Interim Results

Ashtead Group PLC 15 January 2002 ASHTEAD GROUP PLC Interim Results for the 6 months ended 31 October 2001 * Revenues up 12% to £310.6m (£276.6m) * Operating profit* up 13% to £50.3m (£44.4m) * Adjusted profit before tax* up 16% to £25.8m (£22.3m) * After exceptionals of £31.3m and goodwill amortisation of £4.4m, the FRS 3 loss before tax is £9.9m (profit of £4.1m) * Adjusted earnings per share* up 9% to 6.2p (5.7p) * FRS 14 loss per share of 1.4p (earnings per share of 0.0p) based on the FRS 3 loss before tax * Net cash inflow from operations* rose 52% to £109.8m (£72.4m) * Slowing economies will impact second half performance * Interim dividend maintained at 0.62p per share * before goodwill amortisation, exceptional items and other non recurring costs and, in the case of adjusted earnings per share, excluding the prior year taxation credits. Additionally the tax charge in the comparatives has been adjusted for the current year credit to give a comparable effective tax rate. Chief executive George Burnett said: 'In the six months to 31 October 2001 the Group achieved a sound performance in slowing economic conditions. Sunbelt consolidated its position as one of the top five rental companies in the United States by taking an increased market share. Ashtead Technology enjoyed strong growth in turnover and operating profits. A-Plant's concentration was on its strategic repositioning and on improved cash generation in the highly competitive general equipment market in the UK.' 'The evidence of the first two months of the second half is of a slowdown in activity, which is now affecting the profitability of Sunbelt and A-Plant, but not Ashtead Technology. In the current economic climate, while the Group continues to trade profitably, full year adjusted pre-tax profits will fall below last year's equivalent figure of £43.7m by a material amount.' 'Whilst the difficulties in the US economy are affecting the immediate prospects for the Group, we remain confident that the ongoing shift from ownership to rental will ensure that the US equipment rental market continues to outperform the US economy as a whole. The Group is well placed to take advantage of this and of any upturn in both the UK and US economies.' OVERVIEW In the six months to 31 October 2001 the Group achieved a sound performance in slowing economic conditions. Group turnover increased by 12% to £310.6m (£ 276.6m); operating profits, before goodwill amortisation and exceptional items, were up 13% to £50.3m (£44.4m); and pre-tax profits, again before goodwill amortisation and exceptional items, rose 16% to £25.8m (£22.3m). Adjusted earnings per share rose 9% to 6.2p (5.7p). The directors have declared an interim dividend maintained at last year's level of 0.62p. These first half results are stated before goodwill amortisation of £4.4m and exceptional costs of £31.3m, the most significant of which is the £30m non-cash write down of the UK equipment rental fleet following the review announced at the AGM. As a result there is a pre-tax loss of £9.9m under FRS3 giving a loss per share of 1.4p. Strong emphasis was placed on cash generation with net cash inflow before exceptional cash costs in the period up 52% to £ 109.8m (£72.4m). Capital expenditure in the period was £81.2m (£165.2m). OPERATIONAL REVIEW Sunbelt Rentals In the six months under review Ashtead's US business, Sunbelt Rentals, enhanced its position as one of the top five companies in the $25 billion American equipment rental market, taking an increased market share and outperforming its quoted competitors in terms of like for like growth. Sunbelt, in increasing its operating profits by 19.3% to £35.9m, accounted for 71% of Group operating profits. Revenues grew 17.7% to £201.8m while 6% same store growth was achieved in an economy which declined in the same period. There was a small increase in operating margins from 17.6% to 17.8% despite the drag effect of the addition of 19 new businesses (of which 6 resulted from small acquisitions). This investment in new sites represents the resumption - on a broader canvas following the acquisition of BET USA in June 2000 - of our process of 'clustering', ie offering our customers an encouragement to outsource through a wide availability of general and specialist equipment on a local basis. For example, we