REG - Ashtead Group PLC - Q4 2024 Results
18/06/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240618:nRSR7786Sa&default-theme=true
RNS Number : 7786S Ashtead Group PLC 18 June 2024
18 June 2024
Audited results for the year and unaudited results
for the fourth quarter ended 30 April 2024
Fourth quarter Year
2024 2023 Growth(2) 2024 2023 Growth(2)
$m $m % $m $m %
Performance(1)
Revenue 2,628 2,444 7% 10,859 9,667 12%
Rental revenue 2,313 2,126 9% 9,630 8,698 10%
EBITDA 1,141 1,074 6% 4,893 4,412 11%
Operating profit 561 575 -2% 2,654 2,522 5%
Adjusted(3) profit before taxation 446 496 -10% 2,230 2,273 -2%
Profit before taxation 417 466 -10% 2,110 2,156 -2%
Adjusted(3) earnings per share 79.3¢ 84.3¢ -6% 386.5¢ 388.5¢ - %
Earnings per share 74.4¢ 79.1¢ -6% 365.8¢ 368.4¢ -1%
Full-year highlights
· Group revenue up 12%(2); US revenue up 13% with rental revenue
up 11%
· Operating profit of $2,654m (2023: $2,522m)
· Adjusted(3) profit before taxation of $2,230m (2023: $2,273m)
· Adjusted(3) earnings per share of 386.5¢ (2023: 388.5¢)
· 113 locations added in North America
· $4.3bn of capital invested in the business (2023: $3.8bn)
· $905m spent on 26 bolt-on acquisitions (2023: $1.1bn)
· Net debt to EBITDA leverage(2) of 1.7 times (2023: 1.6 times)
· Proposed final dividend of 89.25¢, making 105.0¢ for the full
year (2023: 100.0¢)
(1) Throughout this announcement we refer to a number of alternative performance
measures which provide additional useful information. The directors have
adopted these to provide additional information on the underlying trends,
performance and position of the Group. The alternative performance measures
are not defined by IFRS and therefore may not be directly comparable with
other companies' alternative performance measures but are defined and
reconciled in the Glossary of Terms on page 39.
(2) Calculated at constant exchange rates applying current period exchange rates.
(3) Adjusted results are stated before amortisation.
Ashtead's chief executive, Brendan Horgan, commented:
"The Group's operating performance continues to be strong with record revenue
and operating profit, up 12% and 5% respectively, both at constant currency.
After a higher interest expense, reflecting the interest rate environment
and increased average debt levels, adjusted profit before taxation was
slightly lower than last year at $2,230m (2023: $2,273m). This performance
is only possible through the dedication of our team members who deliver for
all our stakeholders every day, while ensuring our leading value of safety
remains at the forefront of all we do.
We completed Sunbelt 3.0 in April, executing well against all actionable
components of that plan and developing a strong foundation for the next phase
of our growth. During the year, we invested $4.3bn in capital across
existing locations and greenfields and $905m on 26 bolt-on acquisitions,
adding a combined 113 locations in North America. This investment is
enabling us to take advantage of the substantial structural growth
opportunities that we see for the business, while maintaining a strong and
flexible balance sheet.
Our end markets in North America remain robust with healthy demand, supported
in the US by the increasing proportion of mega projects and the ongoing impact
of the legislative acts. We are in a position of strength, with the
operational flexibility and financial capacity to capitalise on the
opportunities arising from these market conditions and ongoing structural
changes. Through the actionable components of our new strategic growth plan,
Sunbelt 4.0, we will drive long-term sustainable growth and returns for all
stakeholders and the Board looks to the future with confidence."
Contacts:
Will Shaw Director of Investor Relations +44 (0)20 7726 9700
Sam Cartwright H/Advisors Maitland +44 (0)20 7379 5151
Brendan Horgan and Michael Pratt will hold a conference call for equity
analysts to discuss the results and outlook at 9.30am on Tuesday, 18 June 2024
at Deutsche Numis, 45 Gresham Street, London, EC2V 7EH. The call will be
webcast live via the Company's website at www.ashtead-group.com
(http://www.ashtead-group.com) and a replay will be available via the website
shortly after the call concludes. A copy of this announcement and the slide
presentation used for the call are available for download on the Company's
website. The usual conference call for bondholders will begin at 3pm (10am
EST).
Analysts and bondholders have already been invited to participate in the
analyst and bondholder calls but any eligible person not having received
details should contact the Company's PR advisers, H/Advisors Maitland (Audrey
Da Costa) at +44 (0)20 7379 5151.
Forward-looking statements
This announcement contains forward-looking statements. These have been made
by the directors in good faith using information available up to the date on
which they approved this report. The directors can give no assurance that
these expectations will prove to be correct. Due to the inherent
uncertainties, including both business and economic risk factors underlying
such forward-looking statements, actual results may differ materially from
those expressed or implied by these forward-looking statements. Except as
required by law or regulation, the directors undertake no obligation to update
any forward-looking statements whether as a result of new information, future
events or otherwise.
Trading results
Revenue EBITDA Profit(1)
2024 2023 2024 2023 2024 2023
Canada in C$m 896.8 827.1 362.9 337.0 137.8 167.4
UK in £m 706.0 684.8 199.0 192.2 57.9 65.0
US 9,306.7 8,222.4 4,405.5 3,955.3 2,632.9 2,464.7
Canada in $m 664.4 622.1 268.9 253.5 102.1 125.9
UK in $m 887.6 822.8 250.1 231.0 72.8 78.1
Group central costs - - (31.9) (28.0) (32.9) (29.0)
10,858.7 9,667.3 4,892.6 4,411.8 2,774.9 2,639.7
Financing costs (544.5) (366.2)
Adjusted profit before tax 2,230.4 2,273.5
Amortisation (120.9) (117.7)
Profit before taxation 2,109.5 2,155.8
Taxation charge (511.1) (538.1)
Profit attributable to equity holders of the Company 1,598.4 1,617.7
Margins
US 47.3% 48.1% 28.3% 30.0%
Canada 40.5% 40.7% 15.4% 20.2%
UK 28.2% 28.1% 8.2% 9.5%
Group 45.1% 45.6% 25.6% 27.3%
(1) Segment result presented is adjusted operating profit.
Group revenue increased 12% to $10,859m (2023: $9,667m) during the year.
This revenue growth resulted in EBITDA increasing 11% to $4,893m (2023:
$4,412m), adjusted operating profit increasing 5% to $2,775m (2023: $2,640m)
and adjusted profit before tax was $2,230m (2023: $2,273m). The higher
increase in the depreciation charge relative to revenue growth reflects lower
utilisation of a larger fleet, resulting in the lower rate of operating profit
growth while increased financing costs due to increased average debt levels
and the higher interest rate environment resulted in adjusted profit before
tax slightly lower than last year.
In the US, rental only revenue of $6,558m (2023: $5,879m) was 12% higher than
the prior year, representing continued market outperformance and demonstrating
the benefits of our strategy of growing our Specialty businesses and
broadening our end markets. Organic growth (same-store and greenfields) was
8%, while bolt-ons since 1 May 2022 contributed 4% of rental only revenue
growth. In the year, our General Tool business grew 11%, while our Specialty
businesses grew 14%. The fourth quarter saw growth in our Specialty
businesses return to levels similar to those seen in the first half. Rental
only revenue growth has been driven by both volume and rate improvement.
Rental revenue increased 11% to $8,321m (2023: $7,503m). US total revenue,
including new and used equipment, merchandise and consumable sales, increased
13% to $9,307m (2023: $8,222m). This reflects a higher level of used
equipment sales, as we took advantage of improved fleet deliveries and strong
second-hand markets to catch up on delayed disposals and bring forward some
disposals scheduled for early 2024/25.
Canada's rental only revenue increased 10% to C$605m (2023: C$548m). Markets
relating to the major part of the Canadian business are growing in a similar
manner to the US with strong volume growth and rate improvement. However,
the Writers Guild of America and Screen Actors Guild strikes, which were
settled in December, had a significant impact on the performance of the
Specialty Film & TV business and some impact on the rest of the Canadian
business, which rents into that space. Parts of the US and UK businesses
have been affected similarly. Following the settlement, activity levels
recovered progressively in the fourth quarter. Rental revenue increased 10%
to C$765m (2023: C$696m), while total revenue was C$897m (2023: C$827m).
The UK business generated rental only revenue of £466m, up 9% on the prior
year (2023: £429m). Bolt-ons since 1 May 2022 contributed 2% of this
growth. Rental only revenue growth has been driven by both rate and volume
improvement. Rental revenue increased 6% to £590m (2023: £559m), while
total revenue increased 3% to £706m (2023: £685m). This lower rate of
total revenue growth reflects a higher level of ancillary and sales revenue
associated with the work for the Department of Health last year, which did not
repeat this year.
We have invested in the infrastructure of the business during Sunbelt 3.0, to
support the growth of the business now and into the future. This has been
combined with inflationary pressures across most cost lines, particularly in
relation to labour. During the second half of the year, in recognition of
the lower US revenue growth, we increased our focus on the cost base. US
rental revenue drop through to EBITDA of 40% in the fourth quarter was after
an additional receivables provision following a customer filing for Chapter 11
bankruptcy protection post year-end, due to a contract dispute. This
resulted in drop through of 49% for the year. Excluding this provision, drop
through was 57% for the quarter and 52% for the full year. As a result, the
EBITDA margin was 47.3% (2023: 48.1%) and segment profit increased 7% to
$2,633m (2023: $2,465m) at a margin of 28.3% (2023: 30.0%).
Our Canadian business continues to develop and enhance its performance as it
invests to expand its network and broaden its markets. Despite the drag from
the strike-affected Film & TV business, Canada generated an EBITDA margin
of 40.5% (2023: 40.7%) and a segment profit of C$138m (2023: C$167m) at a
margin of 15.4% (2023: 20.2%).
In the UK, the focus remains on delivering operational efficiency and
long-term, sustainable returns in the business. While we continue to improve
rental rates, this remains an area of focus. The UK generated an EBITDA
margin of 28.2% (2023: 28.1%) and a segment profit of £58m (2023: £65m) at
a margin of 8.2% (2023: 9.5%).
Overall, Group adjusted operating profit increased to $2,775m (2023: $2,640m),
up 5% at constant exchange rates. After increased financing costs of $545m
(2023: $366m), reflecting higher average debt levels and the higher interest
rate environment, Group adjusted profit before tax was $2,230m
(2023: $2,273m). After a tax charge of 24% (2023: 25%) of the adjusted
pre-tax profit, adjusted earnings per share were 386.5ȼ (2023: 388.5ȼ).
Statutory profit before tax was $2,110m (2023: $2,156m). This is after
amortisation of $121m (2023: $118m). Included within the total tax charge is
a tax credit of $30m (2023: $30m) which relates to the amortisation of
intangibles. As a result, basic earnings per share were 365.8¢
(2023: 368.4¢).
Capital expenditure and acquisitions
Capital expenditure for the year was $4,311m gross and $3,404m net of disposal
proceeds (2023: $3,772m gross and $3,105m net). As a result, the Group's
rental fleet at 30 April 2024 at cost was $18bn and our average fleet age is
45 months (2023: 50 months) on an original cost basis.
We invested $905m (2023: $1,146m) including acquired borrowings in 26 bolt-on
acquisitions during the year, as we continue to both expand our footprint and
diversify our end markets. Further details are provided in Note 16.
Return on Investment
The Group return on investment was 16% (2023: 19%). In the US, return on
investment (excluding goodwill and intangible assets) was 23% (2023: 27%),
while in Canada it was 11% (2023: 18%). The reduction in US return on
investment reflects principally the impact of lower utilisation of a larger
fleet. Canada's lower return on investment reflects the drag from the recent
performance of our Film & TV business combined with lower utilisation of a
larger fleet. In the UK, return on investment (excluding goodwill and
intangible assets) was 7% (2023: 9%). The decrease reflects the lower
utilisation of a slightly larger fleet and increased non-rental
depreciation. Return on investment excludes the impact of IFRS 16.
