3rd Quarter Results

Unaudited results for the third quarter and nine months ended 31 January 2009 Financial summary Third quarter Nine months ----------------- ------------- ----------- 2009 2008 Growth 2009 2008 Growth ---- ---- ------ ---- ---- ------ £m £m % £m £m % Revenue 252.3 230.7 +9% 798.6 741.1 +8% Underlying operating profit(1) 28.6 38.0 -25% 138.6 147.7 -6% Underlying profit before taxation(1) 11.0 18.7 -41% 87.6 90.2 -3% Underlying earnings per share(1) 1.6p 2.5p -36% 11.6p 11.4p +2% (Loss)/profit attributable to equity shareholders (1.0) 13.4 - 79.7 60.1 +33% Basic earnings per share (0.1p) 2.4p - 15.7p 10.9p +45% (1) See notes below Highlights * Third quarter performance in line with our expectations in our seasonally most uncertain quarter * The programme announced in December to lower the cost base by £45m is now substantially implemented * £162m of net cash inflow in the nine months (2008: £44m outflow) of which £137m was applied to pay down debt * All our debt is committed for the long term and structured to remain covenant free Ashtead's Chief Executive, Geoff Drabble, commented: "As anticipated market conditions became more difficult in Q3. Revenues in both markets were adversely affected both by volume and yield whilst we continued to benefit from the stronger dollar. Our strong market positions have also ensured a good relative performance and we anticipate continuing to gain market share. We have generated strong net cash inflow which demonstrates the ongoing flexibility of our business model through the cycle as we reduce capital expenditure and adjust our cost base to market conditions. In the medium term, the recently enacted US infrastructure package will also help support our end markets although we continue to be cautious as to the timing and likely quantum of the benefit. We also anticipate that the recession will lead to both increased rental penetration and a greater market share for the larger, better financed rental companies such as ourselves. Our debt package remains committed for the long term and is structured to support us through the cycle. Whilst we are operating in difficult and uncertain markets we have been preparing for these conditions for some time. Our actions in right sizing the business, which are already evident in our performance, together with our strong balance sheet allow the Board to anticipate full year results for profit and cash in line with our expectations." Contacts: Geoff Drabble Chief executive ) 020 7726 9700 Ian Robson Finance director ) Brian Hudspith Maitland 020 7379 5151 Financial definitions (a) Underlying profit and earnings per share are stated before exceptional items and amortisation of acquired intangibles. The definition of exceptional items is set out in note 4 to the attached financial information. The reconciliation of underlying earnings per share and underlying cash tax earnings per share to basic earnings per share is shown in note 7 to the attached financial information. (b) IFRS requires that, as a disposed business, Ashtead Technology's after tax profits and total assets and liabilities are reported in the Group's accounts as single line items within our income statement and balance sheet with the result that revenues, operating profit and pre-tax profits as reported in the Group accounts exclude Ashtead Technology. Prior year figures have been restated accordingly. Geoff Drabble and Ian Robson will host a conference call with equity analysts to discuss the results at 9.30am on Tuesday 3 March. This call will be webcast live via the Company's website at www.ashtead-group.com and there will also be a replay available from shortly after the call concludes. There will also be a conference call for bondholders at 3pm (10am EST). Please contact the Company's PR advisers, Maitland (Kerryn Jahme) at +44 (0)20 7379 5151 for more details if you are an equity analyst or an Ashtead bondholder. Trading results --------------- Revenue EBITDA Operating profit ------- ------ ---------------- Third quarter 2009 2008 2009 2008 2009 2008 ------------- ---- ---- ---- ---- ---- ---- Sunbelt in $m 307.9 362.7 101.4 137.2 37.5 69.4 ===== ===== ===== ===== ==== ==== Sunbelt in £m 208.3 179.5 70.5 67.9 28.8 34.4 A-Plant 44.0 51.2 12.1 16.6 0.3 5.4 Group central costs - - (0.5) (1.8) (0.5) (1.8) --- --- --- --- --- --- 252.3 230.7 82.1 82.7 28.6 38.0 ===== ===== ==== ==== Net financing costs (17.6) (19.3) Profit before tax, exceptionals and ---- ---- amortisation from continuing operations 11.0 18.7 Ashtead Technology - 2.1 Exceptional items (19.7) 0.1 Amortisation (0.8) (0.7) --- --- Total Group (loss)/profit before taxation (9.5) 20.2 === ==== Nine months ----------- Sunbelt in $m 1,129.6 1,171.8 422.2 467.7 224.5 266.0 ======= ======= ===== ===== ===== ===== Sunbelt in £m 645.1 581.4 241.1 232.0 128.2 132.0 A-Plant 153.5 159.7 50.9 54.2 14.5 21.9 Group central costs - - (4.1) (6.2) (4.1) (6.2) --- --- --- --- --- --- Continuing operations 798.6 741.1 287.9 280.0 138.6 147.7 ===== ===== ===== ===== Net financing costs (51.0) (57.5) ---- ---- Profit before tax, exceptionals and amortisation from continuing operations 87.6 90.2 Ashtead Technology 2.8 7.3 Exceptional items 10.8 0.3 Amortisation (2.2) (1.9) --- --- Total Group profit before taxation 99.0 95.9 ==== ==== Third quarter ------------- Third quarter results reflect the difficult market conditions in both our US and UK markets with Sunbelt's revenue in dollars declining 15% and A-Plant's 14% in the quarter. This reflected a reduction in Sunbelt's fleet size of 3%, physical utilisation of 62% (2008: 66%) and a 7% reduction in yield. At A-Plant, fleet size was 2% larger than the prior year, whilst utilisation was 62% (2008: 68%) and yield reduced 7%. Including some early benefit from the cost reduction measures in our right sizing programme, costs, before depreciation, declined 8% in both Sunbelt and A-Plant in the quarter. Despite the cost reductions, underlying operating profits declined in both businesses whilst the stronger exchange rate and lower