Interim Results
Ashtead Group PLC
15 January 2003
ASHTEAD GROUP PLC
Interim results for the 6 months ended 31 October 2002
• Profit before goodwill amortisation and taxation of £20.3m (2001 - £28.8m
before exceptionals)
• FRS 3 profit before tax of £15.8m (2001 - loss before tax of £7.4m)
• Earnings per share of 4.4p (2001 - 6.2p) based on the profit before
goodwill amortisation (and in 2001 exceptional items) less a notional 30 per
cent tax charge
• Interim dividend maintained at 0.62p per share
• Positive free cash-flow in the first half
• US continues to outperform in competitive markets
• New UK product-focussed structure now firmly established and delivering
benefits
Chief executive George Burnett said:
'Against a background of challenging economic conditions, the Group generated a
profit before goodwill amortisation and tax of £20.3m in the 6 months to 31
October 2002. In the same period in the previous year when conditions pre
September 11 were more favourable, the figure was a profit of £28.8m before
exceptional items. Although revenues fell 5.9% to £292.2m (£310.6m) all but 1.5%
of this decline was due to translation effects resulting from the weak dollar.'
'The Board recognises the importance of dividends to shareholders at a time when
stock markets are weak and has declared an unchanged interim dividend of 0.62p.
Bank debt at 31 October 2002 at £431.2m is c£100m lower than the equivalent
figure a year earlier reflecting the successful implementation of the accounts
receivable securitisation, a favourable currency translation effect and positive
free cash flow.'
'Overall, while the Board believes a continued cautious approach is appropriate
in current conditions, it is confident of the Group's ability to continue to
reduce debt levels. The Group's divisions are all leaders in their respective
markets and are well positioned to benefit substantially as and when economic
conditions, particularly in the United States, improve.'
OVERVIEW
Against a background of challenging economic conditions, the Group generated a
profit before goodwill amortisation and tax of £20.3m in the 6 months to 31
October 2002. In the same period in the previous year when conditions pre
September 11 were more favourable, the figure was a profit of £28.8m before
exceptional items. Although revenues fell to £292.2m (£310.6m) all but 1.5% of
this decline was due to translation effects resulting from the weak dollar.
FRS 3 profits before tax of £15.8m compared favourably with the loss of £7.4m in
the same period a year ago. Earnings per share based on the profit before
goodwill amortisation (and in 2001 exceptional items) less a notional 30% tax
charge were 4.4p (2001 6.2p). The Board recognises the importance of dividends
to shareholders at a time when stock markets are weak and has declared an
unchanged interim dividend of 0.62p which will be paid on 7 April 2003 to
shareholders on the register on 28 February 2003. Bank debt at 31 October 2002
at £431.2m is c£100m lower than a year earlier reflecting the successful
implementation of the accounts receivable securitisation, a favourable currency
translation effect and positive free cash flow.
US - SUNBELT
In the six-month period Sunbelt's revenues rose 0.8% to $292.4m ($290.1). A
decline in same store revenues, of 4% year on year, was offset by turnover from
new businesses opened in the last 18 months, 23 in the year to 30 April 2002 and
4 in the six months to 31 October 2002. This modest growth in dollar revenues
was achieved at a time when non-residential construction spending, according to
US Department of Commerce figures, declined 17% year on year and by as much as
30% in the period March 2001 to September 2002. However, the weakness of the
dollar meant that, when translated into sterling, revenues declined by 5.8% from
£201.8m to £190.0m.
For the same reason, Sunbelt's operating profit before goodwill amortisation
declined by 20% in sterling terms but by 14.5% in US dollars. Since equipment
utilisation levels were broadly sustained at last year's levels, the decline in
operating profit largely arose from pressure on rental rates in the current US
economic slowdown and the drag effect of the 27 businesses opened in the last 18
months. Our specialist scaffolding and pump and power businesses in particular
continue to take market share, contributing to a performance which, while
declining year on year, compares favourably with Sunbelt's US peer group.
In response to the economic climate, capital expenditure levels were reduced by
a third to £33.9m (£50.8m) of which £18.0m was spent on expanding the fleet and
the balance on replacement. The average age of the US fleet overall is 3 years 9
months, and only 3 years when aerial work platforms, which have a longer than
average working life, are excluded. Since these figures are at the very least
commensurate with those of Sunbelt's competitors and low compared with the
working life of the equipment, our recent policy of matching expenditure to
economic conditions can be continued for some time without detriment to
Sunbelt's competitive position.
