REG - Ashtead Group PLC - Unaudited results for first quarter ended 31/07/24
03/09/2024 07:00
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RNS Number : 6143C Ashtead Group PLC 03 September 2024
3 September 2024
Unaudited results for the first quarter ended 31 July 2024
First quarter
2024 2023 Growth(2)
$m $m %
Performance(1)
Revenue 2,754 2,696 2%
Rental revenue 2,541 2,376 7%
EBITDA 1,288 1,229 5%
Operating profit 688 703 -2%
Adjusted(3) profit before taxation 573 615 -7%
Profit before taxation 544 585 -7%
Adjusted(3) earnings per share 97.4¢ 107.5¢ -9%
Earnings per share 92.4¢ 102.3¢ -10%
Highlights
● Group rental revenue up 7%(2); revenue up 2%(2)
● US rental revenue up 6%; revenue up 1%
● Operating profit of $688m (2023: $703m)
● Adjusted(3) profit before taxation of $573m (2023: $615m)
● Adjusted(3) earnings per share of 97.4¢ (2023: 107.5¢)
● 33 locations added in North America
● $855m of capital invested in the business (2023: $1,132m)
● $53m spent on two bolt-on acquisitions (2023: $361m)
● Net debt to EBITDA leverage(2) of 1.7 times (2023: 1.6 times)
● We expect full year results in line with our previous expectations
(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 28.
(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:
"We launched our Sunbelt 4.0 strategic growth plan in April and the business
is focused on executing against our five actionable components: Customer,
Growth, Performance, Sustainability and Investment. I want to thank all our
team members for the hard work and professionalism they exhibit every day as
we deliver on this strategy and our commitment to provide exceptional service
to our customers, safely.
The Group is performing well with rental revenue up 7% and revenue up 2% in
the first quarter. In North America, the increasing proportion of mega
projects and the strength of our Specialty businesses has more than offset the
lower activity levels in local commercial construction markets. As expected,
lower used equipment sales and a higher increase in depreciation and interest
costs, resulted in adjusted profit before taxation of $573m (2023: $615m).
The investments in and expansion of the business over Sunbelt 3.0 and into
Sunbelt 4.0 are enabling us to take advantage of the diverse opportunities
that we see while maintaining a balance sheet that affords us considerable
flexibility and optionality. In the quarter we invested $855 million in
capital across existing locations and greenfields and $53m on two bolt-ons,
adding a total of 33 new locations in North America.
We are in a position of strength, with the operational flexibility and
financial capacity to capitalise on the structural growth opportunities we see
for the business. We have started the year well and expect full-year results
will be in line with our expectations. 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 10am on Tuesday, 3 September
2024. 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 248.4 213.0 107.4 93.2 46.5 40.2
UK in £m 186.3 177.7 53.5 50.0 17.6 15.8
US 2,335.0 2,311.4 1,149.6 1,104.7 669.4 691.9
Canada in $m 181.4 159.7 78.5 69.9 33.9 30.1
UK in $m 237.3 225.0 68.1 63.3 22.4 20.0
Group central costs - - (8.5) (8.7) (8.7) (8.9)
2,753.7 2,696.1 1,287.7 1,229.2 717.0 733.1
Financing costs (143.9) (118.2)
Adjusted profit before tax 573.1 614.9
Amortisation (28.7) (30.3)
Profit before taxation 544.4 584.6
Taxation charge (140.9) (137.2)
Profit attributable to equity holders of the Company 403.5 447.4
Margins
US 49.2% 47.8% 28.7% 29.9%
Canada 43.3% 43.8% 18.7% 18.9%
UK 28.7% 28.1% 9.5% 8.9%
Group 46.8% 45.6% 26.0% 27.2%
(1) Segment result presented is adjusted operating profit.
Group revenue for the quarter increased 2% to $2,754m (2023: $2,696m). This
revenue growth resulted in EBITDA increasing 5% to $1,288m (2023: $1,229m),
but with lower used equipment sales and after higher depreciation and interest
costs, adjusted operating profit decreased 2% to $717m (2023: $733m) and
adjusted profit before tax was $573m (2023: $615m). The higher increase in
the depreciation charge relative to revenue growth reflects lower utilisation
of a larger fleet and the ongoing impact of life cycle fleet inflation,
contributing to the decline in operating profit. In addition, increased
financing costs due to higher average debt levels resulted in adjusted
profit before tax being 7% lower than the comparative period.
In the US, rental only revenue of $1,727m (2023: $1,615m) was 7% higher than
the prior year, driven by both volume and rate improvement, 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 5%, while bolt-ons since 1 May 2023
contributed 2% of rental only revenue growth. In the period, our General
Tool business grew 3%, while our Specialty businesses grew 17%. Rental
revenue increased 6% to $2,174m (2023: $2,048m). US total revenue,
including new and used equipment, merchandise and consumable sales, increased
1% to $2,335m (2023: $2,311m). As expected, this reflects a lower level of
used equipment sales than last year when we took advantage of improving fleet
deliveries and strong second-hand markets to catch up on deferred disposals.
Canada's rental only revenue increased 21% to C$180m (2023: C$149m). Markets
relating to the major part of the Canadian business are performing in a manner
similar to the US with volume growth and rate improvement. In addition,
following settlement of the Writers Guild of America and Screen Actors Guild
strikes, activity in the Specialty Film & TV business has recovered,
although it has yet to reach pre-strike levels. Rental revenue increased 21%
to C$222m (2023: C$183m), while total revenue was C$248m (2023: C$213m).
The UK business generated rental only revenue of £124m, up 3% on the prior
year (2023: £120m). Rental only revenue growth has been driven by both
rate and volume improvement. Rental revenue increased 6% to £160m
(2023: £150m), while total revenue increased 5% to £186m (2023: £178m).
