8th Sep 2009 07:00
Unaudited results for the first quarter ended 31 July 2009 First quarter ------------- Financial summary 2009 2008 ----------------- ---- ---- GBPm GBPm % Underlying revenue(1) 221.6 273.4 -19%Underlying operating profit(1) 23.9 51.7 -54%Underlying profit before taxation(1) 8.8 35.9 -75%Underlying earnings per share(1) 1.2p 4.8p -76%Profit before taxation 8.2 35.2 -77%Basic earnings per share 1.1p 15.9p -93%
(1) See explanatory note below
Highlights
----------
* Performance in line with market expectations
* Gaining market share in difficult construction markets
* 57m net cash inflow from operations in the quarter (2008: 36m)
* Net debt at 31 July of 873m (30 April 2009 - 1,036m)
* Net debt to EBITDA leverage of 2.6 times, comfortably within our target range
Ashtead's chief executive, Geoff Drabble, commented:
"As anticipated market conditions remain difficult; however, the actions we have taken to cut costs and reduce fleet size have ensured that our margins have held up well. Our continuing focus on developing stronger customer relationships and maintaining an infrastructure to provide excellent customer service throughout the cycle has been rewarded with clear market share gains.
We expect that market conditions and trading levels will remain largely unchanged for the second quarter. Visibility for Q3 and Q4, our seasonally more challenging periods, is less clear both in terms of demand and the pricing environment. However, the Board continues to believe that the actions taken will deliver full year results and cash generation in line with its expectations.
We continue to believe that the fundamentals of our business model and themarkets we serve remain attractive. Ashtead is well placed both in terms of itscontinuing operational momentum and its financial strength to benefit whenmarkets recover."Contacts:---------Geoff Drabble Chief executive 020 7726 9700 Ian Robson Finance director Brian Hudspith Maitland 020 7379 5151 Explanatory note----------------Underlying revenue, profit and earnings per share are stated before exceptionalitems and amortisation of acquired intangibles. The definition of exceptionalitems is set out in note 4. The reconciliation of underlying earnings per shareand underlying cash tax earnings per share to basic earnings per share is shownin note 7 to the attached financial information.Geoff Drabble and Ian Robson will hold a conference call for equity analysts at9.00am on Tuesday 8 September. Dial in details for this call have already beendistributed but any analyst not having received them should contact AshleyForget at Maitland on 020 7379 5151. The call will be webcast live via theCompany's website at www.ashtead-group.com and there will also be a replayavailable via the website from shortly after the call concludes. There will, asusual, also be a separate call for bondholders at 3.30pm UK time (10.30am EST).Trading results--------------- Revenue EBITDA Operating profit ------- ------ ---------------- 2009 2008 2009 2008 2009 2008 ---- ---- ---- ---- ---- ---- Sunbelt in $m 287.7 422.0 98.9 158.6 38.9 92.0 ===== ===== ==== ===== ==== ==== Sunbelt in m 179.0 213.8 61.6 80.3 24.3 46.5A-Plant 42.6 59.6 11.4 19.2 1.1 7.1Group central costs - - (1.4) (1.9) (1.5) (1.9) --- --- --- --- --- --- Continuing operations 221.6 273.4 71.6 97.6 23.9 51.7 ===== ===== ==== ==== Net financing costs (15.1) (15.8)Profit before tax, exceptionals and amortisation from continuing operations 8.8 35.9Ashtead Technology - 2.8Exceptional items (net) - 67.3 Amortisation (0.6) (0.7) --- --- Total Group profit before taxation 8.2 105.3Taxation (2.8) (23.1) --- ---- Profit attributable to equity holders of the Company 5.4 82.2
=== ==== Margins ------- Sunbelt 34.4% 37.6% 13.5% 21.8%A-Plant 26.7% 32.2% 2.6% 11.9%Group 32.3% 35.7% 10.8% 18.9%First quarter results reflected the prevailing market conditions with rentalrevenues declining in Sunbelt by 29% to $268.1m and in A-Plant by 26% to 39.9m. Total revenue reductions were 32% in Sunbelt and 28% in A-Plant due tothe greater reduction in sales of equipment, merchandise and consumables.The volume of fleet on rent held up well as a result of market share gains.Average fleet on rent in the quarter reduced 12% year on year at Sunbelt and17% at A-Plant. Pricing continued to be under pressure in both markets withyield declining 19% in Sunbelt and 10% in A-Plant compared to the same periodin the prior year. Encouragingly, during the quarter we saw yield stabilisingin both markets.Our prompt action on cost reduction measures is reflected in the quarter'sresults with operating costs down 28% in Sunbelt and 23% in A-Plant. As aresult, Group EBITDA margins remain above 30% and underlying operating profitmargins above 10%. In sterling, including the translation benefit from thestronger dollar, this meant that a first quarter revenue reduction of 52m washeld to declines of only about half that amount at the EBITDA, operating profitand pre-tax levels. Accordingly the underlying pre-tax profit for the quarterwas 8.8m (2008: 35.9m).Whilst we continue to take appropriate actions on cost control, we arebalancing this with the ongoing needs of the business. We remain confident asto the fundamentals of our markets and therefore continue to focus ondeveloping long-term relationships across a wide range of market sectors. Oursuccess in market share gains is demonstrated by our relatively strong volumesof fleet on rent and rental revenues. These successes will provide thespringboard for improving margins and revenues as markets recover.The