ANNUAL REPORT & ACCOUNTS 2001 The integration within a matter of three months of the acquired BET USA business with our existing Sunbelt operations, which more than doubled the size of our US business, will enable us to pursue our objective of increasing our 2% market share and improving on our fifth place in this growing $23 billion US market. In the UK we need to recover from this year’s setback with controlled investment and management in a difficult market. Adjusted Group profits are up for the ninth successive year and, to reflect the Board’s confidence in the future prospects of the Group, the dividend for the year has been increased by 11%. Peter Lewis 31 July 2001 A N N U A L R E P O R T & A C C O U N T S 2 0 0 1 RENTALS Contents Financial Highlights Financial Highlights 2-5 Chairman’s report The results for the year, expressed in accordance with all currently applicable accounting The results for the year, expressed in accordance with all currently applicable accounting standards including FRS 3 and FRS 18 are as follows: standards including FRS 3 and FRS 18 are as follows: Revenues Revenues EBITDA EBITDA Operating profit Operating profit Profit before tax Profit before tax Earnings per share Earnings per share 2000/01 2000/01 1999/00 1999/00 £m £m 552.0 552.0 190.8 190.8 69.0 69.0 11.9 11.9 7.0p 7.0p £m £m 302.4 302.4 124.3 124.3 57.1 57.1 46.2 46.2 12.8p 12.8p The directors consider that the underlying performance of the business is best described by the The directors consider that the underlying performance of the business is best described by the following adjusted figures that exclude non-recurring and non-cash items associated with the BET following adjusted figures that exclude non-recurring and non-cash items associated with the BET USA acquisition: USA acquisition: Previous accounting basis Previous accounting basis New accounting basis New accounting basis under FRS 18 under FRS 18 2000/01 2000/01 1999/00 1999/00 Increase Increase 2000/01 2000/01 1999/00 1999/00 Increase Increase £m £m £m £m Adjusted EBITDA* Adjusted EBITDA* 210.9 210.9 127.3 127.3 Adjusted operating profit* Adjusted operating profit* Adjusted profit before tax* Adjusted profit before tax* 99.7 99.7 58.9 58.9 Adjusted earnings per share* 21.6p Adjusted earnings per share* 21.6p Dividends per share Dividends per share 3.50p 3.50p 59.4 59.4 48.5 48.5 13.5p 13.5p 3.16p 3.16p % % 66 66 68 68 21 21 60 60 11 11 £m £m £m £m 205.6 205.6 124.3 124.3 91.1 91.1 50.3 50.3 18.9p 18.9p 3.50p 3.50p 57.5 57.5 46.6 46.6 12.9p 12.9p 3.16p 3.16p % % 65 65 58 58 8 8 47 47 11 11 * before exceptional BET USA integration and financing costs, non-recurring salary costs paid to * before exceptional BET USA integration and financing costs, non-recurring salary costs paid to redundant former BET USA staff and the non-cash items of goodwill and convertible loan interest redundant former BET USA staff and the non-cash items of goodwill and convertible loan interest amortisation. A full reconciliation between adjusted profits and profits under FRS 3 is given on amortisation. A full reconciliation between adjusted profits and profits under FRS 3 is given on page 14. page 14. 6-9 Chief Executive’s review 10-19 Financial review Operational Reviews 20-21 Sunbelt Rentals 22-23 A-Plant 24-25 Ashtead Technology 26 Directors 27 Advisers 28-30 Directors’ report 31-33 Corporate governance report 34-38 Remuneration Committee report 39 Statement of directors’ responsibilities 40 Auditors’ report 41 42 Consolidated profit & loss account Consolidated balance sheet 43 Company balance sheet 44 Consolidated cash flow statement 45-62 Notes to the accounts 63 Seven year history 64-68 Senior staff and locations 69 Future dates CHAIRMAN’S REPORT Your Group has steadily built a growing presence in America since it began its activities there 11 years ago. It has been the strategic goal of your management for more than three years to secure a larger share of the market by a quality acquisition to supplement our organic growth. Dear Owner, Whilst this makes an already complex set of important result for a rental company, rose This was arguably the most important 12 accounts more complicated it provides a 65% to £205.6m (£124.3m) with adjusted months in your Group’s 17 year history. As a consistent basis for future reporting. operating profit up 58% to £91.1m (£57.5m). result of the acquisition in June 2000 of BET Adjusted earnings per share were 47% higher USA from Rentokil Initial your Group has For the year just ended adjusted profits at 18.9p (12.9p). Your directors are practically doubled in size. By this before tax on the previous accounting basis recommending an increased final dividend transaction, Ashtead realised its long held were £58.9m, on the revised FRS 18 basis (the twelfth consecutive period it has been strategic plan of a substantial presence in the £50.3m and on a pre-tax basis under FRS 3 raised) of 2.88p making a total for the year of growing, but still underdeveloped, US market and FRS 18 £11.9m. Further details of the 3.5p - up 11% - to reflect their confidence in to add to its established leadership in the UK. effects of adopting FRS 18 are included in the future progress of the enlarged Group. The prompt integration programme the accompanying financial review. Your represented management’s biggest test to directors consider that the underlying There has been a significant change in the date. The successful merger of BET USA with performance of the business is best scale of your Group. This year’s revenue was Sunbelt is a welcome reaffirmation of the described in the adjusted figures that exclude more than double that of two years ago; appeal and robustness of our unique non-recurring and non-cash items associated adjusted EBITDA for the year was greater business model. with the BET USA acquisition. Subsequent than revenue of three years ago and adjusted references in this commentary are to the operating profit has more than doubled in the In the light of the acquisition of BET USA and adjusted figures on the post FRS 18 basis. same period. the subsequent increase in the scale of the business, the Board has chosen to adopt Group review Sunbelt early the new Financial Reporting Standard Following the acquisition of BET USA revenue Your Group has steadily built a growing (FRS 18) and as a result has conducted a full increased 83% to £552.0m (£302.4m). presence in America since it began its review of all of its accounting practices. Adjusted EBITDA, arguably the most activities there 11 years ago. It has been the 2 The installation of a 75kVA power pack by A-Plant providing emergency electricity supplies to rural communities strategic goal of your management for more testimony to local management’s strength in A-Plant than three years to secure a larger share of depth. the market by a quality acquisition to The results of A-Plant this year were a setback. EBITDA was broadly unchanged supplement our organic growth. BET USA has There continues to be a fundamental and year on year at £75.2m (£74.3m) but, due to proved to be the ideal vehicle to add to the growing demand for the rental option, which the increased depreciation charge, operating largely home-grown Sunbelt business. Your accounts for an estimated 20-25% of US profits declined 25% to £25.1m, the first Group enjoys a significant advantage over its product usage compared with 75-80% in the reduction in A-Plant’s operating profits since US competitors in that, prior to more than more mature UK market. In a slowing US 1992. The UK market also continues to be doubling the size of its US business with this economy, rental may achieve yet greater competitive. The attempts of last October to purchase, it had already established a unique prominence and Sunbelt’s integrated achieve a much needed price rise met with operating culture in the industry. business is set to increase its current 2% some success. However business levels were share of the US$23 billion market. Good held back by the rigours of exceptionally wet Our approach of a highly devolved progress was made in raising BET USA weather resulting in lower construction management style with emphasis on the local margins towards the levels historically earned activity and the ripple effect from the profit motive in which all staff participate in by Sunbelt. prolonged foot and mouth epidemic. the monthly paid profit share programme is firmly rooted in Sunbelt. Thus, it was possible Sunbelt performed strongly, with operating With hindsight it was a mistake to invest so to extend quickly our “personal profits rising to £62.4m (£21.4m), as the rate heavily in the early part of the year in an responsibility/personal reward” ethos to of growth in the US economy slowed. The attempt to pre-empt market positions. BET USA despite it having been run as three core Sunbelt locations achieved strong like for However, capital expenditure in the current separate businesses under successive like revenue growth of 20% in US dollars with year will be much less as a result of last previous owners. The successful integration the total core business (including recently year’s expenditure. Looking forward, the of BET USA into Sunbelt in 70 days is a opened locations) growing 51% overall. principal features of the UK market are likely 3 Ashtead Technology Rentals is probably the only rental company in North America supplying instruments for cleanroom performance testing for some time to be continued rationalisation This new range offers attractive development The tax credit of £10.9m comprises a credit among competitors but with sustained opportunities in many of the other markets of £1.2m in respect of current tax and a credit demand for the rental product. Whilst these served. of £9.7m relating to deferred tax. The current structural changes in the market take place, your management are resolved to restrict Financial tax credit arises because no tax is due in respect of the current year and due to a future cost growth and capital investment Net cash inflow from operating activities reduction in the level of the required until conditions exist to provide a better before exceptional BET USA integration costs provisions for previous years. The deferred return on capital. rose by 55% to a record £173.0m (£111.4m). tax credit arises partly in the US where Ashtead Technology Exceptional integration costs at £12.3m were any potential deferred tax liability and partly Ashtead Technology has continued its somewhat higher than the £10m estimate we in the UK where the potential deferred tax recovery from the impact of the low oil prices gave when the BET USA acquisition was liability is lower than in the previous year. unused tax losses carried forward eliminate of two years ago. Operating profits rose 44% announced in April 2000. The majority of the to £3.6m. After a period of difficult trading expenditure was for rebranding the BET USA Staff conditions, North Sea activity is greater in the product range (£8.9m). The total also includes Every member of staff makes his or her UK sector but less buoyant in the Norwegian staff redundancy and office closure costs of unique contribution to our success. Monthly area. South East Asia is already showing £1.2m and other one-off costs of £2.2m. No paid profit share was earned by staff at all increased demand and confidence has at last further integration costs are anticipated. levels in the amount of £13.2m (£5.9m) returned to the offshore market in America. reflecting the profits they generated. We are With the acquisition of Response Rentals last Consistent with previous years, the sale of pleased for them and hope they make more October, Ashtead Technology became a retired assets generated a profit over book each year. major participant in the environmental value of £6.8m (£6.0m). products rental market in the United States. 4 A portable diesel air compressor and pneumatic demolition tool Current and future trading term opportunities for growth in the Group’s it and, of course, my successor, Henry Overall the year has begun in line with US markets result in an expectation of a Staunton, many more triumphs in the future. expectations with Group revenues in May and satisfactory outcome for the current year and June up 29%. In the same period, on a like optimism about the Group’s future prospects. for like basis, Sunbelt’s same store revenues grew by 10%, A-Plant’s grew by 2% and My retirement Ashtead Technology’s by 28%. It was announced with the preliminary results that I have chosen to retire at the end of July The Group’s objectives for the current year 2001. In my 61st year and after more than 17 are to continue to grow the Sunbelt Profit years as your Chairman, almost all in an Centre network with around 30 new branch executive capacity, I decided it was the right Peter Lewis Chairman 31 July 2001 openings this year. A-Plant will concentrate time to step down. on improving its operating efficiencies. Both companies will place focus on increasing We have come a long way since we started in returns on capital employed. Capital May 1984 with five branches and revenues of expenditure will reduce significantly year on less than £2m. Ashtead is now one of the year. Ashtead Technology is expected to largest companies of its kind in the world. I continue its progress of the last twelve want to thank all stakeholders in the months. Company: staff, shareholders, customers, suppliers and advisers for their unstinting The Group cannot be immune from macro- support over nearly two decades. To this economic conditions in the UK and USA. “A-team” goes the credit for our success. I However, current trading levels and the long wish the Group and everyone associated with 5 CHIEF EXECUTIVE’S REVIEW The year just ended saw a significant change of scale and focus in your Group with turnover rising by 83% to £552.0m and the original cost of our rental fleet approximating £1 billion. We also became the fifth largest equipment rental company in the United States where Sunbelt now provides 68% of our adjusted operating profits compared with 37% a year ago. Results The US Market important that change was made and made After what has in many ways been one of the Sunbelt trebled in size last year. This was the quickly. most challenging years for your Group, it is result not only of the acquisition of BET USA pleasing to report strong adjusted earnings from Rentokil on 1 June 2000, but also of Sunbelt’s 2000/01 results were achieved amid per share performance (up 47%) and an strong organic growth from the core Sunbelt increasing concerns about the strength of the enhanced competitive position in each of our business reflecting in part the opening of 22 US economy. In this context, Sunbelt’s markets. As usual, our detailed seven-year Profit Centres in the previous year. However, I second half performance, which showed an record is shown at the end of this Annual am pleased to report that, when these too are increase on the first half, is very encouraging. Report (page 63) and you will note excluded, our like-for-like revenue growth rate As many of our competitors are financially consistent year on year growth in all (measured in US dollars) was 20% constrained following their significant important measures. demonstrating the strength of our profit acquisition activity over the past 3-4 years, Nevertheless, it is the recent past and future based on local performance, and of our US to increase its market share, which currently centre model, with its focus on profit share we believe this offers Sunbelt an opportunity opportunities on which I shall be management team. It is to their credit that stands at only 2%. concentrating in this report. The year just they integrated our largest ever acquisition in ended saw a significant change of scale and less than three months while maintaining the The measured build-up of our US operations, focus in your Group with turnover rising by above-mentioned growth in the original almost entirely by greenfield openings over 83% to £552.0m and the original cost of our Sunbelt businesses. It is worth noting that the more than a decade prior to the BET USA rental fleet approximating £1 billion. We also integration was effectively of three cultures acquisition, has stood us in good stead. The became the fifth largest equipment rental into Sunbelt as we inherited through BET new financial year has also started well with company in the United States where Sunbelt USA three different regional businesses with same store revenues up 10% in the two now provides 68% of our adjusted operating different trading names and management months to end June and our strategy over the profits compared with 37% a year ago. styles. For this reason, it was doubly next year and beyond is to resume our 6 Two skid-steer loaders removing silt from the spillway of a dam in North Carolina opening programme on our new enlarged company, has sold off its fleet and Although full year adjusted operating profits geographical base at the rate of 30 Profit abandoned the general equipment market. were 25% down on the previous year, Centres a year. A-Plant’s second half performance gives As noted in our interim statement, it was in modest grounds for optimism given the Currently only 20-25% of manufactured anticipation of increasing consolidation that extremely difficult trading conditions in a year product - it was only 5% a few years ago - is A-Plant invested in its rental fleet at the which included the effects of a fuel strike, the distributed through rental in the USA beginning of the past financial year. In foot and mouth epidemic and the wettest compared with approximately 80% in the UK practice, although many companies have weather since records began in many parts of and in Japan. Yet the US rental market, been put up for sale, much consolidation is the country. estimated at $23bn, is already almost seven still to take place. Against this background, it times the size of the UK market and is set to was decided to limit capital expenditure in the In the coming year, the drive will be to grow substantially. Hence, Sunbelt’s second half - £9m was spent compared with improve returns on invested capital. As a opportunity is to take a growing share of a £58m in the first half. The general strategy is much more mature business than Sunbelt, it potentially very large market. to improve returns on invested capital by is anticipated that A-Plant will be cash controlling costs, raising prices wherever positive in the coming year. It is also a year in The UK Market possible and making our existing assets which the drive will be to reap the benefits, in Highly competitive conditions have “sweat”. To this end, price increases were put terms of customer satisfaction, flowing from characterised the UK market in which A-Plant in place at the beginning of the second half our significant investment in IT and our trades. We have seen significant changes in with reasonable success, despite some national training centre. that our largest competitor has become the sacrifice of volume, with the net effect that subsidiary of Caterpillar’s UK distributor while revenues increased by 7% for the year as a Our scale as a market leader in both the UK another public company, once the UK’s whole compared with 5% in the first half. and the USA and the ownership of our major leading non-operated equipment rental UK competitor indirectly by a manufacturer 7 A-Plant Rentarc and A-Plant Power Generation supply a wide range of electrical power production equipment have strengthened our competitive position In the year just ended we saw a consistently for what remains A-Plant’s largest customer vis-a-vis our suppliers, many of whom are good performance in Singapore, a greatly base, the construction industry, together with themselves market leaders in both countries. improved second half in Houston and a slow significant planned increases in public The number of these major vendors and the market remaining in Aberdeen. However, the spending, suggest a relatively sound trading brand range of product they supply are North Sea market has now started to improve environment and it is inconceivable (surely!) important to us as we continue to enter into and, as we enter our new fiscal year, our that the same combination of weather and long term agreements with major national and Ashtead Technology businesses are trading disease will affect the current year as it did regional customers. At the same time, we will well - with the offshore business alone the last. We are looking, therefore, for seek to supplement this competitive growing 28% in the two months to the end of concentration on delivery of improved returns advantage with strong support for local June. I therefore look forward to an enhanced from your A-Plant management team, who customers through our decentralised profit profit contribution from this cash generative have worked enormously hard on your behalf centre structure. business in the coming year. in the past year in very trying conditions. Offshore & Environmental Markets Outlook In the United States the dominant economic The past year has also seen a change of scale In the UK we expect competitive conditions theme is the degree, if any, to which a full in Ashtead Technology, again through the to continue, resulting in the demise of a scale recession should be anticipated. To the acquisition of an American rental company. number of players through consolidation and extent that there is uncertainty, customers Its move into a wide range of environmental downsizing. On the other hand, benefits faced with equipment buying decisions will equipment takes us into an area which should accrue from added value offered to