TIDMVANL
RNS Number : 1768H
Van Elle Holdings PLC
26 July 2023
26 July 2023
Van Elle Holdings plc
('Van Elle', the 'Company' or the 'Group')
Results for the year ended 30 April 2023
Analyst Briefing & Investor Presentation
'Record revenues, improved profitability and higher return on
capital employed'
Van Elle Holdings plc, the UK's largest ground engineering
contractor, announces its results for the year ended 30 April 2023
('FY2023').
GBPm Year ended Year ended
30 April 30 April
2023 2022
-------------------------------------- ----------- -----------
Revenue 148.7 124.9
EBITDA (1) 12.0 9.8
Operating profit 5.9 4.4
Operating profit margin 3.9% 3.5%
Profit before taxation 5.4 3.6
Basic earnings per share 4.4p 1.7p
Net funds excl. IFRS 16 property and
vehicle lease liabilities 7.5 5.9
Net funds 0.4 0.1
Return on capital employed 12.2% 9.4%
Operating cash conversion 83.1% 86.1%
Total dividend for the year 1.2p 1.0p
-------------------------------------- ----------- -----------
1. EBITDA is defined as earnings before interest, tax,
amortisation and depreciation.
Highlights:
-- Record revenues with growth of 19% compared with FY2022,
driven by increased activity levels across all divisions.
-- Improved operating margins and return on capital following
further progress in delivery of the strategic plan.
-- Operating profit increased by 34% to GBP5.9m (FY2022:
GBP4.4m) driven by higher margins in General Piling, and an
increased contribution from ground engineering services, coupled
with higher activity levels improving overhead recovery rates.
-- The Group's diversity of end markets and its broad range of
capabilities has enabled growth despite economic uncertainties and
project delays in some market segments.
-- Further progress in enhancing the resilience of the Group,
with a growing presence in the UK energy transmission and
distribution infrastructure market, expansion of Housing sector
foundation services, and diversification of Rail capability into
Canada.
-- Capital investment of GBP6.2m including spend on new rigs and the Group's HGV fleet.
-- Improved net funds position of GBP7.5m (excluding IFRS 16
lease liabilities) at 30 April 2023.
-- Strong balance sheet and an undrawn bank facility of up to
GBP11m, providing capacity to fund bolt-on M&A and organic
growth investment.
-- Proposed final dividend of 0.8p per share, to deliver full
year dividends of 1.2p (FY2022: 1.0p).
Current trading and outlook
-- Strong trading momentum from FY2023 has continued into FY2024
with all divisions operating at high activity levels.
-- Strong activity levels in the Housing sector during Q1 FY2024
but a decrease in demand is anticipated from Q2 F2024. Delays to
Highways schemes and the Smart Motorway Programme Alliance
experienced in FY2023 are also expected to ease by FY2025.
-- The Group has a strong pipeline of opportunities in the
energy transmission and distribution sector and is preferred bidder
on three of its targeted schemes in FY2024 to date.
-- Rail sector activities remain buoyant but are expected to
soften ahead of Network Rail's Control Period 7. The Group's
Canadian rail subsidiary is now established and has developed a
strong pipeline of opportunities with the first projects due to
commence in August 2023.
-- Inflationary pressures remain and are mitigated as far as
possible through contract pricing.
-- Order book at 30 April 2023 of GBP30.8m (GBP39.0m at 30 April
2022) which excludes framework agreements and preferred bidder
positions, with estimated annual revenues of GBP30m-GBP40m (subject
to timing and allocation of workload).
Mark Cutler, Chief Executive, commented:
"I am delighted to report a strong set of results, building on
last year's excellent progress as we emerged from the pandemic. The
breadth of the Group's expertise, strength of balance sheet and
depth of resource allows us to offer the best value to our
customers, with whom we are forging closer long-term partnerships.
The actions taken over the last three years are starting to deliver
sustainable results that put us firmly on-track to deliver our
medium-term financial objectives.
"I want to extend my sincere thanks to our employees, suppliers
and customers for their hard work and support over the last
year."
Analyst Briefing: 9.30am on Wednesday 26 July 2023
A briefing for Analysts will be held at 9.30am this morning -
Wednesday 26 July 2023. Analysts interested in attending should
contact Walbrook PR on vanelle@walbrookpr.com or 020 7933 8780.
Investor Presentation: 3.30pm on Wednesday 26 July 2023
Mark Cutler, Chief Executive Officer, and Graeme Campbell, Chief
Financial Officer, will hold a presentation to review the results
and prospects following their release at 3.30pm on Wednesday 26
July 2023, through the digital platform Investor Meet Company.
Investors can sign up to Investor Meet Company for free and add
to meet Van Elle Holdings plc via the following link
https://www.investormeetcompany.com/van-elle-holdings-plc/register-investor
.
Investors who have already registered and added to meet the
Company will automatically be invited. Questions can be submitted
pre-event to vanelle@walbrookpr.com , or in real time during the
presentation via the "Ask a Question" function.
For further information, please contact:
Van Elle Holdings plc Via Walbrook
Mark Cutler, Chief Executive Officer
Graeme Campbell, Chief Financial Officer
Peel Hunt LLP (Nominated Adviser and corporate Tel: 020 7418 8900
broker)
Ed Allsopp / Mike Bell
Walbrook PR Limited Tel: 020 7933 8780
or vanelle@walbrookpr.com
Tom Cooper / Nick Rome 07971 221 972 or
07748 325 236
About Van Elle Holdings plc:
Van Elle Holdings is the UK's largest specialist geotechnical
engineering contractor. Formed in 1984 and listed on AIM in 2016,
the Company provides a wide range of ground engineering techniques
and services including ground investigation, general and specialist
piling, rail geotechnical engineering, modular foundations, and
ground improvement and stabilisation services.
Van Elle operates through three divisions: General Piling,
Specialist Piling and Rail, and Ground Engineering Services; and is
focused on diverse end markets including residential and housing,
infrastructure and regional construction - across which the Group
has completed more than 20,000 projects over the last 35 years.
CHAIRMAN'S STATEMENT
Overview
I am pleased to report that the Group has made further progress
against its strategic targets, delivering another year of record
revenues with growth in all divisions. A strong recovery was
achieved in the prior year, and this momentum has been sustained
throughout FY2023.
The Group delivered full year revenue of GBP148.7m, and an
increase of 19% on the preceding year. Profit before tax increased
by 49% over FY2022 to GBP5.4m. The balance sheet remains strong,
with net funds (excluding IFRS 16 lease liabilities) increasing
from GBP5.9m to GBP7.5m in the year. The Group also has an undrawn
borrowing facility of up to GBP11m.
The Group was impacted by supply chain disruption during the
year, through both a lack of availability of raw materials and
significant input price inflation. Towards the end of the financial
year, these challenges eased, with improved stability of prices and
availability. Inflationary pressures, including wage increases,
also impacted the Group's cost base and we continue to mitigate
this as far as possible through contract pricing mechanisms. Labour
shortages have remained challenging throughout the year, which has
been managed successfully through focussing on employee recruitment
and retention strategies.
We have made good progress on delivery of the Group's strategic
plan and are developing stronger relationships with key customers,
which has resulted in several significant contract and framework
awards in the year. This provides increased visibility and
reliability of future workload. Despite more challenging market
conditions expected in the short term, the Group's core markets are
attractive, and the Board remains confident in achieving the
medium-term strategic targets.
Capital structure and allocation
The capital structure of the Group is reviewed regularly by the
Board, taking into account the need, availability and cost of
sources of funding. The Group's objective is to maximise
shareholder value whilst maintaining a balance sheet structure that
safeguards the Group's financial position through normal economic
and sector-specific cycles and supports investment in medium term
growth strategies including expected increases in working
capital.
