50051-Vp Annual Report 2023.qxp 07/06/2023 16:40 Page 1
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vpplc.com
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:40 Page 3
In This Report
Strategic Report
01
02
04
06
07
08
15
35
37
38
39
Business Model and Strategy
Group Businesses
Long Term Success
Financial Highlights
Chairman’s Statement
Business Review
Responsible Business Report
Financial Review
Viability Statement
Risk Management
Principal Risks and Emerging Risk Areas
Governance
43
44
48
49
52
55
62
70
73
74
The Board
Governance
Nomination Committee
Audit Committee Report
Remuneration Committee Report Annual Statement
Directors’ Remuneration Policy
Annual Report on Remuneration
Directors’ Report
Statement of Directors’ Responsibilities
Independent Auditors’ Report
Financial Statements
83
84
84
85
86
87
88
89
90
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Parent Company Statement of Changes in Equity
Parent Company Balance Sheet
Parent Company Statement of Cash Flows
Notes
Shareholder Information
128
129
130
Five Year Summary
Alternative Performance Measures
Directors and Advisors
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:40 Page 5
Business Model and Strategy
Vp is a specialist rental business providing products and services to a diverse range
of end markets including infrastructure, construction, housebuilding and energy in
the UK and internationally.
We aim to deliver high quality returns to our shareholders and other stakeholders,
sustained over the long term whilst embracing our environmental, social and
governance responsibilities.
growth
BTA
P
•
R O A C E
•
s
a r g i n
M
•
Resilient and
Proven Specialist
Rental Model
• Market leading positions in
niche sectors
• Diverse end markets in UK and
internationally
• Long term time horizon
• Embrace change and innovate
• Exceed customer expectations
• Value added service proposition
s
I
P
K
Sustainability
Focus
•
E
m
i
s
s
i
o
n
s
•
• Defined strategy
• Reduce emissions and waste
• Innovate with green products
• Safe and sustainable
business
W
a
s
t
e
•
KPIs
•Employeeturnover
•
Employer of
Choice; Provider
of Choice
• Attract and retain the
best people
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• Product service reliability and
operational excellence
• Learning and development
commitment
First Class Asset
Management
• Quality products at
competitive prices
• Maintain assets through
rental life cycles
• Strong balance sheet and
cash generation for fleet
growth and acquisitions
estm
inv
capital
e bt • Consistent
•
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• EB I T D A g e a r i n
KPIs
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01
50051-Vp Annual Report 2023.qxp 07/06/2023 16:40 Page 6
Group Businesses
UK Forks are the UK’s leading specialist hirers of
telescopic handlers used to improve safety and
productivity on construction and housebuilding
sites.
Brandon Hire Station is the leading provider of
tools and associated products to industry,
construction and home owners.
ESS is the leading specialist provider of safety,
survey, communications and test & measurement
equipment rental in the UK.
Groundforce is the market leading provider of
excavation support systems to the water, civil
engineering and construction industries with
operations in the UK, the Republic of Ireland and
mainland Europe.
TPA Portable Roadways is one of Europe’s largest
suppliers of temporary access solutions. Operating
from bases in the UK and Germany, TPA provides
portable roadways and temporary access solutions to
markets including transmission, construction, rail and
outdoor events.
02
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:40 Page 7
Group Businesses
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Mechanical, Electrical & Low Level Access Specialists
MEP Hire
MEP Hire is the UK’s largest provider of
mechanical and electrical press fittings and low
level access platforms to the construction, fit
out, mechanical and electrical markets.
Torrent Trackside are specialist suppliers of rail
infrastructure portable plant and trackside
services to Network Rail, London Underground
and their appointed contractors.
Airpac Rentals
Energy Industry Solutions
Airpac Rentals Energy Industry Solutions is an
international business supporting a wide range
of energy markets including, well test, pipeline
testing, rig maintenance, LNG and geothermal
drilling.
Group
TR is Australasia’s leading technical equipment
rental group providing test and measurement,
communications, calibration and audio visual
solutions in Australia, New Zealand and South
East Asia.
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03
50051-Vp Annual Report 2023.qxp 07/06/2023 16:40 Page 8
Long Term Success
Vp plc has a long and distinguished history as a major rental business. Founded
in 1954, the Company floated on the UK Stock Market in 1973 as Vibroplant plc.
In 2000, the Company exited its then core general plant hire business to focus on
higher return, value added, specialist rental activities and subsequently changed
its name to Vp plc.
The Group has since developed a wide range of sector leading, specialist rental
businesses serving a diverse range of end markets in both UK and International
markets.
2000
UK Forks
division
created
2005
TPA
and
ESS
acquired
1996
Cannon
Tool Hire
acquired
Exit from
USA
1982
US powered
access
business
established
1997
Rail:
Torrent
Trackside
acquired
2001
Hire Station
formed through
merger of
5 regional tool
businesses
2001
Renamed
Vp plc
1990
Groundforce
acquired
from SGB
1980
Shoring
division
established
1975
First
move into
specialist
plant
Airpac
1954
Vibratory
Roller &
Plant Hire
(Northern)
Limited
founded
1973
Floated on
main market
Vibroplant
plc
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:40 Page 9
2021
Acquisition of
M&S Hire
2016
Acquisitions of
Higher Access
and
(Australia)
TR Pty
2014
Vp celebrates
60 years
2007
MEP
acquired
2017
Acquisition of
Brandon Hire
2015
Acquisition
of Test &
Measurement
2010
Geographical
expansion:
Global (Airpac
Bukom) Eire
(Groundforce)
Germany (TPA)
2006
Acquisition of
Bukom Oilfield
Services
(Airpac Bukom
formed)
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Revenue History
1970:
£2m
1980:
£14m
1990:
£70m
2000:
£55m
2010:
£129m
2015:
£206m
2016:
£209m
2017:
£249m
2018:
£304m
2019:
£383m
2020:
£363m
2021:
£308m
2022:
£351m
2023:
£372m
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05
50051-Vp Annual Report 2023.qxp 07/06/2023 16:40 Page 10
Financial Highlights
GROUP REVENUE
382.8
362.9
371.5
350.9
ADJUSTED BASIC EARNINGS PER SHARE*
95.1
91.0
308.0
£371.5m
79.0p
79.0
71.2
46.8
2019 2020
2021 2022 2023
2019
2020
2021 2022
2023
ADJUSTED PROFIT
BEFORE TAX,
AMORTISATION AND
EXCEPTIONAL ITEMS*
£40.5m
46.8
47.1
40.5
38.9
23.3
DIVIDENDS PER SHARE
30.2
30.5
37.5
36.0
25.0
37.5
2019
2020
2021 2022
2023
2019
2020
2021 2022
2023
RETURN ON AVERAGE CAPITAL EMPLOYED*
NET DEBT EXCLUDING LEASE LIABILITIES*
14.4%
14.5
14.5
14.5
14.4
9.2
£134.4m
167.7
159.8
134.4
130.6
121.9
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
STATUTORY PROFIT/(LOSS) BEFORE TAX
STATUTORY BASIC EARNINGS/(LOSS) PER SHARE
33.6
28.4
35.6
30.7
£30.7m
58.1p
65.2
46.9
64.5
58.1
(2.3)
(11.6)
2019 2020
2021
2022 2023
2019 2020
2021
2022
2023
*These measures are explained and reconciled in the Alternative Performance Measures section on page 129.
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:40 Page 11
Chairman’s Statement
I am very pleased to report on a year
of solid progress against a background
of stable but occasionally challenging
markets.
For the year to 31 March 2023, adjusted profit before tax,
amortisation,
impairment of intangible assets and
exceptional items* rose by 4% to £40.5 million (2022:
£38.9 million) on revenue ahead 6% to £371.5 million
(2022: £350.9 million). Adjusted EBITDA* improved to
£92.9 million (2022: £88.9 million).
Capital
investment in the rental fleet was £59.9 million
(2022: £59.8 million) as we responded to specific
investment opportunities and our continued transition
towards more environmentally friendly solutions. Supply
chain challenges eased somewhat during the year, although
localised bottlenecks are still present in certain areas.
Year-end net debt excluding lease liabilities* was £134.4
million (2022: £130.6 million).
Return on average capital employed* was 14.4% (2022:
14.5%) in line with our long term target, an excellent
result which reflects once again the underlying quality of
the Group’s earnings. Adjusted earnings per share* of 79.0
pence per share (2022: 71.2 pence per share), grew faster
than profit due to the impact of deferred tax re-
measurements discussed in Note 8.
At the AGM, scheduled to be held on 20 July 2023, the
Board will be recommending payment of a final dividend of
26.5 pence per share (2022: 25.5 pence per share) making
a total for the year of 37.5 pence per share (2022: 36.0
pence per share). Subject to shareholder approval,
it is
proposed to pay the final dividend on 4 August 2023 to
members registered at 23 June 2023. This proposed level
of dividend is based on our policy to distribute on a two
times covered earnings basis over the cycle.
forthcoming,
In April 2022, at the request of the controlling shareholder,
Ackers. P.
the Board
Investment Company Limited,
launched a formal sales process. Although significant
interest was
the Board unanimously
concluded that none of the proposals would meet the
Board’s objectives of delivering an outcome that would
satisfy the interests of all stakeholders. Termination of the
process was announced on 16 August 2022. The process
incurred exceptional costs of £1.7 million. Throughout the
process, we continued to run in a “business as usual”
mode and I am pleased to report that we have not
observed any negative consequences from the process,
either internally or externally.
Whilst the Covid-19 pandemic is thankfully behind us, it
has impacted much of the business landscape within
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Chairman:JeremyPilkington
which we operate. This has made recovery more hesitant
in certain markets than we had originally expected but
nevertheless the Group has made further good progress
this year.
During the year, both Steve Rogers and Allison Bainbridge
retired after 13 and 11 years respectively with the Group.
It is my pleasure to extend a heartfelt thanks to both for
their exemplary service and to wish them a long and
enjoyable retirement.
It is also my pleasurable duty to welcome three new
members to the Board. Anna Bielby joined on 1 January
2023 as our new Chief Financial Officer and brings deep and
relevant experience to the role. Mark Bottomley and Stuart
Watson joined the Board as non-executive Directors at the
same time with Stuart assuming the role of Audit Chairman
to replace the retiring Steve Rogers. Mark will, at the AGM,
assume the role of Remuneration Committee Chairman,
succeeding Phil White who remains on the Board. We look
forward to enjoying the benefit of the experience and new
insights that these appointments will bring.
We have a successful long term track record of meeting
and overcoming economic challenges and we believe we
can identify profitable growth opportunities to continue to
deliver the sector leading results our stakeholders have
come to expect.
It remains my great pleasure to thank all our employees
for their hard work and commitment that has made these
results very satisfactory.
Jeremy Pilkington
Chairman
6 June 2023
*These measures are explained and reconciled in the Alternative Performance Measures section on page 129.
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07
50051-Vp Annual Report 2023.qxp 07/06/2023 16:40 Page 12
Business Review
Overview
Vp plc is a rental business providing
specialist products and services to a
diverse range of end markets including
infrastructure, construction, housebuilding,
and energy. The Group comprises a UK
and an International Division.
Revenue
Adjusted operating profit before amortisation,
impairment of intangible assets and exceptional items*
Adjusted operating margin*
Investment in rental fleet
ChiefExecutive:NeilStothard
Year ended
31 March 2023
Year ended
31 March 2022
£371.5 million
£350.9 million
£46.0 million
£43.3 million
12.4%
12.3%
£59.9 million
£59.8 million
Return on average capital employed*
14.4%
14.5%
Statutory operating profit
£39.3 million
£43.0 million
*These measures are explained and reconciled in the Alternative Performance Measures section on page 129.
the Group.
The year to 31 March 2023 was a period of further
positive development
In spite of
for
significant macro-economic headwinds the Group
delivered tangible progress as we proactively evolved
the business in response to those trading conditions
and with many of our core markets maintaining
demand during the period.
Group adjusted operating profit before amortisation,
impairment of intangible assets and exceptional
items*
increased by 6% to £46.0 million compared with prior year
of £43.3 million. Adjusted operating margin* held up well,
increasing to 12.4% (2022: 12.3%). Maintaining margin is
particularly pleasing given the significant supply chain cost
inflation experienced throughout the year. This resilience
illustrates our ability to react quickly to changing
circumstances and to protect the quality of our profits
through a combination of price increases to customers,
efficient operational management and a keen eye on costs.
Group revenue also grew by 6% to £371.5 million (2022:
£350.9 million). The increased revenue was derived from a
combination of price increases and activity growth from
certain of our markets.
Our Return on Average Capital Employed* (ROACE) continues
to be strong at 14.4% (2022: 14.5%) and close to our long
term, through the cycle, ROACE target of 15%.
Maintaining a modern and reliable rental fleet, including
the widespread introduction of cleaner, greener product
solutions remains a key driver of our capital investment
programme. Gross investment in rental fleet of £59.9
million was at a similar level to prior year of £59.8 million.
Fleet disposals proceeds were £24.6 million (2022: £17.4
million). Net capital expenditure therefore reduced to
£35.3 million (2022: £42.4 million). The disposal of fleet in
the year generated profits on disposal of £9.1 million
(2022: £7.0 million).
We entered the period under review with healthy order
books for new capital investment, partially to support growth
and partially as replacement of products retiring from the hire
fleet in the normal life cycle. Supply chains were particularly
challenging in terms of lead times as well as cost and we
sought to maximise our opportunity with some pre-emptive
ordering. In response to those markets where the rate of
growth slowed, we subsequently reduced fleet capex in the
second half of the year and increased disposals.
Our fleet capex included a large proportion (£15 million) of
more environmentally friendly products which replaced, in
many cases, petrol / diesel driven alternatives.
08
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:40 Page 13
Business Review
The Group experienced relatively consistent, but differing
conditions in its core markets. Both the UK and International
divisions made good progress. Our UK performance was
positive, despite generally weaker confidence in the wider
economy. Our International businesses particularly in South
East Asia, Australia and New Zealand experienced better
trading conditions with an overall improving outlook.
The Infrastructure markets in the UK remained generally
supportive and we experienced solid demand from rail,
transmission and the water sectors in particular. After a
the
strong performance with HS2 in the prior year,
slowdown of workstreams during 2022 translated into
lower levels of activity on this project.
Our other large market exposure is in general non-residential
construction where demand remained relatively stable but
still lacking any further signs of tangible recovery.
In house
building, we enjoyed good demand throughout most of the
Into the new calendar year residential construction
year.
slowed a little but this has stabilised as we enter our new
financial year and we remain optimistic about longer term
prospects in this sector.
The Group’s operating profit before amortisation, impairment of
intangible assets and exceptional items* was primarily sourced
in the UK division, but the International division made good
progress year on year.
Towards the end of the financial year we carried out some
restructuring across a number of our business units where
we had identified tangible efficiency opportunities. These
actions incurred £3.3 million of exceptional costs in the
year mostly relating to properties and should help deliver
further improvement in Group performance in the new
financial year.
We have two business units (Groundforce and TPA) that
also operate in mainland Europe and the Republic of
Ireland, which report into the UK division. Their respective
contributions are included within the UK divisional result.
If we look at the Group’s trading outside of the UK, and
take into consideration the European business units,
revenues were £63.3 million (2022: £50.9 million) which
represents an increase of 24% in the year. The overall
geographic source of revenue for the Group was split 83%
from the UK and 17% from outside of the UK.
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Business Review
UK Division
Adjusted operating profits before
amortisation, impairment of intangible
assets and exceptional items* in the UK
division increased to £42.9 million compared
with £41.8 million in the prior year.
Revenues of £333.4 million (2022: £320.2
million) were 4% up on prior year.
Revenue
Adjusted operating profit before amortisation,
impairment of intangible assets and exceptional items*
Year ended
31 March 2023
Year ended
31 March 2022
£333.4 million
£320.2 million
£42.9 million
£41.8 million
Investment in rental fleet
£53.6 million
£55.2 million
*This measure is explained and reconciled in the Alternative Performance Measures section on page 129.
The UK division, comprises seven main business units:
UK Forks, Groundforce, TPA, Brandon Hire Station, ESS,
MEP Hire and Torrent Trackside. Whilst mainly
operating in the UK, TPA and Groundforce also have
operations in mainland Europe, primarily in Germany,
Austria and the Republic of Ireland. All of the UK
divisions support the three core market sectors of
infrastructure, construction and housebuilding.
The following section comments on the highlights and key
actions for these UK business units during the year.
UK Forks made further progress in the year. Whilst revenue
growth was modest, careful management of the fleet and
the operational cost base enabled the division to deliver
good year on year profit growth. UK Forks encountered the
same cost inflation challenges as elsewhere in the Group
and management protected margin through a combination
of increased hire rates, keen asset management, including
disposing of surplus equipment, and a strong control over
spares and overhead costs. The residential construction
sector held up well until the final quarter of the financial year
when there was a small step down in demand which quickly
stabilised at new levels of activity. The business took the
opportunity in the fourth quarter to accelerate disposal of
surplus rental fleet as utilisation, which had been running
extremely high, eased to a more normalised level. A
customer first approach has continued to pay off as the long-
standing relationships with our core customers including the
national house builders were maintained in the year. During
the period the overall fleet size by number increased by 6%,
though, this was primarily in the first half of the year. Whilst
market demand has marginally reduced into the new
financial year, the business is operationally geared up to that
change and we remain confident of making further progress
despite some elements of market weakness.
The Groundforce UK & Ireland business enjoyed good
levels of demand driven by a generally more buoyant civil
engineering sector. Groundforce UK & Ireland comprises a
number of constituent specialist activities, the largest of
which is the UK Shoring division. This business benefitted
from growing demand from general infrastructure schemes
including Hinkley Point, HS2 and AMP7, although the latter
was a little quieter than had been anticipated. Groundforce
secured preferred supplier status to Scottish Water on their
investment programme. This work
SR21 five year capital
should contribute into the new financial year. Whilst
revenues grew 10% year on year, this was primarily from
increased utilisation of existing fleet and hire rate
The
improvement, with fleet capex flat year on year.
business continued to innovate and successfully introduced
Side Grip hammers to the piling rental fleet providing quicker
installation of pile sheets and enhancing health and safety
benefits. The shoring specification app ‘Your Solution’ was
developed further in the period and experienced strong
customer acceptance as a self-serve preliminary design tool.
Prospects for the new year remain good with ongoing
demand from major
infrastructure projects and the
expectation of further activity in the water sector particularly
with Scottish Water.
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UK Division
The Groundforce Europe business had an excellent year
reporting its best ever performance, driven by traditional core
shoring rental in Germany and complemented by a range of
major excavation support projects in Germany, Austria, France
and Scandinavia. The business, which was a greenfield start
up in Germany some years ago, has secured increasing brand
recognition and a growing acceptance of
the hydraulic
solutions offered by the Groundforce fleet. On the back of a
strong trading year we intend to invest in the infrastructure of
the business creating a platform for further successful growth
in supportive markets.
in fleet
TPA UK had a quieter trading year primarily due to a
significant slowdown in HS2 activity, after enjoying buoyant
demand from Phase1 of the project in the prior year. In
addition, as a result of the energy crisis heading into the
winter the National Grid delayed outage work, a key area
of demand for TPA, to minimise the risk of energy supply
shortages. This resulted in a transmission sector slowdown
over the winter. Despite these unexpected challenges, the
TPA team made significant progress in sourcing alternative
work in the construction and outdoor events segments in
particular, and these mitigated much of
the shortfall.
Investment
focused on innovation with the
introduction of a new wider aluminium track panel offering
increased flexibility and efficiency to both the customer and
the TPA operations team. Innovation in technology was also
a feature with the launch of an app which simplifies the
measurement and quotation process when specifying an
access solution at a site. A further
initiative was the
introduction of an online carbon calculator which identifies
the lower carbon impact of utilising a portable roadway
access solution in comparison to a traditional stone road
construction solution. Looking into the new financial year,
TPA anticipates improving demand in both transmission and
HS2 work to complement activity in the construction, rail
and the outdoor event markets.
The TPA Europe business had a more challenging year,
primarily due to significant increases in supply chain costs
particularly in transport, together with some temporary
shortfalls in staffing due to a difficult employment market.
The target markets of transmission and renewables remain
positive. Moving into the new financial year, the business is
in a good position to embrace the opportunities those
markets offer.
Geographically, TPA Europe operates in
Germany and Austria. We anticipate an improved trading
environment
for the TPA Europe business in the new
financial year.
Brandon Hire Station, the market leader for tool hire
within the UK, delivered modest year on year revenue
growth against a relatively difficult market backdrop.
Whilst operating across all three of the Group’s largest
infrastructure and
market segments i.e. construction,
housebuilding, it is most exposed to the non-residential
construction market which remains subdued and in
relative terms more impacted by the overall economic
uncertainty. The business increased prices by c.10% at
the beginning of the calendar year by way of mitigating of
cost inflation in the business. Brandon Hire Station made
modest changes to its branch network merging / closing
five branches reducing the overall branch count to just
under 150. Brandon Hire Station signed a five year
exclusive trading agreement with Watkin Jones plc, the
Build to Rent and Student accommodation Group together
long standing key
with securing a number of other
account renewals.
Capital investment in fleet was strong in the first half but
slowed as demand eased during the year. A transition to
a cleaner, greener fleet has been a consistent focus for
fleet investment and as usual the routine retirement of
older, less environmentally friendly rental assets has been
Innovations have
an important contributor to the process.
included the launch of a solar powered charging station for
use on construction sites which was developed in
collaboration with a number of partners and has received
positive reviews. As we head into the new financial year
the construction market remains relatively subdued but
we are nevertheless keenly focused on securing additional
revenue growth through a wide range of initiatives.
The ESS division had a satisfactory trading year and
maintained its market leading status in safety, survey and
test & measurement providing a vital support service to
the infrastructure and industrial markets in particular. The
year started relatively slowly, but built up well delivering
year on year revenue growth. ESS re-structured to a de-
centralised management structure in four regions aimed
at creating a better focus and proximity to the customer
from an operational view. This will deliver significant cost
savings. As elsewhere in the Group, ESS had to combat
high cost inflation and mitigated this in part through
negotiated price increases across the customer base. The
management
team was further strengthened by the
appointment of a new sales Director and test &
measurement Director as ESS target growth into the new
financial year.
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Business Review
UK Division
MEP made substantive progress in the year delivering
further revenue and profit growth from the busy but stable
mechanical, electrical and plumbing sectors. The business
continued to develop operationally with the relocation in
Manchester to a new 35,000 sq.ft facility. We also relocated
the Glasgow central hire desk to a bespoke location and at
the same time embraced the Zendesk call centre
technology which is increasingly used across the Group.
MEP acquired M&S Hire at the end of 2021 with a view to
expanding its service offer to the commercial fit out sector,
initially in London and subsequently on a national basis. This
is developing well. MEP have a track record of
introducing
new and innovative products to their customer base and
this year was no exception with the build up of a new
Microscissors fleet. Overall capital investment was strong
for MEP as the business supported growth opportunities and
geared up for the new year. After the financial year-end
MEP acquired a low level access fleet from Aspire Platforms
with back-to-back long term rental agreements. Prospects
remain positive for MEP with a number of large, longer
term, projects due to start in the first half of the new
financial year.
Torrent Trackside enjoyed stronger demand as the year
progressed and this despite of the inevitable disruption
from rail industrial action in the second half of our financial
year. Torrent benefitted from a revival of CP6 rail activity
with most Torrent depots across the UK seeing good year on
year
improvements. Network Rail, a key customer,
remained busy throughout the period and Torrent continued
to achieve an excellent performance against the KPIs within
their contract. The Network Rail high output work also
generated further demand. The transpennine upgrade
delivered improved revenues with both the TRU East and
joint ventures. The solar powered Prolectric
TRU West
lighting fleet also experienced a busier year. Capital
investment in Torrent was relatively strong and in particular
sourcing further equipment in support of Network Rail. The
CP6 five year capital investment programme for the UK rail
network finishes in March 2024, and the appointment of
contractors to CP7 is advanced with Torrent well positioned
those businesses. Torrent successfully trialled a
to support
the future’ concept showcasing our significant
‘site of
commitment
in battery and solar
powered rail specific equipment which operates at much
lower levels of noise and is practically carbon neutral. This
initiative was well received by the customer base who view
Torrent Trackside as a pivotal supply chain partner to help
drive their own carbon reduction targets. Torrent heads
confidently into the new financial year as overall activity
within the rail sector remains good.
to and investment
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Business Review
International Division
The International division reported
adjusted operating profit before
amortisation, impairment of intangible
assets and exceptional items* of £3.1
million (2022: £1.5 million), on
revenue 24% ahead of prior year of
£38.1 million (2022: £30.7 million).
Revenue
Adjusted operating profit before amortisation,
impairment of intangible assets and exceptional items*
Investment in rental fleet
Year ended
31 March 2023
Year ended
31 March 2022
£38.1 million
£30.7 million
£3.1 million
£6.3 million
£1.5 million
£4.6 million
*This measure is explained and reconciled in the Alternative Performance Measures section on page 129.
The International division comprises Airpac Rentals, a
global supplier to the energy sector and TR Group which
operates in Australia, New Zealand, Malaysia and
Singapore and is a leading technical equipment rental
group in the region. The following section comments on
the highlights and key actions of the two business
groupings within the International division during the
year.
Airpac Rentals delivered good revenue and profit growth
as trading conditions improved throughout the year.
In
recent times, Airpac has diversified its activities across a
number of new applications including renewable energy,
decommissioning and infrastructure chemical cleaning.
Demand for the provision of exploration and production
project support in the oil and gas segment also improved in
the year. Our operations primarily centre around Europe,
South East Asia and Australia. Highlights in the year included
increased well testing activity in the North Sea, support of
geothermal projects in Europe, and pipeline and process
services support primarily in South East Asia and Australia.
We have committed further investment to high pressure
equipment as we support the return of activity in new
Liquefied Natural Gas (LNG) production facilities (Asia and
Australia) together with extended shutdown maintenance at
the existing LNG plants. We anticipate further growth across
most of Airpac’s end markets during the new financial year.
TR Group (‘TR’) made further good progress in the year
delivering strong revenue and profit growth as the trading
environment across the region staged further post pandemic
this positive performance was
recovery. As elsewhere,
delivered despite the same pressures from cost inflation,
supply chain and labour shortages experienced elsewhere in
the Group. Customer pricing has been increased and this
helped mitigate the cost
The
communications division, Hirecom, enjoyed further growth
but the Tech Rentals business in Australia experienced a
subdued market recovery, as project delays slowed progress
but ultimately finished the financial year well.
The TR
businesses in New Zealand and Singapore traded strongly
whilst TR Malaysia was quieter partially due to the economic
impact of local political uncertainty. TR Calibration and the
Vidcom audio visual business both made good progress.
inflation challenge.
The TR Group businesses are well placed to build further on
the platform of a strong year.
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Business Review
Employees
The consistent quality of the Group’s business performance
over many years is underpinned by our people. The
individual and collective contributions of colleagues is
fundamental to our success.
We seek to fulfil our commitment to create a great place to
work, where people feel valued and have the opportunities
to fulfil their potential.
In the current year, we have invested in well-being
including mental health awareness training and installation
of defibrillators at larger operational sites. We have also
invested in learning and development, maintained our
highly successful graduate programme, now in its 5th year
and renewed our ongoing commitment to engineering
apprentice training. We have introduced our Long Service
Recognition Programme and it is testament to the whole of
the Group that we have 270 colleagues, representing 10%
of Group headcount, with over 20 years’ service. We look
forward to delivering further supportive initiatives to
employees over the coming year.
Environmental
The business has maintained a keen focus on all matters
environmental and guided by the Environmental Steering
Group, which I chair, alongside the Director of Risk and
Sustainability and with representatives from within the trading
divisions. The Steering Group acts as the main co-ordination
point of this topic for the whole business.
We have maintained momentum in conversion of our rental
fleet towards cleaner solutions led by innovation from our
buying teams and supply chain and taking into account our
customer requirements.
Achievements in the year include securing Plant Charter Gold
Status in an initiative sponsored by the Supply Chain
Sustainability School, an organisation facilitating best
environmental practice in the construction sector. We have also
now achieved ISO 50001 energy management standard across
all our UK network.
Outlook
Our scope 3 emissions inventory was completed in the year
and we subsequently submitted our science based targets
data and hope to achieve full accreditation during 2023. We
have set up a cross-divisional working party for sustainable
procurement, to develop workstreams designed to formally
assess supply chain partners in terms of sustainability
commitments. Overall governance of environmental matters
has been strengthened with the appointment of a Director
dedicated to risk and sustainability and reporting in to the plc
Communication of developments has been
Board.
enhanced by the launch of a dedicated Environmental and
Sustainability website which is aimed at keeping all
stakeholders informed of achievements and current
initiatives.
We look forward to reporting on further substantial progress on
our environmental initiatives in due course.
The financial year under review presented many unexpected
macro-economic challenges and which the whole Vp team
tackled to great effect enabling the Group to deliver another
high quality set of results demonstrating the resilient nature of
the Groups business model. The Group businesses have taken
the necessary action to ensure that we are as efficient as
possible whilst costs have increased and market growth has
been relatively subdued.
After a period of
little change within the wider UK
construction market, some adjustments to recent trends are
forecast in the coming 12 months. Housebuilding, which has
been relatively buoyant for the last two years, is forecast to
experience moderate contraction in 2023 before recovering
in 2024. Infrastructure will recover to modest growth after a
flat 2022 driven by Rail, AMP7 (water), Hinkley Point and
Offshore Wind capital investment. The non-residential new
construction segment, comprising Public, Private Industrial
and Private Commercial output is expected to see modest
improvement overall and the Repair and Maintenance
sectors are anticipated to be stable. This market backdrop
remains positive for the Group.
Our International business is experiencing improving trading
conditions and we believe that the wide range of markets to
which this division is exposed, including mining, oil and gas,
construction and outdoor events, will be supportive in the new
financial year.
Our plan is to develop our business infrastructure and invest in
our people, rental fleet and property to ensure we are well
positioned to deliver further growth. A strong balance sheet
provides a solid financial base that we can utilise to facilitate
both organic and acquisitive growth both in the UK and
Internationally as attractive opportunities are identified.
Neil Stothard
Chief Executive
6 June 2023
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(Source: Experian UK Construction Forecast – Spring 2023).
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:40 Page 19
Responsible Business Report
Overview
The Group’s principles of fairness, integrity, and respect form the foundation of our responsible
business culture. Our corporate responsibility framework reinforces this culture by promoting good
governance and guiding our management of environmental and social impacts. This framework
applies across all aspects of our business and encompasses Sustainability, Environmental and Social
Governance (ESG), and Corporate Responsibility (CR), which are interrelated and mutually supportive.
OUR APPROACH
We recognise that ensuring sustainability across all
operations is a key responsibility for the Group.
With c3,000 employees spread across 10 countries and
more than 250 sites, we provide valuable services to
thousands of customers in various markets. Our goal is to
make sustainability a universal priority throughout the
Group’s network, where we all contribute towards
mitigating climate change and biodiversity loss by
minimising our environmental impact and striving for a
net positive impact on biodiversity. We seek to provide
further mitigation through investing in local community
and conservation projects to further mitigate any
negative environmental effects.
To evaluate our alignment with the United Nations’ 17
Sustainable Development Goals
(SDGs) and their
corresponding targets, we conducted a thorough review.
The Group are focused on 11 of the SDGs, listed below, and
the presence of SDG icons throughout the report signifies
where we are achieving progress towards these goals.
SDGs for our customers, investors and supply chain
SDGs for our people
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Responsible Business Report
ACHIEVEMENTS
Our achievements in environmental developments over the past 12 months include:
Continued investment into increasingly sustainable and
electrified rental fleet solutions
A sustainability website detailing our current and historic
sustainability actions, a range of our innovative products and
recent news articles – access via the QR Code above
We have made significant headway in mainstreaming
sustainability within our procurement functions through
publishing a sustainable procurement policy and integrating
new supplier management software
We have committed to science based emissions reduction
targets which were submitted to the Science-based Target
initiative for validation in December 2022
The Group has achieved Gold status with the Plant
Charter for excellence in our commitment to reducing
carbon emission and air pollution
We have achieved ISO 50001 - Energy Management
System certification across all UK sites
We have published a Medium Term Roadmap to Net Zero
by 2050
We are supporting three new nature conservation
projects focussed on the restoration of seagrass meadows,
agricultural advisor training and the reintroduction of Lynx
to the UK
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Responsible Business Report
Medium Term Roadmap to Net Zero by 2050
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NET ZERO CARBON
Net Zero Target
The Group commits to reach net-zero Green House Gases emissions across the value chain (scope 1, 2 and 3) by 2050 from a
2022 base year.
Short Term Targets
By 2025:
l The majority of The Group’s top 250 suppliers by spend will have set science-based emissions reduction targets.
l All employees will be carbon literate and trained in sustainability.
l The Group will reduce its energy consumption intensity (kWh/m2) 20% from a 2021 baseline.
l The Group shall reduce waste production intensity 30%, recycle more than 85% waste and divert more than 95% waste
from landfill using a 2021 baseline.
We have made the commitment to reach net zero carbon
emissions with the Science Based Targets initiative in line
with the Business Ambition for 1.5°C to ensure a robust
transition plan.
Our transition plan to net zero comprises near term and short
term targets described above. This strategy is designed and
actioned via our Environmental Steering Group which is chaired
by the Chief Executive who meet regularly.
To properly reflect the level of priority these issues occupy
within the Board’s governance structure, environmental, social
and governance accountability has been formally recognised as
a matter to be routinely reviewed at Board level. Coupled with
our transition plan, our climate change strategy has recently
been ratified into our newly published Climate Change policy.
As a major supplier to the UK Government, we published our
Carbon Reduction Plan in November 2022 in response to
Procurement Policy Note 06/21 detailing our commitments,
progress to date, pathways and initiatives.
We understand the need to be transparent and follow best
practices with our reporting on climate change. Our carbon
footprint was calculated in accordance with the World
Business Council for Sustainable Development and World
Resources Institute’s Greenhouse Gas Protocol, along with
HM Government’s Environmental Reporting Guidelines and
DEFRA’s 2022 UK Greenhouse Gas Conversion Factors for
Company Reporting.
