The continued poor performance of Lavendon Group's Belgian business meant the group was hit with an £8.8m impairment charge, following a goodwill revaluation. However, putting the Belgian woes aside, a strengthening UK economic recovery and increasing revenues from its Middle East business drove up full-year operating profits by 11 per cent to £39.3m.
Rental revenues from the tool hire group's UK business grew 7 per cent to £111m during 2014. This was helped by a shift in the fleet mix away from smaller units towards larger construction machines with a higher average hire rate. The business also improved its operating efficiency, including the outsourcing of its transport function to Wincanton (WIN).
Revenues from the group's higher-margin Middle East business continued to steam ahead, up 8 per cent to £49.5m. However, trading conditions for its continental Europe business continued to depress operating profits in the region, down 10 per cent to £9.1m.
Chief executive Don Kenny said management intends to continue growing the group organically this year, but will allocate the majority of its investment to the Middle East. Mr Kenny said the "laggard" European business will need to prove its profitability to secure further investment.
Broker Peel Hunt expects adjusted EPS of 17.2p this year.
LAVENDON GROUP (LVD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 175p | MARKET VALUE: | £296m | |
| TOUCH: | 175-177p | 12-MONTH HIGH: | 248p | LOW: 156p |
| DIVIDEND YIELD: | 3% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 131p* | NET DEBT: | 41% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 217 | 10.9 | 5.0 | 1.00 |
| 2011 | 225 | 14.2 | 9.2 | 1.75 |
| 2012 | 235 | 20.8 | 9.8 | 2.75 |
| 2013 | 237 | 23.4 | 11.4 | 3.55 |
| 2014 | 246 | 21.0 | 8.2 | 4.60 |
| % change | +4 | -10 | -28 | +30 |
Ex-div:05 Mar Payment:23 Apr *includes intangible assets of £76m or 45p per share | ||||
