10 December, 2014
Unaudited results for the half year and second quarter ended 31 October 2014
Read and download the unaudited results for the half year and second quarter ended 31 October 2014 for the Ashtead Group. You can also view the latest webcast
|Second quarter||First half|
|Profit before taxation||145.1||112.8||33%||265.5||212.3||33%|
|Earnings per share||18.6p||14.3p||35%||33.9p||26.7p||35%|
|Profit before taxation||141.7||110.4||33%||259.2||207.8||33%|
|Earnings per share||18.1p||14.0p||34%||33.0p||26.1p||35%|
1 at constant exchange rates
2 before intangible amortisation
- Group rental revenue up 24%1
- Record first half pre-tax profit2 of £266m, up 33% at constant exchange rates
- Group EBITDA margin improves to 46% (2013: 43%)
- £588m of capital invested in the business (2013: £451m) and full year guidance increased
- Group RoI of 19% (2013: 18%)
- Net debt to EBITDA leverage1 of 2.0 times (2013: 2.1 times)
- Interim dividend raised 33% to 3.0p per share (2013: 2.25p)
Ashtead’s Chief Executive, Geoff Drabble , commented:
"The Group delivered another strong quarter with record underlying pre-tax profits of £266m, up 33% on the prior year. It was particularly pleasing to see a strong contribution from both Sunbelt and A-Plant.
We continue to execute on our strategy, focused on organic growth supplemented by bolt-on acquisitions. We invested £588m in capital expenditure and a further £107m on bolt-on acquisitions in the period. Given the profitable growth opportunities evident in our markets, we are increasing our full year guidance for capital expenditure to a range of £925m to £975m.
Even with these significant levels of investment, we continue to grow responsibly, generating strong returns and maintaining leverage within our stated objectives.
With both divisions performing well, recovering end markets, and a proven track record of market share gains, 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|
020 7379 5151
Geoff Drabble and Suzanne Wood will hold a meeting for equity analysts to discuss the results and outlook at 9.30am on Wednesday, 10 December 2014 at The London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS. The meeting will be webcast live via the link at the top of this release and a replay will also be available from shortly after the meeting concludes. A copy of this announcement and the slide presentation used for the meeting will also be available for download via the link 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 analyst meeting and conference call for bondholders but any eligible person not having received dial-in details should contact the Company's PR advisers, Maitland (Astrid Wright) at +44 (0)20 7379 5151.
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.
First half results
|Sunbelt in $m||1,367.9||1,107.5||666.5||514.8||449.3||344.8|
|Sunbelt in £m||821.7||711.5||400.4||330.8||269.9||221.5|
|Group central costs||-||-||(5.0)||(4.8)||(5.0)||(4.8)|
|Net financing costs||(29.1)||(21.8)|
|Profit before tax, and amortisation||265.5||212.3|
|Profit before taxation||259.2||207.8|
|Profit attributable to equity holders of the Company||165.6||130.7|
Group revenue increased 16% to £987m in the first half (2013: £850m) with strong growth in both businesses. This revenue growth, combined with ongoing operational efficiency, generated record underlying profit before tax of £266m (2013: £212m).
The Group's growth is driven by strong same-store growth supplemented by greenfield openings and bolt-on acquisitions. Over the last 18 months we have added 105 locations in the US across a range of market sectors with different characteristics. These factors do impact a number of Sunbelt's metrics in the short term and to aid the understanding of our performance, we have analysed our year on year revenue growth as follows:
|2013 rental only revenue||774|
|Same stores (in existence at 1 May 2013)||17%||133|
|Bolt-ons and greenfields since 1 May 2013||8%||64|
|2014 rental only revenue||25%||971|
|2014 rental revenue||25%||1,247|
|2014 total revenue||1,368|
We continue to capitalise on the opportunity presented by our markets which are up circa 7% year on year. Our same-store growth of 17% demonstrates that we continue to take further market share. In addition, bolt-ons and greenfields have contributed another 8% growth as we execute our long-term structural growth strategy of expanding our geographic footprint and our specialty businesses.
Total rental only revenue growth of 25% can be broken down to a 23% increase in fleet on rent and a net 2% improvement in yield. The improved yield reflects the combination of good rate growth, the drag of greenfield and bolt-on activity as we capitalise on market opportunities and the impact of mix which we highlighted in quarter one. Average first half physical utilisation was 73% (2013: 73%).
