After a tough year of pay freezes, reduced working hours and depot closures, the plant and tool hirer said the worst was over.

But Chairman Jeremy Pilkington warned he remained cautious about next year and beyond as public sector spending cuts took their toll on demand.

Most of the businesses had to take cost reduction action last year to mitigate the impact of lower demand.

This involved a combination of wage freezes, working hour reductions, vehicle and fleet reductions and a small number of depot closures/mergers.

Investment in the rental fleet was halved to £13.9m. Despite this action pre-tax profit for the year to March fell to £14.3m from £20.8m.

Revenues were down at £134.2m against the previous £157.5m. Although net debt was reduced by £17.5m to £48.3m.

Chairman Jeremy Pilkington said: “Within the UK, demand has generally stabilised and some markets, such as rail and residential construction, are showing signs of growth, albeit from a severely depressed base.”

But he warned: “Public infrastructure investment has become an important market for several of our businesses and the prospect of cutbacks, not so much this year as thereafter, causes us to view medium term prospects with a degree of caution.”

He said that Vp would continue to manage the business carefully in the near term, balancing its focus on maintaining a strong balance sheet with a commitment to embrace suitable opportunities, both organic and acquisitive.

Pilkington said that Vp was committed to maintaining a strong balance sheet but would continue to seek acquisitions like Harbray Plant Hire bought last month.

He added: “Where quality opportunities such as this are identified, we will pursue them with vigour.”

Foundation and shoring business Groundforce achieved £9.2m profit against £11m last time despite revenues falling by a fifth to £32m.

Overall the shoring activity had another good year although house building and commercial development remained very subdued.

The specialist divisions of Piletec, Easiform and U Mole which have greater exposure to general contracting suffered relatively more than shoring.

Rough terrain handling plant division UK Forks managed to break even after demand recovered in the three months of 2010. Sales were down 37% at £10.6m.

Sales fell 10% at the small tools business Hire Station to £50.1m. This still outperformed other tool hire businesses where sales have fallen by 20%. Operating profits at Hire Station halved to £3.2m.