>21,000 1,835. Our geographic footprint. Facilitating safe working at height from 3.5 metres to 84 metres

Transcription

1 Interim Report 2016

2 Our geographic footprint access platforms >21,000 Facilitating safe working at height from 3.5 metres to 84 metres Depots 70 We have 70 depots spread over 10 countries employees 1,835 We have 1,835 employees across the Group This document contains bookmarks. Please click on the contents below or use the bookmarks icon to help you navigate through this report. Click here to access our Preliminary Results Presentation and Webcast. contents 02 Chairman s statement 03 Summary for the half-year 09 Statement of directors responsibilities 10 Group income statement 10 Group statement of comprehensive income 11 Group balance sheet 12 Group statement of cash flows 13 Group statement of changes in equity 15 Notes to the interim financial information 27 Independent review report to Lavendon Group plc 28 Company information For further information on our business and updates throughout the year, please visit our individual company websites or our corporate website. Scan the QR code below with your mobile telephone to be taken to the Investor pages on our website. Our Interim Report 2016 is available in both printed form and on the Investors section of the Lavendon website at:

3 About us Welcome to Lavendon Group plc, the European and Middle East market leader in the rental of powered access equipment. The equipment we provide enables users to work safely, productively and comfortably at height, whatever the application. From depots in Bahrain, Belgium, France, Germany, Kuwait, Oman, Qatar, Saudi Arabia, the UK and the United Arab Emirates, we manage a fleet of over 21,000 access platform units. We pride ourselves on delivering excellent service to our customers through providing a safe, highly reliable and diverse fleet from a widespread depot network with the expertise of an industry leader. Your safety, our priority. Lavendon Group plc Interim Report

4 Chairman s statement The Group has performed well in the first six months of 2016, with strong revenue growth driving further improvements in the Group s profits and operational cash flows. This performance has been delivered primarily through the increased momentum developed within our UK and Middle East regions which has more than compensated for the weakness in some of our Continental European markets. John standen Non-Executive Chairman 2 Lavendon Group plc Interim Report 2016

5 Chairman s statement Continued The Group has performed well in the first six months of 2016, with strong revenue growth driving further improvements in the Group s profits and operational cash flows. This performance has been delivered primarily through the increased momentum developed within our UK and Middle East regions which has more than compensated for the weakness in some of our Continental European markets. The interim dividend increase of 18% reflects these good results and the Board s confidence in the Group s long term future. The constant currency growth in revenue seen in the first half reflects the benefits of our strategic fleet investment programme in 2015, in particular the additional 20 million invested towards the end of that year. We also accelerated the main part of our 2016 fleet investment into the first half, and allocated a further 7 million to our original UK investment plan to provide extra capacity of high demand machines in the second quarter. These investment decisions demonstrate the flexibility provided by the strength of our balance sheet and operational cash flows, enabling us to deploy additional capital to capture growth opportunities while maintaining capital discipline and remaining within our preferred debt leverage range. Our encouraging start to the year also benefited from operational efficiency gains secured from within our transport and maintenance operations, improving our fleet availability and releasing additional machines for hire. The restructuring of our German business into a more regionally-based depot business is progressing as planned and is on track to be operational in quarter four of this year. As anticipated, the changes being made have impacted the financial performance of the business in the first half. However we believe that they will provide the firm foundation from which improved financial returns to the Group can be delivered. Our strategic focus remains on the development of strong market positions with a differentiated service offering that will continue to drive the Group s revenues and improve profitability. We are confident that continued revenue growth delivered from our efficient operational cost base will generate substantial shareholder value in the medium term. Summary for the half-year 6 months ended 30 June 2016 total GRoUp RevenUe 134.2m 6 months ended 30 June 2015: 119.1m UnDeRlyinG ebitda * 43.4m 6 months ended 30 June 2015: 37.0m UnDeRlyinG ebita ** 18.4m 6 months ended 30 June 2015: 16.8m UnDeRlyinG pre-tax profit ** 15.9m 6 months ended 30 June 2015: 14.5m UnDeRlyinG basic eps ** 7.40p 6 months ended 30 June 2015: 6.60p Notes * Stated before exceptional items. 13% 17% 10% 10% 12% net assets 237.9m 30 June 2015: 221.5m net Debt 148.9m 31 December 2015: 119.2m RetURn on capital employed 12.2% 30 June 2015: 12.7% 50bps pre-tax profit 12.5m 6 months ended 30 June 2015: 13.7m eps (basic) 5.83p 6 months ended 30 June 2015: 6.19p proposed total DiviDenD increased by 18% to 2.00 pence 6 months ended 30 June 2015: 1.70p ** Stated before amortisation of intellectual property and intangibles recognised on acquisitions and exceptional items. EBITDA is Earnings Before Interest, Taxation, Depreciation and Amortisation. EBITA is Earnings Before Interest, Taxation and Amortisation. Exceptional items represent exceptional operating expenses. 7% 25% 9% 6% Lavendon Group plc Interim Report

6 Television and media sporting event case study View from a height Earlier in the year our UK and French subsidiaries supplied a variety of powered access units to facilitate television and media coverage of sporting events. Two large truck mounted platforms from the UK fleet were supplied at short notice to provide an excellent and safe vantage point from which to capture impressive aerial coverage of the Leicester City Football Club Champions parade. In France a number of our machines were used in the European Championship fan zone in Paris. Some were used in the set up of temporary networks and others to capture video and images during the opening ceremony. Both these customers value the provision of reliable, highly manoeuvrable, timely and safe access solutions and trust in Lavendon to deliver. LEICESTER, UK PARIS, FRANCE 4 Lavendon Group plc Interim Report 2016

