LVD.L Regulatory News (LVD)

16 November 2010

Lavendon Group plc

Interim Management Statement

Lavendon Group plc (the "Group"), the market leader in Europe and the Middle East in the rental of powered access equipment, today issues the following interim management statement for the period to 15 November 2010:-

"As expected, the Group's trading performance has improved in the third quarter and into the fourth quarter. Although economic prospects still remain unclear in a number of markets, the Board believes that this improvement will be maintained for the balance of the year and that the Group will deliver a full year result in line with its expectations.

Group revenues in the four months since the half-year, excluding ex-fleet equipment sales, increased by 3% over the same period last year, reducing the rate of revenue decline for the ten months ended 31 October 2010 to 4% on an actual (3% on a constant) currency basis, compared to the same period last year.

The Group has generated strong cash flows during the period and net debt levels have continued to reduce in line with our plans, and at 31 October 2010, using consistent exchange rates with those at the half-year, net debt stood at £150.8 million (a reduction of £16.8 million since 30 June 2010). However, the weakening of Sterling against the Euro since the half-year has created an adverse foreign exchange movement of £7.3 million, partially offsetting this debt reduction. As a result, the Group's net debt as at 31 October 2010, at actual closing rates, was £158.1 million. The Group remains fully compliant with its banking covenants and we expect net debt to reduce further by the year-end.

On 30 September, John Standen was appointed Chairman, and we are making good progress appointing two additional Non-Executive Directors to further broaden and strengthen the Board's range of skills and experience. We are also undertaking a broad review of our business to identify and prioritise performance improvement opportunities, notwithstanding current market conditions. This review will help shape the future strategy and investment programme of the Group for the coming years. We will update shareholders on progress when we announce our preliminary results for the year ending 31 December 2010 in March 2011.

Turning to the Group's geographic performance, revenues in the UK (47% of Group revenues in 2009) in the four months since the half-year grew by 5% over the same period last year, reducing the ten-month revenue decline over 2009 to 2%. Volume levels continue to be above those of last year and we are making some positive progress on pricing improvement.

The rate of year on year revenue decline in Germany (23% of Group revenues in 2009) has slowed to 8% for the ten-month period, following the four months since the half-year where revenues were 1% down on the same period last year. It is expected that further progress will be made in reducing the rate of year on year decline in revenues over the remainder of the fourth quarter, as demand from the telecommunications and services sectors partially offsets continuing weakness in construction activity.

In the Middle East (15% of Group revenues in 2009), rental revenues have fallen by 9% for the ten-month period, with total revenues, including sales of new equipment, falling by 10% over 2009. Revenues for the four months since the half-year, as a result of the timing of Ramadan, saw a decline in rental and total revenues of 9% and 12% respectively. Activity levels have now returned to pre Ramadan levels.

Both France and Belgium (11% of Group revenues in 2009) reported revenue growth for the ten-month period, with combined revenues having increased by 14% compared to 2009. Since the half-year, combined revenues for the four months have increased by 23% over the same period last year. Our French operation in particular continues to make progress in expanding its market share.

Spanish revenues (4% of Group revenues in 2009) declined by 19% in the first ten months compared to the prior year, following the four months since the half-year where revenues reduced by 12% over the same period last year. Against a market environment that continues to be very difficult, the business has remained broadly breakeven and is generating positive cash flow.

All revenue growth percentages exclude ex-fleet equipment sales, and overseas revenue growth percentages are stated on a constant currency basis." 

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