4th Mar 2008 07:00
Unaudited results for the third quarter and nine months ended 31 January 2008 Continued strong growth with profits and earnings at record levelsFinancial summary Third quarter Nine months----------------- ------------- ----------- 2008 2007 Growth 2008 2007 Growth ----- ----- ----- ----- ----- ----- ‚£m ‚£m % ‚£m ‚£m %Underlying operating profit (1) 40.1 32.1 +25% 155.0 114.8 +35%Underlying profit before taxation (1) 20.8 11.3 +82% 97.5 65.7 +48%Underlying earnings pershare (1) - basic 2.5p 1.3p +83% 11.4p 8.5p +33%- cash tax 3.8p 2.1p +80% 15.9p 13.1p +21%Profit/(loss) before taxation 20.2 2.1 n/a 95.9 (28.5) n/aBasic earnings per share 2.4p 0.3p n/a 10.9p 2.9p n/a(1) See notes belowHighlights
‚· Strong performance continues at all three divisions
- 25% growth in Sunbelt's year to date underlying profit
- 49% growth in A-Plant's year to date underlying profit
‚· Market conditions remain good in the US and UK
- utilisation rates improved over the equivalent period last year
- fleet age and mix at optimum levels
- business model has flexibility to react quickly and effectively to change
‚· 5% share buy-back progressing well
- 4.2% purchased to date at a cost of ‚£18.1m (77p per share)
Ashtead's Chief Executive, Geoff Drabble, commented:
Our three divisions have all continued to perform well in the third quarter. Inthe US, where our principal markets remain strong, we again increased margins aswe continue to drive efficiencies from the enlarged Sunbelt business. At A-Plantthe 49% growth in its year to date operating profit is a clear indication of themomentum this business has developed and its good position in the UK market.Despite the economic uncertainty, our markets in the US and the UK remain goodand our experience on the ground suggests that this will continue for theforeseeable future. In the event of changing markets, we have a flexiblebusiness model that is able to respond quickly and effectively to marketconditions. The Board remains confident in the Group's prospects for the fullyear and beyond.Contacts:Geoff Drabble Chief executive ) 020 7726 9700Ian Robson Finance director )Brian Hudspith Maitland 020 7379 5151Financial definitions
a) Underlying profit and earnings per share are stated before exceptional
items, amortisation of acquired intangibles and non-cash fair value
remeasurements of embedded derivatives in long-term debt. The definition of
exceptional items is set out in note 4. The reconciliation of underlying
basic earnings per share and underlying cash tax earnings per share to basic
earnings per share is shown in note 7 to the attached financial information.
b) Pro forma basis includes the NationsRent and Lux Traffic acquisitions
throughout the year ended 30 April 2007 rather than from their respective
dates of acquisition of 31 August 2006 and 15 October 2006. For this purpose
the pre-acquisition results of NationsRent have been derived from its
reported financial performance under US GAAP adjusted to exclude the large
profits on disposal of rental equipment it reported following the application
of US "fresh start" accounting principles and to include an estimated
depreciation charge under Ashtead's depreciation policies and methods.
Geoff Drabble and Ian Robson will host a conference call with equity analysts todiscuss the results at 9.30am on Tuesday 4 March. This call will be webcast livevia the Company's website at www.ashtead-group.com and there will also be areplay available from shortly after the call concludes. A copy of thisannouncement and the slide presentation which will be used for the call areavailable for download on the Company's website. There will also be a conferencecall for bondholders at 3pm (10am EST).
Please contact the Company's PR advisers, Maitland (Camilla Vella) at +44 (0)20 7379 5151 for more details if you are an equity analyst or an Ashtead bondholder.
OverviewThe third quarter saw a continuation of the trends reported at the half year.All three divisions traded strongly in good market conditions and, as a result,underlying operating profit grew by 25% to ‚£40.1m while underlying pre-taxprofits grew by 82% to ‚£20.8m. Underlying basic earnings per share rose 83% to2.5p.
Nine months underlying pre-tax profits have grown 48% to ‚£97.5m at actual rates of exchange and by 55% at constant rates whilst the nine months underlying earnings per share are up one-third to 11.4p.
Return on Investment ("RoI") for the Group rose to 13.6% for the 12 months ended31 January 2008 (year to April 2007 - 12.9%). Sunbelt delivered 14.1% RoI whilstA-Plant's RoI was 10.6%. The after tax return on equity was 17.4% (year to April2007 - 15.3%).Divisional performanceSunbelt Third quarter Nine months ------------- ----------- 2008 2007 Growth 2008 2007 Growth ------ ------ ------ ------ ------ ------ $m $m $m $mRevenue---------As reported 362.7 361.5 Nil% 1,171.8 958.5 +22%NationsRent - - - 230.7 ------ ------ ------ ------Pro forma combined 362.7 361.5 Nil% 1,171.8 1,189.2 -1% ====== ====== ====== ======Underlying operating profit---------------------------As reported 69.4 58.1 +19% 266.0 193.3 +38%NationsRent - - - 19.2 ------ ------ ------ ------Pro forma combined 69.4 58.1 +19% 266.0 212.5 +25% ====== ====== ====== ======Operating profit 19.1% 16.1% 22.7% 17.9%margin ====== ====== ====== ======
Sunbelt's operating profit margin again improved as we continue to enhance theoperational efficiency of the business following the NationsRent acquisition.Whilst revenues remain flat in total, this reflects our curtailment of the lowmargin sales of new equipment undertaken previously by NationsRent. Excludingsales revenues, rental and rental related revenues grew 1.6% in the thirdquarter to $338m and by 1.3% in the nine months to $1,092m.Dollar utilisation was 63% at 31 January 2008 compared to a pro forma 62% at 30April 2007. Fleet size was on average 1% larger in the third quarter than in theprevious year whilst physical utilisation for the quarter rose 4% to 66% (2007 -63%). Rental rates declined 0.5% in the nine months. This includes a decline of3.5% in the quarter reflecting the high comparative from a year ago when ratesinitially grew strongly after the NationsRent acquisition. We anticipate thatrental rates will return to being broadly flat year on year as we enter the
busier summer season.A-Plant Third quarter Nine months ------------- ----------- 2008 2007 Growth 2008 2007 Growth ------ ------ ------ ----- ----- ------ ‚£m ‚£m ‚£m ‚£mRevenue---------As reported 51.2 48.2 +6% 159.7 139.7 +14%Lux Traffic - - - 9.5 ------ ------ ------ -----Pro forma combined 51.2 48.2 +6% 159.7 149.2 +7% ====== ====== ====== =====Underlying operating profit-----------------------------As reported 5.4 3.1 +77% 21.9 14.2 +55%Lux Traffic - - - 0.6 ----- ----- ------ -----Pro forma combined 5.4 3.1 +77% 21.9 14.8 +49% ===== ===== ====== ======Operating profit margin 10.6% 6.4% 13.7% 9.9% ===== ===== ====== ====== A-Plant grew revenues strongly in mature markets with 6% growth in the thirdquarter. This growth reflected a 10% increase in average fleet size and a 1%increase in physical utilisation to 68% (2007 - 67%). Like for like rental rateswere broadly flat. Third quarter operating costs rose only 1% with the resultingoperating leverage producing a 77% rise in third quarter operating profit to‚£5.4m.A-Plant continues to benefit from being able to provide its contractor customerswith the complete plant and tool product range supported by strong operationaldelivery and IT support.Ashtead Technology Third quarter Nine months --------------- ------------- 2008 2007 Growth 2008 2007 Growth ------ ------ -------- ------ ------ -------- ‚£m ‚£m ‚£m ‚£mRevenue 6.5 5.0 +29% 19.6 16.3 +20% ===== ===== ===== =====Operating profit 2.1 1.1 +96% 7.3 4.4 +67% ===== ===== ===== =====Operating profit margin 32.5% 21.4% 37.3% 26.9% ===== ===== ===== =====Ashtead Technology again grew its revenues and profits strongly in offshore andonshore markets which remain good. The strategic review of Technology announcedin December is progressing well.
