18 November 2014

Lavendon Group plc

Interim Management Statement

Board Confident of Delivering its Expectations for 2014

Lavendon Group plc ("Lavendon" or the "Group"), the market leader in the rental of powered access equipment in Europe and the Middle East, today issues the following Interim Management Statement covering the period 1 January 2014 to date:

Summary

·     Board remains confident of delivering its expectations for the year 

·     Rental revenues increased by 6% in both Q3 and over the first nine months of the year

·     Strong rental revenue growth in key UK and Middle East businesses

·     German business returned to revenue growth towards end of Q3

·     Investment programme continues to be funded by cash flow

·     Revenue growth driving improved profitability, margins and ROCE despite strong FX headwinds

The Group's total and rental revenues for the nine months ended 30 September 2014, on a constant currency basis and excluding ex-fleet equipment sales, increased by 6% compared with the prior year. In the third quarter, both Group total and rental revenues increased by 6% on the same basis. At actual exchange rates, the Group's total revenue and rental revenues for the nine month period, excluding ex-fleet equipment sales, increased by 3% compared with the prior year.

The rental revenue growth rates across the Group's business units, on a constant currency basis, for the last nine months by quarter are given in the table below:

   Percentages shown are on a constant currency basis and are rental revenues only
       (excluding revenues from the sale of new and ex-fleet equipment)

In the UK, third quarter revenue growth was good despite increasingly more difficult comparators. The growth of 8% was driven by continued pricing improvements and further favorable mix movements that more than offset the lower year on year volumes we expected in the quarter. The shift in demand seen this year, away from high volume smaller machines towards larger higher revenue generating units, is expected to continue over the balance of the year and is an indication that the commercial and industrial construction sectors we serve continue to recover.

The rate of revenue growth in the Middle East business, despite stronger comparators, increased to 15% during the third quarter. This revenue growth was principally driven by increases in volume but was supported with some further pricing improvements. The market outlook for the region continues to be positive and we are currently planning to deploy additional capital into the region as we move into 2015.

Whilst economic conditions within Continental Europe remain generally difficult, volumes in our German business improved in the quarter and, despite some continued pricing pressure in the market, the business returned to year on year revenue growth in September (albeit against relatively weak comparators). Our French business has delivered another quarter of strong revenue growth, whilst Belgian revenues declined against the prior year (a period which benefited from a major project that has since completed).

The growth in Group revenue across the first nine months of the year has driven improved profitability, operating margins and ROCE, despite the strong exchange rate headwinds on our overseas earnings. The Board's primary focus remains on improving the Group's ROCE above our average weighted cost of capital across the business cycle and we are confident of delivering good progress towards this objective in 2014.

As expected, the Group's net debt level at 30 September 2014 increased to £105 million, on a constant currency basis, relative to the £97 million at the 2013 year end. At actual exchange rates, after reflecting a favorable foreign exchange movement on our Euro denominated debt, the Group's reported net debt position at 30 September 2014 was £99 million. Our planned investment programme for 2014 is being funded from our annual cash flows, and the Board continues to expect the Group's year end net debt level to be broadly in line with that at 31 December 2013.

Don Kenny, Chief Executive of Lavendon, commented:

"The Group has performed well in the first nine months of the year, with particularly strong revenue growth coming from our key UK and Middle East businesses. It is encouraging to see the growth in Group revenue driving improvements in our profitability and margins, and at the same time delivering a better return on our capital employed. The Board remains confident of delivering on its expectations for 2014, despite the FX headwinds on our overseas earnings and the continuing economic weakness in our Continental European markets."

Ends

Conference call

A conference call will be held for analysts at 8.00am (UK time) today (18 November 2014), the details of which can be obtained from FTI Consulting. A replay of the call will be available on the company's website after the event at www.lavendongroup.com.

Next Update

Lavendon will issue a Full Year pre-close trading update in January 2015.

For further information, please contact:

Notes to Editors

Lavendon is the European and Middle East market leader in the rental of powered access equipment. The quality of diversity of its hire fleet, coupled with the professionalism and accessibility of its depot network, provides an exceptional product range for customers. 

Powered access equipment is designed to enable people to work safely, productively and comfortably at height. It can be used in a comprehensive range of applications, both inside and outside buildings and structures.

The Group has operations in the United Kingdom, Germany, Belgium, France, Bahrain, Kuwait, India, Oman, Qatar, Saudi Arabia and the United Arab Emirates. The equipment fleet totals over 20,000 units and the Group employs over 1,650 people.