4 September, 2007

Unaudited results for the first quarter ended 31 July 2007.

Read and download the 1st quarter results for the Ashtead Group. You can also view the latest webcast.

Unaudited results for the first quarter ended 31 July 2007

Financial summary

First quarter Growth
 20072006At actual ratesAt constant rates1
Underlying operating profit149.735.0+42%+52%
Underlying profit before taxation130.724.3+26%+35%
Underlying earnings per share1   
- basic3.6p3.8p-6%nil%
- cash tax4.9p4.3p+12%+19%
Profit before taxation30.18.6n/an/a
Basic earnings per share3.2p0.2pn/an/a

1 See explanatory notes below


  • Continued strong profit growth in all three divisions with underlying operating profit up 52% at constant exchange rates.
  • Underlying profit before tax grew 35% whilst underlying basic earnings per share (reflecting the additional equity issued to fund last year's NationsRent acquisition) matched last year, measured in each case at constant exchange rates.
  • Sunbelt's Q1 underlying operating profit grew by 25% on a pro forma basis1 to $84.8m with pro forma operating margins up from 16.7% to 21.8%.
  • A-Plant continues to deliver good growth with pro forma operating profits up 45% to £7.0m (2006 - £4.8m).

Ashtead’s chief executive, Geoff Drabble , commented:

"We are pleased to report a strong performance in the first quarter as we continue to benefit from good market conditions in all three divisions. In Sunbelt we again delivered significant growth in pro forma margins and profits reflecting the integration cost savings and the progress made in driving growth in dollar utilisation1 at the acquired NationsRent stores.

A-Plant continues to progress based upon good revenue growth and the initial benefits from the profit centre rationalisation undertaken in the fourth quarter of last year.

We were also pleased to have delivered sufficient earnings improvement in the combined business to bring underlying earnings per share, calculated on a much larger equity base, to last year's level in only the third full quarter following the acquisition.

Despite the recent uncertainty in global equity and debt markets, the key economic indicators for our primary markets, US and UK non-residential construction, continue to indicate a favourable growth outlook. Current physical utilisation is also strong in both markets.

Looking forward, given the ongoing integration benefits at Sunbelt and the continuing improvement in pro forma dollar utilisation as well as the strong performance in A-Plant and Ashtead Technology, we expect to report further good progress."


Geoff DrabbleChief executive020 7726 9700
Ian RobsonFinance director 
Brian HudspithMaitland020 7379 5151

Explanatory Notes

  • 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.
  • Pro forma basis includes the NationsRent and Lux Traffic acquisitions throughout both periods. For this purpose the pre-acquisition results of NationsRent have been derived from its reported financial 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 and methods.
  • Constant rates assumes that US dollar amounts for both periods were consolidated and translated at the average exchange rate applied in the period ended 31 July 2007.
  • Dollar utilisation is defined as last twelve months rental and rental related revenues divided by average original or "first" cost of rental equipment.


The quarter saw continuing emphasis on driving the operational performance of all three divisions.

The 25% improvement in Sunbelt's pro forma first quarter profits is very encouraging. Sunbelt's fleet has now been significantly reconfigured and was on average 3% smaller than the combined fleet in the corresponding period last year. We were therefore pleased to have maintained Sunbelt's rental revenue whilst focussing principally on margin improvement and raising the physical utilisation of its fleet.

At 29 August 2007, Sunbelt's physical utilisation was 71% compared to 72% for the Sunbelt fleet alone at the same date last year. With this current strong physical utilisation, we are now again investing to grow Sunbelt's fleet which we expect to allow us to drive rental revenue growth and continued margin improvement in future periods.

A-Plant's programme to enhance its profits and return on investment has continued and it has once again delivered strong revenue and profit growth. Its focus on growing revenue by providing a range of plant and tools to our contractor customer base together with the restructured profit centre infrastructure continues to improve margins.

We have also continued to invest in Ashtead Technology to support positive market conditions contributing to its good revenue and profit growth.

A strong first quarter

Good progress continued in the quarter to July 2007, sustaining the momentum established in the second half of last year.

