Unaudited results for the first quarter ended 31 July 2009

Financial summary

¹ _{See explanatory notes below}

Highlights

• Performance in line with market expectations
• Gaining market share in difficult construction markets
• £57m net cash inflow from operations in the quarter (2008: £36m)
• Net debt at 31 July of £873m (30 April 2009 - £1,036m)
• Net debt to EBITDA leverage of 2.6 times, comfortably within our target range

Ashtead’s Chief Executive, Geoff Drabble , commented:

"As anticipated market conditions remain difficult; however, the actions we have taken to cut costs and reduce fleet size have ensured that our margins have held up well. Our continuing focus on developing stronger customer relationships and maintaining an infrastructure to provide excellent customer service throughout the cycle has been rewarded with clear market share gains.

We expect that market conditions and trading levels will remain largely unchanged for the second quarter. Visibility for Q3 and Q4, our seasonally more challenging periods, is less clear both in terms of demand and the pricing environment. However, the Board continues to believe that the actions taken will deliver full year results and cash generation in line with its expectations.

We continue to believe that the fundamentals of our business model and the markets we serve remain attractive. Ashtead is well placed both in terms of its continuing operational momentum and its financial strength to benefit when markets recover."

Contacts:

Explanatory Notes

Underlying revenue, 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 of the full release pdf at the top of this page. The reconciliation of underlying earnings per share and underlying cash tax earnings per share to basic earnings per share is shown in note 7 of the full release pdf at the top of this page.

Geoff Drabble and Ian Robson will hold a conference call for equity analysts at 9.00am on Tuesday 8 September. Dial in details for this call have already been distributed but any analyst not having received them should contact Ashley Forget at Maitland on 020 7379 5151. The call will be webcast live via the the link at the top of this page and there will also be a replay available on this website shortly after the call concludes. There will, as usual, also be a separate call for bondholders at 3.30pm UK time (10.30am EST).

Trading results

First quarter results reflected the prevailing market conditions with rental revenues declining in Sunbelt by 29% to $268.1m and in A-Plant by 26% to £39.9m. Total revenue reductions were 32% in Sunbelt and 28% in A-Plant due to the greater reduction in sales of equipment, merchandise and consumables.

The volume of fleet on rent held up well as a result of market share gains. Average fleet on rent in the quarter reduced 12% year on year at Sunbelt and 17% at A-Plant. Pricing continued to be under pressure in both markets with yield declining 19% in Sunbelt and 10% in A-Plant compared to the same period in the prior year. Encouragingly, during the quarter we saw yield stabilising in both markets.

Our prompt action on cost reduction measures is reflected in the quarter's results with operating costs down 28% in Sunbelt and 23% in A-Plant. As a result, Group EBITDA margins remain above 30% and underlying operating profit margins above 10%. In sterling, including the translation benefit from the stronger dollar, this meant that a first quarter revenue reduction of £52m was held to declines of only about half that amount at the EBITDA, operating profit and pre-tax levels. Accordingly the underlying pre-tax profit for the quarter was £8.8m (2008: £35.9m).

Whilst we continue to take appropriate actions on cost control, we are balancing this with the ongoing needs of the business. We remain confident as to the fundamentals of our markets and therefore continue to focus on developing long-term relationships across a wide range of market sectors. Our success in market share gains is demonstrated by our relatively strong volumes of fleet on rent and rental revenues. These successes will provide the springboard for improving margins and revenues as markets recover.

The effective tax rate for the quarter was broadly stable at 35% (2008: 36%). Underlying earnings per share for the quarter decreased to 1.2p (2008: 4.8p) whilst basic earnings per share for the quarter were 1.1p (2008: 15.9p, including the 11.6p impact of June 2008's exceptional gain on disposal of Ashtead Technology).

Capital expenditure

Capital expenditure in the quarter was £15.2m (2008: £108.5m) including £12.2m on rental fleet replacement. Disposal proceeds were £6.0m, including £1.2m from the disposal of most of the remaining assets held for sale at year end, giving net capital expenditure in the first quarter of £9.2m (2008: £93.9m). We retain a significant ability to age our fleet and sustain our free cash flow at a time of lower earnings. This is a result of the relatively low average age of the Group's rental fleet which, at 31 July 2009, was 37 months (2008: 31 months).

This year's capital expenditure is again expected to be entirely for replacement rather than growth. We currently anticipate spending this year around £100m gross and £75m net of disposal proceeds. With short lead times and no forward commitments, we have the flexibility to adjust this as required to reflect market conditions.

Cash flow and net debt

£56.5m of net cash inflow was generated from operations in the quarter, up 58% on last year's £35.9m, all of which was applied to reduce outstanding debt. As a result, including the benefit of a translation gain of £108m, closing net debt at 31 July 2009 reduced to £873m (30 April 2009: £1,036m). The ratio of net debt to EBITDA was 2.6 times at 31 July 2009 well within our 2-3 times target range.

Our debt package remains well structured for the challenges of current market conditions. We retain substantial headroom on facilities which are committed for the long term, an average of 4.6 years at 31 July 2009, with the first maturity on our asset-based senior bank facility not being due until August 2011. Availability under the $1.7bn asset-based loan facility was $635m at 31 July 2009 ($550m at 30 April 2009) well above the $125m level at which the entire debt package is covenant free.

Current trading and outlook

We expect that market conditions and trading levels will remain largely unchanged for the second quarter. Visibility for Q3 and Q4, our seasonally more challenging periods, is less clear both in terms of demand and the pricing environment. However, the Board continues to believe that the actions taken will deliver full year results and cash generation in line with its expectations.

We continue to believe that the fundamentals of our business model and the markets we serve remain attractive. Ashtead is well placed both in terms of its continuing operational momentum and its financial strength to benefit when markets recover.