central costs helped bring the underlying operating profit at Group level to £ 28.6m (2008: £38.0m). Lower interest rates and reduced underlying debt levels, partially offset by the stronger dollar, brought about a reduction in the interest charge to £17.6m (2008: £19.3m) whilst the underlying pre-tax profit for the quarter was £11.0m (2008: £18.7m). Exceptional items of £19.7m comprise £16.1m and £4.1m relating to, respectively, the US and UK cost reduction programmes less a profit on sale of property from closed sites of £0.5m. The quarter's results also included a £ 0.8m expense for amortisation of acquired intangibles. Nine months ended 31 January ---------------------------- The nine months' results reflect the previously announced profit growth for the first half largely achieved before the current weakness in our end markets took hold and the third quarter performance outlined above. For the nine months, Sunbelt's rental revenues reduced by 3% to $1,061m reflecting a rental fleet which over this period was 2% larger than last year, physical utilisation of 67% (2008: 69%) and a decline in yield of 4% whilst A-Plant's rental revenues reduced by 3% to £150m reflecting a 10% increase in fleet size, physical utilisation of 67% (2008: 70%) and an 8% reduction in yield. Including the benefit of lower finance costs and the translation benefit from the stronger dollar the nine months underlying pre-tax profit decline is 3% to £87.6m (2008: £90.2m). The effective tax rate for the nine months was stable at 35% whilst the weighted average share count reduced reflecting earlier share repurchases. As a result underlying earnings per share for the nine months increased 2% to 11.6p (2008: 11.4p). The nine months results also include a net exceptional gain of £10.8m comprising the pre-tax gain of £66.2m from the sale of Ashtead Technology in June 2008 and a one-time charge of £55.4m relating to the right sizing programme. This includes £39m in respect of asset impairments, £14m of provisions for future lease expense at closed stores and £1m of other costs, principally severance payments. Approximately half of the used rental equipment being disposed of in the programme had been sold by 31 January raising £17m with the remainder expected to be sold in the fourth quarter. In cash terms we now expect the programme to generate a cash inflow of at least £30m this year, slightly ahead of our initial estimate. Reflecting these one time items, the total Group profit before taxation for the nine months was £99.0m (2008: £95.9m) whilst basic earnings per share for the nine months were 15.7p (2008: 10.9p). Capital expenditure ------------------- Capital expenditure for the nine months totalled £234.0m (2008: £301.2m), including £206.2m on rental fleet replacement. Disposal proceeds totalled £ 72.0m (2008: £56.8m) giving net expenditure in the period of £162.0m (2008: £ 244.4m). The average age of the Group's rental fleet at 31 January 2009 was 34 months (2008: 29 months). Next year's capital expenditure is expected to be entirely for replacement rather than growth. We currently anticipate spending around 70% of depreciation or £150m gross and £125m net of disposal proceeds but, with short lead times and no forward commitments, we will be able to adjust this as required to reflect actual market conditions. Cash flow and net debt ---------------------- £161.6m of net cash inflow was generated in the nine months. £24.3m of this net inflow was applied in returns to equity shareholders with £137.3m used to reduce outstanding debt. As a result net debt at 31 January 2009 was £1,147m (30 April 2008: £963m) which includes a translation increase of £318m since year end, reflecting sterling's 27% decline against the dollar. The ratio of net debt to underlying EBITDA at constant rates was 2.6 times at 31 January 2009 well within our 2-3 times target range. Our debt package is well structured for the challenges of current market conditions. We retain substantial headroom on facilities which are committed for the long term, an average of 4.8 years at 31 January 2009, with the first maturity on our asset based senior bank facility not being due until August 2011. Availability under the $1.75bn asset based loan facility was $523m at 31 January 2009 ($602m at 30 April 2008) well above the $125m level at which the entire debt package is covenant free. Current trading and outlook --------------------------- Whilst we are operating in difficult and uncertain markets we have been preparing for these conditions for some time. Our actions in right sizing the business, which are already evident in our performance, together with our strong balance sheet allow the Board to anticipate full year results for profit and cash in line with our expectations. CONSOLIDATED INCOME STATEMENT Three months to 31 January -------------------------- 2009 2008 Before Before exceptional Exceptional exceptional Exceptional items and items and items and items and amortisation amortisation Total amortisation amortisation Total ------------ ------------ ----- ------------ ------------ ----- £m £m £m £m £m £m Revenue 252.3 - 252.3 230.7 - 230.7 Staff costs (81.7) (1.0) (82.7) (73.2) - (73.2) Other operating costs (89.0) (11.3) (100.3) (77.1) - (77.1) Other income 0.5 0.5 1.0 2.3 0.1 2.4 --- --- --- --- --- --- EBITDA* 82.1 (11.8) 70.3 82.7 0.1 82.8 Depreciation (53.5) (7.9) (61.4) (44.7) - (44.7) Amortisation of intangibles - (0.8) (0.8) - (0.7) (0.7) --- --- --- --- --- --- Operating profit 28.6 (20.5) 8.1 38.0 (0.6) 37.4 Investment income 1.0 - 1.0 1.0 - 1.0 Interest expense (18.6) - (18.6) (20.3) - (20.3) ---- --- ---- ---- --- ---- Net financing costs (17.6) - (17.6) (19.3) - (19.3) ---- --- ---- ---- --- ---- (Loss)/profit on ordinary activities before taxation 11.0 (20.5) (9.5) 18.7 (0.6) 18.1 Taxation: - current (0.7) 0.3 (0.4) 0.1 - 0.1 - deferred (2.7) 6.9 4.2 (6.5) 0.2 (6.3) --- --- --- --- --- --- (3.4) 7.2 3.8 (6.4) 0.2 (6.2) --- --- --- --- --- --- (Loss)/profit after taxation from continuing operations 7.6 (13.3) (5.7) 