Looking to the medium term Second quarter results | 31 October 2012 Issued: 11 December 2012
Legal notice Some of the factors which may adversely impact some of This presentation has been prepared to inform investors these forward looking statements are discussed in the and prospective investors in the secondary markets Principal Risks and Uncertainties section on pages 18–19 about the Group and does not constitute an offer of of the Group’s Annual Report and Accounts for the year securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for ended 30 April 2012 and in the unaudited results for the or otherwise acquire securities in Ashtead Group plc or second quarter ended 31 October 2012 under “Current trading and outlook” and “Principal risks and any of its subsidiary companies. uncertainties”. Both these reports may be viewed on the Group’s website at www.ashtead ‐ group.com The presentation contains forward looking statements which are necessarily subject to risks and uncertainties This presentation contains supplemental non ‐ GAAP because they relate to future events. Our business and financial and operating information which the Group operations are subject to a variety of risks and believes provides valuable insight into the performance uncertainties, many of which are beyond our control of the business. Whilst this information is considered as and, consequently, actual results may differ materially from those projected by any forward looking important, it should be viewed as supplemental to the statements. Group’s financial results prepared in accordance with International Financial Reporting Standards and not as a substitute for them. Page 1 Second quarter results | 31 October 2012
Overview Revenue growth of 17% Record H1 pre ‐ tax profit of £141m (2011: £84m) Group EBITDA margin rises to 41% (2011: 36%) Interim dividend raised 50% to 1.5p per share (2011: 1.0p) Acquired JMR Industries, a business serving the oil and gas industry Board now anticipates full year profit ahead of its earlier expectations Page 2 Second quarter results | 31 October 2012
Page 3 Second quarter results | 31 October 2012
Q2 Group revenue and profit Q2 Change 1 (£m) 2012 2011 Revenue 356 307 16% ‐ of which rental 316 273 15% Operating costs (209) (194) 8% EBITDA 147 113 29% Depreciation (57) (50) 15% Operating profit 90 63 41% Net interest (11) (12) ‐ 20% Profit before tax and amortisation 79 51 56% Earnings per share (p) 10.0 6.4 53% Margins ‐ EBITDA 41% 37% ‐ Operating profit 25% 21% 1 At constant exchange rates 2 The results in the table above are the Group’s underlying results and are stated before exceptionals, intangible amortisation and fair value remeasurements Page 4 Second quarter results | 31 October 2012
H1 Group revenue and profit H1 (£m) 2012 2011 Change 1 Revenue 681 575 17% ‐ of which rental 605 517 15% Operating costs (405) (368) 8% EBITDA 276 207 31% Depreciation (113) (97) 14% Operating profit 163 110 47% Net interest (22) (26) ‐ 11% Profit before tax and amortisation 141 84 64% Earnings per share (p) 17.7 10.7 62% Margins ‐ EBITDA 41% 36% ‐ Operating profit 24% 19% 1 At constant exchange rates 2 The results in the table above are the Group’s underlying results and are stated before exceptionals, intangible amortisation and fair value remeasurements Page 5 Second quarter results | 31 October 2012
H1 divisional results – Sunbelt Total revenue EBITDA Revenue bridge +18% Change ($m) $913m 2011 rental revenue 694 Change – Volume +10% 79 $776m – Yield +5% 38 2012 rental revenue 811 Sales revenue 102 2012 total revenue 913 +33% $395m EBITDA bridge Change ($m) $296m 2011 EBITDA 296 Rental revenue increase +17% 117 Operating cost increase +6% (24) Increase in profit on sale of fixed assets 6 2012 EBITDA 395 2011 2012 2011 2012 Margins: 38% 43% Page 6 Second quarter results | 31 October 2012
H1 divisional results – A ‐ Plant Total revenue EBITDA Revenue bridge +11% Change (£m) £104m 2011 rental revenue 86 £94m Change – Volume +9% 8 – Yield ‐ 2% (2) 2012 rental revenue 92 Sales revenue 12 2012 total revenue 104 EBITDA bridge +18% Change (£m) £31m £26m 2011 EBITDA 26 Rental revenue increase +8% 6 Operating cost increase +4% (1) Increase in profit on sale of fixed assets ‐ 2012 EBITDA 31 2011 2012 2011 2012 Margins: 28% 30% Page 7 Second quarter results | 31 October 2012