now have 10 businesses in the Seattle area compared with 2 a year ago. Total profit centres at 31 October 2001 numbered 181. Expenditure of £ 50.8m on rental equipment this year was significantly lower than the £95.6m spent in the first half of last year. £23.2m was spent this year on replacement items reflecting the fleet's average age of only 36 months. A-Plant A-Plant's first half operating profits before exceptional items fell 4.9% to £ 11.6m (£12.2m) on turnover marginally ahead at £100.4m (£99.5m). The market in general equipment rental has remained highly competitive and there have been clear signs of a decline in the Irish economy which has had a detrimental effect on revenues. Specialist businesses on the whole have shown an advance on the same period last year. There has been a concentration on improving operating efficiencies, asset utilisation and cash generation. In particular, during the last six months the level of capital expenditure continued at lower levels than previously at £19.6m (£57.7m). Reflecting this, A-Plant will now be significantly cash generative in the second half. The strategic decision to discontinue lower margin high-risk business has been to the short term detriment of revenues but there are encouraging signs of further success in promoting A-Plant's national market leadership in geographic spread, product range and customer support through IT development to obtain long term preferred supplier agreements. A-Plant is optimistic that it will benefit from a number of major contracts scheduled to be awarded in the UK in coming months and is now well positioned to benefit from these. Ashtead Technology Ashtead Technology increased its turnover by 50% to £8.4m (£5.6m) aided by the contribution from Response Rentals acquired in October 2000. Same store growth of 25% underlined a strong performance in its recovering offshore markets, particularly in Houston. Overall operating profits grew by 33% to £2.8m (£ 2.1m). CASHFLOW Net cash inflow from operations before exceptional cash costs grew by 52% to £ 109.8m (£72.4m). This reflected growth of 5.0% in EBITDA before exceptional items to £109.5m (£104.3m) and good control of working capital, particularly receivables. The combined total of bank debt and bills of exchange was reduced by £29.1m in the first half. There will be further reductions in the second half reflecting in particular the reduction in capital expenditure over the last year. CURRENT TRADING The evidence of the first two months of the second half (ie November and December) is of a slowdown in activity, which is now affecting the profitability of Sunbelt and A-Plant, but not Ashtead Technology. For the eight months to 31 December, total revenue grew 9% for the Group as a whole, with the same store revenue growth in the period being 5% in Sunbelt, a decline of 2% in A-Plant and growth of 28% in Ashtead Technology. Sunbelt is trading well on a comparative basis in the United States which is now clearly in recession while A-Plant continues to operate in a competitive market in the UK and a declining one in Ireland. In the current economic climate, the Board anticipates that, while the Group continues to trade profitably, full year adjusted pre-tax profits will fall below last year's equivalent figure of £43.7m by a material amount. OUTLOOK Whilst the difficulties in the US economy are affecting the immediate prospects for the Group, the Board remains confident that the ongoing shift from ownership to rental will ensure that the US equipment rental market continues to outperform the US economy as a whole. The Board considers that the Group is well placed to take advantage of this and of any upturn in both the UK and US economies. There will be a presentation to analysts at 9.00am at the London Stock Exchange Media Centre. A copy of the slides will be available on the Company's website (www.ashtead-group.com) as soon as practicable after the presentation. ENDS 15 January 2002 Contacts: George Burnett Chief Executive 01372 362 300 Ian Robson Finance Director Andrew Grant Tulchan Communications 0207 353 4200 Nigel Fairbrass FINANCIAL REVIEW RESULTS Group revenues rose by 12.3% to £310.6m (2000 - £276.6m). Revenues in Sunbelt Rentals grew 17.7% to £201.8m of which 11.0% was accounted for by the inclusion of BET USA (acquired 1 June 2000) revenues