TIDMAHT
RNS Number : 6360V
Ashtead Group PLC
05 December 2023
5 December 2023
Unaudited results for the half year and
second quarter ended 31 October 2023
Second quarter First half
2023 2022 Growth 2023 2022 Growth
(2) (2)
$m $m % $m $m %
Performance (1)
Revenue 2,877 2,537 13% 5,573 4,796 16%
Rental revenue 2,585 2,308 11% 4,960 4,383 13%
EBITDA 1,354 1,207 12% 2,583 2,246 15%
Operating profit 799 745 7% 1,502 1,339 12%
Adjusted (3) profit
before taxation 697 688 1% 1,312 1,243 5%
Profit before taxation 666 658 1% 1,250 1,185 5%
Adjusted (3) earnings
per share 118.3c 117.9c - % 225.8c 212.2c 6%
Earnings per share 113.0c 112.8c - % 215.3c 202.4c 6%
Half year highlights
-- Record first half performance in robust end markets
-- Group revenue up 16%(2) ; US revenue up 18% with
rental revenue up 14%
-- Adjusted (3) earnings per share increased 6% to 225.8c
(2022: 212.2c)
-- 74 locations added in North America
-- $2.5bn of capital invested in the business (2022:
$1.7bn)
-- $705m spent on 16 bolt-on acquisitions (2022: $609m)
-- Net debt to EBITDA leverage(2) of 1.8 times (2022:
1.6 times)
-- Interim dividend increased 5% to 15.75c per share
(2022: 15c per share)
(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 36.
(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 continues to perform strongly with revenue up 16% and
rental revenue growth of 13%, both at constant currency. This
strong 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 are executing well against all actionable components of our
strategic growth plan, in end markets which remain robust. In the
period, we invested $2.5bn in capital across existing locations and
greenfields and $705m on 16 bolt-on acquisitions, adding a combined
74 locations in North America. This investment is enabling us to
take advantage of the substantial structural growth opportunities
that we see for the business as we deliver our strategic priorities
to grow our General Tool and Specialty businesses and advance our
clusters. We are achieving all this while maintaining a strong and
flexible balance sheet with leverage in the middle of our target
range.
On 20 November we issued a trading update lowering our revenue
growth and earnings guidance for the full year to reflect the lower
level of emergency response activity related to natural disasters
in North America in late Q2 and into Q3 and the longer than
anticipated actors' and writers' strikes, impacting both the Film
& TV business and adjacencies within our Canadian, US and UK
businesses.
Notwithstanding these factors, 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 change. As we
prepare our next strategic plan, Sunbelt 4.0, the Board looks to
the future with confidence."
Contacts :
Director of Investor +44 (0)20 7726
Will Shaw Relations 9700
+44 (0)20 7379
Sam Cartwright H/Advisors Maitland 5151
Brendan Horgan and Michael Pratt will hold a conference call for
equity analysts to discuss the results and outlook at 9am on
Tuesday, 5 December 2023. The call will be webcast live via the
Company's website at 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.
First half trading results
Revenue EBITDA Profit (1)
2023 2022 2023 2022 2023 2022
Canada in C$m 446.2 388.5 190.5 169.2 80.4 91.7
UK in GBPm 358.7 361.4 102.2 110.0 32.7 47.8
US 4,792.1 4,069.0 2,331.4 1,998.2 1,481.1 1,282.7
Canada in $m 331.5 297.1 141.5 129.4 59.7 70.1
UK in $m 449.8 430.1 128.1 130.9 41.0 56.9
Group central costs - - (17.7) (12.5) (18.3) (13.0)
5,573.4 4,796.2 2,583.3 2,246.0 1,563.5 1,396.7
Financing costs (251.7) (153.8)
Adjusted profit before
tax 1,311.8 1,242.9
Amortisation (61.3) (57.8)
Profit before taxation 1,250.5 1,185.1
Taxation charge (309.1) (293.9)
Profit attributable to equity holders
of the Company 941.4 891.2
Margins
US 48.7% 49.1% 30.9% 31.5%
Canada 42.7% 43.5% 18.0% 23.6%
UK 28.5% 30.4% 9.1% 13.2%
Group 46.3% 46.8% 28.1% 29.1%
(1) Segment result presented is adjusted operating profit.
Group revenue for the first half increased 16% to $5,573m (2022:
$4,796m). This revenue growth, combined with strong operational
execution and a focus on drop-through, resulted in EBITDA
increasing 15% to $2,583m (2022: $2,246m) and adjusted profit
before tax increasing 5% to $1,312m (2022: $1,243m). This lower
rate of growth in adjusted profit before tax reflects principally,
increased net financing costs due to increased average debt levels
and the higher interest rate environment.
In the US, rental only revenue of $3,380m (2022: $2,952m) was
15% 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 11%, while bolt-ons
since 1 May 2022 contributed 4% of rental only revenue growth. In
the first half, our General Tool business grew 14%, while our
Specialty businesses grew 16%. Year-over-year growth in our
Specialty businesses was affected adversely in October due to
strong hurricane and wildfire related revenue last year that has
not repeated this year. This impact is continuing into the third
quarter, along with a continuation of overall fleet utilisation,
although historically strong, slightly lower than planned. Rental
only revenue growth has been driven by both volume and rate
improvement. Rental revenue increased 14% to $4,299m (2022:
$3,774m). US total revenue, including new and used equipment,
merchandise and consumable sales, increased 18% to $4,792m (2022:
$4,069m). This reflects a higher level of used equipment sales, as
we took advantage of improved fleet deliveries and strong
second-hand markets to bring forward some disposals scheduled for
later in the year.
Canada's rental only revenue increased 11% to C$310m (2022:
C$279m). 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 appear to be
settled, continued for longer than anticipated and have not only
had a significant impact on the performance of the Film & TV
business, but also 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. Rental revenue increased
12% to C$382m (2022: C$341m), while total revenue was C$446m (2022:
C$389m).
The UK business generated rental only revenue of GBP239m, up 11%
on the prior year (2022: GBP215m). Excluding the impact of the work
for the Department of Health, which ended during the first quarter
of last year, rental only revenue increased 12%. Bolt-ons since 1
May 2022 contributed 4% of this growth. Rental only revenue growth
has been driven by both rate and volume improvement. Rental revenue
increased 3% to GBP301m (2022: GBP293m), while total revenue
decreased 1% to GBP359m (2022: GBP361m), reflecting the high level
of ancillary and sales revenue associated with the work for the
Department of Health last 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. Our focus on
rate improvement and leveraging our infrastructure has driven
strong revenue and profit growth in the US. This has resulted in US
rental revenue drop through to EBITDA of 53% in the period. This
contributed to an EBITDA margin of 48.7% (2022: 49.1%) and a 15%
increase in segment profit to $1,481m (2022: $1,283m) at a margin
of 30.9% (2022: 31.5%).
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 42.7% (2022: 43.5%)
and a segment profit of C$80m (2022: C$92m) at a margin of 18.0%
(2022: 23.6%).
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, which remains an area of focus,
this has been insufficient to offset the inflation impact on the
cost base. These factors, together with the loss of revenue from
the work for the Department of Health, contributed to the UK
generating an EBITDA margin of 28.5% (2022: 30.4%) and a segment
profit of GBP33m (2022: GBP48m) at a margin of 9.1% (2022:
13.2%).
Overall, Group adjusted operating profit increased to $1,563m
(2022: $1,397m), up 12% at constant exchange rates. After increased
financing costs of $252m (2022: $154m), reflecting higher average
debt levels and the higher interest rate environment, Group
adjusted profit before tax was $1,312m (2022: $1,243m). After a tax
charge of 25% (2022: 25%) of the adjusted pre-tax profit, adjusted
earnings per share increased 6% at constant currency to 225.8
(2022: 212.2 ).
