Van Elle’s H1: revenue up, margins tight, and the strategy shifts to energy and water
Van Elle delivered a resilient first half to 31 October 2025. Revenue rose 16% to £73.4 million, driven mainly by General Piling and Specialist Piling & Rail. Profits were modest and margins thin as a tough market kept pricing keen, but the order book grew and the dividend held steady.
The big picture: the business is leaning hard into energy and water, where long-term frameworks and regulatory cycles look attractive. Residential is still subdued – particularly high-rise in London due to Building Safety Act delays – but approvals have started to move. Management expects to meet full-year expectations.
Key numbers for the six months to 31 October 2025
| Metric | H1 2025/26 | H1 2024/25 (restated) |
|---|---|---|
| Revenue | £73.4m | £63.4m |
| Underlying EBITDA | £5.7m | £6.1m |
| Underlying operating profit | £2.0m | £2.2m |
| Underlying operating margin | 2.8% | 3.4% |
| Underlying profit before tax | £1.9m | £2.2m |
| Statutory profit before tax | £1.7m | £2.0m |
| EPS (continuing, basic) | 1.2p | 1.4p |
| Underlying EPS (continuing, basic) | 1.4p | 1.5p |
| Underlying ROCE | 10.4% | 11.4% |
| Net funds (excl. IFRS 16) | £2.8m | £3.1m |
| Order book (excl. frameworks) | £44.9m | £41.6m |
| Interim dividend | 0.4p per share | 0.4p per share |
Where growth came from – and where margins pinched
General Piling revenue jumped 25% to £28.9 million, helped by the Sheffield Forgemasters industrial project. However, heavy price competition and a weaker residential mix meant a £0.1 million operating loss for the period. This is the weak spot that needs H2 to deliver higher-margin work.
Specialist Piling & Rail was the star again. Revenue rose 21% to £25.9 million and operating profit stepped up to £2.7 million (H1 FY2025: £2.1 million). The work here is more complex and specialised, which generally supports better margins. Rail activity is recovering from a low base as the industry transitions into CP7 (the current five-year rail funding cycle), with TransPennine Route Upgrade providing support, but spend hasn’t yet reached the levels originally expected.
Ground Engineering Services dipped 2% to £18.4 million, but profitability improved to a £0.5 million operating profit (H1 FY2025: £0.3 million). Strata Geotechnics is making strong headway in energy-related ground investigation work in Scotland.
Strategic pivot: energy and water take centre stage
This is the core of the Van Elle story. The Group is winning work and frameworks across the power grid and the UK water sector:
- Energy: workstreams in ground investigation, design and construction on two major transmission schemes for Wood Group, initial transmission projects for M-Group and National Grid, and the milestone of the 150th high-voltage substation, many using ScrewFast modular foundations.
- Water: Strata secured a place on United Utilities’ AMP8 ground investigation framework, with wastewater schemes underway alongside Galliford Try, Kier and Costain. AMP8 (the five-year water investment cycle) is expected to see £104 billion of spend versus £54 billion in AMP7.
Importantly, Van Elle cites visibility of at least £40 million expected annual revenue through long-term frameworks in energy from FY28. That is meaningful scale for a business of this size and underpins the medium-term growth case.
Residential and the Building Safety Act: signs of life at last
Residential was 32% of Group revenue and fell 15% to £23.8 million. High-rise activity in London remained suppressed, with Building Safety Act Gateway 2 approvals slowing starts. The RNS notes a four-fold increase in Gateway 2 approvals in Q3 compared to Q2 and forecasts stabilisation in London from Q4. That would be a welcome turning point after prolonged delays.
Over the medium term, the sector backdrop looks better, supported by the Government’s pledge to build 1.5 million homes this parliament and speed up planning. Van Elle’s offsite Smartfoot foundation system should help housebuilders accelerate programmes when volumes improve.
Cash, balance sheet, and refinancing: quietly stronger
Net funds excluding IFRS 16 lease liabilities improved to £2.8 million (30 April 2025: £1.1 million). Working capital reduced by £1.5 million, supported by £1.2 million of delayed R&D tax credits. The Group invested £5.5 million in its rig fleet and realised £3.2 million from asset disposals, largely from selling the in-house HGV fleet.
Refinancing is in place: a £10 million asset lending facility with Lloyds, of which £7.6 million is undrawn at period end. Lease liabilities under IFRS 16 for property and vehicles were £4.9 million, and total lease liabilities on the balance sheet were £6.1 million. Overall, liquidity looks sensible heading into a busier H2.
Canada exit: focus back on the UK
Van Elle Canada Inc. was sold in December 2025 and is treated as a discontinued operation. The Canadian business generated £1.2 million of revenue and a £1.0 million trading loss in the period, with an additional £0.2 million loss for November to be recognised in H2. Disposal proceeds are approximately CAD $4.7 million – CAD $2.7 million cash upfront and CAD $2.0 million deferred, payable between January and July 2026.
This disposal cleans up the story and lets management focus fully on the UK opportunity, while still providing advisory support to the Canadian unit.
Outlook and my take on guidance
The order book rose 8% to £44.9 million, excluding frameworks and preferred bidder positions, providing visibility through the year end and into FY2027. Management expects the second half to see a richer mix as higher-margin complex projects mobilise. The Board remains confident in meeting market expectations, with company-compiled consensus for FY2026 underlying PBT at £3.0 million.
On the plus side: revenue momentum, strong positioning in energy and water, order book growth, improved net funds, and a maintained interim dividend at 0.4p per share. On the cautious side: margin pressure in General Piling, rail spend slower than hoped in early CP7, and residential still below par despite improving approvals. Execution in H2 is key.
What I’m watching next
- Conversion and mobilisation of energy frameworks – progress towards that £40 million annual revenue visibility from FY28.
- AMP8 awards translating into site activity and margin delivery.
- Rail CP7 ramp-up and TransPennine Route Upgrade continuity.
- Gateway 2 approvals sustaining at higher levels and stabilising London performance from Q4.
- General Piling margin recovery as the mix shifts towards more complex work.
- Cash generation versus capex and utilisation of the £10 million asset facility.
Bottom line
Van Elle is grinding out growth in a difficult market and positioning itself where the spend is coming – energy and water. H1 margins were skinny, and one division posted a small loss, but the strategic direction is sound, the balance sheet is sensibly managed, and the order book is moving the right way.
If H2 brings the expected mix improvement, CP7/AMP8 acceleration, and continued easing of Building Safety Act bottlenecks, the Group has a fair shot at delivering on its full-year targets and setting up a better FY2027-FY2029 runway. Steady rather than spectacular – but the foundations for medium-term growth are being laid.
