Half Year Results

31 August 2012

Lavendon Group plc Half Year Results 2012

Lavendon Group plc, Europe's market leader in the rental of powered access equipment, today announces its Half Year Results for the six months ended 30 June 2012.

Notes

(i) Underlying results stated before amortisation charges, exceptional items, movements in the fair value of financial

derivatives and with the exception of Net Debt and ROCE excludes the Group's discontinued Spanish operation.

(ii) Underlying and statutory measures are the same.

(iii) Net debt is stated before the deduction of unamortised debt refinancing fees.

Lavendon confirms results ahead of the Board's expectations

·; ROCE increased by 210bp to 10.0% (2011: 7.9%)

·; Good momentum in Group trading performance; H1 rental revenues up 6% at constant FX

·; Robust UK performance with further market share gains and good margin growth

·; Strong rental revenue growth in France and Middle East

·; Group underlying operating profit increased by 31%; margins up to 11.9% (2011: 9.8%)

·; On track to deliver £5m of annualised operational efficiency gains by end 2013

·; Continued focus on capital efficiency through fleet realignment and capital allocation

·; Capital investment plans, including expansion in Middle East, fully funded from annual

cash flows

·; Continued net debt reduction to £98.3 million; net debt/EBITDA 1.32x

·;  Interim dividend increased by 102%

Don Kenny, Group Chief Executive said:

"Performance in the first half of the year has been good, with our results coming in ahead of our original expectations. Revenues, profits, margins and our ROCE have all improved over 2011 whilst net debt has continued to fall."

"With general market conditions reflecting the uncertain economic environment, the Group's performance has principally been driven by the successful, ongoing implementation of our business plan to improve ROCE. We have made encouraging progress to date and have established a firm foundation to support the ongoing development of the Group which is not wholly reliant on buoyant market conditions. It is our continued aim to drive ROCE to a sustainable level in excess of the cost of capital over the business cycle and we believe the Group is well positioned to achieve this."

"Trading since the half year end has been in line with our expectations and we are well positioned to deliver another year of financial progress and, in the medium term, significant value to our shareholders."

For further information please contact:

Lavendon Group plc

Don Kenny, Group Chief Executive Today T: +44(0)207 831 3113

Alan Merrell, Group Finance Director Thereafter T: +44(0)1455 558874

FTI Consulting

Jonathon Brill/Alex Beagley T: +44(0)207 831 3113

A meeting for investors and analysts will be held today at 9.30am at FTI Consulting, Holborn Gate, 26 Southampton Buildings, London WC2A 1PB. A copy of the presentation and audio webcast will be available at www.lavendongroup.com later today.

Next Trading Update

The Group's next scheduled announcement of financial information will be its third quarter interim management statement in November 2012.

Notes to Editors

Lavendon Group 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, Oman and Qatar, Saudi Arabia and the United Arab Emirates. The equipment fleet totals more than 19,000 units and the Group employs over 1,600 people.

CHAIRMAN'S STATEMENT

The Group has performed well in the first six months of the year, with our financial results coming in ahead of our original expectations for the period.

With general market conditions reflecting the uncertain economic environment, the Group's performance has principally been driven by the ongoing and disciplined implementation of our business plan. Our broad-based plan targets improvements in operational and capital efficiencies, further development of our differentiated service offering and supports our strong market positions through investment. To date these actions have delivered encouraging market share gains, revenue growth, margin improvement, reduced debt levels and have enhanced our return on capital employed.

The Board believes that the measures being taken have resulted in encouraging progress to date, and are establishing a firm foundation to support the development of the Group; one from which increased financial returns and shareholder value will be created, but one that is not wholly reliant on buoyant market conditions.

Return on capital employed

The Group's key performance metric, return on capital employed (ROCE), increased during the period, reaching 10.0% at the half year, compared to 7.9% and 9.0% at the 2011 half year and full year respectively. This calculation has been based on Group operating profits before exceptional items for the 12 months to 30 June 2012 and an average of the opening and closing capital employed in this period of £302.5 million (2011: £329.1 million). A further improvement is expected in the Group's ROCE during the second half of the year, moving us closer to our aim of returning and maintaining the Group's ROCE to a level above our weighted average cost of capital of 11% across the business cycle.