Statutory profit before tax was $1,250m (2022: $1,185m). This is
after amortisation of $61m (2022: $58m). Included within the total
tax charge is a tax credit of $15m (2022: $15m) which relates to
the amortisation of intangibles. As a result, basic earnings per
share were 215.3c (2022: 202.4c).
Capital expenditure and acquisitions
Capital expenditure for the first half was $2,526m gross and
$2,093m net of disposal proceeds (2022: $1,685m gross and $1,428m
net). As a result, the Group's rental fleet at 31 October 2023 at
cost was $17bn and our average fleet age is 31 months (2022: 38
months).
We invested $705m (2022: $609m) including acquired borrowings in
16 bolt-on acquisitions during the half year as we continue to both
expand our footprint and diversify our end markets. Further details
are provided in Note 16. Since the period end, we have invested a
further $103m in bolt-ons.
Return on Investment
The Group return on investment was 18% (2022: 19%). In the US,
return on investment (excluding goodwill and intangible assets) for
the 12 months to 31 October 2023 was 26% (2022: 27%), while in
Canada it was 14% (2022: 19%). Canada's lower return on investment
reflects predominantly the drag from the recent performance of our
Film & TV business. In the UK, return on investment (excluding
goodwill and intangible assets) was 7% (2022: 12%). The decrease
reflects the lower profit margin together with the impact of the
demobilisation of the Department of Health testing sites in the
prior year. Return on investment excludes the impact of IFRS
16.
Cash flow and net debt
The Group had a free cash outflow of $355m (2022: inflow of
$154m) during the period, which reflects increased capital
expenditure payments of $2,506m (2022: $1,546m). As expected, this
combined with continued investment in bolt-ons and returns to
shareholders increased debt during the period. We spent $43m
(GBP34m) on share buybacks (2022: $207m (GBP173m)).
In July 2023, the Group issued $750m 5.950% senior notes
maturing in October 2033. 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 31 October 2023 was $10,644m (2022: $8,415m).
Excluding the effect of IFRS 16, net debt at 31 October 2023 was
$8,149m (2022: $6,212m), while the ratio of net debt to EBITDA was
1.8 times (2022: 1.6 times) on a constant currency basis. The
Group's target range for net debt to EBITDA is 1.5 to 2.0 times,
excluding the impact of IFRS 16 (1.9 to 2.4 times post IFRS 16).
Including the effect of IFRS 16, the ratio of net debt to EBITDA
was 2.2 times (2022: 2.1 times) on a constant currency basis.
At 31 October 2023, availability under the senior secured debt
facility was $1,803m with an additional $6,378m of suppressed
availability - substantially above the $450m level at which the
Group's entire debt package is covenant free.
Dividend
In line with our policy of providing a progressive dividend,
which considers both profitability and cash generation, and results
in a dividend that is sustainable across the cycle, the Board has
increased the interim dividend 5% to 15.75c per share (2022: 15.0c
per share). This will be paid on 8 February 2024 to shareholders on
the register on 12 January 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 interim dividend is 26 January 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 1.5 to 2.0 times target range for net debt to
EBITDA pre IFRS 16.
Current trading and outlook
On 20 November we issued a trading update lowering our revenue
growth and earnings guidance for the full year to reflect the lower
level of emergency response activity related to natural disasters
in North America in late Q2 and into Q3 and the longer than
anticipated actors' and writers' strikes, impacting both the Film
& TV business and adjacencies within our Canadian, US and UK
businesses.
Notwithstanding these factors, 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 change. As we
prepare our next strategic plan, Sunbelt 4.0, the Board looks to
the future with confidence.
Q1 guidance Current guidance
Rental revenue(1)
- US 13 to 16% 11 to 13%
- Canada(2) 15 to 20% 14 to 16%
- UK 6 to 9% 6 to 9%
- Group 13 to 16% 11 to 13%
Capital expenditure (gross)(3) $3.9 - 4.3bn $3.9 - 4.3bn
Free cash flow(3) c. $300m c. $150m
(1) Represents change in year-over-year rental revenue at
constant exchange rates
(2) Reflects impact of Writers Guild of America and Screen
Actors Guild strikes
(3) Stated at C$1=$0.75 and GBP1=$1.20
Directors' responsibility statement
We confirm that to the best of our knowledge:
a) the condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 'Interim Financial Reporting';
and
b) the interim management report includes a fair review of the
information required by Disclosure and Transparency Rule 4.2.7R
(indication of important events during the first six months
and description of principal risks and uncertainties for the
remaining six months of the year) and Disclosure and Transparency
Rules 4.2.8R (disclosure of related parties' transactions and
changes therein).
By order of the Board
Eric Watkins
Company secretary
4 December 2023
CONSOLIDATED INCOME STATEMENT FOR THE THREE MONTHSED 31 OCTOBER
2023
2023 2022
Before Before
amortisation Amortisation Total amortisation Amortisation Total
$m $m $m $m $m $m
Second quarter - unaudited
Revenue
Rental revenue 2,584.5 - 2,584.5 2,308.4 - 2,308.4
Sale of new equipment,
merchandise and consumables 100.4 - 100.4 88.3 - 88.3
Sale of used rental
equipment 192.4 - 192.4 140.5 - 140.5
2,877.3 - 2,877.3 2,537.2 - 2,537.2
Operating costs
Staff costs (635.1) - (635.1) (558.7) - (558.7)
Other operating costs (743.1) - (743.1) (666.2) - (666.2)
Used rental equipment
sold (145.0) - (145.0) (104.9) - (104.9)
(1,523.2) - (1,523.2) (1,329.8) - (1,329.8)
EBITDA(*) 1,354.1 - 1,354.1 1,207.4 - 1,207.4
Depreciation (523.7) - (523.7) (432.3) - (432.3)
Amortisation of intangibles - (31.0) (31.0) - (29.9) (29.9)
Operating profit 830.4 (31.0) 799.4 775.1 (29.9) 745.2
Interest income 0.5 - 0.5 0.4 - 0.4
Interest expense (134.0) - (134.0) (87.3) - (87.3)
Profit on ordinary
activities
before taxation 696.9 (31.0) 665.9 688.2 (29.9) 658.3
Taxation (179.7) 7.8 (171.9) (170.4) 7.5 (162.9)
Profit attributable
to equity
holders of the Company 517.2 (23.2) 494.0 517.8 (22.4) 495.4
Basic earnings per 118.3 113.0 117.9 112.8
share c (5.3c) c c (5.1c) c
Diluted earnings per 117.8 112.5 117.2 112.1
share c (5.3c) c c (5.1c) c
(*) 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 SIX MONTHSED 31 OCTOBER
2023
2023 2022
Before Before
amortisation Amortisation Total amortisation Amortisation Total
$m $m $m $m $m $m
First half - unaudited
Revenue
Rental revenue 4,960.4 - 4,960.4 4,383.1 - 4,383.1
Sale of new equipment,
merchandise and consumables 196.8 - 196.8 172.5 - 172.5
Sale of used rental
equipment 416.2 - 416.2 240.6 - 240.6
5,573.4 - 5,573.4 4,796.2 - 4,796.2
Operating costs
Staff costs (1,253.3) - (1,253.3) (1,078.7) - (1,078.7)
Other operating costs (1,433.3) - (1,433.3) (1,294.4) - (1,294.4)
Used rental equipment
sold (303.5) - (303.5) (177.1) - (177.1)
(2,990.1) - (2,990.1) (2,550.2) - (2,550.2)
EBITDA* 2,583.3 - 2,583.3 2,246.0 - 2,246.0