We invested in the infrastructure of the business during Sunbelt 3.0 to
support the growth of the business now and into the future. Our intention is
to leverage this infrastructure during Sunbelt 4.0 as we look to improve
operating performance. This, combined with our focus on the cost base and
lower erection and dismantling revenue, contributed to US rental revenue drop
through to EBITDA of 69% for the quarter. This resulted in an EBITDA margin
of 49.2% (2023: 47.8%). Following the impact of lower gains due to lower
used equipment sales and higher depreciation on a larger fleet, segment profit
decreased by 3% to $669m (2023: $692m) with a margin of 28.7%
(2023: 29.9%).
Our Canadian business continues to develop and invest to expand its network
and broaden its markets. This, combined with the recovery in the Film &
TV business contributed to an EBITDA margin of 43.3% (2023: 43.8%) and a
segment profit of C$46m (2023: C$40m) at a margin of 18.7% (2023: 18.9%).
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 28.7% (2023: 28.1%) and a segment profit of £18m (2023: £16m) at
a margin of 9.5%
(2023: 8.9%).
Overall, Group adjusted operating profit decreased to $717m (2023: $733m),
down 2% at constant exchange rates. After increased financing costs of $144m
(2023: $118m), reflecting higher average debt levels, Group adjusted profit
before tax was $573m (2023: $615m). After a tax charge of 26% (2023: 24%)
of the adjusted pre-tax profit, adjusted earnings per share were 97.4ȼ (2023:
107.5ȼ).
Statutory profit before tax was $544m (2023: $585m). This is after
amortisation of $29m (2023: $30m). Included within the total tax charge is a
tax credit of $7m (2023: $8m) which relates to the amortisation of
intangibles. As a result, basic earnings per share were 92.4¢
(2023: 102.3¢).
Capital expenditure and acquisitions
Capital expenditure for the quarter was $855m gross and $722m net of disposal
proceeds (2023: $1,132m gross and $899m net). As a result, the Group's
rental fleet at 31 July 2024 at cost was $18bn and our average fleet age is 46
months (2023: 48 months) on an original cost basis.
We invested $53m (2023: $361m) in two bolt-on acquisitions during the period,
as we continue to both expand our footprint and diversify our end markets.
Further details are provided in Note 15.
Return on Investment
The Group return on investment was 16% (2023: 19%). In the US, return on
investment (excluding goodwill and intangible assets) for the 12 months to 31
July 2024 was 22% (2023: 27%), while in Canada it was 11% (2023: 17%). The
reduction in US and Canada return on investment reflects principally the
impact of lower utilisation of a larger fleet. In the UK, return on
investment (excluding goodwill and intangible assets) was 7% (2023: 7%).
Return on investment excludes the impact of IFRS 16.
Cash flow and net debt
The Group generated free cash flow of $161m (2023: outflow of $139m) during
the quarter, which is after capital expenditure payments of $933m (2023:
$1,164m).
Net debt at 31 July 2024 was $10,761m (2023: $9,679m). Excluding the effect
of IFRS 16, net debt at 31 July 2024 was $8,033m (2023: $7,200m), while the
ratio of net debt to EBITDA was 1.7 times (2023: 1.6 times) on a constant
currency basis. The Group's 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: 2.1 times) on a constant currency basis.
At 31 July 2024, availability under the senior secured debt facility was
$2,757m with an additional $7,100m of suppressed availability - substantially
above the $450m level at which the Group's entire debt package is covenant
free.
The Group's debt facilities are committed for an average of six years at a
weighted average cost of 5%.
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
We are in a position of strength, with the operational flexibility and
financial capacity to capitalise on the structural growth opportunities we see
for the business. We have started the year well and expect full-year results
will be in line with our expectations. 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
CONSOLIDATED INCOME STATEMENT FOR THE THREE MONTHS ENDED 31 JULY 2024
2024 2023
Before Before
amortisation Amortisation Total amortisation Amortisation Total
$m $m $m $m $m $m
Unaudited
Revenue
Rental revenue 2,540.5 - 2,540.5 2,375.9 - 2,375.9
Sale of new equipment,
merchandise and consumables 91.6 - 91.6 96.4 - 96.4
Sale of used rental equipment 121.6 - 121.6 223.8 - 223.8
2,753.7 - 2,753.7 2,696.1 - 2,696.1
Operating costs
Staff costs (633.3) - (633.3) (618.2) - (618.2)
Other operating costs (731.8) - (731.8) (690.2) - (690.2)
Used rental equipment sold (100.9) - (100.9) (158.5) - (158.5)
(1,466.0) - (1,466.0) (1,466.9) - (1,466.9)
EBITDA(*) 1,287.7 - 1,287.7 1,229.2 - 1,229.2
Depreciation (570.7) - (570.7) (496.1) - (496.1)
Amortisation of intangibles - (28.7) (28.7) - (30.3) (30.3)
Operating profit 717.0 (28.7) 688.3 733.1 (30.3) 702.8
Interest income - - - 0.5 - 0.5
Interest expense (143.9) - (143.9) (118.7) - (118.7)
Profit on ordinary activities
before taxation 573.1 (28.7) 544.4 614.9 (30.3) 584.6
Taxation (148.1) 7.2 (140.9) (144.8) 7.6 (137.2)
Profit attributable to equity
holders of the Company 425.0 (21.5) 403.5 470.1 (22.7) 447.4
Basic earnings per share 97.4¢ (5.0¢) 92.4¢ 107.5¢ (5.2¢) 102.3¢
Diluted earnings per share 96.9¢ (5.0¢) 91.9¢ 106.8¢ (5.1¢) 101.7¢
(*) 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 STATEMENT OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED 31
JULY 2024
Unaudited
2024 2023
$m $m
Profit attributable to equity holders of the Company for the period 403.5 447.4
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences 13.8 40.3
Movement on equity instruments held at fair value (25.5) -