Cash flow and net debt
The Group generated free cash flow of $216m (2023: $531m) during the year,
which is after increased capital expenditure payments of $4,445m (2023:
$3,530m). As expected, this combined with continued investment in bolt-ons
and returns to shareholders increased debt during the year. We spent $78m
(£62m) on share buybacks (2023: $264m (£221m)).
In July 2023, the Group issued $750m 5.950% senior notes maturing in October
2033 and in January 2024, the Group issued $850m 5.800% senior notes maturing
in April 2034. The net proceeds were used to reduce the amount outstanding
under the ABL facility. This ensures the Group's debt package continues to
be well structured and flexible, enabling us to optimise the opportunity
presented by end market conditions. The Group's debt facilities are now
committed for an average of six years at a weighted average cost of 5%.
Net debt at 30 April 2024 was $10,655m (2023: $8,960m). Excluding the effect
of IFRS 16, net debt at 30 April 2024 was $8,014m (2023: $6,588m), while the
ratio of net debt to EBITDA was 1.7 times (2023: 1.6 times) on a constant
currency basis. The Group's revised target range for net debt to EBITDA is
1.0 to 2.0 times, excluding the impact of IFRS 16 (1.4 to 2.4 times post IFRS
16). Including the effect of IFRS 16, the ratio of net debt to EBITDA was
2.2 times (2023: 2.0 times) on a constant currency basis.
At 30 April 2024, availability under the senior secured debt facility was
$2,771m with an additional $6,740m of suppressed availability - substantially
above the $450m level at which the Group's entire debt package is covenant
free.
Dividends
The Company has a progressive dividend policy, which considers both
profitability and cash generation, and results in a dividend that is
sustainable across the cycle. Our intention has always been to increase the
dividend as profits increase and be able to maintain it when profits
decline. In accordance with this policy, and reflecting its confidence in
the future, the Board is recommending a final dividend of 89.25¢ per share
(2023: 85.0¢) making 105.0¢ for the year (2023: 100.0¢), an increase of
5%. If approved at the forthcoming Annual General Meeting, the final
dividend will be paid on 10 September 2024 to shareholders on the register on
9 August 2024.
The dividend is declared in US dollars but will be paid in sterling unless
shareholders elect to receive their dividend in US dollars. Those
shareholders who wish to receive their dividend in US dollars and have not yet
made an election may do so by contacting Equiniti on +44 (0) 371 384 2085.
The last day for election for the proposed final dividend is 23 August 2024.
Capital allocation
The Group remains disciplined in its approach to allocation of capital with
the overriding objective being to enhance shareholder value.
Our capital allocation framework remains unchanged and prioritises:
· organic fleet growth;
- same-stores;
- greenfields;
· bolt-on acquisitions; and
· a progressive dividend with consideration to both profitability and
cash generation that is sustainable through the cycle.
Additionally, we consider further returns to shareholders. In this regard,
we assess continuously our medium-term plans which take account of investment
in the business, growth prospects, cash generation, net debt and leverage.
Therefore, the amount allocated to buybacks is simply driven by that which is
available after organic growth, bolt-on M&A and dividends, whilst allowing
us to operate within our 1.0 to 2.0 times target range for net debt to EBITDA
pre IFRS 16.
Current trading and outlook
Our end markets in North America remain robust with healthy demand, supported
in the US by the increasing number of mega projects and recent legislative
acts. We are in a position of strength, with the operational flexibility and
financial capacity to capitalise on the opportunities arising from these
market conditions and ongoing structural changes. Through the actionable
components of our new strategic growth plan, Sunbelt 4.0, we will drive
long-term sustainable growth and returns for all stakeholders and the Board
looks to the future with confidence.
Guidance
Rental revenue(1)
- US 4 to 7%
- Canada 15 to 19%
- UK 3 to 6%
- Group 5 to 8%
Capital expenditure (gross)(2) $3.0 - 3.3bn
Free cash flow(2) c. $1.2bn
( )
(1) Represents change in year-over-year rental revenue at constant exchange
rates
(2) Stated at C$1=$0.75 and £1=$1.27
Directors' responsibility statement on the annual report
The responsibility statement below has been prepared in connection with the
Company's Annual Report & Accounts for the year ended 30 April 2024.
Certain parts thereof are not included in this announcement.
We confirm that to the best of our knowledge:
a) the consolidated financial statements, prepared in accordance with
UK-adopted International Accounting Standards ('IFRS') in conformity with the
requirements of the Companies Act 2006, give a true and fair view of the
assets, liabilities, financial position and profit of the Group;
b) the Strategic report includes a fair review of the development and
performance of the business and the position of the Group, together with a
description of the principal risks and uncertainties that it faces; and
c) the Annual Report and financial statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Group's position, performance, business model and
strategy.
By order of the Board
Alan Porter
Company secretary
17 June 2024
CONSOLIDATED INCOME STATEMENT FOR THE THREE MONTHS ENDED 30 APRIL 2024
2024 2023
Before Before
amortisation Amortisation Total amortisation Amortisation Total
$m $m $m $m $m $m
Fourth quarter - unaudited
Revenue
Rental revenue 2,313.5 - 2,313.5 2,126.1 - 2,126.1
Sale of new equipment,
merchandise and consumables 91.1 - 91.1 87.9 - 87.9
Sale of used rental equipment 222.9 - 222.9 229.7 - 229.7
2,627.5 - 2,627.5 2,443.7 - 2,443.7
Operating costs
Staff costs (602.6) - (602.6) (576.0) - (576.0)
Other operating costs (718.4) - (718.4) (641.1) - (641.1)
Used rental equipment sold (165.4) - (165.4) (153.1) - (153.1)
(1,486.4) - (1,486.4) (1,370.2) - (1,370.2)
EBITDA(*) 1,141.1 - 1,141.1 1,073.5 - 1,073.5
Depreciation (551.3) - (551.3) (468.6) - (468.6)
Amortisation of intangibles - (28.6) (28.6) - (30.3) (30.3)
Operating profit 589.8 (28.6) 561.2 604.9 (30.3) 574.6
Interest income 0.2 - 0.2 0.8 - 0.8
Interest expense (144.4) - (144.4) (109.8) - (109.8)
Profit on ordinary activities
before taxation 445.6 (28.6) 417.0 495.9 (30.3) 465.6
Taxation (99.4) 7.1 (92.3) (127.1) 7.6 (119.5)
Profit attributable to equity
holders of the Company 346.2 (21.5) 324.7 368.8 (22.7) 346.1
Basic earnings per share 79.3¢ (4.9¢) 74.4¢ 84.3¢ (5.2¢) 79.1¢
Diluted earnings per share 78.8¢ (4.9¢) 73.9¢ 83.8¢ (5.1¢) 78.7¢
(*) EBITDA is presented here as an alternative performance measure as it is
commonly used by investors and lenders.
All revenue and profit is generated from continuing operations.
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 APRIL 2024
2024 2023
Before Before
amortisation Amortisation Total amortisation Amortisation Total
$m $m $m $m $m $m
Year to 30 April 2024 - audited
Revenue
Rental revenue 9,630.2 - 9,630.2 8,698.2 - 8,698.2
Sale of new equipment,
merchandise and consumables 369.7 - 369.7 341.7 - 341.7
Sale of used rental equipment 858.8 - 858.8 627.4 - 627.4
10,858.7 - 10,858.7 9,667.3 - 9,667.3
Operating costs
Staff costs (2,485.1) - (2,485.1) (2,222.1) - (2,222.1)
Other operating costs (2,845.2) - (2,845.2) (2,591.1) - (2,591.1)
Used rental equipment sold (635.8) - (635.8) (442.3) - (442.3)
(5,966.1) - (5,966.1) (5,255.5) - (5,255.5)
EBITDA* 4,892.6 - 4,892.6 4,411.8 - 4,411.8
Depreciation (2,117.7) - (2,117.7) (1,772.1) - (1,772.1)
Amortisation of intangibles - (120.9) (120.9) - (117.7) (117.7)
Operating profit 2,774.9 (120.9) 2,654.0 2,639.7 (117.7) 2,522.0
Interest income 1.8 - 1.8 2.6 - 2.6
Interest expense (546.3) - (546.3) (368.8) - (368.8)
Profit on ordinary activities
before taxation 2,230.4 (120.9) 2,109.5 2,273.5 (117.7) 2,155.8
Taxation (541.3) 30.2 (511.1) (567.7) 29.6 (538.1)
Profit attributable to equity
holders of the Company 1,689.1 (90.7) 1,598.4 1,705.8 (88.1) 1,617.7
Basic earnings per share 386.5¢ (20.7¢) 365.8¢ 388.5¢ (20.1¢) 368.4¢
Diluted earnings per share 384.3¢ (20.6¢) 363.7¢ 386.0¢ (19.9¢) 366.1¢
(*) EBITDA is presented here as an alternative performance measure as it is
commonly used by investors and lenders.
All revenue and profit is generated from continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 APRIL
2024
Unaudited Audited
Three months to Year to
30 April 30 April
2024 2023 2024 2023
$m $m $m $m
Profit attributable to equity holders of the Company for the period 324.7 346.1 1,598.4 1,617.7
Items that will not be reclassified to profit or loss:
Movements on equity instruments held at fair value - - - (36.8)
Remeasurement of the defined benefit pension plan (22.6) (2.9) (22.6) (2.9)
Tax on defined benefit pension plan 5.6 0.7 5.6 0.7
(17.0) (2.2) (17.0) (39.0)
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences (40.4) 10.7 (17.6) (19.2)
Loss on cash flow hedge - 0.1 0.2 (3.1)
(40.4) 10.8 (17.4) (22.3)
Total other comprehensive (loss)/income for the period (57.4) 8.6 (34.4) (61.3)
Total comprehensive income for the period 267.3 354.7 1,564.0 1,556.4
CONSOLIDATED BALANCE SHEET AT 30 APRIL 2024
Audited
2024 2023
$m $m
Current assets
Inventories 162.0 181.3
Trade and other receivables 1,850.2 1,659.2
Current tax asset 13.0 14.6
Cash and cash equivalents 20.8 29.9
2,046.0 1,885.0
Non-current assets
Property, plant and equipment
- rental equipment 11,450.8 9,649.1
- other assets 1,797.7 1,392.0
13,248.5 11,041.1
Right-of-use assets 2,425.6 2,206.0
Goodwill 3,211.5 2,865.5
Other intangible assets 485.9 523.4
Other non-current assets 189.3 145.2
Current tax asset 44.5 44.7
Net defined benefit pension plan asset - 18.4
19,605.3 16,844.3
Total assets 21,651.3 18,729.3
Current liabilities
Trade and other payables 1,482.9 1,572.3
Current tax liability 10.1 12.4
Lease liabilities 273.8 233.2
Provisions 42.5 39.9
1,809.3 1,857.8
Non-current liabilities
Lease liabilities 2,406.8 2,161.1
Long-term borrowings 7,995.1 6,595.1
Provisions 75.4 67.9
Deferred tax liabilities 2,224.2 1,995.3
Other non-current liabilities 55.5 44.1
Net defined benefit pension plan liability 0.4 -
12,757.4 10,863.5
Total liabilities 14,566.7 12,721.3
Equity
Share capital 81.8 81.8
Share premium account 6.5 6.5
Capital redemption reserve 20.0 20.0
Own shares held by the Company (818.7) (740.9)
Own shares held by the ESOT (43.5) (38.8)
Cumulative foreign exchange translation differences (263.5) (245.9)
Retained reserves 8,102.0 6,925.3
Equity attributable to equity holders of the Company 7,084.6 6,008.0
Total liabilities and equity 21,651.3 18,729.3
The current tax asset balance shown in non-current assets has been
reclassified from other non-current assets in comparative periods.
