REG - Van Elle HoldingsPLC - Final Results & Investor Presentation
03/08/2022 07:15
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RNS Number : 6927U Van Elle Holdings PLC 03 August 2022
Van Elle Holdings plc
('Van Elle', the 'Company' or the 'Group')
Results for the year ended 30 April 2022
Analyst Briefing & Investor Presentation
'Record revenues and return to profit following a strong recovery
driven by high levels of activity across all divisions'
Van Elle Holdings plc, the UK's largest ground engineering contractor,
announces its results for the year ended 30 April 2022 ('FY2022').
£m Year ended Year ended
30 April 2022 30 April 2021
Revenue 124.9 84.4
EBITDA(1) 9.8 4.2
Operating profit / (loss)(2) 4.4 (0.8)
Profit / (loss) before taxation(2) 3.6 (1.4)
Basic earnings per share 1.7p (1.3)p
Adjusted basic earnings per share(3) 2.7p (1.2)p
Net funds excl. IFRS 16 property and vehicle lease liabilities 5.9 3.7
Net funds / (debt) 0.1 (1.7)
Return on capital employed 9.4% (1.8)%
Operating cash conversion (%) 86.1% 18.5%
1. EBITDA is defined as earnings before interest, tax, amortisation and
depreciation.
2. Share-based payments have been reclassified from 'non-underlying' to
'underlying' in FY2022. The comparative period has been restated to reflect
this reclassification. Current year non-underlying items have a net value of
£nil and are disclosed in note 4 (FY2021: £0.1m).
3. Adjusted basic earnings per share is stated before non-underlying items of
£nil (FY2021: £0.1m) and the one-off deferred tax charge of £1.1m relating
to the enacted change to the future corporation tax rate (see note 6).
Highlights:
· Record activity levels and revenues following strategic targeting
of structurally growing end markets.
· Significant growth across all divisions, notably in higher margin
Specialist Piling, Rail and Ground Engineering Services.
· Appointed to the 10-year Smart Motorways Programme Alliance
framework (SMPA), with work on current contracts and construction of emergency
refuge areas continuing despite the announced pause to the programme.
· Piling work commenced on the Core Valley Lines rail network, the
Group's first major electrification project since 2018.
· Success in passing on cost and managing the inflationary
environment and supply chain challenges.
· Capital investment of £4.9m including the addition of 8 rigs to
the fleet.
· Strong balance sheet with significant reduction of Group debt to
just £1.1m (excl. IFRS 16 lease liabilities) at 30 April 2022 and an unused
bank facility of up to £11m.
· Net cash position of £5.9m (excluding IFRS 16 lease liabilities)
at 30 April 2022.
· Reinstatement of dividends with final dividend of 1p per share
recommended.
Current trading and outlook:
· Trading momentum in FY2022 has continued into FY2023 with all
divisions operating at high activity levels.
· Supply chain challenges moderating, albeit inflationary pressures
remain.
· Investment in infrastructure, including the decarbonisation and
electrification of the rail network, where the Group has established a
market-leading position, expected to continue in the longer term.
· Appointed, post period end, to the piling framework for the
TransPennine Route Upgrade programme (TRU).
· Order book at 30 June 2022 of £39.0m (£39.0m at 30 April 2022)
· Current levels of activity and demand support prospects for
FY2023.
· Further progress expected in achieving the Group's medium-term
financial targets.
Mark Cutler, Chief Executive, commented:
"These results are the first to reflect a full year's trading post COVID and
demonstrate the positive progress the Group is making under its transformation
strategy launched in 2019. Although the sector continues to face several wider
challenges, we have significant opportunities ahead to further improve, and
momentum has continued into the new financial year. Overall, it is pleasing to
see the actions taken over the last three years starting to deliver
sustainable results that put us firmly on-track to deliver our medium-term
objectives.
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 3 August 2022
A briefing for Analysts will be held at 9.30am this morning - Wednesday 3
August 2022. 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 3 August 2022
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 3 August 2022, 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
Mike Bell / Ed Allsopp
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. The Company provides a 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 three end
markets: residential and housing, infrastructure and regional construction -
across which the Group has completed more than 20,000 projects over the last
35 years.
General Piling provides a range of larger piling and ground engineering
solutions for open-site construction projects. Specialist Piling and Rail
provides a range of geotechnical solutions in operationally constrained
environments including on-track rail applications. Ground Engineering Services
offers a range of ground investigation and geotechnical services and modular
foundation solutions such as Smartfoot®. Van Elle has a market-leading
reputation and the UK's largest rig fleet of 122 rigs.
Having floated on AIM in 2016 it now has a strong national presence,
diversified offering and market-leading brand name.
CHAIRMAN'S STATEMENT
Overview
I am pleased to report that FY2022 has been a year of record revenues,
following a strong recovery for the Group, driven by high levels of activity
across all divisions. Following the relaxation of Covid-related restrictions,
and our strategy of working closely with key customers, we saw a strong
rebound in revenues across all sectors. As a result, trading has been well
ahead of pre-pandemic levels, and the Group has returned to profitability in
the year. The Group generated full year revenue of £124.9m, an increase of
48% on the preceding year and operating profit of £4.4m, an increase of
£5.2m over FY2021.
We have faced a number of supply chain challenges during the year with lack of
availability of key materials impacting operations. In addition, the Group has
experienced price inflation across the spectrum. We have been able to pass on
some, but not all, of these price increases with the consequential impact on
contract margins. These challenges are starting to show early signs of
moderating, and the impacts of further material price inflation are being
managed, as far as possible, through contract pricing mechanisms.
Significant progress has continued to be made on delivery of the of the
Group's strategic plan, focused on improving operational performance and
establishing strong positions for future growth. Several significant contracts
and framework appointments were awarded in the year in the key infrastructure
growth sectors of Rail and Highways.
FY2022 represents the first full year of ScrewFast Foundations Limited
('ScrewFast') being part of the Group, having acquired the business on 1 April
2021. In line with the Board's expectations at the time of the acquisition,
ScrewFast has strengthened the Group's position in its growth markets, notably
highways and energy with significant potential identified in rail and housing.
The business has been fully integrated, with projects being bid for, and
delivered, in an integrated model within the Specialist Piling division.
Capital structure and allocation
The Group's capital structure is reviewed regularly by the Board and
management, taking into account the need, availability and cost of sources of
funding. The Group's objective is to deliver long-term value to shareholders
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.