7 Chairman s statement Continued Dividend The Board has declared an interim dividend of 2.00 pence per share, an increase of 18% over the previous year (2015: 1.70 pence per share). This will be paid on 7 October 2016 to shareholders on the register at 9 September The increased dividend reflects the consistent improvement in the Group s profits, the strength of its operating cash flows and the Board s confidence in the Group s future prospects. It is the Board s intention to move towards dividend distributions that are covered around three times by earnings. The actual dividend cover in any one year will be balanced against the Group s investment needs and funding requirements as we move through the business cycle. Return on Capital Employed The Group s return on capital employed ( ROCE ) at the half year was 12.2% (2015: 12.7%), firmly above our weighted average cost of capital ( WACC ) of 9.5%. On a like for like basis with the prior year, adjusting for the impairment in 2015 of the carrying value of the goodwill in the Group s German and Belgian businesses, the ROCE at the half year was 11.8% (2015: 12.7%). The movement in like for like ROCE over the past 12 months reflects the additional capital deployed in support of our growth plans, from which the delivery of returns will initially lag this investment. The calculation of ROCE has been based on the Group s operating profit prior to exceptional items for the 12 months to 30 June 2016 and the average of the opening and closing capital employed in this period of million (2015: million). The Group s key strategic aim remains the delivery of a ROCE greater than its WACC across the business cycle. Financial Results The Group s total revenue increased by 13% to million (2015: million), with rental revenues also increasing by 13% to million (2015: million). Underlying operating profits increased by 10% to 18.4 million (2015: 16.8 million) driven by strong growth in the UK and Middle East. Margins slightly softened to 13.7% (2015: 14.1%), as further margin improvement in the UK was offset by expected margin mix changes from Middle East growth and the effects of the German restructuring programme. We expect Group margins to improve during the second half, as the cost of investments made are fully absorbed within the business. The increased underlying operating profits more than absorbed an increase in underlying net interest costs to 2.6 million (2015: 2.2 million), to enable the Group s underlying profit before tax to increase by 10% to 15.9 million (2015: 14.5 million). With the Group s underlying effective tax rate declining to 21% (2015: 23%), underlying profit after tax increased by 13% to 12.6 million (2015: 11.2 million) and underlying earnings per share increased by 12% to 7.40 pence (2015: 6.60 pence). Amortisation* charges for the six months to 30 June 2016 were 0.9 million (2015: 0.9 million) and exceptional items totalling 2.4 million were incurred in the period. The exceptional items relate to the costs incurred from in-sourcing the UK s transportation function and the charges associated with the restructuring programme being undertaken in Germany. After amortisation* charges and exceptional items, the Group s operating profit was 15.1 million (2015: 15.9 million). The Group s profit before tax and after tax were 12.5 million and 9.9 million respectively (2015: 13.7 million and 10.5 million respectively), whilst earnings per share were 5.83 pence (2015: 6.19 pence). Using exchange rates consistent with 2015, total revenues and rental revenues increased by 9% to million and million respectively, with underlying operating profits increasing by 5% to 17.5 million. Underlying profit before tax increased by 3% to 15.0 million, whilst underlying profit after tax increased by 5% to 11.8 million and underlying earnings per share increased by 5% to 6.93 pence. Cash Flow Underlying earnings before interest, tax, depreciation and amortisation ( EBITDA ) increased by 17% to 43.4 million (2015: 37.0 million), with margins improving to 32.3% (2015: 31.0%). The strong growth in the Group s EBITDA in the period is a reflection of the Group s robust business model where the strength of cash generation from revenue growth is a key attribute. After absorbing movements in working capital and the payment of interest and tax, the Group generated 31.2 million of operating cash prior to the purchase of rental fleet assets (2015: 27.4 million). After funding the purchase of rental fleet assets in the period, the net operating cash used by operating activities was 5.2 million (2015: 6.5 million). The Group s absorption of working capital in the first half of circa 5 million was consistent with recent years, despite the strong revenue growth of 13% reported in the period and the well-publicised liquidity issues within the Middle East. The working capital pressure within the Middle East region remains primarily within our Saudi Arabian business, however its impact continues to be mitigated by the better working capital metrics seen in our other markets in the region that are driving our current revenue growth. As previously reported, our investment in the Middle East region for 2016 has been moderated compared to previous years and, as a consequence, we expect to increase the level of free cash flow generated by the region this year. We will continue to control the level of capital allocated to the Middle East region until the liquidity pressures show signs of easing. Investment During the first half of 2016, a total of 54.9 million (2015: 39.1 million) was invested in the Group s rental fleet and operational infrastructure. This investment was partly financed by the disposal of retired assets which generated 3.1 million (2015: 4.5 million). After reflecting movements in the amounts owed to equipment suppliers at the start and end of the period, our investment resulted in a net cash outflow of 36.6 million (2015: 31.0 million) for the first half. As highlighted earlier, the year on year increase in investment reflects our decision to accelerate fleet deliveries into the first half in order to meet growing demand and underpin our drive for revenue growth. This growth in demand, particularly for more specialised equipment, also led us to increase the original planned level of 2016 investment for the UK by 7.0 million in the second quarter. As a *Amortisation of intellectual property and intangibles recognised on acquisition. Lavendon Group plc Interim Report

8 Chairman s statement Continued result, our overall planned fleet investment programme (net of disposals) for 2016 has been increased to 62.0 million. Net Debt The Group s net debt before issue costs at 30 June 2016 was million (31 December 2015: million). The increase in the level of net debt reflects our investment programme in the six month period, including settlement of amounts owed to equipment suppliers brought forward from 2015, and an adverse foreign exchange movement of 11.0 million as a result of the sharp deterioration in Sterling s value against the Euro and US Dollar at the period end (following the UK s vote to leave the European Union (EU)). After adjusting for the unamortised debt issue costs, the Group s reported net debt at 30 June 2016 was million (31 December 2015: million). Subject to further movement in foreign exchange rates, we expect the Group s net debt level at the end of this year to be broadly in line with that reported at the half year. The corresponding debt to equity ratio** was 63% (31 December 2015: 53%) and our net debt to pre-exceptional EBITDA ratio was 1.61 times (31 December 2015: 1.39 times), comfortably within our preferred leveraged range of up to 1.75 times despite the sharp adverse movement in exchange rates at the half year. During the second quarter, we increased the size of our debt facilities by 25 million in order to maintain the headroom available under these facilities at their level prior to the settlement of amounts owing to equipment suppliers brought forward from This increase was provided under our existing banking arrangements with the same margin structure, and increases the Group s total debt facilities to circa 205 million (comprising of revolving bank facilities of 75 million and 60 million, together with US Private Placements with a combined value of 95 million). The total debt facilities have maturity dates that range from July 2019 through to August 2024 and the Group s available headroom within the facilities was circa 40 million at 30 June Of the total borrowings at the period end, circa 65% was denominated in either Euros or US Dollars and circa 50% of the borrowings were at fixed interest rates. Review of Business Operations Revenues and revenue growth percentages given in this section relate to rental revenue only and exclude revenues derived from the sale of new and ex-rental fleet equipment. For the Group s overseas operations, figures are quoted in local currencies, unless otherwise stated, to remove the impact of movements in foreign exchange rates and ensure a like for like comparison with the previous year (for the Middle East, the US Dollar has been used as a proxy for the basket of Middle East currencies). The split of revenues by country between rental revenues and revenues from the sale of new and ex-rental fleet equipment is given in Note 2 Segmental Analysis on page 16. UK (45% of Group Rental Revenues) The UK s rental revenues in the first half increased by 7% to 57.2 million (2015: 53.3 million) with underlying operating profits increasing by 8% to 9.5 million (2015: 8.8 million) and margins improving to 15.7% (2015: 15.2%). The rate of year on year revenue growth increased across the first half with growth in the second quarter reaching 8%. This growth was driven by strong volumes principally derived from market share gains that more than absorbed a 3% year on year softening in pricing. The ability to satisfy this increasing demand has been supported by our fleet investment decisions made in 2015 and the first half of 2016, that improved the scale and mix of the UK s rental fleet. At the same time, the availability of our fleet has improved through efficiency gains made within our transport and maintenance operations. In particular, as previously reported, the successful re-integration during the first half of the UK s previously out-sourced transportation function has reduced the level of fleet unavailable through transportation delays. These operational efficiency improvements have increased the availability of the UK fleet by almost 5% in the first half, effectively releasing around 500 extra machines for hire. We have continued to successfully promote our differentiated service through our BlueSky safety and efficiency enhancing products together with our managed service capability, securing additional volume from our major customers. At the same time, we have added sales resource and further developed our merchant and rehire partnership programmes in order to drive growth and increase our market share in more localised customer segments. As we move into the second half, the business is well positioned to strengthen its market leading position and deliver further growth over the balance of the year. Middle East (28% of Group Rental Revenues) Our Middle East region has grown strongly in the first half, despite increasingly more demanding comparators, with rental revenues increasing by 22% to $50.1 million (2015: $41.0 million) and underlying operating profits growing by 15% to $14.5 million (2015: $12.6 million). Margins of 27.0% (2015: 30.3%) reflect the region s revenue growth drivers transitioning away from our higher margin Saudi Arabian business. Within the region, growth in revenue from our operations in the UAE, Kuwait, Oman and Qatar has more than offset the decline in Saudi Arabia. Increased utilisation of an enlarged fleet has been the principal driver generating the strong levels of revenue growth in the first half (there were on average almost 1,000 extra rental machines available within the region s fleet compared to the first half of 2015). This volume growth has more than absorbed any pricing pressure in the region, particularly prevalent in Saudi Arabia, and we expect volumes to continue to be the main driver of revenue growth over the balance of the year. We continue to be mindful of the current business climate in the Middle East, where the pace of new investments in the region is significantly influenced by the price of oil. However, the structural drivers of growth across the Middle East remain in place and our current geographic spread of large scale projects already under way provides some resilience to the market outlook in the near term. As we have previously highlighted, compared to recent years, our 2016 investment plans for the region have been moderated with capital only being allocated to those markets where we are seeing strong growth. With this lower level of investment and our manageable working capital profile, we expect to increase the level of free cash flow generated from the region in This disciplined approach to capital allocation will continue until the liquidity pressures in the region show signs of easing. **Net debt as a percentage of equity. 6 Lavendon Group plc Interim Report 2016

