Ashtead

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Audited results for the year and unaudited results for the fourth quarter ended 30 April 2014

Read and download the audited results for the year and unaudited results for the fourth quarter for the Ashtead Group. You can also view the latest webcast

  Fourth quarter Year
  2014  20131 Growth2 2014  20131 Growth2
  £m £m % £m £m %
Underlying results3            
Rental revenue 355.7 306.8 24% 1,475.3 1,206.4 24%
EBITDA 153.7 122.4 36% 685.1 519.0 34%
Operating profit 82.6 62.6 45% 409.2 290.0 43%
Profit before taxation 69.4 51.9 48% 362.1 245.4 50%
Earnings per share 9.8p 7.0p 55% 46.6p 31.4p 51%
 
Statutory results            
Revenue 384.9 347.6 19% 1,634.7 1,361.9 22%
Profit before taxation 70.8 50.0 56% 356.5 214.2 69%
Earnings per share 10.3p 6.8p 68% 46.1p 27.6p 71%
1   prior year figures restated for the adoption of IAS 19 'Employee Benefits' (revised)
     (see explanatory note below)
2   at constant exchange rates
3   before exceptionals, intangible amortisation and fair value remeasurements

 

Highlights
  • Group rental revenue up 24%2
  • Record Group pre-tax profit3 of £362m, up 50% at constant exchange rates
  • Group EBITDA margin3 improves to 42% (2013: 38%)
  • £741m of capital invested in the business (2013: £580m)
  • Group RoI of 19% (2013: 16%)
  • Net debt to EBITDA leverage2 of 1.8 times (2013: 1.9 times)
  • Proposed final dividend of 9.25p making 11.5p for the year (2013: 7.5p)

 

Ashtead's Chief Executive, Geoff Drabble, commented:

"2013/14 was a very successful year for the Group, enabling us to deliver record twelve month underlying pre-tax profits of £362m, up 50% from the prior year. It is particularly pleasing that we achieved this growth whilst also delivering on our long-stated commitments of return on investment progression, now 19% for the Group, and maintaining debt leverage below 2 times EBITDA.

Our performance reflects the benefits of the consistent execution of our strategy focussed largely on organic growth, supplemented by greenfield openings and bolt-on acquisitions. We invested £741m in our rental fleet and a further £103m on acquisitions during the year. We anticipate growing our fleet in the coming year in the low to mid teens percent range and will continue to open greenfields and make bolt-ons to further grow our market share and profitability. Current planning suggests around 50 new locations in the new financial year, another measured step towards our medium term objective of 600 locations.

With both divisions performing well and beginning to enjoy recovering markets, we are well positioned for further growth and the Board looks forward to the medium term with continued confidence."

 

Contacts:

Geoff Drabble Chief executive 020 7726 9700
Suzanne Wood Finance director 020 7726 9700
Brian Hudspith Maitland 020 7379 5151

 

Geoff Drabble and Suzanne Wood will hold a meeting for equity analysts to discuss the results and outlook at 9.30am on Tuesday, 17 June at The London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS. The call will be webcast live via the link at the top of this release and a replay will also be available via the same link shortly after the call concludes. A copy of this announcement and the slide presentation used for the meeting are available at the top of this release. The usual conference call for bondholders will begin at 3pm (10am EST).

Analysts and bondholders have already been invited to participate in the analyst meeting and conference call for bondholders but any eligible person not having received dial-in details should contact the Company's PR advisers, Maitland (Astrid Wright) at +44 (0)20 7379 5151.

 

Explanatory note

Prior year figures have been restated following the adoption of the revised IAS 19 'Employee Benefits'. Adoption of the revised standard has decreased the Group's reported operating profit and has increased net financing costs. The net effect is to reduce profit before taxation by £1.3m for the year ended 30 April 2013. See note 1 for further information.

 

Forward looking statements

This announcement contains forward looking statements. These have been made by the directors in good faith using information available up to the date on which they approved this report. The directors can give no assurance that these expectations will prove to be correct. Due to the inherent uncertainties, including both business and economic risk factors underlying such forward looking statements, actual results may differ materially from those expressed or implied by these forward looking statements. Except as required by law or regulation, the directors undertake no obligation to update any forward looking statements whether as a result of new information, future events or otherwise.

 

Trading results
  Revenue EBITDA Operating profit
  2014 2013 2014 2013 2014 2013
        (restated)       (restated)
 
Sunbelt in $m 2,188.5 1,819.9 987.6 741.4 631.1 452.5
 
Sunbelt in £m 1,366.2 1,155.8 616.5 470.9 394.0 287.4
A-Plant 268.5 206.1 78.6 57.3 25.2 11.9
Group central costs   -   - (10.0) (9.2) (10.0) (9.3)
  1,634.7 1,361.9 685.1 519.0 409.2 290.0
Net financing costs         (47.1) (44.6)
Profit before tax, exceptionals,
remeasurements and amortisation
362.1 245.4
Exceptional items     4.2 (18.0)
Fair value remeasurements     - (7.4)
Amortisation         (9.8) (5.8)
Profit before taxation         356.5 214.2
Taxation         (125.3) (76.4)
Profit attributable to equity holders of the Company 231.2 137.8
 
Margins            
Sunbelt     45.1% 40.7% 28.8% 24.9%
A-Plant     29.3% 27.8% 9.4% 5.8%
Group     41.9% 38.1% 25.0% 21.3%

 

Group revenue for the year increased 20% to £1,635m (2013: £1,362m) with strong growth in both businesses. This revenue growth, combined with ongoing operational efficiency, generated record underlying profit before tax of £362m (2013 restated: £245m).

