7th Mar 2006 07:03
Lavendon Group PLC07 March 2006 7 March 2006 Lavendon Group plc Preliminary Results for the year ended 31 December 2005 Lavendon Group is Europe's market leader in the rental of powered accessequipment. Powered access provides a high degree of flexibility, therebyreducing labour costs and saving both time and money. The equipment is quick,safe, convenient and highly manoeuvrable. Consequently, it is now used toprovide temporary aerial access in a variety of applications and is fastbecoming industry's favoured option when compared to traditional access methodssuch as scaffolding, ladders and aluminium towers. It is also ideal for a widerange of other applications including industrial and building maintenance,construction, sign erection, outside broadcasting, telecommunications, treesurgery and highway maintenance. Highlights: • Return to profitability • Restructuring complete with margins improving • Net debt reduced by £27.3m to £61.7m (2004: £89.0m) • Since the year end two earnings enhancing acquisitions in the UK completed • Resumption of dividend payments Financial: • Operating profit increased by 28% to £7.3m (2004: £5.7m) • PBT of £2.9m (2004: loss of £0.1m before exceptional costs) • Gearing stands at 80% (2004: 118%) • Outlook for the year expecting further progress both in terms of revenue growth and profitability Outlook John Gordon, Chairman, said today: "Strong cash flows over recent years have strengthened the Group's balance sheetand are now providing the necessary resources to enable us to make acquisitionsshould we so choose. Since the year end we have made two acquisitions in the UK,both of which are earnings enhancing and it is this investment combined withorganic growth that will deliver a significant increase in shareholder value inthe medium term. "Trading so far this year is in line with our expectations and we look forwardto being able to report further progress in the coming months." For further information please contact: Lavendon Group plcKevin Appleton, Chief Executive On 07.03.06: 020 7067 0700Alan Merrell, Group Finance Director Thereafter: 01455 558874 Weber Shandwick Square MileTerry Garrett / Nick Dibden 020 7067 0700 CHAIRMAN'S STATEMENT SummaryIncreased operating margins have produced an improved trading performance in2005, in line with our expectations. Our strategy is to seek to grow through acombination of selective fleet investment and the acquisition of existing marketcapacity when the appropriate opportunities arise, to further enhance ourmargins and return on capital. The financial capacity to support this strategyfor growth is now available, as over the past three years, the Group hasgenerated significant free cash and reduced it's debt levels by some £52million, thereby leaving it well placed to respond to improving marketconditions. Financial ResultsThe Group's results for the year ended 31 December 2005 are the first annualresults to be prepared under International Financial Reporting Standards("IFRS"). All financial data contained in this statement, including comparisonswith the previous year, reflect the conversion to IFRS, with reconciliationsfrom IFRS to UK GAAP forming part of these financial statements. The Group's turnover for the year was £100.0 million (2004: £108.0 million)following the restructuring of our German operation and the sale of our Austrianbusiness. Despite this decline in revenues, operating profits increased by 28%to £7.3 million (2004: profit of £5.7 million before exceptional costs and aloss of £8.8 million after exceptional costs). Operating profit margins improvedto 7.3% (2004: 5.3% before exceptional costs and a negative margin of 8.1% afterexceptional costs). Net interest charges reduced by £1.4 million to £4.4 million (2004: £5.8million), reflecting the £27.3 million reduction in the Group's borrowinglevels. The improved trading performance, combined with the reduced interestcharges, produced a profit before tax of £2.9 million (2004: loss of £0.1million before exceptional costs and a loss of £14.6 million after exceptionalcosts). The earnings per share were 2.40 pence (2004: loss per share of 3.43pence before exceptional costs and a loss of 34.63 pence after exceptionalcosts). Earnings before interest, tax, depreciation and amortisation ("EBITDA") were£29.8 million (2004: £31.3 million before exceptional costs and £25.6 millionafter exceptional costs). Cash generated from operations increased by 7% to£31.2 million (2004: £29.1 million), despite absorbing a cash flow outflow of£2.5 million during the year relating to the exceptional costs accrued,principally associated with the restructuring of our German business, at the2004 year end. The net cash generated from operating activities, after paymentof interest and taxation due, increased to £25.3 million (2004: £24.2 million). The net cash inflow from investing activities of £5.1 million (2004: outflow of£0.3 million) resulted from the proceeds of the sale of the Austrian business,the sale of retired rental units and the sale of 410 surplus German rental unitsidentified at the end of 2004, exceeding the capital expenditure