Q4 & Full Year Results

Ashtead Group Audited results for the year and unaudited results for the fourth quarter ended 30 April 2008 Fourth quarter Year Financial summary 2008 2007 Growth 2008 2007 Growth £m £m % £m £m % Total Group (including Technology) Revenue(1) 241.9 233.8 +3% 1,002.6 896.1 +12% Underlying operating profit(1) 42.7 35.7 +20% 197.7 150.5 +31% Underlying profit before 25.4 15.7 +63% 122.9 81.4 +51% taxation(1) Underlying earnings per share (1) 3.4p 1.8p +86% 14.8p 10.3p +44% Profit/(loss) before taxation (1) 24.4 (8.0) n/a 120.3 (36.5) n/a Basic earnings/(loss) per share 3.3p (1.2p) n/a 14.2p 1.5p n/a Continuing activities (excluding Technology) Underlying profit before 22.1 13.9 +60% 112.3 75.2 +49% taxation(1) Underlying earnings per share (1) 2.9p 1.6p +79% 13.4p 9.5p +40% Profit/(loss) before taxation (1) 21.1 (9.8) n/a 109.7 (42.7) n/a Basic earnings/(loss) per share 2.8p (1.4p) n/a 12.8p 0.4p n/a Highlights * Strong performance across both core divisions(1) - 21% growth in Sunbelt's underlying operating profit to $330.9m - 46% growth in A-Plant's underlying operating profit to £30.2m * Sale of Ashtead Technology for £96m announced on 23 June 2008 * Market conditions remain good in both the UK and the US: - physical utilisation in both businesses currently exceeds last year on a larger fleet - fleet age and mix at optimum levels - business model has flexibility to react quickly and effectively to change * Net debt to EBITDA of 2.5 times (2007: 2.7 times). With the Technology sale and our anticipated strong cash flow, we are targeting net debt at constant exchange rates at 30 April 2009 of £785m (2008: £963m) * Final dividend of 1.675p per share proposed, making 2.5p for the year, up 52% on 2007's 1.65p * £23m spent in the year on share buy-backs. To 20 June, a total of £30m has been spent acquiring 7.5% of the issued capital at an average cost of 73p (1) See explanatory notes below Ashtead's chief executive, Geoff Drabble, commented: We are pleased to report strong results for the year. In the United States, in the first full year of our ownership of NationsRent, Sunbelt has delivered strong 21% growth in underlying operating profit and established a foundation for further improvement as the full benefits of the acquisition are realised. In the UK, A-Plant saw strong organic revenue growth and a tight control of infrastructure cost, delivering an excellent 46% improvement in underlying operating profit. The sale of Ashtead Technology for £96m will allow us to continue to focus on the development of our core businesses and significantly reduce debt. In May both Sunbelt and A-Plant delivered improved year on year performance. We continue to enjoy high levels of utilisation and expect to benefit further from the momentum established in the Group. Therefore, despite the current economic uncertainty, the Board anticipates the Group continuing to trade in line with its expectations in the coming year. Contacts: Geoff Drabble Chief executive ) 020 7726 9700 Ian Robson Finance director ) Brian Hudspith Maitland 020 7379 5151 Explanatory notes a. IFRS requires that, as a disposed business, Ashtead Technology's after tax profits and total assets and liabilities are reported in the Group's accounts as single line items within our income statement and balance sheet with the result that revenues, operating profit and pre-tax profits as reported in the Group accounts exclude Ashtead Technology. To aid comparability with our previous results announcements and with market expectations, however, the total Group's results above include Ashtead Technology's revenues and profits alongside those of Sunbelt and A-Plant. A reconciliation of these total Group underlying results to the reported results for the year is included in the Review of Results, Balance sheet and Cash flow section of this announcement. b. 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 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. c. Divisional comparisons above are on a pro forma basis which includes the NationsRent and Lux Traffic acquisitions throughout the whole of the 2006/7 fiscal year. For this purpose the pre-acquisition results of NationsRent have been derived from its reported 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. Review of the year The year was a significant one in terms of the development of the Group both in the US and the UK. In our first full year of ownership of NationsRent, our transformational US acquisition, we completed the final structural elements of the integration. An integration of this scale can be a distraction and, therefore, delivering a 21% growth in Sunbelt's underlying operating profit over last year's pro forma combined performance was particularly pleasing. Sunbelt's utilisation improved throughout the year which allowed us to invest in growing the fleet during the fourth quarter. We have, therefore, entered the new fiscal year with a larger, reconfigured fleet, good levels of utilisation and the major distractions of integration behind us. Our focus for the coming year will be on driving organic revenue growth and deriving full benefit from the enlarged, nationwide footprint of our profit centres. In the UK, A-Plant also performed well, benefiting from a clear sales strategy which delivered strong growth together with infrastructure cost control. As a result, A-Plant delivered an excellent 46% improvement in underlying operating profit. We continue to offer a broad range of plant, tools and specialty products to our customer base, a strategy where we are the clear market leader and one which has significant advantages for our larger customers. On 23 June we announced the sale of Ashtead Technology for £95.6m. Our strategic review concluded that Ashtead Technology was a non-core, niche business serving different markets and customers to the rest of the Group. The Board believes that the disposal price achieved (5.9 times 2007/8 EBITDA) represents good value for shareholders. We have continued to invest in our fleet in the US and UK with total capital expenditure for the year of £331.0m. Our rental fleet has now reached an age and mix which we consider optimal for this stage in the economic cycle and, therefore, in the coming year we intend to greatly reduce gross capital expenditure to approximately £230m. The resulting increased free cash flow, together with the proceeds from the Technology sale, should reduce net debt to EBITDA leverage towards the lower end of our 2-3 times target range by April 2009. Group results * Total Group revenue (including Ashtead Technology) for the year was £ 1,002.6m up 11.9% on 2008 at actual exchange rates and 16.2% at constant rates. * Total Group underlying operating profit for the year at £197.7m (£150.5m) grew 31.4% at actual exchange