The acquisition of Brandon Hire presents a huge opportunity for Vp’s (VP.) specialist tool hire business, adding around 900 product-savvy staff and 200 locations across the UK. The Competition and Markets Authority cleared the £69.2m deal in March, prompting a bull run on the shares that has brought them to their highest level in 12 months on the release of full-year numbers.
It is still too early to gauge the impact of the deal, although the group did incur £1.68m of exceptional costs and the balance sheet has expanded via a near-doubling in intangible assets, coupled with a steep increase in non-current liabilities, including debt incurred in the acquisition. Aside from the usual noises about potential cost synergies, early trading has been encouraging.
Meanwhile, the UK business clocked a 20 per cent rise in adjusted operating profit, confounding fears over the UK construction industry following the Brexit referendum. Growth is expected to speed up here as the integration of Brandon Hire increases the group’s exposure to the small- and medium-sized enterprise (SME) sector, one of its key markets.
Analyst Peel Hunt increased its forecasts following the results, and now expects adjusted pre-tax profits of £48.5m in 2019, giving EPS of 98.3p (from £40.6m and 80.8p in 2018).
| VP (VP.) | ||||
| ORD PRICE: | 990p | MARKET VALUE: | £398m | |
| TOUCH: | 952-990p | 12-MONTH HIGH: | 990p | LOW: 785p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 384p* | NET DEBT: | 116% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 183 | 18.9 | 39.8 | 14.00 |
| 2015 | 206 | 25.1 | 51.0 | 16.50 |
| 2016 | 209 | 27.5 | 57.5 | 18.85 |
| 2017 | 249 | 30.3 | 60.3 | 22.00 |
| 2018 | 304 | 30.8 | 61.7 | 26.00 |
| % change | +22 | +2 | +2 | +18 |
| Ex-div: | 28 Jun | |||
| Payment: | 09 Aug | |||
| *Includes intangible assets of £91.5m, or 228p a share | ||||