Contingent consideration liabilities have been re-classified from current and
non-current provisions to trade and other payables and other non-current
liabilities in comparative periods.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 APRIL 2024
Own Cumulative
Own shares foreign
Share Capital shares held exchange
Share premium redemption held by the by translation Retained
capital account reserve Company the ESOT differences reserves Total
$m $m $m $m $m $m $m $m
Audited
At 1 May 2022 81.8 6.5 20.0 (480.1) (44.9) (226.7) 5,677.1 5,033.7
Profit for the year - - - - - - 1,617.7 1,617.7
Other comprehensive income:
Movement on equity instruments held at fair value
- - - - - - (36.8) (36.8)
Foreign currency translation
differences - - - - - (19.2) - (19.2)
Loss on cash flow hedge - - - - - - (3.1) (3.1)
Remeasurement of the defined
benefit pension plan - - - - - - (2.9) (2.9)
Tax on defined benefit
pension scheme - - - - - - 0.7 0.7
Total comprehensive income
for the year - - - - - (19.2) 1,575.6 1,556.4
Dividends paid - - - - - - (356.6) (356.6)
Own shares purchased
by the ESOT - - - - (12.5) - - (12.5)
Own shares purchased by
the Company - - - (260.8) - - - (260.8)
Share-based payments - - - - 18.6 - 26.2 44.8
Tax on share-based payments - - - - - - 3.0 3.0
At 30 April 2023 81.8 6.5 20.0 (740.9) (38.8) (245.9) 6,925.3 6,008.0
Profit for the year - - - - - - 1,598.4 1,598.4
Other comprehensive income:
Foreign currency translation
differences - - - - - (17.6) - (17.6)
Loss on cash flow hedge - - - - - - 0.2 0.2
Remeasurement of the defined
benefit pension plan - - - - - - (22.6) (22.6)
Tax on defined benefit
pension scheme - - - - - - 5.6 5.6
Total comprehensive income
for the year - - - - - (17.6) 1,581.6 1,564.0
Dividends paid - - - - - - (436.6) (436.6)
Own shares purchased
by the ESOT - - - - (29.9) - - (29.9)
Own shares purchased by
the Company - - - (77.8) - - - (77.8)
Share-based payments - - - - 25.2 - 22.3 47.5
Tax on share-based payments - - - - - - 9.4 9.4
At 30 April 2024 81.8 6.5 20.0 (818.7) (43.5) (263.5) 8,102.0 7,084.6
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 APRIL 2024
Audited
2024 2023
$m $m
Cash flows from operating activities
Cash generated from operations before
changes in rental equipment 4,541.0 4,073.6
Payments for rental property, plant and equipment (3,759.2) (3,019.6)
Proceeds from disposal of rental property,
plant and equipment 831.7 573.6
Cash generated from operations 1,613.5 1,627.6
Financing costs paid (513.1) (340.2)
Tax paid (245.8) (287.3)
Net cash generated from operating activities 854.6 1,000.1
Cash flows from investing activities
Acquisition of businesses (875.6) (1,083.2)
Disposal of businesses 1.9 -
Financial asset investments (15.0) (42.4)
Payments for non-rental property, plant and equipment (685.6) (510.0)
Proceeds from disposal of non-rental
property, plant and equipment 47.5 41.4
Net cash used in investing activities (1,526.8) (1,594.2)
Cash flows from financing activities
Drawdown of loans 3,616.3 3,355.0
Redemption of loans (2,275.0) (2,001.5)
Repayment of principal under lease liabilities (133.7) (109.5)
Dividends paid (436.1) (357.8)
Purchase of own shares by the ESOT (29.9) (12.5)
Purchase of own shares by the Company (78.4) (264.4)
Net cash generated from financing activities 663.2 609.3
(Decrease)/increase in cash and cash equivalents (9.0) 15.2
Opening cash and cash equivalents 29.9 15.3
Effect of exchange rate differences (0.1) (0.6)
Closing cash and cash equivalents 20.8 29.9
Reconciliation of net cash flows to net debt
Decrease/(increase) in cash and
cash equivalents in the year 9.0 (15.2)
Increase in debt through cash flow 1,207.6 1,244.0
Change in net debt from cash flows 1,216.6 1,228.8
Exchange differences (9.7) (37.8)
Debt acquired 154.5 227.9
Deferred costs of debt raising 8.7 7.2
New lease liabilities 325.3 373.4
Increase in net debt in the year 1,695.4 1,799.5
Net debt at 1 May 8,959.5 7,160.0
Net debt at 30 April 10,654.9 8,959.5
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. General information
Ashtead Group plc ('the Company') is a company incorporated and domiciled in
England and Wales and listed on the London Stock Exchange. The condensed
consolidated financial statements as at, and for the year ended 30 April 2024,
comprise the Company and its subsidiaries ('the Group') and are presented in
US dollars.
The condensed consolidated financial statements for the year ended 30 April
2024 were approved by the directors on 17 June 2024.
This preliminary announcement of the results for the year ended 30 April 2024
contains information derived from the forthcoming 2023/24 Annual Report &
Accounts and does not constitute statutory accounts as defined in Section 434
of the Companies Act 2006. The statutory accounts for the year ended 30
April 2024 were approved by the directors on 17 June 2024 and will be
delivered to shareholders, filed with the Registrar of Companies and made
available on the Group's website at www.ashtead-group.com in July 2024. The
auditor's report on those accounts was unqualified, did not include a
reference to any matter by way of emphasis and did not contain a statement
under Section 498(2) or (3) of the Companies Act 2006.
Details of principal risks and uncertainties are given in the Review of Fourth
Quarter, Balance Sheet and Cash Flow accompanying these condensed consolidated
financial statements.
The condensed consolidated financial statements for the year ended 30 April
2024 have been audited by the Group's auditors. The Group's auditors have
not audited the fourth quarter results.
2. Basis of preparation
The financial statements for the year ended 30 April 2024 have been prepared
in accordance with relevant UK-adopted International Accounting Standards
('IFRS'), including the Disclosure Guidance and Transparency Rules sourcebook
of the United Kingdom's Financial Conduct Authority and the accounting
policies set out in the Group's Annual Report & Accounts for the year
ended 30 April 2023.
In preparing the financial statements, the exchange rates used in respect of
the pound sterling (£) and Canadian dollar (C$) are:
Pound sterling Canadian dollar
2024 2023 2024 2023
Average for the three months ended 30 April 1.26 1.22 0.74 0.74
Average for the year ended 30 April 1.26 1.20 0.74 0.75
At 30 April 1.25 1.26 0.73 0.74
The directors have adopted various alternative performance measures to provide
additional useful information on the underlying trends, performance and
position of the Group. The alternative performance measures are not defined
by IFRS and therefore may not be directly comparable with other companies'
alternative performance measures but are defined within the Glossary of Terms
on page 39.
The financial statements have been prepared on the going concern basis. The
Group's internal budgets and forecasts of future performance, available
financing facilities and facility headroom (see Note 13), provide a reasonable
expectation that the Group has adequate resources to continue in operation for
the foreseeable future and consequently the going concern basis continues to
be appropriate in preparing the financial statements.
3. Segmental analysis
Three months to 30 April 2024 (unaudited)
Corporate
US Canada UK items Group
$m $m $m $m $m
Revenue
Rental revenue 1,983.3 141.8 188.4 - 2,313.5
Sale of new equipment, merchandise
and consumables 59.4 8.3 23.4 - 91.1
Sale of used rental equipment 191.9 13.0 18.0 - 222.9
2,234.6 163.1 229.8 - 2,627.5
Segment profit 551.7 23.7 20.9 (6.5) 589.8
Amortisation (28.6)
Net financing costs (144.2)
Profit before taxation 417.0
Taxation (92.3)
Profit attributable to equity shareholders 324.7
Three months to 30 April 2023 (unaudited)
Corporate
US Canada UK items Group
$m $m $m $m $m
Revenue
Rental revenue 1,833.7 127.0 165.4 - 2,126.1
Sale of new equipment, merchandise
and consumables 50.2 20.2 17.5 - 87.9
Sale of used rental equipment 199.2 14.0 16.5 - 229.7
2,083.1 161.2 199.4 - 2,443.7
Segment profit 574.4 26.4 12.0 (7.9) 604.9
Amortisation (30.3)
Net financing costs (109.0)
Profit before taxation 465.6
Taxation (119.5)
Profit attributable to equity shareholders 346.1
Year to 30 April 2024 (audited)
Corporate
US Canada UK items Group
$m $m $m $m $m
Revenue
Rental revenue 8,320.8 567.0 742.4 - 9,630.2
Sale of new equipment, merchandise
and consumables 244.5 45.4 79.8 - 369.7
Sale of used rental equipment 741.4 52.0 65.4 - 858.8
9,306.7 664.4 887.6 - 10,858.7
Segment profit 2,632.9 102.1 72.8 (32.9) 2,774.9
Amortisation (120.9)
Net financing costs (544.5)
Profit before taxation 2,109.5
Taxation (511.1)
Profit attributable to equity shareholders 1,598.4
Year to 30 April 2023 (audited)
Corporate
US Canada UK items Group
$m $m $m $m $m
Revenue
Rental revenue 7,502.6 523.8 671.8 - 8,698.2
Sale of new equipment, merchandise
and consumables 186.1 66.2 89.4 - 341.7
Sale of used rental equipment 533.7 32.1 61.6 - 627.4
8,222.4 622.1 822.8 - 9,667.3
Segment profit 2,464.7 125.9 78.1 (29.0) 2,639.7
Amortisation (117.7)
Net financing costs (366.2)
Profit before taxation 2,155.8
Taxation (538.1)
Profit attributable to equity shareholders 1,617.7
Corporate
US Canada UK items Group
$m $m $m $m $m
At 30 April 2024 (audited)
Segment assets 18,148.4 1,901.0 1,517.1 6.5 21,573.0
Cash 20.8
Taxation assets 57.5
Total assets 21,651.3
At 30 April 2023 (audited)
Segment assets 15,637.5 1,567.3 1,427.8 7.5 18,640.1
Cash 29.9
Taxation assets 59.3
Total assets 18,729.3
Taxation assets in the comparative period have been represented to include
non-current taxation assets. Previously this amount was shown in corporate
items.
4. Operating costs and other income
2024 2023
Before Before
amortisation
amortisation Amortisation Total Amortisation Total
$m $m $m $m $m $m
Three months to 30 April (unaudited)
Staff costs:
Salaries 545.9 - 545.9 523.6 - 523.6
Social security costs 44.5 - 44.5 41.7 - 41.7
Other pension costs 12.2 - 12.2 10.7 - 10.7
602.6 - 602.6 576.0 - 576.0
Other operating costs:
Vehicle costs 159.4 - 159.4 145.2 - 145.2
Spares, consumables & external repairs 133.0 - 133.0 125.1 - 125.1
Facility costs 30.3 - 30.3 32.4 - 32.4
Other external charges 395.7 - 395.7 338.4 - 338.4
718.4 - 718.4 641.1 - 641.1
Used rental equipment sold 165.4 - 165.4 153.1 - 153.1
Depreciation and amortisation:
Depreciation of tangible assets 498.9 - 498.9 422.9 - 422.9
Depreciation of right-of-use assets 52.4 - 52.4 45.7 - 45.7
Amortisation of intangibles - 28.6 28.6 - 30.3 30.3
551.3 28.6 579.9 468.6 30.3 498.9
2,037.7 28.6 2,066.3 1,838.8 30.3 1,869.1
2024 2023
Before Before
amortisation Amortisation Total amortisation Amortisation Total
$m $m $m $m $m $m
Year to 30 April (audited)
Staff costs:
Salaries 2,265.1 - 2,265.1 2,026.0 - 2,026.0
Social security costs 172.3 - 172.3 155.9 - 155.9
Other pension costs 47.7 - 47.7 40.2 - 40.2
2,485.1 - 2,485.1 2,222.1 - 2,222.1
Other operating costs:
Vehicle costs 658.0 - 658.0 620.3 - 620.3
Spares, consumables & external repairs 547.8 - 547.8 488.8 - 488.8
Facility costs 115.7 - 115.7 112.3 - 112.3
Other external charges 1,523.7 - 1,523.7 1,369.7 - 1,369.7
2,845.2 - 2,845.2 2,591.1 - 2,591.1
Used rental equipment sold 635.8 - 635.8 442.3 - 442.3
Depreciation and amortisation:
Depreciation of tangible assets 1,913.6 - 1,913.6 1,600.5 - 1,600.5
Depreciation of right-of-use assets 204.1 - 204.1 171.6 - 171.6
Amortisation of intangibles - 120.9 120.9 - 117.7 117.7
2,117.7 120.9 2,238.6 1,772.1 117.7 1,889.8
8,083.8 120.9 8,204.7 7,027.6 117.7 7,145.3
5. Amortisation
Amortisation relates to the write-off of intangible assets over their
estimated useful economic life. The Group believes this item should be
disclosed separately within the consolidated income statement to assist in the
understanding of the financial performance of the Group. Adjusted profit and
earnings per share are stated before amortisation of intangibles.