effective tax rate for the quarter was broadly stable at 35% (2008: 36%).Underlying earnings per share for the quarter decreased to 1.2p (2008: 4.8p)whilst basic earnings per share for the quarter were 1.1p (2008: 15.9p,including the 11.6p impact of June 2008's exceptional gain on disposal ofAshtead Technology).Capital expenditure-------------------Capital expenditure in the quarter was 15.2m (2008: 108.5m) including 12.2mon rental fleet replacement. Disposal proceeds were 6.0m, including 1.2m fromthe disposal of most of the remaining assets held for sale at year end, givingnet capital expenditure in the first quarter of 9.2m (2008: 93.9m). We retaina significant ability to age our fleet and sustain our free cash flow at a timeof lower earnings. This is a result of the relatively low average age of theGroup's rental fleet which, at 31 July 2009, was 37 months (2008: 31 months).This year's capital expenditure is again expected to be entirely forreplacement rather than growth. We currently anticipate spending this yeararound 100m gross and 75m net of disposal proceeds. With short lead times andno forward commitments, we have the flexibility to adjust this as required
toreflect market conditions.Cash flow and net debt----------------------
56.5m of net cash inflow was generated from operations in the quarter, up 58%on last year's 35.9m, all of which was applied to reduce outstanding debt. Asa result, including the benefit of a translation gain of 108m, closing netdebt at 31 July 2009 reduced to 873m (30 April 2009: 1,036m). The ratio ofnet debt to EBITDA was 2.6 times at 31 July 2009 well within our 2-3 timestarget range.Our debt package remains well structured for the challenges of current marketconditions. We retain substantial headroom on facilities which are committedfor the long term, an average of 4.6 years at 31 July 2009, with the firstmaturity on our asset-based senior bank facility not being due until August2011. Availability under the $1.7bn asset-based loan facility was $635m at 31July 2009 ($550m at 30 April 2009) well above the $125m level at which theentire debt package is covenant free.Current trading and outlook---------------------------We expect that market conditions and trading levels will remain largelyunchanged for the second quarter. Visibility for Q3 and Q4, our seasonally morechallenging periods, is less clear both in terms of demand and the pricingenvironment. However, the Board continues to believe that the actions takenwill deliver full year results and cash generation in line with itsexpectations.
We continue to believe that the fundamentals of our business model and the markets we serve remain attractive. Ashtead is well placed both in terms of its continuing operational momentum and its financial strength to benefit when markets recover.
CONSOLIDATED INCOME STATEMENT FOR THE THREE MONTHS ENDED 31 JULY 2009
2009 2008 ---- ---- Before Before exceptional items Exceptional items
exceptional items Exceptional items
and amortisation and amortisation Total and
amortisation and amortisation Total
---------------- ---------------- ----- ---------------- ---------------- ----- (restated) (restated) GBPm GBPm GBPm GBPm GBPm GBPm Continuing operations Revenue Rental revenue 206.8 - 206.8 244.1 - 244.1 Sale of new equipment
merchandise and consumables 11.1 - 11.1 15.4 - 15.4Sale of used rental equipment 3.7 1.2 4.9
13.9 - 13.9 --- --- --- ---- --- ---- 221.6 1.2 222.8 273.4 - 273.4 ----- --- ----- ----- --- ----- Operating costs Staff costs (70.0) - (70.0) (75.4) - (75.4)
Used rental equipment sold (4.4) (1.2) (5.6)
(11.6) - (11.6)Other operating costs (75.7) - (75.7) (89.0) - (89.0)Other income 0.1 - 0.1 0.2 - 0.2 --- --- --- --- --- --- (150.0) (1.2) (151.2) (175.8) - (175.8) ----- --- ----- ----- --- ----- EBITDA* 71.6 - 71.6 97.6 - 97.6Depreciation (47.7) - (47.7) (45.9) - (45.9)
Amortisation of intangibles - (0.6) (0.6)
- (0.7) (0.7) --- --- --- --- --- --- Operating profit 23.9 (0.6) 23.3 51.7 (0.7) 51.0Net financing costs (15.1) - (15.1) (15.8) - (15.8) ---- --- ---- ---- --- ----
Profit on ordinary activities
before taxation 8.8 (0.6) 8.2 35.9 (0.7) 35.2Taxation: - current (0.9) - (0.9) (1.1) - (1.1)- deferred (2.1) 0.2 (1.9) (11.8) 0.2 (11.6) --- --- --- ---- --- ---- (3.0) 0.2 (2.8) (12.9) 0.2 (12.7) --- --- --- ---- --- ----Profit from continuing operations 5.8 (0.4) 5.4 23.0 (0.5) 22.5Profit from
discontinued operations - - - 2.0 57.7 59.7 --- --- --- --- ---- ---- Profit attributable to equity holders of the Company 5.8 (0.4) 5.4
25.0 57.2 82.2 === === === ==== ==== ====Continuing operations
Basic earnings per share 1.2p (0.1p) 1.1p 4.4p (0.1p) 4.3p === === === === === ===Diluted earnings per share 1.2p (0.1p) 1.1p 4.4p (0.1p) 4.3p === === === === === ===Total continuing and discontinued operations Basic earnings per share 1.2p (0.1p) 1.1p 4.8p 11.1p 15.9p === === === === ==== ====Diluted earnings per share 1.2p (0.1p) 1.1p 4.8p 11.1p 15.9p === === === === ==== ====
* EBITDA is presented here as an additional performance measure as it is commonly used by investors and lenders.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE THREE MONTHS ENDED 31 JULY 2009 2009 2008 ---- ---- (restated) GBPm GBPm
Profit attributable to equity holders of the Company for the period 5.4 82.2 Foreign currency translation differences
(24.4) (0.2)
---- --- Total comprehensive income for the period
(19.0) 82.0
==== ==== Details of principal risks and uncertainties are given in the Review of the Balance Sheet and Cashflow accompanying these interim financial statements.
