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Van Elle Holdings PLC  -  VANL   

Final Results

Released 07:00 26-Jul-2017

RNS Number : 0767M
Van Elle Holdings PLC
26 July 2017
 

Van Elle Holdings plc

 

For Immediate Release

                  26 July 2017

 

Preliminary Results for the year ended 30 April 2017

 

Van Elle Holdings plc ("Van Elle", the "Company" or the "Group"), the AIM quoted geotechnical engineering contractor offering a wide range of ground engineering techniques and services to customers in a variety of UK construction end markets, announces its preliminary results for the year ended 30 April 2017.

 

Highlights

 

Year ended  30 April 2017

Year ended 30 April 2016

Growth %

Revenue (£m)

94.1

84.2

11.8

Underlying* EBITDA (£m)

16.3

14.4

12.9

Reported EBITDA (£m)

14.4

14.4

-

Underlying* operating profit (£m)

11.6

11.1

4.6

Reported operating profit (£m)

9.7

11.1

(12.2)

Underlying* earnings per share (p)

12.1

12.1

-

Reported earnings per share (p)

9.8

12.1

(19.0)

Operating cash conversion (%)

91.9%

79.6%

 

Return on capital employed (%)

30.6%

38.0%

 

* before share-based payments and exceptional costs

Summary highlights

·      Successful first year on the market, delivering record revenue and underlying operating profit

·      Group revenue increased by 11.8% to £94.1m (2016: £84.2m), with growth in all four divisions

·      Robust operational performance and impact of sales mix delivered gross margin of 35.5% (2016: 36.1%)

·      Underlying EBITDA increased by 12.9% to £16.3m (2016: £14.4m)

·      Underlying operating profit increased by 4.6% to £11.6m (2016: £11.1m) reflecting sales mix effect and overhead investment

·      Progress in delivering the growth strategy - increasing the service offering with new techniques, rigs and geographical presence

·      Strong balance sheet with net debt at 30 April 2017 of £1.5m (2016: £8.3m)

·      The Board is pleased to recommend a final dividend of 1.75p per share (total dividend of 2.60p per share)

·      Trading in the new financial year has started well and is in line with the Board's expectations

 

Jon Fenton, Chief Executive, commented:

 

"We are delighted to announce these results reflecting record turnover and underlying operating profit in our maiden year as a quoted company.  This year will stand out as transformational in the development of Van Elle with the admission to AIM giving the Company an elevated platform from which to drive the business forward.

Looking ahead, we continue to actively monitor conditions in our core markets and, whilst mindful of the risks posed by any sustained period of political or economic uncertainty, we are cautiously optimistic for further progress in the year ahead."

 

 

For further information please contact:

 

Instinctif Parters (Financial Public Relations)

Tel: 020 7457 2020

Mark Garraway

James Gray

Rosie Driscoll

 

 

 

Peel Hunt LLP (Nominated Adviser and corporate broker)

Tel: 020 7418 8900

Charles Batten

Mike Bell

Justin Jones

 

 

Chairman's statement

 

I am delighted to announce, on behalf of the Board of Van Elle Holdings plc, a positive set of results for the year ended 30 April 2017.  This is the first full year statement following the successful Initial Public Offering ("IPO") on the Alternative Investment Market ("AIM") of the London Stock Exchange in October 2016. 

Van Elle's equity story, which centred around the Company's leading position in the UK, its differentiated offering and attractive end markets, supported by a strong financial profile, a well-invested platform and a strategy for growth, was well received by investors.

Although we have only been a quoted company for a short time, I believe that we have made much progress across the business and confidence is high.  It is thanks to the hard work put in by our talented management team, as well as those working across and within the business, that we could make this progress and create the foundation from which to continue to grow our operation.

Highlights

I am pleased that in our maiden results as a quoted company Van Elle has reported an 11.8% increase in revenue to £94.1m (2016: £84.2m) and an underlying operating profit of £11.6m (2016: £11.1m), representing a record year and continuing our impressive year-on-year profitable growth.

These results reflect our continuing strategic drive to focus on growth markets, enabled by targeted investment in specialist rigs, expansion of our precast concrete manufacturing capabilities and further expansion of our geographical footprint in Scotland, serviced by a dedicated facility at Blantyre, Glasgow.

The IPO in October 2016, together with the funds raised, strengthens our balance sheet and gives us the flexibility to invest in new equipment and consider acquisitions that complement our strategy for growth.

As a company, we have worked hard to bring together a team that has the right combination of sector knowledge and corporate experience to enable us to deliver on our vision and strategy.

Dividend

As a quoted company, one of our key ongoing objectives is to create shareholder value.  The Board has adopted a progressive dividend policy and, having paid an interim dividend of 0.85p, is recommending a final dividend of 1.75p, making a total of 2.6p for the financial year. 