9 Industry case study Lasco project, Paris, France Lavendon Group s French subsidiary recently supported a major urban art project undertaken on a section of the A86 motorway, west of Paris. Four thousand square metres of road tunnel was decorated from floor to ceiling with contemporary graffiti art in just five days. Because of the time constraints and difficult setting for the project, five Lavendon powered access units were used by the artists to provide a safe working environment and ensure the installation was completed on time. PARIS, FRANCE Lavendon Group plc Interim Report

10 Chairman s statement Continued On conversion to Sterling, rental revenues increased by 30% to 35.0 million (2015: 26.9 million) and underlying operating profits increased by 22% to 10.1 million (2015: 8.3 million). Continental Europe (27% of Group Rental Revenues) Rental revenues for the Group s Continental European region (Germany, France and Belgium) increased by 3% in the first half of the year to 44.9 million (2015: 43.7 million). Underlying operating profits declined to 2.2 million (2015: 3.0 million). Margins for the region of 4.7% (2015: 6.6%), reflect the impact of the German restructuring programme which absorbed the profit growth in France. Once rental revenues are converted to Sterling, they show a 9% increase to 35.0 million (2015: 32.0 million), with underlying operating profits declining to 1.7 million (2015: 2.2 million). Germany (13% of Group Rental Revenues) German rental revenues declined by 2% in the first half to 22.4 million (2015: 22.8 million). As expected, a small underlying operating loss for the period of 0.3 million was incurred (2015: underlying operating profit of 0.7 million) as the business became more price competitive to drive volume growth during the period in which operations were being restructured. As we move into the traditionally stronger trading months of the year, we expect margins to improve and the business to return to profit. The restructuring programme is progressing as planned, with the regional structure now in place and resource realignment on track to be operational in the final quarter of this year. The organisational changes to date have enabled the business to reduce its headcount requirements by circa 9% over the first half. While these changes have incurred restructuring charges and disrupted our ability to grow revenues in the short term, we firmly believe the adoption of a local champion strategy (as seen in the Group s French business) will enable us to grow market share, increase revenues and improve financial returns to the Group. On conversion to Sterling, rental revenues increased by 4% to 17.4 million (2015: 16.7 million), with an underlying operating loss of 0.2 million for the first half compared to a profit of 0.5 million in the prior year. France (10% of Group Rental Revenues) Our French business continued to grow strongly during the first half, despite the market continuing to show little sign of a sustained recovery. Rental revenues increased by 10% to 15.8 million (2015: 14.4 million) with underlying operating profits increasing to 1.8 million (2015: 1.7 million) and margins slightly improving to 11.5% (2015: 11.4%). Revenue growth has been volume driven, with the business being price competitive where required in order to strengthen its market positions in specific customer sectors or geographic areas. As in previous years, additional resources have been invested in the business to develop its operational base to effectively manage and grow revenues as the rental fleet expands. This investment has constrained margins in the first half but we expect this effect to unwind over the second half. On conversion to Sterling, rental revenues increased by 17% to 12.3 million (2015: 10.5 million), with underlying operating profits increasing to 1.4 million (2015: 1.2 million). Belgium (4% of Group Rental Revenues) Rental revenues in our Belgian business increased by 3% in the first half to 6.7 million (2015: 6.5 million), with underlying operating profits and margins stable at 0.7 million and 9.0% respectively (2015: 0.7 million and 9.5% respectively). Revenue growth has been driven by strong fleet utilisation which more than compensated for the continuing weak pricing environment. The business continues to be tightly managed and its structure is reviewed on a regular basis to identify opportunities to improve the financial returns to the Group. On conversion to Sterling, rental revenues increased by 8% to 5.2 million (2015: 4.8 million), with underlying operating profits stable at 0.5 million (2015: 0.5 million). Summary and Outlook The Group has performed well in the first half with strong revenue growth driving further improvements in our profits and operational cash flows, building on the momentum established towards the end of The interim dividend increase of 18% reflects this good performance and the Board s confidence in the Group s long term future. The Group s growth over the first six months of the year reflects the benefits of our strategic fleet investment decisions in 2015, as well as the actions taken to optimise the 2016 fleet deliveries and improve the availability of our enlarged fleet. Whilst the cost of these actions has constrained our overall margins in the first half, the Group s profits have continued to improve and we expect this impact on margins to unwind over the second half of the year. Our ability to accelerate both the scale and timing of investment illustrates the flexibility provided by the strength of the Group s balance sheet and operational cash flows. This is a key factor which underpins our robust business model, whereby our strong cash flows can be used to build strong market positions, respond to growth opportunities and drive earnings or, when more difficult market conditions prevail, can be used to reduce debt levels and protect the sustainability of returns. The Board s core focus is to ensure the allocation of capital, and use of our cash flows, remains disciplined and our 2017 investment plans will be structured accordingly so that our target of maintaining ROCE above our WACC across the business cycle is delivered and that increased shareholder value is created. Whilst it is still too early to fully assess the wider economic implications of the UK s decision to leave the EU, we do believe the Group remains well positioned with over 50% of its revenues, profits and cash flows being generated from outside the UK. Should there be a prolonged period of Sterling weakness, the Group s reported results would benefit from the translational impact on its overseas earnings which would offer some mitigation should there be any adverse economic consequences on the Group arising from the UK s decision. Trading since the half year has continued to be in line with our expectations and, whilst mindful of the recent increased economic uncertainty, the Board remains confident of making further progress in the second half and delivering on its expectations for John Standen Non-Executive Chairman 26 August Lavendon Group plc Interim Report 2016

