7th Mar 2006 07:00
ASHTEAD GROUP PLC Unaudited results for the third quarter and nine months ended 31 January 2006 Ashtead Group plc, the equipment rental group serving the US and UKconstruction, industrial and homeowner markets, announces record results forthe nine months and third quarter ended 31 January 2006.Highlights Third quarter Nine months ------------- ----------- 2006 2005 2006 2005 ---- ---- ---- ---- ‚£m ‚£m ‚£m ‚£m Revenue 162.5 123.4 476.3 398.1Profit before tax and exceptional items 12.8 (0.1) 53.0 18.2Pre-tax profit 24.2 (0.1) 62.5 18.2 * Record third quarter revenues and profits * Sunbelt's nine months operating profit before exceptionals rises 62.6% to $138.4m (2005 - $85.1m) * A-Plant's nine months operating profit rises 14.7% to ‚£10.0m (2005 - ‚£8.7m) * Restructuring of sales force drives 6.1% increase in A-Plant's Q3 revenues * Market conditions in the United States expected to remain strong * c‚£18m pension deficit to be fully funded in March 2006 Ashtead's chief executive, George Burnett, commented:"We are pleased to report a strong performance in our seasonally weak thirdquarter. Favourable conditions continued in all Sunbelt's markets and drovethird quarter revenue growth of 31.0%. The new sales structure at A-Plantintroduced at the start of the current financial year began to deliver itsplanned benefits with revenue growth of 6.1% in the third quarter. And AshteadTechnology also continued to trade strongly with third quarter revenues up31.1%. As we announced on 24 November 2005, the third quarter also saw a ‚£11.3mexceptional receipt on settlement of a longstanding legal claim in the US.With the nine month profits nearly three times last year's level, continuingstrong trading conditions at Sunbelt and at Ashtead Technology, enhanced by theongoing shift from ownership to rental, and an encouraging return to revenueand profit growth in A-Plant, the Board continues to look forward withconfidence."Contacts:Cob Stenham Non-executive chairman 020 7299 5562 George Burnett Chief executive ) Ian Robson Finance director ) 01372 362300 Brian Hudspith )Emma Burdett Maitland ) 020 7379 5151 PRESS RELEASEOverviewThe Group achieved a record nine month performance. Revenue increased by 19.6%to ‚£476.3m. The nine month profit before tax and exceptional items of ‚£53.0mwas almost three times last year's ‚£18.2m. After a net exceptional credit of ‚£9.5m, the nine month pre-tax profit was ‚£62.5m. Basic earnings per share were8.8p before and 10.3p after exceptional items compared to 2.5p a year ago. On acash tax basis, earnings per share before exceptional items were 13.9p (2005 -5.4p).The Group now reports its results under international financial reportingstandards (IFRS) and comparatives have been restated accordingly. Full detailsof the migration to IFRS are included in the separate statement published on 20September 2005 and available on the Company's website at www.ashtead-group.com.Review of nine month trading performance---------------------------------------- Revenue EBITDA* Profit* ------- ------- ------- 2006 2005 2006 2005 2006 2005 ---- ---- ---- ---- ---- ---- Sunbelt in $m 616.0 501.6 236.1 171.8 138.4 85.1 ----- ----- ----- ----- ----- ---- Sunbelt in ‚£m 345.6 271.6 132.5 93.0 77.7 46.1A-Plant 118.9 117.6 37.2 37.1 10.0 8.7Ashtead Technology 11.8 8.9 5.7 4.4 2.9 2.1Group central costs - - (5.1) (4.8) (5.2) (4.8) --- --- --- --- --- --- 476.3 398.1 170.3 129.7 85.4 52.1 ----- ----- ----- ----- ---- ---- Interest (32.4) (33.9) ---- ----Profit before tax & exceptionals 53.0 18.2 ---- ----* in 2006 before exceptional itemsReflecting the Group's operational gearing, the 19.6% revenue increase resultedin a 31.3% increase in EBITDA before exceptional items to ‚£170.3m and anincrease of 63.9% in operating profit before exceptional items to ‚£85.4m.Measured at constant exchange rates, to eliminate the translation effect of thestrengthening US dollar, revenue grew 16.7%, EBITDA before exceptional itemsgrew 27.9%, operating profit before exceptional items grew 58.7% and profitbefore tax and exceptional items grew 175%. These improvements were reflectedin the Group's margins. EBITDA margins grew from 32.6% to 35.8% and operatingmargins rose from 13.1% to 17.9%.SunbeltIn the nine months to 31 January 2006 revenue grew 22.8% to $616.0m. This wasachieved through increased investment in the rental fleet which was on average10% larger than a year ago and by significant increases in rental rates whichwere increased approximately 12% in strong market conditions. Averageutilisation remained high at 71% compared to 70% in the prior year. Revenuegrowth was broadly based with all regions and all major product areas tradingahead of last year. As we reported in December, last summer's hurricanes areestimated to have added around 2% to revenues. In a strong trading environmentwhere US non-residential construction rose 6.4% in the 12 months to endJanuary, according to figures published by the US Department of Commerce,Sunbelt continued to take market share. Sunbelt's operating profit beforeexceptional items was up 62.6% to $138.4m, representing a margin of 22.5% (2005- 17.0%).Sunbelt invested $195.6m in the nine months to maintain the quality of itsrental fleet and reduce its age as well as for growth. This included theopening of five new greenfield stores. A further sixteen new general equipmentrental stores have been acquired this year for a consideration of approximately$100m. In August Sunbelt disposed of 12 west coast specialist scaffoldlocations for $24.3m generating an exceptional disposal profit of $6.0m (‚£3.4m). The new stores continue Sunbelt's strategy of clustering stores in majormetropolitan markets. Additional infill acquisition opportunities are underconsideration but Sunbelt also continues to pursue organic growth. 