Slide 1: Responsible investment in growth
Responsible investment in growth Full year results | 30 April 2016 Issued: 14 June 2016
Slide 2: Legal notice
Legal notice This presentation has been prepared to inform investors Some of the factors which may adversely impact some of and prospective investors in the secondary markets these forward looking statements are discussed in the about the Group and does not constitute an offer of Group’s audited res
Slide 3: Overview
Overview Another strong performance demonstrating the relative strength of both our model and execution; ̶ Group rental revenue1 +17% ̶ Group EBITDA margin 46% ̶ Group EBITA margin 29% ̶ Group RoI 19% Improving margins reflect; ̶ Strong growth from existing mature stores ̶ Operational efficiency
Slide 4: Suzanne Wood
Suzanne Wood Finance director Page 3 Full year results | 30 April 2016
Slide 5: Q4 Group revenue and profit
Q4 Group revenue and profit Q4 (£m) 2016 2015 Change1 Revenue 666 539 18% - of which rental 585 479 16% Operating costs (358) (311) 9% EBITDA 308 228 29% Depreciation (123) (99) 19% Operating profit 185 129 36% Net interest (22) (19) 8% Profit before exceptionals, amortisation and tax 163 110 42% Ea
Slide 6: Full year Group revenue and profit
Full year Group revenue and profit FY (£m) 2016 2015 Change1 Revenue 2,546 2,039 19% - of which rental 2,260 1,838 17% Operating costs (1,368) (1,131) 15% EBITDA 1,178 908 23% Depreciation (450) (351) 22% Operating profit 728 557 23% Net interest (83) (67) 16% Profit before exceptionals, amortisatio
Slide 7: Full year Sunbelt revenue and profit
Full year Sunbelt revenue and profit FY ($m) 2016 2015 Change Revenue 3,277 2,742 19% - of which rental 2,924 2,475 18% Operating costs (1,693) (1,449) 17% EBITDA 1,584 1,293 22% Depreciation (570) (460) 24% Operating profit 1,014 833 22% Margins - EBITDA 48% 47% - Operating profit 31% 30% Page 6 Fu
Slide 8: Full year A-Plant revenue and profit
Full year A-Plant revenue and profit FY (£m) 2016 2015 Change Revenue 365 323 13% - of which rental 314 289 9% Operating costs (228) (214) 7% EBITDA 137 109 25% Depreciation (70) (63) 11% Operating profit 67 46 45% Margins - EBITDA 38% 34% - Operating profit 18% 14% Page 7 Full year results | 30 Apr
Slide 9: Cash flow
Cash flow Significant reinvestment in our rental fleet FY FY (£m) 2016 2015 Change EBITDA before exceptional items 1,178 908 30% Cash conversion ratio1 91% 93% Cash inflow from operations2 1,071 841 27% Payments for capital expenditure (1,234) (937) Rental equipment and other disposal proceeds recei
Slide 10: Net debt and leverage
Net debt and leverage Net debt to EBITDA continues to reduce despite the fleet investment Leverage* 3.5 3.2 April April 2.9 (£m) 2016 2015 3.0 2.6 2.6 Net debt at 30 April 1,687 1,149 2.5 2.3 Translation impact 82 122 2.0 Target range 2.0 1.8 1.8 1.7 Opening debt at closing exchange rates 1,769 1,27
Slide 11: Cash generation capability
Cash generation capability Positive free cash flow expected in 2016/17 2016/17 capital expenditure plans remain unchanged with gross spend at £0.7 - 1bn High EBITDA margins and lower replacement capital expenditure requirement result in significant cash generation capability 2016/17 free cash
Slide 12: Capital allocation
Capital allocation Our priorities for using this capital are returns focused 1. Organic growth • Invest in same-store fleet growth • Continue programme of opening around 50 greenfield locations per year in North America 2. Bolt-on acquisitions • Targeted bolt-on acquisitions to support geographic ex
Slide 13: Geoff Drabble
Geoff Drabble Chief executive Page 12 Full year results | 30 April 2016
Slide 14: This is a long-term structural story
This is a long-term structural story We continue to anticipate multi-year moderate end market growth 200 500 180 400 160 140 300 120 200 100 1975 - 1982 80 1982 - 1991 100 1991 - 2011 60 Current cycle Forecast 0 40 T T+2 T+4 T+6 T+8 T+10 T+12 T+14 T+16 T+18 T+20 Construction starts Source: Dodge Dat