Dividend

The Board is declaring an interim dividend of 0.75 pence per share, an increase of 10% over the previous year (2011: 0.37 pence per share). This will be paid on 15 October 2012 to shareholders on the register at 14 September 2012. The increased dividend reflects the improved trading performance of the Group, our confidence in the future and our continued recognition that dividends are an important element in delivering shareholder value.

It is our intention that over time the Group will increase dividend distributions to a level that is covered in the range of 3-4 times by earnings; the speed of progress towards this aim will reflect the Group's investment needs and funding requirements as we move through the business cycle.

Operational and capital efficiency programmes

Our three year plan to deliver operational efficiency gains of £5.0 million per annum by the end of 2013 remains firmly on track. To date, annualised benefits of approximately £2.6 million have been secured through a combination of better pricing, transport efficiencies, sales resource alignment and, to an increasing extent, procurement of goods and services. Further benefits are expected to accrue over the balance of the year, and the timely delivery of the programmes that facilitate these efficiency gains remains a core priority of the Board.

Improvements in our capital efficiency are being driven by the review and reallocation of fleet between business units, the removal and disposal of under-utilised assets and through better fleet availability following enhancements to our maintenance programmes. During the first half, a managed reduction in the level of capital employed in our German business has been an area of particular focus, principally through an ongoing disposal programme of surplus equipment. In the six months to June 2012, the German rental fleet has been reduced by almost 400 machines, resulting in a smaller but more efficient fleet mix that is better aligned to the prevailing market conditions. This action is a key component of our wider programme of measures to address the German business's sub-optimal ROCE, which is enabling this business to improve its contribution to the Group's overall financial performance. The capital released from the reduction in our German fleet has been reallocated to support our Middle East expansion as we increase this fleet to meet growing demand in the region.

Financial results

The Group's total revenues for the six months to 30 June 2012 increased by 8% to £114.5 million (2011: £106.1 million), reflecting an increase in rental revenues of 4% and a £4.2 million increase in the sale of new and ex-rental fleet equipment. Using constant exchange rates with 2011, total revenues increased by 9% and rental revenues increased by 6%.

Underlying operating profits increased by 31% to £13.6 million (2011: £10.4 million), with margins improving to 11.9% (2011: 9.8%) following the growth in revenues and additional operational efficiency gains accrued in the period.

The improved trading performance of the Group combined with a decline in underlying net interest costs to £4.1 million (2011: £4.3 million) enabled the Group's underlying profit before tax to increase by 55% to £9.5 million (2011: £6.1 million). Following a reduction in the Group's underlying effective tax rate to 23% (2011: 24%), mainly as a result of changes to the UK's corporation tax rates, the underlying profit after tax for the first half increased to £7.3 million (2011: £4.7 million), generating a 56% increase in underlying earnings per share to 4.45 pence (2011: 2.85 pence).

There would be no material difference to the Group's 2012 underlying operating profits, profits before and after tax or earnings per share for the first half, if consistent exchange rates with 2011 were used to convert the results of the Group's international operations.

During the first half, the Group incurred a total exceptional post-tax charge of £2.4 million (2011: post-tax credit of £2.0 million) relating to restructuring charges incurred during the period, principally within our German business, and the fees associated with the Group's bank refinancing in February 2012 which have been written off in accordance with Accounting Standards.

Amortisation charges in the first half increased to £1.7 million (2011: £1.0 million), reflecting the acquisition of BlueSky Access Limited ("BlueSky") in October 2011.

After exceptional and amortisation charges, the Group's operating profit was £10.8 million (2011: £6.9 million). The Group's profit before tax was £5.0 million (2011: £2.1 million) and the Group's profit after tax was £4.0 million (2011: £6.0 million), with earnings per share of 2.44 pence (2011: 3.28 pence).

As previously reported, the Group's Spanish business was closed in 2011 and its results for the comparative periods have been reported as a "discontinued business".