(11.7) 40.3
Total other comprehensive (loss)/income for the period (11.7) 40.3
Total comprehensive income for the period 391.8 487.7
CONSOLIDATED BALANCE SHEET AT 31 JULY 2024
Unaudited Audited
31 July 30 April
2024 2023 2024
$m $m $m
Current assets
Inventories 178.1 188.9 162.0
Trade and other receivables 2,015.5 1,904.7 1,850.2
Current tax asset 5.9 7.9 13.0
Cash and cash equivalents 17.0 25.0 20.8
2,216.5 2,126.5 2,046.0
Non-current assets
Property, plant and equipment
- rental equipment 11,667.1 10,295.9 11,450.8
- other assets 1,854.4 1,476.2 1,797.7
13,521.5 11,772.1 13,248.5
Right-of-use assets 2,498.0 2,302.5 2,425.6
Goodwill 3,245.2 3,052.0 3,211.5
Other intangible assets 457.2 534.8 485.9
Other non-current assets 173.2 163.1 189.3
Current tax asset 45.7 45.7 44.5
Net defined benefit pension plan asset - 19.0 -
19,940.8 17,889.2 19,605.3
Total assets 22,157.3 20,015.7 21,651.3
Current liabilities
Trade and other payables 1,442.3 1,544.5 1,482.9
Current tax liability 118.0 90.1 10.1
Lease liabilities 284.0 245.9 273.8
Provisions 43.6 40.5 42.5
1,887.9 1,921.0 1,809.3
Non-current liabilities
Lease liabilities 2,486.0 2,264.2 2,406.8
Long-term borrowings 8,008.0 7,194.0 7,995.1
Provisions 76.9 70.3 75.4
Deferred tax liabilities 2,241.5 2,049.9 2,224.2
Other non-current liabilities 61.6 55.9 55.5
Net defined benefit pension plan liability 0.4 - 0.4
12,874.4 11,634.3 12,757.4
Total liabilities 14,762.3 13,555.3 14,566.7
Equity
Share capital 81.8 81.8 81.8
Share premium account 6.5 6.5 6.5
Capital redemption reserve 20.0 20.0 20.0
Own shares held by the Company (818.7) (762.5) (818.7)
Own shares held by the ESOT (35.0) (43.5) (43.5)
Cumulative foreign exchange translation differences (249.7) (205.6) (263.5)
Retained reserves 8,390.1 7,363.7 8,102.0
Equity attributable to equity holders of the Company 7,395.0 6,460.4 7,084.6
Total liabilities and equity 22,157.3 20,015.7 21,651.3
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED 31 JULY
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
Unaudited
At 1 May 2023 81.8 6.5 20.0 (740.9) (38.8) (245.9) 6,925.3 6,008.0
Profit for the period - - - - - - 447.4 447.4
Other comprehensive income:
Foreign currency translation
differences - - - - - 40.3 - 40.3
Total comprehensive income
for the period - - - - - 40.3 447.4 487.7
Own shares purchased
by the ESOT - - - - (29.8) - - (29.8)
Own shares purchased by
the Company - - - (21.6) - - - (21.6)
Share-based payments - - - - 25.1 - (12.8) 12.3
Tax on share-based payments - - - - - - 3.8 3.8
At 31 July 2023 81.8 6.5 20.0 (762.5) (43.5) (205.6) 7,363.7 6,460.4
Profit for the period - - - - - - 1,151.0 1,151.0
Other comprehensive income:
Foreign currency translation
differences - - - - - (57.9) - (57.9)
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 period - - - - - (57.9) 1,134.2 1,076.3
Dividends paid - - - - - - (436.6) (436.6)
Own shares purchased
by the ESOT - - - - (0.1) - - (0.1)
Own shares purchased by
the Company - - - (56.2) - - - (56.2)
Share-based payments - - - - 0.1 - 35.1 35.2
Tax on share-based payments - - - - - - 5.6 5.6
At 30 April 2024 81.8 6.5 20.0 (818.7) (43.5) (263.5) 8,102.0 7,084.6
Profit for the period - - - - - - 403.5 403.5
Other comprehensive income:
Foreign currency translation
differences - - - - - 13.8 - 13.8
Movement on equity instruments held at fair value - - - - - - (25.5) (25.5)
Total comprehensive income
for the period - - - - - 13.8 378.0 391.8
Own shares purchased
by the ESOT - - - - (84.6) - - (84.6)
Share-based payments - - - - 93.1 - (86.6) 6.5
Tax on share-based payments - - - - - - (3.3) (3.3)
At 31 July 2024 81.8 6.5 20.0 (818.7) (35.0) (249.7) 8,390.1 7,395.0
CONSOLIDATED CASH FLOW STATEMENT FOR THE THREE MONTHS ENDED 31 JULY 2024
Unaudited
2024 2023
$m $m
Cash flows from operating activities
Cash generated from operations before
changes in rental equipment 1,110.1 981.7
Payments for rental property, plant and equipment (794.8) (1,031.1)
Proceeds from disposal of rental property,
plant and equipment 93.2 148.0
Cash generated from operations 408.5 98.6
Financing costs paid (114.0) (106.9)
Tax paid (6.6) (6.1)
Net cash generated from/(used in) operating activities 287.9 (14.4)
Cash flows from investing activities
Acquisition of businesses (58.8) (316.0)
Payments for non-rental property, plant and equipment (138.1) (133.1)
Proceeds from disposal of non-rental
property, plant and equipment 11.3 8.6
Net cash used in investing activities (185.6) (440.5)
Cash flows from financing activities
Drawdown of loans 238.6 1,328.9
Redemption of loans (237.2) (798.1)
Repayment of principal under lease liabilities (35.2) (29.8)
Purchase of own shares by the ESOT (72.5) (29.8)
Purchase of own shares by the Company - (21.7)
Net cash (used in)/generated from financing activities (106.3) 449.5
Decrease in cash and cash equivalents (4.0) (5.4)
Opening cash and cash equivalents 20.8 29.9
Effect of exchange rate differences 0.2 0.5
Closing cash and cash equivalents 17.0 25.0
Reconciliation of net cash flows to net debt
Decrease in cash and
cash equivalents in the period 4.0 5.4
(Decrease)/increase in debt through cash flow (33.8) 501.0
Change in net debt from cash flows (29.8) 506.4
Exchange differences 10.7 36.9
Debt acquired 18.6 77.9
Deferred costs of debt raising 2.4 (0.5)
New lease liabilities 104.2 98.9
Increase in net debt in the period 106.1 719.6
Net debt at 1 May 10,654.9 8,959.5
Net debt at 31 July 10,761.0 9,679.1
NOTES TO THE CONDENSED CONSOLIDATED INTERIM 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 interim financial statements as at, and for the three months
ended 31 July 2024, comprise the Company and its subsidiaries ('the Group')
and are presented in US dollars.
