3rd Dec 2009 07:00
Unaudited results for the half year and second quarter ended 31 October 2009 Financial summary----------------- Second quarter First half -------------- ---------- 2009 2008 2009 2008 ---- ---- ---- ---- GBPm GBPm % GBPm GBPm % Revenue 218.2 307.7 -29% 441.0 581.1 -24%Underlying profit before taxation(1) 11.3 40.7 -72% 20.1 76.6 -74%Profit before taxation 10.4 4.3 +137% 18.6 39.5 -53%Basic earnings per share 0.9p (0.3p) n/a 2.0p 15.8p -87%Highlights----------
* Continuing to gain market share across both geographies * First half pre-tax profit before amortisation of 20.1m in line with expectations (2008: 76.6m before exceptional items & amortisation)
* 97m of cash generated from operations in the first half with full year
cash generation target raised to 125m from the 100m previously stated
* Net debt reduced by 189m to 847m (30 April 2009: 1,036m) * Interim dividend unchanged at 0.9p per share (2008: 0.9p)
* $1.3bn refinancing of our asset-based loan through November 2013 provides
the Group with substantial resources and flexibility for future growth
Ashtead's chief executive, Geoff Drabble, commented:
"These results show that, while market conditions have remained difficult throughout the first half, the actions we took last winter to cut costs and reduce fleet size prepared our businesses for the conditions ahead and ensured that margins held up well.
Our operational performance is strong and we are clearly gaining market share.This has helped protect our profitability and deliver strong cash generation inthe first half.
Whilst we remain focused on current trading, our timely decision to extend the maturity of our asset-based loan until November 2013 allows us to turn our attention to preparing for the recovery.
We continue to believe in the fundamentals of our markets. With a restructuredbusiness delivering good margins and gaining market share, together with theflexibility given by the recently extended debt facilities, the Board believesthat Ashtead is well placed to benefit when markets recover."Contacts:Geoff Drabble Chief executive 020 7726 9700 Ian Robson Finance director Brian Hudspith Maitland 020 7379 5151 (1)Underlying revenue, profit and earnings per share are stated beforeexceptional items and amortisation of acquired intangibles. The definition ofexceptional items is set out in note 4. The reconciliation of underlyingearnings per share and underlying cash tax earnings per share to basic earningsper share is shown in note 7 to the attached financial information.Geoff Drabble and Ian Robson will host a meeting for equity analysts to discussthe results at 9.30am on Thursday 3 December at the offices of UBS at 100Liverpool Street, London EC2M 2RH. For the information of shareholders andother interested parties, the analysts' meeting will be webcast live via theCompany's website at www.ashtead-group.com and there will also be a replayavailable via the website from shortly after the call concludes. A copy of theannouncement and slide presentation used for the meeting will also be availablefor download on the Company's website. There will, as usual, also be a separatecall for bondholders at 3.00pm UK time (10.00am EST).Analysts and bondholders have already been invited to participate in themeeting and conference call but anyone not having received dial in detailsshould contact the Company's PR advisers, Maitland (Ashley Forget) on 020 73795151.First half results----------------- Revenue EBITDA Operating profit ------- ------ ---------------- 2009 2008 2009 2008 2009 2008 ---- ---- ---- ---- ---- ----Sunbelt in $m 576.1 870.2 199.3 320.8 80.0 187.0 ===== ===== ===== ===== ==== ===== Sunbelt in m 355.4 462.6 122.9 170.6 49.3 99.4A-Plant 84.0 118.5 23.7 38.8 3.1 14.2Group central costs - - (2.7) (3.6) (2.7) (3.6) --- --- --- --- --- --- Continuing operations 439.4 581.1 143.9 205.8 49.7 110.0 ===== ===== ===== ===== ==== =====Net financing costs (29.6) (33.4)Profit before tax, exceptionals and ---- ---- amortisation from continuing operations 20.1 76.6Ashtead Technology - 2.8Exceptional items (net) - 30.5Amortisation (1.5) (1.4) --- ---Total Group profit before taxation 18.6 108.5Taxation (8.6) (27.8) --- ---- Profit attributable to equity holders of the Company 10.0 80.7 Margins ------- Sunbelt 34.6% 36.9% 13.9% 21.5%A-Plant 28.2% 32.7% 3.7% 12.0%Group 32.7% 35.4% 11.3% 18.9%
First half results reflected the prevailing market conditions with rental revenues declining in Sunbelt by 31% to $534.4m and in A-Plant by 26% to 78.9m. Total revenue reductions were 34% in Sunbelt and 29% in A-Plant due to the greater reduction in sales of new and used equipment, merchandise and consumables.
The volume of fleet on rent held up well as a result of market share gains.Average fleet on rent in the first half reduced 13% year on year at Sunbelt and16% at A-Plant. Pricing continued to be under pressure in both markets withyield declining 20% in Sunbelt and 11% in A-Plant compared to the same periodin the prior year. Encouragingly, yield was broadly stable from month to monthduring the first half.
Our prompt action on cost reduction measures is reflected in the first half results with operating costs down 31% in Sunbelt and 24% in A-Plant. As a result, Group EBITDA margins remain above 30% and operating profit margins above 10%. The pre-tax profit before amortisation for the first half was in line with the Board's expectations at 20.1m (2008: 76.6m).