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NET ZERO CARBON (continued)
Our statutory greenhouse gas emissions data (scope 1 & 2) for the year ended 31 March 2023 is set out below:
Scope 1 (Tonnes CO2e)
Scope 2 Location-based (Tonnes CO2e)
Scope 2 Market-based (Tonnes CO2e)
UK
Total Scope 1 & 2 Location-based (Tonnes CO2e)
Total Scope 1 & 2 Market-based (Tonnes CO2e)
Energy Consumption of Scope 1 & 2 (kWh)
Intensity Ratio Location-based (Tonnes CO2e per £m revenue)
Intensity Ratio Market-based (tonnes CO2e per £m revenue)
Scope 1 (Tonnes CO2e)
Scope 2 Location-based (Tonnes CO2e)
Scope 2 Market-based (Tonnes CO2e)
Global
Total Scope 1 & 2 Location-based (Tonnes of CO2e)
Total Scope 1 & 2 Market-based (Tonnes of CO2e)
Energy Consumption of Scope 1 & 2 (kWh)
Intensity Ratio Location-based (Tonnes CO2e per £m revenue)
Intensity Ratio Market-based (Tonnes CO2e per £m revenue)
2023
15,363
1,269
-
16,632
15,363
65.4m
50
46
17,736
1,463
676
19,199
18,412
76.4m
52
50
2022
15,322
1,891
66
17,213
15,388
64.2m
54
48
17,356
2,574
749
19,930
18,105
73.7m
57
52
Note: Location-based calculations use the average emissions intensity of the grid where we obtain the energy, while market-based calculations use
the emissions intensity based on the specific energy mix that we procure.
The Group has a strong track record of decoupling our growth as a business and our carbon emissions. We have reduced our
greenhouse gas emissions with CO2 equivalent tonnes per £m revenue from 101 tonnes per £1 million revenue in 2010 to 48
tonnes per £1 million revenue for the year ended 31 March 2023, a reduction of 52%.
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Year ending 31st March
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Scope 3 Breakdown Y/E 2022
Waste, Business Travel, Employee
Commuting & Other 4%
NET ZERO CARBON (continued)
The Group seeks to maximise the efficiency of its energy
consuming assets. We are pleased to announce we have
achieved ISO 50001 - the Energy Management System
accreditation in all UK sites. This has formalised continuous
improvement in energy efficiency and reinforces sustainable
behaviours.
Training throughout
the Group on energy efficiency and
environmental awareness has resulted in behavioural changes
such as reduced engine
idling and turning off
lights and unnecessary
heating and cooling.
new
Embedding
behaviours
combined
with LED replacements in
2023 led to energy
consumption reductions
of c7% which equates to
substantial reductions in
carbon emissions. We
expect to maintain these
trends as we continue
with site refurbishments.
Purchased Goods
and Services 16%
Capital
Expenditure 24%
of
number
A
our
businesses (Brandon Hire
Station, ESS, MEP Hire and Groundforce) have recently achieved
the Fleet
Operator Recognition Scheme (FORS) gold
certification across their entire branch networks. This attests to
fuel,
their meaningful
reductions in total fuel usage and transport related CO2 output.
improvements in efficient use of
We have recently completed our scope 3 inventory for the
year ended 31 March 2022, which has enabled us to prioritise
carbon reduction initiatives not only relating to our business
operations but in the wider context of our entire value chain.
c4% of our total emissions relates to scope 1 emissions
through the combustion of fuel in commercial vehicles and
facility heating.
the
Rental Fleet Use
Once Sold 32%
c54% of the Group’s carbon footprint relates to the use of its
fleet and sold
rental
items. We are reducing
this
through moving
towards an increasingly
lower emissions based
fleet and, where fossil
fuel powered fleet still
provides
best
solution, we invest in the
latest
to
ensure the cleanest and
most
efficient
engines. c38% of our
carbon footprint relates to
the embodied carbon
within the purchase of
capital goods and other
goods and services. Finally, three additional categories – waste,
business travel and employee commuting make up the
remaining c4% of our carbon footprint. Detail on how we are
tackling these emissions can be found in the procurement
section below.
Rental Fleet Use
by Customers 24%
technology
fuel
To achieve our targets, our transition plan to net zero
prioritises initiatives including:
l Working with suppliers to consider robust alternatives
to petrol and diesel powered fleet;
l Roll out of our new supplier management software
and integrated within procurement functions enabling
closer management of our embodied carbon footprint;
l Electrification of our commercial and company car
fleets where possible;
l Identify opportunities to co-locate on site reducing
haulage and business travel emissions whist providing
closer customer support;
l Continue integrating telematics software for route
planning and driver feedback;
l Targeted training and behaviour change programmes
on efficient energy use and driving practices, and
environmental awareness;
l Exploring the use of HVO fuel in our commercial
vehicles;
l Increase our procurement of renewable energy.
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NET ZERO CARBON (continued)
Renewable Energy
The table below illustrates our worldwide energy consumption by source. 87% of our electricity is from renewable sources,
as is 8% of our energy consumed overall. We have now transitioned the remaining UK properties onto our fully renewable
electricity contract, backed by certificates of renewable energy guarantees of origin (REGOs) accredited by the Carbon Trust.
The Group have invested c£150,000 to power four sites with solar energy with an additional four sites and c£200,000 of
investment planned for the coming year. We continue to explore renewable heating options to reduce our consumption of
natural gas.
Worldwide Energy Consumption by Source for the year ended 31 March 2023
Scope 1 (kWh)
Scope 2 (kWh)
Diesel
Natural Gas
Renewable Electricity
Non-Renewable Electricity
72m
3m
7m
1m
PROCUREMENT
In our continued use of ISO 20400 for Sustainable Procurement as a guide, we have established a forum with representatives from
each business. Through this forum, and in collaboration with key suppliers, we have published a Sustainable Procurement Policy.
Furthermore, we are integrating new environmental health and safety (EHS) software which includes supplier, carbon and social
value modules. This will enable quantitative supplier-led reporting for sustainability performance data and our subsequent
monitoring and evaluation. This data includes progress towards suppliers own ISO 50001 aspirations and the procurement of
renewable electricity as well as metrics for health and safety, governance and quality.
The EHS software will also enable us to track supplier self-reported Scope 1 and 2 emissions. This data, together with the
aforementioned sustainability performance data, will provide a backbone for more reflective, two-way, conversations with
incumbent suppliers. In turn, this will allow for the opportunity to promote increasingly positive behaviour and, concurrently, a shift
within the Group’s procurement to focus on sustainability just as much as price, quality and service. For new suppliers, our aim is to
select those who are aware of their own carbon footprint and have a similar ambition and track record as the Group in reducing it.
We are proud to announce that the Group has recently achieved Gold Status
for the Supply Chain Sustainability School’s (SCSS) Plant Charter. The SCSS is
an online learning platform aiming to develop skills to deliver a sustainable
built environment. Their Plant Charter is a set of minimum standards
evaluating one’s commitment to reducing carbon emission and air pollution.
The Group’s achievement of the highest award, Gold, demonstrates our
excellence in combatting air pollution and carbon emissions through our high
standards in procurement, stakeholder engagement, training and innovation.
It is a priority for the Group to accelerate our transition away from rental
assets powered by fossil fuel and towards those powered by battery and
solar as well as non-powered products.
Future efforts will look at embedding the recommended standards of the First Movers Coalition (FMC). The FMC is a group of
companies whose purchasing commitments help scale up and enable the environment for critical emerging technologies
essential for net zero. We will look at the hard to abate sectors of Steel, Trucking and Aluminium as we not only want to reduce
emissions produced through rental fleet operation but equally, reduce the embodied carbon through supporting the latest
technologies and processes in the manufacture and transportation of our fleet.
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PROCUREMENT (continued)
We have made the following progress in reducing our
carbon footprint:
l Divisional Product Review Groups have been established
throughout the Group to focus on accelerating the
transition towards a zero emissions at point of use
rental fleet.
l We currently estimate that more than 60% of rental
assets Group-wide are zero emissions at point of use.
l We are electrifying a fleet of 44 forklift trucks with
significant carbon savings.
l We increasingly order more hybrid and electric vehicles
where possible with 11 sites offering electric vehicle
charging capabilities.
l Where electrification of our commercial vehicle fleet is
currently not viable, we continue to enjoy reductions in
emissions via replacements to more efficient
technology.
l We have increased the amount of sustainable company
cars in the fleet from 20% to 50% having introduced
sustainable options in all bandings last year.
l Alongside customers, we have and continue to
participate in “sites of the future” where up to 90% of
all rental fleet is battery operated.
investment in non-fossil fuel powered
tools and equipment in 2023
An example of this is the stressing equipment that we supply
to the rail sector through our business Torrent Trackside. We
have replaced 90% of our petrol powered rail stressing
equipment for battery operated equivalents. The remaining
10% will be swapped out over the next 12 to 24 months.
Our business UK Forks has conducted HVO fuel trials with 2
of our larger housebuilding customers, to show performance
and environmental benefits of using HVO fuel. This was
independently verified results:
•
•
92% reductions in greenhouse gas emissions and;
75% reduction in particulates with HVO compared
to diesel
One of these customers have
subsequently moved to HVO
fuel
for 20% of their fleet and
the other customer is currently
running 80 machines on HVO
and have committed to buying
enough HVO fuel to run c50% of
their hire fleet.
Examples of our new battery-operated tools and equipment including Airpac Rental’s Electric Air Compressor:
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PROCUREMENT (continued)
CASE STUDY: Electric Forklifts
Examples of Zero Emissions of Point of Use Products
Our business Groundforce has made great progress in
switching 44 of our diesel forklifts to electric powered which
saves 600 tonnes CO2 per year as well as cutting down on air
pollution for our employees and wider stakeholders.
CASE STUDY: SiteSafe SureLock Pro
As an example of working with our
r
f
through a process of
supply chain,
r
collaborative design with their supplier
e
Metal & Modular, MEP Hire have
managed to reduce embodied carbon
o
emissions of the SiteSafe SureLock Pro
through using 85% less welding and 90%
less power use. Through this innovation,
f
MEP Hire has saved over 20 tonnes of
y
embodied CO2 and brought a significantly
more sustainable product to market.
Our business MEP Hire operates 5,000 mechanical low-
level access platforms. The majority of which are zero
emission and powered manually by the user.
Equally, our businesses
TPA, Groundforce and
Brandon Hire Station
offer aluminium
roadways, trench boxes
and scaffold towers
respectively, which are
all fully recyclable.
Anexampleofourlow-
levelaccessmachines
thatconsumenoenergy
(right).
WASTE, WATER, PLASTIC & PAPER
The vast majority of our old fleet when it leaves operational control, by both number and weight, is sold either directly to
customers or via auction to increase its working life. We track and aim to minimise the amount of fleet sold directly as scrap
metal and push for supplier buy-back deals to promote the circular economy whilst acknowledging some old fleet when sold is
beyond economical repair and will be broken down into component parts. Where possible, we also look to repurpose parts of
old fleet for extended life elsewhere and this is especially true with batteries.
YEAR
% DIVERTED FROM LANDFILL
2023
95%
2022
96%
2021
94%
In recognition of our waste strategy and progress, we have won a Green World Award. We maintain a high percentage of waste
diverted from landfill and continue to increase the proportion sent to recycling. To increase our recycling ratio and decrease
overall waste produced in line with our waste target, we have switched waste provider and consolidated all contracts onto one
supplier for improved management and data provision.
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WASTE, WATER, PLASTIC & PAPER (continued)
We continue to explore ways to reduce our single use plastic consumption and are exploring recycled personal protective
equipment and end of life recycling methods.
Throughout the business, we continue to upgrade our interceptors to recycle rainwater and grey water, and where feasible we
are investing in rainwater harvesting infrastructure. We have managed to consolidate the majority of our water contracts to
enable tracking and evaluation of water use.
TPAWorksop’srainwater
collectiontanksableto
hold60,000litres
NATURE CONSERVATION PROJECTS
Below are the eleven projects which we have sponsored over the past three years.
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NATURE CONSERVATION PROJECTS (continued)
“Globally, over half of global GDP relies directly or indirectly on nature, making it the most productive
component of our economy.” World Economic Forum
To date, the UK has failed to reverse the steep loss of biodiversity with 41% of UK species in decline and one in 10 species
threatened with extinction. To do our part, the Group are proud to sponsor some of the best examples of nature conservation
projects around the UK each year including the reintroduction of beaver, bison, lynx and eagles and the restoration of seagrass
beds, wildflower meadows, sand dunes and peatlands. This year, we are especially proud to have committed support to the
training of Wildlife Trust land advisors who, given more than 70% of the UK’s land is farmed, have a crucial role in promoting
nature alongside our food production to the betterment of both.
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Last September, six employees from different
divisions of the Group visited the Isle of Arran project
site of the coastal conservation project we were
supporting around Scotland for
rock pooling and
beach cleaning.
To maximise colleague involvement with these
projects and the wider natural world, we select
projects around the whole of the UK to give all
colleagues a chance to participate and support with
their time. Colleagues do not have to take leave to
volunteer on these days.
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OUR PEOPLE
The 2022/23 year has been a challenging one, but we
have continued to make progress in our efforts to create
a great place to work, where our people feel valued and
have the opportunities to fulfil their potential.
Wellbeing
We are committed to creating an environment
that
promotes good mental health and where all our people can
thrive and feel supported. Further investing in the health
and wellbeing of all our people is critical to delivering long-
term success. We are therefore continuing to provide
Mental Health First Aider training and rolling out our digital
learning mental health awareness module to all
employees. Through our Essentials of Management
Programme, we are equipping our managers to implement
our mental wellbeing policy and support employees who
are experiencing mental health problems.
We also have begun to install defibrillators and delivering
the accompanying training starting with our larger locations.
of
have
continued
programme
Systems
Following the investment in our HR and Payroll system,
we
digital
our
transformation, removing paper-based processes where
possible across the function. We have implemented an
IT
automated process with the support of our internal
Function to link our HR system and new Learning
Management System (LMS), enabling timely and accurate
updates of people information into the LMS. Future
developments will include additional self-service options
for our managers, a move to a digital process for the
annual pay review, and a streamlined Gender Pay Gap
reporting process.
Talent Attraction
Continuing to attract high-calibre new recruits at all levels
across our business is key to our future growth and
internal
continued success. To further enhance our
capability in this area, we have created a new role of
Talent Acquisition Manager to lead our talent acquisition
team. Further
in maximising our use of
LinkedIn and more fully utilising social media are current
priorities.
investment
Benefits
We have significantly improved our employee benefits
including introducing an
package in the last year,
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employee benefits online portal enabling our people to
easily access online discounts and wellbeing solutions. In
addition, key salary sacrifice benefits such as a Cycle to
Work Scheme and additional holiday purchase.
Development
We have continued to strengthen our Learning and
Development resource capability, having created two new
roles to facilitate this and accelerate the pace of rollout of
tracking learning and
our digital
development. Our
Leaders
programme, equipping our managers to effectively lead
other managers in the future, have just concluded with
very positive feedback.
learning content,
two Developing
first
The Essentials of Management Programme, developed to
upskill all Managers across our Group, is now being rolled
out in face-to- face sessions with colleagues from all the
businesses learning together. The programme sees our
people developing their skills, knowledge and behaviours
alongside the relevant policies and processes. Our
Managers will also benefit from being able to access
additional
learning modules accessed
through our recently launched digital learning platform.
tailored digital
We are now in the fifth year of our rotational Group
Graduate Scheme, which continues to be a great success,
providing an excellent pipeline of young talent for our
Group businesses and central functions. The next intake
join in September and spend the next 18 months
will
working in all our businesses and head office department.
They will
to
appointment in a variety of roles across the businesses in
the New Year.
then undertake a business project prior
The annual recruitment for our Engineering Apprentice
intake continues to progress and expand, with 49 new
Apprentices being recruited to join our September intake
to support our
future succession planning across our
branch and depot networks. Learners on our first ever
Sales Apprenticeship for Sales Managers are successfully
nearing completion and learners on our first Management
Apprenticeship Programme are continuing to make good
progress. We successfully launched our new LGV
Apprenticeship, another internal development opportunity
for our depot-based colleagues and our first Business
Administration Apprenticeship is also in progress.
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Inclusion and Diversity
We know that having engaged employees is critical to the
long-term success of our business. Being an inclusive
organisation is important
to us. We are committed to
ensuring that everyone is treated with fairness and respect
and encourage everyone to develop their skills and fulfill
their potential. Whilst we are active in our drive for
inclusivity and the progression of diverse talent, we
acknowledge we still have a way to go. We are committed
to driving positive, sustainable change to improve the
experiences and opportunities for under-represented
groups. Women are represented at all
levels of our
organisation. 17% of
the Board and 14% of Senior
Managers are female. As an equal opportunity employer,
we are committed to promoting the same level of
opportunities to all.
Workforce
by gender*
Male
Number
Female
Number
Female
%
Board of Directors
Senior Managers
Salaried
5
86
2,311
1
14
442
17
14
16
We are conscious of the targets relating to board diversity.
Whilst we have not met all of these the Board is committed to
supporting and developing a diverse pipeline of candidates for
managerial and director roles within the Group.
Retention
We are delighted to have recently introduced a Long
Service Recognition Programme, celebrating the valuable
contributions of colleagues across the Group with 20, 30
and 40 years’ service, and all the intervening years, critical
to our business success to date. With c270 employees
across the Group participating, this is testament to our
ability to retain talent across all our businesses despite the
challenges posed by the pressures of the current labour
market. We continue to offer our people the opportunity to
share in our success through our SAYE Employee share
ownership scheme and encourage them to participate.
Particularly pleasing despite the current economic situation
and cost of
living pressures, as at 31 March 2023,
approximately 43% (2022: 38%) of our UK employees
were participating in the Save As You Earn Scheme.
HEALTH & SAFETY
Excellent health and safety performance is fundamental to
our business. It is essential that we provide a safe working
environment for our employees and that the equipment we
supply to our customers is safe and fit for purpose.
We strive to minimise accidents and dangerous occurrences.
We aim to continually improve standards of health and safety
within all our businesses and with our customers. The Group
sets an overall policy for the management of health and
safety. The Chief Executive retains oversight in this area and
discusses performance on a regular basis with the individual
businesses. He also reports to the Board on overall
performance and any more serious incidents that arise.
Operational responsibility lies within the Group’s individual
businesses which are closest to and best positioned to
manage their risks. All businesses, however, have clear
policies and procedures and appropriate risk assessment
techniques backed by training and clear communication.
Training is focused not only on specific hazards but also the
wider obligations of management. These activities are
overseen by appropriately qualified and experienced
health and safety advisers and are subject to regular audit,
both internally and externally.
As noted above Health and Safety performance is
monitored at a business level. This incorporates analysis of
accidents, near misses and dangerous occurrences. Where
accidents, near misses or dangerous occurrences happen
these are investigated in order
them to be fully
understood and for appropriate action to be taken to
minimise the risk of occurrence.
for
We ended the year with an Accident Frequency Rate of
0.28, representing an increase on our 2022 rate of 0.19.
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.
Accident frequency rate
2023
0.28
2022 2021 2020
0.27
0.29
0.19
Reportable accidents under the Reporting of Injuries Disease
and Dangerous Occurrences regulations 1995 were 16, an
increase from prior year (2022: 11).
COMMUNITY
We aim to have a positive impact on 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 £85,000 (2022:
£61,000) to charities.
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BUSINESS RELATIONSHIPS AND ETHICS
The Group has always conducted its business responsibly
and ethically. The Group is committed to operating with
honesty and integrity, and all employees are expected to
maintain these high standards. The standards expected are
specified in codes of conduct and group policies to which
employees are required to adhere. Some of our policies are
based in applicable laws and regulations.
Policies
Anti-bribery policy
The Group has in place an anti- bribery policy, which clearly
states a number of obligations for our employees, and is
committed to zero – tolerance to acts of bribery and corruption.
Each Division is required to update their specific risk assessment
each year when business circumstances change.
Competition law policy
We believe that a competitive marketplace benefits both
the Group and our customers. Accordingly, we compete
vigorously but
fairly, acting in full compliance with all
applicable Competition Laws and Regulations. We are
committed to conducting our business with honesty and
the same of all employees.
integrity, and we expect
Awareness programmes are continually updated and rolled
out
teams and employees with
potential exposure.
to our Management
Modern slavery statement
We support the objectives of the Modern Slavery Act and
will not tolerate modern slavery or human trafficking within
our own supply chain. During the year the Group conducted
its supply chain and published its
a further review of
statement accordingly.
Respect for human rights
We do not maintain a standalone human rights policy. The
Group supports and is guided by the Universal Declaration of
Human Rights. The Group understands its responsibility to
respect
the communities and
workforces with whom it interacts, and employees are
expected to behave accordingly.
the human rights of
Sustainable procurement policy (introduced in last
financial year)
Vp’s approach to sustainable procurement has been
formalized, this acts as a guide to internal procurement
teams as well as current and prospective suppliers. Vp’s
objective as a business is to deliver longer term value to our
stakeholders whilst embracing our commitment
to the
highest environmental, social and ethical standards.
Environmental policy
We are acutely aware of our impact on the environment
through our business operations. The policy lays out the
expected practices recognizing the continual need to adapt
to the many moving parts in this area of management and
stakeholder engagement.
Climate change policy (introduced in the last financial
year)
To complement the Environmental Policy the Group has
added a Climate Change Policy in this financial year. Vp plc
is aware of the threat to our collective future which climate
change poses. As such we have recognized this area as a
principal risk to Vp. To support this we felt it necessary to
provide more guidance on the Group approach. See page 41
for further information.
Whistleblowing policy
Our whistleblowing policy ensures our employees feel
empowered to raise concerns relating to malpractice or
wrongdoing through a confidential hotline. In the financial
year we have not received any material whistleblowing
reports. Where incidents of whistleblowing are reported,
there is a process for bringing this to the Board’s attention to
seek guidance on how to respond.
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NON-FINANCIAL INFORMATION STATEMENT
Our Annual Report and Accounts details our approach to environmental, social and employee related matters. The table below
outlines where in this report you can find this information and where additional information can be found on our website.
Reporting requirement
Standards and policies that govern our approach
Business model, principal risks
and non-financial KPIs
For the business model, see p.1
For principal risks, see p.39
For non-financial KPIs see, p.1, 18, 19, 26
Environmental matters
Environmental policy, see above and vpplc.com/responsible-business
Sustainability, see p.15
Corporate responsibility, see p.15
Employees
Human rights
Social matters
Anti-fraud, bribery and corruption
Diversity and inclusion policy, see p.26
Health safety and wellbeing policy, see p.26 and vpplc.com/responsible-business
Whistleblowing policy, see above and vpplc.com/responsible-business
Recruitment and retention of staff, see p.40 (Risk section) and p.26
Employee handbook
Modern slavery statement, see above and vpplc.com/responsible-business
Corporate responsibility, see p.15
Sustainability, see p.15 and vpplc.com/responsible-business
Corporate responsibility, see p.15 and vpplc.com/responsible-business
Diversity and inclusion policy, see p.26
Anti-bribery policy, see above and vpplc.com/responsible-business
Competition Law policy, see above and vpplc.com/responsible-business
Whistleblowing policy, see above and vpplc.com/responsible-business
Employee handbook
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TASK FORCE FOR CLIMATE RELATED FINANCIAL DISCLOSURES (TCFD) DECLARATION
General
The Board recognises global climate change and is
committed to ensuring appropriate resources are allocated
internally to the management of
the many risks and
opportunities to our business model and strategy.
In response, the Group has completed a full assessment of
the TCFD framework and supporting guidance documents
(listed below) including the FRC Thematic review. This report
provides a point in time assessment of progress against the
framework. The Group will periodically reassess the evolving
risks and opportunities and modify our strategy and
resultant reporting accordingly.
This year we have provided a greater level of transparency
and granularity regarding elements of our sustainability
strategy which is intrinsically linked to the overall risk of
climate change. The details provided below illustrate the
past, present and future elements of this strategy.
The Group has committed to become net-zero emitters of
Greenhouse Gases by 2050 at the latest. Our aspiration is to
meet this target before that date. In accordance with this
ambition the Group completed its scope 3 emissions
inventory in the financial year. Many workstreams have
been unlocked by completing this milestone including the
setting of Science Based Targets which are currently being
validated by the Science Based Target Initiative (SBTi).
This section of the annual report covers all statements made
by the Group regarding TCFD – it is not covered elsewhere in
this report.
Governance
Describe the Board’s oversight of climate-related risks and
opportunities.
Describe management’s role in assessing and managing
climate-relatedrisksandopportunities.
Climate change is included in the Group’s principal risk
statement (see page 41). The Board formally recognised this
in the 2022 Annual Report. All principal risk areas are
considered by the Board and by applying the Group’s risk
management processes – more details on these processes are
included - see page 38.
The Board takes responsibility for the management of risks
and opportunities arising from climate change. The Board is
informed by the Risk Committee and directly from the Chief
Executive who chairs our Environmental Steering Group (ESG)
which meets at least 4 times per year. In the financial year
being reported on the ESG met five times. In the financial year
2023 the Group published a dedicated climate change policy.
In the reporting year the Group appointed a Group Risk and
Sustainability Director (GRSD). This role sits on the ESG with
selected other senior Directors and Managers from within the
Group. With this collected knowledge the ESG supports the
Board’s climate responsibilities. The Board sets the strategy to
ensure climate and sustainability risks and opportunities are
being effectively managed – part of this is to consider
whether further expertise is required to adequately inform
the Board as a collective.
Regular communication is enabled between the ESG and
wider management
team through senior management
meetings. This acts as a two way process:
l To inform management of the overall strategy and their
obligations in fulfilling the elements of it; and
l Receiving feedback from the Group’s Divisions regarding
stakeholder expectations and
customer and other
requirements.
The below graphic illustrates the pillars of the Governance structure in place at Vp:
Main Board plc
Risk
Committee
Audit
Committee
Environmental
Steering Group
Divisional Board
Meetings
Group Risk and Sustainability Director
The ESG routinely monitors progress with, and redefines, the strategic plan. In the reported financial year the climate change
risk register has been updated. The GRSD takes responsibility for this and reports directly to the Board on these matters.
TCFD Area
Governance a)
Governance b)
TCFD Area Description
Vp’s Assessment
Board oversight of climate related
risks and opportunities (CRRO)
Management’s role in assessing
and managing CRRO
Consistent
Consistent
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Strategy
Describe the climate-related risks and opportunities the
organisation has identified in the short, medium and long
term.
Describetheimpactofclimate-relatedrisksandopportunities
on the organisation’s businesses, strategy and financial
planning.
Describe the resilience of the organisation’s strategy, taking
into consideration different climate-related scenarios,
includinga2degreeCorlowerscenario.
As described above the Board has ultimate responsibility for
setting the strategy to achieve the Group’s sustainable
intentions. The development of these strategic objectives is
informed by a risk and opportunity analysis (which is listed in
summary form below).
The key elements of our sustainability strategy are:
l Overall corporate commitment
regarding emission
reduction – this includes our net zero commitment – which
includes near term (as defined by the Science Based Target
Initiative) emission targets (2033) and longer term net
zero aspirations (2050). The transition plans related to near
and long terms targets are under constant review. The ESG
is content with the level of change being achieved.
Related risk – Enhanced emission reporting. Requirement
to comply with legal/regulatory obligations relating to
climate change.
l Composition of Vp’s hire fleet – Where possible, our
divisions are actively investing in transforming our fleet to
incorporate more environmentally friendly options,
thereby reducing our impact on climate change. This
ongoing process is driven by a combination of innovation
and demand. A notable example of our commitment is our
submission to comply with the Plant Charter, and initiative
led by the supply chain sustainability school. Related risk –
Customer preference changes.
l Sustainable Procurement - Our scope 3 emissions
inventory highlighted where the hotspots are in our value
chain. Reducing embodied carbon in the products we
procure for hire is the immediate priority. To this end our
Sustainable Procurement Group has been active for over a
year. Many workstreams have been completed and more
specified for prioritisation, for example:
l Investment in a system to enable robust assessment of
suppliers and log the carbon emissions of the products
they provide (initial implementation of the system is
complete)
l Development of a sustainable procurement policy
(complete)
l Consideration of the recommendations of ISO 20400
(Sustainable Procurement) - ongoing
l Transitioning to low carbon supply alternatives (general
supply and fleet for hire) – ongoing. Related risk –
Transition to a lower carbon operation.
l Work to transition to a low carbon operation. The Group
has been successful in gaining accreditation against ISO
50001 – the energy management accreditation. The Group
has also consolidated waste and water supply ensuring
better data is available to reduce usage. Related risk –
transition to a lower carbon operation, customer
preference changes.
l Awareness and training – Our Learning and Development
module SAP Litmos will be used to deliver key messages
to all employees in the Group. Related risk – transition to
a lower carbon operation.
The following table highlights the principal risks and opportunities that have been considered by the ESG and Board. This
analysis is an intrinsic part of determining our strategy. Areas highlighted as a priority for management are denoted with
a (P). The analysis below is built up using our standard risk management model. This assesses risks and opportunities using
an impact and likelihood scale. The position of the risk/opportunities on this scale will determine management’s approach
to mitigation of the risk or pursuing the opportunity.
Within Vp, impact or materiality is assessed using 3 methods – impact on Group profit, impact on reputation and potential
disruption to the Group. Likelihood is based on the probability that the risk/ opportunity is to crystallise and over what time
scale. The timelines used in our risk analysis are:
2023-2025 Short Term
2026-2030 Medium Term
2031-2050 Long Term
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Opportunities
Timelines
Perceived
Impact
Response
Transition
l Changing fleet dynamic to meet
customer demand – proactive
innovation and reacting to
demand (P)
ST - Ongoing
Medium
l Market leadership through
ST - Ongoing
Medium
ST - Ongoing
Low
ST - Ongoing
Low
Our Divisional Management teams are
continually assessing fleet options through
product review groups. Innovation is
considered by the Board within the overall
strategy for the Group
ISO 50001 challenges the business to
achieve demonstrable change in energy
consumption
ST - Ongoing
Very Low
The Group may experience benefit from
increased rental income as climate related
issues become more prevalent
Timelines
Perceived
Impact
Response
ST - Ongoing
Medium
development of a sustainable
range of products (P)
l Engaging with technological
advancements in our strategy to
reduce carbon emissions (P)
l Value engineering of operational
processes to consume less
energy (P)
Physical
l Greater demand for our products
related to temperature control
and flood relief
Risks
Transition
l Customer preferences change
and regulatory requirements
toughen to hasten the move to
a ‘cleaner’ hire fleet (P)
l Requirement to comply with
legal/ regulatory obligations
relating to climate change (P)
l Transition to a lower carbon
operation (P)
ST - Ongoing
Low
ST - Ongoing
Low
l Availability of capital
ST - Ongoing
Low
l Enhanced emission reporting
ST - Ongoing
Low
l Carbon credit pricing
Long term
Low
Physical
l Flood, extreme heat, fire, water
availability, rising sea levels,
biodiversity loss
ST - Ongoing
Low
l Supply chain continuity risk
ST - Ongoing
Low
Our Divisional Management teams are
continually assessing fleet options through
product review groups. Innovation is
considered by the Board within the overall
strategy for the Group
Our ESG has a standing agenda for
horizon scanning
The varied workstreams agreed by our ESG
address this risk. The completion of our scope
3 emissions inventory has unlocked many
further areas to focus on. The Board is due to
consider whether a formal scenario analysis
is required
Our CFO is in constant dialogue with our
lenders and how our approach to
sustainability and climate change could
impact on the business
The ESG and Board are comfortable with the
concept of completing an emissions
inventory, however we are awaiting
validation from the SBTi
The Group is focusing efforts on organic
reduction in emission values, however is
vigilant to carbon credit markets and the
potential impact on the business
The Board is due to consider whether a
formal scenario analysis is required taking
into account the geographic footprint of the
organisation
The feedback loop within the business is our
Sustainable Procurement Group which reports
into our ESG. The Group has not reported
supply chain issues as at the year-end but
will keep this under continual review
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Responsible Business Report
Impact assessment
Physical - The Board recognise that
risk
elements mentioned above are active threats. Some
elements have experienced increased prominence in the
financial year – heat stress is a good example.
the physical
The Group is currently collecting the required data to
In the next financial year the
facilitate this assessment.
Board will conclude whether a more formal physical risk
assessment is required.
We have overlaid the risk analysis onto our operating
model in terms of operating and supply chain locations and
reliance on key sites. The initial assessment has rated the
residual risk as minor. As at the year end the Group has not
completed a formal physical risk assessment linked to
varying scenarios of planetary warming.
Transition - The transition risks are more immediate in timing.
The Group continues to assess the impacts but at the time of
writing these are considered minor. The greater demand for
low carbon products (embodied and operation carbon) has
been successfully built into our business planning. The Risk
Committee will continue to review this analysis.
TCFD Area
Strategy a)
Strategy b)
Strategy c)
TCFD Area Description
Vp’s Assessment
Risk and Opportunities identified
Impact of Climate Related Risk
Resilience of strategy considering
climate related scenarios
Consistent
Consistent
Not consistent
Risk Management
Describe the organisation’s process for identifying and
assessingclimate-relatedrisks.
Describe the organisation’s process for managing climate-
relatedrisks.
Describe how processes for identifying, assessing and
managing climate-related risks are integrated into the
organisation’soverallriskmanagement
As described in pages 38 to 42, the Group’s embedded risk
management approach applies equally to climate change as
it does to any other area of management. An incumbent part
of the Group’s risk management process is to horizon scan to
assess any changes in the risk environment.
The responsibility for assessing climate risks ultimately falls
with the ESG. Significant issues are formally reported to the
Risk Committee and the Board to determine the approach
taken to achieve appropriate mitigation. The governance
structure within Vp is that the Risk Committee is a sub-
committee of the Audit Committee.
