First half results reflect continued improvement in the US with Sunbelt's rental revenue growing 25% to $694m (2010: $557m). This comprised a 12% increase in fleet on rent, 7% higher yield and a first-time contribution from Empire Scaffold. In the UK, A-Plant's first half rental revenue grew by 11% to £86m (2010: £77m) including 2% growth in average fleet on rent and 6% yield improvement.

Total revenue growth for the Group of 24% at constant rates (19% at actual rates) included higher used equipment sales revenue of £37m (2010: £21m) as we increased capital expenditure and hence sold more used equipment.

Costs remained under close control with the reported growth in staff costs being due principally to the first-time inclusion of Empire following its acquisition in January 2011. Consequently, Sunbelt's EBITDA increased by $84m or 74% of the net $113m increase in first half rental revenue as adjusted to exclude the $24m first-time impact of Empire's largely pass-through erection and dismantling labour recovery billings. This high 'drop through' demonstrates the significant operational gearing in our business. In a tough market, A-Plant also delivered an improved performance with its operating profits growing to £5m.

Underlying Group pre-tax profit grew to £84m, 2.8 times greater than 2010's £30m. This reflected the operating profit growth and lower net financing costs of £25m (2010: £36m), mainly as a result of the benefits of the debt refinancing undertaken in the fourth quarter of 2010/11.

After £1m of intangible amortisation, the statutory profit before tax was £83m (2010: £24m). The effective tax rate on the underlying pre-tax profit was 37% (2010: 35%). Underlying earnings per share grew 176% to 10.7p (2010: 3.9p) whilst basic earnings per share were 10.5p (2010: 3.1p).

Capital expenditure

Capital expenditure this year will, as usual, be concentrated in the first, second and fourth quarters of the year as we maximise expenditure for the seasonally stronger summer months. First half expenditure was £253m gross and £212m net of disposal proceeds (2010: £96m gross and £72m net). As a result the average age of the Group's rental fleet at 31 October 2011 was 39 months (2010: 44 months). Sunbelt's fleet size at 31 October of $2.3bn was 8% larger than a year earlier whilst average first half physical utilisation grew to 73% (2010: 71%) as we successfully put the new equipment out on rent.

For the year as a whole we now expect to invest around £400m or roughly double depreciation on a gross basis (up from our earlier 175% of depreciation guidance) whilst, after disposal proceeds, net payments for capex this year are expected to be around £300m. The additional expenditure, much of which will only be received into the fleet in March and April next year will ensure we are positioned ready for the 2012 summer season.

Return on Investment

Sunbelt's pre-tax return on investment (operating profit to the sum of net tangible assets, goodwill and other intangibles) in the 12 months to 31 October 2011 improved to 12.0% (2010: 7.2%) despite end US construction markets being at 30 year lows. In the UK, return on investment remains weak at 1.6% (2010: 1.2%) reflecting continuing excess supply in the UK market. For the Group as a whole, return on investment of 9.9% (2010: 5.9%) now exceeds our cost of capital.

Cash flow and net debt

Debt increased in the first half in line with plan. This resulted from the capital expenditure made to grow and renew the fleet and due to the usual seasonal increase in working capital that occurs in the first half as activity rises in the summer months. As usual the working capital increase should largely reverse in the second half. Net debt at 31 October 2011 was therefore £889m (2010: £777m) whilst the ratio of net debt to EBITDA has been reduced to 2.7 times (2010: 2.9 times), well within our 2-3x target leverage range. We are also targeting further deleveraging in the second half.

The Group's two debt facilities remain committed until 2016 (March 2016 for the senior bank facility and August 2016 for the $550m senior secured notes) whilst ABL availability was $574m - substantially above the $168m level at which the Group's entire debt package is covenant free.

Dividend

In line with its policy of providing a progressive dividend having regard to both underlying profit and cash generation and to sustainability through the economic cycle, the Board has declared an interim dividend of 1.0p per share (2010: 0.93p per share). This will be paid on 8 February 2012 to shareholders on record on 20 January 2012.

Current trading and outlook

November saw both Sunbelt and A-Plant deliver good year-on-year revenue and profit growth continuing the pattern established in the first half.

With our robust debt structure, substantial capacity to fund fleet growth and the well-established momentum in our business, we now anticipate a full year profit substantially ahead of our earlier expectations.

Forward looking statements

This announcement contains forward looking statements. These have been made by the directors in good faith using information available up to the date on which they approved this report. The directors can give no assurance that these expectations will prove to be correct. Due to the inherent uncertainties, including both business and economic risk factors underlying such forward looking statements, actual results may differ materially from those expressed or implied by these forward looking statements. Except as required by law or regulation, the directors undertake no obligation to update any forward looking statements whether as a result of new information, future events or otherwise.

Directors' responsibility statement in respect of the interim financial report

We confirm that to the best of our knowledge:

• the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the International Accounting Standards Board; and
• the interim management report includes a fair review of the information required by:
  
  
  1. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
  2. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

By order of the Board of Directors
7 December 2011