CONSOLIDATED BALANCE SHEET AT 31 JULY 2009
31 July 30 April 2009 2008 2009 ---- ---- ---- (restated) GBPm GBPm GBPm Current assets Inventories 9.5 23.7 10.4Trade and other receivables 137.6 175.2 148.3Current tax asset 1.0 2.2 1.5Cash and cash equivalents 2.4 1.5 1.7 --- --- --- 150.5 202.6 161.9Assets held for sale 0.3 - 1.6 --- --- --- 150.8 202.6 163.5 ----- ----- ----- Non-current assets
Property, plant and equipment
- rental equipment 1,011.8 1,039.1 1,140.5- other assets 137.2 141.4 153.5 ----- ----- ----- 1,149.0 1,180.5 1,294.0
Intangible assets - brand names and other acquired intangibles 5.0
7.3 5.9Goodwill 346.0 291.9 385.4Deferred tax asset 10.6 17.1 12.3
Defined benefit pension fund surplus 0.4
6.0 0.3 --- --- --- 1,511.0 1,502.8 1,697.9 ------- ------- ------- Total assets 1,661.8 1,705.4 1,861.4 ======= ======= ======= Current liabilities Trade and other payables 108.5 193.9 106.7Current tax liability - 1.0 -Debt due within one year 5.9 7.9 6.9Provisions 14.3 8.5 17.4 ---- --- ---- 128.7 211.3 131.0 ----- ----- ----- Non-current liabilities
Debt due after more than one year 869.0
845.2 1,030.7Provisions 34.3 19.2 36.8Deferred tax liabilities 122.6 118.6 136.9 ----- ----- ----- 1,025.9 983.0 1,204.4 ------- ----- ------- Total liabilities 1,154.6 1,194.3 1,335.4 ------- ------- ------- Equity Share capital 55.3 56.2 55.3Share premium account 3.6 3.6 3.6Capital redemption reserve 0.9 - 0.9Non-distributable reserve 90.7 90.7 90.7
Own shares held by the Company (33.1) (36.3) (33.1)Own shares held through the ESOT (6.3) (7.0) (6.3)Cumulative foreign exchange translation differences 4.7
(27.1) 29.1Retained reserves 391.4 431.0 385.8 ----- ----- -----
Equity attributable to equity holders of the Company 507.2
511.1 526.0
----- ----- ----- Total liabilities and equity 1,661.8
1,705.4 1,861.4 ======= ======= ======= CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED 31 JULY 2009 Cumulative Own foreign Share Capital Non- shares exchange Share premium redemption distributable
Treasury held by translation Distributable
capital account reserve reserve stock ESOT differences reserves Total ------- ------- ------- ------- ----- ---- ----------- -------- ----- GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPmAt 1 May 2008 as restated 56.2 3.6 - 90.7 (23.3) (7.0) (28.2) 348.3 440.3Total comprehensive income for the period - - - - - - (0.2) 82.2 82.0Shares issued - - - - 0.1 - - - 0.1Share-based payments - - - - - - - 0.5 0.5Own shares purchased - - - - (13.1) - - - (13.1)Realisation of foreign exchangetranslation differences - - - - - - 1.3 - 1.3 --- --- --- --- --- --- --- --- ---At 31 July 2008 56.2 3.6 - 90.7 (36.3) (7.0) (27.1) 431.0 511.1Total comprehensive incomefor the period - - - - - - 56.3 (24.2) 32.1Shares issued/re-issued - - - - 0.4 - - (0.3) 0.1Dividends paid - - - - - - - (12.9)(12.9)Share-based payments - - - - - - - (1.3) (1.3)Vesting of share awards - - - - - 1.1 - (1.1) -Own shares purchased - - - - (2.6) (0.4) - - (3.0)Cancellation of shares heldin treasury by the Company 0.9 - 0.9 - 5.4 - - (5.4) -Realisation of foreign exchangetranslation differences - - - - - - (0.1) - (0.1) --- --- --- --- --- --- --- --- --- At 30 April 2009 55.3 3.6 0.9 90.7 (33.1) (6.3) 29.1 385.8 526.0Total comprehensive incomefor the period - - - - - - (24.4) 5.4 (19.0)Share-based payments - - - - - - - 0.2 0.2 --- --- --- --- --- --- --- --- ---At 31 July 2009 55.3 3.6 0.9 90.7 (33.1) (6.3) 4.7 391.4 507.2 ==== === === ==== ==== === === ===== =====