Capital expenditure
Capital expenditure for the nine months was ‚£301m (2007 - ‚£236m), more thandouble the depreciation charge as we invested to de-age our fleets, to completethe reconfiguration of the acquired fleet in the US and to support the top-linegrowth in the UK. Our capital expenditure guidance for the 2007/8 fiscal year asa whole is unchanged at approximately ‚£320m gross and ‚£260m net of disposalproceeds.Our rental fleet in all divisions has now reached an age and mix which weconsider optimum. Accordingly, we expect significantly reduced capitalexpenditure next year at approximately ‚£220m gross and ‚£175m net of disposalproceeds. Around ‚£180m of the gross expenditure will be for replacement with‚£40m of investment for growth (2.5% of current fleet size).
Share repurchase, net debt and leverage
Good progress has been made in implementing the 5% share repurchase announced inDecember. To 3 March, 4.2% of the issued share capital has been acquired at acost of ‚£18.1m or 77p per share.Net debt rose ‚£55m from ‚£931m at the start of the quarter to ‚£986m due tocurrency translation effects as the US dollar strengthened from $2.08 to $1.99(‚£40m effect) and to the ‚£11m spent by the quarter end on the share buy-back.The ratio of net debt to the LTM EBITDA at 31 January 2008 of ‚£370m was 2.7times, comfortably within our 2-3 times target. With a reduced requirement forreplacement capital expenditure in future, we expect to be in the lower half ofthis range by April 2009 and to continue deleveraging in future periods.Debt facilities remain committed for the long-term with the first significantmaturity being in August 2011. At 31 January 2008, availability under the$1.75bn asset based loan facility was $590m ($589m at 30 April 2007), well inexcess of the threshold of $125m at which financial covenants would be measured.
Current trading and outlook
Despite the economic uncertainty, our markets in the US and the UK remain goodand our experience on the ground suggests that this will continue for theforeseeable future. In the event of changing markets, we have a flexiblebusiness model that is able to respond quickly and effectively to marketconditions. The Board remains confident in the Group's prospects for the fullyear and beyond.
CONSOLIDATED INCOME STATEMENT
Three months to 31 January - unaudited----------------------------------------- 2008 2007 Before Before exceptional Exceptional exceptional Exceptional items items items, items, and and amortisation amortisation amortisation amortisation and fair value and fair value of intangibles of intangibles Total
remeasurements+ remeasurements+ Total
---------------- ---------------- -------
---------------- --------------- -------
‚£m ‚£m ‚£m ‚£m ‚£m ‚£mRevenue 237.2 - 237.2 240.0 - 240.0Staff costs (74.6) - (74.6) (79.7) (1.2) (80.9)Other operatingcosts (78.8) - (78.8) (85.8) (4.5) (90.3)Other income 2.5 0.1 2.6 2.0 - 2.0 ----- ----- ----- ----- ----- -----EBITDA* 86.3 0.1 86.4 76.5 (5.7) 70.8Depreciation (46.2) - (46.2) (44.4) - (44.4)Amortisation
of intangibles - (0.7) (0.7) - (3.8) (3.8) ----- ----- ----- ----- ----- -----Operating profit 40.1 (0.6) 39.5 32.1 (9.5) 22.6Investment income 1.0 - 1.0 1.1 - 1.1Interest expense (20.3) - (20.3)
(21.9) 0.3 (21.6) ----- ----- ----- ----- ----- -----Net financingcosts (19.3) - (19.3) (20.8) 0.3 (20.5) ----- ----- ----- ----- ----- -----Profit on ordinaryactivities beforetaxation 20.8 (0.6) 20.2 11.3 (9.2) 2.1Taxation: - current 0.1 - 0.1 0.1 - 0.1 - deferred (7.1) 0.2 (6.9) (4.1) 3.6 (0.5) ----- ----- ----- ----- ----- ----- (7.0) 0.2 (6.8) (4.0) 3.6 (0.4) ----- ----- ----- ----- ----- -----Profit attributable to equityshareholders 13.8 (0.4) 13.4 7.3 (5.6) 1.7 ===== ----- ===== ===== ----- =====Basic earningsper share 2.5p (0.1)p 2.4p 1.3p (1.0)p 0.3p ===== ----- ===== ===== ----- =====Diluted earnings pershare 2.5p (0.1)p 2.4p 1.3p (1.0)p 0.3p ===== ----- ===== ===== ----- =====Nine months to 31 January - unaudited--------------------------------------- Revenue 760.7 - 760.7 662.3 - 662.3Staff costs (232.0) - (232.0) (206.3) (8.7) (215.0)Other operating costs (247.4) - (247.4)
(231.2) (10.4) (241.6)Other income 10.2 0.3 10.5 6.6 - 6.6 ----- ----- ----- ----- ----- -----EBITDA* 291.5 0.3 291.8 231.4 (19.1) 212.3Depreciation (136.5) - (136.5) (116.6) - (116.6)Amortisation
of intangibles - (1.9) (1.9) - (6.6) (6.6) ----- ----- ----- ----- ----- -----Operating profit 155.0 (1.6) 153.4 114.8 (25.7) 89.1Investment income 3.2 - 3.2 3.1 - 3.1Interest expense (60.7) - (60.7) (52.2) (68.5) (120.7) ----- ----- ----- ----- ----- -----Net financing costs (57.5) - (57.5) (49.1) (68.5) (117.6) ----- ----- ----- ----- ----- -----Profit/(loss) onordinary activitiesbefore taxation 97.5 (1.6) 95.9 65.7 (94.2) (28.5)Taxation: - current (9.7) - (9.7) - - - - deferred (24.9) (1.2) (26.1) (23.1) 66.3 43.2 ----- ----- ----- ----- ----- ----- (34.6) (1.2) (35.8) (23.1) 66.3 43.2 ----- ----- ----- ----- ----- -----Profitattributable to
equity shareholders 62.9 (2.8) 60.1
42.6 (27.9) 14.7 ====== ----- ====== ====== ----- ======Basic earningsper share 11.4p (0.5)p 10.9p 8.5p (5.6)p 2.9p ====== ----- ====== ====== ----- ======Diluted earnings pershare 11.3p (0.5)p 10.8p 8.4p (5.5)p 2.9p ====== ----- ====== ====== ----- ======
* EBITDA is presented here as an additional performance measure as it is
commonly used by investors and lenders.
