Total dollar turnover in Sunbelt increased by 5.6% in the quarter ended 31 January 2004 and by 2.0% for the nine months. Average fleet utilisation for the nine month period improved to 65.1% from 64.5% in the previous year. Reflecting the operational leveraging inherent in the business, the growth in Sunbelt’s turnover produced an improvement in its EBITDA margins from 29.9% in 2003 to 30.6% in 2004. Consequently dollar EBITDA grew by 10.6% in the quarter ended 31 January 2004 and by 4.4% in the nine months.

A-Plant’s results for the nine months ended 31 January 2004 continue to reflect the effect of its business refocusing strategy which has seen the closure or sale of 59 profit centres since 1 May 2002, including 15 in Ireland sold on 15 January 2004. In the nine months ended 31 January 2004 A-Plant has seen a 13.6% reduction in turnover to £118.4 million. Average fleet utilisation for the nine month period was 58.9% compared to 61.1% in the previous year. More encouragingly utilisation has now risen to a current level of 65%. Cost reductions as part of the refocusing programme have limited the reduction in EBITDA margin to 2% (down to 28.0% from 30.0%).

When measured in sterling, the continued weakness of the dollar resulted in a 5.6% decline in Sunbelt’s total turnover for the nine months ended 31 January 2004. Total Group turnover in sterling decreased by 8.2% for the nine months ended 31 January 2004.

For the Group as a whole, EBITDA for the nine months ended 31 January 2004 declined 4.3% at constant exchange rates (but 9.1% at actual rates due to the impact of the weak dollar). For the 12 months ended 31 January 2004 Group EBITDA was £138.9 million which compares with £142.9 million for the year ended 30 April 2003 at constant exchange rates (£150.1 million at actual rates).

After depreciation and interest costs, which were also reduced by the weak dollar, the profit before tax, goodwill amortisation and exceptional items for the nine months ended 31 January 2004 was £4.5 million compared with £7.9 million in the previous year at constant exchange rates (£8.8 million at actual rates).

Cash management

Free cash flow1 for the nine months ended 31 January 2004 was £36.2 million (£22.7 million in 2003). For the 12 months ended 31 January 2004 free cash flow was £52.4 million. After non-core disposal proceeds of £13.0 million and exceptional costs mostly related to the default and refinancing costs of £11.3 million, the net cash generated and applied to reduce bank debt was £37.9 million in the nine months ended 31 January 2004 (£11.0 million in 2003) and £48.1 million for the twelve months ended on the same date.

As a result of this cash flow and the impact of the weak US dollar, total net debt at 31 January 2004 was £535.2 million (£618.5 million at 31 January 2003 and £622.3 million at 30 April 2003). Total net debt leverage at 31 January 2004 was 3.85 times (4.15 times at 30 April 2003). At 29 February 2004, total net debt was £523.1 million.

Capital expenditure for the nine months ended 31 January 2004 was £49.7 million (2003 - £60.4 million) and is expected to total between £70 million and £75 million by year-end. The Group’s average fleet age at 31 January 2004 was 54 months (30 April 2003 – 49 months). The Group expects to increase capital expenditure in the year ending 30 April 2005 to an amount broadly equivalent to the annual depreciation charge and thereby hold the fleet age broadly constant over the course of the coming year.

Outlook

While A-Plant’s profits for the current year will reflect the effects of its refocusing programme and trading conditions remain difficult, its management is now free to concentrate on improving the future performance of the business. In the US there are signs of continued growth in Sunbelt’s end markets as evidenced by the improvement in the non-residential construction market and in recent results announcements from its competitors. Although the weakness of the US dollar will continue to impact Sunbelt’s profits when reported in sterling, the Board is encouraged by the increasing rate of improvement in Sunbelt’s underlying performance and by the better trading conditions in the United States.