TIDMAHT
RNS Number : 3116Z
Ashtead Group PLC
10 December 2014
Unaudited results for the half year and
second quarter ended 31 October 2014
Second quarter First half
2014 2013 Growth(1) 2014 2013 Growth(1)
GBPm GBPm % GBPm GBPm %
Underlying results(2)
Rental revenue 477.9 392.2 26% 895.6 765.4 24%
EBITDA 245.6 192.5 32% 455.5 369.2 31%
Operating profit 161.1 123.7 35% 294.6 234.1 34%
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%
Statutory results
Revenue 529.4 439.2 24% 987.3 849.7 23%
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
Highlights
-- Group rental revenue up 24%(1)
-- Record first half pre-tax profit(2) of GBP266m, up 33% at constant exchange rates
-- Group EBITDA margin improves to 46% (2013: 43%)
-- GBP588m of capital invested in the business (2013: GBP451m) and full year guidance increased
-- Group RoI of 19% (2013: 18%)
-- Net debt to EBITDA leverage(1) 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 GBP266m, 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 GBP588m in
capital expenditure and a further GBP107m 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 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.
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."
Contacts:
Geoff Drabble Chief executive +44 (0)20 7726 9700
Suzanne Wood Finance director
Brian Hudspith 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 9.30am on Wednesday,
10 December 2014 at The London Stock Exchange, 10 Paternoster
Square, London, EC4M 7LS. The meeting will be webcast live via the
Company's website at www.ashtead-group.com and a replay will also
be available via the website 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 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 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
Revenue EBITDA Operating profit
2014 2013 2014 2013 2014 2013
Sunbelt in $m 1,367.9 1,107.5 666.5 514.8 449.3 344.8
Sunbelt in GBPm 821.7 711.5 400.4 330.8 269.9 221.5
A-Plant 165.6 138.2 60.1 43.2 29.7 17.4
Group central costs - - (5.0) (4.8) (5.0) (4.8)
987.3 849.7 455.5 369.2 294.6 234.1
Net financing costs (29.1) (21.8)
Profit before tax and amortisation 265.5 212.3
Amortisation (6.3) (4.5)
Profit before taxation 259.2 207.8
Taxation (93.6) (77.1)
Profit attributable to equity holders of the
Company 165.6 130.7
Margins
Sunbelt 48.7% 46.5% 32.8% 31.1%
A-Plant 36.3% 31.3% 17.9% 12.6%
Group 46.1% 43.4% 29.8% 27.6%
Group revenue increased 16% to GBP987m in the first half (2013:
GBP850m) with strong growth in both businesses. This revenue
growth, combined with ongoing operational efficiency, generated
record underlying profit before tax of GBP266m (2013: GBP212m).
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:
$m
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
Ancillary revenue 23% 276
2014 rental revenue 25% 1,247
Sales revenue 121
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 GBP147m, up 18% on the prior year
(2013: GBP124m). 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 GBP30m
(2013: GBP17m), with a drop through of 62%. As a result, Group
operating profit increased 26% to GBP295m (2013: GBP234m).
Net financing costs increased to GBP29m (2013: GBP22m),
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
GBP266m (2013: GBP212m). 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 GBP259m (2013: GBP208m) 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 GBP588m
gross and GBP538m net of disposal proceeds (2013: GBP451m gross and
GBP401m net). As a result of this investment, the Group's rental
fleet at 31 October 2014 at cost was GBP3.2bn, up 27% on the prior
year. Our average fleet age is now 26 months (2013: 29 months).
We spent GBP107m (2013: GBP61m) 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
GBP16m.
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 GBP925m to GBP975m
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 GBP1,571m (2013: GBP1,230m)
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.
