20 June, 2013
Audited results for the year and unaudited results for the fourth quarter ended 30 April 2013
Read and download the fourth quarter results for the Ashtead Group. You can also view the latest webcast
|Profit before taxation||52.2||25.6||95%||246.7||130.6||87%|
|Earnings per share||7.0p||4.0p||71%||31.6p||17.3p||80%|
|Profit before taxation||50.3||31.9||52%||215.5||134.8||65%|
|Earnings per share||6.8p||4.7p||39%||27.7p||17.8p||54%|
2 before exceptionals, intangible amortisation and fair value remeasurements
- Momentum continued in Q4 with Sunbelt rental revenue up 23%
- Record Group pre-tax profit2 for the year of £247m (2012: £131m)
- Group EBITDA margins of 38% (2012: 34%)
- £580m of capital invested in the business
- Group RoI of 16% (2012: 12%)
- Net debt to EBITDA leverage reduced to 2.0 times (2012: 2.2 times)
- Proposed final dividend of 6.0p making 7.5p for the year (2012: 3.5p)
Ashtead’s Chief Executive, Geoff Drabble , commented:
"We are delighted to report another excellent set of results with key financial and non-financial metrics at record levels. Our largely organic investment strategy has again delivered strong revenue growth together with margin and return on investment improvement. We continue to make significant investment in the business with capital expenditure of £580m in the year and a similar level planned for the coming year. As a result of our strong margins, we are able to support this investment while at the same time continuing to delever.
With this momentum established in the business, cyclical recovery still to come and a strong balance sheet to support growth opportunities, we anticipate that our profits in the coming year will be ahead of our earlier expectations."
|Geoff Drabble||Chief executive||020 7726 9700|
|Suzanne Wood||Finance director||020 7726 9700|
|Brian Hudspith||Maitland||020 7379 5151|
Geoff Drabble and Suzanne Wood will host a meeting for equity analysts to discuss the results at 9.30am on Thursday 20 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 also 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||1,819.9||1,506.6||741.4||540.8||452.5||289.9|
|Sunbelt in £m||1,155.8||945.7||470.9||339.4||287.4||181.9|
|Group central costs||-||-||(9.2)||(7.8)||(9.3)||(7.9)|
|Net financing costs||(43.6)||(50.7)|
|Profit before tax, exceptionals,remeasurements and amortisation||246.7||130.6|
|Fair value remeasurements||(7.4)||7.3|
|Profit before taxation||215.5||134.8|
|Profit attributable to equity holders of the Company||138.8||88.5|
The fourth quarter saw a continuation of the strong performance seen during the rest of the year. In Sunbelt, rental revenue increased 23% as a result of having 18% more fleet on rent and a 6% year on year improvement in yield. A-Plant also experienced strong revenue growth of 11% due to increased fleet on rent and broadly stable yields.
For the year, Group revenue increased 20% to £1,362m (2012: £1,135m), reflecting the continued strong momentum in the business. This revenue growth, combined with ongoing operational efficiency and lower financing costs generated record underlying profit before tax of £247m (2012: £131m). Exchange rate fluctuations did not have a significant effect on year on year comparisons.
Sunbelt continues to drive the Group's performance. Rental revenue grew 21% to $1,611m (2012: $1,335m) driven by a 13% increase in average fleet on rent and 7% improvement in yield. Sunbelt's total revenue, including new and used equipment, merchandise and consumable sales, also grew 21% to $1,820m (2012: $1,507m). In difficult market conditions A-Plant performed well and delivered rental revenue growth of 9%. This was due to 11% more fleet on rent, which was partially offset by a 2% yield decline.
Sunbelt's strong revenue growth, combined with continued focus on operational efficiency, resulted in a 67% drop-through to profit. As a result, it recorded a record EBITDA margin of 41%. Sunbelt's operating profit of $453m (2012: $290m) also represented a record which is particularly encouraging as we still have cyclical recovery to come. A-Plant's EBITDA margin improved to 28% (2012: 26%), resulting in a satisfying growth in operating profit to £12m (2012: £7m).
