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Interim Results

Lavendon revenues up

26 August 2016 07:16

Lavendon, Europe's market leader in the rental of powered access equipment, saw total revenues rise by 13% due to strong rental revenue growth in the UK, Middle East and France.

The group's total revenue increased to £134.2 million (2015: £119.1 million), with rental revenues also increasing by 13% to £127.1 million (2015: £112.2 million).

Underlying operating profits increased by 10% to £18.4 million (2015: £16.8 million) driven by strong growth in the UK and Middle East. Margins slightly softened to 13.7% (2015: 14.1%), as further margin improvement in the UK was offset by expected margin mix changes from Middle East growth and the effects of the German restructuring programme.

Lavendon expects group margins to improve during the second half, as the cost of investments made are fully absorbed within the business.

The increased underlying operating profits more than absorbed an increase in underlying net interest costs to £2.6 million (2015: £2.2 million), to enable the Group's underlying profit before tax to increase by 10% to £15.9 million (2015: £14.5 million). With the Group's underlying effective tax rate declining to 21% (2015: 23%), underlying profit after tax increased by 13% to £12.6 million (2015: £11.2 million) and underlying earnings per share increased by 12% to 7.40 pence (2015: 6.60 pence).

Amortisation charges for the six months to 30 June 2016 were £0.9 million (2015: £0.9 million) and exceptional items totalling £2.4 million were incurred in the period.

The exceptional items relate to the costs incurred from in-sourcing the UK's transportation function and the charges associated with the restructuring programme being undertaken in Germany.

After amortisation charges and exceptional items, the Group's operating profit was £15.1 million (2015: £15.9 million). The Group's profit before tax and after tax were £12.5 million and £9.9 million respectively (2015: £13.7 million and £10.5 million respectively), whilst earnings per share were 5.83 pence (2015: 6.19 pence).

Using exchange rates consistent with 2015, total revenues and rental revenues increased by 9% to £129.9 million and £123.1 million respectively, with underlying operating profits increasing by 5% to £17.5 million. Underlying profit before tax increased by 3% to £15.0 million, whilst underlying profit after tax increased by 5% to £11.8 million and underlying earnings per share increased by 5% to 6.93 pence.

Chief executive Don Kenny said: "The Group's trading performance in the first half has seen the delivery of strong revenue growth that has driven further improvements in our profits and operational cash flows.

"This growth has built upon the momentum established within the business towards the end of 2015 with the UK, Middle East and France being the primary drivers. The 18% rise in the interim dividend reflects this performance and the Board's confidence in the Group's long term future.

"Our growth reflects our strategic fleet investment decisions in 2015 and the actions taken in the first half to optimise our fleet deliveries and improve our operational processes. The restructuring of our German business is progressing as planned and is on track to be operational in quarter four.

"The Group's strong operational cash flows and strength of our balance sheet enables us to develop our market positions with investment, underpinning the positive momentum created within the business, whilst at the same time remaining within our preferred debt leverage range.

"Trading since the half year has continued to be in line with our expectations and, whilst mindful of the recent increased economic uncertainty, the Board remains confident of making further progress in the second half and delivering on its expectations for 2016."

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