The condensed consolidated interim financial statements for the three months
ended 31 July 2024 were approved by the directors on 2 September 2024.
The condensed consolidated interim financial statements do 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 have been mailed to shareholders and filed with
the Registrar of Companies. 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
Balance Sheet and Cash Flow accompanying these condensed consolidated interim
financial statements.
2. Basis of preparation
The condensed consolidated interim financial statements for the three months
ended 31 July 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 2024.
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 31 July 1.27 1.27 0.73 0.75
At 30 April 1.25 1.26 0.73 0.74
At 31 July 1.28 1.29 0.72 0.76
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 28.
The condensed consolidated interim 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 12), 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 31 July 2024 (unaudited)
Corporate
US Canada UK items Group
$m $m $m $m $m
Revenue
Rental revenue 2,174.4 162.1 204.0 - 2,540.5
Sale of new equipment, merchandise
and consumables 60.6 9.5 21.5 - 91.6
Sale of used rental equipment 100.0 9.8 11.8 - 121.6
2,335.0 181.4 237.3 - 2,753.7
Segment profit 669.4 33.9 22.4 (8.7) 717.0
Amortisation (28.7)
Net financing costs (143.9)
Profit before taxation 544.4
Taxation (140.9)
Profit attributable to equity shareholders 403.5
Three months to 31 July 2023 (unaudited)
Corporate
US Canada UK items Group
$m $m $m $m $m
Revenue
Rental revenue 2,048.2 137.3 190.4 - 2,375.9
Sale of new equipment, merchandise
and consumables 62.9 13.5 20.0 - 96.4
Sale of used rental equipment 200.3 8.9 14.6 - 223.8
2,311.4 159.7 225.0 - 2,696.1
Segment profit 691.9 30.1 20.0 (8.9) 733.1
Amortisation (30.3)
Net financing costs (118.2)
Profit before taxation 584.6
Taxation (137.2)
Profit attributable to equity shareholders 447.4
Corporate
US Canada UK items Group
$m $m $m $m $m
At 31 July 2024 (unaudited)
Segment assets 18,550.5 1,944.2 1,588.1 5.9 22,088.7
Cash 17.0
Taxation assets 51.6
Total assets 22,157.3
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
4. Operating costs and other income
2024 2023
Before Before
amortisation Amortisation Total amortisation Amortisation Total
$m $m $m $m $m $m
Three months to 31 July (unaudited)
Staff costs:
Salaries 578.4 - 578.4 565.1 - 565.1
Social security costs 43.0 - 43.0 41.3 - 41.3
Other pension costs 11.9 - 11.9 11.8 - 11.8
633.3 - 633.3 618.2 - 618.2
Other operating costs:
Vehicle costs 180.5 - 180.5 162.0 - 162.0
Spares, consumables & external repairs 137.3 - 137.3 141.5 - 141.5
Facility costs 27.5 - 27.5 28.6 - 28.6
Other external charges 386.5 - 386.5 358.1 - 358.1
731.8 - 731.8 690.2 - 690.2
Used rental equipment sold 100.9 - 100.9 158.5 - 158.5
Depreciation and amortisation:
Depreciation of tangible assets 518.4 - 518.4 448.1 - 448.1
Depreciation of right-of-use assets 52.3 - 52.3 48.0 - 48.0
Amortisation of intangibles - 28.7 28.7 - 30.3 30.3
570.7 28.7 599.4 496.1 30.3 526.4
2,036.7 28.7 2,065.4 1,963.0 30.3 1,993.3
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
Three months to
31 July
2024 2023
$m $m
Amortisation of intangibles 28.7 30.3
Taxation (7.2) (7.6)
21.5 22.7
6. Net financing costs
Unaudited
Three months to
31 July
2024 2023
$m $m
Interest income:
Net income on the defined benefit pension plan asset - 0.2
Other interest - 0.3
- 0.5
Interest expense:
Bank interest payable 34.8 39.3
Interest payable on senior notes 69.9 47.0
Interest payable on lease liabilities 35.5 29.9
Non-cash unwind of discount on liabilities 1.3 0.5
Amortisation of deferred debt raising costs 2.4 2.0
143.9 118.7
7. Taxation
The tax charge for the period has been determined by applying the expected
effective tax rates in each jurisdiction for the year as a whole, based on the
tax rates in force as at 31 July 2024 of 25% in the US (2023: 25%), 26% in
Canada (2023: 26%) and 25% in the UK (2023: 25%). This results in a blended
effective rate for the Group as a whole of 26% (2023: 23%) for the period.