11 Statement of directors responsibilities The directors confirm that the condensed consolidated interim financial information has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as adopted by the European Union and that the Interim Report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely: an indication of important events that have occurred during the first six months and their impact on the condensed consolidated interim financial information, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and material related-party transactions in the first six months and any material changes in the related-party transactions described in the last Annual Report. The directors of Lavendon Group plc are listed on page 28 of this report. A list of current directors is maintained on the Lavendon Group plc web site: By order of the Board John Standen Non-Executive Chairman Alan Merrell Group Finance Director 26 August 2016 Lavendon Group plc Interim Report

12 Group income statement (Unaudited) (Unaudited) (Audited) 6 months ended 30 June months ended 30 June 2015 Year ended 31 December 2015 Non- Non- Non- Underlying underlying (i) Total Underlying underlying (i) Total Underlying underlying (i) Total Notes Revenue 2 134, , , , , ,649 Cost of sales (75,817) (75,817) (65,870) (65,870) (136,136) (136,136) Gross profit 58,365 58,365 53,200 53, , ,513 Operating expenses (39,933) (3,359) (43,292) (36,445) (872) (37,317) (69,451) (22,327) (91,778) Operating profit/(loss) 2 18,432 (3,359) 15,073 16,755 (872) 15,883 43,062 (22,327) 20,735 Net finance expense 4 (2,554) (2,554) (2,224) (2,224) (4,579) (4,579) Profit/(loss) before tax 15,878 (3,359) 12,519 14,531 (872) 13,659 38,483 (22,327) 16,156 Taxation on profit/(loss) 5 (3,311) 694 (2,617) (3,365) 174 (3,191) (8,084) 246 (7,838) Profit/(loss) for the period 12,567 (2,665) 9,902 11,166 (698) 10,468 30,399 (22,081) 8,318 Basic earnings per share p 5.83p 6.60p 6.19p 17.95p 4.91p Diluted earnings per share p 5.78p 6.57p 6.16p 17.85p 4.88p (i) Non-underlying is defined as amortisation of intellectual property and intangibles recognised on acquisitions and exceptional items (note 3). Group statement of comprehensive income (Unaudited) (Unaudited) (Audited) 6 months ended 6 months ended Year ended 30 June June December Profit for the period 9,902 10,468 8,318 Other comprehensive income/(expense): Items that may be reclassified subsequently to profit or loss: Currency translation differences 10,935 (4,586) 1,434 10,935 (4,586) 1,434 Total comprehensive income for the period attributable to owners of the parent 20,837 5,882 9, Lavendon Group plc Interim Report 2016

13 Group balance sheet (Unaudited) (Unaudited) (Audited) As at As at As at 30 June June December 2015 Notes ASSETS Non-current assets Goodwill 8 45,541 65,543 45,541 Other intangible assets 8 6,168 6,770 6,573 Property, plant and equipment 9 330, , , , , ,356 Current assets Inventories 10 5,238 4,176 5,393 Trade and other receivables 89,233 66,622 72,482 Cash and cash equivalents 11 19,010 11,992 11, ,481 82,790 89,790 LIABILITIES Current liabilities Financial liabilities borrowings 12 (1,047) (558) (314) Trade and other payables (71,908) (55,735) (55,254) Current tax liabilities (4,198) (3,699) (4,182) (77,153) (59,992) (59,750) Net current assets 36,328 22,798 30,040 Non-current liabilities Financial liabilities borrowings 12 (166,906) (107,466) (130,759) Deferred tax liabilities (13,371) (11,918) (12,736) (180,277) (119,384) (143,495) Net assets 237, , ,901 SHAREHOLDERS EQUITY Ordinary shares 1,699 1,696 1,697 Share premium 105, , ,284 Capital redemption reserve Other reserves 4,325 (12,630) (6,610) Retained earnings 126, , ,526 Total equity 237, , ,901 The condensed consolidated interim financial information on pages 10 to 26 was approved by the Board of Directors on 26 August Lavendon Group plc Interim Report

14 Group statement of cash flows (Unaudited) (Unaudited) (Audited) 6 months ended 6 months ended Year ended 30 June June December 2015 Notes Cash flows from operating activities: Profit for the period 9,902 10,468 8,318 Taxation charge 5 2,617 3,191 7,838 Net finance expense 4 2,554 2,224 4,579 Amortisation and depreciation 2 25,908 21,067 44,535 Exceptional impairment of goodwill 20,580 Gain on sale of non-rental fleet property, plant and equipment (186) (10) (13) Other non-cash movements Purchase of rental fleet (36,345) (33,911) (89,917) Net increase in working capital (5,335) (3,509) (5,422) Cash used by operations (513) (232) (8,800) Net interest paid (2,093) (2,285) (4,628) Taxation paid (2,552) (4,006) (7,646) Net cash used by operating activities (5,158) (6,523) (21,074) Cash flows from investing activities: Purchase of non-rental fleet property, plant and equipment and intangible assets (3,346) (1,648) (4,452) Proceeds from sale of non-rental fleet property, plant and equipment Net cash used by investing activities (3,081) (1,638) (4,427) Cash flows from financing activities: Drawdown of loans 23,771 33,928 54,171 Repayment of loans (2,698) (24,959) (25,181) Repayment of principal under hire purchase agreements (426) (624) (925) Equity dividends paid 7 (6,279) (5,406) (8,290) Proceeds from equity shares issued Fees relating to increased debt facilities (113) Net cash generated by financing activities 14,329 3,026 19,934 Net increase/(decrease) in cash and cash equivalents before exchange differences 6,090 (5,135) (5,567) Effects of exchange rates 1,005 (533) (178) Net increase/(decrease) in cash and cash equivalents after exchange differences 7,095 (5,668) (5,745) Cash and cash equivalents at the start of the period 11,915 17,660 17,660 Cash and cash equivalents at the end of the period 19,010 11,992 11, Lavendon Group plc Interim Report 2016

