Financial summary

¹ _{at constant exchange rates}
² _{before exceptionals, intangible amortisation and fair value remeasurements}
³ _{per billing day}

Highlights

• 11%³ growth in Sunbelt's Q3 rental revenue
• A-Plant returned to growth in Q3 with its rental revenues rising 2%³
• Nine month pre-tax profits of £28.3m, £20m ahead of last year
• Net debt £55m lower at £774m (April 2010: £829m) and leverage down to 2.8x (April 2010: 3.2x)
• Acquisition of Empire Scaffold completed in January in line with our strategy of extending Sunbelt's offering in attractive specialty markets

Ashtead’s Chief Executive, Geoff Drabble , commented:

"It was encouraging to see our improving year on year trends in revenue and profitability continue in the third quarter, our seasonally most difficult period. Our high levels of fleet on rent and our continued focus on yield and costs have produced strong results for the first nine months with profits now £20m ahead of last year.

Whilst we remain cautious about predicting short term recoveries in end construction markets, the momentum we have established in difficult conditions reinforces the Board's long held confidence in the medium term attractiveness of our rental markets.

Based on our third quarter performance which continued in February, it is now likely that the full year outcome will exceed our earlier expectations."

Contacts:

These results reflect continuing improvement in the US with Sunbelt's rental revenues growing 7% in the nine months to $811m (2010: $760m). Sunbelt's nine month rental revenue growth reflected 4% more fleet on rent compared to 2010 and a 2% increase in yield, year on year. Yield has now improved at an increasing rate throughout the fiscal year with growth of 5% year on year in the third quarter contributing to total Q3 rental revenue growth of 11%³. Supported by higher used equipment sales as we stepped up capital expenditure on fleet replacement, Sunbelt's total revenues grew by 10% in the nine months.

In the UK, A-Plant's nine month rental revenues were flat at £113m (2010: £114m) reflecting 3% more fleet on rent relative to the previous year and 3% lower yield. However, UK yields are now also on an improving trend with growth of 1% year on year in the third quarter and total Q3 growth in rental revenues of 2%³.

Operating costs, excluding the cost of used equipment sales, remain under tight control with headcount flat since year end and down 4% over the previous year despite the growth in fleet on rent. As a result, operating profit grew 42% to £81m for the nine months and pre-tax profits by £20m to £28m this year (2010: £8m).

After a non-cash charge of £6m relating to the remeasurement to fair value of the early prepayment option in our long-term debt and £1m of acquired intangible amortisation, the statutory profit before tax was £22m (2010: £4m). The effective tax rate on the underlying pre-tax profit was stable at 35% (2010: 35%) whilst underlying earnings per share grew four fold to 3.7p (2010: 0.6p).

Capital expenditure

As we begin the cyclical reinvestment in our rental fleets, capital expenditure in the nine months was £129m (2010: £35m) of which £113m was rental fleet replacement with the balance spent principally on vehicles and property improvements. Disposal proceeds were £40m (2010: £19m), giving net capital expenditure in the nine months of £89m (2010: £16m). The average age of the Group's rental fleet at 31 January 2011 was 45 months (2010: 41 months).

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

£57m (2010: £144m) of cash was generated from operations in the nine months after £105m of net payments for capital expenditure (2010: £15m) and £37m in interest payments. £25m of the cash generated was spent on the acquisition of Empire Scaffold, £10m was paid out to shareholders through the 2010 final dividend with the remaining £22m applied to reduce outstanding net debt.

Reflecting this and currency fluctuations which reduced debt by £39m, net debt at 31 January 2011 was £774m (30 April 2010: £829m). This quarter saw the ratio of net debt to EBITDA fall to 2.8 times at 31 January 2011 (30 April 2010: 3.2 times). Availability on the ABL senior debt facility at 31 January 2011 was $624m (30 April 2010: $537m) substantially above the $150m level at which the Group's entire debt package is effectively covenant free.

Current trading and outlook

Whilst we remain cautious about predicting short term recoveries in end construction markets, the momentum we have established in difficult conditions reinforces the Board's long held confidence in the medium term attractiveness of our rental markets.

Based on our third quarter performance which continued in February, it is now likely that the full year outcome will exceed our earlier expectations.

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 regulation, the directors undertake no obligation to update any forward looking statements whether as a result of new information, future events or otherwise.

Geoff Drabble and Ian Robson will hold a conference call for equity analysts at 9.30am on Tuesday 8 March. Dial in details for this call have already been distributed but any analyst not having received them should contact the Company's PR advisors, Maitland (Astrid Wright) on 020 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 3.00pm UK time (10.00am EST).