Pre-tax profit at ground engineering specialist Van Elle Ltd rose by 30 per cent last year, although “softer market conditions” reduced the firm’s turnover.
Accounts for the year to 30 April 2024 show that the firm recorded a profit of £7m compared with £5.4m the previous year.
But turnover dropped by 10 per cent year on year from £148.7m to £133.6m. “The reduction in revenue was driven primarily by softer market conditions,” directors said in the accounts.
They added that the housing and infrastructure sectors were each affected by “lower levels of demand and project delays throughout the financial year”.
The firm was ranked second in the CN Specialists Index for ground engineering last year.
Market conditions and investment delays affected Van Elle more in the first half of its financial year. “In Q4 [the fourth quarter], revenues were particularly strong and ahead of Q4 in the previous financial year,” directors said.
The firm’s profit margin broadened from 3.6 to 5.2 per cent. Directors attributed this primarily to “better contract execution across divisions”, and to subdued activity in the housing sector that tends to deliver lower margins.
Both rail and highways sectors reported lower activity levels during the year. “Rail was impacted by lower spending during the final year of Network Rail’s CP6 investment period,” the accounts stated.
The firm still won a place on Network Rail’s southern region CP7 civils framework.
Highways revenue was also reduced, impacted by the cancellation of the smart motorways programme, other project cancellations and delays in regional delivery programmes.
Directors also described “challenging” conditions in the regional construction sector, with developer confidence affected by build cost inflation and delays to commercial schemes in most regions.
Cash at bank fell from £8.8m to £5.7m, but the firm held no short-term or long-term repayable bank loans, compared with £830,000 and £328,000 respectively the previous year.
Van Elle paid a lower dividend of £979,000 compared with £2.1m the year before.
The firm’s headcount fell slightly from a monthly average of 648 to 639 employees.
“Some inflationary pressures have continued to affect the cost base, particularly through wage inflation,” directors said. “Cost saving measures and efficiency projects are being implemented where possible.”
The accounts show that the annual wage bill fell from £35.9m to £35m.
Looking ahead, directors said they expect market conditions to remain difficult, despite lower inflation and more stable interest rates.
But they still expect “further steady progress” in Van Elle’s performance in the current financial year “ahead of accelerated growth in FY2026 and FY2027”.
Directors foresee increased investment in water, rail and roads over the next five years “along with significant new investment in the UK’s energy transmission network”.
Here, the accounts mentioned that the firm had “developed strong customer partnerships for delivery of future works” in the UK energy sector’s Accelerated Strategic Transmission Investment programme.
A “strong pipeline of opportunities” has also been developed in the water sector, “where there is a clear pipeline of planned investment”.
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Ben Vogel