UK - A-PLANT
In the six months under review significant changes were made in the operating
structure of the A-Plant business following the appointment of new senior
management at the end of the last financial year. From the beginning of the
period the specialist businesses, such as portable accommodation, power
generation, welding, rail maintenance and powered access, took on a national
role under a single operating division. The benefits of this approach are
already apparent in terms of performance and increased customer awareness. The
refocusing of the smaller equipment businesses through the roll-out of the 'Tool
Hire Shops' brand was achieved on schedule. Where those smaller businesses had
become 'mini A-Plants' their larger equipment was redistributed to plant hire
locations and capital expenditure concentrated on tool hire activities.
Following this process, from 1 December 2002, the 73 Tool Hire Shops have been
brought together, like the Specialists, as a separate national division to
ensure optimum operational and marketing impact. At the same time the remaining
A-Plant businesses, 92 in total, were grouped into two operating divisions,
A-Plant North and South. Finally the Irish business, which had suffered a
significant downturn in the year to 30 April 2002, has made good progress under
its new all-Ireland identity.
Since 1 May 2002 the functions of the four previously separate accounting
offices and the marketing and corporate office of A-Plant have been transferred
to a new location at Warrington, and the four computer systems have been merged,
following a similar process in Sunbelt last year. This rationalisation will
significantly improve operating efficiency, customer support and internal and
external communications and will also enable support costs to be reduced once
the new systems are fully bedded down. Resulting from the focus given by its new
product driven structure, A-Plant anticipates closing a small number of
locations in the second half in markets where it is either geographically
over-represented or in product lines where its market presence is insufficiently
strong to achieve its return on investment criteria. Rental equipment released
from these locations will be mostly utilised elsewhere in the business where
better returns can be obtained.
The previously announced supplier rationalisation programme has made good
progress with a reduction in the number of suppliers from 10,000 to 2,500
already achieved with the anticipated savings from this exercise expected to
exceed £1m in a full year. Thus, although A-Plant's turnover fell by £5.3m to
£95.1m and its operating profit before goodwill amortisation and, in 2001,
exceptional items by £2.4m to £9.7m, much has been done to reverse the decline
suffered by the business in the second half of last year. Indeed in December
A-Plant's monthly revenues (for the first time this year) exceeded those of the
previous year. With a continued focus on improving the rate of return on
investment, capital expenditure was kept under tight control at £15.0m (£19.6m)
thereby increasing utilisation rates and increasing the average age of the
rental fleet to 3 years 9 months, which compares with a working life on average
of more than 8 years.
OFFSHORE AND ENVIRONMENTAL - ASHTEAD TECHNOLOGY
A strong performance in Ashtead Technology's environmental businesses in the
United States and Canada despite the slow-down in the US economy was
insufficient to offset difficult trading conditions in the Company's oil and gas
markets in the North Sea and the Gulf of Mexico. As a result turnover fell £1.3m
to £7.1m and operating profits before goodwill amortisation by £0.9m to £2.1m.
Operating margins, however, remain the highest in the Group at 29.6%.
CASH MANAGEMENT
Total rental fleet capital expenditure committed in the period was £51.2m
(£73.2m) split almost equally between equipment for expansion and replacement
items. There was a gain of £2.2m on sale of fixed assets. Debtors days at 31
October 2002 were reduced to 56 days (2001 - 57 days). Net cash inflow from
operating activities was £152.9m (£121.8m) and free cash flow (defined as cash
inflow from operating activities less interest other than exceptional interest,
dividends, tax and capital expenditure) was £60.6m (outflow of £35.0m). Both
these figures include the initial proceeds from the first drawdown of the
accounts receivable securitisation in June 2002 of £57.4m. The continued control
of capital expenditure will result in increased free cash flow in the second
half and beyond. Actual tax payments were £0.4m and will remain minimal for the
foreseeable future.
CURRENT TRADING AND OUTLOOK
Trading in November and December has continued to show the same trends seen in
the first half with group revenues for the eight months to 31 December 2002 1.4%
lower than the previous year at constant rates of exchange.
Looking forward, the major influence on trading will be the US economy which
continues to give mixed signals. The December US Institute of Supply Management
survey indicated that 70% of manufacturers and service companies expect sales in
2003 to exceed 2002 levels. The year on year rate of decline in non-residential
construction reduced to 14% in November and more importantly the absolute level
of activity rose by 1.4% between September and November. President Bush is
introducing a significant package of measures to stimulate the US economy. On
the other hand, geopolitical risks and a high oil price threaten the general
economic outlook.