Board and governance

On behalf of the Board, I would like to express our thanks to Michael Ellis who retired from the Board in December 2016. Michael, along with his wife Joan, founded the business some 33 years ago and their contribution during that time has been invaluable.  Michael and Joan created the high-quality company that Van Elle now is and I would like to wish them a happy retirement.

I am delighted to follow Michael Ellis as Chairman of Van Elle Holdings plc and I am joined by Robin Williams as Senior Independent Director.  Robin chairs the Audit Committee and sits on the Remuneration and Nomination Committees, both of which I chair.  We are joined on the Board by the two Executive Directors: Jon Fenton as Chief Executive Officer and Paul Pearson as Chief Financial Officer.  The Board intends to recruit a further Non-Executive Director to broaden the experience and support offered to the Company during the new financial year.

I would also like to thank Thomas Lindup, who left the Board as Executive Director in March 2017.  Thomas joined the Company in 2015 and helped steer the Group through its successful IPO in October 2016.

As a board, we are committed to promoting the highest standards of corporate governance and ensuring effective communication with shareholders.  We intend to apply the UK Corporate Governance Code as far as it is appropriate for a Company of its size.

People

Van Elle has an outstanding group of employees and we continue to place great importance on their engagement.  Our objective is to provide opportunities for development, personal growth and successful careers with the Company.

All our staff have gone through a year of significant change.  They have coped admirably and delivered an excellent result.  On your behalf and on behalf of the Board, I wish to formally record our thanks.

Outlook

The fundamental market drivers for our business look positive in the short and medium terms.  The order book remains in line with our expectations and we are well placed in each of our markets. 

This is an exciting time to be part of Van Elle as we seek to build on the performance outlined in these accounts.  As a profitable and fast-growing geotechnical engineering company, I am confident that the Company has an exciting year ahead.  The Board looks forward to meeting shareholders at the AGM on 12 September 2017.

 

Adrian Barden

Chairman

25 July 2017

 

Chief Executive's review

 

This year will stand out as being transformational in the development of Van Elle.  We successfully joined AIM, the junior market of the London Stock Exchange, on 26 October 2016 after extensive preparations.  This step is important for the Group as not only does it give us access to equity capital markets as we seek to grow the business, but it has also resulted in enhanced governance and improved discipline, which we implemented in preparation for our IPO.

You have already heard from our Chairman on the appointments to the Board.   I would also like to echo the words of our Chairman and take this opportunity to thank our founders, Michael and Joan, for their vision and hard work over the last 33 years and to reassure them that the business is in safe hands as they enjoy their well earned retirement.

Delivering the strategy

Van Elle's strategy can be framed, quite simply, as "Driving Profitable Growth".  We aim to grow the business by broadening our range of products and services and extending our geographical footprint into high-growth markets.  This will be achieved both organically and selectively through acquisitions.

Capital investment has been a key driver of our growth with a further £11.8m spent in the current year bringing the total to £31.5m over the last three years.  Our rig fleet now stands at 111 rigs (2016: 98 rigs) and we believe that Van Elle has the broadest and most modern range of specialist piling rigs in the market. 

Following our successful move into rail infrastructure and after swiftly becoming one of the sector's leading on-track ground engineering specialists, we have recently completed works on our new test track located at our Kirkby-in-Ashfield site.  As one of the largest privately owned specialist facilities in the country, it is designed to enable us to test equipment, develop new techniques and practice for complex projects.  There is no other UK specialist putting such time and resource into developing innovative solutions for the UK's rail network.

As part of our continued development, the Group is launching its own training academy to deliver an unequalled standard of training to all industry professionals and companies.  Our brand new state-of-the-art, purpose-built training facility is due for completion late summer 2017.

To extend our geographical footprint, we have recently invested in a new factory, offices and a maintenance depot in Blantyre near Glasgow.  We often work on large schemes in Scotland and manufacturing our Smartfoot® precast ground beams locally will ensure that mobilisation costs are minimised whilst also delivering environmental benefits, which is key for our housebuilding partners.  We are always looking for ways in which we can improve and we see this commitment to Scotland as the next step in delivering a truly comprehensive service for years to come.

We continue to pursue acquisition opportunities and discussions are ongoing with several interested parties.  We have discounted certain targets due to unrealistic price expectations and lack of fit; however, there remains a positive pipeline of good opportunities.

Trading performance

I am pleased that we successfully grew revenues by 11.8% in the year to £94.1m (2016: £84.2m), our fourth successive year of double-digit revenue growth.  UK construction output grew by 2.2% for the same period, reflecting our view that we continue to grow our market share.  We also maintained our record of profitable growth since 2010. 