18.9% of thetotal nine month revenue growth of 22.8% was delivered by stores openthroughout both periods.In the third quarter, which benefited from milder than usual weatherconditions, Sunbelt delivered revenue growth of 31.0% and growth in operatingprofit before exceptional items of 87.5%.A-PlantThe restructuring of A-Plant's sales force undertaken in the first halfcontributed to a strong third quarter performance with revenues increasing by6.1%. Third quarter operating profits were ‚£1.1m compared to last year's ‚£0.1m.As a result A-Plant's nine months revenue was ‚£118.9m compared to ‚£117.6m lastyear. Rental rates, average fleet size and utilisation for the nine months wereall at similar levels to those of last year.A-Plant's sales operations are now structured to serve the differingrequirements of national, regional and local customers in a more focused way.Senior sales management resources have been increased as has the size of thesales force to ensure that A-Plant can address the needs of a UK constructionmarket which continues to show solid growth. The emphasis placed by customerson Health & Safety continues to increase and is driving increased outsourcingactivity coupled with a need for the rental equipment provider to be able tomonitor and measure its performance across a range of key performanceindicators. These trends are benefiting A-Plant which, with its nationalpresence and sophisticated IT systems, is one of only a few national providersable to meet customers' needs. Revenues from its largest customers continue togrow and represented 40% of the total in the period.Careful management of operating expenses continued. These increased by 1.4%reflecting principally the full year impact of cost reduction measures takenlast year. As a result A-Plant's nine months operating profit grew 14.7% to ‚£10.0m (2005 - ‚£8.7m), representing a margin of 8.4% (2005 - 7.4%).Ashtead TechnologyAshtead Technology's performance continued recent trends with nine monthrevenue up 32.6% to ‚£11.8m (2005 - ‚£8.9m) and operating profit up 40.5% to ‚£2.9m (2005 - ‚£2.1m). This reflects increased investment by the oil majors whichis delivering higher offshore exploration and construction activity as well ascontinued growth in Ashtead Technology's on-shore environmental business. Wealso invested in the third quarter in enlarging the US sales force and opened anew environmental rental location in Chicago in November. The positive markettrends are expected to continue.Exceptional items-----------------In addition to the trading results discussed above, operating profit asreported in the consolidated income statement includes ‚£14.3m of netexceptional profits. These comprise the ‚£11.3m received when Sunbelt settledits litigation with Head & Engquist, a ‚£3.4m profit on disposal of Sunbelt's 12scaffold stores on the US west coast and in Texas less ‚£0.4m of postacquisition integration costs. The ‚£4.8m net cost of last summer's capitalreorganisation, mainly relating to the 12% premium payable on the ‚£42m ofsterling senior secured notes redeemed early out of the proceeds of the equityplacing, is also included as an exceptional item within finance costs.Taxation--------Overall for the nine months the effective accounting tax rate on the profitbefore exceptional items was unchanged since the half year at 38%. The cash taxrate remains low at 2%. Although the Group's cash tax rate is likely to remainwell below the accounting rate, the recent increases in Sunbelt's profitabilitytogether with the H&E litigation receipt make it likely that the cash taxrate will rise into double digits in 2006/7.Pensions--------The Board has determined to fully fund the UK pension plan deficit on anongoing actuarial basis before the end of the year. This will involve paymentof approximately ‚£18m to the plan with the exact amount depending on the planactuary's final recommendation which is expected shortly. Payment of thisamount, the majority of which will be funded from the H&E litigation receipt,will have no significant effect on the Group's income statement but will reducefuture payments to the plan.Capital expenditure and net debt--------------------------------Capital expenditure in the nine months was ‚£173.0m of which ‚£158.5m wasinvested in the rental fleet (2005 - ‚£92.1m in total) with the increasedexpenditure mainly directed towards expanding Sunbelt's rate of growth. ‚£62.1mof the fleet expenditure was for growth with the remainder spent to replaceexisting equipment. Disposal proceeds were ‚£35.9m (2005 - ‚£25.2m) generating aprofit on disposal of ‚£5.5m (2005 - ‚£3.6m).As indicated in December gross capital expenditure for the current financialyear is expected to be approximately ‚£220m. After anticipated disposal proceedsof approximately ‚£55m (including those earned from the scaffold sale which havebeen reinvested in general equipment), net capital expenditure is anticipatedto be approximately ‚£165m. Approximately ‚£110m of the ‚£220m gross expenditurewill be for growth. To take advantage of the continuing strong markets,particularly in the US, we anticipate that capital expenditure for the year to30 April 2007 will be approximately ‚£250m.Net debt at 31 January 2006 was ‚£497.4m, an increase of ‚£15.1m since 30 April2005 but largely unchanged since 31 January 2005. At constant exchange ratesthe increase since year end was only ‚£2.2m with debt lowered by ‚£11.3m in thepast year. Availability under the asset based loan facility was $292m at 31January 2006 ($157m at 30 April 2005).In November we finalised an amendment to our asset based senior credit facilitywhich increased the amount of the facility, extended its maturity and reducedits cost. Based on the results announced today, the Group has now reduced itsleverage to the level at which the lowest interest rate available under theamended facility applies and accordingly interest on revolver borrowings underthe facility will now be at the rate of LIBOR plus 150bp.Current trading and outlook---------------------------With the nine month profits nearly three times last year's level, continuingstrong trading conditions at Sunbelt and at Ashtead Technology enhanced by theongoing shift from ownership to rental and an encouraging return to revenue andprofit growth in A-Plant, the Board continues to look forward with confidence. - o0o - There will be a conference call for equity analysts at 10.00am today and afurther conference call for bondholders this afternoon at 3.00pm. For furtherdetails please contact Emma Burdett at Maitland on 020 7379 5151 or the Companyat 01372 362300. A simultaneous webcast of the equity analysts' presentationwill be available via the Company's website at www.ashtead-group.com and therewill also be a recorded playback available from shortly after the callfinishes.CONSOLIDATED INCOME STATEMENT Unaudited Unaudited Audited Three months to Nine months to Year to 31 January 31 January 30 April 2006 2005 2006 2005 2005 ---- ---- ---- ---- ---- ‚£m ‚£m ‚£m ‚£m ‚£m Revenue 162.5 123.4 476.3 398.1 523.7Staff costs (52.3) (44.0) (148.4) (130.8) (172.9)Other operating costs (net) (44.9) (42.8) (143.3) (137.6) (181.3) ---- ---- ----- ----- -----EBITDA* 65.3 36.6 184.6 129.7 169.5Depreciation (29.8) (25.7) (84.9) (77.6) (102.4) ---- ---- ---- ---- -----Operating profit 35.5 10.9 99.7 52.1 67.1Financing costs (11.3) (11.0) (37.2) (33.9) (44.7) ---- ---- ---- ---- ----Profit/(loss) on ordinary activities before taxation 24.2 (0.1) 62.5 18.2 22.4 Profit/(loss) before taxation and exceptional items 12.8 (0.1) 53.0 18.2 22.4 Exceptional items 11.4 - 9.5 - - ---- --- --- --- --- Profit/(loss) on ordinary activities before taxation 24.2 (0.1) 62.5 18.2 22.4 Taxation: - current 0.9 (0.1) (1.3) (0.6) (0.7)- deferred (10.3) (0.8) (23.1) (9.6) (13.3) ---- --- ---- --- ---- (9.4) (0.9) (24.4) (10.2) (14.0) --- --- ---- ---- ----Profit/(loss) attributable to equity shareholders of the company 14.8 (1.0) 38.1 8.0 8.4 ---- --- ---- --- --- Basic earnings per share 3.8p (0.3)p 10.3p 2.5p 2.6p --- --- ---- --- ---Diluted earnings per share 3.7p (0.3)p 10.1p 2.5p 2.6p --- --- ---- --- --- * EBITDA is presented here as an additional performance measure as it iscommonly used by investors and lenders.STATEMENT OF RECOGNISED INCOME AND EXPENSE ‚£m ‚£m ‚£m ‚£m ‚£m -- -- -- -- --Net profit for the period 14.8 (1.0) 38.1 8.0 8.4Actuarial loss on defined benefit pension plan - - - - (3.7)Foreign currency translationdifference (0.6) (6.7) 19.3 (13.5) (16.0) --- --- ---- --- ----Total recognised income and expense for the period 14.2 (7.7) 57.4 (5.5) (11.3) ---- --- ---- --- ----MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS ‚£m ‚£m ‚£m ‚£m ‚£m -- -- -- -- --Total recognised income and expense for the period 14.2 (7.7) 57.4 (5.5) (11.3)Issue of ordinary shares, net of 1.1 - 69.5 - 0.1expenses Share based payments 0.3 0.3 0.8 0.4 0.6Own shares acquired - - (2.8) - - --- --- --- --- ---Net increase in equity 15.6 (7.4) 124.9 (5.1) (10.6)shareholders' funds Opening equity shareholders' funds 219.2 122.8 109.9 120.5 120.5 ----- ----- ----- ----- -----Closing equity shareholders' funds 234.8 115.4 234.8 115.4 109.9 ----- ----- ----- ----- -----CONSOLIDATED BALANCE SHEET Unaudited Audited 31 January 30 April 2006 2005 2005 ---- ---- ---- ‚£m ‚£m ‚£mCurrent assets Inventory 14.3 13.4 13.8Trade and other receivables 109.6 90.7 91.9Cash and cash equivalents 1.3 8.0 2.1 --- --- --- 125.2 112.1 107.8 ----- ----- -----Non-current assets Property, plant and equipment - rental equipment 557.2 445.3 452.9- other assets 89.0 82.7 84.2 ---- ---- ---- 646.2 528.0 537.1Intangible assets - goodwill 152.4 119.7 118.2 ----- ----- ----- 798.6 647.7 655.3 ----- ----- -----Total assets 923.8 759.8 763.1 ----- ----- ----- Current liabilities Trade and other payables 89.1 70.6 95.0Debt due in less than one year 11.0 11.4 12.2Provisions 6.8 6.7 7.1 --- ---- --- 106.9 88.7 114.3 ----- ---- ----- Non-current liabilities Other payables - 7.8 7.9Debt due in more than one year 487.7 494.2 472.2Provisions 11.0 9.1 7.9Defined benefit pension fund deficit 15.8 13.0 16.2Deferred taxation 67.6 31.6 34.7 ---- ---- ---- 582.1 555.7 538.9 ----- ----- ----- Total liabilities 689.0 644.4 653.2 ----- ----- ----- Equity shareholders' funds Share capital 40.3 32.6 32.6Share premium account 1.9 100.7 100.8Non-distributable reserve 90.7 - -Equity element of convertible loan note - 24.3 24.3Own shares held in treasury through the ESOT (4.2) (1.6) (1.6)Cumulative foreign exchange translationdifferences (13.3) (30.1) (32.6)Distributable reserves 119.4 (10.5) (13.6) ----- ---- ----Total equity shareholders' funds 234.8 115.4 109.9 ----- ----- -----Total liabilities and equity shareholders' funds 923.8 759.8 763.1 ----- ----- ----- CONSOLIDATED CASH FLOW STATEMENT Unaudited Audited Nine months to Year to 31 January 30 April 2006 2005 2005 ---- ---- ---- ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m Cash flows from operating activities Cash generated from operations before exceptional items 158.3 123.5 164.8Exceptional items 11.5 (5.7) (5.7) ---- --- ---Cash generated from operations 169.8 117.8 159.1Financing costs paid before exceptional items (27.7) (22.9) (30.2) Exceptional financing costs paid (14.5) - - ---- --- ---Financing costs paid (42.2) (22.9) (30.2)Tax paid (1.5) (0.9) (0.6) --- --- ---Net cash from operating activities 126.1 94.0 128.3 ----- ---- ----- Cash flows from investing activities Acquisition of businesses (56.8) - -Disposal of businesses 12.5 0.5 0.5Payments for property, plant andequipment (184.0) (86.5) (111.2)Proceeds on sale of propertyplant and equipment 35.7 25.4 35.9 ---- ---- ----Net cash used in investing activities (192.6) (60.6) (74.8) ----- ---- ---- Cash flows from financing activities Drawdown of loans 238.9 248.9 244.6Redemption of loans (230.3) (274.2) (293.3)Decrease in cash held as collateral - 5.7 5.8Capital element of finance leasepayments (9.6) (9.5) (12.3)Purchase of own shares by the ESOT (2.8) - -Proceeds from issue of ordinary shares 69.5 - 0.1 ---- --- ---Net cash from/(used in) financingactivities 65.7 (29.1) (55.1) ---- ---- ----(Decrease)/increase in cash and cash equivalents (0.8) 4.3 (1.6) Opening cash and cash equivalents 2.1 3.9 3.9Effect of exchange rate changes - (0.2) (0.2) --- --- ---Closing cash and cash equivalents 1.3 8.0 2.1 --- --- --- NOTES TO THE INTERIM FINANCIAL STATEMENTS1. Basis of preparation These interim financial statements were approved by the directors on 6 March2006. They have been prepared in accordance with relevant InternationalFinancial Reporting Standards (including IAS 34 Interim Financial Reporting)and the accounting policies set out in the document entitled - "Impact ofadoption of International Accounting Standards and restatement of previouslyreported financial information" published on 20 September 2005 and available onthe Company's website at www.ashtead-group.com. The interim financialstatements are unaudited and do not constitute statutory accounts within themeaning of Section 240 of the Companies Act 1985.The statutory accounts for the year ended 30 April 2005 were prepared inaccordance with UK generally accepted accounting standards and have been mailedto shareholders and filed with the Registrar of Companies. The auditors' reporton those accounts was unqualified and did not contain a statement under section237 of the Companies Act 1985.The