4 September 2023

Ashtead Technology Holdings plc

("Ashtead Technology" or the "Group")

Unaudited Half Year Results for the Six-Months Ended 30 June 2023

Strong start to the year with positive outlook

Ashtead Technology Holdings plc (AIM: AT.), a leading subsea equipment rental and solutions provider for the global offshore energy sector, announces its unaudited results for the six months ended 30 June 2023 ("HY23" or "the period").

Financial Performance (£'m)

Additional Statutory Accounting Measures (£'m)

·      Strong year-on-year increase in revenue (57.1%) driven by continued high demand across both offshore renewables and offshore oil and gas

o  Offshore renewables revenue increased by 74.1% to £16.3m (HY22: £9.4m)

o  Offshore oil and gas revenue increased by 50.0% to £33.5m (HY22: £22.3m)

·          Organic growth of 40.5%, with M&A contributing 13.9% and 2.7% from favourable FX

·         Gross Profit margin increased to 78.8% (HY22: 73.4%) reflecting a higher proportion of growth coming from equipment rental, higher utilisation and increased pricing

·        Adjusted EBITA increased by 91.5% to £15.7m (HY22: £8.2m) with an adjusted EBITA margin of 31.4% (HY22: 25.8%) driven by top line growth and operational leverage

·          Adjusted basic earnings per share of 14.2p (HY22: 8.3p) and basic earnings per share of 13.1p (HY22: 7.4p)

·          ROIC of 25.5% increased from 19.1% in HY22

·         Net debt of £26.4m (HY22: £21.2m) with leverage reducing to 0.7x from 1.0x at year end due to cash generation and growth in LTM EBITDA 

Operational Highlights and Outlook

·      WeSubsea and Hiretech acquisitions both integrated and demonstrating strong momentum with growth in revenues and profits.  

·       Year to date investment of £8m in capital expenditure (HY22: £7.8m) with full year forecast of £20m, having raised capex earlier in the year.  We remain focused on expanding our capabilities and international reach and are investing in expanding our fleet to take advantage of structural growth opportunities

·       Breadth, depth and reliability of the Ashtead Technology fleet, the largest independent fleet in the market, continuing to provide a competitive advantage

·          Continuing to see high levels of quoting activity with value of quotes in HY23 up >50% compared to HY22

·       Employee headcount at 30 June 2023 of 289, 11% higher than December 2022, with recruitment focused on expanding on our sales and technical capacity for continued growth

·         Continuing to review M&A opportunities to complement organic growth and consolidate a highly fragmented market

·        The Board is very encouraged by the Group's performance in HY23 and expects FY23 to be comfortably ahead of its previous expectations

Allan Pirie, Chief Executive Officer, said:

"I am extremely pleased to announce our strongest ever set of interim results. We have continued to see positive momentum through the first half of 2023 with the Group benefiting from our strategic investment in people and equipment, together with further increases to both utilisation and pricing. Our recent acquisitions of Hiretech and WeSubsea have performed ahead of our expectations and we are benefitting from our increased breadth of capabilities.  

Market fundamentals remain strong and we continue to expand our offering whilst growing within our existing markets. Given the unseasonal strength of the final quarter of FY22 we expect year-on-year growth to moderate in the second half.  Our HY23 results and positive end market dynamics give the Board increased confidence in the outlook for the business and we expect FY23 outturn to be comfortably ahead of our previous expectations."

For further information, please contact:

¹Adjusted EBITDA is defined as operating profit adjusted to add back depreciation, amortisation, foreign exchange movements and non-trading items as shown in Note 18 of the HY23 accounts

²Adjusted EBITA is defined as operating profit adjusted to add back amortisation, foreign exchange movements and non-trading items as shown in Note 18 of the HY23 accounts

³Adjusted profit before tax is defined as profit before tax adjusted to add back amortisation, foreign exchange movements and non-trading items as shown in Note 18 of the HY23 accounts

⁴Return on Invested Capital (ROIC) is defined as LTM⁶ Adjusted EBITA divided by Invested Capital.  Invested capital is defined as average net debt plus average equity

⁵Leverage is defined as net debt divided by LTM Adjusted EBITDA

⁶LTM is defined as latest twelve months to 30 June 2023

Notes to editors:

Ashtead Technology is a leading subsea equipment rental and solutions provider for the global offshore energy sector.  Ashtead Technology's specialist equipment, advanced-technologies and support services enable its customers to understand the subsea environment and manage offshore energy production infrastructure.

