15th Mar 2005 07:01
Ashtead Group PLC15 March 2005 ASHTEAD GROUP PLC Unaudited results for the third quarter and nine months ended 31 January 2005 Ashtead Group plc, the equipment rental group serving the US and UKconstruction, industrial and homeowner markets, announces its results for thethird quarter and nine months ended 31 January 2005. Highlights---------- • Group nine months pre-tax profit before goodwill of £20.9m (2004* - £4.5m) • Group nine months pre-tax profit of £14.3m (2004 - loss of £23.1m) • Group Q3 pre-tax profit before goodwill of £0.8m (2004* - loss of £6.6m) • Group Q3 pre-tax loss of £1.4m (2004 - loss of £14.6m) • Sunbelt nine months profit** of $84.7m (2004 - $53.1m) • A-Plant nine months profit** of £8.5m (2004 - £2.5m) * additionally, in 2004, before exceptional items** Sunbelt's and A-Plant's profit comprises their operating profit before goodwill amortisation and, in 2004, exceptional items. Ashtead's chief executive, George Burnett, commented: "Achievement of a pre-goodwill profit in what is by far our seasonally weakestquarter underlines the strength of the recovery we have seen in all threedivisions. Sunbelt again delivered a strong performance with third quarterdollar revenues up 19.3% reflecting improving markets, increasing market shareand the shift from ownership to rental in the US. A-Plant and Ashtead Technologyboth also exceeded last year's third quarter performance by a significantmargin. Current trading conditions are now good in all our markets. The Board continuesto be encouraged by the underlying performance of each of our divisions andlooks forward to a successful outcome for the year." Contacts: Cob Stenham Non-executive chairman 020 7299 5562George Burnett Chief executive )Ian Robson Finance director ) 01372 362300 Brian Hudspith The Maitland Consultancy 020 7379 5151Michelle Jeffery PRESS RELEASE Overview-------- For the nine months to date, Group profit before tax, goodwill amortisation andexceptional items (2004 only) increased to £20.9m from £4.5m in 2004 (£2.9m atconstant exchange rates). After goodwill amortisation and exceptional items,pre-tax profits were £14.3m compared with last year's loss of £23.1m. Cash taxearnings per share* were 6.3p (2004 - 1.4p). After goodwill amortisation andexceptional items, and the accounting tax charge, basic earnings per share were1.3p in 2005 compared to the loss of 7.9p in 2004. The Group performed strongly in the seasonally weakest third quarter deliveringa profit before tax, goodwill amortisation (and, in 2004, exceptional items) of£0.8m (2004 - loss of £6.6m). After goodwill amortisation and exceptional items,the pre-tax loss was £1.4m compared with the loss of £14.6m in 2004. *Cash tax earnings per share comprises earnings before goodwill amortisation,exceptional items and deferred tax divided by the weighted average number ofshares in issue. Cash tax earnings per share is considered to be a relevantmeasure of earnings per share as the deferred tax liability is not expected tocrystallise in the foreseeable future. Review of nine months trading----------------------------- Divisional operating Turnover** EBITDA** profit*** ------------ ---------- ----------- 2005 2004 2005 2004 2005 2004 ------ ------ ------ ------ ------ ------ Sunbelt in $m 501.6 429.7 167.0 131.6 84.7 53.1 ======= ======= ======= ======= ====== ====== Sunbelt in £m 271.6 255.0 90.4 78.1 45.8 31.4A-Plant 117.6 118.4 35.6 33.2 8.5 2.5Ashtead Technology 8.9 8.9 4.4 4.7 2.1 2.2Group central costs - - (4.5) (4.0) (4.5) (3.9) ------ ------ ------- ------- ------- ------- 398.1 382.3 125.9 112.0 51.9 32.2 ======= ======= ======= =======Interest ** (31.0) (27.7) ------- -------Profit before tax *** 20.9 4.5 ====== ======= ** In 2004, before exceptional items. *** Before goodwill amortisation and, in2004, exceptional items. Despite a 10% year on year decline in the US dollar, Group turnover increased by4.1% to £398.1m, EBITDA by 12.4% to £125.9m and total divisional operatingprofit by 61.2% to £51.9m. The underlying growth, measured at constant exchangerates, was stronger with turnover up 10.7%, EBITDA up 19.9% and total divisionaloperating profit up 76.2%. The Group's profit margins also improved. EBITDAmargins rose from 29.3% to 31.6% and the total divisional operating profitmargin increased from 8.4% to 13.0%. Sunbelt------- Sunbelt continued to perform strongly in the nine months with both rental ratesand utilisation continuing to rise. Turnover grew 16.7% to $501.6m reflectinggrowth of approximately 7% in rental rates and an increase in the nine monthsutilisation rate from 65% to 70% whilst the fleet size remained broadlyconstant. Turnover growth was broadly based