In terms of our performance in the end markets, sales to the housebuilding sector were up 24.4% to £42.5m (2016: £34.2m) and infrastructure sector were up 17.3% to £28.9m (2016: £24.6m).  Sales to the commercial and industrial sector reduced by 17.0% to £18.8m (2016: £22.7m) which was, in part a reflection of some short term market uncertainty and the deferral or cancellation of several projects but also reflects the completion of several large education and retail projects by the Company in the previous year.  The ability to redirect resources to reflect short term trends in our markets is a key strength of the business, mitigating the impact of a slow down in any one sector.

As we reported in March 2017, the Group experienced a challenging period in its rail business during the fourth quarter with the start dates for several contracts delayed and expected call-off and work distribution schedules revised.  Whilst we have seen some encouraging signs of stabilisation in the market, and remain confident in the long term structural growth opportunity in rail, we are remaining cautious as to the near term outlook for the sector.

Operating performance

Sales have grown in each of our operating segments, with a particularly strong performance in Ground Engineering Products, up 71.2% to £10.4m (2016: £6.1m).  This has been driven by a significant increase in demand for Smartfoot® as well as additional precast concrete products and our additional investment in manufacturing capacity has enabled this demand to be met.

Sales growth was also strong in Specialist Piling, up 16.6% to £30.1m (2016: £25.8m), enabled by our investment in several specialist rigs and equipment during the year.  The restricted access business performed strongly, including securing its largest ever contract at Eden Brows.  The division's profit result though was adversely impacted by the weaker-than-expected performance in the higher margin rail business during the fourth quarter.

General Piling has seen sales growth in the year, up 1.9% to £42.9m (2016: £42.1m), a result of the healthy housebuilding sector offset by reduced demand for industrial and commercial work. Divisional gross margin remained strong at 32% (2016: 31%), reflecting the Group's ability to deliver a large number of contracts across a broad range of end markets, achieving good returns through its long-standing and effective operational model. 

Ground Engineering Services has increased its sales by 4.6% to £10.6m (2016: £10.2m), boosted by the establishment of a stand-alone operation in Scotland during January 2017.

Outlook

Trading in the new financial year has started well and is in line with our expectations.  We are seeing opportunities with each of our markets as we continue our strategy of broadening our range of products and services.  We continue to actively monitor conditions in our core markets and, whilst mindful of the risks posed by any sustained period of political or economic uncertainty, we are cautiously optimistic for further progress in the year ahead.

I continue to believe that, with our growth strategy described above, Van Elle is well positioned to deliver further value to shareholders in the year ahead.

 

 

Jon Fenton

Chief Executive Officer

25 July 2017

Financial Review

 

Revenue

The Group continued its strong revenue growth during the year.  Revenue for the year ended 30 April 2017 was £94.1m (2016: £84.2m), which represented an increase of 11.8%.  Our business continues to be weighted towards the second half of the year as shown below:

 

2017

£'000

2016

£'000

Change

%

2017

%

2016

%

H 1

43,126

40,063

7.6

45.8

47.6

H 2

50,967

44,136

15.5

54.2

52.4

Revenue

94,093

84,199

11.8

100.0

100.0

 

 

 

 

 

 

Group results are seasonally weighted to H2 due to work patterns over the Christmas and Easter holiday periods, particularly in the infrastructure sector.  Weighting is most pronounced in the highest margin Specialist Piling division which has an additional impact on the split of profit.  This year saw the seasonal weighting further impacted by a lower level of rail infrastructure activity year on year in Q1 as well as a strong Q3 that saw delivery of the Eden Brows contract for £5.4m, alongside an active rail sector.

Our strategy is to direct our resources and investment into growth markets and, by tracking enquiry levels by end market, this acts as a barometer for identifying trends and targeting our activities into the growth areas. The mix of revenue by end markets is shown below:

 

2017

£'000

2016

£'000

Change

%

2017

%

2016

%

Housebuilding

42,504

34,156

24.4

45.2

40.6

Infrastructure

28,906

24,637

17.3

30.7

29.3

Commercial and industrial

18,814

22,667

(17.0)

20.0

26.9

Public sector

3,171

2,425

30.8

3.4

2.9

Other

698

315

121.9

0.7

Revenue

94,093

84,199

11.8

100.0

100.0

 

 

 

 

 

 

New housing, infrastructure and public sector continued to generate growth with strong revenues in this year's sales mix buoyed by the healthy housing market and the Government's investment in the country's infrastructure networks.   The commercial and industrial revenues fell year on year as 2016 benefited from several significant contracts for retail developments and student accommodation units in the education sector, boosting performance. 

