Annual Report and Accounts 2022
vpplc.com
Vp plc Annual Report and Accounts 2022 vpplc.com
Strategic Report
Governance Financial Statements Shareholder Information
In This Report
Strategic Report
01 About Us
01 Our Business Model and Strategy
01 Diverse Range of End Markets
02 Group Businesses
04 Long Term Success
06 Financial Highlights
08 Chairman’s Statement
09 Business Review
14 Responsible Business Report
27 Financial Review
30 Viability Statement
31 Risk Management
32 Principal Risks and Uncertainties
Governance
34 The Board
35 Governance
38 Audit Committee Report
41 Annual Report on Remuneration
56 Directors’ Report
59 Statement of Directors’ Responsibilities
60 Independent Auditors’ Report
Financial Statements
69 Consolidated Income Statement
70 Consolidated Statement of Comprehensive Income
71 Consolidated Statement of Changes in Equity
72 Parent Company Statement of Changes in Equity
73 Consolidated Balance Sheet
74 Parent Company Balance Sheet
75 Consolidated Statement of Cash Flows
76 Parent Company Statement of Cash Flows
77 Notes
Shareholder Information
116 Five Year Summary
117 Directors and Advisors
Vp plc Annual Report and Accounts 2022 vpplc.com
01
Strategic Report
Governance Financial Statements
Shareholder Information
Our objective is to deliver longer term, quality returns to our shareholders by
providing products and services to a diverse range of sectors including
infrastructure, construction, housebuilding and energy, both in UK and
international markets, whilst embracing our commitment to our environmental,
social and governance responsibilities as impacted by our activities.
About Us
Resilient and
proven model
- market leading
positions in niche
sectors
- diverse markets
in UK and
International
- take long term
view
KPIs
- PBTA
- revenue growth
- margins
First class asset
management
- buy quality
products at
competitive prices
- maintain assets
through rental life
cycles
- use strong balance
sheet and cash
generation for fleet
growth and
acquisitions
Specialist
rental
- embrace change
and innovate
- provider of choice
- continue to exceed
customer
expectations
- value added
service proposition
Building on
core attributes
- retain and attract
the best people
- safe and
sustainable business
- product service
reliability and
operational
excellence
Sustainability
focus
- defined strategy
- reduce emissions
and waste
- innovate with
green products
Our Business Model and Strategy
Our aim is to create long term value
*shown in Responsible Business Report
KPIs
- ROACE
- EBITDA gearing
- net debt
- fleet spend
KPIs
- PBTA
- revenue growth
- margins
KPIs
- annualised
employee turnover*
- reportable
accidents*
KPIs
- emissions*
- waste*
- supply chain*
- fleet*
Diverse Range of End Markets
INFRASTRUCTURE CONSTRUCTION HOUSEBUILD ENERGY
UK Forks is one of the UK’s leading specialist hirers
of telescopic handlers and tracked access platforms.
The products and services are utilised by its
customers to improve safety and productivity on
construction and housebuilding sites across the UK.
Groundforce is a market leading rental and design
provider of excavation support systems and specialist
products 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
customers in the transmission, construction, rail and
outdoor events markets.
vpplc.com Vp plc Annual Report and Accounts 2022
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Group Businesses
Brandon Hire Station is the leading provider of
tools and specialist rental products to industry,
construction and home owners across the UK.
ESS is the leading specialist provider of safety,
survey, communications and test & measurement
equipment rental in the UK.
Vp plc Annual Report and Accounts 2022 vpplc.com
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Strategic Report
Governance Financial Statements Shareholder Information
Group Businesses
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.
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
Group
geographies
UK EUROPE ASIA PACIFIC
Mechanical, Electrical & Low Level Access Specialists
MEP Hire
Specialist suppliers of rail infrastructure portable plant
and related trackside services to Network Rail,
London Underground and their appointed track
renewal, maintenance and project contractors.
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.
Airpac Rentals
Energy Industry Solutions
vpplc.com Vp plc Annual Report and Accounts 2022
04
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.
1973
Floated on
main market
Vibroplant
plc
1954
Vibratory
Roller &
Plant Hire
(Northern)
Limited
founded
1980
Shoring
division
established
1990
Groundforce
acquired
from SGB
1997
Rail: Torrent
Trackside
acquired
2001
Hire Station
formed through
merger of
5 regional tool
businesses
2001
Renamed
Vp plc
1975
First
move into
specialist
plant
Airpac
1982
US powered
access
business
established
1996
Cannon
Tool Hire
acquired
Exit from
USA
2000
UK Forks
division
created
2005
TPA
and
ESS
acquired
Vp plc Annual Report and Accounts 2022 vpplc.com
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Governance Financial Statements Shareholder Information
2007
MEP
acquired
2014
Vp celebrates
60 years
2016
Acquisitions of
Higher Access
and TR Pty
(Australia)
2019
Acquisition
of Sandhurst
2006
Acquisition of
Bukom Oilfield
Services
(Airpac Bukom
formed)
2010
Geographical
expansion:
Global (Airpac
Bukom) Eire
(Groundforce)
Germany (TPA)
2015
Acquisition
of Test &
Measurement
2017
Acquisition of
Brandon Hire
2021
Acquisition of
M&S Hire
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
179.2
2018
167.7
2019
159.8
2020
14.8
2018
14.5
2019
14.5
2020
26.0
2018
30.2
2019
30.5
2020
40.6
2018
46.8
2019
47.1
2020
84.9
2018
95.1
2019
91.0
2020
303.6
382.8
362.9
2018 2019 2020
vpplc.com Vp plc Annual Report and Accounts 2022
06
Financial Highlights
GROUP REVENUE
308.0
350.9
2021 2022
£350.9m
PROFIT BEFORE TAX
1
£38.9m 36.0
BASIC EARNINGS PER SHARE
1
46.8
71.2
2021 2022
71.2p
DIVIDENDS PER SHARE
RETURN ON AVERAGE CAPITAL EMPLOYED
1
9.2
2021
14.5
2022
14.5%
NET DEBT
121.9
2021
130.6
2022
£130.6m
Notes on alternative performance measures:
1
l
All performance measures stated as before amortisation are also before impairment of intangibles, exceptional items and the impact of
IFRS 16.
l
Basic earnings per share pre amortisation and exceptional items is reconciled to basic earnings per share in note 22.
l
Profit before tax, amortisation and exceptional items is reconciled to profit before tax in the Income Statement.
l
EBITDA is reconciled to profit before tax, amortisation and exceptional items by adding back net financial expenses and depreciation.
l
Return on average capital employed is based on profit before tax, interest, amortisation and exceptional items divided by average
capital employed on a monthly basis using the management accounts. Profit before tax, interest, amortisation and exceptional items is
reconciled to profit before interest and tax in the Income Statement.
23.3
38.9
2021 2022
25.0
36.0
2021 2022
30.8
33.6
28.4
2018 2019 2020
35.6
2022
Vp plc Annual Report and Accounts 2022 vpplc.com
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Financial Highlights
STATUTORY PROFIT/(LOSS) BEFORE TAX
£35.6m
STATUTORY BASIC EARNINGS/(LOSS) PER SHARE
64.5p
61.7
65.2
46.9
2018 2019 2020
64.5
2022
Impact on Consolidated Income Statement, EBITDA and earnings per share
The financial impact of IFRS 16 on the Group’s consolidated income statement and EBITDA for the year ended 31 March
2022 is set out below:
£000
) £000) £000)
Operating profit before amortisation 43,333) 2,966) [46,299)
Operating profit 40,031) 2,966) 42,997)
EBITDA 88,868) 19,525) [108,393)
Net financial expense (4,428) (2,925) (7,353)
Profit before taxation and amortisation 38,905) 41) 38,946)
Profit before taxation 35,603) 41) 35,644)
UNAUDITED
EXCLUDING
IFRS 16
UNAUDITED
IFRS 16
IMPACT
AUDITED
REPORTED
(2.3)
2021
(11.6)
2021
vpplc.com Vp plc Annual Report and Accounts 2022
08
Chairman’s Statement
Profit before tax, amortisation and exceptional items
rose by 67% to £38.9 million (2021: £23.3 million) on
turnover ahead 14% to £350.9 million (2021: £308.0
million). EBITDA (pre IFRS 16) improved to £88.9
million (2021: £72.7 million).
Capital investment in the rental fleet grew almost 50% to
£59.8 million (2021: £40.2 million). This increased
spending was in response to improving customer demand
with particular emphasis on new lower emission product
substitutions and also reflects pre-emptive bulk
purchasing to avoid some of the supply chain difficulties
that we were anticipating.
Year end net debt (pre IFRS 16) rose marginally to £130.6
million (2021: £121.9 million).
Return on average capital employed (‘ROCE’) recovered
strongly to 14.5% (2021: 9.2%) in line with our long term
target, an excellent result which reflects once again the
underlying resilience in the Group’s quality of earnings.
Earnings per share grew 52% to 71.2 pence per share
(2021: 46.8 pence per share).
At the AGM, scheduled to be held on 21 July 2022, the
Board will be recommending payment of a final dividend
of 25.5 pence per share (2021: 25.0 pence per share)
making a total for the year of 36.0 pence per share (2021:
25.0 pence per share). Subject to Shareholder’s approval
it is proposed to pay the final dividend on 5 August 2022
to members registered at 24 June 2022. This proposed
level of dividend is based on our policy to distribute on a
two times covered earnings basis going forward.
In November 2021, we purchased the fit-out specialist M&S
Hire Limited (‘M&S’) for £2.8 million. M&S complements
and extends our MEP service offering and since acquisition
has performed in line with our expectations. We are excited
about the opportunities presented by this new niche market.
We also achieved two notable contract wins in the period.
In March 2022, we were awarded a further renewal to our
long running support contract with the Valero Refinery in
Pembrokeshire and at the very end of the financial year, we
finalised a five-year exclusive hire partnership with Watkin
Jones plc, the UK's leading developer and manager of
residential for rent homes. This partnership agreement
included the acquisition of Watkin Jones’ in-house plant and
tools fleet as they transitioned to a pure outsourced rental
supply model. Key to our success in winning this vigorously
contested contract was the strength of our ESG offering.
In April, Vp announced that its controlling shareholder, a
company connected to me, had indicated to the Board its
desire to explore opportunities to dispose of its c.50.26%
shareholding in Vp. In light of this, the Company has
launched a formal sale process and further communication
with shareholders will be made if and when appropriate
to do so. In the meantime, it is ‘business as usual’ as we
stay fully focused on delivering on our plans for the
current financial year.
Although we are facing some headwinds from cost
inflation and supply chain disruptions, we identify
significant upside growth opportunities for this year and
further ahead. This gives us every confidence that we can
continue to deliver sector-leading results for all our
stakeholders.
It remains my great pleasure to thank, on behalf of
Shareholders and the Board, all our employees for their
hard work and commitment that has made these
excellent results possible.
Jeremy Pilkington
Chairman
8 June 2022
I am delighted to report a robust set
of results that demonstrates the very
strong progress and continued
recovery in trading performance across
all our core markets following the
impact of Covid last year.
Chairman: Jeremy Pilkington
Vp plc Annual Report and Accounts 2022 vpplc.com
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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.
Year ended
31 March 2022
Revenue
Operating profit before amortisation and exceptionals
Operating margin
Investment in rental fleet
Return on average capital employed
Statutory operating profit
£308.0 million
£27.7 million
9.0%
£40.2 million
9.2%
£5.7 million
£350.9 million
£43.3 million
12.3%
£59.8 million
14.5%
£43.0 million
Year ended
31 March 2021
The year to 31 March 2022 was a period of significant
recovery for the Group as the Covid-19 restrictions were
gradually removed and our customers began to trade
back towards pre-pandemic levels of activity.
Group operating profits before amortisation and exceptional
items showed a significant recovery in the year to £43.3
million compared with prior year of £27.7 million, a 56%
increase. Operating margins improved to 12.3% (2021:
9.0%) with Group revenues at £350.9 million (2021: £308.0
million) 14% up on prior year. Return on average capital
employed of 14.5% increased strongly on the prior year of
9.2% demonstrating the resilience of the Group in being
able to restore the quality of profits back towards our long
term, through the cycle, ROCE target of 15%.
Cash generation also improved and EBITDA before
exceptionals was £88.9 million (2021: £72.7 million). Net
debt at 31 March 2022 was £130.6 million (2021: £121.9
million), a small increase of £8.7 million and after funding a
healthy increase in capital expenditure during the year.
The increased investment in rental fleet reflected growing
demand across our business network. Gross capital
expenditure was £59.8 million (2021: £40.2 million). Fleet
disposal proceeds were £17.8 million (2021: £17.5 million)
generating profit on disposals of £7.0 million (2021: £4.3
million). The increase in capex during the year was partially
driven by increased demand within our divisions, and also
due to bulk buying of products ahead of the usual timeframes
to compensate for the extended lead times in certain of our
supply chains, a necessary and successful strategy.
The markets which the Group serves experienced different
paces of recovery both in functionality and geography. In the
UK and Europe, certain of the infrastructure markets e.g. HS2
and transmission fared well, whilst water (AMP7) and Rail
(CP6) were more subdued, only starting to show signs of
uplift in Q4.
The general construction market was mixed with repair and
maintenance strong whilst new construction was more
subdued. The house building market provided sustained
demand.
Internationally, border restrictions initially inhibited business
recovery but in early 2022 these were eased facilitating both
improved customer contact and a subsequent increase in
activity.
The operating profit (before amortisation) result of £43.3
million was primarily sourced in the UK division, but it is the
quality of all our specialist divisions across the whole Group
in the UK, Europe and Internationally that has driven an
excellent overall performance.
Chief Executive: Neil Stothard
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Business Review
Year ended
31 March 2022
Revenue
Operating profit before amortisation and exceptionals
Investment in rental fleet
£281.3 million
£27.2 million
£35.6 million
£320.2 million
£41.8 million
£55.2 million
Year ended
31 March 2021
UK Division
Operating profits (before amortisation and
exceptionals) in the UK division increased
to £41.8 million compared with £27.2
million in the prior year. Revenues of
£320.2 million (2021: £281.3 million)
were 14% up on prior year.
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
and Austria. All of the business units in the UK division
support the three core market sectors of infrastructure,
construction and housebuilding.
The following section comments on the highlights and key
actions for the constituent businesses within the UK division.
The UK Forks business had a good year, experiencing high
levels of activity for their telehandler fleet, particularly in
the residential construction sector where demand remained
very good throughout the year. This performance was
despite the ongoing challenges of supply chain delays on
acquiring new machines for the hire fleet and as a result,
the division is not yet back to its pre-Covid fleet size.
Overall fleet numbers grew by 7%. Disposal of fleet was
also slowed down and equipment retained longer in the
rental fleet to ensure that we were able to meet the
demands of our customer base. As part of our sustainability
commitments the business has started to introduce electric
versions of both the 6m telehandler and teletruck products
and further investment in these lines will continue into the
current financial year. Whilst we have seen inflationary cost
increases in both parts and labour the business has been
able to pass on some of these costs by increasing hire rates.
We have successfully renewed all our key account
relationships during the year. In March 2022 the Higher
Access spider platform business transitioned to a partnered
services offer, with our customer base primarily utilising
third party products.
The Groundforce UK & Ireland business experienced a
positive year which having started relatively slowly, accelerated
as activity increased in the final quarter and into the new
financial year.
Activity in Groundforce was buoyed by good demand from the
HS2 and Hinkley Point projects in addition to a supportive
housebuilding sector. The general construction and civil
engineering sectors outside of infrastructure were slower to
recover in the year. The AMP7 water industry capital
investment programme was frustrated as activity levels
remained relatively subdued for most of what was the second
full year of the five year AMP programme. The transition from
the planning to implementation stage was delayed and we
also saw regional differences in levels of AMP activity.
Investment in hire fleet grew by over 88% on prior year
partially to satisfy increased demand and partially in
anticipation of a busier AMP programme in the new
financial year. The foundation year of Groundforce’s three
year digital roadmap went well as ecommerce capability
was introduced to the website and the online, self-service
specification tool, ‘Your Solutions’ for shoring was upgraded
and continued to enjoy increased customer take-up.
Future prospects remain good with an anticipated increase
in AMP and other infrastructure activity.
The Groundforce Europe business had an excellent year
making good progress both in its core shoring offer and also
with much improved activity in significant major project
support solutions in Germany, Scandinavia and France. The
signs remain positive for this to continue.
The TPA UK business traded well in the year with strong
demand for roadway panels particularly from HS2 and the
transmission sectors which provided an increase in longer
term hires. The business delivered an excellent result for
the year against a backdrop of product and labour cost
inflation. We continued to invest in aluminium roadway
panels, which enabled the business to meet solid demand.
There will be further opportunities in both the construction
and enabling phases of HS2, and the outdoor event sector
should provide further demand as this market re-opens
after a two year break.
Vp plc Annual Report and Accounts 2022 vpplc.com
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Business Review
UK Division
For TPA Europe it was a successful, if challenging year, as
the business consolidated a strong prior year performance.
Demand from the transmission and renewables sectors was
good in both Germany and Austria and we continued to
support the business with new fleet investment. Whilst
revenues grew there were some costs pressures in
particular on transport and recruitment. The end markets
for TPA in Germany and Austria remain positive for the
coming year.
The Brandon Hire Station business secured further
recovery particularly in the early months of the year, though
activity levels did subsequently flatten out through to the
end of the year. As reported before, construction markets
were led by a buoyant repair and maintenance segment,
whilst new build construction was less busy and impacted
by materials and labour shortages. The business has good
customer retention, but many of our SME customers are still
trading on fewer contracts than they were pre-Covid. A
number of new strategic accounts were secured in the
period notably the tool and plant fleet of Watkin Jones plc,
which was acquired at the end of the financial year
alongside a five year sole supply arrangement.
In early 2022 the new Brandon Hire Station website was
launched and developed as a progressive web app for use
on mobile devices. We anticipate growth in this rental
channel as customers increasingly interface with us on
mobile devices. The National Partnered Service Centre
made further excellent progress in the year in support of
those of our customers who are looking for a captive
provider for their rental requirements. The fleet investment
programme in Brandon Hire Station moved ahead strongly
in the year with a marked re-alignment towards
environmentally friendly asset solutions for our customer
base. The core fleet holding (top 350 products) continues
to transition to battery powered, solar and electrically
driven solutions and replacing traditional diesel / petrol
powered products. These include e.g. mini excavators,
hedge trimmers and cut-off saws. The older equipment
continues to be sold off as new products are added to the
fleet thereby accelerating the transition to greener fleet
solutions.
In the year, Brandon Hire Station gained the FORS Gold
accreditation for continuous improvement in driving
standards and safety processes, together with RoSPA Gold
award for Health & Safety. Recently ISO 50001, the
International Standard for continuous improvement in
environmental performance, energy efficiency and
sustainability, was also secured by the Brandon Hire Station
business.
ESS, our UK market leading Safety, Survey and Test &
Measurement rental business had a good year and
delivered excellent year on year profit growth. The
completion of the Valero shutdown contract in
Pembrokeshire made for a very busy start to the year for
ESS. The focus of the business has been in strengthening of
the management team and the re-positioning of the
divisions into a core (branch network) mainstream rental
offer complemented by specialist services supporting the
wider industrial sector in the UK. Operationally the business
moved into new flagship premises in Manchester providing
further operational capacity. Aside from the core survey and
safety rental activities, ESS has some excellent additional
service offers to their customer base including
communications, confined space training, test &
measurement, safety teams and breathing air solutions.
These specific services provide further growth opportunities
going forward, over and above the core survey and safety
revenue streams.
MEP Hire (‘MEP’) which provides low level access and
press fitting equipment and associated services to the
mechanical, electrical and plumbing sectors delivered
another excellent performance in the year. The business
recovered quicker than most after the worst of the
pandemic in the prior year and pleasingly this trend was
maintained. The business benefitted from good demand
from contracts in schools and hospitals alongside projects
aimed at re-purposing existing buildings into living
accommodation or re-configuring offices for new modes of
working. MEP further expanded its national operational
footprint opening new depots in Scotland and Manchester
during the year. Recent growth in the business has been
derived from further market penetration in the major
conurbations outside of London. The important London
market also started to recover back towards historic levels
of demand. As previously reported, in November 2021,
MEP acquired M&S Hire Limited, a South East based supplier
to the large scale commercial fit out sector. This acquisition
widens MEP’s offer and also establishes an important
foothold in the commercial fit out market. Capital
investment in the fleet was strong combining fleet
refreshment with the introduction of additional new and
innovative product solutions to further enhance the
customer experience.
Torrent Trackside experienced a relatively quiet rail
market for most of the financial year, with activity only
picking up in the final quarter. A number of larger projects
such as the Transpennine Route Upgrade (‘TRU’), the
Transport for Wales, Core Valleys line upgrade and the CP6
programme in general offered lower demand than
anticipated for most of the year. A contributory factor to a
volatile 2021 was the cancellation of planned blockades
and engineering works as the train operators struggled with
a combination of Covid impact and major timetable
changes. The good news is that these projects are now
underway and the Network Rail High output contract also
resumed in the final quarter.
Proactive investment in fleet was maintained to ensure
supply to the customer base. The business further
enhanced its sustainability focus with the acquisition of
solar powered lighting products, via a strategic relationship
with Prolectric, delivering excellent product efficiencies and
emission reductions to our rail customers. The expectation
is for improved and more consistent levels of rail demand
into the new financial year as the major projects, listed
above, in particular, gather further momentum.
vpplc.com Vp plc Annual Report and Accounts 2022
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Business Review
Year ended
31 March 2022
Revenue
Operating profit before amortisation and exceptionals
Investment in rental fleet
£26.7 million
£0.6 million
£4.6 million
£30.7 million
£1.5 million
£4.6 million
Year ended
31 March 2021
International Division
The International division reported
operating profits before amortisation
and exceptionals of £1.5 million, on
revenues 15% ahead of prior year of
£30.7 million (2021: £26.7 million).
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. The following section comments on the highlights
and key actions for the two main business groupings
within the International division.
The Airpac Rentals business made good progress in the
year despite trading conditions remaining changeable.
Operations were impacted by Covid restrictions causing
customer driven contract delays due to lack of labour
availability. In spite of this, revenues recovered well
compared with prior year, driven by solid demand in Asia,
and a much improved performance in Europe and Australia.
The improved oil price certainly changed sentiment for the
better in well testing where we have seen enhanced
demand in both the North Sea and Asia. In Asia, the
business also secured preventative maintenance revenues,
and in Australia LNG infrastructure maintenance as
shutdown activity increased. We have committed further
investment to support a combination of high pressure
pipeline applications and core well test, together with a
growing focus on geothermal drilling projects. We acquired
more electric compressors to support our European markets
and to complement those electric units already on long
term contracts in Asia and Australia as we seek to offer
alternatives to diesel driven compressors where we can.
The TR Group (‘TR’) enjoyed a satisfactory year achieving
results ahead of plan but still below pre-Covid levels. In
spite of the extended lockdowns experienced, particularly
in Australia and New Zealand, the business traded well
overall. TR provides instrumentation and communication
products to a wide range of markets including
construction, mining and infrastructure.
In Australia, the closure of state borders actually
contributed to improved activity in Western Australia and
Queensland where the resource sectors experienced
buoyant conditions. This was tempered by weaker non-
resource driven markets in other Australian states.
Highlights included a strong recovery in long term rental
activity in the communication business Hirecom, and solid
demand in TR New Zealand, Malaysia and Singapore. The
audio visual business Vidcom, in New Zealand, had a
better year with further development of their
livestreaming solution for events customers compensating
for the significantly reduced number of ‘in person’ events
during the year. As elsewhere in the Vp Group, supply
chain delays and cost inflation are common but, again,
mitigated by a focus on increasing rental rates where
possible.
TR anticipates further recovery, particularly in those market
areas e.g. aviation and outdoor events, where demand
has been subdued but where there is likely to be a catch
up in due course.
Business Review
Neil Stothard
Chief Executive
8 June 2022
The success of the Group is fundamentally down to the
quality of our team and their individual and collective
contributions to the ongoing development of the business.
We are therefore committed to provide relevant support to
colleagues to allow them to develop as individuals within
our business. We have launched a range of internal learning
and development programmes during the year aimed at
delivering on that commitment.
We have continued to invest in engineering apprenticeships
group wide and are currently working on the 2022 intake for
both apprentices and graduates across the Group. The Group
HR team are leading a wide range of new initiatives
including sales professional development, talent
management, career pathways, mental health first aid,
essentials of management and customer service training
amongst others. We also invested in a new SAP, HR &
Payroll system which will significantly streamline and
modernise all areas of human resource administration.
Allied to that we also introduced the SAP Litmos learning
management system to support the learning and
development initiatives listed above.
Outlook
We are extremely pleased with the quality of the recovery in
our trading performance as the impact of Covid-19 diminished
during the financial year. These results not only demonstrate
a significant increase in profitability but also importantly a
material recovery in the quality of those profits measured by
return on average capital employed.
The Group has made a positive start to the new financial year
and in line with our expectations. The markets, which the
Group serves, are for the most part supportive and we believe
offer good prospects for further increases in demand for our
products and services into the new financial year.
As with all businesses, the current challenges of managing
cost inflation, supply chain delays and labour shortages are
being met on a day-to-day basis. The entire Vp team have
contributed significantly to a successful year and we are well
set as a Group to both embrace the opportunities, and
manage through the inevitable challenges, over the next
twelve months.
Employees
We have continued, throughout the year, to invest in the
journey to deliver on our commitment to achieve net
carbon zero by 2050 in line with the Science Based Targets
Initiative to which the Group has signed up. The
Environmental Steering Group, which I chair, acts as the
main co-ordinator in terms of the Group approach to this
wide ranging topic. We have achieved ISO 50001, the
International Energy Management System Standard across
three of our businesses with the aim to attain this Group
wide by the end of calendar year 2022. All of our
businesses have continued to introduce new ‘greener’
equipment solutions to their customer base and I
comment on some of those initiatives within the
respective business sections. We supported three UK
regional restoration and conservation projects during the
year with allied employee engagement opportunities. We
plan to continue our investment in such projects in the
coming year.
Environmental
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Overview
We have a responsible business culture resting upon our principles of fairness, integrity and respect.