The Group has a borrowing facility of up to GBP11m on a
revolving basis, secured against receivables and certain tangible
assets. The facility was undrawn at the end of the financial year.
The arrangement matures in October 2024 and negotiations have
commenced regarding extending the facility. The Group had hire
purchase debt of GBP1.3m remaining at the year end, with GBP1.1m
being repaid during the first quarter of FY2024.
Capital expenditure was GBP6.2m, an increase over the previous
three years as a result of prudent cash management during the
pandemic, and was focused on upgrading or replacing ageing rigs,
investing in new rigs to meet growth opportunities and renewal of
the Group's HGV fleet.
The Board continues to review and appraise acquisition
opportunities, in line with its disciplined criteria and approach.
The Board will look to supplement organic growth with earnings
accretive, bolt-on acquisitions of established businesses which can
augment and strengthen the Group's offering.
Dividend
The Group reinstated the payment of dividends following the
recovery of our core markets, and an improved financial performance
in the prior year. A final dividend of 1.0p per share was paid on 7
October 2022.
With a stronger performance in FY2023, the Board is pleased to
recommend the payment of a final dividend of 0.8p per share to be
paid on 13 October 2023 to shareholders on the register as at the
close of business on 29 September 2023. The shares will be marked
ex-dividend on 28 September 2023.
An interim dividend of 0.4p (interim dividend FY2022: nil) was
paid on 17 March 2023. The total dividend payable for FY2023 will
therefore be 1.2p (FY2022: 1.0p).
People
I would like to thank all our employees for their hard work and
commitment over the past year. The Group has delivered significant
growth, with some difficult market conditions, and I am proud that
our people have responded positively to these challenges.
We recognise the importance of attracting and retaining the
highest-quality workforce and accordingly take steps to understand
the views of all employees. Our annual employment survey allows the
Group to gather feedback from all employees and to develop action
plans which support and improve employee engagement.
Through our dedicated Training division, we are highly focussed
on developing our people. We ensure that all our workforce hold
valid industry certifications and we offer training opportunities
across the workforce.
The Board recognises the cost-of-living crisis that is being
experienced in the UK. Employee pay has been reviewed on a more
regular basis and higher salary increases have been targeted for
lower paid employees.
Board and governance
There have been no changes to the Board during the current year.
Van Elle remains committed to promoting the highest standards of
corporate governance and ensuring effective communication with
shareholders. The Group adopts and complies with the Quoted
Companies Alliance Corporate Governance Code, complemented with
other suitable governance measures appropriate for a company of its
size.
I wish to thank my Board colleagues and the management team for
their commitment over the past year as the Group has achieved
significant growth and navigated some challenging market
conditions.
Outlook
The Board anticipates that the current market uncertainty will
continue over the coming year, particularly in the housebuilding
sector. Notwithstanding these market challenges, activity levels in
the first quarter of FY2024 have sustained and are broadly
consistent with trading volumes throughout FY2023.
The Group's core markets have a positive outlook in the medium
to long term and there are some good opportunities for growth
including the high voltage power sector and geographical expansion
of our rail capability. There is also a strong pipeline of
opportunities across all divisions.
The Board remains confident of achieving its medium-term
financial targets of 5-10% annual revenue growth, 6-7% operating
profit margin and 15-20% ROCE.
Frank Nelson
Non-Executive Chair
25 July 2023
CHIEF EXECUTIVE'S STATEMENT
OPERATING REVIEW
Overview
The Group made excellent progress against its strategy in
FY2023, delivering record revenues with strong trading momentum in
all divisions throughout the majority of the financial year.
Building on the strong growth achieved in the previous year, full
year revenue increased to GBP148.7m, 19% higher than the prior year
(FY2022: GBP124.9m). Each of the Group's three segments reported
revenue growth in the year.
General Piling revenue increased by 41% on the prior year, with
a strong brought forward order book and several large contracts won
and delivered in the year. Revenue growth was primarily from high
activity levels on major energy and logistics projects.
Specialist Piling and Rail revenue was 2% higher when compared
to the prior year. The Specialist Piling division experienced
softer market conditions in the second half of the year, primarily
as a result of delays to highways projects, although in the
medium-term opportunities for the division remain positive. The
Rail division performed very well, despite some disruption caused
by rail strikes in the first quarter of the financial year. The
division experienced a strong workload from closer customer
partnerships formed during CP6 ahead of the transition to CP7 in
2024. Large electrification projects provided a solid baseline of
work throughout the year, particularly on the Midland Mainline and
Core Valley Lines projects and numerous stations, slopes and
embankment schemes across the UK.
Ground Engineering Services revenue increased by 32%. The
housebuilding market, into which the Group delivers a range of
services including its Smartfoot ground beam system, experienced
high demand throughout the year. Softer market conditions are
expected in FY2024, but the division delivers a range of services
with a diverse customer base which is expected to mitigate some of
the wider market impacts ahead of improved conditions expected in
FY2025.
The supply chain disruption which impacted the Group's results
over recent reporting periods has eased, with improved stability of
input prices and more reliable availability. However, inflationary
pressures adversely affected the Group's cost base, particularly
through wage, utilities and fuel cost increases. These cost
increases are mitigated through contract price mechanisms as far as
possible, however, in some cases there is a lag in recovery. Group
overheads have been unavoidably impacted by wage growth, as
retention of key skills remains a priority to deliver our
strategy.
Despite some challenges due to wider economic uncertainty and
some softer market conditions in certain segments, the Group
reported a materially improved profit before tax of GBP5.4m
(FY2022: GBP3.6m), operating margins improving to 3.9% (FY2022:
3.5%), progressing towards our target range of 6-7%. Basic earnings
per share increased by 159% to 4.4p (FY2022: 1.7p). Return on
capital employed improved to 12.2%, demonstrating good progress
towards achieving the Group's strategic target range of 15-20%.
The safety and wellbeing of all employees is Van Elle's first
priority. Greater investment in resources and systems has been
delivered in FY2023, including the launch of an upgraded Integrated
Management System, involving an overhaul of all operational
processes to embed best practices and improved consistency. The
Group's headcount increased to an average of 648 (FY2022: 601) but
pleasingly the number of safety incidents reduced, with three
RIDDOR reportable accidents in FY2023 compared to four in FY2022.
Accordingly, the Group's Accident Frequency Rate reduced to 0.19
(FY2022: 0.28).
Net funds, excluding IFRS 16 property and vehicle lease
liabilities, increased to GBP7.5m at 30 April 2023 (30 April 2022:
GBP5.9m). Working capital increased by GBP1.9m, primarily due to
the impact of higher trading activity. Net capital expenditure of
GBP5.6m (FY2022: GBP4.6m) primarily represents increased investment
in rigs and the Group's HGV transport fleet.
The Group maintains a strong balance sheet with a healthy cash
balance and significant liquidity headroom against its GBP11.0m
funding facility. An additional GBP1.5m of new hire purchase
finance was arranged during the year on a variable interest rate
basis, with no early repayment charges. Total hire purchase finance
at the end of the year was GBP1.3m, of which GBP1.1m has been
repaid in Q1 FY2024. Group debt remains well within the target
leverage threshold of less than 1.5 times EBITDA.
ESG
The Group launched its sustainability strategy in FY2021, which
is aligned with the UN Sustainable Development Goals that are most
applicable to our business operations.
Our strategic plan includes goals, targets and performance
indicator measures, and allocates business leaders to manage
actions. We aim to measure our strategy against the indicators
annually to monitor our performance and identify continuous
improvement measures. Our long-term 'Net Zero by 2050' commitment
is supported in the medium-term by a roadmap to 2030 which provides
a clear strategic pathway to a 30% reduction in our greenhouse gas
emissions from a 2020 baseline.
