24th Jun 2008 07:00
Ashtead Group Audited results for the year and unaudited results for the fourth quarter ended 30 April 2008 Fourth quarter Year Financial summary 2008 2007 Growth 2008 2007 Growth ‚£m ‚£m % ‚£m ‚£m % Total Group (including Technology) Revenue(1) 241.9 233.8 +3% 1,002.6 896.1
+12%
Underlying operating profit(1) 42.7 35.7 +20% 197.7 150.5
+31%Underlying profit before 25.4 15.7 +63% 122.9 81.4 +51%taxation(1) Underlying earnings per share (1) 3.4p 1.8p +86% 14.8p 10.3p +44%Profit/(loss) before taxation (1) 24.4 (8.0) n/a 120.3 (36.5) n/aBasic earnings/(loss) per share 3.3p (1.2p) n/a 14.2p 1.5p n/a Continuing activities (excluding Technology) Underlying profit before 22.1 13.9 +60% 112.3 75.2 +49%taxation(1) Underlying earnings per share (1) 2.9p 1.6p +79% 13.4p 9.5p +40%Profit/(loss) before taxation (1) 21.1 (9.8) n/a 109.7 (42.7) n/aBasic earnings/(loss) per share 2.8p (1.4p) n/a 12.8p 0.4p n/aHighlights
* Strong performance across both core divisions(1)
- 21% growth in Sunbelt's underlying operating profit to $330.9m
- 46% growth in A-Plant's underlying operating profit to ‚£30.2m
* Sale of Ashtead Technology for ‚£96m announced on 23 June 2008
* Market conditions remain good in both the UK and the US:
- physical utilisation in both businesses currently exceeds last year on a
larger fleet
- fleet age and mix at optimum levels
- business model has flexibility to react quickly and effectively to change
* Net debt to EBITDA of 2.5 times (2007: 2.7 times). With the Technology sale
and our anticipated strong cash flow, we are targeting net debt at constant
exchange rates at 30 April 2009 of ‚£785m (2008: ‚£963m)
* Final dividend of 1.675p per share proposed, making 2.5p for the year, up
52% on 2007's 1.65p
* ‚£23m spent in the year on share buy-backs. To 20 June, a total of ‚£30m has
been spent acquiring 7.5% of the issued capital at an average cost of 73p
(1) See explanatory notes below
Ashtead's chief executive, Geoff Drabble, commented:
We are pleased to report strong results for the year.
In the United States, in the first full year of our ownership of NationsRent,Sunbelt has delivered strong 21% growth in underlying operating profit andestablished a foundation for further improvement as the full benefits of theacquisition are realised.
In the UK, A-Plant saw strong organic revenue growth and a tight control of infrastructure cost, delivering an excellent 46% improvement in underlying operating profit.
The sale of Ashtead Technology for ‚£96m will allow us to continue to focus on the development of our core businesses and significantly reduce debt.
In May both Sunbelt and A-Plant delivered improved year on year performance. Wecontinue to enjoy high levels of utilisation and expect to benefit further fromthe momentum established in the Group. Therefore, despite the current economicuncertainty, the Board anticipates the Group continuing to trade in line withits expectations in the coming year.Contacts:Geoff Drabble Chief executive ) 020 7726 9700 Ian Robson Finance director ) Brian Hudspith Maitland 020 7379 5151 Explanatory notes
a. IFRS requires that, as a disposed business, Ashtead Technology's after tax
profits and total assets and liabilities are reported in the Group's
accounts as single line items within our income statement and balance sheet
with the result that revenues, operating profit and pre-tax profits as reported in the Group accounts exclude Ashtead Technology. To aid comparability with our previous results announcements and with market expectations, however, the total Group's results above include Ashtead
Technology's revenues and profits alongside those of Sunbelt and A-Plant. A
reconciliation of these total Group underlying results to the reported
results for the year is included in the Review of Results, Balance sheet
and Cash flow section of this announcement.
b. 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 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.
c. Divisional comparisons above are on a pro forma basis which includes the
NationsRent and Lux Traffic acquisitions throughout the whole of the 2006/7
fiscal year. For this purpose the pre-acquisition results of NationsRent
have been derived from its reported 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. Review of the year
The year was a significant one in terms of the development of the Group both in the US and the UK.
In our first full year of ownership of NationsRent, our transformational USacquisition, we completed the final structural elements of the integration. Anintegration of this scale can be a distraction and, therefore, delivering a 21%growth in Sunbelt's underlying operating profit over last year's pro formacombined performance was particularly pleasing.Sunbelt's utilisation improved throughout the year which allowed us to investin growing the fleet during the fourth quarter. We have, therefore, entered thenew fiscal year with a larger, reconfigured fleet, good levels of utilisationand the major distractions of integration behind us. Our focus for the comingyear will be on driving organic revenue growth and deriving full benefit fromthe enlarged, nationwide footprint of our profit centres.In the UK, A-Plant also performed well, benefiting from a clear sales strategywhich delivered strong growth together with infrastructure cost control. As aresult, A-Plant delivered an excellent 46% improvement in underlying operatingprofit. We continue to offer a broad range of plant, tools and specialtyproducts to our customer base, a strategy where we are the clear market leaderand one which has significant advantages for our larger customers.On 23 June we announced the sale of Ashtead Technology for ‚£95.6m. Our strategicreview concluded that Ashtead Technology was a non-core, niche business servingdifferent markets and customers to the rest of the Group. The Board believesthat the disposal price achieved (5.9 times 2007/8 EBITDA) represents goodvalue for shareholders.We have continued to invest in our fleet in the US and UK with total capitalexpenditure for the year of ‚£331.0m. Our rental fleet has now reached an ageand mix which we consider optimal for this stage in the economic cycle and,therefore, in the coming year we intend to greatly reduce gross capitalexpenditure to approximately ‚£230m. The resulting increased free cash flow,together with the proceeds from the Technology sale, should reduce net debt toEBITDA leverage towards the lower end of our 2-3 times target range by April2009.Group results
* Total Group revenue (including Ashtead Technology) for the year was ‚£
1,002.6m up 11.9% on 2008 at actual exchange rates and 16.2% at constant
rates.
* Total Group underlying operating profit for the year at ‚£197.7m (‚£150.5m)
grew 31.4% at actual exchange rates and 37.3% at constant rates whilst, on
a pro forma basis, the growth was 22.7% at actual exchange rates and 28.2%
at constant rates. This reflected good performance in all three divisions.
* Total Group underlying profit before tax of ‚£122.9m grew 51.1% at actual
rates of exchange and by 56.3% at constant rates over last year's ‚£81.4m.
Excluding Technology, the underlying profit before tax from continuing
operations was ‚£112.3m (2007: ‚£75.2m), growth of 49%.
* Total underlying earnings per share for the year were 14.8p (2007: 10.3p)
up 44% at actual rates and 48% at constant rates. On a cash tax basis
underlying earnings per share grew 35% to 21.4p (2007: 15.8p).
* This year pre-tax exceptional costs were nil (2007: exceptional costs of ‚£
91.5m, mostly relating to the NationsRent acquisition) whilst there was a
much reduced charge for amortisation of acquired intangible assets and no
fair value remeasurements. Consequently this year's profit before tax from
continuing operations (which excludes Ashtead Technology) was ‚£109.7m
compared to last year's ‚£42.7m loss. Basic earnings per share (which
include Ashtead Technology) were 14.2p (2007: 1.5p).