The tax charge of $148m (2023: $145m) on the adjusted profit before taxation
of $573m (2023: $615m) can be explained as follows:
Unaudited
Three months to
31 July
2024 2023
$m $m
Current tax
- current tax on income for the period 130.0 96.1
- adjustments to prior year 1.2 0.1
131.2 96.2
Deferred tax
- origination and reversal of temporary differences 16.9 62.1
- adjustments to prior year - (13.5)
16.9 48.6
Tax on adjusted profit 148.1 144.8
Comprising:
- US 140.2 138.8
- Canada 5.3 4.0
- UK 2.6 2.0
148.1 144.8
In addition, the tax credit of $7m (2023: $8m) on amortisation of $29m (2023:
$30m) consists of a current tax credit of $3m (2023: $3m) relating to the US,
$0.1m (2023: $0.1m) relating to Canada and $nil (2023: $nil) relating to
the UK and a deferred tax credit of $2m (2023: $2m) relating to the US, $1m
(2023: $2m) relating to Canada and $0.5m (2023: $0.5m) relating to the UK.
8. Earnings per share
Basic and diluted earnings per share for the three months ended 31 July 2024
have been calculated based on the profit for the relevant period and the
weighted average number of ordinary shares in issue during that period
(excluding shares held by the Company and the ESOT over which dividends have
been waived). Diluted earnings per share is computed using the result for
the relevant period and the diluted number of shares (ignoring any potential
issue of ordinary shares which would be anti-dilutive). These are calculated
as follows:
Unaudited
Three months to 31 July
2024 2023
Profit for the financial period ($m) 403.5 447.4
Weighted average number of shares (m) - basic 436.5 437.4
- diluted 438.9 440.1
Basic earnings per share 92.4¢ 102.3¢
Diluted earnings per share 91.9¢ 101.7¢
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
Three months to 31 July
2024 2023
Basic earnings per share 92.4¢ 102.3¢
Amortisation of intangibles 6.6¢ 6.9¢
Tax on amortisation (1.6¢) (1.7¢)
Adjusted earnings per share 97.4¢ 107.5¢
9. Property, plant and equipment
2024 2023
Rental Rental
equipment Total equipment Total
Net book value $m $m $m $m
At 1 May 11,450.8 13,248.5 9,649.1 11,041.1
Exchange differences 16.5 18.8 37.4 43.9
Reclassifications - - 0.2 -
Additions 717.5 855.5 998.7 1,132.3
Acquisitions 20.1 22.2 150.1 162.3
Disposals (95.9) (105.1) (154.0) (159.4)
Depreciation (441.9) (518.4) (385.6) (448.1)
At 31 July 11,667.1 13,521.5 10,295.9 11,772.1
10. 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 2,390.5 35.1 2,425.6 2,184.8 21.2 2,206.0
Exchange differences 0.9 0.9 1.8 10.6 0.4 11.0
Additions 76.7 2.5 79.2 75.2 6.5 81.7
Acquisitions 18.6 - 18.6 34.8 - 34.8
Remeasurement 26.9 - 26.9 26.3 - 26.3
Disposals (1.5) (0.3) (1.8) (9.1) (0.2) (9.3)
Depreciation (50.3) (2.0) (52.3) (46.6) (1.4) (48.0)
At 31 July 2,461.8 36.2 2,498.0 2,276.0 26.5 2,302.5
11. Lease liabilities
31 July 30 April
2024 2024
$m $m
Current 284.0 273.8
Non-current 2,486.0 2,406.8
2,770.0 2,680.6
12. Borrowings
31 July 30 April
2024 2024
$m $m
Non-current
First priority senior secured bank debt 1,859.1 1,848.0
1.500% senior notes, due August 2026 548.0 547.8
4.375% senior notes, due August 2027 596.9 596.6
4.000% senior notes, due May 2028 596.2 596.0
4.250% senior notes, due November 2029 595.5 595.3
2.450% senior notes, due August 2031 744.7 744.6
5.500% senior notes, due August 2032 739.1 738.8
5.550% senior notes, due May 2033 743.6 743.4
5.950% senior notes, due October 2033 744.2 744.1
5.800% senior notes, due April 2034 840.7 840.5
8,008.0 7,995.1
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 31 July
2024, availability under the senior secured bank facility was $2,757m ($2,771m
at 30 April 2024), with an additional $7,100m of suppressed availability,
meaning that the covenant did not apply at 31 July 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 31 July 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 31 July 2024 At 30 April 2024
Book Fair Book Fair
value value value value
$m $m $m $m
Long-term borrowings
- first priority senior secured bank debt Level 1 1,859.1 1,859.1 1,848.0 1,848.0
- 1.500% senior notes Level 1 550.0 509.9 550.0 498.1
- 4.375% senior notes Level 1 600.0 585.1 600.0 571.5
- 4.000% senior notes Level 1 600.0 574.2 600.0 559.9
- 4.250% senior notes Level 1 600.0 571.8 600.0 549.9
- 2.450% senior notes Level 1 750.0 623.5 750.0 596.5
- 5.500% senior notes Level 1 750.0 749.1 750.0 719.9
- 5.550% senior notes Level 1 750.0 749.5 750.0 719.2
- 5.950% senior notes Level 1 750.0 770.2 750.0 739.7
- 5.800% senior notes Level 1 850.0 864.7 850.0 828.3
Total long-term borrowings 8,059.1 7,857.1 8,048.0 7,631.0
Discount on issue of debt (13.6) - (14.0) -
Deferred costs of raising finance (37.5) - (38.9) -
8,008.0 7,857.1 7,995.1 7,631.0
Other financial instruments(1)
Contingent consideration Level 3 26.2 26.2 31.4 31.4
Financial asset investments Level 3 31.5 31.5 57.0 57.0
Cash and cash equivalents Level 1 17.0 17.0 20.8 20.8
( )
(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 2024 can be attributed to $5.7m of payments in the period (see
Note 14), offset by $0.3m of exchange differences and $0.2m 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. During
the period, one of the Group's investments failed to secure additional funding
and commenced Chapter 7 bankruptcy proceedings in August 2024. As a result,
the Group has estimated the fair value of its investment as $nil and
consequently recognised a movement in the fair value of the equity investment
of $25m through other comprehensive income.