Our culture is underpinned by our corporate responsibility framework that ensures good governance
and influences the way we manage our environmental and social impacts. This framework applies
to all elements of our business and incorporates Sustainability, Environmental and Social Governance
(ESG) and Corporate Responsibility (CR) – all of which overlap and are complementary.
SUSTAINABILITY STRATEGY AND ACTION PLAN
OUR APPROACH
We acknowledge that it is our responsibility to address
sustainability throughout the Vp Group.
We employ around 2,800 people across 10 different
countries operating from over 250 sites delivering a valued
service to thousands of customers across all the markets
that we serve. It is our aim that sustainability will be
universally addressed across the Vp network and that we
will all help to play our part in mitigating climate change
and biodiversity loss by minimising our own environmental
footprint and seeking to have a net positive impact on
biodiversity. To help further mitigate any negative
environmental impacts, the Group continues to invest in
local community and conservation projects.
Our Sustainability Report is focused on 11 of the 17 United
Nations Sustainability Development Goals (SDGs). These
are 17 aspirational goals defined with the purpose of
progressing positive environmental, social and governance
change for the world by the year 2030 and a blueprint to
achieve a better and more sustainable future for all and
address the global challenges we face including poverty, climate change and environmental degradation.
We have reviewed the SDGs and each corresponding target to evaluate where we align most strongly and where we shall
strive to improve our contribution going forward. The 11 SDGs we are focussed on are listed below and the SDG icons
throughout the report indicate where we are making progress towards the achievement of these goals.
SDGs for our customers, investors and supply chain
SDGs for our people
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ACHIEVEMENTS
Our achievements over the past 12 months include:
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ISO 50001 accreditation
across three of our divisions,
Brandon Hire Station, MEP
Hire and ESS Safeforce. This
will be achieved Group-
wide and in all UK sites by
the end of 2022
We have invested, and
continue to invest, in more
sustainable rental fleet
solutions.
Our largest division,
Brandon Hire Station,
recently won the inaugural
Hire Association of Europe
(HAE) Best Sustainability
and CSR Initiative.
The majority of UK
properties have switched to
100% renewable electricity,
backed by certificates of
renewable energy
guarantees of origin, which
has reduced our Scope 2
emissions by 88%.
We have published our
Short Term Roadmap to Net
Zero by 2050 (below).
HVO (Hydrotreated
Vegetable Oil) fuel is
available to customers at
all Brandon Hire Station
branches.
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SCIENCE BASED TARGETS
As a Group, we have committed to reducing our emissions in line with limiting global warming to 1.5 °C and to becoming net-
zero, by 2050 at the latest, across our entire value chain with the Science Based Targets Initiative. This ensures our goals are
validated, robust and accurate.
We are working through a Scope 3 inventory and plan to validate our Science-based Targets by November 2022.
FOSSIL FUEL CONSUMPTION
We acknowledge our dependence on fossil fuels and the
impact this continues to have on climate warming.
Led by CEO Neil Stothard, we have a monthly environmental
steering group meeting to drive our overall sustainability
agenda forwards.
Our greenhouse gas emissions are calculated in accordance
with the World Business Council for Sustainable Development
and World Resources Institutes Greenhouse Gas Protocol,
along with HM Government’s Environmental Reporting
Guidelines and the latest DEFRA conversion factors.
Greenhouse gas emissions data for the period 1st April 2021 to 31st March 2022 is set out below:
Scope 1 (Tonnes CO2e) 11,397 11,146
Scope 2 (Tonnes CO2e) 23 1,977
Total Scope 1 & 2 (Tonnes CO2e) 11,420 13,123
Energy consumption of Scope 1 & 2 (kWh) 55.7m 55.0m
Intensity Ratio: Tonnes CO2e (gross Scope 1 + 2) / £1 million revenue 36 49
Scope 3* 1,318 1,970
Scope 1 (Tonnes CO2e) 2,034 1,411
Scope 2 (Tonnes CO2e) 241 268
Total Scope 1 & 2 (Tonnes CO2e) 2,275 1,679
Energy consumption of Scope 1 & 2 (kWh) 9.5m 7.0m
Intensity Ratio: Tonnes CO2e (gross Scope 1 + 2) / £1 million revenue 74 45
Scope 3* 1,379 1,036
UK
Y/E 2022
Y/E 2021
International
(excluding UK)
*Scope 3 figures are limited to emissions from external haulage
62
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FOSSIL FUEL CONSUMPTION
Since 2009, the Vp Group has reduced its greenhouse gas emissions year-on-year with CO2 equivalent tonnes per £m revenue
reducing from 103 tonnes per £1m revenue in 2009 to 39 tonnes per £1m revenue in 2022. There is, however, still much more
that we can do.
Scope 1 & 2 emissions
Vp seeks to maximise the efficiency of its resource use and
energy consuming assets. We are building on our ISO 14001
Environmental Management System by setting the goal of
having ISO 50001 - the Energy Management System
accreditation in all UK sites by the end of 2022. This
formalises continuous improvement in energy efficiency and
reinforces sustainable behaviours across the Group. We have
already achieved ISO 50001 accreditation across three of our
divisions, Brandon Hire Station, MEP Hire and ESS Safeforce.
Year ending 31st March
New telematics software has enabled better
decision making influencing eco-friendly driving
practices and has prompted further fleet
rationalisation.
We are moving away from internal combustion
engine vehicles through investing in hybrids,
electric vehicles, forklifts and chargers.
We are taking advantage of new digital
communication platforms and only travel when
necessary which has reduced business travel by
up to 20%.
Fleet rationalisation and replacement means our
fleet is increasingly efficient.
22% of our company car fleet is sustainable and
we have introduced sustainable options in all car
bandings.
We are planning extended HVO trials in our
commercial vehicles.
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FOSSIL FUEL CONSUMPTION
Vehicle Fleet and Fuel Emissions
The Group operates circa 1,350 commercial vehicles and company cars covering, in a typical year, 48 million miles annually.
We have a range of initiatives to minimise the emissions from our commercial and company car fleet including:
Renewable Energy
Almost all UK properties are supplied with fully renewable electricity, backed by certificates of renewable energy guarantees
of origin (REGOs). This has reduced our Scope 2 emissions by 88%.
We are reviewing and investing in solar generation across the Group currently with four sites complete and three sites in
progress. The solar panels installed in the Melbourne and Sydney locations have already saved over 65 tonnes CO2e from
entering the atmosphere.
We are reviewing sites of high gas consumption and exploring renewable heating options.
88
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Waste, Water, Plastic & Paper
Water
A water audit has resulted in the implementation of a
number of savings opportunities. As a result, interceptors are
being upgraded to utilise rainwater harvesting and grey
water recycling opportunities.
Paper
A significant reduction in our paper usage over the past 12 months has come from digitising many of our marketing materials.
Plastic
We are planning a single-use plastic audit to identify all
sources of single-use plastic and start eliminating these or
replacing them with viable alternatives.
SUPPLY CHAIN & RENTAL FLEET
The Group is using ISO 20400 for Sustainable Procurement
to guide our procedures and systems to influence our supply
chain to be more sustainable across their environmental,
social and governance performance. It is our goal to work
with those whose environmental objectives best align with
our own and to encourage improvements in those who fall
short.
We work closely with our supply chain to provide the best
performing rental fleet possible to the customer and those
considerations have developed substantially to include
embodied carbon and waste generation.
Vp aims to source all of its equipment responsibly and is
committed to reduce the embedded emissions in
equipment by working with manufacturers, suppliers and
customers to drive innovation and provide the best
performing rental fleet possible.
We have developed procurement guidelines and
performance standards for site upgrades using best-in-class
innovations to implement our efficiency requirements.
We maintain our long-term focus on innovation, working
with both our suppliers and customers continually seeking
to improve our offering and reduce the number of fossil fuel
powered products. Concurrently, we actively raise the
awareness of, and encourage, our customers to utilise
products that are less impactful to the environment and
user.
YEAR
% DIVERTED FROM LANDFILL
2019-20
87%
2020-21
94%
2021-22
96%
of our rental assets, group wide,
are zero emissions at point of use
Offering mechanical fleet with no internal power
source where possible.
Replacing diesel and petrol tools and generators
with cordless equipment and battery technology
wherever possible.
Supplying battery charging stations powered by
solar and hybrid generator technologies.
Using a Life Cycle Assessment methodology tool
which tracks the emissions produced during the
different stages of the life cycle of a product or
service.
On long term projects, we look to identify
strategic locations to co-locate on sites and we
offer remote customer support thereby greatly
reducing business travel emissions.
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SUPPLY CHAIN & RENTAL FLEET
In developing a decarbonisation strategy with our stakeholders, key innovations include:
For charging of our battery powered tools on location,
ChargePod has been developed to deliver 24 battery
charging points in a single, secure container, powered by a
hybrid generator with industry leading solar panels.
We also supply 24 and 60 kWh battery packs which are
offered with solar panels for renewable power generation
We operate 5,000 mechanical low-level access platforms,
the majority of which are zero emission and powered
manually by the user.
We also operate aluminium roadways, trench boxes and
scaffold towers which are fully recyclable.
Zero Emissions Range
We have recently transitioned our rail lighting fleet to 100% solar and battery powered and at full utilisation, this saves over
1.5 tonnes of CO2 emissions and 600,000 litres of fuel.
Examples of new battery-operated tools and equipment: 19C-1E Mini Excavator, 525-60E 6-metre Telehandler, HTD5 E-TEC Dumpster from JCB,
Brandon Hire Station’s ChargePod and K1 PACE Disc Cutter from Husqvarna.
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Globally, over half of global GDP relies directly or indirectly on
nature, making it the most productive component of our
economy. 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, we are supporting seven outstanding
ambitious conservation projects. With the Yorkshire Peat
Partnership, Fauna & Flora International we aim to discover
effective methods to restore degraded peatlands, improve
the management of Scotland’s coastline. Looking forward, we
are already in well advanced plans with four Wildlife Trusts
and one Rivers Trust for 2022 onwards.
Through these projects, we hope to enhance the connection
Vp employees and families have to the natural world by
providing first hand restoration and learning experiences.
Closer to home, we are also enhancing biodiversity in our
own sites with our pilot site in Kintore complete.
Credit: Seawilding Credit: John Smith
NATURE CONSERVATION PROJECTS
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OUR PEOPLE
Our people are what makes our business successful. We
aim to provide a great place to work, where they feel
valued and have opportunities to fulfil their potential. Our
teams across the businesses have coped magnificently
with the unprecedented rapidly changing conditions
caused by Covid. Throughout the pandemic they have
risen to the many challenges and worked tirelessly,
continuing to provide great service to our customers. The
Group’s results and achievements clearly demonstrate
this.
Wellbeing
In a year like no other, our colleagues have demonstrated
their resilience and capability to operate under extremely
challenging conditions. Supporting their wellbeing is a key
priority for us and we have enhanced the skills of our
teams to support our people through the introduction of
trained Mental Health First Aiders and continuing our
programme of mental health awareness training for
everyone. Our focus on improved communication of our
Employee Assistance Programme, private medical
provision, health plan and occupational health resource
provision has also increased both awareness and uptake.
Systems
We have made a significant investment in HR and Payroll
systems. The successful recent implementation of a new
SAP HR and Payroll system has accelerated our digital
transformation programme. With this new platform in
place we will have significant opportunities to be more
efficient in delivering HR and Payroll operations and our
programme of continuous improvement as the business
grows. The deployment of a self-service HR system will
also enable our people to have direct access and visibility
to their own data and Line Managers to access up to date
timely management information.
Development
Attracting talented individuals to join our growing
business and creating an environment and opportunities
where they can develop the necessary skills and
knowledge to effectively perform in their roles is a key
priority. We previously committed to strengthening
Learning and Development resource capability and have
created two new central roles to facilitate this. In addition,
we have expanded our digital transformation investment
to also include a new Learning Management System
which we have begun to cascade across our businesses.
This will enable us to provide digital learning content to
our people across the world, track learning and
development and create rich learning experiences for
everyone. This will be followed by the introduction of a
Talent Management System enabling us to give added
focus to effectively identifying and developing talent
across our business.
We encourage everyone to take responsibility for their
own learning and development ensuring they have a
personal development plan in place. This will allow us to
develop the operational capabilities of our teams and
enhance the management and leadership skills across the
Group. Our Essentials of Management Programme
developed to upskill all Managers across our businesses is
about to launch, just one element of a suite of
programmes aimed at developing the behavioural,
managerial and leadership capability of many of our very
talented colleagues.
Our rotational Group Graduate Scheme has continued to
be a great success, with four Graduates mid-way through
the programme and an additional intake due to start at
the end of the summer. This 18 month comprehensive
programme enables our Graduates to work across all our
businesses and Head office functions, equipping them to
become part of our internal talent pool and succession
plans in the future.
For many years we have recruited an annual intake of
Engineering Apprentices across our branch and depot
network as part of our future succession planning and
continue to do so with another intake currently being
recruited for a September start. We successfully launched
both a Sales Apprenticeship for Sales Managers and a
Management Apprenticeship Programme. In addition, our
new LGV Apprenticeship and LGV Bootcamp Programme is
also ready for launch to create internal development
opportunities for our depot based colleagues. We will also
have our first Business Studies Degree Apprenticeship
Programme commencing at the end of the summer.
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Inclusion and Diversity
We believe in equality, diversity and inclusion and
recognise its importance to the future continued growth
and success of our business. Raising awareness amongst
our colleagues is a key priority for us and having recently
developed our own in house digital EDI learning module,
we will be progressively cascading this to both existing
employees and all future new joiners to our business.
As an equal opportunity employer we are committed to
promoting the same level of opportunities to all. Women
are represented at all levels of our organisation, 20% of
the Board and 14% of Senior Managers are female.
Retention
Critical to our long term success over many years has been
our ability to attract and retain highly talented capable
people. As a Group, 467 of our colleagues have five to nine
years’ service and a further 703 have 10 years’ service and
over. Despite the challenges of the current labour market,
we aim to keep employee turnover as low as possible.
Employee share ownership is encouraged and where
practical the Group offers the opportunity to participate in
share schemes. At 31 March 2022, approximately 38%
(2021: 41%) 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 for them to be fully
understood and for appropriate action to be taken to
minimise the risk of occurrence.
We ended the year with an Accident Frequency Rate of
0.19, an improvement on our 2021 rate of 0.29.
The AFR is calculated by multiplying the number of RIDDOR
reportable accidents by 100,000 (the average number of
hours worked in a lifetime), divided by the overall number
of hours worked by all members of staff.
Reportable accidents under the Reporting of Injuries Disease
and Dangerous Occurrences regulations 1995 were 11, a
decrease from prior year (2021: 17).
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 £61,000 (2021:
£41,000) to charities.
2022 2021 2020 2019
Accident frequency rate 0.19 0.29 0.27 0.19
Workforce by gender* Male Female Female %
Board of Directors 4120
Senior Managers 55 9 14
Salaried 2,101 388 16
*United Kingdom only
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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 high standards. The standards expected are
specified in codes of conduct to which employees are
required to adhere, including compliance with all 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.
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
integrity, and we expect the same of all employees.
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
a further review of its supply chain and published its
statement accordingly.
Environmental policy
A new environmental policy was developed at the
beginning of 2021 and outlines that we recognise that a
changing climate requires that society and business work
together to adapt.
Whistleblowing policy
Our whistleblowing policy ensures our employees feel
empowered to raise concerns relating to malpractice or
wrongdoing through a confidential hotline. We have no
incidents of whistleblowing. 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.
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 human rights of the communities and
workforces with whom it interacts, and employees are
expected to behave accordingly.
Reporting requirement Standards and policies that govern our approach
Business model, principal risks For the business model, see p.1
and non-financial KPIs For principal risks, see p.32
For non-financial KPIs see, p.1, 16, 17, 23
Environmental matters Environmental policy, see above and vpplc.com/responsible-business
Sustainability, see p.14
Corporate responsibility, see p.14
Employees Diversity and inclusion policy, see p.23
Health safety and wellbeing policy, see p.23 and vpplc.com/responsible-business
Whistleblowing policy, see above and vpplc.com/responsible-business
Recruitment and retention of staff, see p.32 (Risk section) and p.23
Employee handbook
Human rights Modern slavery statement, see above and vpplc.com/responsible-business
Corporate responsibility, see p.14
Social matters Sustainability, see p.14 and vpplc.com/responsible-business
Corporate responsibility, see p.14 and vpplc.com/responsible-business
Diversity and inclusion policy, see p.23
Anti-fraud, bribery and corruption 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
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.
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OUR POSITION ON TCFD
Vp supports the impetus that the Task Force on Climate-related Financial Disclosures TCFD will provide for companies and
stakeholders to understand relevant climate-related risks and to also ensure appropriate risk mitigation processes are in place.
The Group has been developing its understanding of its exposure to climate change risk, completing a ‘gap analysis’ to full
TCFD alignment, and creating a clear plan to move towards a comprehensive TCFD disclosure. This initial review highlighted
that we already fulfil many of the TCFD’s recommendations. Further work will be implemented during the next two years.
SUMMARY OF KEY FOCUS AREAS
GOVERNANCE
l
The Chief Executive has overall responsibility for our environmental strategy including climate
related issues
l
The Board is responsible for reviewing and guiding strategy and is committed to sustainability
l
The Environmental Steering Group meets monthly to monitor and review performance against key
work streams
STRATEGY
l
Climate change related risks and opportunities have been identified including those involving our fleet
and solutions benefiting society, carbon intensity from our operations, and potential issues in the wider
supply chain
l
The potential climate-related benefits that our fleet offers present a strong business opportunity,
bringing environmental and societal benefits. See further details on pages 19 and 20 Supply Chain and
Rental Fleet.
l
The Group has committed to producing science-based targets (SBTs) and has made a commitment to
be net zero by 2050.
l
In 2022 we will conduct scenario analysis to assess the impacts of climate risks and opportunities. Our
scenario analysis will be based on two scenarios: a 1.5°C Paris aligned ‘low carbon transition’ scenario
and a 4°C ‘business as usual’ scenario, covering the period to 2050 (based on underlying temperature
pathways from the Intergovernmental Panel on Climate Change (‘IPCC’)).
RISK
MANAGEMENT
l
Business risks (including climate related risks) are identified and addressed using the corporate risk
process (see pages 31 to 33).
l
Climate change has been included as one of our Principal Risks (see page 33).
l
Each risk is thoroughly evaluated based on the likelihood of occurrence and severity of impact. This
is completed both before and after the effect of risk controls and mitigation are taken into account.
l
Risk Registers are regularly reviewed and risks escalated as appropriate. This approach is used to
risk assess all business risks evaluated through the corporate risk management process.
l
Corporate risks are reviewed by the Board and Executive Risk Committee every year.
METRICS
l
Vp’s short term road map to net zero by 2050 goals are shown on page 15.
l
We calculate and track our Scope 1, 2 emissions and our approach to 3 GHG emissions is being
finalised, including our absolute carbon and measures of intensity according to the GHG Protocol
Corporate Standard.
l
We have established longer term aspirational goals with associated short term milestone targets
related to climate change; this includes our aspiration to achieve carbon net zero for our own
operations by 2050.
l
We have also committed to the SBTi to start the process of establishing a science based target in
line with the global accord to minimise global warming to 1.5°C.
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What is Vp doing on TCFD?
The management team (chaired by the Chief Executive) is
responsible for reviewing and guiding major plans of action
to achieve the sustainability strategy. Climate change
aspects have been reviewed through the sustainability
planning and steering process. The corporate ‘Sustainability
Road Map’ on page 15 specifically addresses climate change
impacts from carbon emissions. Further work to support
SBTi includes a lifecycle analysis of our products and more
detailed assessment of Scope 3 impacts.
Below the Board and the management team, the highest
level committee with responsibility for climate related
issues is the Environmental Steering Group and associated
work stream groups. The team monitors and reviews
performance against the corporate sustainability policy. The
policy was established following a materiality review that
helped to prioritise environmental management on risks
and opportunities including resource efficiency and
sustainable solutions.
The Environmental Steering group monitors and reviews
performance against key work streams. We also engage
with external assessments such as working with our
insurance brokers and insurers to manage risk.
TCFD Compliance Statement
Vp plc has complied with the requirements of LR 9.8.6R by
including climate related financial disclosures consistent
with the TCFD recommendations and recommended
disclosures except for where disclosed below.
For each of the exceptions provided below, technical
expertise constraints and the complex nature of the
discussions to be held within the business required further
time and deliberation. For this reason the Group has
abstained from full disclosure as it carefully considers its
position during this transition stage.
A plan detailing how recommendations and actions will be
developed over the next two years is being formed by the
Environmental Steering Group, this plan will support the
work towards fuller disclosure by 2024.
Specifically, our disclosures currently exclude the following;
l
Further consideration of material (financial) and actual
impacts, risks and opportunities affecting specific sectors
and geographic regions of the business over the short,
medium and long term is required.
l
The applicability and use of climate related scenarios is
yet to be considered as is a review of our strategy in
relation to opportunities and risks in a 1.5
0
c aligned
scenario to 2030 and beyond. We expect closer and fuller
alignment of disclosures to be phased in by 2024.
l
Aligned with the above further review is needed in
relation to historic and forward looking climate related
metrics. Again we expect closer and fuller alignment of
disclosures to be phased in by 2024.
Board
Key working groups
Management Team (‘MT’)
Sustainable
solutions
Resource
efficiency
Social
responsibility
Safety, health
and wellbeing
The Management Team embeds sustainability strategy target reviews into the regular meetings they undertake
with their respective teams.
The Board has reviewed the proposed 2030 goals and plans and will continue to challenge how they are
embedded, whilst ensuring sustainability remains at the core of our purpose values and strategy.
Vp plc Annual Report and Accounts 2022 vpplc.com
27
Strategic Report
Governance
Financial Statements Shareholder Information
F
i
n
a
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c
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R
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v
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EARNINGS PER SHARE, DIVIDEND AND SHARES
Basic earnings per share before the amortisation of
intangible assets, exceptional items and IFRS 16 impact
increased from 46.8 pence to 71.2 pence. Basic
earnings/(loss) per share after the amortisation of
intangible assets, exceptional items and IFRS 16 rose to
64.5 pence (2021: (11.6) pence).
There were no exceptional items reported in the financial
year (2021: £15.1 million).
It is proposed to pay a final dividend of 25.5 pence per
share. If approved the full year dividend would be
increased to 36.0 pence per share with dividend cover of
2.0 times (2021: 1.9 times) based upon earnings per
share before amortisation and exceptional items. At 31
March 2022, 40.2 million shares were in issue of which
0.5 million were held by Vp’s Employee Trust.
The application of IFRS16 improves PBTAE by £41,000.
BALANCE SHEET
Net assets increased by £13.4 million to £166.5 million.
The Group’s balance sheet is summarised above.
Total property, plant and equipment increased by £13.6
million to £247.5 million. The movement in the year
mainly comprised; £68.0 million (2021: £44.2 million)
total capital expenditure offset by £45.5 million total
depreciation, £10.7 million net book value of disposals
and £1.6 million on acquisition.
Rental equipment at £216.6 million (2021: £206.0 million)
accounts for 88% of property, plant and equipment net
book value. Expenditure on equipment for hire was £59.8
million (2021: £40.2 million) and depreciation of rental
equipment £39.9 million (2021: £39.8 million).
The Group carried forward £17.5 million (2021: £20.6
million) of intangible assets and £44.9 million (2021:
£43.8 million) of goodwill at 31 March 2022. The £2.0
million movement in the year mainly reflects £3.3 million
of amortisation offset by £1.3 million of additions to
goodwill and intangibles on the acquisition of M&S.
Debtor days decreased to 55 days compared to 56 days in
the previous year. Gross trade debtors were £73.9 million
at 31 March 2022 (2021: £68.5 million). Bad debt and
credit note provisions totalled £5.2 million (2021: £7.2
million) equivalent to 7% (2021: 10%) of gross debtors.
The bad debt write off for the year ended 31 March 2022
as a percentage of total revenue was 0.6% (2021: 0.6%).
The Group’s defined benefit pension schemes have a
net surplus of £2.7 million (2021: £2.2 million) which is
recorded as an asset on the balance sheet on the basis
the Company has an unconditional right to a refund of
the surplus. The valuation of the pension schemes is
subject to uncertainty associated with the assumptions
used. This is covered in more detail in notes 1 and 25.
A
s at As at
31 March 31 March
2022 2021
£'million £'million
Hire fleet 216.6 206.0
Other fixed assets 30.9 27.9
Intangible/goodwill 62.4 64.4
Working capital 1.8 (11.6)
Pension asset 2.7 2.2
IFRS 16, net assets/liabilities (3.5) (4.3)
Deferred tax liability/tax (13.8) (9.6)
Net debt (130.6) (121.9)
Net assets 166.5 153.1
G
r
o
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p
F
i
n
a
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e
D
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c
t
o
r
:
A
l
l
i
s
o
n
B
a
i
n
b
r
i
d
g
e
The Group has continued to improve its
financial performance. Group revenues
increased to £350.9 million (2021: £308.0
million). Profit before tax, amortisation and
exceptional items (PBTAE) increased to £38.9
million (2021: £23.3 million) with PBTAE
margins at 11.1% (2021: 7.6%). Statutory
profit/(loss) before tax was £35.6 million (2021:
(£2.3) million). The return on average capital
employed returned to 14.5% (2021: 9.2%).
vpplc.com Vp plc Annual Report and Accounts 2022
28
Financial Review
CASH FLOWS AND NET DEBT
The Group continues to generate strong cash flows and
net debt increased modestly by £8.7 million from
£121.9 million at 31 March 2021 to £130.6 million at
31 March 2022 after funding fleet investment of £59.8
million and the £2.8 million acquisition of M&S. EBITDA
before exceptional items totalled £88.9 million (2021:
£72.7 million).
The Group’s cash flow is summarised below:
Cash generated from operations reduced by £32.9 million
to £69.4 million (2021: £102.3 million) mainly due to an
unwinding of working capital inflows experienced during
the prior year as a result of the impact of the pandemic
on trading.
After adjusting for an outflow for capital creditors of £0.6
million, cash flows in respect of
capital expenditure were
£68.7 million (2021: £46.5 million). Proceeds from
disposal of assets amounted to £17.8 million (2021:
£17.5 million), producing a profit on disposal of £7.0
million (2021: £4.3 million). The margin on profit on sale
from disposals of fleet assets at 40% (2021: 25%)
reflects effective asset management.
