3rd Quarter Results

Unaudited results for the third quarter and nine months ended 31 January 2008 Continued strong growth with profits and earnings at record levels Financial summary Third quarter Nine months ----------------- ------------- ----------- 2008 2007 Growth 2008 2007 Growth ----- ----- ----- ----- ----- ----- £m £m % £m £m % Underlying operating profit (1) 40.1 32.1 +25% 155.0 114.8 +35% Underlying profit before taxation (1) 20.8 11.3 +82% 97.5 65.7 +48% Underlying earnings per share (1) - basic 2.5p 1.3p +83% 11.4p 8.5p +33% - cash tax 3.8p 2.1p +80% 15.9p 13.1p +21% Profit/(loss) before taxation 20.2 2.1 n/a 95.9 (28.5) n/a Basic earnings per share 2.4p 0.3p n/a 10.9p 2.9p n/a (1) See notes below Highlights · Strong performance continues at all three divisions - 25% growth in Sunbelt's year to date underlying profit - 49% growth in A-Plant's year to date underlying profit · Market conditions remain good in the US and UK - utilisation rates improved over the equivalent period last year - fleet age and mix at optimum levels - business model has flexibility to react quickly and effectively to change · 5% share buy-back progressing well - 4.2% purchased to date at a cost of £18.1m (77p per share) Ashtead's Chief Executive, Geoff Drabble, commented: Our three divisions have all continued to perform well in the third quarter. In the US, where our principal markets remain strong, we again increased margins as we continue to drive efficiencies from the enlarged Sunbelt business. At A-Plant the 49% growth in its year to date operating profit is a clear indication of the momentum this business has developed and its good position in the UK market. Despite the economic uncertainty, our markets in the US and the UK remain good and our experience on the ground suggests that this will continue for the foreseeable future. In the event of changing markets, we have a flexible business model that is able to respond quickly and effectively to market conditions. The Board remains confident in the Group's prospects for the full year and beyond. 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, amortisation of acquired intangibles and non-cash fair value remeasurements of embedded derivatives in long-term debt. The definition of exceptional items is set out in note 4. The reconciliation of underlying basic 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) Pro forma basis includes the NationsRent and Lux Traffic acquisitions throughout the year ended 30 April 2007 rather than from their respective dates of acquisition of 31 August 2006 and 15 October 2006. For this purpose the pre-acquisition results of NationsRent have been derived from its reported financial performance under US GAAP adjusted to exclude the large profits on disposal of rental equipment it reported following the application of US "fresh start" accounting principles and to include an estimated depreciation charge under Ashtead's depreciation policies and methods. Geoff Drabble and Ian Robson will host a conference call with equity analysts to discuss the results at 9.30am on Tuesday 4 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. A copy of this announcement and the slide presentation which will be used for the call are available for download on the Company's website. There will also be a conference call for bondholders at 3pm (10am EST). Please contact the Company's PR advisers, Maitland (Camilla Vella) at +44 (0)20 7379 5151 for more details if you are an equity analyst or an Ashtead bondholder. Overview The third quarter saw a continuation of the trends reported at the half year. All three divisions traded strongly in good market conditions and, as a result, underlying operating profit grew by 25% to £40.1m while underlying pre-tax profits grew by 82% to £20.8m. Underlying basic earnings per share rose 83% to 2.5p. Nine months underlying pre-tax profits have grown 48% to £97.5m at actual rates of exchange and by 55% at constant rates whilst the nine months underlying earnings per share are up one-third to 11.4p. Return on Investment ("RoI") for the Group rose to 13.6% for the 12 months ended 31 January 2008 (year to April 2007 - 12.9%). Sunbelt delivered 14.1% RoI whilst A-Plant's RoI was 10.6%. The after tax return on equity was 17.4% (year to April 2007 - 15.3%). Divisional performance Sunbelt Third quarter Nine months ------------- ----------- 2008 2007 Growth 2008 2007 Growth ------ ------ ------ ------ ------ ------ $m $m $m $m Revenue --------- As reported 362.7 361.5 Nil% 1,171.8 958.5 +22% NationsRent - - - 230.7 ------ ------ ------ ------ Pro forma combined 362.7 361.5 Nil% 1,171.8 1,189.2 -1% ====== ====== ====== ====== Underlying operating profit --------------------------- As reported 69.4 58.1 +19% 266.0 193.3 +38% NationsRent - - - 19.2 ------ ------ ------ ------ Pro forma combined 69.4 58.1 +19% 266.0 212.5 +25% ====== ====== ====== ====== Operating profit 19.1% 16.1% 22.7% 17.9% margin ====== ====== ====== ====== Sunbelt's operating profit margin again improved as we continue to enhance the operational efficiency of the business following the NationsRent acquisition. Whilst revenues remain flat in total, this reflects our curtailment of the low margin sales of new equipment undertaken previously by NationsRent. Excluding sales revenues, rental and rental related revenues grew 1.6% in the third quarter to $338m and by 1.3% in the nine months to $1,092m. Dollar utilisation was 63% at 31 January 2008 compared to a pro forma 62% at 30 April 2007. Fleet