with all regions and all majorproduct areas trading ahead of last year. The nine month figures reflect further strong growth in the third quarter whereturnover was up 19.3% compared with the same period last year thanks tocontinuing high utilisation levels and further year on year rises in rentalrates of approximately 7%. As predicted construction activity in Floridaremained strong in the third quarter in the aftermath of the hurricanes earlierin the year, an effect which is expected to continue into the next financialyear. The new profit centres opened in the first half continued to make goodprogress and further new locations in Miami and Phoenix will be opened in thefourth quarter. Sunbelt's turnover improvement reflected market share gains and growth innon-residential construction activity (which rose 3.6% in the year to December2005) as well as the continued shift from ownership to rental. Sunbelt'sdivisional operating profit was up 93.2% in the third quarter from $11.8m to$22.8m. For the year to date it grew 59.5% to $84.7m representing a margin of16.9% (2004 - 12.4%). A-Plant------- A-Plant continued to build on the improvements in its performance seen in thefirst half of this year. Although total turnover for the nine months declined to£117.6m from £118.4m in 2004 as a result of the 2003/4 non-core disposalprogramme, on a same store basis turnover increased by 5.9% as a furtherimprovement in year on year performance was achieved in the third quarter. Theyear to date figure reflected a fleet size which was approximately 5% smallerthan in the equivalent period last year, an increase in utilisation from 59% to64% and growth in rental rates of approximately 3%. The growth in rental ratesin the third quarter was 5%. In its seasonally slowest third quarter A-Plant's divisional operating profitimproved to breakeven from a loss of £3.1m in 2004. As a result its nine monthdivisional operating profit grew more than threefold to £8.5m (2004 - £2.5m)representing a margin of 7.2% (2004 - 2.1%). Although this signifies aconsiderable increase in its return on capital employed, we are increasinginvestment in the higher return tool hire product to help improve returnsfurther. In addition to the current 69 branded Tool Hire Shops, a further 22plant locations already offer the tool hire product. During the course of thenext twelve months 26 more plant locations will start carrying the tool hirerange of which 8 will be fully equipped by 30 April 2005. It is intended thatall 48 plant locations will be co-branded as Tool Hire Shops by April 2007 - anincrease of 70% on the current 69 fully branded locations. Thanks to the breadth of its product offering and its geographic coverageA-Plant continues to benefit from its major account business. A-Plant recentlyagreed a new five-year contract with Balfour Beatty Utilities and a two-yearextension to the existing three-year contract with Skanska UK plc, whichtogether are estimated to be worth over £25m. Ashtead Technology------------------ Ashtead Technology substantially improved its performance in the third quarterwith the quarter's revenues up from £2.1m to £2.9m and divisional operatingprofit up from £0.1m to £0.7m reflecting recovery in its offshore markets. Forthe nine months turnover is now unchanged from last year at £8.9m. The first UKenvironmental rental store was opened in Hitchin at the beginning of the yearand the US environmental rentals expansion continued with an opening in Atlantain October. Both stores are developing well. Nine month divisional operatingprofit was £2.1m (2004 - £2.2m). There is now good reason to believe that theoil majors will fund greater offshore exploration and construction activity in2005 from which Ashtead Technology should benefit. Capital expenditure and net debt-------------------------------- Capital expenditure in the nine months was £89.8m of which £80.1m was on therental fleet (2004 - £49.7m in total). Capital expenditure was increasedsignificantly in Q3 to enable Sunbelt to take advantage of the improvingeconomic conditions in the US. £18.8m of the fleet expenditure was for growthwith the remainder being spent to replace existing equipment. Disposal proceedsof £25.0m (2004 - £17.0m) were achieved in the period generating a profit ondisposal of £3.6m (2004 - £1.0m). The markets used for disposing of used rentalequipment continue to be healthy. As previously announced capital expenditurefor the year to 30 April 2005 is expected to total £120m to £130m. The tax effect on cash flow was again minimal and is expected to remain so. Net debt at 31 January was £490.8m, a reduction of £35.9m since year-end and£44.5m in the twelve months since 31 January 