Whilst we continue to take appropriate actions on cost control, we arebalancing this with the ongoing needs of the business. We remain confident asto the fundamentals of our markets and therefore continue to focus ondeveloping long-term relationships across a wide range of market sectors. Oursuccess in market share gains is demonstrated by our relatively strong volumesof fleet on rent and rental revenues. These successes will provide thespringboard for improving margins and revenues as markets recover.The effective current year tax rate for the first half was broadly stable at35% (2008: 36%). In addition, there was an adjustment of 2.1m to prior yeardeferred tax. Basic earnings per share for the first half were 2.0p (2008:15.8p, including the 11.0p impact of June 2008's exceptional gain on disposalof Ashtead Technology).Capital expenditure-------------------Capital expenditure in the first half was 28.5m (2008: 201.5m) of which 24.4m was rental fleet replacement. Disposal proceeds were 13.2m (2008: 40.7m), including 1.6m from the disposal of the remaining assets held for saleat year end, giving net capital expenditure in the first half of 15.3m (2008: 160.8m). We retain a significant ability to age our fleet and sustain our freecash flow at a time of lower earnings. The average age of the Group's rentalfleet at 31 October 2009 was 39 months (2008: 32 months).In the year as a whole, we continue to anticipate spending around 100m gross,all of which will be for replacement, or 75m net of disposal proceeds. Withshort lead times and no forward commitments, we have the flexibility to adjustthis as required to reflect market conditions.Cash flow and net debt---------------------- 97m of net cash inflow (2008: 19m) was generated from operations in the firsthalf, of which 8m was returned to equity shareholders by way of dividends and 89m applied to reduce outstanding debt. As a result, including the benefit ofa translation gain of 102m, closing net debt at 31 October 2009 reduced to 847m (30 April 2009: 1,036m). This substantial cash flow has helped to keepthe ratio of net debt to EBITDA at 31 October 2009 to 2.9 times, within our 2-3times target range despite the decline in our earnings due to the downturn.Our revised debt package remains well structured for the challenges of currentmarket conditions. Under the terms of the recent amendment of our asset-basedsenior bank facility, $1.3bn is now committed for four years until November2013 with an additional $0.5bn available on the original terms until August2011. Our debt facilities continue to be committed for the long term, with anaverage of 5.3 years at 31 October 2009 pro forma for the recent amendment.Based on August 2009 asset values, which were 27% below Spring 2007 peakvalues, availability at 31 October 2009 was $500m ($550m at 30 April 2009 basedon November 2008 asset values which were 17% below peak). Availabilitytherefore remains well above $150m, the level at which the entire debt packageis covenant free.Dividends---------As we have stated previously, the Board's dividend policy is to seek toincrease cash returns to shareholders progressively over time, considering boththe underlying performance of the Group and the ongoing cash flow of thebusiness. In light of the impact of the recession on earnings, the Board hasdeclared an unchanged interim dividend of 0.9p per share which will be paid on3 February 2010 to shareholders on record on 15 January 2010.Current trading and outlook---------------------------We maintain the view that market conditions will remain difficult throughoutthe second half of the current financial year as more private sector projectsfunded prior to the downturn are completed and overall activity declines.However, there are reasons to believe that this seasonally difficult period mayrepresent the bottom or near bottom of our cycle. Beyond the end of this fiscalyear, we anticipate that markets will remain difficult in 2010 but that theeffect of US stimulus work and a recovering residential construction marketwill benefit us until general economic recovery brings an improvement incommercial construction, most likely towards the end of our 2010/11 fiscalyear.We continue to believe in the fundamentals of our markets. With a restructuredbusiness delivering good margins and gaining market share, together with theflexibility given by the recently extended debt facilities, the Board believesthat Ashtead is well placed to benefit when markets recover.
Directors' responsibility statement in respect of the interim financial report ------------------------------------------------------------------------------ We confirm that to the best of our knowledge:
* the condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU and the International Accounting Standards Board; * the interim management report includes a fair review of the information required by:
i. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for
the remaining six months of the year; and
ii. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the
related party transactions described in the last annual report that could
do so.
By order of the Board of Directors 2
December 2009
CONSOLIDATED INCOME STATEMENT FOR THE THREE MONTHS ENDED 31 OCTOBER 2009
2009 2008 ---- ---- Before Before exceptional items Exceptional items exceptional items Exceptional items and amortisation and amortisation Total and amortisation and amortisation Total ---------------- ---------------- ----- ---------------- ---------------- ----- (restated) (restated) Second quarter - unaudited GBPm GBPm GBPm GBPm GBPm GBPm Continuing operations Revenue Rental revenue 201.8 - 201.8 272.0 - 272.0Sale of new equipment, merchandise and consumables 10.0 - 10.0 14.8 - 14.8Sale of used rental equipment 6.0 0.4 6.4 20.9 - 20.9 --- --- --- ---- --- ---- 217.8 0.4 218.2 307.7 - 307.7 ----- --- ----- ----- --- -----Operating costs Staff costs (66.2) - (66.2) (79.6) (0.6) (80.2)Used rental equipment sold (6.4) (0.4) (6.8) (18.5) - (18.5)Other operating costs (72.8) - (72.8) (102.0) (7.4) (109.4)Other (expense)/income (0.1) - (0.1) 0.6 0.1 0.7 --- --- --- --- --- --- (145.5) (0.4) (145.9) (199.5) (7.9) (207.4) ----- --- ----- ----- --- ----- EBITDA* 72.3 - 72.3 108.2 (7.9) 100.3Depreciation (46.5) - (46.5) (49.9) (27.8) (77.7)Amortisation of intangibles - (0.9) (0.9) - (0.7) (0.7) --- --- --- --- --- --- Operating profit 25.8 (0.9) 24.9 58.3 (36.4) 21.9Net financing costs (14.5) - (14.5) (17.6) - (17.6) ---- --- ---- ---- --- ----Profit on ordinary activities before taxation 11.3 (0.9) 10.4 40.7 (36.4) 4.3 Taxation: - current (0.7) - (0.7) (0.3) 1.0 0.7- deferred (5.4) 0.3 (5.1) (14.4) 11.2 (3.2) --- --- --- ---- ---- --- (6.1) 0.3 (5.8) (14.7) 12.2 (2.5) --- --- --- ---- ---- --- Profit from continuing operations 5.2 (0.6) 4.6 26.0 (24.2) 1.8Loss from discontinued operations - - - - (3.3) (3.3) --- --- --- --- --- ---Profit/(loss)attributable to equity holders of the Company 5.2 (0.6) 4.6 26.0 (27.5) (1.5) === === === ==== ==== === Continuing operations Basic earnings per share 1.0p (0.1p) 0.9p 5.2p (4.8p) 0.4p ==== ==== ==== ==== ==== ====Diluted earnings per share 1.0p (0.1p) 0.9p 5.2p (4.8p) 0.4p ==== ==== ==== ==== ==== ====Total continuing and discontinued operations Basic earnings per share 1.0p (0.1p) 0.9p 5.2p (5.5p) (0.3p) ==== ==== ==== ==== ==== ====Diluted earnings per share 1.0p (0.1p) 0.9p 5.2p (5.5p) (0.3p) ==== ==== ==== ==== ==== ====
* EBITDA is presented here as an additional performance measure as it is commonly used by investors and lenders.
Details of principal risks and uncertainties are given in the Review of Results, Balance Sheet and Cash Flow accompanying these interim financial statements.
CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 OCTOBER 2009
2009 2008 ---- ---- Before Before exceptional items Exceptional items exceptional items Exceptional items and amortisation and amortisation Total and
amortisation and amortisation Total
---------------- ---------------- -----
---------------- ---------------- -----
(restated) (restated)First half - unaudited GBPm GBPm GBPm GBPm GBPm GBPm---------------------- Continuing operations Revenue Rental revenue 408.6 - 408.6 516.1 - 516.1Sale of new equipment, merchandise and consumable 21.1 - 21.1 30.2 - 30.2Sale of used rental equipment 9.7 1.6 11.3 34.8 - 34.8 --- --- ---- ---- --- ---- 439.4 1.6 441.0 581.1 - 581.1 ----- --- ----- ----- --- -----Operating costs Staff costs (136.2) - (136.2) (155.0) (0.6) (155.6)Used rental equipment sold (10.8) (1.6) (12.4) (30.1) - (30.1)Other operating costs (148.5) - (148.5) (191.0) (7.4) (198.4)Other income - - - 0.8 0.1 0.9 --- --- --- --- --- --- (295.5) (1.6) (297.1) (375.3) (7.9) (383.2) ----- --- ----- ----- --- -----EBITDA* 143.9 - 143.9 205.8 (7.9) 197.9Depreciation (94.2) - (94.2) (95.8) (27.8) (123.6)Amortisation of intangibles - (1.5) (1.5) - (1.4) (1.4) --- --- --- --- --- --- Operating profit 49.7 (1.5) 48.2 110.0 (37.1) 72.9Net financing costs (29.6) - (29.6) (33.4) - (33.4) ---- --- ---- ---- --- ----Profit on ordinary activities before taxation 20.1 (1.5) 18.6 76.6 (37.1) 39.5Taxation: - current (1.6) - (1.6) (1.4) 1.0 (0.4)- deferred (7.5) 0.5 (7.0) (26.2) 11.4 (14.8) --- --- --- ---- ---- ---- (9.1) 0.5 (8.6) (27.6) 12.4 (15.2) --- --- --- ---- ---- ----Profit from continuing operations 11.0 (1.0) 10.0 49.0 (24.7) 24.3Profit from discontinued operations - - - 2.0 54.4 56.4 --- --- --- --- ---- ----Profit attributable to equity holders of the Company 11.0 (1.0) 10.0 51.0 29.7 80.7 ==== === ==== ==== ==== ====Continuing operations Basic earnings per share 2.2p (0.2p) 2.0p 9.6p (4.8p) 4.8p ==== ==== ==== ==== ==== ====Diluted earnings per share 2.2p (0.2p) 2.0p 9.6p (4.8p) 4.8p ==== ==== ==== ==== ==== ====Total continuing and discontinued operations Basic earnings per share 2.2p (0.2p) 2.0p 10.0p 5.8p 15.8p ==== ==== ==== ===== ==== =====Diluted earnings per share 2.2p (0.2p) 2.0p 10.0p 5.8p 15.8p ==== ==== ==== ===== ==== =====
* EBITDA is presented here as an additional performance measure as it is commonly used by investors and lenders.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited --------- Three months to Six months to 31 October 31 October 2009 2008 2009 2008 ---- ---- ---- ---- (restated) (restated) GBPm GBPm GBPm GBPm
Profit/(loss) attributable to equity holders of the Company for the period
4.6 (1.5) 10.0 80.7Foreign currency translation differences 0.8 39.9 (23.6) 39.7Actuarial loss on defined benefit pension scheme (14.0) - (14.0) -Tax on foreign currency translation differences - (3.7) - (3.7)Tax on defined benefit pension scheme
3.9 (0.3) 3.9 (0.3)
--- --- --- --- Total comprehensive income for the period (4.7) 34.4 (23.7) 116.4 === ==== ==== =====
CONSOLIDATED BALANCE SHEET AT 31 OCTOBER 2009
Unaudited Audited --------- ------- 31 October 30 April 2009 2008 2009 ---- ---- ---- (restated) GBPm GBPm GBPm Current assets Inventories 9.0 21.7 10.4Trade and other receivables 143.6 213.5 148.3Current tax asset 0.9 2.8 1.5Cash and cash equivalents 19.4 1.9 1.7 ---- --- --- 172.9 239.9 161.9Assets held for sale - - 1.6 --- --- --- 172.9 239.9 163.5 ----- ----- ----- Non-current assets Property, plant and equipment - rental equipment 978.1 1,193.9 1,140.5- other assets 135.6 155.3 153.5 ----- ----- ----- 1,113.7 1,349.2 1,294.0 Intangible assets - brand names and other acquired intangibles 4.1 7.4 5.9Goodwill 347.9 354.6 385.4Deferred tax asset 12.5 14.7 12.3Defined benefit pension fund surplus - 6.7 0.3 --- --- --- 1,478.2 1,732.6 1,697.9 ------- ------- -------Total assets 1,651.1 1,972.5 1,861.4 ======= ======= ======= Current liabilities Trade and other payables 106.3 166.8 106.7Current tax liability 0.7 3.6 -Debt due within one year 5.2 9.3 6.9Provisions 12.3 11.4 17.4 ---- ---- ---- 124.5 191.1 131.0 ----- ----- ----- Non-current liabilities Debt due after more than one year 860.8 1,068.3 1,030.7Provisions 32.3 26.3 36.8Deferred tax liabilities 126.2 150.0 136.9Defined benefit pension fund deficit 13.2 - - ---- --- --- 1,032.5 1,244.6 1,204.4 ------- ------- ------- Total liabilities 1,157.0 1,435.7 1,335.4 ------- ------- ------- Equity Share capital 55.3 56.2 55.3Share premium account 3.6 3.6 3.6Capital redemption reserve 0.9 - 0.9Non-distributable reserve 90.7 90.7 90.7Own shares held by the Company (33.1) (36.3) (33.1)Own shares held through the ESOT (6.3) (6.4) (6.3)Cumulative foreign exchange translation differences 5.5 9.0 29.1Retained reserves 377.5 420.0 385.8 ----- ----- -----Equity attributable to equity holders of the Company
494.1 536.8 526.0
----- ----- ----- Total liabilities and equity
1,651.1 1,972.5 1,861.4
======= ======= =======
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 OCTOBER 2009
Cumulative Own foreign Share Capital Non- shares exchange Share premium redemption distributable
Treasury held by translation Retained
capital account reserve reserve stock ESOT differences reserves Total ------- ------- ------- ------- ----- ---- ----------- -------- ----- GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm At 1 May 2008 as restated 56.2 3.6 - 90.7 (23.3) (7.0) (28.2) 348.3 440.3 Total comprehensive income for the period - - - - - - 36.0 80.4 116.4Shares issued - - - - 0.5 - - (0.3) 0.2Dividends paid - - - - - - - (8.4) (8.4)Share-based payments - - - - - - - 1.0 1.0 Vesting of share awards - - - - - 1.0 - (1.0) -Own shares purchased - - - - (13.5) (0.4) - - (13.9)Realisation of foreign exchange translation differences - - - -
- - 1.2 - 1.2