Cash flow generation

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 9% to £34.1 million (2011: £31.4 million), with margins stable at 29.9% (2011: 29.6%). Cash generated from operations was £21.6 million (2011: £21.3 million), despite the increased net cash outflows relating to the purchase of rental fleet assets of £6.7 million (2011: £2.2 million). Net cash generated from operations declined to £12.2 million (2011: £14.1 million), following an increase in both interest and tax payments in the period.

Investment

During the first half, a total of £20.8 million (2011: £7.5 million) was invested in the Group's rental fleet and operational infrastructure, partly funded by the disposal of surplus and retired assets that generated £6.1 million (2011: £2.7 million). This investment, after reflecting movements in amounts owing to equipment suppliers at the beginning and end of the period, resulted in a net cash outflow relating to capital expenditure of £8.4 million (2011: £3.9 million).

Our planned investment programme for 2012, of some £50.0 million, will continue during the second half of the year as we proceed with a substantial refreshment of the Group's rental fleet (over 2,000 machines will be replaced in 2012), make additional investment in expanding our Middle East rental fleet and increase the availability of our BlueSky range of machine attachments. The overall impact of our investment and disposal programme will be a marginal reduction in the size of the Group's rental fleet, however this fleet will have a more efficient fleet mix that enhances its revenue generation capability.

Net debt

Although the Group's investment programme has increased in 2012, the strength of the Group's cash flows, combined with a favourable foreign exchange movement of £3.0 million, enabled the Group to reduce its net debt levels during the first half from £106.6 million at the end of 2011 to £98.3 million at 30 June 2012. Adjusting for the un-amortised costs relating to the Group's US Private Placement in February 2012 of £0.9 million, the Group's reported net debt position at 30 June 2012 is £97.4 million. The corresponding debt to equity ratio was 52% (2011: 72%), with an improved net debt to pre-exceptional EBITDA ratio (calculated on a rolling 12 month basis) of 1.32 times (2011: 1.85 times). The Group is operating well within its banking covenants, and has significant additional liquidity available from its combined finance facilities.

Review of business operations

This year, for the first time, the costs associated with the Corporate Head Office (including the Group directorate, statutory compliance and administrative functions) have been disclosed separately from the business operations within the segmental analysis, as we believe that this better demonstrates the underlying trading performance of our individual business units. These Head Office costs have historically been included within the UK business unit's underlying operating results, and for the first half were £1.8 million (2011: £1.3 million for the first half and £4.0 million for the full year).

UK

During the first half, total revenues in the UK increased by 6% to £57.0 million (2011: £53.7 million). Rental revenues increased by 1% to £52.4 million (2011: £51.8 million), as annual pricing improvements continued to compensate for lower year on year volumes, and the sale of new and ex-rental fleet equipment increased to £1.6 million (2011: £0.3 million) and £3.0 million (2011: £1.5 million) respectively.

Although demand in the UK remains relatively subdued, we believe that we have continued to gain market share with the major users of powered access equipment within the construction market. By providing value-adding solutions that improve safety while increasing efficiency in the use of powered access equipment, we are increasingly seen as the supplier of choice for large projects and key contractors. This differentiation from the marketplace, enhanced through our acquisition of BlueSky in October 2011, both facilitates our ability to secure market share and provides a degree of resilience to pricing pressures.

During the first half, the UK business commenced a planned fleet replacement programme that will refresh some 1,700 rental units during 2012, providing the opportunity to improve the fleet mix and thereby the capacity to deliver revenue growth. The disposal of the replaced rental units is under way and has generated £3.0 million of disposal revenues in the first half (2011: £1.5 million).

The combination of revenue growth, together with improved operational efficiency and asset management, increased underlying operating profits to £7.2 million (2011: £5.8 million), with margins improving to 12.7% (2011: 10.9%).

Continental Europe

Overall Euro revenues from the Group's Continental European operations (Germany, Belgium and France) increased by 9%, while Sterling revenues, which reflect movements in exchange rates, increased by 4% to £40.6 million (2011: £39.1 million). Underlying operating profits increased to £3.5 million (2011: £2.5 million).