rates and 37.3% at constant rates whilst, on a pro forma basis, the growth was 22.7% at actual exchange rates and 28.2% at constant rates. This reflected good performance in all three divisions. * Total Group underlying profit before tax of £122.9m grew 51.1% at actual rates of exchange and by 56.3% at constant rates over last year's £81.4m. Excluding Technology, the underlying profit before tax from continuing operations was £112.3m (2007: £75.2m), growth of 49%. * Total underlying earnings per share for the year were 14.8p (2007: 10.3p) up 44% at actual rates and 48% at constant rates. On a cash tax basis underlying earnings per share grew 35% to 21.4p (2007: 15.8p). * This year pre-tax exceptional costs were nil (2007: exceptional costs of £ 91.5m, mostly relating to the NationsRent acquisition) whilst there was a much reduced charge for amortisation of acquired intangible assets and no fair value remeasurements. Consequently this year's profit before tax from continuing operations (which excludes Ashtead Technology) was £109.7m compared to last year's £42.7m loss. Basic earnings per share (which include Ashtead Technology) were 14.2p (2007: 1.5p). * Total capital expenditure in the year, including Ashtead Technology, was £ 331.0m gross (2007: £290.2m) whilst total disposal proceeds were £77.9m (2007: £89.1m) giving net capex of £253.1m (2007: £201.1m) * Net debt at 30 April 2008 was £963.2m (2007: £915.9m), including £22.9m spent on share buy-backs during the year. The ratio of net debt to total Group underlying EBITDA of £380.0m was 2.5 times at 30 April 2008 (2007: 2.7 times). * Availability under the $1.75bn asset based loan facility (including suppressed availability of $10m) was $602m at 30 April 2008 ($589m at 30 April 2007) providing substantial assurance that the debt package will remain covenant free. Sunbelt Fourth quarter Year 2008 2007 Growth 2008 2007 Growth $m $m $m $m Revenue As reported 356.3 349.4 +2% 1,528.1 1,307.9 +17% NationsRent - - - 230.7 -------------------------------------------------- Pro forma combined 356.3 349.4 +2% 1,528.1 1,538.6 -1% -------------------------------------------------- Underlying operating profit As reported 64.9 59.8 +8% 330.9 253.1 +31% NationsRent - - - 19.2 -------------------------------------------------- Pro forma combined 64.9 59.8 +8% 330.9 272.3 +21% -------------------------------------------------- Pro forma margin 18.2% 17.1% 21.7% 17.7% -------------------------------------------------- Sunbelt's performance for the year following the transformational acquisition of NationsRent in August 2006 was excellent. The focus remained throughout the year on establishing a cost efficient infrastructure for profitable future growth. The success of this work is demonstrated by the operating profit of $330.9m, an increase of 21% on a pro forma basis. Profit margins rose from 17.7% to 21.7%. These improvements were achieved by above expectation cost reductions with 2007 /8 operating costs $82m lower than 2006/7 costs despite significant inflationary pressure in certain key cost areas such as fuel. Total revenue remained broadly flat at $1.5bn due to our curtailment of the low margin sales of new equipment previously undertaken by NationsRent whilst rental and rental related revenues grew 2% to $1.4bn on a pro forma basis. Within this there were major regional variations, with areas of weakness such as the well publicised challenges in Florida being more than offset by good growth elsewhere. The 2% pro forma growth in rental and rental related revenues was achieved with a combined fleet that on average was 1% larger than last year measured across the year as a whole. However, the fleet was 1% smaller on average for the first three quarters of the year as we focused on improving physical utilisation which for the full year averaged 68%. In the fourth quarter, physical utilisation was 64% (2007: 62%) whilst the average fleet size grew 6%. We also gained an increased share of larger, longer-running projects which will provide good momentum into the new financial year. With our enlarged national footprint, we are increasingly targeting larger regional and national accounts where the profile of business is different from our historical mix. Whilst this work tends to be at lower rates, rental periods are longer. This benefits margins by improving average physical utilisation and reducing transactional costs. We intend to continue this strategy of rebalancing our customer mix. Whilst the current period of economic uncertainty will affect certain sectors of the market in the short term, particularly private commercial investment, other areas such as institutional expenditure and industrial markets are likely to remain more robust. We are a late cycle business with only 5% market share and continue to perform well. These factors, together with self-help available in a number of the acquired profit centres, contribute to our optimism regarding Sunbelt's performance in the coming year. A-Plant Fourth quarter Year 2008 2007 Growth 2008 2007 Growth £m £m £m £m Revenue As reported 55.1 50.2 +10% 214.8 189.9 +13% Lux Traffic - - - 9.5 --------------------------------------------------- Pro forma combined 55.1 50.2 +10% 214.8 199.4 +8% --------------------------------------------------- Underlying operating profit As reported 8.3 5.9 +42% 30.2 20.1 +50% Lux Traffic - - - 0.6 --------------------------------------------------- Pro forma combined 8.3 5.9 +42% 30.2 20.7 +46% --------------------------------------------------- Pro forma margin 15.1% 11.8% 14.1% 10.4% --------------------------------------------------- A-Plant performed strongly throughout the year with market share gains generating organic like for like revenue growth of 8%. This growth was achieved by focusing on the value added products and services required by our customers. We are now the market leader in providing a combined plant and tool product offering which has proven particularly attractive to our larger customers. This growth was supported by 8% growth in average fleet size and a specific programme of investment in de-aging which has resulted in a fleet age of 23 months at 30 April 2008, down from 29 months a year ago. Whilst the focus on major contractors can have a negative impact on our pricing yield, it also provides a number of other opportunities in terms of improved physical utilisation (71% for the year compared to 69% in 2006/7) and reduced infrastructure cost. Our initiative in April 2007 to move to fewer, larger depots has clearly delivered results, with a 46% increase in A-Plant's underlying operating profit to £30.2m. As a result of these actions, margins improved significantly from 10.4% in 2006/7 to 14.1% in 2007/8. In the fourth quarter the average fleet size grew 12% and we enjoyed