12.3 (0.4) 11.9 Profit after taxation from discontinued operations - 4.7 4.7 1.5 - 1.5 --- --- --- --- --- --- (Loss)/profit attributable to equity shareholders 7.6 (8.6) (1.0) 13.8 (0.4) 13.4 === === === ==== === ==== Basic earnings per share 1.6p (1.7p) (0.1p) 2.5p (0.1p) 2.4p ==== ==== ==== ==== ==== ==== Diluted earnings per share 1.6p (1.7p) (0.1p) 2.5p (0.1p) 2.4p ==== ==== ==== ==== ==== ==== Nine months to 31 January ------------------------- Revenue 798.6 - 798.6 741.1 - 741.1 Staff costs (236.7) (1.6) (238.3) (228.0) - (228.0) Other operating costs (280.0) (18.7) (298.7) (242.8) - (242.8) Other income 6.0 0.6 6.6 9.7 0.3 10.0 --- --- --- --- --- ---- EBITDA* 287.9 (19.7) 268.2 280.0 0.3 280.3 Depreciation (149.3) (35.7) (185.0) (132.3) - (132.3) Amortisation of intagibles - (2.2) (2.2) - (1.9) (1.9) --- --- --- --- --- --- Operating profit 138.6 (57.6) 81.0 147.7 (1.6) 146.1 Investment income 3.1 - 3.1 3.2 - 3.2 Interest expense (54.1) - (54.1) (60.7) - (60.7) ---- --- ---- ---- --- ---- Net financing costs (51.0) - (51.0) (57.5) - (57.5) ---- --- ---- ---- --- ---- Profit on ordinary activities before taxation 87.6 (57.6) 30.0 90.2 (1.6) 88.6 Taxation: - current (2.1) 1.3 (0.8) (9.5) - (9.5) - deferred (28.9) 18.3 (10.6) (22.8) (1.2) (24.0) ---- ---- ---- ---- --- ---- (31.0) 19.6 (11.4) (32.3) (1.2) (33.5) ---- ---- ---- ---- --- ---- Profit after taxation from continuing operations 56.6 (38.0) 18.6 57.9 (2.8) 55.1 Profit after taxation from discontinued operations 2.0 59.1 61.1 5.0 - 5.0 --- ---- ---- --- --- --- Profit attributable to equity shareholders 58.6 21.1 79.7 62.9 (2.8) 60.1 ==== ==== ==== ==== === ==== Basic earnings per share 11.6p 4.1p 15.7p 11.4p (0.5p) 10.9p ===== ==== ===== ===== ==== ===== Diluted earnings per share 11.6p 4.1p 15.7p 11.3p (0.5p) 10.8p ===== ==== ===== ===== ==== ===== * EBITDA is presented here as an additional performance measure as it is commonly used by investors and lenders. Details of risks and uncertainties are given in the Review of Balance Sheet and Cash Flow accompanying these interim financial statements. CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Three months to Nine months to 31 January 31 January 2009 2008 2009 2008 ---- ---- ---- ---- £m £m £m £m Net (loss)/profit for the period (1.0) 13.4 79.7 60.1 Effect of the limitation on net pension asset recognised (0.3) - (1.2) - Tax on items taken directly to equity - (4.0) (3.7) (0.5) Foreign currency translation differences 23.5 6.7 63.2 1.3 Total recognised income ---- --- ---- --- and expense for the period 22.2 16.1 138.0 60.9 ==== ==== ===== ==== CONSOLIDATED MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS Three months to Nine months to 31 January 31 January 2009 2008 2009 2008 ---- ---- ---- ---- £m £m £m £m Total recognised income and expense for the period 22.2 16.1 138.0 60.9 Issue of ordinary shares, net of expenses - 0.1 - 0.5 Re-issue of ordinary shares from treasury - - 0.2 - Dividends paid - - (8.4) (6.1) Share based payments (2.1) 2.1 (1.1) 2.0 Vesting of share awards - (1.6) - - Own shares purchased by the Company (2.2) (11.1) (15.7) (11.1) Own shares purchased by the ESOT - (0.7) (0.4) (1.5) Realisation of foreign exchange translation differences on Technology disposal - - 1.2 - --- --- --- --- Net increase in equity shareholders' funds 17.9 4.9 113.8 44.7 Opening equity shareholders' funds 532.0 436.5 436.1 396.7 ----- ----- ----- ----- Closing equity shareholders' funds 549.9 441.4 549.9 441.4 ===== ===== ===== ===== CONSOLIDATED BALANCE SHEET 31 January 30 April 2009 2008 2008 ---- ---- ---- £m £m £m Current assets Inventories 16.6 24.0 22.6 Trade and other receivables 187.8 161.1 159.9 Current tax asset 3.0 - 2.2 Cash and cash equivalents 1.8 2.0 1.8 --- --- --- 209.2 187.1 186.5 Assets held for sale 20.1 - 26.8 ---- --- ---- 229.3 187.1 213.3 ----- ----- ----- Non-current assets Property, plant and equipment - rental equipment 1,217.4 1,037.7 994.0 - other assets 162.3 135.8 136.1 ----- ----- ----- 1,379.7 1,173.5 1,130.1 Intangible assets - brand names and other acquired intagibles 7.2 8.7 8.0 Goodwill 395.7 292.7 291.9 Deferred tax asset 13.1 25.6 19.6 Defined benefit pension fund surplus - 5.9 - --- --- --- 1,795.7 1,506.4 1,449.6 ------- ------- ------- Total assets 2,025.0 1,693.5 1,662.9 ======= ======= ======= Current liabilities Trade and other payables 121.7 134.9 129.1 Current tax liability 2.8 4.3 - Debt due in less than one year 7.1 7.8 7.6 Provisions 16.1 12.4 9.1 ---- ---- --- 147.7 159.4 145.8 Liabilities associated with assets classified as held for sale - - 6.5 --- --- --- 147.7 159.4 152.3 ----- ----- ----- Non-current liabilities Debt due in more than one year 1,141.7 980.4 957.4 Provisions 32.8 18.9 18.8 Deferred tax liability 152.9 93.4 98.3 ----- ---- ---- 1,327.4 1,092.7 1,074.5 ------- ------- ------- Total liabilities 1,475.1 1,252.1 1,226.8 ------- ------- ------- Equity shareholders' funds Share capital 56.2 56.2 56.2 Share premium account 3.6 3.6 3.6 Non-distributable reserve 90.7 90.7 90.7 Own shares held in treasury by the Company (38.5) (11.1) (23.3) Own shares held in treasury through the ESOT (6.3) (7.2) (7.0) Cumulative foreign exchange translation differences 32.5 (28.9) (28.2) Retained earnings 411.7 338.1 344.1 ----- ----- ----- Total equity shareholders' funds 549.9 441.4 436.1 ----- ----- ----- Total liabilities and equity shareholders' funds 2,025.0 1,693.5 1,662.9 ======= ======= ======= CONSOLIDATED CASH FLOW STATEMENT Nine months to 31 January 2009 2008 ---- ---- £m £m Cash flows from operating activities Cash generated from operations before exceptional items 282.4 265.2 Exceptional costs paid (4.1) (8.1) --- --- Cash generated from operations 278.3 257.1 Financing costs paid (38.3) (44.9) Tax paid (1.6) (4.0) --- --- Net cash from operating activities 238.4 208.2 ----- ----- Cash flows from investing activities Disposal/(acquisition) of businesses 89.6 (5.9) Payments for property, plant and equipment (220.1) (322.4) Proceeds on sale of property, plant and equipment 53.7 76.6 ---- ---- Net cash used in investing activities (76.8) (251.7) ---- ----- Cash flows from financing activities Drawdown of loans 133.5 145.2 Redemption of loans (261.2) (77.2) Capital element of finance lease payments (10.0) (5.4) Purchase of own shares by the Company (15.7) (11.1) Purchase of own shares by the ESOT (0.4) (1.5) Dividends paid (8.4) (6.1) Proceeds from issue of ordinary shares 0.2 0.5 --- --- Net cash (used in)/from financing activities (162.0) 44.4 ----- ---- (Decrease)/increase in cash and cash equivalents (0.4) 0.9 Opening cash and cash equivalents 1.8 1.1 Effect of exchange rate differences 0.4 - --- --- Closing cash and cash equivalents 1.8 2.0 === === NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS 1. Basis of preparation The condensed financial statements for the nine months ended 31 January 2009 were approved by the directors on 2 March 2009. They have been prepared in accordance with International Financial Reporting Standards (`IFRS') (including International Accounting Standard (IAS) 34, Interim Financial Reporting) and the accounting policies set out in the Group's Annual Report and Accounts for the year ended 30 April 2008. They are unaudited and do not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The statutory accounts for the year ended 30 April 2008 were prepared in accordance with relevant IFRS and have been mailed to shareholders and filed with the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include a reference to any matter to which the auditors drew attention by way of emphasis without qualifying the report and did not contain a statement under section 237 of the Companies Act 1985. The exchange rates used in respect of the US dollar are: 2009 2008 ---- ---- Average for the nine months ended 31 January 1.75 2.02 At 31 January 1.44 1.99 2. Segmental analysis Operating profit before Exceptional exceptionals and items and Operating Revenue amortisation amortisation profit ------- ------------ ------------ ------ Three months to 31 January £m £m £m £m 2009 ---- Sunbelt 208.3 28.8 (16.5) 12.3 A-Plant 44.0 0.3 (4.0) (3.7) Corporate costs - (0.5) - (0.5) --- --- --- --- 252.3 28.6 (20.5) 8.1 ===== ==== ==== === 2008 ---- Sunbelt 179.5 34.4 (0.6) 33.8 A-Plant 51.2 5.4 - 5.4 Corporate costs - (1.8) - (1.8) --- --- --- --- 230.7 38.0 (0.6) 37.4 ===== ==== === ==== Nine months to 31 January 2009 ---- Sunbelt 645.1 128.2 (41.4) 86.8 A-Plant 153.5 14.5 (16.2) (1.7) Corporate costs - (4.1) - (4.1) --- --- --- --- 798.6 138.6 (57.6) 81.0 ===== ===== ==== ==== 2008 ---- Sunbelt 581.4 132.0 (1.6) 130.4 A-Plant 159.7 21.9 - 21.9 Corporate costs - (6.2) - (6.2) --- --- --- --- 741.1 147.7 (1.6) 146.1 ===== ===== === ===== Segment assets Cash Taxation assets Total assets -------------- ---- --------------- ------------ At 31 January 2009 Sunbelt 1,649.4 - - 1,649.4 A-Plant 357.4 - - 357.4 Central items 0.3 1.8 16.1 18.2 --- --- ---- ---- 2,007.1 1.8 16.1 2,025.0 ======= === ==== ======= At 30 April 2008 Sunbelt 1,254.4 - - 1,254.4 A-Plant 356.9 - - 356.9 Central items 1.2 1.8 21.8 24.8 --- --- ---- ---- Continuing operations 1,612.5 1.8 21.8 1,636.1 Discontinued operations 26.0 - 0.8 26.8 ---- --- --- ---- 1,638.5 1.8 22.6 1,662.9 ======= === ==== ======= 3. Operating costs 2009 2008 ---- ---- Before Before exceptional Exceptional exceptional Exceptional items and items and items and items and amortisation amortisation Total amortisation amortisation Total £m £m £m £m £m £m Three months to 31 January Staff costs: Salaries 74.1 1.0 75.1 66.1 - 66.1 Social security costs 6.1 - 6.1 5.9 - 5.9 Other pension costs 1.5 - 1.5 1.2 - 1.2 --- --- --- --- --- --- 81.7 1.0 82.7 73.2 - 73.2 ---- --- ---- ---- --- ---- Other operating costs: Vehicle costs 19.1 0.2 19.3 17.5 - 17.5 Spares, consumables & external repairs 15.2 0.2 15.4 12.4 - 12.4 Facility costs 12.7 9.9 22.6 9.9 9.9 Other external charges 42.0 1.0 43.0 37.3 - 37.3 ---- --- ---- ---- --- ---- 89.0 11.3 100.3 77.1 - 77.1 ---- ---- ----- ---- --- ---- Other income: Profit on disposal of fixed assets (0.5) (0.5) (1.0) (2.3) (0.1) (2.4) --- --- --- --- --- --- Depreciation and amortisation: 53.5 7.9 61.4 44.7 - 44.7 Amortisation of acquired intangibles - 0.8 0.8 - 0.7 0.7 --- --- --- --- --- --- 53.5 8.7 62.2 44.7 0.7 45.4 ---- --- ---- ---- --- ---- 223.7 20.5 244.2 192.7 0.6 193.3 ===== ==== ===== ===== === ===== Nine months to 31 January Staff costs: Salaries 215.4 1.6 217.0 207.0 - 207.0 Social security costs 17.0 - 17.0 17.2 - 17.2 Other pension costs 4.3 - 4.3 3.8 - 3.8 --- --- --- --- --- --- 236.7 1.6 238.3 228.0 - 228.0 ----- --- ----- ----- --- ----- Other operating costs: Vehicle costs 66.0 0.2 66.2 53.9 - 53.9 Spares, consumables & external repairs 47.0 1.5 48.5 40.7 - 40.7 Facility costs 34.5 14.4 48.9 30.0 - 30.0 Other external charges 132.5 2.6 135.1 118.2 - 118.2 ----- --- ----- ----- --- ----- 280.0 18.7 298.7 242.8 - 242.8 ----- ---- ----- ----- --- ----- Other income: Profit on disposal of fixed assets (6.0) (0.6) (6.6) (9.7) (0.3) (10.0) --- --- --- --- --- ---- Depreciation and amortisation: Depreciation 149.3 35.7 185.0 132.3 - 132.3 Amortisation of acquired intangibles - 2.2 2.2 - 1.9 1.9 --- --- --- --- --- --- 149.3 37.9 187.2 132.3 1.9 134.2 ----- ---- ----- ----- --- ----- 660.0 57.6 717.6 593.4 1.6 595.0 ===== ==== ===== ===== === ===== 4. Exceptional items and amortisation `Exceptional items' are those items of financial performance that are material and non-recurring in nature. Amortisation relates to the periodic write off of acquired intangible assets. The Group believes these items should be disclosed separately within the consolidated income statement to assist in the understanding of the financial performance of the Group. Exceptional items and amortisation are excluded from underlying profit and earnings per share and are set out below: Three months to Nine months to 31 January 31 January 2009 2008 2009 2008 ---- ---- ---- ---- £m £m £m £m US cost reduction programme (16.1) - (39.9) - UK cost reduction programme (4.1) - (16.1) - Profit on sale of property