* Total capital expenditure in the year, including Ashtead Technology, was ‚£
331.0m gross (2007: ‚£290.2m) whilst total disposal proceeds were ‚£77.9m
(2007: ‚£89.1m) giving net capex of ‚£253.1m (2007: ‚£201.1m)
* Net debt at 30 April 2008 was ‚£963.2m (2007: ‚£915.9m), including ‚£22.9m
spent on share buy-backs during the year. The ratio of net debt to total
Group underlying EBITDA of ‚£380.0m was 2.5 times at 30 April 2008 (2007:
2.7 times).
* Availability under the $1.75bn asset based loan facility (including
suppressed availability of $10m) was $602m at 30 April 2008 ($589m at 30
April 2007) providing substantial assurance that the debt package will
remain covenant free. Sunbelt Fourth quarter Year 2008 2007 Growth 2008 2007 Growth $m $m $m $m Revenue As reported 356.3 349.4 +2% 1,528.1 1,307.9 +17%NationsRent - - - 230.7
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Pro forma combined 356.3 349.4 +2% 1,528.1 1,538.6 -1%
--------------------------------------------------
Underlying operating profit As reported 64.9 59.8 +8% 330.9 253.1 +31%NationsRent - - - 19.2
--------------------------------------------------
Pro forma combined 64.9 59.8 +8% 330.9 272.3
+21%
--------------------------------------------------
Pro forma margin 18.2% 17.1% 21.7% 17.7%
--------------------------------------------------
Sunbelt's performance for the year following the transformational acquisition of NationsRent in August 2006 was excellent.
The focus remained throughout the year on establishing a cost efficient infrastructure for profitable future growth. The success of this work is demonstrated by the operating profit of $330.9m, an increase of 21% on a pro forma basis. Profit margins rose from 17.7% to 21.7%.
These improvements were achieved by above expectation cost reductions with 2007 /8 operating costs $82m lower than 2006/7 costs despite significant inflationary pressure in certain key cost areas such as fuel.
Total revenue remained broadly flat at $1.5bn due to our curtailment of the lowmargin sales of new equipment previously undertaken by NationsRent whilstrental and rental related revenues grew 2% to $1.4bn on a pro forma basis.Within this there were major regional variations, with areas of weakness suchas the well publicised challenges in Florida being more than offset by goodgrowth elsewhere.The 2% pro forma growth in rental and rental related revenues was achieved witha combined fleet that on average was 1% larger than last year measured acrossthe year as a whole. However, the fleet was 1% smaller on average for the firstthree quarters of the year as we focused on improving physical utilisationwhich for the full year averaged 68%. In the fourth quarter, physicalutilisation was 64% (2007: 62%) whilst the average fleet size grew 6%. We alsogained an increased share of larger, longer-running projects which will providegood momentum into the new financial year.With our enlarged national footprint, we are increasingly targeting largerregional and national accounts where the profile of business is different fromour historical mix. Whilst this work tends to be at lower rates, rental periodsare longer. This benefits margins by improving average physical utilisation andreducing transactional costs. We intend to continue this strategy ofrebalancing our customer mix.Whilst the current period of economic uncertainty will affect certain sectorsof the market in the short term, particularly private commercial investment,other areas such as institutional expenditure and industrial markets are likelyto remain more robust. We are a late cycle business with only 5% market shareand continue to perform well. These factors, together with self-help availablein a number of the acquired profit centres, contribute to our optimismregarding Sunbelt's performance in the coming year.A-Plant Fourth quarter Year 2008 2007 Growth 2008 2007 Growth ‚£m ‚£m ‚£m ‚£m Revenue As reported 55.1 50.2 +10% 214.8 189.9 +13%Lux Traffic - - - 9.5
---------------------------------------------------
Pro forma combined 55.1 50.2 +10% 214.8 199.4
+8%
---------------------------------------------------
Underlying operating profit As reported 8.3 5.9 +42% 30.2 20.1 +50%Lux Traffic - - - 0.6
---------------------------------------------------
Pro forma combined 8.3 5.9 +42% 30.2 20.7
+46%
---------------------------------------------------
Pro forma margin 15.1% 11.8% 14.1% 10.4%
---------------------------------------------------
A-Plant performed strongly throughout the year with market share gainsgenerating organic like for like revenue growth of 8%. This growth was achievedby focusing on the value added products and services required by ourcustomers. We are now the market leader in providing a combined plant and toolproduct offering which has proven particularly attractive to our largercustomers. This growth was supported by 8% growth in average fleet size and aspecific programme of investment in de-aging which has resulted in a fleet ageof 23 months at 30 April 2008, down from 29 months a year ago.Whilst the focus on major contractors can have a negative impact on our pricingyield, it also provides a number of other opportunities in terms of improvedphysical utilisation (71% for the year compared to 69% in 2006/7) and reducedinfrastructure cost. Our initiative in April 2007 to move to fewer, largerdepots has clearly delivered results, with a 46% increase in A-Plant'sunderlying operating profit to ‚£30.2m. As a result of these actions, marginsimproved significantly from 10.4% in 2006/7 to 14.1% in 2007/8.In the fourth quarter the average fleet size grew 12% and we enjoyed averagephysical utilisation of 74% (2007: 71%). Underlying operating profit grew 42%to ‚£8.4m. We therefore enter the coming year with strong momentum.Whilst economically there are now areas of difficulty in the UK, notably theresidential market and new commercial offices, the overall picture for ourserved market remains healthy. Infrastructure and utility work remains good andwe are well positioned to benefit from major projects such as the Olympics,Crossrail, M25 widening and changes to the energy infrastructure. These factorstogether with the opportunity to drive further market share gains fromA-Plant's current single digit market share give us confidence in the prospectsfor the year ahead.Ashtead Technology Fourth quarter Year 2008 2007 Growth* 2008 2007 Growth* ‚£m ‚£m ‚£m ‚£m Revenue 6.9 5.3 +30% 26.5 21.6 +23%
-----------------------------------------------
Operating profit 3.3 1.8 +84% 10.6 6.2
+72%
-----------------------------------------------
Margin 47.0% 34.0% 40.0% 28.7%
-----------------------------------------------
* At constant exchange rates
In good markets, aided by a very strong oil price, Ashtead Technology continued to deliver excellent revenue and profit growth.
Taxation
The effective tax rate on underlying pre-tax profits for the year was 35% (2007: 35%) and is expected to remain at around 35% in coming years. In addition, there was a ‚£1.6m exceptional tax charge to write down the UK deferred tax asset to reflect the reduction in the rate of UK corporation tax from 30% to 28% effective 1 April 2008.