Depreciation (1,019.8) - (1,019.8) (849.3) - (849.3)
Amortisation of intangibles - (61.3) (61.3) - (57.8) (57.8)
Operating profit 1,563.5 (61.3) 1,502.2 1,396.7 (57.8) 1,338.9
Interest income 1.0 - 1.0 1.6 - 1.6
Interest expense (252.7) - (252.7) (155.4) - (155.4)
Profit on ordinary
activities
before taxation 1,311.8 (61.3) 1,250.5 1,242.9 (57.8) 1,185.1
Taxation (324.5) 15.4 (309.1) (308.5) 14.6 (293.9)
Profit attributable
to equity
holders of the Company 987.3 (45.9) 941.4 934.4 (43.2) 891.2
Basic earnings per 225.8 215.3 212.2 202.4
share c (10.5c) c c (9.8c) c
Diluted earnings per 224.6 214.2 211.4 201.6
share c (10.4c) c c (9.8c) c
(*) 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 SIX
MONTHSED 31 OCTOBER 2023
Unaudited
Three months Six months
to to
31 October 31 October
2023 2022 2023 2022
$m $m $m $m
Profit attributable to equity holders of
the Company for the period 494.0 495.4 941.4 891.2
Items that may be reclassified subsequently
to profit or loss:
Foreign currency translation differences (80.5) (66.0) (40.2) (89.9)
Loss on cash flow hedge 0.1 (0.6) 0.1 (0.6)
Total other comprehensive income for the
period (80.4) (66.6) (40.1) (90.5)
Total comprehensive income for the period 413.6 428.8 901.3 800.7
CONSOLIDATED BALANCE SHEET AT 31 OCTOBER 2023
Unaudited Audited
31 October 30 April
2023 2022 2023
$m $m $m
Current assets
Inventories 180.4 202.4 181.3
Trade and other receivables 2,007.4 1,817.8 1,659.2
Current tax asset 28.4 11.3 14.6
Cash and cash equivalents 25.7 29.9 29.9
2,241.9 2,061.4 1,885.0
Non-current assets
Property, plant and equipment
- rental equipment 11,000.5 8,524.8 9,649.1
- other assets 1,602.2 1,206.4 1,392.0
12,602.7 9,731.2 11,041.1
Right-of-use assets 2,310.0 2,061.4 2,206.0
Goodwill 3,144.1 2,586.3 2,865.5
Other intangible assets 550.8 529.5 523.4
Other non-current assets 162.5 168.6 145.2
Current tax asset 43.2 40.9 44.7
Net defined benefit pension plan asset 18.2 18.3 18.4
18,831.5 15,136.2 16,844.3
Total assets 21,073.4 17,197.6 18,729.3
Current liabilities
Trade and other payables 1,579.1 1,360.8 1,533.6
Current tax liability 8.0 25.8 12.4
Lease liabilities 254.9 212.3 233.2
Provisions 64.1 51.5 78.6
1,906.1 1,650.4 1,857.8
Non-current liabilities
Lease liabilities 2,272.6 2,005.6 2,161.1
Long-term borrowings 8,141.7 6,227.2 6,595.1
Provisions 85.8 85.9 75.9
Deferred tax liabilities 2,129.6 1,849.8 1,995.3
Other non-current liabilities 42.5 32.3 36.1
12,672.2 10,200.8 10,863.5
Total liabilities 14,578.3 11,851.2 12,721.3
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 (783.4) (685.8) (740.9)
Own shares held by the ESOT (43.5) (38.8) (38.8)
Cumulative foreign exchange translation
differences (286.1) (316.6) (245.9)
Retained reserves 7,499.8 6,279.3 6,925.3
Equity attributable to equity holders
of the Company 6,495.1 5,346.4 6,008.0
Total liabilities and equity 21,073.4 17,197.6 18,729.3
The current tax asset balance shown in non-current assets has
been reclassified from other non-current assets in comparative
periods.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHSED
31 OCTOBER 2023
Own Cumulative
Own shares foreign
Share Capital shares held exchange
Share premium redemption held by translation Retained
by the
capital account reserve Company the ESOT differences reserves Total
$m $m $m $m $m $m $m $m
Unaudited
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
period - - - - - - 891.2 891.2
Other comprehensive
income:
Foreign currency
translation
differences - - - - - (89.9) - (89.9)
Loss on cash flow
hedge - - - - - - (0.6) (0.6)
Total comprehensive
income
for the period - - - - - (89.9) 890.6 800.7
Dividends paid - - - - - - (291.8) (291.8)
Own shares purchased
by the ESOT - - - - (12.5) - - (12.5)
Own shares purchased
by
the Company - - - (205.7) - - - (205.7)
Share-based payments - - - - 18.6 - 3.7 22.3
Tax on share-based
payments - - - - - - (0.3) (0.3)
At 31 October 2022 81.8 6.5 20.0 (685.8) (38.8) (316.6) 6,279.3 5,346.4
Profit for the
period - - - - - - 726.5 726.5
Other comprehensive
income:
Movement on financial
asset
investments - - - - - - (36.8) (36.8)
Foreign currency
translation
Differences - - - - - 70.7 - 70.7
Loss on cash flow
hedge - - - - - - (2.5) (2.5)
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 period - - - - - 70.7 685.0 755.7
Dividends paid - - - - - - (64.8) (64.8)
Own shares purchased
by
the Company - - - (55.1) - - - (55.1)
Share-based payments - - - - - - 22.5 22.5
Tax on share-based
payments - - - - - - 3.3 3.3
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
period - - - - - - 941.4 941.4
Other comprehensive
income:
Foreign currency
translation
differences - - - - - (40.2) - (40.2)
Loss on cash flow
hedge - - - - - - 0.1 0.1
Total comprehensive
income
for the period - - - - - (40.2) 941.5 901.3
Dividends paid - - - - - - (368.3) (368.3)
Own shares purchased
by the ESOT - - - - (29.8) - - (29.8)
Own shares purchased
by
the Company - - - (42.5) - - - (42.5)
Share-based payments - - - - 25.1 - (0.5) 24.6
Tax on share-based
payments - - - - - - 1.8 1.8
At 31 October 2023 81.8 6.5 20.0 (783.4) (43.5) (286.1) 7,499.8 6,495.1
CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHSED 31 OCTOBER
2023
Unaudited
2023 2022
$m $m
Cash flows from operating activities
Cash generated from operations before
changes in rental equipment 2,227.5 1,777.6
Payments for rental property, plant and
equipment (2,163.0) (1,299.9)
Proceeds from disposal of rental property,
plant and equipment 327.5 203.8
Cash generated from operations 392.0 681.5
Financing costs paid (234.0) (140.4)
Tax paid (187.6) (156.4)
Net cash (used)/generated from operating
activities (29.6) 384.7
Cash flows from investing activities
Acquisition of businesses (676.1) (619.1)
Financial asset investments (5.0) (42.4)
Payments for non-rental property, plant
and equipment (342.7) (246.1)
Proceeds from disposal of non-rental
property, plant and equipment 17.4 15.8
Net cash used in investing activities (1,006.4) (891.8)
Cash flows from financing activities
Drawdown of loans 2,475.5 2,041.8
Redemption of loans (942.4) (953.6)
Repayment of principal under lease liabilities (60.8) (52.9)
Dividends paid (367.7) (292.9)
Purchase of own shares by the ESOT (29.8) (12.5)
Purchase of own shares by the Company (42.6) (206.9)
Net cash generated from financing activities 1,032.2 523.0
(Decrease)/increase in cash and cash equivalents (3.8) 15.9
Opening cash and cash equivalents 29.9 15.3
Effect of exchange rate differences (0.4) (1.3)
Closing cash and cash equivalents 25.7 29.9
Reconciliation of net cash flows to net
debt
Decrease/(increase) in cash and
cash equivalents in the period 3.8 (15.9)
Increase in debt through cash flow 1,472.3 1,035.3
Change in net debt from cash flows 1,476.1 1,019.4
Exchange differences (44.4) (76.5)
Debt acquired 96.7 88.9
Deferred costs of debt raising 3.8 3.0
New lease liabilities 151.8 220.4
Increase in net debt in the year 1,684.0 1,255.2
Net debt at 1 May 8,959.5 7,160.0
Net debt at 31 October 10,643.5 8,415.2
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 six months ended 31 October 2023, comprise the
Company and its subsidiaries ('the Group') and are presented in US
dollars.