Slide 15: Capitalising on structural and cyclical factors to drive revenue growth
Capitalising on structural and cyclical factors to drive revenue growth BOLT-ONS SAME STORE TOTAL RENTAL ONLY GROWTH +12% + AND GREENFIELDS = REVENUE GROWTH +19% +7% END MARKET STRUCTURAL GROWTH SHARE GAINS +6% +6% Page 14 Full year results | 30 April 2016
Slide 16: Sunbelt revenue drivers
Sunbelt revenue drivers Q4 General Tool Specialty exc. Oil & Gas Oil & Gas Total % of business 77% 21% 2% 100% Rental revenue growth +20% +17% -55% +16% Fleet on rent +20% +16% -38% +18% Yield - +1% -28% -2% Year-on-year physical utilisation +1% -5% -4% +1% Full year General Tool Specialty exc. Oil
Slide 17: Strong margin progression despite pressure from Oil & Gas
Strong margin progression despite pressure from Oil & Gas Full year Same-stores* Greenfields* Bolt-ons* Oil & Gas Total Proportion of revenue 88% 5% 4% 3% 100% Fleet on rent - % change +12% +399% +101% -10% +18% Net yield +2% +6% +15% -29% - Physical utilisation - actual 72% 61% 68% 50% 70% Dollar u
Slide 18: Sunbelt margins continue to improve
Sunbelt margins continue to improve Progression in mature stores continues to drive margins. Further improvements in RoI as fleet profile normalises and newer stores develop $m Revenue $m EBITDA % 3,500 3,277 2,000 47 48 50 45 1,750 41 3,000 2,742 38 37 1,584 36 36 40 1,500 34 35 32 2,500 31 32 2,18
Slide 19: Well proven track record of developing scale and profitability of locations
There is a well proven track record of developing the scale and profitability of locations over time Number Operating margin* RoI* Location size Fleet size 2008 2016 2008 2016 2008 2016 Extra large > $15 million 14 108 37% 41% 26% 27% Large > $10 million 35 129 35% 39% 25% 26% Medium > $5 million 17
Slide 20: Mature stores have enhanced returns profile
Mature stores have enhanced returns profile Improvements driven by efficiency gains and scale 35 large stores 174 medium stores 2008 2016 % Change 2008 2016 % Change Rental revenue growth - - +44% - - +56% Volume - - +46% - - +60% Yield - - -1% - - -2% EBITDA* 53% 64% +72% 47% 62% +103% EBITA* 35% 4
Slide 21: Mature stores continue to grow at twice the pace of the market
Mature stores continue to grow at twice the pace of the market Significant potential for further margin development as newer stores get older Stores older than 3 years* Stores younger than 3 years* YoY revenue growth EBITA % RoI YoY revenue growth EBITA % RoI 2015 16% 38% 29% 2015 516% 23% 13% 2016
Slide 22: We have a young fleet age which affects RoI in the short term
We have a young fleet age which affects RoI in the short term Sunbelt fleet age profile $m 1,400 1,200 1,000 800 600 400 200 0 2007 & 2008 2009 2010 2011 2012 2013 2014 2015 2016 Older High levels of growth expenditure and new greenfields have distorted the fleet age profile RoI will improve as
Slide 23: Rental is historically cheap relative to the cost of new and used equipment
Rental is historically cheap relative to the cost of new and used equipment Positive for rates as more Tier 4 purchased Skidsteer Backhoe 2008 2010 2016 2008 2010 2016 Fleet cost 100 110 141 100 127 142 OLV 100 91 128 100 83 114 Monthly rate 100 76 112 100 73 104 Weekly rate 100 87 130 100 86 124 Da
Slide 24: Rental penetration will continue to grow our market
Rental penetration will continue to grow our market 2010 2015 2020s Rental penetration Low 40s % Low 50s % Mid 60s % Market growth +20 to 25% +20 to 25% Why? On a historical basis rental inexpensive relative to cost of equipment Rental industry a more viable option Legislation – Health & Safet
Slide 25: The big are getting bigger which provides further opportunity
The big are getting bigger which provides further opportunity US market share 2010 2016 2020s 5% 4% 10% 3% United Rentals Sunbelt 3% 7% Others 6% 3% RSC Herc Rentals - mid Top 7% 30s Top 4-10 Top 11-100 100 13% Others 66% - mid 57% 16% 60s Note: Restated to reflect latest IHS Global insight market s