--- --- --- --- --- --- --- --- --- At 31 October 2008 as restated 56.2 3.6 - 90.7 (36.3) (6.4) 9.0 420.0 536.8Total comprehensive income for the period - - - - - - 20.1 (22.4) (2.3)Dividends paid - - - - - - - (4.5) (4.5)Share-based payments - - - - - - - (1.8) (1.8)Vesting of share awards - - - - - 0.1 - (0.1) -Own shares purchased - - - - (2.2) - - - (2.2)Cancellation of shares held in treasury by the Company (0.9) - 0.9 - 5.4 - - (5.4) - --- --- --- --- --- --- --- --- --- At 30 April 2009 55.3 3.6 0.9 90.7 (33.1) (6.3) 29.1 385.8 526.0Total comprehensive income for the period - - - - - - (23.6) (0.1) (23.7)Dividends paid - - - - - - - (8.3) (8.3)Share-based payments - - - - - - - 0.1 0.1 --- --- --- --- --- --- --- --- ---At 31 October 2009 55.3 3.6 0.9 90.7 (33.1) (6.3) 5.5 377.5 494.1 ==== === === ==== ==== === === ===== =====
CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31 OCTOBER 2009
Unaudited --------- 2009 2008 ---- ---- (restated)Cash flows from operating activities GBPm GBPmCash generated from operations before exceptional items and changes in rental fleet 143.4 194.9Exceptional costs paid (5.0) (1.4)Payments for rental property, plant and equipment (23.6) (154.0)Proceeds from disposal of rental property, plant and equipment before exceptional disposals 9.5 24.6Exceptional proceeds from disposal of rental property, plant and equipment
1.6 -
--- ---Cash generated from operations 125.9 64.1Financing costs paid (26.4) (28.4)Tax paid (0.4) (0.5) --- ---Net cash from operating activities 99.1 35.2 ---- ---- Cash flows from investing activities Disposal of businesses - 89.8Payments for non-rental property, plant and equipment (3.5) (19.4)Proceeds on sale of non-rental property, plant and equipment
1.5 3.0
--- ---Net cash (used in)/from investing activities
(2.0) 73.4
--- ----Cash flows from financing activities Drawdown of loans 33.9 94.1Redemption of loans (102.3) (177.6)Capital element of finance lease payments (2.5) (3.2)Purchase of own shares by the Company - (13.5)Purchase of own shares by the ESOT - (0.4)Dividends paid (8.3) (8.4)Proceeds from issue of ordinary shares
- 0.2
--- ---Net cash used in financing activities
(79.2) (108.8)
---- -----Increase/(decrease) in cash and cash equivalents 17.9 (0.2)Opening cash and cash equivalents 1.7 1.8Effect of exchange rate differences
(0.2) 0.3
--- ---Closing cash and cash equivalents 19.4 1.9 ==== ===
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
The condensed interim financial statements for the six months ended 31 October2009 were approved by the directors on 2 December 2009. They have been preparedin accordance with relevant International Financial Reporting Standards(`IFRS') (including International Accounting Standard - IAS 34 InterimFinancial Reporting) and the accounting policies set out in the Group's AnnualReport and Accounts for the year ended 30 April 2009 except for the adoption of`IAS 1 (revised) - Presentation of financial statements'. The adoption of IAS 1(revised) has resulted in the `Consolidated statement of changes in equity'being presented as a primary statement (previously disclosed as a note titled`Reconciliation of changes in equity'). In addition, the Group has continued topresent a separate `Income statement' and `Statement of comprehensive income'(previously titled `Statement of recognised income and expense'). The adoptionof IAS 1 (revised) has had no impact on the consolidated results or financialposition of the Group. In addition, the Group has adopted "IFRIC 15 -Agreements for the construction of real estate", "IFRIC 16 - Hedges in a netinvestment in a foreign operation" and "IAS 39 - Reclassification of financialassets: effective and transition". None of these had any effect on theconsolidated results or financial position of the Group. The financialstatements have been prepared on the going concern basis as described in thecorporate governance report included in the 2009 Annual Report and Accounts.They are unaudited and do not constitute statutory accounts within the meaningof Section 435 of the Companies Act 2006.Comparative amounts have been restated for the impact of adopting the`amendment to IAS 16 - Property, plant and equipment', the consequentialamendment to `IAS 7 - Statement of cashflows' and the adoption of `IFRIC 14,IAS 19 - The limit on a defined benefit asset, minimum funding requirement andtheir interaction' as adopted in the 30 April 2009 Annual Report and Accounts.The interim financial statements are unaudited.The statutory accounts for the year ended 30 April 2009 were prepared inaccordance with relevant IFRS and have been mailed to shareholders and filedwith the Registrar of Companies. The auditors' report on those accounts wasunqualified and did not include a reference to any matter by way of emphasiswithout qualifying the report and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
The exchange rates used in respect of the US dollar are:
2009
2008
---- ---- Average for the three months ended 31 October 1.64
1.80
Average for the six months ended 31 October 1.62 1.88At 31 October 1.65 1.622. Segmental analysis Operating Revenue profit before Exceptional before exceptionals items and Operating exceptional and amortisation amortisation profit ----------- ---------------- ------------ ------ = GBPm GBPm GBPm GBPm Three months to 31 October 2009 ---- Sunbelt 176.4 25.0 (0.7) 24.3A-Plant 41.4 2.0 (0.2) 1.8Corporate costs - (1.2) - (1.2) --- --- --- --- 217.8 25.8 (0.9) 24.9 ===== ==== === ====2008 (restated) ---- Sunbelt 248.8 52.9 (24.4) 28.5A-Plant 58.9 7.1 (12.0) (4.9)Corporate costs - (1.7) - (1.7) --- --- --- --- 307.7 58.3 (36.4) 21.9 ===== ==== ==== ==== Six months to 31 October 2009 ---- Sunbelt 355.4 49.3 (1.2) 48.1A-Plant 84.0 3.1 (0.3) 2.8Corporate costs - (2.7) - (2.7) --- --- --- --- 439.4 49.7 (1.5) 48.2 ===== ==== === ====2008 (restated) ---- Sunbelt 462.6 99.4 (24.9) 74.5A-Plant 118.5 14.2 (12.2) 2.0Corporate costs - (3.6) - (3.6) --- --- --- --- 581.1 110.0 (37.1) 72.9 ===== ===== ==== ==== Segment Taxation Total assets Cash assets assets GBPm GBPm GBPm GBPm At 31 October 2009 Sunbelt 1,307.4 - - 1,307.4A-Plant 310.4 - - 310.4Corporate items 0.5 19.4 13.4 33.3 --- ---- ---- ---- 1,618.3 19.4 13.4 1,651.1 ======= ==== ==== =======At 30 April 2009 Sunbelt 1,514.7 - - 1,514.7A-Plant 331.0 - - 331.0Corporate items 0.2 1.7 13.8 15.7 --- --- ---- ---- 1,845.9 1.7 13.8 1,861.4 ======= === ==== ======= 3. Operating costs 2009 2008 ---- ---- Before Before exceptional Exceptional exceptional Exceptional items and items and items and items and amortisation amortisation Total