Dividend
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:
a) the condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 'Interim Financial
Reporting'; and
b) 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
CONSOLIDATED INCOME STATEMENT FOR THE THREE MONTHS ENDED 31
OCTOBER 2014
2014 2013
Before Before
amortisation Amortisation Total amortisation Amortisation Total
GBPm GBPm GBPm GBPm GBPm GBPm
Second quarter - unaudited
Revenue
Rental revenue 477.9 - 477.9 392.2 - 392.2
Sale of new equipment,
merchandise and consumables 23.8 - 23.8 20.8 - 20.8
Sale of used rental
equipment 27.7 - 27.7 26.2 - 26.2
529.4 - 529.4 439.2 - 439.2
Operating costs
Staff costs (119.1) - (119.1) (109.4) - (109.4)
Used rental equipment
sold (21.0) - (21.0) (20.7) - (20.7)
Other operating costs (143.7) - (143.7) (116.6) - (116.6)
(283.8) - (283.8) (246.7) - (246.7)
EBITDA* 245.6 - 245.6 192.5 - 192.5
Depreciation (84.5) - (84.5) (68.8) - (68.8)
Amortisation of intangibles - (3.4) (3.4) - (2.4) (2.4)
Operating profit 161.1 (3.4) 157.7 123.7 (2.4) 121.3
Interest expense (16.0) - (16.0) (10.9) - (10.9)
Profit on ordinary
activities
before taxation 145.1 (3.4) 141.7 112.8 (2.4) 110.4
Taxation (52.0) 1.2 (50.8) (41.2) 0.8 (40.4)
Profit attributable
to equity
holders of the Company 93.1 (2.2) 90.9 71.6 (1.6) 70.0
Basic earnings per
share 18.6p (0.5p) 18.1p 14.3p (0.3p) 14.0p
Diluted earnings per
share 18.4p (0.4p) 18.0p 14.2p (0.3p) 13.9p
* 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 Second Quarter Balance Sheet and Cash Flow accompanying
these condensed consolidated interim financial statements.
CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 31
OCTOBER 2014
2014 2013
Before Before
amortisation Amortisation Total amortisation Amortisation Total
GBPm GBPm GBPm GBPm GBPm GBPm
First half - unaudited
Revenue
Rental revenue 895.6 - 895.6 765.4 - 765.4
Sale of new equipment,
merchandise and consumables 45.5 - 45.5 38.5 - 38.5
Sale of used rental
equipment 46.2 - 46.2 45.8 - 45.8
987.3 - 987.3 849.7 - 849.7
Operating costs
Staff costs (226.2) - (226.2) (213.0) - (213.0)
Used rental equipment
sold (35.5) - (35.5) (36.9) - (36.9)
Other operating costs (270.1) - (270.1) (230.6) - (230.6)
(531.8) - (531.8) (480.5) - (480.5)
EBITDA* 455.5 - 455.5 369.2 - 369.2
Depreciation (160.9) - (160.9) (135.1) - (135.1)
Amortisation of intangibles - (6.3) (6.3) - (4.5) (4.5)
Operating profit 294.6 (6.3) 288.3 234.1 (4.5) 229.6
Investment income 0.1 - 0.1 - - -
Interest expense (29.2) - (29.2) (21.8) - (21.8)
Profit on ordinary activities
before taxation 265.5 (6.3) 259.2 212.3 (4.5) 207.8
Taxation (95.7) 2.1 (93.6) (78.6) 1.5 (77.1)
Profit attributable
to
equity holders of the
Company 169.8 (4.2) 165.6 133.7 (3.0) 130.7
Basic earnings per share 33.9p (0.9p) 33.0p 26.7p (0.6p) 26.1p
Diluted earnings per
share 33.6p (0.8p) 32.8p 26.5p (0.6p) 25.9p
* 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 Six months to
to
31 October 31 October
2014 2013 2014 2013
GBPm GBPm GBPm GBPm
Profit attributable to equity holders
of the Company for the period 90.9 70.0 165.6 130.7
Items that may be reclassified subsequently
to profit or loss:
Foreign currency translation differences 35.0 (27.1) 35.3 (15.7)
Total comprehensive income for the period 125.9 42.9 200.9 115.0
CONSOLIDATED BALANCE SHEET AT 31 OCTOBER 2014
Unaudited Audited
31 October 30 April
2014 2013 2014
GBPm GBPm GBPm
Current assets
Inventories 22.4 19.4 18.5
Trade and other receivables 364.0 277.0 259.8
Current tax asset 9.7 0.6 9.9
Cash and cash equivalents 6.9 1.5 2.8
403.0 298.5 291.0
Non-current assets
Property, plant and equipment
- rental equipment 2,200.5 1,659.8 1,716.3
- other assets 252.5 199.1 212.8
2,453.0 1,858.9 1,929.1
Goodwill 459.9 405.4 400.4
Other intangible assets 59.2 42.1 45.8
Net defined benefit pension plan asset 6.2 0.3 6.1
2,978.3 2,306.7 2,381.4
Total assets 3,381.3 2,605.2 2,672.4
Current liabilities
Trade and other payables 403.1 300.5 345.8