The condensed consolidated interim fina ncial statements for the
six months ended 31 October 2023 were approved by the directors on
4 December 2023.
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 2023 were approved by the directors on 12 June 2023 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.
The condensed consolidated interim financial statements for the
six months ended 31 October 2023 are unaudited but have been
reviewed by the Group's auditors. Their report is on page 34.
2. Basis of preparation
The condensed consolidated interim financial statements for the
six months ended 31 October 2023 have been prepared in accordance
with relevant UK-adopted International Accounting Standards
('IFRS'), including IAS 34, Interim Financial Reporting, 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 (GBP) and Canadian dollar (C$)
are:
Pound sterling Canadian dollar
2023 2022 2023 2022
Average for the three months ended
31 October 1.24 1.16 0.74 0.75
Average for the six months ended
31 October 1.25 1.19 0.74 0.76
At 30 April 1.26 1.26 0.74 0.78
At 31 October 1.21 1.15 0.72 0.73
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 36.
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 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 31 October 2023
Corporate
US Canada UK items Group
$m $m $m $m $m
Revenue
Rental revenue 2,251.0 146.3 187.2 - 2,584.5
Sale of new equipment, merchandise
and consumables 69.1 12.3 19.0 - 100.4
Sale of used rental equipment 160.6 13.2 18.6 - 192.4
2,480.7 171.8 224.8 - 2,877.3
Segment profit 789.2 29.6 21.0 (9.4) 830.4
Amortisation (31.0)
Net financing costs (133.5)
Profit before taxation 665.9
Taxation (171.9)
Profit attributable to equity
shareholders 494.0
Three months to 31 October 2022
Corporate
US Canada UK items Group
$m $m $m $m $m
Revenue
Rental revenue 2,005.6 137.5 165.3 - 2,308.4
Sale of new equipment, merchandise
and consumables 45.9 16.6 25.8 - 88.3
Sale of used rental equipment 118.3 5.9 16.3 - 140.5
2,169.8 160.0 207.4 - 2,537.2
Segment profit 715.6 40.2 25.4 (6.1) 775.1
Amortisation (29.9)
Net financing costs (86.9)
Profit before taxation 658.3
Taxation (162.9)
Profit attributable to equity
shareholders 495.4
Six months to 31 October 2023
Corporate
US Canada UK items Group
$m $m $m $m $m
Revenue
Rental revenue 4,299.2 283.6 377.6 - 4,960.4
Sale of new equipment, merchandise
and consumables 132.0 25.8 39.0 - 196.8
Sale of used rental equipment 360.9 22.1 33.2 - 416.2
4,792.1 331.5 449.8 - 5,573.4
Segment profit 1,481.1 59.7 41.0 (18.3) 1,563.5
Amortisation (61.3)
Net financing costs (251.7)
Profit before taxation 1,250.5
Taxation (309.1)
Profit attributable to equity
shareholders 941.4
Six months to 31 October 2022
Corporate
US Canada UK items Group
$m $m $m $m $m
Revenue
Rental revenue 3,774.0 260.9 348.2 - 4,383.1
Sale of new equipment, merchandise
and consumables 93.8 26.6 52.1 - 172.5
Sale of used rental equipment 201.2 9.6 29.8 - 240.6
4,069.0 297.1 430.1 - 4,796.2
Segment profit 1,282.7 70.1 56.9 (13.0) 1,396.7
Amortisation (57.8)
Net financing costs (153.8)
Profit before taxation 1,185.1
Taxation (293.9)
Profit attributable to equity
shareholders 891.2
Corporate
US Canada UK items Group
$m $m $m $m $m
At 31 October 2023
Segment assets 17,689.0 1,810.4 1,470.8 5.9 20,976.1
Cash 25.7
Taxation assets 71.6
Total assets 21,073.4
At 30 April 2023
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
2023 2022
Before Before
amortisation Amortisation Total amortisation Amortisation Total
$m $m $m $m $m $m
Three months
to 31 October
Staff costs:
Salaries 582.1 - 582.1 511.7 - 511.7
Social
security
costs 41.7 - 41.7 37.5 - 37.5
Other pension
costs 11.3 - 11.3 9.5 - 9.5
635.1 - 635.1 558.7 - 558.7
Other
operating
costs:
Vehicle costs 182.6 - 182.6 166.5 - 166.5
Spares,
consumables &
external
repairs 140.4 - 140.4 120.9 - 120.9
Facility costs 28.0 - 28.0 25.9 - 25.9
Other external
charges 392.1 - 392.1 352.9 - 352.9
743.1 - 743.1 666.2 - 666.2
Used rental
equipment
sold 145.0 - 145.0 104.9 - 104.9
Depreciation
and
amortisation:
Depreciation
of tangible
assets 474.7 - 474.7 391.3 - 391.3
Depreciation
of
right-of-use
assets 49.0 - 49.0 41.0 - 41.0
Amortisation
of
intangibles - 31.0 31.0 - 29.9 29.9
523.7 31.0 554.7 432.3 29.9 462.2
2,046.9 31.0 2,077.9 1,762.1 29.9 1,792.0
2023 2022
Before Before
amortisation Amortisation Total amortisation Amortisation Total
$m $m $m $m $m $m
Six months to
31 October
Staff costs:
Salaries 1,147.2 - 1,147.2 985.4 - 985.4
Social
security
costs 83.0 - 83.0 73.9 - 73.9
Other pension
costs 23.1 - 23.1 19.4 - 19.4
1,253.3 - 1,253.3 1,078.7 - 1,078.7
Other
operating
costs:
Vehicle costs 344.6 - 344.6 325.8 - 325.8
Spares,
consumables &
external
repairs 281.9 - 281.9 246.3 - 246.3
Facility costs 56.6 - 56.6 50.1 - 50.1
Other external
charges 750.2 - 750.2 672.2 - 672.2
1,433.3 - 1,433.3 1,294.4 - 1,294.4
Used rental
equipment
sold 303.5 - 303.5 177.1 - 177.1
Depreciation
and
amortisation:
Depreciation
of tangible
assets 922.8 - 922.8 767.8 - 767.8
Depreciation
of
right-of-use
assets 97.0 - 97.0 81.5 - 81.5
Amortisation
of
intangibles - 61.3 61.3 - 57.8 57.8
1,019.8 61.3 1,081.1 849.3 57.8 907.1
4,009.9 61.3 4,071.2 3,399.5 57.8 3,457.3
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.