The mix of revenue by our divisions is shown below:

 

2017

£'000

2016

£'000

Change

%

2017

%

2016

%

General Piling

42,905

42,111

1.9

45.7

50.0

Specialist Piling

30,126

25,840

16.6

33.2

30.6

Ground Engineering Services

10,621

10,151

4.6

10.8

12.1

Ground Engineering Products

10,441

6,097

71.2

7.3

Revenue

94,093

84,199

11.8

100.0

100.0

 

 

 

 

 

 

The changing mix reflects our focus on growth markets as well as our ability to focus resources where we feel the best opportunities lie.  We have targeted investment into several specialist rigs and equipment during the year and this will be our continuing strategy into the medium term.

Our investment in our production capabilities has increased our capacity to meet demand from the housebuilders for Smartfoot® modular beams and internal demand for precast piles, reducing our reliance on the supply chain.  The returns can be seen in our growth in Ground Engineering Products revenues.

Gross profit

The gross margin of the Group has reduced slightly to 35.5% (2016: 36.1%), reflecting sales mix changes due to reduced rail activity in Q4.  The delay and restructuring of several contracts prior to the year end adversely impacted utilisation of our RRV rigs which had a consequent impact on divisional overhead recovery.  The variability of timing of contracts in the rail sector is unfortunately a feature of Government-backed infrastructure spend and one that we are mindful of and will continue to monitor closely going forward.

 

Operating profit

The strong revenue performance has translated into strong underlying EBITDA growth during the year.  Our EBITDA, before exceptional IPO costs and share-based payment charges, for the year ended 30 April 2017 was £16.3m (2016: £14.4m), which represented an increase of 12.9%. 

 

2017

£'000

2016

£'000

Change

%

Underlying EBITDA

16,250

14,388

12.9%

Share-based payments

(77)

-

-

Exceptional items

(1,781)

-

-

EBITDA

14,392

14,388

-

Depreciation / amortisation

(4,687)

(3,333)

-

Operating profit

9,705

11,055

(12.2%)

 

 

 

 

Underlying EBITDA

17.3%

17.1%

 

EBITDA

15.3%

17.1%

 

Underlying operating margin

12.3%

13.1%

 

Operating margin

10.3%

13.1%

 

 

 

 

 

Our underlying EBITDA margin has improved marginally to 17.3% (2016: 17.1%) despite the sales mix impact of reduced rail activity and an investment in overheads to facilitate our year on year growth strategy.  Consequently, our underlying operating margin has reduced slightly to 12.3% (2016: 13.1%).

Exceptional costs

Exceptional items, by their size, incidence or nature, are disclosed separately to allow a better understanding of the underlying performance of the Group.  During the year, exceptional items of £1,781,000 were incurred in respect of the IPO of the Company on 26 October 2016 and legal costs associated with post IPO claim and settlements (see note 4).

The Board believes that the underlying performance measures for operating profit, EBITDA and EPS, stated before the deduction of exceptional items and share-based payment charges, give a clearer indication of the actual performance of the business.

Net finance cost

Net finance costs were £422,000 (2016: £333,000) and interest was covered 23.0 times (2016: 33.2 times).  This increase reflects the targeted capital investment expenditure over the last couple of years funded by hire purchase lease contracts.  The hire purchase contracts are at fixed rates of interest and normally for a five-year term.

 

Taxation

The effective tax rate for the year was 20.8% (2016: 21.2%).  The decrease in effective tax rate from the previous year is principally due to the adjustment in respect of prior year charges mitigated by exceptional IPO costs of £1,348,000 being disallowed for tax purposes.  The tax charge includes a deferred tax credit of £40,000 arising due to substantively enacted reductions in the rate of corporation tax to 17% by April 2020.

The Group has paid £2,281,000 (2016: £1,748,000) of corporation tax during the year.

Contingent liability

Our interim announcement referenced a possible liability relating to material bonus payments allegedly due to a former employee pursuant to historic employment arrangements.  Having robustly rejected that any such liability exists, the Board has now been informed by solicitors acting for the former employee, that he no longer wishes to pursue the claim.

Dividends

The Board has adopted a progressive dividend policy.  On 28 February 2017, the Company paid an interim dividend of 0.85p per share.  The Board is now recommending a final dividend of 1.75p per share making a total dividend of 2.60p per share for the financial year. 

Subject to approval at our Annual General Meeting of shareholders on 12 September 2017, the recommended final dividend will be paid on 29 September 2017 to shareholders who are on the register on 22 September 2017.

Earnings per share

The underlying basic earnings per share was 12.1p (2016: 12.1p), based on underlying earnings of £9,125,000 (2016: £8,445,000).  Underlying earnings are stated after adding back £1,781,000 of exceptional IPO costs, £77,000 of share-based payment charges and deducting tax arising on exceptional charges of £86,000. 

This flat performance in underlying earnings per share reflects the consequences of the additional funds raised on IPO to fund future acquisitions with no acquisitions having been completed in the period. 

