TIDMAHT
RNS Number : 3206G
Ashtead Group PLC
03 March 2015
Unaudited results for the nine months and
third quarter ended 31 January 2015
Third quarter Nine months
2015 2014 Growth(1) 2015 2014 Growth(1)
GBPm GBPm % GBPm GBPm %
Underlying results(2)
Rental revenue 462.9 354.2 25% 1,358.5 1,119.6 24%
EBITDA 225.0 162.2 32% 680.5 531.4 31%
Operating profit 132.8 92.5 36% 427.4 326.6 34%
Profit before
taxation 113.9 80.4 33% 379.4 292.7 33%
Earnings per share 14.5p 10.1p 36% 48.4p 36.8p 35%
Statutory results
Revenue 512.9 400.1 23% 1,500.2 1,249.8 23%
Profit before
taxation 109.9 77.9 33% 369.1 285.7 33%
Earnings per share 14.1p 9.7p 35% 47.1p 35.8p 35%
(1) at constant exchange rates
(2) before intangible amortisation
Highlights
-- Group rental revenue up 24%(1)
-- Record nine month pre-tax profit(2) of GBP379m, up 33% at constant exchange rates
-- Group EBITDA margin improves to 45% (2014: 43%)
-- GBP783m of capital invested in the business (2014: GBP564m)
-- Group RoI of 19% (2014: 18%)
-- Net debt to EBITDA leverage(1) 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 GBP379m, 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 GBP783m in
capital expenditure and GBP162m 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 GBP925m to
GBP975m.
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."
Contacts:
Geoff Drabble Chief executive +44 (0)20 7726 9700
Suzanne Wood Finance director
Liz Morley Maitland +44 (0)20 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
Company's website at www.ashtead-group.com and a replay will also
be available via the website from shortly after the call concludes.
A copy of this announcement and the slide presentation used for the
meeting will also be available for download on the Company's
website. 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
Revenue EBITDA Operating profit
2015 2014 2015 2014 2015 2014
Sunbelt in $m 2,047.5 1,658.1 983.3 755.2 646.9 494.2
Sunbelt in GBPm 1,257.8 1,048.2 604.1 477.4 397.4 312.3
A-Plant 242.4 201.6 84.1 61.1 37.7 21.4
Group central costs - - (7.7) (7.1) (7.7) (7.1)
1,500.2 1,249.8 680.5 531.4 427.4 326.6
Net financing costs (48.0) (33.9)
Profit before amortisation and
tax 379.4 292.7
Amortisation (10.3) (7.0)
Profit before taxation 369.1 285.7
Taxation (133.2) (106.2)
Profit attributable to equity holders of the
Company 235.9 179.5
Margins
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 GBP1,500m in the nine months
(2014: GBP1,250m) with strong growth in both businesses. This
revenue growth, combined with ongoing operational efficiency,
generated record underlying profit before tax of GBP379m (2014:
GBP293m).
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:
$m
2014 rental only revenue 1,151
Same stores (in existence at 1 May
2013) 17% 193
Bolt-ons and greenfields since 1
May 2013 9% 112
2015 rental only revenue 26% 1,456
Ancillary revenue 22% 406
2015 rental revenue 25% 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 GBP215m, up 18% on the prior year
(2014: GBP181m). 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 GBP38m (2014: GBP21m), with drop through of 56%. As
a result, Group underlying operating profit increased 31% to
GBP427m (2014: GBP327m).
Net financing costs increased to GBP48m (2014: GBP34m),
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
GBP379m (2014: GBP293m). 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 GBP369m (2014: GBP286m) and
basic earnings per share were 47.1p (2014: 35.8p).
Capital expenditure and acquisitions
Capital expenditure for the nine months was GBP783m gross and
GBP701m net of disposal proceeds (2014: GBP564m gross and GBP480m
net). As a result of this investment, the Group's rental fleet at
31 January 2015 at cost was GBP3.5bn. Our average fleet age is now
26 months (2014: 29 months).
We spent GBP162m (2014: GBP85m) 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 GBP925m to GBP975m,
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 GBP1 - 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 Investment(1)
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 GBP1,769m (2014: GBP1,266m)
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.
CONSOLIDATED INCOME STATEMENT FOR THE THREE MONTHS ENDED 31
JANUARY 2015
2015 2014
Before Before
amortisation Amortisation Total amortisation Amortisation Total
GBPm GBPm GBPm GBPm GBPm GBPm
Third quarter - unaudited
Revenue
Rental revenue 462.9 - 462.9 354.2 - 354.2
Sale of new equipment,
merchandise and consumables 20.4 - 20.4 14.9 - 14.9
Sale of used rental
equipment 29.6 - 29.6 31.0 - 31.0
512.9 - 512.9 400.1 - 400.1
Operating costs
Staff costs (124.7) - (124.7) (104.8) - (104.8)
Used rental equipment
sold (22.1) - (22.1) (24.0) - (24.0)
Other operating costs (141.1) - (141.1) (109.1) - (109.1)
(287.9) - (287.9) (237.9) - (237.9)
EBITDA* 225.0 - 225.0 162.2 - 162.2
Depreciation (92.2) - (92.2) (69.7) - (69.7)
Amortisation of intangibles - (4.0) (4.0) - (2.5) (2.5)
Operating profit 132.8 (4.0) 128.8 92.5 (2.5) 90.0
Investment income 0.1 - 0.1 - - -
Interest expense (19.0) - (19.0) (12.1) - (12.1)
Profit on ordinary
activities
before taxation 113.9 (4.0) 109.9 80.4 (2.5) 77.9
Taxation (40.8) 1.2 (39.6) (29.9) 0.8 (29.1)
Profit attributable
to equity
holders of the Company 73.1 (2.8) 70.3 50.5 (1.7) 48.8
Basic earnings per
share 14.5p (0.4p) 14.1p 10.1p (0.4p) 9.7p
Diluted earnings per
share 14.5p (0.6p) 13.9p 10.0p (0.3p) 9.7p
* EBITDA is presented here as an additional performance measure
as it is commonly used by investors and lenders.
All revenue and profit for the period is generated from
continuing operations.
Details of principal risks and uncertainties are given in the
Review of Third Quarter, Balance Sheet and Cash Flow accompanying
these condensed consolidated interim financial statements.
