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ability to offer customers a flexiblerange of products with predictablecosts has enabled the MHE divisionto achieve both revenue and profitgrowth in 2016.Significant strengthening of thesales and support teams, combinedwith a strong focus on cost control,should ensure that profitable growthcan be sustained.Recent investment in the divisions’headquarters at Garforth hasenhanced the staff workingenvironment and internalcommunication, which in turn hasbrought higher efficiencies andcustomer satisfaction. Furthermore,equipment investment hasremained high to take advantage ofnew fuel-efficient technologies anda growing confidence in this sector,which in turn has supported ourpartnership relationship with anumber of leading equipmentmanufacturers.SweepersDawsonrentals Sweepersstrengthened its position as amarket leader in the UK self drivesweeper sector with a strongdouble digit growth performance in2016. Ongoing investment in newEuro 6 equipment continued toreduce the fleet age profile,ensuring higher levels of reliabilityand performance for customers.A strong focus on customer servicehas increased the customer baseand secured new long termcontracts, justifying the decision toexpand into the gully tanker andrefuse collection sectors, withcontinuing encouraging results. Theestablishment of a fully operationalsub depot at Pucklechurch willfurther support the businessdevelopment in the South ofEngland.Temperature-controlled productsDawsonrentals Temperature ControlSolutions has evolved in recent yearsfrom an equipment rental provider tobecome a consultative businesspartner, offering innovative solutionsand assisting process change to bringbest results for customers. Thecompany ethos that “it’s not just aboutthe box, it’s how you use it” sums upthe approach that has been sosuccessful.Temperature Control SolutionsThis consultative approach is clearlydemonstrated in the pharmaceuticalsector, where DawsonrentalsTemperature Control Solutions is nowidentified as the industry preferredsupplier.Investment is concentrated on safetyand energy management, which whencombined with the long product lifecycle in this sector, will providesignificant competitor advantage overtime. With revenue growth of nearly6% in 2016, over 60% of unitsdelivered were brand new or newgeneration, energy efficientequipment. Future prospects remainstrong, aided by new products underdevelopment.Materials Handling EquipmentThe temperature controlled solutionsbusinesses in Europe also performedwell, considering market conditions;growing group revenue and profitcontributions, in addition to positiveexchange rate movements.Buses and coachesA relatively static public transportsector has not preventedDawsonrentals Bus and Coach fromimproving its core performance,diversifying from the traditional busand coach sectors by expanding insmaller vehicles, targeting stafftransportation and patient transfer.Utilising in house finance facilities,Dawsonrentals Bus and Coach’sability to offer fully supported contractAnnual Report & Accounts 20167

Strategic Report continuedhire packages for passenger carryingvehicles, including mini-buses,maintains the company’s position as aleader in this sector.Portable cold roomsThe company maintains strongindustry links and recognises thatwhile recent Government funding hasbeen constrained in this sector, thereis pressure on local authorities tofavour public transport as part of anobligation to improving city air quality,and the business is well placed tocapitalise on any opportunities.Portable cold rooms andtemporary kitchensThis division is now making a positivecontribution to group results.Having largely withdrawn from thechilled display cabinet sector, asreturns have been historically weak,new modular cold room products andservices are being developed, whichare now performing well.The new high capacity inflatablefridge/freezer is opening up newmarket opportunities – whichcombined with modular cold roomsand towable fridge units, provide a fullrange of refrigerated products on offer.Temporary kitchensThis complements the temporarykitchen business, which isexperiencing significant growth,alongside the development of a similartemporary laundry unit.The division also incorporates acamper van rental business, utilisingand converting nearly new vanssourced from Dawsonrentals Vans.Finance BrokerageFollowing a rebuilding year in 2015,2016 has brought fresh energy anddirection to this business, which theboard has every confidence canregain its role as a key profitcontributor to the group, as well asfacilitating other group sales activities.8DawsongroupThe development of DawsongroupFinance, which started trading inJanuary 2016, seeks to serviceinternal financing opportunities, byexpanding away from being largely afinance broker, to provide a spectrumof finance products to support groupbusinesses using capital marketfunds, backed up by the strength ofDawsongroup’s balance sheet andability to manage assets throughoutlife – from acquisition to disposal.First year results are veryencouraging, with nearly 80m offunding transacted, and astrengthening inter-companyrelationship developing between thefinance company and the operationaldivisions.OtherThe group has three dedicated assetdisposal arms which operate on anational basis, Dawsondirect(previously National Truck and TrailerSales), Ventura – the bus and coachspecialist and Dawsonrentals VanSales. All have built enviablereputations for the quality andcondition of the products they sell andthe customer service that theyprovide. The other divisions dispose oftheir ex-hire fleet assets through theirown resources.These sales and marketing efforts,together with the group’s prudentdepreciation policies, provideddisposal profits of 5.3m (2015: 6.2m) from proceeds of 49.3m(2015: 44.9m).EmployeesWe would like to express our gratitudeto our workforce, now numbering over750, for their continued dedicationand hard work which will ensure thecontinued success and growth ofDawsongroup.