from closed site 0.5 0.1 0.6 0.3 Gain on sale of Ashtead Technology - - 66.2 - Taxation on exceptional items 11.5 - 11.7 (1.8) ---- --- ---- --- Total exceptional items (8.2) 0.1 22.5 (1.5) Amortisation of acquired intangibles (net of tax credit) (0.4) (0.5) (1.4) (1.3) --- --- --- --- (8.6) (0.4) 21.1 (2.8) === === ==== === The US and UK cost reduction programmes relate to store closures, fleet downsizing and other cost reduction measures being taken in advance of expected lower demand for our equipment. The principal costs relate to impairment of rental fleet as a result of the accelerated disposal programme and vacant property costs and the impairment of leasehold improvements at profit centres that will be closed. The gain on Ashtead Technology arose on the sale of that business (refer note 13). The items detailed in the table above are presented in the income statement as follows: Three months to Nine months to 31 January 31 January 2009 2008 2009 2008 ---- ---- ---- ---- £m £m £m £m Staff costs (1.0) - (1.6) - Other operating costs (11.3) - (18.7) - Other income 0.5 0.1 0.6 0.3 Depreciation (7.9) - (35.7) - Amortisation of acquired intangibles (0.8) (0.7) (2.2) (1.9) --- --- --- --- Charged in arriving at operating profit and profit before tax (20.5) (0.6) (57.6) (1.6) Taxation 7.2 0.2 19.6 (1.2) --- --- ---- --- (13.3) (0.4) (38.0) (2.8) Profit after taxation from discontinued operations 4.7 - 59.1 - --- --- ---- --- (8.6) (0.4) 21.1 (2.8) === === ==== === The exceptional depreciation charge relates to the impairment of rental equipment to be sold during the accelerated disposal programme and the impairment of leasehold improvements at closed sites. 5. Net financing costs Three months to Nine months to 31 January 31 January 2009 2008 2009 2008 ---- ---- ---- ---- £m £m £m £m Investment income: Expected return on assets of defined benefit pension plan 1.0 1.0 3.1 3.2 --- --- --- --- Total investment income 1.0 1.0 3.1 3.2 --- --- --- --- Interest expense: Bank interest payable 5.0 9.8 17.8 28.6 Interest on second priority senior secured notes 11.5 8.7 30.4 26.4 Interest payable on finance leases 0.2 0.2 0.6 0.9 Non-cash unwind of discount on defined benefit pension plan liabilities 0.8 0.7 2.3 2.2 Non-cash unwind of discount on self insurance provisions 0.4 0.4 1.0 0.9 Amortisation of deferred costs of debt raising 0.7 0.5 2.0 1.7 --- --- --- --- Total interest expense 18.6 20.3 54.1 60.7 ---- ---- ---- ---- Net financing costs 17.6 19.3 51.0 57.5 ==== ==== ==== ==== 6. Taxation The tax charge for the period has been computed using an estimated effective rate for the year of 40% in the US (2008: 40%) and 28% in the UK (2008: 31%) applied to the profit before tax, exceptional items and amortisation of acquired intangibles. The blended effective rate for the Group as a whole is 35%. The tax charge of £31.0m (2008: £32.3m) on the underlying pre-tax profit of £ 87.6m (2008: £90.2m) from continuing operations consists of current tax of £ 1.3m relating to the UK (2008: £nil), current tax of £0.8m relating to the US (2008: £9.5m), deferred tax of £8.6m relating to the UK (2008: £11.8m) and deferred tax of £20.3m relating to the US (2008: £11.0m). In addition, the tax credit of £19.6m (2008: charge of £1.2m) on exceptional costs (including amortisation) of £57.6m (2008: £1.6m) relating to continuing operations consists of current tax credit of £1.3m relating to the UK (2008: £nil), a deferred tax credit of £2.4m (2008: charge of £1.9m) relating to the UK and a deferred tax credit of £15.9m (2008: £0.7m) relating to the US. Tax on discontinued operations is discussed in note 13. 7. Earnings per share Basic and diluted earnings per share for the three and nine months ended 31 January 2009 have been calculated based on the profit for the relevant period and on the weighted average number of ordinary shares in issue during that period (excluding shares held in treasury and by 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 to Nine months to 31 January 31 January 2009 2008 2009 2008 ---- ---- ---- ---- Profit/(loss) for the financial period (£m) From continuing operations (5.7) 11.9 18.6 55.1 From discontinued operations 4.7 1.5 61.1 5.0 --- --- ---- --- From continuing and discontinued operations (1.0) 13.4 79.7 60.1 === ==== ==== ==== Weighted average number of shares (m) - basic 500.3 551.6 506.6 552.1 ===== ===== ===== ===== - diluted 500.8 552.6 507.3 555.0 Basic earnings per share ===== ===== ===== ===== From continuing operations (1.0p) 2.1p 3.7p 10.0p From discontinued operations 0.9p 0.3p 12.0p 0.9p ---- ---- ----- ---- From continuing and discontinued operations (0.1p) 2.4p 15.7p 10.9p ==== ==== ===== ===== Diluted earnings per share From continuing operations (1.0p) 2.1p 3.7p 9.9p From discontinued operations 0.9p 0.3p 12.0p 0.9p ---- ---- ----- ---- From continuing and discontinued operations (0.1p) 2.4p 15.7p 10.8p ==== ==== ===== ===== Underlying earnings per share (defined in any period as the earnings before exceptional items, amortisation of acquired intangibles and fair value remeasurements for that period divided by the weighted average number of shares in issue in that period) and cash tax earnings per share (defined in any period as underlying earnings before other deferred taxes 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 to Nine months to 31 January 31 January 2009 2008 2009 2008 ---- ---- ---- ---- Basic earnings per share (0.1p) 2.4p 15.7p 10.9p Exceptional items and amortisation of acquired intangibles 4.1p 0.1p (1.7p) 0.6p Tax on exceptional items and amortisation (2.4p) - (2.4p) (0.1p) --- --- --- --- Underlying earnings per share 1.6p 2.5p 11.6p 11.4p Other deferred tax 0.5p 1.3p 5.8p 4.5p ---- ---- ---- ---- Cash tax earnings per share 2.1p 3.8p 17.4p 15.9p ==== ==== ===== ===== 8. Dividends During the period, a final dividend in respect of the year ended 30 April 2008 of 1.675p (2007: 1.1p) per share was paid to shareholders. 