Interim Results
Ashtead Group PLC
22 January 2004
ASHTEAD GROUP PLC
Interim results for the 6 months ended 31 October 2003
Ashtead Group is one of the world's leading equipment outsourcers. The Group
comprises: Sunbelt Rentals, the fourth largest equipment rental company in the
United States; A-Plant, a market leader in the rental of non-operated equipment
in the UK; and Ashtead Technology, a world leader in the rental of electronic
survey and inspection equipment to the offshore oil and gas industry.
• Improving trading conditions and operating performance in US businesses
• Continued refocusing at A-Plant creating annualised cost savings of
c£15 million partially offsetting the effects of the turnover reduction in
the first half
• Profit before goodwill, exceptionals and tax of £11.1 million (2002:
£14.7 million)
• After exceptional items of £15.1m mainly related to the Group's banking
arrangements and goodwill amortisation of £4.5m, the loss before tax was
£8.5m (2002: loss of £6.6m)
• Earnings per share of 2.4p (2002: 3.2p) based on the profit before
goodwill amortisation and exceptional items, less a notional 30 per cent tax
charge. Under FRS 14 the loss per share is 3.4p (2002 - 1.6p)
• Free cash flow* in the first half of £27.8 million (2002: £7.4 million)
and £59.3 million in the last twelve months
• Total net debt including the debtors' securitisation at 31 October of
£575.5 million (31 October 2002: £649.6 million)
* Cash inflow from operations before exception items less net capital
expenditure, interest (excluding exceptional interest) and tax
Chief Executive George Burnett said:
'During the six months ended 31 October 2003 the Group completed the independent
review of its accounting issues in the US and secured the ongoing support of its
banks (to January 2005); returned to profit before exceptional charges mainly
related to the Group's banking arrangements; and continued to generate
significant net free cash flow and to pay down debt.
By disposing of three non-core businesses for 5 times EBITDA, A-Plant has
completed its restructuring programme leaving its management free to concentrate
on taking the business forward. While a weak dollar will continue to reduce
reported sterling debt and turnover levels, the effect on profitability will be
more modest. The Board is encouraged by the improved performance in its US
businesses, particularly since the equipment rental industry tends to see late
cycle recovery. The favourable indicators regarding the current strength of the
US economic recovery enables the Board to take a more optimistic view of
prospective trading conditions in 2004 and beyond.'
PRESS RELEASE
OVERVIEW
During the six months ended 31 October 2003 the Group completed the independent
review of its accounting issues in the US and secured the ongoing support of its
banks to January 2005; returned to profit before exceptional charges mainly
related to the Group's banking arrangements; and continued to generate
significant net free cash flow and to pay down debt.
Group profit before goodwill amortisation, exceptional charges and tax was £11.1
million (2002: £14.7 million) and the FRS 3 loss after exceptional items and
goodwill amortisation was £8.5 million (2002: £6.6 million). Based on profits
before goodwill and exceptional items and a notional 30% tax charge), earnings
per share were 2.4p (2002: 3.2p). The actual tax payable is estimated to be only
£0.1 million. The FRS 14 loss per share was 3.4p (1.6p). Net free cash flow was
£27.8 million compared with £7.4 million in 2002 making a total of £59.3 million
over the last 12 months. Total net debt including the debtors' securitisation
was £575.5 million (2002: £649.6 million). Sterling turnover, profit and debt
figures were all reduced due to the weakness of the dollar.
US - SUNBELT RENTALS
Total dollar revenues increased by $1.2 million (0.4%) to $293.6 million and
divisional profit (Operating profit before exceptional items and goodwill
amortisation) by $0.4 million (1.0%) to $41.3 million. The weakness of
the dollar however was such that this underlying growth was translated in
sterling terms into a decline in turnover of 5.7% and in operating profit of
5.6% against the same period in the previous year. Year on year rental revenues
grew on an increasing scale throughout the period reflecting improved rental
rates, while utilisation levels gradually improved to match 2002 levels by
October. The net effect was a 1.7% increase in rental revenues over the prior
year in Quarter 1, rising to a 4.8% increase in Quarter 2. The lower rate of
growth in total revenues reflected lower consumable sales, and lower erection
and dismantling income in the Group's scaffolding business.
A comparison of these figures with our peer group in the US indicates that we
continued to outperform in terms both of growth in rental revenues and in margin
levels. This quarterly analysis also gave encouraging evidence of a general
upturn in the US equipment rental market which supplements other improving
indicators such as the level of non residential construction, which is now
showing year on year growth for the first time in nearly three years.