Net interest outflows, excluding IFRS 16 adjustments, for
the year totalled £4.5 million (2021: £4.7 million).
Interest cover before amortisation was 10.12 times
(2021: 6.66 times) and the gearing ratio of adjusted Net
Debt/EBITDA was 1.43 (2021: 1.62); 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 £7.4 million (2021: £7.8
million). Cash tax grew to £6.3 million due to improved
profitability.
Dividend payments to shareholders totalled £14.0 million
(2021: £8.7 million), and cash investment in own shares
on behalf of the Employee Benefit Trust (EBT) during the
year was £0.5 million (2021: £5.1 million). The
application of IFRS16 increases EBITDA by £19.5 million.
CAPITAL STRUCTURE
The Group finances its operations through a combination
of shareholders’ funds, bank borrowings, finance leases
and operating leases. The capital structure is monitored
using the gearing ratio quoted above. The Group’s funding
requirements are largely driven by capital expenditure
and acquisition activity.
As at 31 March 2022 the Group had £183.0 million debt
capacity (2021: £200.0 million) comprising £90 million
committed revolving credit facilities and £93 million
private placement agreements. In addition to the
committed facilities the Group’s net overdraft facility at
the year end was £7.5 million (2021: £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 LIBOR plus a margin. The
interest rate margin is linked to the net debt to EBITDA
leverage of the Group.
Revolving credit facilities of £135.0 million were due to
mature in December 2021. Consequently, in April 2021, the
Group drew down a new £28.0 million seven year private
placement under the existing agreement with PGIM inc. In
June 2021, the Group also refinanced its £135.0 million
revolving credit facilities with a new three year £90.0
million facility. The new revolving credit facility agreement
also includes a £20.0 million uncommitted accordion facility.
The Board has evaluated the facilities and covenants on
the basis of the budget for 2022/23 (including the
2023/24 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.
Refer to further discussion regarding going concern
within the Directors’ Report on page 58.
2022 2021
£million £million
EBITDA* 88.9 72.7
Working capital movements (12.5) 33.9
Profit on sale (7.0) (4.3)
Cash from operations 69.4 102.3
Exceptional items - (15.2)
Capital expenditure (68.7) (46.5)
Proceeds from disposal 17.8 17.5
Acquisitions (2.7) -
Interest (4.5) (4.7)
Tax (6.3) (2.9)
Dividends (14.0) (8.7)
Other 0.3 (3.9)
Change in net debt (8.7) 37.9
*Pre IFRS 16
Vp plc Annual Report and Accounts 2022 vpplc.com
29
Strategic Report
Governance Financial Statements Shareholder Information
Financial Review
TREASURY
The Group has exposure to movements in interest rates
on its borrowings, which is managed by maintaining a
mix of fixed and floating interest rates. In the year
ended 31 March 2022, the fixed element of borrowings
in respect of the private placement agreement was
£93.0 million which was 68% of average net debt.
The Group is exposed to movements in exchange rates
for both foreign currency transactions and the translation
of net assets and income statements of foreign
subsidiaries. The Group regards its interests in overseas
subsidiary companies as long term investments and
manages its translational exposures through the currency
matching of assets and liabilities where possible.
The matching is reviewed regularly with appropriate
risk mitigation performed, where necessary. The Group
has exposure to a number of foreign currencies. The
Group had two foreign exchange hedges to reduce the
risk of rate fluctuations between US dollars and Sterling
in the year ended 31 March 2021. The foreign
exchange hedges ended during the year and have not
been replaced.
TAXATION
The overall tax charge on profit before tax was £10.1
million (2021: £2.3 million), an effective rate of 28.3%
(2021: (102.8)% negative). The current year tax charge
on a statutory profit of £35.6 million was increased by
£2.7 million in respect of tax rate changes and £0.4
million due to overseas taxes paid at rates higher than
the UK tax rate. The underlying tax rate was 20.6%
(2021: 21.3%) before prior year adjustments, impact of
tax rate changes, impairment of intangibles and
exceptional items. A more detailed reconciliation of
factors affecting the tax charge is shown in note 8 to
the Financial Statements.
SHARE PRICE
During the year the Company’s share price increased
by 3% from 814 pence to 840 pence, compared to a
72% increase in the FTSE small cap index excluding
investment trusts. The Company’s shares ranged in
price from 826 pence to 1060 pence and averaged
937 pence during the year.
Allison Bainbridge
Group Finance Director
8 June 2022
vpplc.com Vp plc Annual Report and Accounts 2022
30
Viability Statement
The directors have assessed the viability of the Group up to 31 March 2024.
The directors have assessed the prospects of the Group in
accordance with provision C.2.2 of the UK Corporate
Governance Code 2014 with reference to the Group’s
current position, its strategy, risk appetite and the potential
impact of the principal risks and how these are managed.
During the financial year the Group has continued to use
regular reporting of the lead indicators relating to the
principal risks.
The assessment of the Group’s prospects by the directors
covers the two years to 31 March 2024 and is underpinned
by management’s 2022 – 2024 business plan which
includes projections of the Group’s profit performance, cash
flow, investment plans and returns to shareholders.
The projections have been subjected to sensitivity analysis,
involving the flexing of key assumptions reflecting severe
but plausible downside scenarios. A range of scenarios
have been modelled to reflect changing circumstances
with respect to the principal risks facing the Group together
with the likely effectiveness of mitigating actions that
would be executed by the directors. These scenarios
include consideration of market risk arising from the impact
of a downturn in economic activity.
Based on this assessment, the directors have a reasonable
expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the
two year assessment period.
Vp plc Annual Report and Accounts 2022 vpplc.com
31
Strategic Report
Governance Financial Statements Shareholder Information
Risk Management
The Board is responsible for determining the level and nature of risks it is appropriate to take in
delivering the Group’s objectives, and for creating the Group’s risk management framework. The
Board recognises that good risk management aids effective decision making and helps ensure
that risks taken on by the Group are adequately assessed and challenged.
RISK ASSESSMENT
The Group has an established risk management strategy in
place and regularly reviews divisional and departmental risk
registers as well as the summary risk registers used at Board
level. A risk register is prepared as part of the due diligence
carried out on acquisitions and the methodology is
subsequently embedded.
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 targeted assurance across all departments and
divisions, and key control reviews across the Group’s major
overseas operations.
The Internal Audit team continues to be heavily engaged in
ad-hoc consultative work, supporting new risk areas and
areas of change across the Group. In 2021/22, the Group
Internal Audit team embarked on a project to enhance risk
management via the development of targeted risk indicators
and exception reporting. This will support the business in
continually monitoring the effectiveness of key controls.
A separate risk register considering Climate Related risks
has been prepared and will be further developed over
the next two years.
The summary divisional and departmental risk registers
and action plans were reviewed at risk meetings held in
May 2022. In all cases it is considered that the risk
registers are being used as working documents which
provides the required assurance that existing risks are
being managed appropriately. This year, live risk registers
were made available on the Group’s data visualisation
software, enhancing use and accountability over key risk
and control areas.
The risk registers are reviewed 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.
If new risks are identified following an audit project they are
added to the relevant risk register. Heat maps illustrating
post audit risk ratings and new risks are provided to the
Board in each published internal audit report.
Further information is provided on pages 32 and 33 on
our principal risks and uncertainties section alongside the
mitigating activities to address them.
RISK MANAGEMENT STRUCTURE LINES OF DEFENCE
Board
Audit
Committee
Internal Audit
3
2
1
Divisional
Compliance
External Audit
Defined Risk &
Control Owners
Divisional
Board
Internal Audit provide regular assurance over
the effectiveness of risk management and
internal control systems.
Management of operational risk by those
responsible for the day-to-day effectiveness
of controls.
Governance, risk management and control
systems. This includes training, development
of monitoring and reporting tools, and other
quality management systems.
vpplc.com Vp plc Annual Report and Accounts 2022
32
Principal Risks and Uncertainties
RISK DESCRIPTION
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.
Vp provides products and services to a diverse range of
markets with increasing geographic spread. The Group
regularly monitors economic conditions and our investment
in fleet can be flexed with market demand.
MITIGATION
CHANGE
FROM 2021
➜
Competition
The equipment rental market is
already competitive and could
become more so, impacting market
share, revenues and margins.
Vp aims to provide a first class service to its customers and
maintains significant market presence in a range of specialist
niche sectors. The Group monitors market share, market
conditions and competitor performance and has the financial
strength to maximise opportunities.
➜
The directors carry out a robust assessment of the principal risks facing the Group and continue to
review lead indicator reporting on these risks. The principal risks in the current risk register are:
Investment/Fleet Management
In order to grow it is essential the
Group obtains first class products at
attractive prices and keeps them well
maintained.
Vp has well established processes to manage its fleet from
investment decision to disposal. The Group’s return on average
capital employed was 14.5% (2021: 9.2%) in 2022. The quality
of the Group’s fleet disposal margins also demonstrate robust
asset management and appropriate depreciation policies.
➜
People
Retaining and attracting the best
people is key to our aim of
exceeding customer expectations
and enhancing shareholder value.
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.
➜
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.
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.
➜
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.
The Group currently has 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 into opportunities.
The Group continues to generate strong cash flows and net debt
increased modestly by £8.7 million from £121.9 million at 31 March
2021 to £130.6 million at 31 March 2022 after funding fleet investment
of £59.8 million and the £2.8 million acquisition of M&S. Management
are in regular dialogue with our lenders who continue to express their
commitment to the business.
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 55 days (2021: 56 days) and bad debts
as a percentage of revenue remained low at 0.6% (2021: 0.6%).
➜
Strategic Report
Governance Financial Statements Shareholder Information
Vp plc Annual Report and Accounts 2022 vpplc.com
33
Principal Risks and Uncertainties
RISK DESCRIPTION MITIGATION
CHANGE
FROM 2021
➜
➜
Decreased risk
➜
Increased risk
➜
No change
➜
➜
Not yet determined
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.
➜
➜
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.
The Group has formally declared 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. Once our
scope 3 inventory is complete the Group will commit to, and
publish, Science-Based Targets.
➜
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 (e.g. GDPR) with ongoing
responsibility to review key compliance areas and investigate
breaches and non-conformance.
l
Assurance routines from Group Internal Audit and External
Auditors.
l
Comprehensive training and awareness programmes rolled
out to wider business (including GDPR, Modern Slavery,
Competition Law, Bribery and Corruption) by representatives
from Group Finance, HR, 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.
STRATEGIC REPORT
The strategic report has been signed on behalf of the Board by:
Neil Stothard
Chief Executive
8 June 2022
vpplc.com Vp plc Annual Report and Accounts 2022
34
The Board
Jeremy Pilkington BA (Hons)
Chairman
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.
Allison Bainbridge MA, FCA
Group Finance Director
Appointment
Appointed to the Board as Finance
Director in March 2011.
Experience
Allison was previously Group Finance
Director of Kelda Group Limited, the
holding company of Yorkshire Water
and also Finance Director of Yorkshire
Water. She is a non-executive director
of RPS Group Plc.
Committee membership
None
Stephen Rogers BSc, FCA, JP
Non-executive Director
Appointment
Appointed to the Board in October
2008.
Experience
Stephen retired as a senior partner of
PricewaterhouseCoopers in 2007.
Committee membership
Chairman of the Audit Committee and
a member of the Remuneration and
Nomination Committees.
Phil White BCom, FCA, CBE
Non-executive Director
Appointment
Appointed to the Board in April 2013.
Experience
Phil is a chartered accountant and has
extensive experience within both
listed and private companies.
Committee membership
Chairman of the Remuneration
Committee and member of the Audit
and Nomination Committees.
Neil Stothard MA, FCA
Chief Executive
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.
He is a non-executive director of
Wykeland Group Limited.
Committee membership
None
Vp plc Annual Report and Accounts 2022 vpplc.com
35
Strategic Report
Governance
Financial Statements Shareholder Information
Governance
Length of service of director
31 March 2022
One to two years -
Two to three years -
Four to six years -
More than six years 5
Balance of directors
31 March 2022
Gender
Male 4
Female 1
Balance of directors
31 March 2022
Role
Executive Chairman 1
Executives 2
Non executives 2
INTRODUCTION FROM THE CHAIRMAN
The Board is accountable to our shareholders and
stakeholders for the Group’s activities and is responsible for
the effectiveness of corporate governance.
The values and ethical standards of the Group rest upon
principles of fairness, integrity and respect and the Board seeks
to promote and exemplify these values in discharging their
responsibilities. These principles are both ethically based and
commercially essential to delivering our strategic and growth
objectives and to the long term success of the Company.
The Corporate Governance Report is set out on pages 34 to 58
and includes the Directors’ Remuneration Report on pages 41
to 55. 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 revised UK Corporate Governance Code which was
published in July 2018 (the “Revised Code”) applies to the
Group with effect from 1 April 2019.
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 - Stephen Rogers has served as
a non executive director for more than nine years and has
informed the Chairman that he will retire from the Board at
31 December 2022 or on completion of the sale of the Group,
whichever is earlier.
From 1 April 2022 existing executive directors’ pension
contributions are 15% of base salary. The Board recognises this is
not in line with provision 38 as it is not in line with the wider
workforce. In line with the Remuneration Policy approved last
year, new executive directors’ pension contributions will be 10%.
This report and the following reports of the committees
describe the structures, processes and events through which
compliance is achieved.
CORPORATE GOVERNANCE
Board structure
The Board comprised two executive directors, two non-
executive directors and the Chairman. All directors are subject
to annual re-election by shareholders. Accordingly, all the
directors will retire at the AGM in July 2022 and their details
are provided on page 34.
The roles of the Chairman and Chief Executive are separate
and clearly defined. The Chairman, Jeremy Pilkington, is
responsible for the effective working of the Board and leading
the development of the strategic agenda for the Group.
The Chairman is also responsible for promoting a culture of
openness and debate, in addition to ensuring constructive and
productive relations between executive and non-executive
directors.
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 role of the non-executive directors is to provide
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 judgments.
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.
Stephen Rogers has informed the Chairman that he will retire
from the Board at 31 December 2022 or on completion of the
sale of the Group, whichever is earlier.
Our senior independent director, Stephen Rogers, is available
to shareholders if they request a meeting or have concerns
which contact through normal channels has failed to resolve.
No such requests were received during the year.
vpplc.com Vp plc Annual Report and Accounts 2022
36
Governance
The Board is assisted by the Audit, Remuneration and
Nomination Committees. Separate reports from the Audit
and Remuneration Committees can be found on pages 38
and 41. There were no Nomination Committee meetings
during the year. 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 and regulatory 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
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.
Matters falling outside of the Board’s reserved list are
delegated to the Group executive 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, Allison Bainbridge is also the
Group Finance Director. 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 six scheduled meetings during the year, but
also met on other occasions as required by specific
activities.
Whilst Jeremy Pilkington, Neil Stothard and Allison
Bainbridge are not members of the Audit Committee, they
did attend all meetings; they also attended, in part, certain
of the Remuneration Committee meetings. There were no
Nomination Committee meetings.
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.
Appointments to the Board
The Nominations Committee is chaired by the Company’s
Chairman, Jeremy Pilkington, with the two non-executive
directors also on the Committee.
The Nomination Committee meets as required to ensure
that appointments to Board roles within the Group are
made after due consideration of the relevant and
necessary skills, knowledge and experience of the
potential candidates.
In addition it considers succession planning in order to
ensure the continued ability of the Group to compete
effectively in the market place. The Group’s policy on
diversity is set out on page 24 in the Strategic Report.
Board Audit Remuneration Nomination
Number of
63 2 0
meetings held
Executive directors
Jeremy Pilkington 6- - -
Neil Stothard 6- - -
Allison Bainbridge 6- - -
Non-executive directors
Stephen Rogers 63 2 -
Phil White 63 2 -
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Strategic Report
Governance
Financial Statements Shareholder Information
Governance
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.
During the year the Chairman and non-executive directors
met with and received presentations from members of the
Group’s senior management and engaged with the Group’s
businesses more generally.
Advice is available from the Company’s solicitors, auditors
and brokers if 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.
Performance evaluation
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.
A detailed report regarding the Group’s systems of risk
management and internal controls was prepared. Having
reviewed and discussed this report the Board was satisfied
that these systems are effective. The principal risks to which
the Group is exposed and the measures to mitigate such risks
are described on pages 32 to 33.
The respective responsibilities of the directors and the
independent auditors in connection with the accounts are
explained on page 59 and the statement of the directors in
respect of going concern appears on page 58. The long term
viability statement is set out on page 30.
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
the likely consequences
of any decisions in the
long term
Annual process to determine current and medium term priorities and set two year
financial plan
ACTIONS TAKEN BY THE BOARD
the interests of the
Company’s employees
Health, safety and wellbeing of employees a priority
Refer to pages 22 and 23 of Responsible Business Report
Neil Stothard CEO is the director with designated responsibility for workforce engagement
the need to foster the
Company’s business
relationships with suppliers,
customers and others
Refer to Business Review pages 9 to 13
the impact of the Company’s
operations on the community
and environment
The Board receives monthly updates on health, safety and wellbeing of our employees
Group activities aligned to targeted UN sustainability goals (pages 14 to 26)
the desirability of the
Company for maintaining a
reputation of high standards
of business conduct
See Responsible Business Report page 24
the need to act fairly as
between members of the
Company
Annual Report available on line 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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Audit Committee Report
STATEMENT FROM STEPHEN ROGERS, CHAIRMAN
OF THE AUDIT COMMITTEE
I am pleased to present our Audit Committee report for the
year ended 31 March 2022. The report below describes the
Committee’s ongoing responsibilities as well as the major
activities undertaken. This will be my last report as Chairman
of the Audit Committee and I would like to place on record my
appreciation of the excellent work of the finance team in
maintaining the most professional standards of accounting and
control throughout the Group. I would also like to thank the
Internal Audit department for their invaluable work.
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 and announcements
relating to the financial performance of the Group, including
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
complies with the Code principle to be ‘fair, balanced and
understandable’,
l
Assessing the scope and results of the annual audit and
reporting to the Board on the effectiveness of the audit
process and how the independence and objectivity of the
auditors has been safe-guarded,
l
Determining matters associated with the appointment,
terms and remuneration of the external auditors,
l
Evaluating the scope, remit and effectiveness of the internal
audit function and the Group’s internal control and risk
management systems,
l
Reviewing significant legal and regulatory matters and
l
Reporting to the Board on how the Committee has
discharged its responsibilities.
MEMBERSHIP AND MEETINGS
The Committee met three times during the year and has a
programme of business reflecting the Committee’s
responsibilities and Terms of Reference.
The effectiveness of the Committee in fulfilling its remit was
considered by the Board as part of the most recent evaluation
of performance.
Phil White and I are members of the Committee. The
following other attendees regularly attend meetings; the
Chairman and executive directors, Head of Internal Audit,
Group Financial Controller and representatives from the
external auditors, PwC. I also meet separately with the
external auditors and the Head of Internal Audit twice a year
without management being present.
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 34. The
members of the Committee are all independent non-
executive directors. The Board is satisfied that the
Committee as a whole has competence relevant to the
sectors in which the Group operates and have recent and
relevant financial experience as required by the Code. I
am a fellow of the Institute of Chartered Accountants of
England and Wales and was previously a senior partner at
PricewaterhouseCoopers LLP.
ACTIVITIES UNDERTAKEN DURING THE YEAR
The following activities were undertaken in the year, some of
which are described in more detail below;
l
The Group’s policy is that the audit appointment should be
retendered at least every ten years. During 2021 the
Committee invited PwC and other audit firms to tender for
the audit service for the year ended 31 March 2022 with
effect from October 2021. Following a comprehensive
process PwC were re-selected as auditors.
l
Reviewed PwC’s proposed audit strategy and plan for the
2021/22 audit, including the level of materiality applied by
PwC and the areas of particular audit focus,
l
Agreed PwC’s engagement letter and the statutory audit fee
for the year ended 31 March 2022,
l
Confirmed the independence of the auditors and assessed
the effectiveness of the 2021/22 external audit,
l
Discussed the final audit report from PwC on the financial
statements
l
Reviewed and discussed reports on the financial statements
and considered management’s significant accounting
judgements and policies being applied,
l
Reviewed the basis of preparation of the financial
statements as a going concern and the long term viability
statement, prior to making a recommendation to the Board,
Stephen Rogers
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Strategic Report
Governance
Financial Statements Shareholder Information
Audit Committee Report
l
Assessed the 2021/22 Annual Report and recommended
to the Board that it was ‘fair, balanced and understandable’,
l
Approved the internal audit plan and reviewed reports on
the work of the internal audit function from the Head of
Internal Audit,
l
Considered the findings of the internal audit reports and
satisfied ourselves that management has resolved or is in
the process of resolving any outstanding issues or concerns,
l
Approved the internal audit plan for 2022/23,
l
Reviewed the effectiveness of the risk management and
internal control systems prior to making a recommendation
to the Board,
l
Reviewed the conclusion of the Committee’s annual
evaluation.
SIGNIFICANT ACCOUNTING ISSUES
In respect of the year under review and as part of its role in
reviewing estimates and judgements made by management,
the following significant issues were reviewed and addressed.
Going concern
The Group considered the going concern assumption at half
year and full year and more detail on this is set out on our
going concern statement on page 58.
Existence and valuation of rental equipment
The Group holds a significant quantum and carrying amount of
rental equipment in the normal course of its business.
Management carry out fleet checks at interim and year end
periods to confirm the existence of the rental fleet. There is
management judgement involved in estimating the useful
economic lives, residual values and any impairment of rental
assets. Management annually review the appropriateness of
useful lives and residual values assigned to rental equipment.
Intangible assets
This classification of assets receives consideration from the
Board and Committee who need to be satisfied that their
carrying value is appropriate. Goodwill impairment testing is
carried out at each year end.
The Board and Committee considered the appropriateness of
the CGUs for goodwill testing along with the assumptions and
estimates used in the modelling. Following the year end
review, the Board and the Committee concluded that there is
sufficient headroom between the carrying value of assets and
their value in use, as such no impairment has been recorded
(2021: £7.1 million).
FAIR BALANCED AND UNDERSTANDABLE VIEWS
Having reviewed the Report and Accounts, the Committee
concluded and advised the Board that in its view the
Report and Accounts for 2022, taken as a whole, is fair,
balanced and understandable. The Board then separately
considered this matter and concurred with the Audit
Committee’s recommendation. In reaching this conclusion
the Committee and the Board were satisfied that the
Group’s performance across its segments, as well as its
business model, strategy and the key risks that it faces are
clearly explained in the relevant sections of the Report
and Accounts.
AUDITOR 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 upon the Committee’s interactions with the
external auditors and through feedback from the Group
Finance Team and Internal Audit. As a result the Committee
has satisfied itself that PwC have provided an effective
audit service to the Company and its subsidiaries.
The Committee ensures that the Group auditor remains
independent of the Group and reviews this on an annual
basis, with PwC providing a written report to the
Committee showing its compliance with professional and
regulatory requirements designed to ensure their
independence.
During the year PwC’s fee for the year ended 31 March
2022 was £541,000.
As part of its responsibility to ensure audit independence,
the Committee has adopted a policy in relation to the use
of auditors for the provision of non-audit services set out
in an appendix to the Committee’s terms of reference.
In the year the only non-audit service provided by the
auditors was a subscription to an accounting knowledge
portal and non-audit fees were £1,200 representing 0.2%
of the audit fee (2021: £21,400 representing 4% of the
audit fee).
PwC was re-appointed as the Group’s Auditor in October
2021 following a comprehensive tender process. PwC
operate a policy requiring a change in lead partner every
five years, with other senior staff rotating at regular
intervals. The Group’s audit partner Ian Morrison
completed his fifth year as the lead audit partner in the
year to March 2021 and rotated off. Tom Yeates is now
lead audit partner.
PwC’s audit of our 2021 Annual Report was subject to a
review by the FRC’s Audit Quality Review Team. We received
a copy of the report issued by the FRC following their review,
discussed it with PwC and are pleased that the improvements
suggested by the AQR have been fully incorporated into PwC’s
audit for the year ended 31 March 2022.
The Committee recommended to the Board that a
resolution to re-appoint PwC as auditor be proposed at
the Annual General Meeting.
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Audit Committee Report
RISK MANAGEMENT AND INTERNAL CONTROLS
The Audit Committee has responsibility for reviewing risk
management systems and the effectiveness of these systems.
The responsibilities and processes in respect of risk
management are described in detail on page 31.
There is in place an ongoing process for identifying, evaluating
and managing significant risks faced by the Group. This process
is regularly reviewed by the Board. Risk management reports,
prepared by the operating divisions supported by Internal
Audit, were submitted to the Committee at its meeting in July
2021. The reports identified the significant risks to the Group,
highlighted controls that mitigate the risks and the resultant
post-mitigation risk. The Committee also considered the
tolerance levels (risk appetite) that the Group is prepared to
accept.
During the year the Committee monitored and reviewed the
effectiveness of the Group’s internal control systems,
accounting policies and practices, risk management procedures
and compliance controls.
The Group’s internal control systems are designed to manage
rather than eliminate business risk. They provide reasonable
but not absolute assurance against material mis-statement or
loss. Such systems are necessary to safeguard shareholders’
investment and the Group’s assets and depend on regular
evaluation of the extent of the risks to which the Group is
exposed.
Management is responsible for establishing and maintaining
adequate internal control over financial reporting for the Group.
The Committee also reviews the Group’s whistleblowing policy
whereby employees may, on a confidential basis, raise
concerns with regard to improprieties relating to financial
reporting, internal control or other matters. In the financial year
there have been no whistleblowing reports which require
changes in the Group’s control environment.
The Committee is of the view that the Group continues to
operate a well-designed system of internal control.
INTERNAL AUDIT
The Group’s internal audit function comprises a team of four
auditors. The purpose of the department is to support the
business in its achievement of objectives and facilitate and aid
effective risk management. Internal Audit provides assurance
that the Group’s process for managing internal control is
effective and appropriate to the level of risk facing the Group.
The annual internal audit plan is considered and approved each
year by the Committee. 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 assesses the appropriateness of the
internal plan and the resourcing of the function to enable it to
deliver it. Progress against the internal audit plan is reviewed
at each meeting.