size was on average 1% larger in the third quarter than in the previous year whilst physical utilisation for the quarter rose 4% to 66% (2007 - 63%). Rental rates declined 0.5% in the nine months. This includes a decline of 3.5% in the quarter reflecting the high comparative from a year ago when rates initially grew strongly after the NationsRent acquisition. We anticipate that rental rates will return to being broadly flat year on year as we enter the busier summer season. A-Plant Third quarter Nine months ------------- ----------- 2008 2007 Growth 2008 2007 Growth ------ ------ ------ ----- ----- ------ £m £m £m £m Revenue --------- As reported 51.2 48.2 +6% 159.7 139.7 +14% Lux Traffic - - - 9.5 ------ ------ ------ ----- Pro forma combined 51.2 48.2 +6% 159.7 149.2 +7% ====== ====== ====== ===== Underlying operating profit ----------------------------- As reported 5.4 3.1 +77% 21.9 14.2 +55% Lux Traffic - - - 0.6 ----- ----- ------ ----- Pro forma combined 5.4 3.1 +77% 21.9 14.8 +49% ===== ===== ====== ====== Operating profit margin 10.6% 6.4% 13.7% 9.9% ===== ===== ====== ====== A-Plant grew revenues strongly in mature markets with 6% growth in the third quarter. This growth reflected a 10% increase in average fleet size and a 1% increase in physical utilisation to 68% (2007 - 67%). Like for like rental rates were broadly flat. Third quarter operating costs rose only 1% with the resulting operating leverage producing a 77% rise in third quarter operating profit to £5.4m. A-Plant continues to benefit from being able to provide its contractor customers with the complete plant and tool product range supported by strong operational delivery and IT support. Ashtead Technology Third quarter Nine months --------------- ------------- 2008 2007 Growth 2008 2007 Growth ------ ------ -------- ------ ------ -------- £m £m £m £m Revenue 6.5 5.0 +29% 19.6 16.3 +20% ===== ===== ===== ===== Operating profit 2.1 1.1 +96% 7.3 4.4 +67% ===== ===== ===== ===== Operating profit margin 32.5% 21.4% 37.3% 26.9% ===== ===== ===== ===== Ashtead Technology again grew its revenues and profits strongly in offshore and onshore markets which remain good. The strategic review of Technology announced in December is progressing well. Capital expenditure Capital expenditure for the nine months was £301m (2007 - £236m), more than double the depreciation charge as we invested to de-age our fleets, to complete the reconfiguration of the acquired fleet in the US and to support the top-line growth in the UK. Our capital expenditure guidance for the 2007/8 fiscal year as a whole is unchanged at approximately £320m gross and £260m net of disposal proceeds. Our rental fleet in all divisions has now reached an age and mix which we consider optimum. Accordingly, we expect significantly reduced capital expenditure next year at approximately £220m gross and £175m net of disposal proceeds. Around £180m of the gross expenditure will be for replacement with £40m of investment for growth (2.5% of current fleet size). Share repurchase, net debt and leverage Good progress has been made in implementing the 5% share repurchase announced in December. To 3 March, 4.2% of the issued share capital has been acquired at a cost of £18.1m or 77p per share. Net debt rose £55m from £931m at the start of the quarter to £986m due to currency translation effects as the US dollar strengthened from $2.08 to $1.99 (£40m effect) and to the £11m spent by the quarter end on the share buy-back. The ratio of net debt to the LTM EBITDA at 31 January 2008 of £370m was 2.7 times, comfortably within our 2-3 times target. With a reduced requirement for replacement capital expenditure in future, we expect to be in the lower half of this range by April 2009 and to continue deleveraging in future periods. Debt facilities remain committed for the long-term with the first significant maturity being in August 2011. At 31 January 2008, availability under the $1.75bn asset based loan facility was $590m ($589m at 30 April 2007), well in excess of the threshold of $125m at which financial covenants would be measured. Current trading and outlook Despite the economic uncertainty, our markets in the US and the UK remain good and our experience on the ground suggests that this will continue for the foreseeable future. In the event of changing markets, we have a flexible business model that is able to respond quickly and effectively to market conditions. The Board remains confident in the Group's prospects for the full year and beyond. CONSOLIDATED INCOME STATEMENT Three months to 31 January - unaudited ----------------------------------------- 2008 2007 Before Before exceptional Exceptional exceptional Exceptional items items items, items, and and amortisation amortisation amortisation amortisation and fair value and fair value of intangibles of intangibles Total remeasurements+ remeasurements+ Total ---------------- ---------------- ------- ---------------- --------------- ------- £m £m £m £m £m £m Revenue 237.2 - 237.2 240.0 - 240.0 Staff costs (74.6) - (74.6) (79.7) (1.2) (80.9) Other operating costs (78.8) - (78.8) (85.8) (4.5) (90.3) Other income 2.5 0.1 2.6 2.0 - 2.0 ----- ----- ----- ----- ----- ----- EBITDA* 86.3 0.1 86.4 76.5 (5.7) 70.8 Depreciation (46.2) - (46.2) (44.4) - (44.4) Amortisation of intangibles - (0.7) (0.7) - (3.8) (3.8) ----- ----- ----- ----- ----- ----- Operating profit 40.1 (0.6) 39.5 32.1 (9.5) 22.6 Investment income 1.0 - 1.0 1.1 - 1.1 Interest expense (20.3) - (20.3) (21.9) 0.3 (21.6) ----- ----- ----- ----- ----- ----- Net financing costs (19.3) - (19.3) (20.8) 0.3 (20.5) ----- ----- ----- ----- ----- ----- Profit on ordinary activities before taxation 20.8 (0.6) 20.2 11.3 (9.2) 2.1 Taxation: - current 0.1 - 0.1 0.1 - 0.1 - deferred (7.1) 0.2 (6.9) (4.1) 3.6 (0.5) ----- ----- ----- ----- ----- ----- (7.0) 0.2 (6.8) (4.0) 3.6 (0.4) ----- ----- ----- ----- ----- ----- Profit attributable to equity shareholders 13.8 (0.4) 13.4 7.3 (5.6) 1.7 ===== ----- ===== ===== ----- ===== Basic earnings per share 2.5p (0.1)p 2.4p 1.3p (1.0)p 0.3p ===== ----- ===== ===== ----- ===== Diluted earnings per share 2.5p (0.1)p 2.4p 1.3p (1.0)p 0.3p ===== ----- ===== ===== ----- ===== Nine months to 31 January - unaudited --------------------------------------- Revenue 760.7 - 760.7 662.3 - 662.3 Staff costs (232.0) - (232.0) (206.3) (8.7) (215.0) Other operating costs (247.4) - (247.4) (231.2) (10.4) (241.6) Other income 10.2 0.3 10.5 6.6 - 6.6 ----- ----- ----- ----- ----- ----- EBITDA* 291.5 0.3 291.8 231.4 (19.1) 212.3 Depreciation (136.5) - (136.5) (116.6) - (116.6) Amortisation of intangibles - (1.9) (1.9) - (6.6) (6.6) ----- ----- ----- ----- ----- ----- Operating profit 155.0 (1.6) 153.4 114.8 (25.7) 89.1 Investment income 3.2 - 3.2 3.1 - 3.1 Interest expense (60.7) - (60.7) (52.2) (68.5) (120.7) ----- ----- ----- ----- ----- ----- Net financing costs (57.5) - (57.5) (49.1) (68.5) (117.6) ----- ----- ----- ----- ----- ----- Profit/(loss) on ordinary activities before taxation 97.5 (1.6) 95.9 65.7 (94.2) (28.5) Taxation: - current (9.7) - (9.7) - - - - deferred (24.9) (1.2) (26.1) (23.1) 66.3 43.2 ----- ----- ----- ----- ----- ----- (34.6) (1.2) (35.8) (23.1) 66.3 43.2 ----- ----- ----- ----- ----- ----- Profit attributable to equity shareholders 62.9 (2.8) 60.1 42.6 (27.9) 14.7 ====== ----- ====== ====== ----- ====== Basic earnings per share 11.4p (0.5)p 10.9p 8.5p (5.6)p 2.9p ====== ----- ====== ====== ----- ====== Diluted earnings per share 11.3p (0.5)p 10.8p 8.4p (5.5)p 2.9p ====== ----- ====== ====== ----- ====== * EBITDA is presented here as an additional performance measure as it is commonly used by investors and lenders. + Fair value remeasurements related to embedded derivatives in long term debt. All results are from continuing operations. Details of risks and uncertainties are given in the Review of Results, Balance sheet and Cash flow which accompany these interim financial statements. CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Unaudited Unaudited Three months to Nine months to 31 January 31 January 2008 2007 2008 2007 ----- ----- ----- ----- £m £m £m £m --- --- --- --- Net profit for the period 13.4 1.7 60.1 14.7 Tax on items taken directly to equity (4.0) - (0.5) - Foreign currency translation differences 6.7 (3.3) 1.3 (10.5) ----- ----- ----- ----- Total recognised income and expense for the period 16.1 (1.6) 60.9 4.2 ===== ----- ===== ===== CONSOLIDATED MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS Unaudited Unaudited Three months to Nine months to 31 January 31 January 2008 2007 2008 2007 ------ ------ ------ ------ £m £m £m £m --- --- --- --- Total recognised income and expense for the period 16.1 (1.6) 60.9 4.2 Issue of ordinary shares, net of expenses 0.1 0.8 0.5 148.2 Treasury shares purchased (11.1) - (11.1) - Dividends paid - - (6.1) (4.0) Share based payments 2.1 0.6 2.0 2.0 Vesting of share awards (1.6) - - - Own shares acquired by ESOT (0.7) - (1.5) (4.9) ------- ------ ------- ------- Net increase in equity shareholders' funds 4.9 (0.2) 44.7 145.5 Opening equity shareholders' funds 436.5 404.0 396.7 258.3 ------- ------- ------- ------- Closing equity shareholders' funds 441.4 403.8 441.4 403.8 ======= ======= ======= ======= CONSOLIDATED BALANCE SHEET Unaudited Audited 31 January 30 April 2008 2007 2007 ------ ------ ------ £m £m £m Current assets Inventories 24.0 32.1 24.2 Trade and other receivables 161.1 158.1 163.7 Current tax asset - 3.7 2.0 Assets held for sale - 35.4 10.3 Cash and cash equivalents 2.0 1.2 1.1 ------ ------ ------ 187.1 230.5 201.3 ------ ------ ------ Non-current assets Property, plant and equipment - rental equipment 1,037.7 946.1 920.6 - other assets 135.8 131.9 127.4 ------ ------ ------ 1,173.5 1,078.0 1,048.0 Intangible assets - brand names and other acquired intangibles 8.7 15.9 9.7 Goodwill 292.7 288.5 289.6 Deferred tax asset 25.6 41.5 41.7 Defined benefit pension fund surplus 5.9 2.4 5.2 ------ ------ ------ 1,506.4 1,426.3 1,394.2 ------ ------ ------ Total assets 1,693.5 1,656.8 1,595.5 ========= ========= ========= Current liabilities Trade and other payables 134.9 152.5 166.8 Current tax liability 4.3 0.8 0.7 Debt due in less than one year 7.8 9.5 9.0 Provisions 12.4 14.9 12.7 ------ ------ ------ 159.4 177.7 189.2 ------ ------ ------ Non-current liabilities Debt due in more than one year 980.4 963.8 908.0 Provisions 18.9 18.6 19.6 Deferred tax liability 93.4 92.9 82.0 ------ ------ ------ 1,092.7 1,075.3 1,009.6 ------ ------ ------ Total liabilities 1,252.1 1,253.0 1,198.8 ========= ========= ========= Equity shareholders' funds Share capital 56.2 55.9 56.0 Share premium account 3.6 2.7 3.3 Non-distributable reserve 90.7 90.7 90.7 Treasury shares (11.1) - - Own shares held in treasury through the ESOT (7.2) (8.6) (8.7) Cumulative foreign exchange translation differences (28.9) (27.7) (30.2) Distributable reserves 338.1 290.8 285.6 ------ ------ ------ Total equity shareholders' funds 441.4 403.8 396.7 ------ ------ ------ Total liabilities and equity shareholders' funds 