In October 2020, the Group secured up to £11m of asset backed lending
facilities on a revolving basis over 4 years, secured against the receivables
and certain tangible assets. The facility was not drawn at any time during the
financial year. Group debt has been further reduced to £1.1m at 30 April
2022, excluding IFRS lease liabilities.
Rig fleet and equipment investment was increased in the year to £4.9m having
been restricted over the previous two financial years in order to manage cash
resources during the pandemic. Capital investment is focused on both
maintaining and upgrading existing rigs and investing in new rigs to meet
growth opportunities and to replace ageing rigs.
The Board continue to review and appraise acquisition opportunities, in line
with its disciplined criteria and approach. Whilst not core to the delivery of
the Group strategy, 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
I am pleased to confirm the reinstatement of dividends with the recovery of
the Group's core markets. In light of the performance in the year and given
the importance to shareholders of dividends as part of total shareholder
return, the Board is recommending a final dividend of 1.0p per share. If
approved, the final dividend will be payable on 7 October 2022 to shareholders
on the share register as at 16 September 2022. The shares will be marked
ex-dividend on 15 September 2022.
People
The Group has strengthened the leadership team with significant industry and
corporate experience in recent years. This management team is now embedded
into the Group structure, supported by strengthened teams at a divisional
level. Bringing together a mix of experience and capability has allowed the
Group to maximise opportunities during the post-pandemic market recovery and
puts it well placed to deliver on its vision and strategy. Increased levels of
training are now being delivered with internal training days doubling between
FY2021 and FY2022. FY2023 sees the launch of the inaugural Van Elle leadership
programme.
Van Elle is proud to be supported by an outstanding group of employees. My
thanks go to all employees for their hard work in a year of such significant
levels of trading, and with the additional challenges caused by supply chain
disruption.
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.
Outlook
The Board is pleased with the progress made in FY2022, with many of the
Group's end markets having shown sustained and strong levels of trading. The
trading momentum in FY2022 has continued into FY2023 and the Group's order
book continues to be maintained at high levels. Significant framework
appointments such as the Smart Motorways Programme Alliance and TransPennine
Route Upgrade programmes are expected to provide considerable future workflows
for the Group and help underpin Van Elle's growth expectations. Investment in
infrastructure, including the decarbonisation and electrification of the rail
network, where the Group has established a market-leading position, is
expected to continue in the longer term. Future prospects in other growth
markets also remain encouraging. The Board is therefore increasingly confident
of achieving its mid-term financial targets of 5-10% annual revenue growth,
7-8% operating profit margin and 15-20% ROCE.
Frank Nelson
Non-Executive Chair
2 August 2022
CHIEF EXECUTIVE'S STATEMENT
OPERATING REVIEW
Overview
The high levels of demand across Van Elle's core markets were sustained
throughout the financial year, resulting in the Group reporting record
revenues in FY2022 and delivering a 3.5% operating profit margin.
Market conditions started to recover from the COVID-19 pandemic towards the
end of the previous year and the Group entered the year with a strong pipeline
of projects and increasing enquiry levels.
Full year revenue was £124.9m, representing an increase of 48% on the
preceding year (FY2021: £84.4m). After adjusting for the impact of the
acquisition of ScrewFast Foundations Limited ('ScrewFast'), the year-on-year
increase in revenue was 41%. Revenue was also 41% higher than FY2019 (32%
after adjusting for the acquisition of ScrewFast), which was the last year
unaffected by the COVID-19 pandemic.
There was a significant increase in demand and activity levels across all
divisions. Workload in the rail sector lagged behind the recovery of our other
core markets, but activity levels accelerated and increased during the second
half of the financial year. Piling work commenced on the Core Valley Lines
rail network, the Group's first major electrification project since 2018.
Since the year end, Van Elle has been appointed to the piling framework for
the TransPennine Route Upgrade (TRU) programme with site activity expected to
commence later in FY2023.
Whilst the Group reports a slight improvement in contract margins overall,
mainly due to better execution and higher utilisation of the rig fleet, there
have been a number of supply chain challenges during the year. A lack of
availability and price inflation of raw materials impacted contract margins.
The Group has successfully passed through price increases to partially offset
the inflated input costs, however some disruption to site work caused by
material shortages has been unavoidable.
In order to attract and retain high quality employees, Van Elle took steps in
the year to review remuneration and benefits, which has resulted in an
increase to the Group's cost base. In the short term, particularly on longer
term contracts already mobilised, these increased costs could not be fully
recovered in all cases.
Despite the supply chain challenges and wage inflation, the Board is pleased
to report a return to profitability for the Group, following two financial
years impacted by the COVID-19 pandemic. Operating profit was £4.4m, an
increase of £5.2m over the loss in FY2021.
The Group acquired ScrewFast on 1 April 2021, and over the course of the year
the business was integrated into the wider Van Elle structure, whilst
retaining key employees and the brand. The team has continued to deliver high
quality projects in line with its previous strong track record. Going forward,
the Group anticipates an increase in demand for ScrewFast's helical piling and
steel modular foundation solutions, particularly in the highways sector.
The safety and wellbeing of all employees is Van Elle's primary operational
priority. Van Elle's average headcount increased by 12% to 577 and the safety
performance in FY2022 improved on that of the previous year, with the accident
frequency rate dropping to 0.28 (FY2021: 0.59) and the positive indicators
also improving. During the year, Van Elle has strengthened the health and
safety team and introduced significantly more internal training, with training
days double those of FY2021.
In the previous financial year, Van Elle took measures to strengthen its
balance sheet, including a refinancing of existing debt facilities in October
2020, following which the Group has access to a debt facility of up to £11m.
This facility remained undrawn throughout the financial year. In FY2022, Van
Elle further reduced Group debt by continuing to repay hire purchase
liabilities, whilst financing all capital expenditure from cash resources. The
remaining hire purchase debt at 30 April 2022 was £1.1m (30 April 2021:
£4.0m). On acquiring ScrewFast, the Group inherited certain bank loans and
hire purchase debt totalling £1.3m, all of which was repaid in FY2022. These
actions leave the Group in a net cash position, with adequate liquidity
headroom to support further growth and future investment.
ESG
The Group launched its sustainability strategy last year, aligned to industry
best practice including the Construction Leadership Council programme. The
Group's teams are passionate about making positive changes to their equipment
and processes to considerably reduce waste and carbon production and limit the
negative impact of their activities.
Van Elle's newly appointed Environment Manager will take the lead in
delivering the Group's vision, which is to help create a sustainable future
through innovation, engagement and collaboration with local communities,
customers, and broader industry.