The Board is routinely made aware of
information:
the following
l Risks relating to Climate Change and Sustainability matters
l The strategy determined by the ESG
l The progress on key workstreams that support the overall
strategy
Our standard risk register model details risk owners and
control owners. It is the risk owner’s responsibility to ensure
that the controls are delivered on a timely basis and continue
to mitigate the risk identified. Where owners are multiple
and/ or spread across the organisation it is the responsibility
of the Group Risk and Sustainability Director to monitor the
mitigation. Exceptions will be raised at Risk Committee level.
internal audit
The effectiveness of our risk management is continually
reviewed by our
function who carry out
independent review of all principal risk areas and report into
our Risk and Audit Committees. Where areas where
these will be prioritised for
shortcomings are raised,
remediation with an action plan raised. During the financial
year the Group internal audit function provided a review of
the calculation of scope 3 emissions and the issues raised
were immediately addressed.
TCFD Area
TCFD Area Description
Vp’s Assessment
Risk Management a)
Process for identifying and
assessing climate related risks (CRR)
Risk Management b)
Management of Climate Related Risk
Risk Management c)
Integration of Climate Related Risk management
into overall risk management
Consistent
Consistent
Consistent
32
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Responsible Business Report
Metrics and Targets
Disclose the metrics used by the organisation to assess
climate-relatedrisksandopportunitiesinlinewithitsstrategy
andriskmanagementprocess.
Disclose Scope 1, Scope 2, and if appropriate, Scope 3
greenhousegas(GHG)emissions,andtherelatedrisks.
Describe the targets used by the organisation to manage
climate-related risks and opportunities and performance
againsttargets
The principal metrics the Group calculates and reviews are
Emissions, Waste and Energy use. The Group has robust
processes in place to facilitate the Environmental Steering
Group and Board to review metrics which drives the
following actions:
l Provision of an indicator of the risk related to a particular
part of the business
l Provides a measure of trends
l Provides a measure of achievement
likely
achievement in the case of longer term goals) of our
targets to have a positive impact on the environment.
(or
The Group has disclosed some of
the above metrics
highlighted above in the Responsible Business Report on
pages 16 to 24.
Emissions
The Group continues to calculate Scope 1 and 2 emissions
and provides a relative measure in relation to Tonnes of CO2e
in relation to £m of revenue. The detail is included on page
18 of this report. One significant change the Group made is
the purchase of REGO back renewable electricity in 2021.
Depending on the stability of supply the Group has
committed to increase the purchase of renewable electricity
to 100% of electricity purchased by 2030.
Our Scope 3 emissions inventory has been completed as
directed by GHG Protocol Technical Guidance. The Group is
using a base year of 2022 i.e. year ended March 2022. We
have not disclosed these figures in the annual report as the
calculations and assumptions are being validated by the SBTi.
Along with the scope 3 inventory we have submitted our
near term and long term targets to be net carbon zero by
2050. When our inventory and targets have been validated
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by the SBTi (current expectation is August 2023) the Group
will disclose the baseline figures and progress against the
SBTi pathway for reducing carbon emissions. The metrics the
Group utilises continue to be developed and plans formalised
to drive the reductions we are seeking.
Financial Impact
Other metrics used by the Group are change in average cost
prices in our capital expenditure, energy consumption and
remediation of physical risks (insurance/ repair costs). As
part of our annual review none of these cost elements are
showing a material
impact on the Group’s operations or
finances. The financial impacts are deemed gradual. As the
impact of climate change is felt more acutely and financial
impacts are deemed to be increasing it will become possible
to provide meaningful quantification.
An example of the gradual change is asset values and useful
lives of our hire assets. The Group constantly review this on
a Division by Division basis. The Board feel that this review
process would trigger any required changes under TCFD.
Targets
The Group’s overall target is to be net carbon zero by 2050.
Some of our more specific short term targets are detailed on
page 17 of the Responsible Business Report.
The Group is currently in the process of consolidating supply
in relation to our water use. This will allow the Group to
formally set targets.
During the year under review the Group has gained ISO
50001 accreditation. Part of
the process of gaining
accreditation is to formalise year on year targets for energy
consumption reduction. To achieve these targets the Group
will need to demonstrate the progress to the ISO auditor at
the time of future certification.
Executive Pay
The current remuneration packages for Executives and Senior
Management are not linked to climate related metrics. The
Remuneration Committee will retain this under review as
progress is being made with formalising metrics.
TCFD Area
TCFD Area Description
Vp’s Assessment
Metrics and Targets a)
Metrics used by the Organisation
Consistent
Metrics and Targets b)
Scope 1, 2 and 3 emissions
Metrics and Targets c)
Targets used by the Organisation
Partially consistent – see
compliance statement (page 34)
Partially consistent – see
compliance statement (page 34)
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Responsible Business Report
TCFD Compliance Statement – concluding analysis
In knowledge of the extensive assessment undertaken, the view of the Board is that this TCFD statement is not fully
consistent with the complete TCFD framework. In its simplest form this refers to the fact that our sustainability strategy has
been formally defined but not fully implemented. The Board is committed to be consistent with the TCFD and aim for this
to be achieved for year ended March 2025. We have identified the key elements of work to ensure consistency with TCFD
and we now are confident we have an appropriate governance structure and resource to achieve this.
Reconciliation of consistency
TCFD Area
TCFD Description
Vp’s Current Position
Vp’s Roadmap to Consistency
Strategy (c)
Resilience of the
organisation’s strategy into
consideration of different
climate related scenarios.
Metrics and
Targets (b)
Scope 3 carbon emissions.
Metrics and
Targets (c)
Targets used by the
organisation to manage
climate-related risk and
opportunities and
performance against targets.
Reference Documents Used
Issuing Body
Guidance Name
FRC
TCFD
FCA
FCA
CRR Thematic review of TCFD
disclosures and climate in
the financial statements.
Implementing the
Recommendations of the
Task Force on Climate-related
Financial Disclosures (Annex)
Primary Market Technical
Note TN 802.1
February 2022
Primary Market Bulletin 36
November 2021
The Group is preparing data to
consult with our advisors to consider
materiality levels.
The Board to formally decide
whether a physical risk assessment
is required. This will be based on
the perceived risk to the overall
business. December 2023.
As soon as these elements are
approved by the SBTi the Group
will publish for stakeholder review
– September 2023.
Emissions targets will be
operational in September 2023.
Water targets will be operational
by March 2024.
The Group has not
completed a formal
external physical risk
(scenario analysis)
assessment incorporating
different planetary
warming levels.
We have submitted our
Science Based Targets and
Scope 3 inventory to the
SBTi. We are awaiting
validation.
Scope 1 and 2 have been
reported on pages 17 to
19 of this document.
Scope 3 emissions – our
Scope 3 inventory and
Science Based targets
are yet to be validated
by the SBTi.
Water metrics are being
finalised.
Date
July 2022
How Used
Advisory on completion of TCFD
Statement
October 2021
Section C - Guidance for all sectors
Section F - Fundamental principles
for effective disclosure
Advisory on completion of TCFD
Statement
Advisory on completion of TCFD
Statement
34
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 39
Financial Review
Our strong balance sheet underpins the
delivery of sustainable long term value
TRADING PERFORMANCE
The Group has delivered a strong financial performance
against a challenging backdrop with Group revenue
increasing by 6% to £371.5 million (2022: £350.9
million). Profit before taxation, amortisation, impairment
of intangible assets and exceptional items increased to
£40.2 million (2022: £38.9 million) with net margins at
10.8% (2022: 11.1%). Statutory profit before tax was
£30.7 million (2022: £35.6 million). The return on
average capital employed* was 14.4% (2022: 14.5%).
EXCEPTIONAL ITEMS
This year the Group has recorded exceptional items of
£5.0 million (2022: £nil). These items have been reported
separately due to their size and nature and in order to
better understand the underlying performance of the
Group. Exceptional items comprise £1.7 million of costs
from the Group’s terminated formal sale process alongside
restructuring costs of £3.3 million, mainly in relation to
depot closures across three of the Group’s business units.
EARNINGS PER SHARE, DIVIDEND AND SHARES
Adjusted basic earnings per share before amortisation,
impairment of intangible assets and exceptional items*
increased from 71.2 pence to 79.0 pence. The increase of
7.8 pence includes the impact of a lower effective tax rate
in the current year. Basic earnings per share is 58.1 pence
(2022: 64.5 pence). The Board has proposed a final
dividend of 26.5 pence per share. If approved the full year
dividend would increase to 37.5 pence per share with
dividend cover of 2.1 times (2022: 2 times) based upon
adjusted earnings per
share before amortisation,
impairment of intangible assets and exceptional items*. At
31 March 2023, 40.2 million shares were in issue of which
609,000 were held by Vp’s Employee Trust.
BALANCE SHEET
The Group’s balance sheet is set out on page 85.
Total property, plant and equipment increased by £4.9
million to £252.4 million. The movement in the year
mainly comprised £66.9 million (2022: £68.0 million) of
capital expenditure offset by depreciation of £46.9
million (2022: £45.5 million) and £15.7 million (2022:
£10.7 million) of disposals (net book value).
Rental equipment at £220.6 million (2022: £216.6 million)
accounts for 87% of property, plant and equipment net
book value. Expenditure on equipment for hire was £59.9
million (2022: £59.8 million) and depreciation of rental
equipment was £40.9 million (2022: £39.9 million).
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ChiefFinancialOfficer:AnnaBielby
Intangible assets are £57.7 million (2022: £62.4 million)
and relate to goodwill, customer relationships and trade
names.
Days sales outstanding has increased by four from 55
to 59 days as we have seen a slight worsening of the
external credit environment. Gross trade debtors were
£77.6 million at 31 March 2023 (2022: £72.8 million).
Bad debt and credit note provisions totalled £4.6
million (2022: £5.2 million) equivalent to 6% (2022:
trade
7%) of gross debtors. The impairment of
total
the year as a percentage of
receivables for
revenue was 0.9% (2022: 0.6%).
The Group’s defined benefit pension schemes have a net
surplus of £2.3 million (2022: £2.7 million) which is
recorded as an asset on the balance sheet on the basis
that the Company has an unconditional right to a refund
of the surplus of its main scheme.
CASH FLOWS AND NET DEBT
The Group’s cash flow is shown on page 86. Year end net
debt excluding lease liabilities* increased slightly by £3.8
million to £134.4 million.
The Group continues to generate strong cash flows with
£80.2 million (2022: £90.4 million) generated from
operating activities.
This includes working capital outflow as a result of
revenue growth experienced during the year and a slight
worsening of the external credit market, particularly in
the construction sector.
Cash flows in respect of capital expenditure were £63.3
million (2022: £68.7 million). Proceeds from disposal of
assets totalled £24.9 million (2022: £17.8 million),
generating a profit on disposal of £9.2 million (2022: £7.0
million). The margin on profit on sale from disposals of
fleet assets at 37% (2022: 40%) continues
to
demonstrate effective asset management.
*These measures are explained and reconciled in the Alternative Performance Measures section on page 129.
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Financial Review
Net interest outflows, excluding IFRS 16 interest, for the
year were £5.4 million (2022: £4.5 million). This
additional cost was largely due to the increase in SONIA
Interest cover before
in the second half of the year.
amortisation was 8.3 times (2022: 10.1 times) and the
gearing ratio of adjusted Net Debt/EBITDA was 1.44
(2022: 1.43); both are calculated in accordance with our
bank facility agreements and are comfortably within our
covenants of greater than 3 times and lower than 2.5
times respectively. Net interest expense including IFRS 16
was £8.6 million (2022: £7.4 million). Cash tax was £5.5
million (2022: £6.3 million).
Dividend payments to shareholders totalled £14.5 million
(2022: £14.1 million), and cash investment in own
shares on behalf of the Employee Benefit Trust (EBT)
during the year was £1.1 million (2022: £0.5 million).
CAPITAL STRUCTURE
The Group finances its operations through a combination
of shareholders’ funds, bank borrowings and 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.
In addition to the committed facilities,
At the year end date, the Group had £183.0 million debt
capacity (2022: £183.0 million) comprising £90 million
committed revolving credit
facilities and £93 million
private placement agreements. At 31 March 2023 £146
million of the facilities were drawn down (2022: £145
million).
the
Group’s net overdraft facility at the year end was £7.5
million (2022: £7.5 million). These facilities were with
NatWest Bank, HSBC Bank plc and PGIM, Inc. Borrowings
under the Group’s bank facilities are priced on the basis of
SONIA plus a margin. The interest rate margin is linked to
the net debt to EBITDA leverage of the Group. The Group
also has a £20.0 million uncommitted accordion facility.
The Group’s revolving credit facility is due to expire in
June 2024 and positive preliminary conversations have
been held with our lenders. We anticipate the refinance
of the Group’s facilities in advance of the Group’s interim
results announcement in November 2023.
The Board has evaluated the facilities and covenants on
the basis of the 2024/25 long term forecasts, which has
been prepared taking into account the current economic
climate, together with a severe but plausible downside
scenario. All scenarios retain adequate headroom against
borrowing facilities and fall within existing covenants.
This evaluation, alongside the anticipated bank facility
renewal, gives the Directors confidence that the Group
has adequate resources to continue in operation for the
foreseeable future. Refer to further discussion regarding
going concern within the Directors’ Report on page 72.
TREASURY
The Group has exposure to movements in interest rates
on its borrowings, which is managed by maintaining a
mix of fixed and floating debt. The fixed element of
borrowings was £93.0 million which was 69% of net
debt excluding lease liabilities during the year.
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. During the year
the Group has not had any foreign exchange hedges.
TAXATION
The overall tax charge for the year was £7.7 million
(2022: £10.1 million). This represents an effective rate of
25.1% (2022: 28.3%). In both years, the rate is higher
than the statutory rate in the UK of 19%, principally as a
result of the re-measurement of deferred tax liabilities
reflecting the forthcoming change in corporation tax rates
alongside certain expenses not deductible for tax. A
more detailed reconciliation of factors affecting the tax
charge is shown in note 8 to the Financial Statements.
Anna Bielby
Chief Financial Officer
6 June 2023
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 41
Viability Statement
The Directors have assessed the viability of the Group.
In accordance with the Corporate Governance Code, the
Board has assessed the viability of the Group over the two-
year period to 31 March 2025. The Board believes this
period to be appropriate as the Group’s detailed plan
encompasses this period.
While it is impossible to foresee all risks (or take into
account risks which are currently immaterial but could turn
out
to be significant), mitigating activities could be
performed, for example reducing capital expenditure or
discretionary spend.
Process and scenarios considered
The Group’s detailed plan considers the profit and loss,
balance sheet, cashflows, debt and other key financial
ratios over a two-year forward-looking period. Compliance
with existing covenant arrangements and headroom to
borrowing facilities are also assessed.
The detailed plan has been subjected to sensitivity analysis
in which a number of the main underlying assumptions are
adjusted and tested to consider alternative risk-based
scenarios.
The plan has been stress tested to take into
account severe but plausible scenarios which are aligned
risks as
to the Group’s risk appetite and principal
documented on pages 39 to 42.
These scenarios include consideration of market risk arising
from the impact of a downturn in economic activity. The
modelling is at least as severe as the most recent financial
downturn and more severe than the financial year 2020-
21 which included two full lockdowns in our major regions.
the
The Board has also considered the availability of
Group’s borrowing facilities which have a range of maturity
dates, the earliest of which is June 2024.
In the most severe scenario modelled, the test indicates
that the Group has sufficient headroom in its borrowing
facilities and would not breach any of the associated
covenants. Details of the Group’s financing arrangements
can be found in Note 16.
Renewal of borrowing facility
As a portion of the Group’s borrowing facilities expire in
June 2024, the Board has considered the options available
for refinancing this as required. The Board has determined
that there are sufficient options available to refinance this
portion of the facilities such that this does not affect the
viability of the Group.
Viability statement
its
Having assessed the current position of the Group,
prospects and principal risks and taking into account the
assumptions above, the Board has determined that it has
a reasonable expectation that the Group is financially
sound and stable and therefore will be able to continue in
operation and meet its liabilities as they fall due over a
period of two years from 1 April 2023.
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 42
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 and overseeing 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 RESOURCES
to further
During the financial year the Group has made a structural
change which aims
improve the risk
management processes in the Group. Previously under
the wider banner of Group internal audit sat some
responsibility to design and upkeep the risk management
processes in the Group. Earlier this year the Board decided
to separate internal audit and risk management,
in so
doing providing dedicated resource to both areas. The
recently
takes
Group
implementing
designing
responsibility
appropriate risk management processes with direct
reporting to the Board. The Board feel that the revised
approach is an important step to ensure the Group is
managing risk in a way that provides clear support to the
achievement of Group and Divisional objectives.
appointed
Director
Risk
and
for
PROCESS OF MANAGEMENT
The Group has an established risk management strategy in
place. At present the Board regularly reviews divisional and
departmental risk registers as well as the summary risk
– covering Strategic,
registers used at Board level
Reputational and Fraud and Loss risk.
All risk registers have a documented action plan to mitigate
each risk identified. The progress made on the action plan is
considered as part of the risk review process. Within the last
financial year, the Group internal audit department has
completed
all
assurance
departments and divisions. The engagements are selected
on a risk based approach. Internal audit and other assurance
risk
programmes are designed to inform the overall
management process.
targeted
reviews
across
A risk register is prepared as part of all major projects the
Group undertakes. This will include work to deliver change
programmes, major investment due diligence programmes
(acquisitions and major fleet investments) and adherence
with changing regulation.
RISK MANAGEMENT GOVERNANCE
REFINEMENT OF THE RISK MANAGEMENT PROCESS
The Board considers the current processes fit for purpose. To
this end the Board has signed off the Effectiveness of Internal
Control and Risk Management completed for the Year Ended
March 2023.
The appointment of the Group Risk & Sustainability Director
mentioned above will further strengthen governance in this
area. The Board look forward to considering the plans initially
identified. At high level these plans will provide formality in
these areas:
l Convening a regular Risk Committee meeting
l Communication of risk appetite
l Consultation with the management teams regarding re-
focusing the risk registers.
RISK ASSURANCE
The Board considers the following measures have provided
the necessary assurance that risks are being adequately
assessed and managed.
l The Divisional Board meetings held in May each year
ensure that the Divisional teams are duly considering risk.
The Divisional MDs are required to report on the risk
management process, new risks identified and the
effectiveness of internal control.
l Regular Divisional reports give information provided by
second line assurance providers such as Divisional
compliance teams.
l Risk registers are reviewed by Group internal audit at the
start (to facilitate the planning process) and at the end of
each internal audit project. A post audit risk rating is
agreed with management.
l Group Internal Audit team continues to be engaged in
ad-hoc consultative work, supporting new risk areas and
areas of change across the Group. In 2022/23, the Group
internal audit team continued to provide enhanced risk
management indicators and exception reporting. This
supports the business in continually monitoring the
effectiveness of key controls.
The diagram below summarises the layers the Group utilises to ensure risk management is robust.
Vp Plc Board
Determines appetite, assesses risk impacts, in the context of objectives
Audit Committee
Group Risk & Sustainability Director
Risk Committee
Group Internal Audit
Divisional Assurance Teams
Management Teams
Risk Indicators / Risk Events
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 43
Principal Risks and Emerging Risk Areas
The Board has completed its assessment of the Group’s principal and emerging risks. Shown below
are 10 principal risk areas. For this reporting period we have provided further detail on how we
monitor each risk area.
As flagged last year, Climate Change risk is growing in prominence and requires a clear mitigation
plan. We are pleased to report a clearer indication of how we are managing this risk.
The Board has formally added IT Resilience as a new principal risk for this report. Our IT And Risk
functions work closely together to ensure our mitigation strategy fits our business and the systems
we use in the delivery of our internal and external services.
RISK DESCRIPTION
MITIGATION
HOW RISK IS MONITORED
Market risk
An economic downturn (as a
result of economic cycles,
political or global related
uncertainty) could result in
worse than expected
performance of the business
due to lower activity levels or
prices.
The Group 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.
l The Board monitors the revenue activity
and economic trends closely. Many
aspects of our business are linked to the
construction sector therefore long range
trends are under regular review.
l Revenue is analysed by market
segment and group customer analysis is
completed.
l The principal risk lead indicator reporting
considers many market metrics relevant
to our business.
CHANGE
FROM 2022
➜
Competition
The equipment rental market is
already competitive and could
become more so, impacting
market share, revenues and
margins.
The Group 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.
l Competitive forces and competitive
actions are experienced daily by our
Divisional Management teams. Key
issues are brought to the Divisional
Board meetings which the Executive
Board attend. The Main Board will
discuss some elements of these key
issues.
Investment/Fleet Management
In order to grow it is essential
the Group obtains first class
products at attractive prices
and keeps them well
maintained.
The Group has well established
processes to manage its fleet
from investment decision to
disposal. The Group’s return on
average capital employed was
14.4% (2022: 14.5%) in 2023.
The quality of the Group’s fleet
disposal margins also
demonstrate robust asset
management and appropriate
depreciation policies.
l Return on capital employed is a key
measure in our business and review of
this metric will drive business decisions.
l The Board receives data on disposal
proceeds and margins which informs
whether depreciation rates remain
suitable.
l Individual investments will be subject to
review throughout their lifecycle.
➜
➜
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➜
➜
➜
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 44
Principal Risks and Emerging Risk Areas
RISK DESCRIPTION
MITIGATION
HOW RISK IS MONITORED
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 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.
l Routine reporting is provided on
vacancy levels, employee turnover by
role, sickness. This is provided for each
Division and at Group level.
l Training hours will be monitored from
Learning and Development systems SAP
Litmos.
The Group has robust health
and safety policies and
management systems. Our
induction and training
programmes reinforce these
policies. We have compliance
teams in each division.
We provide support to our
customers exercising their
responsibility to their own
workforces when using our
equipment.
l Data from our internal compliance
teams and external H&S consultants is
tabled at all Divisional and Main Board
meetings
l All of our trading locations are audited
twice per year. Trend and root cause
analysis is completed on the results
generated
l Group Internal Audit will include safety
matters in the scope of their audits and
provide further insight to the Board.
l The Group currently has
l Daily cash reporting forms the lowest
level indicator of our liquidity situation.
At higher level the Board will consider
total facility, headroom and cash
generation trends.
l Debtor days by Division is monitored
and negative trends are addressed with
customers.
l Proactive engagement with our lenders
in advance of renewal dates.
borrowing facilities of £190.5
million and strong relationships
with all lenders. Our treasury
policy defines the level of risk
that the Board deems
acceptable. Vp continues to
benefit from a strong balance
sheet, and EBITDA, which
allows us to invest in
opportunities.
l The Group continues to
generate strong cash flows and
net debt increased modestly by
£3.8 million from £130.6
million at 31 March 2022 to
£134.4 million at 31 March
2023 after funding fleet
investment of £59.9 million.
Management are in regular
dialogue with our lenders who
continue to express their
commitment to the business.
l Our treasury policy requires a
significant proportion of debt to
be at fixed interest rates and
we facilitate this through fixed
interest borrowings. We have
strong credit control practices
and use credit insurance where
it is cost effective. Debtor days
were 59 days (2022: 55 days)
and bad debts as a percentage
of revenue remained low at
0.9% (2022: 0.6%)
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 45
Principal Risks and Emerging Risk Areas
RISK DESCRIPTION
MITIGATION
HOW RISK IS MONITORED
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.
l Our internal procedures flag where
contractual requests require further
diligence and sign off.
l Group Internal Audit will include review
of contractual matters in the scope of
their audits and provide further insight
to the Board.
CHANGE
FROM 2022
➜
Legal and Regulatory Requirements
Failure to comply with legal or
regulatory obligations
culminating in financial penalty
and/or reputational damage.
The Group mitigates this risk
utilising:
l Specialist Project Committees
with ongoing responsibility to
review key compliance areas
and investigate breaches and
non-conformance.
l The Risk Committee will provide
intelligence to the Audit Committee
and Main Board of current regulatory
requirements as well as horizon
scanning for impending changes
relevant to the Group
➜
l Assurance routines from Group
Internal Audit and External
Auditors.
l Comprehensive training and
awareness programmes rolled
out to wider business
(including Modern Slavery,
Competition Law, Bribery and
Corruption) by representatives
from Group Finance, HR, Group
Internal Audit and IT. Many of
these programmes are
completed using our preferred
online training portals.
l Established whistleblowing
policy circulated to all
employees.
l Use of legal advisers where
required.
The Group has formally
declared its intention to be net
carbon zero by 2050 at the
latest. This declaration is part of
a wider body of work in
relation to the quantifying and
ultimately reducing the
environmental impact of the
Group’s operations.
We have completed our Scope
3 emissions inventory, this has
unlocked many workstreams to
reduce our carbon emissions.
We have submitted our
Science-Based Targets to the
Science-Based Targets Initiative
for validation.
Climate Change
The effects of climate change
and the transition to a lower
carbon economy could lead to
increasing levels of regulation
and demands on the business
from customers, employees
and shareholders. Changes in
weather patterns may increase
the likelihood of disruption to
our business, although this is
considered minimal at this
stage.
➜
l Our emissions inventory is the most
basic indicator of the impact our
business has on climate change. The
Group now has targets in emission
reduction which have been submitted
to the Science Based Target Initiative.
l Energy use and water consumption are
key metrics which we are working on to
allow prioritisation in our approach.
l Environmental Steering Group considers
information and data from sub-
committees.
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➜
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 46
Principal Risks and Emerging Risk Areas
RISK DESCRIPTION
MITIGATION
HOW RISK IS MONITORED
l System downtime is reported to the
Divisions and at Group level.
l Instances of reported incidents are
considered for severity, root cause and
corrective actions required.
l The Group has an IT Steering Group,
resourced by appropriately skilled
individuals to consider risk and advise
on mitigating actions in accordance with
risk appetite.
IT Resilience
As is the case with most
businesses, the Group is reliant
on the consistent availability of
its IT systems and security of
key systems. Disruption to, or
failure of, our principle systems
could result in significant
disruption to our business,
potentially leading to
reputation and financial loss
The Group continues to develop
existing systems and introduce
new software packages. As
such cyber and data risks have
become an area of increased
focus and controls are
constantly evolving.
This area is being led by our
Group IT Director supported by
our IT Technical and
development teams. Where
appropriate consultancy is
provided by trusted third parties
who understand and validate the
level of risk the Group faces in
its various processes, systems
and interfaces.
The Group has tested continuity
plans in place and reviews
learnings on an ongoing basis.
Employee awareness continues
and is being enhanced to ensure
it remains relevant and
meaningful with the added
ability for easier and more
timely delivery to all users.
The Group has achieved Cyber
Essentials and Cyber Essentials
Plus.
➜ Decreased risk ➜ Increased risk ➜ No change ➜➜ Not yet determined
STRATEGIC REPORT
The strategic report has been signed on behalf of the Board by:
Neil Stothard
Chief Executive
6 June 2023
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The Board
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Jeremy Pilkington BA (Hons)
Chairman
Neil Stothard MA, FCA
Chief Executive
Anna Bielby FCA
Chief Financial Officer
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
management and logistics sectors.
Committee membership
None
Appointment
Appointed to the Board as Chief
Financial Officer in January 2023.
Experience
Anna was previously Chief Financial
Officer at KCOM Group PLC and Lookers
plc. Prior to that she was a Director at
PwC.
Committee membership
None
Phil White BCom, FCA, CBE
Non-executive Director
Mark Bottomley BSC, FCA
Non-executive Director
Stuart Watson BA, FCA
Non-executive Director
Appointment
Appointed to the Board in April 2013.
Appointment
Appointed to the Board in January 2023.
Appointment
Appointed to the Board in January 2023.
Experience
Phil is a chartered accountant and has
extensive experience within both
listed and private companies.
Experience
Chief Financial Officer of Cranswick plc
and previous senior finance roles in
the food production industry.
Committee membership
Chairman of the Remuneration
Committee and member of the Audit
and Nomination Committees.
Committee membership
Member of the Audit, Remuneration
and Nomination Committees.
Experience
Stuart retired as a senior partner in
EY in 2017. He is a non-executive
Director and Audit Committee Chair of
both the Humber and North Yorkshire
Integrated Care board and Flowtech
Fluidpower plc.
Committee membership
Chairman of the Audit Committee and
a member of the Remuneration and
Nomination Committees.
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Governance
INTRODUCTION FROM THE CHAIRMAN
The Board is responsible and accountable to its shareholders
and stakeholders for the activities and is responsible for the
effectiveness of the Group’s corporate governance.
The values and ethical standards of the Group are based upon
principles of fairness, integrity and mutual respect and the
Board seeks to promote and exemplify these values in
discharging it’s responsibilities. These principles are both
ethically based and we believe are commercially central to
delivering our strategic and growth objectives and the long
term success of the Group.
The Corporate Governance Report is set out on pages 44 to 73
and includes the Directors’ Remuneration Report on pages 55
to 69. This section of the annual report covers how we
manage the Group and how we comply with the provisions
of the UK Corporate Governance Code. The Group continues to
maintain and review its systems, processes and policies to
support its governance practices.
The Board reports that throughout the year the Company
complied with the provisions of the UK Corporate Governance
Code as applicable to a small market capitalisation company
with the following exceptions:
l The Group is not compliant with provisions 40 and 41 in
respect of formally promoting effective engagement with
its workforce. Workforce engagement does occur,
throughout the year, though this is informal in nature. The
methods of engaging with our workforce are set out on
page 25 in the Responsible Business Report this is led by
our Chief Executive Officer, Neil Stothard.
This report and the following reports of the committees
describe the structures, processes and events through which
compliance is achieved.
CORPORATE GOVERNANCE
Board structure
During the year the composition of the Board changed. Until 31
December 2022 the Board comprised two executive Directors,
two non-executive Directors and the executive chairman.
Following the retirement of Stephen Rogers the subsequent
appointment of Stuart Watson and Mark Bottomley, the Board
now includes three non-executive Directors, with Anna Bielby
replacing the retiring Allison Bainbridge.
l Stephen Rogers had served as a non-executive Director for
more than nine years before his retirement from the Board
on 31 December 2022.
All Directors are subject to annual re-election by shareholders
at the Group’s AGM. Details of the Group’s Directors are
provided on page 43.
l Phil White has served as a non-executive Director for more
than nine years. The Group has recently appointed two
new non-executive Directors and Phil White is assisting in
the orderly transition of the Board.
l Jeremy Pilkington, in his role as Chairman, is an Executive
Director and as such not considered independent. In addition
he has served more than nine years as Chairman to retain
corporate memory and important relationships. Therefore, it
is valuable to retain Jeremy’s services in a strategic capacity.
l Two of the Group’s executive Directors receive pension
contributions of 15% of base salary. The Board recognizes
this is not in line with provision 38 as it is not in line with
the wider workforce. In line with the Group’s Remuneration
Policy, Anna Bielby joined the Board in January 2023 with
a lower pension contribution of 10%.
The roles of the Chairman and Chief Executive are separate and
clearly defined. The Chairman,
is
responsible for the effective working of the Board and leading
the strategic agenda for the Group.
Jeremy Pilkington,
The 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.
the non-executive Directors is to provide
The role of
independent and considered advice to the Board in matters of
strategy, risk and performance, whilst providing governance
oversight through operation of the Board’s committees.
The Board is satisfied that all non-executive Directors are
independent and that
there are no circumstances or
relationships that may affect judgements.
Length of service of Directors
Balance of Directors
Balance of Directors
31 March 2023
31 March 2023
31 March 2023
Less than one year
One to nine years
More than nine years
3
1
2
Gender
Male
Female
5
1
Role
Executive Chairman
Executives
Non executives
1
2
3
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Governance
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Each Director is required, in accordance with the Companies
Act 2006, to declare any interests that may give rise to a
conflict of interest with the Company on appointment and
subsequently as they may arise. Where such conflict, or
potential conflict arises the Board is empowered under the
Company’s articles of association to consider and authorise
such conflicts as appropriate and subject to such terms as they
think fit. No such conflict arose during the year under review.
Any term of a non-executive Director beyond nine years is
reviewed. Stephen Rogers has served for longer than this
before his retirement on 31 December 2022. Phil White has
also served as a non-executive Director for more than nine
years. The Board feels strongly that Phil’s continued presence
on the Board serves as a valuable short term continuity. The
Group has recently appointed two new non-executive
Directors and Phil White will step down from the Board in due
course once an orderly transition has been effected.
Our non-executive Directors are 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.
The Board is assisted by the Audit, Remuneration and
Nomination Committees. Separate reports from these
Committees can be found on pages 48 to 54. The Chair of
each committee provides regular updates at Board meetings.
Board meetings and operation
The Board’s agenda seeks to achieve a balance between
review of performance, the development of strategy, the
adoption of appropriate corporate policies and the
management of risk, regulatory and ESG obligations.
The Board has a clearly documented schedule of matters
reserved for its approval including:
l Strategy,
l Group results and the annual report and accounts,
l Significant market announcements,
l Dividends and dividend policy
l Annual budgets and business plan,
l Major capital expenditure, significant investments or
disposals,
l Environmental, Social and Governance
l Review of internal control and risk management,
l Treasury policy.
In certain areas, specific responsibility is delegated to
committees of the Board within defined terms of reference.
the Board’s reserved list are
Matters falling outside of
delegated to the Divisional Management under the direction
of the Chief Executive; responsibilities are delegated further
to the Group’s business segments and in turn within each
business.
A system of delegated authorities whereby the incurring of
expenditure and assumption of contractual commitments can
only be approved by specified individuals and within
predefined limits is in place throughout the Group.
Detailed papers are made available in advance of meetings in
support of relevant agenda items. The Company Secretary
assists the Chairman in ensuring that Board procedures are
followed and is available to assist Directors generally as well
as advising on matters of corporate governance.
The Company Secretary is also the Chief Financial Officer. 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.
The Board had eight scheduled meetings during the year, but
also met on other occasions as required by specific activities.
Board Audit Remuneration Nomination
Number of
meetings held
ExecutiveDirectors
Jeremy Pilkington
Neil Stothard
8
8
8
Allison Bainbridge 6
Anna Bielby
2
Non-executiveDirectors
Stephen Rogers
Phil White
Stuart Watson
Mark Bottomley
6
8
2
2
3
-
-
-
-
3
3
-
-
1
-
-
-
-
1
1
-
-
1
1
-
-
-
1
1
-
-
Allison Bainbridge and Stephen Rogers retired on 31
December 2022. Anna Bielby was appointed as Chief
Financial Officer on 1 January 2023 and two new non-
executive Directors, Stuart Watson and Mark Bottomley were
appointed on 3 January 2023.