The tax charge again comprised mostly deferred tax, with cash tax payments onlyamounting to approximately 5% of profits due to available tax losses and theaccelerated tax depreciation available due to the capital intensive nature ofthe business. Following the introduction of a "like kind exchange" programme atSunbelt effective from 1 May 2008 and with the benefit of US bonus depreciationas part of the economic stimulus measures introduced earlier this year, thecash tax rate is expected to remain in single digits in 2008/9 and to continueto be well below the effective 35% long term accounting tax rate for severalmore years.Earnings per shareBasic earnings per share for the year were 14.2p (2007: 1.5p) and 14.1p (2007:1.5p) on a fully diluted basis. Underlying earnings per share were 14.8p (2007:10.3p) whilst, on a cash tax basis, underlying earnings per share were 21.4p(2007: 15.8p).Underlying earnings per share of 14.8p has now grown 45% at constant exchangerates from the 11.3p delivered in 2005/6, immediately prior to the NationsRentacquisition. This equates to compound annual growth of 20% per annum inearnings at constant exchange rates (14% per annum at actual rates) over the past two years, notwithstanding the enlarged share capital in issue following the NationsRent acquisition.
Return on Investment and Return on Equity
Group return on investment improved to 14.0% (2007: 12.9%), reflectingimproving performance in Sunbelt and A-Plant. RoI for Sunbelt was 14.4% (2007:14.0 %) whilst RoI at A-Plant continued its recently improving trend and was10.9% (2007: 8.8%). Both businesses therefore now return well above ourweighted average cost of capital.
Aided by the beneficial impact of using lower cost, tax deductible debt to finance a significant part of our fleet investment, the after tax return on equity was 19.0% (2007: 15.3%) producing strong accretive returns for shareholders.
Capital expenditure
Capital expenditure in the year totalled ‚£331.0m (2007: ‚£290.2m) including ‚£294.8m on the rental fleet. ‚£168.8m of the rental fleet expenditure wasmaintenance or replacement expenditure with ‚£126.0m spent for growth. Disposalproceeds totalled ‚£77.9m (2007: ‚£89.1m) giving net expenditure of ‚£253.1m(2007: ‚£201.1m). The average age of the Group's rental fleet at 30 April 2008was 31 months (2007: 31 months).Our rental fleet is now at an age and mix which we consider optimum.Accordingly, we expect significantly reduced capital expenditure next year atapproximately ‚£230m gross and ‚£175m net of disposal proceeds. Around ‚£180m ofthe gross expenditure will be for replacement with ‚£50m of investment forgrowth (3% of current fleet size).
Net debt
Net debt increased to ‚£963m at 30 April 2008 (2007: ‚£916m) reflecting thecapital investment in fleet growth and de-ageing and the ‚£23m spent on sharebuy-backs. However, the ratio of net debt to last twelve months total GroupEBITDA of ‚£380m improved to 2.5 times at 30 April 2008. From a leverageposition of around 3 times when the NationsRent acquisition closed in August2006, the Group has therefore, as we had anticipated, already delevered to themid point of our long term 2-3 times net debt to EBITDA target.With the US fleet reconfiguration complete and with both the US and UK fleetsin excellent shape, we anticipate significant free cash flow in the coming yearwhich we expect to apply largely towards debt pay-down. Together with theTechnology sale proceeds we are therefore, by April 2009, targeting net debt,at constant exchange rates, of ‚£785m 2008: ‚£963m) and to be at the lower end ofour 2-3 times net debt to EBITDA range.
Dividends
The Board is proposing a final dividend of 1.675p (2007: 1.1p) making 2.5p forthe year (2007: 1.65p), an increase of 52%. If approved by shareholders at theforthcoming Annual General Meeting, the final dividend will be paid on 26September 2008 to shareholders on record at 5 September 2008.
Current trading and outlook
Current trading is in line with our expectations with both Sunbelt and A-Plant delivering improved year on year performance in May.
We continue to enjoy high levels of utilisation and expect to benefit furtherfrom the momentum established in the Group. Therefore, despite the currenteconomic uncertainty, the Board anticipates the Group continuing to trade inline with its expectations in the coming year. - o0o - Geoff Drabble and Ian Robson will host a meeting for equity analysts to discussthe results at 9.30am on Tuesday 24 June at the offices of RBS Hoare Govett at250 Bishopsgate, London EC2M 4AA. For the information of shareholders and otherinterested parties, the analysts' meeting will be webcast live via theCompany's website at www.ashtead-group.com and there will also be a replayavailable from shortly after the call concludes. A copy of this announcementand the slide presentation used for the meeting will also be available fordownload on the Company's website. There will also be a conference call forbondholders at 3pm (10am EST).
Analysts and bondholders have already been invited to participate in the meeting and conference call but anyone not having received dial-in details should contact the Company's PR advisers, Maitland (Jane Franklin) at +44 (0)20 7379 5151.
CONSOLIDATED INCOME STATEMENTS
2008 2007 Before exceptional Exceptional items, items, Before amortisation amortisation exceptional Exceptional and and Items and Items and fair value fair value amortisation amortisation Total remeasurements+ remeasurements+ Total ‚£m ‚£m ‚£m ‚£m ‚£m ‚£mFourth quarter - unaudited Revenue 235.0 - 235.0 228.5 - 228.5Staff costs (70.9) - (70.9) (76.7) (1.4) (78.1)Other operating costs (80.4) - (80.4) (81.0) (16.1) (97.1)Other income - (0.3) (0.3) 5.1 (0.9) 4.2
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EBITDA* 83.7 (0.3) 83.4 75.9 (18.4) 57.5Depreciation (44.3) - (44.3) (42.0) (0.9) (42.9)Amortisation of - (0.7) (0.7) - (4.4) (4.4)intangibles
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Operating profit 39.4 (1.0) 38.4 33.9 (23.7) 10.2Investment income 1.1 - 1.1 0.8 - 0.8Interest expense (18.4) - (18.4) (20.8) - (20.8)
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Net financing costs (17.3) - (17.3) (20.0)
- (20.0)
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Profit/(loss) on 22.1 (1.0) 21.1 13.9 (23.7) (9.8)ordinary activities before taxation Taxation: - current 3.8 - 3.8 (0.4) - (0.4)- deferred (10.8) 0.6 (10.2) (4.6) 6.8 2.2
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(7.0) 0.6 (6.4) (5.0)
6.8 1.8
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Profit/(loss) after taxation from continuing operations 15.1 (0.4) 14.7 8.9 (16.9) (8.0)Profit after taxation 2.8 - 2.8 1.2 - 1.2from discontinued operations
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Profit/(loss) attributable to equity shareholders 17.9 (0.4) 17.5 10.1 (16.9) (6.8)
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Basic earnings per share 3.4p (0.1p) 3.3p 1.8p
(3.0p) (1.2p)
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Diluted earnings per share 3.4p (0.1p) 3.3p 1.8p
(3.0p) (1.2p)
-------------------------------------------------------------------
Year to 30 April 2008 - audited Revenue 976.1 - 976.1 874.5 - 874.5Staff costs (298.9) - (298.9) (280.1) (10.1) (290.2)Other operating costs (323.2) - (323.2) (306.5) (26.5) (333.0)Other income 9.7 - 9.7 11.4 (0.9) 10.5
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EBITDA* 363.7 - 363.7 299.3 (37.5) 261.8Depreciation (176.6) - (176.6) (155.0) (0.9) (155.9)Amortisation of - (2.6) (2.6) - (11.0) (11.0)intangibles
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Operating profit 187.1 (2.6) 184.5 144.3 (49.4) 94.9Investment income 4.3 - 4.3 3.9 - 3.9Interest expense (79.1) - (79.1) (73.0) (68.5) (141.5)
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Net financing costs (74.8) - (74.8) (69.1)
(68.5) (137.6)
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Profit/(loss) on 112.3 (2.6) 109.7 75.2 (117.9) (42.7)ordinary activities before taxation Taxation: - current (5.7) - (5.7) (0.2) - (0.2)- deferred (33.4) (0.6) (34.0) (26.2) 71.0 44.8
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(39.1) (0.6) (39.7) (26.4)
71.0 44.6
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Profit/(loss) after 73.2 (3.2) 70.0 48.8 (46.9) 1.9taxation from continuing operations Profit after taxation 7.6 - 7.6 3.9 2.1 6.0from discontinued operations
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Profit attributable to equity shareholders 80.8 (3.2) 77.6 52.7 (44.8) 7.9
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Basic earnings per share 14.8p (0.6p) 14.2p 10.3p
(8.8p) 1.5p
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Diluted earnings per share 14.7p (0.6p) 14.1p 10.2p
(8.7p) 1.5p
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* 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.
