Vp reports 12.7% Net Income growth and 1.5% Revenue growth

07 Jun 2016 • About Vp ($VP.) • By InTwits

Vp reported FY2016 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 22.1%. At the same time it's a lot of higher than industry average of 3.1%.
CAPEX is quite volatile: 15.1 in 2016, 13.0 in 2015, 15.0 in 2014, 26.8 in 2013, 27.6 in 2012
The company has highly profitable business model: ROIC is at 14.5%
It operates with high leverage: Net Debt/EBITDA is 1.5x while industry average is 1.0x

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. £	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	161.5	167.0	183.1	205.6	208.7	1.5%
Gross Profit	40.6	42.2	49.6	56.8	59.0	3.8%
SG&A	22.7	23.4	28.9	29.7	29.4	-1.1%
EBITDA	38.7	41.0	44.3	53.8	59.3	10.2%
Net Income	12.2	13.0	15.7	19.9	22.4	12.7%
Balance Sheet
Cash	5.6	8.7	9.0	5.2	4.5	-13.7%
Short Term Debt	0.0	24.0	0.0	0.0	0.9
Long Term Debt	46.0	30.0	62.0	72.0	89.8	24.7%
Cash flow
Capex	34.6	29.6	39.5	52.9	50.2	-5.0%
Ratios
Revenue growth	14.6%	3.4%	9.6%	12.3%	1.5%
EBITDA growth	12.3%	6.0%	8.2%	21.3%	10.2%
Gross Margin	25.1%	25.3%	27.1%	27.6%	28.3%	0.6%
EBITDA Margin	23.9%	24.5%	24.2%	26.2%	28.4%	2.2%
Net Income Margin	7.6%	7.8%	8.6%	9.7%	10.7%	1.1%
SG&A, % of revenue	14.1%	14.0%	15.8%	14.5%	14.1%	-0.4%
CAPEX, % of revenue	21.4%	17.7%	21.6%	25.7%	24.1%	-1.7%
ROIC	12.2%	12.3%	12.3%	14.9%	14.5%	-0.5%
ROE	13.4%	13.6%	15.0%	18.1%	19.2%	1.1%
Net Debt/EBITDA	1.0x	1.1x	1.2x	1.2x	1.5x	0.2x

Revenue and profitability

Vp's Revenue increased slightly on 1.5% in FY2016. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.2 pp from 26.2% to 28.4% in FY2016.

Gross Margin increased slightly on 0.62 pp from 27.6% to 28.3% in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.

Net Income marign increased slightly on 1.1 pp from 9.7% to 10.7% in FY2016.

Capital expenditures (CAPEX) and working capital investments

Vp's CAPEX/Revenue was 24.1% in FY2016. CAPEX/Revenue increased on 6.3 pp from 17.7% in FY2013 to 24.1% in FY2016. It's average level of CAPEX/Revenue for the last three years was 23.8%.The company invested a large share of EBITDA (84.8%) to CAPEX.

Return on investment

The company operates at good ROIC (14.46%) and ROE (19.21%). ROIC showed almost no change in FY2016. ROE increased slightly on 1.1 pp from 18.1% to 19.2% in FY2016.

Leverage (Debt)

Company's Net Debt / EBITDA is 1.5x and Debt / EBITDA is 1.5x. Net Debt / EBITDA surged on 0.2x from 1.2x to 1.5x in FY2016. Debt surged on 25.9% in FY2016 while cash dropped on 13.7% in FY2016.

Appendix 1: Peers in Support Services

Below we provide Vp benchmarking against other companies in Support Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Camco Clean Energy ($CCE)		88.0%	-54.7%	99.4%
Optimal Payments ($OPAY)	39.9%	41.5%	44.0%	68.1%
Inspired Energy ($INSE)	83.8%	44.8%	42.2%	40.2%
21St Century Technology ($C21)	0.1%	-22.8%	-16.6%	35.5%
Ibex Global Solutions ($IBEX)	7.4%	35.7%	30.0%	29.8%
Median (54 companies)	5.9%	8.0%	4.7%	6.6%	1.3%
Vp ($VP.)		3.4%	9.6%	12.3%	1.5%

Top companies by Gross margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Inspired Energy ($INSE)	94.6%	86.8%	78.7%	76.2%
Ienergizer Ltd ($IBPO)	56.2%	78.4%	76.8%	72.7%
Grafenia ($GRA)	53.4%	54.3%	56.1%	70.8%
Vianet Group ($VNET)	53.3%	51.3%	58.8%	69.2%	70.1%
Prime People ($PRP)	63.4%	58.3%	57.7%	61.4%
Median (48 companies)	29.5%	28.8%	30.4%	29.8%	25.7%
Vp ($VP.)	25.1%	25.3%	27.1%	27.6%	28.3%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
21St Century Technology ($C21)	13.4%	-0.2%	36.0%	44.8%
Northgate ($67GX)	41.2%	40.4%	40.6%	39.4%	38.3%
Inspired Energy ($INSE)	46.2%	48.5%	1.5%	35.4%
Vianet Group ($VNET)	18.6%	17.3%	19.7%	27.1%	22.1%
Optimal Payments ($OPAY)	10.3%	18.5%	21.3%	22.6%
Median (54 companies)	6.7%	6.3%	6.8%	7.2%	7.3%
Vp ($VP.)	23.9%	24.5%	24.2%	26.2%	28.4%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Sagentia Group ($SAG)	1.9%	1.4%	1.5%	25.2%
Nature Group ($NGR)	14.3%	7.2%	5.6%	22.9%
Augean ($AUG)	9.8%	15.9%	12.3%	12.3%
Falkland Islands Hldgs ($FKL)	3.7%	6.8%	12.9%	11.9%
Capital Drilling Ltd ($CAPD)	18.9%	4.9%	13.9%	10.1%
Median (54 companies)	1.0%	1.1%	1.0%	1.1%	1.2%
Vp ($VP.)	21.4%	17.7%	21.6%	25.7%	24.1%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
21St Century Technology ($C21)	20.3%	-2.9%	45.6%	111.0%
Inspired Energy ($INSE)	63.9%	65.5%	-7.5%	28.0%
Petards Group ($PEG)	35.5%	-78.0%	24.7%	23.9%
Servoca ($SVCA)	1.0%	7.8%	14.9%	22.3%
Rtc Group ($RTC)	14.6%	17.6%	19.9%	22.2%
Median (54 companies)	9.5%	7.8%	9.3%	9.9%	10.5%
Vp ($VP.)	12.2%	12.3%	12.3%	14.9%	14.5%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Redhall Group ($RHL)	22.8x	5.8x	6.6x	16.8x
Mitsubishi Corp ($MBC)	9.9x	15.9x	14.3x	12.5x	25.0x
Ienergizer Ltd ($IBPO)	6.3x	2.8x	3.0x	4.0x
Ceps ($CEPS)		3.0x	6.6x	3.8x
Kellan Group(The ($KLN)			6.5x	3.6x
Median (50 companies)	0.8x	0.5x	0.6x	0.4x	0.6x
Vp ($VP.)	1.0x	1.1x	1.2x	1.2x	1.5x

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.