3 March, 2015

Unaudited results for the nine months and third quarter ended 31 January 2015

Read and download the unaudited results for the nine months and third quarter ended 31 January 2015 for the Ashtead Group. You can also view the latest webcast

Financial summary

 Third quarterNine months
Underlying results2      
Rental Revenue462.9354.225%1,358.51,119.624%
Operating profit132.892.536%427.4326.634%
Profit before taxation113.980.433%379.4292.733%
Earnings per share14.5p10.1p36%48.4p36.8p35%
Statutory results      
Profit before taxation109.977.933%369.1285.733%
Earnings per share14.1p9.7p35%47.1p35.8p35%

1   at constant exchange rates
2   before intangible amortisation


  • Group rental revenue up 24%1
  • Record nine month pre-tax profit2 of £379m, up 33% at constant exchange rates
  • Group EBITDA margin improves to 45% (2014: 43%)
  • £783m of capital invested in the business (2014: £564m)
  • Group RoI of 19% (2014: 18%)
  • Net debt to EBITDA leverage1 of 2.0 times (2014: 2.0 times) 

Ashtead’s Chief Executive, Geoff Drabble , commented:

"It is pleasing to report another strong quarter enabling the Group to deliver record underlying pre-tax profits of £379m, up 33% on the prior year. Strong contributions came from both Sunbelt and A-Plant, with rental revenue growth of 25% and 18%, respectively.

We continue to execute on our strategy, focused on organic growth supplemented by bolt-on acquisitions. We invested £783m in capital expenditure and £162m on bolt-on acquisitions in the period and expect full year capital expenditure to be at the top of, or slightly above, our previously announced 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.

We now anticipate a full year result ahead of our previous expectations and the Board looks forward to the medium term with continued confidence."


Geoff DrabbleChief executive020 7726 9700
Suzanne WoodFinance director020 7726 9700
Brian HudspithMaitland020 7379 5151

Geoff Drabble and Suzanne Wood will hold a conference call for equity analysts to discuss the results and outlook at 9.00am on Tuesday, 3 March 2015. The call will be webcast live via the link at the top of this release and a replay will also be available via the same link 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 analyst call 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.

Nine months' results

 RevenueEBITDAOperating profit
Sunbelt in $m2,047.51,658.1983.3755.2646.9494.2
Sunbelt in £m1,257.81,048.2604.1477.4397.4312.3
Group central costs  -  -(7.7)(7.1)(7.7)(7.1)
Net financing costs    (48.0)(33.9)
Profit before amortisation and tax379.4292.7
Amortisation    (10.3)(7.0)
Profit before taxation    369.1285.7
Taxation    (133.2)(106.2)
Profit attributable to equity holders of the Company235.9179.5
Sunbelt  48.0%45.5%31.6%29.8%
A-Plant  34.7%30.3%15.6%10.6%
Group  45.4%42.5%28.5%26.1%

Group revenue increased 20% to £1,500m in the nine months (2014: £1,250m) with strong growth in both businesses. This revenue growth, combined with ongoing operational efficiency, generated record underlying profit before tax of £379m (2014: £293m).

The Group's growth is driven by strong same-store growth supplemented by greenfield openings and bolt-on acquisitions. This growth in the US is across a range of market sectors with different characteristics, which is impacting a number of Sunbelt's metrics in the short term. To aid the understanding of our performance, we have analysed our year on year revenue growth as follows:

2014 rental only revenue 1,151
Same stores (in existence at 1 May 2013)17%193
Bolt-ons and greenfields since 1 May 20139%112
2015 rental only revenue26%1,456
Ancillary revenue22%406
2015 rental revenue25%1,862
Sales revenue 185
2015 total revenue 2,047

We continue to capitalise on the opportunity presented by our markets which were up circa 7% last year and are forecast to grow around 8% this year. Our same-store growth of 17% demonstrates that we continue to take market share as we grow at more than double the market rate. In addition, bolt-ons and greenfields have contributed another 9% 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 26% can be broken down to a 24% 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 the first half of the year. Average nine month physical utilisation was 72% (2014: 71%).

A-Plant continues to perform well in improving markets and delivered total rental revenue of £215m, up 18% on the prior year (2014: £181m). This reflects 13% 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 and focus on operational efficiency is driving improving margins resulting in a nine month EBITDA margin of 48% (2014: 46%) as 59% of revenue growth dropped through to EBITDA. Drop through reflects the drag effect 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 $647m (2014: $494m). A-Plant's EBITDA margin improved to 35% (2014: 30%) and operating profit rose to £38m (2014: £21m), with drop through of 56%. As a result, Group underlying operating profit increased 31% to £427m (2014: £327m).

Net financing costs increased to £48m (2014: £34m), reflecting the higher average debt during the period, the additional $400m of senior secured notes issued in December 2013 and the $500m senior secured notes issued in September 2014.

Group profit before amortisation of intangibles and taxation was £379m (2014: £293m). After a tax charge of 36% (2014: 37%) of the underlying pre-tax profit, underlying earnings per share increased 32% to 48.4p (2014: 36.8p). Following the introduction of accelerated tax depreciation by the US government for 2014, we no longer expect to be a significant cash tax payer in the US until 2015/16. As a result, the cash tax charge for the nine months was 4%.

Statutory profit before tax was £369m (2014: £286m) and basic earnings per share were 47.1p (2014: 35.8p).

Capital expenditure and acquisitions

Capital expenditure for the nine months was £783m gross and £701m net of disposal proceeds (2014: £564m gross and £480m net). As a result of this investment, the Group's rental fleet at 31 January 2015 at cost was £3.5bn. Our average fleet age is now 26 months (2014: 29 months).

We spent £162m (2014: £85m) on 15 bolt-on acquisitions during the period as we continue to both expand our footprint and diversify into specialty markets.

For the full year, we expect gross capital expenditure at the top of, or slightly above, our range of £925m to £975m, reflecting both strong activity levels and the impact of weaker sterling.

Our expectation for next year is that the percentage growth in our rental fleet will be in the mid teens with capital expenditure around £1 - 1.1bn. 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. 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 2016.

Return on Investment1

Sunbelt's pre-tax return on investment (excluding goodwill and intangible assets) in the 12 months to 31 January 2015 was 26% (2014: 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 13% (2014: 9%). For the Group as a whole, returns (including goodwill and intangible assets) are 19% (2014: 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 nine months as we invested in the fleet, made an increased number of bolt-on acquisitions and due to increased working capital to support the growth in the business.

Net debt at 31 January 2015 was £1,769m (2014: £1,266m) while, reflecting our strong earnings growth, the ratio of net debt to EBITDA remained constant at 2.0 times (2014: 2.0 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 $500m 5.625% senior secured notes due in 2024, the Group's debt facilities are committed for an average of six years. At 31 January 2015, ABL availability was $688m, with an additional $1,562m 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 February. We now anticipate a full year result ahead of our previous expectations and the Board looks forward to the medium term with continued confidence.