6 March, 2012

Unaudited results for the nine months and third quarter ended 31 January 2012

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

Financial summary

Third quarterNine months
Underlying results2      
Operating profit33.714.9+118%143.380.6+84%
Profit/(loss) before taxation20.6(1.7)n/a105.028.3+286%
Earnings per share2.7p(0.2p)n/a13.3p3.7p+285%
Statutory results      
Profit before taxation20.0(2.0)n/a102.921.6+396%
Earnings per share2.6p(0.2p)n/a13.0p2.8p+396%

1 at constant exchange rates
before amortisation of acquired intangibles and fair value remeasurements


  • Record third quarter pre-tax profit of £21m (2011: £2m loss)
  • Group nine month EBITDA margin rises to 35% (2011: 31%) with Sunbelt at 37% (2011: 33%)
  • Net debt to EBITDA leverage1 further reduced to 2.5 times (2011: 2.8 times)
  • Full year profit anticipated to be significantly ahead of our earlier expectations

Ashtead’s Chief Executive, Geoff Drabble , commented:

"Once again, we are pleased to report a strong set of results. Our record third quarter pre-tax profit of £21m (2011: £2m loss), whilst undoubtedly being helped by favourable weather conditions, is predominantly due to the continuation of the momentum we have established over recent quarters.

We continue to invest strongly in organic growth, with our rental fleet now being 11% larger and an average of five months younger than a year ago. However, with a continued focus on margin improvement, this investment has been accompanied by a reduction in net debt to EBITDA leverage to 2.5 times (2011: 2.8 times).

The Board remains committed to a strategy of strong organic growth and continues to believe that we are well positioned to take advantage of a continuation of current market trends. We therefore now anticipate a full year profit significantly ahead of our earlier expectations."



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

Nine months' results

 RevenueEBITDAOperating profit
Sunbelt in $m1,130.0903.7416.5298.0228.8128.4
Sunbelt in £m708.5584.5261.1192.7143.583.1
Group central costs  -  -(5.6)(5.5)(5.6)(5.6)
Continuing operations846.8705.7292.4220.5143.380.6
Net financing costs    (38.3)(52.3)
Profit before tax, remeasurementsand amortisation105.028.3
Fair value remeasurements  -(5.7)
Amortisation    (2.1)(1.0)
Profit before taxation    102.921.6
Taxation    (37.9)(7.6)
Profit attributable to equity holders of the Company65.014.0
Sunbelt  36.9%33.0%20.2%14.2%
A-Plant  26.7%27.5%3.9%2.6%
Group  34.5%31.2%16.9%11.4%

These results reflect continued improvement in the US with Sunbelt's rental revenue growing 25% to $1,012m (2011: $811m). This comprised a 13% increase in average fleet on rent, 7% higher yield and a first-time contribution from Empire Scaffold. In the UK, A-Plant's rental revenue grew by 11% to £125m (2011: £113m) including 1% growth in average fleet on rent and 6% yield improvement.

Total revenue growth for the Group of 23% at constant rates (20% at actual rates) also included higher used equipment sales revenue of £54m (2011: £37m) as we increased capital expenditure and hence sold more used equipment.

Costs remained under close control with the reported growth in staff costs being due principally to the first-time inclusion of Empire following its acquisition in January 2011. Sunbelt's 'drop-through' again remained high with EBITDA increasing by $118m or 69% of the net $171m increase in rental revenue as adjusted to exclude the $30m first-time impact of Empire's largely pass-through erection and dismantling labour recovery billings. This high 'drop-through' demonstrates the significant operational gearing in the business and meant that Sunbelt's operating profit rose to $229m (2011: $128m). In a tough market, A-Plant also delivered an improved performance with its operating profits growing to £5m (2011: £3m).

Underlying Group pre-tax profit grew to £105m, 3.7 times greater than 2011's £28m. This reflected the operating profit growth at Sunbelt and A-Plant coupled with lower net financing costs of £38m (2011: £52m), mainly as a result of the debt refinancing undertaken in the fourth quarter of 2010/11.

After £2m of intangible amortisation, the statutory profit before tax was £103m (2011: £22m). Underlying earnings per share grew to 13.3p, 3.6 times greater than 2011's 3.7p and reflected an effective tax rate on the underlying pre-tax profit of 37% (2011: 35%)

Capital expenditure

We continue to invest heavily to support our growth. Capital expenditure for the nine months was £336m gross and £276m net of disposal proceeds (2011: £129m gross and £89m net). As a result the average age of the Group's rental fleet at 31 January 2012 was 40 months (2011: 45 months). Sunbelt's fleet size at 31 January of $2.3bn was 10% larger than a year earlier whilst average nine month physical utilisation grew to 72% (2011: 69%) as we continued to put the newly purchased equipment successfully out on rent.

For the fiscal year, we now anticipate spending around £425m or roughly double depreciation on a gross basis whilst, after disposal proceeds, net payments for capital expenditure are expected to be around £325m.

Our preliminary capital expenditure plan for next year is for gross additions of around £500m and net payments after disposal proceeds of approximately £400m. 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) in the 12 months to 31 January 2012 rose to 12.9% (2011: 8.1%). In the UK, return on investment remains weak at 2.1% (2011: 1.5%). For the Group as a whole, pre-tax return on investment of 10.9% (2011: 6.7%) now clearly exceeds our roughly 9% weighted-average pre-tax cost of capital.

Cash flow and net debt

Net debt increased in the nine months to £911m at 31 January 2012 (30 April 2011: £776m) reflecting the translation increase from the stronger dollar we have seen all year (£46m as at end Q3) as well as the capital investment made to grow and renew the fleet. Despite the higher net debt, our stronger earnings meant that net debt to EBITDA leverage reduced to 2.5 times (2011: 2.8 times) and has therefore now reached the midpoint of our 2-3x target leverage range.

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) whilst ABL availability was $574m - substantially above the $168m level at which the Group's entire debt package is covenant free.

Current trading and outlook

February saw both Sunbelt and A-Plant again deliver year-on-year revenue and profit growth continuing the pattern established in the first nine months of the year.

The Board remains committed to a strategy of strong organic growth and continues to believe that we are well positioned to take advantage of current market trends. We therefore now anticipate a full year profit significantly ahead of 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 9.30 am on Tuesday 6 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 3pm UK time (10am EST).