amortisation amortisation Total
------------ ------------ -----
------------ ------------ -----
GBPm GBPm GBPm GBPm GBPm GBPm Three months to 31 October Staff costs: Salaries 61.3 - 61.3 72.5 0.6 73.1Social security costs 4.6 - 4.6 5.7 - 5.7Other pension costs 0.3 - 0.3 1.4 - 1.4 --- --- --- --- --- --- 66.2 - 66.2 79.6 0.6 80.2 ---- --- ---- ---- --- ----Used rental equipment sold 6.4 0.4 6.8 18.5 - 18.5Other operating costs: --- --- --- ---- --- ----Vehicle costs 17.2 - 17.2 25.0 - 25.0Spares, consumables & external repairs 12.5 - 12.5 17.0 1.3 18.3Facility costs 10.9 - 10.9 11.4 4.5 15.9Other external charges 32.2 - 32.2 48.6 1.6 50.2 ---- --- ---- ---- --- ---- 72.8 - 72.8 102.0 7.4 109.4 ---- --- ---- ----- --- -----Other income: Loss/(profit) on disposal of non-rental property,plant and equipment 0.1 - 0.1
(0.6) (0.1) (0.7)
--- --- --- --- --- ---Depreciation and amortisation:Depreciation 46.5 - 46.5 49.9 27.8 77.7Amortisation of acquired intangibles - 0.9 0.9 - 0.7 0.7 46.5 0.9 47.4 49.9 28.5 78.4 ---- --- ---- ---- ---- ---- 192.0 1.3 193.3 249.4 36.4 285.8 ===== === ===== ===== ==== =====Six months to 31 October Staff costs: Salaries 125.7 - 125.7 141.3 0.6 141.9Social security costs 9.7 - 9.7 10.9 - 10.9Other pension costs 0.8 - 0.8 2.8 - 2.8 --- --- --- --- --- --- 136.2 - 136.2 155.0 0.6 155.6 ----- --- ----- ----- --- -----Used rental equipment sold 10.8 1.6 12.4 30.1 - 30.1 ---- --- ---- ---- --- ----Other operating costs: Vehicle costs 33.4 - 33.4 46.9 - 46.9Spares, consumables & external repairs 25.9 - 25.9 31.8 1.3 33.1Facility costs 22.3 - 22.3 21.8 4.5 26.3Other external charges 66.9 - 66.9 90.5 1.6 92.1 ---- --- ---- ---- --- ---- 148.5 - 148.5 191.0 7.4 198.4 ----- --- ----- ----- --- -----Other income: Profit on disposal of non-rental property, plant and equipment - - - (0.8) (0.1) (0.9) --- --- --- --- --- --- Depreciation and amortisation Depreciation 94.2 - 94.2 95.8 27.8 123.6Amortisation of acquired intangibles - 1.5 1.5 - 1.4 1.4 --- --- --- --- --- --- 94.2 1.5 95.7 95.8 29.2 125.0 ---- --- ---- ---- ---- ----- 389.7 3.1 392.8 471.1 37.1 508.2 ===== === ===== ===== ==== =====
4. Exceptional items and amortisation
Exceptional items are those items of financial performance that are materialand non-recurring in nature. Amortisation relates to the periodic write off ofacquired intangible assets. The Group believes these items should be disclosedseparately within the consolidated income statement to assist in theunderstanding of the financial performance of the Group. Underlying revenue,profit and earnings per share are stated before exceptional items andamortisation of acquired intangibles.
Exceptional items and amortisation are set out below.
Three months to Six months to 31 October 31 October 2009 2008 2009 2008 ---- ---- ---- ---- GBPm GBPm GBPm GBPm US cost reduction programme - (23.8) - (23.8)UK cost reduction programme - (12.0) - (12.0)Profit on sale of UK property from closed sites - 0.1 - 0.1Gain on sale of Ashtead Technology - (1.1) - 66.2Taxation on exceptional items - 9.8 - 0.2 --- --- --- ---Total exceptional items - (27.0) - 30.7Amortisation of acquired intangibles (net of tax credit) (0.6) (0.5) (1.0) (1.0) --- --- --- --- (0.6) (27.5) (1.0) 29.7 === ==== === ==== The items detailed in the table above are presented in the income statement asfollows: Three months to Six months to 31 October 31 October 2009 2008 2009 2008 ---- ---- ---- ---- GBPm GBPm GBPm GBPm Sale of used rental equipment 0.4 - 1.6 -Staff costs - (0.6) - (0.6)Used rental equipment sold (0.4) - (1.6) -Other operating costs - (7.4) - (7.4)Other income - 0.1 - 0.1Depreciation - (27.8) - (27.8)Amortisation of acquired intangibles (0.9) (0.7) (1.5) (1.4)Charged in arriving at operating profit --- --- --- --- and profit before tax (0.9) (36.4) (1.5) (37.1)Taxation 0.3 12.2 0.5 12.4Profit/(loss) after taxation from discontinued operations - (3.3) - 54.4 --- --- --- ---- (0.6) (27.5) (1.0) 29.7 === ==== === ==== 5. Financing costs Three months to Six months to 31 October 31 October 2009 2008 2009 2008 ---- ---- ---- ---- GBPm GBPm GBPm GBPmInvestment income: Expected return on assets of defined benefit pension plan (0.8) (1.0) (1.6) (2.1) --- --- --- ---Interest expense: Bank interest payable 2.5 6.8 5.4 12.8Interest on second priority senior secured notes 10.8 9.9 21.9 18.9Interest payable on finance leases 0.1 0.2 0.2 0.4Non-cash unwind of discount on defined benefit pension plan liabilities 0.7 0.7 1.5 1.5Non-cash unwind of discount on self insurance provisions 0.4 0.3 0.7 0.6Amortisation of deferred costs of debt raising 0.8 0.7 1.5 1.3 --- --- --- ---Total interest expense 15.3 18.6 31.2 35.5 ---- ---- ---- ----Net financing costs 14.5 17.6 29.6 33.4 ==== ==== ==== ====6. Taxation The tax charge for the period has been computed using an estimated effectiverate for the year of 36% in the US (2008: 40%) and 29% in the UK (2008: 29%)applied to the profit before tax, exceptional items and amortisation ofacquired intangibles. The current year blended effective rate for the Group asa whole is 35%.The tax charge of 9.1m (2008: 27.6m) on the underlying pre-tax profit of 20.1m (2008: 76.6m) from continuing operations consists of current tax of 1.6m relating to the UK (2008: 1.0m), current tax of nil relating to the US(2008: 0.4m), deferred tax of 3.8m relating to the UK (2008: 6.4m), currentyear deferred tax of 1.6m relating to the US (2008: 19.8m) and an adjustmentto prior year deferred tax relating to the US of 2.1m. In addition, the taxcredit of 0.5m (2008: 12.4m) on exceptional costs (including amortisation) of 1.5m (2008: 37.1m) relating to continuing operations consists of current taxcredit of nil relating to the UK (2008: 1.0m), deferred tax credit of 0.1m(2008: 1.8m) relating to the UK and deferred tax credit of 0.4m (2008: 9.6m)relating to the US.7. Earnings per share Basic and diluted earnings per share for the three and six months ended 31October 2009 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 in treasury and by the ESOT over which dividendshave been waived). Diluted earnings per share are 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 as follows:
Three months to Six months to 31 October 31 October 2009 2008 2009 2008 ---- ---- ---- ---- Profit/(loss) for the financial period ( m) From continuing operations 4.6 1.8 10.0 24.3From discontinued operations - (3.3) - 56.4 --- --- --- ----
From continuing and discontinued operations 4.6 (1.5) 10.0
80.7
=== === ==== ====
Weighted average number of shares (m) - basic 497.6 504.2 497.6
509.8 ===== ===== ===== ===== - diluted 502.4 504.4 500.8 510.1 ===== ===== ===== ===== Basic earnings per share From continuing operations 0.9p 0.4p 2.0p 4.8pFrom discontinued operations - (0.7p) - 11.0p --- ---- --- -----
From continuing and discontinued operations 0.9p (0.3p) 2.0p
15.8p ==== ==== ==== =====Diluted earnings per share From continuing operations 0.9p 0.4p 2.0p 4.8p From discontinued operations - (0.7p) - 11.0p --- ---- --- -----
From continuing and discontinued operations 0.9p (0.3p) 2.0p
15.8p
==== ==== ====
=====
Underlying earnings per share (defined in any period as the earnings beforeexceptional items and amortisation of acquired intangibles for that perioddivided by the weighted average number of shares in issue in that period) andcash tax earnings per share (defined in any period as underlying earningsbefore other deferred taxes divided by the weighted average number of shares inissue in that period) may be reconciled to the basic earnings per share asfollows: Three months to Six months to 31 October 31 October 2009 2008 2009 2008 ---- ---- ---- ---- Basic earnings per share 0.9p (0.3p) 2.0p 15.8pExceptional items and amortisation of acquired intangibles 0.2p 7.5p 0.3p
(5.7p)
Tax on exceptional items and amortisation (0.1p) (2.0p) (0.1p) (0.1p) ---- ---- ---- ----Underlying earnings per share 1.0p 5.2p 2.2p 10.0pOther deferred tax 1.1p 2.8p 1.5p 5.3p ---- ---- ---- ----Cash tax earnings per share 2.1p 8.0p 3.7p 15.3p ==== ==== ==== =====8. Dividends
During the period, a final dividend in respect of the year ended 30 April 2009 of 1.675p (2008: 1.675p) per share was paid to shareholders.
9. Property, plant and equipment
2009 2008 ---- ---- Rental Rental equipment Total equipment Total --------- ----- --------- ----- Net book value GBPm GBPm GBPm GBPm-------------- At 1 May 1,140.5 1,294.0 994.0 1,130.1Exchange difference (90.8) (101.8) 157.7 176.5 Reclassifications (3.4) (0.1) (0.3) (0.1)Additions 24.4 28.5 179.3 201.5Disposals (10.6) (12.7) (33.1) (35.2)Depreciation (82.0) (94.2) (103.7) (123.6) ---- ---- ----- -----At 31 October 978.1 1,113.7 1,193.9 1,349.2 ===== ======= ======= =======
10. Called up share capital
Ordinary shares of 10p each:
31 October 30 April 31 October 30 April 2009 2009 2009 2009 ---- ---- ---- ---- Number Number GBPm GBPm Authorised 900,000,000 900,000,000 90.0 90.0 =========== =========== ==== ====
Allotted, called up and fully paid 553,325,554 553,325,554 55.3 55.3
=========== ===========
==== ====
There were no movements in shares authorised or allotted during the period. At31 October 2009, 50m shares were held by the Company and a further 5.7m shareswere held by the Company's Employee Share Ownership Trust.
11. Notes to the cash flow statement
Six months to 31 October 2009 2008 ---- ---- GBPm GBPm a. Cash flow from operating activities ----------------------------------- Operating profit before exceptional items and amortisation: - continuing operations 49.7 110.0- discontinued operations - 2.8 --- --- 49.7 112.8Depreciation 94.2 95.8 ---- ----EBITDA before exceptional items 143.9
208.6
Loss/(profit)on disposal of rental equipment 1.1
(4.7)
Profit on disposal of other property, plant and equipment - (0.8) Decrease in inventories
0.5
4.9
Increase in trade and other receivables (6.7)
(16.6)
Increase in trade and other payables 4.5 1.6 Exchange differences - 0.8Other non-cash movements 0.1 1.1 --- ---Cash generated from operations before exceptional items and changes in rental equipment 143.4 194.9 ===== ===== Six months to 31 October 2009 2008 ---- ---- GBPm GBPm b. Reconciliation to net debt -------------------------- (Increase)/ decrease in cash in the period (17.9)
0.2
Decrease in debt through cash flow (70.9)
(86.7)
----
----
Change in net debt from cash flows (88.8)
(86.5)
Exchange differences (102.1)
196.8
Non-cash movements: - deferred costs of debt raising 1.5 1.3- capital element of new finance leases 0.1 0.9 --- ---Reduction in net debt in the period (189.3) 112.5Opening net debt 1,035.9 963.2 ------- -----Closing net debt 846.6 1,075.7 ===== =======c. Analysis of net debt -------------------- 1 May Exchange Cash Non-cash 31 October 2009 movement flow movements 2009 ---- -------- ---- --------- ---- GBPm GBPm GBPm GBPm GBPm Cash (1.7) 0.2 (17.9) - (19.4)Debt due within 1 year 6.9 (0.5) (2.4) 1.2 5.2Debt due after 1 year 1,030.7 (101.8) (68.5) 0.4 860.8 ------- ----- ---- --- -----Total net debt 1,035.9 (102.1) (88.8) 1.6 846.6 ======= ===== ==== === =====
Details of the Group's debt are given in the Review of Balance Sheet and Cashflow accompanying these interim financial statements.
12. Contingent liabilities and contingent assets
There have been no significant changes in contingent liabilities from those reported at 30 April 2009.
13. Post balance sheet event
On 23 November 2009, the Group extended the maturity of a $1.3bn tranche of its asset-based senior bank facility until November 2013.