Whilst Jeremy Pilkington, Neil Stothard and Anna Bielby (from
1 January 2023, Allison Bainbridge to 31 December 2022) are
not members of the Audit Committee, they did attend all
meetings; they also attended, as appropriate, Remuneration
and Nomination Committee meetings.
During the year the non-executive Directors met with the
Chairman without the executive Directors present and the
non-executives met without the Chairman present.
The Board is satisfied that the Chairman and each of the non-
executive Directors committed sufficient time during the year
to enable them to fulfill their duties as Directors of the
company.
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Governance
Appointments to the Board
Performance evaluation
The Nominations Committee is chaired by the Company’s
Jeremy Pilkington, supported by the Group’s
Chairman,
non-executive Directors. The Nomination Committee
meets as required to consider succession planning to
ensure that appointments to Board roles are made after
due consideration of the skills, knowledge and experience
of the potential candidates. The Report of the Nomination
Committee is shown on page 48.
The Group’s policy on diversity is set out on page 26 in the
Strategic Report.
Training and induction
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.
Advice is available from the Company’s solicitors, auditors
and brokers as required. There is an agreed procedure for
Directors to take independent professional advice at the
Company’s expense. Updates are provided on key technical
issues as required including those relating to corporate
governance.
The Board undertakes an annual appraisal of its performance.
During 2022 an internal evaluation of Board performance was
undertaken, whereby the Company’s Directors were asked to
rate various areas of Board and committee activity and to
raise any areas of concern and suggestions. No areas of
material concern were highlighted during this year’s review.
Annual Review
The Board retains overall responsibility for setting the Group’s
risk appetite as well as risk management and internal control
systems.
regarding the Group’s systems of
A detailed report
risk
management and internal controls is prepared annually.
Having reviewed and discussed this report the Board is
satisfied that these systems and processes are effective. The
principal risks to which the Group is exposed and the measures
to mitigate such risks are described on pages 39 to 42.
The respective responsibilities of
the Directors and the
independent auditors in connection with the accounts are
explained on page 73 and the statement of the Directors in
respect of going concern appears on page 72. The Group’s
viability statement is set out on page 37.
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Governance
SECTION 172 AND STAKEHOLDER ENGAGEMENT
The requirements of Section 172 and how they have been met are set out in the table below. Directors of the Company
act in a way he or she considers, in good faith, would be most likely to promote the success of the Company for the benefit
of its members as a whole and in doing so have regard to:
S172 REQUIREMENTS
ACTIONS TAKEN BY THE BOARD
the likely consequences
of any decisions in the
long term
the interests of the
Company’s employees
the need to foster the
Company’s business
relationships with suppliers,
customers and others
the impact of the Company’s
operations on the community
and environment
the desirability of the
Company for maintaining a
reputation of high standards
of business conduct
the need to act fairly as
between members of the
Company
Annual process to determine current and medium term priorities and set two year
financial plan
Health, safety and wellbeing of employees a priority
Refer to pages 25 and 26 of Responsible Business Report
Neil Stothard, Chief Executive, is the Director with designated responsibility for workforce
engagement
Refer to Business Review pages 8 to 14
The Board receives monthly updates on health, safety and wellbeing of our employees
Group activities aligned to targeted UN sustainability goals (pages 15 to 34)
See Responsible Business Report page 27
Annual Report available online and sent to shareholders on request
AGM open to all investors and questions to the Board welcomed
Receiving reports from sector analysts to ensure that the Board maintains an understanding
of investors’ priorities
Regular trading updates
Presentations to new investors
Half year and full year results presentations and investor meetings
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Nomination Committee
Dear Shareholders
As Chairman of the Nomination Committee I am pleased
to report on the work of the Committee in recommending
changes to the Board during the year.
Background
The role of the Nomination Committee is to establish a
framework for appointment of Executive and non-executive
Directors.
The Nomination Committee meets as required to assist the
Board in considering the skills, knowledge, independence,
diversity and experience requirements of the Board, ensuring
its size, structure and composition is reviewed and refreshed
as required.
The Committee also 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 26 in the Strategic Report.
Membership and Meetings
In addition to my role as Chairman, the Committee includes
the Group’s non-executive Directors.
The Committee met once during the year in order to discuss
the succession of the Group’s previous Group Finance Director,
Allison Bainbridge alongside the appointment of a new non-
executive Director
following the retirement of Stephen
Rogers, which was signalled in our Annual Report and
Accounts for the year ended 31 March 2022.
ChairmanoftheNominationCommittee:JeremyPilkington
Appointment of Directors
During the year, appointments were facilitated principally
through personal recommendation.
Anna Bielby was appointed as Chief Financial Officer
following meetings held with each member of the Board.
The Committee discussed the merits of the candidate and it
was agreed that she would be appointed to the Board.
Meetings were also held with Stuart Watson and Mark
Bottomley as potential successors to Stephen Rogers. Each
candidate was considered to be strong and, as a result, the
Committee recommended the appointment of both to the
Board, increasing the number of non-executive Directors to
three.
It was further agreed that Stuart Watson be
recommended to the Board to take on the role of Chair of
Audit Committee.
Shareholders are asked to vote annually in resolutions
proposing each Director for re-election at the Annual General
Meeting.
Jeremy Pilkington
Chairman of the Nomination Committee
6 June 2023
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Audit Committee Report
STATEMENT FROM STUART WATSON,
CHAIRMAN OF THE AUDIT COMMITTEE
I am pleased to present our Audit Committee report for the
year ended 31 March 2023. Stephen Rogers was the Audit
Committee Chair until he retired from the Board on 31
December 2022. I was appointed as a non-executive Director
and Audit Committee Chair on 3 January 2023. On behalf of the
Committee I should like to place on record our thanks for all of
his hard work as Chair.
MAIN RESPONSIBILITIES OF THE COMMITTEE
The Audit Committee provides an independent overview of the
effectiveness of the financial reporting process and internal
financial control systems including:
l Reviewing the financial statements of the Group, including
its annual and interim reports,
trading updates and
preliminary results announcements, reporting to the Board
on the significant issues considered by the Committee in
relation to the financial statements and how these were
addressed,
l Advising the Board in relation to whether the Annual Report
is fair, balanced and understandable,
l Keep under review the Group’s internal financial controls and
including arrangements for
risk management systems,
whistleblowing and the detection of fraud and error,
l Monitor and review the scope, remit and effectiveness of
the Group’s internal audit function,
l Consider and recommend to the Board the appointment,
reappointment and remuneration of the external auditors,
including considering tendering the external audit
appointment,
l Assessing the scope and results of the annual external audit
and reporting to the Board on the effectiveness of the audit
and the independence and objectivity of the auditors,
l Reviewing significant legal and regulatory matters,
l Reporting to the Board on how the Committee has
discharged its responsibilities.
MEMBERSHIP AND MEETINGS
the Committee throughout
Stephen Rogers chaired the Committee until 31 December
2022 when he retired as Director. Phil White has been a
member of
the year. Mark
Bottomley and I joined the Committee on 3 January 2023
when I also became the Committee Chair. Invitations to attend
our meetings, in whole or in part, are also extended to the
Chairman and Executive Directors and representatives from
internal and external auditors.
The Committee met 3 times during the year. Since the year
end we have met once. Meetings with internal and external
auditors without management present are held at least once
a year.
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StuartWatson
The Committee is authorised to seek outside legal or other
independent advice as it sees fit, but has not done so during
the year.
The qualifications of the Committee members are outlined in
the Directors’ biographies on page 43. The Board is satisfied
that the Committee as a whole has recent and relevant
financial experience as required by the Code. The
effectiveness of the Committee in fulfilling its remit was
considered by the Board as part of
recent
evaluation of its performance.
the most
ACTIVITIES UNDERTAKEN DURING THE YEAR
The activities undertaken included:
l Reviewed PwC’s audit strategy and plan for the audit of the
year ended 31 March 2023, including materiality and areas
of particular audit focus,
l Agreed the PwC audit engagement letter and the statutory
audit fee for the year ended 31 March 2023,
l Confirmed the independence of the external auditors and
assessed the effectiveness of their work,
l Reviewed and discussed the report from PwC setting out
their comments and findings arising from their audit,
l Reviewed and discussed the financial statements and
accounting
significant
considered management’s
judgements and policies being applied,
l Reviewed the basis for preparing the financial statements as
a going concern and the viability statement included in the
financial statements, and recommending them to the Board,
l Assessed the Annual Report for the year ended 31 March
2023 and recommended it to the Board as being fair,
balanced and understandable,
l Considered the findings of Group internal audit and the
management response to their findings,
l Reviewed and approved the Group internal audit plan for
the year to 31 March 2023,
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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Audit Committee Report
l Reviewed the effectiveness of the risk management and
internal control systems and recommended to the Board
that they be considered effective,
confirm the existence of the rental fleet. We have reviewed
management’s judgement in estimating the useful economic
lives, residual values and any impairment of rental assets.
l Undertook the annual review of the effectiveness of the
Audit Committee,
l During the year the Group received a letter from the FCA
in relation to its review of the Group’s TCFD aligned
climate-related disclosures for the year ended 31 March
2022. The FCA has concluded its review and does not
intend to take action in relation to the specific matters
raised. We have reflected on the feedback, which has
been taken into account in finalizing the TCFD statement
on pages 29 to 34.
l We also received a letter from the FRC in relation to its
review of the Group’s interim report for the six months
ended 30 September 2022 in accordance with Part 2 of
the FRC Corporate Reporting Review Operating
Procedures. This review was limited in its nature. Based
on this review, no questions or queries were raised.
Again we have reflected on the comments made in the
letter and will take them into account in preparing our
interim results for the six months ending 30 September
2023.
SIGNIFICANT ACCOUNTING ISSUES
In respect of the year to 31 March 2023, the following
significant issues were reviewed.
Going concern
The basis for adopting the going concern assumption in the
financial statements is discussed on page 72 of this report.
The Committee in particular noted that bank facilities of
£90 million, representing 49% of the Group’s facilities, are
due to expire in June 2024. Whilst this is 12 months beyond
the date of approving these financial statements, this is a
key aspect of the going concern review. The Committee
therefore reviewed management’s paper on continuing
compliance with all the terms of that facility and their
judgement that these facilities will be renewed in advance
of that date. This enabled us to recommend the continued
adoption of the going concern assumption in the financial
statements.
Intangible assets - goodwill
The Group’s intangible assets include £44.6 million of
goodwill. This goodwill is not amortised but is subject to an
test. We have considered the
annual
appropriateness of the assumptions and estimates used by
management in assessing the carrying value of goodwill.
More information is available in Note 10.
impairment
FAIR BALANCED AND UNDERSTANDABLE VIEWS
The Committee reported to the Board its conclusion that the
Report and Accounts for the year ended 31 March 2023,
taken as a whole, is fair, balanced and understandable.
RISK MANAGEMENT AND INTERNAL CONTROLS
The Board is responsible for the overall system of internal
controls for the Group and for reviewing its effectiveness.
The responsibilities and processes in respect of
risk
management are described on page 38. The Committee has
identifying, evaluating and
reviewed the process for
managing significant
risk faced by the Group. Risk
management reports for each of the divisions, as reviewed
also by Group internal audit, were submitted for review to
the Audit Committee. The reports highlighted risks and
mitigating controls. The Committee also considered the risk
tolerance levels that the Group is prepared to accept in the
course of carrying out its business.
The Committee monitored and reviewed the Group’s
internal control systems, accounting policies and practices,
risk management procedures and compliance controls.
Internal control systems are designed to manage rather
than eliminate business risk. They provide reasonable but
not absolute assurance against material misstatement or
loss. Management is responsible for establishing and
maintaining adequate internal control over
financial
reporting for the Group.
The Committee also reviews the Group’s whistleblowing
policy. There have been no whistleblowing reports which
required changes in the control environment during the year.
Existence and valuation of rental equipment
The Group holds a significant quantum and carrying amount of
rental equipment. Management carry out fleet checks to
The Committee has concluded that the Group continues to
operate a well designed and effective system of internal
controls.
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Audit Committee Report
GROUP INTERNAL AUDIT
The Group internal audit function provides assurance that
is effective and
the Group’s system of internal control
appropriate to the level of risk facing the Group.
The Group internal audit plan is considered and approved at
set intervals by the Committee. The current plan runs from
2023 to 2025, with facility to engage with emerging and
new risks as required. In reviewing the proposed plan the
Committee considers the Group’s strategic priorities, specific
initiatives which could impact the business and the Group’s
risk register. The Committee assess the appropriateness of
the Group internal audit plan and the resourcing of the
Group internal audit function to deliver it. Progress against
the plan is assessed at each Committee meeting.
During the year the current and former Chairman of the
Committee met with the head of Group internal audit twice,
to discuss completed projects and issues arising. The head
of Group internal audit attended each audit committee
meeting and presented Group internal audit reports. The
Committee considered the results of Group internal audit
and the adequacy of management’s response to matters
raised in them. The committee were satisfied with the
reports and the management response to them.
AUDITORS’ EFFECTIVENESS AND INDEPENDENCE
The Committee keeps the scope, cost and effectiveness of
the external audit under review. The Committee assessed the
effectiveness of the external audit process during the year,
based on feedback from the Group Finance Team and Group
internal audit, and through Committee interactions with the
external auditors. As a result the Committee has satisfied
itself that PricewaterhouseCoopers LLP (PwC), the external
auditors, has provided an effective audit service.
that
the auditors
remain
The Committee ensures
independent of the Group and reviews this on an annual
basis. PwC provided a written report to the Committee to
show its compliance with professional and regulatory
requirements designed to ensure their independence. The
Committee has satisfied itself that they remain independent.
The Committee has a policy in relation to the use of the
auditors for non-audit services, set out in an appendix to
the Committee terms of reference. In the year the only
non-audit services provided by the auditors were a
subscription to an accounting knowledge portal with fees
of £1,300 representing 0.2% of the audit fee.
PwC were re-appointed as the Group’s auditors in October
2021 following a tender process. Tom Yeates has
completed his second year as the Group’s audit partner.
The Committee recommended to the Board that a
resolution to re-appoint PwC as auditors be proposed at the
Annual General Meeting.
Stuart Watson
Chairman of the Audit Committee
6 June 2023
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 56
Remuneration
Committee Report
Annual Statement
Dear Shareholders
On behalf of the Remuneration Committee (the Committee)
I am pleased to present the Directors’ Remuneration Report
for the year ended 31 March 2023. This report is split into
the Directors’
three sections: my Annual Statement,
Remuneration Policy report and our Annual Report on
Remuneration for
In
accordance with UK reporting regulations, we will be asking
shareholders to approve a new Remuneration Policy at the
forthcoming Annual General Meeting (AGM), with the
background to, and reasons for, proposed changes set out
later in this Statement.
the year ended 31 March 2023.
BACKGROUND
As detailed in the Strategic Report, the year to 31 March 2023
saw continued strong progress in our core markets of
infrastructure, construction, housebuilding and energy, with
Group revenues up 6% on prior year and operating profit before
amortisation and exceptional items having further increased by
5% to £48.8 million. From an operational perspective, our
businesses have continued to make good progress in their
engagement with customers and supply chain partners to
deliver sustainable and innovative fleet solutions whilst, from
an employee perspective, we have taken positive actions to
minimise the impact of the cost of living crisis on colleagues.
to 31 March 2024,
Going into the financial year
the
Committee remains optimistic that the Group can continue to
deliver sector leading results for the benefit of all our
stakeholders. In approving remuneration outcomes for the
year ended 31 March 2023, the Committee took into account
this strong financial and operational performance and
PhilWhite
considered also the experience of its main stakeholders. We
are comfortable that actions taken on pay during the year
across the Group were appropriate.
REVIEW OF THE REMUNERATION POLICY
The current Remuneration Policy (‘Policy’) was approved by
shareholders at the 2020 AGM with 87.25% support and has
since governed our approach to determining executive
Directors remuneration at Vp. In line with the UK reporting
regulations, we are required to submit a new Policy to
shareholders for approval at this year’s AGM, and therefore the
Committee has recently undertaken a review of our existing
structures and processes to ensure that we can continue to
attract, motivate and retain the calibre of talent required to
deliver the Group’s strategy over the next three years.
In summary, the Committee is broadly satisfied that the
Group’s approach to executive remuneration – comprising
fixed and variable elements – remains fit-for-purpose. Our
review has taken into account changes in best practice since
the Policy was last approved by shareholders, as well as
comments received during the intervening period. The
Committee has sought, where appropriate, to bring the
Group’s approach to executive remuneration in line with
market,
including the introduction of a formal bonus
deferral requirement, expanding the list of triggers for the
application of recovery provisions, and providing greater
flexibility to vary the performance measures applying to our
variable incentives each year. A summary of the key Policy
changes being introduced – and the rationale for these – is
set out in the table below:
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 57
Remuneration
Committee Report
Annual Statement
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ELEMENT
CURRENT POLICY
NEW POLICY
RATIONALE
Annual bonus
deferral
None. Any bonus earned
is paid in cash following
year-end.
Where an Executive Director has yet to
meet their minimum share ownership
guideline then any bonus earned over
100% of salary will be used to meet
these ownership guidelines.
Share Matching
Scheme
Opportunity to earn
matching shares of up to
10% of salary based on
performance.
Dropped from Policy.
An element of mandatory bonus
deferral reflects best practice and
supports shareholder alignment. Linking
the deferral requirement to share
ownership provides an incentive for
Directors to build their personal
shareholding more quickly.
Simplification of the Policy. Recognises
that this is a legacy arrangement which
has not been used for a number of
years.
Recovery
provisions
Clawback provisions apply
to both the annual bonus
and LTIP in the event of a
misstatement of results.
Malus is introduced alongside clawback,
with an expanded list of trigger events
to apply to future awards under both
schemes.
Reflects market and best practice for UK
companies. Helps ensure that there will
be no reward for failure.
Performance
measures
Annual bonus: PBTAE.
LTIP: EPS, ROACE underpin.
Less specificity in performance
measures aligns with best practice and
allows for greater flexibility.
Committee
discretion
Not explicit.
Clarified that the Committee will retain
overarching discretion to override
formulaic incentive outcomes (both
upwards and downwards).
Provides the Committee with greater
flexibility to select metrics which reflect
and reinforce strategic priorities from
year to year. The Committee has no
immediate intention to change its
measures.
Reflects the UK Corporate Governance
Code and best practice. Gives the
Committee flexibility to ensure that pay
and underlying performance are
strongly aligned.
tenure. To reflect
BOARD CHANGES
Allison Bainbridge retired as Group Finance Director and
stood down from the Board on 31 December 2022,
remaining available to provide transition support until 31
January 2023. Allison was a highly valued member of the
Board and contributed significantly to the Group’s successful
growth over her eleven year
this
contribution, and in line with the flexibility provided by the
the Committee applied modest
Remuneration Policy,
discretion to disapply time pro-rating of her 2022/23 annual
bonus, with her overall payout set out on page 62.
In
accordance with the relevant plan rules, Allison was
considered to be a ‘good leaver’ under the LTIP, with her
outstanding awards granted in 2020, 2021 and 2022 each
pro-rated for time served and remaining subject to the
original performance conditions set. To the extent that any of
these awards vest for performance, a mandatory two-year
holding period will continue to apply. Finally, Allison will be
expected to maintain a minimum shareholding in the
Company until 31 December 2023, in line with our post-
employment shareholding policy.
Allison was succeeded as Chief Financial Officer by Anna
Bielby, a qualified chartered accountant and experienced
hire.
In accordance with the Remuneration Policy, and
reflecting her relevant experience serving as CFO at a
number of other UK-listed companies, Anna’s starting salary
was set at £300,000 per annum, just above that of her
predecessor. Anna will receive a pension contribution of 10%
of salary, with her variable incentive opportunities aligned to
those of her predecessor at 150% of salary under the annual
bonus and 100% of salary under the LTIP. Anna was eligible
for a pro-rated annual bonus for the 2022/23 financial year
but did not receive an LTIP award, nor any buy-out awards.
Stephen Rogers, non-executive Director, retired from the
Board on 31 December 2022. We appointed two new non-
executive Directors from 3 January 2023 – Stuart Watson and
Mark Bottomley – with the former succeeding Stephen as
Chair of the Audit Committee. Both Stuart and Mark receive
an all-in fee of £50,000 per annum, effective from their
dates of appointment.
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 58
Remuneration
Committee Report
Annual Statement
2022/23 REMUNERATION OUTCOMES
Base salary - see also page 62
In line with the group-wide salary increase, the Committee
approved a 3% salary increase for Neil Stothard and Allison
Bainbridge which took effect from 1 April 2022; Jeremy
Pilkington's salary was not increased during the year. As
noted above, Anna Bielby joined the Board as Chief
Financial Officer with effect from 1 January 2023, with her
starting salary set at £300,000.
Pensions - see also page 62
As long-serving employees, pension contributions for Jeremy
Pilkington, Neil Stothard and Allison Bainbridge (until her
retirement) remained at 15% of base salary during the year.
Anna Bielby received a pension contribution of 10% of salary
from her appointment to the Board.
Annual bonus - see also page 62
The maximum bonus opportunity for financial year ended 31
March 2023 was 150% of salary.
Targets for the annual bonus were set by the Committee at the
beginning of the financial year and were based upon growth
in Group profit before tax, amortisation and exceptional items
(PBTAE). Targets are set by the Committee to be stretching and
generally reflect year-on-year growth, with entry thresholds
set in line with the Group’s budget PBTAE for the relevant
financial year and full payout
requiring a material
outperformance of budget. A similar approach to target setting
is taken in respect of other Group and divisional participants to
ensure fairness and alignment.
For 2022/23, the Committee approved a pre-IFRS16 PBTAE*
target range of £39.0 million (threshold) to £44.0 million
(maximum), which was considered to be both stretching and
motivational. In particular, threshold was set marginally above
the prior year’s outturn. Actual PBTAE* achieved was £40.5
million and a bonus of 30% of maximum was therefore earned
by each Executive Director under the scheme. No discretion
was used to adjust
reflecting the
Committee's view that the outcome delivered is a genuine
reflection of the performance of the business and appropriately
reflects the experience of stakeholders during the year.
Annual bonuses paid to each of Jeremy Pilkington, Neil
Stothard and Allison Bainbridge equated to 45% of salary.
Anna Bielby’s annual bonus was 45% of her pro-rated salary
for the year.
LTIP - see also page 62
LTIP awards granted to Jeremy Pilkington, Neil Stothard and
Allison Bainbridge in 2020 reached the end of
their
performance period as at 31 March 2023. Vesting of these
awards was based wholly on 3-year absolute EPS
performance, underpinned by a minimum ROACE hurdle.
Having exceeded the ROACE hurdle, EPS of 79.0 pence
the award vesting. The Committee
resulted in 7% of
considered that this outcome was both appropriate and a fair
reflection of underlying performance over the period, and
accordingly has not exercised any discretion in respect of this
vesting result.
this formulaic result,
IMPLEMENTATION OF POLICY FOR 2023/24
Base salary - see also page 66
Following a review of Executive Directors’ base salaries, the
Committee approved an increase of 4% for Neil Stothard and
Anna Bielby with effect from 1 April 2023, in line with the
average increase applied across the wider workforce. Jeremy
Pilkington's salary will again remain unchanged.
Pensions - see also page 66
As long-serving employees, pension contributions for Jeremy
Pilkington and Neil Stothard will remain at 15% of base salary.
Anna Bielby will continue to receive a pension contribution of
10% of salary.
Annual bonus - see also page 66
The maximum bonus opportunity will remain at 150% of base
salary for all Executive Directors. Bonuses will be based on
challenging growth targets for Group PBTAE derived from the
Group’s budget, with the maximum payout target set at a
level which is stretching and appropriately reflects the
maximum opportunity available. As in previous years, details
of the target range and the Group’s actual performance will be
disclosed in next year’s report.
Subject to the approval of the new Remuneration Policy, any
2023/24 bonus earned in excess of 100% of salary will be
used to meet share ownership guidelines where a Director
has not, at the time of payment, met their minimum share
ownership requirement. Based on current shareholdings, this
requirement would apply only to Anna Bielby.
LTIP - see also page 66
Executive Directors will each receive an LTIP award in
2023/24 with face value of 100% of salary. Vesting of this
year’s awards will continue to be based on the achievement
of challenging EPS growth targets, underpinned by a
minimum ROACE hurdle.
The Committee will continue to monitor market developments
throughout the year and will consider the appropriateness of
any emerging trends for the Group. I hope that you find this
report a clear account of the Committee’s decisions for the year
and would be happy to answer any questions you may have
at the upcoming AGM.
Following the appointment of
two new non-executive
Directors to the Board during the year, Mark Bottomley will
take over as the Chairman of the Remuneration Committee
after the AGM in July 2023.
This report has been approved by the Board and is signed on
its behalf by:
Phil White
Chairman Remuneration Committee
6 June 2023
*These measures are explained and reconciled in the Alternative Performance Measures section on page 129.
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 59
Directors’ Remuneration Policy (unaudited)
DIRECTORS’ REMUNERATION POLICY REPORT
This Report has been prepared in accordance with the provisions of the Companies Act 2006, and Schedule 8 of
the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended). It
also meets the requirements of the UK Listing Authority’s Listing Rules and the Disclosure and Transparency Rules.
The Remuneration Committee is seeking shareholder approval for a new Remuneration Policy at the July 2023 AGM. It is
intended that the revised Policy will formally apply for three years beginning on the date of approval. A summary of the
key changes compared to the previously-approved Policy is set out in Annual Statement on page 54.
POLICY OVERVIEW
The Group aims to balance the need to attract, retain and motivate Executive Directors of a high calibre with the need to be
cost effective, whilst at the same time appropriately rewarding 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. Our Remuneration Policy is consistent with the
principles set out in Provision 40 of the 2018 UK Corporate Governance Code, namely:
l
l
l
The Policy is clear, simple and easy to understand, with a single short- and long-term incentive and a small number of
important financial targets. Our approach to remuneration has remained broadly consistent for a number of years and
is well-understood both internally and externally;
Incentive targets are set by the
The design and implementation of the Policy takes into account possible risks.
Committee ahead of each cycle to be appropriately stretching and achievable within the risk appetite set by the Board,
and the Committee has discretion to adjust outcomes where the formulaic assessment would lead to an outcome which
is misaligned with underlying Company performance. Where it is deemed appropriate, an expanded list of recovery
provisions ensures that the Committee can withhold or recover incentives in certain cases;
Incentives are clearly and appropriately capped. The balance of pay is aligned with market norms and a significant
proportion is dependent on the achievement of stretching short- and long-term targets; and
l Performance measures are aligned with our strategy and culture.
FUTURE POLICY TABLE FOR DIRECTORS
PURPOSE AND LINK
TO STRATEGY
Base salary
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
in a cost-efficient manner.
OPERATION
OPPORTUNITY
Base salaries are reviewed
annually, taking into account a
range of relevant reference points.
Any changes are normally
effective from 1 April in the
financial year.
Current salary levels are set out on
page 66. In determining Executive
Director salary increases, the
Committee considers the range of
increases for the broader
employee population.
PERFORMANCE
METRICS
None.
All Executive Directors are either
members of a defined contribution
scheme or receive a cash
allowance in lieu of pension
contribution.
None.
None.
The maximum pension contribution
for Executive Directors appointed
prior to July 2020 is 15% of salary.
The maximum pension contribution
for Executive Directors appointed
since July 2020, and for future
Executive Director appointments, is
10% of base salary.
Benefits values vary by role and
are reviewed periodically relative to
the market. It is not anticipated
that the cost of benefits provided
will change materially year on year
over the period for which this
Policy will apply.
Taxable benefits
To provide market consistent
benefits.
Can include car allowance, health
insurance and other benefits paid
from time to time. The cost of
providing benefits is paid monthly
or as required for one off events.
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Directors’ Remuneration Policy (unaudited)
FUTURE POLICY TABLE FOR DIRECTORS (continued)
PURPOSE AND LINK
TO STRATEGY
Annual bonus
To provide a direct link between
annual performance and reward.
To incentivise achievement of
stretching short-term performance
targets.
Long Term Incentive Plan (LTIP)
To drive sustained long-term
performance that supports the
creation of shareholder value.
OPERATION
OPPORTUNITY
PERFORMANCE
METRICS
Up to 150% of base salary.
Up to 100% of base salary.
Performance measures and targets
are set by the Committee at the
start of the year to reflect the
Group’s strategic priorities. At the
end of the year, the Remuneration
Committee determines the extent
to which these have been achieved.
Annual bonuses are typically paid in
cash following year end. For the
2023/24 annual bonus onwards,
where an Executive Director has not
met their minimum share
ownership requirement at the time
of payment, any bonus earned in
excess of 100% of salary will be
deferred in shares.
Payments under the annual bonus
are subject to malus and clawback
provisions, further details of which
are set out in the notes to this table.
Annual grant of nil cost options
which normally vest after 3 years,
made in accordance with the LTIP
rules.
For awards made from 1 April
2021, an additional holding period
applies so that the total vesting
and holding period is at least 5
years. Shares subject to awards
may accrue dividend equivalents.
Sufficient shares can be sold at the
end of three years to cover tax
liabilities.
The LTIP award to Jeremy Pilkington
will typically be in the form of
notional shares settled by cash.
LTIP awards are subject to malus
and clawback provisions, further
details of which are set out in the
notes to this table.
Bonuses for Executive
Directors will be based
primarily on financial
performance. The Committee
retains flexibility to introduce
an element based on
relevant non-financial
measures, where appropriate
(with a total weighting of not
more than 25% of bonus).
The Committee retains
discretion to adjust the
formulaic bonus outcome
(either upwards or
downwards) if it considers
that the payout is
inconsistent with the
Company’s underlying
performance when taking
into account any factors it
considers relevant.
The vesting of awards will be
subject to continued
employment and
performance against relevant
metrics measured over a
period of at least three years.
The Committee will select
performance measures
ahead of each cycle that
reinforce delivery of the
Company strategy. Details of
the performance measures
attaching to awards (and the
targets for these) will be
disclosed in the relevant
Annual Report on
Remuneration.
The Committee retains
discretion to adjust the
formulaic LTIP outcome
(either upwards or
downwards) if it considers
that the payout is
inconsistent with the
Company’s underlying
performance when taking
into account any factors it
considers relevant.
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.
Up to the savings limit as
determined by HMRC from
time to time (or such lower
limit as determined by the
Committee), across all
sharesave schemes in which
an individual has enrolled.
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Directors’ Remuneration Policy (unaudited)
FUTURE POLICY TABLE FOR DIRECTORS (continued)
PURPOSE AND LINK
TO STRATEGY
Share Ownership Guidelines
To ensure strong alignment
between Executive Directors
and shareholders.
PERFORMANCE
METRICS
None.
OPERATION
OPPORTUNITY
Shareholding to be built up
within five years of an Executive
Director’s appointment.
At least 100% of salary for
Executive Directors.
On stepping down from the Board,
Executive Directors will typically be
required to retain shares to the
lower of 100% of salary or their
actual shareholding at the time.
These shares must be held for at
least one year post-cessation.
Non-executive Director fees
To attract and retain high-
calibre non-executive Directors.
To reflect the time commitment
and responsibilities of the role,
and the fees paid by similar
sized companies.
Fees are reviewed on an annual
basis and are currently paid 100%
in cash.
The Company retains flexibility to
pay either a single ‘all-in’ fee or to
differentiate fees to reflect
additional responsibilities (e.g. to
the Senior Independent Director,
chairs of Board committees, etc.).
No prescribed maximum
annual increase.
None.
NOTES TO THE POLICY TABLE
Malus and clawback policy
Annual bonus payments and LTIP awards granted prior to the approval of the Remuneration Policy detailed in this report (i.e. prior to
July 2023) are subject to clawback in the event of a material misstatement of results.
For annual bonuses and LTIP awards granted following approval of this Policy, malus and clawback will apply in cases of a material
misstatement of results, an error in determining performance outcomes, gross misconduct, corporate failure as determined by the
Remuneration Committee, or where a participant has been deemed to have caused, in full or in part, a material loss for the Group as
a result of negligent, reckless or wilful actions or inappropriate behaviour or values. Cash bonuses will be subject to clawback, with
deferred shares subject to malus. LTIP awards will be subject to malus and clawback over the vesting period to the fifth anniversary of
grant.
Payments under existing awards
The Company will honour any commitment entered into, and Directors will be eligible to receive payment from any award granted,
prior to the approval and implementation of the Remuneration Policy detailed in this Report, even if these commitments and/or awards
fall outside the above Policy (but were in line with the Policy in force at the time, if so required).
Performance measures and targets
Performance measures applying to the annual bonus and LTIP are selected at the start of each performance cycle to reflect the Group’s
short- and longer-term strategic objectives. Incentive targets are set at an appropriately stretching level, taking into account relevant
internal and external reference points. LTIP targets will typically be disclosed prospectively in the remuneration report.
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(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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Directors’ Remuneration Policy (unaudited)
ILLUSTRATION OF APPLICATION OF REMUNERATION POLICY
The chart below illustrates the total remuneration for each Executive Director that could result from the remuneration policy
in 2023/24 under different performance scenarios.
Jeremy Pilkington
Percentages/Amounts (£’000)
Minimum
100%
Total £541
On plan
48%
Maximum
31%
Max inc 50%
share app
28%
31%
41%
36%
Neil Stothard
Percentages/Amounts (£’000)
Minimum
100%
Total £493
On plan
50%
Maximum
33%
Max inc 50%
share app
29%
30%
40%
35%
Anna Bielby
Percentages/Amounts (£’000)
Minimum
100%
Total £358
On plan
48%
Maximum
31%
Max inc 50%
share app
28%
31%
41%
36%
Basic salary, benefits and pension
Annual bonus
LTIP
21%
Total £1,130
27%
36%
Total £1,718
Total £1,953
Basic salary, benefits and pension
Annual bonus
LTIP
21%
Total £1,003
27%
35%
Total £1,512
Total £1,716
Basic salary, benefits and pension
Annual bonus
LTIP
-
Total £748
27%
36%
Total £1,138
Total £1,294
The value of base salary for 2023/24 is set out in the Base Salary table on page 66.