In addition to the focus on sustainability of site operations, the Group has
undertaken a number of initiatives, including establishing an electric company
car scheme, installing vehicle charging points at its offices, and planning to
install solar panels at the Group's head office and main depot in
Kirkby-in-Ashfield through FY2023.
Van Elle's target is to achieve Scope 1 and Scope 2 carbon neutral by 2050,
however, to achieve this the Group needs to deliver on all of aspects of its
strategy, and harness opportunities within the supply chain, product
development and site operations.
Van Elle's social initiatives include various charitable activities, including
partnering with a local charity, which is selected by employees. Van Elle also
promotes volunteering and teams have completed activities to support the local
community over the course of the year.
Strategic approach
Van Elle is making good progress against Phase 3 of the Group strategy and is
seeing the early benefits of actions taken under Phases 1 and 2 which are
substantially complete, although subject to continuous improvement, as
summarised below:
Phase 1: Stabilising and improving performance
Simplifying the Group structure, improving leadership capability,
strengthening commercial capability, cost reduction and efficiency
improvements, safety and asset utilisation performance, and employee
engagement activities.
Phase 2: Developing foundations for growth
Developing clear strategic plans for the Group's core sectors of housing,
infrastructure and regional construction, improving customer relationships and
tendering activity, maximising the integrated solutions offering, broadening
the range of products and services, and strengthening the Group's balance
sheet.
Phase 3: Establishing market leadership
Sustainable, profitable growth towards medium term objectives of revenue
growth of 5-10% per annum, underlying operating margins of 7-8%, and return on
capital employed of 15-20%.
The Group's vision is to be the leading, most trusted provider of Total
Foundation Solutions and its strategic goals are aligned under three pillars
of developing trusted partnerships, deploying the best people and assets and
the perfect delivery of our projects. Some highlights in the year include:
- further improvement in employee engagement scores from our annual
employee survey;
- a full review of employee remuneration and benefits, with
improvement to terms targeted at employee engagement and retention;
- doubling of internal training days delivered, compared to FY2021;
- integration of ScrewFast into the Specialist Piling division, with
aligned management and operational delivery teams;
- further expansion of the Group's operational capabilities with
excellent growth delivered in sheet piling, vibro and rigid inclusions, and
the development of an ancillary civils capability in the Rail division. These
techniques have been added to Van Elle's services and have all contributed
positively to the financial result; and
- further reduction in Group debt, with all capital expenditure in the
year funded from cash resources. Outstanding hire purchase debt as at 30 April
2022 is £1.1m, and a funding facility of up to £11m remains available.
Markets
The Group operates in the following three market segments:
· Residential constitutes approximately 43% of Group revenues (down
from 45% in FY2021). Van Elle's teams deliver integrated piling and foundation
systems for national and regional housebuilders, retirement and multi-storey
residential properties.
The prior year financial results in the residential sector were heavily
impacted by the COVID-19 pandemic, with housebuilders closing all sites during
the first national lockdown. After a gradual recovery in in the first half of
FY2021, demand and activity levels continued to increase. Demand from
housebuilders for Van Elle's piling services and precast concrete modular
foundation solution (Smartfoot) has been very strong, with the Housing
division operating at near capacity levels throughout FY2022.
The long-term outlook for the sector is likely to remain strong, however
changes to building regulations are expected to soften the exceptionally high
demand seen this year as we progress through FY2023.
Van Elle remains confident that its Smartfoot system will continue to be
popular with both traditional housebuilders and emerging modular
housebuilders, due to the benefits of reduced delivery time, certainty of
supply and cost, sustainability benefits and reduced on-site resource levels.
The Directors anticipate the residential sector will move increasingly to
modern methods of construction as the time and resource savings of modular
foundations become better appreciated, and the expanded range of integrated
services from early ground investigation, ground stabilisation and
improvement, followed by piling and foundations systems, provides a strong
model to support housebuilder customers.
· Infrastructure constitutes approximately 35% of Group revenues
(up from 34% in FY2021) and includes specialist ground engineering services to
the rail, highways, coastal and flooding, energy and utility sectors.
In the highways sector, Van Elle continues to deliver projects under local
authority and Highways England frameworks. The Group was appointed to the
10-year Smart Motorways Programme Alliance (SMPA) framework in the second half
of the year. Whilst there is a pause to the new-build programme to collect
safety and economic data, design work, current contracts and construction of
emergency refuge areas is continuing. The Group's helical piling and modular
steel foundation solution (ScrewFast) is increasingly a gantry foundation
solution of choice in many highways projects.
In the rail sector, revenues were slower to recover with subdued activity
levels continuing through the first half of the year. However, the second half
delivered strong revenue growth, with electrification work commencing on the
Core Valley Lines rail network in South Wales, the Group's first major
electrification project since 2018. Van Elle also delivered a series of
high-profile station modernisation projects involving the rail and specialist
piling divisions in tandem, including expansions of Gatwick airport station
for Costain, Birmingham University station for Volker Fitzpatrick, and several
other regional station schemes taking Van Elle's historical station portfolio
to over 200 completed projects. Van Elle also delivered several embankment
and slope stabilisation schemes, often at short notice, including major
schemes in Network Rail's southern region and has been delivering complex
coastal rail works on the Dawlish coast on a series of projects throughout
FY2022, and ongoing, for Bam Nuttall. Van Elle was also appointed to the
piling framework for the TransPennine Route Upgrade (TRU) programme in the
first quarter of FY2023.
High Speed 2 continues to offer considerable medium-term opportunities, where
Van Elle anticipates its services will be used by main contractors to provide
additional capacity for the high workloads required to meet the project
deadlines. In the year, Van Elle undertook various works on all the main works
civil engineering sections on phase 1 (London to Birmingham).
Led primarily by customer interest in the ScrewFast solution, the Group has
developed a growing presence in the high voltage power sector and has
completed several contracts on substation and other infrastructure projects
across the National Grid and regional distribution networks.
· Regional Construction constitutes approximately 22% of Group
revenues (up from 21% in FY2021). 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.
The regional construction market improved over the financial year, as greater
confidence returned following the previous year impacts from COVID-19 and
Brexit. The market remains highly competitive and, as a result, price
sensitive. The most buoyant segment is the construction of industrial and
logistics warehouses across the UK. Van Elle has delivered several schemes
in the year benefiting from a wider offering by the development of its ground
improvement services (vibro stone columns and rigid inclusions) which are
often specified alongside traditional driven and Continuous Flight Auger
("CFA") piling on the larger warehouse schemes.