Three months to Six months to
31 October 31 October
2023 2022 2023 2022
$m $m $m $m
Amortisation of intangibles 31.0 29.9 61.3 57.8
Taxation (7.8) (7.5) (15.4) (14.6)
23.2 22.4 45.9 43.2
6. Net financing costs
Three months Six months to
to
31 October 31 October
2023 2022 2023 2022
$m $m $m $m
Interest income:
Net income on the defined benefit
plan asset 0.2 0.1 0.4 0.2
Other interest 0.3 0.3 0.6 1.4
0.5 0.4 1.0 1.6
Interest expense:
Bank interest payable 42.7 26.0 82.0 44.2
Interest payable on senior notes 57.5 34.7 104.5 60.3
Interest payable on lease liabilities 31.2 24.4 61.1 46.8
Non-cash unwind of discount on provisions 0.5 0.3 1.0 0.6
Amortisation of deferred debt raising
costs 2.1 1.9 4.1 3.5
134.0 87.3 252.7 155.4
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 October 2023
of 25% in the US (2022: 25%), 26% in Canada (2022: 26%) and 25% in
the UK (2022: 19%). This results in a blended effective rate for
the Group as a whole of 25% (2022: 25%) for the period.
The tax charge of $324m (2022: $309m) on the adjusted profit
before taxation of $1,312m (2022: $1,243m) can be explained as
follows:
Six months to 31 October
2023 2022
$m $m
Current tax
- current tax on income for the period 186.8 166.6
- adjustments to prior year 2.8 (2.6)
189.6 164.0
Deferred tax
- origination and reversal of temporary
differences 151.7 145.5
- adjustments to prior year (16.8) (1.0)
134.9 144.5
Tax on adjusted profit 324.5 308.5
Comprising:
- US 315.0 277.7
- Canada 7.8 13.5
- UK 1.7 17.3
324.5 308.5
In addition, the tax credit of $15m (2022: $15m) on amortisation
of $61m (2022: $58m) consists of a current tax credit of $6m (2022:
$6m) relating to the US, $0.1m (2022: $0.4m) relating to Canada and
$nil (2022: $0.1m) relating to the UK and a deferred tax credit of
$5m (2022: $5m) relating to the US, $3m (2022: $3m) relating to
Canada and $1m (2022: $0.5m) relating to the UK.
On 20 June 2023, Finance (No.2) Act 2023 was substantively
enacted in the UK, introducing a global minimum effective tax rate
of 15%. The legislation implements a domestic top-up tax and a
multinational top-up tax, effective for accounting periods starting
on or after 31 December 2023. Accordingly, the first accounting
period to which these rules will apply to the Group will be the
year ending 30 April 2025 and hence, the Group is applying the
exception under the IAS 12 amendment to recognising and disclosing
information about deferred tax assets and liabilities related to
top-up income taxes for the year ending 30 April 2024. We do not
expect that the 15% global minimum tax rate will affect materially
the amount of tax the Group pays, as corporation tax rates in the
principal jurisdictions in which the Group operates exceed 15%.
8. Earnings per share
Basic and diluted earnings per share for the three and six
months ended 31 October 2023 have been calculated based on the
profit for the relevant period and the weighted average number of
ordinary shares in issue during that period (excluding shares held
by the Company and the ESOT over which dividends have been waived).
Diluted earnings per share is computed using the result for the
relevant period and the diluted number of shares (ignoring any
potential issue of ordinary shares which would be anti-dilutive).
These are calculated as follows:
Three months Six months to
to
31 October 31 October
2023 2022 2023 2022
Profit for the financial period ($m) 494.0 495.4 941.4 891.2
Weighted average number of
shares) (m) - basic 437.2 439.3 437.3 440.3
- diluted 439.3 441.9 439.6 442.0
Basic earnings per share 113.0 112.8 215.3 202.4
c c c c
Diluted earnings per share 112.5 112.1 214.2 201.6
c c c c
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:
Three months Six months to
to
31 October 31 October
2023 2022 2023 2022
Basic earnings per share 113.0c 112.8c 215.3c 202.4c
Amortisation of intangibles 7.1c 6.8c 14.0c 13.1c
Tax on amortisation (1.8c) (1.7c) (3.5c) (3.3c)
Adjusted earnings per share 118.3 117.9 225.8 212.2
c c c c
9. Dividends
During the period, a final dividend in respect of the year ended
30 April 2023 of 85.0c (2022: 67.5c) per share was paid to
shareholders resulting in a cash outflow of $368m (2022: $293m). In
addition, the directors have declared an interim dividend in
respect of the year ending 30 April 2024 of 15.75c (2022: 15.0c)
per share to be paid on 8 February 2024 to shareholders who are on
the register of members on 12 January 2024.
10. Property, plant and equipment
2023 2022
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 (43.7) (50.5) (89.3) (103.9)
Reclassifications (0.4) - (0.4) -
Additions 2,185.8 2,525.8 1,440.6 1,684.7
Acquisitions 291.8 309.2 195.2 204.2
Disposals (289.1) (300.1) (170.1) (178.6)
Depreciation (793.0) (922.8) (665.5) (767.8)
At 31 October 11,000.5 12,602.7 8,524.8 9,731.2
11. Right-of-use assets
2023 2022
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 (9.6) (0.7) (10.3) (21.5) (1.3) (22.8)
Additions 154.1 11.0 165.1 190.9 3.4 194.3
Acquisitions 53.6 - 53.6 79.5 - 79.5
Remeasurement 39.6 - 39.6 30.7 - 30.7
Disposals (46.6) (0.4) (47.0) (3.2) (0.4) (3.6)
Depreciation (94.0) (3.0) (97.0) (79.9) (1.6) (81.5)
At 31 October 2,281.9 28.1 2,310.0 2,045.6 15.8 2,061.4
12. Lease liabilities
31 October 30 April
2023 2023
$m $m
Current 254.9 233.2
Non-current 2,272.6 2,161.1
2,527.5 2,394.3
13. Borrowings
31 October 30 April
2023 2023
$m $m
Non-current
First priority senior secured bank debt 2,838.5 2,038.4
1.500% senior notes, due 2026 547.3 546.8
4.375% senior notes, due 2027 596.1 595.6
4.000% senior notes, due 2028 595.6 595.1
4.250% senior notes, due 2029 595.0 594.6
2.450% senior notes, due 2031 744.2 743.9
5.500% senior notes, due 2032 738.3 737.8
5.550% senior notes, due 2033 743.1 742.9
5.950% senior notes, due 2033 743.6 -
8,141.7 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. 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. Our $4.5bn asset-based senior credit
facility is committed until August 2026. The $550m 1.500% senior
notes mature in August 2026, the $600m 4.375% senior notes mature
in August 2027, the $600m 4.000% senior notes mature in May 2028,
the $600m 4.250% senior notes mature in November 2029, the $750m
2.450% senior notes mature in August 2031, the $750m 5.500% senior
notes mature in August 2032, the $750m 5.550% senior notes mature
in May 2033 and the $750m 5.950% senior notes mature in October
2033.
