Ashford Hospitality Trust
Annual Report 2003

Plain-text annual report

RENTALS Ashtead Group plc King’s Court 41-51 Kingston Road Leatherhead Surrey KT22 7AP www.ashtead-group.com Annual Report & Accounts 2003 “ The Group has had to confront unprecedented internal difficulties in the USA against a background of the worst trading conditions in at least a decade. With the aid of our advisers, the Group’s management has in the space of four months drawn a line under the accounting issue, committed significant additional resources to strengthening the Group’s finance function, conducted a full commercial review of the business and of its balance sheet and negotiated renewed bank facilities with revised covenants reflecting the current trading environment. The Group is a half billion pound turnover business with leading positions in each of its markets. It is once again ready to take advantage of its significant operating leverage as and when economic conditions improve. The Board regrets that the past year has been a difficult one for all the Company’s stakeholders but looks forward to making progress along the road to recovery in the current year. Henry Staunton, Ashtead’s non-executive chairman ” Financial highlights Loss before exceptional items, goodwill amortisation and tax of £1.8m (2002 profit of £28.9m) After exceptional charges of £31.4m, £16.8m of which related to prior years and £7.5m to advisory and commitment fees, the loss before tax was £42.2m (2002 – loss of £15.5m) £68.3m increase in net free cash flow* from 2002 outflow of £29.4m to 2003 inflow of £38.9m Net debt** at 30 April of £622.3m (2002 - £675.3m). At constant exchange rates, debt reduced by £21.2m in the year. Renewed banking arrangements agreed at 30 May providing committed financing through January 2005 * net cash inflow from operating activities before exceptional items, less interest paid, net capital expenditure and tax ** net bank debt, the subordinated, unsecured convertible loan note, finance lease obligations and non recourse funding received under the accounts receivable securitisation Contents 1 Financial highlights 2 Chairman’s report 4 Chief executive’s review 8 Financial review Operational reviews: 20 - Sunbelt 22 - A-Plant 24 - Ashtead Technology Rentals 26 Directors 27 Advisers 28 Directors’ report 31 Corporate Governance Report 34 Directors’ Remuneration Report 40 Statement of Directors’ Responsibilities 41 Auditors’ report 42 Consolidated profit and loss account 43 Consolidated balance sheet 44 Company balance sheet 45 Consolidated cash flow statement 46 Notes to the financial statements 64 Seven year history 64 Senior Management 65 Locations 67 Future dates A N N U A L R E P O R T & A C C O U N T S 2 0 0 3 ▼ ▼ ▼ ▼ ▼ Chairman’s Report The Group is a half billion pound turnover business with leading positions in each of its markets. It is once again ready to take advantage of its significant operating leverage as and when economic conditions improve. The Board regrets that the past year has been a difficult one for all the Company’s stakeholders but looks forward to making progress along the road to recovery in the current year. Results The year to 30 April 2003 has been the most difficult since the The knock on effects of the events of March were significant in inception of the Group in 1984. The effect of slowing economies both the USA and the UK but particularly the latter, given the in the USA and the UK, coupled with more difficult conditions in Group’s status as a UK public company. They are reflected in the the oil and gas sector, made for challenging trading conditions outcome for the year of a loss of £1.8m before exceptional items, particularly against the background of uncertainty about war in goodwill amortisation and tax, and in the scale of exceptional Iraq. Nevertheless all of this was manageable and was being charges incurred and a loss before tax of £42.2m. The prior year managed. What had not been anticipated was the admission in impact of the US accounting issue was £9.4m. A-Plant has also early March by the financial controller of our US subsidiary provided for the cost of the rationalisation of a number of its Sunbelt Rentals, that he had been failing properly to reconcile a businesses and for the centralisation of all of its UK accounting number of balance sheet accounts. The effects of this admission and head office functions at Warrington, the total sum being were immediate. On the following day the Group had been due to £7.4m. In addition, the Group has taken the opportunity to make representations and warranties as part of a normal rollover review the method by which it estimates the likely cost of of part of its debt facility. In the circumstances it was clearly incurred insurance claims in the USA by moving from a case by unable to do so and as a result was put in default of its banking case analysis carried out by appointed independent claims agreements. handling agents to a more conservative actuarial estimate of the likely total cost of the self-insured risk. This has given rise to an It was gratifying therefore to be able to announce on 2 June the additional current year expense of £2.7m and to an exceptional conclusion of the forensic examination and the renewal of our £7.4m charge relating to the brought forward balance. banking arrangements until January 2005. As we noted in our June statement “the Group will Total exceptional costs therefore amounted to £31.4m in the year generate a significant amount of of which £16.8m relates to the year to 30 April 2002 and prior and cash over the next two years and £7.5m to the cost of advisory and commitment fees in respect of the Board expects to refinance the successful renegotiation of the Group’s debt facilities. the senior debt facilities well before January 2005.” Costs relating to the successful legal action in the United States Annual Report & Accounts 2003 of approximately £1m in total have been charged to the profit and the unexpected default under the bank facility. They have loss account over the last two years and no credit has been responded magnificently and our thanks go to all of them. taken in this year’s accounts for the anticipated recovery of these or in respect of the US$15m of damages awarded to the The Board Company by the North Carolina business court as announced on Finally, our congratulations to Philip Lovegrove on being awarded the OBE in the Queen’s Birthday Honours List. Henry Staunton Chairman 15 July 2003 6 May 2003. Dividend It was with regret that the Board in late March withdrew the previously declared interim dividend but it was clearly essential at that time to conserve resources. As announced in early June resumption of dividends in future is dependent upon completion of the refinancing anticipated before expiry of the existing facilities in January 2005. An announcement on future dividend policy will be made once that refinancing has been completed. Staff The Group’s staff across the world have faced unprecedented challenges in recent months in light of the uncertainty caused by . 