2004. At constant exchange ratesthese reductions were £22.7m and £32.5m respectively. New asset based bank facility----------------------------- As previously announced, the Group completed the syndication of a new $675mfive-year asset based first priority senior debt facility on 12 November 2004.Based on January 2005 debt and EBITDA levels, the Group has now achieved thenecessary targets to reduce the interest rate payable on borrowings under thisfacility to LIBOR plus 225bp from the average of LIBOR plus 260bp payable whenthe facility closed. This 35bp reduction in interest cost, which took effectfrom 28 February, provides a useful partial offset against the recent increasesin US dollar LIBOR and means that we are now borrowing at the lowest interestrate tier in the facility's interest rate grid. $110m was available under thenew facility at 31 January 2005. Current trading and outlook--------------------------- Achievement of a pre-goodwill profit in what is by far our seasonally weakestquarter underlines the strength of the recovery we have seen in all threedivisions. Sunbelt again delivered a strong performance with third quarterdollar revenues up 19.3% reflecting improving markets, increasing market shareand the shift from ownership to rental in the US. A-Plant and Ashtead Technologyboth also exceeded last year's third quarter performance by a significantmargin. Current trading conditions are now good in all our markets. The Board continuesto be encouraged by the underlying performance of each of our divisions andlooks forward to a successful outcome for the year. - o0o - There will be a conference call for equity analysts at 9.30am this morning. Asimultaneous webcast of this call will be available through the Company'swebsite, www.ashtead-group.com and there will also be a recorded playbackavailable from shortly after the call finishes. CONSOLIDATED PROFIT & LOSS ACCOUNT---------------------------------- Unaudited Audited Three months to Nine months to Year to 31 January 31 January 30 April 2005 2004 2005 2004 2004 ------ ------ ------ ------ ------ £m £m £m £m £m Turnover 123.4 111.7 398.1 381.1 497.0 ======= ======= ======= ======= ======= Operating profit/(loss) 8.9 (2.2) 45.3 16.2 16.2 Loss on sale of business - (3.8) - (3.8) (3.8) Interest payable and similarcharges (10.3) (8.6) (31.0) (35.5) (45.5) (Loss)/profit before taxation (1.4) (14.6) 14.3 (23.1) (33.1) Profit/(loss) before taxation,exceptionalitems and goodwill amortisation 0.8 (6.6) 20.9 4.5 7.6 Exceptional items - (5.7) - (20.8) (31.5) Goodwill amortisation (2.2) (2.3) (6.6) (6.8) (9.2) (Loss)/profit on ordinaryactivities before taxation (1.4) (14.6) 14.3 (23.1) (33.1) Taxation on (loss)/profit onordinary activities: - current tax (0.1) - (0.6) (0.1) 0.3- deferred tax (0.8) 0.3 (9.6) (2.2) (2.0) (0.9) 0.3 (10.2) (2.3) (1.7)(Loss)/profit for the financialperiod transferred to reserves (2.3) (14.3) 4.1 (25.4) (34.8) Basic and diluted (loss)/earningsper share (0.7p) (4.4p) 1.3p (7.9p) (10.8p) -------- -------- ------ -------- --------- Reconciliation of operating profit to EBITDA before exceptional items Operating profit 8.9 (2.2) 45.3 16.2 16.2 Exceptional items - 1.9 - 9.2 18.8 Goodwill amortisation 2.2 2.3 6.6 6.8 9.2 Depreciation excluding exceptionalimpairment 25.4 25.1 74.0 79.8 102.8 ------ ------ ------ ------ -------EBITDA before exceptional items 36.5 27.1 125.9 112.0 147.0 ====== ====== ======= ======= ======= EBITDA is presented here as an additional performance measure as it is commonlyused by investors and lenders. STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES---------------------------------------------- Unaudited Audited Three months to Nine months to Year to 31 January 31 January 30 April 2005 2004 2005 2004 2004 ------ ------ ------ ------ ------ £m £m £m £m £m (Loss)/profit for the financialperiod (2.3) (14.3) 4.1 (25.4) (34.8)Foreign currency translationdifferences (3.2) 0.8 (6.8) 1.3 4.9 Total recognised gains andlosses in the period (5.5) (13.5) (2.7) (24.1) (29.9) RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Unaudited Audited Three months to Nine months to Year to 31 January 31 January 30 April 2005 2004 2005 2004 2004 ------ ------ ------ ------ ------ £m £m £m £m £m Total recognised gains and lossesin the period (5.5) (13.5) (2.7) (24.1) (29.9)Charge for share scheme awards 0.1 - 0.2 - -Goodwill transferred to profit andloss account in respect of businessessold - 2.3 - 2.3 2.3 Net decrease in shareholders'funds in the period (5.4) (11.2) (2.5) (21.8) (27.6)Opening shareholders' funds 134.7 148.8 131.8 159.4 159.4 ------- ------- ------- ------- ------- Closing shareholders' funds 129.3 137.6 129.3 137.6 131.8 ======= ======= ======= ======= ========= CONSOLIDATED BALANCE SHEET-------------------------- Unaudited Audited 31 January 30 April 2005 2004 2004 ------ ------ ------ £m £m £mFixed assets Intangible assets: - goodwill 136.3 145.3 142.9Tangible fixed assets:- rental equipment 445.3 470.2 469.7- other fixed assets 64.8 65.7 65.8 ------ ------ ------ 510.1 535.9 535.5 646.4 681.2 678.4 ------ ------ -------Current assets Stock 13.4 13.7 15.1Trade debtors subject to non-recourse financing - 75.8 82.4Non-recourse financing received - (49.6) (52.2) ------ ------ -------Trade debtors net of non-recourse financing - 26.2 30.2Other trade debtors, prepayments & accruedincome 90.2 17.3 11.7Cash at bank and in hand 8.0 14.3 9.9 ------ ------ ------- 111.6 71.5 66.9 ------ ------ -------Creditors - amounts falling due within one year Bank loans, overdrafts and finance leaseobligations (5.6) (20.2) (15.6)Trade and other creditors (70.7) (64.2) (77.3) ------ ------ ------- (76.3) (84.4) (92.9) ------ ------ ------- Net current assets/(liabilities) 35.3 (12.9) (26.0) ------ ------ ------- Total assets less current liabilities 681.7 668.3 652.4 Creditors - amounts falling due after more thanone year Bank and other loans, and finance leaseobligations (362.1) (349.4) (338.2)5.25% unsecured convertible loan note, due 2008 (131.1) (130.4) (130.6)Trade and other creditors (7.8) (8.9) (9.4) ------ ------ ------- (501.0) (488.7) (478.2) ------ ------ -------Provision for liabilities and charges Deferred taxation (35.6) (27.7) (27.7) Other provisions (15.8) (14.3) (14.7) ------ ------ ------- (51.4) (42.0) (42.4) ------ ------ ------- Total net assets 129.3 137.6 131.8 ====== ====== ======= Capital and reserves Called up share capital 32.6 32.6 32.6Share premium account 100.7 100.7 100.7Revaluation reserve 0.5 0.5 0.5Own shares held by ESOT (1.6) (1.6) (1.6)Profit and loss account (2.9) 5.4 (0.4) ------ ------ -------Total equity shareholders' funds 129.3 137.6 131.8 ====== ====== ======= CONSOLIDATED CASH FLOW STATEMENT-------------------------------- Unaudited Audited Nine months to Year to 31 January 30 April 2005 2004 2004 ------ ------ ------ £m £m £m Net cash inflow from operating activities Cash inflow before exceptional items 119.6 113.0 140.0Exceptional costs (3.7) (7.6) (11.1)Movement in non-recourse finance received under trade debtors securitisation (51.7) (4.5) (2.2) ------ ------ ------Net cash inflow from operating activities 64.2 100.9 126.7 ------ ------ ------ Returns on investments and servicing of finance Interest paid (21.9) (23.4) (32.9)Exceptional finance costs (2.0) (3.7) (7.1) ------ ------ ------Net cash outflow from returns on investmentsand servicing of finance (23.9) (27.1) (40.0) ------- ------ ------ Taxation (outflow)/inflow (0.9) (0.3) 0.1 Capital expenditure and financial investment Purchase of tangible fixed assets (86.5) (70.3) (82.9)Sale of tangible fixed assets 25.4 17.2 32.3 ------ ------ ------Net cash outflow from capital expenditure andfinancial investment (61.1) (53.1) (50.6) ------ ------ ------Acquisitions & disposals inflow 0.5 13.0 15.2 ------ ------ ------ Net cash (outflow)/inflow before management ofliquid resources and financing (21.2) 33.4 51.4 Financing Drawdown of loans 248.9 - 115.6Redemption of loans (222.5) (17.3) (156.6)Decrease/(increase) in cash collateral balances 5.7 (2.5) (2.6)Capital element of finance lease payments (6.6) (6.5) (8.6) ------ ------ ------Net cash outflow from financing 25.5 (26.3) (52.2) ------ ------ ------Increase/(decrease) in cash 4.3 7.1 (0.8) ====== ====== ------ NOTES TO THE FINANCIAL STATEMENTS--------------------------------- 1. Basis of preparation The financial statements for the three months and nine months ended 31 January2005 were approved by the directors on 14 March 2005. They have been prepared inaccordance with relevant UK accounting standards on the basis of the accountingpolicies set out in the Group's Annual Report and Accounts for the year ended 30April 2004. They are unaudited and do not constitute statutory accounts withinthe meaning of Section 240 of the Companies Act 1985. The abridged 2004 profitand loss account, balance sheet and cash flow statement are taken from thestatutory accounts for the year ended 30 April 2004 which have been filed withthe Registrar of Companies. The auditors' report on those accounts wasunqualified and did not contain a statement under section 237 of the CompaniesAct 1985. 