+ Fair value remeasurements related to embedded derivatives in long term debt.
All results are from continuing operations. Details of risks and uncertaintiesare given in the Review of Results, Balance sheet and Cash flow which accompanythese interim financial statements.
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
Unaudited Unaudited Three months to Nine months to 31 January 31 January 2008 2007 2008 2007 ----- ----- ----- ----- ‚£m ‚£m ‚£m ‚£m --- --- --- ---Net profit for the period 13.4 1.7 60.1 14.7
Tax on items taken directly to equity (4.0) - (0.5)
-
Foreign currency translation differences 6.7 (3.3) 1.3 (10.5) ----- ----- ----- -----Total recognised incomeand expense for the period 16.1 (1.6) 60.9 4.2 ===== ----- ===== =====
CONSOLIDATED MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
Unaudited Unaudited Three months to Nine months to 31 January 31 January 2008 2007 2008 2007 ------ ------ ------ ------ ‚£m ‚£m ‚£m ‚£m --- --- --- ---Total recognised income and expense for theperiod 16.1 (1.6) 60.9
4.2
Issue of ordinary shares, net of expenses 0.1 0.8 0.5 148.2Treasury shares purchased (11.1) - (11.1) -Dividends paid - - (6.1) (4.0)Share based payments 2.1 0.6 2.0 2.0Vesting of share awards (1.6) - - -Own shares acquired by ESOT (0.7) - (1.5) (4.9) ------- ------ ------- -------
Net increase in equity shareholders' funds 4.9 (0.2) 44.7 145.5 Opening equity shareholders' funds
436.5 404.0 396.7
258.3
------- ------- -------
-------
Closing equity shareholders' funds 441.4 403.8 441.4 403.8 ======= ======= ======= =======CONSOLIDATED BALANCE SHEET Unaudited Audited 31 January 30 April 2008 2007 2007 ------ ------ ------ ‚£m ‚£m ‚£mCurrent assetsInventories 24.0 32.1 24.2Trade and other receivables 161.1 158.1 163.7Current tax asset - 3.7 2.0Assets held for sale - 35.4 10.3Cash and cash equivalents 2.0 1.2 1.1 ------ ------ ------ 187.1 230.5 201.3 ------ ------ ------Non-current assetsProperty, plant and equipment- rental equipment 1,037.7 946.1 920.6- other assets 135.8 131.9 127.4 ------ ------ ------ 1,173.5 1,078.0 1,048.0Intangible assets - brand names and otheracquired intangibles 8.7 15.9 9.7Goodwill 292.7 288.5 289.6Deferred tax asset 25.6 41.5 41.7
Defined benefit pension fund surplus 5.9 2.4
5.2 ------ ------ ------ 1,506.4 1,426.3 1,394.2 ------ ------ ------Total assets 1,693.5 1,656.8 1,595.5 ========= ========= =========Current liabilitiesTrade and other payables 134.9 152.5 166.8Current tax liability 4.3 0.8 0.7
Debt due in less than one year 7.8 9.5
9.0Provisions 12.4 14.9 12.7 ------ ------ ------ 159.4 177.7 189.2 ------ ------ ------Non-current liabilitiesDebt due in more than one year 980.4 963.8 908.0Provisions 18.9 18.6 19.6Deferred tax liability 93.4 92.9 82.0 ------ ------ ------ 1,092.7 1,075.3 1,009.6 ------ ------ ------Total liabilities 1,252.1 1,253.0 1,198.8 ========= ========= =========Equity shareholders' fundsShare capital 56.2 55.9 56.0Share premium account 3.6 2.7 3.3Non-distributable reserve 90.7 90.7 90.7Treasury shares (11.1) - -Own shares held in treasury through the ESOT (7.2) (8.6) (8.7)Cumulative foreign exchange translationdifferences (28.9) (27.7) (30.2)Distributable reserves 338.1 290.8 285.6 ------ ------ ------Total equity shareholders' funds 441.4 403.8
396.7
------ ------
------
Total liabilities and equity shareholders' funds 1,693.5 1,656.8 1,595.5 ========= ========= =========
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Nine months to 31 January 2008 2007 ------ ------ ‚£m ‚£m ‚£m ‚£mCash flows from operating activitiesCash generated from operations beforeexceptional items 265.2 236.2Exceptional costs paid (8.1) (9.7) ------- -------Cash generated from operations 257.1
226.5
Financing costs paid before exceptional (44.9) (34.9)
items
Exceptional financing costs paid - (49.8) ------ --------Financing costs paid (44.9) (84.7)Tax paid (4.0) (6.0) ------- -------Net cash from operating activities 208.2
135.8
-------
-------
Cash flows from investing activitiesAcquisition of businesses (5.9)
(327.1)
Payments for property, plant and equipment (322.4)
(265.6)
Proceeds on sale of property, plant andequipment and assets held for sale 76.6
42.0
-------
-------
Net cash used in investing activities (251.7)
(550.7)
-------
-------
Cash flows from financing activitiesDrawdown of loans 145.2
883.3
Redemption of loans (77.2)
(599.5)
Capital element of finance lease (5.4)
(8.0)
payments
Purchase of own shares by the ESOT (1.5) (4.9)Purchase of treasury shares (11.1) -Dividends paid (6.1) (4.0)Proceeds from issue of ordinary shares 0.5
148.2
-------
-------
Net cash from financing activities 44.4
415.1
-------
-------
Increase in cash and cash equivalents 0.9
0.2
Opening cash and cash equivalents 1.1
1.0
Effect of exchange rate changes -
-
-------
-------
Closing cash and cash equivalents 2.0
1.2 ======= =======
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
The condensed financial statements for the nine months ended 31 January 2008were approved by the directors on 3 March 2008. They have been prepared inaccordance with 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 2007. They are unaudited and do not constitute statutoryaccounts within the meaning of Section 240 of the Companies Act 1985.The statutory accounts for the year ended 30 April 2007 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 contain a statement under section 237 of the CompaniesAct 1985.