The weighted average interest cost of these facilities
(including non-cash amortisation of deferred debt raising costs) is
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
October 2023 , availability under the senior secured bank facility
was $1,803m ($2,573m at 30 April 2023), with an additional $6,378m
of suppressed availability, meaning that the covenant did not apply
at 31 October 2023 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 October 2023, 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 October At 30 April 2023
2023
Book Fair Book value Fair
value value value
$m $m $m $m
Long-term borrowings
Level
* first priority senior secured bank debt 1 2,838.5 2,838.5 2,038.4 2,038.4
Level
* 1.500% senior notes 1 549.2 482.6 549.0 486.1
Level
* 4.375% senior notes 1 600.0 554.3 600.0 573.0
Level
* 4.000% senior notes 1 600.0 535.5 600.0 560.3
Level
* 4.250% senior notes 1 600.0 522.0 600.0 556.5
Level
* 2.450% senior notes 1 748.5 552.2 748.4 595.3
Level
* 5.500% senior notes 1 743.3 670.3 743.0 741.6
Level
* 5.550% senior notes 1 748.3 669.4 748.3 744.4
Level
* 5.950% senior notes 1 749.4 683.4 - -
Total long-term borrowings 8,177.2 7,508.2 6,627.1 6,295.6
Deferred costs of raising
finance (35.5) - (32.0) -
8,141.7 7,508.2 6,595.1 6,295.6
Other financial instruments(1)
Level
Contingent consideration provision 3 36.5 36.5 46.7 46.7
Level
Financial asset investments 3 46.6 46.6 41.3 41.3
Level
Cash and cash equivalents 1 25.7 25.7 29.9 29.9
(1) The Group's trade and other receivables and trade and other
payables are not shown in the table above. The carrying amounts of
these financial assets and liabilities approximate their fair
values.
Contingent consideration provisions are 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 can be attributed
to $21m of payments in the period (see Note 15), $1m of provision
releases and $1m of exchange differences offset by $12m of
additions through business acquisitions (see Note 16) and $1m of
discount unwind (see Note 6).
Financial asset investments are measured at fair value and are
Level 3 financial assets. $21m of these assets are held at fair
value through profit and loss and $25m of 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 $5m and interest of $1m.
14. Share capital
Ordinary shares of
10p each:
31 October 30 April 31 October 30 April
2023 2023 2023 2023
Number Number $m $m
Issued and fully paid 451,354,833 451,354,833 81.8 81.8
During the period, the Company purchased 0.7m ordinary shares at
a total cost of $43m (GBP34m) under the Group's share buyback
programme, which are held in treasury. At 31 October 2023, 13.5 m
(April 2023: 12.9m) shares were held by the Company ($783m; 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
Six months to 31 October
2023 2022
$m $m
Operating profit 1,502.2 1,338.9
Depreciation 1,019.8 849.3
Amortisation 61.3 57.8
EBITDA 2,583.3 2,246.0
Profit on disposal of rental equipment (112.7) (63.5)
Profit on disposal of other property, plant
and equipment (11.7) (7.0)
Increase in inventories - (26.8)
Increase in trade and other receivables (258.6) (399.4)
Increase in trade and other payables 3.9 7.0
Exchange differences (1.3) (1.0)
Other non-cash movement 24.6 22.3
Cash generated from operations before
changes in rental equipment 2,227.5 1,777.6
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 31 October
2023 flow movement acquired liabilities movements 2023
$m $m $m $m $m $m $m
Long-term borrowings 6,595.1 1,533.1 (33.4) 43.1 - 3.8 8,141.7
Lease liabilities 2,394.3 (60.8) (11.4) 53.6 151.8 - 2,527.5
Total liabilities from
financing activities 8,989.4 1,472.3 (44.8) 96.7 151.8 3.8 10,669.2
Cash and cash
equivalents (29.9) 3.8 0.4 - - - (25.7)
Net debt 8,959.5 1,476.1 (44.4) 96.7 151.8 3.8 10,643.5
Non-cash movements
----------------------------------------------
1 May Cash Exchange Debt New lease Other 31 October
2022 flow movement acquired liabilities movements 2022
$m $m $m $m $m $m $m
Long-term borrowings 5,180.1 1,088.2 (53.5) 9.4 - 3.0 6,227.2
Lease liabilities 1,995.2 (52.9) (24.3) 79.5 220.4 - 2,217.9
Total liabilities from
financing activities 7,175.3 1,035.3 (77.8) 88.9 220.4 3.0 8,445.1
Cash and cash
equivalents (15.3) (15.9) 1.3 - - - (29.9)
Net debt 7,160.0 1,019.4 (76.5) 88.9 220.4 3.0 8,415.2
Details of the Group's cash and debt are given in Notes 12 and
13 and the Review of Second Quarter, Balance Sheet and Cash Flow
accompanying these condensed consolidated interim financial
statements.
c) Acquisitions
Six months to 31 October
2023 2022
$m $m
Cash consideration paid:
- acquisitions in the period 655.5 598.1
- contingent consideration 20.6 21.0
676.1 619.1
During the period, 16 businesses were acquired with cash paid of
$656m (2022: $598m), after taking account of net cash acquired of
$3m (2022: $24m). Further details are provided in Note 16.
Contingent consideration of $21m (2022: $21m) was paid relating
to prior year acquisitions.
16. Acquisitions
The Group undertakes bolt-on acquisitions to complement its
organic growth strategy. During the period, 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.
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 37.0
Inventory 0.5
Property, plant and equipment
- rental equipment 291.8
- other assets 17.4
Right-of-use assets 53.6
Creditors (8.9)
Current tax 0.3
Deferred tax (11.5)
Debt (43.1)
Lease liabilities (53.6)
Intangible assets (non-compete agreements
and customer relationships) 92.7
376.2
Consideration:
- cash paid and due to be paid (net of cash acquired) 661.6
- contingent consideration 11.7
673.3
Goodwill 297.1
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. $188m 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 $37m.
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 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 GBP36m, 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 GBP36m
as at 31 October 2023 ($43m at October 2023 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 GBP36m ($43m at October 2023 exchange rates) paid has been
recognised separately as a non-current asset on the balance
sheet.
18. Events after the balance sheet date
Since the balance sheet date, the Group has completed five
acquisitions for total purchase consideration of $103m, including
acquired debt of $12m, as follows:
i) On 3 November 2023, Sunbelt US acquired the business and assets of EFFEM Corporation, trading as A to Z
Equipment Rentals
& Sales ('A to Z'). A to Z is a general tool business operating in Arizona.
ii) On 3 November 2023, Sunbelt UK acquired the entire share capital of Acorn Film & Video Ltd ('Acorn'). Acorn is
a specialty
business.
iii) On 8 November 2023, Sunbelt US acquired the business and assets of Farmers Rental & Power Equipment, Inc.
('Farmers'). Farmers
is a general tool business operating in North Carolina.
iv) On 14 November 2023, Sunbelt US acquired the business and assets Southwest Ohio Temporary Heat, LLC, trading
as Temporary
Heating Solutions Cincinnati ('THS'). THS is a specialty business operating in Ohio.
v) On 1 December 2023, Sunbelt Canada acquired the entire share capital of Nor-Val Rentals, Ltd. ('Nor-Val').
Nor-Val is a general
tool business operating in British Columbia.
The initial accounting for these acquisitions is incomplete
given the proximity to the period end. Had these acquisitions taken
place on 1 May 2023, their contribution to revenue and operating
profit would not have been material.
REVIEW OF SECOND QUARTER, BALANCE SHEET AND CASH FLOW
Second quarter
Revenue EBITDA Profit (1)
2023 2022 2023 2022 2023 2022
Canada in C$m 233.2 212.1 97.3 93.2 40.2 53.3
UK in GBPm 181.0 179.6 52.2 52.9 16.9 22.1
US 2,480.7 2,169.8 1,226.7 1,082.0 789.2 715.6
Canada in $m 171.8 160.0 71.6 70.3 29.6 40.2
UK in $m 224.8 207.4 64.8 60.9 21.0 25.4
Group central costs - - (9.0) (5.8) (9.4) (6.1)
2,877.3 2,537.2 1,354.1 1,207.4 830.4 775.1
Financing costs (133.5) (86.9)
Adjusted profit before
tax 696.9 688.2
Amortisation (31.0) (29.9)
Profit before taxation 665.9 658.3
Margins as reported
US 49.5% 49.9% 31.8% 33.0%
Canada 41.7% 43.9% 17.3% 25.1%
UK 28.8% 29.5% 9.3% 12.3%
Group 47.1% 47.6% 28.9% 30.5%
(1) Segment result presented is operating profit before
amortisation.