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
Unaudited Audited Three months to Year to 30 April 30 April 2008 2007 2008 2007 ‚£m ‚£m ‚£m ‚£m Net profit/(loss) for the period 17.5 (6.8) 77.6
7.9
Net actuarial (loss)/ gain on defined (0.6) 2.5 (0.6)
2.5
benefit pension schemes
Effect of the limitation on net pension (5.8) - (5.8)
-
asset recognised
Foreign currency translation differences 0.7 (2.5) 2.0 (13.0) Tax on items taken directly to equity
(0.9) 1.6 (1.4)
1.6
----- ----- -----
-----
Total recognised income and expense for the 10.9 (5.2) 71.8 (1.0)period ----- ----- ----- -----
CONSOLIDATED MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
Unaudited Audited Three months to Year to 30 April 30 April 2008 2007 2008 2007 ‚£m ‚£m ‚£m ‚£m Total recognised income and expense for the 10.9 (5.2) 71.8 (1.0)period Dividends paid (4.4) (3.0) (10.5) (7.0)Issue of ordinary shares, net of expenses - 0.7 0.5
148.9
Own shares purchased by the Company (12.2) - (23.3)
-
Own shares purchased by the ESOT (0.1) - (1.6)
(4.9)
Credit in respect of share based payments 0.5 0.4 2.5 2.4
------ ------ ------
------
Net (decrease)/ increase in equity (5.3) (7.1) 39.4
138.4
shareholders' funds Opening equity shareholders' funds 441.4 403.8 396.7
258.3
------ _----- ------
------
Closing equity shareholders' funds 436.1 396.7 436.1 396.7 ------ ------ ------ ------
CONSOLIDATED BALANCE SHEETS AT 30 APRIL
Audited 2008 2007 ‚£m ‚£mCurrent assets Inventories 22.6 24.2Trade and other receivables 159.9 163.7Current tax asset 2.2 2.0Cash and cash equivalents 1.8 1.1 ------------------- 186.5 191.0Assets held for sale 26.8 10.3 ------------------- 213.3 201.3 -------------------Non-current assets Property, plant and equipment - rental equipment 994.0 920.6- other assets 136.1 127.4 ------------------- 1,130.1 1,048.0Intangible assets - brand names and other acquired 8.0 9.7intangibles Goodwill 291.9 289.6Deferred tax asset 19.6 41.7Defined benefit pension fund surplus - 5.2 ------------------- 1,449.6 1,394.2 -------------------Total assets 1,662.9 1,595.5 -------------------Current liabilities Trade and other payables 129.1 166.8Current tax liability - 0.7Debt due in less than one year 7.6 9.0Provisions 9.1 12.7 ------------------- 145.8 189.2
Liabilities associated with assets classified as held for sale 6.5
- ------------------- 152.3 189.2 -------------------Non-current liabilities Debt due in more than one year 957.4 908.0Provisions 18.8 19.6Deferred tax liability 98.3 82.0 ------------------- 1,074.5 1,009.6 -------------------Total liabilities 1,226.8 1,198.8 -------------------Equity shareholders' funds Share capital 56.2 56.0Share premium account 3.6 3.3Non-distributable reserve 90.7 90.7Own shares held in treasury by the Company (23.3)
-
Own shares held in treasury through the ESOT (7.0)
(8.7)
Cumulative foreign exchange translation differences (28.2) (30.2)Distributable reserves 344.1 285.6 -------------------Total equity shareholders' funds 436.1
396.7
-------------------
Total liabilities and equity shareholders' funds 1,662.9 1,595.5 -------------------
CONSOLIDATED CASH FLOW STATEMENTS FOR THE YEARS ENDED 30 APRIL
Audited 2008 2007 ‚£m ‚£m ‚£m ‚£m Cash flows from operating activities Cash generated from operations before 356.4 319.3exceptional items Exceptional items (9.5) (19.0) ------ ------Cash generated from operations 346.9
300.3
Financing costs paid before exceptional items (76.4) (64.2)
Exceptional financing costs paid - (49.8) ------ ------Financing costs paid (76.4) (114.0)Tax paid (6.4) (5.0) ------ ------Net cash from operating activities 264.1
181.3
------
------
Cash flows from investing activities Acquisition of businesses (5.9)
(327.2)
Payments for property, plant and equipment (351.5)
(308.3)
Proceeds on sale of property, plant and equipment and assets held for sale 92.7
78.5
------
------
Net cash used in investing activities (264.7)
(557.0)
------
------
Cash flows from financing activities Drawdown of loans 186.7 890.5Redemption of loans (143.9) (641.8)Capital element of finance lease payments (7.0)
(9.9)
Purchase of own shares by the Company (22.9)
-
Purchase of own shares by the ESOT (1.6)
(4.9)
Dividends paid (10.5)
(7.0)
Proceeds from issue of ordinary shares 0.5
148.9
------
------
Net cash from financing activities 1.3
375.8
------
------
Increase in cash and cash equivalents 0.7
0.1
Opening cash and cash equivalents 1.1
1.0
------
------
Closing cash and cash equivalents 1.8
1.1
------
------
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The financial statements for the year ended 30 April 2008 were approved by thedirectors on 23 June 2008. This preliminary announcement of the results for theyear ended 30 April 2008 contains information derived from the forthcoming 2007/8 Annual Report & Accounts and does not contain sufficient information tocomply with International Financial Reporting Standards (IFRS) and does notconstitute the statutory accounts for either 2007/8 or 2006/7 for the purposesof section 240(3) of the Companies Act 1985. The 2007/8 results are extractedfrom the audited accounts for that year which have not yet been filed withCompanies House. The comparative figures for 2006/7 have been extracted fromthe accounts for that year which have been delivered to Companies House exceptthat the income statement has been restated to separate Ashtead Technology as adiscontinued operation in accordance with IFRS 5. The auditors' reports inrespect of both years were unqualified and do not contain a statement undersection 237(2) or (3) of the Companies Act 1985. The results for the year endedand quarter ended 30 April 2008 have been prepared in accordance with relevantIFRS and the accounting policies set out in the Group's Annual Report &Accounts for the year ended 30 April 2007.
The figures for the fourth quarter are unaudited.