average physical utilisation of 74% (2007: 71%). Underlying operating profit grew 42% to £8.4m. We therefore enter the coming year with strong momentum. Whilst economically there are now areas of difficulty in the UK, notably the residential market and new commercial offices, the overall picture for our served market remains healthy. Infrastructure and utility work remains good and we are well positioned to benefit from major projects such as the Olympics, Crossrail, M25 widening and changes to the energy infrastructure. These factors together with the opportunity to drive further market share gains from A-Plant's current single digit market share give us confidence in the prospects for the year ahead. Ashtead Technology Fourth quarter Year 2008 2007 Growth* 2008 2007 Growth* £m £m £m £m Revenue 6.9 5.3 +30% 26.5 21.6 +23% ----------------------------------------------- Operating profit 3.3 1.8 +84% 10.6 6.2 +72% ----------------------------------------------- Margin 47.0% 34.0% 40.0% 28.7% ----------------------------------------------- * At constant exchange rates In good markets, aided by a very strong oil price, Ashtead Technology continued to deliver excellent revenue and profit growth. Taxation The effective tax rate on underlying pre-tax profits for the year was 35% (2007: 35%) and is expected to remain at around 35% in coming years. In addition, there was a £1.6m exceptional tax charge to write down the UK deferred tax asset to reflect the reduction in the rate of UK corporation tax from 30% to 28% effective 1 April 2008. The tax charge again comprised mostly deferred tax, with cash tax payments only amounting to approximately 5% of profits due to available tax losses and the accelerated tax depreciation available due to the capital intensive nature of the business. Following the introduction of a "like kind exchange" programme at Sunbelt effective from 1 May 2008 and with the benefit of US bonus depreciation as part of the economic stimulus measures introduced earlier this year, the cash tax rate is expected to remain in single digits in 2008/9 and to continue to be well below the effective 35% long term accounting tax rate for several more years. Earnings per share Basic earnings per share for the year were 14.2p (2007: 1.5p) and 14.1p (2007: 1.5p) on a fully diluted basis. Underlying earnings per share were 14.8p (2007: 10.3p) whilst, on a cash tax basis, underlying earnings per share were 21.4p (2007: 15.8p). Underlying earnings per share of 14.8p has now grown 45% at constant exchange rates from the 11.3p delivered in 2005/6, immediately prior to the NationsRent acquisition. This equates to compound annual growth of 20% per annum in earnings at constant exchange rates (14% per annum at actual rates) over the past two years, notwithstanding the enlarged share capital in issue following the NationsRent acquisition. Return on Investment and Return on Equity Group return on investment improved to 14.0% (2007: 12.9%), reflecting improving performance in Sunbelt and A-Plant. RoI for Sunbelt was 14.4% (2007: 14.0 %) whilst RoI at A-Plant continued its recently improving trend and was 10.9% (2007: 8.8%). Both businesses therefore now return well above our weighted average cost of capital. Aided by the beneficial impact of using lower cost, tax deductible debt to finance a significant part of our fleet investment, the after tax return on equity was 19.0% (2007: 15.3%) producing strong accretive returns for shareholders. Capital expenditure Capital expenditure in the year totalled £331.0m (2007: £290.2m) including £ 294.8m on the rental fleet. £168.8m of the rental fleet expenditure was maintenance or replacement expenditure with £126.0m spent for growth. Disposal proceeds totalled £77.9m (2007: £89.1m) giving net expenditure of £253.1m (2007: £201.1m). The average age of the Group's rental fleet at 30 April 2008 was 31 months (2007: 31 months). Our rental fleet is now at an age and mix which we consider optimum. Accordingly, we expect significantly reduced capital expenditure next year at approximately £230m gross and £175m net of disposal proceeds. Around £180m of the gross expenditure will be for replacement with £50m of investment for growth (3% of current fleet size). Net debt Net debt increased to £963m at 30 April 2008 (2007: £916m) reflecting the capital investment in fleet growth and de-ageing and the £23m spent on share buy-backs. However, the ratio of net debt to last twelve months total Group EBITDA of £380m improved to 2.5 times at 30 April 2008. From a leverage position of around 3 times when the NationsRent acquisition closed in August 2006, the Group has therefore, as we had anticipated, already delevered to the mid point of our long term 2-3 times net debt to EBITDA target. With the US fleet reconfiguration complete and with both the US and UK fleets in excellent shape, we anticipate significant free cash flow in the coming year which we expect to apply largely towards debt pay-down. Together with the Technology sale proceeds we are therefore, by April 2009, targeting net debt, at constant exchange rates, of £785m 2008: £963m) and to be at the lower end of our 2-3 times net debt to EBITDA range. Dividends The Board is proposing a final dividend of 1.675p (2007: 1.1p) making 2.5p for the year (2007: 1.65p), an increase of 52%. If approved by shareholders at the forthcoming Annual General Meeting, the final dividend will be paid on 26 September 2008 to shareholders on record at 5 September 2008. Current trading and outlook Current trading is in line with our expectations with both Sunbelt and A-Plant delivering improved year on year performance in May. We continue to enjoy high levels of utilisation and expect to benefit further from the momentum established in the Group. Therefore, despite the current economic uncertainty, the Board anticipates the Group continuing to trade in line with its expectations in the coming year. - o0o - Geoff Drabble and Ian Robson will host a meeting for equity analysts to discuss the results at 9.30am on Tuesday 24 June at the offices of RBS Hoare Govett at 250 Bishopsgate, London EC2M 4AA. For the information of shareholders and other interested parties, the analysts' meeting 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 used for the meeting will also be available for download on the Company's website. There will also be a conference call for bondholders at 3pm (10am EST). Analysts and bondholders have already been invited to participate in the meeting and conference call but anyone not having received dial-in details should contact the Company's PR advisers, Maitland (Jane Franklin) at +44 (0)20 7379 5151. CONSOLIDATED INCOME STATEMENTS 2008 2007 Before exceptional Exceptional items, items, Before amortisation amortisation exceptional Exceptional