Capital structure and allocation

The Group's capital structure is kept under constant review, taking account of the need for, and availability and cost of, various sources of finance.

The Group's objective is to deliver long-term value to its shareholders whilst maintaining a balance sheet structure that safeguards the Group's financial position through economic cycles.  In this context, the Board has established clear priorities for the use of capital.  In order of priority these are:

·      to fund profitable organic growth opportunities;

·      to finance bolt-on acquisitions that meet the Group's investment criteria;

·      to pay ordinary dividends at a level which allows dividend growth through the cycle; and

·      where the balance sheet allows, to deploy funds for the benefit of shareholders in the most appropriate manner.

 

Balance sheet summary

 

2017

£'000

2016

£'000

Fixed assets (including intangible assets)

34,440

27,411

Net working capital

5,337

3,993

Net debt

(1,458)

(8,341)

Taxation and provisions

(1,998)

(2,311)

Net assets

36,321

20,752

 

 

 

The Group has increased net assets by £15.6m to £36.3m (2016: £20.8m) during the year.  This increase is partly due to the issue of shares on IPO, raising net funds of £8.8m to finance future acquisitions, and the balance is retained profit from robust underlying trading for the year.

The Group continues to invest in specialist rigs to drive growth in our chosen markets, as well as continuing to invest in our facilities with capital expenditure of £11.8m in the year and a corresponding annual depreciation charge of £4.7m.

The ROCE has decreased in the period to 30.6% at 30 April 2017 (2016: 38.0%), reflecting the additional capital expenditure investment during the year.

Analysis of net debt

 

2017

£'000

2016

£'000

Bank loans

(1,275)

(1,425)

Other loans                                                                                   

(205)

-

Finance leases

(12,836)

(10,517)

Total borrowings

(14,316)

(11,942)

Cash and cash equivalents

12,858

3,601

Net debt

(1,458)

(8,341)

 

 

 

Net debt has reduced by £6.9m to £1.5m at 30 April 2017, reflecting the net cash inflow from the additional shares issued as part of the IPO of £8.8m, and the movement in hire purchase obligations.

 

 

Cash flow summary

 

2017

£'000

2016

£'000

Operating cash flows before working capital

14,380

14,335

Working capital movements

(1,251)

(2,917)

Cash generated from operations

13,129

11,418

Net interest paid

(422)

(333)

Income tax paid

(2,281)

(1,748)

Net cash generated from operating activities

10,426

9,337

Capital expenditure

(5,495)

(6,177)

Financing activities

4,326

(1,903)

Net increase in cash and cash equivalents

9,257

1,257

 

The Group has always placed a high priority on cash generation and the active management of working capital.  Cash generated from operations was £13.1m (2016: £11.4m), representing 92% of EBITDA (2016: 80%).

 

 

Paul Pearson

Chief Financial Officer

25 July 2017

Consolidated statement of comprehensive income

For the year ended 30 April 2017

 

Note

2017

2016

 

 

£'000

£'000

 

 

 

 

Revenue

2

94,093

84,199

Cost of sales

 

(60,712)

(53,796)

Gross profit

 

33,381

30,403

Administrative expenses

 

(22,018)

(19,348)

Other operating income

3

200

-

Operating profit before exceptional costs and share-based payment expense

 

11,563

11,055

Share-based payment expense

 

(77)

-

Exceptional costs

4

(1,781)

-

Operating profit

 

9,705

11,055

Finance expense

 

(436)

(344)

Finance income

 

14

11

Profit before tax

 

9,283

10,722

Income tax expense

5

(1,930)

(2,277)

Total comprehensive income for the year

 

7,353

8,445

 

 

 

 

Earnings per share (pence)

 

 

 

Basic

7

9.8

12.1

Diluted

7

9.8

12.1

 

 

 

 

Underlying earnings per share (pence)

 

 

 

Basic

7

12.1

12.1

Diluted

7

12.1

12.1

 

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 2017

 

 

2017

2016

 

 

£'000

£'000

 

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

 

32,110

25,120

Intangible assets

 

2,330

2,291

 

 

34,440

27,411

 

 

 

 

Current assets

 

 

 

Inventories

 

2,423

1,611

Trade and other receivables

 

18,796

16,696

Cash and cash equivalents

 

12,858

3,601

 

 

34,077

21,908

Total assets

 

68,517

49,319

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

 

15,882

14,314

Loans and borrowings

 

4,461

3,500

Corporation tax payable

 

878

1,224

 

 

21,221

19,038

 

 

 

 

Non-current liabilities

 

 

 

Loans and borrowings

 

9,855

8,442

Provisions

 

342

375

Deferred tax

 

778

712

 

 

10,975

9,529

Total liabilities

 