CONSOLIDATED INCOME STATEMENT FOR THE NINE MONTHS ENDED 31
JANUARY 2015
2015 2014
Before Before
amortisation Amortisation Total amortisation Amortisation Total
GBPm GBPm GBPm GBPm GBPm GBPm
Nine months - unaudited
Revenue
Rental revenue 1,358.5 - 1,358.5 1,119.6 - 1,119.6
Sale of new equipment,
merchandise and consumables 65.9 - 65.9 53.4 - 53.4
Sale of used rental
equipment 75.8 - 75.8 76.8 - 76.8
1,500.2 - 1,500.2 1,249.8 - 1,249.8
Operating costs
Staff costs (350.9) - (350.9) (317.8) - (317.8)
Used rental equipment
sold (57.6) - (57.6) (60.9) - (60.9)
Other operating costs (411.2) - (411.2) (339.7) - (339.7)
(819.7) - (819.7) (718.4) - (718.4)
EBITDA* 680.5 - 680.5 531.4 - 531.4
Depreciation (253.1) - (253.1) (204.8) - (204.8)
Amortisation of intangibles - (10.3) (10.3) - (7.0) (7.0)
Operating profit 427.4 (10.3) 417.1 326.6 (7.0) 319.6
Investment income 0.2 - 0.2 - - -
Interest expense (48.2) - (48.2) (33.9) - (33.9)
Profit on ordinary activities
before taxation 379.4 (10.3) 369.1 292.7 (7.0) 285.7
Taxation (136.5) 3.3 (133.2) (108.5) 2.3 (106.2)
Profit attributable
to
equity holders of the
Company 242.9 (7.0) 235.9 184.2 (4.7) 179.5
Basic earnings per share 48.4p (1.3p) 47.1p 36.8p (1.0p) 35.8p
Diluted earnings per
share 48.1p (1.4p) 46.7p 36.5p (0.9p) 35.6p
* EBITDA is presented here as an additional performance measure
as it is commonly used by investors and lenders.
All revenue and profit for the period is generated from
continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited
Three months Nine months
to to
31 January 31 January
2015 2014 2015 2014
GBPm GBPm GBPm GBPm
Profit attributable to equity holders
of the Company for the period 70.3 48.8 235.9 179.5
Items that may be reclassified subsequently
to profit or loss:
Foreign currency translation differences 40.4 (11.3) 75.7 (27.0)
Total comprehensive income for the period 110.7 37.5 311.6 152.5
CONSOLIDATED BALANCE SHEET AT 31 JANUARY 2015
Unaudited Audited
31 January 30 April
2015 2014 2014
GBPm GBPm GBPm
Current assets
Inventories 22.6 17.3 18.5
Trade and other receivables 379.5 280.0 259.8
Current tax asset 34.0 10.4 9.9
Cash and cash equivalents 3.8 2.6 2.8
439.9 310.3 291.0
Non-current assets
Property, plant and equipment
- rental equipment 2,396.6 1,645.6 1,716.3
- other assets 269.9 213.4 212.8
2,666.5 1,859.0 1,929.1
Goodwill 499.3 402.2 400.4
Other intangible assets 69.8 45.9 45.8
Net defined benefit pension plan asset 6.1 0.2 6.1
3,241.7 2,307.3 2,381.4
Total assets 3,681.6 2,617.6 2,672.4
Current liabilities
Trade and other payables 306.4 208.8 345.8
Current tax liability 5.3 6.5 5.8
Debt due within one year 1.9 2.3 2.2
Provisions 19.1 21.5 15.0
332.7 239.1 368.8
Non-current liabilities
Debt due after more than one year 1,770.7 1,266.0 1,149.2
Provisions 28.0 20.3 20.3
Deferred tax liabilities 474.9 302.9 309.7
2,273.6 1,589.2 1,479.2
Total liabilities 2,606.3 1,828.3 1,848.0
Equity
Share capital 55.3 55.3 55.3
Share premium account 3.6 3.6 3.6
Capital redemption reserve 0.9 0.9 0.9
Non-distributable reserve 90.7 90.7 90.7
Own shares held by the Company (33.1) (33.1) (33.1)
Own shares held through the ESOT (15.5) (12.2) (11.8)
Cumulative foreign exchange translation
differences 55.5 (5.9) (20.2)
Retained reserves 917.9 690.0 739.0
Equity attributable to equity holders
of the Company 1,075.3 789.3 824.4
Total liabilities and equity 3,681.6 2,617.6 2,672.4
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE NINE MONTHS ENDED 31 JANUARY 2015
Own Cumulative
Own shares foreign
Share Capital Non- shares held exchange
Share premium redemption distributable held through translation Retained
by the
capital account reserve reserve Company the differences reserves Total
ESOT
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 May 2013 55.3 3.6 0.9 90.7 (33.1) (7.4) 21.1 551.4 682.5
Profit for the
period - - - - - - - 179.5 179.5
Other
comprehensive
income:
Foreign
currency
translation
differences - - - - - - (27.0) - (27.0)
Total
comprehensive
income
for the period - - - - - - (27.0) 179.5 152.5
Dividends paid - - - - - - - (30.1) (30.1)
Own shares
purchased
by the ESOT - - - - - (22.4) - - (22.4)
Share-based
payments - - - - - 17.6 - (15.2) 2.4
Tax on
share-based
payments - - - - - - - 4.4 4.4
At 31 January
2014 55.3 3.6 0.9 90.7 (33.1) (12.2) (5.9) 690.0 789.3
Profit for the
period - - - - - - - 51.7 51.7
Other
comprehensive
income:
Foreign
currency
translation
differences - - - - - - (14.3) - (14.3)
Remeasurement
of
the defined
benefit
pension
plan - - - - - - - 5.3 5.3
Tax on defined
benefit
pension plan - - - - - - - (1.0) (1.0)
Total
comprehensive
income
for the period - - - - - - (14.3) 56.0 41.7
Dividends paid - - - - - - - (11.2) (11.2)
Share-based
payments - - - - - 0.4 - 0.6 1.0
Tax on
share-based
payments - - - - - - - 3.6 3.6
At 30 April
2014 55.3 3.6 0.9 90.7 (33.1) (11.8) (20.2) 739.0 824.4
Profit for the
period - - - - - - - 235.9 235.9
Other
comprehensive
income:
Foreign
currency
translation
differences - - - - - - 75.7 - 75.7
Total
comprehensive
income
for the period - - - - - - 75.7 235.9 311.6
Dividends paid - - - - - - - (46.4) (46.4)
Own shares
purchased
by
the ESOT - - - - - (20.3) - - (20.3)
Share-based
payments - - - - - 16.6 - (13.6) 3.0
Tax on
share-based
payments - - - - - - - 3.0 3.0
At 31 January
2015 55.3 3.6 0.9 90.7 (33.1) (15.5) 55.5 917.9 1,075.3
CONSOLIDATED CASH FLOW STATEMENT FOR THE NINE MONTHS ENDED
31 JANUARY 2015
Unaudited
2015 2014
