Overall revenues, on a constant currency basis (excluding ex-fleet equipment sales), grew by 8% compared with the prior year. In the second quarter, Group revenues increased by 6% compared with 2010 on the same basis.
Revenues in all European businesses increased during the second quarter over 2010, through a combination of volume and pricing improvements, although, as expected, this was at a slower rate than in the first quarter where the 2010 comparator was impacted by adverse weather conditions in Europe.
In the UK, despite the extended public holiday period in the second quarter, revenues showed good growth, while our German, Belgian and French operations, notwithstanding progressively stronger comparatives from 2010, continued the trend of growth established in the first quarter. In the Middle East, rental revenues returned to year-on-year growth on a monthly basis during the second quarter, although visibility for the second half of the year continues to be uncertain.
Revenue growth has driven a marked improvement in profitability in the first half, leading to increased operating margins and returns on our capital employed (ROCE). The benefits of the actions taken to improve operating efficiency are already becoming evident.
Lavendon said it expects further progress to be made in improving margins and ROCE during the second half.
The Group's net debt level has reduced in line with plans during the period and, at 30th June 2011, on a constant currency basis with the previous year-end, stood at £129.1m, a reduction of £11.2m in the six month period. After reflecting actual exchange rates, the Group's reported net debt position at 30th June 2011 is £133.7m, a reduction of £6.6 million. The group expects the reduction in net debt levels to accelerate during the second half of the year.
Lavendon will report an exceptional post tax credit of £0.9m in the first half, being the net effect of exceptional restructuring and one-off consultancy costs of £3.1m and an exceptional credit of £4m that follows agreement with the tax authorities on the treatment of previous intra-group financing arrangements.
Due to the weak long-term outlook for the market in Spain, Lavendon has concluded that the capital currently invested in the Spanish operation will achieve better returns if substantially re-deployed to our other markets. Consequently it has made a strategic decision to exit the Spanish powered access market during the second half of 2011 at a cost of approximately £5m (net cash costs will be approximately £1.25m after the disposal of fleet not re-deployed to our other markets). This cost will be principally incurred during the second half of the year and charged as an exceptional item in our final accounts for 2011.
The search for a new Chief Executive Officer for the Group is progressing. In the meantime, John Standen is continuing in his interim role as Executive Chairman, with Jan Astrand, Mike Potts and Andy Wright as Chief Executives of Continental Europe, the UK and International Operations respectively.
The first half has seen a solid improvement in both revenues and margins.
Lavendon will announce Interim Results for the six months ended 30th June 2011 on 26th August 2011.
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