      • Revenue for the quarter was £252.5m up 43.7% on last year.
      • Underlying operating profit for the quarter grew 42.0% on the prior year at actual exchange rates to £49.7m whilst underlying profit before tax grew 26.3% to £30.7m (2006 - £24.3m).
      • Profit before tax, which is stated after amortisation of acquired intangibles was £30.1m. There were no exceptional items in the quarter in comparison with the prior year position where the pre-tax profit of £8.6m was stated after £15.7m of exceptional items.
      • Basic earnings per share for the quarter were 3.2p (2006 - 0.2p) whilst underlying earnings per share were 3.6p (2006 - 3.8p). On a cash tax basis underlying earnings per share were 4.9p (2006 - 4.3p).
      • Capital expenditure in the first quarter was £124.2m (2006 - £110.5m).
      • At 31 July 2007, net debt was £894.4m (30 April 2007 - £915.9m) whilst the ratio of net debt to pro forma LTM EBITDA was 2.6 times (30 April 2007 - 2.7 times). Availability under the $1.75bn asset based loan facility was $671m ($589m at 30 April 2007).
      • For the twelve months ended 31 July 2007, Group pro forma revenues were £1,005.3m, pro forma underlying EBITDA was £348.7m and pro forma underlying operating profit was £169.7m. Approximately $37m of the $48m estimated annual NationsRent integration savings are included in the pro forma LTM results. The remaining $11m will be realised in Q2 (principally) and Q3 of the current year. The pro forma LTM EBITDA and operating profit margins are 34.7% and 16.9% respectively.


      As reported388.5234.0+66%
      NationsRent    -171.3 
      Pro forma combined388.5405.3-4%
      Underlying operating profit   
      As reported84.857.1+49%
      NationsRent    -10.7 
      Pro forma combined84.867.8+25%
      Pro forma operating profit margin21.8%16.7% 

      Sunbelt's first quarter performance was in line with our expectations as we continued to realise the benefits of the NationsRent acquisition with the actions taken to lower costs and increase dollar utilisation driving improved profitability.

      As planned, Sunbelt's revenue growth in the quarter was limited by both our curtailment of low margin sales of new equipment previously undertaken by NationsRent and by the reconfiguration of the acquired fleet towards higher returning product areas which tend to be less seasonal and cyclical. Excluding sales revenues, first quarter rental and rental related revenues grew 0.2% to $362.0m.

      Pro forma dollar utilisation, which is measured on a rolling twelve months basis to eliminate seasonal effects, was 63% at 31 July compared to 62% at 30 April 2007. Pro forma fleet size was on average 3% smaller in the first quarter than in the equivalent period last year as we focused on raising the time utilisation of the acquired fleet. First quarter time utilisation averaged 69% close to the 71% achieved by Sunbelt alone a year ago.


      As reported52.143.9+19%
      Lux Traffic    -5.4 
      Pro forma combined52.149.3+6%
      Underlying operating profit   
      As reported7.04.5+56%
      Lux Traffic    -0.3 
      Pro forma combined7.04.8+45%
      Pro forma operating profit margin13.5%9.8% 

      A-Plant's pro forma revenue growth of 6% was again amongst the highest in its peer group. This growth reflected a 4% increase in average fleet size, a 2% increase in utilisation to a record 72% for the quarter (2006 - 71%) and broadly unchanged rental rates. That this revenue growth was achieved in the period immediately following the store rationalisation programme at the end of last year is a testament to the way A-Plant managed that programme and the strength of the market.

      Consequently the good revenue increase drove first quarter pro forma operating margins to 13.5% (2006 - 9.8%) and produced growth of 45% in pro forma operating profits to £7.0m (2006 - £4.8m).

      Ashtead Technology

      Operating profit2.31.3+79%
      Operating profit margin37.1%23.7% 

      Both Ashtead Technology's offshore and onshore markets remain good and we have continued to invest in order to support these markets. Whilst prior year comparatives now also reflect good markets and quarterly are becoming more challenging, Ashtead Technology continues to deliver good revenue and profit growth.


      Return on investment (underlying operating profit divided by net assets employed before debt, deferred tax and certain other non cash items), which is measured on a rolling twelve month basis to eliminate seasonal effects was 12.9% for the year ended 31 July 2007. RoI for Sunbelt was 13.7% whilst A-Plant's RoI was 9.6% and continues to improve. After tax return on equity for the twelve months to 31 July was 14.9%.

      Current trading and outlook

      The first quarter of the fiscal year developed in line with our expectations with good profits growth in all three divisions.

      Despite the recent uncertainty in global equity and debt markets, the key economic indicators for our primary markets, US and UK non-residential construction, continue to indicate a favourable growth outlook. Current physical utilisation is also strong in both markets.

      Looking forward, given the ongoing integration benefits at Sunbelt and the continuing improvement in pro forma dollar utilisation as well as the strong performance in A-Plant and Ashtead Technology, we expect to report further good progress.

      Geoff Drabble and Ian Robson will host a conference call for equity analysts at 9.30am on Tuesday 4 September and a further conference call for bondholders at 3pm (10am EST) on the same day. The analysts' call will be webcast live via the link at the top of this release and there will also be a replay available from shortly after the call concludes. A copy of the slide presentation used for the call is also available above. Analysts and bondholders have already been invited to participate in the calls but anyone not having received dial-in details should contact the Company's PR advisers, Maitland (Jane Franklin) at 020 7379 5151.