15 Group statement of changes in equity FOR THE SIx MONTHS ENDED 30 JUNE 2016 (UNAUDITED) Attributable to owners of the Company Net Capital investment Share Share redemption Translation hedge Retained Total capital premium reserve reserve reserve earnings Equity Balance at 1 January , , (7,339) 122, ,901 Comprehensive income: Profit for the period 9,902 9,902 Currency translation differences 22,675 (11,740) 10,935 Total comprehensive income 22,675 (11,740) 9,902 20,837 Transactions with owners: Share based payments Tax movement on share based payments (19) (19) Shares issued Dividends paid in the period (6,279) (6,279) Total transactions with owners 2 72 (5,926) (5,852) Balance at 30 June , , ,404 (19,079) 126, ,886 FOR THE SIx MONTHS ENDED 30 JUNE 2015 (UNAUDITED) Attributable to owners of the Company Net Capital investment Share Share redemption Translation hedge Retained Total capital premium reserve reserve reserve earnings Equity Balance at 1 January , , ,826 (11,870) 121, ,620 Comprehensive income: Profit for the period 10,468 10,468 Currency translation differences (12,386) 7,800 (4,586) Total comprehensive income (12,386) 7,800 10,468 5,882 Transactions with owners: Share based payments Tax movement on share based payments Shares issued Dividends paid in the period (5,406) (5,406) Total transactions with owners 7 80 (5,106) (5,019) Balance at 30 June , ,213 4 (8,560) (4,070) 127, ,483 Lavendon Group plc Interim Report

16 Group statement of changes in equity Continued FOR THE YEAR ENDED 31 DECEMBER 2015 (AUDITED) Attributable to owners of the Company Net Capital investment Share Share redemption Translation hedge Retained Total capital premium reserve reserve reserve earnings Equity Balance at 1 January , , ,826 (11,870) 121, ,620 Comprehensive income: Profit for the year 8,318 8,318 Currency translation differences (3,097) 4,531 1,434 Total comprehensive income (3,097) 4,531 8,318 9,752 Transactions with owners: Share based payments Tax movement on share based payments (42) (42) Shares issued Dividends paid in the year (8,290) (8,290) Total transactions with owners (7,630) (7,471) Balance at 31 December , , (7,339) 122, , Lavendon Group plc Interim Report 2016

17 Notes to the interim financial information 1. ACCOUNTING POLICIES This condensed consolidated interim financial information has been prepared in accordance with the Disclosure and Transparency Rules and with IAS 34 Interim Financial Reporting as adopted by the European Union. The same accounting policies, presentation, methods of computation, significant judgements and the key sources of estimation of uncertainties have been followed in the condensed consolidated interim financial information as were applied in the Group s audited financial statements for the year ended 31 December 2015 which were prepared in accordance with IFRS s as adopted by the European Union, with the exception of new standards and interpretations that were only applicable from the beginning of the current financial year and taxes on income in the interim period which are accrued using the tax rates that would be applicable to total expected annual profit or loss. This interim financial information does not constitute statutory accounts as defined in section 434 of the Companies Act A copy of the audited consolidated statutory financial statements for the year ended 31st December 2015 has been delivered to the Registrar of Companies. The auditor s report on these financial statements was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498(2) or (3) of the Companies Act New or revised accounting standards and interpretations issued by 30 June 2016 but not yet effective are listed below: IFRS 9 Financial instruments IFRS 15 Revenue from contracts with customers IFRS 16 Leases recognition, measurement, presentation and disclosure of leases Amendment to IAS 7 Statement of cash flows disclosure initiative Amendment to IAS 12 Income taxes recognition of deferred tax assets for unrealised losses The Group has a stable financing platform and its key debt ratios are within the Boards target range and well within the Group s banking covenants. The directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing this condensed consolidated interim financial information. 2. SEGMENTAL ANALYSIS The internal reporting arrangements for Lavendon Group plc comprises of five operating segments based on the geographical locations of the UK, the Middle East, Germany, France and Belgium and one non operating Corporate cost centre. The Corporate cost centre comprises the Group directorate, statutory compliance and Group functions and holds the Group s bank borrowing facilities. The Group s chief operating decision maker ( CODM ) is the Group Board. The Group Board reviews the Group s internal reporting in order to monitor and assess performance of the operating segments for the purpose of making decisions about allocation of resources. Performance is evaluated based on actual results compared to agreed targets and performance in prior periods. Lavendon Group plc Interim Report

18 Notes to the interim financial information Continued 2. SEGMENTAL ANALYSIS CONTINUED Six months ended 30 June 2016 (unaudited) Corporate UK Middle East Germany France Belgium items Group Rental revenue 57,200 34,976 17,420 12,334 5, ,128 Sale of new equipment 1,715 2, ,185 Sale of ex-rental equipment 1, ,869 Total revenue 60,616 37,424 18,049 12,352 5, ,182 Underlying operating profit/(loss) 9,533 10,112 (248) 1, (2,898) 18,432 Amortisation* (943) (943) Exceptional items (590) (1,826) (2,416) Operating profit/(loss) 8,943 10,112 (2,074) 1, (3,841) 15,073 Net finance expense (2,554) Profit before taxation 12,519 Taxation on profit (2,617) Profit for the period 9,902 Non current assets 199,921 68,166 54,032 42,679 16, ,835 Current assets 35,656 51,945 10,075 9,626 4,281 1, ,481 Total assets 235, ,111 64,107 52,305 20,592 2, ,316 Liabilities (53,311) (9,694) (8,800) (13,033) (8,526) (164,066) (257,430) Net assets/(liabilities) 182, ,417 55,307 39,272 12,066 (161,442) 237,886 Capital expenditure 22,578 12,965 9,359 7,155 2, ,899 Depreciation 9,788 7,752 3,231 2,353 1, ,235 Amortisation ,673 Notes: Inter segment trading has been eliminated in the analysis presented above, so that only trading between the Group and external third parties is represented. Included within the Middle East is external revenue of 15,628,000 (six months ended 30 June 2015: 14,969,000; year ended 31 December 2015: 28,753,000) generated in Saudi Arabia. * Amortisation of intellectual property and intangibles recognised on acquisitions. 16 Lavendon Group plc Interim Report 2016