Group revenue for the quarter increased 13% (13% at constant
currency) to $2,877m (2022: $2,537m). Adjusted profit before tax
for the quarter increased to $697m (2022: $688m).
US rental only revenue in the quarter was 13% higher than a year
ago. This consisted of our General Tool business which was 13%
higher than last year while our Specialty businesses were 14%
higher than a year ago. Year-over-year growth in our Specialty
businesses was affected adversely in October due to strong
hurricane and wildfire related revenue last year that has not
repeated this year. This impact is continuing into the third
quarter.
Canada's rental only revenue increased 9% to C$162m (2022:
C$148m), while total revenue was C$233m (2022: C$212m). Performance
has been affected adversely by the Writers Guild of America and the
Screen Actors Guild strikes which continued for longer than we
assumed and have not only had a significant impact on the Film
& TV business, but also some impact on the rest of the Canadian
business that rents into that space. Parts of the US and UK
businesses have been affected similarly.
The UK generated rental only revenue in the quarter of GBP119m
(2022: GBP111m), 8% higher than the prior year. Total revenue
increased 1% to GBP181m (2022: GBP180m) reflecting the high level
of ancillary and sales revenue associated with the services
provided last year for the Queen's funeral.
Group adjusted operating profit increased 7% to $830m (2022:
$775m). After financing costs of $134m (2022: $87m), Group adjusted
profit before tax was $697m (2022: $688m). After amortisation of
$31m (2022: $30m), statutory profit before taxation was $666m
(2022: $658m).
REVIEW OF BALANCE SHEET AND CASH FLOW
Balance sheet
Property, plant and equipment
Capital expenditure in the first half totalled $2,526m (2022:
$1,685m) with $2,186m invested in the rental fleet (2022: $1,441m).
Expenditure on rental equipment was 87% of total capital
expenditure with the balance relating to the delivery vehicle
fleet, property improvements and IT equipment. Capital expenditure
by division was:
2023 2022
Replacement Growth Total Total
Canada in C$m 70.2 93.5 163.7 123.2
UK in GBPm 64.2 52.2 116.4 81.7
US 873.4 1,044.7 1,918.1 1,249.1
Canada in $m 52.2 69.5 121.7 94.2
UK in $m 80.6 65.4 146.0 97.3
Total rental equipment 1,006.2 1,179.6 2,185.8 1,440.6
Delivery vehicles, property improvements & IT equipment 340.0 244.1
Total additions 2,525.8 1,684.7
In a strong US rental market, $1,045m of rental equipment
capital expenditure was spent on growth while $873m was invested in
replacement of existing fleet. The growth proportion is estimated
based on the assumption that replacement capital expenditure in any
period is equal to the original cost of equipment sold. In a period
of inflation, this understates replacement capital expenditure and
overstates growth capital expenditure.
The average age of the Group's serialised rental equipment,
which constitutes the substantial majority of our fleet, at 31
October 2023 was 31 months (2022: 38 months) on a net book value
basis. The US fleet had an average age of 31 months (2022: 38
months), the Canadian fleet had an average age of 33 months (2022:
36 months) and the UK fleet had an average age of 33 months (2022:
36 months).
Rental fleet at original cost
31 October 30 April LTM LTM rental LTM dollar
2023 2023 average revenue utilisation
Canada in C$m 1,643 1,438 1,471 737 50%
UK in GBPm 1,135 1,081 1,093 568 52%
US 14,772 13,407 13,467 8,028 60%
Canada in $m 1,183 1,061 1,091 546 50%
UK in $m 1,378 1,358 1,348 701 52%
17,333 15,826 15,906 9,275
Dollar utilisation was 60% in the US (2022: 60%), 50% for Canada
(2022: 56%) and 52% for the UK (2022: 57%). The decrease in
Canadian dollar utilisation reflects principally the drag of the
Film & TV business. In the UK, the decrease reflects the lower
level of ancillary revenue following the conclusion of the
Department of Health work last year.
Trade receivables
Receivable days at 31 October 2023 were 49 days (2022: 52 days).
The bad debt charge for the last twelve months ended 31 October
2023 as a percentage of total turnover was 0.4% (2022: 0.5%). Trade
receivables at 31 October 2023 of $1,682m (2022: $1,558m) are
stated net of allowances for bad debts and credit notes of $119m
(2022: $113m), with the provision representing 7% (2022: 7%) of
gross receivables.
Trade and other payables
Group payable days were 45 days at 31 October 2023 (2022: 45
days) with capital expenditure related payables totalling $635m
(2022: $503m). 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
Six months to LTM to Year to
31 October 31 October 30 April
2023 2022 2023 2023
$m $m $m $m
EBITDA 2,583.3 2,246.0 4,749.1 4,411.8
Cash inflow from operations before
changes in rental equipment 2,227.5 1,777.6 4,523.5 4,073.6
Cash conversion ratio* 86.2% 79.1% 95.2% 92.3%
Replacement rental capital expenditure (1,115.5) (560.7) (1,935.6) (1,380.8)
Payments for non-rental capital
expenditure (342.7) (246.1) (606.6) (510.0)
Rental equipment disposal proceeds 327.5 203.8 697.3 573.6
Other property, plant and equipment
disposal proceeds 17.4 15.8 43.0 41.4
Tax paid (187.6) (156.4) (318.5) (287.3)
Financing costs (234.0) (140.4) (433.8) (340.2)
Cash inflow before growth capex 692.6 893.6 1,969.3 2,170.3
Growth rental capital expenditure (1,047.5) (739.2) (1,947.1) (1,638.8)
Free cash flow (354.9) 154.4 22.2 531.5
Business acquisitions (676.1) (619.1) (1,140.2) (1,083.2)
Financial asset investments (5.0) (42.4) (5.0) (42.4)
Total cash absorbed (1,036.0) (507.1) (1,123.0) (594.1)
Dividends (367.7) (292.9) (432.6) (357.8)
Purchase of own shares by the ESOT (29.8) (12.5) (29.8) (12.5)
Purchase of own shares by the Company (42.6) (206.9) (100.1) (264.4)
Increase in net debt due to cash
flow (1,476.1) (1,019.4) (1,685.5) (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 $2,228m (2022: $1,778m). The conversion ratio for
the period was 86% (2022: 79%).
Total payments for capital expenditure (rental equipment and
other PPE) during the first half were $2,506m (2022: $1,546m).
Disposal proceeds received totalled $345m (2022: $220m), giving net
payments for capital expenditure of $2,161m in the period (2022:
$1,326m). Financing costs paid totalled $234m (2022: $140m) while
tax payments were $188m (2022: $156m). 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 period saw a free cash outflow of $355m (2022:
inflow of $154m) and, after acquisition and investment related
expenditure of $681m (2022: $661m), a cash outflow of $1,036m
(2022: $507m), before returns to shareholders.