GBPm GBPm
Cash flows from operating activities
Cash generated from operations before exceptional
items and changes in rental equipment 583.9 454.7
Exceptional operating costs paid (0.4) (1.8)
Payments for rental property, plant and equipment (728.4) (572.1)
Proceeds from disposal of rental property, plant
and equipment 68.7 59.1
Cash used in operations (76.2) (60.1)
Financing costs paid (net) (48.8) (36.5)
Tax paid (net) (36.1) (12.6)
Net cash used in operating activities (161.1) (109.2)
Cash flows from investing activities
Acquisition of businesses (167.9) (85.5)
Payments for non-rental property, plant and equipment (58.2) (72.9)
Proceeds from disposal of non-rental property,
plant and equipment 6.1 9.9
Net cash used in investing activities (220.0) (148.5)
Cash flows from financing activities
Drawdown of loans 890.8 608.6
Redemption of loans (440.0) (315.2)
Capital element of finance lease payments (2.1) (0.8)
Dividends paid (46.4) (30.1)
Purchase of own shares by the ESOT (20.3) (22.4)
Net cash from financing activities 382.0 240.1
Increase/(decrease) in cash and cash equivalents 0.9 (17.6)
Opening cash and cash equivalents 2.8 20.3
Effect of exchange rate difference 0.1 (0.1)
Closing cash and cash equivalents 3.8 2.6
Reconciliation of net debt
(Increase)/decrease in cash in the period (0.9) 17.6
Increase in debt through cash flow 448.7 292.6
Change in net debt from cash flows 447.8 310.2
Exchange differences 169.1 (62.8)
Debt acquired - 1.4
Non-cash movements:
* deferred costs of debt raising 1.1 1.7
* capital element of new finance leases 2.2 1.1
Increase in net debt in the period 620.2 251.6
Net debt at 1 May 1,148.6 1,014.1
Net debt at 31 January 1,768.8 1,265.7
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. General information
Ashtead Group plc ('the Company') is a company incorporated and
domiciled in England and Wales and listed on the London Stock
Exchange. The condensed consolidated interim financial statements
as at, and for the nine months ended, 31 January 2015 comprise the
Company and its subsidiaries ('the Group').
The condensed consolidated interim financial statements for the
nine months ended 31 January 2015 were approved by the directors on
2 March 2015.
The condensed consolidated interim financial statements do not
constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The statutory accounts for the year ended 30
April 2014 were approved by the directors on 16 June 2014 and have
been mailed to shareholders and filed with the Registrar of
Companies. The auditor's report on those accounts was unqualified,
did not include a reference to any matter by way of emphasis and
did not contain a statement under Section 498(2) or (3) of the
Companies Act 2006.
2. Basis of preparation
The condensed consolidated interim financial statements for the
nine months ended 31 January 2015 have been prepared in accordance
with the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority and relevant International Financial
Reporting Standards ('IFRS') as adopted by the European Union
(including IAS 34 - Interim Financial Reporting). The condensed
consolidated interim financial statements should be read in
conjunction with the Group's Annual Report and Accounts for the
year ended 30 April 2014, which were prepared in accordance with
IFRS as adopted by the European Union.
The accounting policies applied in the condensed consolidated
interim financial statements are consistent with those set out in
the Group's Annual Report and Accounts for the year ended 30 April
2014. There are no new IFRS or IFRIC Interpretations that are
effective for the first time for this interim period which have a
material impact on the Group.
The condensed consolidated interim financial statements have
been prepared on the going concern basis. The Group's internal
budgets and forecasts of future performance, available financing
facilities and facility headroom (see note 11), provide a
reasonable expectation that the Group has adequate resources to
continue in operation for the foreseeable future and consequently
the going concern basis continues to be appropriate in preparing
the condensed consolidated interim financial statements.
The exchange rates used in respect of the US dollar are:
2015 2014
Average for the three months ended 31
January 1.55 1.63
Average for the nine months ended 31 January 1.63 1.58
At 30 April 1.69 1.56
At 31 January 1.50 1.64
3. Segmental analysis
Operating
profit before Operating
Revenue amortisation Amortisation profit
GBPm GBPm GBPm GBPm
Three months to 31 January
2015
Sunbelt 436.1 127.5 (2.9) 124.6
A-Plant 76.8 8.0 (1.1) 6.9
Corporate costs - (2.7) - (2.7)
512.9 132.8 (4.0) 128.8
2014
Sunbelt 336.7 90.8 (1.4) 89.4
A-Plant 63.4 4.0 (1.1) 2.9
Corporate costs - (2.3) - (2.3)
400.1 92.5 (2.5) 90.0
Nine months to 31 January
2015
Sunbelt 1,257.8 397.4 (6.9) 390.5
A-Plant 242.4 37.7 (3.4) 34.3
Corporate costs - (7.7) - (7.7)
1,500.2 427.4 (10.3) 417.1
2014
Sunbelt 1,048.2 312.3 (4.1) 308.2
A-Plant 201.6 21.4 (2.9) 18.5
Corporate costs - (7.1) - (7.1)
1,249.8 326.6 (7.0) 319.6
Segment assets Cash Taxation assets Total assets
GBPm GBPm GBPm GBPm
At 31 January 2015
Sunbelt 3,140.1 - - 3,140.1
A-Plant 503.3 - - 503.3
Corporate items 0.4 3.8 34.0 38.2
3,643.8 3.8 34.0 3,681.6
At 30 April 2014
Sunbelt 2,252.7 - - 2,252.7
A-Plant 406.7 - - 406.7
Corporate items 0.3 2.8 9.9 13.0
2,659.7 2.8 9.9 2,672.4
Sunbelt includes Sunbelt Rentals of Canada Inc..
