13 June, 2017
Audited results for the year and unaudited results for the fourth quarter ended 30 April 2017
Read and download the Audited results for the year and unaudited results for the fourth quarter ended 30 April 2017. You can also view the latest webcast
|Profit before taxation||188.8||163.5||2%||793.4||645.3||7%|
|Earnings per share||25.3p||22.0p||1%||104.3p||85.1p||7%|
|Profit before taxation||180.6||151.3||5%||765.1||616.7||8%|
|Earnings per share||24.2p||20.4p||4%||100.5p||81.3p||8%|
- Group rental revenue up 13%1
- Group pre-tax profit2 of £793m (2016: £645m)
- £1.1bn of capital invested in the business (2016: £1.2bn)
- £319m of free cash flow generation4 (2016: £68m outflow)
- £437m spent on bolt-on acquisitions (2016: £65m)
- Net debt to EBITDA leverage1 of 1.7 times (2016: 1.7 times)
- Proposed final dividend of 22.75p, making 27.5p for the full year, up 22% (2016: 22.5p)
1 Calculated at constant exchange rates applying current period exchange rates.
2 Underlying results are stated before intangible amortisation and exceptional items.
3 Q4 rental revenue growth is 14% at constant currency on a billings per day basis.
4 Throughout this announcement we refer to a number of alternative performance measures which are defined in the Glossary.
Ashtead’s Chief Executive, Geoff Drabble , commented:
"I am delighted to be able to report another very successful year for Ashtead with Group rental revenue increasing 28% and underlying pre-tax profit increasing to £793m. The reported results were impacted favourably by weaker sterling but, with 13% growth in Group rental revenue at constant exchange rates, we have good momentum.
Our end markets remain strong and, most importantly, we continue to see structural change as our customers increasingly rely on the flexibility of rental. We continue to execute well on our strategy to support these changes through a combination of organic growth and bolt-on acquisitions. We made significant investments in the year, spending £1.1bn in capital expenditure and £437m on bolt-on acquisitions. In addition, we spent a further £48m on share buybacks in line with our capital allocation priorities.
Our strong margins ensured that, despite these levels of investment, we remained comfortably within our 1.5 to 2.0 times net debt to EBITDA range.
Looking forward, our markets remain good and Spring has seen a good seasonal uplift in fleet on rent, with record levels of physical utilisation for this time of year. We expect a similar level of capital expenditure in 2017/18, consistent with our 2021 strategic plan. A number of the investments we made were in the seasonally quieter second half of the year and we incurred one-off costs associated with acquisition and integration. Now that this work is behind us, we anticipate seeing the full benefit of these investments in the coming year.
Based on our plans we will, once again, see strong free cash flow which will provide us with further flexibility to enhance shareholder value. So, with both divisions performing well and a strong balance sheet to support our plans, the Board continues to look to the medium term with confidence."
|Geoff Drabble||Chief executive||+44 (0)20 7726 9700|
|Suzanne Wood||Finance director||+44 (0)20 7726 9700|
|Will Shaw||Director of Investor Relations||+44 (0)20 7726 9700|
|Becky Mitchell||Maitland||+44 (0)20 7379 5151|
|Tom Eckersley||Maitland||+44 (0)20 7379 5151|
Geoff Drabble and Suzanne Wood will hold a meeting for equity analysts to discuss the results and outlook at 9.00am on Tuesday, 13 June 2017 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 via the same link from shortly after the meeting concludes. A copy of this announcement and the slide presentation used for the call is also available for download via links at the top of this release. The usual conference call for bondholders will begin at 3.30pm (10.30am 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 (Amy Fife) 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.
|Sunbelt in $m||3,583.7||3,276.6||1,768.7||1,583.7||1,088.5||1,013.7|
|Sunbelt in £m||2,768.6||2,180.9||1,366.4||1,054.1||840.9||674.7|
|Group central costs||-||-||(14.8)||(13.5)||(14.9)||(13.5)|
|Net financing costs||(104.2)||(82.9)|
|Profit before exceptionals, amortisation and tax||793.4||645.3|
|Profit before taxation||765.1||616.7|
|Profit attributable to equity holders of the Company||501.0||407.6|
Group revenue for the year increased 25% to £3,187m (2016: £2,546m) with strong growth in both Sunbelt and A-Plant. Overall revenue growth reflects the benefit of weaker sterling, partially offset, as expected, by a lower level of used equipment sales due to lower replacement capital expenditure. This revenue growth, combined with strong drop-through, generated underlying profit before tax of £793m (2016: £645m).
The Group's strategy remains unchanged with growth being driven by strong same-store growth supplemented by greenfield openings and bolt-on acquisitions, with Sunbelt and A-Plant delivering 14% and 15% rental only revenue growth respectively.
Sunbelt's revenue growth continues to benefit from cyclical and structural trends and can be explained as follows:
|2016 rental only revenue||2,304|
|Same stores (in existence at 1 May 2015)||+7%||155|
|Bolt-ons and greenfields since 1 May 2015||+7%||163|
|2017 rental only revenue||+14%||2,622|
|2017 rental revenue||+12%||3,283|
|2017 total revenue||+9%||3,584|
The mix of our revenue growth demonstrates the successful execution of our long-term structural growth strategy. We continue to capitalise on the opportunity presented by our markets with samestore growth of 7% and bolt-ons and greenfields contributing another 7% growth as we expand our geographic footprint and our specialty businesses. As we embark on our plan for 2021 , we have made good progress on new stores with 73 added in North America in the year through greenfields and bolt-ons, almost half of which were specialty locations.