During the year the Chairman of the Committee met privately
with the Head of Internal Audit on two occasions to discuss the
Internal Audit plan, completed projects, identified issues and
resource levels. The Head of Internal Audit reports functionally
to the Group Finance Director. In addition the Head of Internal
Audit attended each Committee meeting, where his reports
were reviewed and discussed in detail. The Committee
considered the results of the internal audits and the adequacy
of management’s response to matters raised in them,
including the time taken to resolve any such matters. The
Committee were satisfied with both the reports and the
responses.
Stephen Rogers
Chairman of the Audit Committee
8 June 2022
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Strategic Report
Governance
Financial Statements Shareholder Information
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 2022. This report is in three
sections: my statement, a summary of the Directors’
remuneration policy approved by the shareholders at the
2020 Annual General Meeting and our annual report on
remuneration for the year ended 31 March 2022.
BACKGROUND
As detailed in the Strategic Report, the year to 31 March 2022
was a period of strong recovery from the impact of Covid 19
with improving levels of activity from our customers. Group
revenues were up 14% on prior year and operating profits
increased by 56% to £43.3 million.
The Committee is optimistic that, despite inflationary and
supply chain headwinds, 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 2022, the Committee took into account the experience
of a range of stakeholders overall, the Committee is
comfortable that actions taken on pay during the year across
the Group (as outlined below) were appropriate and
balanced the interest of all stakeholders.
Covid-19 presented
APPROVAL OF REMUNERATION POLICY
The Company’s current remuneration policy was approved
by shareholders at the 2020 Annual General Meeting with
87.25% support. This policy has operated during the
financial years ended 31 March 2021 and 2022. The current
remuneration policy will reach the end of its three year life
on 31 March 2023. During the year the Committee will
therefore, consider any new policy to be submitted to
shareholders to apply from 1 April 2023 onwards.
2022 REMUNERATION OUTCOMES
Base salary
In line with the group-wide salary increase proposed in the
annual April 2021 pay review, the Committee approved a 2%
salary increase for Neil Stothard and Allison Bainbridge.
Jeremy Pilkington's salary was not increased.
Annual bonus
The maximum bonus opportunity for financial year ended 31
March 2022 was 150% of salary. Targets for annual bonus
payments 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 stretching and generally look for year-on-year
growth, with entry thresholds set in line with the Group’s
budget PBTAE for the relevant financial year. The targets for
financial year ended March 2022 reflected the anticipated
recovery from Covid-19.
The Committee approved a PBTAE target range of £34.0
million a 47% uplift on prior year (threshold) to £43.0 million
an 86% increase on prior year (maximum), which was
considered to be suitably stretching and motivational. Actual
PBTAE achieved was £38.9 million and a bonus of 82% of
salary was therefore earned by each executive director under
the scheme. No discretion was used to adjust this formulaic
result, 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 in FY22.
A similar approach to target setting was taken in respect of
other Group and divisional participants to ensure fairness and
alignment.
LTIP
In respect of the long term incentive scheme with a
performance period ended 31 March 2022, and as noted in
last year’s report, the Committee considered the
appropriateness of adjusting the original target range to
ensure it remained as stretching as originally intended.
Having made no adjustment to the LTIP award vesting on
performance to 31 March 2021 in order to reflect the
experience of stakeholders, the Committee resolved during
the year to revise downwards the threshold EPS target
originally set for July 2019 awards, but to retain the same
stretch target. In making this decision, the Committee took
into account a range of considerations, including that:
l
The Group had maintained its recovery in trading
performance, with a return to full year profitability, the
resumption of regular dividend payments, strong share
price performance and that, more generally, there had
been positive outcomes for all major stakeholder groups;
Phil White
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42
Remuneration
Committee Report
Annual Statement
l
The pandemic was entirely outside of management’s
control and their response had helped to minimise the
longer-term impact on the Group. A failure to adjust the
targets would have resulted in a disproportionate,
multiple-year impact for participants compared to other
stakeholder groups; and
l
In adjusting only the threshold target, participants would
have a renewed incentive to deliver strong performance
for FY22, whilst maximum payout would still require
outperformance of the original stretch target.
A similar approach to adjusting the threshold target was taken
in respect of other Group and divisional participants. Actual
EPS for the year of 77.50 pence resulted in 24% of the award
vesting, which the Committee considered was appropriate,
not excessive compared to the longer-term average LTIP
vesting outcome, and a fair reflection of underlying
performance over the period. For details of the methodology
used to calculate EPS for this purpose see page 50.
Taxable benefits
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 insurance 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, from the Company since 2018.
IMPLEMENTATION OF POLICY FOR 2022/23
Base salary
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 wider workforce. Jeremy Pilkington's salary will
remain unchanged.
Pensions
In line with the Remuneration Policy, from 1 April 2022,
Jeremy Pilkington's pension contribution will reduce by a
further 5%, from 20% to 15% of salary. Neil Stothard’s and
Allison Bainbridge’s will remain at 15% of base salary.
Annual bonus
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 appropriately reflects the maximum
opportunity available. Details of the target range and Vp’s
performance will be disclosed in next year’s report.
LTIP
The maximum LTIP award in 2022 will remain at 100% of
salary for all executive directors. Consistent with past awards,
the extent to which any LTIP awards granted in 2022 will
vest will be dependent upon the achievement of challenging
EPS growth targets, underpinned by Group ROACE. Noting
the preferences of some shareholders, the Committee
considered the prospective disclosure of the target range but
has concluded that this is commercially sensitive information
which would put the Company at a disadvantage. Full details
will therefore continue to be disclosed retrospectively in the
report detailing the vesting of these awards.
EMPLOYMENT CONDITIONS ELSEWHERE IN
THE GROUP
In setting the remuneration policy for Directors, the pay and
conditions of other employees of Vp plc were taken into
account, including any base salary increases awarded. The
Remuneration Committee has not expressly sought the
views of employees and no remuneration comparison
measurements were used when drawing up the policy.
Through the Board, however, the Remuneration Committee
is updated as to employee views on remuneration
generally.
RESPONSIBILITIES AND ACTIVITIES
The Committee held meetings in the year timed to ensure
the proper discharge of the activities described below. The
Executive Chairman, Chief Executive and Group Finance
Director attend these meetings, although they are not
present when their own remuneration is discussed.
The Remuneration Committee is responsible for
determining the overall policy for Executive remuneration
which is then subject to Board and shareholder approval.
Within the context of the shareholder-approved policy, the
Committee is then responsible for determining the specific
remuneration packages for the executive directors. This
incorporates review of salaries as well as determining
opportunities under incentive plans and performance
conditions relating to those plans. Activities also include the
determination of terms for any executive leaving or joining
the Board.
SUPPORT TO THE COMMITTEE
During the year, the Committee sought external professional
advice in respect of the annual remuneration report. The
Committee is satisfied that the advice provided is
independent and objective.
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Strategic Report
Governance
Financial Statements Shareholder Information
Remuneration
Committee Report
Annual Statement
CONSIDERATION OF SHAREHOLDER VIEWS
The Remuneration Committee takes the views of the
shareholders very seriously and these have been influential
in shaping remuneration policy and practice. Shareholders’
views are considered when evaluating and setting on-going
remuneration strategy and the Remuneration Committee
commits to consulting with shareholders prior to any
significant changes to the remuneration policy.
ALIGNMENT WITH SHAREHOLDERS
We continue to be mindful of our shareholders’ interests.
Our share ownership guidelines and claw-back provisions
for the annual bonus and long-term incentive scheme
support an on-going commitment to the business from our
executives, and continued alignment of shareholder and
executive objectives.
We are proud of the support we have received in the past
from our shareholders, with 89% approval for our Annual
Statement and Remuneration Report last year.
This report has been approved by the Board and is signed
on its behalf by:
Phil White
Chairman Remuneration Committee
8 June 2022
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Directors’ Remuneration Policy (unaudited)
ELEMENT
Base salary None.To attract, retain and motivate
individuals with skills and
experience required to deliver
the strategy. To provide a
competitive fixed reward.
PURPOSE AND LINK
TO THE STRATEGY
PERFORMANCE
METRICS
Base salaries are reviewed
annually, and any changes are
normally effective from 1 April
in the financial year.
OPERATION
The Committee considers
average increases across the
Group. Current salary levels
are set out on page 52.
Pension None.To provide retirement
benefits.
All executives are either
members of a defined
contribution scheme or
receive a cash allowance in
lieu of pension contribution.
The maximum pension
contribution for existing
executive directors will transition
to 15% of base salary by April
2022.
The maximum pension
contribution for new executive
directors will be limited to 10%
of base salary.
OPPORTUNITY
Taxable
Benefits
None.To provide market consistent
benefits.
Cost of providing benefits
paid monthly or as required
for one off events.
Car allowance, health
insurance and other benefits
paid from time to time.
DIRECTORS / REMUNERATION POLICY
This part of the directors’ remuneration report sets out a summary of the remuneration policy approved by shareholders
at our July 2020 Annual General meeting and effective from that date. It is intended that the policy will formally apply for
three years beginning on the date of approval. A copy of the full remuneration policy is included in the 2020 Annual Report,
which is available on the Company's website.
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 six
principles set out in Provision 40 of the 2018 Code, namely:
- 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;
- The design of the policy reflects our risk appetite, with the new LTIP holding period, the shareholding requirements and
the clawback provisions support long-term decision making;
- 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;
- Performance measures are aligned with our strategy and culture.
FUTURE POLICY TABLE FOR DIRECTORS
Annual
Bonus
Growth in profit
before tax,
amortisation and
exceptional items.
To incentivise achievement
of demanding performance
targets.
Annual bonuses are generally
paid three months after the
end of the financial year to
which they relate.
Clawback provisions apply in
the event of a material
misstatement of the results
Up to 150% of base
salary.
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Strategic Report
Governance
Financial Statements Shareholder Information
Directors’ Remuneration Policy (unaudited)
Notes to the policy table
The performance targets are determined annually by the Committee and are set at a challenging level. The Committee is of the opinion that the performance
targets for the annual bonus 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.
ELEMENT
PURPOSE AND LINK
TO THE STRATEGY
PERFORMANCE
METRICS
OPERATION OPPORTUNITY
Long Term
Incentive
Plan
Subject to a vesting
period of three
years and the
achievement of
target growth in
EPS over a three
year period.
Minimum ROACE
requirement,
currently set at
12%.
To drive sustained long
term performance that
supports the creation of
shareholder value.
Annual grant of nil cost options
which normally vest after 3 years
based on the achievement of
profit targets, a minimum ROACE
requirement and continual service.
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 to be in notional shares
settled by cash.
Clawback provisions apply in the
event of a material misstatement
of the results.
Up to 100% of base
salary.
Share
Matching
Scheme
Achievement of
target growth in
EPS over a three
year period and a
minimum ROACE,
currently set at
12%.
To encourage share
ownership and alignment
with shareholders.
Annual grant of nil cost
options in proportion to the
number of shares purchased
by an executive director from
their own funds.
Clawback provisions apply in
the event of a material
misstatement of the results.
Maximum award of
shares to the value of
10% of salary.
Jeremy Pilkington does
not participate in this
scheme.
Save As
You Earn
None.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%.
Maximum permitted
savings of £300 per
month across all ongoing
share save contracts in
line with current
legislation.
Share
Ownership
Guidelines
None.To increase alignment
between executives and
shareholders.
Shareholding to be built up
over 5 years.
100% of salary for executive
directors. From 1 April 2021
executive directors will also
be required to retain shares
to the lower of 100% of
salary or their actual
shareholding at the time
employment ceases. The
shares must be held for one
year post-employment.
Non-executive
director
Fees
None.Reflects time commitments
and responsibilities and fees
paid by similar sized companies.
Cash fees paid, reviewed on
an annual basis.
No prescribed maximum
annual increase.
FUTURE POLICY TABLE FOR DIRECTORS (continued)
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 2022/23 under different performance scenarios.
Jeremy Pilkington
Minimum
On plan
Maximum
Maximum
including
50% share
appreciation
100%
48%
32%
28%
Total £1,132
Total £1,721
21%
Percentages/Amounts (£’000)
Basic salary, benefits and pension
Annual bonus
LTIP
Neil Stothard
Minimum
On plan
Maximum
27%
Total £964
Total £1,454
21%
Percentages/Amounts (£’000)
Basic salary, benefits and pension
Annual bonus
LTIP
Allison Bainbridge
Minimum
On plan
Maximum
27%
Total £716
Total £1,081
21%
Percentages/Amounts (£’000)
Basic salary, benefits and pension
Annual bonus
LTIP
The value of base salary for 2022/23 is set out in the Base Salary table on page 52.
The value of taxable benefits in 2022/23 is taken to be the value of taxable benefits received in 2021/22 (with the
exception of the one off payment to Jeremy Pilkington) as shown in the single total figure of remuneration table set out on
page 49. On plan 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 fourth scenario at an assumed 50%.
36%
27%
Total £1,957
Maximum
including
50% share
appreciation
36%
Total £1,649
Maximum
including
50% share
appreciation
Total £1,226
100%
49%
33%
29%
Total £475
30%
40%
36%
100%
49%
33%
29%
Total £352
30%
40%
36%
36%
Total £544
31%
41%
36%
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Strategic Report
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Financial Statements Shareholder Information
Directors’ Remuneration Policy (unaudited)
CONSIDERATION OF EMPLOYMENT CONDITIONS ELSEWHERE IN THE GROUP
Our approach to annual salary reviews is consistent across the Group, with consideration given to the level of experience,
responsibility, individual performance and salary levels in comparable companies.
Most employees are eligible to participate in an annual bonus scheme. The maximum opportunities available are based
upon the seniority and responsibility of the role with business area specific metrics incorporated where appropriate.
Certain senior managers can qualify to participate in the LTIP and share matching schemes. Performance conditions are
consistent for all participants, while award sizes vary by organisational level.
Employees can qualify to participate in approved and unapproved share option schemes whereby they are granted rights
to acquire shares at a predetermined price, which cannot be less than the midmarket price on the dealing day immediately
before the date of the award. Awards under these schemes are not granted to executive directors.
All UK employees are eligible to participate in the Company’s SAYE scheme on the same terms.
APPROACH TO RECRUITMENT
The Group operates in a highly competitive market. The Committee’s approach to remuneration on recruitment is to pay
sufficient to attract appropriate candidates to the role.
The package of a new executive director is likely to include the same elements, and be subject to similar constraints as
those of existing executive directors.
The Committee may make an award in respect of a new appointment to ‘buy out’ incentive arrangements forfeited on
leaving a previous employer on a like-for-like basis. In doing so, the Committee will consider relevant factors including time
to vesting, any performance conditions attached to these awards and the likelihood of those conditions being met. Any
such ‘buy-out’ awards will typically be made under existing annual bonus and LTIP schemes, although in exceptional
circumstances the Committee may exercise discretion under Listing Rule 9.4.2R to make awards using a different structure.
Any ‘buy-out’ awards would have a fair value no higher than the awards forfeited.
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Directors’ Remuneration Policy (unaudited)
DATE OF DIRECTORS’ SERVICE CONTRACTS OR LETTER OF APPOINTMENT
The service agreements of the executive directors are terminable by either the Company or the director on twelve months’
notice. The contracts contain no specific provision for compensation for loss of office, other than an obligation to pay salary
and benefits for any notice period waived by the company. Non-executive directors are appointed under letters of
appointment that may be terminated on six months’ notice. There were no other significant contracts with directors.
The terms and conditions of appointment of non-executive directors are available for inspection by any person at the
Company’s registered office during normal business hours and at the AGM.
APPROACH TO LEAVERS
The Company’s policy is to limit severance payments on termination to pre-established contractual arrangements. Such
contracts contain no specific provision for compensation for loss of office, other than an obligation to pay for any notice
period waived by the Company, where pay is defined as salary plus benefits only.
In the event an executive leaves (other than a good leaver), non-vested LTIP and share matching awards will normally
lapse. For good leavers unvested awards will vest on the normal vesting date subject to the achievement of any relevant
performance condition and with pro-rata reduction to reflect the proportion of the vesting period served.
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.
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 Neil Stothard served as a non-executive
director of Wykeland Group and received £25,000 for his services.
During the year Allison Bainbridge served as non-executive director of RPS Group Plc and received £56,878 for her services.
CONSIDERATION OF SHAREHOLDER VIEWS
The Committee considers shareholder feedback received at the AGM each year. This feedback, plus any feedback received
during other meetings, is then considered as part of the Group’s annual review of remuneration policy.
In addition, the Committee will seek to engage directly with major shareholders and their respective bodies should any
material changes be made to the remuneration policy.
Details of votes cast for and against the resolution to approve last year’s remuneration report and in respect of the current
remuneration policy are set out on page 55 of the annual report on remuneration.
Director Date of service contract/letter of appointment
Jeremy Pilkington 10 June 2002
Neil Stothard 10 June 2002
Allison Bainbridge 15 February 2011
Stephen Rogers 10 September 2008
Phil White 15 April 2013
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Financial Statements Shareholder Information
Annual Report on Remuneration
SINGLE TOTAL FIGURE OF REMUNERATION (audited)
The following table shows a single total figure of remuneration for the year ended 31 March 2022 together with the
comparative figures for 2021.
The following section provides details of how the remuneration policy was implemented during the financial year ending
31 March 2022 and how it is proposed to be implemented in the financial year ending 31 March 2023. Any information
in this section of the report subject to audit is highlighted.
Salaries Taxable Pensions Annual Grant date Share Total Total Total
and fees benefits bonus face value price fixed variable
of vested appreciation pay pay
LTIP shares (depreciation)
£000 £000 £000 £000 £000 £000 £000
Executive directors
Jeremy Pilkington
2022 471 34 93 385 111 4
) 598 500 1,098
2021 448 2 112 353 --
) 562 353 915
Neil Stothard
2022 380 25 57 311 86 4
) 463 401 864
2021 351 25 65 280 --
) 441 280 721
Allison Bainbridge
2022 283 17 42 231 64 3
) 342 298 640
2021 261 17 41 208 --
) 319 208 527
Non-executive directors
Stephen Rogers
2022 45 ---- - 45
2021 43 ---- - 43
Phil White
2022 45 ---- - 45
2021 43 ---- - 43
BASE SALARY
In line with the group wide salary increase proposed in the annual April 2021 pay review, the Committee approved a 2%
salary increase for Neil Stothard and Allison Bainbridge applied from 1 April 2021. No increase was applied to Jeremy
Pilkington's salary.
During the previous financial year due to the uncertainty created by the global pandemic executive and non executive directors
volunteered to accept a 20% reduction in their salaries and fees between April and June 2020. The group’s senior management
also volunteered to accept a 20% reduction in salaries. 2022 salaries reflect base salaries at 100% for the full year.
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.
PENSION BENEFITS
Neil Stothard transitioned from 17.5% to 15% of base salary in lieu of pension contributions from 1 April 2021. Allison
Bainbridge received 15% of base salary in lieu of pension contributions. From 1 April 2021 Jeremy Pilkington’s payment in lieu
of pension contributions transitioned from 25% of salary to 20% of base salary.
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 2022 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.
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Annual Report on Remuneration
Metric Threshold Stretch Actual % Vesting
target target
Earnings per share* 65.75 pence** 115.56 pence 77.50 pence 24%
EPS EPS EPS
ROACE 12.0% 12.0% 14.5%
*EPS is measured on a net basis, in accordance with International Financial Reporting Standards, but assuming a fixed
corporation tax charge on profits currently at the rate of 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 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.
** Revised downwards from 103.60 pence
The LTIP award details for the executive directors are as follows:
Number of Number of Grant date Estimated value
shares shares face value of shares
at grant to vest of vested vesting
July 2019 July 2022 shares
£000 £000
Jeremy Pilkington 54,800 12,926 111
) 115
Neil Stothard 42,600 10,048 86
) 90
Allison Bainbridge 31,600 7,454 64
) 67
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 £8.60. The value of shares vesting is estimated using a 3-month average share price to 10 May
2022 of £8.93. This value will be trued-up in next year's report to reflect the actual share on the date of vesting in July 2022.
Maximum PBTAE PBTAE Actual Actual % Actual bonus
(% of salary) required for required for PBTAE of salary £000
threshold bonus maximum bonus
(0% of salary) (150% of salary)
Jeremy Pilkington 150 34.0 43.0 38.9 82 385
Neil Stothard 150 34.0 43.0 38.9 82 311
Allison Bainbridge 150 34.0 43.0 38.9 82 231
The Committee approved a PBTAE target range of £34.0 million (threshold) to £43.0 million (maximum), which was considered
to be suitably stretching and motivational. Actual PBTAE achieved was £38.9 million and a bonus of 82% 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 FY22.
% £m £m £m % £000
ANNUAL BONUS PAYMENTS (continued)
VESTING OF LTIP AWARDS
(audited)
The LTIP amount included in the 2021/22 single total figure of remuneration reflects the conditional share award granted in
July 2019. Vesting of this award was dependent on earnings per share performance over the three years ended 31 March 2022,
the achievement of a minimum return on average capital employed of 12% and continued service until July 2022.
As detailed in the Remuneration Committee Chairman's Statement on page 41, the Committee resolved to revise downwards
the threshold EPS target applying to these awards to reflect updated expectations, but with the stretch target remaining
unchanged from that originally set. A similar approach to adjusting the threshold target was taken in respect of other Group
and divisional participants. The revised performance targets for this award, and actual performance against those targets, is
set out below, with EPS of 77.50 pence and ROACE of 14.5% resulting in 24% of the awards vesting:
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Annual Report on Remuneration
SHARE SCHEME INTERESTS AWARDED DURING THE FINANCIAL YEAR (audited)
The following awards were granted to executive directors:
The share price at the date of grant has been used to calculate the face value of the awards granted.
Noting the preferences of some shareholders, the Committee considered the prospective disclosure of the target range but has
concluded that this is commercially sensitive information which would put the Company at a disadvantage. Full details will
therefore continue to be disclosed retrospectively in the report detailing the vesting of these awards.
PAYMENTS TO PAST DIRECTORS AND FOR LOSS OF OFFICE
No payments were made to past directors or for loss of office in the year ended 31 March 2022.
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 52.
Executive Scheme Grant Exercise No. of Granted Vested Lapsed No. of Exercise End of
date price shares at during during during shares at period performance
£
31 Mar 2021
the year the year the year
31 Mar 2022
period
Jeremy Pilkington
Total LTIP Various Nil 165,800 51,800 - 43,600 174,000
July 2022 31 Mar 2022
to July 2031 to 31 Mar 2024
Neil Stothard
Total LTIP Various Nil 129,200 41,900 - 33,200 137,900
July 2022 31 Mar 2022
to July 2031 to 31 Mar 2024
SAYE 2018 8.08 445 - 445 --
October 2021
N/A
to March 2022
SAYE 2019 7.11 506 ---506
October 2022
N/A
to March 2023
SAYE 2020 5.84 616 ---616
October 2023
N/A
to March 2024
SAYE 2021 6.93 - 519 --519
October 2024
N/A
to March 2025
Total SAYE 1,567 519 445 - 1,641
Allison Bainbridge
Total LTIP Various Nil 96,000 31,150 - 24,700 102,450
July 2022 31 Mar 2022
to July 2031 to 31 Mar 2024
Executive Scheme Basis of award Date of Share price at Number of Face value Performance
granted grant date of grant £ shares £000 Period end date
Jeremy Pilkington
LTIP 100% of salary 2 July 2021 9.08 51,800 471 31 March 2024
Neil Stothard
LTIP 100% of salary 2 July 2021 9.08 41,900 380 31 March 2024
SAYE N/A 12 July 2021 6.93 519 4 N/A
Allison Bainbridge
LTIP 100% of salary 2 July 2021 9.08 31,150 283 31 March 2024
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Annual Report on Remuneration
STATEMENT OF DIRECTORS’ SHAREHOLDINGS AND SHARE INTERESTS (audited)
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 2022: £8.40.
*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 2022 Ackers P Investment Company Limited owned 20,181,411
shares (2021: 20,181,411 shares).
The LTIP awards outstanding in respect of Jeremy Pilkington are notional shares which would be settled by a cash payment.
The executive directors are each in compliance with the Company’s requirements to hold shares equivalent to at least 100%
of salary.
There were no changes in the interests of the directors between 31 March 2022 and 8 June 2022.
IMPLEMENTATION OF THE REMUNERATION POLICY FOR THE YEAR ENDING 31 MARCH 2023 (unaudited)
A summary of how the directors’ remuneration policy will be applied during the year ended 31 March 2023 is set out below.
Executive Shareholding as Shares Shares Options Options Unvested Unvested Outstanding
% of salary at beneficially beneficially vested vested LTIP share SAYE
31 Mar 2022 owned at owned at but not yet but not yet awards
1
matching awards
31 Mar 2022 31 Mar 2021 exercised exercised awards
1
31 Mar 2022 31 Mar 2021
Jeremy Pilkington * 29,220 29,220 239,411 239,411 174,000 --
Neil Stothard 1844% 858,993 858,548 --137,900 - 1,641
Allison Bainbridge 407% 141,078 141,078 --102,450 --
Stephen Rogers -- ------
Phil White -- ------
1
Unvested LTIP and share matching awards are subject to performance conditions
BASE SALARY AND FEES
The Committee approved a 3% increase in base salary for Neil Stothard and Allison Bainbridge from 1 April 2022, in line
with the average salary increase across the Group. No increases are proposed for the Executive Chairman, nor for the non-
executive directors
A salary increase averaging 3% across the Group was proposed at the annual 2022 pay review, effective from 1 April 2022.
1 April 2022 1 April 2021
£000 £000 % increase
Jeremy Pilkington 471 471 0%
Neil Stothard 391 380 3%
Allison Bainbridge 291 283 3%
Stephen Rogers 45 45 0%
Phil White 45 45 0%
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Financial Statements Shareholder Information
Annual Report on Remuneration
PENSION ARRANGEMENTS
In line with the Remuneration Policy, from 1 April 2022, Jeremy Pilkington's pension contribution will reduce by a further
5%, from 20% to 15% of base salary. Pension contributions for all current executive directors will then be in-line with the
policy maximum of 15% of base salary.
