Vp sees a recovery from the pandemic

The Harrogate-based firm said revenues plunged at the start of the first lockdown, but they are now recovering. In November, trading had improved to 90 per cent of prior year levels.

Vp’s chief executive, Neil Stothard, said: “At its worst point, which was in April, our business levels had collapsed to 55 per cent of normal levels of revenue.

“However, our November trading was just over 90 per cent of prior year levels, so we recovered quite quickly.”

The group said underlying pre-tax profits fell from £26m to £9m in the six months to September 30.

It made a statutory pre-tax loss of £6m over the six month period, down from a profit of £23m in the previous half year.

Jeremy Pilkington, chairman of Vp, said: “The resilience and diversity of the Vp offering has once again proved to be an invaluable asset as the group and its customers recover from the economic impact of Covid-19.

“Vp’s businesses are gradually recovering towards prior year trading levels, buoyed by the positive medium term outlook for infrastructure investment in the UK.”

Vp is in a much better position than many firms as investment in infrastructure will go ahead whatever happens to the economy.

Mr Stothard said: “In comparison to the general construction sector, which I think will be potentially more volatile in terms of the pandemic and in terms of Brexit, I think there is a commitment to invest in the infrastructure markets, which are regulated markets.

“Our markets have got longer term programmes which are committed, whether it’s the rail industry, HS2, which is now picking up reasonably quickly, and then we’ve got the water industry five year programme, which only started in April this year and the first year is always a little quieter so we expect that to ramp up next year.”

Mr Stothard said that Vp is well prepared for every outcome of the Brexit talks.

“We’re all waiting for some direction in terms of what the outcome of the latest discussions will be,” he said.

“If we do have a no-deal scenario, our view is that in the short term, it doesn’t cause us day to day issues. Whilst we do operate in mainland Europe, the businesses are relatively self-sufficient in their day to day operations. There isn’t too much movement between the UK and mainland Europe for us.

“We would love to have greater clarity, but in terms of what we do know, we don’t identify it as a significant short term risk. What happens thereafter depends on what is agreed or not agreed.”

Mr Pilkington said Vp “remains in excellent financial condition and is well positioned to take advantage of the uplift in demand and return the business to its historic levels of profitability”.

He added that the board is optimistic, but also realistic about its prospects for the second half and beyond.

The group said it had to confront unique challenges in the first half of the financial year.

“As the Covid virus struck, it was impossible to know how severe or prolonged the ensuing pandemic might be and what would be the consequences of the associated lockdown,” said Mr Pilkington.

“On a more positive note, many of our businesses were categorised as essential service providers to such sectors as transport, utilities, telecommunications and health and here we were able to maintain a certain level of business functionality.”

In response to sharp reductions in activity, the group ceased all but essential capital investment and recruitment.

It participated in the UK Government’s job retention furlough scheme and whilst this was successful in retaining many jobs in the early part of the financial year, it has subsequently had to reduce capacity to better match ongoing demand.

The firm said that regrettably, this has resulted in 150 redundancies across the group and the merger or closure of 23 locations in the UK.

Since October, it has had no employees on furlough.

Reflecting its record profits in the year to March 31 and a much improved cash position, Vp said it now feels it is appropriate to pay a special dividend, in lieu of the final dividend, of 22p a share.

There is no interim dividend for the current financial year, but the board will take a view for the year as a whole at the time of its preliminary announcement in June 2021.