Germany

Total Euro revenues in Germany increased by 4% in the first half, with revenues from the disposal of ex-rental fleet equipment absorbing a 2% decline in rental revenues. Once converted to Sterling, total revenues were broadly stable at £23.4 million (2011: £23.5 million) while rental revenues showed a decline of 6% to £21.5 million (2011: £23.0 million). The extent of the decline in rental revenues was primarily driven by volume disruption caused by the timing of public holidays during the month of May, with volumes returning to normal seasonal patterns in June.

Overall demand from the German market is proving to be changeable, reflecting the unpredictable nature of the economic outlook for Europe, reinforcing our view that volume growth during the year is unlikely. Consequently, we remain focused on the delivery of our business improvement plan to increase our operational efficiency and lower our capital base. In particular, the specific action to reduce the German rental fleet is well progressed, with almost 400 machines being sold in the first six months. Further disposals will take place in the second half of the year to reduce the fleet by some 600 machines overall during 2012, generating increased year on year disposal revenues and profits, while removing a future capital replacement requirement of approximately £18.0 million from the business.

The rate of progress in reshaping our German business is as planned and whilst this may result in some disruption to revenues in the short term, we are already seeing a positive impact on the ROCE performance of the business.

Underlying operating profits for the first half increased to £1.3 million (2011: £0.6 million), with margins improving to 5.7% (2011: 2.7%).

Belgium

Total Euro revenues in Belgium increased by 12% in the first half, with an increase in revenues derived from the disposal of ex-rental fleet equipment enhancing the 5% increase in rental revenues. On conversion to Sterling, total revenues increased by 6% to £8.0 million (2011: £7.5 million), while rental revenues remained stable at £7.1 million (2011: £7.1 million).

Our Belgian business is progressively utilising the additional fleet that was transferred from our discontinued Spanish business at the end of 2011. Placing this additional fleet on hire was slow to gain traction at the start of the year, but improved as the first half unfolded and we expect utilisation levels to increase further as we move into the traditionally stronger second half of the year.

Underlying operating profits for the first half were stable at £1.3 million (2011: £1.3 million), with margins remaining healthy at 16.2% (2011: 17.6%).

France

Our French business has performed strongly in the first half, with total Euro revenues growing by 20% and rental revenues increasing by 19%. When converted to Sterling, total revenues increased by 14% to £9.3 million (2011: £8.1 million) and rental revenues increased by 13% to £9.1 million (2011: £8.0 million).

This growth has been driven through an increase in fleet size following the transfer of circa 350 machines from our discontinued Spanish business at the end of 2011, which has resulted in further market share gains in a market which has remained relatively flat during the period.

The growth in revenues has resulted in underlying operating profits increasing to £0.9 million (2011: £0.6 million) and margins improving to 9.7% (2011: 7.0%).

Middle East

Across the first half, our Middle East business has continued to accelerate its rate of year on year revenue growth, reflecting in part the relatively weak comparators of the prior year. Total local currency revenues, including the sale of new and ex-rental fleet equipment, increased by 26%, while local currency rental revenues increased by 30%. Upon translation to Sterling, total revenues increased by 27% to £16.9 million (2011: £13.3 million) and rental revenues increased by 33% to £16.4 million (2011: £12.4 million).

Whilst this growth is centred on the markets of Abu Dhabi and Saudi Arabia, we are now seeing growth in other parts of the region, including a return to revenue growth in Qatar. To ensure we are able to meet this increasing demand and support the growth of the business, we invested £5.0 million in expanding the rental fleet during the first half as planned and have recently allocated a further £5.0 million to increase the fleet during the second half of the year.

In recent years, we have increased our capability in the region in terms of fleet scale, geographical spread, management strength and, more recently, our service offering through the use of the value-adding and differentiating BlueSky products. These steps were taken to build a solid platform in anticipation that growth opportunities will be forthcoming in the years ahead. We believe that these opportunities are now emerging in a sustainable manner and their scale could potentially be significant over the medium term, warranting a further shift of our available capital into the region over time.