In geographic terms, four of Sunbelt's five regions were ahead of the same
period in the previous year in terms of turnover and contribution while the
fifth, the West Coast, has showed considerable progress in the second quarter
although still remaining below the same period in the previous year. In terms of
product, the pump and power division has shown particularly strong growth, while
general tool and aerial work platforms have also made good progress.
Scaffolding, where trading conditions have been particularly difficult, has seen
an improved performance in recent months.
Capital expenditure was $28.2 million, less than half the prior year figure of
$57.4 million. In sterling terms capital expenditure was £16.6 million against
£36.7 million in 2002.
UK - A-PLANT
A-Plant continued its refocusing strategy which since 1 May 2002 has seen the
rationalisation of its five support offices into one corporate office and the
closure of 39 profit centres. Also, in the past six months the non-core
businesses of Big Air and Mast Climbing were disposed of generating total
proceeds of £5.0 million and, earlier this month, Ireland was sold for an
estimated consideration of £12.1m. The average EBITDA multiple for these
disposals was 5 times. In the six months we also sold a number of surplus
properties which generated further proceeds of £1.1 million. There was a
non-cash charge of £2.9 million in the six months in connection with the
refocusing programme which is now substantially complete.
Although annualised cost savings of around £15 million have now been achieved in
A-Plant, these were not sufficient to offset the reduction in turnover in the
six month period from £95.1 million to £83.5 million with the result that
divisional profit fell from £9.7 million in 2002 to £5.6 million in 2003.
Capital expenditure remained under tight control. £19.5 million was spent in the
period (2002: £16.8 million) while £10.9 million was generated in proceeds from
the sale of used rental assets.
A-Plant has now achieved its strategic goal of having three significant
businesses with a clear product focus - Main Plant, Tool Hire Shops and
Specialist Products. No further material disposals of non-core activities are
anticipated. Although turnover declined on a same-store basis by 5.7% in the six
month period, major account customers continue to increase in importance to
A-Plant. Its top 100 customers accounted for 31.5% of turnover in the period,
providing a solid core of customer support at a time when the US accounting
issue and its consequences in the UK were an unwelcome distraction to the
A-Plant business.
OFFSHORE AND ENVIRONMENTAL - ASHTEAD TECHNOLOGY
Ashtead Technology, our offshore and environmental business, achieved divisional
profit ahead of the same period last year in constant currency terms, but in
line with last year at £2.1 million in sterling terms. Market conditions in the
offshore market were generally difficult throughout the period but the on-shore
environmental business in North America, aided by the introduction of rental
products already carried by our offshore profit centres, showed encouraging
growth given the economic background.
CASH MANAGEMENT
The Group produced a net cash inflow from operations during the period of £80.9
million (2002: £90.4 million) which as a result of lower capital expenditure
payments and higher proceeds from disposals resulted in a net free cash flow of
£27.8 million compared with £7.4 million in 2002. Debtor days were 55 against 56
in the previous year. Total payments for capital expenditure were £50.8 million
(2002: £73.5 million) while £14.2 million was generated from assets sold giving
a gain of £1.8 million (2002: loss of £0.3 million). Total debt including the
securitisation of debtors stood at £575.5 million (2002: £649.6 million). In
addition to any benefits from the weak dollar it is anticipated that debt levels
will continue to be reduced through the generation of free cash flow.
REFINANCING
On 30 May 2003, the Group's bankers waived the default which had arisen as a
result of accounting problems in Sunbelt and agreed to the extension of the
Group's banking lines to 28 January 2005. We continue to examine options for
refinancing these facilities and remain confident, particularly given the
favourable indicators we are seeing regarding the strength of the US economic
recovery, that we will be able to do so well before January 2005. However,
clearly there can be no guarantee that we will be able to refinance and, as time
progresses, other options to facilitate repayment of those facilities will of
course be considered in parallel.
CURRENT TRADING AND OUTLOOK
In November and December Sunbelt continued to achieve the level of year on year
growth in dollar rental revenues seen in the second quarter and an improvement
in its comparative sales, and erection and dismantling incomes. A-Plant's
like-for-like turnover figures were in line with those achieved in the first
half. Ashtead Technology continued to suffer from weak offshore markets in
Aberdeen and Singapore but experienced good growth both onshore and offshore in
its North American businesses.
A-Plant has completed its restructuring programme leaving its management free to
concentrate on taking the business forward. While a weak dollar will continue to
reduce reported sterling debt and turnover levels, the effect on profitability
will be more modest. The Board is encouraged by the improved performance in its
US businesses, particularly since the equipment rental industry tends to see
late cycle recovery. The favourable indicators regarding the current strength of
the US economic recovery enables the Board to take a more optimistic view of
prospective trading conditions in 2004 and beyond.
