REG - Van Elle HoldingsPLC - Final Results, Analyst Briefing & Investor Pres
26/07/2023 07:00
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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').
£m Year ended Year ended
30 April 2023 30 April 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 £5.9m (FY2022: £4.4m)
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 £6.2m including spend on new rigs and the
Group's HGV fleet.
· Improved net funds position of £7.5m (excluding IFRS 16 lease
liabilities) at 30 April 2023.
· Strong balance sheet and an undrawn bank facility of up to £11m,
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 £30.8m (£39.0m at 30 April 2022)
which excludes framework agreements and preferred bidder positions, with
estimated annual revenues of £30m-£40m (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 (mailto: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
(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 (mailto: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 broker) Tel: 020 7418 8900
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 £148.7m, and an increase of 19% on
the preceding year. Profit before tax increased by 49% over FY2022 to £5.4m.
The balance sheet remains strong, with net funds (excluding IFRS 16 lease
liabilities) increasing from £5.9m to £7.5m in the year. The Group also has
an undrawn borrowing facility of up to £11m.
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 £11m 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 £1.3m remaining at the year end, with £1.1m
being repaid during the first quarter of FY2024.
Capital expenditure was £6.2m, 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 £148.7m, 19% higher than the
prior year (FY2022: £124.9m). 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 £5.4m (FY2022: £3.6m), 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 £7.5m at 30 April 2023 (30 April 2022: £5.9m). Working capital increased
by £1.9m, primarily due to the impact of higher trading activity. Net capital
expenditure of £5.6m (FY2022: £4.6m) 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 £11.0m funding facility. An
additional £1.5m 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 £1.3m, of which £1.1m 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 £10m 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 £54.8m (FY2022: £39.0m),
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 £26m) 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 £3.4m (FY2022: £1.8m).
Specialist Piling and Rail
Revenue increased by 2% in the year to £46.6m (FY2022: £45.8m), 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 £2.2m (FY2022:
£3.0m). 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 £47.1m (FY2022: £40.0m),
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 £3.6m (FY2022:
£2.1m).
Rig fleet
Capital expenditure increased to £6.2m in the year (FY2022: £4.9m) 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 £2.8m 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
£'000 £'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
£'000 £'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
£'000 £'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 £18m 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
£'000 £'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 £427,000
relating to the reduction in the deferred consideration due in respect of the
acquisition of ScrewFast and a charge of £350,000 relating to two warranty
claims where the estimated costs of remediation have increased in the current
financial year. The total net value of £77,000 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 £487,000 (2022: £779,000). 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
£'000 £'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 £3.4m to £50.0m (2022: £46.6m). 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 £6.2m 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 £10.0m (2022: £8.1m), 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 £790k, of which £740k is a guaranteed
sum due on 31 August 2023 and £50k 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 £427k on the estimate as at
30 April 2022 and £1.1m 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
£'000 £'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 £0.4m (2022: £0.1m) with total
cash and cash equivalents increasing to £8.9m at 30 April 2023 (2022:
£7.0m).
The Group's lease liabilities include £7.2m of IFRS 16 property and vehicle
lease liabilities (2022: £5.8m). 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 £1.3m 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 £11m 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
£'000 £'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 £10.0m 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
£'000 £'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 4,678 1,860
shareholders of the parent
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
£'000 £'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
£'000 £'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 Total
Capital premium reserve Retained equity
£'000 £'000 £'000 earnings £'000
£'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
General Specialist Ground Head Total
Piling Piling and Rail Engineering Office £'000
£'000 £'000 Services £'000
£'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
General Specialist Ground Head Total
Piling Piling and Rail Engineering Office £'000
£'000 £'000 Services £'000
£'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 £18.4m 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
End market General Specialist Ground Head Total
Piling Piling and Rail Engineering Office £'000
£'000 £'000 Services £'000
£'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
End market General Specialist Ground Head Total
Piling Piling and Rail Engineering Office £'000
£'000 £'000 Services £'000
£'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
£'000 £'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
£'000 £'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 share options 473 -
Diluted weighted average number of shares 107,140 106,667
£'000 £'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 £1.1m, relating to the enacted change to the future
corporation tax rate.
6. Analysis of cash and cash equivalents and reconciliation to net debt
2022 Cash Non-cash 2023
£'000 flows flows £'000
£'000 £'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
£388,000 (2022: £608,000) and principal paid of £2,394,000 (2022:
£3,637,000).
Non-cash flows in respect of lease liabilities include the purchase of
£4,059,000 of fixed assets on long-term hire and interest expense of
£388,000 (2022: £608,000).
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