CONSOLIDATED CASH FLOW STATEMENT FOR THE THREE MONTHS ENDED 31 JULY 2009
2009 2008 ---- ---- (restated) GBPm GBPm
Cash flows from operating activities Cash generated from operations before exceptional items and changes in rental fleet 74.7 93.8Exceptional costs paid (2.7) (0.6)Payments for rental property, plant and equipment (16.4) (52.6)Proceeds from disposal of rental property, plant and equipment before exceptional disposals 4.7 9.7Exceptional proceeds from disposal of rental property, plant and equipment
1.2 -
--- ---Cash generated from operations
61.5 50.3Financing costs paid (2.6) (4.2)Tax paid (0.5) (0.1) --- ---
Net cash from operating activities
58.4 46.0
---- ----
Cash flows from investing activities Disposal of businesses - 89.8Payments for non-rental property, plant and equipment (2.7) (11.2)Proceeds on sale of non-rental property, plant and equipment
0.8 1.1
--- --- Net cash (used in)/from investing activities
(1.9) 79.7
Cash flows from financing activities
--- ----Drawdown of loans 9.3 10.1Redemption of loans (63.6) (121.8)
Capital element of finance lease payments (1.4) (1.6)Purchase of own shares by the Company - (12.8)Proceeds from issue of ordinary shares
- 0.1
--- ---Net cash used in financing activities
(55.7) (126.0)
---- -----
Increase/(decrease) in cash and cash equivalents 0.8 (0.3)Opening cash and cash equivalents 1.7 1.8Effect of exchange rate differences
(0.1) -
--- --- Closing cash and cash equivalents
2.4 1.5 === ===
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
The financial statements for the three months ended 31 July 2009 were approvedby the directors on 7 September 2009. They have been prepared in accordancewith relevant International Financial Reporting Standards (`IFRS') (includingInternational Accounting Standard - IAS 34 Interim Financial Reporting) and theaccounting policies set out in the Group's Annual Report and Accounts for theyear ended 30 April 2009 except for the adoption of `IAS 1 (revised) -Presentation of financial statements'. The adoption of IAS 1 (revised) hasresulted in the `Consolidated statement of changes in equity' being presentedas a primary statement (previously disclosed as a note titled `Reconciliationof changes in equity'). In addition, the Group has continued to present aseparate `Income statement' and `Statement of comprehensive income' (previouslytitled `Statement of recognised income and expense'). The adoption of IAS 1(revised) has had no impact on the consolidated results or financial positionof the Group. The financial statements are unaudited and do not constitutestatutory accounts within the meaning of Section 435 of the Companies Act 2006.The statutory accounts for the year ended 30 April 2009 were prepared inaccordance with relevant IFRS and have been mailed to shareholders and filedwith the Registrar of Companies. The auditors' report on those accounts wasunqualified and did not include a reference to any matter by way of emphasiswithout qualifying the report and did not contain a statement under section 498(2) or (3) of the Companies Act 2006. The figures for the first quarter areunaudited.
