% (2015: 21%)
Overseas tax
Adjustments in respect of prior years
Total current tax
Deferred tax expense
Current year deferred tax
Impact of tax rate change
Adjustments to deferred tax in respect of prior years
Total deferred tax
Total tax expense in income statement
2016)
£000)
5,502)
479)
(135)
5,846)
(535)
(349)
150)
(734)
5,112)
2015)
£000)
5,164)
294)
99)
5,557)
(295)
3)
(63)
(355)
5,202)
Reconciliation of effective tax rate
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to
profits of the consolidated entities as follows:
Profit before tax
Profit multiplied by standard
rate of corporation tax
Effects of:
Impact of tax rate changes
Expenses not deductible for tax purposes
Non-qualifying depreciation and amortisation
Gains covered by exemption/losses
Overseas tax rate
Adjustments in respect of prior years
Other
Total tax charge for the year
Tax recognised in reserves
Other comprehensive income:
Tax relating to actuarial gains on defined benefit pension scheme
Tax relating to historic asset revaluations
Impact of tax rate change
Direct to equity:
Deferred tax relating to share based payments
Current tax relating to share based payments
Impact of tax rate change
Total
2016)
%)
20.0)
(1.3)
0.9)
0.7)
(1.8)
0.1)
0.1)
(0.1)
18.6)
2016)
£000)
27,500)
5,500)
(349)
250)
192)
(499)
19)
15)
(16)
5,112)
2016)
£000)
24)
(1)
39)
62)
974)
(2,097)
31)
(1,092)
(1,030)
2015)
%)
2015)
£000)
25,073)
21.0)
5,265)
0.0)
0.4)
0.4)
(0.9)
0.2)
0.1)
(0.4)
20.8)
3)
93)
101)
(237)
46)
36)
(105)
5,202)
2015)
£000)
(11)
(1)
-)
(12)
223)
(1,368)
-)
(1,145)
(1,157)
The corporation tax rate for the year ended 31 March 2016 was 20% (2015: 21%). The tax rate for the year ending 31 March 2017 will also be 20%.
The rate will reduce to 19% in the year ended 31 March 2018 and this reduction is reflected in the deferred tax balance. The rate of tax is expected
to further reduce to 17% in the year ended 31 March 2021, but this is not reflected in the deferred tax balance as it is expected that a substantial
proportion of the balance as at 31 March 2016 will reverse before 31 March 2020.
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Notes
8. PROPERTY, PLANT AND EQUIPMENT
GROUP
Cost or deemed cost
At 1 April 2014
Additions
Acquisitions
Disposals
Exchange rate differences
Transfer between categories
At 31 March 2015
Additions
Acquisitions
Disposals
Exchange rate differences
Transfer between categories
At 31 March 2016
Depreciation and impairment losses
At 1 April 2014
Charge for year
On disposals
Exchange rate differences
Transfer between categories
At 31 March 2015
Charge for year
On disposals
Acquisitions
Exchange rate differences
At 31 March 2016
Net book value
At 31 March 2016
At 31 March 2015
At 31 March 2014
COMPANY
Cost or deemed cost
At 1 April 2014
Additions
Group transfers
Disposals
Transfer between categories
At 31 March 2015
Additions
Group transfers
Disposals
Transfer from acquisition
At 31 March 2016
Depreciation and impairment losses
At 1 April 2014
Charge for year
Group transfers
On disposals
At 31 March 2015
Charge for year
Group transfers
On disposals
Transfer from acquisition
At 31 March 2016
Net book value
At 31 March 2016
At 31 March 2015
At 31 March 2014
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Land and)
Buildings)
£000)
14,479)
4,961)
17)
(537)
(15)
(22)
18,883)
3,855)
119)
(5)
13)
-)
22,865)
6,725)
779)
(477)
(10)
(10)
7,007)
971)
(5)
70)
11)
8,054)
14,811)
11,876)
7,754)
Land and)
Buildings)
£000)
8,530)
4,055)
-)
-)
-)
12,585)
2,721)
-)
-)
78)
15,384)
3,585)
293)
-)
-)
3,878)
396)
-)
-)
70)
4,344)
11,040)
8,707)
4,945)
Rental)
Equipment)
£000)
206,896)
49,266)
1,304)
(21,450)
(1,155)
58)
Motor)
Vehicles)
£000)
2,370)
180)
-)
(591)
(23)
(2)
234,919)
45,904)
8,775)
(28,847)
873)
(1)
261,623)
93,959)
22,372)
(12,881)
(166)
5)
103,289)
24,653)
(17,977)
4,098)
316)
114,379)
147,244)
131,630)
112,937)
Rental)
Equipment)
£000)
114,043
)
21,338
)
(1,185)
(9,171)
-)
125,025)
18,792)
337)
(12,909)
6,727)
1,934)
171)
762)
((113)
20)
-)
2,774)
1,728)
276)
(556)
(12)
-)
1,436)
209)
(110)
452)
17)
2,004)
770)
498)
642)
Motor)
Vehicles)
£000)
770)
147)
-)
(223)
(2)
692)
17)
-)
(24)
754)
137,972)
1,439)
53,393)
10,484)
(641)
(5,967)
57,269)
10,670)
59)
(7,820)
2,539)
62,717)
75,255)
67,756)
60,650)
461)
97)
-)
(188)
370)
97)
-)
(21)
452)
898)
541)
322)
309)
Other)
Assets)
£000)
12,682)
1,930)
68)
(3,036)
(33)
(34)
11,577)
2,106)
83)
(689)
31)
1)
13,109)
9,181)
1,596)
(2,995)
(23)
5)
7,764)
1,542)
(629)
30)
26)
8,733)
4,376)
3,813)
3,501)
Other)
Assets)
£000)
4,970)
1,013)
-)
(48)
2)
5,937)
1,266)
(14)
(38)
50)
7,201)
3,356)
711)
-)
(24)
4,043)
703)
(6)
(27)
30)
4,743)
2,458)
1,894)
1,614)
Total)
£000)
236,427)
56,337)
1,389)
(25,614)
(1,226)
-)
267,313)
52,036)
9,739)
(29,654)
937)
-)
300,371)
111,593)
25,023)
(16,909)
(211)
-)
119,496)
27,375)
(18,721)
4,650)
370)
133,170)
167,201)
147,817)
124,834)
Total)
£000)
128,313)
26,553)
(1,185)
(9,442)
-)
144,239)
22,796)
323)
(12,971)
7,609)
161,996)
60,795)
11,585)
(641)
(6,179)
65,560)
11,866)
53)
(7,868)
3,091)
72,702)
89,294)
78,679)
67,518)
Vp plc Annual Report and Accounts 2016
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73
Notes
8. PROPERTY, PLANT AND EQUIPMENT (continued)
The cost or deemed cost of land and buildings for the Group and the Company includes £3,204,000 (2015: £2,704,000) of freehold land not subject
to depreciation.
