Ashford Hospitality Trust
Annual Report 2002

Plain-text annual report

A N N U A L R E P O RT & A C C O U N T S 2 0 0 2 “I am pleased that our overall performance exceeded the forecast in our previous trading statements. Although Sunbelt suffered a modest decline in operating profit this was a strong performance in difficult conditions as the US economy slipped into Contents 1 2 4 8 Financial highlights Chairman’s report Chief executive’s review Financial review recession, particularly after September 11. A-Plant is Operational reviews: now under new management and has reorganised its 18 Sunbelt 20 A-Plant structure and its fleet. The current number of rental 22 Ashtead Technology Rentals contracts is at its highest level in the UK for six months and in the US since last September.” “A-Plant is now in a much stronger position to compete and increase its market share. The recession of the early nineties was a catalyst for the growth of the rental market in the UK. In the same way, the current US recession is likely to prompt the acceleration of the shift from ownership to rental. This 24 Directors 25 Advisers 26 Directors’ report 29 Corporate Governance Report 32 Remuneration Committee Report 38 Statement of Directors’ Responsibilities 39 Auditors’ report 40 Consolidated profit and loss account 41 Consolidated balance sheet 42 Company balance sheet 43 Consolidated cash flow statement 44 Notes to the financial statements will give Sunbelt a huge opportunity over the next few 63 Seven year history years to continue to increase its current estimated 2.5% share in a market independently forecast to grow faster than the US economy as a whole.” 64 Senior staff and locations 69 Future dates George Burnett, Chief Executive, Ashtead Group plc. Financial highlights Turnover up 6% to £583.7m (2000/1 - £552.0m) Profit before exceptional items, goodwill amortisation and taxation of £28.9m (£41.2m) with second half ahead of trading statement forecasts EPS of 6.2p (8.9p) based on above profits and a notional 30% tax charge After mainly non-cash exceptional charges and goodwill, the FRS 3 loss before tax is £15.5m (profit of £11.1m) and the profit after tax is £3.7m (£2.2m) FRS 14 EPS of 1.1p (0.7p) Recommended final dividend of 2.88p per share maintaining the full year dividend of 3.5p Net cash inflow from operations up 17% to £202.0m (£173.0m) Like for like debt* repayment of £48.5m in the year Bank covenants renegotiated in April to provide greater flexibility US continues to outperform its competitors and 23 new profit centres opened Benefits emerging from new UK strategy *Net bank debt plus bills of exchange RENTALS Ashtead Group plc 1. ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ Chairman’s Report Results In its trading statements of March and May, the Board per share). This represents an effective cover of 2.3 times on a envisaged a broadly breakeven second half to add to the cash basis (given that goodwill amortisation, the exceptional £25.8m profit before exceptional items, goodwill amortisation loss from the UK asset disposal programme and deferred and taxation earned in the six months to 31 October 2001. In taxation are non-cash items). the event the final outcome for the year was £28.9m. This compares with a profit before exceptional items, goodwill Board amortisation and taxation of £41.2m in the previous year. This The past two years have seen unprecedented change in the decline reflects recessionary conditions in the Group’s largest composition of the Group Board. Three of the four executive market, the United States, and a disappointing performance in directors, Bruce Dressel, Ian Robson and Sat Dhaiwal, joined the UK and Ireland. the Board in February 2000, June 2000 and March 2002 respectively. Chris Cole joined as an independent non- In the former case, however, there is clear evidence that executive director in January 2002 and I became your Sunbelt is outperforming its major competitors; in the latter, chairman in August 2001. I should like to welcome Sat and steps have been taken to secure improved performance by A- Chris, who both joined in the past year, to the Board. Plant. Additionally George Burnett stepped up to become chief Group revenues increased by 6% to £583.7m (£552.0m). After business successfully through a highly challenging past twelve executive of the Group in February 2000 and has managed the exceptional costs, principally the loss on the asset disposal months. programme announced last September and a tax credit (principally of deferred tax under FRS 19) of £19.2m, there was July 2001 saw the retirement of Peter Lewis, the Company’s an after tax profit of £3.7m (2000/1 - £2.2m) giving earnings long serving chairman who co-founded the Company with per share 1.1p (0.7p). Earnings per share based on the George Burnett in 1984. We also said goodbye to Ted £28.9m profit before exceptional items, goodwill amortisation Forshaw who resigned as a director in March 2002 after many and taxation and a notional tax rate of 30 per cent were 6.2p years service with A-Plant. Our thanks go to both of them. per share (8.9p). Dividend Staff Difficult years often bring out the best in a team and this year During the Group’s 15-year history as a public company, the the Group’s staff have risen to an immense challenge. The dividend has been increased every year except one. That was Board’s appreciation and thanks are due to all of them. ten years ago, in the middle of the severe UK recession, when the previous year’s level was maintained. After nine years of dividend growth the Board believes an unchanged dividend to be again appropriate for the current year. A final dividend of 2.88p per share is therefore proposed, giving an unchanged total for the year of 3.5 pence per share (2000/1 - 3.5 pence Henry Staunton Chairman 8 July 2002 Ashtead Group plc 2. Ashtead Group plc 3. Chief Executive’s Review After a long period of growth, it is always difficult to report a growth of 3.3%. As a result, it was able to consolidate its disappointing profit performance. Only once before in our number 5 position in the $23bn US rental market as Sunbelt eighteen-year history have we encountered a similar situation, and the market leader were the only major players to achieve when we faced the UK recession of a decade ago. Then we any like-for-like growth. Although Sunbelt suffered a modest looked to maximise the long-term future of the Company, not decline in operating profit, this was a strong performance in by closing businesses and wholesale lay-offs, but by difficult market conditions as the US economy slipped into continuing to invest selectively, competing aggressively in the recession, particularly after September 11. Operating margins, market place and generating cash. We have applied the same at a still healthy 14.9% given the trading conditions, were also principles in the current US recession. In the UK we have adversely affected by the drag effect of opening 23 new completed a fundamental review of the business with a view to locations during the year. Of these, 5 were “warm starts” - improved and sustainable returns. small bolt-on acquisitions - with the remainder being greenfield Sunbelt openings. With the BET acquisition fully integrated into the Sunbelt network and culture, the process of infill was started. Sunbelt Rentals, our US business, increased its revenues by Of the 23 new businesses, 17 were in areas supporting the 10.6% from £345.7m to £382.2m, achieving same store former BET businesses. Sunbelt further consolidated its Ashtead Group plc 4. current position and its future potential in the US rental market by profit accountability. The regional businesses in turn have been being the only major player not to have a depot closure more closely focused on tool hire and general equipment at the programme. national and local level and there has been an infusion of new management talent at the most senior level within the Company. Capital expenditure on rental equipment in the year was £67.0m, significantly below the 2000/1 figure of £146.3m, and in line with Two significant steps have been taken to secure additional its rental fleet depreciation of £67.4m. Fleet utilisation was revenues. The major accounts team, which has been successful maximised by meeting 64% of the capital needs of the 23 new in growing our business through sole and preferred supply businesses from existing resources (18% for 10 new businesses in agreements with national customers such as Transco and large 2000/1). A-Plant regional players, has been increased from two to twelve. Secondly, A-Plant’s small equipment businesses have been given a separate “Tool Hire Shops” identity and the rollout of this brand The past year was a difficult one for A-Plant. A marginal (0.9%) is already under way. increase in first-half turnover was followed by an 8.8% fall in the seasonally slower second half and led to an annual decline in Capital expenditure on the rental fleet, significantly reduced since turnover of 3.9% to £187.0m (£194.5m) and a £12.1m reduction in October 2000, was kept under tight control, amounting to £26.7m operating profits to £13.0m due to the effects of operational (2000/1 - £67.0m). This compared with depreciation on the rental gearing. Hire companies, such as A-Plant, with a significant fleet of £40.6m. customer base outside the construction industry have encountered a more difficult market, particularly in the manufacturing sector. In Ashtead Technology A-Plant’s case, the strategic decision to discontinue lower margin, Ashtead Technology increased its turnover by 22.9% in the year to high-risk business and to rationalise its fleet also contributed to £14.5m, of which like-for-like growth from the survey and the reduction in turnover. This major logistical exercise, though a inspection division was 11%. The year to 30 April 2002 was the short-term distraction from its very scale, was completed on first full year of ownership of the environmental testing division schedule by the year-end. acquired in October 2000. This division, although entirely based in North America, held up well throughout the year achieving like-for- In March, Sat Dhaiwal, newly appointed Chief Executive of A- like sales up 3%. More importantly, its rental revenues increased Plant, led an exhaustive review of the entire A-Plant rental fleet, by 17% reflecting reduced emphasis on lower margin sales including a physical examination of every asset not on hire to a business. customer. As a result, a number of under performing assets were added to the disposal programme taking the total exceptional In the Survey and Inspection Division, the Far East and Australian charge to £32.6m. At the same time, A-Plant has been markets were strong with offshore field development more than restructured. As a result of the changes, the specialist businesses, replacing subsea cable business lost in the collapse of the telecom such as Powered Access, Accommodation, Rail, Welding and market. The North Sea and Gulf of Mexico were slower in the Power Generation, have been removed from the regional structure second half although West Africa and Brazil provided some and are now managed by experts in their field who hold national counterbalance. Ashtead Group plc 5. Chief Executive’s Review Overall operating profits rose 13.8% in the year to £4.1m, with the Group’s banking agreements). Further substantial pay operating margins of 28.3% remaining strong. down of debt is anticipated in 2003 and 2004. Financial The Group operates mostly from leasehold properties. It Total capital expenditure in the year was £113.8m, less than manages its fleet of cars and commercial vehicles on a half the previous year’s figure of £237.7m. The average age of contract hire basis. It also has operating lease arrangements the rental fleet at 30 April 2002 was 41 months against an for minor items such as photocopiers and faxes. It has no average working life for the equipment in the fleet of over 100 other form of off balance sheet financing. months. As noted above, the net cash inflow from operations in the year was a record £202.0m (£173.0m). This facilitated a The Group did not breach any of its quarterly banking like for like reduction of £48.5m of senior debt (as defined by covenants in the year. However, given the changed economic Ashtead Group plc 6. circumstances in the United States, the Group requested greater investing in new businesses, Sunbelt has maintained its revenue flexibility in its covenant package. The requested adjustments line - crucial in a fixed cost business - just as the Group did a were unanimously approved by the Company’s bank group in decade ago in the UK recession. A further five new profit centres April. Total headroom against the Group’s banking facilities as at are planned for the coming year. The recession of the early 30 April 2002 was £66.8m. nineties was a catalyst for the growth of the rental market in the UK and of A-Plant in particular. In the same way, the current US The £19.2m tax credit for the year incorporates a minimal current recession is likely to prompt an acceleration of the shift from tax charge and a deferred tax credit relating to the structure ownership to rental and give Sunbelt a huge opportunity over the created to fund the BET acquisition. In cash flow terms the level next few years to continue to increase its current estimated 2.5% of cash tax payments will be significantly less than ten per cent of share in a market independently forecast to grow faster than the profits for the foreseeable future. US economy as a whole. George Burnett Chief Executive 8 July 2002 Current trading & future prospects Although the current number of rental contracts is at its highest level in the UK for 6 months and in the USA since last September, group turnover for the two months ended June 2002 was 6% down on a year on year basis at actual rates of exchange and 3% down at comparable rates of exchange, reflecting the fact that comparative group revenues declined throughout last year as economic conditions deteriorated. In the coming year, the Board anticipates the reverse of this trend with year on year growth expected to improve as the year progresses. In the UK and Ireland, determining the future progress of the economy remains uncertain although overall a modest improvement is expected over the next 12 months. What is more certain is that A-Plant has in the past year addressed issues it needed to confront and is in a much stronger position to compete. Ashtead Technology should continue to make progress, although the offshore market will remain patchy in the coming months. In the United States, the Board expects the market to be generally flat for the rest of 2002 with the possibility of improving conditions in early 2003. Sunbelt should, however, continue to gain market share. By retaining the integrity of its profit centre structure and Ashtead Group plc 7. Financial Review Profit & loss account Revenue Staff costs Total revenue grew by 5.7% to £583.7m. Sunbelt Rentals’ Staff costs constitute the largest single expense of the revenue increased from £345.7m to £382.2m, a rise of 10.6% business and grew from £170.2m to £194.0m. Excluding of which 5.5% was derived from the inclusion of BET USA growth in scaffold erection and dismantling staff costs, where (acquired 1 June 2000) revenues for an additional month in the there is a directly equivalent growth in revenue, staff costs current year. Same store revenues, being revenues from grew 6.8% to £160.0m (£149.8m) reflecting the additional profit centres open throughout both financial years, grew month of BET USA included this year and the 23 new profit 3.3%. A-Plant’s total and same store revenues declined 3.9% centre openings in Sunbelt. The average number of from £194.5m to £187.0m whilst Ashtead Technology’s employees has increased from 5,834 to 6,393 with 6,545 on revenues grew 22.9% from £11.8m to £14.5m with same store the payroll at 30 April 2002. Staff costs include profit share revenues growing 11.0%. paid of £9.0m (£13.2m). Depreciation and gain on sale of fixed assets Rental equipment Other assets £m £m Sunbelt Rentals A-Plant Technology 67.4 40.6 4.2 112.2 Total £m 71.0 45.7 4.2 2001 £m 60.4 50.1 4.0 3.6 5.1 - 8.7 120.9 114.5 The gain on sale of assets in the ordinary course of trading this year was £1.5m compared with £6.8m in the previous year. Ashtead Group plc 8. Segmental performance Revenues Operating profit less finance lease interest 2002 £m 2001 £m 2001 £m 2002 £m 382.2 187.0 14.5 - - - 345.7 194.5 11.8 - - - 56.9 13.0 4.1 - 1.7 - 583.7 552.0 75.7 (39.2) (7.6) 28.9 41.2 64.1 25.1 3.6 (2.5) (1.7) - 88.6 (40.8) (6.6) Net assets 2002 £m 652.5 245.5 12.9 - - (716.4) 194.5 2001 £m (restated) 615.8 283.6 12.2 - (31.2) (678.3) 202.1 * Net bank debt, finance lease obligations and convertible loan note plus deferred taxation Sunbelt Rentals A-Plant Ashtead Technology Redundant BET staff salaries Prior year lease impact Central items * Bank interest payable Convertible loan note interest Profit before exceptional items, goodwill amortisation & taxation This year the segmental analysis of profitability by business is Net assets employed declined in A-Plant, reflecting the impact of based on the operating profit before exceptional items and the disposal programme, whereas the rise in Sunbelt relates to goodwill