for an additional month in the current year. A-Plant's revenues grew 0.9% to £100.4m reflecting continued competitive trading conditions and Ashtead Technology revenues grew 50.0% to £8.4m of which 24% related to the inclusion of Response Rentals (acquired 2 October 2000) revenues for the first time. Same store revenues (defined as revenues from stores owned throughout both financial periods) rose 6% in Sunbelt Rentals reflecting a strong competitive performance in an economy which declined in the period. Technology's same store growth of 25% reflected good performance in its recovering offshore markets. A-Plant's same store growth was in line with its overall growth. Turnover Operating profit 6 months to 31 Year 6 months to 31 Year to October to October 30 April 30 April 2001 2000 2001 2001 2000 2001 £m £m £m £m £m £m (restated) (restated) Sunbelt Rentals 201.8 171.5 345.7 35.9 30.1 62.4 A-Plant 100.4 99.5 194.5 11.6 12.2 25.1 Ashtead Technology 8.4 5.6 11.8 2.8 2.1 3.6 310.6 276.6 552.0 50.3 44.4 91.1 Exceptional items - - - (14.6) (2.6) (12.3) Redundant BET staff - - - - (2.5) (2.5) salary costs Goodwill amortisation - - - (4.4) (3.4) (8.1) Operating profit 310.6 276.6 552.0 31.3 35.9 68.2 Operating profit before exceptional items and goodwill amortisation rose 13.3% to £50.3m. This reflected growth in Sunbelt Rentals and Technology offset by a small reduction in operating profit at A-Plant. Operating margins before goodwill amortisation, exceptional and non-recurring items are as follows: 6 months to 31 October 2001 2000 Sunbelt Rentals 17.8% 17.6% A-Plant 11.6% 12.3% Ashtead Technology 33.3% 37.5% Group 16.2% 16.1% Across the Group operating margins before goodwill amortisation, exceptional and non-recurring items rose slightly from 16.1% to 16.2%. Margins in Sunbelt Rentals rose marginally over last year reflecting continued emphasis on improving margins in the acquired BET USA locations despite the reintroduction of some drag effect from the 19 new stores in the first half. Margins in A-Plant declined reflecting competitive market conditions. Margins in Technology fell compared to last year's first half reflecting the impact of the Response Rentals acquisition. Net interest payable and similar charges 6 months to 31 Year to 30 October April 2001 2000 2001 £m £m £m Net bank interest payable 20.7 18.8 40.8 5.25% unsecured convertible loan note 3.8 3.3 6.6 interest 24.5 22.1 47.4 Exceptional costs re bank facility 1.3 9.7 9.7 25.8 31.8 57.1 Net bank interest payable rose 10.1% over the first half of 2000/01 reflecting the inclusion this year of a full six months' interest on the borrowings assumed on 1 June 2000 to finance the acquisition of BET USA. Compared to the second half of 2000/01 net interest costs fell by 6% reflecting lower prevailing interest rates. Net bank interest payable includes amounts payable under the US$250m 3 year interest rate swaps at 6.825% entered into on 24 August 2000 as required by our banking agreement. Consequently the Company has only benefited from lower interest costs on around two-thirds of its bank debt, a feature which will continue until the swaps expire in August 2003. Interest on the 5.25% unsecured convertible loan note, due 2008 only became payable in cash effective 1 June 2001, the anniversary of its issue to Rentokil Initial plc as part consideration for the acquisition of BET USA. Prior to that date an accrued interest charge was included in the accounts under FRS 4 reflecting the fact that the fair value of the loan note at issue (£121.3m) was less than its face value of £134m. The annual interest charge included in the accounts now that cash interest has become payable will reflect the £7.0m cash interest payment plus an ongoing non-cash charge under FRS 4 of £0.7m annually which will bring the stated value of the loan note in the balance sheet up to its face value of £134m at 31 May 2008 if it is not previously converted by its holder prior to that date. Exceptional items 6 months to 31 Year to 30 October April 2001 2000 2001 £m £m £m UK asset disposal programme - included within cost of sales 14.6 - - - presented as an exceptional loss on disposal 15.4 - - BET USA integration costs (included in cost of - 2.6 12.3 sales) Costs incurred in relation to the bank facility 1.3 9.7 9.7 (included in interest) 31.3 12.3 