Included in the total net book value of fixed assets of the Group is £3,230,000 (2015: £nil) in respect of assets held under finance leases and
similar hire purchase contracts, Company £3,122,000 (2015: £nil). Depreciation for the year on these Group assets was £43,000 (2015: £29,000)
and £30,000 (2015: £29,000) for the Company. In addition the banks have a fixed and floating charge over the assets of the Group as set out in
note 14.
9. INTANGIBLE ASSETS
GROUP
Cost or deemed cost
At 1 April 2014
Acquired through business combinations
At 31 March 2015
Acquired through business combinations
At 31 March 2016
Accumulated amortisation and impairment
At 1 April 2014
Amortisation
At 31 March 2015
Amortisation and impairment
At 31 March 2016
Carrying amount
At 31 March 2016
At 31 March 2015
At 31 March 2014
Trade)
Names)
£000)
Customer)
Relationships)
£000)
Supply)
Agreements)
£000)
2,385)
-)
2,385)
-)
2,385)
493)
98)
591)
105)
696)
1,689)
1,794)
1,892)
6,681)
-)
6,681)
1,210)
7,891)
3,595)
668)
4,263)
746)
5,009)
2,882)
2,418)
3,086)
1,262)
3,727)
4,989)
-)
4,989)
735)
918)
1,653)
851)
2,504)
2,485)
3,336)
527)
Goodwill)
£000)
36,126)
-)
36,126)
4,057)
40,183)
280)
-)
280)
596)
876)
Total)
£000)
46,454)
3,727)
50,181)
5,267)
55,448)
5,103)
1,684)
6,787)
2,298)
9,085)
39,307)
46,363)
35,846)
35,846)
43,394)
41,351)
Goodwill and indefinite life intangible assets considered significant in comparison to the Group’s total carrying amount of such assets have been
allocated to cash generating units (CGUs) or groups of cash generating units as follows:
Groundforce
Airpac Bukom
UK Forks
Hire Station
TPA
Goodwill
Indefinite life
intangible assets
2016
£000
10,397
4,762
2,000
14,227
7,921
39,307
2015
£000
10,397
4,762
-
12,766
7,921
35,846
2016
£000
-
-
-
-
1,400
1,400
2015)
£000)
-)
-)
-)
-)
1,400)
1,400)
An intangible asset of £1,400,000 (2015: £1,400,000) with an indefinite life is included within trade names and relates to the TPA name on the
basis that it is expected to be maintained indefinitely and continue to deliver future value to the Group. The impairment test of this has been
performed using the same assumptions as for the other intangibles.
Goodwill arising on business combinations has been allocated to the CGU’s that are expected to benefit from those business combinations.
As explained in note 2 the Group has identified 6 reportable segments (2015: 6 segments) five of which align with the CGUs to which goodwill
is allocated.
74
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Notes
9. INTANGIBLE ASSETS (continued)
The carrying value of intangibles and goodwill has been assessed for impairment by reference to its value in use. Values have been estimated
using cash flow projections over a period of 5 years derived from the approved budget for the coming year. The key assumptions within the cash
flow projections are those regarding revenue, margin and level of capital spend required to support the business. These assumptions have been
validated based on past experience, market conditions and the size of the fleet. The Group tests goodwill annually for impairment or more
frequently if there are any indications that goodwill might be impaired. Following this assessment some small impairments were booked relating
to tidying up some very old balances.
The pre tax discount rate applied to all CGU’s was 8% (2015: 8%), an estimate based on the group’s weighted cost of capital. A growth rate factor
was not applied to the projections as value in use exceeded the carrying value before such an assumption was applied. Based on this testing the
directors do not consider any of the goodwill or intangible assets carried forward at the year end to be impaired even allowing for a reasonable
degree of sensitivity to the underlying assumptions, including the discount rate. The compound annual growth rate in PBTA experienced by the
Group was 16.7% over the last 5 years and therefore could have been justifiably in the projections.
COMPANY
Cost or deemed cost
At 1 April 2014
Acquired through business combinations
At 31 March 2015
Acquired through business combinations
At 31 March 2016
Accumulated amortisation
At 1 April 2014
Amortisation charge
At 31 March 2015
Amortisation charge
At 31 March 2016
Carrying amount
At 31 March 2016
At 31 March 2015
At 31 March 2014
Trade
Names
£000
643
-
) Customer)
Relationships
£000)
3,750)
-)
Supply)
Agreements)
£000)
394)
-)
643
-
643
242
64
306
64
370
273
337
401
3,750)
-)
3,750)
1,627)
375)
2,002)
374)
2,376)
1,374)
1,748)
2,123)
394)
-)
394)
229)
131)
360)
34)
394)
-)
34)
165)
Goodwill)
)
£000)
)15,031)
)-)
15,031)
2,000)
17,031)
)-)
-)
-)
-)
-)
Total
)
£000)
19,818)
-)
19,818)
2,000)
21,818)
2,098)
570)
2,668)
472)
3,140)
17,031)
15,031)
15,031)
18,678)
17,150)
17,720)
The directors have reviewed the carrying amount of the Company’s goodwill on the same basis as the Group‘s goodwill and concluded that no
impairment charge is required.
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10. INVESTMENTS IN SUBSIDIARIES
COMPANY
Cost
At 1 April 2014 and 31 March 2015
Acquisition
Transfer to goodwill
At 31 March 2016
Impairment
At 1 April 2014, 31 March 2015 and 31 March 2016
Carrying amount
At 31 March 2016
At 31 March 2015
At 31 March 2014
See note 30 for details of subsidiary undertakings.
£000)
27,517)
4,100)
(2,000)
29,617)
1,687)
27,930)
25,830)
25,830
)
Vp plc Annual Report and Accounts 2016
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75
Notes
11. INVENTORIES
Raw materials and consumables
Goods for resale
Group
Company
2016
£000
3,166
2,197
5,363
2015)
£000)
3,084)
3,411)
6,495)
2016
£000
1,238
178
1,416
2015)
£000)
883)
1,068)
1,951)
During the year, as a result of the year end assessment of inventory, there was a £275,000 increase in the provision for impairment of inventories
(2015: £237,000 increase). The cost of goods for resale expensed during the year was £11.4 million (2015: 11.7 million). Due to the nature of
the spares expenditure and the approach to accounting for spares, including acquiring spares on a needs basis, it is not possible to provide the
value of spares inventory expensed.
12. TRADE AND OTHER RECEIVABLES
Group
Company
Gross trade receivables
Trade receivables provisions
Amounts owed by subsidiary undertakings
Other receivables
Prepayments and accrued income
2016)
£000)
42,174)
(3,810)
-)
87)
6,366)
44,817)
2015)
£000)
41,225)
(5,022)
-)
178)
4,721)
41,102)
2016)
£000)
17,024)
(1,831)
36,888)
-)
2,669)
54,750)
2015)
£000)
16,873)
(2,590)
33,967)
-)
2,905)
51,155)
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables as shown above. The Group does not
hold any collateral as security. Receivables acquired as part of the acquisitions in the year were £1,614,000 (2015: £nil).