amortisation of £81.3m less finance lease interest of investment in expansion at its existing profit centres and to the net £5.6m because this provides a better comparison between this capital expenditure of £11.8m in the 23 new profit centres this year year and last following the capitalisation this year of acquired BET (comprising gross expenditure of £33.1m less equipment leases. Adjustment has also been made for the prior year effect of transferred from other profit centres of £21.3m). the revised treatment. These adjustments are discussed further under acquisitions below. Exceptional loss on disposal The exceptional loss on disposal arose as a result of the On this basis, Sunbelt’s profits declined by £7.2m in the year, programme, originally announced at the 2001 Annual General reflecting the impact of the US economic downturn which was Meeting on 8 October 2001, to dispose of surplus assets in A- particularly noticeable in the second half. A-Plant’s profits fell by Plant. The increase of £2.6m in the final cost from the £30.0m £12.1m reflecting its 3.9% revenue decline and the estimated at the half year reflects further analysis undertaken by competitiveness of its main markets. Technology continued to Sat Dhaiwal and the new A-Plant management team following his grow strongly although its second half was affected by the weak appointment on 4 March 2002. All assets subject to the offshore market in the Gulf of Mexico and by a slow start to the programme have now been sold and the programme was season in the North Sea. completed on schedule by year-end. Ashtead Group plc 9. Financial Review Net interest payable and similar charges adjustments made to bank covenants in July 2001 consequent Bank interest payable (net) Accrued interest amortisation on convertible loan note Interest payable on finance leases Exceptional costs re bank facility 2002 £m 39.2 7.6 5.6 52.4 3.0 55.4 2001 £m 40.8 6.6 - 47.4 9.7 57.1 upon adoption of new accounting policies and estimation techniques under FRS18 in the 2001 accounts and (ii) the adjustments made to bank covenants in April 2002 to provide greater future financial flexibility in light of the impact of the downturn in the US economy. Profit/loss before tax The result before tax under FRS 3 was significantly impacted by the UK exceptional loss to produce a loss of £15.5m Bank interest payable relates primarily to the interest payable (2000/1 - profit of £11.1m). Before exceptional items and on the variable rate, secured bank facility. Interest is payable goodwill amortisation, the profit before tax was £28.9m under this facility at an average premium of 250 basis points (2000/1 - £41.2m). The reconciliation between these figures is as follows: over three month LIBOR for the currency in which the loan is drawn. Interest on US$250m of this bank debt has been fixed at 6.825% by three year forward interest rate agreements entered into in August 2000. The impact of these swaps is recognised rateably over their life as part of bank interest Profit before tax before exceptional items and goodwill amortisation payable. The average borrowing rate experienced during the Exceptional UK loss on disposal year on bank borrowings (including the premium) was Exceptional BET USA integration costs approximately 7% (2000/1 - 9%) reflecting predominantly Exceptional costs re bank facility lower US interest rates. Goodwill amortisation 2002 £m 28.9 (32.6) - (3.0) (8.8) 2001 £m 41.2 - (12.3) (9.7) (8.1) (Loss)/profit before taxation (15.5) 11.1 Although no cash interest was payable on the convertible loan until the first anniversary of its issue (i.e. from 1 June 2001), Taxation accounting standards required the loan, which has a par value Reflecting one of the benefits of the capital intensive nature of of £134m, to be recorded at its fair market value at date of the Group’s operations the current tax charge for the year issue and then amortised to bring the loan up to its £134m par continues to be very low at £0.6m. There was also a prior value over its eight year life. This resulted in a non-cash year credit for current tax of £0.9m reflecting cautious interest charge of £6.6m in 2000/1 and an interest cost this provisioning now released following agreement of the tax year which reflects not only the 5.25% fixed interest amount computations for the affected years. The effective current tax actually payable to the loan note holder (£7.0m per annum) but rate is expected to remain at very low levels (significantly less also a further annual non-cash charge of approximately £0.6m. than ten percent) for the foreseeable future due to the continuing availability of tax losses in the US and unclaimed Exceptional costs in relation to the bank facility in 2002 tax depreciation in the UK and to benefits arising from the comprise variation fees payable in connection with (i) the structure of the BET USA acquisition. Ashtead Group plc 10. The new UK standard on deferred tax, FRS 19, which requires fund the BET USA acquisition not previously recognised but, in full provision to be made for deferred tax as opposed to the this case, for benefits in respect of the 2000/1 year. Overall partial provision method previously applicable under SSAP 15, the total tax credit for the year is £19.2m of which £0.3m is the came into effect this year. Adoption of FRS 19 has been dealt net current tax credit and £18.9m is the deferred tax credit with as a prior period adjustment and increases the deferred (2000/1 - a total restated tax charge of £8.9m). tax provision at 30 April 2001 from £4.0m previously reported to a restated £66.0m at that date and to £41.1m at 30 April Earnings per share 2002 but has no impact on the amount of tax the Group will Basic earnings per share computed by reference to the FRS 3 actually pay in years to come. result was 1.1p per share (2000/1 - 0.7p per share). Earnings Under FRS 19 the Group’s full year effective tax rate (for the items and goodwill amortisation and a notional tax rate of 30 current year element of the tax charge) is 11%, which is lower per cent were 6.2p per share (2000/1 - 8.9p per share). per share computed on the pre-tax profit before exceptional than the UK statutory rate due to tax benefits arising from the structure set up to fund the BET USA acquisition. It is also Dividend lower than the effective tax rate estimated at the half year Subject to approval of the final dividend by shareholders, the because of revisions to the assumptions underlying the dividend per share has been maintained at 3.5p per share for calculation of these benefits. The prior year deferred tax credit the year as a whole. If approved, the final dividend of 2.88p also relates to tax benefits deriving from the structure used to per ordinary share will be paid on 30 September 2002. Ashtead Group plc 11. Financial Review Balance sheet Fixed assets Total additions to fixed assets in the year were £113.8m (2001 - £237.7m) of which £98.0m (2001 - £217.5m) was spent on rental equipment as follows: 2002 Expansion Replacement £m £m 30.8 10.6 3.4 44.8 36.2 16.1 0.9 53.2 Total £m 67.0 26.7 4.3 98.0 2001 Expansion Replacement £m £m 91.0 36.3 3.3 130.6 55.3 30.7 0.9 86.9 Total £m 146.3 67.0 4.2 217.5 Sunbelt A-Plant Technology Capital expenditure was less than half that of 2001 reflecting the Group have improved from 64 days last year to 58 days at the US economic slowdown and the continuation of the policy 30 April 2002. The bad debt charge as a percentage of of restricting UK investment in place since October 2000. For turnover was 1.4% (2001 - 1.2%). the first time since the UK recession of the early nineteen nineties, capital expenditure at £113.8m was lower than the Trade and other creditors depreciation charge of £120.9m. Group creditor days declined from 132 days at 30 April 2001 to 85 days at 30 April 2002 reflecting the lower capital Despite lower capital expenditure, the Group retains a expenditure this year. Suppliers continue to be paid in relatively young rental fleet with an overall age at 30 April 2002 accordance with the individual payment terms agreed with of 41 months (comprising Sunbelt of 41 months and A-Plant of each of them. The total amount payable within trade creditors, 43 months). In the coming year the Group currently bills payable and accruals at 30 April 2002 directly attributable anticipates that capital expenditure will again fall below the to the purchase of rental equipment is £60.7m (2001 - level of the depreciation charge and will amount to £150.2m). approximately £75m. This will still be sufficient to complete a significant replacement programme and gives an estimated Acquisitions average overall fleet age of 49 months at 30 April 2003 Note 22 to the accounts summarises the goodwill on compared with the estimated average working life for the acquisition arising in the year. This comprises goodwill of equipment in the fleet of over 100 months. £2.8m arising on two small acquisitions made in the year by Current assets centres in the year and £2.5m related to adjustments made to Stocks of resale items, parts and consumables reduced by the provisional fair values established last year in respect of Sunbelt, which contributed 5 profit centres of its 23 new profit 15.7% to £12.9m (2001 - £15.3m) and trade debtors were the BET USA acquisition. 11.9% lower at £110.7m (2001 - £125.7m). Debtor days for Ashtead Group plc 12. The largest of these adjustments relates to capitalising As described under Segmental performance above, we have acquired rental equipment held under leases entered into by based this year’s analysis of profitability by business on the BET USA in the period from 1997 to 1999. As we completed operating profit before exceptional items and goodwill the hindsight review of the acquired BET assets required this amortisation less finance lease interest to reflect the change in year by accounting standards, it became apparent that the accounting treatment applied to the leased assets this year. terms of these leases were such as to make it highly uneconomic to return the equipment to the lessor at the Cash flow and net debt conclusion of their minimum committed term because the total Net cash inflow from operations rose 16.8% to £202.0m amount paid under the lease in these circumstances (2000/1 - £173.0m). This reflected good control of working substantially exceeds the reduction in market value of the capital, particularly receivables, throughout the year. equipment in the lease period and a reasonable interest cost. Instead the alternative option of buying out the leases or Interest paid in the year rose to £50.4m (2000/1 - £46.4m) and extending the initial lease term is significantly more economic. there was a small tax payment of £0.7m (2000/1 - refund of £1.7m). Cash payments to acquire fixed assets were at a Although these leases were treated as off balance sheet similar level to the previous year (£203.3m v £202.6m in operating leases by BET USA, our view is that it is more 2000/1) due to the delayed effect of the payment terms the appropriate to treat them as finance leases under the relevant group enjoys with its rental fleet suppliers. UK leasing standard, SSAP 21. Applying this treatment has resulted in our bringing these leased assets and the related In the forthcoming year, the halved level of capital expenditure finance lease obligations onto the balance sheet. It also in 2001/2 compared with 2000/1 will result in payments to means that, unlike most of Sunbelt’s quoted US competitors acquire fixed assets broadly halving from this year’s £203.3m (who use off balance sheet leases fairly extensively), all of the and will mean that cash payments to acquire fixed assets will Group’s rental fleet is now on balance sheet. be below the depreciation charge in 2002/3, contributing significantly to the Group’s debt reduction plans. As explained further in note 22 to the accounts, as a consequence of this treatment, the 2001/2 profit and loss Despite the lower expenditure on acquiring fixed assets, account includes not only the depreciation and finance lease proceeds earned from the sale of fixed assets increased from interest relating to the current year for these leases but also £38.3m to £39.2m. This, however, included proceeds of the equivalent amounts for the 11 months ended 30 April 2001 £4.9m from the UK disposal programme (less disposal costs of offset in that case by the rentals paid for the same period £1.1m) and £8.8m generated in the first half from the UK which were previously expensed as incurred as operating vehicle fleet which was moved onto a serviced lease basis lease rentals. The net effect is that 2001/2 profits before similar to that already used by Sunbelt Rentals. Net of these taxation include a net credit of £1.4m (£1.7m before goodwill non-recurring factors disposal proceeds totalled £26.6m, still a amortisation) which would have been accounted for in the 11 good result relative to the £38.3m of 2000/1 in a year when months ended 30 April 2001 had the leases been treated as capital expenditure on new assets more than halved. finance leases in that year. Ashtead Group plc 13. Financial Review Net debt Net bank debt Bills of exchange Net bank debt and bills of exchange 2002 £m 515.0 11.6 526.6 5.25% convertible loan note, due 2008 129.7 Finance lease obligations 656.3 30.6 Total debt including bills of exchange 686.9 2001 £m 484.4 90.7 575.1 127.9 703.0 - 703.0 Increase/(decrease) £m 30.6 (79.1) (48.5) As forecast in the interim statement, net bank debt peaked at long term secured multi-currency loan facility entered into at 31 October 2001 at £527.6m. The reduction in the second half the time of the BET acquisition on 1 June 2000. Interest is from this figure was £12.6m. payable on this facility at variable rates linked to underlying market rates traded in the London interbank market. Taking net bank debt and bills of exchange (the form in which much of the long credit terms provided by equipment vendors At 30 April 2002 £506.7m (2001 - £483.0m) was drawn under is held) together - which is the measure of senior debt used the facility with the remainder of the commitment (£56.9m) under our banking agreements - debt was reduced by £48.5m undrawn. £254.4m is drawn under a seven year medium term over the year as a whole. This comprised a reduction of loan committed to 1 June 2007 with the remainder (£252.3m) £29.1m in the first half and a further reduction of £19.4m in the drawn under a 364 day revolving credit agreement which is seasonally weaker second half of the year. committed until 1 June 2005. The facility is repayable at maturity except that there is a notional 1% amortisation of the Including finance lease obligations on the BET USA equipment term loan each year on the anniversary of its issue (US$3.75m) rental leases which have now been brought on balance sheet and the revolving facility reduces in two tranches of US $50m as discussed under acquisitions above and the 5.25% each on 1 June 2003 & 2004. Accordingly both the amounts unsecured, convertible loan note, due 2008, total debt was drawn under the medium term loan and under the revolving £686.9m at 30 April 2002 (2001 - £703.0m). credit agreement are presented in the balance sheet under The halved capital expenditure in the year to 30 April 2002 and the 1% medium term loan amortisation due on 1 June 2002) the £75m capital expenditure currently anticipated for the year because the year end drawings under the revolving credit to 30 April 2003 are expected to produce further and facility were replaced by new drawings under the same accelerating debt repayments in 2002/3 and 2003/4. committed facility when they matured. creditors due in more than one year (other than in respect of Bank loan facilities The facility is secured by means of fixed and floating charges The Group’s principal bank facility is the US $825m committed over substantially all of the Group’s assets. Under the terms Ashtead Group plc 14. of the facility, the Group is required to demonstrate compliance This new source of funding, which is committed until the revolver with certain financial covenants comprising the ratios of EBITDA to commitment date of 31 May 2005, carries an effective funding interest and to senior and total debt levels and the ratio of debt cost of approximately 135 basis points over US dollar LIBOR levels to the value of tangible assets on a quarterly basis. None of which compares to the average premium of 250 basis points on these quarterly covenants was breached during the year ended 30 borrowings under the senior credit facility - £60m of which was April 2002. Adjustments to the covenants were agreed repaid on a pro-rata basis with the agreement of the Company’s unanimously by the bank group in April 2002 to provide greater bank group concurrently with the initial funding of the financial flexibility in the light of the US economic downturn. securitisation programme which raised £59.4m. The Group also has two secured but uncommitted bank overdraft The securitisation programme therefore provides both a significant lines provided alongside the main secured facility. At 30 April reduction in the level of Ashtead’s borrowings under the Senior 2002 £8.5m was outstanding under these facilities leaving £9.9m Credit Agreement and a new source of funding at lower cost. undrawn. Thus headroom at 30 April 2002 under all the Group’s facilities (committed and uncommitted) was £66.8m. Pensions The Group operates pension plans for the benefit of its employees 5.25% unsecured convertible loan note, due 2008 and made contributions totalling £2.7m to these plans in the year. Part of the consideration for the BET USA acquisition was satisfied These plans are defined contribution plans except for the plans by the issue of the £134m nominal value 5.25% unsecured covering UK employees which were operated on a defined benefit convertible loan note, due 2008 which is currently held by the basis. Take up rates amongst UK employees have historically vendor, Rentokil Initial PLC. No interest was payable on this loan been low with only 661 UK employees out of a total of 2,511 being note in its first year of issue but from 1 June 2001 it has borne contributory members of the plan at 30 April 2002. 