Rental only revenue growth was 14% in generally strong end markets. This growth was driven by increased fleet on rent, partially offset by yield. Average physical utilisation for the year was 71% (2016: 70%). Sunbelt's total revenue, including new and used equipment, merchandise and consumable sales, increased 9% to $3,584m (2016: $3,277m), reflecting the lower level of used equipment sales as a result of lower replacement capital expenditure.
A-Plant continues to perform well and delivered rental only revenue of £304m, up 15% on the prior year (2016: £264m). This reflects increased fleet on rent. A-Plant's total revenue increased 15% to £418m (2016: £365m).
We continue to focus on operational efficiency and driving improving margins. In Sunbelt, 57% of revenue growth dropped through to EBITDA (58% US only). The strength of our mature stores' incremental margin is reflected in the fact that this was achieved despite the drag effect of yield, greenfield openings and acquisitions. Stores open for more than one year saw 60% of revenue growth drop-through to EBITDA (61 % US only). This strong drop-through drove an improved EBITDA margin of 49% (2016: 48%) and contributed to an operating profit of $1,088m (2016: $1,014m). Excluding the impact of gains on used equipment sales, operating profit increased 10% over the prior year.
A-Plant's drop-through of 35%, 36% on a same store basis, contributed to an EBITDA margin of 37% (2016: 38%) and operating profit rose to £72m (2016: £67m). Excluding the impact of lower gains on used equipment sales, operating profit increased 11% over the prior year.
Reflecting the strong performance of the divisions, and with the benefit of weaker sterling, Group underlying operating profit increased 23% to £898m (2016: £728m). Net financing costs increased to £104m (2016: £83m), reflecting higher average debt and weaker sterling. As a result, Group profit before exceptional items, amortisation of intangibles and taxation was £793m (2016: £645m). After a tax charge of 34% (2016: 34%) of the underlying pre-tax profit, underlying earnings per share increased 23% to 104.3p (2016: 85.1 p).
With amortisation of £28m (2016: £22m), statutory profit before tax was £765m (2016: £617m). After a tax charge of 35% (2016: 34%), basic earnings per share were 100.5p (2016: 81.3p). The cash tax charge was 7%. Following the utilisation of brought forward tax losses during the year, we expect to become a more significant cash tax payer in the US in 2017/18.
Capital expenditure and acquisitions
Capital expenditure for the year was £1,086m gross and £917m net of disposal proceeds (2016: £1,240m gross and £1,040m net). Reflecting this investment, the Group's rental fleet at 30 April 2017 at cost was £5.8bn. Our average fleet age is now 29 months (2016: 25 months).
We invested £437m, including acquired debt, (2016: £65m) on 15 bolt-on acquisitions during the year as we continue to both expand our footprint and diversify into specialty markets.
We are expecting a similar level of capital expenditure in 2017/18, consistent with the strategic plan we outlined earlier this year, which anticipates circa double-digit growth through to 2021.
Return on Investment1
Sunbelt's pre-tax return on investment (excluding goodwill and intangible assets) in the 12 months to 30 April 2017 was 22% (2016: 24%). This remains well ahead of the Group's pre-tax weighted average cost of capital although it has been affected in the short term by our investment in greenfields and bolt-on acquisitions and our young fleet age. In the UK, return on investment (excluding goodwill and intangible assets) was 13% (2016: 1 5%). This was impacted adversely during the year by the large number of acquisitions which we are in the process of integrating and optimising their potential. For the Group as a whole, return on investment (including goodwill and intangible assets) was 17% (2016: 1 9%).
Cash flow and net debt
As expected, debt increased during the year as we invested in the fleet and made a number of bolt-on acquisitions. In addition, weaker sterling increased reported debt by £228m in the year. During the year, we spent £48m on share buybacks.
Net debt at 30 April 2017 was £2,528m (2016: £2,002m) while, reflecting our strong earnings growth, the ratio of net debt to EBITDA remained at 1.7 times (2016: 1.7 times) on a constant currency basis. This is in the middle of the Group's target range for net debt to EBITDA of 1.5 to 2 times.
In December 2016, the Group increased the size of its senior credit facility ('ABL facility') to $3.1bn, while other terms and conditions remained unchanged. This ensures the Group's debt package continues to be well structured and flexible, enabling us to optimise the opportunity presented by end market conditions. The Group's debt facilities are committed for an average of four years. At 30 April 2017, availability under the senior secured debt facility was $1,305m, with an additional $1,565m of suppressed availability - substantially above the $310m level at which the Group's entire debt package is covenant free.
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 22.75p per share (2016: 18.5p) making 27.5p for the year (2016: 22.5p), an increase of 22%. If approved at the forthcoming Annual General Meeting, the final dividend will be paid on 15 September 2017 to shareholders on the register on 18 August 2017.
The Group remains disciplined in its approach to allocation of capital with the overriding objective being to enhance shareholder value. Our capital allocation framework prioritises:
- same-store fleet growth and greenfield openings;
- bolt-on acquisitions;
- a progressive dividend with consideration to both profitability and cash generation that is sustainable through the cycle; and
- additional capital returns to shareholders through share buybacks.
During the year we spent £48m on share buybacks. While balancing capital efficiency and security with financial flexibility in a cyclical business, we will consider further returns to shareholders in accordance with our capital allocation priorities.
Current trading and outlook
Our markets remain good and Spring has seen a good seasonal uplift in fleet on rent, together with record levels of physical utilisation for this time of year. So, with both divisions performing well and a strong balance sheet to support our plans, the Board continues to look to the medium term with confidence.
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 2017. Certain parts thereof are not included in this announcement.
"We confirm to the best of our 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;
- the Strategic 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; and
- the Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide information necessary for shareholders to assess the Group's performance, business model and strategy.
By order of the Board
12 June 2017"