The exchange rates used in respect of the US dollar are:
2008
2007
------
------
Average for the nine months ended 31 January 2.02 1.89At 31 January 1.99 1.962. Segmental analysis Operating profit before exceptionals Exceptional and items and Operating Revenue amortisation amortisation profit --------- ------------------ ------------- --------Three months to ‚£m ‚£m ‚£m ‚£m31 January 2008------Sunbelt 179.5 34.4 (0.6) 33.8A-Plant 51.2 5.4 - 5.4Ashtead Technology 6.5 2.1 - 2.1Corporate costs - (1.8) - (1.8) ------ ------- ------ ------- 237.2 40.1 (0.6) 39.5 ======= ====== ------- ======2007------Sunbelt 186.8 29.8 (9.0) 20.8A-Plant 48.2 3.1 (0.3) 2.8Ashtead Technology 5.0 1.1 - 1.1Corporate costs - (1.9) (0.2) (2.1) ------ ------- ------- ------- 240.0 32.1 (9.5) 22.6 ======= ====== ------- ======Nine months to 31 January 2008 ------ Sunbelt 581.4 132.0 (1.6) 130.4A-Plant 159.7 21.9 - 21.9Ashtead Technology 19.6 7.3 - 7.3Corporate costs - (6.2) - (6.2) ------ ------- ------ ------- 760.7 155.0 (1.6) 153.4 ======= ======= ------- =======2007------ Sunbelt 506.3 102.1 (25.2) 76.9A-Plant 139.7 14.2 (0.3) 13.9Ashtead Technology 16.3 4.4 - 4.4Corporate costs - (5.9) (0.2) (6.1) ------ ------- ------- ------- 662.3 114.8 (25.7) 89.1 ======= ======= -------- ======3. Operating costs 2008 2007 ------ ------ Before Before exceptional Exceptional exceptional Exceptional items and items and items and items and amortisation amortisation Total amortisation amortisation Total -------------- -------------- ------- ------------- ------------- ------- ‚£m ‚£m ‚£m ‚£m ‚£m ‚£mThree months to 31 January-----------------------------Staff costs:Salaries 67.4 - 67.4 71.8 - 71.8Social security costs 5.9 - 5.9 6.4 - 6.4Other pension costs 1.3 - 1.3 1.5 - 1.5Redundancies and retentionbonuses - - - - 1.2 1.2 ------ ------ ------ ------ ------ ------ 74.6 - 74.6 79.7 1.2 80.9 ------ ------ ------ ------ ------ ------Other operating costs:Vehicle costs 17.7 - 17.7 17.3 - 17.3Spares, consumables &external repairs 12.9 - 12.9 14.6 - 14.6Facility costs 10.0 - 10.0 14.1 0.1 14.2Other external charges 38.2 - 38.2 39.8 4.4 44.2 ------ ------ ------ ------ ----- ------ 78.8 - 78.8 85.8 4.5 90.3 ------ ------ ------ ------ ----- ------Other income:Profit on disposal offixed assets (2.5) (0.1) (2.6) (2.0) - (2.0) ------ ------ ------ ------ ------ ------Depreciation andamortisation: Depreciation 46.2 - 46.2 44.4 - 44.4Amortisation of acquiredintangibles - 0.7 0.7 - 3.8 3.8 ------ ------ ------ ------ ------ ------ 46.2 0.7 46.9 44.4 3.8 48.2 ------ ------ ------ ------ ------ ------ 197.1 0.6 197.7 207.9 9.5 217.4 ======= ===== ======= ======= ===== =======Nine months to 31 January----------------------------Staff costs:Salaries 210.6 - 210.6 187.3 - 187.3Social security costs 17.5 - 17.5 15.3 - 15.3Other pension costs 3.9 - 3.9 3.7 - 3.7Redundancies and retentionbonuses - - - - 8.7 8.7 ------ ------ ------ ------ ------ ------ 232.0 - 232.0 206.3 8.7 215.0 ------ ------ ------ ------ ------ ------Other operating costs:Vehicle costs 54.5 - 54.5 48.9 - 48.9Spares, consumables &external repairs 42.1 - 42.1 42.2 - 42.2Facility costs 30.3 - 30.3 34.5 4.1 38.6Other external charges 120.5 - 120.5 105.6 6.3 111.9 ------ ------ ------ ------ ------ ------ 247.4 - 247.4 231.2 10.4 241.6 ------ ------ ------ ------ ------ ------Other income:Profit on disposal offixed assets (10.2) (0.3) (10.5) (6.6) - (6.6) ------ ------ ------ ------ ------ ------ Depreciation andamortisation:Depreciation 136.5 - 136.5 116.6 - 116.6Amortisation of acquiredintangibles - 1.9 1.9 - 6.6 6.6 ------ ------ ------ ------ ------ ------ 136.5 1.9 138.4 116.6 6.6 123.2 ------ ------ ------ ------ ------ ------ 605.7 1.6 607.3 547.5 25.7 573.2 ======= ===== ======= ======= ====== =======
4. Exceptional items, amortisation and fair value remeasurements related to embedded derivatives
'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. Non-cash fair value remeasurements relate toembedded derivatives within long term debt instruments. The Group believes theseitems should be disclosed separately within the consolidated income statement toassist in the understanding of the financial performance of the Group.Exceptional items, amortisation and fair value remeasurements are excluded fromunderlying profit and earnings per share and are set out below: Three months to Nine months to 31 January 31 January 2008 2007 2008 2007 ------ ------ ------ ------ ‚£m ‚£m ‚£m ‚£mSenior note redemption costs - (0.3) - 42.0Write off of deferred financing costsrelating to debt redeemed - (0.1) -
10.5
Acquisition integration costs - 3.1 -
16.1
Rebranding costs - 2.1 -
2.5
Profit on sale of UK property from closedsites (0.1) - (0.3) -Other costs - 0.6 - 1.1Taxation - - 1.8 (37.3) ------ ------ ------ ------Total exceptional items (0.1) 5.4 1.5 34.9
Amortisation of acquired intangibles 0.7 3.8 1.9
6.6
Fair value remeasurements of embeddedderivatives - - -
15.4
Tax on exceptional items, amortisation andfair value remeasurements of embeddedderivatives (0.2) (3.6) (0.6) (29.0) ------ ------ ------ ------ 0.4 5.6 2.8 27.9 ===== ===== ===== ======The items detailed in the table above are presented in the income statement asfollows: Three months to Nine months to 31 January 31 January 2008 2007 2008 2007 ------ ------ ------ ------ ‚£m ‚£m ‚£m ‚£mStaff costs - 1.2 - 8.7Other operating costs - 4.5 - 10.4Other income (0.1) - (0.3) -
