9 September, 2004
First quarter results for the three months ended 31 July 2004
Ashtead Group plc, the international equipment rentalgroup serving the construction, industrial and homeowner markets,announces first quarter results for the three months ended 31 July2004.
- Sunbelt’s divisional operating profit* up 44% to $25.2m(2003 - $17.5m)
- A-Plant’s divisional operating profit* increased to£3.0m (2003 - £1.0m)
- Group pre-tax profit before goodwill amortisation of£5.7m (2003 before amortisation and exceptional items -£1.6m at actual exchange rates and £1.0m at 2004exchange rates).
- Group pre-tax profit for the quarter of £3.5m (2003 -£8.0m loss)
- Net debt+ at 31 July of £516.7m (July 2003 -£605.8m at actual rates and £559.3m at constant 2004rates). Net debt reduced by £10.0m in the quarter at actualrates and by £4.6m at constant exchange rates.
*divisional operating profit is defined as the operatingprofit before exceptional items and goodwill amortisation of ourdivisions
+debt plus non-recourse funding received under theaccounts receivable securitisation less cash at bank and inhand.
Further details of these performance measures are given inthe Operating and Financial Review.
Ashtead’s chief executive, George Burnett, commented:
“The Group performed strongly in the quarterreflecting improving markets and increased market share in the USand the beneficial impact of refocusing our business in theUK.
Current trading conditions remain favourable in both ourmain markets and, whilst the weakness of the US dollar and anyfurther interest rate rises may have an adverse impact, the Boardlooks forward to reporting further progress.”
Group profit on ordinary activities before tax, goodwillamortisation and, in 2003, exceptional items increased to£5.7m (2003 - £1.6m at actual exchange rates and£1.0m at constant 2004 exchange rates). After goodwillamortisation and, in 2003, exceptional items, the pre-tax profitwas £3.5m compared with the £8.0m loss in 2003.Earnings per share based on the pre-tax profit before goodwillamortisation and, in 2003 exceptional items and after an imputed30% tax rate increased to 1.2p (2003 - 0.3p). After goodwillamortisation and, in 2003, exceptional items, and the actual taxcharge, earnings per share for the quarter were nil pence per sharein 2004 compared to the loss of 2.6p per share in 2003.
Review of trading
|Turnover*||EBITDA*||Divisional operating profit**|
|Sunbelt Rentals in|
|Sunbelt Rentals in|
|Group central costs||-||-||(1.7)||(1.0)||(1.6)||(1.1)|
*in 2003, before exceptional items
**operating profitbefore goodwill amortisation and, in 2003, exceptionalitems
Group turnover for the first quarter was £129.9m(2003 - £132.5m at actual exchange rates and £123.2m atconstant 2004 exchange rates). EBITDA for the quarter was£39.9m (2003 - £38.8m at actual exchange rates and£35.9m at constant 2004 exchange rates). EBITDA margin was30.7% (2003 – 29.3%). Group operating profit before goodwillamortisation and, in 2003, exceptional items, increased to£15.9m (2003 - £11.6m at actual rates and £10.5mat constant 2004 exchange rates) and the operating profit marginrose to 12.2% (2003 – 8.8%). After goodwill amortisation and,in 2003, exceptional items, first quarter operating profit was£13.7m (2003 - £8.2m at actual exchangerates).
Sunbelt continued to perform strongly. Turnover in dollarsgrew 11.9% to $160.2m. This reflected an increase of approximately5% in rental rates together with growth in average utilisationrates, which improved from 66% in the first quarter of 2003/4 to70% this year. Sunbelt’s growth reflected market share gainsas well as the continued improvement in non-residentialconstruction activity, which according to figures published by theUS Department of Commerce grew 5% in the year to July2004.
Sunbelt’s EBITDA for the quarter grew 16.6% to$51.3m with its EBITDA margin rising to 32.0% from 30.7% a yearearlier. Operating costs in dollars increased by 7.4% in thequarter reflecting increased investment in personnel and highermaintenance costs to service current activity levels as well ashigher fuel and insurance costs. Divisional operating profit grew44.0% to $25.2m and the divisional operating profit margin was15.7% (2003 - 12.2%).
Since the end of the quarter Sunbelt has continued toexperience positive trends with business volumes in its Floridaregion being enhanced by the work necessary to deal with the cleanup of Hurricanes Charley, Frances and Ivan.
A-Plant continued to build on the improvements inperformance seen in the fourth quarter of last year. Turnover forthe quarter declined to £39.0m from £41.4m in 2003principally as a result of last year’s non-core disposalprogramme. On a same store basis, A-Plant improved its operatingefficiency achieving a 1.9% turnover increase on a fleet size whichwas approximately 6% smaller than in the equivalent period in theprevious year. Utilisation rates rose from 61% in 2003 to 66% thisyear while rental rates remained broadly constant. A-Plant’soperating costs (before depreciation) declined 10.6% in the quarterreflecting the non-core disposals and tight management.
Consequently, A-Plant’s EBITDA for the quarter grew7.2% to £11.9m with its EBITDA margin rising to 30.5% from26.8% a year earlier. After depreciation, its divisional operatingprofit was £3.0m (2003 - £1.0m) and its divisionaloperating profit margin was 7.7% (2003 - 2.4%).
Offshore market conditions for Ashtead Technology remaineddifficult and consequently its turnover declined 11.8% to£3.0m at actual exchange rates. In underlying terms, growthin its onshore environmental rental businesses partially offsetlower offshore revenues and at constant exchange rates its totalrevenues decreased by 7.6%. Cost control and the impact of the weakUS dollar limited the reduction in its divisional operating profitwhich was £0.7m (2003 - £1.0m).
Capital expenditure and net debt
Capital expenditure in the quarter was £31.6m ofwhich £30.3m was spent on the fleet. These expenditure levelswere broadly double those of the equivalent period last yearreflecting the improving US economic conditions. £14.1m ofthe expenditure on the fleet was for growth with the remainderspent on replacing existing equipment.
Net debt at 31 July was £516.7m, a reduction of£10.0m since year-end and £89.1m in the twelve monthssince 31 July 2003. At constant exchange rates the reduction in thequarter was £4.6m and £42.6m in the twelve months fromJuly 2003.
Review of advisers
The Company has recently completed a review of itsadvisers. As a result, JP Morgan has joined Close Brothers as theCompany’s financial advisers, The Maitland Consultancy hasbeen appointed as financial PR adviser and Evolution SecuritiesLimited is appointed the Company’s stockbroker, all withimmediate effect.
Current trading and outlook
Current trading conditions remain favourable in both ourmain markets and, whilst the weakness of the US dollar and anyfurther interest rate rises may have an adverse impact, the Boardlooks forward to reporting further progress.
There will be a presentation to equity analysts at 9.30am this morning. A live webcast of this presentation will be availablethrough the Company’s website, www.ashtead-group.com and there will also be arecorded playback from shortly after the call finishes.