be more inclined to rent; to the extent that promises excellent growth, as we further customers through our extranet facility and a the market can currently be gauged, we are develop its product ranges and introduce new sales development programme currently not experiencing recessionary conditions but them to existing Ashtead Technology being put in place. Despite some recent we are outperforming our competitors; to the businesses in Europe and SE Asia. concerns for the economy at large, forecasts extent there is a future downturn, our 8 operating history, including our management in the worst-ever UK recession of the early 1990s which resulted in a significantly increased market share, should provide us with some competitive advantage. We are not recession proof, but we believe we are recession resistant. During the last US recession there was no reduction in the size of the rental market and a very significant subsequent increase. Our aim is for good like-for-like increases in the core Sunbelt business, improved margins from the ex BET USA business as the profit share culture continues to take hold, and managed growth, sustained rise in oil prices from the $10 a substantially from new openings, as we barrel level of two years ago. increase the number of US Profit Centres from 163 at year end to a little over 200. Top: Sunbelt Rentals and A-Plant offer a wide range of non-mechanical plant such as acrow props and equipment, scaffolding and access towers Bottom: A-Plant’s anti-vandal security units provide safe storage on site Finally, as I have previously indicated, we believe Ashtead Technology will be enjoying good trading conditions in the coming year as increased levels of investment follow the George Burnett, Chief Executive 31 July 2001 9 FINANCIAL REVIEW Completion of the BET USA transaction required a complete restructuring of the Group’s finances. On 1 June 2000, or shortly thereafter, all of the Group’s existing debts were repaid and replaced with drawings under the new $825m committed secured loan facility which was also utilised to finance the cash element of the consideration. Adoption of FRS 18 Stationery used in the UK is now accounted for by writing off to The Group has adopted early the new Financial Reporting Standard operating costs the cost of stationery ordered and delivered in the number 18 (FRS 18) in its accounts for the year ended 30 April 2001. period rather than the estimated amount of stationery consumed. This Adoption of FRS 18 required a full review of all the Group’s accounting change in treatment has, as required by FRS 18, been implemented policies and estimation techniques (the latter being the methods by retrospectively with a prior year adjustment to eliminate the balance of which accounting policies are implemented). This review was £0.5m for year end stationery holdings previously included in debtors conducted in accordance with FRS 18 which requires that, where a and prepayments. choice of treatment is available, the “most appropriate” accounting policies and estimation techniques shall be used. Implementation of Revisions to estimation techniques FRS 18 had effect in the following three areas: Non-mechanical equipment (acrow props and equipment, aluminium access towers and steel scaffolding) has until now been held in fixed Accounting policy changes assets at cost with write offs booked against cost of sales in respect Contributions received from equipment vendors to the Group’s selling of both equipment sold in the period and equipment becoming and marketing expenses were previously accounted for as a reduction damaged or broken or otherwise unusable in the period. To ensure in the costs to which they related (and thus as a credit to operating that all such equipment physically exists, twice yearly stock checks profit). Although the prices the Group pays for its rental equipment are undertaken in September and March during which any damaged have generally not increased and in very many cases have decreased or broken equipment is identified for subsequent write off. Because since these arrangements were first established some five years ago, it these items mostly comprise steel or aluminium poles, the has now been decided instead to treat the amounts received as a deterioration in their condition occurring annually is minimal. The reduction in the value of the rental equipment acquired in the period to Group’s experience is also that, because it buys these items in bulk, which they relate. This change in treatment has been implemented the selling price for individual items exceeds their original cost. retrospectively as required by FRS 18 with a prior year adjustment made to fixed assets and to reserves. However, having regard to the FRS 18 requirement to apply the “most 10 appropriate” accounting policies and estimation techniques and in light of the increased materiality of these items following the acquisition of BET USA, Pre-tax profit/net assets under previous accounting policies and One of A-Plant’s many articulated booms to put you in the right position Reduction in profits Reduction in net assets 2000/01 1999/00 £m £m 2001 £m 2000 £m which had a large fleet of steel scaffolding, estimation techniques 20.8 48.1 269.0 246.4 it has been decided in future to depreciate Accounting policy changes these assets over 20 years to zero residual value. Under FRS 18, the introduction of a depreciation charge where none previously existed is a change to a more appropriate estimation technique to be implemented in Contributions to sales and marketing expenditure: - reduced EBITDA & hence lower fixed asset additions - reduced depreciation charge/accumulated depreciation line with the principles set out in FRS 15: Tangible Fixed Assets. Consequently the Stationery impact of the new practice is being implemented prospectively by way of an increased depreciation charge with no adjustments being made to opening reserves. Total accounting policy changes accounted for retrospectively Estimation technique changes Non-mechanical equipment depreciation: -additional depreciation charge for the year The effect of these adjustments on the Effect on goodwill amortisation profit for the period and on asset values at Total impact of implementing FRS 18 both 30 April 2001 and 2000 is shown in the table: Pre-tax profit/net assets under FRS 18 11.9 11 (5.5) (3.0) (16.7) (11.0) 1.7 0.2 1.1 - 4.0 (0.5) 2.1 (0.7) (3.6) (1.9) (13.2) (9.6) (5.0) (0.3) (8.9) - - (1.9) 46.2 (5.0) (0.3) - - (18.5) (9.6) 250.5 236.8 Reaching the top with an A-Plant vertical personnel lift A Sunbelt Rentals backhoe loader in operation at a residential construction site In the remainder of this financial review the figures quoted are taken profit share paid of £13.2m (£5.9m). from the financial statements, after implementation of the above accounting changes, except where otherwise stated. The figures Depreciation and gain on sale of fixed assets quoted are also, except where noted, stated on an adjusted basis The depreciation charge for each business for the year was: excluding exceptional BET USA integration and financing costs, non- recurring salary costs paid to redundant former BET USA staff and the Rental equipment Other assets non-cash items of goodwill and convertible loan interest amortisation. Profit & loss account Revenue Total revenue increased by 83% to £552.0m. Sunbelt Rentals’ revenue increased from £113.1m to £345.7m, an increase of 206%, with Sunbelt Rentals A-Plant Technology £m 55.8 42.9 3.9 102.6 Total £m 60.4 50.1 4.0 £m 4.6 7.2 0.1 11.9 114.5 A-Plant’s rising from £181.5m to £194.5m, an increase of 7%, and The gain on sale of assets this year was £6.8m compared with £6.0m Ashtead Technology’s increasing from £7.8m to £11.8m, an increase of in the previous year. 51%. Acquired BET USA locations contributed £175.2m to Sunbelt Rentals’ revenue with core Sunbelt locations growing 51% overall. On Earnings before interest, taxation, depreciation and a same store, like for like basis, Sunbelt Rentals’ revenue grew 20% amortisation (EBITDA) measured in US dollars. Adjusted EBITDA, which is perhaps the best measure of performance Staff costs resulting from the differing methods and lives applied by different Staff costs, including salary costs paid to redundant BET USA businesses, rose by 65% from £124.3m to an adjusted £205.6m employees, constitute the largest single expense of the business. Total before non-recurring salary costs for redundant BET USA staff and the staff costs have increased from £88.0m to £170.2m. The average exceptional BET USA integration costs. After these costs EBITDA was for a rental business as it eliminates the variations in depreciation rates number of employees has increased from 3,729 to 5,834 with 6,043 on £190.8m. the payroll at 30 April 2001 (30 April 2000 - 3,930). Staff costs include 12 Operating profit Adjusted operating profit for the year by business division is summarised in the table below: Turnover Operating profit Net assets 2001 £m 2000 £m (restated) 2001 £m 2000 £m (restated) Sunbelt Rentals - excluding BET Profit Centres - BET Profit Centres A-Plant Ashtead Technology Exceptional integration costs Redundant BET staff salary costs Goodwill amortisation Central items* 2001 £m 170.5 175.2 345.7 194.5 11.8 552.0 - - - - 2000 £m 113.1 - 113.1 181.5 7.8 302.4 - - - - * net borrowings and deferred taxation 552.0 302.4 62.4 25.1 3.6 91.1 (12.3) (2.5) (7.3) - 69.0 21.4 33.6 2.5 57.5 - - (0.4) - 57.1 Operating margins Interest payable and similar charges As shown above, operating profit under FRS 3 was £69.0m representing an operating margin of 12.5%. Adjusted EBITDA and adjusted operating margins were: Bank interest payable Bank interest receivable EBITDA margin Operating profit margin Net bank interest payable 2000/01 1999/00 2000/01 1999/00 Interest amortisation on convertible loan note Sunbelt Rentals A-Plant Technology Overall group % 35.5 38.7 64.4 37.3 % 40.0 40.9 61.5 41.1 % 18.1 12.9 30.5 16.6 % 18.9 18.5 32.1 19.0 Exceptional one off costs re new banking facilities 9.7 57.1 10.9 Bank interest payable relates primarily to the interest payable on the variable rate, secured bank facility. Interest is payable under this facility at an average premium of 250 basis points over three month The reduced margin earned by Sunbelt Rentals resulted from the LIBOR for the currency in which the loan is drawn. Interest on inclusion within its results of the lower margin BET USA business. US$250m of this bank debt has been fixed at 6.825% by three year A-Plant’s margins fell 5% at the adjusted EBITDA level but declined forward interest rate agreements entered into in August 2000. The more substantially at the operating profit level reflecting the increased impact of these swaps is recognised rateably over their life as part of investment in its rental fleet at the beginning of the calendar year. bank interest payable as is the 0.75% commitment fee payable on the Technology’s EBITDA margin improved as its markets recovered from undrawn element of the facility which is committed at US$825m. The the low oil price effect of the late 1990’s. Overall group margins average borrowing rate experienced during the year on bank borrowings declined mainly due to the impact of the BET USA acquisition. (including the 250 basis point premium) was approximately 9%. 13 571.0 283.6 12.2 866.8 - - - (616.3) 250.5 173.7 259.3 8.2 441.2 - - - (204.4) 236.8 2000/01 1999/00 £m 41.4 (0.6) 40.8 6.6 £m 12.0 (1.1) 10.9 - - A ride-on scrubber from Sunbelt Rentals’ fleet of mobile ‘large area’ cleaning equipment Although no cash interest is payable on the convertible loan until the them in the Group’s tax computations. The premium on early first anniversary of its issue (i.e. from 1 June 2001), accounting redemption of the Sunbelt private placement debt was incurred standards require the loan, which has a par value of £134m, to be because these fixed rate borrowings were redeemed early at a time recorded at its fair market value at date of issue (assessed when lower interest rates prevailed than those current when the debt independently by Schroder Salomon Smith Barney at £121.3m). The was first raised. difference between these amounts is then required to be amortised to bring the loan up to its £134m par value over its life. Effectively this Profit before tax measured in accordance with FRS 3 results in a non-cash interest charge of £6.6m in 2000/01 and an As a result of the significant one-off exceptional items incurred interest charge in future years which will reflect not only the 5.25% following the BET USA acquisition, profits before tax measured under fixed interest cost actually payable to the loan note holders (£7.0m per FRS3 after goodwill amortisation, exceptional items and convertible annum) but also a further non-cash charge of approximately £0.7m loan interest reduced by 74% to £11.9m (£46.2m). annually to give a total annual interest cost on this loan of approximately £7.7m in future years. Adjusted profits before taxation Exceptional one-off costs re new banking facilities comprise £8.3m in FRS 18 basis. Adjusted profits before tax are stated excluding respect of the underwriting fees paid to the banks which arranged the exceptional BET USA integration and financing costs, non-recurring new loan facility and £1.4m in respect of the repayment premium salary costs paid to redundant former BET USA staff and the non-cash payable on the early redemption of Sunbelt’s private placement debts. items of goodwill and convertible loan interest amortisation. Adjusted profits before taxation rose by 8% to £50.3m (£46.6m) on the The underwriting fees were payable to the banks which arranged the new secured bank loan facility to guarantee availability of the As noted above, in future years convertible loan interest will become a necessary loan finance through the period from announcement of the cash charge and thus, for 2001/02 and thereafter, adjusted profits acquisition until its approval by shareholders at the EGM held for this before taxation will be stated after convertible loan interest but before purpose. Expensing these costs under FRS 4 rather than capitalising goodwill amortisation. them as part of the acquisition resulted in credits being available for The reconciliation of adjusted profits before tax to pre-tax profits under FRS 3 is as follows: Previous accounting basis New accounting basis under FRS 18 2000/01 1999/00 2000/01 1999/00 Adjusted pre tax profit for the year Exceptional BET USA integration costs Exceptional costs re new bank facility Non recurring BET USA salary costs Non cash interest convertible loan interest Goodwill amortisation Pre-tax profits under FRS 3 £m 58.9 (12.3) (9.7) (2.5) (6.6) (7.0) 20.8 £m 48.5 - - - - (0.4) 48.1 14 £m £m 50.3 (12.3) (9.7) (2.5) (6.6) (7.3) 11.9 (restated) 46.6 - - - - (0.4) 46.2 Exceptional BET USA integration costs: The deferred tax credit arises partly in the US where the unused tax Rebranding costs relating to the acquired premises and rental equipment Redundant staff Other integration costs £m 8.9 1.2 2.2 12.3 losses carried forward are now sufficient to eliminate any potential deferred tax liability and partly in the UK as a result of the disclaiming of capital allowances discussed above. Earnings per share Basic earnings per share computed by reference to the FRS 3 pre-tax profit on the new accounting basis reduced by 45% to 7.0p per share The fleet repainting programme - to brand the acquired premises and whilst adjusted earnings per share computed on the adjusted pre-tax fleet into Sunbelt’s corporate colours - was largely complete as of 30 profit rose 47% to 18.9p. The reconciliation between the two is shown April 2001 and was undertaken by a combination of external contractors below: and specially retained paintshop staff. Rebranding costs also include paint and other materials used in the rebranding programme. Redundant staff costs related to a combination of office staff made redundant from the former head offices of BET USA and to staff reductions in the Profit Centres completed following the introduction of our computer systems into these locations. A total of 224 positions were made redundant. Other one-off costs include new signage at all the acquired locations and writing off prepaid advertising expenditure in BET USA’s name as Adjusted earnings per share Exceptional BET USA integration costs Exceptional costs re new bank facility Non recurring salary costs paid to redundant former BET USA staff Accrued non-cash interest amortisation on convertible loan Goodwill amortisation Basic earnings per share well as previously capitalised property improvements at closed Dividend 2000/01 1999/00 p 18.9 (3.8) (3.0) (0.8) (2.0) (2.3) 7.0 p 12.9 - - - - (0.1) 12.8 The dividend per share has been increased 11% to 3.5p per share for the year as a whole. The final dividend of 2.88p per ordinary share will be paid on 10 October 2001. Ashtead Technology Rentals provides inspection and testing equipment to a variety of industrial and commercial users locations. Taxation The tax credit of £10.9m comprises a credit of £1.2m in respect of current tax and a credit of £9.7m relating to deferred tax. The current tax credit reflects the fact that no tax is estimated to be payable in the current year in either the UK or the US due to the impact of accelerated capital allowances (or tax depreciation) in the US, the financing structure adopted for the acquisition and a credit arising in respect of the previous year based on the latest computations submitted to the tax authorities. In achieving this result, minimal capital allowances were claimed in the UK tax calculations for the year. Furthermore tax allowances claimed in the year in the US have resulted in significant unused losses. Taken together these benefits are anticipated to be sufficient to ensure that the Group has no material current tax liability for the foreseeable future. 15 A-Plant temporary toilets provide a portable solution for outdoor events Balance sheet Fixed Assets The depreciation charge for the year, as detailed on page 12, was £114.5m in total, of which £102.6m was for rental equipment. Total additions to fixed assets in the year were £237.7m of which £217.5m was spent on rental equipment. Expenditure on rental Current assets equipment was as follows: Stocks increased by 53% to £15.3m and trade debtors by 58% to Sunbelt A-Plant Technology Expansion Replacement £m 91.0 36.3 3.3 130.6 £m 55.3 30.7 0.9 86.9 £125.7m compared with last year. Both these increases reflect, Total £m predominantly, the acquisition of BET USA. Debtor days for the Group have reduced from 71 days last year to 64 days at 30 April 2001. The 146.3 bad debt charge as a percentage of turnover fell from 2.0% to 1.2%. 