-oOo-
There will be a presentation to analysts at 9.30am today at the offices of
Panmure at Woolgate Exchange, 25 Basinghall Street, London EC2V 5HA. A copy of
the slides and a live webcast of the presentation will be available via the
Company's website (www.ashtead-group.com) as well as a playback as soon as
practicable after the presentation closes.
ENDS
22 January 2004
Contacts: Cob Stenham Non-executive chairman 020 7299 5562
George Burnett Chief Executive ) 01372 362300
Ian Robson Finance Director )
David Trenchard ) Tulchan Communications 020 7353 4200
William Davidson )
SUPPLEMENTAL FINANCIAL INFORMATION
Divisional performance Turnover Profit
------------------------ ---------- --------
6 months to Year to 6 months to Year to
31 October 30 April 31 October 30 April
2003 2002 2003 2003 2002 2003
---- ---- ---- ---- ---- ----
£m £m £m £m £m £m
(restated)
Sunbelt Rentals - in $m 293.6 292.4 547.0 41.3 40.9 51.5
===== ===== ===== ==== ==== ====
Sunbelt Rentals - in £m 179.1 190.0 349.1 25.2 26.7 32.9
A-Plant 83.5 95.1 178.4 5.6 9.7 7.9
Ashtead Technology 6.8 7.1 12.0 2.1 2.1 2.5
Group central costs - - - (2.7) (2.6) (4.2)
----- ----- ----- ---- ---- ----
Total divisional revenue
& profit 269.4 292.2 539.5 30.2 35.9 39.1
===== ===== =====
Interest payable (19.1) (21.2) (40.9)
---- ---- ----
Profit/(loss) before taxation, exceptionals and goodwill
amortisation 11.1 14.7 (1.8)
Exceptional items (15.1) (16.8) (31.4)
Goodwill amortisation (4.5) (4.5) (9.0)
--- --- ---
Loss before tax (8.5) (6.6) (42.2)
--- --- ----
Fixed assets - rental equipment additions 6 months to 31 October Year to 30 April
------------------------------------------- 2003 2002 2003
---- ---- ----
£m £m £m
Sunbelt Rentals 14.6 33.9 45.8
A-Plant 18.2 15.0 22.4
Ashtead Technology 1.4 2.3 2.8
---- ---- ----
Total rental equipment 34.2 51.2 71.0
Other fixed assets 3.4 4.7 14.5
---- ---- ----
Total additions 37.6 55.9 85.5
==== ==== ====
Additions in the 6 months to 31 October 2003 were entirely replacement
expenditure.
Net debt At 31 October At 30 April
-------- 2003 2002 2003
---- ---- ----
£m £m £m
(restated)
Net debt 375.6 435.9 412.6
Finance lease obligations 16.4 25.7 22.4
5.25% unsecured convertible loan note, due
2008 130.2 130.1 129.8
----- ----- -----
522.2 591.7 564.8
Non-recourse finance under debtors
securitisation 53.3 57.9 57.5
----- ----- -----
Total net debt 575.5 649.6 622.3
===== ===== =====
SUPPLEMENTAL FINANCIAL INFORMATION
Summarised cash flow statement 6 months to 12 months to Year to
-------------------------------- 31 October 31 October 30 April
2003 2002 2003 2003
---- ---- ---- ----
£m £m £m £m
EBITDA 84.9 91.7 143.3 150.1
==== ==== ===== =====
Cash inflow from operations before
exceptional items 80.9 90.4 147.8 157.3
Cash efficiency ratio* 95.3% 98.6% 103.1% 104.8%
Capital expenditure (50.8) (73.5) (84.4) (107.1)
Proceeds from sale of used 14.2 12.6 31.0 29.4
rental equipment
Tax (paid)/received (0.2) (0.4) 0.9 0.7
---- ---- ---- ----
Free cash flow before interest 44.1 29.1 95.3 80.3
Interest paid (16.3) (21.7) (36.0) (41.4)
---- ---- ---- ----
Free cash flow after interest 27.8 7.4 59.3 38.9
Acquisitions and disposals 5.0 (0.4) 4.6 (0.8)
Exceptional costs (10.2) (1.7) (16.1) (7.6)
Dividends paid - (9.3) - (9.3)
---- --- ---- ----
Reduction/(increase) in total
debt (including debtors
securitisation) 22.6 (4.0) 47.8 21.2
==== === ==== ====
* Cash inflow from operations before exceptional items as a percentage of EBITDA
Operating statistics
--------------------
Profit centre numbers Staff numbers
----------------------- ---------------
At 31 October At 30 April At 31 October At 30 April
2003 2002 2003 2003 2002 2003
---- ---- ---- ---- ---- ----
Sunbelt Rentals 199 195 193 3,765 3,847 3,671
A-Plant 231 264 249 2,198 2,552 2,314
Ashtead Technology 8 7 7 76 71 81
Corporate office - - - 12 14 12
--- --- --- ----- ----- -----
Group 438 466 449 6,051 6,484 6,078
=== === === ===== ===== =====
Since 31 October 2003, the sale of A-Plant's Irish division has reduced the
number of profit centres by 15 to 216.