incurred duringthe year. The combination of cash inflows from both operating and investing activitiesproduced "free cash" (1) of £25.0 million (2004: £20.9 million) which, whencombined with a favourable foreign exchange movement of £2.3 million (2004:adverse movement of £0.5 million), enabled the Group to reduce its net debt to£61.7 million from £89.0 million at the end of 2004. The resultant debt toequity ratio, following this debt reduction, is 80%, compared with 118% at theprevious year-end. DividendIn light of the Group's improved trading performance, the Board is intending toresume the payment of dividends, and accordingly, will propose to pay a finaldividend of 2.25 pence per share, which, if approved at the Annual GeneralMeeting on 28 April 2006, will be paid on 2 June 2006 to shareholders on theregister at the close of business on 17 March 2006. In accordance with IAS 10, dividends are only recognised in the financialstatements when they are approved. AcquisitionsSince the year end, the Group has secured additional revenue streams and fleetcapacity by acquiring two businesses in the UK, Panther Work Platforms Limitedand Kestrel Powered Access Limited, for an aggregate consideration of up to£17.0 million. Both companies have excellent market positions in sectorsexperiencing strong growth, established over a number of years by veryexperienced management teams, and we look forward to leveraging their marketpositions by providing access to the larger rental fleet and depot networkavailable from the Group's existing UK operations. Board ChangesIn September last year, my predecessor and the founder of the Group, DavidPrice, retired upon reaching the age of 60 after a career with the Companyspanning some 13 years. David established the Lavendon Group in 1992 with the acquisition of NationwideAccess Limited, an operation of six depots, 430 machines and 40 employees. Basedmainly upon his earlier experiences in the USA and Australia, he designed andimplemented a business model that enabled Lavendon to become the European marketleader in powered access rental within nine years, operating in nine countrieswith a rental fleet of some 11,000 machines and employing over 1,000 people.Throughout this period, David made a unique contribution to the development ofthe powered access rental market in Europe and beyond, becoming a widely knownand greatly respected advocate of the industry. The Board wishes David a longand happy retirement. Following David's retirement, I was pleased to accept the position of Chairman,with John Standen, who joined the Board in May 2005, becoming the Group's SeniorNon-Executive Director and Chairman of the Audit Committee. In October 2005,Timothy Ross joined the Board as a Non-Executive Director and became a member ofboth the Audit Committee and the Remuneration and Nomination Committee. John Heywood, who has been a Non-Executive Director since the Company'sflotation in 1996, will retire at the end of his third term of appointment atthe forthcoming Annual General Meeting. Prior to John's retirement, we intend toappoint a replacement Non-Executive Director. OutlookThe case for the use of powered access remains compelling. The recognisedattributes of efficiency and cost effectiveness are being underpinned by evermore stringent health and safety legislation. In 2005, the introduction of theWork at Height Regulations in the UK, which seeks to ensure that any work atheight is undertaken in the safest possible manner, will reinforce theestablished trend of powered access being preferred over other means of access.Similar legislation exists across the European Union where the added pressure of limited working weeks and high labour costs means that the use of powered access will be further embraced as a means of enhancing labour productivity in construction and refurbishment projects. In the Middle East, the pressure to deliver huge projects, both on time and on budget, continues to drive the use of powered access in the region. There are now encouraging signs in certain markets that the correction in theimbalance between the capacity to supply and demand levels is under way,although until this is well established pressure on hire rates is expected toremain. By concentrating our efforts in areas where the competitive environmentis less aggressive and pricing more attractive, we have been able to deliverimprovements in trading profitability and, at the same time, develop ouroperations to ensure that they can generate sustainable and superior marginsfrom future investment. Strong cash flows over recent years have strengthened the Group's balance sheet,and are now providing the necessary resources to secure the additional capacityrequired to drive revenue growth and increased profits at rates above thoseavailable from the existing fleet. It is this investment in both organic andacquisitive growth that will deliver a significant increase in shareholder valuein the medium term. Trading so far this year is in line with our expectations and we look forward tobeing able to report further progress in the coming months. John GordonChairman (1) Free cash is defined