National Hire Group Delivers Strong Growth and...

National Hire Group Delivers Strong Growth and Reinstates
Dividend

The major acquisitions undertaken in December 2004 of Allight Holdings Pty Ltd and
The Cat Rental Stores® in Western Australia have contributed to a dramatic increase
in business for the National Hire Group.
This has resulted in revenue for the year ended 30 June 2005 of $117.5 million
compared to $34.5 million (FY2004) and net profit after tax of $8.5 million before
including a one-off $1.6 million benefit from tax consolidation. The statement of
financial position which accompanies this result and the low level of gearing at 13.1%
indicate both a strong financial performance and a sound business platform for
continuing robust growth.
Managing Director, Stephen Donnelley, said “Th is is a strong result and
demonstrate s the benefits of scale that we expected to deliver to our customers and
shareholders. The integration of the acquisitions into the business and management
of our expansion plans have proceeded relatively smoothly.”
Mr Donnelley continued “The Company achieved its pre and post tax profit forecasts
despite experiencing some unexpected delays in the delivery of new equipment.”
Key Performance Summary
· Pre tax profit for FY2005 was $13.1 million significantly up on the $1.4 million
in FY2004 and marginally ahead of the Company’s forecast of $12.9 million
included in the November 2004 Explanatory Statement.
· Net profit after tax was $10.1 million which included a one-off $1.6 million tax
consolidation benefit. This reflects a significant increase to the $0.9 million
recorded in the previous year.
· The inclusion from 10 December 2004 of the major acquisitions of Allight
Holdings Pty Ltd and The Cat Rental Sto re® business in Western Australia
have had a significant impact on the results. The year ending 30 June 2006
will include a full 12 month contribution from these acquisitions.
· Total Revenue for FY2005 amounted to $117.5 million compared to $34.5
million in FY2004.
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· National Hire Group has declared a final fully franked dividend of 0.5 cents
per share which will be paid on 14 October 2005.
The National Hire Board is confident about the continuing good prospects for the
Group in the year ahead. Market conditions are expected to remain strong with the
demand in the mining and infrastructure segments outweighing the softening of the
building construction sector in NSW and Victoria.
Key Financial Result Comparatives
$ million
2005
2004 Variation
%
Total revenue 117.5 34.5 83.0 241
EBITDA 30.9 6.3 24.6 390
EBITDA % 26.3% 18.3%
Depreciation (14.8) (3.6) (11.2) (311)
EBITA 16.1 2.7 13.4 496
Amortisation (2.1) (0.5) (1.6) (320)
EBIT 14.0 2.2 11.8 536
Net Interest (0.9) (0.8) (0.1) (13)
Profit before tax 13.1 1.4 11.7 836
Tax expense (4.6) (0.5 ) (4.1) (820)
Profit after tax and
significant items
8.5 0.9 7.6 844
Tax consolidation benefit 1.6 1.6
Profit after tax 10.1 0.9 9.2 1,022
EPS - cents 2.51 0.97 1.54 159
Full year dividend-cents
per share
0.5

Commentary
Total revenue for the yea r amounted to $117.5 million , compared to $34.5 million for
FY2004. Revenue of $116.4 million, after adjusting for interest income of $1.1
million, compares favourably to the forecast revenue of $113.6 million in the
November 2004 Explanatory Statement. Revenue was positively impacted as a
result of the Company completing the Allight and Cat Rental Store (WA) acquisitions
earlier than forecast, which as announced in the half year interim results, contributed
$7.1 million in revenue for this short period.
The Capital Sales division (Allight Lighting Towers, FG Wilson, Perkins and Allight
Water Management) achieved a strong second half. This benefit was partially offset
by the Rental Services division experiencing a slower than expected delivery of new
equipment orders during the second half.
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As National Hire Group had an extensive capital expenditure programme in place
during the second half of FY2005, the delayed equipment delivery had the effect of
reducing anticipated revenue. Equipment deliveries were affected by the increased
global demand for shipping services, rubber tyres and steel in addition to generally
extended delivery times.
The Company adjusted to these delivery delays by significantly slowing down its
used equipment sales programme. Combined with the consequent lower
depreciation charge and interest costs, National Hire Group delivered a pre-tax profit
in line with that forecast in the Explanatory Statement.
EBITDA for the year ended 30 June 2005 totalled $30.9 million, representing a
margin on sales for the full year of 26.3%. The EBITDA margin in the second half
was 29.1%.
The Company has experienced major integration growth in a short period. This has
necessitated additional structural and foundation costs not originally forecast in the
Explanatory Statement. These costs will reduce proportionately as the business
grows and revenues increase.
Mr Donnelley said, “National Hire’s business has been consolidated and rationalised
into two business units, Rental Services and Capital Sales, which achieve different
operating margins. Based on the mix of the businesses and the lower margin
emanating from the Capital Sales business, the second half overall EBITDA margin
of 29% represents an excellent outcome .”
At the time of the acquisitions, National Hire Group forecast allocating $75 million to
capital expenditure during FY2005. Orders have been placed for the full amount with
actual deliveries to 30 June 2005, due to late arrivals, amounting to $65.5 million.
During the year the Company acquired Allight Holdings Pty Ltd, the business of The
Cat Rental Stores in Western Australia, Ark Hire, Beeline Rentals and Beavis Hire for
a total consideration of $139.5 million, satisfied by the issue of 298.4 million new
National Hire Group shares and cash of $15.0 million.
Outlook
The coming year will reflect the substantial benefits of a full year’s trading for the
acquired businesses together with a substantial capital expenditure programme and
new store openings.
The Company has the scale and resources to capitalise on the platform that has
been established allowing it to continue on a robust growth plan including, additional
capital expenditure programme to increase product range and depth, strategic
acquisitions to continue diversifying into a wider geographic spread and customer
segments and new store rollouts.
The strategic priorities for the National Hire Group in Rental Services are to provide
increased levels of customer service by leveraging off the partnership with WesTrac,
cross selling through existing business units and the improved ability to service
national accounts.
The Company will continue to reduce the cyclical nature of the business through
diversification in geographic locations and customer and industry segments.
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The Capital Sales business unit is focused on becoming a leading supplier in the
lighting, power generation and water management businesses both in Australia and
overseas. In the coming year it is intended to further develop the export market for
the Allight branded products.
The expanded National Hire Group offers opportunities to develop synergies through
improved fleet management, increased buying power, IT standardisation and general
economies of scale. This remains a key management focus.
The National Hire Group Board is confident about the continu ing good prospects for
the Company in the year ahead. Market conditions are expected to remain strong
with the demand in the mining and infrastructure segments outweighing the softening
of the building construction sector in NSW and Victoria.