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 Pension plan provision in the UK was reviewed during the year as 2001 at the holder’s option (giving an effective conversion price of a result of which it was determined to close the existing UK 150p per share) and is repayable at par in June 2008 if not defined benefit plan to new members and to offer a new defined previously converted. Rentokil are unable to transfer the contribution plan to UK staff compliant with the UK Government’s convertible without Ashtead’s consent and certain orderly stakeholder initiative. After an extensive briefing and consultation marketing restrictions also apply to ordinary shares issued through exercise, 556 employees elected membership of the new plan conversion. which commenced operation on 1 May 2002. The Company provides an employer’s contribution of 5% of salary on a matching Accounts receivable securitisation basis to the new plan. On 14 June 2002 the Company and certain of its subsidiaries completed a rolling £60m accounts receivable securitisation with The latest triennial valuation of the existing UK defined benefit plan Banc of America Securities. Under the securitisation programme, (as at 30 April 2001) was completed in the year. This showed a which funded on 20 June 2002, the Group receives non-recourse deficit of 6% (measured as the shortfall in assets compared with funding of up to £60m secured against its UK and US receivables. liabilities) under the best estimate assumptions required to be Ashtead Group plc 15. Financial Review used under SSAP 24 for accounting purposes and 16% under Financial instruments the conservative assumptions used by the actuary for funding The Group’s financial instruments comprise borrowings, some purposes. In consequence the employer’s contribution was cash and liquid resources, and various items such as trade increased from 5% to 11% of salary effective 1 November debtors, trade creditors and bills of exchange payable, etc., 2001 which was the level recommended by the actuary to that arise directly from its operations. The main purpose of address the funding shortfall. these financial instruments is to raise finance for the Group’s This year disclosure is also required for the first time under the operations. transitional provisions of the controversial new UK accounting In addition to the foregoing, on 24 August 2000 Ashtead standard on pensions (FRS 17) of the actuarial position of the Group plc entered into forward rate agreements with plan updated to 30 April 2002. In providing this disclosure, LloydsTSB Bank plc and Bank of America under which the FRS 17 requires use of actuarial methods and assumptions variable interest rates payable under the bank facility on a total which differ from those used by the actuary for the triennial of US$250m of borrowings were exchanged for a three year valuations used for funding purposes. Reflecting these fixed interest rate of 6.825%. differences and the poor performance in the past year of the UK stock market (in which most of the plans’ assets are Derivative transactions are only undertaken for the purposes of invested) the deficit in the Company’s defined benefit plans at managing funding and managing interest rate risk and 30 April 2002 on the basis required by FRS 17 was £7.1m. currency risk. The Group does not trade in financial Operating statistics Profit centre numbers Year end staff numbers 2001 2002 2002 2001 Sunbelt Rentals A-Plant Ashtead Technology Corporate office 188 268 7 - 163 273 7 - 3,886 2,573 71 15 3,471 2,498 61 13 instruments. The main risks arising from the Group’s financial instruments are interest risk, liquidity risk and foreign currency risk. The Board reviews and agrees objectives and treasury policies for managing each of these risks and they are summarised below. Interest rate risk management The Group’s interest rate management policy is to use a 463 443 6,545 6,043 combination of fixed and variable rates of interest to provide During the year Sunbelt established 23 new depots, including five through acquisition. Additionally a further two new profit centres were established to enable specialist activities to be managed and reported separately from general businesses. To increase operational efficiency A-Plant merged five previously separately managed profit centres in the year into other profit centres operating at the same sites. some element of protection against sudden changes in the level of interest rates. New derivative transactions are only entered into with the authority of the Group’s Finance and Administration Committee and the Finance Director provides a regular report on treasury matters to each Board Meeting in which the need for new derivative transactions is reviewed and discussed. At 30 April 2002 some 49% of the Group’s borrowings were at fixed rates (comprising $250m of the bank Ashtead Group plc 16. debt on which interest rates have been fixed for three years from August 2000 as described above and the £134m convertible loan on which interest is fixed at 5.25%). Liquidity risk The Group’s policy is to ensure continuity of funding which is currently provided through the $825m committed secured loan facility and the eight year convertible loan with the result that all the Group’s loan facilities (other than short term overdrafts) currently have a maturity of at least four years although the amount available for borrowing reduces by $50m at each of 30 April 2003 and 2004. At 30 April 2002, £56.9m remained undrawn under the Group’s committed borrowing facilities. The Group anticipates that borrowing levels will fall in the coming year reflecting lower levels of capital expenditure. Foreign exchange risk management into sterling. Foreign exchange risk on significant non-trading With a significant portion of the Group’s operations based outside transactions (eg acquisitions) is considered on an individual basis. exchange rate movements on the translation of overseas profits the UK, the Group faces currency risk on its non-sterling net assets as the translation of overseas subsidiaries can have a Counterparty risk considerable effect on the Group’s reported net assets. The main The Group is exposed to credit risk related losses in the event of exposures are to the US dollar and the Euro (Irish punt) exchange non-performance by a counterparty to its interest rate hedging rates against sterling. financial instruments. This risk is managed by entering into derivative transactions only with institutions with a strong credit The Group seeks to mitigate the effect of these structural currency rating and by limiting the total exposure to any single counterparty. exposures by matching the currency of third party borrowings At 30 April 2002 the counterparties to the Group’s interest rate against the currency of earnings generated from assets. At 30 hedging transactions were LloydsTSB Bank plc and Bank of April 2002, total net borrowings of £675.8m were drawn as to a net America who are not expected to fail to meet their obligations. £481.6m in US dollars, £15.4m in Euros and £178.8m in sterling. 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 Ian Robson Finance Director 8 July 2002 Ashtead Group plc 17. Operational Review - Sunbelt Rentals Markets This was a year that I believe showed the true skills and 43% over the previous year. This year I believe the Pump and determination of the US management team in a difficult US Power team can continue significantly to outperform our economy. While reacting to the difficult economy we focused overall growth. first on the customer and then on matching investment in rental fleet to current demand. Another specialist business is Scaffold Services which we We reduced overall capital expenditure by over 50% and transferred under-utilised fleet to the 23 new profit centres opened this year, 5 of which were acquisitions. We achieved same store sales growth of 3.3% and overall growth of 10.6% in a year when most of our peers showed both negative same store sales and overall growth. I am proud of the entire Sunbelt team and what they have accomplished over the past year. This coming year we will continue to keep a watchful eye on capital expenditure while maintaining our strict fleet replacement policy. Our growth capital will be focused on products that allow us to expand our product offerings and broaden our customer range while enhancing return on invested capital. On 1 May 2002, we completed the consolidation of our accounting and IT functions from three regional facilities to one central facility located in Charlotte, North Carolina. This new efficient structure has allowed us to deliver a greater level of service to the field while focusing on continued cost reduction. During the past year we have increased our profit centre network from 163 to 188 firmly positioning us in the 26 states (covering some 75% of the total US population) from which we now operate. We will continue the process of developing our general products by clustering profit centres in good markets whilst also investing in expanding our specialist businesses. For example, our specialist Pump and Power profit centres now number 13 stores. Whilst these represented only 5% of our total revenues in the year, the division grew its revenues acquired through the BET acquisition and strengthened this year by acquiring a two branch business in the southeast. It represented 16% of our total business in the year ended 30 April 2002. We now have what I believe is the most operationally skilled management team in the US scaffold industry. There are three things that are exciting about this business: the higher returns on capital that it delivers; the overall growth opportunities that it presents; and the access that it has given, and will continue to allow us, to strategic industrial customers to whom we can then rent our whole range of products and services. Prospects Entering this year, Sunbelt, on a profit centre by profit centre basis, is operationally stronger than it has ever been. Anticipating a flat economy, our plans for the coming year are for only five greenfield openings, continued focus on investment in higher return assets and on improving the overall cost efficiency of our business. Regardless of the economy we expect, as in this past year, to see continued market share gains across all key areas of our business. Bruce Dressel President and Chief Executive Sunbelt Rentals 8 July 2002 Ashtead Group plc 18. RENTALS Ashtead Group plc 19. Operational Review - A-Plant Results As reported at the half-year, the market in general equipment as well as real focus on these specialists markets, in many of rental remained competitive and this, along with our strategic which we have a top five market position. decision to reduce our exposure to certain high volume, low return markets, resulted in a 3.9% reduction in revenues year- Our expectation for the coming year is that the Main Plant on-year. market will continue to remain competitive but that there will be good opportunities in many of our Specialist Products and Operating profits were down 48% from £25.1m to £13.0m. Tool Hire businesses to improve market share and hire rates. Capital expenditure was reduced by 60% from £67.0m to £26.7m and will continue to be linked to our focus on return on A-Plant now has 73 dedicated Tool Hire locations in the UK investment. with a further 65 Main Plant locations also offering Tool Hire as part of their general plant fleet. Despite this number of This was a year of consolidation as we addressed a number of locations putting us in the top ten nationwide, A-Plant is not internal issues such as the exceptional equipment disposal perceived as a major player in the Tool Hire market. Instead, programme. Although overall the year has been difficult with customers’ perception of A-Plant is of the core Main Plant the time spent on internal issues acting, in some cases, as a products such as diggers, dumpers and rollers. Therefore, distraction to the business, I am pleased to say that the during the next six months, we will be re-branding our necessary actions are now completed. dedicated Tool Hire locations as ‘Tool Hire Shops’, a brand Prospects Looking ahead, the new structure of A-Plant, which I introduced, is now fully operational and gives us the ability to focus on our three core business areas: Main Plant (general equipment), Tool Hire and Specialist Products. Four operating divisions, A-Plant North, South, Midlands and Ireland, will develop the Main Plant and Tool Hire businesses geographically. Specialist Products, which was previously part of the regional structure, includes Rail, Power Generation, Pumps, Welding, Accommodation, Powered Access, Acrow (formwork and falsework), Groundcare, Big Air, Trenchless Technology and Traffic, will be run, for the first time, on a national basis by senior managers, experts in their field, with appropriate authority and profit accountability. This will give us greater flexibility in servicing and meeting customers’ needs name we have owned (but not used) for many years. This will help in changing customers’ perceptions and allow us to focus with a dedicated management team and staff on increasing our share of this market. National accounts and large regional accounts continued to grow and represented 25% of total revenues in 2001/2. We believe we are one of very few companies in the UK who can offer the full range and breadth of product to support such customers’ wish to outsource their equipment needs. We were pleased to be appointed sole supplier to Transco in April under an agreement estimated by our customer to be worth some £4m annually. We will continue to use our market leadership to develop our major account business as our large customers themselves increase their businesses through, inter alia, winning large PFI projects. Accordingly, in the April 2002 reorganisation, we restructured and enlarged our major accounts sales team to help us better serve this market. Ashtead Group plc 20. This does not, however, mean that the local marketplace is being ignored. Our business has always been built on the foundation of local business and relationships between our profit centres and customers. That is why we have a manager at every one of our locations empowered to make decisions on developing business in their market. It is also why, after a period of experimentation last year when we managed the local salesforce on a regional basis, we reverted in my recent reorganisation to a structure where the local salesman is part of the profit centre team and reports to the profit centre manager. The future progress of A-Plant will result from a focused and committed management team along with the continued hard work by all our highly motivated profit centre staff who are intent on improving turnover, profitability and return on investment. Sat Dhaiwal Chief Executive, A-Plant 8 July 2002 Ashtead Group plc 21. Operational Review - Ashtead Technology Rentals Markets Offshore & Inspection Environmental Overall the business achieved 11% revenue growth in the year. We have now had our first full year of results from the All three offshore and inspection businesses have benefited environmental instrument rental business we purchased in from our ability to react to local demands by moving October 2000. Like for like total revenues were up 3% overall equipment quickly and efficiently between locations. This but more importantly like for like rental revenues grew 17% ability to match availability and demand profiles has led to reflecting a reduced emphasis on lower margin sales business. improved utilisation of our assets worldwide. The four locations in North America that came with the business have all increased their profitability. Although there Our Aberdeen operation, which deals with Europe and Africa, was an overall decline in the US environmental market, our had a mixed year. The North Sea sector had a very good start own performance continued to improve as our marketing to the year with a poorer second half whilst the West African initiatives and selective asset investments following the deepwater market was strong and consistent throughout the acquisition helped us to increase market share. year. Pricing remained very competitive in our major product areas as there was strong pressure in the market for reduced Both our UK and Singapore operations have started to prices both from our customers and our competition. An develop their