The value of taxable benefits in 2023/24 is taken to be the value of taxable benefits received in 2022/23 as shown in the
single total figure of remuneration table set out on page 62 (valued on a full-year equivalent basis for Anna Bielby). On target
performance assumes bonus payout of 75% of salary and LTIP vesting at 50% of maximum award.
Maximum performance assumes bonus pay out of 150% of base salary and LTIP vesting at 100% of maximum award. Share
price appreciation has been included in the value of the LTIP under the fourth scenario, at an assumed 50%.
58
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
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Directors’ Remuneration Policy (unaudited)
CONSIDERATION OF EMPLOYMENT CONDITIONS ELSEWHERE IN THE GROUP
In designing this Remuneration Policy, the Remuneration Committee did not expressly seek the views of employees.
Through the Board, however, the Remuneration Committee is regularly updated as to employee views on remuneration
more generally. Additionally, when making decisions around Executive Director remuneration, the Committee takes into
account the pay and conditions of other employees to ensure fairness.
Overall, there is a strong degree of alignment between the pay of senior executives and other employees, as follows:
l 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.
l There are a number of pension arrangements across the Group. However, with the exception of some legacy
the majority of senior
arrangements for
management is eligible for a pension contribution of up to 10% of salary, subject to their own contribution level.
the Executive Chairman and CEO),
long-serving employees (e.g.
for
l 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.
l Certain senior managers can qualify to participate in the LTIP. Performance conditions are consistent for all participants,
while award sizes vary by organisational level.
l 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.
l 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 employment 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. In particular:
l The base salary of a new Executive Director will be determined by reference to relevant market data, experience and
skills of the individual, internal relativities and their current basic salary. The Committee may set the salary for a newly-
appointed Executive Director above that of their predecessor where it considers it necessary in order to recruit an
individual of sufficient calibre for the role. Alternatively, where a new Executive Director has their starting salary set
below market level, any shortfall may be managed with phased increases over a period of up to two years subject to
the individual’s development in the role (and which may exceed the workforce average increase).
l New appointees will receive company 10% pension contributions or an equivalent in cash allowance. Benefits will
generally be aligned to those offered to other Executive Directors.
l The annual bonus structure described in the Policy table will apply to new Executive Director appointees, with the
maximum opportunity (i.e. up to 150% of salary) being pro-rated to reflect the proportion of the year worked.
l New appointees will be granted awards under the LTIP on the same terms as other Executives Directors, as described
in the Policy table (i.e. up to 100% of salary).
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 the relevant Listing Rule to make awards using a different
structure. Any ‘buy-out’ awards would have a fair value no higher than the awards forfeited.
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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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
Phil White
Anna Bielby
Mark Bottomley
Stuart Watson
10 June 2002
10 June 2002
15 April 2013
1 January 2023
3 January 2023
3 January 2023
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.
The following payments may also be made to departing Executive Directors, depending on circumstances. In all cases, 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:
l An annual bonus may be payable for the period of active service in certain prescribed ‘good leaver’ circumstances and
in other circumstances at the discretion of the Committee and subject to the achievement of the relevant performance
targets. Outstanding deferred bonus awards will typically be retained by a departing Executive Director with no
acceleration of the applicable deferral period;
l Unvested LTIP awards will normally lapse. For ‘good leavers’, unvested awards will typically vest on the normal vesting
date subject to the achievement of any relevant performance condition(s) and with a pro-rata reduction applied to
reflect the proportion of the vesting period served. LTIP awards which are subject to an additional holding period will
typically be retained and released at the end of the relevant holding period;
l At the discretion of the Remuneration Committee, a contribution to reasonable outplacement costs may be made where
considered appropriate. The Committee also retains the ability to reimburse reasonable legal costs incurred in connection
with a termination of employment; and
l Any payment for statutory entitlements or to settle claims in connection with a termination of any existing or future
Executive Director may be made, as necessary.
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(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 65
Directors’ Remuneration Policy (unaudited)
POLICY ON EXTERNAL APPOINTMENTS
Executive Directors are encouraged to hold a non-executive role in addition to their full-time position in order to broaden
their experience, and may retain any fees received in respect of such roles. All appointments must first be agreed by the
Committee and must not represent a conflict to their current role. During the year:
l Jeremy Pilkington held no external Directorships;
l Neil Stothard served as a non-executive Director of Wykeland Group until 31 October 2022 and received £14,583 for his
services;
l Anna Bielby is a Director of BLB (UK) Limited, a dormant professional services company.
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 ongoing review of remuneration. Given the best-practice
nature of changes being proposed, the Committee did not engage directly with major shareholders during the most recent
Policy review. The Committee, however, remains committed to engagement with investors and their respective bodies
should any material changes be made to the Remuneration Policy in future.
Details of votes cast for and against the resolution to approve last year’s Annual Report on Remuneration and in respect
of the current Remuneration Policy are set out on page 69.
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Annual Report on Remuneration
The following section provides details of how the remuneration policy was implemented during the financial year ending
31 March 2023 and how it is proposed to be implemented in the financial year ending 31 March 2024. Any information
in this section of the report subject to audit is highlighted.
SINGLE TOTAL FIGURE OF REMUNERATION (audited)
The following table shows a single total figure of remuneration for the year ended 31 March 2023 together with the
comparative figures for 2022.
Salaries
and fees
Taxable
benefits
Pensions
Annual Grant date
face value
bonus
of vested
LTIP shares
Share
price
appreciation
(depreciation)
Total
fixed
pay
Total
variable
pay
Total
£000
£000
£000
£000
£000
£000
£000
£000
£000
Jeremy Pilkington
Neil Stothard
Anna Bielby
Allison Bainbridge
2023
2022
2023
2022
471
471
392
380
2023
75
2023
2022
246
283
Non-executiveDirectors
Stephen Rogers
Phil White
Mark Bottomley
Stuart Watson
2023
2022
2023
2022
2023
2023
34
45
46
45
12
12
-
34
25
25
4
14
17
-
-
-
-
-
-
71
93
59
57
8
36
42
-
-
-
-
-
-
212
385
176
311
34
133
231
-
-
-
-
-
-
34
111
27
86
-
20
64
-
-
-
-
-
-
-)
4)
-)
4)
-)
-)
3)
-
-
-
-
-
-
542
598
476
463
87
296
342
246
500
203
401
34
153
298
788
1,098
679
864
121
449
640
34
45
46
45
12
12
Base salaries and fees
Following a review of the Executive Directors’ base salaries, the Committee approved an increase of 3% for Neil Stothard and
Allison Bainbridge with effect from 1 April 2022, in line with the average increase applied across the wider workforce. Jeremy
Pilkington’s salary remained unchanged. With effect from 1 January 2023, the non-executive Director base fee was increased
to £50,000 per annum.
Taxable benefits
Taxable benefits consist primarily of company car or car allowance and private health care insurance. In the financial year ended
31 March 2022 the Committee approved a one off payment of £33,850 to Jeremy Pilkington to cover the cost of a minor
operation which was not covered by the Company health scheme. This expense was approved on the basis that Jeremy
Pilkington had dropped out of the Company health scheme in 2018 because of a very significant increase in annual premiums
in respect of his cover. He has not received any of the private health benefits to which he was entitled since 2018. There was
no such benefit in 2023.
Pension benefits
As long-serving employees, Jeremy Pilkington, Neil Stothard and Allison Bainbridge received 15% of base salary in lieu of
pension contributions. Anna Bielby received 10% of base salary in lieu of pension contributions.
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(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 67
Annual Report on Remuneration
Annual bonus payments
The annual bonus outturn presented in the table was based on Group profit before tax and amortisation targets as measured
over the 2023 financial year.
Targets for annual bonus payments typically are set by the Committee at the beginning of the financial year and are based
upon growth in Group profit before tax, amortisation and exceptional items (PBTAE). The targets are challenging and look for
year on year growth with entry thresholds set in line with the Group’s budget PBTAE for the relevant financial year.
The Committee approved a PBTAE target range of £39.0 million (threshold) to £44.0 million (maximum), which was considered
to be suitably stretching and motivational. Actual PBTAE achieved was £40.5 million and a bonus of 45% of salary was therefore
earned by each executive Director under the scheme. The Committee is satisfied that the outcome delivered is a genuine
reflection of the performance of the business and appropriately reflects the experience of stakeholders in financial year 2023.
Maximum
(% of salary)
%
150
150
150
150
Jeremy Pilkington
Neil Stothard
Allison Bainbridge
Anna Bielby
PBTAE
required for
PBTAE
required for
threshold bonus maximum bonus
(150% of salary)
(0% of salary)
£m
39.0
39.0
39.0
39.0
£m
44.0
44.0
44.0
44.0
Actual
PBTAE
Actual % Actual bonus
£000
of salary
£m
40.5
40.5
40.5
40.5
%
45
45
45
45
£000
212
176
133
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Allison Bainbridge retired as Group Finance Director and stood down from the Board on 31 December 2022, remaining available
to provide transition support until 31 January 2023. Allison was a highly valued member of the Board and contributed
significantly to the Group’s successful growth over her eleven year tenure. To reflect this contribution, and in line with the
flexibility provided by the Remuneration Policy, the Committee applied modest discretion to disapply time pro-rating of her
2022/23 annual bonus. Anna Bielby was eligible for a pro-rated annual bonus for the 2022/23 financial year.
VESTING OF LTIP AWARDS (audited)
The LTIP amount included in the 2022/23 single total figure of remuneration reflects the conditional share award granted in
July 2020. Vesting of this award was dependent on earnings per share performance over the three years ended 31 March 2023,
the achievement of a minimum return on average capital employed of 12% and continued service until July 2023.
The performance targets for this award and actual performance against those targets was as follows:
Metric
Earnings per share*
ROACE
Threshold
target
Stretch
target
Actual % Vesting
79.69 pence
93.64 pence
79.0 pence
7.2%
12.0%
12.0%
14.4%
*EPS is measured on a net basis, in accordance with International Financial Reporting Standards, but excluding IFRS16 profit
impact and assuming a fixed corporation tax charge on profits currently at the rate of 20% 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 tax, interest, amortisation and exceptional
items excluding IFRS16 profit impact 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.
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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Annual Report on Remuneration
VESTING OF LTIP AWARDS (audited) – continued
The LTIP award details for the executive Directors are as follows:
Jeremy Pilkington
Neil Stothard
Allison Bainbridge
Number of
shares
at grant
July 2020
Number of
shares
to vest
July 2023
Grant date
face value
of vested
shares
Estimated value
of shares
vesting
67,400
53,400
39,700
4,853
3,845
2,858
£000
34)
27)
20)
£000
33
26
20
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 £6.98. The value of shares vesting is estimated using a 3-month average share price to 1 May 2023
of £6.88. This value will be trued-up in next year's report to reflect the actual share price on the date of vesting in July 2023.
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
19 August 2022
7.87
59,800
471
31 March 2025
LTIP
SAYE
100% of salary
N/A
19 August 2022
5 December 2022
7.87
5.60
49,700
642
391
4
31 March 2025
N/A
LTIP
100% of salary
19 August 2022
7.87
37,000
291
31 March 2025
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 (audited)
No payments were made to past Directors or for loss of office in the year ended 31 March 2023.
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Annual Report on Remuneration
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OUTSTANDING SHARE AWARDS (audited)
The table below sets out details of unvested share awards held by executive Directors. Details of vested awards are shown
in the statement of Directors’ shareholdings and share interests on page 64.
Executive
Scheme
Grant
date
Exercise
price
£
No. of
shares at
1 Apr 2022
Granted
during
the year
Vested
during
the year
Lapsed
during
No. of
shares at
the year 31 Mar 2023
Exercise
End of
period performance
period
Jeremy Pilkington
Total LTIP
Various
Nil
174,000
59,800
13,152
41,648
179,000
Neil Stothard
Total LTIP
Various
Nil
137,900
49,700
10,224
32,376
145,000
July 2023
31 Mar 2023
to July 2032 to 31 Mar 2025
July 2023
31 Mar 2023
to July 2032 to 31 Mar 2025
SAYE
2019
7.11
SAYE
2020
5.84
SAYE
2021
6.93
SAYE
2022
5.60
506
616
519
-
Total SAYE
1,641
-
-
-
642
642
506
-
-
-
506
-
-
-
-
-
-
October 2022
to March 2023
616
519
642
October 2023
to March 2024
October 2024
to March 2025
January 2026
to June 2026
1,777
N/A
N/A
N/A
N/A
Allison Bainbridge
Total LTIP
Various
Nil
102,450
37,000
7,584
92,166
39,700
July 2023
31 Mar 2023
to July 2032 to 31 Mar 2025
STATEMENT OF DIRECTORS’ SHAREHOLDINGS AND SHARE INTERESTS (audited)
Shareholding as
% of salary at
31 Mar 2023
Shares
beneficially
owned at
31 Mar 2023
Shares
beneficially
owned at
31 Mar 2022
Options
vested
but not yet
exercised
31 Mar 2023
Options
vested
but not yet
exercised
31 Mar 2022
Unvested
LTIP
awards1
Outstanding
SAYE
awards
Jeremy Pilkington
Neil Stothard
Allison Bainbridge
Anna Bielby
*
1,487%
n/a
0%
29,220
864,790
n/a
-
29,220
252,563
239,411
858,993
141,078
n/a
-
n/a
-
-
-
n/a
179,000
145,000
39,700
-
-
1,777
-
-
1UnvestedLTIPawardsaresubjecttoperformanceconditions
None of Stephen Rogers, Phil White, Mark Bottomley or Stuart Watson held any shares at any point in the year.
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 2023: £6.74.
*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 2023 Ackers P Investment Company Limited owned 20,181,411
shares (2022: 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, to be built up within five years of appointment. Anna Bielby was appointed on 1 January 2023 and has 5 years to meet
this requirement. As at the date of leaving, Allison Bainbridge held 335% shareholding as a % of salary and she is required to
hold at least 100% of her final salary until 31 December 2023.
There were no changes in the interests of the Directors between 31 March 2023 and 5 June 2023.
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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Annual Report on Remuneration
IMPLEMENTATION OF THE REMUNERATION POLICY FOR THE YEAR ENDING 31 MARCH 2024 (unaudited)
A summary of how the Directors’ remuneration policy will be applied during the year ended 31 March 2024 is set out below.
Base salary and fees
The Committee approved a 4% increase in base salary for Neil Stothard and Anna Bielby from 1 April 2023, in line with
the average salary increase across the Group. No increases are proposed for the Executive Chairman. An increase to the
base fees for the non-executive Directors was applied from 1 January 2023 as disclosed on page 62.
Jeremy Pilkington
Neil Stothard
Anna Bielby
Phil White
Mark Bottomley
Stuart Watson
1 April 2023
1 April 2022 (or date
of appointment)
£000
471
408
312
50
50
50
£000
% increase
471
391
300
45
50
50
0%
4%
4%
11%
0%
0%
A salary increase averaging 4% across the Group was proposed at the annual 2023 pay review, effective from 1 April 2023.
Pension arrangements
As long-serving employees, Jeremy Pilkington and Neil Stothard will continue to receive 15% of base salary in lieu of
pension contributions. Anna Bielby will continue to receive 10% of base salary in lieu of pension contributions.
Annual bonus
The maximum bonus potential will remain at 150% of base salary. Bonuses will continue to be based on challenging growth
targets for profit before tax, amortisation and exceptional items derived from the Group’s budget, with the maximum payout
target set at a level which appropriately reflects maximum opportunity available.
The Committee is of the opinion that the performance targets for the annual bonus 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
The maximum LTIP award in 2023 will remain at 100% of salary for all executive Directors. Consistent with past awards
the extent to which any LTIP awards granted in 2023 will vest will be dependent upon the achievement of a challenging
target growth in the Group’s adjusted earnings per share, underpinned by Group ROACE.
The targets for the LTIP awards granted in 2023 are as follows:
Year of award
2023
Lower target
(0% vesting)
for EPS
Upper target
(100% vesting)
for EPS
Target for
ROACE
89.66
104.60
12%)
Clawback and malus provisions in the event of significant misstatement of the results will apply to both the annual bonus
and the long term incentive as noted on page 62.
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Annual Report on Remuneration
PERFORMANCE GRAPH AND TABLE (unaudited)
The following graph charts the Total Shareholder Return of the Group and the FTSE Small Cap Index over the ten year period
from 1 April 2013 to 31 March 2023.
)
0
0
1
o
t
d
e
s
a
b
e
R
(
e
c
i
r
P
450.0
400.0
350.0
300.0
250.0
200.0
150.0
100.0
50.0
0.0
2013
2014
2014
2015
2016
2016
2017
2017
2018
2018
2019
2020
2020
2021
2021
2022
2023
The FTSE Small Cap index excluding investment trusts is regarded as an appropriate benchmark 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 growth and dividends.
VP plc
FTSE Small Cap
The total remuneration and incentive payouts for the Executive Chairman across the same period were as follows:
Year ending March
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Single figure (£000)
2,042
2,259
1,613
1,580
1,498
1,770
Annual bonus % of maximum
52% 100%
27%
72%
57%
94%
919
0%
LTIP vesting % of maximum
100% 100% 100% 100% 100% 100%
71%
915
1,098
75%
0%
54%
24%
790
30%
7%
EXECUTIVE CHAIRMAN PAY RATIO (unaudited)
The table below provides the ratio between the Executive Chairman single figure total remuneration and total remuneration for
all UK employees and the details of the salary and total remuneration for UK employees in 2022/23. We have chosen option B
as our method for calculating the pay ratio for this report, consistent with the methodology for reporting of the gender pay gap.
Year
Method
25th
percentile
Median
75th
25th
Median
percentile percentile
75th
percentile
Pay Ratio
Remuneration
Total remuneration
Salary
Total remuneration
Salary
Total remuneration
Salary
Total remuneration
Salary
2023
2023
2022
2022
2021
2021
2020
2020
B
B
B
B
B
B
B
B
34
21
49
21
44
23
44
23
28
18
41
18
38
20
37
20
20
13
29
14
27
15
27
15
£23,502
£22,955
£22,527
£22,160
£20,554
£20,466
£20,650
£20,131
£27,863
£27,000
£26,880
£26,000
£24,238
£23,968
£24,624
£23,915
£39,743
£35,598
£38,200
£34,334
£33,366
£30,905
£33,731
£30,600
The Committee has considered the findings of the pay ratio analysis which appear to be reasonable in the context of the
Group’s sector and taking into account the composition of the Group’s UK workforce against which Executive Chairman’s
remuneration is compared.
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Annual Report on Remuneration
PERCENTAGE CHANGE IN ALL DIRECTORS’ REMUNERATION (unaudited)
The table below shows the percentage change in the Directors’ salary, benefits and annual bonus between the financial
year ended 31 March 2022 and 31 March 2023 compared to the percentage change for UK employees of the Group for
each of these elements of pay.
Salary
Taxable Benefits
Annual Bonus
Jeremy Pilkington
Neil Stothard
Anna Bielby
Allison Bainbridge
Stephen Rogers
Phil White
Mark Bottomley
Stuart Watson
UK Employees
2023
2022
2021
2023
2022
2021
2023
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2023
2023
2022
2021
0%
5%
-5%
3%
8%
-4%
n/a
3%
8%
-4%
0%
5%
-4%
3%
5%
-4%
n/a
n/a
5%
12%
1%
-100%
1600%
-33%
0%
2%
-4%
n/a
0%
-2%
0%
0%
0%
0%
0%
0%
0%
n/a
n/a
10%
5%
-7%
9%
100%
-100%
11%
100%
-100%
n/a
11%
100%
-100%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
43%
169%
-67%
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 the Directors 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
2022
116.0
14.3
2023
123.3
14.5
% change
6%)
1%)
Dividend figures relate to amounts payable in respect of the relevant financial year.
68
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 73
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 Stephen Rogers (resigned 31 December 2022)
l Mark Bottomley (appointed 3 January 2023)
l Stuart Watson (appointed 3 January 2023)
Biographical information on Committee members and details of attendance at the Committee meetings during the year
are set out on pages 43 and 45. The Remuneration Committee has access to independent advice where it considers
appropriate. During 2022/23 the Committee sought external professional advice and is satisfied that the advice provided
is independent and objective.
ANNUAL GENERAL MEETING VOTING OUTCOMES (unaudited)
The following table details votes for and against the 2020 Directors’ remuneration policy and the Directors’ remuneration
report for 2021/22, along with the number of votes withheld. The Committee will continue to consider the views of
shareholders when determining and reporting on remuneration arrangements.
Directors’ Remuneration Policy 2020
Directors’ Remuneration Report 2021/22
Votes for
Votes against
Votes withheld
29,022,433 (87.25%)
4,240,672 (12.75%)
8,713
29,347,628 (87.78%)
4,086,324 (12.22%)
722,242
The Company’s remuneration policy was approved by shareholders at the Annual General Meeting held on 23 July 2020
and applies for three years. The Remuneration Committee’s Annual Report for 2021/22 was approved at the Company’s
Annual General Meeting held on 21 July 2022.
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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 2023.
PRINCIPAL ACTIVITIES
The principal activity of the Group is equipment rental and associated services.
STRATEGIC REPORT
Pursuant to Sections S414C(11) Companies Act 2006, elements of required reporting including future developments,
engagement with others and environmental matters are included within the Strategic Report, which can be found on
pages 1 to 42.
RESULTS AND DIVIDEND
Group profit after tax for the year was £23.0 million (2022: £25.5 million). The Directors recommend a final dividend of
26.5 pence per share. Subject to approval, the final dividend will be paid on 4 August 2023 to all shareholders on the
register as at 23 June 2023.
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 43. Details of Directors’ interests in shares are provided in the Directors’ Remuneration
Report on page 65. The Directors’ exposures to conduct and liability issues are mitigated by Directors and Officers insurance
cover where applicable during the financial year.
SHARE CAPITAL
Details of the Company’s share capital structure are shown in note 20 to the accounts. All shares have the same voting
rights. There are no restrictions on the transfer of shares in the Company or restrictions on voting rights.
SUBSTANTIAL SHAREHOLDERS
As at 16 March 2023 the following had notified the Company of an interest of 3% or more in the Company’s issued ordinary
share capital.
Ackers P Investment Company Limited
Jupiter Asset Management
Chelverton Asset Management
Schroder Investment Management
Invesco Asset Management Limited
Canaccord Genuity Wealth Management
Number of
Ordinary Shares
Percentage of Issued
Ordinary Shares
20,181,411
2,450,000
1,646,617
1,530,750
1,477,745
1,250,000
%
50.26
6.10
4.10
3.81
3.68
3.11
Jeremy Pilkington is a Director of Ackers P Investment Company Limited which is the holding company of Vp plc.
FINANCIAL RISK MANAGEMENT
Consideration of the financial risk management of the Group has been included in the Strategic Report on page 40.
70
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 75
Directors’ Report
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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.
Pursuant to listing rule 9.8.4C the Company is required to disclose that an arrangement is in place whereby the trustee of
the Company employee benefit trust has agreed to waive present and future dividend rights in respect of certain shares
that it holds.
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.
Further details regarding employees are provided in the Responsible Business Report on pages 15 to 28.
POLITICAL AND CHARITABLE CONTRIBUTIONS
The Group made no political contributions during the year. Donations to charities amounted to £85,000 (2022: £61,000). The
donations made in the year principally relate to environmental initiatives and 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 2023 was 37 days (2022: 41 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 Strategy, which can be found at: www.vpplc.com/responsible-business
In 2022/23 the Group paid £5.5 million (2022: £6.3 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 the Company’s shareholders at the AGM to authorise the Company to purchase its own shares
up to a maximum of 10% of the Company’s issued share capital either to be cancelled or retained as treasury shares. This
resolution will be proposed as a special resolution resolution in line with previous years. 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 only exercise this power after careful consideration, taking into
account the financial resources of the Company, future funding opportunities and the price of the Company’s shares. The
Directors 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.
During the year ended 31 March 2023 the Company did not acquire any shares under the authority of the resolution passed at
the Annual General Meeting.
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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Directors’ Report
GOING CONCERN
The Group ended the financial year in a healthy financial position. The Group continues to generate strong cash flows. Net debt,
excluding lease liabilities increased by only £3.8 million from £130.6 million at 31 March 2022 to £134.4 million at 31 March
2023. This was after funding an increase in fleet capital investment of £59.9 million. EBITDA before exceptional items and IFRS
16 impact totalled £92.9 million which was 5% higher than prior year of £88.9 million. The Business Review on pages 8 to 14
sets out the Group’s business activities, markets and outlook for the forthcoming year and beyond.
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 of adjusted Net Debt/EBITDA. The Group’s funding
requirements are largely driven by capital expenditure and acquisition activity.
As at 31 March 2023 the Group had £183.0 million of debt capacity (2022: £183.0 million) comprising committed revolving
credit facilities of £90.0 million and £93.0 million private placements which are subject to covenant testing.
In addition to the
committed facilities, the Group net overdraft facility at the year-end was £7.5 million (2022: £7.5 million).
The Board has evaluated the facilities and covenants on the basis of the budget for 2023/24 (including 2024/25 long term
forecast). All of which has been prepared taking into account the current economic climate, together with appropriate sensitivity
analysis. Stress scenarios have also been considered by the Board. Under these scenarios material revenue reductions have
been applied for the financial year ended 31 March 2024 against the Group’s original budget and extended to 30 September
2024. All scenarios retain adequate headroom against borrowing facilities and fall within the existing covenants.
Our most severe downside modelling, which reflects a 15% reduction in revenue levels demonstrates headroom over
borrowing facilities and existing covenant levels throughout the forecast period to the end of September 2024.
The Board recognises that one of the borrowing facilities used by the Group, the RCF of £90.0 million, drawn to £53m at the
balance sheet date, expires in June 2024. The Board has already held positive preliminary conversations with its lenders and
has considered the availability and likelihood of securing replacement facilities on or before the date of expiry as part of their
consideration and testing above. Although no facility has been formally agreed at the date of approval of these financial
statements, the Board considers it appropriate to continue to assume this facility will be renewed or replaced. However, it
recognises that as the Group's (and, inter alia, the Parent company’s) committed financing facilities do not extend over the full
going concern review period and renewal or replacement is subject to future agreement with lenders. Therefore, the Board is
unable to be certain that the required levels of financing will be available throughout the going concern assessment period to
enable the Group to meet its liabilities as they fall due. These conditions indicate the existence of a material uncertainty which
may cast significant doubt about the Group’s and the Parent company's ability to continue as a going concern.
Notwithstanding the above, the Board has a reasonable expectation that the Group and Parent company has adequate
resources to continue in operational existence for at least the next 12 months from the date of approval of these financial
statements, 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 preparation of the consolidated financial
statements. This is covered further in Note 1 Basis of Preparation on page 90, together with the Directors’ consideration of the
impact of the renewal of the Group’s borrowing facilities.
CORPORATE GOVERNANCE
The Corporate Governance Statement on pages 44 to 47 forms part of the Directors’ Report.
INDEPENDENT AUDITORS
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.
By Order of the Board
Anna Bielby
Company Secretary
6 June 2023
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 77
Statement of Directors’ Responsibilities
in respect of the financial statements
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The Directors are responsible for preparing the Annual Report and Accounts and the financial statements in accordance with
applicable law and regulation.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have
prepared the Group and the company financial statements in accordance with UK-adopted international accounting standards.
Under company law, 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 company and of the profit or loss of the Group for that period. In preparing the
financial statements, the Directors are required to:
l select suitable accounting policies and then apply them consistently;
l state whether applicable UK-adopted international accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements;
l make judgements and accounting estimates that are reasonable and prudent; and
l prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and
company will continue in business.
The Directors are responsible for safeguarding the assets of the Group and company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s
and company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and company
and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies
Act 2006.
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.
Directors’ confirmations
The Directors consider that the Annual Report and Accounts and accounts, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess the Group’s and company’s position and performance,
business model and strategy.
Each of the Directors, whose names and functions are listed in governance section of the annual report confirm that, to the
best of their knowledge:
l the Group and company financial statements, which have been prepared in accordance with UK-adopted international
accounting standards, give a true and fair view of the assets, liabilities and financial position of the Group and company,
and of the profit of the Group; and
l the Business Review and Financial Review includes a fair review of the development and performance of the business and
the position of the Group and company, together with a description of the principal risks and uncertainties that it faces.
In the case of each Director in office at the date the Directors’ report is approved:
l so far as the Director is aware, there is no relevant audit information of which the Group’s and company’s auditors are
unaware; and
l they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant
audit information and to establish that the Group’s and company’s auditors are aware of that information.
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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Independent auditors’ report to the
members of Vp plc
Report on the audit of the financial statements
Opinion
In our opinion, 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 2023 and of
the group’s profit and the group’s and parent company’s cash flows for the year then ended;
have been properly prepared in accordance with UK-adopted international accounting standards as applied in
accordance with the provisions of the Companies Act 2006; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which
comprise: the consolidated and parent company balance sheets as at 31 March 2023; the consolidated income
statement, the consolidated statement of comprehensive income, the consolidated and parent company statements of
changes in equity and the consolidated and parent company statements of cash flows for the year then ended; and the
notes to the financial statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were
not provided.
Other than those disclosed in note 3 to the financial statements, we have provided no non-audit services to the parent
company or its controlled undertakings in the period under audit.
Material uncertainty related to going concern
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the
disclosure made in note 1 to the financial statements concerning the group’s and the parent company’s ability to continue
as a going concern. The group's financing facilities include a revolving credit facility ('RCF') of £90m, drawn to £53m at
the balance sheet date, with a renewal date in June 2024 which is within the going concern assessment period. At the
date of this report the Board is in the early stages of discussions with its lenders regarding a refinancing of the RCF and
the group does not currently have alternative sources of committed financing that would replace the RCF at the date of
renewal. Therefore, in their considerations of the use of the going concern basis of accounting in the preparation of the
financial statements of the group and parent company, the directors are unable to be certain that the required levels of
financing will be available throughout the going concern assessment period to enable the group to meet its liabilities as
they fall due. These conditions, along with the other matters explained in note 1 to the financial statements, indicate the
existence of a material uncertainty which may cast significant doubt about the group’s and the parent company's ability
to continue as a going concern. The financial statements do not include the adjustments that would result if the group and
the parent company were unable to continue as a going concern.
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Independent auditors’ report to the
members of Vp plc (continued)
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group's and the parent company’s ability to continue to adopt the going
concern basis of accounting included:
• Obtaining management’s latest forecasts that, on the basis of a successful extension or refinancing of the group's
financing facilities as referred to above, support the Board’s assessment and conclusions with respect to the going
concern basis of preparation of the financial statements;
• Checking the mathematical accuracy of management’s forecasts;
• Considering the outturn of previous forecasts to assess management’s forecasting accuracy;
• Corroborating management’s base case forecast to appropriate supporting documentation including board approved
•
budgets and divisional budgets; and.
Evaluating management’s base case forecast and downside scenarios, challenging the underlying data and adequacy
and appropriateness of the assumptions used in making their assessment. We also evaluated the directors’ plans for
future actions in relation to their going concern assessment, should these be required.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, other than the
material uncertainty identified in note 1 to the financial statements, we have nothing material to add or draw attention to
in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to
adopt the going concern basis of accounting, or in respect of the directors’ identification in the financial statements of any
other material uncertainties to the group's and the parent company’s ability to continue to do so over a period of at least
twelve months from the date of approval of the financial statements.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Our audit approach
Overview
Audit scope
•
The group is organised into 12 reporting units. The group financial statements are a consolidation of these reporting units.
• Of the 12 reporting units, we identified three which, in our view, required an audit of their complete financial information.
Audit procedures were also performed over certain financial statement line items within two further reporting units.
•
The reporting units over which we performed audit procedures accounted for over 78% of the group’s reported revenues
•
and over 76% of the group’s profit before tax, amortisation, impairment of intangible assets and exceptional items. These
coverages are based on absolute values.
Key audit matters
• Material uncertainty related to going concern
•
•
Existence of fleeted rental equipment (group and parent)
Valuation of rental equipment (group and parent)
Materiality
• Overall group materiality: £2,000,000 (2022: £1,945,000) based on 5% of profit before tax, amortisation, impairment
of intangible assets and exceptional items.
• Overall parent company materiality: £3,000,000 (2022: £3,000,000) based on 1% of total assets.
•
Performance materiality: £1,500,000 (2022: £1,459,000) (group) and £2,250,000 (2022: £2,250,000) (parent company).
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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Independent auditors’ report to the
members of Vp plc (continued)
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and
any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
In addition to going concern, described in the material uncertainty related to going concern section above, we determined
the matters described below to be the key audit matters to be communicated in our report. This is not a complete list of
all risks identified by our audit.
Material uncertainty related to going concern in relation to the availability of committed financing is a new key audit matter
this year. Material uncertainty related to going concern in relation to a formal sale process and carrying value of goodwill
and intangible assets, which were key audit matters last year, are no longer included because of the cessation of the
formal sale process in August 2022 and as a result of the headroom in management's goodwill impairment model as well
as performance of the group. Otherwise, the key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Existence of fleeted rental equipment (group and parent)
Refer to page 50 (Significant accounting issues), page 96
(Significant accounting policies) and note 9 in the financial
statements.
We focused on this area because the group and parent
company hold a significant quantum and carrying amount
of rental equipment in the normal course of business, held
within property, plant and equipment. The net book value of
rental equipment was £220.6 million and £100.9 million as
at 31 March 2023 (2022: £216.6 million and £97.6 million)
for the group and parent company respectively.
Given the volume of assets and the frequency of
movement (through purchases, hires and sales) there is
the potential for assets to go missing. This results in
complexity in maintaining an accurate fixed asset register.
We consider the significant risk to be focused on the
fleeted (typically higher value and itemised assets with a
unique serial identifier) given the individual value of these
items and proportion that these make up of the overall
rental equipment balance.
Our audit work in respect of the existence of fleeted assets
included understanding and evaluating management’s key
controls in this area, confirming the correct recording of
fleeted assets movements on the fixed asset register on a
sample basis and substantively testing the existence of a
sample of assets.