and and Items and Items and fair value fair value amortisation amortisation Total remeasurements+ remeasurements+ Total £m £m £m £m £m £m Fourth quarter - unaudited Revenue 235.0 - 235.0 228.5 - 228.5 Staff costs (70.9) - (70.9) (76.7) (1.4) (78.1) Other operating costs (80.4) - (80.4) (81.0) (16.1) (97.1) Other income - (0.3) (0.3) 5.1 (0.9) 4.2 ------------------------------------------------------------------- EBITDA* 83.7 (0.3) 83.4 75.9 (18.4) 57.5 Depreciation (44.3) - (44.3) (42.0) (0.9) (42.9) Amortisation of - (0.7) (0.7) - (4.4) (4.4) intangibles ------------------------------------------------------------------- Operating profit 39.4 (1.0) 38.4 33.9 (23.7) 10.2 Investment income 1.1 - 1.1 0.8 - 0.8 Interest expense (18.4) - (18.4) (20.8) - (20.8) ------------------------------------------------------------------- Net financing costs (17.3) - (17.3) (20.0) - (20.0) ------------------------------------------------------------------- Profit/(loss) on 22.1 (1.0) 21.1 13.9 (23.7) (9.8) ordinary activities before taxation Taxation: - current 3.8 - 3.8 (0.4) - (0.4) - deferred (10.8) 0.6 (10.2) (4.6) 6.8 2.2 ------------------------------------------------------------------- (7.0) 0.6 (6.4) (5.0) 6.8 1.8 ------------------------------------------------------------------- Profit/(loss) after taxation from continuing operations 15.1 (0.4) 14.7 8.9 (16.9) (8.0) Profit after taxation 2.8 - 2.8 1.2 - 1.2 from discontinued operations ------------------------------------------------------------------- Profit/(loss) attributable to equity shareholders 17.9 (0.4) 17.5 10.1 (16.9) (6.8) ------------------------------------------------------------------- Basic earnings per share 3.4p (0.1p) 3.3p 1.8p (3.0p) (1.2p) ------------------------------------------------------------------- Diluted earnings per share 3.4p (0.1p) 3.3p 1.8p (3.0p) (1.2p) ------------------------------------------------------------------- Year to 30 April 2008 - audited Revenue 976.1 - 976.1 874.5 - 874.5 Staff costs (298.9) - (298.9) (280.1) (10.1) (290.2) Other operating costs (323.2) - (323.2) (306.5) (26.5) (333.0) Other income 9.7 - 9.7 11.4 (0.9) 10.5 ------------------------------------------------------------------ EBITDA* 363.7 - 363.7 299.3 (37.5) 261.8 Depreciation (176.6) - (176.6) (155.0) (0.9) (155.9) Amortisation of - (2.6) (2.6) - (11.0) (11.0) intangibles ------------------------------------------------------------------- Operating profit 187.1 (2.6) 184.5 144.3 (49.4) 94.9 Investment income 4.3 - 4.3 3.9 - 3.9 Interest expense (79.1) - (79.1) (73.0) (68.5) (141.5) ------------------------------------------------------------------- Net financing costs (74.8) - (74.8) (69.1) (68.5) (137.6) ------------------------------------------------------------------- Profit/(loss) on 112.3 (2.6) 109.7 75.2 (117.9) (42.7) ordinary activities before taxation Taxation: - current (5.7) - (5.7) (0.2) - (0.2) - deferred (33.4) (0.6) (34.0) (26.2) 71.0 44.8 ------------------------------------------------------------------- (39.1) (0.6) (39.7) (26.4) 71.0 44.6 ------------------------------------------------------------------- Profit/(loss) after 73.2 (3.2) 70.0 48.8 (46.9) 1.9 taxation from continuing operations Profit after taxation 7.6 - 7.6 3.9 2.1 6.0 from discontinued operations ------------------------------------------------------------------- Profit attributable to equity shareholders 80.8 (3.2) 77.6 52.7 (44.8) 7.9 ------------------------------------------------------------------- Basic earnings per share 14.8p (0.6p) 14.2p 10.3p (8.8p) 1.5p ------------------------------------------------------------------- Diluted earnings per share 14.7p (0.6p) 14.1p 10.2p (8.7p) 1.5p ------------------------------------------------------------------- * 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. CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Unaudited Audited Three months to Year to 30 April 30 April 2008 2007 2008 2007 £m £m £m £m Net profit/(loss) for the period 17.5 (6.8) 77.6 7.9 Net actuarial (loss)/ gain on defined (0.6) 2.5 (0.6) 2.5 benefit pension schemes Effect of the limitation on net pension (5.8) - (5.8) - asset recognised Foreign currency translation differences 0.7 (2.5) 2.0 (13.0) Tax on items taken directly to equity (0.9) 1.6 (1.4) 1.6 ----- ----- ----- ----- Total recognised income and expense for the 10.9 (5.2) 71.8 (1.0) period ----- ----- ----- ----- CONSOLIDATED MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS Unaudited Audited Three months to Year to 30 April 30 April 2008 2007 2008 2007 £m £m £m £m Total recognised income and expense for the 10.9 (5.2) 71.8 (1.0) period Dividends paid (4.4) (3.0) (10.5) (7.0) Issue of ordinary shares, net of expenses - 0.7 0.5 148.9 Own shares purchased by the Company (12.2) - (23.3) - Own shares purchased by the ESOT (0.1) - (1.6) (4.9) Credit in respect of share based payments 0.5 0.4 2.5 2.4 ------ ------ ------ ------ Net (decrease)/ increase in equity (5.3) (7.1) 39.4 138.4 shareholders' funds Opening equity shareholders' funds 441.4 403.8 396.7 258.3 ------ _----- ------ ------ Closing equity shareholders' funds 436.1 396.7 436.1 396.7 ------ ------ ------ ------ CONSOLIDATED BALANCE SHEETS AT 30 APRIL Audited 2008 2007 £m £m Current assets Inventories 22.6 24.2 Trade and other receivables 159.9 163.7 Current tax asset 2.2 2.0 Cash and cash equivalents 1.8 1.1 ------------------- 186.5 191.0 Assets held for sale 26.8 10.3 ------------------- 213.3 201.3 ------------------- Non-current assets Property, plant and equipment - rental equipment 994.0 920.6 - other assets 136.1 127.4 ------------------- 1,130.1 1,048.0 Intangible assets - brand names and other acquired 8.0 9.7 intangibles Goodwill 291.9 289.6 Deferred tax asset 19.6 41.7 Defined benefit pension fund surplus - 5.2 ------------------- 1,449.6 1,394.2 ------------------- Total assets 1,662.9 1,595.5 ------------------- Current liabilities Trade and other payables 129.1 166.8 Current tax liability - 0.7 Debt due in less than one year 7.6 9.0 Provisions 9.1 12.7 ------------------- 145.8 189.2 Liabilities associated with assets classified as held for sale 6.5 - ------------------- 152.3 189.2 ------------------- Non-current liabilities Debt due in more than one year 957.4 908.0 Provisions 18.8 19.6 Deferred tax liability 98.3 82.0 ------------------- 1,074.5 1,009.6 ------------------- Total liabilities 1,226.8 1,198.8 ------------------- Equity shareholders' funds Share capital 56.2 56.0 Share premium account 3.6 3.3 Non-distributable reserve 90.7 90.7 Own shares held in treasury by the Company (23.3) - Own shares held in treasury through the ESOT (7.0) (8.7) Cumulative foreign exchange translation differences (28.2) (30.2) Distributable reserves 344.1 285.6 ------------------- Total equity