Full-year earnings for Lavendon (LVD) were constricted by a £20.6m goodwill impairment on the group's Belgian and German businesses, but underlying profits were heading in the right direction due to a 6 per cent reduction in operating expenses, together with lower financing costs. Despite limited top line growth and a tightened gross margin, the equipment hire group achieved a 10 per cent increase in adjusted operating profits to £43.1m.
The aforementioned impairment effectively bumped-up return on capital in the reported period, but the rate still increased by 20 basis points if you disregard the effect. So in a challenging market, Lavendon continues to drive operating efficiencies.
The equipment hire group reported solid trading in its Middle Eastern and French operations throughout 2015, while its UK business saw a return to growth in the final quarter of the year. The group flagged liquidity issues in its Saudi Arabian market, but oil price-linked problems in the Desert Kingdom are being assuaged by strong growth from the UAE, Oman, Qatar and Kuwait.
Berenberg gives an underlying EPS of 18.7p for 2016, rising to 19.8p in 2017.
| LAVENDON GROUP (LVD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 134p | MARKET VALUE: | £228m | |
| TOUCH: | 133-135p | 12-MONTH HIGH: | 212p | LOW: 121p |
| DIVIDEND YIELD: | 4.0% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 131p* | NET DEBT: | 53% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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 |
| 2015 | 249 | 16.2 | 4.9 | 5.40 |
| % change | +1 | -23 | -40 | +17 |
Ex-div: 3 Mar Payment: 21 Apr *Includes intangible assets of £52.1m, or 31p a share | ||||