Amortisation of acquired intangibles 0.7 3.8 1.9 6.6
------ ------ ------
------
Charged in arriving at operating profit 0.6 9.5 1.6 25.7Net financing costs - (0.3) - 68.5 ------ ------- ------ ------Charged in arriving at profit before tax 0.6 9.2 1.6 94.2Taxation (0.2) (3.6) 1.2 (66.3) ------ ------ ------ ------ 0.4 5.6 2.8 27.9 ===== ===== ===== ======5. Net financing costs Three months to Nine months to 31 January 31 January 2008 2007 2008 2007 ------ ------ ------ ------ ‚£m ‚£m ‚£m ‚£mInvestment income:
Interest and other financial income - 0.1 -
0.1
Expected return on assets of defined benefitpension plan 1.0 1.0 3.2 3.0 ----- ----- ----- -----Total investment income 1.0 1.1 3.2 3.1 ===== ===== ===== =====Interest expense:Bank interest payable 9.8 10.6 28.6 24.1Interest on second priority senior securednotes 8.7 9.3 26.4
22.6
Interest payable on finance leases 0.2 0.5 0.9
1.2
Non-cash unwind of discount on defined benefitpension plan liabilities 0.7 0.7 2.2
2.0
Non-cash unwind of discount on selfinsurance provisions 0.4 0.1 0.9
0.4
Amortisation of deferred costs of debtraising 0.5 0.7 1.7 1.9 ----- ----- ----- ----- 20.3 21.9 60.7 52.2Exceptional costs and fair valueremeasurementsof embedded derivatives in long term debt - (0.3) - 68.5 ------ ------- ------ ------Total interest expense 20.3 21.6 60.7 120.7 ====== ====== ====== =======Net financing costs before exceptional itemsand fair value remeasurements of embeddedderivatives 19.3 20.8 57.5
49.1
Net exceptional items and fair valueremeasurements of embedded derivatives - (0.3) - 68.5 ------ ------- ------ ------Net financing costs 19.3 20.5 57.5 117.6 ====== ====== ====== =======6. TaxationThe tax charge for the period has been computed using an estimated effectiverate for the year of 40% in the US (2007 - 40%) and 31% in the UK (2007 - 22%)applied to the profit before tax and amortisation of acquired intangibles. Theblended effective rate for the Group as a whole is 35%. In addition, anexceptional tax charge of ‚£1.8m has been recognised in the nine months toreflect the reduction in the UK deferred tax asset which arises as a result ofthe reduction in the UK statutory corporation tax rate from 30% to 28% effective1 April 2008 which was enacted in the 2007 Finance Act. In the prior year theGroup recognised in full, as an exceptional profit, the previously unrecognisedUK deferred tax asset of ‚£37.3m.The tax charge of ‚£35.8m (2007 - credit of ‚£43.2m) comprises a charge forcurrent tax of ‚£9.7m (2007 - ‚£nil) and a charge for deferred tax of ‚£26.1m (2007- credit of ‚£43.2m). ‚£1.8m (2007 - ‚£37.3m) relates to the exceptional itemdescribed above and the remaining charge relates to current year items andcomprises of ‚£20.8m (2007 - credit of ‚£2.7m) relating to the US, ‚£13.0m (2007 -credit of ‚£3.2m) to the UK and ‚£0.2m (2007 - ‚£nil) to other jurisdictions.
7. Earnings per share
Basic and diluted earnings per share for the three and nine months ended 31January 2008 have been calculated based on the profit for the relevant periodand on the weighted average number of ordinary shares in issue during thatperiod (excluding shares held by the ESOT over which dividends have been waivedand shares held in treasury). Diluted earnings per share is computed using theresult for the relevant period and the diluted number of shares (ignoring anypotential issue of ordinary shares which would be anti-dilutive).
These are calculated as follows:
Three months to Nine months to 31 January 31 January 2008 2007 2008 2007 ------ ------ ------ ------
Profit for the financial period (‚£m) 13.4 1.7 60.1 14.7
====== ===== ======
======
Weighted average number of shares (m) - basic 551.6 550.5 552.1 499.7 ====== ===== ====== ======- diluted 552.6 557.0 555.0 506.4 ====== ===== ====== ======Basic earnings per share 2.4p 0.3p 10.9p 2.9p ====== ===== ====== ======Diluted earnings per share 2.4p 0.3p 10.8p 2.9p ====== ===== ====== ======
Underlying earnings per share (defined in any period as the earnings beforeexceptional items, amortisation of acquired intangibles and fair valueremeasurements for that period divided by the weighted average number of sharesin issue in that period) and cash tax earnings per share (defined in any periodas underlying earnings before other deferred taxes divided by the weightedaverage number of shares in issue in that period) may be reconciled to the basicearnings per share as follows: Three months to Nine months to 31 January 31 January 2008 2007 2008 2007 ------ ------ ------ ------Basic earnings per share 2.4p 0.3p 10.9p 2.9pExceptional items, amortisation of acquiredintangibles and fair value remeasurements 0.1p 1.7p 0.6p 18.9pDeferred tax on exceptional items,amortisation and fair value remeasurements - (0.7)p (0.1)p (5.8)pExceptional deferred tax credit forpreviously unrecognised UK tax losses - - -
(7.5)p
------ ------ ------
--------
Underlying earnings per share 2.5p 1.3p 11.4p
8.5pOther deferred tax 1.3p 0.8p 4.5p 4.6p ------ ------ ------ ------Cash tax earnings per share 3.8p 2.1p 15.9p 13.1p ====== ====== ======= =======8. Dividends
During the period, a final dividend in respect of the year ended 30 April 2007 of 1.1p (2006 - 1.0p) per share was paid to shareholders.