ANNUAL BONUS
The maximum bonus potential will remain at 150% of base salary. Bonuses will 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 the increase in 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 2022 will remain at 100% of salary for all executive directors. Consistent with past awards
the extent to which any LTIP awards granted in 2022 will vest will be dependent upon the achievement of a challenging
target growth in the Group’s earnings per share, underpinned by Group ROACE. The Committee has again considered the
prospective disclosure of the EPS target range but has concluded that this is commercially sensitive information which
would put the company at a disadvantage. Full details will therefore be disclosed retrospectively in the report detailing
the vesting of these awards.
Clawback provisions in the event of significant misstatement of the results will apply to both the annual bonus and the
long term incentive.
IMPLEMENTATION OF THE REMUNERATION POLICY FOR THE YEAR ENDING 31 MARCH 2023
(unaudited) – continued
The FTSE Small Cap index excluding investment trusts is regarded as an appropriate bench mark for the Group’s
shareholders. Total shareholder return is defined as the total return a shareholder would receive over the period inclusive
of both share price growth and dividends.
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 2012 to 31 March 2022.
VP plc FTSE Small Cap
Price (Rebased to 100)
2012
0
100
200
300
400
500
600
700
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
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Annual Report on Remuneration
PERCENTAGE CHANGE IN ALL DIRECTORS REMUNERATION (unaudited)
The table below shows the percentage change in the Executive Chairman’s salary, benefits and annual bonus between the
financial year ended 31 March 2021 and 31 March 2022 compared to the percentage change for UK employees of the
Group for each of these elements of pay.
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 2021/22. 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.
RELATIVE IMPORTANCE OF SPEND ON PAY (unaudited)
The following table shows the Group’s actual spend on pay (for all employees) relative to dividends.
2021 2022 % change
Staff costs £m 108.8 116.0 7%)
Dividends £m 9.9 14.3
44%
)
Dividend figures relate to amounts payable in respect of the relevant financial year. Due to the uncertainty caused by Covid 19
no interim dividend was paid in the financial year ended 31 March 2021.
Salary (5%) 5% (4%) 8% (4%) 8% (4%) 5% 001% 12%
Taxable Benefits (33%) 1600% (4%) -
00000-- --(7%) 5%
Annual Bonus* (100%) 100% (100%) 100% (100%) 100% --(67%) 169%
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, which is the bonus in respect of the financial year ended 31 March 2021. The 100% increase is due to no bonus
being paid in 2020.
The increase in directors salary reflects the 20% voluntary reduction in salary and fees between April and June 2020 and the
2% annual award to Neil Stothard and Allison Bainbridge with effect from 1 October 2020. The increase in Executive Chairman
taxable benefits arises from the one of payment of medical expenses as described on page 42 in the Remuneration Committee
Report Annual Statement.
The total remuneration and award rates of the Executive Chairman across the same period were as follows:
Year ending March 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Single figure (£000) 1,795 2,042 2,259 1,613 1,580 1,498 1,770 919 915 1,098
Annual bonus % of maximum 84% 52% 100% 27% 72% 57% 94% 0% 75% 54%
LTIP vesting % of maximum 95% 100% 100% 100% 100% 100% 100% 71% 0% 24%
Year Method 25th Median 75th 25th Median 75th
percentile percentile percentile percentile
Total remuneration 2022 B 49 41 29 £22,527 £26,880 £38,200
Salary 2022 B 21 18 14 £22,160 £26,000 £34,334
Total remuneration 2021 B 44 38 27 £20,554 £24,238 £33,366
Salary 2021 B 23 20 15 £20,466 £23,968 £30,905
Total remuneration 2020 B 44 37 27 £20,650 £24,624 £33,731
Salary 2020 B 23 20 15 £20,131 £23,915 £30,600
PERFORMANCE GRAPH AND TABLE (unaudited) – continued
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.
Pay Ratio
2021 2022 2021 2022 2021 2022 2021 2022 2021 2022
Remuneration
UK employees
% change
Executive Chairman
% change
Chief Executive
% change
FD
% change
NEDS
% change
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Financial Statements Shareholder Information
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
Biographical information on Committee members and details of attendance at the Committee meetings during the year
are set out on pages 34 and 36. The Remuneration Committee has access to independent advice where it considers
appropriate. During 2021/22 the Committee sought external professional advice and is satisfied that the advice provided
is independent and objective.
ANNUAL GENERAL MEETING VOTING OUTCOMES
The following table details votes for and against the 2020 directors’ remuneration policy and the directors’ remuneration
report for 2020/21, along with the number of votes withheld. The Committee will continue to consider the views of
shareholders when determining and reporting on remuneration arrangements.
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 2020/21 was approved at the Company’s
Annual General Meeting held on 22 July 2021.
Votes for 29,022,433 (87.25%) 30,594,938 (89.05%)
Votes against 4,240,672 (12.75%) 3,762,316 (10.95%)
Votes withheld 8,713 14,142
Directors’ Remuneration Policy 2020 Directors’ Remuneration Report 2020/21
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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 2022.
PRINCIPAL ACTIVITIES
The principal activity of the Group is equipment rental and associated services.
STRATEGIC REPORT
Pursuant to Sections S414C(11) Companies Act 2006, the business review has been replaced with a strategic report, which
can be found on pages 1 to 33.
RESULTS AND DIVIDEND
Group profit after tax for the year was £25.5 million (2021: loss of £4.6 million). The directors recommend a final dividend
of 25.5 pence per share. Subject to approval, the final dividend will be paid on 5 August 2022 to all shareholders on the
register as at 24 June 2022.
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 34. Details of directors’ interests in shares are provided in the Directors’ Remuneration Report
on page 52. 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 31 May 2022 the following had notified the Company of an interest of 3% or more in the Company’s issued ordinary
share capital.
Number of Percentage of Issued
Ordinary Shares Ordinary Shares
%
Ackers P Investment Company Limited 20,181,411 50.26
Discretionary Unit Fund Managers Limited 2,000,000 4.98
Chelverton Asset Management 1,581,617 3.94
Canaccord Genuity Wealth Management 1,575,000 3.92
Invesco Asset Management Limited 1,542,611 3.84
Schroder Investment Management 1,530,750 3.81
Tellworth Investments 1,380,136 3.44
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 pages 31 to 33.
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Strategic Report
Governance
Financial Statements Shareholder Information
Directors’ Report
DISCLOSURE OF INFORMATION UNDER LISTING RULE 9.8.4.
The directors confirm that the Company has entered into a relationship agreement with Ackers P Investment Company Limited
(a controlling shareholder) and has complied with the independence provisions of the agreement. As far as the directors are
aware, the controlling shareholder and its associates have also complied with the independence provision.
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 14 to 26.
POLITICAL AND CHARITABLE CONTRIBUTIONS
The Group made no political contributions during the year. Donations to charities amounted to £61,000 (2021: £41,000). The
donations made in the year principally relate to sponsorship of employee driven fund raising activities on behalf of local and
national charities.
SUPPLIER PAYMENT POLICY
It is the Company’s policy to make payment to suppliers on agreed terms. The Company seeks to abide by these payment terms
whenever it is satisfied that the supplier has provided the goods or services in accordance with the agreed terms and conditions.
The number of days purchases outstanding at 31 March 2022 was 41 days (2021: 46 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 2021/22 the Group paid £6.3 million (2021: £2.9 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. 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 2022 the Company did not acquire any shares under the authority of the resolution passed at
the Annual General Meeting.
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Directors’ Report
GOING CONCERN
The Group ended the financial year in a healthy financial position. The Group continues to generate strong cash flows. Net debt
increased by only £8.7 million from £121.9 million at 31 March 2021 to £130.6 million at 31 March 2022. This was after funding
the acquisition of M&S Hire Limited for £2.8 million and an increase in fleet capital investment of £19.6 million. EBITDA before
exceptional items and IFRS 16 impact totalled £88.9 million which was 22% higher than prior year of £72.7 million due to the
impact of Covid 19. The Business Review on pages 9 to 13 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 2022 the Group had £183.0 million of debt capacity (2021: £200.0 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 (2021: £7.5 million).
£135.0 million of revolving credit facilities were due to mature in December 2021. Consequently in April 2021, the Group drew
down a new £28.0 million seven year private placement under the existing agreement with PGIM, Inc. In June 2021, the
Group also refinanced its £135.0 million committed revolving credit facilities with a new £90.0 million facility. The new revolving
credit facility agreement also includes a £20.0m uncommitted accordion facility. Management are in regular dialogue with our
lenders who continue to express their commitment to the business.
The Board has evaluated the facilities and covenants on the basis of the budget for 2022/23 (including 2023/24 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 2023 against the Group’s original budget and extended to 30 June
2023. All scenarios retain adequate headroom against borrowing facilities and fall within the existing covenants.
Our most severe downside modelling, which reflects a 20% reduction in revenue levels demonstrates headroom over
borrowing facilities and existing covenant levels throughout the forecast period to the end of June 2023.
On the basis of this testing, 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 77, together with the Directors’
consideration of the impact of the proposed sale of the Group.
GOVERNMENT SUPPORT
During the year, and where appropriate, the Group also took government support from tax deferrals on VAT and from Business
Rates relief.
CORPORATE GOVERNANCE
The Corporate Governance Statement on pages 35 to 37 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
Allison Bainbridge
Company Secretary
8 June 2022
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Strategic Report
Governance
Financial Statements Shareholder Information
Statement of Directors’ Responsibilities
IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS
The directors are responsible for preparing the Annual Report and Accounts 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 Parent Company financial statements in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006. Additionally, the Financial Conduct Authority’s Disclosure Guidance and
Transparency Rules require the directors to prepare the Group financial statements in accordance with international financial
reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
The Parent Company has also prepared financial statements in accordance with and international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
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 Parent 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 international accounting standards in conformity with the requirements of the Companies Act 2006
and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union 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 parent
company will continue in business.
The directors are also responsible for safeguarding the assets of the Group and Parent Company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities. The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain the Group’s and Parent Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the Group and Parent 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 Parent Company’s website. Legislation in the United
Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group’s and Parent 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 Parent Company financial statements, which have been prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006 and international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, give a true and fair view of the
assets, liabilities, financial position and loss of the group and profit of the parent company; 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 parent 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 parent 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 parent company’s auditors are aware of that information.
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60
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 2022 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; 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, which comprise: the consolidated and
parent company balance sheets as at 31 March 2022; 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, 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. On 28 April 2022, Vp plc (the ‘Company’) announced that its controlling shareholder, Ackers P
Investment Company Limited (the "Controlling Shareholder" by virtue of its 50.26% holding in the issued share capital of
the Company), had indicated to the Board its desire to explore opportunities to dispose of its entire shareholding in the
Company. As a result, the Board unanimously concluded that it would be appropriate to investigate the sale of the
Company and launched a formal sale process (the ‘sale’). As at the date of this report the sale process is in its early stages
and as a result the Directors do not have visibility of the Company's post sale ownership or funding structure, including
the terms on which such funding will be provided. 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
overlay the impact of a change in control on the group and parent company's funding position, nor consider the mitigating
actions they would take if any were needed. 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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Strategic Report
Governance
Financial Statements Shareholder Information
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 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;
• 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.
• The reporting units over which we performed audit procedures accounted for over 74% of the group’s reported revenues
and over 83% of the group’s profit before tax, amortisation 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)
• Carrying value of goodwill and intangible assets (group)
Materiality
• Overall group materiality: £1,945,000 (2021: £1,944,000) based on 5% of profit before tax, amortisation and
exceptional items.
• Overall parent company materiality: £3,000,000 (2021: £706,000) based on 1% of total assets.
• Performance materiality: £1,459,000 (2021: £1,458,000) (group) and £2,250,000 (2021: £530,000) (parent company).
.
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 is a new key audit matter this year. Covid-19, which was a key audit matter
last year, is no longer included because of the group's performance in the year to date and the limited ongoing impact of
Covid-19 on the group's financial performance and position. Otherwise, the key audit matters below are consistent with
last year.
vpplc.com Vp plc Annual Report and Accounts 2022
62
Key audit matter How our audit addressed the key audit matter
Refer to page 39 (Significant accounting issues) 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 their business. The net book value of
fleeted assets was £163.8 million and £72.0 million as at
31 March 2022 (2021: £156.6 million and £74.9 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.
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; and
• counted a sample of assets and reconciled these to both
management’s count and the fixed asset register. For a
sample of revenue resulting from the hire of fleeted
assets to customers through the year we have also
agreed to sales invoice and either a despatch note or
cash receipt which provides us with evidence of existence
over the underlying asset. 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.
Existence of fleeted rental equipment (group and parent)
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63
Strategic Report
Governance
Financial Statements Shareholder Information
Independent auditors’ report to the
members of Vp plc
(continued)
Key audit matter How our audit addressed the key audit matter
Refer to page 39 (Significant accounting issues), page 78
(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 assets.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.
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
fixed asset data and budgeted trading performance to
determine the appropriateness of management’s
estimates.We tested the appropriateness of the useful
economic lives and estimated residual values applied on a
sample basis 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
tested the integrity of the data held within the fixed asset
registers, given the reliance upon this information for
management's impairment analysis. This comprised
scanning the entire population of assets for inappropriate
entries (such as assets with a useful economic life
inconsistent with the type of asset) or evidence that the
useful economic life assigned is not being applied correctly
in the fixed asset register. We 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.
Valuation of rental equipment (group and parent)
Refer to page 39 (Significant accounting issues) and note
10 in the financial statements for detailed group and
parent company goodwill and intangible assets
disclosures. The group has £44.9 million (2021: £43.8
million) of goodwill and £17.5 million (2021: £20.6 million)
of acquired intangible assets as at 31 March 2022. The
parent company has £9.2 million (2021: £9.5 million) of
intangible assets as at 31 March 2022. The carrying value
of goodwill is assessed by an annual impairment review
with intangible assets at a group and parent company
level reviewed for indicators of impairment and if needed
an impairment review performed. The risk we have
focused on is that the goodwill within the Brandon Hire
Station CGU (Cash Generating Unit), which was partly
impaired in the prior year, could be overstated and a
further impairment charge may be required. We focused
on this area because the determination of whether or not
these non-current assets are impaired involves subjective
judgements and estimates about the future results and
cash flows of the business. On an annual basis,
management calculate the amount of headroom between
the value in use of the group’s CGUs and their carrying
value to determine whether there is a potential impairment
of the goodwill and acquired intangibles relating to those
CGUs. The values in use of the group's and parent
company's CGUs are dependent on a number of key
assumptions which include: • Forecast cash flows for the
next five years;
• A long-term (terminal) growth rate applied beyond the
end of the five year forecast period; and
• A discount rate applied to the model.
We understood and evaluated management’s budgeting
and forecasting process. We obtained the group
impairment analysis and tested the reasonableness of the
key assumptions, including the following:
• We tested the mathematical accuracy of the impairment
model and agreed the carrying value of non-current
assets being assessed for impairment to the balance
sheet;
• We challenged management’s calculated group weighted
average cost of capital (WACC) used for discounting
future cash flows within the impairment model, utilising
valuation experts to assess the cost of capital for the
group and comparable organisations;
• We evaluated the historical accuracy of the budgeting
process to assess the reliability of the data; and
• We traced the forecast financial information within the
model to the latest Board approved budgets and
assessed the rationale for any variances between the
two. We have reviewed the financial statement
disclosures made with respect to the sensitivity of the
WACC, cash flows and growth rates.
In summary, we found, based on our audit work, the
carrying value of goodwill and acquired intangibles to be
acceptable. We also considered the disclosures made
within the financial statements and considered these to be
appropriate.
Carrying value of goodwill and intangible assets (group)
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64
Independent auditors’ report to the
members of Vp plc
(continued)
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 74% of the group’s revenues and over 83% of the group’s profit before tax, amortisation 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.
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:
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 £851,000 and £1,750,000. 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% (2021: 75%) of overall materiality,
amounting to £1,459,000 (2021: £1,458,000) for the group financial statements and £2,250,000 (2021: £530,000) for the
parent company financial statements.
Financial statements - group Financial statements - parent company
£1,945,000 (2021: £1,944,000).
5% of profit before tax, amortisation and
exceptional items.
Overall
materiality
How we
determined it
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. In the prior year we applied the same
benchmark but to a three year average to provide
a more reflective benchmark that considered the
impact of the COVID-19 pandemic on the prior
year results.
£3,000,000 (2021: £706,000).
1% of total assets
In the prior year we calculated materiality using 5%
of a three year average of parent company profit
before tax, amortisation and exceptional items. We
have re-assessed our benchmark and determined
the primary focus of users of these accounts to be
the consolidated results of the Group rather than the
individual results of the parent company. In the
current year we have therefore used an asset based
measure fpr 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.
Independent auditors’ report to the
members of Vp plc
(continued)
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 in the middle of our
normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
£95,000 (group audit) (2021: £95,000) and £95,000 (parent company audit) (2021: £ 95,000) as well as misstatements
below those amounts that, in our view, warranted reporting for qualitative reasons.
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, which includes reporting based on the
Task Force on Climate-related Financial Disclosures (TCFD) recommendations. 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 2022 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.
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;
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Strategic Report
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Financial Statements Shareholder Information
vpplc.com Vp plc Annual Report and Accounts 2022
66
Independent auditors’ report to the
members of Vp plc
(continued)
• 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;
• 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 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, 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.
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, non-compliance with competition law 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
deliberate manipulation of results via improper revenue recognition, 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 or
posted by unexpected users. 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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Strategic Report
Governance
Financial Statements Shareholder Information
vpplc.com Vp plc Annual Report and Accounts 2022
68
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 8 years, covering the years ended 31 March 2015 to 31 March 2022.
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
8 June 2022
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69
Strategic Report
Governance
Financial Statements Shareholder Information
Consolidated Income Statement
for the Year Ended 31 March 2022
2022* 2021)
Note £000) £000)
Revenue 2 350,915 ) 307,997 )
Cost of sales (263,950 ) (259,887 )
Gross profit 86,965
) 48,110 )
Administrative expenses (43,968 ) (42,427 )
Operating profit before amortisation and exceptional items 2 46,299
) 30,928 )
Amortisation and impairment 10 (3,302 ) (10,373 )
Exceptional items 4 -
) (14,872 )
Operating profit 3 42,997
) 5,683 )
Financial income 7 2 ) 8 )
Financial expenses 7 (7,355 ) (7,760 )
Profit before taxation, amortisation and exceptional items 38,946
) 23,176 )
Amortisation and impairment 10 (3,302 ) (10,373 )
Exceptional items 4 -
) (15,072 )
Profit/(loss) before taxation 35,644
) (2,269 )
Income tax expense 8 (10,109 ) (2,332 )
Profit/(loss) attributable to owners of the parent 25,535
) (4,601 )
Basic earnings/(loss) per 5p ordinary share 22 64.49 p) (11.62 p)
Diluted earnings/(loss) per 5p ordinary share 22 63.83 p
) (11.62 p)
Dividend per 5p ordinary share interim paid 21 10.5 p
) - )
Dividend per 5p ordinary share special paid 21 - ) 22.0 p)
Dividend per 5p ordinary share final paid 21 25.0 p) - )
Consolidated Statement of Comprehensive Income
for the Year Ended 31 March 2022
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70
2022) 2021)
Note £000) £000)
Profit/(loss) for the year 25,535 ) (4,601 )
Other comprehensive income/(expense):
)
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension schemes 25 693 ) (795 )
Tax on items taken to other comprehensive income 8 (183 ) 56
)
Impact of tax rate change 8 110 ) - )
Items that may be subsequently reclassified to profit or loss
Foreign exchange translation difference 361 ) 439 )
Effective portion of changes in fair value of cash flow hedges 221 ) 584 )
Total other comprehensive income 1,202 ) 284 )
Total comprehensive income/(expense) for the year
) (4,317 )
attributable to owners of the parent
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Strategic Report
Governance
Financial Statements Shareholder Information
Consolidated Statement of Changes in Equity
) )Capital) ))Foreign) Non-) )
Share) Redemption) Share) Hedging) Currency) Retained) controlling) Total)
Capital) Reserve) Premium) Reserve) Translation) Earnings) Interest) Equity)
Note £000) £000) £000) £000) £000) £000) £000) £000)
Equity at 1 April 2020
Total comprehensive expense -) -) -) 584 ) 439 ) (5,340 )-) (4,317 )
for the year (see page 70)
Tax movements to equity 8-
) -) -) -) -) 165 ) -) 165 )
Share option charge in the year -) -) -) -) -) 1,098 ) -) 1,098 )
Net movement relating to -) -) -) -) -) (5,076 )-) (5,076 )
shares held by Vp Employee Trust
Dividend to shareholders 21 -
) )-) -) -) -) (8,674 )-) (8,674 )
Total change in equity during the year -
) -) -) 584 ) 439 )
(17,827
)-
)
(16,804
)
Equity at 31 March 2021
and 1 April 2021
)
Total comprehensive income -) -) -) 221 ) 366 ) 26,150 ) -) 26,737 )
for the year (see page 70)
Tax movements to equity 8-
) -) -) -) -) 90 ) -) 90 )
Impact of tax rate change 8 -) -) -) -) -) (11 )-) (11 )
Share option charge in the year -
) -) -) -) -) 1,249 ) -) 1,249 )
Net movement relating to -) -) -) -) -) (516 )-) (516 )
shares held by Vp Employee Trust
Movement in minority interest -
) )-) -) -) -) -) (27 ) (27 )
Dividend to shareholders 21 -
) )-) -) -) -) (14,054 )-) (14,054 )
Total change in equity during the year -
) -) -) 221 ) 366 )
) (27 )
)
Equity as at 31 March 2022
for the Year Ended 31 March 2022
vpplc.com Vp plc Annual Report and Accounts 2022
72
Parent Company Statement of Changes in Equity
) Capital) )) )
Share) Redemption) Share) Hedging) Hive Up) Retained) Total)
Capital) Reserve) Premium) Reserve) Reserve) Earnings) Equity)
Note £000) £000) £000) £000) £000) £000) £000)
Equity at 1 April 2020 2,008) 301) 16,192) (805) 8,156) 28,307) 54,159)
Total comprehensive income -) -) -) 584) -) 454) 1,038)
for the year
Tax movements to equity -
) -) -) -) -) 165) 165)
Share option charge in the year -) -) -) -) -) 1,098) 1,098)
Net movement relating to -) -) -) -) -) (5,076) (5,076)
shares held by Vp Employee Trust
Dividend to shareholders 21 -
) -) -) -) -) (8,674) (8,674)
Total change in equity during the year -
) -) -) 584) -) (12,033) (11,449)
Equity at 31 March 2021 2,008
) 301) 16,192) (221) 8,156) 16,274) 42,710)
and 1 April 2021)
Total comprehensive income -) -) -) 221) -) 17,109) 17,330)
for the year
Tax movements to equity -
) -) -) -) -) 90) 90)
Impact of tax rate change -) -) -) -) -) (11) (11)
Share option charge in the year -
) -) -) -) -) 1,249) 1,249)
Net movement relating to -) -) -) -) -) (516) (516)
shares held by Vp Employee Trust
Dividend to shareholders 21 -
) -) -) -) -) (14,054) (14,054)
Total change in equity during the year -
) -) -) 221) -) 3,867) 4,088)
Equity at 31 March 2022 2,008) 301) 16,192) -) 8,156) 20,141) 46,798)
for the Year Ended 31 March 2022
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73
Strategic Report
Governance
Financial Statements Shareholder Information
Consolidated Balance Sheet
at 31 March 2022
2022) 2021)
NET ASSETS Note £000) £000)
Non-current assets
Property, plant and equipment 9 247,526
) 233,912 )
Intangible assets 10 62,422 ) 64,366 )
Right of use assets 11 54,151 ) 56,795 )
Employee benefits 25 2,738 ) 2,175 )
Total non-current assets
) 357,248 )
Current assets
Inventories 13 7,956
) 7,342 )
Trade and other receivables 14 76,057 ) 66,472 )
Income tax receivable - ) 817 )
Cash and cash equivalents 15 13,617 ) 15,917 )
Total current assets 97,630 ) 90,548 )
Total assets 464,467
) 447,796
)
Current liabilities
Interest-bearing loans and borrowings 16 -
) (73,009 )
Lease liabilities 11 (14,147 ) (16,477 )
Income tax payable (152 ) -
)
Trade and other payables 18 (80,676 ) (83,490 )
Total current liabilities
(94,975 ) (172,976 )
Non-current liabilities
Interest-bearing loans and borrowings 16 (144,221 ) (64,814 )
Lease liabilities 11 (43,496 ) (44,603 )
Provisions (1,512 ) (1,892 )
Deferred tax liabilities 19 (13,678 ) (10,394 )
Total non-current liabilities (202,907 ) (121,703 )
Total liabilities (297,882 ) (294,679 )
Net assets
) 153,117 )
EQUITY
Issued share capital 20 2,008
) 2,008 )
Capital redemption reserve 301 ) 301 )
Share premium 16,192 ) 16,192 )
Foreign currency translation reserve (1,020 ) (1,386 )
Hedging reserve -
) (221 )
Retained earnings 149,104
) 136,196 )
Total equity attributable to
equity holders of the parent 166,585
) 153,090 )
Non-controlling interest - ) 27 )
Total equity 166,585 ) 153,117 )
The financial statements on pages 69 to 115 were approved and authorised for issue by
the Board of Directors on 8 June 2022 and were signed on its behalf
by:
Jeremy Pilkington Allison Bainbridge
Chairman Director
Company number: 481833
*The comparative figures have been restated to reclassify a number of balances between financial statement line items. See note 1 for further details.
