16 June, 2011

Audited results for the year and unaudited results for the fourth quarter ended 30 April 2011

Read and download the fourth quarter results for the Ashtead Group. You can also view the latest webcast.

Financial summary

Fourth quarterYear
Underlying results2      
Operating profit18.214.6+35%98.868.5+41%
Profit/(loss) before tax2.7(3.1)-31.05.0-
Earnings per share0.4p(0.4p)-4.0p0.2p-
Statutory results      
(Loss)/profit before tax(19.9)1.9-1.74.8-67%
Earnings per share3(2.6p)0.3p-0.2p0.2p-45%

1 at constant exchange rates
2 before exceptionals, intangible amortisation and fair value remeasurements
3 from continuing operations


  • Group pre-tax profits2 of £31m (2010: £5m)
  • Sunbelt's rental revenue up 10%; operating profit up 39% to $162m (2010: $117m)
  • A-Plant's rental revenue up 1% with operating profit of £2.7m (2010: £1.8m)
  • Capital expenditure increased to £225m (2010: £63m); £325m planned for 2011/12
  • Balance sheet remains strong and our debt well structured with five year average maturities, net debt of £776m (30 April 2010: £829m) and leverage of 2.7 times EBITDA (2010: 3.2 times)
  • Proposed final dividend of 2.07p making 3.0p for the year (2010: 2.9p)

Ashtead’s Chief Executive, Geoff Drabble , commented:

"We enjoyed an encouraging year where our focus on gaining market share and improving yields resulted in strong growth in Group profits.

The performance of Sunbelt in the US was particularly pleasing with good momentum established that has carried into the new financial year with sustainable improvements in both fleet on rent and yield. Against a backdrop of still challenging end construction markets we are clearly benefitting from both the structural change in the US rental market and self help from the programmes we initiated during the downturn. In the UK, performance also improved in the second half and we delivered year on year profit growth.

Looking forward we remain cautious over the outlook for end construction markets in the short term, particularly in the UK. However, we continue to benefit from the structural shift to rental, market share gains and the improvements we have established in all key areas of our business. Together with our balance sheet strength and strong market positions, this makes us confident of another year of good progress."


Geoff DrabbleChief executive020 7726 9700
Ian RobsonFinance director020 7726 9700
Brian HudspithMaitland020 7379 5151

Geoff Drabble and Ian Robson will host a meeting for equity analysts to discuss the results at 9.30 am on Thursday 16 June at the offices of RBS Hoare Govett at 250 Bishopsgate, London EC2M 4AA. This meeting will be webcast live via the link at the top of this page and a replay will be available from shortly after the call concludes. A copy of this announcement and the slide presentation used for the meeting are available to download from the links at the top of this release. A conference call for bondholders will begin at 4pm (11am 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 (Astrid Wright) at +44 (0)20 7379 5151.

Trading results

 Revenue EBITDA Operating profit 
Sunbelt in $m1,224.71,080.5388.2350.8162.1116.6
Sunbelt in £m782.7674.5248.1219.0103.672.7
Group central costs  -  -(7.4)(5.9)(7.5)(6.0)
Continuing operations948.5836.8283.8255.198.868.5
Net financing costs(67.8)(63.5)
Profit before tax, exceptionals, remeasurements and amortisation  31.05.0
Exceptional items (net)(21.9)(2.2)
Fair value remeasurements(5.7)5.5
Profit before taxation1.75.8
Profit attributable to equity holders of the Company0.92.1
Sunbelt  31.7%32.5%13.2%10.8%
A-Plant  26.0%25.9%1.6%1.1%
Group  29.9%30.5%10.4%8.2%

These results reflect a significant improvement in our business despite continued weakness in end construction markets. Group revenue improved by 13% (11% at constant exchange rates) to £949m (2010: £837m) reflecting strong growth in fleet on rent and yield in the US. This revenue growth, continued cost control and the business improvement programmes initiated over the last two years combined to generate underlying pre-tax profits of £31m for the year (2010: £5m).

Rental revenue grew 10% in Sunbelt to $1,084m (2010: $989m) reflecting a 5% increase in average fleet on rent, 3% growth in yield and a first-time contribution from Empire Scaffold which was acquired in January. Sunbelt's total revenue growth of 13% was enhanced by higher used equipment sales revenue as we began the cyclical reinvestment in our fleets and hence sold more used equipment. A-Plant's total revenue growth was 2% including 1% growth in rental revenue to £154m (2010: £152m). Its average fleet on rent grew 2% whilst yield declined by 1%.

Both Sunbelt and A-Plant demonstrated improving trends through the year which is reflected in fourth quarter performance. Sunbelt's Q4 rental revenue growth was 19% reflecting 6% growth in fleet on rent, 6% yield improvement and a first-time contribution from Empire. A-Plant's rental revenue growth in Q4 was 6% reflecting 4% yield growth and 2% growth in fleet on rent.

The improvement in our revenue and profit this year brought about some one-time cost increases as sales commission and staff incentives recovered from last year's depressed levels. Fuel costs also rose rapidly with the increasing oil price. However, tight cost control was maintained throughout the year which ensured that operating costs before depreciation and used equipment sold rose more slowly than rental revenue in both businesses. For the Group as a whole, operating costs (before depreciation and used equipment sold) rose by 7%, at constant exchange rates, to £610m.