Sunbelt's absolute progress will be determined by the resolution of these
matters, but the Board is confident that its comparative position as number four
in the US with only a 2.5% to 3% market share will continue to strengthen. In
the UK others in our industry have observed that the market in which we operate
has worsened over the last 12 months. Nevertheless the Board is confident that
the measures being taken in A-Plant are set to deliver an improved year on year
performance in the second half. Overall, while the Board believes a continued
cautious approach is appropriate in current conditions, it is confident of the
Group's ability to continue to reduce debt levels. The Group's divisions are all
leaders in their respective markets and are well positioned to benefit
substantially as and when economic conditions, particularly in the United
States, improve.
There will be a presentation to analysts at 9.30am today at the offices of
WestLB Panmure at Woolgate Exchange, 25 Basinghall Street, London EC2V 5HA. A
copy of the slides and a live webcast of the presentation will be available via
the Company's website (www.ashtead-group.com) as well as a playback as soon as
practicable after the presentation closes.
ENDS 15 January 2003
Contacts:
George Burnett Chief Executive 01372 362300
Ian Robson Finance Director
Andrew Grant Tulchan Communications 0207 353 4200
Nigel Fairbrass
FINANCIAL REVIEW
RESULTS
Revenues
Group revenues of £292.2m (2001 - £310.6m) were significantly impacted by the
weak US dollar. At constant exchange rates the decline in group revenues was
1.5%, significantly less than the 5.9% decline at actual rates. Sunbelt's
revenues declined from £201.8m to £190.0m when measured in sterling but rose
0.8% in US dollars from $290.1m to $292.4m. A-Plant's revenues declined 5.3%
from £100.4m to £95.1m which was an improvement on the second half of the
previous year when its revenues declined by 8.8% compared to the equivalent
period a year earlier. Ashtead Technology revenues reduced from £8.4m to £7.1m
reflecting lower activity levels in its offshore markets in the North Sea and
Gulf of Mexico.
Divisional performance Turnover Profit
6 months to 31 Year to 6 months to 31 October Year to 30 April
October 30 April
2002 2001 2002 2002 2001 2002
£m £m £m £m £m £m
(restated)
Sunbelt Rentals 190.0 201.8 382.2 32.3 40.4 62.6
A-Plant 95.1 100.4 187.0 9.7 12.1 14.5
Ashtead Technology 7.1 8.4 14.5 2.1 3.0 4.2
Group central costs - - - (2.6) (2.6) (4.7)
Divisional performance 292.2 310.6 583.7 41.5 52.9 76.6
Interest:
- bank interest (16.0) (20.7) (39.2)
- finance leases (1.3) (1.4) (2.7)
- convertible loan note (3.9) (3.8) (7.6)
Profit before tax, exceptionals, goodwill & BET lease impact 20.3 27.0 27.1
Prior year BET lease impact - 1.8 1.8
Profit before tax, exceptional items & goodwill amortisation 20.3 28.8 28.9
Exceptional items* - (31.3) (35.6)
Goodwill amortisation (4.5) (4.9) (8.8)
Profit/(loss) before tax under FRS 3 15.8 (7.4) (15.5)
* comprising, for the six months ended 31 October 2001, the UK asset disposal
programme (£30.0m) and bank facility
amendment fees of £1.3m.
In the table above adjustments have been made to the previously published
results for the six months to 31 October 2001 to reflect the subsequent
capitalisation of certain acquired rental equipment leases in BET as finance
leases at 30 April 2002 as described in note 22 to the 2001/2 report and
accounts. Divisional performance (operating profit before goodwill amortisation
and, in 2001, exceptional items) also excludes the prior year element of the
change in treatment of acquired BET leases because this provides a better
comparison between periods. In addition certain costs previously allocated
across the operating divisions are now presented separately as this better
reflects underlying divisional performance.
On this basis total Divisional operating profit excluding goodwill amortisation
and, in 2001, exceptional items declined by 21.6% from a restated £52.9m to
£41.5m. At constant rates of exchange the reduction was 17.2%.
On the same basis Sunbelt's operating profit before goodwill amortisation
declined 20.0% in sterling at actual rates of exchange but by only 14.5% in US
dollars with the remaining 5.5% decline being due to the weaker US dollar. This
decline reflected a reduction in Sunbelt's operating margins from 20.0% to 17.0%
largely due to reductions in rental rates caused by the competitive operating
environment during the current US economic slowdown. Equipment utilisation was
at similar levels to the equivalent period a year earlier.
A-Plant's operating profit also declined 19.8% with its operating margins
falling from 12.1% to 10.2%. This decline reflected continued competitive
conditions in its principal markets. Its reorganisation on product lines is now
well established and it presently anticipates an improved second half compared
with that of last year.
Technology's profits declined in line with the revenue fall in its key offshore
markets but its operating margins remain the highest in the group at 29.6% (2001
- 35.7%).