environmental fleets to meet their local market enhanced marketing effort has enabled us to maintain our demands. market share. Prospects for the coming year Singapore performed well with the recovery in the Far East Offshore we expect the UK sector of the North Sea to remain economies continuing to drive a demand for energy. This subdued following tax changes announced in the April Budget. increased demand in the field development market has more We anticipate a slight improvement in the Norwegian sector than replaced the subsea cable business lost in the collapse of and continued strength in West Africa. The Gulf of Mexico will the telecom market. There has been considerable strength in remain quiet overall but we will see additional work from South this offshore market recovery as demand has come from America, primarily Brazil, and from Eastern Canada. In South across Australasia. Our inspection business achieved growth East Asia we expect to see moderate growth from the current throughout the region. high base. Houston, like Aberdeen, had an excellent start to the year We are forecasting that our inspection business will maintain followed by a slower second half. As the year progressed, growth in all geographical areas, the most promising area for offshore saw a significant decline in field development related development again being the onshore segment of our work. The inspection business was generally robust inspection market. throughout the year but there was some slackness in the second half of the year due to a slowdown in offshore activity as the US economy slowed down. In Environmental the prospects remain bright in spite of the weakness in the overall US economy. We expect this year to Ashtead Group plc 22. add to the number of locations supplying these instruments. Overall the outlook for our technology based business looks promising. We have in place the necessary procedures, marketing, product range and, above all, good people to continue to make this business a success. Rob Phillips Chief Executive Ashtead Technology Rentals 8 July 2002 Ashtead Group plc 23. Directors 7 5 2 4 9 1 6 3 8 1. Henry Staunton, Non-executive Chairman 4. Bruce Dressel, President and Chief Executive Aged 54, Henry Staunton, BA, FCA, is Finance Director and Officer, Sunbelt Rentals Deputy Chairman, Media Ventures of Granada plc. He is also Aged 38, Bruce Dressel is President and Chief Executive Chairman of the Nominations Committee and a member of the Officer of Sunbelt Rentals Inc, the Group’s equipment rental Audit and Remuneration Committees. division in the USA. Bruce Dressel has some 20 years Executive directors 2. George Burnett, Chief Executive experience in the industry and joined the Group on the acquisition of the business of McLean Rentals in March 1996. The re-election of Bruce Dressel, who retires by rotation in Aged 55, George Burnett, MA, LLB, CA, was Managing accordance with the Articles of Association, as a director of Director from May 1984 until being appointed Chief Executive the Company will be proposed at the Annual General Meeting. in February 2000. He is a non-executive director of Henderson Strata Investments plc and Chairman of the Governors of the 5. Sat Dhaiwal, Chief Executive Officer - A-Plant Surrey Institute of Art and Design, University College. Aged 33, Sat Dhaiwal was appointed a director of the 3. Ian Robson, Finance Director Company and Chief Executive Officer of A-Plant on 4 March 2002. Sat Dhaiwal has spent his career to date in the UK hire Aged 43, Ian Robson, BSc, FCA, was appointed Finance industry and joined A-Plant in 1993 as a manager of one of its Director on 26 June 2000 having joined the Group on 22 May profit centres. He was promoted to trading director in 1995 2000. For the preceding four years he held a series of senior and Managing Director of A-Plant East, one of A-Plant’s four financial positions in Reuters Group Plc and before that he operational regions, in 1998. Having been appointed by the was a partner of Price Waterhouse (now PricewaterhouseCoopers). directors, Sat Dhaiwal retires in accordance with the Articles of Association and his election will be proposed at the Annual General Meeting. Ashtead Group plc 24. Directors Non-executive directors 6. Alan Wheatley, Deputy Chairman and senior 8. Chris Cole, Independent non-executive director independent non-executive director Aged 55, Chris Cole, C.Eng, FCIBSE, is Chief Executive of Aged 64, Alan Wheatley, FCA, is currently Chairman of Special WSP Group plc. He is a member of the Audit and Utilities Investment Trust plc and a non-executive director of Remuneration committees. Having been appointed by the Babcock International Group Plc, ComXo plc and of directors on 10 January 2002, Chris Cole retires in accordance IntaMission plc. He is Chairman of the Remuneration with the Articles of Association and his election will be Committee and a member of the Audit and Nominations proposed at the Annual General Meeting. Committees. 7. Philip Lovegrove, Independent non-executive interests can be found in the Report of the Remuneration Details of the Directors’ contracts, emoluments and share director Committee on pages 32 to 37. Aged 64, Philip Lovegrove, LLM, is Chairman of VTR plc and a non-executive director of Environmental Polymers plc and Company secretary Fiske plc. He is Chairman of the Audit Committee and a 9. Robert Clark, member of the Remuneration and Nominations Committees. Aged 58, Robert Clark, FCA, ATII, joined the Group in August The re-election of Philip Lovegrove, who retires by rotation in 1991 as Group Corporate Controller and was appointed accordance with the Articles of Association, as a director of Company Secretary in May 1997. the Company, will be proposed at the Annual General Meeting. Advisers Auditors PricewaterhouseCoopers 1 Embankment Place London WC2N 6NN 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 1 Aile Street London E1 8DE Joint Brokers Schroder Salomon Smith Barney Citigroup Centre 33 Canada Square Canary Wharf London E14 5LB WestLB Panmure Limited Woolgate Exchange 25 Basinghall Street London EC2V 5HA Bank of America 100 North Tryon Street Charlotte North Carolina 28255 Solicitors Slaughter and May One Bunhill Row London E1Y 8YY Parker, Poe, Adams & Bernstein LLP Three First Union Center 401 South Tryon Street Charlotte North Carolina 28202 Speechly Bircham 6 St Andrew Street London EC4A 3LX Ashtead Group plc 25. Directors’ Report The Directors present their report and the audited accounts for the financial year ended 30 April 2002. 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 loss before taxation for the year is £15.5m (2000/1 - profit of £11.1m). A review of the Group's performance is given on pages 2 to 23. An interim dividend of 0.62p per ordinary share was paid on 6 April 2002. 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 the retained loss of £7.6m be transferred to reserves. If approved, this dividend will be paid on 30 September 2002 to ordinary shareholders on the record at 6 September 2002. Share capital The following shareholders 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 AMVESCAP Henderson Investment Management Limited Lazard Asset Management Limited JM Harvey UBS Asset Management Limited GB Burnett Barclays Bank plc Aegon Asset Management Capital Group of Companies Share option schemes At 30 April 2002, the following shares were subject to option: 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 Exercisable between 26 February 2005 and 26 February 2012 Number of shares 524,676 996,500 1,134,694 441,500 1,297,700 305,700 2,463,500 2,248 522,450 1,111,600 1,076,000 363,500 920,500 29,500 3,424,140 524,000 4,626,000 19,764,208 Ashtead Group plc 26. At 28 June 2002 % 11.5 8.6 6.5 5.4 5.0 4.1 4.1 3.7 3.3 3.0 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 41.500p Directors’ Report SAYE scheme Exercisable between 1 April and 30 September 2002 (5 year contract) Exercisable between 1 April and 30 September 2003 (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) Exercisable between 1 April and 30 September 2005 (3 year contract) Exercisable between 1 April and 30 September 2007 (5 year contract) Number of shares 545,136 65,551 75,545 19,700 201,206 143,690 103,791 52,688 2,783,126 1,495,815 5,486,248 Option price per share 98.000p 152.140p 133.600p 133.600p 81.340p 81.340p 94.800p 94.800p 41.600p 41.600p * 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 2002 was 6,545. 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 maintain and develop arrangements aimed at involving employees in its affairs. For example, monthly meetings are held at Profit Centres to discuss the previous month's performance. The Group has a positive approach to health and safety at work and to compliance with the law and the requirements of the regulatory bodies in both the UK and the USA. A copy of the relevant formal statement of the Group's policy on health and safety is on display at profit centres in the UK and the USA. 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 pages 24 and 25. In addition, PD Lewis served as non-executive Chairman in the year until his retirement on 31 July 2001 and EJ Forshaw served as a director in the year until his resignation on 4 March 2002. 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 environmental and 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 2002 was 85 days (30 April 2001 - 132 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. Ashtead Group plc 27. Directors’ Report Political and charitable donations The Group made a charitable donation during the year of US$100,000 to The American Red Cross National Capital Chapter following the events of 11 September 2001. Additionally other charitable donations of £8,650 were made in the UK (2000/1 - donations totalled £1,500). No political donations were made in either year. 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 enable waste to be disposed of correctly, bulk fuels to be stored safely and fleet cleaning and maintenance to be carried out efficiently. Group companies have documented procedures 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. Post balance sheet event On 14 June 2002 the Company and certain of its subsidiaries entered into the accounts receivable securitisation described in note 31 to the accounts. 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 12.30pm on Friday 20 September 2002, at the offices of West LB Panmure Limited, Woolgate Exchange, 25 Basinghall Street, London EC2V 5HA. For ordinary shareholders, a separate Notice of Annual General Meeting, which includes an explanation of the proposed resolutions, is enclosed with the Report and Accounts. 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 as set out more fully in the Notice. By Order of the Board Robert Clark Company Secretary 8 July 2002 Ashtead Group plc 28. (cid:2) (cid:2) (cid:2) Corporate Governance Report 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 the service contracts of George Burnett and Bruce Dressel 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. New directors appointed since April 2000 have service contracts containing notice periods of one year or less. Additionally as described in the Report and Accounts for last year the Company did not comply throughout that year in the following areas of the Code, all of which were addressed during this year: the Company's Articles of Association were amended at the Annual General Meeting held on 8 October 2001 to ensure that every director is now required to retire by rotation and offer himself for re-election at least once in any period of three consecutive years; procedures were established in June 2001, for directors, singularly or collectively, to obtain independent professional advice at the Company's expense; and the Board resolved in June 2001 that all newly appointed directors would, as needed, receive appropriate training to prepare them for their role as a director. Additionally the three executive directors appointed in 2000 attended such training in November 2001 and Mr Dhaiwal has also commenced this training. The Board and the Executive The Company's 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 pages 24 and 25. 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 been adopted for them to take independent advice as needed at the Company's expense. Board sub-committees 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. Nominations Committee With Henry Staunton as chairman, and George Burnett, Alan Wheatley and Phillip Lovegrove as members, the Nominations Committee is responsible for reviewing the composition of the Board and for recommending to the Board any appropriate changes in its structure. Remuneration Committee Comprising the 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. Ashtead Group plc 29. (cid:2) (cid:2) (cid:2) Corporate Governance Report Finance and Administration Committee The Board has delegated authority for dealing with routine financial and administrative matters to the Finance and Administration Committee chaired by George Burnett. The Committee, of which Henry Staunton and Ian Robson are the other members, meets periodically as necessary to discharge its functions. This Committee has a quorum of any two members but there is also a list of its business which it can only validly perform in the presence of Henry Staunton (eg final approval of announcements, other than routine notices of major shareholdings, to the London Stock Exchange). 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, the most appropriate 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 budgets and cash flow forecasts to 30 April 2003 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 Finance and Administration 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. The process for keeping risks and the related internal control under review is based initially on work undertaken by the heads of the US and UK Performance Standards (internal audit) teams. In the year ended 30 April 2001 they undertook a thorough review of the Group and of the risks it faces in its business and of how these risks are managed. This year, they have reviewed and updated this work and produced a new report in conjunction with the management teams of each of the Group's businesses. Their work included consideration of whether there were any matters which had arisen since their first report was prepared which might indicate omissions or inadequacies in their initial review. They also considered whether, as a result of changes in either the internal or external environment, new significant risks had arisen. The executive directors met and reviewed their draft report which was then presented to and discussed by the Group Board at its April 2002 meeting. Additionally, the executive directors and the Group Board considered business risk and internal control during the year in relation to major projects, such as the UK disposal programme. Ashtead Group plc 30. Corporate Governance Report Before producing the statement on internal control for the annual report and accounts for the year ended 30 April 2002, the Board reconsidered the operational effectiveness of the Group's internal control systems on the basis of the reports discussed above. Each of the most significant risks the Group faces and how well these are controlled and managed were reviewed. 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 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 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: the maintenance and production of accurate and timely financial management information, including a monthly profit and loss account for each profit centre; 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; 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; the preparation of annual budget and periodic update forecasts which are reviewed by the executive directors and then by the Board; a programme of periodical rotational rental equipment inventories conducted fortnightly at each profit centre by equipment type and independently checked on a sample basis; full inventory counts at all profit centres on at least a six monthly basis with independent scrutiny on a sample basis; and 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 8 July 2002 Ashtead Group plc 31. (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) Remuneration Committee Report Structure of the Committee During the year the Committee consisted of the non-executive directors under the Chairmanship of Mr Wheatley. Mr Lewis was also a member until his retirement on 31 July 2001. Mr Cole became a member of the Committee with effect from 10 January 2002 following his appointment as a director. None of the Committee members 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: basic annual salary and benefits in kind; annual performance bonus plan; share related incentives, including the new Investment Incentive Plan (a long-term co-investment plan) approved by shareholders on 8 October 2001; and pension arrangements. In assessing all aspects of pay and benefits, the Company compares packages offered by similar companies, which are chosen having regard to: the size of the company (turnover, profits and number of people employed); the diversity and complexity of its businesses; the geographical spread of its businesses; and 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 now significant operations 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. 