32,196

28,567

Net assets

 

36,321

20,752

 

 

 

 

Equity

 

 

 

Share capital

 

1,600

1,006

Share premium

 

8,633

-

Retained earnings

 

26,070

19,728

Non-controlling interest

 

18

18

Total equity

 

36,321

20,752

 

 

 

 

 

 

 

Consolidated statement of cash flows

For the year ended 30 April 2017

 

Note

2017

2016

 

 

£'000

£'000

 

 

 

 

Cash flows from operating activities

 

 

 

Cash generated from operations

8

13,129

11,418

Interest received

 

14

11

Interest paid

 

(436)

(344)

Income tax paid

 

(2,281)

(1,748)

Net cash generated from operating activities

 

10,426

9,337

 

 

 

 

Cash flows from investing activities

 

 

 

Purchases of property, plant and equipment

 

(5,562)

(6,162)

Disposal of property, plant and equipment

 

138

97

Purchases of intangibles

 

(71)

(112)

Net cash absorbed in investing activities

 

(5,495)

(6,177)

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from bank borrowings

 

-

1,425

Repayment of bank borrowings

 

(150)

-

Proceeds from Invest to Grow loan

 

260

-

Repayments of Invest to Grow loan

 

(55)

-

Issue of shares (net of issue costs)

 

8,833

-

Repayment of confidential invoice discounting facility

 

-

(4)

Payments to finance lease creditors

 

(3,882)

(2,903)

Dividends paid

 

(680)

(421)

Net cash generated/(absorbed) in financing activities

 

4,326

(1,903)

 

 

 

 

Net increase in cash and cash equivalents

 

9,257

1,257

 

 

 

 

Cash and cash equivalents at beginning of year

 

3,601

2,344

Cash and cash equivalents at end of year

9

12,858

3,601

 

 

 

 

 

Consolidated statement of changes in equity

For the year ended 30 April 2017

 

 

Share capital

 

Share premium

Non-controlling interest

 

Retained earnings

 

Total equity

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Balance at 1 May 2015

1,006

-

18

11,704

12,728

 

 

 

 

 

 

Total comprehensive income

-

-

-

8,445

8,445

Dividend paid

-

-

-

(421)

(421)

 

-

-

-

8,024

8,024

Balance at 30 April 2016

1,006

-

18

19,728

20,752

 

 

 

 

 

 

Total comprehensive income

-

-

-

7,353

7,353

Share re-designation

63

-

-

-

63

Issue of bonus shares

331

-

-

(331)

-

Issue of ordinary shares on IPO

200

9,800

-

-

10,000

Share issue costs

-

(1,167)

-

-

(1,167)

Dividends paid

-

-

-

(680)

(680)

 

594

8,633

-

6,342

15,569

Balance at 30 April 2017

1,600

8,633

18

26,070

36,321

 

 

 

 

Notes to the preliminary results

For the year ended 30 April 2017

1.    Basis of preparation

 

The consolidated financial statements and preliminary announcement of Van Elle Holdings plc for the year ended 30 April 2017 were authorised for issue by the Board of Directors on 25 July 2017.

The financial information included within this preliminary 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 2017 has been extracted from the statutory accounts on which an unqualified audit opinion has been issued.

The financial statements for the year ended 30 April 2017 will be posted to shareholders on 21 August 2017 and copies will be available from that date from the company secretary at the registered office of the Company, Kirkby Lane, Pinxton, Nottinghamshire, NG16 6JA.  The statutory accounts for the year ended 30 April 2017 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

The consolidated financial statements of Van Elle Holdings plc and its subsidiaries have been prepared in accordance with International Financial Reporting Standards as endorsed by the European Union ("IFRS"), International Financial Reporting Standards Interpretation Committee ("IFRS IC") interpretations and those provisions of the Companies Act 2006 applicable to companies reporting under IFRS.  The Group financial statements have been prepared on the going concern basis and adopting the historical cost convention. The accounting policies adopted are consistent with those of the previous financial year.  New standards and interpretations which came into force during the year did not have a significant impact on the Group's financial statements.