Exceptional financing costs of £18m (including cash costs of £13m) related to the redemption of our $550m 9.0% senior secured notes in July 2012. There is also a non-cash charge of £7m relating to the remeasurement to fair value of the early repayment options in our long term debt. This charge follows the recognition of a £7m credit related to the $550m senior secured notes in Q4 last year which reflected our ability to issue similar debt at a lower interest rate as we did in June.
As a result, statutory profit before tax was £216m (2012: £135m). The tax charge was 36% (2012: 34%) of the underlying pre-tax profit, reflecting the increasing proportion of US earnings which attract a higher tax rate. Underlying earnings per share increased 83% to 31.6p (2012: 17.3p), whilst basic earnings per share were 27.7p (2012: 17.8p).
Reflecting the strong market conditions, we pulled forward around $100m of capital expenditure into the fourth quarter. As a result, capital expenditure for the year was £580m (calculated at year-end exchange rates), of which £521m was rental fleet and the balance delivery vehicles, property improvements and IT. Disposal proceeds were £103m (2012: £90m), giving net capital expenditure of £477m (2012: £386m). At 30 April 2013 the Group's rental fleet at cost was £2.2bn with a reduced fleet age of 32 months (2012: 37 months). Sunbelt's fleet size at 30 April was $2.9bn.
Our preliminary capital expenditure plan for next year is for gross additions of around £560m, a similar level to this year. However, we expect a greater proportion of next year's spend will be directed to growth rather than replacement as we keep fleet age broadly stable rather than continuing to de-age. As always, our capital expenditure plans remain flexible depending on market conditions and we will adjust our plans appropriately during the course of the year. This level of expenditure is consistent with our strategy at this stage in the cycle of investing in organic growth, opening greenfield sites and continuing to reduce our leverage.
Return on Investment 1
Sunbelt's pre-tax return on investment (excluding goodwill) in the 12 months to 30 April 2013 continued to improve and reached 24.7% (2012: 19.5%), well ahead of the Group's pre-tax weighted average cost of capital. In the UK, return on investment (excluding goodwill) improved to 5.0% (2012: 3.2%). For the Group as a whole, returns including goodwill were 16.2% (2012: 12.0%).
Cash flow and net debt
As expected, our debt increased during the year as we spent to renew and grow the fleet and made a number of bolt-on acquisitions. Despite spending more than twice depreciation on our fleet, this organic growth was broadly self-funded from cash flow with a net free cash outflow of only £34m (cash from operations less net capex, interest and tax). In addition, £34m was spent on acquisitions, whilst dividends paid totalled £20m.
Reflecting our strong earnings growth, net debt to EBITDA leverage reduced to 2.0 times (2012: 2.2 times) whilst, including a £39m translation increase, year-end net debt was £1,014m (2012: £854m).
The Group's debt package remains well structured to enable us to take advantage of prevailing end market conditions. The Group's debt facilities are committed for an average of 5 years. At 30 April 2013, ABL availability was $667m, with an additional $262m of suppressed availability - substantially above the $216m level at which the Group's entire debt package is covenant free.
1 Operating profit divided by the sum of the net tangible and intangible fixed assets, plus net working capital but excluding net debt, deferred tax and fair value remeasurements.
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 6.0p per share (2012: 2.5p) making 7.5p for the year (2012: 3.5p). If approved at the forthcoming Annual General Meeting, the final dividend will be paid on 6 September 2013 to shareholders on the register on 16 August 2013.
Current trading and outlook
The strong momentum developed in the past year has continued in May. With this momentum established in the business, cyclical recovery still to come and a strong balance sheet to support growth opportunities, we anticipate that our profits in the coming year will be 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.
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 2013. Certain parts thereof are not included in this announcement.
"The Board confirms to the best of its knowledge:
- 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
- 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
19 June 2013"