We have committed to developing Science Based Targets to allow
us to set achievable emissions reduction targets against a
representative base year to achieve Net Zero by 2050. We are
actively engaging with our supply partners to understand the
greenhouse gas emissions arising from the materials and services
with which they provide us.
The use of fuel is the main contributor to our Scope 1
emissions, and we are looking at transitional solutions to reduce
emissions whilst new technologies are developed. We expanded our
company car scheme offering to include hybrid and electric vehicles
and these have been taken up by several employees. At Head Office
we have installed electric chargers for employee and visitor
use.
The Group has limited its Scope 2 emissions through a new
electricity purchase agreement which is from 100% renewable sources
(certified under the Renewable Energy Guarantees of Origin scheme).
In addition, we are ESOS phase 2 compliant, and are in the process
of achieving ISO 50001 Energy Management certification.
A key pillar of the Group's sustainability strategy is
engagement with our supply chain and joint participation in
innovation projects. We are trialling battery powered electric
tools and are involved in the trial of low carbon cement in our
precast factory operations. Our near-term roadmap to 2030 includes
trials of hybrid machinery and fleet such as hydrogen/diesel, where
technology is available.
Strategy
The business has continued to make solid progress against its
strategy, with a clear focus on Phase 3 of the plan to deliver
market leading performance. The medium term financial KPIs (annual
revenue growth of 5-10%, underlying operating margins of 6-7%, ROCE
of 15-20% and leverage of less than 1.5 times EBITDA) remain the
Group's objectives. The results for FY2023 are positive steps
towards delivery of those targets.
Strategic highlights in the year include:
- A stronger focus on major project and framework opportunities,
now led by a dedicated director. The Smart Motorways Programme
Alliance and the TransPennine Route Upgrade framework are two of
the major frameworks that present growth opportunities for the
Group in FY2024 and beyond, both progressing through design phases
during FY2023.
- Launch of our Canadian rail subsidiary and commencement of
operations in Canada, with initial framework contracts expected to
be awarded in H1 FY2024.
- An increased focus on the UK energy market, with excellent
progress made in FY2023 on delivery of high voltage infrastructure
projects with our preferred customers. The award of a major new
framework is expected in H1 FY2024 and others are at preferred
bidder stage. Several customer partnerships are being developed
ahead of strong growth in investment driven by the UK Government's
and the regulator's energy security strategy.
- The launch of the Group's Smartdeck housing foundation
solution providing an alternative to Smartfoot where appropriate.
Initial projects are expected to be awarded in Q2 FY2024.
- Further expansion of the Group's ground improvement
capability, reaching GBP10m turnover in these specialised
techniques in FY2023.
- Increased rig fleet investment following a restricted level of
capital expenditure during the pandemic. This is to support a
long-term replacement and renewal strategy and enable expansion in
key strategic growth areas such as rail, ground improvement and
sheet piling.
- The launch of the Van Elle leadership development programme in
FY2023, aimed at developing and retaining the next generation of
leadership talent. An initial cohort of 14 managers will be
followed by a second group in FY2024.
- Expansion and refurbishment of the Group's premises at Kirkby
in Ashfield and nearby Pinxton to provide additional capacity;
and
- Expanded in-house training services to meet the needs of growth in the Group's headcount.
Markets
The Group operates in three market segments:
-- Residential constituted 38% of Group revenues in the year
(down from 43% in FY2022). Divisional teams deliver integrated
piling and foundation systems for national and regional
housebuilders, retirement homes and multi-storey residential
properties.
Following the severe impact on the segment during the pandemic
there was a strong recovery in workloads which resulted in
significant revenue growth in FY2022. This high level of demand was
sustained throughout the majority of FY2023, with 7% revenue
growth, building on the strong prior year sector performance.
To expand its range of foundation systems, the Group launched
Smartdeck, an innovative piled raft foundation solution which
integrates piling and foundations to floor slab level. The system
complements the Company's Smartfoot precast foundation beam system.
Discussions are ongoing with key customers and the Company expects
to deploy Smartdeck on projects commencing in Q2 FY2024.
Industry forecasts predict weaker market conditions in the
segment throughout FY2024. The Group has experienced some slowdown
in new-build housing starts during the second half of the financial
year, although general activity levels have remained strong as
housebuilders have been active in advance of the new Part L
Building Regulation changes which were effective from June 2023.
The Group is closely involved with several national housebuilders
to help develop efficient foundation solutions ahead of further
Building Regulations changes planned for 2025.
The impact of increasing interest rates is likely to slow
new-build starts further and this is being reflected in recent
housebuilder forecasts. A reduction in sector activity levels
during FY2024 is therefore expected and the divisional cost base
will be reduced to mitigate the financial impact as far as
possible.
The Group operates across a diverse range of customers, tenures
and geographies in the housebuilding sector, and this is expected
to provide some protection against reduced volumes experienced by
private housebuilders.
The recent challenges faced by certain modular housebuilders
will not have a significant impact on Group performance.
Offsite/modular housing is still at early-stage lifecycle
development and although several projects have been delivered,
revenues on such projects have, to date, not been material and due
to its credit control processes, the Group had no financial
exposure.
Notwithstanding the short-term challenges in the housebuilding
sector, medium and longer-term opportunities remain compelling, as
the government drives its agenda to deliver 300,000 net additional
dwellings per annum.
-- Infrastructure constituted 42% of Group revenues in the year
(up from 35% in FY2022). The segment includes specialist ground
engineering services to the rail, highways, coastal and flooding,
energy and utility sectors.
Infrastructure saw the largest absolute, and relative, growth in
the year of 44% over FY2022, despite experiencing major delays or
cancellations to certain major projects in the Highways sector
which it previously expected to deliver or commence delivery during
the year. Work continued to be delivered under both local authority
and National Highways frameworks, but the government's pause, and
subsequent cancellation of all new Smart Motorways, impacted the
pipeline of work in this programme.
Design work for the 10-year National Highways Smart Motorway
Programme Alliance has continued for important additional safety
measures on the existing network, including new emergency refuge
areas, being planned for delivery in H2 FY2024 onwards.
Activity levels increased in the Rail sector with ongoing
electrification programmes in South Wales and the East Midlands and
strong revenues as CP6 entered the final year before CP7 commences
in 2024. The Group also delivered several high profile and complex
schemes at stations and to stabilise slopes, embankments and
cuttings including the Dawlish seafront where we have been working
for almost two years. The Group has been appointed as a framework
partner to the TransPennine Route Upgrade (TRU) programme with the
first revenues expected to be delivered in H2 FY2024.
In order to widen the opportunities available for our specialist
rail engineering capabilities and provide some protection against
the cyclical nature of UK rail investment, a Canadian subsidiary
has been established, based in Toronto. The first framework
delivery contracts are expected to commence in Q2 FY2024.
Although participation in Phase 1 (London to Birmingham) to date
has been modest, HS2 continues to offer medium-term opportunities
to parts of the Group, primarily on Phase 2 (north of Birmingham)
where customer partnerships are being established at an early
stage.
There is a rapidly growing pipeline of opportunities in the
energy sector, reflecting the increased investment in distribution
and transmission infrastructure for which the Group is well-placed
due to its range of capabilities, and in particular the ScrewFast
solution. During FY2023, several sub-station, switch-room and power
line schemes were delivered. Further major transmission line
schemes and frameworks are in negotiation.
-- Regional Construction constituted 20% of Group revenues (down
from 22% in FY2022). The Group delivers a full range of piling and
ground improvement services to the commercial and industrial
sectors, from private and public sector building and developer-led
markets across the UK.
Revenue has remained robust in the Regional Construction
segment, increasing by 4% in FY2023, supported by industrial and
logistics warehouse projects for private customers across the UK,
and larger commercial projects in central London, delivered
substantially by the General Piling division. Growth of our ground
improvement capabilities (vibro and rigid inclusion techniques) has
assisted in accessing a wider range of attractive projects in the
industrial sector.
