Lavendon Group plc

1
Lavendon Group plc 2007 Interim
Results Presentation September 2007
2
Agenda

• Highlights
• Financial performance
• Cash flow and debt management
• Strategy and business review
• Summary and outlook

3
Highlights

• Strong trading performance
• Revenues increased by 46
• EBITDA increased by 75
• Operating profit increased by 252
• Margins improving in all territories
• Two further UK acquisitions completed at a cost
  of 3.9m
• German business returned to profit
• Drag of one-off costs in Middle East reducing
• Dividend increased by 83

4
Agenda

• Highlights
• Financial performance
• Cash flow and debt management
• Strategy and business review
• Summary and outlook

5
Summary of 2007 Interim Results
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Breakdown of Group Turnover 1H 2007

• Overall revenues increased by 46 83.3m
• 16 organic growth
• 30 acquisitive growth
• Organic growth achieved through a
  combination of both utilisation and hire rate
  improvements

7
Group Operating Profit 1H 2007

• Group operating margins improved to 13.9 from
  5.8
• Investment in Middle East starting to deliver
  increased returns
• Scope for further margin improvement once
  integration processes complete in the UK and
  Germany

8
Group Profit Before and After Tax 1H 2007

• Interest costs increased to 3.3m (2.2m)
• PBT margin increased to 10 (2)
• Effective tax rate 23.5 (45)
• German tax losses will start to be utilised in
  2007

9
Earnings and Dividend per Share

• EPS increased significantly following improved
  trading performance and reduced effective tax
  rate
• Increase in EPS calculated after 9 increase in
  average number of shares in issue (41,220,028 v
  37,679,011)
• Interim dividend increased by 83 to 2.75 pence

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Agenda

• Highlights
• Financial performance
• Cash flow and debt management
• Strategy and business review
• Summary and outlook

11
EBITDA 1H 2007
EBITDA by Country
26.1
27.5
32.9
12
Application of Cash Flow
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Capex and Depreciation 1H 2007

• Depreciation policies remain unchanged
• Depreciation as a of revenue at 19 (22), due
  to operational leverage
• Capex programme for 2007 totals 45m, of which
  5-10m will remain unpaid at the year end due to
  timing of deliveries

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Acquisitions
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Financing 1H 2007

• Net debt level at 114.5m, with gearing at 113
  (2006 115)
• 62 of debt is Euro denominated
• Blended interest rate at half year is 5.60
• Interest cost covered
• 8.3x EBITDA
• 7.8x cash generated from operations
• 3.5x operating profit

Fixed interest rates
Variable interest rates
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Affordability of Net Debt Levels
Wizard acquired
Rise Hire acquired
Gardemann acquired
AMP acquired
Panther and Kestrel acquired
Strong and increasing cash flows ensure necessary
flexibility in terms of higher debt levels is
available when required to support the future
growth plans
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Agenda

• Highlights
• Financial performance
• Cash flow and debt management
• Strategy and business review
• Summary and outlook

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Strategy for Growth

• There are three main drivers behind our growth in
  revenue and earnings
• Consolidation of growing markets
• Reconfiguration of our fleet
• Operational leverage

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Consolidating Markets
15
10
(9)
17
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H1 Operating Margins
Source Chalcraft Consulting Management Estimates
There is a close correlation between the degree
of market consolidation and margins achieved by
Lavendon
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Focusing Acquisitions
89
87
70
62
15
Source Chalcraft Consulting, Management Estimates
Scope for penetration growth still exists
particularly outside of the new-build
construction sector
21
Reconfiguration of Fleet
Nationwide Access Fleet
3.4 yrs
3.1 yrs
3.7 yrs
3.0 yrs
Payback in years
Through increasingly sophisticated analysis of
demand and payback of different machine types, we
have targeted maintenance Capex on models with
better returns improving utilisation and
increasing revenue generation capacity of the
fleet
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Operational Leverage

• Our approach is to build and leverage scale in
  any market
• where we do business
• The development of a solid operational base with
  flexible IT
• systems is the key to our approach
• Once an effective infrastructure is established,
  disproportionate
• benefits from acquisitions are available
  through-
• Rehiring of fleet between operations
• Sharing of back-office functions
• Commercial rationalisation
• The implementation of this approach is well
  advanced in the UK
• and Germany

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Operational Management Structure
Management structures are in place in the larger
territories to enable self-drive of future
growth. As smaller businesses grow they will
migrate towards the same model
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Market Review

• UK market showing healthy levels of demand
• German market continuing its recovery
• Middle East market remains very strong
• Manufacturer lead times remain extended for most
  
• equipment types
• Outside of Spain, there is little consolidation
  activity

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UK - Review
Units on Hire

• Revenues up 27 to 47.1m (37.2m)
• Like for like revenue growth of 11
• Operating profits up 48 to 6.9m (4.7m), with
  margins up to 14.7 from 12.6
• Newly acquired Rise Hire business moves Group
  into the van-mounted rental sector
• Integration of Wizard into Nationwide to be
  completed by end of 2007

Revenue/Unit on Hire - Index
26
Germany - Review
Units on Hire

• Revenues increased by 131 to 22.7m (9.8m),
  with legacy business growing 17
• Hire rates improved by 11 in legacy business
• Returned to profit of 2.3m (loss of 2.1m)
• Integration benefits being accrued, but majority
  of 2.4m cost synergies expected to be delivered
  next year

Revenue/Unit on Hire - Index
27
Middle East - Review
Units on Hire

• Revenue up 70 to 7.9m (4.7m)
• Fleet increased by 14 across the half to 840
  units, further 150 additions planned in 2nd half
  of 2007
• Operating profits increased by 85 to 2.3m
  (1.2m)
• Transport and import duty costs of 0.15m were
  incurred in 1st half (one-off cost)
• Group ERP system implemented in H1 2007

Revenue/Unit on Hire - Index
28
France - Review
Units on Hire

• Revenue declined by 7 to 3.2m (3.4m)
• Operating loss reduced to 0.3m (0.5m)
• Increased average fleet size per depot is
  delivering operating benefits
• Further progress still required to deliver
  acceptable operational performance

Revenue/Unit on Hire - Index
29
Spain - Review
Units on Hire

• Revenues up 29 to 2.6m (2.0m), driven mainly
  by rate increases
• Operating profit of 0.4m (0.1m)
• A small business with a strong presence in its
  regional markets
• Spanish market offers scope for further growth,
  although there are some issues of oversupply

Revenue/Unit on Hire - Index
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Agenda

• Highlights
• Financial performance
• Cash flow and debt management
• Strategy and business review
• Summary and outlook

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Summary and Outlook

• Market conditions are good
• Implementation of strategy is delivering improved
  financial performance ahead of our
  expectations
• Further acquisition opportunities are being
  actively developed
• Capex programme focused on increasing revenue
  generation capacity of fleet
• Integration of businesses in UK and Germany will
  provide further scope to improve margins into
  2008 and provide solid platforms for further
  consolidation
• Cash generation remains strong and ensures debt
  position is comfortable
• Trading since the half year has remained strong

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Questions