For a sample of fleeted asset purchases in the year we
agreed to invoice and capitalisation onto the fixed asset
register, confirming the value and the appropriateness of
capitalisation. We agreed the existence of a sample of
fleeted assets out on hire at the year end to rental invoice
and cash receipt or despatch note. We attended a sample
of year end fleeted asset counts and:
• considered the design and implementation of count
controls by understanding and observing the count
procedures;
• counted a sample of assets and reconciled these to both
management’s count and the fixed asset register; and
• tested the movements of these assets between the
inspection and year end date in order to confirm their
existence at 31 March 2023.
We found, based on the results of our testing, that the
amounts recorded, and disclosures made in the financial
statements were consistent with the supporting evidence
obtained.
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Independent auditors’ report to the
members of Vp plc (continued)
Key audit matter
How our audit addressed the key audit matter
Valuation of rental equipment (group and parent)
Refer to page 50 (Significant accounting issues), page 96
(Significant accounting policies) and note 9 in the financial
statements.
We focused on this area because there is significant
management judgement involved in estimating the useful
economic lives, residual values and any impairment of the
rental equipment.
The utilisation of rental equipment is key to supporting its
valuation, so if there were a downturn in the trading
performance in a particular market or asset class, this
would present an inherent impairment risk. In addition,
variations between forecast and actual useful economic
lives and/or residual values could result in higher or lower
carrying values than may be considered appropriate.
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, testing
of utilisation statistics, integrity checks over the underlying
rental equipment data and budgeted trading performance
to determine the appropriateness of management’s
estimates.
We considered, on a sample basis, the period over which
each asset product type would recover its carrying value,
using discounted expected future cash flows, and
compared that period with the average remaining useful
economic life of the asset type.
We tested the appropriateness of the useful economic lives
and estimated residual values applied 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 over
or under depreciation of the assets.
We found, based on the results of our testing, that the
amounts recorded, and disclosures made in the financial
statements were consistent with the supporting evidence
obtained.
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 structure of the group and the parent company, the accounting processes
and controls, and the industry in which they operate.
The group’s accounting process is structured around a group finance function at its head office in Harrogate which is
responsible for the group’s reporting units. The group is organised into 12 reporting units and the group financial
statements are a consolidation of these reporting units. Of the 12 reporting units, we identified three which, in our view,
required an audit of their complete financial information. The reporting units over which we performed audit procedures
accounted for over 78% of the group’s revenues and over 76% of the group’s profit before tax, amortisation, impairment
of intangible assets and exceptional items (calculated on an absolute value basis).
All of the audit procedures have been performed by the group engagement team. In addition, the group audit team
performed analytical review procedures over a number of smaller reporting units. This included an analysis of year on year
movements, at a level of disaggregation to enable a focus on higher risk balances and unusual movements. This gave us
the evidence we needed for our opinion on the financial statements as a whole.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the extent of the potential impact of climate risk on
the group’s and parent company's financial statements, and we remained alert when performing our audit procedures for
any indicators of the impact of climate risk. In particular we considered the nature and useful economic lives of the group's
and parent company's rental equipment and the potential impact on the group of maintaining/replacing these assets in
line with climate targets. Our procedures did not identify any material impact as a result of climate risk on the group’s and
parent company’s financial statements.
(cid:5)(cid:17) (cid:17)(cid:12)(cid:16) (cid:14)(cid:18)(cid:18)(cid:9)(cid:13)(cid:12) (cid:4)(cid:8)(cid:17)(cid:11)(cid:6)(cid:10) (cid:13)(cid:18)(cid:7) (cid:14)(cid:16)(cid:16)(cid:11)(cid:9)(cid:18)(cid:10)(cid:3) (cid:15)(cid:1)(cid:15)(cid:2) (cid:5)(cid:7)(cid:7)(cid:2)(cid:6)(cid:1)(cid:6)(cid:4)(cid:3)
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Independent auditors’ report to the
members of Vp plc (continued)
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 the individual financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements - group
Financial statements - parent company
£2,000,000 (2022: £1,945,000).
£3,000,000 (2022: £3,000,000).
Overall
materiality
How we
determined it
5% of profit before tax, amortisation, impairment
of intangible assets and exceptional items
1% of total assets
Rationale for
benchmark
applied
We have chosen this as our benchmark as it is a
key performance measure disclosed to users of
the financial statements. This figure takes
prominence in the Annual Report, as well as the
communications to both the shareholders and the
market. The benchmark is consistent with the prior
year.
We have used an asset based measure for the
parent company, which is a generally accepted
auditing benchmark. Where applicable, we have
performed our testing to a lower, group allocated,
materiality for individual balances that contribute to
the consolidated group results.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group
materiality. The range of materiality allocated across components was between £316,000 and £1,699,000. Certain
components were audited to a local statutory audit materiality that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the
scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures,
for example in determining sample sizes. Our performance materiality was 75% (2022: 75%) of overall materiality,
amounting to £1,500,000 (2022: £1,459,000) for the group financial statements and £2,250,000 (2022: £2,250,000) for
the parent company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of
our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
£100,000 (group audit) (2022: £95,000) and £150,000 (parent company audit) (2022: £95,000) as well as misstatements
below those amounts that, in our view, warranted reporting for qualitative reasons.
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Independent auditors’ report to the
members of Vp plc (continued)
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent
otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report
based on these responsibilities.
With respect to the Strategic report and Directors' report, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
Strategic report and Directors' report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and
Directors' report for the year ended 31 March 2023 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and parent company and their environment obtained in the
course of the audit, we did not identify any material misstatements in the Strategic report and Directors' report.
Directors’ Remuneration
In our opinion, the part of the Annual report on remuneration to be audited has been properly prepared in accordance with
the Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that
part of the corporate governance statement relating to the parent company’s compliance with the provisions of the UK
Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate
governance statement as other information are described in the Reporting on other information section of this report.
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Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit,
and, except for the matters reported in the section headed ‘Material uncertainty related to going concern’, we have nothing
material to add or draw attention to in relation to:
•
•
The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being managed or mitigated;
The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their identification of any material uncertainties to the group’s and
parent company’s ability to continue to do so over a period of at least twelve months from the date of approval of the
financial statements;
•
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 84
Independent auditors’ report to the
members of Vp plc (continued)
•
•
The directors’ explanation as to their assessment of the group's and parent company’s prospects, the period this
assessment covers and why the period is appropriate; and
The directors’ statement as to whether they have a reasonable expectation that the parent company will be able to
continue in operation and meet its liabilities as they fall due over the period of its assessment, including any related
disclosures drawing attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the group and parent company was
substantially less in scope than an audit and only consisted of making inquiries and considering the directors’ process
supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate
Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge
and understanding of the group and parent company and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of
the corporate governance statement is materially consistent with the financial statements and our knowledge obtained
during the audit:
•
•
•
The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable,
and provides the information necessary for the members to assess the group’s and parent company's position,
performance, business model and strategy;
The section of the Annual Report that describes the review of effectiveness of risk management and internal control
systems; and
The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the parent
company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code
specified under the Listing Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of directors' responsibilities in respect of the financial statements, the directors
are responsible for the preparation of the financial statements in accordance with the applicable framework and for being
satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
80
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 85
Independent auditors’ report to the
members of Vp plc (continued)
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The
extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws
and regulations related to the Listing Rules and health and safety legislation, and we considered the extent to which non-
compliance might have a material effect on the financial statements. We also considered those laws and regulations that
have a direct impact on the financial statements such as UK tax legislation and the Companies Act 2006. We evaluated
management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of
override of controls), and determined that the principal risks were related to management bias in key accounting estimates
and posting of inappropriate journal entries to improve the group's result for the period. Audit procedures performed by
the engagement team included:
• Discussions with management, including consideration of known or suspected instances of non-compliance with laws
and regulation and fraud;
• Challenging assumptions and judgements made by management in their significant accounting estimates, particularly
•
in relation to the valuation of assets;
Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations.
Specifically we tested journal entries which increased the group result for the period with unusual offset entries, and
we tested a risk based sample of journal entries impacting revenue with unusual offset entries to detect any potentially
fraudulent revenue being recognised; and
• Review of the financial statement disclosures and agreeing to underlying supporting documentation, review of
correspondence with regulators and review of correspondence with legal advisors.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances
of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the
financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing
complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In
other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is
selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
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.
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(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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Independent auditors’ report to the
members of Vp plc (continued)
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
•
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
certain disclosures of directors’ remuneration specified by law are not made; or
the parent company financial statements and the part of the Annual report on remuneration to be audited are not in
agreement with the accounting records and returns.
•
•
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the members on 15 October 2014 to audit
the financial statements for the year ended 31 March 2015 and subsequent financial periods. The period of total
uninterrupted engagement is 9 years, covering the years ended 31 March 2015 to 31 March 2023.
Other matter
In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R,
these financial statements will form part of the ESEF-prepared annual financial report filed on the National Storage
Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’).
This auditors’ report provides no assurance over whether the annual financial report will be prepared using the single
electronic format specified in the ESEF RTS.
Tom Yeates (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Leeds
6 June 2023
82
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 87
Consolidated Income Statement
for the Year Ended 31 March 2023
Revenue
Cost of sales
Gross profit
Administrative expenses
Impairment losses on trade receivables
Operating profit before amortisation,
impairment of intangible assets and exceptional items
Amortisation and impairment of intangible assets
Exceptional items
Operating profit
Net financial expense
Profit before taxation, amortisation,
impairment of intangible assets and exceptional items
Amortisation and impairment of intangible assets
Exceptional items
Profit before taxation
Income tax expense
Profit after tax
Basic earnings per share
Diluted earnings per share
Dividend per share interim paid
Dividend per share final paid
Note
2
2
10
4
3
7
10
4
8
22
22
21
21
2023*
£000)
371,519)
(284,176)
87,343)
(44,763)
(3,305)
48,775)
(4,490)
(5,010)
39,275)
(8,569)
40,206)
(4,490)
(5,010)
30,706)
(7,696)
23,010)
58.05p)
57.76p)
11.0p)
25.5p)
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Restated*
2022)
£000)
350,915)
(261,876)
89,039)
(43,968)
(2,074)
46,299)
(3,302)
-)
42,997)
(7,353)
38,946)
(3,302)
-)
35,644)
(10,109)
25,535)
64.49p)
63.83p)
10.5p)
25.0p)
*In accordance with IASI, impairment losses on trade receivables are required to be presented separately on the face of the Income
Statement. Previously such losses were presented within Cost of Sales. This has been corrected in the current year and the comparatives
restated accordingly.
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 88
Consolidated Statement of Comprehensive Income
for the Year Ended 31 March 2023
Note
25
8
8
Profit for the year
Other comprehensive income/(expense):)
Itemsthatwillnotbereclassifiedtoprofitorloss
Remeasurements of defined benefit pension schemes
Tax on items taken to other comprehensive income
Impact of tax rate change
Itemsthatmaybesubsequentlyreclassifiedtoprofitorloss
Foreign exchange translation difference
Effective portion of changes in fair value of cash flow hedges
Total other comprehensive income
Total comprehensive income for the year
2023)
£000)
23,010)
(319)
5)
58)
502)
-)
246)
23,256)
2022)
£000)
25,535)
693)
(183)
110)
361)
221)
1,202)
26,737)
Consolidated Statement of Changes in Equity
for the Year Ended 31 March 2023
)
)Capital)
Share) Redemption)
)
Share) Hedging)
Reserve) Premium) Reserve) Translation)
Non-)
Foreign)
Currency) Retained) controlling)
Interest)
Earnings)
Capital)
)
Note
£000)
£000)
£000)
£000)
£000)
£000)
£000)
)
Total)
Equity)
£000)
At 1 April 2021
2,008)
301)
16,192)
(221)
(1,386) 136,196)
27) 153,117)
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
Movement in minority interest
8
8
Dividend to shareholders
21
Total change in equity during the year
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
)-)
)-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
221)
366)
26,150)
90)
(11)
1,249)
(516)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
(27)
(27)
(14,054)
-)
(14,054)
221)
366)
12,908)
(27)
13,468)
-)
-)
-)
-)
-)
26,737)
90)
(11)
1,249)
(516)
At 31 March 2022
and 1 April 2022)
Total comprehensive income
for the year
Tax movements to equity
Impact of tax rate change
8
8
Share option charge in the year
Net movement relating to
shares held by Vp Employee Trust
Dividend to shareholders
21
Total change in equity during the year
2,008)
301)
16,192)
-)
(1,020) 149,104)
-) 166,585)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
)-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
502)
22,754)
-)
-)
-)
-)
-)
62)
16)
580)
(1,096)
(14,471)
502)
7,845)
-)
-)
-)
-)
-)
-)
-)
23,256)
62)
16)
580)
(1,096)
(14,471)
8,347)
As at 31 March 2023
2,008)
301)
16,192)
-)
(518) 156,949)
-) 174,932)
84
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 89
Consolidated Balance Sheet
at 31 March 2023
NET ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Right of use assets
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
Lease liabilities
Income tax payable
Trade and other payables
Total current liabilities
Non-current liabilities
Interest-bearing loans and borrowings
Lease liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued share capital
Capital redemption reserve
Share premium
Foreign currency translation reserve
Retained earnings
Total equity
Note
9
10
11
25
13
14
15
11
18
16
11
19
20
2023)
£000)
252,385)
57,748)
54,637)
2,300)
367,070)
8,915)
81,513)
736)
11,140)
102,304)
469,374)
(14,622)
-)
(72,184)
(86,806)
(145,508)
(43,896)
(1,612)
(16,620)
(207,636)
(294,442)
174,932)
2,008)
301)
16,192)
(518)
156,949)
174,932)
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2022)
£000)
247,526)
62,422)
54,151)
2,738)
366,837)
7,956)
76,057)
-)
13,617)
97,630)
464,467)
(14,147)
(152)
(80,676)
(94,975)
(144,221)
(43,496)
(1,512)
(13,678)
(202,907)
(297,882)
166,585)
2,008)
301)
16,192)
(1,020)
149,104)
166,585)
The financial statements on pages 82 to 127 were approved and authorised for issue by
the Board of Directors on 6 June 2023 and were signed on its behalf by:
Jeremy Pilkington
Chairman
Company number: 481833
Anna Bielby
Director
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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Consolidated Statement of Cash Flows
for the Year Ended 31 March 2023
Note
9
11
10
Cash flows from operating activities
Profit before taxation
Adjustments for:
Share based payment charges
Depreciation
Depreciation of right of use assets
Amortisation and impairment of intangible assets
Release of arrangement fees
Financial expense
Financial income
Profit on sale of property, plant and equipment
Operating cash flow before changes in
working capital and provisions)
Increase in inventories
Increase in trade and other receivables
Decrease in trade and other payables
Cash generated from operations
Interest paid
Interest element of lease liability payments
Interest received
Income taxes paid
Net cash generated from operating activities
Cash flows from 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)
26
Net cash used in investing activities
Cash flows from financing activities
Purchase of own shares by Employee Trust
Repayment of borrowings
Drawdown of borrowings
Arrangement fees
Capital element of lease liability payments
Dividends 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 net of overdrafts as at the beginning of the year
Cash and cash equivalents net of overdrafts as
at the end of the year
21
15
2023)
£000)
30,706)
580)
46,853)
16,305)
4,490)
287)
8,601)
(32)
(9,174)
98,616)
(959)
(5,452)
(11,979)
80,226)
(5,413)
(3,038)
32)
(5,496)
66,311)
24,855)
(63,312)
-)
(38,457)
(1,096)
(29,000)
30,000)
-)
(15,921)
(14,471)
(30,488)
(2,634)
157)
13,617)
11,140)
2022)
£000)
35,644)
1,249)
45,532)
16,561)
3,302)
314)
7,355)
(2)
(7,045)
102,910)
(614)
(9,133)
(2,781)
90,382)
(4,456)
(2,940)
2)
(6,282)
76,706)
17,819)
(68,679)
(2,693)
(53,553)
(516)
(95,044)
102,044)
(773)
(17,149)
(14,054)
(25,492)
(2,339)
39)
15,917)
13,617)
86
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 91
Parent Company Statement of Changes in Equity
for the Year Ended 31 March 2023
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)
Capital)
Share) Redemption)
)
Share)
Reserve) Premium)
Capital)
)
Hedging)
Reserve)
)
Hive Up) Retained)
Earnings)
Reserve)
Note
£000)
£000)
£000)
£000)
£000)
£000)
Total)
Equity)
£000)
At 1 April 2021
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
21
Total change in equity during the year
At 31 March 2022
and 1 April 2022)
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
21
)
2,008)
301)
16,192)
(221)
8,156)
16,274)
42,710)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
221)
-)
-)
-)
-)
-)
221)
-)
-)
-)
-)
-)
-)
-)
17,109)
17,330)
90)
(11)
1,249)
(516)
90)
(11)
1,249)
(516)
(14,054)
(14,054)
3,867)
4,088)
2,008)
301)
16,192)
-)
8,156)
20,141)
46,798)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
17,688)
17,688)
62)
16)
580)
62)
16)
580)
(1,096)
(1,096)
(14,471)
(14,471)
At 31 March 2023
2,008)
301)
16,192)
-)
8,156)
22,920)
49,577)
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 92
Parent Company Balance Sheet
at 31 March 2023
NET ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investments in subsidiaries
Right of use assets
Employee benefits
Trade and other receivables
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
Lease liabilities
Trade and other payables
Total current liabilities
Non-current liabilities
Interest-bearing loans and borrowings
Deferred tax liabilities
Provisions
Lease liabilities
Trade and other payables
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Capital and reserves)
Issued share capital
Capital redemption reserve
Share premium
Hive up reserve
Retained earnings)
At the beginning of the year
Profit for the financial year
Other changes in retained earnings
At the end of the year
)
Total equity
Note
9
10
12
11
25
14
13
14
15
11
18
16
19
11
18
20
2023)
£000)
118,308)
7,674)
68,775)
11,407)
2,135)
61,716)
270,015)
2,272)
28,363)
468)
1,832)
32,935)
302,950)
(3,579)
(64,581)
(68,160)
(145,508)
(14,439)
(54)
(8,237)
(16,975)
(185,213)
(253,373)
49,577)
2,008)
301)
16,192)
8,156)
20,141)
18,294)
(15,515)
22,920)
49,577)
2022)
£000)
114,327)
9,188)
68,775)
13,361)
3,068)
55,699)
264,418)
1,893)
26,141)
342)
2,537)
30,913)
295,331)
(4,004)
(65,493)
(69,497)
(144,221)
(12,813)
-)
(9,754)
(12,248)
(179,036)
(248,533)
46,798)
2,008)
301)
16,192)
8,156)
16,274)
16,597)
(12,730)
20,141)
46,798)
The financial statements on pages 82 to 127 were approved and authorised for issue by
the Board of Directors on 6 June 2023 and were signed on its behalf by:
Jeremy Pilkington
Chairman
Company number: 481833
Anna Bielby
Director
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(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 93
Parent Company Statement of Cash Flows
for the Year Ended 31 March 2023
Cash flows from operating activities
Profit before taxation
Adjustments for:
Share based payment charges
Depreciation
Depreciation of right of use assets
Amortisation and impairment of intangible assets
Release of arrangement fees
Financial expense
Financial income
Profit on sale of property, plant and equipment
Operating cash flow before changes in
working capital and provisions)
(Increase)/decrease in inventories
Increase in trade and other receivables
Increase in trade and other payables
Cash generated from operations
Interest paid
Interest element of lease liability payments
Interest received
Income taxes paid
Net cash generated from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Net cash used in investing activities
Cash flow from financing activities
Purchase of own shares by Employee Trust
Repayment of borrowings
Drawdown of borrowings
Arrangement fees
Capital element of lease liability payments
Dividends paid
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents net of overdrafts as at the beginning of the year
Cash and cash equivalents net of overdraft as
at the end of the year
Note
9
11
10
21
15
2023)
£000)
21,906)
580)
14,093)
4,863)
1,514)
287)
4,615)
(10)
(2,416)
45,432)
(379)
(3,384)
(380)
41,289)
(5,413)
(712)
10)
(1,684)
33,490)
8,956)
(23,733)
(14,777)
(1,096)
(29,000)
30,000)
-)
(4,851)
(14,471)
(19,418)
(705)
2,537)
1,832)
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2022)
£000)
21,730)
1,249)
13,641)
4,956)
359)
314)
3,963)
(1)
(1,715)
44,496)
365)
(13,849)
1,590)
32,602)
(4,456)
(644)
1)
(1,840)
25,663)
6,252)
(20,887)
(14,635)
(516)
(95,044)
102,044)
(773)
(5,260)
(14,054)
(13,603)
(2,575)
5,112)
2,537)
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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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 (limited by shares) which is listed on the London Stock Exchange and incorporated and domiciled in
the United Kingdom. These consolidated Financial Statements of Vp plc for the year ended 31 March 2023, 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
The consolidated financial statements of the Group and the Parent company financial statements have been prepared in accordance with UK-
adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under
those standards.
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.
Going concern
The going concern basis has been adopted in preparation of the consolidated financial statements. The Board has evaluated funding, facilities
and covenants on the basis of the budget for 2023/24 (including 2024/25 long term forecast) and has performed sensitivity analysis on them.
The Group and Parent company forecast positive cash inflows through a pipeline of existing and new hire agreements and other services; the
Group and Parent company also have sufficient finance facilities available if required, subject to the successful renewal of the revolving credit
facility ('RCF'). The assessment included an analysis of the Group’s and Parent company's current financial position, ability to trade, principal risks
facing the Group, and the effectiveness of its strategies to mitigate the impact of liquidity risks. On the basis of these procedures, the Board has
a reasonable expectation that the Group has adequate resources to continue in operation for the foreseeable future.
In making this assessment the Board recognises that one of the borrowing facilities used by the Group, the RCF of £90.0 million, drawn to £53m
at the balance sheet date, expires in June 2024. The Board has already held positive preliminary conversations with its lenders and has
considered the availability and likelihood of securing replacement facilities on or before the date of expiry as part of their consideration and
testing above. Although no facility has been formally agreed at the date of approval of these financial statements, the Board considers it
appropriate to continue to assume this facility will be renewed or replaced. However, it recognises that as the Group's (and, inter alia, the Parent
company’s) committed financing facilities do not extend over the full going concern review period and renewal or replacement is subject to
future agreement with lenders. Therefore, the Board is unable to be certain that the required levels of financing will be available throughout
the going concern assessment period to enable the Group to meet its liabilities as they fall due. These conditions indicate the existence of a
material uncertainty which may cast significant doubt about the Group’s and the Parent company's ability to continue as a going concern.
Notwithstanding the above, the Board has a reasonable expectation that the Group and Parent company has adequate resources to continue in
operational existence for at least the next 12 months from the date of approval of these financial statements. The financial statements do not
include the adjustments that would result if the Group and Parent company were unable to continue as a going concern.
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(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 95
Notes
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
Accounting policies
The Group’s and Company’s accounting policies are set out below and the accounting policies 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 2023.
Future standards
Certain new accounting standards and interpretations have been published that are not mandatory for 31 March 2023 reporting period
and have not been early adopted by the Group. These standards are not expected to have a material impact on the entity in the current
or future reporting periods and on foreseeable future transactions. These standards are as follows:
l IFRS 17 ‘Insurance Contracts’;
l amendments to IAS 12 ‘Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction’
l amendments to IAS 1 ‘Presentation of Financial Statements’ on classification of liabilities as current or non-current
l amendments to IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’
l amendments to IAS 1 and IFRS Practice Statement 2 – making materiality judgements.
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.
Assets acquired via acquisitions are recorded in the accounting records at fair value.
Depreciation is provided by the Group to write off the cost or deemed cost less estimated residual value (where appropriate) 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
20% - 33% straight line
10% - 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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(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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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.
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 relationships
Supply agreements
Trade names
–
–
–
up to 10 years
the initial term of the agreement
over the estimated initial period of usage, normally 10 years
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 (CGU) 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. Recoverable amount of a CGU is determined either by reference to discounted forecast cash flows from the cash generating unit or
an estimate of its fair value less costs of disposal, whichever is higher. A CGU is defined as the smallest identifiable group of assets that
generates largely independent cash inflows.
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. For slow-moving or obsolete items, where net realisable
value is lower than cost, necessary provision is made.
Raw materials and consumables is held primarily for the repair and maintenance of fleet assets. Goods for resale is inventory held for
sale to customers. The basis of expensing stock is on a first-in first-out basis.
Trade and other receivables
Trade and other receivables are stated at their due amounts less impairment losses. The Group applies the IFRS 9 simplified approach to
measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. Trade receivables are written
off when there is no reasonable expectation of recovery. The loss allowance for trade receivables are based on assumptions about risk
of default and expected loss rates. The Group uses judgement in making these assumptions based on the Group’s past history, existing
market conditions as well as forward looking estimates at the end of each reporting period.
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. The Group has a legal right and an intention to settle these balances net.
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 97
Notes
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
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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. 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. A tax provision is recognised where there is a probable requirement to settle, in the
future, an obligation based on a past event.
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 plans 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 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 at the earlier of the date when a plan amendment or curtailment occurs and the date when an
entity recognises related restructuring costs or termination benefits.
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.
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
93
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Notes
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
Derivative financial instruments
Interest rate and exchange rate swaps are only used for economic hedging purposes and not as speculative investments. At inception of
the hedge relationship, the Group documents the economic relationship between hedging instruments and hedged items. The Group
documents its risk management objective and strategy for undertaking its hedge transactions. The Group determines the hedge
effectiveness of its interest and exchange rate swaps at the inception of the hedge relationship, and through periodic prospective
effectiveness assessments to ensure that an economic relationship exists between the hedged item and the hedging instrument.
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”.
instrument is recognised directly in equity.
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
If a hedge of a forecasted transaction subsequently results in the
liability, the associated gains and losses that were recognised directly in equity are
recognition of a financial asset or a financial
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 swaps 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 or other assets
as appropriate.
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
accounted for under IFRS 16 - Leases. Revenue is recognised from the start of hire through to the end of the agreed hire period
predominantly on a time apportioned basis. Revenue for services and sales of goods are accounted for under IFRS 15 - Revenue from
Contracts with Customers. Revenue from providing services is recognised in the accounting period in which the services are rendered.
The majority of services provided are short term and only an immaterial proportion bridge a financial year end. Any increases or decreases
in estimated revenues or costs arising from changed circumstances are reflected in profit in the period in which they become known by
management. Revenue from sale of goods primarily relates to consumables and new machine sales. Revenue is recognised when a
Group entity sells a consumable to the customer or when control of the new machine has transferred ownership to the buyer upon
delivery. Depending on the type of sale, a receivable is recognised when the goods are delivered or due immediately. 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. Below summarises the disaggregation of revenue from contracts with customers from the total revenue disclosed in the
consolidated income statement:
Equipment hire
Services
Sales of goods
Total revenue
UK)
£000)
249,126)
56,967)
27,360)
333,453)
2023
International)
£000)
26,131)
8,078)
3,857)
38,066)
Total)
£000)
275,257)
65,045)
31,217)
371,519)
UK)
£000)
243,287)
52,891)
24,025)
320,203)
2022
International)
£000)
23,508)
5,820)
1,384)
30,712)
Total)
£000)
266,795)
58,711)
25,409)
350,915)
94
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 99
Notes
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
Share based payments
S
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r
a
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e
g
i
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R
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p
o
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t
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e
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a
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f
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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.
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.
The Group’s results are subject to fluctuations caused by the cash settled share options and national insurance costs on LTIPs and 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. A movement of 10 pence in share price would impact the charge
to the Income Statement by £33,000 (2022: £37,000).
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.
Leases
The Group holds leases for various properties, equipment and vehicles. Rental contracts are typically made for fixed periods of 1 to 10
years, but may have extension options as described below. Lease terms are negotiated on an individual basis and contain a wide range
of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased
assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.
Leases are recognised as a right of use asset and a corresponding liability at the date at which the leased asset is available for use by
the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit over the lease
period. The right of use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value
of fixed payments less any incentives receivable, variable lease payments that are based on a specified index or a rate, the exercise price
of a purchase option if the Group is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the
lease term reflects the Group exercising that option. Lease payments to be made under reasonably certain extension options are also
included in the measurement of the liability. A separate provision for onerous leases is therefore no longer required.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is
generally the case for leases in the Group, the lessee’s incremental borrowing rate is used. This incremental borrowing rate is the interest
rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value over a similar term and with
similar security to the right of use asset in a similar economic environment. To determine the incremental borrowing rate, the Group,
where possible uses recent third-party financing received by the lessee as a starting point, adjusted to reflect changes in the financing
conditions since third party financing was received; adjusts for credit risk as required; and makes adjustments specific to the lease for
example to country, currency and security.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so
as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
95
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 100
Notes
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
Leases (continued)
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the
Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.
Where a lease has ended and we have moved to an ongoing rental with the supplier, no right of use asset or lease liability is recognised
until a new contract is signed. Payments associated with short term leases and leases of low value assets are recognised on a straight-
line basis as an expense in the Consolidated Income Statement. Short term leases are certain leases with a lease term of 12 months or
less. Low value assets comprise certain IT equipment and small items of office equipment.
Extension and termination options are included in a number of leases across the Group. In determining the lease term, management
considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination
option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to
be extended (or not terminated). The assessment is reviewed if a significant event or a significant change in circumstances occurs which
affects the assessment and that is within the control of the Group. This reassessment could result in a recalculation of the lease liability
and a material adjustment to the associated balances.
Exceptional items
The business classifies certain events as exceptional items due to their size and nature where it feels that separate disclosure would help
understand the underlying performance of the business. Restructuring and transformational costs are considered on a case by case basis
as to whether they meet the exceptional criteria. Other items are considered against the exceptional criteria based on the specific
circumstances. The presentation is consistent with the way Financial Performance is measured by management and reported to the
Board. Further discussion is disclosed in note 4.
Accounting estimates and judgements
The key accounting policies, estimates and judgements used in preparing the Group’s and Company’s Annual Report and Accounts for the
year ended 31 March 2023 have been reviewed and approved by the Board.
Key accounting estimates
The areas of principal accounting uncertainty that could have a significant impact in the next 12 months are estimated useful lives of
rental assets, including residual values, the testing for impairment of goodwill and other intangibles which require significant estimates
and judgements relating to cash flows, and the valuation of the fair value of acquired assets and liabilities which also requires significant
estimates and judgements.
The Group continually reviews depreciation rates and using its judgement adopts a best estimate policy in assessing estimated useful
economic lives of fleet assets. The rate of technological and legislative change and impact of climate related risks 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.
Goodwill and other intangible assets are tested for impairment by reference to the higher of expected estimated cash generated by the
CGU or fair value less cost to sale. 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 10.
The accounting for acquisitions requires the Group to use its judgement and use estimates to determine the fair value of net assets
acquired, particularly intangible assets. Further details are provided in note 26.
Key accounting judgements
The Group has not identified any significant judgements in the preparation of the financial statements.
96
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 101
Notes
2. SEGMENT REPORTING
Segment reporting is presented in respect of the Group’s business and geographical segments. The Group’s reportable segments are the
two units, UK and International. This has been determined on the way in which financial information is organised and reported to the
Group Board who are responsible for the key operating decisions of the Group, allocating resources and assessing performance and hence
are the chief operating decision makers. Total external revenue in 2023 was £371.5 million (2022: £350.9 million). Inter-segment pricing
is determined on an arm’s length basis. Included within revenue is £31.2 million (2022: £25.4 million) of revenue relating to the sale of
goods, the rest of the revenue is service related including 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 £63.3 million (2022: £50.9 million), including overseas revenue generated by the UK
based divisions.
Business segments
Revenue
External)
Revenue)
£000)
333,453)
38,066)
2023
Internal)
Revenue)
£000)
Total)
Revenue)
£000)
8,217)
341,670)
42)
38,108)
External)
Revenue)
£000)
320,203)
30,712)
2022
Internal)
Revenue)
£000)
5,576)
-)
Total)
Revenue)
£000)
325,779)
30,712)
UK
International
Operating profit
Operating profit
before amortisation,
before
impairment of
amortisation and
intangible assets and
exceptional items
exceptional items
2023)
2022
£000)
£000)
45,564)
44,704)
3,211)
1,595)
371,519)
8,259)
379,778)
350,915)
5,576)
356,491)
48,775)
46,299)
A reconciliation of operating profit before amortisation and exceptional items to profit before tax is provided in the Income Statement.
UK
International
UK
International
Assets
Liabilities
Net Assets
2023)
£000)
427,056)
42,318)
469,374)
2022)
£000)
425,382)
39,085)
464,467)
2023)
£000)
279,951)
14,491)
294,442)
2022)
£000)
286,524)
11,358)
297,882)
2023)
£000)
147,105)
27,827)
174,932)
2022)
£000)
138,858)
27,727)
166,585)
Acquired
Assets
Capital
Expenditure
2023)
£000)
-)
-)
-)
2022)
£000)
1,647)
-)
1,647)
2023)
£000)
59,952)
6,908)
66,860)
2022)
£000)
63,011)
5,023)
68,034)
Acquired assets relate primarily to tangible and intangible assets acquired as a result of acquisitions. Capital expenditure relates to
tangible assets acquired in the normal course of business.
Included within segmental assets above is goodwill in relation to the following segments: UK £42.5 million (2022: £42.7 million),
International £2.1 million (2022: £2.2 million).
S
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a
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c
i
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m
e
n
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s
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h
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h
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d
e
r
l
I
n
f
o
r
m
a
t
i
o
n
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
97
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 102
Notes
3. OPERATING PROFIT
Operating profit is stated after charging/(crediting):
Amortisation and impairment of intangible assets
Depreciation of property, plant and equipment – owned
Depreciation of property, plant and equipment – leased
Profit on disposal of property, plant and equipment
Amounts paid to auditors:
Audit fees – parent company annual accounts
Audit fees – other Group companies
Audit fees – other Group companies in respect of prior year audits
Audit fees – total Group
)
Audit related assurance services all within Parent company
4. EXCEPTIONAL ITEMS
During the year, the Group incurred costs which were identified as being exceptional items.
