Trading Update

RNS Number : 1442A

Van Elle Holdings PLC

22 March 2017

 

22 March 2017

Van Elle Holdings plc

("Van Elle" or the "Group")

Trading update for the year ending 30 April 2017

Van Elle, the geotechnical contractor offering a wide range of ground engineering techniques and services to customers in a variety of UK construction end markets, is issuing the following trading update.

Trading update

Overall trading in the third quarter, which included significant levels of activity in December and January, was in line with the Board's expectations. As a result, for the nine months to 31 January 2017, the Group delivered total revenues of £70.8 million, representing growth of 16.4 per cent. on the prior year. Conditions in Van Elle's end markets remained satisfactory throughout the period and the Group continued to focus on generating improving returns through strong operational execution.

Trading since the start of the fourth quarter across the General Piling, Ground Engineering Services and Ground Engineering Products divisions has continued to reflect stable underlying market conditions and the Group expects the outturn in these divisions for the current financial year to be in line with its previous expectations. As indicated at the time of the Company's interim results on 19 January 2017, there were a number of contracts within the Specialist Piling division expected to be confirmed and commenced in the second half, particularly in the division's on-track rail business.

The Company now anticipates the start date for several of these contracts will be delayed beyond the end of the current financial year and, in a small number of cases, the expected call-off schedule and distribution of work packages may be revised. Whilst Van Elle still expects to deliver a number of these contracts on revised time schedules, the Group will not receive the previously expected contribution from them in the current financial year. As a result, the Board now expects to deliver full year revenue of approximately £93 million, some five per cent. below its previous expectations, with the Group's underlying operating margin slightly reduced as a result of the adverse mix impact. Cash generation in the Group remains strong and the Board intends to recommend a final dividend in line with its expectations at the time of the IPO.

Looking ahead, Van Elle continues to be optimistic about the long term opportunity within its rail business, given the ongoing need for maintenance of the UK track network as well as significant capital programmes such as track-bed stabilisation and the electrification of major routes. However, the delay and deferral of contracts in the fourth quarter is disappointing and creates some uncertainty around this market in the near term. In light of this, the Board believes that it would be prudent to assume only a modest increase in the level of rail activity, and growth in the Specialist Piling division as a whole, in the coming year until visibility over a number of programmes becomes clearer. The outlook for the Group's remaining three divisions remains consistent with the Board's previous views and, having made good strategic progress during the year, the Group is still well positioned to deliver double-digit revenue growth in the year ending 30 April 2018 albeit from a lower base in 2017. Van Elle has continued to invest in new and innovative techniques and equipment which are expected to enable it to keep growing ahead of its underlying markets into the medium term. The Group retains a robust financial position which will enable it to continue to explore investment and acquisition opportunities as well as provide shareholders with anticipated dividend returns.

Update on possible Contingent Liability

Within the interim results, attention was drawn to a possible liability related to material bonus payments allegedly due to a former employee pursuant to historic employment arrangements. The Board is continuing to actively investigate this matter and has been advised that any claim would be contestable on a number of grounds and accordingly it will actively resist the payment of any monies in relation to this matter. The Company will provide a further update as appropriate.

Enquiries:

Van Elle Holdings plc	017 7358 0580
Jon Fenton, Chief Executive Officer
Paul Pearson, Chief Financial Officer
Instinctif Partners (Financial Public Relations)	020 7457 2020
Mark Garraway James Gray
Rosie Driscoll
Peel Hunt LLP (Nominated Adviser and corporate broker)	020 7418 8900
Charles Batten
Mike Bell Justin Jones

Certain information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.

 

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