LVD.L Regulatory News (LVD)

22 April 2010

Lavendon Group plc

Interim Management Statement

Lavendon Group plc (the "Group"), Europe's market leader in the rental of powered access equipment, will make the following Interim Management Statement, covering the period from 1st January 2010 to date, at its Annual General Meeting to be held later today:-

"As previously reported, trading in Europe since the year end has been affected by unusually prolonged adverse weather conditions. We have however seen clear improvements in activity levels from March onwards, particularly in Germany. In the Middle East, demand continues on an improving trend following the slowdown experienced during the second half of 2009. Group revenues, excluding ex-fleet equipment sales, for the three months ended 31 March 2010 have declined by 13% compared with the same period last year, on both an actual and constant currency basis. Despite this challenging start, based on recent increases in activity levels the Board believes that the Group will recover any performance shortfall and will meet its expectations for the full year.

As is common during the first quarter, the Group's borrowing levels remain little changed from the reported year-end position, with net debt as at 31 March 2010 of £181.5 million (31 December 2009: £182.1 million).

In the UK, revenues for the first three months declined by 12% compared with last year, with the rate of year on year decline reducing each month throughout the quarter. This trend has been supported by a recovery in demand from smaller, non key-account customers who had borne the brunt of the sharp downturn last year. By the end of the first quarter volume levels had almost returned to the levels of the prior year, with pricing stabilising. Our attention is now fully focused on improving yields.

Revenues for our German business declined by 20% in the first quarter compared to the previous year, on both an actual and constant currency basis. This decline was heavily weighted towards January and February, reflecting the exceptionally severe period of winter weather in the region, with activity levels improving steadily since March as construction projects recommence.

The combined revenues of France and Belgium declined by 2% in the quarter compared to the previous year, on both an actual and constant currency basis, with the rate of decline reducing month by month and in recent weeks moving to a year on year growth in revenues. The trading conditions in these markets appear slightly more helpful than elsewhere in Europe, and the outlook is reasonably positive.

Our Spanish revenues declined by 21% in the first three months, compared to the prior year, on both an actual and constant currency basis. As with our other European businesses, this decline was significantly weighted towards January and February and the rate of decline has slowed markedly in March, with volume levels moving ahead of prior year. Whilst Spain remains an extremely difficult environment, our business has been aggressively resized to the current market conditions, is broadly breakeven and continues to generate positive cash flows.

In the Middle East rental revenues have declined by 5% for the quarter, on both an actual and constant currency basis, against a strong comparative period last year. Total revenues, including sales of equipment, have declined by 13% on the same basis. This year on year decline in revenues reflects the on-going recovery, particularly in Saudi Arabia, from the slowdown in demand experienced through the second half of 2009, and we should return to year on year growth in the region in the coming months. Our operating margins remain very healthy, and the outlook for long-term major projects continues to be encouraging.

Whilst we have yet to recover fully the impact of the adverse weather conditions in the early part of the year, the increased activity levels seen in more recent weeks are encouraging and, the Board believes, sustainable. Accordingly, the Board continues to believe that its expectations for the year as a whole will be achieved." 

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