16 April 2015

Lavendon Group plc

Trading Update

Trading in Line With Our Expectations - Driving Growth in Profits and Margins

Lavendon Group plc ("Lavendon" or the "Group"), the market leader in the rental of powered access equipment in Europe and the Middle East, will make the following Trading Update, covering the period from 1 January 2015 to date, at its Annual General Meeting to be held later today:

Summary

·     Board confident of delivering its expectations for the year 

·     Strong rental revenue growth in Middle East & France

·     UK returned to rental revenue growth in March

·     Profitability, margins and ROCE continue to improve

·     Annual cash flows to fund 2015 investment programme

The Group's total revenue for the quarter ended 31 March 2015, on a constant currency basis and excluding ex-fleet equipment sales, increased by 2% compared with the prior year, with rental revenues increasing by 1%. The rental revenue growth rates across the Group's markets for the first quarter are given 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, while lower year on year volumes saw rental revenues decline by 3% in the first quarter, revenues progressively improved across the quarter and returned to year on year growth in March (1% year on year). Although the year started slowly in terms of revenue, the UK's more efficient operating model has continued to drive growth in profitability and margins across the period compared to the prior year.

Higher volumes in the Middle East have continued to drive strong growth in revenues, with rental revenues up 11% year on year, despite increasingly more demanding comparatives. This has delivered further improvements in profitability and margins in the quarter. The overall market outlook remains positive, and we are currently allocating additional capital into the region to expand our fleet to support our growth plans. This expansion is being undertaken in a controlled manner, so that we have flexibility to respond accordingly to changes in market conditions should they occur.

Rental revenues in Continental Europe remained in line with the prior year, with continued strong growth in France (+13%) offsetting a weaker performance in Germany (-3%) and the anticipated lower volumes in Belgium (-17%) following the completion of a major contract in the first quarter of 2014.

In summary, the Board is pleased to note that the modest growth in overall Group revenues and continuing operational improvements have driven good year on year growth in the Group's profitability, margins and return on capital employed ("ROCE") across the quarter.

As expected, the Group's net debt level at 31 March 2015 increased to £103 million, on a constant currency basis, relative to the £90 million at the 31 December 2014, due to the purchase of additional equipment to support our growth plans and the payment of amounts owing to equipment suppliers from the previous year end. At actual exchange rates, the Group's reported net debt position at 31 March 2015 was £98 million. As previously stated, our planned investment programme for 2015 will be funded from the Group's annual cash flows.

Don Kenny, Chief Executive of Lavendon, commented:

"The Group has traded in line with our expectations in the first quarter, with a modest growth in overall Group revenues and continuing operational improvements driving growth in profitability, margins and ROCE across the period. The Board is confident of building on this momentum, making further progress during the year and delivering on its expectations for 2015."

Ends

Conference call

A conference call will be held for analysts at 8.00am (UK time) today (16 April 2015), 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 release its Half Year Trading Update in July 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, Oman, Qatar, Saudi Arabia and the United Arab Emirates. The equipment rental fleet totals almost 20,000 units and the Group employs over 1,600 people.