Costs associated with Formal Sale Process
Restructuring and reorganisations
Total Exceptional Items
2023)
£000)
4,490)
46,853)
16,305)
(9,174)
515)
73)
80)
668)
1)
2023)
£000)
1,687)
3,323)
5,010)
2022)
£000)
3,302)
45,532)
16,561)
(7,045)
500)
41)
-)
541)
1)
2022)
£000)
-)
-)
-)
Costs associated with the Formal Sale Process were professional fees which were incurred by the Group as part of the procedure. This was
a one off process which is deemed to be exceptional.
Costs incurred regarding restructuring and reorganisations relates to various regionalisation projects and the closure of certain branches during
the year. Costs cover redundancies, property exit costs and write off of assets which can no longer be used. In all cases, these closures and
reorganisations were part of a one off process and were completed by 31 March 2023 and are thus deemed to be exceptional. The goodwill
and intangible assets charge of these closures was £1.2 million as shown in Note 10. This is not included in exceptional items.
The exceptional items above result in a reduction of £612,000 in the tax charge.
During the year to 31 March 2022, the Group incurred no exceptional items.
98
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 103
Notes
5. 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
Other pension costs
Share option costs including associated social security costs - equity settled
Share option costs including associated social security costs - cash settled
2023)
2,052)
344)
553)
2,949)
2023)
£000)
109,575)
10,125)
3,648)
466)
(521)
123,293)
2022)
2,068)
323)
442)
2,833)
2022)
£000)
103,667)
9,065)
3,256)
1,343)
259)
117,590)
Company
The average monthly number of persons employed by the Company (including Directors) during the year, analysed by category, was as
follows:
Number of employees
Operations
Sales
Administration
Company
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Other pension costs
Share option costs including associated social security costs - equity settled
Share option costs including associated social security costs - cash settled
2023)
403)
123)
187)
713)
2023)
£000)
32,383)
3,686)
838)
281)
(521)
36,667)
2022)
388)
118)
169)
675)
2022)
£000)
30,449)
3,235)
750)
568)
259)
35,261)
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
G
o
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e
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n
a
n
c
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F
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a
n
c
i
a
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S
t
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e
m
e
n
t
s
S
h
a
r
e
h
o
d
e
r
l
I
n
f
o
r
m
a
t
i
o
n
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
99
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Notes
6. 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
2023)
£000)
1,886)
174)
81)
2,141)
2022)
£000)
2,227)
192)
272)
2,691)
Further details of Directors’ remuneration, pensions and share options, including the highest paid Director, are given in the Annual Report
on Remuneration on page 62 onwards.
7. NET FINANCIAL EXPENSE
Financial income:
Bank and other interest receivable
Financial expenses:
Bank loans, overdrafts and other interest
Finance charges in respect of operating leases under IFRS 16
Net financial expense
8. INCOME TAX EXPENSE
Current tax expense
UK Corporation tax charge at 19% (2022: 19%)
Overseas tax - current year
Adjustments in respect of prior years - UK
Adjustments in respect of prior years - Overseas
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
2023)
£000)
32)
(5,563)
(3,038)
(8,601)
(8,569)
2023)
£000)
4,909)
724)
(399)
(738)
4,496)
1,336)
1,151)
713)
3,200)
7,696)
2022)
£000)
2)
(4,414)
(2,941)
(7,355)
(7,353)
2022)
£000)
6,097)
764)
13)
218)
7,092)
489)
2,711)
(183)
3,017)
10,109)
100
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 105
Notes
8. INCOME TAX EXPENSE (continued)
Reconciliation of effective tax rate
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the statutory 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
Capital allowances super-deduction
Unutilised tax losses
Effects of overseas tax rates
Share options
Adjustments in respect of prior years
Total tax charge for the year
Tax recognised in reserves
Other comprehensive income:
Tax relating to actuarial (losses)/gains on defined benefit pension schemes
Tax relating to historic asset revaluations
Tax relating to foreign exchange translation differences
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
2023)
%)
2023)
£000)
30,706)
2022)
%)
2022)
£000)
35,644)
19.0)
5,834)
19.0)
6,772)
3.7%)
1.2%)
1.4%)
(1.6%)
(0.6%)
0.2%)
2.0%)
1.2%)
(1.4%)
25.1%)
1,151)
354)
429)
(488)
(195)
55)
618)
362)
(424)
7,696)
2023)
£000)
(60)
(1)
56)
(58)
(63)
(62)
-)
(16)
(78)
(141)
7.6%)
0.7%)
1.0%)
(0.8%)
(0.4%)
0%)
1.1%)
-)
0.1%)
28.3%)
2,711)
227)
367)
(268)
(136)
-)
388)
-)
48)
10,109)
2022)
£000)
132)
(1)
52)
(110)
73)
(160)
70)
11)
(79)
(6)
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
S
t
a
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e
m
e
n
t
s
S
h
a
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e
h
o
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e
r
l
I
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f
o
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m
a
t
i
o
n
The UK corporation tax rate for the year ended 31 March 2023 was 19% (2022: 19%).
The rate of corporation tax has changed from 19% to 25%, effective from 1 April 2023. Therefore, the closing deferred tax assets/liabilities are
measured at 25%.
The main reconciling items are:
l Expenses not deductible for tax purposes; primarily related to capital transactions, disallowable expenses and customer entertaining
l Non-qualifying depreciation; mainly relates to depreciation on land and buildings
l Gains covered by exemptions/losses; primarily related to chattels exemptions on the disposal proceeds of fleet items
l Overseas tax rates; which are higher than the UK tax rate, particularly in Australia and Germany
l Adjustments in respect of prior years; reflecting the differences between the tax calculation for accounts purposes and the final tax returns. The
main factor this year is a tax credit from the carry back of Australian tax losses. Other factors include disallowed expenses and chargeable gains
l Impact of tax rate change, as noted above
The effective tax rate before any prior year adjustments, tax rate change, impairment of intangible assets and other exceptional items would be
expected to be about 2.1% over the standard rate of tax (2022: 1.6%).
The closing unremitted earnings of subsidiaries is approximately £183m (2022: 172m). No deferred tax liability is recognised on investments in
subsidiaries, branches, associates and interests in joint arrangements because the Parent company is able to control the timing of the reversal of
the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
101
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 106
Notes
9. PROPERTY, PLANT AND EQUIPMENT
GROUP
Cost or deemed cost
At 1 April 2021
Additions
Acquisitions
Disposals
Exchange rate differences
Transfer between categories
At 31 March 2022
Additions
Disposals
Exchange rate differences
Transfer between categories
At 31 March 2023
Land and)
Buildings)
Rental)
Equipment)
Motor)
Vehicles)
£000)
41,829)
3,367)
630)
(503)
10)
-)
£000)
423,774)
59,809)
883)
(41,904)
351)
(5)
£000)
3,792)
2,184)
96)
((367)
15)
-)
Other)
Assets)
£000)
36,148)
2,674)
38)
(1,048)
87)
5)
)
Total)
£000)
505,543)
68,034)
1,647)
(43,822)
463)
-)
45,333)
442,908)
5,720)
37,904)
531,865)
2,532)
(280)
(3)
-)
59,944)
(48,487)
769)
(5)
714)
((258)
69)
-)
3,670)
(407)
(82)
5)
66,860)
(49,432)
753)
-)
47,582)
455,129)
6,245)
41,090)
550,046)
Accumulated depreciation and impairment losses
At 1 April 2021
Charge for year
Acquisitions
On disposals
Exchange rate differences
Transfer between categories
22,465)
1,935)
-)
(357)
11)
-)
217,724)
39,850)
-)
(31,428)
143)
(5)
2,179)
742)
-)
(269)
11)
-)
29,263)
3,005)
-)
(994)
59)
5)
271,631)
45,532)
-)
(33,048)
224)
-)
At 31 March 2022
24,054)
226,284)
2,663)
31,338)
284,339)
Charge for year
On disposals
Exchange rate differences
Transfer between categories
2,093)
(195)
(7)
-)
40,888)
(32,943)
264)
(3)
876)
(231)
11)
-)
2,996)
(383)
(47)
3)
46,853)
(33,752)
221)
-)
At 31 March 2023
25,945)
234,490)
3,319)
33,907)
297,661)
Net book value
At 31 March 2023
21,637)
220,639)
2,926)
7,183)
252,385)
At 31 March 2022
21,279)
216,624)
3,057)
6,566)
247,526)
At 31 March 2021
19,364)
206,050)
1,613)
6,885)
233,912)
102
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 107
Notes
9. PROPERTY, PLANT AND EQUIPMENT (continued)
COMPANY
Cost or deemed cost
At 1 April 2021
Additions
Group transfers in
Group transfers out
Disposals
At 31 March 2022
Additions
Group transfers in
Group transfers out
Disposals
At 31 March 2023
Land and)
Buildings)
Rental)
Equipment)
£000)
18,104)
667)
630)
-)
(220)
£000)
185,767)
16,123)
2,898)
(4,198)
(7,923)
19,181)
192,667)
823)
-)
-)
(109)
22,003)
3,443)
(3,939)
(14,872)
19,895)
199,302)
Accumulated depreciation and impairment losses
Motor)
Vehicles)
£000)
1,960)
50)
-)
-)
(209)
1,801)
236)
-)
-)
(195)
1,842)
1,147)
184)
-)
-)
(201)
1,130)
215)
-)
-)
(181)
1,164)
Other)
Assets)
£000)
14,392)
1,435)
-)
-)
(920)
)
Total)
£000)
220,223)
18,275)
3,528)
(4,198)
(9,272)
14,907)
228,556)
2,009)
-)
-)
25,071)
3,443)
(3,939)
(109)
(15,285)
16,807)
237,846)
10,535)
1,333)
-)
-)
(883)
108,141)
13,641)
1,379)
(2,324)
(6,608)
10,985)
114,229)
1,507)
-)
-)
(89)
14,093)
1,966)
(2,005)
(8,745)
12,403)
119,538)
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
S
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a
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h
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e
r
l
I
n
f
o
r
m
a
t
i
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n
6,692)
526)
-)
-)
(158)
7,060)
584)
-)
-)
(93)
7,551)
89,767)
11,598)
1,379)
(2,324)
(5,366)
95,054)
11,787)
1,966)
(2,005)
(8,382)
98,420)
At 1 April 2021
Charge for year
Group transfers in
Group transfers out
On disposals
At 31 March 2022
Charge for year
Group transfers in
Group transfers out
On disposals
At 31 March 2023
Net book value
At 31 March 2023
At 31 March 2022
At 31 March 2021
12,344)
100,882)
678)
4,404)
118,308)
12,121)
97,613)
11,412)
96,000)
671)
813)
3,922)
114,327)
3,857)
112,082)
The cost or deemed cost of land and buildings for the Group and the Company includes £3,204,000 (2022: £3,204,000) of freehold land
not subject to depreciation.
The banks that provide the Group’s funding facilities have a fixed and floating charge over the assets of the Group as set out in note 16.
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
103
50051-Vp Annual Report 2023.qxp 07/06/2023 17:59 Page 108
Trade)
Names)
£000)
Customer)
Relationships)
£000)
Supply)
Agreements)
£000)
Notes
10. INTANGIBLE ASSETS
GROUP
Cost or deemed cost
At 1 April 2021
Acquired through business combinations
Exchange rate differences
At 31 March 2022
)
Exchange rate differences
At 31 March 2023
Accumulated amortisation and impairment
At 1 April 2021
Exchange rate differences
Amortisation
At 31 March 2022
Exchange rate differences
Amortisation
Impairment
At 31 March 2023
Carrying amount
At 31 March 2023
At 31 March 2022
At 31 March 2021
14,349)
-)
56)
14,405)
(92)
14,313)
6,610)
40)
1,221)
7,871)
(64)
1,230)
271)
9,308)
5,005)
6,534)
7,739)
26,383)
191)
57)
26,631)
(95)
26,536)
13,571)
36)
2,081)
15,688)
(63)
2,103)
714)
18,442)
8,094)
10,943)
12,812)
Goodwill)
£000)
72,054)
1,051)
79)
73,184)
(124)
73,060)
28,239)
-)
-)
28,239)
-)
-)
172)
Total)
£000)
117,775)
1,242)
192)
119,209)
(311)
118,898)
53,409)
76)
3,302)
56,787)
(127)
3,333)
1,157)
4,989)
-)
-)
4,989)
-)
4,989)
4,989)
-)
-)
4,989)
-)
-)
-)
4,989)
28,411)
61,150)
-)
-)
-)
44,649)
57,748)
44,945)
43,815)
62,422)
64,366)
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
Brandon Hire Station
ESS
MEP
TR
Goodwill
*
*
*
*
*
*
*
*
2023
£000
7,465
25,876
5,260
3,981
2,067
44,649
2022)
£000)
7,632)
25,876)
5,260)
3,981)
2,196)
44,945)
104
(cid:5)(cid:7)(cid:7)(cid:2)(cid:6)(cid:1)(cid:6)(cid:4)(cid:3) (cid:5)(cid:17) (cid:17)(cid:12)(cid:16) (cid:14)(cid:18)(cid:18)(cid:9)(cid:13)(cid:12) (cid:4)(cid:8)(cid:17)(cid:11)(cid:6)(cid:10) (cid:13)(cid:18)(cid:7) (cid:14)(cid:16)(cid:16)(cid:11)(cid:9)(cid:18)(cid:10)(cid:3) (cid:15)(cid:1)(cid:15)(cid:2)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 109
Notes
10. INTANGIBLE ASSETS (continued)
Goodwill arising on business combinations has been allocated to the CGUs that are expected to benefit from those business combinations.
The carrying value of intangible assets and goodwill has been assessed for impairment by reference to its recoverable amount, being
the higher of its value in use and fair value less costs of disposal. Value in use has been estimated using cash flow projections over a
period of 5 years derived from the approved budget for the coming year and subsequent year’s long range forecast. 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 based on past experience, market conditions, terminal year growth 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.
In the current year, trading locations associated with Groundforce were closed resulting in some exceptional costs (see note 4). The
goodwill and intangible assets attached to these were impaired as there is no longer any recoverable value associated with these. These
impairments along with amortisation were charged to cost of sales and are not included in exceptional items, but they are excluded from
the Group’s adjusted profit before tax, amortisation, impairment of intangible assets and exceptional
items as per the Alternative
Performance Measures on page 129. The charges relate to the CGUs shown on page 104.
The pre tax discount rate applied to all CGUs was 13% (2022: 11%), an estimate based on the Group’s weighted cost of capital, reflective
of the required return an investee would expect from each CGU. The same discount rate is used as all CGUs are considered to have similar
profiles. A long term growth rate factor of 2% (2022: 2%) was applied when assessing impairment. 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 with the exception of that noted
above even allowing for a reasonable degree of sensitivity to the underlying assumptions, including the discount rate.
COMPANY
Cost or deemed cost
At 1 April 2021, 31 March 2022 and 31 March 2023
Accumulated amortisation and impairment
At 1 April 2021
Amortisation charge
At 31 March 2022
Amortisation charge
Impairment charge
At 31 March 2023
Carrying amount
At 31 March 2023
At 31 March 2022
At 31 March 2021
Trade
Names
) Customer)
Relationships)
Supply)
Agreements)
£000
2,482
2,123
72
2,195
2
271
2,468
14
287
359
£000)
5,548)
3,846)
287)
4,133)
355)
714)
5,202)
346)
1,415)
1,702)
£000)
394)
394)
-)
394)
-)
-)
394)
-)
-)
-)
Goodwill)
£000)
25,163)
17,677)
-)
17,677)
-)
172)
17,849)
7,314)
7,486)
7,486)
Total)
£000)
33,587)
24,040)
359)
24,399)
357)
1,157)
25,913)
7,674)
9,188)
9,547)
The Directors have reviewed the carrying amount of the Company’s goodwill and indefinite life intangible assets on the same basis as
the Group‘s goodwill and concluded that there are no additional impairment charges required.
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
S
h
a
r
e
h
o
d
e
r
l
I
n
f
o
r
m
a
t
i
o
n
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
105
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 110
Notes
11. LEASES
This note provides information for leases where the Group is a lessee.
(a) Amountsrecognisedinthebalancesheet
The recognised right of use assets relate to the following types of assets:
Property
Equipment
Vehicles
Total right of use assets
Group
Company
2023)
£000)
39,785)
5,302)
9,550)
54,637)
2022)
£000)
40,497)
6,016)
7,638)
54,151)
2023)
£000)
5,101)
333,735)
2,571)
11,407)
2022)
£000)
5,982)
5,027)
2,352)
13,361)
The recognised lease liabilities relate to the following types of assets:
Property
Equipment
Vehicles
Total lease liabilities
Of which are:
Current lease liabilities
Non-current lease liabilities
Group
Company
2023)
£000)
43,754)
5,494)
9,270)
58,518)
14,622)
43,896)
58,518)
2022)
£000)
44,067)
6,222)
7,354)
57,643)
14,147)
43,496)
57,643)
2023)
£000)
5,414)
3,910)
2,492)
2022)
£000)
6,273)
5,227)
2,257)
11,816)
13,757)
3,579)
8,237)
11,816)
4,004)
9,754)
13,758)
Additions to the right of use assets during the current financial year for the Group was £9.7 million (2022: £13.1 million) and for the Company
was £1.8 million (2022: £5.4 million).
(b) Amountsrecognisedintheconsolidatedincomestatement
The consolidated income statement shows the following amounts relating to leases for the year ended 31 March 2023:
Group
Company
Depreciation charge on right-of-use assets
Property
Equipment
Vehicles
2023)
£000)
8,556)
3,495)
4,254)
2022)
£000)
7,810)
3,788)
4,963)
16,305)
16,561)
Interest expense (included in finance expenses)
Expense relating to short-term leases
(included in cost of sales and administrative expenses)
Expenses relating to low-value assets that are not shown above
as short-term leases (included in administrative expenses)
3,038)
2,051)
-)
2,941)
2,661)
6)
2023)
£000)
1,010)
2,494)
1,359)
4,863)
701)
131)
-)
2022)
£000)
827)
2,535)
1,594)
4,956)
634)
225)
3)
The total cash outflow for leases in 2023, including interest, for the Group was £19.0 million (2022: £19.5 million) and for the Company
was £5.6 million (2022: £5.5 million).
106
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 18:00 Page 111
Notes
12. INVESTMENTS IN SUBSIDIARIES
COMPANY
Cost
At 1 April 2021
Strike off of dormant companies
At 31 March 2022 and 31 March 2023
Impairment
At 1 April 2021
Strike off of dormant companies
At 31 March 2022 and 31 March 2023
Carrying amount
At 31 March 2023
At 31 March 2022
At 31 March 2021
See note 30 for details of subsidiary undertakings.
£000)
73,571)
(4,796)
68,775)
1,687)
(1,687)
-)
68,775)
68,775)
71,884)
13. INVENTORIES
Group
Company
Raw materials and consumables
Goods for resale
2023
£000
3,599
5,316
8,915
2022)
£000)
3,237)
4,719)
7,956)
2023
£000
1,679
593
2,272
2022)
£000)
1,389)
504)
1,893)
During the year, as a result of the year end assessment of inventory, there was a £56,000 increase in the Group provision for impairment of
inventories (2022: £13,000 increase) and a £104,000 increase for Company (2022: £55,000 increase). The provision reflects the Group’s best
estimate of potential inventory obsolescence. The cost of goods for resale expensed during the year was £23.9 million (2022: £20.0 million).
Inventories are stated after provisions for impairment of £1,870,000 (2022: £1,814,000). Due to the nature of the spares expenditure and
the approach to accounting for spares, it is not possible to provide the value of spares inventory expensed.
S
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a
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c
i
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s
S
h
a
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h
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r
l
I
n
f
o
r
m
a
t
i
o
n
(cid:5)(cid:17) (cid:17)(cid:12)(cid:16) (cid:14)(cid:18)(cid:18)(cid:9)(cid:13)(cid:12) (cid:4)(cid:8)(cid:17)(cid:11)(cid:6)(cid:10) (cid:13)(cid:18)(cid:7) (cid:14)(cid:16)(cid:16)(cid:11)(cid:9)(cid:18)(cid:10)(cid:3) (cid:15)(cid:1)(cid:15)(cid:2) (cid:5)(cid:7)(cid:7)(cid:2)(cid:6)(cid:1)(cid:6)(cid:4)(cid:3)
107
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 112
Notes
14. TRADE AND OTHER RECEIVABLES
Current assets
Gross trade receivables
Trade receivables provisions
Amounts owed by subsidiary undertakings
Other receivables
Prepayments and accrued income
Group
Company
)
2023)
£000)
77,618)
(4,646)
-)
1,732)
6,809)
81,513)
)
2022)
£000)
72,841)
(5,203)
-)
2,125)
6,294)
76,057)
)
2023)
£000)
22,643)
(1,183)
3,633)
1,099)
2,171)
28,363)
)
2022)
£000)
21,107)
(1,221)
2,715)
756)
2,784)
26,141)
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 £Nil (2022: £378,000) being the
fair value of receivables.
During the year there was a decrease in the provisions for impairment of trade receivables of £557,000 (2022: £2,039,000 decrease).
The valuation of the provision reflects the Group’s best estimates of likely impairment as a result of the aging of the debt, expected credit
losses and its knowledge of the debtors. 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:
2023)
£000)
2022)
£000)
Not overdue
0 - 30 days overdue
31 - 90 days overdue
More than 90 days overdue
59,376)
6,038)
3,521)
4,037)
72,972)
55,207)
5,138)
4,427)
2,866)
67,638)
On this basis there are £13.6 million (2022: £12.4 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 2023 that debtors will not meet their payment obligations in respect of trade receivables
recognised in the balance sheet that are unprovided. On this basis there is no material difference between the fair value and the carrying value.
Group
Company
At 1 April
Impairment provision charged to the Income Statement
Utilised in the year
At 31 March
Non-current assets
Amounts owed by subsidiary undertakings
2023)
£000)
5,203)
3,305)
(3,862)
4,646)
2023)
£000)
-)
2022)
£000)
7,242)
2,074)
(4,114)
5,203)
2022)
£000)
-)
Group
2023)
£000)
1,221)
880)
(918)
1,183)
2023)
£000)
61,716)
2022)
£000)
1,277)
693)
(749)
1,221)
2022)
£000)
55,699)
Company
Amounts owed by subsidiary undertakings are unsecured, repayable either on demand or ten years from agreement date and range in
interest from 0% to 3.5%.
15. CASH AND CASH EQUIVALENTS
Group
Company
Bank balances and cash in hand
Bank overdraft
Cash and cash equivalents as per cash flow statement
2023)
£000)
14,697)
(3,557)
11,140)
2022)
£000)
16,622)
(3,005)
13,617)
2023)
£000)
5,389)
(3,557)
1,832)
2022)
£000)
5,542)
(3,005)
2,537)
108
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 113
Notes
16. INTEREST-BEARING LOANS AND BORROWINGS
Current liabilities
Lease liabilities
Non-current liabilities
Secured bank loans
Secured private placement loan
Arrangement fees
Lease liabilities
Group
)
2023)
£000)
2022)
£000)
Company
)
2023)
£000)
14,622)
14,147)
3,579)
)
2022)
£000)
4,004)
)
53,000)
93,000)
(492)
43,896)
189,404)
52,000)
93,000)
(779)
43,496)
187,717)
53,000)
93,000)
(492)
8,237)
153,745)
52,000)
93,000)
(779)
9,754)
153,975)
Net debt defined as total borrowings less cash and cash equivalents was:
Group
As at)
31 Mar 2022)
Cash)
movements)
Non-cash)
movements)
As at)
31 Mar 2023)
Secured loans
Arrangement fees
Cash and cash equivalents
Net debt excluding lease liabilities
Lease liabilities
Net debt including lease liabilities
Company
Secured loans
Arrangement fees
Cash and cash equivalents
Net debt excluding lease liabilities
Lease liabilities
Net debt including lease liabilities
£000)
145,000)
(779)
(13,617)
130,604)
57,643)
188,247)
£000)
1,000)
-)
2,634)
3,634)
(18,959)
(15,325)
£000)
-)
287)
(157)
130)
19,834)
19,964)
£000)
146,000)
(492)
(11,140)
134,368)
58,518)
192,886)
As at)
31 Mar 2022)
Cash)
movements)
Non-cash)
movements)
As at)
31 Mar 2023)
£000)
145,000)
(779)
(2,537)
141,684)
13,758)
155,442)
£000)
1,000)
-)
705)
1,705)
(5,563)
(3,858)
£000)
-)
287)
-)
287)
3,621)
3,908)
£000)
146,000)
(492)
(1,832)
143,676)
11,816)
155,492)
S
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G
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c
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F
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c
i
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S
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m
e
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S
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I
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The repayment schedule of the carrying amount of the non-current borrowings as at 31 March 2023 is:
Group
Company
Due in less than one year:
Lease liabilities
Due in more than one year but not more than two years:
Secured bank loans
Lease liabilities
Total
Due in more than two years but not more than five years:
Secured bank loans
Secured private placement loan
Lease liabilities
Total
Due in more than five years:
Secured private placement loan
Lease liabilities
Total
)
2023
£000
14,622
53,000
12,218
65,218
-
65,000
20,640
85,640
28,000
11,038
39,038
2022
£000
14,147
-
10,898
10,898
52,000
65,000
20,365
137,365
28,000
12,233
40,233
2023
£000
3,579
53,000
2,586
55,586
-
65,000
4,067
69,067
28,000
1,584
29,584
)
2022)
£000)
4,004))
-)
2,712)
2,712)
52,000)
65,000)
4,702)
121,702)
28,000)
2,340)
30,340)
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
109
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 114
Notes
16. INTEREST-BEARING LOANS AND BORROWINGS (continued)
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 SONIA. The unutilised bank facilities available to the Group as at 31 March 2023 were £37 million (2022: £38 million). In January
2020, the Group refinanced £65.0 million of secured bank loans held with Lloyds Bank plc and HSBC Bank plc with a private placement
with PGIM, Inc. at a value of £65.0 million maturing in January 2027 at a fixed interest rate payable semi-annually. In April 2021, the
Group drew down a new £28 million seven year private placement under the existing agreement with PGIM, Inc. In June 2021, the Group
also refinanced its £135 million committed revolving credit facilities with a new three year £90 million facility. The revolving credit facility
agreement also includes a £20 million uncommitted accordion facility.
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 35 to 36, the Risk Management Report on pages 38 to 39 and the Directors’ Report within going concern
on page 70. The loans are subject to covenants. Interest cover before amortisation was 8.3 times (2022: 10.1 times) and the gearing
ratio of adjusted Net Debt/EBITDA was 1.44 (2022: 1.43); both are calculated in accordance with our bank facility agreements and are
comfortably within our covenants of greater than 3 times and lower than 2.5 times respectively.
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.
GROUP
31 March 2023
Secured loans
Lease liabilities
Trade payables, accruals and amounts
owed to subsidiary undertakings
31 March 2022
Secured loans
Lease liabilities
Trade payables, accruals and amounts
owed to subsidiary undertakings (restated)*
COMPANY
31 March 2023
Secured loans
Lease liabilities
Trade payables, accruals and amounts
owed to subsidiary undertakings
31 March 2022
Secured loans
Lease liabilities
Trade payables, accruals and amounts
owed to subsidiary undertakings (restated)*
Carrying
value
£000
146,000
58,518
64,448
268,966
145,000
57,643
71,869
274,512
Carrying
value
£000
146,000
11,816
25,658
183,474
145,000
13,758
25,483
184,241
Contractual)
cash flows)
£000)
172,743)
64,820)
Less than)
1 year)
£000)
5,797)
16,041)
64,448)
302,011)
166,438)
68,518)
71,869)
306,825)
64,448)
86,286)
4,217)
17,650)
71,869)
93,736)
Contractual)
cash flows)
£000)
172,743)
18,274)
Less than)
1 year)
£000)
5,797)
5,083)
25,658)
216,675)
166,438)
16,663)
25,483)
208,584)
8,683)
19,563)
4,217)
4,826)
13,235)
22,278)
1-2)
years)
£000)
58,797)
12,946)
-)
71,743)
4,228)
13,259)
-)
17,487)
1-2)
years)
£000)
58,797)
3,330)
-)
62,127)
4,228)
3,230)
-)
7,458)
2-5)
years)
£000)
80,138)
22,448)
-)
102,586)
129,205)
23,599)
-)
152,804)
2-5)
years)
£000)
80,138)
5,775)
-)
85,913)
129,205)
5,701)
-)
134,906)
Over 5)
years)
£000)
28,011)
13,385)
-)
41,396)
28,788)
14,010)
-)
42,798)
Over 5)
years)
£000)
28,011)
4,086)
16,975)
49,072)
28,788)
2,906)
12,248)
43,942)
*Trade and other payables include trade payables, accruals and, for the parent company, amounts owed to subsidiary undertakings. The
comparative figures have been restated to present the restated figures in note 18.
110
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 115
Notes
17. FINANCIAL INSTRUMENTS
At the start of the previous year, the Group had seven interest rate swaps to fix interest rates on a proportion of the revolving credit facility.
Details are as follows:
Start date
April 2018
May 2018
September 2018
December 2018
August 2019
August 2019
October 2019
Original finish date
April 2021
May 2021
September 2021
December 2021
August 2022
August 2022
October 2022
Notional Debt value
12,000,000
5,000,000
5,000,000
7,500,000
5,000,000
5,000,000
5,000,000
Fixed margin
1.154%
0.930%
0.980%
1.209%
0.890%
0.884%
0.485%
In June 2021, the Group terminated all of these interest rate swaps as part of the refinancing undertaken. At 31 March 2022 and 31 March
2023, the Group has no interest rate swaps.
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 35 and 36 and the Principal Risks and Emerging Risk Areas on pages 39
to 42, as are the risks relating to credit and currency management and the capital management of the Group.
Financial Instrument Sensitivity Analysis
Ten percent 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
2023)
£000)
39)
17)
(2)
2)
(48)
(21)
2)
(2)
(22)
22)
2022)
£000)
75)
(110)
1)
79)
(91)
135)
(2)
(96)
(14)
14)
The exposure of the Group to other foreign exchange rate movements is not significant and therefore is not presented in the analysis above.
S
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c
i
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S
t
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e
m
e
n
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s
S
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a
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e
r
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I
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f
o
r
m
a
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i
o
n
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
111
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 116
Notes
18. TRADE AND OTHER PAYABLES
18. TRADE AND OTHER PAYABLES
Current liabilities
Trade payables
Amounts owed to subsidiary undertakings
Other tax and social security
Accruals and deferred income
Group
Company
2023
£000
30,568
-
5,799
35,817
72,184
2022)
Restated*
£000)
30,326)
-)
6,779)
43,571)
80,676)
2023)
£000)
8,576)
37,882)
2,116)
16,007)
64,581)
2022)
Restated*
£000)
5,705)
38,551)
3,176)
18,061)
65,493)
Within accruals is £2.0 million (2022: £2.6 million) in relation to the liability for cash settled share options which are also valued at fair
value. All other liabilities are valued at amortised cost. There are no material liabilities in relation to contracts with customers. Amounts
owed to subsidiary undertakings are repayable on demand, unsecured and interest free. Payables acquired as part of acquisitions were
£nil (2022: £0.1 million) being the fair value of payables.
*To better reflect the substance of the balance amounts previously disclosed within other payables have been combined with accruals.
The effect of this adjustment on the comparative figures is to increase accruals and deferred income by £6.8 million (Group) and £0.1
million (Company) and reduce other payables by £6.8 million (Group) and £0.1 million (Company).
Non-current liabilities
Group
Company
Amounts owed to subsidiary undertakings
2023
£000
-
2022)
£000)
-)
2023)
£000)
16,975)
2022)
£000)
12,248)
19. 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 2021
Recognised on acquisition
Recognised in income statement
Recognised in reserves
Recognised in equity
Foreign exchange
At 31 March 2022
Recognised on acquisition
Recognised in income statement
Recognised in reserves
Recognised in equity
Foreign exchange
At 31 March 2023
8
8
8,197)
343)
3,568)
12)
-)
63)
12,183)
-)
2,445)
3)
-)
(94)
4,349)
36)
330)
-)
-)
12)
4,727)
-)
(664)
-)
-)
(18)
(671)
-)
7)
9)
(149)
(14)
(818)
-)
582)
(122)
(78)
20)
14,537)
4,045)
(416)
(1,546)
16,620)
Of the deferred tax liability above, the amount expected to unwind within 12 months is £3.6 million (2022: £3.2 million).
COMPANY
Property, plant)
and equipment)
£000)
Intangible)
assets)
£000)
Employee)
benefits)
£000)
Note
1 April 2021
Recognised in income statement
Recognised in reserves
Recognised in equity
At 31 March 2022
Recognised on acquisition
Recognised in income statement
Recognised in reserves
Recognised in equity
At 31 March 2023
9,550)
3,139)
12)
-)
12,701)
-)
1,598)
3)
-)
14,302)
675)
98)
-)
-)
773)
-)
(262)
-)
-)
511)
(129)
(22)
(22)
(149)
(322)
-)
547)
(254)
(78)
(107)
(267)
14,439)
Of the deferred tax liability above, the amount expected to unwind within 12 months is £2.9 million (2022: £2.6 million).
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.
112
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
Other)
items)
£000)
(1,481)
-)
(888)
-)
-)
(45)
(2,414)
-)
837)
-)
-)
31)
Total)
£000)
10,394)
379)
3,017)
21)
(149)
16)
13,678)
-)
3,200)
(119)
(78)
(61)
Other)
items)
£000)
(388)
49)
-)
-)
(339)
-)
72)
-)
-)
Total)
£000)
9,708)
3,264)
(10)
(149)
12,813)
-)
1,955)
(251)
(78)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 117
Notes
20. CAPITAL AND RESERVES
Ordinary share capital
Allotted, called up and fully paid
40,154,253 Ordinary shares of 5 pence each
(2022: 40,154,253)
2023)
£000)
)
2,008)
2022)
£000)
2,008)
The company articles authorise 60,000,000 shares (2022: 60,000,000). All shares have the same voting rights.
Reserves
Full details of reserves are provided in the consolidated and Parent company statements of changes in equity on pages 84 and 87.