Restated*
vpplc.com Vp plc Annual Report and Accounts 2022
74
Parent Company Balance Sheet
at 31 March 2022
2022) 2021)
NET ASSETS Note £000) £000)
Non-current assets
Property, plant and equipment 9 114,327
) 112,082)
Intangible assets 10 9,188) 9,547)
Investments in subsidiaries 12 68,775) 71,884)
Right of use assets 11 13,361) 11,255)
Employee benefits 25 3,068) 2,657)
Trade and other receivables 14 55,699) 47,473)
Total non-current assets
264,418
) 254,898)
Current assets
Inventories 13 1,893
) 2,258)
Trade and other receivables 14 26,141) 19,279)
Income tax receivable 342) 642)
Cash and cash equivalents 15 2,537) 5,112)
Total current assets 30,913) 27,291)
Total assets
295,331
)
282,189
)
Current liabilities
Interest-bearing loans and borrowings 16 -
) (72,951)
Lease liabilities 11 (4,004) (4,246)
Trade and other payables 18 (65,493) (61,438)
Total current liabilities
(69,497)
(138,635)
Non-current liabilities
Interest-bearing loans and borrowings 16 (144,221) (64,777)
Deferred tax liabilities 19 (12,813) (9,708)
Lease liabilities 11 (9,754) (7,662)
Trade and other payables 18 (12,248) (18,697)
Total non-current liabilities (179,036) (100,844)
Total liabilities
(248,533)
(239,479)
Net assets
46,798
) 42,710)
EQUITY
Capital and reserves
)
Issued share capital 20 2,008) 2,008)
Capital redemption reserve 301) 301)
Share premium 16,192) 16,192)
Hedging reserve -) (221)
Hive up reserve 8,156
) 8,156)
Retained earnings)
At the beginning of the year 16,274) 28,307)
Profit for the financial year 16,597) 1,001)
Other changes in retained earnings (12,730) (13,034)
At the end of the year 20,141
) 16,274)
)
Total equity 46,798
)
42,710)
The financial statements on pages 69 to 115 were approved and authorised for issue by
the Board of Directors on 8 June 2022 and were signed on its behalf by:
Jeremy Pilkington Allison Bainbridge
Chairman Director
Company number: 481833
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75
Strategic Report
Governance
Financial Statements Shareholder Information
Consolidated Statement of Cash Flows
for the Year Ended 31 March 2022
2022) 2021)
Note £000) £000)
Cash flows from operating activities
Profit/(loss) before taxation
) (2,269 )
Adjustments for:
Share based payment charges
) 1,098 )
Depreciation 9
) 44,980 )
Depreciation of right of use assets 11
) 20,752 )
Amortisation and impairment 10
) 10,373 )
Release of arrangement fees
) 215 )
Financial expense
) 7,760 )
Financial income
(2
) (8 )
Profit on sale of property, plant and equipment
(7,045
) (4,263 )
Operating cash flow before changes in
) 78,638 )
working capital and provisions)
(Increase)/decrease in inventories
(614
) 1,731 )
(Increase)/decrease in trade and other receivables
(9,133
) 17,717 )
(Decrease)/increase in trade and other payables
(2,781
) 14,450 )
Cash generated from operations
) 112,536 )
Interest paid
(4,456
) (4,723 )
Interest element of lease liability payments
(2,940
) (3,342 )
Interest received
) 7 )
Income taxes paid
(6,282
) (2,867 )
Net cash generated from operating activities 76,706
)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
) 17,536 )
Purchase of property, plant and equipment
(68,679
) (46,582 )
Acquisition of businesses and subsidiaries (net of cash acquired) 26
(2,693
) -
)
Net cash used in investing activities (53,553
)
(29,046 )
Cash flows from financing activities
Purchase of own shares by Employee Trust
(516
) (5,076 )
Repayment of borrowings
(95,044
) (53,000 )
New loans
) 17,000 )
Arrangement fees
(773
) - )
Capital element of lease liability payments
(17,149
) (20,803 )
Dividends paid 21
(14,054
) (8,674 )
Net cash used in financing activities (25,492
)
(70,553 )
Net (decrease)/increase in cash and cash equivalents
(2,339
) 2,012
)
Effect of exchange rate fluctuations on cash held
) (242 )
Cash and cash equivalents net of overdrafts as at the beginning of the year
)
)
Cash and cash equivalents net of overdrafts as 15 13,617
) 15,917 )
at the end of the year
*The comparative figures have been restated to reclassify the interest on lease liabilities. See note 1 for further details.
Restated*
vpplc.com Vp plc Annual Report and Accounts 2022
76
Parent Company Statement of Cash Flows
for the Year Ended 31 March 2022
2022) 2021)
Note £000) £000)
Cash flows from operating activities
Profit before taxation 21,730
) 2,518)
Adjustments for:
Share based payment charges 1,249
) 1,098)
Depreciation 9 13,641) 13,640)
Depreciation of right of use assets 11 4,956) 7,454)
Amortisation and impairment 10 359) 829)
Release of arrangement fees 314) 215)
Financial expense 3,963) 3,552)
Financial income (1) -)
Profit on sale of property, plant and equipment (1,715) (989)
Operating cash flow before changes in
44,496
) 28,317)
working capital and provisions)
Decrease in inventories 365) 290)
(Increase)/decrease in trade and other receivables (13,849) 40,298)
Increase in trade and other payables 1,590) 5,874)
Cash generated from operations 32,602) 74,779)
Interest paid (4,456) (4,723)
Interest element of lease liability payments (644) (757)
Interest received 1
) -)
Income taxes paid (1,840) (651)
Net cash generated from operating activities
25,663
)
68,648)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 6,252
) 9,334)
Purchase of property, plant and equipment (20,887) (15,376)
Net cash used in investing activities
(14,635)
(6,042)
Cash flow from financing activities
Purchase of own shares by Employee Trust (516) (5,076)
Repayment of borrowings (95,044) (53,000)
New loans 102,044
) 17,000)
Arrangement fees (773) -)
Capital element of lease liability payments (5,260) (7,808)
Dividends paid 21 (14,054) (8,674)
Net cash used in financing activities (13,603) (57,558)
Net (decrease)/increase in cash and cash equivalents
(2,575
)
5,048
)
Cash and cash equivalents net of overdrafts as at the beginning of the year 5,112) 64)
Cash and cash equivalents net of overdraft as
15
2,537) 5,112)
at the end of the year
Vp plc Annual Report and Accounts 2022 vpplc.com
77
Notes
(forming part of the financial statements)
1. SIGNIFICANT ACCOUNTING POLICIES
Strategic Report
Governance
Financial Statements Shareholder Information
Statement of compliance
the United Kingdom . These consolidated Financial Statements of Vp plc for the year ended 31 March 2022, 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
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted International
Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. Vp plc transitioned to UK-adopted
International Accounting Standards in its consolidated financial statements on 1 April 2021. This change constitutes a change in accounting
framework. However, there is no impact on recognition, measurement or disclosure in the period reported as a result of the change in framework.
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 2022/23 (including 2023/24 long term forecast) and has performed sensitivity analysis on them.
On the basis of this testing, the directors have a reasonable expectation that the Group has adequate resources to continue in operation for the
foreseeable future.
On 28 April 2022, Vp plc (the ‘Company’) announced that its controlling shareholder, Ackers P Investment Company Limited (the "Controlling
Shareholder" by virtue of its 50.26% holding in the issued share capital of the Company), had indicated to the Board its desire to explore
opportunities to dispose of its entire shareholding in the Company. As a result, the Board unanimously concluded that it would be appropriate
to investigate the sale of the Company and launched a formal sale process (the ‘sale’). As at the date of this report the sale process is in its
early stages and as a result the Directors do not have visibility of the Company's post sale ownership or funding structure, including the terms
on which such funding will be provided. In addition, the Group’s existing committed debt facilities contain change of control clauses which, upon
completion of the sale process, could result in the existing committed debt facilities being withdrawn. 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 overlay the impact of a change in control, nor consider the mitigating actions they would take if any were needed. 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 Directors have a reasonable expectation that the Group and parent company have 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
reviewed the Group’s and parent company’s financial projections and cash flow forecasts and believe, based on those projections and forecasts,
that it is appropriate to prepare the Group and parent company financial statements on the going concern basis. 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. 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. 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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Accounting policies and restatements
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 2022.
Future standards
Certain new accounting standards and interpretations have been published that are not mandatory for 31 March 2022 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
Onerous contracts; cost of fulfilling a contract – amendments to IAS 37;
l
Annual improvements to IFRS standards 2018– 2020;
l
Property, plant and equipment; proceeds before intended use – amendments to IAS 16;
l
Reference to the Conceptual Framework – amendments to IFRS 3
l
Disclosure of Accounting Policies – amendments to IAS 1;
l
Classification of liabilities as current or non-current – amendments to IAS 1; and
l
IFRS 17 Insurance Contracts – amendments to IFRS 17.
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.
Where the information is available, assets acquired via acquisitions are recorded in the accounting records at fair value on a gross cost
and accumulated depreciation basis. The fair value of the acquired property, plant and equipment is therefore the net of the cost and
accumulated depreciation shown in the fixed asset note. The Group considers it appropriate to show this on a gross basis as the cost
gives a better indication of the earning capacity of the hire fleet.
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 – 2% straight line
Land and Buildings - Leasehold improvements – Term of lease
Rental equipment – 7% - 33% straight line depending on asset type
Motor vehicles – 25% straight line
Other - Computers – 10% - 33% straight line
Other - Fixtures, fittings and other equipment – 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.
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
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Business combinations and goodwill
For acquisitions on or after 1 April 2010, the Group measures goodwill at the acquisition date as:
l
The fair value of the consideration transferred; plus
l
The recognised amount of any non-controlling interests in the acquiree; plus
l
The fair value of the existing equity interest in the acquiree; less
l
The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
Costs related to the acquisition are expensed to the income statement as incurred.
In respect of acquisitions between 1 April 2004 and 1 April 2010, goodwill represents the difference between the cost of the acquisitions
and the fair value of identifiable net assets and contingent liabilities acquired. Costs related to the acquisition were capitalised as part of
the cost of the acquisition.
Goodwill is stated at cost less any accumulated impairment losses and is included on the balance sheet as an intangible asset. It is
allocated to cash generating units and is not amortised, but tested annually for impairment against expected future cash flows from the
cash generating unit to which it is allocated.
The Group has chosen not to restate business combinations prior to 1 April 2004 on an IFRS basis as permitted by IFRS 1. Goodwill is
included on the basis of deemed cost for the transactions which represent its carrying value at the date of transition to adopted IFRSs.
Other intangible assets
Intangible assets other than goodwill that are acquired by the Group are stated at cost less accumulated amortisation and impairment
losses. Amortisation is included within cost of sales within the Income Statement. The rate of amortisation attempts to write-off the cost
of the intangible asset over its estimated useful life using the following rates:
Customer relationships – up to 10 years
Supply agreement – the initial term of the agreement
Trade names – over the estimated initial period of usage, normally 10 years
No amortisation is provided where trade names are expected to have an indefinite life.
Impairment
The carrying amounts of non financial assets are reviewed at each balance sheet date to determine whether there is any indication of
impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the
carrying amount of an asset or its cash-generating unit (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. 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 stock is held primarily for the repair and maintenance of fleet assets. Goods for resale relate to stock
held for sale. The basis of expensing stock is 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.
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.
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
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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”.
Where a derivative financial instrument is designated as an effective cash flow hedge, the effective part of any gain or loss on the
derivative financial instrument is recognised directly in equity. If a hedge of a forecasted transaction subsequently results in the
recognition of a financial asset or a financial liability, the associated gains and losses that were recognised directly in equity are
reclassified into profit or loss in the same period or periods during which the asset acquired or liability assumed affects profit or loss (i.e.
when interest income or expense is recognised). For cash flow hedges, other than those covered by the preceding policy statement, the
associated cumulative gain or loss is removed from equity and recognised in the Income Statement in the same period or periods during
which the hedged item affects profit or loss.
When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the hedge relationship but
the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in equity and is recognised in
accordance with the above policy when the transaction occurs. If the hedged transaction is no longer expected to take place, the
cumulative unrealised gain or loss recognised in equity is recognised immediately in the Income Statement.
The fair value of interest rate swaps is the estimated amount the Group would receive or pay to terminate the swap at the balance sheet
date, taking into account current and future interest rates and the current creditworthiness of the swap counterparties. The fair value of
the exchange rate 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. 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.
Customers are invoiced on an agreed upon basis and consideration is payable when invoiced. 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:
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
2022 2021
UK
) International) Total) UK) International) Total)
£000) £000) £000) £000) £000) £000)
Equipment hire 243,287
)
23,508
)
266,795) 211,515) 20,043) 231,558)
Services 52,891
)
5,820
)
58,711) 46,793) 4,930) 51,723)
Sales of goods 24,025
)
1,384
)
25,409) 23,001) 1,715) 24,716)
Total revenue 320,203) 30,712) 350,915) 281,309) 26,688) 307,997)
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1. SIGNIFICANT ACCOUNTING POLICIES (continued)
Share based payments
The fair value of share options is charged to the Income Statement based upon their fair value at the date of grant with a corresponding
increase in equity. The charge is recognised evenly over the vesting period of the options. The liabilities for cash settled share based payment
arrangements are measured at fair value.
The fair values are calculated using an appropriate option pricing model. The Group’s Approved, Unapproved and Save As You Earn (SAYE)
schemes have been valued using the Black-Scholes model and the Income Statement charge is adjusted to reflect the expected number of
options that will vest, based on expected levels of performance against non-market based conditions and the expected number of
employees leaving the Group. The fair values of the Group’s Long Term Incentive Plan (LTIP) and Share Matching scheme are calculated using
a discounted grant price model, again adjusted for expected performance against non-market based conditions and employees leaving the
Group. Amendments to IFRS 2, “Share Based Payments”, clarified the treatment of cancelled options, whereby if a grant of equity
instruments is cancelled the Group shall account for the cancellation as an acceleration of vesting and shall recognise immediately the
amount that would have been recognised over the remainder of the vesting period.
Any cash settled options are valued at their fair value as calculated at each period end, taking account of performance criteria and expected
numbers of employees leaving the Group and the liability is reflected in the balance sheet within accruals.
The parent company recharges the subsidiary entities with the fair value of the share options relating to the employees associated with that entity.
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 £37,000 (2021: £36,000).
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.
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.
While the Group re-values its land and buildings that are presented within property, plant and equipment, it has chosen not to do so for
the right-of-use buildings held by the Group.
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.
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Exceptional items
The business classifies certain events as exceptional due to their size and nature where it feels that separate disclosure would help
understand the underlying performance of the business. Further discussion is disclosed in note 4.
Government grants
Government grants for furlough income and similar income are not recognised until there is reasonable assurance that the Group will
comply with the conditions attaching to them and the income will be received. Government grants are recognised in the Consolidated
Income Statement on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the
grants are intended to compensate.
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 2022 have been reviewed and approved by the Audit Committee. 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, and
assumptions relating to pension costs. In addition the testing for impairment of goodwill and other intangibles requires significant
estimates and judgements relating to cash flows, and the valuation of the fair value of acquired net assets 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 (see page 71). The rate of technological and legislative change is factored into the estimates, together with
the diminution in value through use and time. The Group also takes account of the profit or loss it makes on the disposal of fixed assets
in determining whether depreciation policies are appropriate.
The key assumptions and sensitivities applied to pensions are disclosed in note 25. The pension scheme position is derived using actuarial
assumptions for inflation, discount rates and assumed life expectancy which are inherently uncertain. Due to the relative size of the
scheme, small changes to these assumptions can give rise to a significant impact on the pension scheme position reported in the Balance
Sheet. A pension asset for the Vp plc pension scheme has been recognised as there is an unconditional right to a refund of the surplus
prior to winding up the scheme.
Goodwill and other intangibles are tested for impairment by reference to the expected estimated cash generated by the CGU. 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.
Prior year restatements
Following a review of certain financial statement line items within the consolidated balance sheet and the consolidated statement of
cash flows the directors identified a number of errors impacting the prior period, which have been adjusted in these financial statements,
as follows:
1. Right of use assets and Lease liabilities
Certain leases entered into in the periods up to and including the financial year ended 31 March 2021 had not been previously captured
in the accounting under IFRS 16. The impact of correcting this error on the balance sheet at 31 March 2021 was to increase right of use
assets by £3.5 million, current lease liabilities by £0.8 million and non-current lease liabilities by £2.6 million. There was no impact on
the Income Statement for the year ended 31 March 2021 or on the balance sheet at 1 April 2020 consequently there was no impact on
opening reserves.
2. Classification of items within trade and other payables
Certain items previously classified within trade and other payables should have been classified into either lease liabilities or provisions
on the balance sheet. The impact of correcting this error on the balance sheet at 31 March 2021 was to decrease trade and other payables
by £2.7 million, increase provisions by £1.9m and increase current lease liabilities by £0.8 million. There was no impact on the Income
Statement for the year ended 31 March 2021. If the same changes had been made at 1 April 2020, the impact would have been to
decrease trade and other payables by £1.2 million, increase provisions by £0.8 million and increase current lease liabilities by £0.4 million.
Consequently there was no impact on opening reserves.
The total impact of correcting the above errors on the balance sheet at 31 March 2021 was to increase right- of- use assets from £53.3
million to £56.8 million, current lease liabilities from £14.9 million to £16.5 million, non-current lease liabilities from £42.0 million to
£44.6 million and provisions from nil to £ 1.9 million. Trade and other payables decreased from £86.2 million to £83.5 million.
3. Classification of interest in the consolidated statement of cash flows
Interest on lease liabilities had been included within 'Payments for lease liabilities' (now renamed to 'Capital element of lease liability
payments') in the 'Cash flows from financing activities' section of the consolidated statement of cash flows, rather than within 'Interest
element of lease liability payments' within the 'Cash flows from operating activities' section. The impact of this correction on the
consolidated statement of cash flows for the year ended 31 March 2021 was to decrease 'Capital element of lease liability payments'
by £3.3 million from £24.1 million to £20.8 million and increase 'Interest element of lease liability payments' from £nil to £3.3 million.
'Net cash generated from operating activities' for the year ended 31 March 2021 is therefore £3.3 million lower than as previously
reported and 'Net cash used in financing activities' is lower by the same amount.
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
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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 2022 was £350.9 million (2021: £308.0 million). Inter-segment pricing
is determined on an arm’s length basis. Included within revenue is £25.4 million (2021: £24.7 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 £50.9 million (2021: £50.0 million), including overseas revenue generated by the UK
based divisions. In the prior year, the Group had one operating branch of a UK registered company operating in another country within
the EU, namely a branch of Hire Station Limited operating in the Netherlands. This branch was closed during 2020-21.
Assets Liabilities Net Assets
) Restated*) ) Restated*) ) )
2022) 2021) 2022) 2021) 2022) 2021)
£000) £000) £000) £000) £000) £000)
UK 425,382
)
410,227) 286,524) 283,454) 138,858) 126,773)
International 39,085
)
37,569) 11,358) 11,225) 27,727) 26,344)
464,467) 447,796) 297,882) 294,679) 166,585) 153,117)
Acquired Capital
Assets Expenditure
2022
) 2021) 2022) 2021)
£000) £000) £000) £000)
UK 1,647) -) 63,011) 39,308)
International -) -) 5,023) 4,896)
1,647) -) 68,034
)
44,204
)
Acquired assets relate primarily to tangible and intangible assets acquired as a result of acquisitions. Capital expenditure relates to
tangible fixed assets acquired in the normal course of business.
Included within segmental assets above is goodwill and indefinite life intangibles in relation to the following segments: UK £42.7 million
(2021: £41.7 million), International £2.2 million (2021: £2.1 million).
*The comparative figures have been restated to reclassify a number of balances between financial statement line items. See note 1 for
further details.
Operating
profit before
amortisation and
Revenue exceptional items
2022 2021 2022
) 2021
External
) Internal) Total) External) Internal) Total)
Revenue) Revenue) Revenue) Revenue) Revenue) Revenue)
£000) £000) £000) £000) £000) £000) £000) £000)
UK 320,203) 5,576) 325,779) 281,309) 5,019) 286,328) 44,704) 30,266)
International 30,712) -) 30,712) 26,688) -) 26,688) 1,595) 662)
350,915) 5,576) 356,491) 307,997) 5,019) 313,016) 46,299) 30,928)
A reconciliation of operating profit before amortisation and exceptional items to profit/(loss) before tax is provided in the Income Statement.
Business segments
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3. OPERATING PROFIT
2022) 2021)
£000) £000)
Operating profit is stated after charging/(crediting):
Amortisation and impairment of intangible assets 3,302
) 10,373)
Depreciation of property, plant and equipment – owned 45,532) 44,980)
Depreciation of property, plant and equipment
– leased 16,561) 20,752)
Profit on disposal of property, plant and equipment (7,045) (4,263)
Amounts paid to auditors:
Audit fees – parent company annual accounts 500
) 500)
Audit fees
– other group companies 41) 70)
Audit fees
– total group 541) 570)
)
Audit related assurance services 1) 21)
Amounts paid to the Company’s auditors in respect of services to the Company, other than audit of the Company’s Financial Statements,
have not been disclosed as the information is only required to be disclosed on a consolidated basis.
No furlough payments were received during the year. During the prior year, furlough payments of £8.6 million received from the
Government were passed through to employees. These were treated as a credit against employee costs in the Income Statement.
Audit fees include £nil in 2022 (2021: £60,000) which relates to the 2020/21 audit due to the impact of Covid-19 on the audit.
4. EXCEPTIONAL ITEMS
During the year, the Group incurred no exceptional costs. The prior period costs are analysed as follows:
During the year to 31 March 2021, the Group incurred £15.1 million of exceptional costs in relation to regulatory review costs, restructuring
costs and Covid-19 covenant amendments.
The regulatory review costs related to an investigation by the Competition and Markets Authority which was concluded in February 2021.
2022) 2021)
£000) £000)
Regulatory review costs -) 7,519)
Restructuring costs -) 7,353)
Exceptional Items recognised in Operating Profit -) 14,872)
Financing expense -) 200)
Exceptional Items recognised in Net Financial Expense -) 200)
Total Exceptional Items -) 15,072)
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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
2022
) 2021)
Operations 2,068) 2,183)
Sales 323) 363)
Administration 442) 431)
2,833) 2,977)
The aggregate payroll costs of these persons were as follows:
2021
) 2020)
£000) £000)
Wages and salaries 103,667) 96,572)
Social security costs 9,065) 9,059)
Other pension costs 3,256) 3,136)
Share option costs including associated social security costs - equity settled 1,343) 1,355)
Share option costs including associated social security costs
- cash settled 259) 606)
117,590) 110,728)
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
2022
) 2021)
Operations 388) 423)
Sales 118) 119)
Administration 169) 154)
675) 696
)
Company
The aggregate payroll costs of these persons were as follows:
2022
) 2021)
£000) £000)
Wages and salaries 30,449) 26,475)
Social security costs 3,235) 3,284)
Other pension costs 750) 674)
Share option costs including associated social security costs - equity settled 568) 1,040)
Share option costs including associated social security costs
- cash settled 259) 606)
35,261) 32,079)
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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:
2022
) 2021)
£000) £000)
Basic remuneration including bonus and benefits 2,227) 2,031)
Cash allowances/pension contributions 192) 218)
Share options 272) -)
2,691) 2,249)
Further details of directors’ remuneration, pensions and share options, including the highest paid director, are given in the Remuneration
Report on page 41 onwards.
Notes
7. FINANCIAL INCOME AND EXPENSES
2022) 2021)
£000) £000)
Financial income:
Bank and other interest receivable 2
) 8)
Financial expenses:
Bank loans, overdrafts and other interest (4,414) (4,405)
Finance charges payable in respect of finance leases and hire purchase contracts (15) (38)
Finance charges in respect of operating leases under IFRS 16 (2,926) (3,317)
(7,355) (7,760)
8. INCOME TAX EXPENSE
2022) 2021)
Current tax expense £000) £000)
UK Corporation tax charge at 19% (2021: 19%) 6,097) 2,354)
Overseas tax - current year 764) 552)
Adjustments in respect of prior years - UK 13) (78)
Adjustments in respect of prior years - Overseas 218
) 56)
Total current tax 7,092) 2,884)
Deferred tax expense
Current year deferred tax 489
) (445)
Impact of tax rate change 2,711
) -)
Adjustments to deferred tax in respect of prior years (183) (107)
Total deferred tax 3,017
) (552)
Total tax expense in income statement 10,109
) 2,332
)
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Notes
2022) 2022) 2021
)
2021
)
%) £000) %
)
£000
)
Profit/(loss) before tax 35,644) (2,269)
Profit/(loss) multiplied by standard
rate of corporation tax 19.0
) 6,772
)
19.0) (431)
Effects of:
Impact of tax rate changes 7.6%
) 2,711) -) -)
Expenses not deductible for tax purposes 0.3%) 91
)
(72.0%) 1,633)
Non-qualifying depreciation and amortisation 1.0%) 367
)
(11.6%) 263)
Gains covered by exemption/losses (0.8%) (268) 16.1%) (365)
Overseas tax rate 1.1%
) 388) (12.5%) 285)
Adjustments in respect of prior years 0.1%) 48) 5.6%) (129)
Impairment of intangible assets 0%
) -) (47.4%) 1,076)
Total tax charge for the year 28.3%) 10,109) (102.8%) 2,332)
Tax recognised in reserves
2022
) 2021)
£000) £000)
Other comprehensive income:
Tax relating to actuarial gains/(losses) on defined benefit pension schemes 132
) (151)
Tax relating to historic asset revaluations (1) (1)
Items recognised in reserves 52
) 96)
Impact of tax rate change (110) -)
73)
(56)
Direct to equity:
Deferred tax relating to share based payments (160) (103)
Current tax relating to share based payments 70
) (62)
Impact of tax rate change 11
) -))
(79) (165)
Total (6) (221)
Reconciliation of effective tax rate
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable
to profits of the consolidated entities as follows:
The corporation tax rate for the year ended 31 March 2022 was 19% (2021: 19%).
In the Spring budget 2021, the UK Government proposed to change the rate of corporation tax from 19% to 25%. The rate was substantively
enacted in May 2021. Therefore the deferred tax assets/liabilities are measured at the rate that will be substantively enacted on the date when
the underlying temporary differences will unwind.
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 relates to chattels exemptions on the disposal proceeds of fleet items
l
Overseas tax rates; due to higher overseas tax rates compared to the UK, particularly in Australia and Germany
l
Adjustments in respect of prior years; reflects the differences between the tax calculation for accounts purposes and the final tax returns. The
main areas were overseas taxes, 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 intangibles and other exceptional items would be expected
to be about 1.6% over the standard rate of tax.
The closing unremitted earnings of subsidiaries is approximately £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.