9. Property, plant and equipment 2009 2008 ---- ---- Rental Rental equipment Total equipment Total --------- ----- --------- ----- Net book value £m £m £m £m -------------- At 1 May 994.0 1,130.1 920.6 1,048.0 Exchange difference 256.2 286.8 3.3 3.7 Reclassifications (0.4) - (0.2) 0.1 Additions 206.2 234.0 272.1 301.2 Acquisitions - - 3.3 3.3 Disposals (43.6) (48.5) (42.3) (46.3) Depreciation (157.3) (185.0) (119.1) (136.5) Transfer to assets held for sale (37.7) (37.7) - - ---- ---- --- --- At 31 January 1,217.4 1,379.7 1,037.7 1,173.5 ======= ======= ======= ======= Included in depreciation is an impairment charge of £35.7m (see note 4). 10. Called up share capital Ordinary shares of 10p each: 2009 2008 2009 2008 ---- ---- ---- ---- Number Number £m £m Authorised 900,000,000 900,000,000 90.0 90.0 ============ =========== ==== ==== Allotted, called up and fully paid 561,572,726 561,572,726 56.2 56.2 =========== =========== ==== ==== Since 30 April 2008, the Company has purchased 27,288,283 shares at a total cost of £15.7m, which are held in treasury and the ESOT has purchased 471,377 shares at a total cost of £0.4m. In addition, during the period, 675,559 ordinary shares of 10p each were re-issued out of treasury at an average price of 23p per share raising £0.2m. 11. Statement of changes in shareholders' equity Cummulative Own foreign Non shares exchange 31 Share Share distributable Treasury held by translation Distributable January capital premium reserves stock ESOT differences reserves Total 2008 ------- ------- -------- ----- ---- ----------- -------- ----- ---- £m £m £m £m £m £m £m £m Total recognised income and expense - - - - - 59.5 78.5 138.0 60.9 Shares issued/re-issued - - - 0.5 - - (0.3) 0.2 0.5 Dividends paid - - - - - - (8.4) (8.4) (6.1) Share based payments - - - - - - (1.1) (1.1) 2.0 Vesting of share awards - - - - 1.1 - (1.1) - - Own shares purchased - - - (15.7) (0.4) - - (16.1) (12.6) Realisation of foreign exchange translation differences - - - - - 1.2 - 1.2 - --- --- --- --- --- --- --- --- --- Net changes in shareholders' equity - - - (15.2) 0.7 60.7 67.6 113.8 44.7 Opening shareholders' equity 56.2 3.6 90.7 (23.3) (7.0) (28.2) 344.1 436.1 396.7 ---- --- ---- ---- --- ---- ----- ----- ----- Closing shareholders' equity 56.2 3.6 90.7 (38.5) (6.3) 32.5 411.7 549.9 441.4 ==== === ==== ==== === ==== ===== ===== ===== 12. Notes to the cash flow statement Nine months to 31 January 2009 2008 ---- ---- a) Cash flow from operating activities £m £m ----------------------------------- Operating profit before exceptional items and amortisation: - continuing operations 138.6 147.7 - discontinued operations 2.8 7.3 --- --- 141.4 155.0 Depreciation: - continuing operations 149.3 132.3 - discontinued operations - 4.2 --- --- EBITDA before exceptional items 290.7 291.5 Profit on disposal of property, plant and equipment (6.0) (10.2) Decrease in inventories 8.0 0.4 Decrease/(increase) in trade and other receivables 19.4 (7.6) Decrease in trade and other payables (30.5) (11.8) Exchange difference 2.1 1.0 Other non-cash movements (1.3) 1.9 --- --- Cash generated from operations before exceptional items 282.4 265.2 ===== ===== b) Reconciliation to net debt -------------------------- Decrease/(increase) in cash in the period 0.4 (0.9) (Decrease)/increase in debt through cash flow (137.7) 62.6 ----- ---- Change in net debt from cash flows (137.3) 61.7 Exchange difference 317.5 6.8 Non-cash movements: - deferred costs of debt raising 2.0 1.7 - capital element of new finance leases 1.6 0.1 --- --- Movement in net debt in the period 183.8 70.3 Opening net debt 963.2 915.9 ----- ----- Closing net debt 1,147.0 986.2 ======= ===== c) Analysis of net debt -------------------- 1 May Exchange Cash Non-cash 31 January 2008 difference flow movements 2009 ---- ---------- ---- --------- ---- £m £m £m £m £m Cash (1.8) (0.4) 0.4 - (1.8) Debt due within 1 year 7.6 2.2 (4.5) 1.8 7.1 Debt due after 1 year 957.4 315.7 (133.2) 1.8 1,141.7 ----- ----- ----- --- ------- Total net debt 963.2 317.5 (137.3) 3.6 1,147.0 ===== ===== ===== === ======= 13. Disposal of Ashtead Technology The Group sold its Ashtead Technology division on 26 June 2008 for a cash consideration of £96.0m which has been applied to reduce outstanding debt. Ashtead Technology has been accounted for as a discontinued operation and accordingly the after tax profit for the period from its operations and the gain on the sale of its assets and liabilities has been shown as a single line item within the Group's income statement. The profit after taxation from operations of the business sold comprises: Two months to Nine months to 30 June 31 January 2008 2008 ---- ---- £m £m Revenue 4.7 19.6 Operating costs (1.9) (8.6) Other income - 0.5 --- --- EBITDA 2.8 11.5 Depreciation - (4.2) --- --- Operating profit 2.8 7.3 Net financing costs - - --- --- Profit before taxation from operations 2.8 7.3 Taxation (0.8) (2.3) --- --- Profit after taxation from operations 2.0 5.0 Gain on sale of Ashtead Technology, after taxation 59.1 - ---- --- Profit after taxation from discontinued operations 61.1 5.0 ==== === The £0.8m tax charge consists of a deferred tax charge of £0.4m (2008: £1.3m) relating to the UK, a deferred tax charge of £0.3m relating to the US (2008: £ 0.8m) and a current tax charge of £0.1m (2008: £0.2m) relating to Singapore. The assets and liabilities of Ashtead Technology as at the date of disposal were: At 26 June 2008 --------------- £m £m Assets Cash and cash equivalents 2.8 Inventories 0.1 Trade and other receivables 5.8 Taxation assets 0.8 Property, plant and equipment - rental equipment 18.9 - other assets 0.3 --- 19.2 Goodwill 2.0 --- Total assets of the disposal group 30.7 ---- Liabilities ----------- Trade and other payables 4.6 Taxation liabilities 2.9 --- Total liabilities of the disposal group 7.5 --- Net assets 23.2 ==== The proceeds from the sale of Ashtead Technology which have been included in the profit after tax from discontinued operations are as follows: Sale of Ashtead Technology 2009 -------------------------- ---- £m Consideration received 96.0 Less: Costs of disposal (5.4) --- Net disposal consideration 