The Company's service offering is applicable across the lifecycle of offshore wind farms and offshore oil and gas infrastructure.

In the fast-growing offshore wind sector, Ashtead Technology's specialist equipment and services are essential through the project development, construction and installation phase. Once wind farms are operational, Ashtead Technology supports customers with inspection, maintenance and repair ("IMR") equipment and services.  In the more mature oil and gas sector, Ashtead Technology's focus is on IMR and decommissioning.

Headquartered in the UK, the Company operates globally, servicing customers from its ten facilities located in key offshore energy hubs.

Cautionary Statement

This announcement contains certain forward-looking statements, including with respect to the Group's current targets, expectations and projections about future performance, anticipated events or trends and other matters that are not historical facts.  These forward-looking statements, which sometimes use words such as "aim", "anticipate", "believe", "intend", "plan", "estimate", "expect" and words of similar meaning, include all matters that are not historical facts and reflect the directors' beliefs and expectations, made in good faith and based on the information available to them at the time of the announcement.  Such statements involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement and should be treated with caution.  Any forward-looking statements made in this announcement by or on behalf of Ashtead Technology speak only as of the date they are made.  Except as required by applicable law or regulation, Ashtead Technology expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in its expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

This announcement contains inside information as defined in Article 7 of the retained EU law version of the Market Abuse Regulation No 596/2014 ("UK MAR") and has been announced in accordance with the Company's obligations under Article 17 of UK MAR.  Upon publication of this announcement, this information is now considered in the public domain.

CEO STATEMENT

We have seen continued positive momentum in the business through the first half of 2023 and I am pleased to present our half year results which demonstrate significant growth on HY22.  As we near the second anniversary of our IPO in November 2021, I am delighted with the progress the business has made against its strategic goals, as we continue to grow and go from strength to strength.

Strong market dynamics, investment in both organic and inorganic growth, and increased cost utilisation and pricing have resulted in a strong financial performance in HY23 with revenue growth of 57.1% on the prior year, delivering EBITA margins of 31.4% (HY22: 25.8%) and ROIC of 25.5% (HY22: 19.1%).  Market dynamics remain strong with long term structural growth across our key end markets.  Rystad Energy predict a 22% increase in addressable market in 2023 with a CAGR of 12% 2022 through to 2025.  We have seen an increase in quoting activity of over 50% compared to HY22 and our customers continue to report increases in backlog which gives us confidence through the remainder of the year, into 2024 and beyond.

As the market continues to evolve and with increased need for energy security, we delivered significant growth in revenues from the offshore renewables market with a 74.1% growth on HY22, whilst our oil and gas activity grew at 50.0%.  Renewables revenues made up 32.7% of our business with this activity coming from our European, American and Asian operations.  Whilst the offshore wind sector currently faces increased cost pressures, the global inventory of projects support a reported increase in offshore wind backlog amongst our largest customers, with a record 70 GW of projects expected to be auctioned in 2023.

Our People

We were delighted to recruit Christine Cochrane as our first HR Director who joined us in August.  Hiring new talent, providing valuable training and development, and a rewarding place to work, has been, and always will be, a priority for the business and Christine's appointment underlines our focus on these areas.

We increased our headcount to 289, an increase of 11% from year end and 32% on the prior year with the growth predominantly coming from further expansion of our technical and sales teams.  We have continued with our Star Awards programme where we reward our employees that have gone above and beyond in demonstrating our company values, and increased our employee recruitment referral bonus which has been a successful tool in supporting our recruitment drive.

Our Equipment

£8m of capital expenditure (£7.7m in rental fleet) was invested during the first half of the year with a forecast of £20m for the full year, having increased capex earlier in the year.  We continue to broaden our range of complementary equipment and services, increasing our offering to our customers, investing in equipment that is fungible across both sectors, or is relevant to the offshore renewables market, and ensuring that we maintain our market position as the leading independent provider of subsea rental equipment. The strength of the underlying markets is contributing to lengthening lead times on certain products. Our investment in rental fleet in 2H23 will help secure the equipment to meet anticipated demand both in coming months and into 2024.