67.0 4.2 Trade and other creditors 217.5 Group creditor days have reduced from 174 to 132 days. Suppliers continue to be paid in accordance with the individual payment terms Expenditure on replacement was unusually high in Sunbelt in the year agreed with each of them. The total amount payable within trade because, following the acquisition of BET USA, Sunbelt has creditors, bills payable and accruals directly attributable to the rationalised the number of manufacturers’ aerial work platform assets purchase of rental equipment is £150.2m (£115.7m). held to eliminate, generally on a one for one basis, equipment from peripheral manufacturers previously used by BET USA. This Despite the significant increase in the size of the Group following the programme was undertaken both to reduce exposure to the potential BET USA acquisition bills payable increased from £81.7m to only decline in the acceptability in the US market of certain manufacturers’ £90.7m. This reflects the fact that increasingly major manufacturers product and to reduce the need to carry spare parts inventory and to are prepared to work with the Group without requiring the use of bills train staff in the use and maintenance of such a large number of giving added flexibility to the Group’s financing plans. The Group manufacturers’ product. expects that in future, whilst remaining a continuing feature of its 16 financing plans, bills will no longer be a substantial element in its demonstrate compliance with certain financial covenants relating the overall financial structure. ratios of EBITDA to debt levels and to interest and the ratio of debt levels to the value of tangible assets on a quarterly basis. Bank borrowings Completion of the BET USA transaction required a complete Adjustments to these covenants have recently been agreed with the restructuring of the Group’s finances. On 1 June 2000, or shortly banking group to address, inter alia, the impact of the adoption of the thereafter, all of the Group’s existing debts were repaid and replaced new accounting basis. with drawings under the new $825m committed secured loan facility which was also utilised to finance the cash element of the consideration. This facility is multi currency and can be drawn in combinations of US dollars, Sterling and Euros. Interest is payable at variable rates linked to underlying market rates traded in the London interbank market. The facility was led and underwritten by Citibank NA, LloydsTSB Bank plc and Bank of America. Subsequently it was syndicated by these banks to a wider banking group and there are now approximately 35 lenders involved in the provision of finance to the Group. Other borrowings Part of the consideration for the BET USA acquisition was satisfied by the issue of the £134m nominal value 5.25% unsecured convertible loan note, due 2008 which is currently held by the vendor, Rentokil Initial PLC. No interest was payable on this loan note in its first year of issue and from 1 June 2001 it bears interest at a fixed discounted rate of 5.25% per annum. It is convertible into 89.3m ordinary shares at any time after 1 June 2001 at the holder’s option and is repayable at par in June 2008 if not previously converted. Rentokil are unable to transfer the convertible without Ashtead’s consent and certain orderly marketing restrictions also apply to ordinary shares issued through At 30 April 2001 £483.0m was drawn under the facility with the conversion. remainder of the commitment (US$133.5m or £93.3m) available to meet future expansion and working capital requirements. £261.1m ($375m) is drawn under a seven year medium term loan with the remainder (£221.9m) drawn under a 364 day revolving credit agreement which is committed until 31 May 2005. Both are presented in the balance sheet under creditors due in more than one year because drawings under the revolving credit facility are replaced by new drawings under the same committed facility on a rolling basis as they mature. The facility is repayable at maturity except that there is a notional 1% amortisation of the term loan each year on the anniversary of its issue and the revolving facility reduces in two tranches of $50m each on 31 May 2003 and 2004 before becoming repayable in full at 31 May 2005. The Group can prepay all or part of the facility without penalty save for a 1% fee on the term loan for prepayment prior to 31 May 2002. The facility is secured by means of fixed and floating charges over substantially all of the Group’s assets. The Group is required to As discussed under interest above, accounting standards required the loan note to be included in the accounts at its fair market value of £121.3m, when issued on 1 June 2000 as part consideration for the acquisition, and for this amount to then be amortised up to par value over its 8 year life. These calculations generate the £6.6m interest amortisation charge this year resulting in a net carrying value of £127.9m at 30 April 2001. Although not in immediate prospect (based on the share price of 96.5p ruling on 31 July 2001), conversion of the convertible loan note would significantly reduce the Group’s balance sheet gearing position from its current 240% at year end (77% at 30 April 2000, prior to the acquisition) to a pro forma 127% (calculated assuming conversion had taken place at 30 April 2001). Furthermore such a strengthening of the Group’s balance sheet would enable the current bank debt to be refinanced soon thereafter at a substantially reduced borrowing premium from the current 250 basis points. The resulting interest saving, together with the interest on the convertible which would no longer be payable after conversion, would mean that the act of 17 An electric chop saw cutting industrial steel tubing - an example from Sunbelt Rentals’ extensive range of small tools conversion (involving the issue of 89.3m new ordinary shares) has a Derivative transactions are only undertaken for the purposes of broadly neutral impact on earnings per share once the existing bank managing funding and managing interest rate risk and currency risk. facility has been refinanced. The Group does not trade in financial instruments. The main risks Acquisitions risk and foreign currency risk. The Board reviews and agrees The acquisition of BET USA on 1 June 2000 was the largest single objectives and treasury policies for managing each of these risks and arising from the Group’s financial instruments are interest risk, liquidity acquisition the Group has ever made, effectively doubling revenues in they are summarised below. the US in a single stride. Two other acquisitions were also made in the year: Response Rentals, an onshore environmental equipment rental Interest rate risk management business was acquired by Ashtead Technology and Sunbelt Rentals The Group’s interest rate management policy is to use a combination made an early small infill acquisition of a single profit centre business of fixed and variable rates of interest to provide some element of in Seattle on the West Coast of the United States. protection against sudden changes in the level of interest rates. New derivative transactions are only entered into with the authority of the The impact of these acquisitions, which generated total goodwill of Group’s Executive Committee and the Finance Director provides a £148.1m, is shown in note 22 to the financial statements. The goodwill regular report on treasury matters to each Board Meeting in which the arising on these acquisitions is being amortised over 20 years. need for new derivative transactions is reviewed and discussed. At 30 Financial instruments (comprising $250m of the bank debt on which interest rates have been The Group’s financial instruments comprise borrowings, some cash fixed for three years as described above and the £134m convertible and liquid resources, and various items such as trade debtors, trade loan on which interest is fixed at 5.25%). April 2001 some 50% of the Group’s borrowings were at fixed rates creditors and bills of exchange payable, etc., that arise directly from its operations. The main purpose of these financial instruments is to raise Liquidity risk finance for the Group’s operations. The Group’s policy is to ensure continuity of funding which is currently provided through the $825m committed secured loan facility and the In addition to the foregoing, on 24 August 2000 Ashtead Group plc eight year convertible loan with the result that all the Group’s loan entered into forward rate agreements with LloydsTSB Bank plc and facilities (other than short term overdrafts) currently have a maturity of Bank of America under which the variable interest rates payable under at least four years although the amount available for borrowing the bank facility on a total of US$250m of borrowings were exchanged reduces by $50m at each of 30 April 2003 and 2004. At 30 April 2001, for a three year fixed interest rate of 6.825%. US$133m or £93.3m remained undrawn under the Group’s committed borrowing facilities. The Group anticipates that borrowing levels will Other derivative transactions completed in the year related to the rise in the period to 31 October 2001 as it completes the payments settlement in June 2000 of the interest rate and currency exchange due to its equipment vendors for first half 2000/01 capital expenditure. agreement with LloydsTSB Bank plc originally entered into when the Thereafter, the subsequently lower levels of capital expenditure should Sunbelt private placements were first drawn in 1998 and 1999. The result in repayment of debt. Group also entered into a short term currency hedge on 20 April 2000 to fix the dollar price of the cash element of the consideration for BET Foreign exchange risk management USA at US$294.9m (£186m). With a significant portion of the Group’s operations based outside the 18 Four large diesel-driven trash pumps acting as a sewer bypass near Charlotte, North Carolina UK, the Group faces currency risk on its non sterling net assets as the exchange risk on significant non-trading transactions (eg acquisitions) translation of overseas subsidiaries can have a considerable effect on is considered on an individual basis. the Group’s reported net assets. The main exposures are to the US dollar and the Euro (Irish punt) exchange rates against sterling. Counterparty risk The Group is exposed to credit risk related losses in the event of non- The Group seeks to mitigate the effect of these structural currency performance by a counterparty to its interest rate hedging financial exposures by matching the currency of third party borrowings against instruments. This risk is managed by entering into derivative the currency of earnings generated from assets. At 30 April 2001, total transactions only with institutions with a strong credit rating and by net borrowings of £612.3m were drawn as to a net £399.7m in US limiting the total exposure to any single counterparty. At 30 April 2001 dollars, £9.0m in Euros and £203.8m in sterling less £0.2m in the counterparties, to the Group’s interest rate hedging transactions Singapore dollars where there was net cash in hand. were LloydsTSB Bank plc and Bank of America who are not expected to fail to meet their obligations. The Group’s exposure to exchange rate movements on trading transactions is relatively limited. All Group companies invoice revenues in their respective local currency and generally incur expense and, except in the Republic of Ireland, purchase assets in their local currency. Consequently the Group does not routinely hedge either forecast foreign exchange exposures or the impact of exchange rate movements on the translation of overseas profits into sterling. Foreign Ian Robson Finance Director 31 July 2001 19 OPERATIONAL REVIEW - SUNBELT RENTALS Right: An electric driven welder allows repairs to be carried out during an industrial plant shutdown Far right: Underground utility lines being located with a Sunbelt Rentals vacuum evacuator system The bringing together of our own 91 Profit Centres with the 59 previously owned by Rentokil Initial in June 2000 transformed your US business. We moved quickly and effectively to consolidate our new found premier position as the fifth largest company in our $23 billion market. RENTALS Divisional review on an adjusted basis New accounting basis under FRS 18 The bringing together of our own 91 Profit Centres with the 59 previously owned by Turnover: excluding BET Profit Centres BET Profit Centres Total EBITDA EBITDA margin % Depreciation Operating profit Operating profit margin % Rental equipment capex: - expansion - replacement Net assets employed Profit Centres at year end Number of staff at year end Increase Rentokil Initial in June 2000 transformed your % 51 - 206 172 - 154 192 - 52 289 97 229 85 185 US business. We moved quickly and effectively to consolidate our new found premier position as the fifth largest company in our $23 billion market. The operational integration of the two businesses was accomplished in 70 days. I wish to record my thanks to all Sunbelt staff, including especially our new colleagues, for their tremendous efforts in achieving what none of our competitors has even attempted - an immediate integration to a single, homogeneous business. Equally as pleasing in the past year was the achievement by the core Sunbelt Profit Centres of strong like for like revenue growth in US dollars of 20%. So, with our large unified business up and running, we turn our attention to the future. As is proper for any service business, Sunbelt’s obsession is its focus on the 2000/01 £m 170.5 175.2 345.7 122.8 35.5 (60.4) 62.4 18.1 91.0 55.3 146.3 571.0 163 3,471 1999/00 (restated) £m 113.1 - 113.1 45.2 40.0 (23.8) 21.4 18.9 60.0 14.2 74.2 173.7 88 1,220 20 customer. We can now provide a pan 2000. Inevitably, it takes some time - typically experience any significant nationwide American service with 163 Profit Centres in up to 3 years - for new Profit Centres to attain downturn in demand and, indeed, like for like 27 states at year end. Our range of product is the same level of profitability as the revenues have increased by 10% in the first the most diverse offered in our industry. As established network. In this year and next we two months of the new financial year. We are we extend our policy of providing “clusters” will therefore enjoy a growing contribution therefore looking to continue the strong same of Profit Centres in major conurbations, we from the substantial opening program in the store growth pattern of previous years whilst have also stratified our product offering by year to April 2000. recognising that the larger one becomes the creating specialised units for those products harder it is to outgrow the overall market to that require particular expertise. Thus a In the year to 30 April 2001 we opened just the extent we have achieved in the recent customer can call any Profit Centre and, no 10 new Profit Centres whilst our past. However, our target remains double digit matter how specialist their requirement, they concentration was on the integration process. same store growth in percentage terms are put in contact immediately with the Together with the new Profit Centres added throughout the whole of the coming year. appropriate personnel. By working together in as we split out acquired scaffold operations groups our goal is to provide a level of service into separately managed businesses, we We may be the fifth largest in our 15,000 beyond expectations. The customer does not ended the year with a total of 163 Profit strong universe but we have only a 2% want to hear claims about service, he wants Centres. In the new financial year I expect we market share which means there is 98% still to experience it. will add a further 30, mostly by way of available! Our goal is to continue to improve greenfield openings or, if the opportunities our service levels which will lead inexorably to An example of this specialisation is our 12 arise, local acquisitions. As a result of the an increase in our share of the market no Pump and Power Profit Centres offering up to prompt integration programme we are able to matter the overall economic conditions with 150 horse power 12” pumps and up to 1500 concentrate all our attention in this first full which we are faced. kilowatt portable generators. Taken together year on the commercial development of our these businesses have increased their total enlarged enterprise - both in improved revenues by 62% year on year. The potential performance from our existing businesses for continued expansion is very substantial (some 163 at year end) and in the renewed indeed. opening programme. We have other prospective benefits in the We are not complacent about the potential form of the dividends to be reaped from the impact on our performance of a slowing 22 Profit Centres opened in the year to April American economy. However, we have yet to Bruce Dressel President and Chief Executive Sunbelt Rentals Inc 31 July 2001 21 OPERATIONAL REVIEW - A-PLANT The results of A-Plant this year were a setback. Whilst revenues rose by 7% in the year as a whole - against only 5% in the first half - there is no disguising that this was a difficult year with the first reduction in our operating profits since 1992. Divisional review on an adjusted basis New accounting basis under FRS 18 Turnover EBITDA EBITDA margin % Depreciation Operating profit Operating profit margin % Rental equipment capex: - expansion - replacement Net assets employed Profit Centres at year end Number of staff at year end 2000/01 £m 194.5 75.2 38.7 (50.1) 25.1 12.9 36.3 30.7 67.0 283.6 273 2,498 1999/00 (restated) £m 181.5 74.3 40.9 (40.7) 33.6 18.5 30.5 34.4 64.9 259.3 261 2,672 Increase % 7 1 - 23 (25) - 19 (11) 3 9 5 (7) 22 Results The results of A-Plant this year were a setback. Whilst revenues rose by 7% in the year as a whole - against only 5% in the first half - there is no disguising that this was a difficult year with the first reduction in our operating profits since 1992. However, there were some highlights in our performance. Revenue from national and large regional accounts with long term agreements grew faster than the average at 16% for the year as a whole and represented 22% of the total. We initiated the first full price increase programme seen on a national basis in our industry for many years and were successful in raising prices for the latter part of the year. EBITDA improved from £74.3m to £75.2m but EBITDA margins declined 5% to 38.7% (40.9%). However, the increased depreciation expense on the new capital spend meant that operating profit fell 25% to £25.1m (£33.6m). Above left: Tree planting less backbreaking with an A-Plant skidsteer and auger Above right: A-Plant 32 x 10 site offices arriving at the start of a major contract Below: Take ‘Advantage’ of A-Plant with its gold loyalty card Prospects Although it has been a difficult year, there are During the year our training school, which positive signs for the future. As yet, we have opened last year, completed training courses not enjoyed the benefits of our substantial for over 500 participants. We will continue to investment over the last two years in new benefit from our industry leadership role in technology, which has the dual benefits of training. reducing our costs and improving our service. We will soon add a customer extranet to our We believe that the successful future progress website which will allow customers to review of A-Plant will result from our sustained their account status online with a investment in these two key areas of training commensurate reduction in reciprocal and communication which we regard as administrative costs. A-Plant’s established pivotal to success in a multi-location service intranet is also being merged with the business. Company’s online contract and invoicing systems resulting in control of growing This year’s setback - our first in a decade - is communication costs and facilitating access being used by management as a spur to to all our systems amongst the greatest improve our performance at all levels. Your number of our staff. management is determined to move forward from this year’s profit decline and, over time, Concurrently we are introducing automatic to restore returns on capital employed to pricing on the computer of our rental and acceptable levels. ancillary revenues, thereby increasing efficiencies in both contract and invoice generation. These measures are part of a series which will have the effect of releasing commercial staff from time spent on administrative roles, which can instead be used to promote customer relationships. Ted Forshaw Chief Executive - A-Plant 31 July 2001 23 OPERATIONAL REVIEW - ASHTEAD TECHNOLOGY Right: High value, high accuracy multi-beam sonar for underwater imaging Far right: The Response acquisition expanded Ashtead Technology Rentals’ fleet to include ambient air monitoring and gas detection analysers We are now a much more broadly based business than we were a year ago. We have, however, maintained our focus in the rental of technology-based equipment to industrial users. We simply have more products to offer more customers. Divisional review on an adjusted basis New accounting basis under FRS 18 Markets Turnover EBITDA EBITDA margin % Depreciation Operating profit Operating profit margin % Rental equipment capex: - expansion - replacement Net assets employed Profit Centres at year end Number of staff at year end 2000/01 £m 1999/00 £m Increase % 11.8 7.6 64.4 (4.0) 3.6 30.5 3.3 0.9 4.2 12.2 7 61 7.8 4.8 61.5 (2.3) 2.5 32.1 1.5 1.1 2.6 8.2 3 36 51 58 - 74 44 - 120 (18) 62 49 133 69 As expected, the year did not see anything approaching a full recovery in the offshore market. The demand in the North Sea remained weak with an oversupply of equipment having a continuing negative effect on pricing. The Aberdeen Profit Centre faced severe price pressure from its competitors and customers who were themselves experiencing poor returns. Even so we believe that Aberdeen held its market share in the offshore business. Successful efforts were made to increase the scope of our non-oil related business both on and offshore. Recent investment in non-destructive testing, remote visual inspection and cable tracking equipment brought immediate returns in the year. Our marketing programme, which has been enhanced by improved information systems, gave us the ability to introduce new product both quickly and profitably. Self-propelled pipeline inspection camera Singapore again produced a good 24 performance as it benefited from field locations in North America supplying this staff toiled successfully in very tough market developments in the Philippines, Malaysia, wide product range to a large and diverse conditions. Our new colleagues in the Indonesia and to a lesser extent in New customer base. These new locations have environmental business met and exceeded Zealand. Singapore also saw further business also opened up local supply channels to growth targets whilst having simultaneously to from the subsea cable market and new expand our existing onshore equipment deal with new systems and procedures business from the dredging industry following rentals. The business now trades under the integration. substantial investment in new multi-beam Ashtead Technology brand and has been fully technology. Here again, sales and marketing integrated into our operational, quality, and In this coming year the prospects for the efforts made in previous years meant we did financial control procedures. offshore business should continue to improve. not miss the opportunity to take full We expect Aberdeen to benefit from an advantage of the Asian market upswing. We expect to increase the geographical increase in North Sea developments. This will spread of the environmental business through consolidate the gains already made from Houston finally saw some life return to their our other locations in the UK and Singapore contracts awarded by US and European offshore business in the second half of the as well as further development in the US contractors working in the booming West year as Gulf of Mexico development projects were given the go ahead. During the Prospects African market. In Singapore, we foresee a fall-off in business from the cable laying downturn the Houston operation was, of A year ago we said we would see further market but this should be more than made up necessity, transformed. The lost offshore expansion in our onshore business and this by growth in the offshore and dredging revenue was more than replaced by the has proved to be the case. This business markets. Houston already has a strong order development of a nationwide onshore rental revolves around the supply of non-destructive book and prospects for the full year are very business. We now have an operation better testing and remote visual inspection positive. able to deal with any future oil downturn and equipment where we have transferred our one which will be less seasonal. experience in subsea solutions to supply We are now a much more broadly based technology that is used in practically every business than we were a year ago. We have, Response Rentals onshore industry. In the US particularly we however, maintained our focus in the rental of In October 2000 we purchased Response have developed a number of national technology-based equipment to industrial Rentals, a US environmental equipment rental accounts for which we are lead or sole users. We simply have more products to offer business. The purchase price represented a supplier of this equipment. The product range more customers. multiple of 3.2 times last twelve months offers real potential and this business will be adjusted EBITDA. The product range further developed this year. comprises a wide variety of instruments to sample, measure and monitor environmental The fundamental changes in the business factors including air and water quality, during the year could not have happened hazardous waste, toxic gases, noise vibration without the exceptional efforts of the and industrial hygiene. We now have four new workforce. The existing survey and inspection Rob Phillips Managing Director, Ashtead Technology 31 July 2001 25 1 2 3 4 1. PETER LEWIS, Non-executive Chairman 3. IAN ROBSON, BSC, FCA, Finance Director Aged 60, Peter Lewis has been Non-executive Chairman since 1 February 2001 following his retirement from his role of Executive Chairman, which position he had held from May 1984 when he and George Burnett effected the management buy-in of Ashtead Plant Hire Company Limited. He is Non-executive Chairman of The Electronics Boutique plc. Peter Lewis is Chairman of the Nominations Committee and a member of the Audit and Remuneration Committees. He is standing down from the Board on 31 July 2001 and will be succeeded as Non-executive Chairman by Henry Staunton. Executive Directors 2. GEORGE BURNETT, MA, LLB, CA, Chief Executive Aged 54, George Burnett, MA, LLB, CA, was Managing Director from May 1984 until being appointed Chief Executive in February 2000. He is a non-executive director of Henderson Strata Investments plc and Chairman of the Governors of the Surrey Institute of Art and Design, University College. The re-election of George Burnett, who retires by rotation in accordance with the Articles of Association, as a director of the Company will be proposed at the Annual General Meeting. Aged 42, Ian Robson, BSc, FCA, was appointed Finance Director on 26 June 2000 having joined the Group on 22 May 2000. For the preceding four years he held a series of senior financial positions in Reuters Group Plc and before that he was a partner of Price Waterhouse (now PricewaterhouseCoopers). 