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000696 - City News 25/9/08 16:31 Page 1
CITY
NEWS
MARKET MAYHEM
Catherine Stratton assesses the current state of the Stock Market and considers
Ashtead’s first quarter results.
The hurricanes in the Caribbean this September seem like breezes the company indicates that yields have fallen by 5%, indicating
compared with the turbulence sweeping through the world’s Stock lower rental rates. In the UK, A-Plant has invested heavily in the past
Markets. At the time of going to press, the volatility has been given year and its fleet is now 16% larger, with the yield falling by 8%.
further impetus by growing uncertainty over whether the US During the three months, Group capital expenditure was £108.5m
government will be able to steer its massive rescue package through (2007: £124.2m).The average age of the fleet at the end of the period
Congress and, even if it succeeds, there remains the enormous was 31 months, compared with 29 months a year earlier. The
question of the long term consequences for the US economy and, company indicated that gross capital expenditure for the full year
by implication, for the rest of us. would be £230m (approximately two-thirds of the level of last year)
and would be predominantly replacement expenditure.
SHARE PRICE PERFORMANCE (23 September 2008)
Company Share Price Market 12 month 12 month
Commenting on the results, Ashtead Group Chief
Capitalisation (£m) High Low
Executive Geoff Drabble concluded, “despite the current
Aggreko 576p 1.610 745p 421.5p
Ashtead 81p 421 126.5p 49.5p
economic uncertainty, our operating businesses continue
Speedy 440p 224 1135p 383.75p
to perform well and our financing costs continue to be
Vp 200p 92 440.75p 195p
lower than last year as we reduce debt. The board
Andrews Sykes 76p 34 178p 72p
anticipates the Group continuing to trade in line with its
expectations for the remainder of the year.”
Almost all shares have been savaged and it is not surprising that
AGGREKO: INTERIM RESULTS TO 30 JUNE 2008
those of construction and allied industries are continuing to suffer as
30.06.08 (£m) 30.06.07 (£m) % change
our table shows. Ashtead’s first quarter figures, however, prompted a
Revenue 407.7 317.5 +28.4
positive reaction from investors with the shares rising 10% to a 2008
Operating profit 74.2 53.3 +39.4
high of 85p. In the three month period the company continued to
Profit before tax 67.9 47.5 +42.8
grow revenues by over 5% in the US and nearly 8% in the UK and its
profits were ahead of analysts’ forecasts. The £90m net proceeds Despite its 42% jump in half year profits, Aggreko saw its shares fall
from the sale of Ashtead Technology in late June have contributed to 19p to 692.5p on the announcement in late August and they have
reduced gearing as debt fell by £111m in the quarter to £852m. fallen further since, despite Chairman Philip Rogerson’s assurance
that the Aggreko board expected the company’s performance to
ASHTEAD: FIRST QUARTER RESULTS TO 31 JULY 2008
exceed market expectations in the current year. Demand in North
31.07.08 (£m) 31.07.07 (£m) % change
Revenue
America and Europe is softer, but this is being more than offset by
Sunbelt 204.4 194.1 +5.3
strong growth in Asia, Africa, the Middle East and Central & South
A-Plant 55.1 52.1 +7.8
America. In order to meet this demand the company is increasing
259.5 246.2 +5.4
capital expenditure; in the first half of the year it was up by almost
Operating Profit 50% to £124.3m and the full year figure is expected to show a similar
Sunbelt 46.5 42.4 +9.7 percentage rise to £265m. The decline in the share price, however,
A-Plant 7.1 7.0 +1.4
suggests that the Stock Market is adopting a more cautious stance
Less Central costs (1.9) (2.0)
towards the shares, which have performed so well until recently.
51.7 47.4 +9.1
Net financing costs (15.8) (19.0) -16.3
At the Vp AGM in September, Chairman Jeremy Pilkington confirmed
Profit before tax 35.9 28.4 +26.4
and amortisation
the “good start” to the new financial year described in the Group’s
Amortisation (0.7) (0.6)
Interim Management statement issued three weeks earlier. He added
Profit before tax 35.2 27.8 +26.6 that Vp was “alert to the challenges presented by the broader
economic environment and their impact on specific markets” but it
Ashtead achieved a 70% utilisation rate in both the US and the UK. continued “to benefit from the diversity of markets” it serves.

The Sunbelt fleet is 8% larger than in the first quarter of 2007, but • Our Profile on Vp’s tool hire division, Hire Station, commences on page 15.
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