Van Elle has continued to secure projects and exited FY2022 with a robust and
high-quality order book. Contract execution and commercial management have
remained high focus areas in the General Piling division and further progress
has been achieved in delivering improved contract gross margins.
The impact of delivering against the strategy to develop a diversified range
of complementary services, as well as a strong balance sheet, has allowed the
Group to be awarded several larger contracts, which contributed strongly to
revenue growth in the year.
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 and precast driven piling.
· 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); ground
investigation and geotechnical services (Strata Geotechnics).
Note: The results of ScrewFast Foundations Limited, acquired on 1 April 2021,
are reported within the Specialist Piling and Rail segment.
General Piling
Revenue increased by 43% in the year to £39.0m (2021: £27.3m), representing
31% of Group revenues.
The primary target market of regional construction remained challenging
throughout the year, with highly competitive, price-sensitive tendering
required. However, the division continues to develop stronger relationships
with its key customers and delivered multiple high-quality contracts in the
year, requiring significant technical capabilities.
The General Piling division has had success in delivering larger projects,
particularly in London, utilising its deep CFA technical capability and
expertise, and the Group has furthered its investment to strengthen its
capabilities in support of its strategy. Growth in rigid inclusions activity,
a ground improvement technique which was recently added to the Group's
capabilities has also supported revenue growth within the division.
A strong order book is carried forward into FY2023, underpinned by a large
contract in the energy sector, which represents the largest single contract
award since the outset of the pandemic.
There has been a high focus on contract execution in the year, delivering a
gradual increase in gross margins through improved operational performance.
Underlying operating profit for the division was £1.8m (2021: £0.3m).
Specialist Piling and Rail
Revenue increased by 56% in the year to £45.8m (2021: £29.3m), representing
37% of Group revenues. Revenue from the acquisition of ScrewFast is reported
within the Specialist Piling and Rail segment. Revenue growth, after adjusting
for the impact ScrewFast was 30%.
Specialist Piling recovered quickly following the first COVID-19 lockdown with
strong demand across all of its target markets. The division has expanded its
operational capability by investing in new rigs for growth and increasing the
number of site gangs, having operated at near capacity throughout most of the
financial year.
The division has developed a strong reputation for a broad range of technical
capabilities, has seen further growth in ground stabilisation workload and has
developed a strong sheet piling offering including the successful delivery of
a major flood protection scheme to the A40 Llanegwad for the Welsh Government.
Similar to the prior year, the division benefited from several high-profile
schemes in the infrastructure sector including selected highways projects and
several rail station and geotechnical schemes. Despite the award of a partner
role with the 10-year Smart Motorway Programme Alliance (SMPA), ongoing
projects were fewer in FY2022 compared to previous years but are expected to
ramp-up significantly in FY2023 onwards as the SMPA programme progresses.
ScrewFast has been fully integrated into Specialist Piling, with aligned
management and operational delivery teams. The helical piling and steel
grillage solution has seen strong demand in the highways and energy sectors.
With expected increased demand, the Group has invested in increased steel
fabrication capacity.
Rail revenue gathered strong momentum during the second half, after a subdued
first half of the financial year. Work commenced on piling for the
decarbonisation and electrification of the Core Valley Lines rail network,
alongside a typically weekend-dominated workload of smaller schemes across all
Network Rail regions. Rail capabilities were expanded organically by the
launch of an ancillary civil engineering service which complements the Group's
piling and foundations specialisms. The first major project was the
re-opening of the Dartmoor line in north Devon which was successfully
completed in the period for Linbrooke, a Network Rail signalling framework
contractor.
The Group was appointed to the piling framework for the TransPennine Route
Upgrade (TRU) programme between Manchester and Leeds in the first quarter of
FY2023, with work due to commence later in the financial year and is expected
to involve both the Specialist Piling and Rail divisions for up to three
years.
The Group's fleet of 17 Colmar road and rail piling rigs are approaching an
average age of 7 years, and require a major overhaul which has commenced in
FY2022 and is to be concluded over the next 24 months at an anticipated cost
of approximately £70k per rig. In addition to peak weekend demands, this has
resulted in more hired, less reliable equipment than is preferable. Orders for
five, new generation, UK designed and built rigs were placed in the period at
a cost of approximately £2.5m, with delivery expected by mid FY2023, allowing
the Group to expand the fleet to meet the greater levels of demand.
Underlying operating profit for the division increased to £3.0m (2021:
£1.0m).
Ground Engineering Services
Revenue increased by 45% in the year to £40.0m (2021: £27.6m), representing
32% of Group revenues.
The Housing division delivers integrated piling and Smartfoot foundation beam
solutions to UK housebuilders. The prior year was heavily impacted from the
first COVID-19 lockdown at the start of the financial year, which resulted the
cessation of all housebuilding activity for several weeks. Following the
reopening of sites, the division saw a gradual increase in demand which
continued throughout FY2022. The division has operated at capacity for the
majority of the financial year, delivering significant revenue growth. A
strong and high-quality order book is carried forward into FY2023.
There has been a high level of focus on operational efficiency to improve
gross margins, in a highly competitive market, with a gradual improvement
delivered over the year.
Strata, Van Elle's Geotechnical division, reported revenues of £5.9m (2021:
£4.7m). Further progress has been made in the infrastructure sector, with
increased activity levels in the highways sector (including under the Highways
England ground investigation framework) and on HS2 ground investigation
projects. The Group anticipates further growth in the infrastructure market
under the Smart Motorway Programme Alliance and rail electrification and
signalling programmes and have grown the division's workforce to meet this
potential demand.
Underlying operating profit for the segment increased to £2.1m (2021:
£0.2m).
Rig fleet
Capital expenditure was restricted in the last two financial years as we
sought to manage cash resources during the pandemic. In FY2022 the Group
increased its level of investment to sustain the existing rig fleet and expand
the fleet in key strategic growth areas.
Capital spend in FY2022 was £4.9m, including 8 rigs added to the fleet. Three
rigs were added in Specialist Piling to support growth in the ground
stabilisation sector; a piling rig with deep CFA capability was added to the
General Piling division, where the Group has developed a positive reputation
for large schemes in the London region; and rigs were also added to the Ground
Engineering Services division to expand capacity given the higher levels of
demand.
Van Elle expects to continue to invest in the rig fleet at broadly similar
levels in FY2023, with capital spend proposals being approved only where there
is high confidence in a division's forward orders, and forecast ROCE
contributes to the Group's medium-term target of 15-20%.
The total fleet size at the year-end was 122, up from 115 last year.