exchange rates used in respect of the US dollar are: 2006 2005 ---- ----Average for the nine months ended 31 January 1.7824 1.8471At 31 January 1.7774 1.88612. Segmental analysis Operating profit before Exceptional Operating Capital Revenue exceptionals items profit expenditure ------- ------------ ----- ------ -----------Three months to 31 January: ‚£m ‚£m ‚£m ‚£m ‚£m2006---- Sunbelt Rentals 119.5 24.1 11.4 35.5 26.5A-Plant 39.2 1.1 - 1.1 12.7Technology 3.8 0.6 - 0.6 2.5Corporate costs - (1.7) - (1.7) - --- --- --- --- --- 162.5 24.1 11.4 35.5 41.7 ----- ---- ---- ---- ----2005---- Sunbelt Rentals 83.5 11.6 - 11.6 16.2A-Plant 37.0 0.1 - 0.1 5.5Technology 2.9 0.7 - 0.7 1.3Corporate costs - (1.5) - (1.5) - --- --- --- --- --- 123.4 10.9 - 10.9 23.0 ----- ---- --- ---- ---- Nine months to 31 January: 2006---- Sunbelt Rentals 345.6 77.7 14.3 92.0 121.8A-Plant 118.9 10.0 - 10.0 45.2Technology 11.8 2.9 - 2.9 6.0Corporate costs - (5.2) - (5.2) - --- --- --- --- --- 476.3 85.4 14.3 99.7 173.0 ----- ---- ---- ---- -----2005 ---- Sunbelt Rentals 271.6 46.1 - 46.1 58.5A-Plant 117.6 8.7 - 8.7 30.3Technology 8.9 2.1 - 2.1 3.3Corporate costs - (4.8) - (4.8) - --- --- --- --- --- 398.1 52.1 - 52.1 92.1 ----- ---- --- ---- ----3. Operating costs 2006 2005 ---- ---- Before Before exceptional Exceptional exceptional Exceptional items items Total items items Total ----- ----- ----- ----- ----- -----Three months to 31 January ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m--------------------------Staff costs: Salaries 47.6 - 47.6 41.0 - 41.0Social security costs 4.1 - 4.1 2.6 - 2.6Other pension costs 0.6 - 0.6 0.4 - 0.4 --- --- --- --- --- --- 52.3 - 52.3 44.0 - 44.0 ---- --- ---- ---- --- ----Other operating costs (net): Vehicle costs 14.2 - 14.2 10.6 - 10.6Spares, consumables & ext'l repairs 11.6 - 11.6 9.6 - 9.6Facilities costs 8.2 0.1 8.3 6.7 - 6.7Other external charges 23.6 0.3 23.9 17.0 - 17.0Profit on disposal of fixed assets (1.3) (0.5) (1.8) (1.1) - (1.1)Other income - (11.3) (11.3) - - - --- ---- ---- --- --- --- 56.3 (11.4) 44.9 42.8 - 42.8 ---- ---- ---- ---- --- ---- Depreciation 29.8 - 29.8 25.7 - 25.7 ---- --- ---- ---- --- ---- 138.4 (11.4) 127.0 112.5 - 112.5 ----- ---- ----- ----- --- ----- Nine months to 31 January ------------------------- Staff costs: Salaries 134.6 0.3 134.9 119.3 - 119.3Social security costs 11.3 - 11.3 9.2 - 9.2Other pension costs 2.2 - 2.2 2.3 - 2.3 --- --- --- --- --- --- 148.1 0.3 148.4 130.8 - 130.8 ----- --- ----- ----- --- -----Other operating costs (net): Vehicle costs 39.0 - 39.0 31.9 - 31.9Spares, consumables & ext'l repairs 32.4 - 32.4 29.8 - 29.8Facilities costs 22.9 0.5 23.4 20.8 - 20.8Other external charges 69.1 0.3 69.4 58.7 - 58.7Profit on disposal offixed assets (5.5) (4.1) (9.6) (3.6) - (3.6)Other income - (11.3) (11.3) - - - --- ---- ---- --- --- --- 157.9 (14.6) 143.3 137.6 - 137.6 ----- ---- ----- ----- --- ----- Depreciation 84.9 - 84.9 77.6 - 77.6 ---- --- ---- ---- --- ---- 390.9 (14.3) 376.6 346.0 - 346.0 ----- ---- ----- ----- --- -----4. Exceptional items `Exceptional items' are those items of financial performance that are materialand non-recurring in nature that the Group believes should be disclosedseparately within the consolidated income statement category to assist in theunderstanding of the financial performance of the Group. Three months to Nine months to Year to 31 January 31 January 30 April 2006 2006 2005 ---- ---- ---- ‚£m ‚£m ‚£m Litigation proceeds (11.3) (11.3) -Debt facility costs - 4.8 -Profit on sale of scaffolding (0.4) (3.4) -Post acquisition integration costs 0.3 0.4 - --- --- --- (11.4) (9.5) - ---- --- ---Litigation proceeds relate to the Head & Engquist settlement. Debt facilitycosts include the premium paid to redeem 35% of the second priority seniorsecured notes due 2014 (‚£5.0m), the write off of the portion of deferred debtissue costs related to the notes redeemed (‚£1.5m), other refinancing costs (‚£0.3m) and a gain on the repayment of the Rentokil convertible loan note (‚£2.0m). Profit on sale of scaffolding relates to the net gain on the disposal by Sunbelt of 12 west coast and Texas specialist scaffold locations. Integrationcosts relate to costs incurred in integrating acquisitions during the period.Exceptional items are presented in the income statement as follows: Three months to Nine months to Year to 31 January 31 January 30 April 2006 2006 2005 ---- ---- ---- ‚£m ‚£m ‚£mStaff costs - 0.3 -Other operating costs (11.4) (14.6) - ---- ---- ---Credited in arriving at operatingprofit (11.4) (14.3) -Financing costs - 4.8 -Credited in arriving at profitbefore tax (11.4) (9.5) - ---- --- ---5. Financing costs Three months to Nine months to Year to 31 January 31 January 30 April 2006 2005 2006 2005 2005 ---- ---- ---- ---- ---- ‚£m ‚£m ‚£m ‚£m ‚£m Bank interest payable 4.9 3.5 11.6 10.4 13.6Funding cost on trade debtors'securitisation - 0.2 - 2.1 2.1Interest on second priority senior secured notes 5.3 3.5 14.3 10.9 14.5Interest on 5.25% unsecured convertible loan note, due 2008 - 1.9 1.9 5.7 7.6Interest payable on finance leases 0.4 0.5 1.4 1.4 1.9Other 0.7 1.4 3.2 3.4 5.0 --- --- --- --- --- 11.3 11.0 32.4 33.9 44.7Exceptional debt facility costs - - 4.8 - - --- --- --- --- --- 11.3 11.0 37.2 33.9 44.7 ---- ---- ---- ---- ----6. Taxation The tax charge for the period has been calculated by applying the directors'best estimate of the effective annual tax rate (estimated at 38%) to theGroup's profit before exceptional items and tax. Tax attributable toexceptional items has been calculated using the standard tax rates in eachjurisdiction in which the exceptional item arose. The tax charge comprises acredit of ‚£1.6m related to the UK (2005 - ‚£nil) and a charge of ‚£26.0m (2005 -‚£10.2m) related to the US.7. Earnings per share Basic and diluted earnings per share for the three and nine months ended 31January 2006 have been calculated based on the profit for the relevant periodand on the weighted average number of ordinary shares in issue during thatperiod which excludes the shares held by the ESOT in respect of which dividendshave been waived. Diluted earnings per share is computed using the result forthe relevant period and the diluted number of shares (ignoring any potentialissue of ordinary shares which would be anti-dilutive). These are calculated asfollows: Three months to Nine months to Year to 31 January 31 January 30 