Commentary
Net profit after tax for the year ended 30 June 2005 of $10,110,000 compares favourably to the
previous corresponding period profit of $872,000. This is a $9,238,000 improvement for the period.
National Hire, as head entity in a tax consolidation group, entered into the new consolidation regime
effective 1 July 2002. Entry of the group into the tax consolidation regime has provided a tax benefit
totaling $1,571,000 on the restatement of the tax values of depreciating assets.
The result included the trading performance of The Cat Rental Store business in Western Australia
and the Allight group from the date of acquisition on 10 December 2004. These operations,
together with the existing National Hire business were consolidated and rationalized into two
business units- Rental Services and Equipment Manufacturing and Sales.
Total revenue for the year was $117,501,000 an increase of 240.6% or $83,006,000 over the
previous corresponding period.
Operating profit for the period (before borrowing costs, tax, goodwill/brand name amortisation and
significant items) was $16,628,000 compared to the previous corresponding period of $3,664,000
an increase of 353.8% or $12,964,000.
Profit before tax and before goodwill/brand name amortisation and significant items for the period
was $14,666,000 compared favourably to the previous corresponding period of $2,404,000 an
improvement $12,262,000 or 510.1% on the corresponding period last year.
The profit before tax for the year of $13,061,000 compares favourably to the previous
corresponding period of $1,443,000 representing an increase of $11,618,000.
Business Acquisitions
On the 10 December 2004 National Hire Group Limited completed the acquisition of the assets of
the Cat Rental Store business (“CRS”) operated by WesTrac Pty Ltd in Western Australia and
100% of the shares in Allight Holdings Pty Ltd for a combined equity consideration of $122.4
million. The consideration was satisfied through the issue of 298.4 million shares in National Hire
Group Limited at a negotiated contract price of $0.375 per share. In accordance with accounting
standards the transaction were accounted for at the prevailing market rate immediately after the
company assumed control of the acquired assets. Subsequent cash completion adjustments
pertaining to the CRS acquisition amounted to $6.1 million.
3
Other acquisitions during the period included the purchase of Beavis Hire on the 31 March 2005,
Beeline Rental & Hire on 3 December 2004 and Ark Hire Portaloo and Site Shed on 2 November
2004.

Equity raising
During December 2004, the Company successfully completed an equity raising to institutional
investors at an offer price of $0.35 per share to raise $40 million, before transaction costs, primarily
to fund further expansion of the combined group.
On 29 December 2004 the Company offered to existing shareholders the opportunity to participate
in a share purchase plan. The offer allowed each shareholder to subscribe for up to $5,000 worth of
new fully paid ordinary shares in the Company. The offer raised $4.8 million with 13.6 million shares
allotted.
Employee Retention Bonus Shares
During December 2004 the Company offered Retention Bonus Shares to 66 executives under the
National Hire Group Limited Deferred Employee Share Plan.The offer was accepted by all
nominated employees and consequently in January 2005 the Company issued 4,285,227 ordinary
shares at $0.44 each.
The shares were issued under conditions contained in the Offer Booklet and included a 2 year
continuous employment requirement with the Company from the offer date
Employee Options
During November 2004 National Hire Group Limited issued 600,000 employee options under its
employee share option plan. The exercise price in respect of each option is $0.46 and the period
during which the options maybe exercised is between 20 November 2006 and 20 November 2008.
Under the employee option plan a total of 1,200,000 options are on issue.
Contingent liabilities
The parent entity and controlled entities have agreed to indemnify Australia and New Zealand
Banking Group Limited in respect of guarantees given by the Group in favour of third parties. At 30
June 2005 the maximum amount of the guarantees was $821,756.
Segment reporting
The National Hire group’s principal activities are the hire of general equipment, access equipment,
temporary site accommodation and toilets together with mobile lighting equipment, power
generation equipment and dewatering pumps which are also designed, assembled and sold. Other
activities include the distribution of engines, power generation sets and parts.
.