Final Results, Analyst Briefing & Investor Pres

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 30 April 2023	Year ended 30 April 2022
Revenue	148.7	124.9
EBITDA1	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 [e-mail] 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.

Investors who have already registered and added to meet the Company will automatically be invited. Questions can be submitted pre-event to [e-mail], or in real time during the presentation via the "Ask a Question" function.

For further information, please contact:

Van Elle Holdings plc Mark Cutler, Chief Executive Officer Graeme Campbell, Chief Financial Officer	Via Walbrook
Peel Hunt LLP (Nominated Adviser and corporate broker) Ed Allsopp / Mike Bell	Tel: [phone]
Walbrook PR Limited	Tel: [phone] or [e-mail]
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 £'000	2022 £'000	Change %	2023 %	2022 %
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 £'000	2022 £'000	Change %	2023 %	2022 %
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 £'000	2022 £'000	Change %	2023 %	2022 %
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 £'000	2022 £'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 £'000	2022 £'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 £'000	2022 £'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 £'000	2022 £'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 £'000	2022 £'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 shareholders of the parent	4,678	1,860
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 £'000	2022 £'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 £'000	2022 £'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 Capital £'000	Share premium £'000	Other reserve £'000	Retained earnings £'000	Total equity £'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 Piling £'000	Specialist Piling and Rail £'000	Ground Engineering Services £'000	Head Office £'000	Total £'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 Piling £'000	Specialist Piling and Rail £'000	Ground Engineering Services £'000	Head Office £'000	Total £'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 Piling £'000	Specialist Piling and Rail £'000	Ground Engineering Services £'000	Head Office £'000	Total £'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 Piling £'000	Specialist Piling and Rail £'000	Ground Engineering Services £'000	Head Office £'000	Total £'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 £'000	2022 £'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 £'000	2022 £'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 '000	2022 '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 £'000	Cash flows £'000	Non-cash flows £'000	2023 £'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).

 

END