April 2006 2005 2006 2005 2005 ---- ---- ---- ---- ----Profit for the financial period (‚£m) 14.8 (1.0) 38.1 8.0 8.4 ---- --- ---- --- ---Weighted average number of shares (m) - basic 393.6 322.9 371.1 322.9 323.0 ----- ----- ----- ----- ----- - diluted 401.5 326.7 377.6 325.6 326.3 ----- ----- ----- ----- -----Basic earnings per share 3.8p (0.3)p 10.3p 2.5p 2.6p --- --- ---- --- ---Diluted earnings per share 3.7p (0.3)p 10.1p 2.5p 2.6p --- --- ---- --- ---Cash tax earnings per share (defined in any period as the earnings beforeexceptional items and deferred taxation for that period divided by the weightedaverage number of shares in issue in that period) may be reconciled to thebasic earnings per share as follows: Three months to Nine months to Year to 31 January 31 January 30 April 2006 2005 2006 2005 2005 ---- ---- ---- ---- ---- Basic earnings per share 3.8p (0.3)p 10.3p 2.5p 2.6pExceptional items (2.9)p - (2.6)p - -Deferred tax on exceptional items 1.1p - 1.1p - - --- --- --- --- ---Earnings per share before exceptionalitems 2.0p (0.3)p 8.8p 2.5p 2.6pOther deferred tax 1.5p 0.2p 5.1p 2.9p 4.1p --- --- --- --- ---Cash tax earnings per share 3.5p (0.1)p 13.9p 5.4p 6.7p --- --- ---- --- --- 8. Property, plant and equipment 2006 2005 ---- ---- Rental Rental equipment Total equipment Total --------- ----- --------- -----Net book value ‚£m ‚£m ‚£m ‚£m-------------- At 1 May 452.9 537.1 469.7 554.9Exchange difference 22.7 25.9 (18.1) (19.8)Reclassifications (0.2) (0.1) - -Additions 158.5 173.0 80.1 92.1Acquisitions 31.9 35.0 - -Disposals (36.7) (39.8) (20.6) (21.6)Depreciation (71.9) (84.9) (65.8) (77.6) ---- ---- ---- ----At 31 January 557.2 646.2 445.3 528.0 ----- ----- ----- ----- 9. Called up share capital Ordinary shares of 10p each: 31 January 30 April 31 January 30 April 2006 2005 2005 2006 2005 2005 ---- ---- ---- ---- ---- ---- Number Number Number ‚£m ‚£m ‚£mAuthorised 900,000,000 900,000,000 900,000,000 90.0 90.0 90.0 ----------- ----------- ----------- ---- ---- ---- Allotted, called up and fully paid 403,285,036 325,677,156 326,074,928 40.3 32.6 32.6 ----------- ----------- ----------- ---- ---- ----On 3 August 2005 the Group issued 73,350,352 ordinary shares of 10p each at95.5p through a Placing and Open Offer which raised ‚£70.0m before issueexpenses of ‚£3.1m.10. Statement of changes in shareholders' equity Equity Own Cumulative element shares foreign of Non held in exchange 31 30 Share Share convertible distributable treasury translation Distributable Jan April capital premium loan note reserves (ESOT) differences reserves Total 2005 2005 ------- ------- --------- -------- ---- ----------- -------- ----- ---- ---- ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m Total recognised income and expense - - - - - 19.3 38.1 57.4 (5.5) (11.0)Shares issued 7.7 64.9 - (3.1) - - - 69.5 - 0.1Share based payments - - - - - - 0.8 0.8 0.4 0.3Capital reduction - (163.8) - 93.8 - - 70.0 - - -Vesting of share awards - - - - 0.2 - (0.2) - - -Own shares purchased - - - - (2.8) - - (2.8) - -Redemption of convertible loan note - - (24.3) - - - 24.3 - - - --- --- ---- --- --- --- ---- --- --- ---Net changes in shareholders' equity 7.7 (98.9) (24.3) 90.7 (2.6) 19.3 133.0 124.9 (5.1) (10.6)Opening shareholders' equity 32.6 100.8 24.3 - (1.6) (32.6) (13.6) 109.9 120.5 120.5 ---- ----- ----- --- --- ---- ---- ----- ----- ------Closing shareholders' equity 40.3 1.9 - 90.7 (4.2) (13.3) 119.4 234.8 115.4 109.9 ---- --- --- ---- --- ---- ----- ----- ----- -----At the extraordinary general meeting of the Company held on 1 August 2005,shareholders approved a resolution to cancel the amount standing to the creditof the share premium account. Subsequently the High Court of Justice approvedthe cancellation on 24 August 2005. Accordingly, of the total amount cancelledof ‚£163.8m, ‚£70.0m has been credited to distributable reserves while thebalance of ‚£93.8m has been credited to a non-distributable reserve.11. Notes to cash flow statement Nine months to Year to 31 January 30 April 2006 2005 2005 ---- ---- ---- ‚£m ‚£m ‚£m a) Cash flow from operating activities ----------------------------------- Operating profit 99.7 52.1 67.1Depreciation 84.9 77.6 102.4Exceptional items (14.3) - - ---- --- ---EBITDA before exceptional items 170.3 129.7 169.5Profit on disposal of property, plant and equipment (5.5) (3.6) (7.1)(Increase)/decrease in inventories 0.8 1.0 0.4Increase in trade and other receivables (9.3) (0.3) (0.3)Increase/(decrease in trade andother payables 1.9 (3.7) 1.5Exchange differences (0.8) 0.1 0.4Other non-cash movements 0.9 0.3 0.4 --- --- ---Cash generated from operations beforeexceptional items 158.3 123.5 164.8 ----- ----- ----- Nine months to Year to 31 January 30 April 2006 2005 2005 ---- ---- ---- ‚£m ‚£m ‚£m b) Reconciliation to net debt -------------------------- Decrease/(increase in cash in the period 0.8 (4.3) 1.6Increase/(decrease) in debt throughcash flow (1.0) (29.1) (55.2) --- ---- ----Change in net debt from cash flows (0.2) (33.4) (53.6)Exchange difference 12.2 (12.3) (15.1)Non-cash movements: - deferred cost of debt raising 2.2 0.6 1.2 - convertible loan note (1.0) 2.8 3.8 - capital element of new finance leases 1.9 7.7 13.8 --- --- ----Movement in net debt in the period 15.1 (34.6) (49.9)Opening debt 482.3 532.2 532.2 ----- ----- -----Closing debt 497.4 497.6 482.3 ----- ----- -----c) Analysis of net debt -------------------- 1 May Exchange Cash Non-cash 31 January 2005 movement flow movements 2006 ---- -------- ---- --------- ---- ‚£m ‚£m ‚£m ‚£m ‚£m Cash (2.1) - 0.8 - (1.3)Debt due within 1 year 12.2 0.7 (9.6) 7.7 11.0Debt due after 1 year 472.2 11.5 8.6 (4.6) 487.7 ----- ---- --- --- -----Total net debt 482.3 12.2 (0.2) 3.1 497.4 ----- ---- --- --- -----12. Acquisitions and disposals On 17 October 2005, Sunbelt acquired 100% of the issued share capital ofNorthridge Equipment Rentals, Inc for cash consideration of ‚£39.7m. NorthridgeEquipment Rentals traded through five stores located in central and southernCalifornia. In addition, Sunbelt has acquired the business and assets of tenfurther stores during the period in Florida, California, Nevada and Tennesseefor a total cash consideration of ‚£16.3m. A-Plant also acquired one store inBournemouth for a cash consideration of ‚£0.5m.The acquired businesses have been integrated into Sunbelt and A-Plant and theacquired rental fleets reorganised through