Vp CAPEX jumped on 33.8% in 2015 and Revenue jumped on 12.3%

04 Jun 2015 • About Vp ($VP.) • By InTwits

Vp reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

Vp has high CAPEX intensity: 5 year average CAPEX/Revenue was 20.4%. At the same time it's a lot of higher than industry average of 2.9%.
CAPEX is quite volatile: 3.0 in FY2015, 7.5 in FY2014, 3.7 in FY2013, 2.7 in FY2012, 1.1 in FY2011
The company has highly profitable business model: ROIC is at 14.9%
It operates with medium-size leverage: Net Debt/EBITDA is 1.2x while industry average is 1.3x

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Vp ($VP.) key annual financial indicators

mln. £	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	141.0	161.5	167.0	183.1	205.6	12.3%
Gross Profit	34.5	40.6	42.2	49.6	56.8	14.6%
SG&A	19.6	22.7	23.4	28.9	29.7	2.9%
EBITDA	34.4	38.7	41.0	44.3	53.8	21.3%
Net Income	9.8	12.2	13.0	15.7	19.9	26.6%
Balance Sheet
Cash	5.5	5.6	8.7	9.0	5.2	-41.7%
Short Term Debt	20.0	0.0	24.0	0.0	0.0	-100.0%
Long Term Debt	26.0	46.0	30.0	62.0	72.0	16.1%
Cash flow
Capex	21.9	34.6	29.6	39.5	52.9	33.8%
Ratios
Revenue growth	5.1%	14.6%	3.4%	9.6%	12.3%
EBITDA growth	-7.3%	12.3%	6.0%	8.2%	21.3%
Gross Margin	24.5%	25.1%	25.3%	27.1%	27.6%	0.5%
EBITDA Margin	24.4%	23.9%	24.5%	24.2%	26.2%	1.9%
Net Income Margin	6.9%	7.6%	7.8%	8.6%	9.7%	1.1%
SG&A, % of revenue	13.9%	14.1%	14.0%	15.8%	14.5%	-1.3%
CAPEX, % of revenue	15.5%	21.4%	17.7%	21.6%	25.7%	4.1%
ROIC	10.3%	12.2%	12.3%	12.3%	14.9%	2.6%
ROE	11.1%	13.4%	13.6%	15.0%	18.1%	3.1%
Net Debt/EBITDA	1.2x	1.0x	1.1x	1.2x	1.2x	0.0x

Revenue and profitability

Vp's Revenue jumped on 12.3% in FY2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 7.2 pp from 16.1% to 23.3% in 2015.

Gross Margin increased slightly on 0.55 pp from 27.1% to 27.6% in FY2015. SG&A as a % of Revenue decreased slightly on 1.3 pp from 15.8% to 14.5% in FY2015.

Net Income marign increased slightly on 1.1 pp from 8.6% to 9.7% in FY2015.

Capital expenditures (CAPEX) and working capital investments

The company's CAPEX/Revenue was 25.7% in FY2015. Vp showed CAPEX/Revenue growth of 4.3 pp from 21.4% in FY2012 to 25.7% in FY2015. Average CAPEX/Revenue for the last three years was 21.7%.Vp invested a big chunk of EBITDA (98.3%) to CAPEX to fuel its growth.

Return on investment

The company operates at good ROIC (14.94%) and ROE (18.09%). ROIC increased on 2.6 pp from 12.3% to 14.9% in FY2015. ROE increased on 3.1 pp from 15.0% to 18.1% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 1.2x and Debt / EBITDA is 1.3x. Net Debt / EBITDA increased on 0.045x from 1.2x to 1.2x in FY2015. Debt jumped on 16.1% in FY2015 while cash dropped on 41.7% in FY2015.

Appendix 1: Peers in Support Services

Below you can find Vp benchmarking vs. other companies in Support Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Petards Group ($PEG)	6.5%	-25.7%	-30.6%	115.1%
Optimal Payments ($OPAY)	107.9%	39.9%	41.5%	44.0%
1Spatial ($SPA)		98.7%	131.4%	42.7%	13.5%
Inspired Energy ($INSE)	32.9%	83.8%	44.8%	42.2%
Interquest Group ($ITQ)	7.8%	-6.8%	2.0%	31.2%
Median (52 companies)	9.8%	6.6%	7.4%	4.8%	3.8%
Vp ($VP.)		14.6%	3.4%	9.6%	12.3%

