For the year ending 30th April 2019, Van Elle made a pre-tax profit of 拢4.0m, down 56% on the previous year鈥檚 figure of 拢9.2m. Revenue for the year was down 15% to 拢88.5m (2018: 拢103.9m).
Even allowing for 拢559,000 spent on redundancies during the year, underlying operating profit was just 拢5.2m, compared to 拢11.1m the previous year.
The equipment fleet has been reduced from 123 to 115, with no new rigs procured during the year. Instead the company has concentrated on utilisation, reliability and self-build of new VSC rigs, the benefits of which are expected to be seen in the current financial year.聽
Chief executive Mark Cutler, who joined in August 2018, said that Van Elle鈥檚 performance had been impacted by a combination of lower customer confidence, delayed decision making and, in turn, increased competition and pricing pressures.
He said: 鈥淭he rail market is currently experiencing a lull in activity following the completion of electrification schemes and reduced spend towards the end of the current funding period CP5, and ahead of the start of CP6.
鈥�Highways remains a buoyant market, where the group continues to have significant bid success, but which has also been impacted by delays to project start dates.
鈥淚n Commercial & Industrial, the period saw a notable slowdown in London, which has driven competition further afield outside the capital. However, the Industrial market presents a significant growth opportunity with the wide-spread development of 'big shed' logistics capacity which the group's Vibro techniques will help us to capture.
鈥淭he reduced proportion of sales to the housing sector is explained primarily by fewer large projects in General Piling to multi-storey developments. However, we have seen notable continued success with our integrated piling and Smartfoot foundations 辞蹿蹿别谤颈苍驳.鈥�
Revenue in the General Piling division contracted by 15.6% in the year to 拢37.2m (2018: 拢44.1m). 鈥淭he subdued markets resulted in low utilisation of large diameter rotary and CFA piling rigs that not only supressed revenue, but also impacted on margin mix as these techniques command higher gross margins,鈥� Mr Cutler said. 鈥淲eaker than anticipated operational execution of contracts, particularly in Q3, further compounded gross margin performance, resulting in a reduction in operating profit to 拢1.2m (2018: 拢5.4m).鈥�
Specialist Piling revenue was 25% down at 拢28.6m (2018: 拢38.1m). Of this, 拢4.5m was down to the decision to stop lump sum drill & grout activities following poor returns.
Ground Engineering Services revenue was up nearly 5% to 拢22.6m. 鈥淥ur integrated piling and Smartfoot foundation beam sales to the housebuilders increased by 拢1.8m (9.8%).聽 As the housing sector moves increasingly to modern methods of construction the time and resource savings of modular foundations are becoming better appreciated.聽 In parallel our relationships with national housebuilders are maturing.聽 As a group, rigs and personnel have been deployed effectively to meet the increased demand,鈥� Mark Cutler said.
He summarised: "This has been a year of transition for the business, having taken action to strengthen the leadership team, refine the group's commercial approach, streamline operations and re-focus on our customers.
"Whilst it is disappointing to report that performance across the year has been impacted by a combination of widely-reported market uncertainties and previously highlighted operational weaknesses, we are seeing tangible signs of operational improvement as a result of the transition plan we are implementing. Our strengthened commercial approach is gaining traction as evidenced by recent contract wins and an encouraging orderbook.
"Nevertheless, the group is continuing to experience customer uncertainty as well as some heightened competitive pressure, resulting in a quiet start to the current year in some segments and increased volatility in month on month performance. Whilst the improved customer focused approach and positive order book development underpins the board's confidence in the prospects for the group in the medium term, the board is mindful that challenging market conditions and the resultant volatility is persisting into the current financial year and impacting visibility.
"Whilst the benefits of our self-help initiatives should drive improved performance in the business, the ability to make overall progress in FY20 will require supportive market conditions as we progress through the year.
"Van Elle fundamentally remains a market-leading business with a clear strategy. Having seen the positive impact of the initial actions undertaken as part of phase one of the transition plan, we are confident that these steps, as well as the further commercial and operational initiatives that will be deployed in the current year, will leave us well placed to capture significant opportunities across our target markets today and into the future."
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