Net interest payable and similar charges
6 months to 31 October Year to 30 April
2002 2001 2002
£m £m £m
(restated)
Interest payable on bank and other borrowings 16.0 20.7 39.2
Finance lease interest 1.3 1.4 2.7
5.25% unsecured convertible loan note interest 3.9 3.8 7.6
Interest cost before non-recurring charges 21.2 25.9 49.5
Prior year BET lease interest charge - 2.9 2.9
Exceptional costs re bank facility - 1.3 3.0
Total interest 21.2 30.1 55.4
Interest (excluding the prior year BET lease interest and the exceptional costs
incurred in 2001/2 in resetting bank covenants) reduced by 18.1% from £25.9m to
£21.2m reflecting both lower interest rates and the weakness of the US dollar
which is the currency in which around 80% of bank interest is payable. Net bank
interest payable includes £4.1m (2001 - £1.7m) payable under the US$250m 3 year
interest rate swaps at 6.825% entered into at the end of August 2000 as required
by the banking agreement. Consequently the Company has only benefited from lower
interest costs on less than two-thirds of its bank debt, a feature which will
continue until the swaps expire in early September 2003.
Exceptional items
No exceptional costs were incurred in the first half of the current financial
year. Exceptional items in the previous year related to the UK rental fleet
rationalisation programme (£30.0m for the 6 months to 31 October and £32.6m for
the full 2001/2 year) and to the banking covenant reset costs (£1.3m for the 6
months to 31 October and £3.0m for the full 2001/2 year) discussed above.
Profit before tax
Profit before tax, exceptional items and goodwill (and excluding the £1.8m prior
year lease impact booked in 2001/2) declined 24.8% at actual rates of exchange
from the comparable £27.0m shown in the table above to £20.3m but by only 20.0%
at constant rates.
Profit before tax for the second quarter (1 August to 31 October 2002) of £12.3m
compared with the first quarter result announced on the day of the 2002 AGM of
£8.0m. The FRS 3 profit before tax for the six months to 31 October 2002 was
£15.8m compared to last year's half year FRS 3 loss before tax of £7.4m.
Taxation
Reflecting one of the benefits of the capital intensive nature of the Group's
operations, the current tax charge for the half year continues to be low at
£0.6m representing an effective tax rate on profits before tax and goodwill
amortisation of less than 3% (2001 - less than 2%). The effective current tax
rate is expected to remain at very low levels (significantly less than ten
percent) for the foreseeable future.
The total half year tax charge of £7.2m (2001 - tax credit of £5.4m) therefore
includes a £6.6m deferred tax charge representing full provision under FRS 19
for tax amounts which are not expected to be payable for many years. All of this
charge arises in the United States because the group is currently in a net tax
loss position in the UK after the impact of the interest rate hedging costs
discussed above and the beneficial effects of the structure used to finance the
BET acquisition and is consequently unable to recognise any tax credit for these
UK tax losses. The full US tax charge and the inability to take credit for the
UK tax loss position explain why the overall effective tax rate (based on pre-
goodwill profits) of 35.5% in the first half is currently higher than the UK
statutory rate of 30%. As and when UK taxable profitability recovers (which will
be aided by the forthcoming expiry of the interest rate swap in September 2003)
then these unrecognised UK tax losses (£10.6m at 30 April 2002) will act as a
'tax shelter'. Consequently, in these circumstances, the Group would report an
effective tax rate lower than the UK statutory rate of 30%.
The full year tax charge is currently again expected to almost entirely comprise
a deferred tax charge as was the case in the year to 30 April 2002.
Earnings per share
Earnings per share for the six months to 31 October 2002 is 4.4p based on the
profit before tax and goodwill amortisation for the period and on a notional 30
per cent tax charge (which has been used for illustrative purposes in view of
the volatility in the actual tax charge for the reasons outlined above). This
compares with 6.2p for 2001 before exceptional items. Earnings per share under
FRS 14 which are based on the profit after goodwill amortisation and after the
full FRS 19 tax charge are 2.7p (2001 - loss per share of 0.6p).
Dividends
The Board has declared an unchanged interim dividend of 0.62p net per share
which has a total cost of £2.0m (2001 - £2.0m). This dividend will be paid on 7
April 2003 to shareholders on the record on 28 February 2003.
BALANCE SHEET
Fixed assets - rental equipment additions
6 months to 31 Oct 2002 6 months to 31 Oct Year to 30
2001 April 2002
Expansion Replacement Total
£m £m £m £m £m
Sunbelt Rentals 18.0 15.9 33.9 50.8 67.0
A-Plant 6.5 8.5 15.0 19.6 26.7
Ashtead Technology 1.5 0.8 2.3 2.8 4.3
26.0 25.2 51.2 73.2 98.0
Capital expenditure in the six months to 31 October 2002 was £55.9m, including
£51.2m spent on rental equipment. This was lower than in the previous year when
£81.2m (rental equipment - £73.2m) was spent in the first six months and £113.8m
for the year as a whole (rental equipment - £98.0m).
