Redhall's performance continues to be overshadowed by the ongoing legal action relating to the Vivergo contract that was terminated last year. Management is pushing hard for a resolution and, according to analysts from Canaccord Genuity, a successful outcome could lead to a cash return of £10m. This would virtually wipe out debt and enable the resumption of dividends.
Strip out £11.9m of Vivergo revenue in the prior half year's figures and Redhall's turnover was actually 14 per cent higher, with adjusted pre-tax profits up a third to £1.3m. Recent contract wins include a £3.2m deal with Sellafield and a five-year £25m contract with Huntsman. The order book is up marginally to £103m.
New chief executive Richard Shuttleworth, formerly of former Amec and Cape, completes a management shake up designed to focus attention on growing each of the group's three operating divisions: nuclear, engineering and manufacturing. There is scope for margin improvement at both nuclear and engineering, while manufacturing should bounce back after problems with sub-contracted work at the Aldermaston nuclear weapons facility hit margins in the first half.
Broker FinnCap expects full-year adjusted EPS of 10.7p, rising to 12.6p in 2013.
REDHALL (RHL) | ||||
---|---|---|---|---|
ORD PRICE: | 81p | MARKET VALUE: | £24.2m | |
TOUCH: | 80-82p | 12-MONTH HIGH: | 114p | LOW: 55p |
DIVIDEND YIELD: | nil | PE RATIO: | na | |
NET ASSET VALUE: | 128p* | NET DEBT: | 28% |
Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2011 | 64.3 | 0.29 | 0.70 | nil |
2012 | 59.9 | 0.99 | 2.70 | nil |
% change | - | +237 | +286 | - |
*Includes intangible assets of £29.8m, or 100p a share |