Unaudited Audited
Three months to Year to
30 April 30 April
2024 2023 2024 2023
$m $m $m $m
Amortisation of intangibles 28.6 30.3 120.9 117.7
Taxation (7.1) (7.6) (30.2) (29.6)
21.5 22.7 90.7 88.1
6. Net financing costs
Unaudited Audited
Three months to Year to
30 April 30 April
2024 2023 2024 2023
$m $m $m $m
Interest income:
Net income on the defined benefit pension plan asset 0.2 0.4 0.9 0.6
Other interest - 0.4 0.9 2.0
0.2 0.8 1.8 2.6
Interest expense:
Bank interest payable 38.0 33.5 175.1 116.7
Interest payable on senior notes 69.8 46.4 232.3 142.8
Interest payable on lease liabilities 33.7 27.7 128.0 100.9
Non-cash unwind of discount on liabilities 0.6 0.3 2.2 1.2
Amortisation of deferred debt raising costs 2.3 1.9 8.7 7.2
144.4 109.8 546.3 368.8
7. Taxation
The tax charge for the year has been computed using the tax rates in force for
the year ending 30 April 2024 of 25% in the US (2023: 25%), 25% in Canada
(2023: 26%) and 25% in the UK (2023: 19%). This results in a blended
effective rate for the Group as a whole of 25% (2023: 25%) for the year before
adjustments to prior period state taxes and 24% (2023: 25%) after these
adjustments.
The tax charge of $541m (2023: $568m) on the adjusted profit before taxation
of $2,230m (2023: $2,273m) can be explained as follows:
Year to 30 April
2024 2023
$m $m
Current tax
- current tax on income for the period 307.8 295.4
- adjustments to prior year (3.8) (7.6)
304.0 287.8
Deferred tax
- origination and reversal of temporary differences 253.3 278.1
- adjustments to prior year (16.0) 1.8
237.3 279.9
Tax on adjusted profit 541.3 567.7
Comprising:
- US 526.1 521.5
- Canada 9.9 19.4
- UK 5.3 26.8
541.3 567.7
In addition, the tax credit of $30m (2023: $30m) on amortisation of $121m
(2023: $118m) consists of a current tax credit of $13m (2023: $12m) relating
to the US, $0.3m (2023: $1m) relating to Canada and $nil (2023: $0.3m)
relating to the UK and a deferred tax credit of $9m (2023: $10m) relating to
the US, $6m (2023: $5m) relating to Canada and $2m (2023: $1m) relating to
the UK.
On 20 June 2023, Finance (No.2) Act 2023 was substantively enacted in the UK,
introducing a global minimum effective tax rate of 15%. The legislation
implements a domestic top-up tax and a multinational top-up tax, effective for
accounting periods starting on or after 31 December 2023. Accordingly, the
first accounting period to which these rules will apply to the Group will be
the year ending 30 April 2025 and hence, the Group is applying the exception
under the IAS 12 amendment to recognising and disclosing information about
deferred tax assets and liabilities related to top-up income taxes for the
year ending 30 April 2024. We do not expect that the 15% global minimum tax
rate will affect materially the amount of tax the Group pays, as corporation
tax rates in the principal jurisdictions in which the Group operates exceed
15%.
8. Earnings per share
Basic and diluted earnings per share for the three and twelve months ended 30
April 2024 have been calculated based on the profit for the relevant period
and the weighted average number of ordinary shares in issue during that period
(excluding shares held by the Company and the ESOT over which dividends have
been waived). Diluted earnings per share is computed using the result for
the relevant period and the diluted number of shares (ignoring any potential
issue of ordinary shares which would be anti-dilutive). These are calculated
as follows:
Unaudited Audited
Three months to Year to
30 April 30 April
2024 2023 2024 2023
Profit for the financial period ($m) 324.7 346.1 1,598.4 1,617.7
Weighted average number of shares (m) - basic 436.6 437.7 437.0 439.1
- diluted 439.0 440.5 439.5 441.9
Basic earnings per share 74.4¢ 79.1¢ 365.8¢ 368.4¢
Diluted earnings per share 73.9¢ 78.7¢ 363.7¢ 366.1¢
Adjusted earnings per share (defined in any period as the earnings before
exceptional items and amortisation for that period divided by the weighted
average number of shares in issue in that period) may be reconciled to the
basic earnings per share as follows:
Unaudited Audited
Three months to Year to
30 April 30 April
2024 2023 2024 2023
Basic earnings per share 74.4¢ 79.1¢ 365.8¢ 368.4¢
Amortisation of intangibles 6.5¢ 6.9¢ 27.6¢ 26.8¢
Tax on amortisation (1.6¢) (1.7¢) (6.9¢) (6.7¢)
Adjusted earnings per share 79.3¢ 84.3¢ 386.5¢ 388.5¢
9. Dividends
During the year, a final dividend in respect of the year ended 30 April 2023
of 85.0¢ (2023: 67.50¢) per share was paid to shareholders resulting in a
cash outflow of $368m (2023: $293m). The interim dividend in respect of the
year ending 30 April 2024 of 15.75¢ (2023: 15.0¢) per share announced on 5
December 2023 was paid on 8 February 2024 to shareholders and cost $68m (2023:
$65m).
In addition, the directors are proposing a final dividend in respect of the
year ended 30 April 2024 of 89.25¢ (2023: 85.0¢) per share which will absorb
$390m of shareholders' funds, based on the 436m shares qualifying for dividend
on 17 June 2024. Subject to approval by shareholders, it will be paid on 10
September 2024 to shareholders who are on the register of members on 9 August
2024.
10. Property, plant and equipment
2024 2023
Rental Rental
equipment Total equipment Total
Net book value $m $m $m $m
At 1 May 9,649.1 11,041.1 7,814.3 8,892.6
Exchange differences (13.4) (16.0) (25.9) (30.7)
Reclassifications 1.1 - (1.7) -
Additions 3,624.0 4,310.7 3,262.1 3,772.1
Acquisitions 440.8 466.9 410.8 456.1
Disposals (610.0) (640.6) (426.5) (448.5)
Depreciation (1,640.8) (1,913.6) (1,384.0) (1,600.5)
At 30 April 11,450.8 13,248.5 9,649.1 11,041.1
11. Right-of-use assets
2024 2023
Property Other Property Other
Net book value leases leases Total leases leases Total
$m $m $m $m $m $m
At 1 May 2,184.8 21.2 2,206.0 1,849.1 15.7 1,864.8
Exchange differences (4.1) (0.1) (4.2) (14.0) - (14.0)
Additions 294.6 21.8 316.4 324.5 10.4 334.9
Acquisitions 99.2 - 99.2 151.5 - 151.5
Remeasurement 71.8 - 71.8 53.4 - 53.4
Disposals (58.5) (1.0) (59.5) (11.9) (1.1) (13.0)
Depreciation (197.3) (6.8) (204.1) (167.8) (3.8) (171.6)
At 30 April 2,390.5 35.1 2,425.6 2,184.8 21.2 2,206.0
Included within depreciation is an impairment charge of $6m (2023: $nil).
12. Lease liabilities
30 April 30 April
2024 2023
$m $m
Current 273.8 233.2
Non-current 2,406.8 2,161.1
2,680.6 2,394.3
13. Borrowings
30 April 30 April
2024 2023
$m $m
Non-current
First priority senior secured bank debt 1,848.0 2,038.4
1.500% senior notes, due August 2026 547.8 546.8
4.375% senior notes, due August 2027 596.6 595.6
4.000% senior notes, due May 2028 596.0 595.1
4.250% senior notes, due November 2029 595.3 594.6
2.450% senior notes, due August 2031 744.6 743.9
5.500% senior notes, due August 2032 738.8 737.8
5.550% senior notes, due May 2033 743.4 742.9
5.950% senior notes, due October 2033 744.1 -
5.800% senior notes, due April 2034 840.5 -
7,995.1 6,595.1
The senior secured bank debt is secured by way of fixed and floating charges
over substantially all the Group's property, plant and equipment, inventory
and trade receivables and is committed until August 2026. The senior notes
are guaranteed by Ashtead Group plc and all its principal subsidiary
undertakings.
Our debt facilities are committed for the long term, with an average maturity
of six years and a weighted average interest cost (including non-cash
amortisation of deferred debt raising costs) of 5%.
There is one financial performance covenant under the first priority senior
credit facility. That is the fixed charge ratio (comprising EBITDA before
exceptional items less net capital expenditure paid in cash over the sum of
scheduled debt repayments plus cash interest, cash tax payments and dividends
paid in the last twelve months) which, must be equal to, or greater than, 1.0.
This covenant does not apply when availability exceeds $450m. At 30 April
2024, availability under the senior secured bank facility was $2,771m ($2,573m
at 30 April 2023), with an additional $6,740m of suppressed availability,
meaning that the covenant did not apply at 30 April 2024 and is unlikely to
apply in forthcoming quarters.
Fair value of financial instruments
Financial assets and liabilities are measured in accordance with the fair
value hierarchy and assessed as Level 1, 2 or 3 based on the following
criteria:
- Level 1: fair value measurement based on quoted prices (unadjusted)
in active markets for identical assets or liabilities;
- Level 2: fair value measurements derived from inputs other than
quoted prices that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
- Level 3: fair value measurements derived from valuation techniques
that include inputs for the asset or liability that are not based on
observable market data.
Fair value of derivative financial instruments
At 30 April 2024, the Group had no derivative financial instruments. The
embedded prepayment options included within the senior notes are either
closely related to the host debt contract or immaterial and hence, are not
accounted for separately. These loan notes are carried at amortised cost.
Fair value of non-derivative financial assets and liabilities
The table below provides a comparison, by category of the carrying amounts and
the fair values of the Group's non-derivative financial assets and
liabilities.
At 30 April 2024 At 30 April 2023
Book Fair Book Fair
value value value value
$m $m $m $m
Long-term borrowings
- first priority senior secured bank debt Level 1 1,848.0 1,848.0 2,038.4 2,038.4
- 1.500% senior notes Level 1 550.0 498.1 550.0 486.1
- 4.375% senior notes Level 1 600.0 571.5 600.0 573.0
- 4.000% senior notes Level 1 600.0 559.9 600.0 560.3
- 4.250% senior notes Level 1 600.0 549.9 600.0 556.5
- 2.450% senior notes Level 1 750.0 596.5 750.0 595.3
- 5.500% senior notes Level 1 750.0 719.9 750.0 741.6
- 5.550% senior notes Level 1 750.0 719.2 750.0 744.4
- 5.950% senior notes Level 1 750.0 739.7 - -
- 5.800% senior notes Level 1 850.0 828.3 - -
Total long-term borrowings 8,048.0 7,631.0 6,638.4 6,295.6
Discount on issue of debt (14.0) - (11.3) -
Deferred costs of raising finance (38.9) - (32.0) -
7,995.1 7,631.0 6,595.1 6,295.6
Other financial instruments(1)
Contingent consideration Level 3 31.4 31.4 46.7 46.7
Financial asset investments Level 3 57.0 57.0 41.3 41.3
Cash and cash equivalents Level 1 20.8 20.8 29.9 29.9
( )
(1) The Group's trade and other receivables and trade and other payables,
excluding contingent consideration, are not shown in the table above. The
carrying amounts of these financial assets and liabilities approximate their
fair values.