ASHTEAD GROUP PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 31 OCTOBER 2003
Unaudited Audited
--------- -------
6 months to Year to
31 October 30 April
2003 2002 2003
---- ---- ----
£m £m £m
(restated)
Turnover 269.4 292.2 539.5
Cost of sales (220.7) (251.1) (479.8)
----- ----- -----
Gross profit 48.7 41.1 59.7
Administrative expenses (26.1) (22.0) (50.4)
Goodwill amortisation (4.5) (4.5) (9.0)
---- ---- ----
Total administrative expenses (30.6) (26.5) (59.4)
Operating profit 18.1 14.6 0.3
Profit on disposal of tangible fixed
assets 0.3 - 0.3
Net interest payable and similar charges (26.9) (21.2) (42.8)
---- ---- ----
Loss on ordinary activities before
taxation (8.5) (6.6) (42.2)
--------------------------------------------------------------------------------
Profit/(loss) before taxation, exceptional
items and goodwill amortisation 11.1 14.7 (1.8)
Exceptional items (15.1) (16.8) (31.4)
Goodwill amortisation (4.5) (4.5) (9.0)
--- --- ---
Loss on ordinary activities before
taxation (8.5) (6.6) (42.2)
=== === ====
--------------------------------------------------------------------------------
Taxation on loss on ordinary activities:
- current tax charge (0.1) (0.6) (0.3)
- deferred tax - current year (charge)/credit (2.5) (2.5) 4.8
- deferred tax - prior year credit - 4.6 4.5
--- --- ---
(2.6) 1.5 9.0
--- --- ---
Loss for the financial period transferred
to reserves (11.1) (5.1) (33.2)
==== === ====
Basic loss per share (3.4p) (1.6p) (10.3p)
==== ==== =====
Diluted loss per share (3.4p) (1.6p) (10.3p)
==== ==== =====
Comparative figures for the six months to 31 October 2002 have been restated as
described in note 2.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE SIX MONTHS ENDED 31 OCTOBER 2003
Unaudited Audited
----------- ---------
6 months to Year to
31 October 30 April
2003 2002 2003
---- ---- ----
£m £m £m
(restated)
Loss for the financial period (11.1) (5.1) (33.2)
Foreign currency translation differences 0.5 0.2 (0.4)
---- --- ----
Total recognised gains and losses for the
period (10.6) (4.9) (33.6)
==== === ====
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
FOR THE SIX MONTHS ENDED 31 OCTOBER 2003
Unaudited Audited
----------- ---------
6 months to Year to
31 October 30 April
2003 2002 2003
---- ---- ----
£m £m £m
(restated)
Loss for the financial period (11.1) (5.1) (33.2)
Share capital subscribed - 0.1 0.1
Foreign currency translation differences 0.5 0.2 (0.4)
----- ----- -----
Net reduction in equity shareholders' funds (10.6) (4.8) (33.5)
At 1 May 161.0 194.5 194.5
----- ----- -----
Closing equity shareholders' funds 150.4 189.7 161.0
===== ===== =====
Comparative figures for the six months to 31 October 2002 have been restated as
described in note 2.