3 . C L P P U O R G D A E T H S A ● Chief Executive’s Review Having addressed a number of significant coinciding issues the Board looks forward to making progress on the road to recovery in the coming year. The Board is confident that all three divisions will continue to be cash generative and that significant net free cash flow will be generated in the coming year and beyond, with an attendant reduction in debt levels. Divisional performance Revenues EBITDA* Divisional profit** 2003 £m 349.1 178.4 Sunbelt Rentals A-Plant Ashtead Technology 12.0 Group central costs - 2002 £m 382.2 187.0 14.5 - 2003 £m 99.3 48.9 6.1 (4.2) 2002 £m 130.5 60.2 8.4 (4.7) 539.5 583.7 150.1 194.4 2003 £m 32.9 7.9 2.5 (4.2) 39.1 2002 £m 62.6 14.5 4.2 (4.7) 76.6 * before exceptional items and in 2002 excluding the prior year BET lease impact ** operating profit before exceptional items and goodwill amortisation. Additionally in 2002, the Sunbelt figures exclude the prior year BET lease impact. A reconciliation between these figures and the loss before tax for the year is given in the financial review on pages 8 to 11. While it is impossible to determine precisely the trading effects trading conditions were the most challenging for over a decade. of the US accounting irregularities they undoubtedly had an impact on the Group’s performance in the last quarter. On a constant currency basis, total revenues for the year declined 2% and EBITDA by 18%. However, the effect of the weak US dollar increased these reductions to 8% and 23% respectively at These were exacerbated in the second half by the wettest weather conditions on parts of the East Coast since records began. The maintenance of dollar revenues at last year’s levels reflected maintained utilisation levels and the benefit of the actual exchange rates and operating profit before exceptional twenty-three branches opened in the previous year and four in items and goodwill amortisation declined by 49% at actual rates the first half of the current year. These benefits were offset by with similar percentage declines in each division. Actions taken to reduce the cost base included a reduction of 23 in the number of UK branches and a reduction of 7.1% in Group staff numbers. Sunbelt increased pressure on rental rates. The 0.2% decline in Sunbelt’s dollar revenues compared with the collective decline of 6% in revenues reported by the top ten US equipment rental companies in calendar year 2002. Although cost reduction measures were put in place, the drag effect of the additional 27 Sunbelt continued to take market share in the USA although branches reduced Sunbelt’s profitability with its EBITDA margin Annual Report & Accounts 2003 falling to 28.4% (34.1%) and its divisional profit margin to 9.4% accounting problem had an adverse impact on A-Plant, our UK (16.4%). subsidiary, as it damaged the confidence of customers and suppliers. As a result the positive trend achieved in the first half During the last quarter of the year Sunbelt implemented the and beyond was reversed. Full year EBITDA margins were leading IT operating system in the US rental market. This will 27.4% (32.2%) while divisional profit margins fell to 4.4% (7.8%). facilitate improved efficiencies in customer service and cost control through a supplier rationalisation programme in the During the year the integration of the four regional accounting coming year. Capital expenditure will also be kept under tight offices and the UK Corporate and Marketing office into our new control being concentrated on higher margin products as part of Warrington facility was successfully completed on time and a reconfiguration of the rental fleet. within budget. A-Plant’s business was also restructured on a In recent months there has been a better balance between businesses a national presence and our general equipment product basis to give our specialist and tool hire shop supply and demand as major equipment disposal programmes locations a greater focus. by our competitors appear to have been largely completed and dollar revenues have continued broadly in line with those of a A national meeting of UK managers was held in June, supported year ago. A-Plant by a number of key suppliers, to confirm the successful outcome of the banking discussions, to share with them our strategy and business plan and to brief them on a significant new incentive As previously mentioned the knock-on effect of the US programme with a view to increasing market share. The . 5 . C L P P U O R G D A E T H S A ➲ Chief Executive’s Review achievement of this goal has been enhanced by the impending economic conditions. £71.0m was spent on the equipment fleet announcement of a 3 year preferred supplier contract with one of which £58.4m was replacement expenditure and £12.6m for of the country’s largest contractors. The contract has a potential expansion. The average age of the fleet at 30 April 2003 was a value of several million pounds per annum. fraction over four years in both the UK and the US but, in the US, when the longer-life aerial work platform fleet is excluded, Since the beginning of June there has been a steady increase in the average fleet age for the rest of the fleet reduces to slightly the number and value of rental contracts towards the level of below three and a half years. This means that the Group retains early March. a relatively young fleet, which is important at the current difficult stage of the economic cycle. Gains on disposal of fixed assets Ashtead Technology were £2.7m up from £1.5m in the previous year. The offshore oil and gas industry was particularly weak in Technology’s two principal markets, Aberdeen where the effects It is anticipated that capital expenditure in the coming year will were partially offset by serving customers in the West African remain at similar levels but with a higher proportion spent in the sector and Houston. Despite the slow US economy the UK. Significant net free cash flow is also expected. environmental business continued to trade well. Costs and capital expenditure were kept under tight control. Recently we Response to the US accounting issue have seen improvement in the offshore market and Technology’s Immediate action was taken in response to the US accounting management is more optimistic about the future than it has been issue. Sunbelt’s financial controller left the Company. A for some time. Cashflow temporary replacement was installed who continues to provide transitional support to a full time appointee who joined Sunbelt in May. A forensic investigation was undertaken by KPMG The Group generated a net free cash inflow in the year of reporting to the Group and its banks. Deloitte & Touche was £38.9m, a £68.1m turn-round on the previous year’s outflow of also employed to assist the Company in the production and £29.2m. Net debt at year review of detailed business plans across the Group. An end was £622.3m, £53.0m ambitious target date of the end of May was set for the less than the previous year’s determination of the extent of the accounting problem and the £675.3m. At constant conclusion of discussions with the Group’s bankers and the exchange rates the delivery of a renewed bank facility. These deadlines were met reduction was £21.2m. and an amended facility, committed to January 2005, with revised covenants reflecting current trading conditions was put Capital expenditure was in place at the end of May. limited to £85.5m down from £113.8m in the The audit of our financial statements has since been concluded previous year reflecting by PricewaterhouseCoopers and a new senior Group position, Annual Report & Accounts 2003 Director of Financial Reporting, has been created and filled from of significant coinciding issues the Board looks forward to outside the Group. making progress on the road to recovery in the coming year. Outlook The Board is confident that all three divisions will continue to be There are some indications that the worst is over as far as the cash generative and that significant net free cash flow will be economic cycle is concerned. US government statistics for our generated in the coming year and beyond, with an attendant principal market, non-residential construction, show that after a reduction in debt levels. The Group remains a half billion pound 30% decline in the period March 2001 to September 2002, the business with market leading positions which offer significant position has been stable for the last eight months. The operating leverage as market conditions improve. continued large investment in PFI work and the announcement of a significant road-widening programme by the UK government are signs of encouragement as A-Plant continues to develop its major account programme. The offshore market, particularly that in Houston, has picked up in recent months after a slow period. The equipment rental industry tends to lag the economic cycle making it prudent to be cautious. Having addressed a number George Burnett Chief Executive 15 July 2003 . 