13. Share capital
Ordinary shares of 10p each:
31 July 30 April 31 July 30 April
2024 2024 2024 2024
Number Number $m $m
Issued and fully paid 451,354,833 451,354,833 81.8 81.8
At 31 July 2024, 14.1m (April 2024: 14.1m) shares were held by the Company
($819m; April 2024: $819m) and a further 0.5m (April 2024: 0.9m) shares were
held by the Company's Employee Share Ownership Trust ($35m; April 2024: $43m).
14. Notes to the cash flow statement
a) Cash flow from operating activities
Three months to 31 July
2024 2023
$m $m
Operating profit 688.3 702.8
Depreciation 570.7 496.1
Amortisation 28.7 30.3
EBITDA 1,287.7 1,229.2
Profit on disposal of rental equipment (20.7) (65.3)
Profit on disposal of other property, plant and equipment (2.7) (3.3)
Increase in inventories (17.4) (4.0)
Increase in trade and other receivables (145.9) (164.6)
Increase/(decrease) in trade and other payables 2.0 (22.8)
Exchange differences 0.6 0.2
Other non-cash movement 6.5 12.3
Cash generated from operations before
changes in rental equipment 1,110.1 981.7
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 31 July
2024 flow movement acquired liabilities movements 2024
$m $m $m $m $m $m $m
Long-term borrowings 7,995.1 1.4 9.1 - - 2.4 8,008.0
Lease liabilities 2,680.6 (35.2) 1.8 18.6 104.2 - 2,770.0
Total liabilities from
financing activities 10,675.7 (33.8) 10.9 18.6 104.2 2.4 10,778.0
Cash and cash
equivalents (20.8) 4.0 (0.2) - - - (17.0)
Net debt 10,654.9 (29.8) 10.7 18.6 104.2 2.4 10,761.0
Non-cash movements
1 May Cash Exchange Debt New lease Other 31 July
2023 flow movement acquired liabilities movements 2023
$m $m $m $m $m $m $m
Long-term borrowings 6,595.1 530.8 25.5 43.1 - (0.5) 7,194.0
Lease liabilities 2,394.3 (29.8) 11.9 34.8 98.9 - 2,510.1
Total liabilities from
financing activities 8,989.4 501.0 37.4 77.9 98.9 (0.5) 9,704.1
Cash and cash
equivalents (29.9) 5.4 (0.5) - - - (25.0)
Net debt 8,959.5 506.4 36.9 77.9 98.9 (0.5) 9,679.1
Details of the Group's cash and debt are given in Notes 11 and 12 and the
Review of Balance Sheet and Cash Flow accompanying these condensed
consolidated interim financial statements.
c) Acquisitions
Three months to 31 July
2024 2023
$m $m
Cash consideration paid:
- acquisitions in the period 53.1 315.1
- contingent consideration 5.7 0.9
58.8 316.0
During the period, two businesses were acquired with cash paid of $53m (2023:
$315m), after taking account of net cash acquired of $nil (2023: $3m).
Further details are provided in Note 15.
Contingent consideration of $6m (2023: $1m) was paid relating to prior year
acquisitions.
15. Acquisitions
The Group undertakes bolt-on acquisitions to complement its organic growth
strategy. During the period, the following acquisitions were completed:
i) On 21 May 2024, Sunbelt US acquired the business and assets
of RentalMax, LLC ('RentalMax'). RentalMax is a general tool business
operating in Illinois.
ii) On 25 June 2024, Sunbelt Canada acquired the business and
assets of Wave Equipment Ltd. ('Wave'). Wave is a general tool business
operating in Ontario.
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 1.9
Property, plant and equipment
- rental equipment 20.1
- other assets 2.1
Right-of-use assets 18.6
Deferred tax 0.1
Creditors (2.2)
Lease liabilities (18.6)
22.0
Consideration:
- cash paid and due to be paid (net of cash acquired) 52.7
Goodwill 30.7
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. $30m of the goodwill is expected to be
deductible for income tax purposes.
The gross value and the fair value of trade receivables at acquisition was
$2m.
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 2024 to
their date of acquisition was not material.
16. 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 31 July 2024 ($46m at July 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 ($46m at July 2024 exchange rates) paid has been recognised
separately as a non-current asset on the balance sheet.
REVIEW OF BALANCE SHEET AND CASH FLOW
Balance sheet
Property, plant and equipment
Capital expenditure in the quarter totalled $855m (2023: $1,132m) with $717m
invested in the rental fleet (2023: $999m). Expenditure on rental equipment
was 84% of total capital expenditure with the balance relating to the delivery
vehicle fleet, property improvements and IT equipment. Capital expenditure
by division was:
2024 2023
Replacement Growth Total Total
Canada in C$m 35.6 52.5 88.1 72.4
UK in £m 21.5 27.5 49.0 64.6
US 283.2 307.6 590.8 862.6
Canada in $m 26.0 38.3 64.3 54.3
UK in $m 27.4 35.0 62.4 81.8
Total rental equipment 336.6 380.9 717.5 998.7
Delivery vehicles, property improvements & IT equipment 138.0 133.6
Total additions 855.5 1,132.3
In the US, $308m of rental equipment capital expenditure was spent on growth
while $283m was invested in replacement of existing fleet. The growth
proportion is estimated based on the assumption that replacement capital
expenditure in any period is equal to the original cost of equipment sold.