Current tax liability 11.4 5.6 5.8
Debt due within one year 1.9 1.9 2.2
Provisions 18.1 21.7 15.0
434.5 329.7 368.8
Non-current liabilities
Debt due after more than one year 1,576.2 1,229.4 1,149.2
Provisions 24.1 20.7 20.3
Deferred tax liabilities 385.6 282.9 309.7
1,985.9 1,533.0 1,479.2
Total liabilities 2,420.4 1,862.7 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 15.1 5.4 (20.2)
Retained reserves 843.9 631.9 739.0
Equity attributable to equity holders
of the Company 960.9 742.5 824.4
Total liabilities and equity 3,381.3 2,605.2 2,672.4
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 OCTOBER 2014
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 - - - - - - - 130.7 130.7
Other
comprehensive
income:
Foreign currency
translation
differences - - - - - - (15.7) - (15.7)
Total
comprehensive
income
for the period - - - - - - (15.7) 130.7 115.0
Dividends paid - - - - - - - (30.1) (30.1)
Own shares
purchased
by the ESOT - - - - - (22.4) - - (22.4)
Share-based
payments - - - - - 17.6 - (16.1) 1.5
Tax on share-based
payments - - - - - - - (4.0) (4.0)
At 31 October 2013 55.3 3.6 0.9 90.7 (33.1) (12.2) 5.4 631.9 742.5
Profit for the
period - - - - - - - 100.5 100.5
Other
comprehensive
income:
Foreign currency
translation
differences - - - - - - (25.6) - (25.6)
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 year - - - - - - (25.6) 104.8 79.2
Dividends paid - - - - - - - (11.2) (11.2)
Share-based
payments - - - - - 0.4 - 1.5 1.9
Tax on share-based
payments - - - - - - - 12.0 12.0
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 - - - - - - - 165.6 165.6
Other
comprehensive
income:
Foreign currency
translation
differences - - - - - - 35.3 - 35.3
Total
comprehensive
income
for the year - - - - - - 35.3 165.6 200.9
Dividends paid - - - - - - - (46.4) (46.4)
Own shares
purchased
by
the ESOT - - - - - (20.1) - - (20.1)
Share-based
payments - - - - - 16.4 - (14.5) 1.9
Tax on share-based
payments - - - - - - - 0.2 0.2
At 31 October 2014 55.3 3.6 0.9 90.7 (33.1) (15.5) 15.1 843.9 960.9
CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31
OCTOBER 2014
2014 2013
GBPm GBPm
Cash flows from operating activities
Cash generated from operations before exceptional
items and changes in rental equipment 376.8 302.2
Exceptional operating costs paid (0.4) (1.3)
Payments for rental property, plant and equipment (490.0) (408.7)
Proceeds from disposal of rental property, plant
and equipment 38.0 41.3
Cash used in operations (75.6) (66.5)
Financing costs paid (net) (25.0) (20.5)
Tax paid (net) (31.2) (9.2)
Net cash used in operating activities (131.8) (96.2)
Cash flows from investing activities
Acquisition of businesses (112.5) (61.3)
Payments for non-rental property, plant and equipment (44.3) (44.2)
Proceeds from disposal of non-rental property,
plant and equipment 4.3 4.1
Net cash used in investing activities (152.5) (101.4)
Cash flows from financing activities
Drawdown of loans 784.5 264.9
Redemption of loans (428.3) (33.1)
Capital element of finance lease payments (1.4) (0.5)
Dividends paid (46.4) (30.1)
Purchase of own shares by the ESOT (20.1) (22.4)
Net cash from financing activities 288.3 178.8
Increase/(decrease) in cash and cash equivalents 4.0 (18.8)
Opening cash and cash equivalents 2.8 20.3
Effect of exchange rate difference 0.1 -
Closing cash and cash equivalents 6.9 1.5
Reconciliation of net debt
(Increase)/decrease in cash in the period (4.0) 18.8
Increase in debt through cash flow 354.8 231.3
Change in net debt from cash flows 350.8 250.1
Exchange differences 69.9 (37.3)
Debt acquired - 1.2
Non-cash movements:
* deferred costs of debt raising 0.6 1.2
* capital element of new finance leases 1.3 0.5
Increase in net debt in the period 422.6 215.7
Net debt at 1 May 1,148.6 1,014.1
Net debt at 31 October 1,571.2 1,229.8
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 six months ended, 31 October 2014 comprise the
Company and its subsidiaries ('the Group').
