Companies: LVD   

Powered access equipment rental group Lavendon, historically UK and Germany focused, has scaled up its Spanish and French operations and gained market leadership in Belgium through the €87.8m (£61.4m) acquisition of DK Rental.

Led by chief executive Kevin Appleton, Lavendon rents equipment that helps people work safely and productively at height. The company has acquired DK Rental Spain for £16.9m and inked deals (subject to the nod from shareholders) to buy both DK Rental Belgium and DK Rental France for £44.5m.

Margin enhancement in France and Spain should follow, as utilisation levels improve and economies of scale bear fruit, while the acquisitions better position Lavendon for further consolidation on the Continent. Combined, DK Rental has a 2,700-strong fleet, an experienced management team that is sticking with the business, and made £12.3m from £22.2m sales in 2006. The acquisition should boost Lavendon’s earnings in the year to December 2008, before exceptional costs.

Alongside the news, Appleton said trading for Lavendon has remained strong in all its main markets (UK, Germany and the Middle East), contributing to growth year-on-year. At the interim, Lavendon delighted investors with a record first half-year in which pre-tax profits powered up from £1.1m to £8.3m, driven by organic and acquisitive growth. Some £18m of cash was generated, underpinning an 80% interim dividend increase to 2.75p per share. First backed by Growth Company Investor as a speculative recovery punt at 217p, Lavendon has come a long way yet remains well worth holding for further growth in legislation-backed markets.

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