REVIEW OF SECOND QUARTER, BALANCE SHEET AND CASH FLOW
Second quarter Revenue EBITDA Operating profit 2009 2008 2009 2008 2009 2008 ---- ---- ---- ---- ---- ----Sunbelt in $m 288.4 448.2 100.4 162.2 41.1 95.0 ===== ===== ===== ===== ==== ====Sunbelt in m 176.4 248.8 61.3 90.3 25.0 52.9A-Plant 41.4 58.9 12.3 19.6 2.0 7.1Group central costs - - (1.3) (1.7) (1.2) (1.7) --- --- --- --- --- ---Continuing operations 217.8 307.7 72.3 108.2 25.8 58.3 ===== ===== ==== ===== Net financing costs (14.5) (17.6)Profit before tax,exceptionals ---- ---- and amortisation 11.3 40.7 Exceptional items - (36.8)Amortisation (0.9) (0.7) --- --- Profit before taxation 10.4 3.2 ==== ===Margins-------Sunbelt 34.8% 36.2% 14.2% 21.2%A-Plant 29.7% 33.3% 4.9% 12.1%Group 33.2% 35.2% 11.8% 19.0%Second quarter results reflected the prevailing market conditions with rentalrevenues declining in Sunbelt by 32% to $266.3m and in A-Plant by 26% to 39.0m. Total revenue reductions were 36% in Sunbelt and 30% in A-Plant due tothe greater reduction in sales of new and used equipment, merchandise andconsumables.The volume of fleet on rent held up well as a result of market share gains.Average fleet on rent in the second quarter reduced 14% year on year at Sunbeltand 15% at A-Plant. Pricing continued to be under pressure in both markets withyield declining 21% in Sunbelt and 12% in A-Plant compared to the same periodin the prior year.Our prompt action on cost reduction measures is reflected in the second quarterresults with operating costs down 34% in Sunbelt and 26% in A-Plant. After areduced interest charge of 14.5m reflecting lower interest rates and loweraverage debt levels, the pre-tax profit before amortisation for the secondquarter was 11.3m (2008: 40.7m).
Balance sheet
Fixed assets------------Capital expenditure in the first half was 28.5m (2008: 201.5m) with 24.4minvested in the rental fleet (2008: 179.3m). Capital expenditure by divisionwas as follows: 2009 2008 ---- ---- Sunbelt in $m 33.7 207.3 ==== ===== Sunbelt in m 20.5 128.3A-Plant 3.9 51.0 --- ----Total rental equipment 24.4 179.3Delivery vehicles, property improvements & computers 4.1 22.2 --- ---- Total additions 28.5 201.5 ==== =====
All 2009 capital expenditure was for replacement whereas, in 2008, 59.9m was spent on growth and 119.4m on replacement.
The average age of the Group's serialised rental equipment, which constitutesthe substantial majority of our fleet, at 31 October 2009 was 39 months (2008:32 months) on a net book value basis. Sunbelt's fleet had an average age of 42months (2008: 34 months) comprising 42 months for aerial work platforms whichhave a longer life and 40 months for the remainder of its fleet while A-Plant'sfleet had an average age of 32 months (2008: 23 months).
The table below summarises dollar and physical utilisation:
Rental fleet at original cost LTM LTM LTM ----------------------------- rental dollar physical 31 October 2009 30 April 2009 LTM average revenues
utilisation utilisation
--------------- ------------- ----------- --------
----------- -----------
Sunbelt in $m 2,131 2,136 2,180 1,076 49% 65% ===== ===== ===== ===== === ===Sunbelt in $m 1,293 1,442 1,322 663 49% 65%A-Plant 319 321 337 164 49% 67% --- --- --- --- === === 1,612 1,763 1,659 827 ===== ===== ===== === Dollar utilisation is defined as rental revenues divided by average fleet atoriginal (or "first") cost and, measured over the last twelve months to 31October 2009, was 49% at Sunbelt (2008: 61%) and 49% at A-Plant (2008: 57%).Physical utilisation is time based utilisation, which is calculated as thedaily average of the original cost of equipment on rent as a percentage of thetotal value of equipment in the fleet at the measurement date and, measuredover the last twelve months to 31 October 2009 was 65% in Sunbelt (2008: 67%)and 67% at A-Plant (2008: 70%).Trade receivables-----------------Receivable days at 31 October were 49 days (2008: 49 days). The bad debt chargefor the six months ended 31 October 2009 as a percentage of total turnover was1.1% (2008: 1.0%). Trade receivables at 31 October 2009 of 120.0m (2008: 185.7m) are stated net of provisions for bad debts and credit notes of 16.4m(2008: 17.1m) with the provision representing 12.0% (2008: 8.4%) of grossreceivables.Trade and other payables------------------------Group payable days were 53 days in 2009 (2008: 54 days). Payment periods forpurchases other than rental equipment vary between 7 and 45 days and for rentalequipment between 30 and 120 days.Cash flow and net debt Six months to LTM to Year to 31 October 31 October 30 April 2009 2008 2009 2009 ---- ---- ---- ---- GBPm GBPm GBPm GBPm EBITDA before exceptional items 143.9 208.6
294.2 358.9
===== =====
===== ===== Cash inflow from operations before exceptional items and changes in rental equipment
143.4 194.9 322.1 373.6Cash efficiency ratio* 99.7% 93.4% 109.5% 104.1%Maintenance rental capital expenditure (23.6) (103.2) (78.1) (208.5)Non-rental capital expenditure (3.5) (19.4) (11.2) (27.1)Rental equipment disposal proceeds 11.1 24.6 71.8 85.3Other property, plant and equipment disposal proceeds 1.5 3.0 5.1 6.6Tax (paid)/received (0.4) (0.5) 0.9 0.8Financing costs paid (26.4) (28.4) (62.7) (64.7) ---- ---- ---- ----Cash flow before growth capex and exceptionals 102.1 71.0 247.9 166.0Growth rental capital expenditure - (50.8) - -Exceptional costs paid (5.0) (1.4) (13.0) (9.4) --- --- ---- ---Total cash generated from operations 97.1 18.8 234.9 156.6Business disposals/(acquisitions) - 89.8 (0.8) 89.0 --- ---- --- ----Total cash generated 97.1 108.6 234.1 245.6Dividends paid (8.3) (8.4) (12.8) (12.9)Share buy-backs and other equity transactions (net) - (13.7) (2.2) (15.9) --- ---- --- ---- Decrease in net debt 88.8 86.5 219.1 216.8 ==== ==== ===== =====
* Cash inflow from operations before exceptional items and changes in rental equipment as a percentage of EBITDA before exceptional items.