Annual Report & Accounts 20169

Strategic Report continuedFinancial reviewThe group’s trading performance isexplained in the strategic review. Thisreview provides further information onother significant financial issues.InterestOn average net borrowings duringthe year of 213.6m (2015: 197.8m),net interest payable decreased by 1.22m to 17.34m (2015: 18.56m).This excludes a net 20m creditarising on the settling of 138.5m ofinterest rate swaps during the year.Interest cover is the same as last yearat 2.7 times (2015: 2.7 times).TaxThe 2016 tax charge is 7.0m whichis comprised of corporation taxpayable of 4.8m and deferred tax of 2.2m. Corporation tax actuallypayable in respect of 2016 profits was 7.39m (2015: 7.57m).Cash flowThe group cash inflow from operatingactivities, essentially profit plusdepreciation and changes in workingcapital, totalled 118.8m (2015: 122.3m). A further 49.3m (2015: 44.9m) was generated from thedisposal of fixed assets. Cash outflowfor interest paid, tax and dividends,together amounted to 35.4m (2015: 29.6m).Capital expenditureCapital expenditure, almost entirelyrelating to investment for hire fleetgrowth and replacementprogrammes, amounted to 143.2m(2015: 183.0m).BorrowingsNet debt increased to 215.1m (2015: 212.1m), comprising hire fleet assetfinance of 246.3m (2015: 246.4m)less net cash of 31.2m (2015: 34.3m). Year-end gearing was 101%(2015: 114%).10DawsongroupRisks and uncertaintiesFinance and treasuryThe group operates a central financeand treasury function which isresponsible for arranging andmanaging all of the group’s financialinstruments, comprising borrowings,cash and liquid resources and interestrate swaps, in the most appropriatemanner, at the lowest cost.These policies remained unchangedthroughout the year and aresummarised as follows:FinancingThe group’s principal borrowings arein respect of hire fleet investmentswhich are funded, net of suitabledeposits, by way of asset finance.The preference for variable rate hirepurchase debt continues because itis administratively simple, avoids theissues of fees and covenants whichtypically arise with bank lending,provides for total flexibility withoutpenalties on early termination andenables capital allowances to beclaimed on the assets. Wherecircumstances so permit in terms ofthe group’s tax position, the groupwill also consider fixed or variable ratefinance leases. All other assets arepurchased for cash and areunencumbered.Asset finance repayments arematched, conservatively, against therevenue stream from the relatedassets over their income-generatinglives. In the case of trucks this policyhas been set at 3 years, vans at 2years and, for all other assets, at 5years. As a result, 40% of suchborrowings at the year-end were dueto mature in more than 2 but lessthan 5 years.Asset finance facilities are establishedwith a wide range of lenders primarilyon a revolving basis and each subjectto different annual review dates. Theboard considers that there aresufficient credit facilities available tomeet all projected requirements.Short-term flexibility for workingcapital purposes is achieved throughoverdraft facilities.Interest ratesThe exposure to variable rate debt ishedged through interest rate swaps.At the year-end these totalled 160.0m (2015: 298.5m), effectivelyfixing the relevant variable rate assetfinance debt at an average base rateof 4.6%.Foreign currenciesThe group has subsidiaries in theEuro currency zone and finances allhire fleet additions and most workingcapital requirements for thesebusinesses in local currencies inorder to partially protect the group’sSterling statement of financial positionfrom exchange rate movements. Thegroup also purchases certain hirefleet assets in the UK from overseassuppliers which are denominated inforeign currencies. This exchangerate exposure is limited throughforward currency purchases.