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 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 9 years. 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 an initial 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. Ashtead Group plc 32. (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) Remuneration Committee Report The service agreements between the Company and Mr Robson (dated 4 August 2000) and Mr Dhaiwal (dated 5 July 2002) are terminable by either party giving the other twelve months' notice. Mr Lewis retired as non-executive chairman of Ashtead Group plc and of Sunbelt Rentals Inc on 31 July 2001 whereupon his contract with the Company terminated. On retirement Mr Lewis did not receive any payments beyond his remuneration accrued up to that date. Mr Forshaw resigned as a director of the Company and of Ashtead Plant Hire Company Limited, of which he was Chief Executive Officer, on 4 March 2002. His employment within the Group terminated on 1 May 2002. 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 financial statements, were as follows: Name Year ended 30 April 2002 George Burnett Ian Robson Bruce Dressel Sat Dhaiwal Ted Forshaw Henry Staunton Alan Wheatley Philip Lovegrove Chris Cole Peter Lewis Year ended 30 April 2001 Peter Lewis George Burnett Ian Robson Bruce Dressel Ted Forshaw Alan Anderson Henry Staunton Alan Wheatley Philip Lovegrove Fees £'000 Salary £'000 Performance Compensation for loss of office £'000 related bonus £'000 Other benefits in kind £'000 Total emoluments excluding pension benefits £'000 - - - - - 104 55 30 8 - 197 - - - - - - 25 55 30 110 420 220 261 24 185 - - - - 38 1,148 199 216 152 233 180 23 - - - 1,003 - 80 189 - 1 - - - - - 270 541 541 161 245 46 - - - - 1,534 - - - - 347 - - - - - 347 - - - - - - - - - - 19 14 10 2 8 - - - - - 53 15 23 29 1 9 3 - - - 80 439 314 460 26 541 104 55 30 8 38 2,015 755 780 342 479 235 26 25 55 30 2,727 The 2001/02 emoluments of: (1) Sat Dhaiwal are those for the period from his appointment on 4 March 2002 until 30 April 2002. (2) Ted Forshaw are those for the period until his resignation on 4 March 2002; and (3) Peter Lewis are those for the period until his retirement on 31 July 2001; The 2000/01 emoluments of: (1) Ian Robson are those for the period from his appointment on 26 June 2000; and (2) Alan Anderson are those for the period to his retirement on 26 June 2000. In addition, an ex-gratia payment of £30,000 was made to Mr Anderson at the time of his retirement. Ashtead Group plc 33. Remuneration Committee Report Directors' emoluments (continued) Effective 1 May 2001, the Company adopted new annual performance related bonus plans for the executive directors under which payments are related directly to performance in the year. The maximum entitlement under annual bonus plans was also capped at two-thirds of salary for all executive directors other than Mr Dressel whose annual bonus was capped at 100% of salary. The annual bonus plan of Mr Dressel and Messrs Forshaw and Dhaiwal depended exclusively on the performance of Sunbelt and A-Plant respectively, Mr Robson's depended partly on the Group's financial performance and partly on non- financial targets relating to the management of the Group's financial position and its relationships with its lenders and Mr Burnett's depended on the Group's financial performance. Actual payments reflect the extent to which these objectives were attained. In accordance with the provisions of his contract, which provided for one year's notice, on or shortly after the termination of his employment with the Group on 1 May 2002, Mr Forshaw received compensation of £250,000, his existing company car valued at £6,200, and outplacement counselling and other benefits paid for by the Company to a value of £41,000. His remuneration for the period from the date of his resignation as a director on 4 March 2002 until his employment terminated on 1 May 2002 was £35,000. He was also allowed, in accordance with the rules of the relevant option plans, to retain his existing outstanding share options as described further below. In addition the Company agreed to procure that the Trustees of the Ashtead Group plc Retirement Benefits Plan credited Mr Forshaw with the benefits accruing from an additional year's membership of the pension plan at a cost to the Company of £49,500. Directors' pension benefits Age at 30 April Years Accrued pensionable service at 30 April Years Contributions paid by the director £000 Accrued annual pension £000 Increase in annual pension at 30 April £000 Year ended 30 April 2002 George Burnett Ian Robson Sat Dhaiwal Year ended 30 April 2001 George Burnett Ian Robson Ted Forshaw 55 43 33 54 42 50 18 2 8 17 1 8 - 11 1 - 8 7 348 14 11 330 6 19 18 8 3 62 6 8 Under the terms of his service contract, Mr Burnett is entitled to retire at age 60 with a pension of two-thirds of remuneration on retirement. For this purpose remuneration is defined as the highest average annual remuneration received in the best three consecutive years in the ten years prior to retirement with remuneration meaning basic salary effective from 1 May 2001 under a change to Mr Burnett's employment contract agreed on 10 January 2002. Prior to that date, remuneration is defined as the gross value of emoluments received in the year. Mr Burnett's pension entitlement is funded through contributions to the managed funds of independent fund managers operated through the Ashtead Group plc Pension Scheme. 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. 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 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 Retirements Benefits Plan in the current year. Ashtead Group plc 34. Remuneration Committee Report Mr Dhaiwal's and Mr Forshaw's pension benefits are also provided through the Ashtead Group plc Retirement Benefits Plan. Their pension rights accrue at the rate of one-sixtieth of basic salary for each year of pensionable service and normal retirement is at age 65. Except where otherwise stated above, the Retirement Benefits Plan provides: 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; an 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 and the Trustees as reflecting the cost to the Plan of the early retirement; pension increases in line with the increase in retail price inflation up to 5% a year; and transfer values do not include discretionary benefits. Mr Dressel is a member of the US defined contribution plan to which the Group contributed £2,024 in the year (£3,600 in 2000/01). Directors' interests in shares The Directors of the Company are shown below together with their interests in the share capital of the Company: 28 June 2002 Number of ordinary shares of 10p each 30 April 2002 Number of ordinary shares of 10p each 30 April 2001* Number of ordinary shares of 10p each Beneficial Non-beneficial Beneficial Non-beneficial Beneficial Non-beneficial GB Burnett SI Robson BJ Dressel SS Dhaiwal PA Lovegrove HE Staunton AE Wheatley C Cole * or date of appointment where later 12,284,399 105,821 317,157 13,000 382,500 245,000 282,000 20,000 Investment Incentive Plan 1,056,192 - - - - - - - 12,284,399 105,821 317,157 13,000 382,500 245,000 282,000 20,000 1,056,192 - - - - - - - 12,000,000 11,000 200,000 13,000 182,500 145,000 132,000 - 1,056,192 - - - - - - - This new long-term incentive plan under which executive directors who elect to invest all or a portion of their annual cash bonuses in shares of the Company are eligible for matching awards in the form of shares which only vest subject to demanding performance conditions was approved by shareholders of the 2001 Annual General Meeting on 8 October 2001. Initial matching awards were made on 23 January 2002 as follows: George Burnett Ian Robson Bruce Dressel Ted Forshaw Maximum number of shares which may vest 1,422,006 474,107 650,878 175,541 These matching awards, made in respect of investment shares acquired with all or part of the directors' bonuses for the year ended 30 April 2001, will only vest, in whole or part, based on the annual growth in the Company's earnings per share in the three year period ended 30 April 2004 over that of the year ended 30 April 2001 and on the Company's Total Shareholder Return ("TSR") performance relative to a comparator group comprising all of the FTSE250 mid-cap stocks other than investment trusts over the three year period from 8 October 2001 (when the Company's share price at close was 72p) to 8 October 2004. Ashtead Group plc 35. (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) Remuneration Committee Report Investment Incentive Plan (continued) Vesting of the matching awards is based on the following required performance grid: Real EPS growth performance upper range RPI + 7% p.a. target range RPI + 5% p.a. minimum range RPI + 3% p.a. TSR performance against peer group Below Median TSR Median 63rd Percentile 75th Percentile 1.0 x match 0.75 x match 0.5 x match 2.0 x match 1.5 x match 1.0 x match 2.5 x match 2.0 x match 1.5 x match 3.0 x match 2.5 x match 2.0 x match No matching award vests Vesting operates on a scaled basis for performance between the target levels shown in the grid above. Performance is measured at the end of the performance period when the awards either vest in full or part or lapse completely. For performance measurement purposes earnings per share is based on the profit before exceptional items measured under consistently applied accounting policies. In connection with the operation of the Plan, the Company has established an Employee Share Ownership Trust which, on 21 and 22 January 2002, purchased 2,722,575 shares at an average cost of 57p per share, being the number of shares potentially equal, at the maximum performance level, to the matching awards granted. Ownership of these shares was conditionally transferred to each director on 15 April 2002 subject to forfeiture to the extent that the required performance conditions are not attained. The executive directors have also waived their entitlement to any dividend on these shares until the conclusion of the performance period. The Company will charge against profit each year an amount equal to one-third of the expected cost of the proportion of the matching award expected to vest at the end of the three year performance period. Directors' interests in share options Options at 1 May 2001 or on appointment Granted Exercised/ lapsed the year during year during Market price at date of Options at exercise 30 April 2002 Discretionary schemes GB Burnett 521,362 491,400 487,494 200,000 350,000 166,700 300,000 90,000 29,500 195,500 230,000 - - - - - - - 300,000 - - - - - - - - - - - - - - - - - - - - - - - - 521,362 491,400 487,494 200,000 350,000 166,700 300,000 90,000 29,500 195,500 230,000 300,000 SI Robson Ashtead Group plc 36. Earliest normal exercise date Sept 1995 Aug 1997 Sept 1998 Feb 2000 Feb 2001 Feb 2002 Aug 2003 Feb 2004 Aug 2003 Aug 2003 Feb 2004 Feb 2005 Expiry Sept 2002 Aug 2004 Sept 2005 Feb 2007 Feb 2008 Feb 2009 Aug 2010 Feb 2011 Aug 2010 Aug 2010 Feb 2011 Feb 2012 Exercise price 14.870p 61.440p 72.535p 132.250p 184.200p 172.500p 102.500p 125.000p 101.670p 102.500p 125.000p 41.500p Remuneration Committee Report Options at 1 May 2001 or on appointment Granted Exercised/ lapsed the year during year during Market price at date of Options at exercise 30 April 2002 Discretionary schemes SS Dhaiwal JB Dressel 40,000 32,500 50,000 35,000 - 60,000 200,000 66,700 140,000 230,000 - - - - - 100,000 - - - 300,000 SAYE scheme GB Burnett S I Robson SS Dhaiwal 17,602 17,800 Contract cancelled - - 3,520 - 39,783 - 22,836 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Earliest normal exercise date Expiry Feb 2000 Feb 2001 Feb 2002 Feb 2004 Feb 2005 Feb 2000 Feb 2001 Feb 2002 Aug 2003 Feb 2004 Feb 2005 Feb 2007 Feb 2008 Feb 2009 Feb 2011 Feb 2012 Feb 2007 Feb 2008 Feb 2009 Aug 2010 Feb 2011 Feb 2012 Exercise price 132.250p 184.200p 172.500p 125.000p 41.500p 132.250p 184.200p 172.500p 102.500p 125.000p 41.500p 40,000 32,500 50,000 35,000 100,000 60,000 200,000 66,700 140,000 230,000 300,000 17,602 - 39,783 3,520 22,836 98.000p 94.800p 41.600p 98.000p 41.600p April 2002 Sept 2002 April 2006 Sept 2006 Sept 2007 April 2007 April 2002 Sept 2002 April 2005 Sept 2005 The market price of the Company's shares at the end of the financial year was 42.0p; the highest and lowest share prices during the financial year were 130.5p and 30.0p respectively. Mr Dressel also holds an award over 250,000 units under the Company's Cash Incentive Scheme which was granted on 22 February 2000 at a price of 102p per unit. This award is subject to the same performance conditions as apply to the Company's unapproved share option scheme and is 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 him by way of a cash award. On his appointment on 4 March 2002, Mr Dhaiwal held 50,000 units under the Cash Incentive Scheme which were granted to him on 22 February 2000. In his case, he can exercise his options in the period from 22 February 2003 to 21 February 2010. Mr Forshaw was allowed to retain the options held at the date of his resignation as a director of the Company for exercise according to the rules of the relevant scheme. His holdings under the approved scheme, 109,210 shares granted in August 1994 at 61.44p per share and 152,334 shares granted in September 1995 at 72.525p per share, will lapse on 1 November 2002, if not exercised on or before that date. His holdings of options under the unapproved scheme, 60,000 shares granted in February 1997 at 132.25p per share, 125,000 shares granted in February 1998 at 184.20p per share and 230,000 shares granted in February 2001 at 125.00p per share, will lapse on 1 May 2003 if not exercised on or before that date. The matching shares awarded to Mr Forshaw under the Investment Incentive Plan reverted to the ESOT on 1 May 2002. Mr Forshaw's holdings of 250,000 units under the Cash Incentive Scheme granted in February 2000 lapsed on 1 May 2002. Finally, Mr Forshaw has until the end of September 2002 to exercise his options over 17,602 shares at 98.00p per share granted under the Company's SAYE scheme. 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 before taxes of £804,716. Mr Lewis' holdings of options granted in February 1997 (200,000 shares at 132.250p), February 1998 (350,000 shares at 184.2p) and February 1999 (166,700 shares at 172.5p), which he was permitted to retain on his retirement on 31 July 2001, will lapse unless exercised by 31 July 2002 in accordance with the rules of the unapproved share option scheme. Alan Wheatley Chairman of the Remuneration Committee 8 July 2002 Ashtead Group plc 37. Statement of Directors Responsibilities 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; and 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. The maintenance and integrity of the Ashtead Group plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. By order of the Board Robert Clark Company Secretary 8 July 2002 Ashtead Group plc 38. (cid:2) (cid:2) (cid:2) Independent Auditors’ Report to the Members of Ashtead Group plc We have audited the financial statements which comprise the consolidated profit and loss account, the consolidated balance sheet, the Company balance sheet, the consolidated cash flow statement, the consolidated 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 report 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 as at 30 April 2002 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 8 July 2002 Ashtead Group plc 39. Consolidated Profit & Loss Account for the year ended 30 April 2002 2001 Before goodwill Goodwill amortisation amortisation and exceptional exceptional items £m items £m and Before goodwill Goodwill amortisation amortisation and exceptional items £m (restated) and exceptional items £m (restated) Total £m 583.7 (462.2) 121.5 (40.2) - - - 583.7 (462.2) - - (8.8) 121.5 (40.2) (8.8) 552.0 (430.8) 121.2 (32.6) - - - - (12.3) (8.1) Total £m (restated) 552.0 (430.8) 121.2 (44.9) (8.1) 81.3 (8.8) 72.5 88.6 (20.4) 68.2 - (32.6) (32.6) - - - Notes 2 2,3 23 5, 23 (52.4) (3.0) (55.4) (47.4) (9.7) (57.1) Turnover Cost of sales Gross profit Administrative expenses Goodwill amortisation Operating profit Exceptional loss on disposal of fixed assets Net interest payable and similar charges 28.9 0.3 18.9 19.2 48.1 (Loss)/profit on ordinary activities before taxation Taxation on profit on ordinary activities: - current tax - deferred tax 6 6, 19 Profit for the financial year Equity dividends 21 8 Retained (loss)/profit transferred to reserves Basic earnings per share Diluted earnings per share 9 9 (44.4) (15.5) 41.2 (30.1) 11.1 1.2 (10.1) (8.9) - - - 32.3 (30.1) - - - (44.4) 0.3 18.9 19.2 3.7 (11.3) (7.6) 1.1p 1.1p 1.2 (10.1) (8.9) 2.2 (11.3) (9.1) 0.7p 0.7p Consolidated Statement of Total Recognised Gains & Losses For the Year Ended 30 April Profit for the financial year Foreign currency translation differences Total recognised gains and losses relating to the year Prior period adjustments relating to deferred taxation Total gains and losses recognised since the last annual report Notes 19 2001 £m (restated) 2.2 (0.2) 2.0 2002 £m 3.7 (0.7) 3.0 (48.4) (45.4) 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 