4. Operating costs and other income
2015 2014
Before Before
amortisation Amortisation Total amortisation Amortisation Total
GBPm GBPm GBPm GBPm GBPm GBPm
Three months to 31 January
Staff costs:
Salaries 113.0 - 113.0 95.6 - 95.6
Social security costs 9.5 - 9.5 7.3 - 7.3
Other pension costs 2.2 - 2.2 1.9 - 1.9
124.7 - 124.7 104.8 - 104.8
Used rental equipment sold 22.1 - 22.1 24.0 - 24.0
Other operating costs:
Vehicle costs 28.5 - 28.5 24.3 - 24.3
Spares, consumables & external
repairs 25.9 - 25.9 19.6 - 19.6
Facility costs 15.7 - 15.7 12.7 - 12.7
Other external charges 71.0 - 71.0 52.5 - 52.5
141.1 - 141.1 109.1 - 109.1
Depreciation and amortisation:
Depreciation 92.2 - 92.2 69.7 - 69.7
Amortisation of intangibles - 4.0 4.0 - 2.5 2.5
92.2 4.0 96.2 69.7 2.5 72.2
380.1 4.0 384.1 307.6 2.5 310.1
Nine months to 31 January
Staff costs:
Salaries 319.0 - 319.0 290.8 - 290.8
Social security costs 25.7 - 25.7 21.5 - 21.5
Other pension costs 6.2 - 6.2 5.5 - 5.5
350.9 - 350.9 317.8 - 317.8
Used rental equipment sold 57.6 - 57.6 60.9 - 60.9
Other operating costs:
Vehicle costs 88.4 - 88.4 80.4 - 80.4
Spares, consumables & external
repairs 73.9 - 73.9 59.8 - 59.8
Facility costs 42.4 - 42.4 37.5 - 37.5
Other external charges 206.5 - 206.5 162.0 - 162.0
411.2 - 411.2 339.7 - 339.7
Depreciation and amortisation:
Depreciation 253.1 - 253.1 204.8 - 204.8
Amortisation of intangibles - 10.3 10.3 - 7.0 7.0
253.1 10.3 263.4 204.8 7.0 211.8
1,072.8 10.3 1,083.1 923.2 7.0 930.2
5. Amortisation
Amortisation relates to the periodic write-off of intangible
assets. The Group believes this item should be disclosed separately
within the consolidated income statement to assist in the
understanding of the financial performance of the Group. Underlying
profit and earnings per share are stated before amortisation of
intangibles.
Three months Nine months to
to
31 January 31 January
2015 2014 2015 2014
GBPm GBPm GBPm GBPm
Amortisation of intangibles 4.0 2.5 10.3 7.0
Taxation (1.2) (0.8) (3.3) (2.3)
2.8 1.7 7.0 4.7
6. Net financing costs
Three months Nine months to
to
31 January 31 January
2015 2014 2015 2014
GBPm GBPm GBPm GBPm
Investment income:
Net interest on the net defined benefit
asset (0.1) - (0.2) -
Interest expense:
Bank interest payable 4.6 4.6 13.1 14.6
Interest payable on second priority senior
secured notes 13.8 7.0 33.4 17.4
Interest payable on finance leases 0.1 - 0.2 0.1
Non-cash unwind of discount on provisions 0.1 0.1 0.5 0.3
Amortisation of deferred debt raising
costs 0.4 0.4 1.0 1.5
Total interest expense 19.0 12.1 48.2 33.9
Net financing costs 18.9 12.1 48.0 33.9
7. Taxation
The tax charge for the period has been computed using an
estimated effective rate for the year of 39% in North America
(2014: 39%) and 21% in the UK (2014: 24%). The blended effective
rate for the Group as a whole is 36% (2014: 37%).
The tax charge of GBP136.5m (2014: GBP108.5m) on the underlying
pre-tax profit of GBP379.4m (2014: GBP292.7m) can be explained as
follows:
Nine months to 31 January
2015 2014
GBPm GBPm
Current tax
- current tax on income for the period 16.3 12.7
- adjustments to prior year (0.4) (7.3)
15.9 5.4
Deferred tax
- origination and reversal of temporary differences 121.2 95.3
- adjustments to prior year (0.6) 7.8
120.6 103.1
Tax on underlying activities 136.5 108.5
Nine months to 31 January
2015 2014
GBPm GBPm
Comprising:
- UK 11.8 9.1
- North America 124.7 99.4
136.5 108.5
In addition, the tax credit of GBP3.3m (2014: GBP2.3m) on
amortisation of intangibles of GBP10.3m (2014: GBP7.0m) consists of
a deferred tax credit of GBP0.7m relating to the UK (2014: GBP0.7m)
and GBP2.6m (2014: GBP1.6m) relating to North America.
8. Earnings per share
Basic and diluted earnings per share for the three and nine
months ended 31 January 2015 have been calculated based on the
profit for the relevant period and the weighted average number of
ordinary shares in issue during that period (excluding shares held
by the Company and the ESOT over which dividends have been waived).
Diluted earnings per share is computed using the result for the
relevant period and the diluted number of shares (ignoring any
potential issue of ordinary shares which would be anti-dilutive).
These are calculated as follows:
Three months Nine months to
to
31 January 31 January
2015 2014 2015 2014
Profit for the financial period (GBPm) 70.3 48.8 235.9 179.5
Weighted average number of shares
(m) - basic 501.4 501.2 501.4 501.0
- diluted 504.2 504.8 504.8 504.5
Basic earnings per share 14.1p 9.7p 47.1p 35.8p
Diluted earnings per share 13.9p 9.7p 46.7p 35.6p
Underlying earnings per share (defined in any period as the
earnings before amortisation of intangibles for that period divided
by the weighted average number of shares in issue in that period)
may be reconciled to the basic earnings per share as follows:
Three months Nine months to
to
31 January 31 January
2015 2014 2015 2014
Basic earnings per share 14.1p 9.7p 47.1p 35.8p
Amortisation of intangibles 0.7p 0.6p 2.0p 1.4p
Tax on amortisation (0.3p) (0.2p) (0.7p) (0.4p)
Underlying earnings per share 14.5p 10.1p 48.4p 36.8p
9. Dividends
During the period, a final dividend in respect of the year ended
30 April 2014 of 9.25p (2013: 6.0p) per share was paid to
shareholders costing GBP46.4m (2013: GBP30.1m). The interim
dividend for the year ending 30 April 2015 of 3.0p (2014: 2.25p)
per share announced on 10 December 2014 was paid on 4 February
2015.