Contingent consideration is a Level 3 financial liability. Future
anticipated payments to vendors in respect of contingent consideration are
initially recorded at fair value which is the present value of the expected
cash outflows of the obligations. The obligations are dependent upon the
future financial performance of the businesses acquired. The fair value is
estimated based on internal financial projections prepared in relation to the
acquisition with the contingent consideration discounted to present value
using a discount rate in line with the Group's cost of debt. The movement
since 30 April 2023 can be attributed to $30m of payments in the period (see
Note 15), $1m released and $1m of exchange differences offset by $15m of
additions through business acquisitions (see Note 16) and $1m of discount
unwind.
Financial asset investments are measured at fair value and are Level 3
financial assets. These assets are measured at fair value through other
comprehensive income. Their fair values are estimated based on the latest
transaction price and any subsequent investment-specific adjustments. The
movement since 30 April 2023 reflects additions of $15m and interest of $1m.
14. Share capital
Ordinary shares of 10p each:
30 April 30 April 30 April 30 April
2024 2023 2024 2023
Number Number $m $m
Issued and fully paid 451,354,833 451,354,833 81.8 81.8
During the year, the Company purchased 1.2m ordinary shares at a total cost of
$78m (£62m) under the Group's share buyback programme, which are held in
treasury. At 30 April 2024, 14.1m (April 2023: 12.9m) shares were held by
the Company ($819m; April 2023: $741m) and a further 0.9m (April 2023: 1.0m)
shares were held by the Company's Employee Share Ownership Trust ($43m; April
2023: $39m).
15. Notes to the cash flow statement
a) Cash flow from operating activities
Year to 30 April
2024 2023
$m $m
Operating profit 2,654.0 2,522.0
Depreciation 2,117.7 1,772.1
Amortisation 120.9 117.7
EBITDA 4,892.6 4,411.8
Profit on disposal of rental equipment (223.0) (185.1)
Profit on disposal of other property, plant and equipment (22.0) (19.0)
Decrease/(increase) in inventories 21.2 (4.7)
Increase in trade and other receivables (177.1) (209.6)
Increase in trade and other payables 2.5 34.2
Exchange differences (0.7) 1.2
Other non-cash movement 47.5 44.8
Cash generated from operations before
changes in rental equipment 4,541.0 4,073.6
b) Analysis of net debt
Net debt consists of total borrowings and lease liabilities less cash and cash
equivalents. Borrowings exclude accrued interest. Non-US dollar
denominated balances are translated to US dollars at rates of exchange ruling
at the balance sheet date.
Non-cash movements
1 May Cash Exchange Debt New lease Other 30 April
2023 flow movement acquired liabilities movements 2024
$m $m $m $m $m $m $m
Long-term borrowings 6,595.1 1,341.3 (5.3) 55.3 - 8.7 7,995.1
Lease liabilities 2,394.3 (133.7) (4.5) 99.2 325.3 - 2,680.6
Total liabilities from
financing activities 8,989.4 1,207.6 (9.8) 154.5 325.3 8.7 10,675.7
Cash and cash
equivalents (29.9) 9.0 0.1 - - - (20.8)
Net debt 8,959.5 1,216.6 (9.7) 154.5 325.3 8.7 10,654.9
Non-cash movements
1 May Cash Exchange Debt New lease Other 30 April
2022 flow movement acquired liabilities movements 2023
$m $m $m $m $m $m $m
Long-term borrowings 5,180.1 1,353.5 (23.6) 77.9 - 7.2 6,595.1
Lease liabilities 1,995.2 (109.5) (14.8) 150.0 373.4 - 2,394.3
Total liabilities from
financing activities 7,175.3 1,244.0 (38.4) 227.9 373.4 7.2 8,989.4
Cash and cash
equivalents (15.3) (15.2) 0.6 - - - (29.9)
Net debt 7,160.0 1,228.8 (37.8) 227.9 373.4 7.2 8,959.5
Details of the Group's cash and debt are given in Notes 12 and 13 and the
Review of Fourth Quarter, Balance Sheet and Cash Flow accompanying these
condensed consolidated financial statements.
c) Acquisitions
2024 2023
$m $m
Cash consideration paid:
- acquisitions in the year 845.6 1,061.3
- contingent consideration 30.0 21.9
875.6 1,083.2
During the year, 26 businesses were acquired with cash paid of $846m (2023:
$1,061m), after taking account of net cash acquired of $6m (2023: $32m).
Further details are provided in Note 16.
Contingent consideration of $30m (2023: $22m) was paid relating to prior year
acquisitions.
16. Acquisitions
The Group undertakes bolt-on acquisitions to complement its organic growth
strategy. During the year, the following acquisitions were completed:
i) On 17 May 2023, Sunbelt US acquired the business and assets
of Beattie Construction Services, LLC ('Beattie'). Beattie is a specialty
business operating in Michigan.
ii) On 24 May 2023, Sunbelt US acquired the business and assets of
Jones & Hollands, Inc. ('Jones'). Jones is a general tool business
operating in Michigan.
iii) On 24 May 2023, Sunbelt US acquired the business and assets of
West Coast Equipment, LLC ('West Coast'). West Coast is a general tool
business operating in California.
iv) On 1 June 2023, Sunbelt Canada acquired the entire share capital
of Loue Froid, Inc. ('Loue Froid'). Loue Froid is a specialty business
operating in Quebec, Ontario, Alberta and British Columbia.
v) On 14 June 2023, Sunbelt US acquired the business and assets of
American Covers Incorporated ('American Covers'). American Covers is a
specialty business operating in Louisiana.
vi) On 16 June 2023, Sunbelt US acquired the business and assets of
AGF Machinery, LLC ('AGF'). AGF is a general tool business operating in
Alabama.
vii) On 23 June 2023, Sunbelt US acquired the business and assets of
Miele Central Equipment, LLC ('CEC'). CEC is a general tool business
operating in Pennsylvania.
viii) On 28 June 2023, Sunbelt US acquired the business and assets of J
& J Equipment Rentals, Inc. ('J&J'). J&J is a general tool
business operating in Virginia.
ix) On 31 July 2023, Sunbelt US acquired the entire membership
interest of Runyon Equipment Rental Co., LLC ('Runyon'). Runyon is a general
tool business operating in Indiana.
x) On 9 August 2023, Sunbelt US acquired the business and assets of
A-One Rental, Inc. and Holmes A-One Inc. (together 'A-One'). A-One is a
general tool business operating in Wyoming.
xi) On 25 August 2023, Sunbelt US acquired the business and assets
of Caribbean Rentals & Sales Ltd and International Rental Services, Inc.
(together 'CRS'). CRS is a general tool business operating in the Bahamas.
xii) On 30 August 2023, Sunbelt US acquired the business and assets of
Timp Rental Center, Inc. ('Timp'). Timp is a general tool business operating
in Utah.
xiii) On 30 August 2023, Sunbelt Canada acquired the business and assets
of 688768 NB Inc., trading as Modu-Loc Maritimes Fence Rentals ('Modu-Loc
Maritimes'). Modu-Loc Maritimes is a specialty business operating in Nova
Scotia and New Brunswick.
xiv) On 15 September 2023, Sunbelt US acquired the business and assets
of 2-C Equipment, L.L.C. ('2C'). 2C is a general tool business operating in
Texas.
xv) On 22 September 2023, Sunbelt US acquired the business and assets of
Casale Rent-All, LLC ('Casale'). Casale is a general tool business operating
in New York.
xvi) On 25 October 2023, Sunbelt Canada acquired the business and assets
of Able Rental & Supply (Sudbury), Inc. ('Able'). Able is a general tool
business operating in Ontario.
xvii) On 3 November 2023, Sunbelt US acquired the business and assets of
EFFEM Corporation, trading as A to Z Equipment Rentals & Sales ('A to Z').
A to Z is a general tool business operating in Arizona.
xviii) On 3 November 2023, Sunbelt UK acquired the entire share capital of
Acorn Film & Video Ltd ('Acorn'). Acorn is a specialty business.
xix) On 8 November 2023, Sunbelt US acquired the business and assets of
Farmers Rental & Power Equipment, Inc. ('Farmers'). Farmers is a general
tool business operating in North Carolina.
xx) On 14 November 2023, Sunbelt US acquired the business and assets of
Southwest Ohio Temporary Heat, LLC, trading as Temporary Heating Solutions
Cincinnati ('THS'). THS is a specialty business operating in Ohio.
xxi) On 1 December 2023, Sunbelt Canada acquired the entire share
capital of Nor-Val Rentals, Ltd. ('Nor-Val'). Nor-Val is a general tool
business operating in British Columbia.
xxii) On 13 December 2023, Sunbelt US acquired the business and assets of
Freedom Scaffold, LLC ('Freedom'). Freedom is a specialty business operating
in Oklahoma.
xxiii) On 10 January 2024, Sunbelt US acquired the business and assets of
Falcon Shoring Company, LLC ('Falcon'). Falcon is a specialty business
operating in Oregon.
xxiv) On 17 January 2024, Sunbelt US acquired the business and assets of
Root Rents, Inc. ('Root Rents'). Root Rents is a general tool business
operating in Idaho.
xxv) On 19 January 2024, Sunbelt US acquired the business and assets of ABC
Equipment Rental, Inc. ('ABC'). ABC is a general tool business operating in
Maryland.
xxvi) On 31 January 2024, Sunbelt US acquired the business and assets of
Bosk Equipment Rental Inc. ('Bosk'). Bosk is a general tool business
operating in Michigan.
The following table sets out the fair value of the identifiable assets and
liabilities acquired by the Group. The fair values have been determined
provisionally at the balance sheet date.
Fair value
to the Group
$m
Net assets acquired
Trade and other receivables 44.4
Inventory 2.3
Property, plant and equipment
- rental equipment 440.8
- other assets 26.1
Right-of-use assets 99.2
Creditors (12.4)
Current tax (0.1)
Deferred tax (20.2)
Debt (55.3)
Lease liabilities (99.2)
Intangible assets (non-compete agreements
and customer relationships) 86.2
511.8
Consideration:
- cash paid and due to be paid (net of cash acquired) 849.7
- contingent consideration 15.5
865.2
Goodwill 353.4
The goodwill arising can be attributed to the key management personnel and
workforce of the acquired businesses, the benefits through advancing our
clusters and leveraging cross-selling opportunities, and to the synergies and
other benefits the Group expects to derive from the acquisitions. The
synergies and other benefits include elimination of duplicate costs, improving
utilisation of the acquired rental fleet, using the Group's financial strength
to invest in the acquired business and drive improved returns through a
semi-fixed cost base and the application of the Group's proprietary software
to optimise revenue opportunities. $232m of the goodwill is expected to be
deductible for income tax purposes.
Contingent consideration is the fair value of consideration that is payable
based on the post-acquisition performance of certain acquired businesses.
The gross value and the fair value of trade receivables at acquisition was
$44m.
Due to the operational integration of acquired businesses post-acquisition, in
particular due to the merger of some stores, the movement of rental equipment
between stores and investment in the rental fleet, it is not practical to
report the revenue and profit of the acquired businesses post-acquisition.
The revenue and operating profit of these acquisitions from 1 May 2023 to
their date of acquisition was not material.