22.0 It was announced at the Annual General Meeting on 8 October 2001 that A-Plant had decided to withdraw from certain low margin, high debt risk areas of business and that a review of associated assets was therefore being conducted which was then anticipated to result in an exceptional non-cash charge of no more than £25 million. This review has now been largely completed and the disposal of the associated assets is underway with the initial sale of a portion of these assets having taken place at a major European auction in late November. It is expected that the programme will be completed by June 2002 with the majority of the asset sales expected to have taken place prior to the year end. Once the assets to be sold have been earmarked, the disposal programme is being largely managed outside A-Plant's operating management structure to ensure that operational management can focus on meeting customers' requirements and on revenue maximisation. At 31 October the anticipated net cost of the programme of £30.0m has been booked as an exceptional item with around half of the charge taken to exceptional loss on disposal of fixed assets (where the disposal process is underway) and the balance taken to cost of sales (relating to assets where the ultimate disposal route is still subject to some uncertainty as well as to the estimated loss on disposal of the parts inventory relating to the machines being sold). By year end, when the disposal programme is expected to be largely complete, all of the charge except that related to parts inventory will be reclassified to the exceptional loss on disposal of fixed assets line in the profit and loss account. The increase in the charge from the 8 October estimate reflects the fact that, following the public announcement, an in depth review of the programme was carried out with all of A-Plant's operational management which has led to the additional charge to ensure that all appropriate equipment is fully addressed in the programme. The exceptional item in 2000/01 relating to BET USA integration costs covered the costs of integrating the acquired BET USA branches into Sunbelt of which the largest cost was the rebranding programme. The exceptional costs in relation to the bank facility in the six months to 31 October 2001 relate to variation and other fees paid to the banking group in connection with the changes required to the banking agreement (principally to covenants) consequent on the adoption of revised accounting policies and estimation techniques under FRS 18 in the accounts for the year ended 30 April 2001. The exceptional cost in the previous year related to the underwriting fees of £ 8.3m paid on 1 June 2000 to the banks which underwrote the new bank facility entered into to finance the BET USA acquisition and to early redemption costs of £1.4m on Sunbelt's private placement debts which were redeemed in June 2000. Profit before tax before exceptional items and goodwill Profit before tax before exceptional items and goodwill or adjusted pre-tax profit rose 15.7% to £25.8m. The adjusted pre-tax profit margin rose from 7.9% for the year ended 30 April 2001 and 8.1% for the six months to 31 October 2000 to 8.3% for the current period. The reconciliation to the loss before tax under FRS 3 is as follows: Unaudited Audited 6 months to 6 months to Year to 30 April 31Oct 2001 31Oct 2000 2001 £m £m £m (restated) (restated) Adjusted pre-tax profit 25.8 22.3 43.7 Exceptional A-Plant asset (30.0) - - write down Exceptional BET USA - (2.6) (12.3) integration costs Exceptional costs re bank (1.3) (9.7) (9.7) facility Non recurring BET USA salary - (2.5) (2.5) costs Goodwill amortisation (4.4) (3.4) (8.1) Pre-tax profit/(loss) under (9.9) 4.1 11.1 FRS 3 Taxation Reflecting one of the benefits of the capital intensive nature of the Group's operations, the current tax charge for the half year continues to be low at £ 0.4m representing an effective tax rate on adjusted pre-tax profits of 2%. The effective current tax rate is expected to remain at low levels (significantly less than ten percent) for the foreseeable future. The Group has, however, adopted the new UK standard on deferred tax, FRS 19, which requires full provision to be made for deferred tax in line with international practice as opposed to the partial provision method previously applicable