Own shares held
Deducted from retained earnings (Group and Company) is £5,110,000 (2022: £4,478,000) in respect of own shares held by the Vp
Employee Trust. The Trust acts as a repository of issued Company shares and held 609,000 shares (2022: 510,000) with a market value
at 31 March 2023 of £4,104,000 (2022: £4,285,000).
21. DIVIDENDS
Amounts recognised as distributions to equity holders of the Parent company in the year:
Ordinary shares:
Final paid
25.5p (2022: 225.0p) per share
Interim paid 11.0p (2022: 210.5p) per share
2023)
£000)
10,112)
4,359)
14,471)
2022)
£000)
9,897)
4,157)
14,054)
The dividend paid in the year is after dividends were waived to the value of £184,000 (2022: £201,000) 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 26.5p per share which will absorb an estimated
£10.5 million of shareholders’ funds. The proposed dividend is subject to approval by shareholders at the Annual General Meeting and
has not been included in liabilities in the financial statements.
22. EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share of 58.05 pence (2022: 64.49 pence) was based on the profit after tax of £23,010,000 (2022:
£25,535,000) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2023 of 39,635,000
(2022: 39,597,000), calculated as follows:
Issued ordinary shares
Effect of own shares held
Weighted average number of ordinary shares
2023)
Shares)
000s)
40,154)
(519)
39,635)
2022)
Shares)
000s)
40,154)
(557)
39,597)
Basic earnings per share before the amortisation of intangibles and exceptional items was 78.41 pence (2022: 71.24 pence) and is based
on an after tax add back of £8,067,000 (2022: £2,675,000) in respect of the amortisation of intangibles and exceptional items.
S
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a
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r
l
I
n
f
o
r
m
a
t
i
o
n
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
113
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 118
Notes
22. EARNINGS PER SHARE (continued)
Diluted earnings per share
The calculation of diluted earnings per share of 57.76 pence (2022: 63.83 pence) was based on profit after tax of £23,010,000 (2022:
£25,535,000) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2023 of 39,835,000
(2022: 40,009,000), calculated as follows:
Weighted average number of ordinary shares
Effect of share options
Weighted average number of ordinary shares (diluted)
2023)
Shares)
000s)
39,635)
200)
)
39,835
2022)
Shares)
000s)
39,597)
412)
40,009)
The calculation of diluted earnings per share in the prior year does not assume conversion, exercise or other issue of potential ordinary shares
that would have an antidilutive effect on earnings per share. Diluted earnings per share before the amortisation of intangibles and
exceptional items was 78.01 pence (2022: 70.51 pence).
23. SHARE OPTION SCHEMES
SAYE Scheme
During the year options over a further 410,764 shares were granted under the SAYE scheme at a price of 560 pence. The outstanding
options at the year end were:
Date of Grant
July 2019
July 2020
July 2021
December 2022
Price per share
711p
584p
693p
560p
Number of shares
116,101
265,018
246,602
400,396
1,028,117
The 2022 scheme was not granted in June because of the ongoing Formal Sale Process and was deferred until December 2022. All the
options are exercisable between 3 and 3.5 years. At 31 March 2023 there were 954 employees saving an average £159 per month (2022:
957 employees saving £161 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 253,250 shares were granted during the year at a price of 787 pence. The options outstanding at the year end were:
Date of Grant
July 2013
July 2014
July 2015
July 2016
July 2017
July 2019
July 2020
July 2021
August 2022
Price per share
389.0p
680.0p
770.0p
657.0p
870.0p
860.0p
698.0p
908.0p
787.0p
Number of shares
4,000
9,350
25,350
20,150
51,333
21,900
166,400
91,600
243,850
633,933
These options are exercisable between the third and tenth anniversary of the grant. The awards for 2020 to 2022 are subject to
achievement of performance targets over a three year period. The awards for 2019 and prior are vested, but not yet exercised.
114
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 119
Notes
23. SHARE OPTION SCHEMES (continued)
Unapproved Share Option Scheme
Options over 628,750 shares were granted during the year at a price of 787 pence. The options outstanding at the year end were:
Date of Grant
July 2013
July 2014
July 2015
July 2016
July 2017
July 2019
July 2020
July 2021
August 2022
Price per share
389.0p
680.0p
770.0p
657.0p
870.0p
860.0p
698.0p
908.0p
787.0p
Number of shares
24,200
48,600
58,250
139,850
154,851
83,700
469,600
653,900
590,150
2,223,101
These options are exercisable between the third and tenth anniversary of the grant. The awards for 2020 to 2022 are subject to
achievement of performance targets over a three year period. The awards for 2019 and prior are vested, but not yet exercised.
Long-Term Incentive Plan
Awards were made during the year in relation to a further 367,100 shares. Shares outstanding at the year end were:
Date of Grant
July 2014
July 2015
July 2016
July 2017
July 2019
July 2020
July 2021
August 2022
Number of shares
72,600
69,500
86,600
62,196
42,960
384,400
278,050
330,100
1,326,406
These options are exercisable between the third and tenth anniversary of the grant. The awards for 2020 to 2022 are subject to
achievement of performance targets over a three year period as shown in the Annual Report on Remuneration on page 64. The awards
for 2019 and prior are vested, but not yet exercised.
Share Matching
No awards were made during the year in relation to shares. Shares outstanding at the year end were:
Date of Grant
August 2013
July 2014
August 2015
August 2016
Number of shares
1,500
2,500
2,400
2,200
8,600
These options are exercisable between the third and tenth anniversary of the grant. The awards for 2016 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 2023 was 674 pence (2022: 840 pence), the highest market value in the year to
31 March 2023 was 980 pence (2022: 1060 pence) and the lowest 660 pence (2022: 826 pence). The average share price during the
year was 779 pence (2022: 937 pence).
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m
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r
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I
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f
o
r
m
a
t
i
o
n
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:3) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
115
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 120
Notes
23. SHARE OPTION SCHEMES (continued)
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
2023
2022
Weighted)
average)
exercise price)
554p)
561p)
484p)
557p)
555p)
521p)
Number of)
options)
000s)
4,658)
(962)
(136)
1,660)
5,220)
1,100)
Weighted)
average)
exercise price)
553p)
681p)
667p)
669p)
554p)
484p)
Number of)
options)
000s)
4,511)
(1,035)
(318)
1,500)
4,658)
905)
The options outstanding at 31 March 2023 have an exercise price in the range of 0.0p to 908.0p and have a weighted average life of
2.0 years.
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 probable options granted during the year were 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
2023
184.0p
700.0p to 787.0p
0.0p to 787.0p
35.7% to 35.9%
3 to 10 years
4.6% to 5.1%
1.75% to 3.00%
2022
298.5p
866.0p to 908.0p
0.0p to 908.0p
37.4%
3 to 10 years
2.8% to 2.9%
0.10%
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 5.
The total carrying amount of cash settled transaction liabilities including associated national insurance at the year end was £1,991,000
(2022: £2,550,000). £1,937,000 of this liability had vested at the year end (2022: £2,314,000).
116
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 121
Notes
24. CAPITAL COMMITMENTS
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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
25. EMPLOYEE BENEFITS
Group
Company
2023
£000
10,715
2022
£000
14,523
2023
£000
5,137
2022)
£000)
10,764)
Defined benefit schemes
The details in this section of the note relate solely to the defined benefit arrangements and exclude any allowance for contributions in
respect of death in service insurance premiums and expenses which are also borne by the Company.
The Group has two defined benefit pension schemes, the main scheme is the Vp pension scheme with a net present value surplus of
£2.1 million (2022: £3.1 million). In addition, Torrent Trackside participate in a small section of the Railways Pension Scheme with a net
present value surplus of £0.2 million (2022: £0.3 million net present value obligation). The two schemes are considered below.
Vppensionscheme
Vp plc 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, which sets out their powers. The Trustee of the Scheme is required to act in the
best interests of the beneficiaries of the Scheme.
There are two categories of pension scheme member:
l Deferred members: former employees of the Company not yet in receipt of a pension
l Pension members: in receipt of pension.
The defined benefit obligation is valued by projecting the best estimate of future benefit outgoings (allowing for 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 receive increases in deferment 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 overall duration of the Scheme’s defined benefit obligation as at 31 March 2023 was 11
years (2022: 11 years).
The Trustee is required to carry out an actuarial valuation every 3 years. The last actuarial valuation of the Scheme was performed by the
Scheme Actuary for the Trustee as at 31 March 2021. The valuation revealed a funding surplus of approximately £2,000,000. The Company
therefore does not expect to pay any contributions into the Scheme during the accounting year beginning 1 April 2023. The difference
between the actuarial valuation and the IAS 19 valuation reflects the different valuation dates, the last actuarial valuation was as at 31
March 2021, and the assumptions adopted. The actuarial valuation uses assumptions determined by the Scheme Trustees to evaluate the
Scheme funding requirements on a triannual basis and the IAS 19 valuation uses assumptions that are chosen by the Company, but
heavily prescribed by the accounting standard.
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 some of the assets in diversified growth funds. 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 (subject to the appropriate caps in place).
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 Investment (LDI) funds in order to control interest rate and inflation risks.
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
117
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 122
Notes
25. EMPLOYEE BENEFITS (continued)
TorrentRailwayspensionscheme
Torrent participates in a section of the multiemployer Railways Pension Scheme (the “Section”), 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 Section in accordance with the Section’s Trust Deed and Rules, which sets out
their powers. The Trustee of the Scheme is required to act in the best interests of the beneficiaries of the Scheme.
There are three categories of pension scheme members in the Section:
l Active members: currently employed by the Company and accruing pension benefits
l Deferred members: former members of the Section not yet in receipt of pension
l Pensioner 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 receive increases linked to the CPI inflation. The valuation method used is known as
the Projected Unit Method. The approximate overall duration of the Section’s defined obligation as at 31 March 2023 was 20 years.
The Trustee is required to carry out an actuarial valuation every 3 years. As at December 2022 this process was ongoing.
The last actuarial valuation for the Section was performed by the Scheme Actuary for the Trustee as at 31 December 2019. This valuation
revealed a surplus in the Section of £33,000 on the Scheme Funding basis. The Company agreed to pay annual contributions of 20.9%
pa of members’ section pay prior to 30 June 2018, and 21.7% pa of members’ pensionable salaries from 1 July 2018; all subject to the
Omnibus rate as defined in the Rules. The Company expects to pay around £15,000 to the Section during the accounting year beginning
1 April 2023. The difference between the actuarial valuation and the IAS 19 valuation is due to the same principles as described in the
Vp plc details above, albeit the last actuarial valuation was performed at 31 December 2019.
Through the Section, the Company is exposed to a number of risks:
l Asset volatility: the Section’s defined benefit obligation is calculated using a discount rate set with reference to corporate bond
yields, however the Section invests significantly in equities. 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 Section’s defined benefit obligation, however, this
would be partially offset by an increase in the value of the Section’s assets.
l Inflation risk: a significant proportion of the Section’s defined benefit obligation is linked to inflation, therefore higher inflation will
result in a higher defined benefit obligation (subject to the appropriate caps in place). The majority of the Section’s assets are either
unaffected by inflation, or only loosely correlated with inflation, therefore an increase in inflation would also increase the deficit.
l Life expectancy: if Section members live longer than expected, the Section’s benefits will need to be paid for longer, increasing
the Section’s defined benefit obligation.
The Trustee manages risks in the Section 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 the investment strategy on a regular basis.
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 has adopted IAS 19 revised as set out in the accounting policies in note 1.
Present value of net surplus
Group
Company
Present value of defined benefit obligation
Fair value of scheme assets
Present value of net surplus
2023)
£000)
(7,201)
9,501)
2,300)
2022)
£000)
(9,531)
12,269)
2,738)
2023)
£000)
(6,012)
8,147)
2,135)
2022)
£000)
(7,706)
10,774)
3,068)
118
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 123
Notes
25. EMPLOYEE BENEFITS (continued)
The movement in the defined benefit surplus is as follows:
Group
At beginning of year
Service costs
Interest (cost)/income
Present)
value of)
obligation)
£000)
2023)
Fair)
value of)
assets)
£000)
(9,531)
(34)
(250)
12,269)
(173)
322)
)
Total)
£000)
2,738)
(207)
72)
Present)
value of)
obligation)
£000)
(10,600)
(37)
(177)
Re-measurements
Actuarial losses: change in demographic assumptions
Actuarial gains: change in financial assumptions
Actuarial losses: experience differing
from that assumed
Actuarial losses: actual return on assets
Contributions: employer
Contributions: employees
Benefits paid
-)
2,199)
(131)
-)
-)
(7)
553)
-)
-)
-)
2,199)
-)
(2,387)
16)
7)
(553)
(131)
(2,387)
16)
-)
-)
(108)
911)
(11)
-)
-)
(7)
498)
2022)
Fair)
value of)
assets)
£000)
12,775)
(145)
212)
-)
-)
-)
(98)
16)
7)
(498)
)
Total)
£000)
2,175)
(182)
35)
(108)
911)
(11)
(98)
16)
-)
-)
(7,201)
9,501)
2,300)
(9,531)
12,269)
2,738)
Company
At beginning of year
Service costs
Interest (cost)/income
Present)
value of)
obligation)
£000)
2023)
Fair)
value of)
assets)
£000)
(7,706)
-)
(201)
10,774)
(158)
282)
)
Total)
£000)
3,068)
(158)
81)
Present)
value of)
obligation)
£000)
(8,737)
-)
(145)
Re-measurements
Actuarial losses: change in demographic assumptions
Actuarial gains: change in financial assumptions
Actuarial gains: experience differing
from that assumed
Actuarial losses: actual return on assets
Benefits paid
-)
1,507)
(113)
-)
501)
-)
-)
-)
1,507)
-)
(2,250)
(501)
(113)
(2,250)
-)
2,135)
(86)
765)
26)
-)
471)
2022)
Fair)
value of)
assets)
£000)
11,394)
(136)
189)
-)
-)
-)
(202)
(471)
)
Total)
£000)
2,657)
(136)
44)
(86)
765)
26)
(202)
-)
(6,012)
8,147)
(7,706)
10,774)
3,068)
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Expense/(income) recognised in the Income Statement
Group
Company
Service costs
Net interest
2023)
£000)
207)
(72)
135)
2022)
£000)
182)
(35)
147)
2023)
£000)
158)
(81)
77)
These expenses/(income) are recognised in the following line items in the Income Statement:
Cost of sales
Administrative expenses
Group
Company
2023)
£000)
207)
(72)
135)
2022)
£000)
182)
(35)
147)
2023)
£000)
158)
(81)
77)
2022)
£000)
136)
(44)
92)
2022)
£000)
136)
(44)
92)
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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Notes
25. EMPLOYEE BENEFITS (continued)
Amount recognised in other comprehensive income
Group
Company
Actuarial gains/(losses) on defined benefit obligation
Actual return on assets less interest
Amount recognised in other comprehensive income
2023)
£000)
2,068)
(2,387)
(319)
2022)
£000)
792)
(99)
693)
2023)
£000)
1,394)
(2,250)
(856)
2022)
£000)
705)
(202)
503)
Cumulative actuarial net gains/(losses) reported in the statement of comprehensive income since 1 April 2004, the transition to adopted
IFRSs, for the Group are gain of £110,000 (2022: gain of £428,000), Company loss of £710,000 (2022: gain of £146,000).
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
Equities and other growth assets
Bonds and cash
Liability driven investments (LDI)
Returns
Actual return on scheme assets
2023)
£000)
4,043)
555)
3,055)
1,848)
9,501)
Group
Company
2022)
£000)
4,145)
1,088)
5,385)
1,651)
12,269)
2023)
£000)
4,043)
-)
2,256)
1,848)
8,147)
2022)
£000)
4,145)
-)
4,978)
1,651)
10,774)
(2,065)
114)
(1,968)
(13)
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. The Scheme invests in the “Matching Core” range of LDI funds provided by Legal & General Investment
Management (LGIM) (the Scheme’s investment manager). These are unit-linked, pooled investment vehicles, with an unquoted unit price. The
market value for the purposes of the financial statements was provided by LGIM and was the bid-value of the funds at the accounting date.
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
2023
3.5%
4.8%
2.0%
3.4%
2.9%
2022
4.2%
2.7%
2.1%
3.9%
3.6%
Mortality rate assumptions adopted at 31 March 2023, based on S2PA CMI Model 2019, 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
2023
23 years
26 years
22 years
24 years
2022
23 years
26 years
22 years
24 years
120
(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 125
Notes
25. EMPLOYEE BENEFITS (continued)
History of schemes
The history of the schemes for the current and prior years is as follows:
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Group
Present value of defined benefit obligation
Fair value of plan assets
Present value of net surplus
Company
Present value of defined benefit obligation
Fair value of plan assets
Present value of net surplus
2023)
£000)
(7,201)
9,501)
2,300)
2023)
£000)
(6,012)
8,147)
2,135)
2022)
£000)
(9,531)
12,269)
2,738)
2022)
£000)
(7,706)
10,774)
3,068)
2021)
£000)
(10,600)
12,775)
2,175)
2021)
£000)
(8,737)
11,394)
2,657)
2020)
£000)
(9,812)
12,830)
3,018)
2020)
£000)
(8,312)
11,665)
3,353)
2019)
£000)
(10,187)
12,919)
2,732)
2019)
£000)
(8,591)
11,757)
3,166)
(Losses)/gains recognised in statement of comprehensive income
Group
2023)
2022)
2021)
2020)
2019)
Difference between expected and actual return on scheme assets:
Amount (£000)
Percentage of scheme assets
(2,387)
(25.1%)
(98)
(0.8%)
Experience gains and losses arising on the scheme liabilities:
Amount (£000)
Percentage of present value of scheme liabilities
(131)
(1.8%)
(11)
(0.1%))
223)
1.7%)
15)
0.1%)
178)
1.4%)
(8)
(0.1%)
468)
3.6%)
205)
2.0%)
Effects of changes in the demographic and financial assumptions
underlying the present value of the scheme liabilities:
Amount (£000)
Percentage of present value of scheme liabilities
2,199)
30.5%)
803)
8.4%)
(1,033)
(9.7%)
198)
2.0%)
(95)
(0.9%)
Recognition of Railways pension scheme
Amount (£000)
Percentage of present value of scheme liabilities
-)
(0.0%)
-)
(0.0%)
-)
(0.0%)
-
(0.0%)
-)
(0.0%)
Total amount recognised in statement of comprehensive income:
Amount (£000)
Percentage of present value of scheme liabilities
(319)
(4.4%)
693)
7.3%)
(795)
(7.5%)
368)
3.8%)
536)
5.3%)
Company
2023)
2022)
2021)
2020)
2019)
Difference between expected and actual return on scheme assets:
Amount (£000)
Percentage of scheme assets
(2,250)
(27.6%)
(202)
(1.9%)
Experience gains and losses arising on the scheme liabilities:
Amount (£000)
Percentage of present value of scheme liabilities
(113)
(1.9%)
26)
0.3%)
Effects of changes in the demographic and financial assumptions
underlying the present value of the scheme liabilities:
Amount (£000)
Percentage of present value of scheme liabilities
Total amount recognised in statement of comprehensive income:
Amount (£000)
Percentage of present value of scheme liabilities
1,507)
25.1%)
(856)
(14.2%)
679)
8.8%)
503)
6.5%)
27)
0.2%)
-)
0.0%)
(708)
(8.1%)
(681)
(7.8%)
201)
1.7%)
-)
0.0%)
33)
0.4%)
234)
2.8%)
426)
3.6%)
192)
2.2%)
(30)
(0.3%)
546)
6.4%
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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Notes
25. EMPLOYEE BENEFITS (continued)
Sensitivity analysis
The sensitivity of the net pension asset/obligation to assumptions is set out below:
Vp plc scheme
Assumption
Discount rate
RPI inflation
Assumed life expectancy
Torrent Railways scheme
Assumption
Discount rate
CPI inflation
Assumed life expectancy
Change in
assumption
+/- 0.5% pa
+/- 0.5% pa
+ 1 year
Change in
assumption
+/- 0.5% pa
+/- 0.5% pa
+ 1 year
Change in defined
benefit obligation
-5%/+6%
+1%/-1%
+5%
Change in defined
benefit obligation
-9%/+10%
+7%/-7%
+4%
All of these are consistent with the prior year except Assumed Life Expectancy which was +4% compared to 5%.
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 £2,310,000 (2022: £1,945,000) in the year.
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 127
Notes
26. BUSINESS COMBINATIONS
During the prior year, the Group acquired the following business:
Name of acquisition
Date of acquisition
Type of acquisition
Acquired by
M. & S. Hire Limited
16 November 2021
Share purchase
(100% equity)
Hire Station Limited
Details of the acquisition are provided below:
Property, plant and equipment
Cash
Other current assets
Tax, trade and other payables
Deferred tax
Fair value of net assets
Fair value adjustments
Intangibles on acquisition
Deferred tax on intangibles
Fair value of intangible assets acquired
Goodwill on acquisition
Cost of acquisitions
Satisfied by
Cash consideration
Analysis of cash flow
for acquisitions
Cash consideration
Net cash in acquisitions
)
)
)
)
)
)
)
)
)
)
)
)
)
Group
2022)
Total)
£000)
1,647)
107)
387)
(196)
(351)
1,594)
191)
(36)
155)
1,051)
2,800)
2,800)
2,800)
(107)
2,693)
The fair value of net assets generally reflect the book value of assets in the acquired company/business. The acquisition was made to grow
market share and expand the product range. Intangibles identified in relation to the acquisition relate to customer lists. The amortisation
periods for these intangibles are set out in note 1. The goodwill arising on acquisition is primarily attributable to the expected operational
synergies within the Group’s businesses. The acquisition costs expensed in the year ended 31 March 2023 in relation to the acquisition were
£nil (2022: £56,500).
The acquired business' trade and assets were hived up into Hire Station Limited at 1 December 2021. The acquired business contributed
revenues of £91,000 and net profit of £37,000 to the Group for the period 16 November 2021 to 30 November 2021.
If the acquisition had occurred on 1 April 2021, consolidated pro-forma revenue and profit for the year ended 31 March 2022 would have
been £1,320,000 and £176,000 respectively. These amounts have been calculated using the subsidiary's results and adjusting them for:
l differences in the accounting policies between the Group and the subsidiary; and
l the additional depreciation and amortisation that would have been charged using the fair value adjustments to property, plant and
equipment and intangible assets had applied from 1 April 2021, together with the consequential tax effects.
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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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 52 to 69 and in note 6 to the Financial Statements.
Trading transactions with subsidiaries – Group
Transactions between the Company and the Group’s subsidiaries, which are related parties, has 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. 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 2023 totalled £65,349,000 (2022: £58,414,000).
Amounts owed to subsidiary undertakings by the Company at 31 March 2023 totalled £54,857,000 (2022: £50,799,000).
The Company and certain subsidiary undertakings has entered into cross guarantees of bank loans, private placement loans and overdrafts
to the Company. The total value of such borrowings at 31 March 2023 was £146.0 million (2022: £145.0 million).
28. CONTINGENT LIABILITIES
In an international Group a variety of claims arise from time to time in the normal course of business. Such claims may arise due to
matters concerning suppliers or customers, actions being taken against Group companies as a result of investigations by fiscal authorities
or under regulatory requirements. Provision has been made in these consolidated financial statements against any claims which the
Directors consider are likely to result in significant liabilities or required under accounting standard IAS 37.
29. ULTIMATE PARENT COMPANY
The Company is a subsidiary undertaking of Ackers P Investment Company Limited which is the ultimate Parent company incorporated
in United Kingdom and registered at Central House, Beckwith Knowle, Otley Road, Harrogate, HG3 1UD. 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.
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(cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9) (cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:3)
50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 129
Notes
30. SUBSIDIARY UNDERTAKINGS
The investments in trading subsidiary undertakings as at 31 March 2023 and 31 March 2022 are:
Country of
Registration or
Incorporation
Principal
Activity
Country of
Principal
Operation
Class and
Percentage of
Shares Held
Torrent Trackside Limited
England
Rail equipment hire
Hire Station Limited
England
Tool hire
UK
UK
Ordinary shares 100%
Ordinary shares 100%
Airpac Rentals Pte Limited
Singapore
Oilfield services
Singapore
Ordinary shares 100%
Airpac Bukom Oilfield
Services (Curacao) NVA
Airpac Bukom Oilfield
Services Middle East FZE
Airpac Rentals
(Australia) Pty Limited
Curacao
Oilfield services
Curacao
Ordinary shares 100%
Sharjah
Oilfield services
Sharjah
Ordinary shares 100%
Australia
Oilfield services
Australia
Ordinary shares 100%
Vp GmbH
Germany
Equipment hire
Germany
Ordinary shares 100%
Vp Equipment Rental
(Ireland) Limited
Ireland
Equipment hire
Ireland
Ordinary shares 100%
Vp Equipment Rental Pty Limited
Australia
Holding company
Australia
Ordinary shares 100%
TR Pty Limited
Australia
Equipment hire
Australia
Ordinary shares 100%
Tech Rentals (Malaysia) SDN BHD
Malaysia
Equipment hire
Malaysia
Ordinary shares 100%
Vidcom New Zealand Limited
New Zealand
Equipment hire
New Zealand
Ordinary shares 100%
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(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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50051-Vp Annual Report 2023.qxp 07/06/2023 16:41 Page 130
Notes
30. SUBSIDIARY UNDERTAKINGS (continued)
The full list of the dormant subsidiary undertakings is:
Country of
Registration or
Incorporation
Principal
Activity
Country of
Principal
Operation
Class and
Percentage of
Shares Held
Stoppers Specialists Limited
Trench Shore Limited
Vibroplant Investments Limited
Bukom General Oilfield
Services Limited
Fred Pilkington & Son Limited
Domindo Tool Hire Limited
Instant Tool Hire Limited
The Handi Hire Group Limited
Hire & Sales (Canterbury) Limited
Vibroplant Trustees Limited
UM (Holdings) Limited
U-Mole Limited
727 Plant Limited
Cannon Tool Hire Limited
M.E.P. Hire Limited
Arcotherm (UK) Limited
Vibroplant Limited
Mr Cropper Limited
Direct Instrument Hire Limited
Test & Measurement Hire
Group Limited
Test & Measurement Hire Limited
Higher Access Limited
Zenith Survey Equipment Limited
Survey Connection Scotland Limited
Brandon Hire Group Limited
Brandon Hire Group Holdings Limited
Brandon Hire Limited
FNPR Holdings Limited
First National Plant Rental Limited
TPA Portable Roadways Limited
Sandhurst Limited
M. & S. Hire Limited
England
England
England
England
England
England
England
England
England
England
England
England
England
England
Scotland
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
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
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 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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Notes
30. SUBSIDIARY UNDERTAKINGS (continued)
The registered offices of the companies are:
Country of Registration
Registered Office Address
England
Scotland
Singapore
Curacao
Sharjah
Australia
Germany
Ireland
Malaysia
Central House, Beckwith Knowle, Otley Road, Harrogate HG3 1UD
Tofthills Avenue, Midmill Business Park, Kintore, Aberdeenshire AB51 0QP
9 Pioneer Sector 2, Singapore 628371
Brionplein 4, Curacao, Netherlands Antilles
SAIF Office P8-13-10, PO Box 121378, Sharjah, United Arab Emirates
18 Joseph Street, Blackburn North, Victoria 3130
Lurgiallee 6-8, 60439 Frankfurt
70 Sir John Rogerson’s Quay, Dublin 2
Wisma Goshen, 2nd Floor, 60 & 62 Jalan SS22/21, Damansara Jaya,
47400 Petaling Jaya, Selangor Dami Ehsan
New Zealand
27 Exmouth Street, Eden Terrace, Auckland 101
The subsidiary companies listed below are exempt from the requirements of Companies' Act 2006 relating to the audit of individual
accounts by virtue of section 479A of Companies' Act 2006.
Company
Registered number
Torrent Trackside Limited
01132882
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(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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Five Year Summary
Revenue
382,830)
362,927)
307,997)
350,915
371,519)
2019)
£000)
2020)
£000)
2021)
£000)
2022)
£000)
2023)
£000)
Operating profit before amortisation and exceptional items
51,571)
55,480)
30,928)
46,299)
48,775)
Profit before amortisation, taxation and exceptional items
46,829)
46,640)
23,176)
38,946)
40,206)
Profit/(Loss) before taxation
Taxation
33,581)
(7,759)
28,366)
(9,779)
(2,269)
(2,332)
35,644)
(10,109)
30,706)
(7,696)
Profit/(Loss) after taxation
25,822)
18,587)
(4,601)
25,535)
23,010)
Dividends✶
Share capital
Capital redemption reserve
Reserves
(10,853)
(12,055)
(8,674)
(14,054)
(14,471)
2,008)
301)
2,008)
301)
2,008)
301)
2,008)
301)
2,008)
301)
166,549)
167,585)
150,781)
164,276)
172,623)
Total equity before non-controlling interest
168,858)
169,894)
153,090)
166,585)
174,932)
Share Statistics
Asset value
421p)
423p)
381p)
415p)
436p)
Earnings (pre amortisation)
95.14p
90.21p)
46.56p)
71.24p)
78.41p)
Dividend✶✶
30.20p
30.45p)
25.00p)
36.0p)
37.5p)
Times covered (pre amortisation)
3.15p
3.0p
1.9p
2.0p
2.1)
✶✶ 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. The special dividend of 22.00 pence
per share declared on 17 January 2021 is in relation to the financial year ended 31 March 2020.
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Alternative Performance Measures
The Board monitors performance principally through adjusted and like-for-like performance measures. Adjusted profit and earnings per share
measures exclude certain items including the impact of IFRS16, amortisation of acquired intangible assets and goodwill impairment charges
and exceptional items.
The Board believes that such alternative measures are useful as they exclude one-off (amortisation, impairment of intangible assets and
exceptional items) and non-cash (amortisation of intangible assets) items which are normally disregarded by investors, analysts and brokers
in gaining a clearer understanding of the underlying performance of the Group from one year to the next when making investment and
other decisions. Equally, IFRS16 is excluded from measures used by these same stakeholders and so is removed from certain APMs.
The key measures used as APMs are reconciled below.
Profit before tax as per Income Statement
Adjustment to remove IFRS 16 impact
Adjusted profit before tax APM
Amortisation and impairment of intangible assets
Exceptional items
Adjusted profit before tax, amortisation, impairment of
intangible assets and exceptional items APM (PBTAE)
Interest (excluding interest on lease liabilities)
Adjusted operating profit before tax, amortisation, impairment of
intangible assets and exceptional items APM
Depreciation (excluding depreciation of right of use assets)
Adjusted EBITDA APM
2023)
£000)
30,706)
283)
30,989)
4,490)
5,010)
40,489)
5,542)
46,031)
46,853)
92,884)
2022)
£000)
35,644)
(41)
35,603)
3,302)
-)
38,905)
4,431)
43,336)
45,532)
88,868)
Operating profit before tax, amortisation,
impairment of intangible assets and exceptional items
Adjustment to remove
IFRS 16 impact
Adjusted operating profit before tax,
amortisation, impairment of intangible assets
and exceptional items APM
2023
UK) International)
Segment)
Segment)
Total)
)
2022
UK) International)
Segment)
Segment)
Total)
)
45,564)
3,211)
48,775)
44,704)
1,595)
46,299)
(2,622)
(122)
(2,744)
(2,872)
(91)
(2,963)
42,942)
3,089)
46,031)
41,832)
1,504)
43,336)
Adjusted operating margin is calculated by dividing adjusted operating profit before tax, amortisation, impairment of intangible assets
and exceptional items by revenue.
Basic earnings per share
Impact of amortisation, impairment of intangible assets
and exceptional items after tax
Impact of IFRS 16
Adjusted basic earnings per share APM
Net debt including lease liabilities
Lease liabilities
Net debt excluding lease liabilities APM
2023)
Pence)
58.1)
20.3)
0.6)
79.0)
2023)
£000)
192,886)
(58,518)
134,368)
2022)
Pence)
64.5)
6.7)
-)
71.2)
2022)
£000)
188,247)
(57,643)
130,604)
Return on average capital employed (ROACE) is based on profit before Operating profit before tax, amortisation, impairment of
intangible assets and exceptional
items as defined above divided by average capital employed on a monthly basis using the
management accounts.
(cid:15)(cid:8) (cid:8)(cid:20)(cid:5) (cid:24)(cid:7)(cid:7)(cid:21)(cid:23)(cid:20) (cid:17)(cid:9)(cid:8)(cid:11)(cid:18)(cid:22) (cid:23)(cid:7)(cid:19) (cid:24)(cid:5)(cid:5)(cid:11)(cid:21)(cid:7)(cid:22)(cid:12) (cid:3)(cid:16)(cid:3)(cid:14) (cid:10)(cid:13)(cid:13)(cid:8)(cid:12)(cid:7)(cid:12)(cid:11)(cid:9)
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Directors and Advisors
Executive Directors
Jeremy F G Pilkington, B.A. Hons. (Chairman)
Neil A Stothard, M.A., F.C.A.
Anna C Bielby, F.C.A. (appointed 1 January 2023)
Non-executive Directors
Stuart Watson, B.A, F.C.A. (appointed 3 January 2023)
Mark Bottomley, B.S.C, F.C.A. (appointed 3 January 2023)
Philip M White, B.Com, F.C.A., CBE
Company Secretary
Anna C Bielby, (appointed 19 January 2023)
Registered Office
Central House, Beckwith Knowle,
Otley Road, Harrogate, North Yorkshire, HG3 1UD
Registered in England and Wales: No 481833
Telephone: 01423 533400
Independent Auditors
PricewaterhouseCoopers LLP
Central Square, 29 Wellington Street, Leeds, LS1 4DL
Lawyers
Squire Patton Boggs (UK) LLP
6 Wellington Place, Leeds LS1 4AP
Registrars and Transfer Office
Link Asset Services, The Registry, 34 Beckenham Road,
Beckenham, Kent, BR3 4TU
Bankers
HSBC Bank plc
Natwest Bank plc
Investment Bankers
N M Rothschild & Sons Limited
Brokers
Singers Capital Markets
Berenberg
Public Relations
Buchanan Communications
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