Construction News

Wed June 03 2020

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Shareholders provide Van Elle with safety net

14 Apr Foundations specialist Van Elle raised £6.67m by way of a share placing just before Easter to cushion it from the economic fallout of Covid-19.

Since the virus outbreak, Van Elle has seen all of its house-building sites close, putting a big dent in revenues from March until at least May. Roughly half of Van Elle’s £90m annual revenue is normally derived from the residential market.

While all of house-building sites are closed, most road and rail sites remain active, although impacted by widespread materials disruption and the constraints of complying with social distancing, as best as possible. In the regional construction sector, work has been suspended on many sites but they are beginning to re-open, under the new Site Operating Procedure guidelines.

About half of the shares placed on 9th April were snapped up by existing major shareholders

Ruffer Investment Management, Otus Capital Management and Premier Miton Investors.

Van Elle chief executive Mark Cutler said: "This fundraising provides the group additional flexibility to manage the impact of Covid-19 as well as potential capacity to support growth investment as markets recover.”

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However, the share placing is not the only measure being taken by Van Elle to get through the crisis. It has furloughed more than 200 staff, representing approximately 40% of the total workforce., and the board and executive team is taking a temporary 20% pay cut.

It is also “working to agree deferral of payments with suppliers where possible”, despite the Construction Leadership Council last week urging all contractors to keep money moving through the supply chain.

The company is also negotiating deferral of rent, rates and hire purchase payments and has closed (temporarily) its precast concrete factory.

It is also now reviewing what property or machinery might be surplus to requirement and could be sold to raise further cash.

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