During the year there was a decrease in the provisions for impairment of trade receivables of £1,212,000 (2015: £1,374,000 increase). The Group
has a reasonable spread of credit risk with the top 25 customers accounting for significantly less than 50% of gross trade debtors. The ageing of
the Group’s trade receivables (net of impairment provision) at the end of the year was as follows:
Not overdue
0 - 30 days overdue
31 - 90 days overdue
More than 90 days overdue
2016)
£000)
25,139)
9,596)
1,952)
1,677)
38,364)
2015)
£000)
24,171)
8,184)
2,268)
1,580)
36,203)
On this basis there are £13.2 million of trade receivables that are overdue at the balance sheet date that have not been provided against. There
is no indication as at 31 March 2016 that debtors will not meet their payment obligations in respect of trade receivables recognised in the balance
sheet that are overdue and unprovided. On this basis there is no material difference between the fair value and the carrying value.
13. CASH AND CASH EQUIVALENTS
Bank balances
14. INTEREST-BEARING LOANS AND BORROWINGS
Current liabilities
Bank overdraft
Obligations under finance leases and hire purchase contracts
Non-current liabilities
Secured bank loans
Obligations under finance leases and hire purchase contracts
2016
£000
4,517
2016
£000
-
873
873
)
88,000
1,778
89,778
Group
Company
2015
£000
5,236
2016)
£000)
657)
Group
Company
2015
£000
-
-
-
72,000
-
72,000
2016
£000
5,662
823
6,485
88,000
1,748
89,748
2015)
£000)
1,555)
2015)
£000)
4,263)
-)
4,263)
72,000)
-)
72,000)
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Notes
14. INTEREST-BEARING LOANS AND BORROWINGS (continued)
Net debt defined as total borrowings less cash and cash equivalents was:
Total borrowing
Cash or cash equivalents
Net debt
2016)
£000)
90,651)
(4,517)
86,134)
The repayment schedule of the carrying amount of the non-current liabilities as at 31 March 2016 is:
Group
Company
Due in more than one year but not
more than two years:
Secured bank loans
Obligations under finance leases and hire purchase contracts
Due in more than two years but not
more than five years:
Secured bank loans
Obligations under finance leases and hire purchase contracts
Total
2016
£000
43,000
724
43,724
45,000
1,054
46,054
2015
£000
35,000
-
35,000
37,000
-
37,000
2016
£000
43,000
694
43,694
45,000
1,054
46,054
2015)
£000)
72,000)
(5,236)
66,764)
2015)
£000)
35,000)
-)
35,000)
37,000)
-)
37,000)
The Group’s bank accounts are subject to set off arrangements covered by cross guarantees and, where appropriate, are presented accordingly.
In particular at Group level the overdraft in Vp plc of £6.9 million with HSBC is offset against other HSBC sterling cash balances in the Group.
Similarly in the Parent Company accounts the net overdraft reported of £5.7 million is after set off of sterling cash balances within the Company
of £1.2 million. The bank loans and overdraft are secured by a fixed and floating charge over the assets of the Group and are at variable interest
rates linked to LIBOR. The unutilised bank facilities available to the Group as at 31 March 2016 were £12.0 million.
There is no material difference between the carrying value and fair value of the Group’s borrowings. Further details relating to the Group’s funding
strategy (including the maturity details of the bank loans) and its credit, interest rate and currency risk policies are provided in the Financial Review
on pages 18 to 20 and the Risk Management Report on pages 21 and 22. The loans are subject to covenants and these have been fulfilled at all
times during the year.
Liquidity Risk
The following are cash flows relating to the Group’s financial liabilities, including estimated interest payments, but excluding the impact of netting
agreements, based on the assumption that the loans are repaid at the end of the committed period and interest rates reflect future dated swap
agreements.
GROUP
31 March 2016
Secured bank loans
Finance lease liabilities
Trade and other payables
31 March 2015
Secured bank loans
Trade and other payables
Carrying)
amount)
£000)
88,000)
2,651)
46,628)
137,279)
72,000)
50,221)
122,221)
Contractual)
cash flows)
£000)
Less than)
1 year)
£000)
93,825)
3,122)
46,628)
143,575)
75,730)
50,221)
)
125,951
1,834)
1,035)
46,628)
49,497)
1,615)
50,221)
51,836)
1-2)
years)
£000)
44,912)
853)
-)
45,765)
36,668)
-)
36,668)
2-5)
years)
£000)
47,079)
1,234)
-)
48,313)
37,447)
-)
37,447)
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Notes
14. INTEREST-BEARING LOANS AND BORROWINGS (continued)
COMPANY
31 March 2016
Secured bank loans
Bank overdraft
Finance lease liabilities
Trade and other payables
31 March 2015
Secured bank loans
Bank overdraft
Trade and other payables
Contractual)
cash flows)
£000)
Less than)
1 year)
£000)
Carrying
amount
£000
88,000
5,662
2,571
43,133
93,825)
5,662)
3,039)
43,133)
139,366
145,659)
72,000
4,263
44,114
120,377
75,730)
4,263)
44,114)
124,107)
1-2)
years)
£000)
44,912)
-)
822)
-)
45,734)
36,668)
-)
-)
36,668)
2-5)
years)
£000)
47,079)
-)
1,234)
-)
48,313)
37,447)
-)
-)
37,447)
1,834)
5,662)
983)
43,133)
51,612)
1,615)
4,263)
44,114)
49,992)
Hire purchase and finance lease liabilities
GROUP
Payment)
Interest)
Principal)
Payment)
Interest)
Principal)
Less than one year
One to two years
Two to five years
COMPANY
Less than one year
One to two years
Two to five years
2016)
£000)
1,035)
853)
1,234)
3,122)
Payment)
2016)
£000)
983)
822)
1,234)
3,039)
2016)
£000)
162)
129)
180)
471)
2016)
£000)
873)
724)
1,054)
2,651)
2015)
£000)
-)
-)
-)
-)
2015)
£000)
-)
-)
-)
-)
2015)
£000)
-)
-)
-)
-)
Interest)
Principal)
Payment)
Interest)
Principal)
2016)
£000)
160)
128)
180)
468)
2016)
£000)
823)
694)
1,054)
2,571)
2015)
£000)
-)
-)
-)
-)
2015)
£000)
-)
-)
-)
-)
2015)
£000)
-)
-)
-)
-)
15. FINANCIAL INSTRUMENTS
During the year the Group had eight interest rate swaps to fix interest rates on a proportion of the revolving credit facility. Details are as follows:
Start date
August 2013
October 2013
November 2013
April 2014
April 2014
1 June 2015
1 September 2015
1 December 2015
Finish date
August 2016
October 2016
October 2016
April 2017
April 2017
1 June 2018
1 September 2018
1 December 2018
Notional Debt value
7,500,000
2,500,000
2,500,000
1,500,000
1,500,000
5,000,000
5,000,000
7,500,000
Fixed margin
1.323%
0.980%
0.980%
1.400%
1.390%
1.045%
1.120%
1.200%
All of the swaps are effective cash flow hedges and the movements in fair values have been taken to equity. Fair values of these derivatives have
been determined by the respective counterparties based on quoted prices in active markets for identical assets and liabilities.