Underlying operating profits increased to £4.7 million (2011: £3.4 million), with margins improving to 27.6% (2011: 25.2%).

Summary and Outlook

The progress made in the first half has been encouraging, with revenues, profits, margins and our ROCE all improving over 2011.

Our strategic actions to differentiate our service offering through the use of BlueSky products, improve our operating efficiency, and carefully manage our capital base (redeploying fleet from our discontinued Spanish business and partially funding the expansion of our Middle East fleet through the reduction in our German fleet) have all gained traction over the first half and further momentum in their contribution to the Group's financial performance should be seen in the second half of the year.

The Group's net debt levels have reduced in the first half and represent a comfortable level of borrowing that supports a healthy capital structure. Our investment programme for the year will be fully funded from our annual cash flows and is directed towards replacing approximately 2,000 machines from the rental fleet, improving the mix of the fleet and supporting selective growth opportunities, particularly in the Middle East.

Our over-riding objective as a Board remains to enhance shareholder value, principally through the improvement in our ROCE to a level that is above our weighted average cost of capital across the business cycle. We believe that our ongoing actions to improve operational and capital efficiencies, while supporting growth opportunities, are providing the necessary impetus that will deliver further progress towards this target over the balance of the year.

Trading since the half year has been in line with the Board's expectations and whilst very mindful of the continuing economic uncertainty, the Board believes that the Group remains well positioned to deliver another year of financial progress and substantial shareholder value in the medium term.

Note: Underlying operating profits, profit before and after tax are stated before amortisation charges, exceptional items, movements in the fair value of financial derivatives and the Group's discontinued Spanish business.

Group income statement

Notes:

(i) Non-underlying is defined as amortisation charges, exceptional items and fair value movements on financial derivatives.

(ii) The results for the period ended 30 June 2011 have been restated to reflect the disclosure of the Group's Spanish business under discontinued operations.

Group statement of comprehensive income

Group balance sheet

Group statement of cash flows

Statement of changes in equity

For the six months ended 30 June 2012 (unaudited)

For the six months ended 30 June 2011 (unaudited)

Statement of changes in equity

For the year ended 31 December 2011 (audited)

Notes to the interim financial information (unaudited)

1. This condensed consolidated interim financial information has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union. The same accounting policies, presentation and methods of computation are followed in the condensed consolidated interim financial information as applied in the Group's audited financial statements for the year ended 31 December 2011 which were prepared in accordance with IFRS's as adopted by the European Union, with the exception of new standards and interpretations that were only applicable from the beginning of the current financial year, taxes on income in the interim period which are accrued using the tax rates that would be applicable to total expected annual profit or loss and the separation of the costs associated with the Corporate Head Office in the segmental analysis of the Group's financial performance.

The new standards and interpretations applicable from the beginning of the year are as follows:

• Amendment to IAS 12 'Income taxes'

• Amendment to IFRS 7 'Financial Instruments: Disclosures'

• Amendment to IFRS 1 'First time adoption on financial instrument disclosures'

• Annual improvements 2011

There is no significant impact on the condensed consolidated interim financial information for the period ended 30 June 2012.

The financial information for the year ended 31 December 2011 is extracted from the audited accounts for that period, which have been delivered to the Registrar of Companies. The Auditors' report was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The condensed consolidated interim financial information does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The condensed consolidated interim financial information for the six months ended 30 June 2012 and the comparatives to 30 June 2011 are unaudited, but have been reviewed by the Auditors.

The Group does not consider that any standards or interpretations issued by the International Accounting Standards Board (IASB), but not yet applicable, will have a significant impact on the financial statements for the year ending 31 December 2012.

The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing this condensed consolidated interim financial information.

This condensed consolidated interim financial information was approved for issue on 30 August 2012.