shareholders' funds 436.1 396.7 ------------------- Total liabilities and equity shareholders' funds 1,662.9 1,595.5 ------------------- CONSOLIDATED CASH FLOW STATEMENTS FOR THE YEARS ENDED 30 APRIL Audited 2008 2007 £m £m £m £m Cash flows from operating activities Cash generated from operations before 356.4 319.3 exceptional items Exceptional items (9.5) (19.0) ------ ------ Cash generated from operations 346.9 300.3 Financing costs paid before exceptional items (76.4) (64.2) Exceptional financing costs paid - (49.8) ------ ------ Financing costs paid (76.4) (114.0) Tax paid (6.4) (5.0) ------ ------ Net cash from operating activities 264.1 181.3 ------ ------ Cash flows from investing activities Acquisition of businesses (5.9) (327.2) Payments for property, plant and equipment (351.5) (308.3) Proceeds on sale of property, plant and equipment and assets held for sale 92.7 78.5 ------ ------ Net cash used in investing activities (264.7) (557.0) ------ ------ Cash flows from financing activities Drawdown of loans 186.7 890.5 Redemption of loans (143.9) (641.8) Capital element of finance lease payments (7.0) (9.9) Purchase of own shares by the Company (22.9) - Purchase of own shares by the ESOT (1.6) (4.9) Dividends paid (10.5) (7.0) Proceeds from issue of ordinary shares 0.5 148.9 ------ ------ Net cash from financing activities 1.3 375.8 ------ ------ Increase in cash and cash equivalents 0.7 0.1 Opening cash and cash equivalents 1.1 1.0 ------ ------ Closing cash and cash equivalents 1.8 1.1 ------ ------ NOTES TO THE FINANCIAL STATEMENTS 1. Basis of preparation The financial statements for the year ended 30 April 2008 were approved by the directors on 23 June 2008. This preliminary announcement of the results for the year ended 30 April 2008 contains information derived from the forthcoming 2007 /8 Annual Report & Accounts and does not contain sufficient information to comply with International Financial Reporting Standards (IFRS) and does not constitute the statutory accounts for either 2007/8 or 2006/7 for the purposes of section 240(3) of the Companies Act 1985. The 2007/8 results are extracted from the audited accounts for that year which have not yet been filed with Companies House. The comparative figures for 2006/7 have been extracted from the accounts for that year which have been delivered to Companies House except that the income statement has been restated to separate Ashtead Technology as a discontinued operation in accordance with IFRS 5. The auditors' reports in respect of both years were unqualified and do not contain a statement under section 237(2) or (3) of the Companies Act 1985. The results for the year ended and quarter ended 30 April 2008 have been prepared in accordance with relevant IFRS and the accounting policies set out in the Group's Annual Report & Accounts for the year ended 30 April 2007. The figures for the fourth quarter are unaudited. The exchange rates used in respect of the US dollar are: 2008 2007 Average for the year ended 30 April 2.01 1.91 At 30 April 1.98 2.00 2. Segmental analysis Operating profit before Exceptional exceptionals items and Operating Revenue and amortisation profit amortisation Three months to 30 April £m £m £m £m 2008 Sunbelt 179.9 32.9 (0.5) 32.4 A-Plant 55.1 8.3 (0.5) 7.8 Corporate costs - (1.8) - (1.8) ----- ----- ----- ----- Continuing operations 235.0 39.4 (1.0) 38.4 Ashtead Technology 6.9 3.3 - 3.3 ----- ----- ----- ----- Total group 241.9 42.7 (1.0) 41.7 ----- ----- ----- ----- 2007 Sunbelt 178.3 30.4 (17.1) 13.3 A-Plant 50.2 5.9 (6.5) (0.6) Corporate costs - (2.4) (0.1) (2.5) ----- ----- ----- ----- Continuing operations 228.5 33.9 (23.7) 10.2 Ashtead Technology 5.3 1.8 - 1.8 ----- ----- ----- ----- Total group 233.8 35.7 (23.7) 12.0 ----- ----- ----- ----- Operating profit before Exceptional exceptionals items and Operating Revenue and amortisation profit amortisation Year to 30 April £m £m £m £m 2008 Sunbelt 761.3 164.9 (2.1) 162.8 A-Plant 214.8 30.2 (0.5) 29.7 Corporate costs - (8.0) - (8.0) ----- ----- ----- ----- Continuing operations 976.1 187.1 (2.6) 184.5 Ashtead Technology 26.5 10.6 - 10.6 ----- ----- ----- ----- Total group 1,002.6 197.7 (2.6) 195.1 ----- ----- ----- ----- 2007 Sunbelt 684.6 132.5 (42.3) 90.2 A-Plant 189.9 20.1 (6.9) 13.2 Corporate costs - (8.3) (0.2) (8.5) ----- ----- ----- ----- Continuing operations 874.5 144.3 (49.4) 94.9 Ashtead Technology 21.6 6.2 - 6.2 ----- ----- ----- ----- Total group 896.1 150.5 (49.4) 101.1 ----- ----- ----- ----- 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 30 April Staff costs: Salaries 64.8 - 64.8 69.7 - 69.7 Social security 5.3 5.3 6.0 - 6.0 costs Other pension costs 0.8 - 0.8 1.0 - 1.0 costs Redundancies and - - - - 1.4 1.4 retention bonuses ----- ----- ----- ----- ----- ----- 70.9 - 70.9 76.7 1.4 78.1 ----- ----- ----- ----- ----- ----- Other operating costs: Vehicle costs 17.1 - 17.1 15.2 - 15.2 Spares, consumables 15.0 - 15.0 14.9 - 14.9 & external repairs Facility costs 10.9 - 10.9 10.8 6.1 16.9 Other external 37.4 - 37.4 40.1 10.0 50.1 charges ----- ----- ----- ----- ----- ----- 80.4 - 80.4 81.0 16.1 97.1 ----- ----- ----- ----- ----- ----- Other income: Profit on disposal - 0.3 0.3 (5.1) 0.9 (4.2) of fixed assets ----- ----- ----- ----- ----- ----- Depreciation and amortisation: Depreciation 44.3 - 44.3 42.0 0.9 42.9 Amortisation of - 0.7 0.7 - 4.4 4.4 acquired intangibles ----- ----- ----- ----- ----- ----- 44.3 0.7 45.0 42.0 5.3 47.3 ------ ----- ----- ----- ----- ----- 195.6 1.0 196.6 194.6 23.7 218.3 ------ ----- ----- ----- ----- ----- 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 Year to 30 April Staff costs: Salaries 271.7 - 271.7 254.4 - 254.4 Social security 22.5 - 22.5 21.1 - 21.1 costs Other pension costs 4.7 - 4.7 4.6 - 4.6 Redundancies and - - - - 10.1 10.1 retention bonuses ----- ----- ----- ----- ----- ----- 298.9 - 298.9 280.1 10.1 290.2 ----- ----- ----- ----- ----- ----- Other operating costs: Vehicle costs 71.0 - 71.0 63.7 - 63.7 Spares, consumables & 55.7 - 55.7 55.9 - 55.9 external repairs Facility costs 40.9 - 40.9 37.5 10.2 47.7 Other external 155.6 - 155.6 149.4 16.3 165.7 charges ----- ----- ----- ----- ----- ----- 323.2 - 323.2 306.5 26.5 333.0 ----- ----- ----- ----- ----- ----- Other income: Profit on disposal (9.7) - (9.7) (11.4) 0.9 (10.5) of fixed assets ----- ----- ----- ----- ----- ----- (9.7) - (9.7) (11.4) 0.9 (10.5) ----- ----- ----- ----- ----- ----- Depreciation and amortisation: Depreciation 176.6 - 176.6 155.0 0.9 155.9 Amortisation of - 2.6 2.6 - 11.0 11.0 acquired intangibles ----- ----- ----- ----- ----- ----- 176.6 2.6 179.2 155.0 11.9 166.9 ----- ----- ----- ----- ----- ----- 789.0 2.6 791.6 730.2 49.4 779.6 ----- ----- ----- ----- ----- ----- 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 Year to 30 April 30 April 