1,693.5 1,656.8 1,595.5 ========= ========= ========= CONSOLIDATED CASH FLOW STATEMENT Unaudited Nine months to 31 January 2008 2007 ------ ------ £m £m £m £m Cash flows from operating activities Cash generated from operations before exceptional items 265.2 236.2 Exceptional costs paid (8.1) (9.7) ------- ------- Cash generated from operations 257.1 226.5 Financing costs paid before exceptional (44.9) (34.9) items Exceptional financing costs paid - (49.8) ------ -------- Financing costs paid (44.9) (84.7) Tax paid (4.0) (6.0) ------- ------- Net cash from operating activities 208.2 135.8 ------- ------- Cash flows from investing activities Acquisition of businesses (5.9) (327.1) Payments for property, plant and equipment (322.4) (265.6) Proceeds on sale of property, plant and equipment and assets held for sale 76.6 42.0 ------- ------- Net cash used in investing activities (251.7) (550.7) ------- ------- Cash flows from financing activities Drawdown of loans 145.2 883.3 Redemption of loans (77.2) (599.5) Capital element of finance lease (5.4) (8.0) payments Purchase of own shares by the ESOT (1.5) (4.9) Purchase of treasury shares (11.1) - Dividends paid (6.1) (4.0) Proceeds from issue of ordinary shares 0.5 148.2 ------- ------- Net cash from financing activities 44.4 415.1 ------- ------- Increase in cash and cash equivalents 0.9 0.2 Opening cash and cash equivalents 1.1 1.0 Effect of exchange rate changes - - ------- ------- Closing cash and cash equivalents 2.0 1.2 ======= ======= NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS 1. Basis of preparation The condensed financial statements for the nine months ended 31 January 2008 were approved by the directors on 3 March 2008. 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 2007. They are unaudited and do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The statutory accounts for the year ended 30 April 2007 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 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: 2008 2007 ------ ------ Average for the nine months ended 31 January 2.02 1.89 At 31 January 1.99 1.96 2. Segmental analysis Operating profit before exceptionals Exceptional and items and Operating Revenue amortisation amortisation profit --------- ------------------ ------------- -------- Three months to £m £m £m £m 31 January 2008 ------ Sunbelt 179.5 34.4 (0.6) 33.8 A-Plant 51.2 5.4 - 5.4 Ashtead Technology 6.5 2.1 - 2.1 Corporate costs - (1.8) - (1.8) ------ ------- ------ ------- 237.2 40.1 (0.6) 39.5 ======= ====== ------- ====== 2007 ------ Sunbelt 186.8 29.8 (9.0) 20.8 A-Plant 48.2 3.1 (0.3) 2.8 Ashtead Technology 5.0 1.1 - 1.1 Corporate costs - (1.9) (0.2) (2.1) ------ ------- ------- ------- 240.0 32.1 (9.5) 22.6 ======= ====== ------- ====== Nine months to 31 January 2008 ------ Sunbelt 581.4 132.0 (1.6) 130.4 A-Plant 159.7 21.9 - 21.9 Ashtead Technology 19.6 7.3 - 7.3 Corporate costs - (6.2) - (6.2) ------ ------- ------ ------- 760.7 155.0 (1.6) 153.4 ======= ======= ------- ======= 2007 ------ Sunbelt 506.3 102.1 (25.2) 76.9 A-Plant 139.7 14.2 (0.3) 13.9 Ashtead Technology 16.3 4.4 - 4.4 Corporate costs - (5.9) (0.2) (6.1) ------ ------- ------- ------- 662.3 114.8 (25.7) 89.1 ======= ======= -------- ====== 3. Operating costs 2008 2007 ------ ------ 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 67.4 - 67.4 71.8 - 71.8 Social security costs 5.9 - 5.9 6.4 - 6.4 Other pension costs 1.3 - 1.3 1.5 - 1.5 Redundancies and retention bonuses - - - - 1.2 1.2 ------ ------ ------ ------ ------ ------ 74.6 - 74.6 79.7 1.2 80.9 ------ ------ ------ ------ ------ ------ Other operating costs: Vehicle costs 17.7 - 17.7 17.3 - 17.3 Spares, consumables & external repairs 12.9 - 12.9 14.6 - 14.6 Facility costs 10.0 - 10.0 14.1 0.1 14.2 Other external charges 38.2 - 38.2 39.8 4.4 44.2 ------ ------ ------ ------ ----- ------ 78.8 - 78.8 85.8 4.5 90.3 ------ ------ ------ ------ ----- ------ Other income: Profit on disposal of fixed assets (2.5) (0.1) (2.6) (2.0) - (2.0) ------ ------ ------ ------ ------ ------ Depreciation and amortisation: Depreciation 46.2 - 46.2 44.4 - 44.4 Amortisation of acquired intangibles - 0.7 0.7 - 3.8 3.8 ------ ------ ------ ------ ------ ------ 46.2 0.7 46.9 44.4 3.8 48.2 ------ ------ ------ ------ ------ ------ 197.1 0.6 197.7 207.9 9.5 217.4 ======= ===== ======= ======= ===== ======= Nine months to 31 January ---------------------------- Staff costs: Salaries 210.6 - 210.6 187.3 - 187.3 Social security costs 17.5 - 17.5 15.3 - 15.3 Other pension costs 3.9 - 3.9 3.7 - 3.7 Redundancies and retention bonuses - - - - 8.7 8.7 ------ ------ ------ ------ ------ ------ 232.0 - 232.0 206.3 8.7 215.0 ------ ------ ------ ------ ------ ------ Other operating costs: Vehicle costs 54.5 - 54.5 48.9 - 48.9 Spares, consumables & external repairs 42.1 - 42.1 42.2 - 42.2 Facility costs 30.3 - 30.3 34.5 4.1 38.6 Other external charges 120.5 - 120.5 105.6 6.3 111.9 ------ ------ ------ ------ ------ ------ 247.4 - 247.4 231.2 10.4 241.6 ------ ------ ------ ------ ------ ------ Other income: Profit on disposal of fixed assets (10.2) (0.3) (10.5) (6.6) - (6.6) ------ ------ ------ ------ ------ ------ Depreciation and amortisation: Depreciation 136.5 - 136.5 116.6 - 116.6 Amortisation of acquired intangibles - 1.9 1.9 - 6.6 6.6 ------ ------ ------ ------ ------ ------ 136.5 1.9 138.4 116.6 6.6 123.2 ------ ------ ------ ------ ------ ------ 605.7 1.6 607.3 547.5 25.7 573.2 ======= ===== ======= ======= ====== ======= 4. Exceptional items, amortisation and fair value remeasurements related to embedded derivatives '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. Non-cash fair value remeasurements relate to embedded derivatives within long term debt instruments. 