90.6 Less: Carrying amounts of net assets disposed of (23.2) Less: Recycling of cumulative foreign exchange translation differences (1.2) --- Gain on sale before taxation 66.2 Taxation (7.1) --- 59.1 ==== The results of the discontinued operations which have been included in the consolidated cash flow statement are as follows: Two months to Nine months to 30 June 31 January 2008 2008 ---- ---- £m £m Cash flows attributable to discontinued operations -------------------------------------------------- Cash flows from operating activities 3.7 11.5 Cash flows from investing activities (0.9) (6.4) Cash flows from financing activities (0.3) (4.3) --- --- 2.5 0.8 === === Net cash inflow on disposal --------------------------- Consideration received in cash 96.0 Less: Cash and cash equivalents balance sold (2.8) Less: Costs of disposal paid (3.6) --- Net consideration reported on cash flow statement 89.6 ==== 14. Contingent liabilities There have been no significant changes in contingent liabilities from those reported at 30 April 2008. The Group remains subject to periodic legal claims in the ordinary course of its business. However, the claims outstanding at 31 January 2009 are not expected to have a significant impact on the Group's financial position. As part of the NationsRent acquisition, the Group has agreed to pay cash deferred contingent consideration of up to $89m depending on the Company's share price performance over the three years from 1 September 2006 to 31 August 2009. Deferred contingent consideration starts to become payable when the Company's share price reaches 250p with the maximum $89m being payable at 286p. REVIEW OF BALANCE SHEET AND CASH FLOW Balance sheet Capital expenditure in the nine months was £234.0m (2008: £301.2) of which £ 206.2m (2008: £272.1) was invested in the rental fleet. Expenditure on rental equipment was 88% of total capital expenditure with the balance relating to the delivery vehicle fleet, property improvements and to computer equipment. Capital expenditure by division was as follows: 2009 2008 ---- ---- Sunbelt in $m 216.8 338.2 ===== ===== Sunbelt in £m 150.4 170.2 A-Plant 55.8 94.6 ---- ---- Continuing operations 206.2 264.8 Ashtead Technology - 7.3 --- --- Total rental equipment 206.2 272.1 Delivery vehicles, property improvements & computers 27.8 29.1 ---- ---- Total additions 234.0 301.2 ===== ===== As a result of the decision to right size the fleet, the fleet in both Sunbelt and A-Plant is smaller at 31 January 2009 than at 30 April 2008. Accordingly, this year all capitalexpenditure has now been for replacement. In 2008, £126.2m was spent on growth and £145.9m on replacement. The average age of the Group's serialised rental equipment, which constitutes the substantial majority of our fleet, at 31 January 2009, was 34 months (2008: 29 months) on a net book value basis. Sunbelt's fleet had an average age of 36 months (2008: 31 months) comprising 37 months for aerial work platforms which have a longer life and 36 months for the remainder of its fleet and A-Plant's fleet had an average age of 26 months (2008: 22 months). The original cost of the Group's rental fleet and the dollar utilisation for the twelve months ended 31 January 2009 are shown below: Rental fleet at original cost LTM rental & LTM LTM ----------------------------- rental related dollar physical 31 January 2009 30 April 2008 LTM average revenues utilisation utilisation --------------- ------------- ----------- -------- ----------- ----------- Sunbelt in $m 2,157 2,314 2,326 1,391 60% 68% ===== ===== ===== ===== === === Sunbelt in £m 1,496 1,168 1,613 794 60% 68% A-Plant 355 360 371 203 55% 67% --- --- --- --- === 1,851 1,528 1,984 997 59% ===== ===== ===== === === Dollar utilisation is defined as rental and rental related revenues divided by average fleet at original (or "first") cost. Dollar utilisation at Sunbelt for the twelve months ended 31 January 2009 was 60%, down slightly from 62% in the year ended 30 April 2008. Dollar utilisation of 55% at A-Plant reflects the lower pricing (relative to equipment cost) prevalent in the competitive UK market. Physical utilisation is time-based utilisation, which is calculated at the daily average of the original cost of equipment on rent as a percentage of the total volume of equipment in the fleet at the measurement date. Trade receivables ----------------- Receivable days at 31 January 2009 were 56 days (2008: 53 days). The bad debt charge for the nine months ended 31 January 2009 as a percentage of total turnover was 1.2% (2008: 0.8%). Trade and other payables ------------------------ Group payable days were 54 days in 2009 (2008: 60 days). Capital expenditure related payables at 31 January 2009 totalled £10.4m (2008: £25.3m). Payment periods for purchases other than rental equipment vary between 7 and 45 days and for rental equipment between 30 and 120 days. Cash flow and net debt Free cash flow (defined as the net cash inflow from operations less net maintenance capital expenditure, financing costs paid, tax paid, growth capital expenditure and net exceptional costs) is summarised below: Nine months to LTM to Year to 31 January 31 January 30 April 2009 2008 2009 2008 ---- ---- ---- ---- £m £m £m £m EBITDA before exceptional items 290.7 291.5 379.2 380.0 ===== ===== ===== ===== Cash inflow from operations before exceptional items 282.4 265.2 373.6 356.4 Cash efficiency ratio* 97.1% 91.0% 98.5% 93.8% Maintenance rental capital expenditure (196.9) (172.9) (218.9) (195.3) Non-rental capital expenditure (23.2) (28.7) (30.3) (35.8) Proceeds from sale of used rental equipment 53.7 76.6 69.8 92.7 Tax paid (1.6) (4.0) (4.0) (6.4) --- --- --- --- Cash flow before interest & growth capex 114.4 136.2 190.2 211.6 Financing costs paid (38.3) (44.9) (69.8) (76.4) ---- ---- ---- ---- Cash flow before growth capex after interest 76.1 91.3 120.4 135.2 Growth capital expenditure - (120.8) - (120.4) Exceptional costs paid (net) (4.1) (8.1) (5.5) (9.5) --- --- --- --- Free cash flow 72.0 (37.6) 114.9 5.3 Business disposals/(acquisitions) 