The exchange rates used in respect of the US dollar are:
2008
2007
Average for the year ended 30 April 2.01 1.91At 30 April 1.98 2.002. Segmental analysis Operating profit before Exceptional exceptionals items and Operating Revenue and amortisation profit amortisation Three months to 30 April ‚£m ‚£m ‚£m ‚£m2008 Sunbelt 179.9 32.9 (0.5) 32.4A-Plant 55.1 8.3 (0.5) 7.8Corporate costs - (1.8) - (1.8) ----- ----- ----- -----Continuing operations 235.0 39.4 (1.0) 38.4Ashtead Technology 6.9 3.3 - 3.3 ----- ----- ----- -----Total group 241.9 42.7 (1.0) 41.7 ----- ----- ----- ----- 2007 Sunbelt 178.3 30.4 (17.1) 13.3A-Plant 50.2 5.9 (6.5) (0.6)Corporate costs - (2.4) (0.1) (2.5) ----- ----- ----- -----Continuing operations 228.5 33.9 (23.7) 10.2Ashtead Technology 5.3 1.8 - 1.8 ----- ----- ----- -----Total group 233.8 35.7 (23.7) 12.0 ----- ----- ----- ----- Operating profit before Exceptional exceptionals items and Operating Revenue and amortisation profit amortisation Year to 30 April ‚£m ‚£m ‚£m ‚£m2008 Sunbelt 761.3 164.9 (2.1) 162.8A-Plant 214.8 30.2 (0.5) 29.7Corporate costs - (8.0) - (8.0) ----- ----- ----- -----Continuing operations 976.1 187.1 (2.6) 184.5Ashtead Technology 26.5 10.6 - 10.6 ----- ----- ----- -----Total group 1,002.6 197.7 (2.6) 195.1 ----- ----- ----- -----2007 Sunbelt 684.6 132.5 (42.3) 90.2A-Plant 189.9 20.1 (6.9) 13.2Corporate costs - (8.3) (0.2) (8.5) ----- ----- ----- -----Continuing operations 874.5 144.3 (49.4) 94.9Ashtead Technology 21.6 6.2 - 6.2 ----- ----- ----- -----Total group 896.1 150.5 (49.4) 101.1 ----- ----- ----- ----- 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 30 April Staff costs: Salaries 64.8 - 64.8 69.7 - 69.7Social security 5.3 5.3 6.0 - 6.0costs Other pension costs 0.8 - 0.8 1.0 - 1.0costs Redundancies and - - - - 1.4 1.4retention bonuses ----- ----- ----- ----- ----- ----- 70.9 - 70.9 76.7 1.4 78.1 ----- ----- ----- ----- ----- -----Other operating costs: Vehicle costs 17.1 - 17.1 15.2 - 15.2 Spares, consumables 15.0 - 15.0 14.9 - 14.9& external repairs Facility costs 10.9 - 10.9 10.8 6.1 16.9 Other external 37.4 - 37.4 40.1 10.0 50.1charges ----- ----- ----- ----- ----- ----- 80.4 - 80.4 81.0 16.1 97.1 ----- ----- ----- ----- ----- -----Other income: Profit on disposal - 0.3 0.3 (5.1) 0.9 (4.2)of fixed assets ----- ----- ----- ----- ----- -----Depreciation and amortisation: Depreciation 44.3 - 44.3 42.0 0.9 42.9 Amortisation of - 0.7 0.7 - 4.4 4.4acquired intangibles ----- ----- ----- ----- ----- ----- 44.3 0.7 45.0 42.0 5.3 47.3 ------ ----- ----- ----- ----- ----- 195.6 1.0 196.6 194.6 23.7 218.3 ------ ----- ----- ----- ----- ----- 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 ‚£mYear to 30 April Staff costs: Salaries 271.7 - 271.7 254.4 - 254.4Social security 22.5 - 22.5 21.1 - 21.1costs Other pension costs 4.7 - 4.7 4.6 - 4.6Redundancies and - - - - 10.1 10.1retention bonuses ----- ----- ----- ----- ----- ----- 298.9 - 298.9 280.1 10.1 290.2 ----- ----- ----- ----- ----- -----Other operating costs: Vehicle costs 71.0 - 71.0 63.7 - 63.7Spares, consumables & 55.7 - 55.7 55.9 - 55.9external repairs Facility costs 40.9 - 40.9 37.5 10.2 47.7Other external 155.6 - 155.6 149.4 16.3 165.7charges ----- ----- ----- ----- ----- ----- 323.2 - 323.2 306.5 26.5 333.0 ----- ----- ----- ----- ----- ----- Other income: Profit on disposal (9.7) - (9.7) (11.4) 0.9 (10.5)of fixed assets ----- ----- ----- ----- ----- ----- (9.7) - (9.7) (11.4) 0.9 (10.5) ----- ----- ----- ----- ----- ----- Depreciation and amortisation: Depreciation 176.6 - 176.6 155.0 0.9 155.9Amortisation of - 2.6 2.6 - 11.0 11.0acquired intangibles ----- ----- ----- ----- ----- ----- 176.6 2.6 179.2 155.0 11.9 166.9 ----- ----- ----- ----- ----- ----- 789.0 2.6 791.6 730.2 49.4 779.6 ----- ----- ----- ----- ----- -----
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 believesthese items should be disclosed separately within the consolidated incomestatement to assist in the understanding of the financial performance of theGroup. Exceptional items, amortisation and fair value remeasurements areexcluded from underlying profit and earnings per share and are set out below: Three months to Year to 30 April 30 April 2008 2007 2008 2007 ‚£m ‚£m ‚£m ‚£m Senior note redemption costs - - - 42.1Write off of deferred financing costs relating to debt redeemed - - - 10.5Acquisition integration costs - 5.2 - 21.3Rebranding costs - 6.9 - 9.4UK restructuring 0.3 6.2 - 6.2Other costs - 1.0 - 2.0 ---- ---- ---- -----Total exceptional items 0.3 19.3 - 91.5Amortisation of acquired intangibles 0.7 4.4 2.6
11.0
Fair value remeasurements of embedded Derivatives - - - 15.4 ---- ---- ---- ----- 1.0 23.7 2.6 117.9 ---- ---- ---- ----- The items detailed in the table above are presented in the income statement asfollows: Three months to Year to 30 April 30 April 2008 2007 2008 2007 ‚£m ‚£m ‚£m ‚£m Staff costs - 1.4 - 10.1Other operating costs - 16.1 - 26.5Other income 0.3 0.9 - 0.9Depreciation - 0.9 - 0.9Amortisation of acquired intangibles 0.7 4.4 2.6
11.0
---- ---- ----
----
Charged in arriving at operating profit 1.0 23.7 2.6 49.4Net financing costs - - - 68.5 ---- ---- ---- ----Charged in arriving at profit before tax 1.0 23.7 2.6 117.9 ---- ---- ---- ----5. Financing costs Three months to Year to 30 April 30 April 2008 2007 2008 2007 ‚£m ‚£m ‚£m ‚£m Investment income: Interest and other - - - 0.1financial income Expected return on assets of 1.1 0.8 4.3 3.8
defined benefit pension plan
---- ---- ---- ---- 1.1 0.8 4.3 3.9 ---- ---- ---- ---- Interest expense: Bank interest payable 7.5 9.9 36.1 34.0
Interest payable on second priority 9.0 9.1 35.4 31.7 senior secured notes
Interest payable on finance leases 0.3 0.4 1.2 1.6Non-cash unwind of discount on defined benefit pension plan liabilities 0.7 0.5 2.9 2.5Non-cash unwind of discount on self insurance provisions 0.2 0.3 1.1 0.7Amortisation of deferred costs 0.7 0.6 2.4 2.5of debt raising ---- ---- ---- ---- 18.4 20.8 79.1 73.0Exceptional costs and fair value - - - 68.5remeasurements of embedded derivatives in long term debt ---- ---- ---- ---- Total interest expense 18.4 20.8 79.1 141.5 ---- ---- ---- ----
Net financing costs before exceptional 17.3 20.0 74.8 69.1 items and fair value remeasurements
of embedded derivatives
Net exceptional items and fair value - - - 68.5 remeasurements of embedded derivatives
---- ---- ---- ---- Net financing costs 17.3 20.0 74.8 137.6 ---- ---- ---- ---- 6. Taxation The ‚£39.1m tax charge on the underlying pre-tax profit of ‚£112.3m fromcontinuing operations represents an effective tax rate of 35% (2007: 35%). The‚£39.1m underlying tax consists of current tax of ‚£nil relating to the UK (2007:‚£nil), current tax of ‚£5.7m relating to the US (2007: ‚£0.2m), deferred tax of ‚£18.0m relating to the UK (2007: ‚£6.9m), deferred tax of ‚£15.4m relating to theUS (2007: ‚£19.3m). In addition, there was a ‚£1.6m exceptional charge reflectingthe effect on the UK deferred tax asset of the reduction in the corporation taxrate from 30% to 28% from 1 April 2008.