Despite the lower capital expenditure both Sunbelt and A-Plant retain fleets
whose ageing is comparable to or younger than their competitors with the average
age of the Group's rental fleet at 31 October 2002 being 45 months (30 April
2002 - 41 months). This comprises an overall age of 45 months for both A-Plant
and Sunbelt. Within the Sunbelt fleet the average age of the aerial work
platforms (the equipment type with virtually the longest life in its fleet) is
51 months and the remainder of its equipment has an average age of 36 months. It
is still expected, as stated in the 2001/2 annual report and accounts, that
total capital expenditure for 2002/3 will be around £75m and that this is
expected to give an average fleet age of around 49 months at 30 April 2003.
Debtors
Gross trade debtors before non-recourse funding received under the accounts
receivables securitisation at 31 October 2002 were £101.3m (2001 - £107.8m).
Gross debtors days were 56 days compared with 58 days at 30 April 2002 and 57
days at 31 October 2001.
Non-recourse funding received against these receivables at 31 October 2002 under
the receivables securitisation programme entered into in June 2002 was £57.9m
which represented 59% of the net value of the receivables in the pool. The
effective funding charge applicable to this funding is 1.35% over LIBOR and is
included within net bank interest payable. This compares with a margin of 2.5%
over LIBOR on the £60m of bank debt repaid in the period principally with the
proceeds derived from the securitisation.
Creditors
The total amount included within creditors directly attributable to the purchase
of fixed assets was £43.2m at 31 October 2002 (£82.3m at 31 October 2001 and
£60.7m at 30 April 2002). Bills of exchange at £11.0m (2001 - £18.4m) were again
an insignificant part of the Group's financial structure as they were at the
April 2002 year-end.
CASH FLOW AND DEBT
Net cash inflow from operating activities was £152.9m (2001- £121.8m) including
the initial proceeds from the first drawdown of the accounts receivable
securitisation in June 2002 of £57.4m. £23.4m (2001 - £25.2m) of interest and
similar charges was paid in the period and £0.4m (2001 - £0.1m) of tax. As
anticipated following the halving of capital expenditure last year, cash
payments for the purchase of fixed assets were less than half those of a year
earlier at £73.5m (2001 - £149.1m).
Free cashflow (defined as cash inflow from operating activities less capital
expenditure, servicing of finance other than exceptional interest costs, tax and
equity dividends paid) was a positive cash inflow for the first time since the
recession of the early nineteen-nineties of £60.6m (2001 - outflow of £35.0m) -
albeit that the majority of the inflow relates to the initial proceeds of the
securitisation of £57.4m.
This free cashflow was applied to reducing debt. Free cash flow is anticipated
to increase in the second half reflecting an expectation that the usual seasonal
reduction in working capital in the second half will continue and that payments
for capital expenditure will be significantly lower in the second half than the
£73.5m paid in the first half (as was the case last year when £149.1m was paid
in the first half but only £54.2m in the second).
Net debt
At 31 October At 30 April
2002 2001 2002
£m £m £m
(restated)
Bank debt 431.2 530.1 515.5
Finance lease obligations 25.7 33.5 30.6
456.9 563.6 546.1
5.25% unsecured convertible loan note, due 2008 130.1 129.4 129.7
Cash at bank and in hand (0.4) (2.5) (0.5)
Total net debt 586.6 690.5 675.3
Bank debt at 31 October 2002 was £431.2m, £98.9m less than the equivalent figure
at 31 October 2001 (£530.1m) and £84.3m less that the figure at 30 April 2002
(£515.5m). Including outstanding obligations under finance leases and the 5.25%
unsecured, subordinated convertible, due 2008 held by Rentokil plc, total net
debt at 31 October 2002 was £586.6m (2001 - £690.5m). The Group retains
significant headroom in both committed and uncommitted facilities above its
projected borrowing requirements. Headroom was £49.9m against all facilities at
31 October 2002 and £39.2m against committed facilities. The Group's secured
bank facility is committed through June 2005 as is the accounts receivable
securitisation discussed above. At 10 January 2003, the latest date prior to
publication of this report for which figures are available, total net debt was
£572.3m.