9. Property, plant and equipment
2008 2007 ------ ------ Rental Rental equipment Total equipment Total ----------- ------- ----------- -------Net book value ‚£m ‚£m ‚£m ‚£m----------------At 1 May 920.6 1,048.0 559.9 646.7Exchange difference 3.3 3.7 (35.9) (40.3)Reclassifications (0.2) 0.1 (0.4) (0.1)Additions 272.1 301.2 207.9 235.9Acquisitions 3.3 3.3 349.8 390.3Disposals (42.3) (46.3) (34.2) (37.9)Depreciation (119.1) (136.5) (101.0) (116.6) --------- --------- --------- ---------At 31 January 1,037.7 1,173.5 946.1 1,078.0 ========= ========= ======= =========
During the period we reassessed the useful economic lives and residual values of the rental fleet which reduced the depreciation charge for the period by ‚£1.7m.
10. Called up share capital
Ordinary shares of 10p each:
2008 2007 2008 2007 ------ ------ ------ ------ Number Number ‚£m ‚£mAuthorised 900,000,000 900,000,000 90.0 90.0 ============= ============= ====== ======Allotted, called up and fully paid 561,572,726 559,215,991 56.2 55.9 ============= ============= ====== ======
Since 30 April 2007, 1,674,378 shares have been issued at an average price of28.4p per share under the Company's share option plans raising ‚£0.5m. Inaddition, during the period the Company has purchased 14,814,961 ordinary sharesof 10p each at a total cost of ‚£11.1m, which are held as treasury shares.
11. Statement of changes in shareholders' equity
Own Cumulative shares foreign Non held in exchange 31 Share Share Treasury distributable treasury translation Distributable January capital premium stock reserves (ESOT)
differences reserves Total 2007
--------- --------- ------- ---------- -------- ------------ ---------- ------- ------ ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£mTotalrecognisedincome andexpense - - - - - 1.3 59.6 60.9 4.2Shares issued 0.2 0.3 - - - - - 0.5 148.2Treasurysharespurchased - - (11.1) - - - - (11.1) -Dividends paid - - - - - - (6.1) (6.1) (4.0)Share basedpayments - - - - - - 2.0 2.0 2.0Vesting ofshare awards - - - - 3.0 - (3.0) - -Own sharespurchased - - - - (1.5) - - (1.5) (4.9) ------ ------ ------ ------ ------- ------ ------ ------- -------Net changesinshareholders'equity 0.2 0.3 (11.1) - 1.5 1.3 52.5 44.7 145.5Openingshareholders'equity 56.0 3.3 - 90.7 (8.7) (30.2) 285.6 396.7 258.3 ------ ----- ------ ------ ------- -------- ------- ------- -------Closingshareholders'equity 56.2 3.6 (11.1) 90.7 (7.2) (28.9) 338.1 441.4 403.8 ====== ===== -------- ====== ------- -------- ======= ======= =======
12. Notes to the cash flow statement
Nine months to 31 January 2008 2007 ------ ------
a) Cash flow from operating activities ‚£m
‚£m
-----------------------------------------
Operating profit 153.4 89.1Depreciation and amortisation 138.4 123.2Exceptional items (0.3) 19.1 ------- ------EBITDA before exceptional items 291.5
231.4
Profit on disposal of property, plant and equipment (10.2)
(6.6)
Decrease in inventories 0.4
9.4
(Increase)/decrease in trade and other receivables (7.6)
6.4
Decrease in trade and other payables (11.8) (6.1)Exchange differences 1.0 (0.1)Other non-cash movements 1.9 1.8 ----- -----Cash generated from operations before exceptional items 265.2 236.2 ======= =======b) Analysis of net debt--------------------------
1 May Exchange Cash Non-cash 31 January 2007 movement flow movements 2008 ------ ---------- ------ ----------- ------ ‚£m ‚£m ‚£m ‚£m ‚£mCash (1.1) - (0.9) - (2.0)Debt due within 1 year 9.0 - (5.4) 4.2 7.8Debt due after 1 year 908.0 6.8 68.0 (2.4) 980.4 ------- ----- ------ ------- -------Total net debt 915.9 6.8 61.7 1.8 986.2 ======= ===== ====== ===== ======= Nine months to 31 January 2008 2007 ------ ------
c) Reconciliation to net debt ‚£m
‚£m
---------------------------------
Increase in cash in the period (0.9)
(0.2)
Increase in debt through cash flow 62.6
275.8
------
-------
Change in net debt from cash flows 61.7 275.6Debt acquired - 232.8Exchange difference 6.8 (44.7)Non-cash movements:- deferred costs of debt raising 1.7
12.4
- capital element of new finance leases 0.1
2.4
-----
-----
Movement in net debt in the period 70.3 478.5Opening net debt 915.9 493.6 ------- -------Closing net debt 986.2 972.1 ======= =======13. AcquisitionsIn November 2007, A-Plant acquired the in-house site accommodation rental fleetof one of its customers and entered into a five year sole supply agreement toprovide that customer's site accommodation needs. The consideration paid of‚£5.9m has been allocated between the fair value of the acquired assets (‚£3.5m),the intangible asset relating to the supply contract (‚£1.0m) and goodwill(‚£1.4m).
14. Contingent liabilities and contingent assets
There have been no significant changes in contingent liabilities from those reported at 30 April 2007. The Group remains subject to periodic legal claims in the ordinary course of its business. However, the claims outstanding at 31 January 2008 are not expected to have a significant impact on the Group's financial position.
As part of the NationsRent acquisition, the Group has agreed to pay deferredcontingent consideration of up to $89m. The amount of the deferred contingentconsideration is linked to the Company's share price performance over the threeyears from 1 September 2006 to 31 August 2009. In the event that the Company'sshare price (measured on a five day average basis) rises by more than 22.2%above the reference price of 204p (as adjusted for the bonus element of therights issue), contingent consideration becomes payable at the rate of $5m forevery additional 1% rise in the share price up to a maximum of 40% above thereference price. Accordingly, deferred contingent consideration starts to becomepayable when the Company's share price reaches 250p with the maximum $89m beingpayable at 286p. The contingent consideration is payable on a quarterly basis incash. It is not practicable to estimate reliably the amount of contingentconsideration which will become payable and accordingly no provision has beenmade.