Cash inflow from operations before exceptional items and changes in rentalequipment decreased 26.4% to 143.4m reflecting the lower EBITDA in 2009 whilstthe cash efficiency ratio was 99.7% (2008: 93.4%) reflecting lower changes inworking capital in the recession and losses on fleet disposals.Payments for capital expenditure were broadly in line with capital expendituredelivered into the fleet whilst disposal proceeds received totalled 12.6m. Netcash capital expenditure was therefore 14.5m in the first half (2008: 145.8m).
Financing costs paid differ from the accounting charge in the income statement due to the timing of interest payments in the quarter and non-cash interest charges.
After exceptional costs paid of 5.0m, representing mostly the settlement ofstaff severance and vacant property costs all of which were provided for at 30April 2009, the Group generated 97.1m of net cash inflow in the first half. 8.3m of this net inflow was returned to equity shareholders by way of dividendswith the balance of 88.8m applied to reduce outstanding debt.Net debt-------- 31 October 30 April 2009 2008 2009 ---- ---- ---- GBPm GBPm GBPm First priority senior secured bank debt 385.7 578.4
501.1
Finance lease obligations 4.9 15.3
7.9
8.625% second priority senior secured notes,due 2015 148.3 150.9
165.1
9% second priority senior secured notes, due 2016 327.1 333.0
363.5 ----- ----- ----- 866.0 1,077.6 1,037.6Cash and cash equivalents (19.4) (1.9) (1.7) ---- --- ---Total net debt 846.6 1,075.7 1,035.9 ===== ======= =======Net debt at 31 October 2009 was 846.6m (30 April 2009: 1,035.9m) whichincludes a translation reduction since year end of 102.1m reflecting thestrengthening of the pound against the dollar. The Group's underlying EBITDAfor the twelve months ended 31 October 2009 was 294.2m and the ratio of netdebt to underlying EBITDA was therefore 2.9 times at 31 October 2009 (2008: 2.5times).Under the terms of the recent amendment of our asset-based senior bankfacility, $1.3bn is now committed for four years until November 2013 with anadditional $0.5bn available on the original terms until August 2011. Our debtfacilities continue to be committed for the long term, with an average of 5.3years remaining at 31 October 2009 pro forma for the recent amendment. Theweighted average interest cost of these facilities (including non-cashamortisation of deferred debt raising costs) is approximately 7.5%, most ofwhich is tax deductible in the US where the tax rate is 39%. Financialperformance covenants under the two senior secured notes issues are onlymeasured at the time new debt is raised. There are two financial performancecovenants under the asset-based first priority senior bank facility:
* funded debt to EBITDA before exceptional items not to exceed 4.0 times; and
* a fixed charge ratio comparing EBITDA before exceptional items less net
capital expenditure paid in cash to the sum of scheduled debt repayments
plus cash interest, cash tax payments and dividends paid which is required
to be equal or greater to 1.1 times.
These covenants do not, however, apply when availability (the differencebetween the borrowing base and facility utilisation) exceeds $150m. At 31October 2009 availability under the bank facility was $500m ($550m at 30 April2009). Accordingly, the Board continues to believe that it is appropriate toprepare the accounts on a going concern basis. Additionally, although thesenior debt covenants were not required to be measured at 31 October 2009, theGroup was in compliance with both of them at that date.
Principal risks and uncertainties
Risks and uncertainties in achieving the Group's objectives for the remainderof the financial year, together with assumptions, estimates, judgements andcritical accounting policies used in preparing financial information remainunchanged from those detailed in the 2009 Annual Report and Accounts on pages26 to 33. Our business is subject to significant fluctuations in performancefrom quarter to quarter as a result of seasonal effects. Commercialconstruction activity tends to increase in the summer and during extendedperiods of mild weather and to decrease in the winter and during extendedperiods of inclement weather. Furthermore, due to the incidence of publicholidays in the US and the UK, there are more billing days in the first half ofour financial year than the second half leading to our revenues normally beinghigher in the first half. On a quarterly basis, the second quarter is typicallyour strongest quarter, followed by the first and then the third and fourthquarters.In addition, the current trading and outlook section of the interim statementprovides a commentary on market and economic conditions for the remainder ofthe year.Fluctuations in the value of the US dollar with respect to the pound sterlinghave had, and may continue to have, a significant impact on our financialcondition and results of operations as reported in pounds due to the majorityof our assets, liabilities, revenues and costs being denominated in US dollars.100% of our debt was denominated in US dollars at 31 October 2009. At that datedollar denominated debt represented approximately 80% of the value of dollardenominated net assets (other than debt) providing a partial, but substantial,hedge against the translation effects of changes in the dollar exchange rate.The dollar interest payable on this debt also limits the impact of changes inthe dollar exchange rate on our pre-tax profits and earnings. Based on thecurrent currency mix of our profits and on dollar debt levels, interest andexchange rates at 31 October 2009, a 1% change in the US dollar exchange ratewould impact pre-tax profit by 0.2m.
OPERATING STATISTICS
Number of rental stores Staff numbers ----------------------- ------------- 31 October 30 April 31 October 30 April 2009 2008 2009 2009 2008 2009 ---- ---- ---- ---- ---- ----Sunbelt Rentals 397 430 398 5,733 7,007 6,072A-Plant 111 180 122 1,944 2,442 2,159Corporate office - - - 12 13 13 --- --- --- -- -- --Group 508 610 520 7,689 9,462 8,244 === === === ===== ===== =====
Sunbelt's store numbers include 90 Sunbelt at Lowes stores at 31 October 2009 (2008: 90).
INDEPENDENT REVIEW REPORT TO ASHTEAD GROUP PLC
We have been engaged by the Company to review the condensed interim financialstatements for the six months ended 31 October 2009 which comprise the incomestatement, the statement of comprehensive income, the balance sheet, thestatement of changes in equity, the cash flow statement and related notes 1 to13. We have read the other information contained in the half-yearly financialreport and considered whether it contains any apparent misstatements ormaterial inconsistencies with the information in the condensed financialstatements.This report is made solely to the Company in accordance with InternationalStandard on Review Engagements (UK and Ireland) 2410 "Review of InterimFinancial Information performed by the Independent Auditor of the Entity"issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the Company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone otherthan the Company, for our review work, for this report, or for the conclusionswe have formed.Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdoms' Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union. The condensed financial statements included in this half-yearly financial report have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, "Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity" issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making inquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly,we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us tobelieve that the condensed interim financial statements for the six monthsended 31 October 2009 are not prepared, in all material respects, in accordancewith International Accounting Standard 34 as adopted by the European Union andthe Disclosure and Transparency Rules of the United Kingdom's FinancialServices Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditors
London, UK
2 December 2009
vendorRelated Shares:
Ashtead Group