Trading update and Chairman appointment

 4 June 2020

 

Van Elle Holdings plc

("Van Elle", the "Company" or the "Group")

AIM: VANL

 

 

Trading update and appointment of Chairman designate

 

Van Elle Holdings plc, the UK's largest ground engineering contractor, today provides an update on the outturn for the year ended 30 April 2020, its operational response to Covid-19 and financial position ahead of publishing the report and accounts for the year ended 30 April 2020 ('FY 2020'), in late August 2020.

 

In addition, the Group is also pleased to announce the appointment of Frank Nelson as a Non-Executive Director and Chair designate with effect from 1 July 2020.

 

Performance in the year ended 30 April 2020

 

Market conditions during April were consistent with the Board's revised planning assumptions and reflected the closure of many customer sites, particularly across the housing and regional construction sectors, together with considerable supply chain and logistical disruption. As a result, trading in April was within the range of scenarios outlined at time of the Group's announcement of 9 April 2020 (the 'April Update'), with revenues at approximately 20% of pre Covid-19 forecast levels.

Group revenues for the year were down approximately 4% compared to FY 2019 at approximately £85 million, but the significant, adverse impact of the Covid-19 outbreak on the final six weeks of the year impacted FY 2020 profitability such that, subject to audit, the Board expects to report an underlying pre-tax loss for the year.

Current trading

 

Whilst the Board does not yet believe it is appropriate to reinstate financial guidance for the year to April 2021, it is pleased to report that, following Government guidance regarding a return to work across the wider construction sector, customer activity levels within the Group are beginning to increase. As at 1 June 2020, approximately 30-40% of projects had resumed across the Housing and General Piling divisions, whilst the Specialist Piling, Rail and Geotechnical divisions are operating at approximately 60-70% of pre Covid-19 levels due to greater exposure to infrastructure sector activity.

 

The Group is fully complying with the Government's Covid-19 Secure guidance to ensure the continued wellbeing of its staff and other site workers and has commenced the return of staff from furlough in line with the return in customer demand.

 

Alongside managing the re-mobilisation of its operations, the Group has maintained a close dialogue with customers to progress its commercial pipeline. The Group's order book at 31 April 2020 remains in line with the half year position at £31.7m (31 October 2019: £31.9m) although enquiry levels have reduced by circa 20% compared to previous levels. 

 

Whilst the Board expects that it will still take time for new project starts to gather momentum in some sectors, the Group is encouraged by developments in its targeted infrastructure markets.  These include the confirmation of Notice to Proceed on phase one of High Speed 2 and the announcement of partner contracts on Highways England's Smart Motorways Alliance. The Group is therefore pleased to have achieved preferred bidder status for its first contract on High Speed 2 and to be recently appointed to two of the three regions on Highways England's new four-year ground investigation framework, both of which are expected to commence during the first half of the financial year.

 

Financial position & liquidity

 

As a result of the decisive actions taken to conserve cash and manage liquidity, including ongoing self-help actions and participation in a range of Government schemes, the Group's cash performance has been ahead of the Board's expectations at the time of the April Update. 

 

The Group has a significantly strengthened balance sheet following the successful equity capital raise, announced on 9 April 2020, which raised gross proceeds of £6.7m. As at 31 May 2020, the Group had cash balances of approximately £12 million, having repaid its £0.9 million remaining term loan with Lloyds Bank, which was due for repayment in August 2020. The cash balance is enhanced by the deferral of some £1.4m of PAYE payments to HMRC.

 

The Group is progressing discussions with existing and potential lenders to put in place additional debt facilities as part of its long-term capital structure strategy and expects this process to be concluded in August 2020. The Board remains confident that it has sufficient financial stability and liquidity to respond quickly as the markets recover, building a platform from which to progress its longer-term strategic ambitions.

 

Appointment of new Chair and Board Update

 

Following the announcement in February that Adrian Barden will not be seeking re-election as Chair at the next AGM, the Board is delighted to announce the appointment of Frank Nelson as a new Non-Executive Director and Chair designate from 1 July 2020, assuming the role of Chair following the release of the FY 2020 results.

 

Frank is currently the Senior Independent Director for three quoted companies: McCarthy & Stone plc, HICL Infrastructure PLC and Eurocell plc, and the chair of PE backed contractor and developer DSM SFG Group Holdings Limited.  He was previously a Non-executive Director at Telford Homes Plc and formerly the Chief Financial Officer of Galliford Try plc.

 

Further information on Frank is set out at the end of this announcement.

 

It was also previously announced that Robin Williams would step down from the Board at the end of July 2020 following the release of the FY 2020 results.  Due to the revised results timetable set out below, Robin has agreed to remain as Non-executive Director and Chairman of the Audit Committee until late August 2020.

 

Preliminary results timetable

 

In light of the practical challenges presented by the current situation, the Group is running an extended audit timetable this year, with the preliminary results expected to be announced in late August 2020 and the annual general meeting in late September 2020.

 

Mark Cutler, Chief Executive, commented:

 

"It is encouraging to see a gradual return to work underway across our markets. We hope to see this trend continue in the coming weeks and are working with customers to support their plans.  Thanks to the actions taken to preserve cash and the commitment of our employees, we are in a strong position to manage the return to activity.

 

Having been able to retain our market leading capabilities and with a strengthened financial position, we are well-placed to benefit from significant opportunities as construction markets recover and new major infrastructure investment programmes commence.

 

I would also like to warmly welcome Frank to the Board as our Chair designate."

 

 

ENDS

 

Enquiries:

 

Van Elle Holdings plc		Tel: 01773 580 580
Mark Cutler
Graeme Campbell
Peel Hunt LLP (Nominated Adviser and corporate broker)		Tel: 020 7418 8900
Mike Bell Ed Allsopp
Instinctif Partners (Financial Public Relations)		Tel: 020 7457 2020
Mark Garraway
James Gray
Rosie Driscoll

 

 

 

Disclosures required by Schedule Two, paragraph (g) of the AIM Rule for Companies in relation to the appointment of Francis (Frank) Eamon Nelson, aged 68, as Non-Executive Director:

 

Current directorships	Directorships held in the last five years
DSM SFG Group Holdings Limited	McCarthy & Stone (Developments) Limited
Eurocell plc	McCarthy & Stone Retirement Lifestyles Limited
HICL Infrastructure PLC	Telford Homes Limited
McCarthy & Stone plc