OverviewIn 2016 Dawsongroup once again demonstrated its reputationas a successful asset rental company in its markets in the UKand Europe.The excellent financial performance continues to be built on aplatform of:- a wide asset portfolio – over 21,750 hire fleet assets atthe year-end; a high contractual base; a broad customer base – the largest customer in 2016represented just 5.4% of group revenue; first-rate supplier relationships – without a dependencyon any single supplier of product or finance; a committed and motivated management teamsupported by hard-working and enthusiastic employees– numbering over 750 across 7 countries; and a proven track record in the asset rental and contract hireindustry spanning over 40 years.This report was approved by the board on 22 March 2017 andsigned on its behalf by:Stephen J MillerAnthony ColemanGroup Chief ExecutiveGroup Finance Director22 March 2017Annual Report & Accounts 2016 11

Directors and AdvisersPeter M DawsonB Eng, FIMIExecutive ChairmanPeter joined the family haulagebusiness in 1956 and spearheadedthe early growth and developmentof the group.AGED 78Stephen J MillerGroup Chief ExecutiveStephen joined the group in 1986 andwas appointed managing director ofDawsonrentals Truck and Trailer in2002. In October 2009 he wasappointed group managing director. InSeptember 2016 he was appointedgroup chief executive.AGED 51Anthony ColemanFCAGroup Finance DirectorAppointed group finance director inJanuary 2006, Anthony is now in his17th year with the group having joinedas group financial controller andcompany secretary.AGED 43Ian JonesNon-Executive DirectorIan was appointed a non-executivedirector of Dawsongroup plc on1 August 2012, having spent theprevious ten years as managingdirector of Commercial Vehicles andvans at Mercedes-Benz UK.AGED 6312DawsongroupGroup headquarters andregistered officeDawsongroup plcDelaware DriveTongwellMilton KeynesMK15 8JHTel: 01908 218111Fax: 01908 218444Registered Lucinda A KentFCAAuditorMazars LLPThe Pinnacle160 Midsummer BoulevardMilton KeynesMK9 1FFPrincipal bankersBarclays BankBarclays Client ServicesLuton Regional Service CentrePO Box No. 729LutonLU1 2LJThe Royal Bank of ScotlandCorporate and Institutional Banking2nd Floor152 Silbury BoulevardMilton KeynesMK9 1LT

Statutory Directors' ReportDirectorsdevelopment and promotion ofThe current directors ofemployees are based on the relevantDawsongroup plc are set out onpage 12. Mr Michael Williams retiredas a director on 15 September 2016.Directors’ indemnityThe company’s Articles ofAssociation provide, subject to theprovisions of UK legislation, anindemnity for directors and officers ofthe company in respect of liabilitiesLucinda A Kentthey incur in the discharge of theirduties or in the exercise of theirThe directors present their report andthe audited financial statements ofthe group for the year ended31 December 2016.powers, including any liabilitiesActivities and business reviewomitted, or alleged to have beenrelating to the defence of anyproceedings brought against themwhich relate to anything done ormerits and abilities of the individualsconcerned. The policies also allowdisabled persons to compete on anequal basis. Any existing employeewho becomes disabled is given thetraining required to ensure that,wherever possible, continuity ofemployment can be maintained.The group promotes all aspects ofhealth and safety throughout thegroup in the interest of its employees.Creditor payment policyOperating businesses are responsiblefor agreeing the terms and conditionsunder which business transactionswith their suppliers are conducted. Itis group policy that payments toThe principal activity of the group isthe rental of commercial vehicles,buses, coaches, materials handlingequipment, sweepers, temperaturecontrolled products and portablekitchen units. It also provides financebroker services. Dawsongroup plc isthe holding company.done or omitted, by them as officersA detailed review of the group’strading during the year and of itsbusiness outlook is contained withinthe chairman’s statement on pages 2and 3 and the strategic report onpages 4 to 11.The group made charitable donationsaverage daily purchases for theduring the year amounting to 9,721company and 31 days (2015: 14) in(2015: 7,823). No political donationsrespect of the group’s main UKResults and dividendsthe participation of its employees inThe consolidated trading results andyear-end financial position are shownin the financial statements on pages16 to 39.The profit after tax for the financialyear was 32,784,000 (2015: 34,246,000). Ordinary dividends of 9,991,000 were paid (2015: 3,030,000). The retained profit of 22,793,000 has been transferredto reserves.or employees of the company.Appropriate directors̓ and officers’indemnity insurance cover is in placein respect of all the company’sdirectors.Donationssuppliers are made in accordancewith these terms, provided that thesupplier complies with all relevantterms and conditions.At 31 December 2016 the amount fortrade creditors in the balance sheetrepresented 24 days (2015: 23) ofwere made in either year.operating subsidiaries.Employment policiesDisclosure in the strategicreportThe group continues to encouragethe business in which they work.Established communication andconsultation procedures exist whichaim to ensure that employees areinformed about, and involved in,matters which are of interest andconcern to them.The group is an equal opportunitiesAs permitted by Paragraph 1A ofSchedule 7 to the Large andMedium-sized Companies andGroups (Accounts and reports)Regulations 2008 certain matterswhich are required to be disclosed inthe directors’ report have beenomitted as they are included in thestrategic report on pages 4 to 11.These matters relate to activities andemployer and its policies for thebusiness review and risks andrecruitment, training, careeruncertainties.Annual Report & Accounts 2016 13