The Group had twelve foreign exchange hedges to reduce the risk of foreign exchange fluctuations between US Dollars and Sterling in the year
ended 31 March 2016. It also has a further nine foreign exchange hedges between US Dollars and Sterling covering the period from 1 April 2016
to 30 June 2017. In addition to the US Dollar hedges the group also had Australian Dollar and Singapore Dollar hedges in the year. All the exchange
rate hedges are effective cash flow hedges and movements in fair value have been taken to equity.
An analysis of fair values by hierarchy level is provided below:
Liabilities measured at fair value:
31 March 2016
31 March 2015)
Financial liabilities at fair value:
Interest rate swaps
Forward exchange rate agreements
Total)
£000)
309)
459)
768)
Level 1
£000)
Level 2)
£000)
Level 3)
£000)
-)
-)
-)
309)
459)
768)
-)
-)
-)
Total)
£000)
278)
1,066)
1,344)
The values are based on the amount the Group would pay/receive from the bank in order to settle the instruments at the year end.
78
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Notes
15. FINANCIAL INSTRUMENTS (continued)
The movements in liabilities are reconciled below:
Opening liability
Other comprehensive income
Recycled to income statement
Closing liability
There have been no transfers between levels of the fair value hierarchy.)
Interest rate)
swaps)
£000)
278)
31)
-)
309)
31 March 2016
Forward exchange
rate agreements
£000)
1,066)
(612)
5)
459)
Total)
£000)
1,344)
(581)
5)
768)
There are no material differences between the carrying value and the fair value of the Group’s other financial instruments including trade debtors
and trade creditors. The risks associated with interest rate and foreign exchange rate management are discussed in the Capital Structure and
Treasury section of the Financial Review on pages 19 and 20 and the Principal Risks and Uncertainties on page 23, as are the risks relating to
credit and currency management.
Financial Instrument Sensitivity Analysis
Ten per cent movements in Sterling exchange rates and interest rates in the current and prior year would have increased/(decreased) equity and
profit/(loss) by the amounts shown below. This analysis assumes that all other variables remain constant.
Equity and Profit /(Loss)
10% strengthening of Sterling against:
US Dollar
Australian Dollar
Singapore Dollar
Euro
10% weakening of Sterling against:
US Dollar
Australian Dollar
Singapore Dollar
Euro
10% movement in Sterling interest rates:
Increase in interest rates
Decrease in interest rates
2016)
£000)
286)
39)
9)
(4)
(349)
(45)
(11)
5)
(94)
94)
2015)
£000)
(366)
19)
(49)
33)
446)
(22)
60)
(41)
(75)
75)
The exposure of the Group to other foreign exchange rate movements is not significant and therefore is not presented in the analysis above.
16. TRADE AND OTHER PAYABLES
Current liabilities
Trade payables
Amounts owed to subsidiary undertakings
Other taxes and social security
Other payables
Accruals and deferred income
Group
Company
2016
£000
18,826
-
4,939
7,361
20,441
51,567
2015)
£000)
17,700)
-)
4,767)
7,733)
24,788)
54,988)
2016)
£000)
5,149)
24,768)
2,254)
1,076)
12,140)
45,387)
2015)
£000)
6,613)
20,045)
878)
1,344)
16,112)
44,992)
Within Group and Company other payables is £0.8 million (2015: £1.3 million) in relation to interest rate swaps and foreign exchange rate agreements.
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Notes
17. DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities are attributable to the following:
GROUP
Property, plant)
and equipment)
£000)
Intangible)
assets)
£000)
Employee)
benefits)
£000)
Note
1 April 2014
Recognised in income statement
Recognised in equity
Foreign exchange
At 31 March 2015
Recognised on acquisition
Recognised in income statement
Recognised in equity
Foreign exchange
At 31 March 2016
COMPANY
1 April 2014
Recognised in income statement
Recognised in equity
At 31 March 2015
Recognised on acquisition
Recognised in income statement
Recognised in equity
At 31 March 2016
7
7
5,967)
231)
(1)
(3)
6,194)
333)
(1,059)
(4)
4)
1,420)
(94)
-)
-)
1,326)
242)
(185)
-)
-)
(2,619)
(174)
212)
-)
(2,581)
-)
295)
1,071)
-)
Property, plant)
and equipment)
£000)
Intangible)
assets)
£000)
Employee)
benefits)
£000)
Note
7
7
4,517)
350)
(1)
4,866)
280)
(825)
(4)
4,317)
663)
(68)
-)
595)
-)
(97)
-)
498)
(2,619)
(174)
212)
(2,581)
-)
295)
1,071)
Other)
items)
£000)
(237)
(318)
-)
-)
(555)
-)
215)
-)
-)
Total)
£000)
4,531)
(355)
211)
(3)
4,384)
575)
(734)
1,067)
4)
Other)
items)
£000)
(109)
(114)
-)
(223)
-)
74)
-)
Total)
£000)
2,452)
(6)
211)
2,657)
280)
(553)
1,067)
5,468)
1,383)
(1,215)
(340)
5,296)
(1,215)
(149)
3,451)
Deferred tax assets have been recognised on employee benefits and other items on the basis that there will be future taxable profits against
which these assets can be utilised. Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there
is an intention to settle the net balance.
18. CAPITAL AND RESERVES
Ordinary share capital
Allotted, called up and fully paid
40,154,253 Ordinary shares of 5 pence each
(2015: 40,154,253)
All shares have the same voting rights.
2016)
£000)
)
2,008)
2015)
£000)
2,008)
Reserves
Full details of reserves are provided in the consolidated and parent company statements of changes in equity on page 59.
Own shares held
Deducted from retained earnings (Group and Company) is £8,064,000 (2015: £8,203,000) in respect of own shares held by the Vp Employee
Trust. The Trust acts as a repository of issued Company shares and held 1,082,000 shares (2015: 1,315,000) with a market value at 31 March
2016 of £7,144,000 (2015: £8,665,000).
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Notes
19. DIVIDENDS
Amounts recognised as distributions to equity holders of the Parent in the year:
Ordinary shares:
Final paid
11.50p (2015: 10.40p) per share
Interim paid 15.35p (2015: 5.00p) per share
2016)
£000)
4,482)
2,086)
6,568)
2015)
£000)
4,039)
1,947)
5,986)
The dividend paid in the year is after dividends were waived to the value of £198,000 (2015: £198,000) in relation to shares held by the Vp
Employee Trust. These dividends will continue to be waived in the future.
In addition the directors are proposing a final dividend in respect of the current year of 13.5p per share which will absorb an estimated £5,281,000
of shareholders’ funds. The proposed dividend is subject to approval by shareholders at the Annual General Meeting and has not been included
as a liability in these financial statements.
20. EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share of 57.49 pence (2015: 51.03 pence) was based on the profit attributable to equity holders of the Parent
of £22,388,000 (2015: £19,871,000) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2016 of
38,942,000 (2015: 38,940,000), calculated as follows:
Issued ordinary shares
Effect of own shares held
Weighted average number of ordinary shares
2016)
Shares)
000s)
40,154)
(1,212)
38,942)
2015)
Shares)
000s)
40,154)
(1,214)
38,940)
Basic earnings per share before the amortisation of intangibles was 62.21 pence (2015: 54.45 pence) and is based on an after tax add back of
£1,838,000 (2015: £1,330,000) in respect of the amortisation of intangibles.
Diluted earnings per share
The calculation of diluted earnings per share of 54.51 pence (2015: 47.01 pence) was based on profit attributable to equity holders of the Parent
of £22,388,000 (2015: £19,871,000) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2016 of
41,069,000 (2015: 42,273,000), calculated as follows:
Weighted average number of ordinary shares
Effect of share options
Weighted average number of ordinary shares (diluted)
2016
Shares
000s
38,942
2,127
41,069
2015)
Shares)
000s)
38,940)
3,333)
42,273)
Diluted earnings per share before the amortisation of intangibles was 58.99 pence (2015: 50.15 pence).
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Notes
21. SHARE OPTION SCHEMES
SAYE Scheme
During the year options over a further 333,575 shares were granted under the SAYE scheme at a price of 620 pence. The outstanding options at
the year end were:
Date of Grant
July 2012
June 2013
July 2014
July 2015
Price per share
197p
Number of shares
1,827
282p
530p
620p
353,294
251,223
304,488
910,832
All the options are exercisable between 3 and 3.5 years. At 31 March 2016 there were 841 employees saving an average £138 per month in
respect of options under the SAYE scheme. The only SAYE scheme condition is continuous employment over the term of the option.
Approved Share Option Scheme
Options over a further 174,000 shares were granted during the year at a price of 770 pence. The options outstanding at the year end were:
Date of Grant
July 2008
July 2009
July 2011
July 2012
July 2013
July 2014
July 2015
Price per share
213.0p
Number of shares
7,136
154.0p
249.5p
266.5p
389.0p
680.0p
770.0p
2,460
18,050
51,900
242,775
136,625
170,600
629,546
These options are exercisable between the third and tenth anniversary of the grant. The awards for 2013 to 2015 are subject to achievement of
performance targets over a three year period. The awards for 2012 and prior are vested, but not yet exercised.
Unapproved Share Option Scheme
Options over 302,250 shares were granted during the year at a price of 770 pence. The options outstanding at the year end were:
Date of Grant
July 2006
July 2008
July 2009
July 2010
July 2011
July 2012
July 2013
July 2014
July 2015
Price per share
293.0p
Number of shares
23,000
213.0p
154.0p
165.0p
249.5p
266.5p
389.0p
680.0p
770.0p
7,805
11,480
59,913
76,500
228,650
609,225
354,575
294,400
1,665,548
These options are exercisable between the third and tenth anniversary of the grant. The awards for 2013 to 2015 are subject to achievement of
performance targets over a three year period. The awards for 2012 and prior are vested, but not yet exercised
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21. SHARE OPTION SCHEMES (continued)
Long-Term Incentive Plan
Awards were made during the year in relation to a further 241,300 shares. Shares outstanding at the year end were:
Date of Grant
July 2012
July 2013
July 2014
July 2015
Number of shares
66,000
443,900
260,700
241,300
1,011,900
These options are exercisable between the third and tenth anniversary of the grant. The awards for 2013 to 2015 are subject to achievement of
performance targets over a three year period as shown in the Remuneration Report on page 38. The awards for 2012 are vested, but not yet
exercised.
Share Matching
Awards were made during the year in relation to a further 19,300 shares. Shares outstanding at the year end were:
Date of Grant
August 2006
August 2008
August 2009
August 2010
August 2011
July 2012
August 2013
July 2014
August 2015
Number of shares
750
446
7,657
5,231
4,000
8,500
35,250
22,000
19,300
103,134
These options are exercisable between the third and tenth anniversary of the grant. The awards for 2013 to 2015 are subject to achievement of
performance targets over a three year period as shown in the Remuneration Report on page 38. The awards for 2012 and prior are vested, but
not yet exercised.
Awards under the above schemes will be generally made utilising shares owned by the Vp Employee Trust.
The market value of the ordinary shares at 31 March 2016 was 660 pence (2015: 659 pence), the highest market value in the year to 31 March
2016 was 816 pence and the lowest 640 pence. The average share price during the year was 720 pence.
The number and weighted average exercise price of share options is as follows:
Outstanding at beginning of the year
Lapsed during the year
Exercised during the year
Granted during the year
Outstanding at the end of the year
Exercisable at the year end
2016
2015
Weighted)
average)
exercise price)
Number of)
options)
000s)
Weighted)
average)
exercise price)
Number of)
options)
000s)
251p)
462p)
156p)
536p)
362p)
208p)
5,857)
(222)
(2,384)
1,070)
4,321)
581)
191p)
351p)
152p)
261p)
251p)
165p)
6,625)
(210)
(1,702)
1,144)
5,857)
888)
The options outstanding at 31 March 2016 have an exercise price in the range of 0.0p to 770p and have a weighted average life of 2.1 years.
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Notes
21. SHARE OPTION SCHEMES (continued)
For options granted, the fair value of services received in return for share options granted are measured by reference to the fair value of those
share options. The fair value for the approved, unapproved and SAYE options are measured using the Black-Scholes model and the LTIP and share
matching schemes are valued using a discounted grant price method. Cash settled options are valued at their fair value at each year end. The
assumptions used to value the models are in the following ranges:
Weighted average fair value per share
Share price at date of grant
Exercise price (details provided above)
Expected volatility
Option life
Expected divided yield
Risk free rate
2016
256.8p
770.0p to 775.0p
0p to 770.0p
26.9% to 28.3%
3 to 10 years
2.4% to 2.4%
0.50%
2015
315.0p
640.0p to 680.0p
0p to 680.0p
39.2% to 40.3%
3 to 10 years
2.3% to 2.4%
0.50%
The expected volatility is based on historic volatility which is based on the latest three years’ share price data.
The cost of share options charged to the Income Statement is shown in note 4.
The total carrying amount of cash settled transaction liabilities including associated national insurance at the year end was £1,631,000
(2015: £3,136,000). £496,000 of this liability had vested at the year end (2015: £1,305,000).
