Challenges remain for Redhall

REDHALL Group, the specialist engineering support services group, said this morning that it expects profits in its second half to be below expectations.

In a trading update, the Wakefield-based group said: “Trading in the second half of the financial year ending September 30 is anticipated to be below management expectations with profits below market consensus due to activity levels and margins in the nuclear segment and in certain aspects of the engineering segment continuing to be adversely affected.

“We announced in our half-year results the award of two new framework contracts within the nuclear segment but we have experienced a slower than anticipated order intake on these contracts. Steps have been taken to resize the businesses to suit the current activity levels and this has resulted in further exceptional restructuring costs in the second half-year.”

Redhall said that activity levels and opportunities in the manufacturing segment are currently promising, but this together with the cash cost of restructuring has led to some increase in the group’s working capital requirements although the total borrowings remain within current facilities.

“Our bankers, HSBC, remain supportive of the group.”

Redhall also commented on its on going dispute with Vivergo.

It has been pursuing Vivergo for £16.7m following the renewable energy firm’s decision to terminate the engineering company’s work at a new biofuels plant at Saltend in 2011.

“We continue to await the judgement on the Vivergo case which was heard in November last year,” Redhall said.

“We are hopeful of a judgement in the near future, and will update the market as appropriate.”