Van Elle, a ground engineering specialist, reports a slight increase in profits despite rising provisions for construction defects.
- The firm’s pre-tax profit rose marginally to £5.6m, up from £5.4m the previous year, amidst challenging market conditions.
- Provisions totalling £8.1m were made to handle defects and legal costs, with £1.3m specifically allocated for defect claims.
- Turnover decreased from £148.7m to £139.5m, driven by reduced demand in housing and infrastructure sectors.
- Despite market challenges, Van Elle maintains a strong order book and anticipates growth opportunities in strategic markets.
Van Elle’s slight increase in pre-tax profit to £5.6m from £5.4m underscores its resilience amid rising provisions for construction defects. This Nottinghamshire-based company has allocated £8.1m towards handling these defects and associated legal costs. Of the total provision, £1.3m is designated for defect claims, reflecting a £419,000 rise due to both an existing claim and a new one identified during the year. The remaining amount is allocated for legal and other related claims, marking a decrease from the previous year’s £7.3m.
Despite the increase in profit, Van Elle reported a decline in turnover, which fell from £148.7m to £139.5m. This decline is attributed to softer market conditions, particularly affecting the housing and infrastructure sectors, where demand has waned and projects have faced delays. Additionally, cash reserves saw a drop from £8.9m to £6m over the same period, illustrating the financial pressures faced by the firm.
The previous year’s acquisition of Rock & Alluvium from Galliford Try, valued up to £3.8m, also impacted Van Elle’s financial results. Of this amount, only £228,000 was paid last year, with the remaining payments scheduled for the upcoming months.
In a separate safety-related expense, Van Elle confirmed payment of a £250,000 fine imposed by the Health and Safety Executive following a fatal incident involving one of its piling rigs in 2021.
Chief Executive Mark Cutler characterised Van Elle’s performance as ‘resilient’ despite the challenging market landscape. He emphasised the breadth of the firm’s capabilities and its engagements across various sectors as key strengths. The firm anticipates maintaining a strong order book and strategic partnership focus, projecting significant growth opportunities in the upcoming years.
The company expects to endure the current market challenges, particularly in the housing and infrastructure sectors throughout 2024. Van Elle remains optimistic due to its diverse capabilities and exposure to multiple sectors, which offer a buffer against broader economic challenges. The company foresees a market recovery in the near term, aiming for medium-term financial targets that include a 5-10% turnover increase and an operating profit margin between 6-7% by the 2026/27 fiscal year.
Alongside expected growth in the water and energy sectors, the firm is developing a fast-growing rail business in Canada, signalling opportunities for medium-term expansion. The board remains optimistic about capitalising on these emerging opportunities.
Van Elle navigates a challenging market with modest profit growth and increased provisions for defects, driven by strategic resilience.