89.6 (5.9) 89.6 (5.9) ---- --- ---- --- Total cash generated/(absorbed) 161.6 (43.5) 204.5 (0.6) Dividends paid (8.4) (6.1) (12.8) (10.5) Purchase of own shares by the ESOT (0.4) (1.5) (0.5) (1.6) Purchase of own shares by the Company (15.7) (11.1) (27.5) (22.9) Proceeds from issues of ordinary shares - 0.5 - 0.5 Proceeds from re-issue of shares 0.2 - 0.2 - --- --- --- --- Reduction/(increase) in total debt 137.3 (61.7) 163.9 (35.1) ===== ==== ===== ==== * Cash inflow from operations before exceptional items as a percentage of EBITDA before exceptional items. Nine month cash inflow from operations increased 6.5% to £282.4m and the cash efficiency ratio was 97.1% (2008: 91.0%). Tax payments remain low reflecting tax depreciation in excess of book and utilisation of tax losses. Financing costs paid differ from the accounting charge in the income statement due to the timing of interest payments in the year and non-cash interest charges. As noted above, capital expenditure slowed in the nine months with net payments for capital expenditure of £166.4m this year compared to £245.8m in 2008. As a result the Group generated positive free cash flow of £72.0m in the nine months (2008: outflow of £37.6m). Including £89.6m generated from the sale of Ashtead Technology (net of disposal costs), the Group generated total cash of £ 161.6m in the nine months compared to the outflow of £43.5m last year. On a last twelve months basis free cash flow generated totals £114.9m (year to 30 April 2008: £5.3m) whilst total cash generation including the Technology sale is £204.5m (year to 30 April 2008: outflow of £0.6m). Net debt 31 January 30 April 2009 2008 2008 ---- ---- ---- £m £m £m First priority senior secured bank debt 596.3 579.6 556.2 Finance lease obligations 9.4 16.7 15.2 8.625% second priority senior secured notes,due 2015 169.7 121.6 122.2 9% second priority senior secured notes, due 2016 373.4 270.3 271.4 ----- ----- ----- 1,148.8 988.2 965.0 Cash and cash equivalents (1.8) (2.0) (1.8) --- --- --- Total net debt 1,147.0 986.2 963.2 ======= ===== ===== Net debt at 31 January 2009 was £1,147.0m (30 April 2008: £963.2m) which includes a translation increase of £317.5m due to the weakness of sterling relative to the dollar. The Group's underlying EBITDA (excluding Ashtead Technology) for the last twelve months calculated at constant 31 January 2009 exchange rates was £448.2m. Accordingly the ratio of net debt to underlying EBITDA was 2.6 times at constant exchange rates at 31 January 2009 (30 April 2008: 2.5 times). The Group's debt facilities are now committed for a weighted average period of 4.8 years with the earliest significant maturity being in August 2011. The weighted average interest cost of these facilities (including non-cash amortisation of deferred debt raising costs) is approximately 6%, most of which is tax deductible in the US where the tax rate is 39%. Financial performance covenants under the two senior secured notes issues are only measured at the time new debt is raised. There are two quarterly financial performance covenants under the asset based first priority senior bank facility: * funded debt to EBITDA before exceptional items not to exceed 4.25 times (4.0 times from April 2009), and * a fixed charge ratio comparing EBITDA before exceptional items less net capital expenditure paid in cash to the sum of scheduled debt repayments plus cash interest, cash tax payments and dividends paid which is required to be equal or greater to 1.1 times. These covenants are not, however, required to be adhered to when availability (the difference between the borrowing base and facility utilisation) exceeds $125m. At 31 January 2009 availability under the bank facility was $523m ($602m at 30 April 2008). Although the covenants were therefore not required to be measured at 31 January 2009, the Group was in compliance with both of them at that date. Return on investment Return on investment (underlying operating profit divided by the weighted average net assets employed, including goodwill but excluding debt and deferred tax) which is measured on a rolling twelve month basis to eliminate seasonal effects was 11.5% for the year ended 31 January 2009 (14.0% for the year ended 30 April 2008). RoI for Sunbelt was 12.6% whilst A-Plant's RoI was 7.1%. 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 2008 Annual Report and Accounts on pages 21 to 23. 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 revenues 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. 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. Approximately 97% of our debt was denominated in US dollars at 31 January 2009. At that date dollar denominated debt represented approximately 85% of the value of dollar denominated net assets (other than debt) providing a partial, but substantial, hedge against the translation effects of changes in the dollar exchange rate. The dollar interest payable on this debt also limits the impact of changes in the dollar exchange rate on our pre-tax profits and earnings. Based on the currency mix of our profits currently prevailing and on dollar debt levels and interest and exchange rates at 31 January 2009, a 1% change in the US dollar exchange rate would impact pre-tax profit by 0.8%. We anticipate that the weaker market conditions in which we traded during the third quarter will prevail for the remainder of this financial year. OPERATING STATISTICS Profit centre numbers Staff numbers --------------------- ------------- 31 January 30 April 31 January 30 April ---------- -------- ---------- -------- 2009 2008 2008 2009 2008 2008 ---- ---- ---- ---- ---- ---- Sunbelt 402 429 430 6,429 6,963 7,039 A-Plant 154 194 192 2,305 2,422 2,422 Ashtead Technology - 13 13 - 131 120 Corporate office - - - 13 10 13 --- --- --- -- -- -- Group 556 636 635 8,747 9,526 9,594 === === === ===== ===== ===== Sunbelt's profit centre numbers include 90 Sunbelt at Lowes stores at 31 January 2009 (90 at 30 April 2008 and 31 January 2008).

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