OPERATING STATISTICS
Profit centre numbers Staff numbers
At 31 October At 30 April At 31 October At 30 April
2002 2001 2002 2002 2001 2002
Sunbelt Rentals 195 181 188 3,847 3,884 3,886
A-Plant 264 265 268 2,552 2,547 2,573
Ashtead Technology 7 7 7 71 81 71
Group 466 453 463 6,484 6,525 6,545
ASHTEAD GROUP PLC
CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 OCTOBER 2002
Unaudited Audited
6 months ended Year to 30
April
31 October
2002 2001 2002
£m £m £m
(restated)
Turnover 292.2 310.6 583.7
Cost of sales (228.7) (246.2) (462.2)
Gross profit 63.5 64.4 121.5
Administrative expenses (26.5) (26.3) (49.0)
Operating profit 37.0 38.1 72.5
Exceptional loss on disposal of UK fixed assets - (15.4) (32.6)
Net interest payable and similar charges (21.2) (30.1) (55.4)
Profit/(loss) on ordinary activities before taxation 15.8 (7.4) (15.5)
Profit before tax, goodwill amortisation and exceptionals 20.3 28.8 28.9
Goodwill amortisation (4.5) (4.9) (8.8)
Exceptional items - (31.3) (35.6)
Profit/(loss) on ordinary activities before taxation 15.8 (7.4) (15.5)
Tax on (loss)/profit on ordinary activities:
- current tax (0.6) (0.4) 0.3
- deferred tax - current year (11.2) (5.3) (2.5)
- deferred tax - prior year 4.6 11.1 21.4
(7.2) 5.4 19.2
Profit/(loss) for the financial period 8.6 (2.0) 3.7
Equity dividends (2.0) (2.0) (11.3)
Retained profit/(loss) transferred to reserves 6.6 (4.0) (7.6)
Basic earnings/(loss) per share 2.7p (0.6p) 1.1p
Diluted earnings/(loss) per share 2.7p (0.6p) 1.1p
Comparative figures have been restated as described in note 6.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE SIX MONTHS ENDED 31 OCTOBER 2002
Unaudited Audited
6 months ended Year to 30
April
31 October
2002 2001 2002
£m £m £m
(restated)
Profit/(loss) for the financial period 8.6 (2.0) 3.7
Foreign currency translation differences 0.2 (1.4) (0.7)
Total recognised gains and losses for the period 8.8 (3.4) 3.0
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
FOR THE SIX MONTHS ENDED 31 OCTOBER 2002
Unaudited Audited
6 months ended Year to 30
April
31 October
2002 2001 2002
£m £m £m
(restated)
Profit/(loss) for the financial period 8.6 (2.0) 3.7
Dividends (2.0) (2.0) (11.3)
6.6 (4.0) (7.6)
Share capital subscribed 0.1 0.6 0.7
Foreign currency translation differences 0.2 (1.4) (0.7)
Net addition/(reduction) to shareholders' funds 6.9 (4.8) (7.6)
At 1 May 194.5 202.1 202.1
Closing shareholders' funds 201.4 197.3 194.5
Comparative figures have been restated as described in note 6.
CONSOLIDATED BALANCE SHEET AT 31 OCTOBER 2002
Unaudited Audited
31 October 30 April
2002 2001 2002
Fixed assets £m £m £m
Intangible assets (restated)
- goodwill 156.4 169.3 160.8
Tangible assets
- rental equipment 635.8 725.2 678.1
- other fixed assets 70.0 69.3 72.8
705.8 794.5 750.9
Investments - own shares held by ESOT 1.6 - 1.6
863.8 963.8 913.3
Current assets
Stocks 11.9 14.7 12.9
Trade debtors subject to non-recourse financing 97.6 - -
Non-recourse financing received (57.9) - -
Net trade debtors subject to non-recourse financing 39.7 - -
Other trade debtors, prepayments & accrued income 20.0 119.9 110.7
Cash at bank and in hand 0.4 2.5 0.5
72.0 137.1 124.1
Creditors - amounts falling due within one year
Bank loans, overdrafts & finance lease obligations (49.3) (15.2) (23.5)
Bills of exchange (11.0) (18.4) (11.6)
Trade and other creditors (86.7) (125.6) (110.1)
(147.0) (159.2) (145.2)
Net current liabilities (75.0) (22.1) (21.1)
Total assets less current liabilities 788.8 941.7 892.2
Creditors - amounts falling due after more than one year
Bank and other loans (394.5) (527.3) (504.4)
Finance lease obligations (13.1) (21.1) (18.2)
5.25% unsecured convertible loan note, due 2008 (130.1) (129.4) (129.7)
(537.7) (677.8) (652.3)
Provisions for liabilities and charges
Deferred taxation (45.0) (59.4) (41.1)
Other provisions (4.7) (7.2) (4.3)
(49.7) (66.6) (45.4)
Total net assets 201.4 197.3 194.5
Capital and reserves
Called up share capital 32.6 32.5 32.5
Share premium account 100.7 100.7 100.7
Revaluation reserve 0.5 0.5 0.5
Profit and loss account 67.6 63.6 60.8
Total equity shareholders' funds 201.4 197.3 194.5
Comparative figures have been restated as described in note 6.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 31 OCTOBER 2002