7. Earnings per share
Basic and diluted earnings per share for the three and twelve months ended 30April 2008 have been calculated based on the profit for the relevant period andon the weighted average number of ordinary shares in issue during that period(excluding shares held in treasury and by the ESOT over which dividends havebeen waived). Diluted earnings per share is computed using the result for therelevant period and the diluted number of shares (ignoring any potential issueof ordinary shares which would be anti-dilutive). These are calculated asfollows: Three months to Year to 30 April 30 April 2008 2007 2008 2007 Profit for the financial period (‚£m) From continuing operations 14.7 (8.0) 70.0 1.9From discontinued operations 2.8 1.2 7.6 6.0 ----- ----- ----- -----
From continuing and discontinued operations 17.5 (6.8) 77.6 7.9
----- ----- -----
-----
Weighted average number of shares (m) - basic 531.3 551.4 547.0 512.3 ----- ----- ----- ------ - diluted 532.4 562.1 549.2 519.0 ----- ----- ----- -----Basic earnings per share From continuing operations 2.8p (1.4p) 12.8p 0.4pFrom discontinued operations 0.5p 0.2p 1.4p 1.1p ----- ----- ----- -----From continuing and discontinued operations 3.3p (1.2p) 14.2p 1.5p ----- ----- ----- -----Diluted earnings per share From continuing operations 2.8p (1.4p) 12.7p 0.4pFrom discontinued operations 0.5p 0.2p 1.4p 1.1p ----- ----- ----- -----
From continuing and discontinued operations 3.3p (1.2p) 14.1p 1.5p
----- ----- -----
-----
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 thebasic earnings per share as follows: Three months to Year to 30 April 30 April 2008 2007 2008 2007 Basic earnings per share 3.3p (1.2p) 14.2p 1.5pExceptional items, amortisation of acquired intangibles and fair value remeasurements 0.2p 4.3p 0.5p 23.0pTax on exceptional items, amortisation and fair value remeasurements (0.1p) (1.5p) (0.2p)
(7.2p)
Exceptional deferred tax charge/(credit) - 0.2p 0.3p (7.0p) ----- ----- ----- -----Underlying earnings per share 3.4p 1.8p 14.8p 10.3pOther deferred tax 2.1p 1.0p 6.6p 5.5p ----- ----- ----- -----Cash tax earnings per share 5.5p 2.8p 21.4p 15.8p ----- ----- ----- -----
8. Property, plant and equipment
2008 2007 Rental Rental equipment Total equipment TotalNet book value ‚£m ‚£m ‚£m ‚£m At 1 May 920.6 1,048.0 559.9 646.7Exchange difference 5.7 6.4 (48.4) (54.4)Reclassifications (0.5) - (0.4) -Additions 294.8 331.0 256.4 290.2Acquisitions 2.8 2.8 344.6 385.2Disposals (52.8) (57.7) (53.1) (59.0)Depreciation (158.8) (182.3) (138.4) (160.7) ------- ------- ------- ------- 1,011.8 1,148.2 920.6 1,048.0 ------- ------- ------- -------Transfer to assets held for sale (17.8) (18.1) - - ------- ------- ------- ------- At 30 April 994.0 1,130.1 920.6 1,048.0 ------- ------- ------- -------
During the period we reassessed the useful economic lives and residual values of the rental fleet which reduced the depreciation charge by ‚£3.0m.
9. Called up share capital
Ordinary shares of 10p each:
2008 2007 2008 2007 Number Number ‚£m ‚£m Authorised 900,000,000 900,000,000 90.0 90.0 ----------- ----------- ---- ---- Allotted, called up and fully paid 561,687,727 559,898,348 56.2
56.0
----------- ----------- ----
----
In the year ended 30 April 2008, 1,789,379 ordinary shares of 10p each wereissued at an average price of 28.4p per share under share option plans raising‚£0.5m. In addition, during the year the Company purchased 31,758,096 shares ata total cost of ‚£23.3m, which are held in treasury and the ESOT purchased1,253,962 shares at a total cost of ‚£1.6m.
10. Statement of changes in shareholders' equity
Cumulative Own foreign Non shares exchange Share Share distributable Treasury held by translation Distributable
capital premium reserves stock ESOT difference reserves Total ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m Total recognised income and expense - - - - - 2.0 69.8 71.8Shares issued 0.2 0.3 - - - - - 0.5Treasury shares - - - (23.3) - - - (23.3)purchased Dividends paid - - - - - - (10.5) (10.5)Share based payments - - - - - - 2.5 2.5Vesting of share - - - - 3.3 - (3.3) -awards Own shares purchased - - - - (1.6) - - (1.6) --------------------------------------------------------------------------------
Net changes in 0.2 0.3 - (23.3) 1.7 2.0 58.5 39.4shareholders' equity Opening 56.0 3.3 90.7 - (8.7) (30.2) 285.6 396.7shareholders' equity
--------------------------------------------------------------------------------Closing 56.2 3.6 90.7 (23.3) (7.0) (28.2) 344.1 436.1shareholders' equity --------------------------------------------------------------------------------
11. Notes to the cash flow statement
Year to 30 April 2008 2007 ‚£m ‚£ma) Cash flow from operating activities Operating profit before exceptional items and amortisation: - continuing operations 187.1 144.3- discontinued operations 10.6 6.2 ----- ------ 197.7 150.5 Depreciation - continuing operations 176.6 155.0- discontinued operations 5.7 4.8 ----- ------ EBITDA before exceptional items 380.0 310.3
Profit on disposal of property, plant (10.1) (11.8) and equipment
Decrease in inventories 1.7 14.8(Increase)/decrease in (16.1) 7.2trade and other receivables Decrease in trade and other payables (2.5) (4.6)Exchange differences 1.0 1.1Other non-cash movements 2.4 2.3 ----- ------ Cash generated from operations 356.4 319.3before exceptional items ----- ------ b) Reconciliation to net debt Increase in cash in the period (0.7) (0.1)Increase in debt through cash flow 35.8 238.8 ----- ----- Change in net debt from cash flows 35.1 238.7Debt acquired - 232.8Exchange difference 9.8 (64.7)Non-cash movements: - deferred costs of debt raising 2.4 13.0- capital element of new finance leases - 2.5 ----- ------ Movement in net debt in the period 47.3 422.3Opening net debt 915.9 493.6 ----- ------ Closing net debt 963.2 915.9 ----- ------ c) Analysis of net debt 1 May Exchange Cash Non-cash 30 April 2007 movement flow movements 2008 ‚£m ‚£m ‚£m ‚£m ‚£m Cash (1.1) - (0.7) - (1.8)
Debt due within 1 year 9.0 - (6.9) 5.5 7.6 Debt due after 1 year 908.0 9.8 42.7 (3.1) 957.4
------------------------------------------
Total net debt 915.9 9.8 35.1 2.4 963.2
------------------------------------------
Details of the changes in the Group's debt are given in the Review of Results, Balance Sheet and Cashflow accompanying these financial statements.