19. Ashtead Group plc 40. Consolidated Balance Sheet at 30 April Notes 2002 £m 2001 £m (restated) 10 11 11 12 13 14 26 (c) 15 16 17 19 19 20 21 21 21 160.8 164.3 678.1 72.8 750.9 1.6 913.3 12.9 110.7 0.5 124.1 (23.5) (121.7) (145.2) 725.6 76.9 802.5 - 966.8 15.3 125.7 1.1 142.1 (4.8) (222.7) (227.5) (21.1) (85.4) 892.2 881.4 (504.4) (18.2) (129.7) (652.3) (41.1) (4.3) (45.4) (480.7) - (127.9) (608.6) (66.0) (4.7) (70.7) 194.5 202.1 32.5 100.7 0.5 60.8 194.5 32.4 100.1 0.5 69.1 202.1 Fixed assets Intangible assets - goodwill Tangible fixed assets: - rental equipment - other fixed assets Investments - own shares held by ESOT Current assets Stock Debtors Cash at bank and in hand Creditors - amounts falling due within one year Bank loans, overdrafts and finance lease obligations 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 Finance lease obligations 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 equity shareholders' funds Comparative figures have been restated as described in notes 15, 17 and 19. These financial statements were approved by the Board on 8 July 2002. GB Burnett SI Robson Ashtead Group plc 41. Company Balance Sheet at 30 April Fixed assets Investments - own shares held by ESOT Investments in group companies Current assets Debtors Creditors - amounts falling due within one year 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 Total equity shareholders' funds These financial statements were approved by the Board on 8 July 2002. GB Burnett SI Robson Notes 12 12 14 16 17 17 20 21 21 21 2002 £m 1.6 351.7 353.3 2001 £m - 348.5 348.5 132.5 133.5 (15.2) (11.4) 117.3 470.6 (129.7) (0.3) (130.0) 122.1 470.6 (127.9) (0.3) (128.2) 340.6 342.4 32.5 100.7 198.6 8.8 340.6 32.4 100.1 198.6 11.3 342.4 Ashtead Group plc 42. Consolidated Cash Flow Statement for the year ended 30 April Notes 26(a) 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 bank facility Interest element of finance lease payments Net cash outflow from returns on investments and servicing of finance Taxation (outflow)/inflow Capital expenditure and financial investment Purchase of tangible fixed assets Sale of tangible fixed assets Purchase of own shares by employee share ownership trust Net cash outflow from capital expenditure and financial investment - (43.5) (1.3) (5.6) (203.3) 39.2 (1.6) Acquisitions & disposals outflow 26(d) Equity dividends paid Net cash outflow before management of liquid resources and financing Inflow from management of liquid resources Financing Issue of ordinary share capital Drawdown of loans Redemption of loans Capital element of finance lease payments Net cash inflow from financing (Decrease)/increase in cash 0.7 89.3 (56.8) (10.7) 26(e) 26(e) 26(b) £m 2002 £m £m 2001 £m 173.0 (10.3) 162.7 (46.4) 1.7 (164.3) (214.1) (10.4) (270.8) 15.6 296.8 41.6 202.0 - 202.0 (50.4) (0.7) (165.7) (3.3) (11.3) (29.4) - 22.5 (6.9) 0.6 (37.3) (9.7) - (202.6) 38.3 - 0.5 466.6 (170.3) - All acquisitions made this year were immediately integrated in to the Group's ongoing operations. No segregated cash flow information is therefore available. Ashtead Group plc 43. Notes to the Financial Statements 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 adoption of FRS 19: Deferred tax as described in note 19, is given in the following paragraphs. Comparative figures have been restated to reflect the change in accounting policy. 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. Other exchange differences are dealt with in the profit and loss account. Assets and liabilities in foreign currencies including long term liabilities are translated at rates of exchange ruling at the balance sheet date. 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 Schedule 4, paragraph 12 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, including those held under finance leases, 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% 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. Repair and maintenance Repair and maintenance of rental equipment is charged against revenue costs incurred in the period. Ashtead Group plc 44. Notes to the Financial Statements 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 tax is provided using the incremental liability approach and is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws substantively enacted at the balance sheet date. Deferred tax is recognised in respect of timing differences that originated but not reversed by the balance sheet date except that (a) deferred tax in respect of the unremitted earnings of overseas subsidiaries is only recognised where there is a binding intent to distribute past earnings at the balance sheet date; and (b) deferred tax assets are only recognised to the extent that they are regarded as recoverable. Leases Assets held under finance leases are capitalised with a related credit to finance lease obligations in respect of the capital asset of the lease payments. Such assets are depreciated in accordance with the Company's depreciation policy at the same rate as applied to equivalent owned assets. Interest payable on finance leases is computed at the rate inherent in the lease. 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 average 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. Own shares held by the Employee Share Ownership Trust Shares owned beneficially by the Employee Share Ownership Trust are capitalised as fixed asset investments at cost less any required provision for permanent impairment. Where these shares are subject to commitments to release them to employees (subject to the attainment of performance target) in connection with the Group's long term incentive plans, then provision is made by way of a charge against profits to write off the estimated cost of the shares expected to be released at the end of the performance period over the long term incentive period which is normally three years. Ashtead Group plc 45. Notes to the Financial Statements 2 Segmental analysis The Company operates one class of business: rental of equipment. The segmental analysis by geographic unit is given below: North America United Kingdom Rest of World Exceptional costs Goodwill amortisation Central items* * net borrowings and deferred taxation Turnover 2001 £m 2002 £m Operating profit 2001 £m (restated) 2002 £m 2002 £m Net assets 2001 £m (restated) 389.1 192.3 2.3 583.7 350.2 199.7 2.1 552.0 - - - - 66.0 14.6 0.7 81.3 61.2 26.8 0.6 88.6 - (12.3) (8.8) (8.1) 659.7 249.1 2.1 910.9 - - 591.5 286.9 2.0 880.4 - - - 583.7 - 552.0 - 72.5 - 68.2 (716.4) 194.5 (678.3) 202.1 There is no material difference between turnover by origin as shown above and turnover by destination. Acquisitions in the year added £7.7m (2000/1 - £175.2m) to revenue in the North American segment. The exceptional loss on disposal of fixed assets in the year of £32.6m (note 23) arises in the UK. 3 Operating profit Operating profit is stated after charging / (crediting) : Staff costs: Salaries Social security costs Other pension costs Depreciation (see note 11) Goodwill amortisation Profits on disposal of fixed assets Net currency gain Hire of plant and machinery Other operating leases 2002 £m 169.6 21.6 2.8 120.9 8.8 (1.5) (1.0) 6.6 20.4 2001 £m (restated) 149.7 17.4 3.1 114.5 8.1 (6.8) (1.2) 15.9 13.1 Audit fees payable to PricewaterhouseCoopers were £409,000 (2001 - £259,500). This includes £25,000 (2001 - £20,000) in respect of the parent company. Fees paid to PricewaterhouseCoopers for non-audit services amounted to £244,500 (2001 - £999,400) in the UK and £70,304 in the US (2001 - £140,600). Profits on disposal of fixed assets (excluding the exceptional UK disposal programme) 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 32 to 37. Ashtead Group plc 46. Notes to the Financial Statements 5 Net interest payable and similar charges Bank interest payable Accrued interest amortisation on convertible loan Interest payable on finance leases Total interest payable Bank interest receivable Exceptional costs re bank facility 2002 £m 39.2 7.6 5.6 52.4 - 3.0 55.4 2001 £m 41.4 6.6 - 48.0 (0.6) 9.7 57.1 Exceptional costs in relation to the bank facility in 2002 comprise variation fees payable in connection with (i) the adjustments made to bank covenants in July 2001 consequent upon adoption of new accounting policies under FRS18 in the 2001 accounts and (ii) the adjustments made to bank covenants in April 2002 to provide greater future financial flexibility in light of the impact of the downturn in the US economy. 6 Taxation UK Corporation tax at 30% (2000/1 - 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 - current year charge - prior year credit 2002 £m 2001 £m (restated) - (0.9) (0.9) - (0.9) 0.6 - 0.6 (0.3) 2.5 (21.4) (18.9) (19.2) 0.1 (1.1) (1.0) (0.1) (1.1) 0.1 (0.2) (0.1) (1.2) 10.1 - 10.1 8.9 All of the 2001/2 and 2000/1 deferred tax relates to the origination and reversal of timing differences. Details of the restatement of the prior year taxation charge on implementation of FRS 19 - Deferred taxation and of the reconciliation between the tax credit expected on the basis of the loss before taxation evaluated at the UK standard rate of corporation tax of 30% and the actual tax credit are given in note 19. 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 £8.8m (2001 - £11.5m). Ashtead Group plc 47. Notes to the Financial Statements 8 Equity dividends Interim dividend paid at 0.62p net per share (2001 - 0.62p) Proposed final dividend of 2.88p net per share (2001 - 2.88p) 9 Earnings per share 2002 £m 2.0 9.3 11.3 2001 £m 2.0 9.3 11.3 Earnings per share for the year ended 30 April 2002 have been calculated based on the profit for the financial year and on 324,090,666 ordinary shares, being the weighted average number of ordinary shares in issue during the year which excludes the 2,722,575 shares held by the ESOT since 22 January 2002 in respect of which dividends have been waived (2001 - 323,334,079 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: Profit for the financial year £m Weighted average no. of shares millions 2002 Per share amount p Profit for the financial year £m (restated) Weighted average no. of shares millions 2001 Per share amount p (restated) As used in the calculation of basic earnings per share excluding the shares held by the ESOT Outstanding share options As used in the calculation of diluted earnings per share 10 Intangible assets - goodwill 3.7 - 3.7 324.1 1.6 325.7 1.1 - 1.1 2.2 - 2.2 323.3 3.0 326.3 0.7 - 0.7 Group At 1 May 2002 as previously reported Prior year adjustment re BET USA deferred tax At 1 May 2001 as restated Arising in respect of acquisitions in the year Adjustment in relation to BET USA acquired 1 June 2000 Amortisation during the year Cost £m Amortisation £m Net book value £m 158.4 14.4 172.8 2.8 2.5 - (7.7) (0.8) (8.5) - - (8.8) 150.7 13.6 164.3 2.8 2.5 (8.8) At 30 April 2002 178.1 (17.3) 160.8 Goodwill written off directly to reserves as at 30 April 2002 was £58.1m (2001 - £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. Ashtead Group plc 48. Notes to the Financial Statements 11 Tangible fixed assets Cost or valuation At 1 May 2001 Exchange difference Acquisitions Additions Disposals At 30 April 2002 Depreciation At 1 May 2001 Exchange difference Charge for the period Disposals At 30 April 2002 Net book value At 30 April 2002 Rental equipment Held under Freehold Leasehold property property £m £m Owned £m Office & finance workshop leases equipment £m £m Motor vehicles £m Total £m 41.0 (0.3) - 1.1 (1.1) 40.7 (4.5) - (0.5) 0.2 (4.8) 23.4 (0.2) - 6.8 (1.4) 28.6 (4.3) 0.1 (1.6) 0.6 (5.2) 962.8 (11.7) (0.9) 98.0 (110.1) 938.1 (237.2) 4.3 (105.5) 51.3 (287.1) - 0.9 32.9 - - 33.8 - - (6.7) - (6.7) 16.7 (0.1) 0.1 6.1 (4.7) 18.1 (8.3) 0.1 (3.6) 4.1 (7.7) 28.9 (0.3) - 1.8 (23.1) 7.3 1,072.8 (11.7) 32.1 113.8 (140.4) 1,066.6 (16.0) 0.2 (3.0) 14.6 (4.2) (270.3) 4.7 (120.9) 70.8 (315.7) 35.9 23.4 651.0 27.1 10.4 3.1 750.9 At 30 April 2001 36.5 19.1 725.6 - 8.4 12.9 802.5 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: 12 Investments Group 2002 £m 1.1 22.3 23.4 2001 £m 2.1 17.0 19.1 Freehold £m Leasehold £m 34.4 1.5 35.9 22.4 1.0 23.4 1.2 0.8 Fixed asset investments of the group of £1.6m comprise own shares held by the Employee Share Ownership Trust ("ESOT") which is established in Jersey and holds an interest in 2,722,575 shares in the Company acquired at a cost of 57p per share. These shares, which as described in the Remuneration Committee report on pages 32 to 37, relate to matching awards to directors under the Company's Investment Incentive Plan and had a market value at 30 April 2002 of £1.1m. Ashtead Group plc 49. Notes to the Financial Statements 12 Investments (continued) Company At 1 May 2001 Additions in the year At 30 April 2002 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 Inc. Sunbelt Rentals Inc. Shares in group companies £m Loans to group companies £m 224.1 - 124.4 3.2 224.1 127.6 Employee share ownership trust £m - 1.6 1.6 Total £m 348.5 4.8 353.3 Country of incorporation Principal country in which subsidiary undertaking operates England England Scotland Singapore USA USA 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 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 Ashtead Group plc 50. 2002 £m 11.1 1.8 12.9 2001 £m 12.9 2.4 15.3 The Group 2002 £m 96.6 - 14.1 110.7 The Group 2001 £m 107.4 - 18.3 125.7 The Company 2002 £m The Company 2001 £m - 132.3 0.2 132.5 - 133.0 0.5 133.5 Notes to the Financial Statements 15 Bank loans, overdrafts and finance lease obligations Secured bank overdrafts Short term portion of secured bank loans Finance leases due in less than one year The Group 2002 £m 8.5 2.6 12.4 23.5 The Group 2001 £m (restated) 2.2 2.6 - 4.8 The Company 2002 £m The Company 2001 £m - - - - - - - - Comparative figures have been restated to correct a misclassification of the 1% term loan amortisation per annum which was previously ignored in the ageing analysis with all the term loan having been shown as repayable in more than five years. 16 Trade and other creditors Trade creditors Bills payable Taxation Other taxes and social security Proposed dividend Accruals and deferred income The Group 2002 £m 59.5 11.6 0.9 5.7 9.3 34.7 121.7 The Group 2001 £m 69.8 90.7 1.9 9.3 9.3 41.7 222.7 The Company 2002 £m The Company 2001 £m - - - - 9.3 5.9 15.2 - - - - 9.3 2.1 11.4 Trade and other creditors include amounts relating to the purchase of fixed assets (including outstanding bills of exchange) of £60.7m (2001: £150.2m). Accruals and deferred income include accrued deferred consideration of £0.9m (2001: £nil). 17 Creditors - amounts falling due in more than one year Loans are payable as follows: Between two and five years: - Secured bank debt - Finance lease obligations Over five years: - Secured bank debt - Loan notes - 5.25% Unsecured convertible loan note due 2008 The Group 2002 £m 262.7 18.2 241.4 0.3 129.7 652.3 The Group 2001 £m (restated) 232.3 - 248.1 0.3 127.9 608.6 The Company 2002 £m The Company 2001 £m - - - 0.3 129.7 130.0 - - - 0.3 127.9 128.2 Interest is payable on these loans currently at rates between 3.9% and 7.1%. Loans payable in between two and five years relate principally to revolving advances within the US$825m committed secured senior credit facility. These revolving advances were repayable in May 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 Ashtead Group plc 51. Notes to the Financial Statements 17 Creditors - amounts falling due in more than one year (continued) facility which is repayable on 31 May 2007 except in respect of an amount equal to 1% of the original term facility of £2.6m ($3.75m) which is repayable annually on 1 June each year. 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 the 1% term loan amortisation per annum which was previously ignored in the ageing analysis with all the term loan having been shown as repayable in more than five years. 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 16 and 17. Short term debtors and creditors have been excluded from all the following disclosures (except the currency profile of monetary assets). a) The currency and interest rate profile of the Group's financial assets is: Sterling US dollar At 30 April 2002 Sterling Irish punt (Euro) US dollar Singapore dollar At 30 April 2001 Total £m 0.1 0.4 0.5 0.3 0.3 0.3 0.2 1.1 Floating Financial assets on which no rate deposits interest is received £m £m - - - - 0.3 - - 0.3 0.1 0.4 0.5 0.3 - 0.3 0.2 0.8 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 Weighted Fixed rate average interest rate at 30 April % borrowings £m Weighted average time for which rate is fixed Years 48.8 279.4 15.4 343.6 75.9 225.3 9.3 310.5 130.0 202.2 - 332.2 128.2 174.7 - 302.9 5.6 5.7 6.4 5.7 5.6 6.8 - 6.3 6.0 1.4 - 2.6 7.2 2.3 - 4.4 Total £m 178.8 481.6 15.4 675.8 204.1 400.0 9.3 613.4 Sterling US dollar Euro At 30 April 2002 Sterling US dollar Euro At 30 April 2001 The Group's sterling fixed rate borrowings at 30 April 2002 comprised the £134m nominal value unsecured convertible loan note due 2008 (see note 20) on which interest is fixed at 5.25% per annum and £0.3m of fixed rate loan notes issued by the Company. The fixed rate US dollar borrowings relate to US$250m (£171.6m) 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) and to finance lease obligations which are at fixed rate. Interest payable on floating rate borrowings is linked to LIBOR rates for the relevant currency. Ashtead Group plc 52. Notes to the Financial Statements 18 Financial instruments (continued) 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 2002 the only currency exposures in the group's operations in currencies other than their own functional currency related to payables of £0.2m in the Republic of Ireland, all of which is payable in pounds sterling. The equivalent comparatives at 30 April 2001 were payables of £25.9m in the US, £16.6m of which was payable in pounds sterling and £9.3m of which was payable in Euros, and payables of £11.4m in the Republic of Ireland, all of which was payable in pounds sterling. 