3 May 2018
Van Elle Holdings plc
("Van Elle" or "the Group" or "the Company")
Year end trading update and CEO succession process
Van Elle, the geotechnical contractor offering a wide range of ground engineering techniques and services to customers in a variety of UK construction end markets, makes the following trading update in respect of the year ended 30 April 2018, together with an announcement in relation to the CEO succession process.
Trading update
Following a good overall performance in the first half, adverse weather contributed to more challenging market conditions since January, although the Group is expected to show modest year-on-year revenue growth in the second half against a strong comparative period in the prior year.
Further to the announcement of 25 January 2018, the Group has been actively engaged with Carillion's advisers to determine the status and intentions regarding existing and anticipated projects where Carillion were acting as contractor and on which the Group was, or anticipated to be, engaged as sub-contractor. The Group is pleased to report that it was able to agree satisfactory terms to recommence work on some Carillion contracts during the fourth quarter, although this is only expected to have a limited financial benefit in the year to 30 April 2018. Notwithstanding the Carillion situation, the Rail operating unit has enjoyed a strong second half, continuing to win work and delivering a better operating performance. Combined with a solid performance from Restricted Access, this led to an encouraging performance in the Specialist Piling Division in the second half.
Having reported a very strong first half performance, revenues and margins in the General Piling Division have been lower in the second half reflecting the slightly slower market.
The Ground Engineering Services division had a challenging second half. This reflects lost productive time and contract delays resulting from severe weather affecting the Group's Scottish operations in January and February, as well as the effects felt more recently in March, together with a loss-making contract in the Ground Stabilisation business unit. The Division's first half performance had been impacted by a legacy contract issue for which a final account settlement is still to be concluded and the Board's anticipated outcome is reflected in its full year expectations. Moving into the new financial year, the Board believes the Division is in a more stable position with a healthy orderbook, particularly in Scotland.
In Ground Engineering Products, the Group's proprietary Smartfoot® foundation system has continued to gain share in the market and delivered encouraging year-on-year growth in the second half in spite of some weather disruption.
The Group now anticipates reporting a lower than previously expected exceptional bad debt charge of approximately £1.0 million (rather than £1.6 million). Despite the bad debt charge and the poor performance of Ground Engineering Services in the second half, cash generation across the Group in general has continued to be strong and provides an ongoing platform to support Van Elle's strategic initiatives.
In light of all the factors above, the Board currently expects to report overall adjusted profit before taxation* for the year ended 30 April 2018 of approximately £10.5 million. Whilst mindful of recent commentary as to the outlook for the UK construction market more generally, the Board remains positive about the opportunities it can see for the Group.
* before share-based payments and exceptional costs (including the bad debt charge)
CEO Succession
Van Elle is pleased to announce that, following a detailed process, Mark Cutler will join the Board and succeed Jon Fenton as Chief Executive Officer no later than October 2018 and, it is hoped, somewhat earlier if prior agreement can be reached.
Mark Lloyd Cutler, aged 49, joins Van Elle from Balfour Beatty PLC where he was previously Managing Director of the UK regional construction and engineering businesses and recently Managing Director of the Balfour Beatty VINCI joint venture, with responsibility for the High Speed 2 programme.
From 2010 to 2014 Mark was Chief Executive at Barhale Construction, one of the UK's largest privately-owned infrastructure specialists working across the water, transport and energy sectors. Mark joined Barhale, from Morgan Est (2006-2010), the infrastructure arm of Morgan Sindall Group, where he was Managing Director. Mark's early career (1990-2006) was at the Tarmac/Carillion Group.
As announced on 22 November 2017, Jon Fenton informed the Board at that time that due to a serious medical matter within his close family, he wished to step down and he will be leaving the Company on 18th May 2018. In order to help support Van Elle ahead of Mark's arrival, the Company has engaged Stephen Christopher Prendergast, aged 62, a highly experienced interim manager, in the role of acting Chief Executive Officer, reporting into the Board. Steve has been undertaking interim management roles for the last 13 years which have included assignments for ISG, Balfour Beatty, Amey and Network Rail. Steve has significant sector experience having also previously held executive roles at Costain PLC and Amec PLC. Jon has agreed to remain available to Steve and the Company as a consultant to help ensure a smooth transition period.
Other than that set out below, there are no other matters that are required to be disclosed under Schedule 2 paragraph (g) of the AIM Rules in relation to the appointments of Mr Cutler or Mr Prendergast.
Adrian Barden, Chairman, commented:
"We wish Jon and his family well for the future, and thank him for his contribution to the Company over the past eight years, including the successful IPO in 2016.
"We are delighted that Mark is joining Van Elle. He is highly regarded across the industry and will be bringing with him a wealth of valuable experience across all our major sectors, especially in rail and housing where we have many opportunities to build on our already strong market positions. Ensuring a smooth leadership transition process has been a key focus of the Board and we are pleased that Steve will be able to step in to support the management team over the next few months.
Whilst market conditions have been less supportive in the second half, the team has worked hard to continue to win work and deliver this effectively. We continue to progress our strategic initiatives and believe that these have positioned the Group well for the future."
Enquiries:
Instinctif Partners (Financial PR Advisers) |
Tel: 020 7457 2020 |
Mark Garraway |
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Rosie Driscoll |
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Peel Hunt LLP (Nominated Adviser and corporate broker) |
Tel: 020 7418 8900 |
Charles Batten |
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Mike Bell |
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Justin Jones |
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Certain information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain
AIM Rules Disclosure
In the previous 5 years, Mr Cutler has been the director of the following entities:
Mark Cutler Current Directorships
Mark Cutler Associates Ltd
Mark Cutler Past Directorships
Balfour Beatty Build Limited
Balfour Beatty Civils Limited
Balfour Beatty Civil Engineering Limited
Balfour Beatty Civil Engineering (SW) Limited
Balfour Beatty Construction Limited
Balfour Beatty Construction (SW) Limited
Balfour Beatty Construction Northern Limited
Balfour Beatty Engineering Solutions Limited
Balfour Beatty Regional Civil Engineering Limited
Balfour Beatty Regional Construction Limited
Balvac Limited
Barhale Limited
Barhale Resource Solutions Limited
Birse Construction Limited
Birse Group Limited
Birse Group Services Limited
Birse Integrated Solutions Limited
Birse Properties Limited
BPH Equipment Limited
Burnbank House Limited
Cowlin Group Limited
Cowlin Management Limited
Dean & Dyball Limited
Dean & Dyball Investments Limited
Footprint Furniture Limited
Keepmoat Limited
Keepmoat In Partnership Limited
Keepmoat Property Services Limited
Keepmoat Regeneration Limited
Keepmoat Regeneration (Apollo) Limited
Keepmoat Regeneration (Bramall) Limited
Keepmoat Regeneration (FHM) Limited
Mansell plc
Multibuild (Construction & Interiors) Limited
Multibuild Hotels and Leisure Ltd
Multibuild Interiors Ltd
Office Projects Limited
Office Projects Group Limited
Office Projects (Interiors) Limited
Raynesway Construction Limited
William Cowlin (Holdings) Limited
In the previous 5 years, Mr Prendergast has been the director of the following entities:
Stephen Prendergast Current Directorships
SSARD Limited
Stephen Prendergast Past Directorships
N/A