7 . C L P P U O R G D A E T H S A ● Financial Review Profit & loss account Revenues Group revenues of £539.5m (2002 - £583.7m) were significantly impacted by the weak US dollar. At constant exchange rates the decline in Group revenues was 2%, significantly less than the 8% decline at actual rates. Sunbelt’s revenues declined from £382.2m to £349.1m when measured in sterling but by only 0.2% in US dollars from $548.3m to $547.0m. A-Plant’s revenues declined 4.6% from £187.0m to £178.4m reflecting competitive markets and the decision a year ago to withdraw from certain low return activities. Ashtead Technology revenues reduced from £14.5m to £12.0m reflecting lower activity levels in its offshore markets in the North Sea and Gulf of Mexico. Divisional performance Sunbelt Rentals A-Plant Ashtead Technology Group central costs Central items* Interest Revenues Profit Net assets 2003 £m 349.1 178.4 12.0 - - 2002 £m 382.2 187.0 14.5 - - 539.5 583.7 2003 £m 2002 £m 2003 £m (restated) 32.9 7.9 2.5 (4.2) - 39.1 (40.9) 62.6 14.5 4.2 (4.7) 582.1 218.6 11.3 - - (651.0) (716.4) 161.0 194.5 76.6 (49.5) 2002 £m 652.5 245.5 12.9 - (Loss)/profit before exceptional items, goodwill amortisation, prior year BET lease impact & taxation (1.8) 27.1 Prior year BET lease impact (Loss)/profit before exceptional items, goodwill & tax Exceptional items Goodwill amortisation Loss before tax - (1.8) (31.4) (9.0) 1.8 28.9 (35.6) (8.8) (42.2) (15.5) * Net bank debt, finance lease obligations and convertible loan plus funding received under the debtors securitisation and deferred taxation In the table above divisional performance excludes the prior year with the exclusion of exceptional items and goodwill element of the change in treatment of acquired BET leases amortisation, better reflects underlying divisional performance. because this provides a better comparison between periods. In addition certain costs previously allocated across the operating In the discussion of divisional performance below reference is divisions are now presented separately as this, in conjunction made in each case to the divisional profit unless otherwise Annual Report & Accounts 2003 stated as the operating profit before exceptional items, goodwill during the current US economic slowdown and cost growth as amortisation, central costs and, as discussed above, the prior the new stores opened in 2002 matured. Equipment utilisation year element of the change in BET lease treatment. Divisional was at similar levels to the equivalent period a year earlier. margins are also discussed on the same basis. A-Plant’s divisional profit declined 46% with its divisional profit Total divisional profit including Group central costs declined by margin falling from 7.8% to 4.4%. This decline reflected 49% from a restated £76.6m to £39.1m. At constant rates of continued competitive conditions in its principal markets. exchange the reduction was 45%. Technology’s divisional profit declined 40% in line with the On the same basis Sunbelt’s divisional profit declined 47% in margin remains the highest in the group at 20.8% (2002 – revenue fall in its key offshore markets but its divisional profit sterling at actual rates of exchange but by 43% in US dollars 29.0%). with the remaining 4% decline being due to the weaker US dollar. This decline reflected a reduction in Sunbelt’s divisional Net assets employed reduced over the year reflecting the ageing profit margin from 16.4% to 9.4% largely due to reductions in of the rental fleet by an average of seven months in the year to rental rates caused by the competitive operating environment 49 months at year-end. . 9 . C L P P U O R G D A E T H S A ➲ Financial Review Depreciation and gain on sale of fixed assets Depreciation charge Rental equipment Other assets Sunbelt Rentals A-Plant Technology Exceptional impairment £m 62.2 37.1 3.4 102.7 5.0 107.7 £m 4.2 3.9 0.2 8.3 0.8 9.1 Total £m 66.4 41.0 3.6 2002 £m 71.0 45.7 4.2 111.0 120.9 5.8 - 116.8 120.9 The gain on sale of fixed assets in the ordinary course of trading Adjusted EBITDA declined by 23% in the year reflecting both a this year was £2.7m compared with £1.5m in the previous year. reduction in EBITDA margins from 33.3% to 27.8% and the Staff costs Staff costs constitute the largest single expense of the business and rose 0.5% to £195.0m (2002 - £194.0m). The average number of employees in the year reduced from 6,393 to 6,386 with 6,078 on the payroll at 30 April 2003 (2002- 6,545). Staff costs include profit share of £5.9m (2002 - £9.0m). EBITDA before exceptional items EBITDA before exceptional items, which is not an accounting measure under GAAP but is presented here because it is an important measure of performance utilised in the bank covenants under the Company’s senior debt facility, may be reconciled to the loss before tax for the year as follows: Loss before tax Interest payable Exceptional items Goodwill amortisation Depreciation excluding exceptional impairment EBITDA before exceptional items Less: amount relating to prior year 2003 £m (42.2) 40.9 31.4 9.0 2002 £m (15.5) 52.4 35.6 8.8 111.0 150.1 120.9 202.2 BET lease impact - (7.8) impact of the weak US dollar which meant that Sunbelt’s 2003 EBITDA before exceptional items was some £9.1m less than it would have been if measured at the rates of exchange which prevailed during 2002. At constant rates of exchange the reduction in EBITDA before exceptional items was 18%. Net interest payable and similar charges Bank and finance interest payable (net) Accrued interest and amortisation on convertible loan note Prior year BET lease interest Exceptional costs 2003 2002 £m £m 33.2 41.9 7.7 7.6 40.9 49.5 - 1.9 2.9 3.0 42.8 55.4 Bank interest payable relates primarily to the interest payable on the variable rate, secured bank facility. Interest was payable under this facility until March at an average premium of 250 basis points over three month LIBOR for the currency in which the loan is drawn. Thereafter, an additional default interest premium of 1% applied, totalling £0.4m which is included in EBITDA excluding prior year BET lease impact (“Adjusted EBITDA”) 150.1 194.4 exceptional costs. Annual Report & Accounts 2003 Interest on US$250m of this bank debt has been fixed at method for self insured costs (see exceptional items below). 6.825% by three year forward interest rate agreements entered Application of the new estimation method increased the into in August 2000. The impact of these swaps is recognised provisions made for self insured costs in the current year by rateably over their life as part of bank interest payable with the £2.7m meaning that a profit of £0.9m before exceptionals and amount recognised in the year totalling £8.4m (2002 - £6.3m). goodwill amortisation would have been reported had the The average borrowing rate experienced during the year on bank estimation basis not been changed. borrowings was approximately 6% (2002 - 7%) reflecting predominantly lower US interest rates. Exceptional items Interest is payable on the £134m subordinated convertible loan 2003 2002 £m £m note, due 2008, held by Rentokil Initial plc at a fixed rate of Prior year impact of the US accounting issue 9.4 5.25% per annum (£7.0m annually) and also includes a further annual non-cash charge of approximately £0.6m representing the amortisation over the life of the loan note of the difference between its fair value at date of issue and its £134m redemption Brought forward impact of change in estimation method for US self insurance Advisory and other fees relating to the Company’s debt facilities UK business rationalisation 7.4 