In a period of inflation, this understates replacement capital expenditure
and overstates growth capital expenditure. Life cycle inflation is c. 20%.
The average age of the Group's serialised rental equipment, which constitutes
the substantial majority of our fleet, at 31 July 2024 was 46 months (2023: 48
months) on an original cost basis. The US fleet had an average age of 45
months (2023: 47 months), the Canadian fleet had an average age of 51 months
(2023: 54 months) and the UK fleet had an average age of 50 months (2023: 51
months).
Rental fleet at original cost LTM rental LTM dollar
revenue utilisation
31 July 2024 30 April 2024 LTM average
Canada in C$m 1,813 1,751 1,699 804 47%
UK in £m 1,156 1,130 1,134 600 53%
US 15,397 15,057 14,846 8,447 57%
Canada in $m 1,313 1,274 1,250 592 47%
UK in $m 1,485 1,414 1,428 756 53%
18,195 17,745 17,524 9,795
Dollar utilisation was 57% in the US (2023: 60%), 47% for Canada (2023: 53%)
and 53% for the UK (2023: 52%). The decrease in US dollar utilisation is due
to principally lower physical utilisation while Canadian dollar utilisation
reflects both lower physical utilisation and the remaining drag from the Film
& TV business.
Trade receivables
Receivable days at 31 July 2024 were 49 days (2023: 48 days). The bad debt
charge for the last twelve months ended 31 July 2024 as a percentage of total
turnover was 0.8% (2023: 0.5%). Trade receivables at 31 July 2024 of
$1,659m (2023: $1,586m) are stated net of allowances for bad debts and credit
notes of $151m (2023: $118m), with the provision representing 8% (2023: 7%)
of gross receivables.
Trade and other payables
Group payable days were 47 days at 31 July 2024 (2023: 46 days) with capital
expenditure related payables totalling $438m (2023: $576m). 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
Three months to LTM to Year to
31 July 31 July 30 April
2024 2023 2024 2024
$m $m $m $m
EBITDA 1,287.7 1,229.2 4,951.1 4,892.6
Cash inflow from operations before
changes in rental equipment 1,110.1 981.7 4,669.4 4,541.0
Cash conversion ratio* 86.2% 79.9% 94.3% 92.8%
Replacement rental capital expenditure (574.6) (584.3) (2,111.3) (2,121.0)
Payments for non-rental capital expenditure (138.1) (133.1) (690.6) (685.6)
Rental equipment disposal proceeds 93.2 148.0 776.9 831.7
Other property, plant and equipment disposal proceeds 11.3 8.6 50.2 47.5
Tax paid (6.6) (6.1) (246.3) (245.8)
Financing costs (114.0) (106.9) (520.2) (513.1)
Cash inflow before growth capex 381.3 307.9 1,928.1 1,854.7
Growth rental capital expenditure (220.2) (446.8) (1,411.6) (1,638.2)
Free cash flow 161.1 (138.9) 516.5 216.5
Business acquisitions (58.8) (316.0) (618.4) (875.6)
Business disposals - - 1.9 1.9
Financial asset investments - - (15.0) (15.0)
Total cash generated/(absorbed) 102.3 (454.9) (115.0) (672.2)
Dividends - - (436.1) (436.1)
Purchase of own shares by the ESOT (72.5) (29.8) (72.6) (29.9)
Purchase of own shares by the Company - (21.7) (56.7) (78.4)
Decrease/(increase) in net debt due to cash flow 29.8 (506.4) (680.4) (1,216.6)
* 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
$1,110m (2023: $982m). The conversion ratio for the period was 86%
(2023: 80%).
Total payments for capital expenditure (rental equipment and other PPE) during
the first quarter were $933m (2023: $1,164m). Disposal proceeds received
totalled $105m (2023: $157m), giving net payments for capital expenditure of
$828m in the period (2023: $1,007m). Financing costs paid totalled $114m
(2023: $107m) while tax payments were $7m (2023: $6m). Financing costs paid
typically differ from the charge in the income statement due to the timing of
interest payments in the period and non-cash interest charges.
Accordingly, the period saw a free cash inflow of $161m (2023: outflow of
$139m) and, after acquisition related expenditure of $59m (2023: $316m), a
cash inflow of $102m (2023: outflow of $455m), before returns to
shareholders.
Net debt
31 July 30 April
2024 2023 2024
$m $m $m
First priority senior secured bank debt 1,859.1 1,892.4 1,848.0
1.500% senior notes, due 2026 548.0 547.0 547.8
4.375% senior notes, due 2027 596.9 595.9 596.6
4.000% senior notes, due 2028 596.2 595.3 596.0
4.250% senior notes, due 2029 595.5 594.8 595.3
2.450% senior notes, due 2031 744.7 744.0 744.6
5.500% senior notes, due 2032 739.1 738.1 738.8
5.550% senior notes, due 2033 743.6 743.0 743.4
5.950% senior notes, due 2033 744.2 743.5 744.1
5.800% senior notes, due 2034 840.7 - 840.5
Total external borrowings 8,008.0 7,194.0 7,995.1
Lease liabilities 2,770.0 2,510.1 2,680.6
Total gross debt 10,778.0 9,704.1 10,675.7
Cash and cash equivalents (17.0) (25.0) (20.8)
Total net debt 10,761.0 9,679.1 10,654.9
Net debt at 31 July 2024 was $10,761m with the increase since 30 April 2024
reflecting additional lease commitments as we continue our greenfield and
bolt-on expansion. The Group's EBITDA for the twelve months ended 31 July
2024 was $4,951m. 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 31 July 2024. Including the impact of IFRS 16, the ratio of net
debt to EBITDA was 2.2 times (2023: 2.1 times) as at 31 July 2024.