The regional construction market remained strong in the year but
has continued to be relatively competitive and, as a result, price
sensitive.
Operating structure
Van Elle's operational Group structure has remained consistent
and is reported in three segments:
-- General Piling : open site; larger projects; key techniques
being large diameter rotary, CFA piling, precast driven piling,
rigid inclusions and vibro stone columns.
-- Specialist Piling and Rail : restricted access and low
headroom piling; extensive rail mounted capability; helical piling
and steel modular foundations (ScrewFast); sheet piling, soil nails
and anchors, mini-piling and ground stabilisation projects.
-- Ground Engineering Services : driven and CFA piling for
housebuilders, precast concrete modular foundations (Smartfoot and
Smartdeck); ground investigation and geotechnical services (Strata
Geotechnics).
General Piling
Revenue increased by 41% in the year to GBP54.8m (FY2022:
GBP39.0m), representing 37% of Group revenues.
The General Piling division operates across each of the Group's
three market segments. Market conditions remained competitive
throughout the year, with price-sensitive tendering continuing to
be a key factor in work winning. However, the division made further
progress in developing strong customer relationships and delivered
high-quality contract works utilising its broad and significant
technical capabilities.
Performance in the residential and regional construction
segments was robust, assisted by the completion of several major
projects across the UK, using the Group's rotary, CFA, precast
driven, sheet piling and rigid inclusion capabilities. Strong
revenue growth was also delivered in the infrastructure segment,
with activity on two major energy contracts (total value of
approximately GBP26m) in the year. The first of these contracts was
completed in January 2023 and the second contract is now expected
to complete in Q2 FY2024.
Inflationary pressures have remained challenging for the
division (particularly fuel, raw materials and wages) but the
increased activity levels resulted in significantly improved
profitability in FY2023.
Underlying operating profit for the division was GBP3.4m
(FY2022: GBP1.8m).
Specialist Piling and Rail
Revenue increased by 2% in the year to GBP46.6m (FY2022:
GBP45.8m), representing 31% of Group revenues.
Specialist Piling experienced very high levels of demand in the
first half of the financial year as a result of the division
expanding its operational capability by investing in new rigs for
growth and increasing the number of site gangs. Key contracts
included the Group's 200(th) rail station project, the start of the
M6 Smart Motorway scheme, several high voltage substations and
several major ground stabilisation contracts for housebuilders.
Softer market conditions were experienced in the second half of
the year, primarily because of delays to major infrastructure work
on highways and a short-term decrease in demand for drill and grout
activity. The medium-term outlook for the division's work in the
infrastructure sector remains very positive, with work on existing
Smart Motorways safety measures, including new emergency refuge
areas, expected to commence during FY2024.
The Specialist Piling division is also developing a growing
presence in the high voltage power sector, primarily due to the
attractive capabilities of the ScrewFast solution. There is a
strong pipeline of prospects in the sector and the division has
already completed several contracts on substation and other
infrastructure projects across the National Grid and regional
distribution networks.
The Rail division performed strongly throughout the year,
despite some early challenges due to the impact of rail strikes in
the first quarter. In FY2023, we delivered our 200(th) rail station
upgrade project and delivered several high-profile slope and
embankment stabilisation schemes. Piling works continued for the
decarbonisation and electrification of the Core Valley Lines rail
network in south Wales and ongoing works on the Midland Mainline.
The division has a strong reputation and has embedded relationships
with several key customers.
Activity levels were positively impacted as CP6 entered the
final year before CP7 commences in 2024. The Group was appointed to
the piling framework for the TRU programme between Manchester and
Leeds and work is expected to commence in FY2024, involving both
the Specialist Piling and Rail divisions for up to three years.
Rail activities are impacted by the cyclical nature of the rail
activity programme. A Canadian subsidiary has been established,
where there are numerous opportunities to offer the specialist
skills of our UK rail team.
A rolling programme of upgrade work on the Group's road/rail
(RRV) piling rigs has continued and will be largely concluded by
the end of FY2024.
Underlying operating profit for the division decreased to
GBP2.2m (FY2022: GBP3.0m). The result was primarily impacted by
short-term reduced activity volumes in Highways and some
challenging contracts in the Specialist Piling division, which have
been closed out in the financial year. Both Rail and Specialist
Piling divisions were also impacted by inflationary factors across
their cost base.
Ground Engineering Services
Revenue increased by 18% in the year to GBP47.1m (FY2022:
GBP40.0m), representing 32% of Group revenues.
Ground Engineering Services consists of the Group's Housing
division and Strata Geotechnics; Van Elle's geotechnical division.
The Housing division delivers integrated piling and Smartfoot
foundation beam solutions to UK housebuilders plus Smartdeck, an
innovative piled raft foundation solution which integrates piling
and foundations to floor slab level which was launched in the final
quarter of the year.
Activity levels in the Housing division were high throughout the
year with further revenue growth building on an already strong
prior year performance. Normal production capacity was consistently
exceeded, with precast production being partially outsourced to
meet the demand of site works. Geographical expansion was a focus
during the year, with new contracts being won and delivered in the
South of England. The division has been heavily focussed on
maximising operational efficiency, which has delivered further
improvements to reported contract margins.
Housing revenues have continued to be strong as housebuilders
have been active in advance of the new Part L Building Regulation
changes which were effective from June 2023. However, softer market
conditions as a result of interest rate rises and build cost
inflation are expected later in the year, as reflected in industry
forecasts.
Strata Geotechnics also reported increased revenue in the year.
Further progress in infrastructure work has increased activity
levels, particularly in the highways sector (including under the
Highways England ground investigation framework) and on rail ground
investigation projects.
Underlying operating profit for the division increased to
GBP3.6m (FY2022: GBP2.1m).
Rig fleet
Capital expenditure increased to GBP6.2m in the year (FY2022:
GBP4.9m) but was lower than expected due to long lead times on
certain capital purchases, which will not be delivered until
FY2024. With positive cash generation, investment was increased to
both sustain the existing rig fleet as well as invest for growth in
key strategic growth areas.
The Group invested GBP2.8m of capital spend in the Rail
division, which included the continued rolling programme of
mid-life overhauls of the rig fleet where major parts of the rigs
are replaced and are expected to extend the rig life for at least
another 7 years. In addition, two new RRV rigs were acquired to
continue to expand the division's capacity and capabilities.
The HGV fleet has commenced a full renewal after relatively low
investment during the pandemic. This refresh of the fleet will be
completed in FY2024.
The total rig fleet size at the year-end was 132, up from 122
last year.
Summary and outlook
Activity levels in the first quarter of FY2024 have continued to
be strong with a healthy pipeline of opportunities across all
divisions.
All of the Group's core markets show a positive outlook in the
medium to long term, despite some short-term challenges in certain
sectors. Higher interest rates, high inflation and the
cost-of-living crisis are contributing to greater market
uncertainty, particularly in the housebuilding sector which is
expected to deliver lower volumes during FY2024. Several projects
in the infrastructure sector have also been cancelled or delayed.
However, our other core markets are showing resilience, and the
Group continues to focus on growth sectors, including an increasing
presence in the high voltage power sector and expanding our rail
capabilities geographically.
The Group is also benefitting from improved future work
visibility, primarily due to being appointed to several framework
agreements which are expected to deliver consistent future
workloads.
Inflationary pressures on the Group's cost base have continued
and are likely to persist in the short term, however, the Group
continues to largely offset cost increases through contract pricing
mechanisms.
Despite a more challenging macroeconomic environment currently
impacting some of the Group's divisions, the diversity of our range
of activities and operating segments, a focus on growth sectors,
and continued delivery of the strategy results in a positive
outlook in line with the medium-term targets previously
announced.