under SSAP 15. Adoption of FRS 19 has been dealt with as a prior period adjustment and increases the deferred tax provision at 30 April 2001 from £4.0m previously reported to £66.0m but has no impact on the amount of tax the Group will actually pay in years to come. Under FRS 19 the Group's full year estimated effective tax rate (for the current year element of the tax charge) is 22% which is lower than the UK statutory rate due to tax benefits arising from the structure of the BET USA acquisition. Additionally, no deferred tax benefit has been assumed in relation to the exceptional items at the half year because to do so would result in a net deferred tax asset in the UK. The prior year deferred tax credit relates to tax benefits relating to the structure of the BET USA acquisition not previously recognised which are now being brought into account. Overall the total tax credit for the half year is £5.4m (charge of £ 4.0m). FIXED ASSETS Rental equipment 6 months to 31 Oct 2001 6 months to 31 Year to 30 additions Oct 2000 April 2001 Expansion Replacement Total £m £m £m £m £m Sunbelt Rentals 27.6 23.2 50.8 95.6 146.3 A-Plant 6.8 12.8 19.6 57.7 67.0 Ashtead Technology 2.5 0.3 2.8 1.7 4.2 36.9 36.3 73.2 155.0 217.5 Capital expenditure in the six months to 31 October 2001 of £81.2m, including £73.2m spent on rental equipment is significantly lower than in the previous year when £165.2m (rental equipment - £155.0m) was spent in the first six months and £237.7m for the year as a whole (rental equipment - £217.5m). Despite the lower capital expenditure both Sunbelt and A-Plant retain relatively young fleets with the average age of the Group's rental fleet at 31 October being 38 months. CASH FLOW Net cash inflow from operations before exceptional cash costs rose 52% to £ 109.8m (£72.4m). This reflected growth in EBITDA before exceptional items and, in 2000, non recurring BET USA staff salary costs which rose 5.0% over the previous year to £109.5m (£104.3m) and good control of working capital, particularly receivables. This control resulted in a net inflow of £0.6m from working capital movements in the six months to 31 October 2001 compared with an outflow of £22.1m for 2000/01 as a whole and an outflow of £26.9m in the first half last year. As a result net cash inflow from operating activities before exceptional items represented 100.3% of EBITDA before exceptional items compared to 71.1% in the first half of 2000/01 and 85.2% for the year as a whole. Other cash items Interest paid rose 28.9% in the half year reflecting the timing of interest payments and the additional month's financing for BET USA. Capital expenditure paid in the period rose to a record £149.1m as we completed paying for the high capital expenditure in the first six months of 2000/01. In consequence bills payable fell from £90.7m at 30 April 2001 to only £18.4m at 31 October 2001. Proceeds from disposals of fixed assets rose 38.9% to a record figure for the six months of £25.7m and provided a useful contribution to the reduction in debt levels in the period. This included £8.8m relating to the sale of the UK vehicle fleet which was moved onto a serviced lease basis similar to that already used by Sunbelt Rentals. Net debt At 31 October At 30 April 2001 2000 2001 £m £m £m 5.25% unsecured, convertible loan note, due 2008 129.4 124.5 127.9 Net bank debt 527.6 464.1 484.4 Bills of exchange payable 18.4 120.7 90.7 Net bank debt rose as anticipated in the half year reflecting the £149.1m paid in the period for capital expenditure (up 48% over the previous half year). Much of this expenditure related to equipment purchased on long credit terms in the first six months of 2000 before capital expenditure levels were reduced. This is further shown by the level of bills payable which have reduced 85% from £120.7m at 31 October 2000 to only £18.4m at 31 October 2001. Taking net bank debt and bills of exchange together, the combined total has reduced steadily over the past year (by £29.1m in the first half and by £38.8m since 31 October 2000) reflecting the Group's cash generation from operations which will in future be reflected directly in the level of bank borrowings. Consequently net bank debt is expected to fall further in coming months with A-Plant in particular expected to be significantly cash positive in the second half