In Sunbelt, rental revenue grew 23% to $1,973m (2013: $1,611m), driven by a 17% increase in fleet on rent and 4% improvement in yield. Sunbelt has continued to take market share with the rental market as a whole growing 6% in 2013, as estimated by IHS Global Insight. This has been achieved through the excellent execution of a clear and consistent strategy by the Sunbelt team, focussing on a balance between same store growth, greenfield expansion and bolt-on acquisitions. Sunbelt's total revenue, including new and used equipment, merchandise and consumable sales, grew 20% to $2,189m (2013: $1,820m).

A-Plant continues to perform well and, with the acquisition of Eve Trakway ('Eve'), delivered rental revenue of £244m, up 33% on the prior year (2013: £183m). This reflects 21% more fleet on rent and a 9% improvement in yield. Yield has benefitted from an improved product mix over the period, including Eve's events work. Rental revenue growth excluding Eve was 19%, reflecting 10% more fleet on rent and a 9% yield improvement.

Sunbelt's strong revenue growth resulted in a record EBITDA margin of 45% (2013: 41%) as 65% of revenue growth dropped through to EBITDA. This contributed to an operating profit of $631m (2013: $453m). A-Plant's EBITDA margin improved to 29% (2013: 28%) and operating profit more than doubled to £25m (2013: £12m). As a result, Group operating profit increased 41% to £409m (2013 restated: £290m).

Net financing costs increased slightly to £47m (2013: £45m), reflecting higher average debt during the year and the additional $400m senior secured notes issued in December, partially offset by the lower margin on our senior debt facility following the August amendment.

Group profit before exceptional items, amortisation of intangibles and taxation was £362m (2013 restated: £245m). After a tax charge of 36% (2013: 36%) of the underlying pre-tax profit, underlying earnings per share increased 48% to 46.6p (2013 restated: 31.4p). The cash tax charge remained low at 3% due to the utilisation of tax losses brought forward and the capital intensive nature of the business. However, cash tax payments will increase in 2014/15 as we utilise the brought forward tax losses during the year and we expect the cash tax rate to be in the mid teens in 2014/15.

The exceptional income of £4m relates to the release of part of the provision for deferred consideration related to the Eve acquisition, which was payable depending on the achievement of increased earnings targets. £7m was provided in full on acquisition, based on an expectation that the targets would be achieved in full. They were achieved partially, resulting in an additional cash payment of £3m.

Statutory profit before tax was £357m (2013 restated: £214m) and basic earnings per share were 46.1p (2013 restated: 27.6p).

Capital expenditure

Capital expenditure for the year was £741m gross and £642m net of disposal proceeds (2013: £580m gross and £477m net). As a result of this investment, the Group's rental fleet at 30 April 2014 at cost was £2.6bn with an average age of 28 months (2013: 32 months).

Sunbelt's fleet size at 30 April was $3.6bn. This larger fleet supported strong fleet on rent growth of 17% year on year. Average twelve month physical utilisation was 71% (2013: 71%).

Our preliminary capital expenditure plan for 2014/15 is for spend at a similar level to this year which should result in percentage growth in our fleet in the low to mid teens. This level of expenditure is consistent with our strategy at this stage in the cycle of investing in organic growth, opening greenfield sites and continuing to reduce our leverage. As always, our capital expenditure plans remain flexible depending on market conditions and currently, our principal focus is on fleet deliveries through the first quarter of fiscal 2015.

Return on Investment 1

Sunbelt's pre-tax return on investment (excluding goodwill and intangible assets) in the 12 months to 30 April 2014 continued to improve to 26.4% (2013: 24.7%), well ahead of the Group's pre-tax weighted average cost of capital. In the UK, return on investment (excluding goodwill and intangible assets) improved to 9.2% (2013 restated: 4.9%). For the Group as a whole, returns (including goodwill and intangible assets) are 18.6% (2013: 16.2%).

Cash flow and net debt

As expected, debt increased during the year as we invested in the fleet, made a number of bolt-on acquisitions and increased working capital to support higher activity levels. The net free cash outflow was only £51m (cash from operations less net capital expenditure, interest and and tax) with capital expenditure of 2.7 times depreciation being substantially funded from cash flow. In addition, £103m was spent on acquisitions, while dividends totalled £41m.

Reflecting our strong earnings growth, the ratio of net debt to EBITDA reduced to 1.8 times (2013: 1.9 times) on a constant currency basis, while net debt was £1,149m (2013: £1,014m), including an £88m exchange translation benefit.

The Group's debt package remains well structured and flexible, enabling us to take advantage of prevailing end market conditions. The Group's debt facilities are committed for an average of six years. At 30 April 2014, ABL availability was $916m, with an additional $770m of suppressed availability - substantially above the $200m level at which the Group's entire debt package is covenant free.

Dividends

In accordance with our progressive dividend policy, with consideration to both profitability and cash generation at a level that is sustainable across the cycle, the Board is recommending a final dividend of 9.25p per share (2013: 6.0p) making 11.5p for the year (2013: 7.5p). If approved at the forthcoming Annual General Meeting, the final dividend will be paid on 5 September 2014 to shareholders on the register on 15 August 2014.

Current trading and outlook

Our strong performance continued in May. With both divisions performing well and beginning to enjoy recovering markets, we are well positioned for further growth and the Board looks forward to the medium term with continued confidence.

 

1 Underlying operating profit divided by the sum of net tangible and intangible fixed assets, plus net working capital but excluding net debt, deferred tax and fair value remeasurements.

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