Nine months' results

Group revenue grew 23% in the quarter and 20% in the nine months, reflecting the continued strong momentum in the business.

The performance continues to be driven mainly by Sunbelt where rental revenue in the quarter grew 27%. The quarter was enhanced by the impact of Hurricane Sandy and we estimate that this event contributed around 5% ($15m) of the growth. The one-off benefit of this event will not carry forward into the fourth quarter as major restoration and remediation work is now largely complete. For the nine months, rental revenue grew 20% to $1,213m (2012: $1,012m) driven by an 11% increase in fleet on rent and a 7% increase in yield.

In the UK, A-Plant delivered another strong quarter. Rental revenue in the quarter grew 11%, giving 9% growth for the nine months to £136m (2012: £125m), driven by a 10% growth in average fleet on rent, offset by a 2% yield decline.

Sunbelt delivered a strong EBITDA margin of 42% (2012: 37%) in the nine months resulting from the high 'drop through' of rental revenue to profit as we continue to benefit from improved operational efficiency. As a result, EBITDA increased by 37% to $571m (2012: $416m) and operating profit by 56% to $358m (2012: $229m). A-Plant's operating profit increased to £9m (2012: £5m).

This strong operational performance, combined with a lower interest charge of £33m (2012: £38m) as a result of our successful refinancing of our senior secured notes earlier this year, resulted in underlying profit before tax increasing 85% to £194m (2012: £105m).

Exceptional financing costs of £18m (including cash costs of £13m) related to the redemption of our $550m 9.0% senior secured notes in the first quarter. The refinancing of these notes with the $500m 6.5% senior secured notes maturing in 2022 will generate an annual saving in our finance cost of circa £8m.

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 £165m (2012: £103m). The effective tax rate on the underlying pre-tax profit was 37% (2012: 37%). Underlying earnings per share grew 84% to 24.6p (2012: 13.3p), whilst basic earnings per share were 20.9p (2012: 13.0p).

Capital expenditure

The strong market conditions have given us confidence to invest ahead of our original plan. As a result, capital expenditure for the nine months was £427m gross and £349m net of disposal proceeds (2012: £336m gross and £276m net). At 31 January 2013 the Group's rental fleet at cost was £2.1bn with a reduced fleet age of 32 months (2012: 40 months). Sunbelt's fleet size at 31 January was $2.7bn. Utilisation continued to improve and was ahead of the prior year in the third quarter. Average nine month physical utilisation was 71% (2012: 72%).

For the full year, we now anticipate capital expenditure around £550m. This includes the pull forward of around $100m of fleet expenditure previously planned for fiscal 2014 into the fourth quarter of this year. After disposal proceeds, net payments for capital expenditure are expected to be around £450m.

Our preliminary capital expenditure plan for next year is for gross additions of around £525m, a similar level to this year. However, 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 currently, our principal focus is on fleet deliveries through the first quarter of fiscal 2014. 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

Sunbelt's pre-tax return on investment¹ in the 12 months to 31 January 2013 continued to improve to 17.8% (2012: 12.9%), well ahead of the Group's pre-tax weighted average cost of capital. In the UK, return on investment improved to 4.1% (2012: 2.1%). For the Group as a whole, returns are 15.3% (2012: 10.9%).

Cash flow and net debt

As expected, debt increased during the nine months. This resulted from the capital expenditure to grow and renew the fleet and increased working capital to support higher activity levels. Net debt at 31 January 2013 was £1,077m (2012: £911m) whilst the ratio of net debt to EBITDA fell to 2.2 times at constant exchange rates (2012: 2.5 times) as a result of our stronger earnings.

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 31 January 2013, ABL availability was $547m, with an additional $157m of suppressed availability - substantially above the $216m level at which the Group's entire debt package is covenant free.

Current trading and outlook

Our strong performance continued in February. With this momentum clearly established in the business we now anticipate a full year profit ahead of our earlier expectations.

To further support ongoing market opportunities, we plan to pull forward around $100m of fleet expenditure previously planned for fiscal 2014 into the fourth quarter of this year. This will have no impact on our stated intention to sustain leverage below two times.

With a broad range of metrics already at record levels at this stage in the cycle, together with a strong balance sheet to support medium term growth opportunities, the Board looks forward with confidence.

¹ _{Operating profit divided by the sum of the net tangible and intangible fixed assets, plus net working capital but excluding netdebt, deferred tax and fair value remeasurements.}