REVIEW OF RESULTS, BALANCE SHEET AND CASH FLOW
Results
Segmental results
Divisional results before exceptional items and amortisation of acquiredintangibles for the three months and nine months ended 31 January 2008 aresummarised below: Operating Revenue EBITDA profitThree months to 31 January 2008 2007 2008 2007 2008 2007
---------------------------- ------ ------ ------ ------ ------
------Sunbelt in $m 362.7 361.5 137.2 121.9 69.4 58.1 ====== ====== ====== ====== ====== ======Sunbelt in ‚£m 179.5 186.8 67.9 62.7 34.4 29.8A-Plant 51.2 48.2 16.6 13.2 5.4 3.1Ashtead Technology 6.5 5.0 3.6 2.4 2.1 1.1Group central costs - - (1.8) (1.8) (1.8) (1.9) ------ ------ ------- ------- ------- ------- 237.2 240.0 86.3 76.5 40.1 32.1 ====== ======= ====== ======Net financing costs (19.3) (20.8) -------- --------Profit before tax,
exceptionals and amortisation 20.8
11.3Exceptional income/(costs) 0.1 (5.4)Amortisation (0.7) (3.8) ------- -------Profit before taxation 20.2 2.1 ====== =====Nine months to 31 January--------------------------- Sunbelt in $m 1,171.8 958.5 467.7 352.2 266.0 193.3 ====== ====== ====== ====== ====== ======Sunbelt in ‚£m 581.4 506.3 232.0 186.0 132.0 102.1A-Plant 159.7 139.7 54.2 43.2 21.9 14.2Ashtead Technology 19.6 16.3 11.5 8.0 7.3 4.4Group central costs - - (6.2) (5.8) (6.2) (5.9) ------ ------ ------- ------- ------- ------- 760.7 662.3 291.5 231.4 155.0 114.8 ======= ======= ======= =======Net financing costs (57.5) (49.1) -------- --------Profit before tax,
exceptionals and amortisation 97.5
65.7Exceptional income/(costs) 0.3 (87.6)Amortisation (1.9) (6.6) ------- -------
Profit/(loss) before taxation 95.9
(28.5) ====== --------In the quarter ended 31 January 2008 revenue decreased 1.2% to ‚£237.2m (2007 -‚£240.0m) but increased 2.2% at constant rates. This reflects the limiting effectof the weak dollar which, in the third quarter, declined 7.2% from $1.88 = ‚£1 ayear ago to $2.02 = ‚£1. EBITDA grew by 12.9% to ‚£86.3m (2007 - ‚£76.5m) andunderlying operating profit increased 25.1% to ‚£40.1m (2007 - ‚£32.1m) reflectingmargin growth in all three operating divisions. Profit before tax, exceptionalsand amortisation for the quarter increased to ‚£20.8m (2007- ‚£11.3m) and, afterexceptional items and amortisation, the profit before tax for the quarter was‚£20.2m (2007- ‚£2.1m).For the nine months ended 31 January 2008 revenue increased 14.9% to ‚£760.7m(2007 - ‚£662.3m). This reflects the contribution from NationsRent since 31August 2006 as well as the limiting effect of the weak dollar which, in the ninemonths, declined 6.5% from $1.89 = ‚£1 a year ago to $2.02 = ‚£1. UnderlyingEBITDA grew 26.0% to ‚£291.5m (2007 - ‚£231.4m) and operating profit increased35.1% to ‚£155.0m (2007 - ‚£114.8m) reflecting the inclusion of the acquiredNationsRent business throughout the period this year but only for five months inthe prior year and the margin improvement delivered in all three divisions.Profit before tax, exceptionals and amortisation for the nine months was ‚£97.5m(2007 - ‚£65.7m) and, after exceptional items and amortisation, the profit beforetax was ‚£95.9m (2007 - loss of ‚£28.5m).
Balance sheet
Capital expenditure in the nine months was ‚£301.2m (2007 - ‚£235.9) of which‚£272.1m (2007 - ‚£207.9) was invested in the rental fleet. Expenditure on rentalequipment was 90.3% of total capital expenditure with the balance relating tothe delivery vehicle fleet, property improvements and to computer equipment.Capital expenditure by division was as follows: 2008 2007 ------ ------ Growth Maintenance Total Total -------- ------------- ------- -------Sunbelt in $m 177.2 161.0 338.2 279.7 ======= ======= ======= =======Sunbelt in ‚£m 89.2 81.0 170.2 142.9A-Plant 31.5 63.1 94.6 57.4Ashtead Technology 5.5 1.8 7.3 7.6 ----- ----- ----- -----Total rental equipment 126.2 145.9 272.1 207.9 ======= =======Delivery vehicles, propertyimprovements & computers 29.1 28.0 ------ ------Total additions 301.2 235.9 ======= =======‚£126.2m of the rental equipment capital expenditure was invested for growth with‚£145.9m spent on replacing existing fleet. The growth proportion is estimated onthe basis of the assumption that maintenance capital expenditure in any periodis equal to the original cost of equipment sold.The average age of the Group's serialised rental equipment, which constitutesthe substantial majority of our fleet, at 31 January 2008 was 29 months (2007 -31 months) on a net book value basis. Sunbelt's fleet had an average age of 31months (2007 - 32 months) comprising 35 months for aerial work platforms whichhave a longer life and 27 months for the remainder of its fleet and A-Plant'sfleet had an average age of 22 months (2007 - 30 months).
The original cost of the Group's rental fleet and the dollar utilisation for the twelve months ended 31 January 2008 are shown below:
Rental fleet at original cost ------------------------------- LTM rental
Dollar
31 January 2008 30 April 2007 LTM average revenues
utilisation
----------------- --------------- ------------- ---------- -------------Sunbelt in $m 2,323 2,147 2,252 1,411 63% ======= ======= ======= =======Sunbelt in ‚£m 1,168 1,074 1,117 700 63%A-Plant 357 321 337 204 61%
Ashtead Technology 46 39 42 25
59% ------- ------- ------- ------- 1,571 1,434 1,496 929 ======= ======= ======= =====
Dollar utilisation is defined as rental and rental related revenues divided byaverage fleet at original (or "first") cost. Dollar utilisation at Sunbelt forthe twelve months ended 31 January 2008 improved to 63% from a pro forma figureof 62% in the year ended 30 April 2007 as Sunbelt focused on improving thepreviously low dollar utilisation in the acquired NationsRent profit centres.Dollar utilisation of 61% at A-Plant reflects the lower pricing (relative toequipment cost) prevalent in the competitive UK market and its higher physicalutilisation.Trade receivables
Receivable days at 31 January 2008 were 49 days (2007 - 47 days). The bad debt charge for the nine months ended 31 January 2008 as a percentage of total turnover was 0.8% (2007 - 0.7%).
