06.03.2007

Lavendon confirms 25% rise

The Lavendon Group, Europe’s largest aerial lift rental company has announced its final numbers for 2006, which are well up in 2005 and marginally better than its preliminary statement. See Lavendon up 23%

Revenues for the Group rose by 25 percent to £124.7 million due both to the UK acquisitions made this time last year and to respectable organic growth in all of the regions that it operates in,

Earnings Before Interest Depreciation and Amortisation (EBITDA) jumped by 29 percent to £38.3 million, while it’s operating profit leapt 74 percent to £12.7 million and profits before tax rose by 166 percent to £7.7 million.

These results represent an exceptional improvement over 2005, however thanks to tax loses particularly associated with its German operation and acquisition the company was able to reduce its tax level to 12 percent boosting after tax profits from £900,000 in 2005 to £8.9 million a more than seven fold increase.

The company has spent £55.2 million on acquisitions this year, £20.4 million in the UK buying Panther Platform Rental, Kestrel and A.M.P and £34.8 million in Germany to buy Gardemann.

In addition it ‘invested’ £35 million in maintenance and expansion, including new machines, refurbishment of older units, new trucks and service vehicles.

The net effect of the spending has been to boost its borrowings to £99 million up 63 percent on year end 2005. However this is well covered by the improvement in cash flows. After tax cash generation was up 17 percent to £29.6 million.

Performance within each region was

...................Revenues......Operating Profit/(Loss)
£' millions....2006... 2005......2006.... 2005
UK................81.3....61.1.......12.2...... 8.3
Germany......21.8....21.1........(1.9)....(3.2)
France............7.1..... 6.7........(0.5)....(0.5)
Spain..............4.2......3.6........ 0.4........0
Middle East....10.3.....7.5........ 2.5.......2.7

Totals..........124.7...100.0......12.7.... 7.3

John Gordon, Lavendon chairman, said this morning:

"2006 was a positive year for the Group, as we achieved significant top line growth both organically and via some excellent strategic acquisitions.

"With a strengthened market position in Germany and the UK, and further strategic investment in the Middle East, we believe that we are able to generate the necessary momentum in the business to deliver an improved performance in 2007 and continue to enhance shareholder returns."

He also confirmed that 2007 had got off to a strong start and suggested that the business will see good levels of organic growth this year in addition to benefiting form full year revenues for all of its acquisitions.

Vertikal Comment

There is no question that Lavendon is back. After several years where its expansion into other parts of Europe appeared to be dragging the company inevitably towards a break up and scaling down the company is instead getting into a strong expansionist stride again.

It is well placed now to benefit form a strong UK market in which it has regained its position and spread its bets. While at the same time it looks set to benefit from the ongoing improvement in the German market. If all goes well 2007 could be an exceptional year for the group, as it benefits both from the market and from getting its act together.

Recent restructuring on the Nationwide business should help regain some of its earlier spirit, lost in recent years. Add this to the three regional entrepreneurial operations which are ‘cooking on gas’ add in a bolt on acquistion or two and we could see the UK businesses easily breach £90 million this year.

In spite of all this positivism, the company also has a lot to do with renewing and rejuvenating its massive fleet. It will need to step up its spending on new equipment if it is not to start suffering from a major replacement build up in a year or so.

All in all an excellent result which is not only good for Lavendon shareholders but also good for the platform rental industry as a whole.