as net cash inflow from continuing operating activitiesless interest, taxation, dividends paid, and capital expenditure beforeinception of new hire purchase agreements. Free cash 2005 2004 £'million £'million Net cash generated from operating activities 25.3 24.2 Net cash generated from/(used by) investing activities 5.1 (0.3)Dividends paid - (2.6)Capital expenditure financed by hire purchase agreements (5.4) (0.4) _________ __________Free cash 25.0 20.9 ========= ========== Chief Executive's Review The past year has seen the Group return to profitability through operatingmargin enhancement, driven by operational efficiencies and concentrating on ourcompetitive strengths. At the same time as securing an improved tradingperformance, we have maintained our focus on the prudent management of cashflows by limiting capital expenditure to continue the reduction in net debt. Asa result, the Group is well positioned to take advantage of growth opportunitiesthat are becoming available, not only by having the financial resourceavailable, but also by having a solid operating platform with proven processesfrom which to develop. UKThe UK remains the Group's largest and most important market, representing some60% of the total revenue. During 2005, the operation delivered solid profitgrowth from broadly stable revenues of £61.1 million (2004: £61.5 million).Operating profits increased by 14% to £8.3 million (2004: £7.3 million beforeexceptional costs and £5.3 million after exceptional costs), with operatingmargins improving to 14% from 12% in 2004. This margin improvement has beenachieved despite the increase in fuel costs, and is as a result of actions takento increase the average length of hire, thereby reducing both workshop andtransport workloads, removing low margin-generating assets from the fleet andfurther refining operational and IT systems. The UK management has completed the restructuring of the business and it is nowable to deliver superior customer service to higher-margin revenue streams andto avoid the intense competition present in the highly price-sensitive localconstruction market. This concentration of effort has undoubtedly, in the shortterm, meant that we have been unable to capitalise on growth opportunities inother more attractive sectors of the local market and future strategicinitiatives in the UK will be aimed at allowing us to attack these sectors withgreater vigour. To provide a platform for this market penetration, we have recently completedthe acquisitions of Panther Work Platforms Limited and Kestrel Powered AccessLimited, which together increase the UK's rental fleet by 1,650 machines and addseven depots to our network. These businesses have developed strong marketpositions, with excellent operational management, in local service andmaintenance sectors that are enjoying robust growth. We will seek to maximisethe opportunities that these market sectors present by providing support, bothoperationally and financially, to allow the respective management teams tocontinue to grow these businesses. The combination of the existing UK business, with the recent acquisitions,should ensure further substantial progress is made in 2006, both in terms ofrevenue growth and profitability. GermanyOur German operation came into 2005 with the least auspicious of operatingscenarios - a declining market, tough economy and coming towards the end of amajor restructuring programme that saw the sale of the Austrian subsidiary, theclosure of 45% of the depot network and a 25% reduction in fleet and staffnumbers. It was critical for the business that it "re-invented" itself in 2005in a leaner, more streamlined form and laid the foundations for significantfinancial progress in the coming years. It was also necessary, given the scaleand cost of the restructuring, that management reverse a trend of declining orstatic trading performance dating back to 2001. Against all of these benchmarks, the German operation has made progress. The restructuring of the company has produced an operation costing around £8million less per year to run than its previous incarnation. The attrition incustomer revenue that the restructuring precipitated was worse than we hadanticipated, but the contraction of the cost base enabled a reduction inoperating losses compared to 2004 of some £0.3 million for the German businessin isolation and £0.6 million when combined with the operational saving producedfrom the sale of the Austrian subsidiary. Revenues for the year declined by 25% to £21.2 million (2004: £28.3 million),but operating losses reduced to £3.1 million (2004: loss of £3.4 million priorto exceptional costs and a loss of £13.9 million after exceptional costs). The business does not require significant capital investment to functioneffectively and will not do so for some time. This feature, combined with thefact that the operation remains cash generative, despite incurring operatinglosses, will enable the business to operate its way back to acceptable levels ofprofitability before we need to consider any further investment. As part of the restructuring of the German operation towards the end of 