7.5 7.4 - - - - value. Rentokil Initial plc agreed in May 2003 to defer receipt of (Profit)/loss on disposal of fixed assets the semi-annual interest payments due on this facility Exceptional interest costs commencing with the payment due on 31 March 2003 until the earlier of the date on which the Company’s secured bank facility (0.3) 32.6 - 3.0 31.4 35.6 is refinanced and 31 January 2005. This interest will, however, Details of the principal current year exceptional items are as continue to be accrued in the accounts. follows: Exceptional interest costs in 2003 comprise the 1% default The final prior year impact of the US accounting issue was interest payment discussed above together with the fees paid in £9.4m of which an estimated £4.9m relates to the 2001/2 March and April to certain members of the bank group. financial year and £4.5m to earlier years. The adjustment is Exceptional interest costs in the previous year comprised comprised of the following errors in the balance sheet at 30 variation fees payable in connection with the covenant April 2002: (1) an overstatement of fixed assets by £2.4m; (2) amendments agreed in that year. an understatement of debt by £1.4m; and (3) an (Loss)/profit before exceptional items, goodwill Significant enhancements have been made to the controls at amortisation, prior year BET lease impact and tax Sunbelt in light of the accounting problems. understatement of trade creditors and accruals by £5.6m. Reflecting the reduction in divisional profit, there was a loss for The method used to estimate the provision required in the year before exceptional items, goodwill and tax of £1.8m relation to the self insured element of the Group’s US (2002 – profit of £27.1m before the prior year BET lease impact insurance programme has been changed in the year from of £1.8m). This loss is stated after applying the new estimation the previous case by case estimates by the appointed . 1 1 . C L P P U O R G D A E T H S A ➲ ● ● Financial Review independent claims handling agent to an actuarial estimate withdrawal from individual locations undertaken with of the likely total cost of the self insured retained risk based previous profit centre closures having been the combination on previous years’ experience adjusted for cost inflation and of two profit centres at the same site under a single business growth. The impact of this change is described manager. Additionally A-Plant’s previous four regional more fully in the financial statements. The increase in the accounting centres were all shut and their functions amount that would have been provided at 30 April 2002 migrated to the new centre at Warrington. £1.0m of the total under the new estimation basis over the amount which was cost relates to vacant property rental costs which will only actually provided last year is £7.4m which is reported as an be paid in future periods. exceptional item resulting from the adoption of the new basis for estimating the liability. Loss before tax After the above exceptional items, the loss before tax for the Advisory and other fees relating to the Company’s debt year was £42.2m (2002 – loss of £15.5m). facilities comprise principally the professional advisory costs incurred in resolving the defaults under the Company’s debt Taxation facilities resulting from the revelation of the US accounting Reflecting one of the benefits of the capital intensive nature of issue together with fees paid to debt providers. All these the Group’s operations, the current tax charge continues to be costs have been accounted for in the year ended 30 April low at £0.3m. No significant current tax payments are expected 2003 save for fees which only became payable conditional in the foreseeable future due to the continuing availability of tax on execution of the agreements resolving the defaults which losses in the US and unclaimed tax depreciation in the UK and occurred on 30 May 2003. Under FRS 12 these fees, to ongoing benefits arising from the structure of the BET USA totalling an additional £6.8m (£2.9m of which has since been acquisition. paid and £3.9m which will be payable at the time the forthcoming refinancing is completed) are required to be The total tax credit for the year is £9.0m (2002 – credit of accounted for as exceptional items in 2003/4 as they only £19.2m) and predominantly represents deferred tax credits become due in that financial year. This caption also includes arising in the United States. The Group remains in a net £0.4m of default interest cost. deferred tax loss position in the UK and is consequently unable to recognise any credit for its UK tax losses. This inability to UK business rationalisation relates to the cost of A-Plant’s take credit for the UK tax loss position explains why the overall rationalisation of a number of its businesses and to the effective tax rate (based on pre- goodwill profits) of 27.1% is centralisation of all of its UK accounting and head office less than the UK statutory rate of 30%. For the same reason the functions at Warrington. Following a strategic reassessment overall effective tax rate will remain volatile in future dependent 23 profit centres were closed in the second half under the on the profit mix between the UK and the US. programme announced in January, primarily relating to areas where A-Plant was geographically over-represented. This Earnings per share major closure programme was the first large scale The basic loss per share computed by reference to the FRS 3 Annual Report & Accounts 2003 ● ● loss was 10.3p per share (2002 – profit of 1.1p per share). The loss per share computed on the pre-tax loss before exceptional items and goodwill amortisation less a notional 30 per cent tax credit was 0.4p per share (2002 – EPS of 6.2p per share). This additional measure of earnings per share is presented as the directors believe that to do so is helpful to users of the accounts. Dividend No dividend is recommended in respect of the year (2002 – total dividend of £11.3m at 3.5p per share). As announced on 2 June 2003, resumption of dividend payments is dependent on the completion of a refinancing of the Company’s senior debt facility. Balance sheet Fixed Assets Total additions to fixed assets in the year were £85.5m (2002 - £113.8m) of which £71.0m (2002 - £98.0m) was spent on rental equipment as follows: Sunbelt A-Plant Technology Expansion Replacement 2003 £m 11.3 - 1.3 12.6 £m 34.5 22.4 1.5 58.4 Total £m 45.8 22.4 2.8 71.0 Expansion Replacement 2002 £m 30.8 10.6 3.4 44.8 £m 36.2 16.1 0.9 53.2 Total £m 67.0 26.7 4.3 98.0 Capital expenditure in the year was restricted in light of the charge and will amount to approximately £80m. This will still be difficult market conditions faced by all of the Group’s three sufficient to complete a significant replacement programme and divisions. The Group has been able to lower capital expenditure will result in the fleet ageing by between six and seven months in this way without harming the business because it entered the by 30 April 2004. slow down with a young rental fleet. At 30 April 2003 the average age of the fleet was 49 months. Current assets In the coming year the Group currently anticipates that capital to £11.6m (2002 - £12.9m) and trade debtors and prepayments expenditure will again fall below the level of the depreciation (excluding non-recourse financing received under the accounts Stocks of resale items, parts and consumables reduced by 10% . 3 1 . C L P P U O R G D A E T H S A ➲ Financial Review receivable securitisation discussed further under cash flow and when finalised by the Court which is expected in late Summer or net debt below) were 5% lower at £104.3m (2002 - £110.7m). early Autumn 2003. All litigation costs (totalling over £1m) have Debtor days for the Group were 60 days at 30 April 2003 (2002 – been expensed by the Company since July 2000 when the 58 days). The bad debt charge as a percentage of turnover was action was commenced. 