13th Nov 2008 07:00
13th November 2008
LAVENDON GROUP PLC
INTERIM MANAGEMENT STATEMENT
Lavendon Group plc, Europe's market leader in the rental of powered access equipment, today issues the following interim management statement for the period to 12 November 2008:-
"The Group's revenues for the ten months ended 31 October 2008 have increased by 36% compared to the same period last year, with good improvement in operating margins.
The Group's current net debt level is approximately £260 million, and is well supported by strong operational cash flows, which have been further strengthened by the acquisition of The Platform Company during the year. In September, the Group agreed a new five year £180 million banking facility, to replace its previous arrangements which were due to expire in September 2009. The new facility has a pricing structure broadly in line with the Group's previous arrangements, and a covenant package appropriate for the future development of the Group. In addition to this new banking facility, the Group has available significant leasing and hire purchase facilities, which currently total £120 million.
In the UK, revenues have increased by 26% for the period, a rate of growth that has benefited from the acquisition of The Platform Company, completed on 1 April 2008. As expected, this rate of growth is now slowing as the year on year comparisons reflect more fully the acquisitions completed in 2007. Operating margins remain healthy, benefiting from the increase in scale of the overall UK business and the integration activities undertaken in recent months.
Revenues from Germany, in sterling terms, have increased by 7% in the period. On a local currency basis, revenues for the period have declined by 5%. Whilst it has proven more difficult to grow revenues in recent months, operating margins have continued to improve, as they benefit from the integration synergies extracted at the start of the year.
Revenues for the Group's French and Belgian businesses have increased by 327%, reflecting the acquisition of the DK Rental businesses. This rate of growth is delivering the expected improvement in operating margins.
In Spain, revenues have increased by 182%, following the acquisition of DK Rental Spain, with operating margins improving.
Total revenues in the Middle East have grown by 27%, with underlying rental revenues, excluding revenues from the sale of new equipment, increasing by 41%. The strong growth in rental revenues is continuing to deliver the expected improvements in overall operating margins.
Trading conditions across our UK and European operations have become noticeably more difficult in recent weeks. However, the Group's performance during this period and for the year to date, including the successful execution of our planned integration activities, means that we remain confident of delivering results in line with our expectations for the current year.
Given the increasingly uncertain economic outlook, we have revised our operational plans for 2009 to focus more aggressively on cash generation and thereby debt reduction. This will be achieved principally by reducing our capital expenditure programme for 2009 by £30 million, focusing the remaining investment on our expanding Middle East operation and other areas that offer attractive growth opportunities. We believe that this is operationally prudent and represents the right strategy to deliver value to shareholders in the current economic circumstances."
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