04.07.2005

Lavendon first half revenues fall 4%

The Lavendon group, parent company of Nationwide Access in the UK, Zooom in Germany, France and Spain and Rapid Access in the Middle East, has reported a fall in revenues for the first half of 2005, down four percent compared to the same period in 2004.

The reduction is entirely due to the disposal of the Austrian business at the start of the year and a 22 percent fall in German revenues. The reduction in Germany followed the closure of 20 depots and a reduction in head count of over 100.Revenues at all other group companies either grew or remained flat.

Nationwide in the UK, the groups largest business by far, grew by two percent, with a strong first quarter followed by slower growth in the second. The company’s statement suggests that the upward trend in the UK will continue in the busier second half, which combined with operational efficiencies, should boost margins.

In France, Euro revenues were up by 32 percent compared to last year, driven by an increase in the fleet and an expansion in the depot network. The cost of this expansion, has prevented the French business from breaking even or even reducing its losses, but the company says that it is in line with its forecasts.

Spanish revenues remained roughly at the same levels as last year, this in spite of a refocusing of the business in Spain on fewer regions.

The Middle East continues its strong growth, with revenues rising by seven percent. Lavendon forecasts that Rapid Access will continue to grow at this level for the foreseeable future.

While revenues dipped, cash flow remained strong and along with the proceeds from the sale of the Austrian business and surplus machines from Germany, allowed debt to be reduced month on month during the first half.

At the same time as it announced this trading statement, Lavendon announced the appointment of Timothy Ross as a non executive director from October 2005 and that chairman David Price will retire on his 60th birthday, later this year. John Gordon, currently the senior Non executive director will take over his role.

Vertikal Comment

While the headline four percent revenue fall looks gloomy, the news from Lavendon is in fact positive. Revenues outside of Germany are up, the German results are at least matched by cost savings, thus helping reduce its losses. The French business has significantly increased its presence in what is a large and improving market and the Middle East, where profits have been excellent, is up by seven percent on last years strong result.

We would expect to see first half profitability at the group to have improved significantly on last year.

The departure of David Price is no surprise, for more than three years he has let it be known that he wished to gradually move towards retirement. As part of this process he has gradually reduced his shareholding to a point where he is left with around five percent of the equity.