Van Elle [LON:VANL] the Nottinghamshire-based, AIM-listed engineering contractor has issued a trading update to 31st October 2022 today.
The company announced continued strong momentum in the six-month period under report. The best performing division was the Housing and General Piling division, the company said in a statement this morning.
The company advised that it is looking at revenues of GBP81m for the period – a record return for the company, it said. This would be a 35% increase in revenue from the previous six months, where it reported revenues of GBP60.1m.
This led to a 57.9% increase in profit before tax from GBP1.9m in in the previous six months to GBP3m in the six months ending 31st October.
However, the company warned that despite it experiencing some easing from the start of the year, it was still grappling with rising costs in terms of fuel, wages and materials, which was having a tangible effect on the engineering company’s cost base. The company said in the statement that it had tried to limit these effects through contract price mechanisms to the best of its ability, though: “in some cases there is a lag in recovery.”
The company acknowledged that the UK was facing difficult economic circumstances but remained confident in it ability to maintain its positive forward momentum for the second half of its financial year, “despite the winter months which traditionally deliver lower activity levels due to weather disruptions.”
The company was so confident that it announced that it was expecting to close the year ahead of market expectations, stating that its order book at 31st October was GBP49m, up from GBP39m in the year to 3oth June, and has increased its cash-on-balance by GBP1.4m period-to-period to GBP8.4m.
Van Elle closed trading on 21st November at 44.5p, rose to 47.75p on receipt of the statement today and was priced at around 45.1p within the first hour of trading. The company has offered a -2.6% return year-to-date, a 6.1% one-year return and its shares have ranged between 33.5p and 53.9p over a 52-week period. The company has a market capitalisation of GBP47.5m.
As previously reported, Van Elle won a series of projects in the energy sector in the last three months, including a GBP13m piling project with an energy company in South East England, which followed a similar win in May through a GBP8m ground engineering contract by Acciona in the West Midlands or piling and foundations work on Enfinium’s Kelvin waste-to-energy facility in Sandwell.
The company has had a good 2022, despite the economic headwinds, Van Elle returned to profit earlier this year with a GBP125m record revenue, the first time that it shown a profit since 2019. With further contract wins in the energy sector, at a time when the nation’s focus is on energy supply, the future looks good for the construction company and is targeting its mid-term financial targets of 5-10% annual revenue growth, 7-8% operating profit margin and 15-20% ROCE.
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.
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.