2. Segmental analysis Turnover Operating profit ---------- ------------------ Before goodwill Goodwill Before mortisation & amortisation & exceptional Exceptional exceptional exceptional Net items items Total items items Total assets ------- ------- ------ ------- --------- ------- -------- £m £m £m £m £m £m £mThree months to 31 January 2005------Sunbelt Rentals 83.5 - 83.5 11.8 (2.2) 9.6 452.7A-Plant 37.0 - 37.0 - - - 192.0Technology 2.9 - 2.9 0.7 - 0.7 11.0Corporate costs - - - (1.4) - (1.4) -Central items* - - - - - - (526.4) ------ ------ ------ ------ ------ ------ --------- 123.4 - 123.4 11.1 (2.2) 8.9 129.3 ======= ====== ======= ====== ------- ===== =======2004------Sunbelt Rentals 74.7 - 74.7 6.2 (4.1) 2.1 487.8A-Plant 34.9 - 34.9 (3.1) (0.1) (3.2) 203.0Technology 2.1 - 2.1 0.1 - 0.1 9.8Corporate costs - - - (1.2) - (1.2) -Central items* - - - - - - (563.0) ------ ------ ------ ------ ------ ------ --------- 111.7 - 111.7 2.0 (4.2) (2.2) 137.6 ======= ====== ======= ===== ------- ------- ======= Nine months to 31 January 2005------Sunbelt Rentals 271.6 - 271.6 45.8 (6.4) 39.4 452.7A-Plant 117.6 - 117.6 8.5 (0.1) 8.4 192.0Technology 8.9 - 8.9 2.1 (0.1) 2.0 11.0Corporate costs - - - (4.5) - (4.5) -Central items* - - - - - - (526.4) ------ ------ ------ ------- ------ ------ --------- 398.1 - 398.1 51.9 (6.6) 45.3 129.3 ======= ====== ======= ====== ------- ====== =======2004------Sunbelt Rentals 255.0 (1.2) 253.8 31.4 (12.3) 19.1 487.8A-Plant 118.4 - 118.4 2.5 (3.6) (1.1) 203.0Technology 8.9 - 8.9 2.2 (0.1) 2.1 9.8Corporate costs - - - (3.9) - (3.9) -Central items* - - - - - - (563.0) ------ ------ ------ ------ ------ ------ --------- 382.3 (1.2) 381.1 32.2 (16.0) 16.2 137.6 ======= ------- ======= ====== -------- ====== ======= * Net borrowings, non-recourse funding in 2004 under the accounts receivable securitisation and deferred taxation. NOTES TO THE FINANCIAL STATEMENTS--------------------------------- 3. Operating costs Three months to Three months to 31 January 2005 31 January 2004 ----------------- ----------------- Before Before goodwill Goodwill goodwill Goodwill amortisation & amortisation & amortisation amortisation Total exceptional items exceptional items Total ------------ ------------ ------ ----------------- ----------------- -------- £m £m £m £m £m £mStaff costs:Salaries 40.2 - 40.2 37.4 - 37.4Social security costs 2.6 - 2.6 2.7 - 2.7Other pension costs 1.1 - 1.1 1.0 - 1.0 ----- ------ ----- ----- ------ ----- 43.9 - 43.9 41.1 - 41.1 ------ ------ ------ ------ ------ ------Depreciation andamortisation: Depreciation 25.4 - 25.4 25.1 - 25.1Goodwill amortisation - 2.2 2.2 - 2.3 2.3 ------ ----- ----- ------ ----- ----- 25.4 2.2 27.6 25.1 2.3 27.4 ------ ----- ------ ------ ----- ------ Other costs:Vehicle costs 11.0 - 11.0 10.4 - 10.4Spares,consumablesand external repairs 9.6 - 9.6 8.1 - 8.1Facilities costs 6.7 - 6.7 6.8 - 6.8Refinancing costs - - - - 1.8 1.8Other external charges 16.8 - 16.8 17.7 0.4 18.1 ------ ------ ------ ------ ----- ------ 44.1 - 44.1 43.0 2.2 45.2 ------ ------ ------ ------ ----- ------Profit on disposalof fixed assets (1.1) - (1.1) 0.5 (0.3) 0.2 ------- ------ - ------ ----- ------- ----- 112.3 2.2 114.5 109.7 4.2 113.9 ======= ===== ======= ======= ===== ======= Nine months to Nine months to 31 January 2005 31 January 2004 ----------------- -----------------Staff costs:Salaries 118.3 - 118.3 116.7 - 116.7Social security costs 9.2 - 9.2 9.3 - 9.3Other pension costs 3.1 - 3.1 3.0 - 3.0 ----- ------ ----- ----- ------ ----- 130.6 - 130.6 129.0 - 129.0 ------- ------ ------- ------- ------ ------- Depreciation andamortisation: Depreciation 74.0 - 74.0 79.8 2.9 82.7Goodwill amortisation - 6.6 6.6 - 6.8 6.8 ------ ----- ----- ------ ----- ----- 74.0 6.6 80.6 79.8 9.7 89.5 ------ ----- ------ ------ ----- ------Other costs:Vehicle costs 36.1 - 36.1 34.7 - 34.7Spares, consumablesand external repairs 29.8 - 29.8 27.6 - 27.6Facilities costs 20.8 - 20.8 22.0 - 22.0Refinancing costs - - - - 4.9 4.9Other external charges 58.5 - 58.5 58.0 0.8 58.8 ------ ------ ------ ------ ----- ------ 145.2 - 145.2 142.3 5.7 148.0 ------- ------ ------- ------- ----- -------Profit on disposalof fixed assets (3.6) - (3.6) (1.0) (0.6) (1.6) ------- ------ ------- ------- ------- ------- 346.2 6.6 352.8 350.1 14.8 364.9 ======= ===== ======= ======= ====== ======= NOTES TO THE FINANCIAL STATEMENTS--------------------------------- 4. Exceptional items Three months to Nine months to Year to 31 January 31 January 30 April 2004 2004 2004 ------ ------ ------ £m £m £m Debt facility costs 2.2 13.5 20.6UK business refocusing programme 3.8 6.7 6.1Prior year impact of change in USestimation methods - 1.2 5.3US severence costs - - 0.5Profit on sale of land andbuildings (0.3) (0.6) (1.0) ------- ------- ------- 5.7 20.8 31.5 ======= ====== ====== Presented in the profit and loss account as follows:Revenue - 1.2 3.3Depreciation - 2.9 2.3Other operating