1.6% (2002 - 1.4%). Cash flow and net debt Trade and other creditors Net cash inflow from operations before exceptional items Group creditor days declined from 135 days at 30 April 2002 to reduced 22% to £157.3m (2002 - £202.0m). This reflected good 115 days at 30 April 2003 reflecting lower capital expenditure control of working capital, particularly receivables, throughout levels. Suppliers continue to be paid in accordance with the the year. Exceptional items paid in the year were £4.4m. individual payment terms agreed with each of them. The total amount payable within trade creditors, bills payable and accruals Interest paid in the year (excluding exceptional costs and, in at 30 April 2003 relating to the purchase of rental equipment is 2002, prior year BET lease impact) fell to £41.4m (2002 - £46.2m) £33.3m (2002 - £60.7m). and there was a small tax refund of £0.7m (2002 – payment of £0.7m). Cash payments to acquire fixed assets virtually halved Litigation from £203.3m to £107.1m reflecting the impact of the active The North Carolina business court issued a ruling in May 2003 ageing of the fleet undertaken in the past two years. provisionally awarding Sunbelt Rentals damages of $5m tripled under State law to $15m in a dispute with Head & Engquist. The Proceeds from the sale of fixed assets decreased from £39.2m events subject to litigation date back to December 1999 prior to to £29.4m but, as reported a year ago, last year’s total included the acquisition of BET USA by the Company when the former two special non-recurring items. Excluding these items, last president of its BPS division joined Head & Engquist as year’s disposal proceeds totalled £26.6m so this year’s £29.4m president of their aerial work platform division and over the represents a good result given the lower level of new subsequent six months led the recruitment of over 100 former expenditure. BPS staff in a concerted raid on BPS’s business and staff. Net debt Subsequent to the Court ruling Head & Engquist (which is registered with the SEC) announced that it had booked a provision of $17m against the litigation and related costs and Net bank debt Non-recourse finance under debtors securitisation Finance lease obligations that it had amended its bank 5.25% unsecured convertible loan note, facility to avoid breaching its covenants as a result of this charge. It also announced that it intended to appeal the ruling due 2008 Total net debt 2003 £m 2002 £m 412.6 515.0 57.5 22.4 492.5 129.8 622.3 - 30.6 545.6 129.7 675.3 Annual Report & Accounts 2003 Aided by the weak US dollar, total net debt levels, which we (and $50m reduction in revolver commitment at 31 May 2003 our bankers) define to include non-recourse funding received which was effected by cancellation of part of the undrawn under the accounts receivable securitisation, fell to £622.3m (2002 - £675.3). Measured at constant (30 April 2003) exchange rates, total net debt was reduced in the year by £21.2m. Further significant debt repayments are expected in both 2003/4 and 2004/5. revolver commitment referred to above plus the usual 1% ($3.75m) term loan amortisation on the same date; a further $50m of reduction in revolver commitment at 31 May 2004 which is to be effected by cancelling the remaining undrawn revolver commitment of $18m and $32m payable from cash generation over the coming year. The Company has also agreed with the bank group not to use Bank loan facilities the $18m undrawn revolver commitment in the period prior The Group’s principal bank facility is the committed secured to its expiry; and multi-currency loan facility entered into at the time of the BET acquisition on 1 June 2000. Interest is payable on this facility at variable rates linked to underlying market rates traded in the London interbank market. additionally at 31 May 2004 the Company has now committed to make a $28m amortisation payment to the term loan holders so as to provide them with the same pro rata paydown in 2004 as the revolver banks are due to receive. At 30 April 2003 £417.9m (2002 - £506.7m) was drawn under the To the extent that cash is generated from transactions outside facility with the remainder of the commitment (£42.5m) undrawn. the normal course of business prior to 31 May 2004, all or part The effects of the surprise disclosure by Sunbelt’s financial controller in early March that he had been failing properly to reconcile a number of balance sheet accounts proved immediate. On the following day, the Group was due to make representations and warranties as part of a normal rollover of part of its debt facility. In the light of the disclosure of the amortisation payments due at that date will be accelerated and funded from such proceeds as they are received. The facility is secured by means of fixed and floating charges over substantially all of the Group’s assets. Under the terms of the facility, the Group is required to demonstrate compliance with certain financial covenants comprising the ratios of EBITDA to interest and to senior and total debt levels, the ratio of debt inaccuracies in Sunbelt’s reported accounts, it was impossible levels to the value of tangible assets, a maximum capital for these representations to be made and as a result the Group expenditure commitment and a minimum cash flow requirement was put in default of its banking agreements. on a quarterly basis. These ratios were reset at the time the Following the amendment to the bank agreement agreed on 30 May 2003 resolving the defaults, the facility now terminates on 28 January 2005, four months earlier than the previous revolver termination date of 31 May 2005. Amortisation of the facility prior to repayment now comprises: banks waived the defaults resulting from the revelation of the US accounting issue and the Board is satisfied that they provide the appropriate financial flexibility. Interest is now payable on borrowings under the facility at 300 basis points above LIBOR. This margin was increased from the average 250 basis point margin which applied prior to the default. . 5 1 . C L P P U O R G D A E T H S A ➲ ● ● ● Financial Review The Group also has a secured but uncommitted bank overdraft practice, however, the programme was continued throughout the line provided alongside the main secured facility as well as period of default and Banc of America agreed on 30 May 2003 various customary ancilliary facilities. At 30 April 2003 £4.8m to waive its cross default rights and to recommit the was outstanding under the overdraft facility leaving £6.2m securitisation until 28 January 2005. A funding charge of LIBOR undrawn. Subsequently written confirmation was received from plus 200 basis points now applies to amounts received under the provider of this facility indicating their intention to continue to the securitisation (previously LIBOR plus 135 basis points). make it available until January 2005 so long as the quarterly financial covenants under the main bank facility are met. 5.25% secured convertible loan note, due 2008 Part of the consideration for the BET USA acquisition was The Board considers that the satisfied by the issue of the £134m nominal value 5.25% renewed facilities provide unsecured convertible loan note, due 2008 which is currently adequate funding for the held by the vendor, Rentokil Initial plc (“Rentokil”). No interest group and that the anticipated was payable on this loan note in its first year of issue but from 1 future cash generation, June 2001 it has borne interest at a fixed discounted rate of together with current cash 5.25% per annum. It is convertible into 89.3m ordinary shares at balances and undrawn amounts, are sufficient to meet the any time after 1 June 2001 at the holder’s option (giving an agreed facility reductions. effective conversion price of 150p per share) and is repayable at par in June 2008 if