Summary and outlook
The strong momentum achieved throughout FY2022 has continued into the first
quarter of FY2023 and all divisions continue to operate at high activity
levels.
The supply chain challenges relating to cost inflation and availability issues
remain a concern, although there are some signs of the issue moderating and
generally the Group is able to recover cost inflation through contract pricing
mechanisms. Access to raw materials for site works is improving, although
inflationary cost increases have continued, albeit to a lesser extent than
during FY2022.
The Group continues to monitor wage inflation and, in particular, the 'cost of
living crisis' in the UK, which impacts all employees' living standards. Van
Elle has made several changes to employees' terms of employment and benefits
and will keep this under constant review to ensure that the Group continues to
attract and retain the best people.
The Group has made good progress in the delivery of its three-phase strategy
and is now firmly focussed on achieving a market leading position, including
delivering the Board's medium term financial KPIs.
Van Elle's core markets continue to show a positive outlook, particularly in
the infrastructure sector where government-backed investment is anticipated
over the medium term. The Group is well-positioned on the Smart Motorways
Programme Alliance on which a strong pipeline of current and retrofit works is
forecast through to FY2025, while the government's review of new projects is
ongoing. Activity levels in the rail sector have improved, with a much
clearer pipeline of opportunities in place on which the Group is already
engaged or bidding, many of which span the CP6-CP7 transition. HS2 is expected
to continue to take capacity out of the ground engineering market, and Van
Elle expects to be increasingly involved in support of the phase 1 joint
ventures. There is a growing number of opportunities for ScrewFast, which is
now fully integrated into the wider Group structure, particularly in the
highways and energy sectors.
Whilst mindful of the wider macro challenges affecting the sector, the Board
is confident that the current levels of activity and demand will be sustained
in FY2023, and further progress will be made on our strategy in this financial
year.
Mark Cutler
Chief Executive Officer
2 August 2022
CHIEF FINANCIAL OFFICER'S STATEMENT
FINANCIAL REVIEW
Revenue
Revenue in the year to 30 April 2022 was significantly ahead of the COVID-19
impacted prior year. The recovery in the infrastructure, regional construction
and housebuilding markets delivered strong order levels and significantly
increased contract activity in the year with total revenue above pre-pandemic
levels.
2022 2021 Change 2022 2021
£'000 £'000 % % %
H1 60,601 38,323 56.7 48.1 45.4
H2 64,854 46,045 40.8 51.9 54.6
Revenue 124,915 84,368 48.1 100.0 100.0
Throughout H1 of the prior year, there was a gradual recovery in contract
activity, with revenues recovering to pre-COVID levels by H1 of FY2021.
Recovery of the Group's core markets continued into H2 of FY2021 and
throughout FY2022. High activity levels across all divisions throughout the
year resulted in total revenue growth of £40.5m (+48.1%). FY2022 represents
the first full year of ScrewFast trading as part of the Group. Revenue growth
in FY2022, allowing for the impact of the acquisition of ScrewFast was £33.8m
(+40.1%).
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:
2022 2021 Change 2022 2021
£'000 £'000 % % %
Residential 53,307 37,296 42.9 42.7 44.2
Infrastructure 43,378 28,464 52.4 34.7 33.7
Regional construction 27,879 18,481 50.9 22.3 21.9
Other 351 127 163.8 0.3 0.2
Revenue 124,915 84,368 48.1 100.0 100.0
Residential: The residential sector was impacted the most by COVID-19
restrictions in the preceding year. A strong recovery, assisted by the stamp
duty holiday, resulted in high levels of demand. These market conditions
continued, with enquiries and contract activity levels reported at record
levels, despite the phasing out of the stamp duty holiday over the summer of
2021. The residential sector continues to lead the Group's revenues.
Infrastructure: The recovery in Rail, whilst initially lagging behind the
other divisions, improved throughout the year with work commencing on the
Group's first major electrification programme since 2018 in H2 of FY2022. The
Group was appointed to the Smart Motorways Alliance Programme (SMPA) in the
year for a period of up to 10 years, and whilst there is a pause to the
programme to collect safety and economic data, design work, live contracts and
investment in emergency refuge areas continues. ScrewFast solutions are
primarily targeted at the infrastructure sector, with a focus on highways and
power projects, and therefore the benefit of ScrewFast is largely reflected
within this sector's revenues.
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
larger schemes in London, particularly utilising its deep CFA technical
expertise.
The mix of revenue by division is shown below:
2022 2021 Change 2022 2021
£'000 £'000 % % %
General Piling 38,974 27,340 42.6 31.2 32.4
Specialist Piling and Rail 45,771 29,345 56.0 36.6 34.8
Ground Engineering Services 40,043 27,596 45.1 32.1 32.7
Head Office 127 87 46.0 0.1 0.1
Revenue 124,915 84,368 48.1 100.0 100.0
General Piling revenues, whilst impacted by high levels of competition within
the regional construction market and by the industry-wide supply chain
challenges (due to the higher raw material requirements of the division's
contract works), increased due to higher demand and improved tender conversion
during the year. Revenue was supported by further growth in rigid inclusions
activity, a ground improvement technique which was recently added to the
Group's capabilities.
The Specialist Piling and Rail division includes ScrewFast. Excluding
ScrewFast, revenue growth was £9.7m (+34.3%). This division was least
impacted by COVID-19 in the preceding year, with revenues returning to
pre-pandemic levels quickly following the first COVID-19 lockdown. Investment
in drill and grout ground stabilisation capability delivered strong revenue
growth in the year and activity levels on infrastructure projects have also
continued positively, with notably high levels of work on rail station
projects.
Growth in the Ground Engineering Services division's revenue reflects the
significant demand in the residential sector during the year, also supported
by geographical expansion within the UK. 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 increased to 27.3% (2021: 26.1%). The improvement is partially
due to a change in mix, with a greater proportion of Group revenues delivered
by Specialist Piling and Rail, which typically deliver gross margins at the
upper end of the Group's range of activities. There has also been a high focus
across the Company on contract execution, with improved margins delivered
across many contract activities.
Strong growth in Ground Engineering Services revenues, particularly Housing,
resulted in a negative mix impact due to the highly competitive sector
delivering margins at the lower end of the Group's margin range.
Supply chain challenges also impacted the Group, with the primary issues being
a lack of availability and price inflation of key raw materials. Some of the
impact was mitigated through higher pricing but unrecovered inflationary
increases and the disruption caused by material shortages had a negative
effect on contract margins. Wage inflation also impacted gross margins in the
year, particularly on longer term contracts, where pricing could not be fully
adjusted to reflect higher staff costs.