The condensed consolidated interim financial statements for the
six months ended 31 October 2014 were approved by the directors on
9 December 2014.
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.
The condensed consolidated interim financial statements are
unaudited but have been reviewed by the Group's auditors. Their
report is on page 26.
2. Basis of preparation
The condensed consolidated interim financial statements for the
six months ended 31 October 2014 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:
2014 2013
Average for the three months ended 31
October 1.63 1.58
Average for the six months ended 31 October 1.66 1.56
At 30 April 1.69 1.56
At 31 October 1.60 1.61
3. Segmental analysis
Operating
profit before Operating
Revenue amortisation Amortisation profit
GBPm GBPm GBPm GBPm
Three months to 31 October
2014
Sunbelt 445.0 147.8 (2.2) 145.6
A-Plant 84.4 16.0 (1.2) 14.8
Corporate costs - (2.7) - (2.7)
529.4 161.1 (3.4) 157.7
2013
Sunbelt 367.6 116.6 (1.4) 115.2
A-Plant 71.6 9.5 (1.0) 8.5
Corporate costs - (2.4) - (2.4)
439.2 123.7 (2.4) 121.3
Six months to 31 October
2014
Sunbelt 821.7 269.9 (4.0) 265.9
A-Plant 165.6 29.7 (2.3) 27.4
Corporate costs - (5.0) - (5.0)
987.3 294.6 (6.3) 288.3
2013
Sunbelt 711.5 221.5 (2.7) 218.8
A-Plant 138.2 17.4 (1.8) 15.6
Corporate costs - (4.8) - (4.8)
849.7 234.1 (4.5) 229.6
Segment assets Cash Taxation assets Total assets
GBPm GBPm GBPm GBPm
At 31 October 2014
Sunbelt 2,863.0 - - 2,863.0
A-Plant 501.3 - - 501.3
Corporate items 0.4 6.9 9.7 17.0
3,364.7 6.9 9.7 3,381.3
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
4. Operating costs and other income
2014 2013
Before Before
amortisation Amortisation Total amortisation Amortisation Total
GBPm GBPm GBPm GBPm GBPm GBPm
Three months to 31 October
Staff costs:
Salaries 108.7 - 108.7 100.6 - 100.6
Social security costs 8.4 - 8.4 7.1 - 7.1
Other pension costs 2.0 - 2.0 1.7 - 1.7
119.1 - 119.1 109.4 - 109.4
Used rental equipment sold 21.0 - 21.0 20.7 - 20.7
Other operating costs:
Vehicle costs 31.3 - 31.3 28.5 - 28.5
Spares, consumables & external
repairs 24.1 - 24.1 21.2 - 21.2
Facility costs 13.6 - 13.6 12.6 - 12.6
Other external charges 74.7 - 74.7 54.3 - 54.3
143.7 - 143.7 116.6 - 116.6
Depreciation and amortisation:
Depreciation 84.5 - 84.5 68.8 - 68.8
Amortisation of intangibles - 3.4 3.4 - 2.4 2.4
84.5 3.4 87.9 68.8 2.4 71.2
368.3 3.4 371.7 315.5 2.4 317.9
Six months to 31 October
Staff costs:
Salaries 206.0 - 206.0 195.2 - 195.2
Social security costs 16.2 - 16.2 14.2 - 14.2
Other pension costs 4.0 - 4.0 3.6 - 3.6
226.2 - 226.2 213.0 - 213.0
Used rental equipment sold 35.5 - 35.5 36.9 - 36.9
Other operating costs:
Vehicle costs 59.9 - 59.9 56.1 - 56.1
Spares, consumables & external
repairs 48.0 - 48.0 40.2 - 40.2
Facility costs 26.7 - 26.7 24.8 - 24.8
Other external charges 135.5 - 135.5 109.5 - 109.5
270.1 - 270.1 230.6 - 230.6
Depreciation and amortisation:
Depreciation 160.9 - 160.9 135.1 - 135.1
Amortisation of intangibles - 6.3 6.3 - 4.5 4.5
160.9 6.3 167.2 135.1 4.5 139.6
692.7 6.3 699.0 615.6 4.5 620.1
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 Six months to
to
31 October 31 October
2014 2013 2014 2013
GBPm GBPm GBPm GBPm
Amortisation of intangibles 3.4 2.4 6.3 4.5
Taxation (1.2) (0.8) (2.1) (1.5)
2.2 1.6 4.2 3.0
6. Net financing costs
Three months Six months to
to
31 October 31 October
2014 2013 2014 2013
GBPm GBPm GBPm GBPm
Investment income:
Net interest on the net defined benefit - - (0.1) -
asset
Interest expense:
Bank interest payable 4.4 5.1 8.5 10.0
Interest payable on second priority senior
