8 June 2011 – meeting

We met with the management of Redhall Group yesterday following last week’s announcement of the interim results.  Clearly, the results have been seriously affected by the loss of the Vivergo contract and this is an ongoing saga at the moment.  At the end of March, there was an amount of  £14.6m of costs that had been incurred by Redhall on the contract for which the company has not been paid.  No provision has been made in the accounts for this as the company believes that it should get most, if not all of this amount paid.  However, until the matter has been resolved, the shares are unlikely to make much progress.  Despite this though, the company is continuing to win new business and sees particular scope in the nuclear industry.  Although there must be an element of risk in buying now, those that are brave enough to do so must have a chance of a significant gain.  SPECULATIVE BUY.