2 June 2011 – interim results
Not surprisingly, the interim results from the specialist engineering group Redhall, which cover the six months to 31 March have disappointed. The poor first half, which saw turnover fall to £64.3m (2010: £65.4m), was largely due to the loss of the Vivergo contract on which we have commented before. Adjusted pre-tax profit fell to £1.0m (2010: £3.3m) with earnings per share on the same basis amounting to 2.4p (2010: 8.0p). Net debt at the period end was £10.8m largely due to £14.6m outflow from operations principally due to Vivergo.
The Vivergo contract has clearly had a very negative effect on these results. There was also a lower level of orders from Sellafield and a more competitive environment in the oil and gas sector. On the other hand, the defence business continued to perform well, helped by the £20m contract with AWE announced in February and the group’s order book stands at £101m.
The Board believe that this is a low point for the group with trading set to improve in the second half and beyond. Nevertheless, despite the share price fall today the uncertainties surrounding Vivergo will continur to depress the shares in the short term. We are hoping to meet with the company next week at which point more clarity may be gained. Until then, the shares are a HOLD.