not previously converted. The Company’s The Board intends to refinance the existing bank facilities well consent is required for any transfer of the convertible loan which before their expiry in January 2005. In light of the significant would result in the transferee holding, on conversion, ten percent cash generation this year and that which is expected in the or more of the Company’s share capital. forthcoming two years, the Board expects that it will be able to complete the necessary refinancing before the existing facilities Additionally, certain orderly marketing restrictions also apply to expire. ordinary shares issued through conversion. Accounts receivable securitisation Under the terms of the inter creditor agreement executed in June On 14 June 2002 the Company and certain of its subsidiaries 2000 between the senior banks, Rentokil and the Company, completed a rolling £60m accounts receivable securitisation with Rentokil had agreed that the banks would have the right to issue Banc of America Securities. Under the securitisation programme a notice preventing the Company from making an interest the Group receives non-recourse funding secured against its UK payment to Rentokil in circumstances where there was a default and US receivables. under the Senior Credit agreement. Rentokil had also agreed The securitisation programme contained a cross default clause able to take any action against the Company for a minimum with the effect that, from 13 March 2003, the securitisation period of 180 days. On 31 March 2003 the banks issued the provider could have ceased to purchase future receivables. In relevant notice with the result that the Company did not make that in the event of such a notice being issued it would not be Annual Report & Accounts 2003 the £3.5m interest payment due to Rentokil on that day. consequence the employer’s contribution was increased from Subsequently agreement was reached with Rentokil to defer 5% to 11% of salary effective 1 November 2001 which was the both this payment and all subsequent payments due up to level recommended by the actuary to address the funding January 2005 (a total of £14m) until the earlier of the point at shortfall. Like most similar UK plans, the plan remains mostly which the Company refinances its existing senior debt facilities invested in equities and in light of the poor returns on equity and 31 January 2005. investments in the two years since the last valuation the Pensions Company agreed earlier this year that the employer’s contribution would be raised to 15% of salary effective The Group operates pension plans for the benefit of its 1 May 2003. employees and made contributions totalling £3.8m to these plans in the year. Except for the old UK plan which now covers This is the second year disclosure is required under the approximately 500 UK employees out of the UK total of 2,350 transitional provisions of the new UK accounting standard on and plans affecting two directors, these plans are defined pensions (FRS 17) of the actuarial position of the plan updated contribution plans. to 30 April 2003. In providing this disclosure, FRS 17 requires use of actuarial methods and assumptions which differ from The last triennial valuation of the existing UK defined benefit plan those used by the actuary for the triennial valuations used for (as at 30 April 2001) showed a deficit of 6% (measured as the funding purposes. Reflecting these differences and the poor shortfall in assets compared with liabilities) under the best performance in the past two years of the UK stock market (in estimate assumptions required to be used under SSAP 24 for which most of the plans’ assets are invested) the deficit in the accounting purposes and 16% under the conservative Company’s defined benefit plans at 30 April 2003 on the basis assumptions used by the actuary for funding purposes. In required by FRS 17 was £14.5m (2002 - £7.1m). . 7 1 . C L P P U O R G D A E T H S A ➲ Financial Review Operating statistics Profit centre numbers Year end staff numbers 2003 2002 Sunbelt Rentals A-Plant Ashtead Technology Corporate office 193 249 7 - 188 268 7 - 2003 2002 3,671 3,886 2,314 2,573 81 12 71 15 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 combination of fixed and variable rates of interest to provide 449 463 6,078 6,545 some element of protection against sudden changes in the level of interest rates. New derivative transactions are only entered Financial instruments into with the authority of the Group’s Finance and Administration The Group’s financial instruments comprise borrowings, some Committee and the Finance Director provides a regular report on cash and liquid resources, and various items such as trade treasury matters to each Board Meeting in which the need for debtors, trade creditors and bills of exchange payable, etc., that new derivative transactions is reviewed and discussed. arise directly from its operations. The main purpose of these financial instruments is to provide finance for the Group’s At 30 April 2003 some 54% of the Group’s borrowings were at operations. fixed rates (comprising $250m of the bank debt on which In addition to the foregoing, on 24 August 2000 Ashtead Group as described above, the £134m convertible loan on which plc entered into forward rate agreements with LloydsTSB Bank interest is fixed at 5.25% and the £22.4m of finance lease debt plc and Bank of America under which the variable interest rates which carries an average interest rate of 7.9%). interest rates have been fixed for three years from August 2000 payable under the bank facility on a total of US$250m of borrowings were exchanged for a three year fixed interest rate of Liquidity risk 6.825%. On 5 March 2003 a further three year hedge The Group’s policy is to ensure continuity of funding which is commencing 1 May 2003 was entered into with Bank of America currently provided through the committed secured loan facility on a total of $100m of borrowings at a three year fixed interest which now runs for 18 months to January 2005 and the £134m rate of 2.5%. convertible loan note which now has four years and eight months until its maturity. As discussed above the Board Derivative transactions are only undertaken for the purposes of expects to refinance the bank debt facilities before their January managing funding, interest rate 2005 expiry. and currency risks. The Group does not trade in financial Foreign exchange risk management instruments. The main risks With a significant portion of the Group’s operations based arising from the Group’s outside the UK, the Group faces currency risk on its non-sterling financial instruments are interest, liquidity, counterparty and net assets as the translation of overseas subsidiaries can have a foreign currency risks. The Board reviews and agrees objectives considerable effect on the Group’s reported net assets. The main Annual Report & Accounts 2003 exposures are to US dollar and Euro exchange rates against considered on an individual basis. sterling. Counterparty risk The Group seeks to mitigate the effect of these structural The Group is exposed to credit risk related losses in the event of currency exposures by matching the currency of third party non-performance by a counterparty to its interest rate hedging borrowings against the currency of earnings generated from financial instruments. This risk is managed by entering into assets. At 30 April 2003, total net borrowings (excluding the derivative transactions only with institutions with a strong credit securitisation funding) of £575.1m were drawn as to a net rating and by limiting the total exposure to any single £389.4m in US dollars, £18.4m in Euros and £167.3m in sterling. counterparty. At 30 April 2003 the counterparties to the Group’s interest rate hedging transactions were LloydsTSB Bank plc and The Group’s exposure to exchange rate movements on trading Bank of America who are not expected to fail to meet their transactions is relatively limited. All Group companies invoice obligations. revenues in their respective local currency and generally incur expense and, except in the Republic of Ireland, purchase assets in their local currency. Consequently the Group does not routinely hedge either forecast foreign exchange exposures or the impact of exchange rate movements on the translation of overseas profits into sterling. Foreign exchange risk on significant non-trading transactions (eg acquisitions) is Ian Robson Finance Director 15 July 2003 . 