17. Contingent liabilities
Following its state aid investigation, in April 2019 the European Commission
announced its decision that the Group Financing Exemption in the UK controlled
foreign company ('CFC') legislation constitutes state aid in some
circumstances. In common with the UK Government and other UK-based
international companies, the Group does not agree with the decision and has
therefore lodged a formal appeal with the General Court of the European
Union. In common with other UK taxpayers, the Group's appeal has been stayed
while the appeals put forward by the UK Government and ITV plc proceed.
On 8 June 2022 the General Court of the European Union dismissed the appeals
put forward by the UK Government and ITV plc. However, there remains a high
degree of uncertainty in the final outcome given the UK Government and ITV plc
have both appealed against the decision to the EU Court of Justice. The EU
Court of Justice held a hearing on the case in January 2024 and the
Advocate-General's opinion was published in April 2024, proposing that the EU
Court of Justice set aside the judgement of the General Court and annul the
decision made by the European Commission that the Group Financing Exemption in
the UK CFC legislation constituted state aid. The Group will continue to
monitor proceedings closely.
Despite the UK Government appealing the European Commission's decision, His
Majesty's Revenue & Customs ('HMRC') was required to make an assessment of
the tax liability which would arise if the decision is not successfully
appealed and collect that amount from taxpayers. HMRC issued a charging
notice stating that the tax liability it believes to be due on this basis is
£36m, including interest payable. The Group has appealed the charging
notice and has settled the amount assessed on it, including interest, in line
with HMRC requirements. On successful appeal in whole or in part, all or
part of the amount paid in accordance with the charging notice would be
returned to the Group. If either the decision reached by the General Court
of the European Union or the charging notice issued by HMRC are not ultimately
appealed successfully, we have estimated the Group's maximum potential
liability to be £36m as at 30 April 2024 ($45m at April 2024 exchange rates),
including any interest payable. Based on the current status of proceedings,
we have concluded that no provision is required in relation to this matter.
The £36m ($45m at April 2024 exchange rates) paid has been recognised
separately as a non-current asset on the balance sheet.
18. Events after the balance sheet date
On 21 May 2024, Sunbelt US acquired the business and assets of RentalMax, LLC
('RentalMax'). RentalMax is a general tool business operating in Illinois.
The initial accounting for this acquisition is incomplete given the proximity
to the year end. Had this acquisition taken place on 1 May 2023, its
contribution to revenue and operating profit would not have been material.
REVIEW OF FOURTH QUARTER, BALANCE SHEET AND CASH FLOW
Fourth quarter (unaudited)
Revenue EBITDA Profit(1)
2024 2023 2024 2023 2024 2023
Canada in C$m 221.2 218.2 91.0 82.5 32.1 35.9
UK in £m 182.3 163.1 52.7 42.2 16.6 9.7
US 2,234.6 2,083.1 1,013.8 968.5 551.7 574.4
Canada in $m 163.1 161.2 67.1 60.8 23.7 26.4
UK in $m 229.8 199.4 66.4 51.8 20.9 12.0
Group central costs - - (6.2) (7.6) (6.5) (7.9)
2,627.5 2,443.7 1,141.1 1,073.5 589.8 604.9
Financing costs (144.2) (109.0)
Adjusted profit before tax 445.6 495.9
Amortisation (28.6) (30.3)
Profit before taxation 417.0 465.6
Margins as reported
US 45.4% 46.5% 24.7% 27.6%
Canada 41.1% 37.8% 14.5% 16.5%
UK 28.9% 25.9% 9.1% 5.9%
Group 43.4% 43.9% 22.4% 24.8%
(1) Segment result presented is operating profit before amortisation.
Group revenue for the quarter increased 8% (7% at constant currency) to
$2,628m (2023: $2,444m). Adjusted profit before tax for the quarter
decreased to $446m (2023: $496m), due to principally the fourth quarter
additional receivables provision, a higher depreciation charge relative to
revenue growth and an increased interest expense of $144m (2023: $109m).
US rental only revenue in the quarter was $1,564m (2023: $1,437m), 9% higher
than a year ago. In the quarter, our General Tool business grew 7%, while
our Specialty businesses grew 15%. Total revenue was $2,235m (2023:
£2,083m).
Canada's rental only revenue increased 13% to C$148m (2023: C$132m), while
total revenue was C$221m (2023: C$218m). Performance has been affected by
the Writers Guild of America and the Screen Actors Guild strikes. These were
settled in early December and activity levels in the Film & TV business
recovered progressively through the fourth quarter.
The UK generated rental only revenue in the quarter of £116m (2023: £108m),
8% higher than the prior year. Total revenue increased 12% to £182m (2023:
£163m) reflecting a higher level of ancillary and sales revenue.
Group adjusted operating profit decreased 3% to $590m (2023: $605m). After
financing costs of $144m (2023: $109m), Group adjusted profit before tax was
$446m (2023: $496m). After amortisation of $29m (2023: $30m), statutory
profit before taxation was $417m (2023: $466m).
Balance sheet
Property, plant and equipment
Capital expenditure in the year totalled $4,311m (2023: $3,772m) with $3,624m
invested in the rental fleet (2023: $3,262m). Expenditure on rental
equipment was 84% of total capital expenditure with the balance relating to
the delivery vehicle fleet, property improvements and IT equipment. Capital
expenditure by division was:
2024 2023
Replacement Growth Total Total
Canada in C$m 160.5 157.1 317.6 254.2
UK in £m 129.8 44.1 173.9 161.0
US 1,935.2 1,234.9 3,170.1 2,877.5
Canada in $m 118.9 116.4 235.3 191.2
UK in $m 163.2 55.4 218.6 193.4
Total rental equipment 2,217.3 1,406.7 3,624.0 3,262.1
Delivery vehicles, property improvements & IT equipment 686.7 510.0
Total additions 4,310.7 3,772.1
In a strong US rental market, $1,235m of rental equipment capital expenditure
was spent on growth while $1,935m was invested in replacement of existing
fleet. The growth proportion is estimated based on the assumption that
replacement capital expenditure in any period is equal to the original cost of
equipment sold. In a period of inflation, this understates replacement capital
expenditure and overstates growth capital expenditure. Life cycle inflation
is c. 20%.
The average age of the Group's serialised rental equipment, which constitutes
the substantial majority of our fleet, at 30 April 2024 was 45 months (2023:
50 months) on an original cost basis. The US fleet had an average age of 44
months (2023: 49 months), the Canadian fleet had an average age of 52 months
(2023: 55 months) and the UK fleet had an average age of 50 months (2023: 52
months).
Rental fleet at original cost LTM rental LTM dollar
revenue utilisation
30 April 2024 30 April 2023 LTM average
Canada in C$m 1,751 1,438 1,631 765 47%
UK in £m 1,130 1,081 1,122 590 53%
US 15,057 13,407 14,453 8,321 58%
Canada in $m 1,274 1,061 1,209 567 47%
UK in $m 1,414 1,358 1,411 742 53%
17,745 15,826 17,073 9,630
Dollar utilisation was 58% in the US (2023: 61%), 47% for Canada (2023: 55%)
and 53% for the UK (2023: 53%). The decrease in US dollar utilisation is due
to principally lower physical utilisation while Canadian dollar utilisation
reflects both lower physical utilisation and the drag of the Film & TV
business.
Trade receivables
Receivable days at 30 April 2024 were 50 days (2023: 48 days). The bad debt
charge for the last twelve months ended 30 April 2024 as a percentage of total
turnover was 0.8% (2023: 0.5%). Trade receivables at 30 April 2024 of
$1,528m (2023: $1,385m) are stated net of allowances for bad debts and credit
notes of $141m (2023: $107m), with the provision representing 8% (2023: 7%)
of gross receivables.
Trade and other payables
Group payable days were 60 days at 30 April 2024 (2023: 43 days) with capital
expenditure related payables totalling $512m (2023: $606m). Payment periods
for purchases other than rental equipment vary between seven and 60 days and
for rental equipment between 30 and 120 days.
Cash flow and net debt
Year to 30 April
2024 2023
$m $m
EBITDA 4,892.6 4,411.8
Cash inflow from operations before
changes in rental equipment 4,541.0 4,073.6
Cash conversion ratio* 92.8% 92.3%
Replacement rental capital expenditure (2,121.0) (1,380.8)
Payments for non-rental capital expenditure (685.6) (510.0)
Rental equipment disposal proceeds 831.7 573.6
Other property, plant and equipment disposal proceeds 47.5 41.4
Tax paid (245.8) (287.3)
Financing costs (513.1) (340.2)
Cash inflow before growth capex 1,854.7 2,170.3
Growth rental capital expenditure (1,638.2) (1,638.8)
Free cash flow 216.5 531.5
Business acquisitions (875.6) (1,083.2)
Business disposals 1.9 -
Financial asset investments (15.0) (42.4)
Total cash absorbed (672.2) (594.1)
Dividends (436.1) (357.8)
Purchase of own shares by the ESOT (29.9) (12.5)
Purchase of own shares by the Company (78.4) (264.4)
Increase in net debt due to cash flow (1,216.6) (1,228.8)
* Cash inflow from operations before changes in rental equipment as a
percentage of EBITDA.
Cash inflow from operations before the net investment in the rental fleet was
$4,541m (2023: $4,074m). The conversion ratio for the year was 93%
(2023: 92%).
Total payments for capital expenditure (rental equipment and other PPE) during
the year were $4,445m (2023: $3,530m). Disposal proceeds received totalled
$879m (2023: $615m), giving net payments for capital expenditure of $3,566m in
the year (2023: $2,915m). Financing costs paid totalled $513m (2023: $340m)
while tax payments were $246m (2023: $287m). Financing costs paid typically
differ from the charge in the income statement due to the timing of interest
payments in the year and non-cash interest charges.
Accordingly, the Group generated free cash flow of $216m (2023: $531m) and,
after acquisition and investment related expenditure, net of disposal
proceeds, of $889m (2023: $1,126m), a cash outflow of $672m (2023: $594m),
before returns to shareholders.
Net debt
2024 2023
$m $m
First priority senior secured bank debt 1,848.0 2,038.4
1.500% senior notes, due 2026 547.8 546.8
4.375% senior notes, due 2027 596.6 595.6
4.000% senior notes, due 2028 596.0 595.1
4.250% senior notes, due 2029 595.3 594.6
2.450% senior notes, due 2031 744.6 743.9
5.500% senior notes, due 2032 738.8 737.8
5.550% senior notes, due 2033 743.4 742.9
5.950% senior notes, due 2033 744.1 -
5.800% senior notes, due 2034 840.5 -
Total external borrowings 7,995.1 6,595.1
Lease liabilities 2,680.6 2,394.3
Total gross debt 10,675.7 8,989.4
Cash and cash equivalents (20.8) (29.9)
Total net debt 10,654.9 8,959.5
Net debt at 30 April 2024 was $10,655m with the increase since 30 April 2023
reflecting the cash outflow set out above and additional lease commitments as
we continue our greenfield and bolt-on expansion. The Group's EBITDA for the
year ended 30 April 2024 was $4,893m. Excluding the impact of IFRS 16, the
ratio of net debt to EBITDA was 1.7 times (2023: 1.6 times) on a constant
currency and a reported basis as at 30 April 2024. Including the impact of
IFRS 16, the ratio of net debt to EBITDA was 2.2 times (2023: 2.0 times) as at
30 April 2024.
Financial risk management
The Group's trading and financing activities expose it to various financial
risks that, if left unmanaged, could adversely impact current or future
earnings. Although not necessarily mutually exclusive, these financial risks
are categorised separately according to their different generic risk
characteristics and include market risk (foreign currency risk and interest
rate risk), credit risk and liquidity risk.
Market risk
The Group's activities expose it primarily to interest rate and currency risk.