additions, disposals and transfersof equipment. Accordingly, it is not practicable to disclose separately therevenue and profit of the acquired assets.The goodwill arising on these acquisitions which relates to the excess of theconsideration necessary to acquire these businesses over the fair market valueof the net assets acquired is summarised in the table below: Acquiree's Fair book value value ---------- ----- ‚£m ‚£mNet assets acquired: Property, plant and equipment 24.2 35.1Inventories 0.6 0.5Trade and other receivables 4.4 4.8Trade and other payables (2.4) (2.4)Deferred tax liabilities (3.3) (7.3) --- --- 23.5 30.7 ----Goodwill 26.1 ---- Total consideration 56.8 ---- Satisfied by: Cash 56.5Directly attributable costs 0.3 --- 56.8 ----The consideration paid for these acquisitions includes ‚£2.5m paid into escrowwhich remains subject to adjustment on agreement of closing net assetstatements. Such adjustments are not expected to result in a significantvariation in the total consideration payable.On 15 August 2005 Sunbelt sold 12 specialist scaffold locations on the US westcoast and in Texas for an estimated cash consideration of ‚£13.8m. The profit ondisposal is as follows: ‚£mDisposal proceeds: - cash received 13.2- disposal related costs paid (0.7) --- 12.5 - further proceeds due following agreement of closing balance sheet 0.6- further disposal related costs (0.1) --- Net consideration receivable 13.0Net assets sold: - property, plant and equipment (9.5)- inventory (0.1) --- Exceptional profit on disposal 3.4 ---13. Contingent liabilities and contingent assets There have been no significant changes in contingent liabilities from thosereported at 30 April 2005. At 30 April 2005, Sunbelt had provided performanceguarantees to a value of ‚£1.6m to various state bodies. These obligations areguaranteed by Ashtead Group plc. The Group is subject to periodic legal claimsin the ordinary course of its business. However, the claims outstanding at 31January 2006 are not expected to have a significant impact on the Group'sfinancial position.14. Reconciliation between UK GAAP and IFRS The Group published financial information in accordance with IFRS for 2004/5,as required byIFRS 1, on 20 September 2005 in its news release entitled "Adoption ofInternational Accounting Standards". The news release is available on theGroup's website, www.ashtead-group.com and includes: * a summary of the main differences applicable to Ashtead between UK GAAP and IFRS * the restated income statement, balance sheet and cash flow statement under IFRS for the year ended 30 April 2005 * full reconciliations of the IFRS financial statements to the comparable information published previously under UK GAAP. These reconciliations cover income statement information for the quarter ended 31 July 2004, the six months ended 31 October 2004, the nine months ended 31 January 2005 and the year ended 30 April 2005 and balance sheet information as at 30 April 2004, 31 July 2004, 31 October 2004, 31 January 2005 and 30 April 2005. The news release also included the Group's detailed accounting policies underIFRS.The tables below give a summary of the impact of the move to IFRS on previouslyreported financial information.Reconciliation of equity 31 January 30 April 2005 2005 ---- ---- ‚£m ‚£m Total equity presented under UK GAAP 129.3 126.9Additional non-cash convertible loan note interest (12.7) (13.4)Equity element of convertible loan note 24.3 24.3Pensions (12.8) (16.5)Share based payments (0.1) (0.1)Lease reclassification (0.5) -Restate $100m swap to fair value 0.5 0.6Goodwill 6.6 8.9Revaluation of goodwill to current exchange rates (23.2) (24.7)Deferred taxation 4.0 3.9 --- --- Total equity presented under IFRS 115.4 109.9 ----- ----- 15. Reconciliation between UK GAAP and IFRS (continued) Reconciliation of profit attributable to equity shareholders of the company Three months Nine months Year ended ended ended 31 January 31 January 30 April 2005 2005 2005 ---- ---- ---- ‚£m ‚£m ‚£m Attributable profit/(loss) under UK GAAP (2.3) 4.1 2.4Goodwill 2.2 6.6 8.9Additional non-cash convertible loan note interest (0.8) (2.3) (3.0)Pensions (0.1) (0.2) (0.2)Share based payments (0.1) (0.3) (0.4)Lease reclassification (0.4) (0.5) -Restate $100m interest rate swap to fair value 0.5 0.6 0.7 --- --- ---Attributable profit/(loss) under IFRS (1.0) 8.0 8.4 --- --- --- Reconciliation of cash flowsThe Group's cash flows under IFRS are unchanged from those under UK GAAP. TheIFRS cash flow format is similar to UK GAAP but presents various cash flows indifferent categories and in a different order from the UK GAAP cash flowstatement. All of the IFRS accounting adjustments net out within cash generatedfrom operations except for the reclassification of the debtors securitisationas debt under IFRS.OPERATING AND FINANCIAL REVIEWThird quarter (to 31 January) results compared with prior yearOverview-------- 2006 2005 ---- ---- Before Exceptional Before Exceptional exceptionals items Total exceptionals items Total ------------ ----- ----- ------------ ----- ----- ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m Revenue 162.5 - 162.5 123.4 - 123.4Staff costs (52.3) - (52.3) (44.0) - (44.0)Other operating costs (net) (56.3) 11.4 (44.9) (42.8) - (42.8) ---- ---- ---- ---- --- ----EBITDA* 53.9 11.4 65.3 36.6 - 36.6Depreciation (29.8) - (29.8) (25.7) - (25.7) ---- --- ---- ---- --- ----Operating profit 24.1 11.4 35.5 10.9 - 10.9Financing costs (11.3) - (11.3) (11.0) - (11.0) ---- --- ---- ---- --- ----Profit/(loss) before taxation 12.8 11.4 24.2 (0.1) - (0.1)Taxation: - current 0.9 - 0.9 (0.1) - (0.1)- deferred (5.8) (4.5) (10.3) (0.8) - (0.8) --- --- ---- --- --- --- (4.9) (4.5) (9.4) (0.9) - (0.9) --- --- --- --- --- ---Profit for the quarter 7.9 6.9 14.8 (1.0) - (1.0) --- --- ---- --- --- ---* EBITDA is presented here as an additional performance measure as it iscommonly used by investors and lenders.Third quarter revenue increased 23.9% at constant 2006 exchange rates to ‚£162.5m and by 31.7% at actual rates. EBITDA before exceptional items grew by37.5% at constant exchange rates to ‚£53.9m and by 47.1% at actual rates.Operating profit before exceptional items of ‚£24.1m in the quarter increased98.0% at constant 2006 exchange rates and 120.9% from ‚£10.9m in 2005 at actualrates. EBITDA margins before exceptional items grew from 29.7% to 33.1% andoperating margins before exceptional