9 1 . C L P P U O R G D A E T H S A ● RENTALS Operational Review - Sunbelt Rentals This past year has been the most challenging year that the I am pleased once again to report on the continued growth of Sunbelt management team has had to manage through in its our specialty rental businesses, Pump and Power Services, history. Although the accounting irregularities we experienced Scaffold Services and now also the Industrial Resource Group, and our planned IT migration were difficult in themselves, the US which is a new specialty we added in the past year. Pump and economy also proved to be extremely challenging. After an Power has now grown to 14 locations and has continued to extensive internal and external investigation into the accounting expand its product offerings. It achieved same store sales irregularities, we have isolated the issues and have taken growth of 25%, while also continuing to deliver a higher return definitive actions to ensure that our accounting functions are on investment than the company average. Pump and Power now robust enough to prevent any repetition. I would like to now accounts for 6% of total revenues. I expect the current thank the Sunbelt team for their determination in continuing to Pump and Power management team to continue this growth do what they do better than any in our industry, which is to both via new locations and also by expansion of our current focus on the customer, through this difficult period. I also product line, without sacrificing the returns we have traditionally acknowledge the difficulties our shareholders and employees achieved. have faced and would like to thank them for their support and loyalty through this challenging time. Scaffold Services now represents 17% of total revenue broadly similar to the level of last year despite a significant decline in Sunbelt’s revenues and divisional profit declined from £382.2m industrial maintenance activity. The focus has been on safety, to £349.1m and £62.6m to £32.9m respectively. These sterling operational improvements and continued integration with the results were impacted by the weak US dollar as in US dollars core Sunbelt business. Scaffold Services continues to be an revenues declined only marginally from $548.3m in 2002 to important part of our overall strategy by allowing diversification $547.0m. Divisional profit in US dollars declined 43% from of both product and services offered to our current and growing $89.8m to $51.5m. customer base. The proof of the strength in Sunbelt comes from the operational The Industrial Resource Group in its first year of operation performance exhibited in a year that saw the worst construction comprises two locations. This business was developed to serve and industrial economic conditions in most of our life times. the specialty industrial tool and equipment needs of the Sunbelt has outperformed both the published revenue figures industrial service contractor. Although accounting for less than from our peer group in the United States and the US economy. one percent of total revenue, I believe it will continue to grow Sunbelt held its revenues rapidly and strengthens our ability to deliver service to our virtually level at a time when customer at an attractive return. our primary market - non- residential construction – saw a While the General Tool businesses performed well given the 13% deterioration and the top difficult market conditions, growing their revenues 4% over the ten equipment rental previous year, we continued to see significant rate pressure in companies - we are number four - reported a 6% decline in our Aerial Work Platform business whose revenues reduced 7%. overall revenues. In both cases our relentless focus on customer service helped Annual Report & Accounts 2003 us gain share in most markets in which we operate. increasing our return on invested capital. In the fourth quarter of the year just ended we successfully I would like to end by thanking all the members of the Sunbelt migrated both our financial and point of sales system to the team for achieving the goals we set for ourselves in making industry leading US rental software package. This was a major Sunbelt a safer workplace for our team members and our project for the company, which involved training over 1,000 of customers. This was accomplished by focus on staff turnover, our staff on the new system. As expected we have seen an training and continued commitment to safety. I have total immediate improvement in our customer service levels and confidence we will meet and exceed the goals we have set for productivity in our transactional processes resulting from this the coming year. investment. Looking forward to this year: we plan to leverage the new IT system to allow Sunbelt to launch strategic programs which will further improve our service levels to the most important part of our business - the customer. These programs include a rental related accessory and consumables sales program of high margin, impulse purchase items that will be sold from our existing infrastructure. It also includes a program that helps Our business plan for the coming year is built around the expectation that we will not see any improvement in the economy. We believe, however, that our competitors will continue to rationalise their businesses through store closings and fleet disposals from which we should benefit. All capital investment will be focused on fleet replacement in higher return items as we continue to reconfigure the fleet. I am committed to leveraging the benefits and efficiency gains from our new IT management determine the correct minimum stocking quantities system and the reduction of costs through supplier for high return rental assets and thus increases efficiency and customer service. rationalisation. This plan will be executed whilst continuing to focus and improve upon what Sunbelt is known for - its unequalled customer service. We are also continuing to focus on the reconfiguration of the rental fleet towards higher return assets while keeping tight control over capital spending and emphasising the need for controlled disposals of lower return assets. The entire management team’s profit share program is now based on Bruce Dressel President and Chief Executive - Sunbelt Rentals 15 July 2003 . 