22. OPERATING LEASES
The total remaining cost of non-cancellable operating leases is payable as follows:
GROUP
Operating leases which expire:
Within one year
In the second to fifth years inclusive
Over five years
COMPANY
Operating leases which expire:
Within one year
In the second to fifth years inclusive
Over five years
2016
2015
Land and
buildings
£000
3,554
7,767
857
12,178
685
1,896
222
2,803
Other
£000
5,052
5,965
134
11,151
3,632
3,085
-
6,717
Land and
buildings
£000
3,631
5,675
852
10,158
796
1,222
180
2,198
Other)
£000)
4,192)
5,534)
235)
9,961)
3,070)
3,303)
-)
6,373)
23. CAPITAL COMMITMENTS
Capital commitments for property, plant and equipment at the end of the financial year for which no provision has been made are as follows:
Contracted
24. EMPLOYEE BENEFITS
Group
Company
2016
£000
6,525
2015
£000
7,630
2016
£000
4,292
2015)
£000)
3,674)
Defined benefit scheme
The details in this section of the note relate solely to the defined benefit arrangement and exclude any allowance for contributions in respect of
death in service insurance premiums and expenses which are also borne by the Company.
The Company operates a UK registered trust based pension scheme that provides defined benefits. Pension benefits are linked to the members’
final pensionable salaries and service at their retirement (or date of leaving if earlier). The Trustee is responsible for running the Scheme in
accordance with the Scheme’s Trust Deed and Rules. The Trustee of the Scheme is required to act in the best interests of the beneficiaries of the
Scheme.
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Notes
24. EMPLOYEE BENEFITS (continued)
There are three categories of pension scheme member:
l Active members: currently employed by the Company and accruing benefits
l Deferred members: former employees of the Company or current employees no longer accruing benefits
l Pension members: in receipt of pension.
The defined benefit obligation is valued by projecting the best estimate of future benefit outgoings (allowing for future salary increases for active
members, revaluation to retirement for deferred members and annual pension increases for all members) and then discounting to the balance
sheet date. The majority of benefits are subject to increases linked to inflation (subject to a cap of no more than 5% pa). The valuation method
used is known as the Projected Unit Method. The approximate duration of the Scheme’s defined obligation as at 31 March 2016 was 14 years.
The Trustee is required to carry out an actuarial valuation every 3 years. The last actuarial valuation of the Schemes performed by the Scheme
Actuary for the Trustee as at 31 March 2015, is currently being finalised. The Company agreed to pay annual contributions of 24.1% of members’
pensionable salaries to 31 March 2016 and 37.9% per annum of members’ pensionable salaries from 1 April 2016. The Company therefore
expects to pay £21,000 to the Scheme during the accounting year beginning 1 April 2016.
Through the Scheme, the Company is exposed to a number of risks:
l Asset volatility: the Scheme’s defined benefit obligation is calculated using a discount rate set with reference to corporate bond yields,
however the Scheme invests significantly in diversified growth assets. These assets are expected to outperform corporate bonds in the
long term, but provide volatility and risk in the short term.
l Changes in bond yields: a decrease in corporate bond yields would increase the Scheme’s defined benefit obligation.
l Inflation risk: a significant proportion of the Scheme’s defined benefit obligation is linked to inflation. Therefore higher inflation will result
in a higher defined benefit obligation.
l Life expectancy: if Scheme members live longer than expected, the Scheme’s benefits will need to be paid for longer, increasing the
Scheme’s defined benefit obligation.
The Trustee and Company manage risks in the Scheme through the following strategies:
l Diversification: investments are well diversified, such that the failure of any single investment would not have a material impact on the
overall level of assets.
l Investment strategy: the Trustee is required to review its investment strategy on a regular basis.
l LDI: the scheme invests in Liability Driven Investments (LDI) funds in order to control interest rate and inflation risks.
All actuarial gains and losses are recognised in the year in which they occur in the Statement of Comprehensive Income. From 1 April 2013 the
Group and the Company have adopted IAS 19 revised as set out in the accounting policies in note 1.
Present value of net surplus
Group and Company
Present value of defined benefit obligation
Fair value of scheme assets
Present value of net surplus
2016)
£000)
(9,058)
10,592)
1,534)
2015)
£000)
(9,345)
10,388)
1,043)
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Notes
24. EMPLOYEE BENEFITS (continued)
The movement in the defined benefit surplus is as follows:
At beginning of year
Current service cost
Interest (cost)/income
Re-measurements
Actuarial gains/(losses): change in demographic assumptions
Actuarial gains/(losses): change in financial assumptions
Actuarial losses: experience differing
from that assumed
Actuarial (losses)/gains: actual return on assets
Contributions: employer
Contributions: employees
Benefits paid
Present)
value of)
obligation)
£000)
2016)
Fair)
value of)
assets)
£000)
Total)
£000)
Present)
value of)
obligation)
£000)
(9,345)
10,388)
1,043)
(8,318)
(19)
(283)
90)
234)
(199)
-)
-)
(3)
467)
-)
320)
-)
-)
-)
(3)
351)
3)
(467)
(19)
37)
90)
234)
(199)
(3)
351)
-)
-)
(11)
(348)
(11)
(1,115)
-)
-)
-)
(3)
461)
2015)
Fair)
value of)
assets)
£000)
9,007)
-)
386)
-)
-)
-
1,071
382)
3)
(461)
Total)
£000)
689)
(11)
38)
(11)
(1,115)
-)
1,071)
382)
-)
-)
Expense recognised in the Income Statement
Group and Company
(9,058)
10,592)
1,534)
(9,345)
10,388)
1,043)
Current service costs
Net interest
2016)
£000)
19)
(37)
(((18)
2015)
£000)
11)
(38)
(27)
These expenses are recognised in the following line items in the Income Statement:
Group and Company
Cost of sales
Administrative expenses
2016)
£000)
19)
(37)
(18)
2015)
£000)
11)
(38)
(27)
Amount recognised in other comprehensive income
Group and Company
Actuarial gains/(losses) on defined benefit obligation
Actual return on assets less interest
Amount recognised in other comprehensive income
2016)
£000)
125)
(3)
122)
2015)
£000)
(1,126)
1,071)
(55)
Cumulative actuarial net losses reported in the statement of comprehensive income since 1 April 2004, the transition to adopted IFRSs, for the
Group and Company are £2,075,000 (2015: £2,197,000).
Scheme assets and returns
The fair value of the scheme assets and the return on those assets were as follows:
Fair value of assets
Diversified growth funds
Bonds and cash
Liability driven investments
Returns
Actual return on scheme assets
Group and Company
2016)
£000)
8,008)
168)
2,416)
10,592)
2015)
£000)
5,910)
4,478)
-)
10,388)
317)
1,457)
None of the fair values of the assets shown above include any of the Company’s own financial instruments or any property occupied by or other
assets used by the Company. All assets listed above have a quoted market price in an active market.