4. BRUCE DRESSEL, President and Chief Executive Officer - Sunbelt Rentals Aged 37, Bruce Dressel is President and Chief Executive Officer of Sunbelt Rentals Inc, the Group’s equipment rental division in the USA. Bruce Dressel has some 20 years experience in the industry and joined the Group on the acquisition of the business of McLean Rentals in March 1996. 5 6 7 8 5. TED FORSHAW, Chief Executive Officer - A-Plant 7. PHILIP LOVEGROVE, LLM, independent non-executive director Aged 50, Ted Forshaw is Chief Executive Officer of A-Plant, the Group’s equipment rental division in the UK and the Republic of Ireland. Ted Forshaw has some 34 years experience in the industry and joined the Group in 1987 on the acquisition of Keyplant Limited. Non-executive Directors 6. ALAN WHEATLEY, FCA, Deputy Chairman and senior independent non-executive director Aged 63, Alan Wheatley, FCA, is currently Chairman of Special Utilities Investment Trust plc and a non-executive director of Legal & General Group Plc, Babcock International Group Plc, ComXo plc and of IntaMission plc. Alan Wheatley is Chairman of the Remuneration Committee and a member of the Audit and Nominations Committees. The re-election of Alan Wheatley, who retires by rotation in accordance with the Articles of Association, as a director of the Company will be proposed at the Annual General Meeting. Aged 64, Philip Lovegrove, LLM, is Chairman of VTR plc and W T Foods plc and a non-executive director of Environmental Polymers plc. He is Chairman of the Audit Committee and a member of the Remuneration and Nominations Committees. 8. HENRY STAUNTON, BA, FCA, independent non-executive director Aged 53, Henry Staunton, BA, FCA, is Finance Director and Deputy Chairman Media Ventures of Granada plc. He is also a non-executive director of EMAP Plc and of ITV Digital plc. Henry Staunton is a member of the Audit and Remuneration Committees. Henry Staunton will become Non-executive Chairman on 1 August 2001 on the retirement of Peter Lewis. Details of the Directors’ contracts, emoluments and share interests can be found in the Report of the Remuneration Committee on pages 34 to 38. 26 ADVISERS ASHTEAD GROUP PLC Solicitors Speechly Bircham 6 St Andrew Street London EC4A 3LX Slaughter and May 35 Basinghall Street London EC2V 5DB Parker, Poe, Adams & Bernstein LLP Three First Union Center 401 South Tryon Street Suite 3000 Charlotte North Carolina 28202 UK Brokers and Investment Bankers Schroder Salomon Smith Barney Citigroup Centre 33 Canada Square Canary Wharf London E14 5LB US Investment Bankers Salomon Smith Barney 38 Greenwich Street New York New York 10013 Advisers Auditors PricewaterhouseCoopers 1 Embankment Place London WC2N 6RH Registrars & Transfer Office Lloyds TSB Registrars The Causeway Worthing West Sussex BN99 6DA Financial PR Advisers Tulchan Communications St Martin’s House 16 St Martin’s Le Grand London EC1A 4ES Principal Bankers Lloyds TSB Bank plc St George’s House 6/8 Cheapside London EC3M 1LL Bank of America 100 North Tryon Street NC1-007-09-01 Charlotte North Carolina 28255 Citigroup NA Citigroup Centre 33 Canada Square Canary Wharf London E14 5LB 27 DIRECTORS REPORT ASHTEAD GROUP PLC Directors’ Report The Directors present their report and the audited accounts for the financial year ended 30 April 2001. Principal activities The principal activity of the Company is that of an investment holding and management company. The principal activity of the Group is the rental of equipment to industrial and commercial users. Trading results & dividends The Group’s consolidated profit before taxation for the year is £11.9m. A review of the Group’s performance is given on pages 2 to 25. An interim dividend of 0.62p per ordinary share was paid on 6 April 2001. The Directors recommend that a final dividend of 2.88p per ordinary share amounting to £9.3m be paid to the holders of the ordinary shares and that £11.5m be transferred to reserves. If approved, this dividend will be paid on 10 October 2001 to ordinary shareholders on the record at 7 September 2001. Share capital The following investors, in addition to PD Lewis and GB Burnett, have notified the Directors that they hold or are beneficially interested in 3% or more of the Company’s ordinary share capital as set out below: Schroders Investment Management Limited Henderson Investment Management Limited Barclays Bank plc Lazard Asset Management Prudential Portfolio Managers UBS Asset Management Limited Deutsche Asset Management Share option schemes At 30 April 2001, the following shares were subject to option: At 31 July 2001 % 12.7 10.7 10.2 4.2 3.9 3.5 3.2 Discretionary schemes Exercisable between 16 September 1995 and 16 September 2002 Exercisable between 26 August 1997 and 26 August 2004 Exercisable between 27 September 1998 and 27 September 2005 Exercisable between 27 February 2000 and 27 February 2007 Exercisable between 27 February 2000 and 27 February 2007 Exercisable between 3 February 2001 and 3 February 2008 Exercisable between 5 February 2001 and 5 February 2008 Exercisable between 5 January 1998 and 5 January 2004 Exercisable between 24 February 2002 and 24 February 2009 Exercisable between 26 February 2002 and 26 February 2009 Exercisable between 22 February 2003 and 22 February 2010 Exercisable between 8 March 2003 and 8 March 2010 Exercisable between 8 August 2003 and 8 August 2010 Exercisable between 16 August 2003 and 16 August 2010 Exercisable between 9 February 2004 and 9 February 2011 Exercisable between 26 February 2004 and 26 February 2011 Number of shares 1,046,038 1,487,900 1,622,188 457,500 1,303,700 319,700 2,486,500 2,248 540,450 1,140,800 1,127,000 401,000 920,500 Option price per share 14.870p 61.440p 72.535p 134.665p 132.250p 191.200p 184.200p 170.370p 177.830p 172.500p 102.000p 101.840p 102.500p 101.670p 125.000p 124.500p 555,750 29,500 3,672,890 17,113,664 28 SAYE scheme Exercisable between 1 April and 30 September 2002 (5 year contract) Exercisable between 1 April and 30 September 2001 (3 year contract) Exercisable between 1 April and 30 September 2003 (5 year contract) Exercisable between 1 September 2001 and 28 February 2002 (5 year contract)* Exercisable between 1 April and 30 September 2002 (3 year contract) Exercisable between 1 April and 30 September 2004 (5 year contract) Exercisable between 1 April and 30 September 2003 (3 year contract) Exercisable between 1 April and 30 September 2005 (5 year contract) Exercisable between 1 April and 30 September 2004 (3 year contract) Exercisable between 1 April and 30 September 2006 (5 year contract) Number of shares 644,662 67,741 97,064 1,752 111,896 808,484 428,504 353,884 129,940 2,695,824 Option price per share 98.000p 152.140p 152.140p 117.880p 133.600p 133.600p 81.340p 81.340p 94.800p 94.800p 51,897 * These options result from the rolling over of options under the Sheriff Holdings share option schemes into options under the Company’s schemes. Employees The total number of employees worldwide of the Group at 30 April 2001 was 6,043. The Group makes every reasonable effort to give disabled applicants, and existing employees becoming disabled, opportunities for work, training and career development in keeping with their aptitudes and abilities. The Group is an equal opportunities employer. The Group has taken action consistently through the year to introduce, maintain and develop arrangements aimed at involving employees in its affairs. The Group has a positive approach to health and safety at work and to compliance with the provisions of the Health and Safety at Work Act 1974 and a copy of its formal health and safety policy statement is on display at all Group locations in the UK. The Group encourages employees to become shareholders through discretionary and SAYE share option schemes. Details of options outstanding under these schemes are set out above. Directors and directors’ insurance Details of the current directors of the Company are given on page 26. In addition, A Anderson served as a director in the year until his retirement on 26 June 2000. The Company has maintained insurance throughout the year to cover all directors against liabilities in relation to the Company and its subsidiary undertakings. Future developments The Group seeks to develop by expansion of its activities in equipment rental in the United Kingdom, the United States, the Republic of Ireland and the offshore oil and gas industries throughout the world. Policy on payment of suppliers Suppliers are paid in accordance with the individual payment terms agreed with each of them. The number of Group creditor days at 30 April 2001 was 132 days (30 April 2000 - 174 days) which reflects the terms agreed with individual suppliers. There were no trade creditors in the Company’s balance sheet at any time during the past two years. Political and charitable donations The Group made charitable donations amounting to £1,500 (£1,300) in the UK during the year. No political donations were made. 29 DIRECTORS REPORT ASHTEAD GROUP PLC Directors’ Report Environmental report The Group, through its equipment purchasing policies, maintenance programmes and environmental monitoring practices, endeavours to ensure that its trading activities have as little adverse impact on the environment as it is possible to achieve. In pursuit of this ideal, the Group has developed environmental management processes which are designed to ensure: compliance with relevant legislation; removal of potential causes of environmental damage where practicable; and continuous reduction in environmental impact through monitoring and corrective action. The Group’s continued investment in its rental fleet, along with its maintenance programmes, minimises both pollution to the atmosphere and accidental contamination. The facilities the Group maintains throughout its Profit Centre network enables waste to be disposed of correctly, bulk fuels to be stored safely and fleet cleaning and maintenance to be carried out efficiently. Prior to acquisition, environmental surveys were conducted at the BET USA locations and improvements have subsequently been made as required to ensure compliance with the Group’s environmental standards. Group companies have documented procedures operating at Profit Centre level for fleet maintenance, removal of waste from customers’ sites back to Company premises for safe disposal as well as contractual arrangements for the disposal of all major waste products. The Group’s Performance Standards teams measure and monitor environmental performance and control measures at Profit Centres as part of their rolling audit programme and report their findings to senior operational management. Auditors PricewaterhouseCoopers have indicated their willingness to continue in office and a resolution concerning their re-appointment and authorising the directors to fix their remuneration will be proposed at the Annual General Meeting. Annual General Meeting The Annual General Meeting will be held at 12 noon on Monday, 8 October 2001, at Citigroup’s offices at Stirling Square, 5-7 Carlton Gardens, London SW1Y 5AD. For ordinary shareholders, a separate Notice of Annual General Meeting, which includes an explanation of the proposed resolutions, will be mailed nearer the time. In addition to the ordinary business of the Meeting, shareholder consent will be sought to renew authorities for the directors to allot ordinary shares in the Company. By Order of the Board Robert Clark Company Secretary 31 July 2001 30 (cid:2) (cid:2) (cid:2) Corporate Governance Report CORPORATE GOVERNANCE REPORT ASHTEAD GROUP PLC The Group is committed to high standards of corporate governance. The Board recognises that it is accountable to the Company’s shareholders for corporate governance and this statement describes how the relevant principles have been practised by the Company. The Company complied during the year with the principles of corporate governance set out in Section I of the Combined Code save that: (1) the service contracts of Peter Lewis, George Burnett, Bruce Dressel and Ted Forshaw provide for either notice periods in excess of one year or pre-determined compensation in excess of one year’s salary. Details of these arrangements and the justification for them are given in the Remuneration Committee Report; (2) technically, under the Company’s Articles of Association, only two directors are required to retire by rotation each year meaning that, since February 2000, when the Group Board was expanded to eight members, the requirement in the Code for every director to stand for re-election every third year has not been stipulated in the Articles. At the Annual General Meeting, the Company will seek shareholders’ approval to amend the Articles to ensure compliance with the Code. In the meantime, however, no director has served for more than three years since last elected by shareholders; (3) there was no formal documented procedure for a director to obtain independent professional advice at the Company’s expense. A procedure was put in place in June 2001; (4) the three executive directors appointed in 2000 have not yet attended a training course on their responsibilities as board members. The Board has now agreed that in future all newly appointed directors will attend an appropriate training course within six months of appointment unless their previous experience on other boards makes this inappropriate. The executive directors appointed in 2000 will be attending a suitable course within the next six months. The Board and the Executive The Group Board currently comprises the non-executive Chairman, the Chief Executive, the Finance Director, the executive heads of Sunbelt and A-Plant and three non-executive directors. Short biographies of the directors are given on page 26. All directors are responsible under the law for the proper conduct of the Company’s affairs. The directors are also responsible for ensuring that the strategies proposed by the executive directors are discussed in detail and critically assessed to ensure that they conform with the long term interests of shareholders and are compatible with the interests of employees, customers and suppliers. The Board has reserved to itself those matters which reinforce its control of the Company. To ensure that the directors are suitably briefed to fulfil their roles, regular reports and briefings are provided to the Board by the executive directors and the company secretary. The Board normally meets at least five times a year and there is contact between meetings to advance the Company’s activities. The directors also have access to the company secretary and a procedure has recently been adopted for them to take independent advice as needed at the Company’s expense. Board sub-committees Executive Committee The Board has delegated authority for the day-to-day management of the Company to the Executive Committee chaired by George Burnett. The Committee, of which Peter Lewis and Ian Robson are the other members, meets periodically as necessary to discharge its functions. Henry Staunton will become a member of this Committee when Peter Lewis retires. Audit Committee Comprising the non-executive directors under the chairmanship of Philip Lovegrove, the Audit Committee meets twice a year to consider the draft interim and final financial statements and to receive the report of the Auditors. The Committee considers the effectiveness of the Group’s internal controls and its financial and accounting policies and practices and also meets periodically with the heads of the US and UK Performance Standards (Internal Audit) teams. It also deals with any matters which may be brought to the attention of the Committee by the Auditors. 31 CORPORATE GOVERNANCE REPORT ASHTEAD GROUP PLC Corporate Governance Report Nominations Committee With Peter Lewis as chairman, and Alan Wheatley and Phillip Lovegrove as members, the Nominations Committee is responsible for recommending to the Board any new appointments of directors. Henry Staunton will succeed Peter Lewis as chairman of this committee when Peter Lewis retires. Remuneration Committee Comprising the four non-executive directors under the chairmanship of Alan Wheatley, the Remuneration Committee is responsible for setting the remuneration packages of the executive directors and for establishing the terms and conditions of their employment. Financial reporting The directors are required by UK company law and financial reporting standards to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and of the Group at the end of the financial year and of the profit and cash flows of the Group for the period. In preparing the financial statements applicable accounting standards have been followed, suitable accounting policies have been used and applied consistently and reasonable and prudent judgements and estimates have been made. Going concern The directors also have a responsibility under UK company law and financial reporting standards to prepare the financial statements on a going concern basis unless the entity is being liquidated or the directors have no realistic alternative but to liquidate the entity or to cease trading. When preparing the financial statements the directors are also required to assess whether there are any significant doubts concerning the Group’s ability to continue as a going concern. After making appropriate enquiries the Directors have reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future and that it is therefore appropriate to adopt the going concern basis in preparing the financial statements. In forming this view the Directors have reviewed the Group’s budget and cash flow forecast for the year to 30 April 2002 and outline projections for the subsequent year. Internal controls The directors acknowledge their responsibility for the Group’s system of internal control and confirm they have reviewed its effectiveness. In doing so, the Group has taken note of the guidance for directors on internal control, Internal Control: Guidance for Directors on the Combined Code (the Turnbull Guidance). The Board confirms that there is a process for identifying, evaluating and managing significant risks faced by the Group. This process has been in place for the full financial year and is ongoing. It is kept under regular review by the Executive Committee and is considered periodically by the Board and accords with the Turnbull Guidance. The Board considers that the Group’s internal control system is appropriately designed to manage, rather than eliminate, the risk of failure to achieve business objectives. Any such control system, however, can only provide reasonable and not absolute assurance against material misstatement or loss. The concept of reasonable assurance recognises that the cost of a control procedure should not exceed the benefits. During the year ended 30 April 2001, the directors were not aware of any control breakdowns which resulted in a material loss. During the year, led by the directors of the Sunbelt and A-Plant Performance Standards (internal audit) teams with input from the Finance Director, the executive managers of each of the Group’s businesses reviewed the risks that could impede the achievement of the objectives for their businesses. For each significant risk, an overview of the risk, details of how it is managed and any improvement actions required were documented. A similar review was undertaken in conjunction with the Finance Director of the risks faced at Group level. A report was prepared in April/May 2001 summarising the results of this work for the information of the Board which also discussed the preliminary risk assessment for the Group at its January meeting. 