2008 2007 2008 2007 £m £m £m £m Senior note redemption costs - - - 42.1 Write off of deferred financing costs relating to debt redeemed - - - 10.5 Acquisition integration costs - 5.2 - 21.3 Rebranding costs - 6.9 - 9.4 UK restructuring 0.3 6.2 - 6.2 Other costs - 1.0 - 2.0 ---- ---- ---- ----- Total exceptional items 0.3 19.3 - 91.5 Amortisation of acquired intangibles 0.7 4.4 2.6 11.0 Fair value remeasurements of embedded Derivatives - - - 15.4 ---- ---- ---- ----- 1.0 23.7 2.6 117.9 ---- ---- ---- ----- The items detailed in the table above are presented in the income statement as follows: Three months to Year to 30 April 30 April 2008 2007 2008 2007 £m £m £m £m Staff costs - 1.4 - 10.1 Other operating costs - 16.1 - 26.5 Other income 0.3 0.9 - 0.9 Depreciation - 0.9 - 0.9 Amortisation of acquired intangibles 0.7 4.4 2.6 11.0 ---- ---- ---- ---- Charged in arriving at operating profit 1.0 23.7 2.6 49.4 Net financing costs - - - 68.5 ---- ---- ---- ---- Charged in arriving at profit before tax 1.0 23.7 2.6 117.9 ---- ---- ---- ---- 5. Financing costs Three months to Year to 30 April 30 April 2008 2007 2008 2007 £m £m £m £m Investment income: Interest and other - - - 0.1 financial income Expected return on assets of 1.1 0.8 4.3 3.8 defined benefit pension plan ---- ---- ---- ---- 1.1 0.8 4.3 3.9 ---- ---- ---- ---- Interest expense: Bank interest payable 7.5 9.9 36.1 34.0 Interest payable on second priority 9.0 9.1 35.4 31.7 senior secured notes Interest payable on finance leases 0.3 0.4 1.2 1.6 Non-cash unwind of discount on defined benefit pension plan liabilities 0.7 0.5 2.9 2.5 Non-cash unwind of discount on self insurance provisions 0.2 0.3 1.1 0.7 Amortisation of deferred costs 0.7 0.6 2.4 2.5 of debt raising ---- ---- ---- ---- 18.4 20.8 79.1 73.0 Exceptional costs and fair value - - - 68.5 remeasurements of embedded derivatives in long term debt ---- ---- ---- ---- Total interest expense 18.4 20.8 79.1 141.5 ---- ---- ---- ---- Net financing costs before exceptional 17.3 20.0 74.8 69.1 items and fair value remeasurements of embedded derivatives Net exceptional items and fair value - - - 68.5 remeasurements of embedded derivatives ---- ---- ---- ---- Net financing costs 17.3 20.0 74.8 137.6 ---- ---- ---- ---- 6. Taxation The £39.1m tax charge on the underlying pre-tax profit of £112.3m from continuing operations represents an effective tax rate of 35% (2007: 35%). The £39.1m underlying tax consists of current tax of £nil relating to the UK (2007: £nil), current tax of £5.7m relating to the US (2007: £0.2m), deferred tax of £ 18.0m relating to the UK (2007: £6.9m), deferred tax of £15.4m relating to the US (2007: £19.3m). In addition, there was a £1.6m exceptional charge reflecting the effect on the UK deferred tax asset of the reduction in the corporation tax rate from 30% to 28% from 1 April 2008. 7. Earnings per share Basic and diluted earnings per share for the three and twelve months ended 30 April 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 in treasury and by the ESOT over which dividends have been waived). Diluted earnings per share is computed using the result for the relevant period and the diluted number of shares (ignoring any potential issue of ordinary shares which would be anti-dilutive). These are calculated as follows: Three months to Year to 30 April 30 April 2008 2007 2008 2007 Profit for the financial period (£m) From continuing operations 14.7 (8.0) 70.0 1.9 From discontinued operations 2.8 1.2 7.6 6.0 ----- ----- ----- ----- From continuing and discontinued operations 17.5 (6.8) 77.6 7.9 ----- ----- ----- ----- Weighted average number of shares (m) - basic 531.3 551.4 547.0 512.3 ----- ----- ----- ------ - diluted 532.4 562.1 549.2 519.0 ----- ----- ----- ----- Basic earnings per share From continuing operations 2.8p (1.4p) 12.8p 0.4p From discontinued operations 0.5p 0.2p 1.4p 1.1p ----- ----- ----- ----- From continuing and discontinued operations 3.3p (1.2p) 14.2p 1.5p ----- ----- ----- ----- Diluted earnings per share From continuing operations 2.8p (1.4p) 12.7p 0.4p From discontinued operations 0.5p 0.2p 1.4p 1.1p ----- ----- ----- ----- From continuing and discontinued operations 3.3p (1.2p) 14.1p 1.5p ----- ----- ----- ----- 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 Year to 30 April 30 April 2008 2007 2008 2007 Basic earnings per share 3.3p (1.2p) 14.2p 1.5p Exceptional items, amortisation of acquired intangibles and fair value remeasurements 0.2p 4.3p 0.5p 23.0p Tax on exceptional items, amortisation and fair value remeasurements (0.1p) (1.5p) (0.2p) (7.2p) Exceptional deferred tax charge/(credit) - 0.2p 0.3p (7.0p) ----- ----- ----- ----- Underlying earnings per share 3.4p 1.8p 14.8p 10.3p Other deferred tax 2.1p 1.0p 6.6p 5.5p ----- ----- ----- ----- Cash tax earnings per share 5.5p 2.8p 21.4p 15.8p ----- ----- ----- ----- 8. 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 5.7 6.4 (48.4) (54.4) Reclassifications (0.5) - (0.4) - Additions 294.8 331.0 256.4 290.2 Acquisitions 2.8 2.8 344.6 385.2 Disposals (52.8) (57.7) (53.1) (59.0) Depreciation (158.8) (182.3) (138.4) (160.7) ------- ------- ------- ------- 1,011.8 1,148.2 920.6 1,048.0 ------- ------- ------- ------- Transfer to assets held for sale (17.8) (18.1) - - ------- ------- ------- ------- At 30 April 994.0 1,130.1 920.6 1,048.0 ------- ------- ------- ------- During the period we reassessed the useful economic lives and residual values of the rental fleet which reduced the depreciation charge by £3.0m. 9. 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 561,687,727 559,898,348 56.2 56.0 ----------- ----------- ---- ---- In the year ended 30 April 2008, 1,789,379 ordinary shares of 10p each were issued at an average price of 28.4p per share under share option plans raising £0.5m. In addition, during the year the Company purchased 31,758,096 shares at a total cost of £23.3m, which are held in treasury and the ESOT purchased 1,253,962 shares at a total cost of £1.6m. 10. Statement of changes in shareholders' equity Cumulative Own foreign Non shares exchange Share Share distributable Treasury held by translation Distributable capital premium reserves stock ESOT difference reserves Total £m £m £m £m £m £m £m £m Total recognised income and expense - - - - - 2.0 69.8 71.8 Shares issued 0.2 0.3 - - - - - 0.5 Treasury shares - - - (23.3) - - - (23.3) purchased Dividends paid - - - - - - (10.5) (10.5) Share based payments - - - - - - 2.5 2.5 Vesting of share - - - - 3.3 - (3.3) - awards Own shares purchased - - - - (1.6) - - (1.6) -------------------------------------------------------------------------------- Net changes in 0.2 0.3 - (23.3) 1.7 2.0 58.5 39.4 shareholders' equity Opening 56.0 3.3 90.7 - (8.7) (30.2) 285.6 396.7 shareholders' equity -------------------------------------------------------------------------------- Closing 56.2 3.6 90.7 (23.3) (7.0) (28.2) 344.1 436.1 shareholders' equity -------------------------------------------------------------------------------- 11. Notes to the cash flow statement Year to 30 April 2008 2007 £m £m a) Cash flow from operating activities Operating profit before exceptional items and amortisation: - continuing operations 187.1 144.3 - discontinued operations 10.6 6.2 ----- ------ 197.7 150.5 Depreciation - continuing operations 176.6 155.0 - discontinued operations 5.7 4.8 ----- ------ EBITDA before exceptional items 380.0 310.3 Profit on disposal of property, plant (10.1) (11.8) and equipment Decrease in inventories 1.7 14.8 (Increase)/decrease in (16.1) 7.2 trade and other receivables Decrease in trade and other payables (2.5) (4.6) Exchange differences 1.0 1.1 Other non-cash movements 2.4 2.3 ----- ------ Cash generated from operations 356.4 319.3 before exceptional items ----- ------ b) Reconciliation to net debt Increase in cash in the period (0.7) (0.1) Increase in debt through cash flow 35.8 238.8 ----- ----- Change in net debt from cash flows 35.1 238.7 Debt acquired - 232.8 Exchange difference 9.8 (64.7) Non-cash movements: - deferred costs of debt raising 2.4 13.0 - capital element of new finance leases - 2.5 ----- ------ Movement in net debt in the period 47.3 422.3 Opening net debt 915.9 493.6 ----- ------ Closing net debt 963.2 915.9 ----- ------ c) Analysis of net debt 1 May Exchange Cash Non-cash 30 April 2007 movement flow movements 2008 £m £m £m £m £m Cash (1.1) - (0.7) - (1.8) Debt due within 1 year 9.0 - (6.9) 5.5 7.6 Debt due after 1 year 908.0 9.8 42.7 (3.1) 957.4 ------------------------------------------ Total net debt 915.9 9.8 35.1 2.4 963.2 ------------------------------------------ Details of the changes in the Group's debt are given in the Review of Results, Balance Sheet and Cashflow accompanying these financial statements. d) Acquisitions Year to 30 April 2008 2007 £m £m Initial consideration 5.9 327.0 Less: cash/overdrafts acquired - (6.2) Attributable costs paid - 6.4 ----- ----- 5.9 327.2 ----- ----- 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 (£3.4m), the intangible asset relating to the supply contract (£1.0m) and goodwill (£ 1.5m). 12. Contingent liabilities and contingent assets The Group is subject to periodic legal claims in the ordinary course of its business. However, net of provisions held, the claims outstanding at 30 April 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. 13. Disposal of Ashtead Technology The Group announced the disposal of its Ashtead Technology division on 23 June 2008 for a cash consideration of £95.6m which, when received, will be applied to reduce outstanding debt. Ashtead Technology has been accounted for as a discontinued operation at 30 April 2008 and accordingly the after tax profit for the year and its assets and liabilities have been shown as single line items within the Group's income statement and balance sheet. The profit after taxation of the business sold comprises: 2008 2007 £m £m Revenue 26.5 21.6 Operating costs (10.2) (10.6) ------ ------ EBITDA 16.3 11.0 Depreciation (5.7) (4.8) ------ ------ Operating profit 10.6 6.2 Net financing costs - - ------ ------ Profit before taxation 10.6 6.2 Taxation (3.0) (0.2) ------ ------ Profit after taxation 7.6 6.0 ------ ------ The £3.0m tax charge consists of a deferred tax charge of £1.7m (2007: credit of £0.8m) relating to the UK, a deferred tax charge of £1.0m relating to the US (2007: £0.8m), a deferred tax charge of £0.1m (2007: nil) and a current tax charge of £0.2m (2007: £0.2m) relating to Singapore. 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 year ended 30 April 2008 are summarised below: Revenue EBITDA Operating profit Three months to 30 April 2008 2007 2008 2007 2008 2007 Sunbelt in $m 356.3 349.4 131.2 122.8 64.9 59.8 ------------------------------------------------ Sunbelt in £m 179.9 178.3 66.4 62.6 32.9 30.4 A-Plant 55.1 50.2 19.0 15.7 8.3 5.9 Group central costs - - (1.7) (2.4) (1.8) (2.4) ------------------------------------------------ Total continuing operations 235.0 228.5 83.7 75.9 39.4 33.9 Ashtead Technology 6.9 5.3 4.8 3.0 3.3 1.8 ------------------------------------------------ 241.9 233.8 88.5 78.9 42.7 35.7 ------------------------------------------------ Net financing costs (17.3) (20.0) ------------- Profit before tax, exceptionals and amortisation 25.4 15.7 Exceptional items (0.3) (19.3) Amortisation (0.7) (4.4) ------------- Profit/(loss) before taxation 24.4 (8.0) ------------- Year to 30 April Sunbelt in $m 1,528.1 1,307.9 598.9 475.0 330.9 253.1 -------------------------------------------------- Sunbelt in £m 761.3 684.6 298.4 248.6 164.9 132.5 A-Plant 214.8 189.9 73.2 58.9 30.2 20.1 Group central costs - - (7.9) (8.2) (8.0) (8.3) -------------------------------------------------- Total continuing operations 976.1 874.5 363.7 299.3 187.1 144.3 Ashtead Technology 26.5 21.6 16.3 11.0 10.6 6.2 -------------------------------------------------- 1,002.6 896.1 380.0 310.3 197.7 150.5 -------------------------------------------------- Net financing costs (74.8) (69.1) ------------- Profit before tax, exceptionals and amortisation 122.9 81.4 Exceptional items - ( 106.9) Amortisation (2.6) (11.0) ------------- Profit/(loss) before taxation 120.3 (36.5) ------------- Underlying revenue increased 3.5% to £241.9m (2007: £233.8m) in the quarter ended 30 April 2008 and 11.9% to £1,002.6m (2007: £896.1m) in the year then ended. Underlying operating profit increased 19.9% to £42.8m (2007: £35.7m) in the quarter ended 30 April 2008 and 31.4% to £197.7m (2007: £150.5m) in the year then ended. Underlying profit before tax, exceptionals and amortisation for the quarter increased to £25.4m (2007: £15.7m) and for the year ended 30 April 2008 was £122.9m (2007: £81.4m). After exceptional items and amortisation, the profit before tax for the quarter (including Technology) was £24.4m (2007: loss of £8.0m) and for the year was a profit of £120.3m (2007: loss of £36.5m). Net financing costs Net financing costs, before exceptional costs and fair value remeasurements, increased from £69.1m to £74.8m reflecting principally higher average debt levels following the NationsRent acquisition. The average interest rate payable at 30 April 2008 on all of our debt facilities (including the impact of amortisation of deferred debt raising costs) was 6.5%. Balance sheet Fixed assets Capital expenditure in the year was £331.0m of which £294.8m was invested in the rental fleet (2007: £290.2m in total). Expenditure on rental equipment was 89.0% 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 168.4 183.8 352.2 348.2 ---------------------------------- Sunbelt in £m 85.0 92.8 177.8 174.2 A-Plant 35.0 