Powered-access rental company Lavendon reported a 65 per cent leap in underlying pre-tax profits to £21.9m after fully exiting from its Spanish business. New chief executive Don Kenny also announced £150m in new banking facilities, and management backed up its confident outlook with a hefty dividend hike.
The strong profit performance was achieved as rental volumes grew in the UK, Germany, Belgium and France, which improved the group operating margin from 11.4 to 13.4 per cent. That figure was also boosted by cost savings of £2m, and chief executive Don Kenny added that management was on target to achieve £5m in savings by 2013.
Cash flow remained strong, which meant net debt was reduced by £33.7m to £106.6m. That came despite increased investment in new fleet, which rose from £14.7m to £16.9, and lower sales of surplus and retired machinery. Finance director Alan Merrell added that the group has committed £15m to further investment this year already, and could increase this to £30m.
Broker Peel Hunt upgraded adjusted pre-tax profit forecasts by 2 per cent to £25.5m, giving EPS of 11.5p (from 10p in 2011).
LAVENDON (LVD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 119p | MARKET VALUE: | £196m | |
| TOUCH: | 119-121p | 12-MONTH HIGH: | 121p | LOW: 80p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 112p* | NET DEBT: | 58% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 186 | 18.9 | 26.0 | 6.48 |
| 2008 | 260 | 22.5 | 37.4 | 5.00 |
| 2009 | 227 | -47.8 | -77.5 | 1.60 |
| 2010 | 218 | 10.9 | 4.9 | 1.00 |
| 2011 | 225 | 14.2 | 5.7 | 1.75 |
| % change | +4 | +29 | +16 | +75 |
Ex-div: 7 Mar Payment: 1 May *Includes intangible assets of £91m, or 55p a share | ||||
