Engineering group plans to resume dividend payments as turnaround continues

Engineering group Redhall has announced plans to resume dividend payments to shareholders through a capital reduction process as the company’s turnaround gathers pace.

The Wakefield-based firm does not currently have distributable reserves and is therefore prohibited from making distributions to shareholders, including the payment of dividends.

Redhall said: “Following the successful implementation of its strategic turnaround programme, the group has been transformed from a site-based contractor and manufacturer into a high integrity manufacturing business with significant growth prospects.”

Redhall’s order book has grown to £32m with a pipeline of outstanding bids and “other identified opportunities,” it said.

The group also said it is currently accelerating its growth into key markets, in particular investing in its capability to serve customers in three core and growing nuclear-related sectors: defence, decommissioning and new build.

In June, Redhall posted a narrower H1 pretax loss. Loss for the six months to March 31 was £619,000, from a loss of £752,000 while revenue came in at £18.96m, from £21.35m.

In July, the Company raised £9.53m through a share placing and converted £3.75m of debt into equity.

“These actions have significantly improved the company’s balance sheet and, in the board’s opinion, provided the flexibility to implement the group’s growth plans,” Redhall said.

“In light of the group’s growth prospects, the board believes that it might be considered desirable in the future to commence paying dividends to shareholders. However, the company currently has negative distributable reserves and is, therefore, prohibited from making distributions to its shareholders, including the payment of dividends.

“The board, therefore, believes it is an appropriate time to undertake the capital reduction and create distributable reserves which would enable the payment of dividends in the future. In addition, the board believes the capital reduction will have the effect of further strengthening the balance sheet and improving the group’s access to capital.”

Redhall’s chief executive Phil Brierley said: “At the time of our interim results in June we highlighted the momentum in Redhall’s recovery and our confidence in being able to deliver profitable growth.

“At the appropriate time, once this profitability is established, we would like to return Redhall to the dividend list, both to reward existing shareholders and to increase the marketability of Redhall shares. This proposed capital reduction is an essential procedural step to enable dividend payments to be made.”