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, amortisation and fair value remeasurements are excluded from underlying profit and earnings per share and are set out below: Three months to Nine months to 31 January 31 January 2008 2007 2008 2007 ------ ------ ------ ------ £m £m £m £m Senior note redemption costs - (0.3) - 42.0 Write off of deferred financing costs relating to debt redeemed - (0.1) - 10.5 Acquisition integration costs - 3.1 - 16.1 Rebranding costs - 2.1 - 2.5 Profit on sale of UK property from closed sites (0.1) - (0.3) - Other costs - 0.6 - 1.1 Taxation - - 1.8 (37.3) ------ ------ ------ ------ Total exceptional items (0.1) 5.4 1.5 34.9 Amortisation of acquired intangibles 0.7 3.8 1.9 6.6 Fair value remeasurements of embedded derivatives - - - 15.4 Tax on exceptional items, amortisation and fair value remeasurements of embedded derivatives (0.2) (3.6) (0.6) (29.0) ------ ------ ------ ------ 0.4 5.6 2.8 27.9 ===== ===== ===== ====== 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 2008 2007 2008 2007 ------ ------ ------ ------ £m £m £m £m Staff costs - 1.2 - 8.7 Other operating costs - 4.5 - 10.4 Other income (0.1) - (0.3) - Amortisation of acquired intangibles 0.7 3.8 1.9 6.6 ------ ------ ------ ------ Charged in arriving at operating profit 0.6 9.5 1.6 25.7 Net financing costs - (0.3) - 68.5 ------ ------- ------ ------ Charged in arriving at profit before tax 0.6 9.2 1.6 94.2 Taxation (0.2) (3.6) 1.2 (66.3) ------ ------ ------ ------ 0.4 5.6 2.8 27.9 ===== ===== ===== ====== 5. Net financing costs Three months to Nine months to 31 January 31 January 2008 2007 2008 2007 ------ ------ ------ ------ £m £m £m £m Investment income: Interest and other financial income - 0.1 - 0.1 Expected return on assets of defined benefit pension plan 1.0 1.0 3.2 3.0 ----- ----- ----- ----- Total investment income 1.0 1.1 3.2 3.1 ===== ===== ===== ===== Interest expense: Bank interest payable 9.8 10.6 28.6 24.1 Interest on second priority senior secured notes 8.7 9.3 26.4 22.6 Interest payable on finance leases 0.2 0.5 0.9 1.2 Non-cash unwind of discount on defined benefit pension plan liabilities 0.7 0.7 2.2 2.0 Non-cash unwind of discount on self insurance provisions 0.4 0.1 0.9 0.4 Amortisation of deferred costs of debt raising 0.5 0.7 1.7 1.9 ----- ----- ----- ----- 20.3 21.9 60.7 52.2 Exceptional costs and fair value remeasurements of embedded derivatives in long term debt - (0.3) - 68.5 ------ ------- ------ ------ Total interest expense 20.3 21.6 60.7 120.7 ====== ====== ====== ======= Net financing costs before exceptional items and fair value remeasurements of embedded derivatives 19.3 20.8 57.5 49.1 Net exceptional items and fair value remeasurements of embedded derivatives - (0.3) - 68.5 ------ ------- ------ ------ Net financing costs 19.3 20.5 57.5 117.6 ====== ====== ====== ======= 6. Taxation The tax charge for the period has been computed using an estimated effective rate for the year of 40% in the US (2007 - 40%) and 31% in the UK (2007 - 22%) applied to the profit before tax and amortisation of acquired intangibles. The blended effective rate for the Group as a whole is 35%. In addition, an exceptional tax charge of £1.8m has been recognised in the nine months to reflect the reduction in the UK deferred tax asset which arises as a result of the reduction in the UK statutory corporation tax rate from 30% to 28% effective 1 April 2008 which was enacted in the 2007 Finance Act. In the prior year the Group recognised in full, as an exceptional profit, the previously unrecognised UK deferred tax asset of £37.3m. The tax charge of £35.8m (2007 - credit of £43.2m) comprises a charge for current tax of £9.7m (2007 - £nil) and a charge for deferred tax of £26.1m (2007 - credit of £43.2m). £1.8m (2007 - £37.3m) relates to the exceptional item described above and the remaining charge relates to current year items and comprises of £20.8m (2007 - credit of £2.7m) relating to the US, £13.0m (2007 - credit of £3.2m) to the UK and £0.2m (2007 - £nil) to other jurisdictions. 7. Earnings per share Basic and diluted earnings per share for the three and nine months ended 31 January 2008 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 by the ESOT over which dividends have been waived and shares held in treasury). 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 2008 2007 2008 2007 ------ ------ ------ ------ Profit for the financial period (£m) 13.4 1.7 60.1 14.7 ====== ===== ====== ====== Weighted average number of shares (m) - basic 551.6 550.5 552.1 499.7 ====== ===== ====== ====== - diluted 552.6 557.0 555.0 506.4 ====== ===== ====== ====== Basic earnings per share 2.4p 0.3p 10.9p 2.9p ====== ===== ====== ====== Diluted earnings per share 2.4p 0.3p 10.8p 2.9p ====== ===== ====== ====== 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 2008 2007 2008 2007 ------ ------ ------ ------ Basic earnings per share 2.4p 0.3p 10.9p 2.9p Exceptional items, amortisation of acquired intangibles and fair value remeasurements 0.1p 1.7p 0.6p 18.9p Deferred tax on exceptional items, amortisation and fair value remeasurements - (0.7)p (0.1)p (5.8)p Exceptional deferred tax credit for previously unrecognised UK tax losses - - - (7.5)p ------ ------ ------ -------- Underlying earnings per share 2.5p 1.3p 11.4p 8.5p Other deferred tax 1.3p 0.8p 4.5p 4.6p ------ ------ ------ ------ Cash tax earnings per share 3.8p 2.1p 15.9p 13.1p ====== ====== ======= ======= 8. Dividends During the period, a final dividend in respect of the year ended 30 April 2007 of 1.1p (2006 - 1.0p) per share was paid to shareholders. 