Trade and other payables
Group payable days were 60 days in 2008 (2007 - 68 days). Capital expenditurerelated payables at 31 January 2008 totalled ‚£25.3m (2007 - ‚£32.7m). Paymentperiods for purchases other than rental equipment vary between 7 and 45 days andfor rental equipment between 30 and 120 days.
Cash flow and net debt
Free cash flow (defined as the net cash inflow from operations less netmaintenance capital expenditure, financing costs paid and tax paid) issummarised below: Nine months to LTM to Year to 31 January 31 January 30 April 2008 2007 2008 2007 ------ ------ ------ ------ ‚£m ‚£m ‚£m ‚£mEBITDA before exceptional items 291.5 231.4 370.4 310.3 ======= ======= ======= =======Cash inflow from operationsbefore exceptional items 265.2 236.2 348.3 319.3Cash efficiency ratio* 91.0% 102.1% 94.0% 102.9%Maintenance rental capital (172.9) (119.0) (267.0) (213.1)expenditureNon-rental capital expenditure (28.7) (26.2) (34.8) (32.3)Proceeds from sale of used rentalequipment 76.6 42.0 113.1 78.5Tax paid (4.0) (6.0) (3.0) (5.0) ------ ------ ------ ------Free cash flow before interest 136.2 127.0 156.6 147.4Financing costs paid (44.9) (34.9) (74.2) (64.2) ------ ------ ------ ------Free cash flow after interest 91.3 92.1 82.4 83.2Growth capital expenditure (120.8) (120.4) (63.3) (62.9)Dividends paid (6.1) (4.0) (9.1) (7.0) ------ ------ ------ ------Cash flow before acquisitions,equity issues &buybacks & exceptional costs (35.6) (32.3) 10.0 13.3Purchase of treasury shares (11.1) - (11.1) -
Purchase of own shares by ESOT (1.5) (4.9) (1.5) (4.9) Acquisitions
(5.9) (327.1) (6.0)
(327.2)
Issue of ordinary share capital 0.5 148.2 1.2 148.9 Exceptional costs paid (net)
(8.1) (59.5) (17.4) (68.8) ------ ------ ------ ------Increase in total debt (61.7) (275.6) (24.8) (238.7) ------ ------ ------ ------
* Cash inflow from operations before exceptional items as a percentage of EBITDA before exceptional items.
Cash inflow from operations increased 12.3% to ‚£265.2m and the cash efficiencyratio was 91.0% (2007 - 102.1%). Last year's cash efficiency ratio was unusuallyhigh as that period benefited from cash generated by reducing NationsRentinventory and receivables levels post acquisition. The Group continues togenerate strong free cash flow after interest with ‚£91.3m (2007 - ‚£92.1m)generated in the nine months. After growth capital expenditure and equitydividends, the cash inflow in the last year was ‚£10.0m (year to 30 April 2007 -‚£13.3m).Net debt 31 January 30 April 2008 2007 2007 ------ ------ ------ ‚£m ‚£m ‚£mFirst priority senior secured bank debt 579.6 552.1
506.1
Finance lease obligations 16.7 24.0
22.0
8.625% second priority senior secured notes, due 121.6 123.2 120.620159% second priority senior secured notes, due 2016 270.3 274.0 268.3 ------- ------- ------- 988.2 973.3 917.0Cash and cash equivalents (2.0) (1.2) (1.1) ------- ------- -------Total net debt 986.2 972.1 915.9 ======= ======= =======Reflecting normal seasonal trends, Group net debt increased from ‚£915.9m at 30April 2007 to ‚£986.2m at 31 January 2008 as we invested in the rental fleet andin receivables. The ratio of net debt to EBITDA was 2.7 times at 31 January2008. LTM EBITDA before exceptional items was ‚£370.4m.The Group's debt facilities are now committed for a weighted average period ofapproximately 5 years with the earliest significant maturity being in August2011. The weighted average interest cost of these facilities (including non-cashamortisation of deferred debt raising costs) is approximately 8%, most of whichis tax deductible in the US where the tax rate is 39%. Financial performancecovenants under the two senior secured notes issues are only measured at thetime new debt is raised. There are two financial performance covenants under theasset based first priority senior bank facility:
- funded debt to EBITDA before exceptional items not to exceed 4.25 times (4.0
times from April 2009), 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 are not, however, required to be adhered to when availability(the difference between the borrowing base and facility utilisation) exceeds$125m. At 31 January 2008 availability under the bank facility, includingsuppressed availability of $45m, was $590m ($589m at 30 April 2007).
Principal risks and uncertainties
Risks and uncertainties in achieving the Group's objectives for the remainder ofthe financial year, together with assumptions, estimates, judgements andcritical accounting policies used in preparing financial information remainunchanged from those detailed in the 2007 Annual Report and Accounts on pages 21to 23. In particular, our business is subject to significant fluctuations inperformance from 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 majority ofour assets, liabilities, revenues and costs being denominated in US dollars.Approximately 94% of our debt was denominated in US dollars at 31 January 2008.At that date dollar denominated debt represented approximately 85% of the valueof dollar denominated net assets (other than debt) providing a partial, butsubstantial, hedge against the translation effects of changes in the dollarexchange rate. The dollar interest payable on this debt also limits the impactof changes in the dollar exchange rate on our pre-tax profits and earnings.Based on the currency mix of our profits currently prevailing and on currentdollar debt levels and interest rates, every 1% change in the US dollar exchangerate would impact pre-tax profit by 0.8%.
OPERATING STATISTICS
Profit centre numbers Staff numbers ----------------------- --------------- 31 January 30 April 31 January 30 April ------------ ---------- ------------ ---------- 2008 2007 2007 2008 2007 2007 ------ ------ ------ ------ ------ ------Sunbelt 429 454 445 6,963 7,475 7,524A-Plant 194 231 201 2,422 2,592 2,424Ashtead Technology 13 12 13 131 116 115Corporate office - - - 10 14 14 ------ ------ ------ ---- ---- -------Group 636 697 659 9,526 10,197 10,077 ===== ===== ===== ======= ======== ========
Sunbelt's profit centre numbers include 90 Sunbelt at Lowes stores at 31 January 2008 (99 at 30 April 2007).
ASHTEAD GROUP PLCRelated Shares:
Ashtead Group