Net debt 31 October 30 April
2023 2022 2023
$m $m $m
First priority senior secured bank
debt 2,838.5 2,416.3 2,038.4
1.500% senior notes, due 2026 547.3 546.3 546.8
4.375% senior notes, due 2027 596.1 595.2 595.6
4.000% senior notes, due 2028 595.6 594.7 595.1
4.250% senior notes, due 2029 595.0 594.2 594.6
2.450% senior notes, due 2031 744.2 743.5 743.9
5.500% senior notes, due 2032 738.3 737.0 737.8
5.550% senior notes, due 2033 743.1 - 742.9
5.950% senior notes, due 2033 743.6 - -
Total external borrowings 8,141.7 6,227.2 6,595.1
Lease liabilities 2,527.5 2,217.9 2,394.3
Total gross debt 10,669.2 8,445.1 8,989.4
Cash and cash equivalents (25.7) (29.9) (29.9)
Total net debt 10,643.5 8,415.2 8,959.5
Net debt at 31 October 2023 was $10,644m 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 twelve months ended
31 October 2023 was $4,749m. Excluding the impact of IFRS 16, the
ratio of net debt to EBITDA was 1.8 times (2022: 1.6 times) on a
constant currency and a reported basis as at 31 October 2023.
Including the impact of IFRS 16, the ratio of net debt to EBITDA
was 2.2 times (2022: 2.1 times) as at 31 October 2023.
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 2023 Annual Report and Accounts on pages 40 to
45.
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 market is
cyclical and typically
lags the general economic cycle by between 12 and 24 months.
The economic uncertainties resulting from the impact of pandemics (such as COVID-19) 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 small companies 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 our culture 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 - the Group has made a long-term commitment to reduce its Scope 1 and 2 carbon intensity by
35% by 2030, from
its level in 2018, with a near term commitment to reduce its carbon intensity by 15% by 2024, and set out a
roadmap to achieve
this. Failure to do so could adversely impact the Group and its stakeholders.
A significant part of our rental fleet is reliant on diesel engines. Over time, lower carbon 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 waste water, 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 - failure to comply with the frequently changing regulatory environment could result in
reputational
damage or financial penalty.
Further details, including actions taken to mitigate these
risks, are provided within the 2023 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.
Fluctuations in the value of the pound sterling and Canadian
dollar with respect to the US dollar 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 31 October
2023 , 86% of its debt (including lease liabilities) was
denominated in US dollars. Based on the current currency mix of our
profits and on non-US dollar debt levels, interest and exchange
rates at 31 October 2023, a 1% change in the pound sterling and
Canadian dollar exchange rate would impact adjusted pre-tax profit
by approximately $0.2m.
OPERATING STATISTICS
Number of rental stores Staff numbers
31 October 30 April 31 October 30 April
2023 2022 2023 2023 2022 2023
US 1,157 1,025 1,094 20,032 17,568 18,981
Canada 129 98 119 2,337 1,887 2,094
UK 192 184 185 4,358 4,184 4,250
Corporate
office - - - 22 21 22
Group 1,478 1,307 1,398 26,749 23,660 25,347
INDEPENT REVIEW REPORT TO ASHTEAD GROUP PLC
REPORT ON THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
Our conclusion
We have reviewed Ashtead Group plc's condensed consolidated
interim financial statements (the 'interim financial statements')
in the unaudited results for the half year of Ashtead Group plc for
the six month period ended 31 October 2023 (the 'period').
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the consolidated income statement for the period ended 31 October 2023;
-- the consolidated statement of comprehensive income for the period then ended;
-- the consolidated balance sheet as at 31 October 2023;
-- the consolidated statement of changes in equity for the period then ended;
-- the consolidated cash flow statement for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the unaudited
results for the half year of Ashtead Group plc have been prepared
in accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom ('ISRE (UK) 2410'). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the unaudited
results for the half year and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with ISRE (UK) 2410.
However, future events or conditions may cause the group to cease
to continue as a going concern.
RESPONSIBILITIES FOR THE INTERIM FINANCIAL STATEMENTS AND THE
REVIEW
Our responsibilities and those of the directors
The unaudited results for the half year, including the interim
financial statements, is the responsibility of, and has been
approved by the directors. The directors are responsible for
preparing the unaudited results for the half year in accordance
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority. In preparing the
unaudited results for the half year, including the interim
financial statements, the directors are responsible for assessing
the group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the group or to cease operations, or have no realistic
alternative but to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the unaudited results for the half year
based on our review. Our conclusion, including our Conclusions
relating to going concern, is based on procedures that are less
extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the
conclusion, has been prepared for and only for the company for the
purpose of complying with the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority and for no other purpose. We do not, in giving this
conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
4 December 2023
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 Definition and purpose
equivalent
statutory
measure
Drop None Calculated as the change in rental revenue which
through converts into EBITDA (excluding gains from sale
of new equipment, merchandise and consumables
and used equipment).
2023 2022 Change
$m $m
------ ------ -------
US
Rental revenue 4,299 3,774 525
EBITDA 2,331 1,998
Gains (146) (91)
EBITDA excluding gains 2,185 1,907 278
Drop through 53%
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 Net cash Net cash generated from operating activities less
flow generated non-rental net property, plant and equipment expenditure.
from Non-rental net property, plant and equipment expenditure
operating comprises payments for non-rental capital expenditure
activities less disposal proceeds received in relation to
non-rental asset disposals. 2023 2022
$m $m
------ ------
Net cash generated from operating
activities (30) 385
Payments for non-rental property,
plant and equipment (343) (246)
Proceeds from disposal of non-rental
property,
plant and equipment 18 15
Free cash flow (355) 154
------ ------
This measure shows the cash retained by the Group
prior to discretionary expenditure on acquisitions
and returns to shareholders.
----------- ---------------------------------------------------------------------------------------------------
Growth None Calculated by applying the current period exchange
at rate to the comparative period result. The relevant
constant foreign currency exchange rates are provided within
exchange Note 2, Basis of preparation, to the financial
rates 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. 2023 2022 %
$m $m
------ ------ ----
Rental revenue
As reported 4,960 4,383 13%
Retranslation effect - 11
At constant currency 4,960 4,394 13%
Adjusted profit before tax
As reported 1,312 1,243 6%
Retranslation effect - -
At constant currency 1,312 1,243 5%
----------- ---------------------------------------------------------------------------------------------------
Leverage None Leverage calculated at constant exchange rates
uses the period end exchange rate for the relevant
period and is determined as net debt divided by
EBITDA.
2023 2022
---------------------- ----------------------
Excluding Including Excluding Including
IFRS IFRS IFRS IFRS
16 16 16 16
---------- ---------- ---------- ----------
Net debt ($m)
As reported and
at constant currency 8,149 10,644 6,212 8,415
EBITDA ($m)
As reported 4,512 4,749 3,826 4,023
Retranslation effect (10) (11) (29) (32)
At constant currency 4,502 4,738 3,797 3,991
Leverage
As reported 1.8 2.2 1.6 2.1
At constant currency 1.8 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 None Last 12-month ('LTM') adjusted operating profit
on divided by the LTM average of the sum of net tangible
Investment and intangible fixed assets, plus net working
('RoI') 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:
2023 2022
$m $m
------- -------
Adjusted operating profit 2,807 2,358
IFRS 16 impact (55) (34)
Adjusted operating profit
(excluding IFRS 16) 2,752 2,324
Average net assets 15,074 12,250
Return on investment 18% 19%
RoI for the businesses is calculated in the same
way, but excludes goodwill and intangible assets: US Canada UK
$m C$m GBPm
------- ------- ------
Adjusted operating
profit 2,663 156 50
IFRS 16 impact (47) (9) (1)
Adjusted operating
profit (excluding
IFRS 16) 2,616 147 49
Average net assets,
excluding goodwill
and intangibles 10,013 1,033 753
Return on investment 26% 14% 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 Second 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 Second 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: net book value 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 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 or visit 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.
END
IR FLFETFFLSIIV
(END) Dow Jones Newswires
December 05, 2023 02:00 ET (07:00 GMT)
Ashtead (LSE:AHT)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Ashtead (LSE:AHT)
Gráfica de Acción Histórica
De May 2023 a May 2024