9. Property, plant and equipment 2008 2007 ------ ------ Rental Rental equipment Total equipment Total ----------- ------- ----------- ------- Net book value £m £m £m £m ---------------- At 1 May 920.6 1,048.0 559.9 646.7 Exchange difference 3.3 3.7 (35.9) (40.3) Reclassifications (0.2) 0.1 (0.4) (0.1) Additions 272.1 301.2 207.9 235.9 Acquisitions 3.3 3.3 349.8 390.3 Disposals (42.3) (46.3) (34.2) (37.9) Depreciation (119.1) (136.5) (101.0) (116.6) --------- --------- --------- --------- At 31 January 1,037.7 1,173.5 946.1 1,078.0 ========= ========= ======= ========= During the period we reassessed the useful economic lives and residual values of the rental fleet which reduced the depreciation charge for the period by £1.7m. 10. Called up share capital Ordinary shares of 10p each: 2008 2007 2008 2007 ------ ------ ------ ------ Number Number £m £m Authorised 900,000,000 900,000,000 90.0 90.0 ============= ============= ====== ====== Allotted, called up and fully paid 561,572,726 559,215,991 56.2 55.9 ============= ============= ====== ====== Since 30 April 2007, 1,674,378 shares have been issued at an average price of 28.4p per share under the Company's share option plans raising £0.5m. In addition, during the period the Company has purchased 14,814,961 ordinary shares of 10p each at a total cost of £11.1m, which are held as treasury shares. 11. Statement of changes in shareholders' equity Own Cumulative shares foreign Non held in exchange 31 Share Share Treasury distributable treasury translation Distributable January capital premium stock reserves (ESOT) differences reserves Total 2007 --------- --------- ------- ---------- -------- ------------ ---------- ------- ------ £m £m £m £m £m £m £m £m £m Total recognised income and expense - - - - - 1.3 59.6 60.9 4.2 Shares issued 0.2 0.3 - - - - - 0.5 148.2 Treasury shares purchased - - (11.1) - - - - (11.1) - Dividends paid - - - - - - (6.1) (6.1) (4.0) Share based payments - - - - - - 2.0 2.0 2.0 Vesting of share awards - - - - 3.0 - (3.0) - - Own shares purchased - - - - (1.5) - - (1.5) (4.9) ------ ------ ------ ------ ------- ------ ------ ------- ------- Net changes in shareholders' equity 0.2 0.3 (11.1) - 1.5 1.3 52.5 44.7 145.5 Opening shareholders' equity 56.0 3.3 - 90.7 (8.7) (30.2) 285.6 396.7 258.3 ------ ----- ------ ------ ------- -------- ------- ------- ------- Closing shareholders' equity 56.2 3.6 (11.1) 90.7 (7.2) (28.9) 338.1 441.4 403.8 ====== ===== -------- ====== ------- -------- ======= ======= ======= 12. Notes to the cash flow statement Nine months to 31 January 2008 2007 ------ ------ a) Cash flow from operating activities £m £m ----------------------------------------- Operating profit 153.4 89.1 Depreciation and amortisation 138.4 123.2 Exceptional items (0.3) 19.1 ------- ------ EBITDA before exceptional items 291.5 231.4 Profit on disposal of property, plant and equipment (10.2) (6.6) Decrease in inventories 0.4 9.4 (Increase)/decrease in trade and other receivables (7.6) 6.4 Decrease in trade and other payables (11.8) (6.1) Exchange differences 1.0 (0.1) Other non-cash movements 1.9 1.8 ----- ----- Cash generated from operations before exceptional items 265.2 236.2 ======= ======= b) Analysis of net debt -------------------------- 1 May Exchange Cash Non-cash 31 January 2007 movement flow movements 2008 ------ ---------- ------ ----------- ------ £m £m £m £m £m Cash (1.1) - (0.9) - (2.0) Debt due within 1 year 9.0 - (5.4) 4.2 7.8 Debt due after 1 year 908.0 6.8 68.0 (2.4) 980.4 ------- ----- ------ ------- ------- Total net debt 915.9 6.8 61.7 1.8 986.2 ======= ===== ====== ===== ======= Nine months to 31 January 2008 2007 ------ ------ c) Reconciliation to net debt £m £m --------------------------------- Increase in cash in the period (0.9) (0.2) Increase in debt through cash flow 62.6 275.8 ------ ------- Change in net debt from cash flows 61.7 275.6 Debt acquired - 232.8 Exchange difference 6.8 (44.7) Non-cash movements: - deferred costs of debt raising 1.7 12.4 - capital element of new finance leases 0.1 2.4 ----- ----- Movement in net debt in the period 70.3 478.5 Opening net debt 915.9 493.6 ------- ------- Closing net debt 986.2 972.1 ======= ======= 13. Acquisitions In November 2007, A-Plant acquired the in-house site accommodation rental fleet of one of its customers and entered into a five year sole supply agreement to provide that customer's site accommodation needs. The consideration paid of £5.9m has been allocated between the fair value of the acquired assets (£3.5m), the intangible asset relating to the supply contract (£1.0m) and goodwill (£1.4m). 