21 June, 2012
Audited results for the year and unaudited results for the fourth quarter ended 30 April 2012
Read and download the fourth quarter results for the Ashtead Group. You can also view the latest webcast.
|Profit before taxation||25.6||2.7||+736%||130.6||31.0||+332%|
|Earnings per share||4.0p||0.4p||+820%||17.3p||4.0p||+344%|
|Profit/(loss) before taxation||31.9||(19.9)||n/a||134.8||1.7||-|
|Earnings per share||4.7p||(2.6p)||n/a||17.8p||0.2p||-|
1 at constant exchange rates
2 before amortisation of acquired intangibles and fair value remeasurements
- Record Group pre-tax profit2 for the year of £131m (2011: £31m)
- Group EBITDA margins of 34% (2011: 30%)
- £476m of capital invested in the business
- Group RoI, including goodwill, grew to 12% (2011: 7%)
- Net debt to EBITDA leverage reduced to 2.2 times (2011: 2.7 times)
- Proposed final dividend of 2.5p making 3.5p for the year (2011: 3.0p)
Ashtead’s Chief Executive, Geoff Drabble , commented:
"We are delighted to report record Group profits, encouragingly delivered against a backdrop of end construction markets remaining at historically low levels.
This performance demonstrates the success of our largely organic investment strategy and our ability to generate significant revenue growth from market share gains and translate this into stronger margins through improved operational efficiency.
The momentum we have established, and the flexibility provided by our strong balance sheet, allows us to anticipate further growth with or without end market recovery. As a result, it is likely that our profits in the coming year will be ahead of our previous expectations."
|Geoff Drabble||Chief executive||020 7726 9700|
|Ian Robson||Finance director||020 7726 9700|
|Brian Hudspith||Maitland||020 7379 5151|
Geoff Drabble, Ian Robson and Suzanne Wood will host a meeting for equity analysts to discuss the results at 9.30 am on Thursday 21 June at the offices of Jefferies Hoare Govett at Vintners Place, 68 Upper Thames Street, London, EC4V 3BJ. This meeting will be webcast live via the link at the top of this release 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 is available for download at the top of this release. The usual conference call for bondholders will begin at 3pm (10am 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.
|Sunbelt in $m||1,506.6||1,224.7||540.8||388.2||289.9||162.1|
|Sunbelt in £m||945.7||782.7||339.4||248.1||181.9||103.6|
|Group central costs||-||-||(7.8)||(7.4)||(7.9)||(7.5)|
|Net financing costs||(50.7)||(67.8)|
|Profit before tax, remeasurementsand amortisation||130.6||31.0|
|Fair value remeasurements||7.3||(5.7)|
|Profit before taxation||134.8||1.7|
|Profit attributable to equity holders of the Company||88.5||0.9|
Group revenue improved by 20% to £1,135m (2011: £949m) reflecting strong growth in fleet on rent and yield in the US. This revenue growth, continued cost control, lower net financing costs and the business improvement programmes initiated over the last three years combined to generate record underlying pre-tax profits of £131m (2011: £31m). Exchange rate fluctuations did not have a significant effect on year on year comparisons.
Rental revenue grew 23% in Sunbelt to $1,335m (2011: $1,084m) including a 13% increase in average fleet on rent and 7% growth in yield. Combined with new and used equipment, merchandise and consumable sales, Sunbelt's total revenue also grew 23% to $1,507m (2011: $1,225m). A-Plant's rental revenue growth was 9% to £168m (2011: £154m). Fleet on rent grew 1% with yield increasing by 6%.
The strong performance seen all year at Sunbelt continued in the fourth quarter when Sunbelt's rental revenue grew 19% including 13% growth in fleet on rent and 6% yield improvement. A-Plant's Q4 rental revenue growth was 5% reflecting 3% yield improvement and a 1% increase in fleet on rent.
Operational efficiency enabled Sunbelt to deliver high 'drop-through' with its EBITDA increasing by $153m or 69% of the net $222m increase in rental revenue, as adjusted to exclude the $29m first-time impact of Empire's largely pass-through erection and dismantling labour recovery billings. This high 'drop-through' shows our significant operational gearing and meant that Sunbelt's operating profit rose to $290m (2011: $162m). In a tough market, A-Plant also delivered an improved performance with operating profit of £7m (2011: £3m).
The strong 'drop-through' meant that Sunbelt's EBITDA margin grew 4% to 36% whilst A-Plant's EBITDA margin held steady at 26% despite a near doubling in its inherently lower margin non-rental revenue to £21m. For the Group as a whole, the full year EBITDA margin was 34% (2011: 30%).