Slide 26: We have increased our footprint and gained significant share
We have increased our footprint and gained significant share April 2012 April 2016 0% Top 100 US markets market share Stores – April 2012 Clustered: 37 markets – 368 stores 10% Non clustered: 57 markets – 117 stores Store growth – May 2012 to April 2016 (includes Hawaii – 2 May 2016) No presence: 6
Slide 27: Growth opportunity to build out clusters in major markets
Growth opportunity to build out clusters in major markets Charlotte, NC Minn/St. Paul, MN Denver, CO Population 3m Population 4.5m Population 4.1m Put in Place $4.0bn Put in Place $5.9bn Put in Place $9.6bn Starts $3.9bn Starts $6.2bn Starts $9.9bn Stores 14 Stores 4 Stores 7 Fleet cost $134m Fleet
Slide 28: Continued strategy of greenfield and bolt-on growth
Continued strategy of greenfield and bolt-on growth Benefits of filling out existing markets Store openings Greenfields Acquisitions Total Planned greenfields FY 13 17 6 23 Existing Non- New Total FY 14 24 15 39 cluster cluster market FY 15 31 51 82 General Tool 12 8 15 35 FY 16 58 10 68 Specialty 1
Slide 29: Further share gains available
Further share gains available US market share Capital spend 16 12% 15% 14 12 9% 10 $bn 8 6% 7% 6 4% 4 3% 2% 2 0 0% 2003 2010 2016 Target 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Management information / IHS Global Insight (April 2016) Rental industry capital expenditu
Slide 30: A-Plant revenue drivers
A-Plant revenue drivers Growth continues backed by fleet investment Average fleet on rent 80% Physical utilisation +10% +7% +11% +13% 70% 60% 50% 2014-15 2015-16 40% 2016-17 30% Q1 Q2 Q3 Q4 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Year over year change in yield Fleet size and growth +10% +25%
Slide 31: A-Plant continues to gain market share profitably
A-Plant continues to gain market share profitably Margins and returns continue to improve EBITDA EBITA RoI 15% £m % £m % 15% 38% 40 100 20 18% 13% 150 34% 137 12% 125 29% 28% 30 75 14% 15 26% 109 9% 67 100 9% 79 9% 20 50 46 10 75 6% 5% 57 49 6% 3% 50 25 10 25 4% 5 3% 25 12 7 0 0 0 0 0% 2012 2013 201
Slide 32: Strong fleet growth planned for the Group in 2016/17
Strong fleet growth planned for the Group in 2016/17 No need to change plans at this stage 2017 Anticipated volume 2014 2015 2016 outlook growth (%) Sunbelt ($m) rental fleet - replacement 308 395 572 175 - 250 - growth 655 873 871 600 - 900 Double digit growth non-rental fleet 119 100 133 100 1,082
Slide 33: Summary
Summary Strong growth as we capitalise on ongoing structural opportunities and good end markets Further margin improvements as we improve technology, leverage our scale and maturing stores High margins provide strong cash flows; ̶ Organic and bolt-on growth ̶ Rebased sustainable dividend ̶ Up
Slide 34: Appendices
Appendices Page 33 Full year results | 30 April 2016
Slide 35: The benefit of our diversification has been shown in recent relative performance
The benefit of our diversification has been shown in recent relative performance Will remain a key element of our strategy 2007 2016 General Tool Specialty General Tool Specialty 85% 15% 78% 22% Non Non Construction Construction construction construction 65% 60% 35% 40% Total Total 45% Construction
Slide 36: General Tool vs Specialty mix
General Tool vs Specialty mix Sunbelt Total rental 2008 2009 2010 2011 2012 2013 2014 2015 2016 CAGR revenue General Tool 87% 85% 85% 82% 80% 78% 78% 76% 78% 20% Specialty 13% 15% 15% 18% 20% 22% 22% 24% 22% 28% 100% 100% 100% 100% 100% 100% 100% 100% 100% 22% Oil & Gas as a % 0% 0% 0% 0% 0% 5% 14%
Slide 37: Different margin characteristics but similar RoI due to lower capital intensity