secured notes 11.0 5.1 19.6 10.4
Interest payable on finance leases - - 0.1 0.1
Non-cash unwind of discount on provisions 0.3 0.2 0.4 0.2
Amortisation of deferred debt raising
costs 0.3 0.5 0.6 1.1
Total interest expense 16.0 10.9 29.2 21.8
Net financing costs 16.0 10.9 29.1 21.8
7. Taxation
The tax charge for the period has been computed using an
estimated effective rate for the year of 39% in the US (2013: 39%)
and 21% in the UK (2013: 24%). The blended effective rate for the
Group as a whole is 36% (2013: 37%).
The tax charge of GBP95.7m (2013: GBP78.6m) on the underlying
pre-tax profit of GBP265.5m (2013: GBP212.3m) can be explained as
follows:
Six months to 31 October
2014 2013
GBPm GBPm
Current tax
- current tax on income for the period 38.0 12.2
- adjustments to prior year 0.2 0.1
38.2 12.3
Deferred tax
- origination and reversal of temporary differences 57.7 66.1
- adjustments to prior year (0.2) 0.2
57.5 66.3
Tax on underlying activities 95.7 78.6
Six months to 31 October
2014 2013
GBPm GBPm
Comprising:
- UK tax 8.7 6.8
- US tax 87.0 71.8
95.7 78.6
In addition, the tax credit of GBP2.1m (2013: GBP1.5m) on
amortisation of intangibles of GBP6.3m (2013: GBP4.5m) consists of
a deferred tax credit of GBP0.5m relating to the UK (2013: GBP0.5m)
and GBP1.6m (2013: GBP1.0m) relating to the US.
8. Earnings per share
Basic and diluted earnings per share for the three and six
months ended 31 October 2014 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 Six months to
to
31 October 31 October
2014 2013 2014 2013
Profit for the financial period (GBPm) 90.9 70.0 165.6 130.7
Weighted average number of shares
(m) - basic 501.4 501.1 501.3 500.9
- diluted 504.2 504.5 505.1 505.5
Basic earnings per share 18.1p 14.0p 33.0p 26.1p
Diluted earnings per share 18.0p 13.9p 32.8p 25.9p
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 Six months to
to
31 October 31 October
2014 2013 2014 2013
Basic earnings per share 18.1p 14.0p 33.0p 26.1p
Amortisation of intangibles 0.7p 0.4p 1.3p 0.8p
Tax on amortisation (0.2p) (0.1p) (0.4p) (0.2p)
Underlying earnings per share 18.6p 14.3p 33.9p 26.7p
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). In addition, the
directors are proposing an interim dividend in respect of the year
ending 30 April 2015 of 3.0p per share (2013: 2.25p) to be paid on
4 February 2015 to shareholders on record on 16 January 2015.
10. Property, plant and equipment
2014 2013
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 78.1 87.0 (35.0) (38.8)
Reclassifications (0.4) - (0.4) -
Additions 541.5 588.2 407.0 451.1
Acquisitions 42.0 48.1 34.8 35.4
Disposals (35.4) (38.5) (34.9) (38.3)
Depreciation (141.6) (160.9) (119.5) (135.1)
At 31 October 2,200.5 2,453.0 1,659.8 1,858.9
11. Borrowings
31 October 30 April
2014 2014
GBPm GBPm
Current
Finance lease obligations 1.9 2.2
Non-current
First priority senior secured bank debt 699.8 609.5
Finance lease obligations 2.6 2.4
6.5% second priority senior secured notes, due
2022 566.8 537.3
5.625% second priority senior secured notes, 307.0 -
due 2024
1,576.2 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 new $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 new $500m senior secured notes
are similar to the existing $900m senior secured notes with
financial performance covenants 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 October 2014,
excess availability under the bank facility was $830m ($916m at 30
April 2014), with an additional $1,420m of suppressed availability,
meaning that covenants were not measured at 31 October 2014 and are
unlikely to be measured in forthcoming quarters.