CONSOLIDATED BALANCE SHEET AT 31 OCTOBER 2003
Unaudited Audited
31 October 30 April
---------- --------
2003 2002 2003
---- ---- ----
£m £m £m
Fixed assets (restated)
Intangible assets
- goodwill 147.5 156.4 152.0
Tangible assets
- rental equipment 520.3 633.4 577.5
- other fixed assets 69.7 70.0 74.0
----- ----- -----
590.0 703.4 651.5
----- ----- -----
Investments - own shares held by ESOT 1.6 1.6 1.6
----- ----- -----
739.1 861.4 805.1
----- ----- -----
Current assets
Stocks 13.8 11.9 11.6
Trade debtors subject to non-recourse
financing 88.2 97.6 88.0
Non-recourse financing received (53.3) (57.9) (57.5)
---- ---- ----
Net trade debtors subject to non-recourse
financing 34.9 39.7 30.5
Other trade debtors, prepayments and
accrued income 17.2 19.6 16.3
Cash at bank and in hand 18.8 0.4 10.3
---- ---- ----
84.7 71.6 68.7
---- ---- ----
Creditors - amounts falling due within one year
Bank loans, overdrafts and finance lease
obligations (47.8) (54.4) (10.6)
Trade and other creditors (87.0) (101.5) (92.2)
----- ----- -----
(134.8) (155.9) (102.8)
----- ----- -----
Net current liabilities (50.1) (84.3) (34.1)
----- ----- -----
Total assets less current liabilities 689.0 777.1 771.0
Creditors - amounts falling due after more than one year
Bank and other loans (353.5) (394.5) (415.8)
Finance lease obligations (9.5) (13.1) (18.9)
5.25% unsecured convertible loan (130.2) (130.1) (129.8)
note, due 2008 ----- ----- -----
(493.2) (537.7) (564.5)
----- ----- -----
Provisions for liabilities and charges
Deferred taxation (29.9) (36.3) (28.6)
Other provisions (15.5) (13.4) (16.9)
---- ---- ----
(45.4) (49.7) (45.5)
---- ---- ----
Total net assets 150.4 189.7 161.0
===== ===== =====
Capital and reserves
Called up share capital 32.6 32.6 32.6
Share premium account 100.7 100.7 100.7
Revaluation reserve 0.5 0.5 0.5
Profit and loss account 16.6 55.9 27.2
----- ----- -----
Total equity shareholders' funds 150.4 189.7 161.0
===== ===== =====
Comparative figures at 31 October 2002 have been restated as described in note
2.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 31 OCTOBER 2003
Unaudited Audited
---------- ---------
6 months to Year to
31 October 30 April
2003 2002 2003
---- ---- ----
£m £m £m
(restated)
Net cash inflow from operating activities
Cash inflow before exceptional items 80.9 90.4 157.3
Exceptional items (6.8) - (4.4)
Non-recourse finance (paid)/received
under trade debtors securitisation (2.7) 57.4 57.4
---- ----- -----
Net cash inflow from operating activities 71.4 147.8 210.3
---- ----- -----
Returns on investments and servicing of
finance
Interest paid - net (16.3) (21.7) (41.4)
Exceptional costs re bank facility (3.4) (1.7) (3.2)
---- ---- ----
Net cash outflow from returns on
investments and servicing of finance (19.7) (23.4) (44.6)
---- ----- ----
Taxation (outflow)/inflow (0.2) (0.4) 0.7
Capital expenditure
Purchase of tangible fixed assets (50.8) (73.5) (107.1)
Sale of tangible fixed assets 14.2 12.6 29.4
---- ---- ----
Net cash outflow from capital expenditure (36.6) (60.9) (77.7)
---- ---- ----
Acquisitions and disposals inflow/
(outflow) 5.0 (0.4) (0.8)
Equity dividends paid - (9.3) (9.3)
---- ---- ----
Net cash inflow before financing 19.9 53.4 78.6
Financing
Issue of ordinary share capital - 0.1 0.1
Net redemption of loans (7.4) (49.6) (53.9)
Increase in cash collateral balances (2.3) - (3.7)
Capital element of finance lease payments (5.1) (2.8) (11.9)
--- --- ----
Net cash outflow from financing (14.8) (52.3) (69.4)
---- ---- ----
Increase in cash 5.1 1.1 9.2
=== === ===
Comparative figures for the six months to 31 October 2002 have been restated as
described in note 2.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 OCTOBER 2003
1. The abridged 2003 profit and loss account, balance sheet and cash flow
statement are taken from the statutory accounts for the year ended 30 April 2003
which have been filed with the Registrar of Companies. The auditors' report on
these accounts was unqualified and did not contain a statement under section 237
of the Companies Act 1985.
