9 March, 2010
Unaudited results for the nine months and third quarter ended 31 January 2010
Read and download the unaudited results for the nine months and third quarter ended 31 January 2010. You can also view the latest webcast.
|Third quarter||Nine months|
|Underlying (Loss)/Profit before taxation1||(12.0)||11.0||8.1||87.6|
|(Loss)/Profit before taxation||(15.7)||(9.5)||2.9||30.0|
|Basic earnings per share||(1.9p)||(0.1p)||0.2p||15.7p|
1 See explanatory note below
- Nine months underlying profit before taxation of £8.1m in line with expectations (2009: £87.6m)
- EBITDA margins strong at 31% (2009: 34%)
- £144m of cash generated from operations in the nine months (2009: £72m), ahead of expectations
- Net debt reduced since April 2009 by £207m to £829m
Ashtead’s Chief Executive, Geoff Drabble , commented:
"Whilst market conditions have remained difficult throughout the period, our operational performance has been good relative to both our UK and US peers and we are clearly gaining market share. This outperformance, together with the preparatory actions we took a year ago to reduce costs and fleet size, has helped us to protect profitability and deliver continued strong cash generation. Our strong balance sheet will also enable us to ensure that we have the appropriate infrastructure and fleet mix in place when cyclical recovery begins.
We continue to believe in the fundamental strength of our markets. The business is delivering good margins and gaining market share, which, together with its financial strength, means that the Board believes that Ashtead is increasingly well placed to benefit when markets recover."
|Geoff Drabble||Chief executive||020 7726 9700|
|Ian Robson||Finance director||020 7726 9700|
|Brian Hudspith||Maitland||020 7379 5151|
1 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 within the full release available to download 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 within the full release available to download at the top of this page.
Geoff Drabble and Ian Robson will hold a conference call for equity analysts at 9.30am on Tuesday 9 March. 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 link at the top of this page 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 3.00pm UK time (10.00am EST).
Nine months results
|Sunbelt in $m||821.3||1,183.8||269.4||422.2||92.2||224.5|
|Sunbelt in £m||505.5||676.1||165.8||241.1||56.7||128.2|
|Group central costs||-||-||(4.0)||(4.1)||(4.1)||(4.1)|
|Net financing costs||(45.8)||(51.0)|
|Profit before tax, exceptionals and|
|amortisation from continuing operations||8.1||87.6|
|Exceptional items (net)||(2.2)||10.8|
|Total Group profit before taxation||3.9||99.0|
|Profit attributable to equity holders of the Company||0.8||79.7|
The nine months' results reflect the prevailing market conditions with rental revenues declining in Sunbelt by 28% to $759.6m and in A-Plant by 24% to £113.5m. There were encouraging signs, however, in the third quarter when rental revenues were down 22% in Sunbelt and 19% in A -Plant.
This improving third quarter trend was driven by comparatively strong fleet on rent, reflecting market share gains in both markets and improving yield comparators in the US as highlighted below:
|9 months||Q3||9 months||Q3|
|Fleet on rent||-11%||-8%||-13%||-6%|
The prompt action we took a year ago to reduce costs is reflected in the nine months results with operating costs before depreciation down 28% in Sunbelt and 22% in A-Plant. As a result, Group EBITDA margins remain above 30% and declined by only three percentage points from last year. After reduced net financing costs of £45.8m (2009: £51.0m), principally reflecting the lower average debt, the pre-tax profit before exceptionals and amortisation for the nine months was £8.1m (2009: £87.6m).
The current year effective tax rate for the nine months was stable at 35% (2009: 35%). In addition, there was an adjustment of £2.3m to prior year deferred tax.
Capital expenditure during the nine months was £35.1m (2009: £234.0m) of which £29.6m was rental fleet replacement. Disposal proceeds were £19.4m (2009: £72.0m), including £1.6m from the disposal of the remaining assets held for sale at year end, giving net capital expenditure during the nine months of £15.7m (2009: £162.0m). The average age of the Group's rental fleet at 31 January 2010 was 41 months (2009: 34 months).
Cash flow and net debt
£144.2m (2009: £72.0m) was generated from operations in the nine months, of which £8.3m was returned to equity shareholders by way of a dividend and £135.3m applied to reduce outstanding debt. Including the benefit of a translation gain of £77.9m, closing net debt at 31 January 2010 reduced to £828.6m (30 April 2009: £1,035.9m).
This substantial cash flow has helped to keep the ratio of net debt to EBITDA at 31 January 2010 to 3.2 times. This level is just outside our 2-3 times target range and results from the decline in EBITDA at what we believe to be the bottom or near bottom of our cycle. We anticipate that continuing debt pay down and cyclical recovery will in due course rapidly restore the ratio, at constant exchange rates, to well within the target range.
Our debt package remains well structured for the challenges of current market conditions. Our debt facilities are committed for the long term, with an average of 5.2 years at 31 January 2010. Based on August 2009 asset values, which were 27% below Spring 2007 peak values, availability at 31 January 2010 was $481m and therefore remains well above $150m, the level at which the entire debt package is covenant free.
Current trading and outlook
We maintain the view that market conditions will remain difficult throughout much of 2010 due to low activity levels in our key construction markets.
However, a range of lead indicators support the view that we are currently at or very near the bottom of the cycle in the US. We also expect that the effect of US stimulus related work and a recovering residential construction market will be of increasing benefit from the second half of calendar 2010 until sustained general recovery in the US economy brings an improvement in commercial construction, most likely towards the end of our 2010/11 fiscal year. Whilst we expect the UK recovery to lag that in the US, we nevertheless anticipate A-Plant continuing to gain market share.
We continue to believe in the fundamental strength of our markets. The business is delivering good margins and gaining market share, which, together with its financial strength, means that the Board believes that Ashtead is increasingly well placed to benefit when markets recover.