The exchange rates used in respect of the US dollar are:
2009
2008
---- ---- Average for the quarter ended 31 July 1.61 1.97At 31 July 1.66 1.982. Segmental analysis Operating Revenue profit before Exceptional before exceptionals items and Operating exceptionals and amortisation amortisation profit ------------ ---------------- ------------ ------Three months to 31 July GBPm GBPm GBPm GBPm2009 ---- Sunbelt 179.0 24.3 (0.5) 23.8A-Plant 42.6 1.1 (0.1) 1.0Corporate costs - (1.5) - (1.5) --- --- --- --- 221.6 23.9 (0.6) 23.3 ===== ==== === ====2008 ---- Sunbelt 213.8 46.5 (0.5) 46.0A-Plant 59.6 7.1 (0.2) 6.9Corporate costs - (1.9) - (1.9) --- --- --- --- 273.4 51.7 (0.7) 51.0 ===== ==== === ==== Segment assets Cash Taxation assets Total assets -------------- ---- --------------- ------------At 31 July 2009 Sunbelt 1,327.8 - - 1,327.9A-Plant 319.8 - - 319.7Central items 0.2 2.4 11.6 14.2 --- --- ---- ---- 1,647.8 2.4 11.6 1,661.8 ======= === ==== =======At 30 April 2009 Sunbelt 1,514.7 - - 1,514.7A-Plant 331.0 - - 331.0Central items 0.2 1.7 13.8 15.7 --- --- ---- ---- 1,845.9 1.7 13.8 1,861.4 ======= === ==== =======3. Operating costs 2009 2008 ---- ---- Before Before exceptional Exceptional exceptional Exceptional items and items and items and items and amortisation amortisation Total
amortisation amortisation Total
------------ ------------ -----
------------ ------------ -----
GBPm GBPm GBPm GBPm GBPm GBPmThree months to July 31 Staff costs: Salaries 64.4 - 64.4 68.8 - 68.8Social secutiry costs 5.1 - 5.1 5.2 - 5.2Other pension costs 0.5 - 0.5 1.4 - 1.4 --- --- --- --- --- --- 70.0 - 70.0 75.4 - 75.4 ---- --- ---- ---- --- ----Used rental equipment sold 4.4 1.2 5.6 11.6 - 11.6 --- --- --- ---- --- ---- Other operating costs: Vehicle costs 16.2 - 16.2 21.9 - 21.9Spares, consumables & external repairs 13.4 - 13.4 14.8 - 14.8Facility costs 11.4 - 11.4 10.4 - 10.4Other external charges 34.7 - 34.7 41.9 - 41.9 ---- --- ---- ---- --- ---- 75.7 - 75.7 89.0 - 89.0 ---- --- ---- ---- --- ----Other income:
Profit on disposal of non-rental
property,plant and equipment (0.1) - (0.1) (0.2) - (0.2) --- --- --- --- --- ---
Depreciation and amortisation: Depreciation 47.7 - 47.7 45.9 - 45.9Amortisation of acquired intangibles - 0.6 0.6
- 0.7 0.7 --- --- --- --- --- --- 47.7 0.6 48.3 45.9 0.7 46.6 ---- --- ---- ---- --- ---- 197.7 1.8 199.5 221.7 0.7 222.4 ===== === ===== ===== === =====
4. Exceptional items and amortisation
Exceptional items are those items of financial performance that are materialand non-recurring in nature. Amortisation relates to the periodic write off ofacquired intangible assets. The Group believes these items should be disclosedseparately within the consolidated income statement to assist in theunderstanding of the financial performance of the Group.
Exceptional items and amortisation are excluded from underlying profit and earnings per share and are set out below.
Three months to 31 July 2009 2008 ---- ---- GBPm GBPm
Profit on sale of Ashtead Technology - 67.3Taxation on exceptional items - (9.6) --- ---Total exceptional items - 57.7Amortisation of acquired intangibles (net of tax credit) (0.4) (0.5)
--- --- (0.4) 57.2 === ==== The items detailed in the table above are presented in the income statement asfollows: Three months to 31 July 2009 2008 ---- ---- GBPm GBPm Sale of used rental equipment 1.2 -Used rental equipment sold (1.2) -
Amortisation of acquired intangibles (0.6)
(0.7)
---
---
Charged on arriving at operating profit and profit before tax (0.6)
(0.7)Taxation 0.2 0.2 --- --- (0.4) (0.5)
Profit after taxation from discontinued operations -
57.7 --- ---- (0.4) 57.2 === ====5. Financing costs Three months to 31 July 2009 2008 ---- ---- GBPm GBPm Investment income:
Expected return on assets of defined benefit pension plan
0.8 1.1 --- --- Interest expense: Bank interest payable 2.9 6.0
Interest payable on second priority senior secured notes 11.1 9.0 Interest payable on finance leases 0.1 0.2Non-cash unwind of discount on defined benefit pension plan liabilities 0.8 0.8Non-cash unwind of discount on self insurance provisions 0.3 0.3Amortisation of deferred costs of debt raising
0.7 0.6 --- --- Total interest expense 15.9 16.9 ---- ---- Net financing costs 15.1 15.8 ==== ====6. Taxation The tax charge for the period has been computed using an estimated effectiverate for the quarter of 36% in the US (2008: 40%) and 29% in the UK (2008: 29%)applied to the profit before tax, exceptional items and amortisation ofacquired intangibles. The blended effective rate for the Group as a whole is35%.The tax charge of 3.0m (2008: 12.9m) on the underlying pre-tax profit of 8.8m (2008: 35.9m) from continuing operations consists of current tax of 0.9mrelating to the UK (2008: 1.0m), current tax of nil relating to the US (2008:charge of 0.1m), deferred tax of 1.7m relating to the UK (2008: 2.5m) anddeferred tax of 0.4m relating to the US (2008: charge of 9.3m). In addition,the tax credit of 0.2m (2008: 0.2m) on the amortisation charge of 0.6m(2008: 0.7m) relating to continuing operations is deferred tax and relates tothe US.7. Earnings per share Basic and diluted earnings per share for the three months ended 31 July 2009have been calculated based on the profit for the relevant period and on theweighted average number of ordinary shares in issue during that period(excluding shares held in treasury and by the ESOT over which dividends havebeen waived). Diluted earnings per share is computed using the result for therelevant period and the diluted number of shares (ignoring any potential issueof ordinary shares which would be anti-dilutive). These are calculated asfollows: Three months to 31 July 2009 2008 ---- ----