Sustainability

We continue to make progress on our sustainability journey and being a good corporate citizen is at the heart of the way we do business at Ashtead Technology.  We have maintained our QHSE record and were delighted with the positive feedback from our recent external ISO audits.  Our revenues from the renewables market continued to grow and we retain our focus on supporting the energy transition.

Integration

Integration of both WeSubsea and Hiretech into the Ashtead Technology group has progressed well, both businesses have performed ahead of expectations, demonstrating a combined 38.6% growth in revenues year on year.  Both acquisitions are highly complementary to our mechanical solutions business and we have witnessed an increase in both cross selling and international opportunities and synergistic benefits of having the equipment as part of our wider offering. 

We have integrated both acquisitions into our ERP system with all employees and assets transferred to Ashtead Technology entities.  The WeSubsea brand has been retained in relation to the equipment only and we are in the process of fully phasing out the Hiretech brand name in support of our one route to market approach.

These acquisitions are great case studies of the benefits of our M&A strategy and approach to integration and we continue to build on the M&A pipeline as one of our key growth strategies. 

Outlook

Market fundamentals remain strong and we continue to expand our offering whilst growing within our existing markets. Given the unseasonal strength of the final quarter of FY22 we expect year-on-year growth to moderate in the second half.  Our HY23 results and positive end market dynamics give the Board increased confidence in the outlook for the business and we expect outturn for the year to be comfortably ahead of our previous expectations.

Allan Pirie

Chief Executive Officer

CFO STATEMENT

I am delighted to report another strong set of financial results for the first half of 2023 as the positive momentum from FY22 continues into FY23.  Our revenues have grown by 57.1% predominantly due to organic growth (40.5%), enhanced by M&A (13.9% growth) and positive FX movements (2.7%).

Renewables revenues accounted for 32.7% of Group HY23 revenue, representing 74.1% growth from this market compared to the prior year.  An increased focus on energy security has also resulted in continued growth from the oil and gas market with revenues from this market increasing by 50.0%.  Despite the continued resurgence of oil and gas activity, we maintain our target of 50% activity from the offshore renewables market in the medium term.

Our strongest growth in the period has come from our European operations which saw a 90% increase in revenue year on year, in part supported by acquisition as both Hiretech and WeSubsea operations were European based.  This region has seen a resurgence in activity across its multiple geographies and in both renewables and oil and gas activity, with a positive outlook for remainder of the year and into 2024 and beyond with Rystad predicting a 16% CAGR in the European market from 2022 to 2025.  Both Americas and Middle East businesses continued to grow (40% and 18% respectively) with Asia revenues down 6% on prior year due to a number of project delays in the region, but with Asia expected to rebound in 2024 with Rystad predicting a 22% CAGR in addressable market in this region from 2022 to 2025.  We have taken advantage of the global nature of our fleet and the different pricing dynamics across the regions, with a focus on return on investment.

Gross profit

The Group achieved gross profit of £39.3m (HY22: £23.3m) representing a gross profit margin of 78.8%, up from 73.4% in HY22.  The gross margin improvement predominantly resulted from improved pricing, higher activity levels and an increase in the proportion of revenues from equipment rental.  Our average annualised cost utilisation increased to 45% (HY22: 44%).  Our target cost utilisation remains around 45%+.

Administration costs

Administration costs (excluding depreciation, amortisation and exchange gain/loss) for HY23 were £18.5m (HY22: £11.6m), a £6.9m increase on HY22.  £2.6m of this increase is due to increased bonus provision (£1.3m) and LTIP costs (£1.3m).  The performance in HY23 compared to budget has resulted in us increasing our bonus provision in HY23 and the increased LTIP cost is predominantly due to the timing of awards.  Personnel costs (excluding bonus and LTIP) increased by £3.1m due to the increase in employees (32% increase in personnel since June 2022) and a 7% pay increase adopted in January 2023.  Excluding the bonus accrual and LTIP cost, personnel cost reduced as a percentage of revenue to 21.7% (from 24.3% in HY22).  Other overhead increases relate to travel, marketing, audit, legal and professional costs and insurance which have increased by £1.1m due to increased scale and activity in the business, and inflationary rises.