Overall, an improved revenue mix, better contract execution and higher rig
utilisation rates delivered an improved gross margin, despite the supply chain
and wage inflation challenges.
Operating profit
Operating profit margins improved significantly in the year with the Group
returning to profitability due to high levels of activity, improved gross
margins and better overhead recovery rates.
2022 2021
£'000 £'000
Operating profit / (loss) 4,372 (801)
Operating margin 3.5% (0.9)%
Underlying operating profit / (loss) 4,372 (706)
Underlying operating margin 3.5% (0.8)%
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 FY2022 include a credit of £362,000
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 arising in the year. The total value of £12,000 is recognised within
administration expenses and forms part of underlying operating profits.
Underlying operating profits and reported operating profits are consistent in
FY2022.
During the preceding year, total non-underlying items of £0.1m were incurred
in respect of the fees associated with the acquisition of ScrewFast
Foundations Limited on 1 April 2021.
Net finance costs
Net finance costs were £779,000 (2021: £598,000). The increase in finance
costs during the year reflects the absorption of debt on acquisition of
ScrewFast Foundations Limited on 1 April 2021. All outstanding loans and hire
purchase agreements in ScrewFast were repaid in April 2022 resulting in
accelerated interest charges in the year.
Taxation
The Group has taken advantage of the extended loss carry back rules in the
period, carrying back losses from the preceding financial year to the years
ending 30 April 2019 and 30 April 2018, resulting in a refund which was
received in Q1 of the FY2023 year.
The effective tax rate in the year was 48.2% (2021: -0.9%). The relatively
high effective tax rate in the year is due to the enacted change to the future
corporation tax rate from 19% to 25%. This has resulted in a restatement of
the Group's deferred tax liabilities and a deferred tax charge in the current
year of £1,072,000. Excluding this one-off deferred tax charge, the effective
tax rate in the year was 18.4%.
The Group has a taxable loss in the current financial year due to the use of
super deduction allowances on qualifying items of plant and machinery. Tax
losses have been recognised on the basis the Group has net deferred tax
liabilities.
Dividends
The Board is recommending a final dividend of 1.0p. No interim dividend was
paid during the year.
Subject to approval at the Annual General Meeting on Thursday 29 September,
the recommended final dividend will be paid on 7 October 2022 to shareholders
on the share register as at 16 September 2-22. The associated ex-dividend date
will be 15 September 2022.
Earnings per share
Reported basic earnings per share were 1.7p (2021: -1.3p) and adjusted basic
earnings per share were 2.7p (2021: -1.2p). There is no dilutive effect of
outstanding share options as conditions remain unsatisfied or the share price
is below the exercise price meaning diluted earnings per share is equal to
basic earnings per share, as was the case in the previous financial year.
Adjusted basic earnings per share is based on profit before non-underlying
items, net of tax, and the one-off deferred tax charge relating to future
corporation tax rate changes enacted during the current year.
Balance sheet
2022 2021
£'000 £'000
Fixed assets (including intangible assets) 43,377 42,835
Net working capital 8,113 6,930
Net funds / (debt) 134 (1,711)
Deferred consideration (1,220) (1,521)
Taxation and provisions (3,793) (1,956)
Net assets 46,611 44,577
Note: net working capital and taxation and provisions are stated net of claim
liabilities and associated insurance assets
Net assets increased by £2.0m to £46.6m (2021: £44.6m).
The Group increased its level of investment in the year (having restricted
capital investment in the last two financial years to manage cash resources
during the pandemic). A total of £4.9m was invested over the course of the
year with 8 rigs added to the fleet. Three rigs were added to the Specialist
Piling fleet to support growth in the drill and grout ground stabilisation
sector. A rig was added to the General Piling division to support growth in
deep CFA piling, where the Group has delivered a number of large schemes in
the London region during the year. Rigs were also added to the Ground
Engineering Services division to expand capacity given the high levels of
demand.
On 1 April 2021 the Group acquired 100% of ScrewFast Foundations Limited, a
specialist helical pile design, fabrication and installation business for
consideration of £1,760,000 plus £740,000 payable on 31 August 2023, up to a
further £65,000 payable on 31 August 2022, and up to £1,110,000 payable on
31 August 2023 subject to future performance. Goodwill of £2,116,000 was
recognised on acquisition in the previous financial year. Management's
assumptions are that, of the further potential payment of £1,175,000 subject
to performance criteria, £543,000 will be payable based on current financial
performance forecasts. This is a reduction of £362,000 on the estimate as at
30 April 2021. This reduction has been recognised as a credit within
administration expenses in the period. The reduction in ScrewFast's
performance forecast is driven by the pause to the smart motorways scheme
which has affected the timing of some of the more significant opportunities
for this part of the business.
Working capital (defined as inventories, trade and other receivables and trade
and other payables) increased to £8.1m (2021: £6.9m), predominantly as a
result of increased activity in the year.
ROCE has increased in the period to 9.4% at 30 April 2022 (2021: -1.8%),
reflecting the impact of the increased operating profit.
The prior period opening deferred tax liability has been restated for the
recognition of tax losses which were previously not recognised as deferred tax
assets. The impact of this restatement is a reduction in prior period net
deferred tax liabilities of £592,000 and an increase in prior period retained
earnings of £592,000. This prior period restatement has no impact on profits
or cashflow in the current financial year.
Net funds
2022 2021
£'000 £'000
Bank loans - (812)
Lease liabilities (6,853) (9,417)
Total borrowings (6,853) (10,229)
Cash and cash equivalents 6,987 8,518
Net (debt)/funds 134 (1,711)
Net funds excluding IFRS 16 property and vehicle lease liabilities 5,935 3,704
Net debt decreased during the year. The Group has moved to a net funds
position of £0.1m as at 30 April 2022.
Debt acquired on the acquisition of ScrewFast Foundations Limited of £1.2m
was repaid in full during the year and existing hire purchase debt finance was
reduced further. Capital investments in the year were funded from cash
resources. As a result, the balance of outstanding hire purchase debt as at 30
April 2022 is now £1.1m, of which £0.9m will be repaid in FY2023 as the
majority of remaining hire purchase contracts reach their term. Hire purchase
agreements are typically at fixed rates of interest and over a five-year term.
Lease liabilities includes £5.8m of IFRS 16 property and vehicle lease
liabilities. The increase in IFRS16 property and vehicle lease liabilities in
FY2022 reflects the renewal of the Group's van fleet, the roll out of which
commenced in Q4 of FY2021 and is on a long-term hire basis over a maximum
period of 4 years.
