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Listed on the AIM Market on the 28th Of October 2016

The company is into infrastructure work for roads and railways.

It crossed my radar when a my builder asked me if I had heard of them, as he had had a conversation with a third party saying they were going places. (he does not do shares so was not ramping it to me)

I did some research and thought "Well the government are into infrastructure spending so maybe worth a punt."

This is hardly sexy stuff, pushing Piles into the ground, but I dipped my bread at 101 and expected to regret this impulse buy. However so far there appears to be others thinking the same. Not on the radar of the various BBs that I can find so other than my builder not being talked up. (Till now by me.)

Proceed with caution

I'm hearing this is one to "watch"...

StockMarketWire.com
Geotechnical engineering Van Elle said it expected its first-half profit to almost halve, due to subdued demand in the UK, though it said market conditions had improved in the second quarter.

Underlying pre-tax profit for the six months through October was expected to fall to £2.8m, down from £5.4m on-year.

Revenue was expected to fall to around £43.0m, down from £52.6m on-year.

'The first quarter of the current year was relatively quiet as a result of subdued UK market conditions following a challenging period for the UK construction markets in early 2018,' the company said.

'As anticipated, market conditions have been more supportive in the second quarter and new contract starts have progressively gained momentum.'

Peel Hunt today downgrades its investment rating on Van Elle Holdings Plc (LON:VANL) to hold (from buy) and cut its price target to 65p (from 100p).

Interim results for the six months ended 31 October 2018

Summary highlights
· Trading in H1 was in line with revised expectations at £42.9m (H1 2018: £52.6m) and reflected the quiet first quarter

· Underlying operating profit reduced 47.4% to £3.0m (H1 2018: £5.7m), largely reflecting lower overhead recovery despite gross margins improving slightly to 32.8% (H1 2018: 31.7%)

· The new CEO, Mark Cutler, joined in August 2018 and has implemented a full review of the business as part of a three-phase transformation programme. Steps already taken include:

o simplification of the divisional structure and associated overhead improvements

o strategic customer engagement

o initial improvements to operational project delivery and work winning performance

o initial strengthening of the leadership team with two key senior appointments, being John Foster as Commercial Director and Peter Handley as Business Improvement Director

· Good cash performance with net debt of £5.6m (H1 2018: £4.6m) reduced from the year end position, (FY 2018: £5.9m)

· An interim dividend of 1.0 pence per share (H1 2018: 1.4 pence per share), reflecting first half performance and outlook for the Group

Current trading and outlook
· Contract margin performance in the General Piling division during the third quarter has been weaker than anticipated:

o The causes have been identified and action taken to resolve the issues, including a change of divisional management

o Poor profitability in Q3 but expected to return to normal margin levels by the start of Q4

· The Company saw strong demand for its Specialist Services division over the Christmas period, particularly in the rail sector, however several contracts across the Group have had contract start dates delayed in December and January

o The Orderbook at the start of January 2019 is at similar levels to last year and, based on current enquiry levels and order conversion rates, the Board continues to expect Q4 activity to be strong;

o In light of the delays to contract start dates experienced in Q3, the Board has re-assessed workload forecasts for H2 and believes it is prudent to reduce its revenue expectation for the current year

· Despite these setbacks in Q3, the Board continues to expect the Group to deliver a stronger performance in H2 than H1 albeit for the reasons set out above, this will still result in a full year performance significantly below its previous expectations

· Longer term the board remains positive regarding sustainable, profitable growth.

Mark Cutler, Chief Executive, commented:
"First half results were in line with our revised expectations and reflected the improved performance in the second quarter after a quiet start to the year.

"This is a transitional year for the business and since my arrival in August 2018, I have been undertaking a full review of the business. As part of this process I have been taking action to refine the Group's commercial approach, streamline operations, strengthen the leadership team and re-focus on our key customers. This is already creating a strong platform from which to pursue our growth strategy.

"The third quarter has been more challenging than we anticipated, with a disappointing performance in General Piling and several project delays. As a result and despite good momentum being carried in from the first half, we don't believe we will be able to deliver the significant step up in performance during the second half that we anticipated at the time of our trading statement in December 2018.

"These challenges have been frustrating, but it is pleasing to see outlook for the final quarter remaining robust and with a strong pipeline of target projects providing good forward visibility.

"Whilst we are mindful of the wider market environment, we are confident that the initiatives we are taking will develop a strong platform for future strong, profitable growth."