10. Property, plant and equipment
2015 2014
Rental Rental
equipment Total equipment Total
Net book value GBPm GBPm GBPm GBPm
At 1 May 1,716.3 1,929.1 1,407.8 1,584.6
Exchange difference 172.0 191.4 (59.3) (65.8)
Reclassifications (0.5) - (0.5) -
Additions 718.8 782.5 491.4 563.7
Acquisitions 72.2 80.4 45.0 46.8
Disposals (59.3) (63.8) (57.9) (65.5)
Depreciation (222.9) (253.1) (180.9) (204.8)
At 31 January 2,396.6 2,666.5 1,645.6 1,859.0
11. Borrowings
31 January 30 April
2015 2014
GBPm GBPm
Current
Finance lease obligations 1.9 2.2
Non-current
First priority senior secured bank debt 837.1 609.5
Finance lease obligations 2.8 2.4
6.5% second priority senior secured notes, due
2022 603.7 537.3
5.625% second priority senior secured notes, 327.1 -
due 2024
1,770.7 1,149.2
The senior secured bank debt and the senior secured notes are
secured by way of, respectively, first and second priority fixed
and floating charges over substantially all the Group's property,
plant and equipment, inventory and trade receivables.
Under the terms of our asset-based senior bank facility, $2.0bn
is committed until August 2018. The $900m 6.5% senior secured notes
mature in July 2022, whilst the $500m 5.625% senior secured notes
mature in October 2024. Our debt facilities therefore remain
committed for the long term, with an average of six years
remaining. The weighted average interest cost of these facilities
(including non-cash amortisation of deferred debt raising costs) is
approximately 5%. The terms of the $900m senior secured notes and
the $500m senior secured notes are such that financial performance
covenants are only measured at the time new debt is raised.
There are two financial performance covenants under the first
priority senior bank facility:
-- funded debt to LTM (last twelve months) EBITDA before
exceptional items not to exceed 4.0 times; and
-- a fixed charge ratio (comprising LTM EBITDA before
exceptional items less LTM net capital expenditure paid in cash
over the sum of scheduled debt repayments plus cash interest, cash
tax payments and dividends paid in the last twelve months) which
must be equal to or greater than 1.0 times.
These covenants do not apply when excess availability (the
difference between the lower of the facility size and the borrowing
base and facility utilisation) exceeds $200m. At 31 January 2015,
excess availability under the bank facility was $688m ($916m at 30
April 2014), with an additional $1,562m of suppressed availability,
meaning that covenants were not measured at 31 January 2015 and are
unlikely to be measured in forthcoming quarters.
As a matter of good practice, we calculate the covenant ratios
each quarter. At 31 January 2015, as a result of the significant
investment in our rental fleet, the fixed charge ratio, as
expected, did not meet the covenant requirement whilst the leverage
ratio did so comfortably. The fact the fixed charge ratio is
currently below 1.0 times does not cause concern given the strong
availability and management's ability to flex capital expenditure
downwards at short notice. Accordingly, the condensed consolidated
interim financial statements are prepared on a going concern
basis.
Fair value of financial instruments
At 31 January 2015, the Group had no derivative financial
instruments.
With the exception of the Group's second priority senior secured
notes, the carrying value of non-derivative financial assets and
liabilities is considered to materially equate to their fair
value.
The carrying value of the second priority senior secured notes
due 2022, excluding deferred debt raising costs, was GBP614m at 31
January 2015 (GBP547m at 30 April 2014), while the fair value was
GBP660m (GBP593m at 30 April 2014). The carrying value of the
second priority senior secured notes due 2024, excluding deferred
debt raising costs, was GBP333m at 31 January 2015 (GBPnil at 30
April 2014) while the fair value was GBP342m (GBPnil at 30 April
2014). The fair value of the second priority senior secured notes
has been calculated using the quoted market prices at 31 January
2015.
12. Share capital
Ordinary shares of 10p each:
31 January 30 April 31 January 30 April
2015 2014 2015 2014
Number Number GBPm GBPm
Authorised 900,000,000 900,000,000 90.0 90.0
Allotted, called up and
fully paid 553,325,554 553,325,554 55.3 55.3
At 31 January 2015, 50m (2014: 50m) shares were held by the
Company and a further 1.9m (2014: 2.2m) shares were held by the
Company's Employee Share Ownership Trust.
13. Notes to the cash flow statement
Nine months to 31 January
2015 2014
GBPm GBPm
a) Cash flow from operating activities
Operating profit before amortisation 427.4 326.6
Depreciation 253.1 204.8
EBITDA before exceptional items 680.5 531.4
Profit on disposal of rental equipment (18.2) (15.8)
Profit on disposal of other property, plant
and equipment (1.2) (2.4)
Increase in inventories (0.9) (0.9)
Increase in trade and other receivables (66.4) (46.0)
Decrease in trade and other payables (12.9) (14.0)
Other non-cash movements 3.0 2.4
Cash generated from operations before exceptional
items
and changes in rental equipment 583.9 454.7
b) Analysis of net debt
Net debt consists of total borrowings less cash and cash
equivalents. Borrowings exclude accrued interest. Foreign currency
denominated balances are retranslated to pounds sterling at rates
of exchange ruling at the balance sheet date.
1 May Exchange Cash Non-cash 31 January
2014 movement flow movements 2015
GBPm GBPm GBPm GBPm GBPm
Cash (2.8) (0.1) (0.9) - (3.8)
Debt due within
one year 2.2 - (1.9) 1.6 1.9
Debt due after one
year 1,149.2 169.2 450.6 1.7 1,770.7
Total net debt 1,148.6 169.1 447.8 3.3 1,768.8
Details of the Group's cash and debt are given in the Review of
Third Quarter, Balance Sheet and Cash Flow accompanying these
condensed consolidated interim financial statements.
c) Acquisitions
Nine months to 31 January
2015 2014
GBPm GBPm
Cash consideration paid
- acquisitions in the period (net of
cash acquired) 162.4 85.5
- deferred consideration 5.5 -
167.9 85.5
During the period, 15 acquisitions were made for a total cash
consideration of GBP162m (2014: GBP85m), after taking account of
net cash acquired of GBP0.7m. Further details are provided in note
14.
