2 September, 2008
Unaudited results for the first quarter ended 31 July 2008
Read and download the first quarter results for the Ashtead Group. You can also view the latest webcast.
|Underlying operating profit1||51.7||47.4||+9%|
|Underlying profit before taxation1||35.9||28.4||+26%|
|Underlying earnings per share1||4.8p||3.6p||+34%|
|Profit before taxation||35.2||27.8||+27%|
|Basic earnings per share||15.9p||3.2p||+398%|
1 See explanatory notes below
- Another strong performance with Group revenue up 5% and 9% growth in Group operating profit
- Underlying pre-tax profits up 26%, reflecting good operational performance and lower financing costs
- Underlying earnings per share growth of 34% to 4.8p
- Sale of Ashtead Technology completed on 26 June with the net proceeds of £90m applied to pay down debt
- Net debt reduced by £111m in the quarter to £852m at 31 July - on track to meet our year end debt reduction target
Ashtead’s Chief Executive, Geoff Drabble , commented:
"I am pleased to report further good revenue and profit growth in the first quarter of the year
In the US we delivered revenue and profit growth as we benefited from improvements in operational performance. We improved utilisation on a larger fleet and continue to benefit from our broad geographic and market exposure. We performed well in the UK underpinned by our exposure to the larger non-residential projects.
Despite the current economic uncertainty, our operating businesses continue to perform well and our financing costs continue to be lower than last year as we reduce debt. The Board anticipates the Group continuing to trade in line with its expectations for the remainder of the year."
|Geoff Drabble||Chief executive||020 7726 9700|
|Ian Robson||Finance director||020 7726 9700|
|Brian Hudspith||Maitland||020 7379 5151|
- RS 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 a single line item within our income statement with the result that revenues, operating profit and pre-tax profits as reported in the Group accounts exclude Ashtead Technology. Prior year figures have been restated accordingly.
- Underlying profit and earnings per share are stated before exceptional items and amortisation of acquired intangibles. The definition of exceptional items is set out in note 4 in the attached pdf. The reconciliation of underlying earnings per share to basic earnings per share is shown in note 7 in the attached pdf.
Geoff Drabble and Ian Robson will hold a conference call for equity analysts at 9.00am on Tuesday 2 September. Dial in details for this call have already been distributed but any analyst not having received them should contact Emma Burdett at Maitland on 020 7379 5151. The call will be webcast live via the link at the top of this release and there will also be a replay available via this website from shortly after the call concludes. There will, as usual, also be a separate call for bondholders at 3pm UK time (10am EST).
|Sunbelt in $m||403.4||388.5||158.6||150.7||92.0||84.8|
|Sunbelt in £m||204.4||194.1||80.3||75.3||46.5||42.4|
|Group central costs||–||–||(1.9)||(2.0)||(1.9)||(2.0)|
|Net financing costs||(15.8)||(19.0)|
|Profit before tax, exceptionals and amortisation||35.9||28.4|
Revenues at Sunbelt and A-Plant grew by 3.8% and 5.8% respectively as both divisions focused on meeting the needs of their customers and driving market share gains. Continued operating efficiencies generated a further 0.5% improvement in Sunbelt's EBITDA margin to just under 40% whilst A-Plant's EBITDA margin grew 2% to just under 35%.
Sunbelt's first quarter revenue growth reflected a fleet which was 8% larger than the previous year, physical utilisation up 1% to an average 70% (2007: 69%) and a 5% lower yield. At A-Plant, reflecting principally last year's capital investment, first quarter fleet growth was 16% whilst physical utilisation was unchanged at 70% and yield was 8% lower.
On a Group basis, this performance generated 5.4% growth in revenue, 8.0% growth in underlying EBITDA and 9.2% growth in underlying operating profit. Lower interest rates and reduced debt levels combined to reduce net financing costs by 17% and, as a result, the underlying profit before tax for the quarter grew 26% to £35.9m.
The effective tax rate was stable at 36% of the pre-tax result (2007 full year: 35%). Reflecting the Group's capital intensive business and the utilisation of brought forward tax benefits, cash tax represented just 3% of the 36% charge (2007 full year: 5%) with the balance being deferred tax.
The sale of Ashtead Technology in June for £96.0m generated net cash proceeds of £89.8m which were applied to pay down debt and an exceptional profit of £67.3m before tax. After a deferred tax charge of £9.6m, the after tax exceptional profit was £57.7m whilst Ashtead Technology's after tax trading profit for the period up to its disposal was £2.0m (2007: £1.6m for the whole of the quarter).
During the quarter, the Group repurchased 19.6m shares at a total cost of £13.1m, an average price per share of 67p.
Reflecting the beneficial impact of this and the repurchases last year, underlying earnings per share for the quarter grew faster than pre-tax profits at 34% to 4.8p whilst basic EPS, which includes the exceptional Technology disposal gain and intangible amortisation, was 15.9p (2007: 3.2p).
Capital expenditure in the quarter totalled £108.5m (2007: £124.2m) including £96.6m on the rental fleet. Disposal proceeds totalled £14.6m (2007: £23.8m) giving net expenditure of £93.9m (2007: £100.4m). The average age of the Group's rental fleet at 31 July 2008 was 31 months (2007: 29 months).
We continue to review capital expenditure levels based on the economic outlook and our own experiences on the ground. Accordingly, we continue to expect gross capital expenditure for this year of approximately £230m (2007/8: £331m) which will be predominantly replacement expenditure. After disposal proceeds, net capital expenditure of approximately £165m (2007/8: £253m) is expected for the full year.
Net debt at 31 July 2008 was £851.6m (30 April 2008: £963.2m), including £12.8m spent on share buy-backs during the quarter. The ratio of net debt to LTM underlying EBITDA (excluding Ashtead Technology) of £370.9m was 2.3 times at 31 July 2008 (30 April 2008: 2.5 times). Whilst the second quarter will see the usual seasonal increase in debt levels, with £111m of debt reduction delivered in the first quarter we are on track to achieve the full year debt reduction target announced in June. We therefore continue to target net debt at 30 April 2009 of $1,555m (£785m at 30 April 2008 exchange rates).
Availability under the $1.75bn asset based loan facility (including suppressed availability of $59m) was $861m at 31 July 2008 ($602m at 30 April 2008) providing very substantial assurance that the debt package will remain covenant free.
Return on investment
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 14.1% for the year ended 31 July 2008 (14.0% for the year ended 30 April 2008). RoI for Sunbelt was 14.7% whilst A-Plant's RoI was 10.5%.
Current trading and outlook
Utilisation of both Sunbelt and A-Plant's fleets remains high and one-third of the way through our seasonally busiest second quarter, both businesses continue to have substantially more fleet on rent than this time last year, albeit at a lower yield.
Despite the current economic uncertainty, our operating businesses continue to perform well and our financing costs continue to be lower than last year as we reduce debt. The Board anticipates the Group continuing to trade in line with its expectations for the remainder of the year.