costs 1.9 5.1 13.2 ----- ----- ------Charged in arriving at operating profits 1.9 9.2 18.8Loss on sale of business 3.8 3.8 3.8Interest payable and similar charges - 7.8 8.9 ------ ----- ----- 5.7 20.8 31.5 ===== ====== ====== 5. Interest payable and similar charges Three months to Nine months to Year to 31 January 31 January 30 April 2005 2004 2005 2004 2004 ------ ------ ------ ------ ------ £m £m £m £m £m Bank interest payable 3.9 5.6 10.8 18.3 24.1Funding cost on trade debtors'securitisation 0.4 0.8 2.3 2.4 3.2Interest on 5.25% unsecuredconvertible loan note, due 2008 2.1 2.0 6.3 6.0 8.1Interest on 12% senior securednotes, due 2014 3.6 - 11.0 - -Interest payable on financeleases 0.3 0.2 0.6 1.0 1.2 ----- ----- ----- ----- -----Total interest payable beforeexceptional costs 10.3 8.6 31.0 27.7 36.6Exceptional costs re debtfacilities - - - 7.8 8.9 ------ ------ ------ ----- ----- 10.3 8.6 31.0 35.5 45.5 ====== ===== ====== ====== ====== 6. Taxation The effective rate of tax for the nine months ended 31 January 2005 is nil%(2004 - nil%) in the UK and 39.7% (2004 - 41.3%) in the US. The tax charge forthe period has been calculated applying the directors' best estimate of theannual tax rate in each jurisdiction in which the Group operates to the relevantproportion of the profit before tax for the period after adding back goodwillamortisation for which no tax allowance is available. NOTES TO THE FINANCIAL STATEMENTS--------------------------------- 7. (Loss)/earnings per share Basic and diluted (loss)/earnings per share for the three months and nine monthsended 31 January 2005 have been calculated based on the (loss)/profit for the relevant period and on the weighted average number of ordinary shares in issue during that period which excludes the 2,723,461 shares held by the ESOT in respect of which dividends have been waived. Diluted (loss)/earnings per share is computed using the result for the relevant period and the diluted number of shares (ignoring any potential issue of ordinary shares which would be anti-dilutive). There was no dilutive effect arising from the potential issue of ordinary shares resulting in basic and diluted (loss)/earnings per share being the same, as set out below: Three months to Nine months to Year to 31 January 31 January 30 April 2005 2004 2005 2004 2004 ------ ------ ------ ------ ------ (Loss)/profit for the financialperiod (£m) (2.3) (14.3) 4.1 (25.4) (34.8) Weighted average number of shares(m) (in millions) 322.9 322.9 322.9 322.9 322.9 ======= ======= ======= ======= ======= Basic/diluted (loss)/earnings pershare (p) (0.7p) (4.5p) 1.3p (7.9p) (10.8p) Cash tax earnings/(loss) per share (defined in any period as the earnings/(loss)before exceptional items, goodwill amortisation and deferred taxation for thatperiod divided by weighted average number of shares in issue in that period) maybe reconciled to the basic (loss)/earnings per share as follows: Three months to Nine months to Year to 31 January 31 January 30 April 2005 2004 2005 2004 2004 ------ ------ ------ ------ ------ Basic (loss)/earnings per share (0.7p) (4.5p) 1.3p (7.9p) (10.8p)Exceptional items - 1.8p - 6.5p 9.7pGoodwill amortisation 0.7p 0.7p 2.0p 2.1p 2.8pDeferred tax 0.2p (0.1p) 3.0p 0.7p 0.6p ------ -------- ------ ------ ------Cash tax earnings per share 0.2p (2.1p) 6.3p 1.4p 2.3p ------ -------- ------ ------ ------ 8. Tangible fixed assets 2005 2004 ------- ------ Rental RentalNet book value equipment Total equipment Total---------------- ----------- ------- ----------- ------- £m £m £m £m At 1 May 469.7 535.5 577.5 651.5Exchange difference (18.1) (19.8) (44.9) (48.6)Additions 80.1 89.8 43.7 49.7Disposals (20.6) (21.4) (28.5) (32.5)Depreciation - excluding impairment (65.8) (74.0) (73.2) (79.8)- UK refocusing programme - - (4.4) (4.4) ------ ------ ---------- -------At 31 January 445.3 510.1 470.2 535.9 ======= ======= ======= ======= NOTES TO THE FINANCIAL STATEMENTS--------------------------------- 9. Notes to cash flow statement Nine months to Year to 31 January 30 April 2005 2004 2004 ------ ------ ------a) Cash flow from operating activities £m £m £m-----------------------------------------Operating profit 45.3 16.2 16.2Exceptional items - 9.2 18.8Depreciation excluding exceptional impairment 74.0 79.8 102.8Goodwill amortisation 6.6 6.8 9.2 ----- ----- -----EBITDA before exceptional items 125.9 112.0 147.0Gain on sale of tangible fixed assets (3.6) (1.0) (5.2)Decrease/(increase) in stocks 1.0 (2.1) (4.4)(Increase)/decrease in debtors (0.3) 12.1 0.5(Decrease)/increase in creditors (3.7) (8.2) 0.9Exchange differences 0.1 0.2 1.2Other non-cash movement 0.2 - - ----- ------ ------Net cash inflow from operating activities