2. Accounting policies and adjustments to previously published results
These interim results have been prepared on the basis of accounting policies set
out in the Group's statutory accounts for the year ended 30 April 2003 to which
no changes have been made. Adjustments have been made to the previously
published interim financial statements for the six months to 31 October 2002 to
reflect:
• the prior year effect of the US accounting issue of £9.4m identified
in March 2003 as an exceptional item in the same way as it was treated in the
2002/3 statutory accounts. Additionally the results for the six months to 31
October 2002 have been reduced by £4.3m being the estimated amount by which the
accounting issue impacted those interim financial statements;
• the impact of the change in estimation method for the costs of the
self insured element of the US insurance programme implemented in the 2002/3
statutory accounts. This led to an exceptional £7.4m charge relating to the
amount by which the provision required at 30 April 2002 exceeded the amount
originally provided at that date and to a £2.7m increase in the charge for the
2002/3 year. The interim financial statements for the six months to 31 October
2002 have therefore been adjusted to include the £7.4m exceptional item and by
£1.3m being the impact of the new basis for estimating the liability on the
profit and loss account for that period;
• the withdrawal in March 2003 of the interim dividend of £2.0m
originally proposed in respect of the six month period ended 31 October 2002.
3. Segmental analysis
The Group operates one class of business: rental equipment to industrial and
commercial users. The segmental analysis by business unit is given below:
Turnover Operating profit
Unaudited Audited Unaudited Audited
--------- ------- --------- -------
6 months to Year to 6 months to Year to
31 October 30 April 31 October 30 April
2003 2002 2003 2003 2002 2003
---- ---- ---- ---- ---- ----
£m £m £m £m £m £m
(restated)
Sunbelt Rentals 179.1 190.0 349.1 25.2 26.7 32.9
A-Plant 83.5 95.1 178.4 5.6 9.7 7.9
Ashtead Technology 6.8 7.1 12.0 2.1 2.1 2.5
Group central costs - - - (2.7) (2.6) (4.2)
----- ----- ----- ---- ---- ----
Group 269.4 292.2 539.5 30.2 35.9 39.1
===== ===== =====
Exceptional items (Note 5) (7.6) (16.8) (29.8)
Goodwill amortisation (4.5) (4.5) (9.0)
---- ---- ---
Operating profit 18.1 14.6 0.3
==== ==== ===
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 OCTOBER 2003 (continued)
3. Segmental analysis (continued)
The segmental analysis by geographic unit is given below:
Turnover Operating profit
Unaudited Audited Unaudited Audited
--------- -------- --------- -------
6 months to Year to 6 months to Year to
31 October 30 April 31 October 30 April
2003 2002 2003 2003 2002 2003
---- ---- ---- ---- ---- ----
£m £m £m £m £m £m
(restated)
North America 182.1 192.8 354.4 20.0 6.1 5.5
United Kingdom 86.3 98.2 183.2 (2.1) 8.0 (5.7)
Rest of World 1.0 1.2 1.9 0.2 0.5 0.5
----- ----- ----- ---- ---- ---
269.4 292.2 539.5 18.1 14.6 0.3
===== ===== ===== ==== ==== ===
Net assets: Unaudited Audited
----------- ---------
6 months to Year to
31 October 30 April
2003 2002 2003
---- ---- ----
£m £m £m
(restated)
North America 539.7 620.5 588.2
United Kingdom 214.5 253.3 222.2
Rest of World 1.6 1.8 1.5
Central items (net debt, securitisation
funding and deferred taxation) (605.4) (685.9) (650.9)
----- ----- -----
150.4 189.7 161.0
===== ===== =====
4. Net interest payable and similar charges
Unaudited Audited
--------- -------
6 months to Year to
31 October 30 April
2003 2002 2003
---- ---- ----
£m £m £m
(restated)
Bank interest payable 12.7 14.4 28.3
Funding cost on trade debtors securitisation 1.6 1.6 2.7
Interest payable on finance leases 0.8 1.3 2.2
Interest on unsecured convertible loan note 4.0 3.9 7.7
---- ---- ----
19.1 21.2 40.9
Exceptional costs re bank facility 7.8 - 1.9
---- ---- ----
26.9 21.2 42.8
==== ==== ====
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 OCTOBER 2003 (continued)
5. Exceptional items
Unaudited Audited
--------- -------
6 months to Year to
31 October 30 April
2003 2002 2003
---- ---- ----
£m £m £m
(restated)
Debt facility costs 11.3 - 7.5
Prior year impact of US accounting issue - 9.4 9.4
Prior year impact of change in estimation
method for US self insurance - 7.4 7.4
UK business rationalisation 2.9 - 7.4
US deferred income 1.2 - -
Profit on disposal of tangible fixed assets (0.3) - (0.3)
---- ---- ----
15.1 16.8 31.4
==== ==== ====
These costs are presented in the profit and loss account as follows:
Turnover 1.2 - -
Cost of sales 2.9 16.8 22.5
Administrative expenses 3.5 - 7.3
--- ---- ----
Charged in arriving at operating profits 7.6 16.8 29.8
Interest payable and similar charges 7.8 - 1.9
Profit on disposal of tangible fixed assets (0.3) - (0.3)
---- ---- ----
15.1 16.8 31.4
==== ==== ====
Total exceptional items for the six months ended 31 October 2003 were as
follows:
• Debt facility costs of £11.3 million consist of £6.3 million payable in
connection with the waiver on May 30, 2003 by the bank group of the default
under our existing senior secured credit facility and other debt facilities as
a result of the accounting issues at Sunbelt Rentals, £2.7 million of advisory
fees related to the waiver of the default and £2.3 million of other costs.