19 Notes to the interim financial information Continued 2. SEGMENTAL ANALYSIS CONTINUED Six months ended 30 June 2015 (unaudited) Corporate UK Middle East Germany France Belgium items Group Rental revenue 53,291 26,911 16,701 10,537 4, ,233 Sale of new equipment 2, ,333 Sale of ex-rental equipment 2, ,504 Total revenue 58,243 27,355 17,668 10,586 5, ,070 Underlying operating profit/(loss) 8,849 8, , (2,601) 16,755 Amortisation* (872) (872) Operating profit/(loss) 8,849 8, , (3,473) 15,883 Net finance expense (2,224) Profit before taxation 13,659 Taxation on profit (3,191) Profit for the period 10,468 Non current assets 173,507 44,792 51,612 28,204 17,473 2, ,069 Current assets 30,787 30,958 8,640 7,195 3,780 1,430 82,790 Total assets 204,294 75,750 60,252 35,399 21,253 3, ,859 Liabilities (46,124) (5,093) (5,012) (5,780) (6,305) (111,062) (179,376) Net assets/(liabilities) 158,170 70,657 55,240 29,619 14,948 (107,151) 221,483 Capital expenditure 20,094 8,807 5,694 3,109 1, ,173 Depreciation 8,905 5,008 2,693 1, ,518 Amortisation ,549 Note: Inter segment trading has been eliminated in the analysis presented above, so that only trading between the Group and external third parties is represented. * Amortisation of intellectual property and intangibles recognised on acquisitions. Lavendon Group plc Interim Report

20 Notes to the interim financial information Continued 2. SEGMENTAL ANALYSIS CONTINUED Year ended 31 December 2015 (audited) Corporate UK Middle East Germany France Belgium items Group Rental revenue 110,218 55,928 35,301 22,038 10, ,532 Sale of new equipment 5, ,307 Sale of ex-rental equipment 5, , ,810 Total revenue 121,117 57,201 37,277 22,405 10, ,649 Underlying operating profit/(loss) 22,718 18,415 2,539 3,639 1,131 (5,380) 43,062 Amortisation* (1,747) (1,747) Exceptional impairment (15,088) (5,492) (20,580) Operating profit/(loss) 22,718 18,415 (12,549) 3,639 (4,361) (7,127) 20,735 Net finance expense (4,579) Profit before taxation 16,156 Taxation on profit (7,838) Profit for the period 8,318 Non current assets 188,668 56,876 43,148 32,997 13,026 1, ,356 Current assets 28,939 38,755 8,447 8,204 3,608 1,837 89,790 Total assets 217,607 95,631 51,595 41,201 16,634 3, ,146 Liabilities (44,116) (8,769) (5,700) (6,308) (5,774) (132,578) (203,245) Net assets/(liabilities) 173,491 86,862 45,895 34,893 10,860 (129,100) 222,901 Capital expenditure 46,587 24,192 13,232 8,877 2, ,470 Depreciation 18,499 11,551 5,464 3,949 1, ,416 Amortisation 1, ,747 3,119 Notes: Inter segment trading has been eliminated in the analysis presented above, so that only trading between the Group and external third parties is represented. * Amortisation of intellectual property and intangibles recognised on acquisitions. 18 Lavendon Group plc Interim Report 2016

21 Notes to the interim financial information Continued 3. ExCEPTIONAL ITEMS AND AMORTISATION* Exceptional items and amortisation* incurred during the period are set out below: (Unaudited) (Unaudited) (Audited) 6 months ended 6 months ended Year ended 30 June June December Exceptional items (i) 2,416 Exceptional impairment of goodwill (ii) 20,580 Amortisation* ,747 Total exceptional items and amortisation* before tax 3, ,327 Taxation: tax credits on exceptional items (679) effect of taxation on amortisation* (15) (174) (246) (694) (174) (246) Total exceptional items and amortisation* after tax 2, ,081 Notes: (i) Exceptional items relate to the costs associated with insourcing the UK s transportation function and the restructuring programme being undertaken in Germany. (ii) Exceptional impairment of goodwill related to the impairment of the carrying value of goodwill associated with the Group s Belgian and German businesses in * Amortisation of intellectual property and intangibles recognised on acquisitions. 4. FINANCE INCOME AND ExPENSE (Unaudited) (Unaudited) (Audited) 6 months ended 6 months ended Year ended 30 June June December Finance income: bank interest 7 Finance expense: interest on bank loans and overdraft (2,422) (2,116) (4,390) interest on hire purchase and finance lease agreements (37) (19) (18) amortisation of debt issue costs (95) (89) (178) Total finance expense (2,554) (2,224) (4,586) Net finance expense (2,554) (2,224) (4,579) Lavendon Group plc Interim Report

22 Notes to the interim financial information Continued 5. TAxATION ON PROFIT/(LOSS) Analysis of charge for the period: (Unaudited) (Unaudited) (Audited) 6 months ended 6 months ended Year ended 30 June June December Corporation taxation 2,568 2,545 6,671 Deferred taxation ,167 Taxation 2,617 3,191 7,838 The tax charge on profits is based on the expected effective tax rate for the year. In the July 2015 Budget Statement, it was announced that the standard rate of corporation tax in the UK will be further reduced to 19% with effect from 1 April 2017 and to 18% with effect from 1 April These changes were substantively enacted on 26 October 2015 and are therefore reflected in the deferred tax balances in this financial information. In the March 2016 Budget Statement, it was further announced that the standard rate of corporation tax will be reduced to 17% from 1 April This further change had not been substantively enacted at the balance sheet date and is not therefore reflected in this financial information. 6. EARNINGS PER SHARE Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below: Six months ended 30 June 2016 (unaudited) Weighted average Per share Profit no. of shares amount 000 (in millions) (pence) Basic earnings per share 9, p Effect of dilutive securities Under Long Term Incentive Plan and Approved Options 1.4 Diluted earnings per share 9, p Underlying earnings per share Basic 12, p Diluted 12, p Six months ended 30 June 2015 (unaudited) Weighted average Per share Profit no. of shares amount 000 (in millions) (pence) Basic earnings per share 10, p Effect of dilutive securities Under Long Term Incentive Plan and Approved Options 0.9 Diluted earnings per share 10, p Underlying earnings per share Basic 11, p Diluted 11, p 20 Lavendon Group plc Interim Report 2016

23 Notes to the interim financial information Continued 6. EARNINGS PER SHARE CONTINUED Year ended 31 December 2015 (audited) Weighted average Per share Profit no. of shares amount 000 (in millions) (pence) Basic earnings per share 8, p Effect of dilutive securities Under Long Term Incentive Plan and Approved Options 0.9 Diluted earnings per share 8, p Underlying earnings per share Basic 30, p Diluted 30, p Earnings per share is calculated on the 169,778,922 ordinary shares in issue for the six months ended 30 June 2016 being the weighted average number of ordinary shares in issue (six months ended 30 June 2015: 169,129,840; year ended 31 December 2015: 169,392,703). Diluted underlying earnings per share assumes conversion of all potential dilutive ordinary shares which arise from share incentive scheme awards granted to employees where the performance criteria is being met as at the end of the period and where the exercise price is less than the average market price of the Company s ordinary share capital during the period. The effect of this dilution is to increase the weighted average number of ordinary shares to 171,158,759 (six months ended 30 June 2015: 170,016,929; year ended 31 December 2015: 170,262,717). Underlying earnings per share is presented as the directors believe that this provides additional relevant information about underlying business performance. 7. DIvIDENDS (Unaudited) (Unaudited) (Audited) 6 months ended 6 months ended Year ended 30 June June December Final dividend paid in respect of 2015 of 3.70p per 1p ordinary share (2014: 3.20p) 6,279 5,406 5,406 Interim dividend paid in respect of 2015 of 1.70p per 1p ordinary share (2014: 1.40p) 2,884 6,279 5,406 8,290 The directors are declaring an interim dividend of 2.00 pence per ordinary share which will distribute an estimated 3,400,000 of shareholders funds. It will be paid on 7 October 2016 to shareholders who are on the register at 9 September Lavendon Group plc Interim Report