2.    Segment information

The Group evaluates segmental performance based on profit or loss from operations calculated in accordance with IFRS but excluding non-recurring losses, such as goodwill impairment, and the effects of share-based payments.  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.  Loans and borrowings, 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 2017

 

 

General Piling

 

Specialist Piling

Ground Engineering Services

Ground Engineering Products

 

Head Office

 

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

Revenue

 

 

 

 

 

 

Total revenue

45,008

30,126

10,621

13,714

-

99,469

Inter-segment revenue

(2,103)

-

-

(3,273)

-

(5,376)

Revenue

42,905

30,126

10,621

10,441

-

94,093

 

 

 

 

 

 

 

Operating profit

 

 

 

 

 

 

Underlying operating profit

4,685

5,355

772

751

-

11,563

Share-based payments

-

-

-

-

(77)

(77)

Exceptional item

-

-

-

-

(1,781)

(1,781)

Operating profit

4,685

5,355

772

751

(1,858)

9,705

 

 

 

 

 

 

 

Finance expense

-

-

-

-

(436)

(436)

Finance income

-

-

-

-

14

14

Profit before tax

4,685

5,355

772

751

(2,280)

9,283

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Property, plant & equipment

10,456

9,696

2,778

1,373

7,807

32,110

Inventories

414

370

179

1,460

-

2,423

Reportable segment assets

10,870

10,066

2,957

2,833

7,807

34,533

Intangible assets

-

-

-

-

2,330

2,330

Trade and other receivables

-

-

-

-

18,796

18,796

Cash and cash equivalents

-

-

-

-

12,858

12,858

Total assets

10,870

10,066

2,957

2,833

41,791

68,517

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Loans and borrowings

-

-

-

-

14,316

14,316

Trade and other payables

-

-

-

-

16,760

16,760

Provisions

-

-

-

-

342

342

Deferred tax

-

-

-

-

778

778

Total liabilities

-

-

-

-

32,196

32,196

 

 

 

 

 

 

 

Other information

 

 

 

 

 

 

Capital expenditure

4,267

2,948

1,841

668

2,041

11,765

Depreciation / amortisation

1,631

1,656

554

211

635

4,687

There are no individual customers accounting for more than 10% of Group revenue in either the current or preceding year.

Operating segments - 30 April 2016

 

 

General Piling

 

Specialist Piling

Ground Engineering Services

Ground Engineering Products

 

Head Office

 

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

Revenue

 

 

 

 

 

 

Total revenue

42,707

25,840

10,151

8,358

37

87,093

Inter-segment revenue

(596)

-

-

(2,261)

(37)

(2,894)

Revenue

42,111

25,840

10,151

6,097

-

84,199

 

 

 

 

 

 

 

Operating profit

 

 

 

 

 

 

Underlying operating profit

4,735

5,879

456

(15)

-

11,055

Share-based payments

-

-

-

-

-

-

Exceptional item

-

-

-

-

-

-

Operating profit

4,735

5,879

456

(15)

-

11,055

 

 

 

 

 

 

 

Finance expense

-

-

-

-

(344)

(344)

Finance income

-

-

-

-

11

11

Profit before tax

4,735

5,879

456

(15)

(333)

10,722

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Property, plant & equipment

7,949

8,372

1,444

907

6,448

25,120

Inventories

338

217

82

974

-

1,611

Reportable segment assets

8,287

8,589

1,526

1,881

6,448

26,731

Intangible assets

-

-

-

-

2,291

2,291

Trade and other receivables

-

-

-

-

16,696

16,696

Cash and cash equivalents

-

-

-

-

3,601

3,601

Total assets

8,287

8,589

1,526

1,881

29,036

49,319

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Loans and borrowings

-

-

-

-

11,942

11,942

Trade and other payables

-

-

-

-

15,538

15,538

Provisions

-

-

-

-

375

375

Deferred tax

-

-

-

-

712

712

Total liabilities

-

-

-

-

28,567

28,567

 

 

 

 

 

 

 

Other information

 

 

 

 

 

 

Capital expenditure

2,534

4,280

359

390

3,842

11,405

Depreciation / amortisation

1,421

1,316

435

161

-

3,333

 

 

3.     Other operating income

      

 

2017

2016

 

£'000

£'000

 

 

 

Recovery in respect of insurance excess

200

-

 

Pursuant to an agreement with the Company, an employee settled an insurance policy excess of £200,000.  This was in respect of a claim on a contract for which there is already an insurance provision for the policy excess. 
 

 

4.     Exceptional costs

      

 

2017

2016

 

£'000

£'000

 

 

 

Initial Public Offering ("IPO")

1,452

-

Other exceptional costs

329

-

 

1,781

-

 

                                                                             

Initial Public Offering ("IPO")

The charge in the year represents fees and other costs arising because of the IPO which have not been treated as deductions against the share premium account. Of the exceptional charge of £1,452,000, approximately £342,000 is treated as tax deductible and the balance of £1,110,000 is treated as disallowed tax expenses in the tax computation (see note 5).

Other exceptional items

The other exceptional item relates to severance costs arising from the Board changes following the IPO and other legal matters arising as a consequence of the IPO. These are treated as fully tax deductible within the tax computation.