2004, atotal of 717 rental machines were removed from the fleet and a disposalprogramme commenced with the aim of selling these units into markets outside ofour current areas of operation. At the end of 2005, a total of 410 machines hadbeen sold, with the remainder being scheduled for sale in 2006 to complete thisprocess. FranceThe objective this year for our French operation was to move the business closerto breakeven, by increasing the scale of its rental fleet to allow sufficientrevenues to be generated over time to cover the high fixed costs of theoperation. Revenues for the year increased by 26% to £6.7 million (2004: £5.3 million),reducing operating losses to £0.5 million (2004: £0.6 million). The costs of theincreased fleet and the two new depot openings placed a drag on profits in thefirst half of the year, which was progressively reversed in the second half. Thebusiness exited the year with encouraging volume levels and, providing themarket stays relatively robust, the outlook for 2006 is for further progress. There are no short-term requirements for further investment and the business nowhas the scale to demonstrate that it can achieve acceptable returns in thecurrent market conditions. SpainThe Spanish operation consolidated its depot network at the start of 2005 andnow has two sizeable depots in Madrid and Murcia, with a satellite operation inSantiago, serving the niche market of Galicia. The decision to limit ourambitions in this market to a small number of strong regional positions hasstabilised the performance of the business, with revenues in line with theprevious year at £3.6 million (2004: £3.6 million) and a break-even operatingresult (2004: breakeven). The achievement of high utilisation, combined with a tight control overoperating costs, is a pre-requisite to delivering acceptable levels ofprofitability. Our operation is starting to make progress in both of these areasand we anticipate an improved performance in 2006. Middle EastOur Middle East business, with operations in Bahrain, Kuwait, Qatar, SaudiArabia and the United Arab Emirates, produced another excellent performance.Revenues increased to £7.5 million (2004: £7.2 million), with operating profits,due to the timing of fleet additions and the cost of strengthening themanagement team, in line at £2.7 million (2004: £2.7 million). The region finished 2005 with increasing levels of demand, a trend which iscontinuing into the new year and which has led to additional equipment beingtransferred from our European operations in the first few weeks of 2006. Theincreasing level of activity in the region allows us to look forward withconfidence for the foreseeable future. SummaryIt is pleasing to be able to report good progress in a number of areas duringthe last twelve months. It is worth emphasising that this progress has beenachieved without recourse to any substantial capital investment, indicating theimproved quality of the business' operational disciplines. The strategy of rigidfiscal self-discipline over the last three years has positioned the Groupfinancially to support investment going forward, to drive revenue growth aboveaverage levels of general economic activity and deliver superior profitperformance. With the acquisition of Panther Work Platforms Limited and Kestrel PoweredAccess Limited, we have started the process of consolidating our position in theUK market where we have the best-developed infrastructure, the largest fleet,the largest customer base and a strong management team. We anticipate thisprocess will provide the platform for profitable growth for the Group over thecoming years, and, with prudent management of the balance sheet, will enable theGroup to deliver enhanced returns to our shareholders. Kevin AppletonChief Executive7 March 2006 Consolidated profit and loss accountFor the year ended 31 December 2005 2005 2004 £000 £000________________________________________________________________________________Revenue 100,009 108,013 Cost of sales before exceptional cost of sales (58,652) (63,960)Exceptional cost of sales - (8,118)________________________________________________________________________________Total cost of sales (58,652) (72,078)________________________________________________________________________________Gross profit 41,357 35,935Operating expenses before exceptional operating expenses (34,013) (38,326)Exceptional operating expenses - (6,396)________________________________________________________________________________Total operating expenses (34,013) (44,722)________________________________________________________________________________Operating profit/(loss) 7,344 (8,787)Interest receivable 46 30Interest payable (4,491) (5,810)________________________________________________________________________________Profit/(loss) before taxation 2,899 (14,567)Taxation on profit/(loss) (2,010) 1,753________________________________________________________________________________Profit/(loss) after taxation 889 (12,814)________________________________________________________________________________ Profit/(loss) per ordinary share - basic 2.40p (34.63)p- diluted 2.38p (34.63)p There is no difference between the profit/(loss) on ordinary activities beforetaxation and the profit/(loss) for the year as stated above, and their historical cost equivalents. All of the Group's trading activities relate to continuing operations for theyear. Consolidated balance sheetAt 31 December 2005 2005 2004 £000 £000_______________________________________________________________________________ AssetsNon-current assetsIntangible assets 1,107 1,218Property, plant and equipment 143,292 166,157________________________________________________________________________________ 144,399 167,375Current assetsInventories 749 873Trade and other receivables 23,406 26,024Cash and cash equivalents 7,980 7,534________________________________________________________________________________ 32,135 34,431LiabilitiesCurrent liabilitiesFinancial liabilities- borrowings (14,162) (15,673)- derivative financial instruments (9) -Trade and other payables (15,879) (16,782)Current tax liabilities (1,879) (250)________________________________________________________________________________ (31,929) (32,705)________________________________________________________________________________Net current assets 206 1,726________________________________________________________________________________Non-current liabilitiesFinancial liabilities - borrowings (55,514) (80,870)Deferred tax liabilities (12,028) (12,831)________________________________________________________________________________ (67,542) (93,701)________________________________________________________________________________Net assets 77,063 75,400________________________________________________________________________________ Shareholders equityOrdinary shares 370 370Share premium 70,449 70,412Capital redemption reserve 4 4Other reserves (431) (841)Retained earnings 6,671 5,455________________________________________________________________________________Total equity 77,063 75,400________________________________________________________________________________ Consolidated cash flow statementFor the year ended 31 December 2005 2005 2004 £000 £000________________________________________________________________________________Cash flows from operating activities:Profit/(loss) after taxation 889 (12,814)Taxation charge/(credit) 2,010 (1,753)Net interest expense 4,445 5,780Amortisation and depreciation 22,428 26,230Gain on sale of plant, property and equipment (307) (119)Other non-cash movements 178 74Provision against German assets held for resale - 6,443Provision against Austrian subsidiary - 1,675Net decrease in working capital 1,582 3,588________________________________________________________________________________Cash generated from operations 31,225 29,104________________________________________________________________________________Interest paid (4,898) (5,404)Interest received 46 -Taxation (paid)/received (1,035) 542________________________________________________________________________________Net cash generated from operating activities 25,338 24,242________________________________________________________________________________Cash flows from investing activities:Proceeds from sale of subsidiary 2,665 -Proceeds from sale of property, plant and equipment 4,113 1,542Purchase of property, plant and equipment (1,657) (1,881)________________________________________________________________________________Net cash generated from/(used by) investing activities 5,121 (339)________________________________________________________________________________Cash flows from financing activities:Repayment of loans (18,220) (5,032)Repayment of principal under hire purchase agreements (11,802) (12,807)Equity dividends paid - (2,572)Proceeds from equity shares issued 37 -________________________________________________________________________________Net cash used by financing activities (29,985) (20,411)________________________________________________________________________________Net increase in cash and cash equivalents before exchange differences 474 3,492Effects of exchange rates (28) 4________________________________________________________________________________Net increase in cash and cash equivalents after exchange 446 3,496differences________________________________________________________________________________Cash and cash equivalents at start of period 7,534 4,038________________________________________________________________________________Cash and cash equivalents at end of period 7,980 7,534________________________________________________________________________________ Shareholders funds and statement of changes in equityFor the year ended 31 December 2005 Cash Net Capital Flow Investment Share Share Redemption Translation Hedge Hedge Retained Capital Premium Reserve Reserve Reserve Reserve Earnings Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000_________________________________________________________________________________________________________Balance at 31 December 2004 370 70,412 4 (841) - - 5,455 75,400Profit for the year - - - - - - 889 889Share based payments - - - - - - 178 178Deferred tax