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Notes
24. EMPLOYEE BENEFITS (continued)
Principal actuarial assumptions
The principal actuarial assumptions at the balance sheet date (expressed as weighted averages) are:
Inflation
Discount rate at 31 March
Expected future salary increases
Expected future pension increases
Revaluation of deferred pensions
Group and Company
2016
3.0%
3.3%
3.0%
2.9%
2.0%
2015
3.0%
3.1%
3.0%
2.9%
2.0%
Mortality rate assumptions adopted at 31 March 2016, based on S2PA CMI Model 2015, imply the following life expectations on retirement at
age 65 for:
Male currently aged 45
Female currently aged 45
Male currently aged 65
Female currently aged 65
History of scheme
The history of the scheme for the current and prior years is as follows:
2016
24 years
26 years
22 years
24 years
Present value of defined benefit obligation
Fair value of plan assets
Present value of net obligations
2016)
£000)
(9,058)
10,592)
1,534)
2015)
£000)
(9,345)
10,388)
1,043)
Group and Company
2014)
£000)
(8,318)
9,007)
689)
2013)
£000)
(8,893)
8,973)
80)
2015
24 years
26 years
22 years
24 years
2012)
£000)
(8,958)
7,912)
(1,046)
Gains/(losses) recognised in statement of comprehensive income
Difference between expected and actual return on scheme assets:
Amount (£000)
Percentage of scheme assets
Experience gains and losses arising on the scheme liabilities:
Amount (£000)
Percentage of present value of scheme liabilities
Effects of changes in the demographic and financial assumptions
underlying the present value of the scheme liabilities:
2016)
(3)
0.0%)
(199)
(2.2%)
1,071)
10.3%)
-)
0.0%)
Amount (£000)
Percentage of present value of scheme liabilities
324)
3.6%)
(1,126)
(12.0%)
Total amount recognised in statement of comprehensive income:
Amount (£000)
Percentage of present value of scheme liabilities
122)
1.3%)
(55)
(0.6%)
Sensitivity analysis
The sensitivity of the net pension asset/obligation to assumptions is set out below:
Group and Company
2014)
2015)
2013)
2012)
(2)
0.0%)
-)
0.0%)
235)
2.8%)
233)
2.8%)
599)
6.7%)
350)
3.9%)
(525)
(6.6%)
(76)
(0.8%)
(252)
(2.8%)
(754)
(8.4%)
697)
7.8%)
(1,355)
(15.1%)
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Assumption
Discount rate
RPI inflation
Assumed life expectancy
Change in
assumption
+/- 0.5% pa
+/- 0.5% pa
+ 1 year
Change in defined
benefit obligation
-/+ 6%
+/- 2%
+3%
These calculations provide an approximate guide to the sensitivity of results and may not be as accurate as a full valuation carried out on these
assumptions. Each assumption change is considered in isolation, which in practice is unlikely to occur, as changes in some of the assumptions are
correlated.
Defined contribution plans
The Group also operates defined contribution schemes for other eligible employees, the main schemes being the Vp money purchase scheme
and the Legal and General Stakeholder Scheme. The assets of the schemes are held separately from those of the Group. The pension cost
represents contributions payable by the Group and amounted to £904,000 (2015: £810,000) in the year.
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Notes
25. BUSINESS COMBINATIONS
The Group acquired the following businesses from 1 April 2014 to 31 March 2016:
Name of acquisition
Higher Access Ltd
Test & Measurement
Group Limited
Trackside plant and equipment
rental business of Balfour Beatty
Rail Limited
Details of the acquisitions are provided below:
Date of acquisition
Type of acquisition
Acquired by
29 February 2016
4 November 2015
Share purchase
(100% equity)
Share purchase
(100% equity)
Vp plc
Hire Station Limited
28 July 2014
Business and assets
Torrent Trackside Limited
Property, plant and equipment
Current assets
Net debt
Tax, trade and other payables
Book value of assets acquired
Fair value adjustments
Intangibles on acquisition
Deferred tax on intangibles
Fair value of assets acquired
Goodwill on acquisition
Cost of acquisitions
Satisfied by
Cash consideration
Analysis of cash flow
for acquisitions
Cash consideration
Net cash included in acquisitions
Group
Company
2016)
£000)
5,089)
1,614)
(2,166)
(1,512)
3,025)
1,210)
(242)
3,993)
4,057)
8,050)
2015)
£000)
1,389)
289)
-)
-)
1,678)
3,727)
-)
5,405)
-)
5,405)
2016)
£000)
4,518)
1,037)
(2,662)
(793)
2,100)
-)
-)
2,100)
2,000)
4,100)
8,050)
5,405)
4,100)
8,050)
(982)
7,068)
5,405)
-)
5,405)
4,100)
(382)
3,718)
2015)
£000)
-)
-)
-)
-)
-)
-)
-))
-)
-)
-)
-)
-)
-)
-)
The acquisitions were made to grow market share and expand the product range. Intangibles were identified in relation to the acquisitions year
ended 31 March 2016 in relation to customer lists. In the year ended 31 March 2015 the intangibles related to a supply agreement. The
amortisation periods for these intangibles are set out in note 1. The acquisition costs expensed in the year ended 31 March 2016 in relation to
these acquisitions were £104,000.
As the acquisitions were not material to the trading performance of the Group they have not been disclosed separately in the Income Statement.
For the same reason, disclosure of the revenue or profit for the combined entity, if the business combination had occurred on 1 April 2015, has
not been provided.
26. POST BALANCE SHEET EVENT
On the 21 April 2016 the Group acquired TR Pty Limited, a group based in Australia, for cash consideration of A$17.4 million (Australian Dollars).
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Notes
27. RELATED PARTIES
Material transactions with key management (being the directors of the Group) mainly constitute remuneration including share based payments,
details of which are included in the Remuneration Report on pages 36 to 48 and in note 5 to the Financial Statements. In addition two directors
have sold some Vp plc shares they acquired, as a result of exercising their options, to the Vp Employee Trust at market value, being the previous
days closing mid market share price, namely 119,000 shares at a market value of £916,300 and 80,000 shares at a market value of £616,000.
Furthermore, a company van was sold to a Director for £3,750 based on an independent valuation of the vehicle.
Trading transactions with subsidiaries – Group
Transactions between the Company and the Group’s subsidiaries, which are related parties, have been eliminated on consolidation and are
therefore not disclosed.
Trading transactions with subsidiaries – Parent Company
The Company enters into transactions with its subsidiary undertakings in respect of the following:
l Internal funding loans
l Provision of Group services (including Senior Management, IT, Group Finance, Group HR, Group Properties and Shared Service Centre)
l Rehire of equipment on commercial terms
Recharges are made for Group services based on the utilisation of those services, however the Group does not charge interest on internal funding.
In addition to these services the Company acts as a buying agent for certain Group purchases such as insurance and IT services. These are
recharged based on utilisation by the subsidiary undertaking.