Principal risks and uncertainties
Risks and uncertainties in achieving the Group's objectives for the remainder
of the financial year, together with assumptions, estimates, judgements and
critical accounting policies used in preparing financial information remain
broadly unchanged from those detailed in the 2024 Annual Report and Accounts
on pages 36 to 41.
The principal risks and uncertainties facing the Group are:
● economic conditions - 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.
● competition - 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.
● cyber security - 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.
● health and safety - 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.
● people and culture - 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
strategic 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.
● environmental - 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.
● laws and regulations - breaches of laws or regulations governing the Group's
activities could result in criminal prosecution, substantial claims and loss
of reputation.
Further details, including actions taken to mitigate these risks, are provided
within the 2024 Annual Report & Accounts.
Our business is subject to significant fluctuations in performance from
quarter to quarter as a result of seasonal effects. Commercial construction
activity tends to increase in the summer and during extended periods of mild
weather and to decrease in the winter and during extended periods of inclement
weather. Furthermore, due to the incidence of public holidays in the US,
Canada and the UK, there are more billing days in the first half of our
financial year than the second half leading to our revenue normally being
higher in the first half. On a quarterly basis, the second quarter is
typically our strongest quarter, followed by the first and then the third and
fourth quarters.
In addition, the current trading and outlook section of the interim statement
provides commentary on market and economic conditions for the remainder of the
year.
OPERATING STATISTICS
Number of rental stores Staff numbers
31 July 30 April 31 July 30 April
2024 2023 2024 2024 2023 2024
US 1,215 1,128 1,186 18,878 19,583 19,245
Canada 138 125 135 2,355 2,089 2,306
UK 190 190 190 4,442 4,288 4,384
Corporate office - - - 27 22 23
Group 1,543 1,443 1,511 25,702 25,982 25,958
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 2,174 2,048 126
EBITDA 1,150 1,105
Gains (42) (84)
EBITDA excluding gains 1,108 1,021 87
Drop through 69%
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 period.
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 288 (14)
Payments for non-rental property, plant and equipment
(138) (133)
Proceeds from disposal of non-rental property,
plant and equipment 11 8
Free cash flow 161 (139)
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 $m
Rental revenue
As reported 2,541 2,376 7%
Retranslation effect - (2)
At constant currency 2,541 2,374 7%
Adjusted profit before tax
As reported 573 615 -7%
Retranslation effect - (1)
At constant currency 573 614 -7%
Leverage None Leverage calculated at constant exchange rates uses the period end exchange
rate for the relevant period and is determined as net debt divided by last
12-month ('LTM') EBITDA.
2024 2023
Excluding IFRS 16 Including IFRS 16 Excluding IFRS 16 Including IFRS 16
Net debt ($m)
As reported and 8,033 10,761 7,200 9,679
at constant currency
EBITDA ($m)
As reported 4,687 4,951 4,382 4,602
Retranslation effect - - 16 17
At constant currency 4,687 4,951 4,398 4,619
Leverage
As reported 1.7 2.2 1.6 2.1
At constant currency 1.7 2.2 1.6 2.1
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 $m
Adjusted operating profit 2,759 2,751
IFRS 16 impact (63) (44)
Adjusted operating profit (excluding IFRS 16) 2,696 2,707
Average net assets 17,310 14,247
Return on investment 16% 19%
RoI for the businesses is calculated in the same way, but excludes goodwill
and intangible assets:
US Canada C$m UK
$m £m
Adjusted operating profit 2,611 144 60
IFRS 16 impact (53) (11) (2)
Adjusted operating profit (excluding IFRS 16) 2,558 133 58
Average net assets, excluding goodwill and intangibles 11,735 1,242 809
Return on investment 22% 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 period.
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 288 (14)
Payments for non-rental property, plant and equipment
(138) (133)
Proceeds from disposal of non-rental property,
plant and equipment 11 8
Free cash flow 161 (139)
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 $m
Rental revenue
As reported 2,541 2,376 7%
Retranslation effect - (2)
At constant currency 2,541 2,374 7%
Adjusted profit before tax
As reported 573 615 -7%
Retranslation effect - (1)
At constant currency 573 614 -7%
Leverage
None
Leverage calculated at constant exchange rates uses the period end exchange
rate for the relevant period and is determined as net debt divided by last
12-month ('LTM') EBITDA.
2024 2023
Excluding IFRS 16 Including IFRS 16 Excluding IFRS 16 Including IFRS 16
Net debt ($m)
As reported and 8,033 10,761 7,200 9,679
at constant currency
EBITDA ($m)
As reported 4,687 4,951 4,382 4,602
Retranslation effect - - 16 17
At constant currency 4,687 4,951 4,398 4,619
Leverage
As reported 1.7 2.2 1.6 2.1
At constant currency 1.7 2.2 1.6 2.1
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 $m
Adjusted operating profit 2,759 2,751
IFRS 16 impact (63) (44)
Adjusted operating profit (excluding IFRS 16) 2,696 2,707
Average net assets 17,310 14,247
Return on investment 16% 19%
RoI for the businesses is calculated in the same way, but excludes goodwill
and intangible assets:
US Canada C$m UK
$m £m
Adjusted operating profit 2,611 144 60
IFRS 16 impact (53) (11) (2)
Adjusted operating profit (excluding IFRS 16) 2,558 133 58
Average net assets, excluding goodwill and intangibles 11,735 1,242 809
Return on investment 22% 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 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
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 14.
● 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.
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