Unaudited Audited
6 months ended Year to 30
April
31 October
2002 2001 2002
£m £m £m
(restated)
Net cash inflow from operating activities
Cash inflow from current period operations 95.5 121.8 202.0
Non-recourse finance received under debtors securitisation 57.4 - -
Net cash inflow from operating activities 152.9 121.8 202.0
Returns on investments and servicing of finance
Interest paid (net) (20.4) (19.6) (43.5)
Interest element of finance lease payments (1.3) (4.3) (5.6)
Exceptional costs re bank facility (1.7) (1.3) (1.3)
Net cash outflow from returns on investments and servicing of finance (23.4) (25.2) (50.4)
Taxation (outflow) (0.4) (0.1) (0.7)
Capital expenditure
Purchase of tangible fixed assets (73.5) (149.1) (203.3)
Sale of tangible fixed assets 12.6 25.7 39.2
Purchase of own shares held by employee trust - - (1.6)
Net cash outflow from capital expenditure (60.9) (123.4) (165.7)
Acquisitions and disposals outflow (0.4) (6.7) (3.3)
Equity dividends paid (9.3) (9.4) (11.3)
Net cash inflow/(outflow) before management of liquid resources and
financing 58.5 (43.0) (29.4)
Financing
Issue of ordinary share capital 0.1 0.7 0.7
Net draw down/(redemption) of loans (49.6) 53.4 32.5
Capital element of finance lease payments (2.8) (7.7) (10.7)
Net cash inflow from financing (52.3) 46.4 22.5
Increase/(decrease) in cash 6.2 3.4 (6.9)
Comparative figures have been restated as described in note 6.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. The abridged 2002 profit and loss account, balance sheet and cash flow
statement are taken from the statutory accounts for the year ended 30 April
2002 which have been filed with the Registrar of Companies. The auditor's
report on these accounts was unqualified and did not contain a statement
under section 237 of the Companies Act 1985.
2. Basic and diluted earnings per share for the six months ended 31 October 2002
have been calculated based on the profit or loss attributable to the
shareholders of Ashtead Group plc and on the weighted average number of
ordinary shares in issue during the period excluding the shares held by the
Company's employee share ownership trust as follows:
Unaudited
6 months ended 31 October 2002 6 months ended 31 October 2001
Profit for Weighted Per share Loss for Weighted Per share
average no of amount average no of amount
the financial shares the financial shares
period period
£m p £m p
As used in the calculation of
basic EPS 8.6 322.6 2.7 (2.0) 324.5 (0.6)
Outstanding share options - 0.2 - - 1.7 -
As used in the calculation of
diluted EPS 8.6 322.8 2.7 (2.0) 326.2 (0.6)
3. Segmental analysis
Turnover Operating profit
Unaudited Audited Unaudited Audited
6 months to Year to 30 6 months to Year to 30
31 October April 31 October April
2002 2001 2002 2002 2001 2002
£m £m £m £m £m £m
(restated)
United States 192.8 205.7 389.1 30.9 44.5 66.0
United Kingdom 98.2 103.7 192.3 10.1 12.8 14.6
Rest of World 1.2 1.2 2.3 0.5 0.3 0.7
292.2 310.6 583.7 41.5 57.6 81.3
Exceptional items - (14.6) -
Goodwill amortisation (4.5) (4.9) (8.8)
37.0 38.1 72.5
Net assets: Unaudited Audited
6 months to 31 October Year to 30 April
2002 2001 2002
£m £m £m
(restated)
United States 637.8 670.6 659.7
United Kingdom 251.3 274.8 249.1
Rest of World 1.8 1.8 2.1
890.9 947.2 910.9
Central items (debt, securitisation funding and
deferred tax) (689.5) (749.9) (716.4)
201.4 197.3 194.5
4. Net interest payable and similar charges
Unaudited Audited
6 months ended Year to 30
April
31 October
2002 2001 2002
£m £m £m
(restated)
On bank and other borrowings 16.0 20.7 39.2
Finance lease interest 1.3 4.3 5.6
Convertible loan interest 3.9 3.8 7.6
21.2 28.8 52.4
Exceptional costs re bank facility - 1.3 3.0
21.2 30.1 55.4
5. Exceptional items of £31.3m in the six months ended 31 October 2001 comprised
£30.0m relating to the UK disposal programme (£14.6m included in cost of
sales and £15.4m as an exceptional loss on disposal of fixed assets) and
£1.3m in relation to bank covenant amendment fees. Exceptional items of
£35.6m for the year ended 30 April 2002 included £32.6m relating to the UK
disposal programme and £3.0m in relation to bank covenant amendment fees.