Mark Cutler
Chief Executive Officer
25 July 2023
CHIEF FINANCIAL OFFICER'S STATEMENT
FINANCIAL REVIEW
Revenue
Revenue in the year to 30 April 2023 was significantly ahead of
the previous financial year, up 19% in total. Strong trading
momentum in the later part of FY2022 was sustained throughout H1 of
FY2023, despite a challenging macro environment, with all divisions
operating at high activity levels and delivering record revenues in
the first half of the financial year. Rates of revenue growth
slowed in H2 due to the industry-wide softening and investment
delays due to macro-economic factors in the housing and
infrastructure markets. Despite market challenges and seasonal
impacts on contract delivery during H2 revenues grew by 5% on the
preceding year H2.
2023 2022 Change 2023 2022
GBP'000 GBP'000 % % %
--------- ---------- --------- ------- ------ ------
H1 80,836 60,061 34.6 54.3 48.1
H2 67,898 64,854 4.7 45.7 51.9
--------- ---------- --------- ------- ------ ------
Revenue 148,734 124,915 19.1 100.0 100.0
--------- ---------- --------- ------- ------ ------
The Group tracks enquiry levels by market sector, which helps to
identify trends and target our activities into growth areas. The
mix of revenue by end markets is shown below:
2023 2022 Change 2023 2022
GBP'000 GBP'000 % % %
----------------------- ---------- --------- ------- ------ ------
Residential 56,860 53,307 6.7 38.2 42.7
Infrastructure 62,592 43,378 44.3 42.1 34.7
Regional construction 28,943 27,879 3.8 19.5 22.3
Other 339 351 (1.5) 0.2 0.3
----------------------- ---------- --------- ------- ------ ------
Revenue 148,734 124,915 19.1 100.0 100.0
----------------------- ---------- --------- ------- ------ ------
Residential : Record levels of enquiries and contract activity
reported in FY2022 continued into early FY2023, buoyed by pending
changes in building regulations which resulted in significant
levels of new builds being started. The levels of new build housing
starts began to slow down in Autumn 2022 due to increasing interest
rates and approaching regulation changes. Despite this, enquiry and
order levels remained at strong levels throughout H2 of FY2022,
albeit lower than H1 levels.
Infrastructure : Rail activity levels improved in FY2023 as Rail
infrastructure spend levels increased ahead of the end of Control
Period 6 in March 2024 and work was completed on the Group's first
major electrification programme since 2018. The Group has also had
success in delivering two significant industrial energy projects
utilising its deep CFA technical expertise which drives the
significant increase in this sector's revenues in FY2023. The
government pause to the new 'all lane running' Smart Motorway
projects resulted in a slow down in highways work during the year,
albeit the final phase of the significant M6 contract, with
installation of ScrewFast piles, was completed during the year and
work on new emergency areas on the existing smart motorway network
are due to commence in H1 of FY2024.
Regional construction : The sector has remained highly
competitive despite an increase in activity levels. During the year
the Group has continued to secure and deliver high quality projects
whilst also continuing to focus on contract execution and
commercial improvement. The Group has had success in delivering
large schemes utilising our vibro, and recently developed rigid
inclusions, techniques.
The mix of revenue by segment is shown below:
2023 2022 Change 2023 2022
GBP'000 GBP'000 % % %
-------------------- ---------- --------- ------- ------ ------
General Piling 54,838 38,974 40.7 36.9 31.2
Specialist Piling
and Rail 46,593 45,771 1.8 31.3 36.6
Ground Engineering
Services 47,067 40,043 17.5 31.6 32.1
Head Office 236 127 85.8 0.2 0.1
Revenue 148,734 124,915 19.1 100.0 100.0
-------------------- ---------- --------- ------- ------ ------
General Piling revenues, whilst impacted by high levels of
competition within the regional construction market have grown
significantly in FY2023 with two significant industrial energy
projects delivered during the year which, combined, delivered
GBP18m of revenue in FY2023. Revenue was also supported by further
growth in the Group's ground improvement capability, with several
large projects completed successfully during the year.
The Specialist Piling and Rail segment includes ScrewFast,
which, as of the beginning of the financial year was fully
integrated into the Specialist Piling division. Growth in Rail
revenues, driven by an increase in infrastructure spend ahead of
the end of control period 6, delivery of significant
electrification programmes and diversification into the rail civils
market during the year, is offset by a reduction in activity within
the Specialist Piling division predominately due to the slowdown in
highways work as a result of the pause to the new Smart Motorways
schemes. As such, revenue growth in this segment has been slower
than the other segments in FY2023.
As part of the strategic plan to grow the Rail division and
reduce exposure to cyclical workloads between control periods, Van
Elle Canada Inc was incorporated in March 2023 ahead of major rail
infrastructure and electrification opportunities in Ontario which
are expected to commence in FY2024.
Growth in the Ground Engineering Services division's revenue
reflects the significant demand in the residential sector during
the year and expansion into rail and highways ground investigation.
The division has operated at near-capacity for the majority of the
year.
Head office revenues relate to the provision of training
services delivered through the dedicated training facility located
at Kirkby-in-Ashfield.
Gross profit
Gross margin remained consistent in FY2023 at 27% (FY2022:
27%).
The strong growth in Ground Engineering Services revenues,
particularly Housing, has a negative mix impact due to the highly
competitive sector delivering margins at the lower end of the
Group's margin range. The two significant infrastructure projects
supporting General Piling growth also have a negative mix impact
with gross margins at the lower end of the Group's margin
range.
Despite the negative revenue mix, gross margins have been
maintained in FY2023 due to improved contract execution across all
divisions, higher rig utilisation due to increased volumes and a
softening of the supply chain challenges, including material
availability and price volatility, seen in the previous financial
year. Wage, utilities and fuel inflation has continued to impact
the Group throughout the year, mitigated through contract price
mechanisms as far as possible.
Operating profit
Total operating profit and operating profit margins have
improved in FY2023 as record activity levels resulted in improved
overhead recovery rates. The rate of operating profit growth is
limited by inflationary pressures, particularly in wages, utilities
and fuel experienced during the year. These cost increases have
been mitigated through contract price mechanisms as far as
possible, however, in some cases there is a lag in recovery.
2023 2022
GBP'000 GBP'000
------------------ --------- ---------
Operating profit 5,858 4,372
Operating margin 3.9% 3.5%
------------------ --------- ---------
Alternative performance measures
In previous years, the Group has presented alternative
performance measures (APMs), which are not defined or specified
under the requirements of IFRS. The Group believes that these APMs
provide depth and understanding to the users of the financial
statements to allow for further assessment of the underlying
performance of the Group and comparability from one year to the
next.
The Board believes that the underlying performance measures for
operating profit, profit before tax and EPS, stated before the
deduction of non-underlying items give a clearer indication of the
actual performance of the business.
The Group's non-underlying items in FY2023 include a credit of
GBP427,000 relating to the reduction in the deferred consideration
due in respect of the acquisition of ScrewFast and a charge of
GBP350,000 relating to two warranty claims where the estimated
costs of remediation have increased in the current financial year.
The total net value of GBP77,000 is recognised as a credit within
administration expenses and forms part of underlying operating
profits. Underlying operating profits and reported operating
profits are consistent in FY2023. This is consistent with the
presentation in the previous financial year.
Net finance costs
Net finance costs were GBP487,000 (2022: GBP779,000). Finance
costs relate to interest on outstanding hire purchase agreements
and interest on property and vehicle liabilities classified under
IFRS 16. Finance costs in the preceding year included accelerated
interest charges as a result of early repayment of loans and hire
purchase agreements by ScrewFast in April 2022.
