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Redhall Group plc

("Redhall" or the "Group")

Interim Results for the six months ended 31 March 2012

Redhall Group plc, the specialist engineering support services group, announces its interim results for the six months ended 31 March 2012.

FINANCIAL HIGHLIGHTS

OPERATIONAL HIGHLIGHTS

David Jackson, Chairman & Chief Executive of Redhall, commented:

 "We are pleased to be showing improvement on last year's results; however, I firmly believe that the Group still has potential for further progression. We are delighted to have recruited Richard Shuttleworth as Group Chief Executive. His extensive industry knowledge and experience will be invaluable to Redhall".

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CHAIRMAN'S STATEMENT

Introduction

The result for the first half of the current financial year is an improvement on last year, but I believe the Group is capable of a much better performance. We have strengthened our commercial and operational management over the last six months to address the issues that have affected our financial performance. This team is further enhanced by the appointment of Richard Shuttleworth as our Group Chief Executive with effect from 1 September 2012 which we announced last week. Richard has had a wealth of contracting experience in major businesses particularly during his time as Group Commercial Director of AMEC plc.

I am pleased to announce the award, subject to contract, of a major project working directly with Sellafield Limited in the high hazard area of the site. This nuclear project is initially valued at £3.2 million and will commence in July 2012. This is the first major award from Sellafield since the new management under Helen Simms took control of our Nuclear business at the beginning of last year. With other opportunities currently available I am looking forward to a more productive chapter from our decommissioning and waste management activities.

Unfortunately the Vivergo contract dispute remains unresolved, although we are advised that the position we adopted at 30 September 2011 remains valid.

Trading Results

Revenue for the half year to 31 March 2012 amounted to £59.9 million, down on the comparative of £64.3 million although this did include £11.9 million of Vivergo turnover. On a like-for-like basis, this shows a 14% improvement. Adjusted profit before tax and amortisation was £1.34 million, up 33% on the comparative of £1.01 million. Adjusted fully taxed diluted earnings per share at 3.4p was 42% ahead of the 2011 figure of 2.4p.

As stated in last year's annual report we are adopting a new segmental reporting system this year which reflects our new business structure and analyses our performance in Engineering, Nuclear and Manufacturing. We will, for the sake of good order, make available on our website the previous segmental analysis of our first half performance.

Operating Review

Engineering

Engineering activity for the six months to 31 March 2012 reported revenue of £27.0 million up 9% on a 2011 comparative of £24.8 million (excluding Vivergo). Adjusted operating profit stood at £744,000 (2.8% margin) compared to a 2011 figure of £805,000 (3.3% margin). The decline in margin reflects the current competitiveness of the industry but this is anticipated to recover when the start of the nuclear new build programme impacts on the wider engineering market.

The significant contract signed in the period was the £25 million five year term contract for Huntsman which I referred to in last year's annual report when we had reached preferred contractor status.

Nuclear

Nuclear turnover in the first half was £18.1 million up 12% on the 2011 comparative of £16.2 million. Adjusted operating profit was significantly higher at £624,000 compared to £35,000 last year although the first half of last year was an exceptional period due to the change of management. An operating margin of 3.4% was achieved this year compared with 0.2% last year. Margins are below the current management team's expectations due to the completion of contracts taken on prior to their arrival. It is anticipated that our margin in nuclear contracting can be significantly improved.

Our work at both Aldermaston and Burghfield for AWE continues to perform well. At Barrow we continue to work on the Astute class submarine programme for BAE Systems. There are signs here that the quality of our work may lead to further opportunities with BAE.

Manufacturing

Manufacturing turnover stood at £14.8 million for the first half compared to £11.5 million in 2011, an increase of 29%. Adjusted operating profit on this year's turnover stood at £1,353,000 (9.1% margin) compared to £1,379,000 (12.0% margin). This year's margin is disappointing and relates to the subcontract production issues that we announced earlier. These issues are now behind us and we hope shortly to return to more normal margins.