Profit for the financial period ( m)
From continuing operations 5.4 22.5From discontinued operations - 59.7 --- ---- From continuing and discontinued operations 5.4
82.2
===
====
Weighted average number of shares (m) - basic 497.6 515.4 ===== ===== - diluted 497.7 516.1 ===== ===== Basic earnings per share From continuing operations 1.1p 4.3pFrom discontinued operations - 11.6p --- ---- From continuing and discontinued operations 1.1p 15.9p === ==== Diluted earnings per share From continuing operations 1.1p 4.3pFrom discontinued operations - 11.6p --- ---- From continuing and discontinued operations 1.1p
15.9p
===
====
Underlying earnings per share (defined in any period as the earnings beforeexceptional items and amortisation of acquired intangibles for that perioddivided by the weighted average number of shares in issue in that period) andcash tax earnings per share (defined in any period as underlying earningsbefore other deferred taxes divided by the weighted average number of shares inissue in that period) may be reconciled to the basic earnings per share as
follows: Three months to 31 July 2009 2008 ---- ---- Basic earnings per share 1.1p 15.9p
Exceptional items and amortisation of acquired intangibles 0.1p (12.9p) Tax on exceptional items and amortisation
- 1.8p --- ---Underlying earnings per share 1.2p 4.8pOther deferred tax 0.4p 2.5p --- ---Cash tax earnings per share 1.6p 7.3p === ===
8. Property, plant and equipment
2009 2008 ---- ---- Rental Rental equipment Total equipment Total --------- ----- --------- ----- Net book value GBPm GBPm GBPm GBPm-------------- At 1 May 1,140.5 1,294.0 994.0 1,130.1Exchange difference (95.5) (107.1) (0.1) (0.1)Reclassifications 0.3 - - -Additions 12.2 15.2 96.6 108.5Disposals (4.3) (5.4) (11.5) (12.1)Depreciation (41.4) (47.7) (39.9) (45.9) ---- ---- ---- ---- At 31 July 1,011.8 1,149.0 1,039.1 1,180.5 ======= ======= ======= =======9. Called up share capital
Ordinary shares of 10p each:
2009 2008 2009 2008 ---- ---- ---- ---- Number Number GBPm GBPm Authorised 900,000,000 900,000,000 90.0 90.0 =========== =========== ==== ====
Allotted, called up and fully paid 553,325,554 561,572,726 55.3 56.2
=========== =========== ====
====
There were no movements in shares authorised or allotted during the period. At 31 July 2009, 50m shares were held by the Company and a further 5.8m shares were held by the Company's Employee Share Ownership Trust.
10. Notes to the cash flow statement
Three months to 31 July 2009 2008 ---- ---- GBPm GBPm a. Cash flow from operating activities ----------------------------------- Operating profit before exceptional items and amortisation: - continuing operations 23.9 51.7- discontinued operations - 2.8 --- --- 23.9 54.5Depreciation 47.7 45.9 ---- ----
EBITDA before exceptional items 71.6
100.4
Loss/(profit)on disposal of rental equipment 0.7
(2.3)
Profit on disposal of other property,plant and equipment (0.1)
(0.2)
Increase in inventories (0.1)
(1.1)
Increase in trade and other receivables (2.2)
(11.3)
Increase in trade and other payables 4.4
7.7Exchange differences 0.2 0.1Other non-cash movements 0.2 0.5
Cash generated from operations before exceptional items --- --- and changes in rental equipment 74.7
93.8 ==== ==== Three months to 31 July 2009 2008 ---- ---- GBPm GBPm
b. Reconciliation to net debt
-------------------------- (Increase)/decrease in cash in the period (0.8)
0.3
Decrease in debt through cash flow (55.7)
(113.3)
----
-----
Change in net debt from cash flows (56.5)
(113.0)Exchange differences (107.6) 0.1Non-cash movements:
- deferred costs of debt raising 0.7
0.6
- capital element of new finance leases -
0.7
--- --- Reduction in net debt in the period (163.4)
(111.6)Opening net debt 1,035.9 963.2 ------- ----- Closing net debt 872.5 851.6 ===== ===== c. Analysis of net debt -------------------- 1 May Exchange Cash Non-cash 31 July 2009 movement flow movements 2009 ---- -------- ---- --------- ---- GBPm GBPm GBPm GBPm GBPm Cash (1.7) 0.1 (0.8) - (2.4)Debt due within 1 year 6.9 (0.5) (0.9) 0.4 5.9Debt due after 1 year 1,030.7 (107.2) (54.8) 0.3 869.0 ------- ----- ---- --- ----- Total net debt 1,035.9 (107.6) (56.5) 0.7 872.5 ======= ===== ==== === =====
Details of the Group's debt are given in the Review of Balance Sheet and Cashflow accompanying these interim financial statements.
11. Contingent liabilities and contingent assets
There have been no significant changes in contingent liabilities from those reported at 30 April 2009.
