Van Elle Holdings plc (“Van Elle” or the “Group”), the leading geotechnical engineering company offering a wide range of ground engineering techniques and services to customers in a variety of UK construction end markets, is today providing an update on the impact of the COVID-19 pandemic on its business and the measures it is taking to mitigate the risks presented by this situation.
The health and safety of our employees and stakeholders is our highest priority and we have closely followed the UK government’s guidance in our response to the crisis. We will continue to monitor the situation closely and respond to conditions by making such operational changes as are necessary to ensure the continued wellbeing of our staff and the communities in which we operate.
As set out in the interim results on 21 January 2020, conditions in the Group’s housing and highways markets were encouraging in the early part of FY2020 and good progress has continued to be made in these segments. The transition to the CP6 funding period in the rail sector continues to be slow, but this remains a very significant opportunity for the Group, with activity levels expected to increase materially in FY2021. In addition, the Group welcomed the UK government’s decision to proceed with the HS2 project, which offers significant opportunities for Van Elle.
The rapid spread of COVID-19 is now having a significant, direct impact on the Group. Many customer sites, particularly in the housing and regional construction sectors, have closed in the last few days, with some suppliers also suspending operations. The situation continues to evolve and it is to be expected that there will be further temporary closures and operational disruption. It is inevitable that this will have an adverse impact on performance for the remainder of the year ending 30 April 2020, which the Board now expects to be below current market expectations. This situation is unprecedented, with the duration and scale of potential impacts being difficult to predict. In view of this uncertainty the Board does not believe it is possible to provide meaningful guidance for FY2021 at this stage.
The Company continues to have a positive cash balance and an undrawn overdraft facility. However, to provide the flexibility required for the highly uncertain planning environment, the Company will enter discussions with its bankers and other debt providers on medium-term financing options, backed by its substantial asset base. The potential short-term cash impacts of the current situation are difficult to predict accurately and depend on a variety of factors, including future customer and governmental actions. In light of this, the Group is taking all appropriate proactive and prudent steps to manage costs and preserve cash within the business. In line with this approach, the Board has resolved to cancel the interim dividend of 0.2p per share, which was due to be paid to shareholders on 27 March 2020, with the dividend policy to be kept under review as conditions become clearer.
The Board will continue to monitor the situation closely and explore such further actions as are necessary to support the Group’s liquidity, including accessing any relevant UK government support measures that are available.
Van Elle is a clear leader in the UK geotechnical engineering market, with strong positions in the housing, infrastructure and regional construction sectors that will benefit the Group as and when market activity resumes.
A further market update will be provided post the FY2020 year-end as normal.