In October 2020, the Group secured up to £11m of asset backed lending
facilities on a revolving basis over 4 years secured against the Group's
receivables and certain tangible assets. There are no financial covenants
associated with the facilities and they remain available and undrawn to date.
Cash flow
2022 2021
£'000 £'000
Operating cash flows before working capital 9,816 4,059
Working capital movements (1,442) (3,286)
Cash generated from operations 8,374 773
Income tax received - 1,408
Net cash generated from operating activities 8,374 2,181
Investing activities (4,738) (1,316)
Financing activities (5,167) (4,535)
Net decrease/increase in cash (1,531) (3,670)
Operating cash flows of £9.8m have primarily been used to repay outstanding
debt and fund capital expenditure, all of which has been paid from cash
resources in the year. Working capital increased in the year, primarily due to
the increased trading levels.
Graeme Campbell
Chief Financial Officer
2 August 2022
Consolidated statement of comprehensive income
For the year ended 30 April 2022
Restated
2022 2021
£'000 £'000
Revenue 124,915 84,368
Cost of sales (90,842) (62,365)
Gross profit 34,073 22,003
Administrative expenses (29,980) (23,320)
Credit loss impairment charge (159) (81)
Other operating income 438 597
Operating profit / (loss) 4,372 (801)
Operating profit / (loss) before non-underlying items 4,372 (706)
Other non-underlying items - (95)
Operating profit / (loss) 4,372 (801)
Finance expense (779) (607)
Finance income - 9
Profit / (loss) before tax 3,593 (1,399)
Income tax expense (1,733) (13)
Profit / (loss) after tax and total comprehensive income/(expense) for the 1,860 (1,412)
year attributable to shareholders of the parent
Earnings per share (pence)
Basic 1.7 (1.3)
Diluted 1.7 (1.3)
All amounts relate to continuing operations. There was no other comprehensive
income in either the current or preceding year.
Share-based payments are no longer classified as non-underlying. Comparative
information for 2021 has been restated to reflect this, with no impact on the
total comprehensive loss for the year.
Consolidated statement of financial position
As at 30 April 2022
Restated
As at 1 May 2020
Restated £'000
2022 2021
£'000 £'000
Non-current assets
Property, plant and equipment 38,719 38,243 38,566
Investment property 811 820 829
Intangible assets 3,847 3,772 1,517
43,377 42,835 40,912
Current assets
Inventories 3,773 3,022 2,702
Trade and other receivables 34,112 32,038 12,633
Corporation tax receivable 322 84 854
Cash and cash equivalents 6,987 8,518 12,188
Assets classified as held for sale - - 683
45,194 43,662 29,060
Total assets 88,571 86,497 69,972
Current liabilities
Trade and other payables 22,475 20,833 11,579
Loans and borrowings - 230 -
Deferred consideration 50 - -
Lease liabilities 1,696 3,110 3,875
Provisions 7,738 7,635 241
31,959 31,808 15,695
Non-current liabilities
Loans and borrowings - 582 -
Deferred consideration 1,170 1,521 -
Lease liabilities 5,157 6,307 7,461
Deferred tax 3,674 1,702 980
10,001 10,112 8,441
Total liabilities 41,960 41,920 24,136
Net assets 46,611 44,577 45,836
Equity
Share capital 2,133 2,133 2,133
Share premium 8,633 8,633 8,633
Other reserve 5,807 5,807 5,807
Retained earnings 30,038 28,004 29,263
Total equity 46,611 44,577 45,836
A third Group statement of financial position as at 1 May 2020 has been shown
above to show the effect of the prior year restatement of deferred tax.
Consolidated statement of cash flows
For the year ended 30 April 2022
2022 2021
£'000 £'000
Cash flows from operating activities
Operating profit/(loss) 4,372 (801)
Depreciation of property, plant and equipment 5,282 4,844
Amortisation of intangible assets 101 125
Depreciation of investment property 9 9
Property on disposal of property, plant and equipment (122) (272)
Share based payment expense 174 153
Operating cash flows before movement in working capital 9,816 4,058
(Increase)/decrease in inventories (750) 869
Increase in trade and other receivables (2,074) (10,688)
Increase in trade and other payables 1,280 6,437
Increase in provisions 102 97
Cash generated from operations 8,374 773
Income tax received / (paid) - 1,408
Net cash generated from operating activities 8,374 2,181
Cash flows from investing activities
Purchases of property, plant and equipment (4,946) (2,135)
Disposal of property, plant and equipment 384 899
Disposal of assets held for sale - 700
Acquisition of subsidiary, net of cash acquired - (780)
Purchases of intangibles (176) -
Net cash absorbed in investing activities (4,738) (1,316)
Cash flows from financing activities
Repayment of bank borrowings (812) (12)
Principal paid on lease liabilities (3,637) (3,930)
Interest paid on lease liabilities (608) (553)
Interest paid on loans and borrowings (110) (49)
Interest received - 9
Net cash absorbed in financing activities (5,167) (4,535)
Net decrease in cash and cash equivalents (1,531) (3,670)
Cash and cash equivalents at beginning of year 8,518 12,188
Cash and cash equivalents at end of year 6,987 8,518
Consolidated statement of changes in equity
For the year ended 30 April 2022
Share Share Other Total
Capital premium reserve Retained equity
£'000 £'000 £'000 earnings £'000
£'000
At 1 May 2020 (as previously stated) 2,133 8,633 5,807 28,671 45,244
Prior year restatement - - - 592 592
At 1 May 2020 (as restated) 2,133 8,633 5,807 29,263 45,836
Total comprehensive loss - - - (1,412) (1,412)
Share-based payments - - - 153 153
Total changes in equity - - - (1,259) (1,259)
At 30 April 2021 (as restated) 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
At 30 April 2022 2,133 8,633 5,807 30,038 46,611
NOTES:
1. Basis of preparation
The consolidated financial statements and announcement of Van Elle Holdings
plc for the year ended 30 April 2022 were authorised for issue by the Board of
Directors on 2 August 2022.
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 2022 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 2022 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 2021
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;
· IAS 16 Property, Plant and Equipment;
· IAS 37 Provisions, Contingent Liabilities and Contingent Assets;
and
· Annual Improvements to IFRSs (2018-2020 Cycle): IFRS 1; IFRS 9;
Illustrative Examples Accompanying IFRS 16; and 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);
· 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; and
· Amendment to IFRS 17 - Initial Application of IFRS 17 and IFRS 9
- Comparative Information.