6. The interim results information has been prepared on the basis of accounting
policies set out in the Group's statutory accounts for the year ended 30
April 2002 to which no changes have been made. Adjustments have also been
made to the previously published results for the six months to 31 October
2001 to reflect the subsequent capitalisation of certain acquired leases in
BET as finance leases at 30 April 2002 as described in note 22 to the 2001/2
report and accounts.
7. The effective rate of tax assumed for the six months to 31 October 2002 is
35.5% and is calculated by applying the Director's present best estimate of
the annual tax rate to the profit before tax for the period after adding
back goodwill amortisation for which no tax allowance is available.
8. The Directors have declared an interim dividend of 0.62p per share (2001 -
0.62p per share) which will be paid on 7 April 2003 to shareholders on the
register on 28 February 2003.
9. Fixed assets
2002 (unaudited) 2001 (unaudited)
Rental equipment Total Rental equipment Total
Net book value: £m £m £m £m
At 1 May 678.1 750.9 725.6 802.5
Exchange difference (31.1) (33.7) (7.4) (8.0)
Additions 51.2 55.9 73.2 81.2
Acquisitions - - 37.6 37.7
Disposals (10.7) (11.5) (16.6) (26.3)
UK asset write-down - - (28.7) (28.7)
Depreciation (51.7) (55.8) (58.5) (63.9)
At 31 October 635.8 705.8 725.2 794.5
10. Goodwill
Unaudited
Cost Amortisation NBV
£m £m £m
At 30 April 2002 178.1 (17.3) 160.8
Acquisitions 0.1 - 0.1
Amortisation - (4.5) (4.5)
At 31 October 2002 178.2 (21.8) 156.4
11. Notes to the cash flow statement
Unaudited Audited
a. Reconciliation to net debt
6 months ended Year to 30
April
31 October
2002 2001 2002
£m £m £m
(restated)
(Increase)/decrease in cash in the period (6.2) (3.4) 6.9
(Decrease)/increase in bank loans (49.6) 53.4 32.5
Change in net debt from cash flows (55.8) 50.0 39.4
Translation difference (28.4) (6.8) (8.8)
Non cash movement - 5.25% convertible loan note 0.4 1.5 1.8
- finance lease obligations (4.9) 33.5 30.6
Movement in net debt in the period (88.7) 78.2 63.0
Net debt at 1 May 675.3 612.3 612.3
Net debt at 31 October 586.6 690.5 675.3
b. Cash flow from operating activities
Unaudited Audited
6 months ended Year to 30
April
31 October
2002 2001 2002
£m £m £m
(restated)
Operating profit 37.0 38.1 72.5
Amortisation of goodwill 4.5 4.9 8.8
Depreciation of tangible fixed assets 55.8 63.9 120.9
Non cash exceptional UK asset write down - 14.6 -
(Gain)/loss on sale of tangible fixed assets (2.2) 0.7 (1.5)
Decrease/(increase) in stocks 1.0 (0.7) 2.4
(Increase)/decrease in trade debtors (5.4) 6.9 15.3
Increase/(decrease) in trade creditors 4.2 (5.6) (15.4)
Exchange differences 0.6 (1.0) (1.0)
Net cash inflow from operating activities before exceptional
operating costs 95.5 121.8 202.0
12. Copies of this interim statement are being posted to all shareholders. Copies
are available on request from the Company Secretary at the Registered Office of
the Group at Kings Court, 41/51 Kingston Road, Leatherhead, Surrey KT22 7AP.
INDEPENDENT REVIEW REPORT TO ASHTEAD GROUP PLC
Introduction
We have been instructed by the company to review the financial information which
comprises the consolidated income statement, consolidated statement of total
recognised gains and losses, consolidated balance sheet, consolidated cash flow
statement and related notes. We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not express
an audit opinion on the financial information.
This report has been prepared for and only for the company for the purpose of
the Listing Rules of the Financial Services Authority and for no other purpose.
We do not, in producing this report, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or in to whose
hands it may come save where expressly agreed by our prior consent in writing.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 October 2002.
PricewaterhouseCoopers
Chartered Accountants, London 15 January 2003
Notes: (a) The maintenance and integrity of the Ashtead Group plc website is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the interim report
since it was initially presented on the website; (b) Legislation in the United
Kingdom governing the preparation and dissemination of financial information may
differ from legislation in other jurisdictions.
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