Reflecting these operating results, Group EBITDA grew 34% to £381m (2011: £284m). Depreciation expense increased 8% to £200m reflecting the larger average fleet size whilst Group operating profit grew 84% to £181m (2011: £99m). Net financing cost reduced by £17m to £51m (2011: £68m) due principally to the benefits of the debt refinancing undertaken in Spring 2011.
As a result, the underlying profit before tax for the Group increased to £131m (2011: £31m). The tax charge for the year was broadly stable at 34% (2011: 35%) of the underlying pre-tax profit with underlying earnings per share increasing more than four-fold to 17.3p (2011: 4.0p). After a non-cash credit of £7m relating to the remeasurement to fair value of the early prepayment option in our long-term debt and amortisation of acquired intangibles of £3m (2011: £2m), the reported profit before tax for the year was £135m (2011: £2m) whilst basic earnings per share was 17.8p (2011: 0.2p).
We invested heavily in the past year to support our growth and prepare for the future. Capital expenditure for the year was £476m (2011: £225m) of which £426m was rental fleet replacement with the balance spent on delivery vehicles, property improvements and computers. Disposal proceeds were £90m (2011: £65m), giving net capital expenditure in the year of £386m (2011: £160m). The average net book value weighted age of the Group's rental fleet at 30 April 2012 was 37 months (2011: 44 months).
Gross expenditure exceeded the £425m guidance provided in March because we elected to bring forward into April deliveries originally scheduled for May. As a result, our capital expenditure guidance for 2012/13 is now lowered to reflect those early deliveries with our current plan being for gross additions of around £450m. The early deliveries do not impact the timing of when the expenditure will be paid for and accordingly we still expect net payments for capex of approximately £400m after disposal proceeds of approximately £100m. This level of expenditure is consistent with our strategy at this stage in the cycle of investing in organic growth, whilst both de-ageing our fleet and continuing to reduce our leverage.
Return on Investment
Sunbelt's pre-tax return on investment (operating profit to the sum of net tangible assets, goodwill and other intangibles) rose to 14.0% (2011: 8.6%). In the UK, return on investment remained weak at 2.9% (2011: 1.1%). For the Group as a whole, pre-tax return on investment of 12.0% (2011: 7.0%) is already significantly ahead of our pre-tax cost of capital.
Cash flow and net debt
Despite investing more than twice depreciation in our fleet, we were pleased to have achieved our objective of largely funding our organic growth from cash flow with only a net £13m free cash outflow (cash from operations less net capex, interest and tax) in the year (2011: £54m inflow). In addition £22m was spent on acquisitions (Topp - £21m & Empire deferred consideration - £1m) whilst dividends paid totalled £15m.
Reflecting our strong earnings growth, net debt to EBITDA leverage reduced to 2.2 times (2011: 2.7 times) whilst, including a £21m translation increase, year-end net debt was £854m (2011: £776m).
The Group's two debt facilities remain committed until 2016 (March 2016 for the senior bank facility and August 2016 for the $550m senior secured notes). In light of the Group's strong growth, the committed senior bank facility was recently increased in size from $1.4bn to $1.8bn with no changes to its pricing or other terms. At 30 April 2012, ABL availability under the enlarged facility was $735m - substantially above the level at which the Group's entire debt package is covenant free.
In accordance with our progressive dividend policy, with consideration to both profitability and cash generation at a level that is sustainable across the cycle, the Board is recommending a final dividend of 2.5p per share (2011: 2.07p) making 3.5p for the year (2011: 3.0p).
Payment of the 2011/12 dividend will cost £17.5m in total and is covered five times by underlying earnings. If approved at the forthcoming Annual General Meeting, the final dividend will be paid on 7 September 2012 to shareholders on the register on 17 August 2012.
Current trading and outlook
The good growth of the past year has carried forward into May with encouraging levels of fleet on rent and yield improvement. For the month, rental revenue grew by 15% in Sunbelt and by 5% in A-Plant.
The momentum we have established, and the flexibility provided by our strong balance sheet, allows us to anticipate further growth with or without end market recovery. As a result, it is likely that our profits in the coming year will be ahead of our previous 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.
Directors' responsibility statement on the annual report
The responsibility statement below has been prepared in connection with the Company's Annual Report & Accounts for the year ended 30 April 2012. Certain parts thereof are not included in this announcement.
"The Board confirms to the best of its knowledge (a) the consolidated financial statements, prepared in accordance with IFRS as issued by the International Accounting Standards Board and IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and (b) the Directors' Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.
By order of the Board
20 June 2012