Taxation
The effective tax rate in the year is 12.9% (2022: 48.2%). The
Group has benefitted from the super deduction allowances on
qualifying items of plant and machinery during the year, resulting
in an effective tax rate below the rate or corporation tax
applicable in the financial year. The Group has carried forward
taxable losses into the current financial year. Tax losses have
been recognised on the basis that the Group has net deferred tax
liabilities against which to offset those tax losses.
The Group's net deferred tax liabilities were restated from 19%
to 25% in the preceding year resulting in an effective tax rate of
48.2% in FY2022.
Dividends
An interim dividend of 0.4p (2022: nil) was paid on 17 March
2023. The Board is recommending a final dividend of 0.8p (2022:
1.0p) taking the total dividend payable for the year to 1.2p (2022:
1.0p).
Subject to approval at the Annual General Meeting on Thursday 21
September, the recommended final dividend will be paid on 13
October 2023 to shareholders on the share register as at 29
September 2023. The associated ex-dividend date will be 28
September 2023.
Earnings per share
Basic and diluted earnings per share are 4.4p in FY2023 (2022:
1.7p). An adjusted earnings per share of 2.7p was reported in the
preceding financial year based on profit before non-underlying
items, net of tax, and the one-off deferred tax charge relating to
the restatement of deferred tax liabilities from 19% to 25%.
Balance sheet
2023 2022
GBP'000 GBP'000
-------------------------------------------- --------- ---------
Fixed assets (including intangible assets) 45,630 43,377
Net working capital 9,973 8,113
Net funds / (debt) 367 134
Deferred consideration (790) (1,220)
Taxation and provisions (5,149) (3,793)
-------------------------------------------- --------- ---------
Net assets 50,031 46,611
-------------------------------------------- --------- ---------
Note: net working capital and taxation and provisions are stated
net of claim liabilities and associated insurance assets
Net assets increased by GBP3.4m to GBP50.0m (2022: GBP46.6m).
ROCE has increased in the period to 12.2% at 30 April 2023 (2022:
9.4%), reflecting the impact of the increased operating profit.
The Group invested GBP6.2m in capital over the course of the
year with three new Rail rigs added to the fleet as well as the
mid-life overhaul and upgrade of approximately one third of the
existing Rail fleet. The programme of overhaul and upgrade
commenced in the previous financial year and is due to conclude in
FY2024. Investment in the Rail fleet supports growth opportunities
in this sector in the UK and overseas. Approximately half of the
Group's aging transport fleet was also replaced with more efficient
vehicles in the financial year with the remainder due to be
replaced in FY2024.
Working capital (defined as inventories, trade and other
receivables and trade and other payables) increased to GBP10.0m
(2022: GBP8.1m), due to increased activity in the year.
The estimated remaining balance due in respect of the
acquisition of ScrewFast Foundations Limited on 1 April 2021 is
GBP790k, of which GBP740k is a guaranteed sum due on 31 August 2023
and GBP50k is the expected outcome of the consideration payable
based on post-acquisition performance to 31 May 2023 and payable on
31 August 2023. This is a reduction of GBP427k on the estimate as
at 30 April 2022 and GBP1.1m below the maximum possible contingent
consideration. Performance is expected to be at the lower end of
the pay-out range due to the delay to several large highways
projects caused by a pause, and subsequent cancellation of the
Smart Motorways programme, a work bank that favours the ScrewFast
piling solution. Significant opportunities for ScrewFast in
highways, high voltage power and modular homes exist in FY25 and
beyond.
The Group's deferred tax liability has increased in FY2023 due
to utilisation of the super capital allowances scheme. Corporation
tax receivables have also reduced in the year following the
repayment of corporation tax as a result of an extended loss carry
back claim made in April 2022.
Net funds
2023 2022
GBP'000 GBP'000
------------------------------------------ --------- ---------
Lease liabilities (8,518) (6,853)
------------------------------------------ --------- ---------
Total borrowings (8,518) (6,853)
Cash and cash equivalents 8,885 6,987
------------------------------------------ --------- ---------
Net funds 367 134
------------------------------------------ --------- ---------
Net funds excluding IFRS 16 property and
vehicle lease liabilities 7,526 5,935
------------------------------------------ --------- ---------
Net funds have increased during the year to GBP0.4m (2022:
GBP0.1m) with total cash and cash equivalents increasing to GBP8.9m
at 30 April 2023 (2022: GBP7.0m).
The Group's lease liabilities include GBP7.2m of IFRS 16
property and vehicle lease liabilities (2022: GBP5.8m). The
increase in IFRS16 property and vehicle lease liabilities reflects
the renewal of the Group's van fleet which commenced in previous
years and was substantially complete in FY2023. Additional vans,
required to service additional activity levels have also been taken
during the year. Vans are leased on a long-term hire basis over a
period of 4 years with early termination possible.
Remaining lease liabilities of GBP1.3m relate to outstanding
hire purchase agreements. The majority of outstanding hire purchase
debt relates to two new hire purchase agreements taken out in H1 of
the current year, funded on a variable basis, expiring in August
2024.
The Group has an GBP11m asset back lending facility, secured
against the Group's receivables and certain tangible assets. A draw
down of the facility was made in H1 to support working capital
investment given the significant increase in revenues. This was
repaid in H2 and the facility remains undrawn as at 30 April 2023.
There are no financial covenants associated with the facility which
is due to expire in October 2024. It is expected that the facility
will be extended for a further 4-year period to October 2028.
Cash flow
2023 2022
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Operating cash flows before working capital 11,846 9,816
Working capital movements (including provisions
and deferred consideration) (1,885) (1,442)
------------------------------------------------- --------- ---------
Cash generated from operations 9,961 8,374
Income tax received 323 -
------------------------------------------------- --------- ---------
Net cash generated from operating activities 10,284 8,374
Investing activities (5,602) (4,738)
Financing activities (2,784) (5,167)
------------------------------------------------- --------- ---------
Net decrease/increase in cash 1,898 (1,531)
------------------------------------------------- --------- ---------
Operating cash flows of GBP10.0m have primarily been used to
repay outstanding debt and fund capital expenditure. Working
capital increased in the year, due to the increased trading
levels.
Graeme Campbell
Chief Financial Officer
25 July 2023
Consolidated statement of comprehensive income
For the year ended 30 April 2023
2023 2022
GBP'000 GBP'000
--------------------------------------------------- ---------- ---------
Revenue 148,734 124,915
Cost of sales (108,646) (90,842)
--------------------------------------------------- ---------- ---------
Gross profit 40,088 34,073
Administrative expenses (35,089) (29,980)
Credit loss impairment charge (45) (159)
Other operating income 904 438
--------------------------------------------------- ---------- ---------
Operating profit 5,858 4,372
--------------------------------------------------- ---------- ---------
Finance expense (487) (779)
Profit before tax 5,371 3,593
Income tax expense (693) (1,733)
--------------------------------------------------- ---------- ---------
Profit after tax and total comprehensive
income for the year attributable to shareholders
of the parent 4,678 1,860
--------------------------------------------------- ---------- ---------
Earnings per share (pence)
Basic 4.4 1.7
Diluted 4.4 1.7
--------------------------------------------------- ---------- ---------
All amounts relate to continuing operations. There was no other
comprehensive income in either the current or preceding year.