d) Acquisitions Year to 30 April 2008 2007 ‚£m ‚£mInitial consideration 5.9 327.0Less: cash/overdrafts acquired - (6.2)Attributable costs paid - 6.4 ----- ----- 5.9 327.2 ----- ----- In 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 (‚£3.4m),the intangible asset relating to the supply contract (‚£1.0m) and goodwill (‚£1.5m).
12. Contingent liabilities and contingent assets
The Group is subject to periodic legal claims in the ordinary course of its business. However, net of provisions held, the claims outstanding at 30 April 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 tobecome payable when the Company's share price reaches 250p with the maximum$89m being payable at 286p. The contingent consideration is payable on aquarterly basis in cash. It is not practicable to estimate reliably the amountof contingent consideration which will become payable and accordingly noprovision has been made.
13. Disposal of Ashtead Technology
The Group announced the disposal of its Ashtead Technology division on 23 June2008 for a cash consideration of ‚£95.6m which, when received, will be applied toreduce outstanding debt. Ashtead Technology has been accounted for as adiscontinued operation at 30 April 2008 and accordingly the after tax profitfor the year and its assets and liabilities have been shown as single lineitems within the Group's income statement and balance sheet. The profit aftertaxation of the business sold comprises: 2008 2007 ‚£m ‚£m Revenue 26.5 21.6Operating costs (10.2) (10.6) ------ ------EBITDA 16.3 11.0Depreciation (5.7) (4.8) ------ ------Operating profit 10.6 6.2Net financing costs - - ------ ------Profit before taxation 10.6 6.2Taxation (3.0) (0.2) ------ ------Profit after taxation 7.6 6.0 ------ ------The ‚£3.0m tax charge consists of a deferred tax charge of ‚£1.7m (2007: creditof ‚£0.8m) relating to the UK, a deferred tax charge of ‚£1.0m relating to the US(2007: ‚£0.8m), a deferred tax charge of ‚£0.1m (2007: nil) and a current taxcharge of ‚£0.2m (2007: ‚£0.2m) relating to Singapore.
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 year ended 30 April 2008 are summarisedbelow: Revenue EBITDA Operating profit Three months to 30 April 2008 2007 2008 2007 2008 2007 Sunbelt in $m 356.3 349.4 131.2 122.8 64.9 59.8
------------------------------------------------
Sunbelt in ‚£m 179.9 178.3 66.4 62.6 32.9 30.4A-Plant 55.1 50.2 19.0 15.7 8.3 5.9Group central costs - - (1.7) (2.4) (1.8) (2.4)
------------------------------------------------
Total continuing operations 235.0 228.5 83.7 75.9 39.4 33.9Ashtead Technology 6.9 5.3 4.8 3.0 3.3 1.8
------------------------------------------------
241.9 233.8 88.5 78.9 42.7
35.7
------------------------------------------------
Net financing costs (17.3)
(20.0)
-------------
Profit before tax, exceptionals and amortisation 25.4 15.7Exceptional items (0.3) (19.3)Amortisation (0.7) (4.4) -------------Profit/(loss) before taxation 24.4 (8.0) ------------- Year to 30 April Sunbelt in $m 1,528.1 1,307.9 598.9 475.0 330.9 253.1
--------------------------------------------------
Sunbelt in ‚£m 761.3 684.6 298.4 248.6 164.9 132.5A-Plant 214.8 189.9 73.2 58.9 30.2 20.1Group central costs - - (7.9) (8.2) (8.0) (8.3)
--------------------------------------------------
Total continuing operations 976.1 874.5 363.7 299.3 187.1 144.3Ashtead Technology 26.5 21.6 16.3 11.0 10.6 6.2
--------------------------------------------------
1,002.6 896.1 380.0 310.3 197.7
150.5
--------------------------------------------------
Net financing costs (74.8)
(69.1)
-------------
Profit before tax, exceptionals and amortisation 122.9 81.4Exceptional items - ( 106.9)Amortisation (2.6) (11.0) -------------Profit/(loss) before taxation 120.3 (36.5) -------------Underlying revenue increased 3.5% to ‚£241.9m (2007: ‚£233.8m) in the quarterended 30 April 2008 and 11.9% to ‚£1,002.6m (2007: ‚£896.1m) in the year thenended. Underlying operating profit increased 19.9% to ‚£42.8m (2007: ‚£35.7m) inthe quarter ended 30 April 2008 and 31.4% to ‚£197.7m (2007: ‚£150.5m) in theyear then ended. Underlying profit before tax, exceptionals and amortisationfor the quarter increased to ‚£25.4m (2007: ‚£15.7m) and for the year ended 30April 2008 was ‚£122.9m (2007: ‚£81.4m). After exceptional items andamortisation, the profit before tax for the quarter (including Technology) was‚£24.4m (2007: loss of ‚£8.0m) and for the year was a profit of ‚£120.3m (2007:loss of ‚£36.5m).Net financing costsNet financing costs, before exceptional costs and fair value remeasurements,increased from ‚£69.1m to ‚£74.8m reflecting principally higher average debtlevels following the NationsRent acquisition. The average interest rate payableat 30 April 2008 on all of our debt facilities (including the impact ofamortisation of deferred debt raising costs) was 6.5%.
Balance sheet
Fixed assets
Capital expenditure in the year was ‚£331.0m of which ‚£294.8m was invested inthe rental fleet (2007: ‚£290.2m in total). Expenditure on rental equipment was89.0% of total capital expenditure with the balance relating to the deliveryvehicle fleet, property improvements and to computer equipment. Capitalexpenditure by division was as follows: 2008 2007 Growth Maintenance Total Total Sunbelt in $m 168.4 183.8 352.2 348.2
----------------------------------
Sunbelt in ‚£m 85.0 92.8 177.8 174.2A-Plant 35.0 73.3 108.3 73.8
----------------------------------
Continuing operations 120.0 166.1 286.1 248.0Ashtead Technology 6.0 2.7 8.7 8.4
----------------------------------
Total rental equipment 126.0 168.8 294.8 256.4 --------------------- Delivery vehicles, property improvements & computers 36.2 33.8 -------------Total additions 331.0 290.2 -------------With strong market conditions for the majority of the year, ‚£126.0m of rentalequipment capital expenditure was spent on growth (including for reinvestmentin connection with the NationsRent fleet reconfiguration) whilst ‚£168.8m wasinvested in replacement of existing fleet. The growth proportion is estimatedon the basis of the assumption that maintenance capital expenditure in anyperiod is equal to the original cost of equipment sold. Investment at A-Plantwas high as we invested to de-age and grow its fleet in good market conditions.The average age of the Group's serialised rental equipment, which constitutesthe substantial majority of our fleet, at 30 April 2008 was 31 months (2007: 31months) on a net book value basis. Sunbelt's fleet had an average age of 34months (2007: 32 months) comprising 38 months for aerial work platforms whichhave a longer life and 30 months for the remainder of its fleet and A-Plant'sfleet had an average age of 23 months (2007: 29 months).