Our manufacturing activity at Booths in Bolton remains buoyant with strong demand from both the defence and oil and gas sectors. R Blackett Charlton is returning to full production after a quiet spell due to increased activity in the offshore oil and gas sector. Jordan Manufacturing in Bristol remains relatively quiet due to the continued lull in activity in the civil nuclear industry but this is anticipated to change markedly once we enter the nuclear new build phase.

Financial Position

Our cash-flow from operating activities was broadly neutral in the first half of this financial year compared with an outflow of £14.6 million in the first half of last year. Net debt at £10.5 million compared with £10.2 million at 30 September 2011. We anticipate an increase in working capital between now and our year-end of 30 September 2012 due to legal costs on the Vivergo dispute and an increase of work in progress due to high levels of shut-down activity by our clients in September. Our bank facilities remain adequate for the foreseeable future.

Our tax rate for the current year is estimated to be 20% reflecting the use of losses in our engineering business brought forward from last year.

Vivergo

Our strategy of adjudication against Vivergo has resulted in further positive results which has strengthened the Board's view that we have adopted a reasonable position in our balance sheet. However, these adjudications, whilst defining important principle decisions, have to date resulted in minimal cash awards. We are surprised that Vivergo continues to adopt a defensive stance notwithstanding the adjudication verdicts. While our preferred route is for a negotiated settlement, we are resigned to resolving this issue through the Courts, if necessary, and this process may take a number of months.

Dividend

The Board has recommended that no interim dividend will be paid in 2012. The dividend policy is regularly reviewed by the Board but it is unlikely that the dividend will resume until the Vivergo dispute is settled.

People

As announced on 7 June 2012 we have appointed Richard Shuttleworth as our new Chief Executive Officer with effect from 1 September 2012. The recruitment for this position has been a lengthy process, but it was extremely important that we appointed the right person and I believe that we have found an individual with the right credentials for the job. Richard spent 28 years with AMEC plc, rising to the position of Group Commercial Director and has, since then, run Cape's UK operation and the UK Division of Harsco Infrastructure, formerly known as SGB. He is a qualified Quantity Surveyor and I am delighted to have a man with his experience and attention to detail running our Group.

For my part I will take the position of Non-Executive Chairman with effect from 1 October 2012.

Prospects

I remain comfortable with the short term prospects of the business and the award of the nuclear contract at Sellafield and the signing of the £25 million five year term contract with Huntsman, underline the reputation that we have with our major clients in the niche areas in which we work. We await with interest the appointment by EDF of the civils contractor for Hinkley Point which will be the trigger for the commencement of the nuclear new build programme in the UK. We remain well positioned for contract awards once the programme commences due to the strength of our joint offering with our French business partners.

Our order book stands at £103 million compared to £101 million at this time in 2011 which is satisfactory for current trading purposes.

David Jackson

Chairman and Chief Executive

14 June 2012

Redhall Group plc

Consolidated Interim Income Statement

* Before exceptional items and amortisation of intangible assets acquired with business combinations.

Redhall Group plc

Consolidated Interim Statement of Comprehensive Income

Redhall Group plc

Consolidated Interim Balance Sheet

Redhall Group plc

Consolidated Interim Statement of Changes in Equity

Redhall Group plc

Consolidated Interim Cash Flow Statement

Redhall Group plc

Notes to the Consolidated Interim Financial Statements

1. Basis of preparation

These consolidated interim financial statements ("interim financial statements) are for the six months ended 31 March 2012 and do not constitute statutory accounts under sections 434 and 435 of the Companies Act 2006. They do not include all of the information required for full annual financial statements. The comparative figures for the financial year ended 30 September 2011 are not the Group's consolidated statutory accounts for that financial year. Those accounts have been reported on by the Group's auditor and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under sections 498(2) or 498(3) of the Companies Act 2006. These interim financial statements should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 September 2011.

These interim financial statements have been prepared in accordance with the recognition and measurement requirements of IFRSs as adopted by the EU and under the historical cost convention, except for the revaluation of certain non-current assets and include fair values for share-based payments and the initial recognition of financial instruments.

These interim financial statements have been prepared in accordance with the accounting policies adopted in the latest consolidated financial statements for the year to 30 September 2011. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these interim financial statements.