24 Notes to the interim financial information Continued 8. INTANGIBLE ASSETS (Unaudited) (Unaudited) (Audited) 6 months ended 6 months ended Year ended 30 June June December 2015 Goodwill Other intangibles Goodwill Other intangibles Goodwill Other intangibles Net book value at start of period 45,541 6,573 67,716 7,836 67,716 7,836 Additions 1, ,925 Amortisation (1,673) (1,549) (3,119) Exceptional impairment (20,580) Exchange movements 96 (2,173) (104) (1,595) (69) Net book value at end of period 45,541 6,168 65,543 6,770 45,541 6,573 Included within other intangible additions is 518,000 (June 2015: 191,000; December 2015: 766,000) of internal labour costs. The carrying value of internally generated computer software is 4,706,000 (June 2015: 3,517,000; December 2015: 4,662,000). All other intangible assets related to acquired intangible assets. Goodwill acquired in a business combination was allocated, at date of acquisition, to the cash generating unit that benefited from that business combination. The directors consider that a cash generating unit is generally an individual country of operation. Where there is a change in the way the Group manages and operates, the goodwill allocation to individual cash generating units is reviewed and reallocated where appropriate. The allocation of the goodwill by cash generating unit is shown in the table below: (Unaudited) (Unaudited) (Audited) As at As at As at 30 June June December Cash generating unit: United Kingdom 45,541 45,541 45,541 Germany 14,664 Belgium 5,338 Total 45,541 65,543 45,541 Goodwill is tested annually for impairment or more frequently if there are indications that goodwill might be impaired. The next goodwill impairment review will be performed at 31 December Management do not consider there to be any indications of impairment as at 30 June PROPERTY, PLANT AND EQUIPMENT (Unaudited) (Unaudited) (Audited) 6 months ended 6 months ended Year ended 30 June June December Net book value at start of period 284, , ,034 Additions 53,727 38,586 93,545 Disposals (79) (12) Transferred to inventories (1,048) (2,096) (3,129) Depreciation (24,235) (19,518) (41,416) Exchange movement 17,519 (8,250) (1,780) Net book value at end of period 330, , , Lavendon Group plc Interim Report 2016

25 Notes to the interim financial information Continued 10. INvENTORIES (Unaudited) (Unaudited) (Audited) As at As at As at 30 June June December Ex-rental fleet equipment available for resale Spares 4,713 3,225 3,977 Consumables Third party equipment purchased for resale ,238 4,176 5, ANALYSIS OF CHANGES IN NET DEBT (Audited) (Unaudited) Currency As at Non-cash translation As at 1 January 2016 Cash flows item (i) differences 30 June Cash and cash equivalents 11,915 6,090 1,005 19,010 Bank debt (61,436) (21,073) (2,453) (84,962) Loan placement (70,007) (9,265) (79,272) Hire purchase and finance lease liabilities (356) 426 (4,229) (304) (4,463) (131,799) (20,647) (4,229) (12,022) (168,697) Net borrowings before unamortised debt issue costs (119,884) (14,557) (4,229) (11,017) (149,687) Unamortised debt issue costs (95) 744 Net debt (119,158) (14,444) (4,324) (11,017) (148,943) (i) Non-cash movements relate to the amortisation of debt issue costs, and new hire purchase facilities. 12. FINANCE LIABILITIES BORROWINGS (Unaudited) (Unaudited) (Audited) As at As at As at 30 June June December 2015 Current Hire purchase and finance lease liabilities 1, , (Unaudited) (Unaudited) (Audited) As at As at As at 30 June June December 2015 Non-current Bank loans 84,962 41,118 61,436 Loan placement 79,272 67,067 70,007 Hire purchase and finance lease liabilities 3, , , ,485 Unamortised debt issue costs (744) (815) (726) 166, , ,759 Lavendon Group plc Interim Report

26 Notes to the interim financial information Continued 12. FINANCE LIABILITIES BORROWINGS CONTINUED Bank loans and loan placements are repayable as follows: (Unaudited) (Unaudited) (Audited) As at As at As at 30 June June December Between two and five years 135,029 83, ,651 More than five years 29,205 24,709 25, , , ,443 Bank loans and loan placements are secured by both fixed and floating charges on the assets of the Group. With the exception of long term borrowings before unamortised debt issue costs, the fair value of the Group s financial instruments are materially equal to their carrying value. The fair value of long term borrowings before unamortised debt issue costs is 173,497,000 (June 2015: 118,070,000; December 2015: 140,408,000). 13. CAPITAL COMMITMENTS (Unaudited) (Unaudited) (Audited) As at As at As at 30 June June December Capital expenditure that has been contracted for by the Group but has not yet been provided for in the financial information at the balance sheet date 24,685 41,098 26, CONTINGENT LIABILITIES The Group has no significant contingent liabilities at 30 June 2016 (30 June 2015 and 31 December 2015: nil). 15. SEASONALITY OF INTERIM OPERATIONS The Group s financial results and cash flows have, historically, been subject to seasonal trends between the first and second half of the financial year. Traditionally, the second half of the financial year sees higher revenue and profitability as a result of there being an increased number of working days and higher customer demand in the Group s countries of operation. There is no assurance that this trend will continue. 24 Lavendon Group plc Interim Report 2016