REVIEW OF BALANCE SHEET AND CASH FLOW
Balance sheetFixed assets------------Capital expenditure in the quarter was 15.2m (2008: 108.5m) with 12.2minvested in the rental fleet (2008: 96.6m). Capital expenditure by divisionwas as follows: 2009 2008 ---- ---- Sunbelt in $m 17.0 109.8 ==== ===== Sunbelt in m 10.3 55.4A-Plant 1.9 41.2 --- ---- Total rental equipment 12.2 96.6
Delivery vehicles, property improvements & computers 3.0 11.9 --- ---- Total additions 15.2 108.5 ==== =====As a result of the decision to actively reduce fleet size in the second half oflast year both Sunbelt's and A-Plant's fleets were smaller at 31 July 2009 thanat 31 July 2008. Accordingly, all 2009 capital expenditure was for replacement.In 2008, 54.0m was spent on growth and 42.6m on replacement.The average age of the Group's serialised rental equipment, which constitutesthe substantial majority of our fleet, at 31 July 2009 was 37 months (2008: 31months) on a net book value basis. Sunbelt's fleet had an average age of 40months (2008: 34 months) comprising 41 months for aerial work platforms whichhave a longer life and 38 months for the remainder of its fleet and A-Plant'sfleet had an average age of 29 months (2008: 22 months). Rental fleet at original cost LTM LTM ----------------------------- LTM LTM rental dollar physical 31 July 2009 31 July 2008 average revenues
utilisation utilisation
------------ ------------ ------- --------
----------- -----------
Sunbelt in $m 2,144 2,371 2,238 1,204 54% 66% ===== ===== ===== ===== === ===Sunbelt in m 1,293 1,197 1,350 749 54% 66%A-Plant 318 385 352 178 50% 67% --- --- --- --- --- --- 1,611 1,582 1,702 927 ===== ===== ===== ===Dollar utilisation is defined as rental revenues divided by average fleet atoriginal (or "first") cost and, measured over the last twelve months to 31 July2009, was 54% at Sunbelt (2008: 62%) and 50% at A-Plant (2008: 59%). Physicalutilisation is time based utilisation, which is calculated as the daily averageof the original cost of equipment on rent as a percentage of the total value ofequipment in the fleet at the measurement date and, measured over the lasttwelve months to 31 July 2009 was 66% in Sunbelt (2008: 68%) and 67% at A-Plant(2008: 71%).Trade receivables-----------------Receivable days at 31 July were 48 days (2008: 52 days). The bad debt chargefor the quarter ended 31 July 2009 as a percentage of total turnover was 1.1%(2008: 0.9%). Trade receivables at 31 July 2009 of 117.1m (2008: 151.5m) arestated net of provisions for bad debts and credit notes of 16.6m (2008: 13.8m) with the provision representing 12.4% (2008: 8.4%) of gross receivables.Trade and other payables------------------------Group payable days were 47 days in 2009 (2008: 70 days). The reduction is due,primarily, to lower capital expenditure related payables at 31 July 2009 of 4.9m (2008: 74.6m) which have longer payment terms. Payment periods forpurchases other than rental equipment vary between 7 and 45 days and for rentalequipment between 30 and 120 days.Cash flow and net debt Three months to LTM Year to 31 July 31 July 30 April 2009 2008 2009 2009 ---- ---- ---- ---- GBPm GBPm GBPm GBPm EBITDA before exceptional items 71.6 100.4
330.1 358.9
==== ===== ===== ===== Cash inflow from operations before exceptionsl items and changes in rental equipment 74.7 93.8 354.5 373.6Cash efficiency ratio* 104.4% 93.4% 107.4% 104.1% Maintenance rental capital expenditure (16.4) (30.7) (172.3) (208.5)Non-rental capital expenditure (2.7) (11.2) (18.6) (27.1)Rental equipment disposal proceeds 5.9 9.7 81.5 85.3Other property, plant and equipment disposal proceeds 0.8 1.1
6.3 6.6Tax (paid)/received (0.5) (0.1) 0.4 0.8Financing costs paid (2.6) (4.2) (63.1) (64.7) --- --- ---- ---- Cash flow before growth capex and exceptionals 59.2 58.4 188.7 166.0Growth rental capital expenditure - (21.9)
- -Exceptional costs paid (2.7) (0.6) (11.5) (9.4) --- --- ---- --- Total cash generated from operations 56.5 35.9 177.2 156.6Business disposals/(acquisitions) - 89.8
(0.8) 89.0 --- ---- --- ---- Total cash generated 56.5 125.7 176.4 245.6Dividends paid - - (12.9) (12.9)
Share buy-backs and other equity - (12.7)
(3.2) (15.9)transactions (net) --- ---- --- ---- Decrease in net debt 56.5 113.0 160.3 216.8 ==== ===== ===== =====
*Cash inflow from operations before exceptional items and changes in rental equipment as a percentage of EBITDA before exceptional items.
Cash inflow from operations before exceptional items and changes in rental equipment decreased 20.4% to 74.7m reflecting the lower EBITDA in 2009 whilst the cash efficiency ratio was 104.4% (2008: 93.4%) reflecting lower working capital in the recession and reduced fleet disposal profits.