8. INCOME TAX EXPENSE (continued)
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9. PROPERTY, PLANT AND EQUIPMENT
GROUP Land and) Rental) Motor) Other) )
Buildings) Equipment) Vehicles) Assets) Total)
Cost or deemed cost £000) £000) £000) £000) £000)
At 1 April 2020 42,587) 430,990) 3,784) 35,551) 512,912)
Additions 1,353) 40,165) 606) 2,080) 44,204)
Disposals (2,126) (47,468) ((606) (1,681) (51,881)
Exchange rate differences 15
) 92) 8) 193) 308)
Transfer between categories -) (5) -) 5) -)
At 31 March 2021 41,829) 423,774) 3,792) 36,148) 505,543)
Additions 3,367) 59,809) 2,184) 2,674) 68,034)
Acquisitions 630) 883) (96) 38) 1,647)
Disposals (503) (41,904) ((367) (1,048) (43,822)
Exchange rate differences 10
) 351) 15) 87) 463)
Transfer between categories -) (5) -) 5) -)
At 31 March 2022 45,333) 442,908) 5,720) 37,904) 531,865)
Accumulated depreciation and impairment losses
At 1 April 2020 22,827
) 212,852) 2,293) 27,179) 265,151)
Charge for year 1,386) 39,760) 467) 3,367) 44,980)
On disposals (1,769) (34,868) (580) (1,391) (38,608)
Exchange rate differences 21
) (16) (1) 104) 108)
Transfer between categories -) (4) -) 4) -)
At 31 March 2021 22,465) 217,724) 2,179) 29,263) 271,631)
Charge for year 1,935) 39,850) 742) 3,005) 45,532)
Acquisitions -) -) -) -) -)
On disposals (357) (31,428) (269) (994) (33,048)
Exchange rate differences 11
) 143) 11) 59) 224)
Transfer between categories -) (5) -) 5) -)
At 31 March 2022 24,054) 226,284) 2,663) 31,338) 284,339)
Net book value
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)
At 31 March 2020 19,760) 218,138) 1,491) 8,372) 247,761)
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Notes
9. PROPERTY, PLANT AND EQUIPMENT (continued)
COMPANY Land and) Rental) Motor) Other) )
Buildings) Equipment) Vehicles) Assets) Total)
Cost or deemed cost £000) £000) £000) £000) £000)
At 1 April 2020 17,785
) 188,211) 2,145) 13,559) 221,700)
Additions 467
)
10,765
)
395) 1,111) 12,738)
Group transfers in -) 5,757) -) -) 5,757)
Group transfers out -) (6,846) -) -) (6,846)
Disposals (148) (12,118) (580) (280) (13,126)
Transfer between categories - (2) -
) 2) -)
At 31 March 2021 18,104) 185,767) 1,960) 14,392) 220,223)
Additions 667
)
16,123
)
50) 1,435) 18,275)
Group transfers in 630) 2,898) -) -) 3,528)
Group transfers out -) (4,198) -) -) (4,198)
Disposals (220) (7,923) (209) (920) (9,272)
At 31 March 2022 19,181
) 192,667) 1,801) 14,907) 228,556)
Accumulated depreciation and impairment losses
At 1 April 2020 6,312
) 85,812) 1,497) 9,441) 103,062)
Charge for year 514
)
11,539) 220) 1,367) 13,640)
Group transfers in -) 3,033) -) -) 3,033)
Group transfers out -) (3,001) -) -) (3,001)
On disposals (134) (7,615) (570) (274) (8,593)
Transfer between categories - (1) -
) 1) -)
At 31 March 2021 6,692) 89,767) 1,147) 10,535) 108,141)
Charge for year 526
)
11,598) 184) 1,333) 13,641)
Group transfers in -) 1,379) -) -) 1,379)
Group transfers out -) (2,324) -) -) (2,324)
On disposals (158) (5,366) (201) (883) (6,608)
At 31 March 2022 7,060
) 95,054) 1,130) 10,985) 114,229)
Net book value
At 31 March 2022 12,121
) 97,613
)
671) 3,922) 114,327)
At 31 March 2021 11,412) 96,000
)
813) 3,857) 112,082)
At 31 March 2020 11,473) 102,399
)
648) 4,118) 118,638)
The cost or deemed cost of land and buildings for the Group and the Company includes £3,204,000 (2021: £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.
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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:
Goodwill
* 2022 2021)
*
£000 £000)
Groundforce/TPA * 7,632 7,632)
Hire Station * 35,117 34,066)
TR * 2,196 2,117)
*
44,945 43,815)
10. INTANGIBLE ASSETS
GROUP Trade) Customer) Supply) Goodwill) Total)
Names) Relationships) Agreements)
£000) £000) £000) £000) £000)
Cost or deemed cost
At 1 April 2020 14,169
) 26,222) 4,989) 71,806) 117,186)
Exchange rate differences 180
)
161
)
-) 248
)
589
)
At 31 March 2021 14,349) 26,383) 4,989) 72,054) 117,775)
)
Acquired through business combinations -
)
191) -) 1,051) 1,242)
Exchange rate differences 56
)
57
)
-) 79
)
192
)
At 31 March 2022 14,405) 26,631) 4,989) 73,184) 119,209)
Accumulated amortisation and impairment
At 1 April 2020
5,317
) 11,443) 4,989) 21,170) 42,919
)
Exchange rate differences 69) 48) -) -) 117)
Amortisation 1,224) 2,080) -) -) 3,304)
Impairment -) -) -) 7,069) 7,069)
At 31 March 2021 6,610) 13,571) 4,989) 28,239) 53,409)
Exchange rate differences 40) 36) -) -) 76)
Amortisation 1,221) 2,081) -) -) 3,302)
At 31 March 2022 7,871) 15,688) 4,989) 28,239) 56,787)
Carrying amount
At 31 March 2022 6,534
) 10,943) -) 44,945) 62,422 )
At 31 March 2021 7,739) 12,812) -) 43,815) 64,366 )
At 31 March 2020 8,852) 14,779) -) 50,636) 74,267)
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Notes
10. INTANGIBLE ASSETS (continued)
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.
COMPANY Trade
) Customer) Supply)
Names Relationships) Agreements) Goodwill) Total)
Cost or deemed cost £000 £000) £000) £000) £000)
At 1 April 2020, 31 March 2021 and 31 March 2022 2,482 5,548) 394) 25,163) 33,587)
Accumulated amortisation and impairment
At 1 April 2020
1,986 3,623
) 394) 17,208) 23,211
)
Amortisation charge 137 223
)
-) -
)
360)
Impairment --
)
-) 469
)
469)
At 31 March 2021 2,123 3,846) 394) 17,677) 24,040)
Amortisation charge 72 287
)
-) -
)
359)
At 31 March 2022 2,195 4,133) 394) 17,677) 24,399)
Carrying amount
At 31 March 2022
287
1,415
) -
)
7,486
)
9,188)
At 31 March 2021
359
1,702) -
)
7,486
)
9,547)
At 31 March 2020
496 1,925
) -
)
7,955
)
10,376)
Goodwill arising on business combinations has been allocated to the CGUs that are expected to benefit from those business combinations.
The carrying value of intangibles and goodwill has been assessed for impairment by reference to its value in use as this is higher than
the potential fair value on disposal. Values have been estimated using cash flow projections over a period of 5 years derived from the
approved budget for the coming year. The key assumptions within the cash flow projections are those regarding revenue, margin and
level of capital spend required to support the business. These assumptions have been 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 prior year, goodwill attached to CGUs within the Hire Station and Groundforce/TPA divisions was written off as we no longer trade
from the acquired locations. In addition, part of the goodwill associated with the acquisition of Brandon Hire was written off as a result
of the restructuring during the year. These impairments along with amortisation were charged to cost of sales. The charges relate to the
CGUs shown on page 91 and were all goodwill (£7,068,000).
The pre tax discount rate applied to all CGUs was 11% (2021: 11%), an estimate based on the Group’s weighted cost of capital. A long
term growth rate factor of 2% (2021: 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 even allowing for a reasonable degree of
sensitivity to the underlying assumptions, including the discount rate.
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11. LEASES
This note provides information for leases where the Group is a lessee.
(a) Amounts recognised in the balance sheet
The recognised right of use assets relate to the following types of assets:
Group Company
) Restated*) ) )
2022) 2021) 2022) 2021)
£000) £000) £000) £000)
Property 40,497) 41,363) 5,982) 4,785)
Equipment 6,016) 5,472) 5,027) 3,752)
Vehicles 7,638) 9,960) 2,352) 2,718)
Total right of use assets 54,151) 56,795) 13,361) 11,255
)
(b) Amounts recognised in the consolidated income statement
The consolidated income statement shows the following amounts relating to leases for the year ended 31 March 2022:
Group Company
2022
) 2021) 2022) 2021)
£000) £000) £000) £000)
Depreciation charge on right-of-use assets
Property 7,810
) 9,034) 827) 1,109)
Equipment 3,788) 6,076) 2,535) 4,424)
Vehicles 4,963) 5,642) 1,594) 1,921)
16,561) 20,752) 4,956) 7,454)
Interest expense (included in finance expenses) 2,925) 3,304) 634) 725)
Expense relating to short-term leases
(included in cost of goods sold and administrative expenses) 2,661
) 332) 225) 7)
Expenses relating to low-value assets that are not shown above
as short-term leases (included in administrative expenses) 6
) 237) 3) 78)
The total cash outflow for leases in 2022 for the Group was £19.5 million (2021: £23.9 million) Company: £5.5 million (2021: £8.2 million).
*The comparative figures have been restated to reclassify a number of balances between financial statement line items. See note 1 for
further details.
The recognised lease liabilities relate to the following types of assets:
Group Company
) Restated*) ) )
2022) 2021) 2022) 2021)
£000) £000) £000) £000)
Property 44,067) 45,654) 6,273) 5,213)
Equipment 6,222) 5,716) 5,227) 4,002)
Vehicles 7,354) 9,710) 2,257) 2,693)
Total lease liabilities 57,643) 61,080) 13,757) 11,908)
Of which are:
Current lease liabilities 14,147
) 16,477) 4,004) 4,246)
Non-current lease liabilities 43,496) 44,603) 9,754) 7,662)
57,643) 61,080) 13,758) 11,908)
Additions to the right of use assets during the current financial year for the Group was £13.1 million (2021: £5.4 million) Company: £5.4
million (2021: £2.5 million).
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11. LEASES (continued)
Operating profit before amortisation and exceptional items, segment assets and segment liabilities would all decrease if the impact of
IFRS 16 was reversed. Pre IFRS 16 figures each segment for the year ending 31 March 2022 and 2021 are as follows:
Assets Liabilities
Pre IFRS 16 Per Pre IFRS 16 Per Pre IFRS 16 Per
)
IFRS 16
Adjustment
Note 2 IFRS 16
Adjustment
Note 2 IFRS 16
Adjustment
Note 2)
£000 £000 £000 £000 £000 £000 £000 £000 £000)
UK 41,829 2,875 44,704 377,471 47,911 425,382 236,444 50,080 286,524)
International 1,504 91 1,595 36,538 2,547 39,085 8,587 2,771 11,358)
43,333 2,966 46,299 414,009 50,458 464,467 245,031 52,851 297,882
)
Operating Profit Before
Amortisation and
Exceptional Items
Notes
Assets
(restated)
Liabilities
(restated)
Pre IFRS 16 Per Pre IFRS 16 Per Pre IFRS 16 Per)
IFRS 16
Adjustment
Note 2 IFRS 16
Adjustment
Note 2 IFRS 16
Adjustment
Note 2)
£000 £000 £000 £000 £000 £000 £000 £000 £000)
UK 27,156 3,110 30,266 359,326 50,901 410,227 229,151 54,303 283,454)
International 565 97 662 35,158 2,411 37,569 8,639 2,586 11,225)
27,721 3,207 30,928 394,484 53,312 447,796 237,790 56,889 294,679
)
Operating Profit Before
Amortisation and
Exceptional Items
(c) Impact on Consolidated Income Statement, EBITDA, segment disclosures and earnings per share
Basic earnings per share before the amortisation of intangibles and exceptional items increased by 0.04 pence for the period to 31 March
2022 if results were presented without the impact of IFRS 16. The financial impact of IFRS 16 on the Group’s Consolidated Income
Statement and EBITDA for the year ended 31 March 2022 and 2021 is set out below:
Excluding
) IFRS 16)
IFRS 16) Impact) Reported)
£000) £000) £000)
Operating profit before amortisation and exceptional items 43,333) 2,966) 46,299)
Operating profit 40,031) 2,966) 42,997)
EBITDA 88,868) 19,525) 108,393)
Net financial expense before exceptional items (4,428) (2,925) (7,353)
Profit before taxation, amortisation and exceptional items 38,905
) 41) 38,946)
Profit before taxation 35,603) 41) 35,644)
Excluding) IFRS 16)
IFRS 16) Impact) Reported)
£000) £000) £000)
Operating profit before amortisation and exceptional items 27,721) 3,207) 30,928)
Operating profit 2,476) 3,207) 5,683)
EBITDA 72,701) 23,959) 96,660)
Net financial expense (4,448) (3,304) (7,752)
Profit before taxation, amortisation and exceptional items 23,273
) (97) 23,176)
Loss before taxation (2,172) (97) (2,269)
For the year ended 31 March 2022
For the year ended 31 March 2022 At 31 March 2022
For the year ended 31 March 2021 At 31 March 2021
For the year ended 31 March 2021
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13. INVENTORIES
Group Company
2022 2021
) 2022 2021)
£000 £000) £000 £000)
Raw materials and consumables 3,237 3,811) 1,389 1,502)
Goods for resale 4,719 3,531) 504 756)
7,956 7,342
)
1,893 2,258
)
During the year, as a result of the year end assessment of inventory, there was a £13,000 increase in the Group provision for impairment
of inventories (2021: £3,000 decrease) and a £55,000 increase for Company (2021: £154,000 decrease). The provision reflects the Group’s
best estimate of potential inventory obsolescence. The cost of goods for resale expensed during the year was £20.0 million (2021: £22.2
million). 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.
COMPANY
Cost £000
)
At 1 April 2020 and 31 March 2021 73,571)
Strike off of dormant companies (4,796)
At 31 March 2022 68,775
)
Impairment
At 1 April 2020 and 31 March 2021 1,687
Strike off of dormant companies (1,687)
At 31 March 2022 -
)
Carrying amount
At 31 March 2022 68,775
)
At 31 March 2021 71,884)
At 31 March 2020 71,884)
12. INVESTMENTS IN SUBSIDIARIES
See note 31 for details of subsidiary undertakings.
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96
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 £378,000 (2021: £nil) being the
fair value of receivables.
14. TRADE AND OTHER RECEIVABLES
Group Company
Current assets
) Restated*) ) )
2022) 2021) 2022) 2021)
£000) £000) £000) £000)
Gross trade receivables 72,841) 68,503) 21,107) 18,330)
Trade receivables provisions (5,203) (7,242) (1,221) (1,277)
Amounts owed by subsidiary undertakings -
) -) 2,715) -)
Other receivables 2,125) 568) 756) 318)
Prepayments and accrued income 6,294) 4,643) 2,784) 1,908)
76,057
)
66,472
)
26,141
)
19,279)
On this basis there are £12.4 million (2021: £10.7 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 2022 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.
During the year there was a decrease in the provisions for impairment of trade receivables of £2,039,000 (2021: £2,978,000 increase).
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:
2022
) 2021)
£000) £000
)
Not overdue 55,207) 50,594)
0 - 30 days overdue 5,138) 5,102)
31 - 90 days overdue 4,427) 2,082)
More than 90 days overdue 2,866) 3,483)
67,638) 61,261)
Notes
15. CASH AND CASH EQUIVALENTS
Group Company
2022
) 2021) 2022) 2021
)
£000) £000) £000) £000
)
Bank balances 13,617) 15,917) 2,537) 5,112)
Cash and cash equivalents as per cash flow statement 13,617) 15,917) 2,537) 5,112)
Group Company
Non-current assets 2022
) 2021) 2022) 2021)
£000) £000) £000) £000)
Amounts owed by subsidiary undertakings -) -) 55,699 ) 47,473)
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%.
*The comparative figures have been restated to reclassify a number of balances between financial statement line items. See note 1 for
further details.
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Notes
The repayment schedule of the carrying amount of the non-current borrowings as at 31 March 2022 is:
Group Company
Restated*
)
2022 2021 2022 2021)
Due in less than one year: £000 £000 £000 £000)
Secured bank loans - 73,000 - 73,000)
Obligations under finance leases - 106 - 48)
Lease liabilities 14,147 16,477 4,004 4,246)
Total 14,147 89,583 4,004 77,294)
Due in more than one year but not more than two years:
Obligations under finance leases - 37 - -
)
Lease liabilities 10,898 12,334 2,712 2,901)
Total 10,898 12,371 2,712 2,901)
Due in more than two years but not more than five years:
Secured bank loans 52,000 - 52,000 -
)
Secured private placement loan 65,000 - 65,000 -)
Lease liabilities 20,365 19,936 4,702 3,558)
Total 137,365 19,936 121,702 3,558)
Due in more than five years:
Secured private placement loan 28,000 65,000 28,000 65,000
)
Lease liabilities 12,233 12,333 2,340 1,203)
Total 40,233 77,333 30,340 66,203)
)
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 2022 were £38 million (2021: £62 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 As at
) Cash) Non-cash) As at)
31 Mar 2021) movements) movements) 31 Mar 2022)
Restated*
£000
) £000) £000) £000)
Secured loans 138,143) 6,857) -) 145,000)
Arrangement fees (320) (773) 314) (779)
Cash and cash equivalents (15,917) 2,339
) (39) (13,617)
Net debt excluding lease liabilities 121,906
) 8,423) 275) 130,604)
Lease liabilities 61,080) (17,149) 13,712) 57,643)
Net debt including lease liabilities 182,986) (8,726) 13,987) 188,247)
16. INTEREST-BEARING LOANS AND BORROWINGS
Group Company
) Restated*) ) )
2022) 2021) 2022) 2021)
£000) £000) £000) £000)
Current liabilities
Secured bank loans -
) 73,000) -) 73,000)
Arrangement fees -) (97) -) (97)
Obligations under finance leases -
) 106) -) 48)
Lease liabilities 14,147) 16,477) 4,004) 4,246)
14,147
)
89,486
)
4,004
)
77,197
)
Non-current liabilities )
Secured bank loans 52,000) -) 52,000) -)
Secured private placement loan 93,000) 65,000) 93,000) 65,000)
Arrangement fees (779) (223) (779) (223)
Obligations under finance leases -
) 37) -) -)
Lease liabilities 43,496) 44,603) 9,754) 7,662)
187,717
)
109,417
)
153,975
)
72,439)
Net debt defined as total borrowings less cash and cash equivalents was:
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Notes
16. INTEREST-BEARING LOANS AND BORROWINGS (continued)
Group also refinanced its £135 million committed revolving credit facilities with a new £90 million facility. The new 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 27 to 29, the Risk Management Report on pages 31 to 33 and the Directors’ Report within going concern
on page 58. The loans are subject to covenants and these have been fulfilled at all times during the year.
*The comparative figures have been restated to reclassify a number of balances between financial statement line items. See note 1 for
further details.
Liquidity Risk
The following are cash flows relating to the Group’s financial liabilities, including estimated interest payments, but excluding the impact
of netting agreements, based on the assumption that the loans are repaid at the end of the committed period and interest rates reflect
future dated swap agreements.
COMPANY Carrying Contractual
) Less than) 1-2) 2-5) Over 5)
value cash flows) 1 year) years) years) years)
31 March 2022 £000 £000) £000) £000) £000) £000)
Secured loans 145,000 166,438) 4,217) 4,228) 129,205) 28,788)
Lease liabilities 13,758 16,663) 4,826) 3,230) 5,701) 2,906)
Trade and other payables
57,622 57,622) 45,374) -) -
)
12,248)
216,380 240,723) 54,417) 7,458) 134,906) 43,942)
31 March 2021
Secured loans 138,000 149,884
) 76,224) 1,819) 71,841) -)
Finance leases 48 54) 54) -) -) -)
Lease liabilities 11,908 15,958) 5,287) 3,703) 4,656) 2,311)
Trade and other payables
58,664 58,664) 39,967) -) -
)
18,697)
208,715 224,659) 121,593) 5,557) 76,500) 21,008)
GROUP Carrying Contractual) Less than) 1-2) 2-5) Over 5)
value cash flows) 1 year) years) years) years)
31 March 2022 £000 £000) £000) £000) £000) £000)
Secured loans 145,000 166,438) 4,217) 4,228) 129,205) 28,788)
Lease liabilities 57,643 68,519) 17,650) 13,259) 23,599) 14,010)
Trade and other payables
38,039 38,039) 38,039) -) -
)
-)
240,682 272,996) 59,906) 17,487) 152,804) 42,798)
31 March 2021 (as restated*)
Secured loans 138,000 149,884
) 76,224) 1,819) 71,841) -)
Finance leases 143 153) 115) 35) 3) -)
Lease liabilities 61,080 80,847) 21,539) 15,546) 26,077) 17,685)
Trade and other payables
43,635 43,635) 43,635) -) -
)
-)
242,858 274,519) 141,513) 17,400) 97,921) 17,685)
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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.
The exposure of the Group to other foreign exchange rate movements is not significant and therefore is not presented in the analysis above.
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 28 and 29 and the Principal Risks and Uncertainties on pages 32 and 33,
as are the risks relating to credit and currency management and the capital management of the Group.
Equity and Profit/(Loss)
2022
) 2021)
10% strengthening of Sterling against: £000) £000)
US Dollar 75) 116)
Australian Dollar (110) 34)
Singapore Dollar 1) (4)
Euro 79
) 28)
10% weakening of Sterling against:
US Dollar (91) (142)
Australian Dollar 135
) (41)
Singapore Dollar (2) 5
)
Euro (96) (34)
10% movement in Sterling interest rates:
Increase in interest rates (14) (122)
Decrease in interest rates 14
) 122)
Notes
The movements in liabilities are reconciled below:
31 March 2022
Interest rate
) Forward exchange )
swaps) rate agreements Total)
£000) £000) £000)
Opening liability as at 1 April 2021 251) (30) 221)
Other comprehensive income (251) 30) (221)
Closing liability as at 31 March 2022 -
) -) -)
There have been no transfers between levels of the fair value hierarchy.
An analysis of fair values by hierarchy level for the prior year is provided below:
The values are based on the amount the Group would pay/receive from the bank in order to settle the instruments at the year end.
Liabilities measured at fair value:
31 March 2021
)
Total)
£000)
Financial liabilities at fair value:
Interest rate swaps 251
)
Forward exchange rate agreements (30)
221
)
17. FINANCIAL INSTRUMENTS
At the start of the 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 Original finish date Notional Debt value Fixed margin
April 2018 April 2021 12,000,000 1.154%
May 2018 May 2021 5,000,000 0.930%
September 2018 September 2021 5,000,000 0.980%
December 2018 December 2021 7,500,000 1.209%
August 2019 August 2022 5,000,000 0.890%
August 2019 August 2022 5,000,000 0.884%
October 2019 October 2022 5,000,000 0.485%
In June 2021, the Group terminated all of these interest rate swaps as part of the refinancing undertaken. At 31 March 2022, the Group has no
interest rate swaps.
In the prior year, the Group had 2 foreign exchange hedges to reduce the risk of foreign exchange fluctuations between US dollars and Sterling.
All the exchange rate hedges were effective cash flow hedges and movements in fair value were taken to equity. The foreign exchange hedges
ended during the year and have not been replaced.
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Notes
19. DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities are attributable to the following:
Of the deferred tax liability above, the amount expected to unwind within 12 months is £2.6 million (2021: £2.3 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.
Of the deferred tax liability above, the amount expected to unwind within 12 months is £3.2 million (2021: £2.3 million).
GROUP Property, plant) Intangible) Employee) Other)
and equipment) assets) benefits) items) Total)
Note £000) £000) £000) £000) £000)
1 April 2020 7,756) 5,575) (822) (1,321) 11,188)
Reclassification 369) (428) 97) (38) -)
Recognised in income statement 29) (863) 347) (65) (552)
Recognised in reserves (1) -) (151) -) (152)
Recognised in equity 8-) -) (103) -) (103)
Foreign exchange 44) 65) (39) (57) 13)
At 31 March 2021 8,197) 4,349) (671) (1,481) 10,394)
Reclassification -) -) -) -) -)
Recognised on acquisition 343) 36) -) -) 379)
Recognised in income statement 3,568) 330) 7) (888) 3,017)
Recognised in reserves 12) -) 9) -) 21)
Recognised in equity 8-) -) (149) -) (149)
Foreign exchange 63) 12) (14) (45) 16)
At 31 March 2022 12,183) 4,727) (818) (2,414) 13,678)
COMPANY Property, plant) Intangible) Employee) Other)
and equipment) assets) benefits) items) Total)
Note £000) £000) £000) £000) £000)
1 April 2020
9,712
)
725) (331) (355) 9,751)
Recognised in income statement (161) (50) 434) (33) 190)
Recognised in reserves (1) -) (129) -) (130)
Recognised in equity -) -) (103) -) (103)
At 31 March 2021 9,550) 675) (129) (388) 9,708)
Recognised on acquisition -) -) -) -) -)
Recognised in income statement 3,139) 98) (22) 49) 3,264)
Recognised in reserves 12) -) (22) -) (10)
Recognised in equity -) -) (149) -) (149)
At 31 March 2022 12,701
)
773) (322) (339) 12,813)
18. TRADE AND OTHER PAYABLES
Current liabilities Group Company
2022 2021
) 2022) 2021)
£000 £000) £000) £000)
Trade payables 30,326 26,935) 5,705) 7,330)
Amounts owed to subsidiary undertakings - -) 38,551) 32,361)
Other taxes and social security 6,779 14,982) 3,176) 5,137)
Other payables 6,681 16,700) 86) 276)
Accruals and deferred income 36,890 24,873) 17,975) 16,334)
80,676 83,490) 65,493) 61,438)
Within Group and Company other payables is £nil (2021: £0.2 million) in relation to interest rate swaps and foreign exchange rate
agreements which are valued at fair value. In addition within accruals is £2.6 million (2021: £2.3 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 the acquisitions in the year were £0.1 million (2021: £nil) being the fair value of payables.
Non-current liabilities Group Company
2022 2021
) 2022) 2021)
£000 £000) £000) £000)
Amounts owed to subsidiary undertakings - -) 12,248) 18,697)
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Notes
The dividend paid in the year is after dividends were waived to the value of £201,000 (2021: £160,000) 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 25.5p per share which will absorb an estimated
£10.1 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.