27 Notes to the interim financial information Continued 16. PRINCIPAL RISKS AND UNCERTAINTIES The principal risks and uncertainties for the Group are set out below: Risk area Risk description potential impact mitigation Financial & funding Currency fluctuation The Group reports its performance in sterling, but generates revenues, profits and cash flows in different currencies. The Group also owns assets and borrows money in different currencies. Currency fluctuations can materially affect the level of revenues, profits and cash that the Group can generate. The Group has a formal hedging policy to mitigate structural and transactional foreign exchange exposures. It seeks to match the assets and liabilities denominated in a particular currency to provide a natural hedge. Wherever possible, cash flows arising in a given currency are utilised to service borrowings and capital investment in the same currency. Availability of capital funding The Group requires access to capital to fund fleet replacement and expansion, depot network expansion and acquisitions should they occur. If the cash flow that the Group generates, together with its credit facilities is not sufficient to meet these requirements, then additional debt and/or equity funding may be required. If additional funding was not available, then the Group s revenue and cash flow could be adversely impacted. The Group aims to ensure it has the necessary equity base and sufficient banking and other credit facilities available to support its development plans. The Group operates within a relatively modest range of debt leverage ( times EBITDA) to minimise its refinancing risk. A comprehensive investor relations programme is in place to communicate our business strategy and financial performance, to ensure the investor community and debt providers are well informed to ease the process of raising additional funding should it be required. Market and external Volatility in Middle East Significant volatility in the Middle East market could result in severe trading reduction, major bad debt exposure and/or asset impairments. There is regular monitoring of economic and political changes within the market, including legislative and taxation changes. Performance in each Middle East operation is closely monitored using daily, weekly and monthly reporting systems against prior year, budget and forecasts. The level of bad debt provisioning is regularly reviewed to ensure this remains appropriate. Additional resources have been allocated to strengthen credit control and debt collection functions within the region. The amount of cash that is held in the Middle East region is limited, with surplus funds repatriated on a regular basis. Changes to the competitive structure of the market Excessive competitor fleet expansion that introduces surplus capacity into the market could place pressure on hire rates and utilisation levels, and may erode market share. Market consolidation, the merging of one or more of our competitors or customers could also have a similar impact on our market share There is also the potential that customers may choose to move to the more generalist plant hire providers that seek to offer a one stop shop (acting as a broker for equipment they are unable to directly supply), which could erode market share and margins. We continue to build the differentiation of the Lavendon brand through service initiatives and safety enhancements. We also continuously monitor our customer service levels. Our customer base is wide, from large multi-national companies through to smaller sole traders, and operates in many sectors. This diversity offers a degree of resilience to competitive pressures. We closely monitor fleet utilisation and fleet replacement programmes to avoid surplus capacity. Lavendon Group plc Interim Report

28 Notes to the interim financial information Continued 16. PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED Risk area Risk description potential impact mitigation Market and external External economic pressures put stress on business performance The equipment rental business is largely cyclical, being linked to the industrial, commercial and construction sub sectors. Changes to demand in these sectors will directly impact on revenues, and because of the high proportion of fixed costs this will have a greater impact on margins. The Group exercises prudent management through the different phases of the economic cycle. Plans to mitigate a downturn are regularly reviewed and updated and include fleet redeployment and disposal, as well as headcount and capital expenditure controls. The geographical diversity of the Group helps to mitigate exposure to the effects of individual market fluctuations. Operations Major IT Systems Failure The Group operates a group-wide ERP system, which supports all key processes. A major IT systems failure and/or cyber attack could significantly impact Group operations and customer relationships. The Group has a full disaster recovery programme including on and off site systems replication, and the use of resilient networks. There is a robust change management process to ensure IT systems and data remain secure and correctly configured. Specific cyber security reviews are undertaken, with enhanced security measures being introduced where required. Injury to or death of staff, subcontractor or customer As the Group works in an environment where people are in contact with heavy machinery, accidents can occur that result in injury to individuals, liability to the Group and damage to its reputation. The Group has robust health and safety procedures, provides clear training and guidance, reviews through H&S audits, and has embedded accident reporting systems. Maintenance regimes and statutory inspection requirements of the Group s rental fleet are rigorously enforced. Appropriate insurance cover is maintained. People Failure to recruit and retain appropriately skilled people Delivery of Group business plans is dependent on the skills and abilities of our people. If we cannot recruit and retain those people, particularly in key roles, then this may impact on our ability to meet the business objectives. There is a clear resource strategy in place, and processes to identify which people and roles are essential for the continued delivery of our business. This feeds into our recruitment, development, reward and succession planning, to provide resilience for the business. Legal and regulatory Failure to comply with the regulatory framework Because of the geographical diversity of the Group s business, it is subject to a wide range of different legal, regulatory and taxation regimes. There is a risk that changes in these frameworks, particularly in the Middle East, may cause operational difficulties. Some legislative requirements, for example, compliance with the Anti Bribery and Corruption regime, have potentially significant financial penalties for the Group. The Group has processes in place to identify any changes in legislative or tax frameworks, and takes regular external advice. We regularly review internal arrangements in place to ensure compliance with regulations, and update policies and procedures where required after receiving appropriate external advice. 26 Lavendon Group plc Interim Report 2016

29 Independent review report to Lavendon Group plc We have been engaged by the Company to review the condensed set of financial information in the half-yearly financial report for the six months ended 30 June 2016 which comprises the Group income statement, the Group balance sheet, the Group statement of cash flow, the Group statement of changes in equity and related notes 1 to 16. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial information. This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed. Directors responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom s Financial Conduct Authority. As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial information included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial information in the half-yearly financial report based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial information in the half-yearly financial report for the six months ended 30 June 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom s Financial Conduct Authority. Deloitte LLP Chartered Accountants and Statutory Auditor Four Brindleyplace, Birmingham, B1 2HZ 26 August Lavendon Group plc Interim Report

30 Company information DIRECTORS John Standen Non-Executive Chairman, Chairman of the Nomination Committee and a member of the Remuneration Committee Don Kenny Group Chief Executive Alan Merrell Group Finance Director Andrew Wood Non-Executive Director, Senior Independent Director, Chairman of the Audit Committee and a member of the Remuneration and Nomination Committees John Coghlan Non-Executive Director, Chairman of the Remuneration Committee and a member of the Audit and Nomination Committees John Wyatt Non-Executive Director, Member of the Audit, Remuneration and Nomination Committees COMPANY SECRETARY AND REGISTERED OFFICE Richard Cole 15 Midland Court, Central Park, Lutterworth, Leicestershire, LE17 4PN ADvISERS Independent Auditors Deloitte LLP, 4 Brindley Place, Brindley Place, Birmingham, B1 2HZ Solicitors Stephenson Harwood, 1 Finsbury Circus, London, EC2M 7SH Bankers Lloyds TSB Bank plc, 1 Bede Island Road, Bede Island Business Park, Leicester, LE2 7EA Stockbrokers Peel Hunt LLP, Moor House, 120 London Wall, London, EC2Y 5ET Financial advisors Canaccord Genuity Limited, 88 Wood Street, London, EC2V 7QR Registrars Capita Registrars Limited, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU Public Relations FTI Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD 28 Lavendon Group plc Interim Report 2016

31 Our Group is founded on common values that are relevant wherever we re working. We believe in providing helpful, responsive powered access solutions, with reliable service and equipment. Above all, we believe in providing simplicity and peace of mind to our customers by offering best practice when working at height. The paper used in this document contains materials sourced from responsibly managed and sustainable commercial forests, certified in accordance with the FSC (Forest Stewardship Council). Designed and produced by fourthquarter

32 15 Midland Court Central Park Lutterworth Leicestershire LE17 4PN Tel: Fax: Registered in England No Scan the QR code above with your mobile telephone to be taken to the Investor pages on our website. Our Interim Report 2016 is available in both printed form and on the Investors section of the Lavendon website at We view effective communication with our shareholders as a key requirement and we would welcome feedback on either the printed or electronic versions of the Interim Report.