Payments for capital expenditure were broadly in line with capital expendituredelivered into the fleet whilst disposal proceeds received totalled 6.7m. Netcash capital expenditure was therefore 12.4m in the quarter (2008: 53.0m).
Financing costs paid differ from the accounting charge in the income statement due to the timing of interest payments in the quarter and non-cash interest charges. They reduced compared to last year due to the impact of both lower interest rates and lower average debt levels.
After exceptional costs paid of 2.7m, representing mostly the settlement ofstaff severance and vacant property costs all of which were provided for at 30April 2009, the Group generated 56.5m of net cash inflow in the quarter whichwas applied to reduce outstanding debt.Net debt-------- 31 July 30 April 2009 2008 2009 ---- ---- ---- GBPm GBPm GBPm
First priority senior secured bank debt 396.5 445.1
501.1
Finance lease obligations 6.1 14.2
7.9
8.625% second priority senior secured notes, due 2015 147.3 122.3
165.1
9% second priority senior secured notes, due 2016 325.0 271.5
363.5 ----- ----- ----- 874.9 853.1 1,037.6Cash and cash equivalents (2.4) (1.5) (1.7) --- --- --- Total net debt 872.5 851.6 1,035.9 ===== ===== ======= Net debt at 31 July 2009 was 872.5m (30 April 2009: 1,035.9m) which includesa translation reduction since year end of 107.6m reflecting the recentstrengthening of the pound against the dollar. The Group's underlying EBITDAfor the twelve months ended 31 July 2009 was 330.1m and the ratio of net debtto underlying EBITDA was therefore 2.6 times at 31 July 2009 (2008: 2.3 times).The Group's debt facilities are now committed for a weighted average period ofapproximately 4.6 years with the earliest significant maturity being in August2011. The weighted average interest cost of these facilities (includingnon-cash amortisation of deferred debt raising costs) is approximately 6%, mostof which is tax deductible in the US where the tax rate is 39%. Financialperformance covenants under the two senior secured notes issues are onlymeasured at the time new debt is raised. There are two financial performancecovenants under the asset based first priority senior bank facility:
* funded debt to EBITDA before exceptional items not to exceed 4.0 times; and
* a fixed charge ratio comparing EBITDA before exceptional items less net
capital expenditure paid in cash to the sum of scheduled debt repayments
plus cash interest, cash tax payments and dividends paid which is required
to be equal or greater to 1.1 times.
These covenants do not, however, apply when availability (the differencebetween the borrowing base and facility utilisation) exceeds $125m. At 31 July2009 availability under the bank facility was $635m ($550m at 30 April 2009).Accordingly, the Board continues to believe that it is appropriate to preparethe accounts on a going concern basis. Additionally, although the senior debtcovenants were not required to be measured at 31 July 2009, the Group was incompliance with both of them at that date.
Principal risks and uncertainties
Risks and uncertainties in achieving the Group's objectives for the remainderof the financial year, together with assumptions, estimates, judgements andcritical accounting policies used in preparing financial information remainunchanged from those detailed in the 2009 Annual Report and Accounts on pages26 to 33. Our business is subject to significant fluctuations in performancefrom quarter to quarter as a result of seasonal effects. Commercialconstruction activity tends to increase in the summer and during extendedperiods of mild weather and to decrease in the winter and during extendedperiods of inclement weather. Furthermore, due to the incidence of publicholidays in the US and the UK, there are more billing days in the first half ofour financial year than the second half leading to our revenues normally beinghigher in the first half. On a quarterly basis, the second quarter is typicallyour strongest quarter, followed by the first and then the third and fourthquarters.Fluctuations in the value of the US dollar with respect to the pound sterlinghave had, and may continue to have, a significant impact on our financialcondition and results of operations as reported in pounds due to the majorityof our assets, liabilities, revenues and costs being denominated in US dollars.100% of our debt was denominated in US dollars at 31 July 2009. At that datedollar denominated debt represented approximately 80% of the value of dollardenominated net assets (other than debt) providing a partial, but substantial,hedge against the translation effects of changes in the dollar exchange rate.The dollar interest payable on this debt also limits the impact of changes inthe dollar exchange rate on our pre-tax profits and earnings. Based on thecurrent currency mix of our profits and on dollar debt levels, interest andexchange rates at 31 July 2009, a 1% change in the US dollar exchange ratewould impact pre-tax profit by 1.5%. In addition, the current trading andoutlook section of this interim statement provides a commentary on market andeconomic conditions for the remainder of the financial year.
OPERATING STATISTICS
Number of rental stores Staff numbers ----------------------- ------------- 31 July 30 April 31 July 30 April 2009 2008 2009 2009 2008 2009 ---- ---- ---- ---- ---- ----Sunbelt Rentals 398 432 398 5,818 7,025 6,072A-Plant 115 188 122 1,933 2,396 2,077Corporate office - - - 12 13 13 --- --- --- -- -- -- Group 513 620 520 7,763 9,434 8,162 === === === ===== ===== =====
Sunbelt's store numbers include 90 Sunbelt at Lowes stores at 31 July 2009 (2008: 90).
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