of the current year and in the subsequent year. The Group retains significant headroom in both committed and uncommitted facilities above its projected borrowing requirements and is in full compliance with the financial covenants in its banking agreements which were adjusted in July to reflect the impact of the new accounting policies and estimation techniques adopted under FRS 18. Headroom was £55.7m against all facilities at 31 October 2001 and £37.3m against committed facilities. OPERATING STATISTICS Profit centre numbers Staff numbers At 31 October At 30 April At 31 October At 30 April 2001 2000 2001 2001 2000 2001 Sunbelt Rentals 181 151 163 3,884 3,313 3,471 A-Plant 265 270 273 2,547 2,771 2,498 Ashtead Technology 7 7 7 81 56 61 Corporate office - - - 13 13 13 453 428 443 6,525 6,153 6,043 ASHTEAD GROUP PLC CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 OCTOBER 2001 Unaudited Audited Six months to 31 October 2001 Six months to Year to 30 31Oct 2000 April 2001 Before Exceptional items & exceptional items & goodwill Total goodwill amortisation £m £m £m £m £m (restated) (restated) Turnover 310.6 - 310.6 276.6 552.0 Cost of sales (238.9) (14.6) (253.5) (214.5) (430.8) Gross profit 71.7 (14.6) 57.1 62.1 121.2 Administrative (21.4) (4.4) (25.8) (26.2) (53.0) expenses Operating profit 50.3 (19.0) 31.3 35.9 68.2 Operating profit 50.3 - - 41.9 88.6 before goodwill and exceptional items Exceptional loss on - (15.4) (15.4) - - disposal of UK fixed assets Net interest payable (24.5) (1.3) (25.8) (31.8) (57.1) and similar charges (Loss)/profit on 25.8 (35.7) (9.9) 4.1 11.1 ordinary activities before taxation Tax on (loss)/profit on ordinary activities: - current tax (0.4) - (0.4) - 1.2 - deferred tax - (5.3) - (5.3) (4.0) (10.1) current year - deferred tax - 11.1 - 11.1 - - prior year 5.4 - 5.4 (4.0) (8.9) (Loss)/profit for the 31.2 (35.7) (4.5) 0.1 2.2 financial period Equity dividends (2.1) (2.0) (11.3) Retained (loss)/ (6.6) (1.9) (9.1) profit transferred to reserves Basic (loss)/earnings (1.4p) 0.0p 0.7p per share Diluted (loss)/ (1.4p) 0.0p 0.7p earnings per share Comparative figures have been restated as described in note 6 CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE SIX MONTHS ENDED 31 OCTOBER 2001 Unaudited Audited Six months to Six months to Year to 30 31 October 2001 31 October 2000 April 2001 £m £m £m (restated) (restated) (Loss)/profit for the financial (4.5) 0.1 2.2 period Foreign currency translation (1.2) 3.1 (0.2) differences Total recognised gains and losses (5.7) 3.2 2.0 for the period Prior period adjustments (48.4) (9.6) Total losses recognised since the (54.1) (6.4) last annual report/interim report RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS FOR THE SIX MONTHS ENDED 31 OCTOBER 2001 Unaudited Audited Six months to 31 Six months to 31 Year to 30 October 2001 October 2000 April 2001 £m £m £m (restated) (restated) (Loss)/profit for the (4.5) 0.1 2.2 financial period Dividends (2.1) (2.0) (11.3) (6.6) (1.9) (9.1) Share capital subscribed 0.7 0.3 0.5 Foreign currency translation (1.2) 3.1 (0.2) differences Net (reduction)/addition to (7.1) 1.5 (8.8) shareholders' funds At 1 May as previously 250.5 246.4 236.8 reported Prior year adjustment (48.4) (35.5) (25.9) At 1 May as restated 202.1 210.9 210.9 Closing shareholders' funds 195.0 212.4 202.1 Comparative figures have been restated as described in note 6 CONSOLIDATED BALANCE SHEET AT 31 OCTOBER 2001 Unaudited Audited 31 October 31 October 30 April 2001 2000 2001 £m £m £m (restated) (restated) Fixed assets Intangible assets - goodwill 162.4 163.4 164.3 Tangible assets - rental equipment 696.3 724.1 725.6 - other fixed assets 69.3 72.2 76.9 765.6 796.3 802.5 928.0 959.7 966.8 Current assets Stocks 14.7 17.4 15.3 Debtors 119.9 137.2 125.7 Cash at bank and in hand 2.5 10.2 1.1 137.1 164.8 142.1 Creditors - amounts falling due within one year Bank loans and overdrafts (0.2) (13.6) (2.2) Bills of exchange (18.4) (120.7) (90.7) Trade and other creditors (125.6) (128.1) (132.0) (144.2) (262.4) (224.9) Net current liabilities (7.1) (97.6) (82.8) Total assets less current liabilities 920.9 862.1 884.0 Creditors - amounts falling due after more than one year Bank and other loans (529.9) (460.7) (483.3) 5.25% unsecured convertible loan note, due (129.4) (124.5) (127.9) 2008 (659.3) (585.2) (611.2) Provisions