A-Plant continues to perform well in improving markets and delivered total rental revenue of £147m, up 18% on the prior year (2013: £124m). This reflects 11% more fleet on rent and a 6% improvement in yield. Yield has benefitted from an improved pricing environment and the diversification of the product line.
Sunbelt's strong revenue growth resulted in a record first half EBITDA margin of 49% (2013: 46%) as 59% of revenue growth dropped through to EBITDA. Drop through reflects the impact of greenfield openings and acquisitions. Stores open for more than one year saw 67% of revenue growth drop through to EBITDA. This contributed to an operating profit of $449m (2013: $345m). A-Plant's EBITDA margin improved to 36% (2013: 31%) and operating profit rose to £30m (2013: £17m), with a drop through of 62%. As a result, Group operating profit increased 26% to £295m (2013: £234m).
Net financing costs increased to £29m (2013: £22m), reflecting the higher average debt during the period, the additional $400m of senior secured notes issued last December and the $500m senior secured notes issued in September.
Group profit before amortisation of intangibles and taxation was £266m (2013: £212m). After a tax charge of 36% (2013: 37%) of the underlying pre-tax profit, underlying earnings per share increased 27% to 33.9p (2013: 26.7p). The cash tax charge increased to 15% following the utilisation of brought forward tax losses during the year.
Statutory profit before tax was £259m (2013: £208m) and basic earnings per share were 33.0p (2013: 26.1p).
Capital expenditure and acquisitions
Capital expenditure for the first half of the year was £588m gross and £538m net of disposal proceeds (2013: £451m gross and £401m net). As a result of this investment, the Group's rental fleet at 31 October 2014 at cost was £3.2bn, up 27% on the prior year. Our average fleet age is now 26 months (2013: 29 months).
We spent £107m (2013: £61m) on ten bolt-on acquisitions during the period as we continue to both expand our footprint and diversify into specialty markets. Following the quarter end, we took our first step into Canada with the acquisition of GWG Rentals, a general tool business based in western Canada, for £16m.
With the strong demand in both our end markets and an ongoing greenfield opening programme, we are increasing our full year capital expenditure guidance to support these activity levels. Full year capital guidance is now in the range of £925m to £975m which reflects both the increased activity but also the impact of weaker sterling.
Return on Investment 1
Sunbelt's pre-tax return on investment (excluding goodwill and intangible assets) in the 12 months to 31 October 2014 was 26% (2013: 26%), well ahead of the Group's pre-tax weighted average cost of capital. In the UK, return on investment (excluding goodwill and intangible assets) improved to 12% (2013: 9%). For the Group as a whole, returns (including goodwill and intangible assets) are 19% (2013: 18%).
1 Underlying operating profit divided by the sum of net tangible and intangible fixed assets, plus net working capital but excluding net debt and deferred tax.
Cash flow and net debt
As expected, debt increased during the first half as we invested in the fleet, made a number of bolt-on acquisitions and experienced the usual seasonal increase in working capital.
Net debt at 31 October 2014 was £1,571m (2013: £1,230m) while, reflecting our strong earnings growth, the ratio of net debt to EBITDA reduced to 2.0 times (2013: 2.1 times) on a constant currency basis.
The Group's debt package remains well structured and flexible, enabling us to take advantage of prevailing end market conditions. Following the issue of the new $500m 5.625% senior secured notes due in 2024, the Group's debt facilities are committed for an average of six years. At 31 October 2014, ABL availability was $830m, with an additional $1,420m of suppressed availability - substantially above the $200m level at which the Group's entire debt package is covenant free.
In line with its policy of providing a progressive dividend, having regard to both underlying profit and cash generation and to sustainability through the economic cycle, the Board has increased the interim dividend 33% to 3.0p per share (2013: 2.25p per share). This will be paid on 4 February 2015 to shareholders on record on 16 January 2015.
Current trading and outlook
Our strong performance continued in November. With both divisions performing well and the benefit of weaker sterling, we now anticipate a full year result ahead of our previous expectations.
Directors' responsibility statement
We confirm that to the best of our knowledge:
- the condensed consolidated interim financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting'; and
- the interim management report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year) and Disclosure and Transparency Rule 4.2.8R (disclosure of related parties' transactions and changes therein).
By order of the Board of Directors
9 December 2014