Top companies by Gross margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Inspired Energy ($INSE)		94.6%	86.8%	78.7%
Ienergizer Ltd ($IBPO)	48.1%	56.2%	78.4%	76.8%
Vianet Group ($VNET)	53.1%	53.3%	51.3%	58.8%	69.2%
Prime People ($PRP)	57.6%	63.4%	58.3%	57.7%	61.4%
Murgitroyd Group ($MUR)	59.9%	58.4%	61.4%	57.6%
Median (46 companies)	31.9%	31.4%	29.6%	30.6%	36.5%
Vp ($VP.)	24.5%	25.1%	25.3%	27.1%	27.6%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Northgate ($67GX)		41.2%	40.4%	40.6%	39.4%
21St Century Technology ($C21)	11.4%	13.4%	-0.2%	36.0%
Ienergizer Ltd ($IBPO)	34.5%	27.6%	27.8%	23.6%
Capital Drilling Ltd ($CAPD)	26.3%	24.1%	15.7%	21.7%
Optimal Payments ($OPAY)	11.2%	10.3%	18.5%	21.3%
Median (52 companies)	7.6%	6.8%	6.5%	6.9%	9.5%
Vp ($VP.)	24.4%	23.9%	24.5%	24.2%	26.2%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Norish ($NSH)	5.0%	10.2%	1.4%	15.4%
Capital Drilling Ltd ($CAPD)	20.5%	18.9%	4.9%	13.9%
Falkland Islands Hldgs ($FKL)	2.6%	3.7%	6.8%	12.9%
Augean ($AUG)	11.2%	9.8%	15.9%	12.3%
Latchways ($LTC)	1.0%	1.7%	1.9%	9.7%
Median (52 companies)	0.9%	1.1%	1.1%	1.1%	1.1%
Vp ($VP.)	15.5%	21.4%	17.7%	21.6%	25.7%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
21St Century Technology ($C21)	16.2%	20.3%	-2.9%	45.6%
Petards Group ($PEG)	25.6%	35.5%	-78.0%	24.7%
Driver Group ($DRV)	6.5%	18.7%	27.9%	24.0%
Optimal Payments ($OPAY)	-2.9%	7.1%	27.7%	23.8%
Premier Farnell ($PFLA)		33.2%	21.0%	23.2%	18.5%
Median (52 companies)	9.4%	9.9%	7.9%	9.3%	9.5%
Vp ($VP.)	10.3%	12.2%	12.3%	12.3%	14.9%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Inspired Energy ($INSE)	-0.8x	0.8x	0.6x	19.4x
Mitsubishi Corp ($MBC)	7.2x	9.9x	15.9x	14.3x	12.5x
Nature Group ($NGR)	-0.6x	-0.5x	-0.4x	6.6x
Ceps ($CEPS)	4.1x		3.0x	6.6x
Redhall Group ($RHL)		22.8x	5.8x	6.6x
Median (50 companies)	0.6x	0.8x	0.6x	0.6x	0.7x
Vp ($VP.)	1.2x	1.0x	1.1x	1.2x	1.2x

Vp stock price chart

Vp financials

mln.	FY2010	FY2011	FY2012

Revenue	134.2	141.0	161.5
EBITDA	37.168	34.441	38.669
Net income	10.245	9.783	12.227
CAPEX	16.744	21.911	34.596
Debt	49.710	46.021	46.001
Cash	1.385	5.509	5.582

About Vp

Vp plc provides equipment rental and associated services to the civil engineering, rail, oil and gas exploration, construction, outdoor events, and industrial markets in the United Kingdom and internationally. The company operates through Groundforce, UK Forks, Airpac Bukom, Torrent Trackside, TPA, and Hire Station segments. It provides trench boxes and sheets, hydraulic bracing systems, piling equipment, formwork, pipe stoppers, and pumps, as well as excavation support systems, temporary bridges, and trenchless technology for the water, gas, civil engineering, and construction industries; and rents telescopic handlers, rough terrain straight mast fork lift trucks, and associated products and services to the housebuilding, general construction, and industrial markets. The company also offers equipment and services, including compressors, steam generators, heat exchangers, sand filters, and operators to the oil and gas exploration and development markets. In addition, it provides rail infrastructure portable plants; and trackside lighting, traffic management, and training services to the railway maintenance and renewal contractors. Further, the company offers portable roadway access solutions to the outdoor events, transmission, construction, and utility sectors, as well as access solutions utilizing aluminum panels, plastic panels, and matting to temporary roadways, pedestrian walkways, barriers, bridges, and pitch cover requirements. Additionally, it provides small tools, specialist equipment, and allied services for industry and construction markets; and press fitting and fusion equipment to the mechanical and electrical industries, as well as offers climate, lifting, safety, survey, and pressfitting equipment. The company was formerly known as Vibroplant and changed its name to Vp plc in 2000. Vp plc was founded in 1954 and is headquartered in Harrogate, the United Kingdom. Vp plc is a subsidiary of Ackers P Investment Company Limited.