"We are putting our money where our mouth is," said Don Kenny, chief executive of platform rental company Lavendon as he outlined how self-help measures and rising capital investment gave the board the confidence to double the interim dividend. In the first half underlying pre-tax profits increased by 55 per cent to £9.5m, excluding £4.5m in costs related to a debt refinancing and ongoing restructuring.
Underlying rental revenue growth of 4 per cent in the six-month period was more muted than the figures in our table suggest, as group turnover was boosted by a £4.2m increase in the sale of new and ex-rental fleet. However, Lavendon is far from downsizing and capital investment in the rental fleet was up from £7.5m in the same period last year to £20.8m. Mr Kenny said investment will accelerate in the second half to reach £50m for the full year. This will be funded through cash flow, so the net debt - down by £8.3m from the 2011 year-end to £98.3m at the end of June this year - should remain stable.
Following upgrades earlier in the year broker Peel Hunt expects full-year adjusted pre-tax profits of £26.5m, giving EPS of 11.9p, up from £21.9m and 10p, respectively, last year.
LAVENDON (LVD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 124p | MARKET VALUE: | £205m | |
| TOUCH: | 122-124p | 12-MONTH HIGH: | 132p | LOW: 80p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 113p* | NET DEBT: | 53% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 106 | 2.10 | 3.64 | 0.37 |
| 2012 | 115 | 4.97 | 2.44 | 0.75 |
| % change | +8 | +137 | -33 | +103 |
Ex-div: 12 Sep Payment: 15 Oct *Includes intangible assets of £87m, or 53p a share. | ||||
