4 September, 2013
Unaudited results for the first quarter ended 31 July 2013
Read and download the first quarter results for the Ashtead Group. You can also view the latest webcast
|Profit before taxation||99.5||61.1||59%|
|Earnings per share||12.4p||7.7p||57%|
|Profit before taxation||97.4||34.6||173%|
|Earnings per share||12.1p||4.5p||163%|
(see explanatory note below)
2 at constant exchange rates
3 before exceptionals, intangible amortisation and fair value remeasurements
- Record Q1 pre-tax profits1 of £99m, up 59% at constant exchange rates
- Sunbelt's rental revenue increases 25%
- Group EBITDA margins rise to 43% (2012: 40%)
- £279m of capital invested in the business (2012: £223m)
- Group RoI of 17% (2012: 13%)
- Senior debt facility increased to $2bn and maturity extended to August 2018 at lower cost
- Net debt to EBITDA leverage of 2.1 times (2012: 2.4 times)
Ashtead’s Chief Executive, Geoff Drabble , commented:
"The first quarter saw a continuation of the momentum established in the business, resulting in pre-tax profit of £99m. This performance is being driven by strong revenue growth and operational efficiency as demonstrated by the improvement in margins and return on investment.
Our focus remains on organic growth with £279m of capital expenditure in the first quarter. Whilst we continue to invest significantly in the business, our strong margins allow us to do this while delevering.
As a result of this impressive performance, and with a strong balance sheet to support future growth, we now anticipate a full year result ahead of our previous 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 hold a conference call for equity analysts at 9.30am on Wednesday, 4 September 2013. 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 4.00pm UK time (11.00am EST).
Prior year figures have been restated following the adoption of IAS 19 'Employee Benefits' (revised). Adoption of the revised standard has decreased the Group's reported operating profit and has increased net financing costs. The net effect is to reduce profit before taxation by £1.3m for the year ended 30 April 2013. See note 1 for further information.
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.
|Sunbelt in $m||526.3||432.1||243.0||183.6||160.7||114.4|
|Sunbelt in £m||343.9||275.3||158.7||117.0||104.9||72.9|
|Group central costs||-||-||(2.4)||(2.0)||(2.4)||(2.1)|
|Net financing costs||(10.9)||(12.7)|
|Profit before tax, exceptionals,remeasurements and amortisation||99.5||61.1|
|Fair value remeasurements||-||(7.4)|
|Profit before taxation||97.4||34.6|
|Profit attributable to equity holders of the Company||60.7||22.3|
Group revenue increased 26% to £411m in the quarter (2012: £325m) with strong growth in both businesses. This revenue growth, combined with ongoing operational efficiency and lower financing costs generated record underlying profit before tax of £99m (2012: £61m).
Sunbelt continues to drive the Group's performance. Rental revenue grew 25% to $479m (2012: $384m), driven by a 17% increase in average fleet on rent and 6% improvement in yield. Sunbelt's total revenue, including new and used equipment, merchandise and consumable sales, grew 22% to $526m (2012: $432m) as it sold less used equipment. A-Plant had a good quarter, delivering rental revenue growth of 35% to £61m (2012: £45m). Rental revenue growth excluding acquisitions was 12%, reflecting 9% more fleet on rent and a 3% improvement in yield.
Sunbelt's strong revenue growth, combined with continued operational efficiency resulted in a record first quarter EBITDA margin of 46% (2012: 43%) as 63% of revenue growth dropped-through to EBITDA. This contributed to an operating profit of $161m (2012: $114m). A-Plant's EBITDA margin improved to 31% (2012: 29%) and operating profit increased to £8m (2012: £3m).
As a result, statutory profit before tax was £97m (2012: £35m). The tax charge was 38% (2012: 37%) of the underlying pre-tax profit, reflecting the increasing proportion of US earnings which attract a higher tax rate. Underlying earnings per share increased 61% to 12.4p (2012: 7.7p), whilst basic earnings per share were 12.1p (2012: 4.5p).
Capital expenditure is under constant review based on market conditions. Reflecting our strong markets, first quarter expenditure was £279m gross and £257m net of disposal proceeds (2012: £223m gross and £199m net). As a result of this investment, the Group's rental fleet at 31 July 2013 at cost was £2.5bn, with an average age of 29 months (2012: 33 months).
Sunbelt's fleet size at 31 July was $3.1bn (2012: $2.7bn). This larger fleet supported strong fleet on rent growth of 17% year on year. Average first quarter physical utilisation was 73% (2012: 70%) as the higher levels achieved during the second half of 2012/13 continued in the first quarter.
For the year as a whole we will continue to respond to market conditions and currently, our expectation for gross capital expenditure is unchanged from the year end at £560m and net capital expenditure, after disposal proceeds, of £470m.
Return on Investment 1
Sunbelt's pre-tax return on investment (excluding goodwill) in the 12 months to 31 July 2013 continued to improve to 25.3% (2012: 21.1%), well ahead of the Group's pre-tax weighted average cost of capital. In the UK, return on investment (excluding goodwill) improved to 6.8% (2012: 3.4%). For the Group as a whole, returns (including goodwill) are 17.0% (2012: 13.2%).
Cash flow and net debt
As expected, debt increased during the quarter as we invested in the fleet, made a number of small bolt-on acquisitions and experienced the usual seasonal increase in working capital. Net debt at 31 July 2013 was £1,187m (2012: £988m), whilst the ratio of net debt to EBITDA was 2.1 times (2012: 2.4 times) on a reported basis and 2.0 times (2012: 2.4 times) on a constant currency basis.
The Group took advantage of good debt markets in August and increased the size of its senior credit facility to $2bn. The facility's maturity has been extended to August 2018 and the pricing grid reduced. Depending on leverage, the pricing grid ranges from LIBOR plus 175bp to LIBOR plus 225bp. This ensures our debt package remains well structured and flexible, enabling us to take advantage of prevailing end market conditions. The Group's amended debt facilities are now committed for an average of 6 years. At 31 July 2013, ABL availability under the enlarged facility was $657m, with an additional $246m of suppressed availability - substantially above the $200m level at which the Group's entire debt package is covenant free.
Current trading and outlook
Our strong performance continued in August. As a result of this impressive performance, and with a strong balance sheet to support future growth, we now anticipate a full year result ahead of our previous expectations.
1 Operating profit divided by the sum of net tangibleand intangible fixed assets, plus net working capital but excluding net debt, deferred tax and fair value remeasurements.