Consolidated statement of financial position
As at 30 April 2023
2023 2022
GBP'000 GBP'000
------------------------------- --------- ---------
Non-current assets
Property, plant and equipment 41,917 38,719
Investment property - 811
Intangible assets 3,713 3,847
------------------------------- --------- ---------
45,630 43,377
------------------------------- --------- ---------
Current assets
Inventories 4,971 3,773
Trade and other receivables 35,544 34,112
Corporation tax receivable - 322
Cash and cash equivalents 8,885 6,987
49,400 45,194
------------------------------- --------- ---------
Total assets 95,030 88,571
------------------------------- --------- ---------
Current liabilities
Trade and other payables 23,245 22,475
Deferred consideration 790 50
Lease liabilities 2,339 1,696
Provisions 8,143 7,738
------------------------------- --------- ---------
34,517 31,959
------------------------------- --------- ---------
Non-current liabilities
Deferred consideration - 1,170
Lease liabilities 6,179 5,157
Deferred tax 4,303 3,674
10,482 10,001
------------------------------- --------- ---------
Total liabilities 44,999 41,960
------------------------------- --------- ---------
Net assets 50,031 46,611
------------------------------- --------- ---------
Equity
Share capital 2,133 2,133
Share premium 8,633 8,633
Other reserve 5,807 5,807
Retained earnings 33,458 30,038
Total equity 50,031 46,611
------------------------------- --------- ---------
Consolidated statement of cash flows
For the year ended 30 April 2023
2023 2022
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Cash flows from operating activities
Operating profit 5,858 4,372
Depreciation of property, plant and equipment 5,984 5,282
Amortisation of intangible assets 134 101
Depreciation of investment property 9 9
Property on disposal of property, plant and
equipment (310) (122)
Share based payment expense 171 174
------------------------------------------------- --------- ---------
Operating cash flows before movement in working
capital 11,846 9,816
------------------------------------------------- --------- ---------
(Increase) in inventories (1,200) (750)
(Increase) in trade and other receivables (1,434) (2,074)
Increase in trade and other payables 344 1,280
Increase in provisions 405 102
------------------------------------------------- --------- ---------
Cash generated from operations 9,961 8,374
------------------------------------------------- --------- ---------
Income tax received 323 -
------------------------------------------------- --------- ---------
Net cash generated from operating activities 10,284 8,374
------------------------------------------------- --------- ---------
Cash flows from investing activities
Purchases of property, plant and equipment (6,167) (4,946)
Proceeds from disposal of property, plant
and equipment 615 384
Acquisition of subsidiary, net of cash acquired (50) -
Purchases of intangibles - (176)
Net cash absorbed in investing activities (5,602) (4,738)
------------------------------------------------- --------- ---------
Cash flows from financing activities
Proceeds from new hire purchasing finance 1,544 -
Proceeds from new borrowings 3,000 -
Repayment of borrowings (3,000) (812)
Principal paid on lease liabilities (2,394) (3,637)
Interest paid on lease liabilities (388) (608)
Interest on borrowings (53) (110)
Dividends paid (1,493) -
Net cash absorbed in financing activities (2,784) (5,167)
------------------------------------------------- --------- ---------
Net increase / (decrease) in cash and cash
equivalents 1,898 (1,531)
Cash and cash equivalents at beginning of
year 6,987 8,518
Cash and cash equivalents at end of year 8,885 6,987
------------------------------------------------- --------- ---------
Consolidated statement of changes in equity
For the year ended 30 April 2023
Share Share Other Retained Total
Capital premium reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- --------- --------- ----------- ---------
Balance at 1 May 2021 2,133 8,633 5,807 28,004 44,577
---------------------------- --------- --------- --------- ----------- ---------
Total comprehensive income - - - 1,860 1,860
Share-based payments - - - 174 174
---------------------------- --------- --------- --------- ----------- ---------
Total changes in equity - - - 2,034 2,034
Balance at 30 April 2022 2,133 8,633 5,807 30,038 46,611
---------------------------- --------- --------- --------- ----------- ---------
Total comprehensive income - - - 4,678 4,678
Dividends paid - - - (1,493) (1,493)
Share-based payments - - - 171 171
Deferred tax credit on
share-based payments - - - 64 64
---------------------------- --------- --------- --------- ----------- ---------
Total changes in equity - - - 3,420 3,420
At 30 April 2023 2,133 8,633 5,807 33,458 50,031
---------------------------- --------- --------- --------- ----------- ---------
1. Basis of preparation
The consolidated financial statements and announcement of Van
Elle Holdings plc for the year ended 30 April 2023 were authorised
for issue by the Board of Directors on 25 July 2023.
The financial information included within this announcement does
not constitute statutory accounts within the meaning of section 435
of the Companies Act 2006 (the "Act"). The financial information
for the year ended 30 April 2023 has been extracted from the
statutory accounts on which an unqualified audit opinion has been
issued.
The statutory accounts for the year ended 30 April 2023 will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting.
The Group financial statements have been prepared in accordance
with UK adopted International Accounting standards in conformity
with the requirements of the Companies Act 2006.The Group financial
statements have been prepared on the going concern basis and
adopting the historical cost convention.
Adoption of new and revised standards
New standards, interpretations and amendments effective from 1
May 2022
During the year, the Group has adopted the following new and
revised Standards and Interpretations. Their adoption has not had
any significant impact on the accounts or disclosures in these
financial statements:
-- IFRS 3 Business Combinations
-- IFRS 16 Property, Plant and Equipment
-- IFRS 37 Provisions, Contingent Liabilities and Contingent Assets
-- Annual improvements to IFRSs (2018-2020 Cycle): IFRS 1; IFRS
9; Illustrative Examples accompanying IFRS 16; IAS 41
New standards, interpretations and amendments not yet
effective
The Group has not early adopted the following new standards,
amendments or interpretations that have been issued but are not yet
effective:
-- IFRS 17 Insurance contracts including amendments to IFRS 17 (issued on 25 June 2020)
-- IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information
-- IFRS S2 Climate-related Disclosures
-- Amendments to IAS 1: Classification of Liabilities as Current or Non-current
-- Amendments to IAS 8 - Definition of Accounting Estimates
-- Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting policies
-- Amendments to IAS 12 - Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
-- Amendment to IFRS 17 - Initial Application of IFRS 17 and IFRS 9 - Comparative Information
-- Amendment to IFRS 16 Leases: Lease liability in a Sale and Leaseback
-- Amendments to IAS 12 International Tax Reform - Pillar Two Model Rules
2. Segment information
The Group evaluates segmental performance based on profit or
loss from operations calculated in accordance with IFRS but
excluding non-recurring items. Inter-segment sales are priced along
the same lines as sales to external customers, with an appropriate
discount being applied to encourage use of Group resources at a
rate acceptable to local tax authorities. Insurances and head
office central services costs are allocated to the segments based
on levels of turnover. All turnover and operations are based in the
UK.
