Redhall convinced of strong future prospects
REDHALL today said it remains convinced that its future prospects are strong, despite seeing a dip in revenue and pre-tax losses widening.
In its interim results for the six months ended March 31, the Wakefield-based specialist engineering support services group reported adjusted revenue for the half year of £51.3m, down 9.4%.
Adjusted profit before tax and amortisation was £233,000 compared with £498,000 in the first half of last year and loss before tax widened to £1.02m from £449,000 in the previous period.
However operating profit before exceptional items increased by 9% to £1.1m. The most notable contribution came from the Manufacturing division which increased turnover by 8.1% and adjusted operating profit by 72.6% to £1.26m. Redhall said this represents solid progress against its aim of rebalancing the business towards manufacturing.
David Jackson, chairman, said: “The new management team has set realistic targets for the future and will concentrate on maximising profitable execution. There has been much change in the Group in the last 18 months and we look to a period of stability in order to assist Redhall to reach its full potential.”
Jackson said the results are in line with management expectations and said the business is expected to make progress on this performance in the second half of the financial year, although as announced last week, this progress has been slowed by the delay to certain major projects for existing key customers.
The order book stands at £85m compared with a year-end position of £111m.
Redhall said its financial position was much improved during the first half by raising £7m net in a share placing, which it said has enabled it to reduce debt levels and to enter into constructive discussions with its bankers, HSBC Bank, regarding the extension of existing facilities which are due to expire on 30 September 2015.
Looking ahead, Jackson said: “Our high level prospects remain good and we are close to realising work in several areas of the business, but particularly so in Manufacturing and in the food segment of our Engineering division. In the longer-term, we remain convinced that the proposed new nuclear reactors at Hinkley for EDF will go ahead, but we cannot give any guidance on a start date and have therefore excluded this potential work from our forecasts.
“The new management team will concentrate on profitable execution and increasing margins rather than top line growth in the short term. Once we have achieved this we can again look to grow. The board remain convinced that the group’s future prospects are strong. “
Newly appointed chief executive Phil Brierley added: “During the first half of 2014 the group made advances in improving margin and increasing the proportion of contribution from Manufacturing. Our progress will be impacted in the second half of the year as a result of delays to our clients’ programmes of work, however we remain confident that these contracts will be awarded during 2015. We will continue to focus on higher margin work and profit growth, reinforcing robust contract controls and forecasting.”
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