14. Contingent liabilities and contingent assets There have been no significant changes in contingent liabilities from those reported at 30 April 2007. The Group remains subject to periodic legal claims in the ordinary course of its business. However, the claims outstanding at 31 January 2008 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 deferred contingent consideration of up to $89m. The amount of the deferred contingent consideration is linked to the Company's share price performance over the three years from 1 September 2006 to 31 August 2009. In the event that the Company's share price (measured on a five day average basis) rises by more than 22.2% above the reference price of 204p (as adjusted for the bonus element of the rights issue), contingent consideration becomes payable at the rate of $5m for every additional 1% rise in the share price up to a maximum of 40% above the reference price. Accordingly, deferred contingent consideration starts to become payable when the Company's share price reaches 250p with the maximum $89m being payable at 286p. The contingent consideration is payable on a quarterly basis in cash. It is not practicable to estimate reliably the amount of contingent consideration which will become payable and accordingly no provision has been made. REVIEW OF RESULTS, BALANCE SHEET AND CASH FLOW Results Segmental results Divisional results before exceptional items and amortisation of acquired intangibles for the three months and nine months ended 31 January 2008 are summarised below: Operating Revenue EBITDA profit Three months to 31 January 2008 2007 2008 2007 2008 2007 ---------------------------- ------ ------ ------ ------ ------ ------ Sunbelt in $m 362.7 361.5 137.2 121.9 69.4 58.1 ====== ====== ====== ====== ====== ====== Sunbelt in £m 179.5 186.8 67.9 62.7 34.4 29.8 A-Plant 51.2 48.2 16.6 13.2 5.4 3.1 Ashtead Technology 6.5 5.0 3.6 2.4 2.1 1.1 Group central costs - - (1.8) (1.8) (1.8) (1.9) ------ ------ ------- ------- ------- ------- 237.2 240.0 86.3 76.5 40.1 32.1 ====== ======= ====== ====== Net financing costs (19.3) (20.8) -------- -------- Profit before tax, exceptionals and amortisation 20.8 11.3 Exceptional income/(costs) 0.1 (5.4) Amortisation (0.7) (3.8) ------- ------- Profit before taxation 20.2 2.1 ====== ===== Nine months to 31 January --------------------------- Sunbelt in $m 1,171.8 958.5 467.7 352.2 266.0 193.3 ====== ====== ====== ====== ====== ====== Sunbelt in £m 581.4 506.3 232.0 186.0 132.0 102.1 A-Plant 159.7 139.7 54.2 43.2 21.9 14.2 Ashtead Technology 19.6 16.3 11.5 8.0 7.3 4.4 Group central costs - - (6.2) (5.8) (6.2) (5.9) ------ ------ ------- ------- ------- ------- 760.7 662.3 291.5 231.4 155.0 114.8 ======= ======= ======= ======= Net financing costs (57.5) (49.1) -------- -------- Profit before tax, exceptionals and amortisation 97.5 65.7 Exceptional income/(costs) 0.3 (87.6) Amortisation (1.9) (6.6) ------- ------- Profit/(loss) before taxation 95.9 (28.5) ====== -------- In the quarter ended 31 January 2008 revenue decreased 1.2% to £237.2m (2007 - £240.0m) but increased 2.2% at constant rates. This reflects the limiting effect of the weak dollar which, in the third quarter, declined 7.2% from $1.88 = £1 a year ago to $2.02 = £1. EBITDA grew by 12.9% to £86.3m (2007 - £76.5m) and underlying operating profit increased 25.1% to £40.1m (2007 - £32.1m) reflecting margin growth in all three operating divisions. Profit before tax, exceptionals and amortisation for the quarter increased to £20.8m (2007- £11.3m) and, after exceptional items and amortisation, the profit before tax for the quarter was £20.2m (2007- £2.1m). For the nine months ended 31 January 2008 revenue increased 14.9% to £760.7m (2007 - £662.3m). This reflects the contribution from NationsRent since 31 August 2006 as well as the limiting effect of the weak dollar which, in the nine months, declined 6.5% from $1.89 = £1 a year ago to $2.02 = £1. Underlying EBITDA grew 26.0% to £291.5m (2007 - £231.4m) and operating profit increased 35.1% to £155.0m (2007 - £114.8m) reflecting the inclusion of the acquired NationsRent business throughout the period this year but only for five months in the prior year and the margin improvement delivered in all three divisions. Profit before tax, exceptionals and amortisation for the nine months was £97.5m (2007 - £65.7m) and, after exceptional items and amortisation, the profit before tax was £95.9m (2007 - loss of £28.5m). Balance sheet Capital expenditure in the nine months was £301.2m (2007 - £235.9) of which £272.1m (2007 - £207.9) was invested in the rental fleet. Expenditure on rental equipment was 90.3% 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: 2008 2007 ------ ------ Growth Maintenance Total Total -------- ------------- ------- ------- Sunbelt in $m 177.2 161.0 338.2 279.7 ======= ======= ======= ======= Sunbelt in £m 89.2 81.0 170.2 142.9 A-Plant 31.5 63.1 94.6 57.4 Ashtead Technology 5.5 1.8 7.3 7.6 ----- ----- ----- ----- Total rental equipment 126.2 145.9 272.1 207.9 ======= ======= Delivery vehicles, property improvements & computers 29.1 28.0 ------ ------ Total additions 301.2 235.9 ======= ======= £126.2m of the rental equipment capital expenditure was invested for growth with £145.9m spent on replacing existing fleet. The growth proportion is estimated on the basis of the assumption that maintenance capital expenditure in any period is equal to the original cost of equipment sold. The average age of the Group's serialised rental equipment, which constitutes the substantial majority of our fleet, at 31 January 2008 was 29 months (2007 - 31 months) on a net book value basis. Sunbelt's fleet had an average age of 31 months (2007 - 32 months) comprising 35 months for aerial work platforms which have a longer life and 27 months for the remainder of its fleet and A-Plant's fleet had an average age of 22 months (2007 - 30 months). The original cost of the Group's rental fleet and the dollar utilisation for the twelve months ended 31 January 2008 are shown below: Rental fleet at original cost ------------------------------- LTM rental Dollar 31 January 