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 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 (3,324) 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 2,097 2,462 1,207 254 6,020
Depreciation / amortisation 1,166 1,907 1,296 913 5,282
Operating segments - 30 April 2021
General Specialist Ground Head Total
Piling Piling and Rail Engineering Office £'000
£'000 £'000 Services £'000
£'000
Revenue 27,340 29,345 27,596 87 84,368
Other operating income - - - 597 597
Underlying operating profit / (loss) 295 1,035 247 (2,283) (706)
Non-underlying items - - - (95) (95)
Operating profit / (loss) 295 1,035 247 (2,378) (801)
Finance expense - - - (607) (607)
Finance income - - - 9 9
Profit / (loss) before tax 295 1,035 247 (2,976) (1,399)
Assets
Property, plant and equipment 8,496 12,405 8,031 9,311 38,243
Intangible assets 26 3,476 262 8 3,772
Inventories 984 1,208 810 20 3,022
Reportable segment assets 9,506 17,089 9,103 9,339 45,037
Investment property - - - 820 820
Trade and other receivables - - - 32,122 32,122
Cash and cash equivalents - - - 8,518 8,518
Total assets 9,506 17,089 9,103 50,799 86,497
Liabilities
Trade and other payables - - - 20,833 20,833
Provisions - - - 7,635 7,635
Loans and borrowings - - - 812 812
Deferred consideration - - - 1,521 1,521
Lease liabilities - - - 9,417 9,417
Deferred tax - - - 1,702 1,702
Total liabilities - - - 41,920 41,920
Other information
Capital expenditure 96 1,154 2,231 203 3,684
Depreciation / amortisation 1,152 1,601 1,137 1,087 4,977
There are no individual customers accounting for more than 10% of Group
revenue in the current or preceding year. All revenue is generated in the UK.
3. Revenue from contracts with customers
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
Head office revenue relates to revenue generated from the provision of
training services.
Disaggregation of revenue - 30 April 2021
End market General Specialist Ground Head Total
Piling Piling and Rail Engineering Office £'000
£'000 £'000 Services £'000
£'000
Residential 8,009 6,275 23,085 - 37,296
Infrastructure 6,765 19,302 2,396 - 28,464
Regional construction 12,529 3,768 2,112 - 18,481
Other 37 - 3 87 127
Total 27,340 29,345 27,596 87 84,368
4. Other non-underlying items
2022 2021
£'000 £'000
Exceptional costs - 95
The Group's non-underlying items in FY2022 include a credit of £362,000
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 arising in the year. The total net value of £12,000 is recognised
within administration expenses and forms part of underlying operating profits.
Prior year exceptional costs relate to the acquisition costs for the purchase
of ScrewFast Foundations Limited on 1 April 2021.
5. Income tax expense
2022 2021
£'000 £'000
Current tax credit
Current tax on profit/loss for the year - -
Adjustment for over-provision in the prior period (238) (554)
Total current tax credit (238) (554)
Deferred tax expense
Origination and reversal of temporary differences 842 (184)
Adjustment for over-provision in the prior period 396 751
Effect of decreased tax rate on opening balance 733 -
Total deferred tax expense 1,971 567
Income tax expense 1,733 13
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:
2022 2021
£'000 £'000
Profit / (loss) before income taxes 3,593 (1,339)
Tax using the standard corporation tax rate of 19% (2021: 19%) 683 (266)
Adjustments for over provision in previous periods 159 197
Expenses not deductible for tax purposes 104 121
Income not taxable (40) (39)
Unused tax losses for which no deferred tax asset has been recognised - -
Tax rate changes 1,072 -
Previously unrecognised tax losses (30) -
Capital allowances super deductions (215) -
Total income tax expense 1,733 13
During the year ended 30 April 2022, corporation tax has been calculated at
19% of estimated assessable profit for the year (2021: 19%).
The March 2021 Budget announced a further increase to the main rate of
corporation tax to 25% from 1 April 2023. This rate was substantively enacted
on 24 May 2021, as a result, deferred tax balances as at 30 April 2022 are
measured at 25% resulting in a deferred tax charge of £1,072,000 in the year.
6. Earnings per share
The calculation of basic and diluted earnings per share is based on the
following data:
Restated
2022 2021
'000 '000
Basic weighted average number of shares 106,667 106,667
£'000 £'000
Profit / (loss) for the year 1,860 (1,412)
Add back / (deduct):
Non-underlying items - 95
Underlying profit / (loss) for the year 1,860 (1,317)
Pence Pence
Earnings per share
Basic 1.7 (1.3)
Diluted 1.7 (1.3)
Basic - adjusted* 2.7 (1.2)
Diluted - adjusted* 2.7 (1.2)
*The adjusted earnings per share is based on profit/(loss) for the year
adjusted for non-underlying items of £Nil (2021: £95,000) and corporation
tax rate changes amounting to £1,072,000 (2021: £Nil) (refer to note 5).
This tax rate change is a one-off deferred tax charge relating to future
corporation tax rate changes enacted during the year. Share based payment
changes have been reclassified from non-underlying profits to underlying
profits in the current year and the prior year earnings per share has been
restated to reflect this reclassification. The Directors consider this measure
provides an additional indicator of the underlying performance of the Group.
There is no dilutive effect of the share options, as in the previous year the
performance conditions remain unsatisfied, or the share price was below the
exercise price.
The calculation of the basic earnings per share is based on the earnings
attributable to ordinary shareholders and on 106,666,650 ordinary shares
(2021: 106,666,650), being the weighted average number of ordinary shares.
7. Analysis of cash and cash equivalents and reconciliation to net debt
2021 Cash Non-cash 2022
£'000 flows flows £'000
£'000 £'000
Cash at bank 8,480 (1,532) - 6,948
Cash in hand 38 1 - 39
Cash and cash equivalents 8,518 (1,531) - 6,987
Loans and borrowings (812) 861 (49) -
Lease liabilities (9,417) 4,245 (1,681) (6,853)
Net funds/ (debt) including IFRS 16 property and vehicle lease liabilities (1,711) 3,575 (1,730) 134
Cash flows in respect of lease liabilities include interest paid on leases of
£608,000 (2021: £553,000) and principal paid of £3,637,000 (2021:
£3,930,000).
Non-cash flows in respect of lease liabilities includes the purchase of
£1,074,000 of fixed assets on long term hire and interest expense of
£608,000 (2021: £553,000).
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