Certain statements in this interim report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risk and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. The Group undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

2. Segmental analysis

From 1 January 2012, the internal reporting arrangements for Lavendon were reorganised into six operating segments based on the geographical locations of UK, Germany, Belgium, France, and Middle East and one non operating Corporate cost centre. The corporate cost centre comprises the Group directorate, statutory compliance and Group administrative functions and holds the Group's bank borrowing facilities. The segmental reporting has therefore been updated to reflect this change for the current and comparative periods with Corporate items, that were previously reported as part of the UK segment, now separately reported.

The Group's chief operating decision maker (the "CODM") is the Group Executive Board, comprising the two executive directors and direct reports from the operating subsidiaries and business functional units in the Group. The Group Executive Board reviews the Group's internal reporting in order to monitor and assess performance of the operating segments for the purpose of making decisions about allocation of resources. Performance is evaluated based on actual results compared to agreed targets and performance in prior periods.

Six months ended 30 June 2012 (unaudited)

Note:

The assets and depreciation charge shown for the Middle East operation 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 and the reporting to the CODM.

Inter segment trading is not significant and therefore has been eliminated in the analysis presented above, so that only trading between the Group and external third parties is represented.

2. Segmental analysis continued

Six months ended 30 June 2011 (unaudited)

Note:

The assets and depreciation charge shown for the Middle East operation 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 and the reporting to the CODM.

Inter segment trading is not significant and therefore has been eliminated in the analysis presented above, so that only trading between the Group and external third parties is represented.

2. Segmental analysis continued

Year ended 31 December 2011 (audited)

Note:

The assets and depreciation charge shown for the Middle East operation 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 and reporting to the CODM.

Inter segment trading is not significant and therefore has been eliminated in the analysis presented above, so that only trading between the Group and external third parties is represented.

3. Exceptional items, amortisation and movement in fair value of financial derivatives

Exceptional items, amortisation and movement in fair value derivatives incurred during the period set out below:

Notes:

(i) Restructuring costs during the period relate to ongoing reorganisation of the German operation. 2011 costs relate to consultancy costs, employee termination costs and associated professional fees that arose following the operational and business plan reviews conducted during the period.

(ii) In 2011 the Group reached an agreement with certain tax authorities on the treatment of intra-group financing agreements from prior periods (2006-2009). This agreement resulted in a reduction being required to the Group's corporation tax and deferred tax creditors to reduce these provisions to reflect the actual liability agreed and interest payable becoming due on the agreed liability.

(iii) Relates to movement in fair value of interest rate swaps that are not designated as cash flow hedges.

(iv) Fees incurred on bank refinancing (note 12).

4. Discontinued operations

During 2011 the Group's Spanish operation was closed and accordingly it has been presented as a discontinued operation.

(i) Restructuring costs principally relate to employee termination costs, transport of rental machines, impairment of machines identified for disposal, machine refurbishment costs, depot closures and associated professional fees, net of recycled translation reserves.

The cash flow of discontinued operations includes cash flows from intra-group transactions.

5. Interest receivable and payable

6. Taxation

Analysis of charge/ (credit) for the period:

The tax charge on the underlying profits is based on the estimated effective rate for the whole period.

Legislation passed by Parliament on 26 March 2012 reduced the main rate of corporation tax in the UK to 24% from 1 April 2012. The deferred tax liability at 30 June 2012 has been re-measured to reflect this reduction in the corporation tax rate the impact being £572,000.

Legislation to reduce the main rate of corporation tax in the UK from 24% to 23% from 1 April 2013 is included in the Finance Act 2012. A further reduction to the main rate is proposed to reduce the rate to 22% from 1 April 2014. These rate reductions had not been substantively enacted at the balance sheet date and are not therefore included in these financial statements.

The effect of the change expected to be enacted in the Finance Act 2012 would be to further reduce the deferred tax liability provided at the balance sheet date by an additional £501,000. This £501,000 decrease in the deferred tax liability would increase after tax profits by £501,000. This decrease in the deferred tax liability is due to the reduction in the corporation tax rate from 24% to 23% with effect from 1 April 2013. The effect of the further rate change from 23% to 22% if this applied to the deferred tax balance at the balance sheet date would be to reduce the deferred tax liability by a further £501,000.

7. Earnings per share

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below: