Van Elle, the leading geotechnical engineering company offering a wide range of specialist foundation solutions and techniques to customers in a variety of UK construction end markets, is issuing the following trading update ahead of announcing its interim results for the six months ended 31 October 2018 on 16 January 2019.
As reported at the time of the full year results, on 25 July 2018, the first quarter of the current year was relatively quiet as a result of subdued UK market conditions following a challenging period for the UK construction markets in early 2018. As anticipated, market conditions have been more supportive in the second quarter and new contract starts have progressively gained momentum. Consequently, the Board expects to report turnover of approximately £43.0m for the period, against a strong comparative period in the prior year (H1 2017: £52.6m). Expected underlying PBT of £2.8m (H1 2017: £5.4m) for the first half reflects the subdued activity levels in the first quarter but pleasingly gross margins have continued to improve over the period.
This year is an important one of transition for the Group, with our new Chief Executive, Mark Cutler, having joined the Board in August. Mark has focussed on refining the Group's strategic client relationships, strengthening the leadership team and streamlining the operational structure to establish a stronger platform from which to pursue our growth strategy. In addition to enhancing the Group's effectiveness, the operational restructuring to date is expected to generate annualised cost savings of approximately £0.6m. A provision of £0.3m has been included at the half year for exceptional restructuring costs relating to this.
Net debt has reduced in the period (standing at £5.6m at 31 October 2018 compared to £5.9m at year end 2017) and is expected to reduce further over the second half.
The quiet first quarter, together with the relatively weak second half of the prior year, means that the Group's results are likely to have a greater second half weighting in the current year. The positive momentum exiting the first half has continued into the start of the third quarter and the Group's orderbook at 31 October 2018 was 16% ahead of last year at £32m (H1 2017: £27.6m), including strong demand for our specialist services over the Christmas period. The Board continues to monitor market conditions closely and whilst mindful of the strong second half performance required, expects the company to deliver a full year performance similar to that of last year.
Mark Cutler, Chief Executive, commented:
"Since joining the business in August I have been taking action to refine the Group's commercial approach, streamline operations, strengthen the leadership team and re-focus on our key customers. This is already creating a strong platform from which to pursue our growth strategy. It is pleasing to see momentum building into the third quarter with growing demand for our specialist services and a strong orderbook providing good forward visibility. The Group is well placed to benefit from the significant opportunities we see in the second half and beyond."