beforeexceptional items 119.6 113.0 140.0 ======= ======= ======= b) Reconciliation to net debt--------------------------------- (Increase)/decrease in cash in the period (4.3) (7.1) 0.8Decrease/(increase) in cash collateral balances 5.7 (2.5) (2.6)Increase/(decrease) in bank loans 26.4 (17.3) (156.6)Increase in senior secured notes due 2014 - - 115.6Decrease in finance lease obligation (6.6) (6.5) (8.6) ------- ------- -------Change in net debt from cash flows 21.2 (33.4) (51.4)Translation difference (11.8) (46.2) (39.7)Non cash movement:- First priority asset based senior debt facility 0.4 - -- 12% second priority senior secured notes 0.2 - -- 5.25% unsecured convertible loan note 0.5 0.5 0.8- obligation due on finance leases 5.8 - - ----- ------ ------Movement in net debt in the period 16.3 (79.1) (90.3)Opening net debt 474.5 564.8 564.8 ------- ------- -------Closing net debt 490.8 485.7 474.5 ======= ======= ======= c) Analysis of net debt 1 May Exchange Cash Non-cash 31 January-------------------------- 2004 movement flow movements 2005 ------ ---------- ------ ----------- ------ £m £m £m £m £m Cash (3.9) 0.2 (4.3) - (8.0)Cash collateral balances (6.0) 0.3 5.7 - -Overdrafts 3.3 - - (3.3) - ----- ------ ------ ------- ------ (6.6) 0.5 1.4 (3.3) (8.0)Debt due after 1 year 465.5 (12.0) 36.1 3.6 493.2Debt due within 1 year 15.6 (0.3) (16.3) 6.6 5.6 ------ ------- -------- ----- -----Total net debt 474.5 (11.8) 21.2 6.9 490.8 ======= -------- ====== ===== ======= APPENDIX: OPERATING AND FINANCIAL REVIEW---------------------------------------- Third quarter (to 31 January) results compared with prior year Overview-------- 2005 2004 ------ ------ Before goodwill Goodwill amortisation & amortisation & Before goodwill Goodwill exceptional exceptional amortisation amortisation Total items items Total -------------------- --------------- ----- --------------- ------------- ----- £m £m £m £m £m £m Turnover 123.4 - 123.4 111.7 - 111.7Staff costs (43.9) - (43.9) (41.1) - (41.1)Other operatingcosts (net) (43.0) - (43.0) (43.5) (1.9) (45.4) --- -------EBITDA* 36.5 - 36.5 27.1 (1.9) 25.2Depreciation &amortisation (25.4) (2.2) (27.6) (25.1) (2.3) (27.4)Operating profit 11.1 (2.2) 8.9 2.0 (4.2) (2.2)Loss on saleof business - - - - (3.8) (3.8) -------Interest payable (10.3) - (10.3) (8.6) - (8.6) Profit/(loss)before taxation 0.8 (2.2) (1.4) (6.6) (8.0) (14.6)Taxation (0.9) - (0.9) (0.4) 0.7 0.3 Loss for the quarter(0.1) (2.2) (2.3) (7.0) (7.3) (14.3) ======= ======= ======= ======= ======= ======== * EBITDA is presented here as an additional performance measure as it iscommonly used by investors and lenders. Third quarter turnover increased 15.3% at constant 2005 exchange rates to£123.4m and by 10.5% at actual rates due to the weak US dollar. EBITDA beforeexceptional items grew by 40.6% at constant exchange rates to £36.5m and by34.7% at actual rates. Total EBITDA increased 44.8% at actual rates. Operating profit of £8.9m in the quarter was a significant improvement over theloss of £2.2m in 2004. Before goodwill amortisation and exceptional items,operating profit increased to £11.1m from £1.9m at constant exchange rates and£2.0m at actual rates. Divisional performance---------------------- Divisional results are summarised below and are stated before goodwillamortisation and exceptional items: Turnover EBITDA Divisional operating profit 2005 2004 2005 2004 2005 2004 ------ ------ ------ ------ ------ ------ Sunbelt in $m 159.6 133.8 52.3 37.5 22.8 11.8 ======= ======= ====== ====== ====== ====== Sunbelt in £m 83.5 74.7 27.3 20.6 11.8 6.2A-Plant 37.0 34.9 9.1 6.7 - (3.1)Ashtead Technology 2.9 2.1 1.5 1.1 0.7 0.1Group central costs - - (1.4) (1.3) (1.4) (1.2) 123.4 111.7 36.5 27.1 11.1 2.0 ======= ======= ====== ====== ====== ===== Sunbelt------- Turnover increased 19.3% to $159.6m due to a combination of improved rentalrates up approximately 7% over 2004, higher equipment utilisation levels (upfrom 62% a year ago to 67%), and a fleet size which grew 2% over the previousyear. Growth was broadly based with all regions and all major product areastrading ahead of last year. Operating costs (excluding depreciation and goodwill amortisation) rose 11.4% to$107.3m in 2005. This reflected principally increased investment in personneland higher maintenance costs to service current activity levels and growth infuel and insurance costs. As a result, EBITDA grew 39.5% to $52.3m and the EBITDA margin for the quarterimproved to 32.8% from 28.0% in 2004. The reported EBITDA margin was enhanced bya change in classification of certain leases from operating to finance leases inthe quarter which increased fixed assets and finance lease debt by $8.4m(£4.5m). Excluding