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 2002 £m 23.5 280.9 371.4 675.8 2001 £m (restated) 4.8 232.3 376.3 613.4 e) Borrowing facilities Undrawn committed facilities at 30 April 2002 in respect of which all conditions precedent had been met totalled £56.9m 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. At the same date undrawn, uncancelled overdraft facilities totalled £9.9m. 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 2002. 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, finance lease obligations and cash: - 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 2002 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 2002 Primary financial instruments held or issued to finance the Group's operations: Short term borrowings and overdrafts Finance lease obligations 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 At 30 April 2002 Fair value £m Book value £m (restated) At 30 April 2001 Fair value £m (restated) 11.1 30.6 504.1 0.3 129.7 (0.5) 675.3 11.1 30.6 504.1 0.3 100.2 (0.5) 645.8 4.8 - 480.4 0.3 127.9 (1.1) 612.3 4.8 - 480.4 0.3 131.1 (1.1) 615.5 - 10.1 - 8.0 Ashtead Group plc 53. (cid:2) (cid:2) (cid:2) Notes to the Financial Statements 18 Financial instruments (continued) 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, £7.4m of the total unrecognised loss on the interest rate swaps of £10.1m at 30 April 2002 will be recognised in the year ending 30 April 2003. 19 Provisions for liabilities and charges Deferred taxation Liability recognised in the accounts: - Short term timing differences - Tax effect of losses in subsidiary company - Accelerated capital allowances Unrecognised deferred tax asset relating to: - Accelerated capital allowances - Tax losses in subsidiary company The movement in the year in the liability provided is: At 1 May 2001 as previously reported under SSAP 15 Prior year adjustment to reserves Restatement of fair market value of acquired BET USA deferred taxation At 1 May 2001 as restated under FRS 19 Exchange differences Credited to profit and loss account Adjustments to goodwill relating to acquisition of BET USA (note 22) At 30 April 2002 2002 £m (1.0) (54.7) 96.8 41.1 9.8 0.8 10.6 2001 £m (3.7) (26.2) 95.9 66.0 - - - £m 4.0 47.6 14.4 66.0 (1.1) (18.9) (4.9) 41.1 The Company has adopted FRS 19 - Deferred taxation this year which requires full provision to be made for deferred taxation as opposed to the partial provision required by the previous accounting standard, SSAP 15. Comparative figures for the previous year have been restated accordingly by way of a prior year adjustment to reserves. 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. The reconciliation between the tax credit for the year and that expected on the basis of the UK standard corporation tax rate of 30% is as follows: Expected tax credit based on the loss before taxation of £15.5m for the year at the standard UK corporation tax rate of 30% Prior year tax items included in the actual tax credit (£0.9m credit re current tax and £21.4m credit re deferred tax) Tax benefits deriving from the structure of the BET USA acquisition Increase in unrecognised deferred tax assets in the year Goodwill amortisation included in the loss before tax not allowable for tax Impact of overseas profits taxed at rates above the UK standard rate Other permanent differences Actual tax credit for the year £m 4.7 22.3 6.7 (10.6) (2.6) (2.5) 1.2 19.2 Ashtead Group plc 54. Notes to the Financial Statements 19 Provisions for liabilities and charges (continued) Other provisions At 1 May 2001 Exchange differences Utilised Charged in the year At 30 April 2002 Self insurance £m Other £m 2.9 - (9.3) 9.9 3.5 1.8 - (1.7) 0.7 0.8 Total £m 4.7 - (11.0) 10.6 4.3 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 2002 Number 2001 Number Authorised 450,000,000 450,000,000 Allotted, called up and fully paid 325,131,792 323,611,327 2002 £m 45.0 32.5 2001 £m 45.0 32.4 During the year to 30 April 2002, 1,520,465 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. Ashtead Group plc 55. Notes to the Financial Statements 21 Movements in shareholders' funds Share Share capital £m premium Revaluation reserve account £m £m Profit and loss account £m Group Profit for the financial year Equity dividends Other recognised gains and losses relating to the year Share capital subscribed Net additions/(reductions) to shareholders' funds At 1 May 2001 as previously reported Prior year adjustment At 1 May 2001 as restated - - - - 0.1 0.1 32.4 - 32.4 - - - - 0.6 0.6 100.1 - 100.1 Closing shareholders' funds 32.5 100.7 Company Profit for the financial year Equity dividends Transfer of Group undertaking to subsidiary Share capital subscribed Net additions/(reductions) to shareholders' funds - - - - 0.1 0.1 - - - - 0.6 0.6 - - - - - - 0.5 - 0.5 0.5 - - - - - - At 1 May 2001 32.4 100.1 198.6 Closing shareholders' funds 32.5 100.7 198.6 Total £m 3.7 (11.3) (7.6) (0.7) 0.7 (7.6) 250.5 (48.4) 202.1 2001 £m (restated) 2.2 (11.3) (9.1) (0.2) 0.5 (8.8) 236.8 (25.9) 210.9 3.7 (11.3) (7.6) (0.7) - (8.3) 117.5 (48.4) 69.1 60.8 194.5 202.1 8.8 (11.3) (2.5) - - (2.5) 11.3 8.8 8.8 (11.3) (2.5) - 0.7 (1.8) 11.5 (11.3) 0.2 (0.1) 0.5 0.6 342.4 341.8 340.6 342.4 The prior year adjustment of £48.4m relates to the adoption of FRS 19 - Deferred taxation and comprises the £47.6m increase in deferred tax arising at 1 May 2001 on implementation of FRS 19 together with the additional goodwill amortisation of £0.8m for the period to 30 April 2001 consequent on remeasuring, under FRS 19, the fair market value of the deferred tax liability of BET USA at acquisition on 1 June 2000. Ashtead Group plc 56. Notes to the Financial Statements 22 Acquisitions i) Current year acquisitions (a) on 29 June 2001, the business and certain assets of two East Coast locations of United Scaffolding were acquired and (b) on 1 August 2001, the business and certain assets of SuperRents which traded from three locations in the Seattle, Washington area were acquired. Assets acquired at provisional fair market value: - Fixed assets - Debtors Consideration (including costs): Cash paid Accrual deferred consideration Goodwill arising Total £m 4.1 1.1 5.2 7.1 0.9 2.8 No fair value adjustments have been made to the value of assets acquired in relation to these acquisitions at this time but fair values remain provisional pending agreement of the related consideration. These acquisitions have been accounted for from their respective acquisition dates stated above. ii) Adjustments to prior year fair values On 1 June 2000 the Group acquired BET USA. The acquisition was accounted for by the acquisition method of accounting. The fair values used in the 2001 accounts were provisional. In the year ended 30 April 2002 post acquisition amendments, as explained below and in accordance with FRS7 'Fair values in acquisition accounting', have been made to these provisional fair values. The differences have been taken as an adjustment to goodwill on acquisition. Provisional and amended fair values for net assets acquired were as follows: Fixed assets Stocks Debtors Cash Creditors Deferred taxation Purchase consideration Goodwill Provisional fair value to the Group £m 173.0 4.6 32.4 2.0 (29.0) - 183.0 326.2 143.2 Completion & hindsight Change of accounting Final fair period value to the Group £m policy adjustments £m £m - - - - - (14.4) (14.4) - 14.4 28.0 - - - (40.1) 4.9 (7.2) (4.7) 2.5 201.0 4.6 32.4 2.0 (69.1) (9.5) 161.4 321.5 160.1 The change of accounting policy adjustment relates to FRS19 - Deferred taxation which was adopted during the year. The principal hindsight period adjustment to fair values relates to the reclassification of certain leases over rental equipment as finance leases which were previously treated as operating leases by the acquired company, increasing fixed assets by £32.9m, increasing creditors by £40.3m and generating additional goodwill of £7.4m. Other adjustments are in respect of reassessments of asset and liability valuations completed in the year which have reduced fixed assets and creditors by £4.9m and £0.2m respectively less related deferred taxation of £1.8m and the inclusion of a deferred tax asset relating principally to acquired tax losses of £3.1m. Ashtead Group plc 57. Notes to the Financial Statements 22 Acquisitions (continued) The final purchase price was also agreed in the year under the price adjustment mechanism in the original acquisition agreement reducing the purchase consideration and goodwill by £4.7m. This reduction was effected through £3.8m received as a cash repayment from Rentokil and the agreement by Rentokil to assume responsibility for settling a pre-acquisition tax liability of BET USA totalling £0.9m. The adjustment to redesignate assets held under certain leases as finance leased assets has resulted in an increase in depreciation charge and interest expense of the Group but with a reduction in hire of plant and machinery costs. The impact on the prior year profit and loss account, if these leases had been treated as finance leases in that year, would have been as follows: Turnover Cost of sales Gross profit Administrative expenses Operating profit Net interest payable Profit before tax £m - 4.7 4.7 (0.4) 4.3 (2.9) 1.4 These adjustments have been reflected in the current year profit and loss account in addition to current year depreciation and interest charges. 23 Exceptional costs Loss on disposal of UK assets BET USA integration costs Bank facility costs included in interest payable (note 5) 2002 £m 32.6 - 3.0 35.6 2001 £m - 12.3 9.7 22.0 The exceptional loss on disposal of UK assets is net of proceeds received of £4.9m and also includes incremental transport, storage and disposal costs of £1.1m. A fuller description of these items is given in the financial review on pages 8 to 17. 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 Ashtead Group plc 58. 2002 £m 0.8 4.3 9.4 14.5 1.6 10.4 1.4 13.4 27.9 2001 £m 1.1 5.5 7.3 13.9 4.4 5.4 0.6 10.4 24.3 Notes to the Financial Statements 25 Pensions 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 2001 by Aon Limited. This valuation used the projected unit credit method and was carried out on a market-related basis, 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 for funding and for accounting purposes were the same except for the pre-retirement investment return where 6.9% per annum and 7.25% per annum were used respectively for past service and future service for funding purposes against 7.9% per annum in both cases for accounting purposes and the assumed annual increase in salaries which was 4.5% for funding purposes and 4% for accounting purposes. The other main assumptions for both funding and accounting purposes were the post-retirement investment return for current pensioners of 5.1% and for non-current pensioners of 5.25% and the annual inflation rate of 2.5%. The market value of the plan assets was £18.3m at the valuation date of 30 April 2001. On an on-going basis, assets at market value were sufficient to cover 84% of the benefits that had accrued to members on the funding basis and 94% on the SSAP 24 accounting basis. On the advice of the actuary, employer's contributions were paid to this plan during the year ended 30 April 2002 at the rate of 5.0% of members' pensionable salaries at 1 May 2001, as adjusted for leavers during the year, increasing to 11% of pensionable service from November 2001. For accounting purposes, the actuarial deficit in the main UK plan is being spread over the ten year average remaining expected 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 2002 £m 1.1 0.1 1.5 2.7 0.1 2001 £m 0.8 (0.2) 2.4 3.0 0.1 Other plans include the defined contribution 401K plan operated by Sunbelt Rentals for the benefit of its employees and the Ashtead Group plc pension scheme described more fully in the Remuneration Committee report on pages 32 to 37. Additional pension disclosures under FRS17 Each of the Company's defined benefit pension commitments were valued at 30 April 2002 under the provisions of FRS 17 by independent qualified actuaries using the projected unit valuation method. The major financial assumptions applied by the actuary were: a discount rate of 6.0%; a rate of increase in pensions in payment of 2.5% in respect of pension accrued after April 1997; an inflation rate of 2.75%; and a rate of increase in salaries of 4.25%. The classes of asset in the plans and their expected rates of return were: equities 6.9%; fixed interest bonds and gilts 5.5%; property 6.9% and cash 4.0%. Under these assumptions and the methods prescribed in FRS 17, the Group's total commitment at 30 April 2002 in respect of its defined benefit pension commitments is: Equities Bonds Property Cash Total market value of assets Present value of schemes' liabilities as determined by the actuaries using the method and assumptions prescribed by FRS17 as outlined above Net deficit on the basis prescribed by FRS17 £m 17.3 3.1 2.0 1.4 23.8 30.9 7.1 Ashtead Group plc 59. Notes to the Financial Statements 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 Gain on sale of tangible fixed assets Decrease/(increase) in stocks Decrease/(increase) in trade debtors (Decrease) in trade creditors Exchange differences 2002 £m 72.5 - 8.8 120.9 (1.5) 2.4 15.3 (15.4) (1.0) 2001 £m 68.2 12.3 8.1 114.5 (6.8) (0.7) (12.1) (9.3) (1.2) Net cash inflow from operating activities before BET integration costs 202.0 173.0 b) Reconciliation to net debt Decrease/(increase) 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 debt at 1 May Net debt at 30 April Non cash movement - 5.25% unsecured convertible loan note, due 2008 - obligation due on finance leases Net debt at 30 April c) Analysis of movement in net debt 2002 £m 6.9 32.5 - 39.4 (8.8) 30.6 612.3 642.9 1.8 30.6 675.3 2001 £m (41.6) 296.3 15.6 270.3 22.8 293.1 191.3 484.4 127.9 - 612.3 1 May 2001 £m (restated) (1.1) 2.2 1.1 608.6 2.6 612.3 Cash flow £m Non-cash movements £m Exchange movement £m 30 April 2002 £m 0.6 6.3 6.9 32.5 - 39.4 - - - 20.0 12.4 32.4 - - - (8.8) - (8.8) (0.5) 8.5 8.0 652.3 15.0 675.3 Cash at bank and in hand Overdrafts Debt due after 1 year Debt due within 1 year Total net debt Non-cash movements relate to the accrued interest on the 5.25% unsecured convertible loan note, due 2008 and to acquired finance lease obligations (see note 22). Ashtead Group plc 60. Notes to the Financial Statements 26 Notes to the cash flow statement (continued) d) Acquisitions Cash consideration on current year acquisitions Cash consideration refunded on prior year acquisition Less: cash acquired with subsidiary undertakings Deferred consideration paid on prior year acquisitions 2002 £m 7.1 (3.8) - - 3.3 2001 £m 211.3 - (2.0) 4.8 214.1 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 f) Exceptional items 2002 £m - 89.3 89.3 (56.8) - - (56.8) 2001 £m 251.2 215.4 466.6 (79.6) (90.4) (0.3) (170.3) 32.5 296.3 Cash flows relating to exceptional items comprise £4.9m of disposal proceeds less disposal costs of £1.1m relating to the UK equipment disposal programme. In addition £1.3m was paid in relation to the exceptional bank facility costs and the balance of this exceptional item was paid in May 2002. 27 Contingent liabilities The Group is subject to periodic legal claims in the ordinary course of its business. However, the claims outstanding at 30 April 2002 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 2002 the amount borrowed under these facilities was £515.2m (30 April 2001 - £485.2m). The Company has also guaranteed annual operating lease commitments of subsidiary undertakings where the minimum lease commitment at 30 April 2002 totalled £79.0m (2001 - £53.2m) in respect of land and buildings and £28.3m (2001 - £26.2m) in respect of other operating lease rentals of which £3.4m and £8.6m respectively is payable by subsidiary undertakings in the year ending 30 April 2003. 