As a matter of good practice, we calculate the covenant ratios
each quarter. At 31 October 2014, 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 October 2014, 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 GBP576m at 31
October 2014 (GBP547m at 30 April 2014), while the fair value was
GBP620m (GBP593m at 30 April 2014). The carrying value of the
second priority senior secured notes due 2024, excluding deferred
debt raising costs, was GBP313m at 31 October 2014 (GBPnil at 30
April 2014) while the fair value was GBP326m (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 October
2014.
12. Share capital
Ordinary shares of 10p each:
31 October 30 April 31 October 30 April
2014 2014 2014 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 October 2014, 50m (2013: 50m) shares were held by the
Company and a further 1.9m (2013: 2.2m) shares were held by the
Company's Employee Share Ownership Trust.
13. Notes to the cash flow statement
Six months to 31 October
2014 2013
GBPm GBPm
a) Cash flow from operating activities
Operating profit before amortisation 294.6 234.1
Depreciation 160.9 135.1
EBITDA before exceptional items 455.5 369.2
Profit on disposal of rental equipment (10.7) (8.9)
Profit on disposal of other property, plant
and equipment (1.1) (1.3)
Increase in inventories (2.0) (2.9)
Increase in trade and other receivables (70.4) (52.2)
Increase/(decrease) in trade and other payables 3.7 (3.0)
Exchange differences (0.1) (0.2)
Other non-cash movements 1.9 1.5
Cash generated from operations before exceptional
items
and changes in rental equipment 376.8 302.2
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 October
2014 movement flow movements 2014
GBPm GBPm GBPm GBPm GBPm
Cash (2.8) (0.1) (4.0) - (6.9)
Debt due within
one year 2.2 - (1.3) 1.0 1.9
Debt due after one
year 1,149.2 70.0 356.1 0.9 1,576.2
Total net debt 1,148.6 69.9 350.8 1.9 1,571.2
Details of the Group's cash and debt are given in the Review of
Second Quarter, Balance Sheet and Cash Flow accompanying these
condensed consolidated interim financial statements.
c) Acquisitions
Six months to 31 October
2014 2013
GBPm GBPm
Cash consideration paid
- acquisitions in the period 107.0 61.3
- deferred consideration 5.5 -
112.5 61.3
During the period, ten acquisitions were made for a total cash
consideration of GBP107m (2013: GBP61m), after taking account of
net cash acquired of GBP0.6m. Further details are provided in note
14.
Payments for deferred consideration on prior year acquisitions
were also made of GBP5.5m (2013: 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.
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 12.4 12.4
Inventory 0.8 0.8
Property, plant and equipment
- rental equipment 40.4 42.0
- other assets 6.2 6.1
Creditors (0.5) (0.5)
Intangible assets (non-compete
agreements and customer relationships) - 17.5
59.3 78.3
Consideration:
- cash paid (net of cash acquired) 107.0
- deferred consideration payable in
cash 9.3
116.3
Goodwill 38.0
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. GBP38m of the goodwill is expected to be deductible
for income tax purposes.
The gross value and fair value of trade receivables at
acquisition was GBP12m.
The contribution to revenue and operating profit from these
acquisitions from the date of acquisition to 31 October 2014 was
not material. On an annual basis they generate approximately GBP70m
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 the Group has completed three
acquisitions as follows:
(i) On 3 November, 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.
(ii) On 10 November, 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.
(iii) On 2 December, A-Plant acquired the business and assets of
Balfour Beatty Equipment Services Limited for a cash consideration
of GBP0.5m.