32 At the year end, before producing this statement on internal control for the annual report and accounts, the Board considered the operational effectiveness of the Group’s internal control systems on the basis of the report discussed above. This review included consideration of each of the most significant risks the Group faces and how well these are controlled and managed. The control system includes written policies and control procedures, clearly drawn lines for accountability and delegation of authority, and comprehensive reporting and analysis against budgets and latest forecasts. In a growing group of the size and complexity and geographical diversity of Ashtead, it should be expected that minor breakdowns in established control procedures might occur. There are supporting policies and procedures for investigation and management of control breakdowns at any of the Group’s Profit Centres or elsewhere. The Audit Committee has met with the heads of the Performance Standards (internal audit) teams for both Sunbelt and A-Plant and discussed the results of their work. The Audit Committee also meets with PricewaterhouseCoopers twice annually to discuss the results of their work. In relation to internal financial control, the Group’s control and monitoring procedures include: a) the maintenance and production of accurate and timely financial management information, including a monthly profit and loss account for each Profit Centre; b) the control of key financial risks through clearly laid down authority levels and proper segregation of accounting duties at the Group’s accounting support centres of which there are now eight following the BET USA and Response Rentals acquisitions; c) the preparation of a regular financial report to the Board including profit and loss accounts for the Group and each subsidiary, balance sheets and cash flow statements; d) the preparation of annual budget and periodic update forecasts which are reviewed by senior management and the Executive Committee and provided to the Board; e) a programme of periodical rotational rental equipment inventories conducted fortnightly at each Profit Centre by equipment type and independently checked on a sample basis; f) full inventory counts at all Profit Centres on at least a six monthly basis with independent scrutiny on a sample basis; and g) comprehensive audits of all Profit Centres carried out on average at least once per year by the Performance Standards Department. These reports are copied to the Finance Director to whom the heads of the Sunbelt and A-Plant Performance Standards Departments have direct access in the event of any issues which they may need to discuss independently of the operational management team. By order of the Board Robert Clark Company Secretary 31 July 2001 33 REMUNERATION COMMITTEE REPORT ASHTEAD GROUP PLC Remuneration Committee Report Structure of the Committee During the year the Committee consisted of the three non-executive directors under the Chairmanship of Mr AE Wheatley. After agreement of his new contract and on becoming non-executive Chairman, Mr Lewis also became a member of the Committee with effect from 15 January 2001. None of the Committee has any personal financial interests, other than as shareholders, in the matters to be decided. Remuneration policies In formulating its policies, the Committee has access to professional advice from outside the Company and to publicly available reports and statistics. Executive remuneration packages are designed to attract, motivate and retain directors of the high calibre needed to achieve the Group’s objectives and to reward them for enhancing value to shareholders. The main elements of the remuneration package for executive directors and senior management are: a) basic annual salary and benefits in kind; b) annual performance bonus payments; c) share option incentives; and d) pension arrangements. In assessing all aspects of pay and benefits, the Company compares packages offered by similar companies, which are chosen having regard to: a) the size of the company (turnover, profits and number of people employed); b) the diversity and complexity of its businesses; c) the geographical spread of its businesses; and d) their growth, expansion and change profile. In making the comparisons, the Company takes into consideration the international scope, complexity and speed of change of the Group’s business and, particularly, its recent rapid growth in the USA. In relation to share option awards, the Committee’s policy is to make regular awards to senior staff in order that their personal interests are aligned with those of shareholders. The value of the shares underlying the options awarded is assessed by reference to a number of factors including the employee’s salary, seniority and length of service. The Committee implements its remuneration policies by the design of reward packages for executive directors comprising the appropriate mix of salary, performance related cash incentive bonuses and share options. Mr Burnett, with the approval of the Board, holds two non-executive appointments outside the Group and is allowed to retain the fees arising therefrom. None of the other executive directors has any outside appointments. The remuneration of the non-executive directors is determined by the Board. With the exception of Mr Lewis whose contract is discussed below, none of the non-executive directors has a service contract with the Company and their appointment is therefore terminable by the Board at any time. Executive Directors’ service agreements Mr P D Lewis retired as executive Chairman to become employed as part-time non-executive Chairman of Ashtead Group plc and of Sunbelt Rentals Inc under a new contract effective 1 February 2001. Mr Lewis has decided to retire fully and has given notice to terminate his contract on 31 July 2001. On retirement Mr Lewis will not receive any payments beyond his remuneration accrued up to that date. Mr G B Burnett’s service agreement, first entered into on 27 November 1986 and amended periodically until consolidation into a new agreement dated 21 May 1997, provides for termination by either party by the giving of two years’ notice. However, Mr Burnett is entitled at any time after reaching age 59 to give at least six months’ notice to retire from age 60. Otherwise the contract remains in place until he reaches age 65. The unexpired period of the contract is a little over 10 years. The service agreement between the Company and Mr SI Robson, dated 4 August 2000, after a fixed initial term which expires on 4 August 2001, is terminable by either party giving the other twelve months’ notice. 34 Mr Dressel entered into a new service agreement with Sunbelt Rentals Inc on 15 January 2001 under which he is employed as its President and Chief Executive Officer for an automatically extended rolling period of two years until the contract is terminated. Mr Dressel may not terminate the contract in the first two years but can do so at any point thereafter by giving 180 days’ notice to Sunbelt. Early termination provisions apply should there be a change of control of Ashtead Group, defined as at least 50% of the voting rights becoming held by a single person. Sunbelt, however, can only terminate Mr Dressel’s employment by giving two years’ notice except in the case of misconduct. On termination, except on change of control, Mr Dressel is prohibited from working in the rental industry in the USA for two years. The Remuneration Committee considered that it was appropriate to secure the services of Mr Dressel for a minimum period of two and a half years in light of the importance of his contribution to Sunbelt’s successful development within the Group and accordingly decided to depart from the recommendations of the Combined Code by entering into a contract with more than one year’s notice. Mr Forshaw is employed under a service agreement dated 17 February 1993, as amended on 3 December 1997, with Ashtead Plant Hire Company Limited, the company of which he is Chief Executive Officer. The contract provides for termination by either party giving not less than 12 months’ notice to the other party except where there has been a change of control of Ashtead Group plc, control being defined as 50.1% of voting rights, when the notice period is 18 months. The Committee considered it appropriate to retain this provision within Mr Forshaw’s service agreement when he was appointed to the Board for similar reasons to Mr Dressel. The service agreements of the executive directors all contain suitable non-compete provisions appropriate to their roles in the Group. Directors’ emoluments The emoluments of the directors, which are included in staff costs in note 3 to the Accounts, were as follows: Fees £’000 Salary £’000 Performance related bonus £’000 Other benefits in kind £’000 Total emoluments excluding pension £’000 2000/01 PD Lewis GB Burnett SI Robson A Anderson JB Dressel EJ Forshaw AE Wheatley PA Lovegrove HE Staunton 1999/00 PD Lewis GB Burnett A Anderson JB Dressel EJ Forshaw AE Wheatley PA Lovegrove HE Staunton - - - - - - 55 30 25 110 - - - - - 25 25 25 75 199 216 152 23 233 180 - - - 1,003 214 214 138 50 34 - - - 650 541 541 161 - 245 46 - - - 1,534 373 373 249 33 7 - - - 1,035 15 23 29 3 1 9 - - - 80 20 22 12 2 2 - - - 58 755 780 342 26 479 235 55 30 25 2,727 607 609 399 85 43 25 25 25 1,818 The emoluments of SI Robson are those for the period from his appointment on 26 June 2000. The emoluments of A Anderson are those for the period to his resignation on 26 June 2000. In addition, an ex-gratia payment of £30,000 was made to Mr Anderson at the time of his retirement. The emoluments of JB Dressel and EJ Forshaw for the year ended 30 April 2000 are those for the period from their appointment on 2 February 2000. 35 REMUNERATION COMMITTEE REPORT ASHTEAD GROUP PLC Remuneration Committee Report Directors’ emoluments continued The performance related cash incentive bonuses of Mr Lewis and Mr Burnett are based on long term growth in profit before tax adjusted to take account of the growth in earnings per share. Those of Mr Dressel and Mr Forshaw are based upon the achieved growth in the operating profit and returns of their respective businesses, Sunbelt Rentals and A-Plant, subject to adjustment at the discretion of the Remuneration Committee. Finally, that of Mr Robson was discretionary in the first year of his appointment and was set by the Remuneration Committee in the light of his and the Group’s performance. A common bonus plan for all Executive Directors has been introduced by the Committee for the year to 30 April 2002 under which annual bonuses will be linked to operating performance in the year. Directors’ pension benefits Accrued pensionable service at 30 April Years Age at 30 April Years Directors contributions paid £ Accrued Annual Pension* £ Increase in annual pension at 30 April £ 54 42 50 59 53 53 49 17 1 8 16 16 12 7 - 7,600 6,750 - - 7,096 1,687 330,588 6,000 18,889 360,694 268,133 124,831 10,191 62,455 6,000 8,361 84,279 62,920 27,912 404 2001 GB Burnett SI Robson EJ Forshaw 2000 PD Lewis GB Burnett A Anderson EJ Forshaw * Comparatives for 2000 have been adjusted to correct a calculation error. Under the terms of his service contract, Mr Burnett is entitled to retire at age 60 with a pension of two-thirds of gross remuneration on retirement. It was considered appropriate to include the performance related bonus in pensionable earnings as this arrangement was agreed more than ten years ago and the bonus forms a significant part of Mr Burnett’s earnings. However, it is proposed to amend Mr Burnett’s service contract to base his pension on two-thirds of his annual salary with effect from 1 May 2001. Although Mr Burnett’s pension is linked to his final salary, it is funded through contributions to the managed fund of an independent insurance company. Mr Burnett’s pension in payment increases in line with price inflation, up to 7% a year. A spouse’s pension of two-thirds of Mr Burnett’s retirement benefit is payable in the event of his death either before or after retirement. The Company receives regular advice from external advisers on the level of contributions required to meet the anticipated final salary liability. The current level of funding is as most recently recommended by the advisers. Mr Lewis’ pension entitlement and the funding thereof were similar to those of Mr Burnett until his retirement when the fund supporting the entitlement was realised to purchase an annuity giving him his contractual pension of £373,776, equal to two- thirds of final gross remuneration, of which £13,082 accumulated during the year. Under the terms of his contract, Mr Robson is entitled to retire at age 60 on a pension equal to one-thirtieth of his final gross salary for each year of pensionable service. He is a member of the Company’s Retirement Benefits Plan, which is a defined benefits scheme, in respect of his earnings up to the Inland Revenue limit. The pension in respect of his earnings above that limit is provided by an unapproved unfunded retirement benefits arrangement agreed between him and the Company. Mr Robson’s contract also contains early retirement provisions allowing him to retire and draw a pension based on actual years of service, but without deduction for early payment which take effect once he has completed ten years service with the Company (or at anytime after age 50 if there is a change of control). Mr Robson pays contributions equal to 5% of his salary, all of which was paid to the pension scheme in the current year. Mr Forshaw is also a member of the Company’s Retirement Benefits Plan and is entitled to retire at age 65 on a pension of one- sixtieth of basic salary for each year of pensionable service. 36 Mr Dressel is a member of a US defined contributions plan to which the Group contributed £3,600 in the year (£2,000 in the period from his appointment on 2 February 2000 to 30 April 2000). Mr Anderson is a pensioner member of the Retirement Benefits Plan since his resignation on 26 June 2000 when he took early retirement on a pension based on one - thirtieth of his gross remuneration (excluding benefits in kind) for each year of service reduced to take account of its early payment. His pension at retirement amounted to £76,944, which included an accrual of £1,734 for service in the current year and a reduction of £49,621 to reflect its early payment. Taking early retirement at a reduced pension is an opportunity available to all members of the Company’s Retirement Benefits Plan. For members of the Company’s Retirement Benefits Plan, except where otherwise stated: in the event of death, between leaving service and retirement while retaining membership of the Plan, a spouse’s pension equal to 50% of the member’s deferred pension calculated at the date of death plus a return of his contributions; in the event of death in retirement, a spouse’s pension equal to 50% of the member’s pension at the date of death; option to retire at any time after age 50 with the Company’s consent. Early retirement benefits are reduced by an amount agreed between the Actuary to the Plan and the Trustees as being reasonable; pension increases in line with the increase in the Retail Price Index but capped at 5% per annum; and transfer values do not include discretionary benefits. Directors’ interests in shares The Directors of the Company are shown below together with their interests in the share capital of the Company: 31 July 2001 Number of ordinary shares of 10p each 30 April 2001 Number of ordinary shares of 10p each PD Lewis GB Burnett SI Robson BJ Dressel EJ Forshaw PA Lovegrove HE Staunton AE Wheatley Beneficial Non-beneficial - 1,056,192 - - - - - - 12,000,000 12,000,000 11,000 200,000 15,024 182,500 145,000 132,000 Beneficial 12,000,000 12,000,000 11,000 200,000 15,024 182,500 145,000 132,000 Non-beneficial - 1,056,192 - - - - - - 30 April 2000 Number of ordinary shares of 10p each or date of appointment where later Beneficial 12,000,000 12,000,000 11,000 - 15,024 157,500 45,000 72,000 Non-beneficial - 1,056,192 - - - - - - 37 (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) REMUNERATION COMMITTEE REPORT ASHTEAD GROUP PLC Remuneration Committee Report Directors’ interests in share options Options at 1 May 2000 Granted Exercised/ lapsed the year during year during Market price at date of Options at exercise 30 April 2001 Exercise price Earliest normal exercise date Discretionary schemes PD Lewis 521,362 491,400 487,494 200,000 350,000 166,700 521,362 491,400 487,494 200,000 350,000 166,700 - - - - - 109,210 152,334 60,000 125,000 - 60,000 200,000 66,700 - - - - - - - - - - - - - - 300,000 90,000 29,500 195,500 230,000 - - - - 230,000 - - - 140,000 230,000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 521,362 491,400 487,494 200,000 350,000 166,700 521,362 491,400 487,494 200,000 350,000 166,700 300,000 90,000 29,500 195,500 230,000 109,210 152,334 60,000 125,000 230,000 60,000 200,000 66,700 140,000 230,000 14.870p 61.440p 72.535p 132.250p 184.200p 172.500p 14.870p 61.440p 72.535p 132.250p 184.200p 172.500p 102.500p 125.000p 101.670p 102.500p 125.000p 61.440p 72.535p 132.250p 184.200p 125.000p 132.250p 184.200p 172.500p 102.500p 125.000p Sept 1995 Aug 1997 Sept 1998 Feb 2000 Feb 2001 Feb 2002 Sept 1995 Aug 1997 Sept 1998 Feb 2000 Feb 2001 Feb 2002 Aug 2003 Feb 2004 Aug 2003 Aug 2003 Feb 2004 Aug 1997 Sept 1998 Feb 2000 Feb 2001 Feb 2004 Feb 2000 Feb 2001 Feb 2002 Aug 2003 Feb 2004 GB Burnett SI Robson EJ Forshaw JB Dressel Expiry Sept 2002 Aug 2004 Sept 2005 Feb 2007 Feb 2008 Feb 2009 Sept 2002 Aug 2004 Sept 2005 Feb 2007 Feb 2008 Feb 2009 Aug 2010 Feb 2011 Aug 2010 Aug 2010 Feb 2011 Aug 2004 Sept 2005 Feb 2007 Feb 2008 Feb 2011 Feb 2007 Feb 2008 Feb 2009 Aug 2010 Feb 2011 SAYE scheme PD Lewis GB Burnett S I Robson EJ Forshaw 9,948 17,602 - 17,602 Contract matured without options being exercised 17,800 - - - - - - - - 17,602 17,800 17,602 98.000p 98.000p 94.800p 98.000p April 2000 April 2002 April 2006 April 2002 Sept 2000 Sept 2002 Sept 2006 Sept 2002 The market price of the Company’s shares at the end of the financial year was 105.5p; the highest and lowest share prices during the financial year were 138.0p and 80.5p respectively. Following his retirement from full time office, Mr Lewis’ holdings of options granted in September 1992, September 1994 and August 1995 would have lapsed on 31 July 2001 in accordance with the rules of the approved share option scheme unless previously exercised. Accordingly, on 18 July 2001 he exercised all these options crystallising a profit of £804,716. Consequent upon his complete retirement on 31 July 2001, his other options will lapse unless exercised by 31 July 2002. Mr Forshaw and Mr Dressel also hold awards over 250,000 units each under the Company’s Cash Incentive Scheme which were granted on 22 February 2000 at a price of 102p per unit. These awards are subject to the same performance conditions as apply to the Company’s unapproved share option scheme and are exercisable on 22 February 2003 if the performance criteria have been satisfied when the difference between the mid market price of Ashtead Group shares on that day and the grant price multiplied by the number of units held will be paid to them by way of a cash award. Alan Wheatley Chairman of the Remuneration Committee 31 July 2001 38 STATEMENT OF DIRECTORS’ RESPONSIBILITIES ASHTEAD GROUP PLC Statement of Directors’ Responsibilties The Directors are required by the Companies Act 1985 to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year and of the profit or loss for the financial year. In preparing the financial statements the Directors are required to: select suitable accounting policies and then apply them consistently supported by judgements and estimates that are reasonable and prudent state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements prepare the financial statements on a going concern basis unless this is inappropriate The Directors are also responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 1985. The Directors also have responsibility for taking reasonable steps to safeguard the assets of the Group and prevent and detect fraud and other irregularities. By order of the Board Robert Clark Company Secretary 31 July 2001 39 (cid:2) (cid:2) (cid:2) INDEPENDENT AUDITORS’ REPORT ASHTEAD GROUP PLC Independent Auditors’ Report to the Members of Ashtead Group plc We have audited the financial statements which comprise the profit and loss account, the balance sheet, the cash flow statement, the statement of total recognised gains and losses and the related notes and the additional disclosures within the remuneration committee report relating to the remuneration of the directors specified for our review by the London Stock Exchange. Respective responsibilities of directors and auditors The directors` responsibilities for preparing the annual report and the financial statements in accordance with applicable United Kingdom law and accounting standards are set out in the statement of directors’ responsibilities. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements, United Kingdom Auditing Standards issued by the Auditing Practices Board and the Listing Rules of the Financial Services Authority. We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the directors’ report is not consistent with the financial statements, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law or the Listing Rules regarding directors’ remuneration and transactions is not disclosed. We read the other information contained in the annual report and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. The other information comprises only the directors’ report, the chairman’s report, the chief executive’s review, the financial review, the Sunbelt Rentals, A-Plant and Ashtead Technology operational reviews and the corporate governance report. We review whether the corporate governance statement reflects the company’s compliance with the seven provisions of the Combined Code specified for our review by the Listing Rules, and we report if it does not. We are not required to consider whether the board’s statements on internal control cover all risks and controls, or to form an opinion on the effectiveness of the group’s corporate governance procedures or its risk and control procedures. Basis of audit opinion We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion the financial statements give a true and fair view of the state of affairs of the company and the group at 30 April 2001 and of the profit and cash flows of the group for the year then ended and have been properly prepared in accordance with the Companies Act 1985. PricewaterhouseCoopers Chartered Accountants and Registered Auditors London 31 July 2001 40 CONSOLIDATED PROFIT & LOSS ACCOUNT ASHTEAD GROUP PLC Consolidated Profit & Loss Account For the year ended 30 April 2001 Turnover: - continuing activities - acquisitions Cost of sales Gross profit Administrative expenses Operating profit Net interest payable and similar charges Profit on ordinary activities before taxation Taxation on profit on ordinary activities: - current tax - deferred tax Profit for the financial year Equity dividends Retained profits transferred to reserves Basic earnings per share Diluted earnings per share Consolidated Statement of Total Recognised Gains & Losses Notes 2 23 2,3 5 6 6, 19 21 8 9 9 Notes Profit for the financial year Foreign currency translation differences Total recognised gains and losses relating to the year Prior period adjustments 27 Total gains and losses recognised since the last annual report 2000 £m (restated) 302.4 - 302.4 (220.4) 82.0 (24.9) 57.1 (10.9) 46.2 0.8 (5.7) (4.9) 41.3 (10.2) 31.1 12.8p 12.6p 2000 £m (restated) 41.3 (0.8) 40.5 2001 £m 376.8 175.2 552.0 (430.8) 121.2 (52.2) 69.0 (57.1) 11.9 1.2 9.7 10.9 22.8 (11.3) 11.5 7.0p 6.7p 2001 £m 22.8 1.7 24.5 (9.6) 14.9 All acquisitions made this year were immediately integrated into the Group’s ongoing operations. No segregated operating profit information is therefore available. There is no material difference between the results shown above and those which would have been shown on a historical cost basis. Comparative figures have been restated as described in note 27. The notes on pages 45 to 62 form part of these financial statements. 41 CONSOLIDATED BALANCE SHEET ASHTEAD GROUP PLC Consolidated Balance Sheet at 30 April 2001 Fixed assets Intangible assets - goodwill Tangible fixed assets: - rental equipment - other fixed assets Total fixed assets Current assets Stock Debtors Short term investments Cash at bank and in hand Creditors - amounts falling due within one year Bank loans and overdrafts Trade and other creditors Net current liabilities Total assets less current liabilities Creditors - amounts falling due after more than one year Bank and other loans 5.25% unsecured convertible loan note, due 2008 Provision for liabilities and charges Deferred taxation Other provisions Total net assets Capital and reserves Called up share capital Share premium account Revaluation reserve Profit and loss account Total capital and reserves (equity interests) Notes 10 11 11 13 14 26 (c) 26 (c) 15 16 20 17 19 19 20 21 21 21 2001 £m 150.7 725.6 76.9 802.5 953.2 15.3 125.7 - 1.1 142.1 (2.2) (222.7) (224.9) (82.8) 870.4 (483.3) (127.9) (611.2) (4.0) (4.7) (8.7) 250.5 32.4 100.1 0.5 117.5 250.5 2000 £m (restated) 9.9 450.1 62.5 512.6 522.5 10.0 79.4 15.0 0.1 104.5 (96.7) (169.6) (266.3) (161.8) 360.7 (109.7) - (109.7) (13.1) (1.1) (14.2) 236.8 32.3 99.7 0.5 104.3 236.8 The notes on pages 45 to 62 form part of these financial statements. Comparative figures have been restated as described in notes 17, 19 and 27. These financial statements were approved by the Board on 31 July 2001. GB Burnett SI Robson 42 Company Balance Sheet at 30 April 2001 CONSOLIDATED BALANCE SHEET ASHTEAD GROUP PLC Fixed assets Tangible fixed assets Investments in group companies Current assets Debtors Creditors - amounts falling due within one year Loans and overdrafts Trade and other creditors Net current assets Total assets less current liabilities Creditors - amounts falling due after more than one year 5.25% unsecured convertible loan note, due 2008 Other loan notes Total net assets Capital and reserves Called up share capital Share premium account Revaluation reserve Profit and loss account Notes 11 12 14 15 16 17 17 20 21 21 21 Capital and reserves (equity interests) The notes on pages 45 to 62 form part of these financial statements. Comparative figures have been restated as described in note 17. These financial statements were approved by the Board on 31 July 2001. GB Burnett SI Robson 2001 £m - 348.5 348.5 133.5 - (11.4) (11.4) 122.1 470.6 (127.9) (0.3) (128.2) 342.4 32.4 100.1 198.6 11.3 342.4 2000 £m (restated) 3.4 224.2 227.6 125.1 (0.3) (10.3) (10.6) 114.5 342.1 - (0.3) (0.3) 341.8 32.3 99.7 198.7 11.1 341.8 43 CONSOLIDATED CASH FLOW STATEMENT ASHTEAD GROUP PLC Consolidated Cash Flow Statement For the year ended 30 April 2001 Net cash inflow from operating activities Cash inflow before integration costs Exceptional BET USA integration costs Net cash inflow from operating activities Returns on investments and servicing of finance Interest received Interest paid Exceptional costs re new bank facility Net cash outflow from returns on investments and servicing of finance Taxation inflow/(outflow) Capital expenditure Purchase of tangible fixed assets Sale of tangible fixed assets Net cash outflow from capital expenditure Notes £m 2001 £m £m (restated) 2000 £m (restated) 26(a) 0.6 (37.3) (9.7) 173.0 (10.3) 162.7 (46.4) 1.7 1.0 (11.3) - (202.6) 38.3 (163.4) 25.0 (164.3) (214.1) (10.4) (270.8) 111.4 - 111.4 (10.3) (3.2) (138.4) (11.3) (8.9) (60.7) 0.3 Acquisitions & disposals outflow 26(d) Equity dividends paid Net cash outflow before management of liquid resources and financing Inflow from management of liquid resources due to decrease in short term investments 26(c) 15.6 Financing Issue of ordinary share capital Drawdown of loans Redemption of loans Principal payment under hire purchase agreements Net cash inflow from financing Increase/(decrease) in cash 0.5 466.6 (170.3) - 26(e) 26(e) 26(b) - 29.3 (9.3) (2.3) 296.8 41.6 17.7 (42.7) All acquisitions made this year were immediately integrated in to the Group’s ongoing operations. No segregated cash flow information is therefore available. Comparative figures have been restated as described in note 27. The notes on pages 45 to 62 form part of these financial statements. 44 NOTES TO THE FINANCIAL STATEMENTS ASHTEAD GROUP PLC Notes to the Financial Statements For the year ended 30 April 2001 1 Accounting policies Accounting convention and basis of consolidation The financial statements have been prepared under the historical cost convention as modified by the revaluation of certain freehold properties and in accordance with applicable accounting standards. The financial statements include the results of the Company and all its subsidiaries. A summary of the more important accounting policies, which have been applied consistently with the exception of the impact of the early adoption of FRS 18: Accounting Policies as described in note 27, is given in the following paragraphs. Comparative figures have been restated to reflect the change in accounting policies and also as described in notes 17 and 19 to accord with the current year presentation. Foreign currency translation and derivative financial instruments Exchange differences arising from the retranslation of the opening net investment of overseas subsidiaries and the difference between the inclusion of their profits at average rates of exchange in the Group profit and loss account and the closing rate are dealt with as movements on reserves. Assets and liabilities in foreign currencies including long term liabilities are translated at rates of exchange ruling at the balance sheet date. All exchange differences are dealt with in the profit and loss account. This treatment is required by Statement of Standard Accounting Practice number 20 (SSAP 20) in order to give a true and fair view of the Group’s results. Compliance with SSAP 20 overrides paragraph 12, Schedule 4, of the Companies Act 1985 which states that only profits realised at the balance sheet date should be included in the profit and loss account. The Group uses derivative financial instruments to manage its interest rate exposures. These are principally swap agreements used to manage the balance between fixed and floating rate finance on long term debt. The Group accounts for such derivatives, which are only used for hedging purposes, using the accrual method under which amounts payable or receivable in respect of derivatives are recognised rateably in net interest payable over the period of the contract. They are not revalued to fair value or shown on the Group balance sheet at the balance sheet date. Turnover Turnover represents the total amount receivable for the provision of goods and services to customers net of returns and value added tax. Rental income is recognised on a straight line basis over the period of the contract. Fixed assets Fixed assets are stated at historical cost or valuation (net of any discounts received) less accumulated depreciation and provisions for impairment where appropriate. Leasehold properties are amortised over the life of each lease. Other fixed assets are depreciated on a straight line basis applied to the opening cost to write down each asset to its residual value over its useful economic life. The rates in use are as follows: Freehold property Rental equipment Motor vehicles Office and workshop equipment Per annum 4% 5% to 33% 16% to 25% 20% 45 NOTES TO THE FINANCIAL STATEMENTS ASHTEAD GROUP PLC Notes to the Financial Statements For the year ended 30 April 2001 Fixed assets that are not capable of individual identification (non-itemised equipment), are depreciated so as to write them down to their residual value over their useful economic lives of 5 to 20 years. Some of the Group’s freehold and long leasehold properties were revalued on the basis of their open market value at 30 April 1989. On adoption of FRS 15 the Group followed the transitional provisions to retain the book value of land and buildings that were revalued in 1989 but not to adopt a policy of revaluation in future. Repairs and maintenance Repair and maintenance of rental equipment is charged against revenue costs incurred in the period. Acquisitions and goodwill Acquisitions during the financial year have been accounted for on an acquisition basis and the results of companies acquired are therefore included from the effective date of acquisition. The net tangible assets of companies acquired are incorporated in the consolidated accounts at their fair value to the Group. In accordance with the requirements of FRS 7, post acquisition integration expenses are charged to the profit and loss account and, where material, disclosed as an exceptional item. Goodwill, being the difference between the cost and fair value of the Group’s share of net assets acquired, arising on all acquisitions since 1 May 1999 has been capitalised in the year in which it arises and is amortised on a straight line basis over its useful economic life. Goodwill arising before 1 May 1999 has been deducted from the accumulated profit and loss account reserve but will be written back and taken to the profit and loss account in the event that it either becomes impaired or if the business to which it relates is disposed of. Deferred taxation Deferred taxation is provided on the liability method in respect of timing differences between profits as computed for taxation purposes and profits as stated in the accounts is provided only to the extent that there is a reasonable probability that a liability will crystallise in the foreseeable future. Operating leases Operating lease rentals are charged against profits on a straight line basis over the period of the lease. Stocks Stocks are valued at the lower of cost and net realisable value. Pensions The Group operates defined benefit and defined contribution pension plans for the benefit of its employees under arrangements established by Group companies. In respect of the defined benefit plans, actuarial valuations are made regularly and the contributions payable are adjusted as appropriate. Pension costs are accounted for on the basis of charging the expected cost of providing pensions over the period during which the Group benefits from the employees’ services. The effect of variations from regular cost are spread over the expected remaining service lives of the members of the plan. Contributions to defined contribution plans are expensed as incurred. Investments Investments in subsidiary undertakings are stated at cost less any necessary provision for impairment in the parent company balance sheet. Where an investment in a subsidiary undertaking is transferred to another subsidiary undertaking, any uplift in the value at which it is transferred over its carrying value is treated as a revaluation of the investment prior to the transfer and is credited to the revaluation reserve. 46 2 Segmental analysis The Group operates one class of business: rental of equipment. The segmental analysis by geographic unit is given below: Turnover 2000 £m 2001 £m Operating profit 2001 2000 £m £m (restated) 2001 £m Net assets 2000 £m (restated) 350.2 199.7 2.1 552.0 - - 114.4 186.6 1.4 302.4 - - 61.2 26.8 0.6 88.6 21.5 35.8 0.2 57.5 577.9 286.9 2.0 866.8 (12.3) - (7.3) (0.4) - - 175.9 262.9 2.4 441.2 - - - 552.0 - 302.4 - 69.0 - 57.1 (616.3) 250.5 (204.4) 236.8 North America United Kingdom Rest of World Exceptional integration costs Goodwill amortisation Central items* * net borrowings and deferred taxation There is no material difference between turnover by origin as shown above and turnover by destination. Acquisitions in the year added £175.2m to revenue in the North American segment. Exceptional integration costs were incurred in the North American segment (see note 23). 3 Operating profit Operating profit is stated after charging / (crediting) : Staff costs: Salaries Social security costs Other pension costs Depreciation Goodwill amortisation Profits on disposal of fixed assets Hire of plant and machinery Other operating leases 2001 £m 149.7 17.4 3.1 114.5 7.3 (6.8) 15.9 13.1 2000 £m (restated) 74.7 8.9 4.4 66.8 0.4 (6.0) 2.5 6.3 Audit fees payable to PricewaterhouseCoopers were £259,500 (2000 - £165,000). This includes £20,000 (2000 - £20,000) in respect of the parent company. Fees paid to PricewaterhouseCoopers for non-audit services (largely in connection with acquisitions) amounted to £999,400 (2000 - £4,950) in the UK and £140,600 in the US (2000 - £nil). Profits on disposal of fixed assets have been included within operating profit as they resulted from routine sales of rental equipment and are considered in effect to be no more than required adjustments to depreciation previously charged. 4 Directors’ emoluments Directors’ remuneration and interests are given in the Report of the Remuneration Committee on pages 34 to 38. 47 NOTES TO THE FINANCIAL STATEMENTS ASHTEAD GROUP PLC Notes to the Financial Statements For the year ended 30 April 2001 5 Net interest payable and similar charges Bank interest payable Accrued interest amortisation on convertible loan Total interest payable Bank interest receivable Exceptional costs re new bank facility 6 Taxation UK Corporation tax at 30% (2000 - 30%) - current year charge - credit in respect of prior year Double taxation relief Overseas taxation - current year charge - credit in respect of prior year Total current tax credit Deferred taxation (credit)/charge (see note 19) 2001 £m 41.4 6.6 48.0 (0.6) 9.7 57.1 2001 £m 0.1 (1.1) (1.0) (0.1) (1.1) 0.1 (0.2) (0.1) (1.2) (9.7) (10.9) 2000 £m 12.0 - 12.0 (1.1) - 10.9 2000 £m 1.4 (2.4) (1.0) (0.1) (1.1) 0.3 - 0.3 (0.8) 5.7 4.9 The deferred tax credit arises partly in the US where the unused tax losses carried forward are now sufficient to eliminate any potential deferred tax liability and partly in the UK as a result of the disclaiming of capital allowances. 7 Profit and loss account Ashtead Group plc has not presented its own profit and loss account as permitted by section 230 (3) of the Companies Act 1985. The amount of the profit for the financial year dealt with in the accounts of Ashtead Group plc is £11.5m (2000 - £11.9m). 8 Equity dividends Interim dividend paid at 0.62p net per share (2000 - 0.56p) Proposed final dividend of 2.88p net per share (2000 - 2.60p) 2001 £m 2.0 9.3 11.3 2000 £m 1.8 8.4 10.2 48 9 Earnings per share Earnings per share for the year ended 30 April 2001 have been calculated based on the profit for the financial year and on 323,334,079 ordinary shares, being the weighted average number of ordinary shares in issue during the year (2000 - 322,987,960 ordinary shares). Diluted earnings per share for the year are computed using the profit for the financial year and the diluted number of shares calculated as follows: 2001 Profit for Weighted the financial average no of shares millions year £m 2000 Profit for Weighted the financial average no of shares millions year £m As used in the calculation of basic earnings per share Outstanding share options Unsecured convertible loan stock after assumed tax at the UK standard rate of 30% (£2.0m) As used in the calculation of diluted earnings per share 22.8 - 323.3 3.0 4.6 81.9 41.3 - - 323.0 4.0 - 27.4 408.2 41.3 327.0 10 Intangible assets - goodwill Group At 1 May 2000 Arising in respect of acquisitions in the year Amortisation during the year At 30 April 2001 Cost Amortisation £m £m Net book value £m 10.3 148.1 - 158.4 (0.4) - (7.3) (7.7) 9.9 148.1 (7.3) 150.7 Goodwill written off directly to reserves as at 30 April 2001 was £58.1m (2000 - £58.1m). An amortisation period of 20 years has been selected for the goodwill arising on acquisitions in the year and in previous years because this is considered to best represent the useful life of the goodwill arising on these acquisitions. 11 Tangible fixed assets Group Cost or valuation At 1 May 2000 as previously reported Prior year adjustments At 1 May 2000 (as restated) Exchange differences Acquisitions Additions Disposals At 30 April 2001 Freehold property £m Leasehold property £m Office & Rental workshop equipment equipment £m £m Motor vehicles £m 36.6 - 36.6 1.0 1.8 1.7 (0.1) 41.0 15.1 - 15.1 0.7 1.1 7.2 (0.7) 23.4 640.5 (11.0) 629.5 33.4 169.3 217.5 (86.9) 962.8 14.7 - 14.7 0.6 0.7 4.5 (3.8) 16.7 27.1 - 27.1 0.9 1.6 6.8 (7.5) 28.9 Total £m 734.0 (11.0) 723.0 36.6 174.5 237.7 (99.0) 1,072.8 49 NOTES TO THE FINANCIAL STATEMENTS ASHTEAD GROUP PLC Notes to the Financial Statements For the year ended 30 April 2001 11 Tangible fixed assets (continued) Freehold property £m Leasehold property £m Office & Rental workshop equipment equipment £m £m Motor vehicles £m Group Depreciation At 1 May 2000 as previously reported Prior year adjustments At 1 May 2000 (as restated) Exchange difference Charge for the period Disposals At 30 April 2001 Net book value At 30 April 2001 At 30 April 2000 (restated) 3.6 - 3.6 0.1 0.8 - 4.5 3.0 - 3.0 0.2 1.7 (0.6) 4.3 36.5 33.0 19.1 12.1 181.5 (2.1) 179.4 9.9 102.6 (54.7) 237.2 725.6 450.1 The net book amount of leasehold property comprises: Long leasehold Short leasehold The closing net book value of property stated at cost or valuation may be analysed as follows: Stated at cost Stated at valuation performed at 30 April 1989 The net book value at which assets stated at valuation would have been shown if they had not been revalued is as follows: Total £m 212.5 (2.1) 210.4 11.3 114.5 (65.9) 270.3 16.3 - 16.3 0.6 6.1 (7.0) 16.0 12.9 10.8 802.5 512.6 2000 £m 2.1 10.0 12.1 8.1 - 8.1 0.5 3.3 (3.6) 8.3 8.4 6.6 2001 £m 2.1 17.0 19.1 Freehold £m Leasehold £m 35.0 1.5 36.5 1.2 18.1 1.0 19.1 0.8 Fixed assets in the Company comprising freehold and leasehold property which had a net book value of £3.4m at 30 April 2000 were transferred in the year to a subsidiary at their net book value. 