Payments for deferred consideration on prior year acquisitions
were also made of GBP5m (2014: GBPnil).
14. Acquisitions
During the period, the following acquisitions were
completed:
i) On 1 May 2014, Sunbelt acquired the entire issued share
capital of Metrolift, Inc. ('Metrolift') for a cash consideration
of GBP25m ($42m). Metrolift is a Chicago-based aerial work platform
rental business.
ii) On 19 May 2014, Sunbelt acquired the business and assets of
Northeast Equipment and Supply LLC, trading as Superior Heating
Solutions ('Superior'), for a cash consideration of GBP2m ($4m).
Superior is a Pennsylvania-based heating rental business.
iii) On 29 May 2014, Sunbelt acquired the business and assets of
Nashville High Lift, LLC ('NHL') and Contractors Equipment, LLC
('CE') for an aggregate cash consideration of GBP5m ($8m). Deferred
consideration of up to GBP0.3m ($0.5m) is payable over the next two
years, depending on revenue meeting or exceeding certain
thresholds. The business consisted of three aerial work platform
and general tool locations in Tennessee.
iv) On 1 August 2014, Sunbelt acquired the business and assets
of Hebbronville Lone Star Rentals, LLC ('Lone Star') for an initial
cash consideration of GBP21m ($36m) with deferred consideration of
up to GBP10m ($16m), payable over the next three years, depending
on revenue meeting or exceeding certain thresholds. Lone Star is a
Texas-based eight location energy-related rental and service
company.
v) On 1 September 2014, A-Plant acquired the business and assets
of East Coast Construction Services (Hire) Limited ('ECCS') for a
cash consideration of GBP0.7m. ECCS is a fusion and associated
equipment rental and service company.
vi) On 5 September 2014, Sunbelt acquired the business and
assets of ECM Energy Services, Inc. ('ECM') for a cash
consideration of GBP19m ($31m). ECM is a four location,
energy-related equipment rental business.
vii) On 26 September 2014, Sunbelt acquired the business and
assets of Ventura Rental, Inc. and Renegade Rental Center, Inc.
(together 'Ventura') for a cash consideration of GBP13m ($22m).
Ventura is a California-based two location general tool
business.
viii) On 2 October 2014, A-Plant acquired the business and
assets in Scotland of Hy-Ram Engineering Company Limited ('Hy-Ram')
for a cash consideration of GBP0.1m.
ix) On 16 October 2014, Sunbelt acquired the business and assets
of Atlas Sales and Rentals, Inc. ('Atlas') for a cash consideration
of GBP21m ($33m). Atlas is a 29 location business, specialising in
permanent and temporary cooling and heating solutions, which
operates across the US.
x) On 16 October 2014, Sunbelt acquired the business and assets
of Gustafson Enterprises, Inc., trading as General Rental Center,
for a cash consideration of GBP0.1m ($0.2m). General Rental Center
is a one location general tool business in Florida.
xi) On 3 November 2014, we acquired the entire issued share
capital of GWG Rentals, Ltd ('GWG') for an initial cash
consideration of GBP16m (C$29m) with deferred consideration of up
to GBP4m (C$7m) payable over the next three years depending on
profitability. GWG is a six location equipment rental business
based in Canada. GWG now constitutes Sunbelt Rentals of Canada
Inc..
xii) On 10 November 2014, Sunbelt acquired the business and
assets of Select Equipment, Inc. and High Lakes Leasing, LLC
(together 'Select') for a cash consideration of GBP9m ($14m).
Select is a one location business in Utah providing rental
equipment to the oil and gas industry.
xiii) On 2 December 2014, A-Plant acquired the business and
assets of Balfour Beatty Engineering Services Limited for a cash
consideration of GBP0.5m.
xiv) On 15 December 2014, A-Plant acquired all the issued share
capital of Event Infrastructure and Branding Limited ('EIB') for a
cash consideration of GBP3m. EIB provides fencing and barrier
solutions to the sporting and events sector.
xv) On 2 January 2015, Sunbelt acquired the business and assets
of DAB, Inc. and NCS Transportation, Inc. (together 'NCS') for a
cash consideration of GBP28m ($43m). NCS is a five location general
tool business located in Nebraska.
The following table sets out the book values of the identifiable
assets and liabilities acquired and their fair value to the Group.
The fair values have been determined provisionally at the balance
sheet date.
Acquirees' Fair value
book value to Group
GBPm GBPm
Net assets acquired
Trade and other receivables 16.9 16.9
Inventory 0.9 0.9
Property, plant and equipment
- rental equipment 67.0 72.2
- other assets 8.3 8.2
Creditors (2.2) (2.4)
Intangible assets (non-compete
agreements and customer relationships) - 29.7
90.9 125.5
Consideration:
- cash paid and due to be paid (net
of cash acquired) 163.1
- deferred consideration payable in
cash 11.9
175.0
Goodwill 49.5
The goodwill arising can be attributed to the key management
personnel and workforce of the acquired businesses and to the
synergies and other benefits the Group expects to derive from the
acquisitions. GBP39m of the goodwill is expected to be deductible
for income tax purposes.
The gross value and fair value of trade receivables at
acquisition was GBP17m.
The contribution to revenue and operating profit from these
acquisitions from the date of acquisition to 31 January 2015 was
not material. On an annual basis they generate approximately GBP95m
of revenue.
Had these acquisitions taken place on 1 May 2014 their
contribution to revenue and operating profit would not have been
material.
15. Contingent liabilities
There have been no significant changes in contingent liabilities
from those reported in the financial statements for the year ended
30 April 2014.
16. Events after the balance sheet date
Since the balance sheet date Sunbelt has completed two
acquisitions as follows:
(i) On 2 February 2015, Sunbelt acquired the business and assets
of Theros Equipment, Inc. ('Theros') for a cash consideration of
GBP30m ($45m). Theros is a four location general tool business
based in Virginia.