for liabilities and charges Deferred taxation (59.4) (61.0) (66.0) Other provisions (7.2) (3.5) (4.7) (66.6) (64.5) (70.7) Total net assets 195.0 212.4 202.1 Capital and reserves Called up share capital 32.5 32.3 32.4 Share premium account 100.7 100.0 100.1 Revaluation reserve 0.5 0.5 0.5 Profit and loss account 61.3 79.6 69.1 Total capital and reserves (equity 195.0 212.4 202.1 interests) Comparative figures have been restated as described in note 6 CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31 OCTOBER 2001 Unaudited Audited Six months Six months to Year to to 31 31 October 30 April October 2000 2001 2001 £m £m £m (restated) Net cash inflow from operating activities Cash inflow before operating exceptional 109.8 72.4 173.0 items Exceptional cash costs - (2.6) (10.3) Net cash inflow from operating 109.8 69.8 162.7 activities Returns on investments and servicing of finance Interest paid (net) (19.6) (15.2) (36.7) Exceptional costs re bank facility (1.3) (9.7) (9.7) Net cash outflow from returns on investments and servicing of finance (20.9) (24.9) (46.4) Taxation (outflow)/inflow (0.1) (0.3) 1.7 Capital expenditure Purchase of tangible fixed assets (149.1) (100.7) (202.6) Sale of tangible fixed assets 25.7 18.5 38.3 Net cash outflow from capital (123.4) (82.2) (164.3) expenditure Acquisitions and disposals (6.7) (213.1) (214.1) Equity dividends paid (9.4) (8.4) (10.4) Net cash outflow before management of (50.7) (259.1) (270.8) liquid resources and financing Inflow from management of liquid - 15.0 15.6 resources due to decrease in short term investments Financing Issue of ordinary share capital 0.7 0.3 0.5 Net draw down/(redemption) of loans 53.4 287.3 296.3 Net cash inflow from financing 54.1 287.6 296.8 Increase in cash 3.4 43.5 41.6 Comparative figures have been restated as described in note 6 NOTES TO THE INTERIM FINANCIAL STATEMENTS 1. The abridged 2001 profit and loss account, balance sheet and cash flow statement are taken from the statutory accounts for the year ended 30 April 2001 which have been filed with the Registrar of Companies. The auditor's report on these accounts was unqualified and did not contain a statement under section 237 of the Companies Act 1985. 2. The Directors have declared an interim dividend of 0.62p per share (2000 - 0.62p per share) which will be paid on 8 April 2002 to shareholders on the register on 1 March 2002. 3. Earnings per share for the six months ended 31 October 2001 have been calculated based on the profit or loss attributable to the shareholders of Ashtead Group plc and on 324,482,727 ordinary shares, being the weighted average number of ordinary shares in issue during the period (6 months to 31 October 2000 - 323,172,959 shares, year to 30 April 2001 - 323,334,079 shares). Diluted earnings per share for the six months ended 31 October 2001have been calculated based on the profit or loss attributable to the shareholders of Ashtead Group plc and on 324,482,727 Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period in each case adjusted as required to reflect conversion of the convertible loan stock and the issue of shares under the Group's option schemes (6 months to 31 October 2000 - 325,848,045 shares, year to 30 April 2001 - 326,307,678 shares). 4. Segmental analysis Turnover Operating profit 6 months to Year to 30 6 months to Year to 30 31 October April 31 October April Unaudited Audited Unaudited Audited 2001 2000 2001 2001 2000 2001 £m £m £m £m £m £m (restated) (restated) United States 205.7 172.7 350.2 37.2 27.8 61.2 United Kingdom 103.7 102.6 199.7 12.8 13.6 26.8 Rest of World 1.2 1.3 2.1 0.3 0.5 0.6 310.6 276.6 552.0 50.3 41.9 88.6 Exceptional items - - - (14.6) (2.6) (12.3) Goodwill - - - (4.4) (3.4) (8.1) amortisation 310.6 276.6 552.0 31.3 35.9 68.2 Net assets: 6 months to 31 October Year to 30 April Unaudited Audited 2001 2000 2001 £m £m £m (restated) (restated) United States 634.8 573.1 591.5 United Kingdom 274.8 287.1 286.9 Rest of World 1.8 1.8 2.0 911.4 862.0 880.4 Central items (funding related) (716.4) (649.6) (678.3) 195.0 212.4 202.1 5. Net interest payable and similar charges Unaudited Unaudited Audited 6 months to 31 6 months to 31 Year to October 2001 October 2000 30 April 2001 £m £m £m (restated) On bank and other 20.7 18.8 40.8 borrowings Convertible loan interest 3.8 3.3 