Margins were impacted by significantly higher, but inherently lower margin, used equipment sales revenue this year of £61m (2010: £27m). Despite this, full year EBITDA margins were 32% in Sunbelt (28% at the low point of the last cycle in 2003) and 26% at A-Plant. For the Group as a whole the full year EBITDA margin was 30% (2010: 30%).

Depreciation expense declined 3% at constant rates to £185m reflecting the smaller average fleet size in the past fiscal year. This, and the factors discussed above, meant that the underlying operating profit for the year rose to $162m (2010: $117m) in Sunbelt and £3m in A-Plant (2010: £2m).

Reflecting these operating results, Group EBITDA before exceptional items grew by £29m or 9% at constant rates to £284m (2010: £255m) whilst the Group's underlying operating profit grew 41% at constant rates to £99m (2010: £68m).

Following the refinancing of our asset-based senior loan facility ('ABL facility') in November 2009, higher interest margins and an adverse translation effect from the stronger dollar meant there was an increase in the net financing cost for the year to £68m (2010: £63m) despite lower average debt levels. After interest, the underlying profit before tax for the Group increased to £31m (2010: £5m). The tax charge for the year was again stable at 35% of the underlying pre-tax profit with underlying earnings per share increasing to 4.0p (2010: 0.2p).


Exceptional items and statutory results

There were no exceptional charges relating to operations this year or last. Instead, as previously reported, the exceptional charges of £22m incurred this year were all attributable to financing matters and comprised a £15m non-cash write-off of the unamortised deferred financing costs on the debt facilities renewed or redeemed in the year (the ABL facility following its renewal in March 2011 and the $250m 8.625% senior secured notes redeemed in April 2011) and an early redemption fee of £7m on the notes.

After these exceptional finance charges, a non-cash charge of £6m relating to the remeasurement to fair value of the early prepayment option in our long-term debt and amortisation of acquired intangibles of £2m (2010: £2m), the reported profit before tax for the year was £2m (2010: £5m) whilst basic earnings per share was 0.2p (2010: 0.4p).


Capital expenditure

As we began the cyclical reinvestment in our rental fleets, capital expenditure rose to £225m (2010: £63m) of which £202m was rental fleet replacement with the balance spent on delivery vehicles, property improvements and computers. Disposal proceeds were £65m (2010: £32m), giving net capital expenditure in the year of £160m (2010: £31m). The average age of the Group's rental fleet at 30 April 2011 was unchanged over the year at 44 months (2010: 44 months).

Moving forward we expect capital expenditure of about 175% of depreciation or around £325m gross and £250m net next year. We anticipate that by investing at around this level we will be able to grow Sunbelt's average fleet size by between 1% and 3% depending on demand.


Cash flow and net debt

£54m (2010: £191m) of cash was generated from operations in the year after £143m of net payments for capital expenditure (2010: £12m) and £71m in interest and tax payments. £35m of the cash generated was spent on acquisitions and £15m was paid out to shareholders in dividends. The balance of £4m was applied to reduce outstanding net debt.

Reflecting this and currency fluctuations which reduced debt by £73m in the year, net debt at 30 April 2011 was £776m (2010: £829m). The ratio of net debt to EBITDA was 2.7 times at 30 April 2011 (2010: 3.2 times).

Our renewed debt package remains well structured to enable us to take advantage of the next phase in the cycle. We retain substantial headroom on facilities which are committed for the long term, an average of 5.1 years at 30 April 2011, with the first maturity being on our ABL facility which now extends until March 2016. Availability on the ABL facility at 30 April 2011 was $479m - significantly above the $168m level at which the Group's entire debt package is effectively covenant free whilst, as previously reported, the average interest margin next year is reduced relative to the facilities in place in the past year.



Reflecting our policy of setting dividend levels in light of both profitability and cash generation at a level that is sustainable across the cycle, the Board is recommending a final dividend of 2.07p per share (2010: 2.0p) making 3.0p for the year (2010: 2.9p).

Payment of the 2010/11 dividend will cost £14.9m in total and is covered 1.3 times by underlying earnings. Whilst this coverage ratio is still quite low, given the cyclicality of the Group's earnings, the Board is comfortable that the proposed dividend level is appropriate. If approved at the forthcoming Annual General Meeting, the final dividend will be paid on 9 September 2011 to shareholders on the register on 19 August 2011.


Current trading and outlook

The momentum we established throughout the past year has carried forward into May with encouraging levels of fleet on rent and yield growth. For the month, rental revenue grew by 21% in Sunbelt, measured in dollars, and by 11% in A-Plant.

Looking forward we remain cautious over the outlook for end construction markets in the short term, particularly in the UK. However, we continue to benefit from the structural shift to rental, market share gains and the improvements we have established in all key areas of our business. Together with our balance sheet strength and strong market positions, this makes us confident of another year of good progress.


Forward looking statements

This announcement contains forward looking statements. These have been made by the directors in good faith using information available up to the date on which they approved this report. The directors can give no assurance that these expectations will prove to be correct. Due to the inherent uncertainties, including both business and economic risk factors underlying such forward looking statements, actual results may differ materially from those expressed or implied by these forward looking statements. Except as required by law or egulation, the directors undertake no obligation to update any forward looking statements whether as a result of new information, future events or otherwise.