12 Investments Company At 1 May 2000 Additions in the year Transfer of Group undertaking to subsidiary At 30 April 2001 Shares in group companies £m 224.2 - (0.1) 224.1 Loans to group companies £m - 124.4 - 124.4 Total £m 224.2 124.4 (0.1) 348.5 50 The Company’s principal subsidiaries are: Name Ashtead Plant Hire Company Limited Ashtead Plant Hire Company (Ireland) Limited Ashtead Technology Limited Ashtead Technology (South East Asia) pte Limited Ashtead Technology (North America) Inc. Sunbelt Rentals Inc. Country of Incorporation England England Scotland Singapore USA USA Principal country in which subsidiary undertaking operates United Kingdom Republic of Ireland United Kingdom Singapore USA USA The issued share capital (all of which comprises ordinary shares) of subsidiaries is 100% owned by the Company or by subsidiary undertakings and all subsidiaries are consolidated. The principal activity of each subsidiary undertaking listed above is equipment rental. All of the above subsidiaries are held by Ashtead Group plc except for Sunbelt Rentals Inc, and Ashtead Technology (North America) Inc, which are owned indirectly through other subsidiary undertakings. 13 Stock Group Raw materials, consumables and spares Goods for resale 14 Debtors Trade debtors Amounts due from group undertakings Prepayments and accrued income Comparative figures have been restated as described in note 27. 15 Bank loans and overdrafts Secured bank overdrafts Short term portion of unsecured loans 2001 £m 12.9 2.4 15.3 The Group 2001 £m 107.4 - 18.3 125.7 The Group 2001 £m 2.2 - 2.2 2000 £m 7.7 2.3 10.0 The The Group Company 2001 £m 2000 £m (restated) The Company 2000 £m 69.6 - 9.8 79.4 - 133.0 0.5 133.5 - 124.7 0.4 125.1 The The Group Company 2001 £m 2000 £m (restated) The Company 2000 £m (restated) 41.1 55.6 96.7 - - - - 0.3 0.3 Comparative figures have been restated to correct a misclassification of £0.3m previously included in short term loans. Bank overdrafts are secured by fixed and floating charges over the Group’s assets. 51 NOTES TO THE FINANCIAL STATEMENTS ASHTEAD GROUP PLC Notes to the Financial Statements For the year ended 30 April 2001 16 Trade and other creditors Trade creditors Bills payable Taxation Other taxes and social security Other creditors Proposed dividend Accruals and deferred income The Group 2001 £m 69.8 90.7 1.9 9.3 - 9.3 41.7 222.7 The The Group Company 2001 £m 2000 £m (restated) 31.9 81.7 1.6 4.1 0.2 8.4 41.7 169.6 - - - - - 9.3 2.1 11.4 The Company 2000 £m - - 1.1 - - 8.4 0.8 10.3 Accruals and deferred income at 30 April 2000 included accrued deferred consideration of £4.8m. Comparative figures have been restated for the transfer to other provisions described in note 19. 17 Creditors - amounts falling due in more than one year Loans are payable as follows: Between two and five years (secured bank debt) Over five years: Secured bank debt Loan notes 5.25% Unsecured convertible loan note due 2008 The Group 2001 £m 221.9 261.1 0.3 127.9 611.2 The The Group Company 2001 £m 2000 £m (restated) 22.5 - - 0.3 127.9 128.2 86.9 0.3 - 109.7 The Company 2000 £m (restated) - - 0.3 - 0.3 Interest is payable on these loans currently at rates between 5% and 9%. Loans payable in between two and five years relate to revolving advances within the US$825m committed secured senior credit facility. These revolving advances were repayable in June 2001 but have been presented as long term because the revolving advance facility is committed until 31 May 2005. The secured bank debt over five years relates to the medium term bank loan also provided under the senior credit facility which is repayable on 31 May 2007. Secured bank debt is secured by way of fixed and floating charges over substantially all of the Group’s assets. Comparative figures have been restated to correct a misclassification of £0.3m previously included in short term loans. 18 Financial instruments A discussion of financial instruments used by the Group and its approach to managing foreign exchange risk are included in the financial review on pages 18 and 19. Short term debtors and creditors have been excluded from all the following disclosures (except the currency profile of monetary assets). 52 a) The currency and interest rate profile of the Group’s financial assets is: Floating rate deposits £m Fixed rate deposits £m Financial assets on which no interest is received £m Fixed rate deposits Weighted Weighted average average interest time for rate at which rate is fixed Years 30 April % - 0.3 - - 0.3 - - - - - - - - - - 8.5 6.4 14.9 0.3 - 0.3 0.2 0.8 0.1 - 0.1 0.2 - - - - - - 5.4 7.0 6.5 - - - - - - 0.2 0.9 0.5 Total £m 0.3 0.3 0.3 0.2 1.1 0.1 8.5 6.5 15.1 Sterling Irish punt (Euro) US dollar Singapore dollar At 30 April 2001 Sterling Irish punt (Euro) US dollar At 30 April 2000 Floating rate financial assets are deposited for variable periods at prevailing money market rates. b) The currency and interest rate profile of the Group’s financial liabilities is: Floating rate borrowings £m Fixed rate borrowings £m 75.9 225.3 9.3 310.5 68.0 36.2 104.2 128.2 174.7 - 302.9 15.3 86.9 102.2 Total £m 204.1 400.0 9.3 613.4 83.3 123.1 206.4 Fixed rate borrowings Weighted Weighted average average interest time for rate at which rate is fixed Years 30 April % 5.6 6.8 - 6.3 6.1 7.0 6.6 7.2 2.3 - 4.4 0.5 8.3 7.1 Sterling US dollar Euros At 30 April 2001 Sterling US dollar At 30 April 2000 The Group’s fixed rate borrowings at 30 April 2001 comprised the £134m nominal value unsecured convertible loan note due 2008 (see note 20) on which interest is fixed at 5.25% per annum payable half yearly effective from 1 June 2001, one year after its issue in connection with the acquisition of BET USA and US$250m (£174.7m) of the borrowings under the group’s secured loan facility on which interest rates have been fixed by means of two interest rate swaps executed in August 2000 with LloydsTSB Bank plc (US $125m) and Bank of America (US$125m). Interest payable on floating rate borrowings is linked to LIBOR rates for the relevant currency. c) Currency profile of monetary assets During the year the Company has used financial instruments for the purpose of managing funding, interest rate and currency risk. Such derivative financial instruments are only used to manage or hedge underlying exposures and not to create exposures. At 30 April 2001 the only currency exposures in the Group’s operations in currencies other than their own functional currency related to payables of £25.9m in the US, £16.6m of which is payable in pounds sterling and £9.3m of which is payable in Euros, and payables of £11.4m in the Republic of Ireland, all of which is payable in pounds sterling. The equivalent comparatives at 30 April 2000 were payables of £6.0m in the US, payable in pounds sterling and payables of £9.3m in the Republic of Ireland, also payable in pounds sterling. 53 NOTES TO THE FINANCIAL STATEMENTS ASHTEAD GROUP PLC Notes to the Financial Statements For the year ended 30 April 2001 18 Financial instruments (continued) d) Maturity of financial liabilities The maturity profile of the Group’s financial liabilities included in note 15 and 17 was: In one year or less In more than two years but not more than five years In more than five years e) Borrowing facilities 2001 £m 2.2 221.9 389.3 613.4 2000 £m (restated) 96.7 22.5 87.2 206.4 The Group has various borrowing facilities available to it. Undrawn committed facilities available at 30 April 2001 in respect of which all conditions precedent had been met totalled £93.3m and relate to the undrawn balance of the revolving loan commitment under the Group’s senior secured bank loan facility which expires in more than two years but less than five years. f) Fair value of financial assets and liabilities The table below provides a comparison by category of the carrying amounts and the fair values of the Group’s financial assets and liabilities at 30 April 2001. Fair value is the amount at which a financial instrument could be exchanged in an arm’s length transaction between informed and willing parties and includes accrued interest. Where available, market values have been used to determine fair values. Where market values are not available, fair values have been calculated by discounting expected cash flows at prevailing interest and exchange rates. Summary of methods and assumptions Bank loans and overdraft, loan notes, cash and short term investments: - fair value approximates to the carrying value because of the short maturity of these items or because they bear interest at floating rates which are reset to market rates at intervals of less than one year. 5.25% convertible loan note: - fair value at 30 April 2001 is calculated by reference to an independent opinion provided by Schroder Salomon Smith Barney Interest rate swap agreements: - fair value is determined by reference to market quotations obtained with reference to interest rates ruling at 30 April 2001 At 30 April 2001 Primary financial instruments held or issued to finance the Group’s operations: Short term borrowings and overdrafts Other secured bank loans (all of which bear interest at floating rates) Other loan notes 5.25% unsecured convertible loan note due 2008 Cash at bank Derivative financial instruments held to manage interest rate profile: Interest rate swaps (net loss) Book value £m Fair value £m 2.2 483.0 0.3 127.9 (1.1) 612.3 - 2.2 483.0 0.3 131.1 (1.1) 615.5 8.0 54 (cid:2) (cid:2) (cid:2) At 30 April 2000 US$ Private Placement Notes Bank loans and overdrafts Cash at bank Liquid resources Foreign exchange contract re BET USA acquisition (net loss) Book value £m Fair value £m 86.9 119.5 (0.1) (15.0) 191.3 £m - 87.6 119.5 (0.1) (15.0) 192.0 £m 3.8 In line with the Group’s accounting policy of accounting for derivatives used to manage the balance between fixed and floating rate interest rates on long term debt rateably in earnings over the period of the contracts, £3.1m of the total unrecognised loss on the interest rate swaps of £8.0m at 30 April 2001 (computed by reference to interest rates ruling at year end) will be recognised in the year ending 30 April 2002. 19 Provisions for liabilities and charges Deferred taxation Short term timing differences Tax effect of losses in subsidiary company Accelerated capital allowances The movement in the year is as follows: At 1 May 2000 Exchange differences Relating to the acquisition of BET USA Credited in the year At 30 April 2001 Provided in the accounts Full potential liability 2000 2000 £m £m (restated) 2001 £m 2001 £m (0.2) - 4.2 4.0 (0.3) - 13.4 13.1 (3.7) (26.2) 94.1 64.2 (0.3) (13.7) 51.6 37.6 Provided in the accounts Full potential liability £m £m 13.1 0.6 - (9.7) 4.0 37.6 1.7 18.4 6.5 64.2 No deferred tax has been provided in respect of the surplus arising on revaluation of the Group’s properties because all of the properties are employed in the Group’s business, and it is not the Group’s intention to dispose of any of them. In any event, the likelihood of a material tax liability arising on disposal is remote due to the availability of rollover relief. Additionally no deferred tax is provided on the unremitted earnings of overseas subsidiaries because it is not intended to remit these in the foreseeable future. 55 NOTES TO THE FINANCIAL STATEMENTS ASHTEAD GROUP PLC Notes to the Financial Statements For the year ended 30 April 2001 19 Provisions for liabilities and charges (continued) Other provisions The movement in the year is as follows: As at 1 May 2000 as previously stated Restatement At 1 May 2000 restated Exchange differences Utilised Charged in the year At 30 April 2001 Self insurance £m - 0.6 0.6 0.7 (6.8) 8.4 2.9 Other £m - 0.5 0.5 0.1 (0.9) 2.1 1.8 Total £m - 1.1 1.1 0.8 (7.7) 10.5 4.7 Comparative figures have been restated in order to adhere to the presentation of provisions adopted this year. Self insurance provisions relate to the estimated liability in respect of costs to be incurred under the Group’s self insurance programmes for events occurring on or prior to the year end. The provision is determined, with advice from external insurance brokers, based on claims notified to date plus an allowance for claims incurred but not yet reported. The majority of the amount provided is expected to be utilised within one year. Other provisions include individually insignificant items expected to be utilised within one year. 20 Called up share capital and 5.25% unsecured convertible loan note due 2008 Ordinary shares of 10p each 2001 Number 2000 Number 2001 £m Authorised 450,000,000 376,000,000 45.0 Allotted, called up and fully paid 323,611,327 323,052,685 32.4 2000 £m 37.6 32.3 During the year to 30 April 2001, 558,642 ordinary shares were issued for cash to employees exercising options granted over the Company’s share capital. Also on 1 June 2000, in connection with the acquisition of BET USA, the Company issued the 5.25% £134m nominal value unsecured convertible loan note due 2008. This loan note is convertible, at the holder’s option, into 89,333,333 ordinary shares at any time after 1 June 2001 and if not converted is redeemable at par on 1 June 2008. The convertible loan note bore no interest in its first year of issue. No transfer of the loan note is permitted in its first year of issue and thereafter it may only be transferred with the consent of the Company which will be granted if the Company is satisfied that the transferee (and any connected persons) would not, in consequence of the transfer, hold ten per cent or more of the issued share capital of the Company after conversion. Certain orderly marketing restrictions also apply to ordinary shares issued through conversion. 56 21 Movements in shareholders’ funds Share Share capital £m premium Revaluation reserve account £m £m Profit and loss account £m Group Profit for the year Equity dividends Other recognised gains and losses relating to the year Share capital subscribed Net additions to shareholders’ funds At 1 May 2000 as previously reported Prior year adjustment At 1 May 2000 as restated - - - - 0.1 0.1 32.3 - 32.3 - - - - 0.4 0.4 99.7 - 99.7 Closing shareholders’ funds 32.4 100.1 Comparative figures have been restated as described in note 27. - - - - - - 0.5 - 0.5 0.5 Total £m 22.8 (11.3) 11.5 1.7 0.5 13.7 246.4 (9.6) 236.8 2000 £m (restated) 41.3 (10.2) 31.1 (0.8) - 30.3 214.2 (7.7) 206.5 22.8 (11.3) 11.5 1.7 - 13.2 113.9 (9.6) 104.3 117.5 250.5 236.8 Company Profit for the year Equity dividends Transfer of Group undertaking to subsidiary Revaluation of investment in subsidiary undertakings Share capital subscribed Net additions to shareholders’ funds Opening shareholders’ funds Share Share capital £m premium Revaluation reserve account £m £m Profit and loss account £m - - - - - 0.1 0.1 32.3 - - - - - 0.4 0.4 99.7 - - - (0.1) - - (0.1) 198.7 11.5 (11.3) 0.2 - - - 0.2 11.1 Total £m 11.5 (11.3) 0.2 (0.1) - 0.5 0.6 341.8 2000 £m (restated) 11.9 (10.2) 1.7 - 198.2 - 199.9 141.9 Closing shareholders’ funds 32.4 100.1 198.6 11.3 342.4 341.8 57 NOTES TO THE FINANCIAL STATEMENTS ASHTEAD GROUP PLC Notes to the Financial Statements For the year ended 30 April 2001 22 Acquisitions The goodwill arising on the acquisitions completed in the year is: BET USA Fair value adjustments Assets acquired at provisional fair value: Fixed assets Stocks Debtors Cash Creditors Consideration (including costs): Cash paid 5.25% convertible loan stock, due 2008 issued at fair market value at date of issue Goodwill arising Original Alignment book of accounting value £m At Other Valuation provisional policies adjustments fair values acquisitions £m £m £m £m 225.5 10.6 33.8 2.0 (25.4) 246.5 (35.1) - (1.1) - - (36.2) (17.4) (6.0) (0.3) - (3.6) (27.3) 173.0 4.6 32.4 2.0 (29.0) 183.0 204.9 121.3 326.2 143.2 1.5 - - - - 1.5 6.4 - 6.4 4.9 Total £m 174.5 4.6 32.4 2.0 (29.0) 184.5 211.3 121.3 332.6 148.1 The fair value of assets acquired has been determined on a provisional basis with the main adjustments being needed to apply Group depreciation methods, to write down acquired fixed assets and inventory to their fair value determined in accordance with FRS 7 and in respect of termination costs incurred in relation to an onerous contract. The fair market value of the convertible loan stock at its date of issue was determined by Schroder Salomon Smith Barney. BET USA was acquired on 1 June 2000. Its trading results in its most recent full year prior to its acquisition (year ended 31 December 1999) and in the five months to 31 May 2000 are summarised in its reporting currency (US dollars) in the table below: Revenues Operating costs Operating profit Interest payable and similar charges Profit on ordinary activities before taxation Tax on profit on ordinary activities Profit on ordinary activities after taxation Dividend Retained profit for the period Year ended 31 December 1999 $m 376 (328) 48 (27) 21 (2) 19 (18) 1 Five months ended 31 May 2000 $m 149 (138) 11 (4) 7 (1) 6 - 6 Other insignificant acquisitions in the year include Response Rentals, acquired by Ashtead Technology on 1 October 2000. No fair value adjustments were required for the other acquisitions. 58 23 Exceptional integration costs Exceptional integration costs included in cost of sales relate to the acquisition of BET USA and comprise: Rebranding programme for acquired premises and rental equipment Redundancies Other integration costs 24 Operating leases Minimum annual commitments under existing operating leases may be analysed by date of expiry of the lease as follows: Land and buildings: Expiring in one year Expiring between two and five years Expiring in more than five years Other: Expiring in one year Expiring between two and five years Expiring in more than five years Total 25 Pensions 2001 £m 1.1 5.5 7.3 13.9 4.4 5.4 0.6 10.4 24.3 £m 8.9 1.2 2.2 12.3 2000 £m 0.4 1.4 5.6 7.4 - 2.3 0.4 2.7 10.1 The Group operates pension plans for the benefit of qualifying employees. The Group’s principal pension plan for its UK employees, which is a funded defined benefit plan with trustee administered assets held separately from those of the Group, was subject to an actuarial valuation as at 30 April 1998 by Cartwright Consulting Limited. This valuation used the projected unit credit method and was carried out on two different market-related bases, using a conservative set of actuarial assumptions for funding purposes and a “best estimate” set for accounting purposes (as required by SSAP 24). The principal actuarial assumptions used in the valuation were that pensionable salaries would grow at 4.75% per annum and that the funds’ investments would yield 7.4% per annum (for funding purposes) and 8.4% per annum (for SSAP 24 purposes) before retirement and 5.9% per annum (for both funding and SSAP 24 purposes) after retirement. The assets were taken at their market value of £10,176,000 at the valuation date. Assets at market value were sufficient to cover the benefits that had accrued to members by 115% on the funding basis and 129% on the SSAP 24 basis. On the advice of the actuary, employer’s contributions were paid to this plan during the year ended 30 April 2001 at the rate of 5.0% of members’ pensionable salaries at 1 May 2000 as adjusted for leavers during the year. For accounting purposes, the actuarial surplus in the main UK plan is being spread over the fifteen year average remaining service life of the employees in the scheme. The table below shows the employer’s cost calculated in accordance with the provisions of SSAP 24 for the main UK plan and for the other plans: Principal UK scheme: Regular cost Variation from regular cost Other plans Accrual for future contributions included in creditors 2001 £m 0.8 (0.2) 2.4 3.0 0.1 2000 £m 1.0 (0.2) 3.5 4.3 0.1 Other plans include the defined contribution 401K plan operated by Sunbelt Rentals for the benefit of its employees and the directors’ plan covering certain directors described more fully in the Remuneration Committee report on pages 34 to 38. 