73.3 108.3 73.8 ---------------------------------- Continuing operations 120.0 166.1 286.1 248.0 Ashtead Technology 6.0 2.7 8.7 8.4 ---------------------------------- Total rental equipment 126.0 168.8 294.8 256.4 --------------------- Delivery vehicles, property improvements & computers 36.2 33.8 ------------- Total additions 331.0 290.2 ------------- With strong market conditions for the majority of the year, £126.0m of rental equipment capital expenditure was spent on growth (including for reinvestment in connection with the NationsRent fleet reconfiguration) whilst £168.8m was invested in replacement of 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. Investment at A-Plant was high as we invested to de-age and grow its fleet in good market conditions. The average age of the Group's serialised rental equipment, which constitutes the substantial majority of our fleet, at 30 April 2008 was 31 months (2007: 31 months) on a net book value basis. Sunbelt's fleet had an average age of 34 months (2007: 32 months) comprising 38 months for aerial work platforms which have a longer life and 30 months for the remainder of its fleet and A-Plant's fleet had an average age of 23 months (2007: 29 months). The original cost of the Group's rental fleet and the dollar utilisation for the year ended 30 April 2008 are shown below: Rental fleet at original cost Rental & Dollar Physical 30 April 30 April Average related utilisation utilisation 2008 2007 revenues Sunbelt in $m 2,314 2,147 2,289 1,422 62% 68% ------------------------------------- Sunbelt in £m 1,168 1,074 1,140 709 62% 68% A-Plant 360 321 346 209 60% 71% ----- Ashtead Technology 47 39 44 26 60% ------------------------------------- 1,575 1,434 1,530 944 62% ------------------------------------------------- Dollar utilisation is defined as rental and rental related revenues divided by average fleet at original (or "first") cost. Dollar utilisation at Sunbelt was 62% in the year ended 30 April 2008 (2007 pro forma: 62%). The 60% (2007: 60%) achieved by A-Plant reflects the lower pricing (relative to equipment cost) prevalent in the competitive UK market and its higher physical utilisation. Physical utilisation is time based utilisation which is calculated as the original cost of equipment on rent as a percentage of the total value of equipment in the fleet at the measurement date. Assets held for sale This category comprises the assets of Ashtead Technology which has also been classed as a discontinued operation in the profit and loss account. Trade receivables Continued active collection efforts which produced an improved position in the former NationsRent businesses contributed to a reduction in receivable days to 49 days (2007: 54 days). The bad debt charge for the year ended 30 April 2008 as a percentage of total turnover was 0.8% (2007: 0.7%). Trade and other payables Group payable days were 70 days in 2008 (2007: 72 days). Capital expenditure related payables at 30 April 2008 totalled £24.1m (2007: £47.0m). 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: Year to 30 April 2008 2007 £m £m EBITDA before exceptional items 380.0 310.3 -------------- Cash inflow from operations before exceptional items 356.4 319.3 Cash efficiency ratio* 93.8% 102.9% Maintenance rental capital expenditure (195.3) (213.1) Non-rental capital expenditure (35.8) (32.3) Proceeds from sale of used rental equipment 92.7 78.5 Tax paid (6.4) (5.0) -------------- Free cash flow before interest 211.6 147.4 Financing costs paid (76.4) (64.2) -------------- Free cash flow after interest 135.2 83.2 Growth capital expenditure (120.4) (62.9) Dividends paid (10.5) (7.0) -------------- Cash flow available for acquisitions, buy-backs & debt 4.3 13.3 paydown Acquisitions and disposals (5.9) (327.2) Issue of ordinary share capital 0.5 148.9 Purchase of own shares by the Company (22.9) - Purchase of own shares by ESOT (1.6) (4.9) Exceptional costs paid (net) (9.5) (68.8) -------------- Increase in net debt (35.1) (238.7) -------------- * Cash inflow from operations before exceptional items as a percentage of EBITDA before exceptional items. Cash inflow from operations increased 11.6% to £356.4m and the cash efficiency ratio was 93.8% (2007: 102.9%) as trade receivables normalised following the NationsRent acquisition. Net cash capital expenditure in the year ended 30 April 2008 increased to £258.8m (2007: £229.8m) reflecting investment in de-ageing, in the US fleet reconfiguration and in fleet growth at A-Plant. Tax payments remain low reflecting tax depreciation in excess of book and utilisation of tax losses. Financing costs paid exceed the accounting charge in the income statement due to the timing of interest payments in the year, with accrued unpaid interest at 30 April 2008 totalling only £9.8m (2007: £13.5m). The Group continues to generate strong free cash flow after interest, with £ 135.2m (2007: £83.2m) generated in the year. With our expectation of lower growth investment in the coming year, we anticipate delivering significant further deleveraging by April 2009. Net debt 2008 2007 £m £m First priority senior secured bank debt 556.2 506.1 Finance lease obligations 15.2 22.0 8.625% second priority senior secured notes, due 2015 122.2 120.6 9% second priority senior secured notes, due 2016 271.4 268.3 ------- ------- 965.0 917.0 Cash and cash equivalents (1.8) (1.1) ------- ------- Total net debt 963.2 915.9 ------- ------- Group net debt increased from £915.9m at 30 April 2007 to £963.2m at 30 April 2008, reflecting the investment made in the fleet during the year and the £ 22.9m spent on share buy-backs. The ratio of net debt to EBITDA was 2.5 times down from 2.7 times at April 2007. 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 6.5%, 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 30 April 2008 availability under the bank facility, including suppressed availability of $10m, was $602m ($589m at 30 April 2007). Although the covenants were therefore not required to be measured at 30 April 2008, the Group was in compliance with both of them at that date. Principal risks and uncertainties Risks and uncertainties in achieving the Group's objectives for the forthcoming 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. 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 30 April 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 0.7%. OPERATING STATISTICS Profit centre numbers Staff numbers 2008 2007 2008 2007 Sunbelt Rentals 430 445 7,039 7,524 A-Plant 192 201 2,422 2,424 Ashtead Technology 13 13 120 115 Corporate office - - 13 14 ---- ---- ----- ------ Group 635 659 9,594 10,077 ---- ---- ----- ------ Sunbelt's profit centre numbers include 90 Sunbelt at Lowes stores at 30 April 2008 (99 at 30 April 2007).

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