9 December, 2010
Unaudited results for the half year and second quarter ended 31 October 2010
Read and download the half year and second quarter results for the Ashtead Group. You can also view the latest webcast.
|Second quarter||First half|
|Profit before taxation||18.1||11.3||+49%||30.0||20.1||+41%|
|Earnings per share||2.3p||1.0p||+92%||3.9p||2.2p||+61%|
|Profit before taxation||9.6||10.4||-14%||23.6||18.6||+20%|
|Earnings per share||1.2p||0.9p||+11%||3.1p||2.0p||+39%|
1 at constant exchange rates
2 before exceptionals, intangible amortisation and fair value remeasurements
3 per billing day
- Revenue growth accelerated in the second quarter driven by increased rental penetration, more fleet on rent and higher yields
- Strong operating profit growth of 25% in the first half and 32% in the second quarter
- First half capital expenditure increased to £96m (2009: £29m) in line with depreciation as we begin the cyclical reinvestment in our rental fleets
- Balance sheet remains strong and our debt well structured with long maturities, lower net debt of £777m (30 April 2010: £829m) and leverage of 2.9 times EBITDA
- Interim dividend raised to 0.93p per share (2009: 0.9p) consistent with the progressive dividend policy announced in June
Ashtead’s Chief Executive, Geoff Drabble , commented:
"In this, the second consecutive quarter in which we have delivered good profit2 growth, it was pleasing to see rental revenues accelerating with growth3 of 9% in the US. In the UK there were improving trends throughout the first half and, whilst the UK market remains difficult, this was also encouraging.
Clearly end markets remain fragile. However, increased reliance on rental by our customers particularly in the US, together with continuing market share gains, is supporting our performance, a trend we expect to continue.
As we enter the seasonally weaker winter period precise forecasting can be difficult. However, the momentum we have established during the year has continued into November and will, we expect, be sufficient to ensure a full year outcome ahead of our earlier expectations."
|Geoff Drabble||Chief executive||020 7726 9700|
|Ian Robson||Finance director||020 7726 9700|
|Brian Hudspith||Maitland||020 7379 5151|
First half results
|Sunbelt in $m||615.0||576.1||212.5||199.3||99.0||80.0|
|Sunbelt in £m||401.9||355.4||138.9||122.9||64.7||49.3|
|Group central costs||-||-||(3.1)||(2.7)||(3.2)||(2.7)|
|Net financing costs||(35.7)||(29.6)|
|Profit before tax, remeasurements and amortisation||30.0||20.1|
|Fair value remeasurements||(5.7)||-|
|Profit before taxation||23.6||18.6|
These results reflect gradually improving conditions in the US with Sunbelt's rental revenues growing 4% in the first half to $557m (2009: $534m). They were achieved despite a 14% decline in Sunbelt's core end market, US non-residential construction, in the same period as reported by the US Department of Commerce. Sunbelt's rental revenue growth reflected 4% more fleet on rent compared to 2009 and a 1% increase in yield, year on year. Yield improved throughout the period with growth of 3% year on year in the second quarter after a flat first quarter and is also up 8% sequentially since January's seasonal low. Supported by higher used equipment sales as we stepped up capital expenditure on fleet replacement, Sunbelt's total revenues grew by 7%.
In the UK, A-Plant's first half rental revenues declined 2% to £77m (2009: £79m) reflecting 3% more fleet on rent relative to the previous year and 5% lower yield. UK yield declines continue to moderate with a second quarter reduction of 2%.
Operating costs, excluding the cost of used equipment sales, remain under good control with headcount flat since year end and down 6% over the previous year despite the growth in fleet on rent. As a result, first half operating profit grew 32% to £66m. After interest, which rose by £6m broadly as estimated at the time of last November's senior debt maturity extension, underlying profit before tax rose 49% to £30m.
After a non-cash charge of £5.7m relating to the remeasurement to fair value of the early prepayment option in our long-term debt and £0.7m of acquired intangible amortisation, the statutory profit before tax was £24m (2009: £19m). The effective tax rate on the underlying pre-tax profit was stable at 35% (2009: 35%) whilst underlying earnings per share grew 75% to 3.9p (2009: 2.2p) and basic earnings per share were 3.1p (2009: 2.0p).
As we began the cyclical reinvestment in our rental fleets, capital expenditure in the first half was increased to £96m (2009: £29m) of which £84m was rental fleet replacement with the balance spent principally on vehicles and property improvements. Disposal proceeds were £24m (2009: £13m), giving net capital expenditure in the first half of £72m (2009: £16m). The average age of the Group's rental fleet at 31 October 2010 was 44 months (2009: 39 months), unchanged from year end.
In the year as a whole, we continue to anticipate spending around £225m gross and £175m net of disposal proceeds, principally on fleet replacement and thereby holding the average age of our rental fleets broadly flat over the course of the fiscal year.
Cash flow and net debt
£30m (2009: £97m) of net cash was generated in the first half reflecting £74m of net capital expenditure (2009: £15m) together with a £27m increase in the value of receivables since April as revenues regained more usual seasonal patterns. £10m of the cash generated was returned to equity shareholders through the payment in September of 2010's final dividend with the remaining £20m applied to reduce outstanding net debt.
Reflecting this and currency fluctuations which reduced debt by £37m, net debt at 31 October 2010 was £777m (30 April 2010: £829m). This quarter saw the ratio of net debt to EBITDA fall to 2.9 times at 31 October 2010 (30 April 2010: 3.2 times) bringing leverage back within our long held 2-3 times target range. Availability on the ABL senior debt facility at 31 October 2010 was $639m (30 April 2010: $537m) substantially above the $150m level at which the Group's entire debt package is effectively covenant free.
In line with the Board's aim of providing a progressive dividend having regard to both underlying profit and cash generation and to sustainability through the economic cycle, the Board has declared an interim dividend of 0.93p per share (2009: 0.9p per share). This will be paid on 9 February 2011 to shareholders on record on 21 January 2011.
Current trading and outlook
In this, the second consecutive quarter in which we have delivered good profit growth, it was pleasing to see rental revenues accelerating with growth of 9% in the US. In the UK there were improving trends throughout the first half and, whilst the UK market remains difficult, this was also encouraging.
Clearly end markets remain fragile. However, particularly in the US, increased reliance on rental by our customer base, together with continuing market share gains, is supporting our performance, a trend we expect to continue.
As we enter the seasonally weaker winter period precise forecasting can be difficult. However, the momentum we have established during the year has continued into November and will, we expect, be sufficient to ensure an outcome ahead of our earlier expectations.
Geoff Drabble and Ian Robson will host a meeting for equity analysts to discuss the results at 9.30am on Thursday 9 December at the offices of UBS at 1 Finsbury Avenue, London EC2M 2PP. This meeting will be webcast live via link above and a replay will be available from shortly after the call concludes. A copy of the announcement and slide presentation used for the meeting is available for download at the top of this release. There will, as usual, also be a separate call for bondholders at 3.00pm UK time (10.00am EST).
Analysts and bondholders have already been invited to participate in the meeting and conference call but anyone not having received dial in details should contact the Company's PR advisers, Maitland (Emma Stevens), on 020 7379 5151.