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Van Elle reports record half-year revenue; profits up


Van Elle LON:VANL the Nottinghamshire-based, AIM-listed engineering contractor issued its interim results to 31st October 2022 today (25th January).

The contractor published a strong set of results. The company has been making encouraging progress since swinging from a period of loss to a GBP3.6m profit for FY2021/22, after two successive years of losses. The company’s performance was telegraphed in November 2022 and Van Elle has not disappointed.

Revenue for the six months ending 31st October 2022 was GBP80.8m, a 34.4% increase on the same period in 2021. Pre-tax profit was also up from GBP2.3m to GBP3.3m for the six-month period. However net debt also increased from GBP2m to GBP2.5m year-on-year.

On target

All in all, it was a good half-year for Van Elle, a record in terms of revenue and an outstanding order book of GBP38.3m at the close of the calendar year and is well on the way to delivering forecast full-year profitability of between GBP5.2m and GBP5.4m.

However, the company’s shares took a bit of a hit in morning trading, opening at 48p, but dropping to 46p following the results publication before climbing back to 47p in early trading. Part of that fall might be explained by the interim results offering no surprises, so any price appreciation would have already been factored in.

However, Van Elle’s chief executive, Mark Cultler, did sound a note of caution, saying: “Market conditions in the short term, especially in respect of new build housing, are expected to be more challenging.”

The AIM-listed company has offered a year-to-date return of -7.8% and a one-year return of 8.3% with shares ranging between 33.5p and 56p. Van Elle has a market capitalisation of GBP57m.

Cutler also noted that it was dealing with “challenging macro environment” and that in the last year the company had to deal with raw material supply chain disruptions – but that the company was getting over its supply chain issues; prices were stabilising and materials were becoming more available. The company has also – like most sectors of the economy – been dealing with inflationary pressures which look set to continue into 2023.

Founded in 1984, and listed on AIM in late 2016, Van Elle has grown to become one of the UK’s largest and most diverse ground engineering contractors. The company offers a wide range of specialist geotechnical techniques and services to customers in a variety of construction end markets. Van Elle’s end-to-end solutions encompass ground investigation, general and specialist piling, rail engineering services, modular foundations and ground improvement and stabilisation services in a wide range of environments.

Diversified operations

The company is focused on three core UK market sectors – residential, infrastructure and construction – offering a full range of integrated ground engineering services on both a regional and national basis. Van Elle’s work in the residential market is focused on building integrated piling and foundation systems for national and regional house builders, retirement and multi-storey residential units, whilst the business also provides specialist ground engineering services to the rail, coastal and energy and utility sectors through its infrastructure department.

The last six months have seen all the company’s business units operating at high capacity. Its rail engineering division delivered major electrification programmes under framework agreements, seeing continuation of strong activity levels, and as previously reported Van Elle won a number of piling projects for clients in the energy sector.

It is Van Elle’s diversification that might help it see out a downturn in the housing market, which the company sees as delivering lower revenues in the near future, as housebuilders hold back from investment whilst they scope out the effect of rising interest rates and falling property prices.

Improved visibility

The company continues to be confident of its involvement in the first phase of the GBP40bn HS2 high-speed railway development, which added to “improved work visibility through to FY25”. Van Elle is also part of the transition to net-zero story and has been contracted by waste-to-energy generators to prepare initial groundworks and piling.

The company estimates annual revenues of GBP30m to GBP40m over the medium-term and is experiencing improved work visibility due to be involved in a number of strategic infrastructure works in highways and rail.

Deshe Analytics sees Van Elle performing reasonably well and on par with its peers but warns: “It is highly likely that the company will be mostly tethered to market performance and sector movements for the near term. We therefore gave Van Elle Holdings plc a total score of 64 out of 100 and a ‘HOLD’ recommendation.”

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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