The original cost of the Group's rental fleet and the dollar utilisation for the year ended 30 April 2008 are shown below:
Rental fleet at original cost Rental & Dollar Physical 30 April 30 April Average related utilisation utilisation 2008 2007 revenues Sunbelt in $m 2,314 2,147 2,289 1,422 62% 68% -------------------------------------Sunbelt in ‚£m 1,168 1,074 1,140 709 62% 68%A-Plant 360 321 346 209 60% 71% -----Ashtead Technology 47 39 44 26 60% ------------------------------------- 1,575 1,434 1,530 944 62% ------------------------------------------------- Dollar utilisation is defined as rental and rental related revenues divided byaverage fleet at original (or "first") cost. Dollar utilisation at Sunbelt was62% in the year ended 30 April 2008 (2007 pro forma: 62%). The 60% (2007: 60%)achieved by A-Plant reflects the lower pricing (relative to equipment cost)prevalent in the competitive UK market and its higher physical utilisation.Physical utilisation is time based utilisation which is calculated as theoriginal cost of equipment on rent as a percentage of the total value ofequipment in the fleet at the measurement date.
Assets held for sale
This category comprises the assets of Ashtead Technology which has also been classed as a discontinued operation in the profit and loss account.
Trade receivables
Continued active collection efforts which produced an improved position in theformer NationsRent businesses contributed to a reduction in receivable days to49 days (2007: 54 days). The bad debt charge for the year ended 30 April 2008as a percentage of total turnover was 0.8% (2007: 0.7%).
Trade and other payables
Group payable days were 70 days in 2008 (2007: 72 days). Capital expenditurerelated payables at 30 April 2008 totalled ‚£24.1m (2007: ‚£47.0m). Paymentperiods for purchases other than rental equipment vary between 7 and 45 daysand for 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: Year to 30 April 2008 2007 ‚£m ‚£m EBITDA before exceptional items 380.0
310.3
-------------- Cash inflow from operations before exceptional items 356.4 319.3Cash efficiency ratio* 93.8% 102.9% Maintenance rental capital expenditure (195.3)
(213.1)
Non-rental capital expenditure (35.8)
(32.3)
Proceeds from sale of used rental equipment 92.7 78.5Tax paid (6.4) (5.0) --------------Free cash flow before interest 211.6 147.4Financing costs paid (76.4) (64.2) --------------Free cash flow after interest 135.2 83.2Growth capital expenditure (120.4) (62.9)Dividends paid (10.5) (7.0) --------------Cash flow available for acquisitions, buy-backs & debt 4.3 13.3paydown Acquisitions and disposals (5.9) (327.2)Issue of ordinary share capital 0.5
148.9
Purchase of own shares by the Company (22.9)
-
Purchase of own shares by ESOT (1.6)
(4.9)
Exceptional costs paid (net) (9.5) (68.8) --------------Increase in net debt (35.1) (238.7) --------------
* Cash inflow from operations before exceptional items as a percentage of
EBITDA before exceptional items.
Cash inflow from operations increased 11.6% to ‚£356.4m and the cash efficiencyratio was 93.8% (2007: 102.9%) as trade receivables normalised following theNationsRent acquisition. Net cash capital expenditure in the year ended 30April 2008 increased to ‚£258.8m (2007: ‚£229.8m) reflecting investment inde-ageing, in the US fleet reconfiguration and in fleet growth at A-Plant. Taxpayments remain low reflecting tax depreciation in excess of book andutilisation of tax losses. Financing costs paid exceed the accounting charge inthe income statement due to the timing of interest payments in the year, withaccrued unpaid interest at 30 April 2008 totalling only ‚£9.8m (2007: ‚£13.5m).
The Group continues to generate strong free cash flow after interest, with ‚£ 135.2m (2007: ‚£83.2m) generated in the year. With our expectation of lower growth investment in the coming year, we anticipate delivering significant further deleveraging by April 2009.
Net debt 2008 2007 ‚£m ‚£m First priority senior secured bank debt 556.2
506.1
Finance lease obligations 15.2
22.0
8.625% second priority senior secured notes, due 2015 122.2 120.6 9% second priority senior secured notes, due 2016
271.4 268.3 ------- ------- 965.0 917.0Cash and cash equivalents (1.8) (1.1) ------- -------Total net debt 963.2 915.9 ------- ------- Group net debt increased from ‚£915.9m at 30 April 2007 to ‚£963.2m at 30 April2008, reflecting the investment made in the fleet during the year and the ‚£22.9m spent on share buy-backs. The ratio of net debt to EBITDA was 2.5 timesdown from 2.7 times at April 2007.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 (includingnon-cash amortisation of deferred debt raising costs) is approximately 6.5%,most of which is tax deductible in the US where the tax rate is 39%. Financialperformance covenants under the two senior secured notes issues are onlymeasured at the time new debt is raised. There are two financial performancecovenants under the asset based first priority senior bank facility:
* funded debt to EBITDA before exceptional items not to exceed 4.25 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 30 April 2008 availability under the bank facility, includingsuppressed availability of $10m, was $602m ($589m at 30 April 2007). Althoughthe covenants were therefore not required to be measured at 30 April 2008, 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 forthcomingfinancial year, together with assumptions, estimates, judgements and criticalaccounting policies used in preparing financial information remain unchangedfrom those detailed in the 2007 Annual Report and Accounts on pages 21 to 23.Our business is subject to significant fluctuations in performance from quarterto quarter as a result of seasonal effects. Commercial construction activitytends to increase in the summer and during extended periods of mild weather andto decrease in the winter and during extended periods of inclement weather.Furthermore, due to the incidence of public holidays in the US and the UK,there are more billing days in the first half of our financial year than thesecond half leading to our revenues normally being higher in the first half. Ona quarterly basis, the second quarter is typically our strongest quarter,followed by the first and then the third and fourth quarters.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.Approximately 94% of our debt was denominated in US dollars at 30 April 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 dollarexchange rate would impact pre-tax profit by 0.7%.OPERATING STATISTICS Profit centre numbers Staff numbers 2008 2007 2008 2007 Sunbelt Rentals 430 445 7,039 7,524A-Plant 192 201 2,422 2,424Ashtead Technology 13 13 120 115Corporate office - - 13 14 ---- ---- ----- ------Group 635 659 9,594 10,077 ---- ---- ----- ------
Sunbelt's profit centre numbers include 90 Sunbelt at Lowes stores at 30 April 2008 (99 at 30 April 2007).
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Ashtead Group