LVD.L Regulatory News (LVD)

4 Jul 2005 07:00

Lavendon Group PLC04 July 2005 4 July 2005 LAVENDON GROUP PLC PRE-CLOSE TRADING UPDATE Lavendon Group plc announces the following trading update for the six monthsending 30 June 2005. The Group's revenues for the first half of 2005 show a decline of 4% compared to2004. This follows the major restructuring in Germany and the sale of theGroup's Austrian business, which, as anticipated, more than offset the revenuegrowth achieved in the Group's other markets. In the UK, revenues for the first six months have increased by 2% against 2004,with the strong year on year growth achieved in the first quarter being temperedby more modest levels of activity in the second quarter. The combination of thisrevenue growth together with operational efficiency improvements has allowedprogress to be made in increasing margins over the same period last year. Demandlevels are now showing an improving trend as we move into the traditionallybusier months of the year. In line with our expectations, the Euro revenues of our German operation havedeclined by 22% over the first half of last year, reflecting both the reductionin our network from 44 to 24 depots and continuing weak market demand. However,the reduced cost base resulting from the restructuring of our depot network hasallowed the business, despite the revenue decline, to continue to make progressin reducing its operating losses. In France, Euro revenues have increased by 32% over the same period last year,driven by an increase in fleet size and an expansion in the depot network. Dueto the costs associated with this expansion, progress in reducing operatinglosses has proven difficult for the year to date, although they remain in linewith our expectations. Revenues in Spain are broadly in line with the prior year. The Middle Eastregion has again performed well, with revenues growing by 7%, supported byrobust market demand; a trend that is expected to continue into the foreseeablefuture. The Group's debt levels have progressively reduced month on month during thefirst half of the year, as a result of solid operating cashflows, minimalcapital expenditure, disposal proceeds from the sale of the Austrian businessand proceeds generated from the sale of surplus rental machines in Germany whichwere identified at the end of 2004. We expect the Group's debt levels tocontinue to reduce during the second half of the year. Preparations to ensure that the Group is able to report its consolidatedfinancial statements in accordance with International Financial ReportingStandards (IFRS) are well advanced. As part of this process, the Group willshortly issue re-stated results for 2004 prepared using IFRS, together withexplanations of any changes from the results prepared using UK GAAP. Overall, trading remains in line with the Board's expectations, as the benefitsof operational efficiency improvements begin to have an impact and the Group'sdebt levels continue to reduce. -ends- For further information please contact: Lavendon Group plc Tel: 01455 206750David Price, ChairmanKevin Appleton, Chief ExecutiveAlan Merrell, Group Finance Director Weber Shandwick Square Mile Tel: 020 7067 0700Terry Garrett/Nick Dibden / Yvonne Alexander This information is provided by RNS The company news service from the London Stock Exchange