movement on share based payments - - - - - - 149 149Cash flow hedges- fair value losses in period - - - - (9) - - (9)Proceeds from shares issued - 37 - - - - - 37Currency translation differences - - - (1,391) - 1,810 - 419_________________________________________________________________________________________________________Balance at 31 December 2005 370 70,449 4 (2,232) (9) 1,810 6,671 77,063_________________________________________________________________________________________________________ For the year ended 31 December 2004 Cash Net Capital Flow Investment Share Share Redemption Translation Hedge Hedge Retained Capital Premium Reserve Reserve Reserve Reserve Earnings Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000_________________________________________________________________________________________________________Balance at 1 January 2004 370 70,412 4 - - - 20,789 91,575Loss for the year - - - - - - (12,814) (12,814)Dividends - - - - - - (2,572) (2,572)Share based payments - - - - - - 74 74Deferred tax movement on share based payments - - - - - - (22) (22)Currency translation differences - - - (841) - - - (841)_________________________________________________________________________________________________________Balance at 31 December 2004 370 70,412 4 (841) - - 5,455 75,400_________________________________________________________________________________________________________ Reconciliation of net cash flow movement to movement in net debt 2005 2004 £000 £000_______________________________________________________________________________Net increase in cash 446 3,496 Outflow from decrease in debt 30,022 17,839_______________________________________________________________________________Change in net debt resulting from cash flows 30,468 21,335_______________________________________________________________________________Non-cash items:New hire purchase and finance lease agreements (5,374) (369)Currency translation differences - on cash and net debt 2,219 (515)_______________________________________________________________________________Movement in net debt in the period 27,313 20,451Net debt at 1 January (89,009) (109,460)_______________________________________________________________________________Net debt at 31 December (61,696) (89,009)_______________________________________________________________________________ Primary segmental analysis - geographical segmentsYear ended 31 December 2005 Middle UK Germany France Spain East Group £'000 £'000 £'000 £'000 £'000 £'000_________________________________________________________________________________________Revenue 61,106 21,153 6,661 3,614 7,475 100,009_________________________________________________________________________________________Operating profit/(loss) 8,313 (3,130) (521) (27) 2,709 7,344Interest receivable 46Interest payable (4,491)_________________________________________________________________________________________Profit before tax 2,899Taxation on profit (2,010)_________________________________________________________________________________________Profit for the year attributable to shareholders 889_________________________________________________________________________________________ Total assets 86,250 40,600 19,050 11,732 18,902 176,534Total liabilities (87,145) (6,381) (4,495) (960) (639) (99,620)_________________________________________________________________________________________Net(liabilities)/assets (895) 34,219 14,555 10,772 18,263 76,914_________________________________________________________________________________________Capital expenditure 4,785 761 2,479 38 127 8,190_________________________________________________________________________________________Depreciation 12,095 5,068 1,824 1,313 1,690 21,990_________________________________________________________________________________________Amortisation of intangible assets 209 174 22 23 10 438_________________________________________________________________________________________ Notes:The assets and depreciation charge shown for the Middle East includes rental equipment owned by the UK operation, but which is used by and costed to the Middle East operation. The inclusion of the assets and depreciation charge in the Middle East more accurately reflects the commercial nature of the arrangement. The information disclosed for the UK operation includes centralised Group costs, assets andliabilities which may relate to the operation and financing of overseas subsidiaries. Primary segmental analysis - geographical segmentsYear ended 31 December 2004 Middle UK Germany France Spain Austria East Group £'000 £'000 £'000 £'000 £'000 £'000 £'000___________________________________________________________________________________________________Revenue 61,512 28,339 5,297 3,549 2,128 7,188 108,013___________________________________________________________________________________________________Operating profit/(loss) before exceptional costs 7,334 (3,351) (599) (62) (289) 2,694 5,727Exceptional costs (2,040) (10,550) - - (1,924) - (14,514)___________________________________________________________________________________________________Operating