 

5.       Income tax expense

         

      

2017

2016

 

£'000

£'000

Current tax expense

 

 

Current tax on profits for the year

2,060

2,071

Adjustment for (over)/underprovision in the prior period

(196)

90

Total current tax

1,864

2,161

Deferred tax expense

 

 

Origination and reversal of temporary differences

103

105

Recognition of previously unrecognised deferred tax assets

3

11

Effect of decreased tax rate on opening balance

(40)

-

Total deferred tax

66

116

Income tax expense

1,930

2,277

 

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 profits for the year are as follows:

      

2017

2016

 

£'000

£'000

Profit before income taxes

9,283

10,722

Tax using the standard corporation tax rate of 19.9% (2016: 20%)

1,849

2,144

Adjustments for (over)/underprovision in previous periods

(193)

101

Expenses not deductible for tax purposes

288

55

Short-term timing differences

(14)

(23)

Total income tax expense

1,930

2,277

During the year ended 30 April 2017, because of the reduction in the UK corporation tax rate from 20% to 19% from 1 April 2017, corporation tax has been calculated at 19.9% of estimated assessable profit for the year (2016: 20%).

The Finance (No 2) Act 2015, which provides for reductions in the main rate of corporation tax from 20% to 19% effective from 1 April 2017 and to 18% effective from 1 April 2020, was substantively enacted on 26 October 2015.  Subsequently, the Finance Act 2016, which provides for a further reduction in the main rate of corporation tax to 17% effective from 1 April 2020, was substantively enacted on 6 September 2016.  These rate reductions have been reflected in the calculation of the deferred tax at the statement of financial position date.  The closing deferred tax liability at 30 April 2017 has been calculated at 17% reflecting the tax rate at which the deferred tax is expected to be utilised in future periods.

6.       Dividends

         

      

2017

2016

 

£'000

£'000

Interim dividend - year ended 2016

 

 

-     A and B ordinary shares (16p per share)

-

312

-     C ordinary shares (15p per share)

-

33

-     D ordinary shares (17p per share)

-

76

Interim dividend - year ended 2017

 

 

0.85p per ordinary share paid during the year

680

-

 

680

421

 

The proposed final dividend for the year ended 30 April 2017 of 1.75p per share amounting to £1,400,000 and representing a total dividend of 2.6p per share for the full year, will be paid on 29 September 2017 to the shareholders on the register at the close of business on 22 September 2017.  The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

7.       Earnings per share

          The calculation of basic and diluted earnings per share is based on the following data:          

      

2017

2016

 

'000

'000

Basic weighted average number of shares

75,123

70,000

Dilutive potential ordinary shares from share options

-

-

Diluted weighted average number of shares

75,123

70,000

 

 

 

 

£'000

£'000

Profit for the year

7,353

8,445

Add back / (deduct):

 

 

Share-based payments

77

-

Exceptional costs

1,781

-

Tax effect of the above

(86)

-

Underlying profit for the year

9,125

8,445

 

 

 

 

Pence

Pence

Earnings per share

 

 

Basic

9.8

12.1

Diluted

9.8

12.1

Basic - excluding exceptional costs and share-based payments

12.1

12.1

Diluted - excluding exceptional costs and share-based payments

12.1

12.1

         The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders and on 75,123,288 ordinary shares (2016: 70,000,000) being the weighted average number of ordinary shares. In accordance with IAS 33 the weighted average number of shares in issue during the period has been retrospectively adjusted for the proportionate change in the number of the shares outstanding because of the bonus issue and share splits that occurred on admission to AIM.

         The underlying earnings per share is based on profit adjusted for exceptional operating costs and share-based payment charges, net of tax, and on the same weighted average number of shares used in the basic earnings per share calculation above.  The Directors consider that this measure provides an additional indicator of the underlying performance of the Group.

         There is no dilutive effect of the share options as performance conditions remain unsatisfied and the share price was below the exercise price. 

 

 

8.     Cash generated from operations                                                                                  

      

2017

2016

 

£'000

£'000

Operating profit

9,705

11,055

Adjustments for:

 

 

Depreciation of property, plant and equipment

4,687

3,333

Profit on disposal of property, plant and equipment

(89)

(53)

Share-based payment expense

77

-

Operating cash flows before movement in working capital

14,380

14,335

Increase in inventories

(812)

(507)

(Increase)/decrease in trade and other receivables

(1,950)

440

Increase/(decrease) in trade and other payables

1,544

(1,919)

Decrease in provisions

(33)

(931)

Cash generated from operations

13,129

11,418

 

9.     Analysis of cash and cash equivalents and reconciliation to net debt                          

      

2017

2016

 

£'000

£'000

Cash at bank

12,810

3,550

Cash in hand

48

51

Cash and cash equivalents

12,858

3,601

Bank loans secured

(1,275)

(1,425)

Other loans secured

(205)

-

Finance leases

(12,836)

(10,517)

Net debt

(1,458)

(8,341)

 

 


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