(ii) On 6 February 2015, Sunbelt acquired the business and
assets of Texas Gulf Rentals and Texas Gulf Refrigeration LP
(together 'TGR') for a cash consideration of GBP31m ($48m).
Deferred consideration of up to GBP7m ($10m) is payable over the
next three years, depending on revenue meeting or exceeding
thresholds. The business consisted of four power and industrial
climate control equipment locations in Texas.
The initial accounting for these acquisitions is incomplete. Had
these acquisitions taken place on 1 May 2014 their contribution to
revenue and operating profit would not have been material.
REVIEW OF THIRD QUARTER, BALANCE SHEET AND CASH FLOW
Third quarter
Revenue EBITDA Operating profit
2015 2014 2015 2014 2015 2014
Sunbelt in $m 679.6 550.6 316.8 240.4 197.6 149.4
Sunbelt in GBPm 436.1 336.7 203.7 146.6 127.5 90.8
A-Plant 76.8 63.4 24.0 17.9 8.0 4.0
Group central costs - - (2.7) (2.3) (2.7) (2.3)
512.9 400.1 225.0 162.2 132.8 92.5
Net financing costs (18.9) (12.1)
Profit before amortisation and tax 113.9 80.4
Amortisation (4.0) (2.5)
Profit before taxation 109.9 77.9
Margins
Sunbelt 46.6% 43.7% 29.1% 27.1%
A-Plant 31.3% 28.2% 10.5% 6.3%
Group 43.9% 40.5% 25.9% 23.1%
Group revenue increased 28% to GBP513m in the third quarter
(2014: GBP400m) with strong growth in both businesses. This revenue
growth, combined with ongoing operational efficiency, generated
underlying profit before tax of GBP114m (2014: GBP80m).
As for the nine months, the Group's growth was driven by strong
same store growth supplemented by greenfield openings and bolt-on
acquisitions. Sunbelt's revenue growth for the quarter can be
analysed as follows:
$m
2014 rental only revenue 377
Same stores (in existence at 1 November
2013) 19% 71
Bolt-ons and greenfields since 1
November 2013 10% 37
2015 rental only revenue 29% 485
Ancillary revenue 19% 130
2015 rental revenue 27% 615
Sales revenue 65
2015 total revenue 680
Our same-store growth of 19% is more than double that of the
rental market as we continue to take market share. In addition,
bolt-ons and greenfields have contributed a further 10% 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 29% consists of a 26% increase in fleet on
rent and a net 2% improvement in yield.
A-Plant continues to perform well and delivered total rental
revenue up 19% at GBP68m (2014: GBP57m) in the quarter. This
consisted of 17% more fleet on rent and a 4% improvement in
yield.
Group operating profit increased 44% to GBP133m (2014: GBP93m).
Net financing costs increased to GBP19m (2014: GBP12m) reflecting
the higher level of debt in the period and a higher proportion of
longer term fixed rate debt. As a result, Group profit before
amortisation and taxation was GBP114m (2014: GBP80m). After
amortisation of GBP4m, the statutory profit before taxation was
GBP110m (2014: GBP78m).
Balance sheet
Fixed assets
Capital expenditure in the nine months totalled GBP783m (2014:
GBP564m) with GBP719m invested in the rental fleet (2014: GBP491m).
Expenditure on rental equipment was 92% of total capital
expenditure with the balance relating to the delivery vehicle
fleet, property improvements and IT equipment. Capital expenditure
by division was:
2015 2014
Replacement Growth Total Total
Sunbelt in $m 257.0 635.4 892.4 687.4
Sunbelt in GBPm 171.1 423.2 594.3 418.3
A-Plant 35.7 88.8 124.5 73.1
Total rental equipment 206.8 512.0 718.8 491.4
Delivery vehicles, property improvements
& IT equipment 63.7 72.3
Total additions 782.5 563.7
In a strong US rental market, $635m of rental equipment capital
expenditure was spent on growth while $257m was invested in
replacement of existing fleet. The growth proportion is estimated
on the basis of the assumption that replacement capital expenditure
in any period is equal to the original cost of equipment sold.
The average age of the Group's serialised rental equipment,
which constitutes the substantial majority of our fleet, at 31
January 2015 was 26 months (2014: 29 months) on a net book value
basis. Sunbelt's fleet had an average age of 26 months (2014: 28
months) while A-Plant's fleet had an average age of 29 months
(2014: 36 months).
LTM LTM
Rental fleet at original cost LTM rental dollar physical
31 Jan 2015 30 April LTM average revenue utilisation utilisation
2014
Sunbelt in
$m 4,409 3,596 3,904 2,351 60% 71%
Sunbelt in
GBPm 2,936 2,130 2,600 1,436 60% 71%
A-Plant 536 446 489 277 57% 71%
3,472 2,576 3,089 1,713
Dollar utilisation is defined as rental revenue divided by
average fleet at original (or "first") cost and, measured over the
last twelve months to 31 January 2015, was 60% at Sunbelt (2014:
61%) and 57% at A-Plant (2014: 55%). Physical utilisation is time
based utilisation, which is calculated as the daily average of the
original cost of equipment on rent as a percentage of the total
value of equipment in the fleet at the measurement date. Measured
over the last twelve months to 31 January 2015, average physical
utilisation at Sunbelt was 71% (2014: 71%) and 71% at A-Plant
(2014: 72%). At Sunbelt, physical utilisation is measured for
equipment with an original cost in excess of $7,500 which comprised
approximately 89% of its fleet at 31 January 2015.
Trade receivables
Receivable days at 31 January 2015 were 55 days (2014: 53 days).
The bad debt charge for the nine months ended 31 January 2015 as a
percentage of total turnover was 0.7% (2014: 0.8%). Trade
receivables at 31 January 2015 of GBP331m (2014: GBP242m) are
stated net of allowances for bad debts and credit notes of GBP24m
(2014: GBP21m) with the allowance representing 6.8% (2014: 8.0%) of
gross receivables.
Trade and other payables
Group payable days were 58 days in 2015 (2014: 57 days) with
capital expenditure related payables, which have longer payment
terms, totalling GBP110m (2014: GBP62m). Payment periods for
purchases other than rental equipment vary between seven and 60
days and for rental equipment between 30 and 120 days.