Cash flow Significant reinvestment in our rental fleet H1 H1 (£m) 2012 2011 Change EBITDA before exceptional items 276 207 +33% Cash conversion ratio 1 80.2% 83.7% Cash inflow from operations 2 221 173 +28% Payments for capital expenditure (413) (258) Rental equipment and other disposal proceeds received 49 39 (364) (219) Interest and tax paid (24) (27) Exceptional costs paid (15) (2) Free cash flow (182) (75) Dividends paid (13) (10) Purchase of own shares by the ESOT (10) ‐ Increase in net debt (205) (85) 1 Cash inflow from operations as a percentage of EBITDA 2 Before fleet changes and exceptionals Page 8 Second quarter results | 31 October 2012
Net debt and leverage Net debt to EBITDA continues to reduce as we invest in the fleet 4.0 Leverage Oct Oct (£m) 2012 2011 3.5 Net debt at 30 April 854 776 3.1 2.9 Translation impact 4 26 3.0 Opening debt at closing exchange rates 858 802 2.6 2.4 2.5 Change from cash flows 205 85 2.3 Non ‐ cash movements 6 2 2.0 Net debt at period end 1,069 889 2009 2010 2011 2012 Oct April 2012 2013 projection Comprising: Interest First lien senior secured bank debt 763 573 Floating rate: 71% Fixed rate: 29% Second lien secured notes 304 336 Finance lease obligations 3 3 Cash in hand (1) (23) Total net debt 1,069 889 Net debt to EBITDA leverage (x) 2.4 2.7 Page 9 Second quarter results | 31 October 2012
Strong RoI pre cyclical recovery Sunbelt RoI 1 A ‐ Plant RoI 1 25% 25% 20% 20% 15% 15% Cost of capital Cost of 10% 10% capital Cost of debt 5% 5% Cost of debt 0% 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 LTM 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 LTM 1 Excluding goodwill Oct Oct 2012 2012 Group RoI 2 20% 15% 10% Cost of capital 5% Cost of debt 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 LTM Page 10 2 Including goodwill Oct Second quarter results | 31 October 2012 2012
Page 11 Second quarter results | 31 October 2012
Sunbelt revenue drivers Continuation of strong performance in both volume and yield Average fleet on rent Q1 Q2 Physical utilisation +10% +11% 80% 70% 60% Year over year change in yield 2010 ‐ 11 Q1 Q2 2011 ‐ 12 +6% 2012 ‐ 13 50% +4% May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Page 12 Second quarter results | 31 October 2012
Impact of Sandy ● No impact in Q2 reported results ● Certainly will impact the short term ● November rental revenues +26% ‐ including Sandy impact of +5% Page 13 Second quarter results | 31 October 2012
Markets have clearly stabilised Sustained period of growth forecast US construction markets remain at historical lows 1,200 1,100 1,000 900 2005 $bn 800 700 600 500 2005 2006 2007 2008 2009 2010 2011 LTM Sept Source: Maximus Advisors 2012 US construction growth forecasts 30% McGraw ‐ Hill 25% Maximus Advisors Global Insight 20% 15% 10% 5% 0% 2012 2013 2014 2015 Page 14 Second quarter results | 31 October 2012
Performance through the cycle 2007 2009 2010 2008 Strong market Rightsizing of Running Benefitting from structural change Medium term growth opportunity Preparation for the business tight downturn business Revenue ($m) ● Further structural change 1,644 1,626 1,507 1,450 1,308 1,225 Rental penetration 1,081 75% Fleet age (months) 46 44 50% 45% 38 36 34 31 32 25% Fleet size ($m) 2,698 2000 2011 2014E 2012 2,453 2,314 2,151 2,136 2,147 2,094 US UK Source: Kaplan Associates / Management estimates EBITDA margins (%) US market share 39% 37% 36% 36% 35% 32% 32% Return on investment (%) 6% 22% 4% 20% 19% 19% 2% 14% 9% 6% 2002 2007 2012 US construction markets (2005 $bn) Source: Management estimates 1,066 1,006 897 ● Cyclical recovery 777 696 677 658 Leverage to be sustained below 2 times net debt to EBITDA Page 15 Second quarter results | 31 October 2012
Rental penetration slows in recovery but does not go backwards Sunbelt vs. Rental industry spend Development of US rental penetration 100% 18% 16 15% Rental industry capital expenditure Sunbelt as % of industry total 16% 90% 14 12% 14% 80% 12 12% US rental penetration 70% 10 9% 10% Market share $bn 60% 8 8% 6% 50% 6 6% 40% 4 4% 3% 30% 2 2% 20% 0% 0 0% 2000 2005 2010 ? 2003 2004 2005 2006 2007 2008 2009 2010 2011 US rental penetration Sunbelt market share Recession Source: IHS Global Insight / Management information ● Flexibility of rental becomes well established ● Fleet ownership infrastructure permanently reduced ● Underpinned by technical and legislative changes Page 16 Second quarter results | 31 October 2012
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