this impact, the EBITDA margin in the quarter would have been30.6%. Sunbelt's divisional operating profit increased 93.2% to $22.8mrepresenting a margin of 14.3% (2004 - 8.8%). Sunbelt's results in sterlingreflected the factors discussed above and the weak US dollar. A-Plant------- Turnover rose 6.0% to £37.0m in the quarter. Excluding the effect of thedisposal of the Irish business in January 2004, same store turnover increased9.6% reflecting improved rental rates (up approximately 5%), a fleet size whichwas approximately 6% smaller than in the equivalent period a year ago and a risein utilisation to 59% this year from 56% in 2004. Operating costs (excludingdepreciation and goodwill amortisation) decreased 1.1% to £27.9m reflectingtight management and the sale of the Irish business. EBITDA for the quarterincreased 35.8% to £9.1m and the EBITDA margin increased from 19.2% to 24.6% in2005. A-Plant's divisional operating profit improved to breakeven from a loss of£3.1m in 2004. Ashtead Technology------------------ Turnover improved 38.1% to £2.9m at actual rates of exchange and by 45.1% atconstant exchange rates. Ashtead Technology's divisional operating profit of£0.7m increased from £0.1m in 2004 at both actual and constant exchange rates.These results reflected growth in its onshore environmental rental businessesand improved activity levels in the North Sea. Interest payable and similar charges------------------------------------ Interest payable and similar charges increased to £10.3m from £8.6m in 2004reflecting lower average debt levels but higher average interest rates followingissue of the 12% senior secured notes in April 2004 and the recent rises in USdollar interest rates. Taxation-------- The tax charge for the quarter of £0.9m (2004 - £0.3m credit) comprised a chargefor current tax of £0.1m and a charge for deferred tax of £0.8m. The Groupremains in a tax loss position in the UK for which it is unable to take benefitthrough its deferred tax charge and, accordingly, the deferred tax chargereflects only a charge on US profits which accounts for the high reportedeffective tax rate. Cash tax payments remain low. Profit/(loss) before taxation----------------------------- The loss on ordinary activities before taxation for the third quarter was £1.4mcompared with £14.6m in 2004. Before goodwill amortisation and exceptionalitems, the profit before tax was £0.8m (2004 - £6.6m loss). After taxation,there was a loss for the quarter of £2.3m compared to £14.3m in 2004. Nine month (to 31 January) results compared with prior year 2005 2004 ------ ------ Before goodwill Goodwill Before goodwill Goodwill mortisation & amortisation & amortisation amortisation exceptional exceptional Total items items Total ----------------- --------------- ------- ------------- ------------ ----- £m £m £m £m £m £m Turnover 398.1 - 398.1 382.3 (1.2) 381.1Staff costs (130.6) - (130.6) (129.0) - (129.0)costsOther operatingcosts (net) (141.6) - (141.6) (141.3) (5.1) (146.4) EBITDA* 125.9 - 125.9 112.0 (6.3) 105.7Depreciation& amortisation (74.0) (6.6) (80.6) (79.8) (9.7) (89.5) -------- --------Operating profit 51.9 (6.6) 45.3 32.2 (16.0) 16.2Loss on saleof business - - - - (3.8) (3.8)Interest payable (31.0) - (31.0) (27.7) (7.8) (35.5) --- -------Profit/(loss)before taxation 20.9 (6.6) 14.3 4.5 (27.6) (23.1)Taxation (10.2) - (10.2) (7.0) 4.7 (2.3)Profit/(loss) 10.7 (6.6) 4.1 (2.5) (22.9) (25.4)for the period ====== ======= ===== ======= ======== ======== * EBITDA is presented here as an additional performance measure as it iscommonly used by investors and lenders. Turnover before exceptional items in the nine months increased 10.7% at constant2005 exchange rates to £398.1m and by 4.1% at actual rates due to the weak USdollar. EBITDA before exceptional items grew by 19.9% at constant exchange ratesto £125.9m and by 12.4% at actual rates. Total EBITDA increased 19.1% at actualrates to £125.9m. Operating profit tripled to £45.3m. Before goodwill amortisation and exceptionalitems, operating profit increased 76.2% to £51.9m at constant exchange rates andby 61.2% at actual rates. Divisional performance---------------------- Divisional results are summarised below and are stated before goodwillamortisation and exceptional items: Turnover EBITDA Divisional operating profit -------- ------ --------------------------- 2005 2004 2005 2004 2005 2004 ------ ------ ------ ------ ------ ------ Sunbelt Rentals in $m 501.6 429.7 167.0 131.6 84.7 53.1 ======= ======= ======= ======= ====== ====== Sunbelt Rentals in £m 271.6 255.0 90.4 78.1 45.8 31.4A-Plant 117.6 118.4 35.6 33.2 8.5 2.5Ashtead Technology 8.9 8.9 4.4 4.7 2.1 2.2Related Shares:
Ashtead Group