• The charge of £2.9 million related to the U.K. business refocusing
program is an adjustment to the non-cash depreciation charge recorded as of
April 30, 2003 relating to the restructuring of A-Plant's business and its
non-core asset disposal program.
• The US deferred income adjustment of £1.2m reflects an adjustment to
the method of determining deferred income at 30 April 2003. Application of the
revised method increased the loss for the six months ended 31 October 2003 by
£0.2m and is not expected to have any significant impact on the results of
future periods.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 OCTOBER 2003 (continued)
6. The effective rate of tax assumed for the six months ended 31 October
2003 is nil% in the UK and 41.3% in the US. The tax charge for the period has
been calculated by applying the Directors' present best estimate of the annual
tax rate in each jurisdiction in which the Group operates to the relevant
proportion of the profit before tax for the period after adding back goodwill
amortisation for which no tax allowance is available.
7. Basic and diluted losses per share for the six months ended 31 October
2003 have been calculated based on the loss attributable to the shareholders of
Ashtead Group plc and on the weighted average number of ordinary shares in issue
during the period excluding the shares held by the Group's employee share
ownership trust as follows:
Unaudited
-----------
6 months to 31 October 2003 6 months to 31 October 2002
--------------------------- ---------------------------
Loss for Weighted Per Loss for Weighted Per
the financial average no share the financial average no share
period of shares amount period of shares amount
------ --------- ------ ------ --------- ------
£m pence £m pence
(restated) (restated)
As used in the
calculation
of basic EPS (11.1) 322.9 (3.4) (5.1) 322.6 (1.6)
Outstanding - - - - 0.2 -
share options ---- ----- --- --- ----- ---
As used in the
calculation
of diluted EPS (11.1) 322.9 (3.4) (5.1) 322.8 (1.6)
---- ===== --- --- ==== ---
8. Goodwill
Unaudited
-------------------------------------------------
Cost Amortisation NBV
---- ------------ ---
£m £m £m
At 30 April 2003 178.3 (26.3) 152.0
Amortisation - (4.5) (4.5)
---- ---- -----
At 31 October 2003 178.3 (30.8) 147.5
===== ---- =====
9. Fixed assets
2003 (unaudited) 2002 (unaudited)
------------------ -----------------------
Rental Rental
equipment Total equipment Total
-------- ----- --------- -----
£m £m £m £m
(restated) (restated)
Net book value:
At 1 May 577.5 651.5 678.1 750.9
Exchange difference (22.2) (23.9) (31.1) (33.7)
Additions 34.2 37.6 51.2 55.9
Disposals (16.0) (17.6) (13.1) (13.9)
Depreciation
- excluding exceptional)
impairment (50.3) (54.7) (51.7) (55.8
- exceptional impairment
(UK business rationalisation) (2.9) (2.9) - -
----- ----- ----- -----
At 31 October 520.3 590.0 633.4 703.4
===== ===== ===== =====
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 OCTOBER 2003 (continued)
10. Notes to the cash flow statement
a. Cash flow from operating activities
Unaudited Audited
--------- -------
6 months to Year to
31 October 30 April
2003 2002 2003
---- ---- ----
£m £m £m
(restated)
Operating profit 18.1 14.6 0.3
Exceptional items 7.6 16.8 29.8
Goodwill amortisation 4.5 4.5 9.0
Depreciation excluding exceptional
impairment 54.7 55.8 111.0
---- ---- -----
EBITDA 84.9 91.7 150.1
(Gain)/loss on sale of rental equipment (1.5) 0.3 (2.7)
(Increase)/decrease in stocks (2.2) 1.0 1.3
(Increase)/decrease in debtors (2.2) (5.0) 5.4
Increase in creditors 1.7 1.8 2.5
Exchange differences 0.2 0.6 0.7
--- --- ---
Net cash inflow from operating activities
before exceptional items 80.9 90.4 157.3
==== ==== =====
Unaudited Audited
--------- -------
b. Reconciliation to net debt 6 months to Year to
31 October 30 April
2003 2002 2003
---- ---- ----
£m £m £m
(restated)
Increase in cash in the period 5.1 1.1 9.2
Increase in cash collateral balances 2.3 - 3.7
Decrease in bank loans 7.4 49.6 53.9
Decrease in finance lease obligations 5.1 - 11.9
---- ---- ----
Reduction in net debt from cash flows 19.9 50.7 78.7
Translation difference 23.1 28.4 38.3
Non cash movements:
- 5.25% unsecured convertible loan note (0.4) (0.4) (0.1)
- finance lease obligations - 4.9 (6.4)
---- ---- -----
Reduction in net debt in the period 42.6 83.6 110.5
Net debt at 1 May 564.8 675.3 675.3
----- ----- -----
Net debt at 31 October 522.2 591.7 564.8
===== ===== =====
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 OCTOBER 2003 (continued)
11. Bank loan facilities
The Group's principal bank facility is the committed secured multi-currency loan
facility entered into at the time of the BET acquisition on 1 June 2000.