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 SECOND QUARTER BALANCE SHEET AND CASH FLOW
Second quarter
Revenue EBITDA Operating profit
2014 2013 2014 2013 2014 2013
Sunbelt in $m 729.5 581.2 355.4 271.8 242.4 184.1
Sunbelt in GBPm 445.0 367.6 216.8 172.0 147.8 116.6
A-Plant 84.4 71.6 31.5 22.9 16.0 9.5
Group central costs - - (2.7) (2.4) (2.7) (2.4)
529.4 439.2 245.6 192.5 161.1 123.7
Net financing costs (16.0) (10.9)
Profit before tax and amortisation 145.1 112.8
Amortisation (3.4) (2.4)
Profit before taxation 141.7 110.4
Margins
Sunbelt 48.7% 46.8% 33.2% 31.7%
A-Plant 37.3% 32.0% 18.9% 13.3%
Group 46.4% 43.8% 30.4% 28.2%
Group revenue increased 21% to GBP529m in the second quarter
(2013: GBP439m) with strong growth in both businesses. This revenue
growth, combined with ongoing operational efficiency, generated
underlying profit before tax of GBP145m (2013: GBP113m).
As for the half year, 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
2013 rental only revenue 403
Same stores (in existence at 1 August
2013) +19% 76
Bolt-ons and greenfields since 1
August 2013 +8% 33
2014 rental only revenue +27% 512
Ancillary revenue +28% 149
2014 rental revenue +27% 661
Sales revenue 69
2014 total revenue 730
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 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 27% consists of a 24% increase in fleet on
rent and a net 2% improvement in yield.
A-Plant continues to perform well and delivered total rental
revenue up 17% at GBP75m (2013: GBP64m) in the quarter. This
consisted of 12% more fleet on rent and a 4% improvement in
yield.
Group operating profit increased 30% to GBP161m (2013: GBP124m).
Net financing costs increased to GBP16m (2013: GBP11m) 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 GBP145m (2013: GBP113m). After
amortisation of GBP3m, the statutory profit before taxation was
GBP142m (2013: GBP110m).
Balance sheet
Fixed assets
Capital expenditure in the first half totalled GBP588m (2013:
GBP451m) with GBP542m invested in the rental fleet (2013: GBP407m).
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:
2014 2013
Replacement Growth Total Total
Sunbelt in $m 160.6 534.7 695.3 552.7
Sunbelt in GBPm 100.4 334.2 434.6 344.0
A-Plant 20.4 86.5 106.9 63.0
Total rental equipment 120.8 420.7 541.5 407.0
Delivery vehicles, property improvements
& IT equipment 46.7 44.1
Total additions 588.2 451.1
In a strong US rental market, $535m of rental equipment capital
expenditure was spent on growth while $161m 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
October 2014 was 26 months (2013: 29 months) on a net book value
basis. Sunbelt's fleet had an average age of 25 months (2013: 27
months) while A-Plant's fleet had an average age of 29 months
(2013: 35 months).
LTM LTM
Rental fleet at original cost LTM rental dollar physical
31 Oct 2014 30 April LTM average revenue utilisation utilisation
2014
Sunbelt in
$m 4,241 3,596 3,670 2,222 61% 71%
Sunbelt in
GBPm 2,651 2,130 2,294 1,341 61% 71%
A-Plant 534 446 468 266 57% 71%
3,185 2,576 2,762 1,607
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 October 2014, remained constant at 61% at
Sunbelt (2013: 61%) and rose to 57% at A-Plant (2013: 54%).
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
October 2014, average physical utilisation at Sunbelt was 71%
(2013: 72%) and 71% at A-Plant (2013: 71%). 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 October 2014.
Trade receivables
Receivable days at 31 October 2014 were 48 days (2013: 45 days).
The bad debt charge for the six months ended 31 October 2014 as a
percentage of total turnover was 0.6% (2013: 0.6%). Trade
receivables at 31 October 2014 of GBP314m (2013: GBP234m) are
stated net of allowances for bad debts and credit notes of GBP20m
(2013: GBP18m) with the allowance representing 6.0% (2013: 7.3%) of
gross receivables.