Different margin characteristics but similar RoI due to lower capital intensity Specialty far more consistent through the cycle Sunbelt EBITA margins 2008 2009 2010 2011 2012 2013 2014 2015 2016 General Tool 27% 22% 17% 19% 25% 32% 36% 38% 39% Specialty 27% 24% 20% 22% 19% 24% 25% 28% 25% RoI 2008 2
Slide 38: As we have grown we have naturally increased key account work
As we have grown we have naturally increased key account work However, we remain very transactional 2011 2012 2013 2014 2015 2016 Managed accounts as a % of 4 4 4 4 4 4 total accounts % of total rental revenue 26 27 30 31 34 34 Small to mid-sized contractors - 19% CAGR - significant market share g
Slide 39: Our second hand value movements are consistent with Rouse data
Our second hand value movements are consistent with Rouse data Interesting trends within the data on OEC and fleet age often missed Page 38 Full year results | 30 April 2016
Slide 40: The market
The market The majority of our markets are very strong with good long-term prospects 200 Construction activity by cycle (T=100 based on constant dollars) Rental revenue forecasts 2016 2017 2018 180 160 Industry rental revenue +6% +5% +5% 140 Source: IHS Global Insight (April 2016) 120 100 1975 - 198
Slide 41: Sunbelt revenue drivers – rental only
Sunbelt revenue drivers – rental only Continuation of strong performance Average fleet on rent Physical utilisation 80% +23% +22% +16% +19% 70% 60% 2014-15 50% 2015-16 40% 2016-17 30% Q1 Q2 Q3 Q4 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Volume growth of $571m (2015: $561m) Fleet size and gr
Slide 42: Divisional performance – Q4
Divisional performance – Q4 Revenue EBITDA Profit 2016 2015 Change1 2016 2015 Change1 2016 2015 Change1 Sunbelt ($m) 809 695 +16% 393 310 +27% 243 186 +31% Sunbelt (£m) 565 458 +23% 275 206 +34% 170 123 +38% A-Plant 101 81 +25% 38 25 +51% 20 9 +135% Group central costs - - - (5) (3) +74% (5) (3) +75
Slide 43: Divisional performance – twelve months
Divisional performance – twelve months Revenue EBITDA Profit 2016 2015 Change1 2016 2015 Change1 2016 2015 Change1 Sunbelt ($m) 3,277 2,742 +19% 1,584 1,293 +22% 1,014 833 +22% Sunbelt (£m) 2,181 1,716 +27% 1,054 809 +30% 675 521 +30% A-Plant 365 323 +13% 137 109 +25% 67 46 +45% Group central costs
Slide 44: Robust debt structure with substantial capacity to fund further growth
Robust debt structure with substantial capacity to fund further growth £2,000m £1,750m £1,500m ● 6 year average remaining commitment £1,250m ● No amortisation £1,000m ● No financial monitoring covenants £750m ̶ whilst availability exceeds $260m (April 2016 : $1,126m) £500m £250m £m 2016 2018 Jul Jul
Slide 45: Cash flow across the cycle
Cash flow across the cycle (£m) 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 EBITDA before exceptional items 1,178 908 685 519 381 284 255 359 380 310 225 170 147 150 EBITDA margin 46% 45% 42% 38% 34% 30% 30% 33% 38% 35% 35% 32% 29% 28% Cash inflow from operations before 1,0
Slide 46: Cyclical cash generation
Cyclical cash generation Cash positive as growth moderates – highly generative during downturn High growth Moderate to flat growth Declining market 2011 2012 2013 2014 2015 2016 Moderate growth Cyclical downturn Cash flow from Decreasing but remains 280 365 501 646 841 1,071 Growing operations posit
Slide 47: $1,126m of availability at 30 April 2016
$1,126m of availability at 30 April 2016 Book value Borrowing base Senior debt £4,086m (April 15 : £3,213m) Calculation Other PPE £113m Inventory £41m 50% of book value Receivables £456m 85% of net eligible receivables £3,089m (April 15 : £2,434m) £298m Availability of £768m 85% of net appraised ($1
Slide 48: Debt and covenants
Debt and covenants Facility Interest rate Maturity $2.6bn first lien revolver LIBOR +125-175bp July 2020 Debt $900m second lien notes 6.5% July 2022 $500m second lien notes 5.625% October 2024 Capital leases ~7% Various S&P Moody’s Ratings Corporate family BB Ba2 Second lien BB Ba3 Availability ■ Co