Operating segments - 30 April 2023
Specialist Ground
General Piling Engineering Head
Piling and Rail Services Office Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- --------- ----------- ------------- --------- ---------
Revenue 54,838 46,593 47,067 236 148,734
----------------------------- --------- ----------- ------------- --------- ---------
Other operating
income - - - 904 904
----------------------------- --------- ----------- ------------- --------- ---------
Operating profit
/ (loss) 3,403 2,236 3,642 (3,423) 5,858
Finance expense - - - (487) (487)
Profit / (loss)
before tax 3,403 2,236 3,642 (3,910) 5,371
----------------------------- --------- ----------- ------------- --------- ---------
Assets
Property, plant and
equipment 9,090 14,411 8,005 10,411 41,917
Intangible assets 11 3,483 219 - 3,713
Inventories 1,858 727 1,902 484 4,971
----------------------------- --------- ----------- ------------- --------- ---------
Reportable segment
assets 10,959 18,621 10,126 10,895 50,601
Trade and other receivables - - - 35,544 35,544
Cash and cash equivalents - - - 8,885 8,885
Total assets 10,959 18,621 10,126 55,324 95,030
----------------------------- --------- ----------- ------------- --------- ---------
Liabilities
Trade and other payables - - - 23,245 23,245
Provisions - - - 8,143 8,143
Deferred consideration - - - 790 790
Lease liabilities - - - 8,518 8,518
Deferred tax - - - 4,303 4,303
Total liabilities - - - 44,999 44,999
----------------------------- --------- ----------- ------------- --------- ---------
Other information
Capital expenditure
(including IFRS 16
leased assets) 1,171 4,188 1,351 1,977 8,687
Depreciation (including
IFRS 16 leased assets) 1,422 2,262 1,421 879 5,984
----------------------------- --------- ----------- ------------- --------- ---------
Operating segments - 30 April 2022
Specialist Ground
General Piling Engineering Head
Piling and Rail Services Office Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------- --------- ----------- ------------- --------- ---------
Revenue 38,974 45,771 40,043 127 124,915
------------------------------------------------------- --------- ----------- ------------- --------- ---------
Other operating income - - - 438 438
------------------------------------------------------- --------- ----------- ------------- --------- ---------
Operating profit / (loss) 1,804 2,998 2,115 (2,545) 4,372
Finance expense - - - (779) (779)
Profit / (loss) before tax 1,804 2,998 2,115 (2,545) 3,593
------------------------------------------------------- --------- ----------- ------------- --------- ---------
Assets
Property, plant and equipment 9,341 12,589 8,145 8,644 38,719
Intangible assets 18 3,594 233 2 3,847
Inventories 1,251 1,163 1,320 39 3,773
------------------------------------------------------- --------- ----------- ------------- --------- ---------
Reportable segment assets 10,610 17,346 9,698 8,685 46,339
Investment property - - - 811 811
Trade and other receivables - - - 34,434 34,434
Cash and cash equivalents - - - 6,987 6,987
Total assets 10,610 17,346 9,698 50,917 88,571
------------------------------------------------------- --------- ----------- ------------- --------- ---------
Liabilities
Trade and other payables - - - 22,475 22,475
Provisions - - - 7,737 7,737
Deferred consideration - - - 1,220 1,220
Lease liabilities - - - 6,854 6,854
Deferred tax - - - 3,674 3,674
Total liabilities - - - 41,960 41,960
------------------------------------------------------- --------- ----------- ------------- --------- ---------
Other information
Capital expenditure (including IFRS 16 leased assets) 2,097 2,462 1,207 254 6,020
Depreciation (including IFRS 16 leased assets) 1,166 1,907 1,296 913 5,282
------------------------------------------------------- --------- ----------- ------------- --------- ---------
The Group has one customer with revenues greater than 10% in the
current year (2022: none). Total revenues from the customer were
GBP18.4m and these are reported within the General Piling operating
segment. All revenue is generated in the UK.
3. Revenue from contracts with customers
Disaggregation of revenue - 30 April 2023
Specialist Ground
General Piling Engineering Head
Piling and Rail Services Office Total
End market GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- --------- ----------- ------------- --------- ---------
Residential 13,924 4,840 38,096 - 56,860
Infrastructure 20,761 37,180 4,651 - 62,592
Regional construction 20,147 4,507 4,289 - 28,943
Other 6 66 31 236 339
----------------------- --------- ----------- ------------- --------- ---------
Total 54,838 46,593 47,067 236 148,734
----------------------- --------- ----------- ------------- --------- ---------
Head office revenue relates to revenue generated from the
provision of training services.
Disaggregation of revenue - 30 April 2022
Specialist Ground
General Piling Engineering Head
Piling and Rail Services Office Total
End market GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- --------- ----------- ------------- --------- ---------
Residential 13,569 6,346 33,392 - 53,307
Infrastructure 5,224 34,333 3,821 - 43,378
Regional construction 20,177 4,872 2,830 - 27,879
Other 4 220 - 127 351
----------------------- --------- ----------- ------------- --------- ---------
Total 38,974 45,771 40,043 127 124,915
----------------------- --------- ----------- ------------- --------- ---------
4. Income tax expense
2023 2022
GBP'000 GBP'000
--------------------------------------------------- --------- ---------
Current tax credit
Current tax on profit/loss for the year - -
Adjustment for over-provision in the prior
period - (238)
--------------------------------------------------- --------- ---------
Total current tax credit - (238)
--------------------------------------------------- --------- ---------
Deferred tax expense
Origination and reversal of temporary differences 1,176 842
Adjustment for over-provision in the prior
period (483) 396
Effect of decreased tax rate on opening balance - 733
--------------------------------------------------- --------- ---------
Total deferred tax expense 693 1,971
--------------------------------------------------- --------- ---------
Income tax expense 693 1,733
--------------------------------------------------- --------- ---------
The reasons for the difference between the actual tax charge for
the year and the standard rate of corporation tax in the United
Kingdom applied to profit/(loss) for the year are as follows:
2023 2022
GBP'000 GBP'000
--------------------------------------------- --------- ---------
Profit / (loss) before income taxes 5,371 3,593
--------------------------------------------- --------- ---------
Tax using the standard corporation tax rate
of 19.5% (2022: 19%) 1,047 683
Adjustments for over-provision in previous
periods (483) 159
Expenses not deductible for tax purposes 130 104
Income not taxable (83) (40)
Tax rate changes 259 1,072
Previously unrecognised tax losses used to
reduce current tax expense - (30)
Capital allowances super deductions (177) (215)
--------------------------------------------- --------- ---------
Total income tax expense 693 1,733
--------------------------------------------- --------- ---------
During the year ended 30 April 2023, corporation tax has been
calculated at 19% of estimated assessable profit for the 11-month
period to 1 April 2023 and 25% for the 1-month period ending 30
April 2023 (2022: 19%).
Deferred tax balances as at 30 April 2023 are measured at the
current corporation tax rate of 25%.
5. Earnings per share
The calculation of basic and diluted earnings per share is based
on the following data:
2023 2022
'000 '000
------------------------------------------- -------- --------
Basic weighted average number of shares 106,667 106,667
Dilutive potential ordinary shares from 473 -
share options
------------------------------------------- -------- --------
Diluted weighted average number of shares 107,140 106,667
------------------------------------------- -------- --------
GBP'000 GBP'000
------------------------------------------- -------- --------
Profit for the year 4,678 1,860
------------------------------------------- -------- --------
Pence Pence
------------------------------------------- -------- --------
Earnings per share
Basic 4.4 1.7
Diluted 4.4 1.7
Basic - adjusted* 4.4 2.7
Diluted - adjusted* 4.4 2.7
------------------------------------------- -------- --------
The calculation of the basic earnings per share is based on the
earnings attributable to ordinary shareholders and on 106,666,650
ordinary shares (2022: 106,666,650), being the weighted average
number of ordinary shares.
The dilutive shares of 473,000 represent share options
exercisable under the Group's CSOP scheme that vested during the
financial year.
* Adjusted earnings per share in the prior year is stated before
the one-off deferred tax charge of GBP1.1m, relating to the enacted
change to the future corporation tax rate.
6. Analysis of cash and cash equivalents and reconciliation to net debt
Cash Non-cash
2022 flows flows 2023
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- --------- --------- --------- ---------
Cash at bank 6,948 1,899 - 8,847
Cash in hand 39 (1) - 38
------------------------------- --------- --------- --------- ---------
Cash and cash equivalents 6,987 1,888 - 8,885
Lease liabilities (6,853) 2,782 (4,447) (8,518)
------------------------------- --------- --------- --------- ---------
Net funds/ (debt) including
IFRS 16 property and vehicle
lease liabilities 134 4,680 (4,447) 367
------------------------------- --------- --------- --------- ---------
Cash flows in respect of lease liabilities include interest paid
on leases of GBP388,000 (2022: GBP608,000) and principal paid of
GBP2,394,000 (2022: GBP3,637,000).
Non-cash flows in respect of lease liabilities include the
purchase of GBP4,059,000 of fixed assets on long-term hire and
interest expense of GBP388,000 (2022: GBP608,000).
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END
FR FZGZNGKLGFZZ
(END) Dow Jones Newswires
July 26, 2023 02:00 ET (06:00 GMT)
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