Trade and other payables
Group payable days were 62 days in 2014 (2013: 68 days) with
capital expenditure related payables, which have longer payment
terms, totalling GBP202m (2013: GBP138m). 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
Six months LTM to Year
to to
31 October 31 October 30 April
2014 2013 2014 2014
GBPm GBPm GBPm GBPm
EBITDA before exceptional items 455.5 369.2 771.4 685.1
Cash inflow from operations before exceptional
items and changes in rental equipment 376.8 302.2 720.1 645.5
Cash conversion ratio* 82.7% 81.9% 93.3% 94.2%
Replacement rental capital expenditure (127.5) (144.1) (233.0) (249.6)
Payments for non-rental capital expenditure (44.3) (44.2) (85.4) (85.3)
Rental equipment disposal proceeds 38.0 41.3 87.1 90.4
Other property, plant and equipment
disposal proceeds 4.3 4.1 11.7 11.5
Tax (net) (31.2) (9.2) (36.9) (14.9)
Financing costs (25.0) (20.5) (45.0) (40.5)
Cash inflow before growth capex and
payment of exceptional costs 191.1 129.6 418.6 357.1
Growth rental capital expenditure (362.5) (264.6) (503.5) (405.6)
Exceptional costs (0.4) (1.3) (1.3) (2.2)
Total cash used in operations (171.8) (136.3) (86.2) (50.7)
Business acquisitions (112.5) (61.3) (154.5) (103.3)
Total cash absorbed (284.3) (197.6) (240.7) (154.0)
Dividends (46.4) (30.1) (57.6) (41.3)
Purchase of own shares by the ESOT (20.1) (22.4) (20.1) (22.4)
Increase in net debt (350.8) (250.1) (318.4) (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 25% to
GBP377m. Reflecting a higher level of working capital due to higher
activity levels, the first half cash conversion ratio was 83%
(2013: 82%). As the year progresses, we anticipate that these
seasonal impacts on working capital will substantially reverse.
Total payments for capital expenditure (rental equipment and
other PPE) in the first half were GBP534m (2013: GBP453m). Disposal
proceeds received totalled GBP42m, giving net payments for capital
expenditure of GBP492m in the period (2013: GBP408m). Financing
costs paid totalled GBP25m (2013: GBP21m) while tax payments were
GBP31m (2013: GBP9m). The increase in tax payments reflects the
utilisation of brought forward tax losses during the year.
Financing costs paid 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 first half the Group generated GBP191m
(2013: GBP130m) 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 GBP284m (2013: GBP198m).
Net debt
31 October 30 April
2014 2013 2014
GBPm GBPm GBPm
First priority senior secured bank debt 699.8 922.1 609.5
Finance lease obligations 4.5 4.0 4.6
6.5% second priority senior secured
notes, due 2022 566.8 305.2 537.3
5.625% second priority senior secured 307.0 - -
notes, due 2024
1,578.1 1,231.3 1,151.4
Cash and cash equivalents (6.9) (1.5) (2.8)
Total net debt 1,571.2 1,229.8 1,148.6
Net debt at 31 October 2014 was GBP1,571m 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 October 2014 was GBP771m and the ratio
of net debt to EBITDA was therefore 2.0 times at 31 October 2014
(2013: 2.1 times) on a constant currency basis and 2.0 times (2013:
2.0 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 October 2014, 97% 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 October 2014, dollar-denominated debt represented approximately
71% 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 October 2014,
a 1% change in the US dollar exchange rate would impact pre-tax
profit by approximately GBP4m.
OPERATING STATISTICS
Number of rental stores Staff numbers
31 October 30 April 31 October 30 April
2014 2013 2014 2014 2013 2014
Sunbelt 493 407 425 8,459 7,325 7,562
A-Plant 129 121 131 2,496 2,220 2,361
Corporate office - - - 11 11 11
Group 622 528 556 10,966 9,556 9,934
Sunbelt's rental store number includes 30 Sunbelt at Lowes
stores at 31 October 2014 (2013: 30).
INDEPENDENT REVIEW REPORT TO THE BOARD OF DIRECTORS OF ASHTEAD
GROUP PLC
We have been engaged by the Company to review the condensed
consolidated interim financial statements for the six months ended
31 October 2014 which comprise the consolidated income statement,
the consolidated statement of comprehensive income, the
consolidated balance sheet, the consolidated statement of changes
in equity, the consolidated cash flow statement and related notes 1
to 16. We have read the other information contained in the
half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed consolidated interim financial
statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with IFRS as adopted by the
European Union and issued by the IASB. The condensed consolidated
interim financial statements included in this half-yearly financial
report have been prepared in accordance with International
Accounting Standard 34, "Interim Financial Reporting", as adopted
by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed consolidated interim financial statements in the
half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed consolidated interim
financial statements for the six months ended 31 October 2014 are
not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Deloitte LLP Chartered Accountants and Statutory
Auditor
London 9 December 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR VKLFBZLFZFBZ
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