Van Elle has had more than its fair share of the negative publicity recently but that is all about to change with the arrival of new CEO Mark Cutler.
In August Van Elle announced that Mark Cutler had taken up the post of CEO, replacing Steve Prendergast who temporarily took on the role for three months after Jon Fenton’s exit from the business earlier in the year.
After months of turmoil for the firm, including significant changes in management, the financial fallout from collapse of Carillion, public board room scuffles and unhappy shareholders, Cutler is ready to steady the ship.
Most recently of Balfour Beatty, Cutler has over 30 years’ experience of the industry and felt the time was right for a change.
“I made the change to come to Van Elle as I felt it was a business that I could lead from the front and shape to my vision for the business,” explains Cutler.
“Van Elle has high potential to do very well. It was already operationally and financially very sound business, and a market leader without really being recognised as such.”
With a degree from Imperial College, Cutler is a chartered civil engineer who has always worked for contractors, primarily in infrastructure.
“There’s great potential for development, improvement, modernisation, growth and somewhere where I could build from what I have learnt over the years with previous different employers.”
Having floated on the stock market in 2016, Van Elle, previously a family-run business, now has a whole host of new responsibilities that Cutler is keen to drive forward.
“The business now has a commitment to investors and the markets to deliver in line with the promises made to shareholders and future investors.
“This involves mainly transitioning from private family business to a public company with the responsibilities and professionalism that goes with that. There is still work to do there, to transition successfully, and complete that journey but we are well on the way,” says Cutler.
One of Cutler’s ambitions is to see Van Elle recognised as a market leader, especially for the scale and diversity of what the firm can deliver.
“We are under-recognised for what we can do. We have probably undersold ourselves, we don’t have particularly strategic customer relationships and there isn’t widespread knowledge of our capabilities. We have been quite introverted in the way we have gone about our business over the years. I’m looking to change that.
“I want to turn Van Elle into a highly professional, very customer facing, collaborative, innovative and dynamic business, alongside the customer care you get from a family business. That is my biggest challenge.”
But it is Van Elle’s potential for growth that Cutler believes should be exploited, including expanding through acquisition.
“Already we are a £100M turnover business, we are very profitable, but we haven’t really tried to grow. We will be doing that through organic and acquisition strategies.
We are under-recognised for what we can do. We have probably undersold ourselves, we don’t have particularly strategic customer relationships and there isn’t widespread knowledge of our capabilities.
“The business is in good shape, but nevertheless there is significant room to improve the way we work, modernise the business, improve our efficiencies, create much closer relationships in the marketplace and improve internal performance. We are not in a crisis, we are in a good position.
“We are interested in growing through acquisitions, through bolt-on, careful, strategic acquisitions. We are not rushing into anything but it is very much on the agenda. It is something we are ready for and intending to pursue. We haven’t done anything significant since we floated, and this is something I’d like to bring forward.
“We are quite open minded to where we will grow, but I expect housing and infrastructure to be our growth areas.”
Cutler is also keen for the firm to reduce the number of bids it undertakes and be more selective.
“If I’m honest we bid too much at moment and we are becoming increasingly selective on what we bid for,” he says. “We deliver 1,000 projects a year and we bid for far too many projects. I’d like us to be more selective and work in closer partnerships with customers where there is a mutual appreciation and deep relationships, and where our integrated services are of greater value, but without reducing the diversity of what we do.
“It could be that we still deliver 1,000 projects a year, but I want to be clearer about who we are working for, why we are working for them and make sure there is clearer commercial sense.
“I want to know our customers better than we have previously and they know us, therefore we are entering something that is a long-term relationship. Small or big relationship, it is still valuable.”
An internal restructuring operation has resulted in a few key people leaving the firm in the past two years, as well as widely reported boardroom scuffles and shareholder displeasure. Cutler says this is all the past now.
“We’re making internal changes and we have started to move from eight divisions to five and integrated our capabilities more logically within the divisions.
“The board room changes over the past two years are done and dusted and the board is settled. As for previous family shareholders that were part of that boardroom shake up, that is now accepted and understood and there is a perfectly constructive dialogue with large private shareholders who are communicated with in line with how we communicate with our larger shareholding community,” explains Cutler.
As for the people who have left the firm over the past couple of years, Cutler’s aim now is to continue to drive the business forward with the right people in place.
“One of my challenges is to set the strategy and align the business behind a clear vision for going forward and engage the talent we have in the business towards a set of goals they believe in and get excited by. I’m not unduly concerned about our ability to retain key people going forward at all,” he says.
In fact, a number people are returning to the business after moving elsewhere in recent years, reports Cutler.
“Some highly regarded people have already returned, and I’m expecting others to return as confidence grows around the culture and way forward to where we are heading,” he says.
Despite a bad debt charge of £1M in the last financial year following the collapse of Carillion, Van Elle reported a turnover of £103.9M and an underlying pretax profit of £10.6M for the 2017/2018 financial year.
“We took an exceptional charge to our 2017/2018 accounts,” said Cutler, “but we are remaining positive about the current year.
“In common with most of the geotechnical sector, the first two quarters of this financial year have been relatively slow for a variety of reasons including post-Carillion confidence. But we remain positive regarding our performance.
“When I look at our customer database, it is remarkable how broad and diverse it is. We can’t work for everyone that we would like to, and we can’t work on every project we would like to do, but there is awful lot of work to be done in the UK infrastructure space.
“We don’t need to be concerned about the scale of the market for Van Elle. It’s about taking market share perhaps and setting ourselves aside from some of rivals by providing a better service, rather than worrying about whether the market is big enough.
“With High Speed 2 coming along there is enough work for everyone.”