Ashtead share price: Group posts rise in FY profits

Company hikes payout to shareholders

Ashtead share price: Group posts rise in FY profits

Ashtead (LON:AHT) has updated investors on its fourth-quarter and full-year performance this morning.

Highlights from Ashtead's statement:

Ashtead's chief executive, Geoff Drabble, commented:

"2015/16 was another very successful year for Ashtead with Group rental revenue increasing 17% and underlying pre-tax profit up 24% to £645m at constant exchange rates.

We continue to deliver on our well-established strategy of organic growth, supplemented by bolt-on acquisitions. We have broadened both our geographic footprint and the markets we serve and the benefits of this diversification are evident, both in our financial performance and our market share gains.

Particularly encouraging is the continued improvement in our margins, with Group EBITDA margins now a record 46%. These strong margins, together with the natural moderation of our replacement fleet expenditure, mean we are entering a phase where we anticipate both good earnings growth and significant free cash flow generation. We therefore have the flexibility to continue both to invest in our long-term structural growth opportunity and enhance returns to shareholders. As a consequence, we have announced today both a proposed 48% increase in our full year dividend to 22.5p and a share buyback of up to £200m. As always, we will continue to grow responsibly and will operate within our 1.5 to 2.0 times net debt to EBITDA range.

We have seen a good seasonal upward trend in fleet on rent throughout the Spring which has continued into the new financial year. Our end markets remain strong, the structural drivers are still in place and we have a strong balance sheet which allows us to execute our plans responsibly. As a consequence, the Board continues to look to the medium term with confidence."

Group revenue for the year increased 25% to £2,546m (2015: £2,039m) with strong growth in both Sunbelt and A-Plant. This revenue growth, combined with ongoing operational efficiency and strong drop through, generated underlying profit before tax of £645m (2015: £490m).

After a net exceptional charge of £6m (2015: nil) and amortisation of £22m (2015: £16m), statutory profit before tax was £617m (2015: £474m). After a tax charge of 34% (2015: 36%), basic earnings per share were 81.3p (2015: 60.5p). The cash tax charge for 2015/16 was 4%. Following the announcement in 2015 of a continuation of accelerated tax depreciation by the US government, brought forward tax losses will not be utilised until 2016/17 when we expect to become a more significant cash tax payer in the US.

Dividends

In accordance with our progressive dividend policy, with consideration to both profitability and cash generation at a level that is sustainable across the cycle, the Board is recommending a final dividend of 18.5p per share (2015: 12.25p) making 22.5p for the year (2015: 15.25p), an increase of 48%. If approved at the forthcoming Annual General Meeting, the final dividend will be paid on 9 September 2016 to shareholders on the register on 12 August 2016.

Current trading and outlook

We have seen a good seasonal upward trend in fleet on rent throughout the Spring which has continued into the new financial year. Our end markets remain strong, the structural drivers are still in place and we have a strong balance sheet which allows us to execute our plans responsibly. As a consequence, the Board continues to look to the medium term with confidence.

As of 07:13 BST, Tuesday, 14 June, Ashtead Group plc share price is 957.00p.

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