LAVENDON GROUP PLC 
By ?
16 January 2014
Lavendon Group plc
Full Year Trading Update 2013
Board Confident of its Profit Expectations for 2013
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 year ended 31 December 2013:
Summary
· Confident of delivering the Board's profit expectations for 2013
· Strong rental revenue growth in the Middle East and France
· Improving revenue trend in the UK, the Group's largest business unit
· Annualised operational efficiency gains ahead of expectations at the end of 2013
· Significant fleet investment funded from annual cash flows
· Net debt reduced on a constant currency basis
The Group'stotal and rental revenues for year ended 31 December 2013, on a constant currency basis and excluding ex-fleet equipment sales remained in line with the prior year. The rental revenue growth rates across the Group's markets by quarter and for the year are shown below:
Territory | Contribution to Total Group Rental Revenue | Q1 2013 Rental Revenue Growth Y-O-Y | Q2 2013 Rental Revenue Growth Y-O-Y | Q3 2013 Rental Revenue Growth Y-O-Y | Q4 2013 Rental Revenue Growth Y-O-Y | 12 months to 31 Dec 2013 Rental Revenue Growth Y-O-Y |
UK | 46% | (7)% | (6)% | (4)% | 0% | (4)% |
Germany | 19% | (12)% | (1)% | 0% | (13)% | (7)% |
Belgium | 6% | (12)% | (10)% | (2)% | 0% | (6)% |
France | 10% | 2% | 10% | 10% | 6% | 7% |
Middle East | 19% | 34% | 26% | 20% | 8% | 21% |
Group | 100% | (2)% | 1% | 2% | (1)% | 0% |
Percentages shown are on a constant currency basis and are rental revenues only (excluding revenues from the
sale of new and ex-fleet equipment)
The UK's revenue performance continued to improve in the quarter and is starting to gather momentum as we move into 2014, with volumes remaining consistently ahead of the prior year and pricing showing further signs of strengthening. The influence of the shift in fleet mix on hire towards smaller units is now diminishing although remained a factor in the final quarter, offsetting the benefit of the increased volumes and prices on overall revenues and margins per hire.
In Germany, our business was more competitive on pricing to ensure volumes were held in line with the prior year and market share was maintained. Revenues in the fourth quarter reflect the resolution of initial teething issues with the implementation of our new IT platform in the third quarter. Aggregate revenues for the third and fourth quarters, which show a decline of 7%, better reflect the underlying performance of the business in the second half of the year. As the business moves into 2014, and having completed its restructuring plan and implemented the Group's new IT platform, its key focus is to return revenues to year on year growth through both pricing and fleet utilisation improvements.
In the Middle East, despite increasingly more difficult comparators, revenue growth continues to be good, driven by ongoing robust demand and supported by additional fleet investment over the year. The overall outlook for the region continues to be very positive, although the more onerous regulatory environment, particularly in Saudi Arabia, is slowing the progress of some projects while the market adjusts to these requirements.
Our initial three year programme to deliver operational efficiencies has exceeded our expectations, and we plan to set out the next phase of our efficiency programme when we announce our preliminary results in February 2014. These efficiency gains together with a lower interest charge for the year, has enabled the Group to make further progress in improving its profitability for the year.
As previously reported, the Group's return on capital employed (ROCE) in 2013 is expected to be marginally below the 10.7% reported for 2012, principally due to a decline in the UK's relative contribution to the Group's ROCE. Measures were taken in the fourth quarter to address this performance, and we remain confident that, over the business cycle, we will deliver a ROCE for the Group greater than our average weighted cost of capital.
The Group's net debtlevel at 31 December 2013 reduced by £1 million to £96 million, on a constant currency basis relative to the 2012 year end (FY2012: £97 million), after funding a net capex programme during the year of £44 million. At actual exchange rates, the Group's reported net debt position at 31 December 2013 was £98 million.
Don Kenny, Chief Executive of Lavendon, commented:
"During the year, we have again delivered strong revenue growth in France and the Middle East, and, importantly, seen an improving trend in our UK business through both increased volumes and an improved pricing environment. The Board expects the Group's results for 2013 to be in line with its expectations, and, whilst mindful of continuing economic uncertainties in our European markets, we are looking forward to making further progress in 2014."
Ends
Conference call
A conference call will be held for analysts at 8.00am (UK time) today (16 January 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 atwww.lavendongroup.com.
Next Update
Lavendon will announce its preliminary results for 2013 on 27 February 2014.
For further information, please contact:
Lavendon | |
Don Kenny, Chief Executive Alan Merrell, Group Finance Director | Today T: +44 (0)207 831 3113 Thereafter T: +44 (0)1455 206 736 |
FTI Consulting | |
Jonathon Brill Alex Beagley | T: +44 (0)207 831 3113 |
Notes to Editors
Lavendon is the European and Middle East market leader in the rental of powered access equipment. The quality and 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, India, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. The equipment fleet totals over 20,000 units and the Group employs almost 1,650 people.
This information is provided by RNS
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