1 2 . C L P P U O R G D A E T H S A ● Operational Review - A-Plant The market remained competitive and this, along with our Towards the end of the year, to increase operational efficiency, continued strategy to reduce our exposure to certain high 23 profit centres were closed in geographical areas where we volume low return markets, resulted in a 4.6% reduction in had an overlap of coverage of the same product type. This revenues year-on-year. The decline was predominantly in our closure programme represents the first withdrawal from Main Plant and Tool Hire businesses. A number of our Specialist individual locations we have ever undertaken. Previous profit businesses saw growth in double digits and have the potential to centre closures having been the combination of two profit improve further in the coming year. Although we reduced our centres (eg Main Plant and Tool Hire) at the same location into a cost base year on year, we were unable to mitigate fully the lost single profit centre managed by one manager. The assets from revenues and consequently divisional profit declined from the closed locations have been redistributed to locations that £14.5m last year to £7.9m in 2003. have the capacity to do more business from their fixed cost As we focused on our three key product areas, Main Plant, Tool as markets and customers are now being developed using the base. The full benefit of the improved efficiency is ahead of us, Hire and Specialist products (which includes Rail, Power transferred fleet. Generation, Pumps, Welding, Accommodation, Powered Access, Acrow Formwork and Falsework, Groundcare, Bigair, Trenchless Undoubtedly the events following the announcement of the Technology and Traffic), a great deal of work has been done to accounting issues in the US, such as the fall in share price, UK realign our fleet from a geographical to a product based press speculation on the future of A-Plant and the Group, and structure. This in turn has helped keep expenditure on rental competitors targeting our staff and customers all had a equipment under control at £22.4m. As a consequence despite significant effect on our business. Since the Group’s our reduced profitability we remained significantly cash positive announcement on 2 June that these issues have been resolved, in the year. we have taken several steps designed to rebuild our team’s confidence. I would like to thank all our staff, customers and suppliers for their commitment, loyalty and efforts during this difficult period. The Tool Hire rebranding programme at our 64 dedicated locations was completed on schedule last Autumn and the Tool Hire business was then split out last December as a separate division under the management of one Managing Director. During the year we also undertook the consolidation of the four separate accounting offices and A-Plant Marketing Department into one single office, based in Warrington. This not only benefits our staff but also offers an even greater level of service to our Annual Report & Accounts 2003 customers who now only need to deal with a single accounting office nationally. Our strategy to develop major customers continued. This customer group accounted for 23% of our total revenue in the year. 23 national accounts were renegotiated in the period and we successfully won 8 new accounts. Our contracts with national account customers cover an average period of 2 years. The future As will be clear from the report above, this has been a year of many changes to the structure of A-Plant and has also been a period of consolidation and bedding-in. The market will remain competitive in the coming year but I believe we are now well positioned as a business to operate in the tough conditions we expect, with the necessary structural changes made. Our management structure and business are now clearly aligned to our core product areas, which gives us the ability to manage much more efficiently. We expect this to help us improve revenues and profits in the coming year. Sat Dhaiwal Chief Executive, A-Plant 15 July 2003 . 3 2 . C L P P U O R G D A E T H S A ● Operational Review - Ashtead Technology Rentals Overall our revenues declined 17% in difficult markets last year continued to develop its product range and remains the largest which, given the relatively fixed cost nature of the rental rental company of its type in the region. business, inevitably led to a decline in EBITA margin from 29% to 21%. Divisional profit reduced from £4.2m to £2.5m. Our biggest disappointment was the performance of our Houston operation. As with our Aberdeen operation, the poor Offshore & Inspection second half of the last financial year continued throughout this This stream of our business had a particularly difficult year as year. A severe decline in the Gulf of Mexico offshore market was the number of both Construction & Inspection, Repair & exacerbated by the effect of the general US economic decline Maintenance projects fell from the previous year. In some of our on our onshore inspection business. markets the over-supply of equipment has led to very damaging competitive pricing. As the offshore business operates world- Environmental wide, all three of our offshore operations suffered to a greater or Once again we saw an increase in our Environmental revenues. lesser extent the effects of this over-supply. Although the effects of the US recession were not uniform Our Aberdeen operation, which serves Europe & Africa, is our locations failed to increase its revenues and that was against a largest offshore business. The poorer second half reported last record prior year. The businesses have continued to benefit year for this business continued into this year. The North Sea from a focus on rental and a widening product range. across our four North American locations only one of the market appears to be in a steady decline as no large-scale developments have been brought to the market again. Africa’s Prospects deepwater developments have continued to give us a steady Currently we are trading ahead of last year in all of our level of business but could not compensate for declines in businesses. Offshore pricing remains competitive but against a Europe. background of rising demand. The environmental market is also Singapore fell back from the previous year’s strong performance. opening a further location in the Bay area of Northern California. However, our performance was encouraging against a Overall we believe we can deliver profit improvement in the improving in North America and we have recently expanded by background of coming year. concerns about political and health risks in the region. There is still an underlying strength in the offshore market as energy demand increases across South-East Asia. Ashtead has Rob Phillips Chief Executive - Ashtead Technology Rentals 15 July 2003 Annual Report & Accounts 2003 . 5 2 . C L P P U O R G D A E T H S A Directors 9 4 8 3 5 7 6 2 1 1. Henry Staunton, BA, FCA, Non-executive Chairman Investments plc and Chairman of the Governors of the Surrey Aged 55, Henry Staunton, BA, FCA, is Finance Director and Deputy Chairman, Media Ventures of Granada plc. Henry Staunton is chairman of the Nominations Committee and a member of the Finance and Administration, Audit and Institute of Art and Design, University College. George Burnett is also Chairman of the Finance and Administration Committee and a member of the Nominations Committee. Remuneration Committees. The re-election of Henry Staunton, 3. Ian Robson, BSc, FCA, Finance Director who retires by rotation in accordance with the Articles of Aged 44, Ian Robson, BSc, FCA, was appointed Finance Association, as a director of the Company will be proposed at Director on 26 June 2000 having joined the Group on 22 May the Annual General Meeting. 2000. For the preceding four years he held a series of senior financial positions in Reuters Group plc and before that he was a Executive Directors partner of Price Waterhouse (now PricewaterhouseCoopers LLP). 2. George Burnett, MA, LLB, CA, Chief Executive Ian Robson is a member of the Finance and Administration Committee. The re-election of Ian Robson, who retires by Aged 56, George Burnett, MA, LLB, CA, was Managing Director rotation in accordance with the Articles of Association, as a from May 1984 until being appointed Chief Executive in February director of the Company will be proposed at the Annual General 2000. He is a non-executive director of Henderson Strata Meeting. Annual Report & Accounts 2003 Future Dates 2003 Annual General Meeting - 22 September 2003 2004 Annual General Meeting - 20 September 2004 Company Secretary Robert Clark, FCA, ATII Registered Office King’s Court 41-51 Kingston Road Leatherhead Surrey KT22 7AP Registered number: 1807982 . 3 . C L P P U O R G D A E T H S A Designed & produced by DS Marketing - 07000 887700 

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