profit/(loss) after exceptional costs 5,294 (13,901) (599) (62) (2,213) 2,694 (8,787)Interest receivable 30Interest payable (5,810)___________________________________________________________________________________________________Loss before tax (14,567)Taxation on loss 1,753___________________________________________________________________________________________________Loss for the year attributable to shareholders (12,814)___________________________________________________________________________________________________ Total assets 96,690 54,405 15,896 13,429 3,220 15,665 199,305Total liabilities (107,323) (12,197) (2,486) (1,010) (487) (402) (123,905)___________________________________________________________________________________________________Net(liabilities)/assets (10,633) 42,208 13,410 12,419 2,733 15,263 75,400___________________________________________________________________________________________________Capital expenditure 336 1,047 423 48 88 375 2,317___________________________________________________________________________________________________Depreciation 12,903 7,293 1,429 1,314 574 1,559 25,072___________________________________________________________________________________________________Amortisation of intangible assets 242 188 17 18 25 13 503___________________________________________________________________________________________________ General Notes: 1. The consolidated accounts of the Group are prepared under the historical cost convention and in accordance with the Companies Act 1985, and applicable International Financial Reporting Standards in the United Kingdom. 2. Earnings per share calculations are based on: (a) the profit for the year, after deducting taxation, of £889,000 (2004: loss of £12,814,000); and (b) the weighted average of 37,021,112 ordinary shares in issue during the year (2004: 37,003,383) For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume issue of all dilutive potential ordinary shares, based on the average market price of the Company's shares of £1.844 (2003: £1.377). The Group has only one category of potential dilutive ordinary shares: those options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the year. The effect of this dilution is to increase the weighted average number of ordinary shares to 37,370,394 (2004: 37,123,889). This dilution cannot be applied to a loss and the stated EPS is hence equal to the basic EPS for the prior year. Exceptional cost of sales and operating expenses charged to the profit and loss account in the prior year do not relate to the profitability of the Group on an ongoing basis. Therefore the earnings per ordinary share before exceptional cost of sales and operating expenses has been calculated after adjustment for these costs and the related tax effect based on the basic number of shares in issue. 2005 2004 Earnings Loss per per Profit share Loss share £000 pence £000 pence_______________________________________________________________________________Profit/(loss) / earnings per share 889 2.40 (12,814) (34.63)_______________________________________________________________________________Exceptional cost of sales:Provision against German assets held for resale - - 6,443 17.41Write down of Austrian assets - - 1,675 4.53_______________________________________________________________________________ - - 8,118 21.94_______________________________________________________________________________Exceptional operating expenses:Bank fees - - 495 1.34Refinancing advisory fees - - 843 2.27Restructuring costs - - 4,403 11.90 Goodwill write down - - 655 1.77_______________________________________________________________________________ - - 6,396 17.28______________________________________________________________________________________________________________________________________________________________Total exceptional costs - - 14,514 39.22Taxation effect from exceptional costs - - (2,968) (8.02)_______________________________________________________________________________Total exceptional costs net of taxation - - 11,546 31.20_______________________________________________________________________________Earnings/(loss) per share before exceptional costs 889 2.40 (1,268) (3.43)_______________________________________________________________________________ 3. The financial information set out in this announcement does not constitute the Group statutory accounts for the year ended 31 December 2005 or 31 December 2004, but is derived from these accounts. The statutory accounts for the Group for the year ended 31 December 2005 and 2004 were reported on by the auditors without qualification and such reports did not contain any statement under section 237(2) or (3) of the Companies Act 1985. The accounts for 2004 have been delivered to the Registrar of Companies and those for 2005 will be delivered in due course. 4. The Annual General Meeting of Lavendon Group plc will be held at PricewaterhouseCoopers LLP, Cornwall Court, 19 Cornwall Street, Birmingham B3 2DT on 28 April 2006 at 10:30. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
LVD.L