Profitability

Adjusted EBITA of £15.7m compares to £8.2m in HY22 representing an EBITA margin of 31.4% compared to 25.8% in HY22 and delivering continued margin growth on our full year FY22 numbers.  The increase in EBITA was the principal driver for an increase in ROIC to 25.5% (HY22: 19.1%).

Finance costs of £1.9m include a £0.5m write-off of deferred finance costs due to the refinancing which completed in April 2023.  Excluding this, normalised finance costs were £1.4m, an increase of £0.8m due to an increase in drawn debt (utilised for the WeSubsea and Hiretech acquisitions) and increased banking base rates.

Profit Before Tax of £13.2m compares to £6.9m in HY22, an increase of 92%.

The tax provision for the period was £2.8m (HY22: £1.0m) representing an effective tax rate of 21.1% (HY22: 14.4%).  The estimate has been based on the effective tax rates of each entity after removing any adjusting items.  The higher effective tax rate in HY23 reflects reduced availability of brought forward overseas losses and the increased tax rate in the UK.

Adjusting for amortisation and exceptional costs results in an Adjusted basic earnings per share of 14.2p which compares to 8.3p in HY22.

Cash flow and balance sheet

The Group generated positive cash inflow before financing activities of £4.3m (HY22: £2.8m) in the period.

Continued investment in our equipment rental fleet has resulted in an increased net book value of property, plant and equipment from £25.8m in HY22 to £34.2m, and contributed to the £1.6m increase in depreciation from £4.1m in HY22 to £5.6m in HY23.  We also increased our goodwill and intangible assets compared to the prior year due to the acquisitions completed in H2 2022.

Working capital at 30 June 2023 represented 9% of the last 12 months revenues compared to 16% at 30 June 2022 due to improvements in cash collection and timing of capex creditors.

We were pleased to announce our first dividend payment as a listed company following announcement of our annual results for FY22 which resulted in a £0.8m payment in June. We continue to see attractive opportunities in our M&A pipeline and in line with previous guidance, the Board has not recommended an interim dividend for HY23 and intends to continue its small, progressive dividend policy as part of its full year reporting.

Net debt has increased from £21.2m at HY22 to £26.4m but leverage has reduced from 0.9x to 0.7x (1.0x at year end).  Both acquisitions were funded wholly through debt which contributed to the increase in net debt year on year.  We have debt capacity of £118.5m (including £50m accordion facility) as at 30 June 2023 that can be utilised to fund further organic and inorganic growth.

Ingrid Stewart

Chief Financial Officer

RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE

HALF-YEARLY FINANCIAL REPORT

The Directors of Ashtead Technology Holdings plc (set out on page 26 and 27 of the latest Annual Report and Accounts) confirm that to the best of their knowledge:

•        the condensed consolidated set of financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK;

•          the interim management report includes a fair review of the information required by:

(i)      DTR 4.2.7R of the Disclosure Guidance 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 consolidated set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(ii)     DTR 4.2.8R of the Disclosure Guidance 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

Allan Pirie                                                                                   Ingrid Stewart

Chief Executive Officer                                                Chief Financial Officer

4 September 2023                                                       4 September 2023

Consolidated income statement

for the six-month period ended 30 June 2023

^         Adjusted EBITDA is calculated as earnings before interest, tax, depreciation, amortisation and items not considered part of underlying trading including share based payments and foreign exchange gains and losses, is a non-GAAP metric used by management and is not an IFRS disclosure.  See Note 18 to the condensed consolidated interim financial statements for calculations.

^^          Adjusted EBITA is calculated as earnings before interest, tax, amortisation and items not considered part of underlying trading including share based payments and foreign exchange gains and losses, is a non-GAAP metric used by management and is not an IFRS disclosure.  See Note 18 to the condensed consolidated interim financial statements for calculations.

All results derive from continuing operations.

Consolidated statement of comprehensive income

for the six-month period ended 30 June 2023

Consolidated balance sheet

at 30 June 2023

Consolidated statement of changes in equity

for the six-month period ended 30 June 2023