Interest rate risk is monitored on a continuous basis and managed, where
appropriate, through the use of interest rate swaps whereas the use of forward
foreign exchange contracts to manage currency risk is considered on an
individual non-trading transaction basis. The Group is not exposed to
commodity price risk or equity price risk as defined in IFRS 7.
Interest rate risk
The Group has fixed and variable rate debt in issue with 77% of the drawn debt
at a fixed rate as at 30 April 2024, excluding lease liabilities. The
Group's accounting policy requires all borrowings to be held at amortised
cost. As a result, the carrying value of fixed rate debt is unaffected by
changes in credit conditions in the debt markets and there is therefore no
exposure to fair value interest rate risk. The Group's debt that bears
interest at a variable rate comprises all outstanding borrowings under the
senior secured credit facility. Pricing is based on leverage and average
availability according to a grid, varying from the applicable interest rate
plus 125bp to 150bp. The applicable interest rate is based on SOFR for US
dollar loans, CDOR for Canadian dollar loans and SONIA for sterling loans.
Subsequent to 30 April 2024, the Group has amended its ABL agreement to
replace CDOR with CORRA in line with the replacement of CDOR in the market.
At 30 April 2024, the borrowing rate was the applicable interest rate plus
150bp.
The Group periodically utilises interest rate swap agreements to manage and
mitigate its exposure to changes in interest rates. However, during the year
ended and as at 30 April 2024, the Group had no such swap agreements
outstanding. The Group may, at times, hold cash and cash equivalents, which
earn interest at a variable rate.
At 30 April 2024, based upon the amount of variable rate debt outstanding, the
Group's pre-tax profits would change by approximately $19m for each one
percentage point change in interest rates applicable to the variable rate debt
and, after tax effects, equity would change by approximately $14m.
Currency risk
Currency risk is predominantly translation risk as there are no significant
transactions in the ordinary course of business that take place between
foreign entities. The Group's reporting currency is US dollars. The
majority of our assets, liabilities, revenue and costs are denominated in US
dollars, but Canadian dollars and sterling make up 25% of our net assets.
Fluctuations in the value of Canadian dollars and pounds sterling with
respect to US dollars may have an impact on our financial condition and
results of operations as reported in US dollars. The Group's financing is
arranged such that the majority of its debt and interest expense is in US
dollars. At 30 April 2024, 88% of its debt (including lease liabilities) was
denominated in US dollars.
The Group's exposure to exchange rate movements on trading transactions is
limited. All Group companies invoice revenue in their respective local
currency and generally incur expense and purchase assets in their local
currency. Consequently, the Group does not routinely hedge either forecast
foreign exchange exposures or the impact of exchange rate movements on the
translation of overseas profits into dollars. Where the Group does hedge, it
maintains appropriate hedging documentation. Foreign exchange risk on
significant non-trading transactions is considered on an individual basis.
Based on the current currency mix of our profits and on current sterling and
Canadian and US dollar debt levels, interest and exchange rates at 30 April
2024, a 1% change in the US dollar to sterling and Canadian dollar exchange
rates would impact adjusted pre-tax profit by $0.5m.
Credit risk
The Group's principal financial assets are cash and bank balances and trade
and other receivables. The Group's credit risk is primarily attributable to
its trade receivables. The amounts presented in the balance sheet are net of
allowances for doubtful receivables. The credit risk on liquid funds and
derivative financial instruments is limited because the counterparties are
banks with high credit ratings assigned by international credit rating
agencies.
The Group has a large number of unrelated customers, serving over 900,000
during the financial year. Each business segment manages its own exposure to
credit risk according to the economic circumstances and characteristics of the
markets they serve. The Group believes that management of credit risk on a
devolved basis enables it to assess and manage credit risk more effectively.
However, broad principles of credit risk management practice are observed
across the Group, such as the use of credit reference agencies and the
maintenance of credit control functions.
Liquidity risk
Liquidity risk is the risk that the Group could experience difficulties in
meeting its commitments to creditors as financial liabilities fall due for
payment.
The Group uses both short and long-term cash forecasts to assist in monitoring
cash flow requirements ensuring sufficient cash is available to meet
operational needs. The Group monitors available facilities against forward
requirements on a regular basis.
The Group generates significant free cash flow before investment (defined as
cash flow from operations less replacement capital expenditure net of proceeds
of asset disposals, interest paid and tax paid). This free cash flow before
investment is available to the Group to invest in growth capital expenditure,
acquisitions, dividend payments and other returns to shareholders or to reduce
debt.
In addition to the strong free cash flow from normal trading activities,
additional liquidity is available through the Group's senior secured debt
facility. At 30 April 2024, availability under the $4.5 billion facility was
$2,771m ($2,573m at 30 April 2023), which compares with the threshold of
$450m, above which the covenant does not apply.
Principal risks and uncertainties
The Group faces a number of risks and uncertainties in its day-to-day
operations and it is management's role to mitigate and manage these risks.
The Board has established a formal risk management process which has
identified the following principal risks and uncertainties which could affect
employees, operations, revenue, profits, cash flows and assets of the Group.
Economic conditions
Potential impact
In the longer term, there is a link between levels of economic activity and
demand for our services. The most significant end market which affects our
business is construction. The construction industry is cyclical and
typically lags the general economic cycle by between 12 and 24 months.
The economic uncertainties resulting from the impact of pandemics is
considered as part of this risk.
Mitigation
· Prudent management through the different phases of the cycle.
· Flexibility in the business model.
· Capital structure and debt facilities arranged in recognition of the
cyclical nature of our market and able to withstand market shocks.
Change
Our business continues to be well positioned to benefit from supportive end
markets. However, while market forecasts are predicting continued growth
both in terms of starts and the rental market, supported by the emergence of
'mega projects', there remains some uncertainty in end market conditions due
to the level of interest rates. At all times, we remain cognisant of market
dynamics and uncertainties to ensure that we take actions to ensure the Group
is positioned to take advantage of opportunities.
Competition
Potential impact
The already competitive market could become even more competitive and we could
suffer increased competition from large national competitors or smaller
regional or local companies resulting in reduced market share and lower
revenue.
This could negatively affect rental rates and physical utilisation.
Continuing industry consolidation could also have a similar effect.
Mitigation
· Create commercial advantage by providing the highest level of service,
consistently and at a price which offers value.
· Differentiation of service.
· Enhance the barriers to entry to newcomers provided by our platform:
industry-leading technology, experienced personnel and a broad network and
equipment fleet.
· Regularly estimate and monitor our market share and track the
performance of our competitors.
Change
Our markets continue to be competitive but the big continue to get bigger.
We have a 11% market share in the US, a 9% market share in Canada and a 10%
market share in the UK.
Cyber security
Potential impact
A cyber-attack or serious uncured failure in our systems could result in us
being unable to deliver service to our customers and / or the loss of data.
In particular, we are heavily dependent on technology for the smooth running
of our business given the large number of both units of equipment we rent and
our customers. As a result, we could suffer reputational loss, revenue loss
and financial penalties.
This is the most significant factor in our business continuity planning.
Mitigation
· Stringent policies surrounding security, user access, change control
and the ability to download and install software.
· Testing of cyber security including red team exercises, system
penetration testing and internal phishing and other training exercises
undertaken.
· Use of antivirus and malware software, firewalls, email scanning and
internet monitoring as an integral part of our security plan.
· Use of firewalls and encryption to protect systems and any connections
to third parties.
· Use of multi-factor authentication.
· Continued focus on development of IT strategy taking advantage of cloud
technology available.
· Separate near-live back-up data centres which are designed to be able
to provide the necessary services in the event of a failure at a primary site.
Change
The Group remains vigilant with regards to cyber security, with a significant
and ongoing investment in resource and tooling to maintain and where
appropriate, enhance our posture. Nevertheless, cyber security remains a
continually evolving area and a priority for the Group.
In relation to business continuity, our plans have been subject to continued
review and update during the year and our disaster recovery plans are tested
regularly.
Health and safety
Potential impact
A failure to comply with laws and regulations governing health and safety and
ensure the highest standards of health and safety across the Group could
result in accidents which may result in injury to or fatality of an
individual, claims against the Group and/or damage to our reputation.
Mitigation
· Maintain appropriate health and safety policies and procedures
regarding the need to comply with laws and regulations and to reasonably guard
our employees against the risk of injury.
· Induction and training programmes reinforce health and safety policies.
· Programmes to support our customers exercising their responsibility to
their own workforces when using our equipment.
· Maintain appropriate insurance coverage.
Change
Health and safety remains a key focus area for the Group and an area of
continuous improvement in order to consider what actions can be implemented to
further reduce the risks within our business.
In terms of reportable incidents, the TRIR was 0.76 (2023: 0.97) in the US and
0.78 (2023: 0.89) in Canada. The RIDDOR reportable rate was 0.19 (2023:
0.25) in the UK.
People and culture
Potential impact
Retaining and attracting good people is key to delivering superior performance
and customer service and maintaining and enhancing our culture.
Excessive staff turnover is likely to impact on our ability to maintain the
appropriate quality of service to our customers and would ultimately impact
our financial performance adversely.
At a leadership level, succession planning is required to ensure the Group can
continue to inspire the right culture, leadership and behaviours and meet its
strategy objectives. Furthermore, it is important that our remuneration
policies reflect the Group's North American focus and enable us to retain and
enhance our strong leadership team.
Mitigation
· Provide well-structured and competitive reward and benefit packages
that ensure our ability to attract and retain the employees we need.
· Ensure that our staff have the right working environment and equipment
to enable them to do the best job possible and maximise their satisfaction at
work.
· Invest in training and career development opportunities for our people
to support them in their careers.
· Ensure succession plans are in place and reviewed regularly which meet
the ongoing needs of the Group.
Change
Recruiting, retention and training continue to be key priorities for the
business.
Our compensation and incentive programmes have continued to evolve to reflect
market conditions, the economic environment and the results of our employee
engagement surveys.
Diversity, equity and inclusion programmes are established across the business
to enhance our efforts to attract and retain the best people.
Environmental
Potential impact
As part of Sunbelt 4.0, the Group has made a long-term commitment to reduce
its Scope 1 and 2 carbon intensity by 50% by 2034, compared to a baseline of
2024, on a journey to Net Zero by 2050. Failure to achieve these goals
could adversely impact the Group and its stakeholders.
In terms of the Group's assessment of the broader environmental impacts of our
activities, we also consider the upstream and downstream impacts of our
operations and note that a significant part of our Scope 3 emissions arises
from our rental fleet, which today is reliant on diesel engines. Over time,
'greener' alternatives will become available as technology advances. If we
do not remain at the forefront of technological advances, and invest in the
latest equipment, our rental fleet could become obsolete.
In addition, we need to comply with the numerous laws governing environmental
protection matters. These laws regulate such issues as wastewater, storm
water, solid and hazardous wastes and materials, and air quality. Breaches
potentially create hazards to our employees, damage to our reputation and
expose the Group to, amongst other things, the cost of investigating and
remediating contamination and also fines and penalties for non-compliance.
Mitigation
· Policies and procedures in place at all our stores regarding the need
to adhere to local laws and regulations.
· Procurement policies reflect the need for the latest available
emissions management and fuel efficiency tools in our fleet.
· Collaboration with key suppliers to develop and pilot new technologies.
· Lower carbon vehicle transition plan.
· Real estate and facility standards to reduce emissions from our
operations.
· Monitoring and reporting of carbon emissions.
Change
The work of the Health, Safety and Environmental departments, and the
Sustainability and operational audit teams, continue to assess environmental
compliance.
In 2023/24 our Scope 1 and 2 carbon emission intensity ratio reduced to 37.4
(2023: 38.4).
We quantified our Scope 3 emissions for the first time during the year, the
largest components of which are category 11 (use of sold products) and
category 13 (downstream leased assets). These categories are complex to
measure and reliant on significant assumptions and estimation techniques.
Laws and regulations
Potential impact
Breaches of laws or regulations governing the Group's activities could result
in criminal prosecution, substantial claims and loss of reputation.