2008 30 April 2007 LTM average revenues utilisation ----------------- --------------- ------------- ---------- ------------- Sunbelt in $m 2,323 2,147 2,252 1,411 63% ======= ======= ======= ======= Sunbelt in £m 1,168 1,074 1,117 700 63% A-Plant 357 321 337 204 61% Ashtead Technology 46 39 42 25 59% ------- ------- ------- ------- 1,571 1,434 1,496 929 ======= ======= ======= ===== 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 2008 improved to 63% from a pro forma figure of 62% in the year ended 30 April 2007 as Sunbelt focused on improving the previously low dollar utilisation in the acquired NationsRent profit centres. Dollar utilisation of 61% at A-Plant reflects the lower pricing (relative to equipment cost) prevalent in the competitive UK market and its higher physical utilisation. Trade receivables Receivable days at 31 January 2008 were 49 days (2007 - 47 days). The bad debt charge for the nine months ended 31 January 2008 as a percentage of total turnover was 0.8% (2007 - 0.7%). Trade and other payables Group payable days were 60 days in 2008 (2007 - 68 days). Capital expenditure related payables at 31 January 2008 totalled £25.3m (2007 - £32.7m). 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 and tax paid) is summarised below: Nine months to LTM to Year to 31 January 31 January 30 April 2008 2007 2008 2007 ------ ------ ------ ------ £m £m £m £m EBITDA before exceptional items 291.5 231.4 370.4 310.3 ======= ======= ======= ======= Cash inflow from operations before exceptional items 265.2 236.2 348.3 319.3 Cash efficiency ratio* 91.0% 102.1% 94.0% 102.9% Maintenance rental capital (172.9) (119.0) (267.0) (213.1) expenditure Non-rental capital expenditure (28.7) (26.2) (34.8) (32.3) Proceeds from sale of used rental equipment 76.6 42.0 113.1 78.5 Tax paid (4.0) (6.0) (3.0) (5.0) ------ ------ ------ ------ Free cash flow before interest 136.2 127.0 156.6 147.4 Financing costs paid (44.9) (34.9) (74.2) (64.2) ------ ------ ------ ------ Free cash flow after interest 91.3 92.1 82.4 83.2 Growth capital expenditure (120.8) (120.4) (63.3) (62.9) Dividends paid (6.1) (4.0) (9.1) (7.0) ------ ------ ------ ------ Cash flow before acquisitions, equity issues & buybacks & exceptional costs (35.6) (32.3) 10.0 13.3 Purchase of treasury shares (11.1) - (11.1) - Purchase of own shares by ESOT (1.5) (4.9) (1.5) (4.9) Acquisitions (5.9) (327.1) (6.0) (327.2) Issue of ordinary share capital 0.5 148.2 1.2 148.9 Exceptional costs paid (net) (8.1) (59.5) (17.4) (68.8) ------ ------ ------ ------ Increase in total debt (61.7) (275.6) (24.8) (238.7) ------ ------ ------ ------ * Cash inflow from operations before exceptional items as a percentage of EBITDA before exceptional items. Cash inflow from operations increased 12.3% to £265.2m and the cash efficiency ratio was 91.0% (2007 - 102.1%). Last year's cash efficiency ratio was unusually high as that period benefited from cash generated by reducing NationsRent inventory and receivables levels post acquisition. The Group continues to generate strong free cash flow after interest with £91.3m (2007 - £92.1m) generated in the nine months. After growth capital expenditure and equity dividends, the cash inflow in the last year was £10.0m (year to 30 April 2007 - £13.3m). Net debt 31 January 30 April 2008 2007 2007 ------ ------ ------ £m £m £m First priority senior secured bank debt 579.6 552.1 506.1 Finance lease obligations 16.7 24.0 22.0 8.625% second priority senior secured notes, due 121.6 123.2 120.6 2015 9% second priority senior secured notes, due 2016 270.3 274.0 268.3 ------- ------- ------- 988.2 973.3 917.0 Cash and cash equivalents (2.0) (1.2) (1.1) ------- ------- ------- Total net debt 986.2 972.1 915.9 ======= ======= ======= Reflecting normal seasonal trends, Group net debt increased from £915.9m at 30 April 2007 to £986.2m at 31 January 2008 as we invested in the rental fleet and in receivables. The ratio of net debt to EBITDA was 2.7 times at 31 January 2008. LTM EBITDA before exceptional items was £370.4m. The Group's debt facilities are now committed for a weighted average period of approximately 5 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 8%, 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 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 2008 availability under the bank facility, including suppressed availability of $45m, was $590m ($589m at 30 April 2007). 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 2007 Annual Report and Accounts on pages 21 to 23. In particular, 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 94% of our debt was denominated in US dollars at 31 January 2008. 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 current dollar debt levels and interest rates, every 1% change in the US dollar exchange rate would impact pre-tax profit by 0.8%. OPERATING STATISTICS Profit centre numbers Staff numbers ----------------------- --------------- 31 January 30 April 31 January 30 April ------------ ---------- ------------ ---------- 2008 2007 2007 2008 2007 2007 ------ ------ ------ ------ ------ ------ Sunbelt 429 454 445 6,963 7,475 7,524 A-Plant 194 231 201 2,422 2,592 2,424 Ashtead Technology 13 12 13 131 116 115 Corporate office - - - 10 14 14 ------ ------ ------ ---- ---- ------- Group 636 697 659 9,526 10,197 10,077 ===== ===== ===== ======= ======== ======== Sunbelt's profit centre numbers include 90 Sunbelt at Lowes stores at 31 January 2008 (99 at 30 April 2007).

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