The amount outstanding from subsidiary undertakings to the Company at 31 March 2016 totalled £36,888,000 (2015: £33,967,000). Amounts
owed to subsidiary undertakings by the Company at 31 March 2016 totalled £24,768,000 (2015: £20,045,000).
The Company and certain subsidiary undertakings have entered into cross guarantees of bank loans and overdrafts to the Company. The total value
of such borrowings at 31 March 2016 was £88.0 million (2015: £72.0 million).
28. CONTINGENT LIABILITIES
There are no contingent liabilities (2015: nil) in respect of the Group or Company.
29. ULTIMATE PARENT COMPANY
The Company is a subsidiary undertaking of Ackers P Investment Company Limited which is the ultimate parent Company incorporated in Great
Britain. Consolidated accounts are prepared for this Company. Ackers P Investment Company Limited is ultimately controlled by a number of Trusts
of which, for the purposes of Sections 252 to 255 of the Companies Act 2006, Jeremy Pilkington is deemed to be a connected person.
30. SUBSIDIARY UNDERTAKINGS
The investments in trading subsidiary undertakings as at 31 March 2016 are:
Country of
Registration or
Incorporation
Principal
Activity
Country of
Principal
Operation
Class and
Percentage of
Shares Held
Torrent Trackside Limited
Hire Station Limited
TPA Portable Roadways Limited
England
England
England
Rail equipment hire
Tool hire
Hire of portable roadways
UK
UK
UK
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Airpac Bukom Oilfield
Services Pte Limited
Airpac Bukom Oilfield
Services (Curacao) NVA
Airpac Bukom Oilfield
Services Middle East FZE
Airpac Bukom Oilfield
Services (Australia) Pty Limited
Vp GmbH
Vp Equipment Rental
(Ireland) Limited
Singapore
Oilfield services
Singapore
Ordinary shares 100%
Curacao
Oilfield services
Curacao
Ordinary shares 100%
Sharjah
Oilfield services
Sharjah
Ordinary shares 100%
Australia
Germany
Ireland
Oilfield services
Australia
Ordinary shares 100%
Equipment hire
Germany
Ordinary shares 100%
Equipment hire
Ireland
Ordinary shares 100%
Vp plc Annual Report and Accounts 2016
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89
Notes
30. SUBSIDIARY UNDERTAKINGS (continued)
The full list of the dormant subsidiary undertakings as at 31 March 2016 is:
Stoppers Specialists Limited
Trench Shore Limited
UK Training Limited
Vibroplant Investments Limited
Bukom General Oilfield
Services Limited
Redding Hire Limited
Climate Hire & Sales Limited
Fred Pilkington & Son Limited
Vacuum Excavation Limited
Domindo Tool Hire Limited
Instant Tool Hire Limited
The Handi Hire Group Limited
Halls Hire Centres Limited
L&P 52 Limited
Northern Site Supplies Limited
Power Tool Supplies Limited
Hire & Sales (Canterbury) Limited
Handy Tool Hire (Derby) Limited
Handy Tool Hire
(Nottingham) Limited
Handy Tool Hire
(Loughborough) Limited
Cool Customers Limited
Arcotherm (GB) Limited
Vibroplant Trustees Limited
Vibrobet Limited
UM (Holdings) Limited
Harbray (Plant Hire) Limited
Power Rental Services Limited
Rapid Response Barriers Limited
U Mole Limited
727 Plant Limited
Cannon Tool Hire Limited
Thanet (Hire) Plant Limited
The Hire Brigade Limited
MEP Hire Limited
Able Safety (Yorkshire) Limited
Arcotherm (UK) Limited
Saville Hire Limited
Vibroplant Limited
Mechanical Electrical
Press Fittings Limited
Arco’therm Limited
Mr Cropper Limited
Airpac Bukom Oilfield
Services (Nigeria) Limited
Direct Instrument Hire Limited
Test & Measurement Hire
Group Limited
Test & Measurement Hire Limited
Higher Access Limited
Country of
Registration or
Incorporation
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
Scotland
England
England
England
England
Scotland
England
England
Nigeria
England
England
England
England
Principal
Activity
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Country of
Principal
Operation
Class and
Percentage of
Shares Held
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 90%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
Ordinary shares 100%
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Five Year Summary
Revenue
161,514)
167,034)
183,064)
205,602)
208,746)
2012)
£000)
2013)
£000)
2014)
£000)
2015)
£000)
2016)
£000)
Operating profit before amortisation
18,500)
19,815)
21,831)
28,780)
31,891)
Profit before amortisation and taxation
15,961)
17,351)
20,053)
26,757)
29,798)
Profit before taxation
Taxation
Profit after taxation
Dividends✶
Share capital
Capital redemption reserve
Reserves
15,328)
(3,101)
16,402)
(3,353)
18,933)
(3,238)
25,073)
(5,202)
27,500)
(5,112)
12,227)
13,049)
15,695)
19,871)
22,388)
(4,457)
(4,437)
(4,962)
(5,986)
(6,568)
2,309)
-)
88,725)
2,008)
301)
98,586)
2,008)
301)
105,648)
2,008)
301)
109,431)
2,008)
301)
119,014)
Total equity before non-controlling interest
91,034)
100,895)
107,957)
111,740)
121,323)
Share Statistics
Asset value
197p)
251p)
269p)
278p)
302p)
Earnings (pre amortisation)
30.76p)
35.47p)
41.97p)
54.45p)
62.21p)
Dividend✶✶
11.35p)
12.25p)
14.00p)
16.50p)
18.85p)
Times covered (pre amortisation)
2.71p)
2.90p)
3.00p)
3.30p)
3.30p)
✶✶ Dividends under IFRS relate only to dividends declared in that year.
✶✶ Dividends per share statistics are the dividends related to that year whether paid or proposed.
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91
Directors and Advisors
Executive Directors
Jeremy F G Pilkington, B.A. Hons. (Chairman)
Neil A Stothard, M.A., F.C.A.
Allison M Bainbridge, M.A., F.C.A.
Non-Executive Directors
Stephen Rogers B.Sc., F.C.A., J.P.
Philip M White B.Com, F.C.A., CBE
Secretary
Allison M Bainbridge
Registered Office
Central House, Beckwith Knowle,
Otley Road, Harrogate, North Yorkshire, HG3 1UD
Registered in England and Wales: No 481833
Telephone: 01423 533400
Independent Auditor
PricewaterhouseCoopers LLP
Benson House, 33 Wellington Street, Leeds, LS1 4JP
Solicitors
Squire Patton Boggs (UK) LLP,
6, Wellington Place, Leeds LS1 4AP
Registrars and Transfer Office
Capita Asset Services, The Registry, 34 Beckenham Road,
Beckenham, Kent, BR3 4TU
Bankers
HSBC Bank plc
Lloyds Bank plc
Merchant Bankers
N M Rothschild & Sons Limited
Stockbrokers
N +1 Singer
Public Relations
Buchanan Communication
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