Mitigation
· Maintaining a legal function to oversee management of these risks and
to achieve compliance with relevant legislation.
· Group-wide modern slavery, business ethics and ethical sourcing
policies and whistle-blowing arrangements.
· Evolving policies and practices to take account of changes in legal
obligations.
· Training and induction programmes ensure our staff receive appropriate
training and briefing on the relevant policies.
Change
We monitor regulatory and legislative changes to ensure our policies and
practices reflect them and we comply with relevant legislation.
Our whistle-blowing arrangements are well established and the Company
Secretary reports matters arising to the Audit Committee and the Board during
the course of the year.
During the year 4,929 people in the US, 513 people in Canada and 944 people in
the UK underwent induction training. In addition, training programmes were
undertaken in safety and business ethics.
OPERATING STATISTICS
Number of rental stores Staff numbers
2024 2023 2024 2023
US 1,186 1,094 19,245 18,981
Canada 135 119 2,306 2,094
UK 190 185 4,384 4,250
Corporate office - - 23 22
Group 1,511 1,398 25,958 25,347
GLOSSARY OF TERMS
The glossary of terms below sets out definitions of terms used throughout this
announcement. Included are a number of alternative performance measures
('APMs') which the directors have adopted in order to provide additional
useful information on the underlying trends, performance and position of the
Group. The directors use these measures, which are common across the
industry, for planning and reporting purposes. These measures are also used
in discussions with the investment analyst community and credit rating
agencies. The APMs are not defined by IFRS and therefore may not be directly
comparable with other companies' APMs and should not be considered superior to
or a substitute for IFRS measures.
Term Closest equivalent statutory measure Definition and purpose
Drop through None Calculated as the change in rental revenue which converts into EBITDA
(excluding gains from sale of new equipment, merchandise and consumables and
used equipment).
2024 2023 Change
$m $m
US
Rental revenue 8,321 7,503 818
EBITDA 4,405 3,955
Gains (284) (235)
EBITDA excluding gains 4,121 3,720 401
Drop through 49%
This measure is utilised by the Group to demonstrate the change in
profitability generated by the Group as a result of the change in rental
revenue in the year.
Free cash flow Net cash generated from operating activities Net cash generated from operating activities less non-rental net property,
plant and equipment expenditure. Non-rental net property, plant and
equipment expenditure comprises payments for non-rental capital expenditure
less disposal proceeds received in relation to non-rental asset disposals.
2024 2023
$m $m
Net cash generated from operating activities 855 1,000
Payments for non-rental property, plant and equipment
(686) (510)
Proceeds from disposal of non-rental property,
plant and equipment 47 41
Free cash flow 216 531
This measure shows the cash retained by the Group prior to discretionary
expenditure on acquisitions and returns to shareholders.
Growth at constant exchange rates None Calculated by applying the current period exchange rate to the comparative
period result. The relevant foreign currency exchange rates are provided
within Note 2, Basis of preparation, to the financial statements. This
measure is used as a means of eliminating the effects of foreign exchange rate
movements on the period-on-period changes in reported results.
2024 2023 %
$m $m
Rental revenue
As reported 9,630 8,698 11%
Retranslation effect - 24
At constant currency 9,630 8,722 10%
Adjusted profit before tax
As reported 2,230 2,273 -2%
Retranslation effect - -
At constant currency 2,230 2,273 - 2%
Leverage None Leverage calculated at constant exchange rates uses the period end exchange
rate for the relevant period and is determined as net debt divided by last
12-month ('LTM') EBITDA.
2024 2023
Excluding IFRS 16 Including IFRS 16 Excluding IFRS 16 Including IFRS 16
Net debt ($m)
As reported and 8,014 10,655 6,588 8,960
at constant currency
EBITDA ($m)
As reported 4,637 4,893 4,203 4,412
Retranslation effect (5) (6) 4 4
At constant currency 4,632 4,887 4,207 4,416
Leverage
As reported 1.7 2.2 1.6 2.0
At constant currency 1.7 2.2 1.6 2.0
This measure is used to provide an indication of the strength of the Group's
balance sheet and is widely used by investors and credit rating agencies. It
also forms part of the remuneration targets of the Group and has been
identified as one of the Group's key performance indicators.
Return on Investment ('RoI') None LTM adjusted operating profit divided by the LTM average of the sum of net
tangible and intangible fixed assets, plus net working capital but excluding
net debt and tax.
RoI is calculated excluding the impact of IFRS 16.
RoI is used by management to help inform capital allocation decisions within
the business and has been identified as one of the Group's key performance
indicators. It also forms part of the remuneration targets of the Group.
A reconciliation of Group RoI is provided below:
2024 2023
$m $m
Adjusted operating profit 2,775 2,640
IFRS 16 impact (59) (40)
Adjusted operating profit (excluding IFRS 16) 2,716 2,600
Average net assets 16,657 13,565
Return on investment 16% 19%
RoI for the businesses is calculated in the same way, but excludes goodwill
and intangible assets:
US Canada C$m UK
$m £m
Adjusted operating profit 2,633 138 58
IFRS 16 impact (49) (11) (1)
Adjusted operating profit (excluding IFRS 16) 2,584 127 57
Average net assets, excluding goodwill and intangibles 11,214 1,169 788
Return on investment 23% 11% 7%
This measure is utilised by the Group to demonstrate the change in
profitability generated by the Group as a result of the change in rental
revenue in the year.
Free cash flow
Net cash generated from operating activities
Net cash generated from operating activities less non-rental net property,
plant and equipment expenditure. Non-rental net property, plant and
equipment expenditure comprises payments for non-rental capital expenditure
less disposal proceeds received in relation to non-rental asset disposals.
2024 2023
$m $m
Net cash generated from operating activities 855 1,000
Payments for non-rental property, plant and equipment
(686) (510)
Proceeds from disposal of non-rental property,
plant and equipment 47 41
Free cash flow 216 531
This measure shows the cash retained by the Group prior to discretionary
expenditure on acquisitions and returns to shareholders.
Growth at constant exchange rates
None
Calculated by applying the current period exchange rate to the comparative
period result. The relevant foreign currency exchange rates are provided
within Note 2, Basis of preparation, to the financial statements. This
measure is used as a means of eliminating the effects of foreign exchange rate
movements on the period-on-period changes in reported results.
2024 2023 %
$m $m
Rental revenue
As reported 9,630 8,698 11%
Retranslation effect - 24
At constant currency 9,630 8,722 10%
Adjusted profit before tax
As reported 2,230 2,273 -2%
Retranslation effect - -
At constant currency 2,230 2,273 - 2%
Leverage
None
Leverage calculated at constant exchange rates uses the period end exchange
rate for the relevant period and is determined as net debt divided by last
12-month ('LTM') EBITDA.
2024 2023
Excluding IFRS 16 Including IFRS 16 Excluding IFRS 16 Including IFRS 16
Net debt ($m)
As reported and 8,014 10,655 6,588 8,960
at constant currency
EBITDA ($m)
As reported 4,637 4,893 4,203 4,412
Retranslation effect (5) (6) 4 4
At constant currency 4,632 4,887 4,207 4,416
Leverage
As reported 1.7 2.2 1.6 2.0
At constant currency 1.7 2.2 1.6 2.0
This measure is used to provide an indication of the strength of the Group's
balance sheet and is widely used by investors and credit rating agencies. It
also forms part of the remuneration targets of the Group and has been
identified as one of the Group's key performance indicators.
Return on Investment ('RoI')
None
LTM adjusted operating profit divided by the LTM average of the sum of net
tangible and intangible fixed assets, plus net working capital but excluding
net debt and tax.
RoI is calculated excluding the impact of IFRS 16.
RoI is used by management to help inform capital allocation decisions within
the business and has been identified as one of the Group's key performance
indicators. It also forms part of the remuneration targets of the Group.
A reconciliation of Group RoI is provided below:
2024 2023
$m $m
Adjusted operating profit 2,775 2,640
IFRS 16 impact (59) (40)
Adjusted operating profit (excluding IFRS 16) 2,716 2,600
Average net assets 16,657 13,565
Return on investment 16% 19%
RoI for the businesses is calculated in the same way, but excludes goodwill
and intangible assets:
US Canada C$m UK
$m £m
Adjusted operating profit 2,633 138 58
IFRS 16 impact (49) (11) (1)
Adjusted operating profit (excluding IFRS 16) 2,584 127 57
Average net assets, excluding goodwill and intangibles 11,214 1,169 788
Return on investment 23% 11% 7%
Other terms used within this announcement include:
· Adjusted: adjusted results are results stated before exceptional
items and the amortisation of acquired intangibles. A reconciliation is shown
on the income statement.
· Availability: represents the headroom on a given date under the
terms of our $4.5bn asset-backed senior bank facility, taking account of
current borrowings.
· Capital expenditure: represents additions to rental equipment and
other property, plant and equipment (excluding assets acquired through a
business combination).
· Cash conversion ratio: represents cash flow from operations
before changes in rental equipment as a percentage of EBITDA. Details are
provided within the Review of Fourth Quarter, Balance Sheet and Cash Flow
section.
· Dollar utilisation: dollar utilisation is trailing 12-month
rental revenue divided by average fleet size at original (or 'first') cost
measured over a 12-month period. Dollar utilisation has been identified as
one of the Group's key performance indicators. Details are shown within the
Review of Fourth Quarter, Balance Sheet and Cash Flow section.
· EBITDA and EBITDA margin: EBITDA is earnings before interest,
tax, depreciation and amortisation. A reconciliation of EBITDA to profit
before tax is shown on the income statement. EBITDA margin is calculated as
EBITDA divided by revenue. Progression in EBITDA margin is an important
indicator of the Group's performance and this has been identified as one of
the Group's key performance indicators.
· Exceptional items: those items of income or expense which the
directors believe should be disclosed separately by virtue of their
significant size or nature and limited predictive value to enable a better
understanding of the Group's financial performance. Excluding these items
provides readers with helpful additional information on the performance of the
business across periods and against peer companies. It is also consistent
with how business performance is reported to the Board and the remuneration
targets set by the Company.
· Fleet age: original cost weighted age of serialised rental
assets. Serialised rental assets constitute the substantial majority of our
fleet.
· Fleet on rent: quantity measured at original cost of our rental
fleet on rent. Fleet on rent has been identified as one of the Group's key
performance indicators.
· Net debt: net debt is total borrowings (bank, bonds) and lease
liabilities less cash balances, as reported. This measure is used to provide
an indication of the Group's overall level of indebtedness and is widely used
by investors and credit rating agencies. An analysis of net debt is provided
in Note 15.
· Operating profit and operating profit margin: Operating profit is
earnings before interest and tax. A reconciliation of operating profit to
profit before tax is shown on the income statement. Operating profit margin
is calculated as operating profit divided by revenue. Progression in
operating profit margin is an important indicator of the Group's performance.
· Organic: organic measures comprise all locations, excluding
locations arising from a bolt-on acquisition completed after the start of the
comparative financial period.
· Rental only revenue: rental revenue excluding loss damage waiver,
environmental fees, erection and dismantling revenue and revenue from rental
equipment delivery and collection.
· Same-store: same-stores are those locations which were open at
the start of the comparative financial period.
· Segment profit: operating profit before amortisation and
exceptional items by segment.
· Suppressed availability: represents the amount on a given date
that the asset base exceeds the facility size under the terms of our $4.5bn
asset-backed senior bank facility.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR QKOBDFBKDQADRecent news on Ashtead
See all newsREG-Ashtead Group Plc: Director/PDMR Shareholding
AnnouncementREG-Ashtead Group Plc: Director/PDMR Shareholding
AnnouncementREG-Ashtead Group Plc: Director/PDMR Shareholding
AnnouncementREG-Ashtead Group Plc: Holdings in Company
AnnouncementREG-Ashtead Group Plc: Director/PDMR Shareholding
Announcement