Vp flags steady but subdued half-year, acquires 80pc of CPH

Specialist equipment rental company Vp reported a steady half-year performance on Thursday, despite challenging macroeconomic conditions, as it announced the acquisition of a majority interest in CPH.

The London-listed firm said growth in infrastructure projects, particularly in transmission, water, and civil engineering, continued to provide strong demand in the six months ended 30 September.

However, delays in the rollout of Network Rail's Control Period 7 (CP7) projects had slowed progress in the rail sector.

Non-residential construction activity remained subdued, with Vp’s Brandon Hire Station business seeing slower-than-expected improvement despite management efforts.

The company also noted continued weakness in housebuilding, although the UK government's push for rapid progress in the sector offered some encouragement.

On the other hand, the energy market remained robust, with strong demand and high project activity.

Vp said it was continuing to execute its strategy, focusing on digital innovation to drive operational efficiency and long-term returns for stakeholders.

However, due to current headwinds in construction and housebuilding, coupled with delays in CP7, Vp said it expected to report a profit of about £37m for the full financial year.

“Despite an uncertain and challenging economic backdrop, we have delivered a resilient performance which is testament to our specialist businesses and diversified revenue streams,” said chief executive officer Anna Bielby.

“We are encouraged by initial steps taken by the new UK government to reinvigorate its industrial and housebuilding strategies.

“However, further clarity and action in these areas is needed to boost confidence and drive investment and activity.”

Vp also announced the acquisition of a majority interest in Charleville Hire and Platform (CPH), a specialist powered access business based near Cork, Ireland, on Thursday.

It said CPH primarily serves the pharmaceutical, renewables, technology, and food ingredient sectors, providing Vp with a strategic growth platform in the Ireland market.

The acquisition cost included an initial cash payment of €12.1m for 90% of CPH's shares, with the remaining 10% to be acquired over three years, subject to EBITDA performance.

An additional deferred payment of up to €21.7m could be payable over the next two years.

CPH generated €9.5m in revenue and €5.7m in EBITDA for the year ended 31 December 2023.

The acquisition was expected to immediately boost Vp’s earnings per share, and aligned with the company’s strategy of expanding its specialist capabilities in the equipment rental market.

Vp said the acquisition was being funded through its existing debt facilities and cash resources, with net debt-to-adjusted EBITDA remaining comfortably below 2x.

Key members of CPH’s management team would retain a minority stake and remain committed to the business.

“This acquisition is exactly in line with our renewed strategic focus on building our highly differentiated, specialist customer offering,” Anna Bielby added.

“CPH brings to the group a market-leading powered access fleet in a growing Irish market while complementing our existing divisions.

“The CPH management team has a track record of successfully growing the business and, with the opportunities that exist in the Irish market, we believe they are well placed for further expansion in the future.”

At 1142 BST, shares in Vp were down 9.69% at 587p.

Reporting by Josh White for Sharecast.com.