7 September, 2010
Unaudited results for the first quarter ended 31 July 2010
Read and download the unaudited results for the first quarter ended 31 July 2010 for the Ashtead Group. You can also view the latest webcast.
|2010||2009||Actual||At constant rates|
|Profit before taxation||11.9||8.8||+35%||+18%|
|Earnings per share||1.6p||1.2p||+34%||+19%|
|Profit before taxation||14.0||8.2||+70%||+56%|
|Earnings per share||1.8p||1.1p||+70%||+72%|
1 Before exceptionals, intangible amortisation and fair value remeasurements
- Encouraging improvement in year on year Group profit
- Return to profit growth in both divisions
- Capital expenditure of £51m (2009: £15m) in line with previous guidance
- Balance sheet remains strong and our debt well structured with long maturities, lower net debt of £806m (2009: £873m) and conservative leverage of 3.1 times EBITDA
Ashtead’s Chief Executive, Geoff Drabble , commented:
"We are pleased to announce good Group profit growth for the first quarter, reflecting an improvement in both divisions. Whilst end markets remain fragile, our strong performance in fleet on rent reflects the impact of the responsible correction in fleet sizes throughout the rental industry and increased outsourcing by customers, a trend we expect to continue.
Gross capital expenditure totalled £51m (2009: £15m) as we began the fleet reinvestment programme announced in June. Our investment remains flexible and directed towards replacement not growth as we focus on maintaining the momentum we have established in yield improvement in recent months.
We continue to believe in the fundamental strength of the underlying demand and opportunities in our end markets. The business is delivering strong margins and gaining market share which, together with its financial strength, means that the Board believes that Ashtead is particularly well placed to benefit as markets recover."
|Geoff Drabble||Chief executive||020 7726 9700|
|Ian Robson||Finance director||020 7726 9700|
|Brian Hudspith||Maitland||020 7379 5151|
|Sunbelt in $m||297.3||287.7||100.8||98.9||44.2||38.9|
|Sunbelt in £m||199.4||179.0||67.6||61.6||29.7||24.3|
|Group central costs||-||-||(1.5)||(1.4)||(1.5)||(1.5)|
|Net financing costs||(18.3)||(15.1)|
|Profit before tax, remeasurements and amortisation||11.9||8.8|
|Fair value remeasurements||2.5||-|
|Profit before taxation||14.0||8.2|
|Profit attributable to equity holders of the Company||9.1||5.4|
First quarter results reflect gradually improving conditions in the US with Sunbelt's rental revenues growing 1% to $271m (2009: $268m). Sunbelt's total revenue grew faster at 3% supported by higher used equipment sales as we stepped up fleet replacement.
Average US fleet on rent in the quarter grew 1% over Q1 last year. Yield was broadly flat year on year although sequentially the series of small monthly increments in both fleet on rent and yield since January 2010 we reported in June continued throughout the quarter.
In the UK, A-Plant's rental revenues declined 6% to £38m (2009: £40m). This reflected good growth of 3% in average fleet on rent with demand for A-Plant's quality service continuing to result in market share gains. UK yield declined 7% year on year principally due to the full year effect of price renegotiations last Autumn with its key accounts (which in aggregate constitute approximately 50% of its revenues).
Lower costs, reflecting the full year impact of measures we took in earlier quarters and a reduced depreciation charge on our smaller but well utilised fleet, helped deliver good operating profit growth despite the still weak end construction markets.
Underlying pre-tax profit for the quarter grew by 35% to £11.9m (2009: £8.8m) reflecting the operating profit growth and higher net financing costs which increased due to the full year impact of last November's senior debt refinancing.
After a credit of £2.5m relating to the remeasurement to fair value of the early prepayment option in our long-term debt and £0.4m of intangible amortisation, the statutory profit before tax was £14.0m (2009: £8.2m). The effective tax rate on the underlying pre-tax profit was again stable at 35% (2009: 35%). Underlying earnings per share grew 34% to 1.6p (2009: 1.2p) whilst basic earnings per share were 1.8p (2009: 1.1p).
For the year as a whole we continue to anticipate investing around £225m gross and £175m net of disposal proceeds, principally on fleet replacement and thereby holding fleet age broadly flat over the course of the fiscal year. For the quarter, capital expenditure was in line with this guidance at £51m (2009: £15m) gross and £41m (2009: £9m) net of disposal proceeds of £10m. As a result the average age of the Group's rental fleet at 31 July 2010 was 44 months, unchanged from year end.
Cash flow and net debt
Reflecting the £32m increase in net capital expenditure and a £20m increase in the value of receivables since April as quarterly revenues regained more usual seasonal patterns, £6m (2009: £57m) of net cash was generated in the quarter and applied to reduce outstanding debt. Reflecting this and currency fluctuations, net debt at 31 July 2010 was £806m (30 April 2010: £829m) whilst the ratio of net debt to EBITDA was 3.1 times at 31 July 2010, unchanged from year end.
Availability on the ABL senior debt facility at 31 July 2010 was $584m (30 April 2010: $537m) substantially above the $150m level at which the Group's entire debt package is covenant free.
Current trading and outlook
August saw both Sunbelt and A-Plant perform in line with expectations and continue the pattern established in the first quarter.
We continue to believe in the fundamental strength of our markets. The business is delivering strong margins and gaining market share which, together with its financial strength, means that the Board believes that Ashtead is well placed to benefit as markets recover.
Geoff Drabble and Ian Robson will hold a conference call for equity analysts at 9.30am on Tuesday 7 September. Dial in details for this call have already been distributed but any analyst not having received them should contact the Company's PR advisers, Maitland (Ashley Forget), on +44 (0)20 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 the same link from shortly after the call concludes. There will, as usual, also be a separate call for bondholders at 3.30pm UK time (10.30am EST).