items rose from 8.9% to 14.8%. TotalEBITDA increased 78.4% to ‚£65.3m, at actual rates and total operating profitmore than tripled to ‚£35.5m.Seasonality-----------Our business is subject to significant fluctuations in performance from quarterto quarter as a result of seasonal effects. Commercial construction activitytends to increase in the summer and during extended periods of mild weather andto decrease in the winter and during extended periods of inclement weather.Furthermore, due to the incidence of public holidays in the US and the UK,there are more billing days in the first half of our financial year than thesecond half leading to our revenues normally being higher in the first half.Typically, the third quarter of our fiscal year is our weakest quarter withrevenue and operating results reflecting significant public holidays overThanksgiving (in the US), Christmas and the New Year as well as winter weatherconditions. However, this year weather conditions have remained generallyfavourable and Sunbelt experienced particularly high utilisation in Novembercompared to historic norms.Divisional performance----------------------Divisional results before exceptional items are summarised below: Revenue EBITDA Operating profit ------- ------ ---------------- 2006 2005 2006 2005 2006 2005 ---- ---- ---- ---- ---- ----Sunbelt in $m 209.2 159.6 76.3 51.6 42.0 22.4 ----- ----- ---- ---- ---- ----Sunbelt in ‚£m 119.5 83.5 43.6 26.9 24.1 11.6A-Plant 39.2 37.0 10.3 9.7 1.1 0.1Ashtead Technology 3.8 2.9 1.6 1.5 0.6 0.7Group central costs - - (1.6) (1.5) (1.7) (1.5) --- --- --- --- --- --- 162.5 123.4 53.9 36.6 24.1 10.9 ----- ----- ---- ---- ---- ----SunbeltRevenue increased 31.0% to $209.2m reflecting strong growth of approximately15% in rental rates and a 15% increase in the average fleet size. Utilisationincreased slightly to approximately 69% from 68% last year. Revenue growth wasbroadly based with all regions and all major product areas trading ahead oflast year. Sunbelt's revenue improvement reflected market share gains andgrowth in non-residential construction activity as well as the continued shiftfrom ownership to rental.Costs (excluding depreciation) rose 22.9% to $132.9m in 2006. This reflectedprincipally increased headcount, higher commissions and profit share paymentsto staff as a result of the increased activity levels and increased fuel costsfor Sunbelt's delivery fleet. As a result, EBITDA grew 48.0% to $76.3m and theEBITDA margin for the quarter improved to 36.5% from 32.3% in 2005. Sunbelt'soperating profit increased 87.5% to $42.0m representing a margin of 20.1% (2005- 14.0%). Sunbelt's results in sterling reflected the factors discussed aboveand the stronger US dollar.A-PlantIn a continued competitive market, A-Plant's third quarter performancebenefited from the sales force restructuring undertaken in the first half ofthe year. Revenue increased 6.1% to ‚£39.2m (2005 - ‚£37.0m), reflecting rentalrates similar to last year, a fleet size which was approximately 1% larger thanin the equivalent period a year ago and utilisation at approximately 63%compared to approximately 62% last year. Costs (excluding depreciation)increased 5.8% year over year mainly reflecting predominantly increased salaryand fuel costs. As a result EBITDA increased 6.9% to ‚£10.3m and the EBITDAmargin was 26.2% (2005 - 26.1%). A-Plant's operating profit increased from ‚£0.1m to ‚£1.1m representing a margin of 3.0% (2005 - 0.3%).Ashtead TechnologyAshtead Technology delivered strong third quarter revenue growth of 31.1% to ‚£3.8m at actual rates (25.2% at constant exchange rates). This growth reflectedhigher offshore exploration and construction activity as well as continuedgrowth in our on-shore environmental business where a new store was opened inChicago in the quarter.Exceptional items-----------------Exceptional items can be summarised as follows: Three months to 31 January 2006 2005 ---- ---- ‚£m ‚£mLitigation proceeds 11.3 -Profit on sale of scaffolding 0.4 -Post acquisition integration costs (0.3) - --- --- 11.4 - ---- ---Litigation proceeds relate to settlement of the Head & Engquist litigation withHead & Engquist paying Sunbelt $20.1m (‚£11.3m net of costs). The additionalprofit on sale of scaffolding arises on the finalisation of the closing balancesheet adjustments on the disposal by Sunbelt of 12 west coast and Texasspecialist scaffold locations. Integration costs relate to costs incurred inintegrating acquisitions during the period.Exceptional items are presented in the profit and loss account as otheroperating costs.Financing costs---------------Financing costs increased to ‚£11.3m from ‚£11.0m in 2005 reflecting slightlylower average debt levels and an average interest rate slightly higher than theprior period. Compared to the previous year, the average interest ratebenefited from the repayment of ‚£42.0m of our 12% notes and from a lower marginunder our first priority asset based senior secured loan facility due 2014 butthese benefits have been offset by increases in US dollar interest ratespayable under our floating rate senior facility.Taxation--------The tax charge for the quarter of ‚£9.4m (2005 - ‚£0.9m) comprised a credit forcurrent tax of ‚£0.9m and a charge for deferred tax of ‚£10.3m. Overall for thefirst nine months the effective accounting tax rate on the profit beforeexceptional items is 38% whilst the cash tax rate is 2%. Although the Group'scash tax rate is likely to remain well below the accounting rate, the recentincreases in Sunbelt's profitability together with the H&E litigation receiptmake it possible that the cash tax rate will rise into double digits in 2006/7.Balance sheetProperty, plant and equipment----------------------------- 31 January 2006 31 January 2005 --------------- --------------- Rental Rental Net book value equipment Total equipment Total-------------- --------- ----- --------- ----- ‚£m ‚£m ‚£m ‚£m At 1 May 452.9 537.1 469.7 554.9Exchange difference 22.7 25.9 (18.1) (19.8)Reclassifications (0.2) (0.1) - -Additions 158.5 173.0 80.1 92.1Acquisitions 31.9 35.0 - -Disposals (36.7) (39.8) (20.6) (21.6)Depreciation (71.9) (84.9) (65.8) (77.6) ---- ---- ---- ----At 31 January 557.2 646.2 445.3 528.0 ----- ----- ----- -----Capital expenditure in the nine months was ‚£173.0m of which ‚£158.5m wasinvested in the rental fleet (2005 - ‚£92.1m in total). Expenditure on rentalequipment was 91.6% of