Cash flow and net debt
Nine months LTM to Year
to to
31 January 31 January 30 April
2015 2014 2015 2014
GBPm GBPm GBPm GBPm
EBITDA before exceptional items 680.5 531.4 834.2 685.1
Cash inflow from operations before exceptional
items and changes in rental equipment 583.9 454.7 774.7 645.5
Cash conversion ratio* 85.8% 85.6% 92.9% 94.2%
Replacement rental capital expenditure (217.6) (238.4) (228.8) (249.6)
Payments for non-rental capital expenditure (58.2) (72.9) (70.6) (85.3)
Rental equipment disposal proceeds 68.7 59.1 100.0 90.4
Other property, plant and equipment
disposal proceeds 6.1 9.9 7.7 11.5
Tax paid (net) (36.1) (12.6) (38.4) (14.9)
Financing costs paid (net) (48.8) (36.5) (52.8) (40.5)
Cash inflow before growth capex and
payment of exceptional costs 298.0 163.3 491.8 357.1
Growth rental capital expenditure (510.8) (333.7) (582.7) (405.6)
Exceptional operating costs paid (0.4) (1.8) (0.8) (2.2)
Total cash used in operations (213.2) (172.2) (91.7) (50.7)
Acquisition of businesses (167.9) (85.5) (185.7) (103.3)
Total cash absorbed (381.1) (257.7) (277.4) (154.0)
Dividends paid (46.4) (30.1) (57.6) (41.3)
Purchase of own shares by the ESOT (20.3) (22.4) (20.3) (22.4)
Increase in net debt (447.8) (310.2) (355.3) (217.7)
* Cash inflow from operations before exceptional items and
changes in rental equipment as a percentage of EBITDA before
exceptional items.
Cash inflow from operations before payment of exceptional costs
and the net investment in the rental fleet increased by 28% to
GBP584m. Reflecting a higher level of working capital due to higher
activity levels and the seasonality of the business, the nine month
cash conversion ratio was 86% (2014: 86%).
Total payments for capital expenditure (rental equipment and
other PPE) in the nine months were GBP787m (2014: GBP645m).
Disposal proceeds received totalled GBP75m, giving net payments for
capital expenditure of GBP712m in the period (2014: GBP576m).
Financing costs paid totalled GBP49m (2014: GBP36m) while tax
payments were GBP36m (2014: GBP13m). The increased tax payments
reflect our expectation that brought forward tax losses would be
utilised during the year. However, following the introduction of
accelerated tax depreciation by the US government for 2014, we no
longer expect these tax losses to be utilised fully until 2015/16,
and so we do not expect further significant tax payments this year.
Financing costs paid can differ from the charge in the income
statement due to the timing of interest payments in the year and
non-cash interest charges.
Accordingly, in the nine months the Group generated GBP298m
(2014: GBP163m) of net cash before discretionary investments made
to enlarge the size and hence earning capacity of its rental fleet
and on acquisitions. After growth investment, payment of
exceptional costs (closed property costs) and acquisitions, there
was a net cash outflow of GBP381m (2014: GBP258m).
Net debt
31 January 30 April
2015 2014 2014
GBPm GBPm GBPm
First priority senior secured bank debt 837.1 711.6 609.5
Finance lease obligations 4.7 4.5 4.6
6.5% second priority senior secured
notes, due 2022 603.7 552.2 537.3
5.625% second priority senior secured 327.1 - -
notes, due 2024
1,772.6 1,268.3 1,151.4
Cash and cash equivalents (3.8) (2.6) (2.8)
Total net debt 1,768.8 1,265.7 1,148.6
Net debt at 31 January 2015 was GBP1,769m with the increase
since 30 April 2014 reflecting principally the net cash outflow set
out above and exchange rate fluctuations. The Group's EBITDA for
the twelve months ended 31 January 2015 was GBP834m and the ratio
of net debt to EBITDA was therefore 2.0 times at 31 January 2015
(2014: 2.0 times) on a constant currency basis and 2.1 times (2014:
1.9 times) on a reported basis.
Principal risks and uncertainties
Risks and uncertainties in achieving the Group's objectives for
the remainder of the financial year, together with assumptions,
estimates, judgements and critical accounting policies used in
preparing financial information remain unchanged from those
detailed in the 2014 Annual Report and Accounts on pages 20 to 27.
Our business is subject to significant fluctuations in performance
from quarter to quarter as a result of seasonal effects. Commercial
construction activity tends to increase in the summer and during
extended periods of mild weather and to decrease in the winter and
during extended periods of inclement weather. Furthermore, due to
the incidence of public holidays in the US and the UK, there are
more billing days in the first half of our financial year than the
second half leading to our revenue normally being higher in the
first half. On a quarterly basis, the second quarter is typically
our strongest quarter, followed by the first and then the third and
fourth quarters.
In addition, the current trading and outlook section of the
interim statement provides commentary on market and economic
conditions for the remainder of the year.
Fluctuations in the value of the US dollar with respect to the
pound sterling have had, and may continue to have, a significant
impact on our financial condition and results of operations as
reported in pounds due to the majority of our assets, liabilities,
revenues and costs being denominated in US dollars. The Group has
arranged its financing such that, at 31 January 2015, 95% of its
debt was denominated in US dollars so that there is a natural
partial offset between its dollar-denominated net assets and
earnings and its dollar-denominated debt and interest expense. At
31 January 2015, dollar-denominated debt represented approximately
69% of the value of dollar-denominated net assets (other than
debt). Based on the current currency mix of our profits and on
dollar debt levels, interest and exchange rates at 31 January 2015,
a 1% change in the US dollar exchange rate would impact underlying
pre-tax profit by approximately GBP4m.
OPERATING STATISTICS
Number of rental stores Staff numbers
31 January 30 April 31 January 30 April
2015 2014 2014 2015 2014 2014
Sunbelt 508 416 425 8,628 7,467 7,562
A-Plant 133 130 131 2,643 2,328 2,361
Corporate office - - - 11 11 11
Group 641 546 556 11,282 9,806 9,934
Sunbelt's rental store number includes 30 Sunbelt at Lowes
stores at 31 January 2015 (2014: 30).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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