6.6 24.5 22.1 47.4 Exceptional costs re bank 1.3 9.7 9.7 facility 25.8 31.8 57.1 6. The interim results information has been prepared on the basis of accounting policies set out in the Group's statutory accounts for the year ended 30 April 2001 to which no changes have been made except for the implementation of FRS 19, Deferred Tax. Adoption of FRS 19 which requires full provision to be made for deferred tax has been dealt with by way of a prior year adjustment. Adjustments have also been made to the previously published results for the six months to 31 October 2000 to reflect the subsequent adoption of FRS 18 as described in the accounts for the year ended 30 April 2001 and to comply with the presentation adopted in the accounts for the year ended 30 April 2001. 7. The effective rate of tax assumed for the six months to 31 October 2001, reflecting the new accounting basis for deferred tax is 22% (six months to 31 October 2000 - 53%, year to 30 April 2001 - 53%) and is calculated by applying the Director's present best estimate of the annual tax rate to the profit before tax for the period after adding back goodwill amortisation for which no tax allowance is available. It is also stated before the impact of prior period adjustments (£11.1m credit in the six months to 31 October 2001 and a credit of £1.3m in the year to 30 April 2001). The full year tax charge is currently expected to almost entirely comprise a deferred tax charge as was also the case in the year to 30 April 2001. 8. Fixed assets Rental equipment Total Net book value: £m £m At 30 April 2001 725.6 802.5 Exchange difference (7.4) (8.0) Additions 73.2 81.2 Acquisitions 4.0 4.1 Disposals (16.6) (26.3) Depreciation (53.8) (59.2) Exceptional UK asset write-down (28.7) (28.7) At 31 October 2001 696.3 765.6 9. Goodwill Cost Amortisation NBV £m £m £m At 30 April 2001 158.4 (7.7) 150.7 Prior year adjustment re BET USA deferred tax 14.4 (0.8) 13.6 As restated 172.8 (8.5) 164.3 Acquisitions in the period 2.5 - 2.5 Charged in the period - (4.4) (4.4) 175.3 (12.9) 162.4 10. Notes to the cash flow statement (a) Reconciliation to net debt Unaudited Audited Six months to 31 Six months to 31 Year to 30 October 2001 October 2000 April 2001 £m £m £m (Increase) in cash in the (3.4) (43.5) (41.6) period Increase in bank loans 53.4 287.3 296.3 Cash inflow from decrease in - 15.0 15.6 short term investments Change in net debt from cash 50.0 258.8 270.3 flows Translation difference (6.8) 14.0 22.8 Movements in net debt in the 43.2 272.8 293.1 period Net bank debt at 1 May 484.4 191.3 191.3 Net bank debt at 31 October 527.6 464.1 484.4 5.25% unsecured convertible 129.4 124.5 127.9 loan note, due 2008 Net debt at 31 October 657.0 588.6 612.3 (b) Cash flow from operating activities Unaudited Audited Six months to Six months to Year to 30 31 October 31 October April 2001 2000 2001 £m £m £m (restated) (restated) Operating profit 31.3 35.9 68.2 Exceptional operating costs 14.6 2.6 12.3 Amortisation of goodwill 4.4 3.4 8.1 Depreciation of tangible fixed assets 59.2 59.9 114.5 EBITDA before exceptional operating 109.5 101.8 203.1 costs Loss/(gain) on sale of tangible fixed 0.7 (2.5) (6.8) assets Decrease/(increase) in stocks (0.7) 0.6 (0.7) Decrease/(increase) in trade debtors 6.9 (25.1) (12.1) (Decrease)/increase in trade creditors (5.6) (2.4) (9.3) Exchange differences (1.0) - (1.2) Net cash inflow from operating activities before exceptional 109.8 72.4 173.0 operating costs 11. Copies of this interim statement are being posted to all shareholders. Copies are available on request from the Company Secretary at the Registered Office of the Group at Ashtead House, Business Park 8, Barnett Wood Lane, Leatherhead, Surrey KT22 7DG. INDEPENDENT REVIEW REPORT TO ASHTEAD GROUP PLC Introduction We have been instructed by the Company to review the interim financial information comprising the consolidated income statement, consolidated statement of total recognised gains and losses, consolidated balance sheet, consolidated cash flow statement, reconciliation of movement in shareholders' funds and related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999 /4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 October 2001. PricewaterhouseCoopers Chartered Accountants London 15 January 2002

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