total capital expenditure. Capital expenditure bydivision was as follows: 31 January 2006 2005 --------------- ---- Growth Maintenance Total Total ------ ----------- ----- -----Sunbelt in $m 80.1 115.5 195.6 93.7 ---- ----- ----- ----Sunbelt in ‚£m 45.0 65.0 110.0 49.7A-Plant 12.4 30.3 42.7 27.2Ashtead Technology 4.7 1.1 5.8 3.2 --- --- --- ---Total rental equipment 62.1 96.4 158.5 80.1 ---- ---- Other fixed assets 14.5 12.0 ---- ----Total additions 173.0 92.1 ----- ---- With the improvement in market conditions in the US and a return to fleetinvestment in the UK, the Group spent ‚£62.1m of its rental equipment capitalexpenditure on growth with ‚£96.4m spent on replacing existing fleet. The growthproportion is estimated on the basis of the assumption that maintenance capitalexpenditure in any period is equal to the original cost of equipment sold inthat period.The average age of the Group's serialised rental equipment, which constitutesthe substantial majority of our fleet, at 31 January 2006 was 38 months (2005 -45 months) on a net book value basis. Sunbelt's fleet had an average age of 40months (2005 - 47 months) comprising 50 months for aerial work platforms whichhave a longer life and 29 months for the remainder of its fleet and A-Plant'sfleet had an average age of 37 months (2005 - 43 months).As indicated in December, gross capital expenditure for the current financialyear is expected to be approximately ‚£220m.Trade debtors-------------The Group continues to focus on debtor collections and debtor days were reducedto 47 days (2005 - 53 days). The bad debt charge as a percentage of totalturnover was 0.7% in 2006 compared with 1.2% in 2005.Trade and other creditors-------------------------Group creditor days were 55 days in 2006 (2005 - 63 days). Capital expenditurerelated payables at 31 January 2006 totalled ‚£24.4m (2005 - ‚£19.0m). Paymentperiods for purchases other than rental equipment vary between 30 and 60 daysand for rental equipment between 30 and 90 days.Cash flow and net debtFree cash flow in the nine months ended 31 January 2006 (which is defined asour net cash inflow from operations less net maintenance capital expenditure,financing costs paid and tax paid) is summarised below: Nine months LTM Year ended to 31 January To 31 January 30 April 2006 2005 2006 2005 ---- ---- ---- ---- ‚£m ‚£m ‚£m ‚£mEBITDA before exceptional items 170.3 129.7 210.1 169.5 ----- ----- ----- -----Cash inflow from operations before exceptional items 158.3 123.5 199.6 164.8Cash efficiency ratio* 93.0% 95.2% 95.0% 97.2%Maintenance capital expenditure (118.8) (74.7) (145.1) (101.0)Proceeds from sale of used rentalequipment 35.7 25.4 46.2 35.9Tax paid (1.5) (0.9) (1.2) (0.6) --- --- --- ---Free cash flow before interest 73.7 73.3 99.5 99.1Financing costs paid (27.7) (22.9) (35.0) (30.2) ---- ---- ---- ----Free cash flow after interest 46.0 50.4 64.5 68.9Growth capital expenditure (65.2) (11.8) (63.6) (10.2)Acquisitions and disposals (44.3) 0.5 (44.3) 0.5Issue of ordinary share capital 69.5 - 69.6 0.1Purchase of own shares by ESOT (2.8) - (2.8) -Exceptional costs paid (3.0) (5.7) (3.0) (5.7) --- --- --- ---(Increase)/reduction in total debt 0.2 33.4 20.4 53.6 --- ---- ---- ----* Cash inflow from operations before exceptional items as a percentage ofEBITDA before exceptional items.Cash inflow from operations increased 28.2% to ‚£158.3m and the cash efficiencyratio was 93.0% (2005 - 95.2%) reflecting seasonal increases in workingcapital. After net maintenance capital expenditure of ‚£83.1m (2005 - ‚£49.3m)and tax, free cash flow before interest was ‚£73.7m (2005 - ‚£73.3m). Financingcosts (excluding exceptional financing costs) paid this year were more in linewith the accounting charge. Last year's financing costs of ‚£22.9m wereunusually low compared to last year's ‚£33.9m accounting charge and reflectedthe timing of interest payments. After interest, there was a free cash inflowof ‚£46.0m (2005 - ‚£50.4m).Including payments of ‚£65.2m in respect of growth capital expenditure, ‚£44.3min respect of acquisitions and disposals, ‚£2.8m for the purchase of shares bythe ESOT and net exceptional costs of ‚£3.0m and taking into account the netproceeds received from share issues of ‚£69.5m, there was a net draw under ourbank facilities in the nine months of ‚£0.2m. The largest outflow was forpurchases of rental equipment which give rise to a corresponding increase inthe borrowing base under our asset based facilities. Accordingly, combined withamendments to our asset based debt facility discussed below, availability underthe facility increased from $157m at 30 April 2005 to $292m at 31 January 2006.Net debt-------- 31 January 2006 2005 ---- ---- ‚£m ‚£mFirst priority senior secured bank debt 261.6 241.0Finance lease obligations 26.0 29.312% second priority senior secured notes, due 2014 75.4 115.88.625% second priority senior secured notes, due 2015 135.7 -5.25% unsecured convertible loan note, due 2008 - 119.5 --- ----- 498.7 505.6Cash and cash equivalents (1.3) (8.0) --- ---Total net debt 497.4 497.6 ----- -----At 31 January 2006 total net debt was ‚£497.4m (31 January 2005 - ‚£497.6m and 30April 2005 - ‚£482.3m). Measured at constant (31 January 2006) exchange rates,the decrease in total net debt since 31 January last year was ‚£11.3m whilstdebt has increased ‚£2.2m in the nine months since year end.Amended first priority asset based senior secured loan facilityOn 14 November 2005, the Group agreed amended terms with the syndicate oflenders who make available its first priority asset based senior secured loanfacility to increase the amount, extend the maturity and reduce the cost of thefacility.As a result of this amendment and the earlier capital re-organisation theGroup's debt facilities are now committed for a weighted average period ofapproximately 6.5 years and carry a weighted average interest rate ofapproximately 8%.OPERATING STATISTICS Profit centre numbers Staff numbers --------------------- ------------- 31 January 30 April 31 January 30 April ---------- -------- ---------- -------- 2006 2005 2005 2006 2005 2005 ---- ---- ---- ---- ---- ----Sunbelt Rentals 206 200 200 4,067 3,827 3,854A-Plant 196 205 202 2,052 1,982 1,973Ashtead Technology 11 10 10 103 86 94Corporate office - - - 14 15 14 --- --- --- -- -- --Group 413 415 412 6,236 5,910 5,935 --- --- --- ----- ----- ----- ENDASHTEAD GROUP PLCRelated Shares:
Ashtead Group