These interim financial statements have been reviewed, but not audited, by the Group's auditors.

2. Segment analysis

Following the restructuring of the Group and of its operational management team as reported by the Chairman in the 2011 Annual Report and Accounts, the segmental reporting has been changed to reflect the new structure.

The revised reporting represents how the Group operates now and in the future. The 2011 comparatives have been restated. The activities in each segment are as follows:

Nuclear

Nuclear comprises activities in both the civil and defence sectors and includes design, project management and execution of on-site works through qualified and experienced engineers and trades personnel. Activities in the civil sector include decommissioning and waste management, support to operating nuclear power stations, and nuclear new build. Activities in the defence sector encompass activities on behalf of the Ministry of Defence and include the marine outfitting of Astute class submarines at Barrow, West Cumbria, and the design and manufacture of specialist equipment and mechanical and electrical engineering activities for the AWE establishments at Aldermaston and Burghfield.

Engineering

Engineering comprises activities in industrial processes including oil and gas, petrochemical, chemical, pharmaceutical and food and includes design, project management and execution of on-site works through qualified and experienced engineers and trades personnel. Activities include mechanical design and construction, storage tank services, plant modifications and upgrades, repair and maintenance, shutdown services and offsite services.

Manufacturing

Manufacturing encompasses the design, manufacture and installation of bespoke specialist plant and equipment typically in the nuclear, defence, oil and gas, petrochemical, chemical, pharmaceutical and food sectors. The division has particular expertise in the design and manufacture of high integrity fire and blast resistant doors, window and wall systems.

Operating segments

The revenues and profit before tax generated by each of the Group's operating segments are summarised as follows:

2. Segment analysis continued

Six months to 31 March 2012

 Adjusted operating profit is stated before amortisation of acquired intangible assets and exceptional items.

2. Segment analysis continued

Six months to 31 March 2011

Adjusted operating profit is stated before amortisation of acquired intangible assets and exceptional items. Exceptional items relate largely to restructuring and redundancy costs.

2. Segment analysis continued

Year to 30 September 2011

Adjusted operating profit is stated before amortisation of acquired intangible assets and exceptional items. Exceptional items in the period relate to contract provisions and restructuring costs.

Geographical segments

The following table shows the distribution of the Group's consolidated revenue by geographical market, regardless of the origin of the goods or services.

3. Financial income and expenses

* Includes £75,000 of pension administration expenses paid for by the Group (31 March 2011: £75,000; 30 September 2011: £150,000).

4. Taxation

The charge for taxation has been based upon the estimated effective rate of tax of 20% (2011: 28%) for the current year.

5. Earnings per share

Basic earnings per share

The calculation of basic earnings per share of 2.7p (31 March 2011: 0.7p; 30 September 2011: loss per share (23.5p) is based on 29,730,033 shares (31 March 2011: 29,616,700; 30 September 2011: 29,616,700), being the weighted average number of shares in issue throughout the period and on earnings of £788,000, (31 March 2011: £210,000; 30 September 2010: loss of £(6,959,000)).

Diluted earnings per share

The calculation of diluted earnings per share of 2.6p (31 March 2011: 0.7p) is based on a profit for the period of £788,000 because there were no adjustments required (31 March 2011: £210,000 because no adjustments were required) and on 29,801,548 ordinary shares (31 March 2011: 29,816,662) as calculated below.

The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted loss per share for the year ended 30 September 2011 are identical to those used for the basic loss per share. This is because the exercise of share options would have the effect of reducing the loss per share and is, therefore, not a dilution under the terms of IAS33.

5. Earnings per share (continued)

Adjusted earnings per share

The Directors believe that helpful additional earnings per share calculations are earnings per share on adjusted bases. The basic and adjusted weighted average numbers of shares and the adjusted earnings have been calculated as follows:

6. Cash flow from operating activities

7. Dividends on equity shares

Amounts recognised as distributions to equity holders in the period:

The Directors do not propose the payment of an interim dividend for the six months ended 31 March 2012.

8. Distribution of interim report