Following the amendment to the bank agreement agreed on 30 May 2003, the
facility now terminates on 28 January 2005, four months earlier than the
previous revolver termination date of 31 May 2005. Amortisation of the facility
prior to repayment comprises:
1. a $50m of reduction in revolver commitment at 31 May 2004 which is to
be effected by cancelling the remaining undrawn revolver commitment of $18m and
$32m payable from cash generation over the coming year. The Group has also
agreed with the bank group not to use the $18m undrawn revolver commitment in
the period prior to its expiry; and
2. additionally at 31 May 2004 the Group has now committed to make a
$28m amortisation payment to the term loan holders so as to provide them with
the same pro rata paydown in 2004 as the revolver banks are due to receive.
The facility is secured by means of fixed and floating charges over
substantially all of the Group's assets. Under the terms of the facility, the
Group is required to demonstrate compliance with certain financial covenants
comprising the ratios of EBITDA to interest and to senior and total debt levels,
the ratio of debt levels to the value of tangible assets, a maximum capital
expenditure commitment and a minimum cash flow requirement on a quarterly basis.
These ratios were reset at the time the banks waived the defaults resulting from
the revelation of the US accounting issue and the Board is satisfied that they
provide the appropriate financial flexibility.
The Group also has a secured but uncommitted bank overdraft line provided
alongside the main secured facility as well as various customary off balance
sheet facilities. At 31 October 2003 £5.5m was outstanding under the overdraft
facility leaving £5.5m undrawn. Written confirmation has been received from the
provider of this facility indicating their intention to continue to make it
available until January 2005 so long as the quarterly financial covenants under
the main bank facility are met.
The Board considers that the facilities provide adequate funding for the Group
and that the anticipated future cash generation, together with current cash
balances and undrawn amounts, are sufficient to meet the agreed facility
reductions. The Board continues to examine options for refinancing these
facilities and remains confident, particularly given the favourable indicators
being seen regarding the strength of the US economic recovery, that they will be
refinanced well before January 2005. However, clearly there can be no guarantee
that the Company will be able to refinance and, as time progresses, other options
to facilitate repayment of those facilities will of course be considered in
parallel.
12. Post balance sheet events
On 15 January 2004, the Irish business of A-Plant was sold for an estimated
consideration of £12.1m of which £8.2m was paid in cash at closing and the
balance will be payable in stages in coming months following agreement of asset
values.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 OCTOBER 2003 (continued)
13. 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 Company at Kings Court, 41/51 Kingston Road, Leatherhead, Surrey
KT22 7AP.
INDEPENDENT REVIEW REPORT TO ASHTEAD GROUP PLC
Introduction
We have been instructed by the company to review the financial information which
comprises the consolidated profit and loss account, consolidated statement of
total recognised gains and losses, consolidated balance sheet, consolidated cash
flow statement 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. This report, including the
conclusion, has been prepared for and only for the company for the purpose of
the Listing Rules of the Financial Services Authority and for no other purpose.
We do not, in producing this report, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent in writing.
Going concern
In arriving at our review conclusion, we have considered the adequacy of
disclosures made in the interim financial statements concerning the uncertainty
of the continuation of banking facilities beyond 28 January 2005. Details of the
circumstances relating to this fundamental uncertainty are described in note 11.
Our review conclusion is not qualified in this respect.
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 2003.
PricewaterhouseCoopers LLP Chartered Accountants
London, 21 January 2004
Notes:
The maintenance and integrity of the Ashtead Group plc website is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the interim report
since it was initially presented on the website.
Legislation in the United Kingdom governing the preparation and dissemination of
financial information may differ from legislation in other jurisdictions.
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