16 July 2015

Lavendon Group plc

First Half Trading Update

Encouraging First Half Performance

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 Trading Update for the six months to 30 June 2015:

Summary

·     Board remains confident of delivering further progress for the year 

·     Profitability, margins and returns on capital employed ("ROCE") continue to improve

·     Strong rental revenue growth in Middle East & France

·     Improving rental revenue performance in UK

·     Germany returned to rental revenue growth in second quarter

·     Investment accelerated to bring forward c.£20m from 2016 into current financial year

The Group's total revenue for the six months ended 30 June 2015, on a constant currency basis and excluding ex-fleet equipment sales, increased by 3% compared with the prior year, with rental revenues increasing by 1%. The rental revenue growth rates across the Group's markets for the first six months by 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, the gradual improvement in revenue performance seen in the first half was driven by a more favorable mix of machines on hire and better pricing, broadly mitigating lower year on year volumes. The improved revenue mix, together with a more efficient operating model, has continued to drive growth in profitability and margins across the first half compared to the prior year.

Higher volumes in the Middle East have continued to drive strong growth in revenues, despite increasingly more demanding comparatives, delivering further improvements in profitability and margins in the first half. The overall outlook for the region remains positive and we continue to allocate additional capital to expand our fleet in support of our growth strategy. As previously advised, this expansion will be undertaken in a controlled manner so that we retain flexibility to respond accordingly to changes in market conditions should they occur.

The trend in rental revenue performance in Continental Europe improved across the first half. This rate of improvement increased in the second quarter as volumes drove continued strong growth in France (+14%) and returned Germany to year on year revenue growth (+2%), more than offsetting the anticipated revenue decline in Belgium (-7%).

In summary, growth in overall Group revenues and continuing operational improvements have driven good year on year growth in the Group's profitability and margins in the first half. The Group's ROCE has also continued to improve and remains firmly above the Group's weighted average cost of capital.

Our performance to date is encouraging, and consequently we are increasing the level of fleet investment, principally in the UK and the Middle East, above the level originally planned for 2015. These revised plans will bring forward c.£20 million of investment from 2016 into the current financial year, accelerating the delivery of additional fleet in the final months of this year to ensure we are better able to take advantage of our market position and growth opportunities as we move into 2016. 

As expected, the Group's net debt level at 30 June 2015 increased to £104 million, on a constant currency basis, relative to the £90 million at 31 December 2014. At actual exchange rates, the Group's reported net debt position at 30 June 2015 was £97 million.

Don Kenny, Chief Executive of Lavendon, commented:

"The Group's trading performance has progressively improved across the first half, with modest growth in overall Group revenues and continuing operational improvements driving further increases in profitability and margins. The Board remains confident of delivering further progress during the current year. Furthermore, to build on this momentum, we are accelerating the investment in our fleet over the final months of this year to ensure we are well placed to respond to improving market conditions as we move into 2016."

Ends

Conference call

A conference call will be held for analysts at 8.00am (UK time) today (16 July 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 Interim Results for the six months ended 30 June 2015 on Friday 28 August 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.