Statutory Directors' Report continuedDirectors’ responsibilitiesstatementThe directors are responsible forpreparing the corporate statementand financial highlights, thechairman’s statement, strategicreport, the directors’ report and thefinancial statements in accordancewith applicable law and regulations.Company law requires the directorsto prepare financial statements foreach financial year. Under that lawthe directors have elected to preparethe financial statements inaccordance with United KingdomGenerally Accepted AccountingPractice (United Kingdom AccountingStandards, including FRS 102 TheFinancial Reporting Standardapplicable in the UK and Republic ofIreland and applicable law). Undercompany law the directors must notapprove the financial statementsunless they are satisfied that they givea true and fair view of the state ofkeeping adequate accountingand explain the group’s transactionsand disclose with reasonableaccuracy at any time the financialposition of the group and enablethem to ensure that the financialstatements comply with theCompanies Act 2006. They are alsoresponsible for safeguarding theassets of the group and hence fortaking reasonable steps for theprevention and detection of fraud andother irregularities.The directors are responsible for themaintenance and integrity of theAnnual Review and SummaryFinancial Statements and AnnualReport and Financial Statementspublished on the group’s corporatewebsite. Legislation in the UKconcerning the preparation anddissemination of financial statementsmay differ from legislation in otherjurisdictions.loss of the group for that period.Statement as to disclosure ofinformation to auditorstatements, the directors arerequired to: select suitable accounting policiesand then apply them consistently; make judgments and accountingSo far as each person who is adirector is aware, there is no relevantaudit information of which the group’sauditor is unaware. Each director hastaken all steps that he ought to havetaken in his duty as a director in orderestimates that are reasonable andto make himself aware of any relevantprudent;audit information and to establish that state whether applicable UKAccounting Standards have beenthe group’s auditor is aware of thatinformation.followed, subject to any materialAuditordepartures disclosed andMazars LLP has expressed itsexplained in the financialwillingness to continue in office and astatements; andresolution concerning reappointment prepare the financial statements onthe going concern basis unless it isinappropriate to presume that thegroup will continue in business.DawsongroupApproved on behalf of the board andsigned on its behalf byrecords that are sufficient to showaffairs of the group and of the profit orIn preparing these financial14The directors are responsible forwill be put to the directors at theboard meeting approving thesefinancial statements.Lucinda A KentFCASecretary22 March 2017

Report of the AuditorsIndependent auditor’s reportto the members ofDawsongroup plcWe have audited the financialstatements of Dawsongroup plc for theyear ended 31 December 2016 whichcomprise the consolidated statementof comprehensive income, theconsolidated and company statementof financial position, the consolidatedand company statement of changes inequity, the consolidated statement ofcash flows and the related notes. Thefinancial reporting framework that hasbeen applied in their preparation isapplicable law and United KingdomAccounting Standards (UnitedKingdom Generally AcceptedAccounting Practice), includingFRS 102 “The Financial ReportingStandard applicable in the UK andRepublic of Ireland”.Respective responsibilities ofdirectors and auditor:As explained more fully in the directors’responsibilities statement set out o

Dawson Road, Milton Keynes. With continued investment in new equipment and infrastructure, a fleet age profile of 14 months and a highly flexible rental offering, the Dawsonrentals Vans package is proving highly attractive to established van operators. Combined with the group's customer service ethic and effective support systems,