28 Capital commitments At 30 April 2002 capital commitments in respect of purchases of rental equipment totalled £8.6m (2001 - £33.9m), all of which had been ordered. There were no other material capital commitments at the year-end. 29 Related party transactions During the year Sunbelt Rentals Inc incurred £0.2m 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. Ashtead Group plc 61. Notes to the Financial Statements 30 Employees The average number of employees during the year was as follows: North America United Kingdom Rest of World 31 Post balance sheet event 2002 3,807 2,578 8 6,393 2001 3,158 2,669 7 5,834 On 14 June 2002 the Company and its subsidiaries Sunbelt Rentals Inc, Ashtead Technology Inc and Ashtead Plant Hire Company Limited entered into an accounts receivable securitisation programme under which the trade debtors of these subsidiaries were pledged as security in return for non-recourse advances of up to £60m. Concurrently with the initial funding of the programme on 20 June 2002 which raised £59.4m, £60m of commitments under the Company's secured bank loan agreement were cancelled and repaid. The securitisation programme is committed until 1 June 2005, the same date as the revolving advance portion of the Company's bank debt. Advances received under the programme will be accounted for as a reduction in trade debtors. Ashtead Group plc 62. Seven Year History Restated Year Year to 30 April to 30 April to 30 April to 30 April to 30 April to 30 April to 30 April 1996 2000 2002 1997 1998 2001 1999 Year Year Year Year Year In £m Turnover 583.7 552.0 302.4 256.0 202.5 147.6 Depreciation 120.9 114.5 Operating profit+ • Pre-tax profit+ • 81.3 28.9 91.1 43.7 66.8 57.5 46.6 63.3 46.3 38.6 48.5 40.7 35.7 Capital expenditure 113.8 237.7 158.2 145.7 153.4 33.1 29.2 27.4 98.9 95.9 21.2 19.5 18.3 61.0 Book cost of rental equipment 971.9 962.8 629.5 527.9 394.1 245.6 172.2 Net cash inflow from operating activities 202.0 173.0 111.4 89.1 77.6 56.5 33.1 Shareholders' funds 194.5 202.1 236.8 207.5 151.3 119.9 107.7 In pence Dividends per share In percent Depreciation (% of turnover) Operating profit margin+ • Pre-tax profit margin+ • People Employees at year end Locations Profit Centres at year end 3.50 3.50 3.16 2.70 2.30 1.825 1.52 20.7 13.9 5.0 20.7 16.6 7.9 22.1 19.0 15.4 24.7 18.1 15.1 23.9 20.0 17.6 22.4 19.8 18.6 22.1 20.3 19.1 6,545 6,043 3,930 3,735 3,174 2,268 1,968 463 443 352 341 275 181 164 + Before exceptional items and goodwill amortisation and the non-recurring salary costs of £2.5m paid to redundant former BET USA employees before they were made redundant in the year 30 April 2001. • The results for the years up to 30 April 2000 were restated in 2000/1 to reflect the adoption of new accounting policies and estimation techniques under FRS 18 in that year. Ashtead Group plc 63. Who we are Senior staff - Sunbelt Directorate Bruce Dressel Kurt Kenkel Charles Miller Brendan Horgan Cliff Miller Rod Nease Randy Nelson Earl Rose Brian Tate Trading Managers Bradley Anderson Carlos Aquino Jeffrey Bair Kenneth Beck Douglas Bertz Russ Brown Steven Brown Patrick Connolly Eddie Dempster Mark Ellis Duane Francis David Glaser Kyle Horgan Lon Jenkins Chad Maughan Paul Nicely Christopher Pera Greg Schamel Kenneth Smerz Donnie Smith Thomas Wall Jason Wallace Frederick Weidner Wayne Young Support Managers CMIS Mark Long Paul Hartland Finance Cheryl Black Mike Godsey Ron Matley Matt Reinhard Pump & Power Services Jeff Cooper Eric Eaton Scott Webb Performance Standards Dawn Atkins Jonathan Dalton Bonnie Everett Donna Nicely James Parrish Robert Swingle Ollie Windle Chris Watson Training James Cowley Jeff Stachowiak Steve Costantini Chip Brunt Bill Moertel Marketing Services Brad Lull Jake Stout Mary Roberts Brett Bigham Strategic Account Sales David Titus Rob Murn Steve Heyman Ken Rothmel Al Kabo Danny Grimes Safety and Risk Management Byron Adkins Chuck Leeper Brad Palmer Darrylle Hood Matt Harding Scaffold Services Peter Casey Keith Lane Francis Lombardi Bruce Williams Profit Centre Managers Jeff Adair Kenneth Allen Brent Anderson Charles Ambrose Craig Ambrose Paul Anthony Jaime Aquino Tim Ardell Timothy Atkins Douglas Atkins Michel Axline William Bacon Stephen Bailey Michael Barrow Christopher Belcher Keith Bengtson Peter Blaikie Kent Borror James Bradley Greg Brewer Clarence Browder Conway Brown Scott Brown Alan Buchanan Bryan Bumpus John Calvano Richard Carpenter Jeffrey Casto Randy Clark Jeffrey Coscia Tim Cousino Douglas Davidson Roger Day James Dennis James Deutsch David Dicks Andrew Dixson Ralph Douglas John Drew Christopher Dulnik Larry Eason Miles Edge Stephen Edwards Brian Elbrecht Everett Evans James Faulkner William Fish James Fitzpatrick Gregory Flanagan Troy Fleming Verland Fluharty Cristopher Follett Gregory Frost Bruce Funderburgh Robert Furr Donald Furr Michael Gervasini Samuel Glova Jason Goldberg James Grech Jeffrey Groundwater Bryan Hadley Samuel Harding James Hartsfield Roberta Hassele Stephen Hassett Daniel Heselton Andrew Hewitt Sara Hinsey Barry Holdcroft Christopher James Jared Jansen Joseph Johnson Kirk Johnson Robert Jones Robert Kaczenski Thomas Kagey Jacco Kappers David Kenyon David King Jeffrey Labenski Dwayne Landry Keith Lee Robert Longello Steve Lowder David Lytle Chris. Macey Steven Martucci William Mather John May Christopher Mayer Todd Mayer Kenneth McBride Cynthia McBride Jacquelyn McCoy Scott McCoy David McGlone Joseph McIntyre Scott McLeod Tom Meeuwsen Stephen Mick Richard Minton Brian Morrison David Morse Richard Morse Robert Morse Richard Moss Wayne Myers Clark Neff Paul Neff Richard Newbold Carey Nicholson Shawn Olmstead Brandon Owens Billy Page Ricky Parker Richard Parr Russell Pate Rodney Patterson Russell Pavur Steven Peterson Carl Pierce Donald Pline Michael Poteete Charles Powell Paul Rice Hugh Rickles Christopher Ritz Curtis Rogers Richard Rollason Albert Salchenberg Jared Sampson Kyle Sandidge Court Sawyer Larry Schaff Bradley Schlottman Steve Seelbach William Sentelle John Sepa Brent Sexton Jerry Shaw Ryan Sherwood Jamie Simmons William Sinclair Douglas Smith Scott Smith Timothy Smith William Smith Kurtis Specht Todd Staley James Stallings Robert Stinson Richard Suarez John Suberbielle Paul Syverson Thomas Tegner, Sr. Scott Telford Gunner Thompson Jason Thompson Johnny Tippie George Tompkins Bruce Turner Michael Varnell John Vedok Douglas Wallace Richard Wallace Thomas Walton Chris Wear Russell Weidner Kevin White Mark White Jude Yimin James Yonce Lawrence Zellner Wendy Zielinski Dirk Zienow Gregory Zoeller David Zoss Ashtead Group plc 64. Who we are Senior staff - A-Plant Mark Siney Steve Westhead Directorate Sat Dhaiwal John Bankes Richard Dey Tony Durant Paul Fereday Paul Mooney Mark Sharkey Gary Thompson Bob Watts Richard Winfield Support Managers Marketing & National Sales Mike Abbott Maria Congreve Marc Daley Steve Doughty Tony Grimshaw Seamus Kelly Carli Milsom Tony Reynolds Keith Robertson Barry Stephens Tim Tait Legal Paul Edmunds Training John Devonport Tom McNeill Derek Purdon Transport Services Paul Green Performance Standards Ian Armstrong Bob Harper John Helliwell Serena Lucas Mel Moore Chris Ryan Dale Thurnham George Winker Finance Sue Carey Colin Foster Iain Guthrie Anne Hopkins North Ian Cass Paul Dennis Bob Dixon Dave Mellor Steve Pickering Derek Stewart Midlands Steve Day Chris Muirhead Jason Newell Yas Swindell South Karl Dunstan Susan Files Dick May Richard Mills Penny Noad Derek Smith Ashley Tarrant Ireland Bert Benson John Owens Specialist Products John Crook Mike Dixon Kevin Foord Peter Fearn Dave Jones Jim Jones Michael Thistlethwaite Profit Centre Managers Vince Akers Mick Allen Kamal Amanullah Tony Andrews Mark Antoine Nigel Arnott Simon Ashby Tony Ashton Brian Aspin Mark Atkins Ken Bailey Neil Bailey Sarah Barber Alan Barnes Barry Barnes Kevin Barrett Mark Barron Vince Barry Andy Benham Barry Bevis Wayne Bolton Dave Bone Darren Brady Phil Briggs Steve Buckley Jim Buffoni Richard Bull Helen Bullock John Bunting Mark Burdge Paul Burns Andrew Burrows Mandy Buss Sean Byrne Dean Cable David Cadwallader Mike Caesar Olga Carroll Sharon Carruthers Adrian Chapman Lorraine Cavanagh Andy Chatham Richard Clark Ciaran Clancy Peter Clay Gary Clements Len Clough Tommy Coates Scott Cooper Steve Cornforth Dean Corthorn David Creasey Mike Crumpton Andy Cullen Phil Davies Douglas Davy Jim Denihan Alistair Dickson Brian Dillon Russell Dodd Pete Dodds Darryl Doherty Martyn Dolan Craig Donley Andy Douglas Barney Duffy Matt Duggins Paul Dukes Graeme Dunlop John Dunne Jane Dyckoff Matthew Eames Nick East Dean Edwards Jim Edwards Steve Elkington Tom Fenton Ross Fitzgerald Eddie Ford Jamie Fountain Richard Freeman Brian Galt Jane Garfield Clive Gilbert Fraser Gillespie Eddie Gilmore Scot Graham Jamie Grant Jonathan Greenwood Tom Grieve Dave Griffiths Dean Groves John Guthrie Eric Gwynne Dermot Hagerty Anthony Hales Gary Hallam Daren Hallas John Hansbury Tony Harrison Richard Hart Peter Hayward Graham Hewitt Douglas Hill Tony Holland Doug Hoskins Marianne How Phil Howell Mark Huckle Dale Hudson Michael Hufton Steve Hulley Howard Hunt Ian Jackson Scott Jamieson Jesse Johal Ian Johnson Mark Jones Ian Jordan Paul Keenan Steve Kelf Maria Kennedy Terry Kingcott John Kingham Haydn Kinsey Jason Kinsey Gary Kirby Ian Knight Martin Lambert Robbie Lamond Mark Laud Paul Lewis Leon Lippett Richard Llewellyn Colin Lockless Alex Love Martin Ludkins Jon McCarthy Paul McClusky Kevin McDade Bill McGuckin Alex McGuffie Lisa McMahon Andy Mackey Wayne Maddocks Steve Matthews Shaun Medd David Meek Colin Meikle Sean Mercer Mike Merrigan David Methven Graham Milne Kevin Mitchell Bob Mitchinson Peter Molloy Martin Moody Stephen Morell Jim Morrison Keith Moss Joe Murphy John Murray Ian Needham Dyllis Newman Ian Nicholls Andy Nightingale Hamish Oliphant Mike Omond Jim Oliver Gary Orton Jim Palmer Richard Parry Mandy Payton Dave Pearcy Alan Peck Graham Peel Andy Perchard Paul Perks Michael Phelan Alan Plant John Plumb Lee Prince Alan Purdie Mike Purdy David Quantril Steve Raper Jim Reed Norman Riches Lee Rigby Julian Ring Dave Roberts Denny Robinson Adrian Rose Shaun Ryan Kevin Sanderson John Savage Sean Scarah Chris Schaschke Andy Scott Mark Scutt Keith Simpson Nat Singleton David Skyner Mark Skyner David Smith Leslie Smith Paul Smith Robin Smith Steve Smith Peter Stalker Cornal Stewart Ian Stewart Bill Stoodley Ruth Swain Colin Tall Gordon Taylor Jane Taylor Keven Theobald Karen Thomas Andy Thompson Ian Thompson Jason Thorne Carl Tidey Steven Tinsley Paul Trantum Jamie Trevis Andy Tribble Andy Varley Jamie Vincent Wilson Walker Gary Ward Graham Ward Steven Welling Metro Werezak Brian White Colin Wight Mike Wigley Martin Williams Mark Wilson Mike Wishart Lawrence Woodward Roy Woods Simon Yarwood Ashtead Group plc 65. Who we are Senior staff - Ashtead Technology & Corporate Office Support Managers Marketing & National Sales Chris Echols Lorraine Monteiro Colin Erskine Ashtead Technology Corporate Rob Phillips Peter Simpson Singapore Neil Christie North America Andy Holroyd Wendy Zielinski Michael Klembus Doug Allen Steve Rozunick Tony Barreca UK Andy Doggett Finance Iain Guthrie Mary Ruth Carlton Technical Mark Emslie Ian Harvey Dave Thomson Ashtead Group plc Corporate Office Leatherhead Robert Clark FCA ATII Company Secretary Ritain Patel ACCA Group Financial Controller Emily Shotter PhD ATII Group Taxation Manager CMIS Derrick Adamson Andrew Wortley Ashtead Group plc 66. Where we are Locations - Sunbelt Alabama Birmingham Birmingham Access Birmingham AWP Mobile Mobile Pump & Power Allegheny Ashland Charleston Charlottesville Roanoke Winchester California Belmont Concord Fontana Fresno Fresno Access Glendale La Mirada Sacremento Capital Frederick Fredericksburg Gaithersburg Manassas McLean Northern Pile Driving Springfield Sterling Central Charlotte Charlotte Access Charlotte AWP Charlotte Pump & Power Concord Gastonia Hickory Indian Trail Lake Wylie Mooresville Pineville Rock Hill Central Florida Convention Services East Orlando Lake Fairview Mid City Orlando Orlando Orlando Access Orlando AWP Orlando Pump & Power Orlando Traffic Safety Sanford Titusville Wintergarden Coastal Little River Myrtle Beach Wilmington Wilmington Access Wilmington Industrial Resources Coastal Atlantic Charleston Charleston Access Coastal Pump & Power Hilton Head Savannah Summerville Delaware Valley Pennsauken Philadelphia Southampton South Jersey Pump & Power Swedesboro Eastern Central Evansville Granite City Indianapolis Kokomo Lansing Layfayette St Louis South Bend Toledo Florida Gulf Ft Myers Ft Myers Access Ft Myers Mast Climbers Oldsmar Tampa Tampa Access Tampa AWP Tampa Pump & Power Inland Mountain Boise Las Vegas Tempe West Valley Access West Valley AWP Mid Altantic Durham Fayetteville Greensboro Raleigh Raleigh Access Raleigh AWP Wake Forest Winston Salem Winterville Northern Baltimore Baltimore Washington Access Finsburg Hunt Valley Laurel Maryland Pump & Power Parkville Waldorf Washington North Florida Brunswick Imeson Park Jacksonville Jacksonville Access Jacksonville AWP Jacksonville Pump & Power Orange Park West Jacksonville North Georgia Atlanta Access Atlanta Pump & Power Atlanta AWP Augusta Augusta Access College Park Conyers Douglasville Lake Lanier Macon Marietta Mid Town Atlanta Norcross North Texas Arlington Austin Dallas Kyle Ohio Valley Cincinnati Clarksville Columbus Dayton Lexington Louisville Louisville Access West Columbus Oregon Albany Eugene Gresham Hillsboro Portland Salem Southern VA Chesapeake Chesapeake Access East Richmond Newport News Richmond Richmond Access Richmond AWP Virginia Beach VA Beach Pump & Power West Creek South Florida Ft. Lauderdale Pembroke Pines South Florida Access South Florida AWP South Texas Beaumont Houston Access Houston AWP San Antonio Tennessee Clarksville Decatur La Vergne Nashville Nashville Access Nashville Pump & Power Rivergate Upstate South Carolina Augusta Columbia Florence Greenville Spartanburg Washington Kent Access Kent AWP Lakewood Lynwood North Bend Pasco Redmond Seattle Pump & Power Tacoma Woodinville Western Central Bloomington Chicago Pump & Power Decatur Des Moines East Peoria Joliet Moline Locations - A-Plant North West Tool Blackpool Ellesmere Port Liverpool North Liverpool City Manchester UK Oldham UK Salford Stockport UK Warrington Worsley North West Plant Astley Barrow Carlisle Deeside Dumfries Egremount Kendal Liverpool Preston Reddish Whitehaven Scotland East Aberdeen St Machar Dundee Dundee Main Road Earlston Edinburgh Edinburgh Main Ladybank Inverness Perth Ashtead Group plc 67. Where we are Scotland West Ayr Cumbernauld Tool Falkirk Glasgow Anniesland Glasgow Baillieston Glasgow South Glasgow Traffic Kilmarnock Stevenson North East Tool Doncaster Gateshead Hartlepool Hull City Leeds UK Leeds City Sheffield City Scunthorpe Sunderland Teeside TH Tyneside Wetherby North East Plant Bradford Tool Bradford TS Hull Immingham Leeds Leeds Stanningly Middlesbrough Newcastle Rotherham UK Sheffield Teeside MP York South East Plant Barking Battersea MP Canterbury Charlton Ford Leatherhead Maidstone Medway New Cross Romford Southampton Staines TT South East Tool Arundel Basildon Fareham Gatwick Heathrow Leatherhead TH Lancing Maidstone Southampton City London Tools Battersea TH Bow TH East London Luton Southwark Staples Corner Watford TH Thames Valley & West Bridgend Bristol Central Cardiff Cardiff City Colnbrook TM Heathrow MP Milford Haven Newport St Phillips Swansea Swindon Thatcham Northern Home Counties Aylesbury Bedford Bedford TM Cambridge Colchester Epping Hemel Hempstead Ipswich Long Stratton Letchworth Milton Keynes Norwich St Albans Watford Westerfield South West Plant Barnstaple Bodmin Bridgwater Exeter Plymouth Plymouth Weymouth North Midlands Tool Burton TH Chesterfield North Derby North Derby South Grantham Heanor Kesteven Leicester City Lincoln City (Tool) Loughborough Central Newark Nottingham East Nottingham West North Midlands Plant Boston Burton Chesterfield South Derby Ascot Leicester Leicester Central Lincoln Loughborough TM Loughborough Mansfield Nottingham Nottingham Central Sleaford Midlands Plant Cheltenham Coventry Northampton Central Nuneaton Oldbury Rugby Stoke Telford Walsall Wood Wolverhampton Worcester Midlands Tool Birmingham City Corby Coventry City Donnington Erdington Hunsbury Shrewsbury Stoke City Stoke Fenton Tamworth TH Wolverhampton Tool Ireland General Plant Carlow Cork Dublin Main Plant Dublin Rail Dublin Tools Galway Limerick Lisburn Ireland Specialist Plant Belfast Acrow Cork Acrow Dublin Acrow Galway Acrow Lisburn Rentarc A-Plant Specialist Products Acrow Aberdeen Acrow Bristol Acrow Cardiff Acrow Chesterfield Acrow Colnbrook Acrow Edinburgh Acrow Glasgow Acrow Leeds Acrow Liverpool Acrow Manchester Acrow Newcastle Acrow Norwich Acrow Romford Acrow Tavistock Acrow Walsall Acrow Groundcare Abergavenny Irvine Manchester Newcastle (Dunston) Peterborough Storrington Big Air Bridgend Derby Stockton Rail Avonmouth Derby Manchester Norwich Romford Scotland (Perth) West London Powered Access Aberdeen Avonmouth Birmingham Brentwood Brentwood Masts Bridgend Kendal Kilmarnock Leeds Manchester Northampton Nottingham Southampton Stockton Tamworth West London Accommodation Alresford Ampthill (Bedford) Basildon Boroughbridge Bridgend Exeter Kilmarnock Lincoln Maidstone Manchester Nottingham West Midlands Power Generation & Rentarc Aberdeen Barton Birkenhead Cambridge Carlisle Derby Eastleigh Lowestoft Manchester Newmains Newport Salford Stockton Walsall (West Midlands) Pumps Falkirk Manchester Leeds Preston Romsey Tottenham Ashtead Group plc 68. Future dates 2002 Annual General Meeting 20 September 2002 Payment of final dividend 30 September 2002 Payment of interim dividend 7 April 2003 2003 Annual General Meeting 26 September 2003 Robert Clark, FCA, ATII Company Secretary Registered Office Ashtead House Business Park 8 Barnett Wood Lane Leatherhead Surrey KT22 7DG Corporate Office King’s Court 41-51 Kingston Road Leatherhead Surrey KT22 7AP Registered number: 1807982 Designed & produced by DS Marketing King’s Court 41-51 Kingston Road Leatherhead Surrey KT22 7AP www.ashtead-group.com RENTALS 

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