21. DIVIDENDS
2022) 2021)
£000) £000)
Amounts recognised as distributions to equity holders of the Parent in the year:
Ordinary shares:
Final paid 25.0p (2021:
20.0p) per share 9,897) -)
Special paid 20.0p (2021: 22.0p) per share -) 8,674)
Interim paid 10.5p (2021: 20.0p) per share 4,157) -)
14,054) 8,674)
2022) 2021)
Ordinary share capital £000) £000)
)
Allotted, called up and fully paid
40,154,253 Ordinary shares of 5 pence each 2,008
) 2,008)
(2021: 40,154,253)
20. CAPITAL AND RESERVES
The company articles authorise 60,000,000 shares (2021: 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 71 and 72.
Own shares held
Deducted from retained earnings (Group and Company) is £4,478,000 (2021: £4,419,000) in respect of own shares held by the Vp
Employee Trust. The Trust acts as a repository of issued Company shares and held 510,000 shares (2021: 554,000) with a market value
at 31 March 2022 of £4,285,000 (2021: £4,508,000).
22. EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share of 64.49 pence (2021: (11.62) pence) was based on the profit attributable to equity holders
of the Parent of £25,535,000 (2021: £(4,601,000)) and a weighted average number of ordinary shares outstanding during the year ended
31 March 2022 of 39,597,000 (2021: 39,595,000), calculated as follows:
Basic earnings per share before the amortisation of intangibles and exceptional items was 71.24 pence (2021: 46.56 pence) and is based
on an after tax add back of £2,675,000 (2021: £23,037,000) in respect of the amortisation of intangibles and exceptional items.
2022
) 2021)
Shares) Shares)
000s) 000s)
Issued ordinary shares 40,154) 40,154)
Effect of own shares held (557) (559)
Weighted average number of ordinary shares 39,597
) 39,595)
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23. SHARE OPTION SCHEMES
SAYE Scheme
During the year options over a further 361,189 shares were granted under the SAYE scheme at a price of 693 pence. The outstanding
options at the year end were:
Date of Grant Price per share Number of shares
July 2018 808p 9,045
July 2019 711p 199,264
July 2020 584p 321,930
July 2021 693p 325,377
855,616
All the options are exercisable between 3 and 3.5 years. At 31 March 2022 there were 957 employees saving an average £161 per month
(2021: 1,022 employees saving £57 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 104,600 shares were granted during the year at a price of 908 pence. The options outstanding at the year end were:
Date of Grant Price per share Number of shares
July 2012 266.5p 7,000
July 2013 389.0p 4,200
July 2014 680.0p 9,350
July 2015 770.0p 25,350
July 2016 657.0p 21,750
July 2017 870.0p 52,185
July 2019 860.0p 93,500
July 2020 698.0p 184,800
July 2021 908.0p 102,750
500,885
These options are exercisable between the third and tenth anniversary of the grant. The awards for 2019 to 2021 are subject to
achievement of performance targets over a three year period. The awards for 2017 and prior are vested, but not yet exercised.
22. EARNINGS PER SHARE (continued)
Diluted earnings per share
The calculation of diluted earnings per share of 63.83 pence (2021: (11.62) pence) was based on profit/(loss) attributable to equity
holders of the Parent of £25,535,000 (2021: £(4,601,000)) and a weighted average number of ordinary shares outstanding during the
year ended 31 March 2022 of 40,009,000 (2021: 40,218,000), calculated as follows:
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 70.51 pence (2021: 45.84 pence).
2022
) 2021)
Shares) Shares)
000s) 000s)
Weighted average number of ordinary shares 39,597) 39,595)
Effect of share options 412) 623)
Weighted average number of ordinary shares (diluted) 40,009
)
40,218)
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Notes
23. SHARE OPTION SCHEMES (continued)
Long-Term Incentive Plan
Awards were made during the year in relation to a further 309,200 shares. Shares outstanding at the year end were:
Date of Grant Number of shares
July 2014 72,600
July 2015 69,500
July 2016 86,600
July 2017 62,196
July 2019 284,000
July 2020 384,400
July 2021 309,200
1,268,496
These options are exercisable between the third and tenth anniversary of the grant. The awards for 2019 to 2021 are subject to
achievement of performance targets over a three year period as shown in the Remuneration Report on page 50. The awards for 2017
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 Number of shares
August 2013 1,750
July 2014 2,500
August 2015 2,400
August 2016 2,200
8,850
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 2022 was 840 pence (2021: 814 pence), the highest market value in the year to
31 March 2022 was 1060 pence (2021: 888 pence) and the lowest 826 pence (2021: 604 pence). The average share price during the
year was 937 pence (2021: 720 pence).
Unapproved Share Option Scheme
Options over 724,900 shares were granted during the year at a price of 908 pence. The options outstanding at the year end were:
Date of Grant Price per share Number of shares
July 2012 266.5p 19,750
July 2013 389.0p 27,200
July 2014 680.0p 48,600
July 2015 770.0p 64,850
July 2016 657.0p 152,650
July 2017 870.0p 163,371
July 2019 860.0p 356,500
July 2020 698.0p 491,700
July 2021 908.0p 699,750
2,024,371
These options are exercisable between the third and tenth anniversary of the grant. The awards for 2019 to 2021 are subject to
achievement of performance targets over a three year period. The awards for 2017 and prior are vested, but not yet exercised.
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23. SHARE OPTION SCHEMES (continued)
For options granted, the fair value of services received in return for share options granted are measured by reference to the fair value of
those share options. The fair value for the approved, unapproved and SAYE options are measured using the Black-Scholes model and the
LTIP and share matching schemes are valued using a discounted grant price method. Cash settled options are valued at their fair value
at each year end. The assumptions used to value the probable options granted during the year were in the following ranges:
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 £2,550,000
(2021: £2,301,000). £2,314,000 of this liability had vested at the year end (2021: £2,218,000).
2022 2021
Weighted average fair value per share 298.5p 293.4p
Share price at date of grant 866.0p to 908.0p 698.0p to 729.0p
Exercise price (details provided above) 0.0p to 908.0p 0.0p to 698.0p
Expected volatility 37.4% 35.3% to 35.4%
Option life 3 to 10 years 3 to 10 years
Expected divided yield 2.8% to 2.9% 1.2%
Risk free rate 0.10% 0.10%
The number and weighted average exercise price of share options is as follows:
2022 2021
Weighted
) Number of) Weighted) Number of)
average) options) average) options)
exercise price) 000s) exercise price) 000s)
Outstanding at beginning of the year 553p) 4,511) 529p) 4,145)
Lapsed during the year 681p) (1,035) 695p) (622)
Exercised during the year 667p
) (318) 113p) (632)
Granted during the year 669p
) 1,500) 498p) 1,620)
Outstanding at the end of the year 554p
)
4,658) 553p) 4,511)
Exercisable at the year end 484p) 905) 567p) 924)
The options outstanding at 31 March 2022 have an exercise price in the range of 0.0p to 908.0p and have a weighted average life of
2.0 years.
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Notes
25. EMPLOYEE BENEFITS
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
£3.1 million (2021: £2.7 million). In addition, Torrent Trackside participate in a small section of the Railways Pension Scheme with a net
present value obligation of £0.3 million (2021: £0.5 million). The two schemes are considered below.
Vp pension scheme
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 2022 was 11
years (2021: 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 2022. 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.
24. CAPITAL COMMITMENTS
Capital commitments for property, plant and equipment at the end of the financial year for which no provision has been made are as
follows:
Group Company
2022 2021 2022 2021
)
£000 £000 £000 £000)
Contracted 14,523 15,676 10,764 5,954)
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25. EMPLOYEE BENEFITS (continued)
Present value of net surplus Group Company
2022
)
2021
)
2022
)
2021)
£000
)
£000
)
£000
)
£000)
Present value of defined benefit obligation (9,531) (10,600) (7,706) (8,737)
Fair value of scheme assets 12,269
) 12,775) 10,774) 11,394)
Present value of net surplus 2,738) 2,175) 3,068) 2,657)
Torrent Railways pension scheme
Torrent participates in a section of the 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 2022 was 20 years.
The Trustee is required to carry out an actuarial valuation every 3 years.
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 2022. 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 have adopted IAS 19 revised as set out in the accounting policies in note 1.
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25. EMPLOYEE BENEFITS (continued)
Group 2022) 2021)
Present) Fair) ) Present) Fair) )
value of) value of) value of) value of)
obligation) assets) Total) obligation) assets) Total)
£000) £000) £000) £000) £000) £000)
At beginning of year (10,600) 12,775) 2,175) (9,812) 12,830) 3,018)
Service costs (37) (145) (182) (28) (103) (131)
Interest (cost)/income (177) 212
) 35) (220) 288) 68)
Re-measurements
Actuarial (losses)/gains: change in demographic assumptions (108) -
) (108) 20) -) 20)
Actuarial gains/(losses): change in financial assumptions 911) -) 911) (1,053) -) (1,053)
Actuarial (losses)/gains: experience differing
from that assumed
(11)
-
)
(11) 15
) -
) 15)
Actuarial (losses)/gains: actual return on assets -) (98) (98) -) 223) 223)
Contributions: employer -) 16) 16) -) 15) 15)
Contributions: employees (7) 7) -) (7) 7) -)
Benefits paid
498
)
(498)
-) 485) (485) -)
(9,531) 12,269) 2,738) (10,600) 12,775) 2,175)
The movement in the defined benefit surplus is as follows:
Company 2022) 2021)
Present) Fair) ) Present) Fair) )
value of) value of) value of) value of)
obligation) assets) Total) obligation) assets) Total)
£000) £000) £000) £000) £000) £000)
At beginning of year (8,737) 11,394) 2,657) (8,312) 11,665) 3,353)
Service costs -) (136) (136) -) (91) (91)
Interest (cost)/income (145) 189
) 44) (185) 261) 76)
Re-measurements
Actuarial (losses)/gains: change in demographic assumptions (86) -
) (86) 16) -) 16)
Actuarial gains/(losses): change in financial assumptions 765) -) 765) (724) -) (724)
Actuarial gains: experience differing
from that assumed
26
)
-)
26) -
) -
) -)
Actuarial (losses)/gains: actual return on assets -) (202) (202) -) 27) 27)
Benefits paid
471
)
(471)
-) 468) (468) -)
(7,706) 10,774) 3,068) (8,737) 11,394) 2,657)
Expense/(income) recognised in the Income Statement Group Company
2022
)
2021
)
2022
)
2021)
£000
)
£000
)
£000
)
£000)
Service costs 182) 131) 136) 91)
Net interest (35) (68) (44) (76)
147
) 63) 92) 15)
Group Company
2022
)
2021
)
2022
)
2021)
£000
)
£000
)
£000
)
£000)
Cost of sales 182) 131) 136) 91)
Administrative expenses (35) (68) (44) (76)
147
) 63) 92) 15)
These expenses/(income) are recognised in the following line items in the Income Statement:
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25. EMPLOYEE BENEFITS (continued)
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 £428,000 (2021: loss of £265,000), Company gain of £146,000 (2021: loss of £357,000).
The fair value of the scheme assets and the return on those assets were as follows:
Scheme assets and returns
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 a quoted unit price. The
market value for the purposes of the accounts was provided by LGIM and was the bid-value of the funds at the accounting date.
Amount recognised in other comprehensive income Group Company
2022
)
2021
)
2022
)
2021)
£000
)
£000
)
£000
)
£000)
Actuarial gains/(losses) on defined benefit obligation 792) (1,018) 705) (708)
Actual return on assets less interest (99) 223
) (202) 27)
Amount recognised in other comprehensive income 693) (795) 503) (681)
Group Company
2022
)
2021
)
2022
)
2021)
£000
)
£000
)
£000
)
£000)
Fair value of assets
Diversified growth funds 4,145
) 3,968) 4,145) 3,968)
Equities and other growth assets 1,088) 1,127) -) -)
Bonds and cash 5,385) 5,882) 4,978) 5,628)
Liability driven investments (LDI) 1,651) 1,798) 1,651) 1,798)
12,269) 12,775) 10,774) 11,394)
Returns
Actual return on scheme assets 114
) 511) (13) 288)
Group and Company
2022 2021
Inflation 4.2% 3.5%
Discount rate at 31 March 2.7% 1.7%
Expected future salary increases 2.1% 2.0%
Expected future pension increases 3.9% 3.4%
Revaluation of deferred pensions 3.6% 2.8%
2022 2021
Male currently aged 45 23 years 23 years
Female currently aged 45 26 years 25 years
Male currently aged 65 22 years 22 years
Female currently aged 65 24 years 24 years
Mortality rate assumptions adopted at 31 March 2022, based on S2PA CMI Model 2019, imply the following life expectations on
retirement at age 65 for:
Principal actuarial assumptions
The principal actuarial assumptions at the balance sheet date (expressed as weighted averages) are:
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25. EMPLOYEE BENEFITS (continued)
Company 2022) 2021) 2020) 2019) 2018)
Difference between expected and actual return on scheme assets:
Amount (£000) (202) 27
) 201) 426) (78)
Percentage of scheme assets (1.9%) 0.2%
) 1.7%) 3.6%) (0.7%)
Experience gains and losses arising on the scheme liabilities:
Amount (£000) 26
) -) -) 192) (12)
Percentage of present value of scheme liabilities 0.3%
) 0.0%) 0.0%) 2.2%) (0.1%)
Effects of changes in the demographic and financial assumptions
underlying the present value of the scheme liabilities:
Amount (£000) 679
) (708) 33) (30) 246
Percentage of present value of scheme liabilities 8.8%
) (8.1%) 0.4%) (0.3%) 2.8%
Total amount recognised in statement of comprehensive income:
Amount (£000) 503
) (681) 234) 546) 156
Percentage of present value of scheme liabilities 6.5%
) (7.8%) 2.8%) 6.4%) 1.8%
(Losses)/gains recognised in statement of comprehensive income
Group 2022
) 2021) 2020) 2019) 2018)
Difference between expected and actual return on scheme assets:
Amount (£000) (98) 223
) 178) 468) (25)
Percentage of scheme assets (0.8%) 1.7%
) 1.4%) 3.6%) (0.2%)
Experience gains and losses arising on the scheme liabilities:
Amount (£000) (11) 15
) (8) 205) (13)
Percentage of present value of scheme liabilities (0.1%) 0.1%
) (0.1%) 2.0%) (0.1%)
Effects of changes in the demographic and financial assumptions
underlying the present value of the scheme liabilities:
Amount (£000) 803
) (1,033) 198) (95) 313)
Percentage of present value of scheme liabilities 8.4%) (9.7%) 2.0%) (0.9%) 3.0%)
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) 693
) (795) 368) 536) 275)
Percentage of present value of scheme liabilities 7.3%) (7.5%) 3.8%) 5.3%) 2.6%)
History of schemes
The history of the schemes for the current and prior years is as follows:
Group 2022) 2021) 2020) 2019
)
2018
)
£000) £000) £000) £000
)
£000
)
Present value of defined benefit obligation (9,531) (10,600) (9,812) (10,187) (10,388)
Fair value of plan assets 12,269
) 12,775) 12,830) 12,919) 12,618)
Present value of net surplus 2,738) 2,175) 3,018) 2,732) 2,230)
Company 2022) 2021) 2020) 2019
)
2018
)
£000) £000) £000) £000
)
£000
)
Present value of defined benefit obligation (7,706) (8,737) (8,312) (8,591) (8,902)
Fair value of plan assets 10,774
) 11,394) 11,665) 11,757) 11,523)
Present value of net surplus 3,068) 2,657) 3,353) 3,166) 2,621)
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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 £1,945,000 (2021: £1,917,000) in the year.
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.
Sensitivity analysis
The sensitivity of the net pension asset/obligation to assumptions is set out below:
Vp plc scheme
Change in Change in defined
Assumption assumption benefit obligation
Discount rate +/- 0.5% pa -5%/+6%
RPI inflation +/- 0.5% pa +1%/-1%
Assumed life expectancy + 1 year +5%
Torrent Railways scheme
Change in Change in defined
Assumption assumption benefit obligation
Discount rate +/- 0.5% pa -9%/+10%
CPI inflation +/- 0.5% pa +7%/-7%
Assumed life expectancy + 1 year +4%
25. EMPLOYEE BENEFITS (continued)
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Group
2022
) 2021)
Total) Total)
£000) £000)
Property, plant and equipment 1,647) -)
Cash 107) -)
Other current assets 387) -)
Tax, trade and other payables (196) -)
Deferred tax (351) -)
Fair value of net assets
1,594) -)
Fair value adjustments
Intangibles on acquisition 191
) -)
Deferred tax on intangibles (36) -)
Fair value of intangible assets acquired 155) -)
Goodwill on acquisition 1,051) -)
Cost of acquisitions
2,800
) -)
Satisfied by
Cash consideration 2,800
) -)
Analysis of cash flow
for acquisitions
Cash consideration 2,800
) -)
Net cash in acquisitions (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 2022 in relation to the acquisition were
£56,500 (2021: £Nil).
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.
Details of the acquisition are provided below:
Notes
26. BUSINESS COMBINATIONS
The Group acquired the following businesses from 1 April 2020 to 31 March 2022:
Name of acquisition Date of acquisition Type of acquisition Acquired by
M. & S. Hire Limited 16 November 2021 Share purchase Hire Station Limited
(100% equity)
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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 41 to 55 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, have been eliminated on consolidation and
are therefore not disclosed.
Trading transactions with subsidiaries – Parent Company
The Company enters into transactions with its subsidiary undertakings in respect of the following:
l
Internal funding loans
l
Provision of Group services (including Senior Management, IT, Group Finance, Group HR, Group Properties and Shared Service Centre)
l
Rehire of equipment on commercial terms
Recharges are made for Group services based on the utilisation of those services. 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 2022 totalled £58,414,000 (2021: £47,473,000).
Amounts owed to subsidiary undertakings by the Company at 31 March 2022 totalled £50,799,000 (2021: £51,058,000).
The Company and certain subsidiary undertakings have entered into cross guarantees of bank loans, private placement loans and
overdrafts to the Company. The total value of such borrowings at 31 March 2022 was £145.0 million (2021: £138.0 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
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.
30. SUBSEQUENT EVENTS
On 28 April 2022, Vp plc (the ‘Company’) announced that its controlling shareholder, Ackers P Investment Company Limited (the
"Controlling Shareholder" by virtue of its 50.26% holding in the issued share capital of the Company), had indicated to the Board its desire
to explore opportunities to dispose of its entire shareholding in the Company. As a result, the Board unanimously concluded that it would
be appropriate to investigate the sale of the Company and launched a formal sale process (the ‘sale’). As at the date of this report the
sale process is in its early stages.
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31. SUBSIDIARY UNDERTAKINGS
The investments in trading subsidiary undertakings as at 31 March 2022 are:
Country of Country of Class and
Registration or Principal Principal Percentage of
Incorporation Activity Operation Shares Held
Torrent Trackside Limited England Rail equipment hire UK Ordinary shares 100%
Hire Station Limited England Tool hire UK Ordinary shares 100%
Airpac Rentals Pte Limited Singapore Oilfield services Singapore Ordinary shares 100%
Airpac Bukom Oilfield
Curacao Oilfield services Curacao Ordinary shares 100%
Services (Curacao) NVA
Airpac Bukom Oilfield
Sharjah Oilfield services Sharjah Ordinary shares 100%
Services Middle East FZE
Airpac Rentals
Australia Oilfield services Australia Ordinary shares 100%
(Australia) Pty Limited
Vp GmbH Germany Equipment hire Germany Ordinary shares 100%
Vp Equipment Rental
Ireland Equipment hire Ireland Ordinary shares 100%
(Ireland) Limited
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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The full list of the dormant subsidiary undertakings is:
Country of Country of Class and
Registration or Principal Principal Percentage of
Incorporation Activity Operation Shares Held
Stoppers Specialists Limited England Dormant n/a Ordinary shares 100%
Trench Shore Limited England Dormant n/a Ordinary shares 100%
UK Training Limited* England Dormant n/a Ordinary shares 100%
Vibroplant Investments Limited England Dormant n/a Ordinary shares 100%
Bukom General Oilfield
Services Limited
England Dormant n/a Ordinary shares 100%
Fred Pilkington & Son Limited England Dormant n/a Ordinary shares 100%
Domindo Tool Hire Limited England Dormant n/a Ordinary shares 100%
Instant Tool Hire Limited England Dormant n/a Ordinary shares 100%
The Handi Hire Group Limited England Dormant n/a Ordinary shares 100%
Datum Survey Products Limited* England Dormant n/a Ordinary shares 100%
Power Tool Supplies Limited* England Dormant n/a Ordinary shares 100%
Hire & Sales (Canterbury) Limited England Dormant n/a Ordinary shares 100%
Cool Customers Limited* England Dormant n/a Ordinary shares 100%
Vibroplant Trustees Limited England Dormant n/a Ordinary shares 100%
Vibrobet Limited* England Dormant n/a Ordinary shares 90%
UM (Holdings) Limited England Dormant n/a Ordinary shares 100%
Power Rental Services Limited* England Dormant n/a Ordinary shares 100%
Rapid Response (Barriers) Limited* England Dormant n/a Ordinary shares 100%
U-Mole Limited England Dormant n/a Ordinary shares 100%
727 Plant Limited England Dormant n/a Ordinary shares 100%
Cannon Tool Hire Limited England Dormant n/a Ordinary shares 100%
M.E.P. Hire Limited Scotland Dormant n/a Ordinary shares 100%
Arcotherm (UK) Limited England Dormant n/a Ordinary shares 100%
Saville - Hire Limited* England Dormant n/a Ordinary shares 100%
Vibroplant Limited England Dormant n/a Ordinary shares 100%
Mechanical Electrical
Pressfittings Limited*
Scotland Dormant n/a Ordinary shares 100%
Mr Cropper Limited England Dormant n/a Ordinary shares 100%
Direct Instrument Hire Limited England Dormant n/a Ordinary shares 100%
Test & Measurement Hire
Group Limited
England Dormant n/a Ordinary shares 100%
Test & Measurement Hire Limited England Dormant n/a Ordinary shares 100%
Higher Access Limited England Dormant n/a Ordinary shares 100%
Zenith Survey Equipment Limited England Dormant n/a Ordinary shares 100%
Survey Connection Scotland Limited England Dormant n/a Ordinary shares 100%
Brandon Hire Group Limited England Dormant n/a Ordinary shares 100%
Brandon Hire Group Holdings Limited England Dormant n/a Ordinary shares 100%
Brandon Hire Limited England Dormant n/a Ordinary shares 100%
FNPR Holdings Limited England Dormant n/a Ordinary shares 100%
First National Plant Rental Limited England Dormant n/a Ordinary shares 100%
TPA Portable Roadways Limited England Dormant n/a Ordinary shares 100%
Sandhurst Limited England Dormant n/a Ordinary shares 100%
M. & S. Hire Limited England Dormant n/a Ordinary shares 100%
31. SUBSIDIARY UNDERTAKINGS (continued)
During the year, applications have been made to wind up the companies marked with *.
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31. SUBSIDIARY UNDERTAKINGS (continued)
The registered offices of the companies are:
Country of Registration Registered Office Address
Scotland Tofthills Avenue, Midmill Business Park, Kintore, Aberdeenshire AB51 0QP
Singapore 9 Pioneer Sector 2, Singapore 628371
Curacao Brionplein 4, Curacao, Netherlands Antilles
Sharjah SAIF Office P8-13-10, PO Box 121378, Sharjah, United Arab Emirates
Australia 18 Joseph Street, Blackburn North, Victoria 3130
Germany Lurgiallee 6-8, 60439 Frankfurt
Ireland 70 Sir John Rogerson’s Quay, Dublin 2
Malaysia 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
M.E.P. Hire Limited SC162952
727 Plant Limited 2448801
M. & S. Hire Limited 1858587
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Five Year Summary
2018) 2019) 2020) 2021) 2022)
£000) £000) £000) £000) £000)
Revenue 303,639) 382,830) 362,927) 307,997 350,915)
Operating profit before amortisation and exceptionals 44,018) 51,571) 55,480) 30,928) 46,299)
Profit before amortisation, taxation and exceptionals 40,597) 46,829) 46,640) 23,176) 38,946)
Profit/(Loss) before taxation 30,814) 33,581) 28,366) (2,269) 35,644)
Taxation (6,448) (7,759) (9,779) (2,332) (10,109)
Profit/(Loss) after taxation
24,366
) 25,822) 18,587) (4,601) 25,535)
Dividends
✶
(8,983) (10,853) (12,055) (8,674) (14,054)
Share capital 2,008
) 2,008) 2,008) 2,008) 2,008)
Capital redemption reserve 301) 301) 301) 301) 301)
Reserves 152,110) 166,549) 167,585) 150,781) 164,276)
Total equity before non-controlling interest
154,419
) 168,858) 169,894) 153,090) 166,585)
Share Statistics
Asset value 385p
) 421p) 423p) 381p) 415p)
Earnings (pre amortisation) 84.91p 95.14p) 90.21p) 46.56p) 71.24p)
Dividend
✶✶
26.00p 30.20p) 30.45p) 25.00p) 36.0p)
Times covered (pre amortisation) 3.27p 3.15p 3.0p 1.9p 2.0)
✶✶
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.
Strategic Report
Governance Financial Statements
Shareholder Information
Vp plc Annual Report and Accounts 2022 vpplc.com
117
Executive Directors
Jeremy F G Pilkington, B.A. Hons. (Chairman)
Neil A Stothard, M.A., F.C.A.
Allison M Bainbridge, M.A., F.C.A.
Non-Executive Directors
Stephen Rogers, B.Sc., F.C.A., J.P.
Philip M White, B.Com, F.C.A., CBE
Secretary
Allison M Bainbridge
Registered Office
Central House, Beckwith Knowle,
Otley Road, Harrogate, North Yorkshire, HG3 1UD
Registered in England and Wales : No 481833
Telephone: 01423 533400
Independent Auditors
PricewaterhouseCoopers LLP
Central Square, 29 Wellington Street, Leeds, LS1 4DL
Solicitors
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
Merchant Bankers
N M Rothschild & Sons Limited
Stockbrokers
N +1 Singer
Berenberg
Public Relations
Buchanan Communications
Directors and Advisors
Printed on carbon balanced and 100% recycled paper