59 NOTES TO THE FINANCIAL STATEMENTS ASHTEAD GROUP PLC Notes to the Financial Statements For the year ended 30 April 2001 26 Notes to the cash flow statement a) Cash flow from operating activities Operating profit Exceptional BET USA integration costs Amortisation of goodwill Depreciation of tangible fixed assets EBITDA before BET USA integration costs Gain on sale of tangible fixed assets Increase in stocks Increase in trade debtors (Decrease)/increase in trade creditors Exchange differences Net cash inflow from operating activities before BET integration costs b) Reconciliation to net debt (Increase)/decrease in cash in the period Increase in bank loans Cash inflow from decrease in short term investments Change in net debt from cash flows Translation difference Movement in net debt in the period Net bank debt at 1 May Net bank debt at 30 April Non cash movement re 5.25% unsecured convertible loan note, due 2008 Net debt at 30 April c) Analysis of net debt Cash at bank and in hand Overdrafts Liquid resources Debt due after 1 year Debt due within 1 year Total net debt Cash at bank and in hand Overdrafts Liquid Resources Debt due after 1 year Debt due within 1 year Hire purchase liabilities Total 2001 £m 69.0 12.3 7.3 114.5 203.1 (6.8) (0.7) (12.1) (9.3) (1.2) 173.0 2001 £m (41.6) 296.3 15.6 270.3 22.8 293.1 191.3 484.4 127.9 612.3 2000 £m (restated) 57.1 - 0.4 66.8 124.3 (6.0) (2.6) (9.0) 4.7 - 111.4 2000 £m 42.7 17.7 0.3 60.7 4.5 65.2 126.1 191.3 - 191.3 1 May 2000 £m (restated) (0.1) 41.1 41.0 (15.0) 109.7 55.6 Cash Non-cash Exchange flow movements movement £m £m £m 30 April 2001 £m (1.0) (40.6) (41.6) 15.6 354.2 (57.9) - - - - 127.9 - - 1.7 1.7 (0.6) 19.4 2.3 (1.1) 2.2 1.1 - 611.2 - 191.3 270.3 127.9 22.8 612.3 1 May 1999 £m Cash Exchange flow Movement £m £m (10.1) 7.1 (15.5) 113.0 29.3 2.3 126.1 9.6 33.1 0.3 (6.3) 26.3 (2.3) 60.7 0.4 0.9 0.2 3.0 - - 4.5 30 April 2000 £m (re-stated) (0.1) 41.1 (15.0) 109.7 55.6 - 191.3 Non-cash movements relate to the issue of the 5.25% unsecured convertible loan note, due 2008 as part consideration for the acquisition of BET USA. 60 26 Notes to the cash flow statement (continued) d) Acquisitions Cash consideration on current year acquisitions Less: cash acquired with subsidiary undertakings Deferred consideration paid on prior year acquisitions 2001 £m 211.3 (2.0) 4.8 214.1 2000 £m 11.1 - 0.2 11.3 Because the acquired businesses were fully integrated immediately into the Group’s operations it is not practicable to analyse net cash flows between the acquired entities and the Group’s other operations. e) Drawdown/redemption of loans Drawdown of loans Term loan Revolver loans Redemption of loans Bank loans US$ private placement notes Other loan notes 2001 £m 251.2 215.4 466.6 (79.6) (90.4) (0.3) (170.3) 296.3 2000 £m - 29.3 29.3 (9.3) - - (9.3) 20.0 27 Implementation of FRS18: Accounting Policies The Group has adopted early the new Financial Reporting Standard number 18 (FRS 18) in its accounts for the year ended 30 April 2001. Adoption of FRS 18 required a full review of all the Group’s accounting policies and estimation techniques (the latter being the methods by which accounting policies are implemented). This review was conducted in accordance with FRS 18 which requires that, where a choice of treatment is available, the “most appropriate” accounting policies and estimation techniques shall be used. Implementation of FRS 18 resulted in the following changes to accounting policies and estimation techniques: Accounting policy changes Amounts received from equipment vendors were previously taken to profit and loss account but are now being treated as a reduction in the value of the rental equipment acquired in the period to which they relate. This change in accounting policy has been implemented retrospectively as required by FRS 18 with a prior year adjustment made to fixed assets and to reserves. Stationery is now accounted for by writing off to operating costs the cost of stationery ordered and delivered in the period rather than the estimated amount of stationery consumed. This change in accounting policy has been implemented retrospectively as required by FRS 18 with a prior year adjustment made to debtors and to reserves. Revisions to estimation techniques Non-mechanical equipment (acrow props and equipment, aluminium access towers and steel scaffolding) has until now been held in fixed assets at cost with write offs booked against cost of sales in respect of both equipment sold in the period and equipment becoming damaged or broken or otherwise unusable in the period. Having regard to the FRS 18 requirement to apply the “most appropriate” accounting practices and in light of the increased materiality of these items following the acquisition of BET USA (which had a large fleet of steel scaffolding) it has been decided in future to calculate depreciation using an estimated life of 20 years and zero residual value. This change to depreciation is a change to a more appropriate estimation technique to be implemented in line with the principles set out in FRS 15: Tangible Fixed Assets. Consequently the impact of the revised estimation technique is being implemented prospectively by way of an increased depreciation charge with no adjustments made to opening reserves. 61 NOTES TO THE FINANCIAL STATEMENTS ASHTEAD GROUP PLC Notes to the Financial Statements For the year ended 30 April 2001 27 Implementation of FRS18: Accounting Policies (continued) The effect of these adjustments on the profit for the year and net assets are shown in the table below: Reduction in profits 2000/01 1999/00 £m £m Reduction in net assets/ shareholders funds 2000 £m 2001 £m Pre-tax profits/net assets under previous accounting policies & estimation techniques Accounting policy changes Contributions to sales and marketing expenditure: - reduced EBITDA & hence lower fixed asset additions - reduced depreciation charge/accumulated depreciation Effect on net book value of fixed assets Stationery (included in debtors and prepayments) Total accounting policy changes accounted for retrospectively Estimation technique changes Non-mechanical equipment depreciation: - additional depreciation charge for the year Effect on goodwill amortisation Total impact of implementing FRS 18 Pre-tax profit/net assets under FRS 18 20.8 48.1 269.0 246.4 (5.5) 1.7 (3.8) 0.2 (3.6) (5.0) (0.3) (8.9) 11.9 (3.0) 1.1 (1.9) - (1.9) (16.7) 4.0 (12.7) (0.5) (13.2) (11.0) 2.1 (8.9) (0.7) (9.6) - (5.0) - - (1.9) 46.2 (0.3) (18.5) 250.5 - (9.6) 236.8 There is no impact on the Group’s tax position from these changes in accounting policies and estimation techniques. 28 Contingent liabilities The Group is subject to periodic legal claims in the ordinary course of its business. However, the claims outstanding at 30 April 2001 are not expected to have a significant impact on the Group’s financial position. The Company has guaranteed bank and other borrowing facilities of subsidiary undertakings under the Group’s secured credit facility. At 30 April 2001 the amount borrowed under these facilities was £485.2 million (30 April 2000 - £206.7m). The Company has also guaranteed annual operating lease commitments of subsidiary undertakings where the minimum lease commitment at 30 April 2001 totalled £53.2m in respect of land and buildings and £26.2m in respect of other operating lease rentals of which £3.3m and £4.5m respectively is payable by subsidiary undertakings in the year ending 30 April 2002. 29 Capital commitments At 30 April 2001 capital commitments in respect of purchases of rental equipment totalled £33.9m, all of which had been ordered. There were no other material capital commitments at the year end. 30 Related party transactions During the year Sunbelt Rentals Inc incurred £0.4m in the purchase of artwork, equipment decals and business cards from Images Unlimited, a company controlled by the wife of Mr B Dressel, a director of the Company. The amount due to Images Unlimited at the end of the year was less than £0.1m. 31 Employees The average number of employees during the year was as follows: North America United Kingdom Rest of World 62 2001 3,158 2,669 7 5,834 2000 1,049 2,673 7 3,729 SEVEN YEAR HISTORY ASHTEAD GROUP PLC Seven Year History Year to 30 April 2000 Year to 30 April 1999 Year to 30 April 1998 Year to 30 April 1997 Year to 30 April 1996 Year to 30 April 1995 Restated• Year to 30 April 2001 Year to 30 April 2001 (Adjusted as below+) By £m Turnover EBITDA 552.0 552.0 302.4 256.0 202.5 147.6 95.9 67.3 190.8 205.6 124.3 109.6 89.2 62.4 40.6 27.3 Depreciation 114.5 114.5 Operating profit 69.0 91.1 Pre-tax profit 11.9 50.3 66.8 57.5 46.6 63.3 48.5 33.1 21.2 13.4 46.3 40.7 29.2 19.5 13.9 38.6 35.7 27.4 18.3 13.6 Capital expenditure 237.7 237.7 158.2 145.7 153.4 98.9 61.0 38.9 Book cost of rental equipment Net cash inflow from operating activities 962.8 962.8 629.5 527.9 394.1 245.6 172.2 102.6 162.7 173.0 111.4 89.1 77.6 56.5 33.1 26.1 Shareholders’ funds 250.5 250.5 236.8 207.5 151.3 119.9 107.7 48.8 By pence Basic earnings per share * 7.0 18.9 12.9 11.1 9.5 7.7 6.5 5.3 Dividends per share * 3.50 3.50 3.16 2.70 2.30 1.825 1.52 1.17 By percent EBITDA margin Depreciation (% of turnover) 34.6 37.3 41.1 42.8 44.0 42.2 42.3 40.6 20.7 20.7 Operating profit margin 12.5 16.6 Pre-tax profit margin 2.2 9.1 22.1 19.0 15.4 24.7 23.9 22.4 22.1 19.9 18.1 15.1 20.0 17.6 19.8 20.3 20.7 18.6 19.1 20.2 By people Employees at year end By location Profit Centres at year end 6,043 6,043 3,930 3,735 3,174 2,268 1,968 1,250 443 443 352 341 275 181 164 107 * Adjusted for capitalisation and rights issues in subsequent years + Before exceptional items, goodwill amortisation, the non-cash accrued convertible loan interest amortisation and the non-recurring salary costs paid to redundant former BET USA employees before they were made redundant • The results in the table above have been restated to reflect the impact of the adoption of FRS 18 in the year and are presented before exceptional items and goodwill amortisation. 63 WHO WE ARE ASHTEAD GROUP PLC Who We Are SENIOR STAFF - SUNBELT Directorate Bruce Dressel Kurt J. Kenkel Charles Miller Rod D. Nease Cliff Miller Brendan Horgan Earl Rose Bob Veshosky Brian Tate Trading Managers Bradley Anderson Carlos Aquino Kenneth Beck Douglas Bertz Russ Brown Dan Clarkson Eddie Dempster Ray Lello Chad Maughan Randy Nelson Paul Nicely Christopher Pera Rich Rollason Greg Schamel Kenneth Smerz Donnie Smith James Tanner Thomas Wall Jason Wallace Frederick Weidner Support Managers CMIS Mark Long Finance Kurt Kenkel - CFO Mike Godsey Matt Reinhard Ronald Matley Cheryl Black Marketing Charles Miller Vice President Jeff Cooper Daniel Grimes Brad Lull Douglas Guy William McBrayer David Titus Douglas Whitman Patrick Connolly Robert Murn Walter Paczkowski Performance Standards Brian Tate Robert Swingle Bonnie Everett Donna Nicely James Parrish Chris Watson Olliver Windle Risk Byron Adkins Safety Randy Fairburn Charles Leeper John Wardlaw Alan Williams Jeffrey Stachowiak Scaffold Peter Casey Keith Lane Bruce Williams Training James Cowley Sunbelt Profit Centre Managers Howard Ahlstrom Glenn Allen Kenneth Allen Charles Ambrose Craig Ambrose Jaime Aquino Tim Ardell Dave Armastrong Jason Asuncion Douglas Atkins Timothy Ray Atkins Eric Bacon Stephen Bailey Terrel Barlow Michael Barrow Paul Barton Christopher Belcher Prentice Bell Randy Bellflower Keith Bengston Barry Boggs Kent Borror Chris Bowles John Bozsoki Greg Brewer Clarence Browder Conway Brown Steven Brown Alan Buchanan John Calvano Richard Carpenter Randy Carr Michael Clark Randy Clark Zachary Cleary Jeffrey Coscia Tim Cousino Timothy Crews 64 Douglas Davidson James Dennis Richard Denoncour James Deutsch David Dicks Thomas Dixon Andrew Dixson Ralph Douglas John Drew Christopher Dulnik Miles Edge Harrold Edwards Brian Elbrecht Mark Ellis Everett Evans Richard Fimbel Gregory Flanagan Verland Fluharty Cristopher Follet Duanne Francis Donald Furr Michael Gervasini Douglas Gietl Ernest Gildon Linda Gomez Jeffrey Groundwater Brian Hadley James Hartsfield Stephen Hassett Andrew Hewitt Barry Holdcroft Darwin Hollar Kyle Horgan Lenn Jackson Christopher James Robert Jellison Lon Jenkins Patrick Johnson Robert Kaczenski Thomas Kagey Jacco Kappers David Kenyon David King Ron Leffew Christopher Lewis Francis Lombardi Steve Lowder Dave Lytle Steven Martucci John May Cynthia McBride Bradley McCoy Jacquelyn McCoy Scott McCoy David McGlone Joseph McGuire Joseph McIntyre Tom Meeuwsen Stephen Mick Brian Mills Lewis Morris Brian Morrison Robert Morrison David Morse Richard Morse Robert Morse Richard Moss Wayne Myers Clark Neff Paul Neff Richard Newbold William Newkirk Shawn Olmstead David Park Rodney Patterson Russell Pavur Jesse Pickrell Carl Pierce Jennings Pierce Donald Pline Michael Poteete Jeffery Raymond Paul Rice Hugh Rickles Ronald Riding Chris Ritz Luis Rivera William Robinson Curtis Rogers Michael Romero Jared Sampson Kyle Sandidge Court Sawyer Bradley Schlottman Douglas Schubert Steve Seelbach John Sepa Jerry Shaw Gerard Simmons Rickey Slater Michael Smith Timothy Smith Kurtis Specht Joseph Spratt James Stallings Reginald Stanley Rex Sterling Scott Stinson Jason Stout Richard Suarez Thomas Tegner Jason Thompson Dave Tippie Jeffrey Todd George Tompkins Miguel Ugarte Harry Venezia Charles Waller Douglas Wallace Richard Wallace Thomas Walton Calvert White Kevin White Daniel Wood Jude Yimin James Yonce Wayne Young Lawrence Zellner Dirk Zienow David Zoss SENIOR STAFF - A-PLANT Directorate Ted Forshaw Sat Dhaiwal Tracey Hazel Tim Tait Bob Watts Tony Durant Paul Mooney John Bankes Richard Winfield Support Managers CMIS Andy Wortley Finance Tony Durant - FD Steve Westhead Sue Carey Legal Paul Edmunds Marketing Paul Mooney - MD Tony Grimshaw Seamus Kelly Marc Daley Barry Stephens Andy Clapham Chris Geddes John Pettitt Keith Robertson Tony Heard Carli Milsom Ian Armstrong Ken Pierce Performance Standards Richard Winfield Bob Harper John Helliwell Bob Kane Serena Lucas Mel Moore Chris Ryan Dale Thurnham George Winker Property John Bankes Training John Devonport Derek Purdon Tom McNeil Transport Services Paul Green A-PLANT NORTH Tim Tait - MD Iain Guthrie - FD Sales Directors Bob Dixon Mike Barron Derek Stewart David Bell Sales Managers Alistair Niven Mark Hogg Keith Steele Harry Poxon Phil Mostyn A-PLANT SOUTH Tracey Hazel - MD Brian Key - FD Sales Directors Dick May Tony Thomas Penny Noad Dave Comber Ray Caulfield Tim Lewis Glen Mahony Sales Manager Lisa Giffard A-PLANT EAST Sat Dhaiwal - MD Mark Siney - FD Sales Directors Paul Dennis Paul Fereday Chris Muirhead Gary Thompson Mark Sharkey Dave Pearcey Sales Managers Maria Congreve Richard Mason Dave Couzens Vince Oddy Steve Grainger Andy Tallentire Chris Myers Steve Bradshaw A-PLANT WEST Bob Watts - MD Colin Foster - FD Sales Directors Steve Day Kevin Foord Sue Young Yas Swindell Bert Benson John Owens Sales Managers Jim Kendall Mike Abbott Jason Thorne Metro Werezak A-PLANT Profit Centre Managers John Ainger Jim Ainslie Vince Akers Mick Allen Kam Amanullah Dave Andrews Tony Andrews Nigel Arnott Simon Ashby Tony Ashton Mark Atkins Ken Bailey Neil Bailey Alan Barnes Barry Barnes Kevin Barrett Mark Barron Vince Barry Matthew Bates Jane Bell Andy Benham Barry Bevis Tom Biggins Peter Bilton Keith Bloodworth Wayne Bolton Steve Bottomley Philip Briggs John Brown Steve Buckley Richard Bull Mark Burdge Brian Burton Jim Bush Mandy Buss Sean Byrne Grant Campbell Olga Carroll Sharon Carruthers Ian Cass Shane Castledine Brian Cavall Adrian Chapman Alan Charge Andy Chatham Ciaran Clancy David Clegg Richard Clark Graham Clarke Peter Clay Debby Clayton Len Clough Tommy Coats Gary Coburn Tom Coleman Steve Cornforth Dean Corthorn Dave Creasey John Crook Kim Croxton 65 Andrew Cullin Daren Cummings Brian Dagger Frank Davidson Lee Davies Phil Davies Douglas Davy Jim Denihan Alastair Dickson Brian Dillon Russell Dodd Peter Dodds Daryl Doherty Steve Doughty Martyn Dolan Andrew Douglas Barney Duffy Matt Duggins Paul Dukes Graeme Dunlop John Dunne Jane Dyckhoff Matthew Eames Nick East Dean Edwards Jim Edwards Mike Edwards Steve Elkington Jim Evans David Farr Peter Fearn Tom Fenton Keith Ferris Ross Fitzgerald Paul Flegg Eddie Ford Jamie Fountain Richard Freeman Andy Freshwater Brian Galt Jane Garfield Lisa Gerrard Clive Gilbert Eddie Gilmour Scott Graham Jamie Grant Tom Grieve Dave Griffiths Martin Griggs Dean Groves John Guthrie Eric Gwynne Gary Hallam John Hansburry Duncan Harkins Tony Harrison Richard Hart Peter Hayward Dermot Hegarty Tony Holland Doug Hoskins Marianne How Phil Howell Mark Huckle Dale Hudson Michael Hufton Steve Hulley Glen Hutton Asim Iqbal Ian Jackson WHO WE ARE ASHTEAD GROUP PLC Who We Are Ashtead Group plc Corporate Office Leatherhead Robert Clark FCA ATII Company Secretary Ritain Patel ACCA Group Financial Controller Lourdes Rey Bsc ACCA Group Taxation Manager Tamworth Derrick Adamson FCMA Director of CMIS Sandy Williamson Charlie Wilson Mike Wishart Roy Woods Scott Young SENIOR STAFF AND LOCATIONS - OTHER Ashtead Technology Rob Phillips Managing Director Peter Simpson Operations Director Singapore Andy Doggett Divisional Director Neil Christie Dave Thomson North America Andy Holroyd President Mary Ruth Carlton Katie Machi Houston Chris Echols Survey and NDT Michael Klembus Environmental Rochester Doug Allen Los Angeles Steve Rozunick Toronto Tony Barreca UK - Aberdeen Colin Erskine Mark Emslie Ian Harvey Lorraine Mitchell Ian Johnson Richard Johnston David Jones Jim Jones Tracey Jones Paul Keenan John Kennedy Maria Kennedy Steve King Terry Kingcott John Kingham Haydn Kinsey Jason Kinsey Gary Kirby Ian Knight Paul Lewis Paul R. Lewis Colin Lockless Alex Love Martin Ludkins Geoffrey Mackay Andy Mackey Wayne Maddocks Andrew Mair Neil Macara Paul Mason Steve Matthews Stuart McAllister Kevin McDade Bill McGuckin Alex McGuffie Lisa McLaughlin Paul McLusky Shaun Medd Dave Meek David Mellor Sean Mercer Mike Merrigan Richard Mills Graeme Milne Andy Mitchell Kevin Mitchell Peter Molloy Martin Moody Derek Moore Stephen Morrell Jim Morrison Keith Moss Russel Moxham John Munton Joe Murphy John Murray Rob Murray David Naylor Mick Naylor Jason Newell Dyllis Newman Ian Nicholls Peter Nicolson Tracey Nicolson Andy Nightingale Jim O’Grady Jim Oliver Mike Omond Gary Orton Jeff Orton Andy Owen Frank Page Jim Palmer Mandy Payton Keith Peden Graham Peel Paul Perks Michael Phelan Steve Pickering Alan Plant Richard Prescott Lee Prince Stuart Puggmur Alan Purdie Mike Purdy Steve Raper Julian Ring Dave Roberts David Robinson Kevin Sanderson Steve Sawyer Sean Scarah Chris Schaschke Andy Scott Jim Scott John Shaun Ryan Nathaniel Singleton David Skyner Mark Skyner Paul Smith Robin Smith Steve Smith John Stewart Ron Stewart Bill Stoodley Kevin Stringer Robert Sullivan Colin Tall Russ Tarleton Andrew Taylor Brian Taylor Gordon Taylor Jane Taylor James Temple Michael Thistlethwaite Karen Thomas Ian Thompson Carl Tidey John Tiffen Steve Tinsley Paul Trantum Jamie Trevis Andy Varley Jamie Vincent Wilson Walker Mike Walsh Gary Ward Mary Wardle Steve Warren Michael Warrior William Watt Steve Welling Brian White Colin Wight Mike Wigley David Wilkinson Martin Williams 66 Where We Are LOCATIONS - SUNBELT Allegheny Ashland Charleston Roanoke Capital Frederick Fredericksburg Gaithersburg Manassas McLean Northern Pile Driving Springfield Sterling Winchester Central Charlotte Charlotte Access Charlotte AWP Charlotte Pump Concord Gastonia Indian Trail Lake Wylie Mooresville Pineville Rock Hill Winston Salem Central Florida East Orlando Convention Services Lake Fairview Mid City Orlando Orlando Orlando Access Orlando AWP Orlando Pile Driving Orlando Pump & Power Orlando Traffic Systems Sanford Wintergarden Coastal Atlantic Brunswick Charleston Charleston Access Charleston AWP Florence Hilton Head Little River Myrtle Beach Savannah Summerville Wilmington Delaware Valley Pennsauken Southampton South Jersey Pump & Power Swedesboro Eastern Central Indianapolis Kokomo Lansing Layfayette South Bend Toledo Florida Gulf Ft. 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Myers AWP Lauderdale Mulberry Oldsmar South Florida Access South Florida AWP Tampa Tampa Pump & Power Mid Altantic Durham Fayetteville Greensboro Raleigh Raleigh Access Raleigh AWP Winston Salem Winterville Mid West Decatur Evansville Granite City Northern Carolina Belmont Concord Fresno Sacremento North Florida Birmingham Birmingham Access Jacksonville Jacksonville Access Jacksonville AWP Jacksonville Pump & Power Mobile Mobile Pump & Power N Jacksonville Orange Park West Jacksonville North Georgia Atlanta AWP Atlanta Access Atlanta Power Covington Douglasville Duluth Kennesaw Lake Lanier Mid Town Atlanta Riverdale Northern Baltimore Finsburg Hunt Valley WHERE WE ARE ASHTEAD GROUP PLC Laurel Maryland Pump & Power Parkville Waldorf Northwest Boise Eugene Hillsboro Portland Salem West Valley Ohio Valley Cincinnati Clarkville Columbus Dayton Louisville Lexington Southern VA Charlottesville Chesapeake Newport News Richmond Richmond AWP Richmond Access Virginia Beach VA Beach Pump & Power West Creek Southwestern Glendale La Mirada Las Vegas Tempe Texas Arlington Austin Beaumont Dallas Houston Access Houston AWP Kyle San Antonio Tennessee Clarksville Decatur La Vergne Nashville Nashville Access Nashville Pump & Power Rivergate Upstate South Carolina Columbia Greenville Spartanburg Washington Kent Kent AWP Lakewood Pasco Tacoma 67 Western Central Bloomington Chicago Pump & Power Des Moines E Peoria Joliet Moline LOCATIONS - A-PLANT A-PLANT NORTH Ayrshire Ayr Irvine Groundcare Kilmarnock Kilmarnock Powered Access Stevenston Grampian Aberdeen Aberdeen Acrow Aberdeen Rentarc Aberdeen Powered Access Dundee Dundee Mains Road Inverness Ladybank Scotland Rail Teesside Hartlepool Middlesbrough Stockton Large Air Stockton Powered Access Stockton Rentarc Teesside Main Plant Teesside Tool Hire Scotland West Cumbernauld Cumberland Tool Hire Glasgow Glasgow Acrow Glasgow Baillieston Glasgow South Newmains Rentarc Falkirk Falkirk Pumps Falkirk Water Pumps Scotland East Earlston Edinburgh Edinburgh Acrow Edinburgh City Falkirk Falkirk Pumps Falkirk Water Pumps Newmains Rentarc Cumbria Barrow Carlisle Carlisle Kingstown Carlisle Rentarc Egremont Kendal Kendal Powered Access Whitehaven Tyneside Gateshead Newcastle Newcastle Acrow Sunderland Tyneside Groundcare Tyneside A-PLANT SOUTH South Coast West Alresford Eastleigh Fareham Tool Hire Romsey Romsey Rentarc Southampton Southampton City Southampton Powered Access Home Counties East Cambridge Cambridge Rentarc Long Stratton Lowestoft Norwich Norwich Acrow Norwich Tool Hire Essex Basildon Basildon Tool Hire Brentwood Brentwood Masts Epping Epping Tool Hire Ipswich East Ipswich West South East Canterbury Maidstone Maidstone Accommodation Maidstone Tool Hire Medway London Region Barking Battersea Main Plant Battersea Tool Hire Charlton East London New Cross Romford Romford Acrow Romford Rail Southwark Staples Corner Tottenham WHERE WE ARE ASHTEAD GROUP PLC Where We Are Bedford Bedford Bedford Accommodation Letchworth Luton Luton Powered Access St Albans London West Colnbrook Acrow Heathrow Main Plant Heathrow Tool Hire Leatherhead Leatherhead Tool Hire Staines Power Generation Staines Trenchless Technology South Coast East Arundel Ford Gatwick Lancing Storrington Groundcare Home Counties Central Aylesbury Hayes Traffic Systems Hemel Hempstead Milton Keynes Milton Keynes Traffic Systems Thatcham Watford Watford Tool Hire A-PLANT EAST North Midlands Mansfield Chesterfield Acrow Chesterfield South Chesterfield North Nottinghamshire Newark Nottingham Nottingham Building Systems Nottingham Central Nottingham East Nottingham Powered Access Nottingham West Leeds Boroughbridge Building Systems Leeds Main Plant Leeds Acrow Leeds Central Leeds City Leeds Powered Access Leeds South Yorkshire Wetherby York Bradford TH Bradford TS S. 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